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The Court of Appeal has granted Shumuk Aluminium Industries Limited and its proprietor, Mukesh Shukla, a conditional stay of execution of a multibillion-shilling High Court judgment in favour of Bank of Baroda (Uganda) Limited, pending determination of their appeal.
In a ruling delivered by Justice of Appeal Esta Nambayo, sitting as a single judge, the court ordered the applicants to deposit 4.8 billion shillings and USD 36,870.02 within 30 days as security for the outstanding debt. The court has also restrained the bank, its servants and agents from selling, transferring or otherwise disposing of two mortgaged properties in Kampala pending determination of Civil Appeal No. 398 of 2026. Justice Nambayo warned that the orders would automatically lapse if the applicants failed to deposit the full amounts within the prescribed period.
The dispute arises from credit facilities advanced by Bank of Baroda to Shumuk Aluminium Industries Limited, secured by mortgages over properties at Plot 24, Mukabya Road, Kampala, and Plot M700, UMA Lugogo Showground. Shukla executed a personal guarantee in respect of the company’s indebtedness.
As a result, in a judgment delivered on June 2, 2026, the High Court, presided over by Justice Patience Rubagumya, dismissed the company’s suit challenging the bank’s demands and proposed enforcement of the mortgage securities. The court instead entered judgment for the bank on its counterclaim for the outstanding debt.
Shumuk Aluminium was ordered to pay 16.03 billion shillings and USD 122,900.05, while Shukla was held liable under his personal guarantee to the extent of 6.36 billion shillings. The court also awarded interest at 10 per cent per annum from the date of judgment until payment in full, together with costs.
Dissatisfied with the decision, Mukesh and his company appealed and sought a stay of execution from the High Court. That application was dismissed on August 28, 2026, prompting them to approach the Court of Appeal on September 10.
In their application, the applicants argued that the intended appeal raises substantial questions concerning the conversion of foreign currency, the computation and basis of interest, reconciliation of accounts and notices preceding the recall of the credit facilities and enforcement of the securities.
They further argued that selling the properties before the appeal is determined could cause substantial loss, particularly because the Mukabya Road property houses the company’s only factory.
Their lawyers, Anthony Oloka and Ukasha Sekajja, submitted that a sale to third parties could make it difficult to recover the properties even if the appeal succeeded. They also cited the potential disruption of manufacturing operations and the impact on the company’s workforce.
The bank opposed the application, arguing that the applicants had not demonstrated sufficient grounds to halt recovery of the debt. Its lawyers maintained that the dispute concerned a secured commercial debt and that the bank was capable of refunding any amount found to have been overpaid.
The bank also argued that the applicants’ proposed additional land security was unsuitable because the properties belonged to third parties who were not involved in the proceedings.
Justice Nambayo found that the memorandum of appeal raised arguable questions that deserved consideration by the appellate court, without necessarily establishing that the appeal would succeed. The judge also accepted that the applicants had demonstrated a sufficient threat of enforcement, noting evidence that persons acting for the bank had visited the factory premises to facilitate valuation and recovery. Justice Nambayo observed that although the bank was entitled to enforce its mortgage securities in accordance with the law, a sale before determination of the appeal could complicate restoration of the properties and disrupt the company’s manufacturing operations.
The judge further found that the application had been filed without undue delay, noting that the applicants first sought relief from the High Court nine days after the judgment and approached the Court of Appeal shortly after their initial application was dismissed.
However, the court declined to accept additional land offered as security because it belonged to third parties. Instead, it ordered a monetary deposit equivalent to 30 per cent of the respective decretal principal sums.
Justice Nambayo clarified that Shukla’s liability under the personal guarantee formed part of the same underlying indebtedness and that requiring a separate deposit against the guarantee would duplicate security for the same debt. The court said the conditional stay strikes a balance between protecting the applicants’ right to appeal and safeguarding the bank’s interest in recovering the money owed to it. The costs of the application will abide by the outcome of the appeal. The substantive appeal, which challenges the High Court judgment, remains pending determination.
By URN
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