By Spy Uganda
Kampala: In another shameful act, the Bank of Uganda (BoU) has issued a controversial statement in regard to the decision of the Supreme Court in Civil Appeal No. 07 of 2020 Crane Bank Limited (In Receivership) Vs. Sudhir Ruparelia and Meera Investments Ltd which was delivered on February 11, 2022, dismissing the Appeal with costs.
In its ruling of February 11, 2022, the Supreme Court decided as follows: –
(i) That the Judgments of the lower courts, stood. The lower courts found that the receivership of Crane Bank Ltd. ended on January 20, 2018, it was a closed financial institution and was non-existent.
(i) That upon withdrawal of the appeal by Crane Bank Ltd (In Receivership) and objection by Sudhir Ruparelia and Meera Investments Ltd on September 20, 2021, the Appeal stood dismissed and the only issue to be determined was on costs and who should pay. However, the dismissal would take effect on the date of endorsement of the ruling (February 11, 2022).
(ii) That Bank of Uganda should pay the costs of the suit because it was aware at the time of taking over that Crane Bank Ld was financially distressed, incapacitated and could not be expected to pay costs. That it is not logical to expect a shareholder of Crane Bank Ltd. (ln Receivership) who is entitled to costs of an action to pay costs to himself.
Further, the Supreme Court noted that the implication of the finding that the receivership of the Appellant had ended was that the management of the Appellant reverted to the shareholders after the 20th of January 2018.
Now, BoU shamelessly says that before this recent Supreme Court decision, it had in October 2021 filed an application for review of some of its findings and declarations and that ‘this application is yet to be determined by the same court.’
“That application is yet to be heard and disposed of by the Supreme Court. The determination of that Application is critical in guiding the Bank of Uganda in implementing the court decisions. We are following up with the Court to have this application fixed for hearing,” BoU says in its statement.
As if that is not enough, BoU continues to shamelessly confuse Ugandans thus, “Please note that the main suit that related to a claim against the shareholders for wrongful extraction of funds from Crane Bank Ltd by Sudhir Ruparelia and Meera Investments Ltd. has never been heard on its merits.”
Meanwhile, one of the top economic pundits in Uganda who is actually inside the Bank of Uganda has on the condition of anonymity noted that the central bank’s statement is kicks of dying horse and the Supreme Court has nothing else to decide because the appeal was withdrawn by the appellant itself. So there is no decision to review.
The economist adds, “There is nothing to review. BoU continue to commit legal blunder after legal blunder. The application for review was arising from a pending appeal which is no longer there. BoU will just incur more costs. They don’t care about taxpayers money.”
“In fact, it’s a shame that BoU issued such a statement. So the application in October is pending what?? 🤣 🤣. Once the appeal was withdrawn…all pending applications collapsed. An application arising out of an existent appeal can’t stand on its own!,” pundit adds.
Summary Of This Saga
For starters, after the 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. In fact, receivership had ended and Crane Bank was a non-citizen company that 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 favour of Sudhir…just like previous court rulings.
You may actually remember that in all legal battles, Courts of law have been ordering the Bank of Uganda to pay costs to Sudhir who has floored them multiple times.
Hint On Previous Rulings
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. 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.
But Where Did It Begin From?
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.
