Businessman ordered to pay Shs 1.1bn interest on Shs 330m loans

Kampala businessman Arvind Patel has been ordered to pay more than Shs 1.1 billion in outstanding amounts arising from two loans totalling Shs 330 million obtained from Prime Finance Company Limited.

The High court also awarded the lender Shs 20 million in aggravated damages after finding that Patel had breached the loan agreements by failing to repay the money within the agreed periods.

Court records show that Patel borrowed Shs 200 million from Prime Finance in November 2013 under an agreement requiring him to repay the principal within four months, together with interest of Shs 29 million.

The agreement further provided that any outstanding balance after the repayment deadline would attract interest of 0.75 per cent per week.

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

Before clearing the balance on the first loan, Patel obtained a second loan of Shs 130 million from the same lender in 2014. The agreement required repayment within four months and imposed interest of 0.75 per cent per week on any amount that remained unpaid after the deadline.

According to court records, Patel failed to repay the second loan within the stipulated period. By the time Prime Finance sought to recover the money through court, the outstanding amount had grown to Shs 992 million.

In his ruling, 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 Patel to pay Shs 132 million arising from the first loan and Shs 992 million from the second loan, bringing the total to Shs 1.124 billion before aggravated damages.

The court further awarded Prime Finance Shs 20 million in aggravated damages and ordered Patel to pay the costs of the suit.

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.

The judge also ordered that the outstanding amounts attract interest at 18 per cent per year until full payment.

The post Businessman ordered to pay Shs 1.1bn interest on Shs 330m loans appeared first on The Observer Media Ltd.