The High Court has dismissed a case filed by a bank against a firm associated with a company at the heart of an ownership battle between Agriculture Cabinet Secretary Mithika Linturi and Adai Member of Parliament Maryanne Kitany.
Justice David Majanja ruled Gulf African Bank is to blame for failing to ascertain whether the holders of the account were the genuine Atticon Limited shareholders before disbursing Sh 20 million loan.
According to the judge, the bank could only pursue Doulas Kailanya, Dorothy Chepkirui, and Billy Onyango and not the firm.
Although the trio were sued, they never appeared or responded to the case.
“Since the Bank was negligent in making unauthorised advances to the Company, it cannot recover the amount advanced to the Company. It can only recover the money from the 2nd, 3rd, and 4th defendants who purported to execute guarantees in favour of the Bank and who ultimately benefitted from the money paid to the Company. Since they neither entered an appearance nor filed a defense, the case against them is uncontroverted,” ruled Justice Majanja.
At the same time, the judge ruled that Kailanya, Chepkirui, and Onyango should reimburse Atticon Sh 21 million.
In the case, the firm complained that they received Sh 15 million paid by Jubilee Insurance on May 17, 2018, Sh 5.7 million from the Interior Ministry, paid on May 18, 2018, and 804,570.00 paid by the Ministry of Defence on December 31, 2018.
In the case, the Gulf African Bank claimed that Atticon applied for a credit facility on March 23, 2018, to finance a construction contract with Export Processing Zone Authority (EPZA). According to the lender, Kailanya, Chepkirui, and Onyango agreed to joint and personal guarantees as Atticon directors before the amount was disbursed.
It also claimed that the agreement was that anything paid by EPZA would be channeled through Atticon’s account.
However, the Gulf African Bank claimed that EPZA paid Atticon Sh 28 million but the money was channeled to Family Bank.
According to the Gulf African Bank, Atticon failed to repay the loan, which stood at Sh 21.9 million by February 19, 2019.
In its reply, Atticon denied that Kailanya, Chepkirui, and Onyango were its directors. At the same time, it argued that it did not have any relationship with the bank. The court heard that Atticon directors were Linturi and Emily Nkirote adding that they had not delegated any powers to the trio to conduct any business on their behalf.
Atticon accused Gulf African Bank of negligence adding that it omitted the name of Joseph Gitonga M’limbiine from the case, yet he was among those who had illegally posed as a director.
The company claimed that it had lost Sh 21.8 million as the trio has used the account to deprive it of revenue.
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EPZA also denied dealing with the bank. It argued that it awarded Atticon a tender to construct a pre-cast concrete perimeter wall at Athi River. According to the authority, the company gave the name of one Belinda Shitsama as its representative.
However, it argued that there was no board resolution from Atticon indicating that Shitsama had been appointed to represent it in the contract.
According to EPZA, it got a letter dated November 2, 2018, indicating that the authorized representative was Nkirote and all the money should be sent to Family Bank. At the Same time, EPZA stated that one Lilian Muge was allegedly seeking to illegally control the firm.
Atticon attached a CR12 indicating that Nkirote and Linturi were its directors.
Justice Majanja stated that upon looking at the letter by EPZA, there was no promise that it would pay Atticon’s money through the Gulf African Bank.
“A cursory look at the letter I have reproduced above shows that there was no promise by EPZA that it will channel funds to the said account as has been advanced by the Bank. EPZA only acknowledged receipt of instructions and promised that payment certificates will be processed once it is in receipt of funds from the National Treasury,” he said.