The High Court has found officials of the Ugandan-based Sarrai Group Ltd in contempt of court for proceeding with operations at the troubled Mumias Sugar Company factory despite being ordered to stop.
Justice Dorah Chepkwony found the senior officials of Sarrai Group Ltd, including its owner Sarbjit Singh Rai, in contempt of court and ordered them to pay Sh100,000 each over the failure to cease operations as directed on July 28, last year.
The judge further directed the officials to appear before the presiding judge of the Commercial Division of the High Court on May 18, to show cause why they should not be sent to jail.
“The contemnors should appear personally before the presiding judge and show cause why they should not be committed to civil jail,” the judge said.
Justice Chepkwony said the operations should be halted immediately, a move that is likely to dash the hopes of farmers who yearned for the reopening of the once giant miller.
Mumias Sugar Company has the capacity to process 8,000 tonnes of sugarcane per day and a cane-growing nucleus of 4,000 hectares, the largest in the country.
The company’s sugar brand hit the markets shelves last December after nearly a decade since the miller stopped processing,
The 20-year lease awarded to Sarrai Group was cancelled by High Court Judge Alfred Mabeya in April last year but the Uganda-based company moved to the Court of Appeal and obtained temporary orders suspending the decision.
KCB Group, which had appointed PVR Rao as the receiver manager also challenged his removal.
Several parties, including rival West Kenya, lawyer Jackline Kimeto and Vartox Resources Inc, later accused Sarrai of taking advantage of the court order to vandalise the once giant miller.
Ms Kimeto, however, filed contempt of court proceedings against the company’s senior officials, arguing that the operations of the miller were still going on even after being served with the court order.
“It has come to the applicant’s knowledge that the 4th respondent company (Sarrai) is currently dismantling and vandalising machinery and striping away Mumias’ assets from the premises in a clear exercise aimed at cannibalising its assets,” she said in the application dated August 2022.
She said she personally confirmed that all operations at the miller continued despite the court order. “I have also received several pictures and videos from residents and former employees from different locations within Mumias informing me that operations within Mumias’ factory were going on in full swing,” Ms Kimeto submitted.
The lawyer, who is demanding more than Sh76 million from Mumias Sugar, told the court that unless punished, the officials of Sarrai Group will go on with the operations.
West Kenya’s Jaswant Rai, through senior counsel Paul Muite, said despite having cancelled the lease, Sarrai has remained in the premises and has been ‘carrying out illegal activities and exposing the assets to vandalism’.
“The continued possession and control of the assets of Mumias by Sarrai has created disorder in what would otherwise be a seamless administration by the court-appointed administrator, Mr Kereto Marima,” Mr Rai said in an affidavit.
Sarrai Group opposed the application and denied claims of vandalism. The firm said it had employed over 300 workers at Mumias Sugar Company, in a bid to kick-start operations.
The company’s lawyer Wesley Gichaba said it would be unfair to order Sarrai to cease operations as it will jeopardise jobs and frustrate the efforts of farmers who are delivering cane and those who have been contracted to make the supplies.
The court heard that some machinery belonging to the company were taken to Kisumu for repairs and before leaving the premises, guards at the gate had to sign. The equipment was later returned, the court heard.
The miller was placed under receivership by KCB Group in 2019 over an unpaid loan of Sh545 million. The lender then appointed Mr Rao as the receiver manager and was tasked by the court to complete the leasing process.
Mr Rao opened the bids on December 22, 2021, and he announced Sarrai as the successful bidder, attracting multiple cases as losing bidders challenged the outcome.
Among the grounds for challenging the 20-year lease granted to Sarrai was that the process was shrouded in secrecy. Justice Mabeya later cancelled the lease saying it was not in line with the best interest of Mumias Sugar Company.
