Saturday, July 13, 2024

Court Bars Absa Bank from Auctioning A Transport firm in Sh1.5bn Data Breach Fight

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WedNesday June 28th, Nairobi Kenya – A transport firm embroiled in a Sh1.5 billion data breach suit with Absa Bank has received a court order stopping the lender from auctioning its property over unpaid loans.

Justice Josephine Mongare certified as urgent the application filed by New Mega Africa Ltd and issued the directive saving the company’s assets from being auctioned over a more than Sh80 million debt.

“A temporary injunction order be and is hereby issued restraining the bank and its employees or agents from advertising for sale, selling by private treaty, or conducting or concluding a public auction of all that land pending the hearing and determination of the suit,” said the judge.

Justice Mongare further issued an order preventing the transfer of the title of the property in Kitusuru in Nairobi, to a third party pending active litigation of the case.

The bank moved to seize the company’s assets to recover unpaid loans, which it says stood at Sh86.4 million as of September 30, 2022.

The bank claims that this loan has fallen into arrears and continues to accrue interest, despite its calls for the company to regularise the account.

“As a result, the bank has commenced the process of realisation of the securities in a bid to recover the outstanding loan amount,” Absa said in its court documents.

The lender said the firm had been given sufficient time to regularise its loan accounts but did not honour the contractual commitment to pay the loan arrears.

However, New Mega Africa director David Abai sought temporary orders prohibiting the bank from advertising for sale or auctioning the property.

Absa and the firm are also involved in another legal battle in which the financial institution is attempting to overturn a Sh1.5 billion award to the company in another civil case.

The court granted the bank permission to file documents to contest the award. The court made the award after the bank failed to defend the claim filed against it last year.

The money was awarded to the firm based on allegations of a data breach, but the bank wants the award reversed, arguing there was no legal basis for it.

The Court issued a decree on November 9, last year, requiring the bank to pay the transport firm billions for allegedly leaking confidential information to third parties, causing the company’s credit ratings to suffer.

The firm claimed it suffered losses as a result of the bank’s data breach, which it claimed crippled its business.

The High Court has already temporarily stayed the decree’s execution to allow the bank to explain why it failed to file its documents within the required timeframe despite being served with court documents.

The bank has claimed that the final decree was obtained without following the law, which requires formal proof of the claims made in the firm’s documents.

It also argued that the decree was issued based on speculative and presumptive claims that were not supported by evidence and that the firm withheld certain material facts relevant to the merits of the case on purpose.

Maryvine Moraa
Maryvine Moraa
MBA, Business Administration & Accounting. A Passionate IT Enthusiast.

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