KAMPALA, Uganda — The Commercial Division of the High Court has ordered Equity Bank Uganda to pay $31,200 (about 115 million shillings) to an Indian nutrition company after bank employees released shipping documents without securing payment for a 2016 industrial supply deal.
Justice Stephen Mubiru ruled Monday that the bank must compensate Sanstar Bio-Polymers Limited for the value of 72 metric tons of liquid glucose concentrate ordered by Mukwano Industrial Suppliers Limited. The court also ordered the bank to pay 8% interest per annum on the 115 million shillings, effective from November 2016.
Court records show that Sanstar and Mukwano agreed that payment would be made upon receipt of shipping documents. Sanstar’s bankers, Karur Vysya Bank Limited, transmitted the documents to Equity Bank’s Kabalagala branch with instructions to release them only after full payment was received.
However, the branch operations manager received the documents and handed them to Unimar Logistics Limited, a clearing agent for Mukwano, without collecting the $31,200 (115 million shillings) purchase price. As a result, the Indian firm never received payment for the goods.
In its defense, Equity Bank denied having a contract with Sanstar and argued it never agreed to act as a collecting bank. Lawyers for the bank, Kampala Associated Advocates, contended that Mukwano had falsely claimed Equity was its banker for the transaction and that the documents were sent without the bank’s prior consent.
The bank’s legal team further argued that Equity did not owe the Indian company a duty of care because it had not been formally notified of its appointment as a collecting bank.
Justice Mubiru rejected these arguments, finding the bank liable for the loss resulting from the unauthorized release of the documents.
The ruling adds to a series of legal and regulatory challenges for Equity Bank Uganda, which has faced recent scrutiny over fraud allegations and the disappearance of funds from customer accounts.
