Felix Okoli Ezeonwu V. Chief Charles A. Onyechi & Ors. (1996)

LAWGLOBAL HUB Lead Judgment Report

OGUNDARE, J.S.C.

There existed an organisation known as the Ufuma Practical Praying Band with headquarters at Ufuma in the Aguata Local Government Area of Anambra State. It had a branch in Kano where the 1st defendant in these proceedings lived for many years. Sometime in June 1978 seven members of this organisation met and agreed among themselves to plan and finance the formation of a company to manufacture biscuits.

The plaintiff and the 1st defendants were among these seven members. Series of meetings were held and contributions made towards the objective. It would appear, however, that the financial burden of the formation of the company fell mostly on the plaintiff and the 1st defendant.

A legal practitioner, Mrs. Uche Offia-Nwali (now dead) was briefed by the 1st defendant to incorporate the company. She filed the necessary documents required by the Companies Act. 1968 for the incorporation of a private company with limited liability. Among these documents were the Memorandum and Articles of Association of the proposed company and Form C.O. 7 (Particulars of Directors).

On 19th October 1978, the company – City Biscuits Manufacturing Company Limited – was incorporated and a certificate of incorporation was issued on that day by the Registrar of Companies. This Company is the 2nd defendant in these proceedings.

Following the incorporation of the company, the members met on a number of occasions to raise funds to enable the company go into business. It would appear that the 1st defendant throughout acted as the Chairman, Managing Director and Secretary to the company for he summoned meetings, presided at such meetings and prepared and signed the minutes of such meetings.

By a circular letter dated 27th September 1980, the 1st defendant requested the other members to:

“Indicate in writing within the next two weeks ..whether you are continuing or withdrawing ….”

The plaintiff replied indicating his intention to continue his participation in the project. It would appear that the other five members discontinued with further participation for there is no evidence in these proceedings that they reacted positively to the circular letter.

The plaintiff made various contributions running into thousands of Naira, by cheques made out in the name of the 2nd defendant. He also secured land at Onitsha for the erection of the company’s factory. The 2nd defendant needed loan for its take-off. An application was made by the company in 1981 to the International Merchant Bank (Nig.) Ltd. (3rd defendant in these proceedings) for a loan. A total amount of N1,000.000.00 (One million Naira) as loan and current line facility was approved by the 3rd defendant. It was the plaintiff who mortgaged his house as security for the loan. The factory went into production in March 1983.

From this stage on, the 1st defendant took complete control of the affairs of the 2nd defendant. The plaintiff was no longer consulted or informed about the goings-on in the company. In September 1985 the 3rd defendant at the reqest of the 2nd defendant, forwarded plaintiff’s title deeds to the 2nd defendant. The documents were not released to the plaintiffs but kept by the 1st and 2nd Defendants.

Displeased with the turn of events, the plaintiff, by originating summons issued in the Federal High Court, Enugu, instituted the proceedings leading to this appeal claiming from the 1st, 2nd and 3rd Defendants as hereunder:

“1. A declaration that the Memorandum and Articles of Association with which the 2nd defendant City Biscuits Manufacturing Company Limited was registered and filed on the 28th day of September, 1978 with the Registrar of Companies at Lagos contains the only provisions regulating the operations of the 2nd defendant since incorporation till date.

2. A declaration that the plaintiff together with the 1st defendant under and by virtue of the Memorandum and Articles of Association dated 14th September, 1978 and filed on the 28th September, 1978 with the Registrar of Companies at Lagos are joint members and owners of the 2nd defendant Company that is City Biscuits Manufacturing Company Limited.
3. An order directing the 1st (and 3rd) defendant(s) (severally) to render an account of the management, operations as well as financial involvements of one and the other with the 2nd defendant company since its incorporation in 1978.
4. An order of this Honourable Court directing a meeting of the 2nd defendant/company to be held within 30 days of the Order for the sole purpose of appointing Secretary and Auditor outside the present subscriber/directors of the 2nd defendant/company.
5. An Order of this Honourable Court directing the 3rd defendant to release the following documents in respect of Plot No. 58 VIP Rest House GRA Onitsha Mortgage on behalf of the 2nd defendant company by the plaintiff that is to say:

(i) A Building lease registered as No. 93, at page 93 in Volume 675 at the Enugu Land Registry.