UNITY BANK PLC v. SOKOTO RIMA AND RURAL DEVELOPMENT AUTHORITY & ANOR (2015)

UNITY BANK PLC v. SOKOTO RIMA AND RURAL DEVELOPMENT AUTHORITY & ANOR

(2015)LCN/7977(CA)

In The Court of Appeal of Nigeria

On Friday, the 24th day of July, 2015

CA/K/378/04

RATIO

COURT: JURISDICTION; WHEN CAN THE ISSUE OF JURISDICTION BE RAISED

It is settled law that the issue of jurisdiction can be raised at any stage of the proceedings, even on appeal. As observed by Uwaifo JSC in Nigeria Deposit Insurance Corporation v Central Bank of Nigeria (2002) 7 NWLR Part 766 Page 272 at 294-295 Para H-B a Court has to be competent, in the sense that it has jurisdiction, before it can undertake to probe and decide the rights of the parties. As jurisdiction is regarded as a threshold issue and a lifeline for continuing any proceedings, objection to jurisdiction should be taken at the earliest opportunity and a decision reached thereon before any other step in the proceedings is taken, for if there is no jurisdiction, the entire proceedings are a nullity, no matter how well conducted. Even though it is desirable that the preliminary objection to jurisdiction should have been raised in the lower Court, in view of the importance of jurisdiction to any proceeding, it can be raised, I hold, at any stage of the case, even on appeal. per. OLUDOTUN ADEBOLAADEFOPE-OKOJIE, J.C.A.

APPEAL: ISSUES FOR DETERMINATION; THE EFFECT OF RAISING AN ISSUE NOT BEING RAISED IN THE LOWER COURT

For the 1st Respondent to raise an issue not being one raised in the lower Court, leave for this must be sought specifically from this Court and cannot be subsumed under a blanket application for leave to file a cross appeal. Having not sought leave as required by law, it cannot be heard to canvass arguments on whether the proper Plaintiff in the interpleader summons filed in the lower Court should have been the Receiver. per. OLUDOTUN ADEBOLAADEFOPE-OKOJIE, J.C.A.

CHARGE: CHARGE ASSETS; THE MEANING OF CHARGED ASSETS

“CHARGED ASSETS” means all the ownership, rights, title, interest, claim and demand in or over the charged assets which are more particularly described in the document referred to in the schedule attached to this Deed including all other such other assets to be acquired by the Borrower in future together with all spare parts for the time being for the charged assets whether or not trade fixtures and however attached or affixed to the charged assets and all rights, ways, liberties, privileges and advantages whatsoever to the charged assets belonging or in any wise appertaining thereto or usually held therewith or reputed to belong or appurtenant thereof. per. OLUDOTUN ADEBOLAADEFOPE-OKOJIE, J.C.A.

MORTGAGE; THE DEFINITION OF A MORTGAGE

It was held by the Court of Appeal, per Amaizu JCA, at Page 257 Para C-D as follows: “A mortgage is defined as the creation of an interest in property defensible (i.e annullable) upon performing the condition of paying a given sum of money with interest at a certain time. The legal consequence of the above definition is that the owner of the mortgaged property becomes divested of the right to dispose of it until he has secured a release of the property from the mortgagee.” per. OLUDOTUN ADEBOLAADEFOPE-OKOJIE, J.C.A.

JUSTICES

ISAIAH OLUFEMI AKEJU Justice of The Court of Appeal of Nigeria

HABEEB ADEWALE OLUMUYIWA ABIRU Justice of The Court of Appeal of Nigeria

OLUDOTUN ADEBOLA ADEFOPE-OKOJIE Justice of The Court of Appeal of Nigeria

Between

UNITY BANK PLC – Appellant(s)

AND

1. SOKOTO RIMA AND RURAL DEVELOPMENT AUTHORITY

2. BIO INVEST ENG NIT LIMITED – Respondent(s)

OLUDOTUN ADEBOLAADEFOPE-OKOJIE, J.C.A. (Delivering the Leading Judgment): This is an appeal against the decision of the Kano State High Court delivered on 22/07/2002 by Hon. Justice A.M Haliru (of blessed memory), wherein the Appellant’s Motion to set aside the attachment and auction sale notice of the properties of the 2nd Respondent mortgaged to the Appellant under a Deed of Mortgage Debenture, was dismissed.

The Appellant, dissatisfied with the Ruling of the Court, filed a Notice of Appeal on 23/7/2002, containing three grounds. The 1st Respondent, dissatisfied with the assumption of jurisdiction by the lower Court to entertain the application, cross appealed, raising, by its Amended Notice of cross Appeal filed on 31/10 /13, one ground of appeal.

Briefs of Argument were filed in respect of the various appeals. By its Amended Appellant’s Brief of Argument of 17/3/15 and settled by Felix Jones Osimerha, a sole issue for determination was raised, namely:

Whether or not the lower Court was not in error in the circumstances of this case in its interpretation of the Terms of the Registered Deed of Floating Debenture created

between the 2nd Respondent and the Appellant charging its movable assets to the Appellant to secure credit facilities obtained and in dismissing the Appellant’s Interpleader’s claim.

The 1st Respondent, by its Amended 1st Respondent’s Brief filed on 30/4/13 and settled by S.A. Nasir, formulated, similarly, a sole issue for determination, to wit:

Was the lower Court in error when it dismissed the claim of the appellant under the floating debenture and whether that has occasioned a miscarriage of justice.

In response, the Appellant filed an Amended Appellant’s Reply Brief on 17 /3/15.

In prosecution of the Cross Appeal, the Respondent, who shall continue to be referred to as ‘the Respondent’, by its Amended Cross Appellant’s Brief of Arguments filed on 31/10 /13 formulated a single issue for determination, to wit:

Was the Court below correct to entertain the 1st Respondent’s application having regard to the provisions of Section 251(1) (e) and (j) of the 1999 Constitution as well as the provisions of clause 8 of the floating debenture Exhibit b-b4?

The 1st Cross Respondent, who shall continue to be referred to

as the Appellant for the avoidance of confusion, by his Amended 1st Cross Respondent’s Brief of Arguments filed on 17/3/15 formulated no issue for determination but responded to that raised in the Cross Appellant’s Brief. The Respondent, in reaction, filed a Cross Appellant’s Reply Brief as Amended, on 31/10/13.

The 2nd Respondent filed no Briefs of Argument

The facts leading to the appeals before this Court are that the 1st Respondent, pursuant to a judgment delivered on 10/5/2000 in its favour, against the 2nd Respondent in K/314/99 in the sum of N1,080,000 (one Million and Eighty Thousand Naira), attached the following properties of the 2nd Respondent in execution of the said judgment:

1. Bedford Lorry

2. Leyland Truck

3. Lister Generating Set

The said items were advertised for auction sale. The Appellant, on the basis of a Deed of Floating Debenture executed between itself and the 2nd Respondent, filed an Interpleader summons, laying claim to the goods attached by the 1st Respondent. The Appellant also filed a Motion on Notice seeking the following relief:

1. To set aside the attachment and Auction Sale Notice dated

Exhibit A herein on the properties of the Defendant Mortgagor to the Claimant under a subsisting Deed of Mortgage Debenture between the Applicant/Claimant and the Defendant.

2. An order releasing the aforesaid Defendant’s properties as contained in Exhibit A or any other one under attachment to the Applicant forthwith.

The Appellant exhibited to the application the Deed of Floating Debenture, some correspondence and the Certificate of Registration of the Debenture by the Corporate Affairs Commission. The 1st Respondent opposed the application and filed a counter affidavit.

The lower Court, after hearing both parties, in a considered ruling, dismissed the application.

The issue for determination raised by both parties in their Briefs of Argument in respect of the main appeal, I find, are similar. I shall adopt the same, with slight modifications, for succinctness. As no issue was formulated by the Appellant, with respect to the Cross Appeal of the 1st Respondent, I shall adopt the sole issue raised by the 1st Respondent. The issues that accordingly arise in respect of both the main appeal and the cross appeal are as follow:

1. Whether the lower Court was in error when it dismissed the claim of the Appellant under the Floating Debenture.

2. Whether the Court below was correct to entertain the 1st Respondent’s application having regard to the provisions of Section 251(1) (e) and (j) of the 1999 Constitution as well as the provisions of Clause 8 of the floating debenture Exhibit b-b4?

In his ruling after hearing the application, the lower Court stated:

“The croix (sic) of the counsel claimant’s argument is that in view of Exhibit B-B4 the floating debenture all on (sic) assets of the judgment debtor the Exhibit C ought to be nullified.

In his response Mr. Nasir said the applicant has slept on its rights as the con of Exhibit B-B4 relating to future assets is speculative and unenforceable and that this remains so even if the properties had not been sold. He placed reliance on 4 paragraphs counter affidavit as well as another affidavit by the litigation Director of the High Court complex where his case is located.

In deciding this issue it is pertinent to state that even by the number of affidavit, it does appear

that this is not an oral matter the requires factual evidence. This is evidence (sic) from the terms of the floating debenture which lists items on its schedule that is no cover (sic) the attached item as in exhibit C but which learned counsel Mr. Olatunji said are covered by the phrase of relating to all future assets being part of the debenture. This is my mind is the crux of the matter. Does that speculative phrase have any practical meaning?

The only way to give effect to that phrase is in view only of the acquired future assets have had a provision made about as to how to have them crystallized and taken cognizance of (sic). In my view as the phrase amends.

It remains an empty phrase reflective of the nature and influence of verbose and meaningless drafting which is so indicative in the high sounding phrase obliging that has rest touch with any practical meaning of or benefit of that phrase in the end I do not find the applicant Bank of the North will bring any merit in fact and in law and dismiss it in its entirely.”

This is a badly typed judgment, almost obscuring the reasoning of the learned Judge. It is clear,

however, from what is decipherable, that the Judge considered the clause in the agreement conferring ownership of the property of the 2nd Respondent, both present and future, in the Appellant, as an empty phrase with no practical meaning. He thus dismissed the Appellant’s application.

The Appellant’s Counsel points out in his Amended Appellant’s Brief of Argument that the Appellant similarly obtained judgment in the sum of N43,597,887.82 (Forty Three Million Five Hundred and Ninety Seven Thousand Eight Hundred and Eighty Seven Naira Eighty Two Kobo) together with interest thereon against the 2nd Respondent in respect of loan facilities granted to it, which money was used by the 2nd Respondent to acquire moveable assets. The 2nd Respondent acknowledged the utilization of the loan facilities to acquire all its present and new plants and equipment, including motor vehicles.

Additional loan facilities were given by it to the 2nd Respondent pursuant to an application by the 2nd Respondent. The existing Deed of Floating Debenture, Counsel submitted, created a Mortgage of all the 2nd Respondent’s moveable assets both present and those listed at the time of

the creation of the mortgage, as well as all future assets of the 2nd Respondent.

Citing Clauses 2, 3, 4(i) and 15(ii) of the Deed of Debenture, he submitted that the Appellant had the power to physically take possession of the assets or any part thereof and sell same to recover the money outstanding against the 2nd Respondent, without disturbance or claim from any persons. The money owed by the 2ndRespondent to the Appellant, he said, had already become due and payable in accordance with Clause 6(a) and (b) of the Deed. He referred to the definition of “Charged Assets” as contained in Clause 15(ii) of the Deed. These terms, he argued, constitutes the terms of the contract entered into between the Appellant and the 2nd Respondent since 2nd February 1993.

Agreeing that the lower Court was right in holding that the interpleader application did not require evidence, he submitted that the Court however erred in its interpretation of the contract between the parties. He contended that the Appellant is a secured creditor to the 2nd Respondent under the Deed which had been registered with the Corporate Affairs Commission in 1993 long before the judgment

obtained by the 1st Respondent in February 2000. It is undisputed, he said, that the Deed was upstamped/registered on 9th October 2000 for N35 Million which constitutes a notice of the charge to the whole world including the 1st and 2nd Respondents and anyone dealing with them. The 1st Respondent, an unsecured creditor to the 2nd Respondent and who is deemed to have notice of the registered Deed, cannot, he said, have greater title or interest than the 2nd Respondent. His right can also not extinguish an existing legal right under a charge that is earlier in time than that of the 1st Respondent. By the doctrine of qui prior est tempore portoirest jure i.e. he who is earlier in time is stronger in law, the Appellant’s rights over the attached assets have prevailed over that of the 1st Respondent whose judgment only came into existence in 2000.

He urged the Court to hold that the Appellant’s right and interest over the attached properties has priority over that of the 1st Respondent and that the Appellant is entitled to the properties, which properties form part of the Deed of Floating Debenture charged to the Appellant. He cited in support of his

contentions Labode v. Otubu 2001 FWLR PT. 43 pg. 207 at 235 para. E – G, Ahmadu Bello University v. Fadinomu Trading Co. Ltd. & Anor. 1975 5 (Unife) UILR PT. IV Pg. 396; Olufowobi v. Agge 1975 5 Unife LR Pt. III pg. 338, Bank of the North v Bello (2000) 7 NWLR Part 664 Page 244 at 257-258.

Learned Counsel to the 1st Respondent’s, in 1st Respondent’s Brief of Argument, submitted that there is nowhere in the proceedings where the 2nd Respondent acknowledged using the facilities to acquire its present and new plants and equipment. He argued that from the documents exhibited by the Appellant to its Motion, the Upstamping of the Deed of Floating Debenture at the Corporate Affairs Commission (CAC) by N16 Million was two months after the 1st Respondent had levied execution on the three items of the 2nd Respondent’s properties.

He submitted that the Floating Debenture was created under Section 166 of the Companies and Allied Matters Act 1990 (CAMA). The same was registered under Section 197,198 (2) and 203(1) CAMA. Under the schedule to the Deed, a comprehensive list of the items charged under the Floating Debenture was set out and accordingly registered

as the properties charged under the Floating Debenture.

He submitted that there is a legal requirement under Sections 197 (1) and (2) (f) and 200 of CAMA to register a charge and particulars of properties charged. Upon acquiring property there is a duty on the company to register the new or additional property acquired as forming part of the existing floating charge with the CAC. The three items of the 2nd Respondent’s properties attached are not among the properties registered at the CAC.

Citing Section 197(1) of CAMA, he submitted that they are thus unsecured charges. As long as there-is no compliance with the provisions of Section 197 (1) within the 90 days stipulated, the charge is void as against another creditor such as 1st Respondent. Having failed to comply with these provisions of CAMA the Court below was entitled to describe that phrase as “a speculative empty phrase verbose and of no practical meaning”. When an act is void, he contended, it does not stop being void because the Court below describes it as “speculative” ’empty’ “verbose” and “of no practicalmeaning”.

He argued further that the Floating Debenture itself specified,

in Clause 6, the time when the charge will become enforceable. He pointed out that the attachment by the 1st Respondent of the three items was done on the 15th day of August 2000 pursuant to the consent judgment of 10th day of May 2000. The Appellant two months after the attachment made a further advance of N16 million to the 2nd Respondent on the same floating debenture on 9th October 2000 thus demonstrating to the whole world that the charge has not crystallized. The meaning is thus that the Floating Debenture did not crystallize when the 1st Respondent attached the said properties.

He again argued that Clause 8 of the Deed, in consonance with Section 178(1) of the Companies and Allied Matters Act (CAMA) stipulates that a Receiver should be appointed to secure the properties when the money secured under a Debenture becomes payable, not to file an Interpleader proceeding. By Section 178 (1) (a) CAMA, it is only the Receiver duly appointed either by the Appellant or the Federal High Court that can maintain this claim. The Appellant cannot, he said, act as the 2nd Respondent’s receiver. He cited Section 387(1) (c) of CAMA.

?Rebutting Appellant’s

arguments on priority of its charge over the 1st Respondent’s judgment, Counsel submitted that this consideration is not applicable to floating debentures, as under a floating debenture, the charge is only enforceable upon crystallization. When it crystallizes, it becomes a fixed charge. A floating charge thus does not become enforceable upon its creation. The date of creation thus does not determine priority. The fact that the Debenture was upstamped by an additional N16 Million, thus raising it to N35 Million, is notice to the whole world that the debenture has not crystallised. The latin maxim on priority of interests will thus not apply to a transaction under a floating debenture strictly regulated by CAMA. He distinguished the cases cited by the Appellant’s Counsel, submitting that in these cases, the particulars of the properties are set out. The phrase “all its undertaking and good will moveable property whatsoever and wheresoever both present and future” is subject to having the future assets registered as soon as they are acquired as required by Section 197 and 200 of CAMA otherwise they will be void as against another Creditor.

On the Cross

Appeal, Learned counsel to the Cross-Appellant/1st Respondent referred this Court to the provisions of Section 251 (1) (e) and (J) of the 1999 Constitution of Nigeria and submitted that by this Provision the Constitution confers exclusive jurisdiction on the Federal High Court in civil causes and matters arising from the operation of Companies and Allied Matters Act, as well as cases involving bankruptcy and insolvency. Giving the incidents of this case, he stated that the 2nd Respondent is a company incorporated under the Companies and Allied Matters Act and is a customer of the 1st Respondent. The 1st Respondent caused the 2nd Respondent to create a floating debenture in its favor to secure some amounts of money advanced to the 2nd Respondent.

Clearly, he said, the floating debenture arose from the operation of the Companies and Allied Matters Act. The Floating Debenture itself sets out the conditions and terms as to how to enforce it and the time when it will become enforceable. Clause 8 provides the method for the enforcement of the Debenture by appointment of a Receiver.

The action to enforce a floating debenture is effectively caught by the

provision of Section 251(e) of the Constitution. The Court referred to is the Federal High Court. It is thus not possible, he argued, for the Court below to enforce the floating debenture without a Receiver having been first appointed as required by Clause 8 of the Deed. By Section 251(1) (e) it is only the Federal High Court to the exclusion of any other Court that has the requisite power to do this.

The State High Court, he said, has no jurisdiction to entertain the claim of the 1st Respondent. The issue of jurisdiction being fundamental and a pre-requisite to the adjudication of any matter, where a Court does not have jurisdiction to entertain a matter before it, the proceedings however well conducted will be a nullity. He cited ALABA “VS. AKEREJE (1988) 3 NWLR (Pt.84) 508,520.

Learned counsel to the Appellant in his Cross-Respondent’s Brief submitted that Unity Bank Plc as the Claimant/Interpleader in SUIT No. K/314/99, in which the cross Appellant is the Judgment creditor and 2nd Cross-Respondent (BIO INVESTMENT ENG. NIG. LIMITED) is the Judgment debtor, filed an Interpleader summons and a motion to set aside the attachment and sale Notice

levied against the movable properties of the said judgment debtor, on the ground that it has a floating charge over the said movable properties. The Cross-Respondent has not, by the Interpleader Summons, sought to enforce the floating charge over the JudgmentDebtor/2nd Respondent but merely to ascertain its right to the movable properties by virtue of its holding of the Deed of Floating Debenture over the movable properties.

He submitted in addition that the 1st Respondent has in this Court raised new points and issues not canvassed before the Lower Court and which the Lower Court did not have the benefit of expressing any opinion on. The same also does not arise nor flow from the Ruling and decision of the Lower Trial Court appealed against. He highlighted the new issues as follow:

1. Section 251 of the 1999 Constitution and the issue that the Kano State High Court lacks jurisdiction over the claim to the attached properties done under the same order and writ of attachment from same High Court Kano.

2. Issue of appointment of a receiver under Section 393 and 387 of CAMA.

3. The issue that the Cross-Respondent

is not a proper claimant by virtue of Section 178 and 501 of CAMA.

He urged this Court to discountenance the Cross-Appeal and all the above issues raised in the Cross- Appellant’s Brief of Argument as the grounds of the said Cross-Appeal and the issues canvassed in the

Cross- Appellant’s Brief are issues that do not arise or relate to the decision of the Lower Trial Court. He cited the cases of ROBERT IKWEKI & ORS V. MR. JAMES EBELE & ANOR (2005) AH FWLR (PT. 257) Pg. 1401 at 1421 Paragraphs L-G And Pg. 1420 Paragraphs B-F JOV V DOM (1999) 9 NWLR (PART 620) Pg, 547 Paras C- E SALAMI V MOHAMMED (2000) FWLR (PT. 18) Pg 382. SAMSON OWIE V. SOLOMON IGHIWI (2005) All FWLR (PT.248) Pg.1762 At 1788 Paras. G-A And At Pg.1792-1793 Para. H-C.

He urged this Court to strike out the sole ground of Appeal in the Cross-Appeal as well as dismiss the arguments raised in the Cross-Appellants Brief.

Learned counsel to the Cross Respondent further submitted that should this Court overrule the objection of the Cross- Respondent, all arguments and the academic discourse by the Cross-Appellant are not relevant to the decision appealed against. The

issues formulated in the Cross-Appellant’s Brief are misconceived, he said, as the Cross-Appellant has refused to consider the provisions of Clause 15(ii) which defines CHARGED ASSETS as those present assets as well as those assets to be acquired or other future assets belonging to the 2nd Respondent not set out in the schedule.

Furthermore, the claim of the Cross-Respondent at the lower Court is an interpleader claim to the attached properties by a third party claiming to be entitled to same under Section 33 of the SHERIFFSAND CIVIL PROCESS LAW CAP 135 LAWS OF KANO STATE OF NIGERIA He submitted that the Court referred to and defined in Sub-section 2 of the Section 33 of the Sheriffs and Civil Process Law (SUPRA) is that Court in which the properties of the 2nd Respondent to which the Appellant’s interpleader claims relate. It would be a ridiculous proposition, as proposed by the 1st Respondent, that the interpleader claim of the Appellant to the attached properties of the 2nd Respondent done by the Deputy Sheriff and Bailiffs of the Kano state High Court at the instance of the 1st Respondent, should be filed in a different Court other than the

Court which issued the Writ of Fifa. The interpleader claim in this matter was accordingly properly filed at the Kano State High Court where the cross-Appellant took out and executed the writ of Fifa, against the charged properties of the 2nd Respondent. He urged this Court to overrule the submissions of the cross-Appellant and hold that the appropriate Court to claim the attached properties is the Kano State High Court.

There is nothing in the interpleader claim that can be remotely construed as raising a civil claim relating to the operations and management of companies under the

Companies and Allied Matters Act.

The Cross Appellant’s Counsel in reply submitted that leave was granted by this Court on the 13th day of April 2005 for the 1st Respondent to cross-appeal. The application for that leave, dated 15th February 2005, exhibited the notice of cross-appellant’s proposed brief of arguments. Accordingly the objection by 1st Cross Respondent’s Counsel is misconceived.

As the Cross Appeal borders on the jurisdiction of the Court, it shall be entertained first, as, if the lower Court did not have the jurisdiction to entertain the Appellant’s

application in the first place, the appeal by the Appellant will be incompetent.

Even though it is desirable that the preliminary objection to jurisdiction should have been raised in the lower Court, in view of the importance of jurisdiction to any proceeding, it can be raised, I hold, at any stage of the case, even on appeal.

To recap, the issue raised by the 1st Respondent for determination in its Cross Appeal,

is the following:

Whether the Court below was correct to entertain the 1st respondent’s application having regard to the provisions of Section 251(1) (e) and (j) of the 1999 Constitution as well as the provisions of clause 8 of the floating debenture Exhibit b-b4?

Counsel to the 1st Respondent has referred this Court to the provisions of Section 251 (1) (e) and (j) of the 1999 Constitution as depriving the lower Court of jurisdiction to entertain the action. The sections provide:

Section 251 of Constitution of the Federal Republic of Nigeria 1999

“1. Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other Court in civil causes and matters –

e. arising from the operation of the Companies and Allied Matters Act or any other enactment replacing that Act or regulating the operation of companies incorporated under the Companies and Allied Matters Act;

j. bankruptcy and

insolvency;”

The question is thus whether the application of the Appellant before the lower Court was a matter arising from the operation of the companies and Allied Matters Act or involves bankruptcy and insolvency.

The Interpleader summons filed before the lower Court by the Appellant is the following:

“Take Notice that Bank of the North Ltd of No. 2 Zaria Road, Kano claims the Bedford Lorry No. AE 191 DKD Kano, Leyland Land No. AE 191 DKD Kano and Lister Patter Generator Reg. No.4100147 Tria 008 KVA 5.75 deed of floating debenture wrongly attached by this Court as the said properties are among the properties of the defendant charges of Bank of the North Ltd. Under the Deed of Mortgaged Debenture executed between the Applicant and the defendant since 2nd February, 1993.

AND the applicant prays for the immediate release of the said properties to it forthwith.”

The same was filed pursuant to Section 33 of the Sheriffs and Civil Process Law Cop 135 Laws of Kano State of Nigeria 1991 which provides as follows:

1. If a claim is made to or in respect of any property attached in execution under

process of a Court, or in respect of the proceeds or value thereof, the registrar may, upon the application of the sheriff, as well before as after any action brought against him, issue a summons calling before the Court the party at whose instance the process issued and the party making the claim.

2. Upon the issue of the summons, any action brought in any Court in respect of the claim or of any damage arising out of the execution of the writ shall be stayed.

3 On the hearing of the summons, the Court shall adjudicate upon the claim, and shall also adjudicate between the parties or either of them and the sheriff upon any claim to damages arising or capable of arising out of the execution of the writ by the sheriff, and shall make such order in respect of any such claim and the costs of the proceedings as it thinks fit.

This claim of the Appellant before the lower Court was in consequence of the attachment of the goods of the 2nd Respondent by the 1st Respondent and which goods the Appellant laid claim to, by reason of the Deed of Floating Debenture. As attractive as the arguments canvassed before this Court by the 1st

Respondent are, the application before the lower Court was simply an Interpleader Summons.

It was not an action relating to the operation and management of companies under the Companies and Allied Matters Act or an action relating to insolvency and bankruptcy. It was simply for the determination of ownership of the goods attached pursuant to the judgment of the Kano State High Court.

Expecting the Appellant to institute this Interpleader Summons in the Federal High Court in respect of a Judgment delivered in the State High Court, does not make sense and does not accord with the law. This objection is accordingly dismissed.

Arguments on whether it is a Receiver that should have instituted the action, borders on the matter of the proper parties before the Court. This issue, as submitted by the Appellant’s Counsel was never raised in the lower Court by the 1st Respondent and was accordingly not pronounced upon by that Court. The law is that a party who seeks to file and argue a fresh issue not canvassed in the lower Court, whether the issue pertains to law or procedure, must seek and obtain the leave of Court first, else such issue must be struck

out. See Corporate Ideal Insurance Ltd v Ajaokuta Steel Co Ltd (2014) 7 NWLR Part 1405 Page 165 Page 165 at 188 Para G-H per Okoro JSC.

1st Respondent’s counsel has countered that leave was granted by this Court on the 13th of April 2006 for the cross Appeal to be filed and that exhibited to its application was the notice of the cross Appellant’s proposed brief of arguments.

Seeking leave to file a Cross Appeal is however different, I hold, from seeking leave to file and argue a fresh issue not canvassed in the lower Court.

before the Court, the cross Appeal of the 1st Respondent, I hold, has no merit and is accordingly dismissed.

I proceed to the main appeal before the Court.

The sole issue that I consider that arises, as aforesaid, is the following:

Whether the lower Court was in error when it dismissed the claim of the Appellant under the Floating Debenture

The question that calls for determination under this issue is whether the words “moveable property whatsoever and wheresoever both present and future…” absolves the Appellant from including in the particulars of the charge registered at the corporate Affairs commission, the items attached by the 1st Respondent pursuant to the judgment of the lower Court. This is because it is undisputed by the parties that the items attached were not included in the schedule to the Deed of Debenture registered at the corporate Affairs Commission (CAC)

The clauses in the Deed of Debenture relied upon by the Appellant as absolving it from the registration of these charges, for the reason, to put it simplistically, whether registered or not, these assets are owned by it until discharge by the 1st Respondent of its

obligations to it, are the following:

Clause 2

‘The Borrower as Beneficial owner hereby charges with the payment and discharge of all the moneys and liabilities intended to be hereby secured. ALL its undertaking goodwill and moveable property whatsoever and wheresoever both present and future including its uncalled capital for the time being and book debts (herein referred to as “the Charged Assets” by way of floating security but so that the Borrower is not at liberty to create any other mortgage or charge upon and so that no other lien shall in any case or in any manner arise on or affect any part of the said assets either in priority to or pari-passu with the charge hereby created it being the intention that the Borrower shall have no further power without the consent of the Bank to part with or dispose of any part of the said assets by way of sole except in the ordinary course of business. Any further debenture, mortgages or charges created by the Borrow over the said assets otherwise than in favour of the Bank shall be expressed to be subject to this debenture”

Clause 3

In consideration aforesaid the Borrower as Beneficial owner hereby charges hypothecates the charged assets as security for moneys arising from the Bank making such advances and other credit and banking facilities and accommodation to the Borrower subject to the proviso for redemption following namely that if all moneys herein before covenanted to be paid accordingly then the term hereby created shall cease.

Clause 15(ii)

Thereafter is a Schedule subdivided into ‘Vehicles’ and ‘Plants and Machinery’. Under ‘vehicles’ are itemised 25 different vehicles, with the model, type, registration number and amount stated beside each. Under ‘Plants and Machinery’ are itemized 5 numbers, with the name of the equipment, quantity and value stated beside each.

The items in dispute, as aforesaid, are not contained in the schedule.

This Deed of Debenture, exhibited as aforesaid to the application before the lower Court, was made on the 2nd of February 1993, Stamped to cover N1.5 Million. It was upstamped to cover the sum of N35 Million and was forwarded to the Registrar CAC for registration by letter from the Appellant dated 9th October 2000. Further exhibited is the Certificate of Registration from the CAC, in respect of the Upstamped Deed of Floating Debenture.

It is clear from the foregoing that, as between the Appellant and the 2nd Respondent, by the Deed of Debenture, the 2nd Respondent has charged in favour of the Appellant all its assets, both present and future, whether included in the schedule to the Deed or not. The 2nd Respondent cannot thus create, I hold, any

charge or lien over its property and cannot, without the consent of the Bank, dispose or part with any of its property. This charge covers all the property or assets of the 2nd Respondent, whether present or in the future and whether contained in the schedule or not. This, I hold, is the binding contract between the Appellant and the 2nd Respondent.

The question however is whether a third party, as the 1st Respondent, who has no notice of the charge on the properties in question can be fixed with notice of them.

It must be remembered that these items were not surrendered voluntarily by the 2nd Respondent, for which consent of the 1st Respondent must be sought, but were attached pursuant to a Writ of Fifa in execution of the judgment of the Court.

The sections relied upon by the 1st Respondent as justifying its attachment of the goods and absolving it of notice of the charge on the items are Sections 197, 198(2) and 203(1) of Companies and Allied Matters Act Supra which provide as follows:

SECTION 197

[REGISTRATION OF CHARGES CREATED BY COMPANIES]

1. Subject to the provisions of this Part of this Act, every

charge created by a company, being a charge to which this section applies, shall so for as any security on the company’s property or undertaking is conferred be void against the liquidator and creditor of the company, unless the prescribed particulars of the charge together with the instrument, if any by which the charge is created or evidenced, have been or are delivered to or received by the Commission for registration in the manner by this Act or by any enactment repealed by this Act within ninety days after the date of its creation but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section, the money thereby secured shall immediately become payable.

2. The provisions of this section shall apply to the following charges, that is

a. a charge for the purpose of securing any issue of debentures;

b. a charge on uncalled share capital of the company;

c. a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale;

d. a charge on land,

wherever situate, or any interest therein, but not including a charge for rent or other periodical sum issuing out of land;

e. a charge on book debts of the company;

f. a floating charge on the undertaking or property of the company;

g. a charge on calls mode but not paid;

h. a charge on a ship or aircraft or any share in a ship; and

i. a charge on goodwill, on a patent or a licence under a patent, on trademark or on o copyright or o licence under a copyright.

SECTION 198

[REGISTER OF PARTICULARS OF CHARGES]

1. The Commission shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration under this Part of this Act, and shall, on payment of such fee as may be specified by regulations mode by the Commission, enter in the register with respect to such charges the following particulars –

a in the case of a charge to the benefit of which the holders of aseries of debentures are entitiled, such particulars as are specified in Section 197(9) of this Act

b in the case of any other charge –

(i) if the charge is a charge created by the company, the date of its creation, and if the charge was a charge existing on property acquired by the company, the date of its creation, and the date of the acquisition of the property;

(ii) the amount secured by the charge,

(iii) short particulars of the property, and

(iv) the persons entitled to the charge.

2. Where a charge is registered under this Part of this Act, the Commission shall issue a registration certificate setting out the parties to the charge, the amount thereby secured, with such other particulars as the Commission may consider necessary; and the certificate shall be prima

facie evidence of due compliance with the requirements as to registration under this Part of this Act.

3. The register kept in pursuance of this section shall be open to inspection by any person on payment of such fee, not exceeding N1 for each inspection as may be specified by regulations made by the Commission.

SECTION 203

[ENDORSEMENT OF CERTIFICATE OF REGTSTRATION ON DEBENTURES]

1. The company shall cause a copy of every certificate of registration given under section 198 of this Act to be endorsed on every debenture or certificate of debenture stock which is issued by the company and the payment of which is secured by the charge so registered:

Provided that nothing in this subsection shall be construed as requiring a company to cause a certificate of registration of any charge so given to be enforced on any debenture or certificate of debenture stock issued by the company before the charge was created, Emphasis Mine

In the interpretation of this statute, I am bound to give it its ordinary interpretation, being plain and unambiguous. See Nyame v FRN (2010) 7

NWLR Part 1193 Page 344 at 399 Para B-H per Adekeye JSC.

Giving this statute its ordinary interpretation, the Appellant, I hold, is to deliver to the Registrar of the Corporate Affairs Commission the particulars of any charge created by it, together with the instrumentcreating it, within 90 days of its creation, otherwise the charge shall be rendered void against any creditor of the 2nd Respondent.

The Registrar shall thence cause to be opened a register containing the charge, the date of its creation, the amount secured by the charge. If the charge is a charge created by the company, the date of its creation, and if the charge was a charge existing on property acquired by the company, the date of its creation, and the date of the acquisition of the property, the particulars of the property charged and the persons entitled to the charge. The Register is open to inspection by the general public on payment of the requisite fees.

As observed by me above, it is not in dispute that the particulars of the property attached by the 1st Respondent are not contained in the schedule attached to the original Deed of Debenture, neither has it been

contended that a revised list has been sent.

Notice not having been given to the Registrar of the charge on these items, within the days stipulated, the 1st Respondent, I hold, cannot be held bound by notice of these items

The Appellant has cited in support of its contention of the priority of its interest the cases of Bank of the North Ltd v Bello (2000) 7 NWLR Part 664 Page 244 and Labode v Otubu (2001) 7 NWLR Part 712 Page 256.

The facts of the case in Bank of the North Ltd v Bello Supra are that a customer of the Bank, in order to secure facilities, executed two deeds of mortgage over his property. He however turned round and mortgaged the same property to another financial institution who sold it, consequent upon the default of the customer. Following default to the Bank and the publication of the sale, the purchaser from the financial institution instituted an action against the initial Bank together with the auctioneer, for a declaration of the nullity of the purported legal mortgage and the auction notice. He sought it to be declared that the valid mortgage transaction is that to the financial institution.

It was held by the Court

of Appeal, per Amaizu JCA, at Page 257 Para C-D as follows:

“A mortgage is defined as the creation of an interest in property defensible (i.e annullable) upon performing the condition of paying a given sum of money with interest at a certain time. The legal consequence of the above definition is that the owner of the mortgaged property becomes divested of the right to dispose of it until he has secured a release of the property from the mortgagee.”

Onnoghen JCA [as he then was] at 258 Para E-F held as follows:

“It is settled law that registration of a deed fixes the whole world with notice of it. It is rather unfortunate that the counsel retained by the respondent to carry out the search did not do a thorough job. If he did, he could have discovered that the property was encumbered by a legal mortgage between Mr. Obasa and 1st appellant. Having regards to the law dealing with Purchaser for value without notice, the respondent, indeed the whole world, is deemed to have notice of the registered deed of legal mortgage between the 1st appellant and Mr. Obasa and as a result he is not qualified to be a bona fide purchase for value without notice as

found by the learned trial judge”.

In Labode v Otubu (2001) 7 NWLR Part 712 Page 256 also cited by the Appellant the Appellant purchased property and retained a Solicitor to effect the transfer of title. The Solicitor deviously deposited the Appellant’s title documents with the Respondents for money advanced to him (the Solicitor). The Appellant demanded for her documents, contending that she was not a party to the transaction between the Solicitor and the Respondents. Upon the Respondents’ failure to return the title deeds she instituted an action in the High Court. The High Court ruled in her favour. This decision was however reversed by the Court of Appeal. Dissatisfied, the Appellant appealed to the Supreme Court which Court unanimously allowed her appeal.

In the judgment of His Lordship Onu JSC cited by the Appellant’s Counsel, His Lordship held as follows, at Page 281-282 Para D-C:

“On the facts disclosed in the statement of claim, the appellant, as can be seen, clearly had a legal right to the property at No.6 Calabar Street, Surulere Lagos and in both law and equity she is entitled to possession of not only the property but the Title

Deed as against the whole world and particularly the respondents in priority. I therefore take the view that the refusal by the respondents to release the Title Deed to her is therefore an infringement of her personal right and is “wrongful.”

His Lordship held further, quoting from Snell’s Principles of Equity:

……At low, as in equity, the basic rule is that estates and interests primarily rank in the order of creation. Qui prior est tempore potiorest jure” he who is earlier in time is stronger in law………, Again, where there are two competing equitable interests, the general rule of equity is that the person whose equity attached to the property first will be entitled to priority over the other. Where the equities are equal and neither claimant has the legal estate, the first in time prevails, since “every conveyance, of on equitable interest is on innocent conveyance, that is to soy, the grant of a person entitled merely in equity posses only that which he is justly entitled to and no more.”

Both cases cited, I note, are in respect of land, with the attendant principles enunciated by their Lordships above. The registration referred to

in the former case is registration at the Lands Registry, where the encumbrance must be specified. The present case is however in respect of registration of charges at the Corporate Affairs commission, with respect to Floating Debentures, where the manner of registration has been clearly stated.

where the law specifies a manner of performing a stated function, the party must comply and if it fails to do so, cannot visit this default on another party, I hold.

The Appellant not having complied with the law by giving particulars of these items, cannot, I hold, fix a third party with notice of this charge;. The cases cited by the Appellant above are unfortunately of no assistance to it.

The lower Court, I hold, was thus not in error when it dismissed the application of the Appellant. I accordingly resolve the sole issue for determination against the Appellant. The appeal of the Appellant accordingly fails and is hereby dismissed. The Cross Appeal also fails and is also dismissed. The Ruling of Hon. Justice Haliru (of blessed memory) of the Kano State High Court, delivered on 22nd July 2002 is accordingly affirmed.

ISAIAH OLUFEMI AKEJU J.C.A.:I had the opportunity of reading the judgment of my learned brother, Oludotun Adebola Adefope – Okojie JCA before it was delivered. I agree with the reasoning of my learned brother. Both the appeal and the cross appeal are not meritorious and I dismiss them accordingly.

HABEEB ADEWALEOLUMUYIWA ABIRU, J.C.A.:I have had the privilege of reading before now the draft of the leading judgment delivered by my learned brother, Oludotun Adebola Adefope-Okojie, JCA. His Lordship has ably considered and resolved the issues in contention in the appeal of the Appellant and in the cross-appeal of the first Respondent. I agree that there is no merit either in the appeal or in the cross-appeal. I too hereby dismiss both the appeal and the cross appeal. I affirm the decision of the High Court of Kano State in Suit No K/314/1999 delivered by Honorable Justice A. M. Haliru on the 22nd of July, 2002 on the Interpleader Summons taken out by the Appellant.

Appearances:

A.T. FalolaFor Appellant(s)

S.A. Nasir, with Fatima Nasir (Miss)

No appearance for 2nd Respondent.For Respondent(s)

Appearances

A.T. FalolaFor Appellant

AND

S.A. Nasir, with Fatima Nasir (Miss)

No appearance for 2nd Respondent.For Respondent

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