DTB's lawyer told the Principal Judge that they have an intended appeal which will be rendered useless in the event that they refund the monies before its hearing, adding that the entire banking sector shall suffer substantial and irreparable loss.
Businessman Hamis Kiggundu has asked
the Commercial Court to dismiss an application in which Diamond Trust Bank
Uganda and Diamond Trust Bank Kenya want court to block the implementation of
orders directing them to refund 120 billion shillings and returning properties to
The two banks want the enforcement of
the orders that were issued by the head of the Commercial Court Justice Henry
Peter Adonyo early this month to be postponed until the determination of their
intended appeal in the Court of Appeal.
On October 5 2020,
Justice Adonyo 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 decision was based on a suit filed by Kiggundu,
through his companies; Ham Enterprises and Kiggs International against DTB
Bank, accusing the banks of illegally
taking out more than 120 billion Shillings from his bank account in Uganda.
Kiggundu said that
between 2011 and 2016 his companies were given loans totaling to 41 billion
shillings and he deposited with them several properties as security. However, Kiggundu told court in his petition
that as his companies were repaying the loans, he realized that the banks had
not disbursed the money yet they were reportedly being removed from his
accounts without his knowledge and consent.
As a result, Kiggundu
argued that 34 billion shillings was illegally removed from his shillings account
and 23 million dollars from the dollar account.
According to the
court documents, the loan was organized jointly by DTB Uganda and DTB Kenya.
But DTB Kenya had continued deducting money from his accounts, reportedly using
DTB Uganda as an agent.
In the aftermath, Commercial Court Judge Adonyo
agreed with Kiggundu and ruled that the credit facilities offered by DTB-Kenya
to Kiggundu were illegal since the bank is not licensed to carry out the
financial institution business in Uganda.
Adonyo also ordered the banks to return the
properties that Kiggundu had mortgaged citing that the evidence on record
indicates that all the loans obtained were fully settled at law. He also
ordered for the refund of the monies the banks had deducted illegally from his accounts.
The Judge also awarded costs to Kiggundu and imposed an interest of eight
percent on the monies and several declarations.
banks through their lawyers led by Kiryowa Kiwanuka petitioned the Principal
Judge Dr Flavian Zeija asking him to issue orders such that they do not implement Justice Adonyo’s decision.
The bank argues that if the
application is not granted, they shall suffer substantial loss by being
required to pay 120 billion shillings and approximately 9.6 billion shillings
in interest on top of releasing the securities deposited with the bank.
Kiryowa also noted that the Adonyo decision
will have far reaching implications on the entire banking sector in Uganda.
him, the decision nullified all syndicated loans and lending by foreign
financiers to Ugandan borrowers which losses will run in trillions of shillings
and will have a damage to the economy of Uganda and thus blocking foreign
lending to Ugandan enterprises.
Kiryowa also told the Principal Judge
that they have an intended appeal which will be rendered useless in the event that
they refund the monies before its hearing adding that the entire banking
sector shall suffer substantial and irreparable loss.
But in response to the application,
businessman Hamis Kiggundu through his lawyers led by Fred Muwema have opposed
the application in a hearing that occurred at the Judiciary headquarters in Kampala.
Kiggundu’s lawyers argue that the Commercial
Court right now has no jurisdiction to hear the case and maintain the illegalities
which were already confirmed by Justice Adonyo.
Muwema noted that the alleged loss or
damage to the banking sector as a result of the ruling is speculative because
the orders were clear and issued to DTB Uganda and Kenya specifically so
there's no way how other banks that are not party to the case can be affected.
Court also heard that the reasons by
the banks are insufficient because for stance saying that DTB is going to
suffer losses shows that they will continue to benefit from their illegalities
by holding on to the monies of the businessman when actually he's the one making
//Cue in: “Sayidi eya banka…
Cue out: …okuyimiriza Judgement yakoti”. // English
//Cue in: “We were before….
Cue out: …confirm that position”. //
Muwema said if court is pleased to
grant the application by DTB, it should be on a condition that the banks deposit
the money in issue with court then stay with the properties mortgaged until the
determination of the appeal. Short of
that, the businessman’s lawyers asked court to dismiss the applications with
costs and that their appeal has no chances of succeeding because it is clear
that DTB Kenya erred by transacting businesses in Uganda without a license.
The Principal Judge has now fixed
November 2, 2020 to deliver his ruling on the application.