Brookside Dairy is locked in fresh court fight with owners of Limuru Milk over a multimillion-shilling processing deal the former secured when it bought out Buzeki Dairy.
Brookside terminated the 10-year milk processing deal, prompting Limuru Dairy Farmers Co-operative Society to seek compensation.
The farmers’ cooperative moved the High Court to compel Brookside to pay it Sh53 million awarded to it through arbitration on January 23.
Justice Maureen Odera dismissed Brookside's claims that the arbitrator’s decision was in direct conflict with various laws and constitutional principles and that it was unfriendly to public policy.
Brookside had agreed to pay the owners of Limuru Fresh Milk brand Sh3.3 million in monthly fees for leasing their plant and committed to buy raw milk estimated at 200,000 litres daily from the troubled co-operative society.
This pact was negotiated by Buzeki Dairy, which owned the Molo Milk brand before being bought out by Brookside Dairy in 2014.
Ms Jacqueline Hinga, Brookside Group Legal Officer, in her affidavit said upon receiving the termination notice the cooperative invited the firm to negotiate new terms with a view to reviewing the lease.
The lease was renewed for a period of three years at a monthly rent of Sh650,000.
"The respondents failed to execute the new lease without any justification or explanation and failed to supply to Brookside 10,000 litres of milk daily as had been agreed," said Ms Hinga.
She contended that on account of the cooperative's failure to execute the lease, the tenancy became a periodic tenancy under Section 57(1) (c) of the Land Act 2012.
By a letter dated February 26, 2016, Brookside terminated the periodic tenancy and eventually vacated the premises on March 18, 2016.
The vacation caused a dispute between the parties and they jointly appointed Mr Arthur Igeria as a sole arbitrator to hear and determine the matter.
Upon conclusion of the arbitration proceedings, Mr Igeria awarded the cooperative Sh53 million.
Brookside then moved to court seeking to have the said award set aside.