Billionaire Dr. Sudhir laughs last, as dfcu Bank is ordered to vacate and repair his 48 properties and compensate him UGX2.4 billion  He who laughs last laughs best! Exactly 7 years and 4 days, after Bank of Uganda, on October 20 2016 seized Crane Bank Limited, then one of Uganda’s top three banks, and subsequently sold it to dfcu Bank on January 24, 2017, the shareholders of Crane Bank are having the last laugh.

On October 24th 2023 the High Court in Kampala ruled that dfcu Bank illegally transferred to itself, 48 properties that Crane Bank had leased from Meera Investments before the seizure. Meera belongs to Dr. Sudhir Ruparelia, Crane Bank’s second-largest shareholder at the time. Court has now ordered dfcu to pay UGX2.4 billion to Meera Investments over and above repairing and restoring all the 48 properties into tenantable position.

But that’s not all, the Bank of Uganda has since lost the Court battle against the businessman and is now facing hundreds of billions in costs and damages, and the entire transaction was found by a Parliament inquiry to be tainted with several illegalities. Dfcu Bank, the principal beneficiary of the impugned sale, has also since lost most of the undue market position it gained from the purchase and has since slid back to its prior market position. Dfcu is also facing billions of Shillings in costs in a suit brought against it by the shareholders of the Bank in the United Kingdom.

Indeed, he who laughs last laughs best. 

The Hon. Justice Tadeo Asiimwe, of the High Court (Land Division), on 24th October 2023, also declared that the process under which dfcu Bank came to purportedly own and occupy the said property⏤ by transferring the leasehold interests in the suit properties from Crane Bank Limited into its names, “was tainted with illegality and fraud and is therefore invalid.”

Meera Investments Limited, the property development arm of Dr. Sudhir’s Ruparelia Group in 2017 brought a case dfcu Bank and the Uganda Government’s Commissioner, Land Registration jointly and severally for illegal and or fraudulent sale and possession of its 48 leasehold properties across the country. The properties were previously leased by Meera to Crane Bank.

Meera told the Court that by virtue of several lease agreements, lease variation of lease agreements and extensions of leases executed between itself and the former Crane Bank Limited it leased out its 48 properties to Crane Bank Ltd. After the leasing, Crane Bank Limited’s interests were registered as encumbrances on the 48 mailo and freehold titles, and leasehold certificates of title were processed and registered in the names of Crane Bank Limited, as the lessee. It is these properties that constituted the 48 former Crane Bank Limited branches, situated across the country.  

That after the January 2017 purchase of the assets of Crane Bank, dfcu illegally and with the aid of the Commissioner of Lands Registration, transferred into its names, the 48 titles, without the written consent of Meera, as is required by law. 

However, dfcu Bank denied the claims, saying that it lawfully acquired its interest in the 48 leasehold properties, having purchased the same in 2017 from the Bank of Uganda as a receiver of Crane Bank Limited. This was after Crane Bank Limited was seized and sold off by the Bank of Uganda. Dfcu Bank further told the Court that no consent was required from Meera Investments before the transfer of or taking possession of the suit properties, as the transfer was a statutory transfer under the provisions of the Financial Institutions Act. Dfcu also denied committing any illegality or fraud in the acquisition of the suit properties.

Meera Investments was represented, by lawyers, Kyazze Joseph and Natukunda Jackline of Magna Advocates while lawyers Fredrick Ssempebwa, Arthur Kunsa and Ssempebwa Edwin represented dfcu Bank. The Commissioner, of Land Registration was represented by lawyers Moses Ssekito and Moses Ssekabira.

At the heart of the 5-year Court battle was whether dfcu Bank required prior written consent from Meera Investments as the registered proprietor of the Freehold/Mailo titles before taking possession of, and causing a transfer of the leasehold interests from Crane Bank to itself. Court was also to determine whether the dfcu acted illegally and fraudulently in taking possession of and transferring the leasehold interests, without the prior written consent of the Meera Investments, as the registered proprietor of the Freehold/Mailo titles/interests. Court also had to determine whether the Commissioner of Land Registration acted illegally and fraudulently in effecting a transfer of the leasehold interest in the suit property into the names of dfcu Bank without the consent of Meera Investments. 

Lastly, the Court had to pronounce itself on whether the said leasehold certificates of title, registered in the names of dfcu Bank, are liable to be cancelled on account of fraud and illegality.

Court Ruling: dfcu Bank is a trespasser

Drawing the parties to Clause 8 (2) of the January 2017 Purchase & Assumption Agreement between Crane Bank Limited (In Receivership) and dfcu Bank, that provided that; “The properties are sold and assigned herein subject to the rents reserved by and the covenants and all other provisions contained in the relevant leases” Justice Tadeo Assimwe ruled that the transfer of the lease from Crane Bank to dfcu Bank, without the consent of Meera Investments was illegal. 

“In my view, any dealing or transaction in the property under a leasehold certificate of title must be concluded in a manner that is consistent with the rights and powers of the Lessor. Where the lessor has reserved the right and power to consent to any transfer of physical and legal possession or parting with possession by the lessee as is the instant case, any transaction concluded having the effect of transferring legal and physical possession of the leasehold properties would be illegal and in breach of the statutory protection conferred upon the lessor by section 36 of the Registration of Titles Act (RTA),” he ruled.  

The judge further dismissed dfcu Bank’s submission that its acquisition of both the physical and legal possession of the suit properties was a statutory transfer. He instead said it was a straight sale subject to the existing lease covenants. 

“The dfcu Bank was bound to ensure that the covenant is complied with before it could take physical and legal possession thereof. dfcu Bank, aware of the legal requirement opted to depend on assurances by the Receiver (Bank of Uganda) to recover the reversionary interests and sell them. It ought to have been clear to the dfcu Bank that its contractual arrangements with the Receiver purporting to contract the Meera Investments out of its properties were not binding on the Meera Investments as the lessor and could not override the rights of the Meera Investments as a lessor, reserved under the lease covenants and protected under the provisions of the Registration of Titles Act (RTA),” the judge ruled.  

“All the acts and conduct of the dfcu Bank right from the execution of the P & A Agreement point to fraud. These as already highlighted included; denying the title of the Meera Investments as the lessor, taking possession without securing the consent of the lessor, occupying and utilising the suit properties without paying any ground rent to the lessor, and purporting to enter into illegal arrangements with Bank of Uganda towards rescission of the purchase with BOU allegedly acting as a receiver, despite knowledge by both the Bank of Uganda and the dfcu Bank of the pronouncements of the High Court and the Court of Appeal that the receivership of CBL had ended in January 2018. These cannot be said to be acts and conduct of an innocent and bonafide purchaser. The dfcu Bank was privy and actively participated in the highlighted illegal and fraudulent acts,” the judge further ruled. 

In light of the above findings, the judge also found that the Commissioner of Land Registration had acted illegally in effecting the transfer of the 48 properties into the ownership of dfcu Bank. 

On the issue of whether the titles in the possession of dfcu are now liable to cancellation, the judge ruled in the affirmative that: “The position of the law is that where a lessee or even a tenant denies the title of the Lessor and or refuses to recognise the lessor of the suit property and the covenants of the lease, such lessee or tenant becomes a trespasser on the suit property and the Lessor would be entitled to an order of vacant possession of the premises”.

“Accordingly, I find that the dfcu Bank (dfcu) became a trespasser on land in January 2017 and the certificates of titles for the lease properties illegally and fraudulently acquired and or transferred in its names are liable for cancellation on account of fraud and illegality,” he concluded.

Meera is the rightful owner of the 48 properties

Dfcu Bank, having lost all the grounds of the case, the judge proceeded to make the following orders: 

1. A declaration that Meera Investments, as the registered proprietor of the freehold/ Mailo interests in the suit properties described herein above had the right to consent or otherwise to any taking of possession and transfer of the leasehold interest to the dfcu Bank. 
2. A declaration that the transfer of the leasehold interests in the suit properties from Crane Bank Limited into the names of the dfcu Bank was tainted with illegality and fraud and is therefore invalid. 
3. A declaration that the transfer of the leasehold interests in the suit properties to the dfcu Bank and taking of possession of the same by the dfcu Bank, without the prior consent of Meera Investments rendered the leases illegal and invalid. 
4. A declaration that there are no valid leases in respect of the suit properties. The said leases are therefore declared to be invalid and absolutely determined on account of breach and illegality. 
5. A declaration that that the occupation and continued utilisation of the suit properties by the dfcu Bank constitutes trespass. 
6. A declaration that Meera Investments as the registered proprietor of the freehold/Mailo interest in the suit properties is entitled to vacant possession of the suit properties within 3 months from the Judgment date. 
7. The Commissioner of Land Registration is hereby ordered to cancel the registration of the dfcu Bank as proprietor of the leasehold interests in respect of all the suit properties. 
8. The Commissioner of Land Registration is hereby ordered to cancel the leasehold titles in respect of the suit properties.
9. A declaration that the occupation and continued utilisation of the suit properties by the dfcu Bank constitutes trespass.  
10. The Commissioner of Land Registration is hereby ordered to cancel the entry of the suit leases, lease variations and lease extensions registered as encumbrances on the Mailo and freehold titles of the Meera Investments. 
11. The dfcu Bank is hereby ordered to vacate all the suit properties and render vacant possession to Meera Investments within three months from the date of judgment after restoring them to tenantable position. 
12. An order of a permanent injunction is hereby issued restraining the dfcu Bank, its agents and its servants from continued trespass on the suit properties. 
13. Meera Investments is awarded general damages in the sum of UGX 2,400,000,000/= (Two Billion, Four Hundred Million) payable by the dfcu Bank. The said sum shall carry interest at 8% per annum from the date of this judgment till payment in full. 
14. Mesne profits are not awarded. 
15. Meera Investments is awarded costs of the suit against the defendants.

Dfcu Bank responds

In a 3rd November 2023 statement by the bank, dfcu acknowledged the ruling and said the ruling  “does not affect the Bank’s day-to-day operations since the branches in question were vacated in 2020.”

dfcu Bank is also fully indemnified by Bank of Uganda under the P&A agreement,” it also added.