The Commercial Division of the High Court has ordered Equity Bank Uganda to pay millions to Indian Company over Mukwano’s documents shipping deal.
On or around September 13th, 2016, Mukwano Industrial Suppliers Limited based in Uganda ordered 72 metric tonnes of Liquid Glucose Concentrate (food grade) at the price of US $ 31,200 (about Shs115m) from Sanstar Bio-Polymers Limited.
A private limited liability company based in India, Sanstar Bio-Polymers Limited specialises in the manufacture of plant-based food and animal nutrition products and ingredients.
Court documents indicate that the parties agreed that “payment would be made against receipt of the shipping documents by the buyer.” Sanstar Bio-Polymers Limited appointed its bankers, Karur Vysya Bank Limited, to handle transmission of the shipping documents to Equity Bank Limited, the bankers for Mukwano Industrial Suppliers Limited.
Equity Bank Limited, court documents further show, “was under an obligation to hand over the shipping documents to the buyer [Mukwano Industrial Suppliers Limited], only after receipt of payment in full.”
Records presented before court also indicate that indeed the shipping documents were delivered by courier to the Kabalagala Branch of Equity Bank Limited and that it was the branch’s operations manager that received them. The bank’s staff would later hand over the shipping documents to Unimar Logistics Limited, the clearing agent working for Mukwano Industrial Suppliers Limited, the buyer.
And here is where the problem was: Equity Bank Uganda’s employees handed over the shipping documents to Unimar Logistics Limited “without first receiving payment from [Mukwano Industrial Suppliers Limited].”
And just like that, Sanstar Bio-Polymers Limited “never received payment of US $ 31,200 as the agreed purchase price for the goods.” That is why the Indian company sued Equity Bank Limited seeking to recover the funds from the commercial bank, as well as general damages for breach of contract, interest and costs.
In its defence filed by its lawyers from Kampala Associated Advocates, Equity Bank Limited insisted “there was no agreement between [Sanstar Bio-Polymers Limited] and M/s Mukwano Industrial Suppliers Limited as alleged or at all” and that Mukwano Industrial Suppliers Limited “does not maintain any bank account” with the Indian company.
Equity Bank further claimed that it was “never asked by any of the parties to act as the collecting bank in the alleged transaction” and that “no shipping documents relating to the alleged underlying transaction were delivered at the [bank’s] principal place of business.”
The commercial bank’s lawyers further insisted that Equity Bank “did not owe [Sanstar Bio-Polymers Limited] any legal duty,” and prayed that the suit should be dismissed with costs to the Indian company.
Equity Bank’s lawyers further argued that while Sanstar Bio-Polymers Limited had a contract of supply of goods with Mukwano Industrial Suppliers Limited, the Ugandan company “falsely claimed that [Equity Bank] was its banker on basis of which it directed [Sanstar Bio-Polymers Limited] to transmit the bill of lading to [Equity Bank Limited] branch at Kabalagala.”
Without first consulting with Equity Bank, the lawyers of the Ugandan bank went on to argue, Sanstar Bio-Polymers Limited’s banker Karur Vysya Bank Limited, transmitted the shipping documents.
“[Sanstar Bio-Polymers Limited] never reached out to [Equity Bank Limited] and neither did the defendant accept to act as the collecting bank in the underlying transaction. There was therefore no contractual relation between [Sanstar Bio-Polymers Limited] and [Equity Bank Limited]. The URC 522 does not create but rather applies to existing contractual relations,” Equity Bank’s lawyers added.
“[Sanstar Bio-Polymers Limited] has no cause of action against [Equity Bank Limited]. There was no relationship of proximity between [Sanstar Bio-Polymers Limited] and [Equity Bank Limited]. Not having been notified of its appointment as a collecting bank, [Equity Bank Limited] did not owe a duty of care to [Sanstar Bio-Polymers Limited].”
In the end, Judge Stephen Mubiru, ruled in favour of Indian company Sanstar Bio-Polymers Limited against Equity Bank Limited.
In his ruling delivered electronically on March 30, 2026, Justice Mubiru ordered Equity Bank Limited to pay US $ 31,200 (about Shs115m) as damages equivalent to the invoice value of the goods to Sanstar Bio-Polymers Limited.
He also ordered Equity Bank Uganda to pay interest on US $ 31,200 (about Shs115m) at a rate of eight per cent per annum from November 8, 2016, when the bank received collection instructions, until payment in full.
Over the years, Equity Bank Uganda has been in the news over a number of allegations, including mysterious disappearance of money from customers’ accounts, multi-billion fraud, and agent banking scandals. (See Details Here, There and Over There).
