Nigeria Deposit Insurance Corporation V. Central Bank Of Nigeria & Anor (2002)

LAWGLOBAL HUB Lead Judgment Report

O. UWAIFO, J.S.C. 

The plaintiff/respondent was granted a banking licence No.000039 dated 10 June, 1988 by the first defendant. By a statutory instrument [S.1.6 of 1995] dated 29 June, 1995, the first defendant with the approval of the Head of State revoked the said licence. The apparent reason for the revocation was that the plaintiff bank was in a grave financial condition which has “culminated in the total erosion of its capital base and the dissipation of the depositors’ funds resulting in the inability of the bank to meet its obligations to its depositors and creditors, and the various actions taken by the regulatory authorities to halt further deterioration, including calls on the shareholders to recapitalize the bank, have failed.” This is undoubtedly a very strong reason to which the respondent should normally equally react without delay. The appointment of the second defendant/appellant as the provisional liquidator of the bank was simultaneously announced. The fact of the revocation and the appointment of a provisional liquidator was published as Government Notice No.16 in Extraordinary Federal Republic of Nigeria Official Gazette No. 10 Vol. 82 of 30 June, 1995. The first defendant claimed to have acted under section 12 of the Banks and Other Financial Institutions Decree No.25 of 1991 (BOFID).

The plaintiff then instituted an action in the Federal High Court on 11 July, 1995 against the defendants seeking

(1) a declaration that the revocation as published “is capricious, illegal, null and void as same is based on a cause not cognisable under section 23 of the Banks and Other Financial Institutions Decree 1991;

(2) a declaration that the appointment of the 2nd defendant as the provisional liquidator of the plaintiff bank is illegal and contrary to section 38(3) of the said BOFID;

(3) an injunction restraining the defendants from giving effect to the revocation and acting pursuant to the said section 38.

A motion on notice was filed the next day for an interlocutory injunction restraining the defendants from giving effect to the revocation by presenting a petition for winding-up and/or by selling or in any way disposing of any of the assets of the plaintiff. The appellant responded by a notice of preliminary objection filed on 12 July, 1995 seeking to strike out the action along with the motion on the grounds

(1) that the court has no jurisdiction to entertain it and

(2) that the plaintiff has no right of action.

In a ruling given on the preliminary objection on 15 August, 1995, Ukeje, J. found that the revocation was properly done under conditions envisaged by section 12 of BOFID and that by section 49 thereof no action shall lie against the defendants. She dismissed the action. The plaintiff appealed and the 2nd defendant cross-appealed to the Court of Appeal. The substance of the two issues formulated in respect of the appeal was

(1) whether the question of jurisdiction could have been raised to enable the court to decide on ouster of jurisdiction before the statement of claim was filed and

(2) whether on the basis of the preliminary objection an order of dismissal or striking out was proper. In respect of the cross-appeal, the issue for determination was formulated by the cross-appellant thus “Whether declaratory action is appropriate in this case, having regard to the fact that this action is for judicial review of an administrative action id est, revocation of the plaintiff’s banking licence by the 1st defendant.” On 18 November, 1998, the Court of Appeal, Lagos Division, in a considered judgment dismissed the cross-appeal and allowed the appeal. It set aside the ruling of the trial court and ordered that the case be remitted to the Federal High Court to be heard by another Judge who would have to comply with Order 31 rule 1 of the Federal High Court (Civil Procedure) Rules.

The 2nd defendant (hereafter called the appellant) has appealed to this court and raised four issues for determination, the substance of which is as follows:

1. Whether the learned trial Judge had jurisdiction to entertain the plaintiff/ respondent’s action.
2. Whether the learned trial Judge was right in holding that the defendant/appellant’s preliminary objection was premature and that it could not have succeeded without an affidavit in support.
3. Whether the Court of Appeal was right in holding that the learned trial Judge ought to have struck out the case for want of jurisdiction instead of dismissing it.
4. Whether the Court of Appeal was right to have dismissed the cross-appeal filed by the defendant/appellant.

This was the way the plaintiff/respondent paraphrased the four issues framed by the appellant in its brief of argument and I think it was quite adequately done. I shall consider the issues together as far as may be necessary for a resolution of any of them, but will focus more on the issue of jurisdiction as well as the court processes upon which it was raised and the procedure adopted. At the time the notice of preliminary objection was filed and argued, it was the writ of summons and a motion on notice for an interlocutory injunction that were the court processes available. No statement of claim had been filed. The motion was supported by affidavit and relevant exhibits which included the Federal Government Gazette notice of revocation of the plaintiff/respondent’s banking licence, notice to the shareholders of the revocation, a letter to the appellant from the 1st defendant to handle the liquidation of the plaintiff/respondent and a letter from the appellant to the respondent to co-operate in the liquidation process. The affidavit itself recited the reliefs claimed as per the writ of summons and the reasons given by the 1st defendant for revoking the licence. It then deposed on the oath of Mrs. Ajibike Adetutu Odubayo, a shareholder and Chairman of the Board of Directors of the respondent bank inter alia as follows: