BoU, DFCU Bank dragged to court over Shs80m debt by former Crane Bank employee - Daily Post Uganda

BoU, DFCU Bank dragged to court over Shs80m debt by former Crane Bank employee

KAMPALA: A former employee of Crane Bank Limited (CBL) Shakil Pathan Ismail has successfully applied for a court order directing Bank of Uganda (BoU), a garnishee, to pay Shs80 million that DFCU Bank owes him as earlier directed by court in mid-January.

The order to force BoU transfer the said money from DFCU Bank account (debtor) and pay the plaintiff was okayed by Her Worship Flavia Nabakooza on May 22, 2019 and arises out of civil suit No.236 of 2017 in which Mr Ismail sued CBL for unlawfully blocking/deducting the money from his salary account (Shs62 million), general damages (Shs20 million), exemplary damages, interest and costs of this suit.

The deducted money attracts 21 percent interest per annum from April 2016 till full payment is made while general damages attract interest of 6 percent per annum from the judgement date of January 15, 2019, as ruled by Justice David Wangutusi of the Commercial Court Division.

Ismail won the case, having sued CBL but DFCU Bank which took over CBL on January 25, 2017 has not paid the money as ruled by court. He claimed CBL ducted his money from his account without authorisation from March 2015 to Feb 2016.

However failure by DFCU Bank to pay the money forced Ismail to drag BoU, the regulator of the banking industry, to court through his attorney Ulfat Ali Pirzada. Court has set June 4, 2019 as date BoU should appear and argue against the order requiring it to transfer the stated money from DFCU Bank’s account in the central bank to Mr. Ismail’s account.

Ismail (Plaintiff) was earning a monthly salary of US$2200 (about Shs7.9 million at rate of Shs3, 600 per USD). He claimed CBL unlawfully blocked his account and thereafter made multiple deductions totaling to Shs 62 million which sum has never been remitted to him by DFCU Bank.

As a recap, on October 20, 2016, BoU in exercise of its powers as the Central Bank under the Financial Institutions Act No. 2 of 2004 took over the management of CBL on the basis that it was significantly undercapitalized as defined by law and placed it under receivership.

By way of a purchase of assets and assumption of liabilities agreement dated January 25, 2017, DFCU Bank as buyer took over some of the assets and liabilities of CBL (In Receivership) from the receiver BoU. DFCU Bank was assigned CBL’s rights and liabilities under all its existing employment contracts subject to certain exclusion clauses.

According to the agreement Schedule 3 Clause 2; terminal benefits and all employment dues of Employees terminated by DFCU Bank within two months from the completion date are listed as excluded liabilities.

Clause 5.3 provides for employee matters. It states that;

“The Receiver shall indemnify the Buyer against all liabilities to an employee arising out of the employment of an employee during the period prior to and ending on the completion date, including arrears of wages or salaries, overtime payments and accrued leave.”

The Plaintiff was one of the employees of CBL whose employment contract was assigned to DFCU Bank. The Plaintiff’s employment was terminated by DFCU Bank. It is the Plaintiff’s claim that despite the termination of his employment no settlement regarding the deductions on his salary account has been made thus he filed this suit seeking recovery of the same.

Denying liability DFCU Bank argued that it was not a successor in title to CBL but only acquired some of its assets and liabilities in January 2017. That the liabilities of CBL were not known to DFCU Bank BoU the Statutory Receiver of CBL as January 25, 2017.

It was DFCU Bank’s claim that the liability within CBL books was only presented to the it at the time when Mr Ismail was leaving its’s employment and that its termination of the Mr Ismail’s contract did not pass on to it a liability that was within CBL’s books. Justice David Wangutusi however quashed DFCU Bank’s arguments and awarded Ismail the money even though not all his request were accepted by the judge.

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