The High Court has issued a directive for billionaire industrialist Jaswant Rai to make a payment of Sh2 billion to Butali Sugar Limited. This sum includes Sh508 million in damages and carries a 12 percent annual interest rate.
In the ruling, Justice Alfred Mabeya has ordered that Rai must pay Sh91.4 million annually as interest on the damages, with this calculation spanning 17 years.
As a result of Justice Mabeya’s order, Rai’s financial obligation now encompasses Sh1.5 billion in interest, in addition to the Sh507.8 million in damages, rendering this one of the most substantial legal settlements to date.
Justice Mabeya’s judgment is rooted in the plaintiff’s claim, which revolves around losses incurred due to alleged unlawful interference in their business operations by the defendants.
According to the plaintiff, they were registered by the second defendant on April 13, 2005, to construct and operate a sugar mill under the provisions of Part III, Section 14 of the Sugar Act, 2000.
Subsequently, a court order was granted, which stayed the plaintiff’s operations, transactions, and business activities associated with their registered milling venture, based on an undertaking by the first defendant.
In light of these circumstances, Rai is also liable for the litigation costs, as the court found in favor of Butali Sugar Company’s argument that Rai’s actions amounted to unlawful interference with their business and investments.
The court’s ruling noted that there was an admission in the second defendant’s defense that representations and assurances had been made to the first defendant, as alleged by Butali Sugar Company.
The court emphasized that such representations and assurances could not be deemed as “without prejudice” at the time they were made, as suggested by the second defendant.
This legal dispute originated in 2007 when Butali Sugar Company filed a lawsuit against Rai’s firm, obtaining court orders to halt any further interference by their business rival.
Subsequently, the two companies entered into an agreement, which stipulated that the Kenya Sugar Board would refrain from issuing new licenses to Butali or any other miller operating within a 24-kilometer radius of Butali Sugar Company.
This agreement paved the way for Rai’s firm to expand significantly in the region, posing a substantial challenge to Butali Sugar Company’s operations. Consequently, Butali Sugar Company pursued legal action in the High Court to seek compensation for the damages incurred during Rai’s firm’s rapid expansion.
In parallel, Butali Sugar Company initiated legal proceedings in the Kisumu High Court, aiming to compel the Kenya Sugar Board to issue them the required license.
