- Standard Chartered Financial Services Limited wants the proceedings suspended saying no financial institution can afford such a huge dent in its finances.
- The matter which is before High Court Judge Alfred Mabeya had been fixed for hearing on May 24 this year.
Image: The Star
The Supreme Court is expected to rule on whether it will suspend proceedings pending at the High Court in which companies owned by Business mogul Mohan Galot are seeking Sh33 billion in damages.
Standard Chartered Financial services limited wants the proceedings suspended saying no financial institution can afford such a huge dent in its finances.
"The Sh33 billion is so colossal that it would draw any financial institution in Kenya and certainly any enterprise to its knees," says the bank through senior counsel George Oraro.
The suspension, he says, is to allow them to pursue an appeal at the Supreme Court.
The assessment of damages commenced in October 2023 and was to be finalized on June 3, 2024. It stems out of a loan advanced to the companies in the 80’s.
The matter which is before High Court Judge Alfred Mabeya had been fixed for hearing on May 24 this year.
“We are apprehensive that if a stay is not granted, the assessment will be finalized, judgment given and execution demanded with grave and irreversible consequences to us,” says Oraro.
In a swift rejoinder, Galot through advocate Philip Nyachoti says their claim for damages in the sum of Sh33 billion is yet to be determined.
He says the figure which has not been ascertained should not be a ground to seek a stay of proceedings in the High Court case.
"It is only fair and just that the assessment of damages proceeds as scheduled considering the many years the dispute has taken in court,” says Nyachoti
According to Galot, the bank has not demonstrated any significant loss it would suffer if the suspension was not granted and the assessment of damages at Milimani proceeds as scheduled.
He argues that the application has been brought in bad faith and solely intended to delay and further prolong the resolution of the dispute between Standard Chartered and its companies following a judgement issued December 16, 2022, that remitted the matter to the High Court for assessment of damages.
“The intended appeal is meant to frustrate us from realizing the fruits of the judgement and long-term litigation and ought to be dismissed,” he says.
Galot has been embroiled in a protracted legal battle with the bank over a loan advanced in March 1982.
King Woolen Mills Limited then known as Manchester Outfitters Ltd, borrowed a loan of 1,300,000 Deutsche Marks and 1,050,000 Swiss Francs in 1982 from the lender and charged some property belonging to Galot Industries Ltd. Both companies are owned by Galot.
According to Oraro, the company admitted it defaulted on the repayment and the lender was left with no option other than to appoint receiver managers.
The customer however challenged the appointments saying the move was made in bad faith.
Galot through his advocate Nyachoti claimed that once the Euro currency loan was localized, it superseded all the previous agreements including a previous debenture of April 1982 under which the bank purported to appoint receiver managers to run the affairs of his companies.
Nyachoti also said the appointment of the managers led to the closure of the firm's business in Athi River as the company suffered losses in terms of machinery and raw materials.
The matter has now escalated to the Supreme Court with Judges expected to determine how lenders should discharge securities used to obtain a loan.