A constitutional petition has been filed before the High Court in Nairobi, with Cape Holdings Limited and two of its directors seeking to halt the enforcement of a Sh10.68 billion decretal sum, arguing that a substantial portion of the amount accrued while the underlying arbitral award had been set aside by the courts.
In the Petition, Cape Holdings Limited, alongside its directors Vinay Bipinchandra Sanghrajka and Bipinchandra Bhaichang Sanghrajka, sued Synergy Industrial Credit Limited and the Attorney General, challenging the constitutionality of enforcing the decree, which they say includes Sh9.01 billion in compounded interest.
According to court documents, the dispute originates from an arbitral award issued on January 30, 2015, requiring Cape Holdings to pay sh1.66 billion together with compound interest at 18 per cent per annum until payment in full.
The award was subsequently set aside by the High Court in March 2016 before being reinstated by the Court of Appeal in November 2020.
The petitioners contended that interest should not have continued accruing during the period when the arbitral award had been nullified, arguing that such computation violates their constitutional rights under Articles 24, 27 and 40 of the Constitution.
Among the issues presented before the court is whether interest can lawfully accrue during a period when the underlying obligation had been annulled by a court of competent jurisdiction.
The petitioners also challenged the constitutionality of Section 44A(4) of the Banking Act, arguing that it unlawfully excludes court decrees and judgment debtors from the protection of the in duplum principle.
They further argued that enforcement of the decretal sum in its current form amounts to a disproportionate limitation of their property rights.
In a Certificate of Urgency filed through Anjarwalla & Khanna LLP, the petitioners state that the decretal amount continues to increase daily because of the 18 per cent compound interest.
“Every passing day increases the disputed figure, deepens the constitutional injury, and further entrenches the unconstitutionality of the present and untamed escalation,” the application states.
The petition further claimed that enforcement measures have extended beyond the company’s assets to property jointly owned by the second and third petitioners together with interested party Jaysukhal Bhaichand Sanghrajka, including Land Reference No. Nairobi/Block 92/259 situated on Bendera Lane in Spring Valley.
According to an affidavit sworn by Bipinchandra Sanghrajka, the interested party is neither a judgment debtor, director nor shareholder of Cape Holdings, and therefore should not be affected by the execution process.
“The 2nd Petitioner and I are directors of the 1st Petitioner. We have separate and distinct corporate personality from the 1st Petitioner and we do not attract any personal liability for the 1st Petitioner’s debts and legal obligations,” he stated in the affidavit.
The petitioners argued that the case raises important constitutional questions on the protection of property rights, the limits of compound interest and the enforcement of court decrees.
“Unless the Petition is heard on a priority basis, the Petitioners’ rights to property, dignity, equal benefit and enjoyment of the law, and proportionate treatment face continuing violation,” read the court documents.
“We are being treated as mere instruments towards an end rather than as human beings and citizens with the constitutional right to enjoy their property, thereby causing us great indignity in violation of the Constitution.”
Justice Patricia Mande Nyaundi on June 25 directed the petitioners to serve the respondents with the petition and mention notice by close of business on June 26.
The matter is scheduled for mention on June 29, when the court will give directions on the hearing of the petition.
Email your news TIPS to Editor@Kahawatungu.com — this is our only official communication channel
