Sarrai Group of Uganda will enjoy a small reprieve after the High Court extended an order suspending a ruling that cancelled its 20-year-lease to run the debt ridden Mumias Sugar Company.
Justice Alfred Mabeya was not persuaded to lift the order as requested by several creditors including a Dubai based Vartox Resources Inc and West Kenya.
Judge Mabeya extended the freeze for at least one month to give Sarrai time to prepare and challenge the bid to cancel their lease as he set the case to be heard on June 8.
He stated that the court-appointed administrator Kereto Marima is running the affairs of the troubled sugar company after he ordered the removal of PVR Rao in April.
“The court is not persuaded to vacate the order granted to Sarrai Group,” the judge ruled.
The ruling is made amid several creditors protesting the suspension of the judgment that cancelled Sarrai’s lease arguing that the Uganda-firm obtained the order without disclosing all facts to the court.
West Kenya also expressed opposition to the move saying the premises had been handed over and bringing Sarrai back through the extension of the order complicates the conduct of the administrator.
These court battles are a result of family fallout between the billionaire Rai brothers. Jaswant Singh Rai, the chairman of Rai Group is opposed to the lucrative leasing contract from his younger sibling — Sarbi Singh Rai.
West Kenya said that Sarrai Group was not condemned unheard. Justice Dorah Chepkwony suspended the revocation of the lease a week after it was cancelled by Justice Mabeya following an application by Sarrai Group.
But Sarrai argued that it will suffer an investment loss of Sh5.6 billion if the lease remains cancelled. Through their lawyer Wesley Gichaba, the company said that they are planning to file an appeal but it will be rendered useless if the order is not suspended.
The court cancelled the lease and removed Mr Rao as the administrator saying it favored KCB but unfairly prejudiced other creditors.
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