By Andrew Irumba
City tycoon Sudhir Ruparelia is demanding USD30M (about Shs110,671,500,000) in legal costs and damages he suffered after Bank of Uganda (BoU) lost a case it had filed against him.
On Monday this week the High Court Commercial Division in a ruling made by Justice David Wangutusi, dismissed a case BoU had filed on behalf of Crane Bank against Sudhir, alleging that the tycoon had pocketed over Shs397Bn from Crane bank before it was closed and later sold to dfcu Bank.
Justice Wangutusi ruled that Crane Bank (under Receivership) had no capacity to sue Sudhir, Meera Investments and others in the suit, before dismissing the case with costs, to be borne by Bank of Uganda.
However, while compiling all the legal costs and damages after taxation, Sudhir’s lawyers agreed to a substantial fee of USD30m.
What is most worrying to most Ugandans is that this money is to be forked out of the national treasury, meaning that it is the tax payers who will bear the burden of paying for BoU’s recklessness.
Bank of Uganda, through their new attorney Dr. Joseph Byamugisha of Byamugisha & Co Ltd, have since opted to file an appeal.
But according to legal experts, this might worsen the situation. This is because a case before the High Court carries at least five percent of interest on the decretal sum, meaning that the BoU is expected to compensate Sudhir with at least Shs19Bn and his Meera Investments Ltd would also claim another Sh19Bn, with the whole bill expected at Shs36Bn, which would have been interest accrued during the time of the appeal.
With the decision to appeal the ruling, should BoU lose at the Court of Appeal, they would be condemned to pay a 10 percent interest on costs of the appeal. A quick calculation puts the whole figure at over Shs110Bn.
In his 22-page ruling that was delivered by the court’s deputy registrar, Mr Festo Nsenga on Monday, Justice Wangutusi noted that at the time BoU and Crane Bank (in receivership) filed the suit against Mr Ruparelia and his Meera Investments in January 2017, Crane Bank was a non-existing entity, having been terminated when the Central Bank sold its assets to Dfcu Bank in October 2016, hence it had no capacity to sue and thus the case lacked merit.
Court noted that the public notice made it clear that BoU as the receiver had done an evaluation of the respondent (Crane Bank in receivership) and arranged for the purchase of its assets and assumption of its liabilities by another financial institution, hence Crane Bank’s existence had been dissolved.
The judge noted that in so doing, the Central Bank had not only fulfilled Section 95(1)(b) of the Financial Institutions Act but had in a way also sold the respondent, albeit that the payment was in kind, by way of exchange of liabilities for assets.
While awarding costs of the suit, the court ruled that under such circumstances, the party to bear the costs must be the one who brought the matter to court and at the time of filing the suit, BoU had taken over management of Crane Bank Ltd, reason why they (BoU) sued on Crane Bank’s behalf.