By:Nasser Kasozi/The Homeland News Agency
The High Court in Kampala, Commercial Division has dismissed with costs the Case that bank of uganda (BoU) had filed against Dr.Sudhir Ruparelia and Meera Investments (the company), seeking to recover shs 379bn.
On Monday, the head of the court, Justice David Wangutusi dismissed the case on grounds that Crane Bank Limited (in receivership) has no legal basis to sue.
The justice Wangutusi dismissed the case on Monday over lack of legal basis to sue and ordered Bank of Uganda (BOU) to pay all the legal costs incurred to Dr.Sudhir Ruparelia and the group, who had been accused of taking Shs397b out of the financial institution in fraudulent transactions and land title transfers.
The ruling clearly indicates that a bank in receivership, under the Financial Institutions Act (2004) is not permitted to sue or be sued, and therefore, Crane Bank (in receivership) cannot and should not have sued businessman Sudhir Ruparelia and his Meera Investments.
Further in the ruling of justice Wangutusi he said, that Crane Bank (in receivership) being foreign owned, cannot own free-land in Uganda and therefore has no legal basis to sue for land it cannot own.
At stake are 48 branches that Crane Bank (in receivership) had wanted to repossess, and whose land titles are in the hands of DFCU that took over the bank.
In 2017, BoU sued Sudhir, accusing him of swindling sh397b out of the financial institution in fraudulent transactions and land title transfers.
BoU took over the management of Crane Bank in November 2017,
putting it under receivership after establishing that it was
over-leveraged.
According to BoU, Crane Bank liabilities exceeded it’s assets, rendering it
insolvent and hence posed a systemic risk to the banking industry.
On January 27, 2017 DFCU acquired Crane Bank assets and liabilities following
the conclusion of the purchase and assumption agreements with BoU.
Crane Bank was the fourth-largest commercial bank in Uganda
licensed and supervised by BoU as at the end of 2015. It started operating in
August 1995 offering corporate and retail services. The bank focused on micro,
small and medium-sized businesses.
In September 2012, the bank acquired assets and some liabilities of the
National Bank of Commerce, indigenous financial service providers in Uganda
that had lost it’s banking license.
Genesis:
The landmark ruling arises out of an application by which the Dr.Sudhir Ruparelia and Meera Investments Ltd sought to dismiss Civil Suit No.493 of 2017 that had been instituted by the Crane Bank (in receivership) against the applicant.
On June 30, 2017, BoU filed a suit against Sudhir and his Meera Investments Ltd, which the Dr.Sudhir says was in breach of the Confidential Settlement and Release Agreement that was reached by both parties after BoU closed and liquidated Crane Bank for allegedly being undercapitalized.
Clause 12 of Confidential Settlement and Release Agreement stipulates that, “Without prejudice to the immediate forging should any legal or administrative proceeding of any kind ensue against Dr.Sudhir Ruparelia as defined in the agreement, the agreement stands voided and BoU shall immediately return to SR the value of the settlement.”
It was averred by Dr.Sudhir Ruparelia that the respondent didn’t have locus standing to institute the suit; that the suit did not disclose a cause of action and that the suit was barred in law.
In 2017, BoU sued Sudhir, accusing him of swindling sh397b out of the financial institution in fraudulent transactions and land title transfers.
The Court held that the Crane Bank (in receivership) did not have jurisdiction to file HCCS No.493 of 2017. It was further held that the suit was barred in law rendering the Plaintiff/ Respondent with no cause of action against the 2nd Applicant.
