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NSM FOODS LIMITED v. DIAMOND BANK PLC

(2018) LPELR-43515(CA)

In The Court of Appeal of Nigeria

On Friday, the 12th day of January, 2018

CA/L/609/2014


Before Their Lordships

MOJEED ADEKUNLE OWOADE Justice of The Court of Appeal of Nigeria

CHIDI NWAOMA UWA Justice of The Court of Appeal of Nigeria

HAMMA AKAWU BARKA Justice of The Court of Appeal of Nigeria


Between

NSM FOODS LIMITED - Appellant(s)

AND

DIAMOND BANK PLC - Respondent(s)


Other Citations

; ;


Summary

INTRODUCTION:
This appeal borders on Jurisdiction of the Federal High Court in matters arising from the operations of the Companies and Allied Matters Act.

FACTS:
The appeal was filed against the decision/Ruling of Oke-Lawal, J. of the High Court of Lagos State.

The Respondent offered the Appellant a loan facility of N800,000,000.00 (Eight Hundred Million Naira) under the Agriculture Credit Guarantee Scheme and the Tenor of the facility was 36 months inclusive of a 15 months Moratorium period. The Appellant pledged a Mortgage Debenture over its fixed and floating assets as security for the loan facility granted. Subsequently, the Federal Government of Nigeria through the Central Bank of Nigeria set up the Manufacturing Intervention Fund to revive the industry and the scheme each corporate body/individual were entitled to not more than N1,000,000,000.00 (One Billion Naira) only. The Appellant then applied to the Respondent for a loan under the CBN Intervention Fund to augment the existing loan facility. Thereafter an All Asset Debenture dated 3rd July, 2011 was executed by the Appellant in favour of the Respondent, in the event where the Appellant fails to honour its repayment obligation. This was followed by a restructure of the loan facility in the sum of N860,000,000 (Eight Hundred and Sixty Million Naira) only. By May 2011, the Respondent made available to the Appellant the sum of N140,000,000 (One Hundred and Forty Million Naira) under the CBN Intervention Fund. By the Appellant's account, it would not be required to repay any sum to the Respondent within 12 months from the date of advance. That the fund was disbursed on 8th May 2011 and by the terms of the Agreement, the first installment only became due on 1st August 2012. That contrary to this, the Respondent demanded and compelled the Appellant to make payment of the first installment under Agreement in February 2012 which period fell within the 12 months Moratorium. Further, that the Respondent wrongly debited the account of the Appellant with the sum of N99,262,587 (Ninety Nine Million, Two Hundred and sixty - Two Thousand, Five Hundred and Eighty - seven Naira) being the installment to the Term Loan.

The Respondent on the other hand pleaded that the Appellant did not inform her of the Appellant's alleged inadequacy of the sum of N140,000,000 (One Hundred and Forty Million Naira) only under the CBN Intervention Fund until the 2nd of November, 2011 (which, was 6 months after the loan was disbursed) when the Respondent made repayment demand. That the Appellant had since failed, refused or neglected to liquidate its indebtedness to the Respondent.

By Writ of Summons and Statement of Claim, the Appellant proceeded against the respondent at the trial Court. Respondent filed a Statement of Defence and Counter Claim. Appellant also filed a Reply to Statement of Defence and counter claim. Respondent filed a Preliminary Objection and challenged the jurisdiction of the High Court of Lagos State to entertain the action. Respondent/Applicant argued that based on Section 251 (e) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) the Federal High Court has jurisdiction to the exclusion of any other Court in Civil Causes and matters arising from the operation of the Companies and Allied Matters Act (CAMA) and that the Appellant's claim deals with debentures. The Appellant/claimant, on the other hand, argued that the State High Court has jurisdiction to entertain matters relating to Banker Customer Relationship and that the enforcement of the mortgage is an ancillary relief which is not enough to defeat the jurisdiction of the State High Court.

The learned trial Judge held that the action is caught by the provision of Section 251 (e) of the 1999 Constitution which gives the Federal High Court exclusive jurisdiction over such matters and oust the jurisdiction of the State High Courts. The judge disagreed with the Appellant/Claimant that the transaction between the parties was a simple agreement on a banker/customer relationship. Aggrieved by the decision, the Appellant appealed to the Court of Appeal.

ISSUES:
The sole issue for determination in the appeal is:
"Whether having regard to the reliefs sought by the Appellant, the learned trial Judge was right in declining jurisdiction and striking out this case."
DECISION/HELD:
In conclusion, the appeal was dismissed as lacking in merit.


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