[2025] UGCA 206

#### THE IN THE COURT OF BLIC OF UGANDA OF UGANDA AT KAMPALA

(Coram: Asa Mugengi, Musa 'sekaona, & Stella Alibateese, JJA)

#### CIVIL APP NO: 37 OF 2018

⁵ (Arlslng fro .rrccs 630 oF 2014)

# RAJMUMAR : : : : : : : : : : : : : r : : : : : : : : : : : : : : APPELLANT/ CROSS PONDENT

VERSUS

# PATEL SURESHBHAI C DUBHAI ::::::::::::::: RESPONDENT/ CR APPELLANT

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### JUDGMENT OF ELLA ALIBATEESE JA

## Introduction

- This is a first appeal arising rom the judgment of the High Court 20 of Uganda (Commercial Division) at Kampala delivered by Anna B. Mugenyi J. on the 6th Decernber 2Ol7 in Civil Suit No. 63O of 2Ol4 which inter alia allowed the spondent/cross appellant's suit for recovery of UGX 85,OO0,000 ising from breach of contract, award of general damages and costs The respondent/ cross appellant also 25 filed a cross appeal seeking ^a award of interest on the contractual - sum of UGX 85,0000,000 ini ially awarded by the High Court.

# gaskground

appeal and cross appeal is that the and respondent/ cross appellant r the sale of a bakery known as Star ³⁰ The brief background of the appellant/cross respondent entered into an agreement fc

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Oven Loaf Bakery and reduced the said agreement into writing. The parties agreed to a consideration of UGX 85,000,000 (Eighty-Five Million Uganda shillings only), and the appellant/cross respondent undertook to pay the said consideration in instalments as per the terms of their agreement.

As part of the payment terms, the appellant/cross respondent undertook to supply the respondent/cross appellant with assorted hardware materials worth $UGX$ 15,000,000/= (Uganda Shillings Fifteen Million only) and also undertook to pay UGX 60,000,000 10 (Uganda Shillings Sixty Million only) starting 1^st April 2014. Lastly, the appellant/ cross respondent also undertook to pay the balance of UGX 10,000,000 (Uganda Shillings Ten Million only) after a period of one year from the date of the said agreement.

On $22^nd$ of March 2014, the sale agreement was executed and the respondent/cross appellant handed over the bakery equipment listed on a list, to the appellant/cross respondent, which was accepted by the appellant/cross respondent and delivered to his premises in Kampala. To guarantee the payment of the 20 consideration, the appellant/cross respondent issued to the respondent/cross appellant a security cheque to the tune of UGX 75,000,000 (Uganda Shillings Seventy-Five Million only). The appellant/cross respondent however did not furnish the consideration for the said equipment as had been agreed by the 25 parties to the sale agreement.

The respondent/cross appellant filed Civil Suit No. 630 of 2014 in the High Court for recovery of the purchase price of UGX 85,000,000 with interest, general damages and costs. The 30 appellant/cross respondent in his defence also filed a counterclaim.


The court heard the ^s t and found in favour of the Court found that the respondent was sum of UGX 85,OOO,O00 and also ral damages of UGX 15,O0O,OOO and 5 costs of the suit but decline to award interest on the contractual respondent/cross appellant. entitled to the contractual awarded the respondent gen sum stating that it had not t counterclaim filed by the ^a dismissed with costs hence court. peen agreed upon by the parties. The lppellant/ cross respondent was also this appeai and cross appeal to this

### Grounds of Appeal

The appellant raised four nds of appeal as follows:

- l. The Honourable Justi erred in law and fact when she held - that the respondent i UGX 85,000,000 (Ugar entitled to the contractual sums of tda Shillings Eighty-Five Million) only. - 2. Th,e Honourable Justic to properly evaluate thr wrong conclusion. [ ....d in law and fact when she failed I evidence on record thus arriving at ^a - 3. The Honourable Justi awarded the responder 15,O0O,OO00 (Uganda ce erred in law and fact when she [t general damages to the tune of UGX Shillings Fifteen Million only) which excesslve. amount was harsh an

## Grounds of the cross appeal

ndent/cross appellant contends that Judge should be varied to the extent declined to award interest to the In the cross appeal, the re the decision of the learned that the learned trial Ju S rl m on the following grounds 30 respondent on the decretal s


e erred in law and fact when she t's counter claim with costs. 4. The Honourable Just 1E dismissed the appel

- 1. The learned trial Judge erred in law and in fact when she declined to award interest to the respondent on the contractual sum of UGX 85,000,000 (Uganda Shillings Eighty-Five Million only) on the basis that the interest had not been agreed upon by the parties. - 2. The learned trial Judge erred in law and in fact when she failed to exercise her discretion judiciously and in favour of awarding interest to the respondent on the decretal sum as sought. - $10$

$\mathsf{S}$

#### **Representation**

On the date of hearing the appeal, the appellant/cross respondent and his counsel were not in court. The respondent/cross appellant was in court and was represented by Mr. Paul Kuteesa and Mr.

David Kisembo. 15

#### ANALYIS AND DETERMINATION

- At the hearing of the appeal, Counsel for the respondent/cross respondent applied for dismissal of the appeal owing to the failure 20 by the appellant to appear for the hearing under Rule $100(1)$ of the Judicature (Court of Appeals Rules) Directions, S. I 13-10 which was granted. - 25 In its decision, the court noted that on several occasions, the appellant had not responded to any directives and schedules from court for the parties to file and serve their conferencing notes nor appeared despite evidence of service. On the day of hearing the appeal, the appellant or his Counsel did not appear despite - evidence of service. Further, the appellant did not file submissions. 30 The court dismissed the appeal under Rule 100(1) of the


Judicature (Court of Appe 2OOO which states that; Rulesf Directions, S. I 13-1O of

"If on ang dag ftxed fo the appellant does not the hearing of an appeal in tle court appea4 the appeal mag be dismissed and an cross-a al unless the couri sees fit to adjoum the heaing."

The court then proceeded hear the cross appeal under Rule lOO(11 of the Judicature ( ourt of Appeals Rulesf Directions, s. I 13-10.

The court adopted the r spondent/cross appellant's written submissions and shall proce d to determine the cross appeal.

# 15 Cross A llant Res onde t's Submissions

Ground 1: The learned trial she declined to award i1 contractual sum of UGX 8: Judge erred in law and in fact when ,terest to the reepondent on the i,OOO,OOO (Uganda Shillings Eighty-

Five Million only) on the b. agreed upon by the parties. asis that the intereet had not been 20

Ground 2: The learned trial she failed to exercise her t of awarding interest to the sought. Judge erred in law and in fact when liscretioo judiciouely and in favour respondent on the decretal aum aa

[nt/respondent argued both grounds at the cross appellant was entitled to decretal sum regardless of whether it e parties or not as he was kept out of long time. He further argued, that Counsel for the cross appell together. Counsel averred th an award of interest on the ^t had been agreed upon by th] the use of his money for I 30


although the award of interebt is discretionary, the circumstances of this case justified an award of interest on the decretal sum. This rising out of a commercial transaction Lilure to pay the contractual sum kept ^ruse of his money for a long time. was because the claim was a1 and the cross respond..r,'" ft the cross appellant out of th(

Counsel cited Section 26(21 that gives the court powers tl Counsel further submitted thl ¹⁰ upon by both parties, the col of the Civil Procedure Act, Cap 71 o award interest on the decretal sum. at as much as interest was not agreed urt should award interest that is just and reasonable to the.ro"" Lpp.ll"nt. Counsel relied on the case of Charles Lwanga v Cent (19911 rEA 17s CACA 30/1 Rural Development Bank Ltd to assert that the court has powers to award interest on the dec tal sum. Counsel also cited Harbutt's

- 15 Plasticine Ltd v Wyne & Pump Co. td (19701 I ChB 447 where Lord Denning fou d that an award of interest is discretionary. - Counsel further submitted hat the respondent/ cross appellant 20 sought orders that the appellirnt/ cross respondent pays interest on the sum of UGX 85,0O0,OO0 at a rate of 25%o p.a from the date of the sale agreement 22 I ³/2A14, because the appellant failed to make payment of the purch se price for the items that were listed since 22"d March 2014 to d te and that the cross appellant was 25 kept out of use of the purch se price by the cross respondent and suffered extra costs and los s to recover the same

## Determination of the Crosq Appeal

This is a first appeal and it id important that we highlight the duty of the court as the l"t appell{te court. 30


Rule 3O(1f(a) of the Ju Directions SI 13-1O gives cature (Court of Appeal Rulesf owers to the Court of Appeal while exercising its appellate jurr ction on any appeal from the decision of the High Court acting rn to re-appraise the evidence of fact in arriving at its own e exercise of its original jurisdiction, the trial court, and draw inferences onclusion.

In Fr. Itlarsensio Begumisa 3 Ors v Eric Tibebaga SCCA No.17 of 2OO2, Court held that the duty of a hrst appellate court is to re-10 evaluate evidence as a wh le and come to its own conclusion bearing in mind that it has either seen nor heard the witnesses and should make due allow ce in that regard.

I have had a thorough revre of the record of appeal, the appeal '15 and cross appeal and the sub issions made by the learned counsel and will consider them in de iding this matter.

### Ground 1 and 2

ire basis that the interest had not been lna that the learned trial Judge erred he failed to exercise her discretion lvarding interest to the respondent on ppeal shall be determined jointly. The )i )E, Ground l and2 ofthe cross grounds are that the learned al Judge erred in law and fact when she declined to award interes to the Respondent on the contractual sum of UGX 85,OOO,OOO on tl agreed upon by the parties ^a in law and in fact when ^s judiciously and in favor of ar the decretal sum as sought.

frt/cross appellant submitted that on the decretal sum is discretionary, ^ejustifies an award of interest to the this was a commercial transaction, Counsel for the responder although an award of interest the circumstances of this cal respondent mainly because,

 and the cross respondent's failure to pay the sum for a long time kept the respondent/cross appellant out of the use of his money for a long time. Counsel cited **Section 26(2) of the Civil Procedure Act, Cap 71** that gives the court powers to award interest on the decretal sum.

$\mathsf{S}$

$10$

The learned trial Judge noted that though the respondent/cross appellant had prayed that the appellant pays interest on the sum of UGX 85,000,000 at a rate of 25% p.a. from 22/March/2014 when the agreement of sale was entered into, up to payment in full, the same was not agreed upon by the parties and she accordingly declined to award the same.

It appears to me, that the learned trial Judge was referring to interest payable as of right. Interest payable as of right is usually provided, where a contract contains a provision for payment of interest in case of delayed or nonpayment. Where such interest 15 agreed upon is harsh or unconscionable, the court is allowed to vary the interest rate as it may consider just under **Section 26(1)** $\frac{1}{2}$ of the Civil Procedure Act, Cap 71. It should be noted that under this section, court would only be allowed to vary the interest rate where the parties have an agreement for payment of interest but 20 not to impose payment of interest where there is no agreement for payment of interest.

However, in the present circumstances, the cross appellant /respondent had sought an order that the appellant/cross 25 respondent pays interest on the sum owing of UGX 85m at a rate of 25% p.a from $22/3/2014$ when the agreement of sale was entered and the defendant received all the equipment but did not pay for the same.

It is clear that the agreement between the parties had not provided for the payment of interest. Therefore, interest on the unpaid sum 30

was not as of right but could only be awarded at the discretion of the learned trial judge.

In Bank of Baroda V Wilson Buyonjo Kamugunda, SCCA No. 10 **of 2004**, Tsekooko JSC held that;

- "*Where there is no agreement between the parties as to the interest* $\mathsf{S}$ *rate payable, the award of interest by court is discretionary and that* the discretion must be exercised judicially. Interest can be award as follows: - *Interest on principal sum prior to the institution of a suit.* $(i)$ - $10$

- *On the principal sum at a given rate from the date of filing* $(ii)$ a suit. - Interest on aggregate sum reflected in the decree till (iii) payment or earlier.

*It is evident that in awarding interest and at what rate the court* is guided by the circumstances of the case."

### Section 26(2) of the Civil Procedure Act, Cap 71 provides that,

"Where and in so far as a decree is for the payment of money, the court may in the decree order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the court considers *fit.* $"$ (emphasis added)

Further, in Attorney General V Sam Semanda, SCCA No. 8 of 2006, Tsekooko JSC noted that under Section 26 of the Civil Procedure Act, unless interest is provided by agreement and is not 30

$\mathcal{A}$

harsh and unconscionable, interest. ourts exercise discretion in awarding

I am therefore of the view discretionary powers to awar at the learned trial judge had the 5 circumstances, and declini interest on the unpaid amount in the to award the same on the basis that ed by the parties was an error which the interest had not been

resulted into an injustice to e respondent/ cross appellant.

The basis for a discretionatry award of interest was laid out in Harbutt's Plasticine Ltd V fafne tank & Pump Co. Ltd (1970] 10 QB 447 where Lord Dennidg found that an award of interest is

discretionary and stated thu{, \*[t seems to me that the basis for an auard of interest is that the defendant has kept the nlaintiff out of his moneg and the defendant has had the use of it himself. lpo he ought to compensate the plaintiff

1 5 accord ingly . "

is a very long time and has e believe this would be a ju discretion to award interest. t case for the court to exercise its In the instant case, the app(illant has kept the respondent /cross appellant out of the use of hib money since 22"d March 20 14 which posed the respondent to suffer loss. I

2U

I note that the respondent/ ross appellant has sought to be paid interest from the date of exe ting the contract. I believe this claim is not supported since the ement between the parties had no provision for the payment of interest and neither is the interest as

25 of right in the circumstances.

#### Limited v The Permanent In Highway Furniture Mart

it was held that interest antecedent vhere under an agreement, there is a ere there is no stipulation, interest is Secretary, (2()()61 2 FlA94. ^t to the suit is only claimable i stipulation for the rate or wh


allowed by mercantile usage there is a statutory right to i interest can be implied from hich must be pleaded or where terest or where an agreement to pay he course of dealing between parties.

I am inclined to award inter st to the respondent/cross appellant 5 from the date of filing the suit till payment to compensate for inflation and the monetary alue the respondent/ cross appellant would have derived from the ame funds if available to him in 2014 as per the agreement betwee the parties. Through his actions, the 10 is that uthere a person is entitled to a liquidated amount or to specific appellant has kept the respo of his money since 22nd respondent to loss which orl Biscuit Manufacturing Co. I 2l l1970l EA 469 where it wt ndent/cross appellant out of the use March 2014 and has exposed the rght to be compensated. See Mukisa ,td v trIest End Distributors Ltd (NO. as held that the pinciple that emerges

15 goods and has been depnue another person, he should be the suit. fl of them through the wrongful oct of fi\*oraed interest from the date of filing

This is further explained in Kanabolic Group of Companies (Uf Ltd v Sugar Corporation of Uganda Ltd, SCCA No, 15 of 1994 where Court held;

"As ue understand the p) uhich such interest is pa]' ruisions of Section 26(2), the rate at able is of three tApes, namely: -

- o Before the institt ltion of a suit interest mag be payable on the pincipal !um. This normallg aises in cases of claims for special damages such as uLhere the claim is for expenses act{ally inanrred before the suit is filed or /or disposses siorl of an article before the filing of the suil .. . - filing suit till judgement This ds ^ta debt is due at the time of filing the From the date ol applicable wherl szif ... (iil


,)A

- (iii) From the date of judgment or decree till full payment or *earlier.* This type of applicant is awarded on general damages arising, for insurance, from personal injuries $\ldots"$ - I find that the respondent/cross appellant is entitled to an award $\mathsf{S}$ of interest on the principal sum of UGX 85,000,000 and I award interest of 20% p.a. from the date of filing the suit till payment in full.

For reasons specified above, I would make the following orders;

- 1. The cross appeal substantially succeeds. 10 - 2. The learned trial Judge's order on interest is set aside and is substituted with an order that interest of 20% on the principal sum of UGX $85,000,000$ is payable by the appellant/cross respondent from the date of filing the suit till payment in full. - 3. The appellant/cross respondent shall pay the costs of the appeal 15 and the cross appeal.

Dated at Kampala this Zuday of June 2025

Stella Alibateese

JUSTICE OF APPEAL

## THE LIC OF UGANDA

#### IN TH RT OF F GANDA AT ALA C(] I

(Corom: Asa Mugengi, Musa Ssekaa a, & Stella Alibateese, JJA)

# CIVI AP NO. 37 0F 18

(Arising Jrom s 630 OF 2014)

RAJIV KUMAR ::: APPELLANT/ CROSS RESPONDENT

# !TERSUS

# PATEL SURESHBHAI CHANDUBHA ,I :::: RESPONDENT/ CROSS APPELLANT

## JUDGMENT OF DR. MUGENYI JA

I have had the advantage of readi g in draft the judgement prepared by my learned sister, Justice Stella Aliba ese, JA. I agree with the reasoning and orders proposed.

Dated at Kampala this 2;a)T. day . J'^^-,-.t) ²⁰²⁵

Dr. Asa M nyi JUSTICE OF APPEAL

| 4 | | | |----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------| | 5 | | THE REPUBLIC OF UGANDA | | | | IN THE COURT OF APPEAL OF UGANDA AT KAMPALA | | | CIVIL APPEAL NO: 37 OF 2018 | | | | | RAJIV KUMAR:::::::::::::::::::::::::::::::::::: | | VERSUS | | | | 10 | | PATEL SURESHBHAI CHANDUBHA:::::::::::::::::::::::::::::::::::: | | | | | | JUDGEMENT OF JUSTICE MUSA SSEKAANA, JA | | | | | I have heard the benefit of reading the leading Judgment of Her Lordship Hon. Lady<br>Justice Stella Alibateese and I concur with the same. | | | 15 | Dated at Kampala this | 2025 | | | | |

**MUSA SSEKAANA** JUSTICE OF APPEAL

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