Wakilii

C-Asian Mining and Mineral Ltd and Nasur Lokeris Modester v Anna Adeke Ebaju and Wanyoto Paul Mugoya (Miscellaneous Cause No. 9 of 2025)

High Court · [2025] UGCOMMC 226 · 2025 Application Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application to set aside statutory demand under the Insolvency Act
Decision
Statutory demand set aside; parties to pursue substantive dispute through civil suit

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court set aside a statutory demand issued under the Insolvency Act where the applicants demonstrated a substantial dispute as to whether the debt was owing or due, raised a counterclaim, and showed that the creditor had not established that the debt was ascertained and unequivocal. The court held that insolvency proceedings are not intended as a means for a single creditor to enforce a disputed debt but are instead a method of collective realization of assets.

Outcome

Statutory demand set aside; parties to pursue substantive dispute through civil suit

Facts

The applicants and the 1st respondent executed a Financing Agreement on 17 May 2024 to finance gold exploration and mining operations. The respondents were to advance USD 66,500 but only provided USD 56,400. The 2nd respondent allegedly demanded early repayment in contravention of the twelve-month agreement term. The applicants made payments totalling UGX 188,700,000 to the 2nd respondent. On 6 January 2025, the 1st respondent served a statutory demand on the applicants claiming USD 76,400 (principal of USD 56,400 plus accumulated interest of USD 20,000 at 5% per month). The applicants contended they dealt primarily with the 2nd respondent, that the statutory demand was premature as the agreement was still subsisting, and that there was a substantial dispute as to the amount owed given the payments already made.

Issues

  1. Whether the application was filed out of time?
  2. Whether the 1st Respondent's affidavit in reply was filed out of time without leave of Court?
  3. Whether the 1st Respondent's statutory demand dated 6th January, 2025 should be set aside?
  4. What remedies are available to the parties?

Orders

  • The statutory demand dated 6th January, 2025 is hereby set aside.
  • Each party shall bear its own costs.

Rules and key headnotes

Insolvency Proceedings — Service of Statutory Demand — Proof of Service
Proof of service of a statutory demand must be by affidavit of service stating the time and manner of service, and in the absence of such affidavit, the court will accept alternative evidence such as a stamped acknowledgment of receipt by the debtor's lawyers.
Insolvency Proceedings — Time Limits for Challenging Statutory Demand
An application to set aside a statutory demand must be made within ten working days after the date of service of the demand, and time runs from the date of actual service as evidenced by proof of service, not from the date stated on the demand itself.
Insolvency — Grounds for Setting Aside Statutory Demand — Substantial Dispute
A statutory demand may be set aside where there is a substantial dispute as to whether the debt is owing or due, and in determining whether such a dispute exists, the debt must be ascertained and unequivocal; the test is similar to that used in determining applications for leave to appear and defend a summary suit.
Insolvency — Role of Court in Disputed Debt Claims
The role of the court in an application to set aside a statutory demand is not to investigate which party's claim is correct on the merits, but rather to determine whether a substantial dispute exists as to whether a debt is owing and is due; where such a dispute is raised, it constitutes a triable issue requiring investigation through a civil suit.
Insolvency — Counterclaim as Ground for Setting Aside Statutory Demand
Where a debtor raises a counterclaim against the creditor, the existence and merits of such counterclaim cannot be determined in insolvency proceedings but must be investigated and determined by way of a civil suit; the raising of a counterclaim is a ground for setting aside a statutory demand.
Insolvency — Purpose of Insolvency Proceedings — Premature Statutory Demand
The law of insolvency aims at enforcing rights and not establishing them, and insolvency proceedings are not intended as a means for a single creditor to enforce a disputed debt but are instead a method of collective realization of the assets of the debtor in order to maximize recovery for the general body of creditors; a court is not, and should not be used as, a debt collecting court.
Insolvency — Prerequisites for Insolvency Proceedings Against Individual Debtor
Where a debt is owed by an individual, the individual must be a judgment debtor before insolvency proceedings can be instituted; where no evidence is adduced to show that the individual is a judgment debtor, the creditor does not have sufficient evidence to trigger the institution of insolvency proceedings.

Legislation cited (11)

Cases cited (11)

  • Ayo Jacinta v Hon. Achieng Sarah Opendi (Miscellaneous Cause No. 223 of 2020)
  • Victoria Seeds Limited v O.N. Sunde (Miscellaneous Cause No. 11 of 2022)
  • Home Connect Properties Ltd v Kassim Buyondo and Another (Miscellaneous Cause No. 258 of 2022)
  • Serunjogi Bernard v Ssekyanzi Adrian (Miscellaneous Cause No. 28 of 2024)
  • Stop and See (U) Ltd v Tropical Africa Bank Ltd (Miscellaneous Application No. 333 of 2020)
  • Dr. Lam Lagoro James v Muni University (Miscellaneous Cause No. 7 of 2016)
  • Luzinda Saleh v Chims Africa (U) Ltd (Miscellaneous Application No. 362 of 2021)
  • Masaba Difasi and 3 Others v Makheti Joseph and 2 Others (Miscellaneous Application No. 131 of 2024)
  • Bugisu Muslim District Council v Musa Kalokola and 2 Others (Miscellaneous Application No. 105 of 2024)
  • Mbale Resort Hotel Limited v Babcon (U) Ltd (Miscellaneous Cause No. 24 of 2018)
  • Civtec Africa Limited v Mantrac Uganda Limited (Miscellaneous Cause No. 154 of 2023)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

C-Asian Mining and Mineral Ltd and Nasur Lokeris Modester v Anna Adeke Ebaju and Wanyoto Paul Mugoya (Miscellaneous Cause No. 9 of 2025) [2025] UGCommC 226 (29 July 2025)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.