A High Court of the Federal Capital Territory, FCT, has ordered a commercial bank to pay N85million damages for freezing its customer’s account without a valid court order.
The court, in the judgement that was delivered by Justice S. U. Bature, further directed both the bank and the Nigeria Police Force, NPF, to publish a public apology to the customer, Abhulimen & Co, in two national newspapers and on its website.
Justice Bature held that the bank’s decision to freeze the account, based on a supposed order by a Magistrate Court, without notifying the said customer, was illogical and a betrayal of the banker-customer relationship that existed between the parties.
The court wondered how the financial institution which had a legal department that is manned by lawyers, hinged its action on an invalid order by a Magistrate Court that lacked the jurisdiction to entertain any banking related case, including issuing orders for the freezing of an account.
The judgement followed a suit marked: FCT/HC/CV/2194/2024, which was brought before the court by Mr. Paulyn O. Abhulimen, SAN.
Cited as 1st and 2nd defendants in the matter were Zenith Bank Plc and the Nigeria Police Force, NPF.
The claimant had through the law firm of Kehinde & Partners LP, approached the court, claiming that sometimes in 2024, after being unable to access the account of her firm – Abhulimen & Co – or to make transactions with it, she discovered that the bank placed a Post-No-Debit, PND, order on it.
According to the claimant, she subsequently contacted an official of the bank that was in charge of the account, who told her about the restriction, following which the bank, in March 13, 2024, claimed to have frozen the account based on an order the NPF obtained from a Chief Magistrates Court in Mararaba Gurku, Nasarawa State.
In his judgement, Justice Bature held that the bank acted on an invalid order made by a court that lacked the requisite jurisdiction.
“The rationale behind seeking the said order at a Magistrate Court under the Nasarawa State jurisdiction cannot be understood, and the 2nd defendant did not appear to be able to give any explanation or reason as to why they decided to follow this line of action.
“The said Magistrate Court lacked the territorial jurisdiction to entertain the application.
“And, regarding the substantive jurisdiction of the court to make the order, it is clear from the provisions of Section 251 of the Constitution of the Federal Republic of Nigeria (1999 as amended), that matters relating to banks and banking transactions are within the exclusive jurisdiction of the Federal High Court, and matters relating to banker-customer disputes are jointly under the jurisdiction of the Federal High Court, State High Courts and High Court of the FCT,” the court held.
Justice Bature further maintained that the Magistrate Court was bereft of the powers to entertain an application for an order to freeze a bank account of a person, and should not have entertained the said application.
“The legal department of the 1st defendant, being lawyers, should have been aware of this position of the law and taken the appropriate action in this situation, as they ought not to have obeyed the court order in the first place.
“Thus, the 1st defendant was wrong to have placed a PND on the account of the claimant based on the order of a court lacking the requisite jurisdiction to do so. I so hold,” Justice Bature held.
He judge faulted the failure of the bank to inform the claimant about its decision to freeze her company’s account, describing it as a breach of the duty of care it owed to its customers.
“It is the humble opinion of this honourable court that, the 1st defendant owed the claimant a duty of care of duly informing her that her account had been frozen.
“The 1st defendant placed a Post-No-Debit on the account of the claimant’s firm, but same was not communicated to the claimant until she encountered difficulties in the use of the said account.
“It is the humble opinion of this honourable court that, the 1st defendant owed the claimant a duty of care of duly informing her that her account had been frozen
“The failure of the 1st defendant to inform the claimant of the state of affairs on her account amounts to negligence on the part of the 1st defendant and hence, a breach of duty of care and due diligence owed to the claimant. I so hold,” the court added.
Consequently, aside from ordering the 1st defendant to immediately vacate the Post-No-Debit order placed on the claimant’s account an to tender an apology to the claimant, the court awarded damages in favour of the litigant.
“The defendants are hereby ordered to jointly and severally pay the sum of N60million to the claimant as general damages for the embarrassment, psychological trauma, financial distress, emotional stress and grave inconveniences suffered by the claimant due to the defendants’ actions.
“The defendants are hereby ordered to jointly and severally pay the sum of N25m to the claimant as cost of this action,” the court further held.
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