Kisumu firm to pay United Millers Sh124m after court dismisses suit

The High Court has dismissed an application by a Kisumu based firm BN Kotecha and Sons seeking to set aside a consent order it signed to pay Sh124 million to United Millers.

B.N Kotecha’s lawyer, Menze signed the agreement before a Kisumu judge Thripsisa Wanjiku Cherere on April 11, 2018, to pay United Millers Sh5 million each month as compensation for lost business due to a failed sugar delivery.

Two months later, on June 12, BN Kotecha went back to court seeking to set aside the consent, arguing that among other things, there were ongoing investigations on the contract and that its lawyer had no instructions to accede to the same.

But Justice Fredrick Ochieng in his ruling on October 8, 2019, found that BN Kotecha’s claims were aimed at supporting its plea for the court to set aside the earlier consent.

“I further find that seeking to have the proceedings stayed until the Director of Public Prosecutors completes his investigations, suggests that the company had realized that it did not yet have sufficient evidence which could have persuaded the court to set aside the consent orders,” Justice Ochieng ruled.

BN Kotecha later claimed that the consent order was illegal, unlawful and could not be enforced.

Justice Ochieng noted that when the case came up on June 12, United Millers had asked the court to cross-examine BN Kotecha on whether it had allowed its lawyer, a Mr Menze the go-ahead to file a consent.

Fast forward to January 24, 2019, when B.N Kotecha directors were to appear before the court to face United Miller's lawyers, the firm notified the court that investigations were being carried out by the Director of Criminal Investigations thus the case should be stopped until the investigations were completed.

The court heard that the investigations would demonstrate that the contracts between United Millers and other firms it had allegedly supplied with sugar were tainted with illegalities.

BN Kotecha acknowledged that there was a consent but it asserted the same was obtained through blackmail and duress on one of its directors.

It also claimed that there was no resolution from its directors for the same.

But Mr Menze disowned the firm in court, saying he had instructions to file a consent and that by the time he was recording it, one of B.N Kotecha directors, Hemal Kotecha was with him in court.

At the same time, B.N Kotecha had asked KPMG advisory services Limited to carry an audit review on its transactions with other trading partners. It had also asked the Director of Public Prosecution to carry out investigations on alleged fraudulent transactions, LPOs and delivery notes.

Lack of evidence

However, the judge dismissed the application to stay the consent, noting that there was no evidence to show Menze had acted against the client.

“I find that, so far, the company has not shown that the advocate who was on record at the material time had acted contrary to any express instructions or directions of the company,” Justice Ochieng ruled.

The irregularity being cited was not in the transaction between B.N Kotecha and United Millers, the judge said.

The court also found that there was no blackmail to Hemal as United Millers had cautioned him that it would execute the findings of the court if B.N Kotecha did not honour its end of the bargain.

Justice Ochieng also noted that the company had after the consent paid united Millers and its cheques were signed by its two directors.

“When a decree-holder tells a judgment debtor that he will take lawful steps to execute a decree, I hold the considered view that it is neither duress nor coercion. In conclusion, I find no reason to warrant setting aside or the discharge of the consent order made on April 11, 2018,” he ruled.