Court dismisses UGX397bn BoU case against Sudhir; central bank ordered to pay costs

A bank in receivership, under the Financial Institutions Act (2004) is not permitted to sue or sued and therefore, Crane Bank (in receivership) cannot and should not have sued businessman Dr. Sudhir Ruparelia and his Meera Investments, the Commercial Court has ruled.

In a landmark ruling today, August 26^th by Hon Mr. Justice David K. Wangutusi, also ruled that Crane Bank (in receivership) being a foreign owned bank, cannot own freehold land in Uganda and therefore has no legal basis to sue for land it cannot own. BEsides, the judge also ruled that in any case, BoU had already given away the suit land to dfcu Bank.

The judge, went on to dismiss with costs, the case HCCS 493 of 2017, in which Crane Bank (in receivership) alleges that the businessman fraudulently took out up to $92.8m (about Shs334b) and another Shs8.2 billion of depositors’ money from Crane Bank for personal gain.  

“Furthermore, its my finding that the orders sought against the 2^nd Applicant are barred in law rendering the Plaintiff/ Respondent with no cause of action against the 2^nd Applicant (Meera Investments). For those reasons this application succeeds and the suit is dismissed. The Respondent shall bear the costs of the application and the suit,” he concluded.

“The Plaintiff/ Respondent (Crane Bank (in receivership)) did not have jurisdiction to file HCCS No. 493 of 2017. It is also my finding that the property the Plaintiff/ Respondent was seeking when she filed the suit on 30^th June 2017 had earlier been given away by the Receiver to DFCU Bank on the 24^th of January 2017 four days into Receivership and five months before the filing of this suit thus leaving the Plaintiff/ Respondent with no property,” ruled Wangutusi.

BoU through Crane Bank (in receivership) had also alleged that the entire land where Crane Bank had branches, was transferred to Meera Investments Limited, another company owned by Sudhir and subsequently leased the land to Crane Bank. Crane Bank (in receivership) had wanted back the 48 freehold certificates together with duly executed transfer deeds in respect of each one of them in favour of Crane Bank.

Dfcu could lose 48 branches

The ruling means that dfcu Bank, will now eventually have to return the land back to Meera Investments the owners and face hefty suits in rent arrears and associated costs and interest.

Apparently, dfcu Bank had already transferred the land into its names on the advice of their lawyers, Sebalu & Lule Advocates, an act deemed premature as they will now have to face extra costs to re-transfer the land back.

This ruling now strengthens the city businessman’s case against dfcu Bank- High Court Civil Court Suit No. 948 of 2017 (Land Division) – Meera Investments Ltd Vs Dfcu Bank Limited and The Commissioner for Land Registration;  in which he challenged the transfer of his land by dfcu into its names.

Sudhir says the transfer is an “illegality”, a “fraud” and tantamount to “trespass” on his property. The lands commissioner on the other hand was sued for “illegally effecting a transfer of the suit properties into the names of dfcu.”

However, dfcu in a defense filed on 28^th January 2018 by Sebalu & Lule Advocates, dfcu argued that “ownership of these properties is still subject to a court decision in High Court Civil Suit No. 493 of 2017 and therefore it was premature for Meera to claim them.”

With this ruling now, dfcu’s defense is in shambles.   

This is a breaking news story- more details and analysis shall come in due course: