• Francis Obonyo
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The Financial Institutions Act gives a time limit of 12 months for any action during receivership to both begin and end.

In the case of Crane Bank in Receivership V Ruparelia & Anor, Civil Appeal NO. 252 OF 2019.

Coram; Hon Justice Alfonse Owiny-Dollo, Cheborion Barishaki & Stephen Musota,
Judgment delivered on the 23rd of June, 2020.

This was a case where the Applicant on Appeal, following dismissal from the trial court, sought declarations that it rightfully sued the Respondents and that the Respondent ought to return all the properties to it. The Applicant was declared insolvent in the year 2016 and put under statutory management by the central bank, which later on put it under receivership.

The issues for determination were whether a bank in receivership had the right to sue and interpretation of the time limit placed under the Financial Institutions Act, which provides for receivership to take place within 12 months.

In resolving the above issues, the Justices of Appeal relied on the Financial Institutions Act to determine whether the bank in receivership could sue. The Justices stated that a right to sue must be created by statute. In this case, the statute barred any company under receivership from any court proceedings. This is not the case, however when it comes to a company under statutory management or liquidation because in this case, a liquidator or statutory manager can institute proceedings.

The Applicant argued that the intention of the drafters was not to bar the Applicant from instituting a suit but rather to protect it from being sued. The Justices of Appeal strictly interpreted this provision and held that the Applicant could not sue because the right to do so is not provided for by statute.

The Applicant also sought orders that the Respondents revert the properties owned by them to the bank. The 1st Respondent, who is a director and owns shares in the company, was accused of allegedly selling the land that belonged to the Applicant. The Court dismissed the allegation because of a lack of evidence and held that the Applicant being a foreign company cannot own freehold land.

With regards to the issue of receivership, the Applicant argued that the statute did not limit the time to 12 months but rather that any action during receivership should start within 12 months, and after that, it is indefinite.

The Justices of Appeal in interpreting the statute held that the statute gives a time limit of 12 months for any action during receivership to both begin and end.
The Court dismissed the appeal and ordered the Applicant to pay the costs.