Wakilii

Greenland Bank Limited v Westmont Land (Asia) (Civil Suit 309 of 1999)

High Court · [1999] UGHC 23 · 1999 Preliminary Objection Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Preliminary objection to locus standi of plaintiff's counsel following seizure of plaintiff bank by Central Bank
Decision
Preliminary objection dismissed; matter to proceed to full hearing

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that when the Central Bank seizes a financial institution under the Financial Institutions Statute 1993, the institution retains its corporate personality and capacity to sue. The Central Bank must sue in the name of the seized institution, not in its own name. The expression 'in its name' in section 32(2)(e) refers to the name of the financial institution, not the Central Bank. The new Board of Directors appointed by the Central Bank under section 32(2)(c) has authority to instruct counsel to institute proceedings. The preliminary objection to locus standi was overruled with costs.

Outcome

Preliminary objection dismissed; matter to proceed to full hearing

Facts

Greenland Bank Limited instituted Civil Suit No. 309 of 1999 against Westmont Land (Asia) Bhd seeking to recover sums allegedly advanced as credit facilities. The Central Bank of Uganda had seized Greenland Bank on 7 January 1999 pursuant to sections 31 and 32 of the Financial Institutions Statute 1993 and appointed a new Board of Directors. In its written statement of defence, the defendant challenged the locus standi of counsel for the plaintiff on the ground that the plaintiff bank had been closed by the Bank of Uganda and was due to be liquidated. The defendant argued that counsel had no instructions from the plaintiff and that the Central Bank should have sued in its own name rather than in the name of Greenland Bank. At the commencement of hearing on 25 August 1999, counsel for the defendant raised this as a preliminary objection.

Issues

  1. Whether counsel for the plaintiff had locus standi to institute the suit after the plaintiff bank was seized by the Central Bank of Uganda.
  2. Whether the meaning of 'in its name' in section 32(2)(e) of the Financial Institutions Statute 1993 refers to the name of the seized financial institution or the name of the Central Bank.
  3. Whether the new Board of Directors appointed by the Central Bank had authority to instruct counsel to institute proceedings on behalf of the seized bank.

Orders

  • Preliminary objection overruled.
  • Costs awarded to the plaintiff.

Rules and key headnotes

Banking & Finance — Seizure of Financial Institutions — Effect on Corporate Personality
When the Central Bank seizes a financial institution under section 31 of the Financial Institutions Statute 1993, the institution does not cease to be a corporation sole capable of suing and being sued in its name. The institution retains its corporate character until liquidation, though it can only sue or be sued through the Central Bank.
Statutory Interpretation — Financial Institutions Statute — Meaning of 'In Its Name'
The expression 'in its name' in section 32(2)(e) of the Financial Institutions Statute 1993, which empowers the Central Bank to 'initiate, defend and conduct, in its name, any action or proceeding', refers to the name of the seized financial institution, not the name of the Central Bank. The Central Bank does not assume the corporate personality of the seized institution but rather assumes the roles of management and control formerly exercised by the Board of Directors and depositors.
Administrative Law — Powers of Central Bank — Authority of Appointed Board
Where the Central Bank appoints a new Board of Directors for a seized financial institution pursuant to section 32(2)(c) of the Financial Institutions Statute 1993, that Board has authority to instruct counsel to institute proceedings on behalf of the institution, notwithstanding any press release characterising the Board's role as advisory. The Board's power to operate the institution's accounts and engage counsel is substantive managerial authority, not merely advisory.
Civil Procedure — Locus Standi — Presumption of Counsel's Authority
Where an advocate who institutes a suit has a valid practising certificate, the presumption is that he has been authorised by the client and he does not need to plead such authority. A challenge to counsel's authority in the written statement of defence does not extinguish validly given authority, and non-disclosure of the letter of authority prior to a preliminary objection does not render the authority null and void.

Legislation cited (6)

  • Financial Institutions Statute 1993 s.31
  • Financial Institutions Statute 1993 s.32
  • Public Enterprises Reform and Divestiture Statute No.9 of 1993 s.20
  • Public Enterprises Reform and Divestiture Statute No.9 of 1993 s.21
  • Public Enterprises Reform and Divestiture Statute No.9 of 1993 s.23
  • Public Enterprises Reform and Divestiture Statute No.9 of 1993 s.25

Cases cited (1)

  • Peoples Transport Company Ltd v Afric Cooperative Society Ltd (Civil Suit No. 467 of 1995)

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Greenland Bank Limited v Westmont Land (Asia) (Civil Suit 309 of 1999) [1999] UGHC 23 (10 September 1999)
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.