The court has ordered Boss Beverage Company Limited to pay Absa Bank Uganda Ltd, formerly Barclays Bank Uganda, over Shs710million as outstanding loan obligations.
The Commercial Court division of the High Court judge, Dr Ginamia Melody Ngwatu, also allowed the bank to proceed with the sale of mortgaged property of Boss Beverages International Limited in order to recover the debt.
In her judgment, Justice Dr Ginamia Melody Ngwatu found that Boss Beverages had failed to prove allegations that the bank had unlawfully computed interest and penalties on its loan facilities.
The dispute arose from loan facilities advanced by the bank to Boss Beverages, including a Shs400 million term loan used to buy out an existing facility from DFCU Bank and a separate short-term facility of up to Shs600 million.
The beverage company, through its lawyers, had argued that the bank had imposed wrongful interest charges and penalties, resulting in an inflated debt figure.
The company sought declarations that the computations were erroneous, that the recovery process be halted, and that the mortgaged properties should not be sold.
However, the court found that the company had defaulted on its repayment obligations and failed to provide convincing evidence that the bank had applied unlawful interest rates.
‘The plaintiff, therefore, owes the defendant the sum of Shs710,176,404,’ Justice Ngwatu ruled.
Court records show that after experiencing repayment difficulties, Boss Beverages requested the bank to consolidate its loan facilities. Following the restructuring, the outstanding balance stood at Shs593.4 million.
The bank later demanded Shs710.1 million, a figure that included principal and accrued interest following continued default by the borrower.
The judge noted that although Boss Beverages commissioned an audit by Izimba and Co. Certified Public Accountants, the company subsequently wrote to the bank requesting that the audit report be disregarded.
The court also observed that efforts by both parties to conduct an independent reconciliation of accounts through another auditor stalled after disagreements and failure to complete the process.
‘Further unnecessary delay will lead to an injustice,’ the judge said while declining to order yet another reconciliation exercise.
Boss Beverages had also relied on evidence from its accountant, David Kyeera, whose qualifications were challenged by the bank. During the proceedings, Kyeera testified that he was a Senior Four dropout who had acquired accounting knowledge through training by the company’s managing director and self-study.
Although the bank argued that his evidence should be expunged because he was not a qualified accountant, the court rejected the objection.
‘The plaintiff witness did not appear in the capacity of an expert but rather as an employee of the plaintiff company who had reviewed the plaintiff’s financial transactions including the loans,’ Justice Ngwatu held.
On the substantive dispute, the court found no evidence that the bank had charged interest outside the rates agreed upon in the loan agreements.
‘In light of the foregoing, I agree with the defendant that it is the contractual interest that was applied to arrive at the amount due and the court has no power to interfere with the rates that were agreed upon by the parties,’ the judge stated.
The court further held that interest rates ranging between 19 and 23 percent per annum, as agreed by the parties, were not unconscionable.
As a result, the suit was dismissed with costs.
Justice Ngwatu also authorised the bank to proceed with the sale of the mortgaged properties located at Banda-Kireka in Kampala, which had been offered as security for the loans.
‘The defendant shall proceed with the sale of the mortgaged property according to the law to recover the outstanding sum of Shs710,176,404 and interest accrued at 20% from the date of filing this suit until payment in full,’ the judge ordered.
The company was additionally directed to pay the bank’s legal costs.