US firm loses Sh29m case against Nyeri coffee farmers
A US firm has lost a case in which they sought the freezing of Tekangu Coffee Farmers Co-operative Society's accounts over a Sh29 million debt. FILE PHOTO | NATION MEDIA GROUP
What you need to know:
- The judge said the firm, being a foreign company, had failed to prove that they can sue or be sued.
- The farmers’ society, through lawyer Wahome Gikonyo, did not deny receiving the loan.
A US lending firm has lost a bid to have Tekangu Coffee Farmers Cooperative Society's bank accounts frozen over a Sh29.6 million debt.
The High Court in Nyeri dismissed an application filed by Root Capital against the cooperative society.
The firm, which has a branch in Nairobi, claimed that the society has failed to pay the loan borrowed to construct a processing plant in Mutathiini in Mathira, Nyeri County.
Justice Jairus Ngaah said the firm, being a foreign company, had failed to prove that they can sue or be sued.
Justice Ngaah said the firm did not submit or demonstrate in court that its certificate of registration as a legal company operating in Kenya exists but instead presented a letter of authority.
“Such a letter cannot be deemed to be conclusive evidence that the US firm is duly registered as a foreign company and if it has complied with the Cooperatives Act,” said the judge.
The firm, through lawyer Bernard Otieno, had told the court that the society borrowed Sh24,069,675 million in April 2013 but failed to repay the money.
'PLOY TO FLEECE FARMERS'
Mr Otieno said the money was deposited in the account of the farmers' organisation and was used to construct the processing plant.
“They also used the money lent [to] them to acquire necessary machinery and equipment for the plant,” he said.
He said the money has since accumulated to Sh29,631,085.25 million, with default interest at the rate of 16 percent per annum.
The farmers’ society, through lawyer Wahome Gikonyo, did not deny receiving the loan.
However, they argued that an annual general meeting had to be held before a loan could be taken.
“There is no evidence to demonstrate that a general meeting was convened or special resolution obtained from the meeting to obtain the loan and charge the society's assets,” he said.
Mr Gikonyo said Root Capital did not follow the Public Procurement and Disposal Act before giving out the loan.
He said the loan was a deliberate ploy to fleece innocent coffee farmers.
Mr Gikonyo also questioned the legal capacity of the US firm to sue or be sued.
