The Commercial Court has Monday dismissed a case filed against city tycoon, Sudhir Ruparelia in which Bank of Uganda and Crane Bank accused Sudhir of taking Shs 397bn out of the financial institution (Crane Bank) in fraudulent transactions and land title transfers.
In his ruling on Monday, Justice David Wangutusi said that while in receivership, Crane Bank has no legal basis to sue.
It followed an April 30, 2019, application filed by Sudhir Ruparelia, the proprietor of Crane Bank which has since been bought by DFCU Bank, asking court to dismiss the Shs 397b case against him.
“The respondent/plaintiff (Crane Bank in receivership) has no locus standi (right to bring action in court) to commence actions under High Court Civil Suit No.493 of 2017 against the applicants (Mr Sudhir and Meera Investments),” the application read in part.
Quoting the Financial Institutions Act (2004), Justice Wangusi ruled that a bank in receivership is not permitted to sue or be sued. He said that in this particular case, Crane Bank (in receivership) cannot and should not have sued businessman Sudhir Ruparelia and his Meera Investments.
As such, BOU has been ordered to pay costs to the businessman and Meera investments.
The defense had argued that Crane Bank in receivership could not own or hold freehold property and was, therefore, not capable of holding the suit property in its names.
After the ruling on Monday, Sudhir told reporters that he is considering instructing his lawyers to file a counter claim seeking compensation from BOU for illegally taking over his bank and subjecting him to court battles.
“We are now going to put up a counter claim. You know COSASE (Parliamentary committee) found out a lot of things that these people (Bank of Uganda) did. So, with guidance for my lawyers, we will now put up a counter claim,” the businessman said.
“Everybody will pay the price for the part they have played,” he said.
Bank of Uganda on October 20, 2016 placed Crane Bank under statutory management for being under-capitalised and according to Governor Tumusiime Mutebile, to stem infection of the country’s financial system.
BOU attributed the under-capitalisation to mismanagement and insider lending, resulting in Crane Bank’s unsustainable non-performing loan portfolio.
On January 25, 2017, the Central Bank placed Crane Bank under the receivership.
When BOU alongside Crane Bank sued Sudhir and his Meera Investments Company for allegedly drawing Shs397b from his bank in fraudulent transactions, the businessman denied the allegations and counter-sued BOU, seeking compensation of USD 8m (Shs 28bn) in damages for breach of contract.