Court orders Sarrai Group to keep off Mumias Sugar

Blow to Sarrai Group Limited in Mumias Sugar lease case after high court ruled that it should keep off the miller until a petition challenging its operations is heard and determined.

In a ruling on Wednesday, court further directed that the application by Sarrai and Vertox be heard together.

Interim orders have also been extended to June 8, 2022 but the same do not affect the duties of administrator as Rao is still expected to handover the administration duties to the new administrator.

The court will issue further direction in June 8.

Last month, Ugandan Sugar mill company Sarrai Group suffered a major blow after a court cancelled its Mumias Sugar lease issued last December.

Sarrai was ordered to immediately vacate Mumias Sugar.

The Ugandan company had already begun works and even pumped money into reviving the collapsed sugar mill but the court stopped the process after several bidders challenge the bid.

Justice Alfred Mabeya cancelled the lease and removed Ponangipalli Ramana Rao as the administrator.

“Accordingly, the lease made to Sarrai Group on December 22, 2021 is hereby nullified and Sarrai Group ordered to fully vacate the premises of Mumias,” the court ruled.

Judge Mabeya appointed Kereto Marima to be the new administrator of Mumias company and directed Rao to hand over within seven days.

“Rao as receiver manager to cooperate with Marima and ensure smooth administration of Mumias and by default the receivership shall stand suspended during the duration of the administration,” he said.

Rao challenged the decision saying it was not right for the court to appoint him as an administrator and receiver at the same time

The court said the only irresistible conclusion drawn is that Rao is an unwilling suitor as he was aggrieved by his appointment as an administrator yet he was already a receiver.

The judge said if Rao found it difficult to juggle the two hats, he should have come back to the court to seek directions.

“Rao was simply running away from his responsibility as an administrator and decided to focus on receivership,” he said.

Tumaz and Tumaz enterprises, the company associated with Mwale City investor Julius Mwale topped the bids with Kshs27.6 billion over a 20-year lease period.

The second highest bid was Kruman Finances with Sh19.7 billion for a 25-year lease.

Transmara Group (Sarai) closed the top 3 bids with Sh11.5 billion over a 20-year lease period and was awarded the tender irregularly.