The High Court’s Commercial Division has authorized Absa Bank Uganda Limited to proceed with the sale of properties belonging to Boss Beverages International Limited after dismissing the company’s claims that the bank had unlawfully inflated its loan obligations through excessive interest charges.
In a judgment delivered through the Judiciary’s Electronic Court Case Management Information System (ECCMIS), Acting Judge Dr. Ginamia Melody Ngwatu ruled in favour of the bank, bringing to an end a commercial dispute that has been before the courts for nearly eight years.
The court dismissed the suit filed by Boss Beverages, ordered the company to bear the costs of the litigation, and permitted the bank to recover an outstanding debt of Shs710.2 million through the sale of mortgaged property.
Justice Ngwatu further ruled that the outstanding amount would continue attracting interest at a rate of 20 percent per annum from the date the suit was filed until the debt is fully settled.
“The defendant shall proceed with the sale of the mortgaged property according to the law to recover the outstanding sum of UGX 710,176,404 together with interest accrued at 20 percent from the date of filing the suit until payment in full,” the judge ruled.
The properties targeted for recovery are situated on Block 232, Plots 2619 and 2406 in Banda-Kireka and had been pledged as security for loan facilities advanced to the beverage company.
The case dates back to 2018 when Boss Beverages International Limited sued Barclays Bank Uganda Limited, which later rebranded to Absa Bank Uganda Limited.
The company challenged the bank’s computation of interest and penalties on a loan facility, arguing that it had substantially serviced a Shs400 million term loan obtained in 2015 to refinance an earlier credit facility from DFCU Bank.
Boss Beverages disputed the bank’s claim that its indebtedness had grown to more than Shs710 million, relying on an audit report prepared by Izimba & Co. Certified Public Accountants. The report estimated the company’s outstanding liability at approximately Shs288 million and questioned aspects of the bank’s calculations.
However, Absa Bank maintained that the company had defaulted not only on the Shs400 million term loan but also on a separate short-term facility worth up to Shs600 million. According to the bank, the two facilities were subsequently consolidated at the borrower’s request.
The bank argued that persistent default on repayments resulted in the accumulation of contractual interest and penalties, causing the debt to rise to Shs710.2 million by August 2017.
Court Rejects Company’s Claims
During the hearing, the court received testimony from David Kyeera, a representative of Boss Beverages, who challenged the bank’s calculations.
Although Absa questioned his expertise, Justice Ngwatu found that Kyeera was competent to testify because of his familiarity with the company’s financial dealings and loan transactions.
Nevertheless, the court identified significant weaknesses in his analysis, particularly his failure to adequately account for contractual interest and default penalties provided for under the loan agreements.
The judge also noted that Boss Beverages failed to file written submissions despite being granted timelines by the court and offered no satisfactory explanation for the omission.
Court records further showed that attempts by both parties to appoint an independent auditor to reconcile the disputed accounts ultimately failed. The reconciliation process had stalled since 2021, contributing to delays in resolving the matter.
Interest Rates Found Lawful
After reviewing the loan agreements, repayment schedules, account statements and correspondence exchanged between the parties, the court concluded that Boss Beverages had failed to prove any wrongdoing on the part of the bank.
Justice Ngwatu held that the interest rates charged by the bank, ranging between 19.8 percent and 23.5 percent, were expressly provided for in the contractual agreements signed by the parties.
The court found no evidence that the rates were unlawful, unconscionable or imposed in violation of the law.
In the absence of illegality, the judge ruled, the court could not interfere with contractual terms voluntarily agreed upon by the borrower and lender.
Consequently, the court dismissed all claims brought by Boss Beverages International Limited and upheld Absa Bank’s right to recover the outstanding debt of Shs710,176,404 through the sale of the mortgaged properties.
The ruling effectively clears the way for the bank to commence recovery proceedings in accordance with Uganda’s mortgage and banking laws.
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