Equity loses bid to be dropped from lawsuit by businessman
Equity Group chairman Peter Munga. He is embroiled in a suit with businessman Joseph Muturi, who is accusing him and the lender of irregular sale of shares worth Sh150m. PHOTO | FILE
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The businessman Joseph Muturi Kamau says he had in 2011 agreed to sell his three million TransCentury shares to Mr Munga at Sh50 each to settle a Sh40 million loan taken from Equity.
Equity had filed an application seeking to be struck off the suit, arguing that its role in the dispute was compromised by Mr Munga’s payment of Sh33 million loan balance.
But Justice Ochieng said it was too soon to let the bank off the hook, as it would lead to another suit in the event Mr Muturi won the case.
Equity Bank has lost a bid to be dropped from a case in which a businessman has sued the lender and its chairman Peter Munga over the sale of his TransCentury shares worth Sh150 million.
Justice Fred Ochieng Thursday ruled that he could not drop Equity Bank from the suit filed by Joseph Muturi Kamau as there is still no guarantee that the lender was not involved in the alleged fraudulent transfer of the businessman’s shares.
Mr Muturi has sued the bank, its securities and custody service — Equity Nominees Limited — and Mr Munga.
The businessman says he had in 2011 agreed to sell his three million TransCentury shares to Mr Munga at Sh50 each to settle a Sh40 million loan taken from Equity. The bank was to deduct the outstanding loan balance of Sh33 million and pay the balance to Bethany Vineyards — Mr Muturi’s company.
The businessman claims he is yet to receive the balance from the sale and wants Equity Bank to pay his company the entire Sh150 million, with interest of 18 per cent per year from 2011 when he filed the suit.
Equity had filed an application seeking to be struck off the suit, arguing that its role in the dispute was compromised by Mr Munga’s payment of the Sh33 million loan balance. But Justice Ochieng said it was too soon to let the bank off the hook, as it would lead to another suit in the event Mr Muturi won the case.
“It will be necessary for Equity to demonstrate the amount of money it received for the loan or whether Mr Muturi and Bethany Vineyards should be asking it to give them the rest of the money after the loan was cleared,” the judge said.
Justice Ochieng added that in the course of proceedings he would be seeking to find out whether it was Equity Bank, its securities service or Mr Munga that was in possession of the money and which of them is liable for the alleged loss of Mr Muturi’s money.
The Bethany Vineyards boss had attached his three million TransCentury shares and other properties as security for the Sh40 million loan he took from Equity Bank. He was to repay the amount either within six months or after the sale of the shares.
Mr Munga, after clearing Mr Muturi’s loan with Equity, paid Sh2.4 million to Bethany Vineyards as the first instalment. During the initial court proceedings, he argued that the deal he struck with Mr Muturi did not place a deadline on the payment of the balance. Mr Muturi claims in suit papers that he and Mr Munga are long time friends.
The three defendants have opposed Mr Muturi’s move to amend the suit he filed in 2011, arguing that the proposed changes were useless to proceedings and not in line with the rules of civil procedure.
Justice Ochieng, however, agreed with the businessman that an application cannot be defeated on a technicality.
Mr Munga has in his defence claimed that the suit is aimed at embarrassing him. But Mr Muturi says Mr Munga caused himself the embarrassment by not remitting the balance from the share sale and loan settlement.
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