National Bank Of Nigeria Ltd. V. The Are Brothers (Nigeria) Ltd (1977)

LawGlobal-Hub Lead Judgment Report

A. G. IRIKEFE, J.S.C

This appeal is a sequel to an interlocutory ruling delivered by the Federal Revenue Court on 9th July, 1974. There had been pending before that court, a winding-up petition filed by the appellants, a limited liability company engaged in banking business against the respondents, also a limited liability company. The said petition was brought on the ground that the respondents were unable to pay debt owed to the appellants. The relevant paragraphs in the petition allege as follows: –

“(5) There is relationship of banker and customer between your petitioner and the company.

(6.) The company is indebted to your petitioner in the sum of N156,088.62 as at 30th September, 1973 in respect of overdraft and banking facilities granted by the petitioner to the company together with interest accruing on the amount aforesaid.

(7.) On the 11th day of December, 1973 your petitioner served on the company by leaving it at the registered office of the company aforesaid a demand under his hand requiring the company to pay the sum so due, and the company has for three weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of your petitioner.

(8.) The company is unable to pay its debts. Your petitioner therefore prays as follows: –

(a.) That ARE BROTHERS (NIGERIA) LIMITED may be wound up by the court under the provisions of the Companies Decree 1968;

(b.) Or that such other order may be made in the premises as to the court shall seem just.”

In opposition to the petition, the respondents filed an affidavit the relevant paragraphs of which assert the following:

“(6.) There is relationship of banker and customer between the National Bank of Nigeria Limited (hereinafter called the “petitioner”) and the respondent.

(7.) The respondent is indebted to the petitioner in the sum of N156,088.62 as at 30th September, 1973 but out of this debt the respondent, had since paid N5,000.00 direct to the petitioner and another sum of N8,000.00 through the solicitor to the petitioner.

(8.) That the temporary inability of the respondent to pay this debt was caused partly by the petitioner which had unduly held up the sum of 62,068.19.6d (Sixty-Two Thousand Shillings and Six-Pence) now N124,137.95 (One Hundred and Thirty Four Thousand, One Hundred and Thirty Seven Naira, Ninety Five Kobo) belonging to the respondent.

(9.) That the said amount was intended for a letter of credit to be opened by the petitioner at the instance of the respondent in favour of Delta Financing Corporation of Panama City, R.D. Panama (hereinafter called the “Beneficiaries”) for the purchase of a quantity of cement.

(10.) That despite the plan of the respondent, the beneficiaries insisted that the letter of credit should be opened only by the Bank of America. Copy of the beneficiaries’ letter of 21st February, 1970 paragraph (3) attached marked Exhibit “A” refers.