Court Orders Billionaire Rai to Pay Rival Ksh2 Billion

The High Court has ordered billionaire industrialist Jaswant Rai to pay Butali Sugar Limited Ksh2 billion including Ksh508 million in damages plus a 12 per cent annual interest rate.

In the judgment, Justice Alfred Mabeya ordered Rai to pay Ksh91.4 million as an annual interest on the damages, which will be calculated over a period of 17 years.  

Justice Mabeya’s order means that Rai will pay Ksh1.5 billion in interest and Ksh507.8 million in damages, making it one of the most expensive legal settlements.

“The plaintiff’s claim was for loss incurred as a consequence of alleged unlawful interference of its business by the defendants. The plaintiff alleged that on 13/4/2005, it was registered by the 2nd defendant to construct and operate a sugar mill in accordance with Part III section 14 of the Sugar Act, 2000,” Justice Mabeya. 

A sugarcane farm in Western parts of Kenya.


Butali Sugar Company Limited

“In pursuance thereof, the court granted a stay of proceedings on the 1st defendant’s undertaking as to damages. That the said order stayed its operations, transactions and business in connection with its objects and undertakings as a registered miller.” 

Consequently, Rai will also pay the cost of litigation after Butali Sugar Company convinced the court that the billionaire’s actions amounted to unlawful interference with its business and investment.

“It is clear that the claim by the plaintiff arises out of the undertaking given by the 1st defendant on 1/8/2005. However, there is admission in the defence of the 2nd defendant that it did make representations and assurances to the 1st defendant as alleged.

“Firstly, it cannot lie in the month of the 2nd defendant that it can make representations and assurances and make them subject to rescission. That can only hold if those representations were made without prejudice at the time they were so made. That is not the case here,” the court ordered.

Butali Sugar Company sued Rai’s firm in 2007, during which the company obtained orders halting any further interference from the business rival.

The two companies later reached an agreement, in which Kenya Sugar Board was not supposed to issue new licenses to Butali or any other miller that would operate within a 24-kilometer radius of the company.

The said agreement allowed Rai’s firm to expand considerably in the region, almost knocking Butali Sugar Company out of the business.

Consequently, Butali Sugar Company moved to the High Court seeking compensation for damages incurred when Rai’s firm expanded rapidly.

Butali Sugar Company also lodged a suit at Kisumu High Court to compel Kenya Sugar Board to issue it with the necessary license.  

A photo collage of different sugar brands at display.

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