The Central Bank of Uganda has written to the Uganda Registration Services Bureau(URSB) asking it to deregister the defunct Crane Bank Limited.
“In line with the Supreme Court decision in which the legal status of the defunct Crane Bank Limited was pronounced, if has under Section 7(1) (a) of the Financial Institutions Act, 2004 (as amended),we have advised the Uganda Registration Services Bureau to strike the word “Bank” off the company name of Crane Bank Limited (the company),” BoU said in a statement on Wednesday.
In 2016, the Bank of Uganda (BoU) took over Crane Bank, citing financial instability and mismanagement. It later sold off some of its assets and liabilities to DFCU Bank in 2017. The sale has been a subject of controversy, with some alleging irregularities in the acquisition process.
Crane Bank’s owners filed a claim in the English courts in December 2020, challenging the transaction in relation to the sale of assets and assumption of liabilities by BOU.
They argued that the sale was undervalued and part of a scheme orchestrated by BOU using its powers.
According to official records at URSB, CBL, a member of the Ruparelia Group of Companies was registered on July 23, 1990 and whose registration number is 80010000221522 to do banking business before being closed in October 2016 and sold in January 2017 by BoU
In 2022 Sudhir Ruparelia, one of the shareholders of CBL obtained a final Supreme court order allowing him to revert Crane Bank back to its shareholders.
The decision made on July 1, 2022, by Justice Prof Lillian Tibatemwa Ekirikubinza followed a disagreement that had been ongoing for over six months between BoU and Sudhir on whether the final order needs to be enforced should also reflect that the bank is reverted to the businessman.
This ruling arose from an appeal filed by CBL in receivership (Bank of Uganda) on August 1, 2020, challenging the decision by the Court of Appeal to dismiss the case in which they accused Sudhir and his company Meera Investments Limited of withdrawing Shs397 billion from CBL fraudulently.
It all started on June 30, 2017, when Crane bank in receivership/Bank of Uganda sued Sudhir and his company Meera before the Commercial Division of the High court seeking to recover the said monies that had reportedly been siphoned by Sudhir.
They also sought to recover freehold certificates of title to 48 properties – together with duly executed transfer agreements and a refund of the monies for which they claimed were for invalid leases.
However, in 2019, the then Commercial Court judge David Wangutusi dismissed the case with costs on grounds that the Crane Bank in receivership had no capacity to commence legal proceedings against Sudhir.
Not happy with the decision of Wangutusi, Crane Bank under receivership challenged Wangutusi’s decision in the Court of Appeal claiming that the judge erred in law by holding that the bank had ceased to own property and its liabilities, and assets had all been exhausted.
The appeal by the BoU was however, dismissed with costs leading to an appeal in the Supreme Court.
BoU on August 1, 2020, however, withdrew the appeal before it could be heard, but Sudhir, together with his company Meera, objected to the withdrawal, saying that they should be awarded costs.
The Supreme Court agreed with Sudhir and directed BoU to pay costs in its February 11, 2022 decision.
The Supreme Court also ruled that receivership of CBL ended on January 20, 2018, and from that date, the management and control of Crane Bank returned to its shareholders.
But in her ruling, Tibatemwa indicated that under the Financial Institution’s Act, after the expiration of 12 months from the date of takeover by the receiver, the receivership must be deemed to have lapsed by operation of the law.
“It is a position at common law that where a legal relationship is terminated by effluxion of time then the rights accruing revert back to the owner,” stated the judge then.
The judge said CBL existed as a legal entity before it was licensed to operate as a financial institution and that the return of management to the shareholders is a logical result of the fact that the central bank is no longer a receiver and no longer the manager.
As such, the court emphasised that the CBL receivership ended on January 20, 2018, and consequently, its management was reverted to its shareholders. However, it is now surprising that BoU wants to erase CBL from the records of URSB, illegally
