Nairobi-based transport firm City Star Shuttle has sued Sidian Bank to stop the auction of four mass transit buses it bought last year following a dispute over repayment of a Sh100 million loan the lender advanced to finance the purchase.
City Star Shuttle claims that Sidian Bank has threatened to auction the four mass transit buses despite remitting monthly installments as per the loan agreement.
Auctioneers hired by the lender last month placed advertisements in the Daily Nation announcing the auction of two of the buses.
Sidian Bank is yet to respond to the suit.
Return to court
Justice Grace Nzioka heard the matter and ordered the parties to return to court on June 23 to confirm filings of their respective documents.
City Star Shuttle claims that Sidian Bank has raised the interest rate for its loan above the mandatory four per cent above Central Bank rate (CBR) prescribed by the law.
The firm says that using interest rates prescribed by law, it is supposed to pay Sh2.7 million monthly but that Sidian Bank has demanded Sh3.09 million every month.
“By an amortisation schedule issued by Sidian Bank, it was confirmed that in line with the published CBR the interest rate would be 14 per cent, effectively meaning that the monthly payment would be Sh2.7 million. By a letter dated January 3, 2017 Sidian Bank without due justification or clarification changed the monthly installment to read Sh3.09 million.”
“It is City Star Shuttle’s unequivocal position that it has certainly overpaid the monthly loan amounts.
Unless restrained, Sidian Bank will proceed to sell City Star Shuttle’s mass transit buses thereby causing the plaintiff irreparable damage as City Star Shuttle has entered into contracts with third parties to engage the vehicles,” City Star Shuttle director Samuel Njoroge Kamau says in suit papers.
City Star Shuttle wants Sidian Bank ordered to bring before court statements for the loan account it has with the lender.
Credit: Business Daily