The Court of Appeal has declined to issue temporary orders stopping the auction of 100 apartments at Great Wall, Athi River by KCB to recover an outstanding debt of Sh2 billion.
Ederman Property Limited, the developer had moved to the appellate court seeking a temporary order against the sale of the units terming it illegal and unprocedural.
Similar reliefs had been sought at the High Court but were declined prompting them to move to the appellate court.
The developer argued that if the Kenya Commercial Bank is to proceed with the sale of the units, their intended appeal will be rendered useless as third parties whom they say are innocent purchasers would suffer.
But Court of Appeal Judges Gatembu Kairu, Jessie Lessit and Ngenye-Macharia dismissed Edermans application saying it failed to meet the threshold for it to grant the temporary orders sought.
They said there is no contention that the suit property is charged to KCB.
"It has also not been suggested that KCB’s right to exercise its statutory power of sale over the suit property is not exercisable," the judges said.
"We note, as the learned Judge of the High Court did, that the said third parties are not parties to this dispute. The burden to inform them that the 100 units were securities to a loan facility, lay with Ederman."
The loan balance dates back to 2015 when Erdemann Property Limited secured a facility of Sh1.3 billion from KCB Bank during the construction of 2,190 units.
Part of the agreement outlined in a letter of offer from KCB Bank was that Edermann Property Limited would relinquish 100 units as security.
Unable to meet its loan obligations, KCB issued Ederman with a letter dated December 15 2021 demanding an outstanding balance of Sh2 billion which resulted in an impending auction.
This auction was to take place on April 23 for the sale of the 100 units already sold to third parties.
The purpose of the auction is to settle part of the outstanding debt owed to it.
