Meera Investments, which is owned by property mogul Sudhir Ruparelia, is in court, battling to recover 46 properties that it had leased out to defunct Crane Bank, but now “illegally” occupied by Dfcu Bank.
When Dfcu took over Crane Bank, Bank of Uganda passed on the defunct bank’s assets and liabilities to Dfcu, but it perhaps overstepped its limits in handing properties owned by Meera Investments over which it had no jurisdiction to Dfcu or Dfcu took more than it had bargained for.
The properties in question are in Rukungiri, Kasese municipality, Busia municipality, Kawempe division, Nkumba, Mukono and Kireka among others across the country.
Meera, through their lawyers Magna Advocates, say they are the registered owner of the branches which are either freehold or mailo systems of land tenure.
Just like you buy an operating boutique or restaurant at mall from a business owner, it doesn’t mean you own the property and you still have to meet rental obligations, but Dfcu in this case also assumed ownership of the properties where Crane Bank was operating.
Meera Investments says Dfcu with the help of the Commissioner Lands registration fraudulently transferred the leases of the properties to its name and they are suing both parties.
Background
Between 2012 and 2016, Meera leased the 46 properties to Crane bank on different terms with the leases being duly registered as encumbrances on Meera’s freehold and mailo interest.
The lease titles were subsequently processed and issued to Crane Bank.
Crane Bank agreed to pay $6,000 as ground rent for each of the properties effective on or before the January 1, of every year to the property owners (Meera Investments).
According to the plaint, for Dfcu to claim ownership of the properties, it needed consent from the real owner who in this case is Meera Investments.
The Commissioner Land Registration is sued alongside Dfcu for “illegally” effecting the transfer of Meera properties to Dfcu Bank.
The lease agreements, court documents show, provided that Meera had the option to review the ground rent after the expiry of three years.
Meera had also agreed with Crane Bank under various lease agreements that in case of any breach, non-performance, or non-observance of what they had agreed on in the lease agreements, it will be lawful for Meera to seek legal redress from court.
“It was further agreed between the plaintiff [Lessor] and Crane Bank [Lessee] that anything done contrary to the terms of the lease agreements would forthwith cease the lessee’s rights or interest in the suit properties without prejudice to the lessor’s entitlement to rent unpaid and due,” Meera claims.
With the agreements in place, on October 20, 2016, BoU took over Crane Bank under statutory management.
On January 24, 2017 Bank of Uganda announced that it had transferred all the assets and liabilities of the bank to Dfcu.
Dfcu, which was the new tenant then moved to take over the 46 properties, without the consent of the owners Meera Investments.
“Through a subsequent search at the relevant land registries, the plaintiff (Meera Investments) discovered that; without it’s prior written consent, the first defendant (Dfcu), in addition to taking possession of the suit properties, caused the leasehold interest to be transferred into its names and had been registered thereon as the proprietor of the leasehold interest,” Meera Investments says in their plaint.
They add that at the execution of the transfers in favour of Dfcu and at the time of causing the transfer of the leasehold interest into the names of Dfcu, the registration of Meera as the proprietor of the freehold and mailo was and is still intact.
Meera says Dfcu was aware of this fact or could have ascertained by way of a simple search.
They also fault the commissioner land registration for fraudulently going ahead to transfer the leases of the properties to Dfcu without the prior consent of the owners.
“The plaintiff avers that the second defendant (commissioner land registration), [was] well aware of the existing lease agreements and the conditions therein including the requirements for obtaining prior written consent from the plaintiff as the lessor, before any transfer of the leases and parting with possession thereof, nonetheless proceeded to illegally transfer and register the first defendant as lessee of the suit properties, without any consent or authorisation from the plaintiff as required under the various lease agreements,” Meera argues.
Dfcu’s defence
Through Sebalu and Lule company advocates, Dfcu filed its defence saying that the issues Meera wants court to determine are already before court.
In the case the Dfcu lawyers refer to, Bank of Uganda alleged that Sudhir fraudulently transferred freehold titles of 48 plots of land (where the bank has its branches), purchased and developed using the bank’s finances into the names of Meera Investments from Crane bank.
The plots, according to the court documents, were then reportedly leased to the owner (Crane bank) at Shs100m premium for 49 years and $6,000 in ground rent per year payable to Meera Investments.
Sudhir in his defence dismissed the allegations as “presumptuous, speculative and founded on fanciful reasoning.”
He said they do not reflect the market realities of obtaining leasehold titles in Uganda.
According to Sudhir, BOU’s allegation that Crane Bank obtained over 14 freehold titles is false since the bank is a “non- citizen,” thus couldn’t hold the land as a freehold owner as stipulated by the Land Act.
As part of Crane Bank’s expansion plan, Sudhir argued, the bank acquired a number of leases with different tenure, some of which were to last just seven years with a commercial view that it was better in the long run to obtain freehold titles in lieu of the said leases.
He added that after Crane bank obtained over 14 freehold titles, it was considered that pursuant to the Land Act, the bank could not hold the land as a freehold owner since it was a non-citizen within the meaning of the Land Act.
Meera now wants court to declare that the continued presence of Dfcu Bank on its properties amounts to trespass and that they should be ordered to vacate with immediate effect.