Commercial Court has Monday morning delivered a ruling of a case in which businessman Sudhir Ruparelia and his real estate company Meera Investment were being accused of fraud by the central bank through Crane Bank Limited (In Receivership).
In the ruling, Justice David Wangutusi of Commercial Court dismissed the allegations and ordered Bank of Uganda to pay for costs the applicants incurred.
The businessman, in Civil Suit No. 493 of 2017, is accused of stealing from Crane Bank Ltd, a bank he founded in 1995, Shs397bn over the years before it was taken over by the regulator in October 2016 for alleged mismanagement and insolvency while the same suit sought to have Meera Investment to hand over land on which Crane Bank had elected its branches to the central bank.
However, Dr. Ruparelia and Meera Investments filed an application against Crane Bank Limited (In Receivership) protesting that Crane Bank had no locus standi to sue, that the plaint in Civil Suit No. 493 of 2017 does not disclose a cause of action against the Applicant, that orders sought against the 2nd Applicant (Meera Investments) in Civil Suit No. 493 of 2017 are barred in law and that Civil Suit No. 493 of 2017 be dismissed with costs.
In court's pronouncement, Justice Wangutusi has agreed with Mr. Sudhir’s lawyers and maintained that BoU/Crane Bank (in receivership) did not have a legal basis to sue Sudhir.
“The end result is that once Crane Bank was put under Statutory Management, its Board of Directors was suspended. If there was to be any suit, it would be brought by the Central Bank as the Statutory manager under section 89(2)(e) or by the Liquidator with approval of the Central Bank under section 100(1)(a) of the Financial Institutions Act.”
“These two were empowered to initiate and defend court action by the Financial Institution Act which interestingly left out the Receiver. The Legislature did not want any court action against the Receiver. So Counsel’s submission that their right to sue was reserved by its company status cannot be sustained.”
“It follows that the Respondent under Receivership lacked locus standi. Without locus standi its attempt at filing a suit was null abi nitio.”
The Applicants’ (Dr. Ruparelia and Meera Investment) also in their application contend that it would be illegal to transfer freehold titles to the Respondent because she is a noncitizen. Bank of Uganda had sought that Meera Investment must deliver freehold certificates of title to 48 properties comprising the Crane Bank’s countrywide branch network together with duly executed transfer deeds.
Court however exclaimed that the law on ownership of land by noncitizens is crystal clear. Noncitizens cannot own land under Freehold or Mailo. For a company to hold land under the tenure herein described it must prove its citizenship.
And because Crane Bank majority shareholding were held by White Saphire Ltd (47.33%), a Mauritius registered company, and businessman Jitendra Sanghai (4%), a non-Ugandan, both entities amassing 51 percent ownership, it was regarded as a foreign company and cannot own land under the law of Uganda.
“For a company to hold land under the tenure herein described it must prove its citizenship. It is clear from the evidence on record that the majority of the shares were owned by White Sapphire, a company incorporated in Mauritius.
“That it owned the majority shares was a matter well known by the Central Bank because 47.33% of the shareholding was transferred to White Sapphire with the approval of the Bank of Uganda.
“Consequently any orders awarding delivery of Freehold title to the Plaintiff/ Respondent would be illegal and barred in law. The Respondent cannot hold freehold and any pleadings seeking court orders to that effect amount to no cause of action.
And because Crane Bank liabilities were transferred to DFCU, and because it is Bank of Uganda which instituted the suit, court has said will be liable to pay costs to the applicants.
"From the foregoing, there is no doubt that the suit was filed by Bank of Uganda. Since section 96 of the Financial Institutions Act insulated Crane Bank under Receivership from court proceedings, execution or other legal processes the person that should pay costs should be the person who instituted the suit and that is Bank of Uganda.
"This is so because Crane Bank in Receivership had no capacity to foot the costs and much so the Bank of Uganda that instituted the suit was aware of this incapacity.
Latest from Earth Finds
- EITI Appoints Bady Baldé As EITI Executive Director
- Snubbed By Museveni, Kasekende Pens Farewell Letter To BoU Colleagues
- 172 Get First Grade As All PLE candidates At Kampala Parents Pass
- Africa Oil & Power To Discuss Renewables, LNG & Energy Finance In Cape Town
- Janet Museveni Explains Why Release Of PLE Results Will Take Place At Kampala Parents School Tomorrow