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CBN, AMCON, others lose bid to stop suit against Bank PHB’s nationalisation

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THE Central Bank of Nigeria (CBN) and the Asset Management Company of Nigeria (AMCON) have lost their bid to stop a suit filed by some shareholders of the defunct Bank PHB against the nationalisation of the bank and transfer of assets without compensation.

In the suit, which also had Keystone Bank Limited, the Attorney General of the Federation and the Nigeria Deposit Insurance Corporation (NDIC) as defendants, the shareholders are demanding N38.6 billion from the defendants being “fair compensation” to them for the value of their investment in the defunct Bank PHB Plc.

The shareholders in the suit marked FHC/L/CS/1273/11 are Benedicta Oyiana, Ifeyinwa Oyiana, Chioma Oyiana, Okoli Dumebi and Felix Oyiana, Pius Okonji, Okonji Obiageli, Ndiwa Uwaonye and Allwell Brown.

They are also praying the court to award N20 billion as damages against the defendants in their favour to cover for the loss of value on their investments in the defunct bank.

They further sought an order of the court setting aside what they described as “unlawful nationalisation, compulsory acquisition and expropriation of their investments in Bank PHB.”

In their papers filed before the court, they contested the validity of a letter dated August 5, 2011, written by the NDIC to the Managing Director of Bank PHB, informing him that the bank’s assets and liabilities had been transferred to Keystone Bank.

According to them, such a transfer amounted to an illegality when the NDIC did not make any arrangement for their compensation prior to the move.

But the defendants had through preliminary objections urged the court to strike out or dismiss the suit for lack of jurisdiction.

They also questioned the locus standi of the plaintiffs to institute the suit, which had a far reaching effect on the planned sale of Keystone Bank (Formerly Bank PHB) by AMCON in the second quarter of the year .

However, in a ruling delivered last week, copy of  which  was made available to The Guardian yesterday, Justice Mohammed Nasir Yunusa held that the holding of shares in a company gives shareholder a say in the company.

In addressing the issue as to whether shareholders have a right of access to the courts, the judge stated that a shareholder has such rights.

Citing the case of Tukur versus Government of Gongola State, the judge held that it is trite that no executive arm of government can take away a citizen’s right to acquire or hold property, thus there can be no compulsory acquisition.

According to the judge, the plaintiffs’ claim hinged on Section 44 of the constitution of the Federal Republic of Nigeria and the right to ownership of property.

The  court stated that by virtue of section six of the constitution of the Federal Republic of Nigeria, an aggrieved person may apply to the High Court to enforce his rights, and the plaintiff has freely exercised this right.

“Section 114 of the Companies and Allied Matters Act provides for the rights and liabilities attached to shares of a company, the judge added that

“in essence, the shareholder has a legal right to approach the court. Section 610 of the Companies and Allied Matters Act gives the Federal High Court jurisdiction to

hear such matters.

“The court stated that in determining jurisdiction, the issues of Parties and Subject Matter must be looked into. The proper parties must be identified as where they are not before the court, the court would lack jurisdiction to hear the matter.

“The plaintiff has a claim and has the locus standi to institute the action and seek redress pursuant to Section 46(1) of the Constitution of the Federal republic of Nigeria.

“It is trite law that there must be a competent Plaintiff and defendant in a suit before the Court”, the judge ruled.

The court also emphasized that by virtue of section 251 (p)(q)(r) of the constitution of the Federal Republic of Nigeria, the Federal High Court has exclusive jurisdiction relating to agencies so far as it affects the Federal Government.

The court stated that the plaintiff’s claim is hinged on Section 44 of the constitution and so is part of fundamental human rights.

“The right of any person is not to be unrestrained and that there are certain conditions which must be fulfilled concerning section 44 of the constitution such as the amount of compensation, there must be a law.

“The mode of commencement is not material and by virtue of Order 3 Rule 1 of the Fundamental Human Rights Enforcement Procedure Rules, 2009 there is no limitation on the time to bring a fundamental human right matter.

“Also, there is no requirement of compliance with the statutory pre-action notices when it involves fundamental human rights issues. The court held.

Subsequently, Justice Yinusa held that the court  had both party and subject-matter jurisdiction on the matter and adjourned hearing of the suit till March 31, 2015.

It will be recalled that AMCON’s Chief Executive Officer, Mustafa Chike-Obi has disclosed  to newsmen that the February general elections had made the corporation to delay the sale of Keystone Bank till the second quarter of the year.

“Keystone Bank will be sold in due course. An election time is clearly not the best time to commence the sale of a bank. We will wait for the elections and allow the dust to settle. Sometime in the second quarter of the year, we will commence the sale of Keystone Bank,” Chike-Obi had said.

In January, the corporation has stated that it would put this into effect soon after the general elections earlier scheduled for February (now shifted to March and April).



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