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ANALYSIS: Why Bank of Uganda’s Appeal in Supreme court had no chance of success

KAMPALA, UGANDA: On Monday this week, the Supreme Court in Kampala delivered yet another ruling in favour of Businessman Dr. Sudhir Ruparelia in which it emphasized that the appeal filed before it by the Bank of Uganda had no chance of success.

This is the fourth application that has been won by Sudhir in the Supreme Court from the time Bank of Uganda appealed the decision of the Court of Appeal.

The Supreme Court in its ruling considered an application filed by Bank of Uganda under Crane Bank Receivership seeking a temporary injunction to restrain Suhdir from taking over the control of Crane Bank Ltd. The Application also sought for orders restraining Sudhir and his associates from registering company resolutions with Uganda Registration Services Bureau.

The Court in its ruling dismissed the Application in its entirety. However, in its ruling, the court made pertinent findings that have a bearing on the Appeal that the Bank of Uganda filed in the Supreme Court.

In the first place, Court refused to consider the evidence that Sudhir had filed a suit against DFCU in the UK. This is because this evidence was raised by Bank of Uganda in its rejoinder yet Sudhir had not talked about it in his reply. To consider this evidence without allowing Sudhir a chance to talk about it would violate his right to a fair hearing. The new evidence was thus excluded by Court from determining the Application.

Court restated the principles for grant of a temporary injunction, namely; that the Applicant must establish that the appeal has a likelihood of success or prima facie case of his right to appeal, that the applicant will suffer irreparable damage or that the appeal will be rendered nugatory if a stay is not granted and if court is in doubt of the above, it must consider a balance of convenience.

On the first ground of establishing a prima facie case, the Supreme Court found that Crane Bank’s appeal had no likelihood of success due to the following reasons. Court interpreted S. 96 of the Financial Institutions Act and found that a Bank in receivership was prohibited by the law governing Banks from being sued. Court reiterated the principle that a party that can sue should naturally be sued and where it cannot sue, then it should not be sued. Court thus found that the decision of the Court of Appeal and High Court that Crane Bank in Receivership could not sue was properly arrived at by the learned judges as a Bank in receivership cannot be sued. On that ground alone, Court held that Crane Bank’s appeal had no likelihood of success.

With regard to the second ground of irreparable damage court emphasised that duration for receivership of a Bank is only 12 months and by the time Crane Bank filed a suit, the 12 months had already lapsed. The Court repeatedly found that receivership of Crane Bank ended on 20th January 2018. Court thus dismissed the assertion by Bank of Uganda that receivership was still ongoing. That the fact that the UK lawyers wrote to DFCU about an impending action in UK does not amount to irreparable damage of receivership which had already ended.

Court found that in trying to register a resolution with URSB, Sudhir had not taken over management of the Bank which was still in the hands of Bank of Uganda and there is no damage that Sudhir could cause to the Bank.
On a balance of convenience, the Court found that it was not in doubt in its earlier findings that the likelihood of success of the appeal is minimal and the actions of Sudhir did not amount to irreparable damage of the Bank. Court found that this application should not have been filed at all and Bank of Uganda was wrongly advised and should have sought another remedy.

Court further found that URSB was wrongly sued in so far as it was doing its statutory job with regard to companies and was not a party to the suit.

In the premises, Court unanimously dismissed the Application in its entirety with costs to Sudhir for failure of the application to satisfy all the grounds for grant of a temporary injunction.

This ruling is very significant to Sudhir and his legal team who have been battling Bank of Uganda with regard to the management and control of Crane Bank. Notably is the repeated finding that receivership ended on 20th January 2018. The ruling has a bearing on the outcome of the appeal which disputed the findings of the lower courts that receivership had ended. The finding that a bank in receivership cannot sue is so significant in that the dispute in the Supreme Court was about the capacity of Crane Bank in Receivership to sue or be sued.

The High Court and Court of Appeal had all held that a Bank in Receivership cannot sue as it cannot also be sued. The findings partially determines the appeal itself and gives Bank of Uganda more reasons to withdraw the appeal as it has recently notified of its intention to do so. Congratulations to Sudhir and the team for winning another Application before the Supreme Court.

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