DEFAULTED ON LOAN PAYMENT

Court okays selling of Mombasa tycoon property

Three-judge bench overturns the Environment and Lands Court ruling that restrained the NBK from selling land

In Summary

• In October 2013 and April 2016, Juja coffee exporters limited, a company owned by Said acquired loans amounting to $29.7 million (about Sh3.2 billion).

• They used the parcel of land in Lamu which was registered under Lamu Ginners Company as security for the loan.

The Court of Appeal has allowed the National bank of Kenya to sell one of the properties belonging to Mombasa tycoon Tahir Sheikh Said who died in 2017.

A three-judge bench overturned the Environment and Lands Court ruling that restrained the bank from selling a parcel of land.

In October 2013 and April 2016, Juja Coffee Exporters Limited, a company owned by Said, acquired loans amounting to $29.7 million (about Sh3.2 billion).

They used the land in Lamu, which was registered under Lamu Ginners Company, as security for the loan.

However, the borrower defaulted on payment of the loans and as of April 2017, the loans had incurred interests and stood at $37.5 million (about Sh4 billion) and  Sh12.3 million and the interest continued to accumulate.

Due to defaults, NBK embarked on a journey to recover its money by auctioning the land.

However, their efforts were halted by an order issued by the lands court restraining them from auctioning or selling the land.

But appeal Court judges William Ouko, Gatembu Kairu and Kathurima M’inoti said the lands court erred when it restrained the bank from carrying out its statutory powers to sell the land.

The judges said the lands court misdirected itself when it claimed that there was contention on the existence of the loan.

The bench said the bank had proven its case and the issue of whether the loan facility existed was not questioned as one of Juja’s director Tauhida Said had acknowledged that they had indeed borrowed money and the land had been charged as security.

Tauhida had also acknowledged the debt to the bank but could not express the exact amount.

The three judges further said the lands judge appeared to have been moved by the plea of sympathy by the borrower that its principal director had died.

The bench said even though the sympathy and compassion expressed was commendable, it was not a sound legal basis for exercising judicial discretion.

Several banking institutions have been seeking to auction the properties, including buildings and companies.

Several cases filed by various banks are pending in court awaiting approval to auction the properties used as security for loans.

Aside from the civil cases, four former directors of the companies are facing criminal charges for allegedly defrauding the firms.

The accused are said to have been responsible for acquiring some of the loans without the knowledge of the principal director.

 

 

Edited by Kiilu Damaris