The Federal High Court in Abuja has struck out a N374bn agricultural loan suit filed by the Ginger Growers, Processors, and Marketers Association of Nigeria against Keystone Bank over claims related to the Anchor Borrowers’ Programme.
The Anchor Borrowers’ Programme, launched by the CBN in 2015, was designed to support smallholder farmers by linking them with financial institutions for loans disbursement.
Justice Obiora Egwuatu, in his ruling, struck out the suit on jurisdictional grounds, emphasising that the plaintiffs failed to serve a pre-action notice to Keystone Bank as required by their contractual agreement.
The suit, filed on behalf of 31,309 farmers, accused Keystone Bank of failing to disburse N8.6bn out of the N335bn approved loan facility, despite receiving the funds from the Central Bank of Nigeria for onward distribution to the farmers in March 2020.
The plaintiffs also sought an additional N30bn in general damages for an alleged breach of the banker-customer relationship.
The ginger farmers’ association, a registered cooperative, stated that it applied for the Anchor Borrowers’ Programme and nominated Keystone Bank as its Participating Financial Institution.
The association claimed that the CBN released the loan amount to Keystone Bank, expecting disbursement within 10 working days.
However, the plaintiffs alleged that Keystone Bank delayed notification of the loan approval until July 29, 2020, failed to disburse the funds within the stipulated period, withheld the funds for over five months, and later returned the loan sum to the CBN without informing the farmers.
“The CBN released the approved loan sum of N8,679,289,368.92 to Keystone Bank for onward disbursement to the plaintiffs within 10 working days in March 2020,” the plaintiffs stated.
They further alleged that the bank “converted for its own use the sum of N8,679,289,368.92 received from the CBN for the sole and exclusive use of the plaintiffs under the Anchor Borrowers’ Programme, thereby depriving them of access to the funds.”
Keystone Bank, through its counsel Dr. Sonny Ajala (SAN), countered the allegations, arguing that the Anchor Borrowers’ Programme guidelines were merely advisory and had no binding legal force.
The bank stated that, as a commercial institution, it had discretionary powers over the disbursement of loans.
It claimed to have offered the loan to the farmers in September 2020 but maintained the right to withhold or return the funds based on CBN directives.
The bank also maintained that the plaintiffs failed to meet the procedural requirement of serving a pre-action notice before filing the lawsuit.
“It is a precondition that must be complied with. Any action commenced in breach of this requirement would be incompetent,” Justice Egwuatu ruled.
He further emphasised that “where a court has declined jurisdiction, it also lacks the power to take any further action.”
“A court without jurisdiction cannot make further orders or take any steps beyond declaring its lack of jurisdiction. Any action taken thereafter is a nullity,” the judge said.
The CBN, represented by Dr. U.Y. Hassan, confirmed that it released the loan sum to Keystone Bank on July 15, 2020, but the bank later returned the funds, citing non-disbursement.
“Upon receipt of this letter, the CBN, in line with its role in coordinating the programme and in accordance with its contractual obligations, accepted the repatriation of the loan sum by Keystone Bank,” Hassan stated.
Justice Egwuatu upheld Keystone Bank’s argument, ruling that the plaintiffs’ failure to issue a pre-action notice rendered their suit incompetent.
Consequently, the case against Keystone Bank was struck out.
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