ABSA Bank Uganda Limited v Etats Limited (Criminal Appeal 6 of 2024) [2026] UGSC 49 (15 September 2026)

THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT KAMPALA CIVIL APPEAL NO.006 OF 2024 (Arising from Judgment of The Court of Appeal in Civil Appeal No.65 of 2014; Kibeedi, Gashirabake , and Kihika JJA; delivered on 11th March 2024) ABSA BANK UGANDA LIMITED: :::::::::::::::2:1t APPELLANT VERSUS

1, ETATS LIMITED |

2. JAMES BALYEJUSA::::::::iiuitsiitiiiii:titti11: RESPONDENTS.

3. MARGARET BALYEJUSA ;

4. MARTIN KAKEMBO

Coram

( TUHAISE; MUSOKE, MUSOTA, BAMUGEMEREIRE, MUGENYI JJ.SC) JUDGMENT OF HON. JUSTICE STEPHEN MUSOTA, JSC Background of the Appeal | In 2008 Barclays Bank Limited (Successor in Title for Nile Bank) as plaintiff lodged a summary suit on plaint in the Commercial Division of the High Court (Civil Suit No. 272 of 2008) under 0.36 | of the Civil Procedure Rules, against the 2”, 3% and 4% | Respondents jointly and severally. res

In the said Civil Suit No.272 of 2008 the respondents were described as directors of Etats Ltd the principal debtor (1st Respondent). The suit was for recovery of loan facilities extended to the principal debtor by the appellant amounting to |

The facts constituting the cause of action were that upon application of the principal debtor (Etats Ltd) the plaintiff extended a loan of UShs. 360,000,000/=, an overdraft facility of | UShs.260,000,000/= and a certificate discounting facility of UShs. | 179,200,000/= to the principal debtor all contained in facility | letters copies of which were attached to the Plaint. As a way of | securing payments for the aforesaid sums, the respondents bound | themselves to pay and satisfy to the plaintiff on demand in writing all sums of money which the principal debtor may owe to the appellant either solely or jointly upon expiry of the facilities. The principal debtor defaulted on the payment obligations in the facility letters on 24 January 2007 and the amount of UShs. 504,998,901 remained due and owing to the appellant bank as of 12% August 2008. A demand note was issued to the principal debtor to make good the outstanding exposure on the 9% January 2007 but the demand was dishonoured. Through its lawyers, the appellant bank demanded for payment of the outstanding from the Defendant but even though they received the demands, they did not heed the demands. The appellant claimed that the failure to pay the outstanding sum upon a formal demand being made caused the appellant loss, by denying it and keeping it out of the use of its due funds.

The plaintiff thus claimed that the 2™, 3 and 4% Respondents were jointly and severally liable for such action and prayed for the following orders, that a. UShs. 504,998,901/= representing the outstanding on the facilities obtained be paid. b, Interest on (a) above at 25% from the 2nd of January 2007 until payment in full ©. Costs of the suit. | The 2", 3 and 4% Respondents opposed the suit and lodged a Written Statement of Defence denying the indebtedness to Barclays Bank Limited in the amounts claimed. They contended that prior to approving the loan application of the principal debtor Nile Bank Limited engaged the services of Bageine & Company, a firm of valuers to establish the value of the properties that had been offered by Etats Limited to secure the loan and the valuers valued one of the properties, LRV 1674 Folio 11 Plots 30-34 Eden | Road Jinja at UShs 865,000,000/= as Current Market Value in 2004 and UShs. 605,000,000/= as the Forced Sale Value in 2004. | Based on the valuations the bank being satisfied that its funds were well secured extended the loan facilities to the principal debtor. The principal debtor suffered financial constraints in mid 2006 and the Bank at a meeting with the Managing Director of the principal debtor the company was directed to sell off some of the mortgaged properties with the Bank’s permission to service the loans. The principal debtor welcomed the Bank’s proposal and advertised the properties for sale, but the bank stopped them for unclear reasons. The principal debtor received offers pursuant to

the advertisement but could not proceed to negotiate any sales because Nile Bank had withdrawn its consent despite the pleas by the principal debtor. Nile Bank subsequently instructed its lawyers to recover the amounts outstanding on the loan and the lawyers in turn issued the demand notice to the principal debtor to which the principal debtor responded that even if they sold at forced sale value just one of the mortgaged properties, the entire loan balance due to the bank would be paid. In July 2007 Freight Auctioneers acting on behalf of the bank advertised Etats Limited’s mortgaged properties for sale. In 2009 | the Directors of Etats Limited learnt from third parties that the Bank had sold the properties including the land comprised in LRV 1674, Folio 11, plots 30-34 Eden Road Jinja for a paltry UShs. 265,000,000/= an amount which was less than half the forced sale value of the property as assessed in 2004 by the bank’s valuers and was paid in small instalments at regular intervals. Aggrieved by the above allegedly reckless rash and negligent decision of the bank the principal debtor sought to lodge a caveat | on the said suit land but the registry copy of the Certificate of Title | for the land comprised in LRV 1674, Folio 11 Plots 30-34 Eden Road Jinja could not be found. Having failed to lodge a caveat, Etats Limited wrote to the Bank of Uganda seeking intervention in the matter. That at the time the Bank sold the land comprised in LRV 1674 Folio 11 Plots 30-34 Eden Road Jinja the balance owing to the bank was UShs 575,433,749/= which was significantly

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