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Court bars Gab International from selling 20 vehicles for defaulting on Sh58 million loan

Justice Mabeya noted that Gab International does not dispute having the trucks neither does it deny removing the tracking systems from them, which he termed as amounting to dishonesty.

A Nairobi court has barred a construction company from disposing 20 trucks it obtained on credit from Diamond Trust Bank after it defaulted on a Ksh 58 million loan.

While delivering the ruling, Milimani Commercial and Tax Court Judge Alfred Mabeya said Gab International Construction Company cannot fail to meet its obligation and still expect to retain the motor vehicles.
“The defendant is expected to pay the money failure to which its right if redemption would fail and the plaintiff right to sell the property will crystallise,” he added.
The Judge noted that Gab International does not dispute having the trucks neither does it deny removing the tracking systems from them, which he termed as amounting to dishonesty.
“If the defendant was working in good faith it ought to have approached the plaintiff and negotiate the terms of agreement. However, it failed to do so in the end to decide to defeat the plaintiff’s right to the motor vehicles and disabled the tracking devices,” he ruled.
Justice Mabeya said the bank remains the owner of the motor vehicles until when such a time when the company will pay the entire hire purchase price.
In case of any default, he said, the lender was entitled to redeem the security by possessing the motor vehicles.
“This position has however hampered by the defendants actions of removing the car tracking system, thus making it impossible for the plaintiff to locate the motor vehicles. In the circumstances I am persuaded that the plaintiff has established a Prima facie case thus find in favour of the plaintiff in granting an injunction against the defendant and allowing the plaintiff right to repossess the trucks,” Justice Mabeya ruled.
The bank sued the construction company on September 22, 2024 seeking injunction orders barring Gab International Construction Company Limited, two of its directors Abdifatah Ali Adan and Noor Haji Ali by themselves, their agents or servants from holding, using, charging, advertising for sale, selling by public auction or by private treaty or otherwise handling, dealing or interfering with the 20 units of trucks in any manner whatsoever pending the hearing and determination of the suit.
They also sought interim orders compelling the defendants, their agents or their servants to release the said trucks to the plaintiff for preservation and storage.
The application was premised on the grounds set out on the motion and supported by an affidavit worn by faith Ndonga a debt recovery officer with the plaintiff.
The plaintiff contended that by a hire purchase agreement it extended a higher purchase facility to Gab International Construction Company Limited aggregating to Ksh 58 million for the purchase of 20 units of Ashok Leyland Tripper trucks whereas Abdifatah and Noor were guarantors.
They defaulted on the monthly instalments and the instalments effected in piecemeal leasing to an outstanding aggregated sum of Ksh 101,946,064 as at July 18, 2023.
The defendants had failed to clear the outstanding amount.
The defendants had refused to return the financed motor vehicles and the plaintiff was unable to trace the said vehicles for the purpose of repossession as they (defendants) had deactivated the tracking systems installed by the plaintiff.
Due to that, the bank was apprehensive that if the inspection, detention and preservatory orders were not issued, the financed motor vehicles would be transferred, damaged or subjected to depreciation thus defeating the present application and the suit.
The company’s lawyer had told the court that the bank failed to demonstrate it has a genuine arguable case which was apparently being infringed by the defendants.
The lawyer claimed that the defendants made payments regularly as required by the agreement and they did not breach the terms of the higher purchase,
“The monthly payments were affected when the trucks started developing some mechanical problems prompting the defendants to pay the instalments in piecemeal and eventually defaulted when the trucks completely broke down,” the lawyer submitted.
The lawyer further submitted that the loss that the plaintiff will suffer is financial in nature which is easily calculable and it cannot be classified as irreparable loss.
The lawyer added that the plaintiff is not entitled to the relief sought as “it sold defective vehicles to the defendants and urged the court to dismiss the application for want of merit,” he prayed.
He submitted that the higher purchase was to be paid in 36 equal monthly installments aggregating to Ksh 1,902,303 at an interest of 9.5 percent plus 4 percent on a reducing balance and “it was a condition of the agreement that an additional 10 percent per annum would be charged on arrears.
Justice Mabeya noted that the defendant does not dispute the default but their contention is that it faults the plaintiff for hiring defective trucks.
However, the defendants did not produce any tangible evidence placing liability on the plaintiff,
“The agreement clearly spelt out the consequences of default by the defendants, the plaintiff was at liberty to terminate the agreement and immediately repossess and dispose of the financed motor vehicles. The court’s duty is to protect and respect the contract entered in to by the parties and not to write the contract,” the judge said.
Justice Mabeya indicated that “from the conduct of the defendant, I am not persuaded that the defendants would be in a position to compensate the plaintiff for the damages caused by the breach of the agreement and the amount due continues to escalate. The defendant also admitted to have utilised the tricks in order to make the payments.”
In allowing the application by the bank, judge said that, “I find that the plaintiff’s application dated September 22, 2024, is merited and I allow the same as prayed.”
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