A company that renovated train coaches for Rift Valley Railways (RVR) is embroiled in a legal tussle over non-payment of Sh174 million.
Siewa Furniture Interior Designers that won the tender to renovate 20 train coaches in 2012 at a contract price of Sh194,719,746, claims it was only paid Sh20 million by RVR and the balance has not been cleared to date.
The company obtained orders requiring RVR to deposit Sh56 million but the latter appealed against the High Court order issued by judge Rachel Ngetich.
Appellate judges Wanjiru Karanja, Martha Koome and Sankale Ole Kantai allowed RVR’s application challenging the deposit of the money at the High Court on the grounds that if its officers were committed to civil jail for not paying, the appeal would be rendered useless.
“This inevitably means that there is real danger of the appellant’s officers being committed to civil jail as they await the hearing of the appeal. If that happens, the harm cannot be subsequently reversed and the appeal, were it to succeed would be rendered nugatory,” read part of the ruling delivered on December 20.
RVR had entered into a concession with Kenya Railways Corporation to operate the Kenya-Uganda railway line for 25 years.
It subsequently took over Kenya Railway property and, in a bid to improve its services sought the services of Siewa Furniture Interior Designers to refurbish the coaches.
However, RVR’s concession was terminated in July 2017 due to its failure to meet the set operating targets and agreements, a move that saw Siewa seek legal redress in court.
The firm was said to owe lenders and suppliers more than Sh16 billion.
In October that same year, the Ugandan government also terminated its contract with RVR, citing failure by the firm to meet its obligations as set out in the concession agreement signed when the firm took over the Kenya-Uganda Railway in 2006.
Siewa sued RVR for breach of contract but before the case could be heard, it filed an application on September 13, 2017 seeking to have RVR give security for the Sh174 million claim.
It argued that RVR had no known assets which could be liquidated to settle any decree made in its favour if it were to succeed in the case.
The court was told that RVR’s shares are owned by foreign entities among them Egyptian firm Qalaa Holdings with 80 per cent shareholding and the remaining 20 per cent held by Bomi Holdings of Uganda and international finance institutions.
In its response, RVR accused the company of misapprehending the law and engaging in what in its view was abuse of court process, adding that the order for security payment if granted would be equal to condemning the defendant unheard.
The High Court judge ordered RVR to pay the Sh56 million for security within 60 days.
Justice Ngetich said with the handing back of assets to the third party, Kenya Railways, and without any proof of business operations in Kenya by RVR, Siewa had justifiable reason to fear the failure or delay in satisfying the decree in the event of successful litigation.
Aggrieved by the order, RVR filed an application at the Court of Appeal on May 28, 2018 seeking orders suspending the High Court decision pending hearing and determination of the intended appeal.