The Court of Appeal has suspended a case at the High Court where a director of Pinewood Beach Resort and Spa is challenging KCB's appointment of a receiver manager to recover a Sh5 billion loan.
Judges Sankale ole Kantai, Dr Kibaya Laibuta, and George Odunga said the suspension would stand until the appeal by the lender is heard and determined. that KCB had satisfied the principles on which its application was considered.
In its main appeal, KCB wants the ruling and order of the High Court suspending its notice of appointment of a receiver manager set aside.
It also wants an order issued directing that Mr Kamal Bhatt was properly appointed as the receiver and manager of ITCO Investments Limited trading as Pinewood Beach Resort & Spa.
In its ruling, the judges agreed with KCB’s argument that its rights under a debenture had crystallised, but the effect of the High Court decision was to negate it (debenture) and grant Mr Alnoor Kanji, a director at the hotel, rights over the assets covered, including the hotel.
The court further agreed that Pinewood Hotel was the main asset charged to KCB under the debenture and that the High Court orders expose the bank to losses which cannot be covered in damages.
KCB argued that Pearl Beach Hotels Ltd defaulted on its repayment obligations and that it placed it under receivership on May 31 2022 to recover an outstanding debt totaling nearly Sh5.2 billion.
But Mr Kanji in applying for a temporary injunction faulted the appointment of Mr Bhatt noting that by extending the receivership to cover the land owned by the company, it did not comply with the Land Act.
Mr Kanji had also argued that the Court of Appeal lacked jurisdiction to suspend the ruling of the High Court and that if KCB’s application was allowed, he stood to suffer prejudice and irreparable loss over the land.
He further argued that Pearl Beach was not in default and the conflict was the subject of ongoing court cases.
