BANK DRAFT : FIRST AFRICAN TRUST BANK LTD V. PARTNERSHIP INVESTENT COMPANY LIMITED

The opening of bank account in Nigeria now is not a ‘big deal’ in fact the least anyone would have is one, I know so many people with several bank accounts even though the balance is zero kobo ‘lol’

The issuance of dud-cheque/dishonored cheque being a criminal offense is no longer news, another very popular means of  business transaction common in the banking sector is the issuance of bank draft.

A bank draft is a written order sent from one bank to another for paying money to a customer. It is a cheque drawn on a bank funds such as cashier’s cheques when paying bills.

A cheque is defined under the section 73 of the bills of exchange Act cap 35 laws of the federal republic of Nigeria as not money until it is presented to a bank and paid. It is a bill of exchanged drawn on bankers and payable on demand.

The usual practice in bank for issuance of bank draft is that bank will not issue draft except they have received the value of the bank draft, this also guarantee payment of the draft without any problem, unfortunately a new position has been arrived in the Supreme Court recent decision on the above quoted case.

In the above case the defendant issued a bank draft of N7,1OO,000 (seven million one hundred  thousand naira only) in favor of the plaintiff for services rendered, on presentation of the draft it was returned unpaid, the plaintiff was surprised because he felt ordinarily a bank draft cannot be stopped because it was the bank itself that issue the cheque, and he had already given value on receipt of the bank draft. As the bank draft has remained unpaid, the respondent commenced an action against the applicant in the high court of Lagos state.

In the high court of Lagos state, it was held that once bank draft has been issued, the bank is under an obligation to pay the value to the person in whose favor the draft was issued.(this was the position before )

The defendant was dissatisfied by the decision of the Lagos high court thereby appealed the decision in the court of Appeal. In the judgment of the Appeal court, it found that the appellant averment of want for consideration for the bank draft and fraud are transverse by way of reply nor was the evidence tendered in support seriously challenged by the respondent. The court of Appeal however held that if the appellant had not received value for bank drafts as it is the practice of bank to receive value before bank drafts are issued. It upheld the judgment of the trial court and dismissed the appeal.

The appellant was still dissatisfied and it appealed to the Supreme Court. The matter was decided in his favor ,it was held by Justice Kutigi j.sc and other justices of the supreme court that a bank draft can be stopped at any time especially if  the promise made by the bank customer to the bank in respect of the transaction is breached.

Please note that bank draft can be stopped at any point according to the decision of the Supreme Court on the above stated case.

JUSTICES OF THE SUPREME COURT THAT DECIDED THE CASE ARE;

Per EJIWNMI J.S.C

       KUTIGI J.S.C

       MOHAMMED J.S.C

      IGUH J.S.C

      MUSDAPHER  J.S.C

Thank you.

Oyenike Alliyu-Adebiyi LLB(hons)BL