Bank of Uganda is determined to cost Ugandans more shs 79 billion in its attempt to appeal a commercial litigation against property mogul Sudhir Ruparelia having lost at the beginning of the week in a commercial court and ordered to pay legal costs amounting to shs 39 billion.
In this court battle it’s the taxpayers who lose because Bank of Uganda uses money generated from the taxes paid by the citizens.
Last Monday, the head of Commercial Court Justice David K Wangutusi threw out a case in which Bank of Uganda and Crane Bank (in receivership) sued Mr Sudhir and his Meera Investments for causing a financial loss of shs 397 billion to Crane Bank before it was taken over by the Central Bank in 2016.
Bank of Uganda legal officers asked court to compel Sudhir to refund this cash which they alleged belonged to Crane Bank depositors.
However, Justice Wangutusi dismissed the case on a technicality that a bank that is under receivership (Crane Bank), under the law has no audacity to sue its former shareholder.
But on Wednesday, the Central Bank’s lawyers announced that they would appeal the loss in the Court of Appeal, however without considering the cost implication in an event that the appeal is also quashed.
We understand that at least is five percent of the dectretal amount, the BoU is expected to compensate Sudhir with at least UGX. 19b and his Meera Investments Ltd would also claim another UGX. 19b, with the whole bill expected at 36b.
With the decision to appeal the ruling, should the Central Bank lose at the Court of Appeal, they would be condemned at 10 percent costs of the appeal. A quick calculation puts the whole figure at UGX. 110 billion.
In his 22-page ruling that was delivered by the court’s deputy registrar, Mr Festo Nsenga, Justice Wangutusi noted 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.
Court noted that the public notice made it clear that BoU as the receiver had done an evaluation of the respondent (Crane Bank in receivership) and arranged for the purchase of its assets and assumption of its liabilities by another financial institution.
“In his [BoU] notice, he specifically stated that the liabilities of the respondent had been transferred to DFCU Bank Ltd and that because DFCU Bank had taken over the liabilities, it would, by way of consideration, be paid by conveying to it the respondent’s assets,” the judge ruled.
The judge noted that in so doing, the Central Bank had not only fulfilled Section 95(1)(b) of the Financial Institutions Act but had in a way also sold the respondent, albeit that the payment was in kind, by way of exchange of liabilities for assets.
While awarding costs of the suit, the court ruled that under such circumstances, the party to bear the costs must be the one who brought the matter to court and at the time of filing the suit, BoU had taken over management of Crane Bank Ltd.
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