By: VINCENT AGOYA
A bank has been ordered to pay a firm Sh155 million for disposing of a piece of land in Nairobi at an undervalued price allegedly to recover a loan.
High Court Judge Luka Kimaru said Bank of Baroda was negligent when it sold the Industrial Area prime plot owned by Mr Dilesh Bid of Komassi Plantations Limited for Sh37.5 million in October 2006, when it was valued at Sh62 million.
The judge ruled that the bank failed to do due diligence in establishing the true market value of the property before auctioning it. He said he reached the decision after a government assessor valued the property at the stated price.
“This court finds that the forced sale value of the suit property ought to have been Sh62 million and not Sh32 million. The valuation commissioned by Bank of Baroda prior to the sale was not reflective of the true market value.
Komassi shall, therefore, be paid the sum of Sh24.5 million plus interest at the rate of 22.75 per cent from October 2006,” the judge ruled.
Komassi lawyer Rapinder Sehmi had told the court that “the bank misled assessors that the land could only be sold at Sh32 million on a quick sale, and that the Sh37 million it got was the best possible deal”.
The judge said he had found that the bank’s valuation read almost identically to another assessment done two years earlier. He upheld the lawyer’s submissions that the property could not have tipped in value since 1999.
The judge also ruled that Bank of Baroda had relied on a valuation done by R R Oswald & Company to advance Komassi the loan, hence could not renounce the subsequent assessment done by the same firm.
“This court noted that the valuation done by Crystal Valuers was more or less similar to the report by Mwaka Musau Consultants with the sole objective of enabling the bank to sell the property at a value that did not reflect the true market and force sale value,” said the judge.
Komassi had said that there were two buyers willing to purchase the property at Sh150 million, which was proof that Bank of Baroda undersold the property.
The bank held that R R Oswald’s assessment of the land should not have been considered as it had been prepared by an employee that was then not registered as a valuer in Kenya.
But the valuer, Rajiv Gujral, argued that his valuation was verified and signed by a colleague registered in Kenya.