Justice Sekaana orders Bank of Uganda to pay interior design firm for breach of contract

The High Court has directed Bank of Uganda (BoU) to pay UGX 200 million to an interior design firm, C&S Upholstery Limited, for unfairly disqualifying it from a multi-billion contract to supply and install carpets at the central bank’s headquarters in Kampala. 

In a ruling delivered by Justice Musa Sekaana, court noted that Bank of Uganda had breached its statutory duty of fairness and transparency in the procurement process by wrongly rejecting C&S Upholstery’s bid over allegations of forgery. 

Court found no credible basis for Bank of Uganda’s actions, which caused financial losses and reputational damage to the company.

Bank of Uganda had accused C&S Upholstery of submitting a forged Manufacturer’s Authorization Form, despite evidence, which confirmed that the form had been legitimately authorized. 

“Public institutions must conduct procurement processes with diligence and impartiality. Disqualifying a bidder without sufficient evidence or due process not only violates procurement laws but also undermines public confidence in the system,” Justice Sekaana rued. 

Although C&S Upholstery had initially sought more than UGX 8 billion in compensation, court found that some of the claims were speculative. 

Therefore, Justice Sekaana instead awarded UGX 200 million in general damages, with an interest of 15% per annum from the date of judgment, in addition to cost of the suit.

Background of the case

The dispute stems from a 2019 tender in which Bank of Uganda had invited bidders for the replacement of carpets at its headquarters. 

Following the invitation, C&S Upholstery submitted a bid together with a Manufacturer’s Authorization Form from Windsor International, a recognized supplier.

However, Bank of Uganda disqualified the company, claiming that the Manufacturer’s Authorization form was forged. 

The matter was referred to the Public Procurement and Disposal of Public Assets Authority (PPDA), which investigated and cleared C&S Upholstery of any wrongdoing. 

Despite this, Bank of Uganda refused to reinstall the firm from the tender process.

C&S Upholstery subsequently sued Bank of Uganda, arguing that the wrongful disqualification had caused them financial distress and prevented the company from securing other contracts, severe financial losses and damage to its reputation as a leading supplier in the industry. 

The company estimated losses of more than UGX 5 billion from lost earnings and UGX 2 billion from rejected bids.

In response, the Bank of Uganda defended its decision, stating that the company’s bid was disqualified due to non-compliance with technical specifications and excessive pricing. The bank also argued that it acted in good faith and within its statutory powers.

However, the court rejected these arguments, ruling that BoU had acted unfairly and without proper justification in eliminating C&S Upholstery from the tender process. For now, C&S Upholstery has secured a legal victory; it remains to be seen whether the Bank of Uganda will appeal the decision.