Non-Performing Assets Recovery Trust v Kapeeka Coffee Works Limited and 2 Others (Tribunal Case No. 40 of 1996) [2000] UGPPDPAAT 1 (28 March 2000)

## THE REPUBLIC OF UGANDA IN THE NON PERFORMING ASSETS RECOVERY TRIBUNAL OF UGANDA AT **KAMPALA** (CORAM: JUSTICE A. O. OUMA CHAIRMAN, MR. G. S. LULE MEMBER, MR. C. S. O'BOKK MEMBER) TRIBUNAL CASE NO. 40 OF 1996 NON-PERFORMING ASSETS <table> RECOVERY TRUST PLAINTIFF **VERSUS** 1. KAPEEKA COFFEE WORKS LIMITED .................................... 2. ABU KASOZI KADJINGO .................................... **BUMALI KADJINGO ....................................** 3.

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## RULING OF THE TRIBUNAL

When on 15<sup>th</sup> February, 2000 this Tribunal Case No. 40 of 1996, was called for hearing, learned counsel Mr. Lumweno, for the 1<sup>st</sup> and 2<sup>nd</sup> Defendants raised a preliminary objection, to the case, on a point of law. The suit claims a big sum of money allegedly advanced to the $1^{st}$ Defendant and allegedly guaranteed by the $2^{nd}$ Defendant. The 1<sup>st</sup> Defendant is a limited company. It is different from Kapeeka Coffee Hullery to which the loan was advanced. Besides, by the Deed of Assignment made on 7<sup>th</sup> December, 1995, Kapeeka Coffee Hullery (No. 5) is the debtor of the loan balance of shs. $839,030,585$ (Eight hundred thirty nine million, thirty thousand five hundred eighty five only). M/S Kapeeka Coffee Works Limited were not the debtor. Moreover, there is no proof that the money was disbursed to Kapeeka Coffee Works Limited. What is on record is that the money was passed on to Kapeeka Coffee Hullers. The right person to be sued is Kapeeka Coffee Hullers, as is shown on the Deed of Assignment and the ledger cards.

THIS IS EXHIBIT / ANNEXTURE of the Affidauit of Ission aths

l,carned r:ounscl for the 3'd Defenclant Mr. Ngaruye also pointed out that by I):1.?igrarph t I of thc 3'd Arnenclecl Written Statement of Defence, the intention was to show that a prelintinar5r objection on a point of law would be raised. 1'he point is that the Arnended Plaint discloses no reasonable cause of action zrgainst [hs Jrtr Defendant or, at all and that the Amended Plaint is frivolous apcl bacl in law, ancl hence, it should be struck out with costs, adding that NIrAI?T cannot sue ar1 allegecl debtor, unless the liabilities of Uganda Cclmmercial tlank have bcen assignecl to it. Counsel relied on Section 4 of Sratutc No. I L of lc)94.

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lrurr.thcr counscl submit.tcd that founclation o[ a casc against the 3'd Defendant is ucccl of Assiggrlcnt to show that the Jrrr [)sfsndant is liable to be sued by the NtrAItT. The Amenclccl Plaint does not show cause of action or right against the Jtrt Psfsndant.

l,carnecl counsel cite<l ancl reliecl on the case of Auto Garage and others Vs Motokor (No. 3) at page 514, holding 3 which reads,

> "Held (iii) A Plaint may clisclose a cause of action without containing all the facts constituting the cause of action providecl that violation by the Defendant of a right of the Plaintiff is shown."

Counscl finally submittccl that Kapeeka Coffee Hullers' appropriation is not clisclosecl in the Amencled Plaint. That being the position there is no cause of ,'rction disclosed particularly against thc 3"r Defendant.

I. reply counsel for thc plaintiff pointecl out that the preliminary objection is prc-mature' in view of the fact that the Plaintiff is to adduce oral and

documentary evidence to show that the Defendants are jointly and severally owing the Plaintiff the amount of money stated in the Amended Plaint.

Learned counsel told the Tribunal that the 1<sup>st</sup> Defendant owned and operated the account referred to as Kapeeka Coffee Hullery. The $2^{nd}$ and $3^{rd}$ Defendants were at the material time Directors of the $1^{st}$ Defendant. The $1^{st}$ Defendant applied for facilities through the Directors who took benefits of the facilities. Kapeeka Coffee Hullery is a project name, owned by the $1^{st}$ Defendant and that Rapeeka Coffee Works Limited operated the account. Counsel referred to Section 3(a) of Statute No. 11 of 1994, which gives a wide interpretation of a non-performing asset as a loan or an advance.

Counsel for the Plaintiff proceeded to tell the Tribunal that the Plaintiff will adduce evidence at the hearing of the case to show that Kapeeka Coffee Hullery is a project name, which project is owned by the 1<sup>st</sup> Defendant which operates the project account (See Annextures "B", "C" and particularly "D" to the Amended Plaint.

In reply to the reply by Mr. Rosco, counsel for the Plaintiff Mr. Lumweno counsel for the 1st and 2<sup>nd</sup> Defendants associated himself with the submissions of Mr. Ngaruye, counsel for the 3<sup>rd</sup> Defendant, emphasising that the Deed of Assignment Annexture "A" to the Amended Plaint, which gives power to sue is bed rock.

In reply to the reply by Mr. Rosco counsel for the Plaintiff, Mr. Ngaruye, counsel for the 3<sup>rd</sup> Defendant argued that considering the wording of the Deed of Assignment, it was not pleaded that Kapeeka Coffee Hullery was a project of M/S Kapeeka Coffee Works Limited, stressing that a party should not be allowed to prove a right it has not pleaded.

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At the outset, for the purposes of the Non-Performing Assets Recovery Trust Statute, 1994 (No. 11 of 1994), and the Non-Performing Assets Recovery Trust Regulations 1995, we point out that the word,

> "Owner" as defined in the Non-Performing Assets Recovery **Trust Regulations**

"means the borrower in respect of a Non-Performing Asset" (See page 2 of the Regulations and may be subsection (2) of Section 13 of the Statute No. 11 of 1994).

In these preliminary objection proceedings, it has not been shown to us by way of evidence or law that Kapeeka Coffee Hullery (No. 5) is owner of the loan stated in the Deed of Assignment dated 7<sup>th</sup> December, 1995, and therefore, as the debtor of the loan balance of shs. $839,030,582/$ = (Eight hundred thirty nine million, thirty thousand, five hundred eighty two only), despite the fact that the words Kapeeka Coffee Hullery are stated in the Deed of Assignment. Neither has the words Kapeeka Coffee Hullery been proved to be the owner of the loan just because the words are shown or stated on, the ledger cards of the loan.

It is in our view, not shown or proved that the right person to be sued is Kapeeka Coffee Hullers, without proof that Kapeeka Coffee Hullers is unlike Kapeeka Coffee Works Limited, which is an incorporated body or company business name. In our view, we would say that the words Kapeeka Coffee Hullers, per se, do not fall within the provisions of sub-section (2) of Section 13 of the Non-Performing Assets Recovery Trust Statute 1994.

We would agree perhaps, that the Amended Plaint does not show cause of action against the 3<sup>rd</sup> Defendant as an individual as argued by his counsel, Mr. Ngaruye. Suffice it to say that according to the Amended Plaint the Plaintiff's claim against the Defendants is jointly and or severally.

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We have studied and considered carefully the case authorities cited to us in support of the counsel's submissions. We have found them not relevant to these preliminary objections.

Consequently the preliminary objections are overruled. We order that hearing of the case proceeds on merit, with costs in the cause.

Dated $28^{\text{th}}$ March, 2000.

MR. G. S. LULE **MEMBER**

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JUSTICE A. O. OUMA **CHAIRMAN**

MR. C. S. O'BOKK **MEMBER**