Nathaniel Adedamola Kotoye v Central Bank of Nigeria & Others (SC. 118/1988) [1989] NGSC 18 (2 February 1989)

In The Supreme Court of Nigeria

On Friday , the 3rd day of February, 1989

SC. 118/1988


Nathaniel Adedamola Kotoye                  .......                      Applicant


Central Bank of Nigeria & Ors                .......            Respondent

Judgement of the Court

Delivered by

Nnaemeka-Agu, J.S.C.:

This appeal involves a question which has raised some serious furor in recent times, to wit: The question of ex parte orders of injunction. It touches an area of law which, in spite of numerous appellate decisions, appears to have been quite often misunderstood and misapplied by some courts of trial. Recent instances show that there is an urgent need to state the law.


The facts leading to the appeal are important for a full appreciation of the legal problems involved. Certain allegations of mismanagement by the third Defendant, Societe Generale Bank (Nigeria) Limited, came to the notice of the Central Bank of Nigeria. After investigating the allegations and taking instructions from the Federal Ministry of Finance, the Central Bank issued to the Chairman of the Bank, Mr. N. A. B. Kotoye, a written directive which because of its bearing in this appeal, I hereby set out in full. It runs thus:


Central Bank of Nigeria

                                                                                                                                                                                        P.M.B. 12194,

Tinubu Square, Lagos.


The Deputy Governor                                                                                                                                                         Tel. 661283/660100/104


Our Ref: DG/COMBANKS/Vol.I/359                                                                                                 14th April, 1987


Mr. N. A. B. Kotoye,


Societe Generale Bank (Nigeria) Ltd.,

13 Martins Street,

Sarah House,



Dear Mr. Kotoye,






Government takes exception of the very serious disagreement among the board members of your bank on fundamental issues resulting in the resignation of majority of the members culminating in the total collapse of the board and particularly allegations of the following:-


(a)     Fraudulent Transfer to Mr. N. A. B. Kotoye of N2,240,000 shares said to belong to Mrs. Saraki,


(b)     Persistent violation of government regulations and advice.


(c)     Representation on the board/method of appointing directors.


(d)     Accumulation of bad debts and non-payment of cash dividend,


(e)     Lapses in the Nigerianisation policy;


(f)     Borrowing by board members/share holders vis-a-vis the bank lending policy.


In view of the urgent need to resolve the above issues which are capable of wrecking the very existence of the bank, the effect of which could have very serious implications on the larger interest of the banking system, the supervising Federal Ministry of Finance having considered our report has directed us, in consideration of the powers conferred on the Honourable Minister of Finance, under Section 22 and particularly, Sub-section (a)(ii) of this Section of the banking Act 1969, to transmit to you, the following directives of the government for immediate implementation without further delay:


1.   The shareholdin guile gal transfer of Mrs. Saraki's Shares:


        That Dr. Saraki and Mr. Kotoye should revert to their status quo as at the date of the meeting both of them had with the Federal Minister of Finance in 1982. Accordingly the 1982 position when adjusted to December, 1986, would be as in Appendix I of this letter thus:-

Dr. Sola Saraki -                                                                                                                                                                 N6,876,840 Shares

Mr. N. A. B. Kotoye-                                                                                                                                                         N2,937,540 Shares


All other fresh shares acquired after 1982 should be divested to other Nigerians within two months of the receipt of this letter.


2.    Representation and Procedure for appointing Directors on the Board of the Bank:


That the government accepted our observations that the issue of appointing new directors revolves around control which cannot be divorced from the issue of ownership and that once the ownership dispute is resolved, it would provide an acceptable solution to how much control both parties could have in running the affairs of the bank.


Similarly, the government is in agreement with the proposal contained in paragraph four of the Nigerian Enterprises Promotion Board's letter reference CT.3422/Vol.1/233 of 27th October, 1986 addressed to the Managing Director (photo-stat copy attached).


In consequence, you are strictly directed to incorporate into the Memorandum and Articles of Association of the bank all agreed understanding between the two partners (Nigerian/French) which formed the basis of your application for banking licence and upon which the banking licence was issued. You are also required to incorporate in the Memorandum and Articles of Association appropriately the Management Agreement on page nine of the feasibility report which is the basis agreed upon between the partners of the method of nomination of Directors of the Board of the bank which now must be followed in the reconstitution of the new Board and should be ratified soon after the new Board has been properly constituted.


Furthermore, the government accepted our recommendation that some of the Articles of Association of the bank would need to be re-examined for suitable amendment by the new Board. For example, article 104 dealing with the quorum of the Board may create problem of interpretation, as it can be interpreted to mean two representatives of the French Foreign Partners on the Board to the exclusion of Nigerians or vice versa. Similarly, articles 64(i) regarding the quorum of the general meeting can also give room for excluding either one of the partners yet a valid quorum could be formed. In order to avoid future conflicts, government has directed that such Articles of Association be amended appropriately within two months of the inception of the new Board and the Ministry notified accordingly through the Central Bank of Nigeria.


Pursuant to the foregoing a fresh Board should therefore, be constituted now and be fully functional within four weeks of receipt of this letter and inform us immediately for onward transmission to the Ministry. Accordingly, the Nigerian and foreign partner should each make its nomination to the Board at once.


Please note that under no circumstance should any of those on the former board which has been fra gmented be re-appointed to serve on the new Board. This is to say that those who have served or are presently serving on the Board should not be re-appointed to serve on the new Board to be constituted.


Accordingly, the Government directs that the Nigerian Shareholders should meet as a group urgently without delay to nominate the Nigerian representatives to serve on the Board. The list of the nominees should reach us not later than 10 days from the date of this letter, failing which the Government will be compelled to take appropriate action in accordance with the provisions of the Banking Decree 1969. Similarly, the French Partners should forward to us the list of their nominees to reach us within the same time frame.


These directives of government are aimed at ensuring that the normal operations of the bank are un-interrupted.


3.    Accumulation of Bad debts and Nonpayment of Cash Dividends.


        Our Special Investigation revealed that facilities obtained from the bank by directors/shareholders were either poorly serviced or never serviced as shown in Appendix II of this letter Most of the facilities were either not secured at all or not adequately secured contrary to the provisions of Section 13(i)(c) of the Banking Act, 1969. These irregularities and other weaknesses in the Credit Administration Machinery of the bank constitute an indictment on the competence and integrity of the Board and Management of the bank. Furthermore, the special investigation revealed a phenomenal increase in the classified bad and doubtful debts from about N24.2 million to about N149.2 million between our 1982 and 1986 examination reports of which 10% were facilities extended to Dr. Saraki and companies introduced by him. The case with which most of the facilities now classified as bad and doubtful debts were obtained did not reflect the level of expert in Credit Administration, one would expect from the French Technical Partner which is largely responsible for the day to day management of the bank.


        As regards the issue of non-payment of cash dividends, the expectation of Dr. Saraki is unrealistic in view of the sharp rise in the accumulated bad debts. The payment of cash dividend by a bank whose capital had been inadequate could not be regarded as prudent, as earnings from which cash dividends could be paid should be seen as a "return on capital" rather than as "return of capital."


        The Federal Ministry of Finance viewed the foregoing observations made by the Central Bank with grave concern and in view of the ineptitude in the conduct and administration of the Board and Management team, the government has directed that they be reciprocally dealt with. Accordingly, by the powers conferred on the Honourable Minister of Finance under Section 22 and Sub-section (a)(ii) of this Section of the Banking Decree 1969, the government directs that the management team for the bank be replaced as a matter of urgency within 3~ months of the inception of the new Board so as to enhance the smooth running of the bank under the new Board.


        In this regard, the new board should ensure that monthly returns of the gradual phasing out of the present management team is made to us for onward transmission to the Federal Ministry of Finance.


        As regards the overdue loans and advances, the government accepts the recommendation of the Central Bank and directs that the new Board when appointed, should cause all deliquent borrowers to submit realistic and acceptable repayment proposals to it while the debt collection machinery should be overhauled to ensure effective collection of past due debts.


4.    Persistent Violation of Government Regulations and Advice.


The Special Investigation Report revealed series of contraventions of the provisions of the Banking Act 1969 and violations of government regulations and advice particularly with regard to capital (1) holding structure by Nigerians, (2) the management agreement which up to the time of our investigation had not been registered with the National Office of Industrial Property (NOIP) as required by Section 5(i) of the National Office of Industrial Property Act 1979 and (3) the holding of the Board Meeting of 28th October, 1986. The nonobservance or deliberate violation of laid down regulations by the Monetary Authorities and other regulatory agencies such as NEPB and SEC will not serve the best interest of the bank.

Accordingly, the government warns the Board and Management that failure to comply with given financial regulations and government advice will in future fetch your bank serious consequences including the suspension of your bank's dealership licence.

As regards the foreign exchange fraud involving ~397, 450 perpetrated in November, 1984, the government accepts our recommendation that the bank be allowed to implement its decision to pay this amount to its customer - (Mr. K. B. Omatseye) under the new dispensation of SFEM and accordingly directed that the settlement be effected within three weeks of receipt of this letter.


5.    Nigerianisation:


        The Special Investigation report revealed that while the management of the bank's branches with very limited authority was in the hands of Nigerians, Head Office Operations in the areas of General Management, Inspection, Treasury, Computer Operations, Organisation and Method (O&M), Commercial lending and the post of Chief Executive were in the hands of the expatriates. The government agreed with our observation that unless necessary adjustment is effected in the allocation of responsibility between the expatriate and Nigerian officers, the control of the bank would hardly be diminished by the projected expatriate staff of six (6) in 1990.


        Accordingly, the government directs that succession plan be reviewed immediately with a view to enabling Nigerians to be actively involved in the affairs of the bank. The new Board, when appointed, is expected to note this directive of government for strict adherence and should submit situation report every six months to the Central Bank on the progress made to Nigerianise the identified posts for onward transmission to the Federal Ministry of Finance.


        Please, note the urgent need to implement the government directives without resorting to acrimony and/or confrontation with the authorities. It is in the best interest of your bank and the entire banking system that the directive, and recommendations contained herein are complied with strictly.


Yours sincerely,

A. 0. G. OTITI,





From appellant's own affidavit this letter was received by him on the 18th of April, 1987, nine clear days before the date scheduled for the General Meeting of the 3rd Respondent bank, the notice of which had been issued on the 26th of March, 1987.


On the 22nd of April, 1987, the appellant issued a writ claiming against the 1st, 2nd and 3rd Respondents the following reliefs that is to say:


(i)    A Declaration that the directive given by the 1st Defendant in its letter DG/COMBANKSIVOl.1/359 of the 14th of April, 1987 to the effect that the shareholding of the plaintiff in the 3rd Defendant should revert to the reduced figure of N2,937,450 shares held by him in 1982 is ultra vires the 1st Defendant and is null and void.


(ii)    A Declaration that the directive given by the 1st Defendant in the said letter that all shares acquired by the plaintiff in the 3rd Defendant since 1982 be divested to other Nigerians is ultra vires the 1st Defendant.


(iii)    A Declaration that the plaintiff is owner of 8,386,100 shares of N1.00 each in the Defendant Bank.


(iv)   A Declaration that the directive of the 1st Defendant that a fresh Board of the 3rd Defendant be re-constituted so that former members of the board be not re-appointed thereto is:


(a)    ultra vires the 1st Defendant and void; and


(b)    is an unwarranted interference with the affairs of the company as constituted.


(c)    an unwarranted interference with the plaintiff's rights to be reelected a Director under the Articles of Association of the Bank.


(v)    A Declaration that the plaintiff is entitled to be re-appointed a Director of the 3rd Defendant Bank at its scheduled Annual General Meeting fixed for the 25th of April, 1987 in accordance with the provisions of Articles 96, 97 and 98 of the Articles of Association of the 3rd Defendant Bank.


(vi)   A Declaration that the directive given by the Federal Ministry of Finance by letter dated the 6th day of April, 1987 to the effect that the Annual General Meeting of the Bank fixed for the 25th April, 1987 be postponed until a new Board of Directors is constituted is ultra vires null and void.


(vii) A Declaration that the plaintiff is entitled to remain in office as a Director of the 3rd Defendant Bank until he is removed from office in accordance with the provisions of the Companies Act or the Articles of Association of the 3rd Defendant Bank.


(viii) An Injunction restraining the 1st and 2nd Defendants from exercising any of their respective powers whether under the Banking Act or under the Companies Act in such a way as to give effect to or provide sanctions against the plaintiff for failure to give effect to any of the aforesaid directives of the 1st Defendant.


(ix)    An Injunction restraining the 1st and 2nd Defendants from in any way obstructing or frustrating the holding of the Annual General Meeting of the 3rd Defendant Bank for the purposes of electing new Directors or effecting any of the Statutory purposes for which Annual General Meetings are required to be held by the Companies Act 1968.

Dated this 22nd Day of April, 1987.


The 4th to 8th Respondents were joined after the order, the subject of this appeal.


On the same day, the appellant filed a motion exparte under Order 20 of the Federal High Court Rules, 1976, for an order:


(i)    restraining the 1st and 2nd Defendants their servants and/or agents from in any way obstructing or frustrating the holding of the Annual General Meeting of the 3rd Defendant Bank until the final determination of this suit;


(ii)    for an order of injunction that until the determination of this suit the Defendants be restrained from appointing or recognising the appointment of any person or persons as Directors of the 3rd Defendant company other than such of them as are or may be duly appointed in accordance with the provisions of the Articles of Association of the 3rd Defendant Bank.


The application was supported by an affidavit and an affidavit of urgency. The affidavit of urgency runs thus:




I, Nathaniel Adelamola Babalola Kotoye, Nigerian, Director of 13 Martins Street, Lagos make oath and say as follows:-


1.    That I am the plaintiff herein.


2.    That I am the Chairman of the Board of Directors of the 3rd Defendant Bank.


3.    That Notice summoning the Annual General Meeting of the 3rd Defendant Bank for the 25th of April, 1987 was issued on the 26th of March, 1987.


4.    That on the morning of Thursday the 16th of April, 1987 I returned home a little after 12 noon and was shown a letter addresed to me by the 1st Defendant herein directing that the Nigerian Directors of the 3rd Defendant Bank to meet urgently and to select its representatives on the Board of the Bank and forward a list thereof to the 1st Defendant within 10 days of the letter. The said letter is dated the 14th ofApril, 1987 and a copy of the same is already exhibited to the Affidavit in support of the Motion filed herein.


5.    That the 1st Defendant has threatened in its aforesaid letter that if the list of new Directors is not supplied to it within 10 days of the said letter it would take appropriate measures against the 3rd Defendant under the Banking Act.


6.    That I have therefore conmmenced these proceedings seeking a number of declarations and injunctive relief.


7.    That I have also filed an exparte Motion for interim injunction and it is of crucial importance that this application for interim injunction be heard immediately in view of the fact that the Annual General Meetin$ of the bank is due to be held at the end of this week and the time limit within which the 1st Defendant has demanded a list of Directors will expire on the 24th April, 1987.


8.    That I therefore pray that this application be heard as a matter of urgency.


No motion on notice was filed to the same effect.


The ex parte motion was heard the same day by Anyaegbunam, C.J. He then proceeded to make the following orders:


(i)    That 1st and 2nd Defendants/Respondents, their servants and agents should not in any way obstruct or frustrate the holding of the Annual General Meeting of 3rd Defendant/Respondent Bank whenever it is fixed.


(ii)    That when the said Annual General Meeting is held the ordinary affairs of the 3rd Defendant/Respondent Bank should be discussed.


(iii)   That no new Directors will be appointed, the old Directors should continue to function until the determination of this Application or the Court otherwise orders.


(iv)   I hereby also order that 1st, 2nd and 3rd Defendants/Respondents be served with all the motion papers. This will enable them file whatever papers they wish to. Adjourned Application to Monday, 27/4/87 at 1 p.m.


By a Notice of Appeal dated the 5th day of May, 1987, the 1st Respondent herein appealed. After hearing the appeal, the Court of Appeal, Lagos Division; allowed the appeal. In the lead judgment of Awogu, J.C.A., to which Akpata and Kalgo, JJ.C.A., concurred, he held inter alia, as follows:


(i)    that what the learned C.J. made was in the nature of an immediate absolute order, not an interim order; and not one appropriate under the rule it was purported to have been brought;


(ii)    that the order made by the learned C.J. amounted to a final order, without hearing the Respondents;


(iii)    that the trial court granted to the applicant more than what he asked for;


(iv)    that although an affidavit of urgency was filed no case of urgency was made out to warrant an exparte hearing; and


(v)    that although he was allowing the appeal on other grounds, he would additionally have done so for failure of the applicant to give an undertaking as to damages.


The applicant, hereinafter called the appellant, has appealed to this court. All the Defendants including those who were joined after the order was made, shall be called the Respondents.


So much confusion and conflict appear to have surrounded the use of the expressions "exparte", "interim", and "interlocutory" in the briefs of counsel that I deem it necessary to begin by examining these terms. Indeed, even in decided cases this lack of agreement as to the precise meanings of these words is pretty obvious. At times they are used as if "interlocutory" and "interim" were interchangeable. In Kufeji V. Kogbe (1961)1 All N.L.R. 113, at p.114, an application for an injunction which was fully argued and deliberated upon and in every way had all the attributes of an interlocutory injunction was referred to as interim injunction. In fact "interim" and "interlocutory" were freely used as if they were interchangeable. See also L U. Iroegbu V. Mark A. Ugbo (197~71) 1 E.C.S.L.R. 162.


I think it is correct to say that "exparte" in relation to injunctions is properly used in contradistinction to "on notice" - and both experessions, which are mutually exclusive, more strictly rather refer to the manner in which the application is brought and the order procured. An applicant for a nonpermanent injunction may bring the application exparte, that is without notice to the other side or with notice to the other side, as is appropriate. By their very nature injunctions granted on ex parte applications can only be properly interim in nature. They are made, without notice to the other side, to keep matters in statu quo to a named date, usually not more than a few days, or until the Respondent can be put on notice. The rationale of an order made on such an application is that delay to be caused by proceeding in the ordinary way by putting the other side on notice would or might cause such an irretrievable or serious mischief. Such injunctions are for cases of real urgency. The emphasis is on "real."


What is contemplated by the law is urgency between the happening of the event which is sought to be restrained by injunction and the date the application could be heard if taken after due notice to the other side. So, if an incident which forms the basis of an application occurred long enough for the applicant to have given due notice of the application to the other side if he had acted promptly but he delays so much in bringing the application until there is not enough time to put the other side on notice, then there is a case of self-induced urgency, and not one of real urgency within the meaning of the law. This self-induced urgency will not warrant the granting of the application ex parte. Megarry, J., as he then was, put the principle rather succinctly in the case of Bates V. Lord Hailsham of Marylebone (1972) 3 ALL E.R. 1019, at p.1025, where he stated:


An injunction is a serious matter, and must be treated seriously. If there is a plaintiff who has known about a proposal for ten weeks in general terms and for nearly four weeks in detail, and he wants an injunction to prevent effect being given to it at a meeting of which he has known for well over a fortnight, he must have a most cogent explanation if he is to obtain his injunction on an ex parte application made two and a half hours before the meeting is due to begin. It is no answer to say, as counsel for the plaintiff sought to say, that the grant of an injunction will do the Defendant no harm, for apart from other considerations, an inference from an insufficiently explained tardiness in the application is that the urgency and the gravity of the plaintiff's case are less than compelling. Ex parte injunctions are for cases of real urgency, where there has been a true impossibility of giving notice of motion.


On the other hand, even though the word interlocutory comes from two Latin words "inter" (meaning between or among) and "locutus" (meaning spoken) and strictly means an injunction granted after due contest interpartes, yet when used in contradistinction to "interim" in relation to injunctions, it means an injunction not only ordered after a full contest between the parties but also ordered to last "until the determination of the main suit." Applications for interlocutory injunctions are properly made on notice to the other side to keep matters in statu quo until the determination of the suit. Evidence is by affidavit. On the hearing of the application for an interlocutory injunction, the court, after avoiding all controversial issues of fact, has to decide a number of important issues, including:


(i)    the strength of the applicant's case. A long time ago, the plaintiff was required to show a strong prima facie case that he was entitled to relief (see Harman Pictures N. V v. Osborne (1967)1 W.L.R. 723). However since the decision of the House of Lords in American Cyanamid Co. V. Ethicon Ltd. (1975) A.C. 396, at pp. 407~09 it has been held that what the applicant needs to show is only a real possibility, not a probability, of success at the trial - that there is a serious question to be tried. This is now an accepted principle in this country. See Obeya Memorial Specialist Hospital Ayi - Onyema Family Ltd. v. Attorney-General of the Federation & Anor. (1987) 3 N.W.L.R. (Pt.60) 325, at p.340. It does appear, too, from the decision in Co

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