Counties

Ex-Naivasha MP loses bid to halt land auction in Sh21m row

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Former Naivasha MP John Kihagi. FILE PHOTO | NMG

Summary

  • Evidence in court showed that the land’s title was charged by microfinance Ridhika Capital Limited from time to time as security for further advances.
  • John Kihagi sought the release of the title, which he had used to secure the loan.

Former Naivasha MP John Kihagi has lost an attempt to stop Jamii Bora Bank from selling his land to recover a Sh21.7 million loan that was advanced to a microfinance institution known as Ridhika Capital Limited, where he is one of the directors.

Mr Kihagi disputed the debt, saying the amount he owed the bank was Sh2.3 million, which was borrowed in 2014 and he had cleared. He sought the release of the title, which he had used to secure the loan.

He told Justice Richard Mwongo that he did not consent to the sum of Sh21.7 million Jamii Bora Bank sought from him through various statutory notices sent to him.

The rationale of his argument was that Sh2.3 million was the only amount he consented to be secured by the land’s title.

He moved to court challenging the statutory notices for sale of the land via public auction or private treaty. The notices indicated that he was at liberty to apply to court for relief as required under Section 90 (1) e) of the Land Act. The Notice was copied to Ridhika Capital Limited, Mr Kihagi’s wife Leah Njeri and the Bank.

But Justice Mwongo declined to stop the possible auction upon finding that the title was a third party charge to secure advances, not to Mr Kihagi but to the microfinance (Ridhika).

Evidence in court showed that the land’s title was charged by the microfinance from time to time as security for further advances.

The microfinance increased the loans from Sh16 million to Sh21.7 million and the existing charge — and other collateral — acted as security.

This, the court ruled, expanded the maximum principal amount of Sh2.3 million to include the entirety of the Secured Obligations subsequently granted.

“Mr Kihagi cannot feign ignorance of the further financial facilities granted when he admitted having signed the letter of offer for advances up to Sh21.7 million and also signed a personal guarantee for a similar amount,” said Justice Mwongo.

One of the statutory notices dated January 24, 2019 indicated that the arrears in default amounted to Sh17,122,137. It gave Mr Kihagi 40 days to redeem the Charged Land, and notified him that a sale by public auction of the Charged Land would commence after the said period.

“Ridhika Capital, although sued did not participate in the court proceedings, not even as a witness, and did not complain that it paid off the amount,” said justice Mwongo.