NBK cleared to sell tycoon’s property

The Court of Appeal has lifted orders barring the National Bank of Kenya (NBK) from selling the property of late Mombasa tycoon Tahir Sheikh Said (TSS) over a Sh4 billion loan.

Justices William Ouko, Gatembu Kairu and Kathurima M’Inoti overturned Environment and Lands Court’s orders, saying that although Justice James Olola sympathised with the fact that TSS had just died when the bank issued its notice, the law was tilted in favour of the lender.

TSS owned a majority stake in Juja Coffee Exporters, which had borrowed Sh2.9 billion from NBK  and used a parcel of land in Mombasa as security. The property was registered under another firm owned by the businessman, Lamu Ginners Company.

“In restraining the bank from pursuing its remedies under the legal charge, the learned judge appears to also have been moved by the plea that one of the directors of the borrower, who was said to be the ‘mover’ of the company and the principal director, had died,” the Appeals Court judges said.

“Whereas the sympathy and compassion shown by the judge may be commendable, it was not a sound legal basis for exercising judicial discretion in the manner that he did.” 

Juja Coffee argued in its petition that TSS was the primary decision-maker and was the one who negotiated the loan.

According to the surviving director, Tauhida Tahir Said, they had difficulties tracing relevant documents on the loan after TSS died on January 10, 2017.

The coffee firm expressed a desire to settle the debt in order to salvage the property.

Justice Olola in his ruling last year said there were doubts on the loan and barred the bank from auctioning the land until it produced documents on the loan and authenticated the amounts the TSS firm owed.

“As matters stand, the plaintiffs (Juja Coffee Exporters) have raised a pertinent issue as to whether the charge was executed and whether the directors who did so had the plaintiff’s authority,” he ruled.

“The plaintiff’s surviving directors have indicated that they had no knowledge of the execution of the charge and I think it was incumbent upon the defendants to demonstrate the existence of the same as well as the fact that it was properly executed by authorised signatories.”

Aggrieved, NBK moved to the Court of Appeal arguing that the judge failed to consider that the borrower had defaulted on the loan and had already accrued more than Sh12 million interest.

The bank said it first issued Juja Coffee with a 30-day notice and when the period lapsed, a second one of 40 days.

The court heard that a third notice of 45 days was issued, which included an intention to auction the property.