Business

Sudhir Demands $8m in Default Judgement as BoU Defence Delays

Sudhir and BoU Governor Tumusiime Mutebile at a function during Crane Bank's heydays

Former Crane Bank (CBL) proprietor Sudhir Ruparelia has filed an application for default judgement against Bank of Uganda for failing to respond to his counterclaim seeking payment of $8m (Shs29bn).

Sudhir was this year dragged to High Court on accusations of fraudulently taking billions of shillings from the bank for personal use among other claims.

On August 3, 2017, Sudhir filed a counter claim before the Kampala High Court against the Central Bank seeking refund of $8m in accordance with an agreement he had earlier signed with the institution.

Sudhir accused BoU and CBL of breaching mid-implementation, an agreement under which he had so far paid them the $8million.

On August 10, Sudhir filed an amendment to the counter claim and a day later served the counter defendants with the amended counter claim.

Sudhir’s lawyers, Kampala Associates Advocates (KAA) now say Bank of Uganda “were to file their reply to the counter claim within 15 days from the date of service of the amended counter claim.”

However, according to KAA’s application to the registrar of the Commercial Division, Bank of Uganda “has not filed their reply to date.”

KAA have now asked for a “default judgement be entered against the counter defendants under 0.9 R.6 for the payment of $8M together with interest at the rate of 18 percent as sought in the counter claim.”

ChimpReports was unable to immediately obtain a response from the central bank’s lawyers by the time we posted this story on Tuesday afternoon.

Court officials recently announced a sit-down strike over welfare issues.

However, judges maintained a distance from industrial action with majority at the Commercial Division continuing to hear cases.

If considered, the application could see Sudhir obtain millions of dollars from the central bank in the widely publicized multi-million dollar legal battle.

KAA's application before the registrar of High Court's commercial division

KAA’s application before the registrar of High Court’s commercial division

How it started

In March this year, Sudhir on one hand, and BoU and Crane Bank on the other, entered a Confidential Settlement and Release Agreement (CSRA).

The agreement was hoped to save the two parties a long and protracted legal battle after accusing him of mismanaging and misappropriating hundreds of billions of Shillings from CBL.

Under the CSRA, Sudhir undertook to pay back $60mn (about Shs. 217b) in cash and real property, in a specified number of installments.

At first he was to pay $8million (in 30days after the signing the agreement), and later (within 90days) another $10million.

The balance of $42million was to be paid by surrendering his properties worth the amount.

The agreement was that Sudhir provides the Central Bank with a list of properties, which were to be valued by a team of valuers (appointed by the two camps) and Bank of Uganda would put these properties up for sale to recover the $42million.

In return for the above payments, BoU and CBL were to assign a number of loans totaling Shs. 63.6bn to Sudhir, release all securities of these loans, and remove Crane Bank from receivership.

In simple terms, Shs 63.6billion worth of loans in Crane Bank would be transferred to Sudhir to manage them.

Bank of Uganda was expected to hand over to Sudhir copies of all loan files and records relating to the agreed files by April 11, 2017.

Upon receiving the first installment of $8million from Sudhir, BoU was expected to release securities of loans representing a total value $8million.

These titles are land and properties located on Plot M418 Industrial Area, Nakawa and Plot 7 on Parliament Avenue.

On April 20, 2017, Sudhir says he paid up the first installment of $8million and the payment was acknowledged.

At this point, BoU and Crane Bank were supposed to release the securities of loans worth $8million to Sudhir as agreed, which they didn’t.

Meanwhile, Sudhir says as agreed upon in the CSRA, he went ahead and provided a list of properties to BoU to be valued and placed on market.

Among these properties however, was one in the names of one Mahmood Bharwani, which BoU and CBL raised concerns about.

Sudhir says he added another 8 titles to the property list to give them comfort but the two rejected this and a joint evaluation of Bharwani property, and instead set their own demands, which were not provided for in the CSRA.

On May 29, before the next installment of $10m was due, BoU Governor Tumusiime wrote to the Attorney General, informing him that he had instructed the Central Bank lawyers to file a civil suit against Sudhir, claiming that the CSRA “had been repudiated.”

One month later on June 28, Sudhir said he was informed by BoU lawyers of their intention to sue, unless among others he undertook to pay in cash, the remaining balance of $52n.

He says he wrote back expressing commitment to the CSRA, and on June 30, he was formally sued before the Kampala High Court.

According to Clause 7 of the March agreement, the two parties had undertaken “not to sue…or prosecute against any other party…concerning the related claims, in Uganda or in any other jurisdiction.”

Under the March SCRA, it was agreed that in the event of breach of the agreement, efforts were to be made to amend the contentious clause(s), or if necessary delete (them).

If the agreement totally collapsed, Bank of Uganda and Crane Bank were to repay Sudhir all the money that he would have deposited at that time.

Sudhir now wants BoU and CBL to release to him as agreed, the titles and mortgages on land and properties (in Industrial Area and Parliament Avenue.)

On top of this, Sudhir seeks general and aggregated damages and costs with interest.

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