KEYSTONE BANK LTD. V. EBUH (2026)

Background

Dr. Vincent Ebuh applied for and paid for 30,000,000 shares in Keystone Bank Limited’s November 2007 Initial Public Offer. He was allotted 4,335,000 shares, leaving 25,665,000 shares allegedly unpaid for or unallotted. He sought, among other reliefs, declarations concerning the contractual effect of the public offer, a refund of N436,305,000, interest, the setting aside of a later allotment, and relief concerning the sale of shares by Midas Stockbrokers Limited.

The suit was commenced before the Investment and Securities Tribunal in November 2017. The Tribunal gave judgment for Ebuh. On appeal, the Court of Appeal set aside the Tribunal’s judgment and struck out the claim, holding, among other things, that the Tribunal lacked jurisdiction for failure to fulfil a condition precedent, but treating the transaction as subject to a 12-year limitation period. Keystone Bank brought a cross-appeal to the Supreme Court, challenging the limitation finding and the order striking out the suit.

Issues

1. Whether the claim was statute-barred and therefore outside the jurisdiction of the Tribunal and the lower courts.
2. Whether the Court of Appeal ought to have dismissed, rather than struck out, the claim.

Ratio Decidendi

The nature of a claim for limitation purposes is determined from the facts pleaded and the reliefs sought. Ebuh’s principal claim was for recovery of money paid for shares that were not allotted. A share application is an offer and becomes a binding contract only upon allotment. No contract under seal was established in relation to the unallotted shares.

Section 385 of the Companies and Allied Matters Act, 1990 concerns recovery of declared dividends. Its express reference to dividends does not extend to a claim for refund of money paid for unallotted shares. The fact that issued share certificates are under seal pursuant to section 146(3) of CAMA does not convert a pre-allotment transaction into a contract under seal.

The claim was therefore a simple-contract or money-had-and-received claim governed by the six-year limitation period under section 8(1) of the Limitation Law. The cause of action accrued on 19 April 2008, while the action was commenced in November 2017, more than nine years later. It was consequently statute-barred.

Court Findings

Limitation is a threshold issue going to jurisdiction. Once the limitation period has expired, the right of action is extinguished and the court is deprived of jurisdiction. The concurrent findings of the lower courts were open to correction because they were based on an incorrect application of the law.

The allegation of fraud raised on appeal could not prevent limitation from operating because fraud had not been distinctly pleaded or strictly proved at trial.

Ordinarily, where a court lacks jurisdiction, the appropriate order is to strike out the proceedings. However, a statute-barred claim is dead and cannot properly be revived by commencing fresh proceedings. In that exceptional circumstance, dismissal is appropriate. The Court of Appeal therefore erred both in holding that the action was not statute-barred and in striking out the claim.

Conclusion

The Supreme Court unanimously allowed the cross-appeal, set aside the Court of Appeal’s conclusion that the claim was not statute-barred, and ordered that Suit No. IST/LA/OA/02/2017 be dismissed as statute-barred and for want of jurisdiction.

Significance

The decision distinguishes claims for declared dividends from claims for refunds of money paid for unallotted shares. It confirms that the issuance of a sealed share certificate does not make the pre-allotment transaction a contract under seal, and that an application for shares crystallises into a contract only upon allotment. It also explains the exceptional basis on which an appellate court may dismiss, rather than strike out, a claim after finding that the lower court lacked jurisdiction because the claim is statute-barred.