Norasa Technical Services Ltd and Others v Centenary Rural Development Bank (Miscellaneous Application No. 1443 of 2024) [2025] UGCommC 211 (8 July 2025)

5 THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCIAL COURT DIVISION) MISCELLANEOUS APPLICATION NO. 1443 OF 2024 (ARISING OUT OF CIVIL SUIT NO. 0669 OF 2022)

1. NORASA TECHNICAL SERRVICES LTD

- 2. CHARLES ASABA - 3. NORAH MUTONYI::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANTS VERSUS

15 CENTENARY RURAL DEVELOPMENT BANK::::::::::::::::::::::::::::::::RESPONDENT

Before: Hon. Lady Justice Dr. Ginamia Melody Ngwatu

RULING

- 20 The applicants brought this application under section 98 of the Civil Procedure Act and Order 36 Rules 1 and 4 of the Civil Procedure Rules S. I. 7l-1. The applicants seek orders that they be granted unconditional leave to appear and defend *Civil Suit No. 0669 of 2024* and that costs for the application be provided for. - 25 The background to this application is that the respondent filed a summary suit vide *Civil Suit No. 0669 of 2024 Centenary Rural Development Bank vs Norasa Technical Services Ltd & 2 Others* against the three applicants under Order 36 rule 1, 2 and 3 and Order 19 of the Civil Procedure Rules SI No. 71-1, as amended, for recovery of a liquidated sum of UGX 307,118,763 being the outstanding amount owed to the respondent bank by the applicants as at 29th February 2024; an 30 order for payment of accrued contractual interest on the outstanding amount at a rate of 21.5% per annum from 1st March 2024 until payment in full; and costs of the suit. The said sum was advanced by the respondent bank to the applicants for purposes of financing a contract for rehabilitation of district and community roads in Adjumani district. The respondent's cause of

- action against the applicants is that the 1st applicant and the 2nd and 3rd 5 applicants as guarantors, failed to repay the loan debt, which amounted to a breach of the loan agreement that the parties had entered into. The respondent sought to recover the same from the applicants and filed *Civil Suit No. 0669/2024*. The applicants filed this application to be granted leave to appear and defend the said suit. - 10

Representation at the hearing

The applicant was represented by Mr. Kigenyi Emmanuel and Ms. Lucy Naiga Kigenyi of Alma Associated Advocates; while the respondent was represented by Mr. Spera Niwomugisha of Kampala Associated Advocates. The parties were granted leave to file written submissions 15 which are on Court record.

Issue for determination

The issue for determination is whether the applicants have disclosed a triable issue of fact or law thereby entitling them to a grant of leave to appear and defend *Civil Suit No. 0669 Of 2024*.

Determination of court

The submissions of the parties have been taken into consideration. The submissions will, however, not be reproduced here. This matter is decided as follows:

Applications for leave to appear and defend are premised on Order 36 rules 3 and 4 of the Civil Procedure Rules SI 71-1, as amended. Order 36 rule 3(1) of the Civil Procedure Rules provides that upon the filing of an endorsed plaint and service of the same on the defendant, the defendant shall not appear and defend the suit except upon applying for and obtaining leave from the court.

30 Further, Order 36 rule 4 of the Civil Procedure Rules provides that the application for leave to appear and defend the suit shall be supported by affidavit which shall state whether the defence alleged goes to the whole or to part only, and if so, to what part of the plaintiff's claim.

The applicant is required to demonstrate to court that there are issues or questions of fact or law which ought to be tried. This requirement aims at ensuring that a defendant with a triable issue is 5 not shut out. (See *M. M. K Engineering vs Mantrust Uganda Ltd Miscellaneous Application No. 128 of 2012;* and *Bhaker Kotecha vs Adam Muhammed [2002]1 EA 112*)

For an applicant to be granted leave to appear and defend a suit, the applicant must show that there is a bona fide triable issue of fact or law that he/she will advance in defence of the suit. 10 This principle was stated in the case of *Maluku Interglobal Trade Agency vs Bank of Uganda*

*[1985] HCB* 65, at 66 where court stated that:

*"Before leave to appear and defend is granted, the defendant must show by affidavit or otherwise that there is a bonafide triable issue of fact or law. When* 15 *there is a reasonable ground of defence to the claim, the defendant is not entitled to summary judgment. The defendant is not bound to show a good defence on the merits but should satisfy the court that there was an issue or question in dispute which ought to be tried and the court shall not enter upon the trial of issues disclosed at this stage."*

It is not in dispute that the respondent advanced a loan facility to the first applicant; while the 2nd and 3rd applicants provided personal guarantees on the same. The dispute emanates, from the respondent's claim that the 1 st applicant defaulted on the payment of the loan facility; which the applicants deny. There is also contention on the respondent's claim of UGX 300,000,000 in 25 interest. The applicants argue that the respondent did not demonstrate how the said interest arose in the face of the 1st applicant's alleged payment of UGX 350,000,000 in payment of the principle and interest.

The respondent, on the other hand, contended that the 1st applicant obtained two loan facilities amounting to UGX 600,000,000 from the respondent bank; one that was issued on 18 30 th May 2021 and a second one that was issued on 29th September 2021. That by the time the 1st applicant took out the second loan facility, the 1st applicant was still indebted to the respondent bank to a tune of UGX 321,802,581. That the 2nd and 3rd applicants, on their part, issued personal guarantees for the loan disbursed to the 1st applicant. The respondent maintains that the

5 applicants are indebted to the respondent. This dispute between the applicants and the respondent bank would require a determination of the correct status of the applicant's loan obligations.

Order 36 rule (4) and (8) of the Civil Procedure Rules, provide that unconditional leave to appear and defend a summary suit will be granted where the applicant shows that he or she has a good 10 defence on the merits; or that a difficult point of law is involved; or that there is a dispute which ought to be tried, or a real dispute as to the amount claimed which requires taking an account to determine or any other circumstances showing reasonable grounds of a bona fide defence (see *Makula Inter global Trade Agency v. Bank of Uganda [1985] HCB 65*). The applicants herein have demonstrated that there is a dispute as to the amount claimed which requires taking an 15 account to determine the loan amount owed, if any. I find that there are grounds disclosed that

In the premises, this application is determined as follows:

entitle the applicant to the relief sought.

- 1. The applicant is granted leave to appear and defend *Civil Suit No. 0669 of 2024*. - 20 2. The applicant shall file their defence and serve it on the respondent/plaintiff within fourteen days from the date of this ruling. - 3. The costs of this application will abide the results of the suit.

25 I so order.

*Dr. Ginamia Melody Ngwatu*

30 *Ag. Judge*

*8 th July 2025*

*Ruling delivered electronically via ECCMIS*