Court orders Kisugu proprietors to cede land to bank over sh412m loan

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The Commercial Division of the High Court has ordered Michael Banga Ssemugabi and Margaret Zalwango, the proprietors of a mortgaged property on Block 244 Plot 4646, Kyadondo land at Kisugu, to hand it over to Cairo Bank Uganda in settlement of a sh412 million debt.

The order, issued by Justice Susan Odongo, followed an application by Cairo Bank Uganda seeking to take possession of the property after the proprietors failed to meet their debt obligations.

“In the premises, this application is allowed and the following orders are made: The respondents (Ssemugabi and Zalwango) forthwith deliver to the applicant (Cairo Bank Uganda) vacant possession of the mortgaged property, described Block 244 Plot 4646, Kyadondo land at Kisugu,” Odongo said.

The application was based on grounds that Ssemugabi and Zalwango had pledged the mortgaged property to Cairo Bank Uganda to secure a credit facility of sh412 million, repayable with interest and other fees, under an offer letter dated February 12, 2020. However, the proprietors allegedly defaulted on payment, prompting the bank to advertise the property for sale.

The bank advanced the loan to Ssemugabi and Zalwango to finance the construction of classroom and office blocks and to settle an outstanding loan with Centenary Bank, repayable with interest and other fees under the agreed terms and conditions.

Ssemugabi and Zalwango argued that granting the application would render their pending suits moot and cause them substantial loss since they risked losing their proprietary interests and possession of the land. However, the court ruled that the question of vacant possession is a factual determination rather than a substantive resolution of ongoing disputes.

The proprietors further argued that the bank breached the contract despite fulfilling part of its lending obligation. Court documents indicate that the bank had agreed to extend a credit facility of sh1 billion for the completion of a five-storey school structure. However, the bank only disbursed sh412 million.

In a ruling delivered electronically and dated September 20, 2025, the court held that the determination of possession does not prevent pending legal challenges concerning the suit property. The court also ordered the proprietors to pay costs to the bank.

The court further noted that any potential loss to the respondents could be compensated through damages if the pending suits were eventually decided in their favour, emphasising that the mortgagee was not impecunious and capable of paying such damages.