The Supreme Court has frozen the transfer of a 25-acre Karen land worth over Sh2 billion associated with former Limuru MP George Nyanja as it prepares a landmark judgment on whether loan defaulters can reclaim auctioned property.
The apex court has halted Kingdom Bank and the property purchaser, Redmars Holdings, from occupying or transferring the land to a third party following Nyanja's defeat in the Court of Appeal.
The court is expected to decide on whether a loan defaulter can reclaim auctioned property instead of being awarded damages.
Mr Nyanja wants the land's auction annulled and the ownership reverted to him, although the Court of Appeal recently ruled that he cannot recover the land and that the only remedy available to him is damages. This ruling triggered the current proceedings at the Supreme Court.
Redmars bought the property through an auction in 2007 for Sh60 million after Mr Nyanja defaulted on a Sh11 million loan, though he argues he had paid Sh54 million at the time of the auction.
Mr Nyanja contends that the property was undervalued because its price at that time was Sh295 and has fought from the High Court to the Supreme Court seeking to reclaim it.
Besides arguing that the property was sold too cheaply, his other core argument is that the bank exercised its statutory power of sale when the debt had been overpaid, and that it relied on illegal interest calculations.
Another argument is that the bank failed to account for previous sale proceeds of his other assets, sold the land despite ongoing litigation and court orders, and transferred it through a flawed private treaty transaction to a purchaser whose acquisition he says was tainted by irregularities.
"Pending the hearing and determination of this application interpartes, an order does issue staying further proceedings with respect to, or execution of, the judgment and decree of the Court of Appeal given on January 30, 2026," the Supreme Court bench led by Chief Justice Martha Koome directed.
"For avoidance of doubt, an injunction does issue barring the respondents, their servants and agents from possessing, occupying or dealing in any any way way with the suit property known as L.R. No. 7583/1, Karen Estate, Nairobi," it added.
The orders were directed to City Finance Limited (now Kingdom Bank), Redmars Holdings, and lawyer James Gitau Singh.
The preservation orders were issued following an application by Mr Nyanja, his wife Enid Nyanja and their trading company, Nyanja Holdings.
The orders also suspend the effect of a Court of Appeal decision that upheld the sale of the property and held that borrowers whose property has been sold through a lender's statutory power of sale are generally limited to damages, unless fraud or collusion involving the purchaser is established.
The latest developments have escalated a dispute that traces its roots to lending facilities advanced to Mr Nyanja by City Finance Limited, in the late 1980s. The loans were secured using several properties, including the Karen estate registered in Mr Nyanja's name.
Court documents show that disagreements later emerged over interest charges and the amount allegedly owed. The dispute culminated in the sale of the Karen property to Redmars Holdings, a transaction that has generated litigation spanning more than three decades.
Mr Nyanja and his family are seeking to overturn the Court of Appeal ruling and recover the property, which they describe as their matrimonial home and last major asset.
The Court of Appeal had last month certified the dispute for hearing by the Supreme Court, finding that it raised issues of general public importance concerning the legal consequences of flawed mortgage sales and the protection available to purchasers.
Redmars Holdings has, however, filed a separate application t the Supreme Court seeking to overturn that certification and stop Mr Nyanja's appeal from proceeding.
In court filings, the company argues that the dispute is an ordinary commercial lending matter that does not satisfy the constitutional threshold required for Supreme Court intervention.
The purchaser maintains that the law governing statutory sales is settled and that completed sales cannot be reversed in the absence of proven fraud attributable to the buyer.
Redmar's director, Pomesh Shah, says the dispute originated from lending facilities of Sh8 million advanced to Mr Nyanja and secured by the Karen property. He maintains that the property was lawfully acquired through a transparent sale process supported by professional valuations.
According to Redmars, the borrowers defaulted on the facility and engaged in prolonged litigation that delayed the lender's efforts to realise its security for years before the property was eventually sold.
Nyanja's advocates take a different position and argue that the sale was unlawful, that the loan had been overpaid and that the Court of Appeal ruling risks permanently depriving borrowers of property even where lenders act illegally.
In earlier court filings, advocate Dudley Ochiel for Nyanja said the borrower paid more than Sh54 million on facilities initially capped at about Sh11 million but still lost the property.
The lawyer argues that the dispute raises fundamental questions affecting borrowers, lenders and purchasers across Kenya's credit market. He also warned that without preservation orders, Redmars could sell, subdivide or otherwise dispose of the property before the appeal is heard.
At the same time, Mr Nyanja has filed an application seeking the disqualification of advocate James Gitau Singh and his law firm, LJA Associates Advocates, from acting for Redmars.
Mr Nyanja's lawyers argue that Mr Singh is a named respondent in the dispute, has affidavits on contested matters and is therefore acting as counsel, party and potential witness.
The outcome could have significant implications to banking and real estate sectors, where land remains the primary form of collateral for credit.
The application remains pending. The Supreme Court is now expected to determine whether courts can restore property sold through a lender's statutory power of sale, whether damages are the only remedy available to borrowers and how far protections for bona fide purchasers extend when the sale process is challenged.
