NIC Bank will Pay the Law firm Sh76 million for the Bounced check

The law firm of Harit Sheth Advocates claims that the decision to order NIC Bank to pay Sh76 million for refusing to honour a check 14 years ago hurt its business.

To create NCBA, the lender merged with Commercial Bank of Africa.

By dishonouring the check, the lender violated its duty of care, according to Justice Alfred Mabeya. According to the law firm, the choice cost it a client and work that would have brought in Sh56 million in fees.

The judge ruled that there was no justification for the lender to refuse to pay Mr. Harit Sheth and Mr. Richard Kariuki Sh5 million each because the check had been properly drawn and executed in accordance with the mandate held by the bank.

“More-so, there was sufficient funds to effect payment of the cheque. There was no good reason to decline payment and the defendant failed to properly exercise its duty of care to the plaintiffs by failing to carry out the plaintiffs’ instructions,” the judge said.

The judge ordered the lender to pay the law firm Sh56.3 million in special damages in addition to the Sh5 million each. The law firm drew and signed a check for Sh13.2 million that was to be given to Mark Properties on April 4, 2009, in exchange for the sale of some land they were developing, the court was informed.

The law firm’s bank account contained Sh29 million at the time.

The lender returned the check to the payee’s bank with the number “80” inscribed, signed in red, and the court determined that this was defamatory.

According to the lender, the customer’s main responsibility is to follow the bank’s rules for maintaining the account. The judge stated, “…this court finds that the defendant violated the banker-customer contract and that the marking of the bankers cheque ’80’ meaning “refer to maker” or “refer to drawer” was disparaging to the plaintiffs.