NIGERIA DEPOSIT INSURANCE CORPORATION v. RAHMAN BROTHERS LIMITED
(2018)LCN/12300(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 18th day of December, 2018
CA/L/972/2017
RATIO
COMMERCIAL LAW: REVOCATION OF LICENCE
“Indeed, it is true that the revocation of licence of a bank by the Governor of Central Bank does not by itself bring to an end, the life of such bank. The bank remains alive possessing its legal personality even though its licence has been revoked. See the opinion expressed by M.D. MUHAMMAD, JCA (as he then was) in CO-OPERATIVE & COMMERCE BANK (NIGERIA) PLC v O’SILVAWAX INTERNATIONAL LIMITED [1999] 7 NWLR (PT 609) 97 at 103, paras A to C, thus: ‘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…'” PER ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.
STATUTE AND INTERPRETATION: WHEN STATUTE ARE UNCLEAR
“Before I proceed any further, I think it ought to be stressed that it is the cardinal principle of law in the interpretation of a statute that where the words of a statute are clear and unambiguous, they must be accorded their plain and ordinary meaning unless this would lead to absurdity. See SKYE BANK PLC v VICTOR ANAEMEM IWU [2017] 16 NWLR (PT 1590) 24 at 87; OKOYE & ORS v C.O.P. & ORS (2015) LPELR 24675 (SC); ANIBOR v EFCC & ORS (2017) LPELR 43381 (CA). The provisions of Sections 417 & 425 CAMA leave no one in doubt that the leave of court must be obtained before any action can be taken or continued against a bank in liquidation.” PER ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.
JUSTICES
TIJJANI ABUBAKAR Justice of The Court of Appeal of Nigeria
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria
JAMILU YAMMAMA TUKUR Justice of The Court of Appeal of Nigeria
Between
NIGERIA DEPOSIT INSURANCE CORPORATION Appellant(s)
AND
RAHMAN BROTHERS LIMITED Respondent(s)
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.(Delivering the Leading Judgment):
This appeal emanates from the judgment of the Lagos State High Court, coram OBADINA, J., (Mrs.) delivered on 20th June, 2014. The Respondent had commenced an action at the lower Court against Peak Merchant Bank Limited and in the course of the proceedings, the latter’s banking licence was revoked by the Central Bank of Nigeria, whereupon the Respondent applied to join the present Appellant, the Nigeria Deposit Insurance Corporation as Defendant, which was granted by the lower Court, and pursuant to an Application by the Respondent, the Appellant’s capacity was amended to read Provisional Liquidator of Peak Merchant Bank Limited.
Upon conclusion of trial, judgment was given in favour of the Respondent and the lower Court directed the Appellant to pay the sum of One Million Naira Only (N1,000,000.00) as damages to the Respondent; delivery to the Respondent of title deeds pledged by the Respondent to Peak Merchant Bank Limited as the collateral for the N50 million Export Finance Facility granted by Peak Merchant Bank Limited to the Respondent.
Dissatisfied with the said decision, the Appellant caused a Notice of Appeal to be filed on 16th June, 2017, sequel to an order of extension of time granted by this Court on 6th June, 2017.
In compliance with the Rules and practice in this Court, briefs of argument were filed and exchanged by the parties. A brief of argument as well as the Reply Brief dated 4th August, 2017 and 18th October, 2018 respectively was settled by Ogechi Ogbonna on behalf of the Appellant. P. O. Jimoh-Lasisi, SAN with L. A. Yusuf settled the Respondent?s brief dated 12th June, 2018.
In the Appellant’s brief of argument, two issues were formulated as follows:
1. Whether the Honourable Court below had the jurisdiction to adjudicate upon the claims made by the Respondent?
2. Whether the Honourable Court below was right in holding ‘the defendant is deemed to have been appointed provisional liquidator of Peak Merchant Bank Lt and can defend action on behalf of the Bank. I hold that the defendant is a proper party to this suit and there is a reasonable cause of action against it…’
On the other hand, a sole issue was formulated by the Respondent thus:
1. Whether the Appellant, Nigerian Deposit Insurance Corporation was made a proper party to the main suit?
SUBMISSIONS OF COUNSEL
Arguing the two issues formulated together, Appellant’s counsel contends that the Court had no jurisdiction to enter judgment against the Appellant. It is the submission of counsel that though the Court had jurisdiction at the time the suit was filed by the Respondent against Peak Merchant Bank Limited but in due course lost jurisdiction when the banking licence of the Bank was revoked and the Respondent failed to obtain leave of the Federal High Court to continue proceedings before the Court below. He cited MADUKOLU v NKEMDILIM (1962) 2 SCNLR 341; UNITED BANK FOR AFRICA PLC v ADEMOLA [2009] 8 NWLR (PT 1142) 113 at 129, paras A – C.
He further submits that until an order of dissolution is made, the legal personality of the bank and its powers to sue and be sued subject to fulfilment of conditions stipulated by law remains intact. Relying on Section 454 of the Companies and Allied Matters Act (CAMA); RE: AMOLEGBE [2014] 8 NWLR (PT. 1408) 76 at 101, paras C – E, he submits that its an error in law and fact to substitute the liquidator of a bank under liquidation for the bank under liquidation in any proceedings against such bank, whether such proceedings are commenced before the commencement of liquidation or during liquidation. He noted that from the testimony of the Respondent’s witness, the Respondent admitted against its own interest that the Bank whom it dealt with was still alive and solely allegedly liable to it, citing INDEPENDENT NATIONAL ELECTORAL COMMISSION v OSHIOMOLE [2009] 4 NWLR (PT 1132) 607 at 662, paras B – C.
He further referred to Section 417 CAMA; NWANKWO v YAR’ADUA [2010] 12 NWLR (PT 1209) 518 at 589, para B to submit that any pending action against a company in liquidation can only be proceeded with/continued subject to the leave of the Federal High Court, further citing NIGERIA DEPOSIT INSURANCE CORPORATION v DAVID BARAU [2017] 7 NWLR (PT. 1565) 501 at 514, paras C – G; Sir T. Nwamara: The Law of Winding Up of Banks and Companies (page 181), Published in 2007 by Law and Educational Publishers Limited; Section 567 CAMA; NIGERIA DEPOSIT INSURANCE CORPORATION (LIQUIDATOR OF UNITED COMMERCIAL BANK LIMITED IN LIQUIDATION) v FEDERAL MORTGAGE BANK OF NIGERIA [1997] 2 NWLR (PT 490) 735 at 757 to 758, paras G – A.
Counsel urged the Court to literally interpret the relevant provisions of the statutes referred to, citing SECURITIES AND EXHANGE COMMISSION v KASUNMU [2009] 10 NWLR (PT. 1150) 509 at 537, paras D; JOHNSON v MOBIL PRODUCING NIGERIA UNLIMITED [2010] 7 NWLR (PT. 1194) 462 at 504, paras B; OYEGUN v NZERIBE [2010] 7 NWLR (PT. 1194) 577 at 594, paras G; OKOROCHA v UBA PLC [2011] 1 NWLR (PT. 1228) 348 at 375, para F; and further relied on NIGERGATE LIMITED v NIGER STATE GOVERNMENT [2008] 12 NWLR (PT. 1103) 111 at 145, para H, to submit that the record of Court is binding upon the Court and the parties; and the record herein shows that no leave of the Federal High Court was obtained by the Respondent.
Appellant’s counsel further noted that the amendment of the capacity of the Appellant to participate in this suit does not obviate the need for the leave of the Federal High Court to continue the proceedings nor make the Appellant a liable person who can be stated as party to the suit between the Respondent and Peak Merchant Bank Limited. Counsel submits that the Appellant is only an agent of the company under liquidation and also an agent of the Court, and since its agents have been disclosed the Appellant can neither sue or be sued on its own, citing Section 37 CAMA; AKALONU v OMOKARO [2003] 8 NWLR (PT 821) 190 at 208, paras B, D; TAKUM LGA v UCB NIGERIA LIMTED [2003] 8 NWLR (PT 846) 288 at 300, paras D – F; Section 425(1)(a) CAMA; PROVISIONAL LIQUIDATOR, TAPP INDUSTRIES LIMITED v TAPP INDUSTRIES LIMITED [1995] 5 NWLR (PT 393) 33, para G. Counsel finally urged that this appeal be allowed.
On the part of the Respondent, counsel referred to Section 40(1) of the Nigeria Deposit Insurance Corporation Act to submit that the Appellant is deemed to have been appointed as liquidator of Peak Merchant Bank Limited by the Federal High Court in order for it to act in a manner as those appointed under CAMA; so that the section makes the Appellant a proper party upon the revocation of the Bank’s licence. He noted that no leave of the Federal High Court is required for the Appellant to sue or be sued.
Referring to Section 425(1)(a) CAMA, Respondent’s counsel submits that there is nowhere it is mentioned that a liquidator appointed by the provision of any law or Acts needs leave of Court for such liquidator to sue or be sued, and it is also not stated in the section that a liquidator appointed pursuant to NDIC Act is a liquidator appointed for the purpose of winding up by Court. It is his submission that the section applies to the provisional liquidator only to the extent of bringing and defending any legal proceeding against the provisional liquidator appointed pursuant to Section 40(1) of NDIC Act. It is further submitted that Section 425(1)(a) applies only to a liquidator appointed by Court in a winding up suit to seek the sanction of the Court or that of the committee of inspection.
It is also the submission of the Respondent’s counsel that the issues submitted to the trial Court was on a banker-customer relationship which the State High Court is clothed with requisite banker-customer relationship, relying on NDIC v OKEM ENT. LTD [2004] 4 S.C. (PT II) 77. He finally submitted that the purported lack of jurisdiction as canvassed by the Appellant is baseless and unfounded.
RESOLUTION
Before I proceed, I wish to observe that I am aware, as noted earlier that the Appellant filed a Reply Brief, but having read through the arguments canvassed therein, I find that copious repetition were made of submissions already contained in the Appellant’s brief. Therefore, I shall not waste the time of the Court enumerating them here but shall consider relevant submissions made therein, where necessary. However, having had the benefit of considering the issues formulated and arguments canvassed by the respective counsel, it is my firm view that this appeal can be determined on a sole issue, to wit: whether the learned trial judge rightly assumed jurisdiction and found against the Appellant in the present case?
There seems to be no controversy as to the facts of this case. It is not in dispute that the suit leading to the present appeal was originally commenced by the Respondent against Peak Merchant Bank Limited, and consequent upon the revocation of the Banking Licence of the original defendant, the Respondent brought an application, which was granted by the trial Court to join the Appellant as 2nd Defendant, before the capacity of the Appellant was subsequently amended to reflect it as the Provisional Liquidator of Peak Merchant Limited. From the record of appeal compiled, the fact shows that the Appellant was not only joined as Defendant in the suit but ultimately became the only defendant in the suit, thereby taking the place of the original defendant, Peak Merchant Bank Limited.
Now, the provision of Section 40 of the Nigeria Deposit Insurance Corporation Act, 2006 establishing the Appellant is clear and unambiguous. It reads in part as follows:
(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.
The natural implication of the above provisions is that, upon the revocation of the licence of a bank by the Central Bank of Nigeria (CBN), the Appellant is deemed to have been appointed as provisional liquidator by the Federal High Court, and it is conferred with the powers of a provisional liquidator appointed pursuant to the CAMA. To this extent, 425 (1)(a) of CAMA provides 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.’
In a similar vein, Section 417 of CAMA states 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 the Court given on such terms as the Court may impose.’
Before I proceed any further, I think it ought to be stressed that it is the cardinal principle of law in the interpretation of a statute that where the words of a statute are clear and unambiguous, they must be accorded their plain and ordinary meaning unless this would lead to absurdity. See SKYE BANK PLC v VICTOR ANAEMEM IWU [2017] 16 NWLR (PT 1590) 24 at 87; OKOYE & ORS v C.O.P. & ORS (2015) LPELR 24675 (SC); ANIBOR v EFCC & ORS (2017) LPELR 43381 (CA). The provisions of Sections 417 & 425 CAMA leave no one in doubt that the leave of court must be obtained before any action can be taken or continued against a bank in liquidation. While construing this provision recently, this court in NDIC v MOHAMMED & ORS (2018) LPELR 44744 (CA); per ADEFOPE-OKOJIE, JCA held that:
“… 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 won dip by the Court followed by its delisting from the Register of Companies.”
Indeed, it is true that the revocation of licence of a bank by the Governor of Central Bank does not by itself bring to an end, the life of such bank. The bank remains alive possessing its legal personality even though its licence has been revoked. See the opinion expressed by M.D. MUHAMMAD, JCA (as he then was) in CO-OPERATIVE & COMMERCE BANK (NIGERIA) PLC v O’SILVAWAX INTERNATIONAL LIMITED [1999] 7 NWLR (PT 609) 97 at 103, paras A to C, thus:
“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 prepare for but to ensure the burial of the 1st respondent.”
See also the decision of the Apex Court in OREDOLA OKEYA TRADING CO. & ANOR v BANK OF CREDIT & COMMERCE INTERNATIONAL & ANOR IN RE: MR. SIKIRU AMOLEGBE & ANOR [2014] 8 NWLR (PT 1408) 77, where the Court, per I.T. MUHAMMAD, JSC held:
“Now, winding up of a company involves liquidation of the company/corporation so that assets are distributed to those entitled to receive them. Campbell Black, says, liquidation is quite distinguishable from dissolution which is the end of the legal existence of a company. Liquidation may precede or follow dissolution… Thus, mere revocation of banking licence of a bank, without more, as claimed by the instant applicant cannot bring to an end the juristic life of the bank or corporation. Likewise, where a bank or corporation ceased to operate or closes its business that does not determine its legal existence of such a bank or corporation.”
As it relates to Section 417 and 425(1)(a) CAMA, the learned Justice held:
“By looking soberly, at the provision of Section 425 (1) (a) set out above, one may ask: whether the NDIC as the provisional liquidator of the 1st respondent can bring or defend any action or other legal proceedings 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 1st 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 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 or 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.”
Stating the position of the law as to the point a company will cease to exist, learned Jurist, DATTIJO MUHAMMAD, JSC held as follows:
“These facts which cease to be in dispute put learned respondents’ counsel in good stead. A.I.B Limited which banking licence stands revoked maintains the competence to sue and be sued. It looses this character only on its being finally dissolved. In C.C.B. (Nig) Ltd v. Onwuchekwa (2000) 3 NWLR (part 647) 65 at 73-74 (a Court of Appeal decision which I adopt) I restated the correct position of the law on the point as follows: “This Court’s decision in C.C.B. (Nig) Plc v. O’Silva wax (supra) stands in clear and violent conflict with the Supreme Court decisions in Tesi Opebiyi v. Shittu Oshoboja (1976) 9 and 10 SC 195 and Nzom v. Jinadu (1987) 1 NWLR (Pt. 51) 533 which is sought to apply. In Nzom v. Jinadu (supra) Oputa, JSC as he then was reiterated thus: ‘The dissolution of legal person is analogous to the death of an ordinary person. Now dead men are no longer persons in the eye of the law as they have laid down their legal personality with their lives at death. Being destitute of rights or interest they can neither sue nor be sued.”
Secondly, Section 454 (1) and (2) of the Companies and Allied Matters Act CAP 59 which is hereunder reproduced, company ceases to be from the date the Court ordered its dissolution. Section 454 (1) ‘If the affairs of company have been fully wound up and the liquidator makes an application in that behalf, the Court shall order the dissolution of the Company and the company shall be dissolved accordingly from the date of the Order. (2) A copy of the Order shall within fourteen days from the date when made; be forwarded by the liquidator to the Commission who shall make in its books a minute of the dissolution of the Company.’ It is clear from the principle enunciated in Tesi Opebiyi v. Shittu Oshoboja & Anor (1976) and 10 SC 195 and Nzom v. Jinadu (supra) and by virtue of the Section 454(1) and (2) reproduced above a company dies on its dissolution. The revocation of the licence of that company where it is a bank, and the further Order of Court winding same up may indicate the acute disposition and extreme position of ineffectiveness of the company but not so the fact of its ‘death’. The liquidator who may be likened to an undertaker, by virtue of the company’s total indisposition goes into preparation for the “burial” of the company but the actual burial of the company takes place on its death at its dissolution. The facts of the instant application consideration of which determines the fate of applicant’s motion, makes the reproduction hereunder of Section 417 of the Companies and Allied Matters Act Cap. 59 desirable. Section 417 ‘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.”
My understanding of this Section is that the fact of winding-up of a Company or the appointment of a liquidator does not by itself result in the death of a corporate body thereby removing its legal personality. Infact quite to the contrary, the Section clearly provides that action or proceedings against a wound-up company and/or for whom a liquidator has been appointed, is maintainable with the leave of Court. In the instant application, the fact of dissolution of the defendant/appellant /Respondent had not been established by the Applicant. Furthermore, the NDIC, as required by Section 417 had not been shown to have obtained leave of Court to conduct legal proceedings against the Bank that had been wound-up.”
Without doubt, the provisions of Section 417 and 425(1)(a) CAMA reproduced supra are crystal clear. They also seem to me plain and admit of no ambiguity. In the circumstance, I ask myself the natural, plain and ordinary meaning of those words. In my view, they connote nothing else other than what they mean, which is that leave of the Court is mandatory to bring or continue an action against a company in liquidation. It is however important to mention that the definition of the word ?Court? in Section 567 CAMA, it is the leave of the Federal High Court that must be obtained before the Appellant may be proceeded against as liquidator of Peak Merchant Bank Limited.
In the instant case, it is not in dispute that the Appellant is deemed to have been appointed as a provisional liquidator of Peak Merchant Bank Limited at the time it was made a party to the suit, and there can be no doubt, therefore, that at that time, the suit cannot be proceeded with against the Bank or the Appellant except the leave of the Court was obtained. In this connection, the learned trial judge erred in law in assuming jurisdiction in this suit against the Appellant and making an award against the Appellant for a claim against Peak Merchant Bank Limited, when the leave of the Federal High Court was not obtained by the Respondent permitting it to proceed or continue the suit against the Appellant, as liquidator of Peak Merchant Bank Limited, a bank/company in liquidation.
Let me quickly make some observation touching on the issue of need for a party to obtain leave of the Federal High Court to proceed with an action against the Appellant herein, who is stepping in and taking the place of the bank whose licence has been revoked and is in liquidation. Granted that the provision of the law is firmly settled and clear as earlier enumerated, I think, quite seriously, that the law ought to be looked at and if need be, amended, especially as it relates to cases as in the instant suit, where there is pending before a State High Court an action against a bank whose licence was subsequently revoked by the Central Bank of Nigeria, and the provision of Section 40 of the NDIC Act is activated. I believe in this age of proactive case management and need for efficient delivery of justice, the need for a party who has instituted an action at the State High Court against the ‘liquidating’ bank to pause that suit and proceed before the Federal High Court to obtain leave to continue the action against the NDIC as provisional liquidator is needless.
It is so unfortunate that the substantive action commenced by the Respondent in the present suit bothering on the need for the Bank and/or its liquidator to release its title documents pledged to the Bank as collateral for facility granted to it by the Bank, can be defeated solely on the basis of failure to obtain leave of another Court of co-ordinate jurisdiction where the party had properly activated the jurisdiction of the Court before whom its case was pleaded. As the Respondent’s counsel rightly argued, the case before the Court is simply on banker-customer relationship which the State High Court is clothed with requisite jurisdiction. See NDIC v OKEM ENT. LTD (supra).
I hope one day our legislature will be persuaded to alter the tone of the law as it relates to the peculiar circumstance of the instant case, or better still, the Apex Court of our land, when faced with such set of facts, will be moved to construe the law to allow a party continue an action against the Appellant, as liquidator of a bank whose licence has been revoked, without the need for the party to proceed before the Federal High Court to obtain leave.
But, as of now, my hands are tied, the law and judicial pronouncements as at today does not favour the Respondent. The Respondent ought to have obtained leave of the Federal High Court before proceeding against the Appellant. Therefore, the sole issue is resolved in the Appellant’s favour.
To this end, I find merit in the Appellant’s appeal and it is hereby allowed. The judgment of the Lagos State High Court, coram OBADINA, J., (Mrs.) delivered on 20th June, 2014 is hereby set aside.
TIJJANI ABUBAKAR, J.C.A.: I read in draft the leading Judgment prepared and rendered in this this appeal by my Learned Brother OBASEKI-ADEJUMO J.C.A. I agree with the reasoning and conclusion and adopt the judgment as my own. I have nothing extra to add.
JAMILU YAMMAMA TUKUR, J.C.A.: My learned brother ABIMBOLA OSARUGUE OBASEKI-ADEJUMO J.C.A. afforded me the opportunity of reading in draft before today the lead Judgment just delivered and I agree with the reasoning and conclusion contained therein. I adopt the Judgment as mine with nothing further to add.
Appearances:
Ogechi Ogbonna For Appellant(s)
Respondent not representedFor Respondent(s)
