SECTIONS

Farmers want more judges for Mumias Sugar court case

Mumias Sugar Factory in Kakamega [David Gichuru, Standard]

A group of sugarcane farmers have filed a new application to have the Mumias Sugar Company case be heard by more than one judge.

Gikwamba Farmers Co-operative Limited wants the file before the Commercial Court sent to the Chief Justice Martha Koome to appoint an uneven number of judges to determine if an administrator and a receiver manager can manage ailing companies concurrently.

According to the farmers’ lawyer Dianah Mureithi, a decision by the court to appoint an administrator while there is a receiver manager amounts to double roles and also under conflicting laws.

“Our existing legal framework does not provide clear guidance on the two processes that is receivership and administration running concurrently. In fact, the Insolvency Act abolished the concept of receivership and is largely based on rescue legal framework such as administration,” said Mureithi.

“Receivership has different procedures under the law separate and distinct from the process provided under administration running concurrent. There is no binding precedent on the concurrent application of receivership and administration."

Under the law, she said, an administrator ought to take care of the interests of all creditors while a receiver manager only caters for the interests of his appointers. “The matter ought to be certified as raising substantial questions of law and referred to the Chief Justice to appoint an uneven number of judges.” 

At the same time, a new round of battle has emerged over the operations of Mumias Sugar days after Ugandan Miller Sarrai Group started running the ailing miller.

Justice Wilfrida Okwany ordered Sarrai to close Mumias but the firm says that her orders are conflicting those of the Court of Appeal that suspended earlier orders by Justice Alfred Mabeya. According to Gichaba, the orders by the Court of Appeal take precedent of the orders by the Commercial Court.

The new battle pits Jaqueline Kimeto against Sarrai which she accuses of starting to run Mumias despite court orders issued by Justice Mabeya canceling the 20-year lease granted to Sarrai by KCB Bank receiver manager Ramana Rao.

But Sarrai accuses Kimeto, who is one of Mumias creditors, of relying on hearsay in her new application seeking to have the company shut down. Sarrai says Kimeto’s application has an implication of rendering the whole revival process useless.