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Court orders Ponangipalli Rao to continue acting as Mumias receiver-manager

BUSINESS
By Winfrey Owino | November 23rd 2021

Mumias Sugar Company receiver-manager, Ponangipalli Venkata Ramana Rao (with half jacket) during a press conference at the company's boardroom on March 4, 2020. [Nathan Ochunge, Standard]

The High Court has allowed Ponangipalli Rao to continue acting as receiver-manager of Mumias Sugar Company after which it dismissed three of four applications submitted on the matter.

While giving his verdict on Friday, November 19, Justice Alfred Mabeya issued an administrative order against the company, Mumias Sugar, and appointed the 2nd respondent (Mr Rao) as the administrator.

He also allowed Rao to proceed with the process of leasing the Company's assets, but in accordance with the law.

“The receivership of the Company will run concurrently with its administration. Rao will also act as an administrator in addition thereto for purposes of reporting to this Court on the administration of the Company,” Judge Mabeya’s ruling read in part.

Then went on, “For the avoidance of any doubt, the 2nd respondent (Mr Rao) shall continue to act as the receiver-manager of the Company on behalf of the 1st respondent (KCB Bank) and as per his appointment”.

Rao was also directed to give the court a financial statement of the receivership since his appointment, report financial operations to the court after every six months and give all creditors status quo within 60 days.

In addition, Justice Mabeya restrained the respondents (Mumias Sugar Company and KCB Bank) from directing the receiver-manager on how to carry out his obligations and conduct his business.

The Commercial and Tax Division-based judge also dismissed orders seeking to restrain the Senate from interfering with the miller’s receivership by summoning the receiver-manager.

“Since the matter touched on public interest, each party is to bear its own costs,” Justice Mabeya ordered.

In June this year, Rao was taken to task by Senate’s Agriculture Committee over claims that he sold scrap metal to Devki Steel Mills Limited when he was Kwale Sugar Factory receiver-manager.

Rao admitted to selling scrap metal to Devki Steels Mills Limited while he was at Kwale Sugar Factory but denied having sold a commercial project to Devki.

“There was a time I was the receiver-manager at Kwale Sugar, I sold scrap metal to Devki, but it was just that. No commercial dealing,” said Rao.

The Committee which was at the time probing the failed leasing bid by Devki faulted Rao for failing to publicly advertise the leasing process of the troubled miller.

Rao was appointed as the receiver-manager on September 20, 2019, after KCB took over the company over Sh20 billion debt.

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