Mortgage, loans and bonds

Steel Rolling Mills Ltd & 3 Ors v Standard Chartered Bank (U) Ltd (MISCELLANEOUS APPLICATION NO 829 OF 2015) [2016] UGCOMMC 35 (15 April 2016);


Search Summary: 

This was an application in which the applicants sought for a temporary injunction to restrain the respondent or his agent from foreclosing or selling the applicants’ mortgaged properties and from enforcing the applicants’ debenture or appointing a receiver there under pending hearing and final determination of the main suit, and that costs be provided for.


The grounds of the application were that, the applicants filed a civil suit in the High court with challenging the legality and enforceability of the master credit agreement loan issued by the respondents, that the suit had triable issues, that there was threat of foreclosure on the applicants’ property, that if the respondent was not restrained, the applicants were likely to suffer irreparable damage and the civil suit would have been rendered nugatory, that the balance of convenience lied in the applicants’ favour, and that it was in the interest of justice to grant the order, pending the determination of the main suit.


The respondent averred that the applicants willingly entered into the master credit contract and could not thereafter claim unfairness in the contract, and that any loss that resulted was due to their default, thus, the respondent could not indemnify them.

Headnote and Holding: 

From the evidence on record, it was found that the second and third applicants were not served with statutory notices. The court however, found that failure to serve them did not cause prejudice in the absence of non-compliance with the Mortgage Act.


Further, it was found that the applicants’ application did not disclose a prima facie case that would merit judicial consideration in the main suit. The respondent was entitled to any of the remedies controlled by the statutory safeguards on default by the applicants, which it exercised judiciously in rectification of the default.


Thus, there was no reason for court to stop any lawful act. Accordingly, the application was dismissed with costs.


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