Kampala, (UG): The High Court in Kampala has issued an order declaring that Bank of Africa was in breach of contract when it froze the account of Victoria Candles Limited after receiving 1.7 billion Shillings.
The Court on Tuesday presided over by Civil Division Judge Musa Ssekaana also ruled that withholding the company’s money or funds and later sending it back to Absa Bank was illegal and done in bad faith.
The records before the Court show that Victoria Candles instituted a suit against the Government, Inspector General of Police, Erasmus Twaruhuka, and Moses Kafeero before the High Court after it had been evicted on land located in Muyenga. The Judgement was delivered in the Company’s favor and the court
The company was issued with a Certificate of Order against the Government. The Attorney General on June 21st, 2023 wrote to the Inspector General of Police directing him to comply with the Court Order.
However, the company waited for the payment from the Government but it was long overdue, and decided to assign its rights and claims in its cases to Molly Katanga through a deed of assignment.
Records show that in compliance with the assignment Molly Katanga instructed M/s Riverwood Logistics Ltd to pay the applicant’s money on Account No. 06011480007 held with the respondent’s Bank, Bank of Africa.
However, that the Bank froze the company’s account held with it without any justifiable cause and has since with impunity withheld its money stalling its businesses and causing great inconvenience.
The court heard that Victoria Candles provided and or disclosed to the Bank all the information leading to the depositing of money on its above-mentioned account but in vain hence they said the Bank had breached its banker-customer relationship without any justifiable cause.
On their part, Bank of Africa through Nelly T. Erongot the Head of Compliance told the Judge that on November 17th, 2023, funds to the tune of 1,750,000,000/= were deposited onto the Company’s bank account from Riverwood Logistics Ltd. Upon being tasked by the Bank to explain the source and purpose of funds, the Company provided an assignment deed dated October 26th, 2023 between them and Molly Katanga.
Bank of Africa said upon perusal of the documents the funds were to come from Molly Katanga as the assignee but the funds in question came from Riverwood Logistics Ltd and there was no documentary explanation regarding the relation and connection of the assignee with the sender of the funds.
“Being left with no option, the applicant treated this transaction as suspicious for lack of sufficient information regarding the transaction in question and therefore sent back the funds to the sender, Riverwood Logistics Ltd on 8th December 2023’, the Bank said.
The bank added that it is a duty bearer in combating money laundering, and the actions taken were justified and reasonable.
In his ruling, Justice Musa Ssekaana indicated that the bank did the right thing to demand an explanation regarding the sources of the said huge amounts of money but it was wrong not to accept the answers given to them and continued to freeze the accounts for three weeks as well as returning it to the sender.
“There is no evidence on record to support the respondent’s contention that indeed they ever questioned the source of money as being sent or wired from another company. The applicant would still have explained the transaction in which the assignee had instructed another company to honor her obligations with the applicant”, said Ssekaana.
According to Ssekaana, the bank would have established in over two weeks whether the transaction from Riverwood Logistics Limited to the applicant was supported by genuine documents and a relationship between the assignee and Riverwood Logistics Limited.
Ssekaana also ruled the decision of the Bank to reverse the transaction and send the money back to the sending banker was an act done in bad faith.
“The bank held on the money since November 17th, 2023 and it was returned on December 8th, 2023 for three weeks. There is no justification for why the bank decided to return the money to ABSA Bank after it had been duly served with the Notice of Motion due to hearing on December 11th, 2023. It would appear the bank acted in panic after breaching the law to make the flimsy argument that the application is overtaken by events because they had illegally returned the money”, said Ssekaana.
Ssekaana awarded the costs of the case to Victoria Candles Limited.
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