Breach of contract: N2b suit slammed on Stanbic IBTC Bank

Breach of contract: N2b suit slammed on Stanbic IBTC Bank

Thursday, April 20, 2017 3:06 pm

Stanbic IBTC Bank

By Akin Kuponiyi

A limited vliability company, Infinity Snacks and Beverages Limited, alleged to have suffered economic misfortune as a result of breach of contract by Stanbic IBTC bank Plc has slammed N2billion suit on the said bank.

In a statement of claim filed before a Lagos high court,south west Nigeria by a Lagos lawyer, Barrister Olumide Sofowora SAN, Infinity Snacks and Beverages Limited alleged that in July 2014, it applied for a loan for its factory expansion from Bank of Industry Limited and it received approval for the sum of N934,029,835.on 19th August 2014.

However one of the conditions for granting of the facility was the provision of a bank guarantee. The company then requested Stanbic IBTC bank to start processing the bank guarantee. However, apart from the unnecessary delay exhibited by the bank, it requested that before the bank guarantee can be provided the company should clear one off the existing loans to the tune of N50 million, all other outstanding loans and that interest due to the bank should be noted on debenture. The company satisfied these requirements. Yet, the bank guarantee was not issued until 22nd of December 2015, about four months,after the approval of the loan by bank of industry. Thereafter, Bank of Industry disbursed the sum of N864,420,000 into the bank’s account in the company ‘s name on 9th of May, 2016. But the bank did not inform the company until 17th of May 2016.

The company then immediately embarked upon ensuring that the loan was utilized. It then mandated the bank to bid for foreign exchange for the purchase of the needed machinery for its expansion. Initially, the bank continued to put stumbling blocks along the way by tying the bank of industry loan to its own loan portfolio granted to the company. Later when the bank agreed to bid for the needed foreign exchange, the bank said there was no foreign exchange supply in the market, only for the company to discover that the bank’s promises to secure foreign exchange for the company were all ploys to frustrate the company from benefiting from the Bank of Industry facility of N864.420 million. This is because apart from bidding for and obtaining foreign exchange for some of its customers who applied for foreign exchange during the same period as the company did, the bank was in fact supporting one of the company, ‘s competitors, Multipro Enterprises Limited that is the Franchisees of Kellogs Breakfast Cereals in Nigeria. It turned out that the bank actually applied for the same Bank of Industry facility as the one granted to the company on behalf of that company.

The company is contending that the delay on the part of the bank to provide the bank guarantee caused the company severe loss as the rate of foreign exchange to the Nigerian currency rose drastically during the period due to Federal Government deregulation of foreign exchange market, aside that the bank unilaterally increase the bid rate from N 280 to $1 to N 288 to $1.

The company also alleged that Stanbic IBTC allegedly breached its duty of care to it and committed several other breaches of contact due to negligence by its refusal to carry out the company, ‘s several instructions and by its decision to place a lien on the company ‘s funds which amounts to an unauthorized freezing of the company’s account without lawful authorization. It allegedly traded with N 864.420 million meant for the expansion of the company’s business for several months without payment of any interest whatsoever.

The company held a meeting with the bank with a view to placing the N864.420 millon in an interest yielding account, the bank promise to revert to the company on the issue but it never did and kept silent on the matter permanently.

The company also contended that, by promoting the business of the company’s competitor whilst frustrating the company business, the bank has breach its fiduciary duty to it since in a banker/customer relationship the banker is regarded as agent of the customer.

Consequently, in view of the alleged several breaches of the bank in its duty care to the company, it is demanding for special damages in the sum of N2,076,801,430.42.

Infinity Snacks and Beverages Limited company is also urging the court to declare that by promoting the business of the company’s competitor whilst frustrating its own business which led the company to sustain loses, the bank has breached its fiduciary duty to the company thereby entitling it to damages.

The defendant has not filed any defence. Meanwhile the presiding judge A. M. Lawal has adjourned the suit till 5th of June for mention.

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