The collapsed Nakumatt’s Chief Executive Officer, Atul Shah has lost a court bid to reverse the auction of his property for Sh1.04 billion over a multibillion-shilling loan he guaranteed the retail chain.
Court of Appeal judges said it would be unfair to stop the transfer of the property given the buyer, Furniture Palace International Ltd, had not been joined in the case.
Justices William Ouko, Roselyn Nambuye and Asike Makhandia said that it is unjust to issue an injunction that will affect its proprietary rights without being accorded an opportunity to be heard since the debt is not denied.
The judgement was accorded in reference to Shah’s application to have the transfer to Furniture Palace stopped.
In court papers, Shah says that some lenders offered Nakumatt loans with an eye on his properties, arguing that the banks were reluctant to support its rescue plan.
“That I believe that if the facilities were not disbursed with the singular agenda of deliberately burdening the borrower beyond the point of return (sic) and therefore appropriating the applicant’s subject property then the respondent ought to have committed to the rejuvenating of the borrower’s operations,” Shah argues.
On April 9,2021, Shah lost his Lavington home to auctioneers.
This is after the High Court dismissed a petition seeking to overturn the forced sale of the high-end property by Kenya Commercial Bank(KCB) Group over a Sh2 billion debt.
Justice Francis Tuiyott dismissed the petition by the administrator of the collapsed Supermarket chain, saying it has no chance of success.
“This court is not persuaded that the suit, as currently presented, demonstrates a prima facie case with a probability of success. Being unable to surmount that hurdle, it is needless for this court to discuss other aspects raised in the application,” the judge said.
Nakumatt’s court-appointed administrator had opposed the sale on grounds that the auction failed to follow the law, and tagged Shah as an interested party to suit.
The bank, through Leakey Auctioneers, early in the year quietly sold the property, which Shah had used as additional security as Nakumatt’s guarantor to offer comfort to the multiple bank loans.
KCB had earlier sold Shah’s prime property in Industrial Area, Nairobi, to Furniture Palace International Ltd for Sh1.04 billion, court records show.
Shah lost his assets to KCB Group and three other banks over debts worth sh4 billion.
KCB Group was seeking to auction the former Nakumatt CEO prime property over a sh2 million debt.
High Court judge Alfred Mabeya on November 24,2020, allowed KCB to complete the sale of the property in Industrial Area, Nairobi that is also charged at Bank of Africa, DTB Bank and Standard Chartered.
“If the court was in doubt, which is not the case here, the balance of convenience tilts in favour of allowing the defendant (KCB) to recover its outlay. The court was invited to consider that the sale by the defendant would injure and prejudice the rights of the other lenders who have the suit property as their only security. While this court sympathises with the said lenders, it defeats logic how prudent bankers would extend facilities amounting to over Sh4 billion on a single security whose value is less than Sh2 billion,” said Justice Mabeya.
The banks offered Nakumatt billions of shillings on the strength of the retail chain’s cash flow but Atul used his company Collogne Investments, which owned the Sh2 billion property in Nairobi, as Nakumatt’s guarantor to offer the multiple bank loans.
