The Supreme Court has issued an injunction restraining I&M Bank Uganda from selling, transferring, alienating, evicting, or taking possession of properties belonging to city businessman Haruna Sentongo, a brother to Hamis Kiggundu. The properties in question are located on Kibuga Block 12, Plots 250, 251, and 252 in Mengo.
In January 2019, Orient Bank Limited (now I&M Bank Uganda) sued Sentongo, demanding repayment of Shs 10.3 billion, accrued interest, general damages, and legal costs. The High Court subsequently ruled in favor of the bank, ordering Sentongo to pay Shs 10.3 billion, Shs 150 million in general damages, and 22% annual interest from the date of default until full payment.
Following this ruling, Sentongo filed an appeal with the Supreme Court, seeking a stay of execution pending the appeal against the Shs 10.3 billion judgment related to a loan default.
The respondent (I&M Bank) raised preliminary objections, arguing that the application was incompetent as it had not been filed first in the Court of Appeal, and that it was barred by lis pendens (a pending legal action).
However, in a ruling delivered by Deputy Registrar Akullo Elizabeth Ogwal on behalf of Justice Catherine Bamugemereire, the Supreme Court dismissed the objections. Justice Bamugemereire held that the court had the discretion to handle such matters when necessary to protect a party’s right to appeal. She accepted Electronic Court Case Management Information System (ECCMIS) records indicating administrative closure of prior Court of Appeal filings.
On the merits, the Court found that the applicant had established a prima facie case, that there was a real risk of execution which could render the appeal moot, and that irreparable harm could occur.
Justice Bamugemereire also dismissed the respondent’s strict reliance on Regulation 13 of the Mortgage Regulations, which mandates 30% repayment prior to challenging execution. She noted that this requirement is not absolute and must be interpreted within the context of procedural compliance—including proper property valuation.
“A temporary injunction is hereby issued, restraining the respondents, their agents, representatives, nominees, assignees and/or successors in title from selling, transferring, alienating, evicting, dealing with, or in any way interfering with the applicant’s interest in and possession of the properties comprised in Kibuga Block 12, Plots 250, 251, and 252 at Mengo until the determination of the applicant’s appeal.” The Court ruled
The injunction will remain in effect for four months or until the appeal is resolved—whichever comes first.
Background
In May 2015, Sentongo obtained a loan of Shs 1.8 billion from I&M Bank to complete construction of Nakayiza Mall on Kibuga Block 12 Plot 825 and to support his imported garments business. He also secured an overdraft facility of Shs 150 million, mortgaging the same property.
He later obtained several additional loans, further securing them with the same or related properties: In September 2015, he received a loan of Shs 2 billion, secured by Plot 825; in December 2015, a loan of Shs 500 million and an overdraft facility of Shs 450 million; in February 2016, a loan of Shs 5 billion, secured by Plots 251, 825, and 250; in May 2016, an overdraft facility of Shs 100 million to complete a shopping mall on Plots 250 and 251; and in July 2016, a loan of Shs 1.5 billion, with Plot 252 added as collateral. By October 12, 2016, Sentongo acknowledged a total debt of Shs 9.6 billion.
Due to non-payment, in March 2016 the bank issued a notice of sale for the mortgaged properties. To reduce his debt, Sentongo sold Plot 825 to Downtown Bags Ltd for $700,000 (originally $800,000), acknowledging receipt of $600,000. Of this, $326,627 was applied to loan arrears, $50,000 was deposited into his account, and the rest went toward installment payments.
In June 2017, the bank issued a default notice demanding Shs 10.29 billion. Sentongo responded by suing the bank. In turn, the bank filed a counterclaim in 2019 for Shs 10.39 billion, general damages, and legal costs.
The suits were consolidated and heard together. In a joint ruling by Justices Barishaki Cheborion, Christopher Gashirabake, and Asa Mugenyi, the Court held that Sentongo was indeed indebted to I&M Bank to the tune 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 these variations,” the court ruled.
Sentongo was ordered to pay interest at 12.5% per annum from January 2019 until full settlement. The bank was awarded Shs 150 million in general damages with 6% annual interest from the date of judgment.