LEGAL PRINCIPLE: COMPANY LAW — Winding Up — Section 417 of Companies and Allied Matters Act — Proceedings by Company
PRINCIPLE STATEMENT
Section 417 of CAMA does not prohibit a company from proceeding with an action against another person; it prohibits, subject to leave of court, proceeding with an action against the company.
RATIO DECIDENDI (SOURCE)
Per Ayoola, JSC, in Onwuchekwa v. Nigeria Deposit Insurance Corporation (2002) NLC-982000(SC) at p. 12; Paras A–B.
"The provisions of an enactment should not be read so as to deny access to the court. There is nothing in section 417 which prohibits such company as is described in the section from proceeding with action or proceedings against another person. What that section prohibited subject to leave of the court is proceeding with an action or proceedings against the company."
EXPLANATION / SCOPE
Section 417 of CAMA protects companies in winding up from being sued without leave. It does not prevent them from suing others. The provision should not be read to deny access to court. The company may initiate proceedings against third parties without leave. The section is a shield, not a sword. The principle ensures that winding up does not paralyse the company’s ability to pursue claims. The court will interpret statutory provisions to promote access to justice. The rule applies to companies in liquidation. The liquidator may bring actions on behalf of the company. The section’s purpose is to protect the company’s assets, not to limit its rights.