Equity Bank Kenya and NCBA Bank Kenya are embroiled in a court battle over a building in Nairobi which the two lenders claimed to have financed at a cost of Sh160 million each.
The structure is owned by Kinjunje Gardens Ltd and Equity alleges that the charge registered by NCBA for a loan that was borrowed in June 2014 is a forgery.
NCBA, on its part, maintains that its charge is valid and the one produced by Equity is illegal and has sought to auction the building to recover the loan.
Justice David Majanja rejected a bid by Equity to stop NCBA from auctioning the property, pending a determination of the case.
The judge said it is difficult to conclude at this stage that Equity, which is asserting the validity of its documents and challenging those of NCBA, would not have exercised due diligence to investigate the entire transaction.
“It follows that even if I were to accept that the material and evidence proffered by Equity is new, it is not important because it is not based on what is pleaded and no relief is sought by Equity against the suit property,” the judge said.
Evidence produced in court shows that Kinjunje approached NCBA for a loan of Sh160 million in June 2014 to purchase the property in Nairobi.
The asset was charged to the bank and Kinjunje defaulted on the loan repayment, forcing NCBA to move to auction the property.
Equity then went to court seeking to block the intended sale saying it also advanced the company Sh160 million to acquire the property.
Equity alleged that NCBA’s claim was invalid because the property was already charged to it when Kinjunje obtained the loan.
The judge noted that the parties accused each other of fraud, forgery and illegalities with respect to the title deeds and securities, but all the claims can be determined after a full hearing.
In a ruling in July, the court noted that NCBA’s charge was registered on July 18, 2014, while Equity’s was registered on October 9, 2014.
He said on the face of it, NCBA’s security must prevail as he declined to stop it from selling the property.
Equity went back to court seeking a review of the order saying it has new evidence, which was not available to it when it filed the case earlier.
The evidence is that Henkam, which sold the property to Kinjunje allegedly received payment from Equity and not NCBA and that the previous owner never executed the sale agreement dated January 20, 2014, which formed the basis of the sale of the property as financed by NCBA.
Equity claimed the sale agreement tabled by NCBA was, therefore, a forgery and the discovery of the new facts was significant as it challenges the validity of NCBA’s charge.