Al-rissalah Printing & Publishing Co. Ltd & Ors V. Kassem El-housseini & Ors (2007)

LawGlobal-Hub Lead Judgment Report

KUDIRAT MOTONMORI OLATOKUNBO KEKERE-EKUN, J.C.A.

This is an appeal and cross-appeal against the judgment of the Federal High Court Kaduna in suit no. FHC/KD/CS/1/02 delivered on 30/7/03.

The appellants were plaintiffs at the trial court. They instituted an action against the respondents as defendants by a writ of summons dated 31/1/02. In paragraph 31 of their Statement of Claim they sought the following reliefs:

a) “A DECLARATION that there was no Board Meeting or Annual General Meeting of the Company held on 15th January, 2002.

OR

A DECLARATION that the purported Board Meeting or Annual General Meeting said to have held on 15th January, 2002 is null, void, illegal and of no effect.

b) AN ORDER SETTING ASIDE the purported Board Meeting and Annual General Meeting purportedly held on 15th January, 2002 and all proceedings, decisions and resolutions purportedly carried.

c) AN ORDER OF PERPETUAL INJUNCTION restraining the Defendants by themselves, servants, privies or agents from interfering with the operations of the Plaintiff company.

d) AN ORDER OF PERPETUAL INJUNCTION restraining the Defendants from entering the Plaintiff’s premises.

e) The sum of 10,000,000,00 (Ten Million Naira) as general damages.”

In reaction to the plaintiffs’ claims the defendants filed a joint statement of defence and counterclaim dated 31/5/02. In paragraph 23 thereof they counter claimed against the plaintiffs thus:

(a) “A DECLARATION that the purported transfer of the shares of 1st Defendant in the 1st Plaintiff to the 3rd Plaintiff is ineffectual, illegal null land void.

(b) A CONSEQUENTIAL MANDATORY ORDER OF RECTIFICATION of the register of members of the 1st Plaintiff to reflect the membership and share holdings of the 1st and 2nd Defendants in the 1st Plaintiff.

(c) A DECLARATION that the 2nd to the 8th Plaintiff were not duly appointed as Directors nor the purported allotment of Shares to them in the 1st Plaintiff valid.

(d) A DECLARATION that the 2nd to the 8th Plaintiff are not entitled to any requisition and/or Notice of Meeting of the 1st Plaintiff they being no Directors and/or Shareholders in the 1st Plaintiff.

(e) A DECLARATION that the appointment of the 2nd to the 8th Plaintiffs as Shareholders and/or Directors in the 1st Plaintiff is contrary to the provision of Memorandum and Articles of Association of the 1st Plaintiff and the provision of the Companies and Allied Matter act.

(f) AN ORDER OF PERPETUAL INJUNCTION restraining the 2nd to the 8th Plaintiffs or through their agents and privies from parading themselves or purporting or parade themselves as Director and/or Shareholders in the Plaintiff.

(g) The sum of N5, 000,000 (Five Million Naira only) as general damages.”

The plaintiffs filed an amended defence to counterclaim dated 21/6/02.

At the trial the parties tendered most of the documents they relied on by consent. The plaintiffs tendered 28 documents marked Exhibits 1-28 respectively. The defendants tendered 7 documents marked Exhibits 29-35 respectively. Two witnesses testified for the plaintiffs while one witness testified for the defence. At the conclusion of the trial, the learned trial Judge ordered written addresses. In a considered judgment delivered on 30/7/03, His Lordship, A.M. Liman, J. found as follows:

“From the totality of the resolved issues in favour of the plaintiffs, I am satisfied that the plaintiffs have proved their case substantially and are entitled to the reliefs no. 1 alternative 2 and 3 absolutely. On relief 4 [1] grant it against the 2nd and 3rd defendants absolutely, but for the 1st defendant, being a member of the company holding 140, 000 ordinary shares, an injunction shall therefore not be decreed against him.

On relief NO.5 – I shall not award damages against the defendants having regard to the fact that no damages are proved.

On the counterclaim I refuse relief NO.1 (c), (d), (e), (f) and (g) not having been proved but relief no. (b) is granted and accordingly an order directing the plaintiffs to rectify the register of members of the 1st plaintiff to reflect the membership and shares of the 1st defendant as adjudged in this case is hereby granted.”

The appellants were dissatisfied with the part of the judgment awarding 140, 000 ordinary shares to the 1st respondent and the part dismissing the claim for general damages against the respondents. They therefore appealed to this court by their notice of appeal dated 1st August, 2003 containing 4 grounds of appeal. By an order of this court on 16/3/05, the appellants were granted leave to file and argue an additional ground of appeal and to amend their original notice of appeal accordingly. The amended notice of appeal containing 5 grounds of appeal dated 8/11/04 was deemed duly filed and served on 16/3/05. The grounds of appeal without their particulars are as follows:

“1. The learned trial judge erred when he awarded 140,000 shares to the 1st respondent.

2. The learned Trial Judge erred when he awarded 140,000 shares to 1st respondent when such were beyond approved share capital of the 1st appellant.
3. Learned Trial Judge erred when he settled on quantum of 140,000 shares in favour of 1st respondent.
4. The trial court erred in law when it held that appellants had admitted that 1st respondent owned 140,000 shares in 1st appellant.
5. Learned Trial Judge erred when he held general damages as unproved against respondents.”

The respondents were also dissatisfied with part of the judgment and filed a cross-appeal. Their notice of appeal dated 19/8/03 contains 6 grounds of appeal. The grounds of appeal without their particulars are as follows:

1. “The learned trial judge erred in law when he held that the transfer of shares of the 1st and 2nd Appellants to the 3rd Respondent without compliance with the mandatory provisions of the Securities & Exchange Commissions Act (1990) is valid.
2. The learned trial judge erred in law when he held thus “Clause 3 of Exhibit 9 however provides that the 1st Defendant shall take all necessary legal proceedings to transfer the property of the share in the name of the first party (i.e. the 3rd plaintiff) towards the component authorities in Nigeria without any tardiness or delay ….

I am satisfied that the 1st Defendant having defaulted in obtaining necessary approval is hereby estopped from raising the issue. I therefore discontinue the case of illegality of the transfer on the grounds of lack of approval from Security & Exchange Commission”. And thereby occasioned a miscarriage of justice.

3. The learned trial judge erred in law when he held that the agreement between the 1st Appellant and the 3rd Respondent, exhibit 9 was not affected in any [way] by subsequent agreements, exhibits 12, 16, 17, 18 & 19 and that they were not novations to the stipulations in exhibit 9 and thereby occasioned a miscarriage of justice.
4. The learned trial judge erred in law when he held that the 1st and 2nd Appellant were validly removed as the Directors of the Company and that the contention that he was not validly removed was not properly before the court and thereby occasioned a miscarriage of justice.
5. The learned trial judge erred in law when he held that there was a valid transfer of shares by the family of Sheik Abubakar Gumi, and mosque foundation to the 3rd Respondent.
6. The learned trial judge erred in law when he held that the shares of the 1st Appellant was transferred to the 3rd Respondent by exhibit 278 and thereby occasioned miscarriage of justice.”

In accordance with the Rules of this Court, the parties duly filed and exchanged their respective briefs of argument. The appellant formulated 2 issues for the determination of the main appeal as follows:

1. Whether the trial Judge was right in holding that the 1st Respondent is the holder of 140, 000 shares in the 1st Appellant Company.
2. Whether the trial Judge was right in holding that the appellants did not prove damages.

The respondents also formulated 2 issues for determination thus:

1. Whether the learned trial Judge was right in his finding that as at the time of making Exhibit 35, Ali Ayoub did not have any shares in the 1st Plaintiff to transfer to the 3rd plaintiff and ordering rectification of the register of members of the 1st Plaintiff to reflect the acquisition by the 1st defendant.
2. Whether the trial Judge was right in holding that the Plaintiffs did not prove damages.

At the hearing of the appeal on 22/1/07, Mr. K.C.O. Njemanze, learned counsel for the appellants adopted the appellants’ brief and urged the court to allow the appeal. Mr. Oladipo Tolani, of counsel for the respondents adopted the respondents’ brief and urged us to dismiss the appeal. The main appeal will be determined on the issues formulated by the appellants, which adequately cover the issues in contention.

The facts that gave rise to this appeal are as follows: The 1st appellant company was incorporated in Nigeria in 1983 by some Nigerians and Lebanese nationals including the 1st respondent, Kassem El-Housseini. In 1985 Ali Ayoub (Lebanese) the founding Managing Director resigned his appointment and was replaced by the 3rd appellant, Mohsen Mahmoud El-Housseini who is also the 1st respondent’s elder brother. The 5th, 7th and 8th appellants and the 1st respondent are all Lebanese nationals. Sometime in 1992, the 1st respondent sought to know the state of affairs of the 1st appellant. The late Sheikh Abubakar Gumi, who was the Chairman, Board of Directors, informed him that based on a letter he (1st respondent) had purportedly written, his shares had been transferred to the 3rd plaintiff. At the time, the 3rd appellant and 1st respondent shared several business interests.

The 1st respondent, who claimed not to have written the letter, proceeded to institute legal proceedings in Lebanon against the 3rd appellant for the dissolution of all their business relationships. Eventually, a settlement was negotiated and an agreement was entered into between the parties on 19/8/93 (Exhibit 9) wherein the 1st respondent agreed to transfer his shares in the 1st appellant to the 3rd appellant. As consideration for the transfer of the shares the 3rd appellant agreed to transfer his interest in the landed property jointly owned by the two brothers in Lebanon to the 1st respondent. The 1st respondent also agreed to pay the sum of $217,000.00 to the 3rd appellant, being the difference between the value of the shares and the property to be transferred to him.

The 1st respondent did not fulfil his part of the agreement, which prompted the 3rd appellant to file a petition in Lebanon in 1996 (Exhibit 17) seeking to revoke the earlier agreement (Exhibit 9). As a result, another agreement was entered into on 2/2/96 (Exhibit 12) wherein the 1st respondent agreed to pay the full monetary value of the land in Lebanon to the 3rd appellant.

The 3rd appellant subsequently filed an application (Exhibit 18) before the court in Lebanon to withdraw Exhibit 17. The withdrawal of the petition was duly registered vide Exhibit 19. Exhibit 12 did not address the issue of the transfer of shares.

Based on Exhibit 12 the 1st respondent took the view that the earlier agreement for the transfer of shares to the 3rd appellant had been cancelled.

It was the case of the appellants at the trial that sometime in January 2002, the 1st and 2nd respondents committed trespass at the 1st appellant’s factory, disrupted business and thereby caused damage and loss. They instituted an action before the Federal High Court, Kaduna challenging their actions and contending that they falsely held themselves out as shareholders and directors of the 1st appellant. The respondents on the other hand contended that by virtue of an agreement with some foreigners, including Ali Ayoub, the 1st respondent had acquired shares in the 1st appellant. That the agreement to transfer the 1st respondent’s shares to the 3rd appellant had been cancelled and he had never applied to any government authority to transfer his shares to the 3rd appellant.

They also maintained that the 2nd – 8th appellants were neither shareholders nor directors of the company.

On the first issue, learned counsel for the appellants submitted that the basis of the appellants’ claim that the 1st respondent is no longer a shareholder or member of the 1st appellant is that by virtue of Exhibits 9, 11, 12 and 16 he had transferred all his shareholding to the 3rd appellant. He referred to the finding of the learned trial Judge at page 331 of the record that the 1st respondent had relinquished his shares and transferred them to the 3rd appellant. He noted that Exhibit 9, which the learned trial Judge relied on, along with exhibits 11, 12 and 16, was executed between the 1st respondent and the 3rd appellant on 19/8/93. He argued that having found that the 1st respondent had relinquished all his shares in 1993, the learned trial Judge was wrong to have held that the 1st respondent retained 140, 000 shares on the basis of Exhibit 33, purportedly executed between him and Ali Ayoub in 1985. In other words whatever shares the 1st respondent held in 1985 had been relinquished in the process of transferring all his shares in 1993. He submitted that when a document is clear and unambiguous the operative words must be given their simple and ordinary grammatical meaning and the parties are bound by them. He relied on: UBN v. Nwaokolo (1995) 6 NWLR (400) 127; UBN v. Sax Nig. Ltd. (1994) 8 NWLR (361) 150.

Learned counsel submitted that there was no basis for the lower court’s finding that Ali Ayoub possessed and had transferred 140, 000 shares to the 1st respondent in 1995 because from the pleadings and the evidence accepted by the court the 1 Million shares of the 1st appellant were fully allotted on 15/4/85 as shown in Exhibit 6 (resolution of allotment) and buttressed by Exhibits 7 a – e (share certificates issued to the respective shareholders). The list of shareholders did not include Ali Ayoub. He referred to Exhibit 27 (a) (notice of increase of share capital) dated 3/8/92 and submitted that the authorised share capital of the company was N1 Million from incorporation in 1983 until 3/8/92 when it was increased to N20 Million. He noted that the learned trial Judge at page 332 of the record held that defendants did not challenge Exhibits 7 a -e nor did they tender the share certificates of Ali Ayoub who purportedly sold his shares to the 1st defendant/respondent.

He submitted that if the shares were fully allotted as of 15/4/85 as found by the learned trial Judge there was no other share available to be issued to Ali Ayoub, which he could have transferred in October 1985 and there was no evidence that any of the persons listed in Exhibit 6 transferred their shares to Ali Ayoub. He relied on Section 117 of the Companies and Allied Matters Act 1990 (CAMA) and Okoya v. Santilli (1994) 4 NWLR (338) 256.

Learned counsel argued that the burden was on the respondents to prove that Ali Ayoub was a shareholder in the 1st appellant and thus empowered to transfer his shares. He relied on Section 137 of the Evidence Act and the case of Lewis Vs Peat (1976) 7 SC 157 at 167. He submitted that apart from the bare averment of the respondents and the court’s reliance on Exhibit 35, which it held to constitute an admission, the respondents failed to establish that Ali Ayoub was a member or shareholder of the 1st appellant. He submitted that where an admission is relied upon as estoppel it must be specifically pleaded. He relied on: K. Chellaram & Sons Ltd. v G.B. Ollivant Ltd. (1944) WACA 77; Ajayi v. Briscoe Nig. Ltd. (1964) 3 ALL ER 556 at 559-560; Ajide v. Kelani (1985) 3 NWLR (12) 248. He contended that the respondents did not plead the fact of admission and submitted that the learned trial Judge was wrong to raise the issue on their behalf and base his decision on it. Learned counsel also submitted that any evidence elicited during cross-examination by a party must be part of his case as established by the pleadings. He relied on: Olomosola v. Oloriawo (2002) 2 NWLR (750) 113 at 123-124 H-B.

He submitted that since Exhibit 35 was not pleaded by the respondents, it goes to no issue and ought to have been rejected by the court. He submitted that this Court is in a position to reject the document if it finds that the lower court wrongly applied the law in that regard. He cited: SSN Ltd. v. Eyaafe (1976) 9 & 10 SC 135.

Finally, on this issue, it was submitted that Exhibit 33 relied upon by the respondents to show Ali Ayoub’s shareholding was contradictory as regards the number of shares purportedly transferred to the 1st respondent. He noted that during cross examination the 1st respondent admitted that in the Arabic version of Exhibit 33 the quantum of shares is described as 10%, while in the English translation it is stated to be 14%. He submitted that the 1st respondent did not explain or clarify the inconsistency and that the court was not entitled to act on such inconsistent evidence without giving reasons for its belief. He relied on: Abdulkadir v. Usman (2002) 8 NWLR (769) 396.

In reply to the first issue, learned counsel for the respondents referred to the testimony of PW1 at pages 256-257 of the record that led to the tendering of Exhibit 35. He contended that the learned trial Judge properly reviewed the evidence of the parties and rightly held that Exhibit 35 (a document executed by the 1st appellant in 2001 to acquire Ali Ayoub’s shares) is an admission by the 1st appellant that Ali Ayoub held shares in the company and that Ali Ayoub’s shares had been transferred to the 1st respondent as far back as 1985. He contended that the decision of the learned trial Judge at pages 332 and 333 of the record could not be faulted as it flows naturally from the evidence and documents before the court. He argued that Exhibit 35 is a clear admission that Ali Ayoub had shares in the company. He referred to Exhibits 33 and 35 and submitted that from the findings of the learned trial Judge it was clear that Ali Ayoub had divested himself of his shares and transferred his interest therein to the 1st defendant for consideration in 1985.

He argued further that at the time of making Exhibit 35 in 2001, Ali Ayoub no longer had any shares to transfer to the 3rd appellant.

Learned counsel submitted that the appellants’ contention that by Exhibit 9 the 1st respondent had transferred all his shares to the 3rd appellant cannot stand. He submitted that Exhibit 1, which is the basis of registration in Exhibit 278 was held by the lower court to be invalid. He observed that Exhibit 1 refers to only 20% of the shares. He contended that Exhibit 278 did not take cognisance of the additional 15% acquired from Ali Ayoub.

He distinguished the authority of Olomosola v. Oloriawo (supra) relied on by learned counsel for the appellants regarding admissions. He submitted that in paragraph 5 of their amended defence to counterclaim, the appellants had joined issues with the respondents on paragraph 19 (c) of their defence and counterclaim and therefore all facts establishing the averments therein or disproving them are admissible. He stated that Exhibit 29 (immigration permit) shows that Ali Ayoub was a shareholder in the company. He submitted that the registration of the alleged transfer of shares to the 3rd appellant was based on Exhibit 1, which the learned trial Judge had held to be invalid, and there is no appeal against that finding. He urged the court to resolve this issue in favour of the 1st respondent.

In resolving the first issue, three questions must be answered: whether it was established that Ali Ayoub held shares in the 1st appellant and the extent of his shareholding (if any), whether he transferred his shares to the 3rd respondent and whether the 3rd respondent still retained those shares.

In paragraph 19 (c) of the statement of defence and counterclaim the defendants/respondents pleaded thus:

“That the 1st defendant by virtue of agreement with the other Foreign Nationals i.e. Ali Jaffal, Ali Ayoub and John Massour acquired their shares and paid them off from the business. Reliance shall be placed on the relevant documents dated 17/3/83 and 25/10/85.” (Emphasis supplied).

In reaction to this averment, the plaintiffs/appellants pleaded in paragraph 5 (iii) of their amended defence to counterclaim as follows:

‘The plaintiffs deny paragraph 19 of the claim and aver as follows:

The first allotment of shares in the 1st plaintiff after incorporation was made on 15th April, 1985, in a meeting presided over by late Sheik Abubakar Gumi when 1, 000, 000 (One Million shares) were allotted as thus:

a. Mosque Foundation – 300, 000

b. Sheik Abubakar Gumi – 100, 000

c. Nurudeen Gumi 100, 000

d. Mohsen Housseini – 200,000

e. Kassem Housseini – 200, 000

f. Company staff 100, 000

Plaintiffs shall rely on copies of issued share certificates. Defendants are put on notice to bring 1st defendant’s original share certificate at trial.”

(Emphasis supplied).

From the pleadings reproduced above, it is evident that while the 1st respondent relied on the fact that he had purchased Ali Ayoub’s shares as proof of his shareholding in the company, the appellants joined issue with him by contending that Ali Ayoub was never a shareholder in the first place. By Section 137 of the Evidence Act the burden of first proving the existence or non-existence of a fact lies on the party against whom the judgment of the court would be given if no evidence were produced on either side, regard being had to any presumption that may arise on the pleadings. However, by virtue of Section 139 of the Act, in the course of a trial, the burden of proof as to any particular fact may shift from one side to the other. The law is settled that parties are bound by their pleadings and any evidence led in respect of facts not pleaded goes to no issue. See: Egonu v. Egonu (1978) 11-12 SC 111; Woluchem v. Gudi (1981) 5 SC 291; Akanu v. Adigun (1993) 7 NWLR (304) 218; Okoya v. Santilli (1994) 4 NWLR (338) 256.

The respondents tendered the two pleaded documents dated 17/3/83 (Exhibit 32) and 25/10/85 (Exhibit 33) at the trial. Exhibit 32 is a letter of resignation from the company written by John Massour while Exhibit 33 is a letter dated 25/10/85 written by Ali Ayoub stating that he had sold his 14% share in the company to the 1st respondent for the sum of Thirty-Five Thousand Lebanese pounds. Since Exhibit 32 has no relevance to the issue of sale of shares (as held by the court below), the only document relied on by the respondents to prove the 1st respondent’s purchase of shares from the foreign nationals was Exhibit 33.

The appellants equally tendered Exhibits 7A-7E, being the share certificates of the persons mentioned in paragraph 5 (iii) of their amended defence to counterclaim. By Exhibits 7A-7E the One Million shares of the 1st appellant were fully allotted and accounted for. Thus, the onus shifted to the respondents to prove that Ali Ayoub held shares in the company. At page 332 of the record, the learned trial judge found that the respondents did not challenge Exhibits 7A-7E nor did they give any evidence to the contrary.

However, during the cross-examination of PW1 (the 3rd plaintiff), the respondents sought to establish the fact that both the 1st and 3rd appellants admitted Ali Ayoub’s shareholding. PW1 admitted that he paid Ali Ayoub the sum of N3.5 Million but maintained that it was from the company’s funds and was not for the purchase of his shares but to assist him because he was very sick when he returned from Abidjan. To contradict this denial, the defendants tendered Exhibit 35 through him. Exhibit 35 bears the heading “Settlement Agreement” and is between the 1st appellant and Ali Ayoub. The recitals read thus:

“Whereas it is agreed that Ali Abdul Hussein Ayoub was part of the constituent that was instrumental to the establishment of the company; And Whereas his removal as the Managing Director of the Company and his replacement with Mr. Mohsen Housseini was not properly done;

And Whereas the change of signatories of the company was not properly done;

And Whereas the withdrawal of his 15% shares from the Company was also not properly done;

IT IS HEREBY RESOLVED.”

The 1st appellant agreed to pay Ali Ayoub a total of N5.3 Million as his “final total benefits from the company including his shares.” The learned trial judge held at pages 332-333 of the record:

‘The courts have held that share certificate is only prima facie evidence of ownership of shares, it is neither conclusive nor is it exclusive. Not conclusive because evidence can still be admissible to prove otherwise and not exclusive because other evidence could be admissible to prove ownership of shares.

See- Oil Field Supply Centre Ltd. v. Johnson (1987) NSCC (supra) per Oputa JSC at 742 …

Undoubtedly Exhibit 35 is the admission of PW1 and also of the company that Ali Ayoub had 15% shares in 1st plaintiff and the issue shall be concluded by the said admission.”

Section 147 of the Companies and Allied Matters Act 1990 (CAMA) provides that a share certificate, specifying any shares held by a member of a company shall be prima facie evidence of the title of the member to the shares. As held by the Supreme Court in: Oil Field Supply Centre Ltd. v. Johnson (1987) 2 NSCC 725, cited by the learned trial Judge, the use of the expression “prima facie” suggests that proof of shareholding is not limited to documentary evidence alone, it could be oral.

The court also held that what is admitted by a party directly or consequentially (as in the pleadings) is deemed to have been established at the hearing and no further proof need be proffered. No doubt, this is a correct statement of the law.

However, it is also trite that each case must be decided on its own peculiar facts. The evidence led in this case was mainly documentary. Therefore, any conclusions reached must be based on the totality of the evidence before the court. Certain facts were undisputed: that the initial share capital of the company was One Million shares of N1 each; that the shares were fully allotted on 15/4/85 as pleaded in paragraph 5 (iii) of the amended defence to counterclaim and that Exhibits 7A-7E represent the share certificates of the shareholders; that Ali Ayoub is not one of the listed shareholders nor a holder of any of the share certificates marked 7A-7E. In the face of this prima facie evidence, I am of the view that the respondents had the burden of proving how and when Ali Ayoub acquired his shares.

This is particularly so having regard to the fact that there was no admission in the pleadings on the issue.

Learned counsel for the appellants has argued that the evidence regarding Exhibit 35 and the document itself, which were elicited under cross-examination should be rejected on the ground that the respondents did not plead the fact of admission.

In the case of Olomosola v. Oloriawo (2002) 2 NWLR (750) 113 at 123-124 H-B, this Court per Niki Tobi, JCA (as he then was) held that evidence procured from cross-examination can only be admitted if it is relevant to the live issues before the court in the instant case, I am of the view that the evidence is relevant and admissible because Ali Ayoub’s shareholding was in issue, In any event, the appellants did not appeal against the admission of Exhibit 35 as an exhibit.

Having said this however, it seems to me that for Exhibit 35 to have any evidential value, it cannot be considered in a vacuum. It must be considered alongside other documentary evidence before the court. Exhibit 35 refers to Ali Ayoub’s 15% shares. This 15% is clearly unaccounted for in the established initial allotment of shares as shown in Exhibits 7A-7E. By Exhibit 33 Ali Ayoub purportedly sold his shares to the 1st respondent on 25/10/85. From the evidence before the court, he was not an original allottee of shares. The respondents therefore had the onus of proving how he acquired his shares between 15/4/85 and 25/10/85. This they failed to do. In my view, Exhibit 35 has no basis and the learned trial Judge ought not to have relied on it as proof of Ali Ayoub’s shareholding.

Furthermore, Exhibit 35 refers to 15% shareholding while Exhibit 33 refers to 14%. PW1 admitted under cross examination that the Arabic version of Exhibit 33 refers to 10%.

The learned trial Judge at page 333 line 16 of the record held that Exhibit 35 was an admission that Ali Ayoub held 15% shares in the company. There was no evidence as to how Ali Ayoub acquired title to any shares in the company. What is more, the discrepancies were unresolved. It was held in: Basil v. Fajebe (2001) 4 S.C. (Pt. II) 119 at 127 lines 2-4 that a party who adduces inconsistent evidence over one and the same issue damages his own case unless he can reconcile the inconsistency. The learned trial Judge therefore had no basis upon which to determine that Ali Ayoub held 14% shares or indeed any shares in the company. As Ali Ayoub’s shareholding was not proved, the purported transfer of title to the 1st respondent was also not proved. The question of whether or not he retained them after the execution of Exhibit 9 clearly does not arise.

The result of all that I have said above is that issue NO.1 is hereby resolved in favour of the appellants against the respondents.

With regard to the second issue, learned counsel for the appellants relied on the principle that general damages are presumed to flow from the wrong complained of and are those damages that the law implies in every violation of a legal right. He relied on: Yalaju-Amaye v. A.R.E.C. Ltd. (1990) 4 NWLR (145) 422 at 450-451; Nwachukwu v. Egbuchu (1990) 3 NWLR (139) 433 at 435: Uhunwangbo v. Uhunwangbo (1992) 2 NWLR (226) 709. He submitted that the appellants gave unchallenged evidence and tendered documents to establish the various acts of trespass by the respondents in line with their pleading. He argued that the learned trial Judge had a duty to accept the unchallenged evidence and award damages in their favour. He relied on the following cases: Adejumo v. Ayantegbe (1989) 3 NWLR (10) 417 at 435; Ifeanyi Chukwu Osondu Co. Ltd. v. Akhigbe (1999) 11 NWLR (625) 1 at 19; Omoregbe v. Lawani (1980) 3-4 SC 108; Nzeribe v. Dave Engineering Co. Ltd. (1994) 8 NWLR (361) 124: Obiami Brick & Stone Nig. Ltd. vs ACB Ltd. (1992) 3 NWLR (229) 260; Oceanic Bank International Ltd. v. G. Chitex Ind. Ltd. (2000) FWLR (1) 678 at 693. He submitted that the appellants suffered loss as a result of the wrongful acts of the respondents and that the learned trial Judge ought to have awarded general damages in their favour. He relied on: Osuji v. Isiocha (1989) 3 NWLR (111) 623.

Learned counsel for the respondents submitted in reply to this issue that the general principle guiding the award of damages is restituto in integrum, to put the person injured in the position he would have been if he had not suffered the wrong for which he is being compensated. He relied on: NEPA v. Alli (1992) 8 NWLR (259) 279 at 298 F-G. He submitted that PW2 did not give any evidence on the direct, probable and proximate consequences of the alleged wrongful acts of the respondents.

He cited the case of: Osuji v. Isiocha (supra); He also submitted that from the evidence before the court the respondents entered the 1st appellant’s premises having obtained a court order for an inventory to be taken. He urged the court to resolve the issue in the respondents’ favour.

The general principle is that general damages may be awarded to assuage a loss, which flows naturally from the defendants’ act. It arises from the inference of law. It is sufficient if it is generally pleaded. The quantum of general damages need not be pleaded and proved. The manner in which general damages is quantified is by relying on what would be the opinion and judgment of a reasonable man. See: Odulaja v. Haddad (1973) 11 SC 357; Incar v. Benson (1975) 3 SC 117; UBN Plc v. Ikwen (2000) 3 NWLR (648) 223. General damages are presumed by law to be the direct and probable consequence of the act complained of. See: Odulaja v. Haddad (supra); Osuji v Isiocha (1989) 3 NWLR (111) 623.

In paragraphs 7-23 of their statement of claim and in their oral evidence at the trial, PW2 stated how on 7th January, 2002 at about 12 noon, four policemen, someone purporting to be a bailiff of the Kaduna State High Court, the 1st and 3rd respondents and their lawyer, came to the 1st appellant’s premises purporting to execute a court order to take inventory of the 1st appellant’s stock. He stated that they locked up the premises and stopped production for the day. He said they left at 7pm and returned the next day at about 10 a.m. with fully armed mobile policemen and threatened them. He also stated that the respondents had established a parallel management of the company and had written letters to the 1st appellant’s bankers alleging that they were the new signatories to the company’s accounts. He testified that the respondents had also written letters to their customers attempting to divert payment for jobs executed. Copies of the letters were tendered as exhibit 25 A-H. He stated that all these acts have affected the integrity of the company.

Although the respondents contended that their entry into the 1st appellant’s premises was based on an order of court, they did not tender the said order as an exhibit. It follows therefore that the appellants’ evidence stands unchallenged.

The court is bound to accept such uncontroverted evidence as the correct version of events and act upon it. See: Nzeribe v. Dave Engineering Co. Ltd. (1994) 8 NWLR (361) 124; Obmiami Brick & Stone Nig. Ltd. v. ACB Ltd. (1992) 3 NWLR (229) 260; Linus Onwuka v. Omogui (1992) 3 SCNJ I am of the view and I do hold that the appellants have suffered loss as a natural and probable consequence of the acts of the respondents. I hold that they are entitled to general damages, which I assess at N200, 000.00 against the respondents.

The two issues in the main appeal having been resolved in favour of the appellants, the appeal succeeds and is accordingly allowed. The part of the judgment of the Federal High Court Kaduna in Suit No. FHC/KD/CS/1/02 delivered on 30/7/03 awarding 140,000 shares in the 1st appellant to the 1st respondent, ordering a rectification of the register of members of the 1st plaintiff to reflect the membership and shareholding of the 1st and 2nd respondents, and refusing the claim for general damages is hereby set aside. With regard to relief (d) of the statement of claim, an order of perpetual injunction is hereby granted in favour of the plaintiffs restraining all the defendants from entering the 1st plaintiff’s premises. I award the sum of N200, 000.00 as general damages in favour of the plaintiffs against the defendants. The parties shall bear their respective costs in this appeal.

Cross-Appeal

The cross appellants formulated six issues for the determination of the cross-appeal:

1. Whether the learned trial judge was right when he held, in spite of the admission of the parties that there was no compliance with the mandatory provisions of the Securities of Exchange Commissions Act 1990, that there was a valid transfer of shares by the 1st & 2nd Defendants/Cross Appellants to the 3rd plaintiff and what is the effect of alleged transfer of shares without compliance with the mandatory provisions of Security and Exchange Commission Act (ground 1 of the Defendants’ Notice of Appeal).
2. Whether in view of the stipulations in exhibit 11 which was made as a result of the agreement, exhibit 9, between the 3rd plaintiff and the 1st defendant, the learned trial judge was right to hold that it was the 1st Defendants/Cross Appellants duty to apply for consent of regulatory bodies for consent to transfer shares belonging to the 1st Defendant to the 3rd plaintiff (Ground 2 of the Defendants’ Notice of Appeal).
3. Whether the learned trial judge was right to have held that the 1st & 2nd Defendants/Cross Appellants were validly removed as Directors of the 1st plaintiff (Ground 4 of the Defendants’ Notice of Appeal).
4. Whether the terms in Exhibit 9 dated 19/8/93 was not affected by subsequent agreements Exhibits 12, 16, 17, 18 and 19 between the 1st Defendant/Cross Appellant and the 3rd plaintiff which are all in respect of the mutual holdings of the 1st Defendants/Cross Appellant and the 3rd Plaintiff in different companies (Ground 3 of the Defendants Notice of Appeal).
5. Whether there was a valid transfer of shares from the family of Sheik Abubakar Gumi, and Mosque Foundations whom both parties agreed did not pay for any share in the 1st Plaintiff to the 3rd Plaintiff (Ground 5 of the Defendants’ Notice of Appeal).

6) Whether in view of the holding of the trial court that there was no valid transfer of shares vide exhibit 1 to the 3rd plaintiff, the registration of the alleged transfer vide exhibit 278 which was based on exhibit 1 is valid (Ground 6).

The cross respondent also formulated six issues for determination:

1. Whether the learned Trial Judge was right when he held that there was valid transfer of shares between 1st cross appellant and 3rd cross respondent.
2. Whether the learned trial judge was right in holding that 1st cross appellant was estopped from raising the issue of illegality of shares transfer.
3. Whether exhibits 12, 16, 17, 18 and 19 are novation to agreement in exhibit 9, (CROSS APPELLANTS’ ISSUE 4)
4. What is the effect of exhibit 1 on validity of shares transferred to 3rd cross respondent and was shares registration at corporate affairs commission an issue canvassed by cross appellants at the trial court? (CROSS APPELLANTS’ ISSUE 6)
5. Whether the trial court was right when it held that issue of illegality of transfer of the shares of Gumi family to 3rd cross respondent was not pleaded nor evidence adduced. (CROSS APPELLANTS’ ISSUE 5)
6. Whether the issue of validity of removal of the 1st & 2nd cross appellants as directors of the 1st cross respondent was raised by the cross appellants in their pleadings and if the answer is in the affirmative did the 1st and 2nd cross appellants establish that they are still directors of the company? (CROSS APPELLANTS’ ISSUE 3)

It is pertinent to note at this stage that the cross respondents filed a respondent’s notice dated 6/10/05 pursuant to order 3 Rule 14 (2) of the Court of Appeal Rules 2002 to contend that the judgment of the lower court be affirmed on grounds other than those relied on by the court. The ground the cross respondents intend to rely on is as follows:

“That illegality of transfer of shares between the 3rd Appellant/cross respondent and 1st respondent/cross appellant, that is contravention of Section 7 (1) of the Securities and Exchange Commission Act 1990, was not raised nor pleaded by the cross appellants at the trial court.”

have considered the issues formulated by the parties. I am of the view that the cross appellants’ issues 1 and 2 are prolix and argumentative. I shall modify them slightly. The cross-respondents’ issues are similar though numbered in a different sequence. The cross-appeal shall be determined on the issues formulated by the cross-appellants with a slight modification of issues 1 and 2 as follows:

1. Whether the learned trial judge was right when he held that there was a valid transfer of shares by the 1st & 2nd Defendants/Cross Appellants to the 3rd plaintiff and what is the effect of alleged transfer of shares without compliance with the mandatory provisions of Security and Exchange Commission Act (ground 1 of the Defendants’ Notice of Appeal).
2. Whether the learned trial judge was right to hold that it was the 1st Defendants/Cross Appellant’s duty to apply for consent of regulatory bodies for consent to transfer shares belonging to the 1st Defendant to the 3rd plaintiff (Ground 2 of the Defendants’ Notice of Appeal).

At the hearing of the appeal, Mr. Tolani adopted the cross appellants’ brief of argument incorporated in the respondents’ brief and urged us to allow the cross-appeal. Mr. Njemanze, of counsel for the cross respondents adopted the cross respondents’ brief. He cited a decision of the Supreme Court, which upheld the decision of the Court of Appeal referred to at page 9 of his brief. The case is: West Construction Co. Ltd. v. Santos Batallha (2006) 9 NWLR (986) 595. He urged us to dismiss the cross-appeal.

ISSUES 1 & 2

In their brief of argument the cross appellants argued issues 1 and 2 together. Learned counsel for the appellants submitted that both parties admitted at the trial that no application was made to the Securities and Exchange Commission (SECOM) for consent to transfer shares either prior to the registration of Exhibit 1 vide Exhibit 27B at the Corporate Affairs Commission, or after the execution of Exhibit 9. Exhibit 9 is the agreement entered into in Lebanon for, inter alia, the transfer of the 1st cross appellant’s shares to the 1st respondent. He submitted that pursuant to Exhibit 9 the 1st cross appellant donated a power of attorney dated 7/9/93 (Exhibit 11) in favour of the 3rd cross respondent to represent him before “competent authorities in Nigeria for the purpose of transfer of shares in the 1st plaintiff and to perform all what is regularly required before competent authorities.”

He noted that in deciding this issue the learned trial Judge only considered clause 3 of Exhibit 9, which states that the 1st defendant shall take all necessary legal steps to transfer the shares. He submitted that as a result, he held that paragraph 20 (g) of the statement of defence and counter claim was an admission by the 1st defendant that he had failed to perform the obligation imposed on him by Exhibit 9, and was therefore estopped from raising the issue. He was of the view that if the learned trial Judge had considered Exhibit 11, he would have reached a different conclusion. He contended that Exhibit 11 had the effect of varying the powers conferred on the 1st cross appellant by Exhibit 9, thus placing the responsibility for the application to the relevant authority to transfer the shares squarely on the 3rd cross respondent. He submitted that the failure of the court to appraise all the material facts before it occasioned a miscarriage of justice. He relied on: Iwuoha v. NIPOST (2003) 4 se (Part II) 37 at 61 lines 15-40; Ibori v. Agbi (2001) 2 se (Part 1) 51 at 82 line 38.83 line 5. He urged this court to review the documentary evidence to arrive at a just decision.

He submitted that in the absence of an application to SECOM for the transfer of shares and consent thereto, there was no valid transfer. He submitted further that there was no formal registration of shares since Exhibit 278, which purports to be evidence of such registration was based on Exhibit 1, which the learned trial Judge held to be invalid. He submitted that failure to comply with the provisions of Section 7 of the Securities and Exchange Commission Act Cap. 406 LFN 1990 (SECA) and Sections 151 and 152 of CAMA means that there was no valid transfer of shares from the 1st cross appellant to the 3rd cross respondent. He relied on: Faloghi v. Faloghi (1995) 3 NWLR (384) 134 at 453 A – 484 paragraph 6.

Learned counsel referred to paragraph 1 (c) – (e) of the amended defence to counterclaim. He submitted that by the state of the pleadings and the clear admission of the 3rd cross respondent, the 1st cross appellant had done all that was required of him to enable the 1st cross respondent apply to the relevant authority for consent to transfer the shares. He contended that the finding of learned trial Judge that it was the 1st cross appellant’s duty to apply for consent is without basis. He urged the court to set it aside. He relied on: NEPA v. Ososanya (2004) 1 SC (Part 1) 159 at 175: Agbomeji v. Buar. (1998) 9 NWLR (564) 1 at 8.

In reply to this issue, learned counsel for the cross respondents argued that the 1st cross appellant did not raise the issue of illegality pursuant to Section 7 of SECA at the trial. He referred to paragraph 20 (b) and (c) of the cross appellants’ counter claim, which the cross appellants relied on as the basis for their contention. He relied on Order 26 Rule 6 (1) of the Federal High Court (Civil Procedure) Rules 2000 and submitted that they ought to have specifically pleaded the issue. He referred to: Ishola v. UBN Ltd. (2005) 6 NWLR (922) 422 at 439 E-G. He submitted that where illegality is not specifically pleaded, any evidence adduced in respect thereof at the trial is irrelevant. He relied on the following cases: Onwuchekwa v. NDIC (2002) 5 NWLR (760) 371; A.G. Lagos State v. C.U.S. Ltd. (2002) 14 NWLR (786) 105; Batalha v. West Africa Construction Ltd. (2001) 18 NWLR (744) 95 at 112-113 H.B and Batalha v. West Africa Construction Ltd. (2006) 9 NWLR (986) 595; Okagbue v. Romaine (1982) 5 SC 133 at 156.

Learned counsel for the cross respondents argued that upon careful reading of the operative clause of Exhibit 11, there was no stipulation that could be construed as imposing the duty of seeking approval for the transfer of shares on the 3rd cross respondent. He submitted that whatever illegality was alleged was perpetrated by the cross appellants.

He submitted further that being a beneficiary of Exhibit 9, the 1st cross appellant, as held by the learned trial Judge, was estopped in equity from raising the defence of illegality. He relied on: Satalha v. West African Construction Ltd. (2001) (supra) at 114 B-D; Chitty on Contract (27th edition) page 219 paragraph 3-076. He submitted that the 1st cross appellant, having promised vide Exhibit 9, and other agreements executed with the 3rd cross respondent, to transfer his shares in the 1st cross respondent, and having received consideration vide Exhibit 16 in respect thereof, equity would not allow him to resile from his promise on the ground of illegality, which was not pleaded. He cited the following cases in support of this submission: Amadi v. Nsirim (2004)17 NWLR (901) 111 at 126 G-H; Fasel Services Ltd. v. N.P.A. (2003) 8 NWLR (821) 73 at 102 C-E; Batalha v. West African Construction Ltd. (2001) (supra) at 114 -115 F.C; Adedeji v. National Bank of Nigeria Ltd. (1989) 88 NWLR (96) 212 at 226; Oilfield Supply Service Ltd. v. Johnson (No. 2) (1987) 2 NWLR (58) 625.

He submitted that assuming, without conceding that the learned trial Judge was wrong in not holding that the transfer of shares was illegal, the failure to obtain approval under Section 7 of SECA does not render the transfer of shares invalid. He submitted that Section 7 does not contain any specific provision voiding such transactions where there is noncompliance.

He contended further that Section 7 does not prohibit a written agreement to transfer shares in a company in which aliens operate, such as Exhibit g. He argued that Exhibit 9 is inchoate until the requisite approval is obtained. He cited the following cases: Awojugbagbe Light Industries Ltd. v. Chinukwe (1995) 4 NWLR (390) 379; M/S O. Ilemobola Co. Ltd. v. Governor of Kaduna State (2000) 7 NWLR (666) 633; Solanke v. Abed (1962) 1 SCNLR 371; Jegede v. Citicon Nig. Ltd. (2001) 4 NWLR (702) 112; Fasel Services Ltd. v. N.P.A. (supra) at 101; Pan Bisbilder Ltd. v. FBN Ltd. (2000) 1 NWLR (642) 684; FBN v. Pan Bisbilder Ltd. (1990) 2 NWLR (134) 647.

Learned counsel challenged the submission at page 15 of the cross appellants’ brief that there was no application for the registration or transfer of shares pursuant to Exhibit 9 on the ground that the issue is being raised for the first time in this Court. He submitted that parties are bound by their pleadings. He relied on: Ogbogu v. Ugwuegbu (2003) 10 NWLR (827) 189.

The bedrock of the submissions of learned counsel for the cross appellants is that there was no transfer of shares from the 1st cross appellant to the 3rd cross respondent or, if there was the transfer was illegal for non-compliance with the provisions of the Security and Exchange Commission Act 1990 (SECA) and Sections 151 and 152 of the Companies and Allied Matters Act 1990 (CAMA). It is contended on behalf of the cross respondents that the issue of illegality was not specifically pleaded and therefore any evidence led in respect thereof goes to no issue. Having regard to the respondent’s notice earlier referred to, which was argued in the cross respondent’s brief, I am of the view that this issue is fundamental and ought to be considered first.

As stated in the course of resolving the main appeal, it is settled law that parties are bound by their pleadings and evidence led on facts not pleaded goes to no issue. See: Egonu v. Egonu (1978) 11-12 SC 111; Woluchem v. Gudi (1981) 5 SC 291; Akanu v. Adigun (1993) 7 NWLR (304) 218; Okoya Vs Santilli (1994) 4 NWLR (338) 256; West Construction Co. Ltd. v. Batalha (2006) 9 NWLR (986) 595 at 616.617 H-B.

Learned counsel for the cross respondents also referred us to Order 26 Rule 6 (1) of the Federal High Court (Civil Procedure) Rules 2000, which provides:

“A party shall plead specifically any matter (for example performance, limitation, fraud or any fact showing illegality) which, if not specifically pleaded might take the opposite party by surprise.”

The cross appellants pleaded in paragraphs 20 (a), (b) and (c) and 22 of their statement of defence and counterclaim at pages 16-17 of the record as follows:

“20. The 1st defendant avers that though the 3rd plaintiff is his brother, the 3rd plaintiff had taken steps, which are very inimical to the 1st defendant’s interest in the 1st plaintiff.

a. Sometime in August 1992, the 1st defendant received a letter purporting to emanate from the late Abubakar Mohammed Gumi who was then the Chairman of the 1st plaintiff stating that the 1st defendant had both been removed as a director and that his shares in the 1st plaintiff had been transferred to the 3rd plaintiff pursuant to the 1st defendant’s alleged application to the board of the 1st plaintiff.

b. The 1st defendant states that he at no time applied to transfer his shares either to the 1st plaintiff or the regulatory authority to the 3rd plaintiff and that the 3rd plaintiff never held any shares in the 1st plaintiff prior to the alleged transfer.

c. The 1st defendant states further that he never executed any form of transfer of shares nor surrendered any share certificate to the 3rd plaintiff or any other person; neither did he request for such transfer to the 3rd plaintiff or any other person. The 1st defendant did not also request for any approval from regulatory authorities for any such transaction.

22. The defendants shall contend during trial that the purported transfer of shares to the third plaintiff and subsequent allotment of shares to various persons including allotment to the 3rd plaintiff’s children are illegal, invalid and ineffectual.”

In paragraph 20 (a) – (c) above, the cross appellants strongly and emphatically denied the transfer of shares to the 3rd cross respondent. A careful examination of those paragraphs shows that they do not allege illegality. What they assert is that no transfer took place because the 1st cross appellant (not the 3rd cross respondent) did not take any of the steps referred to therein. The cross appellants could not be pleading illegality against themselves in those paragraphs. This view is buttressed by the averments in sub-paragraphs (d) – (h) wherein the cross appellants went on to plead the events that took place after the 1st cross appellant received the letter from the Chairman culminating in the execution of certain agreements and court proceedings in Lebanon and the contention that the agreement to transfer his shares to the 3rd cross respondent was subsequently cancelled.

In paragraph 22 on the other hand there is clearly an attempt to plead illegality. I use the word “attempt” advisedly because decided authorities are clear on how special defences such as illegality are pleaded. From the evidence subsequently led at the trial the cross appellants relied on non-compliance with the provisions of SECA and CAMA. This court in the case of Batalha Vs West Construction Co. Ltd. (2001) 18 NWLR (744) 95 at 112-113 H-B relied on the decision of the Supreme Court in Sodipo v. Leminkainen OY (1986) NWLR (15) 220 where that court held thus:

“if the true intention of the respondent was to show that the appellant contravened specific provisions of the law, which makes the contract unenforceable then the law makes it incumbent upon the respondent to specifically plead those provisions so that the appellant may have the opportunity of reacting to them …”

The Supreme Court upheld the decision of the Court of Appeal in: West Construction Co. Ltd. v. Batalha (2006) 9 NWLR (986) 595. At page 616 D-G (supra) Akintan, JSC stated:

”The law is settled that whoever intends to claim illegality as a defence must not only plead the illegality, he is also required to set out the particulars of the illegality in his pleadings. This requirement is mandatory in all cases where the contract is not ex-facie illegal and the question of illegality depends on the circumstances of the case. As a general rule therefore, the court will not entertain the defence unless it is raised in the pleadings unless where the illegality is apparent on the face of the claim. See: Nassar v. Moses (1960) L.L.R. 170; George v. Dominion Flour Mills Ltd. (1963) 1 All N.LR 71, (1963) 1 SCNLR 117 and Ogwuru v. Co-Op Bank of E.N. Ltd. (1994) 8 NWLR (365) 685.” Applying these principles to the facts of this case, the cross appellants pleaded the fact of an agreement between the 1st cross appellant and the 3rd cross respondent for the transfer of shares. The agreement was entered into as a consequence of court proceedings in Lebanon. The cross appellants pleaded in paragraph 20 (f) that a petition was filed in Lebanon to cancel the agreement. Paragraph 22 is a general averment that the purported transfer of shares to the 3rd cross respondent is illegal. There is however nothing in the pleading to suggest that the agreement to transfer shares or the said transfer was exfacie illegal. It follows therefore, that in order to properly raise the issue of illegality arising from other circumstances of the case, the defendants/cross appellants were required to specifically plead the illegality of the transfer of the shares on the ground of non-compliance with Section 7 (1) of SECA and Sections 151 and 152 of CAMA. They failed to do so. They are bound by their pleadings. In the circumstances, any consideration of the effect of non-compliance with those provisions did not arise and therefore does not fall for consideration in this appeal. Issues 1 and 2 are accordingly resolved against the cross appellants.

Issue No.3

Whether the learned trial Judge was right when he held that the 1st and 2nd Defendants were validly removed as Directors of the 1st Plaintiff.

Learned counsel for the cross appellants submitted that from the pleadings the cross respondents had a duty to prove that the 1st and 2nd cross appellants were properly removed as Directors. He submitted that apart from Exhibit 8, which purportedly removed the 1st cross appellant, no evidence was led on the steps taken to effect the said removal in compliance with the mandatory provisions of Section 262 of CAMA. He referred to the evidence of the 1st cross appellant that he only became aware of his alleged removal on the receipt of Exhibit 2 and was unable to confirm its veracity due to the death of the Chairman, late Sheik Abubakar Gumi. He argued that the evidence was unchallenged and must be deemed admitted and proved. He relied on: Okufuye v. Ogungbesan (2001) 5 NWLR (706) 353 at 362 F.H; Bello v. Fayose (1994) 2 NWLR (327) 404 at 417 F-G; Adejumo v. Ayantegbe (1989) 3 NWLR (110) 417 at 435 D-E; Akinsanya v. Longman (1996) 3 NWLR (436) 315 A-B.

He referred to Section 262 of CAMA and argued that its provisions are mandatory. He submitted that where the mandatory provisions are not complied with the act of removal is ultra vires the powers of the company. He referred to: Companies and Allied Matters Law & Practice (1st edition) by Deji Sasegbon, Esq. Vol. 1 at page 405: Halsbury’s Laws of England (4th edition) Vol. 7 paragraph 539 at page 319; also Iwuchukwu v. Nwizu (1994)7 NWLR (357) 379 at 403 H – 404 A.

Learned counsel submitted that notwithstanding the fact that a resolution was filed at the Corporate Affairs Commission, as found by the learned trial Judge at page 327 of the record, the 3rd cross respondent had a duty to establish that the 1st cross appellant was validly removed as a director. He referred to: Iwuchukwu v. Nwizu (supra) and Section 242 of CAMA.

In reply to this issue, learned counsel for the cross respondents referred to the pleadings of the parties. He submitted that the issue joined by the parties at the court below concerned the existence or non-existence of the 1st and 2nd cross appellants’ directorship in the 1st cross respondent and not the validity of their removal or steps taken in that regard. He submitted that by virtue of Section 135 (1) of the Evidence Act, the 1st and 2nd cross appellants had the burden of proving that they were directors of the 1st cross respondent, which they failed to do. He submitted that by tendering Exhibit 8, the cross respondents had discharged the burden on them of proving that they were not directors in line with paragraph 1 (b) of their amended defence to counterclaim. He argued that the cross appellants did not challenge this evidence by further denial in their pleading or with contrary evidence at the trial. He contended that it is not open to the court to enter into enquiry outside the parties’ pleading or to adjudicate on matters not put in issue by them. He referred to: Ademeso v. Okere (2005) 14 NWLR (945) 308; UVN v. Taylor (2005) 15 NWLR (947) 27; Olorunfemi v. Ashe (1999) 1 NWLR (585) 1; Remi v. Sunday (1999) 8 NWLR (613) 92; Alhaji Otaru & Son Ltd. v. Idris (1999) 6 NWLR (606) 330; Ogbogu v. Ugwuegbu (2003) 4 SC (Pt.1) 69.

He observed that in their entire pleading the cross appellants did not challenge their removal as directors nor did they seek any relief to set aside their purported removal or to declare their removal as wrongful. He submitted that these are material facts that must be pleaded before the cross appellants could invoke the provisions of Section 262 of CAMA. He also relied on Order 26 Rule 6 (2) of the Federal High Court (Civil Procedure) Rules. He submitted that evidence led on facts not pleaded go to no issue and must be disregarded by the court. He referred to: Emegokwe v. Okadigbo (1973) 4 SC 113; Passcutto v. Adecentro Nig. Ltd. (1977) 11 NWLR (529) 469.

He submitted that the case of Iwuchukwu v. Nwizu (supra) cited by learned counsel for the cross appellants is distinguishable from the present case because the Supreme Court held in that case, that from the pleadings it was evident that the suit concerned the appellant’s removal as Executive Director. He submitted that the learned trial Judge was correct not to deviate from the parties’ pleadings and issues joined thereon.

With regard to the 2nd cross appellant, learned counsel submitted that from the evidence of PW1 and the unchallenged documentary evidence before the court, he had been settled financially in respect of his stake in the company. He noted that the 2nd cross appellant did not testify. He submitted that averments in the pleadings as they relate to the 2nd cross appellant are deemed abandoned as no evidence was led in support thereof. He also submitted that the court should accept the unchallenged evidence in respect of this issue. He relied on: Ajero v. Ugorji (1999) 10 NWLR (621) 1; Kosile v. Folarin (1989) 3 NWLR (109) 352. He submitted further that the cross appellants failed to tender Forms CO2 and CO7, which they pleaded to prove that they are still directors of the company. He urged the court to invoke the provisions of Section 149 (d) of the Evidence Act against them. He submitted that Exhibit 8 and the ordinary resolution attached thereto shows that the 1st cross appellant is not a director of the 1st cross respondent and that the learned trial Judge was correct when he held that the 1st and 2nd cross appellants are no longer members of the Board of Directors of the company.

In resolving this issue it is necessary to consider the issues joined between the parties on their pleadings. In paragraph 11 of the statement of defence and counterclaim, the cross appellants pleaded thus:

“11. The 1st and 2nd Defendants aver that they are shareholders and directors in the 1st plaintiff and shall at the hearing of this suit rely on the certified true copy of the forms CO2 and CO7 which are hereby pleaded, of the 1st plaintiff obtained at the Corporate Affairs Commission, Abuja evidencing this fact.”

The cross respondents challenged this averment in paragraph 1 of their amended defence to counterclaim. The relevant sub-paragraphs are sub-paragraphs (a), (b), (c), (i) and (n) wherein they pleaded as follows:

a. “The 1st plaintiff was incorporated in 1983 at the instance of the 3rd plaintiff who in Lebanon instructed the 1st defendant, his younger brother, to complete incorporation formalities with Nigerians and Lebanese referred to in paragraph 19 (a) of counterclaim.

b. The 1st defendant who was a director and employed by the 1st plaintiff as the production manager, resigned in 1985 and, because of his non participation in Board activities as a result of long stay out of the country, was duly stripped by the Board of 1st plaintiff – presided over by Sheikh Abubakar Gumi of his directorship in the 1st plaintiff. The plaintiffs shall rely on relevant Board papers, duly filed at Corporate Affairs Commission, during trial.

c. Sometime on August 1993, the 1st defendant divested himself of and transferred his shareholding in 1st plaintiff to 3rd plaintiff by way of a compromise agreement between the two parties in Lebanon.

i. Since 1992, the 1st plaintiff’s return of allotment of shares (Form CO2) filed at Corporate Affairs Commission have excluded the 1st defendant as a shareholder in 1st plaintiff and fact of this has always been known to 1st defendant.

n. The issue of 2nd defendant’s interest in 1st plaintiff was settled through his solicitors in the year 1990 when he was paid a settlement sum of N120, 000.00 (One Hundred and Twenty Thousand Naira) for whatever stake in 1st plaintiff. Plaintiff shall rely on his solicitors’ letters, copies of payment cheques and settlement agreement at hearing (sic) of this case.”

Clearly, the issue joined on the pleading was whether or not the 1st and 2nd cross appellants were directors of the 1st plaintiff/cross respondent. Their case was not that they were directors who had been improperly removed but that they were current and existing directors of the company. They did not tender the forms CO2, which they pleaded. The cross respondents on the other hand tendered Exhibit 8, which comprises Form CO7, the notice of change of Directors along with the resolution removing the 1st cross appellant and the 1st cross appellant’s letter of resignation as 1st cross respondent’s Production Manager. In relation to the 2nd cross appellant the cross respondents tendered all the correspondence regarding the settlement of his interest in the company and evidence of payment of the agreed sum vide Exhibits 22, 23A-G, 24 and 26 respectively.

The learned trial Judge rightly held at page 327 of the record that the appellant did not challenge his removal as a Director in his pleading. He observed that the issue of noncompliance with Section 262 (1) of CAMA was also not pleaded. I am in complete agreement with His Lordship in this regard. The cross appellants are bound by their pleadings. Any evidence led in respect of non-compliance with Section 262 of CAMA goes to no issue and was properly discountenanced by the learned trial Judge. See: Ajero v. Ugorji (1999) 10 NWLR (621) 1 Egonu v. Egonu (supra); Woluchem v. Gudi (supra) and Okoya v. Santilli (supra). By the provisions of Section 139 of the Evidence Act the 1st and 2nd cross appellants had the burden of proving that they were still Directors of the company in the face of the evidence led by the cross respondents to the contrary. They had no answer to the documents tendered. Furthermore, as the learned trial Judge observed, the 2nd defendant did not testify and no evidence was led to support the averment that he is a Director of the 1st cross respondent. The pleading relating to the 2nd defendant’s directorship is deemed abandoned. See: Magnusson v. Koiki & Ors. (1993) 12 SCNJ 114; Obmiami Brick & Stone( Nig.) Ltd. v. A.C.B. Ltd. (1992) 3 SCNJ 1. The learned trial Judge was therefore entitled to act on the unchallenged evidence before him and find in favour of the cross respondents on the issue. Accordingly this issue is resolved against the cross appellants.

Issue NO.4

Whether Exhibit 9 dated 19/8/93 was not affected or in any manner varied by subsequent agreements admitted as Exhibits 12, 16, 17, 18 & 19 between the 1st defendant and the 3rd plaintiff, which are all in respect of the mutual holdings of the 1st defendant and 3rd plaintiff in different companies in Nigeria and Lebanon.

Learned counsel for the cross appellants referred to Exhibit 9 and the power of attorney Exhibit 11 executed in favour of the 3rd cross respondent. He submitted that consequent upon a petition to the court in Lebanon vide Exhibit 16, for the revocation of Exhibit 9 the parties entered into an agreement described as “final, comprehensive and irrevocable acquittance” (Exhibit 12) along with a “surveyed sale” contract (Exhibit 16) on 2/2/96. He contended that Exhibit 9 mainly concerned the sale of the 3rd cross respondent’s portion of the landed property in Lebanon, jointly owned by the 1st cross appellant and the 3rd cross respondent. He submitted further that Exhibit 16 conveyed 1200 shares in the real estate 6831/Shayah to the 1st cross appellant for the sum of $300, 000, which sum he contended is the real sale value of the said shares.

To illustrate the purpose for which Exhibits 9, 12, 16 and 17 were tendered he reproduced paragraph 20 (d), (e), (f) and (g) of the statement of defence and counter claim and paragraph 1 (c), (d), (e) and (h) of the amended defence to counter claim. He submitted that the parties are bound by their pleading and that oral evidence is inadmissible to vary the content of documents. He relied on Ogbogu v. Ugwuegbu (supra) at 81; Nkanu v. Onun (1977) 5 SC 1 3; Sagau v. M.N.I. (1977) 5 SC 143; Section 132 (1) of the Evidence Act.

He submitted that the purpose of Exhibit 17 (petition filed on 29/9/95) was to cancel Exhibit 12 and revert the parties to the status quo ante. He submitted that the failure of the learned trial Judge to properly review the pleadings and documents before him led to a miscarriage of justice. He urged this court to reevaluate the documents. He relied on: Iwu v. NIPOST (2003) 4 SC (Part II) 37 at 54. He argued that by its content, Exhibit 12 varied the stipulations in Exhibit 9.

In reply to this issue, learned counsel for the cross respondents referred to Exhibits 9, 12, 16, 17, 18 and 19 and his view of the purport of each document. He submitted that the cross appellants did not challenge the averments in the cross respondents’ pleading relating to these documents. He submitted that the learned trial Judge correctly held that Exhibit 12 is a re-affirmation of Exhibit 9. He contended that Exhibits 18 and 19 in fact rendered Exhibit 17 inoperable.

He submitted that Exhibits 9, 12 and 16, with express and implied reference to one another, jointly and fully constitute sufficient memorandum to confirm the existence of a binding contract of shares transfer. On the proof of a transaction through a memorandum consisting of two or more documents, he referred to: Sheers v. Thimbleby (1879) 13 TLR 451 and G. H. Treitel, The law of Contract (7th edition) page 142. He referred to the submission of learned counsel for the cross appellants that the payment of $300, 000 represents the real sale value of the 3rd cross respondent’s shares in the landed property in lebanon and argued that by the submission he had misconstrued his client’s case as pleaded in paragraph 20 (h) of the counter claim. He contended that learned counsel also misrepresented and misquoted paragraph 20 (g) thereof.

He urged us to discountenance the submission of learned counsel for the cross appellant on the effect of Exhibits 9, 12 and 16.

In the interpretation of documents, the golden rule is that when a document is clear and unambiguous, the operative words in it should be given their simple and ordinary grammatical meaning. See: U.S.N. Ltd. Vs Sax (Nig) Ltd. & Ors. (1994) 8 NWLR (361) 150; L.R.C.1. v. Mohammed (2005) 11 NWLR (935) 1; Abalogu v. The Shell Dev. Co. of Nigeria Ltd. (2003) 6 SCNJ 262.

In the introductory part of the judgment in the main appeal I reviewed Exhibits 9, 11, 12, 16, 17, 18 and 19 briefly. a. Exhibit 9 is the original agreement dated 19/8/93, executed in Lebanon between the 1st cross appellant and the 3rd cross respondent for the transfer of shares in the 1st cross respondent and interest in landed property in Lebanon.

b. Exhibit 11 is a power of attorney donated to the 3rd cross respondent by the 1st cross appellant to facilitate the transfer of shares to the 1st cross appellant in Nigeria in fulfillment of the agreement in Exhibit 9.

c. Exhibit 12 is the agreement dated 2/2/96 titled “Final, Comprehensive and Irrevocable Acquittance”, which was entered into between the parties after the 3rd cross respondent filed a petition in Lebanon seeking the revocation of Exhibit 9, on the ground that the 1st cross appellant had reneged on the agreement.

d. Exhibit 16 is a surveyed sale agreement entered into in respect of the landed property in Lebanon pursuant to Clause 3 of Exhibit 12.

8. Exhibit 17 is the petition filed before the court in Lebanon by the 3rd cross respondent to revoke Exhibit 9.

f. Exhibit 18 is an application filed by the 3rd cross respondent to withdraw Exhibit 17 as agreed in clause 4 of Exhibit 12.

g. Exhibit 19 is the order of court striking out Exhibit 17.

In determining whether the terms of Exhibit 9 were affected by the subsequent agreements, it is necessary to put the facts surrounding the execution of the documents in perspective.

Exhibit 12 came into being because the 1st cross appellant challenged a letter (Exhibit 1) said to have been written by him resigning from the company and transferring his shares to the 1st cross respondent. He instituted an action before a court in Lebanon. The parties negotiated a settlement, which culminated in Exhibit 12 wherein the 1st cross appellant agreed to transfer the shares. He allegedly breached part of the agreement by dealing with the land before certain conditions precedent to its transfer had been fulfilled. It was for this reason that the 3rd cross respondent filed Exhibit 17 seeking to revoke Exhibit 9 in its entirety. However the parties were again able to resolve their differences and reached another agreement, which was embodied in Exhibit 12. Clauses 3 and 4 of Exhibit 12 provide as follows:

3. ‘To execute the acquittance signed between the two parties towards the Notary Public in Beirut Issam Moukaaddem on 29/8/93 under No. 2949/1993, the second party [3rd cross respondent] relinquished for the benefit of the first party [1st cross appellant] his portion of One Thousand, Two Hundred Naira in the mentioned real estate according to a surveyed sale contract registered in this office on 2/2/96 under No. 1741/1996.
4. The second party undertakes to cross off the lawsuit on the journal of the real estate no. 6831 of Shayah landed Region, the mark that registered after the request of the second party pursuant to the lawsuit raised before the First Instance Civil Court of Beirut aiming (sic) the resiliation of an acquittal, and it is registered by no. 1207 on 27/1/95 as well as the second party undertakes to disclaim the mentioned lawsuit in whole in the Secretariat of the Court immediately after the signature of this acquittal.”

The acquittance referred to in clause 3 is Exhibit 9. The registration number 2949/1993 appears on page 3 of the document. The 1,200 shares in the mentioned real estate is the 3rd cross respondent’s share of the landed property 6831 Shayah referred to in Exhibit 9. The surveyed sale contract, Exhibit 16 is in respect of the same 1,200 shares agreed upon in Exhibit 9. Clause 4 is the basis for the withdrawal and striking out of Exhibit 17. One fact that is clear from Exhibit 12 is that it does not in any way purport to revoke Exhibit 9, Indeed it reiterates some of the clauses in Exhibit 9. It deals only with the landed property in Lebanon (which was the source of the complaint) and the various court processes pending before the Lebanese courts. It does not mention the transfer of shares at all. I do not agree with learned counsel for the cross appellants that the fact that under “special terms” in Exhibit 16 it is stated that the parties agree that the sum of $300, 000.00 is the real sale price of the landed property should be interpreted to mean that the agreement to transfer shares had been revoked. If this were the intention of the parties, Exhibit 16 or 12 would have so stated in plain and unambiguous terms. The court must confine itself to the clear words and contents of the document before it. See: Abalogu Vs The Shell Dev. Co. of Nigeria Ltd. (supra).

I am of the view that the learned trial Judge was correct when he held that Exhibit 12 was a reaffirmation of Exhibit 9 without any variation or new conditions. I also agree with him that Exhibit 16 did not derogate from or rescind the previous acquittance agreements notwithstanding the fact that the 1st cross appellant agreed to pay the 3rd cross respondent the sum of $300, 000.00 as opposed to $217, 000.00. Issue No.4 is accordingly resolved against the cross appellants.

Issue No.5

Whether there was a valid transfer of shares from the family of Sheik Abubakar Gumi and Mosque Foundation, whom both parties agreed did not pay for any shares to (sic) the 3rd plaintiff.

Learned counsel for the cross appellants submitted that the unchallenged evidence of the 1st cross appellant and the 3rd cross respondent at the trial was that only the 1st cross appellant paid for shares in the 1st cross respondent. He referred to their evidence at pages 265 and 273 of the record.

He referred to Sections 117, 135, 136. 137 and 147 of CAMA and submitted that based on the unchallenged evidence that the 1st cross appellant was the only one who paid for shares, any share certificate in possession of any individual in the absence of consideration does not confer any interest on the holder. He relied on the principle of nemo dat qoud non habet and submitted that since the Estate of late Gumi did not pay for shares, they had no interest to transfer and indeed transferred nothing. He urged the court to accept the 1st cross appellant’s testimony that he paid N950, 000.00 out of the initial N1 Million share capital, in the absence of evidence to the contrary. He cited the case of: Okufaye v. Ogungbesan (supra); Bello v. Fayose (supra) and Adejumo v. Ayantegbe (supra).

He argued that assuming (without conceding) Gumi and the Mosque Foundation held shares in the company, the purported transfer is void for non-compliance with Section 7 of SECA. He relied on Faloughi v. Faloughi (supra) at 451 D-E.

Learned counsel for the cross respondents submitted that they duly pleaded and tendered documentary evidence showing how the 3rd cross respondent acquired his shares in the 1st cross respondent, including those of the Gum; family. He submitted that the learned trial Judge rightly observed at page 333 of the record that the cross appellants did not challenge the transfer of shares by the Gumi family, either in their pleadings or by evidence at the trial. He argued that the cross appellants did not plead the issue of consideration for the 1st cross respondent’s shares and therefore any evidence adduced in respect thereof goes to no issue. He submitted further that the cross appellants’ counsel’s submission that the pleading and evidence that the 1st cross appellant was the only one who paid for shares in the 1st cross respondent was not challenged does not take into account the pleading in the cross respondents’ amended defence to counter claim and the exhibits tendered in support thereof.

He observed that the cross appellants did not specifically plead the illegality of the transfer of the shares of the Gumi family to the 3rd cross respondent nor did they seek any declaratory or injunctive relief relating thereto. He submitted that the court would not grant a relief not claimed by a party. He relied on: Ekpenyong v. Nyong. (1975) 2 SC 71.

The cross respondents in paragraph 5 (iii) of their amended defence to counterclaim pleaded that the initial One Million shares of the 1st cross respondent were fully allotted in the manner set out therein. They pleaded that the Mosque Foundation had 300, 000 shares while Sheik Abubakar Gumi and Nurdeen Gumi had 100, 000 shares each, They also averred in paragraph 5 (v) and (vi) that in a matter before the Federal High Court, Lagos in suit No. FHC/L/CS/1302/95 presided over by Ukeje, J it was decided that the 3rd cross respondent should buyout the Nigerian shareholders in the 1st cross respondent by paying the sum of N23 Million. It was further averred that the 3rd cross respondent paid t hem off in compliance with the judgment and thereby became the main shareholder of the company. In their reply to defence to counterclaim the cross appellants contended that the suit before the Federal High Court was not in respect of the shareholding of the company.

At the trial the cross respondents tendered all the relevant documents pertaining to the averments in paragraph 5 (iii), (v) and (vi). They tendered Exhibit 13, the consent judgment in the suit; Exhibits 14A-F (receipts) and 15A-C (undertakings to transfer shares). They also tendered Exhibits 7C and 7D (certified true copies of their original share certificates). The learned trial Judge found that the evidence was unchallenged. I hold that he was entitled to act on the unchallenged evidence before him. I find no reason to interfere with his finding in this regard. The submission that the transfer of shares was illegal for non-compliance with Section 7 of SECA goes to no issue, as it was never pleaded. See: West Construction Co. Ltd. v. Batalha (supra). I therefore resolve this issue against the cross appellants.

Issue NO.6

Whether in view of the holding of the trial court that there was no transfer of shares vide Exhibit 1 by the 1st defendant to the 3rd plaintiff, the registration of the alleged transfer of Exhibit 278 was valid.

In support of this issue, learned counsel for the cross appellants referred to page 329 of the record wherein the learned trial Judge held that certain documents, including Exhibit 1 were unproved. He submitted that the cross respondents did not challenge this finding. He argued that if there was any registration of shares transfer it was only by virtue of Exhibit 27B, to which Exhibit 1 was attached. He contended that since the court held that Exhibit 1 was not proved, it could not constitute evidence of the transfer of those shares. He argued that Exhibit 10, predicated upon Exhibits 1 and 27B, is also invalid. He submitted that since there is no evidence of any registration after the execution of Exhibits 9, 12 and 16, there was no transfer of title in the shares. He argued that failure to obtain consent to transfer shares from SECOM in respect of Exhibits 9 and 12, and the failure of the 3rd cross respondent to register the purported transfer renders the transaction incomplete and therefore invalid.

In reply to this submission, learned counsel for the cross respondents submitted that it was the dispute that arose in respect of Exhibit 1 that led the parties to execute Exhibit 9 and subsequent documents such as Exhibits 11, 12 and 16. He argued that these documents were not based on Exhibit 1, as it had been discarded by the time Exhibit 9 was executed. He submitted further that Exhibit 1 was not the basis for the court’s validation of the shares transferred to the 3rd cross respondent and that was why they did not challenge the court’s finding in respect thereof. He referred to: Akulega v. B.S.C.S.C. (2001) 12 NWLR (728) 524 at 562 D-G.

He submitted that learned counsel’s contention that there was no further registration after Exhibits 9, 12 and 16 were executed is without foundation because the cross appellants did not plead non-registration of shares pursuant to the share agreement of 19/8/93, and it was never part of their case at the trial court. On the bindingness of pleadings, he referred to: Ogbogu v. Ugwuegbu (supra) at 81. He submitted that in any event, nothing in Sections 151-157 of CAMA invalidates the transfer of shares on the basis of non-registration at the Corporate Affairs Commission.

A careful examination of the judgment of the lower court, particularly at page 330 of the record, shows that in determining whether or not there had been a valid transfer of shares between the 1st cross appellant and the 3rd cross respondent, what the court considered was the tenor and effect of Exhibits 9,10,11,12,16,17,18 and 19. He did not base his decision on Exhibit 278. Furthermore, I agree with learned counsel for the cross respondents that the cross appellants did not plead non-compliance with the provisions of SECA nor the non registration of the transfer of shares after the execution of Exhibits 9, 12 and 16. The submissions made in this regard therefore go to no issue and are accordingly discountenanced.

From all that I have said, this issue must be and is hereby resolved against the cross appellants.

In conclusion the cross appeal fails in its entirety and is hereby dismissed. The judgment of the Federal High Court, Kaduna in Suit No. FHC/KD/CS/1/2002 delivered on 30/7/03 per Liman, J refusing reliefs 1, (c), (d), (e), (f) and (g) of the counterclaim is hereby affirmed. In view of my finding in the main appeal, the grant of relief 1 (b) of the counterclaim is hereby set aside.

The parties shall bear their respective costs.

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Other Citations: (2007)LCN/2314(CA)