Zenith Bank Plc Fined N85m For Freezing Customer’s Account Without Valid Court Order

Zenith Bank plc fined N85m for freezing customer’s account without valid court order. The judge held that the bank acted on an invalid order made by a magistrate court that lacked the requisite jurisdiction.

A High Court, Abuja Division, has awarded a fine of N85 million against Zenith Bank Plc for freezing a customer’s bank account by relying on an invalid court order.

In a judgment, Justice S. U. Bature, also ordered the bank to immediately unfreeze the account domicile in its branch at 63, Usuma Street, Maitama, opposite Transcorp Hilton Hotel, Abuja.

Justice Bature directed the bank to publish a public apology to the customer, Abhulimen & Co, in two national newspapers and on its website.

The judge held that the bank acted on an invalid order made by a magistrate court that lacked the requisite jurisdiction.

Justice Bature further held that the decision of the bank and the Nigeria Police Force, the 2nd defendant in the suit, to freeze the customer’s account, based on a supposed order by the magistrate court, without notifying the said customer, was illogical and a betrayal of the banker-customer relationship between parties.

The judge said it was unfortunate that a major financial institution such as Zenith Bank, with a legal department, supposedly manned by lawyers, would claim to have acted based on an invalid order by a magistrate court lacking the jurisdiction to entertain any banking related case, including issuing orders for the freezing of a bank account.

The judgement was delivered on July 16, but its certified true copy was given to journalists on Thursday in Abuja.

Paulyn O. Abhulimen, SAN, trading under the name and style of Abhulimen & Co, had, in the suit marked: FCT/HC/CV/2194/2024, sued the Zenith Bank and NPF as 1st and 2nd defendants.

Abhulimen sued through the law firm of Kehinde & Partners LP, claiming that, in early 2024, after being unable to access the account of her firm, Abhulimen & Co, and make transactions with it, she discovered that the bank placed a post-no-debt (PND) on it.

She claimed to have subsequently contacted an official of the bank, who oversees the account, Obi Okafor.

She said Okafor told her about the development, following which the bank, on March 13, 2024. claimed to have frozen the account based on an order obtained by the NPF from a Chief Magistrates Court in Mararaba Gurku, Nasarawa State.

Delivering the judgment, Justice Bature said, “The said account was opened at the first defendant’s (Zenith Bank’s) Transcorp Hilton branch, in Abuja, and the 2nd defendant (NPF) is also domiciled in Abuja. The rationale behind seeking the said order at a magistrate court under the Nasarawa State jurisdiction cannot be understood, and the 2nd defendant did not appear, to be able to give any explanation or reason as to why they decided to follow this line of action. The said magistrate court lacked the territorial jurisdiction to entertain the application.

“Regarding the substantive jurisdiction of the court to make the order, it is clear from the provisions of Section 251 of the Constitution of the Federal Republic of Nigeria (1999 as amended), that matters relating to banks and banking transactions are within the exclusive jurisdiction of the Federal High Court, and matters relating to banker-customer disputes are jointly under the jurisdiction of the Federal High Court, State High Courts and High Court of the FCT,” Justice Bature said.

According to the judge, from the foregoing, magistrate courts lack the jurisdiction to entertain an application for an order to freeze a bank account of a person and should not have entertained the said application in its entirety.

“The legal department of the first defendant (Zenith Bank), being lawyers, should have been aware of this position of the law and taken the appropriate action in this situation, as they ought not to have obeyed the court order in the first place. Thus, the 1st defendant was wrong to have placed a PND on the account of the claimant based on the order of a court lacking the requisite jurisdiction to do so. I so hold,” the judge held.

Zenith Bank Plc Fined N85m For Freezing Customer’s Account

The judge faulted the failure of the bank to inform the claimant about its decision to freeze her company’s account, describing it as a breach of the duty of care it owed to its customers.

Justice Bature said, “It is the humble opinion of this honourable court that, the first defendant owed the claimant a duty of care of duly informing her that her account had been frozen.

The 1st defendant placed a post-no-debit on the account of the claimant’s firm, but same was not communicated to the claimant until she encountered difficulties in the use of the said account.

“It is the humble opinion of this honourable court that, the 1st defendant owed the claimant a duty of care of duly informing her that her account had been frozen.

The failure of the 1st defendant to inform the claimant of the state of affairs on her account amounts to negligence on the part of the 1st defendant and hence, a breach of duty of care and due diligence owed to the claimant. I so hold,” Justice Bature said.

Having found that the bank and the NPF acted unlawfully, the judge proceeded to declare among others, that an order to freeze a bank account cannot validly be granted ex-parte to last indefinitely.

He also declared that the chief magistrate court of Nasarawa State, sitting at Mararaba Gurku, lacked the requisite jurisdiction to make an order to freeze the claimant’s Zenith Bank Plc’s account number: 1012272348, based on an ex-parte application.

“The defendants are hereby ordered to jointly and severally pay the sum of N60 million to the claimant as general damages for the embarrassment, psychological trauma, financial distress, emotional stress and grave inconveniences suffered by the claimant due to the defendants’ actions.

The defendants are hereby ordered to jointly and severally pay the sum of N25 million to the claimant as cost of this action,” Justice Bature stated.