Telkom Kenya has filed a Constitutional Petition to stop Postel Housing Co-operative Society from instituting private prosecution against its directors-some of whom have already left the firm, for their role in the alleged illegal sale of a portion of a 79- acre piece of land registered in the name of Telkom Kenya, along Ngong Road- Nairobi, to a private company.
The tussle for ownership of this prime property has been a subject of arbitrations and court orders for the past 20 years, attracting interests from several tycoons and political bigwigs, each laying claim to the property.
The matter began on 19th January 1993, when the now defunct Kenya Posts and Telecommunications Corporation (KPTC) entered into an agreement for the sale of 60 acres of property under land reference no 7656 (Grant No IR 8498) to Postel Housing Co-op Society for KSh 21 Million.
On 28th January 1993 and before completion, Postel entered an agreement with Exclusive Estates Limited for construction of houses on the parcel of property being sold.
The housing project was, however, stalled by KPTC in 1995 and the sale was never completed.
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 and sought judgement for monies it had spent towards developing the suit premises.
Additionally, Exclusive Estates sought to have the property transferred to them on account of an alleged default by the defendants.
Telkom having being vested with the property after KPTC ceased operations as a corporation, defended the suit mainly citing the fact that the agreement between Postel Housing Co-op and Exclusive was not binding on KPTC. The suit was dismissed for want of prosecution and Exclusive filed an appeal that never took off.
On 16th January 2009, Exclusives Estates Limited and Postel recorded a consent in which Postel would assign its rights to the suit premises to Exclusives in exchange for KSh 50 Million.
A deed of assignment of these rights dated 15th January 2009 was also executed. This was done without the knowledge of Telkom and presented to the Lands Registry where a caveat was entered. Telkom protested and the Registrar of Titles, Nairobi caused the caveat to be removed from the record.
On 27th May 2011, the suit by Exclusives Estates (HCCC No 1158 of 2001) was referred by the Court to arbitration before Ms Jan Mohammed as sole arbitrator.
Telkom Kenya then offered the entire parcel of 79 acres for sale to Aftraco Limited by Agreement for sale dated 5th July 2011 for KSh 1,520,000,000.
In response, Exclusives Estates filed a Judicial Review Application No 69 of 2011 and obtained an interim order against the Registrar of Titles as well as Commissioner for Lands, preventing them from registering any transactions on the property.
This had the effect of frustrating the sale of the property to Aftraco Limited, who responded by filing a suit against Telkom in HCC No 443 of 2011 to stop the cancellation of the sale.
On 10th October 2013, it was agreed by consent between the parties to refer the suit to Arbitration and this matter is for determination currently before Mr A.F Gross as sole arbitrator.
Exclusives eventually lost the judicial review case on 20th July 2012 and appealed in civil appeal No 135 of 2013 where the Court of Appeal held in their favour on March 11th 2016 that the caveat had been wrongly removed and should be reinstated by the Registrar of Titles.
The effect of this ruling is that Telkom Kenya had no authority to enter into an agreement for sale on the said property with Aftraco.
The arbitrations resumed and each was concluded.
On 6th September 2019, the arbitrator in the Exclusives Limited arbitration gave an award in favour of Exclusives Limited which found that the agreement between KPTC and Postel was valid and enforceable. It also found that the agreement between Exclusives Estates and Postel was valid and enforceable.
The arbitrator also found that the deed of assignment between Postel and Exclusives Estates and the decree that was issued are valid and enforceable and that Exclusives Estates was entitled absolutely by reason of the deed of assignment and the decree to 60 acres of the property.
Telkom Kenya was given 90 days within which to subdivide and transfer to Exclusives Estates the 60 acres and in default, the Claimant being Exclusives could apply for an order to the High Court compelling the Deputy Registrar to execute any documents that will effect the transfer.
Exclusives Estates was to pay Telkom Kenya KSh 21 Million together with interest at court rates from the date of filing the suit in the High Court which was payable within 90 days of receiving the completion documents from Telkom, failure to which the transfer would be null and void.
Telkom opts to file an application to set aside the award
Following the arbitral award, Telkom opted to file an application to set aside the award. But Telkom Kenya through Kamau Karori argued that the arbitrator misconducted herself in the matter by essentially re-wrote the contract between KPTC and Postel Housing amongst other grounds.
The application was heard and Lady Justice Ngenye set aside the arbitral award on 22nd April 2021.
In an attempt to circumvent the setting aside of the arbitral award, Postal Housing Co-operative Society approached the ODPP alleging that Telkom sold the land to AFTRACO for KSh1.5 billion, in a deal they said was fraudulent. This resulted in Postel filing an application to institute private prosecution proceedings against some of the directors of Telkom. The matter is still being heard.
Update
On Monday 25th October, the court granted Telkom orders for stay until the matter is heard and determined. A date of 24th January has been set for highlighting submissions.
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