Court has set 26 of August as the date when Commercial Court judge, Justice David Wangutusi, will give a ruling in the case brought against city businessman Sudhir Ruparelia by Crane Bank in receivership. During today’s submissions, Sudhir’s lawyers led by Peter Kabatsi, argued that an institution in receivership has no right to sue or be sued since the Financial Institutions Act (FIA) which is a financial governing body does not say so.
On the contrary, Crane Bank in receivership lawyer led by Dr Joseph Byamugisha, submitted that when a financial institution is placed under receivership, it does not also lose its powers to sue or be sued since it still remains a corporate entity.
In the main case BoU had asked court to compel Sudhir pay Shs397 billion. Sudhir’s lawyers led by Kabatsi objected and reasoned that an institution in receiver has no right to sue because it is an illegality and as such the institution of the suit is an illegality quoting section 92.25a of the Financial Institutions Act (FIA)
Dr. Byamugisha says the actions weren’t commenced by BoU but rather by Crane Bank that could sue and be sued.
Byamugisha further said it is only the company with the right to sue but not the board because the board is suspended. However, this was contested by Sudhir’s lawyers.
In May 2019, Sudhir Ruparelia and Meera Investments lodged an application seeking court to dismiss a suit in which CBL in receivership sued the two applicants yet it had no legal capacity to do so.
Click on the link below to read full submission
file:///C:/Users/hp/Downloads/Submission.pdf
BoU (receiver) took-over CBL before it connived with Dfcu to sell it at a throw away price.
“…I have been advised by…lawyers, which I advise I verily believe to be true, that the respondent has no legal capacity to sue applicants,” reads part of the application.
Mr. Sudhir and Meera Investments also in the application want the recovery, transfer and return of freehold property from CBL in receivership. “…I have been advised by lawyers, Kampala Associated Advocates, which advice I verily believe to be true, that under the Constitution and the Land Act, the Respondent cannot own and hold freehold property and is therefore, not capable of holding the suit property in its names,” the application continues.
Mr. Sudhir also in the application argues that he was sued as a sole shareholder of CBL, which is not true and that the respondent has no powers to commence against CBL shareholders or Sudhir himself.
“The orders sought against the 2nd applicant in HCCS 493 of 2017 are barred by law. The respondent cannot maintain an action against the 2nd applicant for recovery, transfer and return of freehold property when the respondent is a non-citizen within the meaning of the law” reads the suit.
In the application Sudhir wants CBL in receivership to pay National Social Security Fund (NSSF) the statutory debts. CBL in receivership was in the hands of BoU between October 20, 2016 and January 25, 2017 before its assets were controversially transferred to Dfcu bank by BoU.
“The claim by National Social Security Fund could only be made against the respondent,” the application states.
The application was lodged on April 30, 2019 and court has set July 3, 2019 as date to decide whether the plaintiff has no locus standi to commence actions against the applicant in High Court Civil Suit (HCCS) No 493 of 2017 against the applicants.
Court also will rule whether the plaint does not disclose the cause of action against the applicant and determine whether orders against second applicant (Meera Investments) are barred by the law but court will also determine whether the suit will be dismissed with costs as desired by applicants.
BoU in Panic
According to a legal expert that preferred to remain anonymous in this article, BoU still remain in pani after Court dismissed two conflicted law firms from representing any client in any case involving Sudhir and Ruparelia Group. He said BoU now pondering whether to use the Financial Intelligence report on CBL and a report on receivership of CBL to sue Sudhir on behalf of CBL shareholders.
The source said the officials at BoU are now wondering as to why BoU sued Sudhir and Meera Investments and should court go by proceed with the main case, the taxpayers will lose more money as Sudhir and Meera Investments will be compensated in billions of shillings, their names having been dragged to court by BoU for wrong reasons.
Barring of conflicted lawyers kills BoU hope of winning in main case
Days ago the court put a permanent injunction on law firm Lule & Sebalu Advocates in cases involving the Ruparelia Group since the law firm at one time represented Sudhir or his companies.
The High Court made the ruling in a case where Sudhir was seeking the law firm hired by the Dfcu bank and Bank of Uganda to be declared conflicted, and therefore, unfit to represent the parties in a longstanding commercial dispute.
Sudhir through his Real Estate Company; Crane Management Services some time back sued Dfcu bank demanding rental arrears amounting to Shs2.9 billion and US $385,728.54 in respect of tenancies of suit properties that were formally owned by CBL. Dfcu bank which controversially bought off CBL had hired Sebalu & Lule Advocates. Sudhir said he contracted the same law firm in 2006 to draw and review tenancy agreements in respect of the said rental premises thus there is conflict between the lawyer and his client.
Further In December 2017, the Commercial Court disqualified city lawyers Timothy Kanyererezi Masembe and David Mpanga from the Shs397 billion suit in which BoU sued Sudhir and Meera Investments for recovery of that money. BoU had hired the two lawyers but Sudhir challenged them to be dropped off the case, citing conflict of interest, having hired them at one time.
In his ruling delivered on December 21, 2017, the head of the Commercial Court division, Justice Wangutusi stated that Mr. David Mpanga of A.F. Mpanga Advocates and Timothy Masembe of MMAKS Advocates acted in violation of the Advocates (Professional Conduct) regulations.
Section 4 of the regulation provides that an advocate shall not accept instructions from any person in respect of a contentious or non-contentious matter if the matter involves a former client and the advocate as a result of acting for the former client is aware of any facts which may be prejudicial to the client in that matter.
According to the source, BoU’s hope of riding on conflicted lawyers who were employed by Sudhir and his companies under the Ruparelia Group was killed by the two rulings, the reason it has opted for alternatives, having sensed it could lose the main case against Sudhir and Meera Investments. “Remember that the two sides disagreed to resolve the matter out of court,” he said.
Questioning BoU’s Shs478 billion spent on CBL in Auditor General’s report
The situation, in which BoU is in right now, according to the source, is worsened that BoU has failed to account for Shs320 billion of the Shs478 billion it claimed to have put in CBL during the receivership between October 20, 2016 and January 25, 2017. The situation is further also worsened by the fact that BoU offered to Dfcu bank CBL assets at only Shs200 billion. These statics came out during the Auditor General’s probe of BoU over seven defunct banks closed by BoU. Also during MPs probe of BoU on closed banks, a top official said CBL needed only Shs150 billion to remain operating.
The source said BoU is scared because it used the above money without the involvement of shareholders of CBL. It was the receiver and the lender at the same time and now it cannot tell CBL shareholders to refund the money which belonged to taxpayers.
