SBM Bank has been allowed to auction a house in Phenom Estate in Lang’ata after the developer failed to service a loan of Sh21 million.
Justice David Majanja noted that George Town Travel & Tours Ltd, the developer of the estate, had failed to table evidence showing that the interests charged by the lender were unlawful or exorbitant.
The judge added that it was not enough for the developer to make broad and sweeping statements that the interest rates were exorbitant.
The developer through Mr George Mwangi wanted the court to allow him to sell the property, claiming that he had found a buyer who would acquire it for Sh23 million. He also faulted the bank saying it had failed to issue statutory notices as required by the law.
The court heard that the developer borrowed a loan of Sh6 million in February 2011 and another Sh15 million in May 2013 to develop the property and provided the title deed as security.
Mr Mwangi said although he was servicing the loan, he fell on hard times due to Covid-19 pandemic and the bank sought to auction the property to recover the balance of Sh21 million.
Justice Majanja also noted that the developer had filed a similar case, raising similar issues but claiming different buyers wanted to acquire the house but the bank was frustrating the sale.
“I therefore hold that the application in so far as it seeks an injunction restraining the bank from exercising its statutory power of sale on the same grounds is res judicata,” the judge said.
The judge said the claim that the bank may undervalue the property was speculative because there was no evidence placed before him, to show that the lender will not comply with the necessary steps to recover the debt.
The new buyer, Mr Mwangi said had offered to purchase the house for Sh23 million and made a deposit of Sh2.6 million. The court, however, noted that buyer pulled out of the deal and demanded a refund of his money.
“Since the notices are admitted and the plaintiffs have not shown how they are defective, there is no reason to restrain the bank proceeding to exercise the power of sale,” the judge said as he directed the developer to prosecute its earlier suit.