In a landmark victory with far-reaching implications for corporate governance in Nigeria, the Supreme Court has handed Neconde Energy Limited and Nestoil Limited a decisive win, overturning the earlier judgment of the Court of Appeal and redefining the legal boundaries of receivership.
The dispute, between Neconde Energy Limited and FBNQuest Trustees & others, began with a preliminary objection challenging the competence of the appeal. The respondents had argued that the issues raised were of mixed law and fact, requiring prior leave of court.
However, in a firm and unanimous stance, the apex court overruled the objection, holding that the issues were strictly matters of law. This paved the way for the court to consider the substantive appeal.
At the centre of the case was whether a receiver/manager has exclusive authority to appoint legal representation for a company under receivership, thereby sidelining the company’s board.
In its judgment, the Supreme Court held that where the legality of a receiver/manager’s appointment is being challenged, the company retains the authority to act through its board of directors, including appointing legal counsel.
The court emphasized that denying a company this right would create an unjust situation, effectively stripping it of the means to challenge potentially unlawful control over its assets. It further noted that such a scenario could result in a conflict of interest where a receiver seeks to control both the management and legal representation of the company.
Consequently, the apex court allowed the appeal, overturned the decision of the Court of Appeal which had disqualified the company’s counsel, and restored Neconde’s legal standing.
The court also affirmed that Nestoil Limited, whose appeal was tied to that of Neconde, equally shares in the victory.
Legal observers say the ruling marks a significant win for corporate rights and sends a clear warning against the misuse of receivership as a tool to suppress legitimate legal challenges.
