The Court of Appeal has handed I&M Bank a major victory, clearing the lender to auction four charged properties after rejecting a bid by businessman Divyesh Indubhai Patel and his companies to stop the sales.
In a ruling that could reshape one of Kenya’s longest-running commercial debt disputes, the judges held that although the borrowers had raised legitimate questions about the amount allegedly owed, they failed to show why the bank should be temporarily barred from recovering a debt it says has now ballooned beyond KSh2.5 billion.
Debt Battle
The ruling, delivered on July 31, 2026, by Justices Weldon Korir, Linnet Mumo Ndolo, and Ahmed Isaack Hassan, is the latest twist in a legal contest stretching back nearly a decade.
At stake are four prime properties charged to secure commercial loans advanced by I&M Bank to Equip Agencies Limited, whose directors include Divyesh Indubhai Patel, Vinesh Indubhai Patel, and Grishma Kumar Indubhai Patel.
The other applicants are Unicom Limited and Interactor Company Limited.
The properties targeted for sale are Mainland North/VI/3075, L.R. No. 209/4535, and L.R. No. 214/172 and L.R. No. 209/8755, all pledged as security for loan facilities originally valued at a cumulative KSh450 million.
The borrowers insist they honoured their obligations, arguing they repaid more than KSh1 billion over the years.
They accuse the bank of unlawfully consolidating separate lending facilities, artificially inflating the outstanding balance before moving to auction the securities.
According to them, the figures presented by the lender simply do not reflect the true state of the account.
That disagreement has fuelled a succession of High Court cases, appeals, and interlocutory applications, making the dispute one of the more protracted commercial lending battles in recent years.
Secret Settlement
While several lawsuits challenging the bank’s statutory power of sale remained pending, the parties entered into a Deed of Settlement on June 10, 2021.
The agreement acknowledged an alleged outstanding debt of KSh1.936 billion but provided that I&M Bank would accept KSh875 million as full settlement if paid in three instalments within 180 days.
The agreement also required the applicants to withdraw all pending suits and appeals.
It further allowed the bank to revive enforcement and exercise its statutory power of sale upon default after issuing a 14-day notice.
The applicants told the court the agreement was intended to remain confidential and was not even to be shared with their advocates or the court.
The borrowers now claim they executed the settlement under intense pressure.
They argue they believed an immediate auction was inevitable and only later concluded that the alleged debt offended Kenya’s in duplum rule under the Banking Act, which limits recoverable interest in certain circumstances.
They also contend the bank later advertised the properties for sale without issuing fresh statutory notices.
Those allegations formed the basis of High Court Commercial Case No. E943 of 2021, where the applicants sought to invalidate both the settlement agreement and the intended auction.
However, on June 3, 2022, Justice Enock Chacha Mwita dismissed their application for an injunction, prompting the appeal that reached the Court of Appeal.
Court Test
I&M Bank opposed the application through its Senior Manager for Legal Services, Andrew Muchina, arguing that the dispute had already been litigated repeatedly.
The bank pointed to several earlier High Court cases in which similar injunctions had been refused before maintaining that the applicants voluntarily entered the 2021 settlement but subsequently failed to honour it.
The lender also reminded the appellate judges that another Court of Appeal bench had ruled in March 2025 that the dispute was substantially res judicata and that the applicants’ indebtedness could not easily be disputed because they had signed the settlement deed.
According to the bank, continued delays have only worsened the situation.
It told the Court the outstanding debt has now risen beyond KSh2.5 billion, warning that further postponement would allow interest to accumulate until the debt exceeds the value of the charged securities.
The Court looked at the request based on Rule 5(2)(b) of the Court of Appeal Rules, which states that a person asking for an injunction while waiting for an appeal must meet two requirements.
First, the intended appeal must be arguable. Second, the applicant must demonstrate that refusing interim relief would render the appeal nugatory.
On the first requirement, the judges found in favour of the applicants.
“The applicants… contest the figure presented by the respondents as owing. This, in our view, constitutes an arguable point,” the bench observed, while deliberately avoiding detailed discussion that could prejudice the substantive appeal.
Auction Greenlight
Despite acknowledging an arguable appeal, the Court found the applicants had failed the second legal test.
The judges agreed with the bank that the properties have clear monetary values and that I&M Bank, being a trustworthy commercial institution, could pay the borrowers damages if the appeal is successful.
In those circumstances, the Court concluded the intended appeal would not be rendered nugatory by allowing the recovery process to continue.
The bench was equally persuaded that every additional delay increased the bank’s exposure as interest continued accumulating against an already substantial debt.
Halting the recovery process, it reasoned, could ultimately prejudice the lender more than the borrowers.
Having failed one of the two mandatory requirements, the application could not survive.
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The Court therefore dismissed the June 17, 2022, motion with costs to I&M Bank and auctioneer George Njoroge Muiruri, trading as Phillips International Auctioneers.
The ruling does not determine the substantive appeal.
Instead, it clears the way for I&M Bank to continue pursuing recovery while the wider dispute over the validity of the settlement agreement and the true amount owed awaits its day before the appellate court.
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