Wakilii

Bank of Baroda v M/S Arkay (U) Ltd and Others (HCCS NO. 319 OF 1999)

High Court · [2003] UGHC 115 · 2003 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of overdraft facility and enforcement of guarantees and securities
Decision
Judgment entered against all defendants jointly and severally for the principal sum plus interest and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court granted judgment in favor of Bank of Baroda against all defendants jointly and severally for recovery of an overdraft facility. The court found that the bank advanced Shs.50 million to the first defendant in 1997, secured by guarantees from individual defendants and a mortgage over property belonging to the fourth defendant. Despite demand notices, the defendants failed to pay the outstanding amount.

Outcome

Judgment entered against all defendants jointly and severally for the principal sum plus interest and costs

Facts

In October 1997, Bank of Baroda granted an overdraft facility of Shs.50 million to Arkay (U) Ltd. The facility was secured by guarantees executed by Arun Kumar Sharma, Poonam Sharma, and Henry Senkooza, a demand promissory note, a letter of continuing security, a debenture creating a floating charge over the first defendant's assets, and a legal mortgage over plot 209 Block 32 Kibuga belonging to Henry Senkooza. The defendants defaulted on repayment. By 31 January 1999, the outstanding amount was Shs.111,683,013 plus interest at 25% per annum and bank charges. The bank served demand notices and notice of intention to sue, but the defendants failed to pay. Defendants 1, 2, and 3 did not file defences and judgment in default was entered against them by the Registrar. The fourth defendant filed a defence but his counsel did not attend the hearing.

Issues

  1. Whether the Plaintiff advanced the amount claimed to the 1st Defendant.
  2. Whether the 4th Defendant guaranteed the loan.
  3. Whether the Defendants have paid the money claimed.

Orders

  • Judgment entered in favour of the Plaintiff against the Defendants jointly and severally for Shs.116,683,013/.
  • Interest awarded at 20% per annum from date of filing till payment in full.
  • Defendants to pay the costs of the suit.

Rules and key headnotes

Banking & Finance — Overdraft Facilities — Recovery — Enforcement of Guarantees and Securities
Where a bank advances an overdraft facility secured by personal guarantees and a legal mortgage, and the borrower defaults, the bank is entitled to judgment against all guarantors and the principal debtor jointly and severally for the outstanding amount plus interest.
Contract Law — Guarantees — Liability of Guarantor — Execution of Guarantee Forms
A guarantor who executes guarantee forms in favour of a lending institution is bound by those guarantees and liable for the borrower's debt upon default, even where the guarantor later denies executing the guarantee.
Civil Procedure — Default Judgment — Defendants Failing to File Defence or Attend Hearing
Where defendants fail to file written statements of defence within the prescribed time, judgment in default may be entered against them by the Registrar. Where a defendant files a defence but counsel fails to attend the hearing without reason, the matter may proceed ex parte.

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Bank of Baroda v M_S Arkay (U) Ltd and Others (HCCS NO. 319 OF 1999) [2003] UGHC 115 (3 November 2003)
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.