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Judge withdraws from Mumias Sugar battle

 Rakesh Kumar, Sarbjit Singh Rai and Stephen Kihumba at the High Court on May 18, 2023. [Collins Kweyu, Standard]

Commercial Court judge Alfred Mabeya has withdrawn for the second time from a case pitting one of Mumias' creditors and Sarrai Group directors.

Justice Mabeya has instead allocated the case to yet another judge of the same division after finding that he had earlier withdrawn from the battle on reviving Mumias Sugar Company Limited (MSCL).

He directed that Justice Josephine Mong'are should now handle the case as Justice Dorah Chepkwony is on transfer.

Judge Mabeya said it would be improper for him to handle the dispute.

"The reason why the matter was brought to me was that Judge Chepkwony was on transfer and as the head of division ought to give directions. It is true that having recused myself from this matter last year I cannot make any pronouncement on the merit or otherwise," Mabeya said.

The recusal by the judge follows the argument by Vertox, a creditor, that his orders would be challenged following his earlier withdrawal. Vertox's lawyer Ismail Abbass told the judge that the best option was not to handle the case.

The judge said Sarrai directors, including the owner of the firm, Sarbjit Singh Rai, had appeared before him as Justice Chepkwony had ordered them. She ordered them to appear before the head of the commercial division to explain why they should not be jailed for allegedly disobeying court orders.

But their lawyer, Prof Githu Muigai told the court that their appearance and Sh100,000 fine payment was an indicator that they were purging the contempt application before the court.

Githu asked the judge to suspend the session for at least 90 days in order to allow his clients to argue their application before the Court of Appeal and another application before the commercial court to review the orders by Justice Chepkwony.

Lawyer Jackline Kimeto who claimed that Sarrai had put up an advert indicating that it had stopped the operations of Mumias but would resume after two weeks, opposed his application.

Mumias owes Kimeto's law firm Sh80 million in legal fees. "This is double contempt. They have not attempted to purge the contempt," said Kimeto.

In his rejoinder, Githu said his clients were before the court to show cause why they should not be sentenced but not to the handed a sentence. He said they have a right to argue their case even after being found in contempt.

"We are before you. Allow us to pursue the appeal and the review for a period of 90 days. In case we lose and we may lose, and we will come back to you. My clients are here and have obeyed," argued Githu.

This came as the Court of Appeal certified the case filed by Sarrai, challenging orders by Justice Chepkwony who found the Uganda-based Sarrai directors to have disobeyed the court orders by reviving the ailing miller.

The cases now put the farmers and creditors on the edge as Sarrai had already started crashing cane and packaging it for consumers.

Sarrai, took over Mumias after the Court of Appeal suspended commercial court orders that had blocked it from running the firm.

In the case, the Treasury backed the receiver manager Ramano Rao's decision to hand the miller to Sarrai Group.

Former Treasury PS Julius Muia in his affidavit said it would be of no help to hand Mumias to a competitor or a company with milling machines within the same area as Mumias.

The PS took a cue from Rao who said he dropped off West Kenya Sugar Company from the bid due to a conflict of interest. This is despite the company offering the highest financial bid.

Dr Muia in his argument said in order for the leasing process to be successful, the best bidder should be able to turn the miller into profitability.

He said the most important issue at hand was balancing the lease rent and ensuring that Mumias has funds for sustainable operations.

Mumias was incorporated on June 29, 1971. It was then privatised through listing at the NSE in 2001.

According to court papers, National Treasury owns 20 per cent while institutions have 4.57 per cent shareholding. Meanwhile, individuals own 75.43 per cent of the ailing miller.

The miller's financial troubles started in 2012. According to Treasury's documents, by the end of the 2017-2018 Financial Year, it had registered a Sh39.44 billion loss after tax.

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