Wakilii

Megha Industries Uganda Limited v Shah (Civil Suit 959 of 2023)

High Court · [2024] UGCOMMC 372 · 2024 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of lease agreement and recovery of debt under deed of suretyship; judgment in default after defendant failed to file defence following substituted service
Decision
Judgment entered for plaintiff against defendant who remains liable as surety and co-principal debtor for the dissolved company's debts

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the defendant, as surety and co-principal debtor with the dissolved tenant company Nakumatt Uganda Limited, is liable for unpaid rent, service charges, and utilities totalling USD 358,431.25 and UGX 24,312,350.90 under a validly executed deed of suretyship. The defendant cannot approbate and reprobate by taking benefit under the lease agreement while failing to meet obligations thereunder. Judgment entered for plaintiff with general damages, interest, and costs.

Outcome

Judgment entered for plaintiff against defendant who remains liable as surety and co-principal debtor for the dissolved company's debts

Facts

In 2011, plaintiff leased space in Victoria Mall Entebbe to Nakumatt Uganda Limited. On 29 May 2017, new tenancy and addendum agreements were executed when Knight Frank Uganda became property manager. The defendant, a director and shareholder of Nakumatt Uganda Limited, executed a deed of suretyship agreeing to be surety and co-principal debtor for all debts arising from the lease. The defendant was informed on 14 June 2017 of outstanding debts totalling USD 225,722.61 for rent, USD 28,284 for service charges, and UGX 34,125,224.33 for electricity. Nakumatt Uganda Limited was unable to pay and was subsequently dissolved due to insolvency. The total amount claimed including interest and expenses was USD 358,431.25 and UGX 24,312,350.90. The plaintiff was unable to locate the defendant initially and obtained orders for substituted service. The defendant did not file defence and interlocutory judgment was entered on 4 September 2024.

Issues

  1. Whether the Defendant is indebted to the Plaintiff under a deed of suretyship and as co-principal debtor?
  2. Whether the parties are entitled to any remedies?

Orders

  • It is hereby declared that the Defendant is in breach of the Lease Agreement and its Addendum, all dated 29th May, 2017, that was executed between the Plaintiff and Nakumatt Uganda Limited.
  • An order is issued that the Defendant cannot, at equity, approbate and reprobate by taking benefit under the Lease Agreement and its Addendum, all dated 29th May, 2017 and at the same time omit to meet his obligations thereunder.
  • The Defendant shall pay the Plaintiff a sum of USD 358,431.25 (United States Dollars Three Hundred Fifty-Eight Thousand Four Hundred Thirty-One and Twenty-Five Cents Only) and UGX 24,312,350.90 (Uganda Shillings Twenty-Four Million Three Hundred Twelve Thousand Three Hundred Fifty and Ninety Cents Only).
  • The Plaintiff is awarded general damages of UGX 85,000,000 (Uganda Shillings Eighty-Five Million Only).
  • Interest is awarded on the sums in (3) above at the rate of 20% per annum from the date of filing the suit until payment in full.
  • Interest is awarded on the sums in (4) above at the rate of 6% per annum from the date of Judgment until payment in full.
  • Costs of the suit are awarded to the Plaintiff.

Rules and key headnotes

Contract Law — Suretyship — Deed of Suretyship — Liability as Co-Principal Debtor
Where a defendant executes a valid deed of suretyship agreeing to be surety and co-principal debtor with the principal debtor for all debts arising from a lease agreement, the defendant becomes personally liable co-extensively with the principal debtor, and such liability begins simultaneously with that of the principal debtor.
Contract Law — Contracts — Binding Effect — Signed Documents
It is settled law that once a contract is valid, it automatically creates reciprocal rights and obligations between the parties thereto, and when a document containing contractual terms is signed, then in the absence of fraud or misrepresentation the party signing it is bound by its terms.
Contract Law — Breach of Contract — Definition and Elements
Breach of contract occurs when one party to a contract fails to carry out a term of the said contract, that is, when a party neglects, refuses or fails to perform any part of its bargain or any term of the contract, written or oral, without a legitimate legal excuse.
Contract Law — Suretyship — Surety Guarantee — Nature and Proof
A surety guarantee is an undertaking to be answerable for another's debt or default and is only triggered by proof of actual default and is not independent of the underlying contract. It is limited to the amount of loss suffered from the default within the maximum amount stipulated in the guarantee.
Contract Law — Equitable Doctrines — Approbation and Reprobation
The doctrine of approbation and reprobation reflects the principle that a party cannot elect to approve of or benefit from an action in one instance and then disapprove of it in another. A party cannot take benefit under a lease agreement and addendum and at the same time omit to meet his obligations thereunder.
Contract Law — Unjust Enrichment — Elements
The principle of unjust enrichment requires first, that the defendant has been enriched by the receipt of a benefit; secondly, that this enrichment is at the expense of the plaintiff; and thirdly, that the retention of the enrichment is unjust.
Civil Procedure — Costs — Award of Interest on Decretal Sum and General Damages
In determining a just and reasonable rate of interest, courts take into account the ever-rising inflation and drastic depreciation of the currency. A plaintiff ought to be entitled to such rate of interest as would not neglect the prevailing economic value of money, but at the same time one which would insulate him or her against any economic vagaries and the inflation and depreciation of the currency in the event that the money awarded is not promptly paid when it falls due.

Legislation cited (2)

Cases cited (10)

  • ZTE Corporation v Uganda Telecom (High Court Civil Suit No. 169 of 2013)
  • Barclays Bank of Uganda Limited v Jing Hong Guo Dong (High Court Civil Suit No. 35 of 2009)
  • Kabagambe Mathias v Kahire Nobert (Civil Suit No. 389 of 2016)
  • William Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Ronald Kasibante v Shell Uganda Limited (High Court Civil Suit No. 542 of 2006)
  • Uganda Electricity Transmission Company Limited v Citi Bank Uganda Limited and Others (High Court Miscellaneous Application No. 1397 of 2022)
  • Roko Construction Co. Limited v Attorney General (High Court Civil Suit No. 517 of 2008)
  • Moses v Macferlan [1760] 2 Burr. 1005
  • Mohanlal Kakubhai Radia v Warid Telecom Uganda Ltd (High Court Civil Suit No. 224 of 2011)
  • Uganda Development Bank v Muganga Construction Co. Ltd [1981] HCB 35

Full judgment

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

Megha Industries Uganda Limited v Shah (Civil Suit 959 of 2023) [2024] UGCommC 372 (7 November 2024)
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.