Justice Daniel Osiagor of the Federal High Court in Lagos has ruled that the sale and alienation of assets, including stock belonging to Kay Nath Nigeria Limited, by an old generation bank is illegal, null, and void. This judgment was delivered in a case marked FHC/L/CS/459/2004, where Kay Nath Nigeria Limited sought redress against the bank.

The court ordered the bank to refund the sum of N143,297,700 to Kay Nath, highlighting that the Joint Venture Agreement (JVA) between the two parties was still valid as of March 11, 2004. Justice Osiagor stated, “Parties are bound by the terms of a contract,” and emphasized that the JVA contained explicit terms regarding the company’s obligation to liquidate its debt to the bank.

In his calculations, the judge determined that the valuation of the company’s assets was N246,829,500, minus the cost of a generator and further depreciation for wear and tear, resulting in the ordered refund of N143,297,700. The court did not grant interest on this amount.

The plaintiff’s legal representative, Adenrele Adegborioye of BA Law LLP, argued that the removal and sale of the company’s assets were conducted illegally, as the Chief promoter was excluded from management decisions despite the JVA. The plaintiff sought declarations affirming their entitlement to access and control of their premises at Ajao Estate, Lagos, as well as a declaration that the bank’s takeover of the company’s management was ultra vires, meaning it exceeded the bank’s legal power.

Conversely, the bank contended that, as a mortgagee, it had the right to execute its power of sale over the plaintiff’s properties, referencing the Investment Mortgage Agreement dated November 16, 1992. In its counterclaim, the bank sought N131,811,183.70 as the outstanding balance on the plaintiff’s account.

The court’s ruling reinforces the need for compliance with contractual obligations and protects the rights of businesses against unlawful actions by financial institutions.