Co-operative & Commerce Bank (Nigeria) Ltd. Vs A.G. Of Anambra State (1992)

LawGlobal-Hub Lead Judgment Report

MICHAEL EKUNDAYO OGUNDARE, J.S.C 

When the two applications brought by the applicant were heard on 21st July, 1992 and at the conclusion of arguments, I ordered as prayed by the applicant and intimated that I would give my reasons later. I now proceed to give my reasons.

By two separate applications filed on 13th July, 1992 and 14th July, 1992 respectively the applicant sought for orders of this Court.

“(a) permitting the appeal to be heard within 6 months on grounds of urgency:

(b) waiving the filing of briefs for the appeal”

as to the first motion, and

“an order of stay of execution of the order of interlocutory injunction made by the Court of Appeal (Enugu Division) on the 17/6/92 pending the determination of the defendants’ appeal against the said ruling”

as to the second motion.

The two applications were taken together, Professor Kasunmu SAN of counsel for the applicant withdrew prayer (a) on the 1st motion paper and conceded in respect of prayer (b) that the Court could abridge the time for filing briefs rather than waiving the filing of briefs altogether. He strenuously argued the prayer for stay of execution.

In his address learned Senior Advocate observed that the applicant was a private company until the 25th September, 1991 when at an extra-ordinary general meeting, it was decided that it became a public limited company. Consequently, new articles were filed and some old ones were amended and shares were offered to the public in order to increase the applicant’s share capital to N50,000,000 (fifty million Naira) as required by law and as directed by the Central Bank of Nigeria. Learned Senior Advocate further observed that the former Anambra and Imo State Governments were shareholders in the applicant Company. Learned counsel referred the Court to pages 2 and 3 of the record of appeal now before us and observed that the injunction sought by the respondents to this application was against privatization of the company. He further observed that this was the order sought from the trial Federal High Court when the respondents brought their application for interim injunction. He submitted that what the applicant was doing was not privatisation but rather offering its shares to the public for the purpose of increasing its share capital to fifty million Naira. He observed that the completion board meeting of the applicant was held on 10/6/92 before the order of interlocutory injunction made by the Court of Appeal in Enugu. He submitted that the cheque of thirty million Naira paid by the respondents to the Central Bank of Nigeria might, under section 573(1) of the Companies and Allied Matters Act, amount to a deposit but not capitalisation. He further submitted that it was the applicant that stood to lose its license if the exercise to raise by public offer, the sum of thirty million Naira being the increase in share capital were not allowed to go on. He referred to Exhibit K001 at pages 151 to 152 of the record of appeal. He urged the Court to grant the stay prayed for.

Mr. Okolo SAN for the respondents submitted that the requirements of the Central Bank of Nigeria imposed on commercial banks for the increase in their capital to a minimum of fifty million Naira was distinct from a company offering share to the public. He referred to section 545 of the Companies and Allied Matters Act in support of his submission. Referring to page 172 of the record of appeal, the learned Senior Advocate observed that the applicant’s counsel agreed to the injunction that was granted by the Court below and could not therefore, now appeal against that injunction without leave of the Court or of this Court. He urged the Court not to disturb the injunction granted by the Court below. He further submitted that the applicant had been in breach of that injunction and referred to Exhibit 4 of the further counter affidavit and to paragraph 9 of the affidavit in support of the 2nd motion. He submitted that the Court would not aid a contemnor and went on to further submit that what the defendant was doing was privatisation.

Earlier on Mr. Okolo SAN had addressed the Court on the preliminary objection contained in his notice filed in Court and served on the applicant. He submitted in respect of his preliminary objection that the appeal as presently constituted was incompetent for failure to obtain leave of this court or the court below under section 213 of the Constitution. He submitted that the appeal being an appeal in an interlocutory matter could only be lodged with leave and as no leave was sought nor obtained, it was incompetent. On the second leg of his preliminary objection, learned counsel observed that the application for stay of execution was brought to this Court without the previous application for stay having been made to the Court of Appeal that is the court below. He referred to Order 2 rule 28(4) Supreme Court Rules and submitted that no special circumstances had been shown why the application should be made to this Court in the first instance. He observed that since the Court of Appeal made its ruling on 17/6/92 the applicant had brought two motions before that Court asking respectively for:

(a) an order to discharge the interlocutory injunction, and

(b) leave to appeal;

there was none for stay pending the appeal. Finally, learned Senior Advocate contended that:

(a) there was no appeal before the court and

(b) even if there was one the application for stay was incompetent in that a similar application had not been first brought to the court below.

Professor Kasunmu. SAN in reply to the submissions made on the preliminary objection submitted that section 213(2)(a) of the Constitution gave right of appeal as of right to a party on ground of law. He submitted that ground 3 of the grounds filed by the applicant was a ground of law and that therefore, the appeal, at least in so far as that ground was concerned, was competent. On the second leg of the preliminary objection, learned counsel observed that under Order 7 of the Rules of this Court the record in this appeal was compiled by the applicant, it being an appeal against an interlocutory decision. He submitted that the record having been filed in this Court, the court below no longer had jurisdiction to entertain any application in it. He added further that the applicant had shown special circumstances in the affidavit in support of his application.

Mr. Okolo SAN, In his short reply, observed that the appeal to this Court was filed on the 29/6/92 and the record of appeal by the applicant was lodged in the Registry of this Court on 13/7/92. He therefore submitted that the applicant had time to bring an application to the court below for stay. He relied for his submission E on the first leg of his preliminary objection on Kalu v. Odili (1992) 5 NWLR (Pt.240) Pg.130.

At the conclusion of arguments on the preliminary objection we decided that we would hear arguments on the two motions before us and incorporate our ruling on the preliminary objection in the ruling and motions.

Before I proceed further, it is pertinent at this stage to state the facts leading to the two applications under consideration, how-be-it briefly. The applicant was until 25th September, 1991 a private limited liability company having as its main shareholders the now defunct Anambra and Imo State Government and a number of co-operative societies. Its main function is banking. At an extra ordinary general meeting of the company held on 25th September, 1991. it was resolved to go public and changes in its articles were made to conform to its new status and in accordance with the Companies and Allied Matters Act, Cap.59 Laws of the Federation of Nigeria 1990 (hereinafter called the Act). Its name was changed to Co-operative and Commerce Bank (Nigeria) Plc. Again, in accordance with section 9(2) and (3) the Banking and Other Financial Institutions Decree No.25 of 1991, the Central Bank of Nigeria requested all commercial banks in the country (including the applicant) to raise their share capital each to a minimum of N50,000,000 if they had not done so already and gave 19th of June, 1992 as dead line for this exercise. This meant that the applicant would have to raise its share capital from twenty million Naira (which it was as at the time of the extra-ordinary general meeting) to fifty million Naira, an increase of thirty million Naira. In order to comply with this directive the applicant’s board met and decided to offer shares to the public in order to raise the thirty million Naira increase in capital. Consequently, the board appointed NAL Merchant Bank to sell additional shares in the applicant company to the public. That exercise began on the 17th of June, 1992 through the Savannah Bank and was to end on the 31st of July, 1992.

The respondents who are successors of the former Anambra State Government (following the promulgation of States (Creation and Transitional Provisions) Decree 1991 creating 9 new states in the Federation) being unhappy with the applicant’s decision to become a public company instituted an action on 15th May, 1992 in the Federal High Court (Enugu Division) claiming as hereunder:

“1. A declaration that the Special Resolution passed on 25/9/91 at an Extra ordinary General Meeting of the defendant company amending the Articles of Association of the defendant company in terms shown therein is null and void.

2. A declaration that the Special Resolution passed on 25/9/91 at an Extraordinary General Meeting of the defendant company, amending the Articles of Association of the defendant Company in terms shown therein, is in bad faith, prejudicial, inequitable and/or against the interest of the plaintiffs.
3. A declaration that the composition of the Board of the defendant company consequent upon the said amendment of the Articles of Association is prejudicial, inequitable and against the interest of the plaintiffs.
4. An injunction restraining the defendant company, its agents, privies and/or servants from proceeding with, or completing action on the proposed privatization of the defendant company without first restoring plaintiffs to all the advantages, rights, and/or privileges they enjoyed under the Articles of Association of the defendant company before the said amendment of 25/9/91.
5. An injunction restraining the defendant company, their agents or privies from implementing or continuing to implement the said resolution or anything deriving therefrom.
6. An injunction restraining the defendant company from doing anything to further undermine or erode the rights and/or privileges enjoyed by the plaintiffs under the Articles of Association of the defendant Company before the purported amendment of 25/9/91”

They also brought an application praying for an order of interim injunction in:

“(a) restraining the defendant company, its agents, privies and or servants from proceeding with, or completing action on, the proposed privatisation of the defendant company without first restoring the plaintiffs to all the advantages, rights, and or privileges they enjoyed under the Articles of Association of the company before they were purportedly amended in pursuance of a purported special Resolution passed on 25th September, 1991;

(b) restraining the defendant company, their agents, servants or privies from implementing or continuing to implement the said resolution or anything deriving therefrom;

(c) restraining the defendant company from doing anything to further undermine or erode the rights and or privileges enjoyed by the plaintiffs under the Articles of Association of the defendant company before the purported amendment of 25th September, 1991.

The interim order was made on 21st May, 1992 pending the determination of the motion. The order was subsequently discharged by the trial Judge who dismissed the motion. Being dissatisfied with the discharge of the order, the respondents appealed to the Court of Appeal (Enugu Division). While the appeal was pending they applied to the Court of Appeal for:

(i) An order pursuant to Order 7 rule 2 for a departure from the said Rules, with particular reference to Order 3 rules 9 and 13, permitting the appeal herein to be heard on the BUNDLE OF PAPERS herein complied and attached as Exhibit I and of any other such papers/documents as the Court may direct.

(ii) An order pursuant to Order 6 Rule 11 either waiving compliance with the provisions therein for the filing of briefs or abridging the periods thereof provided in Sub-rules (1) and (4).

(iii) An order for interlocutory injunction restraining the defendant/respondent, its officers, servants, agents and privies howsoever constituted, from either proceeding with, taking any further steps, or completing action on the proposed privatisation, pending the determination of this appeal.”

That Court on 17/6/92 made the following orders –

“(i) That the cheque for N30 million issued by the plaintiffs/appellants be paid into the Central Bank of Nigeria immediately for the purpose of increasing the capital of the Co-operative and Commerce Bank as required by the Central Bank of Nigeria.

(ii) The defendant Bank, its officers, servants, agents and privies howsoever, including the present Board of Directors of the said Bank are restrained from either proceeding with, taking further steps, or completing action on the proposed privatisation of the Bank pending the determination of the appeal now pending before this Court.”

It is against that order that the applicant has appealed to this Court and brought the applications now under consideration.

It may be pointed out that the representatives of the new Anambra State were present at the extraordinary general meeting of the applicant company held on 25th September, 1991 at Owerri when the decision to go public was taken and changes made in the Memorandum and Articles of Association of the Company. Indeed the meeting was addressed by the Military Administrator of Abia State, the Commissioner for Industries, Works and Transport of Imo State and the Special Assistant to the Military Administrator of Anambra State in charge of Agriculture, Commerce and Industries.

I now proceed to consider the preliminary objection raised by Mr. Okolo SAN. The first leg of the objection raises the issue of the competence of the appeal lodged by the applicant to this Court. Unless there is a competent appeal pending, the appellant can not succeed in its application for a stay of execution of the judgment of the court below. The competence of the appeal is being challenged on two grounds both based on the provisions of section 213 of the Constitution and both relying on the fact that the appeal was not brought with leave either of the court below or of this court. Subsections (2) and (3) of section 213 of the Constitution (as amended) provide as follows:

“(2) An appeal shall lie from decisions of the Court of Appeal to the Supreme Court as of right in the following cases –

(a) where the ground of appeal involves questions of law alone, decisions in any civil or criminal proceedings before the Court of Appeal;

(b) decisions in any civil or criminal proceedings on questions as to the interpretation or application of this Constitution,

(c) decisions in any civil or criminal proceedings on questions as to whether any of the provisions of Chapter IV of this Constitution has been, is being or is likely to be, contravened in relation to any person;

(d) decisions in any criminal proceedings in which any person has been sentenced to death by the Court of Appeal or in which the Court of Appeal has affirmed a sentence of death imposed by any other Court;

(e) such other cases as may be prescribed by any law in force in any State,

(3) Subject to the provisions of subsections (2) of this section, an appeal shall lie from the decisions of the Court of Appeal to the Supreme Court with the leave of the Court of Appeal or the Supreme Court.”

There is no doubt that under section 213(2)(a) there is a right of appeal as of right from the Court of Appeal to this Court in any civil or criminal proceedings where the ground of appeal involves questions of law alone, whether or not the decision being appealed against is interlocutory or final. See Rahiu v. The State (1980) 8-11 S.C. 130 (1981) 2 NCLR 293. If, therefore, any of the grounds of appeal contained in the appellant’s notice of appeal to this Court is of law alone, the appeal would be competent as regards that ground. I have examined the grounds of appeal contained in the notice of appeal and I am satisfied that ground (3) thereof raises issues of law alone and to that extent thereof, I must hold that the appeal is competent.

It is also contended by Mr. Okolo that as the decision appealed against was made by the Court below with the consent of the applicant’s counsel Mr. Anyamene SAN, leave of the court below or of this Court would be required before the applicant could appeal against that decision. He has not cited any authority in support of this contention and I can find no support for it in the Constitution either. There is no provision in section 213 of the 1979 Constitution similar to the provision in section 220(2)(c) relating to an appeal to the Court of Appeal or proviso (iii) to section 117(2)(a) of the 1963 Constitution relating to appeal to this Court. I therefore, with respect, find no substance in learned Senior Advocate’s contention,

This disposes of the first leg of the preliminary objection.

It is contended that the application for stay before us is brought in breach of Order 2 rule 28(2) – (5) of the Rules of the Supreme Court and that there is no evidence of compliance with Order 2 rule 31 also. I have read the two Rules, it would appear that learned Senior Advocate is relying on rule 28(4) and rule 31(1) rule 28(4) provides-

“Wherever under these Rules an application may be made either to the court below or to the Court it shall not be made in the first instance to the Court except where there are exceptional circumstances which make it impossible or impracticable to apply to the court below.”

Rule 31(1) provides –

The Court may enlarge the time provided by these Rules for the doing of anything to which these rules apply, or may direct a departure from these Rules in any other way when this is required in the interest of justice.”

This Court has held recently in Kalu v. Odili (supra) when interpreting Order 3 Rule 3(4) of the Court of Appeal Rules (which is in pari materia with Order 2 Rule 28(4) of the Rules of this Court) that the applicant has no right to choose or elect whether to apply first in the High Court or in the Court of Appeal. By the Rule the applicant has first to apply to the High Court unless he can show special circumstances for any departure from the expressed words of that Rule which would entitle him in that regard to apply straight to the Court of Appeal. No doubt both this Court and the Court below have concurrent jurisdiction to grant stay but by Order 2 Rule 28(4) the application has first to be made to the Court below and it is only where that court refuses the application or where the applicant considers the conditions imposed by the court below for the grant of stay to be onerous that he can apply to this Court for stay in the hope of getting the Order made by this Court or of improving on the conditions imposed by the lower court for the stay, unless of course, special circumstances can be shown by him why he has to apply for stay to this Court without first applying to the court below.

It is not in dispute that the applicant did not apply to the court below for stay before applying to this Court. In the affidavit in support of one of the two motions now before us, Richard Obiora Ozobu, a director of the applicant company deposed inter alia as follows:

“8. On the 17th day of June, 1992 the Court of Appeal, Enugu division, granted an interlocutory injunction in favour of the plaintiffs in the following terms:

(i) “That the cheque for N30 million issued by the plaintiffs/appellants/applicants be paid into the Central Bank of Nigeria immediately for the purpose of increasing the capital of the Co-operative and Commerce Bank as required by the Central Bank of Nigeria”

(ii) “The defendant bank, its officers, servants, agents and privies howsoever, including the present board of directors of the said bank are restrained from either proceeding with, taking further steps, or completing action on the proposed privatisation of the Bank pending the determination of the appeal now pending before this Court.”

13. On the 19thdayof June, 1992, the defendant’s counsel on instructions filed a motion for leave of the court of appeal to appeal to the Supreme Court against the said interlocutory order of 17th June, 1992. The motion was fixed for hearing on the 24th day of June, 1992.
14. On the said date the court adjourned the motion to the 291h day of June, 1992.
15. On the said 29th day of June, 1992, the defendant’s counsel pressed for the hearing of the motion reminding the court that the application would be out of time the next day but the court still adjourned the motion to the 8th day of July, 1992.
16. On the 8th day of July 1992, when the motion was called up the court declined to hear it on the ground that it had on that date no jurisdiction to entertain it.
17. When the court of appeal did not yield to my counsel’s pressure to hear the motion for leave to appeal on the 29th day of June, 1992, my counsel filed a notice of appeal the same day which was the last day for appealing as prescribed by law based on grounds of law alone.
18. The defendant’s counsel has now compiled the record of proceedings for the appeal a certified copy of which is attached hereto and marked Exhibit A.
19. The sale of additional shares to beef up the equity capital of the defendant opened on the 18th day of June, 1992, and would close on the 31st day of July, 1992.
20. The sustained mischievous propaganda of the 2nd plaintiff is having adverse effect on the sales of the said shares and places the raising of the equity base of the defendant to the minimum statutory level in jeopardy and I entertain real fear that the defendant will lose its licence if the situation is not reversed.”

The application for stay was filed in this Court on the 14th of July. Could it be said that from the facts deposed to in the paragraphs above – and which facts are not in dispute, special circumstances have been shown why the appellant should come to this Court rather than go first to the Court below. Having regard to the delay encountered in the court below in the hearing of the applicant’s application for leave to appeal which delay frustrated the consideration of that application before that court lost its jurisdiction to decide on it, and having regard also to the urgent nature of the issues before the court – the closing date for the public offer made on behalf of the applicant was 31st July – I am compelled to hold that special circumstances have been shown why the application for stay was made to this Court in the first instance. I am not unaware of the clear principle that the rules of Court must be obeyed and where there is non-compliance, it must be explained, otherwise no indulgence of the Court would be granted. In the case before us, having regard to the facts as deposed to in the various affidavits and counter affidavits, there was a clear urgency and if the rights of the parties, particularly of the applicant were not to be put in jeopardy. It is not clear on record the reasons for the adjournments of the application for leave to appeal made in the lower court but realising that the applicant had only 14 days within which to appeal against the decision of the court below given on the 17th June, one would think that that court would have heard and determined the application before the expiration of the time allowed for appealing more so that the court would have no jurisdiction lo extend time. As it turned out the applicant realising that time was running out, had to appeal on 29th June without waiting for the fate of its application to be determined.

There is yet another reason for refusing respondents’ preliminary objection. If it is submitted by learned Senior Advocate, Mr. Okolo that there was noncompliance with Order 2 rule 28(4), the proper course for him would have been to come by way of application to strike out the applicant’s motion of stay for noncompliance with the Rules. This is the procedure envisaged in rule 29 of Order 2 which reads:

“29(1) An application to strike out or set aside for non-compliance with these Rules, or for any other irregularity arising from the rules of practice and procedure in this Court, any proceedings or any step taken in any proceedings or any document, judgment or order therein shall only be entertained by the Court if it is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.

(2) An application under this rule may be made by motion and the grounds of objection must be stated therein:

That procedure has not been followed by the respondents in this case. That is not all. The respondents having filed counter affidavits in response to applicant’s affidavits, have taken fresh steps in the proceedings since knowing of the non-compliance complained of. That being so under Rule 29(1), they are estopped from now raising the alleged non-compliance by the appellant.

In conclusion therefore, I must hold that the preliminary objection fails. I now proceed to deal with the merits of the application. Mr. Okolo SAN has submitted that the applicant is a contemnor and is therefore not entitled to the indulgence of this Court. The injunction granted by the Court below is in these terms:

“Accordingly the defendant bank, its officers servants, agents and privies howsoever, including the present Board of Directors of the said back are restrained from either proceeding with, taking further steps, or completing action on the proposed privatization of the bank pending the determination of the appeal now pending before this Court.”

(italics mine)

In effect the injunctions to restrain the applicant from privatising the Bank. The applicant has denied doing this and from all facts disclosed in the various affidavits and counter affidavits it is dear that what the applicant was at that time doing and continued to do after the injunction was granted was to sell to the public its shares to the nominal value of N30 million being the increase of its share capital as decided at the extra-ordinary general meeting of the 25th September, 1991. Is this privatisation Privatisation is not defined in the Act but in section 14 of the Privatisation and Commercialisation Act Cap.369 the word is defined as meaning:

“the relinquishment of part or all of the equity and other interests held by the Federal Government or its agency in enterprises whether wholly or partly owned by the Federal Government.”

If this definition is adapted to the facts of the present case, privatisation would mean the relinquishment of part of all of the equity and other interests held by the respondents or their agencies in the applicant company which, on the facts before us, is only partly owned by them. It has not been alleged nor established by the respondents that the applicant had offered their equities in the bank to the public or to anyone else. In the circumstances it would be erroneous, in my respectful view, to say that the applicant is a contemnor. I cannot see what it has done to breach the order of injunction made against it by the Court below. The principles governing the grant of stay of execution pending appeal have been laid down in a number of cases that I need not go over them again. It is sufficient for me to say that the issues to be decided on the appeal to this Court are serious enough to warrant my granting the order of stay sought by the applicant.

I would not discuss these issues in detail as this might amount to prejudicing the appeal.

It is for the reasons I have given above that I granted the orders prayed for by the applicant.

Other Citation: (1992) LCN/2215(SC)