KAMPALA – The Court of Appeal on Tuesday dismissed a multi-billion case in which Bank of Uganda-BoU had sued property mogul, Sudhir Ruparelia and his Meera investments accusing them of siphoning over sh397bn from the defunct Crane Bank.
In a ruling read in court by registrar Mary Babirye, the Court of Appeal Justices, Alphonse Owiny Dollo, Stephen Musota and Cheborion Barishaki, unanimously agreed with the decision of Justice David Wangutusi, that a bank in receivership, under the Financial Institutions Act (2004) cannot sue or be sued and therefore Crane Bank (in receivership) cannot and should not have sued businessman Dr. Sudhir Ruparelia and his company Meera Investments.
“Turning to the facts of this case, under Section 96 of the Financial Institutions Act, it is clear that there is a protection granted to the financial institution in receivership against being sued. In light of Meera Investments decision, it would be unfair to say that the financial institution can sue and on the other hand, it cannot be sued,” ruled the justices of the court.
The judges noted that a person who is protected from suits under the law is also prohibited from suing.
“It’s therefore our finding that this ground should be decided in the negative. The learned trial judge was right to find that a person who cannot be sued, cannot sue,” the Justices said.
The Justices also said that the law protects the appellant (Crane Bank in receivership) from the process of court, and thus cannot then empower it against other court users. This they said would make the appellant (Crane Bank in receivership) enjoy an unequal treatment before the law compared to the respondents (Mr. Sudhir and Meera Investments).
“We, therefore, uphold the trial judge’s order as to costs. The appeal consequently fails. It is thus dismissed with costs here and the court below,” the judges ruled.
– Background –
BoU on October 20, 2016 placed Crane Bank under statutory management for being under-capitalised.
The central bank attributed the under-capitalisation to mismanagement and insider lending, resulting in Crane Bank’s unsustainable non-performing loan portfolio. The bank was later sold to dfcu Bank in January 2017, although the central bank retained some of its liabilities.
At the time Bank of Uganda closed Crane bank, it was not only the second biggest bank, but also the largest indigenous financial institution in the country.