Why Innoson sued GTBank for N30 billion

What would make a company sue another for N30 billion? That was the question on the lips of many when the news recently broke that four companies under the Innoson Group, including Nigeria’s first indigenous automobile manufacturing company (Innoson Vehicle Manufacturing Company Limited), had slammed a N30 billion suit on a bank as damages for the freezing of 18 bank accounts belonging to Innoson companies.

The figure was broken into three: N20 billion was for freezing of their bank accounts in all Nigerian banks from September 1, 2014 to June 15, 2015. N5 billion was for reputational damages and/or injuries suffered by the companies. Another N5 billion was for general damages.

What led to all this? Investigation shows that Innoson and the bank have had a business relationship since 2003. But all that was to change when the Nigerian Customs Service Board seized and auctioned some goods imported by Innoson despite satisfying the importation requirements.

That cost Innoson a lot and it subsequently went to court. In an order absolute, the court had ordered the bank to pay Innoson N2,048,737,443.67 from Customs account. The bank appealed the judgment, but the Court of Appeal, Ibadan affirmed the judgment of the Federal High Court and ordered the bank to pay the judgment debt of N2,048,737,443.67 to Innoson.

The decision was a unanimous one. In his judgment, Justice Chidi Nwaoma Uwa of the Court of Appeal, Ibadan, concluded thus: “I cannot see any reason to fault the order of the learned trial judge. In the final analysis, the order absolute is hereby affirmed. The appeal is without merit; I dismiss same. The Ruling of the trial judge Shakarho, J. of the Federal High Court, delivered on 29th July, 2011 in Suit FHC/L/CS/603/2006 is hereby affirmed.”

Justice Monica Bolna’an Dongban-Mensem added: “I have nothing useful to add to the lead judgment prepared by my learned brother Chidi Nwaoma Uwa JCA. The decision of the Federal High Court holden in Ibadan pronounced by Hon Justice J. E. Shakarho (J) on the 29th day of July, 2011 is hereby affirmed and the consequential orders are as made in the lead judgment.”

Justice Obietonbara Daniel-Kalio agreed: “I have had the privilege of reading, in draft, the lead judgment delivered by my Lord Chidi Nwaoma Uwa J.C.A. My Lord covered all the salient questions that arose under the issue for the determination and came to a conclusion that I entirely agree with. I am also of the view that the appeal lacks merit. It is accordingly dismissed.”

Before then in 2010, Innoson Nigeria Limited had secured a facility of N2.4 billion from the bank to partly finance the importation of new motorcycles and motorcycle spare parts, agricultural spare parts and plastic manufacturing equipment respectively for a period of 365 days. In 2011 the facility was restructured to a three-year-term loan and was said to stand then at N1,478,386,859.66 as at July 31, 2011.

However, in 2012 Innoson discovered that there were some strange charges on its account with the bank. It got its account audited and it was found out that the bank had deducted N786,205,955.99 as charges. It sued the bank. On May 16, 2013, Justice Salihu granted Innoson the sum of N559,374,072.09 against the bank, “with a 22 percent interest on the admitted sum to be paid from March 1, 2004 and at the same rate of 22 percent till satisfaction of the judgment debt.” Justice Salihu added: “Again the 1st defendant/respondent (the bank) is to pay a penalty of 100 percent of the amount as provided by the Central Bank of Nigeria Monetary, Credit, Foreign Trade and Exchange Policy Guideline for Fiscal Year 2012/2013 (circular No.39 of January 2012).”

On May 23, 2013, Justice Salihu granted an order of garnishee nisi of N4,739,037,712.66 against the bank to be paid to Innoson.

The bank appealed the judgment of the Awka High Court, but the Court of Appeal, Enugu Division, upheld the judgment and ordered the bank to pay the judgment debt, which stood at over N5.7 billion, into an interest-yielding account in the name of the Chief Registrar of the Court of Appeal. However, the bank has appealed to the Supreme Court.

Not long after that, the bank secured an ex parte order on Innoson Nigeria Limited, dated September 1, 2014 with suit number FHC/L/CS/1119/2014, filed before a Federal High Court in Lagos, between the bank and Innoson Nigeria Limited, issued by Justice Okon Abang, ordering that, pending the hearing and the determination of the substantive suit, all commercial banks in Nigeria were restrained from accepting, honouring, or giving effect in any manner whatsoever to any mandate or instruction presented to them by Innoson companies or any of its agents or nominees for withdrawal of any sum of money standing to the credit of any account maintained by the company in all the banks.”

On June 10, 2015, Justice Saliu Saidu of the Federal High Court, Lagos struck out the ex parte order freezing the bank accounts of the companies in Innoson Group. Innoson then slammed a N30 billion suit on the bank for what it had suffered in monetary terms and reputational terms during the months when the accounts of its companies in all Nigerian banks were frozen.

With Innoson winning the two separate cases at the High Court as well as the two at the Appeal Court, the bank had appealed to the Supreme Court. The latest N30 billion suit by Innoson makes the cases three. Both parties are bent on getting justice via the court. But one wonders if an out-of-court settlement is not considered by any of them.

Reacting to the legal tussle, public relations practitioner, Mark Idehen, noted that these are two Nigerian brands that bring pride to the nation. He said: “It is hoped that they will resolve this matter as quickly as possible and sheathe their swords or get the court cases dispensed with as soon as possible, so that they can squarely face their primary role of attending to the needs of their numerous customers.”

In his reaction, Kayode Thomas, a public affairs analyst, said: “This case underlines the recurring problem of illegal charges by banks, which most people don’t notice unless they are knowledgeable in financial matters or pay attention to details. There is also the problem of Customs always being quick to auction the goods of people for some flimsy reasons. They and their cronies end up buying these auctioned goods at ridiculously low prices, while the importers lose everything as well as the value they would have added to the economy.”

While these two business giants slug it out in the court, the nation waits, hoping that the issue will end as quickly as possible.

Eban is a Lagos based attorney.