Banks have no right to freeze customers account - Appeal court berates Fidelity bank
Category: Products & Services
By Mustapha OGUNSAKIN, National Mirror / first published January 23, 2012
The Court of Appeal, Lagos has ruled that banks have no right to freeze their customers account without a proper order of court.
The court further ruled that there is no law that confers power on banks to freeze a customer's account. Justice Sidi Dauda Bage of the appellate court delivered the judgment, upholding the judgment of Justice Iyabo Kasali of Lagos High Court who had delivered the same judgment at the lower court on September 29, 2005. It was in a case that involved Fidelity Bank and a private company, Bayuja Ventures Limited and its Managing Director, Mr Bashir Jamoh. The company and Jamoh were customers of the Apapa branch of the bank. On October 8, 2002, the bank froze the accounts of the plaintiffs by entering a no debit status on the accounts.
The bank alleged that the plaintiffs colluded with its Apapa branch manager, Mr Suleiman Lere, who allegedly defrauded the bank of N30 million, using the plaintiffs account. The bank alleged that the fraud was carried out via a draft and third party cheques belonging to the National Maritime Authority (now NIMASA). The sums were traced to the plaintiffs two accounts. The plaintiffs, however, claimed ignorance of the transactions and further insisted that the branch manager used their account for the fraud without their consent.
At the high court, the bank pleaded three different entries into the account made by Lere, the branch manager. The first was the illegal and unauthorized crediting of the second plaintiff's evergreen savings account with the sum of N20.6 million by Lere. Others are the fraudulent conversion of three NIMASA cheques in the value of N4.6 million, and crediting it into the account of the first plaintiff; and the complicity of the second plaintiff in obtaining a N30 million draft which was not paid into the either of the accounts.
The plaintiffs, apparently dissatisfied with the action of the bank, filed a suit before the Lagos High Court seeking to order the bank to lift the no debit status placed on its account; the release of N20 million being the balance in the account; and N20 million as general damages.
The suit was filed by their lawyer, Dele Adesina SAN. Justice Kasali, in her judgment, said that there was no evidence to link the plaintiffs with the fraud perpetuated by Lere who was in the employment of the bank. The trial judge referred to the statement of fraudster bank manager in which he exonerated the plaintiffs from the fraud. She further referred to the report of police investigations which also exonerated the plaintiffs. She, therefore, entered judgement in favour of the plaintiffs.
Not satisfied, the bank challenged the decision of the trial court before the Court of Appeal. The appeal filed by the bank's lawyer, Udom Udom formulated five grounds of appeal which includes the following: " Whether from the documentary and oral evidence placed before the trial court, the appellant proved the respondents complicity defrauding the appellant and benefited from the fraud; " Whether in view of banking practices, rules, and regulations, the sum of N4million transferred from the first respondent's account to the second respondent's account by the second respondent on September 30,2002, is a proceed of fraud.
In a unanimous judgement, the panel of justices at the appellate court, Justices Bage, John Inyang Okoro, and Helen Moronkeki Ogunwumiju upheld the decision of the trial court. In the lead judgement read by Justice Bage, the court maintained that the statement of Lere clearly and unequivocally admitted to the commission of the fraud against the appellant.
He also clearly maintained the fact that he committed the crime of using the respondents account without the second respondents knowledge; These are documentary evidence that oral testimonies cannot be admitted to alter, vary, subtract, or added to, especially where such documents brood no ambiguity.
In the final analysis, having resolved the sole issue formulated by the court in the determination of the appeal in favour of the respondents and against the appellant, this appeal is devoid of any merit and it is hereby dismissed . In concurring with the lead judgment, Justice Ogunwumiju said: It amounts to nothing more than a resort to self help which is unacceptable, and which amounts to lawlessness and brigandage for the appellant to unilaterally freeze the account of the respondents.
No one is allowed to resort to self help, if not, we shall all descend to a state of anarchy . In his own concurrence, Justice Okoro said: The procedure in all civilized countries, including Nigeria , is that suspects are reported to law enforcement agencies who, after investigations and if suspect is found culpable, is charged to court. It is only the court that can pronounce a person guilty of a crime. No other institution or individual is endowed with such power.