Mumias Sugar Case: Outgrowers Company Wants Chief Justice To Intervene

Mumias Outgrowers Company Limited now wants the case filed by five farmers challenging leasing of Mumias Sugar Company to be referred to the Chief Justice to establish a bench of not less than three judges to hear the matter.

In an urgent application filed in court on Monday, Mumias Outgrowers argue that the case raises substantial questions of law and of great public concern.

“The first respondent (Ponangipali Venkata Ramana Rao) has alleged he relied on the decision of this court issued on 19^th November 2021 in Insolvency Petition to illegally lease and hand over possession of the assets of Mumias Sugar Company Limited to the 6^th defendant (Sarrai Group Limited) without the involvement of other creditors despite having been appointed an administrator,” stated the lawyer, Ms Maureen Odeck.

In the application, Mumias Outgrowers argue that in view of the scope and sensitivity of the matter and considering how the matter was transferred by Justice Wilfrida Okwany to the Presiding Judge, Justice Alfred Mabeya, it is prudent to shield the court from undue pressure by having the matter heard by a bench of three judges as opposed to a single judge.

It is also the company’s contention that several matters have been filed in various courts on the same subject matter and the court ought to shield itself and other courts from an embarrassing situation of having conflicting judgments over the same subject matter.

In an affidavit in support of the application, Mumias Outgrowers Chief Executive Officer Mr Gamaliel Anamanjia points out that the case touches on the revival of the industrial gem of Western Kenya and any verdict will affect over one million Kenyans, and hence the matter is of great interest.

When the application was brought to the attention of Justice Mabeya, the judge directed the parties in the case to respond within 23 hours, saying the application should be heard first, as it has the net effect of disrupting what the court does. The application will be heard before the judge on Tuesday at 12.30pm.

On February 4, 2022, Justice Mabeya directed the case by the five farmers to be heard from February 14 to 17, 2022 saying it ought to be determined expeditiously.

The farmers, Lambert Lwanga Ogochi, Augustino Ochacha Saba, Prisca Okwanko Ochacha, Robert Mudinyu Magero and Wycliffe Barasa Ng’onga went to court in January 2022 and obtained orders stopping operations at the sugar milling plant. The defendants in the case are Ponangipali Venkata Ramana Rao, KCB Bank Kenya Limited, the Attorney General, Cabinet Secretary Ministry of Agriculture, Livestock and Fisheries, Competition Authority of Kenya, Sarrai Group Limited, Chief Land Registrar, County Government of Kakamega and Capital Markets Authority

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

West Kenya, through senior counsel, Paul Muite has faulted the bidding process saying it was not fair as they were the highest bidder at Ksh36 billion and the Ugandan firm, Sarrai Group which was awarded the tender was the lowest bidder at under Ksh6 billion.

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

On his part, Mr Rao says 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 Mumias Company, then Rai Group of Companies will control at least 41.95 percent of the total sugarcane crushing capacity per day in Kenya.

The County Government of Kakamega has raised a preliminary objection to the suit saying it is misconceived, incompetent and does not show 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 hand over the assets of the company to Sarrai Group is in blatant disregard and violation of the law and amounts to criminal conduct under Competition Act 2010.

Read: Mumias Sugar: Receiver Manager Accused Of Shortchanging The State Miller In Takeover Bid

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