Court dismisses N374bn ginger farmers’ suit against Keystone Bank

The Federal High Court in Abuja has struck out a N374bn agricultural loan suit brought against Keystone Bank by the Ginger Growers, Processors, and Marketers Association of Nigeria.

The presiding judge, Justice Obiora Egwuatu, dismissed the suit, which represented 31,309 farmers’ claims against the bank, on jurisdictional grounds.

The suit, which concerns the Anchor Borrowers’ Programme, alleged the failure of Keystone Bank to disburse N8,679,289,368.92 out of N335,437,200,000 in entitlement claims and an additional N30bn as general damages for an alleged breach of the banker-customer relationship.

The plaintiffs, a registered cooperative society comprising approximately 31,190 ginger farmers, filed the suit through their lawyer, Eko Ejembi (SAN).

They stated that they had applied to participate in the Anchor Borrowers’ Programme of the Central Bank of Nigeria and nominated Keystone Bank as their Participating Financial Institution. The association claimed that Keystone Bank, following the ABP guidelines, applied to the CBN on their behalf for the release of the approved loan facility.

“The CBN released the approved loan sum of N8,679,289,368.92 to Keystone Bank for onwards disbursement to the plaintiffs within 10 working days in March 2020,” stated the plaintiffs, who alleged that the bank only notified them on July 29, 2020.

They accused Keystone Bank of failing to provide any reason for withholding their funds and refusing to disburse the loan facility within the stipulated 10 working days despite repeated demands.

According to the plaintiffs, the bank, without notifying them, repatriated the loan facility granted under the Anchor Borrowers’ Programme to the CBN.

Aggrieved by their losses and what they described as “unjust, arbitrary, and mischievous acts of the bank,” the plaintiffs sought reliefs totalling over N370bn.

Some of the reliefs sought include “a declaration that the plaintiffs were entitled to the prompt release of the agricultural loan facility granted to them by the CBN under the Anchor Borrowers’ Scheme.

“A declaration that Keystone Bank converted for its own use the sum of N8,679,289,368.92 received from the CBN for the sole and exclusive use of the plaintiffs under the Anchor Borrowers’ Programme, thereby depriving them of access to the funds.”

Meanwhile, Keystone Bank, in its counterclaim, argued that the Anchor Borrowers’ Programme guidelines were mere guidelines lacking statutory and contractual weight and therefore had no binding legal force.

The bank further contended that commercial banks, such as itself, act as the real and ultimate lenders to participating farmers under the Anchor Borrowers’ Programme.

Responding to the plaintiffs’ allegations through its lawyer, Dr. Sonny Ajala (SAN), Keystone Bank stated that it had offered a loan of N8,679,289,368.92 to the plaintiffs via an offer letter dated September 2, 2020, which the plaintiffs accepted on the same date without reservations.

The offer letter granted Keystone Bank the discretion to withhold the disbursement of the loan and, upon demand by the CBN, to repatriate the loan amount to the CBN.

The bank also claimed that on November 11, 2020, the CBN requested the repatriation of the loan, and Keystone Bank promptly complied.

Furthermore, the commercial bank challenged the court’s jurisdiction to hear the case, arguing that the plaintiffs failed to issue and serve a pre-action notice to Keystone Bank, as required by the contractual terms of the offer letter dated September 2, 2020.

The plaintiffs, however, argued that a pre-action notice was immaterial, as any other letter sent to Keystone Bank was sufficient and not misleading.

Additionally, the CBN, represented by Dr. U.Y. Hassan, confirmed that the loan was requested and disbursed to Keystone Bank on July 15, 2020, for onwards distribution to the ginger farmers. He added that Keystone Bank later informed the CBN of its non-disbursement and requested to repatriate the loan sum.

“Upon receipt of this letter, the CBN, in line with its role in coordinating the programme and in accordance with its contractual obligations, accepted the repatriation of the loan sum by Keystone Bank,” Hassan stated.

The CBN launched the Anchor Borrowers’ Programme on November 17, 2015, to create economic linkages between smallholder farmers and anchor companies. However, the programme has faced significant repayment challenges from beneficiaries, leading to multiple litigations.

Delivering judgement in the suit marked FHC/ABJ/CS/350/2024, Justice Egwuatu dismissed the farmers’ suit and upheld the bank’s arguments.

He agreed that a pre-action notice was a mandatory requirement for a suit to be deemed competent.

“It is a precondition that must be complied with. Any action commenced in breach of this requirement would be incompetent,” the judge emphasised.

Justice Egwuatu further noted that while the requirement of a pre-action notice could be waived, Keystone Bank had insisted on being served and raised the objection in time.

He held that the plaintiffs’ failure to issue a pre-action notice rendered their suit incompetent.

“Where a court has declined jurisdiction, it also lacks the power to take any further action. A court without jurisdiction cannot make further orders or take any steps beyond declaring its lack of jurisdiction. Any action taken thereafter is a nullity,” he stated.

Consequently, the judge struck out the suit against Keystone Bank for lack of jurisdiction.