KAMPALA – The Bank of Uganda is procrastinating over their next course of action after the Supreme Court dismissed, with costs their appeal against businessman Sudhir Ruparelia and his real estate arm—Meera Investments Ltd.
The Supreme Court last week ordered the central bank to pay costs at all court levels, right from the High Court and directed that Crane Bank is reverted to its owners.
Many thought that the February 11th, 2022 ruling brought to an end the long-standing commercial dispute between businessman Sudhir Ruparelia and the Ugandan banks regulator, dating back to 2017, but in a statement on Friday, the Central Bank largely sidestepped the key issues of the case, and maintained that it is still pursuing one of the grounds to the case which “relates to the interpretation and application of the substituted section of the Financial Institutions Act”.
The bank also claimed that “the main suit in relation to a claim against the shareholders for wrongful extraction of funds from Crane Bank…has never been heard on its merits.”
Legal analysts on Friday said the BoU statement was a shocking legal standpoint”.
“It’s a shame that the Central Bank issued such a statement. Once the appeal was withdrawn, all pending applications collapsed,” an analyst said.
Justice David Wangutusi of Commercial Court in August 2019 dismissed the first case in which BoU claimed that Ruparelia and his Meera Investments Ltd pulled UGX. 397 billion out of his own Crane Bank Ltd.
On, June 30, 2021, the BoU insisted in a statement that receivership does not take away the corporate personality of a company which includes the right to trace and recover assets and the right to sue for those assets.
In the preliminary stages of the appeal, the Supreme Court in August last year, dismissed with costs, an application by lawyers representing the Bank of Uganda (BoU) in which they sought to substitute the court record from Crane Bank Ltd (in receivership) to Crane Bank Ltd (in Liquidation), with the court rejecting the move, as in bad faith and intended to circumvent facts.
A panel of the Supreme Court Justices including Ruby Opio-Aweri, Faith Mwondha, Lillian Tibatemwa, Ezekiel Muhanguzi and Night Tuhaise, in a ruling issued on August 12, 2021 rejected arguments by BoU lawyers led by veteran attorney the late Dr. Joseph Byamugisha, reasoning that Crane Bank Ltd (in Receivership), Crane Bank Ltd (in Liquidation), and Crane Bank Ltd are three distinct entities with different rights, powers and obligations.
Earlier in the High Court, Justice Wangutusi noted in his ruling that at the time BoU and Crane Bank (in receivership) filed the suit against Mr Ruparelia and his Meera Investments in January 2017, Crane Bank was a non-existing entity, having been terminated when the Central Bank sold its assets to DFCU Bank in October 2016.
The judge ruled that this rendered Crane Bank Ltd in receivership incapable of suing or being sued since there would be no assets to be claimed for.
Court noted that the public notice made it clear that BoU as the receiver had done an evaluation of the respondent (Crane Bank in receivership) and arranged for the purchase of its assets and assumption of its liabilities by another financial institution.”
In his [BoU] notice, he specifically stated that the liabilities of the respondent had been transferred to DFCU Bank Ltd and that because DFCU Bank had taken over the liabilities, it would, by way of consideration, be paid by conveying to it the respondent’s assets,” the judge ruled.
It is understood that the Central Bank was expected to concede defeat and pay costs as ordered by the court.