Supreme Court dismisses Nzeyi’s appeal against take over of National Bank of Commerce

Kampala, Uganda | THE INDEPENDENT | The Supreme Court in Kampala has dismissed businessman Humphrey Nzeyi’s appeal against the Bank of Uganda (BOU) and the government for the illegal takeover, sale, and subsequent liquidation of the National Bank of Commerce.

The Supreme Court, presided over by seven justices led by Professor Lillian Tibatemwa Ekirikubinza has unanimously dismissed the appeal for lack of jurisdiction, saying that the matter arises from a petition filed wrongly before the Constitutional Court and therefore, it ought to have been filed before the High Court.

The other justices on the panel included Percy Night Tuhaise who has written the unanimous decision; Mike Chibita, Elizabeth Musoke,  Christopher Izama Madrama , Catherine Bamugemereire and Monica Mugenyi.

In his appeal filed in 2021, businessman Nzeyi challenged the constitutionality of select sections of the Financial Institutions Act and the Bank of Uganda’s actions in taking over, liquidating, and selling National Bank of Commerce to Crane Bank Uganda Limited.

The records before the Supreme Court show that on September 27, 2012, the Bank of Uganda took over the management of the National Bank of Commerce, a deposit-taking financial institution, citing financial difficulties and poor corporate governance. As a result, a public notice was issued, informing the public that a purchase and assumption agreement had been concluded with Crane Bank Limited, which took over National Bank of Commerce’s deposits and assets effective October 1, 2012.

However, Nzeyi, a shareholder and the director of National Bank of Commerce, filed Constitutional Petition number 44 of 2012 against Bank of Uganda and the Attorney General, challenging the constitutionality of the Financial Institutions Act provisions that allowed BOU to take over and sell National Bank of Commerce.

He alleged that BOU’s actions denied National Bank of Commerce a fair hearing and amounted to an illegal compulsory deprivation of his property in National Bank of Commerce.

The Constitutional Court dismissed Nzeyi’s petition on November 4, 2020, in a majority decision of 4 to 1, with Justice Kenneth Kakuru who is now deceased, being the dissenting judge.

Dissatisfied with this, Nzeyi appealed to the Supreme Court, raising nine grounds of appeal. The Supreme Court in it’s decision has considered the grounds of appeal, including the argument that the Constitutional Court erred in holding that Part 9 of the Financial Institutions Act affords a distressed financial institution a right to be heard and that the Constitutional Court erred in holding that NBC was allowed to be heard regarding its closure on September 27, 2012.

The Supreme Court has held that the Constitutional Court lacks jurisdiction to entertain petitions that merely enforce constitutional provisions without requiring interpretation.

According to the justices, Nzeyi’s claims would be better addressed through a trial process before a court of competent jurisdiction, and in this case the High Court, because it did not raise any questions that warrant constitutional interpretation.

The court noted that the Bank of Uganda is empowered to supervise and regulate financial institutions, with its primary concern being the protection of depositors’ money. However, it is the judge’s finding that any alleged wrong decisions by the Bank of Uganda should be dealt with in an ordinary suit before the High Court.

“Thus, in the given circumstances of this appeal, where the ground of appeal was not specifically on interpretation of the Constitution but rather infringement of constitutional rights, I am of the well-considered opinion that the matter would best be settled through a trial process before a court of competent jurisdiction. I would, just like the Constitutional Court did, decline to make a declaration on the matter, which I would refer for trial at the appropriate court,” reads the lead judgment by Justice Tuhaise.

Now, the Supreme Court’s decision marks the end of a long-standing legal battle between Nzeyi and the Central Bank.

The justices have ordered that each party should bear its costs, given the circumstances of the appeal.

“In the result, since all the grounds of this appeal have failed, I would dismiss this appeal. Bearing in mind the circumstances of this appeal, where the NBC, the subject of this appeal, was liquidated and wound up a long time ago, each party shall bear its costs.”, held the Supreme Court.

The Supreme Court decision has been read in open court by the Deputy Registrar, Elizabeth Akullo Ogwal.

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