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Minister faces bankruptcy case over Sh20 million debt

By - | Published Mon, February 4th 2013 at 00:00, Updated February 4th 2013 at 08:46 GMT +3

By Moses Njagih

Nairobi, Kenya: Public Service Minister Dalmas Otieno risks bankruptcy case over Sh20 million debt he owes a motor vehicle dealer.

The case may jeopardise his bid for Rongo parliamentary seat.

Last week, Twiga Motors Limited filed a seven-day notice at Commercial and Tax Division of the High Court for the minister to honour the final decree obtained against him in court, failure to which bankruptcy proceedings will be commenced against him.

The minister has until Wednesday to pay the money he owes the motor dealers in debts incurred over ten years ago, but which Twiga claims the former Rongo MP has defaulted in paying even after the High Court in 2009 ordered he settles the debt.

If the court is moved to declare the minister bankrupt, he would technically be forced out of the contest for Migori senatorial seat, whose ticket he has been granted by ODM.

The Constitution bars any person declared bankrupt from contesting for political office or holding any other public position.

Twiga motors, through a bankruptcy notice filed in court on January 30, warns the minister that they will initiate the proceedings against him if he fails to honour his promise on the final decree issued by court last December.

Principal amount

“The consequences of not complying with the requisition of this notice are that you will have committed an act of bankruptcy, on which proceedings may be taken against you,” warns the car dealer through their lawyers Ransley McVicker and Shaw Advocates.

In 2009, the High Court ordered the minister to pay Sh12.7 million, which was the principal amount of the 2002 debt, and which the minister admitted he owed Twiga motors.

Twiga won the case against the minister after it merged that Dalmas had failed to honour the promissory notes he had issued in respect to the debt. The motor vehicle dealer also sought to recover interests on the loan at the rate of 17 per cent, but the court slashed that to 12 per cent and also pegged this to commence from the date of the court’s ruling — November 28, 2009.

According to a consent order recorded in court between the two parties on December 4, last year, Dalmas committed to pay the principal sum Sh4.6 million in interests at the court’s rate from November 2009, and a further Sh2.7 million in other costs.

But even after the lapse of the one-month stay notice, which expired on January 5, the minister failed to offset the debt, prompting the motor vehicle dealer to file a bankruptcy notice.

“If, however, you have a counter claim, set off or cross-demand, which equals or exceeds the amount claimed in respect of the final decree and that you could not set up in the action or other proceedings, you must apply to the court to set aside this notice by filing with the registrar an affidavit to this effect,” states the notice.