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Mukwano Enterprises Limited v Ranchhobhai Shivabhai and Another (Civil Application No. 16 of 2019)

Supreme Court · [2020] UGSC 63 · 2020 Application Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Application to the Supreme Court under Rule 2(2) to recall, review and vary its own earlier judgment
Decision
Application for review dismissed as a disguised appeal; the earlier judgment maintained subject to clarification that the applicant must return the plant and machinery or pay its replacement value of UGX 11,944,127,000.

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Holding

The Supreme Court held that its inherent power under Rule 2(2) to recall and review its own judgment is exercisable only to give effect to the court's intention, prevent abuse of process, or set aside a null judgment — it cannot be used as a disguised appeal. The applicant's grounds sought re-evaluation of evidence and reversal of findings on bona fide purchase, the alleged arrangement and the indoor management rule, so the application was barred and collapsed. The court nonetheless clarified its earlier judgment, holding that nullification of the illegal sale required the return of all suit property, including plant and machinery, and ordered the applicant to return the machinery or pay its replacement value of UGX 11,944,127,000.

Facts

African Textile Mill Ltd (ATM), majority-owned by the 1st respondent, borrowed from Crane Bank Ltd to settle an earlier loan, securing the debt by mortgages over several properties and personal guarantees. ATM was placed under voluntary winding up and the 2nd respondent became liquidator. After ATM defaulted, the 2nd respondent sold mortgaged land at Plot 78-96 Pallisa Road, Mbale to the applicant, Mukwano Enterprises Limited, for USD 1,200,000. The 1st respondent sued, alleging the sale was fraudulent and illegal. The High Court and Court of Appeal found the applicant a bona fide purchaser. On second appeal (SCCA No. 06 of 2017), the Supreme Court allowed the appeal, found the sale illegal, nullified the transfer and ordered cancellation of title and restoration to ATM. The applicant then brought this application to recall and review that judgment, contending the court misapplied the repealed Companies Act and the indoor management rule and wrongly accepted the property's valuation.

Issues

  1. Whether the applicant's grounds disclosed an error apparent on the record warranting review of the court's judgment under Rule 2(2), or amounted to a disguised appeal.
  2. Whether the court's earlier orders nullifying the illegal sale of the suit property extended to the plant and machinery, requiring its return or payment of its value.

Orders

  • The judgment of this court in Civil Appeal No. 06 of 2017 is maintained subject to the clarifications.
  • The applicant immediately returns to M/s African Textile Mills Limited (in liquidation) the plant and machinery that was in the factory as at the time it took over.
  • In the event the return of the plant and machinery is not immediately practicable, the applicant shall pay to the 1st respondent the equivalent of UGX 11,944,127,000 per Valuation Certificate dated 14th May 2004, being the replacement value of the plant and machinery.
  • The applicant will pay the costs of this application.

Key headnotes

Civil Procedure — Review of Judgment — Scope of inherent power under Rule 2(2) of the Supreme Court Rules
The Supreme Court's inherent power to recall and review its own judgment is exercisable only to give effect to the court's intention or what would clearly have been its intention but for an omission, to prevent abuse of process, or to set aside a judgment proved null and void, and not to re-evaluate evidence or reverse findings.
Civil Procedure — Review of Judgment — Disguised appeal against a final appellate court
An application for review framed on grounds that the final appellate court erred in fact or law and seeking to substitute the applicant's preferred findings is a disguised appeal and will be dismissed, since the court cannot sit on appeal against its own decision and there must be an end to litigation.
Company Law — Illegal sale by liquidator — Effect of illegality on transfer of title
An illegality vitiates the transfer of title so that the property sold remains the property of its original owner; upon nullification of an illegal sale, all property obtained pursuant to that sale must be returned to its original owner.
Land & Property — Recovery of suit property — Scope of an order nullifying a sale
Where an order nullifies the sale of suit property defined to include land, buildings and machinery, it is implied that all property that was the subject of the nullified sale, including plant and machinery, must be returned to the original owner, failing which its replacement value is payable.

Legislation cited (9)

  • Supreme Court Rules r.2(2)
  • Companies Act Cap. 110 (repealed) s.301(1)(a)
  • Companies Act Cap. 110 (repealed) s.244(1)(d)
  • Companies Act Cap. 110 (repealed) s.244(1)(e)
  • Companies Act Cap. 110 (repealed) s.299
  • Companies Act Cap. 110 (repealed) s.304
  • Evidence Act s.114
  • Judicature Act Cap. 13 s.14
  • Deeds of Arrangement Act Cap. 75 s.3

Cases cited (15)

  • Elizabeth Nalumansi Wamala v Jolly Kasande and Others (SCC Application No. 29 of 2017)
  • Mohammad Mohammad Hamid v Roko Construction Limited (S.C. Miscellaneous Cause No. 18 of 2017)
  • Re East Kent Shipping Co (1868) 18 L. T 748
  • White & Co Ltd vs. The City of Tororo (1955) or 320 ay 326
  • GM Combined Limited v A.K Detergent Uganda Limited (Civil Appeal No. 7 of 1998)
  • Royal British Bank vs. Turquand (1856)
  • B Liggett (Liverpool) Ltd v Barclays Bank [1928] 1 KB 48
  • Sinba (K) Ltd and Others v Uganda Broadcasting Corporation (Civil Appeal No. 3 of 2014)
  • Bostel Brothers Ltd v Hurlock [1948] 2 All ER 312
  • Orient Bank Ltd v Fredrick Zaabwe and Another (Civil Application No. 17 of 2007)
  • Lakhamshi Brothers Ltd v R Raja & Sons (1966) EA 313
  • Isaya Kalya and 2 Others v Macekenyu Ikagobya (SCC Application No. 28 of 2015)
  • Haridas v. Smt. Usha Rani Banik & Others
  • Independent Medico Legal Unit v Attorney General of the Republic of Kenya (Application No. 2 of 2012)
  • Kanoonya David v Kivumbi and 2 Others (HCCS No. 616 of 2003)
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