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Commercial Justice

“Everyone who stole my bank, is going to pay,” Sudhir vows

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Dr Sudhir Ruparelia addresses a media conference soon after Commercial Court dismissed the BoU case

“Everyone who has played a part in the fraudulent activities is going to pay for it – we are not going easy.  That includes dfcu that is fraudulently occupying Meera Properties; they are the biggest fraudsters in this country. They need to understand that they are illegally occupying our branches and they fraudulently transferred them into their names without the consent of Meera Investments.”

These were the words of Ruparelia Group Chairman and founder, Dr Sudhir Ruparelia, immediately after the Commercial Court dismissed a UGX397 billion suit against him his Meera Investments Ltd.

On 30th June 2017 Crane Bank Limited [In Receivership] filed Civil Suit No. 493 of 2017 against the Sudhir and Meera Applicants seeking a payment of US$ 80,000,000, US$ 9,270,172.00, US $ 3,560,000.00, US $ 990,000.00, UGX. 52,083,953,995 as compensation for breach of fiduciary duty.  

Crane Bank (in receivership) also sued Meera Investments for 48 freehold land titles comprising its former countrywide branch network that it claimed were illegally transferred from Crane Bank to Meera Investments.  

Sudhir, through KAA Advocates applied to court to dismiss the suit saying that Crane Bank (in receivership) has no locus to bring the suit to court, since the Financial Institutions Act (2004) did not permit a receiver to sue or be sued.  Sudhir’s lawyers Kampala Associated Advocates also said that on account of being a foreign owned institution, Crane Bank could not own freehold land and therefore couldn’t sue to own, that which it legally cannot own.  

No Jurisdiction

In his ruling today, Hon. Justice David Wangutusi concurred with Dr Sudhir’s lawyers and ruled that Crane Bank (in receivership) “did not have jurisdiction to file HCCS No. 493 of 2017.”

“This is a big win over the mafias and the whole conspiracy that’s been holding the country at ransom in the central bank. I think this is going to be a lesson to them. They have taken over 7 banks and they cannot account for any of them. How do you fail to account to someone? I am a shareholder, I lost a lot of money; I put 25 years of my time and you steal my bank? –you steal all my assets, all my paid-up capital, and all my assets just stolen. And you claim that you put this money in Crane Bank and you can’t even account for it, you can’t even account for Shs290 Billion – where is it all gone?”

He also said that “the property the Plaintiff/ Respondent was seeking when she filed the suit on 30th June 2017 had earlier been given away by the Receiver to dfcu Bank on the 24th of January 2017 four days into Receivership and five months before the filing of this suit thus leaving the Plaintiff/ Respondent with no property.”

“Furthermore, it’s my finding that the orders sought against the 2nd Applicant (Meera) are barred in law rendering the Plaintiff/ Respondent (Crane Bank) with no cause of action against the 2nd Applicant (Meera). For those reasons this application succeeds and the suit is dismissed. The respondent shall bear the costs of the application and the suit,” he ruled.

Big win over the mafias

Addressing a media conference outside the Commercial Court, a tough-talking Sudhir said:  “Everyone is going to pay the price for this,” he said, adding: “We are now going to put up a counter claim. You know COSASE found out a lot of things of what these people did. With guidance from my lawyers, we will put a counter claim. They did not value our assets, they did not account for the cash in the bank; all the money was just stolen. This is terrible,” Sudhir said.

“This is a big win over the mafias and the whole conspiracy that’s been holding the country at ransom in the central bank. I think this is going to be a lesson to them. They have taken over 7 banks and they cannot account for any of them. How do you fail to account to someone? I am a shareholder, I lost a lot of money; I put 25 years of my time and you steal my bank? –you steal all my assets, all my paid-up capital, and all my assets just stolen. And you claim that you put this money in Crane Bank and you can’t even account for it, you can’t even account for Shs290 Billion – where is it all gone?” quizzed Sudhir.

Sudhir also said this was a “tremendous achievement” and “historical.

“Nobody has been in the past been able to win Central Bank – they have stolen 7 different banks and not accounted to any shareholder and this is the unfortunate part of the whole scenario. You take somebody’s assets, you steal it, you profit from it and you don’t account for it; this is so ridiculous!  Then, they sued for $100 Million; the money they stole, they are suing me for it. How?” he wondered.   

Muhereza Kyamutetera is the Executive Editor of CEO East Africa Magazine; strategic communications consultant, social-economic analyst and travel enthusiast based in Kampala.

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Commercial Justice

Lubowa Hospital Construction: ROKO, Finasi Agree to Settle Matter Out of Court

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Parliament early this year approved a loan guarantee of 1.4 trillion shillings to Finasi/ROKO, for the construction of the hospital located in Lubowa, Wakiso district.

Artistic impression of Lubowa International Specialized Hospital

The two construction companies who were selected as a special purpose vehicle have been battling for the construction of an International Modernized Health Facility. As you read this, they have now agreed to settle the case out of court.

The project has faced setbacks with the SPV Finasi/ROKO falling apart following the introduction of another player Power China Guizhou Engineering co as the civil works contractor.

ROKO petitioned court seeking to alter the move by FINASI international FZC chaired by Enrica Pinneti to eject it from the shareholding in the construction of the hospital.

On July, 4th, 2019, Justice Andrew Bashaija issued an interim order to Roko Construction blocking Finasi/Roko Construction from evicting the former from the site in Lubowa where a specialized International Hospital is to be constructed.

Roko Construction through their lawyer Enos Tumusiime argued that they would suffer damages and would be affected should court decline to grant them an injunction.

Justice Bashaija thus granted them the order however, a few weeks later, Roko construction returned to court citing that Finasi Roko and its agents had continued to evict them including removing their properties from the site.

Roko Construction thus demanded that they be paid a fine of 11.8 billion shillings and punitive damages of 22.1 billion shillings as sanctions for contempt of court.

The New Breathe

On Wednesday, the parties told Justice Andrew Bashaija that they are planning to settle the matter out of court.

Justice Bashaija granted them one week to finalize with the mediation and if they fail, they should return to court on September, 4th, 2019.

Media was however not allowed to cover proceedings which were taking place in the Judge’s chambers.

The 264-bed Health care facility if finished, it will be solving most of the complicated diseases that have been forcing Ugandans to go abroad to seek treatment.

It will handle cases of bone marrow transplant, heart diseases, cancer treatment, organ transplant, fertility treatment, highly specialized surgeries, among others.

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Commercial Justice

BAD MONEY AFTER BAD MONEY; BoU risks UGX110 bn in costs; to appeal loss to Sudhir, despite bad case

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The idiom “throwing good money after bad money” refers to spending more money on something problematic that one has already spent money on, in the (presumably futile) hopes of fixing it or recouping one’s original investment.

Unfortunately, this was the decision the Bank of Uganda Governor had to make on Tuesday, August 27th at the behest of Margaret Kasule the central bank’s legal counsel, with help from J.B Byamugisha Advocates, their external lawyers.

At a meeting called by the Governor in his office, on Tuesday, Mutebile was faced with two decisions: accept the ruling, pay the costs and take the smack in the face or appeal the ruling, albeit the flimsy grounds, save face and postpone the costs to a later date, even if they will be higher- after all in either case, it is the taxpayer to bear the costs.

Unfortunately, Mutebile took the latter, thus the hastily made announcement on Twitter, by BoU Director of Communications that BoU would appeal and pursue the matter to its logical conclusion.  

Why do we believe, BoU has a bad case?

On 30th June 2017 Crane Bank Limited [In Receivership] filed Civil Suit No. 493 of 2017 against the Sudhir and Meera Applicants seeking a payment of an equivalent of USD110 million as compensation for breach of fiduciary duty. 

Dr Sudhir Ruparelia has handed down BoU and the various conflicted law firms a legal battle of their lives.

Crane Bank (in receivership) also sued Meera Investments for 48 freehold land titles comprising its former countrywide branch network that it claimed were illegally transferred from Crane Bank to Meera Investments. 

Sudhir, through KAA Advocates applied to court to dismiss the suit saying that Crane Bank (in receivership) has no locus to bring the suit to court, since the Financial Institutions Act (2004) did not permit a receiver to sue or be sued.  Sudhir’s lawyers Kampala Associated Advocates also said that on account of being a foreign owned institution, Crane Bank could not own freehold land and therefore couldn’t sue to own, that which it legally cannot own. 

In his ruling, Hon Justice David Wangutusi, did not mince his words- he said BoU “did not have jurisdiction to file HCCS No. 493 of 2017” and that the orders sought against Meera are “barred in law, rendering” BoU with no “cause of Action” against Meera.

Giving his reasons on why he thought BoU did not have a locus standi, Wangutusi, based his ruling on The Financial Institutions Act which clearly lays out the role of a receiver.

“In my view if it (FIA 2004) had wanted the Receiver who had only 12 months on stage to sue, it would have expressly provided for it. It is not that the Act does not provide for instances of going to Court, having provided for others and left out the Receiver speak loud and clear of the intention of the legislature.

It is not upon Court now to imagine and say “the legislature forgot this we should insert it for them.”          

It is then clear that when the Receiver filed this suit, it was not clothed with   authority. It had no power to do so and Court cannot impute an intention foreign to the legislature.”

“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…… It follows that the Respondent under Receivership lacked locus standi. Without locus standi its attempt at filing a suit was null ab initio (to be treated as invalid from the outset).”   

Following the dismissal, he ruled that “The Bank of Uganda shall bear the costs of the application and the suit”

How much is at stake?

According to several lawyers CEO East Africa talked to in calculating the costs, usually at the High Court Level- usually the judge allows up to about 2% of the decretal amount or amount in dispute. So in this case since the Central Bank was suing Sudhir for an equivalent of $110 million, the least amount that Sudhir would sue for would be USD2.2 million (UGX8.1 billion)- although this can go up to 5% or USD5.5 million (UGX20.3 billion) if the lawyers make a good case.

Given the glaringly bad case, analysts are wondering why BoU’s legal counsel, Margaret Kasule, accepted to have the case go to trial in the first place.

In the case of Meera, it would have to be 2%-5% of the UGX400bn estimated value of the 48 freehold titles in contention, which would come to anywhere between UGX8 billion to UGX20 billion.

In Shilling terms- Sudhir would be entitled to taxed costs amounting up to UGX40.6 billion, before the appeal.

But now that there is a decision to appeal, should BoU lose, they stand to pay up to 10% of the decretal sum- in this case USD11.1 million (UGX41 billion) to Sudhir and UGX40 billion to Meera Investments- altogether in excess of UGX81 billion.  

It could even be more, given that the judges are also allowed discretion. Some lawyers and analysts have put the some to anywhere between UGX81 billion to UGX110 billion.

But maybe Bank of Uganda does not care, at this stage because it is not their money- it is the taxpayer’s money, who incidentally includes Dr. Sudhir Ruparelia, one of the country’s biggest tax payers.  

Moreso, the decision to appeal could be “postponement of embarrassment” given that both the Governor and Deputy Governor’s contracts are about to expire and may not be renewed. An appeal therefore means that the cost and embarrassment of the loss will be in another governor’s regime.

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Commercial Justice

Court dismisses UGX397bn BoU case against Sudhir; central bank ordered to pay costs

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Dr. Sudhir Ruparelia and son, Rajiv Ruparelia together with lawyer Peter Kabatsi of KAA and city journalist and businessman Andrew Mwenda address a press conference outside the Commercial Court. Sudhir said he will launch a counter suit against the BoU and dfcu Bank.

A bank in receivership, under the Financial Institutions Act (2004) is not permitted to sue or sued and therefore, Crane Bank (in receivership) cannot and should not have sued businessman Dr. Sudhir Ruparelia and his Meera Investments, the Commercial Court has ruled.

In a landmark ruling today, August 26th by Hon Mr. Justice David K. Wangutusi, also ruled that Crane Bank (in receivership) being a foreign owned bank, cannot own freehold land in Uganda and therefore has no legal basis to sue for land it cannot own. BEsides, the judge also ruled that in any case, BoU had already given away the suit land to dfcu Bank.

The judge, went on to dismiss with costs, the case HCCS 493 of 2017, in which Crane Bank (in receivership) alleges that the businessman fraudulently took out up to $92.8m (about Shs334b) and another Shs8.2 billion of depositors’ money from Crane Bank for personal gain.  

“Furthermore, its my finding that the orders sought against the 2nd Applicant are barred in law rendering the Plaintiff/ Respondent with no cause of action against the 2nd Applicant (Meera Investments). For those reasons this application succeeds and the suit is dismissed. The Respondent shall bear the costs of the application and the suit,” he concluded.

“The Plaintiff/ Respondent (Crane Bank (in receivership)) did not have jurisdiction to file HCCS No. 493 of 2017. It is also my finding that the property the Plaintiff/ Respondent was seeking when she filed the suit on 30th June 2017 had earlier been given away by the Receiver to DFCU Bank on the 24th of January 2017 four days into Receivership and five months before the filing of this suit thus leaving the Plaintiff/ Respondent with no property,” ruled Wangutusi.

BoU through Crane Bank (in receivership) had also alleged that the entire land where Crane Bank had branches, was transferred to Meera Investments Limited, another company owned by Sudhir and subsequently leased the land to Crane Bank. Crane Bank (in receivership) had wanted back the 48 freehold certificates together with duly executed transfer deeds in respect of each one of them in favour of Crane Bank.

Dfcu could lose 48 branches

The ruling means that dfcu Bank, will now eventually have to return the land back to Meera Investments the owners and face hefty suits in rent arrears and associated costs and interest.

Apparently, dfcu Bank had already transferred the land into its names on the advice of their lawyers, Sebalu & Lule Advocates, an act deemed premature as they will now have to face extra costs to re-transfer the land back.

This ruling now strengthens the city businessman’s case against dfcu Bank- High Court Civil Court Suit No. 948 of 2017 (Land Division) – Meera Investments Ltd Vs Dfcu Bank Limited and The Commissioner for Land Registration;  in which he challenged the transfer of his land by dfcu into its names.

Sudhir says the transfer is an “illegality”, a “fraud” and tantamount to “trespass” on his property. The lands commissioner on the other hand was sued for “illegally effecting a transfer of the suit properties into the names of dfcu.”

However, dfcu in a defense filed on 28th January 2018 by Sebalu & Lule Advocates, dfcu argued that “ownership of these properties is still subject to a court decision in High Court Civil Suit No. 493 of 2017 and therefore it was premature for Meera to claim them.”

With this ruling now, dfcu’s defense is in shambles.   

This is a breaking news story- more details and analysis shall come in due course:

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