Court has ordered the defunct Lanex Forex Bureau Limited to pay $160,000 to its former client, Damas Mulagwe as a refund of what was taken as deposit contrary to the regulations governing financial institutions.
Court of Appeal judges Cheborion Barishaki, Stephen Musota and Christopher Madrama unanimously dismissed with costs, the appeal in which Lanex Forex Bureau Limited had sought to overturn a lower court decision.
In the lead judgment, Justice Madrama held that the appeal did not have merit since the forex bureau received the deposit yet it is prohibited by law from accepting deposits from customers.
“Its officials were forbidden from accepting such deposits and issuing receipts for them. The officials are culpable under the law but there is no sanction against the customer who innocently deposits money and the officials of the forex bureau accepted the deposit,” the judge ruled.
Court documents indicate that in October 2005, Mulagwe deposited $160,000 as a fixed deposit in the forex bureau and he was given a receipt for acknowledgment but contrary to the banking regulations.
Justice Madrama ruled: “For the appellant (Lanex Forex Bureau Limited) to retain the sum of $160,000 would amount to unjust enrichment when it is prohibited from receiving such deposits for purposes of the business of fixed deposit accounts.”
Justice Madrama said that they could not fault the High Court judge for making an order for refund after finding that the money was received illegally.
He added: “In the circumstances, the licence of the appellant (Lanex Forex Bureau) was liable to be revoked and the appellant was accountable to Bank of Uganda. There is no obligation on the part of the respondent (Mulagwe) to the Bank of Uganda.”
The Court of Appeal observed that the appeal did not challenge the question of fact of deposit of $160,000 but only argued that it was illegal deposit received by an employee dishonestly and outside the scope of his employment and the statutory mandate.
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Through its lawyers, Lanex Forex Bureau had appealed against a 2011 High Court decision seeking for orders to quash its proceedings and an order for refund of the illegally deposited and received by its employees.
The forex bureau was represented by Mr Bwogi Kalibala while Senior Counsel Godfrey Lule represented Mulagwe.
In January 2011, the High Court delivered a judgment following a dispute between Lanex Forex Bureau Limited and Damus Mulagwe.
The High Court ordered Lanex Forex Bureau to refund the illegally deposited funds received by its employee in a dishonestly and outside the scope of his employment and outside the statutory mandate of financial institution.
Mulagwe sued the forex bureau and four other persons jointly for recovery of $160,000 being the unpaid deposit or advance to the accused forex bureau. Mulagwe through his lawyers sought for payment of $12,000 being the contractual interest payable per month from October 2005 till final payment.
However, the High Court found that the interest of $12,000 per month that was claimed by Mulagwe was not recoverable because it was contrary to the Exchange Control Regulations.
