The Court of Appeal has thrown Jubilee Secretary-General Raphael Tuju a lifeline in his fight to save his company from being liquidated over a Sh1.6 billion loan dispute.
On Friday, justices Martha Koome, Mohamed Warsame and Jamila Mohammed temporarily stopped the East African Development Bank from placing Dari Ltd under receivership until Mr Tuju’s appeal is heard and determined.
INSOLVENCY
However, Mr Tuju will be required to deposit Sh50 million in a bank account held jointly by his lawyers and those representing the bank within the next 30 days, “failure of which, the stay orders shall lapse and the application (for appeal) shall stand dismissed”.
READ: Bank challenges Tuju’s bid to avoid loan repayment
The dispute between Mr Tuju and EADB has been full of intrigues: two judges have separately recused themselves from hearing the insolvency and receivership matters.
One of the judges hinted at being threatened with removal from office if she did not recuse herself. Justice Francis Tuiyott, on June 9, recused himself from the proceedings for undisclosed personal reasons.
DECLARED BANKRUPT
The bank wants Dari Ltd declared bankrupt for failing to repay the loan advanced to it in April 2015.
Following Justice Tuiyot’s recusal, the file has now been taken back to the Presiding Judge of the Commercial Court Mary Kasango and will come up on July 2.
In another matter regarding receivership, the bank had filed contempt proceedings against Dari Ltd and its directors for preventing the appointed receiver managers from accessing the company premises.
However, before the hearing of the application, Mr Tuju objected to the matter being heard by Justice Grace Nzioka.
In her recusal, she said Mr Tuju’s application for her to recuse herself was strongly-worded and “at times the court has been treated with little respect”.
EADB had appointed George Weru and Muniu Thoithi, both of PWC, as the joint receiver managers. In an affidavit dated June 5, Mr Weru states that Mr Tuju and his co-directors denied the receiver managers access and refused to provide information as ordered by the court.
In March, Justice Kasango directed the directors of Dari Ltd to “immediately grant the receivers full, complete and effective access” to its premises. The directors were also to give the company’s statement of affairs, financial returns, company records and cash book.
READ: EADB says it is doubtful Raphael Tuju will repay Sh1.5bn loan
In the affidavit, Mr Weru said none of these had been complied with and instead, armed police officers had been deployed to guard the premises and block the receivers. “The plaintiffs’ actions bear the hallmark of impunity, disdain, and wilful disobedience of court orders,” said Mr Weru.
SUBSTANTIAL LOSS
In the Court of Appeal ruling on Friday, the judges granted Mr Tuju the orders on the basis that proceeding with the insolvency and receivership would subject him and his co-directors to suffer substantial loss.
However, the judges took note of the bank’s concerns over the disobedience of court orders. The bank had pleaded that the conduct of the applicants “does not commend itself to the orders sought of this court.”
“With this in mind, and considering the rival positions and considering the application in its entirety, and balancing the interests of the parties, the order that commends itself to us is one allowing the application and giving a conditional stay owing to the colossal amount of money that is owing in view of the default on the part of the applicant,” they said.
Mr Tuju’s dispute with EADB started with the judgment and orders in the United Kingdom, which directed that they pay the bank Sh1.6 billion for the loan.
Following the UK court’s ruling, Mr Tuju moved to the High Court for a stay of execution and setting aside the ruling and orders. This application was dismissed, setting the stage for the current battle with EADB and the receivers.
