DFCU loses Shs82m case to former Crane Bank employee, lawyers MMAKS/Bowmans get the ban

Shakil Pathan Ismail, a former employee of the defunct Crane Bank Limited has won Shs82m in a case against DFCU Bank. Shakil sued the bank for unlawfully blocking/deducting Shs62m from his account.   

Head of the Commercial Court, Justice David Wangutusi who delivered the ruling this Tuesday ordered DFCU to pay Shakil his Shs62m, which also attracted 21 per cent interest per annum from April 2016 on till payment is made in full.

The judge awarded damages of Shs20m and also ordered the bank pays a further 6% interest on damages from the date of judgement till the amount is fully paid.  The judge also ruled that DFCU meet Shakil’s costs of the suit.

In 2017, Shakil sued DFCU Bank for the recovery of Shs62m, which he said the bank unlawfully blocked/deducted from his salary account.

In their defence DFCU contended that they are not successors in title to Crane Bank Limited but only acquired some of its assets and liabilities in 2 January 2017.

However, Wangutusi ruled that Shakil was not privy to the Purchase of Assets and Assumption of Liabilities Agreement Purchase of Assets and Assumption of Liabilities Agreement and that legally DFCU assumed the position of Crane Bank when she took over the Bank.

“This position is buttressed by the Employment Act. Section 28(2) provides;

‘Where a trade or business is transferred in whole or in part, the contracts of service of employees employed at the date of transfer shall automatically be transferred to the transferee, all rights and obligations between each employee and the transferee shall continue to apply as if they had been rights and obligations concluded between the employee and transferee.’

 The relationship between the Plaintiff and Crane Bank simply shifted to DFCU by operation of the law. This position would however have been changed if the Plaintiff had been privy to the Purchase of Assets and Assumption of Liabilities Agreement,” Wangutusi ruled.

While awarding  interest, Wangutusi ruled that; “It is without doubt that the defendant kept the plaintiff (Shakil) out of use of his money. The bank must have used this money for commercial purposes. It is also without doubt that if the plaintiff had borrowed that money from the bank, he would have paid it back at commercial interest rate. What is good for the goose should also be good for the gander.”

The ruling means that DFCU Bank can suffer all the previous liabilities inherited from Crane Bank provided the victims of these liabilities were never privy to the purchase of Crane Bank assets and liabilities.

This ruling will definitely energise former Crane Bank workers who last October sued DFCU for unfairly terminating their services which was in breach of an earlier agreement that they wouldn’t be laid off when DFCU took over Crane Bank.

MMAKS lawyer Timothy Masembe Kanyerezi.

MMAKS banned from Crane Bank cases

Meanwhile, Dfcu Bank used MMAKS Advocates in the said suit praying that court allows it to add on CBL in receivership as the second defendant, but the judge dismissed it due to conflict of interest, reasoning MMAKS Advocates had once served CBL and now could not be allowed to turn against the same bank as ruled in; Bank of Uganda Vs Crane Bank Civil Suit No.493 of 2017.

 “It did not matter whether the firm had many lawyers and the one now assigned with the new matter did not personally handle the complainant’s case. Conflict would still be imputed from the “Canteen factor”, he said.

“Canteen factor is this case included social chat between colleagues or with client that gave vital information so if the interaction is between one of the partners it will be imputed to the others,” he explained.

In essence, MMAKS and Bowmans who court earlier ruled were conflicted are forbidden from representing any entity against Crane Bank.

The judgment was delivered in the presence of Timothy Lugayizi-Dfcu Bank counsel and Daphne Atuhaire-assistant to Nelson Walusimbi, Counsel for Shakil.

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