Propriety of Federal Government Policy

CASE TITLE: A.G OF KADUNA STATE & ORS v. A.G OF THE FEDERATION & ORS (2023) LPELR-59936(SC)

JUDGMENT DATE: 3RD MARCH, 2023

PRACTICE AREA: GOVERNMENT/GOVERNMENT AGENCY

LEAD JUDGMENT: EMMANUEL AKOMAYE AGIM, J.S.C.

SUMMARY OF JUDGMENT:

INTRODUCTION:

The main thrust of this appeal evolves around the propriety or otherwise of the exercise of the powers (monetary policies) of the President acting through the Central Bank.

FACTS:

On 26-10- 2022, the Governor of the Central Bank of Nigeria by Press Remarks during a special press briefing at the Central Bank of Nigeria announced that the President of the Federal Republic of Nigeria has given the Central Bank of Nigeria the approval to redesign, produce, release and circulate new series of bank notes at N200, N500 and N1000 levels and to call in or withdraw from circulation existing bank notes of the same levels, that in line with the approval, the Central Bank of Nigeria has finalized arrangements for the new currency to begin circulation from 15-12-2022 after its launch by the President, that the new and existing currencies shall remain legal tender and circulate together until 31-2-23 when they shall cease to be legal tender, that this naira redesign policy would in addition to ensuring that our legal tender is strong and effective, deepen our drive to entrench cashless economy, help rein in the huge currency outside the banking system, thereby making monetary policy more efficacious and help minimize incidents of terrorism and kidnapping through the reduction or elimination of the large volume of money outside the banking system used as source of funds for ransom payments.

The Central Bank of Nigeria wrote a letter dated 6-12-2022 headed “Naira Redesign Policy – Revised Cash Withdrawal Limit” to all Deposit Money Banks (DMBS), other Financial Institutions (Payment Service Banks (PSBS), Primary Mortgage Banks (PMBS) and Microfinance Bank (MFBS) directing them that the:

“1. The maximum cash withdrawal over the counter (OTC) by individuals and corporate organizations per week shall henceforth be N100,000 and 54500,000 respectively. Withdrawals above these limits shall attract processing fees of 5% and 10% respectively.

2. Third party cheques above 5450,000 shall not be eligible for payment over the counter, while extant limits of 1410,000,000 on clearing cheques still subsist.

3. The maximum cash withdrawal per week via Automated Teller Machine (ATM) shall be 14100,000 subjects to a maximum of 5420,000 cash withdrawals per day.

4. Only denominations of 54200 and below shall be loaded into the ATMs.

5. The maximum cash withdrawal via the point of sale (POS) terminal shall be 1420,000 daily.

6. In compelling circumstances, not exceeding once a month, where cash withdrawals above the prescribed limits are required for legitimate purposes, such cash withdrawals shall not exceed 145,000,000.00 and N10,000,000.00 for individuals and corporate organizations, respectively, and shall be subject to the referenced processing fees in (1) above, in addition to enhanced due diligence and further information requirements”.

It stated therein that this is further to the naira redesign policy and in line with the Central Bank of Nigeria’s cashless policy.

The apex Bank again wrote a letter dated 21-12-2022 headed “RE: NAIRA REDESIGN POLICY – REVISED CASH WITHDRAWAL LIMITS” to the same addressees stating that following its letter of 6- 12-2022 on the naira redesign policy and revised cash withdrawal limits and based on the feedbacks it has received from stakeholders, it has reviewed the cash withdrawal limits as follows:

1. The maximum weekly limit for cash withdrawal across all channels by individuals and corporate organizations shall be N500,000.00 and N5,000,000.00 respectively.

2. In compelling circumstances where cash withdrawal above the limits in (1) above is required for legitimate purposes, such requests shall be subject to a processing fee of 3% and 5% for individuals and corporate organizations, respectively.

3. Further to (2) above, the financial institution shall obtain the following information from the customer, at the minimum, and upload the same on the CBN portal created for the purpose.

4. Third-party cheques above N100,000 shall not be eligible for payment over the counter, while the extant limit of N10 million on clearing cheques shall subsist.”

By 15th December 2022, the new naira notes were not available despite the assurances of the Federal Government that they would be introduced on that date. Most people had rushed to pay their existing currencies into their banks ahead of the dateline in the expectation that the new notes would be available by mid-December 2022. Their expectations were dashed as the new notes were scarcely available.

The Central Bank of Nigeria admitted in its press statement of 19-1-2023 that since the call in or withdrawal of the old banknotes started, the bank has received 1.9 trillion naira but did not state the amount of the new redesigned bank notes it has printed and made available to banks and other institutions to pay to persons that had returned or were still returning the old currencies. However, it is not in dispute that none of the banks country-wide had received enough new banknotes from the Central Bank of Nigeria to pay their customers the prescribed maximum amount of withdrawable cash of N5000 for individuals and N500,000 for corporate organizations per week.

For days running into weeks, many customers go to the banks or ATM machines and remain in long queues from early morning till evening and go back home empty-handed. In the few cases of payments being made, customers are paid as little as N1000, N2,000, N5,000, N20,000 irrespective of their huge bank deposits. While it remained very difficult to obtain or access the new naira notes in the banks, the old banknotes ceased to be legal tender after 31-1-2023.

Claiming that without consulting or seeking the advise of the National Council of States and the National Economic Council, which are bodies to which the Governors of the plaintiff States belong, and without prior notice or reasonable notice to the public, the President issued the directive or approval for the implementation of the redesign, production, release and circulation of the new bank notes and withdrawal of the old bank notes, that no Federal Executive Council or National Security Council meeting was called by the President to discuss the economic and security implications of the policy before his approval of the policy and that no consultation whatsoever took place between Federal Government of Nigeria and all stakeholders in the Nigerian economy, including state Governments, Federal and State legislatures, financial institutions, civil societies, professional bodies and other concerned persons before the President directed or approved the redesign production, release and circulation of the new bank notes and withdrawal of the old bank notes, that the implementation of the production, release and circulation of the new bank notes and withdrawal of the old bank notes has punished and inflicted pain and huge losses on their citizens, massively disrupted trades and businesses generally, particularly small and medium enterprises and the rural economies in their states, grinding to a halt all economic activities, made impossible the functioning of the State governance structures that require cash, the 1st to 3rd plaintiffs on 3-2-2023 commenced Suit No. SC/CV/162/2023 by originating summons praying for the determination of the following questions –

1. Whether the demonetization directive/policy by the President of the Federation to wit: withdrawal of the old 200,

500 and 100 Naira notes are consistent with the provisions of the Constitution of the Federal Republic of Nigeria 1999 (as amended) which make provision for the Executive Powers of the President of the Federation and the extant laws on the subject matter.

2. Whether the 3-month notice given for the implementation and completion of the said demonetization policy by which time the old N1000, N500 and N200 Naira notes shall cease to be legal tender satisfies the condition set out in Section 20(3) of the CBN Act 2007?

3. Whether the President can unilaterally give a directive to embark on the demonetization policy pursuant to Section 20(3) of the CBN Act, 2007, in view of Nigeria’s fiscal federalism, the economic interests of the constituents of the Federation and without consultation with, and advice from the plaintiffs individually, and in their capacity as members of the National Council of States and National Economic Council, and also whether such a Directive can be given without consultation with, and advise from the Cabinet, the National Security Council and other stakeholders?

4. Whether in issuing the directive for demonetization policy pursuant to Section 20(3) of the CBN Act, 2007 on behalf of the Federation of Nigeria, the President is not under an obligation to ensure that adequate structures are put in place for the plaintiffs and Nigerian citizens prior to the implementation of the said directives.

5. Whether the demonetization directive/policy by the President of the Federation to wit: withdrawal of the old 200, 500 and 1000 Naira notes does not unlawfully impede the exercise of the Executive Powers of the plaintiffs’ States and other obligations to facilitate and protect the welfare of the citizens of the said States pursuant to Section 5(2) and other provisions of the Constitution of the Federal Republic of Nigeria (as amended) as well as other extant laws?

6. Whether the directive given by the President pursuant to Section 20(3) of the CBN Act 2007 limiting the amount that can be withdrawn and the charges therein Constitutional and binding on the plaintiffs?

7. Whether, the directive given by the President pursuant to Section 20(3) of the CBN Act 2007, imposing a timeline for redeeming at face value the said old Naira notes is not contrary to the provisions of the said section 20(3) of the CBN Act and the Constitution of the Federal Republic of Nigeria 1999 (as amended)?

8. Whether the power the President of the Federation exercised expropriation against the plaintiffs’ States?

The reliefs claimed for in the originating summons are as follows-

“1. A DECLARATION that the demonetization directive/policy by the President of the Federation to wit: withdrawal of the old 200, 500 and 1000 Naira notes is not consistent with the provisions of the Constitution of the Federal Republic of Nigeria 1999 (as amended) which make provision for the Executive Powers of the President of the Federation and the extant laws on the subject matter.

2. A DECLARATION that the 3-month notice given for the implementation and completion of the said demonetization policy by which time the old N1000, N500 and N200 Naira notes shall cease to be legal tender does not satisfy the condition set out in Section 20(3) of the CBN Act 2007.

3. A DECLARATION that the President cannot unilaterally give a directive to embark on the demonetization policy pursuant to Section 20(3) of the CBN Act, 2007, in view of Nigeria’s fiscal federalism, the economic interests of the constituents of the Federation and without consultation with, and advice from the plaintiffs individually, and in their capacity as members of the National Council of States and National Economic Council, and that the Directive cannot be given without consultation with, and advise from the Cabinet, the National Security Council and other stakeholders.

4. A DECLARATION that in issuing the directive for demonetization policy pursuant to Section 20(3) of the CBN Act, 2007 on behalf of the Federation of Nigeria, the President is under an obligation to ensure that adequate structures are put in place for the plaintiffs and Nigerian citizens prior to the implementation of the said directives.

5. A DECLARATION that the demonetization directive/policy by the President of the Federation to wit: withdrawal of the old 200, 500 and 1000 Naira notes unlawfully impedes the exercise of the Executive powers of the plaintiffs’ States and other obligations to facilitate and protect the welfare of the citizens of the said States pursuant to Section 5(2) and other provisions of the Constitution of the Federal Republic of Nigeria 1999 (as amended) as well as other extant laws.

6. A DECLARATION that the directive given by the President pursuant to Section 20(3) of the CBN Act 2007 limiting the amount that can be withdrawn and the charges therein is unconstitutional and not binding on the plaintiffs.

7. A DECLARATION that the directive given by the President pursuant to Section 20(3) of the CBN Act 2007, imposing a timeline for redeeming at face value the said old Naira notes is contrary to the provisions of the Constitution of the Federal Republic of Nigeria 1999 (as amended).

8. A DECLARATION that the Power the President of the Federation exercised is expropriation against the plaintiffs’ States.

9. A DECLARATION of this Honourable Court directing the immediate suspension of the demonetization policy of the Federation as ordered by the President pursuant to the provisions of Section 20(3) of the CBN Act.

10. AND FOR SUCH FURTHER ORDER OR OTHER ORDERS as this Honourable Court may deem fit or expedient to make in the interest of justice.

The Defendants filed their Notice of Preliminary Objection praying for the suit to be struck out or dismissed for want of jurisdiction.

Upon the 1st to 3rd Plaintiff’s application by motion ex parte, the Court on 8-2-2023 made an interim order of injunction that the existing 200, 500 and 1000 naira notes remain legal tender side by side the new and redesigned naira notes pending the determination of their pending application by motion on notice for interlocutory injunction. On 15-2-2023, when the suit came up for hearing, Learned SAN for the 1st to 3rd plaintiffs informed the Court that they have filed an affidavit deposing to the facts of the 1st defendant’s non-compliance with the interim order of the Court, as the 1st defendant has through the Central Bank of Nigeria repeatedly released statements in the electronic and print media that the old notes had ceased to be legal tender on 10-2-2023. Learned SAN for the 1st respondent, argued in reply that the allegation is mere rumour and that they will respond to the said affidavit.

By a motion on notice filed on 17-2-2023, the 3rd plaintiff applied for an order setting aside the directive contained in the Special and Presidential Media Broadcast on Thursday, 16th February 2023 by the President for being an unconstitutional overreach and usurpation of the judicial power of the court on a matter pending before it and in respect of which there subsists an order of interim injunction binding all parties including the President on the grounds that the President in the said Broadcast directed that the old 200 naira note be released back into circulation as legal tender alongside the new banknotes for 60 days from 10-2-2023 to 10-4-2023 and that existing 500 and 1000 naira notes remain redeemable at CBN and designated points and that this directive varies and disobeys the subsisting interim order of the court made on 8-2-2023.

The 1st and 2nd defendants filed counter affidavits supported by written addresses in opposition to the motion on notice to set aside the 16-2-2023 directive of the President and contend that the directive did not contradict or disobey the 8-2-2023 interim order of the court and did not prejudice the pending suits before the court on the naira redesign directive.

The 5th plaintiff by motion on notice filed on 20-2-2023 applied for an order of this court that the 1st defendant should no longer be heard in this case and that the case be adjourned sine die until the 1st defendant complies with the 8-2-2023 interim order of this court.

The defendants had also applied by motion on notice on 20-2- 2023 for an order dismissing or setting aside the Form 48 filed by the plaintiffs to commence committal proceedings against the 1st defendant.

ISSUES FOR DETERMINATION:

The issues for determination are the challenge to the jurisdiction of the Supreme Court to entertain the plaintiffs’ suits, the alleged disobedience of the 8-2-2023 interim order of the apex Court and the merit of the suits.

DECISION/HELD:

The suit was held to be meritorious.

RATIOS:

• GOVERNMENT – FEDERAL GOVERNMENT: Whether the act of the President being an agent of the Federation is the act of the Federation
• JURISDICTION – JURISDICTION OF THE SUPREME COURT: Instances where the Supreme Court will have original jurisdiction to hear a matter
• GOVERNMENT AGENCY – CENTRAL BANK: Whether whatever the Central Bank does is deemed to have been done under the general directives of the President
• GOVERNMENT AGENCY – CENTRAL BANK: Instance(s) when the Central Bank will be held to be an agent of a disclosed principal and need not be joined in an action