Wakilii

Priamit Enterprises Limited v Attorney General (Civil Suit 516 of 1996)

High Court · [1998] UGHCCD 1 · 1998 Preliminary Objection Upheld — Plaint Struck Out AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of debt — preliminary objection raised by defendant
Decision
Suit struck out — plaintiff should have brought action against the defaulting company

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that Uganda Transport Company (1975) Ltd is a legal persona responsible for its own debts. The government cannot be held liable for debts of a company with limited liability simply because it is the sole shareholder. Section 23 of the PERD Statute does not create an unfettered right for creditors to be paid from the divestiture account; it grants discretion to the Minister and Board to use proceeds of sale to pay debts of the sold enterprise. The plaint failed to disclose that UTC had been sold and proceeds were in the PERD account. Preliminary objection upheld; plaint struck out for suing a wrong party.

Outcome

Suit struck out — plaintiff should have brought action against the defaulting company

Facts

The plaintiff supplied tyres worth UGX 8,812,500 to Uganda Transport Company (1975) Limited, a company wholly owned by the Government of Uganda. The company defaulted on payment. The government issued notices in 1994 to sell UTC's assets and appointed joint liquidators. Instead of lodging a claim with the liquidators within the prescribed 14 days, the plaintiff sued the Attorney General in representative capacity under the Government Proceedings Act, claiming the government was liable to pay from the divestiture account under section 23 of the PERD Statute.

Issues

  1. Whether the plaintiff can successfully sue the Attorney General in representative capacity for debts owed by Uganda Transport Company (1975) Limited, a company with limited liability.
  2. Whether section 23 of the Public Enterprises Reform and Divestiture Statute creates liability on government to pay debts of a public enterprise from the divestiture account.

Orders

  • Preliminary objection upheld.
  • Plaint struck out.
  • Costs awarded to the defendant.

Rules and key headnotes

Company Law — Separate Legal Personality — Limited Liability Companies — Government-Owned Companies
A company with limited liability, even where government is the sole shareholder, is a separate legal persona responsible for its own debts. The government cannot be held liable for the debts of such a company.
Statutory Interpretation — PERD Statute — Discretionary Language — 'May Use'
The word 'may' in section 23 of the PERD Statute confers discretion on the Minister and Board of Directors as to whether to use proceeds of sale to pay creditors. It does not create an unfettered right for creditors to be paid from the divestiture account.
Statutory Interpretation — PERD Statute — Proceeds of Sale — Specific Enterprise
Section 23(a) of the PERD Statute, which allows use of proceeds of sale to pay debts of 'the public enterprise', refers specifically to proceeds from the sale of the particular enterprise that owes the debt, not to any money in the PERD account irrespective of which enterprise has been sold.
Civil Procedure — Preliminary Objections — Cause of Action — Wrong Party Sued
Where a plaintiff sues the Attorney General in representative capacity for debts owed by a separate legal entity with power to sue and be sued in its own right, the plaint discloses no cause of action against the government and will be struck out for suing a wrong party.

Legislation cited (2)

Cases cited (3)

  • Mugenyi and Company Advocates v Attorney General (Civil Appeal No. 43 of 1995)
  • Mugenyi and Company Advocates v Attorney General (Civil Suit No. 663 of 1994)
  • Salomon v Salomon & Co Ltd [1897] AC 22

Full judgment

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

Priamit Enterprises Limited v Attorney General (Civil Suit 516 of 1996) [1998] UGHCCD 1 (2 July 1998)
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.