NDIC v. QUALITEM PHARMACY LTD
(2022)LCN/17190(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Friday, April 29, 2022
CA/L/365/2017(1)
Before Our Lordships:
Obietonbara Owupele Daniel-Kalio Justice of the Court of Appeal
Muhammad Ibrahim Sirajo Justice of the Court of Appeal
Peter Oyinkenimiemi Affen Justice of the Court of Appeal
Between
NIGERIA DEPOSIT INSURANCE CORPORATION APPELANT(S)
And
QUALITEM PHARMACY LIMITED RESPONDENT(S)
RATIO
WHETHER OR NOT A COMPANY THAT IS FORMALLY WOUND UP REMAINS A LEGAL ENTITY
The law is now well settled that until a company is formally wound up, it remains a legal entity with capacity to sue or be sued notwithstanding that it is under liquidation. See OREDOLA OKEYA TRADING CO. v BANK OF CREDIT AND COMMERCE INTERNATIONAL, IN RE AMOLEGBE (2014) LPELR-22011(SC), [2014] 8 NWLR (PT. 1408) 76, C. C. B. LTD v O’SILVAWAX INT’L LTD & ORS [1999] 7 NWLR (PT. 607) 97 and NDIC v BALONWU (2017) LPELR 41963(CA). PER AFFEN, J.C.A.
THE POSITION OF LAW ON THE LEGAL STATUS OF NIGERIA DEPOSIT INSURANCE CORPORATION (NDIC)
Now, the legal status of NDIC in relation to a failed or failing bank is that of a statutory liquidator. The Nigeria Deposit Insurance Corporation Act 2006 (“NDIC Act”) provides in S. 40(1) thereof that: “Whenever the licence of an insured institution is revoked by CBN, the corporation shall act as liquidator of such failed insured institution with powers conferred on a liquidator under the Companies and Allied Matters Act and shall be deemed to have been appointed a provisional liquidator by the Federal High Court for purposes of that Act.” What this implies is that NDIC is deemed by operation of law to have been automatically appointed as “provisional liquidator” by the Federal High Court upon the revocation of the licence of an insured institution, such as the defunct Metropolitan Bank Limited. The averments in the amended statement of claim (as contained in the records) reveal that Qualitem’s cause/right of action against the defunct bank stemmed from the pre-existing banker-customer relationship between them, which accrued long before the Bank’s licence was revoked and NDIC assumed the role of a provisional liquidator. Thus, there is no direct cause of action against NDIC whose role in the scheme of liquidation of an insured institution is not at large but falls within well-defined parameters. It is hardly necessary to state that “[a] statutory body or corporation created by or under a statute can only act within the four walls of the statute creating it or other enabling laws. It cannot do anything at all unless authorised expressly or impliedly by the statute or instrument defining its powers. It has no power or authority to act outside the statute. If it so acts, the act will be held to be ultra vires and declared null and void and of no legal effect”: OLANIYAN v UNIVERSITY OF LAGOS [1985] 2 NWLR (PT 9) 599 at 623. Quite unlike a natural human person for whom all acts are permissible unless specifically prohibited, the converse is the case for a statutory body such as NDIC which is an artificial person or entity: all acts are prohibited unless specifically permitted. See MAJOR GENERAL KAYODE ONI & 4 ORS v GOVERNOR OF EKITI STATE & ANOR (2019) LPELR-46413(SC) 1 at 29 –per Augie, JSC. PER AFFEN, J.C.A.
PETER OYINKENIMIEMI AFFEN, J.C.A. (Delivering the Leading Judgment): Introduction
The High Court of Lagos State (coram: Y. O. Idowu, J.) (“the lower Court”) declared the Respondent herein, Qualitem Pharmacy Ltd (“Qualitem” or “Respondent”] “the rightful owner of all that property located and situate at No. 102A Island Way, Dolphin Estate, Ikoyi, Lagos” and restrained the Appellant, Nigeria Deposit Insurance Corporation (“NDIC” or “Appellant”) and/or its agents, privies or anyone claiming through or under it from foreclosing, selling or trespassing on the property in a considered judgment delivered on 16/9/11 in Suit No. LD/507/2004: Qualitem Pharmacy Limited v Nigeria Deposit Insurance Corporation, which lies at Pp. 388 – 410 of the records. Dissatisfied with the judgment, NDIC lodged the present appeal. The Amended Notice of Appeal filed on 4/10/18 relates back to the original notice of appeal filed on 9/12/16 with the leave of this Court. Briefs of arguments were filed and duly exchanged. The Appellant’s Brief filed on 18/9/18 was deemed properly filed on 20/9/18; the Respondent’s Brief was filed on 9/10/18, and the Appellant’s Reply Brief was filed on 29/10/18. This appeal was heard on 7/2/22.
Factual background
The facts undergirding this appeal are straightforward and by no means complex or convoluted. Sometime in 2001, the defunct Metropolitan Bank Limited (“the Bank”) granted Qualitem a loan facility of N7.5m to finance the acquisition of a developed property situate at No. 102A Island Way, Dolphin Estate, Ikoyi, Lagos. The understanding was that the bank would have a lien on the title deeds until the principal sum and accrued interest thereon were liquidated. Qualitem alleged that it had fully repaid the loan but the Bank held on to the title deeds and sought to foreclose on the property. It was further alleged that the Bank opened a letter of credit in the sum N22,174,730.84 on 19/7/02 at the instance of Qualitem in favour of a named beneficiary in France at the exchange rate of N117 per US $1 (as agreed) prior to the introduction of the Dutch Auction System Central Bank of Nigeria (CBN) on 22/7/02 and the attendant surge in exchange rate from N117/1$ to N137 per US $1, but the Bank mulcted Qualitem with “a quantum of unwarranted interest” in excess of N10m even though the Dutch Auction System was not retroactive and could not nullify a concluded transaction. Qualitem consequently initiated the suit that generated this appeal by a writ of summons issued out of the Registry of the lower Court on 4/3/04 claiming declaratory, monetary and injunctive reliefs against the bank (as endorsed in the amended statement of claim dated 8/12/04 copied at Pp. 83 – 86 of the records) as follows:
1. A declaration that the Claimant is the rightful owner and is entitled to all the property located and situated at No. 102A Island way Dolphin Estate, Ikoyi, Lagos.
2. A declaration that the Dutch auction system introduced by Central Bank of Nigeria on the 22nd of July, 2002 is not retroactive.
3. An order declaring null and void all sum, interest accrued to the account of the Claimant as a result of illegal, unjust and excessive charges by the Defendant.
4. An order mandating the Defendant to repay the Claimant the sum of N10,016,985.53 (Ten Million, Sixteen Thousand Nine Hundred and Eighty-Five Naira Fifty-Three Kobo) illegally deducted from the Claimant’s account.
5. An order mandating the Defendant to pay to the Claimant penalty on the excess charges at the CBN MRR up to the dare of judgment.
6. An order of perpetual injunction restraining the Defendant, its agents, privies or anyone claiming through or under it from foreclosing, selling or trespassing on the property situated at 102A Island Way, Dolphin Estate Ikoyi, Lagos.
7. Damages for breach of trust.
The parties joined issues on the merits. The Bank conceded that the Dutch Auction System did not have retroactive effect, but denied that there was mutual agreement on all terms and conditions, particularly in relation to the exchange rate, and insisted that the transaction was not effected on 19/7/02 as alleged but on 22/7/02. The Bank equally denied that the loan was fully repaid as alleged or at all, and subjoined a counter-claim against Qualitem. During the pendency of the action, the Bank’s licence was revoked by the Central Bank of Nigeria along with 13 other banks for inability to “re-capitalize to the minimum capital requirement of N25 Billion (Twenty Five Billion Naira) and had become insolvent with negative shareholders’ fund and have not been acquired by other banks adjudged healthy thereby failing to comply with the obligations imposed on by the Banks and Other Financial Institutions Act of 1991 and the Central Bank of Nigeria Act 1991, as amended”. The revocation was published in Official Gazette No. 3 Vol. 93 of 16/1/06, whereupon Qualitem applied ex parte to substitute the Bank with NDIC, which application was granted by the lower Court on 24/4/07 (see p. 391 of the records). NDIC did not challenge the order of substitution or otherwise seek to set it aside. Rather, it proceeded to file a further amended statement of defence and counter-claim dated 6/10/10 (which lies at pp. 356 – 359 of the Records) wherein it counter-claimed against Qualitem as follows:
(a) The sum of N24,531,343.94 being the outstanding balance of the facilities granted to the Claimant as at September 30, 2005
(b) Interest on the sum at the rate of 21% per annum from the 1st day of October, 2005 till judgment and thereafter at the same rate till the debt is fully liquidated.
(c) Cost of the action.
(d) An order authorizing the Defendant/Counter-claimant to proceed against and sell the property at No. 102A Island Way, Dolphin Estate, Ikoyi, Lagos.
At the close of plenary trial (whereat two witnesses testified on behalf of Qualitem and NDIC fielded a sole witness), the lower Court delivered final judgment on 16/9/11 as aforesaid, granting the main claim in part and dismissing the counter-claim whole and entire. At p. 410 of the records, the learned trial judge summed up thus:
“I hereby declare that the Claimant is the rightful owner and is entitled to all that property located and situate at 102A Island Way, Dolphin Estate, Ikoyi, Lagos. I hereby make an order of perpetual injunction restraining the defendant its agent, privies or anyone claiming through or under it from foreclosing, selling or trespassing on the property situated at 102A Island Way, Dolphin Estate, lkoyi, Lagos.
All other prayers fail and are hereby refused.
The Defendant’s counter-claim for lack of substantive and credible proof hereby fails.”
Issues for determination
From the five issues raised in the Amended Notice of Appeal, the Appellant distilled two issues for determination (which were adopted by the Respondent without modification) as follows:
1. Whether having regards (sic) to the circumstances of this case, it is safe to conclude that proper parties were before the Court below such as to clothe it with the garb of jurisdiction to warrant a hearing and determination of the case as it was presently constituted?
2. Whether from the totality of the pleadings and evidence led, there is a cause of action against the Appellant such that it would be personally liable?
Appellant’s submission
The Appellant cited a litany of cases, including STATE v ONAGORUWA (1992) 23 NSCC (PT 1) 161 at 177, UMANAH v OBONG VICTOR ATTAH [2006] 17 NWLR (PT. 1009) 503 at 525, NWOSU v IMO STATE ENVIRONMENTAL SANITATION AUTHORITY [2004] 20 WRN 95 at 142 – 143, SOCIETE BICS A. COMPAGNIEMOULAGES & ANOR v CHARZIN IND. LTD (2003-2007) 5 I.P.L.R 203 at 226, NASIR v KANO STATE CIVIL SERVICE COMMISSION [2010] 6 NWLR (PT 1190) 253 at 276 on the absolute priority and decisive effect of jurisdiction in judicial proceedings and noted that presence of necessary parties and existence of cause of action play a major role in the scheme of assumption of jurisdiction by a Court of law, citing MIL. ADMIN., AKWA IBOM STATE v OBONG [2001] 1 NWLR (PT 694) 214 (CA) in support of the proposition that a plaintiff cannot sue a defendant against whom he has no cause of action, and that a Court is without jurisdiction to entertain a claim which discloses no reasonable cause of action vide ADETONA v EDET [2001] 3 NWLR (PT 699) 186 and ALALADE v MOROHUNDIYA [2002] 16 NWLR (PT 792) 81 (CA). The Appellant called in aid the cases of GREEN v GREEN [1987] 3 NWLR (PT 61) 480, CHIEF OF ARMY STAFF v LAWAL [2012] 10 NWLR (PT 1307) 62 (CA) and LAGOS STATE BULK PURCHASE CORPORATION v PURIFICATION TECHNIQUE (NIG) LTD [2013] 7 NWLR (PT 1352) 82 at 109 (on the categorization of parties and its dynamics in a civil suit) and submitted that NDIC had no involvement whatsoever in the events leading to the cause of action and cannot be a necessary or proper party before the lower Court, insisting that the banking licence of the closed bank had neither been revoked nor had NDIC become the liquidator when the cause of action accrued, that the Appellant’s role as liquidator is akin to that of a trustee or umpire between debtors and creditors of the closed bank, which depicts a non-partisan role with no personal interest of its own to serve or protect and that interest resided in the closed bank at all material times and it must be the party in the suit, not otherwise.
Placing reliance on S. 425(1) (a) and (b) of the Companies and Allied Matters Act, 1990 (CAMA) (which was in force at all material times) and the cases of CO-OPERATIVE & COMMERCE BANK (NIG) PLC v O’SILVAWAX INTERNATIONAL LTD [1999] 7 NWLR (PT. 609) 97 and RE AMOLEGBE [2014] 8 NWLR (PT. 1408) 76, the Appellant further contended that revocation of banking license does not render a failed bank legally dead or non-existent, insisting that the bank remains a legal entity with power and capacity to sue and be sued; that as liquidator of a closed bank, NDIC may be sued as a nominal party, but in doing so, the mandatory requirement of S. 422 (7) CAMA is that the capacity in which NDIC is sued must be indicated on the face of the pleadings, which was not done in the instant case, citing AKPAN v GOVERNMENT OF AKWA IBOM STATE [2010] 2 NWLR (PT 1178) 338 on the Court’s duty to pronounce on the capacity in which a party sues or is sued before dealing with whether it has jurisdiction to entertain or hear a matter.
On issue no. 2, the Appellant referred to the definition of cause of action in Black’s Law Dictionary (9th ed.) and submitted that a right of action arises only when a cause of action exists, citing HUMBE v ATTORNEY GENERAL BENUE STATE [2000] 3 NWLR (PT 649) 419, DANTATA v MOHAMMED [2000] 7 NWLR (PT 664) SC 176 at 181 – 182; that where NDIC is joined as a party in a matter involving a closed bank in liquidation, which arose out of banker-customer relationship as in the instant case, it is imperative for the Court to determine whether the claimant has established a cause of action against NDIC as distinct from the closed bank, insisting that a liquidator is separate and distinct from the legal entity being liquidated and their respective assets and liabilities are not to be co-mingled; that under and by virtue S. 55 (1) of the NDIC Act of 2006, no direct cause of action is available against NDIC except where there is a clear allegation of negligence, fraud or other wrongdoing committed in the exercise of power conferred on it, and that the fact of being appointed as liquidator without more does not generate any cause of action against NDIC merely because the Respondent has a valid cause of action against the bank being liquidated. The Court was urged to allow the appeal and set aside the judgment of the lower Court.
Respondent’s submission
The Respondent, on its part, contended that the order dated 24/4/07 by which the lower Court substituted NDIC for the defunct Bank was not appealed against or otherwise set aside, and NDIC participated fully in the proceedings, citing AKERE v GOVERNOR OF OYO STATE [2012] 12 NWLR (PT. 1314) 340 at 269, 282 – 283 and ANYANWU v OGUNEWE [2014] 8 NWLR (PT. 1410) 437 at 470 on the proposition that a decision on any point of law or fact not appealed against is deemed to have been conceded by the party against whom it was decided and remains valid and binding on all the parties; that this case is about the rights of the parties over mortgaged property situate at Plot 102A Island Way Dolphin Estate Ikoyi, Lagos which may be sold upon the mortgagor’s default to repay the facility, thus the Appellant is a proper and necessary party insofar as winding up proceedings at the Federal High Court had been carried out, calling in aid NDIC v UBN PLC [2015] 12 NWLR (PT. 1473) 246 at 293 – 294, that non-inclusion of the phrase “Liquidator of Metropolitan Bank Limited” in the designation of the Appellant as enjoined by S. 422(7) CAMA is a mere procedural irregularity that should not affect the competence or jurisdiction of the lower Court to entertain the matter before it as no injustice has been occasioned thereby; that the Appellant acquiesced in the irregularity and misled the Respondent by not only referring to Metropolitan Bank Limited as “defunct” in its letter dated 26/11/08 (at p. 334 of the records) but also participated fully at the hearing only to wake up 7 years after final judgment was entered to peddle technicalities knowing full well that the Bank is now effectively defunct (having been dissolved on the petition of the Appellant) and can no longer sue or be sued in its own name. The case of NDAYAKO v DANTORO [2004] 13 NWLR (PT. 889) 187 at 219 –per Edozie JSC was cited in support of the proposition that a defendant who actively participated in an action commenced by an irregular procedure cannot later be heard to complain and take advantage of the irregularity.
The Respondent insisted that by Order 13 Rule 16(1) of the High Court of Lagos State Civil Procedure Rules 2004, no proceedings shall be defeated by reason of misjoinder or non-joinder of parties and the Court may deal with the matter in controversy so far as regards the rights and interest of the parties actually before it, citing F.G.P. LTD v DURU [2017] 14 NWLR (PT. 1586) 483 at 517 – 518, CROSS RIVER STATE NEWSPAPER CORPORATION v ONI [1995] 1 NWLR (PT. 371) 270 at 291 – 292 and F.U.T., YOLA v A.S.U.U. [2013] 1 NWLR (PT. 1335) 249 at 283. The Respondent maintained that the Appellant has not complained of any injustice or miscarriage of justice suffered by reason of failure to indicate that it was being sued as the Liquidator of Metropolitan Bank Limited to justify setting aside the judgment of the trial Court.
On issue no. 2, the Respondent insisted that paragraphs 4, 5, 6, 7, 20 and 21 of the amended statement of claim dated 8/12/04 and the reliefs sought amply show a reasonable cause of action against the defunct Metropolitan Bank Limited in respect of the property situate at No. 102A Island Way, Dolphin Estate, Ikoyi, Lagos. The cases of EGBE v ADEFARASIN (NO. 2) [1987] 1 NWLR (PT. 47) 1 and BELLO v A-G, OYO STATE [1986] 5 NWLR (PT. 45) 828 relied upon. Qualitem pointed out that it is not in contention that NDIC was the liquidator of the defunct Metropolitan Bank Limited whose assets – including 102A Island Way, Dolphin Estate, Ikoyi, Lagos – are likely to be vested in the Appellant, by virtue of S. 424 CAMA and that S. 425(1)(a) CAMA and the decision of this Court in NDIC v UBN PLC supra clearly indicate that NDIC can bring or defend actions relating to property of a bank that has been wound up as in the instant case. The Court was urged to hold that a combined reading of the amended statement of claim, Ss. 40 and 41 of NDIC Act 2006, and Ss. 424 and 425 CAMA point compellingly to a cause of action against the NDIC.
Appellant’s reply
Replicando, the Appellant (NDIC) submitted that the issue of proper parties to an action is a jurisdictional issue that can be raised on appeal even for the first time at the Supreme Court, and not appealing the order of substitution is of no moment, that the instant appeal is not hinged on misjoinder or non-joinder of parties, but on the Appellant being wrongly subrogated as replacement for a distinct legal entity, which is wrong in law and adversely affects the jurisdiction of the lower Court, insisting that existence of proper parties (whether original or substituted) is a condition precedent to the competence of a Court, placing reliance on GOODWILL TRUST INVESTMENT LTD v WITT & BUSH LTD [2011] All FWLR (PT 576) 517 at 542 – 543 and OBIUWEUBI v CBN [2011] 7 NWLR (PT 1247) at page 465. The Appellant maintained that it is not a proper party and the Court below lacked jurisdiction to entertain the suit as constituted, which is a fatal defect; and not appealing the order of substitution does not translate to waiver of jurisdiction, citing OYENIRAN & ORS v EGBETOLA & ANOR (1997) LPELR- 2876(SC) at 33-34, and NICOTES SERVICES LTD v OJI LEKWUWA (2011) All FWLR (PT 554) 163 at 176. The Appellant argued that NDIC v UBN PLC supra supports its case rather than that of the Respondent as the panel of learned Justices of this Court in that case were on the same page in holding that NDIC is a separate and distinct entity from Fortune International Bank Plc (In Liquidation). The Appellant reiterated that save for actions founded on negligence or fraud, S. 55 (1) of the NDIC Act 2006 protects it against suits in its own name for direct causes of action against banks in liquidation.
Resolution of appeal
The facts undergirding this appeal as well as the two issues nominated by the Appellant and adopted by the Respondent are set out hereinbefore. Issue no. 1 interrogates ‘whether proper parties were before the lower Court so as to clothe it with jurisdiction to warrant a hearing and determination of the case as constituted’, whilst issue no. 2 has to do with ‘whether any cause of action is disclosed against the Appellant (as liquidator)’. As these two issues are intertwined and implicate the jurisdiction of the lower Court, I propose to consider them together.
The lower Court granted an order substituting NDIC for the defunct Metropolitan Bank Limited on 24/4/07 upon the ex parte application of Qualitem, but there is no indication on the face of the proceedings that NDIC was substituted for the defunct bank in its capacity as liquidator. NDIC did not appeal the order of substitution or otherwise seek to have set it aside. Quite the contrary, NDIC participated actively in the proceedings. Not only did it defend the main claim, it also prosecuted a counter-claim against Qualitem, albeit unsuccessfully. Citing the dictum of Edozie JSC in NDAYAKO v DANTORO supra, it is contended on behalf of Qualitem that having actively participated in the proceedings before the lower Court, NDIC cannot now be heard to complain that the action was commenced by an irregular procedure and take advantage of the irregularity. Without doubt, this is a formidable argument. But the relevant enquiry in this appeal is whether the proceedings before the lower Court was plagued by a mere irregularity or something much more fundamental that goes to the roots of the competence of the action and ex ipso facto the jurisdiction of the lower to take cognisance of the matter upon the revocation of the bank’s licence.
Now, the legal status of NDIC in relation to a failed or failing bank is that of a statutory liquidator. The Nigeria Deposit Insurance Corporation Act 2006 (“NDIC Act”) provides in S. 40(1) thereof that: “Whenever the licence of an insured institution is revoked by CBN, the corporation shall act as liquidator of such failed insured institution with powers conferred on a liquidator under the Companies and Allied Matters Act and shall be deemed to have been appointed a provisional liquidator by the Federal High Court for purposes of that Act.” What this implies is that NDIC is deemed by operation of law to have been automatically appointed as “provisional liquidator” by the Federal High Court upon the revocation of the licence of an insured institution, such as the defunct Metropolitan Bank Limited. The averments in the amended statement of claim (as contained in the records) reveal that Qualitem’s cause/right of action against the defunct bank stemmed from the pre-existing banker-customer relationship between them, which accrued long before the Bank’s licence was revoked and NDIC assumed the role of a provisional liquidator. Thus, there is no direct cause of action against NDIC whose role in the scheme of liquidation of an insured institution is not at large but falls within well-defined parameters. It is hardly necessary to state that “[a] statutory body or corporation created by or under a statute can only act within the four walls of the statute creating it or other enabling laws. It cannot do anything at all unless authorised expressly or impliedly by the statute or instrument defining its powers. It has no power or authority to act outside the statute. If it so acts, the act will be held to be ultra vires and declared null and void and of no legal effect”: OLANIYAN v UNIVERSITY OF LAGOS [1985] 2 NWLR (PT 9) 599 at 623. Quite unlike a natural human person for whom all acts are permissible unless specifically prohibited, the converse is the case for a statutory body such as NDIC which is an artificial person or entity: all acts are prohibited unless specifically permitted. See MAJOR GENERAL KAYODE ONI & 4 ORS v GOVERNOR OF EKITI STATE & ANOR (2019) LPELR-46413(SC) 1 at 29 –per Augie, JSC.
The function of NDIC when adorning the garb of liquidator is three-fold: (i) realize the assets of the failed insured institution; (ii) enforce the individual liability of the shareholders and directors thereof; and (iii) wind up the affairs of such failed institution as herein otherwise provided [see S. 41(2) of the NDIC Act 2006], which is consistent with the broad duties and powers of a liquidator under insolvency law and practice as outlined in Palmers Company Law, 23rd ed (Vol. 1), save that only insured institutions whose licences are revoked by the CBN fall within remit of NDIC as liquidator. The point to underscore is that the actions or steps that can validly be taken by or against NDIC in relation to an insured institution in liquidation are heavily regulated by law, and an impressive array of statutory provisions exert a controlling, if not overbearing, influence in especially legal proceedings.
In this regard, S. 41 of the Banks and Other Financial Institutions Act, Cap B3, Laws of the Federation 2004, (“BOFIA”) provides peremptorily that: “41(1) Notwithstanding anything to the contrary contained in any law or enactment, no suit shall be instituted against a bank whose control has been assumed by the Corporation. (2) If any such proceeding is instituted in any Court or Tribunal against the bank, it shall abate, cease or be discontinued without further assurance other than this Act”. Similarly, S. 417 CAMA provides that: “If a winding-up order is made or a provisional liquidator is appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of Court given or imposed on such terms as the Court may impose”; whilst S. 425(1)(a) CAMA is to the effect that: “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 bring or defend any action or other legal proceeding in the name and on behalf of the company”. There is also S. 424 CAMA which provides that: “Where a company is being wound up by the Court, the Court may on the application of the liquidator by order direct that all or any part of the property of whatsoever description belonging to the company or held by trustees on its behalf shall vest in the liquidator by his official name, and thereupon, but subject to the requirements or registration under any particular enactment, the property to which the order relates shall vest accordingly; and the liquidator may, after giving such indemnity if any, as the Court may direct, bring or defend in his official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding-up the company and recovering its property”.
The above statutory provisions are mandatory and their far-reaching, if not devastating, effect on the competence of the suit that generated the instant appeal and/or the jurisdiction of the lower Court in respect thereof is palpable. By S. 41 BOFIA, the suit initiated by Qualitem against the defunct Metropolitan Bank Limited ‘abated, ceased or was discontinued without further assurance’ the very moment the Bank’s licence was revoked on 16/1/06 and NDIC deemed to have been appointed by the Federal High Court as provisional liquidator under and by virtue of S. 40 of the NDIC Act 2006. And even if it is assumed arguendo that the suit did not abate, cease or discontinue, the lower Court was still not at liberty to substitute NDIC for the defunct Bank in the manner it did. This is so because under and by virtue of S. 425 CAMA, the consent of the Federal High Court or Committee of Inspection was required to enable NDIC bring or defend any action or other legal proceedings in the name and on behalf of the Bank in liquidation, but not in its own name (as happened in the instant case). The law is now well settled that until a company is formally wound up, it remains a legal entity with capacity to sue or be sued notwithstanding that it is under liquidation. See OREDOLA OKEYA TRADING CO. v BANK OF CREDIT AND COMMERCE INTERNATIONAL, IN RE AMOLEGBE (2014) LPELR-22011(SC), [2014] 8 NWLR (PT. 1408) 76, C. C. B. LTD v O’SILVAWAX INT’L LTD & ORS [1999] 7 NWLR (PT. 607) 97 and NDIC v BALONWU (2017) LPELR 41963(CA).
In the instant case, NDIC was simply substituted as a successor or privy to the bank, which it is not. Aside from the fact that there is nothing to show that the sanction of either the Federal High Court or the Committee of Inspection was sought and obtained before the order of substitution was made, there is no indication on the face of the proceedings that NDIC was substituted for the defunct bank in its capacity as liquidator. The point has already been made that under and by virtue of S. 425(1) CAMA, a liquidator can only “bring or defend any action or other legal proceeding in the name and on behalf of the company”. The Respondent has invited this Court to treat the failure to indicate the capacity in which NDIC was substituted as a mere irregularity but S. 425(1) CAMA constrain me to decline the invitation. Thus, even if NDIC (as liquidator) could validly defend the action as constituted (and I have already held to the contrary), that could only have been done, not in its own name, but in the name of the defunct bank which, notwithstanding the revocation of its banking licence, was not dead in the eyes of the law.
The Supreme grappled with an analogous scenario in OREDOLA OKEYA TRADING CO v BANK OF CREDIT AND COMMERCE INTERNATIONAL, IN RE AMOLEGBE supra. His Lordship, I. T. Muhammad JSC (now CJN) held thus at pp. 96 -97:
“… Another thorny issue in the Application is the attempt by the Applicant to enrope the NDIC to subrogate the BCCI … Section 40 of the NDIC Act makes provision for the powers of NDIC to act as liquidator to failed insured institutions … Section 425 of the CAMA provides inter alia for the following – Section 425 (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.” By looking soberly at the provision of Section 425(1) (a)set out above, one may ask: whether the NDIC as provisional liquidator of the 1st Respondent can bring or defend any action or other legal proceeding in the name and on behalf of the 1st Respondent. It is clear from the same provision that a liquidator in a winding up by the Court (which the NDIC is by law deemed to have been so appointed) can bring or defend any action or other legal proceedings in the name and on behalf of the Respondent (to subrogate AIB) subject only to the condition i.e. sanction of the Court or committee of inspection to conduct such legal proceedings. In other words, where no sanction of either of the Court or of the committee of inspection is sought and obtained by the liquidator, no legal action or proceedings can be brought or defended by the liquidator. The Applicant herein did not produce any evidence to show that the provisional liquidator has obtained such sanction of the Court or of the committee of inspection to bring or defend any action or other legal proceedings in the name and on behalf of the 1st Respondent. There is therefore no way the Applicant can enrope NDIC as provisional liquidator to conduct any legal proceedings whether for or against the 1st Respondent.”
Not dissimilarly, it was held in NDIC v UNION BANK OF NIGERIA PLC & ANOR (2015) LPELR-24316(CA), [2015] All FWLR (PT 783) 1790 at 1831 that NDIC as provisional liquidator of a bank whose licence is revoked is answerable to the Federal High Court and cannot step into its shoes without authorisation: NDIC does not derive its power to institute or defend proceedings in the name or on behalf of a failed or failing bank from the bank directly but only through the Court and to cloak it with the mantle of a privy (whose actions/activities would be deemed to be that of the bank) would be to inordinately stretch the relevant statutory provisions beyond elastic limit. See also NDIC v MOHAMMED (2018) LPELR-44744 (CA) where this Court (per Adefope-Okojie, JCA) held that the trial Court had no jurisdiction to substitute the name of NDIC for a bank in liquidation without any evidence that leave was sought and obtained from the Federal High Court [or Committee of Inspection] to defend the matter as enjoined by S. 425 CAMA, and that the suit ought not to have been maintained in the name of NDIC as defendant to the action, but in the name of the closed bank.
I have already set out the functions of NDIC as liquidator as provided in S. 41(2) of the NDIC Act. There is no gainsaying that NDIC was not validly substituted for the defunct Metropolitan Bank Limited at the instance of the Respondent in the case at hand. The jurisdiction of the lower Court so to do was gravely impaired when it continued with the proceedings and substituted NDIC for the defunct Bank in respect of a dispute arising from banker-customer relationship as though NDIC were the privy or successor of the bank, which it is not. Upon the order of substitution, the necessary or proper party was no longer before the lower Court, even as no veritable cause of action was disclosed against NDIC which is not an extension of the defunct bank. The lower Court had no jurisdiction to substitute NDIC in place of the defunct Bank, and the fact that NDIC participated in the proceedings makes no difference whatsoever. It is a notorious proposition for which citation of authorities is unnecessary that jurisdiction cannot be donated by consent or compromise or acquiescence where it is lacking as in the instant case. Contrary to the Respondent’s submission, this is not an instance of misjoinder or non-joinder of parties, but one in which the Appellant was wrongly subrogated for a distinct legal entity. As held in OREDOLA OKEYA TRADING CO v BANK OF CREDIT AND COMMERCE INTERNATIONAL, IN RE AMOLEGBE supra, NDIC cannot be ‘enroped’ as provisional liquidator to conduct any legal proceedings. This being so, a fundamental vice that impaired the jurisdiction of the lower Court to proceed with the matter and enter final judgment as it did reared its ugly head in the proceedings [see MADUKOLU v NKEMDILIM (1962) 2 SCNLR 341], and I entertain no reluctance whatsoever in resolving the two issues for determination in favour of the Appellant against the Respondent.
This appeal ought to be allowed. I allow it. The proceedings before the lower Court in their entirety, inclusive of the judgment delivered on 16/9/11, constitute a nullity liable to be set aside. I so order. Suit No. LD/507/2004 is struck out for being incompetent. There shall be no order as to costs.
OBIETONBARA OWUPELE DANIEL-KALIO, J.C.A.: I have read the judgment of my learned, BROTHER PETER OYINKENIMIEMI AFFEN, JCA and I agree with his reasoning and conclusion. The importance of jurisdiction of a Court to entertain any matter before it, cannot be over-emphasized, for as Kayode Eso, JSC once stated, without jurisdiction, the “laborers” that is, the litigants, counsel in the matter and the Court itself, labor in vain.
I too find merit in the appeal and allow it.
MUHAMMAD IBRAHIM SIRAJO, J.C.A.: I agree with the lead judgment prepared by my learned brother, PETER OYINKENIMIEMI AFFEN, JCA, with nothing useful to add. I also allow the appeal and set aside the proceedings and judgment of the lower Court in Suit No. LD/507/2004 for being a nullity. I abide by the order striking out the suit for incompetence as well as the order as to costs.
Appearances:
S. A. Mustapha, Esq. For Appellant(s)
C. Nwude, Esq. For Respondent(s)
