Firm opposes DPP plan to withdraw Sh918m case against businessman

Court gavel. [Courtesy]

The Director of Public Prosecutions Renson Ingonga wants to withdraw charges against businessman Jayesh Kumar Prabhudas Kotecha. The DPP in his application before the magistrate’s court claimed that the decision to drop the case followed a revelation that the probe is incomplete.

According to the prosecution, two separate civil cases were linked to the criminal case and ultimately would determine whether the trial before Milimani Magistrate Caroline Nyaguthii would proceed.

Before the lower court, Kumar and Midland Hauliers are accused of conspiracy to defraud.

The State alleged that he, alongside Midland, on April 29, 2019, at the firm’s offices along Kyangombe Road in Nairobi County, illegally transferred vehicles to Super Hakika without the authority of the administrator Ponangipalli Venkata Ramana Rao.

According to the prosecution, this was intended to defraud Prime Bank of Sh706 million.

Prime Bank placed Midland under administration in a row over the loan. Kumar was also accused of allegedly performing the management function of a company under administration without Ramana Rao’s permission.

Commercial court

The bank and the firm are embroiled in separate cases before the commercial court.

In one case, the battle revolves around the decision to place Midland under administration. At the same time, another case concerns the decision to sell off properties in Kyangombe and Kisumu that were used to secure the loan.

In the land case, Midland Investments (Kisumu) Ltd sued Prime Bank, Midland Hauliers Ltd and Midland Emporium Ltd, arguing that although the lender claimed that it had loaned $1.5 million (Sh195 million) and Sh40 million in 2009 to Emporium, which had allegedly accrued interest, the same was never given to the company.

Midland Investment claimed that the bank had illegally imposed liability on Hauliers.

Midland Investment accused the bank of failing to account for the specific fixed deposits with accrued interest. It further claimed that the lender applied interest rates to the Emporium account that were never agreed upon and imposed penalties. 

According to Midland Investment, this makes it impossible for it to know the level of Midland Haulier’s indebtedness to the bank. It complained that the lender failed to correctly and accurately account to other guarantors for the sum credited to Midland Hauliers.

The court heard that the lender had securities worth Sh195 million when Midland Hauliers took over the loan facilities from Midland Emporium. The bank denied the allegations.

It argued that the case was an abuse of court process as there was a separate insolvency case before the court. 

It asserted that Midland Investment, Midland Hauliers and Midland Emporium had  a common director, Jayesh Kotecha who signed most of the communication with the bank since the establishment of their relationship.

Different companies

According to Prime Bank, the case was filed in a bid to frustrate Ramana Rao, who had been appointed as the administrator.

It asserted that the trio are sister companies, adding that it was untidy for the same directors, though of listed different companies, could pass a resolution to sue the other company.

It stated that the directors of all three companies were aware of the loans taken, adding that Jayesh had committed to injecting Sh80 million from his fixed deposit account to offset the same. It stated that Midland Hauliers owed it $6.6 million (Sh850 million) and Sh6.8 million as at June 30, 2019.

Justice David Majanja dismissed the case on March 26, 2021 and lifted all the orders that had been issued in favour of Midland Investment.

Before the lower court, the DPP maintained that he has the power to withdraw a case at any stage, following a review of the file presented by investigators.

In his reply, the complainant’s lawyer, Elijah Mwangi, opposed the withdrawal of the criminal case, arguing that the trial had no nexus to the civil battle.

“We had already conducted a pre-trial and were ready with witnesses, yet now the prosecution wants to abandon the case without proper justification,” he said.

The case will be mentioned on July 15, 2015.