Following its historic judgement in the Crane Bank case on
February 11th, 2022, the Supreme Court of Uganda issued an official order this
month instructing the Bank of Uganda to pay costs to businessman Sudhir Ruparelia
and his Meera Investments Ltd.
The Supreme Court further directed the Bank of Uganda to
restore Crane Bank to its shareholders in the July 1, 2022, judgement, noting
that the appellant (Crane Bank Limitedreceivership )'s expired on January 20,
2018.
The Supreme Court denied the Bank of Uganda's appeal against
Dr Sudhir and his Meera Investments firm in February of this year.
The court ordered BoU to pay all court expenses immediately
and to restore Crane Bank to its original owners in its verdict.
A panel of five judges rendered the decision, which
comprised Rubby Opio Aweri, Percy Tuhaise, Ezekiel Muhanguzi, Prof. Tabatemwa
Ekirikubinza, and Faith Mwondha.
To prevent uncertainty, the Court of Appeal confirmed the
trial court's decision, which ordered that the Bank of Uganda bear the expenses
of the claim since it was responsible for the filing of the complaint and other
subsequent acts. "The Supreme Court decided that the order shall
remain."
"We equally examined this element in our judgement and
determined that the appellant's (Crane Bank in receivership) receivership had
terminated on January 20, 2018." The significance of that judgement, in
our opinion, is that the appellant's management be returned to shareholders
after January 20, 2018."
In September of last year, the Bank of Uganda decided to
abandon a Supreme Court appeal challenging the Court of Appeal's rejection of
Crane Bank Ltd. (in Receivership) vs. Sudhir Ruparelia and Meera Investments
Ltd.
The Supreme Court Registrar noted in a notice of withdrawal
dated September 15, 2021 that BOU had chosen not to pursue the appeal and would
pay costs.
In 2020, the Bank of Uganda filed an appeal with the Supreme
Court against a Court of Appeal verdict that upheld an earlier High Court
decision to reject a complaint brought by Crane Bank in receivership against
businessman Sudhir.
Previously, the Court of Appeal in Kampala dismissed a
complaint against Dr. Sudhir.
The panel of justices, chaired by acting Chief Justice
Alfonse Owiny-Dollo, backed Commercial Court judge David K. Wangutusi's
decision in an application brought by the Bank of Uganda demanding a repayment
of Shs397 billion from Sudhir, which he allegedly stole from the defunct Crane
Bank. The lawsuit was dismissed without prejudice.
The Bank of Uganda/Crane Bank in Receivership (BoU) has
filed an appeal against an August 26, 2019 judgement in which the High Court
Commercial Division rejected the multi-billion dollar case with costs.
The property developer and Meera Investments Limited were
sued for allegedly defrauding the defunct Crane Bank Limited (CBL) of Shs397
billion, which the central bank demanded be repaid.
Sudhir disputed the accusation and has subsequently
counter-sued BoU for breach of contract damages of $8 million (Shs28 billion).
He urged the Commercial Court to dismiss the lawsuit,
claiming that the central bank exceeded its authority by filing legal action
against him and his Meera Investments Company.
Sudhir, via his attorneys, Kampala Associated Advocates,
filed an objection against BoU, telling Justice Wangutusi that when dissolving
a bank, BoU has three alternatives, including placing someone else in
charge—what is known as statutory management, receivership, or liquidation.
However, despite the fact that the law requires only the management and liquidator of the mentioned bank to bring an action, not a receiver, BoU selected receivership.He went on to say that as a Receiver, BoU could only dissolve or sell Crane Bank within a year, but not suit its management.
In response to Sudhir's attorneys' remarks, BoU, via its
counsel Dr Joseph Byamugisha, informed the court that when a financial
institution is put under receivership, the capacity to trade or proceed with a
civil action does not cease.
Crane Bank was put under statutory administration by BoU on
October 20, 2016, due to undercapitalization.
The central bank blamed Crane Bank's undercapitalisation on
mismanagement and insider lending, which resulted in an unsustainable
non-performing loan portfolio. In January 2017, the bank was sold to DFCU Bank,
while the central bank maintained part of its liabilities.
Sudhir's bank, Uganda's second largest bank and largest
indigenous financial institution, was closed down by the Bank of Uganda.
Separate examinations conducted by the Auditor General and
Parliament have discovered contradictory evidence underlying the acquisition
and sale of Crane Bank. It was also uncovered that BoU executives lacked
professionalism, closing six other banks in the same shoddy and unlawful way.
0 Comments