Honeywell Flour Mills, Sister Companies Owe Ecobank N5.5bn, S’Court Rules

Eighty-nine months after the legal brickbat began at the Federal High Court in 2015, Ecobank Nigeria scored a major victory on Friday when the country’s Supreme Court awarded affirmed a N5.5bn debt in its favour against Honeywell Flour Mills Limited and its sister firms- Anchorage Leisures Limited and Siloam Global Limited.
The Supreme Court dismissed an appeal by Honeywell Flour Mills challenging the judgement of the Court of Appeal in the debt dispute.
The five-member panel of the Supreme Court, led by Justice Tijjani Abubakar ruled that Honeywell, Anchorage, and Siloam were indeed indebted to the bank, the Nigerian arm of the Ecobank Group listed on the Nigerian Exchange as Ecobank Transnational Incorporated (ETI).
In the lead judgement delivered by Justice Emmanuel Agim, the Supreme Court affirmed the verdict of the Court of Appeal to the effect that Honeywell and its sister companies are still indebted to Ecobank.
According to him, “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 N1m to the respondent (Ecobank),” Agim further added.
By this judgment of the apex court confirming the indebtedness of the named customers, Ecobank is now free to recover from the debtor-customers the total outstanding debt of N5.5bn, including all the accrued interest from 2015.
Recall that in the wake of the legal tussle, Dr Oba Otudeko, Honeywell Group chairman, had told the Court of Appeal that the sum was owed by individual companies, including Anchorage Leisures Limited, Siloam Limited, and Honeywell Flour Mills Plc.
Otudeko also maintained that his companies had paid N3.5bn as of December 12, 2013, in full and final settlement of the N5.5 billion debt as agreed by the parties at a July 22, 2013, meeting.
With the latest Supreme Court judgement, however, these companies, including Honeywell Flour, in which Otudeko had during the pendency of the suit sold his 71.69% interest to Flour Mills of Nigeria Plc, remain indebted to the Ecobank, despite protest by the bank of with Honeywell insisting that the transaction is not in breach of any subsisting court order.
Recall that on 6 August 2015, Honeywell, and its sister firms, Anchorage Leisures Ltd and Siloam Global Ltd, dragged Ecobank before the Federal High Court in Lagos over repayments of a N5.5 billion debt, praying the Court in Lagos to declare that “having paid the sum of N3.5bn in cumulative settlement of their total outstanding indebtedness” (of N5.5 billion) to Ecobank, “they owed no further debt obligation” to Ecobank “arising from their banker-customer relationships.”
They also asked the court to hold that Ecobank “was obligated to issue letters of discharge, release collaterals by which the prior indebtedness was secured.”
In addition, Honeywell and its sister companies begged the court to compel Ecobank to “update” their status on the “Credit Risk Management System Portal of the Central Bank of Nigeria (CBN).”
Ecobank had, however, argued that an agreement was reached between it, Honeywell, Anchorage and Siloam on July 22, 2013, “for a definite settlement of N3.5 billion to be paid in terms of N500m immediately and the balance of N3bn before the exit of the CBN examiners from” Ecobank’s offices.
The bank had further contended that the repayment agreement period was for six months, having rejected a request by Honeywell and its sister companies to “pay the balance over a one-and-half-year period in three equal half-yearly instalments.”
The bank informed the court that the debt repayment agreement “lapsed in August 2013.”
In its judgement, Justice Ayokunle Faji of the Federal High Court, upheld the arguments of the Honeywell Group and granted their prayers, following which Ecobank in 2015, approached the Court of Appeal which overturned the lower court’s judgement.
This set the stage for the Supreme Court’s appeal which was resolved in favour of the Ecobank.