Court blocks coffee firm from paying Sh19m in dispute

A court has blocked private coffee marketer, Tropical Farm Management Limited, from releasing Sh19 million to a co-operative society pending the resolution of a dispute with the defunct Kenya Planters Co-operative Union.

Receiver and managers of KPCU got a temporary injunction restraining Tropical Farm from paying Kwa Matingi Farmers Co-operative Society the disputed amount pending the hearing of the case on August 31.

Kenya Commercial Bank (KCB) who are joint receivers and managers are accusing Kwa Matingi of contravening an agreement which required them to deliver all its coffee products to KPCU for milling and marketing.

From the products delivered, KPCU says it was entitled to retain 40 per cent of the proceeds to enable Kwa Matingi clear an outstanding debt it owed them.

KPCU moved to court after it discovered through various sale documents that Kwa Matingi had illegally contracted Tropical Farm to market and sell its products.

Receiver manager Harveen Gadhoke says that Kwa Matingi had admitted the breach during a meeting held with the official receivers on June 18.

Through Mr Greg Karungo of Walker Kontos Advocates, Mr Gadhoke told the court that KPCU owed various creditors and could only meet its financial obligations “if allowed to collect money from our debtors.”

KPCU has pleaded with the court to issue a mandatory injunction directing Tropical Farm to them Sh19,341,152 together with costs arising from the suit amounting to Sh500,000 within seven days.

And in the event Tropical Farm had paid Kwa Matingi the disputed funds, the receivers sought court orders to be issued against the private coffee firm to file an account in court highlighting the transactions.

The agreement requiring Kwa Matingi to deliver its products to KPCU for milling and marketing was signed on July 25, 2006 and authorised the troubled co-operative to recover 40 per cent of all the proceeds.

KPCU informed the court that Kwa Matingi had no assets to meet the outstanding debt and unless restrained by injunction, would pay the money to Tropical Farm.

On August 4, High Court Judge Leonard Njagi stopped the sale of its assets which include Wakulima House pending the mention of the case on September 7.

This sale was planned for August 5.

Mr Justice Njagi considered the fact that the case had a long legal history and said his counterpart Justice Muga Apondi would handle the dispute.

The High Court is currently on vacation and judges are expected to resume duty in September.