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Rajiv Kumar v Patel Sureshbhai Chandubhai (Civil Appeal No 37 of 2018)

Court of Appeal · [2025] UGCA 206 · 2025 Appeal Dismissed; Cross-Appeal Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
First civil appeal and cross-appeal from a decree of the High Court (Commercial Division); the appeal was dismissed for the appellant's non-appearance and the cross-appeal (on interest) was heard.
Decision
Appeal dismissed for non-appearance; cross-appeal allowed and interest of 20% per annum on UGX 85,000,000 from the date of filing the suit till payment in full awarded.

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Holding

The appellant failed to appear at the hearing and his appeal was dismissed under Rule 100(1) of the Judicature (Court of Appeal Rules) Directions. On the respondent's cross-appeal, the Court held that although the parties' contract did not provide for interest, a court retains a discretion under section 26(2) of the Civil Procedure Act to award interest on a decretal sum where a party has been kept out of the use of their money. The trial judge erred in treating the absence of agreement as a bar to any award. The Court set aside the refusal of interest and awarded interest at 20% per annum on UGX 85,000,000 from the date of filing the suit until payment in full.

Facts

The parties entered a written agreement for the sale of a bakery, Star Oven Loaf Bakery, for UGX 85,000,000. The purchaser (appellant) was to pay by instalments: supply assorted hardware materials worth UGX 15,000,000, pay UGX 60,000,000 from 1 April 2014, and pay the UGX 10,000,000 balance one year after the agreement. On 22 March 2014 the seller (respondent) handed over the listed bakery equipment, which the purchaser accepted and delivered to his Kampala premises. To guarantee payment the purchaser issued a security cheque for UGX 75,000,000, but he did not pay the agreed consideration. The seller sued in Civil Suit No. 630 of 2014 for recovery of UGX 85,000,000 with interest, general damages and costs; the purchaser counterclaimed. The High Court found for the seller, awarding the contractual sum, UGX 15,000,000 general damages and costs, and dismissing the counterclaim, but it declined to award interest on the ground that interest had not been agreed by the parties.

Issues

  1. Whether the trial judge erred in declining to award interest on the contractual sum on the basis that interest had not been agreed upon by the parties.
  2. Whether the trial judge failed to exercise her discretion judiciously and in favour of awarding interest to the respondent on the decretal sum.

Orders

  • The appeal is dismissed under Rule 100(1) of the Judicature (Court of Appeal Rules) Directions for the appellant's failure to appear at the hearing.
  • The cross appeal substantially succeeds.
  • The learned trial Judge's order on interest is set aside and substituted with an order that interest of 20% on the principal sum of UGX 85,000,000 is payable by the appellant/cross respondent from the date of filing the suit till payment in full.
  • The appellant/cross respondent shall pay the costs of the appeal and the cross appeal.

Key headnotes

Civil Procedure — Interest — Discretion to Award Interest on a Decretal Sum
Under section 26(2) of the Civil Procedure Act, a court has a discretion to award interest on a decretal sum even where the parties did not agree on the payment of interest, and that discretion may be exercised in favour of a party who has been kept out of the use of their money.
Civil Procedure — Interest — Interest as of Right Distinguished from Discretionary Interest
Interest is payable as of right only where the contract provides for its payment; the power under section 26(1) of the Civil Procedure Act to vary a harsh or unconscionable agreed interest rate does not extend to imposing interest where the parties made no agreement for its payment.
Contract Law — Interest — Interest Antecedent to Suit
Interest antecedent to a suit is claimable only where an agreement stipulates a rate, where mercantile usage (which must be pleaded) allows it, where there is a statutory right to interest, or where an agreement to pay interest can be implied from the parties' course of dealing.
Damages & Quantum — Interest — Basis and Date of Accrual
The basis for an award of interest is that the defendant has kept the plaintiff out of his money and has had the use of it; such interest is properly awarded from the date of filing the suit until payment, to compensate for inflation and the loss of use of the funds.
Civil Procedure — Appeals — Dismissal for Non-Appearance
Under Rule 100(1) of the Judicature (Court of Appeal Rules) Directions, where an appellant does not appear on the day fixed for the hearing of an appeal, the court may dismiss the appeal and proceed to hear any cross-appeal, unless it sees fit to adjourn the hearing.
Civil Procedure — First Appeal — Duty of First Appellate Court to Re-evaluate Evidence
A first appellate court is under a duty to re-appraise the whole of the evidence and to reach its own conclusion, bearing in mind that it neither saw nor heard the witnesses and making due allowance in that regard.

Legislation cited (4)

  • Civil Procedure Act, Cap 71 s.26(2)
  • Civil Procedure Act, Cap 71 s.26(1)
  • Judicature (Court of Appeal Rules) Directions, S.I 13-10, Rule 100(1)
  • Judicature (Court of Appeal Rules) Directions, S.I 13-10, Rule 30(1)(a)

Cases cited (8)

  • Fr. Narsensio Begumisa & 3 Ors v Eric Tibebaga (SCCA No. 17 of 2002)
  • Bank of Baroda v Wilson Buyonjo Kamugunda (SCCA No. 10 of 2004)
  • Attorney General v Sam Semanda (SCCA No. 8 of 2006)
  • Charles Lwanga v Central Rural Development Bank Ltd (19911 rEA 17s CACA 30/1
  • Harbutt's Plasticine Ltd v Wayne Tank & Pump Co. Ltd [1970] 1 QB 447
  • Highway Furniture Mart Ltd v The Permanent Secretary [2006] 2 EA 94
  • Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd (No. 2) [1970] EA 469
  • Kanabolic Group of Companies (U) Ltd v Sugar Corporation of Uganda Ltd (SCCA No. 15 of 1994)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.