BY SAM ALFAN.
The High Court will on Thursday rule on application seeking to direct Sarrai Group ltd to cease activities at Mumias Sugar company after the Uganda based firm was accused of dismantling assets of the ailing miller.
Justice Wilfrida Okwany will deliver a ruling after hearing submissions including Jackline Kimeto, Khaminwa & Associates as well as West Kenya and Vartox Inc, accusing Sarrai of stripping Mumias of its assets.
The parties opposed to the lease granted to Sarrai urged the court to grant an order preserving the assets of the once giant miller.
The creditors urged the court for the assets of Mumias including its machinery or equipment that has so far been removed from the premises of Mumias Sugar company (in administration) be returned with immediate effects.
They further want Sarrai Group, its agents, employees, servants, subsidiaries or other affiliates including Mumias Sugar (2021) ltd and Rai Cement ltd to cease all activities within Mumias company premises.
They also pleaded with the court for Kereto Marima, who was appointed by Justice Alfred Mabeya in April to take physical charge of and secure the assets of Mumias company assets and present a comprehensive report of the status of the assets to the court pending hearing and determination of a case lodged by the creditors.
Creditors wants the court to order Sarrai Group to produce a complete inventory of all the assets of Mumias Sugar ltd that were handed over to it by Ponangipalli Venkata Rao and to produce a full account and inventory of all the assets that have been removed from the premises of Mumias Sugar company.
“Am very apprehensive that unless the illegal removal of assets is stopped by a preservation order issued by this court, Sarrai Group ltd will strip dismantle and carry away other creditors have to recover our debts,” creditors told the court.
In her supporting affidavit, Kimeto told the court that it came to her attention that Sarrai Group has been dismantling, vandalising and removing very expensive Mumias’ turbines and machinery outside of the premises.
She said it is not known whether they are being sold off in consultation with Kenya Commercial Bank (KCB) and Ramana Rao who illegally gave them possession of the premises.
She adds that she has established that Rai is fully owned and controlled by the same people that own and control Sarrai Group, Sarbjit Singh Rai and Rajbir Signh Rai.
“All Mumias assets are currently at Sarrai Group mercy because there is currently no oversight over Mumias’ assets as the new administrator appointed by this court is palpably unable to secure the assets of Mumias as a result of Sarrai’s continued presence in Mumias premises, ” Kimeto told the court.
Kimeto added that she has observed that Sarrai has been emboldened by utterances made by politicians in public meetings that no one can stop Sarrai Group from operationalising Mumias’ sugar factory. Not even the court of appeal.
West Kenya sugar company through veteran lawyer Paul Muite and Martin Gitonga told the court that the occupation and control of the vast assets of Mumias by Sarrai has exposed those assets to vandalism, and theft.
They said the continued occupation, possession or control of the assets of Mumias by Sarrai is a blatant disregard of the statutory objective of the administration order as it promotes illegal and unlawful activities within the Mumias premises.
Lawyer Muite submitted that in dealing with matters relating to insolvency proceedings and particularly in proceedings where there is an administration order in force, the court is guided by the objectives of administration as laid out under Section 522(1) of the Insolvency Act, 2015 (the Act).
“The said Section of the Act provides that the objectives of the administration of a company are to maintain the company as a going concern, to achieve a better outcome for the company’s creditors as a whole that would likely to be the case if the company were liquidated and to realize the property of the company in order to make a distribution to one or more secured or preferential,” he said.
“We humbly submit that a situation where Sarrai on the basis of an irregularly issued lease attacks, takes and vandalizes assets of Mumias without due sanction of the body of creditors would defeat the overall objective of the administration and that the evidence of vandalism and theft as disclosed by the photographs adduced by the Applicant herein are relevant to the just determination of the issue herein and thus admissible.
Lawyer Gitonga added that the Court as the Insolvency Court in the matter of administration of Mumias has a duty to ensure that the assets of the company are safeguarded for the benefit of the body of creditors as a whole and the company, even as the appeals against the decision of April 14, 2022 are pending determination.
Gitonga further submitted that failure to do this will inevitably lead to irreparable harm as the said assets would be vandalized, stolen, and wasted
“By the time the fate of the impugned lease to Sarrai is determined by the Court of Appeal, there would be nothing left from among the assets of Mumias sufficient to cater for the interests of both the company and its body of creditors as envisaged by the objectives of administration under the Insolvency Act at Section 522 thereof aforesaid,” he said.
