Mumias gets reprieve from Dubai Bank winding up bid

The High Court Tuesday granted reprieve to Mumias Sugar by extending to November 3 an order barring Dubai Bank from selling its assets to recover a Sh91 million debt.

Justice Eric Ogola issued the orders after Dubai Bank, which had served a winding up notice on the sugar miller, failed to file its response to the suit, pleading for more time.

Dubai Bank said Tuesday that it had just last week appointed its representatives for the suit, and would need more time to respond to the claims raised by Mumias Sugar.

The debt allegedly arose from a guarantee that Dubai Bank gave to Mumias Sugar to allow it to buy sugar from Sudanese firm, Kenana Sugar Company.

Justice Fred Ochieng had in July granted the same interim orders, which were to expire Tuesday, when the matter was meant to be heard by Justice Ogola.

READ: Mumias Sugar gets reprieve as court halts Dubai Bank winding up petition

“Interim orders herein are extended to November 3 when the matter shall be heard,” the judge said after granting time to Dubai Bank to file a response.

Mumias Sugar is challenging the validity of the guarantee, insisting that Dubai Bank has failed to furnish it with the original documents regarding the deal the two had struck.

“Being unable to confirm the validity of the letter of undertaking, guarantee and Dubai Bank’s claim, Mumias Sugar instructed its auditors, KPMG, to carry out a thorough forensic audit of the account to establish the validity of the claims,” the sugar firm said in its suit papers.

Mumias Sugar adds that Dubai Bank did not give it a chance to conclude the investigations before serving it with a notice of winding up, which was to entail selling of the sugar firm’s assets to recover the alleged debt.

It has accused Dubai Bank of arm-twisting it into paying the debt before it has established the validity of the Sh91 million claim.

“The defendant intended to coerce Mumias Sugar to pay a bona fide disputed debt, and failed to give any valid reason for its action,” said the sugar firm.

The firm’s managing director Coutts Otolo has insisted that in the event that the debt was valid, his firm is not in financial quagmire, and is in a position to pay the debt in full.

George Murugara, who is representing Mumias, argued that the firm would suffer irreparable loss if Dubai Bank is not stopped from enforcing the winding up notice.