Wakilii

Sudhir v Crane Bank Uganda Limited ( In Receivership) & Another (Miscellaneous Application 39 of 2020)

Supreme Court · [2021] UGSC 58 · 2021 Application Granted ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Application by notice of motion for a temporary injunction, an interlocutory mandatory injunction and a declaration of contempt, arising out of a pending Supreme Court civil appeal.
Decision
Application allowed; temporary and mandatory injunctions granted and a declaration of contempt issued against the 2nd respondent pending determination of Civil Appeal No. 07 of 2020.

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Cited — treatment unverified cited in 2 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

The Court granted the application. Bank of Uganda's independence under Article 162(2) does not immunise it from suit, and section 124 of the Financial Institutions Act protects only acts done in good faith; moving the 1st respondent from receivership to liquidation while the appeal on whether a receiver could sue was pending was manifestly bad faith and not protected. Section 101 did not bar the application, which concerned the bank in receivership, not liquidation. A temporary injunction was warranted to prevent the appeal being rendered nugatory, and a mandatory injunction issued to restore the status quo. The transition to liquidation was illegal under the Act and amounted to contempt.

Facts

Crane Bank Limited, licensed as a financial institution, was taken over by Bank of Uganda for statutory management in October 2016, placed under receivership in January 2017, and its assets and liabilities sold to DFCU Bank. The bank (in receivership) sued Sudhir Ruparelia and Meera Investments in HCCS No. 493 of 2017. The High Court upheld preliminary objections that the receiver had no locus standi to sue and that the plaint disclosed no cause of action, and dismissed the suit. The Court of Appeal dismissed the bank's appeal (Civil Appeal No. 252 of 2019), holding a receiver lacks power to sue under the Financial Institutions Act. The bank appealed to the Supreme Court (Civil Appeal No. 07 of 2020). While that appeal was pending, Bank of Uganda published a notice on 15 November 2020 placing Crane Bank under liquidation and ordering its winding up, prompting this application to restrain the liquidation.

Issues

  1. Whether the 2nd respondent (Bank of Uganda) could be made a party to the application and restrained, given its independence under Article 162(2) of the Constitution and the protection in section 124 of the Financial Institutions Act.
  2. Whether the application was barred by section 101 of the Financial Institutions Act, which prohibits a court from entertaining an application for stay of proceedings relating to liquidation or winding up.
  3. Whether the applicant had satisfied the principles for the grant of a temporary injunction under Rule 6(2)(b) of the Supreme Court Rules pending the main appeal.
  4. Whether an interlocutory mandatory injunction should issue to restore the status quo existing at the time of filing the appeal.
  5. Whether the 2nd respondent was in contempt of the orders of the Court of Appeal by altering the 1st respondent's status from receivership to liquidation.

Orders

  • A temporary injunction issued restraining the 2nd respondent, its agents or anyone acting under its authority from placing the 1st respondent under liquidation pending the hearing and determination of Civil Appeal No. 7 of 2020.
  • A temporary injunction issued restraining the 2nd respondent, its agents or anyone acting under its authority from continuing with the liquidation process of the 1st respondent pending the hearing and determination of Civil Appeal No. 7 of 2020.
  • An interlocutory mandatory injunction issued returning the status quo of the 1st respondent to what it was at the time of filing Civil Appeal No. 7 of 2020.
  • A declaration issued that the 2nd respondent is in contempt of court orders.
  • Costs shall abide the main cause.

Key headnotes

Constitutional Law — Independence of Bank of Uganda — Article 162(2) — Whether independence confers immunity from suit
The independence of the Bank of Uganda under Article 162(2) of the Constitution, which provides that it shall not be subject to the direction or control of any person or authority in performing its functions, does not mean that the Bank cannot sue or be sued.
Banking & Finance — Central Bank immunity — Financial Institutions Act s.124 — Good faith requirement
The protection in section 124 of the Financial Institutions Act extends only to acts done or intended to be done in good faith under the Act; acts done in bad faith, such as altering a financial institution's status to render a pending appeal nugatory, expose the Central Bank to litigation.
Banking & Finance — Receivership and liquidation — Financial Institutions Act ss.94, 99 & 3 — Closed institution cannot be liquidated
A financial institution must be closed before it is placed under receivership; upon closure it ceases to be a financial institution as defined in section 3 of the Financial Institutions Act, and a closed institution under receivership cannot lawfully be progressed to liquidation, which under section 99 applies only to a financial institution.
Civil Procedure — Temporary injunction — Rule 6(2)(b) Supreme Court Rules — Principles for grant
Under Rule 6(2)(b) of the Supreme Court Rules the court may grant an injunction pending appeal where the applicant shows a likelihood of success or a prima facie right of appeal, that irreparable damage or a nugatory appeal would result if relief is refused, and, failing those, that the balance of convenience favours the applicant, the application having been brought without delay.
Civil Procedure — Interlocutory mandatory injunction — Restoration of status quo
An interlocutory mandatory injunction may be granted in exceptional cases of extreme hardship and compelling circumstances, principally to restore the status quo existing at the institution of the suit or appeal, and not to establish a new state of things.
Civil Procedure — Inherent power of the court — Orders against non-parties
Every court has inherent power to make any order necessary to achieve the ends of justice or prevent abuse of its process, and that power is not limited to parties but extends to non-parties whose conduct prejudices proceedings that are sub judice.
Civil Procedure — Contempt of court — Conduct perverting the course of justice
Conduct that interferes with the administration of justice or perverts the course of justice, such as attempting to circumvent an appellate decision by altering a party's status while an appeal is pending, constitutes contempt of court.

Legislation cited (18)

  • Financial Institutions Act s.3
  • Financial Institutions Act s.87(3)
  • Financial Institutions Act s.88(1)(a)
  • Financial Institutions Act s.94(1)
  • Financial Institutions Act s.95
  • Financial Institutions Act s.95(1)
  • Financial Institutions Act s.96
  • Financial Institutions Act s.99(1)
  • Financial Institutions Act s.101
  • Financial Institutions Act s.124
  • Constitution of Uganda Article 120
  • Constitution of Uganda Article 128
  • Constitution of Uganda Article 162(2)
  • Judicature (Supreme Court Rules) Directions Rule 2(2)
  • Judicature (Supreme Court Rules) Directions Rule 6(2)(b)
  • Judicature (Supreme Court Rules) Directions Rule 42
  • Judicature (Supreme Court Rules) Directions Rule 43
  • Judicature (Supreme Court Rules) Directions Rule 72

Cases cited (11)

  • Hon. Theodore Ssekikubo and others v Attorney General (Constitutional Application No. 04 of 2014)
  • Hon. Theodore Ssekikubo & others v Attorney General & others (Constitutional Application No. 06 of 2013)
  • Saleh Kamba & another v Attorney General & 4 others (Constitutional Petition No. 16 of 2013)
  • Esther Wanjiku Mwangi & 3 others Vs WambuiNgarachu (2017) Eklr
  • Nandan Pictures Ltd v Art Pictures Ltd & others, AIR 1956 Cal 428
  • Bank of Uganda v Caring for Orphans, Widows and Elderly Ltd (2010) 1 EA 25
  • Somalia Democratic Republic v Anoop Sunderial Trean (Supreme Court Civil Application No. 11 of 1988)
  • Aleon International Ltd v The New Vision Publishing Co. Ltd & others (Supreme Court Civil Application No. 04 of 2010)
  • Akankwasa Damian v Uganda (Constitutional Application Nos. 7 and 9 of 2011)
  • Themi Nakibuuka Sebalu v Peter Sematimba & 2 others (Miscellaneous Application No. 52 of 2014)
  • Indian Cable Co Ltd v Sumira Chackraborty, AIR 1985 Cal 248
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.