Spire Bank ordered to cede extra Sh17m from sale of trader’s asset
Spire Bank branch on Koinange Street in Nairobi on May 29, 2020.
What you need to know:
- Court ruled that the executor of the Will of Lalitaben Kantilal Shah had proved the case against the lender on a balance of probabilities.
- Ms Mercy Mwobobia, the bank’s debt recovery manager admitted that the house was sold in 2007 for Sh50 million.
Spire Bank, which was taken over by Equity Bank, has been ordered by the High Court to refund the estate of a businesswoman over Sh16.8 million being the balance of a property it auctioned in 2007.
The lender sold property belonging to the estate of Lalitaben Kantilal Shah to recover a loan balance of Sh30 million. The property, which had been charged to the bank, however, fetched Sh50 million.
Justice Josephine Mong’are ruled that Mr Dinit Virchand Malde, the executor of the Will of Ms Shah, had proved the case against the lender on a balance of probabilities.
“I hold and find that these funds were the estate of Lalitaben Kantilal Shah and the same ought to be paid to the plaintiff by the defendant (Spire Bank) or its successor with interest from the date of the sale being 26th September 2007,” said the judge,
She added that the interest shall be calculated at the prevailing court rates from September 2007, until payment is made in full.
Evidence adduced in court says Shah and her husband Kantilal Hunja Shah borrowed a loan of Sh90 million from the lender on December 5, 2003, then known as Southern Credit Banking Corporation.
The advance was for use by their companies known as Kenpaper Limited, Malde Transporters, and Africa Ware Paper Limited and was secured by the property.
Mr Shah died in 2004 and the property was registered in the name of the widow but she also passed on in 2007.
Her daughter Nayna Kantilal said her mother willed the house to her and she resided in it before it was sold by the lender.
She testified that she had lived on the premises before they were asked to vacate by the bank after the auction.
Ms Nayna informed the court that she was aware that the property was sold for Sh50 million, and she and her brother were, therefore, entitled to the balance from the proceeds after repayment of the loan.
Ms Mercy Mwobobia, the bank’s debt recovery manager admitted that the house was sold in 2007 for Sh50 million.
The official said once the loan was cleared, Sh16.7 million was later transferred by the bank to an account held by Converters E.A Limited, a firm related to the businesswoman.
The judge said in the decision that the bank had acknowledged a credit balance of Sh16.7 was available in the accounts of one of the companies related to the Shah’s.
Justice Mong’are said no explanation was provided as to why, the lender who had earlier been able to trace the Shah family members, did not find it necessary to advise them that there were funds due and available to them.
“I find that the defendant acted callously in failing to establish who was entitled to these funds and alerting them that indeed there were refunds due to the estate after their loan was fully discharged,” the judge said.
