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  • Kupolati v. New Century Law Publishers Ltd
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  • 2005-03-07
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Kupolati v. New Century Law Publishers Ltd

TAIWO KUPOLATI

(Suing as Director and Shareholder of New Century Law  Publishers Ltd.)

V

NEW CENTURY LAW PUBLISHERS LTD.

JOBELA ENTERPRISES LTD.

LT.-GEN. OLADIPO DIYA (RTD)

KEHINDE DIYA

FEDERAL HIGH COURT

( LAGOS DIVISION )

SHUAIBU J.

FHC/L/CS/1030/2003

MONDAY, 20TH DECEMBER, 2004

ACTION - Cause of action in winding-up proceedings - Consideration of - Duty of court to confine to petition - Whether facts in petition disclose cause of action

ACTION - Cause of action - Where frivolous, vexatious or an abuse of process of court - Power of court to disallow trial of such a matter

ARBITRATION - Arbitration agreement - Party thereto commencing legal proceedings in court in respect of a dispute within the purview of the agreement - Whether thereby reprobates the agreement

ARBITRATION - Arbitration clause retained in a contract - When voluntary and valid -Dispute within contemplation of the clause -  Need for court to enforce same

ARBITRATION - Stay of proceedings pending arbitration - Prayer for -  Need not to grant as a matter of course

ARBITRATION - Stay of proceedings pending reference to arbitration -  Application for - When court will refuse - Section 5(1) and (2), Arbitration and Conciliation Act, Cap. 19, Laws of the Federation of Nigeria, 1990

COMPANY LAW - Memorandum of understanding (M.O.U.) -  When pre-dates incorporation of company - Status of M.O.U. as preincorporation agreement

COMPANY LAW - Petition for winding-up filed by plaintiff - Whether amounts to abuse of court process

COMPANY LAW - Share allotment - Allotment of 38% to petitioner on account of his ‘technical know how’ - Allotment of 62% to 2nd respondent who provided financial contribution - Failure or refusal of 2nd respondent to pay for its alloted shares -  Effect

COMPANY LAW - Winding-up proceedings - Petition in respect of Competence of Federal High Court to entertain

CONTRACT - Arbitration clause retained in a contract - When voluntary and valid -Dispute within contemplation of the clause - Need for court to enforce same

JURISDICTION - Competence of court - Defect in - Effect on proceedings

JURISDICTION - Exercise of in respect of dismissal of action - Need to do so sparingly and cautiously

PRACTICE AND PROCEDURE - Cause of action in winding-up proceedings - Consideration of - Duty of court to confine to petition - Whether facts in petition disclose cause of action

Issues:

1.              Whether the petition is competent.

2.              Whether the petition constitutes abuse of court process.

Facts:

The petitioner and the 2nd respondent incorporated the 1st respondent. They became the two shareholders with the alloted shares of 38% and 62% to the petitioner and 2nd respondent respectively. The petitioner however filed a petition for the winding-up of the company on the ground that “the affairs of the company have reached a deadlock as internal disputes and disagreement between the petitioner and the 2nd respondent (who are both persons that have control of the company’s affairs) have reached such a proportion that is impracticable for the company to carry on its business”. The petitioner particularised the fact of the deadlock thus:

(i)             The 2nd and 3rd respondents have withdrawn their capital contribution by virtue of which their membership of the company ceased.

(ii)           The petitioner has equally withdrawn his intellectual property and technical contribution from the company by virtue of which the company became moribund

The petitioner also maintained that: (a) by virtue of the withdrawal of its capital contribution upon which allotment of 62% shareholding equity in the company was based, the 2nd respondent ceased to be a shareholder in the 1st respondent; (b) the 2nd respondent having ceased to be a shareholder of the company became less than two contrary to the provisions and intendment of section 408(c) of the Companies and Allied Matters Act, 1990 ; (c) the only remedy available in the face of (a) and (b) above is for the company to be wound up.

The respondents filed an application seeking for “an order dismissing the petition herein for the winding-up” of the 1st respondent or alternatively, for an order “staying all further proceedings pending arbitration between the petitioner and 2nd respondent under the agreement between them dated 25  January, 2000”. The respondents further claimed in their preliminary objection that: (a) the petition is not bona fide; (b) the petition does not disclose a reasonable cause of action; (c) the petition is incompetent. They indeed deposed in paragraph 17 of their affidavit thus:

“17. However, the petitioner has now come out without the consent of Jobela with publication entitled “Federation Weekly Law Reports” which is exactly like that being jointly published by

Jobela and the petitioner through the 1st respondent but with “Renaissance Law Publishers Ltd.”, his own company, as the publishers.”

The parties duly addressed the court. The court considered the provisions of section 5(1) and (2) of the Arbitration and Conciliation Act, Cap. 19 Laws of the Federation of Nigeria, 1990:

5(1) If any party to an arbitration agreement commences any action in any court with the respect to any matter which is the subject of an arbitration agreement, any party to the arbitration agreement may at any time after appearance and before delivering any pleadings or taking any letter steps in the proceedings, apply to the court to stay proceedings.

   (2) A court to which an application is made under subsection (1) of this section, may, if it is satisfied:-

(a)           That there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and

(b)           That the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration make an order staying the proceedings.”