How Crane Bank lost 14-year legal row on Fang Fang Hotel
Posted Thursday, October 31 2013 at 02:00
Kampala- Details have emerged about how business mogul Sudhir Ruparelia lost out in a case involving Fang Fang Hotel that dates 14 years back.
Mr Ruparelia’s Crane Bank, having offered credit support to the proprietors of Belex Tour and Travel Limited (BTTL) in 1997, had not anticipated a protracted legal battle out of the transaction.
Unfortunately, in 1999, two years after granting them a loan to furnish Holiday Hotel on Sezibwa Road in the upscale part of the city, BTTL failed to pay back but had mortgaged the premises as security.
According to a statement by the managing director of BTTL, Mr Myers Mucunguzi, by May 1999, the outstanding balance was $704,829 leading to the sale of his property at $745,000, leaving a balance of $5,800.
Documents before court indicate that BTTL sued Crane Bank and Fang Min in the High Court for recovery of $5,800 as balance after repayment of the loan while Holiday Hotel claimed for recovery of Shs194 million as value for furnishings and hotel assets.
When Crane Bank did not comply with the demands, BTTL jointly with Holiday Hotel sued the bank and Ms Fang Min who took over the premises together with the moveable property.
However, in 2007, then High Court judge Stella Arach Amoko dismissed the claims with order to pay legal costs to the bank and Ms Fang Min prompting an appeal.
Through their lawyers, BTTL faulted the High Court judge for dismissing the case arguing that she erred in law and fact to hold that $745,000 was paid for both the land and moveables and dismissing the claims.
Bank ordered to pay
Slightly over six years later, the Court of Appeal ordered Crane Bank to pay its former customer, BTTL $704,829 as damages for loss of business and property in the 14-year case in connection with the loan.
However, this was money meant for loan recovery after BTTL failed to pay a loan they had earlier acquired.
Court also ordered the bank and Ms Fang Min, the proprietor of Fang Fang Hotel, to jointly pay BTTL Shs194 million with 17 per cent interest per year from 1999 until October 2013 and 8 per cent interest from the date of judgment.
According to the judgment delivered by three justices Faith Mwondha, Kenneth Kakuru and Geoffrey Kiryabwire overturning the High Court decision, it was observed that the execution of the mortgage by Crane Bank and Fang Min did not comply with the provisions of the law and hence invalid.
However, in what appears to be contradiction between judicial officers, the awards by the Appeal Court were not pleaded for by the benefiting companies at the time of filing the case in the High Court in September 2003. According to court documents, BTTL and Holiday Hotel, through their lawyers pleaded for special damages worth Shs194.3 million and $5,800 as well as interest thereon at the rate of 25 and 36 per cent respectively.
But the court also directed the registrar of titles to cancel the registration of Ms Fang Min as proprietor of leasehold register and reinstate BTTL as the registered proprietor also to cancels all existing encumbrances if any on the title.
Meanwhile, Crane Bank and Ms Fang Min have appealed to the Supreme Court, challenging the orders of the appeal court.
The two companies have also applied for an interim stay of the execution of the order by the appeal court pending the hearing and determination of the appeal.
Court records show that the protracted legal battle started when the first accuser, BTTL acquired a loan facility from Crane Bank between 1997 and 1999 to furnish Holiday Hotel, currently known as Fang Fang Hotel.