By Uganda online media
Kampala: Supreme Court has this morning dismissed Bank of Uganda (BoU)’s appeal against Sudhir Ruparelia and Meera Investments and also ordered it [BoU] to directly pay costs at all Court levels.
The Court ruled that Crane Bank ended being in receivership in 2018 thus ordering that the Bank is reverted to Sudhir and the stakeholders.
Today’s ruling effectively settles a long-standing legal battle between Sudhir and the bank regulator, dating back to 2017.
Further, the ruling buries BoU’s demand of Sudhir paying the sh397b. “I told you from the beginning that Bank of Uganda stole my bank,” Sudhir, who attended the court session in Kampala, said after the decision was announced before vowing, “They have to pay costs of suit right from the Commercial Bank to the Supreme Court.”
For starters, after dubious sale of tycoon Sudhir’s Bank assets to Dfcu, Bank of Uganda through Crane Bank (in receivership) filed a suit against Sudhir and Meera Investments seeking to recover over Shs400 billion and 48 land titles.However, BoU’s case was dismissed by High Court with costs on grounds that a bank under receivership cannot sue. Infact, receivership had ended and Crane Bank was a non-citizen company which could not hold freehold titles.
“The 1st respondent was closed as a financial institution and placed under receivership. Upon closer, it ceased being a financial institution under the Act and it could therefore, not be progressed to liquidation. The 2nd respondent’s act therefore of moving the 1st respondent to liquidation are contrary to the above clear provisions of the law and the same cannot be sanctioned by this court,” states part of the ruling.
Because it was not satisfied, BoU filed an appeal to the Court of Appeal which didn’t waste its time but upheld the findings of the High Court thus pushing it to the Supreme Court that has today ruled in favor of Sudhir…just like previous court rulings.
You many actually remember that in all legal battles, Courts of law have been ordering Bank of Uganda to pay costs to Sudhir who has floored them multiple times.
In previous court rulings, BoU said that the decision of shutting Crane Bank was necessary upon discovering that it had significant and increasing liquidity problems that could not be resolved without the Central Bank’s intervention, given that Crane Bank had failed to obtain credit from anywhere else.
“An inventory by external auditors found that the assets of Crane Bank were significantly less than its liabilities. In order to protect the financial system and prevent loss to the depositors of Crane Bank, Bank of Uganda had to spend public funds to pay Crane Bank’s depositors,” BoU governor, late Tumusime Mutebile said then.
However, tycoon Sudhir denied the allegation thus counter-suing BoU, seeking compensation of $8m (Shs28 billion) in damages for breach of contract.
He asked the High Court to dismiss the case arguing that the Central Bank overstepped its mandate in commencing court proceedings against him and his Meera Investments Company.
Presenting an objection against BoU, Sudhir through his lawyers Kampala Associated Advocates, told Justice Wangutusi that when dissolving a bank, BoU had three options including putting someone else in its management – what is termed as statutory management, receivership or liquidation.
Counsel Elison Karuhanga a lawyer at Kampala Associated Advocates, argued that however, BoU chose to go for receivership yet under the law, specifically only the manager and the liquidator of the said bank is mandated to file a suit and not a Receiver.
He further explained that BoU as a Receiver could only dissolve or sell Crane Bank within 12 months but not sue its managers.
On June 30, 2017, Crane Bank Limited (in Receivership) took Mr. Sudhir Ruparelia and his Meera Investments Ltd. to court for causing financial loss amounting to UGX 397 billion to Crane Bank in fraudulent transactions and land title transfers.
Crane Bank (in receivership) in its Civil Suit No. 493 of 2017 sought High Court to compel Mr. Ruparelia to pay back the US$80,000,000, US$9,270,172.00, US $ 3,560,000.00, US$990,000.00 and UGX 52,083,995.00 as compensation for breach of fiduciary duty.
While Hon. Justice Wangutusi dismissed the UGX397 billion case against Mr. Ruperalia on a technicality, alleging that Crane Bank (in Receivership) lost its powers to “sue” and to “be sued”, thus rendering its suit a nullity, Crane Bank (in Receivership) maintaining that receivership is a management situation, and hence no legal change as to the capacity of a company to sue and be sued