The Central Bank of Kenya (CBK) is seeking to have orders which had been issued temporarily stopping the liquidation of Imperial Bank Ltd set aside.
In its application, CBK says that in obtaining the orders (to stop the liquidation of IBL) businessman Ashok Doshi and his wife Amit failed to make full and frank disclosure of material facts to court.
According to CBK, the facts included that it had already caused to be published a Gazette Notice confirming the appointment of a liquidator over IBL on December 8.
CBK argues that upon appointment of a liquidator over IBL, Section 56 of the Kenya Deposit Insurance Act states among others that no cause of action which subsisted against directors, management or the institution prior to liquidation shall be maintained against the liquidator.
It further says that no leave (permission) was sought and obtained by the billionaire businessman and his wife before the temporary orders were issued.
On December 22, Justice John Onyiego sitting at the High Court in Mombasa temporarily stopped the liquidation of IBL which had been ordered by the CBK earlier in the month.
Justice Onyiego issued the order suspending CBK’s decision to appoint Kenya Deposit Insurance Corporation (KDIC) as a liquidator of IBL (in receivership) following an application by Mr Doshi and his wife.
CBK also argues that contrary to allegations by Mr Doshi and his wife, a consent entered into does not take away powers conferred to CBK under Section 54 of the Kenya Deposit Insurance Act and those conferred to KDIC pursuant to powers granted to it by Section 53 of KDIC Act.
“In any event, the applicant (CBK) was not party to the alleged consent which was between the plaintiffs (Mr Doshi and his wife) and the second defendant (IBL),” argues CBK.
CBK says it would be impossible for it to comply with the orders temporarily stopping the liquidation as they (orders) have been overtaken by events and actions sought to be restrained by the orders have already taken place and that the receivership of IBL cannot be re-instituted.
“The applicant is therefore apprehensive that unless the application is heard and determined and the orders set aside as a matter of urgency, the legal status of IBL will be rendered uncertain to the serious detriment of its depositors, creditors and shareholders,” CBK argues in its application.
In its grounds of opposition to the application by Mr Doshi and his wife, CBK says that the receiver having recommended to it (CBK) that IBL be liquidated, it was under statutory obligation to appoint a liquidator.
The court had further issued an order restraining CBK and IBL (in receivership) either through KDIC or any other person acting for them from paying out deposits in execution of the CBK’s decision.
Mr Doshi and his wife have sued IBL and CBK seeking over Sh1 billion deposits they held at the bank before its collapse.
In their application, through lawyer Willis Oluga, the couple argues that on July 15 2016 a consent was recorded under which IBL gave an undertaking to pay any money adjudged due and payable to them after determination of the case.
“The consent is still binding to date and has never been reviewed, varied or set aside,” argues Mr Oluga.
Mr Oluga further told the court that while the consent is still binding, CBK appointed KDIC as a liquidator of IBL on December 8.
“The appointment of KDIC as the liquidator has the effect of defeating the consent recorded in this suit since the legal status of IBL has changed from being in receivership to being in liquidation and the consent is no longer binding to IBL,” part of their application states.
According to Mr Doshi and his wife, after its appointment as IBL liquidator, KDIC is likely to start paying out depositors thus the payments will defeat their claim in the case since there will be no money to pay them out should they succeed
Mr Doshi and his wife Amit also want an order issued directing the defendants to deposit US Dollars 7.2 million in a joint account in the names of lawyers on record within 30 days of the order as security for any decree that may be passed by court.
Alternatively, they want the defendants be ordered to jointly and severally give a binding undertaking to pay any money adjudged due and payable to them (applicants).
In their main suit, the couple is seeking an injunction restraining CBK and IBL from continuing with any dealings with their money in any manner, either by investing, transferring to other banks or the Kenya Insurance Deposit Corporation.
They also want an order directing the defendants to file IBL’s statement of accounts showing liquidity in the deposit account, audit statement published and approved for 2014/2015 and any other liquid and tangible securities held by the CBK as of October 13, 2015.
The couple held both US dollar and shillings accounts with IBL.
“The defendants are liable to pay both insured amounts and protected deposits once an institution is put under receivership,” says the suit papers.
Deposits IBL held at the time it was put under receivership, the court heard, were enough to pay all depositors.
The applications by Mr Doshi and his wife and that of the CBK will be heard on January 10.
https://www.businessdailyafrica.com/bd/economy/cbk-wants-orders-on-imperial-bank-liquidation-lifted-3674390
–>