NCBA Bank has won the right to repossess medical equipment leased to Mediheal Hospital and Fertility Centre Ltd after the High Court in Eldoret ruled that the equipment belongs to the lender.
The court, however, found that the lender’s earlier attempt to seize the equipment in March 2024 was irregular because it had not served the hospital with the requisite notifications.
The court ruled that NCBA Leasing LLP, formerly NIC Leasing LLP, owns the equipment supplied to Mediheal under a master lease agreement dated August 9, 2018.
The hospital, founded by former Kesses MP Swarup Ranjan Mishrap, had challenged the seizure, arguing that the equipment proclaimed by Phillips International Auctioneers on March 26, 2024 belonged to Jamii Bora Leasing Limited and not NCBA.
It also claimed that the lender had acted unlawfully by attaching the equipment without a court order and without providing proper statements of account.
The court rejected the ownership claim, saying NCBA Leasing had provided extensive evidence linking it to the equipment.
‘A declaration that the 3rd Defendant, NCBA Leasing LLP (formerly NIC Leasing LLP), is the owner of the medical equipment supplied to the Plaintiff under the Master Lease Agreement dated 9th August, 2018 and the Lease Schedule,’ the court ruled.
NCBA produced its certificate of incorporation, suppliers’ invoices, delivery notes and evidence showing that it had paid for the equipment supplied by Medivision Equipment Limited, Sciencescope Limited and Meditec Systems Limited.
The court found that Mediheal had acknowledged receipt of the equipment in good order and held it as a bailee, with a contractual right to use the machines.
Mediheal had produced a 2017 offer letter from Jamii Bora Leasing Limited. However, the court said the document only established that the hospital had a separate leasing relationship with Jamii Bora and did not identify any of the equipment proclaimed in March 2024.
‘No schedule, delivery note or invoice was produced linking Jamii Bora to a single item on the proclamations,’ the court said, noting that no witness from Jamii Bora had been called to testify.
The court also found Mediheal to have been in breach of the lease agreement after failing to pay rental instalments when they fell due.
Evidence before the court showed that NCBA had issued demands for Sh13.65 million in September 2023 and Sh22.24 million in November 2023. By January 2024, the arrears had risen to Sh28.69 million, prompting the lender to issue a termination notice.
The hospital attributed its financial difficulties to government scrutiny over its kidney transplant operations in 2023, saying it had deliberately stopped admitting new patients.
The court, however, said the explanation amounted to an admission of the circumstances behind the default rather than a denial that the arrears existed.
‘I find that the Plaintiff was in breach of Clause 9.1(a), which is an essential term, and that the breach was substantial and continuing,’ the judge ruled.
Mediheal had argued that repossession could affect critically ill patients, including those on ventilators and patients undergoing kidney transplant procedures.
Despite this, the court held that NCBA was contractually entitled to recover its equipment. It said the lender could proceed with repossession, but only after complying with the proper legal and contractual procedures.
Mediheal filed the case on May 6, 2024, seeking to have the seizure declared null and void and to permanently restrain NCBA and the auctioneer from repossessing its equipment.
NCBA maintained that the lease had been lawfully terminated and that the agreement allowed it to repossess the equipment without first obtaining a court order.
The lender presented evidence showing that the parties had executed 12 lease schedules between 2018 and 2023, covering various medical machines, and that Mediheal had issued irrevocable standing instructions allowing monthly rentals to be deducted from its bank account.
A joint inspection conducted in February 2026 found that some equipment remained at the hospital and was functional. Other machines, including an ultrasound machine, X-ray machine, and surgical equipment, were reported by Mediheal as lost or stolen, although the court noted that the hospital did not provide supporting documentation.