- October 4, 2021
- No Comment
BOU loses again as supreme court rules liquidation of Crane bank was illegal
The Supreme Court has this afternoon ruled that liquidation of Crane Bank Limited is illegal and warned that BoU is in contempt of earlier rulings by both High and Supreme Courts.
The highest court in the land that sat this morning said the bank was closed as a financial institution and placed under receivership and hence after closure, it ceased being a financial institution.
“An interlocutory mandatory injunction doth issue returning the status quo of the 1st respondent to what it was at the time of filing Civil Appeal No.07 of 2020. A declaration doth issue that the 2nd respondent is in contempt of court’s order”. reads the ruling.
“The 1st respondent was closed as a financial institution and placed under receivership. Upon closer, it ceased being a financial institution under the Act and it could, therefore, not be progressed to liquidation. The 2nd respondent’s act therefore of moving the 1st respondent to liquidation are contrary to the above clear provisions of the law and the same cannot be sanctioned by this court” reads the ruling.
Supreme Court further said that the act of the 2nd respondent changing the status of the 1st respondent from Crane Bank (in receivership)to Crane Bank (in liquidation) would be to render the question before this court in the main appeal moot and nugatory. We, therefore, find that this is a proper case for grant of a temporary injunction against the 2nd respondent to restrainit from placing and or continuing with the liquidation of the 1st respondent until the determination of Civil Appeal No.07 of 2020.
“The interests of justice therefore demand that a mandatory interlocutory injunction is issued to restore the status quo that existed at the time of filing Civil Appeal No.07 of 2020”. It further continues “In the present case, the contempt by the 2nd respondent relates to conduct which perverts the course of justice. The attempt at circumvention of the decision of the Court of Appeal by altering the status of the 1st respondent from Crane Bank (in receivership) to Crane Bank (in liquidation) was in our view aimed at impeding or perverting the course of justice before this court and the same amounted to contempt. In the result, we allow this application and make the following orders:
- A temporary injunction doth issue restraining the 2nd respondent, their agents or anyone acting under their authority from placing the 1st respondent under liquidation pending the hearing and determination of Civil Appeal No. 07 of 2020.
- A temporary injunction doth issue restraining the 2nd respondent, their agent or anyone acting under their authority from continuing with the liquidation process of the 1st respondent pending the hearing and determination of Civil Appeal No.07 of 20220
- An interlocutory mandatory injunction doth issue returning the status quo of the 1st respondent to what it was at the time of filing Civil Appeal No.07 of 2020.
- A declaration doth issue that the 2nd respondent is in contempt of court’s order.
BoU insisted on appealed against the High and Supreme Court’s ruling which concurred with Tycoon Sudhir Ruparelia that liquidation was illegal since it ended in January 2018.
The ruling comes at a time when BoU has just withdrawn a Supreme Court appeal that was contesting the Court of Appeal’s dismissal of the case it filed on behalf of Crane Bank Ltd (in Receivership) versus Sudhir Ruparelia and Meera Investments Limited.
In a September 15 notice of withdrawal, the Supreme Court Registrar indicated that BoU has decided not to prosecute the appeal and will pay costs.
The notice was signed by the central bank lawyers Messers Byamugisha & Co Advocates, confirming the latest victory for Mr Ruparelia who has given the BoU a run of their money in the court, ever since they closed his bank. On June 23, 2020, the Court of Appeal upheld the judgment of the Commercial Court in an application filed by BoU seeking a refund of Shs397 billion from city tycoon
Justice David Wangutusi of Commercial Court in August 2019 dismissed the first case in which BoU claimed that Sudhir and his Meera Investments e fleeced his own Crane Bank (now in receivership) of Shs397 billion.
In June 30, the BoU insisted that receivership does not take away the corporate personality of a company which includes the right to trace and recover assets and the right to sue for those assets
In the preliminary stages of the appeal, the Supreme Court in August this year, dismissed with costs, an application by lawyers representing BoU in which they sought to substitute the court record from Crane Bank Limited (in receivership) to Crane Bank Limited (in Liquidation), with the court rejecting the move, as in bad faith and intended to circumvent facts.
A panel of the Supreme Court Justices, Ruby Opio-Aweri, Faith Mwondha, Lillian Tibatemwa, Ezekiel Muhanguzi and Night Tuhaise, in a ruling issued on August 12 rejected arguments by BoU lawyers led by veteran attorney stating that Crane Bank Limited (in Receivership), Crane Bank Ltd (in Liquidation), and Crane Bank Limited are three distinct entities with different rights, powers and obligations.
Earlier in the High Court, Justice Wangutusi noted in his ruling that at the time BoU and Crane Bank (in receivership) filed the suit against Mr Ruparelia and his Meera Investments in January 2017, Crane Bank was a non-existing entity, having been terminated when the Central Bank sold its assets to DFCU Bank in October 2016.
The judge ruled that this rendered Crane Bank in receivership incapable of suing or being sued since there would be no assets to be claimed for.