Court Nullifies Cancellation of Standard Alliance’s Licence

….Says NAICOM did not follow due process

Wale Igbintade

 Justice Akintayo Aluko of the Federal High Court in Lagos has declared the  cancellation of the certificate of Registration of Standard Alliance Insurance Plc by the National Insurance Commission(NAICOM) null and void same having been taken by a body not empowered to do so by law.

Justice Aluko stated this in his judgement delivered on July 7 in a suit filed by Chief Dickson Odoko, Elder Donatus Mrowhobor Uba, and Standard Alliance Investments Limited (Suing for themselves and on behalf of the shareholders of Standard Alliance Insurance Plc) against the National Insurance Commission and 3 others.

Other Defendants in the suit marked FHC/L/CS/1585/2022 are Kehinde Aina, (NAICOM-Appointed Receiver/Liquidator of Standard Alliance Insurance Plc), the Minister of Finance, and Mr. Awodiya Omotayo.

The court also awarded N200,000 as the cost of action of the suit in favour of the Plaintiffs against the Defendants.

Specifically, Justice Aluko held that the purported decision of National Insurance Commission to cancel the certificate of Registration of Standard Alliance Insurance Plc  for the purpose of its winding up did not follow due process of law and are liable to be struck down and set aside. 

The court held “Coming from the above, as the 1st and 3rd Defendants (NIC and Finance Minister) failed to comply with the mandatory provisions in sections 7(4), (5), (6) and (7) and 8 (3) of the Insurance Act, their decision to cancel certificate of registration of Standard Alliance Insurance Plc and the appointment of the 2nd Defendant as receiver/liquidator of the insurance of company remain null and void enterprise in the eye of the law. 

The plaintiffs in their originating summons dated August 23, 2022, sought the court’s interpretation of the relevant provisions of  Sections 7 and 8 of the Insurance Act, 2003 and section 6 (6) of the Constitution of the Federal Republic of Nigeria 1999 as amended.

The plaintiffs asked the court to declare that “the purported notice of cancellation of registration of Standard Alliance Plc issued by the first defendant dated June 21, 2022, was a nullity abinitio.

“A declaration that the purported appointments of the 2nd defendant as a receiver/liquidator of Standard Alliance Insurance Plc is illegal and therefore void. A declaration that all the actions of the 2nd defendant since his appointment as a Receiver/Liquidator of Standard Alliance Insurance Plc is a nullity and, therefore void. 

“And a declaration that the purported decision of the first defendant to cancel the certificate of registration of Standard Alliance Insurance Plc is null and void same having been taken by a body not empowered to do so by law.”

Delivering his judgment on Friday, Justice Akintayo Aluko held that the defendants failed to comply with the mandatory provisions of the Insurance Act.

In his judgement, Justice Aluko stated that the failure of NAICOM  to comply with the provisions of the law was “fatal and rendered the process leading to the cancellation of Standard Alliance Insurance Plc’s certificate of registration and the appointment of a receiver null and void.”

Aluko said,: “To this end, I resolve questions 1 to 5 in the negative, all in favour of the plaintiffs against the 1st to 3rd defendants.

“The declarations in reliefs A, B,C and D are hereby made. The orders prayed for in reliefs E,F and G are hereby granted, cost of this action in the sum of N200,000 is awarded in favour of the plaintiffs against the 1st to 3r defendants.”

By their Originating Summons dated 23/8/2022 filed the same date, the Plaintiffs commenced this suit against the Defendants seeking interpretation of the relevant provisions of sections 7 and 8 of the . Insurance Act, 2003 and section 6 (6) of CFRN 1999 (as amended). 

NAICOM had issued a notice of its intention to cancel certificate of registration of Standard Alliance Insurance Plc on March 28, 2022.

Upon receipt of the notice, the insurance company lodged an appeal with the Minister of Finance (3rd Defendant), highlighting its readiness to address all the grounds raised by the 1st Defendant in the notice of intention to cancel its certificate. 

Without receiving any notification of decision of the 3rd Defendant on its appeal, the insurance company received notice of cancellation of its certificate of registration issued by the 1st Defendant on 21/6/2022 and proceeded to appoint the 2nd Defendant as Receiver/Liquidator of Standard Alliance Insurance Plc without regard to pendency of the company’s appeal to the 3rd Defendant.

The Plaintiffs, who are the largest shareholders in the insurance company have accused the 1st to 3rd Defendants of failure to comply with mandatory provisions of the Insurance Act, 2003 and that their interests have been adversely affected. 

 The Defendants maintained that they complied with provisions of the Insurance Act

However, since the Defendants in their notice of preliminary objection challenged the Court’s jurisdiction to hear and  determine the suit.