The Commercial Court has dismissed an application by city architect Peter Kamya in which he sought a temporary injunction stopping the sale or transfer of his property Simbamanyo house on Lumumba Avenue and Afrique Suites Hotel in Kampala.
On October 8, 2020, Equity Bank sold Afrique Suites Hotel on Mutungo Hill to Luwaluwa at $4,350,000 (Shs15.6bn) and Simbamanyo House on Lumumba Avenue to Meera at $5m (Shs18.5bn) after Kamya failed to pay Shs38b bank debt.
And following the purchase, Sudhir rebranded the building of Labour House.
While dismissing the application, Justice Stephen Mubiru in his April 12 ruling, held that it would not be prudent to temporarily stop Luwaluwa Investment and Meera Investment which belongs to Sudhir from selling or transferring Afrique Suites and Simbamanyo house, respectively.
“The applicants’ (Simbamanyo estates and Mr Peter Kamya) need for such protection must be weighed against the corresponding need of two respondents (Luwaluwa Investment and Meera Investment) to be protected against injury resulting from being prevented from exercising their own legal rights, for which they may not be adequately compensated in damages..,” Justice Mubiru held.
“Considering the effect of the delays inherent in the administration of justice, a temporary junction will have a disproportionate effect on the companies as an impediment from the pursuit of their proprietary rights,” the head of the Commercial Court noted.
Mubiru further stated that the order if granted would inflict more hardship than it would avoid, on the companies. He said the properties since October 8, 2020, have been transferred and are in possession of Meera and Luwaluwa.
“The implication is that the status quo for the last one-and-a-half years is that the two companies have been exercising the right attendant to being the registered proprietors of properties,” he said.
Mubiru said Kamya seeks an interlocutory injunction to protect himself against injury by violation of his claimed property rights which could be compensated if the final case is ruled in his favor.
Although Kamya pleaded that the caveats he lodged on September 8, 2020, were vacated to allow transfers that followed the sale of properties, the judge said he is barred by section 22 (2) of the Registration of titles Act, to renew the caveats.
The court found that the nature of both properties is purely economic, with no aesthetic or sentimental overtones.
During the hearing, Meera managing director Sudhir Ruparelia said he bought the property at plot 33 legally at an auction conducted by Equity Bank as the mortgagee.
He then subsequently caused a transfer into Meera which is in possession to date and has let out to rent-paying tenants.
“Meera neither purchased nor acquired any business of Kamya conducted on that property, their assets, trade fixtures, tenants or goodwill. The allegations that Meera intends to alienate the property is speculative,” he contended in his affidavit.
Meanwhile, the Commissioner Land Registration, contended that it acted lawfully and within its mandate when it caused the transfer of properties into the names of Meera and Luwaluwa based on valid instruments of transfer.
It all began when the two entities of Equity Bank Uganda and Equity Bank Kenya contributed money together of $3.5m and $2.5m respectively of which Simbamanyo Estates challenged saying that it only considered $7.19m (Shs26.48b), hence accusing Equity Bank Uganda of conniving with Equity Bank Kenya to illegally carry business in Uganda where it has no jurisdiction.
Simbamanyo contended that it started servicing the loan but required more financing, which culminated in additional facilities granted by Equity Bank Uganda of $1.2m (about sh4.3b) for the completion of the construction of a hotel at Mutungo, a Kampala suburb, and to take over a prior facility from Shelter Afrique hotel.
In addition, the estate company noted that Equity Bank Uganda and Kenya brokered a new deal with Bank one, a Mauritius-based bank, to lend $10m (sh36b) to it to pay the old loan with Equity Bank lenders.
In fear of the impending adverse actions at the time, Simbamanyo says it accepted the Bank one loan offer, which was made on November 16, 2017, to bridge a $10m Mauritian loan for purposes of refinancing the existing loans for a period of 24 months.
Putting the estate’s dissatisfaction aside, on August 7 and 11 this year, the bank advertised the sale of the two properties by way of public auction. The advert for the sale of the mortgaged properties intended to enforce the disputed credit facility advanced on November 30, 2017.
This is how Equity Bank sold the property to Sudhir’s Meera Investments Company Limited at a whopping $5million approx. (shs18.5 billion) to recover Bank’s unpaid loan amounting to about $8.1million (approx. Shs30billion).
