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Dr. Sudhir Ruparelia
Chairman of Ruparelia group, Sudhir Ruparelia

Dr. Sudhir Ruparelia Dismisses Shs397 Billion Case

City Tycoon Dr. Sudhir Ruparelia has rejected a case in which Bank of Uganda (BoU) sued him for allegedly fleecing defunct Crane Bank Limited (CBL) of Shs397 billion in fraudulent transactions.

Justice Wangutusi of the Commercial Court has set the ruling of the case on August 26, 2019.

Ruparelia through his lawyers of Kampala Associated Advocates on July 3, 2019 presented a preliminary objection against BoU case before Justice Wangutusi.

His lawyers asked court to dismiss the BoU case, arguing that the central bank overstepped its mandate in filing the case that has dragged on for years now.

“When dissolving a bank, BoU had three options. It can put someone in management in what is called statutory management, receivership or liquidation and it chose to go for receivership. Under the law, specifically, only the manager and the liquidator can sue. The case cannot be filed by a receiver,” said Mr Ellyson Karuhanga, one of the lawyers representing Sudhir. Said.

He argued that under the law, BoU has four functions to dissolve and not to sale the financial institutions.

“The 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, he cannot do anything,” the lawyer argued.

“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,” Karuhanga said in his argument.

The lawyers made the objection when the case filed in January 2017 came up for hearing on Friday (today).

Sudhir Ruparelia was no longer majority shareholder of CBL

Mr Bruce Musinguzi also argued that Sudhir Ruparelia 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 said 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.

In to the submissions of Sudhir’s lawyers, BoU’s lawyer Dr Joseph Byamugisha argued that when a financial institution is placed under receivership the power to commerce or to continue with the civil suit does not stop.

BoU on October 20, 2016 BoU closed and placed CBL under receivership and would on January 25, 2017 controversially sell some of its assets to Dfcu bank at Shs200 billion. Later that same year, BoU alongside Crane Bank in receivership sued Sudhir Ruparelia and his Meera Investments Limited for allegedly fleecing CBL of Shs397 billion in fraudulent transactions. Mr Ruparelia denied the allegations and counter-sued BoU, seeking compensation of $8m (Shs28 billion) in damages for breach of contract.

Each side now awaits the ruling set for August 2016, 2019.

Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (Cosase) while investigating Bank of Uganda over the closure of commercial banks  established that over Shs478 billion was allegedly used in the receivership of CBL.

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