Telkom Kenya has defended itself against allegations of fraud by Postel Housing Cooperative Society. This comes just days after a Court’s ruling to allow Postel to privately sue senior officials of Telkom Kenya over a Ksh. 14 billion land sale.
Earlier this month, Senior principal Magistrate Kennedy Cheruiyot allowed members of Postel to bring charges against Telkom directors, some of whom have already left the company.
The dispute stems from a 79 acre parcel of land along Ngong Road, Nairobi, which belongs to Telkom Kenya and was up for sale.
Telkom Kenya has defended itself against fraud allegations, arguing that it followed due process in the acquisition, ownership and sale of the land.
According to supporting documents seen by Hapakenya, the Kenya Posts and Telecommunications Corporation entered into an Agreement for Sale of 60 acres of property under Land Reference No. 7656 (Grant No. IR 8498). The sale was made to Postel Housing Cooperative Society for Ksh. 21,000,000 on 19th January, 1993.
On 28th January, 1993 and before completion, Postel Housing Cooperative Society entered into a development agreement with Exclusives Estates for the construction of houses on the parcel of property being sold. The housing project was however stalled by KPTC in the year 1995 and the sale never completed.
To this end, Exclusive Estates sued Telkom and Postel in HCCC No. 1158 of 2001 with regard to the development agreement signed with Postel for injunctive orders restraining the Defendants from handing over the project to third parties for development. The developer further sought judgement for resources spent towards developing the premises.
Additionally, Exclusives Estates sought to have the property transferred to them on account of alleged default by the defendants.
In response, Telkom defended the suit mainly citing the fact that the agreement between Postel Housing and Exclusives was not binding on KPTC.
The suit was dismissed for want of prosecution and Exclusives filed an appeal that was never taken to Court.
Fast forward to 6th September, 2019, the arbitrator for Exclusives Limited arbitration gave an award in favour of Exclusives Limited.
The arbitrator found that the agreement between KPTC and Postel was valid and enforceable and that the agreement between Postel and Exclusives Estate was valid and enforceable.
Exclusives Estate was then entitled absolutely by reason of the deed of assignment and the decree to 60 acres of the property.
Telkom was then given 90 days within which to sub-divide and transfer to Exclusives Estates the 60 acres. In default, Telkom was also allowed to apply for an order to the High Court compelling the Deputy Registrar to execute any documents that would effect the transfer.
The arbitrator also ruled that Exclusives Estate would pay Telkom Ksh. 21,000,000 together with interest at court rates from the date of filing the suit in the High Court, payable within 30 days of receiving the completion documents from Telkom.
Following the arbitral award, Telkom filed an application to set aside the award and appointed the firm of Iseme, Kamau and Maema. On 1st November, Telkom filed their application to set aside the arbitral award.
On 22nd April, 2021, Lady Justice Ngenye set aside the arbitral award, reverting the previous ruling.
The Court based its decision on three factors, including a re-written contract by the arbitrator, an incorrect current land market value and biased action by the Arbitrator by using different standards of proof.
Currently, the matter is pending hearing at the High Court. Exclusives Estates has since filed a notice of intended appeal but has not taken any steps to file the actual appeal.