Josadeg Nigeria Limited & Anor. V. Nigeria Deposit Insurance Corporation (2004)

LawGlobal-Hub Lead Judgment Report

ROWLAND, J.C.A.

In the High Court of Oyo State, the plaintiff, who is now the respondent filed an action against the appellants who therein were the defendants, claiming jointly and severally as follows:

“(a) The sum of N315,560.42 being balance due and payable by the defendants to the plaintiff on account of loan and overdraft facilities granted by the plaintiff to the defendants jointly and severally at their request as well as interests, commission and or other charges on the said facilities as at 31st August, 1992.

(b) Interest on the above stated sum at the rate ruling in the financial market from the 1stday of September, 1992 until judgment is delivered thereof and, thereafter, interest at the rate of 10% until the whole debt is liquidated.”

Pleadings were ordered and were duly settled, filed and exchanged.

The case then proceeded to trial and the parties called one witness each. At the close of the case, the counsel to the parties addressed the court. In a considered judgment, delivered on 10th October, 1994, the learned trial Judge entered judgment against the defendants jointly and severally in the sum of N315,060.47 (Three hundred and fifteen thousand, sixty naira, forty seven kobo) being the balance due and payable to the plaintiff on account of loan and overdraft facilities granted by the plaintiff to the defendants at their requests as well as interests, commissions and or other charges on the said facilities as at 31st August, 1992. The trial court also awarded in favour of the plaintiff against the defendants interest on the said sum of N315,060.47 at the rate of 21% per annum until the 1st day of September, 1992, and thereafter, interest at the rate of 5% per annum until the whole debt is liquidated.

Dissatisfied with the judgment of the court below the defendants have now appealed to this court on a number of grounds. The defendants shall hereinafter be referred to as the appellants, and the plaintiff the respondent.

As borne by the records, the appellants were granted loans and overdraft facilities by the bank at various times at different rates of interest ruling at the time of each grant or approval of the facility. The first facility of N50,000.00 granted in 1985 was at an agreed rate of 9% per annum. This agreement as to interest rate was reached between the appellants and the bank – the respondent.

In 1986, another facility of N80,000.00 was granted by the bank to the appellants at an agreed rate of 13% which was the ruling interest rate at the time. A third facility of N90,000.00 was later granted to the appellants by the bank. The terms of the two subsequent facilities were agreed upon by the parties as in the first grant of N50,000.00.

The parties executed a deed of legal mortgage, exhibit ‘A’, which stipulated among others, that the bank may vary the interest rate without any prior communication or notice to the appellants. In line with the provisions of clause 2 of exhibit ‘A’, the bank, at various times, applied the rates of interest which were given in evidence by its witness in court.

The appellants contended at the lower court that the facilities were Agricultural facilities granted under the Agricultural Credit Guarantee Scheme Fund Act, Cap. 13, Laws of the Federation of Nigeria, 1990, which they claimed provided for a specially fixed rate of interest. The bank denied this averment both in its pleadings and evidence. It turned out that there was a cover for the first facility of N50,000.00 by the Central Bank of Nigeria pursuant to the ACGSF, aforesaid.

The appellants presented a counter-claim which contained declaratory reliefs. In the course of his judgment, the learned trial Judge made specific findings of fact which appeared to have answered the declaratory reliefs contained in the counter-claim being sought by the appellants.

As already indicated above, the appellants were dissatisfied with the judgment of the lower court and have appealed to this court. From the grounds of appeal, the appellants raised three issues for determination. They are:

“1. Whether the rate of interest applicable to all the loans/overdraft facilities the subject-matter of this suit should be a fixed rate as stipulated under Decree No.2 of 1977 or a rate subject to variation according to the dictate of money market as contained in the deed of legal mortgage executed by the appellants in favour of the respondent?.