Order freezing Imperial Bank liquidation extended
Imperial Bank's branch in Likoni, Mombasa County in this picture taken on October 14, 2015.
The High Court in Mombasa has extended interim orders temporarily stopping the Central Bank of Kenya (CBK) from proceeding with the liquidation of collapsed Imperial Bank Ltd.
Justice Dennis Magare extended the orders until May 4 when an application for injunction orders against CBK filed by Mombasa businessman Ashok Doshi is expected to be heard.
Through its lawyer, CBK had opposed the interim (stay) orders saying their effect was to stop payment of the deposits (in the bank) to depositors. However, through lawyer Willis Oluga, the businessman said the bank was under receivership for six years thus there was no urgency since CBK had deposits for eight years.
Mr Doshi is challenging the appointment of Kenya Deposit Insurance Corporation (KDIC) as the liquidator of the bank claiming it was done illegally and irregularly.
The temporary order is likely to affect recent notices published by KDIC in newspapers indicating its intention to start payments of protected deposits to depositors of the collapsed lender.
Through lawyer Oluga, Mr Doshi argues that under Section 53 (2) of the Kenya Deposit Insurance (KDI) Act, CBK is authorised to appoint the liquidator only in the course of receivership (of the bank). “When the defendant appointed KDIC as the liquidator of Imperial Bank, the period of receivership had long expired. The appointment of KDIC as liquidator (on December 8, 2021) was therefore illegal and unlawful because it was not done in the course of receivership,” argues Mr Oluga. According to the plaintiff, under the KDI Act, CBK could only appoint the liquidator on the recommendation of KDIC which he says was not done thus rendering the appointment illegal and unlawful.
“The defendant deliberately appointed KDIC as the liquidator of Imperial Bank without following the law with the malicious aim of winding up the bank without regard to the law and procedure,” reads the suit documents.
The businessman is seeking a declaration that on December 8 2021 when CBK purported to appoint KDIC as the liquidator of Imperial Bank, the term of the corporation had already lapsed and the bank was no longer in receivership.
