Stanbic Bank #ticker:SBIC is now free to auction assets of Karuturi Ltd over a debt of Sh1.8 billion after the Supreme Court dismissed an appeal by its shareholders and guarantors, who argued that they were not given an opportunity to challenge a contested audit report.
Five judges of the Supreme Court ruled that there was no issue of a constitutional nature, for the court to determine in the dispute.
The judges said the constitutional issues the shareholders of the Naivasha-based flower farm were raising, were never argued before the High Court.
“However, having listened to all the parties in the matter and re-evaluated the pleadings before us, and the record of appeal, and considering our findings herein, we are satisfied that we lack the jurisdiction to entertain the matter before us,” the Judges led by Deputy Chief Justice Philomena Mwilu ruled.
Surya Holdings Ltd and THEA Holdings moved to the Supreme Court arguing that they were denied the opportunity to challenge the contents of the audit report by Deloitte Consulting Limited.
The audit revealed that the flower firm has sank in further debt since it was placed under receivership. The owners objected to being held liable for the debts incurred during the receivership.
They also faulted the Court of Appeal for upholding the High Court’s decision which, in their view, was wrong and evaded a determination of the real issues in the appeal before it.
The two firms also argued that the Court of Appeal missed the vital point that the alleged acknowledged debt was about the alleged pre-receivership debt, and not the alleged receivership debt, which was the subject of the appeal before it.
Receiver managers Muniu Thiothi and Kuria Mucheru opposed the case saying the High Court order made in 2018, did not involve the interpretation and application of the Constitution but merely imposed the condition that the guarantors must deposit the money, which was admitted and agreed upon.
In 2018, High Court judge Francis Tuiyott gave Stanbic the greenlight to auction the assets belonging to the flower farm, in three months.
Karuturi Ltd, one of the world’s top growers of roses and exporting more than one million stems annually, was put under receivership in 2014 after failing to service a Sh383 million loan borrowed from the lender.
The judge directed the firm to settle Sh410 million pre-receivership loan in 60 days. He further directed the owners to settle Sh640 million the company owes creditors other than the bank and Sh680 million advanced to the firm by the bank after it was placed under receivership.
The owners will further have to pay Sh100 million, being the expense incurred to preserve the assets of the company while it was under receivership.