KAMPALA: Principal Judge, Dr Flavian Zeija has blocked the payment of Shs 120 billion to Kampala businessman, Hamis Kiggundu pending the hearing of an application filed by Diamond Trust Bank Kenya (DTB).
Last month, the Commercial Division of High Court Judge Henry Peter Adonyo ordered Diamond Trust Bank (DTB) Kenya to refund Shs 120 billion debited from Hamis Kigundu’s Bank accounts after declaring that $4,014,444 and $6,974,600 loans extended to him were illegal on grounds that the bank had no license to operate in Uganda.
In his ruling, Justice Adonyo faulted DTB Kenya for appointing its counterpart (DTB Uganda) saying it had no license to carry out financial business in Uganda as per the financial institutions act of 2004. “The act contravenes regulation number five and therefore DTB Uganda is penalized for taking part in illegal business,” he ruled.
In tandem, DTB filed an application challenging Justice Adonyo’s ruling.
In his ruling earlier today, the Principal Judge agreed to DTB’s application noting that the bank would suffer a great loss if the order is executed before the appeal is disposed of.
“This decision has far-reaching implications on the banking industry as far as it declares syndicated loans illegal. This calls for maintenance of the status quo to enable the court of appeal to inquire into this illegality and either uphold the finding or reverse it,” he ruled
He said that if the application seeking to stay the execution of the Commercial Court orders is not stayed, it would render the appeal by DTB a waste of time.
The Principal Judge ordered that all the orders of the Commercial Court are not executed until the case filed in the Court of Appeal is disposed of.
In February 2011 and August 2018, Kiggundu sought and offered $4,014,444 and $6,974,600 loans by the banks for construction of commercial properties. To secure the loan Kiggundu mortgaged Kyadondo Block 248, Plot 328 land at Kawuku, FRV 1533, Folio 3, Plot 36-38, Victoria Crescent II Kyadondo and LRV 3176 Folio 10, Plot 923, and Block 9 located at Makerere Hill Road.
DTB Kenya contacted its counterpart in Uganda to collect a loan facility from the Business man.
In March, Ham dragged both banks to court for siphoning over sh120b from his accounts without his consent. He also wanted the court declare that the banks demand for $4,014,444 and $6,974,600, which was advanced to him by DTB-Kenya, is illegal and unenforceable on the grounds that the Kenyan bank had no license to carry out financial business in Uganda.