BASIC Elements Limited, local company, has lost its appeal against payments of about 10bn/- as repayment loan to the National Bank of Commerce (NBC).
This followed the decision of the Court of Appeal to dismiss the appeal the appellant company had lodged to challenge findings of the High Court’s Commercial Division in favour of NBC, the respondent.
In determining the appeal, Justices; Augustine Mwarija, Rehema Mkuye and Gerald Ndika considered two issues on whether or not there existed a loan agreement between appellant and respondent and whether or not the respondent was entitled to the decretal amount awarded by the trial court.
They observed that the appellant did not dispute that it received two credit facilities comprising of an overdraft of 2bn/-and a term loan of 4bn/-.
The appellant’s contention was that such amount was granted as a conditional acceptance to buy a milling plant situated at Mikocheni Light Industrial Area.
“In our considered view, from terms and conditions agreed upon, it is clear apart the parties entered into a loan agreement.
Similarly, the appellant’s defence that the credit facility was received as a conditional acceptance to buy the property is not borne out by evidence on record,” the justices said.
They said that the absence of a letter showing that the appellant had applied for the loan does not have a repercussion on the clear terms and conditions of the Credit Facility Agreement showing that he had secured from the respondent bank a loan which was repayable with interest.
The justices ruled further that the trial court had properly applied the principle of equitable remedy of rescission in determining the effect of fraudulent misrepresentation complained of by the appellant before awarding the respondent bank the decretal sum.
“As correctly observed by trial judge, the appellant did not seek to rescind the contract but decided to claim for damages.
In principle, even if the credit facility agreement would have been dependent on sale agreement validity, since both contracts remained intact, the appellant cannot avoid liability,” they said.
The justices concluded by holding that the appellant’s option to claim for damages instead of rescinding the contract precluded it from denying liabilities over either the Sale Agreement or the Credit Facility Agreement.
Basic Element Limited was one of the defendants in Commercial Case No. 127 of 2013. The other defendants were Robert Simon Kisena, Florencia Robert Mashauri, Robesika Agro Products Ltd, Simon Group Limited and Leonard Dominic Rubuye.