IN THE SUPREME COURT OF NIGERIA
HOLDEN AT ABUJA
ON FRIDAY, THE 21ST DAY OF JUNE,2024
BEFORE THEIR LORDSHIPS
UWANI MUSA ABBA AJI
HELEN MORONKEJI OGUNWUMIJU.
CHIDIEBERE NWAOMA UWA.
STEPHEN JONAH ADAH.
ABUBAKAR SADIQ UMAR.
JUSTICE SUPREME COURT OF NIGERIA
JUSTICE SUPREME COURT OF NIGERIA
JUSTICE SUPREME COURT OF NIGERIA
JUSTICE SUPREME COURT OF NIGERIA
JUSTICE SUPREME COURT OF NIGERIA
HAJIA UMMA MUKTAR AHMED MOHAMMED.
AND
NIGERIA DEPOSIT INSURANCE CORPORATION.
APPELLANT
RESPONDENT
SC/958/2015
JUDGMENT DELIVERED BY CHIDIEBERE NWAOMA UWA, JSC
I have had the privilege of reading in draft the judgement of my learned brother, Hon. Justice Abubakar Sadiq Umar, JSC, just delivered. I agree with his reasoning and conclusion that this appeal has no merit and should be dismissed.
I shall add a few remarks on the contention of the learned counsel to the Appellant that the Respondent is not entitled to any interest whatsoever on the outstanding debt.
It is common knowledge that bank facilities or loans do not come free, while it is part of the business of a bank to grant credit facilities to a customer. The customer is also bound to pay interest to the bank. See STB LTD. v. INTER DRILL NIGERIA LTD. (2007) ALL FWLR pt. 366 page 756 at 761.
It is now well settled that banks, not being charitable organizations, have the power or are entitled to charge interest on loans or other advances or facilities granted or made available to a customer, even where there was no express agreement on the rate of interest to be charged. See Adetoro v. U.B.N. PLC (2007) LPELR – 8991.
In Diamond Bank Ltd v. Partnership Investment Co Ltd & Anor (2009) LPELR – 939(SC) (Pp 29-30 Paras D-A) his lordship, Ikechi Francis Ugbuagu, JSC, in determining the general rule as to payment of interest on a debt or loan, held thus:
“… the general rule at Common Law is that interest is not payable on a debt or loan in the absence of express agreement or some course of dealing or custom to that effect. See London Chattam and Dover Railway v. South Eastern Railway (1893) A.C 249. Thus, interest will, however, be payable where there is an express agreement to that effect and such an agreement may be inferred from a course of dealing between the parties. See Re-Duncan and Co, (1905) 1 Ch. 307, or where an obligation to pay interest arises from common or usage of a particular trade or business, and, I add, like in banking.
Similarly, in Nkwo Market Community Bank (Nig) Ltd v. OBI (2010) LPELR -2051(SC) (Pp 22-22 Paras C-E) his lordship Muhammad Saifullahi Muntaka-Coomassie, JSC also held thus:
“In the case of Alfotrin Vs A-G Federation (1996) 12 SCNJ 236 at 240 this Court held as follows:- “The general rule at common law is that interest is not payable on a debt or loan in the absence of express agreement on some course of dealing or custom to that effect. Interest will, however, be payable where there is an express agreement to that effect and such agreement may be enforced from a course of dealing between the parties or where an obligation to pay interest arises from the custom or usage of a particular trade or business.”
It is therefore clear that interest may be claimed and awarded in any of the following situations:- (1) where the parties expressly agree to the interest or (2) where the customer and practices of the trade giving rise to the legal relationship recognize the payment of interest or (3), where the interest is provided by statute or subsidiary legislations such as the rules of court.
The Respondent in this case, which is the liquidator of the defunct Commercial Trust Bank Limited, (herein after referred to as the bank), is seeking to recover the unpaid loan granted to Credit and Finance Limited, (the first Defendant at the trial court) by the bank. The bank, being a financial institution, is entitled to claim interest on the loan granted to Credit and Finance Limited, in line with the custom and practices of financial institutions, even where, for instance, there is no express agreement to that effect. The case of the Respondent is further strengthened by Exhibit G (The Credit Approval Form) which contains the terms of agreement between the parties, including the terms as to the rate of interest payable.
The lower court, having examined the said Exhibit G, came to the conclusion that:
“At column C6, it states (sic) the interest rate as follows: Interest rate: 2% per annum above Commercial Trust Bank Prime Lending Rate, currently 16.03 per annum GIV (sic), a gross rate of 18% per annum./, interest shall be payable in arrears. This was the interest rate that was agreed between the parties at the time of the application for and grant of the loan facility to which paragraph relates.”
I am in alignment with the findings of the lower court that the parties had by Exhibit G agreed that a gross interest rate of 18% per annum shall be applicable for payment in arrears.
The lower is trite that parties to a contract are bound by the terms of the contract, and in determining the rights and obligations under the contract, the Court must observe and respect its sanctity and not allow a term on which there was no agreement to be read into the contract. See Canitec International Company Ltd. Vs. Solel Bonneh Nig. Ltd. (2017) 10 NWLR (pt. 1572) At. 66; Idufueko vs Pfizer Products Ltd. (2014) 12 NWLR (pt. 1420) AT. 96. It is not the practice of the Court to make a new agreement for parties. The terms of a contract must remain sacred, preserved, and respected by the parties.
In Access Bank v. NSITF (2022) LPELR – 57817(SC) (Pp 32-32 Paras C-D) his lordship Kudirat Motonmori Olatokunbo Kekere-Ekun, JSC, while determining whether parties are bound by the terms of their contract, held thus:
“It is a settled principle of law that parties are bound by their agreements freely entered into and will not be permitted to resile therefrom. This is the essence of the doctrine of sanctity of contract. See: Babatunde & Anor vs Bank of the North Ltd. & Ors (2011) LPELR – 8249 (SC) @ 21 B-F; AG. Rivers State vs A.G. Akwa Ibom State & Anor (2011) 3 SC 1; (2011) – 633 (SC) @ 22 E-F.”
Similarly, in NNPC v. Fung Tai Engineering Co Ltd (2023) LPELR – 59745 (SC) (PP 89 – 89 Paras A-B) his lordship Mohammed Lawal Garba, JSC held succinctly thus:
“The law, as seen earlier, does not allow or permit the rewriting of the terms of a contract made by parties to either import into or export out of terms specifically agreed to by them.”
The parties in this case are therefore bound by the terms of their contract contained in Exhibit G and in resolving the dispute that has arisen in the contract, recourse must be had to the said document in determining the rights and liabilities of the parties. I therefore find it easy to also hold in line with the decision of the lower court, that the Respondent is entitled to claim a gross interest rate of 18% per annum on the outstanding debt.
For the above reason and others contained in the leading judgment, I also hold that this appeal is lacking in merit and it is hereby dismissed. I also affirm the judgment of the lower courts and abide by the order made as to cost in the leading judgment.
CHIDIEBERE NWAOMA UWA,
JUSTICE, SUPREME COURT.
COUNSEL:
Ibrahim Gamdeh Adamu with Fatima Zara Mohammed for the Appellant.
Mustapha I.. Abubakar with Isah D. Haruna for the Respondent.
