Principles Governing the Limit of Interest Payable on Reimbursement of Payment for Unallocated Shares

At the Supreme Court of Nigeria Holden in Abuja on Friday, June 11, 2021

Before Their Lordships
Amina Adamu Augie
Uwani Musa Abba Aji
Mohamed Lawal Garba
Samuel Chukwudumebi Oseji
Emmanuel Akomaye Agim
Judges, Supreme Court

Included between

Unijoy Paper Products Ltd Appellant

1. Nigerian Deposit Insurance Corporation
2. Respondents Alpha Merchant Bank (in liquidation)

(Lead Judgment rendered by Hon. Mohammed Lawal Garba, JSC)


The 1st Defendant is a regulatory authority which secures deposits made by the public in commercial banks in Nigeria, and is also the liquidator of the 2nd Defendant. The 2nd defendant was a publicly listed bank headquartered in Lagos, which offered its shares for sale through the Security and Exchange Commission (SEC).

On October 15, 1992, the appellant made the payment of an amount of N5,395,781.60 to the 2nd defendant, for the purchase of shares for certain persons, namely: Jimi Lawal (2,395,781.60 nairas ), Janet O. Lawal (N1,000,000.00), Francis Nwachukwu (N1,000,000.00) and Richard Ikiebe (N1,000,000.00). However, no shares were awarded to these individuals because the SEC refused to register the shares as payment was made after the offering closed.

The 2nd Defendant, shortly after its public offering, became in difficulty, and was consequently liquidated by the 1st Defendant. Since the shares claimed were never allocated to the said persons, the Appellant’s lawyers made several requests for reimbursement. However, the Defendants failed and refused to refund the amount paid to the 2nd Defendant. The Appellant subsequently applied to the Investment and Securities Court for the recovery of the said sum, with interest at the rate of twenty-one percent (21%) from the date of filing until when the judgment is pronounced and thereafter until the sum of the judgment is paid. is done. The Tribunal issued its decision in October 2009, in which it ordered the reimbursement of the money paid by the Appellant, the sum of N5,395,781.60 with interest at the Minimum Policy Rate (MPR) plus two per cent per year (2% p/a), from the date of filing (December 16, 1992) to the date of liquidation of the 2nd Defendant on September 8, 1994, only.

The Appellant, dissatisfied with the Tribunal’s decision, appealed to the Court of Appeal against the limitation of the interest awarded. The Court of Appeal, suo motu, raised the issue of whether the Appellant was entitled to interest and held that the Respondents were not required to pay any penalty as interest, since no right had been acquired by the Appellant. Therefore, the lower court upheld the Tribunal’s decision, but reversed the Tribunal’s decision in awarding interest. Furthermore, dissatisfied with the decision of the Court of Appeal, the Appellant appealed to the Supreme Court.

Question to be determined

Four questions were formulated from the three grounds of appeal, subject to the decision of the tribunal. However, the Supreme Court considered the single issue below, in its decision on the appeal:
Did the Court of Appeal err in law in concluding that the appellant was not entitled to any interest on the sum paid for the shares of the 2nd respondent?


On this point, counsel for the Appellant argued that the Tribunal was correct in law in holding that the Appellant was entitled to interest, although it was wrong to limit such interest to the date of liquidation of the 2nd Respondent. In other words, the lawyer argued that he was entitled to interest on the deposit made for the purchase of the shares, from the date of the deposit until the date of the reimbursement of the deposit. judgment rendered. It relied on the combined effect of sections 10(2), 13(1), 14(1) and 21(1) of the Nigerian Deposit Insurance Corporation (NDIC) Act 2006; Order 77 of the Investment Court Rules, 2003; Sections 91(1) and 96(1) of the Investments and Securities Act (ISA); Securities and Exchange Commission Rule 64, Rules; among others. The Appellant further argued that the Court of Appeal erred in law in deciding suo motu that the Appellant was not entitled to any interest on the amount paid for the shares of the 2nd Respondent, since he There had been no cross-appeal by the Respondents on the Tribunal’s award of interest nor was the issue raised by the parties in the appeal. She relied on the BAKARE v. NRC (2007) 12 MJSC 1, in support of his case and urged the court to consider that the Appellant is indeed entitled to interest on the sum paid for the actions of the 2nd Respondent from the date of filing until ‘on the date the money is refunded.

In response, counsel for the respondent argued that, since the appellant was not a depositor of an account with the 2nd respondent or an institution insured in this regard, as provided for in the NDIC law, the provisions of the NDIC law cannot apply to the case of the appellant as constituted. He further argued that Order 77 of the Investment Court Rules of 2003 cannot override the provisions of the NDIC Act and that the Appellant had no right to interest, as rightly held the lower court. She relied on EKWUNIFE v. WAYNE (1989) 5 NWLR (Pt. 122) 445. As a result of the foregoing, she urged the court to consider that the Appellant is only entitled to reimbursement of the amount paid without interest.

Judgment and justification of the Court

Before deciding the single issue, the court noted that the only issue subject to arbitration by the lower court was whether the award of interest was limited to the period from the date of filing to the award of actions on the date on which the 2nd defendant was liquidated, instead of the date on which the Court rendered its decision. No other complaint was brought before the Tribunal, particularly on the question of whether the appellant was entitled to any interest whatsoever or as of right, since the payment had been made after the closing of the offer. The said question was not submitted to the lower court for decision on appeal, by any of the parties. The new question was raised suo motu by the lower court without giving the parties the opportunity to be heard on the said question, even the Appellant who would be prejudiced by the decision annulling the interest awarded in its favor – OSHODI c. EYIFUNMI (2000) 7 CS (Part II) 145; (2000) 13 NWLR (Pt. 684) 298. In light of this, the court held that the lower court’s decision on this matter could not be allowed to justify a violation of the right to a fair trial, which resulted in a miscarriage. justice to the Appellant.

In its decision on the matter, the court noted that the court awarded interest on the monies paid for the actions based on the provisions of sections 5(a)(e) of the, 25 and 27 of the NDIC Act; Section 91 of the Investments and Securities Act 2007; Rule 64 of the Rules and Regulations of the Securities and Exchange Commission; as well as the Tribunal’s earlier decision in GBADEBO SMITH v. FIRST BANK OF NIGERIA (Case No. IST/OA/06/08), that the Appellant is entitled to interest on monies paid for the shares.

Section 96 (1) to (3) of the Investments and Securities Law provides for the repayment of excess sums paid by subscribers, the period within which such sums must be repaid and the interest payable thereon. … However, the sums paid by the Appellant in this case concerned the shares of the 2nd Respondent, which company was liquidated and ceased to exist before the reimbursement of the deposit for non-attribution of the Appellant. The deposit was paid for shares, not a deposit made in the accounts maintained by the Appellant with the 2nd Defendant, for which he was insured by the 1st Defendant pursuant to the provisions of Section 2 of the NDIC Act. The payment of interest on the deposit of shares by the unsuccessful candidates in respect of the 2nd defendant ended with its liquidation as a legal person, and the responsibility assumed by the 1st defendant was to administer generally the assets and deposits of the liabilities of the 2nd defendant in respect of depositors or account holders, and not shareholders or owners of the bank.

The court noted the definition of the word “deposit” as found in Section 59 of the NDIC Act, as monies deposited by depositors with any insured institution for safekeeping or for the purpose of earning interest, bonuses or dividends, whether or not payable and demand, at a given period of time, or on a fixed date, or at a time or in circumstances agreed by or on behalf of the depositor making the deposit and the insured institution receiving it, except as otherwise extended under this Act. Applying the above definition, the court held that the provisions of the NDIC Act are not applicable or relevant in determining interest on deposits made for the purchase of 2nd defendant’s stock, since the claim of the appellant did not relate to a filing with the 2nd defendant as defined in Article 59 thereof.

Referring to its earlier decision in EKWUNIFE v WAYNE (W/A) LTD (1989) 5 NWLR (Pt. 122) 422 at 445, the Apex Court reiterated that interest may be asserted as a right when contemplated by agreement between the parties, or by virtue of mercantile custom, or by virtue of a principle of equity such as the breach of a fiduciary relationship. When interest is claimed as of right, it is good practice to claim the right to it on the writ and to plead the facts which demonstrate such a right in the declaration. The decision of the Court of First Instance in this case appears to be based on legal provisions, commercial custom and the Appellant’s assertion of rights. Thus, the lower court has no power to interfere or act as it did. Accordingly, the Supreme Court allowed the appeal in part and reversed the lower court’s decision which reversed the lower court’s award of interest. The award of interest as established by the Tribunal was therefore confirmed. The appeal, however, failed within the time limit set by the Tribunal.

Appeal allowed in part.

Pablo Amaran Esq. for the Appellant.
TOS Fadahunsi Esq. for respondents.

Reported by Optimum Publishers Limited, Publishers of Nigerian Monthly Legal Reports (NMLR) (A subsidiary of Babalakin & Co.)

About Matthew R. Dailey

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