Companies

Rao fails in bid to extend Mumias term

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KCB Group-appointed receiver manager PVR Rao. FILE PHOTO | NMG

The High Court has struck out an application by KCB Group-appointed receiver manager PVR Rao seeking an extension of his tenure as administrator of Mumias Sugar.

Justice Dorah Chepkwony ruled court has no powers to extend appointment of Mr Rao since another judge had revoked the appointment and an application regarding the cancellation of his tenure is pending at the Court of Appeal.

Mr Rao was appointed the administrator of troubled Mumias Sugar on November 19, 2021.

The Insolvency Act states that an administration lapses automatically at the expiry of 12 months, from the date of appointment. Mr Rao’s term expired on November 18.

Justice Alfred Mabeya revoked Mr Rao’s appointment in April for incompetence but KCB and the receiver manager went to the Court of Appeal and obtained temporary orders, suspending his ouster.

Uganda-based Sarai also supported the application arguing that the company will lose billions of shillings following revocation of the contentious 20-year lease.

Mr Rao filed the application seeking an extension of his term but it was opposed by creditors including lawyer Kimeto & Associates who is seeking millions of shillings from the former giant sugar miller.

Ms Kimeto argued that the court had already determined the fate of Mr Rao and had replaced him with Kereto Marima.

She further said Mr Rao had not tabled consent to support his extension as required by law since he has completely refused to deal with creditors.

Justice Chepkwony also agreed to hear an application filed by Ms Kimeto, seeking to find Sarrai in con-tempt of court for going on with operations at the miller despite being stopped.

The court said it will entertain an application seeking to have more than one judge hear the case.

The case will be mentioned on February 10, 2023 to confirm whether parties have filed their replies and to highlight submissions.

The miller was placed under receivership by KCB Group in 2019 over an unpaid loan of Sh545 million and appointed Mr Rao as the receiver manager.

The court later made him the administrator and directed him to complete the leasing process and re-port progress to creditors.

The bids were opened and Sarrai announced the successful bidder on December 22. The Uganda-based company moved into the premises on December 24 and immediately started tilling the land, paving roads, and undertaking repairs at the mill.

The lease was challenged by other bidders on grounds that it was shrouded in secrecy and judge Ma-beya later cancelled it saying it was not in line with the best interest of Mumias.

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