Crane Bank ghost returns to haunt Dfcu as embattled bank faces new legal battle in shs32bn case

The ghost of the fraudulent sale of Crane Bank to Dfcu Bank has once again aroused to haunt the latter after Tycoon Sudhir Ruparelia through his firm Meera Investments Ltd awakened a legal battle against the embattled Bank over uncleared rent arrears.

Meera Investments which is the Real Estates and Property arm of the Ruparelia Group filed a complaint before the commercial court in Kampala demanding that court compels dfcu Bank to pay $8,660,462 (Sh32 billion) for rent arrears for the time it occupied the buildings after the sale of Crane Bank.

In a lawsuit filed by its lawyers, Meera Investment alleges that Dfcu breached the tenancy agreements in respect to Plot 38 Kampala Road (former Crane Chambers) and Plot 40A on Kampala Road and therefore demands further interest on the same.

The background of the tenancy agreement dates way back to December 16, 2014, when Meera Investments let out the basement, ground, 1st, 2nd, 3rd and 7th floor of Plot 38 Kampala Road (Crane Chambers) and all of Plot 40A Kampala Road to Crane bank for a period of 10 years.

The lawyers argued that Dfcu Bank expressly inherited all tenancy agreements and, therefore, assumed the rights and obligations under the tenancies in respect of the suit properties.

“Under clause 3(c) of the tenancy agreement, it was specifically agreed by the parties (Crane bank and Meera) that the tenancies shall remain firm and binding on them until the expiry of ten years,” reads part of the plaint filed by Meera.

According to the tenancy agreement, Crane Bank would pay $46,980 (Shs171m) in rent and $46,980 (Shs 171m) in ground rent per month with a seven per cent annual increment for Plot 38 Kampala Road and $9,890 (Shs36m) in rent and $9,890 (Shs36m) in ground rent for Plot 40A Kampala road.

And that when dfcu bank took over Crane Bank, it inherited the entire premises that the bank formerly rented and rebranded the entire premises. It also undertook to pay Crane Management Services (managers of Meera) $531,000 (Shs 1.93bn) as restoration costs and arrears in utility bills.

The document further reveals that in February 2017, dfcu Bank entered into a revised contract in “respect of the basement and ground floors of Plot 38 Kampala road for a fixed period of three years.”

Dfcu, however, reportedly continued to occupy the 1st, 2nd 3rd and 7th floors of Plot 38 Kampala Road and Plot 40A Kampala Road “under the terms and conditions of the tenancy agreement dated December 16, 2014” until April 30, 2017, when it opted to vacate them.

According to Meera, this constituted a breach of clause 3(c) of the surviving tenancy agreement, which covenanted that the “tenancies shall remain firm and binding on them until the expiry of ten years” and for this breach, dfcu is “liable to pay the plaintiff the sum constituting rent for the unexpired period of 84 months being $8,660,462.34 (Shs 31.6bn).”

Now, Meera among others wants dfcu to pay the rent on account of being the successor in the title to Crane Bank Limited (in receivership) as a tenant in the premises, being the transferee of the assets and liabilities.

Meera also seeks interest on the sum of the prevailing commercial rate from the date the said sums became due until payment in full, general damages with interests and cost of the suit all arising from various breaches allegedly committed by dfcu bank.

Dr Sudhir when asked for a comment on the matter said that the tenancy agreement between Crane Bank and Meera which is scheduled to expire on March 31 2024, has no clause for the termination of the contract.

”The agreement was a fixed tenancy for 10yrs for six floors which binds the successor, dfcu, which continued occupying premises. The rentals were not an excluded liability,” he said, adding that the rent demanded is in respect of the four floors occupied by the Dfcu.

”There is no reasonable tenant as a bank would behave in that manner, dfcu Bank Limited was in breach of the tenancy agreement.”