UGANDA, Kampala | Real Muloodi News | The five-year legal battle between Sudhir Ruparelia and the Bank of Uganda has finally ended with the Central Bank set to pay the business mogul billions of shillings in costs, catering for all the bills from the Commercial Court, Court of Appeal, and Supreme Court after it lost an appeal against Crane Bank and its shareholders.
The Bank of Uganda had appealed to the Supreme Court, seeking to recover USh397 billion from Sudhir and to prevent Crane Bank from returning to its original shareholders.
However, on July 1st 2022, Supreme Court Justice Prof. Lillian Tibatemwa Ekirikubinza dismissed the Bank of Uganda’s attempts to hold on to Crane Bank Limited. The court ruled that receivership of Crane Bank Limited ended on January 20, 2018, and from that date, the management and control of the bank returned to its Shareholders.
The Court of Appeal directed BoU to return all assets of Crane Bank and for it to be returned to its original and rightful shareholders.
The Supreme Court ruling, which is also the final ruling, means that Meera Investments Limited, under Sudhir’s chairmanship, will retain all the 48 land titles where the former Crane Bank was located.
Counsel Peter Kabatsi, Sudhir’s lawyer, revealed that they will calculate the costs according to the Advocates Act, Remuneration and Taxation Rules to come up with a bill of costs against the Bank of Uganda.
Justice Tibatemwa cited the Financial Institutions Act and noted that the closure of Crane Bank meant that it lost its license to operate as a financial institution, but the company itself did not cease to exist.
She explained that through receivership, a company’s assets are managed by a neutral party to assist the company recover funds due from its creditors and this may also help Sudhir’s company to return to profitability.
“In the context of the Financial Institutions Act, closure of the bank meant it lost its licence to operate as a financial institution. However, the company as a legal personality did not cease to exist. It must be noted that an entity must first be incorporated or registered as a company under the Companies Act before it can be licensed to operate as a financial institution,” she ruled.
It was the judge’s observation that after the expiry of 12 months from the date of takeover by the receiver, receivership must be deemed to have expired by operation of law.
“It is the position at common law that where a legal relationship is terminated by effluxion of time, then the rights accruing revert back to the owners,” she explained.
Justice Tibatemwa, therefore, ruled that the Bank of Uganda is no longer a manager nor a receiver of Crane Bank because it stands as a closed financial institution being placed under receivership.
Background Story
Bank of Uganda had placed Crane Bank Limited under receivership on 24th January 2017 and then sold it off the next day.
The Bank of Uganda then filed a civil suit against Sudhir Ruparelia and Meera Investments Limited through Crane Bank.
The High Court dismissed the case with costs against the Bank of Uganda which went ahead to appeal.
On appeal, the Court of Appeal also found out that receivership had already ended in January 2018, under the express provisions of the law.
Bank of Uganda then appealed to the Supreme Court where it filed two applications for injunctions to stop the shareholders of Crane Bank Limited from taking on the company’s management.
The Supreme Court dismissed both the applications with costs.
The significance of the Supreme Court’s decision was that the Bank of Uganda is also subject to the laws of Uganda and cannot act in a manner that places it beyond the reach of the law.
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