Wakilii

Mukesh v Bank of Baroda (Uganda) Limited (Miscellaneous Application 2013 of 2023)

High Court · [2023] UGCOMMC 208 · 2023 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Miscellaneous application arising from civil suit seeking release of certificate of title and mortgage
Decision
Application dismissed; applicant remains liable for written-off debt and mortgage security retained by the bank

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Writing off a debt by a financial institution is an internal accounting procedure for taxation and book-keeping purposes. It does not discharge the borrower from liability to repay or extinguish the creditor's right to recover. The bank retains the right to pursue recovery and hold security until the debt is fully settled. Application dismissed.

Outcome

Application dismissed; applicant remains liable for written-off debt and mortgage security retained by the bank

Facts

The applicant mortgaged land comprised in Kibuga Block 29 Plot 205 situate at Mulago as security for a USD 200,000 overdraft facility granted by the respondent bank to Shumuk Tours & Travel Limited on 30 March 2016. The applicant was managing director and surety. The borrower defaulted. A sister company under the applicant's management also defaulted on separate facilities totalling UGX 6,622,093,474 and USD 57,712. On 31 December 2019, the respondent wrote off the overdraft balance of USD 153,456 to mitigate risk of further loss and informed the applicant through meetings. The applicant brought this application seeking release of the certificate of title and mortgage, asserting that the write-off cleared the debt and discharged the borrower from liability.

Issues

  1. Whether the applicant is entitled to the release of the certificate of title and mortgage after the respondent bank wrote off the debt

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Banking & Finance — Loan Write-Off — Legal Effect on Borrower's Liability
The writing off of a debt by a financial institution does not discharge a borrower from the liability to repay the debt. Write-off is an internal accounting procedure undertaken for taxation and book-keeping purposes to clean the balance sheet, and does not affect the creditor's right to proceed against the borrower to realise the dues.
Banking & Finance — Security — Release of Mortgage — Conditions
Where a loan secured by mortgage has been written off by the lending institution but not fully repaid, the security cannot be released unless and until the borrower fully clears the outstanding balance. The borrower and surety remain liable notwithstanding the write-off.
Banking & Finance — Loan Write-Off — Purpose and Effect
A bad debt is written off by a bank for purposes of taxation and book-keeping, typically where there are no or only slim chances of recovering the debt at the time of write-off. If the debtor's financial status subsequently improves, nothing stops the creditor from pursuing and recovering the debt.

Legislation cited (3)

Cases cited (4)

Full judgment

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

Mukesh v Bank of Baroda (Uganda) Limited (Miscellaneous Application 2013 of 2023) [2023] UGCommC 208 (28 September 2023)
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.