In a significant development, the Court of Appeal has granted Jomayi Property Consultants Limited temporary relief by staying the execution of a High Court order that directed the winding up of the company and appointment of a liquidator. This ruling comes as the company pursues an appeal against the High Court’s decision.
The ruling, delivered on Tuesday by Justice Christopher Gashirabake, addressed Jomayi’s application to halt the winding-up proceedings initiated by NC Bank Uganda Limited.
The bank had sought the liquidation of Jomayi over a debt amounting to UGX 868,250,000, following the company’s failure to comply with a statutory demand served in January 2020. The High Court had consolidated the matter with another case brought by the bank, ultimately ruling in favour of winding up Jomayi.
Jomayi’s legal counsel argued that the company would suffer substantial and irreparable damage if the liquidation proceeded before the appeal was determined. The applicant’s counsel emphasized that the existence of the company was under immediate threat, citing the potential loss of assets and negative implications for ongoing business operations.
In response, the bank’s representative countered that Jomayi’s financial distress made it unjust to delay the liquidation process, noting that the interests of creditors, including buyers of subdivided land from Jomayi, would be severely impacted.
Justice Gashirabake, in his ruling, highlighted the discretionary power of the Court of Appeal to stay execution, particularly when the appeal appears to have a reasonable likelihood of success. He noted that allowing the liquidation to proceed could render the appeal nugatory, effectively denying Jomayi its right to a fair hearing.
“The applicant has demonstrated a prima facie case that raises substantial legal issues worth examining on appeal,” Justice Gashirabake remarked. “The balance of convenience favours the applicant, as the winding up of a company goes beyond mere financial loss; it threatens the very existence of the entity.”
The stay of execution order effectively halts any further steps towards the liquidation of Jomayi Property Consultants until the Court of Appeal hears and determines the substantive appeal. The court also ruled that the costs of this application would follow the outcome of the appeal, signalling that the legal battle between the two parties is far from over.
Meanwhile, Jomayi’s case underscores the legal complexities surrounding corporate insolvency. The company is among many still grappling with the aftermath of the COVID-19 pandemic, during which numerous businesses faced significant losses, making it difficult to service bank loans and ultimately leading to the loss of assets.
Do you have a story in your community or an opinion to share with us: Email us at editorial@watchdoguganda.com
