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Merchants Bank Ltd V. Federal Minister Of Financemerchants Bank Ltd V. Federal Minister Of Finance (1961) LLJR-SC

Merchants Bank Ltd V. Federal Minister Of Financemerchants Bank Ltd V. Federal Minister Of Finance (1961)


This is an appeal from the Judgment of the High Court of Lagos dismissing the Plaintiffs/Appellants’ claims for:–

(a)A declaration that the Order published as Legal Notice No. 152 of 1960 and dated 23rd September, 1960 is void and of no effect.

(b)An injunction restraining the defendants, their servants and/or agents from giving effect to the said Order and also from winding up the banking business of the plaintiffs. There were no pleadings ordered by the lower Court nor was evidence adduced. The trial Judge stated the issue before him in the following words:-

No oral evidence was offered in the case and the single question submit-ted for a decision is whether an order made by the Minister of Finance of the Federal Government of Nigeria impinged on the plaintiffs’ constitutional rights.

It would appear from the arguments of Counsel on record that the following facts are common ground:

(a)That the appellant Bank was duly licensed to carry on banking business, and

(b)That on the 23rd September, 1960, the Federal Minister of Finance made an order, which is the subject-matter of action in the lower Court, revoking the licence granted to the appellant Bank and ordering its winding-up.

At the hearing of this appeal, Chief Williams Q.C., urged that:–

(a)The trial Judge erred in holding that the Banking Ordinance does not confer a right upon the appellant Bank, for, he contended, the question as to whether a licence confers a right is dependent on the relevant statutory provisions and not on the general conception of what is a licence.

(b)That if he is correct in the above contention, then by virtue of Clause 5 of the Sixth Schedule of the Nigeria (Constitution) Order in Council, 1954, (which will be hereafter referred to as the 1954 Constitution) the appellant Bank is entitled to have that right determined or revoked only “by a Court or other tribunal established by law” in accordance with the above Constitution.

Mr. Adebiyi, who appeared for the Federal Minister of Finance, the second defendant in the High Court not having been served, contended that the appellant Bank did not possess any “civil rights” within the meaning of the 1954 Constitution, then in force, and that all they possessed was the privilege to carry on banking business within the meaning of the Banking Ordinance and no more. Further, that such a privilege was determinable in the manner provided by that Ordinance.

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The grant of a licence to do banking business is governed by s.3 of the Banking Ordinance which provides inter alia that:

3(1).    No banking business shall be transacted in Nigeria except by a company which is in possession of a valid licence, which shall be granted by the Minister after consultation with the Central Bank, authorizing it to carry on banking business in Nigeria: Provided that a valid licence granted under the provisions of the Banking Ordinance, 1952, shall be deemed to be a licence granted under the provisions of this section. The revocation of licences is governed by s.3(5)(b) which provides that:–

The Minister may by Order revoke any licence –

(i)  if the holder ceases to carry on banking business in Nigeria or goes into liquidation or is wound up or otherwise dissolved; or

(ii) in the circumstances and in the manner provided for in section 14. Section 14 provides that:–

If, in the opinion of the Minister, an examination shows that the licensed bank is carrying on business in a manner detrimental to the interests of its depositors and other creditors or has insufficient assets to cover its liabilities to the public or is contravening the provisions of this Ordinance, the Minister may take such one or more of the following steps from time to time as may seem to him necessary-

(a)require that Bank forthwith to take such steps as he may consider necessary to rectify the matter; or,

(b)appoint a person who in his opinion has had proper training and experience to advise the Bank in the proper conduct of its business and fix the remuneration to be paid by the Bank to such person; or,

(c) report the circumstances to the Governor-General in Council who, unless satisfied that the Bank is taking adequate measures to put its affairs in order, may direct the Minister to make an Order revoking the Bank’s licence and requiring its business in Nigeria to be wound up; Provided that he shall not so report the circumstances without giving the Bank reasonable prior notice of his intention to do so and an opportunity of submitting a written statement in reply.

It is stated in the Order impugned that the Minister purported to act under this section 14. It has not been contended here, nor was it contended in the lower Court, that the Minister did not comply with the requirements of this section. In fact, this was conceded by Chief Williams in the course of his argument. As I understand Counsel’s argument, his complaint is with the words “in the opinion of the Minister” appearing at the commencement of this section. As the section stood, contended Counsel, the Minister was made the final arbiter, whereas the 1954 Constitution, Clause 5 of the Sixth Schedule, made the Courts or a tribunal established by law the final arbiter in respect of the determination of a person’s “civil rights”. As a result, Counsel urged that the revocation was void as was the Order concerned.

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Clause 5 of the Sixth Schedule of the 1954 Constitution provides that:–

In the determination of his civil rights and obligations a per-son shall be entitled to a fair hearing within a reasonable time by a Court or other tribunal established by law and constituted in such manner as to secure its independence and impartiality: Provided that nothing in this sub-paragraph shall invalidate any law by reason only that it confers on any person or authority power to determine questions arising in the administration of a law that affect or may affect the civil rights and obligations of any person.

The first point that comes up for consideration is whether a right, or licence, to use the words of the Banking Ordinance, granted under such Ordinance, comes within the meaning of civil rights in the context in which it appears in the fifth clause to the Sixth Schedule to the 1954 Constitution? If it does not then this appeal must be dismissed. If it does then I must proceed to a discussion of the effect of the proviso in relation thereto.

On the first issue, and without in any way attempting to define that most controversial term “a right”, or in this case a “civil right”, it seems to me that it cannot be contested that the appellant Bank has not by virtue of the Banking Ordinance, a right to carry on the business of Banking within the terms of that Ordinance. Further, that so long as the revocation takes place within the exercise of the powers granted under s.14 of that Ordinance, the appellant Bank cannot be heard in effect to say that though it acquired the right to do business under the Ordinance, that right by virtue of the fifth clause to the Sixth Schedule of the 1954 Constitution can only be revoked in the manner provided for the determination of a person’s “civil rights and obligations”.

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The cases of Citizens Insurance Co. of Canada v. Parsons, 7. App. Cases 96 at page 110, and Russell v. The Queen, 7. App. Cases 829 at page 838, show that in the determination of what are civil rights the important point to bear in mind is the context in which they appear. The Banking Ordinance was passed with a view to regulate and control the business of Banking. It states the terms under which a licence to do such business shall be granted. It provides for the supervision of such a business and lays down penalties to be imposed on the violation of or the failure to comply with the provisions of the Ordinance. Finally, it also makes provision for the revocation of licences under certain circumstances. I am of the view that, from the context in which the words “civil rights and obligations” appear, from the matter that the Sixth Schedule purports to deal with, it is clear that a right or licence to do banking business under the Banking Ordinance does not come within the meaning of “civil rights”. It seems to me that the argument of Chief Williams breaks down with his admission that if s.14 of that Ordinance had empowered the Minister to revoke a licence at will, he would have been unable to contest the revocation, for, if the Bank was possessed of “civil rights” under clause 5 of the Sixth Schedule of the 1954 Constitution, surely such “civil rights” would be determinable only as provided therein, regard-less of whether the Ordinance made it revocable at the will of the Minister. Such a provision would clearly be inconsistent with the provisions of the Constitution.

This first issue must, in my judgment, be resolved against the appellant Bank and for the reasons already set out I would dismiss this appeal with costs which I would assess at 20 guineas in favour of the respondents.


I concur


I concur.

Other Citation: (1961) LCN/0893(SC)

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