Principal Judge Flavian Zeija yesterday issued an injunction blocking the execution of Commercial Court orders in which Diamond Trust Bank (DTB) was told to refund Shs34b and $23.2m (Shs86b) which they allegedly deducted from Ham Enterprises’ accounts.
The interim order will be in place until the main application for stay of the execution orders is determined.
“It is hereby ordered that an interim order for stay of execution of the decree in the High Court Civil Suit number 43/2020 doth issue pending the determination of the main application for stay of execution,” the interim order issued yesterday reads in part.
This means that Ham Enterprises cannot commence the recovery process of the aforementioned money from the bank as earlier ordered by the head of the Commercial Court, Justice Henry Peter Adonyo.
In his verdict last week, Justice Adonyo declared that DTB Kenya is not licensed to conduct financial business in Uganda and, therefore, the credit facilities granted to Ham Enterprises were irregular, null and void.
He said for DTB Uganda to act as a collecting agent for DTB Kenya, it contravened the Financial Institutions Act and agent bank regulations.
“I declare that the credit defendants (banks) breached the different loan agreements in which the applicant (Ham Enterprises) acquired between 2011 and 2019,” Justice Adonyo ruled last week.
To that effect, the judge, among others, directed the bank to refund Shs34b and $23.2m to Ham Enterprises.
This was because DTB Kenya Limited in conducting a financial institution business as a deposit taking financial institution licensed in Kenya, illegally impacted on activities in Uganda and that it had to be penalised.
Further, the court cancelled the loan mortgages and ordered the banks to return the mortgaged property to Ham since the loan transactions were illegal.
The court’s decision has since rubbed the banking sector the wrong way as the same decision has put a portfolio of Shs5.7 trillion held in syndicated loans at stake and would embolden borrowers with foul intentions to fault, citing the judgment in place.
The issuance of the court’s interim order halting execution orders, comes barely days after DTB appealed the same judgment before the Court of Appeal after it was dissatisfied with the verdict.
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