Seven justices of the court including the Chief Justice of Nigeria, Justice Mariam Mukhtar held that the case was statute-barred, having been filed outside the time limit allowed by the Limitation Act for the recovery of such debt.
The court, in a judgment delivered by Justice Mary Peter-Odili said the cause of action arose in 1983, precisely July 27th when the Federal Government acknowledged the debt.
Justice Peter-Odili held that the suit filed by the 16 states on February 22, 2011, "was an action in futility the cause of action having expired after six years of its accrual computed from July 27, 1983."
According to her, the jurisdiction of the Supreme Court to hear the suit has been effectively ousted by operation of section 7(1) (e) Limitation Act Cap 522 Laws of the Federation of Nigeria, 1990.
The court upheld the objection of the federal government as argued by Mr Ade-Okeaya Inneh, SAN who had urged the court to dismiss the suit because it had become statute barred. 16 of the 19 states in the north had invoked the original jurisdiction of the Supreme Court vide an originating summons asking the apex court to compel the federal government to pay them N7billion as outstanding value of the assets of the defunct NSMB.
The board was said to have been taken over by the federal government in 1977 from the then North-Western, North-Central, Kano, North-Eastern and Central-Western states.
The states as presently constituted comprise Adamawa, Bauchi, Borno, Gombe, Jigawa, Kaduna, Kano, Katsina, Kebbi, Kogi, Kwara, Niger, Sokoto, Taraba, Yobe and Zamfara which instituted the suit.
They had named the AGF as the sole defendant in the case.
The 16 states specifically said that in 1977, the then Federal Military Government forcefully took over the assets of NSMB by virtue of Decree No. 29 of 1977.
They said the then Supreme Military Council stated that the Federal Government would pay for the assets of the NSMB and the assets of any other commodity boards.
According to them, before the assets were transferred to the Federal Government, a valuation was carried out which put the total value of all the assets at N42 million.
They said: "Out of the said N42 million, only N1.1 million was paid to the NSMB by the defendant, leaving a balance of N40 million." They put the cost of immovable assets and produce taken over at N11 million and N18 million respectively."
Bags, tarpaulin and twine as well as cotton stores complexes allegedly taken over were put at N2 million.
The states said that as at July 27, 1983, the Federal Government admitted owing them N10.3 million which when converted using the prevailing exchanging rate (N150.00 to $1) was put at N3 billion.
They argued that the exchange rate at the time the assets were taken over was 50k to one US dollar, whereas the dollar now hovers around N150.00.
They further claimed that government owed them additional N3.9 billion being the current equivalent of alleged undisputed claim of N13 million.
This is said to be the value of some moveable properties and cotton store complexes taken over by the Federal Government.
The states exhibited various documents some of which were correspondence between them and the Federal Government.
Also included were copies of demand notices where they threatened to go to court if the alleged debt was not liquidated. The last one was dated 1st November 2010.
However, in the preliminary objection, Okeaya-Inneh said the northern governors’ statement of claim was statute barred by virtue of section 7(1) (e) of the Limitation Act.
According to him, the cause of action upon which the plaintiffs’ suit was predicated was a letter dated July 27, 1983 and August 13, 1984 in their statement of claim dated February 17, 2011.
He said: ‘’Since the plaintiffs instituted this action by way of civil summons on February 17, 2011 in consequence thereof, the said action is at variance with section 7 (1)( e) of the Limitation Act.
‘’Whenever a party’s action is statute barred, the party would lose his right of action and lose the right of enforcement’’,
Besides, the party who slept on his right also irretrievably lose the right to judicial relief and would have an empty cause of action which no court will assist him to enforce.
In an eight paragraph affidavit in support of the defendant’s notice of preliminary objection, the AGF said ‘’the plaintiffs' cause of action arose sometimes in 1983 and this action was instituted 28 years after the cause of action arose."