JAIZ Bank Chairman, Umaru Mutallab, Sued Over Unremitted N75million Rent

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Tomorrow, Monday March 7, 2022, hearing will begin at a Lagos High Court in the trial of Alhaji (Dr) Adamu Umaru Mutallab, chairman of Jaiz Bank Plc for the recovery of unremitted sum of N75mllion collected as rent on behalf of a limited liability company, GORI Nigeria Limited.

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In the statement of claim accompanied by statement of witness on oath of the Executive Assistant of Gori Company, Evelyn Ayika, filed before the court on behalf of Gori Company by a Lagos lawyer, Olanlokun Omolodun, the company said that it holds power of attorney in respect of the property at No 1621 Danmole Street, Vitoria Island, Lagos.

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The building at No 3c Danmole Street was the residence of the late managing director of the company, Mr. Gobind Malkani, and his family until his demise sometime in 2006. No 3a Danmole Street was and still the residence of Mr. Malkani’s daughter Veena and her family while No 3b Danmole Street was and still the office premises of the company.

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When Gobind Malkani died in 2006, his daughter, Ms Veena Malkani, was appointed new managing Director of the company by the two Directors – Alhaji (Dr.) Adamu Umaru Mutallab and one Alhaji Magaji Mohammad.

Sometime in 2008, the company’s managing director suggested to the defendant that No 3c Danmole be let out to tenants to avoid it remaining empty after the death of her father and earn valuable income for the company.

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The defendant subsequently entered into negotiations with the then Intercontinental Bank which had its head office opposite the property to rent No 3c Danmole for five years in consideration of the rent in the sum of N75million only.

The negotiations were concluded and the rent cheque endorsed in favour of Gori Nigeria Limited was delivered to the defendant in 2008 but the defendant failed to forward same to the company.

Several demand notices in respect of the N75million rent sum were issued to the defendant who failed and/or refused to reply or comply with same till date.

Sometime in 2016, the claimant’s Managing Director declared her intention to commence action to recover the rent sum from the defendant but was informed that the claim had become time-barred as the action ought to have been brought to recover the debt within six years of receipt of the rent cheque by the defendant. Owing to this advice, the proposed action was not filed.

However, in September 2018, the company’s managing director re-established contacts with a Lagos lawyer, Mr. Olanlokun Omolodun who had previously done some legal work for the company and an associated company, IPBC Nig Ltd,, and subsequently sought his legal advice regarding the defendant’s refusal to pay over the N75million rent.

The advice received was to the effect that the proposed recovery action could not be statute-barred because the reliefs against the defendant would be for breach of the defendant’s duty as agent to account to the company his principal, for the rent sum received for the company from the tenant at 3c Danmole (the subject premises) and that such a claim for equitable relief was exempted from the applicable limitation law.

He further advised that the law considers the principal officers of a company to be its agents for the conduct of its business since a corporate body has no body and limbs of its own but must of necessity act through its directing minds and principal officers. The relationship between a company and its officers is thus one of principal and agent by operation of law.

The advice to the claimant also included facts showing that the defendant had probably and fraudulently received value for the rent cheque since 2008 and intended to never account for it thus permanently depriving the company of same.

The company averred that the defendant is believed to have fraudulently received value for the rent cheque as follows:

  • The rent cheque was a banker’s draft endorsed in favour of the company in respect of which value could be received upon presentation over the counter in the relevant bank;
  • Alhaji Muthalab was a non-executive director, a sinecure which entitled him to merely attend annual meetings in exchange for a stipend and who played no role in the operations of the company, was not a signatory to the claimant’s bank accounts; but the defendant fraudulently opened another bank account in the name of the company with himself as the signatory to the said account in order to receive value for the cheque over the counter.
  • The defendant’s refusal to respond to any of the demand notices issued him in respect of the said sum was deliberate to avoid reviving the cause of action for a simple debt which he believed had become stale or time-barred;
  • By his refusal had to account to the company for the rent sum received, the defendant had breached his duty, as agent, not to make secret profit while acting for his principal.

The company said that it will contend that by his refusal to reply several demand notices received by him in respect of the withheld rent sum, the defendant is deemed in law as having admitted the facts of his agency to the company with a duty to account for the rent sum but which account he refused to render. The defendant is thus estopped from denying these material facts it had admitted by its said conduct.

The company further avers that as a director of the claimant company, the defendant had a fiduciary duty to advance the business of his principal, account for all monies of the company in his possession and his retention of the rent sum in the manner aforesaid amounted to breach of his trust position to unjustly enrich himself. It was the said legal advice which made the Claimant’s managing director become aware of the defendant’s conduct.

Despite that the defendant was issued with the mandatory pre-action notices, he still refused all invitations to amicably resolve the claimant’s grievance, thus causing the claimant to incur the avoidable commitment to pay its counsel the claimant contingency fee of 20% of the sum recovered as legal fee for this action. The company is also entitled to recover this fee from the defendant.

The plaintiff contended that the Defendant’s conversion of the N75million rent sum has denied the company the opportunity to profitably trade with same at attractive markups

The defendant having unlawfully utilized and taken benefit of the N75million rent sum belonging to the company and at its expense, the company is entitled to recovery of the judgment sum with 20% interest until judgment and thereafter 10% interest on the judgment sum until full satisfaction thereof.

The company seeks from the Court against the defendant, the following reliefs:

  • A declaration that the defendant’s refusal to account for money for the rent sum was a breach of his       duty to account to the company for monies received on company’s behalf.
  • An order of specific performance directing the defendant to render account for and deliver to the N75m rent received on company’s behalf forthwith.
  • Interest on the said sum at the rate of 20% since 2008 until judgment and thereafter at the rate of 10% until full satisfaction; and Legal cost of this action on a full indemnity basis

However, Alhaji Umaru Muthallab in his statement of defence filed before the court by Chief B.C. Igwilo SAN, stated that:

Gori company was incorporated on 12th February, 1987 with a share capital of N1,000,000.00 held as follows:

i) Mr. Gobind Malkani 400,000 shares

Alhaji (Dr) Umaru Mutaliab – 300,000 Shares

Alhaji Magaji Muhammed    300,000 Shares

The three shareholders mentioned in the proceeding were also the only directors of the company until the passing of Mr. Gobind Malkani sometime in 2005.

In his life time, Mr. Gobind Malkani was managing director of the company and had a daughter named Veena Malkani. Following his death, the surviving directors appointed Veena Malkani, his daughter, to continue to act as Managing Director.

Prior to his death, Mr. Malkani and his daughter separately occupied two of the three houses of the Plaintiff company rent free.

However, following the said death and his residential premises becoming free and vacant, agreement was reached for letting of the said premises and the Defendant retaining the proceeds as compensation for economic loss suffered by the Plaintiff company and consequent deprivation of dividends by defendant shareholders from the Malkani’s occupation of two houses of the company over the years.          The houses are potential income yielding assets which never was on account of occupation of same by Gobind Malkani and his daughter rent free. Veena Malkani had no relationship whatsoever with the Plaintiff company at the material time and yet occupied one of the company’s buildings gratuitously.

He further said that while Veena acted as Managing Director, she failed in the management of the company and its business to the consternation of the surviving directors. She procured and presented false documents to the Corporate Affairs Commission sometime in 2018 in a bid to alter the true records of the Plaintiff company.

Soon after Veena’s false representations in the company’s statutory records came to light, the Defendant was constrained to draw the attention of the Corporate Affairs Commission to the same. The Commission investigated the complaint and expunged the said and false entries from the records of the Plaintiff company.

Mutallab deposed that irked by the steps taken by the Defendant against her steps, Veena malevolently instructed Barrister Olanlokun Omolodun to file this action without board approval or ratification.

He said that Veena’s reason for instituting this action is expressly stated in her letter to Defendant dated February 8, 2019. The Board of the Plaintiff company made up of the present Defendant, Umaru Mutallab and Murtala Magaji Muhammed met on August 8, 2019 Veena was by a special resolution dismissed as managing director of the company. Notice of the meeting dated July 5, 2019 was duly served on her but she chose not to attend.

The Defendant averred further that the purported claim against him for return of rent is “statute barred and unavailing.”

Therefore, the defendant prayed the Court to dismiss the suit for lacking in merit and award of punitive damages against the company for wasting the time of the Court.

Meanwhile, the General Manager of Gori Company, Mr. Adetoyese Adetiloye, has denied all the statement of Alhaji Mutallab in a witness statement on oath he made in reply to the statement of defendant.

Adetiloye averred that additional proof of falsity was revealed by the defendant’s silence as to how Gobind Malkani was compensated for loss of dividend payments because the defendant was compensated with N75million as claim due to loss of dividend owing to use of property as company residence, then it would only be equitable for Mr Malkani to be similarly compensated. “What was his compensation or did the company collude with the defendant against the third director’s interest and entitlement to equal compensation or what amount was the dividend the defendant claims was denied to justify the hefty compensation of N75million? The defendant silence on these aspect proves the falsity of his averment,” he said

Consequently, Adetiloye averred that at the trial or determination of this action he will contend that the entire defence to the claim lacks merit, is not cognisable, dilatory in nature and fails to answer the documented specific allegations of fraud contained therein and is frivolous, vexatious and taken in abuse of court’s process which ought to be dismissed and judgment entered as sought against the defendant.

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