Kagumaho v Ninsima (Civil Suit No. 531 of 2019)

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

Held that a person who lends money at 20% monthly interest carries on the business of money lending and requires a license under the Tier 4 Microfinance Institutions and Money Lenders Act 2016. It is illegal to levy interest without such a license under s.84(1)(a). The defendant had no license and therefore could not lawfully charge interest on the principal sum. Court declared plaintiff not indebted to defendant for any amount arising from the loan or interest thereon, and granted a permanent injunction restraining recovery attempts.

Outcome

Judgment entered for plaintiff with declarations that defendant's interest charges were illegal and permanent injunction restraining recovery

Facts

In 2016 the plaintiff borrowed UGX 10,000,000 from the defendant at 20% monthly interest, payable within one month. He failed to pay as agreed. On 9 December 2017 the parties signed a Debt Discharge Agreement recording the outstanding amount as UGX 42,340,200. The plaintiff made payments totalling UGX 24,960,000. In March 2018 the plaintiff was summoned to police on charges of dishonoured cheques. While in police custody, the defendant with police assistance allegedly forced the plaintiff to sign an acknowledgment that the outstanding amount was UGX 78,340,200. The plaintiff then brought suit seeking declarations that the defendant's claim was illegal because she had no money lender's license and challenging the 20% monthly interest rate.

Issues

1. Whether the defendant was entitled to charge interest of 20% per month on the principal sum of UGX 10,000,000 without a money lender's license.
2. Whether the plaintiff is indebted to the defendant in the sum of UGX 53,380,000.
3. What remedies are available to the parties.

Orders

• It was illegal and contrary to s.84(1)(a) of the Tier 4 Microfinance Institutions and Money Lenders Act 2016 for the defendant to levy interest at 20% per month against the UGX 10,000,000 that the plaintiff borrowed from her.
• It is declared that the plaintiff is neither liable nor indebted to the defendant in respect of a loan of UGX 10,000,000 or any amount arising therefrom as interest.
• A permanent injunction is issued restraining the defendant, her agents, or anyone acting on her instructions from enforcing or making any attempts to recover any money arising from the UGX 10,000,000 that the plaintiff borrowed from the defendant.
• The counterclaim is dismissed for lack of prosecution.
• Each party will bear its own costs.

Rules and key headnotes

Legislation cited (7)

• Tier 4 Microfinance Institutions and Money Lenders Act 2016 s.5
• Tier 4 Microfinance Institutions and Money Lenders Act 2016 s.6
• Tier 4 Microfinance Institutions and Money Lenders Act 2016 s.79
• Tier 4 Microfinance Institutions and Money Lenders Act 2016 s.84
• Tier 4 Microfinance Institutions and Money Lenders Act 2016 s.84(1)(a)
• Evidence Act s.91
• Contract Act 2010 s.10(1)

Cases cited (6)

• Sebuliba v Basalidde (High Court Civil Suit No. 17 of 2014)
• Makula International Ltd v His Eminence Cardinal Emmanuel Nsubuga and Another [1982] HCB 11
• James Balintuma v Dr. Handel Leslie (High Court Civil Suit No. 193 of 2013)
• Ecumenical Church Loan Fund (U) ECLOFF v John Bwiza and 2 Others (High Court Civil Suit No. 614 of 2004)
• Ibaka Group Credit Finance Institution Limited v John Katsigaire and Another (Supreme Court Civil Appeal No. 12 of 2003)
• Greenboat Entertainment Ltd v City Council of Kampala (High Court Civil Suit No. 580 of 2003)

Cases citing this judgment (2)

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.

• Muzunduki Bob v Taija Holdings Limited (Civil Appeal 86 of 2024)
• Kagumaho v Ninsiima (MISCELLANEOUS APPLICTAION NO. 13 OF 2020)

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