Mineral Masters Company (MMC) Limited has suffered a setback after the High Court allowed Simple Pay Capital Limited (SPCL) to proceed with the auction of its parcel of land.
The company had defaulted on a loan of Ksh 15 million advanced by SPCL.
The case was heard at the High Court’s Milimani Commercial and Tax Division before Justice Nixon Sifuna.
The judge allowed SPCL to proceed with the auction of land parcel Reference No. 1338/130 after MMC failed to settle loan arrears amounting to Ksh 15,379,925.
Justice Sifuna noted that MMC had admitted failing to comply with the repayment terms of the loan agreement.
The company also admitted that it owed money to SPCL.
However, MMC challenged the interest rate charged by the lender. The company argued that the interest and penalties imposed by SPCL were unlawful.
The judge, however, noted that MMC had not provided evidence to support its claims.
“Further, as has been held in various cases in our jurisdiction, this is not a sufficient ground to grant an injunction to prevent a chargee from the exercise of its statutory power of sale,” Justice Sifuna said.
Consequently, the judge dismissed MMC’s application with costs.
Mineral Masters Company challenged the planned auction
MMC had filed a case at the High Court seeking to stop SPCL from auctioning or selling the property.
The company also wanted the court to stop SPCL, its agents, servants, assignees or other representatives from interfering with the parcel of land.
MMC argued that SPCL breached the terms of their loan agreement.
The company claimed that SPCL delayed the loan disbursement and released the money in several tranches.
It also accused the lender of failing to provide proper loan accounts.
Furthermore, MMC claimed that SPCL charged interest that exceeded the principal loan amount, contrary to Section 44A of the Banking Act.
The company also accused SPCL of imposing unilateral interest and penalties outside the loan agreement.
MMC further claimed that the lender changed the repayment timelines and made unlawful deductions.
It argued that the alleged outstanding amount of Ksh 24,041,559.66 lacked proper justification.
The company therefore maintained that the planned auction was unlawful.
SPCL opposed the application
SPCL opposed the application and filed a replying affidavit sworn by Yashika Sagar.
According to the affidavit, SPCL advanced MMC a loan of Ksh 10 million on February 21, 2022.
The loan agreement required MMC to repay the money within nine months at an interest rate of 10 percent per month.
MMC also provided guarantees and property charges as security for the loan.
However, the company failed to repay the loan as agreed.
As a result, SPCL issued a demand letter in August 2022.
MMC later acknowledged the default in a letter dated September 2, 2022, and promised to repay the outstanding amount.
However, the company failed to honour the commitment.
SPCL argued that MMC had admitted breaching the loan agreement and failing to make the required repayments.
The lender also maintained that the court application lacked merit and was filed mainly to delay repayment.
Court dismisses MMC’s application
After considering the arguments from both sides, Justice Sifuna found that MMC had not provided sufficient grounds to stop SPCL from exercising its statutory power of sale.
The judge therefore dismissed the application with costs.
The decision allows SPCL to proceed with the auction of the property used as security for the loan, subject to the applicable legal requirements.
