Court Slams UBA With Heavy Damages For Illegally Freezing Customer’s Account
In a significant ruling, a Lagos Federal High Court has taken strong action against United Bank for Africa (UBA) Plc for unlawfully freezing the account of one of its valued customers, Ceddi Services Limited.
The court declared that such an action was a clear violation of the company’s fundamental rights to fair hearing and ownership of property.
Presiding over the case, Justice Yelim Bogoro not only ordered UBA Plc to issue an unreserved public apology to the aggrieved claimant but also mandated the apology to be published in two national newspapers. Additionally, the judge directed the bank to compensate Ceddi Services Limited with a total sum of N3.5 million to cover the losses the company incurred during the period when the account was placed on Post-No-Debit (PND) status.
The lawsuit, filed under suit number FHC/L/CS/1461/2020, involved not only UBA Plc but also the Inspector-General of Police, Deputy Inspector-General of Police (Force Intelligence Bureau, Police Force Headquarters, Abuja), and Nigeria Police Force, who were joined as defendants based on an order by Justice Peter Lifu on November 1, 2021.
Ceddi Services Limited sought redress through a fundamental rights enforcement suit, citing provisions such as Section 42 of the Companies and Allied Matters Act 2020, Section 36 and 44 of the Constitution of the Federal Republic of Nigeria 1999 (As Amended), and Article 7 and 14 of the African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act Cap. A9, LFN, 2004.
According to Mrs. Ngozi Agorua, the Manager of Administration and Property Services at Ceddi Services Limited, the trouble began on August 27, 2020, when Mr. Godwin Abuede, her colleague, visited the bank’s branch office to present cheques for personal income tax payments to the Lagos State Internal Revenue Service. To their surprise, the bank refused to honor the cheques without any explanation. Upon further investigation, they discovered that their account was tagged as ‘Debit Frozen Account’ on the internet banking portal, and all attempts to reach the bank via phone calls yielded no response.
The bank’s arbitrary actions had severe consequences for Ceddi Services Limited, as clients complained that funds remitted to the company’s account were not being disbursed for employee remuneration. The situation persisted, and the company’s reputation suffered while its ability to conduct transactions and provide services to clients was hindered.
Ceddi Services Limited engaged its solicitors, Messrs SimmonsCooper Partners, to address the bank’s conduct. A demand letter was sent to UBA Plc on September 14, 2020, asking for an explanation and the immediate removal of the account restriction. Unfortunately, the bank chose to ignore the letter and continued to withhold access to the company’s funds.
UBA Plc, in its counter-affidavit, claimed that it acted in compliance with a court order received from the Nigeria Police in August 2020, instructing them to freeze the company’s account as part of an investigation. The bank insisted that it was obligated to obey valid court orders and, therefore, the blame should not fall on them.
However, Justice Bogoro ruled that UBA Plc acted illegally by placing the company’s account on Post-No-Debit status using a repealed banker order. As a result, the bank was ordered to issue an apology and pay N3.5 million as damages to Ceddi Services Limited.
This landmark judgment serves as a reminder to financial institutions to act responsibly and within the confines of the law when handling their customers’ accounts.