East African Cables PLC has faced a significant blow in its legal battle with Equity Bank (Kenya) Limited, as the Court of Appeal dismissed its application for an injunction, effectively allowing the bank to proceed with the sale of four prime properties.
This ruling marks a critical development for the struggling cable manufacturer, which has been seeking to prevent the forced sale over a reported debt exceeding Kshs. 2.2 billion.
The decision, delivered by Justices J. Mohammed, Tuiyott, and Nyamweya, upholds a High Court ruling from November 11, 2024, which had also dismissed East African Cables’ initial application to halt the sale.
East African Cables had sought to prevent Equity Bank from advertising, selling, or otherwise dealing with properties identified as L.R. No. 209/4235, L.R. No. 209/8176, L.R. No. 209/6982/1, and L.R. No. 209/6982/2, pending the outcome of an intended appeal. The company argued that the appeal had strong prospects of success and that a sale of the properties would render their appeal nugatory.
However, the Court of Appeal, while acknowledging that East African Cables had an “arguable appeal” concerning the interplay of existing interim orders from another case, ultimately ruled against the injunction. The court’s decision hinged on Section 99(4) of The Land Act 2012, which stipulates that any person prejudiced by an improper exercise of the power of sale has a remedy in damages.
“That is the complete answer to any person who offers his or her property as security in exchange of a Bank facility and pleads that the lender is acting improperly,” the judges stated in their ruling.
Given Equity Bank’s status as a “tier 1 Bank” the judges said it has the ability to pay any damages incurred should East African Cables receive a favourable final judgement in the dispute.
This means Equity Bank is now at liberty to proceed with its statutory right to sell the four properties, which were offered as security for facilities granted to East African Cables. The interim orders that had temporarily protected the properties have been discharged.
For East African Cables, this ruling intensifies the pressure on its financial standing and could lead to the loss of significant assets. The company’s next steps will likely involve pursuing the full appeal, although the immediate threat of the property sales looms large.