Butali Sugar Mills has won a 15-year legal battle against sugar baron Jaswant Rai-owned West Kenya Sugar Company for Sh507 million damages after the latter interfered with its operations.
The Rai-owned firm had opposed the registration of Butali Sugar Mills, which it argued was within 24 kilometre-radius of their Sh4 billion operation.
Justice Alfred Mabeya sitting at the Commercial and Tax Division of the High Court on Friday awarded Butali Sugar Mills the damages after finding its case against West Kenya with merit.
In his summary judgement delivered virtually, Justice Mabeya said Butali Sugar Mills Limited was entitled to the damages amounting to 507,799,607 after proving its case on a balance of probabilities.
“Upon considering the submissions from both parties, I find that the plaintiff has proved its case and is entitled to the damages for the loss suffered as a result of the defendants’ interference with its operation,” stated Justice Mabeya.
The judgement brings the 15-year legal suit between the two rival sugar millers to an end, at least for now.
In the case filed on March 30, 2007, Butali Sugar sued West Kenya for Sh500 million damages after accusing it of illegally interfering with its operations, which caused it huge losses.
The protracted litigation was prompted by the decision by West Kenya Limited to challenge in court the registration and operations of the rival miller in 2005.
It further obtained ex parte orders from the High Court to stop Butali from undertaking any of the operations and business transactions pending determination of the case before court.
However, the company withdrew the case in 2006 after entering into a consent agreement with the Kenya Sugar Board in which they agreed not to grant licence to Butali or any other miller to establish the business within a radius of 24 kilometres of the company.
Aggrieved by the decision, Butali Sugar mills filed a suit for damages against West Kenya and the Kenya Sugar Board.
It claimed the consent had the effect of interfering and scuttling its business, thus occasioning it huge losses.
West Kenya had claimed that the registration and licensing of Butali Sugar was done in contravention of the repeated assurance by the Kenya Sugar Board not to grant permission to a competitor within its radius.
It claimed to have invested Sh4 billion into the expansion and development of the business based on the assurance.
The company filed another application before the High Court in Milimani seeking injunction against the Kenya Sugar Board to restrain it from entertaining any application for licences by Butali but this was dismissed by the court in 2010.
Butali Sugar on the other hand moved to the High court in Kisumu and successfully obtained orders compelling the Kenya Sugar Board to issue it with a licence, which saw the company resume operations.
West Kenya Sugar, however, challenged the orders at the Court of Appeal, which directed the Kenya Sugar Board to hear and determine the application by Butali for the issuance of the operating license while at the same time hear the arguments by West Kenya.
The application by West Kenya to object the damages suit by Butali was dismissed in 2017 by Justice Olga Sewe for lack of merit, paving way for the final disposal of the matter.
The rivalry between the two sugar millers has continued for long, with efforts for arbitration failing.
The demand by the West Kenya Sugar Company to have the Butali closed got the attention of the political leaders especially from Western Kenya.
The ruling comes at a time when President William Ruto has declared war on sugar cartels in Kenya in a bid to institute reforms in the sector.
