High Court Clears Bank of Baroda to Auction Parklands Home in KSh25.9 Million Loan Dispute

A Parklands couple failed to stop an auction after the High Court found insufficient evidence of unlawful interest.

A Parklands apartment now faces auction after the High Court rejected a couple’s bid against Bank of Baroda.

Justice Wananda John R. Anuro dismissed an application by Ashok D. Panchal and Minaxiben Ashok Panchal.

The couple wanted the court to restrain the bank from selling their residential apartment.

They also sought additional time to redeem the property after the disputed accounts were properly examined.

The property, Apartment A102, Block A, Poonam Apartments, secured a KSh20.865 million home loan.

The bank’s auctioneers, Maywood Auctioneers, had commenced recovery proceedings against the charged property.

At the centre of the dispute was a KSh25.94 million demand issued during the recovery process.

The borrowers argued that the figure included excessive interest, penalties and other unlawful charges.

They anchored much of their challenge on Kenya’s statutory in duplum rule.

However, the judge found their argument unsupported by the detailed financial calculations required.

Loan Dispute

The couple had obtained the KSh20.865 million facility from Bank of Baroda for the property.

They had separately paid the vendor KSh7 million before receiving the bank’s financing.

The loan required monthly instalments of KSh277,867 over a period of 180 months.

Those scheduled payments amounted to approximately KSh50.02 million over the full repayment period.

The borrowers argued that this figure exceeded twice their original loan principal.

They therefore contended that the repayment structure offended the statutory in duplum protection.

The couple also told the court they had paid KSh18.18 million towards the facility.

Despite those payments, the bank’s auctioneer demanded approximately KSh25.94 million from them.

The borrowers described the demand as excessive and unsupported by proper account reconciliation.

They also accused the bank of imposing unlawful interest and penalties after default.

Bank of Baroda rejected that interpretation and maintained that the outstanding debt remained recoverable.

The bank also pointed out that the borrowers had not disputed their contractual interest rates.

That distinction became critical as Justice Anuro examined the borrowers’ in duplum argument.

The judge found they had confused total scheduled repayments with statutory recovery limits.

In Duplum Rule

Section 44A of the Banking Act limits recoverable interest after a loan becomes non-performing.

The calculation begins with the principal outstanding when the facility becomes non-performing.

Contractual interest may then accrue, subject to the statutory ceiling established under Section 44A.

Reasonable recovery expenses may also form part of the amount legally recoverable.

The rule therefore prevents interest from accumulating indefinitely after a borrower’s default.

Justice Anuro explained the principle using a hypothetical KSh1 million outstanding principal.

Under that example, recoverable interest would generally be capped at another KSh1 million.

The borrowers, however, never established when their particular loan became non-performing.

They also failed to identify the principal outstanding when that event allegedly occurred.

Nor did they isolate specific charges that they claimed breached the statutory ceiling.

Instead, their argument largely compared the original principal against total scheduled repayments.

Justice Anuro found that approach legally insufficient for purposes of obtaining an injunction.

“Burden of proof cannot be discharged in such manner,” the judge stated.

He said the borrowers should have reconstructed the account using independent financial calculations.

An accountant or financial expert could have tested the bank’s statements and identified disputed entries.

That evidence could then have shown whether unlawful charges actually inflated the outstanding balance.

Without such evidence, the court found that the evidential burden remained with the borrowers.

Recovery Trail

The dispute followed several years of arrears, reminders and unsuccessful repayment restructuring.

Bank of Baroda said it notified the borrowers about arrears as early as January 2021.

The arrears then stood at approximately KSh891,878, while total outstanding debt reached KSh19.11 million.

The borrowers subsequently requested a 12-month moratorium on principal repayments from the bank.

Bank of Baroda accepted the request and entered into a restructuring agreement in March 2022.

The borrowers later failed to honour the restructured repayment terms, according to the bank.

The lender subsequently began enforcing its security through the statutory recovery process.

It issued a 90-day statutory notice on July 5, 2024, according to court records.

A 40-day notice of intention to sell followed on June 24, 2025.

Maywood Auctioneers later issued a 45-day redemption notice dated January 16, 2026.

The borrowers did not dispute receiving the statutory notices served during the recovery process.

That weakened their attempt to stop the bank from exercising its statutory power of sale.

Justice Anuro consequently found that the bank’s right to invoke that power had arisen.

However, that finding came with an important qualification concerning the bank’s conduct.

Court Warning

The judge rejected the injunction but warned Bank of Baroda about its continuing legal obligations.

He stressed that compliance with the in duplum rule remained mandatory throughout recovery.

The bank therefore cannot treat the court’s ruling as permission for unlimited interest accumulation.

“If at all therefore the Defendant has breached the said rule,” Justice Anuro stated, it must remedy the breach.

The judge also noted that unlawful charges could potentially interfere with the borrowers’ equity of redemption.

However, he found that the borrowers had not supplied enough evidence at this stage.

Their allegation could still be examined during the substantive hearing of the dispute.

The judge also rejected the argument that selling their home would automatically cause irreparable harm.

The apartment had been voluntarily offered as security for the bank’s lending facility.

Once property is charged, default can expose it to the lender’s recovery remedies.

The court further found that financial compensation could address any eventual loss suffered.

It therefore concluded that the balance of convenience favoured allowing recovery proceedings to continue.

Stopping the process could meanwhile allow the outstanding debt to continue increasing.

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Justice Anuro consequently dismissed the application and awarded costs to the defendants.

The September 18 ruling leaves the Parklands apartment exposed to the bank’s auction process.

Yet the decision does not finally settle every dispute concerning the outstanding loan balance.

The borrowers can still attempt to prove unlawful interest or charges during the substantive trial.

For now, their challenge failed because the crucial financial evidence was not placed before court.

Their in duplum argument remains legally available but was insufficiently demonstrated at this stage.

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