Wakilii

Jomayi Consultants Limited v NC Bank Uganda Limited (Company Cause 5 of 2020; Miscellaneous Cause 43 of 2020)

High Court · [2024] UGHCCD 58 · 2024 Winding Up Order Granted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Consolidated application for extension of time to set aside statutory demand and petition for winding up of company for failure to pay judgment debt
Decision
Company ordered to be wound up

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held: A judgment creditor may petition to wind up a company that has failed to comply with a statutory demand, even where the debt arises from a consent judgment and without first attempting execution proceedings. The mere filing of an out-of-time application for extension of time to set aside a statutory demand does not stay the demand or prevent winding-up proceedings. Service of a statutory demand on a company at its registered office is effective even if received by a receptionist and not transmitted to management. A company properly served with a statutory demand and failing to pay is presumed unable to pay its debts unless it demonstrates a genuine dispute on substantial grounds.

Outcome

Company ordered to be wound up

Facts

Jomayi Property Consultants Ltd purchased mortgaged land from NC Bank Uganda Ltd for UGX 1,506,000,000, payable in instalments. Jomayi defaulted on payments. In 2018, NC Bank sued and the parties entered a consent judgment in 2019 for UGX 952,250,000 payable in ten monthly instalments with an acceleration clause upon default. Jomayi made incomplete payments on the first three instalments and no payments on the fourth and fifth instalments. On 23 January 2020, NC Bank served a statutory demand for UGX 868,250,000. The demand was received by Jomayi's receptionist but allegedly not transmitted to management. On 20 February 2020, Jomayi filed an application for extension of time to set aside the statutory demand. On 4 March 2020, NC Bank filed a petition to wind up Jomayi. The two matters were consolidated for hearing.

Issues

  1. Whether the Respondent complied with the statutory demand served on it at its office/place of business.
  2. Whether the Respondent is indebted to the Petitioner.
  3. Whether the Respondent is unable to pay its debts and is insolvent.
  4. Whether the Petitioner is entitled to any remedies.

Orders

  • Miscellaneous Cause No. 43 of 2020 dismissed with costs to NC Bank Uganda Ltd.
  • Costs of NC Bank Uganda Ltd in Miscellaneous Cause No. 43 of 2020 to be met from proceeds of winding up.
  • Declaration that Jomayi Property Consultants Ltd failed to comply with the statutory demand.
  • Declaration that Jomayi Property Consultants Ltd is indebted to NC Bank Uganda Ltd in the sum of UGX 868,250,000.
  • Declaration that Jomayi Property Consultants Ltd is unable to pay its debts and is insolvent.
  • Order to wind up/liquidate Jomayi Property Consultants Ltd.
  • Costs of the Petitioner in Company Cause No. 5 of 2020 to be met from proceeds of winding up.

Rules and key headnotes

Company Law — Winding Up — Statutory Demand — Service — Effect of Service on Receptionist at Registered Office
Where a statutory demand is served at the registered office or place of business of a company, service is effective even if the document is received by a receptionist who fails to transmit it to management, provided the company acknowledges receipt.
Company Law — Winding Up — Extension of Time — Effect on Statutory Demand
The filing of an application for extension of time to apply to set aside a statutory demand does not stay the statutory demand or prevent the creditor from petitioning to wind up the company where the application is filed out of time and no extension has been granted.
Company Law — Winding Up — Abuse of Process — Use of Winding Up as Debt Collection
It is not an abuse of court process for a judgment creditor to petition for winding up of a company that has failed to comply with a statutory demand, even where the debt arises from a consent judgment and without first attempting execution proceedings. A creditor owed an undisputed debt is entitled to petition for winding up even if other debt collection methods are available.
Company Law — Winding Up — Presumption of Insolvency — Failure to Comply with Statutory Demand
Under Section 3(1)(a) and 3(2) of the Insolvency Act 2011, unless the contrary is proved, a debtor is presumed to be unable to pay its debts if it has failed to comply with a statutory demand. A company that disputes the debt must demonstrate that the dispute is genuine and based on substantial grounds, not merely raise a cloud of objections.
Contract Law — Consent Judgment — Variation — Requirements
A consent judgment is a settlement agreement between parties and cannot be varied or discharged unless it was obtained by fraud, collusion, or by an agreement contrary to the policy of the court. A party to a consent judgment is estopped from disputing the admitted indebtedness unless the judgment is set aside.
Civil Procedure — Affidavits — Defects — Curable vs Incurable
A distinction exists between a defective affidavit and an incurable affidavit. Where a commissioner for oaths omits to sign one copy of an affidavit by inadvertence but properly commissions the annexures and other copies, the court may in the interests of substantive justice under Article 126(2)(e) of the Constitution substitute the defective copy with a properly commissioned copy.
Civil Procedure — Affidavits — Deponent — Principal Officer of Company
Under Order 29 Rule 1 of the Civil Procedure Rules, an affidavit on behalf of a corporation may be sworn by any director or other principal officer of the corporation who is able to depose to the facts of the case. A Manager Legal and Regulatory Affairs is a principal officer competent to depose without separate written authorization from the company.

Legislation cited (21)

Cases cited (23)

  • NAS Airport Services Ltd v Attorney General of Kenya [1959] EA 53
  • Makula International Ltd v His Eminence Cardinal Nsubuga and Another (1982) HCB 11
  • Mugo and Others v Wanjiri and Another [1970] EA 481
  • Njagi v Munyiri [1975] EA 179
  • Bishop Jacinto Kibuuka v Uganda Catholic Lawyers' Society and Two Others (Miscellaneous Civil Application No. 696 of 2018)
  • Friecca Pharmacy Limited v Anthony Natif (Miscellaneous Application No. 498 of 2019)
  • Horizon Coaches Ltd v Edward Rurangaranga and Another (Supreme Court Civil Application No. 18 of 2009)
  • Kasaala Growers Co-Operative Society v Kakooza Jonathan and Another (Supreme Court Civil Application No. 19 of 2010)
  • Bankone Limited v Simbamanyo Estates Limited (Miscellaneous Application No. 645 of 2020)
  • Mbarara Municipal Council v Jetha Brothers Ltd (Supreme Court Miscellaneous Application No. 10 of 2021)
  • Springs International Hotel Ltd v Hotel Diplomat Ltd and Another (Miscellaneous Cause No. 42 of 2015)
  • Uganda Land Commission v James Mark Kamoga and Another (Supreme Court Civil Appeal No. 8 of 2004)
  • Attorney General v Baker [2000] EWHC 453 (Admin)
  • Coilcolor Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch)
  • Re Pan Interiors [2005] EWHC 3241 (Ch)
  • Re a Company (No 0012209 of 1991) [1992] BCLC 865
  • In Re A Company (No. 001573 of 1983) [1983] BCLC 492
  • BNY Corporate Trustee Services Ltd v Neuberger Berman Europe Ltd [2013] UKSC 28
  • Mann v Goldstein [1968] 2 All ER 769
  • Cornhill Insurance plc v Improvement Services Ltd and Others [1986] BCLC 26
  • Sell your Car with Us Ltd v Anil Sareen [year unknown] EWHC 2332
  • Kyambogo University v The Heights Ltd (High Court Miscellaneous Application No. 954 of 2015)
  • Bahadukali Mohammed Ali Viran v Springs International Hotel Ltd (Company Cause No. 5 of 2019)

Full judgment

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

Jomayi Consultants Limited v NC Bank Uganda Limited (Company Cause 5 of 2020; Miscellaneous Cause 43 of 2020) [2024] UGHCCD 58 (27 April 2024)
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.