The Court of Appeal has upheld an interim injunction in favour of companies linked to the Sahara Power Group, dismissing an appeal filed by a consortium of banks seeking to overturn the order.
A three-member panel of the appellate court, led by Justice Joseph Eyo Ekanem, ruled unanimously that the appeal had no merit. The court affirmed the Federal High Court’s earlier decision, which restrained the banks and a court-appointed receiver from taking further action over disputed assets until the main suit is determined. It also directed that the substantive case be heard on an accelerated basis.
The dispute involves Kepco Energy Resources Limited, NG Power-HPS Limited, and New Electricity Distribution Company Limited, all connected to Sahara Power. The companies challenged the appointment of a receiver/manager by their lenders under a credit facility, arguing that the enforcement action was premature and breached agreed loan conditions.
A central issue in the case was whether the companies could file their lawsuit without first obtaining consent from the receiver/manager, Kunle Ogunba (SAN), who also represented the banks. Ogunba argued that under the Companies and Allied Matters Act (CAMA), directors lose the authority to initiate legal action once a receiver is appointed unless approval is obtained.
However, counsel for the companies, Bode Olanipekun (SAN), argued that an exception exists where the legality of the receivership itself is being challenged. He maintained that it would be unreasonable to require consent from the very receiver whose appointment is under dispute.
The Court of Appeal agreed, holding that consent is not required in such circumstances. It stated that insisting otherwise would unfairly prevent companies from challenging potentially unlawful appointments.
The court also noted that the case raises substantial legal questions, including whether the alleged debt had actually crystallized and whether proper procedures were followed before appointing the receiver. It further observed indications that the companies were still receiving funds at the time, supporting claims that enforcement may have been premature.
In upholding the interim injunction, the court said the trial judge properly exercised discretion in preserving the subject matter of the dispute. The appellate court therefore maintained the order restraining the banks and receiver and instructed that the main case proceed without delay.