Uganda court orders Boss Beverages to pay US$191.8K to ABSA Bank

UGANDA – The Commercial Court division of Uganda’s High Court has ordered Boss Beverage Company Limited to pay Absa Bank Uganda Ltd, formerly Barclays Bank Uganda, more than Ugx 710 million (US$191.8K) in outstanding loan obligations and authorized the sale of mortgaged property to recover the debt. 

Justice Dr Ginamia Melody Ngwatu also allowed the bank to proceed with the sale of property belonging to Boss Beverages International Limited after finding that the company failed to substantiate claims that the bank had unlawfully computed interest and penalties. 

The dispute stemmed from loan facilities issued by Absa Bank to Boss Beverages, including a Ugx 400 million (US$108.1K) term loan used to refinance an existing facility from DFCU Bank and a separate short-term facility of up to Ugx 600 million (US$162.1K). 

The beverage company had argued through its lawyers that the bank imposed wrongful interest charges and penalties, resulting in an inflated debt figure. It sought court orders to stop recovery proceedings and prevent the sale of its mortgaged assets. 

However, the court found that the company had defaulted on its repayment obligations and failed to provide credible evidence of unlawful interest computation. 

“The plaintiff, therefore, owes the defendant the sum of Ugx710,176,404,” Justice Ngwatu ruled. 

Court records indicated that following repayment challenges, Boss Beverages requested consolidation of its loan facilities. After restructuring, the outstanding balance stood at Shs593.4 million, which later increased to Ugx710.1 million due to continued default and accrued interest. 

The judge noted that an audit conducted by Izimba & Co. Certified Public Accountants was later rejected by the company itself, complicating efforts to verify the disputed figures. Attempts by both parties to conduct an independent reconciliation also failed due to disagreements. 

“Further unnecessary delay will lead to an injustice,” Justice Ngwatu stated while declining to order another reconciliation exercise. 

The court also examined testimony from the company’s accountant, David Kyeera, whose qualifications were questioned. Kyeera told the court he was a Senior Four dropout who acquired accounting skills through internal training and self-study. 

The judge ruled that his evidence was admissible but not as expert testimony, stating, “The plaintiff witness did not appear in the capacity of an expert but rather as an employee who reviewed the company’s financial transactions.” 

On the substantive issue, the court found no evidence that Absa Bank charged interest outside agreed contractual terms, noting that rates between 19% and 23% per annum were binding and not unconscionable. 

“The court has no power to interfere with the rates agreed upon by the parties,” the judge held. 

The suit was dismissed with costs, and the court authorized Absa Bank to sell the mortgaged properties located in Banda-Kireka, Kampala, to recover the outstanding debt and ongoing interest at 20% per annum until full repayment. 

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