Businessman Sudhir Ruparelia has petitioned the Commercial Court, seeking to dismiss the multibillion case brought against him by his former bank, Crane Bank.
In an application filed on April 30, 2019, Mr Ruparelia contends that when Crane Bank went into receivership, it lost its powers to “sue” and to “be sued”, rendering its suit against him and Meera Investments Company a nullity.
“The respondent/plaintiff (Crane Bank in receivership) has no locus standi (right to bring action in court) to commence actions under High Court Civil Suit No.493 of 2017 against the applicants (Mr Sudhir and Meera Investments),” the application reads in part.
Mr Ruparelia, in an affidavit to support of the application, noted that Kampala Associated Advocates, a law firm representing him, advised that Crane Bank, while under receivership, had “no legal capacity” to sue him and “I verily believe [the advice] to be true”.
Bank of Uganda on October 20, 2016 placed Crane Bank under statutory management for being under-capitalised and according to Governor Tumusiime Mutebile, to stem infection of the country’s financial system.
The central bank attributed the under-capitalisation to mismanagement and insider lending, resulting in Crane Bank’s unsustainable non-performing loan portfolio. The bank was later sold to dfcu Bank, although the central bank retained some of its liabilities.
In his affidavit, Mr Ruparelia argues that he was no longer the majority owner of Crane Bank that he founded after Mr Rasik Kantaria, a Kenyan national, on December 6, 2010 snapped up 47 per cent of the bank’s shares. Mr Kantaria later transferred his shares to White Sapphire Ltd, a company incorporated in Mauritius. According to Mr Ruparelia, one Jitendera Sanghani, a British citizen, held 4 per cent stake in Crane Bank.
He also contends that under Uganda’s Constitution and the Land Act, Crane Bank in receivership could not own or hold freehold property and was, therefore, not capable of holding the suit property in its names.
BoU on January 25, 2017 placed Crane Bank under the receivership. Later that same year, the central bank alongside Crane Bank sued Mr Ruparelia and his Meera Investments Company for allegedly fleecing his own bank of Shs397b in fraudulent transactions. Mr Ruparelia denied the allegations and counter-sued BoU, seeking compensation of $8m (Shs28b) in damages for breach of contract.
The substantive case has since been under mediation on the advice of the head of the Commercial Court, Justice David Wangutusi, on grounds that a losing party would pay heavily if it goes to full trial. When the parties met the presiding judge last month, he directed them to file any applications arising out of the mother suit before July 3 so that if the mediation fail, the applications are disposed of first.
It is on this basis that Mr Ruparelia filed the April 30 application. Three other applications arising out of the main suit are pending hearing. They include one of BoU seeking to amend its pleadings against Ruparelia; BoU seeking to be allowed time extension to file its defence to counter the lawsuit filed against it by the businessman; and, Mr Ruparelia seeking to have BoU pleadings filed against him dismissed.