MRS. OLAJUMOKE AKINWALE-OGUNTIMEHIN & ORS v. TRADE BANK PLC
(2016)LCN/8450(CA)
In The Court of Appeal of Nigeria
On Wednesday, the 30th day of March, 2016
CA/L/340M/2011
RATIO
WORDS AND PHRASES: MEANING OF FAILED BANKS
It is pertinent to say that Section 23 of the Failed Banks (Recovery of Debts) and Financial Malpractices in Bank Act, Cap F2, Laws of the Federation of Nigeria, 2004 defines “failed banks” thus:
“failed bank” means a bank or other financial institution whose license has been revoked, or which had been declared, closed, placed under receivership or otherwise taken over by the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation or whose capital to risk weighed, assets ratio is below such minimum percentage as ay be prescribed from time or time by the Central Bank of Nigeria or such other appropriate regulation or authority and includes a bank which may otherwise be described as failed by the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation or such other appropriate regulatory authority.” PER ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.
JURISDICTION: EFFECT OF PROCEEDING DONE WITHOUT JURISDICTION
It is an elementary proposition of law that where there is no power to exercise jurisdiction, no legal action results, A fortiori, the question of wavier does not exist neither can it be termed an irregularity. Where the wordings of a statute are mandatory strict compliance is required, so that where as in the instant case, an action fails to meet with the requirements prescribed by law such that the non-compliance renders the action null and void. See: NWOKORO v ONUMA [1990] NWLR (PT 136) 22; SBL CONSORTIUM LTD VS NNPC (2011) 9 NWRL (PT) 317. Failure to continue legal proceedings in the name of the liquidator on behalf of the Respondent – “provisional liquidator of Trade Bank – is fatal to the counter claim having regard to the law vide MADUKOLU v NKEMDILIM [1976] 9 – 10 SC 31 particularly as it relates to proper parties before the Court. See per OGUNBIYI JSC in ONI v CADBURY NIG PLC 2016 LEGALPEDIA SCVZHK DELIVERED ON FRIDAY 22ND JAN 2016 SC/56/2013; OZURUMBA NSIRIM v DR SAMUEL W AMADI 2016 LER SC 1220 DELIVERED JAN 22 2016 SUIT SC 40/2005. PER ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.
BANKING LAW: WHETHER THE REVOCATION OF A BANKING LICENCE BRINGS TO AN END THE JURISTIC LIFE OF A BANK
In the CASE Of OREDOLA OKEYA TRADING CO. & ANOR V. BANK OF CREDIT & COMMERCE INTERNATIONAL & ANOR (2014) LPELR-22011(SC) the Court held:
“Now, winding up of a company involves the liquidation of the company/corporation so that assets are distributed to those entitled to receive them. Campell Black, says, liquidation is quite distinguishable from dissolution which is the end of the legal existence of a corporation. Liquidation may precede or follow dissolution (p.539 of Black’s Law Dictionary 5th ed.) thus, mere revocation of banking license of a bank, without more, as claimed by the applicant cannot bring to an end the juristic life of a bank or corporation.
Likewise where a bank or corporation ceases to operate or closes its business that does not determine the legal existence of such a bank or corporation.”
The implication of this is that a mere revocation of the Respondent’s banking licence without more does not bring to an end the legal existence of the Respondent. PER YARGATA BYENCHIT NIMPAR, J.C.A.
JUSTICES
CHINWE EUGENIA IYIZOBA Justice of The Court of Appeal of Nigeria
YARGATA BYENCHIT NIMPAR Justice of The Court of Appeal of Nigeria
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria
Between
1. MRS OLAJUMOKE AKINWALF-OGUNTIMEHIN
(SIBSTITUTED FOR LATE MR. BENJAMIN ONILARI)
2. OLAONI NIGERIA LIMITED
3. MRS. HANNAH T. ONILARI Appellant(s)
AND
TRADE BANK PLC Respondent(s)
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A. (Delivering the Leading Judgment): This is an appeal against the judgment of the High Court of Lagos Coram Honourable Justice Atilade delivered on the 29th September, 2010 in favour of the Respondent.
The material facts that led to this appeal are that this suit was originally initiated by Mr. Benjamin Onilari who later died on 8th July, 2009. Thus, his daughter, the 1st Appellant in this appeal was substituted for him by an order of Court made on the 14th October, 2009. The original Claimant commenced this action against the Defendant by writ of Summons dated 11th December, 2003 seeking declarative and injunctive reliefs. The Respondent filed a Statement of Defence and a Counter-Claim on the 15th March 2005 joining the 2nd and 3rd Appellants as Defendants to the Counter-Claim. Upon leave of Court granted on the 8th August 2005, the Respondent filed an amended Statement of Defence and Counter-Claim claiming the sum of N87, 253, 331. 11 (Eighty Seven Million, Two Hundred and Fifty Three Thousand, Three Hundred and Thirty One Naira, Eleven Kobo) which the Respondent alleges are principal sum together with interest of
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money owed it by the Appellant on loan facilities granted the 2nd Appellant and guaranteed by the 1st and 3rd Appellants. The agreed interest rate was 19% per annum from December 2004 until judgment and thereafter at 71/2 % per annum until the judgment debt is liquidated. The demand for the repayment of the loan came after the 1st Appellant alleged that the 2nd Appellant’s account with the Respondent has not been properly managed and therefore discharged from the guarantee made. Having failed to proffer satisfactory explanation and understanding on the principal sum and the interest, the Appellant sought to be discharged from the guarantee and requested for the release of his title documents. At the conclusion of trial, the lower Court granted the Counter-Claim of the Respondent and dismissed the Appellant’s claim.
Dissatisfied with the judgment of the lower Court, the Appellant filed a Notice of Appeal dated 23rd December, 2010 with (17) seventeen grounds of appeal.
The Appellant’s brief which was settled by A. J. Owonikoko, SAN, Olushola Keshinro (Mrs.) and Titilola Olatunde (Mrs.) of Synergy Attornies is dated and filed on 3rd June 2013, and the
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Reply Brief is dated and filed on the 13th September, 2013. The Appellant formulated four issues for determination to wit:
1. Whether the Respondent had the locus standi to prosecute the counter-claim involving claims related to banking practices (to wit: receipt of deposits, grants of loans, charging of interests) after its banking license had been withdrawn (Grounds 1, 2 and, 15).
2. Whether the trial Court rightly treated, the 1st Appellant as a customer as of the Respondent instead of as a surety who stood discharged as a result of adverse dealings by the Respondent on the credit facilities granted to the 2nd Appellant (Ground’s 13 and 14).
3. Whether the trial Court correctly absolved the Respondent of any responsibilities to the 2nd Appellant given the peculiar concessions and arrangements involved in the relationship between the two which transcended ordinary banker and, customer relationship (Grounds 3, 6, 7, 8, 10 and 16)
4. Whether there was any credible unchallenged evidence before the trial Court to support the award, of Eighty Seven Million, Two Hundred, and, Fifty Three Thousand, Three Hundred, and Thirty One Naira, Eleven
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Kobo (N87, 253, 331.11) granted, to the Respondent against the 1st Appellant (Grounds 4, 5, 9, 11, 12 and 17).
The Respondent’s Brief dated 4th July, 2013 and filed 5th July, 2013 was settled by Prince Ben C. Onuora Esq. and Martins Besong Esq. of Ben Onuora & Company. The Respondent also distilled four issues fashioned out of the Appellants’ issues as follow:
1. Whether the Respondent was a juristic person capable of suing and being sued.
2. Whether the 1st Appellant was treated as a customer of the Respondent by the trial Court or as a Guarantor of the loan facilities granted to the 2nd Appellant.
3. Whether the trial Court rightly absolved the Respondent of any liability to the 2nd Appellant in respect of the 26 (twenty six) cheques which were returned, to the 2nd Appellant.
4. Whether the Respondent proved its claim of N 87, 253, 331.11 to be entitled to Judgment.
I have carefully perused the briefs submitted by the respective parties’ counsel vis a vis the grounds of appeal evident on the Notice of Appeal. I believe that the issues formulated by the Appellants for the determination of this appeal captures the grouse of
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the Appellants against the decision of the lower Court and are best considered in the resolution of the extant appeal.
ISSUE ONE:
1. Whether the Respondent had the locus standi to prosecute the counter-claim involving claims related to banking practices (to wit: receipt of deposits, grants of loans, charging of interests) after its banking license had been withdrawn (Ground’s 1, 2 and 15).
ARGUMENTS OF COUNSEL
Advancing his arguments, counsel for the Appellant submitted that locus standi of any litigant is a threshold issue which is capable of robbing a court its jurisdiction. Counsel argued that once a Claimant lacks locus standi, the Court before whom the Claimant appears equally lacks jurisdiction. He cited the cases of CBN V. BEICKIT CONSTRUCTION LIMITED (2011) 5 NWLR (PT.1240) 203 AT 222; AMADI V. OKOLI (1977) 7 SC . It is the submission of counsel that a bank’s operation is anchored on the issuance of a banking license so that once the license is revoked, the bank cannot carry on banking operations. He cited Sections 2 , 55(1) and (2) of Banks and Other Financial Institutions Act Cap B3 LFN 2004 . He referred to the case of S.B.N. PLC V.
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N.D.I.C (2004) 11 NWLR (PT. 883) 60 AT 74 PARAS D-E to submit that a bank which has its banking license revoked cannot carry on banking business such as provision of finance and if it cannot provide finance, it cannot charge or claim interest on any sum advanced as finance. Counsel contended that the grant of the Respondent’s Counter-Claim on the loan and its interest was wrong in law since the Respondent is no longer alive by reason of not having a valid banking license. It is the submission of counsel that the proper party to institute action on behalf of failed banks is the Nigerian Deposit Insurance Corporation (NDIC). He cited the case of EJIOGU V. NDIC (2001) 3 NWLR (PT. 699) 1 at 9 paras F-F. Counsel also submitted on the authority of Section 23 of Financial Malpractices in Banks Act Cap F2 LFN 2004 that the Respondent is a failed bank. Counsel further submitted that upon take-over of the Respondent by the NDIC (as admitted in Paragraph 3(a) – (c) of the Counter-Affidavit dated 29th October, 2010 at page 845 of Record of Appeal Vol. 21, the Respondent lacked locus standi to file this action since 2006 and that the lower Court lacked the jurisdiction to
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give judgment its favour in 2010. Learned Counsel contended that the Respondent needed a sanction of Court or of the Committee of Inspection to validly prosecute the Counter-Claim in its name. That it is improper for a company under liquidation to commence an action in its name He referred to Section 425 of the Companies and Allied Matters Act on the above point; NDIC v OBENDE (2001) 5 NWLR (PT.705) 184 PARA D, AND PG. 190 para F; ADMIN/EXEC. ESTATE ABACHA v EKE-SPIFF (2009) 7 NWLR (PT.1139) 97 at 126 – 127.
Learned finally submitted that it is the duty of a Court to determine all issues placed before it; that the trial failed to consider all the issues before especially one of which was whether the Respondent as Defendant/Counter-Claimant at the trial Court had locus to recover any sum from the Appellants. Counsel argued that the failure of the Court to consider all the issues amounted to breach of the 1st Appellant’s right to fair hearing and such renders the judgment liable to be set aside.
Counsel for the Respondent proffering his arguments submitted that a company, once incorporated and registered with the Corporate Affairs Commission (CAC), it
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is vested with corporate personality. That such corporate personality can only be lost when the company is dissolved. Counsel argued that it is incorporation and not issuance of banking license that clothes (gives) a company with legal personality. That revocation of license does not mean the death of the company, death of a company comes only by dissolution. He cited TSOKWE OIL & COMPANY NIG. v UTC (NIG.) PLC (2002) 12 NWLR (PT.782) 437; SALOMON v SALOMON (1897) AC 22; NDIC v OBENDE (2002) FWLR (PT.116) 921, counsel argued that dissolution of a company is deemed to take place after the CAC registers the accounts and returns submitted to it by the liquidator. He referred to CCB (NIG) PLC v. O’SILVAWAT INTERNATIONAL LIMITED (1999) 7 NWLR (PT. 609) 97 AT 103 PARA A; AHMED v. CROWN MERCHANT BANK MC (2006) ALL FWLR (PT.295) 680.
It is the submission of Respondent’s counsel that interest charge does not constitute banking business which requires banking license as argued by the Appellants. That interest is charged where it is incorporated or contemplated in the agreement between parties or mercantile custom or under a principle of equity such as breach of
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fiduciary duty. That in any case, the definition of banking business in Section 66 of Banks and Other Financial Institutions Act Cap B3 LFN 2004 does not include charging interest. In support of the above submission, he cited UNITED BANK FOR AFRICA v M.A LAWAL (2008) ALL FWLR (PT.434) 1548; SOCIETE BANCAIRE (NIG) LIMITED v MARGARIDA SALVADO DE LLUCH (2005) ALL FWLR (PT.242) 419 at 431 PARAS BG; Counsel added that if charging of interest on loan facilities was an exclusive reserve of banks, that the law would have expressly stated. It is also the contention of the Respondent that assuming the Respondent company interest is only charged by a bank with valid license that it follows that the Respondent can charge interest on the loan facilities granted to the Appellants before 16th January 2006. He argued that the Appellants’ submission that the Respondent cannot carry on banking business from 16th January, 2006 will not stand to absolve the Appellants of its indebtedness up to 16th January 2006. He cited the case of UBA v LAWAL (SUPRA) PG. 1562 PARAS D – F.
Respondent counsel further argued that the Appellants’ submission that NDIC (which has taken over the
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Respondent company) ought to continue the suit in its (NDIC’s) name is not tenable in this case since the action was commenced in 2003, the Respondent filed a Counter-Claim in 2004 and a year after the banking license was revoked while the suit was pending in Court.
That the liquidator continued the suit as part of the liquation activities to recover debt owed to the Respondent. Counsel submitted that Section 425 (1) of CAMA vests the liquidator with power to prosecute an action in the name or on behalf of the Company. That it does not preclude NDIC from continuing a pending action for debt recovery in its name. Counsel for Respondent further contended that even if it is true that a sanction must first be obtained from Court or committee of Inspection to continue the action, the purported failure can at best be mere irregularity which has not occasioned miscarriage of justice. That this situation cannot lead to setting aside the judgment of the lower Court. He cited EMMANKEL LARMIE v DPM & S LTD (2000) ALL FWLR (PT. 296) 775 SC; NNAJIFOR v UKONU (1986) 4 NWLR (PT.36) 505′ FAMFA OIL LTD v A.G. FEDERATION (2003) 18 NWLR (PT.852) 453 at 460 RATIO 7.<br< p=””
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On the point that the trial Court failed to address the issue of locus standi of the Respondent, Counsel for the Respondent submitted that Court can only place reliance on evidence based on facts pleaded to make its findings. He argued that evidence on facts not pleaded goes to no issue and that issues not raised at the hearing cannot be joined; so ultimately, no decision can be made them. He cited CHRISTIAN NWARETA V. CHIFI EGBOKA (2006) ALL FWLR (PT.338) 768; EMEKA ODIARI v. FRANCISCA N, ODIARI & ANOR (2009) ALL FWLR (PT.4891 510; KOTUN V. OLASEWERE (2009) ALL FWLR (PT.477) 41 AT 60 PARAS F – H. Counsel submitted that the Appellants did not plead the issue of the Respondent but only raised it in his Final Address at the lower Court. Counsel urged this Court to hold that it has the locus standi to prosecute their Counter-Claim.
RESOLUTION OF ISSUE ONE
The issue at stake here is whether the Respondent has the locus standi to prosecute the counter claim upon which judgment was given in its favour by the lower Court. My lords, the question of locus standi of parties before a Court is of such a vital nature as it essentially encompass the legal
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capacity to institute proceedings.
OPUTA, JSC puts it quite succinctly in A.G. KADUNA STATE v HASSAN [1985] LPELR – 617 (SC) 84, paras B – E thus:
“locus standi literally means a place of standing. It is thus used to denote a right of appearance in a Court of Justice or before a legislative body on a given question. Earl Jowitt ln his Dictionary of English Law, p. 1110 observed:-
‘To say that a person has no locus standi means that he has no right to appear or be heard in such and such a proceeding.
There is perhaps no question more fundamental in the whole process of adjudication than that of access to justice – access to the Courts. He who cannot even reach the Courts talk of Justice from those Courts. It is in this con and, or this fundamental reason that many legal systems are now relaxing the erstwhile severity of their rules regarding locus standi…”
The Apex Court further echoed that the legal concept of Standing or locus standi is predicated on the assumption that no Court is obliged to provide a remedy for a claim in which the applicant has a remote, hypothetical or no interest. In the instant appeal, we are faced with
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a situation where the Respondent herein possesses the legal capacity to competently institute an action but during the pendency of the action, it loses such legal capacity by operation of law. I will say that it is a similar situation where a person sued another but while the action was pending in Court, the person becomes dead. The question then is, whether such an action is sustained albeit the death of the litigant. However, this question shall be considered in the peculiar circumstance of this case as it affect a bank whose banking license was revoked by the Central Bank of Nigeria and a liquidator appointed thereon.
Both parties in this appeal, are ad idem on the fact that Respondent Bank’s license was revoked as per No 41 on list of Closed Financial Institutions under liquidation. At page 818 to 819 of the record, it is stated that the Federal High Court had issued orders for the Respondent to be wound up and appointed
the Nigeria Deposit Insurance Corporation (NDIC) as Liquidator of the Respondent. Respondent’s counsel had argued that the liquidator had continued to prosecute the matter in the name of the Respondent until judgment and further
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that same is nonetheless a mere irregularity.
It is instructive to note that the judgment upon which this appeal is based was delivered on 28th September, 2010 that is, about more than three years after the revocation of banking license and order of winding up by the Federal High Court, still in the name TRADE BANK as a party on record.
Undoubtedly, for an action to be properly sustained before a Court for competent adjudication there must be a competent plaintiff and a competent defendant as it is trite beyond citing of authorities, any natural person that is human beings and juristic or artificial persons to sue or be sued. Consequently, where either of the parties is not or legal person or it is stripped of its legal personality, the action is liable to be struck out as being incompetent.
In EJIOGU v NDIC [2001] 3 NWLR [PT 699] 1 at 9 to 10, paras F G, this Court, per GALADIMA, JCA (as he then was) succinctly emphasized:
“On the first issue whether the respondent has locus standi in the matter, the appellants argument seems to be predicated on the averment that since the Bank has a separated existing legal entity with all the powers of a
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legal personality, the respondent ought to have brought the application in the name of the Bank. This argument does not hold, water. The provision of Section 11(1) of the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks “Decree. No. 18 of 1994” is very clear. This section allows two categories of persons to bring application on behalf of a Bank which has been declared, “Failed” by the Central Bank of Nigeria (which I will hereinafter simply refer to as “C.B.N”). These categories are:
(a)A Receiver/Liquidator of Failed Bank or
(b) Where there is no receiver, any person appointed by the C.B.N. or the Nigerian Deposit Insurance
Corporation (the respondent herein)…
In deciding whether the respondent has Judicial powers to institute an action, the question that needs to be asked is who will be failing in its obligation, its rightful discharge of its duties if the debt owed the bank by the 4th Appellant is not recovered. The principle governing the question of Judicial powers (in other words locus standi) in any given action was established by the Supreme Court in the celebrated case of Adesanya v. The President (1981) 5 SC
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112, (1981) 2 NCLR 358. See A-G, Kaduna State v. Hassan (1985) 2 NWLR (PT 8) 483.
The bank, whose affairs the respondent was to manage, was already a failed bank. It was ineffective. It could, not discharge its obligation to its numerous depositors. It has failed in its duty as a Bank. The respondent, as an Insurer of the depositors has the obligation to ensure that the depositors are duly indemnified…
The respondent has locus standi to institute the action at the lower Tribunal…”
It is pertinent to say that Section 23 of the Failed Banks (Recovery of Debts) and Financial Malpractices in Bank Act, Cap F2, Laws of the Federation of Nigeria, 2004 defines “failed banks” thus:
“failed bank” means a bank or other financial institution whose license has been revoked, or which had been declared, closed, placed under receivership or otherwise taken over by the Central Bank of Nigeria or the Nigerian Deposit Insurance Corporation or whose capital to risk weighed, assets ratio is below such minimum percentage as ay be prescribed from time or time by the Central Bank of Nigeria or such other appropriate regulation or authority and includes a bank
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which may otherwise be described as failed by the Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation or such other appropriate regulatory authority.”
Section 425(1) of CAMA states:
1. The liquidator in a winding up by the Court shall have power, with the sanction either of the Court or of the committee of inspection, to-
(a) Bring or defend any action or other legal proceeding in the name and on behalf of the company;
(b) Carry on the business of the company so far as may be necessary for its beneficial winding up;
(c) Appoint a legal practitioner or any other relevant professionals to assist him in the performance of his duties;
(d) Pay any classes of creditors in full;
(e) make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered, liable;
(f) compromise all calls and liabilities to calls, debts and liabilities capable of resulting in debts, and, all claims, present or future, certain
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or contingent, ascertained or sounding only in damages, subsisting or supposed to subsist between the company and a contributory or alleged, contributory or other debtor or person apprehending liability to the company, and all questions in any way relating to or affecting the assets or the winding up of the company, on such terms as may be agreed, and take any security for the discharge of any such call, debt, liability or claim and give a complete discharge in respect, thereof.
It is thus obvious from the foregoing that as it relates to the counter-claim of the Respondent, upon which judgment was given its favour, the Respondent as presently tagged cannot competently maintain and ipso facto continue the prosecution of the counter-claim. In NDIC v OBENDE [2001] 5 NWLR (PT 705] 184 at 189, paras D – E, this Court, per AKPABIO, JCA noted:
“There is no dispute that the original appellant (The Progressive Bank of Nig. Plc) is now dead by virtue of not only the revocation of its banking licence by the Governor of C.B.N. on 16/1/98, but also by the appointment of a provisional liquidator of the bank by the same authority (CBN) on the same date, What is
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being disputed is whether with the Progressive Bank being now a dead company, the Nigeria Deposit Insurance Corporation, as its provisional liquidator can now be substituted for it as appellant in this case…”
After distinguishing the case of C.C.B. (NIG.) PLC v O’SILVAWAX INTERNATIONAL LTD & ORS (1999) 7 NWLR (PT.609) 97, the learned Justice held at page 190, para F thus:
“In the instant case however, it is sought to substitute the original appellant, now under liquidation with its (provisional liquidator” who was appointed by the CBN at the same time the banking licence was revoked. This is a legitimate thing to do, since the N.D.I.C is a juristic (sic), while the Progress Bank of Nigeria is no longer a person in the eye of the law…”
Therefore, the status of the parties reflected thereon is incompetent, the Respondent not having the locus to neither continue the case nor counter claim. See: FMB v NDIC (1999) 2 NWLR (PT 591) 333; ABEKHE v NDIC [1995] 7 NWLR (PT 406) 222 at 242. In the instant case, it was not shown that the leave of the Court was or that of the commission of inspection was obtained to continue the prosecution of the
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counter-claim in the name of the Respondent by the liquidator pursuant to Section 425(1) of CAMA . This is a mandatory provision that must be complied with and not a mere irregularity as contended by the Respondent’s counsel. See: FAMFA OIL LTD v A-G, FEDERATION [2003] 18 NWLR (PT 852) 453.
It is an elementary proposition of law that where there is no power to exercise jurisdiction, no legal action results, A fortiori, the question of wavier does not exist neither can it be termed an irregularity. Where the wordings of a statute are mandatory strict compliance is required, so that where as in the instant case, an action fails to meet with the requirements prescribed by law such that the non-compliance renders the action null and void. See: NWOKORO v ONUMA [1990] NWLR (PT 136) 22; SBL CONSORTIUM LTD VS NNPC (2011) 9 NWRL (PT) 317. Failure to continue legal proceedings in the name of the liquidator on behalf of the Respondent – “provisional liquidator of Trade Bank – is fatal to the counter claim having regard to the law vide MADUKOLU v NKEMDILIM [1976] 9 – 10 SC 31 particularly as it relates to proper parties before the Court. See per OGUNBIYI JSC in ONI v
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CADBURY NIG PLC 2016 LEGALPEDIA SCVZHK DELIVERED ON FRIDAY 22ND JAN 2016 SC/56/2013; OZURUMBA NSIRIM v DR SAMUEL W AMADI 2016 LER SC 1220 DELIVERED JAN 22 2016 SUIT SC 40/2005.
The trial Court lacked jurisdiction from the time the Respondent was wound up pursuant to the order of the Federal High Court, to this extent, I resolve issue 1 in favour of the Appellant.
Meanwhile, having regards to the resolution of the first issue in this appeal on the question of locus standi in favour of the Appellant, the other issues in this appeal have thus become academic which this Court will not deliberate on as it will have no purposeful and utilitarian value on the substance of the appeal.
On the whole, the appeal succeeds and is allowed. The judgment of ATILADE, J. (now CJ) of Lagos state High Court delivered on 28th September, 2010 is hereby set aside. No order as to costs.
CHINWE EUGENIA IYIZOBA, J.C.A.: I read before now the judgment just delivered by my learned brother, A.O. OBASEKI-ADEJUMO JCA. I agree with his reasoning and conclusions. I had occasion to deal with a similar issue in the case of MR. FRANCIS ATOJU V TRIUMPH BANK PLC AND
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NIGERIA DEPOSIT INSURANCE CORPORATION CA/L/452/09 delivered on 1/11/13 where I observed thus:
“The license of the 1st Respondent was revoked by CBN. Its affairs were taken over by the 2nd Respondent as its receiver. The power of the 1st Respondent to deal with the assets of the company became automatically extinguished. It could only now act through the 2nd Respondent. As rightly submitted by learned counsel for the Respondent, the statutory power of a receiver includes the power to continue with the prosecution or defence of any ongoing action or legal proceeding including arbitration in the name of and on behalf of the company. See Intercontinental Nig. Ltd v. U.A.C. (2004) 28 WRN 41 at P. 79. where Oputa, JSC observed:
“Once a Receiver/Manager is appointed he becomes the alter ego of the Company and the power of the Company to deal with the assets in the ordinary course of business ceases although the Company continues to exist as a Company until it is wound up. When appointed, it is the Company. When a Company is in receivership, it cannot take actions by itself. The Receiver/Manager has to sue for and on behalf of the Company.”
The license
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of the respondent, Trade Bank Plc having been withdrawn, it lacked the locus standi to continue the action in its name. I also allow the appeal and I abide by the orders in the lead judgment including the order as to costs.
YARGATA BYENCHIT NIMPAR, J.C.A.: I have read in draft the judgment delivered by my learned brother, ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, JCA and I agree with the reasoning and conclusions arrived at in the judgment.
In the CASE Of OREDOLA OKEYA TRADING CO. & ANOR V. BANK OF CREDIT & COMMERCE INTERNATIONAL & ANOR (2014) LPELR-22011(SC) the Court held:
“Now, winding up of a company involves the liquidation of the company/corporation so that assets are distributed to those entitled to receive them. Campell Black, says, liquidation is quite distinguishable from dissolution which is the end of the legal existence of a corporation. Liquidation may precede or follow dissolution (p.539 of Black’s Law Dictionary 5th ed.) thus, mere revocation of banking license of a bank, without more, as claimed by the applicant cannot bring to an end the juristic life of a bank or corporation.
Likewise where a bank or
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corporation ceases to operate or closes its business that does not determine the legal existence of such a bank or corporation.”
The implication of this is that a mere revocation of the Respondent’s banking licence without more does not bring to an end the legal existence of the Respondent. The Respondent first of all has its certificate of incorporation and was clothed with corporate personality before it obtained a banking licence based on the nature of its business in the Articles of Association. The fact that the Respondent is under liquidation does not mean it has been dissolved, a company dies once winding up proceedings have been concluded and the Court orders the dissolution of the company.
However, with Section 425 (1) (a) of Companies and Allied Matters Act, the Respondent upon liquidation, failed to obtain the leave of Court or of the committee of inspection to continue the action in its name and consequently ceased to become a competent party before the Court, see PROGRESS BANK (NIG.) PLC V. O.K. CONTACT POINT LTD. (2008) 1 NWLR (PT.1069)514.
In the light of this and the fuller reasoning in the lead Judgment, I also find merit in the
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appeal. I allow the appeal and abide by the consequential orders made in the lead judgment.
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Appearances:
Oworikoko A. J. (SAN) with him, O. Keshinro (Mrs.), T.P. Olatunde Fashogbo (Mrs.)For Appellant(s)
Ben Onuorah with him, I. Diachi (Mrs.)For Respondent(s)
Appearances
Oworikoko A. J. (SAN) with him, O. Keshinro (Mrs.), T.P. Olatunde Fashogbo (Mrs.)For Appellant
AND
Ben Onuorah with him, I. Diachi (Mrs.)For Respondent
