Justice Peter Adonyo, who is also the head of the Commercial Court, ruled that the loans DTB-Kenya offered were illegal since it is not licensed by Bank of Uganda
The Principal Judge, Justice Flavian Zeija, on Tuesday issued an interim order staying the execution of the ruling in the High Court Civil Suit No.43/20/20 and MA no. 654 of 2020 by Justice Henry Peter Adonyo.
Adonyo had ruled that Diamond Trust Bank Uganda Limited and Diamond Trust Bank Kenya Limited had illegally offered loans to HamEnterprises Limited and Kiggs International (U) Limited owned by Kampala real estate developer Ham Kiggundu.
Justice Adonyo last week ruled that the bank cannot recover about $11m (sh41b) loan they had extended to Kiggundu. However, Justice Zeija stayed the execution of the decree pending the determination of the main application.
Justice Zeija issued the interim order after DTB Bank lodged a notice of appeal at the appellate court, arguing that they are dissatisfied with Adonyo’s ruling.
"We do not agree with the whole judgment and we have already filed a notice of appeal against it," Kiryowa-Kiwanuka, the bank’s lawyer, said.
"The ruling means that a person can borrow money and not pay it and court enters an order that the same defaulter be paid without even hearing the evidence," he said, adding: "It is a new legal regime. It brings a very new principle that a court can determine unliquidated damages without hearing evidence."
Justice Adonyo, who is also the head of Commercial Court, ruled that the loans DTB-Kenya offered to Kiggundu are illegal since it is not licensed by Bank of Uganda (BOU) as required under the law to carry out financial business in Uganda.
Adonyo said DTB-Kenya had to seek permission from BOU to carry out financial business in the country.
"DTB-Kenya is not licensed in Uganda to conduct financial business and it, therefore, illegally offered the facilities in Uganda. Consequently, this application is allowed with costs," Adonyo ruled.
The judge said since DTB-Kenya is not licensed in Uganda, the loan ($11m) it offered to Kiggundu is irregular, illegal, null and void and unenforceable.The judge also faulted DTB-Uganda for acting as a collection agent for DTB-Kenya, saying its action was illegal, unethical and unlawful, and in breach of the Financial Institutions Act, 2004 and BOU Consumer Protection Guidelines, 2011.The judge ordered the two banks to refund sh34b and $2,346,670 at an interest rate of 20%, which he declared was unlawfully […]
