The High Court has delivered a scathing indictment of Finance Trust Bank Limited, exposing what the judge described as unlawful, high-handed, and outright illegal conduct in a botched loan recovery operation that saw a customer’s vehicle seized and the man himself detained for hours.
In a ruling that sends shockwaves through Uganda’s banking sector, Justice Dr. Lubega Farouq found the bank and its agents guilty of breaching a loan agreement, wrongfully confiscating property, and violating constitutional rights.
A Simple Loan, A Brutal Turn
The dispute stems from a Shs20 million loan issued in November 2016 to businessman Nkoto Jackson. The loan was secured strictly using land in Kibuku District—not a motor vehicle.
Nkoto made his first repayment but ran into financial difficulty on the second installment. Instead of following lawful recovery procedures tied to the agreed collateral, the bank’s agents allegedly took matters into their own hands.
Dawn Raid and Forced Seizure
On the morning of February 26, 2017, bank operatives descended on Nkoto’s home in what reads more like a security operation than a financial transaction.
They forcefully entered the premises, jumped into his commercial Fuso truck, and drove it away to the bank’s Pallisa branch—without any legal process authorizing such action.
The bank later attempted to spin the incident as a voluntary arrangement by the customer. But the court dismantled this claim, pointing to glaring inconsistencies and missing evidence.
“The explanation… is not satisfactory,” the judge ruled, rejecting the bank’s version of events.
Court: This Was No Mistake — It Was Illegal
In a decisive finding, the court held that the bank had no legal right whatsoever to seize the vehicle.
The loan agreement clearly identified land—not the truck—as collateral. By targeting the vehicle instead, the bank acted outside the contract and the law.
The judge concluded that this amounted to a clear breach of contract and further constituted the tort of wrongful detention of property after the bank refused to release the vehicle despite repeated demands.
8 Hours Locked Up
But what truly stunned the court was what happened next.
After taking his vehicle, bank agents reportedly locked Nkoto inside their offices from 9:00am to 4:00pm—a full eight hours—effectively stripping him of his freedom without any legal authority.
The bank did not even attempt to meaningfully challenge this claim in court.
Justice Lubega did not mince words.
“There is no doubt that the detention… was illegal and contrary to the law,” he ruled, citing constitutional protections on personal liberty.
Legal experts say the finding borders on false imprisonment—a serious civil wrong with constitutional implications.
Financial Loss and Human Impact
The seized truck was not just property—it was Nkoto’s livelihood.
For nearly three months, the vehicle remained out of his reach, cutting off his daily income. The court acknowledged the economic damage and disruption caused by the bank’s actions.
Court Punishes Bank
In the end, the court awarded:
- Shs5 million in general damages
- Shs5 million in special damages
- Shs2 million in punitive damages
- Interest and full legal costs
The bank’s counterclaim was thrown out entirely.
A Warning to Banks
The judgment reads as a warning shot to financial institutions across Uganda: defaulting on a loan does not strip borrowers of their rights.
Debt recovery, the court emphasized, must follow the law—not intimidation, force, or improvised enforcement tactics.
This case lays bare the risks of aggressive loan recovery methods and raises serious questions about internal controls and accountability at Finance Trust Bank Limited.
For Nkoto, it was a costly and humiliating ordeal. For the banking sector, it may mark a turning point.
