Prime
Court rejects BoU case to stop Sudhir takeover of Crane Bank
Uganda’s central bank took over over management of Crane Bank due to a financial crisis that has left the lender without adequate capital. FILE PHOTO
Kampala- The Supreme Court has dismissed the application in which Bank of Uganda (BoU) sought orders to stop property mogul Sudhir Ruparelia from repossessing his former Crane Bank, now under receivership.
Crane Bank in receivership had, in its application, stated that there was an imminent threat from Mr Ruparelia, who was seeking to take over its management again.
The BoU decision was based on two decrees issued by the Commercial Court and Court of Appeal in which the courts ruled that the bank ceased to be in receivership in January 2018.
The Central Bank was prompted by a January 28,2018, letter from Mr Ruparelia to Uganda Registration Services Bureau (URSB) .
Mr Ruparelia notified URSB that the receivership of Crane Bank ended on January 28, 2018 and the bank is no longer under receivership.
The businessman also stated that BoU was thus no longer has legal control over the closed commercial bank and that its board and shareholders are back in full control of it and its affairs.
However, Supreme Court judge dismissed BoU application on November 9.
Ruling
Justice Paul Mugamba ruled that there was no serious threat imposed by Mr Ruparelia to take over the control of Crane Bank in receivership since the bank was still under the control of BoU.
“I agree with counsel for the 1st respondent (Ruparelia) that the letter was simply informing the 2nd respondent (URSB) of what was decreed. The applicant in its submissions, contended that the applicant is still under receivership of the Bank of Uganda which had its property as well as the appeal,” Justice Mugamba ruled.
“I find no cause to doubt that the applicant (Crane Bank in receivership) and its property are in the hands of the statutory receiver (BoU) as clearly stated above.
Had the 1st respondent entertained intentions of taking its full control, he would have written to the receiver and not the 2nd respondent since the management, control and power of the applicant is in the hands of the receiver,” the judge added.
Justice Mugamba said given the circumstances cited above, there was no evidence for the court to rely on to grant Crane Bank an interim order stopping Ruparelia from retaking over control of the bank.
“I do not see the above letter written by the 1st respondent to the 2nd respondent, concerning the substance of the decree to be serious threat of execution before hearing of the pending substantive application,” Justice Mugamba said.
“Consequently, I dismiss this application with costs to the respondents (Ruparelia and URSB),” he ruled.
Background
On October 20, 2016, Crane Bank was closed and taken over by BoU as it was deemed under-capitalised.
The Central Bank sold Crane Bank with some of its assets and liabilities to dfcu Bank.
On June 30, 2017, Crane Bank filed a suit before the High Court seeking to recover over Shs397b from Ruparelia.
On August 29, 2019, presiding judge David Wangutusi dismissed the suit on grounds that Crane Bank had lost its legal powers to sue or be sued after it was placed under receivership.
Bank of Uganda appealed the ruling in the Court of Appeal, which also dismissed the appeal. Bank of Uganda further appealed the appellate court’s ruling in the Supreme Court.
The hearing of the appeal has been set for January next year.
