Court Halts Businessman’s UGX 10.3 Billion Payment to Bank

Haruna Ssentongo of Haruna Towers
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Businessman Haruna Sentongo found temporary relief as the Court of Appeal intervened to halt a UGX 10.3 billion payment he was ordered to make to a city bank. The Commercial Court had, on December 23, 2022, ruled in favor of I & M Bank Limited (formerly Orient Bank Uganda Limited), determining that Sentongo owed the bank this substantial amount.

Sentongo had been facing a significant financial obligation after the Commercial Court’s decision in late 2022. The court’s ruling stated that he was indebted to I & M Bank Limited for 10.3 billion shillings, and that this debt must be settled.

Following the Commercial Court’s ruling, I & M Bank Limited moved forward by advertising Sentongo’s property, consisting of Kibuga Block 12 Plots 25O, 251, and 252, for sale on March 14, 2023. The bank also filed its bill of costs with the Commercial Court, which is now scheduled for a future hearing.

Reacting to these developments, on March 27, 2023, Sentongo made a legal move by filing an application with the Court of Appeal. His application sought an order to suspend the execution of the High Court’s judgment and decree until the appeal’s final determination.

Justice Christopher Gashirabake played a significant role in Sentongo’s legal battle. On Wednesday, he issued an interim order that effectively halted the execution of the High Court’s decree while the appeal is pending before a panel of three justices.

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Justice Gashirabake noted the significance of this step, saying, “Taxation of the bill of costs is the first step to realization of the fruits of a judgment. In the instant case, it is not in dispute that the bank filed the bill of costs and the same has been fixed for hearing. I find that the applicant has proved that there is a serious threat of execution.” However, he also directed the court registrar to promptly schedule the appeal for the soonest available session.

In the background of this legal dispute, court documents reveal that in December 2015, Sentongo initiated a project to construct a commercial property called Segawa market on land located on Kibuga Block 12 Plots 25O and 251 in Kisenyi, Kampala.

Subsequently, Sentongo sought a financial facility from the bank to complete the commercial blocks of Segawa market, intending to generate rental income by renting the space to tenants.

The contractual details are provided in the court documents, which indicate that both parties agreed to a facility letter dated February 22, 2016, for a loan of 5 billion shillings. The agreement stipulated that the facility would be repaid using the rental income generated from Segawa market if the bank funded the project.

Sentongo’s case against the bank revolves around his assertion that the bank violated the facility contract by failing to disburse the agreed-upon sums of money. According to Sentongo, the bank would ostensibly credit his account and simultaneously liquidate the loan, essentially paying itself back immediately.

The bank, on the other hand, claimed that Sentongo had requested and received several loan facilities between February and October 2016. The bank further contended that Sentongo failed to meet his loan repayment obligations, leading to the issuance of two default notices in December 2016 and June 2017.

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