14 Riverside Owners Seek Court Block on Sh10.6 Billion Debt Claim

Owners of Nairobi’s 14 Riverside complex have filed a petition seeking to stop hire purchase lender Synergy Industrial Credit from enforcing a Sh10.6 billion debt linked to an arbitration award. The complex in Westlands houses the DusitD2 hotel and has been at the centre of prolonged recovery proceedings.

Cape Holdings together with directors Vinay Bipinchandra Sanghrajka and Bipinchandra Bhaichandra Sanghrajka filed the case against Synergy Industrial Credit and the Attorney-General. They argue that the current debt amount includes substantial compound interest that accrued during a period when the arbitral award was set aside.

The dispute originates from a failed property transaction in 2015. An arbitrator then ordered Cape Holdings to pay Synergy Sh1.6 billion plus compound interest at 18 percent annually. The High Court set aside the award in 2016 but the Court of Appeal reinstated it in 2020 which opened the door for enforcement action.

The petition asks the court to declare part of the Banking Act that excludes judgment debtors from protection against runaway interest as unconstitutional. It also seeks clarity on whether compound interest could lawfully continue while the award was under challenge between 2016 and 2020.

Cape Holdings contends that the decretal sum has escalated to Sh10.6 billion largely due to interest. The company says enforcement has extended to personal properties of the directors including one in Spring Valley where prohibitory orders have locked them out. Auction threats now hang over the Riverside Drive asset.

The case raises questions about proportionality in debt recovery and the application of the in duplum principle to judgment debts. Cape Holdings argues that the escalating amount violates constitutional property rights and equality provisions. The petition is scheduled for directions on June 29.

This legal battle adds another layer to ongoing disputes over the landmark property. Previous court decisions have already addressed attempts to halt auctions of the complex. The outcome could influence how courts handle similar high value commercial debt enforcement cases in future.