KAMPALA — The Commercial Division of the High Court in Kampala has quashed a warrant of arrest issued against the managing director of Dei Minerals International, Mr Matthias Magoola, in which former Isaac Musumba sought to be paid UGX268 billion in legal fees.
Delivering her ruling dated September 5, Hon. Lady Justice Anna B Mugenyi has quashed the warrant of arrest against Mr Magoola questioned the manner in which the former minister of Urban Development Isaac Musumba, and his lawyers obtained the warrant —describing it as an abuse of court process.
“I agree with Counsel for the Appellant and find that the application for execution was an abuse of court process, and an avenue of exerting unnecessary pressure on the Appellants by the Respondent. At the point of entering the consent, the parties ought to have foreseen all the delays that could have happened and maybe set deadlines, but they did not. This Court therefore cannot be seen to impose time frames on the parties when it was not part of their agreement. It is the duty of the Court to construe the contract as it is,” Lady Justice Mugenyi ruled before awarding Appeal costs to Mr. Magoola.
“Having considered all the submissions and evaluated the evidence on record, I find that the Appeal has merits and succeeds on all the grounds. The Ruling of the Registrar in EMA No. 11 of 2022 allowing execution by warrant of arrest is hereby set aside and costs of the appeal be paid to the Appellants by the Respondent,” she added.
The former minister Musumba had represented Dei Minerals International in a legal dispute, which saw his clients claim a compensation $241 million (over UGX.700b).
Mr. Magoola is meant to pay Mr Musumba the UGX268 billion as 30 percent of the decretal sum of UGX700b that Mr. Magoola and his Dei Minerals International firm are expected to earn from Videocon Industries Ltd, a UK-India based firm, for breach of contract and fraud.
The Commercial Division of the High Court had instructed court bailiffs to effect the arrest of Mr Magoola, a development quashed by Justice Anna Mugenyi, who ruled that if Mr Magoola is jailed, then this will curtail his efforts to recover the monies.
“To this court, the applicants have satisfactorily demonstrated that they will suffer substantial loss if the warrant of arrest against the 2nd applicant is executed because not only would he be incarcerated and curtailed from following up; among other things, recovery of monies mount to satisfy the respondent’s claims as well as his own, which is the main gist of the Consent Order sought to be enforced,” she ruled.
Adding”……This Court therefore cannot be seen to impose time frames on the parties when it was not part of their agreement. It is the duty of the Court to construe the contract as it is.
Upon that premise, I do not find it necessary to delve into a discussion as to whether or not execution by warrant of arrest was a justified mode of execution because the learned Registrar should not have entertained that application in the first place as it was against the Section 28 of the Contracts Act. This ground of appeal also succeeds.”
Mr Musumba had told court that the key clauses of the case were that Musumba would only be compensated upon recovery of the money, which has not yet been done.
“Deputy Registrar [Juliet] Hatanga …. did not at all make reference to weightier clauses of the consent judgment that were emphatic to the effect that payment to Mr Musumba would only be after successful recovery of money from Videocon,” the appeal by Mr Magoola states in part.
Justice Mugenyi agreed with Mr Magoola and said that there does not appear to be any element of bad faith on the side of the latter.
“Without delving into the merits of the Appeal, the terms of payment of the Respondent’s monies appear to have been contingent to recovery of the decretal amount and there does not appear to have been evidence adduced by the Respondent to show an element of bad faith on the part of the Applicants, especially because they appear to have made an effort to explain to the Respondent the progress of the recovery process as attested to by the Respondent himself and which recovery process is meant to benefit not only the Respondent but the Applicants as well,” she said.
“The respondent contends that the applicants are bound by law to pay security for the due performance of the consent order and without such deposit being made in court, the present application is incompetent,” she added.
Mr Magoola runs a multibillion pharmaceutical factory in Matugga, near Kampala. The multi-billion biological drugs and mRNA vaccine manufacturing facility, was launched by President.
In 2006, DEI MINERALS INTERNATIONAL LTD and its managing director Matthias Magoola applied and obtained two mining licenses; Kirwa Wolfram mines located in Kisoro district and Mwerasandu Tin mines located in Ntungamo district.
He also acquired a location license in respect of Mwerasandu Tin mines, which he later surrendered to government to pave way for the transfer of licenses to Videocon Natural Resources PLC. So, in that very year 2006, agents of Videocon Industries Ltd, an Indian Company, approached Magoola and made proposals for a joint venture.
They entered into a memorandum of understanding and agreed to form a new company floated in London so as to enable the new entrants to get shares. The parties also agreed that on the incorporation of the new company; Videocon Natural Resources PLC, Magoola would transfer the licenses to Videocon Industries Ltd plus 99 percent of DEI Minerals International Ltd shares to the new company while Videocon was to inject US$ 100 million in the project.
However, Videocon Industries Ltd failed to inject the US$ 100m, which rendered the operations of the mines impotent. They were in breach of their contractual obligations and it was Videocon’s duty to return Dei Minerals International Ltd and Magoola Matthias to their original position before they entered into business with Videocon Industries.
This meant that the plaintiffs (DEI and Magoola) had to recover their mining licenses that had been cancelled by government.