Reprieve for Tuju as court orders status quo on Sh2.3b loan dispute
National
By
Paul Ogemba
| Nov 29, 2023
Former Cabinet Secretary Raphael Tuju got a temporary reprieve over a bid by a bank to auction his property to repay a Sh2.3 billion loan.
Justice Alfred Mabeya ruled that the status quo be maintained in the dispute between Tuju and East African Development Bank (EADB), meaning that the bank's bid to auction the former CS's property to recover the loan will be put on hold.
"I am alive to the fact that a lender in not barred from recovering its money. However, the question is what happens where the borrower is ready to pay. These are serious issues which need to be interrogated and thus the court directs that status quo be maintained until then," ruled Justice Mabeya.
The Judge's decision also means that the regional bank's decision to appoint two receiver managers to oversee Tuju's Dari Hotel in Karen will be put on hold to await the outcome of the case.
The former CS and his three children Mano, Alma and Yma who are directors of Dari Limited told the court that they are ready and willing to repay the loan and wanted the case transferred to arbitration.
Through senior counsel Paul Muite and lawyer Paul Nyamodi, the former Foreign Affairs Minister argued that he only wants reconciliation and negotiation on the interest owed on the principal amount before making payments.
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"He has at all times engaged the bank to settle the debt owed. He has secured alternative funding from other lenders and even had a settlement agreement drawn but the bank walked away from it without any explanation," said Muite.
According to Tuju, it is the bank that has frustrated and backtracked on various settlement initiatives that they have engaged in and in the circumstances, the best way was to go for a court-annexed mediation to salvage his property from auction.
He argued that his properties are currently valued at Sh4.2 billion which is above what the bank is demanding and the bank will not be prejudiced should the court direct they go for mediation.
But the bank through their lawyer opposed the application for mediation arguing that they are not interested in any further talks since the Court of Appeal and Supreme Court had ordered the former CS to pay the owed amount.
Justice Mabeya however ruled that he could not delve into the merits of the dispute but wanted to interrogate the proposal made by the former CS.
"I note the averments that the debtors are willing to settle the amount owed but there appears to be a disagreement over the correct figure of amount owed. The court needs to interrogate such a case where a borrower is willing to pay but the lender is unwilling," the judge said.
The dispute dates back to 2015 when EADB granted Tuju USD9.3 million (Sh1,421,970,000) for purchase of a 20-acre land and development of housing and hospitality facility which they claimed the former minister defaulted in repaying leading to the court case.