By Kagenyi Lukka
On 26th August, the commercial division of the high court presided over the learned Judge, David Wangutusi will deliver the much awaited ruling on the on the preliminary objection by Sudhir in the Case in which Bank of Uganda (BoU) or Crane Bank in receivership sued Sudhir Ruparelia and Meera Investments Limited of fleecing defunct Crane Bank of Shs397 billion.
It is highly expected that the businessman will take BoU and its lawyers to yet another law school. This will not be the first time that Dr.Ruparelia will outsmart the ‘learned friends’ representing BoU.He successfully blocked three sets of Bank of Uganda and dfcu Bank lawyers from representing these two institutions in several suits.
Background of the Case
Against the provisions of the Confidential Settlement and Release Agreement (CSRA),BoU by its former unprofessional lawyers including AF Mpanga advocates filed a suit against Sudhir in court violating the provisions of the above agreement that was reached by both parties after BoU closed and liquidated Crane Bank Limited early 2017.The CSRA was entered into between January 29 and March 20th 2017.
For instance Clause 6 of the agreement provides that, “This confidential settlement and release agreement is in full, complete and final settlement of all claims that either party (or related parties or shareholders) may have against the other, and each of Bank of Uganda and Crane Bank Limited hereby fully and finally releases and forever discharges and shall refrain from instituting, directing, procuring, instigating or maintaining all or any actions, claims, sanctions [whether administrative, civil or criminal in nature].”
Sudhir claims that on January 25, 2017, BoU sold, at an undisclosed sum, assets of Crane Bank to Dfcu bank Limited yet by mid-January 2017, the central bank had approached and urged him to settle the dispute.
Furthermore, it has been understood that between January 29 and March 20, the parties (Sudhir and BoU) held series of meetings meant to amicably resolve the dispute. Under clause 3.1 of the CSRA, they agreed that he pays US$60m in part cash and property. In return for the above payments, Sudhir says they agreed that BOU would assign a number of loans totaling to Shs 63.6 billion to him, release all securities of those loans, and remove Crane bank from receivership.
On April 4th, 2017 David Mpanga, one of BoU’s lawyers, wrote on behalf of himself and MMAKS, the other BoU lawyers, setting out the implementation timeline of the CSRA, clearly detailing what each party was required to do as per the CSRA agreement.
Sudhir was to provide the property list with an aggregate fair market value of US$42 million and BOU would avail the assigned deed and loan statements to Sudhir with respect to the agreed loan.
BoU was expected to release securities of loans worth about US$ 8million on the account of Sunbury Investments (U) Ltd and Main Freight ICD Limited and upon receiving the balance of US$10 million, BoU was duty bound to release the securities of the remaining portion of the agreed loans.
A joint valuation team would determine the value of the properties and would compile a list that would constitute the settlement titles,” reads lawyer David Mpanga’s letter, which is copied to BoU governor Emmanuel Tumusiime-Mutebile, and Justine Bagyenda, the BoU executive director for supervision.
TWIST OF EVENTS-BoU ABDICATES ITS CONTRACTURAL OBLIGATION UNDER CSRA
Sudhir further states that he went ahead to implement the agreement by giving up his properties to BoU which included titles for land found in FRV 130 folio 18 plot M418 Nakawa Industrial Area and LRV 1239 folio 2 plot 7 Parliamentary avenue Kampala.
On April 19, 2017, BoU acknowledged receipt of US$1.1 million as payment towards the agreed loans and informed him that his deficit on the first installment of US$8 million was $6.9m, which they demanded he must pay that very day.
On April 20, 2017, Sudhir paid BoU US$6.9 million which meant that he paid a total of US$8 million on the same day. Despite paying the said money, BoU never released securities of loans representing a total value of approximately $8m on the account of Sunbury Investments, Main Freight and also the central bank did not return his land titles.
These actions by BoU were in total breach of the CSRA.
In compliance with the agreement, Sudhir says, he had supplied a list of titles, 10 of which were in the names of Mahmoud Bharwani, who had agreed to surrender his titles to settle his indebtedness to Crane bank.
On April 7th, 2017, there was a meeting between Mpanga and Bharwani after BoU raised a number of issues in regard to Bharwani’s land titles and that it’s Mpanga who wrote the minutes.
Sudhir narrates that Mr Mpanga’s minutes indicated that the professional valuer would conduct ajoint valuation to avoid unilateral conclusion by one party. Any defect in title would be established in the joint valuation process
He put an additional eight titles to the property list to give BoU comfort but BoU in further breach of the CSRA implementation agreement and the Bharwani meeting did not honor the joint valuation.
BoU’s Lawyers threaten Sudhir with legal suits
On June 28, 2017 David Mpanga sent a notice of intention to sue to Sudhir, demanding that by close of business on June 29, he unequivocally undertakes in writing to pay the balance of $52 million and that the payment must be made in cash by July 15.
Later on June 30, BoU filed a suit against him in court, which was in breach of clause seven of the CSRA.
By opting for a legal battle with Dr. Ruparelia, BoU had without a doubt, opened a can of worms because the hill has become too steep for it to climb albeit all kinds of machinations they have deployed.
Dr. Ruparelia through his lawyers of Kampala Associated Advocates further argues that a bank under receivership cannot sue or be sued,’ receiver cannot be sued on that act and cannot sue anyone. His action is protected by the law. The second point we are raising is that the receivership is limited by time, the law gives the receiver 12 months to carry out its function and after this, and he cannot do anything’.
Through his lawyers, the business mogul argued that he was no longer the majority owner of CBL that he founded after Rasik Kantaria, a Kenyan national, on December 6, 2010, snapped up 47 per cent of the bank’s shares.He further opined that Kantaria later transferred his shares to White Sapphire Ltd, a company incorporated in Mauritius and that a one Jitendera Sanghani, a British citizen, held 4 per cent stake in CBL.
He also said that under Uganda’s Constitution and the Land Act, CBL in receivership could not own or hold freehold property and was, therefore, not capable of holding the suit property in its names.
“For us, a receivership, unlike the others, is not a siege, they are not surrounding the bank to find out what is happening. The law does not allow the company whose majority shareholder is a Mauritius based company to obtain those companies as is the case of Crane Bank,” he argued.
As we await for the ruling, it should be recalled that in October 20, 2016, BoU closed Crane Bank Limited on account of undercapitalization before selling some of its assets to Dfcu bank in Shs200 billion deal in January 2017. Dfcu bank would in first half of 2017 post 114 billion, with a great percentage of the profits attribute to acquisition of Crane Bank Limited.
The ruling in favor of Ruparelia will seal the dampened image of the formerly glorious BoU which has been once again summoned to appear before parliament on the fluid irregularities that were evident in the closure and sale of defunct banks.
The author is a current affairs analyst and aspiring MP Ikiiki County in Budaka district.