NWABUEZE AKOBUNDU v. FEDERAL REPUBLIC OF NIGERIA
(2019)LCN/13092(CA)
In The Court of Appeal of Nigeria
On Friday, the 12th day of April, 2019
CA/E/122C/2018
JUSTICES
MONICA BOLNA’AN DONGBAN-MENSEM Justice of The Court of Appeal of Nigeria
IGNATIUS IGWE AGUBE Justice of The Court of Appeal of Nigeria
ABUBAKAR SADIQ UMAR Justice of The Court of Appeal of Nigeria
Between
NWABUEZE AKOBUNDU Appellant(s)
AND
FEDERAL REPUBLIC OF NIGERIA Respondent(s)
RATIO
WHETHER OR NOT A REGISTERED COMPANY IS A LEGAL ENTITY
The provision of the law is that when a company is registered, it becomes a legal entity with a distinct legal personality which can sue and be sued. See Section 65 of the Companies and Allied Matters Act, ABACHA V. A.G. FEDERATION (2014) 18 NWLR (Pt. 1438) p.31 and MR. FORT IFEANYI DIKE V. KAY-KAY CONSTRUCTION LTD (2017) 14 NWLR (Pt. 1884) P.1. The fact that a company has been registered and becomes a legal personality does not bestow upon it the ability to carry out its functions personally; these functions are to be carried out by its officers and Directors, through Annual General Meeting and Board Meetings. The law also provides that such acts carried out by the officers of a registered company are deemed acts of the company and the company is liable and responsible for these acts which were carried out on its behalf. See SECTION 63(3) CAMA, ODUTOLA HOLDINGS LTD V. LADEJOBI (2006) 12 NWLR (PT 994) and IWUCHUKWU V. NWIZU (1994) 7 NWLR (PT. 357) 379 S.C. PER DONGBAN-MENSEM, J.C.A.
THE RULE OF INTERPRETATION OF STATUTES
The Courts have been enjoined to accord the natural meanings of words in documents, contracts and statutes where such words are clear and unambiguous in order to ascertain the true intentions of the makers. See UBN LTD. V. OZIGI (1994) 3 NWLR (Pt. 333) 385 and ALFOTRIN LTD. V. A.G. FEDERATION (1996) 9 NWLR (Pt. 475) P.634 @ p. 638. This Court is bound by these laws. PER DONGBAN-MENSEM, J.C.A.
MONICA BOLNA?AN DONGBAN-MENSEM, J.C.A. (Delivering the Leading Judgment): This is an appeal against the decision of the High Court of Enugu State, delivered on the 17th September, 2018 Coram Hon. Justice C.O. Ajah wherein the Accused Person now Appellant was tried, convicted and sentenced to two years imprisonment for the issuance of dud cheques.
The brief facts leading up to this appeal are as follows;
The Appellant is the Managing Director of Basicon Engineering Company Ltd, while PW1 is the Managing Director of Emcyn Industries Ltd. The two companies had a contract for the former to carry out an industrial job for it, to wit: to fabricate and install a functional Palm Kernel Oil Plant for the latter. The nature of the said industrial job falls within the scope of engineering work that Basicon Engineering Company Ltd can legitimately execute, covered by its Memorandum and Articles of Association.
Basicon Engineering Company Ltd carried out the job but did not fully complete it due to its inability at the time to procure and install expeller machines in respect of which it had received about N24,750,000.00 (Twenty Four
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Million, Seven Hundred and Fifty Thousand Naira Only) from Emycn Industries Ltd. Emycn on its own part was to pay N12,296,000.00 (Twelve Million, Two Hundred and Ninety Six Thousand Naira Only) to Basicon for the extent of job executed, to wit: completion of fabrication work of the job.
On the 12th of February, 2015, Basicon entered into another agreement with Emycn Industries Ltd to have the palm kernel oil plant contract terminated for Emycn to source alternative means of procuring and installing the said expellers to the said fabrication work. Basicon was to refund to Emycn the sum of N12,500,000.00 (Twelve Million, Five Hundred Thousand Naira Only) being the outstanding balance of what Basicon at this point owed Emycn after deducting the said sum of N12,296,000.00 (Twelve Million, Two Hundred and Ninety Six Thousand Naira Only) which Emycn should pay Basicon from the said amount of N24,750,000.00 (Twenty Four Million, Seven Hundred and Fifty Thousand Naira Only) as professional fees for the extent of the palm kernel oil plant job executed.
On the same 12th February, 2015, Basicon Engineering Company Ltd gave Emcyn Industries Ltd an undertaking
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to pay Emycn the said amount of N12, 500,000.00 (Twelve Million, Five Hundred Thousand Naira Only). The Appellant paid on behalf of his company. The Appellant purported to pay off the said outstanding sum of N12,500,000.00 (Twelve Million, Five Hundred Thousand Naira Only) on behalf of his company by issuing three (3) different post dud cheques for N3,000,000.00 (Three Million Naira Only); N3,000,000.00 (Three Million Naira Only); and N6,500,000.00 (Six Million, Five Hundred Thousand Naira Only) to be due for payment in March 2015, 21st April 2015 and 30th April 2015 respectively, altogether valued N12,500,000.00 (Twelve Million, Five Hundred Thousand Naira Only). Prosecution agreed that the Appellant, for his company, started redeeming the cheques and had redeemed the 1st cheque of N3, 000,000.00 (Three Million Naira Only) before the PW1 reported the matter to EFCC.
The Appellant continued the payment of the value of the said cheques while the matter was pending before EFCC, until sometime in 2017, during the pendency of the matter before the trial Court, before the commencement of evidence of PW2, when he fully paid off the entire sum of N12, 500,000.00
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(Twelve Million, Five Hundred Thousand Naira Only) to Emycn. The said sum was paid in tranches of N800,000.00 (Eight Hundred Thousand Naira Only), N1,000,000.00 (One Million Naira Only); N1,200,000.00 (One Million, Two Hundred Thousand Naira Only); N1,500,000.00 (One Million, Five Hundred Thousand Naira Only); N3,000,000.00 (Three Million Naira Only); N3,000,000.00 (Three Million Naira Only) and N2,000,000.00 (Two Million Naira Only) from the awaited proceeds of jobs the Appellant?s company handling at the time of issuance of the said cheques, which prompted the postdating of the cheques in the first place, but which unfortunately did not all come in as and when expected.
The Appellant was arraigned on the 7th June 2016 before the trial Court in relation to 2 out of a total of 3 cheques, on a two count charge of dishonoured cheques offences, punishable under Section 1(1) (b) (i) of Dishonoured Cheques (Offences) Act, 2004. He pleaded not guilty and was later admitted to bail on the 24th of June 2016; the same day the Prosecution opened its case. The Prosecution called three witnesses: Festus Chukwuemake Nwobodo as PW1; Okezie Ike as PW2 and James Ebiboloukemi as PW3
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While the Defence called one witness: the Appellant himself as DW1.
The Appellant was tried, convicted and sentenced to a cumulative term of 2 years imprisonment in relation to those 2 post-dated cheques, adjudged by the learned trial Court to be dud, valued together with the 1st post-dated cheque not included in the charge at N12, 500,000.00 (Twelve Million, Five Hundred Thousand Naira Only). All three cheques were issued by Basicon Engineering Company Ltd through the Appellant to Emcyn Industries Ltd, through the PW1 for a credit Basicon obtained from Emcyn.
Dissatisfied with the decision of the learned trial Court, the Appellant filed a Notice of Appeal on 04/10/18. The Record of Proceedings was transmitted to this Court on 12/12/18. The Appellant filed its Brief of Argument on 21/01/19, the Respondent filed its Brief of Argument on 25/02/19 and the Appellant filed a Reply Brief on 04/03/19.
K.E.O. Owuamalam, Esq. of learned Counsel to the Appellant distilled three (3) issues for determination which were duly tied to the Grounds of Appeal as follows:
1. Whether in view of the law that a body corporate could be tried and punished for issuing a dud cheque,
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the trial Court was right to have tried, convicted and sentenced the Appellant in his individual capacity with regard to the two corporate cheques ? Exhibits 2 and 3 in this case which the Appellant issued on behalf of his company ? Basicon Engineering Company Ltd as its Managing Director (Ground 1).
2. Whether the trial Court breached the right of the Appellant to fair hearing when dealing in its judgment, with the issue challenging the alleged presentation of the said Exhibits 2 and 3 to Fidelity Bank Plc for payment (Grounds 2 and 6).
3. Whether from the totality of the evidence adduced and the overall circumstances of this case, the trial Court was right when it reached the conclusion that the Prosecution proved beyond reasonable doubt the elements of the offence of dud cheque with regard to Exhibits 2 and 3 (Grounds 3,4,5,7,8,9 and 10).
Samuel Okeleke, Esq. Prosecuting Legal Officer, EFCC of learned Counsel to the Respondent distilled a lone issue for determination to wit:
Whether the offence upon which the Appellant was charged and convicted was proven against him beyond reasonable doubt by the Respondent?
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From the issues raised by both parties in this appeal, it is clear that the lone issue raised by Respondent is similar to issue (iii) raised by the Appellant. Therefore, this appeal shall be determined based on the issues raised by the Appellant.
ISSUE 1
Whether in view of the law that a body corporate could be tried and punished for issuing a dud cheque, the trial Court was right to have tried, convicted and sentenced the Appellant in his individual capacity with regard to the two corporate cheques ? Exhibits 2 and 3 in this case which the Appellant issued on behalf of his company ? Basicon Engineering Company Ltd as its Managing Director (Ground 1).
The Appellant submits that from all the oral and documentary evidence presented at the trial Court, the alleged dud cheques belong to and were drawn by the Appellant?s company, Basicon Engineering Company Ltd. That by the provisions of Sections 63 – 65 of the Companies and Allied Matters Act, a company registered under the Act may carry out its functions through the members and the company will be criminally or civilly responsible for such acts carried
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out on its behalf. He further submits that since the Appellant?s company is registered with the Corporate Affairs Commission, it has a corporate identity and ought to be charged for this offence. That the Appellant cannot be sued in his personal capacity for acts done on behalf of the company and the person who should have stood trial ought to be the Basicon Engineering Company Ltd since Section 1(1)(b) (ii) of Dishonoured Cheques (Offences) Act, 2004 makes provisions for companies.
Responding to the above issue, the learned Counsel to the Respondent submits that the Appellant is a direct beneficiary of all the gains and liabilities that accrues to Basicon Engineering Company Ltd by virtue of being the owner and alter ego of the company. That the signatures on the contract of service, undertaking and Exhibits 2 and 3 belong to the Appellant and Section 305 of the Investment and Securities Act provides that where an offence has been committed by a company every person who was in charge at the time the offence was committed shall be deemed guilty and liable to be proceeded against. Cites OLAWEPO V. S.E.C (2011) 16 NWLR (Pt. 1272) P. 122.
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He further submits that the acts that led to the charge against the Appellant, although done in the name of his company were undertaken by the Appellant and he should be held liable because the corporate shell of an incorporated company is always cracked whenever the interest of justice so demands. Cites INTERNATIONAL OFFSHORE CONST. LTD V. I.N. LTD (2003) 16 NWLR (PT. 845) 157.
Cites MR. FORT IFEANYI DIKE V KAY-KAY CONSTRUCTION LIMITED (2017) 14 NWLR (PT. 1884) PG. 1, CHARTERED BRAINS LTD AND ANOR V. INTERCITY BANK PLC (2009), ALADE V. ALIC (NIG) LTD, AND ANOR (2010) 19 NWLR (PT. 1226), ABACHA V. A.G. FEDERATION (2014) 18 NWLR (PT.1438) PG. 31 AND EBELE OKOYE V. COMMISSIONER OF POLICE (2015) 17 NWLR (PT. 11488) P. 276.
In its Reply Brief, the Appellant submits that the provisions of Section 305 of Investment and Security Act and the case of OLAWEPO V. S.E.C. (Supra) do not contemplate the lifting of the veil of incorporation of a company to hold its officer responsible but contemplates holding both the company and its officer responsible for the alleged offence. That there is no mention anywhere on the charge sheet of the company name or that the Appellant is
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being charged in his corporate capacity as the Company?s Managing Director. Learned Counsel further submits that the Provisions of law cited by the Respondent do not apply to this case as the Appellant was not charged and tried under Section 305 or any other Section of the Investment and Security Act or any other similar law but was specifically charged and tried under the Dishonoured cheques (Offences) Act which has a specific provision for charging the company.
By a motion filed 21/01/19 the Appellant sought the leave of this Court to raise a fresh issue on appeal which was not raised at the trial Court. This is Ground 1 of the Notice of Appeal where Issue (i) flows from. This application was granted on 22/01/19.
The Appellant who is the Managing Director of Basicon Engineering Company Ltd was charged under Section 1(1) (b) (ii) of Dishonoured Cheques (Offences) Act 2004 for allegedly issuing out dud cheques. These cheques were issued to Emcyn Industries Ltd by Basicon Engineering Company Ltd, both companies are duly registered with the Corporate Affairs Commission as required by the Companies and Allied Matters Act. The fact that Basicon
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Engineering Company Ltd is duly registered as evidenced in Exhibit 7(B) which is a letter from Corporate Affairs Commission confirming that these two companies are registered and also Exhibits 5 and 5A which are letters from Fidelity Bank confirming that both registered companies have their company accounts with Fidelity Bank Plc.
The contract, all the agreements/undertakings and documents leading up to the issuance of the alleged dud cheques were all executed in the name of the two registered companies. Ultimately, the alleged dud cheques were issued from one registered company to another registered company. The signatures on these documents belong to the Appellant as the Managing Director of his company and not in his personal capacity. The provision of the law is that when a company is registered, it becomes a legal entity with a distinct legal personality which can sue and be sued. See Section 65 of the Companies and Allied Matters Act, ABACHA V. A.G. FEDERATION (2014) 18 NWLR (Pt. 1438) p.31 and MR. FORT IFEANYI DIKE V. KAY-KAY CONSTRUCTION LTD (2017) 14 NWLR (Pt. 1884) P.1. The fact that a company has been registered and becomes a legal personality
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does not bestow upon it the ability to carry out its functions personally; these functions are to be carried out by its officers and Directors, through Annual General Meeting and Board Meetings. The law also provides that such acts carried out by the officers of a registered company are deemed acts of the company and the company is liable and responsible for these acts which were carried out on its behalf. See SECTION 63(3) CAMA, ODUTOLA HOLDINGS LTD V. LADEJOBI (2006) 12 NWLR (PT 994) and IWUCHUKWU V. NWIZU (1994) 7 NWLR (PT. 357) 379 S.C. The reference of learned Counsel to the Respondent to Section 305 of the Investment and Securities Act is misplaced in the instant appeal because the Appellant was charged and tried under a different law that is Dishonoured cheques (Offences) Act, 2004. Therefore, the submission by the Respondent?s Counsel that the Appellant who was in charge of the company shall be deemed to be guilty of the offence and held liable is not tenable.
Section 305 of the Investments and Securities Act recognises two categories of persons, the director responsible to the company for the conduct of the business of the company and
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the company as a distinct entity. This was elicited per Regina Obiageli Nwodo, J.C.A. (OBM) in Olawepo V. S.E.C. as cited by the Respondent. This being the case, the company ought to be held liable also, but there is no mention of the Appellant?s company in the charge sheet on whose behalf the Appellant acted.
On the contrary, Dishonoured Cheques (Offences) Act specifically made provisions for registered companies to be charged and tried for the issuance of dud cheques under Section 1(1) (b) (ii) of the Act. The law clearly envisaged situations such as in the instant appeal and made appropriate provisions for it. The Courts have been enjoined to accord the natural meanings of words in documents, contracts and statutes where such words are clear and unambiguous in order to ascertain the true intentions of the makers. See UBN LTD. V. OZIGI (1994) 3 NWLR (Pt. 333) 385 and ALFOTRIN LTD. V. A.G. FEDERATION (1996) 9 NWLR (Pt. 475) P.634 @ p. 638. This Court is bound by these laws.
?The argument canvassed by the Respondent?s Counsel that the veil of incorporation can be lifted whenever the interest of justice demands it is not applicable in the
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instant appeal. This being that this Court has held per Edozie, JCA (AHTW) in A.C.B. LTD V. APUGO (1995) 6 NWLR (PT. 399) P. 72 that;
?The circumstances under which the Courts lift the veil of incorporation for the purpose of paying regards to the economic realities behind the legal facade of incorporation are well defined. They include;
(a) Where the number of members fall below the statutory minimum;
(b) Where the company has been carried on in a reckless manner or with intent to defraud creditors; and
(c) Where the company is a sham.
Though the foregoing is not exhaustive of the circumstances under which the courts lift the veil of incorporation, the common trend in all the circumstances is that the company involved must have been guilty of some improper conduct to warrant the lifting of the veil to see who was behind the improper conduct. In the case under consideration, the conduct of the company was not in issue. The Appellant had not instituted any action against the company for the investigation of its affairs. There was therefore no basis for the request by the Appellant that the corporate veil of the company should be lifted.”
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None of the conditions for lifting the veil of incorporation have been made out in this appeal. There is no basis for the request that the corporate veil of the company be lifted when the company is not standing trial. The Appellant is a human person by the name of Nwabueze Akobundu and he has not been tried jointly with any other person nor body corporate. What veil is there to be lifted?
The company who is the bearer of the alleged dud cheques was the appropriate person to face the charges at the trial Court. The Appellant ought not to be charged and tried for acts done on behalf of the company and in the name of the company.
I resolve the issue in favour of the Appellant.
This appeal is allowed. The conviction and sentence of the Appellant is hereby quashed. The decision of the High Court of Enugu State Coram C.O. Ajah (J) delivered on the 17th September, 2018 is hereby set aside.
IGNATIUS IGWE AGUBE. J.C.A.: The Judgment Of my Learned presiding Justice has been read in advance and I agree totally with her reasoning and conclusion that this Appeal succeeds and same is accordingly allowed
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The conviction and sentence imposed on the Appellant is also quashed and the Appellant is discharged and acquitted.
ABUBAKAR SADIQ UMAR, J.C.A.: I have read in advance a draft of the lead Judgment just delivered by my learned brother Monica B. Dongban-Mensem, JCA, and I am, in complete agreement with the conclusion reached therein that the appeal has merit and perforce ought to be allowed in that none of the conditions for lifting the veil of incorporation have been made out in this appeal.
The appellant Nwabueze Akobuelu is a human being, and he had not been tried Jointly with anybody or corporate, nor was he joined and charge together. He stand trial alone hence he cannot to be tried for the acts alone on behalf of the company.
It is in the light of the above and for the fuller reasons adduced in the lead Judgment that I hold too that the appeal has merit all perforce succeeds and it is hereby allowed by me.
The conviction and sentence of the Appellant by the Court below is hereby quashed.
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Appearances:
K.E.O. Owuamalam, Esq.For Appellant(s)
Samuel Okeleke, Esq. (Prosecuting Legal Officer, EFCC)For Respondent(s)
Appearances
K.E.O. Owuamalam, Esq.For Appellant
AND
Samuel Okeleke, Esq. (Prosecuting Legal Officer, EFCC)For Respondent
