By Ivan Mwine
The Court of Public opinion has expressed dismay at the Commercial Court decision to award Shs1.3Bn in legal costs to Sudhir Ruparelia.
Commercial Court Registrar Elias Kisawuzi held that Simbamanyo Estates and its proprietor Peter Kamya should pay Shs600M to Equity Bank, Shs400M to Sudhir’s Meera Investments Limited and Shs300M to Luwangula’s Luwaluwa Investments Limited, without giving a detailed breakdown for each case.
When our reporter checked the court records this is what he discovered. Simbamanyo filed the following cases:
i) Civil Suit No.198/2020 Against Equity Bank for False Accounting and Engaging in Illegal lending
ii) Civil Suit No. 837/2020 Against fraudulent sale.
iii) HCMA No. 922 /2020 Mandatory & Prohibitory Injunction
iv) HMCA No, 003/2021 Appeal against HCMA No. 922/2020
v) HCMA No. 224 Appeal against the irregular abatement of Civil Suit No. 837/2020 (Fraudulent sale)
vi) HCMA No. 718 /2021 Application for interim order against the removal of the court orders as a result of the irregular abatement.
vii) HCMA No. 719 an Application for main stay in tandem with HCMA 718 above.
Sudhir and his cohorts claimed costs for all those cases except Civil Suit No.198/2020 However, the court awarded costs only in three ie:
a) HCMA No. 003/2021, (Appeal against HCMA No. 922/2020).
b) HCMA No. 224/2021 (Appeal against the irregular abatement of Civil Suit No. 837/2020 – Fraudulent sale)
c) HCMA No. 718/2021, Application for interim order against the removal of the court orders as a result of the irregular abatement.
Of the three above cases, only HCMA No. 224/2021 (Appeal against the irregular abatement of Civil Suit No. 837/2020 – Fraudulent sale) was heard.
The other two misc. applications were never heard.
One wonders how then His Worship Elias Kisauwuzi came to award such colossal sums of money for cases that were either abated or never heard, without giving a breakdown for each of the above cases which are all miscellaneous applications.
The public is wondering how Simbamanyo could have lost all the cases presided over by the Court Registrar His Worship Erias Kisawuzi.
Some of the experts in these matters were amazed that court can award Sudhir such colossal sums of money on Misc. Applications some of which had never been heard.
Simbamanyo stated that they were going to appeal this gross injustice and hope it will be rectified.
Simbamanyo stated also that what the public may not know is that the main case of the fraudulent sale of the properties has never been heard nor the main suit HCCS No. 198/2020 and Sudhir with his cohorts were fighting tooth and nail to see that these cases never see the light of day because they know what they did was not only illegal but fraudulent.
Kamya the proprietor of Simbanyo also noted that despite the current legal battle involving the illegal sale of his properties, Sudhir has, without authority, gone ahead in and renamed Simbamanyo House as Gender & Labour House, when the case of fraudulent acquisition of the property is yet to be decided by the court.
On the issue of fraudulent sale Kamya stated that, notwithstanding the fact that the loan amount was in dispute, the main issue was HOW they were sold.
The High Court has set guidelines for mortgagees i.e. Banks, to follow while exercising their right of sale of mortgaged property. And he quoted from this document thus:
The right of a mortgagee i.e. the Bank, to sell a mortgaged property is not absolute it is caveated by a duty to exercise due care as follows.
- The mortgagee i.e. the Bank must not act in secret and should also obtain the best price and act in good faith.
- The mortgagee i.e. the bank, must value the property before sale to establish the current market value and forced sale and obtain the best price. The bank must not sell the mortgaged property at under the forced sale value or at an undervalued price.
The court holds that even where the bids received are low the bank has no right to sell at any price.
The selling of a property far below its market value is a negligent act and the borrower (mortgagor) is entitled to recover the difference between the true market value of the property and the sale price realized from the sale.
- Sale by public auction is recommended as it is more competitive and more transparent.
- The sale of the mortgaged property under the Mortgage Act does not include the sale of moveable property thereon.
The following Actions reveal that those Guidelines were not by Equity Bank.
- Equity Bank was in breach of its fiduciary duties as a banker when it illegally sold the Simbamanyo properties, converted or caused the conversion of Simbamanyo businesses which were not part of the property mortgaged to the Bank.
And also colluded and or connived with Meera investments, Luwa-Luwa and The Lands Division to unlawfully sell off / dispose of the properties and Simbamanyo Businesses including the Hotel which were not part of the property mortgaged to the bank.
- The Lands office was in breach of its non-delegable statutory duties under the Registration of Titles Act Cap 230 when it hastily facilitated the illegal sale and disposal of the Simbamanyo properties and businesses.
The sale of the Simbamanyo properties violated its right to redeem them as by law provided.
- There is evidence to show that Meera Investments Ltd. and Luwa-Luwa Investments colluded with Equity Bank to be sold the properties well in advance of the so- called auction on October 8,2020.
Consequently, the purported sale of the Simbamanyo properties by the Bank to Meera Investments and Luwa-Luwa respectively on the 8th October, 2020 and the concurrent transfer of the same properties to them by the Lands Office, within literally minutes of alleged auction were all procured by dishonest conduct, fraud and hence illegal.
- The Bank also sold the properties to Meera Investments and Luwa-Luwa at under value because the process was not competitive as required by the mortgage act. And hence was in breach of the Bank of Uganda Financial Consumer Protection Guidelines, 2011.
The purported 8th October, 2020 auction sale amounted to conversion, and hence unlawful takeover of business, hence illegal.
- The sale of the properties undermined and was in contempt of the Court proceedings in High Court Civil Suit No. 198 of 2020; Simbamanyo Estates Limited (Vs Equity Bank Uganda Ltd & Anor which is still pending hearing and final determination.
- The Bank should not have proceeded with the sale because it had submitted to the jurisdiction of the Court to adjudicate and determine any claims to payment under the credit facility of 30th November, 2020 vide HCCS No. 198 of 2020 Simbamanyo Estates Ltd Vs Equity Bank Uganda Ltd & Anor.
- The removal by the Lands Office of the caveats lodged by Simbamanyo on the titles without notice to the Plaintiffs was procedurally irregular and is illegal.
- Willfully and knowingly concluding and closing the purported sale and purchase of the properties and businesses within literally minutes of alleged auction, was not sufficient time to conduct meaningful due diligence, inspection, take an inventory, make payment and secure registration on the certificate of title.
- Committing the above acts with malice, manifest bad faith and an unlawful motive of defeating Simbamanyo’s interest in the properties.
- That in the night of the 14th October, 2020 Meera Investments without a court order/eviction notice, illegally and forcefully gained entry into Simbamanyo House by breaking all padlocks, locking up the Simbamanyo Offices on the property, chased away its security guards, deployed their own guards and have since exercised dominion and control over the property and business.
10 .That on the 15th October, 2020 Luwa-Luwa also without a court order/eviction notice, illegally, forcefully gained entry into Afriquesuites Hotel where they sealed off the premises, deployed their own security guards and have since exercised dominion and control over the property and Hotel Business, Its trade fixtures and assets.
11 . That while the market value of Simbamanyo House was in the region of US$ 12m and the market value of the hotel was in the region of US$ 11m, the Bank sold both properties at a combined undervalue US$ 9.5m to recover an alleged and disputed debt of US$ 10.5m.
The case still rages on contrary to the impression that has been created that Sudhir and his Cohorts have won it. How can they win a case that has not been heard yet?