A bitter electricity project dispute has widened after the High Court allowed Credit Bank to join litigation over guarantees worth KSh123 million.
A commercial dispute over an electricity project has pulled Credit Bank PLC into a legal fight involving millions of shillings.
At the centre is a contract between Magnate Ventures Limited and Zurian Tian Technology Ltd.
Rural Electrification and Renewable Energy Corporation (REREC) awarded Magnate the electricity infrastructure project, marking the beginning of the dispute.
Zurian later became involved after partnering with Hebei Tuofa Telecommunications and Electric Equipment Manufacturing Company Limited.
The partnership eventually led to a subcontract between Zurian and Magnate dated May 10, 2019.
What followed was a breakdown over project performance, payments and contractual obligations.
The disagreement eventually led to Magnate terminating the subcontract and calling two Performance Bonds.
Those guarantees had been issued by Credit Bank on behalf of the contractual arrangement.
One was worth KSh 62,263,936, while the other was worth US$474,634 (KSh 61.6 million).
At the exchange rate reflected in the ruling, the dollar guarantee amounted to approximately KSh61.6 million.
Together, the two guarantees represented more than KSh123 million.
The High Court has now ruled that Credit Bank must be allowed into the dispute.
How It Started
The story begins with REREC’s electricity infrastructure project.
REREC awarded the project to Magnate Ventures Limited, which was responsible for executing the contracted works.
Zurian Tian Technology Ltd subsequently became involved through a joint venture with Hebei Tuofa.
The arrangement resulted in a subcontract dated May 10, 2019, between Zurian and Magnate.
Under that subcontract, Zurian says it undertook substantial project responsibilities.
It says those responsibilities included manufacturing, supplying and installing materials for the electricity distribution works.
According to Zurian, it performed a substantial part of its contractual obligations.
The relationship, nevertheless, began deteriorating over several operational and financial disagreements.
Zurian says Magnate failed to provide wooden poles required for the project.
It also accuses Magnate of delaying approvals and Letters of Credit needed for project implementation.
The company further alleges that Magnate failed to make agreed payments when they became due.
Another dispute involved the operation of a joint project account established by the parties.
Zurian says those failures disrupted the project and caused substantial financial losses.
It also claims that significant invoices and other payments remained outstanding.
The disagreement eventually became serious enough for Magnate to terminate the subcontract.
That termination became the turning point in the dispute.
Guarantees Called
After terminating the subcontract, Magnate turned to the Performance Bonds issued by Credit Bank.
On October 6, 2021, Magnate wrote to Credit Bank demanding payment under both guarantees.
Credit Bank subsequently paid the amounts demanded.
That payment later became one of the most contentious issues in the wider dispute.
Zurian argues that Magnate should never have called up the guarantees in those circumstances.
Its case is that Magnate was itself in breach of the subcontract when demanding payment.
Zurian consequently alleges that the guarantee call-up was procured through fraud, misrepresentation and suppression of material facts.
Those allegations are particularly important because Credit Bank issued the guarantees and eventually paid them.
Zurian has therefore placed the circumstances surrounding those payments directly before the High Court.
Its wider claim seeks various sums arising from the alleged contractual breaches.
The company also seeks compensation for materials manufactured for the project.
It further challenges the termination and claims damages, interest and other relief.
That is the dispute into which Credit Bank has now been admitted.
Bank Steps In
Credit Bank did not originally form part of the main lawsuit.
It became involved after Zurian’s pleadings raised allegations concerning the Performance Bonds.
The bank filed a Chamber Summons dated March 31, 2026, asking to participate as an Interested Party.
Credit Bank argued that it had a direct financial interest in the court’s determination.
It said the allegations concerning fraud and misrepresentation touched directly upon its role.
The bank also said it possessed evidence concerning the demands made by Magnate.
It further pointed to possible indemnity rights arising from the payments already made.
Magnate opposed the application and argued that Credit Bank was unnecessary.
It said the bank was not party to the underlying contracts between the relevant project participants.
REREC also opposed the application for similar reasons.
It argued that Credit Bank had no sufficient contractual connection to the issues before court.
REREC additionally disputed Zurian’s connection to the Performance Bonds.
It argued that the guarantees had instead been issued on behalf of Hebei Tuofa.
The objections therefore raised a straightforward question for Justice Letizia Wachira.
Did Credit Bank have enough interest in the dispute to justify bringing it into the case?
The judge ultimately answered that question in the affirmative.
Judge Allows Joinder
Justice Wachira delivered the ruling on October 2, 2026, at the High Court’s Milimani Commercial and Tax Division.
The judge began by examining the legal test governing joinder under Order 1 Rule 10(2).
The provision allows courts to add a person whose presence is necessary for complete adjudication.
The Court also relied on Supreme Court decisions explaining the role of interested parties.
An applicant must demonstrate an identifiable interest that is sufficiently close to proceedings.
It must be more than an interest that is merely peripheral to the dispute.
Justice Wachira found that Credit Bank satisfied that test.
The judge pointed to the two Performance Bonds at the heart of Zurian’s allegations.
The guarantees were issued by Credit Bank and subsequently paid after Magnate demanded payment.
The judge therefore found that the allegations “directly concern” the bank.
Credit Bank consequently had “a direct and identifiable interest” in the proceedings.
Justice Wachira also rejected the argument that previous litigation over the guarantees prevented joinder.
The judge acknowledged that the Performance Bonds had already featured in separate proceedings.
However, Zurian had independently raised allegations concerning how Magnate obtained their payment.
Those allegations created a fresh reason for Credit Bank to participate in the present case.
Its involvement, the judge said, would assist the Court in completely determining those issues.
The Court nevertheless placed a clear limit on the bank’s participation.
Credit Bank was joined specifically as an Interested Party.
Its participation will remain confined to issues arising from the Performance Bonds.
The bank must file its documents within 21 days from the ruling.
The costs of the application will be determined alongside the wider proceedings.
The ruling does not settle the larger contractual dispute between Zurian and Magnate.
It does not determine whether Magnate breached the subcontract or lawfully terminated it.
Nor does it establish whether the allegations of fraud surrounding the guarantees are ultimately true.
Instead, it decides that Credit Bank deserves a seat at the table when those allegations are examined.
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That decision could become important as the substantive case progresses.
The court will eventually have to examine what happened between Zurian and Magnate.
It may also have to examine why the guarantees were called and whether that call-up was justified.
For now, however, Credit Bank has secured the right to present its own evidence.
The bank has 21 days to place that evidence before the High Court.
The wider battle over the electricity project therefore continues, with another major player now formally involved.
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