High Court at Kampala Confirms Police-Impounded Property Still Enforceable as Collateral

Waboga David
Nov 17
7 min read

FACTS

The Applicant, Pride Bank Limited (formerly Pride Microfinance Limited (MDI)), extended a loan facility of UGX 120,000,000/= to the 1st Respondent, Natumanya Edmund, on August 20, 2022. The loan was repayable over 24 months in monthly installments of UGX 6,354,167/= (noting a reference in the judgment to UGX 6,750,000/= as the installment amount, potentially reflecting an adjustment or interest accrual).

The facility carried an interest rate of 17.5% per annum. As security for the loan, the 1st Respondent executed a Chattels Mortgage Agreement on August 20, 2022, pledging, inter alia, a dump truck motor vehicle (registration number UBH 894J, Shacman make, yellow in color, engine number 1619HO87202, chassis number LZGJRDT60KX134382, manufactured in 2009).

The vehicle was registered in the 1st Respondent's name, and the Applicant perfected its security interest by lodging a caveat with the relevant authority on August 18, 2022, as evidenced by the vehicle's registration book (Schedule D).The 1st Respondent defaulted on repayments, leading the Applicant to recall the loan and assign recovery to an external debt collection firm.

As of October 15, 2024, the outstanding balance stood at UGX 106,688,509.33/=, per a detailed loan account statement. During the recovery process, the debt collection firm discovered that the pledged vehicle had been impounded and was being held at Kajjansi Police Station.

Efforts to secure its release extrajudicially failed, prompting the Applicant to seek a court order for its handover to enable disposal and recovery of the outstanding amount.

The 2nd Respondent, the Attorney General, was joined as a nominal party representing the interests of the state in relation to the impoundment.

ISSUES

Pursuant to Order 15 rule 3 of the Civil Procedure Rules, SI 71-1, the Court framed a single issue for determination:

Whether the Applicant (Pride Bank Ltd) established sufficient grounds to warrant the release of motor vehicle UBH 894J from police custody to enable enforcement of its perfected security interest.

. SUBMISSIONS

Applicant’s Arguments

Learned Counsel for the Applicant, relying on the supporting affidavit of Mr. Olinga Patrick (Supervisor, Debt Collection Recovery), argued that the Applicant had established a clear legal right to the relief sought under the Security Interest in Movable Property Act, Cap. 293 (as amended). Key points included:

Proof of Default and Enforceability:

The 1st Respondent's default triggered enforceability of the security interest under Section 43 (formerly Section 44), allowing the creditor to enforce rights per the security agreement (Section 45(2)(b), formerly Section 44(2)(b)). Annexures "A" (Loan Agreement) and "D" (Loan Statement) confirmed the loan disbursement, default despite reminders, and the outstanding balance of UGX 106,688,509.33/=.

Perfected Security Interest:

The Chattels Mortgage Agreement (Annexure "B") and caveat lodgment (Annexure "C") evidenced priority under Section 47 (formerly Section 48), entitling the Applicant to sell the collateral without judicial process (Section 45(4), formerly Section 46). The agreement explicitly authorized the Applicant or its agents to seize, possess, and sell the vehicle upon default.

Impoundment and Necessity of Relief:

The vehicle's detention at Kajjansi Police Station frustrated enforcement, necessitating a court order under Sections 98 of the Civil Procedure Act, Cap. 282, and 37 of the Judicature Act, Cap. 16, to prevent injustice and abuse of process. Denial of relief would cause irreparable loss to the Applicant's lending operations, reliant on deposit mobilization.

Counsel urged the Court to grant the release order in the interests of justice.

The Respondents were duly served on September 15, 2025, but filed no affidavits in reply or appearances. The Court invoked precedents such as Serefaco Consultants Ltd v. Euro Consult BV & Anor (Civil Application No. 16 of 2007) and William Akankwasa v. Registrar of Titles (HCMA No. 33 of 2008), holding that unchallenged affidavit evidence is deemed admitted.

Thus, the application stood unopposed. However, the Court emphasized that, per Sections 101–103 of the Evidence Act, Cap. 6, the Applicant bore the burden of proving its entitlement.

LEGAL REPRESENTATION

Applicant, Ms. Jacinta Nabakka, Legal Department of Pride Bank Ltd.
Respondents, No legal representation; no affidavits filed; application proceeded unopposed.

COURT’S FINDINGS

1. Unopposed Application and Evidentiary Effect

The Court began by noting that although the Respondents were duly served, they filed no affidavit in reply. Relying on established authority, including Serefaco Consultants Ltd v Euro Consult BV and William Akankwasa v Registrar of Titles, the Court held that unchallenged affidavit evidence is treated as admitted.

“…facts as adduced in the affidavit evidence of the Applicant that are neither denied nor rebutted are presumed to be admitted.”

Consequently, the Applicant’s factual narrative, including the loan transaction, security pledged, default, and the motor vehicle’s impoundment, stood uncontested.

2. Amendment of Pleadings; Recognition of the Applicant’s New Name

Before addressing the merits, the Court considered the Applicant’s request to amend its name from “Pride Microfinance Limited (MDI)” to “Pride Bank Limited.” Relying on Order 6 rule 19 CPR, the Court allowed the amendment after reviewing documentary proof from URSB (8 February 2024) and Bank of Uganda (7 November 2024).

“In accordance with Order 6 rule 19 of the Civil Procedure Rules… the Applicant’s prayer to amend its pleadings to reflect the current name of ‘Pride Bank Limited’ is allowed.”

3. Undisputed Factual Matrix

The Court examined the affidavit and annexures and confirmed that:

A loan of UGX 120,000,000 was advanced on 20 August 2022.
The 1st Respondent defaulted, leaving an outstanding balance of UGX 106,688,509.33.
The suit motor vehicle (UBH 894J) was formally pledged as collateral under a Chattels Mortgage Agreement.
The Applicant perfected its security interest by lodging a caveat on 18 August 2022.
The vehicle was later discovered to be impounded at Kajjansi Police Station.

The Court summarized:

“It is undisputed that the 1st Respondent obtained a loan facility… and has since defaulted… It is also undisputed that… the suit motor vehicle… is currently impounded at Kajjansi Police Station… and that the Applicant perfected its security interest on 18th August, 2022.”

4. Legal Right to Enforce the Security Interest

The Court confirmed that Pride Bank possessed a valid, perfected security interest and therefore enjoyed statutory enforcement rights under the Security Interest in Movable Property Act (SIMPA).

The Chattels Mortgage Agreement empowered the Applicant to seize, possess, and sell the vehicle upon default.

The Court relied extensively on SIMPA provisions:

Section 44 (priority in enforcement):

“Where the enforcement of a security interest is commenced… the secured creditor shall be entitled to take over the enforcement at any time before the sale of the collateral.”

Section 47(1) (right of sale):

“Where a debtor is in default, a secured creditor may sell any or all of the collateral…”

The Court found that perfection through the caveat granted Pride Bank priority and entitled it to enforce its rights without the need for judicial process, save for the fact that the collateral was in police custody.

5. Obstruction of Enforcement; Police Impoundment

The Court accepted that the Applicant was unable to exercise its statutory enforcement rights simply because the vehicle was being held by police. Since neither Respondent provided any lawful justification for continued impoundment, the Court found this to be an impediment warranting judicial intervention.

6. Court’s Discretion and Inherent Powers

To justify ordering the release of the vehicle, the Court relied on Sections 37 of the Judicature Act and 98 of the Civil Procedure Act, which allow courts to issue orders necessary for the ends of justice.

Citing National Union of Clerical, Commercial, Professional and Technical Employees v NIC, the Court emphasized its wide discretion:

“The question whether a Court should invoke its inherent powers… is a matter of the Court’s discretion… but does not limit or remove the Court’s jurisdiction.”

Given the unchallenged evidence and the need to prevent injustice, the Court confirmed that this was an appropriate case to invoke such powers.

This culminated in the Court’s conclusion:

“…this is one such case in which this Court’s inherent powers can be invoked to order the release of the suit motor vehicle such that the Applicant can sell it…”

HOLDING

The Court found that the Applicant had fully satisfied the legal requirements for grant of the orders sought. It therefore made the following orders:

1. Release of the Motor Vehicle

“Motor vehicle registration number UBH 894J… currently impounded at Kajjansi Police Station, be released and handed over to the Applicant or its agent(s) for disposal so that the Applicant can recover the outstanding loan amount…”

This order permits Pride Bank to lawfully seize and sell the collateral pursuant to the Loan Agreement and Chattels Mortgage Agreement.

2. Amendment of Pleadings

The Court formally recognized the Applicant’s change of name to Pride Bank Limited.

3. Costs

No order as to costs was made.

KEY TAKEAWAYS FOR PRACTITIONERS & FINANCIAL INSTITUTIONS

1. Unopposed Affidavit Evidence Is Deemed Admitted

Where an application is not contested, the applicant’s affidavit evidence is taken as admitted. However, the applicant must still meet the civil standard of proof by providing clear documentary support such as loan agreements, statements, and registration documents.

2. Perfecting a Security Interest Is Critical for Enforcement

The bank’s right to enforce hinged on proper perfection steps, including:

Executing a valid chattels mortgage,
Registering the security interest, and
Lodging a caveat promptly.

Timely perfection establishes priority under the Security Interest in Movable Property Act and enables swift enforcement without mandatory judicial oversight.

3. Police Custody Does Not Extinguish a Security Interest

Collateral impounded by the police, such as a vehicle, remains subject to the perfected security interest. The Court can order its release to the secured creditor where continued detention obstructs lawful enforcement.

4. Courts Will Use Inherent Powers to Protect Secured Creditors

Under Sections 37 and 98 of the Judicature Act and the Civil Procedure Act, courts may intervene where public authorities or extrajudicial actors hinder enforcement. This ensures justice is not frustrated by administrative barriers.

5. Clear Chattels Mortgage Agreements Strengthen Enforcement

The Court relied heavily on express contractual terms granting the lender authority to seize and sell the collateral upon default. Financial institutions should ensure clarity and precision in drafting enforcement clauses.

6. Corporate Name Changes Do Not Invalidate Claims

Courts may amend pleadings to reflect corporate rebranding or name changes under Order 6 rule 19 CPR. Such changes do not defeat ongoing litigation or enforcement rights.

7. Implications for Debtors and State Agencies

Borrowers who default on secured loans risk immediate and lawful seizure of collateral. State agencies holding collateral must respect perfected private security interests unless a valid public-interest exception exists.

8. Commercial Impact: Strengthening Uganda’s Lending Environment

The decision reinforces Uganda’s creditor-friendly regime for movable property financing. It enhances certainty for lenders, promotes commercial stability, and warns defaulters that perfected security interests will be aggressively upheld.

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