Court of Appeal is slated to give its ruling in the landmark case involving city businessman Hamis Kiggundu and Diamond Trust Bank.
Kiggundu, through his companies; Ham Enterprises and Kiggs International, had sued DTB-Uganda, accusing the banks of illegally taking away more than Shs120 billion from his bank account in Uganda without consent while he was serving his loans with the same banks.
Justice Henry Peter Adonyo agreed with Kiggundu and ruled that the credit facilities offered by DTB-Kenya to Kiggundu were illegal since DTB Kenya 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, refund of the monies the banks had deducted illegally from his accounts. The judge also awarded costs to Kiggundu and imposed a 6 per cent interest on the monies among other several declarations.
But the banks through their lawyers led by Kiryowa Kiwanuka, petitioned the principal judge asking him to issue staying orders such that they do not implement justice Adonyo’s decision. Kiwanuka argued that if the application is not granted, the banks would suffer substantial loss by being required to pay Shs120 billion and approximately Shs9.6 billion in interest on top of releasing the securities deposited with the bank.
Kiwanuka also noted that the decision would to have far-reaching implications on the entire banking sector in Uganda if the implementation is done before their appeal, which has high chances of success is not yet determined.
In his ruling, Principal Judge Dr. Flavian Zeija noted that the orders need to be stayed because justice Adonyo issued orders in favour of one party in a transaction that he found illegal but made no mention of the sums Kiggundu had borrowed.
Here, Dr Zeija said it important to stay the implementation so that the Court of Appeal can first determine whether the transaction was illegal since it remains an issue of contention in as far as the Contract Act of 2010 is concerned. He said this is because the records show that the banks received independent advice from lawyers before signing the agreements.
Justice Zeija also said the Court of Appeal also needs to first answer the question of agency banking – whether foreign banks that are not trading in Uganda are required to obtain a license from Uganda to execute a contract. The principal judge explained that Bank of Uganda recently released a statement indicating that a license was not required in the transaction under dispute, adding that the Court of Appeal has to first determine whether Bank of Uganda was right or not.
Counsel Fred Muwema, the lawyers for Ham said there wasn’t much to talk about as he did his part in court. “I am waiting for the ruling”.
On his part, Counsel Kiryowa Kiwanuka the attorney for DTB said “The ruling is tomorrow and we leave everything to court to determine”.
