The Commercial court has overturned an order requiring Ham Enterprises to first deposit 30% of the Shs 100 billion it says Diamond Trust Bank (DTB) deducted from its company accounts.
Court had earlier ruled that the deposit should be made before the substantive hearing of the case in which Ham Enterprises took the bank to court alleging that it had unlawfully debited Shs 100 billion from the company’s accounts over ten years.
But On August 3, 2020 the commercial court overturned this order, gifting Ham Enterprises its first legal blow.
On January 17, 2020, Ham Enterprises owned by businessman Hamis Kiggundu took DTB to court arguing that the bank had “fraudulently, illegally and irregularly debited huge sums of money,” from its account. It sought to recover Shs 100 billion.
On the January 23, 2020, DTB filed a statement of defense requesting that Regulation 13 of the Mortgage Act be imposed upon Ham Enterprises (U) Limited.
Under this regulation, a person who files a proceeding against a bank should first deposit 30% of whichever amounts are involved, with the bank. In Ham Enterprises’ case 30% would amount to Shs 30 billion.
Court issued an injunction was granted stopping DTB from claiming recovery of the loans that had already been recovered from the company’s account.
However the bank insisted that Ham Enterprises should deposit the 30%.
Ham Enterprises appealed against the 30% order saying it was contradictory to Article 28 of the Constitution that provides to every Ugandan a right to a fair hearing.
On Monday, August 3, the Commercial Court agreed to quash the order requiring the company to first deposit the 30%.
Ham Enterprises has additionally filled a constitutional petition challenging Regulation 13 and its constitutionality on ground that it’s repugnant and inconsistent to Article 28 of the Constitution.
In the petition, the company says the “Mortgage Act was enacted in 2010 however it was not until 2012 that Regulation 13 under the Mortgage Regulation 2012 that requires payment of a 30% deposit was smuggled into the laws of Uganda as a photocopy to the income tax law which required a tax payer to pay URA a deposit of 30% on an assessment before they could challenge such assessment at courts of law.”