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Crane Bank [In Receivership] v Ruparelia & Another (Civil Appeal No. 252 of 2019)

Court of Appeal · [2020] UGCA 2050 · 2020 Appeal Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Civil appeal from a High Court ruling dismissing a civil suit on preliminary objections (lack of cause of action, locus standi, and being barred in law)
Decision
Appeal dismissed; dismissal of High Court Civil Suit No. 493 of 2017 and costs order against Bank of Uganda upheld

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The Court of Appeal dismissed Crane Bank's appeal. It held that preliminary objections raising pure points of law (no cause of action, no locus standi, suit barred in law) may properly be raised by application under Order 6 Rule 29 and Order 7 Rule 11 and disposed of before trial. Under the Financial Institutions Act, a receiver has no statutory power to sue; unlike a statutory manager or liquidator, no such power is conferred. A receivership must be implemented within twelve months. A financial institution protected from suit under section 96 cannot itself sue. As a company with majority non-citizen shareholding, the appellant could not hold freehold or mailo land. Costs against Bank of Uganda as the party behind the suit were upheld.

Outcome

Appeal dismissed; dismissal of High Court Civil Suit No. 493 of 2017 and costs order against Bank of Uganda upheld

Facts

Crane Bank Limited was licensed by Bank of Uganda to carry on financial institution business. On 20 October 2016 it was placed under statutory management under sections 87(3) and 88(1) of the Financial Institutions Act, and on 20 January 2017 placed under receivership under section 94. On 30 June 2017, while under receivership, Crane Bank (through Bank of Uganda) filed High Court Civil Suit No. 493 of 2017 against Sudhir Ruparelia and Meera Investments Limited, seeking recovery of monies allegedly misappropriated by the first respondent as director, delivery of freehold certificates of title to 48 properties with transfer deeds, and a refund for void leases. The respondents raised preliminary objections that the appellant had no locus standi, no cause of action, and that the suit was barred in law, and applied by notice of motion for dismissal. The trial judge upheld the objections, dismissed the suit, and ordered Bank of Uganda to pay costs. Crane Bank appealed. It was undisputed that the appellant's controlling shareholding lay with a Mauritian company and a British national.

Issues

  1. Whether the preliminary objections to the competence of the suit could legally be raised by way of an application under Order 6 Rule 29 and Order 7 Rule 11, and whether the trial judge acted illegally in disposing of them before the trial on the merits.
  2. Whether a financial institution placed under receivership, or its receiver, retains the legal capacity to institute proceedings under the Financial Institutions Act.
  3. Whether the statutory period for a receivership under section 95 of the Financial Institutions Act is limited to twelve months.
  4. Whether a party protected from being sued under section 96 of the Financial Institutions Act is likewise prohibited from suing.
  5. Whether the appellant, being a company whose controlling interest was held by non-citizens, could lawfully be granted delivery of freehold land titles.
  6. Whether the trial judge properly awarded the costs of the application and suit against Bank of Uganda as the non-party controlling the litigation.

Orders

  • The appeal is dismissed.
  • The trial court's dismissal of HCCS 493 of 2017 is upheld.
  • The trial Judge's order for costs against Bank of Uganda is upheld.
  • Costs of the appeal and of the court below awarded against the appellant/Bank of Uganda.

Rules and key headnotes

Preliminary Objections — Manner of Raising — Order 6 Rule 29 and Order 7 Rule 11 — Discretion of Court
A party may raise a preliminary point of law by way of a notice of motion under Order 6 Rule 29 and Order 7 Rule 11 of the Civil Procedure Rules, and the court has discretion to dispose of such an objection before the trial of the suit on its merits without requiring the consent of the parties or a separate order of court under Order 6 Rule 28.
Preliminary Objections — Pure Point of Law — No Additional Evidence Required
A preliminary objection is in the nature of a demurrer raising a pure point of law argued on the assumption that the facts pleaded by the other side are correct; it may be determined preliminarily where the facts are based on the plaint and no additional evidence is required to resolve it.
Financial Institutions — Receivership — Powers of Receiver — Absence of Statutory Power to Sue
A receiver appointed over a financial institution under the Financial Institutions Act is a creature of statute whose powers are confined to those expressly conferred by section 95; as the Act, unlike its provisions for the statutory manager and liquidator, confers no power to sue, neither the receiver nor the financial institution in receivership has capacity to institute proceedings, and the courts cannot imply such a power.
Financial Institutions — Receivership — Statutory Time Limit of Twelve Months
Under section 95(1) of the Financial Institutions Act a receivership must be both considered and implemented within twelve months from the date of taking over; the receiver must complete one or more of the statutory options within that period, and a receivership cannot continue indefinitely.
Financial Institutions — Section 96 FIA — Party Immune from Suit Cannot Sue — Equality Under Article 21
Where section 96 of the Financial Institutions Act protects a financial institution in receivership from being sued, that protection must be read without parity such that the same institution is also prohibited from suing; to allow it to sue while immune from suit would offend the equality guarantee in Article 21 of the Constitution.
Land Tenure — Non-Citizen Company — Prohibition on Freehold and Mailo Ownership
Under Article 237 of the Constitution and section 40 of the Land Act, a company in which the controlling interest (majority shares) is held by non-citizens is itself a non-citizen and cannot hold or acquire freehold or mailo land; a court cannot order delivery of freehold titles to such a company as it would be an illegality.
Costs — Non-Party Costs — Section 27 Civil Procedure Act
Under section 27 of the Civil Procedure Act the court has discretion to order costs against a non-party who is the real person behind and controlling litigation, particularly where the named party lacks capacity to bear costs; costs following dismissal of a suit on a preliminary objection may include costs of the suit as such a dismissal amounts to a decree conclusively disposing of the matter.

Legislation cited (31)

Cases cited (41)

  • Begumisa v Tibegaga (Civil Appeal No. 17 of 2002)
  • Kifamunte Henry v Uganda (Criminal Appeal No. 10 of 1997)
  • Bogere Moses v Uganda (Criminal Appeal No. 1 of 1997)
  • Express Electrical Engineers & Contractors v Uganda Posts and Telecommunications Corporation (Civil Appeal No. 8 of 1980)
  • Mukisa Biscuits Manufacturing Co. Ltd Vs West End Distributors Ltd [1996] 1 E.A. 696
  • Mugyenzi v Uganda Electricity Generation Company Limited (Civil Appeal No. 8 of 2008)
  • Interfreight Forwarders (U) Ltd V East African Development Bank [1990-1994] EA 117
  • Uganda Telecom Limited v ZTE Corporation (Civil Appeal No. 3 of 2017)
  • Ismail Serugo v Kampala City Council (Constitutional Appeal No. 2 of 1998)
  • Attorney General Versus Oluoch [1972] EA 392
  • Rahim Nagita v Richard Bukenya (Civil Suit No. 389 of 2010)
  • Makula International Limited v Cardinal Nsubuga (Civil Appeal No. 4 of 1981)
  • Wycliff Kiggundu v Attorney General (Civil Appeal No. 22 of 2008)
  • Gordon Sentiba v Inspectorate of Government (Civil Appeal No. 6 of 2013)
  • Inspectorate of Government v UVETSO Association Limited and Others HCMA 536 of 2014
  • Hon Gerald Kafureka Karuhanga and Ors V The Attorney General and Ors HCMA 60 of 2015
  • Smart Protus Magara and 138 Others v Financial Intelligence Authority HCMA 215 of 2018
  • Haj. Kaala Ibrahim V The Attorney General and Anor HCMA 23 of 2017
  • Thugitho Festo vs. Nebbi Municipal Council HCMA 15 of 2017
  • Geraldine Ssali Busulwa v National Social Security Fund HCMC 32 of 2006
  • Amuron Dorothy V The Law Development Center HCMC 42 of 2016
  • Tatu Nayiga and Co Emporium v Verjee Brothers Ltd (Civil Appeal No. 8 of 2000)
  • United Assurance Co. Ltd v Attorney General (Civil Appeal No. 1 of 1986)
  • Gahan (inspector of taxes) v Chloride Batteries Ltd (1995) Vol. 1. All ER 633
  • Commissioner General Uganda Revenue Authority v Meera Investments Limited (Civil Appeal No. 22 of 2007)
  • Commissioner General Uganda Revenue Authority v Meera Investments Ltd (Civil Appeal No. 22 of 2017)
  • Uganda Revenue Authority v Rabbo Enterprises Ltd (Civil Appeal No. 12 of 2004)
  • Attorney General v Uganda Law Society (Constitutional Appeal No. 1 of 2006)
  • Sudhir Ruparellia V MMAKS Advocates, AF Mpanga Advocates (Bowmans Uganda), Crane Bank Limited (in Receivership) and Bank of Uganda HCMA 1063 of 2017
  • Lakeside City Ltd v Sam Engola (Civil Suit No. 251 of 2010)
  • Formular Feeds v KCB Bank (U) Ltd (Civil Appeal No. 76 of 2016)
  • Komakech Geoffrey v Rose Akol Okullo (Civil Appeal No. 21 of 2010)
  • Kwizera v Attorney General (Constitutional Appeal No. 1 of 2008)
  • Lyamulemye v Attorney General (Civil Appeal No. 4 of 2013)
  • Hwan Sung Industries v M&D Timber Merchants and Transporters (Civil Appeal No. 2 of 2018)
  • Stanbic Bank Uganda Ltd v Western Highland Creameries Ltd (Taxation Appeal No. 5 of 2013)
  • Ontario Limited v Laval Tool 2017 ONCA 184
  • CPT Santo Okot Lapolo and 4 Ors Vs Opio and 14 Ors HCMA 145 of 2017
  • Kyaninga Royal Cottages Ltd Vs Kyaninga Lodge Limited HCMA 551 of 2018
  • Ritter v Godfrey (1920) 2 KB 47
  • Anglo-Cyprian Trade Agencies Ltd V Paphos Wine Industries Ltd, [1951] 1 All ER 873

Full judgment

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Crane Bank [In Receivership] v Ruparelia & Another (Civil Appeal No. 252 of 2019) [2020] UGCA 2050 (23 June 2020)
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.