A charitable children’s home has sued Kenya Women Microfinance Bank PLC (formerly Kenya Women Finance Trust) seeking release of KES 25.2 million being outstanding balance withheld by the bank from its fixed deposit account.
Upendo Children’s Development Organization says the bank’s refusal to honour its contractual mandate to remit the money held in credit in the fixed deposit account is in breach of express and implied terms of contract between the parties.
In its case at the High Court in Mombasa, Upendo Children’s Development Organization says that Kenya Women Microfinance Bank PLC continued retention of its funds without lawful justification constitutes unjust enrichment at its (Upendo) expense and the best interest of orphaned children.
“The defendant, as a licensed banking institution is bound by provisions of the Banking Act including the duty to conduct its business with prudence and integrity and to safeguard the interests of its depositors,” part of the case documents state.
According to the plaintiff, at all material times, it was and remains a holder of a fixed deposit account maintained with the bank into which it deposited funds from time to time for the purpose of securing returns on savings intended for the care and education of orphaned children.
It says that on or about August 15, 2022, it deposited KES 32 million into the fixed deposit account held with the bank and that the deposit has thereafter been fixed annually through periodic roll over instructions issued by it to the bank.
“The plaintiff has continued to fix the deposited amounts with the expectation that the defendant would honour its obligation to release the said funds together with accrued interests upon maturity or upon the plaintiff’s lawful instructions,” argues the plaintiff.
The plaintiff further says that by a fixed deposit advice, it fixed KES 27.3 million for a 12-month tenure from August 15, 2025, to August 15, 2026, at an interest of 12.5 per cent per annum within the fixed deposit account.
It says that it issued instructions to the bank for the withdrawal of KES 30.3 million (being the fixed deposit of KES 27.3 million and accrued interest of KES 3 million) standing in credit in the fixed deposit account.
“In breach of the contract, the defendant however failed to effect the instructions to fulfil its contractual mandate despite the plaintiff being lawfully entitled to the funds,” says Upendo Children’s Development Organization.
The plaintiff claims that by a letter, the bank admitted owing it the money within the fixed deposit account and offered to pay in instalments.
“In further blatant breach of its mandate under the terms of its contract with the plaintiff, the defendant failed, neglected and refused to release the full sums to the plaintiff but only released KES 5.1 million,” the plaintiff says.
The plaintiff says that the bank is in breach of its contractual obligations owed to it by failing or refusing to remit the money (KES 25.2 million) lawfully due and owing to it despite demand, in breach of the bank’s duty under the banker-customer contract to honour lawful withdrawal instructions.
It also claims that the bank is in breach of its contractual obligations by failing to provide any lawful, reasonable or contractual basis for withholding its (plaintiff) funds, thereby acting in bad faith and in derogation of the principles of transparency and accountability expected of a licensed banking institution.
The plaintiff claims that it made several attempts, both orally and in writing, to demand the release of the money but the bank has failed, refused and neglected to release it despite having no lawful, contractual or justifiable basis for the continued retention of its (plaintiffs) funds.
“As a result of the defendant’s action or omission, the plaintiff has suffered financial loss, hardship and inconvenience,” says Upendo Children’s Development Organization.
The plaintiff says that being a charitable children’s home, it relies on its deposited funds to provide for care, education, feeding, shelter and welfare of orphaned and vulnerable children hence the bank’s unlawful retention of the money has directly impaired its ability to discharge its charitable obligations.
“The plaintiff holds the defendant liable for the said loss and all consequential damages flowing therefrom,” argues Upendo Children’s Development Organization.
The plaintiff also seeks for general damages and costs of the suit.
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