IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA

IN THE LAGOS JUDICIAL DIVISION

HOLDEN AT LAGOS

 

BEFORE HIS LORDSHIP:                HON. JUSTICE M. N. ESOWE

 

DATE: DECEMBER 1, 2023                        SUIT NO: NICN/LA/10/2022

 

BETWEEN

1.   ONIYELU OLUSOLA OJO

2.   OLANREWAJU GANTYU BABATUNDE

3.   OLADUNJOYE AYOTUNDE

4.   RAJI RASHEED

5.   ADEWALW IBRAHIM

6.   OMOVO MARIA OKIEMUTE

7.   OKAFOR ADLINE ONOSOME

8.   OLANIYAN MUTIU FEMI

9.   NWOKO PRECIOUS IFEOMA               

10.   ODUNLADE TAIWO ADEBIYI

11.   SALAMI ISMAILA

12.   EJIMOFOR UJU LUCY                               CLAIMANTS/RESPONDENTS

13.   UDU IKECHHUKWU

14.   ALESHIN JOSEPH

15.   IBRAHIM JIMOH ABUBAKAR

16.   OLUWATAYO ISAAC OLOMI

17.   OKEME GODWIN A.

18.   AWONUGA OLUYEMI OLUREMI

19.   KUYORO OLUWAKEMI

20.   OYELUSI FUNSO

21.   IBRAHIM O. RIDWAN

22.   LLADI GABRIEL

23.   IBRAHIM RIDWAN OLADELE

 

AND

1.   CHELLARAMS PLC

2.   CHELLARAMS DMK LIMITED           DEFENDANTS/APPLICANTS

 

REPRESENTATION

Adebayo Adesuwa Oniyelu, Esq for the Claimants

Victor Ogunleye, SAN with Anu Babalola, Esq for the Defendants/Applicants

RULING

1.   INTRODUCTION

2.   This is a Ruling of this Honourable Court on the motion on notice dated 7th March, 2022 by the defendants/applicants praying this Court for:

 

a.    An Order staying further proceedings in this suit pending the hearing and determination of the winding up proceedings instituted against the 1st Defendant by First Bank Plc on grounds of insolvency in Suit No. FHCL/CP/862/2020 at the Federal High Court Lagos.

b.    And for such further or other Orders as this Honourable Court may deem fit to make in the circumstances.

 

3.   The motion is accompanied by an affidavit deposed to by Prince Abayomi Ogunsowo, Group General Manager (Admin, Protocol and Security) in the employment of the Defendants and a written address, wherein the Applicants raised a sole issue for determination, to wit:

 

i.          whether having regards to the peculiar facts of this case and the provisions of the law this application ought to be granted.

 

4.   ARGUMENT

5.    This application is predicated on the provisions of Section 575 of CAMA 2020. In canvassing the argument in support of the issue, Counsel maintained that during the period of winding up, actions against the company can only be commenced or continued with the consent of the Federal High Court.

 

6.   Learned Counsel in submitting that the stay of proceeding is mandatory relied on the case of Omaghomi v Nigeria Airways Limited & Ors (2006) 18 NWLR (Pt.1011) 310 where the Court held as follows:

 

a.    ’’The object of winding up provisions is to put all unsecured creditors upon an equality and to pay them parri passu. After an order winding up of a company is made, some safeguards are put in place to prevent a Scramble for the assets of the company. For example, Section 412 of the Companies and Allied Matters Act gives the Court power to stay or restrain proceedings against the company where a winding up petition has been presented and to also refer the case to the court hearing the winding up petition. By Section 417 of the Companies and Allied Matters Act, no action can be proceeded with or commenced against the company except by leave of the court. The provisions of S.417 of the Companies and Allied Matters Act are mandatory".

 

7.   In opposition, the Respondents filed a Counter affidavit deposed to by Dipo, Omotosho, a litigation officer in Falana & Falana's Chambers, the Counsel to Claimants/Respondents and a written address where he submitted the following issue for determination:

 

i.          Whether considering the circumstances of this case and the law sought to be relied upon by the Defendant, it will be equitable, fair and just for this Honourable Court to grant the Defendants/Applicants' application for stay of proceedings and consequently foreclose the constitutional rights of the Claimants/Respondents?

 

8.   ARGUMENT ON ISSUE

9.   Learned Silk argues that a cursory reading of Section 575 of CAMA 2020, would reveal that the provision in itself is not mandatory. The decision to stay proceedings is totally subject to the discretion of the "Court Concerned". The Claimants/Respondents in this suit have approached this honourable Court for the determination of their rights to terminal and redundancy benefits which the Defendants/Applicants ought to have paid when they terminated the Claimants/Respondents employments with them.

 

10.   This he further argues is within the exclusive jurisdiction of this Honourable Court conferred by Section 7 of the National Industrial Court Act, 2006 and Section 254C(1) of the Constitution, (Third Alteration) Amendment Act, 2010. Consequently, this honourable Court is the only Court constitutionally and statutorily empowered with the jurisdiction to determine the case of the Claimants/Respondents as presently constituted. It is the contention of Respondents that the issue of referral only comes up if the Defendants/Applicants concede to the claims of the Claimants in this suit, but since the Defendants/Applicants have wholly denied the claims of the Claimants/Respondents, it is expedient that this honourable Court swiftly determines the propriety or otherwise of the Claimants/Respondents case in order to qualify them for persons entitled to the distribution of the Defendants assets by the official liquidator. The Respondents urged the Court to discountenance the argument canvassed by the Applicants/Defendants, as this Court need no leave whatsoever from Federal High Court, which is a concurrent Court, to proceed or continue with the determination of this suit.

 

11.   Section 6 (6)(b) of the 1999 Constitution (as amended) provides that the judicial powers of courts shall extend, to all matters between persons or between government or authority and any persons in Nigeria, and to all actions and proceedings relating thereto, for the determination of any question as to the civil rights and obligations of that person. The constitutional judicial powers of Courts and the right to fair hearing cannot be ousted by the provision of Section 575 of the Companies and Allied Matters Act, 2020 - Ekpeto & Ors v. Wanogho & Ors (2004) LPELR-SC.193/2001, Japaul Mines and Products Ltd v Salrod (Nig) Ltd (2019) LPELR-CA/C/292/2017.

 

12.   Applying Section 575 of the Companies and Allied Matters Act, 2020 in favour of the Defendants/Applicant will ultimately offend the principles of natural justice, equity and fairness and unduly foreclose the inalienable rights of the Claimants to present their case, whose monetary claims against  the Defendants remain unsecured until their suit against Defendants is adjudicated upon and the liquidator takes cognizance of the Claimants interests while settling the debts of the Defendants/Applicants.

 

13.   RESOLUTION

14.   Having carefully considered the processes filed by the respective parties and the various arguments canvassed in support of their position, this Honourable Court distils the following issue for determination:

 

i.          Whether the instant application is meritorious and such that ought to be granted.

 

15.A cardinal call from the Applicants’ application is one of interpretation of the provision of the Companies and Allied Matters Act, 2020 in relation to on-going proceedings during the hearing of a winding-up petition. Generally, a Court of law is enjoined to give a holistic interpretation to a statute. In doing this, the Court ought to be minded to make broad interpretation aimed at giving a statute purposeful interpretation. State v Ughanwa (2020) 3 NWLR (Pt. 1710) 40, para H. Therefore, where the words of a statute are plain, clear and unambiguous, the Courts should give effect to their literal meaning so as not to defeat the intentions of the drafters. Ezeani v Onyereri (2023) 9 NWLR (Pt. 1889) 325, para A.

 

16.The wordings of Section 575 of CAMA 2020, must be construed in line with the above principle of interpretation. The said section provides as follows: ‘Where a winding up petition has been presented and an action or other proceeding against a company is instituted or pending in any Court (in this section referred to as the “Court concerned"), the company or any creditor or contributory may, before the making of the winding up order, apply to the Court concerned for an order staying proceedings and the Court may, with or without imposing terms, stay or restrain proceedings, or if it deems fit, refer the case to the Court hearing the winding up petition."

 

17.The above Section leaves a “Court concerned” a number of options in the event that a matter involving a company in a winding up proceeding is brought before it. These options include, the power of the Court concerned to grant an unconditional stay of proceedings, the power to impose a conditional stay of proceedings and the power to refer the case to the Court hearing the winding up petition. The Applicants have approached this honourable Court praying the Court particularly to stay proceeding pending the hearing and determination of the winding up proceedings instituted against the 1st Defendant by First Bank Plc on grounds of insolvency in Suit No. FHCL/CP/862/2020 at the Federal High Court Lagos. This clearly is within the contemplation of Section 575 CAMA 2020. The Applicants have argued that the above provision is a mandatory provision whilst the Respondents on other hand insist that the decision lies at the discretion of the Court.

 

18.The word ‘may’ as used in the Section under discourse has been defined as an approving word which merely confer capacity, power or authority and imply discretion. When used in a statute, it indicates that something may be done which prior to it could not be done.[1] In the case of Taiwo v. F.R.N. (2022) 13 NWLR (Pt. 1846) pp. 78-79, paras. E-A, the Court held that: ‘The word ‘may’ when used in a statute, is generally accepted that it is permissive but exceptions exist when "may" could be mandatory from the context in which it is used. Most of the cases in which the word "may" has a mandatory meaning relate to cases in which they are used in penal statutes particularly in criminal procedure legislations conferring powers on Courts… conveys that the authority which has the power to do such an act has an option either to or not to do it.” This Court is of the respectful view that given a literal interpretation of Section 575 of CAMA, 2020 the grant of an application for stay or otherwise is a discretionary power vested in the Court.

 

19.It is also the argument of Counsel for the Applicants that during the period of winding up, actions against the company can only be commenced or continued with the consent of the Federal High Court. See Section 580 of CAMA 2020. It is true that where a winding up order has been made, no action or proceedings can be commenced against the company without the leave of Court. The applicability of the said Section is only triggered when a winding up order has been made. This provision is irrelevant to the instant case as there is nothing before the Court suggesting the grant of the Winding-up Petition before the Federal High Court. It is in the light of the foregoing the Applicants argument is hereby discountenanced. I so hold.

 

20.In any case where the Court is called upon to exercise its discretion in granting any application, the Court must do so judicially and judiciously according to common sense and the interest of justice. An Applicant must place before the Court all facts and materials that would assist it in reaching a decision that is fair and equitable - INEC v ACD (2022) 12 NWLR (Pt. 1844) 294, paras. B-C, F. The question is, what then is the import of Section 575 of the Companies and Allied Matters Act 2020? The purpose of the above Section is to preserve and protect the entire assets in terms of physical property, shares and the status of a company in winding up to ensure that same is not dissipated. CITCO COMMUNICATIONS LTD & ANOR v. DAILY TIMES & ORS (2020) LPELR-50407(CA).

 

21.The question here is, what injustice will be occasioned if the matter proceeds? Will the continuance of this suit defeat the purpose of Section 575 above? It is my considered view that the continuance of this proceeding does not in any way affect the said provision. It is important to note that under Sections 576 and 577 of CAMA, any disposition of the property or attachment, sequestration, distress or execution put in force against the estate of a company after the commencement of the winding up is void.

 

22.A void act is one which has no legal effect or consequence, one which does not confer and is in law, incapable of conferring any legal right or title whatsoever, and it does not and cannot also impose any legal obligation or liability on any one or make any party liable to suffer any penalty or disadvantage in any case. Oghoyone v Oghoyone (2010) 3 NWLR (Pt. 1182) 564, Oyeneyin v Akinkugbe (2010) 4 NWLR (Pt. 1184) 265.

 

23.The implication of the above provisions is to the effect that should the Claimants succeed in proving their claims against the Defendants, they will be unable to enforce the judgment against the company while the Petition is pending. This goes to show that the rights of creditors will be unaffected.

 

24.Conversely, I agree with the submissions of the Respondents that it is in the interest of justice that the Claimants claims be determined to enable the liquidator takes cognizance of the Claimants interests while settling the debts of the Defendants/Applicants should the claim succeed. See Section 588(1)(e) and (f) of the CAMA, 2020. Referring the case to the Federal High Court will in the respectful view of this Court not cure the issue of lack of jurisdiction to entertain the Respondents’ suit. For as our law stands, any proceedings conducted in the absence of requisite jurisdiction, no matter how well conducted will amount to a nullity. It is not the intendment of the drafters of CAMA, 2020 to foist a fait accompli on persons complaining of violation of their civil rights with yet to be ascertained liabilities calls against companies undergoing winding-up.

 

25.Section 575 of the CAMA, 2020 cannot be interpreted out of context, when the provision is read alongside Section 588 of CAMA, 2020, particularly sub-section 1(e), one gets the understanding that a winding-up proceedings takes cognizance of creditors or persons having or alleging themselves to have any claim, present or future, certain or contingent, ascertained or sounding only in damages against the company, or whereby the company may be rendered liable. If the law makes this recognition, would the interest of justice be served, where a stay of proceedings is imposed, and the claim(s) sounding only in damages against the company in winding-up remain unascertained? I do not think so, justice is well served when it is served to all the actors concerned. In the light of this, the Applicants’ prayer is hereby refused and the application is accordingly dismissed. I so find and so hold. 

 

26.The matter is set down for expeditious trial.

 

27.No order as to cost, parties to bear their respective costs.

 

28.Ruling is entered accordingly.

 

 

 

Hon Justice M. N. Esowe, FCIArb

Presiding Judge

 


[1]Subros and Associates, the word “may’ shall mean “shall”? Law discussed, available at https://www.linkedin.com/pulse/when-word-may-shall-mean-law-discussed-sandeep-suri-rohit-suri/ accessed on September 26, 2023.