Court Halts 20-year Lease Awarded to Sarrai Group to Manage Mumias Sugar

The High Court has cancelled a 20-year-lease awarded to Uganda-based Sarrai Group to manage Mumias Sugar Company, delaying plans to revive the ailing miller.

Justice Alfred Mabeya froze the Sarrai Group deal on grounds it would benefit KCB Group and ignore the interest of Mumias shareholders and other lenders.

The judge further said that the receiver/cum administrator ought to have called a creditors meeting to ascertain the total amount of money owed by the company which he did not do.

“His actions was only meant to protect the interest of KCB and if the lease is upheld, it would be tantamount to blessing KCB with an asset known as Mumias,” Justice Alfred Mabeya in his ruling.

The court found that he released the assets of the company to the lowest bidder, Sarrai holdings at Sh5.8billion and left out the highest bidder, West Kenya Sugar company limited that put in a Sh36.7 billion bid. Additionally, the high court said he had not shown how he was going to pay the debt owed to farmers and creditors.

Sarrai Group secured a lease in December, prompting opposition from other bidders including businessman Julius Mwale of Tumaz & Tumaz and West Kenya.

The court fight underlines the family fight between the billionaire Rai brothers after Jaswant Singh Rai, chairman of Rai Group, opposed the lucrative leasing contract from his younger sibling — Sarbi Singh Rai.

Justice Alfred Mabeya appointed Matela Malima as the new receiver-manager and the lease issued to Sarrai holdings was cancelled as it was ordered to move out of Mumias Sugar Company.

The New receiver manager was directed to compute all assets and debts owed by Mumias sugar company within a period of 60 days and file the same in court.

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