Directors of collapsed flower farm Karuturi have lost a bid to reverse a court order to pay the company’s creditors and receiver manager Sh30 million cumulatively for costs incurred in a case involving auction of assets and demolition of a hotel.
The company had been ordered by a magistrate court to pay CfC Stanbic Bank Limited, ICICI Bank and Kolluri Ventaka Subbaraya Kamasastry Sh10 million each as costs of the case. The order was issued on July 29, 2022. Feeling aggrieved by the awards, the directors, Anitha Karuturi and Sai Ramakrishna Karuturi, moved to the High Court seeking to set aside the magistrate’s decision and fresh determination of the costs.
But Justice David Majanja disallowed the request to set aside the decision saying the reference against the ruling was filed late outside the 14-day statutory timelines.
The directors filed the reference on August 22, 2022 while the disputed ruling was delivered on July 29, 2022. The reference was filed ten days late and without seeking authority of the court, the judge said.
“It is trite law that the period of limitation for filing a reference is 14 days from the time when the reasons for the ruling by the Deputy Registrar are given,” said Justice Majanja while striking out the directors’ request.
He noted that failure to adhere to the said time lines would mean that the application would be rendered incompetent. The judge also ordered the directors to pay the creditors and the receiver manager another sum of Sh30,000 as costs of the struck-out application.
The genesis of the case is sale of assets belonging to Karuturi Limited over failure to service a Sh383 million loan from CfC Stanbic. The Naivasha-based flower farm was put under receivership in 2014.
The firm’s debt increased over time and by 2019 it was at Sh1.8 billion after factoring in the expense incurred by the bank to run the property during the receivership period.
The directors later claimed that in March 2015, the creditors and the receiver manager maliciously and without reasonable cause demolished a property known as Masdam House.
They contended that Masdam House stood on Plot No. 9352/3 Naivasha which was not part of the securities offered by the Companies.
They stated that they were the assignees of the right to perpetual enjoyment and use of Masdam House which they utilised as a wild life and bird watching lodge and a venue patronised by high profile and high value individuals.
Following the demolition, the directors said they suffered loss and damage which they claimed in court included the replacement value of Masdam House amounting to $300,000, loss of invaluable arts, artifacts, Persian carpets, jewelry, home ornaments and crockery all valued at $ 314,536.
