By our Reporter’s
On April, 3/2024, Bank of Uganda [BOU] issued a notice titled “Notice on Legal Status of the Defunct Crane Bank Limited under the Financial Institution Act, 2004” quoting section 7(1) (a) of the Financial Institutions Act, 2004 [as amended].
In the notice BoU advises the Uganda Registration Services Bureau [URSB] to strike the word ‘Bank’ off the company name of Crane Bank Limited, meaning BoU wants URSB to remove CBL from its records as a registered company in Uganda which is a misleading notice on the legal status of Crane Bank Limited.
The official records at the Uganda Registration Services Bureau [URSB], crane bank limited [CBL], a member of the Ruparelia Group of Companies was registered on July 23, 1990 and whose registration number is 80010000221522 to do banking business although it was unfairly closed in October 2016 and sold in January 2017 by BoU, causing public outcry.
Speaking to legal expert who preferred to comment on condition of anonymity, Bank of Uganda [BOU] has no powers to direct Uganda Registration Services Bureau [URSB] to deregister [CBL]. Adding that it’s illegal showing that [BoU] is in a desperate situation after Sudhir Ruparelia beating them in courts of law in the related cases.
“BoU has now powers to deregister CBL. I think that the central bank’s legal department should seek the advice of the Attorney General/Solicitor General in this case other than looking for more troubles.”
Expert added that the actions of deregister Crane bank limited, URSB will have to first listen to it’s shareholders. They cannot rely on BoU to take that decision, and I am sure URSB has good lawyers who can sense the legal trouble that BoU wants to cause them.
In other case legal expert warned that should URSB take BoU’s advice and deregister CBL as a company in Uganda, they are likely to be sued by shareholders of CBL. However, crane bank limited can seek a court order prohibiting Uganda Registration Services Bureau from deregistering it as a company in Uganda.
The matter between Bank of Uganda and Crane bank limited has never been settled, and I don’t think Uganda Registration Services Bureau can be all that stupid to do what Bank of Uganda wants them to do.
Saying that Crane bank limited was registered as a company in Uganda about 34 years ago and that it would be hard for BoU to use the Financial Institutions Act, 2004, to deregister the bank. I don’t think Bank of uganda will succeed in deregistering Crane bank limited from Uganda Registration Services Bureau records.
“First Bank of Uganda must do what the Supreme Court has ordered them to handover all the properties and asserts of Crane Bank Limited than talk about Supreme Court conclusion”
CASE BACKGROUND!
Despite Bank of Uganda trying to mislead the public through disinformation, it should be remembered that Sudhir Ruparelia, one of the biggest shareholders of Crane bank limited in 2022 obtained a final Supreme court order allowing him to revert Crane Bank back to it’s shareholders.
January 2017, Crane bank limited was acquired controversially and irregularly by Dfcu-Bank at Shs200 billion after the central bank claimed that it was under capitalised.
The decision of reverting Crane bank limited made on July 1, 2022, by Justice Prof Lillian Tibatemwa Ekirikubinza followed a disagreement that has been ongoing for over six months between Bank of Uganda and Sudhir on whether the final order needs to be enforced should also reflect that the bank is reverted to the businessman.
This ruling arose from an appeal filed by Crane bank limited in receivership (Bank of Uganda) on August 1, 2020, challenging the decision by the Court of Appeal to dismiss the case in which they accused Sudhir and his company Meera Investments Limited of withdrawing Shs397 billion from Crane bank limited fraudulently.
On June 30, 2017, when Crane bank in receivership/Bank of Uganda sued Sudhir and his company Meera before the Commercial Division of the High court seeking to recover the said monies that had reportedly been siphoned by Sudhir.
The sought to recover freehold certificates of title to 48 properties – together with duly executed transfer agreements and a refund of the monies for which they claimed were for invalid leases. However, in 2019, the then Commercial Court judge David Wangutusi dismissed the case with costs on grounds that the Crane Bank in receivership had no capacity to commence legal proceedings against Sudhir.
Not happy with the decision of Wangutusi, Crane Bank under receivership challenged Wangutusi’s decision in the Court of Appeal claiming that the judge erred in law by holding that the bank had ceased to own property and its liabilities, and assets had all been exhausted.
The appeal by the BoU was however, dismissed with costs leading to an appeal in the Supreme Court. BoU on August 1, 2020, however, withdrew the appeal before it could be heard. But Sudhir, together with his company Meera, objected to the withdrawal, saying that they should be awarded costs.
The Supreme Court agreed with Sudhir and directed BoU to pay costs in its February 11, 2022 decision. The Supreme Court also ruled that receivership of CBL ended on January 20, 2018, and from that date, the management and control of Crane Bank returned to its shareholders.
But when Sudhir and his company, who were the successful party, prepared a decree to be approved by the court for enforcement, BoU objected to the format of what the third order should state.
The third court order was that “the appellant’s receivership ended on January 20, 2018 and thereafter, its management reverted to the shareholders. BoU was not happy with the last part of the order to the effect that ”thereafter its (CBL) management reverted to the shareholders.”
BoU however, agreed with the rest of the orders that the appeal be dismissed with costs to be paid by BoU and that the dismissal is with effect from February 11, 2022. But it was not happy with reverting the management of CBL to its shareholders.
The BoU directive to URSB which legal minds have termed bogus.
BoU averred then that the Supreme Court had no jurisdiction to make an order reverting the management to the shareholders because when they withdrew their case, the contention was on who should pay costs and that the Court of Appeal had not ordered that it should be reverted.
But in her ruling, Justice Tibatemwa indicated that under the Financial Institution’s Act, after the expiration of 12 months from the date of takeover by the receiver, the receivership must be deemed to have lapsed by operation of the law.
“It is a position at common law that where a legal relationship is terminated by effluxion of time then the rights accruing revert back to the owner,” stated the judge then.
The judge said CBL existed as a legal entity before it was licensed to operate as a financial institution and that the return of management to the shareholders is a logical result of the fact that the central bank is no longer a receiver and no longer the manager.
As such, the court emphasized that the CBL receivership ended on January 20, 2018, and consequently, its management was reverted to its shareholders. However, it is now surprising that BoU wants to erase crane bank limited [CBL] from the records of [URSB], illegally.
