[2024] UGCommC 228
The court found that the applicant had obtained a judgment against the 1st respondent and had served a statutory demand, which was acknowledged but not complied with. Under section 3(2)(a) of The Insolvency Act, 2011 and Regulation 85(2)(a) of The Insolvency Regulations, 2013, failure to comply with a statutory...
Source-derived case information.
- Citation
- [2024] UGCommC 228
- Parties
- Applicant: Stanbic Bank Limited; Respondent: Jonah Investments Limited; Respondent: The Official Receiver
- Court
- Commercial Court of Uganda
- Jurisdiction
- Uganda
- Case Number
- Miscellaneous Application 8 of 2017
- Procedural Posture
- Miscellaneous Application / Ruling on Application for Winding Up Order
- Outcome
- application allowed; winding up order issued
- Judges
- Stephen Mubiru, J
- Legal Topics
- Insolvency Proceedings, Statutory Demand, Winding Up Petition, Judgment Debt Enforcement
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Stanbic Bank Limited
Applicant
Jonah Investments Limited
Respondent
The Official Receiver
Respondent
Procedural Posture
Miscellaneous Application / Ruling on Application for Winding Up Order
Legal Issues
- 1 Whether the 1st respondent's failure to comply with a statutory demand establishes insolvency under the Insolvency Act, 2011.
- 2 Whether the applicant is entitled to a winding up order against the 1st respondent based on non-payment of an undisputed judgment debt.
Ratio Decidendi
The court found that the applicant had obtained a judgment against the 1st respondent and had served a statutory demand, which was acknowledged but not complied with. Under section 3(2)(a) of The Insolvency Act, 2011 and Regulation 85(2)(a) of The Insolvency Regulations, 2013, failure to comply with a statutory demand creates a presumption of insolvency. The court further held that a creditor of an undisputed debt is entitled to present a winding up petition, regardless of the company's actual ability to pay, provided the statutory demand is not satisfied and the amount exceeds the statutory minimum. As the 1st respondent failed to pay the decretal sum and did not oppose the application,...
Court Disposition
application allowed; winding up order issued
Orders
- Declaration that Jonah Investments Limited failed to comply with the statutory demand and is deemed unable to pay its debts.
- Order for the winding up/liquidation of Jonah Investments Limited.
Full Case Text
Judgment text and source record
26 paragraphs
### **IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA**
## **(COMMERCIAL DIVISION)**
Reportable Misc. Civil Application No. 0008 OF 2017
In the matter between
**STANBIC BANK LIMITED APPLLICANT**
**And**
# **1. JONAH INVESTMENTS LIMITED RESPONDENTS**
**2. THE OFFICIAL RECEIVER**
**Heard: 31 May, 2024. Delivered: 6 June, 2024.**
*Insolvency—Section 3 (2) (a) of The Insolvency Act, 2011 and Regulation 85 (2) (a) of The Insolvency Regulations, 2013. — A company's non-compliance with a statutory demand, or non-satisfaction of execution of a judgment debt, if proved, establishes the court's jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts. —A creditor (including a judgment creditor) of an undisputed debt is entitled to present a petition for winding up petition.*
### **RULING** \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
### **STEPHEN MUBIRU, J.**
Introduction:
[1] Judgment was on 12th September, 2005 entered in favour of the applicant against the 1st respondent. A statutory demand was duly served on the 1st respondent on 14th June, 2017 and service acknowledged by the 1st respondent. The statutory demand gave the 1st respondent ample time from the date of service to make payment of the decretal amount due to the applicant. Despite receipt of service of the statutory demand, the 1st respondent has failed to pay the decretal amount specified in the statutory demand.
### The application;
[2] The application is made under the provisions of section 3 (2) (a) of *The Insolvency Act, 2011* and Regulation 85 (2) (a) of *The Insolvency Regulations, 2013.* The applicant seeks an order winding-up the 1st respondent. It is contended that 1st respondent is saddled with a huge debt burden and is unable to pay its debt obligations as and when they fall due.
### Submissions of counsel for the applicants;
[3] M/s H & G Advocates on behalf of the applicants submitted that the 1st respondent should be placed under liquidation. The grounds are that the petitioner has a decretal sum awarded against it on 12th September, 2005. The respondent lodged a notice of appeal which was struck out by the Court of Appeal on 19th June, 2015. The petitioner issued a statutory demand on 14th June, 2017 and there is proof of service of the demand. It was not complied with.
### The decision.
[4] Under section 3 (2) (a) of The Insolvency Act, 2011 and Regulation 85 (2) (a) of The Insolvency Regulations, 2013 unless the contrary is proved, a debtor is presumed to be unable to pay the debtor's debt if the debtor has failed to comply with a statutory demand. A company's non-compliance with a statutory demand, or non-satisfaction of execution of a judgment debt, if proved, establishes the court's jurisdiction to make a winding up order, even if the company is in fact well able to pay its debts (see *BNY Corporate Trustees Services Ltd and others v. Neuberger Berman Europe Ltd and others; BNY Corporate Trustees Services Ltd* *and others v. Eurosail-IK 2007-3BL plc [2011] EWCA Civ 227; Mann v. Goldstein [1968] 2 ALLER 769; Cornhill Insurance plc v. Improvement Services Ltd and others [1986] BCLC 26 and Jomayi Consultants Limited v. NC Bank Uganda Limited, H. C. Company Cause No. 5 of 2020; H. C. Miscellaneous Cause No. 43 of 2020). A creditor (including a judgment creditor)* of an undisputed debt is entitled to present a petition for winding up petition.
[5] The amount claimed in the statutory demand exceeds the minimum of one million shillings required by section 4 (2) (a) of *The Insolvency Act, 2011*. Consequently, a Declaration is hereby made that the 1st respondent, M/s Jonah Investments Limited failed to comply with the statutory demand by which fact it is deemed unable to pay its debts, and is thus insolvent. For that reason, the application is allowed and an order to wind-up/liquidate M/s Jonah Investments Limited is hereby issued. In accordance with Regulation 97 (a) of *The Insolvency Regulations, 2013* the 2nd respondent is hereby appointed its Provisional Liquidator. The costs of the applicant will be met from the proceeds of the winding-up/liquidation process.
Delivered electronically this 6th day of June, 2024 ……Stephen Mubiru…………... Stephen Mubiru Judge, 6th June, 2024.
#### Appearances
For the applicants : M/s H & G Advocates For the respondent :