By Sadique Bamwita
KAMPALA
Absa Bank Uganda has lost a court case in which it claimed Shs.65 million from a transport firm- Kawa Distributors and Suppliers Ltd, after the Appeal Court ruled that the bank could not repossess leased trucks and still demand millions of shillings in future rental payments.
In a judgment delivered on June 10, 2026, the court of appeal partially allowed Kawa Distributors’ appeal, by quashing the decision of the High Court which had awarded Shs.65 million that Absa had claimed as accrued rental arrears after terminating a lease arrangement and repossessing two tractor heads.
The dispute dates back to 2008 when Kawa Distributors entered into a financing arrangement with what was then Barclays Bank Uganda, now Absa Bank Uganda, for the acquisition of two tractor heads.
Absa failed to convince court that the transaction was a hire-purchase agreement intended to transfer ownership to Kawa, or a finance lease under which the bank retained ownership of the vehicles. As a result, the Court of Appeal upheld the lower court’s finding that the trailer had been wrongfully impounded.
The bank also failed in its attempt to argue that Kawa should simply have collected the trailer.
Available evidence indicated that substantial storage and parking fees had accumulated at the bonded warehouse, creating a major obstacle to recovery.
Court accepted that these costs became the central issue preventing collection and found no basis for blaming Kawa for failing to retrieve the trailer.
Though Court of Appeal agreed that the transaction between Kawa and Absa was indeed a finance lease, it trashed the bank’s attempt to recover rental payments after repossessing the trucks and questioned the credibility of the financial records relied upon to justify the claim.
Nonetheless, Absa succeeded in defending the legal character of the lease but lost the financial war.
