Latest News
Supreme Court Ends Johmat’s 22-Year Fight to Recover Interest on KSh14 Million Frozen by CBK
Johmat Distributors Limited spent more than two decades battling to clear its name after the Central Bank of Kenya froze KSh14 million during investigations into one of the country’s biggest Treasury securities fraud scandals.
The company eventually proved it was not involved in the alleged KSh205 million fraud.
But that victory came with a painful caveat.
Although the courts released its money, Johmat never recovered the interest it said the deposit would have earned while frozen for 14 years.
It also failed to convince judges that the Central Bank should compensate it under an undertaking allegedly given when the freezing orders were obtained.
Now, the Supreme Court has brought the long-running dispute to a definitive end.
In a unanimous decision, all five judges rejected Johmat’s request to make a final appeal, stating that although the issues were significant for the company, they were not important enough for Kenya’s highest court to consider.
The judges also ordered the company to pay the Central Bank’s legal costs.
Fraud Probe
The dispute traces its roots to 2002, when the Central Bank launched investigations into an alleged KSh205 million fraud involving Treasury bonds and Treasury bills.
Investigators suspected Johmat’s bank account had been used to channel part of the allegedly stolen money.
Acting on those suspicions, CBK obtained a Mareva injunction, freezing KSh14 million held by the company in a fixed deposit account at Giro Commercial Bank, now I&M Bank.
Johmat was later joined as a defendant in the civil proceedings.
A Mareva injunction is a court order that freezes a person’s assets to prevent them from being moved or spent before a case is concluded.
It is widely used in commercial disputes where there are fears that assets could disappear before judgement.
Court Victories
After years of litigation, the High Court finally cleared Johmat in December 2019.
Justice George Odunga found that CBK’s case against the company rested on mere suspicion rather than evidence and dismissed the claim.
However, the court declined Johmat’s counterclaim for damages and refused to award compensation for interest allegedly lost during the lengthy freeze.
The judge held that the company had not adequately pleaded or proved how much interest it was entitled to recover.
The parties later agreed to release the frozen KSh14 million to Johmat.
Johmat appealed, arguing that the trial court had ignored evidence showing the money had been earning interest in a fixed deposit account.
It further maintained that CBK had given an irrevocable undertaking to compensate it if the case eventually failed.
The Court of Appeal rejected those arguments in September 2024.
The appellate judges found that Johmat had failed to include typed trial proceedings in the record of appeal, making it impossible to evaluate the evidence relating to the interest claim.
They also upheld the High Court’s decision on costs.
Supreme Court
Seeking one final chance, Johmat asked the Supreme Court to certify its intended appeal as one raising issues of general public importance.
The company argued that the case had grown beyond its own circumstances.
It wanted the Supreme Court to determine whether lengthy freezing of private assets through Mareva injunctions infringes constitutional property rights, whether courts should enforce undertakings made by public institutions, and whether successful defendants should ordinarily recover costs after defeating government claims.
The Central Bank opposed the application, arguing the dispute remained a private commercial disagreement governed by settled legal principles.
It also maintained that several constitutional questions Johmat sought to raise had never been argued before the Court of Appeal.
The Supreme Court agreed.
Relying on its earlier landmark decisions, the judges said certification is reserved for cases whose impact extends beyond the immediate parties.
The court first rejected several questions because Johmat had introduced them for the first time before the Supreme Court instead of raising them before the Court of Appeal.
“An application for review is not a vehicle for advancing arguments that have no footing in the determinations of the superior courts below,” the judges held.
Key Finding
The judges further held that the legal principles governing Mareva injunctions are already well settled in Kenya.
Similarly, questions about interest, costs, and enforcement of undertakings depended on the specific facts of Johmat’s case rather than unresolved questions affecting the wider public.
Perhaps the ruling’s most significant message was directed at future litigants.
The court cautioned that merely framing an ordinary commercial dispute as a constitutional issue does not automatically open the doors of the Supreme Court.
Instead, parties must demonstrate genuine uncertainty in the law or issues whose consequences extend to the public at large.
The judges concluded that Johmat’s complaints were essentially about how settled legal principles had been applied to its own facts, not about unresolved constitutional questions requiring authoritative guidance.
With that finding, the court dismissed the application and awarded costs to the Central Bank, ending one of Kenya’s longest-running commercial disputes and reinforcing the Supreme Court’s long-standing position that it is not a routine third appellate court.
PAY ATTENTION: Reach us at info@gotta.news.