Court orders BGL to pay First Bank N1.4b

By Tunde Opeseitan  /  Snr Correspondent, Lagos

 

A Federal High Court in Lagos has entered N1.407 billion judgment against BGL Plc in favour of First Bank of Nigeria Plc.

Justice Mohammed Idris, while delivering judgment in a suit filed by BGL against First Bank, held that on the balance of probabilities, the bank was entitled to judgment for the credit facilities it advanced to the said BGL.

BGL Plc, BGL Securities Limited and Albert Okumagba had jointly dragged the bank before the court seeking the award of N167. 097 million against the bank for alleged breach of contract in respect of a N2 billion margin loan.

The plaintiffs had specifically alleged that the bank failed to carry out its contractual obligation and duty of care to settle the facility and sell the shares when there is drop in value.

However, the bank through its lawyer, Dr Joseph Nwobike (SAN), had filed a statement of defence as well as counter-claim to the suit.

The plaintiffs had recalled in their claim before the court that by a virtue of an offer letter dated August 30, 2007, the bank granted them a stock trading margin facility of N2 billion.

The terms of the loan, according to the plaintiffs, were that initial 30 percent margin/equity contribution of stock by GBL Securities Limited would be paid, and that the stocks purchased with the facility shall be kept in the bank’s possession.

Corporate guarantee of BGL Limited and that of Okumagba were also required as part of terms of the loan.

Numerous other conditions were also agreed according to the plaintiffs.

However, the plaintiff alleged that by virtue of the contract of the loan, First Bank had a contractual obligation to sell the shares that had been pledged as security for the facility in the event that the value of the shares fell below the percentage cover of 130 percent.

While delivering judgment, Justice Idris referred to a letter written to the plaintiffs by the bank on the need for the plaintiffs to provide additional funds to correct the shortfall of 20.335 when the margin facility fell from 130 percent to 109.67 percent.

The judge added that by the letter, the bank had clearly exhibited its willingness to make the plaintiffs to shore up the value of the facility, and that the failure of the plaintiffs to heed the advise could not be visited on the bank.

The judge added: “In this case, and arising from this decisions, the burden to prove repayment of the loans is full tests squarely on the defendants to the counter-claim (the plaintiffs).

“From the evidence before this court, it is clear that, whilst the defendants to the counter-claim admitted taking the facilities, they did not lead any shred of evidence of repayment of same”.

Source : Independent

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