Court orders Moi University to pay contractor Sh185 million

The High Court in Eldoret has ordered Moi University to pay a contractor Sh185 million, bringing to an end a 25-year legal battle.

The dispute between the university and Vishva Builders Limited follows a contract awarded in 1990 to construct the Faculty of Science building.

According to the contractor on May 24, 1990, it tendered for contract Moi University Phase 1 and got accepted one month later.

Vishva told the court the contract was for the construction of the Faculty of Science buildings including ancillary external works for Sh476,371,024.

A formal contract was agreed between the parties, which was to take 130 weeks from June 21, 1990.

They told the court they raised a certificate for complete works amounting to Sh242 million, but the university only paid Sh57 million.

In 1998, it was Vishva’s contention that despite raising certificates and reminding the university to pay the money it asked the works to be wound up.

The contractor pleaded that at that point, interim certificates amounting to Sh185 million had not been honoured, leading to a protracted dispute.

Vishva Managing Director Ramji Vekaria testified that according to the contract, once the certificates were approved, the university was supposed to pay within 14 days.

He told the court that in April 1991, works were stopped after seven valuations and certificates were not paid as per the contract agreement.

Vekaria disputed the claim by the university that nine percent of the work had been completed by the time the contract stalled and told the court Sh63.6 million was paid for work done since 2002.

In its defence, Moi University pleaded that the agreement was never executed in accordance with the law.

The university claimed that the common seal of the parties was duly witnessed by its officials and that the Bill of Quantities (BQ) was never executed.

They admitted that they were unable to raise funds to complete the project and therefore halted the construction in March-April 1991.

At the time, the university claimed that about nine percent of the works had been completed and never resumed thereafter.

The university further denied that the government and concerned ministries have approved or authorized or instructed the payment of Sh185,305,011.30.

They averred that the “Pending Bills Closing Committee of the Government of Kenya” had unequivocally concluded that the said sum is not payable.

Simon Macharia Maina, who served as the university’s architect from 1990 to 2017 supported the university's assertions.

Justice Wananda Anuro in his analysis noted that the university and Vishva builders had entered into agreement in 1990 and later the works stalled in April 1991.

He dismissed claims by the university that the contract had not been signed by all parties saying that the university had appointed professionals and consultants who worked with the contractor.

“I therefore find that both the BQ and the contract Agreement were properly executed by both parties and bound the parties for all intents and purposes,” the Judge ruled.

Justice Anuro said the architect was wrong to cancel certificates without referring the issue to arbitration as provided in the contract.

“I find the purported cancellation to have been wrong and in breach of the contract and in violation of the Plaintiff’s rights,” the Judge ruled.

He held that the cancellation of the certificate was “biased, irregular and against natural justice” due to failure to involve the contractor who was the most affected by the action.

Justice Anuro ordered the university to pay the contractor Sh185 million at prevailing bank interest rates with effect the date of filing this suit until payment in full.