A judge has stopped the eviction of a family in Karen from land sold via auction last year after doubts emerged over Sh34 million allegedly paid in cash at a public sale by the winning bidder.
Justice Alfred Mabeya stopped the eviction of Mr Shreedhar Girdharlal Hirji from the property in Hardy, pending the hearing of a case challenging the auction, which was conducted in October last year.
The property was sold by Mistan Auctioneers on instructions from micro-finance lender Mwananchi Credit ltd, over a loan of Sh86.2 million that it was claiming from Mr Hirji, who trades as Harrogate Ltd and Alice Muthoni Thuo.
Justice Mabeya said he was convinced that the payment in cash for a 25 percent deposit on the auction property is doubtful because there is no evidence of the source of the money and whether it was eventually deposited in a bank.
The lender claimed the highest bidder placed a Sh135 million offer for the property and paid Sh33.7 million in cash.
“Why would the alleged purchaser be accommodated and deal with sale outside the express conditions of sale that required a banker’s cheque? Isn’t the law that huge transactions be conducted by way of bank transfers in order to curtail money laundering?” the judge said.
The court also said there were intrigues on Sh1 million paid by two bidders to participate in the auction because there was no evidence to show that they deposited the amount with the lender to participate in the auction.
Justice Mabeya said the questions around the source of funds are serious and can only be determined at the trial.
“In any event, there is no evidence that upon handing over huge sums of money around Sh34 million in cash by the purchaser to the interested party, the interested party ever issued any receipt by the defendant to the interested party,” the judge added.
The judge said all that was produced in court are receipts by the micro-financier to the auctioneer.
“To compound the matters further, there was no bank statement by the defendant to show the deposit of the aforesaid sum on the material date,” he said.
According to the judge, the issues raised are so serious that unless they are properly interrogated at a full trial, serious injustice may be meted out on Mr Hirji.
The judge stopped the eviction saying the owner will suffer harm because they will be dispossessed of their property and the rights of third parties might kick in, thus compounding the matter.
Harrogate ltd moved to court in 2021 challenging the loan, which grew from Sh43.1 million to more than Sh88.7 million.
Mr Hirji argued that the interest was illegal and against the ‘in duplum’ rule, which states that interest stops accruing when it exceeds the principal amount that a borrower was advanced.
Evidence tabled in court showed that Mr Hirji, an entrepreneur, borrowed a loan from the lender but the full amount was never disbursed.
He attempted to stop the auction last year arguing that the lender structured the loan in a manner that made it impossible for him to repay the debt, but this was dismissed by Justice Mabeya.
