The 1st respondent, a limited liability engaged in farming business, approached the appellant for a loan in prosecution of its business. The 2nd respondent was the Managing Director of the 1st respondent. Initially the 1st respondent applied for a loan of N6, 000,000.00 out of which the appellant approved N434, 000.00. Further in 1981 the 1st respondent applied for additional loan for N530, 000.00 which was approved. In 1982 the respondent made the 3rd application for N680, 000.00 which was granted. In 1983 additional sum of N400, 000.00 was also advanced as working capital. The total amount thus approved was N2, 044,000.00. The last approval was made on 8/9/93. The loan was repayable by monthly installments spanning over 4 years commencing from 15/3/84 and ending March 1988.

The Loan transaction was granted under the Agricultural Credit Scheme Fund Act Cap 13 Laws of Federation of Nigeria, 1990.

The respondents claimed that as at 28th October, 1983 it still had a balance on N60, 655.37 to its credit in the loan account with the appellant but when it presented cheque to withdraw funds there from the appellant dishonored the said cheque. As a result it was starved of funds with which to feed the birds on the poultry farm. Consequently, the birds died and the company could not maintain its machineries and staff. In 1986, the respondents filed suit No AB/128/86.

Thereafter, in 1987 the appellant published an auction notice in the Daily Sketch newspaper advertising the proposed sale of the 2nd respondent’s properties used as security for the loan. In reaction thereto, the respondents filed another suit No. AB/47/87 wherein it sought among other a declaration that the exercise of mortgage’s power of sale has not arisen; declaration that the registered mortgages were null and void; injunction restrain the appellant and its auctioneer from selling the properties and damages for libel arising from publication of the auction notice.

The two suits were consolidated. Parties filed and exchanged pleadings with the appellant counter-claiming for the total sum granted as loan and interests.

The respondents contended that by virtue of sections 12 and 15 of the Agricultural Credit Scheme Fund Act the appellant's counter-Claim was incompetent in that the Board of the Agricultural Credit Scheme was not made a party. The appellant contended on the other hand that by virtue of the fact that the ceiling of N1, 000,000.00 provided in the Agricultural Credit Scheme had been exceeded in the amount granted, it has taken the matter outside the purview of the Act.

At the end of trial, the learned trial Judge gave judgment in favour of the respondents holding that the appellant breached the load agreement by starving the respondents of funds. It also held that no notice was served on the respondents a required to enable the appellants exercise its powers of sale under the mortgage deeds Exhibits N and N1.

It accordingly held that the publication of auction notice in the circumstance was libelous of the respondents and awarded damages.

Being dissatisfied the appellant appealed to the Court of Appeal.