The Commissioner, Land Registration has cancelled 48 leases previously in favour of dfcu Bank held on land belonging to Meera Investments Limited. This follows a High Court finding and subsequent ruling that dfcu illegally transferred the said leases unto themselves from the defunct Crane Bank, without the consent of Meera Investments, the original owners.
The registrar of lands has also directed that dfcu Bank return the now “legally inconsequential” 48 duplicate certificates it holds, within 7 days.
“You will recall that judgment in the above-captioned suit was entered in the favour of the Plaintiff, Meera Investments Limited against DFCU Bank Limited and the Office of the Commissioner Land Registration. Orders were made directing the office to rectify the register in the terms set out in the decree including cancellation of the leasehold certificates of title. A copy of the decree is enclosed for ease of reference. In view of the self-executing nature of the orders of the Court and in order to avert possible contempt proceedings, this office proceeded and implemented the decree of the court to the extent of the orders made for its implementation, by rectifying the register and cancelling the leases as encumbrances on the Mailo and Freehold certificates of title registered in the names of Meera Investments Limited and further by cancelling all the entries on the register and white pages of DFCU Bank Limited as proprietor of the 48 leasehold properties,” one Mugaino Baker, on behalf of the lands registrar, wrote to the dfcu Managing Director, in a November 8th 2023 letter.
“The purpose hereof is therefore to request that, since the leasehold titles have been cancelled thereby rendering the 48 duplicate certificates of title in your possession legally inconsequential, the same should be returned to this office to avoid any possible misuse thereof. Kindly do so within Seven days from the date of receipt of this letter,” the Commissioner adds.
The letter is copied to Magna Advocates, the learned counsel for Meera Investments Limited, M/s KATS Advocates, learned counsel for dfcu Bank and the Registrar of the High Court, Land Division. The Permanent Secretary Ministry of Lands, Housing and Urban Development, the Deputy Registrar High Court Land Division and Meera Investments Ltd are all copied in.
The move brings to a near-end, a battle by Dr. SUdhir Ruparelia, one of the shareholders of the defunct Crane Bank to get back his properties, which he says were illegally taken over by the Central Bank and subsequently sold to dfcu Bank in January 2017. This followed the seizure of Crane Bank on 20th October 2016, over what the central bank said was undercapitalisation.
Crane Bank’s shareholders have however vehemently rejected the accusation and said that Bank of Uganda deliberately “asset-stripped” and illegally took over and sold Crane Bank. Dr. Sudhir has been leading shareholder efforts to get justice.
He has successfully defended and won- at the High Court, Court of Appeal and Supreme Court- a UGX397 billion suit brought against him by the Central Bank. Separately, a Parliamentary Committee investigating the sale of Crane Bank found out that the process leading to and the manner in which Crane Bank was taken over and sold was fraught with irregularities and illegalities. Separately Crane Bank shareholders are pursuing a case against dfcu Bank and its directors in a London Court.
Just this October, on 24th 2023, exactly 7 years and 4 days, after the Bank of Uganda, seized Crane Bank, the High Court in Kampala ruled that dfcu Bank illegally transferred to itself, 48 properties that Crane Bank had leased from Meera Investments before the seizure. Meera belongs to Dr. Sudhir Ruparelia, Crane Bank’s second-largest shareholder at the time. Court has now ordered dfcu to pay UGX2.4 billion to Meera Investments over and above repairing and restoring all the 48 properties into tenantable position.
The Hon. Justice Tadeo Asiimwe, of the High Court (Land Division), declared that the process under which dfcu Bank came to purportedly own and occupy the said property⏤ by transferring the leasehold interests in the suit properties from Crane Bank Limited into its names, “was tainted with illegality and fraud and is therefore invalid.”
This is after Meera Investments Limited, the property development arm of Dr. Sudhir’s Ruparelia Group in 2017 brought a case dfcu Bank and the Uganda Government’s Commissioner, Land Registration jointly and severally for illegal and or fraudulent transfer and possession of its 48 properties across the country.
Meera told the Court that by several lease agreements, lease variation of lease agreements and extensions of leases executed between itself and the former Crane Bank Limited it leased out its 48 properties to Crane Bank Ltd. That after the January 2017 purchase of the assets of Crane Bank, dfcu illegally and with the aid of the Commissioner of Lands Registration, transferred into its names, the 48 titles, without the written consent of Meera, as is required by law.
However, dfcu Bank denied the claims, saying that it lawfully acquired its interest in the 48 leasehold properties, having purchased the same in 2017 from the Bank of Uganda as a receiver of Crane Bank Limited. This was after Crane Bank Limited was seized and sold off by the Bank of Uganda. Dfcu Bank further told the Court that no consent was required from Meera Investments before the transfer of or taking possession of the suit properties, as the transfer was a statutory transfer under the provisions of the Financial Institutions Act. Dfcu also denied committing any illegality or fraud in the acquisition of the suit properties.
However, drawing the parties to Clause 8 (2) of the January 2017 Purchase & Assumption Agreement between Crane Bank Limited (In Receivership) and dfcu Bank, that provided that; “The properties are sold and assigned herein subject to the rents reserved by and the covenants and all other provisions contained in the relevant leases” Justice Tadeo Assimwe ruled that the transfer of the leases from Crane Bank to dfcu Bank, without the consent of Meera Investments was illegal.
“In my view, any dealing or transaction in the property under a leasehold certificate of title must be concluded in a manner that is consistent with the rights and powers of the Lessor. Where the lessor has reserved the right and power to consent to any transfer of physical and legal possession or parting with possession by the lessee as is the instant case, any transaction concluded having the effect of transferring legal and physical possession of the leasehold properties would be illegal and in breach of the statutory protection conferred upon the lessor by section 36 of the Registration of Titles Act (RTA),” he ruled.
The judge further dismissed dfcu Bank’s submission that its acquisition of both the physical and legal possession of the suit properties was a statutory transfer. He instead said it was a straight sale subject to the existing lease covenants.
“The dfcu Bank was bound to ensure that the covenant is complied with before it could take physical and legal possession thereof. dfcu Bank, aware of the legal requirement opted to depend on assurances by the Receiver (Bank of Uganda) to recover the reversionary interests and sell them. It ought to have been clear to the dfcu Bank that its contractual arrangements with the Receiver purporting to contract Meera Investments out of its properties were not binding on Meera Investments as the lessor and could not override the rights of Meera Investments as a lessor, reserved under the lease covenants and protected under the provisions of the Registration of Titles Act (RTA),” the judge ruled.
“All the acts and conduct of the dfcu Bank right from the execution of the P & A Agreement point to fraud. These as already highlighted included; denying the title of Meera Investments as the lessor, taking possession without securing the consent of the lessor, occupying and utilising the suit properties without paying any ground rent to the lessor, and purporting to enter into illegal arrangements with Bank of Uganda towards rescission of the purchase with BOU allegedly acting as a receiver, despite knowledge by both the Bank of Uganda and the dfcu Bank of the pronouncements of the High Court and the Court of Appeal that the receivership of CBL had ended in January 2018. These cannot be said to be acts and conduct of an innocent and bonafide purchaser. The dfcu Bank was privy and actively participated in the highlighted illegal and fraudulent acts,” the judge further ruled.
In light of the above findings, the judge also found that the Commissioner of Land Registration had acted illegally in effecting the transfer of the 48 properties into the ownership of dfcu Bank.
On the issue of whether the titles in the possession of dfcu are now liable to cancellation, the judge ruled in the affirmative that: “The position of the law is that where a lessee or even a tenant denies the title of the Lessor and or refuses to recognise the lessor of the suit property and the covenants of the lease, such lessee or tenant becomes a trespasser on the suit property and the Lessor would be entitled to an order of vacant possession of the premises”.
“Accordingly, I find that the dfcu Bank (dfcu) became a trespasser on land in January 2017 and the certificates of titles for the lease properties illegally and fraudulently acquired and or transferred in its names are liable for cancellation on account of fraud and illegality,” he concluded.
The judge proceeded to order the Commissioner of Land Registration to cancel the registration of the dfcu Bank as proprietor of the leasehold interests in respect of all the suit properties; cancel the leasehold titles and all encumbrances on them and have them reverted to the original owners, Meera Investments.
Dfcu Bank, in a 3rd November 2023 acknowledged the ruling, but however said, that the ruling “does not affect the Bank’s day-to-day operations since the branches in question were vacated in 2020.”