14 Riverside Drive/ Citizen Digital
NAIROBI Kenya, Dec 14- Justice Alfred Mabeya has allowed Synergy Industrial Credit to auction the property upon which DusitD2 hotel stands, over a Sh5 billion debt.
This is after the judge dismissed an application by I&M Bank and its administrator, which sought to stall the sale arguing that the company which owns the building owes the lender $25 million (Sh2.82 billion).
“The court has considered the foregoing and the fact that it has not been shown that the amount to be realized from the sale of the suit property would not be enough to offset both the decretal amount and a substantial amount part thereof remain for the bank,” Justice Mabeya said.
Cape Holdings Ltd, which owns the property at Nairobi’s 14 Riverside Drive has been embroiled in a dispute with Synergy since 2010 over a botched sale deal.
The dispute revolved around a transaction in which Synergy bought two of the blocks out of 14, which were under construction and paid Sh750 million upfront. When the property was completed, Cape Holdings refused to transfer the property and the matter was referred to arbitration.
In 2015, the arbitrator, Ochieng Oduol ordered the developer to refund the principal amount and interest totalling Sh1.66 billion. Cape Holdings then moved to the High Court and the award was quashed as it was erroneous.
The matter proceeded to the Court of Appeal, which restored the award while a bid by Cape Holdings to reverse the decision at the Supreme Court failed.
In a ruling delivered on October 8, the Supreme Court held that it will not interfere with the judgment of the Court of appeal that upheld the award on grounds of jurisdiction.
“We reiterate our holding, and find the court lacks jurisdiction to entertain this appeal, having found so, we have no hesitation in declaring the application before us one for dismissal,” the Supreme Court judges CJ Martha Koome, Mohammed Ibrahim, Smoking Wanjala, Njoki Ndungu and Isaac Lenaola ruled.
Synergy then moved to the High Court seeking to be allowed to auction the property and recover its money but Vruti Shantilal Shah, who was appointed the administrator by the lender opposed the planned sale saying the company was placed under administration.
In his ruling, Justice Mbeya said the bank would not suffer prejudice because it has other securities whereas stopping the sale would subject Synergy to irreparable loss since its bid to recover the money would be delayed.
Synergy Industrial accused the bank of negligence, arguing it had placed a legal restriction or caveat on dealings with property because it was subject to a dispute.
Justice Mabeya said the charge placed by the lender was designed to allow Cape Holdings evade its legal obligations.
“Taking into consideration the foregoing, the court can but only agree with the applicant’s contention that the timing of the administration was not meant for the purpose known under the Act,” said the judge.
According to the court, Synergy had placed a caveat through a court order in 2011, warning over the property.
“With such a caveat, that property was not free to be given as a security,” he said.
