The High Court in Lilongwe has cleared the way for four companies to seek compensation for business they lost after they were denied fertilizer supply contracts under the 2020/21 Affordable Inputs Programme (AIP).
Justice Simeon Mdeza ruled that Web Commercials Limited, Mulli Brothers Limited, Rock Ba Rock and FF Trading were entitled to damages for loss of business, profit or revenue after finding that the contracts should have been awarded to them.
The companies had successfully gone through the procurement process and were recommended for the contracts before the Public Procurement and Disposal of Public Assets Authority (PPDA) issued its no objection to proceed with the awards.
However, the contracts were not awarded after the Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) was advised that the companies allegedly had outstanding loans with the government.
The companies challenged the decision before the PPDA Review Committee.
The committee found that SFFRFM should have awarded the contracts to the companies and that it was wrong not to do so.
However, the committee only ordered compensation for the costs incurred in preparing and submitting the bids and the applications for review.
The companies then sought judicial review of that decision, arguing that they were also entitled to compensation for the business they lost.
In his judgment delivered on August 27, 2026, Mdeza agreed with the companies.
“The failure by the Respondent to proceed with the award, without lawful justification, constitutes a breach which resulted in loss of business to the Appellants,” the judge said.
He added that the loss reasonably included anticipated profits arising from the performance of the contracts.
The court also rejected the argument that the companies’ alleged outstanding government loans could be used to stop the contracts after the procurement process had been completed.
Mdeza said the financial due diligence should have been conducted before the PPDA issued its no objection.
“The due diligence regarding the financial standing of the Appellants should have been conducted prior to the issuance of the ‘no objection,’ and not after,” he said.
According to the judgment, the failure to conduct the checks at the appropriate stage amounted to a procedural irregularity and undermined transparency, fairness and predictability in public procurement.
The judge further ruled that an award signifies the transition from a procurement process into a contractual relationship or, at the very least, creates binding obligations and legitimate expectations capable of enforcement.
The court therefore found that the PPDA’s decision was amenable to judicial review and that the four companies had sufficient interest to bring the case.
It further ruled that the companies were entitled to damages for loss of business, profit or revenue.
The amount will be assessed by the Registrar if the parties fail to reach an agreement.
The court described the decision under review as ultra vires, irrational, procedurally unfair or otherwise unlawful, and concluded that the companies had demonstrated that the PPDA failed to act within its statutory powers.
The four companies have also been awarded costs.
The dispute dates back to the 2020/21 AIP fertilizer procurement process, when the companies participated in a tender to supply fertilizer to SFFRFM.
The PPDA’s no objection was subject to the contracts being concluded within 90 days and the procuring entity obtaining approval from the Office of the Chief Secretary in the Office of the President and Cabinet.
The case has previously attracted controversy, with the Attorney General challenging the companies’ judicial review proceedings.
