N2 billion suit slammed on Stanbic IBTC bank over breach of contract

Alleged to have suffered economic misfortune as a result of breach of contract by Stanbic IBTC bank Plc, a limited liability company, Infinity Snacks and Beverages Limited, has instituted a N2 billion suit on the said bank.

In a statement of claim filed before a Lagos high court by a Lagos-based lawyer, 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 August 19, 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, apart from the unnecessary delay exhibited by the bank, the bank requested that before the bank guarantee can be provided the company should clear one of the existing loans to the tune of N50 million, all other outstanding loans and interest due to the bank should be noted on debenture, the company satisfied all these requirements,yet the bank guarantee was not issued until December 22, 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 May 9, 2016 but the bank did not inform the company until May 17, 2016.

The company immediately embarked upon ensuring that the loan was utilized, 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 N864.420million 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 who are the Franchisees of Kellogs Breakfast Cereals in Nigeria and 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 StanbicIBTC bank 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 and trading with N 864.420million meant for the expansion of the company’s business for several months without payment of any interest whatsoever.

The company held meeting with the bank with a view to placing the N864.420millon 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 the company 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 in its business, the bank has breached its fiduciary duty to the company thereby entitling it to damages.

The defendant has not file any defence. Meanwhile Justice A. M. Lawal has adjourned the suit till June 5 for mention.