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Prime Finance Company Ltd v Ssali Babu Salim (Civil Suit 298 of 2023)

High Court · [2025] UGCOMMC 54 · 2025 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of loan and interest
Decision
Judgment entered for the plaintiff with modified interest rate; defendant ordered to pay principal and interest less amounts already paid

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that the defendant was indebted to the plaintiff under a loan agreement for UGX 10,000,000 advanced on 6 December 2019. The court found the contractual interest rate of 10% per month (120% per annum) to be harsh, unconscionable and excessive under section 26(1) of the Civil Procedure Act. The court substituted the contractual rate with 30% per annum from the date of the loan until payment in full, less amounts already paid by the defendant.

Outcome

Judgment entered for the plaintiff with modified interest rate; defendant ordered to pay principal and interest less amounts already paid

Facts

On 6 December 2019, the plaintiff money-lending company and the defendant executed a loan agreement whereby the plaintiff disbursed UGX 10,000,000 to the defendant at a monthly interest rate of 10%, repayable within five months by 6 May 2020. The defendant made four partial payments totalling UGX 14,625,000 but failed to repay the full loan amount despite several demand notices sent by the plaintiff in July 2020, November 2020, and January 2022. The plaintiff instituted suit on 13 April 2023 seeking recovery of the loan, interest, and costs. The defendant filed a defence denying indebtedness but failed to appear at multiple hearings. The court granted the plaintiff's application to proceed ex parte after confirming proper service including substituted service through newspaper publication.

Issues

  1. Whether the Defendant is indebted to the Plaintiff?
  2. What remedies are available to the parties?

Orders

  • The Defendant is ordered to pay the Plaintiff the money received as a loan under the loan agreement dated 6th December 2019 with interest at the rate of 30% per annum until payment in full.
  • The payment shall be less UGX 14,625,000 being the money paid by the Defendant to the Plaintiff.
  • Costs of the suit are awarded to the Plaintiff.

Rules and key headnotes

Contract Law — Breach of Contract — Loan Agreements — Failure to Repay
A breach of contract occurs when a party to a contract fails to fulfil a term in the contract, neglects or refuses to perform its bargain. Where a borrower fails to repay a loan according to the agreed terms, the borrower is liable for breach of contract.
Banking & Finance — Interest Rates — Unconscionable Interest — Court's Power to Reduce
Under section 26(1) of the Civil Procedure Act, where an agreement for the payment of interest is sought to be enforced and the court is of the opinion that the rate agreed to be paid is harsh and unconscionable and ought not to be enforced by legal process, the court may give judgment for the payment of interest at such rate as the court may consider just.
Banking & Finance — Money Lending — Excessive Interest Rates — Usury
A monthly interest rate of 10% (equivalent to 120% per annum) on a loan is unjustified, harsh, unconscionable and prima facie usurious where the money lender does not justify the excessive rate or highlight risks that would possibly justify such a rate.
Contract Law — Unconscionability — Definition and Application
Unconscionability applies to a contract or contractual provision that is so unfair or oppressive to one party that no reasonable or informed person would agree to it. An unconscionable contract leaves one party with no real meaningful choice and is unreasonably advantageous to the other party, usually due to the other party's superior bargaining power. The doctrine protects the weaker party from abuse of power by the stronger party.
Civil Procedure — Ex Parte Proceedings — Conditions for Grant
Under Order 9 rule 20(1)(a) of the Civil Procedure Rules, where the court is satisfied that a defendant has been properly served with hearing notices including through substituted service but repeatedly fails to appear, the court may grant the plaintiff's prayer for the suit to proceed ex parte.

Legislation cited (9)

Cases cited (13)

  • Cargo World Logistics Limited v Royal Group Ltd (High Court Civil Suit No. 157 of 2013)
  • William Kasozi v DFCU Bank Ltd (High Court Civil Suit No. 1326 of 2000)
  • Omega Bank Plc Vs O.B.C. Limited (2005) 8 NWLR (pt.928)
  • Jiwali v Jiwali [1968] EA 547
  • Fina Bank Ltd v Spares and Industries Ltd [2000] 1 EA 52
  • Barclays Bank of Uganda Ltd v M. Bakojja (Civil Suit No. 53 of 2011)
  • Bank of Credit & Commerce International S.A (In Liquidation) Vs Munawar Ali & Others [2001] 1 All ER 96
  • R.L Jain v Komugisha and 2 Others (High Court Civil Suit No. 98 of 2018)
  • Rajnish Jain (Administrator of the Estate of the late R.L Jain) v Lokii Peter Abraham (Civil Suit No. 277 of 2013)
  • Jas Ventures International Limited v Atuhaire Juliet (Civil Suit No. 676 of 2021)
  • Juma v Habibu [1975] 1 EA 108
  • Uganda Development Bank v Muganga Construction Co. Ltd [1981] HCB 35
  • MTN Two One Two Staff Cooperative and Credit Society Limited v Samuel Majwega Musoke (Civil Suit No. 82 of 2021)

Full judgment

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

Prime Finance Company Ltd v Ssali Babu Salim (Civil Suit 298 of 2023) [2025] UGCommC 54 (8 April 2025)
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.