Whether Banks can Unilaterally Place a Restriction on the Account of a Customer Without a Court Order

CASE TITLE: FBN PLC & ANOR V. DKN INVESTMENT LTD. & ANOR LPELR-80878(CA)
JUDGMENT DATE: 9TH APRIL, 2025
JUSTICES: MUHAMMAD IBRAHIM SIRAJO, J.C.A.
LATEEF ADEBAYO GANIYU, J.C.A.
ASMAU OJUOLAPE AKANBI, J.C.A.
DIVISION: BENIN

PRACTICE AREA: BANKING LAW

FACTS:

This appeal borders Banking Law

This appeal is against the judgment of the Benin City Division of the High Court of Justice, Edo State.

Sometime on the 20th of January, 2012, the Chief Magistrate in Benin City, Edo State, made an order granting the Commissioner of Police access to inspect and take copies of the ledger and record in respect of the account number of the 1st Respondent which the 1st Respondent holds with the 1st Appellant. The order was made to aid the Police in their investigation of a case of threat of kidnapping and obtaining money by false pretense that was purportedly linked to the account number of the 1st Respondent. The same order was served on the 1st Appellant. The 1st Appellant while acting on the order, froze the account number of the 1st Respondent. The act of freezing the account of the 1st Respondent is the kernel of this appeal. The Respondents contended that although there was an Order of Court, the said order does not suggest that the account should be frozen.

The Appellants, as Defendants, filed a defence to the action, which they later amended with the leave of the trial Court. In the Defendant’s Amended Joint Statement of Defence, they urged the trial Court to dismiss the Claimant’s claims with substantial costs, as the same are vexatious, unmerited, and gold-digging in nature. The trial Court granted reliefs (a) and (b) sought by the Respondents but refused relief (c). Under relief (d), the trial Court granted N 10,000,000.00 in damages to the Respondents for breach of contract.

The Appellants, being dissatisfied with the said judgment, filed the instant appeal.

ISSUES FOR DETERMINATION:

The Court adopted the issues as formulated by the appellant in the determination of the appeal, thus:

1. Whether the learned trial judge properly evaluated the evidence before him.
2. Whether on the preponderance of evidence, the Respondent is entitled to judgement.

COUNSEL SUBMISSIONS:

The Appellants highlighted the relevance of discharging a burden of proof; they argued that the burden of proof in the instant case is on the Respondents which they failed to discharge, relying on AGI vs. PDP (2017) NWLR (PT. 1593) 386 and Sections 131(2), 132-133, and 136 of the Evidence Act. They further contended that the trial Judge did not evaluate all relevant facts and issues that call for consideration, making specific reference to Exhibit “G,” the Court order that led to the freezing of the Respondents’ account by the Appellants, which in turn led to the institution of the matter at the lower Court. Furthermore, the Appellants are aggrieved that the trial Judge’s evaluation of specific findings only began on page 159 and ended at 160 of the Record of Appeal.

In addition to the argument above, the Appellants also justified the arrest of the 2nd Respondent by the Police because it is their statutory duty to do so. The Appellants further justified the freezing of the account because there was a police directive in that regard that they should not disobey. In a nutshell, the Appellants want the evidence tendered to be re-evaluated by this Court. They relied on Fajemirokun vs. Commercial Bank (Nig.) Ltd. (2009) 5 NWLR (PT. 1135) 588, Mohammed vs. The State (1991) 5 NWLR (Pt. 192) 438, Osuji vs. Ekeocha (2009) 16 NWLR (Pt. 1166), and Osazuwa vs. Isibor (2004) 3 NWLR (PT. 859) 16. The Appellants also contested the award of damages on the ground that the award is misconceived. They relied on Iyeke vs. PJI (2019) 2 NWLR (Pt. 1656) 217 @ 235 Para F. Furthermore, the Appellants drew the attention of this Court to its power to reassess damages, relying on JAMB vs. Wicklife (2005) ALL FWLR (Pt.251) 255 @ 259 ratio 7. Finally, the Appellants contended that damages are not awarded as a matter of course; hence, the need for reassessment of the damages awarded. On this argument, they relied on Anambra State Environmental Sanitation Authority vs. Ekwemen (2009) 13 NWLR (Pt. 1158) 410 v. THE STATE (2011) 11 WRN 1 and OGUNBAYO v. THE STATE (2007) 30 WRN 172, 191-192.

The Respondents highlighted the arguments of the Appellants and thereafter took this Court on a voyage as to what transpired at the lower Court. They specifically pointed out paragraphs 6, 11, 12 and 13 of the Appellants Statement of Defense at the lower Court, stating that those paragraphs amounted to admissions by the Appellants, bearing in mind the tenor of the order of the Magistrate Court which the Appellants had relied on in freezing the account of the Respondents. They contended that the said order does not actually contemplate the freezing of the Respondent’s account, and that a Bank cannot freeze the account of its customer without a Court order. In relation to the freezing of the Account, the Respondents relied heavily on the unreported case of GTB vs. Adedamola & 2 Ors Unreported; Appeal Number: CA/L/1285/85 as decided by the Lagos Division of this Court on 1st March, 2019.

DECISION/HELD:

In the final analysis, the Court dismissed the appeal.

RATIO:

BANKING LAW- BANKING BUSINESS:  Whether a bank has the power to unilaterally freeze the account of a customer without a Court order –

“It is trite law that the order of a competent Court, like Exhibit G, remains valid and must be complied with by all persons and authorities to whom it is directed. However, no person, entity or authority can act outside the tenor of the order under the pretext of carrying out the said order. The Appellants cannot, under the guise of Exhibit G, freeze the account of the 1st Respondent, just as the police have no power to authorize or direct a bank to freeze the account of its customer that is under investigation without an order of Court to that effect. No person or institution has the power to unilaterally place a restriction on the account of a customer without a Court Order. See Arogundade vs. Skye Bank (2020) LPELR52304 (CA), Diamond Bank vs. Unaka & Ors (2019) LPELR-50350 (CA), Polaris Bank Ltd vs. Yayamu Global Services Ltd & Anor (2022) LPELR-57376 (CA), Zenith Bank Plc vs. Daily Times of Nig. Plc & Anor (2022) LPELR-58332 (CA). By freezing the account of the 1st Respondent, purportedly on the order of the Magistrate Court and the directive of the Police, and refusing to honour the Respondents’ cheque, the Appellants have committed a grave constitutional and contractual breach.” Per MUHAMMAD IBRAHIM SIRAJO, J.C.A.

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