Marts JP Consult SMC Limited v Airtel Uganda Limited (Miscellaneous Application 1269 of 2021) [2023] UGCommC 116 (6 November 2023)

Full Case Text

#### THE REPUBLIC OF UGANDA

# IN THE HIGH COURT OF UGANDA AT KAMPALA

# ICoMMERCIAL DMSIONI

#### MISCELLANEOUS APPLICATION NO. L269 OF 2O2I

### ARISING FROM CIVIL SUIT NO. 338 OF 2021

MARTS JP CONSULT-SMC LTD: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :APPELLANT

#### VERSUS

AIRTEL UGANDA LTD::::::::::::::::::::::::::::::::::::::::::::RESPONDENT

### Before Hon. Lady Justice Patricia Kahigi Asiimwe

#### Ruling

- 1. On 1"1 October 2O2l the Applicant filed this Application under articles 128 (2\, (3), (50 (2),28 (12\,23 (1) (a) of the Constitution, Section 33 of the Judicature Act, Sections 64 (c) and (e) and 98 of the Civil Procedure Act and Order 52 Rules 1 and 3 of the Civil Procedure Rules. The Applicant seeks orders that: - i. The Respondent be held responsible for the contempt of a court order dated 11th day ofJune 202 1 - ii. The Respondent be fined UGX. 50O,OOO,OOO as a sanction for her contemptuous conduct. - iii. Costs of the application be provided for. - 2 The Application was supported by an Affidavit in Support sworn by Patrick John Kateeba, the manager of the Applicant who stated as follows: - a) On the 17th day of May 2021, the Applicant instituted Civil Suit No. 338 of 2O2l vide Marts JP Consultant-SMc Ltd versus Airtel Uganda Limited.

- b) The Applicant also filed an application for a temporary injunction vide Misc Application No 727 of 2021, Marts JP Consult-SMC Ltd versus Airtel Uganda. - c) That the learned trial Registrar granted the temporary injunction and orders were extracted and served on the Respondent's advocates on the 14th of June 2021. - d) On the 24th day of September 2021, the Respondent issued the Applicant with a notice of amendment of the agreement whose termination the orders of the court had stayed. - e) On the 28th day of September 2021, the Respondent issued another notice restructuring and changing commissions of the Applicant. - f) That the Respondent in the issued amendment notice which stipulated that the Applicant will cease to operate all the Airtel money business and that the same should be handed over to them within 14 days from the 28th day of September 2021. - g) That the Respondent in contempt of this order also stated in the said notice that they would block all Airtel money agency lines being operated by the Applicant contrary to the Court order. - h) That the Respondent is a contemnor and has done everything knowing that there was a subsisting order issued against them but decided to defy and should pay a fine of 500,000,000. - 3. The Respondent in response filed an Affidavit in Reply sworn by Hudson Andrew Katumba, the legal and commercial manager of the Respondent who stated as follows: - a) The Respondent aggrieved by the decision of the Learned Registrar, immediately filed Miscellaneous Appeal No. 007 of 2021 seeking orders that the order of temporary injunction and the ruling of the Learned Registrar be set aside.

- b) That notwithstanding the pendency of the appeal, the Respondent complied with the order of the court and permitted the Applicant to maintain its business with the Respondent, Airtel Uganda Limited. - c) That the Applicant was still required under Clause 4.9 and Annexure 3 of the Franchise Agreement to comply with the requirements communicated bv the Capitalization Respondent for the Assigned Units, which requirement was not fulfilled by the Applicant in further breach of the Franchise Agreement. - d) The Respondent avers that the Applicant was issued with the Notice of amendment of the Agreement dated 24th August 2021 and a Notice of Re-alignment of Business Operations dated 25th August 2021 in fulfilment of the requirements of Section 48 of the National Payment Systems Act, 2020 and the Bank of Uganda directive. - e) The Applicant and Respondent are required under Clause 4.14 and Clause 5.5.1 of the Franchise Agreement to comply with any relevant laws and governmental regulations in Uganda. The Notice of Alignment and Notice of Amendment were therefore issued in compliance with The National Payment Systems Act, 2020. - f) The Temporary Injunction Order does not bar the Respondent from exercising its rights and benefits under the Franchise Agreement which is still in force, save for implementing the Termination Letter dated 10th May 2021. - g) The Temporary Injunction Order does not discharge the Applicant from fulfilling its obligations under the Franchise Agreement; - h) The Respondent has not violated the Temporary Injunction Order and is therefore not in contempt of court when they seek to exercise their rights under the Franchise Agreement and to comply with the requirements of the law.

$\mathbf{A}$

4 In an affidavit in rejoinder sworn by patrick John Kateeba the deponent stated that the Respondent could not invite a third party called Airtel Mobile commerce Uganda Limited to take the applicant's market for Airter Money and compry with the orders to maintain the status quo of operation without interference until hearing of the main suit.

# Representation:

5 The Applicant was represented by pralex Advocates and the Respondent was represented by Verma Jivram and Advocates. A hearing was held on llrh October 2023 at which both parties made oral submissions.

# Issue:

6 Whether the Respondent is in contempt of the court,s orders in Misc Application No 727 of 2O2l

# Resolution:

- 7 Counsel for the Applicant submitted that in an application of this nature, the Appricant is required to show that there is a court order; the respondent knows about it as it was issued in the presence of their advocate and served on them; and wilful noncompliance with the court order. Counsel submitted that the Respondent wilfully refused to comply with the court,s order by taking away part of the business and the attempt to amend the agreement. - 8 Counsel further submitted that the Respondent put up a defence of a regulatory requirement for the Bank of Uganaa However, they onry attached under Annexture c a notice from the Bank of Uganda issuing them a 1icense to operate Mobile

![](_page_3_Picture_9.jpeg)

Money business. There was no requirement to take away Mobile Money business from the Applicant.

- 9. Counsel cited that the South African case of Former Way Trade and Invest PTY Limited t/a Premier Service Stations appellant, 2nd Appellant -Lee Benze vs Bright Idea Projects 66 PTY Limited case No. 1140 of 2020. Counsel submitted that in that case the court was faced with a similar scenario, and the court deemed it fit to maintain a sentence of 30 days in prison for the MD of the offending company. - In response counsel for the Respondent submitted that there is 10. no evidence that the agreement has been terminated. The correspondences confirm the willingness of the Respondent to maintain the status quo. The issuance of a warning letter which refers to capitalisation requirements under clause 4.9 of the agreement was not in breach of the order. It shows that the status quo was maintained. Reminding the Applicant of his obligation is not in contempt of court. The agreements are addenda to the principal agreement so there is no contempt. Section 33 of the Contracts Act requires parties to perform the contract. An order of injunction did not mean that they stop performing. - 11. Counsel further submitted that Airtel Uganda Ltd is no longer authorised to do mobile money business under the National Payments Act. Under section 48 of the National Payment Systems Act, the Respondent was required to establish a subsidiary legal entity. Therefore, Airtel set up a subsidiary, Airtel Mobile Commerce. The Applicant was sent an amendment to join Airtel Mobile Commerce and the Applicant declined to do so. The amendment was not in contempt of the Court.

Counsel cited the Court of Appeal case of Lukenge Hakim vs 12. Hajjat Ajiri Namagembe & 5 others, COA Civil Application No. 0290 of 2022 it was held that in a case of civil contempt of court, each of the elements must be proved to the standard applied in criminal cases which is beyond reasonable doubt.

#### *Analysis:*

- The Black's Law Dictionary 8th Edition on page 956, defines 13. contempt of court to mean conduct that defies the authority or dignity of a court or legislature. It is conduct that interferes with the administration of justice and attacks the integrity of court. - In the case of Granada Hotel (U) Ltd Versus Ntwatwa Jackson $14.$ Miscellaneous Cause No. 206 of 2023 Ssekaana J held that it is contempt of court to refuse to do an act required by a judgment or ruling or order of court within the time specified therein. The dignity and honour of the court cannot be maintained if its orders are treated disdainfully and scornfully without due respect. - In Morris versus Crown office (1970) 1 ALLER 1079 at 1087 15. court discussed that the purpose of contempt proceeding is to give courts the power to effectively protect the rights of the public by ensuring that the administration of justice is not obstructed or prevented. - The case of Ssempebwa and Ors versus Attorney General 16. [2019] 1 E. A 546 set down the ingredients of contempt of court as follows: - a) That an order was issued by court - b) That the order was served or brought to the attention or notice of the alleged contemnor - c) That there was non-compliance with the order by the respondent

d) That the non-compliance was wilful and malafide.

- 17. In this case, the $1^{st}$ and $2^{nd}$ ingredients above have been proved. There was indeed a court order and the order was served on the Respondent. The question then is whether there was noncompliance with the court order by the Respondent. - In this case the order of the court in issue was as follows: 18. *temporary injunction doth issue restraining* the $\overline{A}$ respondent from implementing the termination letter dated $10th$ May 2021 pending the hearing of the main suit civil suit *No. 338 of 2021.* (Emphasis added) - The court order was therefore in respect to the implementation 19. of the termination letter. The Black's Law Dictionary, 8th Edition page 4599 defines termination as the act of ending something. - 20. According to counsel for the Applicant, the acts of contempt are taking away part of the business, that is mobile money business, and the attempt to amend the agreement. - An amendment is defined as a formal revision or addition 21. proposed or made to a statute, constitution, pleading, order, or other instrument; a change made by addition, deletion, or correction. (The Black's Law Dictionary, 8th Edition at page $253).$ - 22. In paragraph 7 of the Affidavit in support of the Application, the deponent referred to a notice of amendment of the agreement issued by the Respondent in contempt of the court order. In the said letter dated 24th August 2021, it was stated as follows:

We wish to advise that following the regulatory/statutory requirement for Airtel Uganda Limited to separate its GSM and Mobile Commerce ('Airtel Money") businesses, a separate Licence for the Airtel Money Services was issued to Airtel Uganda's affiliate, Airtel Mobile Commerce Uganda Limited.

Accordingly, Airtel Uganda *Limited re-aligned* its distribution operations with effect from 1st June 2021 (now in the past) and currently exclusively provides GSM related *products and services.*

In the premises, the aforementioned Agreement with Airtel Uganda which was for the full range of Products and services shall be amended and limited to distribution of only GSM related Products and services excluding Airtel Money. An amendment to Franchise Agreement is hereto enclosed *for your signature.*

23. Attached to the affidavit in support of the Application is a letter dated 25th August 2021 where the Respondent informed the Applicant as follows:

> As you are aware, as part of the re-alignment process, your existing contracts will be accordingly amended to reflect only the GSM business and where applicable you may receive a separate communication from Airtel Uganda's affiliate company Airtel Mobile Commerce Uganda Limited with respect to the electronic money business. In addition, in accordance with the provision of the Franchise Agreement we wish to advise that there will be changes in the commission structure effective $1^{st}$ October 2021 as will be more detailed in the amendment to your existing contract.

- 24. It is clear from the above letter that the Respondent sought to amend the contract and not to terminate the contract which was not in contempt of the court order. - 25. It should be noted that the amendment was a result of the legislation passed. In this case, it became illegal for the Respondent to handle both GSM and Mobile Commerce by virtue of section 48 of the National Payment Systems Act. The respondent had to establish a subsidiary to handle electronic money. Consequently, the Respondent could not implement the contract in its entirety in view of the National Payment Systems Act. The prudent thing to do was to seek to amend the contract. - 26. In conclusion, I find that amending the contract is not the same as termination of the contract. The amendment was not contempt of the court order. - 27. The Application is therefore hereby dismissed with costs to the Respondent.

Dated this 6th day of November 2023

Patricia Kahigi Asiimwe Judge Delivered on ECCMIS