High Court Orders Businessman to Refund UGX 270m in Friendly Loan Dispute
A Friendly Loan Turns Contentious
In a ruling that highlights the legal strength of trust-based agreements, the High Court of Uganda’s Commercial Division has ordered businessman Hitesh Mahendra Mehta to refund UGX 270 million to Mohanpal Singh Bharj, concluding that the money was advanced as a friendly loan — not professional fees.
Delivering judgment on October 2, 2025, Hon. Lady Justice Patience T.E. Rubagumya held that Mehta unlawfully withheld funds lent to him in good faith. The Court awarded Bharj UGX 20 million in general damages, alongside 10% annual interest on the loan amount until payment in full.
How It Started
Court records show that between 13th November and 9th December 2020, Bharj transferred UGX 270 million to Mehta in six instalments.
While Mehta insisted the money was part of an agreed UGX 550 million fee for tax consultancy services, Bharj maintained it was a short-term, friendly loan meant to be repaid within a year.
Bank statements presented in court clearly labeled the transfers as “loan,” supporting Bharj’s claim.
The Court’s Analysis
Justice Rubagumya noted that oral contracts are valid and enforceable under Uganda’s Contracts Act, provided evidence of the agreement and performance exists.
“It would be too much of a technicality to say a contract is invalid simply because it was not reduced to writing,” she stated, emphasizing substance over form.
The Court found no written or oral evidence supporting Mehta’s assertion of a professional fee arrangement and instead ruled that the funds were a friendly loan advanced on trust.
Final Orders and Dismissal of Counterclaim
The Court ordered Mehta to:
- Refund UGX 270,000,000;
- Pay UGX 20,000,000 in general damages;
- Pay 10% annual interest on the loan from the date of filing until payment in full; and
- Pay 6% interest on general damages from the date of judgment.
Mehta’s counterclaim for UGX 280 million was dismissed for lack of evidence.
Why It Matters
The decision reaffirms the enforceability of friendly loan agreements and oral contracts in Uganda, where business relationships often rely on personal trust.
Legal analysts say the judgment provides much-needed clarity on how informal financial dealings can still receive formal legal protection when proven through credible evidence.
Case Citation:
Mohanpal Singh Bharj v. Hitesh Mahendra Mehta — Civil Suit No. 220 of 2024
Court: High Court of Uganda (Commercial Division)
Delivered: October 2, 2025
Presiding Judge: Hon. Lady Justice Patience T.E. Rubagumya
