M C INVESTMENT LIMITED V. PROFESSOR J. T. DUNCAN
(2015)LCN/8013(CA)
In The Court of Appeal of Nigeria
On Friday, the 6th day of November, 2015
CA/L/162/2007
RATIO
COURT: JURISDICTION; THE REQUIREMENTS THAT MUST BE MET BEFORE A FEDERAL HIGH COURT CAN ASSUME JURISDICTION TO TRY CASES UNDER THE COMPANIES AND ALLIED MATTERS ACT
This appeal challenged the jurisdiction of the Federal High Court which tried this suit. It is true that Federal High Court had the jurisdiction to try all cases under the Companies and Allied Matters Act as enshrined in the 1999 Constitution. However, the Federal High Court can only assume jurisdiction if certain fundamental requirements are met.
Section 409 (a) provides:
“A company shall be deemed to be unable to pay its debt if a creditor by assignment or otherwise, to whom the company is indebted in a sum exceeding Two Thousand Naira Only (N2,000) then due has served on the company, by leaving it at its registered office or head office, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor” This is a condition precedent that a petitioner must fulfill to foist jurisdiction on the Federal High Court. per. UZO I. NDUKWE-ANYANWU, J.C.A.
COURT: JURISDICTION; WHEN IS A COURT COMPETENT
Jurisdiction being fundamental to any proceedings, the court must first of all assume jurisdiction to determine whether it indeed had jurisdiction to adjudicate on a matter brought before it. See Section 6 of the 1999 Constitution. See Adeleke vs. O.S.H.A (2006) 16 NWLR Pt 1006 pg 608, Egbebu vs. I.G.P (2006) 5 NWLR Pt 972 pg 146.
“It is settled that a court is competent when the court is properly constituted as regards numbers and qualifications of the members of the bench and no member is disqualified for one reason or the other, the subject matter of the case is within its jurisdiction, and there is no feature in the case which prevents the court from exercising its jurisdiction; and the case comes before the court initiated by due process of law and upon fulfillment of any condition precedent to the exercise of jurisdiction. All the requirements must co-exist conjunctively before jurisdiction can be exercised by the court. It therefore means that where a court has no jurisdiction to hear and determine a case but goes ahead to do so, it becomes an exercise in futility as the decision arrived at in such a case amounts in law to a nullity irrespective of how well the proceedings was conducted.” Umanah vs. Attah (2006) 17 NWLR (Pt.1009) 503, Madukolu vs. Nkemdilim (1962) 1 All NLR 587, Skenconsult vs. Ukey (1981) 1 SC 6, Benin Rubber Producers Ltd vs. Ojo (1997) 9 NWLR (Pt.521) 388, Magaji vs. Matari (2000) 5 SC 46, Alao vs. African Continental Bank Ltd (2000) 6 SC (Pt.1) 27, Galadima vs. Tambai (2000) 6 SC (Part 1) 196, Araka vs. Ejeagwu (2000) 12 SC (Pt.1) 99, Lufthansa Airlines vs. Odiese (2006) 7 NWLR (Pt.978) 39. per. UZO I. NDUKWE-ANYANWU, J.C.A.
COURT: JURISDICTION; THE EFFECT OF THE LACK OF JURISDICTION BY A COURT
Once a court lacks jurisdiction, a party cannot use any statutory provision or common law principle to impose it because absence of jurisdiction is irreparable in law. The matter ends there and the only procedural duty of the court is to strike it out. See Umanah vs. Attah (2006) 17 NWLR pt 1009 pg 503. per. UZO I. NDUKWE-ANYANWU, J.C.A.
COURT: JURISDICTION; WHAT THE COURT OUGHT TO DO WHEN IT HOLDS THAT IT LACKED JURISDICTION
Where a court holds that it lacked the jurisdiction to entertain a suit the proper order it should make is one of striking out the matter Okolo vs. Union Bank of Nig. Plc (2004) 3 NWLR pt 859 pg 87, Johnson vs. Lufadeju (2002) 8 NWLR pt 768 pg 192, Republic Bank Ltd vs. Central Bank of Nig. (1998) 13 NWLR Pt 581 pg 306, Afribank (Nig) Plc vs. Bonik Ind. Ltd (2006) 5 NWLR Pt 973 Pg 300. per. UZO I. NDUKWE-ANYANWU, J.C.A.
JUSTICES
UZO I. NDUKWE-ANYANWU Justice of The Court of Appeal of Nigeria
SAMUEL CHUKWUDUMEBI OSEJI Justice of The Court of Appeal of Nigeria
YARGATA BYENCHIT NIMPAR Justice of The Court of Appeal of Nigeria
Between
M C INVESTMENT LIMITED Appellant(s)
AND
PROFESSOR J. T. DUNCAN Respondent(s)
UZO I. NDUKWE-ANYANWU, J.C.A. (Delivering the Leading Judgment): This is an appeal against the judgment of the Federal High Court sitting in Lagos delivered on the 9th day of November, 2005 by Hon. Justice Abdulahi Mustapha.
The Respondent herein as Petitioner filed a winding up Petition against the Appellant as 1st Respondent and two others who are not parties to this appeal in the Federal High Court sitting at Lagos. In the Petition, the Respondent sought the following orders:-
a. MC Investments may be wound up by the Court under the provisions of the Companies and Allied Matters Act, 1990.
b. The second and third Respondents shall be personally responsible without any limitation of liability, for all the debts and other liabilities of the Company; and
c. Such other orders may be made in the premises as shall be just and equitable.
It is the case of the Respondent that on the 12th of November, 1992 he placed with the Appellant the sum of N1,000, 000.00 (One Million Naira only) for a 360 day period. Sometime in February 1993 he made an additional investment of N150,000.00 (One Hundred and Fifty Thousand Naira Only). By a letter dated the 23rd day of February, 1993 the
Appellant acknowledged the additional investment and agreed to merge same with the earlier investment of N1,000, 000,00 (One Million Naira Only) for a tenor of 80 (eighty) days at the interest rate of 8 percent per month. The Appellant made payments of the Respondent’s due and accrued interests till July, 1993 after which it ceased. The Appellant failed to pay up the balance notwithstanding repeated demands. Hence this suit was commenced at the lower court.
The Appellant did not file a counter affidavit to the Respondent’s Petition; instead he challenged the jurisdiction of the court to hear the Petition on the ground that the petition was incompetent because the failure by the Respondent to comply with the condition precedent laid down under Section 409 (a) of the Companies and Allied Matters Act.
Arguments of counsel were taken. In his judgment, the trial judge held that the Petition was incompetent but went ahead to award the sum of N950,000.00 (Nine Hundred and Fifty Thousand Naira Only) at the rate of 8% per annum (from 1994 when the suit was filed to the 9th day of November 2005, and thereafter interest at 6% per annum until judgment is liquidated).
The
Appellant being dissatisfied with the judgment has brought this appeal. The appeal was heard on the following briefs:-
1). the Appellant’s brief of argument filed 28th March, 2007.
2) the Respondent’s brief of argument filed on 25th day of April, 2012 but deemed properly filed and served on 23rd day of January, 2013.
3) the Appellant’s reply brief filed on 25th day of January, 2013.
The Appellant in his brief raised a sole issue for determination before this court viz:
“Whether the Learned Trial Judge at the court below was right when after holding that the petition was incompetent proceeded to give judgment in favour of the Respondent herein.”
The Respondent on his part formulated two issues for determination in this appeal. They are as follows:-
“1. Whether since the court below had held that the Respondent’s petition to wind up the Appellant was incompetent, all other reliefs sought by the Respondent in the Petition were also incompetent?
2. Whether the learned trial judge was right in giving judgment to the Respondent against the Appellant in the sum of N950,000,00 (Nine Hundred and Fifty Thousand Naira Only) upon Appellant’s admission of indebtedness?”
The issue
framed by the Appellant adequately captures the complaints and shall be used in order to arrive at a just decision in respect of the subject matter to this appeal.
ISSUE 1
Learned Counsel for the Appellant submitted that for a court to assume jurisdiction over a suit the following conditions must be met:-
a) When it is properly constituted as regards members and qualifications of members on the bench, and no member is disqualified for one reason or the other.
b) When the subject matter of the case is within its jurisdiction.
c) When the case comes to the court initiated by due process of law; and
d) Any condition to the exercise of its jurisdiction has been fulfilled.
One of such conditions as can be seen above is the satisfaction of condition precedent. He further submitted that failure to fulfil any of these conditions deprived the court of jurisdiction to entertain the suit. Counsel therefore contended that the Respondent did not fulfill conditions c) and d) above. Having failed to comply with the condition precedent laid down under Section 409(a) of the Companies and Allied Matters Act, thus the Petition is incompetent as the court lacked the jurisdiction to
entertain this suit.
He also contended that the learned trial judge ought to have dismissed or struck out the Petition having found that the Respondent’s petition was incompetent due to the failure of the Respondent to comply with the condition precedent laid down under Section 409(a) of the Companies and Allied Matters Act. He relied on Dangote vs. Civil Service Commission Plateau State & 2 Ors (2001) 9 NWLR (Pt 717) 132.
Furthermore, Counsel submitted that any judgment given without jurisdiction is a nullity. Thus the judgment given to the Respondent by the trial court is null and void. He referred to the cases of Anosike vs. Igbeke (1999) 8 NWLR (Pt 616) 686 @ 696; Miscellaneous Offences Tribunal vs. Okoroafor (2007) 18 NWLR (Pt 745) 295 @ 327 (Paras B-C; 355 Paras A-D), UAC vs. Mcfoy (1962) Ac 152.
He thus urged this court to set aside the judgment of the trial court awarding the sum of N950,000,00 (Nine Hundred and Fifty Thousand Naira Only) at the rate of 8% per annum (from 1994 when the suit was filed to the 9th day of November 2005, and thereafter interest at 6% per annum until judgment is liquidated)
?On its own part, the Counsel for the Respondent
submitted that the Respondent’s originating process i.e. the Petition had three distinct reliefs. One of such relief is the petition to wind up the Appellant. Counsel also submitted that where ancillary or incidental claims are tied or bound up with main claims before the court in a suit, the court can adjudicate over the ancillary or incidental claims even where it has no jurisdiction to entertain the main claims if the ancillary or incidental claims can be determined without determining the main claims at the same time or where the determination of such ancillary or incidental claims will not necessarily involve consideration or determination of the main claims. He referred to the following cases; Tukur vs. Government of Taraba State (1997) 6 NWLR (Pt 510) 549; Tukur vs. Government of Gongola State (1989) 4 NWLR (Pt.117) 517 and Gafar vs. Government of Kwara State (2007) 4 NWLR (Pt 1024) 375.
It is the contention of counsel that the indebtedness of the Appellant was not tied to the Respondent’s application for winding up. Hence the trial court was right to have awarded judgment in the sum of N950,000.00 (Nine Hundred and Fifty Thousand Naira Only) as an
independent claim. He also contended that the pronouncement of the judge that the petition is incompetent was not in respect to the petition as an originating process but petition as a relief endorsed in the originating process. He thus urged this court to hold that the trial judge did not lack jurisdiction and was right in awarding the sum of N1,150,000,00 (One Million One Hundred and Fifty Thousand Naira Only).
He also submitted that the court was right in awarding judgment based on the admission of the Appellant, which admission arose from non-filing of counter affidavit and documents before the court. He relied on the following cases Udofia vs. Afia (1940) 6 WACA 216; Egbunike vs. ACB Limited (1995) 2 NWLR (Pt 375) 34; Edosomwan vs. Ogbeyfun (1996) 4 NWLR (Pt 442) 266; Ajomale v. Yaduat (No 2) (1991) 5 NWLR (Pt 191) 266; Adams vs. AG Federation (2006) 11 NWLR (Pt 991) 341; Onanaku vs. Akubue (2009) 15 NWLR (Pt 1165) 539. He thus urged this court to hold that the trial judge was right in giving judgment to the Respondent upon the Appellant’s own admission of indebtedness to the Respondent. In his reply, the learned Counsel for the Appellant emphasized that
the petition for winding up of a company on grounds of inability to pay its debt or insolvency should not be used as a means of recovery of debt. Also, Counsel submitted that the Federal High Court has no jurisdiction in proceedings for debt recovery. In other words, prayer 2 endorsed on the petition was simply a claim for recovery of debt and does not fall within the jurisdiction of the Federal High Court as contained in Section 251 of the 1999 Constitution of the Federal Republic of Nigeria, He relies on the cases of Oriental Airlines Ltd vs. Air Via Ltd (1998) 12 NWLR (Pt.577) 271 @ 280-281; Air Via Ltd vs. Oriental Airlines Ltd (2004) 9 NWLR (Pt 878) 298; Hansa International Ltd vs. Mobil Producing Nigeria (1994) 9 NWLR (Pt 366) 76.
He further contended that the claim for the sum of money is at best ancillary to the winding up and as the claim for winding up having been struck out as incompetent; the ancillary claim for money has nothing to stand on and ought to have been struck out as well. He submitted that the case of Tukur vs. Government of Taraba State (supra) does not apply as this is not a debt recovery proceeding. He thus urged this court to allow
the appeal.
This appeal challenged the jurisdiction of the Federal High Court which tried this suit. It is true that Federal High Court had the jurisdiction to try all cases under the Companies and Allied Matters Act as enshrined in the 1999 Constitution. However, the Federal High Court can only assume jurisdiction if certain fundamental requirements are met.
Section 409 (a) provides:
“A company shall be deemed to be unable to pay its debt if a creditor by assignment or otherwise, to whom the company is indebted in a sum exceeding Two Thousand Naira Only (N2,000) then due has served on the company, by leaving it at its registered office or head office, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor”
?This is a condition precedent that a petitioner must fulfill to foist jurisdiction on the Federal High Court.
?Jurisdiction being fundamental to any proceedings, the court must first of all assume jurisdiction to determine whether it indeed had jurisdiction to adjudicate on a matter brought before
it. See Section 6 of the 1999 Constitution. See Adeleke vs. O.S.H.A (2006) 16 NWLR Pt 1006 pg 608, Egbebu vs. I.G.P (2006) 5 NWLR Pt 972 pg 146.
“It is settled that a court is competent when the court is properly constituted as regards numbers and qualifications of the members of the bench and no member is disqualified for one reason or the other, the subject matter of the case is within its jurisdiction, and there is no feature in the case which prevents the court from exercising its jurisdiction; and the case comes before the court initiated by due process of law and upon fulfillment of any condition precedent to the exercise of jurisdiction. All the requirements must co-exist conjunctively before jurisdiction can be exercised by the court. It therefore means that where a court has no jurisdiction to hear and determine a case but goes ahead to do so, it becomes an exercise in futility as the decision arrived at in such a case amounts in law to a nullity irrespective of how well the proceedings was conducted.”
Umanah vs. Attah (2006) 17 NWLR (Pt.1009) 503, Madukolu vs. Nkemdilim (1962) 1 All NLR 587, Skenconsult vs. Ukey (1981) 1 SC 6, Benin Rubber Producers Ltd vs.
Ojo (1997) 9 NWLR (Pt.521) 388, Magaji vs. Matari (2000) 5 SC 46, Alao vs. African Continental Bank Ltd (2000) 6 SC (Pt.1) 27, Galadima vs. Tambai (2000) 6 SC (Part 1) 196, Araka vs. Ejeagwu (2000) 12 SC (Pt.1) 99, Lufthansa Airlines vs. Odiese (2006) 7 NWLR (Pt.978) 39.
In the present case, the petitioner under Section 409 (a) ought to have demanded personally that the debt owed him by the Respondents should be paid to him. This demand the petitioner ought to make under his hand and delivered to the Head Office of the 1st Respondent. This was not done and it is a condition precedent to be fulfilled before the Federal High Court can assume jurisdiction.
The Respondent who perceived that the court had no jurisdiction therefore challenged it immediately Nnonye vs. Anyichie (2005) 2 NWLR Pt 910 pg 623.
Having not fulfilled a condition precedent to the exercise of jurisdiction, the court therefore lacked the necessary vires to exercise jurisdiction. The trial Judge was therefore right to have accepted that it had no jurisdiction to adjudicate on the winding up of the 1st Respondent.
?Once a court lacks jurisdiction, a party cannot use any statutory provision or common law
principle to impose it because absence of jurisdiction is irreparable in law. The matter ends there and the only procedural duty of the court is to strike it out. See Umanah vs. Attah (2006) 17 NWLR pt 1009 pg 503.
In the present appeal, the trial Judge rightly held in the court below that it had no jurisdiction. It ought to have struck out the suit but it went on to deal with the ancillary claims of the petitioner.
The trial Judge had no jurisdiction over the principal claim of winding up 1st Respondent, therefore it can no longer deal with the ancillary claims therein. See Ngene & Anor vs. Okuruket XIV & 3 Ors (2014) 5 SC Pt 1 pg 1, FGN vs. Oshiomhole (2004) 3 NWLR Pt 860 pg 305, Tukur vs. Government of Taraba State (1997) 6 NWLR Pt 510 pg 549.
Where a court holds that it lacked the jurisdiction to entertain a suit the proper order it should make is one of striking out the matter Okolo vs. Union Bank of Nig. Plc (2004) 3 NWLR pt 859 pg 87, Johnson vs. Lufadeju (2002) 8 NWLR pt 768 pg 192, Republic Bank Ltd vs. Central Bank of Nig. (1998) 13 NWLR Pt 581 pg 306, Afribank (Nig) Plc vs. Bonik Ind. Ltd (2006) 5 NWLR Pt 973 Pg 300.
The trial court lacked the
necessary jurisdiction to deal with the ancillary claims of the Petitioner without first determining the winding up which was incompetent before the court.
Having held that the court lacked jurisdiction to wind up, the claim on debt owed cannot be dealt with. The lower court ought to have struck out the matter for lack of jurisdiction.
The sole issue articulated by the Appellant is resolved in his favour. This appeal is allowed. The judgment and orders of the trial Judge is hereby set aside. The Federal High Court lacked the jurisdiction to deal with simple debts as in this appeal. However, the Federal High Court has the jurisdiction under Section 22 (2) of Federal High Court Act CAP F 12 LFN 2004 to transfer matters to the appropriate court. This court will under Section 15 of the Court of Appeal Act transfer this matter to the High Court of Lagos State to deal with the claim for simple debts. The Court hereby orders that this suit be transferred to the Chief Judge Lagos State for assignment.
I make no orders as to costs. Each party to bear its own cost.
SAMUEL CHUKWUDUMEBI OSEJI, J.C.A.: I have read the lead judgment just delivered by my learned brother
U. I. NDUKWE-ANYANWU JCA and I agree with him that the Appeal has merit and should be allowed.
My Lord has covered all the issues canvassed in the Appeal and I have nothing extra to add except to emphasis that, where a court lacks jurisdiction to adjudicate on a matter, any proceeding before it in relation to the subject matter of the suit, no matter how well conducted becomes an exercise in futility. In other words any further step taken in relation to the matter is a nullity and void. See EKULO FARMS LTD VS. UNION BANK OF NIGERIA PLC (2006) 4 SC (PT 11) Page 1; ADESOLA VS. ABIDOYE (1999) 14 NWLR (PT 637) 28; MADUKOLU VS. NKEMDILIM (1962) 1 SCNLR 341.
In the instant case, the Learned Trial Judge having rightly held that the court has no jurisdiction to entertain the main claim in the Suit ought not to proceed to deal with the ancillary claims of the petitioner given that where there is no foundation, the structure will have no place to stay on.
For this and the fuller reason given in the lead judgment, I hold that this Appeal is meritorious and it is accordingly allowed.
I abide by the consequential orders including order as to cost.
?YARGATA BYENCHIT NIMPAR,
J.C.A.: I had the privilege of reading in draft the judgment just delivered by my learned brother, UZO I. NDUKWE- ANYANWU, JCA.
I am in total agreement with the reasoning and conclusions arrived at in the judgment. There is no doubt that the trial court did not have jurisdiction to entertain the matter since the pre-condition of a formal demand was not met by the Respondent pursuant to S. 409 (a) of the Companies and Allied Matters Act. Therefore once the court declined jurisdiction to entertain the suit, the only other step it could take in the matter is to make an order striking out the suit. Any other order or pronouncement made by the court after declaring that it lacks jurisdiction to entertain a suit, is null and void and of no effect. OBI v. I.N.E.C. [2007] 11 NWLR (Pt.1046) 560
It does not matter whether there were other ancillary or subsidiary claims in the petition. Once a court lacks the jurisdiction to entertain the main claim or principal claim in a case or matter, it would also lack the power and authority to determine or entertain ancillary claims in the same case. N.D.I.C. v. KOLEOSHO (2006) ALL FWLR (PT. 312) 2099, F.G.N. v. OSHIOMHOLE [2004] 3
NWLR (PT.860) 305.
It is for these reasons and the fuller consideration in the lead judgment that I also allow the appeal. I abide by the other orders made in the lead judgment.
Appearances
S. N. Agweh For Appellant
?
B. l. Ademola-Bello For Respondent
Appearances
S. N. AgwehFor Appellant
AND
B. I. Ademola-BelloFor Respondent
