Patel-led Equip Agencies wins KSh1.16 billion principal claim but loses compound interest that once pushed its government debt into tens of billions.
For 30 years, Equip Agencies Limited has pursued payment for supplies delivered during Kenya’s malaria-control campaign.
The company has fought the Government through courts, Parliament and years of difficult enforcement proceedings.
Now, the Court of Appeal has redrawn the financial consequences of that extraordinary battle.
The three-judge bench comprising John Mativo, Johnson Okello and Paul Lilan upheld the company’s KSh1,157,846,150 principal claim against the government.
But the judges rejected compound interest that had increased the original award dramatically.
The decision leaves the government owing the principal while removing an extraordinary interest burden.
It also brings fresh attention to the Patel family behind the long-running commercial dispute.
Patel Connection
Court records identify Divyesh Indubhai Patel as Equip Agencies’ managing director in several separate commercial disputes.
Recent proceedings also name Vinesh Indubhai Patel and Grishma Kumar Indubhai Patel alongside Equip Agencies.
Those records establish the Patel family’s close management connection with the company.
They do not, however, publicly establish the precise present-day shareholding structure.
The company’s government dispute began much earlier, during the administration of President Daniel Arap Moi.
Equip Agencies entered into two major government supply agreements during the 1990s.
The first agreement, S/4056, was entered into in July 1993.
The second agreement, S/4420, followed on July 14, 1995, covering supplies through June 1997.
Equip Agencies supplied insecticides, agricultural chemicals, anti-malaria products and related equipment.
The Ministry of Health directed deliveries to depots across several major Kenyan towns.
Those destinations included Mombasa, Nairobi, Nakuru, Kisumu, Eldoret and Nyeri.
The judgement records that government officials received and accepted the delivered supplies.
The company subsequently raised invoices totalling KSh1,157,846,150 for goods supplied.
That principal amount would eventually become the centrepiece of the litigation.
Orders Cancelled
The dispute erupted after the ministry began cancelling several Local Purchase Orders.
A July 1996 communication announced the cancellation of various unexecuted orders.
Then came a further cancellation letter dated August 23, 1996.
Three LPOs were withdrawn despite the disputed goods already being delivered.
The government had accepted, distributed and used those supplies, according to the appellate judgement.
The judges found no dispute concerning their quality, quantity or pricing.
There was also no evidence that the government rejected the goods or demanded replacements.
That chronology proved crucial when the Attorney General challenged Equip Agencies’ lawsuit.
The company filed suit on July 22, 1999, seeking approximately KSh1.862 billion.
The claim comprised the principal debt and accumulated interest calculated at 18 per cent.
Equip Agencies also demanded continuing interest at 18 per cent until full payment.
The Attorney General challenged both liability and the legal validity of the procurement process.
The State argued that some LPOs lacked proper authorisation and supporting financial documentation.
It also argued that the claim had been filed outside the statutory limitation period.
The Court of Appeal rejected that argument after examining the disputed cancellation chronology.
It held that the cause of action arose when the government cancelled the LPOs.
That happened on August 23, 1996, within three years of filing.
The claim was therefore not statute-barred under the applicable limitation law.
Government Loses
The government also argued that internal procurement failures rendered the LPOs invalid.
The judges rejected that defence in unusually emphatic language.
They held that government institutions cannot rely solely upon their own internal procedural failures.
The Court stated that such an argument “cannot hold any water”.
The judges further held that government entities cannot escape otherwise binding contractual obligations.
That principle proved important because the supplies had already been accepted.
The Court therefore upheld the validity of the disputed contracts and LPOs.
For Equip Agencies, that finding preserved the heart of its three-decade legal battle.
But the company suffered a major setback over the interest component.
The High Court had awarded approximately KSh1.862 billion, including accumulated interest.
It then ordered compound interest at 18 per cent from March 1, 1999.
That calculation eventually produced claims worth tens of billions of shillings.
In 2021, Divyesh Patel petitioned Parliament seeking payment of an alleged KSh80 billion debt.
He told MPs that Equip Agencies had supplied anti-malaria equipment worth about KSh1.2 billion.
He further claimed that accumulated interest and costs had transformed the original judgement dramatically.
Earlier reporting had similarly placed the claim at KSh35.4 billion by 2017.
That figure reflected the continuing 18 per cent interest applied after the High Court judgement.
Interest Falls
The Court of Appeal has now dismantled that interest calculation.
The judges accepted that courts possess discretion to award interest after delayed payment.
However, they distinguished ordinary interest from compound interest.
Compound interest, they held, requires specific pleading and rigorous proof.
A claimant must establish actual financial loss caused by the alleged contractual breach.
The claimant must also demonstrate foreseeability and commercially reasonable financing costs.
Equip Agencies relied upon evidence concerning commercial borrowing to support its interest claim.
But the judges found that evidence insufficient to establish the necessary causal connection.
The company had also failed to specifically plead compound interest as special damages.
The Court therefore rejected the compound-interest award made by the High Court.
It instead ordered payment of the KSh1,157,846,150 principal sum.
That amount will attract interest at the court rate from June 26, 1995.
Each side will bear its own costs of the appeal.
The ruling is particularly striking against the backdrop of Equip Agencies’ other commercial battles.
The company and Patel family members have faced prolonged litigation involving several banks and charged properties.
In July 2026, the Court of Appeal allowed I&M Bank to proceed against four charged properties.
Those facilities had originally involved hundreds of millions of shillings before interest and disputes accumulated.
The separate banking litigation does not determine the government’s liability in this case.
But it illustrates the commercial pressures surrounding a company pursuing a decades-old public debt.
READ ALSO: Court Clears I&M Bank to Auction Divyesh Patel’s Properties in KSh2.5 Billion Debt Battle
The latest judgement now draws a clear boundary between debt and extraordinary damages.
Government must pay for goods it received and used, according to the appellate court.
But suppliers seeking exceptional financial compensation must prove every element of their claim.
After three decades, Equip Agencies has secured recognition of its principal debt.
The billions generated through compound interest, however, have finally been stripped from the equation.
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