Court Orders Mukesh, Firms to Pay Katatumba Family Shs14b

The High Court has ordered Kampala businessman Shukla Babubhai Mukesh, popularly known as Shumuk, and his companies to pay Shs14 billion in damages to the family of the late Bonney Katatumba for unlawfully occupying and benefiting from his property in Kampala.

In a judgment delivered on December 23, Justice Stephen Mubiru found Shumuk Springs Development Ltd, Springs International Hotel Ltd, Shumuk Financial Services Ltd, and their director Mukesh liable for wrongful possession of condominium units at Plot 2 Colville Street, commonly known as Black Lines House.

Justice Mubiru ruled that the companies took possession of the property without fully paying the agreed purchase price and went on to collect rent while interfering with the rights of the lawful owner and other unit proprietors.

The dispute dates back to August 16, 2008, when Katatumba agreed to sell the property, comprising 92 condominium units, to Shumuk Springs Development Ltd for $5 million (about Shs18.5 billion). The company paid a deposit of $101,000 (about Shs370 million), with the balance due within 60 days.

However, court found that the buyer failed to clear the balance within the agreed period but nonetheless took possession of the premises, collected rental income, and disrupted the rights of other condominium owners. Although some payments were made towards redeeming an existing mortgage, the court held that the contractual purchase price was never fully paid.

Mukesh and his companies had sued Katatumba and other defendants, including Virani Bahadukali Mohamedalli, Joseph Sempebwa, and Peter Lule, accusing them of fraudulently selling or claiming interests in units they argued formed part of the property sold to them. They also sued Tecton Group, Arvind Patel, and the Registrar of Titles over alleged wrongful transfers and registration of titles.

Justice Mubiru dismissed those claims, noting that the plaintiffs were in breach of the initial sale agreement.

The judgment also examined the role of Springs International Hotel Ltd, which became involved through a subsequent agreement dated November 10, 2008, under which Katatumba purportedly resold the same property after Shumuk Springs Development Ltd failed to complete payment. The court noted that this agreement had previously been declared void, as the first sale agreement was still subsisting at the time.

The court ordered that any transfers or registrations made in favour of Springs International Hotel Ltd be cancelled and declared that ownership of the property remains vested in the Katatumba estate until the August 2008 agreement is fully performed.

The case further involved third-party purchasers who had acquired individual condominium units before the Shumuk transaction. These included Joseph Sempebwa, who bought 13 units, and Peter Lule, who purchased 11 units directly from Katatumba.

Court found that the Shumuk companies wrongfully deprived these purchasers of possession and rental income. Based on evidence that each unit could earn about Shs5.5 million per month, the court assessed the loss for Sempebwa’s 13 units at approximately Shs72 million per month. Over a period of 196 months, the court computed recoverable mesne profits at Shs14 billion.

Justice Mubiru ordered Shumuk Springs Development Ltd, Springs International Hotel Ltd, and other related defendants to jointly pay the Shs14 billion in mesne profits.

With regard to Peter Lule, the court recognised his proprietary interest in the units he purchased and faulted the plaintiffs for interfering with his rights, although no specific monetary compensation was quantified in the mesne profits award.