Karuturi fights off Indian bank’s bid to sell Sh8bn land

Troubled flower firm Karuturi Limited has moved to court to fight off fresh attempts by an Indian Bank to sell off six parcels of its land in Naivasha valued at Sh8.1 billion ($90.9 million).

The land was used to secure a loan between 2010 and 2011.

Karuturi wants the High Court to stop the Mumbai-based ICICI Bank from selling the property to recover a disputed $19.9 million (Sh1.7 billion) outstanding loan. The firm also wants the court to revoke the appointment of a receiver manager — Lolluri Kamasastry — by ICICI.

ICICI extended a foreign currency term loan of Sh3.6 billion ($40 million) to Karuturi in two tranches between 2010 and 2011, alongside a working capital demand loan of $11 million (Sh990 million).

The flower firm now claims it only owes $9.84 million (Sh885 million) of the loan, and that the bank’s demand encompasses the working capital loan, which was secured using property in Ethiopia.

“In effect, ICICI has unlawfully combined two completely separate loan facilities that are secured by properties in two different jurisdictions. There has been no default on any payments and the account was up to date as at the date of unlawful appointment of a receiver (Mr Kamasastry),” Karururi says.

The suit was filed by Surya Holdings, Rhea Holdings, Yeshoda Investments, Karuturi Limited and Karuturi Overseas Limited, against ICICI and Mr Kamasastry.

Karuturi holds that Mr Kamasastry’s appointment is illegal because it was done while two court orders barring the sale of its property were in place. The flower firm is fighting two other suits filed by CfC Stanbic over an unpaid loan and another by one of its suppliers, All Pack Industries.

Mr Kamasastry has, however, in a response claimed that he was appointed a receiver manager last June and that the move was in line with the law.

The ICICI appointee adds that he duly served the flower firm with documents from the registrar of companies approving his appointment.

“I was appointed a receiver manager of the defendants on June 5, last year. I notified the general public and the directors of the companies of my appointment via an advertisement,” says Mr Kamasastry.

ICICI added that its attempted sale is warranted, as it is not affected by court orders issued stopping CfC Stanbic from selling the troubled firm’s assets because its receiver manager was never served with the documents.

READ: Karuturi reveals CfC security also held by India bank

Mr Kamasastry argues that the orders only affect CfC Stanbic and supplier Allpack Industries, that have each filed a suit against Karuturi. Allpack is seeking to wind up Karuturi while CfC Stanbic wants to sell the flower firm’s assets to recover a $6.5 million (Sh585 million) outstanding loan.

“I am not a party to those proceedings and neither have I ever been served with a court order issued in the said proceedings,” he adds.