Overview:
Acting Judge Dr Ginamia Melody Ngwatu dismissed a suit in which Boss Beverages had accused the bank of unlawfully inflating its loan obligations through excessive interest charges and penalties.
KAMPALA — The High Court Commercial Division has cleared Absa Bank Uganda Limited to sell property belonging to Boss Beverages International Limited to recover an outstanding debt of more than Shs710 million, bringing to an end an eight-year legal battle over loan repayment and interest charges.
In a judgment delivered through the Judiciary’s Electronic Court Case Management Information System (ECCMIS), Acting Judge Dr Ginamia Melody Ngwatu dismissed a suit in which Boss Beverages had accused the bank of unlawfully inflating its loan obligations through excessive interest charges and penalties.
The court instead upheld the bank’s claim and authorised it to proceed with the sale of mortgaged property pledged 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 UGX710,176,404 and interest accrued at 20 percent from the date of filing this suit until payment in full,” Justice Ngwatu ruled.
The properties earmarked for sale are located on Block 232, Plots 2619 and 2406 in Banda-Kireka.
The dispute dates back to 2018 when Boss Beverages sued Barclays Bank Uganda Limited, which later rebranded to Absa Bank Uganda, challenging the lender’s computation of interest and penalties on loan facilities extended to the company.
Court records show that Boss Beverages obtained a Shs400 million term loan in 2015 to refinance an earlier facility from DFCU Bank. The company later contested the bank’s claim that the outstanding debt had grown to more than Shs710 million.
The company relied on an audit report prepared by Izimba & Co Certified Public Accountants, which estimated the outstanding debt at about Shs288 million and questioned parts of the bank’s calculations.
However, Absa maintained that the company had defaulted on both the Shs400 million term loan and an additional short-term credit facility of up to Shs600 million. According to the bank, the facilities were later consolidated at the borrower’s request, but continued default led to the accumulation of contractual interest and penalties.
The bank argued that by August 2017, the debt had risen to Shs710.2 million.
During the hearing, company representative Mr David Kyeera challenged the bank’s figures and calculations. However, under cross-examination, he acknowledged that he was not a trained accountant.
Although the court found him competent to testify as an employee familiar with the company’s affairs, Justice Ngwatu noted weaknesses in his analysis, particularly his failure to adequately account for contractual interest and penalties arising from default.
The judge also observed that Boss Beverages failed to file written submissions despite being granted timelines by court and did not provide a satisfactory explanation for the omission.
Efforts by both parties to jointly appoint an independent auditor to reconcile the disputed accounts also failed. The court noted that the process had stalled since 2021, contributing to delays in the resolution of the matter.
After reviewing loan agreements, repayment records and correspondence between the parties, Justice Ngwatu found no evidence that the bank had applied unlawful or unconscionable interest rates.
The court held that the contractual interest rates, which ranged between 19.8 percent and 23.5 percent, were expressly agreed upon by the parties and remained enforceable in the absence of proof of illegality.
As a result, the court dismissed all claims against Absa Bank and ordered Boss Beverages to pay costs of the suit.
The ruling paves the way for the lender to recover the outstanding debt through the sale of the mortgaged properties unless the company successfully challenges the decision on appeal.