Shinning Star Nigeria Ltd. & Anor. V. Aks Steel Nigeria, Ltd. & Ors (2011)

LAWGLOBAL HUB Lead Judgment Report

FRANCIS FEDODE TABAI, J.S.C.

This ruling is sequel to a motion dated the 28th July, 2010 and filed on the 29th of July, 2010. Motion prays for:-

1. An order of interlocutory injunction restraining the Respondents, their servants, agents privies or through any person howsoever except Mr. Olusegun Bamidele Ajayi, the Receiver/Manager appointed by the Court of Appeal from running, operating and/or managing the 1st Respondent pending the determination of the appeal now pending in the Supreme Court.

ALTERNATIVELY

2. An Order of interlocutory mandatory injunction to undo what has been done by restoring Mr. Olusegun Bamidele Ajayi who has been physically removed as the Receiver/Manager pending the determination of the said appeal in this Court i.e Supreme Court.
3. An order of interlocutory injunction restraining the 2nd and 3rd Respondents, their servants, agents privies or any person howsoever from acting as directors of the 1st Respondent or from interfering with Finance, Securities and other business of the 1st Respondent pending the determination of the appeal in the Supreme Court.
4. For such further order or orders which this Honourable Court may deem fit to make in the circumstances.

The grounds for the reliefs sought in the application are set out in 11 paragraphs. The application is supported by an affidavit of 25 paragraphs to which were attached Exhibits SCK1, SCK2, SCK3, SCK4, SCK5, SCK6, SCK7, SCK8, SCK9, SCK10, SCK11 and SCK12. On that same 29th of July, 2010, the 2nd Plaintiff/Applicant deposed to an affidavit of urgency of 26 paragraphs. The facts deposed to are substantially the same as those he deposed to in the 25 paragraph affidavit in support of the motion.

In opposition to the application Mr. Ayo Adesanmi counsel in the Law Firm of Chief Wole Olanipekun SAN for and on behalf of the 1st-3rd Dependants/Respondents (who are Respondent herein) deposed to a counter affidavit of 94 paragraphs to which were attached Exhibits 1- 23. This was on the 13/10/2010. On that same day, on behalf of the 1st – 3rd Respondents, Chief Wole Olanipekun SAN filed a Notice of preliminary objection to urge the dismissal or striking out of the motion. The grounds of the preliminary objection are that:-

The party on whose behest and/or for whose benefit the application is being sought is not an appellant before this court or a party to the appeal proceedings.

(ii) The entire application is incompetent

(iii) If countenanced at all and/or granted, the application will dispose of the appeal against the ruling complained of by the Appellant and also dispose of the appeal at the lower court.

(iv) The application is a gross abuse of the processes of superior courts of record in Nigeria as:

(a) While the Appellants appeal to the Court of Appeal against the decision of the trial High Court of 1st July, 2009 discharging the appointment of Olusegun Ajayi as the Receiver/Manager for the 1st Respondent and filed a motion at the lower court asking the lower court to upturn the discharge order of the trial High Court, thesame Appellants through thesame counsel instituted five different actions at the Federal High Court Lagos in the name of the said Olusegun Ajayi as a Receiver/Manager of the 1st Respondent in suit Nos. FHC/L/CS/898/09, FHC/L/CS/899/09, FHC/L/CS/900/09, FHC/L/CS/901/09 and FHC/L/CS/897/09 claiming far reaching injunctive reliefs against some banks named as Defendants.

(b) Appellants did not inform the Federal High Court, Lagos of the pendency of their substantive appeal and application at the Court of Appeal.

(c) Appellants did not inform the Federal High Court of the discharge of the appointment of Olusegun Ajayi as Receiver/Manager by another judge of the Federal High Court on 1st July, 2009.

(d) Appellants have deliberately hidden the facts adumbrated in (a) (b) and (c) supra before this court in their present application.

The Appellants/Applicants unilaterally changed the title of the case in their application from what it is/was in their Notice of Appeal filed in this court and from those of the parties appearing in the Ruling of the lower court appealed against.

(v) The Supreme Court is without jurisdiction to countenance and/or grant the prayers contained in the body of the appellants’ application.

(vi)The said application is not in conformity with the mandatory demand of Order 2 Rule 28 of the Supreme Court Rules”

When the application and the preliminary objection were argued on the 19th of October, 2000 Prof. S. A. Adesanya SAN for the Appellants/Applicants made reference to the ruling of the Court of Appeal dated the 19th of March, 2009, the appointment of Mr. Olusegun Bamidele Ajayi by the Chief Registrar Federal High Court on the 23rd of March, 2009 as the Receiver/Manager of the 1st Respondent, the appeal by the Respondents to this Court against the ruling of the Court of Appeal of 19th March, 2009, and the appointment of the Receiver/Manager pursuant thereto and the ruling of the trial Federal High Court of the 1st July, 2009 discharging the appointment of Receiver/Manager of the 1st Respondent and argued in substance that the orders of the trial court some of which were not even sought amounted to multiple abuses of the court process. Learned senior counsel urged particularly the grant of the alternative prayers for an order of interlocutory mandatory injunction to undo what has been done by restoring Mr. Olusegun Bamidele Ajayi as the Receiver/Manager of the 1st Respondent. He also urged the grant of interlocutory injunction restraining the 2nd and 3rd Respondents their servants agents and or privies from acting as directors of the 1st Respondent or from otherwise interfering with the finances and other businesses of the 1st Respondent pending the determination of the appeal at this Court. Learned senior counsel further argued that on his appointment as Receiver/Manager of the 1st Respondent on the orders of the Court of Appeal, Mr. Olusegun Ajayi became an officer of the court by virtue of the provisions of Section 389(i) of the Companies and Allied Matters Act and that he was not a party in the proceedings. It was learned senior counsel’s further contention that unless this application is granted in term of the prayers sought, the appeal before this Court will be rendered nugatory. Learned senior counsel even urged the grant of a mandatory injunction setting aside the orders of the trial High Court. He referred to the counter affidavit of the Respondents especially paragraphs 5-85 and remarked that the facts deposed therein aired all stories of what happened at the trial court and argued that this Court cannot deal with what happened in that court. He urged in conclusion that the application be granted.

On his part, Chief Wole Olanipekun SAN counsel for the Respondents argued in substance as follows. The application he submitted was incompetent and a gross abuse of the processes of the court. It was his submission that if, in the determination of this application, this Court would not take congnisance of what happened at the trial court then that takes out the bottom of this application since the entire application was premised on or in reaction to the orders of the trial court in its ruling on the 1st July, 2009. He referred to the Applicants Notice of Appeal at page 51 of the application wherein the Chief Registrar of the Federal High Court is stated to be the 4th Respondent and referred further to relief 3 of the Notice of Appeal at page 58 of the application where an order of injunction is sought against the Chief Registrar of the Federal High Court and submitted that the reliefs sought against him cannot be granted since he was not yet a party. He submitted that if the applicant/appellants want to withdraw against the 4h Respondent they can only do so by way of a written application. It was further contended that the first prayer of the application was rather at large. With specific reference to Mr. Olusegun Ajayi as Receiver/Manager, learned senior counsel referred to seven different originating processes filed at the Federal High Court wherein he was made a party. He urged finally that the application be dismissed.

In his reply Prof. S. A. Adesanya SAN argued that a preliminary objection to the application can only based on the materials presented before the court by the applicants. He contended further that the Respondents were only trying to argue the appeal under the guise of a preliminary objection, and urged that the preliminary objection be dismissed.

I have considered the application, the grounds of the application, the 25 and 26 paragraph affidavits in support thereof, the 94 paragraph counter affidavit, the preliminary objection and the address of counsel for the parties. I shall first of all make recourse to the history of the case from the inception up to the 29/7/2009 when the present application under consideration was filed with particular reference to some documents/processes relevant to the determination of the issues raised in this application. The action itself was initiated in 2006.

In paragraph 20 of the statement of claim the plaintiffs who are the Appellants/Applicants herein claimed against the Defendants/Respondents jointly severally or in the alternative as follows:

1. A DECLARATION that the Plaintiffs’ 58.3% majority equity holding in the 1st Defendant is still valid and subsisting.
2. A DECLARATION that the Resolution of the Board of Directors of the 1st Defendant company purportedly passed on the 3rd day of October, 2005 but filed on the 17th day of January, 2006 was never held and never passed or any other resolution diluting or reducing the 58.3% majority equity shares of the plaintiffs in the 1st Defendant is null and void and ineffective.
3. A DECLARATION that the equity holding structure in the Defendant company as at 27/07/2005 is still valid and subsisting.
4. A MANDATORY INJUNCTION compelling the Defendants to revert back to the share holding structure held as at 27/07/2005 by filing the statutory Forms at the Corporate Affairs Commission to reflect the valid equity shareholding structure which stood at 27/07/2005.
5. AN ORDER compelling the Defendants to prepare and submit to the court a comprehensive Financial Statement of Account from 2005 to 2006 Financial year.
6. AN ORDER compelling the 2nd Defendant to refund the N32,000,000.00 fraudulently removed from the 1st Defendant’s account and misappropriated by the 2nd Defendant.
7. AN ORDER compelling the Defendants especially 2nd and 3rd Defendants to account for the N27,000,000.00 loan granted by way of credit on countless promissory notes for steel ingots supplied to AKS ALLOYS PVT (INDIA) LIMITED which is a company owned by Mr. NEMI CHAND KOTHARY the 3rd and(sic) Defendant.
8. AN ORDER compelling the defendants to prepare the Annual Directors statement of the 1st Defendant and made same available to the shareholding.
9. AN ORDER compelling the Defendants to pay cost of this plaintiffs’ action being a Derivative benefit of the 1st Defendant and the shareholders.
10. Ubi Jus Ibi Remedium
11. AND for such further order or other orders to meet the ends of justice in the case.

At the trial High Court, the Appellants/Applicants as plaintiffs sought and obtained an interim exparte order on the 19/01/2007 for the appointment of the receiver/Manager to manage the affairs of the 1st Respondent company pending the determination of the substantive motion on notice for an interlocutory order for the same relief. The interlocutory order for the appointment of a receiver Manager was sought to pend the determination of the suit. The Respondents herein as Defendants brought an application for an order discharging the exparte interim order of the 19/01/2007. The Respondents’ application for the discharge of the interim order appointing a receiver/manager and the Applicant’s application for the appointment of a receiver/manager were consolidated and heard together.

By its ruling on the 28/02/2007 the interim order appointing a receiver/manager for the 1st Respondent was vacated. The trial court however refused to consider the Applicant’s application for the appointment of a receiver/manager for reasons stated in the ruling. The applicants were not satisfied with the ruling and thus proceeded an appeal to the court below. In its judgment on the 19/03/2009 the Court of Appeal allowed the appeal and made a number of far reaching consequential orders. In the concluding paragraphs of the judgment the Court of Appeal, per Adamu JCA OFR at page 17 – 19 of the judgment stated as follows:

“Consequently, I hereby allow the Appellants’ appeal, set aside the ruling of the trial court delivered on the 28/02/2007 and in its place I invoke the powers of this court under Section 16 of the Court of Appeal Act and Order 4 and 6 of the Court of Appeal Rules 2007 by granting all the prayers of the appellants as per their motion on notice filed before the lower court (dated and filed on 19/12/2006 – at pages 139 – 140 of the records) or in the alternative I hereby make interlocutory the interim orders (1) – (7) granted on the trial court pending the hearing and determination of the appellants’ suit at the trial court.”

With respect to the reliefs granted, the Court of Appeal ordered as follows:-

Specifically, I grant the appellants’ application for the appointment of a receiver/manager to manage the affairs of the 1st Respondent’s company as follow:-

1. That the appellants are to supply the names and particulars of a reputable person or company to the chief Registrar of the lower court (Federal High Court, Lagos) for appointment as a receiver/manager to take over the management and control of the operations of the 1st respondent ASK STEEL NIGERIA LIMITED whose address or registered office is at No.27 Industrial Scheme Odogunyan, Ikorodu, Lagos State and all its offices and Guest Houses as well as its banking operations pending the determination of the trial now pending at the Federal High Court, Lagos.
2. The person to be appointed the receiver/manager shall render accounts periodically to the Chief Registrar of the lower Court who shall also fix the remuneration of the said appointee pending the final determination of the suit.
3. An order is hereby made directing the 2nd and 3rd respondents to prepare a comprehensive inventory and deliver up possession of all the properties and funds of the 1st respondent to the receiver/manager to be appointed by the Chief Registrar.
4. The said 2nd and 3rd respondents are hereby restrained from further interfering with the finance, security and other businesses of the 1st respondent pending the determination of the suit.
5. The 2nd and 3rd respondents are also restrained from acting as the directors of the 1st respondent pending the hearing and determination of the suit.
6. The appellants are to give satisfactory undertaking to the satisfaction of the Chief Registrar within 14 days from today and it is on that basis that the Chief Registrar will proceed to appoint the receiver/manager as per the 1st order above’
7. The appellants are hereby directed to prosecute their suit now pending at the trial court with utmost and due diligence failure of which will make them forfeit all the above orders made in their favour.

It is as a result of the forgoing orders that Mr. Olusegun Bamidele Ajayi was appointed the receiver/manager on 23/03/2009.

Trial of the suit then commenced at the trial court on the 9th of April, 2009. There were a number of applications by both sides. By a motion dated and filed on the 7th of May, 2009 at the trial court the plaintiffs/Applicants prayed for

“AN ORDER of this Honourable Court staying further proceedings in this suite pending the hearing and determination of the appeal filed by the applicants to the Court of Appeal against the ruling of this Honourable Court made on the 9’h day of April, 2009.”

On the 22nd of May, 2009 the application for stay of proceedings was moved by Mr. Daniel Ozoma. Chief Olanipekun SAN, while not opposing the application for stay of proceedings contended that since the plaintiffs were not ready to prosecute their claim with utmost and due diligence as directed by the Court of Appeal and were even seeking an order to stay proceedings in their own case, the order for the appointment of receiver/manager be also discharged.

In its ruling on the 1st of July, 2009 the trial court granted the stay sought and also discharged the order for the appointment of the receiver/manager. In the concluding paragraphs of the ruling, the trial court stated:-

“The plaintiffs have clearly shown their reluctance to present their claim…from their conduct I am satisfied that it will be proper to discharge the order appointing receiver manager.”

1. I grant the application for stay by the applicants and stay further proceedings in this suit pending the hearing and determination of the appeal filed by the applicants at the Court of Appeal against the ruling of this court made on 9th April, 2009.
2. I also discharge the order appointing receiver manager appointed to take over the management and control of the 1st Respondent AKS STEEL NIGERIA LIMITED.
3. Chief Registrar to re-instate the 2nd and 3rd Respondents.
4. The receiver/manager shall give account of his operations to the Chief Registrar and same to be filed in court.
5. This suit is adjourned sine-die.

The plaintiffs/Applicants were aggrieved by the ruling and on the 14th of July, 2009 filed their Notice of appeal, containing one ground of appeal. The sole ground without its particulars reads:-

“1. Learned trial judge acted without jurisdiction in overruling/discharging on the 1st July, 2009 the various orders or substantially the orders made by the Court of Appeal in its judgment of 19th March, 2009 and thereby constituted himself an appellate court over the Court of Appeal.”

And in the particulars the orders contained in the judgment of the Court of Appeal of the 19th of March 2009 and the Ruling of the trial court of the 1st July, 2009 were reproduced. The reliefs sought from the Court of Appeal were:-

1. To allow the appeal and reverse the decision of the trail judge; and
2. For an order that the case be transferred to another judge of the Federal High Court to be heard on the merit.

On the following day being the 15th of July, 2009 the Appellants/Applicants filed another motion seeking the following reliefs:-

1. AN ORDER staying and/or suspending the order/orders of the Federal High Court Lagos made on the 1st July, 2009 in suit No.FHC/L/CS/105/06 whereby the said Federal High Court without jurisdiction discharged interfered with and/or over-ruled the existing order/orders of this court i.e the Court of Appeal in suite No.CA/L783/07 made in its judgment on appeal to it on the 19th March, 2009 pending the determination of the appeal.
2. AN ORDER of interlocutory injunction restraining any one from acting as the Receiver/Manager of the 1st Respondent except Mr. Olusegun Aiayi appointed by the Chief Registrar of the Federal High Court pursuant to and in the execution of the order/orders of this court made in the judgment of 19th March 2009 and further restraining the 2nd and 3rd Respondents from acting as Directors of the 1st Respondent thus confirming and/or affirming the orders of this court in its judgment of 19th March, 2009 in the said suit No. CA/L/783/07 pending the determination of the appeal.
3. AN ORDER of interlocutory injunction RESTRAINING THE Chief Registrar of the Federal High Court from complying with the orders of the Federal High court of the 1st July, 2009 in so far as they affect him, pending the determination of the appeal.
4. AN ORDER joining the chief Registrar of the Federal High Court to this suit.
5. For such, further or other orders which this Honourable court may deem fit to make in the circumstances.

In opposing this application, the Respondents filed a counter affidavit of 89 paragraphs, a further counter affidavit and a further and better counter affidavit. By an order of court on the 29th October, 2009 the parties filed and exchanged written arguments.

In its ruling on the 15th of March, 2010, the court of Appeal, for reasons stated therein, considered the application grossly incompetent and same was accordingly struck out. The Court of Appeal highlighted three main reasons for refusing the application. The first is with respect to the provision of order 7 Rule 4 of the Court of Appeal Rules which provides:-

“whenever under these Rules an application may be made either to the court below or to the court it shall not be made in the first instance to the court except where there are special circumstances which made it impossible or impracticable to apply to the court below”

The Court of Appeal reasoned that the supporting affidavit contained no circumstances, let alone special circumstances, to warrant the filing of the application first at the court. Another closely related reason was that the appeal had not been entered; that it is only the entry of the appeal by the transmission of records therein that it becomes seized of the case to entertain the application.

The second reason relates to the 3rd and 4th reliefs for injunction sought against the Chief Registrar of the Federal High Court and his joinder as the 4th Respondent. The Court relying on a number of judicial authorities held that in the circumstances of the case an order for his joinder and injunction against him cannot be sought and obtained simultaneously; that he ought first and foremost be made a party before an order can be made against him; and that it would amount to a breach of the rules of natural justice and the fundamental rights of the said Chief Registrar for an order to be made against him before he becomes a party and aware of the application in respect thereto.

The third reason relates to the sole ground of appeal and the issue of the propriety or otherwise of the ruling of the Federal High court on the 1st July, 2009 raised thereby. The Court of Appeal reasoned that granting the 1st and 2nd reliefs sought in the application would amount to a determination of the live issue in the substantive appeal pending before it.

The foregoing is the substance of the reasons for the decision of the Court of Appeal in its ruling of the 15th of March, 2010 refusing the application.

The plaintiffs are again not satisfied with the decision and have since appealed to this Court against that decision

The Notice of appeal dated and filed on the 25th of March, 2010 raised 14 grounds of appeal. The reliefs sought from this court in the Notice of Appeal are:-

1. Allow the appeal and reverse the decision of the Court of Appeal delivered on the 15th March, 2010.
2. AN ORDER of injunction restraining any one from acting as the Receiver/Manager of the 1st Respondent except Mr. Olusegun Ajayi appointed by the Chief Registrar of the Federal High Court pursuant to and in the execution of the order/orders of this court made in its judgment of the 19th March, 2009 and further restraining the 2nd and 3rd Respondents from acting as Directors of the 1st Respondent, thus confirming and/or affirming the orders of court in its judgment of 19th March, 2O09 in the said suit CA/L/783/07.
3. AN ORDER of injunction restraining the chief Registrar of the Federal High court from complying with the orders of the trial court of 1st July, 2009 in so far as they affect the Receiver/Manager; and
4. AN ORDER joining the Chief Registrar

As it stands today, there are three pending appeals one at the court below and two in this Court. So far there has been four interlocutory appeals in this case, two at the court below and two in this court. The two at the court below were by the plaintiffs/Applicants. The earlier appeal which was against the ruling of the trial court dated 28th of February, 2007 was disposed of by the court below in the judgment on the 19h of March, 2009. The second appeal by the Plaintiffs/Applicants against the ruling of the trial court on the 1st July, 2009 is still pending and the two appeals before this court, one by the plaintiffs/Appellants/Applicants and the other by the Defendants/Respondents are still pending.

Let me first of all examine the preliminary objection. I had earlier above reproduced the six grounds upon which the objection is predicated. Ground three thereof is to the effect that if this application is granted this court would, in effect, have disposed of the appeal in this court against the ruling of the court below of the 15th March, 2010 and also the appeal at the court below against the ruling of the trial court of 1st July, 2009. This was one of the main points agitated by Chief Olanipekun SAN on the 19th October, 2Ol0 when arguments were taken on the application and the preliminary objection. In his view, the application was a gross abuse of the court process in view of the Plaintiffs’/Applicants’ pending appeals in this court and at the court below.

A comparison of this application and the one filed by the Plaintiffs/Appellants/Applicant at the court below on the 15th July, 2009 which ruling is the subject of their appeal before us shows that the two applications are identical in many respects. Apart from reliefs 3 and 4 of the application at the court below pertaining to the joinder of the Chief Registrar of the Federal High Court and the injunction sought against him, the two applications are in substance to the same effect. Reliefs 1 and the alternative reliefs 2 and 3 of this application are to the same effect as reliefs 1 and 2 of the application at the court below. Even reliefs 3 and 4 of the application at the court below concerning the Chief Registrar of the Federal High Court are implicitly for the same purpose of the injunctive reliefs sought.

I have also reproduced the reliefs sought in the appeal against the ruling of the court below of the 15th March, 2010. Relief 2 thereof is to the same effect as the three reliefs sought in this application, the only difference is that while in the Notice of Appeal filed on the 25th March, 2010, the Plaintiffs/Appellants/Applicants seek injunctive orders, in the application they seek, seek interlocution injunction orders. Under such circumstances would the end of justice not better be served in the hearing and determination of the appeal before this court than filing this application which, in substance, is to the same effect as the application of the 15th July, 2009 at the court below I shall answer this question in the affirmative.

I am inclined to this view because of the settled principle of law that a court cannot, in an interlocutory application, decide an issue in the substantive case or appeal. See AKAPOR Vs HAKEEM HABEEB (1992) 6 NWLR (Part 249) 266, VICTORY MERCHANT BANK LTD Vs PELFACO LTD (1993) 9 NWLR (Part 317) 340; AMIARA Vs ALO (1992) 6 NWLR (Part 409) 623; A.C. B. LTD Vs AWOGBORO (1996) 3 NWLR (Part 437) 383.

After a careful consideration of the application and the Notice of appeal in the appeal pending before us, it is clear that we cannot grant the reliefs sought without thereby substantially deciding the substantive interlocutory appeal. The only issue in the interlocutory appeal pending at the court below in the sole ground of appeal is whether or not the trial court was right in its ruling of the 1st July, 2009, and I am, with respect, of the view that the interest of justice will be better served by the appellant’s prosecution of the appeal instead of embarking on this application. The main suit is still pending at the trial court without any conceivable progress towards its final determination. In paragraph 20 of their statement of claim, the Plaintiffs/Appellants/Applicants claim to have 58.3% equity share holding in the 1st Defendant /Respondent. They also claim that the resolution of the Board of Directors of the 1st Defendant/Respondent purportedly passed on the 31st of October, 2005 was never passed as no such meeting of the Board was ever held. These show the Plaintiffs alleged interest in the 1st Defendant/Respondent. These issues have to be tried and no amount of interlocutory applications can help to solve the dispute.

In his concurrent ruling on the 15th March, 2010 GALINJE JCA said:-

“The appeal to this court is interlocutory and it is in the interest of justice and both parties to concentrate on getting the appeal heard, instead of indulging in endless applications.”

I agree entirely with sentiment expressed in the above opinion. These are in my view just too many interlocutory appeals and applications.

On the whole, in view of the appeals pending both in this court and at the court below and having regard to the fact that a grant of this application and the reliefs sought therein, would, in effect, be a determination of the substantive interlocutory appeals both in this Court and at the court below, this application is refused and same is struck out.

I assess the costs of this application at N30,000.00 in favour of the Respondents.

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SC.101/2010