In a twist of events the Principal Judge, Dr.Flavian Zeija has stopped the payment of Shs120 billion by Diamond Trust Bank to city businessman, Hamis Kiggundu’s company, Ham Enterprises while complaining that one of the parties tried to bribe him.
While allowing the application by the banks’ lawyers to stay execution of the high court order for the banks to pay Kiggundu Shs.120bn until the appeal is heard, Dr. Zeija stated , “ before I take leave of this matter , I was flabbergasted by one of the parties sending emissaries to me with financial proposals in order to influence my decision. This is disgusting to say the least .”
Justice Henry Peter Adonyo of the Commercial Court last month ruled that DTB Bank Kenya, did not have a license to conduct banking business in Uganda and therefore the credit facilities it extended to Ham’s business were contrary to the Financial Institutions Act 2004 (as amended) and as such were illegal and unenforceable.
The Court thus ruled that the businessman and his two companies, Ham Enterprises Ltd and Kiggs International (U) Ltd did not owe the two bank’s any money. The judge also went ahead and ordered the two banks to refund to the businessman UGX 34,295,951,553/= and USD 23, 467, 670.61, money that was allegedly -unlawfully deducted from the businessman ‘s accounts .Court further awarded him interest of 8% per annum from the date the suit was filed, an amount estimated to total to UGX. 9,600,000,000/=.
The judge also ordered that the banks to unconditionally release the titles of the properties mortgaged by the businessman. Court also, among other orders issued a permanent injunction against the banks from enforcing the mortgages.
However, the Principal Judge has now allowed the application to stay the decision and orders of the commercial court saying that the bank would suffer a great loss if the order is executed before the appeal is disposed of.
“This decision has far-reaching implications on the banking industry as far as it declares syndicated loans illegal. This calls for maintenance of the status quo to enable the court of appeal to inquire into this illegality (syndicated loans) and either uphold the finding or reverse it,” Zeija ruled on Monday morning.
He said that if the application seeking to stay the execution of the Commercial Court orders is not granted, it would render the appeal by DTB a waste of time.
“There is a serious or imminent threat of execution of the order and if the application is not granted, the appeal would be rendered nugatory. If the mortgages(security) are released (by DTB), it presents a high risk as these titled can be transferred and defeats the only security the applicants (DTB) have against the respondents (Ham).”
The Principal Judge directed that all the orders of the Commercial Court are not executed until the case filed in the Court of Appeal is disposed of.
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