The Supreme Court in Kampala on Tuesday sent back the Shs120 billion case between businessman Hamis Kiggundu and Diamond Trust Bank (DTB) Uganda and Kenya to the Commercial Division of the High Court for fresh hearing.
The ruling which was made by a panel of five Supreme Court Judges unanimously agreed that the trial judge erred in holding the credit agreements between the parties hereto were clothed with illegality.
The five judges including Chief Justice Alphonse Owiny Dollo, Lady Justice Faith Mwondha, Lady Justice Percy Tuhaise, Justice Stephen Musota and Justice Mike Chibita also advised that it will be very wise for the case to return to the lower court for a fresh hearing.
In his ruling, Justice Dollo said that the syndicated credit facility executed between the DTB Kenya and Ham Enterprise with the DTB Uganda as an agent of the DTB Kenya is lawful; and neither the Financial Institutions Act of 2004, as amended, nor the Financial Institutions (Agent Banking) Regulations, apply to them. However, according to the claim impugning, the legality of the credit-facility contracts between the parties hereto is disallowed.
“The issue of illegality having been resolved in this appeal, High Court Civil Suit No. 43 of 2020, between the parties hereto, which was the genesis of the appeal to the Court of Appeal, and ultimately to this Court, is remitted back to the High Court for trial before another judge; basing only on issues of fact arising from the pleadings. The Respondents are awarded 50 per cent of the costs in the Court of Appeal,” he ruled.
In his appeal, HAM had argued that DTB Kenya has no license to operate in Uganda when it came to the repayment of the loan, which DTB Uganda later recovered on behalf of its Kenyan counterpart, however, the court ruled that the transactions which were made were legal.
Case Background
In March 2020, Ham filed a suit against DTB for recoveries of monies unlawfully debited in Excess of Shs120 Billion from its accounts. The bank unlawfully and deceitfully withdrew these amounts over a spread period of 10 years in excess of all the companies’ liabilities to the bank.
In September 2020, DTB Kenya admitted that it did not have a license permitting it to conduct banking business in Uganda and neither did DTB Uganda have the authority to conduct agency business on behalf of DTB Kenya thereby contravening sections; 4 (1) and 117 of the Financial Institutions Act and the banking regulations.
On October 7, 2020, A judgment was entered in favour of Ham Enterprises (U) Limited at the high court by Hon Justice Henry Peter Adonyo.
Diamond Trust Bank admitted on court records by their submissions that they committed illegalities where they emphasized that; “The Court of Appeal justices erred at law when they failed to address the Substantial point of illegality upon which judgment was rightfully entered at the high court specifically stating that: “The learned Justices were entitled to first deal with the grounds regarding the procedure adopted by the trial Judge in striking out the defendants’ pleadings and granting the impugned orders before dealing with the other grounds.
It was within these admissions in the bank’s submissions that they clearly stated that the appellant Judges never addressed the circumstances under which the Bank never sought the permission of the Bank of Uganda to carry out its business in Uganda as required hence violating sections; 4 (1) and 117 of the Financial Institutions Act.
Ham’s grounds of appeal at the Supreme Court were that the justices at the court of appeal failed to address the substantial issue of illegality as rightfully ruled at High Court since DTB admitted the same, Ham made an application for judgment on admission on the 23rd November 2021.
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