Court declares N50 Stamp duty charges on Customers Bank Account, illegal

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A federal high court sitting in Asaba has declared the deduction of stamp duty charges by Nigerian banks as illegal.


Hon. justice Nnamdi Dimgba made this verdict on Wednesday, in a suit marked FHC/ASB/CS/139/2019 filed by one Rupert Irikefe.

The Central Bank of Nigeria (CBN), Zenith Bank PLC and the attorney general of the federation were joined as defendants in the suit.

Electronic transfers above N10,000 through the Money Deposit Banks (MDBs) attract a stamp duty of N50 which the MDBs are obliged to remit to the Federal Inland Revenue Service (FIRS).

In the suit, Irikefe who operates a current account, domiciled in Zenith bank submitted that the bank made several deductions of N50 and N100 from his account as stamp duties charges between 2016 and 2018.

He said he proceeded to visit the bank’s office at Asaba and Warri on September 14, 2018, and October 11, 2018, respectively to inquire as to the basis of the stamp duty charges.

Irikefe said he was told that the bank has legal backing to “enabled them to deduct the said amounts as stamp duties charges on teller deposits or electronic transfers from N1000 (One Thousand Naira) upward.”

The bank had relied on the decision of a federal high court in “Suit No. FHC/L/CS/1462/2013 between Kasmal International Service Limited v. Standard Chartered Bank Nig Ltd & 22 Ors.”

However, the plaintiff said he is aware of a subsisting decision the court of appeal in suit No. CA/L/437A/2014 delivered on April 21, 2016, and of the federal high court in suit No. FHC/L/CS/126/2016 delivered on March 13, 2017, in which CBN and Zenith bank were co-defendants in each suit, “wherein the courts found that there was no express provision in the Stamp Duties Act or any other law imposing any obligation on the 2nd defendant to collect and remit N50 as stamp duties charges on teller deposits or electronic transfers from N1000 upward.”

Irikefe submitted that the bank’s continuous deduction of stamp duty charged is in contempt of court.

He, therefore, prayed the court to declare that the bank’s continuous deduction despite subsisting court orders “is arbitrary, unlawful, illegal, dismissive and contemptuous of the lawful orders of superior courts of competent jurisdiction, condemnable, null and void and of no effect.”

He also prayed the court for an order “directing or mandating the 1st and 2nd  defendants to refund to him the total cumulative sum illegally, unlawfully and wrongfully deducted as stamp duty from his account domiciled with the 2nd  defendant from the commencement of the deductions on 31/01/2016 to the date of filing of this suit.”

The plaintiff also asked the court to award a cost of N50 million as general damages against CBN and Zenith bank for “grievous mental and psychological agony, unnecessary costs, inconveniences and pains caused by the unlawful, illegal and arbitrary imposition and deductions of a non-existent charge of N50 naira as stamp duty from his account” and an order of injunction restraining “the defendants, their servants, officers, privies or whomsoever from further deducting the sum of N50 naira as stamp duty on teller deposits or electronic transfers on money transaction from N1, 000.00 upwards” from his account unless authorized by law.

In urging the court to dismiss the suit, CBN argued that by virtue of sections 52(1) and 53(1) of the CBN Act and BOFIA it has immunity from suits, liability or adverse claims or any demand from anybody, including the plaintiff for actions it did in “good faith”.

They also contended that the Plaintiff failed to show any contractual relationship that he has with the CBN which gave rise to the suit.

On their path, Zenith Bank opposed the suit on the grounds that the plaintiff “wrongly instituted the suit by way of an originating summons instead of by way of a writ of summons requiring oral evidence.”

However, in giving judgment, the judge ruled in favour of the plaintiff.

He dismissed the preliminary objection of CBN on the grounds that it “cannot be shielded on the provisions of the law it relied on.”

He said that CBN’s argument that there is no contractual relationship between them and the plaintiff, “gathers no traction”

Dimgba held that “the 2nd  defendant (Zenith Bank) became a wrongdoer when they willfully disobeyed the judgment of courts.”

“They should therefore suffer the consequence,” he said.

“The truth is that when it comes to obedience to the law, everybody is on his own and should exercise independent judgment. It is my view that the 2nd defendant acted recklessly, and at its own peril, when it continued to deduct stamp duties charges from the plaintiff’s account, in the face of clear and binding judicial decisions arising from judicial proceedings which the 2nd defendant itself participated in.

The judge said the defendants also failed to place before the court “any judgment or orders of a superior court overriding the decisions in Suit Nos. CA/L/437A/2014 and FHC/L/CS/126/2016 that the Plaintiff is relying on, and which authorities empowered them to continue to make the deductions.”

“Nor have they provided the court with any amendment to the Stamp Duties Act empowering them to continue to make the deductions,” he stated.

“In the absence of any of the above, it is irresistible to say that the suit has merit and should succeed.

“I hereby resolve the questions posed in the originating summons in favour of the plaintiff.

I enter judgment in favour of the plaintiff on the following terms: Reliefs 1, 2, 3, 4, 5 and 8 are hereby granted.

Although the court refused to grant the N50 million request as general damages for the plaintiff’s mental distress, Dimgba ordered that the plaintiff be paid N2 million as exemplary damages. The Court further awarded the cost of #500,000 in favour of the Plaintiff against the CBN and Zenith Bank.

“This relief is granted to set an example that it is reprehensible conduct to willfully disobey decisions of competent courts of law,” the judge said.

In the words of the court “Having carefully listened to the pith and substance of the case advanced by the parties, firstly, the Court noted that the argument of the CBN is misconstrued and cannot stand.

“To enjoy the protection of the referenced provision, firstly, the action done or omitted to be done should be in good faith; and secondly, the actions done or undone in good faith should be one done or undone in the process of the execution of any powers conferred upon the apex bank by the legislation”, the Court held, adding that can it be said that the purported deductions made from the Plaintiff’s account “in the face of subsisting decisions of Courts prohibiting same, one done in good faith? I do not believe so. The reason is not far fetched.

“The question, is having been aware of the above clear decisions of competent courts (of this Court and Court of Appeal), why then did the 1st Defendant and the 2nd Defendant continue to treat those decisions as if they were not existing, and to continue to implement the provisions of the circular which had already been nullified as being inconsistent with the law, namely the Stamp Duties Act?

“I have never ceased to wonder the practice that is so very much exacerbated in current climes, where agencies of the government treat decisions of courts of law with disdain, and carry on as if this decisions were not in existence. In my view, and I have raised this alarm anytime an opportunity presents itself, (and I do so for posterity,) obedience to the rule of law of which respect for the authority and decisions of law is an integral part, is at the foundation and the heart of the stability of our society. Everybody has a stake in ensuring that the rule of law prevails, and that the authority of courts of law is held as sacred. The reason is because ultimately, everybody turns to the court for protection, for in the moral authority of the courts lie salvation for all. This includes for the weak, in the immediacy, and for the strong, potentially. Human and executive powers are all transient. Stripped by the ephemerality that attends human affairs of his raw or executive power, the strong today inevitably turns out to be the weak tomorrow. And the question is where will the strong, now weakened, turn to for protection tomorrow, if he or she in the hours of strength of today, facilitate or participate in the destruction of the courts, to which all ultimately turn to as an alcove of salvation in the moment of vulnerability? This is a question that I will continue to pose, and for which all stakeholders must and should ruminate in their minds.”

“Coming down to earth, my empathetic view is that by continuing with the deductions of stamp duty charges from the bank account of the Plaintiff and having same remitted to it, inspite of clear and binding decisions of Court prohibiting same, the 1st Defendant (CBN) has not acted in good faith; it actually acted in bad bad faith. By its every action, the 1st Defendant cannot take lawful shelter under Sections 52(1) and 53(1) of the CBN Act and BOFIA”.


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