A Chinese firm has lost an application seeking to freeze the accounts of a developer over a botched deal for the construction of houses worth Sh3 billion in Mombasa.
Justice David Majanja dismissed the application by China Gansu International Corporation for Economic & Technical Corporation Kenya Company Ltd, stating that the court cannot grant the injunction because the Chinese firm has not set out the cause of action against Gold Gulf International Ltd.
This is the second time the Chinese firm is losing after Justice Majanja dismissed its application in June, seeking to block Equity Bank from releasing Sh77.2 million paid as security to the developer.
“In essence and having regard to the findings the court has made in the previous rulings, there is nothing further to determine in the suit unless it is amended to include a cause of action against the 1st Defendant (Glod Gulf International ltd) in respect of their primary business relationship,” the judge said.
The Chinese firm wanted the court to freeze the developer’s accounts at First Community Bank or any other bank or an order restraining the developer from transferring the money relating to the bid bond, pending the determination of the case.
The firm’s general manager Wang Qian said in an affidavit that in case the case against the developer succeeds, it may face great difficulty in recovering the money.
He further said the firm was organising loan facilities to cover any operational shortfalls resulting from the release of the bid bond sums and that if it is unable to recover any sums released to the developer, it will then be unable to service its loan obligations and other contracts, a move that will lead to termination of contracts.
The court heard that the entire transaction leading up to the issuance of the binding bond and demand for payment by Gold Gulf International ltd was mired in fraud and deception.
The firm accused the developer of inducing it to procure the bid bond, fully aware that it had no intention to enter into a written contract for the construction of the housing units.
According to the Chinese firm, the sole intention of the developer was to demand payment under the bid bond and unjustly enrich itself.
The developer denied the allegations saying they are baseless and unfounded. The company also denied being involved in any fraudulent activities and the transaction between it and the parties was a very clean transaction and it was always ready and willing to accommodate the contractor by granting it an opportunity to extend the bid bond.
The developer invited the Chinese company to construct 522 housing units in Mombasa worth Sh3 billion in May last year. The Chinese firm was supposed to get security worth 2.5 percent of the contract from a reputable bank.
The contractor obtained the security from Equity Bank but Golden Gulf International Ltd later accused the Chinese firm of failing to execute the contract.
The Chinese company blamed the developer saying the contract did not have a time frame and it was wrong to call the bid bond.
