Cairo International Bank v M. Janjua (Civil Appeal 3 of 2010)

Observed later treatment

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

Holding

The Supreme Court dismissed the bank's appeal against a Court of Appeal decision enforcing its letter of guarantee. The condition precedent required tax clearance certificates only in respect of the quarry assets sold, not for the respondent and his companies personally; and it was in any event superfluous because, under section 166(2) of the Income Tax Act, no tax was due on capital assets disposed of before 1 April 1998. The bank was liable to pay the guaranteed USD 250,000. On interest the court allowed the appeal in part, reducing the rate from 18% to 10% per annum and running it from the date of the High Court judgment rather than the date of filing the suit.

Outcome

Appeal dismissed; the bank is liable to pay USD 250,000 under the guarantee, with interest reduced to 10% per annum running from the date of the High Court judgment.

Facts

On 3 March 1998 the respondent and Victoria Quarries and Aggregate (U) Ltd sold land, developments and machinery comprised in Kyadondo Block 185, Plot 190 to Ayosama Ltd for USD 500,000. Ayosama paid half. The balance of USD 250,000 was to be paid by the appellant bank in monthly installments under a letter of guarantee dated 6 March 1998, accompanied by an undated condition precedent. The condition precedent required clearance from the Uganda Revenue Authority of all taxes payable in respect of the quarry assets. The principal debtor defaulted. The respondent demanded payment from the bank, attending its offices about thirty times, but the bank declined, insisting that the respondent and his companies first produce tax clearance certificates for themselves. The respondent then instituted a summary suit to recover the money.

Issues

1. Whether the respondent and his company were required, under the condition precedent to the guarantee, to produce tax clearance certificates for themselves.
2. Whether the letter of guarantee was enforceable against the appellant bank.
3. Whether the Court of Appeal erred in awarding interest at 18% per annum from the date of filing the suit to the date of payment.

Orders

• Appeal dismissed with costs to the respondent in the Supreme Court and the two courts below.
• The fifth issue (interest) allowed in part.
• Interest awarded to the respondent at 10% per annum from the date of the High Court decision (which has been replaced by the Court of Appeal judgment).

Rules and key headnotes

Legislation cited (7)

• Income Tax Act s.166(2)
• Income Tax Act s.18(1)(a)
• Income Tax Act s.22(1)(b)
• Civil Procedure Act s.26(2)
• Rules of the Supreme Court r.79
• Rules of the Supreme Court r.82(1)
• Rules of the Supreme Court r.85(3)

Cases cited (5)

• Twiga Chemical Industries v Viola Bamusedde (Supreme Court Civil Appeal No. 10 of 2004)
• Milton Obote Foundation vs Kenon Trading (Sup. Court Civil Appeal No. [OCR garbled])
• Bank of Baroda Vs Hamugino (Sup. Court Civil Appeal No. [OCR garbled])
• Kimani Vs Attorney General (19[xx]) EA
• SIETCO vs Noble Builder (U) Ltd - Sup. Court Civil Appeal

Cases citing this judgment (5)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

• Cwezi Properties Limited v Tulip Consultancy Limited (Civil Appeal No. 124 of 2015) distinguished
• Mutebi v Kitalemire (Miscellaneous Application 608 of 2025)
• Mukooli v Administrator General (Civil Appeal 6 of 2016)
• Cairo International Bank vs Sadique [2011] UGSC 27
• Kibaaju V National Resistance Movement & 2 Ors (HCT-05-CV-CS-0096-2010)

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