Wakilii

Bukoyo Jaggery Mill Limited v Co-operative Bank Ltd (In Liquidation) and Sil Investments Ltd (Civil Suit No. 305 of 2019)

High Court · [2025] UGCOMMC 189 · 2025 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit seeking declarations that a loan and mortgage were fraudulent and illegal
Decision
Judgment entered for the Plaintiff with declarations that the loan and mortgage were fraudulent, caveat ordered removed, certificate of title ordered returned, permanent injunction granted, and damages awarded

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the 1st Defendant unlawfully lodged a caveat on the Plaintiff's property and the 2nd Defendant unlawfully advertised it for sale. The purported loan agreement was executed in 1998 with a deceased person (Musolo Moses died in 1989), rendering the transaction fraudulent. No valid loan agreement existed between the Plaintiff company and the 1st Defendant. The Plaintiff was awarded general damages of UGX 50,000,000, interest at 6% per annum from judgment, and costs. The caveat was ordered removed and the certificate of title returned to the Plaintiff.

Outcome

Judgment entered for the Plaintiff with declarations that the loan and mortgage were fraudulent, caveat ordered removed, certificate of title ordered returned, permanent injunction granted, and damages awarded

Facts

The Plaintiff company was incorporated on 1 April 1987 and registered as proprietor of land in LRV 1594 Folio 15 on 11 August 1987. One of its two shareholders, Musolo Moses, died on 6 October 1989. In 1998, the 1st Defendant purportedly entered into a loan agreement with 'Musolo Moses t/a Bukoyo Jaggery Mill' for UGX 6,977,858 and lodged a caveat on the Plaintiff's property on 7 April 1999. In May 2014, the 2nd Defendant (as liquidator of the 1st Defendant) advertised the property for auction over an alleged loan default. The surviving shareholder and beneficiaries of Musolo Moses's estate discovered the caveat and loan claim at that time. The Plaintiff had never authorized any loan or mortgage and no board resolution existed. The 1st Defendant is now defunct and in liquidation, with its debt portfolio transferred to the 2nd Defendant.

Issues

  1. Whether the 1st Defendant lawfully lodged a caveat on the suit property?
  2. Whether the Defendants' action of advertising the suit property for sale was lawful?
  3. Whether the Plaintiff entered into a Loan Agreement with the 1st Defendant?
  4. Whether there was breach of the Loan Agreement?
  5. What remedies are available to the parties?

Orders

  • It is declared that the 1st Defendant illegally lodged a caveat on the Plaintiff's land comprised in LRV 1594 Folio 15 land at Kigulu Bulamogi, Bukoyo, Iganga measuring approximately 1.547 hectares.
  • It is declared that the Defendants are illegally holding the Plaintiff's certificate of title for the suit property.
  • The 2nd Defendant is ordered to hand over the certificate of title for the suit property to the Plaintiff.
  • The Commissioner for Land Registration is ordered to remove the caveat lodged by the 1st Defendant on the suit property.
  • A permanent injunction is issued restraining the Defendants, their agents or servants from disposing of the suit property.
  • The Plaintiff is awarded general damages of UGX 50,000,000 (Uganda Shillings Fifty Million Only).
  • Interest is awarded on the general damages at the rate of 6% per annum from the date of Judgment until payment in full.
  • Costs of the suit are awarded to the Plaintiff.

Rules and key headnotes

Contract Law — Validity of Contract — Capacity to Contract — Contract with Deceased Person
A contract purportedly executed with a person who had died years before the date of execution is void ab initio and creates no legal obligations or rights.
Banking & Finance — Due Diligence — Duty of Bank Before Lending
A bank has a duty to conduct proper due diligence before issuing a loan and accepting security, including verifying the identity and legal capacity of the borrower and ensuring proper authorization where company property is pledged as security.
Land & Property — Caveats — Unlawful Lodgment — Fraudulent Caveat
A caveat lodged on the basis of a fraudulent or void transaction is itself unlawful and must be removed by order of the court.
Contract Law — Company Contracts — Authority to Bind Company — Board Resolution Requirement
Under Section 184 of the Companies Act, the management of a company vests in its directors, and decisions to borrow money and pledge company property as security require a valid board resolution. A bank accepting company property as security must verify that proper corporate authorization exists.
Civil Procedure — Limitation of Actions — Fraud — Discovery of Fraud
Under Section 25(a) of the Limitation Act, where an action is based on fraud, the limitation period does not begin to run until the plaintiff has discovered the fraud. The limitation period for an action based on fraudulent mortgage began when the property was advertised for sale, not when the fraudulent documents were executed.
Land & Property — Mortgage — Foreclosure — Right to Sell Mortgaged Property
A mortgagee has no right to advertise or sell mortgaged property where the underlying mortgage is void or fraudulent. A liquidator acquiring a debt portfolio cannot acquire greater rights than the original creditor possessed.
Contract Law — Breach of Contract — No Breach Where No Valid Contract
Where no valid contract exists between parties, there can be no breach of contract. A claim for breach fails where the underlying agreement is void.

Legislation cited (16)

Cases cited (15)

  • Uganda Telecom Ltd v ZTE Corporation (Supreme Court Civil Appeal No. 3 of 2017)
  • Metropolitan Properties Ltd v Mayimuna Muye Amin (Supreme Court Civil Appeal No. 04 of 2022)
  • Patrick Lyamulemye v Stephen Kwiringira & 3 Others (Civil Suit No. 118 of 2019)
  • Necta (U) Ltd and John Ndyabagye v Crane Bank Uganda Ltd (Court of Appeal Civil Appeal No. 219 of 2013)
  • Sebuliba Busuulwa Vs Co-operative Bank Ltd [1982] HCB 129
  • Housing Finance Bank Limited v Seninde Margaret and Another (Originating Summons No. 7 of 2021)
  • Sharif Osman v Hajji Haruna Mulangwa (Supreme Court Civil Appeal No. 38 of 1995)
  • William Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Kabandize John Baptist and 21 Others v Kampala Capital City Authority (Court of Appeal Civil Appeal No. 36 of 2016)
  • Takiya Kashwahiri & Another v Kajungu Denis (Court of Appeal Civil Appeal No. 85 of 2011)
  • Uganda Commercial Bank Vs Deo Kigozi [2002] 1 EA 305
  • Milly Masembe v Sugar Corporation (U) Ltd and Another (Supreme Court Civil Appeal No. 1 of 2000)
  • Mohanlal Kakubhai Radia v Warid Telecom Uganda Ltd (High Court Civil Suit No. 224 of 2011)
  • Uganda Development Bank Vs Muganga Construction Co. Ltd [1981] HCB 35
  • Honest John Kirya v Attorney General & Another (Miscellaneous Cause No. 55 of 2012)

Full judgment

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

Bukoyo Jaggery Mill Limited v Co-operative Bank Ltd (In Liquidation) and Sil Investments Ltd (Civil Suit No. 305 of 2019) [2025] UGCommC 189 (26 June 2025)
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.