Background
The case of Intercity Bank Plc vs. Feed & Food Farms Nigeria Ltd. revolves around a loan facility granted by Intercity Bank Plc to Feed & Food Farms Ltd. The loan amounting to N3,000,000 was secured against certain properties owned by the respondents. Following the default in repayment of the loan, the bank sought to exercise its power of sale as per the terms of the Deed of Legal Mortgage but faced opposition from the respondents.
Issues
The primary issue for determination was whether an unpaid mortgagee (in this case, the bank) could be restrained by a court from exercising its power of sale on the grounds of the disputed amount owed by the mortgagor. The court was tasked with deciding:
- Whether the trial judge was right in granting an interlocutory injunction that restricted the bank from exercising its power of sale.
- Whether mere dispute over the amount owed was adequate grounds to restrain the mortgagee's right to sell the mortgaged property.
Ratio Decidendi
The Court of Appeal held that:
- The mortgagee cannot be restrained from exercising its power of sale merely because the mortgagor disputes the amount owed.
- For the power of sale to be restrained, the mortgagor must pay the claimed amount into court.
- A mortgagee’s motives in exercising their power of sale are not grounds for intervention by the court.
Court Findings
The court found that the lower court erred in granting the injunction. The legal framework surrounding mortgages dictates that:
- The mortgage deed confers upon the mortgagee the right to sell upon default.
- The courts do not assess the motives behind the exercise of the power of sale.
- Disputes over the precise amount owed do not inhibit the right of sale unless payment of the debt is made.
Conclusion
The appeal was upheld, the ruling of the lower court was set aside, and the bank was allowed to proceed with the sale of the mortgaged property.
Significance
This case underscores the legal principles regarding mortgage rights in Nigeria, specifically emphasizing the mortgagee's right to sell without interference from the court if the debtor is in default, regardless of disputes regarding the sum owed. Thus, it protects the rights of lenders against prolonged default from borrowers.