In a decisive judgment on Friday, the Supreme Court ruled in favour of Neconde Energy Limited and Nestoil Limited, delivering a significant victory that reshapes the legal boundaries of Receivership in Nigeria and reaffirms its role as a guardian of constitutionalism and due process.

In a unanimous judgment read by Justice Mohammed Baba Idris, the five-man panel of the Apex court held that where the legality of a receiver’s appointment is itself in dispute, such a receiver cannot assume the authority to appoint counsel to represent the company in the same proceedings.

The ruling preserves the right of fair hearing guaranteed under section 36 of the Nigerian Constitution and effectively restores legal representation for Neconde and Nestoil in the high-profile dispute involving a consortium of lenders led by FBNQuest Merchant Bank Limited and FBN Trustees Limited.

This decision not only helps in strengthening public confidence in the judiciary but also sends a clear message that procedural fairness remains sacrosanct, regardless of the complexity or sensitivity of a matter. In a legal environment where the rights of litigants must be carefully balanced, the Court’s stance reinforces the rule of law and underscores its role as a guardian of justice.

At the heart of the dispute was whether a Receiver appointed by lenders could exclusively determine the legal representation of a company, even when the validity of that Receiver’s appointment is being challenged in court.

The Supreme Court focused on the central question: whether the receiver/manager has the sole power to appoint legal representation for Neconde and Nestoil and whether the company retained any authority to act while under receivership. In a landmark pronouncement, the court held that where the legality of a receiver/manager’s appointment is being challenged, the company, through its board of directors-retains the authority to take necessary administrative actions, including appointing legal representation.

The court emphasised that a company’s right to contest the validity of a receivership cannot be extinguished merely because a receiver has been imposed. To hold otherwise, it noted, would create an unjust situation where the party affected is stripped of the means to challenge potentially unlawful control over its assets, and would amount to a conflict of interest on the part of the receiver/manager and his appointee.

In light of these findings, the Supreme Court allowed the appeal and set aside the earlier decision of the Court of Appeal, which had disqualified the company’s counsel. The judgment was unanimous, underscoring the court’s clear stance on the issue.

This judgment marks a critical affirmation of corporate rights under receivership and sends a strong signal against the misuse of receivership as a tool to stifle legitimate legal challenges.

Justice Idris noted that the questions submitted by the lenders before the trial court sought judicial interpretation on critical issues, including whether the lenders were entitled to enforce security, appoint a receiver, and whether the receiver could lawfully exercise powers under that appointment.

According to the court, these questions strike at the “very foundation” of the receivership, rather than relating to routine management or realisation of assets.

“It would occasion a conflict of interest,” the court held, “for a receiver appointed by parties whose rights are being challenged to also determine the legal representation of the
company in the same proceedings.”

The apex court emphasised that the receiver’s authority is derived from the very transaction under challenge, making it improper for such a receiver to control the company’s legal defence in a suit questioning that authority.

It further held that proceedings challenging the validity and scope of a receivership do not fall within the general powers granted to a receiver under Section 556(3) of the Companies and Allied Matters Act (CAMA) and its Eleventh Schedule.

In such circumstances, the court ruled, a company cannot be stripped of its residual powers to defend itself through its board of directors and counsel of its choice.

“The defence of the action through its directors and the counsel retained by them cannot be said to be incompetent merely because a receiver has been appointed, “Justice Idris declared.

The Supreme Court specifically faulted the Court of Appeal’s January 13, 2026, decision, which had disqualified Chief Wole OLANIPEKUN SAN, Dr Muiz BANIRE SAN, and their legal teams, while recognising the receiver as the sole authority competent to appoint counsel.

Describing that position as erroneous, the apex court held that the lower court failed to
appreciate the conflict inherent in allowing a receiver whose appointment is under judicial scrutiny to control the company’s legal representation.

By affirming that companies can retain independent legal representation in disputes challenging receivership arrangements, the Supreme Court has boldly clarified a critical aspect of corporate governance and creditor enforcement, with implications for future insolvency proceedings.