Supreme Court Upholds AMCON Act Ouster Clause in Landmark 11 Plc vs Milan Case
The recent Supreme Court decision in Appeal No: SC/CV/374/2023 – 11 Plc v. Milan Industries Limited marks a significant doctrinal refinement on two critical legal issues that have long plagued practitioners with uncertainty. This judgment, while addressing various legal positions from jurisdiction to company law, zeroes in on two central points: the court's jurisdiction over sales of eligible bank assets by the Asset Management Corporation of Nigeria (AMCON) and the limited effect of stamp duty on secured credit transactions. This ruling redefines the legal landscape, providing much-needed clarity and setting a precedent for future cases.
Case Background and Summary
Milan Industries Limited obtained credit facilities from Skye Bank Plc, now Polaris Bank Limited, pledging its property at Plots 244 and 255 Kofo Abayomi Street, Victoria Island, Lagos—home to the Lagos Continental Hotel—as security via a Deed of Legal Mortgage. The deed was properly registered with the land registry and Corporate Affairs Commission under the Companies and Allied Matters Act (CAMA). However, stamp duties were paid based on an assessment of 2 billion Naira, despite the loan eventually accruing interest beyond 15 billion Naira. After Milan defaulted, the non-performing loan was purchased by AMCON as an eligible bank asset under the AMCON Act, and the property was sold to 11 Plc.
Dissatisfied, Milan filed a suit at the Federal High Court against Polaris Bank, AMCON, and 11 Plc, seeking to set aside the sale. Milan argued that, although its liability exceeded 15 billion Naira, it had discharged the 2 billion Naira debt for which the instrument was stamped, thus nullifying the security. Relying on section 202 of CAMA 1990 (now section 227 of CAMA 2020), Milan contended the creditor could not resort to the security beyond the stamped amount. The trial court dismissed the suit, but the Court of Appeal sided with Milan, ruling that the security was discharged upon payment of the maximum secured amount of 2 billion Naira.
Jurisdiction of the Court Over AMCON Sales
In response, 11 Plc, represented by Chief Wole Olanipekun, CFR, SAN, appealed to the Supreme Court, challenging the Court of Appeal's decision on multiple grounds, including the court's jurisdiction to interfere with AMCON sales. Olanipekun argued that sections 33A and 34 of the AMCON Act ousted the court's jurisdiction to challenge AMCON's acquisition of eligible bank assets. He emphasized that the Court of Appeal erred by imposing conditions not present in the statute, referencing Abegunde v. Ondo State House of Assembly (2015) to advocate for a strict, ordinary interpretation of unambiguous provisions.
Conversely, Milan's lead counsel, Mr. Ahmed Raji, SAN, contended that these AMCON Act sections were ouster clauses inconsistent with the judicial powers under section 6 of the Nigerian Constitution. The Supreme Court, per Justice Nwosu-Iheme, concurred with the appellants, noting that section 34(6) of the AMCON Act is indeed an ouster clause. The court held that while access to courts can be restricted by statute, such ousters must be construed strictly and require express wording. Justice Abiru added that the combined provisions of sections 33A, 34(1)(a), 34(2), 34(3), and 34(6) extinguish the right to challenge AMCON purchases, limiting grievances to monetary compensation claims only, with retrospective effect.
This decision resolves ongoing debates on the constitutionality of these AMCON Act provisions, countering earlier Court of Appeal rulings like AMCON v. Shittu (2020) and Jumbo V AMCON & Others (2020), which had deemed such clauses null and void for curtailing judicial discretion. The Supreme Court clarified that, while courts naturally resist ouster clauses, they must adhere to clearly worded statutory prohibitions.
Stamping and Up-Stamping Under CAMA
Another key issue was Milan's claim that the security under the Deed of Legal Mortgage was void for amounts exceeding the 2 billion Naira stamped. The Court of Appeal had supported this, but the Supreme Court focused on interpreting sections 197, 199, and 202 of CAMA 1990 (now sections 222, 224, and 227 of CAMA 2020). Olanipekun argued that, under section 199 of CAMA, the duty to register and pay stamp duty fell on Milan, and its failure to up-stamp to the full liability could not excuse it from debt. He cited equity principles from cases like Omobare v. New Nigerian Bank Limited (1986) and Adedeji v. National Bank of Nigeria (1989), asserting that a party cannot benefit from credit while disclaiming liability through procedural irregularities.
The Supreme Court also considered foreign jurisprudence, such as Independent Automatic Sales Ltd v Knowels and Foster [1962] from the English High Court, which interpreted similar provisions to mean that only liquidators or creditors, not the company itself, could challenge charges for lack of registration. In contrast, Raji maintained that CAMA, not the Deed of Legal Mortgage, governs charge enforcement, with section 202 tying enforceability to stamp duty paid.
Justice Nwosu-Iheme, in the lead judgment, criticized Milan for "approbating and reprobating," noting it acknowledged a 13 billion Naira debt while arguing the property could not liquidate it. Justice Abiru emphasized that statutory interpretation should avoid injustice, highlighting that CAMA's registration requirements protect liquidators and creditors, not debtor companies. The court ruled that Milan could not evade liability by relying on its own stamp duty default.
Conclusion and Legal Implications
Beyond the specific dispute, this Supreme Court decision streamlines who has locus standi to invoke CAMA provisions regarding stamp duty adequacy. It reaffirms that parties cannot benefit from contracts while contesting their validity and clarifies obligations for registering company charges. By activating the practical essence of section 224 of CAMA 2020, the court provides judicial finality on default implications and liability extent. This ruling not only settles protracted legal uncertainties but also reinforces the enforceability of AMCON's statutory framework, impacting future secured transactions and asset recoveries in Nigeria's financial sector.
