Barclays Bank of Nigeria Ltd v. Central Bank of Nigeria (1976)

LawGlobal-Hub Lead Judgment Report

FATAYI-WILLIAMS, J.S.C. 

By an originating summons issued in the Federal Revenue Court sitting in Lagos, the Plaintiffs, now Appellants

1. Seek against the Defendants the determination of the court on the following questions, namely: –

Whether or not the right of the Plaintiffs to be reimbursed for payments made by its branches in London and New York in circumstances specified in the particulars to this originating summons was extinguished by the Banking Obligations (Eastern States) Decree 1970; and properly treated by the Central Bank of Nigeria pursuant to section 4 of the Decree aforesaid by excluding it in calculating the residue of banking funds of Barclays Bank of Nigeria Limited.

2. If the answers to 1(a) and (b) are in the negative an order for the refund to the Plaintiffs of such sum as may be agreed by the parties or determined by the court to be due as not having been properly treated when calculating the residue of such banking funds. The particulars given in support of the originating summons are as follows: –

Particulars

(1) At the written requests of the Aba ile Mills Limited, the Aba Branch of Barclays Bank D. C. O. on various dates prior to 30th May, 1967, opened irrevocable documentary letters of credit payable in London and New York amounting to N846,729 in favour of various overseas suppliers or sellers of goods. In each of the said letters of credit, Barclays Bank D. C. O. guaranteed that drafts and documents drawn in strict conformity with the terms of the credit would be honoured at maturity.

(2) In accordance with the terms of each of the documentary credits aforesaid, the various sellers shipped goods to Aba ile Mills Limited and drew bills of exchange (totaling 71 in number) in appropriate foreign currencies (amounting to E911,817 Sterling and U.S. $60,027) on the Aba ile Mills Limited which the said Aba ile Mills Limited duly accepted. The aforesaid shipment as well as the drawing and acceptance of each of the said bill of exchange took place prior to 30th May, 1967.

(3) Between 31st May, 1967, and 28th September, 1967, the branches of Barclays Bank D. C. O. in New York and London paid the amount payable on each of the aforesaid bills on due dates in the appropriate foreign currency to the overseas banks which had negotiated the sellers or suppliers bills. These payments are now represented by a debit suspense account in the books of the Head Office of the Plaintiffs; and in accordance with the instructions of the Aba ile Mills Limited in their applications for the documentary credits aforesaid, the Aba and Port Harcourt Branches of the Barclays Bank D. C. O. between the said dates debited the current accounts of the said Aba ile Mills Limited with the Nigerian currency equivalent of the bills, together with exchange and other bank charges and returned these amounts on credit suspense accounts at these branches.

(4) On the 30th day of May, 1969, the Plaintiffs were incorporated pursuant to the provisions of section 369 of the Companies Decree, 1968 and succeeded to the assets in Nigeria of Barclays Bank D. C. O as provided for under section 369(5) of the said Decree.

(5) The Plaintiffs have maintained at all materials times that the monies held on suspense account at Aba and Port Harcourt branches represent undischarged liabilities which are not extinguished by the Banking Obligations (Eastern States) Decree 1970 and that accordingly the amount of such liabilities should be included when calculating the residue of banking funds whilst the Defendants have maintained the contrary. The Plaintiffs however paid the sum represented by such as part of the residue of banking funds on the Defendants assurance that, in the event of adjustments in their favour being made to the amount properly due, necessary funds will be made to the Plaintiffs.

The summons also states that if the Defendants did not enter appearance, such judgement maybe given or order made against or in relation to it as the court may think just and expedient. On the receipt of the summons, the Defendants entered appearance simpliciter on 15th October, 1973. The effect of this is that an unconditional appearance has been entered. However, pursuant to an application made to it on 5th November, 1973, the court granted the Defendants leave to amend the memorandum of appearance by the insertion of the word conditional before the world appearance therein so that the memorandum would read Memorandum of Conditional Appearance. It is pertinent to observe that this amendment was allowed in spite of very strenuous opposition on the part of learned counsel for the Plaintiffs who had, therefore, appealed against the interlocutory order.

While that appeal was pending, the Defendants, on 28th November, 1973, applied to the court to set aside the originating summons on the ground that the court lacks jurisdiction to hear it. paragraphs 1, 7, 8, 9, 10, 11 and 12 of the affidavit in support of the application, sworn to by one Sikiru Agboola Lasisi, Legal Executive (another name for a lawyers clerk), read: –

1. That I am Legal Executive in the firm of Messrs, Fred Egbe & Co., solicitors acting for the Defendants in the above matter and have authority of the defendants to swear to this affidavit.
2. That on the 9th day of January, 1971, the Plaintiffs bank, being a bank in doubt as to the application of the Banking Obligations (Eastern States) Decree No.56 of 1970, to the subject matter of the Originating Summons, made a statutory application to the Governor of the Defendants bank for directives.
3. That the document now shown to me and marked Exhibits a photostat copy of the said application.
4. That in furtherance of the said application for directives by the Plaintiffs bank, the Governor of the Central Bank of Nigeria by letter dated 20th January, 1973, made a statutory determination, from which appeals are expressly excluded.

10.That the document now shown to me and marked Exhibits is a Photostat copy of the said letter of 20th January, 1971.

11. That the Defendants inform me, and I verily believe them that the above accords with the provisions of sections 6 and 8 of the Banking Obligations (Eastern States) Decree No. 56 of 1970.
12. That the Defendants inform me, and I verily believe them that the Plaintiffs have since complied with the directives of the Governor of the Defendants bank concerning the subject matter of this application.

The letter, dated 20th January, 1971, from the Governor of the Central Bank, containing the directives was exhibited as Exhibit SAL. 2 and it reads: –

The General Manager,