Sudhir Ruparelia Triumphs Over Dfcu Bank in Legal Showdown, Reclaims 48 Properties Worth Billions

After winning several legal battles against the Bank of Uganda regarding the seizure of his bank in 2016, billionaire businessman Dr. Sudhir Ruparelia has shifted his legal dispute to dfcu Bank, the purchaser of his former bank. The High Court in Kampala, on October 24, 2023, ruled that dfcu Bank unlawfully transferred 48 properties leased from Meera Investments by Crane Bank. Meera Investments is owned by Dr. Sudhir Ruparelia, who was the second-largest shareholder of Crane Bank at the time. The court ordered dfcu Bank to pay UGX2.4 billion to Meera Investments and restore the properties to a tenantable condition.

This legal dispute follows the Bank of Uganda’s losses in court and a parliamentary inquiry that revealed multiple illegalities in the transaction. Dfcu Bank, as the primary beneficiary of the sale, has also suffered a loss in market position and is facing substantial financial costs from a lawsuit filed by the bank’s shareholders in the United Kingdom.

At the core of this five-year legal battle is whether dfcu Bank needed prior written consent from Meera Investments, the registered owner of the Freehold/Mailo titles, before taking possession of and transferring leasehold interests from Crane Bank. The court ruled that dfcu Bank’s actions were illegal, rejecting their claims of lawful acquisition.

Dfcu Bank’s ownership of the properties has been canceled, and Meera Investments has been declared as the rightful owner. Dfcu Bank responded to the ruling by stating that it does not impact their day-to-day operations as they had already vacated the branches in question in 2020 and are indemnified by the Bank of Uganda under the Purchase & Assumption agreement.

“In my view, any dealing or transaction in the property under a leasehold certificate of title must be concluded in a manner that is consistent with the rights and powers of the Lessor. Where the lessor has reserved the right and power to consent to any transfer of physical and legal possession or parting with possession by the lessee as is the instant case, any transaction concluded having the effect of transferring legal and physical possession of the leasehold properties would be illegal and in breach of the statutory protection conferred upon the lessor by section 36 of the Registration of Titles Act (RTA),” he ruled.

The judge further dismissed dfcu Bank’s submission that its acquisition of both the physical and legal possession of the suit properties was a statutory transfer. He instead said it was a straight sale subject to the existing lease covenants.

“The dfcu Bank was bound to ensure that the covenant is complied with before it could take physical and legal possession thereof. dfcu Bank, aware of the legal requirement opted to depend on assurances by the Receiver (Bank of Uganda) to recover the reversionary interests and sell them. It ought to have been clear to the dfcu Bank that its contractual arrangements with the Receiver purporting to contract the Meera Investments out of its properties were not binding on the Meera Investments as the lessor and could not override the rights of the Meera Investments as a lessor, reserved under the lease covenants and protected under the provisions of the Registration of Titles Act (RTA),” the judge ruled.

“All the acts and conduct of the dfcu Bank right from the execution of the P & A Agreement point to fraud. These as already highlighted included; denying the title of the Meera Investments as the lessor, taking possession without securing the consent of the lessor, occupying and utilising the suit properties without paying any ground rent to the lessor, and purporting to enter into illegal arrangements with Bank of Uganda towards rescission of the purchase with BOU allegedly acting as a receiver, despite knowledge by both the Bank of Uganda and the dfcu Bank of the pronouncements of the High Court and the Court of Appeal that the receivership of CBL had ended in January 2018. These cannot be said to be acts and conduct of an innocent and bonafide purchaser. The dfcu Bank was privy and actively participated in the highlighted illegal and fraudulent acts,” the judge further ruled.

In light of the above findings, the judge also found that the Commissioner of Land Registration had acted illegally in effecting the transfer of the 48 properties into the ownership of dfcu Bank.

dfcu Bank statement in respect to the court order

On the issue of whether the titles in the possession of dfcu are now liable to cancellation, the judge ruled in the affirmative that: “The position of the law is that where a lessee or even a tenant denies the title of the Lessor and or refuses to recognise the lessor of the suit property and the covenants of the lease, such lessee or tenant becomes a trespasser on the suit property and the Lessor would be entitled to an order of vacant possession of the premises”.

“Accordingly, I find that the dfcu Bank (dfcu) became a trespasser on land in January 2017 and the certificates of titles for the lease properties illegally and fraudulently acquired and or transferred in its names are liable for cancellation on account of fraud and illegality,” he concluded.

Meera is the rightful owner of the 48 properties

Dfcu Bank, having lost all the grounds of the case, the judge proceeded to make the following orders:

A declaration that Meera Investments, as the registered proprietor of the freehold/ Mailo interests in the suit properties described herein above had the right to consent or otherwise to any taking of possession and transfer of the leasehold interest to the dfcu Bank.

A declaration that the transfer of the leasehold interests in the suit properties from Crane Bank Limited into the names of the dfcu Bank was tainted with illegality and fraud and is therefore invalid.

A declaration that the transfer of the leasehold interests in the suit properties to the dfcu Bank and taking of possession of the same by the dfcu Bank, without the prior consent of Meera Investments rendered the leases illegal and invalid.

A declaration that there are no valid leases in respect of the suit properties. The said leases are therefore declared to be invalid and absolutely determined on account of breach and illegality.

A declaration that that the occupation and continued utilisation of the suit properties by the dfcu Bank constitutes trespass.

A declaration that Meera Investments as the registered proprietor of the freehold/Mailo interest in the suit properties is entitled to vacant possession of the suit properties within 3 months from the Judgment date.

The Commissioner of Land Registration is hereby ordered to cancel the registration of the dfcu Bank as proprietor of the leasehold interests in respect of all the suit properties.

The Commissioner of Land Registration is hereby ordered to cancel the leasehold titles in respect of the suit properties.

A declaration that the occupation and continued utilisation of the suit properties by the dfcu Bank constitutes trespass.

The Commissioner of Land Registration is hereby ordered to cancel the entry of the suit leases, lease variations and lease extensions registered as encumbrances on the Mailo and freehold titles of the Meera Investments.

The dfcu Bank is hereby ordered to vacate all the suit properties and render vacant possession to Meera Investments within three months from the date of judgment after restoring them to tenantable position.

An order of a permanent injunction is hereby issued restraining the dfcu Bank, its agents and its servants from continued trespass on the suit properties.

Meera Investments is awarded general damages in the sum of UGX 2,400,000,000/= (Two Billion, Four Hundred Million) payable by the dfcu Bank. The said sum shall carry interest at 8% per annum from the date of this judgment till payment in full.

Mesne profits are not awarded.

Meera Investments is awarded costs of the suit against the defendants.

Dfcu Bank responds

In a 3rd November 2023 statement by the bank, dfcu acknowledged the ruling and said the ruling “does not affect the Bank’s day-to-day operations since the branches in question were vacated in 2020.”

dfcu Bank is also fully indemnified by Bank of Uganda under the P&A agreement,” it also added.