Corporate Affairs Commission V. Mr. Gershom Davis (2006)

LawGlobal-Hub Lead Judgment Report

M. A. OWOADE, J.C.A.

This is an appeal against the ruling of the Federal High Court (Calabar Division) delivered by Hon. Justice A. O. Ajakaiye on 20th October, 2004. The facts giving rise to the action at the lower court were as follows: In June 2001, the directors of Calabar Cement Company Limited were by a special resolution authorized to present a petition for the voluntary winding-up of the company at the Federal High Court, Calabar. The petition was duly presented for the winding-up of the company subject to the supervision of the Court.

Upon the application of the shareholders, the respondent was appointed by the court as provisional liquidator of the company subject to the terms of reference annexed to the application. When the affairs of the company were fully wound up, a final general meeting was held on the 16th July, 2003 in which the account of the liquidation exercise was laid before the members. Sometime in October 2003, the respondent received a letter from the appellant intimating him of its intention to verify the records of the liquidation exercise. On the 3rd of November 2003, representatives of the appellant appeared at the respondent’s office and demanded that all the vouchers, receipts, bank statements and other books of accounts in respect of the liquidation exercise be produced for their inspection. Based on this, the respondent filed a motion on notice on 17/12/2003 pursuant to Order 47 Rule 5(1) of the Federal High Court Civil Procedure Rules and sought the following reliefs:

“1. An order of prohibition preventing the respondent from exceeding their powers under the Companies and Allied Matters Act, 1990 by purporting to verify the receipts and payments made in the course of the respondent’s exercise of his powers as provisional liquidator of Calabar Cement Company Limited.

2. An order of perpetual injunction restraining the respondent, her servants, agents or howsoever called from requiring the applicant to produce for inspection all the vouchers, receipts, bank statements and other books of accounts with respect to liquidation of Calabar Cement Company Limited.
3. An order of injunction restraining the respondent by itself, servants, agents or privies from purporting to exercise any oversight or supervisory powers over the respondent in the discharge of his duties as provisional liquidator of Calabar Cement Company Limited.”

After taking arguments on the motion, the learned trial judge delivered a considered ruling and held at pp. 99 – 100 of the Records as follows:

“Having so considered the various provisions of the CAMA applicable in both cases of winding-up of companies, I am of the view that a winding-up by the court is not the same as a winding-up subject to the supervision of the court, and I so hold. I also hold that in a winding-up subject to the supervision of the court, a liquidator is not under any duty and has no obligation to send to the CAC and the latter has no power to demand from the liquidator any receipt or document for verification. As such, the CAC cannot exercise the control vested by sections 427 to 432 over a liquidator appointed in a winding-up subject to the court’s supervision.”

The learned trial judge continued and made a prohibitory and restraining order as follows:

“Having thus said, I hereby prohibit the respondent by its servants or agents from exercising the power of control over the applicant by seeking to verify the receipts and payments made in the course of the applicant’s exercise of his power as provisional liquidator of calabar Cement Company Limited.

The respondent is also restrained by itself, servants or agents from exercising the power of control over the applicant in the discharge of his duties as provisional liquidator of Calabar Cement Company Limited other than the powers exercisable by it by virtue of section 478 of the CAMA.”

Dissatisfied with this ruling, the appellant filed a Notice of Appeal containing only one Ground of Appeal at the lower court on 19/1/2005 and then obtained leave to argue additional Ground of Appeal before this court.

The appellant formulated two (2) issues from the two (2) Grounds of Appeal as follows:

“1. Whether in a winding-up process under the supervision of the Court the liquidator is subject to the control/supervision of the Corporate Affairs Commission in exercising his powers under the Companies and Allied Matters Act.

2. Whether the prerogative remedy of prohibition and the order of injunction are available to the applicant in the instant case.”

In his own brief of argument, the respondent seems to be in agreement with the appellant and formulated the same two issues as formulated by the appellant’s counsel.

As a preliminary observation, I wish to state that while issue NO.2 as formulated by both counsel captures the facts and the decision of the learned trial judge, Issue No. 1 as formulated seems to have expanded the scope of the trial judge’s decision in this case. I believe that from the facts of the case and the ratio as enunciated by the learned trial judge; Issue No. 1 should have been formulated in terms of Ground 1 of the appellant’s Ground of Appeal that is: