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Credit Bank cleared to auction Upper Hill land in Sh2 billion loan dispute
A view of the foundation of the property, which would have hosted frica’s tallest building in Upper Hill, Nairobi in this picture taken on April 25, 2018.
Credit Bank Ltd can now proceed with the planned sale of a property in Upper Hill area –where Africa’s tallest building was to be built a few years ago— to recover a debt of more than Sh2 billion.
The lender got the nod to auction the property after its owners –One Upperhill Towers Ltd— failed to convince the Court of Appeal to suspend the forced sale.
In a ruling, the appellate court noted that although One Upperhill Towers Ltd had an arguable appeal, the loans granted to its sister companies –Jabavu Village Limited and Hasson Pharmaceuticals Limited— continued to grow and there was no evidence that the facilities were being serviced.
“An injunction is an equitable remedy that a court can grant when it believes it is fair and appropriate. Secondly, where there is clear evidence that the applicant is in default, and the suit property herein was charged to secure the loan, the property becomes a commodity for sale upon the default,” said the court.
The court added that the right of the bank to realise the security becomes established upon default.
“From the material before us, the loan facilities had accumulated to $9,611,501.89 and $6,162,440.67 at the time the parties were before the superior (High) court. They certainly continue to grow. The fact that the applicant was heavily indebted to the 1st respondent (Credit Bank) is not in question,” said the court.
The sale of the property had been stalled earlier by court injunctions as the company and its affiliates obtained court orders stopping the forced sale.
Evidence tabled in court stated that the lender granted loans amounting to Sh1.2 billion to Jabavu Village Limited and Hasson Pharmaceuticals Limited.
One Upper Hill Towers moved to court early this year contending that although the loan was being regularly serviced, the lender had instructed auctioneers to sell the property to recover the outstanding amounts.
The property owner submitted that the intended sale was malicious, unprocedural and unlawful as the mandatory provisions of the Land Act had not been followed, and its right to redeem the property was being compromised.
The lender opposed the case arguing that there was default in the repayment of the loan which led to the letter dated September 6, 2022 seeking the settlement of the outstanding arrears and the regularisation of the current account.
Credit Bank said when nothing was done to pay the arrears to regularise the current account, it went ahead and issued the statutory 90 days’ notice, which was followed by the 40 days’ notice under Section 96(2) of the Land Act with regard to the property.
The bank added that the property was valued and the notification of sale went out. In a ruling in February, the High Court dismissed the application but not satisfied, One Upperhill Towers ltd, moved to the Court of Appeal.
The appellate court ruled that Credit Bank is a bank, and if it turns out that the notices were not procedurally issued, the value of the property can be repaid.
“In conclusion, we find that the application is not merited. The same is dismissed with costs to the respondents,” ruled the court.
