Judge orders bank to refund Sh1.5 million to ex-MP Caleb Kositany family in interest charges

The High Court has ordered the Kenya Development Corporation (KDC) to refund former Soi MP Caleb Kositany’s family Sh1.5 million charged interest.

This is after the court declared that KDC was unlawfully demanding Sh140 million as interest and fee for a Sh10 million bank loan advanced to his late father, Simeon Kositany, nearly 20 years ago.

The family, according to court papers, had already repaid Sh21.5 million, but the bank kept changing terms and issuing new demands on grounds that the loan had remained non-performing for almost 20 years.

Justice Reuben Nyakundi of Eldoret, in a judgment on March 19, 2026, declared that the in-Duplum Rule under the Banking Act bars banks from demanding interest and fees that are more than double the principal sum.

In his finding, Justice Nyakundi said the Kositany family had exceeded the statutory ceiling of Sh20 million, having repaid Sh21,530,000, while faulting the state agency for refusing to discharge the title deed.

“KDC shall refund to the Petitioners the sum of Sh1,530,000, being the amount paid in excess of the statutory ceiling Sh20,000,000,” the judge declared.

Kositany, who is currently the chairman of Kenya Apports Authority (KAA), alongside his relatives Nicholas Kibet Kositany, Truphena Chelagat Seroney and Alice Jeptoo Kositany, filed the case as representatives of the estate of the late Simeon Kositany.

They listed KDC as a respondent. 

“KDC’s continued withholding of the title documents to L.R. No. 8411 is without legal foundation, and nothing in the 2014 settlement arrangement alters that conclusion, since no agreement between the parties, however negotiated, can override a mandatory statutory ceiling,” the judge declared.

He issued an order compelling KDC to execute and register a discharge of the charge registered on December 20 1996, over L.R. No. 8411 (Grant No. I.R. 10084) and to unconditionally release the original title documents to the petitioners within thirty days of the date of this judgment.”

In court papers, the Kositany family stated that the Industrial and Commercial Development Corporation (ICDC), now KDC, advanced Sh10 million to Kabobo Company Limited in December 1996.

As security for the repayment of the loan, the late Simeon Kositany, as chargor, charged his 587 acres of land situated in Eldoret West, Uasin Gishu county.

The Kositany family stated that on diverse dates, Kabobo Company Limited fully paid the outstanding loan, including both the principal sum and accrued interest, in accordance with the agreed terms of the facility. The said payments totalled Sh22,530,000.

“Despite full repayment, on December 6, 2022, the Petitioners, through their advocates, issued a written request to KDC demanding the discharge of the charge registered and the release of all security instruments and the original title documents.”

On March 7, 2023, the court declined to approve the demand for discharge and instead demanded payment of the alleged accrued interest amounting to Sh19,500,000.  This was after the bank said it had varied the principal loan amount by Sh20 million.

KDC, through Ernest Lewa Mwahui, Senior Portfolio Management Officer, filed a Replying Affidavit sworn on September 19, 2025, arguing that the late Kositany defaulted in repayment, and no payments were made until 2014, when Kabobo Ltd approached with a proposal for a negotiated partial settlement.

The bank confirmed that it declined to discharge the security over and instead demanded payment of a further Sh19,500,000, being accrued interest on the negotiated principal of Sh20,000,000.

KDC later said the outstanding principal and accrued interest stood at Sh70,101,120.44 with post-commencement interest capped at an equal amount of Sh70,101,120.44, yielding a maximum principal-and- interest ceiling of Sh140,202,240.88.

“After crediting the Petitioners' post-commencement payments of Sh21,530,000, the maximum amount due as at August 15 2025 (the date of the Petition) stood at Sh118,672,240.88, plus any documented recovery expenses recoverable,” Lewa stated.

However, the judge declared that the correct statutory base for the purposes of Section 44A(2)(a) of the Banking Act is Sh10,000,000, being the principal owing when the loan became non-performing in 1997, and that the maximum sum recoverable by KDC on the facility advanced to Kabobo Company Limited is accordingly Sh20,000,000.

“That ceiling has been exceeded, and the debt is fully extinguished.”