A clearing and forwarding agent has been ordered to provide a bank guarantee of Sh28 million as a condition to delay a Sh56 million debt owed to a bottling firm.
Court of Appeal judges Daniel Musinga, Francis Tuiyott, and George Odunga directed Gamma Villa Ltd to provide a bank guarantee of half the amount that was being demanded by Almasi Bottlers Ltd, within 45 days from the date of the ruling.
The judges said whereas they do not doubt the ability of Almasi Bottlers to refund the money, in case the appeal by the agent succeeded, the amount being demanded was huge and might collapse Gamma Villa Ltd.
“The applicant’s (Gamma Villa) argument is not without some merit. On the other hand, the respondent (Almasi), being the successful decree-holder, is entitled to the fruits of the judgment,” the judges noted.
“If the applicant fails to provide the guarantee within the stipulated period of time (45 days), the applicant’s notice of motion dated 10th September 2024 shall stand dismissed, and the respondent shall be at liberty to execute the trial court’s judgment,” rules justices Musinga, Tuiyott, and Odunga.
The clearing and forwarding firm moved to the appellate court to challenge a decision entered against it by the High Court in Nyeri, last September.
The agent rendered services to the bottling firm for about 25 years. In 2009, differences arose between the parties when Gamma Villa while alleging its right to hold on to goods, detained a consignment of concentrates imported by Almasi.
This prompted Almasi to move to court seeking a declaration that the detention of the said consignment was wrongful. Almasi sought an order that the agent was liable to compensate it for sums paid to the Kenya Revenue Authority (KRA) as tax and costs in defending a claim that KRA had raised against it regarding the consignment.
After hearing the case, the High Court went ahead and awarded Almasi Bottlers Sh56 million.
Gamma Villa denied the claims and maintained that it acted lawfully because the botting firm withheld payment for services it had rendered, and it was, therefore, entitled to exercise its right to withhold the consignment.
After hearing the case, the High Court went ahead and awarded Almasi Bottlers Sh56 million comprising of tax refunds of Sh52 million, Sh2.4 million as costs of defending the case, Sh376,700 for tax consultancy, and Sh2 million for loss of business.
In the appeal, the agent has faulted the High Court for allegedly failing to recognise the standard terms and conditions of the contract between the parties in the finding that it was liable to pay tax arrears of Sh52 million and for granting the other monetary awards.
The beverage company opposed the application arguing that it was undeniable that Gamma Villa received Sh52 million from it but failed to forward it to KRA.
The firm said the false insistence that it (the agent) had paid the said sum to KRA caused the bottling move to court in a bid to contest KRA’s claim for tax against it but lost and was forced to pay for the costs and other expenses.
