Mumias battles new headache as Dubai firm demands Sh431 million

Mumias Sugar has asked the High Court to dismiss a Sh431 million claim by a Dubai firm emanating from ethanol distillery construction deal.

A day after the Sh1 billion bailout announcement, the firm was in court battling Peeraj General Trading and Construction Company over $4.4 million (Sh431 million at the current exchange rate) contract. The struggling miller asked High Court Judge Jaqueline Kamau to dismiss the case as it was still premature.

“The defendant states that in view of the provisions of the contracts and the conditions of the Federation International des Ingenieurs-Conseils (FIDIC), the plaintiff’s suit is still premature and an abuse of the court process,” Mumias Sugar Company Lawyer John Khaminwa told the court.

Struck out

Mr Khaminwa argued that the agreement between the two companies was that they would refer the matter to an arbitrator in case a dispute arose between them. He held that the case should be struck out.

On the other hand, Peeraj General argued that Mumias Sugar Company had undertaken to settle the debt in two equal instalments between November and December last year and it admitted in its papers that it owed the firm the amount.

The firm said there was no case to be brought up before an arbitrator. “There is no dispute to be referred to arbitration, the defendant has already admitted and accepted the claim,” Peeraj said in its court papers.

The firm is among a list of creditors after Mumias over outstanding debt though the State has given its assurance of Sh1 billion. Kenya Power is claiming Sh1.1 billion and security firm G4S is after Sh45 million.

“The plaintiff (Peeraj), due to the hefty amount outstanding, made numerous pleas to the defendant (Mumias) to have the amount paid but despite the undertaking to have the amounts paid, the defendant failed, neglected or otherwise refused to honour the payments due to the plaintiff on the account of work done,” the Judge was told.

Justice Kamau directed that the case be mentioned on September 19 to confirm if the two firms will have filed their submissions.