The Kenya Tea Development Agency (KTDA) is engaged in a legal battle with five farmers over the ownership of the Sh480 million Chelal Tea Factory in Kericho.
KTDA and Litein Tea Factory have filed a suit at the Nairobi High Court against Davis Mutai, Patrick Chepkwony, Richard Cheruiyot, Josphat Kigen, Richard Mibei alleging that they have colluded to forcefully take over the factory.
They have accused the five farmers of registering a firm by the same name as the Kericho-based factory with themselves as directors then demanding Litein and KTDA to hand over the facility to them.
KTDA, being the managing agents of Litein, have joined the suit in a bid to secure ownership of Chelal Factory for Litein. They have enjoined the Registrar of Companies in the suit for registering the Chelal Tea Factory Limited to the farmers despite it being reserved by Litein in 2006.
Benson Milimo, representing Litein and KTDA told the court last week that failure to restrain the five farmers may see his clients lose their massive investment in the project.
“The defendants have persisted in making demands for handover of the factory to them under the guise of the registered company name of Chelal Tea Factory and have threatened to forcefully take over the factory if Litein and KTDA do not succumb to their demands,” he said.
Mr Milimo also wants the five farmers restrained from accessing the factory’s premises.
Justice Francis Gikonyo last week issued orders restraining the five farmers from transacting any business as Chelal Tea Factory Company Limited until the suit is determined.
Litein acquired a Sh290 million loan from Barclays Bank in July 2006 to build the factory, while the remaining Sh190 million was remitted by farmers’ contributions.
The factory’s name was, however, only reserved at the Registrar of Companies, and was to be registered upon completion of the loan from Barclays.
It was also to stand as an independent legal entity until the loan is fully repaid, after which Litein would take full control of the establishment.
Chelal Factory serves thousands of farmers in Chemoiwa, Roret and Kaproret. Its establishment was intended to save tea leaves that go to waste during transportation from these areas. It was also supposed to ease congestion of Litein Factory.
KTDA and Litein now claim that the five farmers are attempting to cleverly defraud them of the Sh480 million factory.
Mr Milimo added that the five farmers have ignored demand letters from the registrar to surrender the company name back to it, as it was issued mistakenly.
“Despite demand being made, the defendants have refused to make good the demands thus warranting this suit. If they are not restrained by this court, they shall take over the company and its assets,” added the lawyer.
He claims that failure to stop the alleged takeover may result in bloodshed, as farmers from the region are likely to intervene in a bid to protect their interests.