UNIJOY PAPER PRODUCTS LTD. V. NIGERIAN DEPOSITS INSURANCE CORPORATION & ANOR.
(2012)LCN/5117(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 24th day of January, 2012
CA/L/235/2010
RATIO
INTERPRETATION OF STATUTES
As rightly postulated by learned counsel for the Respondents in his Brief of Argument, decidedly, it is the duty of the Court to interpret the words the legislature has used. And it is the candid principle of interpretation that where, in their ordinary meaning, the provisions are clear and unambiguous, effect should be given to them as such. See CITY ENGINEERING (NIGERIA) LTD. VS. NIGERIAN AIRPORTS AUTHORITY (1999) 6 SCNJ. Page 263 at 272 lines 25-29. PER. RITA NOSAKHARE PEMU J.C.A.
THE PRINCIPLES GOVERNING THE AWARD OF INTEREST
The Supreme Court in the case of EKWUNIFE VS. WAYNE (1989) 5 NWLR (Part 122), Page 445, paragraph b, enunciated the following principles to govern the award of interest. They are: (a) where it is claim as a right and (b) where there is a power conferred to do so in exercise of the Court’s discretion. “Where a claim is for the return of money, Judgment should be accompanied by the award of interest for the period for which it is claimed, Even where the interest is not claimed specifically in the Writ of Summons and Statement of Claim, the Court can award interest as a consequential order.” PER. RITA NOSAKHARE PEMU J.C.A.
JUSTICES
HELEN MORONKEJI OGUNWUMIJU Justice of The Court of Appeal of Nigeria
RITA NOSAKHARE PEMU Justice of The Court of Appeal of Nigeria
MOHAMMED A. DANJUMA Justice of The Court of Appeal of Nigeria
Between
UNIJOY PAPER PRODUCTS LTD. – Appellant(s)
AND
1. NIGERIAN DEPOSITS INSURANCE CORPORATION
2. ALPHA MERCHANT BANK PLC. (IN LIQUIDATION) – Respondent(s)
RITA NOSAKHARE PEMU J.C.A. (Delivering the Leading Judgment) The action, subject matter of this Appeal was commenced by Originating Application dated 27th of April 2009, by the Applicant (now Appellant) as gleaned from pages 1 – 7 of the Record of Appeal. It issued at the Investments and Securities Tribunal, Lagos.
It is for the following orders.
(I) AN ORDER directing the 1st Respondent to pay the Applicant the sum of N5,395,781.60k (Five Million, Three Hundred and Ninety-Five Thousand, seven Hundred and Eighty-One Naira, Sixty Kobo) being the total sum of money paid by the Applicant to the 22nd Respondent in its Initial Public Offer of shares in October 1992 which shares were not allotted.
(II) AN ORDER directing the 1st Respondent to pay the sum of N17,881,472.39 (Seventeen Million, Eight Hundred and Eighty One Thousand, Four Hundred and Seventy-Two Naira, Thirty-Nine Kobo) being interest on the principal sum, calculated at 21% per annum from 15th October 1992 to 23rd of July 2008 for the unallotted shares of the 2nd Respondents which the 1st Respondent is unjustifiably holding unto despite repeated demands.
(III) AN ORDER directing the 1st Respondent to pay interest at the rate of 21% from the said 23rd July, 2008 till judgment is obtained and thereafter till payment effected.
(IV) A declaration that the action of the 1st and 2nd Respondents in withholding the money paid by the Applicant for the unallotted shares of the 2nd Respondent is malafide, unjustifiable, illegal and unconstitutional.
(V) AND for such further or other orders as this Honourable Tribunal may deem fit to make in the circumstances.
FACTS OF THE CASE
The 1st Respondent (now 1st Respondent in this Appeal) is a regulatory authority that secures deposit made by the public in commercial Bank in Nigeria and is also the liquidator of the 2nd Respondent with its office in Lagos.
The 2nd Respondent (now 2nd Respondent in this Appeal) was a Public quoted bank with head office in Lagos, who offered its shares for sale through the Security and Exchange Commission.
On the 15th of October 1992, the Appellant made payment of the sum of N5,395,781.60k [Five Million, Three Hundred and Ninety-Five Thousand, Seven Hundred and Eighty-One Naira, Sixty Kobo) to the 2nd Respondent for the purchase of shares for some persons namely:
Jimi Lawal N2,395,781.60
Janet O. Lawal N1,000,000.00
Francis Nwachukwu N1,000,000.00
Richard Ikiebe N1,000,000.00
————-
Total N5,395,781.60
—————
No shares were however allotted to these persons, because the Security and Exchange Commission refused to register the shares, because payment was made after the offer had closed.
The 2nd Respondent, shortly after its public offer, became distressed and was consequently liquidated by the 1st Respondent.
It is the case of the Appellant that the Respondents failed and refused to make refund of the said amount paid by the above named person. The shares they sought to Purchase were never allotted to them. In series of letters written by the Appellant’s solicitors, and addressed to the Respondents the Appellant demanded refund.
On the 19th of February, 2007, the 1st Respondent wrote a letter to the Appellant’s solicitor requesting the Applicant to provide an indemnity to 1st Respondent against claims that may be made by the stated shareholders against it, in the event the refund was made to the Appellant.
The Appellant, by a letter dated 22nd February 2007, forwarded the said indemnity to the 1st Respondent, who requested for some amendments to be effected on the indemnity. This was done.
The 1st Respondent, by a letter dated 18th of May 2007, requested further amendments of the indemnity. The Appellant’s solicitor complied. But the refund was being delayed unnecessarily and this prompted the Appellant’s solicitor to protest to the 1st Respondent, who reminded them that the Applicant was losing interest in the corporation by not being paid.
After further amendment on the indemnity, the Appellant’s solicitor on the 22nd of July 2008, vide letter, wrote to the 1st Respondent copied to the security and Exchange Commission, demanding for the payment of N23,277,253.99k) (Twenty-Three Million, Two Hundred and Seventy-Seven Thousand, Two Hundred and Fifty-Three Naira, Ninety-Nine kobo) being the principal sum sought to be invested in the 2nd Respondent, which was rejected, and interest calculated at 21% per annum, from the 15th October, 1992, to 23rd July, 2008, to be paid on or before 7 days of receipt of the letter.
Eventually, the Appellant through its solicitor’ petitioned the Securities and Exchange Commission to intervene through its Administrative Procedure Committee, to compel the 1st Respondent to refund the Appellant’s money for the unallotted shares which the Appellant subscribed for in the initial public offer of the 2nd Respondent in 1992.
The Securities and Exchange Commission by a letter dated 14th November 2008 written to the Appellant’s counsel declined jurisdiction to entertain the matter.
The Appellant served the Securities and Exchange Commission, through its solicitor the necessary pre-requisite-pre-action notice. The Respondents have failed, refused, or neglected to pay to the Appellant the sum of N23,277,253.99k (Twenty-Three Million, Two Hundred and Seventy-Seven Thousand, Two Hundred and Fifty-Three Naira, Ninety-Nine Kobo) till date despite several demands.
After the hearing of witnesses and tendering of exhibits, the Presiding Chairman Mohammed A. Dahiro delivered his Judgment on the 22nd of October 2009, whereby the Tribunal ordered the 1st Respondent to pay the Appellant, the sum of N5,395,781.50 with interest at the Minimum Policy Rate (MPR) plus 2 percent per annum from the date of deposit (16th December, 1992) to the date of liquidation of the 2nd Respondent (Alpha Merchant Bank Plc) on the 8th of September, 1994, only.
The Appellant, being dissatisfied with the decision of the Tribunal has appealed it.
Pursuant to the Practice Direction of this Honourable Court, the Appellant filed his notice of Appeal on the 9th of November, 2010 with a sole ground of Appeal, which I shall reproduce verbatim.
“The tribunal erred in law when it held that the Minimum Policy Rate, plus 2% percent interest in the Appellant’s deposit for the unallotted shares is to be applied only for a period of three years (3 years) (16th December, 1992 – 8th of September, 1994) being the period between the time of the deposit for the unallotted shares with the 2nd Defendant and the time of 2nd Defendants’ liquidation and excluded October, 1994 to October, 2009 (15 years) in which the Appellant’s deposit was in the custody of the 1st Respondent.
The reliefs sought by the Appellant are as follows:-
(1) To allow the appeal and grant the interest on the paid sum of N9,313,562.53 (Nine Million, Three Hundred and Thirteen Thousand, Five Hundred and Sixty-Two Naira, Fifty-Three kobo) at the rate of 21% from 8th September, 1994, being the date of liquidation of the 2nd Respondent, to 22nd October, 2009 being the date of the judgment of the lower tribunal which amounts to N29,594,929.40) (Twenty-Nine Million, Five Hundred and Ninety-Four Thousand, Nine Hundred and Twenty-Nine Naira, forty kobo).
(2) Interest on the said sum of N29,594,929.40 (Twenty-Nine Million, Five Hundred and Ninety-Four Thousand, Nine Hundred and Twenty-Nine Naira, Forty kobo) at the rate of 7 1/2 % from 22nd October, 2009 until Judgment sum is finally liquidated in full.
Pursuant to a Preliminary Objection filed by the Respondent Applicant on the 1st of June 2009, challenging the jurisdiction of the Tribunal to entertain the matter, the Tribunal on the 14th of July 2009 upheld the Preliminary Objection and struck out the suit in consequence.
The Applicant (now Appellant) applied to relist the suit by motion dated and filed 21st August 2009 (Pages 94-97 of the Record of Appeal), which application was granted by the Tribunal on the 2nd of December 2009.
The Notice of Appeal dated 10th March 2010 was filed on the 4th of November 2010, pursuant to the Practice Direction of the Court, the present appeal was transmitted to this court on the 11th of November, 2010 and a prayer for an order extending time within which the Applicant may appeal, by filing its Notice of Appeal against the Judgment delivered by the Investment and Securities Tribunal was granted on the 28th of October, 2010.
The Appellants’ Brief of Argument was filed on the 11th of November 2010. His brief spans a total of sixteen (16) pages. At page 5 paragraph 3.01 thereof, the Appellant submits one sole issue for determination. That is,
“Whether the law limits the period which the Appellant should be paid interest? The learned Tribunal, having held that the Appellant was entitled to interest in the sum of N5,395,781.50 from the date of deposit to the date such money are returned, whether the learned Tribunal was right in limiting the interest to be paid on the sum of N5,395,781.50 from the date of deposit to the date Alpha Merchant Bank Plc was liquidated”.
The page of the Notice of Appeal is not indicated in the index of the Record of Appeal, but I find same reflected at pages 199 – 201 of the Record of Appeal.
The sole ground of Appeal is at page 200 of the Record of Appeal. I shall reproduce same, shorn of its particulars
“The Tribunal erred in law when it held that the Minimum Policy Rate, plus 2% (percent) interest on the Appellants deposit for the unallotted shares is to be applied only for a period of three years (3 years) (16th December, 1992 – 8th of September, 1994) being the period between the time of the deposit for the unallotted shares with the 2nd Defendants’ liquidation and excluded October, 1994 to October, 2009 (15 years) in which the Appellants’ deposit was in the custody of the 1st Respondent.”
At the expense of repetition the Appellant seeks the following reliefs from this Honourable Court.
1. To allow the appeal and grant the interest on the paid sum of N9,313,562.53 (Nine Million, Three Hundred and Thirteen Thousand, Five Hundred and Sixty-Two Naira, Fifty-Three, Kobo) at the rate of 21% from 8th September, 1994, being the date of liquidation of the 2nd Respondent, to 22nd October, 2009 being the date of the Judgment of the lower Tribunal which amounts to N29,594,929.40) (Twenty-Nine Million, Five Hundred and Ninety-Four Thousand, Nine Hundred and Twenty-Nine Naira, Forty Kobo.).
2. Interest on the said sum of N29,594,929.40 (Twenty-Nine Million, Five Hundred and Ninety-Four Thousand, Nine Hundred and Twenty-Nine Naira, Forty kobo) at the rate of 7 1/2% from 22nd October, 2009, until judgment sum is finally liquidated in full.
The Respondent initially filed its Brief of Argument on the 20th of December, 2010, but same having been out of time, by motion of notice filed on the 27th of May, 2011, an order for extension of time, was granted him on the 2nd of November, 2011. The Respondents’ Brief of Argument was therefore deemed filed on the 2nd of November, 2011.
The Respondents’ brief is not paginated. Howbeit, in paragraph 2.01 of their brief, they proffered also one issue for determination which is
“Whether the Tribunal was right in its decision on the payment of interest to the Appellant.”
The Appellant filed a reply brief on the 14th of January 2011, but same being out of time, by motion on notice filed on the 27th of July 2011, he sought an order for extension of time to file his reply brief in reply to the Respondents’ brief. Same was granted by an order of this court on the 2nd of November 2011.
The Appellants’ Reply brief was therefore deemed filed on the 2nd of November, 2011.
The judgment of the Investments and securities Tribunal is at pages 176 – 198 of the Record of Appeal.
In paragraph 2, 3, 4, 5, 6, 7, 9, 21 & 29 of the Originating Application, the Applicant, Unijoy Paper Products Limited had averred thus
Paragraph 2 “The 2nd Respondent was a public quoted bank with head office in Lagos who offered its shares for sale through the Securities and Exchange Commission.”
Paragraph 3 “The Applicant on the 15th of October 1992, made payment of the sum of N5,395,781.60
(Five Million, Three Hundred and Ninety-Five Thousand, Seven Hundred and Eighty One Naira, Sixty Kobo) to the 2nd Respondent for the purchase of shares for the following persons:
1. Jimi Lawal N2,395,781.60
2. Janet O. Lawal N1,000,000.00
3. Francis Nwachukwu N1,000,000.00
4. Richard Ikiebe N1,000,000.00
————–
Total N5,395,781.60
—————-
Paragraph 4 “The Security and Exchange Commission refused to register the shares due to the fact that the payment was made after the offer had closed and so no shares were allotted to the Applicant”‘
Paragraphs 5 “The 2nd Respondent became distressed shortly after its public offer and was liquidated by the 1st Respondent”
Paragraphs 6 “The Respondents failed, refused or neglect to make immediate refund of the Applicant’s N5,395,781.60 (Five Million, Three Hundred and Ninety Five Thousand, Seven Hundred and Eighty One Naira, Sixty Kobo) when the shares they sought to purchase were not allotted to them.”
Paragraph 7 “The Applicant, through its Solicitor, Messrs Amaran & Associates’ by a letter dated 26th October, 2005, wrote the 1st Respondent requesting for a refund of payment made in the 2nd Respondent’s initial public offer, which shares were not allotted to the Applicant’ The Applicant shall at the trial rely on the said letter.”
Paragraph 9 “The Applicant’s Solicitors’ held a meeting with the 1st Respondent on the 7th of November 2005, in which they agreed as follows:
1. That our client, the petitioner’ be paid his dividend warrant for the payment it made during the period of the Initial Public Offer-of Alpha Merchant Bank Plc (In Liquidation) ‘
2. That the payment made after the Initial Public Offer of Alpha Merchant Bank (In Liquidation) be refunded to our client with compound interest at the prevailing rate in 1992. The Applicant’s Solicitors reiterated the decision reached at the meeting by a letter dated 9th November 2005, to the 1st Respondent. The Applicant should at the trial rely on the letter”‘
Paragraph 21 “The Applicant’s Solicitors by a letter dated the 18th of July, 2007 wrote to protest to the 1st Respondent that the refund was being delayed unnecessarily and reminded them that the Applicant was losing interest in the Corporation by not being paid. The Applicant shall at the trial rely on the said letter.”
Paragraph 29 “The Applicant’s Solicitors by a letter dated 9th December 2007, complied with the request of the 1st Respondent and forwarded same. The Applicant shall at the trial rely on the said letter.” (Pages 2 – 5 of the Record of Appeal)
Paragraphs 6, 7, 8, 9, 10, 11, 22, 24 and 25 of the Respondents reply are worthy of reproduction.
Paragraph 6 “That due to the fact that payment was made late, Securities and Exchange Commission refused to register the shares and consequently no shares was allotted to them.”
Paragraph 7 “That upon the liquidation of the 2nd Respondent, the 1st Respondent was appointed the liquidator.”
Paragraph 8 “That a letter dated 26th October, 2005 was received by the 1st Respondent from AMARAN & ASSOCIATES (Solicitors and Advocates) purportedly to have been written on behalf of one Lord CHIEF D.U. IFEGWU for payment of dividend for the Initial Public offer of Alpha Merchant Bank,”
Paragraph 9 “That the 1st Respondent by a letter dated 7th November 2005, requested for a meeting between itself and CHIEF D.U. IFEGWU’S Solicitors (Amaran & Associates) on the 10th November, 2005 at 10.00am”
Paragraph 10 “That the meeting was held but no agreement as to any payment of interest whatsoever to the Applicant.”
Paragraphs 11 “That the same solicitor who wrote on behalf of Chief D.U. Ifegwu wrote a letter dated 22nd February, 2006 to the 1st Respondent on behalf of the Applicant informing the 1st Respondent of payment totally N5,395,781.60 on behalf of the four intended allottees requesting that dividend, refund and interest due from Alpha Merchant Bank Plc. (in liquidation) to be paid to the Applicant.”
Paragraph 22 “That rather than comply with the offer of indemnity of a licensed Bank’ on 22nd July 2008, the Applicant’s Solicitor wrote a letter to the 1st Respondent claiming the sum of N23,277,253,99 being the principal sum and the interest at the rate of 21% per annum from 15th October 1992 to 23rd July 2008.”
Paragraphs 24 “Whereof the Respondent shall contend that the Applicant claim is unfounded having not satisfied the condition for the refund of money paid by it on behalf of the four (4) intended shareholders and that the Applicant is not entitled to any form of interest whatsoever”‘
Paragraphs 25 “That the purchase of shares is not one of commercial transaction to which interest is charged or envisaged’ therefore the Applicant, is only entitled to the sum of N5,395,781.50 paid for the purchase of hares.” (See Pages 104 – 106 of the Record of Appeal).
In his Brief of Argument settled by Pablo Amaran Esq, counsel for the Appellant argues that his sole issue for determination is tied to his sole ground of Appear. He submits, rightly in my view, that in addressing this issue, recourse has to be made to the relevant legislation in respect of the Investment and Securities Tribunal, namely: The Nigeria Deposit Insurance Corporation Act, 2006, Securities and Exchange commission (SEC) Rules and Regulation, Investment and Securities Act, No 45 of 1999, and Investments and Securities Tribunal (Procedure) Rules 2003.
May I add, that one has to consider also whether the court is statutorily empowered to award interest in circumstances such as this. Let me quickly reproduce here the provisions of Section 91(1) and 96 of the Investments and Securities Act (ISA) 2007 and Rule 64 of the Securities and Exchange Commission Rules and Regulation, to see if these provisions can be meaningful in the consideration of the issue before this Court.
Section 91(1) of the Investments and Securities Act (ISA) 2007 has this to say:
“Application money and other money paid prior to allotment of shares by on Applicant on account of shares or other securities shall until the allotments of shares or other Securities, be held in a separate account, as deposit by the issuing house on such terms and condition as may be prescribed by the Commission.”
Section 96 of ISA 2007 provides thus:
1. “The Commission shall have the maximum power to prescribe the maximum period within which surplus monies due to subscribers shall be returned.”
2. “The Commission may subject to section 3 of this Section prescribe the rate of interest payable to subscribers whose surplus monies are held beyond the period prescribed pursuant to section one of this Section.”
3. “The interest due and payable under sub-section 2 of this Section shall not be less than 1% above the CBN minimum rediscount rate and the Commission may, in addition, require a company which fails to honour its obligation under this sub-section to pay a higher rate of interest on the surplus money”
Rule 64 of SEC Rules and Regulation provides:
“The issuing house (the lead issuing house if any) shall ensure that all proceeds of an issue are deposited in a separate interest yielding account offered for that purpose, with the receiving banker duly registered as a Capital Market Operator.”
It is my view that these provisions as they appear, applies to proceeds of the issue which covers monies from successful and unsuccessful Applicants. But section 91(1) of ISA 2007 specifically says application money and other money paid prior to allotment of shares, not payment made after the offered had closed. This is the situation of the Appellant in this case.
Learned counsel for the Appellant had argued that where the licence of an insured institution is revoked, the payment of insured deposit should be refunded within 90 days. That in this matter, the contrary was the case as all efforts by the Appellant and its counsel to recover his money proved abortive, because of unwarranted stringent conditions imposed by the 1st Respondent to the refund of the Appellant’s deposit for the unallotted shares. He refers to Section 14(1)(e) of the NDIC Act 2006, and Section 21(1) of the NDIC Act 2006 which has this to say:
“Where the licence of a failed insured institution is revoked, payment of the insured deposit in such institution shall be made by the corporation within 90 days either by
1. Cash, negotiable instruments, or……….”
He argues that by the combined provisions of Section 64(1) and 64(6)(a), depositor monies are also expected to be kept in a separate interest yielding account and as such the refund of such money will attract interest from the date of deposit to the date of refund. (See paragraph 4.04) Page 7 of the Appellant’s Brief of Argument.
He further argues that Section 64 of the Securities and Exchange Commission Rules and Regulations, provides that the issuing house (the lead issuing house if any) shall ensure that all proceeds of an issue are deposited in a separate interest yielding account opened for that purpose with the receiving banker duly registered as a capital market operator. He submits that section 64(6)[a) of SEC Rules provides that where the issuing house or underwriter(s) default(s) in terms of the day of payment, the issuer shall be entitled to the proceeds plus accrued interest at the prevailing Nigeria Inter-Bank Rate (NIBOR).
Referring to Section 91(1) and 96(1)(2) and (3) of the Investments and Securities Act (Supra) he argues that the Tribunal in reaching its decision in the case in hand made reference to its former decision in GBADEBO SMITH VS FIRST BANK OF NIGERIA PLC., in Suit No. 1ST/OA/06/08, where the Court held inter alia that “‘….for the unsuccessful Applicant who are not allotted any shares for any reason, they are entitled to full return of application monies plus interest accrued for dates of deposit to the date such monies are returned.”
In the present case, the Tribunal limited the interest to the first three of the deposit and excluded fifteen years without giving any reason for exclusion and the deviation from its earlier decision.
But, with respect, there is evidence here that the 1st Respondent became insolvent.
Let me refer to ratio one in GARBA VS. SHEBA INTERNATIONAL (NIG) LTD. 2002. 1 NWLR. Pt. 748 where it was held that (on whether money placed on deposit for purchase of shares will attract interest).
“It is proper for money placed on deposit for purchase of shares to attract interest until it is invested. But an investment can only attract profit or dividend if the investment makes profit and not interest because it is being used to trade…….”
What is the argument of the Respondent as reflected in his brief of argument?
At the expense of repetition, his sole issue for determination is reflected in paragraph 2.01 of his brief which is not pagenated. It is
“Whether the Tribunal was right in its decision on the payment of interest to the Appellant,”
I must note here with dismay that there is nothing in the brief to indicate whether the brief was a joint brief, or was filed by either the 1st Respondent or the 2nd Respondent.
Again, it is observed that one T.O.S. Fadahunsi Esq., had signed the brief as Applicants’ Solicitors. Are there any Applicants or Applicant in this Appeal as reflected in the Notice of Appeal? I think not. Not on the Record of Appeal. These depict recklessness and want of diligence on the part of counsel representing the Respondents and same is highly deprecated. What we have before this Court is an appeal and not an application of any sort to warrant the nomenclature “Applicant”.
Learned counsel for the Respondents did not indicate whether his issue for determination is tied to the sole Ground of Appeal. Again this amounts to want of diligence of part of learned counsel, and indeed bad drafting.
Howbeit, I dare say that the gravamen of the Appellant’s case is whether the interest awarded the Respondents at the Investments and Securities Tribunal was rightly awarded.
It seems to me that the Respondents are of the view that the Appellant is not even entitled to interest at all. This, with respect is also my view.
It is the case of the Respondents that before the Banking license of the 2nd Respondent was revoked by the Central Bank of Nigeria, and the appointment of the 1st Respondent as liquidator, the 1st Respondent had no interest or anything to do with the 2nd Respondent Public Offer. And that as a liquidator of the 2nd Respondent, the 1st Respondent resumed statutory responsibility from 8th, September 1994 (when the Banking license of the 2nd Respondent was revoked by central Bank of Nigeria and the 1st Respondent was appointed the official liquidator for the 2nd Respondent). Therefore the 1st Respondent did not assume statutory responsibility until the 8th of September 1994.
His statutory responsibility is from 8th September 1994 and not 16th of December 1992 when payment for the Public Offer was made.
As rightly postulated by learned counsel for the Respondents in his Brief of Argument, decidedly, it is the duty of the Court to interpret the words the legislature has used. And it is the candid principle of interpretation that where, in their ordinary meaning, the provisions are clear and unambiguous, effect should be given to them as such. See CITY ENGINEERING (NIGERIA) LTD. VS. NIGERIAN AIRPORTS AUTHORITY (1999) 6 SCNJ. Page 263 at 272 lines 25-29.
By the very words in Section 91(1) of ISA 2007, it applies to application money and other money paid prior to allotment of shares (underlined for emphasis).
That provision does not apply to a situation (as in the present circumstance) where payment was made after the offer had closed. (Underlined for emphasis) and the shares were not allotted,
The Supreme Court in the case of EKWUNIFE VS. WAYNE (1989) 5 NWLR (Part 122), Page 445, paragraph b, enunciated the following principles to govern the award of interest. They are:
(a) where it is claim as a right and
(b) where there is a power conferred to do so in exercise of the Court’s discretion.
“Where a claim is for the return of money, Judgment should be accompanied by the award of interest for the period for which it is claimed, Even where the interest is not claimed specifically in the Writ of Summons and Statement of Claim, the Court can award interest as a consequential order.”
Now, is the Appellant entitled to interest as of right, in view of the fact that he made payment for the shares after the offer had closed? I think not.
The Appellant had averred in paragraph 4 of his Originating Application before the Investments and Securities Tribunal that payment was made after the offer had closed. Therefore this is not a case where payment was made, but that he was not allotted, but a case of payment being made after offer had closed, and in which the shares were not registered.
There is therefore no cause of action put to birth. The Appellant has no right which had been infringed. Therefore in my view, the issue of interest accruing is of no moment and indeed otiose. The Appellant in my view is only entitled to the refund of his money which he paid i.e. the sum of N5,395 ,781.60 [Five Million, Three Hundred and Ninety-Five Thousand, Seven Hundred and Eighty-One Naira, Sixty Kobo). The Tribunal went all the way to dwell on the issue of interest which did not arise. It would have been different if shares were allotted the Appellant and same was withheld. This was not the position here.
Yes, the Tribunal may have power to exercise its discretion but this discretion has to be exercised both judiciously and judicially. In the instant case, it was empowered to award to the Applicant the sum of N5,395,781.60k (Five Million, Three Hundred and Ninety Five Thousand, Seven Hundred and Eighty one Naira, Sixty kobo), being the principal sum of money in the custody of the Respondents and nothing more, because the Appellant paid for the shares AFTER the offer had closed. The shares were therefore not registered. The Respondents were not obligated to pay any penalty whatsoever by way of interest, as no right inured to the Appellant.
The result is that, while I affirm the decision of the Tribunal, I hereby set aside its decision regarding the award of interest.
Parties shall bear their own costs.
HELEN MORONKEJI OGUNWUMIJU, J.C.A: I have read the judgment just delivered by my learned sister RITA NOSAKHARE PEMU, JCA. I am in complete agreement that the appeal should be allowed in part. I will add a few words.
Section 91(1) of the Investments and Securities Act (ISA) 2007 proves as follows:
“Application money and other money paid prior to allotment of shares by an Applicant on account of shares or other Securities shall until the allotments of shares or other Securities, be held in a separate account, as deposit by the issuing house on such terms and condition as may be prescribed by the Commission.”
Thus only application money paid prior to the allotment of shares are governed by the provisions of section 96 of Investments Securities Act (ISA) 2007. In this case, payment was made by the Appellant after the offer had closed. Even though it should be refunded promptly it cannot attract any interest moreso when the payment was for allotment of shares after the offer had closed and there were no more shares to register. I agree with the Respondents and the view of my learned sister that the Respondents were not obliged to pay any penalty whatsoever by way of interest as no right inured to the Appellant, I allow the appeal in part.
I abide by all orders in the lead judgment.
MOHAMMED A. DANJUMA, J.C.A: I agree that this appear be allowed in part in terms of the lead Judgment my lord of Rita Nosakhare Pemu, JCA, as payment for the allotment of shares which was only done after the closure of the offer did not attract the benefit of being a sum to be held in a separate Account as Deposit by the issuing House. It was not an amount that was to be held on such terms and conditions as may be prescribed by the Investment and securities Act, 2007 vide its section 96 thereof to warrant any penalty or interest accruing therefrom. There being no shares to register at the close of the register when the payment was made, the Respondents were not under any obligation to pay any penalty by way of interest to the Appellant, herein.
Appeal allowed in part only, even as I abide with the consequential orders in the lead judgment.
Appearances
Pablo Amaran,
J. AjadiFor Appellant
AND
O.S. Fadahunsi Esq.,
Lola Bankole (Miss)
T.A. Kure (Mrs.)
Ifeoma Ahamefule (Miss)For Respondent
