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Long Read: Kamya Sues Equity Bank, Sudhir’s Meera Investments over ‘Fraudulent’ Sale of $12m Simbamanyo House

Peter Kamya, the proprietor of Simbamanyo Estates, has sued Equity Bank Uganda, Meera Investments, Luwaluwa Investments Ltd and the Commissioner Land Registration over the alleged “fraudulent and illegal sell and transfer” of his prime properties in the heart of Kampala city.

Kamya accuses Equity Bank of “selling and causing the transfer of the suit property without following the set down procedures of public auction and obtaining the requisite Government valuation and payment of stamp duty.”

He says bank and the buyers of his properties colluded in the purported sale and purchase process of the suit properties and businesses “at a break neck speed of 2 hours.”

Kamya now wants court to cancel the transfer and registration of the suit properties on to the names of Meera and Luwaluwa Investments and restore Simbamanyo and his respective names to the certificates of title.

Sudhir Ruparelia recently acquired Simbamanyo House, a prime property along Lumumba Avenue in the centre of Kampala at Shs 18.5bn.

Sudhir’s associates said the acquisition through the investment arm of the Ruparelia Group of Companies followed a public auction put up by Equity Bank which sought to recover an unpaid loan of $8.1 million from Simbamanyo Estates.

Afrique Suites, which were also owned by Kamya, were sold by Equity Bank to Luwaluwa Investments Ltd.

However, Kamya has now gone to the High Court, arguing that the “concurrent transfer” of Simbamanyo House and Land at Mutungo known as Afrique Suites Hotel vide an alleged auction, was “procured by dishonest conduct, fraud and is illegal.”

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Kamya is seeking from court a “permanent injunction restraining Meera Investment and Luwaluwa Investments from selling, alienating, mortgaging encumbering or in any way creating any third party interests and rights on the suit properties or any of them and a further order of mandatory injunction restoring possession and ownership of the suit properties” to him.

An official at Simbamanyo said the unpredictability of the court case has left tenants in confusion with some hinting on avoiding signing long-term tenancy contracts.

Background

It all started when Kamya sued Equity Bank Uganda together with Equity Bank Kenya Ltd and Bankone Ltd, a Mauritian Bank seeking orders and declarations to declare that the contested credit facility of 30 November, 2017 was illegal and for orders to cancel/discharge the mortgages created thereunder.

According to court documents seen by ChimpReports this Friday, Simbamanyo said “despite the pendency of the suit”, Equity Bank “commenced measures to enforce the mortgages” created under the disputed credit facility which enforcement was unsuccessfully resisted by the property owners.

Kamya said following the Court proceeding on 7 September, 2020 before the trial Judge Hon. Boniface Wamala, Equity Bank lawyers issued another notice of sale of the suit properties in an act of continuation of the sale process which had been injuncted by Court.

Additionally, Simbamanyo said its lawyers published a notice in the Daily Monitor of 8 September, 2020 under the title “Response to caveat emptor” where they further confirmed that the suit properties would be sold by 8 October, 2020 unless Equity Bank paid 30% of the disputed amounts.

On 8 September, 2020, Kamya and Simbamanyo lodged and registered caveats as registered proprietors on Simbamanyo House and Afrique Suites respectively to protect their interests as a result of Equity Bank’s threat to sell their properties.

Afrique Suites in Mutungo

Kamya further filed a notice of appeal against the said High Court order of 7 September, 2020 and wrote a letter requesting for proceedings which were served to Equity Bank’s Counsel on 1 October, 2020.

Contention

Through lawyers, Muwema & Co. Advocates and Kakuru & Co. Advocates, Kamya says “for all intents and purposes, Equity Bank was at all material times aware that they were aggrieved by its plans to sell its mortgaged properties” and that they were pursuing a remedy through the appeal process.

“Despite having knowledge of the Plaintiff abovementioned appeal process and the existence of the Plaintiffs’ caveats on the suit properties, the Defendant (Equity Bank) through its agents M/s CL Risk Management Services proceeded to sale and cause the transfer of the suit properties to Meera Investments and Luwaluwa Investments,” argues Kamya.

Kamya says the sale and transfer “were unduly and designedly rushed as they were all done on 8 October, 2020 in just a space of 2 hours.”

He also maintains that the act of selling and disposing of the suit properties and businesses was a “premeditated act of explicit and implicit collusion and connivance between Equity Bank, Meera Investments and Luwaluwa Investments as it was not reasonably possible to ordinarily find and negotiate with buyers ready to pay for such large commercial properties within 2 hours.”

Kamya argues that whereas Equity Bank through its said agents had advertised the sale of the suit properties under the mortgage, “they unlawfully proceeded to convert or cause the conversion and sell of the properties without any color of right.”

He says the bank and the buyers of the disputed property “secretly and willfully pre-planned and pre-arranged” the sale and transfer of the suit properties and businesses well before the actual impugned sale and purchase transaction.

Kamya submits that two hours is not sufficient time to conduct meaningful due diligence, inspection, conclude inventory, make payment and secure registration on the certificate of title and close the purported sale and purchase of the suit properties which he says is evidence of collusion and bad faith.

“Committing the above acts with manifest bad faith and an unlawful motive of defeating the Plaintiffs interests in the suit property,” said Kamya in his plaint.

Following the said purported sale and transfer, Equity Bank’s CL Risk Management Services wrote to the tenants, occupants and users of the suit properties advising that the properties had been sold to the Meera Investments and Luwaluwa Investments.

Kamya said in the night of 14 October, 2020, Sudhir’s Meera Investment “forcefully gained entry into Simbamanyo House by breaking all padlocks, locking up the Simbamanyo’s offices on the property, chasing away its security guards, deploying their own guards and have since exercised dominion and control over the property and business.”

Sudhir, a controversial businessman, previously owned Crane Bank which was taken over and sold by the Central Bank on grounds that it was run down – a claim he denies.

Sudhir is the proprietor of Commonwealth Resort Munyonyo, Speke Apartments and also other high-end properties previously owned Asians forced into exile by Idi Amin in the 1970s.

Sudhir Ruparelia was recently appointed as the first honorary Consul of the Republic of Nepal to Uganda.

Kamya further says on 15 October, 2020 Luwaluwa Investments also forcefully gained entry into Afrique Suites where they sealed off the premises, deployed their own security guards and have since exercised dominion and control over the business.

Simbamanyo House

Kamya says Meera Investments and Luwaluwa Investments did not take an inventory of the Plaintiffs trade fixtures and assets which were found on the premises when they took possession and yet they did not buy the Plaintiffs business as a going concern.

He further says the market value of Simbamanyo was in the region of US$ 12m and the market value of Afrique Suites was in the region of US$ 11m but Equity Bank sold the said suit properties at an undervalue to recover an alleged and disputed debt of US$ 10.5m.

Kamya promises to seek an independent survey and valuation of the suit properties at the trial.

He says the bank and the property buyers “jointly and severally acted with evident fraud, collusion and connivance in converting, selling and disposing of the suit properties and businesses which act was premised on blatant illegality.”

He says conducting the purported sale of the suit properties on the 8 October, 2020 without issuing a fresh notice of sale and public notice as required by Regulation 13 (7) of the Mortgage Regulations and without complying with other conditions precedent to the sale under the Mortgage Act is illegal.

Kamya argues that Equity Bank illegally caused the removal of his caveats on the suit properties without complying with the procedure under S. 139 Registration of Titles Act and issued a notice of sale on 7 September, 2020 in contempt of the Court which had maintained the injunction restraining the sale process of the suit properties before expiry of 30 days.

Kamya also accuses the Land Commission of fraud, breach of statutory duty and/or misfeasance in public office by failing to exercise its administrative powers under the Registration of Titles Act Cap 230, to detect and prevent the suspicious and fraudulent transaction thereby occasioning loss and damage to him.

He says the Land Commission should not have removed his caveats on the suit properties without according them a notice under S. 139 Registration of Titles Act Cap 230  with the knowledge or means of knowing that such act would occasion loss and damage to the Plaintiffs.

Orders

Kamya now wants a declaration that Equity Bank’s acts of selling and disposing of the Plaintiffs suit properties was in the circumstances, in violation of his right to redeem the mortgages issued under the impugned credit facility and that the concurrent transfer of the same properties vide an alleged auction, were all procured by dishonest conduct, fraud and illegal.

He also asks court for orders that Equity Bank sold the suit property at an under value and a further order to render an account of the impugned sale proceeds and pay any monies found to be due on account or any monies covering the difference between the sale price and market value of the suit properties.

Kamya further pleads for a court declaration that Equity Bank’s conduct in selling and disposing of the suit properties was in breach of the Bank of Uganda Financial Consumer Protection Guidelines, 2011 and that an act of purporting to sell and transfer the suit properties and businesses undermined and was in contempt of the Court proceedings in High Court Civil Suit No. 198 of 2020; Simbamanyo Estates Limited Vs Equity Bank Uganda Ltd & Anor which is pending hearing and final determination.

He also wants court to declare that the removal by the Land Commission of the caveats lodged on the suit properties on the 8 September, 2020 without notice to him was procedurally irregular and illegal.

The elderly businessman also wants an order for payment of aggravated damages for the high handed and spiteful conduct of the Bank and the property buyers; general damages for the material distress embarrassment and inconvenience caused and payment of interest at 20% per annum on any pecuniary award from the 8th October, 2020 till payment in full and costs of the suit.

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