Tycoon Sudhir Ruparelia’s lawyers Kampala Associated Advocates (KAA) have punched holes in Governor Emmanuel Tumusiime Mutebile’s criticism of ruling on Crane Bank.
In June, justices Alfonse Owiny-Dollo, Cheborion Barishaki and Steven Musota of Court of Appeal upheld High Court judge David Wangutusi’s dismissal of central bank case against Ruparelia.
Bank of Uganda (BoU) and Crane Bank under receivership had sued Ruparelia and Meera Investments claiming the two had drained Shs397bn and sold its assets.
But Wangutusi of the Commercial Division had refused to grant BoU and the now defunct bank’s prayer to compel Ruparelia to cough the money.
BoU and Crane Bank appealed the ruling in the Court of Appeal. Three judges of the court unanimously upheld the ruling of Wangutusi.
COURT OF APPEAL RULES IN SUDHIR RUPARELIA’S FAVOUR
The bench agreed that under Section 96 of the Financial Institutions Act, “it is clear that there is a protection granted to the financial institution in receivership against being sued.”
“In light of Meera Investments decision, it would be unfair to say that the financial institution can sue and on the other hand, it cannot be sued,” ruled the justices.
“A person who is protected from suits under the law is also prohibited from suing. It’s therefore our finding that this ground should be decided in the negative.”
They added that Wangutusi “was right to find that a person who cannot be sued, cannot sue.”
“The law protects the appellant [Crane Bank in receivership] from the process of court, cannot then empower it against other court users,” they emphasized.
“This would make the appellant [Crane Bank in receivership] enjoy an unequal treatment before the law compared to the respondents [Ruparelia and Meera Investments].”
MUTEBILE TO APPEAL RULING IN SUPREME COURT
However, Mutebile announced he would appeal the ruling in the Supreme Court because “neither the High Court nor the Court of Appeal has yet considered or taken a decision on the claims for wrongful and illegal extraction of funds from Crane Bank as claimed in the main suit.”“The implications of these judgments are that a Receiver of a financial institution/bank cannot pursue or seek recovery of assets of a bank in receivership by way of legal proceedings,” he said.
“This renders the principle of tracing and preserving assets of an insolvent bank during statutory management and receivership futile.”
He added that “the judgements also set a precedent that limits the Central Bank’s capacity to resolve banks in a manner that ensures accountability for mismanagement of depositor funds and promotes good corporate governance in the banking industry.”
In response, Ruparelia’s lawyers told him “it is not the Judgments of the High Court and Court of Appeal that restrict the powers of Bank of Uganda in resolution of closed banks.”
“Both judgments stated clearly that the limitation on Bank of Uganda’s powers are found in the Financial Institutions Act.”
They also rejected findings from the investigation into alleged Crane Bank mismanagement.
“The investigators did not interview Dr Ruparelia, or the Managing Director or the Executive Director as required under forensic audit guidelines,” they argued.
On the whole, KAA dismissed Mutebile’s statement as lacking a cause of action, aiming at ignoring the law and full of “inaccuracies and false statements.”
