Plans by KCB Bank Uganda Ltd to auction the home of the late Cedric Ndilima Babu have suffered a setback after the High Court in Kampala issued an interim order blocking the sale of his Kololo residence, pending a full hearing of a dispute over a mortgage insurance policy.
The order, issued on Monday by the Commercial Division’s Assistant Registrar Mastula Mulondo, followed a successful application by Babu’s mother, Olive Zaitun Kigongo, and his widow, Alison Gallagher, who are administrators of the estate.
The court ruled in their favour, holding that the case raises weighty issues that must be examined at trial before any sale can proceed. The applicants sought to restrain the bank from selling Condominium Unit Number Two at Plot 1, Fumu Lane in Kololo, which serves as the family home. Court documents indicate that Babu secured a mortgage from KCB in July 2023, using the Kololo property as collateral.
Following his death in May 2025, the bank issued demand notices citing an outstanding balance of approximately US$182,710 and signalled its intention to recover the debt through the sale of the property. However, the estate argues that under the mortgage agreement, the bank was required to ensure renewal of a group mortgage protection insurance policy arranged through its bancassurance services.
The administrators contend that had the insurance cover remained active, the insurer would have cleared the outstanding loan upon Babu’s death. KCB, on the other hand, maintains that it was the borrower’s responsibility to maintain and renew the insurance policy. The bank asserts that the cover expired in August 2024 after the deceased allegedly failed to facilitate its renewal.
In her ruling, the Assistant Registrar emphasised that at this preliminary stage, the court was not determining liability under the contract, but rather whether the estate’s claim was arguable. She noted that although the agreement required the borrower to insure the property, it also contained a clause directing that insurance renewals be handled through KCB Bancassurance and permitting the bank to automatically renew the policy at the borrower’s cost in the event of default.
The court further found that the differing interpretations of this clause warrant a full hearing. On whether damages would be an adequate remedy, the court held that selling the home could cause harm beyond financial loss. The Assistant Registrar noted that the property is occupied by the widow and the couple’s three children, and that eviction would result in substantial hardship.
The bank had also argued that the application was defective because the applicants had not deposited 30 percent of the outstanding loan, as required under the mortgage law, before challenging a sale. However, the court observed that the suit and application for an injunction were filed before the bank issued its notice of sale. It also emphasised that the law grants the court discretion, particularly where a spouse seeks judicial protection.
As such, the court has restrained KCB, its representatives, and auctioneers from advertising, disposing of, or otherwise interfering with the Kololo property until the main suit is heard and determined. According to the decision, the costs of the application will be determined at the conclusion of the main case.
