Jaswant Rai Ordered to Pay Butali Sugar Sh500m
Butali Sugar Mills has won a 15-year legal battle against the West Kenya Sugar Company, owned by sugar magnate Jaswant Rai, for Sh507 million in damages for interfering with its operations.
The company owned by Rai opposed the registration of Butali Sugar Mills, claiming that it was within a 24-kilometer radius of their Sh4 billion operation. Friday, Justice Alfred Mabeya of the Commercial and Tax Division of the High Court awarded Butali Sugar Mills the damages after determining that its case against West Kenya had merit.
Justice Mabeya ruled virtually in a summary judgment that Butali Sugar Mills Limited was entitled to 507,799,607 in damages after establishing its case with a preponderance of the evidence.
“Having considered the arguments of both sides, I conclude that the plaintiff has proven its case and is entitled to compensation for the loss it sustained as a result of the defendant’s interference with its operations,” stated Justice Mabeya.
The ruling puts an end, at least temporarily, to the opposing sugar millers’ 15-year legal battle. In a lawsuit filed on March 30, 2007, Butali Sugar demanded Sh500 million in damages from West Kenya, accusing it of unlawfully interfering with its operations and causing enormous losses.
The protracted litigation was precipitated by West Kenya Limited’s 2005 decision to challenge the registration and operations of the rival miller in court.
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It also secured ex parte orders from the High Court prohibiting Butali from conducting any operations or business transactions pending the court’s decision.
However, the case was withdrawn in 2006 after the company entered into a consent agreement with the Kenya Sugar Board in which they agreed not to grant Butali or any other miller a license to establish a business within a 24-kilometer radius of the company. Butali Sugar Mills lodged a claim for damages against West Kenya and the Kenya Sugar Board in response to the decision.
It claimed that the consent had the effect of interfering with and destroying its business, resulting in enormous losses. West Kenya asserted that the registration and licensing of Butali Sugar violated the Kenya Sugar Board’s repeated promises not to grant permission to a competitor within its radius.
Based on the assurance, it claimed to have invested Sh4 billion in the expansion and development of the business. In 2010, the High Court in Milimani rejected a second application by the company requesting an injunction against the Kenya Sugar Board prohibiting it from considering any license applications from Butali.
Butali Sugar, on the other hand, petitioned the Kisumu High Court and successfully obtained orders compelling the Kenya Sugar Board to issue it a license, allowing the business to resume operations.
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West Kenya Sugar, however, challenged the orders at the Court of Appeal, which directed the Kenya Sugar Board to hear and decide Butali’s application for the issuance of an operating license while simultaneously hearing West Kenya’s arguments.
Justice Olga Sewe dismissed West Kenya’s objection to Butali’s damages claim for lack of merit in 2017, paving the way for the final resolution of the case.
The rivalry between the two sugar mills has been ongoing for a long time, with attempts at mediation failing. The demand by the West Kenya Sugar Company to close the Butali drew the attention of political leaders in Western Kenya in particular.
The decision comes at a time when Kenyan President William Ruto has declared war on sugar cartels to reform the industry.
Jaswant Rai Ordered to Pay Butali Sugar Sh500m
