Property mogul Mr. Sudhir Ruparelia has again defeated the Central Bank in the Court of Appeal in which the Bank of Uganda contested the ruling of the lower court delivered on August 26.
The Panel of Court of Appeal judges led by Deputy Chief Justice Alfonse Owiny- Dollo upheld the judgment of Commercial Court judge David K. Wangutusi in application filed by Bank of Uganda seeking a refund of shs 397 billion from Sudhir which he allegedly pulled out from Crane Bank.
Court of Appeal dismissed again dismissed the case with costs.
Background
Bank of Uganda (BoU) alongside Crane Bank (in receivership) dragged Sudhir and his Meera Investments Limited to commercial court for allegedly causing a financial loss to Crane Bank as he fraudulently took out shs 397 billion which belonged to customers before the financial institution was taken over by Central Bank.
The presiding judge, Justice David Wangutusi dismissed BoU’s application on grounds that Crane Bank in receivership lacked a legal basis to sue Sudhir.
The judge ordered that the applicant (BoU) should also pay the businessman legal costs.
This becomes the third time, Mr. Sudhir is triumphing commercial litigations against Bank of Uganda which derive from the hotly contested sale of Crane Bank that he owned until October 2016 when the Central Bank took over its liabilities and assets before selling it off to DFCU Bank at a laughable price of shs 200 billion.
But the Auditor General while conducting a forensic audit into sale of Crane Bank ascertained that DFCU only paid shs 139 billion which it borrowed from the regulator (BoU), an interest free loan.
The conclusion is that the process of selling Crane Bank was a conspiracy hatched by Bank of Uganda officials together with city lawyers and DFCU managers.
Sudhir earlier won two conflict of interest cases against the central bank.
About shs 397 billion Case
A receiver cannot sue or be sued!
In their preliminary objections before Hon Mr. Justice David K. Wangutusi, Kampala Associated Advocates, lawyers argued that a receiver or an entity in receivership- in this case Crane Bank cannot sue or be sued.
“The suit was filed when Crane Bank Limited was in receivership. At issue therefore is; can a suit be filed when a financial institution is in receivership? Our submission is that the receiver has no locus to file the suit,” argued the lawyers.
Bank of Uganda on the 20th October 2016 took over the management of Crane Bank and pursuant to Sections 87 (3) and 88 (1) (a) & (b) of the Financial Institutions Act 2004 and on the 20th of January 2018 BoU placed the bank under receivership pursuant to Section 94 of the FIA.
Sudhir’s lawyers further argued that the FIA 2004 provides three ways in which BOU may takeover and resolve a financial institution in distress and these include: statutory management, receivership, and liquidation. They added that while the law allows the statutory manager and the liquidator to sue, it does not allow the receiver to sue or be sued.
Section 95 of the FIA 2004 only grants a receiver powers to:
arrange a merger with another financial institution;
arrange for the purchase of assets and assumption of all or some of the liabilities by other financial institutions;
arrange to sell the financial institution;
liquidate the assets of the financial institution.
But even then this must be done within 12 months of taking over as a receiver.
“The powers of the receiver are therefore limited, both in extent and in time. He can only exercise the four powers mentioned above and this has to be done within twelve months,” Sudhir’s lawyers submitted, adding: “Section 95 does not mention suing as one of the things he (the receiver) will do in the exercise of his powers.”
“Under the FIA, the receiver cannot file a law suit. When the legislature does not grant an express power to a statutory entity to sue then that entity simply cannot sue. This very point was determined by the Supreme Court of Uganda,” argued KAA Advocates.
“If a party cannot be sued, it follows that that party cannot sue. We are fortified in this by the binding decision in the supreme court in the case of The Commissioner General Uganda Revenue Authority vs Meera Investments Limited SCCA 22 of 2007,” the lawyers further submitted.
Non-Ugandan citizens cannot own mailo or freehold land
KAA lawyers also submitted that BoU’s claim on Meera Investments’ land is barred by law since Crane Bank- by virtue of being majority owned by non-Ugandan citizens is a non-citizen and therefore barred from acquiring or holding mailo or freehold land in Uganda by Section 40 (1), (4), (7)(a)(d), and (8)(a) of the Land Act.
“The majority shares in CBL are held by a company incorporated in Mauritius. A further 4% is held by Mr. Jitendera Sanghani, a British national. This would in effect mean that a total of 51.33% of the shares are held by non-citizens…..It is well settled that under no circumstances can a non-citizen hold freehold land and a number of authorities elucidate this Constitutional point.”