Arab Bank (Nigeria) Ltd V. Alhaji Aminu Dantata (1977)

LawGlobal-Hub Lead Judgment Report

FATAYI-WILLIAMS, J.S.C. 

In these proceedings commenced in the High Court of Kano State, the plaintiffs (now appellants) claimed from the defendant –

“the sum of N43,647 under a contract in writing dated 30th September, 1972, whereby the defendant agreed, in consideration of the Plaintiffs granting overdraft facilities to the Kano Dyeing and Printing Factory Limited, to guarantee the payment to the plaintiffs of all sums due by the Kano Dyeing and Printing Factory Limited to the plaintiffs, the said Kano Dyeing and Printing Factory Limited having gone into voluntary liquidation as at 27th August, 1973, and having been due the sum of N174, 589 to the plaintiffs as at that date, which sum is still due and owing to the plaintiffs”.

Paragraphs 3 to 10 of the plaintiffs’ amended Statement of Claim read –

“3. The defendant was a Director of Kano Dyeing & Printing Factory Limited, a limited liability company incorporated in Nigeria and having its head office at 9, Independence Road, Bompai Kano (hereinafter for brevity referred to as “the said company”).

4. (1) The said company had a bank account with the plaintiffs and the plaintiffs granted overdraft facilities to the said Company upon consideration of the defendant inter alia guaranteeing same.

(2) By written contract dated 30th September, 1972 between the plaintiffs, the said company and inter alia the defendant as guarantor the plaintiffs agreed to extend credit to the company up to N160,000 plus interest, commission and expenses until repayment.

5. By the said written contract the defendant, in consideration of the plaintiffs granting the aforesaid credit and/or other banking facilities to the said Company, guaranteed to pay the plaintiffs all sums due to the plaintiffs or that may become due to the plaintiffs by the said company.
6. The plaintiffs duly extended credit to the said Company under the aforesaid written contract and as at 27th August, 1973 the said company was indebted to the plaintiffs in the sum of N174,589 inclusive of interest commission and expenses.
7. The members of the said company passed a resolution on 27th August, 1973 that the said company be wound up voluntarily and that a liquidator be appointed.
8. The plaintiffs rank as unsecured creditors in the winding up and the liquidator has informed the unsecured creditors of the said company that he anticipates the total dividends to be paid to unsecured creditors to be in the region of 35%.
9. That on 25th September, 1974 the liquidator paid a dividend of 25% to the unsecured creditors of the company and the plaintiffs thus received from the liquidator on that date the sum of N43,647 towards the total indebtedness of N174,589 thus leaving a balance due by the company to the bank of N130,942.
10. The plaintiffs now seek to recover from the defendant under the aforesaid written contract dated 30th September, 1972, one-quarter of the aforesaid sum of N130,942 that is N32,735.50 being his proportion of the total debt due, the other three guarantors having already paid their proportions of one quarter each.

The plaintiffs therefore seek judgment against the defendant in the sum of N32,735.50″.

In his own amended Statement of Defence, the defendant denied most of the averments in the statements of claim. The main plank of his defence is in paragraph 9 which reads:-

“9. Further to paragraph 8 hereof, the defendant would aver that if, which is denied, he is liable to the plaintiffs, he is liable jointly with other directors alleged to be parties to the loan contract for the total sums due and no apportionment of the debt was agreed by the parties to the contract, and in any case if, which is denied, he entered into any undertaking to be liable, he did so in the belief which he gathered from the form of the undertaking, that others therein named also would execute the document and as they did not all execute the document, he denies liability. The defendant would allege that the said other directors have not been sued as arrangements, the extent of which have not been disclosed to the Defendant, have been reached with these other directors.”

It is common ground that the basis of the plaintiffs’ claim is the written Agreement (Exhibit A). It is described therein as a – “contract relating to a bank loan between –

A The Arab Bank (Nig.) Limited Kano Branch represented by Mr. Taysir A. Sharaf and Mr. Ali Obeidat hereinafter named the ‘Bank’;

B. Kano Dyeing & Printing Factory Ltd., hereinafter named the ‘Borrower’; and

C. Personal Guarantees of –

1. Mr. M.Z. Khatoun;
2. Mr. J. Aboulafia;
3. Alhaji Aminu Dantata;

(Directors)