The High Court has granted media mogul SK Macharia relief from paying a multimillion shilling loan to his financier, US-based Export-Import Bank of America.
Export-Import Bank of America had filed the suit to recover Sh51.1 million from Royal Media Services owned by Mr Macharia but the High Court ruled that the suit was filed late. Mr Macharia and his wife Gathoni Macharia were the guarantors.
According to Business Daily, the High Court in its decision stated that the suit should have been filed in six years meaning, it should have been presented before judges in May 2006 and not October 2010.
The US-based financier in the suit was seeking to recover the debt from RMS and the guarantors who defaulted on payment of the loan one year after borrowing in 1998 pushing the liability to Sh453 million for defaulted payments and accrued interest for 20 years.
RMS borrowed the loan from Sentry Finance Corporation (SFC) to buy transmission equipment for radio and television. Export-Import Bank of America was the insurance for RMS and declared to pay the loan should it be defaulted.
However, Justice Mary Kasango ruled that: “Ex-Imp Bank slept on its rights and then brought this case after an unreasonable delay. Statute expects parties to be reasonably diligent in enforcing their rights before court.”
At the time of default in 1999, court documents show that the paid amount of the total loan stood at Sh978, 495 ($9,319). This forced Export-Import Bank of America to pay SFC.
The judge added that: “If indeed I had found that this claim is not statute-barred I would have entered judgment for the admitted amount of $447,943.02 (Sh47.1 million) less the paid amount of $9,319.15 (Sh978, 495) plus interest.”
The judge noted that SFC and Export-Import Bank of America should have registered the transmission equipment bought using proceeds of the loan as required in loan contracts. This would have made it possible for them to seize the equipment in case of defaulted loan repayment.
In its defence, RMS said that SFC was in breach of the loan terms as it delayed the delivery of the TV transmission equipment.