Allied Bank International (U) Limited v Jemba (Civil Suit 989 of 1999) [2007] UGHC 45 (14 December 2007)

# **PLAINTIFF THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA HCCS NO. 989/1999 ALLIED BANK INTERNATIONAL (U) LTD VERSUS**

#### **DEFENDANT PRINCE JACKSON JEMBA::::::::::::::::::::**

#### **BEFORE: HON, LADY JUSTICE M. S ARACH-AMOKO**

#### **JUDGEMENT**

The Plaintiff claimed shs 34,019,926 as at 30/7/99 plus interest thereon at 25% p.a compounded on daily balances with monthly rests. The claim is based on a guarantee given to the Plaintiff by the Defendant in favour of Permex International (U) Ltd of which he is a Managing Director.

The defendant admitted having executed the guarantee but contended that receivers duly appointed by the plaintiff took control of the company's stock in trade worth 138,095,000. The Receivers were authorized to sell the said stock. To-date they have not accounted for the stock in trade. Hence the plaintiff cannot invoke the guarantee where it has failed to account for the balance of the guarantee from the proceeds of the sale.

**I**

The only issues agreed on for determination by the court were:

1) Whether the debt was paid and the defendant is thereby discharged of his obligation as a guarantor.

2) Remedies.

prove its case, the plaintiff called three witnesses **5-** In a bid to namely:

1) William Odele (PW1)

2) Gasper Okumu (PW2), and

3) Muhaise Bukamalasa.(PW3).

The defendant did not call any other witnesses <sup>a</sup> part from himself. *I&*

Regarding the 1st issue, the plaintiff's Counsel submitted that the stock in trade was not sold by the Receiver Managers. Secondly, even if it was sold, which is denied no money out of the sale was given to it. The debt was not paid and the defendant is liable as a guarantor.

*•S*

Counsel for the defendant on his part submitted that his client handed over stock worth shs 138,095,000 to the Receivers appointed by the plaintiff and the High court sanctioned the sale of the said stock. The onus is therefore upon the Receivers to explain

what they did with the goods; otherwise the principal debtor fully paid the debt by surrendering valuable goods to the said Receivers appointed by the plaintiff.

I have evaluated the evidence on record and *I find* that the debt was not paid. That is, the Receivers never sold any stock and never took any money to the bank. The finding is supported by exhibit P6, the bank statement of Permex International (U) Ltd, the principal debtor. This shows that debt stood at shs 34,019,926 as at 30/7/99. Exhibit P8, yet another bank statement shows that debt stood at shs 56,183,468. This was the cumulative balance including /£? interest as at 9/7/2001.

PW1, Dr. William Odele the then Chief Credit Manager of the Bank testified that the Receivers did not sell the goods that they were appointed to sell when the defendant defaulted on the loan. They did not bring any money to the bank. The loan is still outstanding, that is why the bank decided to pursue the guarantee.

Okumu Gasper (PW2) a representative of the Receivers also stated that they did not recover any money from the defendant because they didn't sell anything.

PW3, Muhaise Bukalamasa, was one of the Receivers. He testified that when they took control of the store, it was locked and they engaged Delta Force a security guard to guard it. They were later

served with an interim order from High Court (Exh P.10) restraining them from selling the defendants stock.

**I**

The application for temporary injunction was dismissed on 30/8/99 and they told Delta Force to take to take back the guards to the store to take full control of the store and count the stock in the S'" presence of the Defendant (Exh P13 and 14). Defendant was not cooperative. When their agents went to open the store eventually, the keys could not open the door, so they had to look for a *gas* welder to remove the locks. When the locks were removed the store was empty.

The defendant's pleadings also support the findings that the receiver managers did not sell. Paragraph 5(iii) of the W. S. D, the Defendant pleaded thus:

*"(Hi) The Receivers and Manager have had control over and possession ofstock in trade located at Block 232 plot 1114 Kireka since the 4<sup>h</sup> May 1999 and from 3&<sup>h</sup> August 1999, the Receiver Managers could dispose ofthe stock and apply part of the proceeds to the repayment of the whole outstanding balance on the loan ofMs Permex International account for the balance of over shs 100,000,000 (Uganda Shillings one hundred million) to Ms Permex International (U) Ltd'*

In paragraph 5(v), the defendants pleaded that.

"Having had control and possession since 4<sup>th</sup> May 1999 and the Hon Court having dismissed M/S Permex International (U) Ltd's application for a temporary injunction the plaintiff has a right to recourse to the stock in trade and cannot in addition invoke a guarantee"

This was repeated by Defendant's Counsel during submissions.

The Law is settled. Parties are bound by their pleadings.

The defendant further attempted to depart from his pleadings when he stated at the end of his examination in chief that:

"On the debt, Permex as it is has no debt because those $10$ tyres and batteries were hot cakes. They were sold and it is Permex demanding to know the proceeds of the sale and accountability"

In cross –examination he stated that:

"The Receivers disposed off the stock after they got the $\sqrt{5}$ Court Order. I was not there when they disposed off the stock. I cant tell to whom they disposed the stock to. I cant tell when they were disposed off. I don't know which Receiver disposed off the goods. The goods were disposed off by the Receivers because they had the capacity, authority and custody"

The evidence however, is that for a two weeks period the Delta Force security guards were sent off. Then the there is evidence of

$\mathsf{S}$

the uncooperative attitude of the Defendant towards the Receivers. There is also the evidence of the mission and changed locks . PW2 stated that:

*The stock was that in a warehouse in Kireka the warehouse was in the same compound under one perimeter wall as the resident of the defendant. They were divided by an inner wall with <sup>a</sup> gate. But I would consider it as one compound because there were other properties he had to attend to on a daily basis for instance there were Zero grazing cows belonging to the Defendant in the same compound with the to warehouse. The warehouse has separate gate and the main compound has <sup>a</sup> separate gate. It was possible to access the residence from the warehouse"*

The witness further stated that on the day they took over the warehouse, he was with a team of 5 people and the Defendant was *l<^~* also present. They verified the stock then they put additional locks on the Defendant's locks. They kept their keys. The Defendant also kept his keys. When they went back to take charge of the warehouse after the application for temporary injunction had been dismissed, this is what he stated.-

*"We received no cooperation from J. Jemba. We tried to meet him but he avoided us. There was no stock taking. We were actually stopped from going near the door by members ofPrince Jemba's family. They refused to give us*

*the keys because they said Jemba was not around. Since then<sup>7</sup> I have never seen him until today"*

He stated further that:

*On the 9/9/1999 we went to the warehouse with the auctioneers with a hired vehicle to remove the stock. We asked for Prince Jemba. The wife said he was out. We tried his mobile number and someone answered and said he was not available. We decided to get someone from town who cut the locks for us. We entered the store and there was IO nothing inside"*

Finally, he stated:

*"We found only two locks. The other locks were not there. The original locks we had put there and the one of Prince Jemba and the majority of the locks were not there. The inner door had no locks. We had put locks on both doors. We cut the two locks on the outer door"*

The defendant also drew <sup>a</sup> plan of the compound (exh <sup>P</sup> 16). It showed how the warehouse was securely surrounded by a perimeter wall. He stated in cross-examination that:

*"The boundary is <sup>a</sup> wall. The house and the go down are* 2,5' *surrounded by a wall. The wall is made of bricks. This is intended to be a security wall. The wall has never been broken into. On the left is a building adjacent to the house.*

*It is the warehouse. There are two separate entrances. The warehouse has a steel door. There is an entrance for the warehouse to the main house. Yes, you can go directly from the warehouse to the main house without passing through the main house"*

**5"**

*It doesn't make sense to me that the Receivers who had the keys would come and weld offthe locks"*

The burden of proof lies on the person who wishes the Court to /o believe in its existence, unless it is provided by any law that the proof of that fact shall lie on at any particular person. (See: S. 102 of the Evidence Act).

From the foregoing evidence, which was not challenged by the Defendant*,* it is clear and I find that the plaintiff has demonstrated *l£"* that the stock in trade was neither sold nor was any money given to the plaintiff. This issue is therefore answered in the negative.

The issue of remedies is answered in the affirmative. The plaintiff is entitled to the remedies sought. In the result, judgment is hereby entered in favour of the plaintiff in the following terms.

1) shs 34,019,926

2) Interest thereon from the date *of* filing till payment in full.

**S"**

3) Costs.

**/**

M. S Arach-Amoko

## **JUDGE**

Judgment delivered in draft in the presence of:

- David Matovu for Defendant. 1) - Mr. Byamugisha Albert for Plaintiff. 2) - J. Wakulira Court Clerk. 3)

M. S Arach-Amoko

### **JUDGE**

**14/12/2007**