East African Cables has suffered a major legal setback in its extended battle to save four of its prime properties located in Nairobi from the auctioneer’s hammer.
In a blow delivered by the Court of Appeal, the firm’s plea to stop Equity Bank from selling the properties was dismissed, effectively approving the lender’s move to recover a debt reportedly topping Sh2.2 billion.
The ruling by Justices Jamila Mohammed, Francis Tuiyott, and Pauline Nyamweya upholds an earlier High Court decision that also failed to protect East African Cables from the forced sale.
At the heart of the case are four key parcels of land — LR No. 209/4235, LR No. 209/8176, LR No. 209/6982/1, and LR No. 209/6982/2 — which East African Cables used as collateral for loans from Equity Bank.
The embattled cable manufacturer argued that it had a strong appeal underway and that selling the properties now would render that appeal meaningless.
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The skeptical court, while admitting East African Cables had raised a valid legal question on previous interim orders in a related matter, ruled that this alone was inadequate to halt the sale.
Citing Section 99(4) of the Land Act 2012, the judges emphasized that property owners who pledge their assets as security have a clear path to seek damages if a sale is deemed improper.
“That is the complete answer to any person who offers his or her property as security… and pleads that the lender is acting improperly,” the three justices said in their ruling.
The court also noted that Equity Bank, being a Tier 1 lender, has the financial muscle to compensate East African Cables should a future ruling fall in the favor of the company.
With the interim orders now lifted, Equity Bank is legally free to proceed with the sale of the prime properties belonging to the East African Cables to recover the outstanding bank debt.
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