Corporate News
A greenhouse at flower company Karuturi Limited’s farm in Naivasha. PHOTO | FILE
By BRIAN WASUNA, bwasuna@ke.nationmedia.com
In Summary
- The land was used to secure a loan between 2010 and 2011.
- ICICI extended a foreign currency term loan of Sh3.6 billion ($40 million) to Karuturi in two tranches between 2010 and 2011, alongside a working capital demand loan of $11 million (Sh990 million).
- The flower firm is fighting two other suits filed by CfC Stanbic over an unpaid loan and another by one of its suppliers, All Pack Industries.
Troubled flower firm Karuturi Limited has moved to
court to fight off fresh attempts by an Indian Bank to sell off six
parcels of its land in Naivasha valued at Sh8.1 billion ($90.9 million).
The land was used to secure a loan between 2010 and 2011.
Karuturi wants the High Court to stop the
Mumbai-based ICICI Bank from selling the property to recover a disputed
$19.9 million (Sh1.7 billion) outstanding loan. The firm also wants the
court to revoke the appointment of a receiver manager — Lolluri
Kamasastry — by ICICI.
ICICI extended a foreign currency term loan of
Sh3.6 billion ($40 million) to Karuturi in two tranches between 2010 and
2011, alongside a working capital demand loan of $11 million (Sh990
million).
The flower firm now claims it only owes $9.84
million (Sh885 million) of the loan, and that the bank’s demand
encompasses the working capital loan, which was secured using property
in Ethiopia.
“In effect, ICICI has unlawfully combined two
completely separate loan facilities that are secured by properties in
two different jurisdictions. There has been no default on any payments
and the account was up to date as at the date of unlawful appointment of
a receiver (Mr Kamasastry),” Karururi says.
The suit was filed by Surya Holdings, Rhea
Holdings, Yeshoda Investments, Karuturi Limited and Karuturi Overseas
Limited, against ICICI and Mr Kamasastry.
Karuturi holds that Mr Kamasastry’s appointment is
illegal because it was done while two court orders barring the sale of
its property were in place. The flower firm is fighting two other suits
filed by CfC Stanbic over an unpaid loan and another by one of its suppliers, All Pack Industries.
Mr Kamasastry has, however, in a response claimed
that he was appointed a receiver manager last June and that the move was
in line with the law.
The ICICI appointee adds that he duly served the
flower firm with documents from the registrar of companies approving his
appointment.
“I was appointed a receiver manager of the
defendants on June 5, last year. I notified the general public and the
directors of the companies of my appointment via an advertisement,” says
Mr Kamasastry.
ICICI added that its attempted sale is warranted,
as it is not affected by court orders issued stopping CfC Stanbic from
selling the troubled firm’s assets because its receiver manager was
never served with the documents.
Mr Kamasastry argues that the orders only affect
CfC Stanbic and supplier Allpack Industries, that have each filed a suit
against Karuturi. Allpack is seeking to wind up Karuturi while CfC
Stanbic wants to sell the flower firm’s assets to recover a $6.5 million
(Sh585 million) outstanding loan.
“I am not a party to those proceedings and neither
have I ever been served with a court order issued in the said
proceedings,” he adds.
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