Equity Bank had been given the green light to auction Wida Highway Motel. In a court ruling that was delivered by Justice Nixon Sifuna, Equity Bank has been allowed to proceed with the auction after the hotel that is based in Kiambu along the Nairobi highway failed to make any effort to repay the loan.
Wida Highway Motel had borrowed Sh. 89 million from Equity in 2915 and used the land where it is located as collateral.
According to the court, Wida Highway Motel had moved to court five months ago to stall the auction but had since then failed to make any payments or show any effort towards repaying the money it owes Equity Bank.
“May I remind litigants in applications of this nature that courts will not adventurously and foolhardily rush to the aid of a chargor or mortgagor who alleges repayments without providing proof thereof by way of receipts, payments slips or bank deposit slips,” Justice Sifuna said in the ruling.
After failing to repay the money plus the accrued interest, Equity Bank authorized Mbuli Auctioneers to put the motel under the hammer and recover the money.
When arguing its case in court, one of Wida’s directors Daniel Wainaina Njuguna, alleged that Equity was intending to auction the hotel for Sh. 200 million which he claimed was a gross undervalue. He was however overruled by the court.
“In any case, there being a valuation report, it then means the value or approximate value of the charged property is known. Hence, in the event the intended sale later turning out to be irregular, improper or illegal, the plaintiff may sue and be compensated by way of damages,” Justice Sifuna ruled.
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The court also dismissed the claim by the director that the hotel had employees who would lose their livelihoods in the event the hotel was auctioned. Justice Sifuna said that the employees were not party to the loan agreement entered between Equity Bank and Wida Highway Motel, of which the hotel had a duty to honour.
He ruled that the equity of redemption does not operate to exempt, excuse or release a charge of the mortgagor from paying the facility or meeting its obligations under the charge of the mortgage.