Hearing of Mumias Sugar lease case set for next week

A case in which five farmers are contesting the leasing of the troubled Mumias Sugar Company will be heard for four consecutive days starting next week.

Milimani Commercial Court Presiding judge, Justice Alfred Mabeya Monday said the matter must be determined expeditiously and consequently set the hearing for next Monday, February 14th to 17th,2022.

The Gakwamba farmers are challenging the lease on grounds that it was undertaken in an opaque manner and awarded to the lowest bidder, Sarrai Group without regulatory approvals.

The High Court on January 14 temporarily stopped the Uganda-based company from proceeding with operations at Kenya’s largest sugar company for 10 days pending a hearing and determination of the matter.

Since the court’s decision, the matter has drawn the attention of other players who have sought to be enjoined in the case.

It is for this reason that Justice Mabeya, has certified the matter as urgent and directed parties to file written submissions within seven days starting Monday, February 7th,2022.

Mabeya noted that since the case by the farmers was filed in court in January 2022, several applications have been filed by not less than five interested parties, with other parties seeking to set aside the order, another party filing preliminary objection to the suit and others seeking to be enjoined in the matter.

“The dispute should be determined expeditiously. It must be resolved at once without much delay,” Justice Mabeya said.

The Ugandan based company won the lease even after placing the third-highest bid of Ksh11.5 billion in the lease battle.

In response, Sarrai Group says the lease for operating and taking over assets of Mumias Sugar Company was not marred with “improprieties, fraud and apparent corruption as averred” and that the farmers have failed to place before court convincing material to demonstrate corruption in the process leading to the award of the lease to the company.

SarraiGroup argues that the assets of Mumias Sugar Company are wasting away because of the orders stopping its operations.

When the matter came up before Milimani Commercial Judge, Justice Wilfrida Okwany on January 25th,2022, extended the orders to March 14th, 2022 and enjoined West Kenya Sugar Limited in the case.

West Kenya, through senior counsel, Paul Muite had faulted the bidding process saying it was not conducted in a fair and transparent manner as they were the highest bidder at Ksh 36 billion and the Ugandan firm, which was awarded the tender was the lowest bidder at under Ksh 6 billion.

The defendants in the case are Ponangipali Venkata Ramana Rao, KCB Bank Kenya Limited, the AttorneyGeneral, Cabinet Secretary Ministry of Agriculture, Livestock and Fisheries, CompetitionAuthority of Kenya, Sarrai Group Limited, Chief Land Registrar, CountyGovernment of Kakamega and Capital Markets Authority.

He enjoined the parties seeking to be part of the suit and directed them to file their papers within three days and the applicants to file responses within three days.

When the case comes up for hearing starting February 14th, the parties will be highlighting the written submissions.

On his part, KCB administrator Ponangipali Venkata Ramana said the lease was awarded to Sarrai Group because, during technical evaluation, it was noted that if West Kenya Sugar Company was awarded the lease of the assets of Mumia’s Company, then Rai Group of Companies will control at least 41.95% of the total sugarcane crushing capacity per day in Kenya.

The  County Government of Kakamega raised a preliminary objection to the suit saying it is misconceived, incompetent and does not show a reasonable cause of action against the county.

Competition Authority of Kenya(CAK) says no merger approval has been submitted to them in relation to the leasing of the assets of Mumias Sugar and it is evident that Rao’s decision to handover the assets of the company to Sarrai Group is blatant disregard and violation of the law and amounts to criminal conduct under Competition Act 2010.