4 November 2010

Kenya: Delta Petroleum Ordered to Pay Supplier Sh7 Million

A court has ordered Delta Petroleum to pay a supplier Sh7 million for breach of contract.

Lady Justice Martha Koome found Delta Petroleum Trading Company in breach of a memorandum of understanding with businessmen Justus Ambasu and James Kamau for the supply of oil products.

The five-year old agreement signed in 2005, required the businessmen to supply Delta with oil products on credit, but the dealer fell into arrears and reneged in paying Sh7,212,478.

"Evidence by the plaintiffs is clearly supported by documents. On a balance of probability, the plaintiffs have proved their case and the judgment is accordingly entered against the defendant," ruled the judge.

The investors said they supplied Delta with oil products for its two petrol stations in Nairobi on condition the dealer would pay promptly as per the contract.

But the firm started experiencing financial problems and was unable to meet its obligations.

When the debts accumulated, Delta agreed that Mr Ambasu and Mr Kamau operate the two petrol stations along Jogoo Road and Mombasa Road for two years to recover their money.

Upon the take over in June, 2006, Delta director Mr Bhagwanji Parmar refused to move out of the premises and purported to terminate the contract.

The businessmen obtained restraining orders from the court and the parties were forced into further talks where it was agreed that the businessmen assumes the running of petrol station and Delta retain the car wash.

Delta filed a counter claim, which was dismissed by Lady Justice Koome for lack of evidence in its support for special and general damages.

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