The Supreme Court has Monday afternoon ruled that liquidation of Crane Bank Limited is illegitimate.
According to the Court, the bank was closed as a financial institution and placed under receivership and hence after closure, it ceased being a financial institution.
“The 1st respondent was closed as a financial institution and placed under receivership. Upon closer, it ceased being a financial institution under the Act and it could therefore, not be progressed to liquidation. The 2nd respondent’s act therefore of moving the 1st respondent to liquidation are contrary to the above clear provisions of the law and the same cannot be sanctioned by this court” reads in part the ruling.
The ruling comes at a time when Bank of Uganda not long ago withdrew a Supreme Court case that was contesting the Court of Appeal’s dismissal of the case it filed on behalf of Crane Bank Ltd (in Receivership) versus Sudhir Ruparelia and Meera Investments Limited.
In a September 15 notice of withdrawal, the Supreme Court Registrar indicated that BoU had decided not to proceed with the appeal and that it would pay the resultant costs.
On June 23, 2020, the Court of Appeal upheld the judgment of the Commercial Court in an application filed by the Central Bank seeking a refund of Shs397 billion from Mr Sudhir Ruparelia.
Justice David Wangutusi of Commercial Court in August 2019 dismissed the first case in which BoU claimed that Sudhir and his Meera Investments e fleeced his own Crane Bank (now in receivership) of Shs397 billion.
In June 30, the BoU insisted 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
In the preliminary stages of the appeal, the Supreme Court in August this year, dismissed with costs, an application by lawyers representing BoU in which they sought to substitute the court record from Crane Bank Limited (in receivership) to Crane Bank Limited (in Liquidation), with the court rejecting the move, as in bad faith and intended to circumvent facts.
A panel of the Supreme Court Justices, Ruby Opio-Aweri, Faith Mwondha, Lillian Tibatemwa, Ezekiel Muhanguzi and Night Tuhaise, in a ruling issued on August 12 rejected arguments by BoU lawyers led by veteran attorney stating that Crane Bank Limited (in Receivership), Crane Bank Ltd (in Liquidation), and Crane Bank Limited are three distinct entities with different rights, powers and obligations.
Earlier in the High Court, Justice Wangutusi noted in his ruling that at the time BoU and Crane Bank (in receivership) filed the suit against Mr Ruparelia and his Meera Investments in January 2017, Crane Bank was a non-existing entity, having been terminated when the Central Bank sold its assets to DFCU Bank in October 2016.
According to the judgement, this rendered Crane Bank in receivership incapable of suing or being sued since there would be no assets to be claimed for.