Companies

New twist as court shuts Mumias sugar

WILF

Justice Wilfrida Okwany. FILE PHOTO | NMG

The High Court on Thursday ordered the closure of the just re-opened Mumias Sugar Company in a directive that appears to be in conflict with a superior Court of Appeal decision made in May.

Justice Wilfrida Okwany directed Sarrai Group of Uganda to cease all activities at the Kakamega-based factory, saying the lease remains cancelled. The judge rejected attempts by Sarrai to suspend her ruling, pending appeal.

The judge further said the orders obtained by KCB Group at the appellate court, did not nullify a judgment issued by her colleague Alfred Mabeya on April 14.

She added that KCB-appointed receiver manager PVR Rao was removed as the administrator of Mumias and Kereto Marima was in charge of the miller.

Sarrai’s lawyer Wesley Gichaba, however, said the ruling was in conflict with another order issued by a bench of three judges of the Court of Appeal, which suspended the cancellation of the lease and removal of Mr Rao as the administrator.

He said the company will continue with its operations on the strength of the superior court’s ruling.

Mr Gichaba said the ruling will affect sugarcane farmers who have been contracted by the company and over 300 workers who have been hired at the factory, rendered jobless.

The petitioner's lawyer Jackline Kimeto, West Kenya and Dubai-based firm Vartox Resources Inc, argued that Sarrai was taking advantage of the court order to vandalise the assets of Mumias.

“It has come to the applicant’s knowledge that the 4th respondent company (Sarrai) is currently dismantling and vandalising machinery and striping away Mumias’ assets from the premises in clear exercise aimed at cannibalising its assets,” said Ms Kimeto.

Rival West Kenya through senior counsel Paul Muite said despite having cancelled the lease, Sarrai has remained in the premises and has been ‘carrying out illegal activities and exposing the assets to vandalism’.

“The continued possession and control of the assets of Mumias by Sarrai has created disorder in what would otherwise be a seamless administration by the court-appointed administrator, Mr Kereto Marima,” said Mr Jaswant Rai.

The ruling adds to the intrigues facing the once giant miller as it has been dogged by controversy since last December when Sarrai won the tender to lease the company for 20 years.

The company won the tender on December 23 and immediately started tilling land, paving roads, carrying out repairs and maintenance of the distillery and the factory among other activities, in its revival plans.

But soon after making the announcement, companies that lost the tender process filed numerous cases in the High Court in Nairobi and Kakamega, as well as Public Procurement Administrative Review Board, challenging the lease and the whole process undertaken by Mr Rao.

Justice Mabeya canceled the 20-year-lease in April but the Uganda-based company went back to court and obtained temporary orders, suspending the decision. KCB Group also obtained a temporary order at the Court of Appeal suspending Justice Mabeya’s judgment and a ruling will be made in September.

The leasing deal was keenly being watched by shareholders.

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