City businessman Haruna Sentongo, a brother to Hamis Kiggundu, has lost a Shs 10 billion case against I&M Bank Uganda Limited.
In January 2019, Orient Bank Limited (now I&M Bank Uganda) sued Haruna Sentongo, seeking repayment of Shs 10.3 billion, accrued interest, general damages, and costs of the suit.
In its ruling, the court directed Sentongo to pay Shs 10.3 billion, Shs 150 million in damages to I&M Bank, and 22% interest per annum from the date of the first default until full payment.
Sentongo appealed against the High Court Commercial Division’s judgment, delivered by Justice Richard Wejuli Wabwire in December 2022. He cited breach of contract terms, fiduciary and statutory duties, misrepresentation, negligence, undue influence, economic duress, unfair and unconscionable contract terms, and unjust enrichment from extortionate interest rates and charges.
He sought the recovery of sums unjustly and unlawfully charged, special damages for loss of business and income, a permanent injunction on property in Kibuga Block 12 Plots 250, 251, and 252 in Kisenyi, as well as punitive damages and interest at a commercial rate of 25% per annum until full payment.
In May 2015, Sentongo obtained a loan facility worth Shs 1.8 billion from I&M Bank to finance the development and completion of a commercial property on Kibuga Block 12 Plot 825, known as Nakayiza Mall, and for working capital for his imported garments business. He also secured an overdraft facility of Shs 150 million, mortgaging the same property.
In September 2015, he applied for and obtained an additional loan facility worth Shs 2 billion, also secured by the same property. At the time of disbursement, Sentongo already had an outstanding loan of Shs 1.7 billion and an overdraft of Shs 150 million, both accruing interest and penalties in case of default.
In December 2015, Sentongo obtained a further loan of Shs 500 million and an overdraft of Shs 450 million, again secured by Kibuga Block 12 Plot 825 at Mengo.
In November 2015, he applied for another loan of $3 million to partially offset his outstanding facilities and finance the construction of a new commercial property on Kibuga Block 12 Plots 250 and 251. In February 2016, the bank approved a facility of Shs 5 billion, secured by properties in Block 12 Plots 251, 825, and 250.
In May 2016, Sentongo obtained another overdraft facility of Shs 100 million for completing a shopping mall on Block 12 Plots 250 and 251 in Kisenyi. By July 2016, he had acquired an additional loan of Shs 1.5 billion, secured by properties in Block 12 Plots 250, 251, and 252 in Kisenyi. As collateral for the July 5, 2016, facility, he provided the certificate of title for Kibuga Block 12 Plot 252.
In an October 12, 2016, facility letter, Sentongo acknowledged his total outstanding debt of Shs 9.6 billion.
Facing continued interest accrual and non-payment, in March 2016, the bank issued a notice of sale for Sentongo’s mortgaged properties in Kibuga Block 12 Plots 251 and 825 at Mengo. To settle some of his debt, Sentongo entered a sale agreement with Downtown Bags Ltd and sold Kibuga Block 12 Plot 825 for $800,000. In July 2017, the price was reduced to $700,000, with Sentongo acknowledging receipt of $600,000.
Out of the $600,000 received by the bank, $326,627 was applied toward the outstanding arrears. Sentongo requested $50,000, which was deposited into his USD account, while the remainder was used to pay monthly installments. Later, it was agreed that the remaining balance should partially settle the principal debt.
In June 2017, the bank issued a notice of default, demanding repayment of Shs 10.29 billion. In response, Sentongo sued the bank. In 2019, the bank counter-sued, seeking recovery of Shs 10.39 billion, general damages, and costs. Sentongo denied the bank’s claims, arguing that he was not indebted.
The suits were consolidated and heard accordingly. In a ruling delivered by Justices Barishaki Cheborion, Christopher Gashirabake, and Asa Mugenyi, the court determined that Sentongo was indebted to I&M Bank Uganda Limited in the amount of Shs 10.3 billion.
“The appellant’s appeal substantially fails, save for variations regarding interest rates and costs. The orders of the High Court are hereby upheld, subject to variations on interest rates and costs,” the court ruled.
The court ordered Sentongo to pay interest at 12.5% per year from January 2019 until full payment. The bank was also awarded Shs 150 million in general damages, subject to 6% interest per year from the date of judgment.
