Wakilii

Inyatsi Construction Limited v Absa Bank Uganda Limited and Another (Miscellaneous Application No. 1257 of 2024)

High Court · [2025] UGHCCD 124 · 2025 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application for temporary injunction arising from civil suit for breach of contract
Decision
Application for temporary injunction dismissed with costs to follow the outcome of the main suit

Observed later treatment

Cited — treatment unverified cited in 1 (treatment unverified) Sequitur — Uganda’s citator · Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

Citator coverage is limited to judgments in the Wakilii corpus and source-matched treatment records. Absence of a signal is not an assertion that the case remains good law.

No adverse treatment recorded Cited 1 time with no adverse treatment recorded; not yet tested on the merits. Derived from citing cases in the Wakilii corpus — a deterministic signal, not legal advice.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions—always read the source judgment before relying on it.

Holding

Held that a temporary injunction to restrain a bank from honouring demand guarantees will not be granted absent a clear plea of fraud. Performance guarantees are payable on demand with no questions asked, and the applicant did not establish fraud. The court found no prima facie case, no irreparable injury that could not be compensated in damages, and the balance of convenience favoured the respondents, particularly the government's need to complete a public infrastructure project.

Outcome

Application for temporary injunction dismissed with costs to follow the outcome of the main suit

Facts

On 23 November 2022, the applicant contractor entered into a contract with the Ministry of Water and Environment for construction of Kabuyanda Earth Dam at UGX 84,574,952,685. The applicant received an advance of UGX 14 billion and the 1st Respondent bank issued four demand guarantees (two performance guarantees and two advance payment guarantees) totaling approximately UGX 14.7 billion in favour of the Ministry. The applicant commenced works in August 2023 but achieved only 20% physical progress. The applicant subsequently terminated the contract. On 2 December 2024, the Ministry demanded payment under the guarantees. The applicant filed this application seeking a temporary injunction to restrain the bank from honouring the demands, arguing that termination was at its own initiation and that parties were before an adjudication board to determine validity of termination.

Issues

  1. Whether the Applicant has satisfied the requirements for grant of an order for temporary injunction.
  2. Whether the Applicant has established a prima facie case against the Respondents.
  3. Whether the Applicant will suffer irreparable damage which could not be adequately compensated by an award of damages.
  4. Whether the balance of convenience is in favour of the Applicant.

Orders

  • Application for temporary injunction dismissed.
  • Costs of this application to abide the outcome of the main cause.

Rules and key headnotes

Banking & Finance — Demand Guarantees — Nature and Enforceability — Autonomy Principle
Demand guarantees are virtually promissory notes payable on demand and stand on a similar footing to letters of credit. A bank which gives a performance guarantee must honour that guarantee according to its terms and is not concerned with the relations between the supplier and the customer, nor with whether the supplier has performed its contractual obligations or is in default. The bank must pay according to its guarantee on demand as stipulated, without proof or conditions.
Banking & Finance — Demand Guarantees — Exception to Payment — Fraud
The only exception to a bank's obligation to honour a demand guarantee on presentation of a complying demand is when there is clear fraud of which the bank has notice. In the absence of a clear plea of fraud, courts will not intervene to prevent guarantors from making payment under a demand guarantee.
Civil Procedure — Temporary Injunction — Prima Facie Case — Demand Guarantees
Where an applicant seeks to restrain payment under a performance guarantee, the applicant must establish a prima facie case showing fraud as the only exception to the autonomy of demand guarantees. Merely asserting that the demand is illegal or unconstitutional without pleading fraud and without identifying specific legal provisions violated is insufficient to establish a prima facie case.
Civil Procedure — Temporary Injunction — Irreparable Injury — Contractual Obligations
A person cannot be said to suffer irreparable damage by doing what they undertook to do. Where an applicant entered into an undertaking with a bank to pay certain sums upon presentation of a satisfying demand, the applicant cannot successfully claim irreparable injury merely from performing that obligation. Reputational damage alone is not irreparable injury where courts can award damages to compensate for such loss.
Civil Procedure — Temporary Injunction — Balance of Convenience — Public Interest
In assessing the balance of convenience in applications for temporary injunctions, courts must weigh the public interest alongside the interests of the parties. Where the government expended public funds for construction of public infrastructure and the performance guarantees provide a mechanism for recovery in case of failure to complete or termination, the balance of convenience favours allowing the guarantees to be called where the contractor has failed to establish strong grounds for intervention, particularly when suspension of works poses risks including withdrawal of foreign development funding, project delays, and health and safety risks to the community.

Legislation cited (4)

Cases cited (14)

  • Kiyimba Kaggwa v Katende [1985] HCB 43
  • Kagumoha Kakuyo v Shilla Ninsiima (HCMA No. 13 of 2020)
  • BS Mount Sophia PTE LTD VS Join-Aim Pte [2012] SGCA 28
  • Uganda Electricity Transmission Co. Ltd v Citibank Uganda Limited & 2 Others (HCMA No. 1397 of 2022)
  • Busuulwa Vs National Social Security Fund and Anor
  • R Vs Secretary of State for Transport ex parte Factortame Ltd [1991] 1 AC 603
  • Giella Vs Cassman Brown & Co. Ltd [1973] EA 358
  • American Cyanamid Co. v Ethicon Ltd [1975] 1 All ER 504
  • American Cyanamid v Ethicon [1975] AC 396
  • Godfrey Sekitoleko and four others v. Seezi Peter Mutabazi and two others
  • Edward Owen Engineering Ltd v. Barclays Bank International Ltd and another [1978] 1 QB 159; [1978] 1 Lloyd's Rep 166; and [1978] 1 All ER 976
  • Tonny Wasswa v Joseph Kakooza [1989] HCB 79
  • Kiyimba Kaggwa v Katende [1985] HCB 43
  • American Cyanamid Co. v Ethicon Ltd [1975] 1 All ER 504

Cases citing this judgment (1)

How later Ugandan judgments in the Wakilii corpus have cited this case. Treatment labels come from Sequitur — Uganda’s citator — each backed by a verbatim span from the citing judgment, and are not an assertion that this case is, or is not, good law.

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Inyatsi Construction Limited v Absa Bank Uganda Limited and Another (Miscellaneous Application No. 1257 of 2024) [2025] UGHCCD 124 (20 February 2025)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.