National Council On Privatization & Ors V. Magi Johnson & Ors (2014)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

B THERESA NGOLIKA ORJI-ABADUA, J.C.A. (Delivering the Leading Judgment)

The 1st – 70th Plaintiffs, now the 1st – 70th Respondents claimed against the Appellants and 71st Respondent jointly and severally as follows:-

1. A declaration that any and or the purported offer to sell and or sale of the 4th defendant is illegal, arbitrary and unconstitutional.
2. A declaration that the plaintiffs are Bona-fide holders and owners of the shares allotted against their respective names in form CO2 registered at the Corporate Affairs Commission, Abuja.
3. A Mandatory Order of Interlocutory Injunction restraining the defendants, their agents, privies and or representatives from dealing with the 4th defendant in whatever manner and setting aside all steps and procedures so far taking relating to the sale of 4th defendant.
4. An order of perpetual injunction restraining the defendants either by themselves, their agents, privies and or representatives from offering to sell and or selling the 4th defendant to members of the public, persons and group of persons.
5. And any other consequential order and or orders as the Honourable Court may deem fit to make in the circumstances of the suit.”

The 71st Respondent, i.e., Nasitume Investment Limited sought from all the Defendants jointly and severally as follows:-

1. A declaration that Durbar Hotel Plc was sold to Kabo and/or Kabo Holdings Limited, and the said purchaser had in turn sold all their interests in Durbar Plc to Nasitume Investment Limited.
2. A declaration that the Defendants have no interest (judicial or otherwise) in Durbar Hotel Plc and cannot claim any.

Learned Counsel for the Appellant Tochi Nwogu Esq,raised three issues for determination thus:

“1. Whether there was preponderance of evidence before the trial Judge that offer and allotment of shares to the Plaintiffs were made in breach of the Share Purchase Agreement between the parties and the relevant laws thereto and if so whether the learned trial Judge properly evaluated the evidence placed before it before coming to a decision.

2. Whether the 71st Respondent discharged the onus of the evidential burden of proving that Kabo Holdings Ltd sold/transferred the 60% equity shares of the 3rd Appellant to the 71st Respondent in view of the Exhibits tendered and evidence given and if not whether the learned trial Judge rightly placed the evidential burden of proof on the Appellants.
3. Whether Exhibit T is an admissible evidence and if not whether the learned trial Judge can on the basis of Exhibit T determine whether there was mutual rescission of the contract of sale between the Appellants and Kabo Holdings Ltd.

He relied on the cases of A.G Kwara State vs. Alao (2000) Part 84; Iwuoha vs. NIPOST Ltd (2003) 8 NWLR Part 822 PAGE 308 and so many other cases.

Counsel for the 71st Respondent distilled three issues for determination of this Court they are:

“1. Whether the 1st and 2nd Appellants were completety divested of all interest in the 3rd Appellant when they executed Exhibit M with Kabo Holdings Ltd., and if yes, whether the Appellants in that instance can challenge the allotment of 60% stock and shares to the 71st Respondent by Kabo Holdings Ltd.

2. Whether the 71st Respondent discharged the legal burden of proving the allotment of 60% stock and shares in the 3rd Appellant by Kabo Holdings Ltd., to the 71st Respondent, and if yes, whether the Appellant discharged the corresponding evidential burden placed on them to prove that there was no valid allotment of stock and shares to the 71st Respondent by Kabo Holdings Ltd.
3. Whether the basis upon which the learned trial judge determined the question of whether there was mutual rescission of the contract of sale between 1st and 2nd Appellant and Kabo Holdings Ltd was Exhibit ‘M’.”

He submitted the cases of Gadzama vs. RIM Merchant Bank Ltd (1999) 4 NWLR Part 498 page 234 at 236; Total (Nig) Plc vs. Akinpelu (2004) 17 NWLR Part 903 page 509; Nangibo vs. Okafor (2003) FWLR Part 171 page 1529; Ibama vs. Shell Petroleum Dev. Co. Ltd (2005) All FWLR Part 287 page 822; Lion Bank of Nig Plc vs. Siyak Ind. Ltd (2007) ALL FWLR Part 344 page 106; Onyenge vs. Ebere (2004) ALL FWLR Part 219 page 981 at 995; Archibong vs. Ita (2004) ALL FWLR Part 197 page 930 at 951; Ejuetami vs. Olaiya (2001) 18 NWLR part 746 page 572 SC; Dagaci of Dere vs. Dagaci of Ebwa (2001) 7 NWLR Part 712 page 365; Okoro vs. State (1998) 14 NWLR part 584 page 181; Oguonzee vs. State (1997) 8 NWLR Part 718 page 286 at 297 paragraphs A-B and Abuul vs. Bensu (2003) 10 NWLR (supra).

It is glaring in the facts placed before the Lower Court and as are contained in the record of appeal before this Court that the 1st and 2nd Appellant’s sometime by an agreement dated the 4th March, 1993 sold the 3rd Appellant to Kabo Holdings Limited under the Privatization Policy of the Federal Government of Nigeria. The focal point is that the 3rd Appellant was indeed sold to the said Kabo Holdings Ltd, although on the conditions articulated by the Appellants both in their pleadings and the evidence proffered before the Court as contained in Exhibit M tendered before the Lower Court.

Exhibit M distinctly established that the 3rd Appellant was originally owned by the Federal Government of Nigeria as beneficial owner. By that agreement, the vendor representing the Federal Government sold the said Kabo Holdings Ltd purchased free from all encumbrances, the assets and stock of the Company, i.e., Durbar Hotel Plc, Kaduna.

The consideration for all sales by the vendor of all the shares, stocks, and assets of Durbar Hotel Plc was N90 million. Clause 2.2 of the said Agreement indicated that the purchaser, i.e. Kabo Holdings Ltd, had prior to the execution of the said Agreement paid the entire purchase price of N90 million to the vendor the receipt of which the vendor acknowledged.

There were covenants entered into by the parties but one of the hurting ones entered into by the purchaser at clause 6.3 is that it will ensure that 40% of the shares of the Company will be offered to the Nigeria Public including employees of the company within five years of the effective date. It was executed on the 4th March,1993.

It is clear by Exhibit M that all the Federal Government interest/shares in Dubar Hotel Plc., Kaduna were purchased by Kabo Holdings Ltd for the sum of N90 million on 4/3/93. If the 3rd Appellant had been privatized by that Agreement, Exhibit M, it follows that the ownership of the 3rd Appellant had completely changed from the Federal Government of Nigeria to Kabo Holdings Ltd.