UGANDA, Kampala | Real Muloodi News | Aya Investment Limited, the owner of the prestigious Pearl of Africa Hotel in Kampala, has suffered another legal setback in its ongoing battle to prevent the auction of the hotel due to non-payment of loans exceeding $300 million.
In a recent ruling, three Court of Appeal judges, namely Fredrick Egonda-Ntende, Monica Mugenyi, and Oscar Kihika, have dismissed Aya’s bid to stay the execution of an order allowing the auction of the hotel.
The judges determined that Aya’s reference, filed against its financiers, Industrial Development Corporation Of South Africa Limited, to halt the execution orders, became untenable when Aya withdrew the substantive appeal on which the stay of execution application was based.
According to court records, Aya Investments Limited, owned by businessman Muhammad Hamid, entered into various Financial Credit Agreements and Security Agreements with the Industrial Development Corporation of South Africa between 2007 and 2017.
These agreements were aimed at financing the construction of the Pearl of Africa Hotel.
However, a breakdown in their business relationship and Aya’s alleged default on its financial obligations led the financiers to initiate foreclosure proceedings in line with Ugandan legal provisions specified in the Security Agreements.
Aya contested these proceedings, instead opting for arbitration as stipulated in their loan agreements. The company also obtained restraining orders against the foreclosure proceedings until the arbitration process took place in South Africa.
Furthermore, Aya filed a civil suit in 2017, numbered 937, which was grounded in contempt of court and breach of contract. In response, his financiers applied to refer all the matters in the said suit to arbitration.
The arbitration process ultimately favoured the financiers, who subsequently sought court orders to enforce their rights. These actions included the closure of the Pearl of Africa Hotel.
Aya then filed an application challenging the High Court’s decision to allow the execution of the arbitral orders.
This application was heard by a single judge of the Court of Appeal, Christopher Gasharibake, prompting Aya to file a reference seeking the matter to be heard by three judges of the court.
During the court hearing, lawyers representing the Industrial Development Corporation raised a preliminary legal objection, pointing out that the application for leave to appeal, the basis for the stay of execution, had been withdrawn.
Consequently, there was no legal foundation for the reference. The court upheld this objection.
In the absence of an appeal to the Supreme Court, this ruling signifies that the Pearl of Africa Hotel, situated on Nakasero Hill, which was originally owned by the Uganda Broadcasting Corporation, may indeed be auctioned to settle the debts accrued by its owner over the years.
Muhammad Hamid, the owner of Aya Investments Limited, has publicly sought help from President Yoweri Museveni, alleging that there are parties attempting to unlawfully dispossess him of his property.
However, as of now, President Museveni has not made any public statements regarding this matter.
It’s worth noting that President Museveni has previously intervened to assist businessmen facing financial distress due to loans.
One such case was Patrick Bitature, the owner of Protea Hotel, who was on the brink of financial collapse when another South African financier demanded more than $30 million in principal and interest from a loan that had been extended to him, and which he had failed to repay.
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