High Court Orders Mumias Closure

Justice Wilfrida Okwany ordered Sarrai Group of Uganda to halt all operations at the Kakamega-based factory, stating that the lease had been terminated.

The High Court on Thursday ordered the closure of the recently reopened Mumias Sugar Company, a directive that appears to contradict a May decision by the Superior Court of Appeal.

Justice Wilfrida Okwany ordered Sarrai Group of Uganda to halt all operations at the Kakamega-based factory, stating that the lease had been terminated.

Sarrai’s request to suspend her ruling pending appeal was denied by the judge.

“Pending inter-partes hearing, the court do issue preservation orders stopping any dismantling, stripping, removal, transfer or disposal of any movable assets of Mumias Sugar Company with immediate effect,” the order reads.

The judge also stated that the orders obtained by KCB Group at the appellate court did not invalidate a judgment issued on April 14 by her colleague Alfred Mabeya.

According to the judge, PVR Rao, the KCB-appointed receiver manager, was removed as Mumias’ administrator, and Kereto Marima was in charge of the miller.

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

He stated that the company will continue to operate based on the superior court’s decision.

Mr Gichaba stated that the ruling will have an impact on sugarcane farmers who have been contracted by the company as well as over 300 workers who have been hired at the factory and have been laid off.

Sarrai, according to the petitioner’s lawyer Jackline Kimeto of West Kenya and Dubai-based firm Vartox Resources Inc, was using the court order to vandalise Mumias’ assets.

“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.

According to rival West Kenya’s senior counsel Paul Muite, despite canceling 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 that have dogged the once-dominant miller since last December, when Sarrai won the tender to lease the company for 20 years.

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

However, shortly after Mr Rao’s announcement, companies that lost the tender process filed numerous cases in the High Courts of Nairobi and Kakamega, as well as the Public Procurement Administrative Review Board, challenging the lease and the entire process.

In April, Justice Mabeya canceled the 20-year lease, but the Uganda-based company returned to court and obtained temporary orders, effectively suspending the decision. KCB Group also obtained a temporary order suspending Justice Mabeya’s judgment at the Court of Appeal, and a decision is expected in September.

Shareholders were keeping a close eye on the leasing agreement.