The Court of Appeal has stopped the hearing of a multimillion-dollar loan dispute between Dei Industries International, Dei BioPharma, Dr Mathias Magoola and Equity Bank Uganda and Equity Bank Kenya, pending the determination of the main appeal.
Justice Florence Nakachwa, sitting as a single justice of Appeal, ordered that the hearing and all proceedings in the High Court be stayed until the applicants’ intended appeal is heard and finally determined.
However, the order does not determine how much money Dei Industries and Dei BioPharma owe the two banks. It also does not cancel the disputed audit report prepared by Clayton & Co.
Instead, the Court of Appeal has temporarily paused the main case because it found that Dei Industries had raised genuine issues about the audit process that deserve consideration on appeal.
The long-running dispute started with loans that Dei Industries and Dei BioPharma obtained from Equity Bank Uganda and Equity Bank Kenya between 2016 and 2021.
The facilities were obtained to finance the establishment and development of a pharmaceutical manufacturing project at Matugga, intended to produce medicines and vaccines for diseases including HIV, HPV, malaria, cancer, diabetes, and neurodegenerative diseases.
The companies later disputed the amounts demanded by the banks and went to court.
They asked the court to order an account, audit, and reconciliation of their loan accounts to establish the actual amounts owed.
In December 2024, the parties agreed to have KPMG conduct a comprehensive audit of the disputed loan arrangements.
But the agreement soon ran into trouble when the Dei companies challenged KPMG’s involvement, arguing that there was a business relationship between KPMG and the banks which, in their view, created a conflict of interest.
Equity Bank Uganda and Equity Bank Kenya rejected that argument, saying their relationship was with Monitor Publications in connection with the Uganda Top 100 Mid-sized Companies survey, while KPMG’s role was to validate financial information submitted by participating companies.
Indeed, KPMG itself told the court that it had no business or financial relationship with the banks that amounted to a conflict of interest.
The court eventually set aside the earlier KPMG appointment and directed the Institute of Certified Public Accountants of Uganda (ICPAU) to nominate an independent audit firm to conduct the comprehensive audit.
ICPAU subsequently nominated Clayton & Co, and the firm carried out the audit and submitted its report to the High Court on June 28, 2025.
But even before the report was completed, the Dei companies had filed another application challenging the integrity, objectivity and independence of the process through which Clayton & Co had been appointed.
They wanted ICPAU’s role revoked and sought other orders concerning the audit.
The Commercial Court dismissed their concerns, and Justice Susan Abinyo found that the application had been overtaken by events because the audit had already been completed and the report submitted.
She also ruled that Dei had not proved that ICPAU’s independence had been compromised.
It was that decision which pushed the dispute to the Court of Appeal.
Dei Industries, represented by Fred Muwema of Muwema & Co. Advocates, appealed, asking the court to stop the main case while their intended appeal was being pursued.
Muwema argued that allowing the High Court case to continue could cause serious harm because the disputed Clayton & Co report could be relied upon when determining the companies’ indebtedness.
He said the report put their pharmaceutical operations and investor confidence at risk because the companies had invested more than Shs4 trillion in the pharmaceutical manufacturing complex at Matugga and that the project had received support from international partners.
Equity Bank Uganda and Equity Bank Kenya, which were represented by Fahim Matovu of Katende, Ssempebwa & Co. Advocates, strongly opposed the application.
Their lawyers argued that the banks should not be prevented from proceeding with a case that had already been delayed by several interlocutory applications.
The banks also argued that the Clayton & Co report was not their private document. It had been produced pursuant to a court process and submitted to the High Court.
They told the court that the Dei companies would still have a full opportunity to challenge the report during the main trial, including by raising objections, presenting contrary evidence and cross-examining the auditors.
The banks’ position was therefore that the main dispute should be allowed to proceed to trial, where the evidence could be tested properly.
Their lawyers also argued that the companies remained in default on the loan facilities and that continued applications were delaying the banks from recovering substantial sums of money.
The banks also raised a legal objection arguing that the Dei companies had no automatic right to appeal against the earlier dismissal of their application and should first have obtained leave to appeal.
Equity Bank defeats Dei Industries bid to halt independent audit in loan dispute
Justice Nakachwa, however, said that as a single judge, she did not have jurisdiction to determine whether the notice of appeal itself was competent.
She said that the question of whether a notice of appeal is competent can only be determined by a full bench of three justices.
“I have no power or jurisdiction to interrogate or delve into its competence,” she ruled.
She nevertheless declined to order the banks not to rely on the Clayton & Co report, saying the report had become an independent court document and was no longer simply a document belonging to the banks.
She added that it would be for the trial court to decide whether to treat the document as genuine and adopt it, or disregard it.
“The court doesn’t have to wait for either party to tender it in before it is considered or denied,” she said.
The Court of Appeal therefore did not accept Dei Industries’ request to specifically restrain Equity Bank Uganda and Equity Bank Kenya from relying on the report.
However, the bigger question was whether the High Court proceedings should continue while the intended appeal was pending.
On this point, Justice Nakachwa found that the Dei companies had met the requirements for a stay.
Justice Nakachwa said an applicant seeking a stay must show an arguable appeal, possible irreparable harm, that the balance of convenience favours a stay and that the application was filed without unreasonable delay.
“The grounds raise triable issues which merit consideration by this court,” she said.
She also considered the position of the two banks, recognizing that a stay would cause inconvenience and delay to Equity Bank Uganda and Equity Bank Kenya, which have been waiting for the main suit to be resolved.
But she found that, in the circumstances of the case, the balance of convenience favoured the Dei companies because the authenticity of the disputed audit report was still an issue in the intended appeal.
“The hearing of and all proceedings in High Court are stayed pending the hearing and final determination of the intended appeal before this court,” Justice Nakachwa ordered.
She also directed that costs of the application would be determined after the outcome of the intended appeal.
