Supreme Court dismisses BOU application in favour for Sudhir
The Supreme Court has dismissed an application in which Bank of Uganda sought permission to amend the Memorandum and record of appeal before hearing the Crane Bank appeal case.
Crane Bank Limited (in receivership) should be substituted by Crane Bank Limited (in liquidation), according to the Bank of Uganda, because it is still a licensed financial institution under the Financial Intelligence Institutions Act of 2004.
The capacity in which the Central Bank oversees and controls Crane Bank, as well as its assets and liabilities, was essential for the appeal to be determined, according to Bank of Uganda lawyers led by Joseph Byamugisha.
A plea by Bank of Uganda to replace Crane Bank (In Receivership) with Crane Bank was dismissed with costs by Supreme Court Justices Rubby Opio-Aweri, Faith Mwondha, Dr Lillian Tibatemwa, Ezekiel Muhanguzi, and Percy Night Tuhaise in a pending appeal (In Liquidation).
The decision is the latest in a line of setbacks for the Central Bank as a result of a dispute over the sale of the now-defunct Crane Bank with billionaire Dr Sudhir Ruparelia and his Meera Investments Ltd.
The justices denied a BOU application on August 12, 2021, stating that it would fundamentally alter the facts of the case and hinder Dr. Sudhir and Meera a fair trial.
“The primary issue before this Court concerns the Receiver’s ability to sue under High Court Civil Suit 493 of 2017.” The lower courts’ findings, against which this Court is hearing an appeal, are that the Receiver, unlike the Liquidator, has no such powers to sue and be sued under the FIA. The appeal is thus based on the Receiver’s ability to sue or be sued,” the five-judge panel stated.
“The very nature of the amendment sought, namely, the substitution of Crane Bank (In Receivership) for Crane Bank (In Liquidation), would no doubt pre-empt or pre-determine the main appeal in favor of the Appellant and to the detriment of the Respondents without hearing the latter’s defense,” the justices ruled. It would also change the character of the pleadings or cause of action, eroding the appeal’s gist.”
An overview of the past
The Court of Appeal dismissed an appeal and upheld the High Court’s decision in an action filed by Bank of Uganda on behalf of Crane Bank Ltd (in receivership) against Sudhir Ruparelia and Meera Investments Limited on June 23, 2020.
The Court of Appeal dismissed the appeal, noting that the trial judge was satisfied that the respondents’ preliminary points of law were based on the presumption that the facts in the plaint were true, and that if confirmed, the points of law were sufficient to resolve the case.
Justices Alphonse Owiny Dollo, Cheborion Barishaki, and Stephen Musota of the Appellate Court agreed with a previous ruling by Commercial Court Judge Justice David K. Wangutusi on August 26th, 2019, that a bank in receivership (in this case, Crane Bank Limited) cannot sue or be sued under the Financial Institutions Act (2004), and thus Crane Bank (in receivership) could not and should not have sued business.
The ownership of the land on which Crane Bank branches around the country are located was also a matter of contention.
While delivering its judgment, Civil Appeal 252 of 2019, at the Court of Appeal, the court also held that Crane Bank (in receivership), as a foreign [partly] owned bank, cannot purchase freehold land in Uganda and hence has no legal basis to sue Sudhir for land it does not own.
“As a result, the appeal is thrown out. As a result, the matter is dismissed with costs both in this court and in the lower court,” the justices ruled. The expenses would be covered by the Bank of Uganda.
On June 30, 2020, the Bank of Uganda (BoU) released a statement telling the public of its decision to appeal the Court of Appeal’s dismissal of the case to the Supreme Court, just as Sudhir’s lawyers – Kampala Associated Advocates – were preparing to calculate the fees and related damages.
Crane Bank Limited (In Receivership) also filed Supreme Court Miscellaneous Application Nos. 32 and 33 of 2020 against Sudhir Ruparelia and Uganda Registration Services Bureau (URSB) for temporary and interim injunctions against the businessman, respectively, to prevent him from enforcing the Court of Appeal’s ruling to reclaim their company (In Receivership). The application also sought to prevent URSB from recording any resolutions relating to Crane Bank (In Receivership) until the outcome of Civil Appeal No. 7 of 2020. On November 9, 2020, the Supreme Court dismissed the temporary injunction with costs.
Following the Bank of Uganda’s court setback on November 15, 2020, the BOU published a public notice in the Sunday Vision newspaper announcing that it had placed Crane Bank Limited under liquidation and ordered its affairs to be wound up. Dr Sudhir Ruparelia then filed Supreme Court Miscellaneous Application Nos. 39 and 40 of 2020 against Crane Bank Limited (In Receivership) and BOU, seeking interim and provisional injunctions to halt BOU’s liquidation. However, on December 22, 2020, the court dismissed this application.
Following this decision, the Bank of Uganda, this time through Crane Bank (In Liquidation), petitioned the Supreme Court to replace itself as the substantive party in Supreme Court Appeal No. 7 of 2020, an appeal that the five justices dismissed as an attempt to avoid the main issue in the case—whether a company in receivership can sue or be sued.
