ALHAJI LAWAL SARKIN TASHA V UNION BANK OF NIGERIA PLC
(2001) LCN/2847(SC)
In the Supreme Court of Nigeria
Monday, January 29, 2001
Case Number: SC. 17/1996
RATIO
INTERPRETATION OF STATUTE: WHEN THERE IS DEFAULT IN REPAYING LOAN UNDER THE AGRICULTURAL CREDIT GUARANTEE SCHEME FUND DECREE 1977
It is common ground that the loan given by the respondent bank to the appellant was under the Agricultural Credit Guarantee Scheme Fund Decree 1977. The Decree is now an Act to be found in Cap. 13 of the Laws of the Federation 1990. Section 15 of that Act provides that when there is default in repaying the loan (whether principal or interest thereon) by the borrower, any legal proceedings arising there from shall be by or against the Agricultural Board set up by law to oversee the loan- PER UWAIFO JSC.
JUSTICES:
SALIHU MODIBBO ALFA BELGORE Justice of The Supreme Court of Nigeria
EMMANUEL OBIOMA OGWUEGBU Justice of The Supreme Court of Nigeria
SYLVESTER UMARU ONU Justice of The Supreme Court of Nigeria
UMARU ATU KALGO Justice of The Supreme Court of Nigeria
SAMSON ODEMWINGIE UWAIFO Justice of The Supreme Court of Nigeria
Between
ALHAJI LAWAL SARKIN TASHA Appellant(s)
AND
UNION BANK OF NIGERIA PLC. Respondent(s)
BELGORE, J.S.C. (Delivering the Leading Judgment): The Agricultural Credit Guarantee Scheme Decree (now in Cap. 13 Laws of the Federation of Nigeria 1990) sets out clearly how the loan under the agricultural scheme was to be administered. The law empowers the minister responsible for the scheme to fix rate of interest from time to time. In the case of default by the borrower/farmer to pay the debt, s. 12 sets out the procedure for demand. But in case of suing to recover the loan, s.15 is very clear; it is the Board of the scheme that must be sued. Though the amendment to the Decree (now Act) in 1993 allows the bank to sue the debtor directly, this case arose before the amendment and at the time the suit was filed the Board was not sued. This is an incompetent action and the court ought not to have welcomed the suit, irrespective of being placed on the undefended cause list. The court is to decide on cases legally placed before it. This appeal therefore succeeds. The appeal is allowed, decision of court below is set aside and the verdict of striking out the suit entered. N10,000.00 costs to appellant.
OGWUEGBU, J.S.C.: There is merit in this appeal. By section 15 of Agricultural Credit Guarantee Scheme Fund Act, Cap. 13 Laws of the Federation of Nigeria, 1990, all legal proceedings of civil nature arising from the failure of any borrower to repay a loan granted by the bank or guaranteed under the Act or arising from any matter pertaining to any guarantee given pursuant to the Act shall be instituted and conducted by or against the “Board”. The cause of action giving rise to the proceedings falls within section 15 of the Act. In the circumstance, the respondent bank has no standing whatsoever to institute the proceedings against the appellant having regard to the state of the law at the time the cause of action arose. The courts below were in gross error in not giving section 15 of Cap. 13 Laws of the Federation of Nigeria, 1990 its plain and unambiguous meaning. The appeal succeeds. The action was incompetent. It is accordingly struck out. N10,000.00 costs to the appellant.
ONU, J.S.C.: Since the respondent in the instant case in the prosecution of which the provisions of sections 12(1) and 15 of the Agricultural Credit Guarantee Scheme Fund Act Cap. 13 LPN 1990 were not resorted to, but rather it was the undefended list procedure that was applied to give judgment to the respondent, both the trial court and the Court of Appeal were wrong in the method they adopted. The two sections provided: –
12(1). Where there has been a default in the repayment of the interest or principal of any loan guaranteed under this Act, the bank concerned shall in the first instance endeavour to recover the amount outstanding from the borrower or his sureties, if any, and may for that purpose dispose of any security obtained in respect of the loan.”
15. All legal proceedings of a civil nature arising from the failure of any borrower to repay a loan granted by a bank and guaranteed under this Act or arising from any matter pertaining to any guarantee given pursuant to this Act shall be instituted and conducted by or against the Board.”
Since the latter section was ignored by the respondent, the action brought at its instance must perforce be incompetent and unmaintainable against the appellant.
It is for these reasons and those contained in the judgment of my learned brother Belgore, JSC that I too allow this appeal and set aside the decisions of the 2 courts below. I strike out the suit filed by respondent on the undefended list and award N10, 000 costs to the appellant.
KALGO, J.S.C.: This appeal is meritorious and ought to succeed. The issue of locus of the respondent to sue in the first instance was well taken and this denies the trial court and the Court of Appeal the power to entertain and adjudicate on the matter. The loan was granted under the Agricultural Credit Scheme Act ( Cap. 13 of 1990, Laws of the Federation) and by s. 15, any default by the borrower to repay the loans falls on the Board and so only the Board of the Scheme should be sued and not the borrower. It was therefore clearly wrong here to sue the borrower -the appellant. S.12 of the law did not give the respondent the total right to sue but only “to endeavour to recover the amount outstanding” at first instance. This section must be read together with S.15 of the said Act, and in so doing only s. 15 allowed the respondent to sue the Board to recover the outstanding amount of the loan. The respondent’s counsel quite properly conceded to the correct legal position in the matter.
For this reason, I allow the appeal, set aside the decision of the Court of Appeal and strike out the suit filed by the respondent in the trial court in the undefended list.
I award N10,000.00 costs to the appellant.
UWAIFO, J.S.C.: It is common ground that the loan given by the respondent bank to the appellant was under the Agricultural Credit Guarantee Scheme Fund Decree 1977. The Decree is now an Act to be found in Cap. 13 of the Laws of the Federation 1990. Section 15 of that Act provides that when there is default in repaying the loan (whether principal or interest thereon) by the borrower, any legal proceedings arising therefrom shall be by or against the Agricultural Board set up by law to oversee the loan. In the present case, it would appear there was such default to repay. The respondent bank sued the borrower (i.e. the appellant) instead of the Board. The suit was placed on the undefended list and judgment given against the appellant. The lower court affirmed the judgment even though its attention was drawn to s. 15 of the said Act.
There can be no argument that the action was improperly constituted. The parties ought to have been the respondent bank and the Board. Not having been properly constituted, the suit was incompetent. I therefore allow this appeal on that issue alone and set aside the judgment of the lower court. I accordingly strike out the suit.
I award N10,000.00 costs to the appellant.
Appeal struck out.
Appearances
N. Agomoh [Miss.] (with him,
D. D. Dimlong) For Appellant
AND
S. Yerima [Mrs.] For Respondent
