The Court of Appeal has granted Shumuk Aluminium Industries Limited and its proprietor, Mukesh Shukla, a conditional stay of execution of a multibillion-shilling judgment in favour of Bank of Baroda (Uganda) Limited, allowing them to protect two mortgaged properties from sale as they pursue an appeal.
In a ruling delivered by Justice of Appeal Esta Nambayo, the court ordered the applicants to deposit Shs4.8 billion and US$36,870.02 within 30 days as security for the outstanding debt. The judge directed that the bank, its employees and agents must not sell, transfer or otherwise dispose of the two properties in Kampala pending determination of Civil Appeal No. 398 of 2026.
Justice Nambayo warned that the protection would automatically lapse if Shumuk Aluminium and Shukla failed to deposit the full amounts within the prescribed period, leaving the bank free to pursue enforcement in accordance with the law.
The dispute stems from credit facilities extended by Bank of Baroda to Shumuk Aluminium Industries Limited, secured by mortgages over property at Plot 24, Mukabya Road, Kampala, and Plot M700 at the UMA Lugogo Showground. Shukla also personally guaranteed the company’s indebtedness.
On June 2, 2026, the High Court, presided over by Justice Patience Rubagumya, dismissed a suit by the company challenging the bank’s demands and proposed enforcement of the mortgage securities. The court instead ruled in favour of the bank on its counterclaim for recovery of the outstanding debt.
Under that judgment, Shumuk Aluminium was ordered to pay Shs16.03 billion and US$122,900.05, while Shukla was held personally liable under his guarantee to the extent of Shs6.36 billion. The court further awarded interest at an annual rate of 10 per cent from the date of judgment until full payment, together with costs.
Dissatisfied with the decision, the company and Shukla appealed and first sought a stay of execution from the High Court. Their application was dismissed on August 28, 2026, prompting them to file a fresh application in the Court of Appeal on September 10.
Through their lawyers, Anthony Oloka and Ukasha Sekajja, the applicants argued that their intended appeal raises substantial legal questions concerning the conversion of foreign currency, the calculation and basis of interest, reconciliation of the loan accounts and the notices issued before the bank recalled the credit facilities and moved to enforce its securities.
They also warned that selling the mortgaged properties before the appeal is decided could cause irreparable harm, particularly because the Mukabya Road property houses the company’s only factory.
The lawyers argued that transferring the properties to third parties could make it difficult to recover them even if the appeal succeeds. They added that a forced sale could disrupt manufacturing operations and affect workers whose livelihoods depend on the business.
Bank of Baroda opposed the application, maintaining that the applicants had not established sufficient grounds to stop recovery of the debt. The bank argued that the dispute involved a secured commercial loan and that it would be capable of refunding any money found to have been overpaid if the appeal succeeded.
The bank also rejected the applicants’ proposal to provide additional land as security, arguing that the properties belonged to third parties who were not involved in the proceedings.
In considering the application, Justice Nambayo found that the grounds raised in the memorandum of appeal presented arguable issues that deserved consideration by the appellate court. The judge clarified that identifying arguable grounds did not amount to a finding that the appeal would ultimately succeed.
The court was also satisfied that there was a credible risk of enforcement before the appeal could be determined. Evidence showed that individuals acting on behalf of the bank had visited the factory premises to facilitate valuation and recovery.
Justice Nambayo observed that although the bank was entitled to enforce its mortgage securities in accordance with the law, selling the properties before the appeal was heard could complicate their restoration and interfere with the company’s manufacturing activities.
The judge further found that the applicants had acted without undue delay. They sought relief from the High Court nine days after the judgment and approached the Court of Appeal shortly after their initial application was dismissed.
However, the court declined to accept the additional land offered as security because it belonged to third parties. Instead, it ordered the applicants to provide monetary security equivalent to 30 per cent of the respective principal sums awarded in the High Court.
Justice Nambayo also clarified that Shukla’s personal guarantee related to the same underlying debt owed by the company. Requiring a separate deposit against the guarantee, the judge reasoned, would result in duplication of security for the same indebtedness.
The court said the conditional stay was intended to balance the applicants’ right to pursue their appeal against the bank’s interest in recovering the money owed to it.
The costs of the application will be determined as part of the outcome of the appeal. The substantive appeal challenging the High Court judgment remains pending before the Court of Appeal.
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