Kenya: A local bank is embroiled in a legal tussle with a property development company over Sh40 million held by the financial institution.
Dubai Bank is at cross roads with Erdemann Property Ltd in which the financial institution is accusing the company of tarnishing its name. But on the other hand, the property firm is also accusing the bank for unlawfully withholding its monies without a valid reason.
The core element of the relationship of the two firms borders on a 7.5 acres of land worth Sh1.4 billion in Kileleshwa, which the developer had planned to acquire. According to Erdemann Managing Director Zeyun Yang, it was agreed between the two companies that they would have their lawyers open a joint account in Dubai Bank and have Sh105 million deposited in the account pending the signing of the sale agreement.
Mr Yang in his affidavit told High Court Judge Erick Ogola that the two parties also agreed the money was to be released back to the property company with no conditions attached if the transaction failed. “In order to safeguard the first defendant’s ( Erdemann) interest, Erdemann had insisted on being given an irrevocable undertaking that the bank returns the Sh105 million deposited should the transaction not be fully completed,’’
Yang said in his affidavit. The bank was the first to sue Erdemann accusing the company of blackmailing it and its officers and reporting the matter to the Central Bank of Kenya, hence tarnishing its name. Dubai Bank in its case told the court that it had entered into an agreement with Erdemann to release the money in batches and has already released Sh65 million out of the Sh105 million.
The bank further defended the delay to release the balance citing that the lawyer for the property company had issued wrong account number and thus it could not remit the remaining balance. Through its lawyer Paul Wathuta, the financial institution accuses the company of tarnishing its name.
Wathuta further argued that the move by Erdemann to report his client to CBK was meant to tarnish his client’s name. “The Central Bank of Kenya has now written to the bank in a letter dated January 29, 2015 seeking further information so as to resolve the matter,’’ he said adding that Erdemann’s action put the bank’s business in jeopardy and was in bad light. “The nature of the plaintiff business is very sensitive to any bad publicity and Erdemann is taking the advantage of this vulnerability to blackmail the plaintiff,’’ he argued.
Erdemann moved to the court under a certificate of urgency through its lawyer Gichuki King’ara seeking to compel the bank to immediately release the money. The lawyer insists that the bank had undertaken in writing that it would return the amount upon request. “The bank has no valid reason for holding on to the balance in view of its undertaking and the part payment it has so far made,’’ Kingara told the court.