Saturday, July 13, 2024

Koracon wins 191m birr lawsuit over Gimb Gebeya


The Federal High Court’s 20th Civil Bench has given a final verdict in favor of Koracon Construction, which sued Gimb Gebeya Market SC, a company formed by traders at the prominent market location called Gimb Gebeya in Adama Town. The defendant will have to pay 110 million birr and interest and compensation for breaching a contract agreement.
The case was filed by Jibril Geresu, owner and General Manager of Koracon, in May 2017 at the Federal High Court Civil Bench when Gimb Gebeya failed to settle a payment. They had made several attempts to collect the money for building a market center at Gimb Gebeya, Adama Town.
According to the lawsuit a contract was signed in January 2014 for the phase II project, and again for the third phase project in July 2015.
Based on the agreement the second phase project cost 191.233 million birr including VAT, while the supplementary agreement which was signed in March 2016 added further work at a cost of 50.8 million birr including VAT.
According to court documents filed in May 2017 the total cost of the third phase was over 153.6 million birr including VAT.
When the project started however, the client wanted to pay under other terms than they agreed to. According to the deal, the project consultant, ETG Designers and Consultants plc, was supposed to approve any payment request.
“The consultant is responsible for evaluating the project and approving payment requests from the contractor,” the document explained.
The lawsuit reads that even though the company has submitted a payment request approved by the consultant in December 2015 for over 41.25 million birr and in March 2016 for the payment of close to 38.5 million birr for the second phase of the project the payment was not settled by the client.
At the same time the payment request for the project done on the third phase and approved by the consultant in May and August 2016 for the payment of 32.25 million birr and 11.2 million birr respectively, the defendant did not pay as the same as the previous payment request, according to the claim by the plaintiff.
The plaintiff stated that meanwhile it did not receive any payment it has settled the VAT payment for the government.
Even though the defendant was behind in its duty, the plaintiff borrowed from the bank and used the money that it secured from other sources to continue the project as per the initial contract agreement, according to the charge it filed.
The charge stated that the plaintiff wrote two letters in May and July 2016 asking to be paid in order to keep working but they never were.
Since May 2017 the case has been heard at the Civil Bench of the Higher Court until a final decision was handed down last Friday afternoon.
The court verdict indicated that the defendant should pay the 110 million birr to cover the cost of the project undertaken by the contractor and audited by the public enterprise, Ethiopian Construction Design and Supervision Works Corporation. The verdict will also include interest and compensation for the company besides the 110 million birr.
Gimb Gebeya SC is a company formed by about 400 traders that have businesses at the old market place at the heart of Adama town, 98km east of Addis Ababa, which was forcefully taken over by the city administration and transferred to investors.
The project owned by Gimb Gebeya SC is now located on the northern part of the town at a place called Minjare Street. Currently the market is one of the major trading centers in the town, while residents in the city claimed that the old place has not been developed properly.

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