The Supreme Court has dismissed a petition filed by Humphrey Nzeyi challenging the liquidation, closure, and subsequent sale of the National Bank of Commerce (NBC).
In a unanimous ruling, the seven justices; Prof. Lillian Tibatemwa Ekirikubinza, Percy Night Tuhaise, Mike Chibita, Elizabeth Musoke, Christopher Madrama, Catherine Bamugemereire, and Monica Mugenyi dismissed the case in its entirety.
The matter stems from a decision by the Bank of Uganda (BoU) on September 27, 2012, when it took over the management of NBC, placing it under liquidation and later selling it. A public notice was issued by BoU, informing the public that Crane Bank Ltd had entered into a purchase and assumption agreement, taking over all NBC’s deposits and assets effective October 1, 2012.
In 2012, Nzeyi filed a petition with the Constitutional Court, seeking to have several provisions of the Financial Institutions Act (FIA), 2004 declared unconstitutional. He argued that these provisions allowed BoU to take over and sell NBC in a manner that infringed on fundamental rights protected by the 1995 Constitution of Uganda.
On November 4, 2020, the Constitutional Court dismissed the petition in a 4–1 majority decision, with no order as to costs. Dissatisfied, Nzeyi appealed to the Supreme Court, claiming that the Constitutional Court erred in both law and fact. He argued that BoU’s actions—including canceling NBC’s license, taking over management, appointing a liquidator, and selling it to a competitor, all in a single day—violated constitutional principles. He also asserted that the lower court failed to properly evaluate the evidence presented.
In response, BoU defended its actions, noting that from 2009 to 2010, NBC consistently received poor ratings during regulatory inspections, with high overall risk assessments. The central bank cited shareholder disputes and poor corporate governance that had severely impacted the institution. By December 31, 2010, NBC’s core capital stood at Shs 3.48 billion—below the then-required statutory minimum of Shs 4 billion.
Justice Tuhaise, delivering the lead judgment, ruled that NBC was in severe financial distress at the time of its liquidation. She held that the Constitutional Court acted within its discretion and that the right to be heard had not been violated.
“Since all the grounds of this appeal have failed, I would dismiss this appeal. Given that the NBC was liquidated and wound up long ago, each party shall bear its own costs,” she concluded.
Justice Elizabeth Musoke concurred, stating: “I have had the advantage of reading in draft the judgment of my learned sister Tuhaise, JSC, and I agree with her conclusion that this appeal ought to fail. I only wish to add a few observations on some points arising in the appeal.”
