Tata Chemicals battles to stop closure over Sh17bn debt
A dredging machine harvests soda ash at Tata Chemicals Magadi in Kajiado County.
What you need to know:
- Debt collection company hired by Kajiado County ordered the closure of the company over the disputed debt.
- With an annual turnover of Sh5 billion, Tata Chemicals is the largest producer of soda Ash in Africa.
Lawyers representing Tata Chemicals are fighting the attempts of an auctioneer to close the mining factory for non-payment of land rates to Kajiado County Government.
The mining company, formerly known as Magadi Soda, is entangled in a legal dispute with the County government which is demanding Sh17 billion from the makers of soda ash.
Tata Chemicals has maintained that it cannot pay such an amount of money.
In 2019, the High Court directed the two parties to seek an out-of-court settlement within six months via arbitration guided by relevant ministries. However, the company has since moved to the Court of Appeal.
On Monday, a debt collection company hired by Kajiado County Government ordered the closure of the company over the disputed debt.
Land rates payment
Regional Business Connection, in a letter dated January 15, 2023 claimed that it reached the decision after the company failed to pay land rates to its client, Kajiado County, despite serving them with several invoices.
“It is in view of your company’s continued legal defiance that we hereby order closure of your business in premises in Magadi and at Kajiado Railway Station as from Monday January 15, 2024 by yourselves voluntarily as guided by Section 22, Part IV of the Kajiado County Finance Act 2023 up and until when you regularise payments with our client or an agreeable repayment plan of all outstanding payments is agreed upon,” the auctioneer’s letter reads in part.
The letter was signed by James Ndwiga, who is the manager in charge of field operations at Regional Business Connection.
Mr Ndwiga further warned the company that Kajiado County shall station enforcement officers in their premises within Kajiado County to ensure compliance of the order.
However, Tata Chemicals, through Oraro and Company Advocates, said the High judgement that the auctioneer relied on was the subject of the appeal lodged at the Court of Appeal.
Extrajudicial and illegal
The advocates said the proposed action to close the company was both extrajudicial and illegal, noting that a debt collection company has no mandate to close a business.
“We noted that in your letter under reply, you have fudged the facts of this dispute to justify the illegal action that you have threatened to take,” the advocates stated.
“The judgement that you have anchored your proposed action upon is not only presently under appeal in Nairobi Civil Appeal no.530 but the orders issues in the said judgement does not support your proposed action,” reads the response letter signed by Chacha Odera of Oraro and Company Advocates.
With an annual turnover of Sh5 billion, Tata Chemicals is the largest producer of soda Ash in Africa.
Its holding company, Tata Africa Holdings Kenya Limited, was incorporated in 2006 and distributes Tata Motors Vehicles.
