The National Bank has been given the go-ahead to auction a 110-acre estate in Thika owned by the Pentecostal Church of East Africa (PCEA) following a protracted Sh519 million loan repayment dispute.
High Court Judge Fred Ochieng Tuesday lifted an order barring the lender from auctioning Ebenezer Ridges, which is worth over Sh1 billion, to recover the massive loan it aanced to the PCEA in 2011.
Justice Ochieng issued the order stopping National Bank from auctioning the land in December last year after the PCEA pledged to repay the loan balance in three installments of Sh51 million between December last year and February this year.
The lender is demanding Sh153 million inclusive of interest accrued on the loan.
The judge Tuesday ruled that PCEA’s failure to remit any amount since the order was issued is a sign of bad faith and allowed National Bank to sell Ebenezer Ridges to recover the loan.
“As the PCEA had given promises upon which the court granted the orders and because the PCEA has failed to honour its word, this court holds the considered view that it is not deserving of accommodation in terms of more time to repay the loans. NBK may, upon giving the requisite notices, proceed to realise the security,” the judge ruled.
The church took the loan to develop the high-end estate, but stopped remitting monthly instalments to National Bank after repaying Sh475 million.
When Justice Ochieng issued the order stopping the auction, the bank had already agreed to sell the land to a buyer it did not reveal in court. But the lender said it has been unable to complete the sale because of the ongoing case.
The church served the lender with the court order at noon, just 30 minutes after the lender had auctioned the estate.
The PCEA Tuesday asked Justice Ochieng to find the bank in contempt of court for auctioning the land. The church insists that it will sell the property on its own then repay the debt.
But National Bank said it had not completed the sale, and that the PCEA has since December failed to remit a single shilling to repay the loan.
“NBK has continuously told the PCEA that the bank’s interest is in the money so if it comes with either the money or a buyer the matter will be resolved. The PCEA has not honoured the orders made in December as it has not made any payment,” the bank’s lawyers argued.
SOURCE: BUSINESS DAILY