Court orders KenolKobil to deposit security

The court further ordered that the security should either be cash, bank guarantee or insurance bond and will be in the custody of the High Court pending the determination of the appeal.

This follows a judgement delivered by Lady Justice Joyce Khaminwa last December 21, directing KenolKobil to pay a businessman, Jayantilal Dharamshi Gosrani, Sh99.2 million for breach of a lease agreement.

Gosrani took KenolKobil to court claiming more than Sh100 million for damages over the unlawful termination of an agreement where the oil firm was to operate a petrol station within his premises along Murang’a Road in Nairobi.

Lady Justice Khaminwa found the oil company guilty of moving out of the premises only three years after the lease agreement had been signed and thereby breaching the terms of the contract.

“It is quite clear from the documents tabled in court that the parties entered into a binding lease agreement for a fixed term of 15 years renewable for a further five years,’ said Lady Justice Khamniwa while concluding the five-year old dispute.

She awarded the businessman Sh99,262,500 and directed that he be paid interest and costs of the suit.

Soon after the judgement, KenolKobil sought for a stay in lieu of a notice to appeal but Lady Justice Khaminwa declined and directed the company to make a formal application.

In the present application, KenolKobil pleaded with Lady Justice Koome to allow it provide a corporate guarantee arguing that providing cash or guarantee bonds could lead to unnecessary expense.

Financially stable

The firm’s lawyers submitted that KenolKobil was a financially stable, listed at the Nairobi stock Exchange and allowed to borrow from the public through the commercial paper.

When KenolKobil told Lady Justice Koome that they intend to give security by way of a commercial paper, the judge quipped: “I do not know whatever the paper means as a security.”

Lawyer Rumba Kinuthia for the businessman, opposed the application saying the cash security was meant to secure the judgement-creditor and “for the judgement-debtor to demonstrate ability to settle the decretal sum after the appeal.

Mr Kinuthia said oil companies become insolvent due to global meltdown or migrate to other countries ,arguing that by granting KenolKobil the stay of court orders, “there is likelihood they will not pay the decretal amount if the appeal is dismissed.”

The lawyer further said his client was an elderly person aged 78 and should be allowed to enjoy the fruits of his judgment after almost six years in court.

The businessman leased a petrol station to KenolKobil at Sh600,000 for the first five years between 2001 and 2006.

Thereafter, as agreed, the rent was to be increased at the rate of 12 per cent after every five years.

Gosrani said during the proceedings that on January 21, 2005, KenolKobil was to pay for the ground rent of the property and Nairobi City Council rates for the entire term of the lease.

He says the total amount for the levies stood at Sh29,000 and Sh63,000 respectively.

He further submitted that on May 5, 2005, the parties held a meeting where KenolKobil demanded reduction of the rent from Sh600,000 to Sh300,000 but he declined owing to the binding agreement.

But KenolKobil argued that the businessman’s original title deed did not permit the user of the premises as petrol station.

However, the judge said the change of user had already been obtained converting the premises from residential to commercial user and specifically “petrol service station.