Oceanic Bank International Plc (Formerly Oceanic Bank International (Nig) Limited) V. Broken Agro Allied Industries Limited (2008)

LawGlobal-Hub Lead Judgment Report

MONICA BOLNA’AN DONGBAN MENSEM, J.C.A. JP+

The summaries of facts presented by the Respondent as modified in this judgment are as follows:

The Federal Government of Nigeria had set up the National Economic Reconstruction Fund (NERFUND) by statute whose object was to provide soft loans to industrialists for the purposes of promoting industrialization in Nigeria. This objective is stated in section 1 (1) (b) of the Decree NO. 2 of 1989 (now Act) as follows:-

“b. Provide medium to long-term loans to participating commercial and merchant banks for on-lending to small and medium-scale enterprises for the promotion and acceleration of productive activities in such enterprises.”

The said Decree shall hereinafter be referred to as the Act while NERFUND will be referred to sometimes simply as the FUND.

The Act made provisions which spelt out the duties of the obligor bank towards the borrower. Section 5(1) (a) and 5(2) of the Act set out the functions and obligations of the participating banks.

At the trial Court, the Respondent’s case was that after it had received the loan from NERFUND, the Appellant who was the obligor bank in this case is said to have retained the sum of money for more than six months (inspite of repeated demands made to it by the Respondent to release same) and contrary to the provisions of section 5 of the Act. The Appellant is said to have eventually released only part of it to the Respondent to wit – the sum of $995,741.22 Withholding the balance of $2,848. 78.

The Appellant is also alleged to have failed to provide any working capital for the Respondent as required by the Act. Instead it relied on a “purported” private agreement between itself and the Respondent. (Refer:- Pg 43 (last paragraph) and 44 of the records).

As a result of the delay by the Appellant in releasing the funds, the costs of the Plants and Machinery as well as Customs duties are said to have increased. The exchange rate of the dollar to the Naira also increased against the Naira from N22 – N80 to $1.00.

Up to the date of the Judgment in this suit, it is alleged that the Plants and Machinery were yet to be installed and the project for which the loan was provided by NERFUND was yet to take off. Judgment was pronounced on the 5th April, 2006 by the learned trial Judge.

The Respondent pleaded that the project had been designed to yield a monthly profit of N1, 000, 000 (One Million Naira) to it, if it had been completed on schedule. (Refer: – the pleadings of the Respondent paragraph 23 of the Statement of Claim at 8 of the record).

That the Fund eventually vacated the project and handed same over to the Respondent.

The reliefs sought by the Respondent as Plaintiff before the Federal High Court (Lagos) are legion; they are as follows:-

“(a) A declaration that the ceding of the Plaintiffs project to the 1st Defendant is illegal, ultra vires and null void”.