Can A Bank Place A Restriction On A Customer's Bank Account Based On A Law Enforcement Agency's Directive And Without Securing A Court Order? A Review Of The Court Of Appeal's Decision In FBN Plc & Anor V DKN Investment Ltd. & Anor (2025) LPELR-80878(CA)

Introduction:

It has become a notorious practice among banks in Nigeria to place Post-No-Debit (PND) orders on their customers’ accounts upon receiving directives from law enforcement agencies, such as the Nigeria Police Force, the Economic and Financial Crimes Commission (EFCC), or the Independent Corrupt Practices and Other Related Offences Commission (ICPC). These directives are often issued on the grounds that the account holder is under investigation for an alleged crime, such as forgery, fraud, or misappropriation of funds.

Although the Ekiti Division of the Court of Appeal in Kuda Microfinance Bank Limited -v- Mrs Amarachi Kenneth Blessing (2024) LPELR-80643 (CA) held that, based on the Central Bank of Nigeria’s Regulation BPS/DIR/GEN/CIR/02/004 of 11 June 2015, a bank has the power to place a restriction on an account when fraud or suspicious activity is reported on that account without a Court order, some other Divisions of the Court of Appeal have disagreed with this position.

Recently, in the case of FBN Plc & Anor v. DKN Investment Ltd & Anor (2025) LPELR-80878, the Benin Division of the Court of Appeal unequivocally stated that a bank could not place a restriction on a customer’s account without a valid court order expressly authorising it to do so. This decision reiterates the sound and generally accepted position of the Court of Appeal in earlier cases, in which it held that a Bank cannot place a restriction on a customer’s account without a valid court order. Some of these decisions are Arogundade v. Skye Bank (2020) LPELR-52304 (CA), Diamond Bank v. Unaka & Ors (2019) LPELR-50350, Zenith Bank Plc v. Daily Times of Nigeria Plc & Anor (2022) LPELR-58332 (CA) and GTB v. Adedamola & Ors (2019) LPELR 47310.

This article analyses the Court of Appeal’s judgment in FBN Plc & Anor v. DKN Investment Ltd & Anor(2025) LPELR-80878 and highlights why it should be preferred to the Kuda Bank decision.

Facts of FBN Plc & Anor v. DKN Investment Ltd & Anor

A third party reported a case of threat to kidnapping and obtaining money by false pretence against the 1st Respondent to the Edo State Police Command. During its investigation, the Police secured an order from the Chief Magistrate Court in Benin City, Edo State, granting the Commissioner of Police access to inspect and take copies of the ledger and transaction records of the 1st Respondent’s bank account with the Appellant, First Bank of Nigeria.

Based on the Chief Magistrate’s order, the Police issued a directive to First Bank to place a restriction on the 1st Respondent’s account, and the Bank honoured the request.

The Respondent subsequently issued a cheque in favour of one Mr Segun Aiyedun, but the Bank dishonoured it and marked “Account Frozen” on the cheque. The Respondent was unaware of any ongoing investigation in which he had been linked, and he approached the Bank to resolve the issues relating to the freezing of his account. However, when he got to the Bank, he was arrested by the Police.

Being dissatisfied with the actions of the Bank and the Police, the Respondent instituted an action at the High Court of Edo State challenging the freezing of his account by the Bank without a valid court order.

At the trial of the case, the Bank, relying on the order of the Chief Magistrate’s Court and the directive issued by the Police, argued that it was not liable for freezing the Respondent’s account, as its action was based on a valid directive from the Police.

The trial court disagreed with the Bank’s submission and held that only the Court has the power to order the freezing of a customer’s account, and that the Police or any other enforcement agency could not issue a valid order freezing a customer’s account.

The Bank appealed against the trial court’s decision, and the Court of Appeal dismissed the appeal. The Court of Appeal held that it was wrong for the Police to have relied on an order, which merely granted it access to retrieve the ledger of an account, to direct the Bank to freeze the 1st Respondent’s account. Honourable Justice Ibrahim Sirajo, JCA, at Page 13 of the judgment held as follows:

“It is trite law that the order of a competent Court, like Exhibit G, remains valid and must be complied with by all persons and authorities to whom it is directed. However, no person, entity or authority can act outside the tenor of the order under the pretext of carrying out the said order. The Appellants cannot, under the guise of Exhibit G, freeze the account of the 1st Respondent, just as the Police have no power to authorise or direct a Bank to freeze the account of its customer that is under investigation without an order of Court to that effect. No person or Institution has power to unilaterally place a restriction on the account of a customer without a Court Order.”

The Court of Appeal also upheld the trial court’s award of N10,000,000.00 (Ten million naira) as damages in favour of the 1st Respondent because the freezing of its account and the refusal of its cheque amounted to a constitutional breach and a breach of the Banker-Customer relationship between the parties.

Comments on FBN Plc & Anor v. DKN Investment Ltd & Anor vis-à-vis the Court of Appeal’s Decision in Kuda Microfinance Bank Limited -v- Mrs Amarachi Kenneth Blessing (2024) LPELR-80643 (CA)

Although none of the parties raised the issue of the Central Bank of Nigeria’s Regulation BPS/DIR/GEN/CIR/02/004 of 11 June 11 2015 in FBN Plc & Anor v. DKN Investment Limited, we believe that the Court of Appeal’s decision would not have been different even if the Regulation were brought up, because the Court order which First Bank relied on in placing a restriction on its customer’s account did not give it the power to do so.

Furthermore, it is clear that one of the reasons the Court of Appeal in Kuda Microfinance Bank Limited -v- Mrs Amarachi Kenneth Blessing held that a Bank could place a restriction on its customer’s account without a court order was because the Terms and Conditions of Kuda Microfinance Bank expressly gives the Bank the power to place a restriction on any account that is being investigated for fraud or any suspicious activity. The Court of Appeal therefore held that the Bank’s Terms and Conditions were binding on the customer.

We strongly believe that the Kuda Microfinance Bank Case is susceptible to being overturned on appeal to the Supreme Court, as the decision could be abused by law enforcement agencies, which are always quick to invoke their investigative powers even in matters over which they lack jurisdiction. For example, we have seen many cases in which law enforcement agents assume jurisdiction over purely civil matters and claim that a contractual party is under investigation simply because they have a contractual dispute with the other party. Therefore, by wrongly characterising a contractual dispute as a criminal matter, a law enforcement agency could, in theory, direct a Bank to restrict a customer’s account without securing a Court order.

However, the fact that the Court of Appeal has delivered a growing number of judgments emphasising the necessity of a valid Court order before a Bank can place a restriction on a customer’s account is comforting. It may also well be a strong signal that the Kuda Microfinance Bank Decision will not survive scrutiny if it is appealed against to the Supreme Court.

Key Takeaways from the Decision in FBN Plc & Anor v. DKN Investment Limited The following are the key takeaways that can be extracted from the Court’s decision:

1. A Bank or any other financial institution does not have the power to place a restriction on a customer’s account without a valid and subsisting court order directing the Bank to do so in express terms. An order that merely grants access to account records does not, by extension, authorise a restriction or freezing of the account.
2. A law enforcement agency lacks the power to direct a Bank to freeze a customer’s account on the grounds that the customer is under investigation for alleged misconduct or fraud, without first securing a court order specifically permitting such a restriction.
3. A Bank will be liable in damages if it wrongfully deprives a customer of access to their account by placing a restriction without a valid court order. As illustrated by the N10,000,000.00 (Ten million naira) award in this case, the liability arises from both a constitutional breach and a violation of the banker-customer relationship.
4. Where a customer’s account is unlawfully restricted, the appropriate remedy is to approach the High Court to challenge the restriction and seek damages. A customer need not wait for the conclusion of an investigation before seeking judicial redress for the unlawful deprivation of access to their own funds.

Conclusion

The case underscores the illegality of the common practice in which Banks place restrictions on their customers’ accounts based on directives from the police or other law enforcement agencies, on the grounds that such a person is under investigation for alleged misconduct.

This decision further strengthens consumer protection in the banking sector, reinforces the importance of following due process when restricting a customer’s account and reaffirms the sanctity of the banker-customer relationship in Nigeria. Going forward, both Banks and law enforcement agencies must appreciate that a customer’s right to access their funds is constitutionally protected, and that no investigative interest, however legitimate it may appear, justifies circumventing the judicial oversight afforded by a court order.

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