The Court of Appeal has suspended a decision rendered last November stopping the liquidation of collapsed Imperial Bank Ltd after the Central Bank of Kenya protested that the move was frustrating payment of depositors and causing unnecessary anxiety in the banking sector.
A bench of three judges agreed that the orders issued by the High Court would halt the activities at IBL and its legal status would be uncertain.
Justice Njoki Mwangi has in a ruling on November 25 allowed an application by two depositors- Ashok L. Doshi and Amit A. Doshi that the lender should not be placed under liquidation until, CBK and IBL deposits $7,277,314 in a joint interest earning account in the names of advocates representing the parties, as security.
The court had also ruled that in the alternative, the banks’ regulator was required to give an undertaking to pay them any money if the case is determined in their favour.
“The resultant economic prejudice on the Applicant (CBK), 3rd Respondent (IBL) and third-party depositors is one which will be irreversible, and the 1st and 2nd Respondents (Doshi) have not in this respect demonstrated that they will be able to compensate the 3rd Respondent and affected third parties by way of damages,” Justices Gatembu Kairu, Pauline Nyamweya and George Odunga ruled.
In the decision, the court had directed CBK to give the undertaking within 30 days of the ruling, failure to which its appointment of Kenya Deposit Insurance Corporation (KDIC) as the liquidator would be discharged.
The court heard that the application was made on the basis of a consent made between Mr Doshi and IBL in the High Court on July 15, 2016, in which it allegedly made an undertaking to pay any sums that would be found due and payable to them.
The regulator submitted that the activities at the collapsed lender remain in limbo having reversed the process from liquidation back to receivership.
