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Hussein Ahmed v Platinum Credit Uganda Limited (Civil Suit No. 513 of 2021)

High Court · [2026] UGCOMMC 60 · 2026 Judgment for Defendant on Counterclaim AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of loan; plaintiff's claim dismissed for non-appearance; counterclaim heard ex parte
Decision
Plaintiff's suit dismissed for non-appearance; judgment entered for defendant on counterclaim for outstanding loan balance with reduced interest rate

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that upon a counter defendant's failure to file a reply to a counterclaim for a liquidated sum within the prescribed period, the counterclaimant is entitled to default judgment under Order 9 rule 6 of the Civil Procedure Rules. The court found the contractual interest rate of 48% per annum unconscionable and reduced it to 33% per annum, exercising its discretion under section 26(1) of the Civil Procedure Act. Interest in commercial disputes serves the same compensatory purpose as general damages, and an additional award of general damages would constitute overcompensation.

Outcome

Plaintiff's suit dismissed for non-appearance; judgment entered for defendant on counterclaim for outstanding loan balance with reduced interest rate

Facts

The plaintiff borrowed UGX 27,500,000 (defendant claimed UGX 31,422,464) from the defendant money lender, secured by hypothecation of two motor vehicles. The loan was repayable over eighteen months at a contractual interest rate of 4% per month (48% per annum) with a default penalty of 0.33% per day. When the plaintiff defaulted, the defendant issued a demand notice, impounded and sold one vehicle (Toyota Land Cruiser Registration No. UAW 911 K) by public auction, recovering UGX 20,000,000. The defendant counterclaimed for the outstanding balance of UGX 22,187,292. The plaintiff challenged the loan transaction as illegal, the interest rate as unconscionable, and the recovery process as flawed. When the suit came up for hearing, the plaintiff failed to appear despite being given directions, and the suit was dismissed under Order 17 rule 4 of the Civil Procedure Rules. The plaintiff also failed to file a reply to the counterclaim within the prescribed period.

Issues

  1. Whether the plaintiff/counter defendant is liable to pay a sum of UGX 22,187,292 to the defendant/counterclaimant.
  2. Whether the defendant/counterclaimant is entitled to any other remedy.
  3. Whether the contractual interest rate of 48% per annum is unconscionable and should be reduced by the court.

Orders

  • Suit dismissed.
  • Judgment entered for the defendant/counterclaimant against the plaintiff/counter defendant on the counterclaim.
  • Outstanding balance of UGX 22,187,292 awarded to the defendant/counterclaimant.
  • Interest on the award at the rate of 36% per annum from 3rd September 2022 until payment in full.
  • Costs of the suit and of the counterclaim awarded to the defendant/counterclaimant.

Rules and key headnotes

Civil Procedure — Default Judgment — Counterclaim — Failure to File Reply
Upon a counter defendant's failure to file a reply to a counterclaim within the prescribed fifteen days under Order 8 rule 11(1) of the Civil Procedure Rules, if the claim is for a liquidated amount, the counterclaimant is entitled to a default judgment under Order 9 rule 6 of the Civil Procedure Rules for any sum not exceeding the sum claimed together with interest and costs.
Contract Law — Interest Rates — Unconscionable Terms — Court's Discretion to Reduce
By virtue of section 26(1) of the Civil Procedure Act, the court has discretion to award interest at less than the contractual rate when that rate is manifestly excessive or unconscionable. In determining a just and reasonable rate, courts take into account the prevailing inflation and depreciation of currency, awarding a rate that reflects the economic value of money while insulating the creditor against economic vagaries.
Banking & Finance — Money Lending — Maximum Interest Rates — Statutory Caps
The Tier 4 Microfinance Institutions and Money Lenders (Prescription of Maximum Interest Rate) Notice, 2024 (Legal Notice No. 21 of 2024) placed a cap on interest rates that money lenders can charge, setting the maximum at 2.8% per month or 33.6% per annum. Section 86(2) of the Tier 4 Microfinance Institutions and Money Lenders Act, 2016 prohibits compound interest and provides that a money lending contract is illegal and unenforceable if it directly or indirectly provides for compound interest or increased interest by reason of default.
Contract Law — Damages — Interest as Compensation — No Double Recovery
An award of interest in commercial disputes serves the same purposes as an award of general damages as compensation for loss of use of money. Where interest adequately compensates the creditor, an additional award of general damages would be tantamount to overcompensation and should be rejected.

Legislation cited (8)

Cases cited (8)

  • J.K Patel v Spear Motors Ltd (Supreme Court Civil Appeal No. 4 of 1991)
  • Francis Kiyaga v Josephine Segujja and another (Court of Appeal Civil Appeal No. 37 of 2010)
  • Attorney General v Dr. Major (Rtd.) Anthony Jallon Okullo (Court of Appeal Civil Appeal No. 207 of 2016)
  • Dr. Major (Rtd.) Anthony Jallon Okullo v Attorney General (Supreme Court Civil Appeal No. 3 of 2020)
  • Alice Okiror and another v Global Capital Save and another (High Court Civil Suit No. 149 of 2010)
  • Juma v Habibu [1975] 1 EA 108
  • Harriet Arinaitwe v Africana Clays Ltd (High Court Civil Suit No. 376 of 2013)
  • Spring Freight Logistics Limited v Amoo Holding International Limited and others (High Court Civil Suit No. 556 of 2019)

Full judgment

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

Hussein Ahmed v Platinum Credit Uganda Limited (Civil Suit No. 513 of 2021) [2026] UGCommC 60 (25 February 2026)
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.