MOBITEL LIMITED v. MAIN ONE CABLE COMPANY LIMITED (2018)

MOBITEL LIMITED v. MAIN ONE CABLE COMPANY LIMITED

(2018)LCN/10770(CA)

In The Court of Appeal of Nigeria

On Thursday, the 8th day of February, 2018

CA/L/331/2016

RATIO

COMPANY LAW: STATUTORY PROVISION OF SECTION 409 OF THE COMPANY AND ALLIED MATTERS ACT

Having ascertained the actual statutory demand letter, the next poser is whether it conforms to the stipulations of Section 409 (a) of the Companies and Allied Matters Act. The plain and ordinary meaning of the stipulation of the said Section 409 (a) is that the demand letter shall be issued under the hand of the creditor. The demand letter of February 13, 2013 was not issued under the hand of the Respondent. It was issued by the Respondent’s Solicitors, Banwo & Ighodolo. It is consequently not a valid demand letter within the intendment of Section 409 (a) of the Companies and Allied Matters Act. See TATE INDUSTRIES PLC vs. DEVCOM MERCHANT BANK LTD (supra). It is rudimentary law that a Court is competent to adjudicate when, inter alia, there is no feature in the case which prevents the Court from exercising jurisdiction and the case comes before the Court initiated by due process of law and upon the fulfillment of any condition precedent to the exercise of jurisdiction: MADUKOLU vs. NKEMDILIM (supra). Compliance with the stipulations of Section 409 (a) of the Companies and Allied Matters Act, in specie, is a condition precedent to the filing of a Winding-up Petition. The Respondent not having compiled with the letters of the said Section, the Petition it presented before the lower Court was not initiated by due process of law and it constituted a feature which prevented the lower Court from exercising jurisdiction. The lower Court was therefore in error when it assumed jurisdiction. The fulcrum and premise of the Appellant’s contention that the debt is denied and disputed bona fide is on the basis that it deposed in the affidavit in support of the preliminary objection that it is not indebted to the Respondent for the amount claimed. The Respondent filed its Petition alleging that the Appellant was indebted to it. Issues are joined on the averments in the Petition by the filing of an Answer. The Appellant did not file any Answer and there was no joinder of issues on the averments in the Petition by the deposition in the affidavit in support of the preliminary objection. See EGE SHIPPING AND TRADING INDUSTRY vs. TIGRIS INTERNATIONAL CORPORATION (supra). In the circumstances, there was no joinder of issues which would have created a presumption of a disputed debt. Concomitantly, the depositions in the affidavit in support of the preliminary objection cannot be a basis for a Court to hold that the debt averred as owing in the Petition was denied and disputed, such that the Petition would not be heard until the dispute as to the debt is resolved. In a summation, having held that the Petition was not initiated by due process of law, the lower Court was not competent to entertain the Petition as the condition precedent to the exercise of jurisdiction, id est, compliance with Section 409 (a) of the Companies and Allied Matters Act was not fulfilled. The effect of the Court not being competent is that it lacked jurisdiction. Where a Court lacks jurisdiction the proper order to make is to strike out the action. See OKOLO vs. UNION BANK (2004) LPELR (2465) 1 at 15, TINUBU vs. KHALIL & DIBBO TRANSPORT LTD (2000) LPELR (3249) 1 at 10 and A-G LAGOS STATE vs. A-G FEDERATION (2014) LPELR (2270) 1 at 73. PER UGOCHUKWU ANTHONY OGAKWU, J.C.A.

JUSTICES

TIJJANI ABUBAKAR Justice of The Court of Appeal of Nigeria

UGOCHUKWU ANTHONY OGAKWU Justice of The Court of Appeal of Nigeria

ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria

Between

MOBITEL LIMITED Appellant(s)

AND

MAIN ONE CABLE COMPANY LIMITED Respondent(s)

UGOCHUKWU ANTHONY OGAKWU, J.C.A. (Delivering the Leading Judgment): The Respondent herein, as a creditor of the Appellant herein, filed a Petition before the Federal High Court, Lagos Division in SUIT NO. FHC/L/CP/317/2013: MAIN ONE CABLE COMPANY LIMITED VS. MOBITEL LIMITED, for the winding up of the Appellant Company. The Appellant could not see its way clear with the competence of the Petition, it consequently filed a notice of preliminary objection wherein it urged the lower Court to dismiss or strike out the Petition for being incompetent on the grounds , inter alia, that the provisions of Section 409 (a) of the Companies and Allied Matters Act was not complied with and that the debt allegedly owed by the Appellant is bona fide denied and disputed.

The lower Court took argument on the preliminary objection and in a considered Ruling delivered on 9th July 2015 it dismissed the preliminary objection. The Appellant being dissatisfied with the said Ruling appealed against the same. The Ruling of the lower Court is at pages 359-358 of the Records while the Notice of Appeal is at pages 373-376 of the Records.

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The Records of Appeal having been compiled and transmitted, the parties filed and exchanged briefs of argument. The Appellant’s Brief was filed on 27th May, 2016 but deemed as properly filed on 1st March, 2017. The Appellant further filed a Reply Brief on 27th October, 2016 but also deemed as properly filed on 1st March 2017. The Respondent’s Brief was filed on 15th July 2016, but deemed properly filed on 1st March, 2017. At the hearing of the appeal, learned counsel for the parties urged the Court to uphold their respective submissions in the determination of the appeal.
The Appellant distilled two issues for determination as follows:
1. Whether the Petition of the Respondent in the Court below is competent considering that Exhibit AA 5 which was pleaded by the Respondent to be its Statutory Demand Notice is not valid under the law; and
2. Whether the Petition ought to be heard in view of the fact that the alleged debt is denied and disputed, bona fide.

?The Respondent on its part formulated a sole issue for determination, namely:

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?WHETHER HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LOWER COURT HAD JURISDICTION TO ENTERTAIN THE PETITION.?

In resolving this appeal, I will be guided by the issues as crafted by the Appellant.

ISSUE NUMBER ONE
Whether the Petition of the Respondent in the Court below is competent considering that Exhibit AA 5 which was pleaded by the Respondent to be its statutory Demand Notice is not valid under the law.

The conspectus of the Appellant’s argument is that Section 409(a) of the Companies and Allied Matters Act was not complied with prior to the institution of the Petition. It was stated that the letter of demand relied upon by the Respondent was issued by the Respondent’s Solicitor as opposed to being issued by the Respondent itself as required by the said Section 409 (a) of the Companies and Allied Matters Act, Paragraph 11 of the Petition was referred to. It was submitted that parties are bound by their pleadings and the decision of a Court must be based on the issues joined in the pleadings and evidence

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adduced. The cases of OVIAWE vs. I. R. P. (NIG) LTD (1997) 3 NWLR (PT. 492) 126 at 141-142 and OLOMOSOLA vs. OLORIAWO (2002) 2 NWLR (PT. 750) 113 at 124 were referred to.

The Appellant maintained that the failure by the Respondent to sign the letter of demand itself rendered the said letter of demand void ab initio and invalid for being a clear contravention of Section 409 (a) of the Companies and Allied Matters Act. The case of TATE INDUSTRIES PLC vs. DEVCOM MERCHANT BANK LTD (2004) 17 NWLR (PT. 901) 182 was relied upon. The Appellant opined that the condition precedent to the institution of the Petition was not complied with and in consequence it was a feature which prevented the lower Court from exercising jurisdiction. The case of MADUKOLU vs. NKEMDILIM (1952) 1 ALL NLR 587 at 589 was cited in support.

The Respondent in its brief submits that Section 409 (a) of the Companies and Allied Matters Act is clear and unambiguous and the words should be given their ordinary meaning in its interpretation. The cases of AWUSE vs. ODILI (2003) 18 NWLR (PT. 851) 115 and OBIUWEUBI vs. CENTRAL BANK

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(2011) 7 NWLR (PT. 1247) 465 were referred to. It was stated that the key issue for consideration was whether the Respondent delivered the statutory demand notice to the Appellant prior to the filing of the Petition. The Respondent posited that a letter of demand under the hand of the Respondent dated 25th November, 2011 was delivered to the Appellant prior to the institution of the winding-up action. It was asserted that the fact that another demand letter was thereafter issued to the Appellant did not vitiate or invalidate the demand letter issued under the hand of the Respondent.

The Respondent, agreeing with the submission that parties are bound by their pleadings, stated that all that is required of the Respondent is to satisfy the Court that it issued the demand letter in accordance with the law and that it was delivered.

The Appellant in its Reply Brief reiterated its contention that the statutory letter of demand on the basis of which the Petition was filed is dated February 13, 2013 and pleaded in paragraph 11 of the Petition. The lower Court, it was stated, was wrong to have held that the letter of demand dated 25th November, 2011 was the statutory letter of demand.

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ISSUE NUMBER TWO
Whether the Petition ought to be heard in view of the fact that the alleged debt is denied and disputed, bona fide.

The Appellant argues that the Winding-up Petition ought not to be heard in view of the fact that the alleged debt on the basis of which the Petition was presented is denied and disputed bona fide. The Appellant stated that the Respondent did not provide any invoices to support the amount claimed. The cases of ORIENTAL AIRLINES LTD vs. AIR VIA LTD (1998) 12 NWLR (PT. 577) 271 at 281 was referred to. The Appellant further submitted that where a debt is in dispute, the alleged creditor has to first prove that a debt is owed and that where this is not done, the creditor does not qualify as a creditor. The cases ofWEIDE & CO. (NIG.) LTD vs. WEIDE & CO. HAMBURG (1992) 6 NWLR (PT. 249) 627 at 640 and TATE IND. PLC vs. DEVCOM MERCHANT BANK LTD (supra) at 218 were relied upon. It was conclusively submitted that where the issue of debt is to be determined, the lower

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Court did not have jurisdiction. The case of WEIDE & CO. (NIG) LTD vs. WEIDE & CO. HAMBURG (supra) at 641-642 was cited in support.

The Respondent argues in the Respondent’s Brief that the Appellant did not file an Answer to the Petition. It was stated that the Appellant could not in the affidavit in support of the preliminary objection challenge the averment of facts in the Petition. That it is by filing an Answer that the averment as to the debt owed can be traversed. The case of EGE SHIPPING AND TRADING INDUSTRY & ORS vs. TIGRIS INTERNATIONAL CORPORATION (1999) 14 NWLR (PT. 637) 70 was relied upon. The Respondent conclusively posited that the Appellant cannot validly dispute the debt without filing an Answer to the Petition.

The Appellant in the Reply Brief urged the Court to discountenance the submission that it did not file an Answer to the Petition for being misleading.

RESOLUTION
The disceptation in this matter falls within very narrow confines Section 409 (a) of the Companies and Allied Matters Act provides as follows:

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?409. A Company shall be deemed to be unable to pay its debts if –
(a) a creditor, by assignment or otherwise, to whom the Company is indebted in a sum exceeding 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.?

The parties are agreed that the above provision is clear and unambiguous and should be given its plain, ordinary and natural interpretation. See AMASIKE vs. REGISTRAR-GENERAL, CORPORATE AFFAIRS COMMISSION (2005) LPELR (5407) 1 at 53-s4 and NIGERIAN SHIPPERS COUNCIL vs. UNITED WORLD LTD INC. (2001) 7 NWLR (PT 713) 576 at 584-585.

It is agreed on all sides that the law requires that the statutory letter of demand shall be under the hand of the creditor. It is further agreed on all sides that parties are bound by their pleadings.

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The only disagreement is as to which of the letters of demand referred to in the Petition is the statutory letter of demand issued pursuant to Section 409 (a) of the Companies and Allied Matters Act. The Appellant maintains that it is the letter of demand referred to in paragraph 11 of the Petition while the position of the Respondent, which the lower Court agreed with, is that it is the letter of demand dated 25th November, 2011 Therefore to next captivate our attention will be the facts averred to in the Petition in order to ascertain what is relied upon as the statutory letter of demand.

The averments in paragraphs 7-12 of the Petition are relevant.
They read:
?7. The Respondent has, despite the Petitioner’s several demands, continuously failed, refused and/or neglected to liquidate its debt incurred with the Petitioner for the services the Petitioner rendered pursuant to the above agreements.
8. The Petitioner issued a demand letter on November 25, 2012 [sic] which was received and acknowledged by the Company on November 26, 2012. [sic]

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The Respondent, despite receiving the demand letter, still failed to liquidate the outstanding debt being the outstanding Annual Capacity Fees. A copy of the Petitioner’s Letter dated November 25, 2012 is attached to the Petitioner?s Verifying Affidavit in Support of the Petition as Exhibit AA3.
9. The Petitioner subsequently notified the Respondent, via a letter dated January 28, 2013, of an audit of the Petitioner’s financial statements for the year ended December 31, 2012 and sought the Respondent’s confirmation of its outstanding debt owed the Petitioner as at December 31, 2012. A copy of the Petitioner’s letter dated January 28, 2013 is attached to the Petitioner’s Verifying Affidavit in Support of the Petition as Exhibit AA4.
10. On February 5, 2013, the Respondent endorsed the Petitioner’s letter dated January 28, 2013 with a confirmation of the amount it is owing to the Petitioner as at December 31, 2012 US$613,863 (Six Hundred and Thirteen Thousand, Eight Hundred and Sixty-Three Dollars).

Statutory Letter of Demand

11. The Petitioner finally forwarded a statutory letter of demand dated February 13,

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2013, through its Solicitors, to the Company demanding payment of the admitted debt in the sum of US$613,863 (Six Hundred and Thirteen Thousand, Eight Hundred and Sixty-Three Dollars) within twenty-one (21) days. The Company has failed, refused and/or neglected to respond to the said letter or to liquidate the outstanding debt. A copy of the Petitioner’s Solicitors Letter dated February 13, 2013 is attached to the Petitioner’s Verifying Affidavit in Support of the Petition as Exhibit AA5.
12. The Respondent has been unable to pay its debt owed to the Petitioner in sum of US$613, 863 (Six Hundred and Thirteen Thousand, Eight Hundred and Sixty-Three Dollars), as at the date of this petition.”
(See pages 3-4 of the Records)

?In the affidavit verifying the Petition, the documents referred to in the Petition are annexed. The letter of 25th November, 2011 which is referred to as Exhibit AA3 is at page 32 of the Records. The confirmation letter of the amount owed which is referred to in paragraphs 9 and 10 of the Petition and annexed as Exhibit AA4 is at pages 33-34 of the Records. The letter of February 13, 2013 referred to as Exhibit AA5 is at pages 35-36 of the Records.

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In the averment in Paragraph 8 of the Petition which relates to the letter of 25th November 2011, the letter Exhibit AA3 is referred to as demand letter simpliciter. Paragraph 11 of the Petition which deals with the letter of February 13, 2013 is sub-titled ?Statutory Letter of Demand”. This sub-title announces that what is to follow is not an ordinary demand letter, but one prescribed by statute. Furthermore, Paragraphs 10 and 12 of the Petition aver that the debt owed in respect of which the Respondent sought the winding up of the Appellant is USS613,863. The letter of 25th November, 2011 is in respect of a debt of US$563,829.58 while the letter of February 13, 2013 is in respect of the debt of US$613, 863. It seems to me effulgent that the demand letter of February 13, 2013 is the letter issued as the precursor to the filing of the Winding-up Petition. I am fortified by this view I hold by the provisions of Section 409 (a) of the Companies and Allied Matters Act which provides for a period of demand of three weeks.

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The letter of 25th November, 2011 gave the Appellant twelve days to pay the debt; while the letter of February 13, 2013 gave the Appellant twenty-one days to pay the debt.

Accordingly, I make bold to hold that from the angle of strict reference to it as the statutory letter of demand in the Petition, the amount demanded as owed and the number of days within which payment of the debt was demanded to be made, the letter of February 13, 2013 was the demand letter purportedly issued pursuant to Section 409 (a) of the Companies and Allied Matters Act. The lower Court was therefore in error when it held that the letter of demand of 25th November, 2011 was the letter issued as the precursor to the institution of the Winding-up Petition, for the failure by the Appellant to pay the debt of US$613,853 claimed by the Respondent.

Having ascertained the actual statutory demand letter, the next poser is whether it conforms to the stipulations of Section 409 (a) of the Companies and Allied Matters Act. The plain and ordinary meaning of the stipulation of the said Section 409 (a) is that the demand letter shall be issued under the hand of the creditor. ?

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The demand letter of February 13, 2013 was not issued under the hand of the Respondent. It was issued by the Respondent’s Solicitors, Banwo & Ighodolo. It is consequently not a valid demand letter within the intendment of Section 409 (a) of the Companies and Allied Matters Act. See TATE INDUSTRIES PLC vs. DEVCOM MERCHANT BANK LTD (supra). It is rudimentary law that a Court is competent to adjudicate when, inter alia, there is no feature in the case which prevents the Court from exercising jurisdiction and the case comes before the Court initiated by due process of law and upon the fulfillment of any condition precedent to the exercise of jurisdiction: MADUKOLU vs. NKEMDILIM (supra). Compliance with the stipulations of Section 409 (a) of the Companies and Allied Matters Act, in specie, is a condition precedent to the filing of a Winding-up Petition. The Respondent not having compiled with the letters of the said Section, the Petition it presented before the lower Court was not initiated by due process of law and it constituted a feature which prevented the lower Court from exercising jurisdiction.

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The lower Court was therefore in error when it assumed jurisdiction.
The fulcrum and premise of the Appellant’s contention that the debt is denied and disputed bona fide is on the basis that it deposed in the affidavit in support of the preliminary objection that it is not indebted to the Respondent for the amount claimed. The Respondent filed its Petition alleging that the Appellant was indebted to it. Issues are joined on the averments in the Petition by the filing of an Answer. The Appellant did not file any Answer and there was no joinder of issues on the averments in the Petition by the deposition in the affidavit in support of the preliminary objection. See EGE SHIPPING AND TRADING INDUSTRY vs. TIGRIS INTERNATIONAL CORPORATION (supra). In the circumstances, there was no joinder of issues which would have created a presumption of a disputed debt. Concomitantly, the depositions in the affidavit in support of the preliminary objection cannot be a basis for a Court to hold that the debt averred as owing in the Petition was denied and disputed, such that the Petition would not be heard until the dispute as to the debt is resolved.

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In a summation, having held that the Petition was not initiated by due process of law, the lower Court was not competent to entertain the Petition as the condition precedent to the exercise of jurisdiction, id est, compliance with Section 409 (a) of the Companies and Allied Matters Act was not fulfilled. The effect of the Court not being competent is that it lacked jurisdiction. Where a Court lacks jurisdiction the proper order to make is to strike out the action. See OKOLO vs. UNION BANK (2004) LPELR (2465) 1 at 15, TINUBU vs. KHALIL & DIBBO TRANSPORT LTD (2000) LPELR (3249) 1 at 10 and A-G LAGOS STATE vs. A-G FEDERATION (2014) LPELR (2270) 1 at 73.

The appeal therefore succeeds. The decision of the lower Court delivered on 9th July, 2015 is hereby set aside. The Petition in SUIT NO. FHC/L/CP/317/2013: MAIN ONE CABLE COMPNAY LIMITED vs. MOBITEL LIMITED is hereby struck out. There shall be no order as to costs.

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TIJJANI ABUBAKAR, J.C.A.: I had the privilege of reading in draft the lucid leading Judgment prepared and rendered by my learned Brother OGAKWU, JCA. I am in complete agreement with the reasoning and conclusion and adopt the entire Judgment as my own. I have nothing extra to add.

ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.: I have had a preview of the judgment just delivered by my learned brother, UGOCHUKWU ANTHONY OGAKWU, JCA and I agree with the reasoning contained therein and the conclusion arrived thereat. My learned brother has adequately dealt with the issues arising in this appeal; as such I have nothing more to add.

In this respect, the appeal succeeds and the decision of the lower Court is hereby set aside. The petition in SUIT NO: FHC/L/CP/317/2013 MAIN ONE CABLE COMPANY LTD v MOBITEL LTD is hereby struck out. I also make no order as to cost.

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Appearances:

Mrs. ijeoma NjemanzeFor Appellant(s)

C. I. Umeche, Esq. with him, S. U. Iwuoha, Esq.For Respondent(s)

 

Appearances

Mrs. ijeoma NjemanzeFor Appellant

 

AND

C. I. Umeche, Esq. with him, S. U. Iwuoha, Esq.For Respondent