Firm, First Bank dispute over sale of property shifts to high court

First Bank

The battle for the soul of a property situated at 4-6 Odegbami Street, off Adeniji Jones, Ikeja, Lagos between an educational services firm, Management Science Centre Limited and First Bank Nigeria Plc over alleged indebtedness by the former has shifted to the Federal High Court, Lagos.

The shift followed the recent ruling of Lagos division of Court of Appeal on the sale of the property by First Bank for the recovery of the sum of N139.1million alleged to be the unpaid and outstanding indebtedness of the 1st defendant from the credit facility granted to it in January 2006.

Management Science Centre, the first defendant in the case has challenged sale of the property, alleging that, the bank sold its purpose-built school property worth over N2.5billion located in the serene Odegbami Street, off Adeniyi Jones Avenue area of Ikeja, Lagos State, to its cronies for the paltry sum of N1 billion and confiscated the entire sale proceeds.

It also alleged that under the consent judgment procured at the Lagos High Court, the bank has no authority to sell the property, or transfer title to anyone, since the property was not mortgaged.According to the defendant, the proceeds of sale were required to be lodged in an income-earning account pending the account reconciliation. It was further alleged by the defendant that the bank took many mischievous actions to prevent Management Science from selling the said non-mortgaged property.

But the recent decision of the appellate court on the sale of the property has opened a new vista to the case.In the court, the bank has submitted that the property was sold for N550 million for the settlement of the Management Science Centre Limited debt valued at N158 million and described by the bank as specific and not futuristic. However in the suit before Justice Ayokunle Faji of the Federal High Court, Lagos, the bank is alleging fresh indebtedness against Management Science Centre Limited .

In the suit supported by an affidavit of urgency and written addresses, First Bank is urging for a mareva injunction against the bank accounts of Management Science Centre Limited, its directors and shareholders, including Mr Daniel Isimoya, Professor W. Iyiegbuniwe, Professor M. N. Okenimkpe and Management Science Publishing Limited in 20 commercial banks over alleged N139.187 million.

But the defendants in a preliminary objection brought pursuant to Order 26 Rule 2 of The Federal High Court (civil procedure) Rules 2009, Section 251 (1) of the 1999 Constitution, Section 8 (1) of the limitation law of Lagos State and the inherent jurisdiction of the court, sought a declaration that the court lacked the jurisdiction to entertain this matter.

They also want among other reliefs, an order dismissing the action, or in the alternative that the suit been struck out in limine.The defendants further asserted that the action is incompetent and an abuse of the process of court because, the subject matter of the action is in dispute between the same parties in Suit No. LD/2065/2010: Management Science Centre Limited v First Bank of Nigeria.

According to the matter, Management Science Centre has in 2006 applied for, and was offered the following separate credit facilities by the Bank, N160million Term Loan, N40million Standby Overdraft and N200million Bank Guarantee. Three separate securities were provided for the multiple facilities, which however did not include the school property in Odegbami Street, off Adeniyi Jones area of Ikeja which the Bank illegally sold and which is the subject of the dispute. The bank in its letter of September 23,, 2010, stated clearly that the “property is not one of the securities offered ”.

While N40million standing overdraft was due for utilization in 2009, but the bank, in bad faith, declined the draw-down on the fully-collateralized facility.Similarly, the N200million bank guarantee (a contingency liability renewable for five years) was issued on March 18, 2009 but unilaterally cancelled by the bank in July 22, 2009 (four months later), even though it was never called in.

The bank allegedly collected N2 million as commission for the guarantee that lasted less than 120 days, while account was allegedly not credited in spite of the cancellation of the guarantee.On the N160million Term Loan, it was gathered that the loan was renewed twice; On July 11, 2007 with “extension of moratorium period by additional 14 months, expiring 31/05/2008” and (b) on November 6, 2008 another one year moratorium.

However , dispute over the credit facilities had been adjudicated upon and resolved by the High Court of Lagos State in Suit No. LD/2065/2010, prior to the institution of the suit in which Management Science Centre was allegedly not found liable for any particular indebtedness.Nevertheless, while the suit was pending, First bank, allegedly sold Management Science Centre’s prime property to and confiscated the entire sale proceeds.

The defendant alleged that property which occupies over two and half acres in Adeniyi Jones, Ikeja, Lagos is a non-mortgaged property and that the bank in its letter of September 23, 2010 admitted that the property is not one of the securities for the loan.

Two years after the sale of the property and while Management Science Centre’s action to set aside the wrongful sale was pending before the Court of Appeal, Lagos Division, First Bank approached the Federal court Lagos and procured a Mareva Injunction to freeze Management Science Centre and its Directors’ accounts and prevent them from having access to the company’s and their personal fund.

This order, together with other actions effectively crippled the operations of the company and its directors and their financial capacity to run their businesses.The defendant further claimed that the “judgment debt” which First Bank of Nigeria Ltd claims it is recovering is unknown as no Court in Nigeria has awarded even one kobo as judgment debt in favour of First Bank against Management Science Centre Ltd.

They also alleged that the credit contract between the parties is shrouded in secrecy and that the bank against known banking laws and practice, on July 22, 2009, classified the disputed N160million term loan, the unutilized N40million Standing Overdraft and the non-crystallized N200million Bank Guarantee, and demanded the payment of N444,527,354.04.

It was their submission that it was strange that the action came four months before the expiration of the moratorium on the term loan and before the N40million standby overdraft and N200million bank guarantee were due for utilization.

According to them, the purported debt was erratic and arbitrary and the bank has allegedly failed to disclose that the purported debt has been fully liquidated pursuant to Suit No. LD/2065/2010.Despite the fact that the bank’s claim of a payment of N135million has been repudiated, the defendants further claimed that the bank continues to detain the title of three properties of Management Science Centre in defiance of appeals made for their return.
The Federal High Court, Lagos has fixed January 15, 2018 for ruling.

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