By the end of s Supreme Court session yesterday, it emerged that Bank of Uganda illegally placed Crane Bank (in receivership) under liquidation in contempt of court.
The ruling delivered in favour of Sudhir Ruparelia regarding his Bank, Crane Bank which was taken over by Bank of Uganda, placed under receivership and its assets sold to DFCU Bank, the 5 justices, Rubby Opio-Aweri, Faith Mwondha, Dr Lillian Tibatemwa, Ezekiel Muhanguzi and Percy Night Tuhaise aver that after selling the assets to DFCU, Bank of Uganda filed a suit under Crane Bank in Receivership against Sudhir and Meera Investments seeking to recover over 400 billion shillings and 48 land titles.
The suit by Crane Bank was dismissed by High Court with costs to be paid by Bank of Uganda on ground that a bank under receivership cannot sue, receivership had ended and Crane Bank was a non-citizen company which could not hold freehold titles. Bank of Uganda appealed to the Court of Appeal which unanimously upheld the findings of the High Court. Thereafter, Bank of Uganda appealed the matter to the Supreme Court.
However, before the hearing of the appeal, Bank of Uganda decided to place Crane Bank into liquidation which materially altered the status of the Bank before the Court.
Bank of Uganda’s application to change the status of the appellant from Crane Bank in Receivership to Crane Bank in Liquidation was equally dismissed by the Supreme Court.
After issuing a notice to the public placing Crane Bank into Liquidation, Sudhir through his lawyers, Kampala Associated Advocates filed an Application against Bank of Uganda for a temporary injunction objecting to the move by the Bank of Uganda placing Crane Bank under Liquidation yet there was an appeal before Supreme Court showing that Crane Bank was under Receivership. In the Application, the lawyers sought for an order of court restraining Bank of Uganda from continuing with the liquidation process of Crane Bank and a declaration that Bank of Uganda was in contempt of court orders.
In the ruling made yesterday, the Supreme Court delivered its ruling, allowing the Application and restrained Bank of Uganda from placing Crane Bank into liquidation. The highest appellate court of the land made the following findings.
The Court first overruled the objection by Bank of Uganda that it is immune from being sued under the law governing Banks in Uganda. Court found that the Bank of Uganda can be sued for anything done in bad faith. Court found that in the instant case Bank of Uganda was rightly sued as it had acted in bad faith by placing Crane Bank into Liquidation which was after losing the appeal in the Court of Appeal that upheld the high court ruling that Crane Bank under Receivership could not sue and that receivership had ended.
The Court further found that changing the status of Crane Bank (in Receivership) to Crane Bank (in liquidation) would render the appeal before it moot and nugatory (unnecessary). Therefore this was a proper case of granting an injunction restraining Bank of Uganda from continuing with the liquidation of Crane Bank.
Court further issued a mandatory injunction against Bank of Uganda restoring the status of Crane Bank to what it was at the time of filing an appeal in the Supreme Court. The Court reasoned that changing the status of Crane Bank to liquidation would defeat the suit.
Court found that placing Crane Bank into liquidation was illegal. Court reasoned that under the law governing banks in Uganda only a licensed Bank can be liquidated.
However, Crane Bank had been closed and put under receivership which meant that it ceased being a bank and could not be put under liquidation.
Court further found that in placing Crane Bank into liquidation, Bank of Uganda was in contempt of court orders. The move was intended to circumvent the decision of the Court of Appeal hence aimed at preventing the course of justice before.
The Court thus allowed the Application and issued orders to the effect that Bank of Uganda should not place Crane Bank into liquidation, an order restraining Bank of Uganda from continuing with the liquidation process, an order restoring the status of Crane Bank to what it was at the time of filing a suit and declared that Bank of Uganda was in contempt of Court Orders.
NO CHANCE
Going for the Court session yesterday, Bank of Uganda had no success since the receivership ended.
The ruling emphasised that the appeal filed before it by Bank of Uganda had no chance of success. This is the fourth application that has been won by Sudhir in the Supreme Court from the time Bank of Uganda appealed the decision of the Court of Appeal.
The Supreme Court was considering an application for a temporary injunction filed by Bank of Uganda under Crane Bank in which it sought to restrain Suhdir from taking over the control of Crane Bank Ltd. The Application also sought for orders restraining Sudhir and his associates from registering company resolutions with Uganda Registration Services Bureau.
However, the Court delivered a ruling unanimously dismissing the Application in its entirety.
In its ruling, the court made pertinent findings which have a bearing on the Appeal that Bank of Uganda filed in the Supreme Court.
In the first place, the Court refused to consider the evidence that Sudhir had filed a suit against DFCU in the UK. This is because this evidence was raised by Bank of Uganda in its rejoinder yet Sudhir had not talked about it in his reply. To consider this evidence without allowing Sudhir a chance to talk about it would violate his right to a fair hearing.
The new evidence was thus excluded by the Court from determining the Application.
Court restated the principles for grant of a temporary injunction, namely; that the Applicant must establish that the appeal has a likelihood of success or prima facie case of his right to appeal, that the applicant will suffer irreparable damage or that the appeal will be rendered nugatory if a stay is not granted and if court is in doubt of the above, it must consider a balance of convenience.
On the first ground of establishing a prima facie case, the Supreme Court found that Crane Bank’s appeal had no likelihood of success due to the following reasons. Court interpreted S. 96 of the Financial Institutions Act and found that a Bank in receivership was prohibited by the law governing Banks from being sued. Court reiterated the principle that a party that can sue should naturally be sued and where it cannot sue, then it should not be sued. Court thus found that the decision of the Court of Appeal and High Court that Crane Bank in Receivership could not sue was properly arrived at by the learned judges as a Bank in receivership cannot be sued. On that ground alone, the Court held that Crane Bank’s appeal had no likelihood of success.
With regard to the second ground of irreparable damage court emphasised that duration for receivership of a Bank is only 12 months and by the time Crane Bank filed a suit, the 12 months had already lapsed. The Court repeatedly found that receivership of Crane Bank ended on 20th January 2018. Court thus dismissed the assertion by Bank of Uganda that receivership was still ongoing. The fact that the UK lawyers wrote to DFCU about an impending action in the UK does not amount to irreparable damage of receivership which had already ended.
Court found that in trying to register a resolution with URSB, Sudhir had not taken over management of the Bank which was still in the hands of Bank of Uganda and there was no damage that Sudhir could cause to the Bank.
On a balance of convenience, the Court found that it was not in doubt in its earlier findings that the likelihood of success of the appeal is minimal and the actions of Sudhir did not amount to irreparable damage to the Bank. Court found that this application should not have been filed at all and the Bank of Uganda was wrongly advised and should have sought another remedy.
Court further found that URSB was wrongly sued insofar as it was doing its statutory job with regard to companies and was not a party to the suit.
In the premises, the Court unanimously dismissed the Application in its entirety with costs to Sudhir for failure of the application to satisfy all the grounds for grant of a temporary injunction.
This ruling is very significant to Sudhir and his legal team who have been battling Bank of Uganda with regard to the management and control of Crane Bank. Notably is the repeated finding that receivership ended on 20th January 2018. The ruling has a bearing on the outcome of the appeal which disputed the findings of the lower courts that receivership had ended. The finding that a bank in receivership cannot sue is so significant in that the dispute in the Supreme Court was about the capacity of Crane Bank in Receivership to sue or be sued. The High Court and Court of Appeal had all held that a Bank in Receivership cannot sue as it cannot also be sued. The findings partially determines the appeal itself and gives Bank of Uganda more reasons to withdraw the appeal as it has recently notified of its intention to do so.
The above ruling is a landmark win for Sudhir in his attempts to fight the people who illegally took over the control of the Bank.