Chandaran Associates v Kampala Cement Company Limited (MISCELLANEOUS CAUSE NO. 15 OF 2019)
Observed later treatment
No later-treatment classification is recorded for this judgment.
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Holding
Court dismissed application to vacate caveats on motor vehicles registered in the applicant's name. The applicant owed the respondent money from cement purchases and had filed no security for payment. The court held that while the insolvency proceedings were pending in the commercial court, it was disinclined to lift the caveats as the applicant presented no guarantee for payment of the debt.
Outcome
Application dismissed with costs; caveats on motor vehicles remain in place pending determination of winding up proceedings in the commercial court
Facts
The Applicant, a company owning fifteen motor vehicles, applied to vacate caveats placed on those vehicles by the Respondent. In March 2015, the Applicant obtained a credit facility of UGX 4,000,000,000 from the Respondent for cement purchases. By February 2018, the Applicant defaulted on payments, owing over UGX 2,955,496,339. The Respondent issued demand letters which were not honoured and commenced insolvency proceedings vide Company Cause No. 3 of 2018 in the commercial court seeking to recover UGX 3,306,836,339 with interest. The Respondent then applied to caveat the Applicant's motor vehicles to prevent their transfer to third parties, fearing they might be sold to frustrate recovery. The Applicant argued it had never provided logbooks as security, remained liquid with assets worth approximately UGX 21,060,000,000, and that its business was being crippled because the caveats prevented it from obtaining bank loans using the vehicles as collateral.
Issues
- Whether the caveats placed on the Applicant's motor vehicles should be vacated.
- Whether the Respondent wrongfully caveated the Applicant's vehicles.
- Whether the Applicant is entitled to general and punitive damages for the caveating of the vehicles.
Orders
- Application dismissed.
- Costs awarded to the Respondent.
Rules and key headnotes
Legislation cited (2)
Full judgment
The original judgment as reported. Read the original PDF before relying on any passage.