The High Court has allowed the KCB Bank-appointed receiver manager Kamal Anantroy Bhatt to take over the running of Pinewood Beach Resort and Spa in Kwale after lifting an order obtained by the establishment last November.
In a ruling on April 25, Justice Peter Mulwa struck out the application filed by ITCO Investments Ltd (the owner of Pinewood Beach Resort and Spa) clearing the way for the receiver manager to take over the management of the hotel to recover a loan of Sh5.8 billion.
The judge, however, suspended the decision for 21 days to allow the company to pursue an appeal.
Justice Mulwa stated in the ruling that the application violated the doctrine of sub judice since another matter, touching on the same issues, is pending before the Court of Appeal.
“Consequently, I find that both the suit and application dated November 5, 2023, before me were filed in bad faith as the plaintiff did not reveal material information concerning the active proceedings touching on the same subject matter, particularly before the High Court and Court of Appeal in Mombasa,” said Justice Mulwa.
The court heard that sometime in December 2010, Pearl Beach Hotels Limited (PBHL) trading as English Point Marina, obtained a loan from KCB to develop the English Point Marina in Mombasa.
KCB says the loan was secured by among others, debentures issued by the principal debtor (PBHL) as well as an all-asset debenture dated September 12, 2012, issued by ITCO to secure an aggregate principal amount of Sh225 million.
ITCO director Alnoor Kanji said in an affidavit opposed the appointment of the receiver manager arguing that it was unprocedural and illegal.
Mr Kanji maintained that any other securities made were supplemental to the primary security being English Point Marina Mombasa, and the hotel would only be utilised to settle any arrears after the bank had exhausted its options in respect of the primary security. He said on August 2, 2023, the bank stormed the Pinewood Beach Resort and Spa after placing it under receivership.
Mr Kanji said they reached out to the principal borrower PBHL and established that the debt had been settled in its entirety. He said the debt was overpaid and the bank lost the right to appoint a receiver and that the debenture intends to unjustly curtail its operation and growth without first realising the principal security or exploring all possible avenues of compelling the principal debtor to redeem the facility.
Mr Kanji said the hotel was a separate legal entity from the principal debtor and that he did not participate or was not privy to the case pending in the Court of Appeal.
Mr Oscar Obuna, the head of the Credit Support Unit at KCB said the bank advanced to PBHL cumulative principal sum of Sh5.2 billion from 2010 to 2016 for the purpose of funding the development and construction of the English Point Marina Project.
And after the principal debtor was placed under receivership upon default, the lender appointed the receiver manager on August 2, last year to manage the hotel.
He informed the court that the ITCO failed to disclose to the court the fact that there were pending cases before the High Court in Mombasa and the Court of Appeal. Mr Obuna said the conduct of ITCO demonstrates bad faith and is a blatant abuse of the court process.
