The Commercial Division of the High Court in Kampala has overturned regulation 13 of the Mortgage Act 2012 requiring Ham Enterprises (U) Ltd to make a security deposit in a case in which the company alleges Diamond Trust Bank (Uganda) and Diamond Trust Bank (Kenya) unlawfully debited sh120b from its accounts.
The court’s decision follows an appeal by the company owned by prominent businessman Hamis Kiggundu against the regulation saying it was contradictory to Article 28 of the Constitution that provides every Ugandan with a right to a fair hearing. Subsequently, Diamond Trust Bank also conceded that in the interest of justice the 30% condition be vacated and that the matter should be left to court to determine the case on its merits.
Court had earlier ruled that the deposit should be made before the substantive hearing of the case in which Ham Enterprises took the bank to court alleging that it had unlawfully debited Shs 100 billion from the company’s accounts over ten years.
But On August 3, 2020 the commercial court overturned this order, thus giving Ham Enterprises an upper hand in the legal battle.
In March this year, Ham Enterprises dragged Diamond Trust Uganda to commercial court after the bank illegally and fraudulently debited over Shs120 billion from its accounts over a period of 10 years.
When Ham found out about the fraud, he wrote to DTB on November 16 2019, terminating all contracts with the bank.
“It was revealed that through extortionate, irregular, unlawful, deceptive transactions and in breach of your contractual duties, you fraudulently, through misrepresentation irregularly debited and recovered monies from our accounts for the 10 year banking relations, ” reads the letter in part.
Ham says this complicated the working relationship between the two parties, prompting him to terminate any contractual obligations with the bankers. ” We therefore hereby communicate the termination of all existing contracts…, ” read the statement.
On January 1, Ham wrote another letter to DTB, demanding among others, a full accounts figurative audit, accounts reconciliation and a detailed explanation, or else refund the monies to his company accounts within 5 days and that they also return all the certificates of titles in the hands of the bank, to Ham Enterprises.
He also threatened to seek redress from Bank of Uganda or constitute legal action should DTB fail to act accordingly. “Failure to do this leaves us with no option but to seek redress from the regulator or constitute legal action for remedies against DTB Uganda and DTB Kenya for recovery of these monies,” said the tycoon in his letter to DTB.
It ought to be noted that the two parties have enjoyed a long period of what appeared to be a peaceful business relationship, with most of the tycoon’s buildings in Kampala such as Ham Towers Makerere, Ham shopping mall Nakivubo, Haruna towers Ntinda among others, all housing the banking institution.
Meanwhile, the bank failed to refund money it stole from the company’s accounts which prompted Ham to sue the bank for recovery, costs and damages.
The scandal exposes the bank as an untrustworthy institution. Customers currently operating loan accounts in the bank might have to conduct thorough audits as there might be more of the same fraudulently debits being done by the bank.
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