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CaseLaw

IMB (Nig.) Ltd. V. Speegaffs Co. (Nig.) Ltd. (1997) CLR 4(n) (CA)

Brief

  • Petition for winding up; condition precedent
  • Treatment of unopposed winding-up petition
  • Right of unsecured creditor to petition for winding-up
  • Unpaid creditor

Facts

The respondent applied for a loan of N130,000.00 from the appellant.. Appellant made an offer in writing on 7 November 1985 to give the loan on the following conditions which the respondent accepted.

The conditions were:

  • (a)
    secured current loan facility of N130,000.00 to be made available to the respondent at the option of the appellant for up to 90 days for the purpose of financing a contract for the supply of chemicals to Shell Petroleum Development Company of Nigeria Limited (Shell);
  • (b)
    Collateral in the form of
  • (i)
    an equitable mortgage over land provided by the company at Iponri Lagos and
  • (ii)
    an undertaking from Shell to domiciliate payment in respect of the supplies with the bank.

By December, 1986, a total of N113,629.64 was outstanding and the bank made a demand for repayment by letter of that date. The company in promised to liquidate the debt as soon as the contract with Shell was executed and proceeds received from supply made.

The bank sent a final demand notice on 26 February 1987 for the repayment of the principal and interest which then stood at N124,550.90. When the respondent failed to comply, the appellant proceeded to file a winding-up petition against it on the grounds that it had become insolvent and unable to pay its debt which was said to be N130,807.60 as at 31 May 1987.

HOn 14 September 1988, a motion on notice to advertise the petition for winding up was filed. Respondent countered that an offer of N20,000.00 was made in March, 1987 which was not accepted. The motion on notice to advertise the winding-up petition was argued and granted and the advertisement was done.

Respondent did not file any affidavit in opposition to the petition. The trial court however allowed the respondent to rely on the counter affidavit filed by the respondent in opposition to motion on notice to advertise the petition at the hearing of the petition.

Judgement found that the respondent has not neglected to pay its debts in terms of Section 210(a) of the Companies Act, 1968 on the grounds that:

  • (i)
    The debt was a secured loan and hence winding-up petition could not be filed.
  • (ii)
    The respondent made some efforts to pay up. The petition to wind-up was accordingly refused and the appellant was non-suited. The appellant was dissatisfied with the decision of the trial court and appealed to the Court of Appeal.

Issues

  • 1.
    Whether the Federal High Court was right in not treating the petition as...
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