Kanyeihamba & 320 Ors v Nzeyi & 2 Ors (HCT-00-CC-CS 361 of 2010)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The Court held that stay of proceedings is a case management tool within the court's discretion. While the Constitutional Petition and the civil suit involved the same bank, they concerned different subject matters and parties. The suit could largely proceed, but prayers relating to rectification of the company register and repossession of assets were stayed pending liquidation. The plaint required amendment to add the bank as nominal defendant in the derivative action.

Outcome

Proceedings allowed to continue with partial stay; plaint to be amended to add bank as nominal defendant

Facts

321 plaintiffs, including Hon. Justice Prof. George Kanyeihamba, were shareholders in Kigezi Bank of Commerce (KBC), which had allegedly been unlawfully converted to National Bank of Commerce (NBC). The plaintiffs brought a derivative action against three defendants seeking declarations that the conversion was unlawful, rectification of the company register, repossession of bank assets, accounts of profits, and damages. While the suit was pending, Bank of Uganda (BOU) took over NBC, revoked its banking licence, and commenced winding up under the Financial Institutions Act 2004. BOU transferred NBC's deposits to Crane Bank under a purchase and assumption agreement. A Constitutional Petition (No. 44 of 2012) was filed by Humphrey Nzeyi challenging BOU's powers to take over and wind up NBC. The defendants applied for stay of the High Court proceedings pending determination of the Constitutional Petition, arguing that the subject matter overlapped and that orders in the civil suit would be nugatory given the liquidation.

Issues

1. Whether proceedings in the High Court suit should be stayed pending determination of a Constitutional Petition in the Constitutional Court concerning the same bank
2. Whether the existence of liquidation proceedings by Bank of Uganda against National Bank of Commerce necessitates a stay of the derivative action brought by shareholders
3. Whether a derivative action can proceed when the bank has not been made a nominal defendant and is under liquidation

Orders

• Application for stay of proceedings partly allowed.
• The bulk of the suit may proceed.
• Prayers relating to rectification of the company register and repossession of assets are stayed pending completion of the liquidation process.
• The plaint requires amendment to add National Bank of Commerce as a nominal defendant.
• Costs remain in the cause.

Rules and key headnotes

Legislation cited (9)

• Civil Procedure Rules Order 11 rule 1
• Judicature (Court of Appeal) Rules (SI 13-10) Rule 6(2)
• Constitutional Court (Petitions and References) Rules 2005
• Financial Institutions Act 2004 s.17(f)
• Financial Institutions Act 2004 s.89(2)(f)
• Financial Institutions Act 2004 s.89(7)(c)
• Financial Institutions Act 2004 s.99(1)
• Financial Institutions Act 2004 s.100(1)(a)
• Financial Institutions Act 2004 s.107

Cases cited (4)

• National Housing & Construction Corporation v Kampala District Land Board and Anor (Civil Application No. 6 of 2002)
• Fox Odoi & Anor v Attorney General (Constitutional Petition No. 8 of 2003)
• Susan Kigula & 4 Ors v Attorney General (Constitutional Petition No. 6 of 2003)
• Uganda Association of Women Lawyers & Ors v Attorney General (Constitutional Petition No. 2 of 2003)

Cases citing this judgment (2)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Ssentongo v Cooperative Bank ( In Liguidation ) and 5 Others (Miscellaneous Application No. 53 of 2020)
• Muddu Awulira v Buye Abayita Ababiri Growers Coop Society Limited & 3 Ors (HCT-00-CC-CS 627 of 2014)

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