The Bank of Uganda has been dragged to court after local car dealer, Kings Auto Center, sued seeking to recover its land that was placed as collateral for a US$548, 000 (about Shs2 billion) debt obtained from Crane Bank, now in receivership.
Through its lawyers Signum Advocates and Magna Advocates, Kings Auto Centre told the Commercial Court that it obtained the said loan and Shs150 million for a period of 12 months, after putting a prime piece of land in Bunga, a leafy Kampala suburb, with Crane Bank as collateral.
According to the lawyers, the BoU has refused to receive full settlement for the loan facility obtained on December 8, 2015, that was supposed to expire by December 2016, a time the Crane Bank had been taken over by the Central Bank in October.
The BoU then ceded management of Crane Bank to dfcu Bank and, according to the lawyers, at the time Kings Auto Centre was indebted to Crane Bank to the tune of US$399.000 and Shs137 million, which it seeks to pay and regain its land.
‘The plaintiff (Kings Auto Center) avers that following the takeover of the bank by the defendant (BoU), some of the bank’s business was sold to Dfcu bank. The plaintiff shall aver that for unknown reasons, certain accounts including the plaintiff’s accounts which, in effect incapacitated the latter’s ability to properly carry out its ordinary transactions’, the lawyers, acting on behalf of Kings Auto Centre, states in part.
It adds: ‘The defendant’s callous actions referred to above were contrary to its duties as statutory manager to recover debts and other sums of money due and owing to the bank. In addition to the defendant’s (BoU) default in its duty aforementioned, it continued to unify charge interest on the plaintiff’s loan facilities yet its accounts had been suspended’.
Consequently, Kings Auto Center wants court order the BoU to receive its payment in full, and recover its land.
