Questions like why UMSC did not seek legal advice when drafting the now controversial sales agreement are emerging.
The other concern in the public eye is why the purchaser and seller insisted that the agreement would be kept secret and confidential.
The Mufti of Uganda, Sheikh Ramadhan Mubajje. Can his administration save the UMSC properties from being attached by Justus Kyahabwa?
Last week, the High Court Commercial Division issued
an execution order attaching Uganda Supreme Council properties in different
parts of the country to recover 19 billion shilling being
claimed by Justus Kyahabwa.
The Mufti, Sheikh Ramadhan Mubajje while reacting to
the ruling accused the court of favoring those with money. Uganda Muslim Supreme Council was making a last-minute attempt to block Justus Kyahabwa from claiming a refund of 3.5 billion and interest amounting to 19 billion shillings.
What transpired in court and the events that have followed continue generate debate. Some legal brains have indicated to URN that the
application by the Uganda Muslim Supreme Council was bound not to succeed
going by the arguments of its legal team while applying for unconditional leave to appear and defend the council in a civil suit.
Equally, revelations of the details from the sale agreement have put the Uganda Muslim Supreme Council under Sheikh
Shaban Ramadhan Mubajje in the eye of the storm.
has emerged that the Mufti Shaban Ramadhan Mubaje and former Supreme
Council Chairperson, Dr Abdul Kadir Balonde signed a sale agreement for a
two-square-mile land located in Sembabule district to Justus Kyahabwa
through Arthur Kayanja on 24th June 2020. Justus Kyahabwa paid 3.5
billion shillings for the
said land knowing that it had some encumbrances.
like why UMSC did not seek legal advice when drafting the now
controversial sales agreement are emerging. The other concern in the
public eye is why the purchaser and seller insisted that the agreement
would be kept secret and confidential.
being asked is why the Uganda Muslim Supreme Council would sell the
land to Justus Kyahabwa when the same land had been sold to M/s
Enterprise Handling Services Limited as per documents on the court's
The latest saga involving the sale of Uganda Supreme
Council properties rekindles the memories of 2008 when the Mufti and members of
his Executive Mubajje were accused also of illegally selling off properties
that included land and buildings in Kampala.
That disagreement led to the breakaway faction now
headquartered at Kibuli mosque and headed by the Supreme Mufti Sheikh Shaban
URN secured Hon. Lady Justice
Harriet Grace Magala's ruling in which Uganda Muslim Supreme Council was
seeking to be granted unconditional leave to appear and defend civil
suit no. 0505 of 2023.
Did the Judge base on to Dismiss the UMSC application?
On August 7, 2023, Commercial Court judge Harriet
Grace Magala declined to allow an application by the Uganda Muslim Supreme
Council-UMSC seeking orders granting them unconditional leave to appear and
defend civil suit no. 505 in which one Justus Kyabahwa wanted to recover about
19 billion shillings.
Justus Kyahabwa bought the said land at 3.5 billion
shillings even when knowing that it had some encumbrances.
Documents indicate that a caveat had been filed on
the title to the Property by M/s Enterprise Handling Services Limited. Enterprise
Handling Services Limited had allegedly bout the land in dispute in 2017 at 280
The Uganda Muslim Supreme Council had promised it
would secure and hand over the property to the purchaser in not more than 60
Both parties had agreed that they shall endeavour to
use all lawful means possible and to assist each other in carrying into effect
the purpose for which this Agreement is entered into except that if the Vendor
fails or refuses to comply with or the Purchaser fails to obtain possession or transfer
of the property within a period of 150 days.
They further agreed that the Uganda Muslim Supreme
Council would refund all sums paid together with interest of 12% per month from
the date of execution hereof.
The agreement also states that before the
transaction kicked off it had been authorised by all the relevant organs of
UMSC. The agreement also states that all disputes arising out of the
transaction shall be resolved through court but after exhausting arbitration in
accordance with the Arbitration and Conciliation Act.
The purchaser, Justus Kyahabwa went ahead and paid Uganda
Shillings Three Billion, Five Hundred and Eighty-Four Million only inclusive of
all taxes payable in respect of this transaction (price of UGX 3,584,000,000/=)
When UMSC failed to transfer the land as agreed, Justus
Kyahabwa went to the commercial court on 13th June 2023 and sought a
declaration to have him attach properties of UMSC in order to recover the 3.5
Billion shillings and 12% interest per month from the date of execution.
Kyahabwa is altogether demanding 19 billion shillings.
Uganda Muslim Supreme Council (UMSC) on the other through
its lawyers applied to the Commercial Division of the High Court seeking leave
to allow it to appear and defend the suit which was proceeding experte in the
Commercial Division of the High Court.
The judge, Harriet Grace Magala based her ruling on
the sale agreement between the Uganda Muslim Supreme Council and Arthur Kayanja
on behalf of Justus Kyahabwa as a basis to determine the issue at hand.
Among some of the arguments by the Uganda Muslim
Supreme Council was that it entered into the contract without the help of an
The judge ruled that that did not amount to the defence
that would render the contract void.
She wholly dismissed the application for lack of
merit and said UMSC should proceed and pay Kyabahwa close to 19 billion
She further held that UMSC had a spectacularly
frivolous case that had no legs to stand on.
“The Applicant [UMSC] has failed to show the court
that she has any triable issues that warrant the grant of unconditional leave
to appear and defend the suit. The triable issues presented by the Applicant
are frivolous. Had the Applicant made a refund of the purchase price upon
coming to the realization that the contract could not be performed as a result
of claims and interest in the property by M/s ENHAS and the court decision in Civil
Suit no. 20 of 2020 the matter would not have come before the court" said the
“Because the Applicant was not vigilant and now
finds herself in a position where the purchase price and interest on the same
have to be paid from the time the Respondent failed to take possession of the
property and/or transfer the same into his names she is now clutching at
straws,” the judge held.
The Court Case In their application seeking to join
the suit as defendants, UMSC said the agreement that had been signed was null
and void because the buyer had failed to pay stamp duty as according to law.
In their application, UMSC, argued that it is a
requirement of sections 3(1) and (2) of the Stamp Duty Act that a sale of land
agreement must pay stamp duty and if the same is not paid, the sales agreement
is not admissible in court as evidence.
Therefore, UMSC argued, Kyabahwa suit should be
dismissed on that ground.
But the judge disagreed arguing instead that a
technicality like that can’t block the court from serving justice.
“Clearly, non-payment of stamp duty is not fatal to
the instrument or its admission in evidence. I therefore, agree that it is now
settled that Court cannot dismiss a suit merely because the stamp duty has not
been paid on the document relied upon to bring the claim” Said Magala “I believe
this is also in line with the provisions of Article 126 (2) (e) of the
Constitution which enjoins this Court to administer substantive justice without
undue regard to technicalities. I accordingly, find there is nothing to try in
the main suit regarding this contention,” she further ruled.
The judge also disagreed with UMSC over its argument
that Kyabahwa was wrongly before the court because the agreement talked about
arbitration first before any legal proceedings.
finds that clause 9.0 of the agreement for the sale of land is inoperable and
incapable of being performed. The clause is pathological or defective and it
was poorly drafted. The clause implies or presupposes that parties must first
refer the matter to arbitration and if the arbitration proceedings failed, the
parties would resort to the courts of judicature. This is not how arbitration
proceedings should be conducted as envisaged under the Arbitration and
Conciliation Act,” Magala held.
The judge also cut into pieces the argument by UMSC
that they didn’t know whom to pay between Kyabahwa and Kayanja because the
agreement was made with Kayanja but it was Justus Kyabahwa demanding. She said
Uganda Muslim Supreme Council knew the exact bank account on which money moved
to their own account.
“In the absence of evidence controverting the
evidence on the court record the refund must be made to the Respondent. The
Applicant did not prove or show that she received any payment from a one
Kayanja Arthur thereby causing confusion or uncertainty,” the judge ruled.
The other issue that was and is still very
continuous now was how 3.584 billion shillings that had been paid for the
land ended up becoming 19 billion shillings in three years.
Uganda Supreme Council had also argued that the
interest rate of 12% per month was untenable, against public policy, illegal
and too harsh and therefore shouldn't not be enforced by the court.
The judge agreed with the argument by Justus Kyabahwa
that the court can’t change an agreement between the parties.
“The Applicant submitted that she entered into the
contract without the help of an advocate. This does not amount to defense that
would render the contract void. I am therefore persuaded by the arguments of
the Respondent that this court should enforce the clear intention of the
parties. As such, the interest rate of 12% per month is not a triable issue,”
the judge held.
She added that the moment, UMSC realised that it had
failed to provide vacant possession of the land, it should have refunded
Kyabahwa’s money within the stipulated 150 days to avoid the money from
accumulating and then turning around to say the interest rate of 12 percent was
“It was incumbent upon the Applicant to immediately
make a refund of the purchase price to the Respondent once it came to her
realization that the Property could neither be transferred in the name of the
Respondent nor could the Respondent take possession of the said property as a
result of third-party claims by ENHAS to whom the Applicant had leased the
disputed for a period of fifteen (15) years from 2013 to 2028.
The interest of the said entity in the disputed
property also culminated into Civil Suit No. 20 of 2020 that was filed against
Applicant by ENHAS and the court decided in favour of ENHAS…The Applicant lost
this case and filed an appeal which she chose not to pursue but rather
consented to abide by the Orders of the High Court which necessitated
transferring the Property into the name of M/s ENHAS and this is why the
Respondent had to hand back the Duplicate Certificate of Title of the Property
to the Applicant thereby rendering the Applicant incapable of performing the
Contract,” the judge ruled.
Uganda Radio Network has seen a copy of the consent
agreement that was signed between ENHAS and UMSC in which they agreed to
operationalize the Masaka High Court ruling that favoured ENHAS as the owner of
“The parties have thought it wise and proper that in
the interest of mitigating the loss and the interests of all the parties, it is
hereby agreed that; by consent; the parties compromise and or resolve the
intended appeal in the following terms; the judgement of High Court dated
December 2022 between the appellant and respondent be maintained and is hereby
maintained,” the consent agreement signed by Mugalu on behalf of UMSC reads in
part. The parties also agreed to terminate all proceedings in court
against each other. UMSC had filed a notice of appeal in the Court of Appeal
but had not done anything else to execute the appeal.
It has emerged that the controversial
sale between Uganda Muslim Supreme Council and Justus Kyahabwa was supposed to
be kept confidential. “The parties acknowledge and agree that
all information concerning this transaction is confidential and shall be
treated as confidential by the parties, their affiliates, officers, directors,
shareholders, employees, agents, representatives, successors and assigns. No
disclosure of such information may be made by one party without the prior
written consent of the other party save as may be required by or to comply with
the law,” clause 10.0 of the sales agreement reads in