A family in Hardy Karen in Nairobi has a sigh of relief after High Court judge Alfred Mabeya stopped planned eviction from land sold via auction last year after doubts emerged over alleged Sh34million allegedly paid in cash at a public sale by the winning bidder who had loaned the claimant.
Justice Alfred Mabeya stopped the eviction of 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 owned by Rita Njuguna on instructions from micro-finance lender Mwananchi Credit Limited owned by Dennis Mwombo over a Sh86.2million loan that the latter was claiming from Hirji, who trades as Harrogate Ltd and Alice Muthoni Thuo.
Interestingly, Mwananchi Credit Limited, the lender to the claimant participated in the bid and claimed the highest bidder placed a Sh135million offer for the property and allegedly consequently paid Sh33.7million in cash.
The court has since punched holes into the claims.
Justice Mabeya said he was convinced that the payment in cash for a 25 per cent 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.
“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 posed.
The court also observed that there were intrigues on Sh1million 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 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.
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 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.
He then went back to challenge the auction over the alleged payment and also argued that the seller never conducted a valuation of the property.
The businessman said he did an evaluation which quoted a much higher price than the one quoted by the lender.