Court of Appeal, Lagos Division Sets Aside Federal High Court Judgment in Receivership Case of Algrain Foods Limited

Precious Ugwuzor 

The Court of Appeal, Lagos Division, has set aside the judgment of the Federal High Court delivered by Honourable Justice Ambrose Lewis-Allagoa on 3rd November 2021 in the receivership case involving Algrain Foods Limited and the takeover of the private properties of its Managing Director, Chief Anthony Obidulu, by Senior Advocate of Nigeria (SAN) Emmanuel Adeyeye Oyebanji.

In a unanimous decision on Thursday, 6th February 2025, the appellate court ruled that the trial court erred in granting Oyebanji, who was not a party to the original suit, the authority to take possession, manage, and sell the assets of Algrain Foods Limited and Chief Obidulu.

Algrain Foods Limited, through its lawyer, Chief Aloysius C. Ezenduka, had challenged the Federal High Court’s ruling at the Court of Appeal. Delivering the lead judgment, Hon. Justice Paul Ahmed Bassi held that the trial court lacked jurisdiction because proper parties were not before it. The justices cited legal precedents, including U.O.O. Nigeria Plc vs. Okafor & Ors (2020) and Cotecna Int. Ltd vs. Churchgate (Nig) Ltd & Anor (2010), to affirm that the absence of proper parties affects the jurisdiction of the court, rendering its decision invalid.

The Court of Appeal noted that in Appeal No. CA/L/380/2018, delivered on 19th March 2020, it had ruled that the Receiver-Manager, Oyebanji, was not properly joined in the suit. The appellate court had then set aside the Federal High Court’s decision and ordered a retrial before another judge, but that order was not followed, leading to the present appeal.

The Court of Appeal ruled that the Federal High Court lacked jurisdiction to grant Oyebanji possession of Algrain Foods Limited’s assets and that the lower court’s judgment was legally flawed due to the absence of proper parties. It declared the takeover of Algrain Foods Limited by First City Monument Bank Plc (FCMB) and its agents unlawful, upheld Chief Obidulu’s appeal, and struck out Suit No. FHC/L/CS/06/2017, including all orders made by the trial court.

Chief Obidulu has argued that FCMB’s enforcement of the loan was illegal. He maintained that at the time FCMB appointed the Receiver, the All Assets Debenture the bank sought to enforce had not crystallised. He contended that the takeover of Algrain Foods Limited in 2017 deprived the company of its revenue from manufacturing operations and denied him personal income from his warehouses.

Algrain Foods Limited had received a ₦100 million loan in 2011 under the Federal Government’s Small and Medium Enterprises Credit Guarantee Scheme (SMECGS). The loan, guaranteed by the Central Bank of Nigeria (CBN) up to 80%, had a repayment tenure of seven years, ending in November 2020. Obidulu accused FCMB of concealing crucial loan documents from the Federal High Court while obtaining the receivership order.

In a related case, Obidulu’s lawsuit against FCMB is ongoing at the Lagos High Court, Osborne Foreshore Estate II. In Suit No. LD/3873/CMW/2018, he is seeking redress for trespass and the alleged illegal takeover of his personal assets.

On 26th November 2024, FCMB’s counsel, Prof. Taiwo Osipitan, cross-examined Obidulu on his claims. He argued that, contrary to FCMB’s assertions, his factory property at Plots 15/17 Canal Estate, Lagos, was not used as collateral, as there had been no actual “draw down” on the loan amount in question. The case, presided over by Hon. Justice (Dr) Olukolu, is scheduled for further hearing at a later date.

The Court of Appeal’s ruling overturns the Federal High Court’s judgment and reinforces the principle that legal proceedings must adhere to due process. With the Lagos High Court case still ongoing, further legal developments in the dispute between Algrain Foods Limited and FCMB are expected.