Tirupati Development Uganda Limited has taken legal action against KCB Bank Uganda Limited and KCB Bank Kenya Limited over a $7 million loan that was advanced to the company.
According to documents filed in the civil division of the High Court in Kampala, the two banks agreed to advance a syndicated loan to Tirupati for a total of $7 million in July 2021. Tirupati had provided several certificate of titles as collateral for this facility, as stated in the loan agreement.
Both parties agreed that $5.14 million be disbursed to Tirupati’s account between July 2021 and August 2013, a further $1.5 million between September 2013 and August 2014, and a final disbursement of $276,000 in September 2014. However, Tirupati claims that only $6.99 million was disbursed and that the banks breached the contract by failing to disburse the full amount.
Tirupati alleges that the banks charged loan negotiation fees above the agreed amount and failed to provide a breakdown of how this amount was arrived at. Additionally, the banks debited Tirupati’s accounts to meet court case costs, which was contrary to the consent agreement they entered into in 2017.
Tirupati accuses the banks of opening and operating two separate dollar loan accounts in the company’s name without its knowledge and consent in August 2016 and two more in January 2017. When the company complained about suspicious transactions on its accounts, the banks failed to provide an explanation for them.
Tirupati contends that the banks did not act in good faith and for the company’s best interest, but for purposes that were collateral to the agreement. The company claims that the banks breached their fiduciary duty by engaging in illegal activities, including unexplained suspicious transactions, and constituted a conflict of interest between the interests of the plaintiff and those of the banks.
Tirupati engaged external auditors to investigate the transactions on its bank accounts with the two banks, and the audit report indicated that the banks frequently charged the operations account for Tirupati as loan repayment but reflected less figures as having been paid towards the loan. The auditors also found that several unauthorized top-up loans had been given by KCB Bank Uganda and used to pay off loans to the same bank on the same date.
Tirupati seeks several declarations from the court, including that the actions of the banks amounted to breach of contract, fraud, and failure to manage the plaintiff’s accounts. The company also wants the court to order KCB to return its funds amounting to $995,466 and 20 certificates of title that were unlawfully held by Bank of Uganda.
Finally, Tirupati wants the court to declare that the Bank of Uganda failed in its regulatory duty by not detecting KCB’s misfeasance in accurately reporting the status of Tirupati’s loan account.
Would you like to get published on this Website? You can now email Uganda Times: an Opinion, any breaking news, Exposes, story ideas, human interest, articles, or any interesting videos: [email protected]. Or join the Ugandatimes WhatsApp Group or Telegram Channel for the latest updates
