Court dismisses DTB CEO's case in Sh174m row with tycoon's widow

The High Court has dealt Diamond Trust Bank a major blow by dismissing its Chief Executive Officer Mural Natarajan’s case where he sought a magistrate’s court summons in a  Sh174 million loan battle with Mombasa transport tycoon's widow Noor Jeizan.

Justice Jairus Ngaah ruled that Senior Resident Magistrate David Odhiambo was right to order Natarajant to appear before him to provide details about the transaction.

In his case, Natarajan claimed that he was new in the bank, adding that the issues he was required to respond to happened long before he joined DTB.

According to Justice Ngaah, the court's orders were not whether he was privy to what had happened.

Instead, the judge said the magistrate needed to know court orders requiring the bank to release the crucial information had been complied with.

Justice Ngaah said that if the lower court finds that the bank had not complied with the orders, then the magistrate will single out who among the managers had defied.

“I do not find any factual or legal basis for the applicant’s application. Aforitori, this court having ordered the magistrates’ court to proceed and make the appropriate determination in application no. 57 of 2019, it cannot turn around and either quash or prohibit the same proceedings unless it can be demonstrated that those proceedings are being conducted in a manner that is outrightly unlawful or are vitiated on any of the grounds of judicial review,” ruled Justice Ngaah.

In this case, the Director of Public Prosecution moved to court seeking to compel the lender to disclose information to the Banking Fraud Investigations Unit (BFIU) on who authorized the loan and subsequent internal transfers.

 This is after DTB’s head of corporate, Mombasa region Martin Mbithi, told the court that they could not retrieve the email due to age.

He also claimed that the bank would receive verbal instructions for transferring the money and that the system would swap the money between the accounts without the need for instructions.

The magistrate gave the lender seven days to produce the email stating who sought the loan and documents on internal transfers.

 The case is one part of a dispute between DTB and Islam.

There is a separate case before the Court of Appeal.

Islam, in her appeal, wants the court to block the lender from selling her property to recoup the amount claimed to be a loan.

According to her, the loan her late husband had taken was fully repaid, and the bank should have refunded an extra Sh17 million.

High Court Judge Kizito Magare declined to stop the auction.

Aggrieved, she moved to the Court of Appeal. She argued that her children and mother would be left homeless if the lender sold the property.

“The property scheduled for auction is a residential house where my children live together with my elderly mother. Unless the orders sought are granted my children and elderly mother will be left destitute of a home,” she argued.

The battle surrounds a company owned by Islam and her late husband Anwar Mohamed- Anwar Mohamed Bayusuf Limited and DTB.

DTB sold off a yard, and the trucks argued that Bayusuf had defaulted on paying the loan. The agreement was to pay at least 26 per cent per annum on the amount borrowed.

In addition, the bank then sought the house left to Islam by auctioning it last year.

At the centre of the row between the two is some Sh174 million.

On one hand, Islam claimed in the case that DTB created fictitious accounts that resulted to the contested amount.

She asserted that DTB lent Bayusuf Limited a loan that was repaid on June 30, 2011, and that the lender owed her Sh 17 million. This followed an auction of the first property that the couple had used to secure the loan for their company.

Islam further claimed that the lender is withholding crucial documents that affirm her story that Bayusuf does not owe DTB a penny.

On the other hand, DTB replied that it and Islam reached a consent agreement on July 17, 2021, during which it released all the documents, including the details of the accounts at the center of the dispute.

The lender said that its case against Islam was backed by an independent Interest Rates Advisory Centre (IRAC) report confirming that Bayusuf owes it the amount backed up its case against Islam.

DTB asserted that the request for the documents was a fishing expedition.

In her further reply, Islam argued that the IRAC report was about the interest and not her claims that there was fraud.

Islam’s story with DTB started with a loan issued to Bayusuf Limited.   The battle shifted from civil to criminal, with Islam insisting on full disclosure of the accounts.

Based on the exchanges between her lawyers and the Central Bank of Kenya (CBK), the regulator claims that it got stuck along the way because the bank did not reveal full information about how Bayusuf ended up with such a huge loan.