Abiola & Sons Bottling Company Nigeria Limited Vs First City Merchant Bank (2013)

LAWGLOBAL HUB Lead Judgment Report

 I. T.MUHAMMAD, JSC 

The 1st plaintiff at the Kwara State High Court of Justice, holden at Offa [trial court] is a limited liability company carrying on the business of manufacture of and dealers in all kinds of soft drinks. The 2nd plaintiff is also a limited liability company carrying on principally the business of building, civil and Electrical Contractors,Saw-Milling industry etc. The 1st defendant is also a limited liability company carrying on the business of banking while the 2nd defendant is a Chartered Accountant. The 3rd defendant, as its name suggests, is a limited liability company incorporated to manufacture or brew 7-Up soft-drinks.

By a deed of debenture [which the plaintiffs termed ‘purported’], dated 27th November, 1986, between the plaintiffs and the 1st defendant, the sum of N3,5000,000 [Three Million, Five Hundred Thousand Naira] was advanced in the form of a term loan overdraft facilities to the 1st plaintiffs to meet their working capital requirement and finances toimport raw materials. As the plaintiffs defaulted in repaying the loan, the 1st defendant exercised its powers under clause 11 of the Deed of Debenture and appointed the 2nd defendant as a receiver/manager. In exercise of his powers as such, the 2nd defendant sold off some of the 1st plaintiffs assets to the 3rd defendants. Not happy with the sale the plaintiffs took out a writ of Summons on 01/07/91, claiming in paragraph 35 of their joint further amended Statement of Claim the following reliefs:

‘[i] A DECLARATION that the purported unstamped DEBENTURE DEED dated the 22nd day of November, 1986 between the 1st and 2nd Plaintiffs as the company AND the 1st Defendant as’ the bank’ is meaningless, worthless, unenforceable, illegal, null and void and of no effect whatsoever,

[ii] A DECLARATION that the appointment by the 1st Defendant of the 2nd Defendant as a RECEIVER/MANAGER pursuant to the unstamped DEBENTURE DEEDS dated 27th November, 1986 to take over the physical control and sell off all the assets of the Plaintiffs etc, was/is premature, hasty,illegal, null and void and of no effect whatsoever,

[iii] A DECLARATION that even if the unstamped DEBENTURE DEED dated 27th day of November, 1986 is irregular, the 1st Defendant cannot appoint any DEBENTURE DEED to sell off the Plaintiffs assets or properties without giving adequate notices to each of the plaintiffs and that the appointment by the 1st Defendant of the 2nd Defendant to sell off the plaintiffs assets/properties without any notice at all being given to the 2nd plaintiff before, during or after the said appointment is irregular, illegal,null and void and of no effect whatsoever;

[IV] A DECLARATION that the sale of the 1st Plaintiff’s properties situate, lying and being at ASA DAM ROAD, ILORIN and covered by Certificate of Occupancy No. KW3065 and registered as No.6 at page 6 in volume viii [Certificate of Occupancy] of the Land registry at llorin to the 3rd defendant is dishonest, suspicious, illegal, null and void and of no effect whatsoever;

[v] A DECLARATION that the sale by the 2nd defendant to the 3rd defendant of the 1st plaintiffs aforementioned properties is in flagrant violation of the provisions of the AUCTIONEERS LAW [Cap. 10] Laws of Northern Nigeria applicable to Kwara State and is therefore null and void and of no effect whatsoever;

[vi] A DECLARATION that all the actions, steps and decisions taken so far by the 2nd defendant in respect of the assets of the plaintiffs under the purported stampeded DEBENTURE DEED dated 27th November,1986, without due reference or accounting to the Registrar of Companies of the Companies Registry at Lagos or at Abuja are irregular, arbitrary, dishonest,suspicious, illegal, null and void and no effect whatsoever;

[vii] A DECLARATION that the sale, alienation, transfer or lease of the 1st plaintiffs landed property situate, lying and being at ASADAM ROAD, ILORIN and covered by Certificate of Occupancy N0.KW3065 dated 16th May, 1979 by the 2nd defendant to the 3rd defendant without the prior consent[or any consent whatever] of the Military Governor of Kwara State is illegal,null and void and of no effect whatsoever;

[viii] A DECLARATION that the 1st defendant has no righ tor power to debit the 1st plaintiffs account for sundry and numerous expenses incurred by it or any of its agent in respect of or in connection with the sale of the 1st plaintiffs properties;

[ix] AN ORDER setting aside:

[a] The purported unstamped DEBENTURE DEED dated 27th November,1986 between the plaintiffs and the 1st defendant;

[b] The appointment by the 1st defendant of the 2nd defendant as a DEBENTURE DEED to take physical control of the assets and properties of the plaintiff mentioned in the said DEBENTURE DEED of the 2nd defendants letter of appointment [if any];