Nairobi Hospital moves to court to stop Sh51 million insolvency suit
The hospital argued that Opticom (K) Limited's insolvency suit is premature as their contract requires arbitration for disputes.
The Nairobi Hospital has moved to court challenging the insolvency petition filed by a security systems supplier over a disputed Sh51 million debt.
In an application filed by the hospital through lawyer Moses Owour, the facility argued that Opticom (K) Limited's insolvency suit is premature as their contract requires arbitration for disputes.
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He states in court documents that Opticom and the hospital have subsisting contractual relations for the supply and installation of a security system at the Nairobi Hospital.
The said contractual relationship is governed by an elaborate and specific agreement and bid document, which jointly provided equipment specifications to be installed by the Petitioner, and defined the relationship between the parties, including dispute resolution mechanisms.
"Contrary to its obligations, the Petitioner deliberately supplied and installed an inadequate variation of the agreed equipment, which is unfit for the Applicant's use and which was duly rejected as provided for in the agreement," he states in court papers.
"Accordingly, and as provided for in the agreement, the Nairobi Hospital duly exercised its contractual remedies, first by notifying the firm of its rejection, demanding that the equipment be changed, and ultimately treating the contract as repudiated."
Instead of providing a proposal to rectify the situation as required under the agreement, and instead of invoking the clear dispute resolution mechanism provided for in the agreement, the hospital has accused the security firm of instituting insolvency proceedings.
"The proceedings herein are therefore a malicious abuse of court and are intended to embarrass and frustrate the Applicant, which is merely exercising its contractual remedies by withholding the alleged debt on account of the Petitioner/Respondent's refusal to perform its obligations as stipulated in the bid and agreement," Owour argues.
In the circumstances, the hospital is seeking to stay further proceedings prior to a determination of the prayers to strike out the insolvency proceedings initiated by Opticom Limited.
The hospital asserts that the Petition is listed for a case management conference on August 13, 2025, and unless the orders sought are granted on a priority basis and proceedings emanating from the Petition are stayed, the matter is likely to proceed to the Applicant's prejudice.
"It is therefore in the interests of justice that the Notice of Motion and Chamber Summons filed herewith be heard on priority basis during the vacation, and that the Petition struck out as prayed, to avert the Applicant being exposed to financial and operational jeopardy which has an undesirable effect on the vulnerable patients it serves," the hospital said.
The hospital contends that on December 19, 2022, they awarded a tender to the Petitioner for the proposed installation of a pedestrian scanning system at a total cost of Sh51,142,436.
They argue that the court is not the proper forum to determine the suitability of the equipment supplied by the Petitioner, the veracity of the concerns raised by the Applicant and the sufficiency of the justifications offered by the Petitioner for supplying the wrong equipment.
"The jurisdiction of this Court has been invoked prematurely, and the Petitioner Respondent's suit amounts to overkill and is otherwise an abuse of court process," the hospital states.
Justice Peter Mulwa has set November 6 as a mention date for further directions.
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