Corporate Affairs Commission V. Mr. Gershom Davis (2006)
LawGlobal-Hub Lead Judgment Report
M. A. OWOADE, J.C.A.
This is an appeal against the ruling of the Federal High Court (Calabar Division) delivered by Hon. Justice A. O. Ajakaiye on 20th October, 2004. The facts giving rise to the action at the lower court were as follows: In June 2001, the directors of Calabar Cement Company Limited were by a special resolution authorized to present a petition for the voluntary winding-up of the company at the Federal High Court, Calabar. The petition was duly presented for the winding-up of the company subject to the supervision of the Court.
Upon the application of the shareholders, the respondent was appointed by the court as provisional liquidator of the company subject to the terms of reference annexed to the application. When the affairs of the company were fully wound up, a final general meeting was held on the 16th July, 2003 in which the account of the liquidation exercise was laid before the members. Sometime in October 2003, the respondent received a letter from the appellant intimating him of its intention to verify the records of the liquidation exercise. On the 3rd of November 2003, representatives of the appellant appeared at the respondent’s office and demanded that all the vouchers, receipts, bank statements and other books of accounts in respect of the liquidation exercise be produced for their inspection. Based on this, the respondent filed a motion on notice on 17/12/2003 pursuant to Order 47 Rule 5(1) of the Federal High Court Civil Procedure Rules and sought the following reliefs:
“1. An order of prohibition preventing the respondent from exceeding their powers under the Companies and Allied Matters Act, 1990 by purporting to verify the receipts and payments made in the course of the respondent’s exercise of his powers as provisional liquidator of Calabar Cement Company Limited.
- An order of perpetual injunction restraining the respondent, her servants, agents or howsoever called from requiring the applicant to produce for inspection all the vouchers, receipts, bank statements and other books of accounts with respect to liquidation of Calabar Cement Company Limited.
- An order of injunction restraining the respondent by itself, servants, agents or privies from purporting to exercise any oversight or supervisory powers over the respondent in the discharge of his duties as provisional liquidator of Calabar Cement Company Limited.”
After taking arguments on the motion, the learned trial judge delivered a considered ruling and held at pp. 99 – 100 of the Records as follows:
“Having so considered the various provisions of the CAMA applicable in both cases of winding-up of companies, I am of the view that a winding-up by the court is not the same as a winding-up subject to the supervision of the court, and I so hold. I also hold that in a winding-up subject to the supervision of the court, a liquidator is not under any duty and has no obligation to send to the CAC and the latter has no power to demand from the liquidator any receipt or document for verification. As such, the CAC cannot exercise the control vested by sections 427 to 432 over a liquidator appointed in a winding-up subject to the court’s supervision.”
The learned trial judge continued and made a prohibitory and restraining order as follows:
“Having thus said, I hereby prohibit the respondent by its servants or agents from exercising the power of control over the applicant by seeking to verify the receipts and payments made in the course of the applicant’s exercise of his power as provisional liquidator of calabar Cement Company Limited.
The respondent is also restrained by itself, servants or agents from exercising the power of control over the applicant in the discharge of his duties as provisional liquidator of Calabar Cement Company Limited other than the powers exercisable by it by virtue of section 478 of the CAMA.”
Dissatisfied with this ruling, the appellant filed a Notice of Appeal containing only one Ground of Appeal at the lower court on 19/1/2005 and then obtained leave to argue additional Ground of Appeal before this court.
The appellant formulated two (2) issues from the two (2) Grounds of Appeal as follows:
“1. Whether in a winding-up process under the supervision of the Court the liquidator is subject to the control/supervision of the Corporate Affairs Commission in exercising his powers under the Companies and Allied Matters Act.
- Whether the prerogative remedy of prohibition and the order of injunction are available to the applicant in the instant case.”
In his own brief of argument, the respondent seems to be in agreement with the appellant and formulated the same two issues as formulated by the appellant’s counsel.
As a preliminary observation, I wish to state that while issue NO.2 as formulated by both counsel captures the facts and the decision of the learned trial judge, Issue No. 1 as formulated seems to have expanded the scope of the trial judge’s decision in this case. I believe that from the facts of the case and the ratio as enunciated by the learned trial judge; Issue No. 1 should have been formulated in terms of Ground 1 of the appellant’s Ground of Appeal that is:
“Whether in a winding-up subject to the supervision or the court, a liquidator is under any duty and has any obligation to send to the CAC and the latter has power to demand from the liquidator any receipt or document for verification.”
I am adopting and formulating the above as Issue No. 1 because the Issue No. 1 has previously formulated by both counsel has the danger of the possibility of this court unwittingly pronouncing on issues which did not arise at the lower court.
In relation to Issue No. 1 as, formulated, learned counsel, to the appellant submitted that all the types of winding-up, namely, by the court, voluntarily and subject to the supervision of the court are under the supervision of the Corporate Affairs Commission pursuant to section 7(a) of the Companies and Allied Matters Act. And that the appellant is fortified in that submission by the provisions of sections 468 and 470 of the Companies and Allied Matters Act which enjoin the liquidator to file his final accounts with the Commission.
Appellant’s counsel recognized the limitations imposed on the appellant by the provision of section 490(2) and Schedule 12 of CAMA but submitted that these provisions do not exclude the application of sections 468 and 470 of CAMA, pursuant to which the liquidator has already filed his final accounts and therein according to counsel lies the power of the Commission. Appellant’s counsel further submitted that arising from the powers given to the Commission under section ‘468 of CAMA is the corresponding duty pursuant to section 531 of the same CAMA for the Commission to make returns and give information to the Accountant-General of the Federation as he may require. It is thus crystal clear, said learned counsel to the appellant that the power given to the Commission under section 468 of the Companies and Allied Matters Act must of necessity involve the power to ensure due process iii the liquidation of any company.
In response to Issue NO.1, learned counsel to the respondent submitted that section 7 of the Companies and Allied Matters Act (CAMA) must not be read in isolation, for it is a cardinal rule of interpretation of statute that the different section of a statute must be read together to get to the true meaning of a given provision. On this point, learned counsel to the respondent relied on the cases of N. P. A. Superannuation Fund vs. Fasel Services Ltd. (2001) 17 NWLR (Pt. 742) 261 and Obayuwana vs. Governor of Bendel State (1983) 13 NSCC524. And said that in the instant case if the provisions of section 7 are read together with the provisions dealing with the voluntary winding-up of Companies under the Act, it will be clear that the supervisory powers of the Commission are circumscribed where the winding-up is one that is subject to the supervision of the court. He submitted that the powers of the liquidator are as provided in section 425 of CAMA and that in exercising those powers, the liquidator is subject to the general supervision of the court subject to the wishes of the contributories. This he said is in accord with the hallowed principle of Company Law that members are the best judges of what is in their own interest.
Respondent’s counsel further submitted that where as in this case, the winding-up was subject to the supervision of the court, section 490 of CAMA gives the liquidator the lee way to effectively take charge of the affairs’ of the company in liquidation with minimal interference from the court. He said that Schedule 12 which is introduced by subsection (2) of section 490 specifically suspends the operation of certain sections where the winding-up process is one that is subject to the supervision of the court. And that the sections specifically suspended in this regard include the provisions of sections 388, 420, 421, 422 (except subsection 8), 427, 428, 429, 430, 431, 432, 433, 434, 435, 436, 450 and 453 of CAMA.
The clear intention of section 490(2) according to the respondent’s counsel is to suspend the supervisory powers of the Commission in the case of a winding-up subject to ‘the supervision of the court. This, he said, must necessarily be so as the powers of the court in the administration of the Companies and Allied Matters Act are superior to the powers of the Commission. The Court must be seen to be the master of the situation in all matters submitted to it for adjudication. The Commission cannot superintend over matters which are already being supervised by the court as that would amount to subordinating the court to the control and supervision of the Commission in respect of proceedings before it.
Respondent’s counsel submitted that the provisions of section 531 of CAMA as canvassed in the appellant’s brief are not applicable in the instant case. That section, he said, enjoins the Commission and every officer who receives fees in relation to a winding-up, to make returns and give information to the Accountant-General of the Federation. The Commission according to counsel, did not receive any fees in respect of the winding-up of Calabar Cement Company Ltd. neither is the respondent an officer within the meaning of section 650 of the Act. Therefore, the appellant cannot hide under this section to make the enquiries sought to be made. He urged the court to hold that a liquidator in a winding-up subject to the supervision of the court is not subject to the supervision or control of the Corporate Affairs’ Commission in the exercise of its powers under the Companies and Allied Matters Act.
In relation to Issue No.1, it seems to me that the first question to be resolved arising more particularly from the arguments of the learned counsel to the appellant is whether the general provision as to the functions of the appellant Commission in section 7(l)(a) of the Companies and Allied Matters Act override any of the specific provisions in the Act for winding-up of companies as contained in Part XV specifically from sections 401 – 536 of the Act.
The simple answer to the above question is that for the purposes of winding-up under the Companies and Allied Matters Act, the specific provisions contained in sections 401-536 are to be recokened with and not the general provisions relating to functions of the appellant Commission as contained in section 7(1)(a) of the enactment.
It is trite law that where an issue in a statute is governed by a general provision and a specific provision, the latter will be invoked in the interpretation of the issue before the court. This is because the specific provision will be deemed to have anticipated the issue as against the general provision. Thus in the instant case, even if the argument of the learned counsel for the appellant could be described as a case of two sets of provisions in an enactment, one special and the other general covering the same subject matter, a case falling within the words of the special provision must be governed thereby and not by the terms of the general provision. See the M. V. Panormos Bay & Drs. vs. Olam Nigeria Plc. (2004) 5 NWLR (Pt.865) 1 at p. 13; Shroeder & Co. vs. Major & Co. Ltd. (1989) 2 NWLR (Pt.101)21; Kraus Thompson Organisation vs. National Institute for Policy and Strategic Studies (NIPSS)(2004) 17 NWLR(pt. 901) 44 at p. 65.
The second question in relation to Issue No. 1 is: Can the appellant exercise any of the powers of control in sections 427 – 432 over the respondent?
The answer to this question is in the negative. The limitations and control of the power of the liquidator under the Companies and Allied Matters Act are contained in the provisions of sections 427 – 432 of the enactment with the following marginal titles:
Section 427- Exercise and Control of Liquidator’s Power
“428 -Payments by Liquidator into Companies Liquidation Account
“429 -Audit, etc. of Liquidator’s Account
“430 -Books to be kept by Liquidator
“431 -Release of Liquidator and
“432 -Control of Liquidators
It is important to set out in full the provisions of section 432, because the particular action that is complained of the appellant by the respondent would only have been done or accommodated within the provisions of section 432 of CAMA. The section reads thus:
“432(1) The Commission shall take cognizance of the conduct of liquidators of Companies which are being wound up by the court and if a Liquidator does not faithfully perform his duties and duly observe all the requirement imposed on him by any enactment, or otherwise with respect to the performance of his duties, or if any complaint is made to the Commission by any creditor or contributory in regard thereto, the Commission shall inquire “into the matter and may take such action thereon as it thinks fit including the direction of a local investigation of the books and vouchers of the liquidator. [Emphasis supplied].
(2) The Commission may at any time require the liquidator of a company being wound up by the court to answer any inquiry in relation to any winding-up in which he is engaged and if the Commission thinks fit, it may apply to the court to examine the liquidator or any other person on oath concerning the winding-up.”
Now, the provision of section 401(1) of CAMA provides for three categories of winding-up of a company that is (a) by the court; or (b) voluntarily; or (c) subject to the supervision of the court.
If the distinctions envisaged in section 401(1) were not so clear before now, the provision of section 490 of CAMA reveal that winding-up by supervision of the court occupies a unique position indeed an hybrid in between winding-up by the court and voluntary winding-up. Thus section 490(1) opens up as follows:
“Where an order is made for a winding-up subject to supervision, the liquidator may, subject to any restrictions imposed by the court, exercise all his powers, without the sanction or intervention of the court, in the same manner as if the company were being wound up voluntarily.
Provided that the powers specified in paragraphs (d), (e) and (f) of section 425(1) of this Act shall not be exercised by the liquidator except with the sanction of the court of, in a case where before the order the winding-up was a creditors voluntary winding-up, with the sanction of the Court or the Committee of inspection, or (if there is no committee) a meeting of the creditors.”
Subsection (2) of section 490 makes reference to the Twelfth Schedule which excludes some provisions of the Act as, not applying in the case of winding-up subject to the supervision of the court. It reads:
“(2) A winding-up subject to the supervision of the court shall not amount to a winding-up by the court for the purpose of the provisions of this Act as specified in the Twelfth Schedule to this Act (dealing with provisions which do not apply in the case of winding up subject to the supervision of the court) but, subject to this, an order for a winding-up subject to supervision of the court shall for all purposes be an order for a winding-up by the court…”
Meanwhile, under the Twelfth Schedule made in pursuance of the provision of section 490(2), sections 388, 420, 421, 422 as well as sections 427 – 436 and 450 and 453 are said not to be applicable on winding-up under supervision by the court. The implication of the above in the instant case and as rightly pointed out by the learned trial judge is that the respondent being liquidator in a winding-up subject to the supervision of the court is not subject to any of the provisions of the, Act enumerated in the Twelfth Schedule to the Act. And a fortiori he is not subject to any of the controls in section 432 including “the direction, of a local investigation’ or the books and vouchers of the liquidator.”
Finally, in relation to Issue No.1, the third question that arises is: Are there any other provisions of control by the appellant over the respondent outside the provisions of sections 427 – 432 of CAMA.
Here again, the answer is in the negative. The provisions of sections 468, 470 and 531 do not either on their own or in conjunction with any other provisions give the appellant any powers of control and/or powers to conduct investigation of the books and vouchers of the respondent liquidator. The provisions of section 468 as in the case of section 478 are for final meeting and dissolution all that is expected of the liquidator from those provisions is return of account to the appellant Commission. Incidentally, as far as the present case is concerned there is no dispute that the respondent liquidator has indeed compiled with the provision of section 468 by filing final report and account to the appellant.
The provision of section 470 apply only to members voluntary winding-up and even at that the liquidator under that section is expected only to send to the appellant Commission for registration copies of the accounts laid before the meeting and a statement of the holding and date of the meeting. As rightly pointed out by the learned counsel to the respondent, the provisions of section 531 are not applicable in the instant case. The section enjoins the Commission and every officer who receives fees in relation to a winding-up, to make returns and give information to the Accountant-General of the Federation. In the instant case, the appellant Commission did not receive any fees in respect of the winding-up of Calabar Cement Company Ltd. neither is the respondent liquidator an officer within the meaning of section 650 of the Act. It would then be seen that the appellant Commission has no power of control as such in winding-up outside the provisions of sections 427 – 432 of CAMA, which provisions, are not applicable in the present case.
From the foregoing answers, Issue No. 1 is resolved in favour of the respondent and as against the appellant.
The second issue in this appeal is whether the prerogative remedy of prohibition and order of injunction are available to the applicant/respondent in this case.
Learned counsel for the appellant has efficiently sub-divided this issue into two.
(i) Does the prerogative remedy of prohibition avail the applicant/respondent?
(ii) Has the applicant/respondent made out a case for the grant of an order of injunction?
With great respect to the learned counsel to the respondent, the answers to these questions are in the negative.
Even if the appellant had powers to look into the books of accounts and vouchers of the respondent, which is denied in this judgment, such a function or exercise of power could not by any stretch of imagination be described as judicial or quasi-judicial or one of which questions affecting the rights of subjects are to be determined. For this reason, the appropriate remedy of the respondent is against the appellant is clearly not through a writ of prohibition.
Let me quickly add that the cases of Onuzulike vs. Commissioner for Special Duties, Anambra State & 1 Or. (1992) 3 NWLR (Pt. 232) 791 and Menakaya vs. Menakaya (2001) 6 NWLR (Pt. 738) 203, referred to by the learned counsel to the respondent in response to Issue NO.1 are not relevant to the instant case. None of the cases concerned the exercise of ministerial or purely executive or administrative power.
For example, the Onuzulike vs. Commissioner for Special Duties, Anambra State & 1 Or. case (supra) concerns the dissolution of a town union under section 238(1) of Edict No. 44 of 1987 of Anambra State. And despite the fact that the power allegedly exercised by the Commission for Special Duties, Anambra State was quasi-judicial in nature, Uwaifo, JCA, (as he then was) who read the leading judgment of the Court of Appeal (Enugu Division) warned at page 815 of the report that:
“Although it must be admitted that where it is desired to challenge an action apparently of a ministerial nature, it might be better to seek a declaration which has less inhibition and is less problematic, but the present case was such that the action attributed to the Commissioner not having been shown to have complied with a statutory requirement which he was bound by certiorari to quash whatever directives were made thereunder affecting the rights and obligations of the appellant seems proper and unobjectionable in principle. He had not complied with the form or substance of dissolving a union. Even if he did in fact act himself to dissolve the union, he must do so in the manner and form authorized otherwise an order of certiorari would lie…”
Certiorari and prohibition, accordingly, lie not only against the ordinary inferior courts of law but also against administrative tribunals, or against an individual public officer performing a judicial or quasi-judicial function.” Thus it lies against an administrative officer functioning as a statutory tribunal reviewing native court proceedings, but not where the function is administrative or executive. Also merely ministerial or legislative acts cannot be reviewed, by means of these orders.
Uwaifor, JSC, had the opportunity of reiterating his ideas on the subject matter of prerogative writs when again he delivered the lead judgment of the Supreme Court in the case of Prof. Louis Cheluno Nwaobishi & Ors. vs. The Military Governor of Delta State & 2 Ors. (2003) 11 NWLR (Pt. 831) 305 at 320 – 321. Listen to him.
“The writs of prohibition and certiorari are writs forming part of the process by which the High Court restrains Courts of inferior jurisdiction from exceeding their powers. A writ of prohibition restrains an inferior tribunal from proceeding further in excess of jurisdiction, which a writ of certiorari requires the record or the order of the inferior tribunal to be sent up to the High Court to have its legality inquired into, and, if necessary, to have the order quashed. Both writs deal with questions of excessive jurisdiction, and in their origin dealt almost exclusively with the jurisdiction of a court of justice. However, the operation of the writs has extended to control the proceedings of bodies which do not claim to be, and would be recognized as, courts of justice. Thus, wherever any body or persons having legal authority to determine questions affecting the right of subjects, and having the duty to act judicially, acts in excess of its legal authority, it is subject to the controlling jurisdiction of the High Court exercised in writs of prohibition and certiorari.”
Clearly, none of the attributes of judicial or quasi-judicial exercise of powers enumerated above could be said to be present in the perceived attempt by the appellant Commission to investigate the books of accounts and vouchers of the respondent liquidator as in the instant case. It was wrong to have instituted this action by a writ of prohibition and the learned trial judge erred in granting the order of prohibition.
Similarly, the order of injunction was wrongly made because the claim of the respondent before the lower court did not disclose a recognizable legal right of the applicant/respondent. The story would perhaps have been different if there had been a claim for declaration and injunction.
In Akapo vs. Hakeem Habeeb (1992) 6 NWLR (Pt. 247) 266 at 291, the Supreme Court per Karibi Whyte, JSC, had this to say:
“The claim for an injunction is won and lost on the basis of the existence of legal rights. As I have already said above, where an applicant for an injunction has no legal right recognizable by the courts, there is no power to grant him an injunction.”
See also, Obeya Memorial Hospital vs. Attorney-General of the Federation (1987) 3 N.W.L.R (Pt. 60) 325.
In the circumstances I hold that the learned trial judge was also wrong in granting the order of injunction. Issue NO.2 is accordingly resolved in favour of the appellant and as against the respondent.
Issue NO.1 covers Ground One of this appeal as that issue was resolved as against the Appellant, Ground One of the appeal is dismissed.
Issue NO.2 covers Ground Two of the appeal and as that issue has been resolved in favour of the Appellant, notwithstanding my conclusion on Issue NO.1, the appeal is allowed in part. The orders of A. O. Ajakaiye, J. contained in Suit No. FHC/CA/CS/73/2003 are hereby set aside. And as the action was commenced by a writ of prohibition rather than by way of declaration, Suit No. FHC/CA/CS/73/2003 is accordingly struck out.
There shall be no order for costs.
Other Citations: (2006)LCN/2101(CA)
