Attorney-General (AG) Paul Kihara Kariuki has accused Leisure Lodges Limited of deliberately misleading the government into allocating it land in the South Coast.
At the centre of the dispute is more than 76 hectares (187 acres) in parcels of land worth millions of shillings.
Leisure Lodges owns a beach resort and a golf course in South Coast.
It is in a tussle with Mr Kihara, who has filed a cross petition accusing it of illegally disposing of government land meant for settling squatters.
Through senior counsel Nguyo Wachira, the AG has asked the court to dismiss the petition the company filed eight years ago and declare that it does not own the land.
The AG also wants a permanent injunction restraining the company from selling, transferring or entering into any deal that concerns the property in question.
Mr Kihara accuses Leisure Lodges of failing to surrender 10 parcels of land within the Kwale/Diani complex.
He explains that the Diani Complex Scheme was to be developed into a tourist centre in 1979 but that the plan was shelved due to high expenses. Some of the parcels were therefore allocated to the public.
“Leisure Lodges was one of the beneficiaries. It had requested a part which was to be used for golf course development, leading to the amalgamation and subdivision of the land,” he says.
Mr Kihara says Leisure Lodges wrote to the District Development Committee (DDC) in September 1988, proposing to exchange a portion of land, that was being cleared for an agricultural show, with another piece.
The reason the company gave, he says, was that that show activities would interfere with the hotel business.
AG Kihara further explains that the DCC agreed to exchange the parcel of land with another offered by Leisure Lodges' sister company and that around 1991, the hotel applied for the remaining parcel.
The cross petition states that since the remaining parcel had squatters, the management of Leisure Lodges proposed to surrender a parcel to settle them to give room for the development of the golf course.
Mr Kihara says, however, that the organisation disregarded its commitment by disposing of the land meant for squatters and never surrendering the title documents.
“They were asked by the government to surrender the land, subject to proceedings, to the government for purposes of settling the squatters,” the petition states.
The attorney-general wants a permanent injunction restraining all dealings concerning the land, including surveys and transfers.
However, Leisure Lodges says it is the registered owner of the property so it is entitled to its absolute possession.
It has sued individuals, companies, business entities and the government - parties numbering more than 700 - who have interests in the land.
Leisure Lodges wants a declaration that the subdivision of its land, as well as allocation of plots to third parties, declared contrary to the law and in breach of its rights.
It says these moves amount to acquisition of its land without compensation.
The company argues that the State cannot acquire property for distribution among political supporters and others for personal gain.
It also argues that unplanned development of its land reduced the commercial value of viable properties, including those on the beach, which were next to its parcels.
A three-judge bench - justices Eric Ogola, Mugure Thande and Dora Chepkwony - set the hearing for December 11.