Ado Ibrahim & Company Ltd V. Bendel Cement Company Ltd (2007)

LAWGLOBAL HUB Lead Judgment Report

T. MUHAMMAD, J.S.C

The appellant herein was the petitioner at the Federal High Court, Benin City with the respondent as respondent to the petition. In the petition which was filed on the 21st November, 1995, the petitioner averred that the respondent was incorporated under the Companies Act in the month of June, 1964 with its registered office at No.6 Reservation Road, Benin City. The nominal Capital of the respondent Company was N20 million divided into 10,000,000 shares of N2.00 each. The appellant claimed to be a member of the respondent holding 20% of its share capital having acquired 22,000 shares of the respondent’s nominal share capital on the 27th March, 1965. The Government of the then Bendel State, held 80% of the respondent’s share capital. Appellant averred further that he was a creditor to the respondent and as a lessor, he assigned to the respondent the unexpired term of his Mining Lease M.L. 17825 by an agreement dated 30th April, 1973. Appellant claimed that he had only two members in the respondent’s Board of Directors which consisted of 15 Directors.

The appellant averred further that since he acquired the said shares in 1976, the respondent had neither declared any profit nor distributed any dividend. The respondent, he averred, operated with colossal loss.

In relation to the Mining Lease referred to above, the appellant claimed that the lease expired on 28th September, 1990 but the respondent continued to extract limestone from the area covered by the lease which he applied for a renewal in accordance with the Minerals Act. Appellant maintained that from the said expiry date to the end of December, 1992, the respondent had extracted from the said ML 17825 a total of 364, 704 tonnes of limestone for which appellant was to have earned N120 per tonne. The appellant made a claim for this sum but following negotiations between the appellant, the respondent and Edo State Government, it was agreed that the respondent shall pay the sum of N7.0 million. Appellant averred further that the respondent was rescued by its majority share holder, the Edo State Government, which subsequently paid to the appellant the sum of N3.0 million. The outstanding balance of N4.0 million had neither been paid by either the Edo State Government or the respondent itself despite several demands by the appellant. Appellant finally averred that the respondent is irredeemably insolvent and is presently indebted to several other persons. The appellant at the end, couched his prayers as follows:

“your petitioner therefore humbly prays as follows:-

(1) The company is indebted to your petitioner in the sum of N4.0 million.

(2) Your petitioner has made application to the company for payment of its debt but the company has failed and neglected to pay the same.

(3) The Company is insolvent and unable to pay its debts.

(4) In the circumstance it is just and equitable that the Company should be wound up.

(5) That the Bendel Cement Company Limited RC 3863 be wound up by the Court under the provisions of the Companies and Allied Matters Act.”

In an affidavit opposing the petition, the respondent denied many of appellants averments. Notable among such denials are that it is not true that the appellant was a creditor of the respondent Company. The respondent averred that it had always declared profits whenever made. On the Mining Lease, the respondent averred that the appellant went to Okene High Court and obtained an injunction against the respondent restraining it from quarrying the limestone deposit which was assigned to the respondent pending the determination of the suit. The respondent had to source for this raw material elsewhere at very great expense to keep the factory and the workers going. Before the appellant went to court at Okene, efforts were made to negotiate settlement out of court but the appellant refused all entreaties made to him. On the payment of N3.0 million made to the appellant by Edo State Government the respondent stated that the appellant obtained the said amount and other benefits bestowed on it by the respondent in circumstances amounting to deceit and misrepresentation. The respondent averred that the appellant had not made out a prima facie case for the winding up of the respondent Company and that there was no action pending against the respondent in any Court anywhere and no judgment has been obtained against it in any sum by any person or body of persons. The allegation that the respondent is irredeemably, insolvent, is blatantly false. Respondent finally averred that the remedy for a share holder of a Company who has a claim or disputed claim against the Company cannot enforce his claim by way of an action for winding up of the Company. On the 14th December, 1995, the appellant filed an application before the trial court for leave to advertise the petition. The application was fixed for hearing by the trial court on 30th January, 1996. However, before the application for leave to advertise the petition was heard, the respondent filed a motion on notice on the 19th December, 1996. This motion on notice, which the respondent referred to as “the preliminary objection”, sought inter alia to restrain the petitioner from further prosecution of the petition and for an order dismissing the said petition on the sole point that it was incompetent having been presented on the basis of a debt bonafide

disputed.

The contention of the petitioner was that the petition was brought in two capacities to wit: (i) as a creditor and (ii) as a contributory. The learned trial Judge upheld the petitioner’s contention in respect of his capacity as a contributory and struck out his contention as a creditor.

Dissatisfied, the respondent filed his notice and grounds of appeal to the court below. The court below in its judgment of 4th April, 2001 found against the respondent (then appellant) in favour of the petitioner that he was entitled to present the petition as a contributory. The court below however, went on at that stage to consider the competency of the petition under the just and equitable ground. The petition was accordingly struck out. The petitioner was dissatisfied with the decision of the court below and he filed his notice and grounds of appeal to this court.