Rédaction Africa Links 24 with The Observer
Published on 2024-04-10 07:34:42
A recent ruling by the High Court on March 26 put a stop to the sale of two multi-billion properties owned by businessman Shukla Mukesh. The properties in question are the Shumuk Aluminium Industries Ltd plant in Nakawa and another prime property in Lugogo UMA showgrounds. The ruling was made by John Paul Eduko, the High Court registrar, who halted the sale until the disposal of a lawsuit between Mukesh and the Bank of Baroda.
The Bank of Baroda had given Shumuk a 30-day ultimatum to clear an outstanding loan claimed by the group investments, threatening to proceed with the sale process if the loan was not cleared. A similar notice was issued to tenants of the UMA-based building, urging them to vacate immediately or face forceful eviction at their own costs and peril. However, Eduko intervened and warned the bank and its agents to refrain from any actions until the final suit was settled.
Mukesh had filed a lawsuit against the Bank of Baroda, disputing the claims for a loan amounting to Shs 6.3bn and $350,000 that the bank had advanced to the Shumuk group in 2010. Mukesh argued that he had settled the loan and met all obligations since its issuance. The bank claimed that the group still owed them money totaling Shs 18.4bn due to interest and unpaid sums. This led to the bank’s decision to issue the sale notice and attempt to mortgage the Shumuk plant and the UMA-based property.
In response, Mukesh stated that the loan had been settled, and it was unfair for the bank to attempt to auction off their properties. The legal battle between Mukesh and the Bank of Baroda is ongoing, with both parties refraining from commenting publicly due to the pending court case.
Established in 1992, the Shumuk group operates in the aluminium products manufacturing sector and employs over 1,000 workers. The potential closure or takeover of the properties would have severely impacted the employees and the manufacturing industry in Uganda. The group generates an annual turnover of over $1.5m and has been listed among the top 20 taxpayers in the country.
The situation with the Bank of Baroda and the Shumuk Group is reflective of a worrying trend in complex multi-billion cases involving banks and business owners. Earlier this year, a similar case emerged with the Bank of India halting the sale of a disputed piece of land worth Shs 76.2 billion in Kampala. The dispute arose from claims of non-payment of a loan, which the investors contested by asserting that the loan had been cleared.
These legal battles highlight the complexities and challenges faced by businesses and financial institutions in resolving disputes over loans and properties. The outcome of these cases will have significant implications for the parties involved and the broader business environment in Uganda.
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