Shashi Super Investments Ltd v Cipla Quality Chemical Industries Ltd (Miscellaneous Application 18 of 2024) [2025] UGHC 407 (13 March 2025)

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KASESE

HCT-25-CV-MA-0018-2024

(ARISING FROM HCT-01-CV-MA-0070-2023)

(ARISING FROM CIVIL SUIT No. 0068 OF 2022)

SHASHI SUPER INVESTMENTS LTD=============================APPLICANT

VERSUS

CIPLA QUALITY CHEMICAL INDUSTRIES LTD====================RESPONDENT

BEFORE HON. JUSTICE DAVID S. L. MAKUMBI

Representation

Applicant represented by M/s Raymond Aruho & Co. Advocates.

Respondent represented by M/s Kalikumutima & Co. Advocates.

Background

This Application is brought under Order 44 Rules 1(2), (3) and (4) of the Civil Procedure Rules and Section 98 of the Civil Procedure Act seeking for the following orders:

1. Leave be granted to the Applicant to appeal the ruling and order delivered by this Honourable court on 24th May 2024 in Misc Application No. 70 of 2023 2. Costs for the Application be provided for.

The grounds of this Application are contained in the Affidavit of Omar Saleh Temmi and briefly are as follows.

The Applicant being dissatisfied with the ruling and orders of this Court in Miscellaneous Application No. 70 of 2023 delivered on 24th May 2024 with the ruling and order for conditional leave to appear and defend the suit intends to appeal the same on the grounds that the order to deposit USD 47,477 as a condition to defend the case is harsh, punitive, onerous, oppressive and does not advance the interests of justice.

The intended appeal raises serious questions of law and fact that need consideration by the Court of Appeal of Uganda and that furthermore the intended appeal is not frivolous or vexatious.

The Respondent opposes the Application by way of Affidavit in Reply sworn by Nalumansi Esther Mary the Legal and Compliance Officer of the Respondent company in which she stated briefly as follows.

The application is without merit and ought to be dismissed with costs as it does not disclose any prima facie ground of appeal with a chance of success or matter of serious misdirection by this court meriting serious judicial consideration by the appellate court. The applicant’s dissatisfaction does not raise any grounds meriting serious consideration by the Appellate Court and that the same allegations were considered in the Applicant’s favour by this Court as amounting to a triable issue upon which the Applicant was granted conditional leave to appear and defend.

The Court’s decision was justified because the court found that the Applicant was acting dishonestly in denying service of summons and the grant of conditional leave was justified since the Applicant admitted that they are incapable of satisfying the decretal sum owing to their share capital.

The Respondent further argued that this application lacks merit and is an abuse of court process, calculated to merely prolong litigation and delay the Respondent’s enjoyment of the fruits of justice, and it is thereby fair and in the interest of justice that it is dismissed with costs.

Applicant’s Submissions:

Counsel for the Applicant argued that on the basis of the grounds set out in the notice of motion, it is proposed to appeal to the court of appeal against the impugned ruling on the following grounds.

1. *The learned trial judge erred in law and fact when having found that there was a triable issue of fraud or forgery inherent in the suit claims of the respondent, he went ahead to impose a condition upon the appellant to deposit the suit sums of USD 47,577.40 into court before the Appellant can be heard in its defence; these being the contested suit sums borne out of such inherent fraud/forgery.* 2. *The learned trial judge erred in law and fact when he imposed a condition of depositing the sum of USD 47,577.40 INTO COURT BEFORE The appellant can be heard in his defense, hence curtailing or clogging the appellant’s fundamental right to be heard on the triable issue of fraud/forgery, which are illegalities before the court.* 3. *The learned trial judge erred in law and fact when he imposed a condition of depositing a sum of USD USD 47,577.40 into court before the appellant can be heard in his defence, failure of which has the effect of court sanctioning an illegality of forgery and fraud.* 4. *The learned trial judge erred in law and fact when he imposed a condition of depositing USD 47,577.40 into court before the appellant can be heard in his defence, which Is manifestly unfair and unjust in the circumstances where court established a triable issue of fraud and forgery.* 5. *The learned trial judge erred in law and fact when he exercised his discretion unjudiciously in the circumstances of the case involving a triable issue of fraud/forgery and thus occasioned a miscarriage of justice*

Counsel for the Applicant argued that such an astronomical sum as required by court would potentially involve the possibility of taking a commercial bank loan at an interest, and that there would be no assurance that even the loan could be granted, and that this could occasion the Applicant failing to deposit the said amount that it cannot afford.

Respondent’s Submissions:

Counsel for the Respondent argued that on page 15 of the Court’s ruling, in Miscellaneous Application No.70 of 2023 was dealing with a situation where it had found that contrary to the Applicant’s claims, the Applicant was effectively served but did not bother to apply for leave to appear and defend until there was a Notice to Show Cause why Execution should not Issue.

Counsel for the Respondent submitted that the position of the law is that where the court is in doubt whether the proposed defense is being made in good faith, the court may order the defendant to deposit money in court before the leave is granted, Counsel relied on the authority in Children of Africa Vs Sarick Construction Limited, HCCMA No. 134 of 2016at Page 4.

Counsel submitted that therefore, this Court’s exercise of discretion as it did was well in line with the relevant principles of law applicable to the circumstances before the Court in Miscellaneous Application No. 070 of 2023 and that there was no fault in the Court’s approach.

Counsel for the Respondent further argued that the grounds in support of the application contained in the affidavit do not disclose any point of misdirection by the Court in exercise of its discretion under Order 36 Rule 11 of the Civil Procedure Rules because the allegations of illegality, fraud, ad forgery were already considered in Miscellaneous Application No. 70 of 2023, that the Applicant’s alleged working capital was never put to the Court in Miscellaneous Application No. 70 of 2023 and that Court could not be faulted for not taking it into account, and that the Court’s discretion to grant conditional leave to file a defence is a creature of both substantive law and the Constitution under Article 126(1) of the Constitution of Uganda 1995, Section 98 of the Civil procedure Act and Order 36 Rule 11 of the Civil Procedure Rules.

Learned Counsel for the Respondent argued that in light of the foregoing submissions the Application does not disclose any arguable ground of misdirection by this Court in the exercise of its discretion to grant the conditional order and prayed that the application be found to be without merit and should thus be dismissed with costs.

ANALYSIS:

Leave to appeal can be granted where prima facie, it appears that there are grounds of appeal which merit serious judicial consideration (see Sango Bay Estates Ltd & Others Vs Dresdner Bank [1971] EA where Spry V-P held that;

“leave to appeal from an order in civil proceedings will normally be granted where prima facie it appears that there are grounds of appeal which merit serious judicial consideration, but where, as in the present case, the order from which it is sought to appeal was made in the exercise of a judicial discretion, a rather stronger case will have to be made out.”

Where the order from which it is sought to appeal was made in exercise of a judicial discretion, a rather strong case will have to be made out (See GM Combined v. AK Detergents - SCCA No. 23 of 1994).

The Court will only refuse leave if satisfied that the applicant has no realistic prospects of succeeding on appeal. A real prospect of success means that the prospect for the success must be realistic rather that fanciful as held by Justice Stephen Mubiru in Visare Uganda Limited Vs Festus Katerega T/A Quickway Auctioneers & 3 Others - Miscellaneous Application No. 2855 of 2023 citing with approval Swain v Hillman [2001] 1 All ER 91.

In the case of Humphrey Nzeyi v Bank of Uganda and the Attorney General of Uganda Constitutional Application No. 01 of 2013, it was held that,

“*The court has to exercise its discretion by considering all the relevant facts of the case, but in doing so, it has to restrain itself from attempting to resolve complex issues of disputed facts or those of law at this stage, and leave the same to be resolved in the substantive main cause or suit. The court however, is not precluded from considering the strength or weakness of each party’s case, but may do so only where it is apparent from the affidavit evidence and exhibited documents.”*

I have considered this matter carefully in light of the pleadings of both parties and the submissions of their learned Counsel. While I am alive to the position and the reasoning of this Court while granting the conditions for leave to defend and I do maintain the same, I am also cognizant of the fact that in considering whether to grant leave to appeal this Court has to avoid the temptation of being dragged into resolving the issues upon which the Applicant seeks to appeal the decision of this Court concerning the conditions for leave to appear and defend.

The Applicant has argued that the primary basis upon which they wish to appeal is that they find the requirement to deposit the entire sum claimed in the suit to be unjust especially as it exceeds their capacity to pay and would block them from raising a triable issue of fraud. It is not for this Court to determine at this point whether or not the question of fraud is valid and neither will this Court be dragged into the question of the Applicant’s financial capacity. These are questions that the Court of Appeal can in its wisdom evaluate whether the discretion of this Court was exercised correctly or not.

I accordingly find that the Applicant has sufficient grounds for appeal.

ORDERS:

1. The Application is allowed and leave to appeal the decision of this Court in Miscellaneous Application No. 70 of 2023 is granted.

2. Costs in this Application shall abide in the main cause.

David S. L. Makumbi

JUDGE

13/03/25