BY SAM ALFAN.
Elite Intelligent Traffic Systems ltd has lost bid to block Housing Finance Company ltd from auctioning a property in Karen.
Justice Alfred Mabeya dismissed the application by the developer seeking to stop the finance company from selling or transferring property known as L.R No. 209/1051/1 saying the company failed to demonstrate it rights were violated.
The judge said the Elite Intelligent failed to demonstrate the company’s rights were in anyway infringed by Housing Finance Company ltd that would require rebuttal.
Evidence presented in court showed that Elite Intelligent Traffic Systems ltd and Housing Finance Company ltd entered into loan agreement for a facility worth Sh364 million of which Sh95 million was for takeover from Kenya Commercial Bank (KCB) and the balance was for the construction of apartments on the suit property.
The court heard that on November 28, 2013, Elite Intelligent Traffic Systems created a supplementary Charge in favour of the defendant over a property as security for the loan of Sh.364 million in terms of the loan agreement.
It was Elite Intelligent Traffic Systems’s case that Housing Finance Company paid to KCB Sh.95 million but failed to disburse funds to it when needed for the construction of the apartments.
The failure to disburse the money allegedly caused the developer massive losses and when the finance company continued to dishonour its obligations, the company lodged the case seeking to block the sale.
However, Housing Finance Company realised its mistakes and opted to reach a settlement with the Elite Intelligent Traffic Systems whereby the Finance Company was willing to waive excess interest and both parties settled for a final settlement of Sh71,800,000 as the full debt.
The court add that despite the settlement agreement, Housing Finance Company acted unilaterally and reverted back to previous loan agreements in breach of the settlement.
Elite Intelligent Traffic Systems ltd argued that the Finance Company listed it with the Credit Reference Bureau for default whereas there was no time limit set for the payment of Sh50 million as per the settlement agreement.
That therefore, the Finance Company has given wrong information about the Elite Intelligent Traffic Systems ltd to other banks and which listing killed all chances of the plaintiff getting any other financier since the failure of Spire Bank.
According to the company Housing Finance has since received a demand letter from Housing Finance Company lawyers on August 10, 2020 stating that the Finance Company was unilaterally rescinding the settlement agreement and reinstating the loan facility despite the fact that the loan claimed was never advanced and further threatening to dispose of the suit property.
That as at the time of filing this suit, the Housing Finance Company was claiming a staggering sum of Sh. 174,125,294.95 and that unless the court intervenes, the plaintiff would suffer irreparable loss that cannot be compensated by an award of damages.
Housing Finance Company opposed the application through its legal manager and the subject application and suit do not raise any issues warranting a trial as it was only intended to delay the realisation of the bank securities and Elite Intelligent Traffic Systems ltd accepted a loan facility amounting to Sh.364,000,000 with properties known as L.R No. 209/1052/1 and L.R No.1160/330 being offered as security.
Court heard that the parties had agreed that Elite Intelligent Traffic Systems ltd would repay the loan facility without default or else the charged properties would be sold to clear or reduce the debt.
Nevertheless, the Elite defaulted.
Demands by the Housing Finance Company for regularization of the accounts were unsuccessful.
Housing Finance Company therefore contended that since the Elite had changed the scope of the development project and was sourcing for new equity partners or to borrow from other lending entities, it was unable to progress the plaintiff’s application for development financing.
The parties entered into a settlement agreement which was dependent on Elite Intelligent Traffic Systems fulfilling its obligations failure to which the agreement would be rendered otiose.