NIGERIA DEPOSIT INSURANCE CORPORATION v. ALHAJI NASIDI MOHAMMED & ORS
(2018)LCN/11417(CA)
In The Court of Appeal of Nigeria
On Monday, the 14th day of May, 2018
CA/K/303/2014
RATIO
THE ESSENCE OF JURISDICTION
The issue of jurisdiction has been held to be the lifeblood of any adjudication. It is so fundamental that it must be resolved before any other step is taken in the proceedings. It goes to the competence of the Court or Tribunal to entertain a cause or matter. If a Court has no jurisdiction to hear and determine a case, the proceedings remain a nullity ab initio no matter how well conducted and decided and is liable to be set aside. A defect in competence is not only intrinsic but extrinsic to the entire process of adjudication. per OLUDOTUN ADEBOLA ADEFOPE-OKOJIE, J.C.A.
JUSTICES
IBRAHIM SHATA BDLIYA Justice of The Court of Appeal of Nigeria
OLUDOTUN ADEBOLA ADEFOPE-OKOJIE Justice of The Court of Appeal of Nigeria
AMINA AUDI WAMBAI Justice of The Court of Appeal of Nigeria
Between
NIGERIA DEPOSIT INSURANCE CORPORATION
(Sued as Provisional Liquidator of Birnin Kudu Micro Finance Bank) Appellant(s)
AND
- ALHAJI NASIDI MOHAMMED
2. M. B. UMAR
3. ECOBANK PLC Respondent(s)
OLUDOTUN ADEBOLA ADEFOPE-OKOJIE, J.C.A. (Delivering the Leading Judgment)
This is an appeal against the judgment of the High Court of Kano State delivered by Hon. Justice Dije Aboki on 24/6/13. By Writ of Summons dated 9/10/10, the 1st Respondent, as Plaintiff before the lower Court, claimed jointly and severally against the Birnin Kudu Micro Finance Bank as 2nd Defendant and the 2nd and 3rd Respondents as 1st and 3rd Defendants respectively, the following reliefs:
1. The sum of N49, 079,000 (Forty Nine Million and Seventy Nine Thousand Naira) only representing the total sum still outstanding against the 1st defendant and which sum was guaranteed by the 2nd defendant.
2. 25% interest rate per annum beginning from 14th April, 2010 until judgment is delivered and 10% per Court rate interest until the entire debt is fully and finally liquidated.
3. The sum of N50, 000,000.00 (Fifty Million Naira) from the 3rd defendant being the damages suffered by the plaintiff as a result of the misrepresentation of facts by the third defendant.
4. N3, 000,000.00 legal fees which the plaintiff paid to his solicitors for this matter.
5. Cost of this action.
The 3rd Respondent at the period in question was then known as Oceanic Bank Plc.
During the pendency of proceedings, the banking licence of Birnin Kudu Micro Finance Bank (hereafter referred to as the Bank) was revoked vide Federal Government Official Gazette dated 24/9/10. The Appellant, the Nigeria Deposit Insurance Corporation was appointed the Provisional Liquidator of the Bank. By order of the lower Court granted on 7/4/11, on the application of the 1st Respondents Counsel, the Appellant was substituted as 2nd Defendant in place of the Bank and the processes amended accordingly. By another motion dated 13/5/13 and filed on 15/5/13, the 1st Respondent sought and was granted leave to substitute Oceanic Bank Plc for Eco Bank Plc as 3rd Respondent, by reason of the buy over of the former by the latter.
A Preliminary Objection brought by the Appellant before the lower Court challenging its jurisdiction to hear the case was overruled by the Court and the matter proceeded to hearing. The 1st Respondent, as Plaintiff, testified as the sole witness in proof of his case. The Appellant and 3rd Respondent called one witness each. The 2nd Respondent (1st Defendant therein), M.B. Umar, entered no appearance nor filed any processes. The trial Judge, in her judgment delivered on 24/6/13, granted the 1st and 2nd reliefs jointly and severally against the 2nd Respondent, M.B. Umar and the Appellant (2nd Defendant therein), the latter as liquidator of the Micro Finance Bank. She dismissed the claims against the 3rd Respondent for damages, as well as the claim for legal fees.
Aggrieved by this decision, the Appellant appealed, by Notice of Appeal filed on 21/8/13, subsequently amended by leave of the Court, the extant Notice of Appeal being that filed on 25/10/16.
The 1st Respondent, Alhaji Nasidi A. Mohammed, also dissatisfied with the dismissal of his claim against the 3rd Respondent, cross appealed, by Notice of Cross Appeal filed on 3/3/16.
I shall commence with the determination of the main appeal.
I note that while the Appellant and the 1st Respondent filed Briefs of Arguments in respect of the main appeal, neither the 2nd or 3rd Respondent filed any.
The Appellants Amended Brief of Argument, filed on 25/10/16 but deemed properly filed on 22/3/18, settled by A. J. Saidu Abubakar of Saidu Abubakar & Co., distilled 7 (seven) issues for the Courts determination, under the guise of 2 (two) to wit:
ISSUE NUMBER ONE
Whether the learned trial judge was in error when she held that the non tendering of the Article and the memorandum of Birnin Kudu Microfinance Bank is fatal to the assertion that it lacked the legal capacity to enter the contract.
ISSUE NUMBER TWO
a) Whether the learned trial Judge erred in law when she assumed jurisdiction of a Bank in liquidation and made award contrary to the provisions of Section 414 and Section 500 of CAMA Cap C20 LFN 2004.
b) Whether the verdict of the learned trial Judge was right in view of the notice of revocation of the licenses of Birnin Kudu Microfinance Bank published in the Federal Government Official Gazette No. 62, Government Notice No. 363 Volume 97 dated 24th September, 2010. The Nigeria Deposit Insurance Corporation becomes the provisional liquidator of the said Bank as from that date.
- c) Whether the High Courts jurisdiction to entertain an action on breach of agreement by a liquidated bank is ousted by the provision of Section 41(1) and (2) of BOFIA Cap B3 LFN 2004.
d) Whether the trial Court was right when it found that there is a valid contract of guarantee between the plaintiff (Alhaji Nasidi Abubakar) and the 2nd defendant (BKMFB) when the purported letter of guarantee was addressed to the Oceanic Bank (now EcoBank Plc) and not the plaintiff.
ISSUE NUMBER THREE
a) Whether the judgment delivered by the learned trial Judge contains contradictions which approbate and reprobate and thus occasioned a miscarriage of justice.
b) Whether in all circumstance of the case, the appellant were given a fair hearing and if they were not whether the failure occasioned miscarriage of justice.
Reacting thereto, the 1st Respondent filed a Notice of Preliminary Objection challenging the grounds of appeal filed, arguments in respect of which are contained in the 1st Respondents Brief of Argument, filed on 16/5/16 and deemed properly filed on 22/3/18, settled by Segun Olabode Esq of M.N. Duru & Co.
In his challenge of Ground 1, learned Counsel to the 1st Respondent submitted that this ground does not challenge the ratio in the decision but the obiter dictum. The issue formulated thereon, he argued, is therefore also incompetent. He cited Unakalamba v Nze (2002) FWLR Part 104 Page 527.
Issue No. 2, he said, is prolix and complex, as four sub issues were formulated from Ground 2. An issue may arise from a ground or more but not a multiplicity of issues from the same ground. In addition, these sub issues were raised outside the scope of Ground 2. He made the same complaint with regard to Issue No. 3. He urged the Court to discountenance these issues and strike out the three grounds of appeal filed and, in consequence, dismiss the appeal. He cited Khalil v Yar’Adua (2004) All FWLR Part 225 Page 146; Anie v Uzorka (1993) 9 SCNJ 223 among a host of others.
In the event that the Court is of a contrary opinion, he formulated three issues for the determination of the Court,
namely:
1. Whether the Memorandum and Articles of Association of Birnin-Kudu Micro-Finance was pleased by the appellant
2. Whether the suit against the appellant is incompetent in view of Section 41(1) & (2) of the Banks and Other Financial Institutions Act Cap B2 LFN 2004
3. Whether the alleged contradiction on the trial Court Judgment of the trial Court occasioned any miscarriage of justice to the appellant
In the Appellants Reply Brief filed on 8/12/17 and deemed properly filed by this Court on 22/3/18, Counsel submitted, relying on the pleadings of both parties and the proceedings before the lower Court, that Ground 1 was a proper challenge to the ratio of the judgment of the lower Court. With respect to Ground 2, he submitted that only one issue was formulated therefrom, even though several paragraphs came under it. Conceding that this may be inelegant, he submitted that several issues may be formulated from one ground. He reiterated the same argument in respect of Ground 3.
Citing the case of Adejumo v Olawaiye (2014) All FWLR Part 743 Page 1910, he submitted further that a badly drafted brief should not be struck out. The Court should strive to understand it in order to resolve the relevant issues arising therefrom. He again submitted that a Preliminary Objection should be filed only in respect of a fundamentally defective appeal and not against one or more of the grounds of appeal.
While I disagree with the 1st Respondents Counsel that Ground 1 does not attack the ratio of the decision of the lower Court, I am in agreement with him that the 2nd and 3rd issues are prolix and unwieldy. As pointed out by the 1st Respondents Counsel, four issues were formulated under Issue No. 2, while two issues were formulated under Issue No. 3. In effect seven issues were distilled from a three ground appeal! This is not the way to formulate issues for determination.
The principle that guides the formulation of issues, is that not more than one issue can be formulated from a ground of appeal. In other words, an issue may arise from one or more grounds of appeal but more than one issue cannot arise from the same ground of appeal. In consequence, a number of grounds of appeal will, where appropriate, be formulated into a single issue.
Issues for determination, I further hold, are not to coincide with the number of grounds filed. In addition, parties are not allowed to formulate more issues than the grounds of appeal.
It is also undesirable to split a ground of appeal in the formulation of issues. It is not the number of issues formulated and argued by the Appellant or the verbosity of his brief that guarantees the success of his appeal but the relevance of the issues and the potency of the arguments thereon. For these principles, see Chiadi v Aggo (2018) 2 NWLR Part 1603 Page 175 at 211 Para E per Akaahs JSC; Nigerian Agricultural and Cooperative Bank Ltd v Ozoemelam (2016) 9 NWLR Part 1517 Page 376 at 394 Para A-F per Ngwuta JSC; Adejumo v. Olawaiye (2014) 12 NWLR Part 1421 Page 252 at 272 Para F-H per Rhodes-Vivour JSC;Roda v. FRN (2015) 10 NWLR Part 1468 Page 427 at 461-462 Para G-B per M.D. Muhammad JSC.
However, rather than strike out these issues for incompetence, I shall cull from them, together with the issues filed by the 1st Respondent/Objector, those issues which I consider arise for determination in this appeal.
I note that issue No. 2 of the Appellant, with some of its sub issues, is similar to the 2nd issue for determination formulated by the 1st Respondent. I shall accordingly adopt it, with amendments for succinctness and, being in respect of jurisdiction, shall be taken first.
Other issues filed by Counsel are similar in content and shall also be adopted, albeit abridged.
In consequence the issues distilled, are the following:
1. Whether the suit against the Appellant is incompetent in view of Section 41 (1) and (2) of the Banks and Other Financial Institutions Act Cap B3 Laws of the Federation of Nigeria 2004 and Sections 414 and 500 of the Companies and Allied Matters Act Cap C20 LFN 2004.
2. Whether the learned trial Judge erred in holding that the non tendering of the Articles and Association of the Birnin Kudu Micro Finance Bank is fatal to the Appellants assertion that the Bank lacked the capacity to enter into the contract with the 1st Respondent.
3. Whether there were contradictions in the judgment of the lower Court and which occasioned a miscarriage of justice.
The 1st issue for determination, is the following:
Whether the learned trial Judge erred in law in assuming jurisdiction in this suit against the Appellant and making an award, in view of Section 41 (1) and (2) of the Banks and Other Financial Institutions Act Cap B3 LFN 2004 and Sections 414 and 500 of the Companies and Allied Matters Act Cap C20 LFN 2004.
Learned Counsel to the Appellant has submitted that the revocation of the banking license of the Bank did not render it legally dead or non-existent but that it remains a legal entity. The Appellant can therefore not be personally liable for any judgment that emanates from the case in respect of an issue that emanates before it became a provisional liquidator. He cited the cases of Cooperative & Commerce Bank (Nig) Plc v O Silvawax International Ltd (1999) 7 NWLR Part 609 Page 97 and Musa v Ehidiamhen (1994) 3 NWLR Part 334 Page 546, submitting that a company under liquidation, whether voluntary or compulsory liquidation is still a living, legal person until it is dissolved. The 1st Respondent, he said, is aware that the banking license of the Bank has been revoked and NDIC appointed as provisional liquidator. The appointment of a provisional liquidator, he argued, operates as a stay of any proceedings already instituted as well as a bar to any proceeding sought to be instituted or maintained by any person against the company in liquidation NDIC v Ifediegwu (2003) 1 NWLR Part 800 Page 58. He stressed on the importance of jurisdiction in a Court to entertain an action.
Citing Section 41(1) and (2) of Banks and Other Financial Institutions Act Cap B3 LFN 2004 (BOFIA), he submitted that the law provides an insulation for a Bank in liquidation against any form of legal action, to allow the liquidator (NDIC) to carry its legal functions unhampered. Sections 414 and 500 of CAMA Cap C20 LFN 2004, he said, guarantees the protection of assets of companies under liquidation. He urged the Court to hold that the Kano State High Courts jurisdiction was ousted by these statutes.
In response, the 1st Respondent pointed out that it (1st Respondent), by a Motion on Notice dated 30/3/11, substituted the Bank with the Appellant (Page 157-163) and the Writ of Summons amended accordingly. Section 41 (1) and (2) of BOFIA are inapplicable to the circumstances of this case, he submitted. By Section 66 of BOFIA, Bank means incensed (sic) under the said Act. The Bank referred to under Section 41 (1) of BOFIA is the Bank whose control has been assumed by NDIC whereas in this case, it was NDIC as provisional liquidator that was sued.
There is nothing in either this Act or the NDIC Act which prohibits the suing of NDIC, as in this case. He distinguished the case of NDIC v Ifediegwu Supra as being inapplicable to this case as that case is in respect of garnishee proceedings and not on the question whether a creditor can bring an action against NDIC or not. He cited in support of his position the case of NDIC v Akahall & Sons Ltd (2004) All FWLR Part 229 Page 897 at 920 Para F-G. He further submitted that this issue, covered by Ground 2 of the Notice of Appeal, was never raised in the lower Court nor considered by it.
In the Reply filed by Appellants Counsel, it was reiterated that the Birnin Kudu Micro Finance Bank is a Bank within the meaning of BOFIA and that the Courts jurisdiction in respect of the said Bank ceased as soon as the Appellant took over the control of the said Bank on 24/9/2010, even before the substitution of the Bank with the Appellant. The revocation of the Bank does not therefore render it legally dead or non-existent. The Bank remains a legal entity. NDIC cannot thus be personally liable for the judgment that could emanate from the case, in respect of an issue that arose before it became the provisional liquidator. Relying on Musa v Ehidiamhen Supra and CCB v Silvawax Supra, he submitted that it was a misconception to say that the Bank is no longer a party, but NDIC.
Citing the case of State v Onagoruwa (1992) 2 SCNJ Part 1 Page 308, he submitted that the issue of jurisdiction can be raised at any time and the Court is bound to make a ruling thereon. The refusal of the trial Court to make a Ruling on the issue of jurisdiction raised, denied the Appellant of fair hearing, thus occasioning a miscarriage of justice.
The facts leading to the institution of the action before the lower Court and the present appeal are by the case of the 1st Respondent, that sometime in October 2009 he was approached by the 2nd Respondent, M.B. Umar, to supply on credit to him tons of rice worth N72 Million and that he (2nd Respondent) had a contract with certain workers in Katsina to supply the rice to them. He (1st Respondent), gave as his condition for the supply, the procurement by the 2nd Respondent of an irrevocable and unconditional bank guarantee for the payment of the said sum.
He (1st Respondent) sought the advice of the 3rd Respondent, his Bankers, through their Kano Branch Manager, one Muhktar Imam, who promised to be of assistance to him. On 7/10/2009, the Birnin Kudu Micro Finance Bank wrote a letter to him irrevocably and unconditionally guaranteeing the re-payment of the sum of N72 Million, to be paid in instalments of N18 Million monthly for four consecutive months commencing October 2009, terminating in January 2010.
On October 9th, 2009 the 3rd Respondent, then Oceanic Bank Plc, wrote a letter to the 1st Respondent stating that it had verified and confirmed the irrevocable letter of credit and, by the assurance of the Bank Manager of the genuineness of the contract and encouraging him to proceed with it, he supplied the rice requested. Save for payment of the first instalment of N18 Million into the 1st Respondents account with the 3rd Respondent, no further instalments were paid. By the intervention of the Katsina Emirate Council, further payments of N1.5 Million and N3.421 Million were recovered from the 2nd Respondent. No further payments have been made, in spite of repeated demands.
The Appellant, in its Statement of Defence and evidence of its witness alleged that by the Act establishing the Bank, it had no power to guarantee the loan and that the letter of irrevocable undertaking addressed to the 3rd Respondent was fraudulent as it was signed by unknown individuals. All those who participated in the transaction were expelled, as the transaction is contrary to the laws establishing the Bank. It denied that it had any contract with the 1st Respondent.
The 3rd Respondent, while admitting receipt of the letter from the Bank irrevocably and unconditionally guaranteeing the repayment of the said sum, claimed that they only verified the said letter. They denied assuring the 1st Respondent that the transaction with the 2nd Respondent was genuine or that the 1st Respondent should proceed with the transaction. They thus denied liability.
The trial Court, in its judgment, held that the Appellant had failed to prove lack of capacity of the Bank to enter into the contract, having neither pleaded nor tendered the Articles and Memorandum of Association of the Bank.
On the liability of the Appellant for the debt, it held that the Bank irrevocably committed itself to the payment. It thereupon entered judgment in respect of the first two reliefs against the Appellant and 2nd Respondent. It dismissed the claim against the 3rd Respondent, holding it not liable. It also dismissed the other reliefs.
To recap, the 1st issue for determination, is:
Whether the learned trial Judge erred in law in assuming jurisdiction in this suit against the Appellant and making an award, in view of Section 41 (1) and (2) of the Banks and Other Financial Institutions Act Cap B3 LFN 2004 and Sections 414 and 500 of the Companies and Allied Matters Act Cap C20 LFN 2004.
It was argued by the 1st Respondents Counsel that this issue was not raised nor considered by the trial Court and can thus not be raised before this Court. Counsel to the Appellant submits in his Reply that the issue of jurisdiction can be raised for the first time in the Court of Appeal or even in the Supreme Court, without leave to raise the same. He submitted that this issue was raised in Counsels Reply Address before the lower Court, at Page 345 of the Record but not pronounced upon by that Court. This refusal, he submitted, occasioned a miscarriage of justice.
I confirm from the Appellants Reply Address to the 1st Respondents Written Address before the lower Court, at Pages 343-347, particularly at Page 346, that this issue was raised by the Appellants Counsel, in which he disclaimed the Appellants liability and that of the Bank from any form of legal action, submitting that the law provides an insulation for a bank in liquidation against any form of legal action, to allow the liquidator carry out its functions unhampered, citing Sections 41 (1) and (2) of BOFIA.
The lower Court, in its judgment, however made no mention of this submission but proceeded with a deliberation of whether the 1st Respondent had established its claims. It dispensed with the contention of the Appellants Counsel that the Bank lacked legal capacity to enter into a contract of guarantee of the sum of N72 Million. It also dispensed with the submission that the officers who gave the guarantee acted outside their powers and upheld the submission of the 1st Respondents Counsel that the Appellant failed to place before the Court evidence in proof of this assertion,including the Articles of Association and Memorandum of Association of the Bank. Merely pleading these documents, it held, is not tantamount to their being tendered in evidence.
It further held that the processes executed by the 2nd Defendant Bank were clear and unequivocal, that it had expressly committed itself to payment of the contract sum and was bound to its commitment. It thereupon held the claim against the Appellant and the 2nd Respondent proved.
No mention, I have noted, was made of the submission of the Appellant with regard to its disclaimer of liability under Section 41 (1) and (2) of BOFIA.
It is therefore not correct for the 1st Respondents Counsel to contend that this issue was not raised at the lower Court.
The general principle that an issue which was not raised, argued and pronounced upon by a trial Court cannot be validly raised as a ground of appeal or as an issue for determination before the appellate Court, cannot thus apply in this case, the issue having been raised before the lower Court, yet not considered. The failure of the lower Court to pronounce upon this objection does not therefore preclude Counsel from raising the same on appeal, I hold.
In any event, an issue which touches on the jurisdiction of the Court, such as the instant one, can be raised at any time during the proceedings, even in the Supreme Court – Zakari v. Nigerian Army (2015) 17 NWLR Part 1487 Page 77 at 107-108 Para G-A; (2015) All FWLR Part 798 Page 850 at 869 Para A-B per Ariwoola JSC.
The issue of jurisdiction has been held to be the lifeblood of any adjudication. It is so fundamental that it must be resolved before any other step is taken in the proceedings. It goes to the competence of the Court or Tribunal to entertain a cause or matter. If a Court has no jurisdiction to hear and determine a case, the proceedings remain a nullity ab initio no matter how well conducted and decided and is liable to be set aside. A defect in competence is not only intrinsic but extrinsic to the entire process of adjudication. See Adesigbin v Military Governor of Lagos State (2017) 10 NWLR Part 1574 Page 442 at 457-458 Para F-A per Rhodes-Vivour JSC; A/G Lagos State v A/G Federation (2014) 9 NWLR Part 1412 Page 217 at 275 Para B-D per Fabiyi JSC; Shell Petroleum Development Company of Nigeria Ltd v. Anaro (2015) 12 NWLR Part 1472 Page 122 at 185 Para B-C per Kekere-Ekun JSC.
Indeed, I note that this issue was also raised by the 1st Respondent in his Brief of Argument as his 2nd issue for determination, albeit coined slightly differently. He can therefore not be heard to oppose the issue. Counsel cannot approbate and reprobate.
This issue, I accordingly hold, rightly falls for determination.
On the status of the Appellant, both Counsel, by their pleadings and processes filed, are ad idem on the revocation of the licence of the Bank and the appointment of the Appellant as Provisional Liquidator, as shown below.
The 1st Respondent, by motion on notice dated 30/3/11 and filed on 1/4/11, sought the leave of the lower Court to proceed against the Appellant, as liquidators of the Bank and to amend its processes to reflect the changes in the names of the parties. This application was granted by the lower Court on 7/4/11.
In the 1st Respondents Amended Statement of Claim, filed on 1/4/11 and contained at Page 167 of the Record, it was averred in Paragraph 3 as follows:
The 2nd Defendant is the official liquidator of Birnin Kudu Micro Finance Bank which at all times material to this action, was registered Micro Finance Bank carrying on business of micro finance banking with its registered office at Dutse in Jigawa State.
From the Statement of Defence of the Appellant dated 15/5/12, at Pages 318-319 of the Record of Appeal, it was averred in Paragraph 2 as follows:
Paragraph 2
The operating licence of Birnin Kudu Micro Finance Bank was revoked vide Federal Government Official Gazette No. 62, Government Notice No. 363 Vol 97 dated 24th September, 2010. The Nigeria Deposit Insurance Corporation becomes the provisional liquidator of the said Bank.”
It is therefore not in dispute that the license of the Micro Finance Bank was revoked and that the Appellant was appointed as its Provisional Liquidator.
The Appellant, arguing this issue, complains that the lower Court erred in assuming jurisdiction in spite of the provisions of Sections 41 (1) and (2) of BOFIA. It disclaimed personal liability in respect of the relationship that existed between the Bank and their customers prior to its appointment as liquidator and can therefore not be made liable for the Banks debts, in view of its role as liquidator, against whom the 1st Respondent has no direct cause of action. It submitted further that the revocation of the Banks licence does not render it legally dead or non-existent but that it remains a legal entity. He cited Section 41(1) and (2) of BOFIA as well as some decided cases.
The process of liquidation of a bank begins, I hold, when the Central Bank of Nigeria (CBN) revokes its banking license, pursuant to the provisions of Section 12 of Banks and Other Financial Institutions Act Cap B3 Laws of the Federation of Nigeria 2004 (BOFIA).
Sections 40 (1) and (2)and 41 of the Nigeria Deposit Insurance Corporation Act Cap N102 of LFN 2004 (NDIC Act) provides:
Section 40
(1) Whenever the licence of an insured institution is revoked by the Central Bank of Nigeria, the Corporation shall act as liquidator of such failed insured institution with powers conferred on a liquidator under the Companies and Allied Matters Act, 1990 and shall be deemed to have been appointed a provisional liquidator by the Federal High Court for the purpose of that Act.
(2) Immediately following the publication in the gazette of the revocation of the licence of a failed insured institution the Corporation shall apply to the Federal High Court for an order to wind up the affairs of the failed insured institution.
Section 41
(1) The Corporation shall cause notice to be given by advertisement in National Newspapers or other news media requiring all depositors with the insured institution under liquidation to forward their claims to the Corporation.
(2) The Corporation acting as liquidator of the failed institution shall have power to-
a. realize the assets of the failed insured institution;
b. enforce the individual liability of the shareholders and directors thereof; and
c. wind up the affairs of such failed institution as herein otherwise provided.
By this statute above, the Appellant, upon the revocation of the licence of the Bank by CBN, is deemed to have been appointed as provisional liquidator by the Federal High Court for the purpose of that Act.
Once the revocation of the banking licence is published in the gazette, Section 40(2) of the NDIC Act Supra requires the NDIC to apply to the Federal High Court for an order to wind up the affairs of the failed insured institution. Once this order is granted, the NDIC ceases to be a provisional liquidator and assumes the position of liquidator of the failed financial institution.
The question with regard to the instant case and the 1st issue distilled for determination, is whether the Appellant can be sued as Defendant for debts incurred by the Bank.
Section 41 of the Banks and Other Financial Institutions Act Cap B3, Laws of the Federation 2004,provides as follows:
SECTION 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.
It is not in doubt that by this Act (BOFIA), the Bank, its licence having been revoked, cannot be sued for the debt owed by it to the 1st Respondent and that any suit against it stands abated.
To continue proceedings against a bank where a provisional liquidator has been appointed, as here, leave of the Federal High Court, must be obtained.
SECTION 417 of the Companies and Allied Matters Act Cap C20 Laws of the Federation 2004 (CAMA) provides:
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 the Court given on such terms as the Court may impose.
By Section 41(2) of the NDIC Act set out above, the functions of the NDIC, as provisional liquidator, are the following:
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.
The role of NDIC is thus circumscribed by these duties above.
Section 425(1) (a) of CAMA, however, provides:
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:
- bring or defend any action or other legal proceeding in the name and on behalf of the company;
The consequence of Section 425 of CAMA Supra is that the Appellant must seek the sanction of the Court or Committee of Inspection to bring or defend the instant action. If leave is granted to sue or to continue an ongoing suit, the suit will now be against the closed bank in its name but by NDIC for and on behalf of the closed bank and not against the NDIC.
It is not proper, I hold, to ignore the bank in liquidation and substitute the Appellant as a party in place of the bank. This is because the closure of the Birnin Kudu Microfinance Bank or the appointment of the Appellant as its liquidator does not end the life of the Bank. The Bank remains a legal entity until it is formally wound up by the Court followed by its delisting from the Register of Companies in the Corporate Affairs Commission.
In Co-operative & Commerce Bank (Nigeria) Plc V. O’Silvawax International Limited (1999) 7 NWLR Part 609 Page 97 at 103 Para A-C, this Court, per M.D. Muhammad JCA (as he then was), put it succinctly, as follows:
It is my considered view that revocation of licence of the 1st respondent by the Central Bank on 16th January, 1998, did not necessarily remove the “life”, so to say, of the 1st respondent thereby making it incapable of suing or being sued or barring it from becoming an appellant or a respondent in the appeal process. The revocation of the licence could have indicated an ill-disposition, an acute and serious ailment. It did not go beyond that to herald and or constitute the death of the 1st respondent. The bank remained alive possessing its legal personality as sick as it could have been and as indicated by the revocation of its licence. The order of winding up by the Federal High Court on 12/3/98, however, changed not only its effectiveness as a bank, as a body corporate, but also brought about the “death” of the 1st respondent. The appointment of a receiver by the same Court can be likened to naming an undertaker who was not only to prepare for but to ensure the burial of the 1st respondent.
A related question came up before the Supreme Court in the case of Oredola Okeya Trading Co. v Bank of Credit and Commerce International, In Re Amolegbe (2014) 8 NWLR Part 1408 Page 76.Reading the lead judgment, His Lordship I.T. Muhammad JSC at 96-97 Para B-H, held as follows:
” 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. Underlining mine
Prior to this, it was held in the case of NDIC v Ifediegwu (2003) 1 NWLR Part 800 Page 56 at 81 Para B-E per M.D. Muhammad JCA(as he then was):
.it is equally beyond dispute that by virtue of S.417 of the Companies and Allied Matters Act, Cap. 59 of 1990, 1st respondent required leave of Court to commence any action against the appellant.
The leave had not been acquired before his purported action against appellant was undertaken. Where by law, a party required leave of Court to commence an action, an action commenced without the required leave is incompetent.”
By these cases and by the combined provisions of Sections 417 and 425 of the Companies and Allied Matters Act Supra, Sections 40, 41 (2) of the Nigeria Deposit and Insurance Corporation Act Supra and Section 41 (1) and (2) Banks and Other Financial Institutions Act Supra, the position is that before the Appellant could be sued to defend the 1st Respondents suit against the Birnin Kudu Bank, which had been wound up, the same could only be done with the sanction of either the Federal High Court or the Committee of Inspection, which has not been shown to have been obtained in this case.
Furthermore, the suit, once the sanction is given, is in the name of the closed Bank or Institution, with NDIC suing for and on behalf of the bank whose license has been revoked and not against the NDIC in its personal capacity, as the 1st Respondent purports to have done.
The provisions of Section 407 (1) of the Companies and Allied Matters Act Supra, and Section 40 (6) of the Nigeria Deposit Insurance Corporation Act Supra make it clear that, the Court referred to for the purpose of obtaining leave before the suit can be maintained, is the Federal High Court.
Thus, not only was the substitution of the name of the Appellant wrong, leave not having been sought as required by Section 425 of CAMA above, the suit should not have been in the name of the Appellant as Defendant to the action, but in the name of the closed Bank, the Bank not having legally died. The lower Court thus had no jurisdiction to substitute the Appellant in place of the 2nd Defendant Bank, I hold.
In the case of NDIC (Receiver/Liquidator of Allied Bank of Nigeria Plc v Akahall & Sons Co. Ltd (2004) 6 NWLR Part 869 Page 245 cited by the 1st Respondents Counsel, which was an appeal to this Court by the Appellant, in respect of the entry of summary judgment against it, the complaint was that both it and the Bank were precluded from being sued. It was held, per Olagunju JCA, that the jurisdiction of the lower Court was not ousted, the Appellant having failed to show that Allied Bank Nigeria Plc is an insured institution and that it cannot hide under the shadow of that provision to defeat the Respondents claim.
However, not only was this appeal determined under the old NDIC Amended Decree No. 5 of 1997, other Acts, such as the Banks and other Financial Matters Act Supra and the Companies and Allied Matters Act were not considered, which Acts have been cumulatively interpreted in subsequent decisions to alter the earlier positions taken by Courts, joining NDIC as defendant to inherit and be proceeded against for the debts of the closed banks.
The position has now been put to rest by the Supreme Court in Oredola Okeya Trading Co. v Bank of Credit and Commerce International In Re-Amolegbe supra.
By reason of the doctrine of stare decisis, earlier decisions must now bow to the superiority of this decision.
As stated in Palmers Company Law Volume 1, 23rd Edition, with regard to the powers and duties of a liquidator:
In general terms the duties of the Liquidator are to take control of the assets of the Company; to make out a list of creditors and contributors; to resolve disputes; to realize assets and to apply the proceeds in payments of the Companys debts and liabilities in due course of administration.
This, in summary, is the function of the Liquidator, as encapsulated in Section 41 (2) of the NDIC Act above.
The Liquidator is not to be enroped (in the words of I. T. Muhammad JSC in Oredola Okeya Trading Co. v BCCI (Supra), as debtor in place of the liquidated bank or bank whose licence has been revoked.
The lower Court was no doubt swayed with sympathy for the 1st Respondent who was hard done by the 2nd Respondent who collected goods and failed to live up to his undertaking. What the 1st Respondent should have done, however, was to forward his claims to the Appellant, under Section 41(1) of the NDIC Act Supra and apply to be listed as one of the Banks creditors and not attempt to enforce the debt against the Appellant. The Nigerian Deposit Insurance Corporation, as liquidator of a failed bank, cannot take personal responsibility for liabilities incurred by the closed bank before it became distressed, I hold.
The learned trial Judge, I accordingly hold, erred in law in assuming jurisdiction in this suit against the Appellant and making an award against the Appellant for the indebtedness of the Birnin Kudu Micro Finance Bank.
I thus resolve the 1st issue for determination in favour of the Appellant.
Having so done, a resolution of the other issues for determination is rendered unnecessary and a mere academic exercise. This appeal accordingly succeeds.
I now proceed to the Cross Appeal.
Cross Appeal.
The Notice of Cross Appeal of the 1st Respondent dated 29/2/16, filed on 3/3/16, is against the Ruling of the Court refusing his 3rd claim against the 3rd Respondent.
For the purposes of the Cross Appeal, the 1st Respondent and 3rd Respondent shall be referred to interchangeably as 1st Respondent/Cross Appellant and 3rd Respondent/Cross Respondent respectively.
The 3rd claim of the Cross Appellant before the lower Court, by his Amended Statement of Claim, was for the following:
The sum of N50,000,000.00 (Fifty Million Naira) from the 3rd Defendant being the damages suffered by the Plaintiff as a result of the misrepresentation of facts by the 3rd Defendant.”
The sole issue distilled by the Cross Appellants learned Counsel, for determination in the appeal, is:
Whether the trial Judge was right when the Court refused the Cross Appellants claim 3 against the 3rd Respondent.
Learned Counsel to the 1st Respondent/Cross Appellant pointed out that the 1st Respondent was a customer of the 3rd Respondent/Cross Respondent and that the 3rd Respondent was his banker. He claimed that the 3rd Respondent was involved in the transaction between the Appellant and the 1st Respondent, referring to the correspondence between them and in particular the letter written by the 3rd Respondent dated 9/10/09 to the 1st Respondent.
He pointed out that in the 1st Respondents Statement of Claim, it was stated categorically that he entered the transaction based on the advice of his bankers, the 3rd Respondent, through the 3rd Respondents manager who assured him that everything was alright. It was Counsels submission that where a bank holds itself out to advise its customer in respect of any investment, the basis for which the customer entered into the transaction, the bank is under a duty to exercise diligent care. If such advice turned out to be wrong, the bank should be held liable to the customer. He cited Woods v Martins Bank (1964) AC 465. He asked the Court to set aside that portion of the judgment discharging the 3rd Respondent and to allow the 3rd head of claim of the Cross Appellant.
The 3rd Respondents Counsel, Sir Steve Adehi of Steve Adehi & Co, adopted the issue for determination distilled by the Cross Appellant. He contended that the Cross Respondent merely verified that the irrevocable letter of credit was issued by the Appellant and nothing more. It denied assuring the Cross Appellant that the transaction with the 2nd Respondent was genuine, neither did it tell the Cross Appellant to proceed with the transaction. It is not in dispute, he said, that the letter of irrevocable standing payment was genuinely issued by the Appellant. It denied making any misrepresentation as to the genuineness of the irrevocable standing payment as contained in the letter of October 9th 2009. Counsel also submitted that the Cross Appellant never led any evidence at the trial to support his contention that it was the 3rd Respondent who by his misrepresentation misled him into believing the genuineness of the irrevocable standing payment order. He accused the Cross Appellant of raising the issue of negligence in his final address without pleading same and giving particulars in the Statement of Claim, or plead any duty of care. He cited Unipetrol Nig Plc v Adireje W/A Ltd (2004) All FWLR Part 231 Page 1239 and Diamond Bank Ltd v P.I.C. Ltd (2010) All FWLR Part 512 Page 1098 at 1102,Ogbiri v NAOC Ltd (2011) All FWLR Part 577 Page 510 and Ighreriniovo v S.C.C Nigeria Ltd (2013) All FWLR Part 7000 Page 1240 at 1248.
The Cross Appeal of the 1st Respondent revolves around the letter written by the 3rd Respondent to it dated 9/10/09.
The Letter, Exhibit B, is as follows:
October 9, 2009
Alhaji Nasidi Abubakar
Ado Bayero Road, Kano
Dear Sir,
CONFIRMATION OF IRREVOCABLE STANDING PAYMENT ORDER FROM BIRNIN KUDU MICRO FINANCE BANK LTD BY ORDER OF M. B UMAR ENTERPRISES
We are in receipt of an irrevocable standing payment order from Birnin Kudu Micro Finance Bank Ltd in your favor in respect of a supply of foreign rice to M. B. Umar enterprises to the tune of N72 million Naira.
The ISPO stood for a monthly rental payment of N18 Million naira from October 2009 to January 2010.
Birnin Kudu Micro Finance Bank in its letters dated 7th October, 2009 has given full guarantee of N18 Million Naira monthly remittance in your favor, starting from October 2009 to January 2010 and also took full responsibility in the event of default.
We have verified the ISPO and found it genuinely issued by Birnin Kudu Micro Finance Bank Ltd as contained in its confirmation letter dated 9th October 2009 duly signed and sealed.
Thank you.
Your faithfully
FOR: OCEANIC BANK INTERNATIONAL PLC
Sgd
Muhktar Imam
Head Marketing
Sgd
Dalhatu Abdulazeez
Manager.
Attached to Exhibit B is a letter from the Birnin Kudu Micro Finance Bank addressed to the 3rd Respondent. The letter reads as follows:
Birnin Kudu Micro Finance Bank Limited
No 9, Bodan Road, Birnin Kudu L.G.A. Jigawa State.
07 October, 2009
The Manager,
Oceanic Bank Plc,
Main Branch Kano.
Through:
The Manager,
Unity Bank Plc,
Birnin Kudu Branch,
Sir,
IRREVOCABE (sic) STANDING PAYMENT OREDR (sic) IN RESPECT OF ALH. NASIDI ABUBAKAR MOHAMMED
With reference to the loan of foreign rice granted to M. B. Umar Enterprises by Alh. Nasidi Abubakar Mohammed. To the tune of N72,000,000.00 (Seventy Two Million Naira only) to be paid installmentally in (4) months time i.e. N18,000,000.00 (Eighteen Million Naira only) monthly from October to January 2010.
We hereby irrevocable (sic) unconditionally guarantee the monthly repayment of N18,000,000.00 (Eighteen Million Naira only) conservatively for four months (4) until the total amount of N72,000,000.00 (Seventy Two Million Naira only) is fully liquidated.
The content and conditions of this guarantee is unconditional and irrevocable.
Finally we hereby guarantee irrevocable (sic) to execute the above state instruction over agreed period, they (sic) amount shall be remitted to the manager Oceanic Bank Plc, Main Branch Kano Account No. 0041001000519, Alhaji Nasidi Abubakar Mohammed. Through Account No. 391/544469 Birnin Kudu Microfinance Bank Limited, Unity Bank Plc, Birnin Kudu Branch.
Sgd
MANAGING
Sgd
DIRECTOR HEAD OF OPERATION.
I must agree with the 3rd Respondents Counsel and the lower Court, that the words in Exhibit B that We have verified the ISPO and found it genuinely issued by Birnin Kudu Micro Finance Bank Ltd as contained in its confirmation letter dated 9th October 2009 duly signed and sealed cannot be said to be a guaranty by the 3rd Respondent of the payment.
The general rule in the interpretation of instruments is that where the parties have embodied the terms of their agreement or contract in a written document, extrinsic evidence is not admissible to add to, vary, subtract from or contradict the terms of the written instrument. See Lewis v. United Bank for Africa Plc (2016) 6 NWLR Part 1508 Page 329 at 352 Para H per Okoro JSC.
Giving the words in this letter their ordinary meaning, without reference to any extrinsic evidence, their interpretation is an affirmation by the 3rd Respondent that the letter from the Micro Finance Bank was genuinely issued. There was no undertaking, as urged by the Cross Appellant, that the 3rd Respondent would pay, in the event that the Bank defaulted.
There was also no guaranty of the infallibility of the contract or that payment would be effected under the contract. All that can be inferred from this letter is an affirmation by the 3rd Respondent that the letter was genuinely issued by the Micro Finance Bank.
This letter, I agree with the 3rd Respondents Counsel, was not proved in the Court to be a misrepresentation by the 3rd Respondent.
I accordingly agree with the lower Court when it held:
The Plaintiff has woefully failed to prove any false statement issued by the 3rd Defendant (3rd Respondent) in Exhibit B, also the statement in Exhibit B that the 2nd Defendant takes full responsibility in the event of default is not a false statement as that is the effect of the irrevocable payment order of guarantee taken out by the 2nd Defendant for in law a guarantors liability for payment of the guarantee comes into play once there is default of payment on the part of the party he acted for.
On whether the 3rd Respondent was liable to the Cross Appellant for misrepresentation of facts, the lower Court held as follows:
Let me state that it is clear by the wording of the plaintiffs third Head of Claim against the 3rd defendant that the plaintiff has asserted that the claim is a result of the misrepresentation of facts by the 3rd defendant. I dont see how the argument can be made that this Head of Claim is not (sic) founded upon misrepresentation.
I am also in agreement with this finding.
Again, following the challenge of the 3rd Respondent that the 1st Respondent was attempting to smuggle in a claim for negligence in his final address, the claim not having been pleaded nor particulars given, the lower Court held:
The failure by the plaintiff to plead and give sufficient particulars on the tort of negligence is fatal to any claim that may be founded on it. It is also the submission of learned Counsel to the 3rd defendant that the submission of plaintiffs counsel on redress statement (sic) and duty of care should be discountenanced. This is also correct, the reliance by the plaintiff on the English case of Dery vs Peek does not support his claim in the instant case because by the definition of a Tort in that case, the plaintiff even if he had pleaded and particulate (sic) the tort of negligence in his claim cannot succeed in this case since there is no evidence that the 2nd defendant is wrongly (sic) or without belief in the truth reckless (sic) or carelessly wrote the said letter of confirmation to the plaintiff. I therefore found (sic) no evidence to support this Head of claim and it accordingly fails and is refused.
I am also in total agreement with this finding.
I accordingly hold, in view of the foregoing, that the trial Judge was right when it refused the Cross Appellants claim No. 3 against the 3rd Respondent. I thus resolve the sole issue for determination against the Cross Appellant and in consequence dismiss the Cross Appeal.
In conclusion, the substantive appeal succeeds and is hereby allowed. The judgment of the lower Court against the Appellant is accordingly set aside.
The Cross Appeal fails and is dismissed. The dismissal by the lower Court of the 3rd claim of the 1st Respondent is, in consequence affirmed.
The parties shall bear their respective costs.
IBRAHIM SHATA BDLIYA, J.C.A.: I read in advance the lead judgment just delivered by my Lord, OLUDOTUN ADEBOLA ADEFOPE-OKOJIE, J.C.A. I entirely agree with the reasoning and decision arrived at in allowing the substantive appeal, and dismissing the cross-appeal for lacking in merit. I abide by the order made on costs.
AMINA AUDI WAMBAI, J.C.A.: I agree.
Appearances
Saidu Abubakar, Esq.For Appellant
AND
1ST RESPONDENT/CROSS APPELLANT
Segun Olabode, Esq.
O. I. Goodluck, Esq.
3RD RESPONDENT
Steve Adehi, Esq.
M. U. Namtar, Esq.For Respondent
