Equity Bank has got the nod to auction Kiambu-based Wida Highway Motel after the High Court dismissed an application to stop the forced sale.
Justice Nixon Sifuna dismissed the application by the hotel, stating that despite moving to court five months ago, the owners have made no effort repay the loan.
Justice Sifuna said repaying the loan is a sign of good faith and the court might be convinced to stop the sale and despite claiming to be repaying the loan, there was no evidence to support the assertions.
“May I remind litigants in applications of this nature that courts will not adventurously and foolhardily rush to the aid of a chargor or mortgagor who alleges repayments without providing proof thereof by way of receipts, payments slips or bank deposit slips,” the judge said.
The hotel moved to court seeking to restrain the bank from selling the land that was charged to the lender to obtain a loan of Sh89 million borrowed in 2015.
The court heard that the lender had appointed Mbuli Auctioneers to sell the property through a public auction.
The hotel admitted that the loan is in arrears but said it has been paying and at the same time negotiating with certain partners to take over the loan, saying it will be repaid in full.
Daniel Wainaina Njuguna, one of its directors claimed that the property was intended to be auctioned for Sh200 million, which he said was a gross undervalue. He added that Wida Resort has tens of employees and suppliers who will be affected in case the hotel is auctioned.
While dismissing the application, the court said the hotel failed to demonstrate it can be compensated by damages in case it wins the case.
“In any case, there being a valuation report, it then means the value or approximate value of the charged property is known. Hence, in the event the intended sale later turning out to be irregular, improper or illegal, the plaintiff may sue and be compensated by way of damages,” the judge said.
The judge said the argument on the hotel having employees and suppliers is too remote to offer refuge. According to the judge, the employees and suppliers were not party to the loan agreement or the charge.
The judge said the equity of redemption does not operate to exempt, excuse or release a charge of the mortgagor from paying the facility or meeting its obligations under the charge of the mortgage.
Prof Sifuna noted that since the filing of the application in May, the loan was still in arrears and the directors had made no effort to repay or table evidence of payment.
The court said the hotel has a duty to pay the periodic instalments as and when they fall due.
