Stanbic Bank Limited v Jonah Investments Limited & Another (Miscellaneous Application 8 of 2017) [2024] UGCommC 228 (6 June 2024)


### **IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA**

## **(COMMERCIAL DIVISION)**

Reportable Misc. Civil Application No. 0008 OF 2017

In the matter between

**STANBIC BANK LIMITED APPLLICANT**

**And**

# **1. JONAH INVESTMENTS LIMITED RESPONDENTS**

**2. THE OFFICIAL RECEIVER**

**Heard: 31 May, 2024. Delivered: 6 June, 2024.**

*Insolvency—Section 3 (2) (a) of The Insolvency Act, 2011 and Regulation 85 (2) (a) of The Insolvency Regulations, 2013. — A company's non-compliance with a statutory demand, or non-satisfaction of execution of a judgment debt, if proved, establishes the court's jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts. —A creditor (including a judgment creditor) of an undisputed debt is entitled to present a petition for winding up petition.*

### **RULING** \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

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### **STEPHEN MUBIRU, J.**

Introduction:

[1] Judgment was on 12th September, 2005 entered in favour of the applicant against the 1st respondent. A statutory demand was duly served on the 1st respondent on 14th June, 2017 and service acknowledged by the 1st respondent. The statutory demand gave the 1st respondent ample time from the date of service to make payment of the decretal amount due to the applicant. Despite receipt of service of the statutory demand, the 1st respondent has failed to pay the decretal amount specified in the statutory demand.

### The application;

[2] The application is made under the provisions of section 3 (2) (a) of *The Insolvency Act, 2011* and Regulation 85 (2) (a) of *The Insolvency Regulations, 2013.* The applicant seeks an order winding-up the 1st respondent. It is contended that 1st respondent is saddled with a huge debt burden and is unable to pay its debt obligations as and when they fall due.

### Submissions of counsel for the applicants;

[3] M/s H & G Advocates on behalf of the applicants submitted that the 1st respondent should be placed under liquidation. The grounds are that the petitioner has a decretal sum awarded against it on 12th September, 2005. The respondent lodged a notice of appeal which was struck out by the Court of Appeal on 19th June, 2015. The petitioner issued a statutory demand on 14th June, 2017 and there is proof of service of the demand. It was not complied with.

### The decision.

[4] Under section 3 (2) (a) of The Insolvency Act, 2011 and Regulation 85 (2) (a) of The Insolvency Regulations, 2013 unless the contrary is proved, a debtor is presumed to be unable to pay the debtor's debt if the debtor has failed to comply with a statutory demand. A company's non-compliance with a statutory demand, or non-satisfaction of execution of a judgment debt, if proved, establishes the court's jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts (see *BNY Corporate Trustees Services Ltd and others v. Neuberger Berman Europe Ltd and others; BNY Corporate Trustees Services Ltd* *and others v. Eurosail-IK 2007-3BL plc [2011] EWCA Civ 227; Mann v. Goldstein [1968] 2 ALLER 769; Cornhill Insurance plc v. Improvement Services Ltd and others [1986] BCLC 26 and Jomayi Consultants Limited v. NC Bank Uganda Limited, H. C. Company Cause No. 5 of 2020; H. C. Miscellaneous Cause No. 43 of 2020). A creditor (including a judgment creditor)* of an undisputed debt is entitled to present a petition for winding up petition.

[5] The amount claimed in the statutory demand exceeds the minimum of one million shillings required by section 4 (2) (a) of *The Insolvency Act, 2011*. Consequently, a Declaration is hereby made that the 1st respondent, M/s Jonah Investments Limited failed to comply with the statutory demand by which fact it is deemed unable to pay its debts, and is thus insolvent. For that reason, the application is allowed and an order to wind-up/liquidate M/s Jonah Investments Limited is hereby issued. In accordance with Regulation 97 (a) of *The Insolvency Regulations, 2013* the 2nd respondent is hereby appointed its Provisional Liquidator. The costs of the applicant will be met from the proceeds of the winding-up/liquidation process.

Delivered electronically this 6th day of June, 2024 ……Stephen Mubiru…………... Stephen Mubiru Judge, 6th June, 2024.

#### Appearances

For the applicants : M/s H & G Advocates For the respondent :