Surya Holdings Limited & 2 others v Mucheru & 2 others (Joint Receivers and Managers of Karuturi Limited) [2022] KEHC 3306 (KLR)

Surya Holdings Limited & 2 others v Mucheru & 2 others (Joint Receivers and Managers of Karuturi Limited) (Commercial Case 78 of 2014) [2022] KEHC 3306 (KLR) (Commercial and Tax) (8 July 2022) (Ruling)

Neutral citation: [2022] KEHC 3306 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Commercial Case 78 of 2014

DAS Majanja, J

July 8, 2022

Between

Surya Holdings Limited

1st Plaintiff

Rhea Holdings Limited

2nd Plaintiff

Karuturi Limited

3rd Plaintiff

and

Kuria Mucheru

1st Defendant

CFC Stanbic Bank Limited

2nd Defendant

Muniu Thoithi

3rd Defendant

Joint Receivers and Managers of Karuturi Limited

Ruling

1. The application for consideration by the court is the plaintiffs’ Notice of Motion dated March 3, 2022 made, inter alia, under Order 40 rule 1, 2, 3 and 4 of the Civil Procedure Rules.The plaintiffs seek an order that the respondents be directed to undertake the sale of Land Reference Numbers 12248/20, 21, 38, 2561, 2561 and 11669/2 registered in the name of the 1st plaintiff and Land Reference Number 10854/60 (IR 87312) registered in the name of the 2nd Plaintiff together with other assets (‘the suit properties”) as one whole by way of private treaty as advertised for sale in the Daily Nation of July 26, 2021. They also seek an order that the Defendants be ordered to provide a status report and information regarding the sale process to them.

2. The application is supported by the affidavit of Sai Ramakrishna Karuturi, a director and major shareholder of the Karuturi Group, sworn on March 3, 2022. It is opposed by the defendants through Grounds of Opposition dated June 27, 2022 and the replying affidavit of Beatrice Njeru, Head of the Legal in the Corporate and Investment Banking Division of the 1st Defendant, sworn on June 9, 2022. The application was urged by oral submissions.

3. The gravamen of the plaintiffs’ case is that Joint Receivers and Managers of the plaintiffs advertised the suit properties for sale by inviting expressions of interest. They assert that the terms of sale were clear that the suit properties which include moveable assets would be sold as one whole through private treaty. They state that they have obtained credible information that the respondent have resorted to seeking to subdivide the land and selling it in small lots contrary to the terms of sale and that if the land is sold in small lots, it will lead to loss of value in some assets which are perishable and fragile and which have been valued as part of the suit property.

4. The plaintiffs accuse the defendants of acting in bad faith and failing to take into account their interests and those of their shareholders who stand to suffer immensely if the suit properties are sold contrary to the terms of sale. The plaintiffs further assert that they have been denied information on the process of sale despite numerous requests. They urge that it is in the interests of justice that the application be allowed.

5. The defendants oppose the application on several grounds. They submit that their right to sell the suit properties has been affirmed by this court and the Court of Appeal and that any irregularity in the exercise of the power of sale could, if demonstrated, be remedied by an award of damages. The defendants deny that the suit properties were to be sold as a whole and that the invitation to the public was for the purchasers to express their interest by setting out the nature and extent of the interest whether for the whole or part, majority or specific, assets. The defendants aver that they disclosed the nature of the assets for sale in their detailed affidavit filed in court on October 15, 2021 which showed that the assets included several parcels of land and moveable assets. They assert that the plaintiffs have not provided any evidence of the allegation that the suit properties are being subdivided.

6. The defendants aver that the sale is being conducted with the aim of getting the best value for all the plaintiffs and other creditors. They assert that if the court grants the orders sought will prejudice them and all the other creditors who have not been paid since 2014 when this matter was being litigated through this court to the Court of Appeal and the Supreme Court.

7. In the deposition in opposition to the application, the defendants state that a substantial part of the moveable assets have been sold pursuant to a sale agreement dated 2May 6, 2022 executed between Karuturi Limited (in Receivership), the Receivers and Shalimar Flowers Limited. Further that LR No. 10854/60 is the subject of a sale agreement dated May 26, 2022 between the Rhea Holding Limited (in Receivership) and Shalimar Flowers Limited. They state that the Joint Receivers are still engaging potential buyers for the remaining assets in order to secure the best price. The defendants submit that they have, at all times, updated the Plaintiffs through correspondence with its advocates.

8. The plaintiffs seek an order directing the defendants to conduct the sale of the suit properties as one whole by private treaty. The defendants are right to point out that its statutory power of sale is now beyond dispute. In NRB CA Civil Appeal No. 114 of 2018, Surya Holdings Limited and others v CFC Stanbic and another the Court of Appeal dismissed the appeal against the refusal by this court to grant an injunction while the Supreme Court by a judgment dated July 16, 2021 in SCK Petition No. 8 of 2019; Surya Holding Limited and others v CFC Stanbic Bank Limited rejected their attempt to pursue the matter further.

9. The plaintiffs do not deny that the defendants are entitled to proceed with the sale. This means that the sale of the suit properties may now proceed unhindered and in the event of an irregularity, the plaintiffs have a statutory right to seek damages. The plaintiffs point out that if the suit properties are sold piecemeal, they stand to suffer loss and damage. It is this damage that the law contemplates will be the subject of compensation. I therefore reject that application.

10. As concerns, the information on the process of sale. The information on the sale has been furnished in the replying affidavit. Further, the defendants’ deposition shows that their advocates have been given information to the plaintiffs’ advocates when requested. They are at liberty to ask for any information regarding the sale from the defendants’ advocates on record. the plaintiffs have not shown that their request for information has been denied. The court cannot give a broad order generally without a request for specific information.

11. The plaintiffs’ Notice of Motion dated March 3, 2022 lacks merit. It is dismissed with costs to the Defendants.

DATED AND DELIVERED AT NAIROBI THIS 8TH DAY OF JULY 2022. D. S. MAJANJAJUDGECourt of Assistant: Mr M. OnyangoMr Wafula instructed by Chris Davids and Company Advocates for the Plaintiffs.Mr Ogunde instructed by Walker Kontos Advocates for the Defendants.