Alhaji Lawal Sarkin Tasha v. Union Bank of Nigeria Plc

CASE IDENTIFICATION

Court

Supreme Court of Nigeria

Judicial Division

Abuja

Suit / Appeal Number

SC.17/1996

Date of Judgment

29/01/2001

NLC Citation

TASHA v. UNION BANK OF NIGERIA PLC (2001) NLC-171996(SC)

Coram

SALIHU MODIBBO ALFA BELGORE, JSC
EMMANUEL OBIOMA OGWUEGBU, JSC
SYLVESTER UMARU ONU, JSC
UMARU ATU KALGO, JSC
SAMSON ODEMWINGIE UWAIFO, JSC

EDITORIAL SUMMARY

Editorial — not part of the judgment as delivered

Facts of the Case

The respondent bank, Union Bank of Nigeria Plc, granted a loan to the appellant under the Agricultural Credit Guarantee Scheme Fund Decree 1977 (now Cap. 13, Laws of the Federation of Nigeria, 1990). Following an alleged default in repayment by the appellant, the respondent instituted an action against the appellant at the trial court, placing the suit on the undefended list. Judgment was entered in favour of the respondent. The appellant’s appeal to the Court of Appeal was dismissed, prompting a further appeal to the Supreme Court.

At the Supreme Court, the appellant contended that the suit was incompetent as it was not brought against the proper party. The respondent’s counsel conceded the legal position. The central issue for determination was whether the respondent bank had the legal standing to sue the appellant directly for recovery of the loan, given the mandatory provisions of the enabling statute.

Issues for Determination

ISSUE 1: Whether the respondent bank had the locus standi to institute the action against the appellant for the recovery of the loan guaranteed under the Agricultural Credit Guarantee Scheme Fund Act, Cap. 13, Laws of the Federation of Nigeria, 1990.

ISSUE 2: Whether the trial court and the Court of Appeal were right in entertaining and adjudicating upon the suit given the provisions of section 15 of the Agricultural Credit Guarantee Scheme Fund Act.

Decision / Holding

The Supreme Court allowed the appeal. The Court set aside the decisions of the lower courts and struck out the suit filed by the respondent against the appellant. The practical effect of the judgment is that the action was incompetent ab initio for want of proper parties, and the trial court lacked jurisdiction to entertain it.

Ratio Decidendi

1. CIVIL PROCEDURE – Proper Party to Sue – Mandatory Provision for Suits to be Instituted by or Against Board

"By section 15 of Agricultural Credit Guarantee Scheme Fund Act, Cap. 13 Laws of the Federation of Nigeria, 1990, all legal proceedings of civil nature arising from the failure of any borrower to repay a loan granted by the bank or guaranteed under the Act or arising from any matter pertaining to any guarantee given pursuant to the Act shall be instituted and conducted by or against the 'Board'. The cause of action giving rise to the proceedings falls within section 15 of the Act. In the circumstance, the respondent bank has no standing whatsoever to institute the proceedings against the appellant having regard to the state of the law at the time the cause of action arose."

Per Ogwuegbu, JSC, in Alhaji Lawal Sarkin Tasha v. Union Bank of Nigeria Plc (2001) NLC-171996(SC) at p. 1; Paras A–B.

2. CIVIL PROCEDURE – Jurisdiction – Competence of Action – Effect of Non-Joinder of Statutory Party

"The court is to decide on cases legally placed before it. This is an incompetent action and the court ought not to have welcomed the suit, irrespective of being placed on the undefended cause list. The courts below were in gross error in not giving section 15 of Cap. 13 Laws of the Federation of Nigeria, 1990 its plain and unambiguous meaning."

Per Belgore, JSC, in Alhaji Lawal Sarkin Tasha v. Union Bank of Nigeria Plc (2001) NLC-171996(SC) at p. 1; Paras A–B.

3. CIVIL PROCEDURE – Locus Standi – Bank's Standing to Sue Under Agricultural Credit Guarantee Scheme – Statutory Limitation

"Since the latter section (section 15) was ignored by the respondent, the action brought at its instance must perforce be incompetent and unmaintainable against the appellant. The issue of locus of the respondent to sue in the first instance was well taken and this denies the trial court and the Court of Appeal the power to entertain and adjudicate on the matter."

Per Onu, JSC, and Kalgo, JSC, in Alhaji Lawal Sarkin Tasha v. Union Bank of Nigeria Plc (2001) NLC-171996(SC) at pp. 2–3; Paras D–A.

4. STATUTORY INTERPRETATION – Harmonious Construction – Sections 12 and 15 of Agricultural Credit Guarantee Scheme Fund Act

"S.12 of the law did not give the respondent the total right to sue but only 'to endeavour to recover the amount outstanding' at first instance. This section must be read together with S.15 of the said Act, and in so doing only s. 15 allowed the respondent to sue the Board to recover the outstanding amount of the loan."

Per Kalgo, JSC, in Alhaji Lawal Sarkin Tasha v. Union Bank of Nigeria Plc (2001) NLC-171996(SC) at p. 3; Paras A–C.

Orders of Court

Appeal allowed.
The decision of the Court of Appeal is set aside.
The suit filed by the respondent in the trial court on the undefended list is struck out.
Costs of N10,000.00 are awarded to the appellant.

APPEARANCES

Counsel for the Appellant(s)

U. N. Agomoh (Miss.) (with her, D. D. Dimlong)

Counsel for the Respondent(s)

I. S. Yerima (Mrs.)

Amicus Curiae

None

JUDGMENTS / OPINIONS OF THE COURT

Authoritative judicial text as delivered

Lead / Majority Opinion

— (DELIVERED BY SALIHU MODIBBO ALFA BELGORE, J.S.C. (DELIVERING THE LEAD JUDGMENT))

:The Agricultural Credit Guarantee Scheme Decree (now in Cap. 13 Laws of the Federation of Nigeria 1990) sets out clearly how the loan under the agricultural scheme was to be administered. The law empowers the minister responsible for the scheme to fix rate of interest from time to time. In the case of default by the borrower/farmer to pay the debt, s. 12 sets out the procedure for demand. But in case of suing to recover the loan, s.15 is very clear; it is the Board of the scheme that must be sued. Though the amendment to the Decree (now Act) in 1993 allows the bank to sue the debtor directly, this case arose before the amendment and at the time the suit was filed the Board was not sued. This is an incompetent action and the court ought not to have welcomed the suit, irrespective of being placed on the undefended cause list. The court is to decide on cases legally placed before it. This appeal therefore succeeds. The appeal is allowed, decision of court below is set aside and the verdict of striking out the suit entered. N10,000.00 costs to appellant.

Concurring Opinion(s)

— OGWUEGBU, J.S.C.:

There is merit in this appeal. By section 15 of Agricultural Credit Guarantee Scheme Fund Act, Cap. 13 Laws of the Federation of Nigeria, 1990, all legal proceedings of civil nature arising from the failure of any borrower to repay a loan granted by the bank or guaranteed under the Act or arising from any matter pertaining to any guarantee given pursuant to the Act shall be instituted and conducted by or against the “Board”. The cause of action giving rise to the proceedings falls within section 15 of the Act.

P.1

In the circumstance, the respondent bank has no standing whatsoever to institute the proceedings against the appellant having regard to the state of the law at the time the cause of action arose. The courts below were in gross error in not giving section 15 of Cap. 13 Laws of the Federation of Nigeria, 1990 its plain and unambiguous meaning. The appeal succeeds. The action was incompetent. It is accordingly struck out. N10,000.00 costs to the appellant.

— ONU, J.S.C.:

Since the respondent in the instant case in the prosecution of which the provisions of sections 12(1) and 15 of the Agricultural Credit Guarantee Scheme Fund Act Cap. 13 LPN 1990 were not resorted to, but rather it was the undefended list procedure that was applied to give judgment to the respondent, both the trial court and the Court of Appeal were wrong in the method they adopted. The two sections provided: –
12(1). Where there has been a default in the repayment of the interest or principal of any loan guaranteed under this Act, the bank concerned shall in the first instance endeavour to recover the amount outstanding from the borrower or his sureties, if any, and may for that purpose dispose of any security obtained in respect of the loan.”
15. All legal proceedings of a civil nature arising from the failure of any borrower to repay a loan granted by a bank and guaranteed under this Act or arising from any matter pertaining to any guarantee given pursuant to this Act shall be instituted and conducted by or against the Board.”
Since the latter section was ignored by the respondent, the action brought at its instance must perforce be incompetent and unmaintainable against the appellant.

P.2

It is for these reasons and those contained in the judgment of my learned brother Belgore, JSC that I too allow this appeal and set aside the decisions of the 2 courts below. I strike out the suit filed by respondent on the undefended list and award N10, 000 costs to the appellant.

— KALGO, J.S.C.:

This appeal is meritorious and ought to succeed. The issue of locus of the respondent to sue in the first instance was well taken and this denies the trial court and the Court of Appeal the power to entertain and adjudicate on the matter. The loan was granted under the Agricultural Credit Scheme Act ( Cap. 13 of 1990, Laws of the Federation) and by s. 15, any default by the borrower to repay the loans falls on the Board and so only the Board of the Scheme should be sued and not the borrower. It was therefore clearly wrong here to sue the borrower -the appellant. S.12 of the law did not give the respondent the total right to sue but only “to endeavour to recover the amount outstanding” at first instance. This section must be read together with S.15 of the said Act, and in so doing only s. 15 allowed the respondent to sue the Board to recover the outstanding amount of the loan. The respondent’s counsel quite properly conceded to the correct legal position in the matter.
For this reason, I allow the appeal, set aside the decision of the Court of Appeal and strike out the suit filed by the respondent in the trial court in the undefended list.
I award N10,000.00 costs to the appellant.

— UWAIFO, J.S.C.:

It is common ground that the loan given by the respondent bank to the appellant was under the Agricultural Credit Guarantee Scheme Fund Decree 1977.

P.3

The Decree is now an Act to be found in Cap. 13 of the Laws of the Federation 1990. Section 15 of that Act provides that when there is default in repaying the loan (whether principal or interest thereon) by the borrower, any legal proceedings arising therefrom shall be by or against the Agricultural Board set up by law to oversee the loan. In the present case, it would appear there was such default to repay. The respondent bank sued the borrower (i.e. the appellant) instead of the Board. The suit was placed on the undefended list and judgment given against the appellant. The lower court affirmed the judgment even though its attention was drawn to s. 15 of the said Act.
There can be no argument that the action was improperly constituted. The parties ought to have been the respondent bank and the Board. Not having been properly constituted, the suit was incompetent. I therefore allow this appeal on that issue alone and set aside the judgment of the lower court. I accordingly strike out the suit.
I award N10,000.00 costs to the appellant.

Appeal struck out.

P.4

Dissenting Opinion(s)