The Federal High Court in Lagos has recently directed Fidelity Bank Plc to pay a substantial amount of N811,174,229.25 to the Chief Registrar.
This payment represents the principal amount claimed by Shago Payments Limited, a fintech company, in a legal dispute involving Fidelity Bank and additional defendants, including Global Accelerex Ltd and Interswitch Ltd.
Justice Chukwujekwu Aneke issued the order on July 17, 2024, following an ex-parte application made by Dr. Oladapo Olanipekun (SAN) on behalf of Shago Payments. The court’s directive requires that the specified sum be held in trust in an interest-yielding account managed by the Chief Registrar.
The account is to be with one of the following banks: First Bank Nigeria Limited, Zenith Bank Plc, or Guaranty Trust Bank Limited. This arrangement is to remain in place until the legal proceedings concerning Fidelity Bank and the other defendants are concluded.
In addition to the payment order, the court has issued interim injunctions to prevent Fidelity Bank from undertaking certain actions:
- Restraining Further Actions on Chargeback Claims: Fidelity Bank is prohibited from taking any further steps related to the alleged chargeback claims between June 2003 and August 2023. Specifically, the bank is restrained from combining or setting off the credit balances in Shago Payments’ various accounts or acting against any other accounts linked to the plaintiff.
- Preventing Misrepresentation: The bank is also restrained from misrepresenting Shago Payments as a debtor concerning the disputed chargebacks. This includes preventing the bank from listing the plaintiff on credit risk management systems or other credit bureaus.
The court has set the next hearing for August 1, 2024.
Shago Payments alleges that Fidelity Bank debited its accounts without authorization, resulting in a total amount of N940,321,051.58, of which N811,174,229.25 is attributed to fraudulent chargeback claims. The fintech company accuses Fidelity Bank of breaching several obligations, including the Quincecare duty, which obligates banks to act with diligence and refrain from executing transactions when fraud is suspected.
Shago Payments is also seeking a formal investigation into Fidelity Bank’s practices by the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission. Additionally, the fintech company is demanding N10 billion in damages.
In its statement of claim, Shago Payments asserts that Fidelity Bank processed fraudulent chargeback requests and debited its settlement account without authorization. Despite warnings about the fraudulent nature of these claims, the unauthorized debits continued.
As of now, Fidelity Bank has not filed a response to the suit, and the case is under judicial review. The court’s decisions, including the payment order and interim injunctions, aim to address the immediate concerns while the broader legal issues are adjudicated.