A local company has sued Co-operative Bank seeking special damages of more than Sh30 million for alleged negligence.
In a petition the High Court, Erijam Enterprises limited has accused the lender of transferring money from its bank account without the consent of the directors.
The supplier now wants the lender ordered to pay it general damages of Sh11,020,000 and special damages of Sh29 million.
The supplier also wants the court to direct the lender to remove it from the Credit Reference Bureau default listing.
“This court be pleased to issue an order against Co-op Bank requiring it to remove the names of the Erijam Enterprises ltd from CRB and stop all bank charges against Erijam’s account as a result of the Banks’ illegal and negligent action on the Erijam’s Bank account,” the company says.
Erijam Enterprises ltd is also seeking a permanent injunction restraining Co-op Bank or it’s agents from removing, transferring, or withdrawing any sums of money from its bank account without the firm’s consent.
The firm said it is a holder of bank account domiciled at the T-Mall bank.
It is alleged that sometime in June and July 2023, the company issued cheques to its various suppliers, which went unpaid without it’s knowledge.
The officials from Erijam Enterprises later noticed the discrepancies on diverse transactions and diverse dates.
The firm accuses the bank of breach of contract arguing that Co-op Bank proceeded to illegally and unprocedurally transfer a total of Sh10,948,000 to it’s suppliers without consent.
The company adds that the amount was transferred notwithstanding the fact that the company had already paid the supplies through other bank transfers and cash payments.
Court documents state that at the time of the said transfer, there was no agreement or contract between the parties which gave the bank the authority to settle the firm’s accounts in relation to their suppliers.
Furthermore, Co-op bank did not give the company any notice of their intention to transfer the amount so as to obtain the consent.
The firm said the lender also deducted a total of Sh. 72,000 from Erijam’s account as penalties for unpaid cheques.
“It is quite anomalous that the Co-Op bank in one instance dishonored cheques, levied the relevant punitive charges on the plaintiff and then a few days and weeks later they proceeded to pay out the respective monies to the Erijam’s suppliers in whose favor those cheques were drawn,” the company told the court.
The company told the court that it was also quite anomalous that the Bank discovered that on the 20th of June 2023 Erijam’s account lacked sufficient money to bank a cheque of Sh. 800,000, declared the cheque unpaid, and imposed a penalty.
Two weeks later on 6th July 2023, the lender irregularly proceeded to transfer Sh800,000 from Erijam’s account still when the account did not have sufficient funds, leaving a negative balance in it’s account.
“This is the anomalous trend in which the company made transfers from the company’s account from the dates of 6th July 2023 to 29th September 2023 amounting to Sh10,948,000.00,” company TD the court.
According to the company, some of the cheques were paid out to the company’s suppliers by the bank more than two months after they were declared unpaid.
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