The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC), on Monday, challenged the jurisdiction of the Federal High Court in Abuja to hear a suit jointly filed by Aso Savings & Loans Plc and Union Homes Savings & Loans Plc over the revocation of their licences.
CBN’s lawyer, Onyeka Ezeah, and NDIC’s counsel, Abubakar Shehu, raised the objection before Justice Emeka Nwite shortly after the case was called for the defendants to show cause.
Justice Nwite had, on December 29, declined to grant a motion ex parte filed by Aso Savings and Union Homes seeking to stop the CBN and NDIC from taking further action over the recent revocation of their operating licences.
The judge, in a ruling on the plaintiffs’ ex parte motion moved by their lawyer, Joseph Silas, held that the interest of justice would be better served by putting the defendants on notice to show cause why the relief should not be granted.
The judge then adjourned the matter until January 5 for the defendants (CBN and NDIC) to show cause.
When the matter was called on Monday, Silas informed the court that the case was fixed for the defendants to show cause.
The lawyer told the court that the CBN had served them with an affidavit to show cause, a notice of preliminary objection and a counter-affidavit to their originating summons.
He added that earlier in the morning, the NDIC served them with a counter-affidavit and a preliminary objection.
Silas, however, restated that the day’s hearing was for the defendants, especially the NDIC, to show cause why their application should not be granted.
He said that from what the NDIC served on them, the agency had not shown any cause.
He said although the CBN revoked their licences, they still had 30 days to appeal against the apex bank’s action, hence the need to restrain the NDIC from liquidating the two mortgage financial institutions until the hearing and determination of the substantive suit.
The lawyer argued that if the NDIC was allowed to liquidate the plaintiffs and the court eventually found that the CBN’s action was unlawful, his clients would have been prejudiced.
He therefore sought an order for parties to maintain the status quo pending the determination of the matter.
But Ezeah vehemently opposed Silas’ application.
According to her, counsel for the plaintiffs was already delving into substantive issues.
“We have a matter of jurisdiction here,” she said.
Ezeah, who described jurisdiction as “the lifewire of a case,” argued that it must be determined first.
Citing a 2022 Supreme Court decision between Waziri and the PDP, she said issues of jurisdiction must be resolved before any other matter.
Shehu, who appeared for the NDIC, aligned with Ezeah’s submission.
He insisted that the corporation was acting in accordance with its statutory powers.
The lawyer told the court that they had also filed a preliminary objection and that the application was ripe for hearing.
“What should be done now is to adjourn for a date to allow counsel for the plaintiffs to respond so that our applications can be heard,” he said.
Responding, Silas said that while the case was pending, the NDIC was continuing with liquidation actions.
“All we are asking for is for parties to stay action,” he said, citing the Savannah Bank case.
Shehu, however, said the court was aware that once the licence of a financial institution is revoked, the NDIC is empowered to take over in the interest of depositors.
Silas countered that the law gives the plaintiffs a 30-day window to challenge the CBN’s action, but the NDIC was predicating its actions solely on the CBN’s decision.
“So they should allow the plaintiffs, because the plaintiffs will surely succeed,” he said.
He also argued that their application was in the interest of depositors, noting that the NDIC could only pay a maximum of N2 million per depositor, even if a depositor had N1 billion with the plaintiffs.
Shehu said the NDIC’s action became necessary because depositors were no longer able to access their funds.
He added that shareholders could seek damages if they eventually succeeded in the case.
“And that is what they are entitled to if they succeed at the end,” he said.
Justice Nwite asked Silas whether it would be fair to make any order when the defendants had filed preliminary objections challenging the court’s jurisdiction.
“What we are trying to do is to preserve the res, my lord,” Silas replied.
“I don’t want to embark on an exercise in futility, and that is why I am being careful,” the judge said.
Justice Nwite, who described jurisdiction as the threshold of a case, adjourned the matter until January 21 for the hearing of the defendants’ preliminary objections.
