Pearl of Africa Kampala Hotel is set to be auctioned after the owner, Aya Investment Limited, lost a court bid to have the move overturned.
Three Court of Appeal judges; Fredrick Egonda-Ntende, Monica Mugenyi, and Oscar Kihika in their ruling faulted Aya for withdrawing the substantive appeal on which the stay of execution application was based.
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“We, therefore, find that following the withdrawal of Miscellaneous Application No. 271 of 2023, the application upon which the single judge decision referred to this Court was premised, this reference is misconceived and improperly before this Court. We would, therefore, dismiss this reference with costs to the respondent,” the judges ruled.
The lawyers representing the Industrial Development Corporation of South Africa, which lent the money to Aya, had argued that the latter had withdrawn an appeal from the court upon which the stay of execution was premised had been withdrawn, there was no legal basis for the reference.
It is this objection that the court upheld. “It follows therefore that Miscellaneous Application No. 271 of 2023 having since been withdrawn by the Applicant, the substratum of the present Reference stands removed, leaving it with no legal or procedural basis. The supposedly automatic right of appeal based on contempt of court illegality would not cure this defect as it was not pleaded either by an amendment to the original application or to the present reference,” the court ruled.
According to court records, Aya Investments Limited and Industrial Development Corporation of South Africa executed various Financial Credit Agreements as well as Security Agreements, to finance the construction of the Pearl of Africa hotel. Following a breakdown in the business relationship between the parties and the supposed default by Aya on its financial obligations, his financiers instituted foreclosure proceedings under the Ugandan legal regime as provided under the Security Agreements.
Aya objected to these proceedings instead opting for arbitration as provided in the loan agreements they had signed. He also obtained restraining orders against the foreclosure proceedings until the arbitration process plays out in South Africa. He also went ahead and instituted Civil suit No. 937 of 2017 that was grounded in contempt of court and breach of contract; to which his financiers responded by filing an application that sought to refer all the matters in the said suit to arbitration.
The arbitration process ended in the favour of the financiers, who also sought orders from the High Court to execute them. This prompted Aya to file an application challenging the high court decision to allow the execution of the arbitral orders that included the closure of the hotel. He lost the application, which was heard by a single judge of the Court of Appeal; Gasharibake hence prompting him to file a reference seeking the matter to be heard by three judges of the court.
If not appealed in the Supreme Court, this ruling means that Pearl of Africa Hotel that is located on Nakasero Hill will indeed go up for action in order to clear the debts that its owner has accrued over the years.
The embattled company has in the past years been trapped in several legal battles with creditors and many other service providers, all arising from reluctance to pay its debts.
In 2018, Fresh Cuts dragged Aya Investments to court in order to recover over shs44m after it declined to pay for assorted meat products that were supplied to it on credit.
Court went on to order Aya Investments to pay Shs44.9m to its creditor, an order it never honored.
This saw Fresh Cuts further asked the court to declare them insolvent for failure to pay its debts.
Many more entities have had a face-off with Aya Investments for defaulting on payment on its debts which include, Capital City Authority demanding Shs34m meant for local hotel tax arrears.
In 2022, Aya Investments Uganda Limited was ordered to pay Shs175m to Sanlam Insurance Company for breach of insurance contracts.
