JURISDICTIONAL ISSUES IN DEBT RECOVERY MATTERS
To recover debt from a company and individual in Nigeria involves various legal options. It is pertinent to state that there is a limitation period to which a debt can be recovered in Nigeria.
LIMITATION TO AN ACTION FOR A DEBT RECOVERY
The Limitation of Statute Law provides in Section 18 that an action for recovery of debt cannot be brought after 6 years. This means that the law will not allow an action against a debtor if such action is not brought to court within the span of 6 years from the day in which the action arose. It is clear from S. 20 (1) (a) of the Limitation of Statute Law that an action on a simple contract for recovery of debt must be brought to court within six years from the date the cause of action accrued. S. 12 (c) states the consequences of the failure to comply with S.20 (1) (a) of Act. It is stated clearly that the right of action shall cease to exist and therefore not be exercisable after the expiration of the 6 years
The limitation period for debt recovery that arose from a simple contract is six (6) years excluding the year the contract was entered into and executed. So it is, therefore, advisable to institute an action for debt recovery timeously before it becomes statute-barred when the 6 years elapses as provided under Section 21(1) (a) of the Limitation of Action Law.
Usually, clients and lawyers are uncertain as to which Court of record has the requisite jurisdiction to entertain causes of action especially for debt recovery.
To clear this dilemma, Section 251 (1) (d) of the Constitution of the Federal Republic of Nigeria, 1999 provides that both Federal high court and the State High Courts have the jurisdiction to settle disputes between an individual customer and his bank. In effect, both Federal High court and the State High Courts have concurrent jurisdiction over Banker/Customer Relationship issues and transactions between a bank and individual customer.
DEBT RECOVERY PROCESSES
It is a known fact that any judgment obtained a court will be unproductive without the means of enforcing the judgment. Consequently, the major ways of executing a judgment in relation to debt recovery are:
➢ Writ of Fifa
➢ Attachment and Sale of Immovable Property
➢ Writ against goods and chattel
➢ Writ of Sequestration Garnishee Proceedings
➢ Winding Up Proceedings
This is a mode of execution in which a debt that is due to the judgment debtor from another person is attached by the judgment creditor in order to satisfy the judgment debt and costs. By this process, the court has power to order a third party to pay direct on the judgment creditor the debt due or accruing due from him to the judgment debtor, as much of it as may be sufficient to satisfy the amount of the judgment and the cost of the garnishee proceedings.
Furthermore, this is a useful attachment of the debtor’s effects in the garnishee’s hands and is a form of execution of a judgment which is given by court against the debtor.
PARTIES TO A GARNISHEE PROCEEDING
Parties to a garnishee proceeding are;
I. Judgement debtor
ii. Judgment creditor
iii. Debtors to the judgment debtor.
WRITTEN BY: CHAMAN LAW FIRM TEAM
TEL: 08065553671, 08024230080