The High court in Kampala has ordered the Bank of Uganda (BOU) to pay Shs 200 million in damages to C&S Upholstery Limited, a carpet supplier, for lost earnings resulting from a breach of statutory duty.
Justice Musa Ssekaana ruled that BOU unfairly rejected C&S’s bid to supply carpets for six floors of its new headquarters and later recommended the company’s suspension from Public Procurement and Disposal of Assets Authority (PPDA) proceedings over alleged forgery, claims that were unproven.
Background
In May 2019, BOU invited bids to replace carpets on levels 1, 3, 4, 6, 8, and 9 of its new building. C&S submitted its bid on June 14, 2019, including a manufacturer’s authorization from Windsor International Limited.
BOU sought confirmation of C&S’s relationship with Windsor International and Shaw Contract Group. Shaw Contract Group affirmed C&S as an authorized supplier, with Windsor International as an intermediary.
However, despite this confirmation, BOU’s procurement team claimed the manufacturer’s authorization was forged and recommended investigations into C&S. This led to the company’s elimination from the bidding process and a formal complaint to the PPDA on May 4, 2019.
After conducting a hearing, PPDA found no merit in BOU’s allegations, confirming that Windsor International had indeed authorized C&S and that no ethical breaches had occurred.
C&S sued BOU, arguing that the bank’s actions damaged its reputation, caused financial distress, and led to potential foreclosure proceedings. The company claimed losses of Shs 5.2 billion from lost earnings and Shs 2 billion from rejected bids. C&S provided evidence of a 25-year business relationship with the Central Bank.
In its defense, BOU argued that the case was legally barred since C&S had not exhausted administrative review remedies under the PPDA Act.
BOU further stated the company was never suspended by the PPDA and had a valid PPDA registration certificate, a KCCA trading licence, and a certificate of incorporation allowing them to engage in other bids.
The bank also maintained that C&S’s bid was rejected due to non-compliance with technical specifications and higher costs compared to other bidders.
However, justice Ssekaana ruled that BOU breached its statutory duty by failing to conduct proper due diligence and instead relying on unverified claims to disqualify C&S. The judge emphasized that since the PPDA found no wrongdoing, BOU’s actions were unjustified.
The court awarded C&S Shs 200 million in damages, plus a 15 per cent annual interest from the date of judgment until full payment, along with the costs of the suit.
