Corporate

KenolKobil loses Sh386m lease case against Nairobi businessman

Kenol Kobil limited group managing director David Ohana. FILE PHOTO | NMG
Kenol Kobil limited group managing director David Ohana. FILE PHOTO | NMG 

A businessman wants to attach oil marketer KenolKobil’s property for non-payment of Sh386 million arising from breach of a lease contract.

Mr Jayantilal Dharamshi Gorsani has filed the application at the Milimani commercial court after getting a decree from the Court of  Appeal, which dismissed with costs a suit by Kenya Oil Company Limited (Kobil).

Three court of appeal judges Alnshir Visram, GBM Kariuki and Jamilla Mohammed upheld a High Court decision requiring Kobil to pay Mr Gorsani Sh97 million eight years ago for breach of contract.

The judges dismissed the appeal by Kobil as “lacking merit.”

The application to enforce the decree was filed by lawyer Rumba Kinuthia for Mr Gorsani who says the the defendant (Kobil) has failed to comply with the court orders.

Mr Kinuthia is asking the court to allow Mr Gorsani to execute the court decree to recover the amount.

The businessman’s claim includes accrued interest of Sh289 million since 2005.

In the judgement, the appellate judges concurred with the finding of Lady Justice Khaminwa (deceased) who in her decision of December 21, 2009 ruled that “termination of the lease agreement was unlawful.”

The single judge said the plaintiff (Mr Gorsani) was entitled to his claim, which calculated at Sh97 million due to breach of contract.

Mr Gorsani had entered into an agreement with Kobil that he would stay at its premises, which had been leased by the Commissioner of Lands, for a period of 99 years.

In the premises, Kobil had established a petrol station on Murang’a Road.

The premises had been leased from June 1, 2001 for a period of 15 years, which was to end in May 31 2016.

As per the lease agreement Mr Gorsani was to pay a monthly rent of Sh600,000 for a period of five years and  thereafter Kobil would increase the rent by 12.5 per cent after every five years.

The lease agreement further required that the rent for two and half years be payable in advance at the time of possession and that in or after December 2001, a further advance rent of six months would be made, making a total payment of three years in advance.

"After armotization, the rent was to be paid every 24 months in advance during the remaining period of the term of the lease,” the parties agreed in the  lease agreement.

The Commissioner of Lands allowed Mr Gorsani  to operate a restaurant and a petrol station then leased the property to another contractor.