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Supreme Court upholds Honeywell’s N5.5 billion indebtedness to Ecobank

The Supreme Court has dismissed an appeal by Honeywell Flour Mills Limited challenging the judgement of the Court of Appeal in a N5.5 billion debt dispute with Ecobank Nigeria Limited.

A five-member panel of the Supreme Court led by Tijjani Abubakar delivering judgement on the substantive issues in the case on Friday said Honeywell, Anchorage, and Siloam were indebted to Ecobank.

However, the court held that the firms’ appeal succeeded in part, declaring that they were right to commence their suit at the Federal High Court in Lagos.

The judgment: The Supreme Court also held that the Court of Appeal was wrong to have held that the trial court lacked jurisdiction to have heard Honeywell’s case in the lead judgement delivered by Emmanuel Agim.

  • “This appeal succeeds in part in respect of issues numbers one and two… Accordingly, I hold that the appellants have the locus standing to sue and that the trial court has the jurisdiction to determine the suit,” Agim said.

However, the Supreme Court declared the verdict of the Court of Appeal, which said Honeywell and its sister companies are still indebted to Ecobank.

  • “I affirm the judgment of the Court of Appeal, setting aside the decision of the Federal High Court, granting the reliefs claimed for by the appellants (Honeywell).
  • “I hold that the appellants’ claim at the trial court fails and it is hereby dismissed.
  • “The appellants shall pay the cost of N1 million to the respondent (Ecobank),” Agim said.

Ecobank’s warnings: Nairametrics earlier reported that Ecobank Nigeria Limited had warned Flour Mills of Nigeria Plc against the acquisition of an equity stake in Honeywell Flour Mills Plc.

The bank alleged during the build-up to the acquisition by Flour Mills that Honeywell Group Limited, the parent firm, had not been servicing its loans with the bank, according to Punch.

In a letter addressed to the Managing Director of Flour Mills of Nigeria and signed by solicitors to Ecobank, Kunle Ogunba and Associates, the company, as well as the public and corporate bodies were warned of the “danger inherent in dealing in any shares of the company.”

The bank alleged that it had advanced several loan facilities to Honeywell Flour Mills, including working capital disbursements. Further stating that as a result of the failure of the company to liquidate its loan facilities, it was constrained to commence winding up proceedings against Honeywell Group Limited at the Federal High Court, Lagos in suit no: FHC/L/CP/1571/2015.

  • The letter said, “However, while the said action was dismissed at the Federal High Court and the Court of Appeal, it is pertinent to state that an appeal with appeal no: SC/700/2019 has been filed challenging the said decision at the Supreme Court (Notice of Appeal is herein enclosed and marked as Annexure C).
  • “Hence, the effect of the above is that there is currently a winding-up action/proceeding pending against the said Honeywell Group Limited.”
  • The bank quoted a provision of Section 577 of the Companies and Allied Matters Act 2020 as saying, “Where a company is being wound up by the court, any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the commencement of the winding-up is void”

According to the bank, this restricts Honeywell Group from moving ahead with the sale of Honeywell Flour Mills to Flour Mills of Nigeria.

  • “Consequently, we hereby demand that Flour Mills of Nigeria Plc, in its best corporate interest, immediately cease and desist from consummating the subject transaction, which aims to divest the assets of a company being wound up (Honeywell Group Limited).
  • “Please be further informed that the assets of both Honeywell Group Limited and Honeywell Flour Mills Plc. are the subject of the winding-up action and thus based on the doctrine of “lis-pendens” (in addition to the provisions of CAMA supplied above) you are advised to refrain from dealing with the subject asset which forms part of the subject matter of litigation,” the bank added.

The Backstory: Both companies have been in a long-standing legal battle since 2015 over an unpaid debt of N5.5 billion by the latter. While Ecobank is maintaining that Honeywell is indebted to it to the tune of the aforementioned money, out of which N3.5 billion had been paid, Honeywell claimed to have paid the debt in full.

In the wake of the legal tussle, Dr Oba Otudeko, Honeywell Group chairman, had told a Court of Appeal that the sum was owed to individual companies. These companies include Anchorage Leisures Limited, Siloam Limited, and Honeywell Flour Mills Plc.

Otudeko maintained that his companies had paid N3.5 billion as of December 12, 2013, as the full and final payment for the N5.5 billion debt as agreed by the parties at a July 22, 2013 meeting.

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