The main contractor behind the construction of the Sh12 billion facility at Miritini applied to have the African Gas and Oil Ltd declared insolvent. The parties have been embroiled in a contractual disagreement since February last year.
Through lawyer Sanjeev Khagram, the contractors, Unispan Ltd, asked commercial court division judge Mary Kasango to put the company under receivership to contain its rising debts.
He said section 220 of the Companies Act provides for the defendant to be deemed insolvent following the expiry of notice of demand for payment issued on July 5 last year.
“Do not allow the company to continue trading while it’s insolvent because we will be heading into a situation where the company would not be able to pay its creditors. It should be put under receivership,” said Khagram.
Khagram sought the courts intervention after accusing Agol of repeatedly breaching the Sh1.1 billion contract by failing to meet its financial obligations to Unispan.
He said Agol had failed in its financial obligations and had incurred debts from banking institutions including Equity bank whereby they charged one of its parcels of land to acquire unspecified loans.
“The plaintiff has diligently carried out its part of the contract and periodically delivered statements to the project engineer for issuance of interim payment certificates for payment. They have failed,” said Khagram.
The contractors said they contacted Equity Bank, who are among Agol’s financiers inquiring their financial status but the bank failed to respond.
Khagram showed their copy of the email to the bank which was forwarded to Mombasa tycoon Mohammed Jaffer, who is one of Agol’s directors.
Unispan’s directo r Ravinder Singh accused Jaffer of maliciously calling the contractors bank director to inform them they would not pay the contractors.
Singh said Agol had failed to pay Unispan a total of Sh120 million. Agol lawyers Paul Buti and Michael Oloo applied for an adjournment in the hearing of the application.
Kasango ruled that an earlier injunction barring the sale or transfer of the facility still stands. The case resumes on Monday.
– The Star