The High Court entered judgment in favour of National Bank of Kenya (NBK) on November 9, ordering the bank to recover KSh146,874,691 from Golden Cara Investments Ltd over a defaulted Shariah-compliant financing facility.
The court refused to award the bank any additional profit or commercial interest, stating that the claim was unsupported by evidence and that imposing conventional interest would breach the principles of the Musharakah agreement, but it granted statutory interest at court rates on the principal sum from the date of judgment until full payment.
The dispute arose from a Musharakah financing arrangement that NBK provided to facilitate the Kenya Informal Settlements Improvement Project in Nakuru, with capital supplied to Golden Cara and personal guarantees from Hamdi Abdi Mohamed and Mohamed Adan Bare.
NBK told the court that Golden Cara defaulted on repayment obligations and that the guarantors failed to honour their commitments despite statutory demand notices, which triggered acceleration of the debt and enforcement of the guarantees; the defendants did not appear, leading the Deputy Registrar to enter default judgment on October 14, 2021.
The bank’s witness, Morris Tiema, produced financial ledgers, debentures and guarantees, and the court found the documentary evidence sufficient to establish the outstanding principal.
In its reasoning, the court noted that Musharakah arrangements are based on profit-and-loss sharing rather than predetermined interest, and that the bank had not provided evidence of profits accrued before the suit was filed; it also held that awarding conventional interest would effectively rewrite the contract and contravene the prohibition of Riba in Islamic finance, so statutory court rates would apply after judgment.
