The Court of Appeal has dismissed an appeal filed by a consortium of banks against companies linked to the Sahara Power Group, affirming an interim injunction and ordering an accelerated hearing of the substantive suit.
In a unanimous judgment delivered by a three-member panel led by Justice Joseph Eyo Ekanem, the appellate court held that the appeal lacked merit and upheld the earlier orders of the Federal High Court restraining the banks and their appointed receiver from taking further actions over the disputed assets pending determination of the case.
The dispute involves Kepco Energy Resources Limited, NG Power-HPS Limited, and New Electricity Distribution Company Limited, all affiliated with Sahara Power. The companies had challenged the appointment of a receiver/manager by the lenders under a credit facility arrangement, arguing that the enforcement action was premature, unjustified, and in breach of agreed conditions.
A key issue before the court was whether the companies could validly institute the suit without first obtaining the consent of the receiver/manager, Kunle Ogunba (SAN), who also acted as counsel to the banks.
Ogunba had relied on provisions of the Companies and Allied Matters Act (CAMA), arguing that once a receiver is appointed, directors are stripped of authority to commence legal proceedings without the receiver’s approval.
However, counsel to the respondent companies, Bode Olanipekun (SAN), contended that the law recognises an exception where the very appointment of the receiver is being challenged. He argued that requiring consent from the same receiver whose appointment is in dispute would be legally untenable.
Agreeing with this position, the court held that no such consent is required where the legality of the receivership itself is contested. It noted that insisting on prior approval in such circumstances would effectively deny companies the right to challenge actions imposed on them.
The appellate court further found that the case raises serious triable issues, including whether the alleged debt had crystallised and whether the conditions precedent for appointing a receiver had been fulfilled.
It also observed that evidence before the trial court suggested that the companies were still receiving funds at the relevant time, lending weight to their claim that enforcement actions may have been premature.
On the interlocutory injunction, the court ruled that the trial judge properly exercised discretion in granting the order to preserve the subject matter of the dispute.
Accordingly, the Court of Appeal affirmed the subsisting injunction restraining the banks and receiver from further steps and directed that the substantive matter be heard expeditiously.