UBA Floors Vaswani Brothers In A Landmark N156bn Debt Recovery Case

FUNSHO AROGUNDADE 

United Bank for Africa (UBA) Plc has secured a significant legal victory in its N156 billion debt recovery proceedings against Indian billionaire Sunil Vaswani-led Stallion Group, following a court judgment which upheld the Bank’s position on all issues submitted for determination.

In a sweeping decision delivered by Justice Daniel Osiagor of the Federal High Court sitting in Ikoyi, Lagos on Friday, the court granted all the reliefs sought by UBA, affirming the validity of the appointment of a Receiver/Manager, the enforceability of the mortgage security and the liability of the guarantors.

The Court observed that the Defendants did not dispute the existence of their indebtedness to the Bank but challenged the amount claimed. It further held that the reconciliation of accounts between the parties did not extinguish or negate the underlying indebtedness.

The judgment represents a major development in the long-running debt recovery dispute, which began in 2023 when UBA instituted proceedings against Stallion Nigeria Limited and several associated companies over the alleged indebtedness.

In a major affirmation of UBA’s enforcement rights, the Court upheld the appointment of Romeo Ese as the Receiver/Manager and confirmed his entitlement to take possession of the mortgaged property and seek appropriate protective orders.

The Court also dismissed objections raised by Barbedos, the 12th Defendant, holding that it had failed to establish any proprietary rights over the mortgaged property. Consequently, its consent was not required for the creation of the mortgage, and its objections were rejected.

Significantly, the Court restrained the Defendants from diverting receivables due to them from government agencies, thereby reinforcing the Bank’s ability to protect its recovery interests.

The judgment also affirmed the liability of the guarantors, strengthening UBA’s legal position in pursuing recovery of the outstanding obligations.

The decision represents a comprehensive victory for UBA, with the Court resolving all issues in the Bank’s favour and granting all the reliefs sought.

The ruling is particularly significant for the enforcement of creditors’ rights in Nigeria, underscoring the legal validity of properly constituted security arrangements and the authority of duly appointed receivers to enforce creditors’ interests.

It also reinforces the principle that disputes over the precise amount of an outstanding debt do not, by themselves, invalidate the underlying indebtedness or prevent creditors from exercising their lawful recovery rights.

The judgment marks a major milestone in UBA’s efforts to recover its exposure to Stallion Group and safeguard the interests of the Bank and its stakeholders.

The dispute dates back to October 2023, when UBA obtained interim orders from the federal high court to enforce its security over assets belonging to Stallion Nigeria Limited and its subsidiaries. The properties affected by the earlier orders included industrial and commercial assets in Lagos, Port Harcourt and Kano.

The bank had alleged that Stallion Group owed approximately N156.03 billion, a claim that became the subject of litigation involving several companies within the conglomerate and their guarantors.

In November 2023, Stallion Group disputed the bank’s account of the debt controversy, maintaining that it had made substantial repayments and was engaged in discussions over account reconciliation and restructuring.

The proceedings subsequently encountered procedural disputes, including a request by counsel representing some of the defendants for the case to be transferred from the court of Justice Akintayo Aluko, who had handled earlier applications.

Stallion Group has previously faced debt-related disputes involving other Nigerian financial institutions.

In December 2019, Stallion Motors, a Subsidiary of the Group’s showrooms on Victoria Island, Lagos, was sealed following an ex parte court order connected to debt recovery proceedings.

At the time, Stallion Motors’ Chief Executive Officer, Anant Badjatya, dismissed claims that the automobile company’s operations had been shut down over an alleged N330 billion debt owed to Nigerian banks and the Asset Management Corporation of Nigeria (AMCON).

Badjatya said the enforcement action had been taken without the company’s knowledge and maintained that its financial position remained sound.

He stated that Stallion Motors had assets exceeding N750 billion against liabilities of approximately N150 billion, which he described as a healthy debt position.

The 2019 dispute provides historical context to the group’s dealings with creditors.

The latest judgment strengthens UBA’s position in enforcing the mortgage securities and pursuing recovery against the principal debtors and guarantors.