Nile Breweries has been ordered to pay Fuel Stick Uganda Limited Shs 322 million for fuel additives supplied to its Mbarara plant, after the High Court rejected claims that the supplies were fictitious or counterfeit.
The saga began in March 2022, when Nile Breweries issued three purchase orders for the supply of Biofuel Conditioner S19, used in heavy fuel oil operations.
Fuel Stick told the court that it received purchase orders dated March 4, March 21, and April 12, 2022, valued at Shs 100.8 million, Shs 121 million, and Shs 100.8 million, respectively, bringing the total claim to Shs 322 million.
The company said it delivered the fuel stick to Nile Breweries’ Mbarara plant on March 22, March 23, and April 28, 2022. It issued delivery notes and tax invoices, while Nile Breweries issued Goods Received Notes confirming receipt.
Under the purchase orders, Nile Breweries was required to pay within 120 days. Fuel Stick said the payment never came, prompting it to file a suit in 2022 seeking recovery of the outstanding sum, interest, general damages, and costs.
In court, Nile Breweries denied owing the money. It claimed the goods were never delivered and instead accused Fuel Stick of supplying counterfeit products that lacked Uganda National Bureau of Standards (UNBS) certification.
The beer company also alleged that the delivery notes and goods received documents were forged.
So it filed a counter suit accusing Fuel Stick and several individuals, including its director Girish Kamalakar Diwakar and former Nile Breweries employees, of running a racket that generated purchase orders and invoices for fuel stick that was never physically delivered.
Nile Breweries claimed that because of such schemes, it lost Shs 769.5 million in 2020, Shs 1.026 billion in 2021, and Shs 342 million in 2022, bringing the alleged loss to Shs 2.394 billion. It asked the court to award it special, general, aggravated, and exemplary damages.
Fuel Stick’s lawyers, led by Martin Mbanza Kalemera of Birungyi, Barata and Associates, told the court that delivery was proved by signed delivery notes and Goods Received Notes, which are standard procurement documents.
They argued that once a delivery note is signed and stamped and a Goods Received Note is issued, delivery is complete.
They said Nile Breweries accepted the goods, used them without complaint, and only raised allegations of fraud and counterfeiting after being sued.
On the counterclaim by Nile Breweries that Fuel Stick and some of its employees had engaged in fraud, the lawyers argued there was no evidence to prove this. Fuel Stick’s lawyers said the losses cited by Nile Breweries were not supported by any concrete evidence.
Nile Breweries’ lawyer, Henry Agaba of Meritas Advocates, shot back. He told the court that investigations uncovered ghost supplies processed through the company’s electronic procurement system. He relied heavily on internal investigations and statements by former employees.
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In her ruling, Justice Patience Rubagumya of the commercial division of the High Court sided with Fuel Stick.
She found that delivery was proved by a trail of documents including purchase orders, delivery notes, Goods Received Notes, and invoices. She noted that Nile Breweries’ own witnesses confirmed at least one of the deliveries.
On claims that documents were forged, Justice Rubagumya discovered that the specific delivery notes relied upon by Fuel Stick were not among those alleged to be fake.
She added that some of the contested purchase orders appeared in Nile Breweries’ own records as valid and delivered.
On the counterfeit allegation, the court found no evidence that the fuel stick failed to meet standards. Justice Rubagumya held that Nile Breweries had ample opportunity to inspect and reject the goods but did not.
“Nile Breweries retained the goods without intimating to Fuel Stick that it had rejected them until after the institution of this suit,” Justice Rubagumya ruled.
In the end, the court dismissed the entire Shs 2.39 billion counterclaim by Nile Breweries. Justice Rubagumya ordered Nile Breweries to pay Fuel Stick Shs 322 million for the supplied fuel additives.
She also found no proof that Fuel Stick or its director connived with Nile Breweries staff. She noted that statements relied on by the beer firm did not admit collusion or inducement.
