Permex International (U) Limited v Allied Bank International (U) Limited (Miscellaneous Application 571 of 1999) [1999] UGHC 27 (30 August 1999)

Full Case Text

### IN THE HIGH COURT OF UGANDA AT KAMPALA

### MISC. APPLICATION NO. 571 OF *1999*

#### ARISING OUT OF C. S. NO. 549 OF *1999*

PERMEX INTERNATIONAL (U) LTD APPLICANT

### VERSUS

| ALLIED BANK INTERNATIONAL | (U) LTD.] | |---------------------------------|-------------------------------| | | ] RESPONDENTS | | PATRICK KAMAU MAINA | 1 | | | MUHAISE JOHN BIKALEMESA |

# BEFORE - THE HONOURABLE MR. AG. JUSTICE RUGADYA ATWOKI

## RULING

This is an application for a temporary injunction to restrain the respondents from selling the Applicant's stock in trade to wit motor vehicle tyres and tubes, and batteries, until final disposal of HCCS No 549 of 1999,

It is brought by chamber summons supported by the affidavit of one Jackson Jemba, the managing Director of the applicant, dated 24/5/99.

affidavit in reply dated 1/6/99 The applicant in response thereto, fifed an affidavit in rebuttal dated 3/6/99. The 1st respondent through its legal manager, one Stephen Beyanga filed an

The applicant company trades in among other things, motor vehicle tyre and, tubes and batteries. executed infavour of the As security for those facilities, December, 1998, facilities by the 1st respondent bank for utilization in furtherance of its business activities. a floating debenture was respondent bank, over the applicants stock-in-trade. The debenture is dated 16/9/98. In the applicant sought other credit facilities from the respondent bank. In September, 1998, it was offered overdraft and other credit

respondent bank appointed the 2nd and 3rd respondents as receivers, batteries. and challenging the validity of the appointment ofthe receivers under the debenture. He sought a temporary' injunction as herein stated, pending the final disposal ofthat suit. respondents, in exercise of their powers as receivers, on the 4/5/99 entered upon the premises of the applicant, known lespondents are in the process of selling the stock-in-trade taken over. The applicant filed HCCS No. 549 of 1999, against the respondents for inter-alia breach of contract, 2nd as Kyaddondo block 232 plot 1 114 Kireka, the applicants stock-in-trade, to wit motor vehicle tyres, tubes and The applicant deponed, and it was not rebutted nor denied that the 2nd and took over These were duly offered, and accepted as evidenced by the letter of offer and acceptance signed by both parties, dated 11/12/98, annexed to the affidavit in reply deponed by Beyanga. On 30/4/99, the 1st pursuant to the debenture of 16/9/98, in respect of the applicants assets. The and 3rd and 3rd

follows: Grant of interlocutory injunction is governed by 0.37 r I which provides as

- **" 1.** Where in any suit it is proved by affidavit or otherwise- - (a) That any property in dispute is in danger ofbeing wasted, damaged, or alienated by any party to the suit, or wrongfully sold in execution of a decree; The court may, by order grant a temporary injunction to restrain such act, or make such other order for the purpose ofstaying and preventing the wasting, damaging, alienation, sale, removal or disposition of the property as the court thinks fit until disposal of the suit or until further orders."

can be granted, it must be proved by affidavit or Before a temporary injunction otherwise that the property is in danger of being wasted, damaged or alienated. In the

affidavit of Jackson Jemba i 4/5/99. taken as the truth. respondents are in the process ofselling off the applicants assets which they took over on This affidavit evidence was not controverted nor rebutted. It must therefore be , it was deponed in paragraph 8 thereof that the 2 and 3

It was held in Noor Mohamed Jan Mohamed V. Kassamali Virji Madhani (1953) 20 EACA8 that the purpose of an injunction is that matters ought to be preserved in status quo until the question to be investigated in the suit can be finally disposed of

As Odoki, J, (as the then was) in Kiyimba - Kaggwa V, Katende (1985) HCB 43 observed, the granting of a temporary injunction is an exercise ofjudicial discretion. The interlocutory injunction have been spelt out by Spry, V. P. in the Court of Appeal decision of Giella V. Cassman brown prima facie case with a probability ofsuccess. Secondly, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury court is in doubt, it will decide an application on the balance of convenience. & Co. Ltd. [1973] E. A. 358(-C. A-U). These are first that the applicant must show a conditions which court will consider before granting an which would not adequately be compensated by an award of damages. Thirdly, that if

unlawful. receivers pursuant to Mr. Kiyemba Mutale, leaned counsel for the applicant submitted that the debenture of 16/9/98 was for a credit facility which failed. In the event therefore, that debenture expired. The subsequent credit facility offered and accepted on 11/12/98 was not secured by the said debenture. The appointment of the 2nd and 3rd respondents as the debenture of 16/9/98 was, Mr. Kiyemba Mutale submitted,

Mr. Kabugo Musoke, learned counsel for the three respondents on the other hand submitted that the offer and acceptance of the credit facility signed by both parties on 11/12/98 clearly incorporated the debenture of 16/9/98. Therefore the alleged illegality in the appointment of receivers did not arise.

Trade Learned Counsel for the respondents Mr. Kabugo Musoke admitted that this did not materialise, and he blamed the failure on the applicants failure to meet the pre-conditions which had been agreed. Whatever the cause of the failure, it comes out debenture mentioned therein had to be executed to incorporate the new terms including the agreed amounts, which were different from those in the debenture of 18/9/98. 25,200,000 paid to Greenland Bank ltd. The borrower hereby charges all the stock in clearly that this consideration failed. The next offer was for a new Clearly, when the debenture of 16/8/98 was executed, it was for a consideration which was stipulated therein. This can be clearly seen from paragraph 2 of annexture 'B' of the affidavit of Mr. Jackson Jemba; which opens as follows *"* In consideration of the bank having agreed to allow opening of a letter of credit of USS 52,000 expiring on the terms and conditions of the principal agreement, and a further advance of *UG* Shs. facility. The

It was held by the Supreme Court in Robert Kavuma V, International Hotel - Civil Appeal No. 8/1990 (1993) 11KALR73, that the applicant had to prove by affidavit or otherwise that he had a prima facie case with a probability ofsuccess. The court held that annextures to the affidavit were such other evidence. And in the case of Nsubuga & another V. Mutawe [1974] E. A -C. A., it was held that the onus was on the applicant to prove by evidence the matters being alleged in support ofthe application.

( *&lt;*

•Upon the reading ofthe affidavits ofJackson Jemba, and the annextures thereto, I am satisfied that the applicant has a prima facie case find. with a probability of success. I so

temporary injunction will only be granted where irreparable injury is likely to occur, which injury would be incapable of atonement by way of damages. *(See* Noor Mohamed Jan Mohamed V. Kassameli Virji Madhani (supra); and U M. S. C. V. Sheikh Kassam Mulumba & 4 others fl980] HCB 110.) settled that a I now move to the second consideration regarding irreparable injury. *It I well*

It was argued for the applicant that the respondents were in the process ofselling the stock-in-trade. In paragraph 17 of the affidavit in rebuttal, it was deponed that there what irreparable injury the applicant would suffer, if these assets were sold, which could not be compensated for by damages. It was clear that these assets were being stored in these premises with a view to their being sold. The applicant was therefore hoping to realize the monetary value of the stock-in-trade, to later on pay off his indebtedness to, such failure. suffer injury which damages were other beneficiaries interested in these assets. What was not brought out clearly was damages, if proved and awarded to the equivalent value would not adequately compensate him. Lugayizi J, in Francis Nyende & another V, Michael Okwalinga & another Misc. Appl. 477/98 held that where the applicant fails to satisfy court that he will cannot atone, court will not grant an injunction in the face of among others, the respondent bank. He therefore, in the premises cannot say that

I respectfully agree. [ find that this consideration has not been proved to my satisfaction. In the event, having found as I have, I do not find it necessary to cons' the balance of convenience .

This application therefore does costs. not succeed. It is accordingly dismissed with

RUGADYA ATWOKI

AG. JUDGE

30/8/99

9.30a.m.

30/8/99

David Matovu holding brief for Mr. Kiyemba Mutale for the applicant.

Kabugo Musoke holding brief for Dr. Byamugisha for the Respondent.

Musisi Court clerk.

Court:

Case is for ruling.

Ruling read and signed.

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### AG. JUDGE

30/8/99

Matovu: Pray for hearing date.

Court: The case will be fixed for hearing on 8/11/99

(SGD) RUGADY/xATWOKI

AG. JUDGE