Mere revocation of a banking licence does not bring the life of a bank to an end

OREDOLA OKEYA TRADING CO. & ANOR v. BANK OF CREDIT & COMMERCE INTERNATIONAL & ANOR (IN RE: AMOLEGBE)

SUPREME COURT

(MUHAMMED; FABIYI; PETER-ODILI; ARIWOOLA;MUHAMMAD: JJ.CA)

FACTS

Mr. Sakiru Amolegbe (the Applicant), by a Motion on Notice dated 6 June 2013, sought an order of the Supreme Court substituting the late Alhaji Yesufu Alabi Amolegbe, the deceased 2^nd Appellant, with the Applicant in the pending appeal. He also sought an order substituting the Bank of Credit and Commerce International (BCCI) (the 1^st Respondent) with the Nigeria Deposit Insurance Corporation (NDIC) (the 2^nd Applicant)

The application was predicated on the ground that the banking licence of the 1^st Respondent, which subsequently became known as African International Bank Limited (AIB), had been revoked by the Central Bank of Nigeria. The Applicant contended that, by virtue of the relevant statutory provisions, the 2^nd Applicant became the provisional liquidator of the failed bank with the authority to defend legal proceedings on its behalf. He further maintained that the 1^st Respondent had ceased carrying on banking business and was therefore no longer a competent party to the appeal. The Applicant also averred that the 1^st Respondent was, until July 1991, affiliated with Bank of Credit and Commerce International (Holdings) Luxembourg S.A. Following the liquidation of its parent company, it changed its name to African International Bank Limited and continued banking operations until sometime before 2005, when it eventually ceased operations.

Mr. Olurotimi Williams (the 2^nd Respondent) case was that African International Bank Limited was formerly known as Universal Bank, incorporated on 17 January 1990, and that the 1^st Respondent was not among the banks whose licences were revoked by the Central Bank of Nigeria or whose liquidation was being administered by the NDIC. It further maintained that African International Bank Limited remained a juristic person capable of suing and being sued, having not been dissolved. The 2^nd Respondent also asserted that the 2^nd Applicant merely administers the liquidation of banks whose licences have been revoked and does not assume their liabilities or automatically become a substitute party in pending legal proceedings by virtue of its statutory role as liquidator. He also was further contended that throughout the proceedings before the High Court, the Court of Appeal, and upon the entry of the appeal in the Supreme Court, the Appellant consistently prosecuted the matter against the 1st Respondent and never applied to substitute either African International Bank Limited or the NDIC as a party. Accordingly, the 2nd Respondent maintained that the application for substitution was misconceived and ought to be refused.

One of the issues for determination was: the legal existence of the 1st respondent and whether it is one of those financial institutions inspite of its alleged metamorphosis, which qualify for the supervision of the NDIC and to see whether the latter can substitute the 1^st Respondent

ARGUMENT

Counsel for the Applicant submitted that the 2^nd Appellant had died during the pendency of the appeal and was survived by the Applicant, who, as his successor in interest, was both willing and desirous of being substituted in order to prosecute the appeal to its logical conclusion. Counsel argued that the substitution was necessary to prevent the appeal from abating and to ensure that the issues raised therein were determined on their merits. He further submitted that the banking licence of the 1^st Respondent, which subsequently became known as AIB, had been revoked by the Central Bank of Nigeria. Consequently, by operation of the applicable statutory provisions, the NDIC, as the 2^nd Applicant, became the provisional liquidator of the bank and assumed responsibility for managing its affairs, including defending legal proceedings instituted against or by the bank. Counsel maintained that the proposed substitutions would neither occasion prejudice to any party nor alter the substance of the appeal but were necessary procedural steps to facilitate the just, effectual, and final determination of the matter. He therefore urged the Court to grant the application.

In opposition, counsel for the 2^nd Respondent argued that the application was misconceived and had been brought after an inordinate and unexplained delay, noting that it was filed more than two decades after the 1^st Respondent had ceased banking operations. Counsel submitted that no application for substitution had been made either before the trial court or the Court of Appeal, despite the fact that the 1^st Respondent had been continuously represented by counsel throughout the proceedings. He further contended that the revocation of a company’s banking licence does not extinguish its legal personality. According to counsel, a company remains a juristic person until it is formally dissolved in accordance with the law and therefore retains the capacity to sue and be sued. He argued that, if any substitution was required, it ought properly to have been AIB, being the corporate entity in liquidation, rather than the 2^nd Applicant, whose role is merely that of a statutory liquidator acting on behalf of the company. Counsel accordingly urged the Court to refuse the application.

DECISION OF THE COURT

In resolving the issue, the Supreme Court held that:

The mere revocation of a bank’s licence by the Central Bank of Nigeria does not, by itself, bring the life or legal existence of the bank to an end. A bank whose banking licence has been revoked remains a juristic person competent to sue and be sued. The Supreme Court explained that the cessation of banking operations or the closure of its business does not extinguish its corporate personality. Although the bank is no longer authorised to carry on banking business, it retains its legal existence until a winding-up order is made by a court. It is only upon the making of such a winding-up order that the bank ceases to exist as a juristic person.

In the instant case, the Supreme Court held that the 1^st Respondent had merely transformed into AIB whose banking licence was subsequently revoked. Since no winding-up order had been made against AIB, it remained a legal entity capable of suing and being sued. Accordingly, the 2^nd Applicant as statutory liquidator, could not be compelled to assume the position or functions of the 1^st Respondent merely because its banking licence had been revoked.

Issue resolved in favour of the 2^nd Respondent.

Mr. B.B, Lawal (with him, P. U. Abbe, C. Dunkwu) – for the Appellant/Applicant

Mr. Ogechi Ogbonna – for NDIC (2nd party sought to be substituted.)

Mr. M. I. Hanafi (with S.S. Umoru) – for the 2^nd Respondent

This summary is fully reported at (2015) 1 CLRN in association with ALP NG & Co.

See www.clrndirect.com ; www.alp.company.