Connect with us

Commercial Justice

MOMENT OF TRUTH: Court to rule on Sudhir’s application to dismiss BoU’s UGX397bn against him on Monday, August 26

Published

on

WILL SUDHIR HAVE THE LAST LAUGH? Businessman and Ruparelia Group Managing Director, Dr Sudhir Ruparelia speaks the media after an earlier adjournment of a conflict of interest case he brought against city law firm, Sebalu & Lule Advocates in HCCS 493 of 2017.

Commercial Court’s Hon Mr. Justice David K. Wangutusi, will on Monday August 26th rule whether the case brought against city businessman and Ruparelia Group Chairman, Dr. Sudhir Ruparelia by Bank of Uganda and Crane Bank (in receivership) has any merit in law and whether it can go ahead.

In HCCS 493 of 2017, Bank of Uganda through 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 through various payments to two construction companies and a technology company.

The companies alleged to have been used by Sudhir for these payments have since vehemently rejected the above claims and produced evidence to discredit BoU’s claims.  

BoU through Crane Bank (in receivership) also alleges 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.

Ruparelia Group’s Dr. Sudhir Ruparelia. The businessman has put up a spirited legal attack on BoU, dfcu Bank and their respective lawyers for what he maintains was an
illegal, unprofessional and reckless closure of Crane Bank “in violation and in complete disregard of the provisions of the Financial Institutions Act”, and in the process disregarded “the interests of the employees, shareholders, customers and the economy.”

Crane Bank (in receivership) also wants back the 48 freehold certificates together with duly executed transfer deeds in respect of each one of them in favour of Crane Bank or its nominee.

But Dr. Sudhir and Meera through their lawyers, Kampala Associated Advocates, has asked court to dismiss the case, arguing that Crane Bank (in receivership) has “no locus standi to bring the suit” against them and that the case is “barred by law.”

A receiver cannot sue or be sued

In their preliminary objections before Hon Mr. Justice David K. Wangutusi, Kampala Associated Advocates, lawyers argued that a receiver or an entity in receivership- in this case Crane Bank cannot sue or be sued.  

“The suit was filed when Crane Bank Limited was in receivership. At issue therefore is; can a suit be filed when a financial institution is in receivership? Our submission is that the receiver has no locus to file the suit,” argued the lawyers.

Bank of Uganda on the 20th October 2016 took over the management of Crane Bank and pursuant to Sections 87 (3) and 88 (1) (a) & (b) of the Financial Institutions Act 2004 and on the 20th of January 2018 BoU placed the bank under receivership pursuant to Section 94 of the FIA.

Sudhir’s lawyers further argued that the FIA 2004 provides three ways in which BOU may takeover and resolve a financial institution in distress and these include: statutory management, receivership, and liquidation. They added that while the law allows the statutory manager and the liquidator to sue, it does not allow the receiver to sue or be sued. 

Section 95 of the FIA 2004 only grants a receiver powers to:

  1. arrange a merger with another financial institution;
  2. arrange for the purchase of assets and assumption of all or some of the liabilities by other financial institutions;
  3. arrange to sell the financial institution;
  4. liquidate the assets of the financial institution.

But even then this must be done within 12 months of taking over as a receiver.

“The powers of the receiver are therefore limited, both in extent and in time. He can only exercise the four powers mentioned above and this has to be done within twelve months,” Sudhir’s lawyers submitted, adding: “Section 95 does not mention suing as one of the things he (the receiver) will do in the exercise of his powers.”

“Under the FIA, the receiver cannot file a law suit. When the legislature does not grant an express power to a statutory entity to sue then that entity simply cannot sue. This very point was determined by the Supreme Court of Uganda,” argued KAA Advocates.     

“If a party cannot be sued, it follows that that party cannot sue. We are fortified in this by the binding decision in the supreme court in the case of The Commissioner General Uganda Revenue Authority vs Meera Investments Limited SCCA 22 of 2007,” the lawyers further submitted.

Non-Ugandan citizens cannot own mailo or freehold land

KAA lawyers also submitted that BoU’s claim on Meera Investments’ land is barred by law since Crane Bank- by virtue of being majority owned by non-Ugandan citizens is a non-citizen and therefore barred from acquiring or holding mailo or freehold land in Uganda by Section 40 (1), (4), (7)(a)(d), and (8)(a) of the Land Act.  

“The majority shares in CBL are held by a company incorporated in Mauritius. A further 4% is held by Mr. Jitendera Sanghani, a British national. This would in effect mean that a total of 51.33% of the shares are held by non-citizens…..It is well settled that under no circumstances can a non-citizen hold freehold land and a number of authorities elucidate this Constitutional point.”                               

Justice Wangutusi set August 26, for a ruling on the objection.

Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Commercial Justice

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

Published

on

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.

Continue Reading

Commercial Justice

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

Published

on

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.

Continue Reading

Commercial Justice

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

Published

on

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.   

Continue Reading

Ad3

Ad1

Ad2

Now Trending

error: Content is protected !!