You will pay heavily, says Sudhir
Sudhir, after the ruling, told journalists that everyone who in one way or the other participated in taking his bank; including dfcu is going to pay the price.
“We are now going to put up a counter claim. You know COSASE (Committee on Commissions, Statutory Authorities and State Enterprises) found lot things that these people did,” he said.
“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, and all the money was just stolen. This is terrible.”
He said the court ruling should be a big lesson to BoU with regard to taking and selling banks.
“They have taken over seven banks and they cannot account for any of them. How can you fail to account to someone? I am a shareholder, I lost a lot of money,” Sudhir said, adding that he spent 25 years building the bank only to lose it through illegal means including his paid up capital.
However, Charity Mugumya, the director of communications at the Bank of Uganda said the bank will appeal the court ruling.
“Crane Bank (in Receivership) is dissatisfied with the decision of the Hon. Justice Wangutusi, and has served a copy of the Notice of Appeal to Kampala Associated Advocates, the legal representatives of Mr. Sudhir Ruparelia and Meera Investments Limited,” she said in a statement on Aug.27.
She said BoU is committed to pursuing the matter to its logical conclusion.
Most commercial lawyers that The Independent spoke to said the Central Bank has the right to appeal but could incur even heavier costs in case it loses again.
“The ruling gives chance to BoU to define what should be next on their agenda – either to appeal or meet the costs that Ruparelia incurred,” Joel Roy Mucunguzi, an associate lawyer at the Kampala-based Signum Advocates told The Independent in an interview.
He said the ruling has set a precedent for future determination of rulings of similar nature.
BoU has so far taken over and liquidated seven commercial banks since 1993. These include: Teffe, Greenland Bank; formerly owned by the late Sulaiman Kigundu and National Bank of Commerce (NBC), formerly owned by tycoon Amos Nzeyi, former Prime Minister, Amama Mbabazi among others.
Other banks that were liquidated include; International Bank, formerly owned by the Emma Kato family, Cooperative Bank, Global Trust Bank, and Crane Bank.
Beyond the court verdict, Mucunguzi said the whole debate or process about Crane Bank – BoU saga rotates around ensuring that financial institutions and the regulator uphold corporate governance principles that are important in growing businesses and in line with the laws of the land.
The Bank of Uganda has to be cautious whenever it is taking over business of financial institutions to avoid occurrence of similar situations.
Isaac Bakayana, a senior lecturer at the School of Law, Makerere University, told The Independent on Aug.27 that Justice Wangutusi should possibly have looked beyond the Financial Institutions Act of 2004, the Insolvency Act, 2011, and the Company Act, 2012 before giving his verdict in favour of Sudhir on a technicality.
He said based on this, Bank of Uganda could appeal and the case could be sent back to the lower court (commercial court) for fresh hearing/proceedings.
However, Bakayana said Sudhir’s victory should be a lesson to BoU to be more cautious while placing financial institutions under receivership to avoid a similar scenario from happening.
“The central bank has to act carefully and move in quickly,” he said.
On whether this ruling would reignite legal suits as other banks that were previously closed under unclear circumstances challenge the Bank of Uganda, the law don said Sudhir’s case is different as he moved in quickly to challenge the decision of the central bank immediately he lost his bank.
He said the other banks may find it difficult to come up with the grievance in 2019 that they failed to present in years when they were closed.
“When you disagree today…move in quickly and challenge the decision,” he said. “You do not have to wait.”
However, Sudhir could sue BoU and dfcu for return of his Crane Bank assets currently occupied by dfcu.