Court orders bank to refund company funds in liquidation dispute

By Lukman Olabiyi

Justice Dehinde Dipeolu of the Federal High Court, Lagos, has ordered a bank to immediately pay the liquidator of Addy Finance & Investments Limited (in liquidation) the sums of N39,108,417 and $53,078.04, with pre-judgement interest at 20% and post-judgement interest at 10% per annum.

The court also directed the bank to deliver certified statements of account covering the period from Tuesday, November 2, 2021 (the commencement of the company’s winding up), to the date of the judgement.

The ruling followed an application by the liquidator in the winding-up suit FHC/L/CP/1577/2021: Nduka Nwabuwa & 3 Ors v. Addy Finance & Investments Ltd.

The application sought recovery of the company’s funds held by United Bank for Africa Plc (UBA) and delivery of its account statements under Sections 576, 577, and 603 of CAMA 2020 and the Companies Winding-Up Rules 2001.

The liquidator’s counsel, T.Y. Salman, argued that UBA unlawfully withheld the company’s funds despite court orders restraining withdrawals since Wednesday, March 30, 2022, and the appointment of a provisional liquidator on Tuesday, July 5, 2022.

The liquidator had relied on UBA’s own affidavit in earlier proceedings, which showed that the company’s accounts with UBA held balances of N30,455,571.65, N8,652,845.56, and $53,078.04 at different dates.

Justice Dipeolu found that UBA failed to comply with its obligations and attempted to rely on garnishee orders and interim forfeiture orders obtained after the winding-up commenced, which are void under Section 577 of CAMA 2020.

The court also noted UBA’s inconsistent conduct, including:

– Filing a sworn statement in November 2023 denying the existence of funds, while simultaneously negotiating and paying over N27 million to some of the company’s creditors in a separate suit, without disclosing the winding-up order or the appointment of a liquidator.
– Failing to serve critical documents (Exhibit ATO 6) on the liquidator until after the consent judgement and payments had been made.
– Entering settlement terms and disbursing company funds—of which UBA staff received N16 million—without involving the company or the EFCC.

The court held that UBA, as custodian of the company’s accounts, bore the burden of proving that the balances did not exist, and that equity would not assist a party at fault. The court also condemned the professional conduct of UBA’s counsel.

Accordingly, Justice Dipeolu granted the liquidator’s reliefs, ordering UBA to pay N30,455,571.65 (balance as of Thursday, December 1, 2022), N8,652,845.56 (balance as of Wednesday, March 1, 2023), and $53,078.04 (balance as of Wednesday, March 1, 2023).

The court also directed the respondent to deliver certified statements of account from Tuesday, November 2, 2021, to the date of the ruling.

However, the court declined to grant one of the liquidator’s reliefs on the grounds of vagueness.