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Humphrey Nzeyi v Bank of Uganda and Attorney General (Constitutional Appeal No. 01 of 2021)

Supreme Court · [2025] UGSC 20 · 2025 Appeal Dismissed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Appeal to the Supreme Court from the Constitutional Court's majority dismissal of a constitutional petition
Decision
Appeal dismissed; the majority decision of the Constitutional Court upheld; each party to bear its own costs

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Holding

The Supreme Court dismissed the appeal and upheld the Constitutional Court. Part 9 of the Financial Institutions Act 2004, particularly sections 82 and 128, affords a distressed financial institution a right to be heard, and NBC was heard over roughly three years before its closure. Section 17 does not permit summary revocation of a licence. Section 101 only limits the interim remedy of a stay during liquidation and does not oust the court's jurisdiction. The impugned provisions are valid prudential regulation protecting depositors and financial stability. Complaints of infringement of privacy and other rights, requiring no constitutional interpretation, lay outside the Constitutional Court's jurisdiction and belong in an ordinary suit.

Facts

The National Bank of Commerce (NBC), a licensed deposit-taking institution, was undercapitalised and rated unsatisfactory in successive Bank of Uganda (BOU) inspections between 2009 and 2012. Its core capital fell below the statutory minimum, and shareholder disputes escalated into litigation. Over about three years BOU engaged NBC through correspondence and meetings, directing corrective action and recapitalisation, but NBC failed to comply. On 27 September 2012 BOU revoked NBC's banking licence, took over its management, appointed a liquidator and concluded a purchase and assumption agreement transferring NBC's deposits and assets to Crane Bank Ltd. Humphrey Nzeyi, a shareholder and director of NBC, petitioned the Constitutional Court challenging the constitutionality of several provisions of the Financial Institutions Act 2004 and BOU's conduct as a denial of a fair hearing and an unlawful deprivation of property. The Constitutional Court dismissed the petition by a 4 to 1 majority, and Nzeyi appealed to the Supreme Court.

Issues

  1. Whether Part 9 of the Financial Institutions Act 2004 affords a distressed financial institution a right to be heard.
  2. Whether National Bank of Commerce was in fact given an opportunity to be heard before its closure on 27 September 2012.
  3. Whether the Constitutional Court disregarded or failed to interpret sections 28(5), 57, 77, 100 and 101 of the Financial Institutions Act.
  4. Whether section 17 of the Financial Institutions Act, permitting Bank of Uganda to summarily revoke a banking licence, is inconsistent with the Constitution.
  5. Whether section 101 of the Financial Institutions Act ousts the jurisdiction of the court by barring applications for stay of liquidation proceedings.
  6. Whether Bank of Uganda's conduct in cancelling the licence, taking over management, appointing a liquidator and selling NBC to Crane Bank Ltd in one day was unconstitutional.
  7. Whether the appellant's constitutional right to privacy was violated by the disclosure of NBC's confidential information consequent on the sale.

Orders

  • Appeal dismissed.
  • Each party to bear its own costs.

Key headnotes

Banking Regulation — Financial Institutions Act — Right to be Heard under Part 9
Part 9 of the Financial Institutions Act 2004, read with sections 82 and 128, affords a distressed financial institution a right to be heard before the Central Bank imposes civil penalties or takes corrective and resolution measures against it.
Fundamental Rights — Administrative Justice — Article 42 versus Article 28(1)
The constitutionality of statutory powers exercised by a regulator acting as an administrative body falls to be assessed against the right to just and fair treatment in administrative decisions under Article 42, not the fair-trial guarantee under Article 28(1), which governs proceedings before a court or tribunal.
Banking Regulation — Revocation of Licence — Section 17 Financial Institutions Act
Revocation of a banking licence under section 17 of the Financial Institutions Act is not summary; it follows detailed corrective measures prescribed by the Act, and the provision is therefore not inconsistent with the Constitution.
Ouster of Jurisdiction — Stay of Liquidation Proceedings — Section 101 Financial Institutions Act
Section 101 of the Financial Institutions Act, which bars any application other than the Central Bank's for a stay of proceedings during liquidation or winding up of a financial institution, merely limits an interim remedy and does not oust the court's jurisdiction to determine disputes arising from the liquidation.
Constitutional Court — Jurisdiction — Article 137
The jurisdiction of the Constitutional Court is confined to interpretation of the Constitution; a complaint of mere infringement of rights that does not depend for its determination on constitutional interpretation is enforceable as a matter of evidence in an ordinary court under Article 50.
Prudential Regulation — Depositor Protection and Financial Stability
Prudential regulation of financial institutions prioritises depositor protection and the stability of the financial system, justifying speed, efficiency and the curtailment of stays during liquidation to prevent dissipation of assets and moral hazard.
Abuse of Statutory Power — Validity of Action versus Validity of Law
Where a regulator abuses the powers conferred on it by a regulatory statute, it is the impugned action, and not the empowering law, that is liable to be struck down.

Legislation cited (33)

  • Financial Institutions Act 2004 s.17
  • Financial Institutions Act 2004 s.17(f)
  • Financial Institutions Act 2004 s.28(5)
  • Financial Institutions Act 2004 s.57
  • Financial Institutions Act 2004 s.77
  • Financial Institutions Act 2004 s.82
  • Financial Institutions Act 2004 s.88
  • Financial Institutions Act 2004 s.89
  • Financial Institutions Act 2004 s.99
  • Financial Institutions Act 2004 s.100
  • Financial Institutions Act 2004 s.101
  • Financial Institutions Act 2004 s.128
  • Constitution of Uganda 1995 Article 2
  • Constitution of Uganda 1995 Article 26
  • Constitution of Uganda 1995 Article 27
  • Constitution of Uganda 1995 Article 28
  • Constitution of Uganda 1995 Article 40
  • Constitution of Uganda 1995 Article 42
  • Constitution of Uganda 1995 Article 44
  • Constitution of Uganda 1995 Article 50
  • Constitution of Uganda 1995 Article 132(3)
  • Constitution of Uganda 1995 Article 137
  • Constitution of Uganda 1995 Article 139(1)
  • Constitution of Uganda 1995 Article 162
  • Bank of Uganda Act s.40(3)
  • Insolvency Act 2011 s.97
  • Insolvency Act 2011 s.118
  • Insolvency Act 2011 s.254
  • Tax Appeals Tribunal Act s.14(1)
  • Judicature (Supreme Court Rules) Directions SI 13-11 Rule 2(3)
  • Judicature (Supreme Court Rules) Directions SI 13-11 Rule 30
  • Judicature (Supreme Court Rules) Directions SI 13-11 Rule 82(1)
  • Leadership Code Act

Cases cited (17)

  • Bakaluba Peter Mukasa v Nambooze Betty Bakireke (Election Petition Appeal No. 4 of 2009)
  • John Ken Lukyamuzi v Attorney General & Another (Constitutional Appeal No. 2 of 2007)
  • Ismail Serugo v Kampala City Council & Attorney General (Constitutional Appeal No. 2 of 1998)
  • Zachary Olum & Anor v Attorney General (Constitutional Petition No. 6 of 1999)
  • Commissioner General Uganda Revenue Authority v Meera Investments Ltd (Civil Appeal No. 22 of 2007)
  • Mpunga and Sons Transporters Ltd v Attorney General and Kambe Coffee Factory (Coach) Ltd (Civil Appeal No. 7 of 2001)
  • Center for Domestic Violence Prevention & 8 Others v Attorney General (Constitutional Petition No. 13 of 2014)
  • Tournier v National Provincial & Union Bank of England [1924] 1 KB 461
  • Mugerwa Evaristo Kafeero v National Forestry Authority (Civil Appeal No. 008 of 2020)
  • Attorney General v Major General David Tinyefuza (Constitutional Appeal No. 1 of 1997)
  • Dabule & 2 Others v Attorney General & Another (Constitutional Appeal No. 3 of 2007)
  • R v Wholesale Travel Group Inc [1991] 3 SCR 154
  • Minister of Employment and Immigration v Chiarelli [1992] 1 SCR 711
  • Hyman v Hyman [1929] AC 601
  • Joseph Kuruvilla Vellukunnel v Reserve Bank of India [1962] AIR 1371
  • Atlantic Container Line AB and Others vs. Commission of the European Communities, Joined Cases T-191/98 and T-212/98 to T-214/98 (30 September 2003)
  • Technische Universitiit Miinchen vs. Commission of the European Communities, C-269/90, 21 November 1991
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