UGANDA, Kampala | Real Muloodi News | The Commercial Division of the High Court has ordered tycoon Haruna Sentongo to repay Orient Bank, now I&M Bank, USh10.38 billion in mortgages.
Justice Richard Wejuli Wabwire in his ruling on December 23, 2022 also awarded Orient USh150 million in damages and 22% interest from the date of default until Mr Sentongo makes the payment.
Mr Sentongo and Orient Bank had filed civil suits against each other in 2018 and 2019 regarding credit facilities extended to Mr Sentongo in 2015 to fund the development and completion of Nakayiza Mall, and another credit facility to finance garment importation.
However, the court directed the consolidation of the two applications to resolve the issues efficiently.
Court documents show that Mr Sentongo accused Orient of extortion, duress, undue influence, dishonesty, and more, for contracting him into credit facilities with unclear and unfair terms and conditions, to unjustly enrich itself at his expense.
Documents filed by lawyer Mr Arnold Kimara on behalf of Mr Sentongo, read in part, “The conduct of [Orient Bank] … complicated [Mr Sentongo’s] performance and exposed him to excessive loss of income, risk to exposure, psychological torture and mental aguish.”
Consequently, Mr Sentongo sought several remedies, including damages of USh500 million for loss of business and rental income from February 2016 to date, as well as the dismissal of Orient’s claims.
Mr Kimara also argued that Orient was not entitled to recover any money from Mr Sentongo because it had failed to prove its case at trial.
In its defence, Orient, represented by lawyer Mr Ronald Oine, argued that since May 2015 it had extended various credit facilities to Mr Sentongo, all of which Mr Sentongo defaulted on before he asked for consolidation of the loans.
After consolidation, Mr Sentongo’s combined default position was USh9.69 billion, in addition to continued accrued unpaid interest totalling USh184.9 million, amounting to an outstanding sum of USh10.38 billion.
Orient also accused Mr Sentongo of diverting funds intended for developing Nakayiza Mall without notifying the bank, despite the proceeds from the anticipated rent earned from the commercial property slated to be part of the repayment plan for the loan.
Court documents also indicate that even after the consolidation of his credit facilities, Mr Sentongo continued to default on his repayments, thus prompting the bank to issue demand notices, which the tycoon ignored.
Orient thus issued a notice of sale of the mortgaged properties. However, court documents show that Mr Sentongo sought permission to sell part of his property to rectify his default position.
Orient permitted Mr Sentongo to sell a part of the property for $700,000 on the condition $600,000 would go to loan repayment with subsequent recoveries conducted in due course.
However, Mr Sentongo again fell into default, prompting Orient to advertise his mortgaged properties for onward recovery of USh10.38 billion, general damages, and costs.
The Verdict
In his ruling, Justice Wabwire indicated that he had weighed the submissions from both parties. After a careful review, he concluded that Orient was entitled to the remedies it had sought.
Therefore, Justice Wabwire ruled Orient was right to seek damages given that Mr Sentongo subjected it to extended periods of non-repayment.
“The plaintiff, Mr Sentongo is indebted to the defendant, Orient Bank, in the sum of [USh10,38 billion]. The plaintiff is directed to repay the entire sum,” he ruled, noting that Orient had suffered economic strangulation, and commercial distress, among others.
Justice Wabwire also dismissed Mr Sentongo’s case against Orient and awarded the bank interest on the outstanding sum of Shs10.38m as well as costs of the suit, among other remedies.
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