The Court of Appeal has suspended the previous decision made in November to halt the liquidation process of the collapsed Imperial Bank Ltd.
This follows the Central Bank of Kenya’s concerns regarding the adverse impact on depositors’ payments and the destabilization of the banking sector.
Justice Njoki Mwangi in a ruling on November 25 had granted an application made by two depositors, Ashok L. Doshi and Amit A. Doshi. The ruling stipulated that IBL should not undergo liquidation unless the Central Bank of Kenya (CBK) and IBL deposit $7,277,314 into a joint interest-earning account held by the advocates representing the involved parties, as a form of security.
Furthermore, the court ruled that as an alternative, CBK was required to provide an undertaking to pay the depositors any funds if the case were to be decided in their favor.
The High Court court had also directed CBK to give the undertaking within 30 days of the ruling, failure to which its appointment of Kenya Deposit Insurance Corporation (KDIC) as the liquidator would be discharged.
The Business Daily now reports that a panel of three appellate judges ruled that the orders issued by the High Court would effectively bring the operations of Imperial Bank Ltd (IBL) to a standstill and create uncertainty regarding its legal status.
“The resultant economic prejudice on the Applicant (CBK), 3rd Respondent (IBL) and third-party depositors is one which will be irreversible, and the 1st and 2nd Respondents (Doshi) have not in this respect demonstrated that they will be able to compensate the 3rd Respondent and affected third parties by way of damages,” ruled Justices Gatembu Kairu, Pauline Nyamweya and George Odunga.