E-Financial
Zenith Bank Slammed with ₦85m Fine for Freezing Account on Invalid Court Order
A High Court in Abuja 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.
Justice S. U. Bature, in a judgment, 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 (NPF), 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-customers’ relationship between parties.
The judge said it was unfortunate that a major financial institution like Zenith Bank, with a Legal Department, supposedly manned by lawyers, would claim to have acted based on an invalid order by a Magistrate Court that lacked 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 (CTC) made available to newsmen 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 is in charge of the account, Obi Okafor.
She said Okafor told her about the development, following which the bank, in 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, here 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, it is clear that 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.
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 declared.
Nationwide Unstructured Supplementary Service Data (USSD) glitches are occurring because the Nigerian Communications Commission (NCC) and Central Bank of Nigeria (CBN) transitioned to an “End-User Billing” (EUB) framework.
USSD is a real-time messaging protocol that allows you to communicate directly with your mobile network provider’s computers. It operates without needing an internet connection and is typically triggered by dialing a code starting with \(\ast \) and ending with \(\#\) (e.g., $\ast$123\(\#\)).
Instead of deducting fees from bank accounts, the ₦6.98 per-session charge is now deducted directly from mobile airtime.
The disruptions, which have affected customers of several leading banks including First Bank of Nigeria, Access Bank, United Bank for Africa, First City Monument Bank and Stanbic IBTC Bank, have sparked confusion among retail customers, traders and Point of Sale operators who rely heavily on USSD banking for daily transactions.
Previously, banks deducted USSD charges directly from customers’ bank balances before settling telecom operators separately.
That framework has now been replaced with an End-User Billing system.
Under the new model, customers are charged N6.98 for every 120-second USSD session, with the fee deducted directly from mobile airtime.
This means customers with little or no airtime on their SIM cards may be unable to complete transfers, regardless of how much money they have in their bank accounts.
A Federal High Court in Abuja has affirmed the Central Bank of Nigeria’s (CBN) exclusive ownership of the “eNaira” digital currency platform and trademark.
eNaira
Justice James Omotosho, in a judgment delivered on Friday, restrained eNaira Payment Solutions Limited from presenting itself as the owner of the “eNaira” trademark.
The court also ordered the company to immediately adopt a new name that does not contain the word “Naira”.
The suit, marked FHC/ABJ/CS/113/2021, was dismissed, while the court awarded N10 million costs in favour of the CBN following its successful counterclaim.
Justice Omotosho held that although the company had been registered with the Corporate Affairs Commission (CAC) since 2004, its name was misleading because of its close association with Nigeria’s sovereign currency.
“The name chosen by the plaintiff on its incorporation is in the circumstances unregistrable due to the misleading nature of the name, which suggests government patronage,” the judge ruled.
The court further noted that the Trademark Registry had, through a letter dated Nov. 15, 2021, withdrawn approvals earlier granted to the company for applications related to the “eNaira” trademark under classes 36 and 42.
According to the judgment, the company was informed that “eNaira is a national intellectual property and constitutes a symbol and national asset of Nigeria.”
Justice Omotosho ruled that the plaintiff had no superior legal claim to the trademark and therefore could not seek injunctive relief against the CBN.
“A party that has no legal right cannot be entitled to an injunction. The purport of this is that, prima facie, the plaintiff has no valid trademark to the exclusive use of the eNaira trademark,” he held.
The judge also emphasised that under Section 852(2) of the Companies and Allied Matters Act, the CAC has powers to reject or direct changes to company names that suggest government affiliation.
“The ‘eNaira’ name is so closely linked to the legal tender of Nigeria, which is exclusively controlled by the CBN.
“An average person on the street is most likely to think that the plaintiff is an agent of the Federal Government or the CBN,” the court stated.
Justice Omotosho added that the company’s proposed activities involving digital currency operations created the impression that it had official authority to issue or manage a digital version of the naira.
“The proposed business of the plaintiff… no doubt creates the impression that the plaintiff has the authority of the Federal Government of Nigeria to issue and control a digital form of the Naira,” he said.
The judge warned that allowing a private entity to control the “eNaira” name could undermine public confidence and create confusion within the country’s financial system.
“Any digital currency with the name ‘eNaira’ will no doubt create the impression that it is an official digital form of the Naira.
“This would be disastrous for the Nigerian economy and will create skepticism among users, as it is not guaranteed by the Central Bank of Nigeria,” he added.
The court also observed that the CAC had lawfully directed the company to change its name within six weeks of its Dec. 9, 2021 directive, but the company failed to comply.
During proceedings, counsel to the plaintiff, Mr David Ityonyman, argued that the word “Naira” was not exclusive to Nigeria and should not be monopolised.
“Nothing stops India from having a Naira. Also, countries like the U.S. and Canada make use of dollars. None of them has laid claim to the name,” he submitted.
He further argued that the company had used the “Naira” branding internationally for more than two decades before the CBN launched the eNaira platform in 2021.
Central Bank of Nigeria (CBN) and commercial banks are reviewing the large number of transaction alerts sent to customers and the complaints about bank charges.
So called bank alert refers to real-time SMS or email notifications from your financial institution about transactions, balances, or security updates.
Olayemi Cardoso, governor, CBN, said this in Abuja after the 305th Monetary Policy Committee meeting.
He explained that many bank customers are confused because they receive too many debit alerts for a single transaction.
To address this, the CBN has created a quarterly meeting system involving its consumer protection team, commercial banks, and the top 10 microfinance banks. The goal is to resolve customer complaints faster and improve banking services.
Cardoso said one major issue being studied is how banks send multiple notifications for one transaction.African Politics Analysis
He said this often confuses customers and suggested that alerts should be simplified and combined so people can clearly understand what each debit is for.
He added that the issue is still being worked on and solutions will be proposed soon.
On the N50 stamp duty charge, the CBN governor explained that it is not a bank charge.
He said the charge comes from tax authorities, while banks only collect it and send it to the government.
He advised customers who notice wrong charges to first complain to their bank. If the issue is not resolved, they can escalate it to the CBN’s consumer protection department.
Cardoso also said the CBN has strengthened its monitoring system to ensure banks handle complaints properly, compensate customers when needed, and improve customer service.
The CBN is also reviewing how banks apply rules on charges and customer complaints, with the aim of improving transparency and reducing repeated issues in the banking system.
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