UGANDA, Kampala | Real Muloodi News | (This article was updated 20 December 2023 to amend some of the facts based on court documents).
A high-end luxury apartment building off Lugogo Bypass is at risk of being put up for auction by Grant Thornton Management Limited (GTML).
The forty-four apartment residential property, situated at Plot 65A Lugogo Bypass, is owned by city businessman Vijay Reddy Movva’s company, Visare Uganda Limited. According to Open Corporates, Visare is the company behind the real estate brokerage site Houseify.
In 2017, Visare took out a loan from the Kenya Commercial Bank (KCB) to complete construction of the apartments. However, he encountered challenges servicing the debt.
By 2019, Visare owed KCB Bank $1,930,813 United States dollars. It was around this time that KCB began the process to foreclose and sell off the property to recover its money.
Visare was given until December 31, 2019 to deposit the money it owed the bank, or lose control of the building.
On the last day of the payment deadline, Visare struck a deal with GTML, offering twelve of the forty-four units at the price of US $2,400,000. GTML then paid KCB Bank US $500,000 to the bank to satisfy the condition for stay of the sale as ordered by court.
Visare, GTML and KCB Bank subsequently entered into a memorandum of understanding, executed on 28th February, 2020. The parties agreed that the mortgage would be fully paid off once $1,930,813 was paid. As part of the deal, Visare had the option to buy back the 12 units by December 31, 2020.
However, if Visare was unable to raise the outstanding mortgage by this deadline, GTML was to pay off Visare’s outstanding mortgage balance, and in turn, regain full ownership and rights over the 12 units to their name or sell them.
Indeed, Visare was not able to pay the debt within the specified time, defaulting once more. But in a turn of events, there were no independent titles yet to the 12 condominium units GTML had purchased. GTML subsequently, on or about 30th April, 2021, applied for attachment and sale of the entire land comprised in LRV 2651 Folio 9 Plot 65A, on account of Visare’s default.
GTML has the support of the Commercial Court, which ruled in May 2021 that GTML could proceed with the sale of the entire building.
Visare has appointed lawyers to challenge the court verdict and save his property. He claims that GTML only has authority over the original 12 apartments sold to them, not the entire building.
There is debate over whether the transaction qualifies as a sale and purchase, or simply a money lending agreement. It appears that this debate has now lead to an investigation of GTML.
GTML Under Investigation
Following reports that GTML was involved in a legal battle with Visare, media reports suggest Bank of Uganda (BoU) has launched an investigation into GTML for potentially engaging in money lending without the required licensing.
Reports allege BoU summoned GTML Boss, Anil Ramachabal Patel, and his business partners on 17th August for questioning.
The Money Lenders Act, 2016 (the Act) provides for the licensing and operation of money lending business in Uganda. The purpose of the Act is to legitimise and build confidence in money lenders who had for a long time remained unregulated.
Any company wishing to undertake money lending business is required to apply for a license from the Uganda Microfinance Regulatory Authority (UMRA), under the supervision of BOU, by submitting its incorporation documents, the particulars of its directors and secretary and paying the requisite fee.
However, it appears that GTML has never fulfilled these requirements to qualify as a money lending company.
GTML therefore risks closure, since Bank of Uganda officials have launched investigations into the daily operations of this audit firm.
The case remains open for now, as Reddy and his advocates appeal to the court to save his property.
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