The High Court on Thursday ordered the closure of the newly reopened Mumias Sugar Company in a directive that appears to conflict with a Superior Court of Appeal decision handed down in May.
Judge Wilfrida Okwany ordered the Sarrai Group of Uganda to cease all activities at the Kakamega-based factory, saying the lease remained void. The judge rejected Sarrai’s attempts to suspend his decision, pending appeal.
The judge further said that the orders obtained by the KCB group from the appeals court did not overturn a judgment given by her colleague Alfred Mabeya on April 14.
She added that the receiver manager appointed by KCB, PVR Rao, had been removed from his role as administrator of Mumias and Kereto Marima was in charge of the sucker.
Sarrai’s lawyer, Wesley Gichaba, however, said the decision conflicts with another order issued by a three-judge panel of the Court of Appeals, which suspended the cancellation of the lease and the dismissal of Mr. Rao as administrator.
He said the company will continue operations based on the superior court’s decision.
Mr. Gichaba said the decision will affect sugar cane growers who have been contracted by the company and more than 300 workers who have been hired at the factory, rendered unemployed.
The petitioner’s lawyer, Jackline Kimeto of Vartox Resources Inc, based in West Kenya and Dubai, argued that Sarrai was taking advantage of the court order to vandalize Mumias’ assets.
“It has come to the plaintiff’s knowledge that the 4th defendant company (Sarrai) is currently dismantling and vandalizing machinery and removing Mumias’ assets from the premises in a clear exercise to cannibalize its assets,” said Ms. Kimeto.
Rival West Kenya, through lead solicitor Paul Muite, said that despite canceling the lease, Sarrai remained at the premises and “carried out illegal activities and exposed the assets to vandalism”.
“The continued possession and control of Mumias assets by Sarrai has created a mess in what would otherwise be a transparent administration by the court-appointed administrator, Mr. Kereto Marima,” Mr. Jaswant Rai said.
The decision adds to the storylines facing the once-giant miller as he has been embroiled in controversy since last December when Sarrai won the tender to lease the business for 20 years.
The company won the tender on December 23 and immediately began plowing the land, paving the roads, carrying out repairs and maintenance of the distillery and factory among other activities, in its recovery plans.
But soon after making the announcement, the companies that lost the bidding process filed numerous complaints in the Nairobi and Kakamega High Courts, as well as the Public Procurement Administrative Review Board. , challenging the lease and the whole process undertaken by Mr. Rao.
Judge Mabeya canceled the 20-year lease in April, but the Uganda-based company went back to court and won interim orders, suspending the decision. KCB Group has also obtained an interim order from the Court of Appeal suspending the judgment of Judge Mabeya and a decision will be given in September.
The leasing agreement was closely monitored by the shareholders.