Uganda Commercial Bank v General Parts (U) Limited (Civil Suit 386 of 1993) [1993] UGHC 61 (20 July 1993)

## The Hon. Mr. Justice Egonda Ntende

THE REPUBLIC OF UBa<sup>J</sup> DA

### IN THE HIGH COURT OF UG^. ND<sup>h</sup> AT KAMP,-. .. A

## CIVIL SUIT NO, 386 <sup>O</sup>F 1993

UGaNDA COMMERCIAL BANK I:::::::::::::::::::::: PLAINTIFF

# VERSUS

GENERAL PARTS (U) LTD. ::::::::::::::::::::::: DEFENDANT

# BEFORE: The <sup>H</sup>onourabl<sup>e</sup> <sup>M</sup>rs. Justice, bi. Kireju

## Ruling

This is an application brought by the applicant/defendant, General Parts (U) Ltd. It is brought under Or <sup>37</sup> r. 1(a) and r.9 of Civil Procedure Rules and it seeks <sup>a</sup> temporary injunction to restrain the respondent/plaintiff, Uganda Commercial Bank from disposing off the defendant's property until the disposal of the main suit. The application is supported by the affidavit of Hajati Mariam Asiimwe Ssemakula, affirmed on 6/7/1993- There is an affidavit in reply by Emmanuel Jaggwe dated 12/7/1993\*

At the hearing of the application, the applicant -was repre-s^-nted by learned counsel Mr. Omunyokol of M/S Katende, Ssempebwa & Co. Advocates and the respondent was represented by learned counsel Mr. Elue of M/S Edward Elue and Co. Advocates•

The main grounds of this application as stated in the Chamber Summons and the supporting affidavit and as narrated by counsel'erre that the respondents have instructed their agents M/S . Key Agencies and Auctioneers to sell off the defendant's properties on 15/7/19931 under the purported powers to sell the mortaged property. The applicant concedes that there was an agreement for loan from the respondent .• J to the applicant, but contends that the respondent committed a breach of the contract, in that the respondent/plaintiff delayed to process

Letters of Credit in the applicant/defendant ' s favour and subsequently the merchadise delayed to arrive in Uganda.

addition, during tha period when the anplic\-:t ' waiting for the merchandise to arrive the respondent extended

over draft facilities to the applicant on the applicant meet the overdue outstanding local suppliers' dues. When the merchand se arrived the respondent extended facilities to the applicant to clear the taxes for the same. It is the applicant's contention that if the merchadise had arrived on time it would not have been necessary for the applicant/defendant to get more re-negotiated and new money from the respondent. In view of the above, the loan und

arrangements for the payment of the same were agreed upon by the parties. The applicant further contends that while the company was still waiting for the respondent to comply with the new arrangement referred to above, the applicant was shocked to receive a letter from the respondent/plaintiff requesting the applicant/defendant to pay collosal sums of money, and went on to advertise the properties already referred to for sale. The applicant disputes the sums claimed by the respondent and also denies having authorised the bank to transfer funds to the third party namely General Industries (U) Ltd.

$\mathcal{L} = \mathcal{L} \mathcal{L}$ Mr. Omunyakol submitted that the facts outlined above establish a prima facie case for the applicant/defendant which is one of the conditions for a grant of an interlocutary injunction, he referred court to the case of Giella vs. Cassaman Brown &Co Ltd 1973 EA 358. Counsel further submitted that the facts as narrated stand a strong chance of succeeding once they are investigated by court. Counsel contended that if the application is not granted, the applicant will suffer irreparable damage because of the industrial project which has already commenced in some of the plots how threatened to be sold and that there is room for expansion in the adjacent plots and these expansion will be irreparably lost if the sale $d$ $\sim$ takes place as scheduled. The funding of the project is already underway he contended as per paragraph 15 of Asiimwe's affidavit.

On balance of inconvenience, counsel contended that the respondent would not be greatly inconvenienced if the sale is stopped but that on the other hand the applicant would be greatly inconvenienced because of the said project. Counsel prayed that $... / 3.$

the status quo should be preserved with the serious questions in the main suit are investigated at the trial and finally determined. Counsel referred to the following cases in suppress of his contention, $(1)$ Noor Mohamed Jannohammed vs Kassamali Virji Madhani /1953 / 20 EACA 24. (2) Kiyimba - Kaggwa vs. Katende 1985 HCB 43.

Mr. Elue, on the other hand submitted that the applicant has failed to bring the application within the ambits of the principles under which a temporary injunction should be granted. Counsel submitted that the averments in the affidavit of Hajat Asiimwe were mere assertion without any cogent evidence to support them. iust Counsel contended that it was not enough for the applicant to deny because the same is collossal without stating how much the company owes the bank. In the affidavit of Jaggwe the respondent admits that there was an arrangement referred to by the applicont, Counsel contended that since the applicant failed to fulfil its part of the bargain, it cannot rely on that abortive arrangement. Counsel submitted that the applicant has failed to establish a prima facie case and the applicant's case has no chance of success. Counsel further submitted that apart from the alleged industry project which is to be undertaken by General Industries (U) Limited, the applicant has not adduced any evidence that :it is likely to suffer irreparable damage on its own account. A company being a legal entity is different from the applicant and that apart from applicant asserting that General Industries (U) Ltd is a sister company of the applicant, there is no evidence to establish the relationship of the two Campanies The applicant cannot therefore rely on irreparable damage with a company with whom it has no connection. Counsel further submitted that even if it is found that the applicant paid money tp the General Industrics (U) Ltd, this is a liquidated sum which can be paid back to the applicant with interest should the applicant secceed in the main suit. The respondent being a big financial institution was in a position to refund the money, he argued. Counsel further submitted that the debt cutstanding was currently over shs. 3 billion and it continues to attract interest at the rate of 22%, that if the bank succeeds in the

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main suit it may fail to recover the j.^-x-y fi om the defendant• Cn the other hand counsel submitted that the properties of the applicant can be valued so that in case the applicant is successful in the- main suit it can be adequately compesated. Counsel prayed that the application be dismissed as it failed to satisfy the conditions for grant of a temporary injunction.

After perusing the Chamber Summons with the supporting affidavit together with the affidavit in reply and after listening to the submissions of both counsel my task is to decide on the merits and demerits of this application. The purpose of a temporary injunction is -to preserve matters in status quo until the question to be investigated in the main suit can be finally disposed of. Tfoe conditions which must be satisfied by the applicant before a temporary injunction can be granted were set out in the case- of Giella <sup>v</sup> Cassaman Brown & Co Limited already cited above and have been ably expounded on by both counsel.

With regard to the firt condition <sup>a</sup> prima facie case and probability of success in the main suit, both parties in this suit agree that there was a loan agreement between them, .the. agreement was renegotiated, however the applicant claims the respondent has breached with respect to the new arrangement, and therefore counter claims from the respondent/plaintiff as per the written Statement of Defence. On the other hand the respondent claims that it is the applicant who beached the new arrangement. The applicant disputes the same claimed and that transfer to the 3rd partv From what is stared above and what is .available on record there are"some questions to be investigated in the- uiain suit and there is a probability that the applicant might succeed in the main suit.

On the condition of irreparable injury which was defined to mean ) substantial injury which cannot be adequately atoned for in damages, the ca u ofBikwe Estates Coffee Works Etd and <sup>2</sup> others vs. Lutabi 1\_9o2 *<sup>328</sup> refer.* The term irreparable injury does not mean that.there must be no physical possibility of repairing the injury bj^t means th~t the injury must be a material one that cannot be adequately compensated for in damages. The applicant claims that under the new ari\*suigeinent

the construction of an Industrial Project has already commenced on some of the plots now threatened to be sold and possible expansion on the adjacent plots which are also listed for sale. It is contended that if the sale takes place the applicant will suffer irreparable damage, as some funding of the said industrial project from Uganda Development Bank of shs. 31 million has already been paid as appraisal fees and this sum will be lost. On the other hand the respondent says that this amount of be easily paid back to the applicant in case it succeeds into the issues raised by both the main suit. Without going $\frac{1}{2}$ and of the issues raised by both parties regarding the truth of the allegations made which I think will best be handled at the hearing of the head suit, I am of the considered view that if the said 9 properties are sold the applicant is likely to suffer irreparable damage which may not be adequately compensated for in damages.

$\overline{5}$

On the condition of balance of inconvenience, the applicant as a small company compared with the respondent is likely to be more inconvenienced if the said property is sold now.

After considering the whole application generally I have come to a conclusion that if the status quo is not maintained, the found decision in the main suit may be nugatory if/in favour of the applicant as the property would have been sold and the applicant may suffer as a result. I accordingly grant this application for a temporary injunction and order that the status que be maintained. The respondent/plaintiff is ordered not to dispose off the applicant/ defendant's property until determination of the main suit. Costs of this application shall follow the outcome of the main suit.

Who vide M. Kiroju Judge. $20/7/1993$

$.../6...$

$20/7/1993$ :-

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Mr. Omunyakol for the applicant/defendant. Mr. Elue for the respondent/plaintiff. Mr. Oburu Court clerk.

the Ruling read before above.

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$20/7/1993$

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