Background: On the 20th of October 2016, Bank of Uganda took over Crane Bank Limited (CBL) under Sections 87 (3) and 88 (1) (a) of the Financial Institutions Act (FIA) and subsequently placed it under receivership on 20th January 2017, before summarily selling its assets and liabilities to dfcu Bank on the 25th of January 2017.
Bank of Uganda has withdrawn its UGX397 billion case against Dr. Sudhir Ruparelia and his Meera Investments Limited.
Before withdrawing from the case, the central bank had appealed up to the level of Supreme Court. The appeal followed BoU’s losses with costs, at both the Commercial Court and Court of Appeal.
In their ruling, both courts decided that Crane Bank (In receivership) wasn’t legally allowed to sue since the Financial Institutions Act 2004 only gives lee way to Banks in liquidation and statutory management to sue and be sued.
The two Courts also ruled that Crane Bank (In Receivership), couldn’t sue to own freehold land, since it was majority-owned by a foreigner and therefore forbidden under the Constitution of Uganda from owning land. Hence thus Supreme Court of Appeal, Civil Appeal No. 7 of 2020- Crane Bank Limited (In Receivership) versus Sudhir Ruparelia and Meera Investments Limited.
“Take notice that the Appellant does not intend further to prosecute the appeal. Take further notice that the Appellant will pay the costs of the appeal and in the courts below to the Respondents,” read the notice filed by BoU with the Supreme Court on 15th September 2021.
In a 12th August 2021 unanimous decision, five Supreme Court Justices dismissed Bank of Uganda’s application to substitute Crane Bank (In Receivership) with Crane Bank (In Liquidation), noting that the application had been filled in bad faith and intended to circumvent facts of the original appeal.
The 5 justices, Rubby Opio-Aweri, Faith Mwondha, Dr Lillian Tibatemwa, Ezekiel Muhanguzi and Percy Night Tuhaise in unison said that allowing BoU to switch the parties in the case would fundamentally alter the facts of the case and deny both Dr. Sudhir and Meera a chance at justice.
The justices also reiterated that in law, Crane Bank Limited (in Receivership), Crane Bank Limited (in Liquidation), and Crane Bank Limited are three distinct entities with different rights, powers and obligations.
The withdrawal now means BoU will incur costs at all levels of court, bringing to home earlier fears and expert advice to the Central Bank to drop the appeal, when it first lost the case.
On 20th of October 2016, BoU took over Crane Bank Limited (CBL) under Sections 87 (3) and 88 (1) (a) of the Financial Institutions Act (FIA) and subsequently placed it under receivership on 20th January 2017, before summarily selling its assets and liabilities to dfcu Bank on the 25th of January 2017.
On 30th June 2017, Bank of Uganda, through Crane Bank (In Receivership) files Civil Suit No. 493 of 2017 against Dr Sudhir Ruparelia and Meera Investments. BoU alleges that Dr. Sudhir Ruparelia owned 100% of Crane Bank, contrary to Sections 18 and 24 of the Financial Institutions Act. It also claims that Dr. Sudhir wrongfully extracted a sum of USD 92,830,172 from Crane Bank, which they sought to recover from him. BoU also claimed another UGX. 52,083,953,995 which they claimed was owed to NSSF. BoU also lays a claim on 48 freehold titles, previously occupied by Crane Bank, but belonged to Meera Investments.
On 26th August 2019 Commercial Court’s Hon Mr. Justice David K. Wangutusi agreed with Dr. Sudhir’s lawyers that indeed BoU/Crane Bank had no locus standi and the orders sought were barred in law. He dismisses BoU’s case in whole and also awards Dr. Sudhir and Meera Investments the costs of the suit. In September 2019, dissatisfied with the Commercial Court Ruling, BoU/Crane Bank (in receivership) filed Miscellaneous Application No. 320 of 2019 in the Court of Appeal on 9 grounds, maintaining that Justice Wangutusi erred in ruling that BoU/Crane Bank (In Receivership had no locus standi and that the orders sought were barred in law.
On Tuesday, June 23rd, 2020, three Court of Appeal Justices, Alphonse Owiny Dollo; Cheborion Barishaki and Stephen Musota unanimously dismissed all the nine (9) appeal grounds on which Bank of Uganda through Crane Bank (In Receivership) had sought to overturn an earlier August 26th, 2019 ruling by Commercial Court Judge. BoU was also ordered to pay costs, both at the Court of Appeal and the courts below.
Crane Bank Limited (In Receivership) then appealed against the decision of the Court of Appeal by filing Civil Appeal No. 7 of 2020 in the Supreme Court, which it has now withdrawn. (Additional report by CEO East Africa )