Supreme Court has dismissed an application in which Bank of Uganda wanted permission to file fresh evidence as the central bank appealed the court of Appeal’s dismissal of their case against tycoon Sudhir Ruparelia.
BoU wanted to change Crane Bank Limited in (receivership) with Crane Bank Limited in (Liquidation). BoU reasoned that the bank was still a licensed financial institution under resolutions of the Financial Intelligence Institution’s Act of 2004.
The BoU filed the case through Crane Bank Limited (in Receivership) against Mr. Sudhir Ruparelia and Meera Investments Ltd.
However, in their ruling yesterday, justices Faith Mwondha, Opio Aweri, Percy Night Tuhaise, Ezekiel Muhanguzi and Lillian Tibatemwa dismissed the application stating that BoU’s request in which it wanted it control and manage CBL can be handled at the commencement of the main hearing.
“This application is therefore dismissed with costs to the respondents,” the panel ruled in an unanimous judgement” adding “Since the appeal was filed by Crane Bank in (receivership) at the time when Crane Bank in (liquidation) was non existent, it is only prudent that the appeal proceeds under the same parties and no prejudice will be occasioned ” reads the ruling.
It further continues “The applicant’s concerns of reflecting the capacity in BoU is managing and controlling Crane Bank Limited in the pending appeal can be effectively addressed by indulging court to put the changed status on record at the commencement of the hearing, after which the hearing would proceed as filed by parties initially”
On June 23, 2020, the Court of Appeal upheld the judgment of Commercial Court in an application filed by BoU seeking a refund of Shs397 billion from Mr. Sudhir Ruparelia which he allegedly pulled out from Crane Bank.
Justice David Wangutusi of Commercial Court in August 2019 dismissed a case in which BoU claimed that Mr. Ruparelia and his Meera Investments Ltd fleeced his own Crane Bank Ltd (now in receivership) of Shs397 billion.
But on June 30, 2020, the BoU announced they would appear the judgement reasoning 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.
The Justices of Supreme Court further said that while it is right under the rules of procedure to substitute parties to reflect phases, the parties may have undergone during litigation and hence it will defeat justice if such substitution alters the cause of action or introduce new changes to the case.
“We do no agree with the applicant that Crane Bank Limited in receivership is the same as Crane Bank Limited in liquidation. Under the law, the two entities can never enjoy the same status”
Lawyers for the respondent (Sudhir Ruparelia and others) told court that granting the application would be perpetuating an illegality reliance on which would render the appeal nugatory and negate the respondents’ gains in the lower courts.
“He argued that the applicant is no longer a financial institution following its being placed under statutory management and receivership and so, she cannot be liquidated, that, for those reasons, the applicant should not be allowed to amend and substitute the Receivership and Liquidator, an illegal entity.”
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.
Earlier on in the same case, financial lawyers warned that the attempt to liquidate Crane Bank contravenes the Financial Intelligence Act,2015.
“The powers of the Central Bank in the management of commercial banks are spelt out in the Financial Intelligence Act. They are not arbitrary. Any attempts to liquidate Crane Bank would be a violation of that Act,”said one lawyer familiar with the processes of liquidating Banks”.
Lawyers further warned that the judgements of both the High Court and Court of Appeal stating that receivership is still in force are binding.
“Crane Bank ceased being a financial institution under the FIA Act when it was taken over by the Central Bank. The Central Bank has since lost many cases in the Supreme Court. The Central Bank can not therefore try to liquidate it,”said the lawyer.
On January 20, 2017, CBL was closed as a bank (and it ceased to be a licensed bank) and was placed into Receivership by the Central Bank. It ceased to be a licensed financial institution when it was placed in receivership. All of this was within BoU’s power under the FIA, which allowed it to close the bank and to place it into receivership. In both HCCS 493/2017 and Civil Appeal 252/2019, both filed by BoU to assert powers as Receiver of CBL, the High Court and the Court of Appeal both found that the Receivership of CBL ended 12 months after it commenced (i.e. January 2018).
Stories Continues after ad
