AMCON has the power to enforce the recovering of debt over legal and equitable security interest

11 PLC v. MILAN INDUSTRIES LIMITED; POLARIS BANK LIMITED; ASSET MANAGEMENT CORPORATION OF NIGERIA

SUPREME COURT OF NIGERIA

(GARBA; NWOSU-IHEME; TSAMMANI; ABIRU; TUKUR, JJ.SC)

FACTS

Milan Industries Limited and Polaris Bank Limited (the 1^st and 2^nd Respondents) were in a banker/customer relationship under which the 2^nd Respondent granted the 1^st Respondent a loan facility in the sum of USD 29,800,000.00 for the construction of its flagship project, now known as the Lagos Continental Hotel. Subsequently, the 1^st Respondent obtained additional loan facilities from the 2^nd Respondent, all of which were applied towards the completion of the project. As security for the facilities, the 1^st Respondent executed a Deed of Legal Mortgage, charging its property located at Plots 244 and 255, Kofo Abayomi Street, Victoria Island, Lagos, as continuing security for the indebtedness. The mortgage was duly registered at the relevant Land Registry and perfected at the Corporate Affairs Commission in compliance with the provisions of the Companies and Allied Matters Act.

Upon the maturity of the facilities, the 1^st Respondent failed to liquidate the indebtedness despite repeated demands. Consequently, pursuant to Clause 6.05 of the Deed of Legal Mortgage, the 2^nd Respondent appointed a Receiver/Manager over the secured assets. The loan subsequently became a non-performing loan and was acquired by the Asset Management Corporation of Nigeria (AMCON) as part of its statutory mandate. Thereafter, the loan together with its underlying security was transferred and eventually sold to Milan Industries Limited (the Appellant).

Dissatisfied with the sale, the 1^st Respondent instituted an action seeking to set aside the transaction and reverse the sale of the mortgaged property. At trial, the Appellant and the 2^nd and 3^rd Respondents filed a Notice of Preliminary Objection. The trial Court dismissed the objections but found that the 1^st Respondent did not present any evidence to show that it had paid N2 Billion, as all the documents exhibited were all incomplete documents. The 1^st Respondent filed an appeal at the Court of Appeal, while the co-defendant also presented a cross appeal. The Court of Appeal in its judgment found that the 1^st Respondent proved that it had repaid N2 Billion, and also held that the 2^nd Respondent could not proceed against the security for the unsecured amount of the loan and as such it was illegal for the 2^nd and 3^rd Respondents to have bought and sold the collateral property. Aggrieved by the decision, the Appellant appealed to the Supreme Court.

Aggrieved by the decision of the Court of Appeal, the Appellant appealed to the Supreme Court. One of the issues for determination was: In view of the clear provisions of sections 33, 34, 35 and 43 of the Asset Management Corporation of Nigeria (AMCON) Act, whether the lower court was not in error in failing to hold that the trial court lacked jurisdiction to entertain the 1^st Respondent’s action.

ARGUMENTS

Learned Senior Counsel for the Appellant argued that trial Court lacked the jurisdiction to entertain the suit in view of the provisions of the AMCON Act which prohibits the Court from granting certain reliefs stated in that section. He submits that this issue addresses yet another jurisdictional errors by the lower court which failed to see that the trial court lacked the jurisdiction to countenance the action and maintained that the prime place of jurisdiction is one beyond debate or peradventure

He posited that reliefs are jurisdictional, and the jurisdiction of a court to entertain a suit is based on the plaintiff’s averments in the statement of claim and the reliefs sought therein. The Appellant finally argued that an appellate court such as the Supreme Court and the Court of Appeal cannot exercise jurisdiction over a matter where the trial Court was itself divested of jurisdiction

Responding to the arguments, Learned Senior Counsel for the 1^st Respondent argued that its action did not challenge the acquisition of the eligible bank asset. Rather, its complaint was limited to the nature and subsistence of the security underpinning the debt, namely whether the indebtedness was secured or unsecured, and whether the mortgaged property formed part of the assets acquired or had been discharged prior to the acquisition.

He submitted that the AMCON Act is circumscribed in its application and relates strictly to challenges against the acquisition of an eligible bank asset, and does not extend to disputes concerning the validity, existence, or subsistence of the security attached thereto. It was therefore submitted that the said provision was inapplicable in the instant case, as the mortgaged property had allegedly been discharged prior to the acquisition of the eligible bank asset from the 2^nd Respondent, and consequently, no infraction of had arisen. He also argued in the alternative, that the AMCON Act operates to fetter the constitutionally guaranteed right of access to court as enshrined under the Constitution of the Federal Republic of Nigeria, 1999 (as amended), and is, to the extent of such inconsistency, null and void.

DECISION OF THE COURT

In resolving the issue, the Federal High Court held that:

Upon the acquisition of a non-performing loan from an eligible financial institution, AMCON is not restricted in the enforcement of any charge or Deed of Legal Mortgage securing such debt, irrespective of whether the security is legal or merely equitable. By operation of law, AMCON becomes vested with legal title to all assets whether tangible or intangible by which the debt is secured, notwithstanding the prior equitable nature of the security interest.

The Supreme Court further held that the clear and unambiguous provisions of the enabling statute preclude the grant of any form of injunctive relief whether interim, interlocutory, perpetual, preservative, or restorative, against the 3rd Respondent, its directors, or officers, in relation to the exercise or intended exercise of its statutory powers to recover debts or otherwise realise any eligible bank asset or any property securing same. In such circumstances, the remedy available to any aggrieved party is strictly circumscribed and limited to a claim for monetary compensation.

In the instant case, the Supreme Court unequivocally held that the reliefs sought by the Respondents were not grantable against AMCON in law. Consequently, the lower court was devoid of jurisdiction not only to grant the said reliefs but also to entertain the action, as the jurisdiction of the Court was expressly and effectively ousted by the provisions of the Act.

Issue resolved in favour of the Appellant.

Chief Wole Olanipekun, CFR, SAN, with Bode Olanipekun, SAN; Chief Paul C. Obi, SAN; Akintola Makinde Esq; Ope Muritala, Esq., and Ifeyinwa Ikeatuegwu, Esq., for the Appellants.

Ahmed Raji, SAN, with A. G. Kehinde SAN; A. B. Sulu-Gambari, SAN; Mustapha, SAN, E. I. Emmanuel, Esq.; Yomi Oladimeji, Esq., and A. A. Usman, Esq., for the 1^st Respondent.

Lateef Fagbemi SAN (Hon. Attorney-General of the Federation), with T. A. Gazali SAN (Acting Director Civil Appeals); A. O. Adebayo, SAN; Adeola Adedipe SAN; Omosanya Popoola SAN; M.O.  Ayenifuja, Esq, O. A. Oloruntoye, Esq; Onyoche Lawani, Esq. for the 2^nd and 3^rd Respondents.

This summary is fully reported at (2026) 3 CLRN in association with ALP NG & Co.

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