Kenya Commercial Bank (KCB) is set to sell 7 residential units, owned by real estate developer Mahugu Limited, to recover a substantial loan amount.
This comes after the court cleared the bank to proceed in the loan recovery spree. The ruling by Justice Peter Mulwa comes amidst a Ksh446 million loan dispute and claims by the developer of Ksh60 million in overcharged interest.
Justice Mulwa, in his formal and direct judgment, granted KCB approval to proceed with the sale of the units situated in Kerarapon, Karen in Nairobi.
This is after the court found that Mahugu Limited failed to establish a strong case against the bank’s intended action, nor did it demonstrate that it would suffer irreparable loss that could not be adequately addressed by monetary compensation.
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“It is a settled principle that once property is offered as security, it becomes a commodity for sale in the event of default. Once property is offered as security it by that very fact becomes a commodity for sale. And there is no commodity for sale whose less cannot be compensated adequately in damages,” stated Justice Mulwa.
His ruling emphasised that the court should not restrain a mortgage holder, such as a bank, from exercising its statutory power of sale merely because the exact amount due is under contention.
Mahugu Limited, through its director Makenna Wambui Nyammo, had sought an injunction to prevent KCB and its agents from selling, transferring, disposing of, leasing, or otherwise interfering with the 7 housing units. The company also requested an order to stop the bank from evicting its tenants or interfering with their occupation.
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KCB had granted the developer a Ksh446.2 million loan facility in 2013, followed by a further Ksh39.7 million in 2015, specifically for the completion of 20 villas on the property.
These facilities were secured by a charge over the property and a Ksh50 million sum held in a fixed deposit account. The court’s decision now permits KCB to move forward with the sale of the 7 units to reclaim the outstanding debt.
By Cornelius Korir
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