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Justice Kanyeihamba Loses Appeal to Recover National Bank of Commerce :: Uganda Radionetwork
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Justice Kanyeihamba Loses Appeal to Recover National Bank of Commerce

Kanyeihamba and the others said that the two shareholders made the transactions without the authorization and knowledge of the other by the other shareholders and therefore committed fraud.
Prof Kanyeihamba wanted Mbabazi, Rugunda, BOU to retrun Kigezi bank to original shareholders. Courtesy Photo
The Court of Appeal has dismissed an application by Justice George Kanyeihamba, in which he sought to overturn a High Court Ruling over the legal and ownership status of the defunct National Bank of Commerce.

In 2014, the Commercial Division of the High Court ruled that the transformation of the Kigezi Bank of Commerce (KBC) into the National Bank of Commerce (NBC) had been done legally.

KBC which had been formed in 1991 transitioned into NBC in 1997 before being closed over mismanagement and underperformance by the Bank of Uganda in 2012.

Prof. Kanyeihamba and 320 other shareholders in Kigezi Bank of Commerce had accused Amos Nzeyi and Ruhakana Rugunda, two of his fellow shareholders in the Bank, as well as Amama Mbabazi, the Attorney General and National Bank of Commerce of, among others, changing the company name and shareholding.

The appellants were also seeking the court’s declaration that the subsequent liquidation by the Bank of Uganda of the National Bank of Commerce was also illegal because the respondents interfered with the operations of the bank and affected its efficient operations.

However, the Appeals Court ruled that the Bank of Uganda has constitutional powers to liquidate any bank, citing a previous decision in the Humphrey Nzeyi v Bank of Uganda and the Attorney General.

“In this decision, the Constitutional Court found that the prudential measures upon which the Bank of Uganda based, in taking over and selling the National Bank of Commerce are permitted under the Constitution, which gives BOU powers, exercisable in the public interest, to maintain the stability of financial institutions,” reads the ruling.

It concludes that in the premises, therefore, it is unlikely that any finding by the Appeals Court, in this case, will have the effect of overturning the liquidation of NBC or the sale of the shares.

Kanyeihamba and the others said that the two shareholders made the transactions without the authorization and knowledge of the other by the other shareholders and therefore committed fraud.

They also sought to be named shareholders in the newly-formed NBC to protect their interests transferred from KBC. By the time of the ruling, however, since NBC had already been liquidated, a decision in favor would have been too late and moot.

“The Respondents assert that the substance of the suit in the lower Court which can be gleaned from the prayers in the Plaint is for a shareholding in the now defunct KBC/NBC as the said bank was taken over and sold by the Central Bank.

The Appeal has therefore been overtaken by events and in entertaining it, the court will be carrying out an academic exercise.

As is the case with the other issues raised, the Appellant did not address this Court, by way of reply, on this point,” said Justice of Appeal Christopher Gahirakake in the ruling.

The doctrine of mootness applies to the effect that even if the court went ahead to deliberate on the matter before it, the decision will not have the effect of resolving any real controversy between the parties, because it is no longer alive or existent.  

Consequently, also, a decision cannot be made by the court that either KCB or NBC reverts to the shareholders the Appellants' sought an order that the Registrar of Companies be directed to immediately correct the register and other records to revert to the position KBC would have been in if the Respondents had not unlawfully interfered with it.

“It is therefore impossible, in my opinion, to issue an order to the Registrar of Companies to revert the status of the company to the position it would have been in if the Respondents had not acted in any way.

I find that traversing this aspect will be an academic endeavor and the appeal is therefore affected by the doctrine of mootness.“

The Judge ordered the parties to bear their own costs, reversing the high court decision where the Kanyeihamba and the others has been ordered to pay costs.

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