The Court of Appeal has delivered a major reprieve to Guardian Bank and businessman Maganlal Chandaria’s family by cutting their liability from Sh2.5 billion to Sh750 million. This marks the latest development in the long-running dispute over the 1999 acquisition of Guilders International Bank, which has stretched across multiple court levels for more than two decades.
In its judgment, the appellate court ruled that Guardian Bank was not obligated to pay the Sh196 million principal value of Guilders’ purchase. The judges found no contractual evidence showing that the bank had agreed to assume the seller’s liabilities, thereby limiting its financial exposure.
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Moreover, the ruling sheds light on how incomplete documentation and unclear transfer terms can complicate mergers and acquisitions. Legal experts believe the case underscores the importance of transparent agreements that specify ownership transfers, asset quality, and liabilities to prevent similar disputes in future deals.
According to the case documents, Guardian Bank and the Chandaria family argued that the sellers had failed to deliver on key assurances, including loan book performance and asset warranties. They maintained that the portfolio they acquired was largely made up of non-performing loans, which had been misrepresented during the sale process.
The court agreed with the buyers’ position, noting that they had been informed the portfolio was worth Sh768 million but only managed to recover about Sh26 million. As a result, the judges concluded that the sellers had not provided full disclosure of the loan book’s true condition at the time of sale.
Furthermore, the Court questioned whether previous agreements signed before the acquisition were legally enforceable. It clarified that Guardian Bank could not be held responsible for the seller’s obligations unless there was explicit evidence showing consent to assume those liabilities.
Consequently, the ruling reduces the Chandarias’ and Guardian Bank’s financial responsibility to the original purchase amount. It also settles their long-standing contention that the sellers had failed to disclose Sh732 million in bad loans, providing closure to a case that has lingered for years.
Ultimately, this judgment sets a crucial precedent for Kenya’s financial sector. It reinforces the importance of due diligence, contractual clarity, and full disclosure in future bank buyouts, while also boosting investor confidence in the country’s legal and financial systems.
