Question ABC Ltd, borrowed UGX 300 million from Housing Finance (U) Ltd with the sole intention of compensating the community that gave it land on which it built its headquarters on the suburb of Kampala city. It deposited the money with Equity Bank Ltd indicating the purpose of the deposit. It also had an overdraft facility of UGX 50 million with Equity Bank Ltd. However, hardly three months thereafter, ABC Ltd was declared bankrupt by the courts of law and a receiver appointed with the mandate to sell of all of ABC properties and distribute the proceeds to debtors in the order of priority. In an attempt to recover its money due to the overdraft Equity bank is considering setting off the debt from the money meant for compensating the community.

Required:

With specific reference to any relevant Case law you are familiar with explain whether or not Equity Bank (U) Ltd can use the special deposit to settle (set-off) its claim against the overdraft facility extended to ABC Ltd by the time of its insolvency.