Court dismisses Sh150m suit against Equity founder Peter Munga

Billionaire businessman Peter Munga. [File, Standard]

Billionaire businessman Peter Munga has won a 14-year court battle after the High Court dismissed a Sh150 million claim filed against him over a TransCentury Limited share sale deal.

A judgement rendered by Justice Njoki Mwangi on Wednesday ruled that the case lodged by the Equity Bank founder’s former associate Joseph Muturi Kamau and his firm, Bethany Vineyards Limited, lacked merit.

Instead, the judge ordered the duo to refund Mr Munga Sh42.9 million he had paid to offset a loan on their behalf as part of three million TransCentury Ltd (TCL) shares sell.

“I hereby issue a declaration that the oral sale of shares agreement is null, void, and unenforceable. It is rescinded forthwith. The second plaintiff shall refund to the third defendant the sum of Sh42,905,790 received as consideration for purchase of the said shares within 45 days from today,” Justice Mwangi stated.

Mwangi further directed Mr Kamau to pay Munga an additional Sh2 million in damages for misrepresentation that misled the Equity Bank founder into the alleged shares purchase.

The dispute stemmed from an oral share sale agreement dating to 2011, under which Kamau claimed he had sold three million shares in TransCentury Limited (TCL) to Munga at Sh50 per share, totaling Sh150 million. 

The transaction was tied to a loan facility that Kamau had taken out from Equity Bank.

Court documents reveal that, on September 29, 2010, Bethany Vineyards Limited, a company controlled by Kamau, entered into a loan agreement with Equity Bank for Sh40 million, repayable within six months or upon receipt of proceeds from the sale of the pledged TCL shares.

To secure that facility, Kamau pledged three million TransCentury shares, held by Equity nominees as collateral.  He also gave personal guarantees and legal charges on land as further security.

TCL has since been suspended from trading at the Nairobi Securities Exchange, alongside its sister company, East African Cables, after it was placed under receivership.

In June 2011, Kamau purportedly entered into an oral agreement with Munga to sell those three million shares at Sh50 apiece, with the understanding that Munga would first settle the outstanding balance on the loan taken from Equity bank and remit the remainder to Kamau or his company. 

Kamau and his company claimed that after offsetting the loan, Munga refused to deliver the remaining balance to his firm.

Kamau and Bethany Vineyards filed suit in November 2011, demanding that Equity Bank furnish a full statement for its accounts, and that Munga and the bank pay Sh150 million.