40 DAYS TO PAY

Moi varsity sacco building to be sold to recover Sh500m

After bank is paid, contractor and other creditors to be paid

In Summary

•Musco took loan from bank 10 years ago to develop the building but sacco unable to repay.

• Sacco also owes Sh141 million to contractor who put up 12-storey building. Sacco has more than 5,000 members. Judgment says nothing about members.

 

Members of Musco protesting outside building is to be auctioned in Eldoret.
AUCTION: Members of Musco protesting outside building is to be auctioned in Eldoret.
Image: MATHEWS NDANYI

The High Court has allowed a bank to auction a 12-storey building in Eldoret's CBD to recover Sh500 million owed by the Moi University Savings Co-operative Society (Musco).

The Co-operative Bank and Musco have battled for 10 years over the money the bank had lent to the society to put up the building housing a university and other institutions.

Justice Hellen Omondi on Wednesday ordered the bank to attach and sell the imposing Musco Towers because the society had been unable to repay the loan.

The financially troubled sacco has members from Moi University, the University of Eldoret and the Moi Teaching and Referral Hospital staff in Eldoret.

“The Cooperative Bank of Kenya be at liberty to proceed with the sale of the property upon the lapse of 40 days' notice in the event of default in the clearing of the full arrears," Omondi ruled.

She directed the bank to issue a 40-day notice so they sacco can pay up, otherwise, it will lose the building. 

Omondi said the bank should ensure the building be auctioned, then the balance of sale proceeds will be remitted to liquidators for distribution to Musco creditors. They include the contractor who put up the commercial building.

There was no mention in the court order of paying sacco members; there might not be money left after payments to others. 

The contractor, Fredrick Opondo of Dinesh Construction Company Limited, had applied to be enjoined in the suit to demand payment for putting up the building.

Justice Omondi said Musco had failed to pay Sh141 million to the contractor who completed the work and handed over the building as required by the contract.

She said the contractor’s case had earlier been heard by a tribunal that awarded the Sh141 million, plus 14 per cent interest per year from June 17, 2015.

Musco had challenged unsuccessfully at the High Court but the tribunal’s findings were confirmed as a judgment of the court. In her final ruling, justice Omondi ordered that the matter will be marked as settled in its entirety upon the filing of a consent.

Each party will bear its own costs.

Sacco members have been protesting to oppose the sale of the building put up more than 10 years ago. The building and its plot adjacent to the Sirikiwa Hotel are valued at more than Sh500 million.

(Edited by V. Graham)