THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC. APLLICATION NO. 204 OF 2014

ARISING FROM CIVIL SUIT NO. 20 OF 2013

IVAN SAMUEL SSEBADUKA ………………APPLICANT /PLAINTIFF

VERSUS

WARID TELECOM LIMITED ………RESPONDENT/ DEFENDANT

BEFORE HON. JUSTICE FLAVIA SENOGA ANGLIN

RULING

The Applicant brought this application under the provision of SS. 14 (c) and 33 of the Judicature Act, S.98 C.P.A, 0.41 RR 1 and 2 and 0.40 rr 5 and 12 C.P.R; seeking a temporary injunction to restrain the Respondent from disposing off the whole or any part of or parting with possession of the whole or any part of its property to Bharti Airtel Ltd; or any other person until the hearing or disposal of the main suit.

In the alternative, the Applicant sought an order directing the Respondent to furnish security or to produce and place at the disposal of the court, all its assets and property or the value of all its assets and property to satisfy the decree that may be passed against it in the main suit.  Costs of the application were also applied for.

The application is supported by the affidavit of the Applicant.  The gist of the grounds of the application are contained in paragraphs (a), (d), (e), (f), (g), (h), (i), (j), (k) and (l) of the chamber summons and are reiterated in the supporting affidavit.

There is an affidavit opposing the application sworn by Claire Nagimesi, Company Secretary of the Respondent.

The following are the issues to be determined by court:-

1. Whether this is a proper case for grant of a temporary injunction.

2. Whether the Respondent should be directed to furnish security by producing and placing at the disposal of the court any property belonging to it or whether court should order attachment of any of its property.

The issues are dealt with in the order that they have been set out.

Whether Temporary injunction should issue.

It has been established by the law and the decided cases that, the main purpose for issue of an injunction is the preservation of the suit property and the maintenance of the status quo between the parties pending the disposal of the main suit.  – See 0.4 r. 1(a) C.P.R.

The conditions that have got to be fulfilled before court exercises its discretion to grant an injunction have been well laid out as the following:-

1. The Applicant has shown a prima facie case with a probability of success.

2. The likelihood of the Applicant suffering irreparable damage which would not be adequately compensated by award of damages.

3. Where in doubt in respect of the above 2 issues, then the application will be decided on a balance of convenience.  – See case of Robert Kavuma vs. Hotel International Ltd SCC.A 8/1990 Wambuzi C.J as he then was.

As to what amounts to a prima facie case, it has been held that “the court must be satisfied that the claim is not frivolous or vexations, and that there are serious questions to be tried.” – See Godfrey Sekitoleko and 4 Others vs. Seezi Peter Mutabazi and 2 Others CACA 65/2011 [2001 – 2005] HCB 80.

In the present case, it was contended by Counsel for the Applicant the suit was filed in public interest seeking a refund of the money earned by the Respondent through illegal and unjust enrichment means by way of sales promotions dubbed: “be a millionaire and wangula school fees.” And that this raises triable issues.

On the other hand, it was the argument of Counsel for the Respondent that the application had been over taken by events and any order issued will be of no effect.  Relying upon the case of Kiyimba Kaggwa vs. Haji. Abdu Nasser Katende, where the conditions for grant of an injunction are also set out, Counsel for the Respondent argued that there is no status quo to preserve.  He pointed out that paragraphs 5-10 of the affidavit in reply show that 99% of all the properties have been transferred to Airtel, while 1% was transferred to Manoj Kohli.  Further that all operations have been fully taken over, which is not disputed by the Applicant.  Otherwise that the Applicant is obliged to inform court of such property if any, as it is not enough to just state that there are properties.

The Applicant in this case claims that he was a subscriber to the Respondent’s services together with other subscribers.  That they were lured into participating in the Respondent’s promotion dubbed “ Beraako” with hope that they would either become millionaires or win school fees among other things.  It is the Applicant’s contention that the promotion was contrary to the law, hence the suit - seeking that accounts be taken and an audit conducted to compel the Respondent refund the moneys received.  However, it is the Respondent’s case that all its shares have been transferred to Airtel (u) Ltd and another and therefore it is a nonexistent entity not liable for its previous acts.

I find that this contention raises triable issues.

The next question for court to determine is whether the Applicant will suffer irreparable damage if injunction does not issue.

Irreparable damages have been defined to mean. “damages that cannot be easily ascertained because there is no fixed pecuniary standard of measurement.” – See Black’s Law Dictionary, 9^th Edition Page 447.  And “loss that cannot be compensated for with money” – City Council of Kampala vs. Donozio Musisi Sekyaya C.A. C. Appl. 3/2000.

In this case the Applicant seeks a declaration that he and other subscribers are entitled to a refund.  He also seeks an order for audit and accounts to be taken to determine how much was collected.  It is court’s finding that if the declaration is granted, the audit and accounts taken, then the damages if any will be easily ascertainable in monetary terms.  Therefore, I find that the Applicant has failed to discharge the burden placed on him to prove that he is likely to suffer irreparable damage.

Counsel for the Applicant’s submission that the Applicant cannot be adequately compensated for the loss of the right to compensation- Article 50 and 26 of Constitution, cannot therefore be sustained.

It is also on record that the Respondent Company has already been sold off and the shares transferred.  Therefore the status quo the Applicant sought to maintain has already been overtaken by events.

“The purpose of granting a Temporary injunction is the protection of legal rights pending litigation.  The court doesn’t determine the legal rights to the property but merely preserves it in its actual condition until the legal title or ownership can be established or declared” – See Godfrey Sekitoleko and 4 Others vs. Seezi Peter Mutabazi and 2 Others ( Supra).

The status quo to be maintained in the present case is that the sale in the present case was concluded with the approval of Uganda Telecommunications Commission, the transfer of shares done, bank accounts closed and operations and infrastructure taken over by the purchasers.  To issue an injunction will alter other than maintain the status quo.  The Applicant can only establish his rights after full trial of the suit.

The balance of convenience is not applicable either.  Though Counsel for the Applicant submitted that “ court is enjoined to use the weighing scale to determine whether Applicant will be more inconvenienced that the Respondent” – See Gapco (U) Ltd vs. Kamisi Badru and Another HCM A 209/2013.  There is no doubt here that the status quo has changed.

For all those reasons therefore, court finds that this is not a proper case for issue of a temporary injunction.  Public interest will not be adversely affected by the denial if the injunction.  As “public interest includes having confidence that court will enforce reasonable breach of the law that balance the sanctity of business efficacy in a free market economy.”

Those rights can only be enforced after the main suit has been heard.

Counsel for the Applicant sought an alternative remedy; in case the injunction was not issued.  That is, an order directing the Respondent to furnish security or produce any property belonging to it and place it at the disposal of the court or to order attachment of any property.  -  He relied upon S.64 C.P.A and 0.40 r 5(1) C.P.R.

The provisions of 0.40 r 5 (1) C.P.R have been considered in a number of decided cases.  It has been established that the order provides for attachment before judgment and that “it is only available where there is real evidence that the Respondent is about to leave the country, sell the property or delay justice” – See the case of Uganda Telecom Ltd vs. Justus Ampaire HCCS 599/2003 [2001-2005] HCB 95 and V.K. Nataraja Gouder vs. S.A. Bangoru Reddiar, AIR 1965 Mad 212.

In the current case, not only is the Respondent just about to dispose of the whole of its property or remove it from the local limits of the jurisdiction of court; but it has been admitted by the Respondent that the Company’s shares have been transferred and its infrastructure that includes most have been sold to EATON TOWERS LTD and Bank accounts closed. – See paragraphs 5-8 affidavit in reply.

Counsel for the Applicant contends that all this was done after the Respondent became aware of the suit and in a bid to avoid potential liability.  That this was meant to strip court of its powers to enforce any judgment decree that may be passed against the Respondent in case suit succeeds, and to render the decree nugatory.

It was insisted by Applicant’s Counsel that the Respondent still exists as a legal entity and has other property than those sold off.  And that the fear that the Respondent is about to dispose of the rest of this property is well founded.  – The case of M.K Govinda Kutty Menon vs. Reena and Others 07.KLC 2162 was cited to lend credence to the contention that “no guarantee exists from the Respondent if the Applicant / Plaintiff makes out its case.”

It was argued by Counsel for the Respondent that it is not sufficient to state that there is property without showing what the property is “And further that there is no proof of assets being transferred outside the jurisdiction of court”

Courts have established that before ordering attachment of property before judgment or furnishing security, there has to be real evidence that the Defendant is about to leave the country, sell the property and obstruct or delay justice. – Abby Mugimu vs. Basabosa HCCS. 922/1990 [1991] ULSLR 157

The Respondent in this case, has already sold off the shares and its infrastructure.  While Applicant contends that the Respondent has other property than those already sold, he does not name the property.  However, in the circumstances of this particular case, where the Respondent is a foreign Company, which has sold off its shares and infrastructure, the fears of the Applicant are well founded.  According to the case of Ovation International (India) Pvt Ltd vs. Adverts (Private) Ltd and Another 1969 Comp Cas 595 [Bom], “ once the allegations are well founded through affidavit evidence, court is bound to issue an order to the Respondent to furnish security”.

The Applicant in the present case did not specify the property required to be attached or their estimated value as required under 0.40 r 5 (c) C.P.R and therefore no property even if any more exists can be attached.

The only alternative available is therefore for court to order the Respondent to pay into court a sum of money considered sufficient as security to satisfy the claim.

More so in a situation like the present where there is no indication of how much money the Applicant and other subscribers injected into the promotional exercise.  Court considers the sum of shs. 100,000,000/- to be sufficient security and the Respondent is directed to deposit the sum in court within 2 weeks from the date of this order by way of bank guarantee.

The application is allowed in those terms. Costs will abide the outcome of the main suit.

FLAVIA SENOGA ANGLIN

JUDGE

20.08.14