Union Bank of Nigeria is currently entangled in a legal battle after a Lagos State High Court nullified its deduction of £130,720,557.06 from the account of NICON Investment Limited over an alleged debt.
Justice O. O. Abike-Fadipe nullified the bank’s action on the grounds that the deduction was made without authorisation or approval by NICON Investment.
The court subsequently awarded £1 million as damages against Union Bank of Nigeria Plc for breaching its fiduciary duties to NICON Investment Limited, which is owned by Senator Jimoh Ibrahim.
Abike-Fadipe made the ruling while delivering judgment in a suit filed by NICON Investment Limited, Global Fleet Oil and Gas Ltd, and Senator Ibrahim on Thursday.
The claimant had dragged the bank to court to challenge the alleged unlawful deductions from its fixed deposit account with Union Bank, over ₦10 billion and ₦16 billion loan facilities taken for the operation of Global Fleet/NICON Investment.
Union Bank had defended its action on the grounds of an alleged mutual agreement between it and the claimant, as well as its sister company, Global Fleet Oil and Gas Ltd.
Specifically, the bank argued that the fixed deposits in the accounts of the claimant and Global Fleet were provided as collateral for the loans extended to the claimant.
As part of its loan recovery efforts, Union Bank had converted £130,720,557.06 in the claimant’s fixed deposit account to U.S. dollars, prompting the legal action that culminated in Thursday’s judgment.
Justice Abike-Fadipe, who dismissed reliefs 10 and 11 sought by the claimant, ruled that:
“Judgment is entered for the claimant against the defendant on the claimant’s reliefs 1 to 9 and 12 to 17.”
She declared as null and void the “defendant bank’s unilateral act of converting the sum of £130,720,557.06 (one hundred and thirty million, seven hundred and twenty thousand, five hundred and fifty-seven pounds and six pence) from the claimant’s fixed deposit account to US dollars without the due authorisation and/or mandate of the claimant.”
According to the court, the pound sterling fixed deposit account of the claimant was not linked to the indebtedness of Global Fleet Ltd, nor was it meant to provide any form of security for the said debt.
The court further held that the bank’s unilateral use of part of the £130,720,557.06 to liquidate Global Fleet Ltd’s debt without authorisation from the claimant was wrongful, null and void.
“The indebtedness of Global Fleet Ltd to the Defendant (if any) is neither payable from the £130,720,557.06 fixed deposit of the claimant nor is any amount deductible therefrom in respect of Global Fleet Ltd indebtedness,” the court ruled.
“The defendant bank cannot unilaterally deal with or make any deduction from the fixed deposit account of the claimant without the authorisation, mandate or consent of the signatories to the fixed deposit account as on the mandate card.”
The court awarded ₦50 million to the claimant as damages for the unlawful deduction and illegal penalties and charges imposed by the bank on the claimant’s account.
It ordered:
“The defendant is directed to render an account of all the transactions on the claimant’s pound sterling fixed deposit account together with all accrued interests thereon.”
“An order setting aside all acts of the defendant pertaining to and/or connected with and affecting the claimant’s pounds sterling fixed deposit account vis-à-vis its conversion to US Dollars, Naira and unilateral liquidation of the indebtedness of Global Fleet Ltd and NICON Investment Limited from the said account.”
“The sum of £1,000,000:00 (One Million Pounds Sterling) as damages for the defendant’s breach of its fiduciary duties to the claimant and negligence.”
The court also dismissed the defendant’s counterclaim in its entirety and awarded ₦10 million in costs in favour of NICON Investment and Jimoh Ibrahim, who is the 3rd defendant to the counterclaim.
