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Credit Bank gets nod to auction prime Upper Hill plot over Sh1.2bn debt
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 has been given the green light to auction a controversial parcel of land, which was to host Africa’s tallest building project in Nairobi’s Upper Hill area over a Sh1.2 billion debt.
High Court judge Alfred Mabeya, in a ruling on January 27, lifted an injunction that had been obtained in 2023 by Jabavu Village Limited blocking the lender’s plan to auction the land.
The judge said Jabavu Village Ltd was not the registered owner of the property and therefore had no standing to challenge the lender’s attempt to exercise its statutory power of sale.
“It cannot be disputed that the proper party to challenge a lender’s statutory power of sale, is the chargor. The chargor is the registered owner of the property that the lender threatens to dispose of. In that regard, a third party cannot purport to speak for the owner of the property,” said the judge.
A chargor is an entity that provides security to a lender as collateral for a loan.
Credit Bank told the court that the registered owner of the property was Upper Hill Towers Ltd, which was the registered owner and the chargor.
The lender argued that Jabavu Village had been dishonest in its application by failing to disclose that it was not the registered owner of the parcel of land to be auctioned.
The court also heard that Jabavu Village was the principal borrower as per the letter of credit dated March 3, 2022, for a loan of $5,273,332.22 (about Sh681million at the current exchange rates) to refinance an existing credit facility.
The first legal charge had been registered on the subject land, the lender added.
Credit Bank maintained that Upper Hill Towers was the right party to apply against the statutory sale.
The lender added that it issued the required notices under the Land Act by giving the 90-day statutory notice and the 40-day notice to sell.
Further, the property was valued and a further 45-day redemption notice was issued under the Auctioneers Rules.
The lender told the court that Jabavu Village had misrepresented to the court that the land was registered in its name and that of Hassan Pharmaceuticals.
Jabavu Village denied misleading the court but admitted that it was not the registered owner of the charged property.
“The injunction order was made in error and cannot stand. The proper party to challenge the defendant’s statutory power of sale is not in court,” said the judge.
Jabavu Village had planned to build the tallest building in Africa in Nairobi’s Upper Hill area, dubbed the Pinnacle Project.
Last year, the lender contracted Bespan International Ltd to collect the debt. The firm sent a letter on June 24, 2024, demanding payments within seven days, failure to which the debt collector would auction the land.
Jababu Village Ltd rushed to court under certificate of urgency and obtained an injunction restraining the lender and Purple Royal Auctioneers from interfering with, selling or taking possession of the land.
The developer had stated that it was undertaking a housing project where it expected to receive Sh7.68 billion and that the lender was aware of the project and the actions the firm was taking to improve its liquidity and cash flow for the purposes of the project.
In opposing the case, Credit Bank argued that the firm had admitted to the debt and that the same was secured.
According to the lender, it was at liberty not to enforce the securities that it holds and that it was within its right to institute alternative recovery methods such as insolvency proceedings.
