The Supreme Court decision of Friday, 10 April, 2026, that set aside the Ruling of the Court of Appeal which disallowed the appearance of Senior Advocates of Nigeria, Wole Olanipekun and Muiz Banire, as counsel for Neconde Energy Limited and Nestoil Limited, respectively in the action instituted by FBN Quest Merchant Bank Limited and FBN Trustees Limited has continued to reverberate across the legal and business community as landmark and decisive. In a unanimous judgment of the court read by Mohammed Baba Idris, JSC., the Supreme Court held that the Court of Appeal erred by allowing a receiver manager whose appointment was under challenge to perform functions including appointing counsel for the appellant in the proceeding which challenges the very foundation of the receivership.
The Lagos Division of the Court of Appeal had by Ruling delivered on 23 January, 2026, held that the receiver appointed by the plaintiffs, FBNQuest and FBN Trustees, over some assets of the duo of Neconde and Nestoil was upon his appointment vested with wide powers over the companies including the power to sue and the sole authority competent to appoint counsel for the companies in an action instituted by the said plaintiffs. In the decision of the Court of Appeal delivered by Yargat Nimpa, JCA; Danladi Senchi, JCA and Polycarp Kwahar, JCA, it held that the appearance of counsel not appointed by the receiver in the suit remained irregular and accordingly, disqualified Olanipekun and Banire, as well as their respective team from appearing for the companies.
At the hearing of the appeal at the Supreme Court on 10th March, 2026, Bode Olanipekun, SAN argued that the questions submitted by the plaintiffs before the trial court bordered on whether a receiver manager could be validly appointed and if the receiver manager could perform his duties. Pointing to specific questions in the originating summons, he argued that whilst the court was yet to approve the validity of the appointment, there was an exception to the right to exercise powers of a receiver and conferring the power to appoint counsel for the company on the same receiver manager is tantamount to prejudging the substantive suit and a breach of the appellants’ right to fair hearing. Relying on various decisions of the Court of Appeal, Olanipekun contended that it is not the law that where the appointment of a receiver is the subject of a dispute between the appointor and the company in respect of which there is an appointment, the company under receivership cannot appoint counsel to represent it in such proceeding. The Senior Advocate of Nigeria further submitted that an application of section 556 of CAMA to the extent of causing the receiver to appoint counsel for the defendant in an action commenced by his appointor, which puts his appointment in issue, will amount to an absurdity.
Counsel to FBNQuest and FBN Trustees, Jide Koku, SAN leading Victor Ogude, SAN on the other hand, argued that by section 556 (3) of the Companies and Allied Matters Act and item 4 of the Eleventh Schedule of the Act, the receiver has the power to appoint solicitor or accountant or other professionally qualified person to assist him in the performance of his functions.
Arguing in similar vein, counsel appointed by the receiver, Ame Ogie, Esq. and M.B. Ganiyu, Esq., submitted that their respective authorities derived from the power of the receiver conferred by section 556(3) of CAMA and the Eleventh Schedule of CAMA.
Allowing the appeal, the Supreme Court held that where, as in the instant case, the validity of the appointment of the receiver is in issue, the same receiver cannot sanction representation for the company in the same proceeding. Highlighting the questions submitted by FBNQuest and FBN Trustees in their originating summons before the trial court, the apex court noted that a close study of the questions indicates that they do not concern the day-to-day management of the company or realisation of the charged assets; but that they go to the very foundation of the receivership itself. While holding that it would occasion conflict of interest for the receiver appointed by the lenders to represent or approve the representation of the company in the same action instituted on behalf of the lenders, the court noted that “the receiver was appointed by the 1st and 2nd respondents whose rights under the instrument are directly in issue. In such circumstances, to insist that the receiver alone must determine the legal representation of the appellant will create an obvious conflict of interest. The receiver’s authority derives from the very transaction which legality and scope are being questioned. Proceedings of this nature cannot be regarded as falling under the general authority of the receiver under section 556(3) of the Companies and Allied Matters Act, and Eleventh Schedule of Act.”
According to the court, where, as in the instant case, the dispute concerns the legality and the extent of the receivership itself, the company cannot be deprived of the opportunity to challenge it through its directors. It then held that the defence of the action through its directors and the counsel retained by them cannot be said to be incompetent merely because a receiver has been appointed. In expressing the unanimous position of the court, Justice Idris found that the proceedings before the trial court which questions the enforceability of the security and the validity and scope of the receivership fall outside scope of authority of the receiver.
Nume Ekegha
