Ranchhobhai Shivabhai Patel Ltd & Another v Wambuga & Another (Civil Appeal 6 of 2017) [2018] UGSC 68 (6 November 2018)

Full Case Text

## THE REPUBLIC OF UGANDA

## IN THE SUPREME COURT OF UGANDA AT KAMPALA

## CORAM: MWANGUSYA; OPIO AWERI; MWONDHA, TIBATEMWA; **MUGAMBA; JJ. S. C**

#### CIVIL APPEAL NO. 06 OF 2017

# ARISING FROM COURT OF APPEAL CIVIL APPEAL NO. 7 OF 2010,

# (ITSELF ARISING FROM HIGH COURT CIVIL SUIT NO. 094 OF 2008)

1. RANCHHOBHAI SHIVABHAI PATEL LTD::::::::::::::::::::::::::::::::::: 2. JAYANTILAL V. PATEL

**VERSUS**

1. HENRY WAMBUGA (LIQUIDATOR OF AFRICAN TEXTILE MILL LTD) 2. MUKWANO ENTERPRISE LIMITED

### **JUDGMENT OF JUSTICE P. K. MUGAMBA, JSC**

#### **Introduction**

This is an appeal from the decision of the Court of Appeal which upheld the decision of the High Court in High Court Civil Suit No. 094 of 2008 and dismissed the Appeal.

#### Background

The background to this appeal is that the appellants owned 49% share interest in African Textile Mill Ltd (hereinafter called 'the company') while the Government owned 51% shares with full management and administrative powers. Sometime in 1996 the Government divested the 51% share interest to the 1st appellant who then became the majority shareholder.

In 1998 the appellants in a bid to revitalize the operations of the company obtained a loan from the defunct Cooperative Bank Ltd. However before the full repayment of the loan, the Cooperative Bank Ltd was put under statutory liquidation by Bank of Uganda and the entire loan was recalled.

The appellants then entered into a repayment schedule agreement with Bank of Uganda to liquidate the loan but failed to comply with the schedule. In 2005 the appellants put the company under voluntary winding up and appointed Mr. Clive Mutiso (one of the directors) as the liquidator. Mr. Clive Mutiso resigned and was replaced by the 1st respondent.

At the time of the appointment of the $1st$ respondent as liquidator the company's outstanding loan to the defunct Cooperative Bank Ltd was 1.2 billion shillings. The said loan was renegotiated and reduced to 1 billion shillings which was to be paid in one lumpsum. The appellants were unable to settle that amount and obtained a loan of USD 800,000 (eight hundred thousand U. S dollars) from Crane Bank Limited for a duration of 6 months to settle the old outstanding loan.

The said loan from Crane Bank Limited was secured by a demand promissory note, a letter of continuing security, a debenture covering a floating charge on all assets of the company. In consequence there was a registered mortgage of the following properties: Plot 78-96 Pallisa Road Mbale in the names of African Textile Mill Ltd, Plot No.s 1 and 3 Kitintale Way Mbuya Kampala in the names of m/s Art Investment Limited, and Plot No. 152, 6th Street Industrial Area Kampala in the names of Ravi Patel and Thakore Patel. In addition there were personal guarantees by Mr. J. V Patel, Mr. R. R Patel, Mr. Ashwin Patel, Mr. Thakore V Patel, Mr. Ravi C Patel and the 1st respondent. The earlier loan owed to the Co-operative Bank Ltd (in liquidation) appears to have been paid off.

At the expiry of the 6 months the company again failed to pay Crane Bank Ltd and applied for an extension of the period for another 6 months. This meant that the loan was to be repaid by the $18^{th}$ of June 2007. The appellants still failed to pay. The 1st respondent advertised the properties for sale on the 12th and 13th February 2007. The appellants challenged the sale and obtained an interim order of stay. The appellants had not repaid the loan by the 11thJune 2007. The Crane Bank Ltd lawyers advertised the properties for sale on the $3^{rd}$ August 2007 yet again.

On $4^{th}$ September 2007 the $1^{st}$ respondent sold to the $2^{nd}$ respondent the company property mortgaged to Crane Bank Ltd and handed over to the 2nd respondent property comprised in LRV 786 Folio 12 Plot 78-96 Pallisa Road, Mbale. The appellants faulted the 1st respondent for failing to quantify the value of the properties and conniving with the other guarantors to conceal the value of the properties leading to what they claimed was a fraudulent sale of the suit property.

#### Representation

$\mathbf{1}$

Mr. Paul Sebunya was counsel for the appellants. Messrs Christopher Bwanika, Tonny Arinaitwe and Justus Nuwamanya were counsel for the respondents.

## **Preliminary Matters**

At the beginning of his written arguments, counsel for the 2nd Respondent raised objections which I will deal with before I delve into the appeal. These objections were in respect to the propriety of the appeal by the 2nd Appellant and the propriety of the second ground of appeal.

## Propriety of the appeal by the $2^{nd}$ Appellant

Counsel for the 2nd respondent referred to the proceedings before the Court of Appeal at page 18 paragraph 2 where counsel for the appellant had informed court that the 2nd appellant had passed away and he proceeded orally to apply for substitution of the deceased, the $2nd$ appellant, with Prafulchandra Ranchhodbhai Patel . The court ordered counsel for the appellant to make a formal application with certified authenticated documents. Counsel for the 2nd appellant submits that the recommended application was not filed, making this appeal bad in law.

In reply, to the $2nd$ respondent's submissions, counsel for the appellant submitted that the appeal was not incompetent given that the 2nd respondent's legal representative was in the process of applying to court to be made a party to the stated appeal. In this respect he relied on rule 81(2) of the Rules of this Court. Counsel blamed the failure to file the requisite application on Mr. Sebanja Abubaker Malende, said to be a former joint counsel for the appellant.

Before the Court of Appeal, counsel for the appellant had sought to add Mr. Prafulchandra Ranchhodbhai Patel (the legal representative of the late Jayantilal V. Patel) as a party to the suit. Counsel however did not have the certified copy of the letters of administration of Mr. Prafulchandra Ranchhodbhai Patel. That was the reason court asked counsel to make a formal application and present the same certified copies. This was not complied with. Counsel for the appellant should have followed up on his application to court rather than abandon it. Counsel neglected his duty and this was irresponsible of him.

However, upon perusal of the record, I note that Miscellaneous Application No. 14 of 2018 arose out of an appeal in this Court. The application sought to have Mr. Prafulchandra Ranchhodbhai Patel the legal representative of the late Jayantilal V. Patel made a party to this appeal in the place of the deceased, the $2nd$ appellant. This application was brought under Rules $42(1)$ , $(2)$ , $43(1)$ and $81(2)$ of the Judicature (Supreme Court) Rules SI 13-11.

The application came before Hon. Justice Mwangusya JSC on the 4th of May 2018 with all counsel present. It was agreed by consent of counsel for both parties that the application be withdrawn and it was accordingly withdrawn/dismissed with costs to the $1st$ Respondent.

This withdrawal by consent resolves the dispute herein. The appeal therefore proceeded with one party 'RANCHHOBHAI SHIVABHAI **PATEL LTD'** since the $2^{nd}$ appellant was struck off the record. In view of that, it was not proper for the appellants to maintain the $2nd$ Appellant's name on their written arguments filed in this Court. The objection is therefore sustained in this regard.

## The propriety of the second ground of appeal.

The second objection is in respect to the propriety of the second ground of appeal. Counsel for the $2^{nd}$ respondent submitted that Rule 82(1) of the (Supreme Court Rules) Directions, requires that the Judicature memorandum of appeal shall set forth concisely without argument or narrative the grounds of objection to the decision appealed against specifying, in the case of a second appeal, the points of law or of mixed law and fact which are alleged to have been wrongly decided.

He contended that this was not the case with the $2^{nd}$ ground of appeal because it does not specify which law and or mixed law and fact was wrongly decided by the Court of Appeal. Counsel relied on the authorities of Beatrice Kobusingye vs Fiona Nyakana and Anor, SCCA No. 5 of 2004 and Monday Eliab vs A-G, SCCA No. 16 of 2011, where counsel was not allowed to argue any point under a mere general ground of appeal, such as, 'the conviction was bad in law,' or 'the conviction was against the weight of evidence.' Details of any alleged misdirection were required.

In reply, to the 2nd respondent's submissions, counsel for the appellant stated that the ground does not offend rule $82(1)$ of the Rules of this Court because it did not contain any argument or narrative. He said that the ground is concise. He argued that it would have been offensive to rule 82(1) if the appellant had quoted all evidence not evaluated by the $1^{st}$ appellate court to arrive at the conclusion it did.

The objection raised here is that the $2^{nd}$ ground of appeal as drafted by the appellants offends rule 82(1) of the Rules of this Court. Counsel contended that the ground of appeal as presented does not specify which law and or mixed law and fact was wrongly decided by the Court of Appeal.

The ground is couched in the following words:

'The learned Justices of the Court of Appeal erred in law and fact when they failed to evaluate the evidence on record and thereby arrived at a wrong conclusion.'

This ground is too general and does not specify in what way and in which specific areas the learned Justices of Appeal failed to evaluate the evidence. It does not set out the particular wrong decision arrived at by the learned Justices of Appeal. Rule 82(1) of the Rules of this Court provides as follows:

*"82. Contents of memorandum of appeal.*

(1) A Memorandum of Appeal shall set forth concisely and under distinct head, without arguments or narrative, the grounds of objection to the decision appealed against, specifying the points which are alleged to have been wrongly decided and the nature of the order it is proposed to ask the court to make.' Emphasis added

In my view rule $82(1)$ , which is mandatory, is intended to ensure that the court adjudicates on specific issues complained of in the appeal and to prevent abuse of court process. The general nature of ground 2 as presented allows the appellant to ambush the respondents with issues the latter would not have contemplated.

Consequently, I strike out ground 2 of the Memorandum of appeal because of its offensive nature to rule $82(1)$ . The objection in respect of the propriety of ground 2 of the appeal is sustained.

The only ground of appeal left before me for determination is:

That the learned Justices of the Court of Appeal erred in law and fact when they held that the sale of the suit property by the 1stRespondent to the 2nd Respondent was not unlawful and was not fraudulent.

## Appellant's submissions

Counsel for the appellant submitted that it is a legal requirement under sections $301(1)$ (a) and $244(1)$ (e) of the Companies Act that any arrangement between the liquidator and creditor has to be sanctioned by a company through a special resolution during voluntary winding up of the company. He submitted that an arrangement with the creditors meant a debtor's agreement with the creditors for the settlement, satisfaction, or extension of time for payment of debts as elucidated in Black's Law Dictionary. It was counsel's submission that a liquidator's position in a company is that of an agent of the company.

Appellant's counsel stated that the required Special Resolution by the directors of the Company, M/s African Textile Mill Ltd, to sanction the arrangement of settling the creditor's debts which was to be by selling the suit property (mortgaged property) was not obtained, in contravention of sections $301(1)$ (a) and $244(1)$ (e) of the Companies Act. According to counsel this rendered the sale of the suit property by the 1st respondent to the $2^{nd}$ respondent unlawful. He relied on a number of cases such as **Leon v** York-o- Matic [1966]3 AllER 277 at page 278-281, and Re Home and Colonial Insurance Company Ltd [1930] 1 Ch, 102 at page 107 to show that the 1st respondent as the liquidator did not discharge his duty and did not act bonafide. He faulted the 1st respondent for not taking necessary advice as to the value of the property and for unlawfully selling the suit property at a gross undervalue. It was counsel's submission that the 1st respondent acted fraudulently with intent to defraud the appellants and cause them eventual loss.

He contended that there was no bid on court record from the 2nd respondent who bought the suit property. Counsel interpreted this to mean that the 1st respondent was determined to sell the property to the 2nd respondent even without the 2nd respondent making an offer to purchase the property.

Appellant's counsel pointed court to the bids exhibited by the 1st respondent such as Exhibit D1 dated 10/2/07 at page 413 of the record of appeal and Exhibit D2 dated $11/03/07$ at page 414 of the record of appeal, (Volume 2). He advanced the position that these bids were purportedly written by Magaba Timothy and Byansi Godfrey to justify the eventual sale of the property to the $2^{nd}$ respondent at US \$ 1,200,000. It was appellant counsel's contention that the said bids were not genuine and that they were authored by the 1st respondent in a bid to justify the sale of the suit property at gross undervalue.

Appellant's counsel asked Court to scrutinize the said documents and note that:

- Exhibit D1 is dated $10/2/2007$ which date is before the suit $1)$ property was advertised for sale by the 1st respondent as per the advertisements exhibited as AVDI dated 12th February, 2007 and AVDII dated 13th February, 2007. - Exhibit D2 at page 414 of the Record of appeal was not $2)$ originally dated but that the date was merely inserted. - Exhibit D2 was not signed by its alleged author Mr. Godfrey $3)$ Byansi. - That Exhibits D1 and D2, though supposedly authored by two $4)$ different people, have similar writing style, with the same font, same heading, same wording and had the same mistakes such as the word "Kampala" which was mis-spelt as "KAMAPALA (U)" implying that these documents were drafted by the same person.

Appellant's counsel submitted that the above evidence reveals that the documents in question were forgeries and that the 1st respondent may have concealed genuine offers from the public or that the advertisements ADVI and ADVII were a mere formality to justify the sale of the suit property to the $2^{nd}$ respondent.

He further faulted the 1st respondent for not conducting a valuation of the property but instead stating that he had sold it based on market forces of demand and supply. Appellant's counsel referred court to the valuation report on court record, Exhibit P30, which placed the value of the property at 22,324,127,000/= as at 14th May 2004. Counsel asked court to put that into consideration against the baseless estimation made by the $1st$ respondent. Counsel argued that even if the machinery had depreciated in value the value of the land on which the factory sat had appreciated in value as at the date of sale. He pointed court to the advertisements made five months prior to the sale which stated that the land was developed with a fully composite and operational textile mill. To counsel the value of the property could not have depreciated in value in just 5 months for it to have been sold at the price of US \$ 1,200,000. For further emphasis Counsel relied on the persuasive authority of Progress Property Company Ltd v Moorgarth Group Ltd [2010] UKSC 55 (on Appeal from [2009] EWCA 629).

Appellant's counsel also referred court to evidence of the 1st respondent at page 262 where the 1st respondent stated the offer from the 2nd respondent after assessment of the suit property to be US \$ 1,500,000 but eventually the 1st respondent sold the property as per the sale agreement at US \$ 1,200,000 To appellant's counsel no explanation was given for this difference in amount. It was counsel's contention that these contradictions pointed to fraudulent intention by the 1st respondent.

In conclusion on ground one counsel submitted that the 1st Respondent did not exercise his discretion bonafide but that he acted in a manner that no liquidator should have acted when he sold the suit property at gross under value. He added that the 2nd respondent was involved in the fraudulent purchase by bribing the 1st respondent and the guarantors with US \$ 300,000 in order to facilitate the sale of the suit property at US $$$ 1,200,000. Counsel asked court to set aside the stated sale for being unlawful and fraudulent.

$1st$ respondent's submissions

The 1st respondent disputed the claim that he agreed, in his capacity as a liquidator, with Crane Bank limited to sell the suit property to the 2nd respondent without the sanction of the shareholders of M/s African Textile Mill Ltd. It was his submission that the transaction for sale of the suit property between the liquidator and the 2nd respondent did not constitute an arrangement within the meaning of the definition stated by the appellant.

It was argued for the 1st respondent that the agreement dated 4th September 2007, does not disclose any arrangement with Crane Bank Limited as Creditor. The 1st respondent submitted that the Court of Appeal considered the fact that M/s African Textile Mill Ltd was wound up by special resolution of the directors and the 1st respondent was appointed as liquidator. It was submitted also that the company received a demand notice from Crane Bank Limited for US \$ 1,500,000 which was never honoured and that the said suit property was advertised for sale both by the 1st respondent and by Crane Bank Limited at different times but was eventually sold by the 1st respondent in his capacity as a liquidator. Counsel stated that there was no law requiring the liquidator to seek approval of the members.

It was his further submission that S. 301 of the Companies Act empowers the liquidator without sanction exercise of the powers given to the liquidator in the winding up by the Court. He added also that S.244 (2) (a) of the Companies Act empowers the liquidator to sell movable and immovable property and things in action of the Company by public auction or private contract, with power to transfer the same to any person.

The 1st respondent relied on the authority of **Re: Great Eastern Electric Co.** Ltd [1941] AllER 409 which he stated is to the effect that a liquidator in voluntary winding up may, without the sanction carry on the business of the Company as may be necessary for the beneficial winding.

As to the allegations of fraud, the 1st respondent's counsel submitted that no evidence was ever led by the appellants to prove any claim of fraud. He considered the spelling mistakes on exhibits D1 and D2 to be minor omissions which do not prove fraud. Counsel stated that no evidence was ever brought to court to prove that they were authored by the 1st respondent as alleged. The $1st$ respondent's counsel contended that the auctioneers who received the said bids and presented them never disowned the same and that the bids remained unchallenged.

Regarding allegations by the appellants that the $1st$ respondent was given US $$300,000$ , Counsel for the 1st respondent denied those allegations saying no evidence of receipt was ever presented in court. He observed that no evidence was got from Mr. Amirali Karmali who is alleged to have given the money. He took the view that the said individual never came to court to testify in that regard and as such the evidence of PW2 was merely hearsay.

In response to the appellants' allegations that the suit property was sold way below its value which imputed fraud, Counsel submitted that during the process for the sale of the property various offers were received and no evidence was led on behalf of the appellant to prove that any bid for the suit property was concealed. It was counsel's submission that the 1st respondent proved that the Bank's auctioneers received two bids and the highest was US\$ 1,000,000 but that he intervened, in his capacity as liquidator, and found an alternative buyer at US\$ 1,200,000.

## 2nd Respondent's submissions

Counsel for the $2^{nd}$ respondent, in response to the appellant's allegations that the 1st Respondent forged the bids, submitted that the authenticity of the bids in question was never challenged before the trial Court and no evidence was led to show that they were forged. He stated that this complaint came up at the Court of Appeal.

It was counsel's submission that the law requires allegations of fraud to be specifically pleaded and strictly proved which was not done by the appellant, who sought to challenge the same for the first time at appeal level. Counsel added that no proof has ever been presented that the 2nd respondent was party to or had knowledge of any forgery and therefore the $2^{nd}$ respondent cannot be held to have been party to any forgery leading to impeachment of her title to the suit property.

In addition counsel for the $2nd$ respondent submitted that the suit property was sold to the $2nd$ respondent by the $1st$ respondent who was a liquidator duly appointed by the appellants with full powers to sell. He added that the sale was by private treaty with the consent of Crane Bank Limited– the registered mortgagee.

In response to the alleged bribe of US \$ 300,000 said to have been paid to the $1st$ respondent as an inducement to sell the suit property to the $2nd$ respondent, counsel for the $2nd$ respondent submitted that bribery constitutes a form of fraud and requires the same degree of strict proof. He said this was not done by the appellants. It was counsel's submission that the onus of proving the allegation of bribery lay at all material times on the appellants and that the Court of Appeal rightly found no evidence that the $1st$ Respondent was paid the said amount outside the contract of sale. Counsel submitted that the evidence of PW2 was clearly hearsay based on conjecture, speculation and presumption.

On the allegation that the sale of the suit property by the 1st respondent to the 2nd respondent was at an undervalue, counsel for the 2nd respondent submitted that the appellants' valuation of the property which places it at 22.billion shillings was discredited by the trial Judge on the ground that it did not show that it related to the suit land, it did not indicate the period it was done and it did not indicate the methodology and state of the property. Counsel also criticised the fact that the report was made by an engineer who did not state his expertise on land matters. He referred to the Court of Appeal decision which found no evidence that there was any buyer willing to pay a higher price for the property and that there was no evidence that the 1st respondent sold the property in haste and secrecy deliberately denying the Company a chance to get better offers.

Concerning the complaint on the sale by the 1st respondent without sanction by the $1^{st}$ appellant, counsel for the $2^{nd}$ Respondent submitted that the Court of Appeal considered the issue and disposed of it. It was counsel's submission that the Court of Appeal rightly held that on appointment of a liquidator in voluntary winding up all the powers of the directors cease except so far as a general meeting or a liquidator sanctions their continuance. Counsel submitted that the 1st respondent carried out his duty as a liquidator in accordance with the law and that there was no legal requirement for him to seek prior consent of the Directors or members before selling the suit property. It was counsel's further submission that the 2nd respondent transacted with the 1st respondent on the strength of the resolution appointing the $1st$ respondent as the liquidator and that the $2nd$ respondent is protected under the indoor management rule enshrined in Royal British Bank v Turquand (1856) 6 E & B 327 and Mahony v East Holyford Mining Co. (1875) LR 7 HL 869.

Appellant's rejoinder

In rejoinder to the $1^{st}$ respondent, counsel for the appellant reiterated his earlier submissions that the 1st respondent required the special resolution from the directors of the company which was not obtained; in contravention of Sections $301(1)$ (a) and $244(1)$ (e) of the Companies Act. He added that the errors in Exhibits D1 and D2 were not mere errors because two people (Magaba Timothy and Byansi Godfrey) who had no prior relationship with each other could not make separate bids with similar appearance and similar mistakes even when the bids were ostensibly submitted on different dates to the $1st$ respondent.

Counsel also re-affirmed his earlier contention that US\$ 300,000 was paid to the $1st$ respondent as an inducement to sell the suit property to the $2nd$ respondent following the evidence of PW2.

Counsel for the appellant concluded that all evidence pointed out that the liquidator did not act reasonably and bonafide but was acting in the interest of Crane Bank Ltd, the 2nd respondent and other guarantors and that there is justification for the interference of this court in the said sale.

In rejoinder to the $2nd$ respondent's submissions counsel for the appellant submitted that in the authorities of National Social Security Fund &Anor v Alcon International Ltd Civil Appeal No. 15 of 2009, Makula International v His Eminence Cardinal Nsubuga &Anor [1982] HCB 11 it was held that as long as there is an illegality it can be raised anytime as a court of law cannot sanction that which is illegal. Counsel re-stated that the contents of Exhibits D1 and D2 speak for themselves reflecting that they are forgeries made for purposes of the 1st respondent dressing up the suit transaction to give it a legal character which it would not have otherwise possessed. Counsel reiterated his submission that the 1st respondent acted fraudulently and in a manner no reasonable liquidator would act, that he never exercised his discretion bonafide and that the sale was at a gross undervalue.

## **Court's determination**

This is a second appeal against the decision of the High Court dismissing the appellant's suit against the respondents over the sale of the suit property comprised in LRV 786 Folio 12 Plot 78-96, Pallisa Road, Mbale measuring 9.19 hectares. The suit property, which comprises of factory machinery, buildings and other developments, had been mortgaged to Crane Bank at the time of its sale. The proceeds of the sale were inter alia intended to settle the credit facility of US\$ 800,000 obtained from the said bank. The suit property was sold by the 1st Respondent, in exercise of his office as liquidator of M/s African Textile Mill Limited (hereinafter also referred to as "the company") to the $2^{nd}$ Respondent.

The appellants were aggrieved by the manner in which the said sale of the suit property was conducted and concluded by the 1st Respondent. Consequently they filed a suit before the High Court challenging the same and praying for its nullification. The High Court dismissed the suit and subsequently the Court of Appeal also dismissed the appellant's first appeal.

It is now trite law that on a second appeal, the second appellate court is precluded from questioning the findings of fact of the trial court, provided that there was evidence to support those findings, though it may think it possible, or even probable, that it would not have come to the same conclusion. It can only interfere where it considers that there was no evidence to support the finding of fact, this being a question of law. See Kifamunte Henry v Uganda, SCCA No.10 of 1997

As a consequence of that principle, the Supreme Court is generally not required to re-evaluate the evidence in the same manner as a first appellate court since doing so would create unnecessary uncertainty. See Mohammed Mohammed Hamid vs Roko Construction Limited, SCCA **No.014 of 2015.** I apply these principles.

This appeal raises a fairly straight forward question regarding the duties and powers of a liquidator, such as the $1st$ respondent, in a voluntary winding up of a company under the now repealed **Companies Act Cap.110.** That statute was the applicable law at the time of the sale of the suit property leading to the dispute between the appellant members of the company in liquidation, M/s African Textile Mill Limited, and the 1st respondent its duly appointed liquidator.

The appellant contends that the sale of the suit property was riddled with numerous irregularities and outright fraud committed by the 1st respondent in collusion with the $2nd$ respondent Company that purchased the property. The appellant claims that the 1st respondent was bribed with the sum of US $$300,000$ by the 2nd Respondent so as to acquire the property at US \$ 1,200,000.

The appellant adds that the 1st respondent did not carry out a competitive bidding process but that he presented before the Court spurious bids to justify his sale of the suit property at the sum of US \$ 1,200,000 whereas it had been valued at slightly over Ug.shs.22,000,000,000/= (Twenty two billion Uganda Shillings) less than three years before the said sale. Lastly, the appellant contends that the 1st respondent did not seek the consent of the directors through a resolution as required by law.

The 1st respondent maintains that he exercised his discretion properly in selling the suit property and that he was not under any legal obligation to

seek the consent of the appellant since he had been validly appointed as the Company's liquidator. He strongly disputes the allegations of bribery, presentation of forged bids and sale at undervalue. In his view, the property was in danger of being sold by the auctioneers of the registered mortgagee Crane Bank Limited at a much lower price than he obtained from the $2^{nd}$ respondent.

The $2^{nd}$ respondent, on the other hand, maintains that the sale of the suit property was not tainted by any fraud or irregularity and that even if this had been the case, they were not privy to the same. Counsel for the $2nd$ respondent also relies on the indoor management rule.

The trial Judge held that the 1st respondent had not flouted the provisions of the Companies Act in the sale of the suit property and that the $2nd$ respondent was entitled to protection of its ownership as a bonafide purchaser for value without notice. However, the trial judge held that the $1st$ respondent had committed some procedural errors in the liquidation of the company and ordered him to render an account of the proceeds of the sale by filing the same in court within 90 days of the judgment. The trial Judge also granted the appellants costs as against the $1st$ respondent. In a sense, the appellants' suit in the High Court was not entirely unsuccessful. It was not devoid of merit in view of the orders by the trial court.

The Court of Appeal on the other hand dismissed the appellants' first appeal holding that the $1st$ respondent lawfully sold the suit property to the 2nd respondent which acquired a good title. Their Lordships held that the 1st respondent was not legally required to seek prior consent of the directors or members of the company before selling the suit property to the 2nd respondent. Further, it was held that there was no evidence of the sum of US \$ 300,000 allegedly paid to the 1st respondent and that no fraud was proved against him. The Court of Appeal awarded costs only to the 2nd Respondent but none for the 1st Respondent.

In my view, the respective findings of fact by the High Court and the Court of Appeal regarding the failure by the appellant to prove receipt of a bribe of US \$ 300,000 are unassailable. The appellant did not adduce sufficient and credible evidence to prove that the 1st respondent indeed received a bribe when he carried out the sale of the suit property. That particular form of fraud was therefore not proved. Consequently, this partially resolves the issue as to whether the sale of the suit property was tainted with bribery. In agreement with the respective findings of fact by the High Court and the Court of Appeal, I find that the appellant did not prove that the 1st respondent was involved in receiving a bribe as a form of fraud in the sale of the suit property and this aspect of the ground of appeal fails.

Similarly, the contention that exhibits D1 and D2 were irregular and pointed to fraudulent conduct on the part of the 1st Respondent in the bidding process crumbles in light of the respective findings of fact by the High Court and the Court of Appeal. While the said discrepancies inevitably do raise eye brows regarding the casual manner in which the $1st$ respondent conducted the sale, they do not constitute factual evidence that satisfies the standard of proof of fraud. It is settled law that fraud must be proved beyond a mere balance of probabilities, even though the standard is not as high as to reach proof beyond reasonable doubt. See **Ratilal** Gordhanbhai Patel vs. Lalji Makanji [1957] 1 EA 314 and Katureebe JSC dicta in F. J. K. Zaabwe vs. Orient Bank & 5 Ors, S. C. C. A. No. 4 of 2006.

I shall now address the question of whether the said sale of the suit property by the 1st respondent, in exercise of his powers as a liquidator, to the $2nd$ respondent was lawful and devoid of any other fraudulent conduct. In my view, this is a separate question from the allegation of fraudulent

conduct in form of receiving an illegal commission or bribe that was not proved.

The appellant contends also that the secretive manner, devoid of any transparency, in which the $1st$ respondent sold the suit property to the $2nd$ respondent also amounted to fraud. It is further argued that the sale was done in violation of the provisions of the Companies Act, Cap.110, specifically sections 244 and 301 thereof and that the $1st$ respondent, as liquidator, did not discharge his professional duty in a transparent and ethical manner expected of him.

In my view, the lower courts did not address with sufficient detail the contention by the appellant that the law required the $1st$ respondent to seek the consent of the members of the company prior to sale of the suit property. The $1st$ respondent strongly disputed that such a legal requirement exists and the lower courts agreed with him. As a consequence of that finding, the courts did not address the issue of whether the sale of the suit property was done at an under value inevitably pointing to the allegation that the $1st$ respondent had not competently fulfilled his duties as a liquidator.

Given the above, I find it necessary to review the applicable provisions of the repealed Companies Act Cap.110 that governed the powers of the 1st respondent in conduct of the voluntary liquidation of $M/s$ African Textile Mills Limited, the erstwhile owners of the suit property. It is not in dispute that the said company was in a voluntary liquidation and that the shareholders initially appointed one Clive Mutiso as liquidator. Subsequently the same shareholders appointed the $1st$ Respondent to replace the former following the former's resignation.

The relevant provisions in the context of this appeal are reproduced here below.

Section 301(1) of the repealed Companies Act provided as follows:

301. Power and duties of the liquidator in a voluntary winding up

$(1)$ The liquidator may-

(a) in the case of a members' voluntary winding up, with the sanction of a special resolution of the company, and, in the case of a creditors' voluntary winding up, with the sanction of the court or the committee of inspection or (if there is no such committee) a meeting of creditors, exercise any of the powers given by section $244(1)$ (d), (e) and (f) to a liquidator in winding up by the court.

(b) without sanction, exercise any of the other powers by this Act given to the liquidator in a winding up by the court;

$(C)$ ... ... ... ... ... ... ... ... ... . $(d)\ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots$ $(e) \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots$

The relevant provisions of Section 244 of the repealed Act provide as follows:

**244.** Powers of the liquidator

The liquidator in a winding up by the court shall have power, $(1)$ with the sanction either of the court or of the committee of inspection -

- $(a)$ $\cdots \cdots \cdots \cdots$ - $(b)$ $\cdots \cdots \cdots$ - $(c)$ $\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet\bullet$ - to pay any classes of creditors in full $(d)$

- to make any compromise, or arrangement with $(e)$ creditors, or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable: - The liquidator in a winding up by the court shall have power $(2)$ - to sell the movable and immovable property and things in $(a)$ action of the company by public auction or private contract, with power to transfer the whole thereof to any person or company or to sell the same in parcels;

It follows therefore that a liquidator, in a members' voluntary winding up, cannot pay creditors or enter into any arrangement with them without a special resolution by shareholders. This is an exception to the general principle in the repealed Act that a liquidator assumes all rights and responsibilities of officers and or directors of a company in liquidation. Under the cited provisions, any ordinary sale of movable and immovable assets of the company in liquidation can be done by the liquidator without the sanction of a resolution provided it does not amount to a form of payment to creditors and is not done in fulfilment of an arrangement or compromise with creditors.

It is trite law that in conducting a liquidation, a liquidator is expected to discharge that function with a high degree of care and diligence. The words of Maugham J in Re Home and Colonial Insurance Co (1930) Ch 102 at **125** are particularly relevant:

"... a high standard of care and diligence is required from a liquidator in a voluntary winding up. He is of course paid for his services; he is able to obtain whenever it is expedient the assistance of solicitors and counsel; and, which is a most important consideration, he is entitled, in every case of serious doubt or difficulty in relation to the performance of his statutory duties, to submit the matter to the Court, and to obtain guidance."

Similarly, the English Court of Appeal, in Brook v Reed (2012) I WLR 419 approved the following restatement as applicable to all insolvency officeholders such as the 1st Respondent in this appeal:

"The essential point which requires constantly to be borne in mind is that office-holders are fiduciaries charged with the duty of protecting, getting in, realising and ultimately passing on to others assets and property which belong not to themselves but to creditors or beneficiaries of one kind or another. They are appointed because of their professional skills and experience and they are expected to exercise proper commercial judgment in the carrying out of their duties. Their fundamental obligation is, however, a duty to account, both for the way in which they exercise their powers and for the property which they deal with."

Lastly, the Supreme Court of South Africa, in Standard Bank of South Africa vs Basil Brian Nel & 2 Others, Case No.103 of 2009 held that a liquidator owes a duty to the whole body of members and the whole body of creditors. In particular, the Court emphasized that a liquidator's conduct must be beyond reproach as he stands in a fiduciary relationship to the company of which he is the liquidator and to the body of its creditors and members as a whole. Relying on a scholarly text, Commentary on the **Companies Act by M S Blackman et al, Vol.3** the majority endorsed the following statement:

"A liquidator must act with care and skill in the performance of his duties. He has a duty to exercise particular professional skill, care and diligence in the performance of his duties, and will incur liability if he fails to display that degree of care and skill which, by accepting office, he holds himself out as possessing. Thus a high standard of care and diligence is required of a liquidator. He must act reasonably in the circumstances...

The liquidator stands in a fiduciary relationship to the company of which he is the liquidator, to the body of its creditors as a whole, and to the body of its members as a whole. As a fiduciary, the liquidator must at all times act openly and in good faith, and must exercise his powers for the benefit of the company and the creditors as a whole, and not for his own benefit or the benefit of a third party or for any other collateral purpose. He must act in the interests of the company and all the creditors, both as individuals and as a group. He must not make a decision which would prejudice one creditor and be of no advantage to any of the other creditors or to the company."

In view of that well developed position regarding the duty of liquidators at common law and the Companies Act of South Africa, which is in parimateria with our own company law, it is a firmly settled position that the duty of care imposed on a liquidator is of a very high standard and this duty is owed, not only to creditors but also to the other members of the company.

This position of the law has a bearing on the present appeal and the vigorous contention by the $1st$ respondent, the liquidator of African Textile Mills Limited, that his main responsibility was to settle the creditor who was also a registered mortgagee. I have also considered the manner in

which he sold the suit property without the awareness or even consent of the appellant and his failure or outright refusal, up to the present day, to account for the proceeds of the sale save for noting that the main or even sole creditor, Crane Bank Limited, was settled. The 1st respondent was required by the judgment of the High Court to provide an account of the proceeds of the sale and file the same in the Court within 90 days of the Judgment. He is yet to do so.

I think there is merit in the appellant's complaint that the 1st respondent approached his duty as liquidator in disposing of the suit property bearing in mind only the interests of Crane Bank Limited. In that regard, the 1st respondent was clearly at fault as settling the said secured debt owing to the bank should not have been his only duty. He clearly placed the interests of one creditor over and above the interests of any other creditors as well as above the interests of the members of the company. This was contrary to the law.

The suit property was mortgaged to Crane Bank Limited who had a legal mortgage over the same. The 1st respondent justified his sale of the suit property on the ground that it was in danger of being sold off by the bank's auctioneers at a lower price.

It is imperative first of all to resolve the question whether the liquidator's actions were consistent with the provisions of the repealed Companies Act, especially Section 301 thereof. I do not think so. The $1st$ respondent could not have sold the said property without the consent and or acquiescence of Crane Bank Limited. Such consent and or acquiescence of the creditor amounts to an arrangement with a creditor within the terms of Section 244 $(1)$ (e) of the repealed Companies Act. A liquidator can only execute an arrangement with the sanction of a special resolution as provided by

Section 301 of the said Act. It is common ground that there was no such special resolution and consequently, the implicit arrangement reached with Crane Bank Limited and readily admitted by the 1st respondent and the bank's auctioneer was in contravention of Section 301 of the repealed Companies Act.

The Court of Appeal justices held that the 1st respondent carried out his duties as a liquidator in accordance with the law and that there was no legal requirement for him to seek consent before selling the suit property. With respect, I disagree with this conclusion. Their Lordships appear not to have considered the import of Section 301 of the repealed Companies Act which I have referred to earlier. Further, the Court appears not to have addressed its mind to the fiduciary nature of the liquidator's duties to the company as well as to its members alongside the creditors.

It is worth noting that the High Court upheld the validity of the sale of the suit property but faulted the 1st respondent for having committed procedural errors in the liquidation exercise. It was for that reason the trial Judge ordered him to account for proceeds of the sale and allowed the appellants to recover their costs from him. It is evident that the trial Judge had misgivings about the manner in which the 1st respondent carried out his liquidation duties.

The Justices of the Court of Appeal appear not to have directed their minds to this aspect of the High Court decision. If they had done so, they would not have concluded that the $1st$ respondent carried out his duty as liquidator in accordance with the law. He did not do so as I have laboured to explain. I am in agreement with Counsel for the appellant in that regard. The law imposes a very high duty of care on a liquidator because he/she is a professional and has a fiduciary relationship with the company in

liquidation. He is therefore expected to act reasonably and in the best interests of the company as a whole.

The 1st respondent explained that he rushed to sell the suit property for the sum of US\$ 1,200,000 in order to save the property of some guarantors since Crane Bank Limited had advertised the same. Both the Court of Appeal and the High Court accepted this justification. With the greatest respect, I do not agree that this rushed sale was in the best interests of the company, its creditors and members as a whole.

I note foremost that the 1st Respondent did not bother to establish the market value and the forced sale value of the suit property prior to its sale to the $2^{nd}$ Respondent. If he had done so, he would possibly have reconsidered whether the consideration of US \$ 1,200,000 was the best offer in the market.

The 1st Respondent was aware of the valuation two years before the sale which placed the market value of the entire property inclusive of machinery at Ug. Shs.22,300,000,000/ $=$ . That sum was considerably higher than the price the property eventually fetched. I do not think it is possible that the suit property had depreciated that significantly in less than three years after that valuation to fetch a paltry price of US \$ 1,200,000 that was then equivalent to approximately Ug. Shs.2,200,000,000/ $=$ according to the record. Even if that were the case, the liquidator as a competent professional should have carried out a fresh objective valuation to determine the market value and forced sale value. The 1st respondent, who is an advocate and insolvency practitioner, must have been aware that even the bank could not legally sell the suit property for a price below the forced sale value. In the event he did not bother to establish the forced sale value of the suit property from the auctioneer. Instead, upon learning from the auctioneer that two bidders had apparently offered very low amounts, he proceeded to speedily conclude a sale to the $2nd$ respondent without conducting a valuation of the property. With respect, the 1st Respondent did not carry out his duties like a competent insolvency professional placed in a fiduciary relationship to the company and its members. He did not discharge the duty of care imposed on him.

While I appreciate that the company had defaulted on its credit obligations with Crane Bank Limited, that was not an excuse in my view, to dispose of the major asset of the company in such a reckless and out rightly negligent manner apparently for fear that the bank's auctioneer would sell it for a windfall. Being a lawyer, the $1st$ respondent ought to have known that the bank's auctioneer did not have powers to sell the property for a price below the forced sale value either. It defies logic that the $1st$ respondent never bothered to establish the fair market value of the property before concluding the sale. He did not act reasonably.

In view of my findings, I am in agreement with the appellant that the sale of the suit property was conducted unlawfully by the 1st respondent. The sale was done in violation of the provisions of the repealed Companies Act and in breach of the fiduciary relationship which the $1st$ Respondent has with the company and its members.

In the context of land law and specifically, the Registration of Titles Act Cap.230, the irregular and reckless manner in which the 1st Respondent conducted the sale of the suit property in violation of the law and his callous disregard for his fiduciary duties amounts to fraud within the definition adopted by the Supreme Court in Grace Asaba vs Grace Kagaiga, SCCA No.14 of 2014 at page 20 of the lead Judgment of Justice A. S. Nshimye.

In that case, this Court cited with approval the definition of fraud from Kerr on the Law of Fraud and Mistake, 5th Edition where fraud is stated to included:

" all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed, and are injurious to another, or by which an undue or unconscientious advantage is taken of another. All surprise, trick, cunning, dissembling and other unfair way that is used to cheat anyone."

I have no doubt that the 1st Respondent's egregious breach of his legal duty of care to the company in liquidation and to its members as well as his violation of the provisions of the now repealed Companies Act amounted to fraudulent conduct within the above definition. Doubtless the $1^{st}$ respondent conducted the sale of the suit property in an irregular and fraudulent manner. He was guilty of fraud insofar as he breached his duty of trust and confidence justly reposed in him by the company in liquidation.

In view of my finding that the $1^{st}$ Respondent committed fraud in the manner in which he sold the suit property, I must proceed to determine whether the $2^{nd}$ Respondent is a bona fide purchaser for value without notice and therefore unaffected by the fraud proved to have been committed by the $1^{st}$ Respondent.

First of all I have to determine whether the $2nd$ respondent's reliance on the indoor management rule suffices to protect the transaction from the irregular, highly recklessly and fraudulent manner in which the suit property was sold to them by the $1^{st}$ Respondent. The indoor management rule is a common law principle first enunciated in Royal British Bank v Turquand (supra) and is therefore famously known as the "rule in **Turguand**". It is to the effect that where there are persons conducting the affairs of the company in a manner which appears to be perfectly consonant with the articles of association, the memorandum and other public documents of the company, those so dealing with them externally are not to be affected by irregularities which may take place in the internal management of the company. This rule was affirmed by the House of Lords in **Mahony v East Holyford Mining Co.** (supra).

However, it is also a recognized exception that the **rule in Turquand** does not apply if the third party dealing with a company has been put on notice or on enquiry as to the apparent lack of authority. See B. Liggett (Liverpool) Ltd v Barclays Bank [1928] 1 K. B. 48

In my view, the indoor management rule does not apply to the affairs of a company in liquidation such as Africa Textile Mills Limited whose principal officer is only the liquidator. The law requires the fact of liquidation to be extensively publicized and the powers of directors and shareholders of a company in liquidation to be frozen and assumed by the liquidator. The appointment of the liquidator in a voluntary winding up such as happened in this matter is advertised in national newspapers, gazette and contained in a special resolution filed with the registry of Companies.

A third party dealing with a company in liquidation is therefore put on notice and must be presumed to know that a liquidator operates within strict requirements of the law and is the only person with authority on behalf of such company. Consequently, a third party who deals with a liquidator that is not discharging his duties in accordance with the law

In the instant case I have noted that the $2^{nd}$ respondent's officers participated in the irregular purchase of the suit property and did not bother to establish whether the $1st$ respondent had conducted the sale in accordance with the law. Further, it is on record that the $2nd$ respondent had also been in discussions with the appellant's directors with a view to purchasing the suit property prior to the involvement of the 1st respondent but that no agreement had been reached on the price. Curiously, the $2nd$ respondent subsequently bought the suit property from the $1st$ respondent at a price way below their initial proposal made to the appellant and rejected by him. It cannot therefore be true that the $2^{nd}$ respondent acted in good faith and with honesty.

Consequently, the $2^{nd}$ respondent's plea of bona fide purchaser for value without notice does not stand in light of its knowledge about the transaction and their participation in the purchase of the property to the exclusion of the appellant whose officers had previously held discussions with them. The 1st respondent's attempts to exclude the members of the company from the sale of the suit property should have been a red flag for them. At the very least, they should have inquired further whether the actions of the $1^{st}$ respondent, in excluding the appellant's participation in the sale, were legal. They chose not to do so and cannot claim to have acted bona fide.

Needless to say an illegality once brought to the attention of court overrides all matters including pleadings. In effect therefore court cannot sanction what is illegal even if the matter had been agreed upon. See Makula International v His Eminence Cardinal Nsubuga &Anor (supra).

Consequently, the Appellant's ground of appeal succeeds. The respective judgments of the High Court and the Court of Appeal are set aside save for the High Court order directing the 1st respondent to make an account of the liquidation process to the Appellant. I make the following orders as a result;

- 1. Since this appeal has partially succeeded, the appellant is entitled to one third of the costs in this Court and the Court of Appeal to be borne by the 1st respondent. The High Court order on costs remains in force. - 2. The transfer of the suit property by the $1st$ respondent to the $2nd$ respondent is hereby nullified and an order hereby issues for cancellation of the $2nd$ respondent's name from the certificate of title and restoration of the name of M/s African Textile Mills Limited, in Liquidation. - 3. The High Court order for the 1st respondent to render an account of the proceeds of the sale is re-affirmed. He should do so by filing it in the High Court and this Court and by providing copies to the Appellant's Counsel, all within a period not exceeding 30 days from the date of delivery of this judgment. - 4. The 2nd respondent shall meet its costs in this Court and the Courts below.

6th November 2018. Dated at Kampala this ......

PAUL K. MUGAMBA JUSTICE OF THE SUPREME COURT

## IN THE SUPREME COURT OF UGANDA AT KOLOLO

*Coram*: (*Mwangusya*, *Opio-Aweri*, *Mwondha*, *Tibatemwa-Ekirikubinza*, Mugamba, JJ. S. C)

### CIVIL APPEAL NO. 06 OF 2017

#### **BETWEEN**

| | 1. RACHHOBHAI SHIVABHAI PATEL LTD. | | | | | |---------------|-----------------------------------------------------------|----------|--|--|--| | | 2. JAYANTILAL V. PATEL | I | | | | | VERSUS | | | | | | | | 1 HENRY WAMRIIGA (Liquidator of African Mills Itd) | | | | |

$x$ **WAMBUGA** (Liquidator of African Mills Ltd) 2. MUKWANO ENTERPRICES LIMITED ....................................

(Appeal from the Judgment of the Court of Appeal of Uganda at Kampala by Justice (Richard Buteera, Balungi Bossa, Kenneth Kakuru, JJA) dated 29th day of March, 2017).

## **JUDGMENT OF ELDAD MWANGUSYA, JSC**

I have had the opportunity of reading in draft the Judgment of my learned brother, Hon. Justice Mugamba, JSC and I agree with his analysis and decision that this appeal should succeed.

As all the other members of Court agree, this appeal is allowed with costs.

GAL dav of November 2018 Dated at Kampala this...

Mwangusya Eldad JUSTICE OF THE SUPREME COURT

#### IN THE SUPREME COURT OF UGANDA AT KAMPALA

# Coram: Mwangusya, Opio Aweri, Mwondha, Tibatemwa Ekirikubinza, Mugamba JJ. SC

#### Civil Appeal No.06 of 2017

#### Between

$\mathcal{L} \rightarrow \mathcal{L}$

| 1. Ranchobhai Shivabhai Patel Ltd 2. Jayantilal V Patel | | |------------------------------------------------------------|--| | And | | | 1. Henry Wambuga (Liquidator of African Mills Ltd) | |

2. Mukwano Enterprise Limited J. ..................................

(Appeal arising from the decision of the Court of Appeal at Kampala delivered on 29th March 2017 by Buteera, Balungi Bossa, Kakuru JJA)

### JUDGMENT OF MWONDHA JSC

I have had the opportunity to read in draft the judgment of my learned brother Mugamba P. K JSC. I agree with his analysis and decision that the appeal is allowed with costs and the orders as proposed therein.

Dated at Kampala this....................................

Thursday

**MWONDHA** JUSTICE OF THE SUPREME COURT

#### IN THE SUPREME COURT OF UGANDA AT KAMPALA

[CORAM: MWANGUSYA; OPIO-AWERI; MWONDHA; TIBATEMWA-EKIRIKUBINZA; MUGAMBA: JJ. S. C. I

#### CIVIL APPEAL NO. 06 OF 2017

#### **BETWEEN**

#### 1. RANCHOBHAI SHIVABHAI PATEL LTD **2. JAYANTILAL V PATEL**

**APPELLANTS**

#### AND

**1. HENRY WAMBUGA** (Liquidator of African Mills Ltd) **EXAMPLE 20 EXPONDENTS** 2. Mukwano Enterprise Limited

[Appeal arising from the decision of the Court of Appeal in Civil Appeal No.7 of 2010] 15 before (Buteera, Balungi Bossa & Kakuru, JJA) dated 29th March 2017.]

#### JUDGMENT OF TIBATEMWA-EKIRIKUBINZA, JSC.

I have had the benefit of reading the judgment of my learned

brother Mugamba P. K, JSC. I agree with his analysis and $20$ decision that this appeal should succeed. I also agree with the Orders he has proposed.

Dated at Kampala this ......... day of November 2018.

balem: PROF. LILLIAN TIBATEMWA-EKIRIKUBINZA JUSTICE OF THE SUPREME COURT

$25$

$\mathsf{S}$

# IN THE SUPREME COURT OF UGANDA

# **AT KAMPALA**

Coram: Mwangusya, Opio-Aweri, Mwondha, Tibatemwa-Ekirikubinza, Mugamba, J. S. C.

# CIVIL APPEAL NO. 06 OF 2017

## **BETWEEN**

# 1. RANCHOBHAI SHIVABHAI PATEL Ltd

2. JAYANTILAL V PATEL

**:::::::::::::::APPELLANTS**

#### AND

# 1. HENRY WAMBUGA (Liquidator of African Mills Ltd) 2. MUKWANO ENTERPRISE LIMITED :RESPONDENTS

(Appeal from the Judgment of the Court of Appeal of Uganda at Kampala by Justice Buteera, Solomy Balungi Bossa, Kenneth Kakuru, , JJA, dated 29th day of March 2017)

# **JUDGMENT OF OPIO-AWERI, JSC**

I have had the benefit of reading in draft, the judgment of my Learned brother Hon. Justice Mugamba P. K JSC. I agree with his decision that this appeal be allowed and the order of costs as proposed.

day of Ntvember 2018. Dated at Kampala this.. **OPIO-AWERI**

# JUSTICE OF THE SUPREME COURT