Sugar Board wins land dispute case against Mumias

Kenya Sugar Board has won a protracted legal battle against Mumias Sugar Company over a piece of land, which it had claimed from Busia Sugar Company (BSC) over unsettled debt.

The Court of Appeal ruled in favour of the Sugar Board noting that the land changed hands illegally. The land in contest belonged to Busia Sugar Company (BSC), which went under receivership.

The sugar firm, under receivership, owed the board Sh337 million in interest charges.

KSB had taken over the land and all movable and immovable assets of BSC to recover the debt. But upon appointing a receiver manager, who happened to be an employee from Mumias Sugar, the land changed hands to a private firm without the knowledge of the board.

Mumias Sugar, on its end attached the same land to reclaim Sh100 million it had advanced BSC.

“It appears that both MSC and the receiver were acting in contrary to the interests of KSB, the debenture holder over all the assets of BSC,” Court of Appeal Judges Daniel Musinga, Gatembu Kairu and Agnes Murgor ruled.

Agreement

Sugar Board acting CEO Solomon Odera, in an affidavit told the court that Busia Sugar could not make any agreement with a third party without its authority. Odera said that the transaction was made without the knowledge of the board.

“KSB was neither aware nor did it consent to the charges that was executed between BSC (represented by the Receiver) and MSC. The original title to the suit land was held by KSB when Mumias Sugar purported to dispose of the land.

The Receiver was acting contrary to the terms of his appointment and in utter abuse of its powers as spelt out in the debenture agreement dated April 5, 2014,” the court found.

The lawyer who was representing BSC in the case admitted to have signed consent so that a judgment is entered against the firm to allowed the sale of the land under private treaty.

She, however, said that there was no instructions from BSC when she signed it and only depended on what Mumias Sugar Company lawyers told her.

High Court judge Aggrey Muchelule, however, did not quash the consent. “That alone ought not to have prevented the learned judge from considering all the relevant circumstances relating to the sale of the land in question.

The purported sale was out rightly fraudulent, a fact that was known or ought to have been known by MSC,” the Court of Appeal ruled.

The lawyer also complained that her signature was forged to allow transfer of the land to a company called Kaplony Limited.

“Had the trial court given due consideration to all the above, we think it would have exercised its discretion in favour of the appellants (KSB). For these reasons, the appeal lodged by KSB is hereby allowed,” the Appeal Court judges ruled adding that Mumias would have to pay the cost of filing the case by the Sugar Board.