A three‑judge Court of Appeal bench upheld a Sh1.157 billion judgment in favour of Equip Agencies Limited for insecticides and related equipment supplied to the Ministry of Health in the mid‑1990s, but struck out the award of compound interest, reducing the total by over Sh704 million.

Justices Patrick Mativo, Paul Lilan and Dr John Okello ruled that Equip Agencies had neither pleaded nor proved entitlement to the 18 percent per‑annum compound interest that had been added by the High Court.

The dispute stems from two contracts signed in 1993 and 1995 for the supply of anti‑malaria chemicals on an “as and when required” basis, with deliveries made between June 1995 and October 1996 and invoices totalling Sh1.001 billion.

The Ministry of Health cancelled several Local Purchase Orders in July and August 1996, prompting Equip Agencies to sue the government in 1999 for Sh1.862 billion in principal and interest.

The High Court ruled for Equip Agencies in December 2011 and later amended the judgment to include compound interest from March 1999, a decision the Attorney General challenged on limitation grounds.

The appellate judges held that the cause of action arose on 23 August 1996, when the Ministry cancelled the purchase orders despite delivery and acceptance, thereby rendering the claim timely under the Public Authorities Limitation Act.

The court also rejected the government’s argument that some purchase orders were invalid due to lack of signature by an authorised officer, affirming that internal administrative lapses cannot nullify contractual obligations.

Regarding interest, the judges found that Equip Agencies failed to demonstrate that borrowing from commercial banks was a direct consequence of the government’s non‑payment, a prerequisite for claiming compound interest.

Consequently, the Court ordered the government to pay the principal amount of Sh1,157,846,150 with simple interest at the court rate from 26 June 1995, while each party bears its own costs.