Multi-billion Dusit complex situated at 14 Riverside Drive in Nairobi is set for auction to settle a Sh5 billion debt.
After dismissing an application by I&M Bank and its administrator to halt the sale, Justice Alfred Mabeya on Friday allowed Synergy Industrial Credit to auction the complex in which the DusitD2 hotel is located.
I&M Bank and its administrator claimed that the company that owns the building owes them a debt of $25 million (Sh2.82 billion).
The complex’s owner, Cape Holdings Ltd, has been in a legal battle with Synergy since 2010 over a bungled selling deal.
Synergy paid Sh750 million for a portion of the apartments, but the agreement fell through, and the case was referred to an arbitrator, who issued a Sh1.6 billion verdict, which has since escalated to Sh4.9 billion plus interest.
I&M Bank objected to the sale of 14 Riverside Drive, claiming it had been used as collateral for a Sh2.82 billion loan.Â
Synergy Industrial, on the other hand, accused the bank of negligence, claiming that it had imposed a legal limitation or caveat on interactions with property due to a legal dispute.
The charge issued by the lender, according to Justice Mabeya, was intended to assist Cape Holdings to avoid its legal obligations.
"In light of the circumstances, the court can only concur with the applicant's allegation that the administration's timing was not intended for the purpose specified in the Act," the judge said.
Synergy had placed a caveat on the property through a court order in 2011, according to the court.
"That property was not free to be delivered as a security with such a condition," he stated.
The disagreement focused around a transaction in which Synergy bought two of the blocks out of 14, which were under development and paid Sh750 million ahead.
Cape Holdings refused to surrender the property when it was completed, and the dispute was submitted to arbitration.
