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Ham Kiggundu asks court to reject DTB’s application in Ugx 120 billion case

Lawyer Fred Muwema and businessman Hamis Kiggundu.

Kampala, Uganda |  THE INDEPENDENT |  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 businessman.

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.

But the 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.

To 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 losses.

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.

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