Ham: Relief For DTB As Court Orders For Retrial Of Controversial UGX 120Bn Case

Diamond Trust Bank Uganda and DTB Kenya have asked the Court of Appeal to set aside the decision of the Commercial Court directing them to refund more than 120 billion shillings to businessman Hamis Kiggundu or send back the case file to High Court for trial.

The appeal arises from the October, 2020 decision by Commercial Court Judge Henry Peter Adonyo who ordered DTB Uganda to refund all monies deducted from Kiggundu’s accounts in a case involving a syndicated banking agreement between DTB Uganda and DTB Kenya.

The monies were allegedly deducted from Kiggundu’s two accounts for his companies Ham Enterprises Ltd and Kiggs International Ltd without his consent.

Evidence before the Court record, shows that Kiggundu between 2011 and 2016 through his two companies secured loans amounting to more than 120 billion shillings from DTB Uganda and DTB Kenya to finance his real estate business.

However, the banks reportedly served Kiggundu with documents indicating that he has not met his loan obligation to the tune of 39 billion Shillings as per their agreement and threatened to take over the properties he had mortgaged. As a result, Kiggundu petitioned the commercial court saying that the money that was withdrawn from his dollar and shillings accounts was in excess yet he had also fully paid the loan.

Through his lawyer Fred Muwema, Kiggundu asked the court to strike out the defences of the banks and also issue an order of refund of the money illegally obtained.

In the aftermath, the trial Judge Adonyo dismissed the banks’ defense and ordered them to refund the monies illegally obtained from the businessman with interest of 8% plus cost of the suit.

Being dissatisfied with the decision of Justice Adonyo, the banks first went to the Principal Judge Dr Flavian Zeija where they secured an order for stay of execution of Adonyo’s orders meaning that Kiggundu cannot now commence the recovery of the said monies and they later went to the Court of Appeal.

Before going to the Court of Appeal, the Principal Judge noted that before Kiggundu can recover his money, there was need for the Appellant Court to first determine an issue on whether the said transaction was illegal and whether banks that are not trading in Uganda are required to obtain a license from Uganda to execute a contract.

However on Wednesday, through their lawyers Kiryowa Kiwanuka and Usama Sebuufu, the banks told a panel of three Justices namely Richard Buteera, Kenneth Kakuru and Christopher Izama Madrama that the said decision by Adonyo was reached without evaluating any evidence on record related to the breach of contract, fiduciary and statutory duties between the parties.

The lawyers submitted that failure by the trial Judge to cause businessman Kiggundu and his companies Ham Enterprises Ltd and Kiggs International Ltd to prove their claims against the banks is not a mere technicality but goes on to the root of the dispute.

The banks asked Court to disregard Kiggundu’s allegations that Diamond Trust Bank Kenya was not licensed to conduct financial institution business in Uganda and hence the financial credit facilitation offered to him and his companies were irregular and unenforceable.

According to the Banks’ written submissions seen by URN, the trial Judge is faulted for finding that the credit facility issued by the DTB Kenya as illegal and for allowing Kiggundu and his companies to benefit from the illegality by finding that the money lent thereunder had been settled without proof and ordering the repayment of the money related to the facility.

However Kiggundu through his lawyers from Muwema and Company Advocates asked the Court of Appeal Justices to dismiss the Banks’ submissions with costs saying that the laws in Uganda are very clear that a foreign bank cannot operate here without an operating license which was the case with DTB Kenya.

The Justices of the Court of Appeal have now promised to notify the parties when to receive their Judgement.

The previous decision arising from this case was strongly criticized by the Uganda Bankers Association on grounds that it was unlawful and recently, the (central) Bank of Uganda wanted to join the proceedings at the Court of Appeal as a friend of court but they later withdrew their application.urn

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