F. K. Construction Limited Anor V. Nigeria Deposit Insurance Corporation (Ndic) & Anor (2013)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

AMINA ADAMU AUGIE, J.C.A. (Delivering the leading Judgment)

The 2nd Respondent was a licensed Bank until it went into liquidation, and was taken over by NDIC, the 1st Respondent. In May 1994, while the 2nd Respondent was still carrying out its normal banking business, it offered to sell the fixed and movable assets of a Company that was indebted to it – Kano Plastic Company Ltd. After a walking assessment of the Factory in Kano, the Managing Director (MD) of the 1st and 2nd Appellants made an offer in writing dated 5/5/1994, and it reads –

“I refer to the visit to the said factory on the 4th May, 1994 accompanied by Mr. Yusuf Ishak (Head Corporate Banking) to offer you to buy the fixed and moveable assets of KANO PLASTICS COMPANY LTD. for the sum of N33,000,000.00 (Thirty-Three Million Naira Only). It is also understood that the company is free of all encumbrances and liabilities. We also endeavour to re-employ, in priority, as many staff as possible from the defunct company when and as needed. I believed that our offer is agreeable to you and looking forward of hearing from you soon”. …Signed Fahim Khouri (MD).

The 2nd Respondent replied with a letter of acceptance dated 6/5/1994; it reads –

“We refer to your letter dated 5th May 1994 on the above subject matter and write to confirm our acceptance on your offer to buy the fixed and movable assets of Kano Plastic Limited. Our acceptance is based on the following terms and conditions:

Purchase Price: N33 Million (Thirty Three Million Naira)

Payment Terms:

(i) Immediate payment of 25% (N8.25 million) of the purchase price.

(ii) Full and final payment of 75% percent (N24.75 million) of the purchase price on the signing of the relevant documents. This should be completed within two weeks…

We look forward to receiving your cheque for N8.25 million being the 25% of the purchase price to enable us initiate the process of documentations and transfer of title documents. Thank you. Yours faithfully – For CENTURY MERCHANT BANK LIMITED…”

By a letter dated 16/5/94, the Appellant forwarded the said sum, and the 2nd Respondent, in a letter dated 17/5/94, acknowledged receipt of “two bank drafts – totaling N8,500,000.00 as part payment for the acquisition of Kano Plastics Ltd”. The Appellants waited for some time to have the agreement concluded only to receive a letter from the 2nd Respondent dated 10/6/1994, which reads thus –

“This is to formally inform you that continued action on your purchase of the fixed and movable assets of Kano Plastics Limited… has been stalled by reason of the following recent developments…

1. An application filed on behalf of the staff of Kano Plastics Limited as minority shareholders seeking that they be joined in the court action as defendants.
2. A further application on behalf of the staff of Kano Plastic that everything achieved done and/or agreed till date in respect of our claim against the company be set aside by the Court on the basis that these were and are not in the interest of all of the shareholders of the company.
3. The unauthorized take-over by persons claiming to be shareholders & directors of Kano Plastics Limited of the movable assets already attached by the officials of the court in execution of the judgment debt (N11.8 million) owned by the company…

…In consequence of the above stated facts, we regret that we must ask you to bear with us until our solicitors may have successfully rebuffed the mischievous attempt being made to scuttle the agreement, which forms the basis of the offer made to your company and our receipt of the deposit paid by your company.

In concluding this letter, it is important to restate that our meetings that week with Kano Plastic Limited’s own solicitor, have revealed that the original understanding is still firmly in place,even though it is necessary that the above mentioned development should first be resolved before progress on completion of our agreement can be achieved. As soon as this has been done, we shall immediately revert to you for the purpose of completing the agreement reached with you”.