School boss sues bank for Sh216m over defaulter tag

Central Bank of Kenya Governor Njuguna Ndungu and Credit Reference Bureau Africa chairman Michael Karanja sign a licence certificate issued to the bureau to start its operations in Kenya on March 4, 2010. A school director has sued Co-operative Bank of Kenya for branding him a loan defaulter although head duly cleared the loan with the institution. PHOTO/ FILE 

In Summary

• KCB rejected Mr Obadiah Gitonga Micheu's application because he had been listed as a loan defaulter by the Credit Reference Bureau.
• Mr Micheu now seeking an order compelling the bank to pay him damages of Sh216 million for what he deems as a malicious listing with the bureau.

By Nation Correspondent
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A school director has sued a bank for branding him a loan defaulter although he had duly cleared his dues with the institution.

 

Mr Obadiah Gitonga Micheu on Friday told the High Court that he had settled the outstanding loan with Co-operative Bank of Kenya and was subsequently discharged by the bank and given an original title deed he had placed as security for the loan.

“I sold one of the parcels I had placed as collateral and repaid the loan through the bank’s lawyer, Mr Kiautha Arithi, who duly paid the loan through an Equity Bank account on October 18, 2008,” Mr Micheu said.

APPLICATION REJECTED

In July 2012, Mr Micheu applied for a loan from Kenya Commercial Bank to upgrade his hotel in Chogoria — Heritage Hotel.

But KCB rejected his application because he had been listed as a loan defaulter by the Credit Reference Bureau.

He said that on September 3 2013, he made another loan application to KCB to upgrade the facility at his Chogoria college in order to establish St Paul’s University, Chogoria Campus, but his appeal was rejected.

SECOND LISTING

Mr Micheu claimed that his bid was rejected on account of a second listing with the bureau by Co-operative Bank although he has no debt with the bank.

“The listing with the bureau was malicious, illegal, wrongful, unlawful and unconstitutional as I do not have any debt with the bank as at the time of the listing,” he said.

Mr Micheu said that no bank can give him a loan and that his dignity in the community had been drastically eroded.

The school director is thus seeking an order compelling the bank to pay him damages of Sh216 million for what he deems as a malicious listing with the Credit Reference Bureau.