Imperial Bank pay plan remains suspended

Imperial Bank's branch in Likoni, Mombasa closed on October 14, 2015 after the financial institution was placed under receivership. PHOTO | KEVIN ODIT | NATION MEDIA GROUP

What you need to know:

  • Justice Patrick Otieno refused to disallow the extension of the orders as sought by lawyers Philip Murgor and Paul Chege for Imperial Bank and the Central Bank of Kenya, respectively.

The Central Bank of Kenya (CBK) and Imperial Bank, which is in receivership, suffered a setback after the High Court declined to lift orders suspending a scheme of payment to depositors, which was being implemented by two commercial banks.

Justice Patrick Otieno refused to disallow the extension of the orders as sought by lawyers Philip Murgor and Paul Chege for Imperial Bank and CBK respectively.

“To allow the process (scheme of payment) to go on is to disregard the applicants, it will not be just not to extend the orders,” said Justice Otieno in his ruling.

Mr Murgor and Mr Chege had urged the court not to extend the orders, an application that was opposed by lawyer Francis Kadima representing Mombasa billionaire Ashok Doshi and his wife, who sued the two institutions.

Mr Kadima had argued that not extending the orders would be prejudicial to the hearing of the case at “this stage” saying the defendants are yet to place arguments before the court that needs his response.

He told the court that how the depositors “will be handled” will determine the level of confidence individuals might have on the Kenyan money market.

Mr Murgor who said they would be grateful if the court would consider the matter as that of national interest noted that out of the 50,000 depositors; only 10,000 were yet to be paid their money back.

In his objection to the suit by the Doshis, Mr Murgor said the applicants did not comply with the requirements that no injunction may be brought against an institution in receivership unless permitted by court. The court will deliver its ruling on July 4.