Wakilii

Dembe Trading Enterprise Ltd. v Bidco (U) Ltd. (Misc. Applic. No. 152 of 2008)

High Court · [2010] UGHC 20 · 2010 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for leave to appear and defend a suit for recovery of money by specially endorsed plaint
Decision
Judgment entered for the plaintiff for recovery of UGX 161,342,241/= with interest at 15% per annum and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

The court dismissed the defendant's application for leave to appear and defend a suit on dishonoured cheques. Once consideration for a cheque is admitted, the court cannot enquire into its adequacy. A cheque is by nature an unconditional order to pay. Even if blank cheques were issued, the Bills of Exchange Act grants prima facie authority to fill them in. The defendant failed to demonstrate triable issues and judgment was entered for the plaintiff.

Outcome

Judgment entered for the plaintiff for recovery of UGX 161,342,241/= with interest at 15% per annum and costs

Facts

The plaintiff sued the defendant for UGX 161,342,241/= being the price of goods supplied. The defendant had issued two cheques dated 28 June 2007 for the exact amount claimed. The cheques were presented to the bank on 2 July 2007 but were dishonoured on 4 July 2007. Notice of dishonour was given to the defendant. The defendant then applied for leave to appear and defend, arguing that accounts needed reconciliation, that the amount claimed exceeded goods supplied, that the cheques were issued as security only and were not meant to be banked, and that there was a distribution agreement breach.

Issues

  1. Whether the amount claimed by the plaintiff was for more goods than the plaintiff had supplied.
  2. Whether the facts stated in the application vitiated the cheques, thus disentitling the plaintiff from relying on them in a suit for recovery of the debt.
  3. Whether the application for leave to appear and defend raised triable issues.

Orders

  • Application for leave to appear and defend dismissed.
  • Judgment entered for the plaintiff for the sum of UGX 161,342,241/=.
  • Interest awarded at 15% per annum from the date of filing suit until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Bills of Exchange — Adequacy of Consideration — Cheques
Once there is in fact consideration and a cheque has been given based on some consideration, in a suit upon that cheque the court cannot enquire into whether the consideration was sufficient. The burden is on the defendant to show there was no consideration, not that there was insufficient consideration.
Bills of Exchange — Nature of Cheques — Unconditional Order to Pay
A cheque is by its very nature an unconditional order in writing to pay. One cannot issue a cheque on conditions except if those conditions are notified to the banker, because the cheque is addressed to the drawee bank, not to the bearer.
Bills of Exchange — Inchoate Instruments — Blank Cheques
Where a simple signature on a blank stamped paper is delivered in order that it may be converted into a bill, it operates as prima facie authority to fill it up as a complete bill for any amount the stamp will cover. If such instrument after completion is negotiated to a holder in due course, it is valid and effectual for all purposes in the holder's hands.
Leave to Defend — Test for Triable Issues
Before leave to appear and defend is granted the defendant must show by affidavit or otherwise that there is a bona fide triable issue of fact or law. The defendant need not show a good defence on the merits but must satisfy the court that there is an issue or question in dispute which ought to be tried.
Bills of Exchange — Dishonoured Cheques — Right of Recourse
When a bill is dishonoured by non-payment, an immediate right of recourse against the drawer and endorsers accrues to the holder. There is no further need to prove the underlying debt, as any disagreements about the amount are assumed settled and replaced by the unconditional order that the drawer's bankers pay the sums in the cheques.
Commercial Practice — Cheques as Security — Judicial Policy
The business practice of issuing cheques as security for payment with the intention that they should not be banked or negotiated should be strongly discouraged as it goes against the very nature of such instruments. Courts have a duty to protect the integrity of cheques as they facilitate the efficient running of commerce.

Legislation cited (11)

Cases cited (5)

  • Abubaker Kato Kasule v Tomson Muhwezi [1992-1993] HCB 212
  • Maluku Interglobal Trade Agency Ltd v Bank of Uganda [1983] HCB 63
  • Bidco (U) Ltd v Western Distributors Ltd (H.C.C.S No. 271 of 2008)
  • Hassanali Issa & Co v Jeraj Produce Store [1967] EA 555
  • Adib El Hinnawi v Yacoub Fahmi Abu El Huda [1936] 1 All ER 639

Full judgment

↓ Download PDF

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

Dembe Trading Enterprise Ltd. Vs Bidco (U) Ltd. (Misc. Applic. No. 152 of 2008) [2010] UGHC 20 (16 February 2010)
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.