Businessman to Pay UGX 1.1 Billion as Accumulated Interest on UGX 330 Million Loan

The High Court has ordered businessman Arvind Patel to pay more than 1 billion Shillings in outstanding loans and interest to Prime Finance Company Limited, despite having already paid 450 million Shillings for a principal loan of 330 million Shillings.

Court records show that Patel borrowed 200 million Shillings from Prime Finance in November 2013, under an agreement requiring him to repay the principal within four months, together with interest of 29 million Shillings.  The agreement further provided that any outstanding balance after the four-month repayment period would attract interest of 0.75 per cent per week.

Patel subsequently repaid most of the loan, leaving an outstanding balance of 37 million Shillings. However, the amount accumulated to 132 million Shillings, which Prime Finance later sought to recover through court proceedings.

Before clearing the outstanding balance on the first loan, Patel obtained a second loan of 130 million Shillings from the same lender in 2014. The second loan was also repayable within four months, with the agreement providing for interest of 0.75 per cent per week on any amount that remained unpaid after the deadline.

But according to court records, Patel failed to repay the second loan within the stipulated period. By the time Prime Finance approached court to recover the money, the outstanding amount had grown to 992 million Shillings.

In determining the dispute, Justice Boniface Wamala found that Patel had breached both loan agreements by failing to repay the loans within the agreed periods. The judge consequently ordered him to pay 132 million Shillings arising from the first loan and 992 million Shillings from the second loan. He also awarded Prime Finance a sum of 20 million Shillings in aggravated damages.

The order brings Patel’s total repayment obligation to about 1.6 billion, including the amounts previously paid, interest and damages.

Justice Wamala held that the failure to repay the loans within the agreed four-month periods constituted a breach of contract. He noted that the evidence before the court showed that Patel had not fully repaid either loan, adding that this amounted to a breach of each of the two agreements.

The judge further ordered that the outstanding amounts attract interest at 18 per cent per year until full payment. Patel was also ordered to meet the costs of the suit.