By Prof Awa Kalu, SAN

Following recent developments around the world, particularly in Israel, where the country’s legislature (the Knesset) is considering an unprecedented overhaul of their judicial system, and in India where such manoeuvres are in contemplation, no one can predict the short or long term effect of our judicial entanglement with the Naira redesign and swap policy introduced by the Central Bank of Nigeria, CBN. At the moment, there are a handful of cases pending at the Federal High Court as well as the Supreme Court in what is presently known colloquially as the Naira redesign case.

In the last quarter of 2022, CBN gave notice that the prevailing currency- the Naira- in its ?200, ?500 and ?1,000 denominations would have a new design. As altered, the new Naira notes were to come into circulation mid-December of last year. However, those who had the old notes were directed to ‘surrender’ them to commercial banks before the stipulated deadline, that is, January 31, 2023. 

It is also very well known that the surrender date was later extended to February 10, 2023. The word surrender has been deployed advisedly in that the pertinent question was, and still is, how were we to just dig out ‘cash in hand’, dump it in a bank and return empty-handed? From hindsight, the order from the CBN directing persons in custody of old notes to mandatorily deposit them in a bank seems ultra vires. 

Provisions of CBN Act

The CBN Act in clear terms, by Section 20(3) thereof, stipulates that: “Notwithstanding subsections (1) & (2) of this Section, the bank shall have power, if directed to do so by the President and after giving reasonable notice in that behalf, to call in any of its notes or coins on payment of the face value thereof and any note or coin with respect to which a notice has been given under this subsection, shall, on the expiration of the notice, cease to be legal tender, but, subject to Section 22 of this Act, shall be redeemed by the bank upon demand.” 

It is my humbly-held view that the purport of Section 20(3) may be broken down as follows: (i) the Central Bank shall have power if and only if it is directed by the President; (ii) to call in any of its notes or coins on payment of the face value thereof; (iii) any note or coin with respect to which any notice has been given… shall on the expiration of notice cease to be legal tender; (iv) but subject to Section 22 of this Act shall be redeemed by the bank upon demand. 

There are several points or issues arising from the Section of the Central Bank Act quoted above. The first question is this: (i) What does the phrase ‘call in’ mean in the context of that section? (ii) What happens when the Central Bank calls in any of its notes or coins? (iii) Can the actions of the Central Bank be questioned after the call in and the expiration of the notice contemplated by its enabling legislation? 

In answer to the foregoing questions, the New Lexicon Webster’s Encyclopedic Dictionary of the English Language defines to ‘call-in’ as, ‘to withdraw from circulation, to call in an old coinage.’ The Black’s Law Dictionary (11th Edition) refers to coinage as ‘the making of coins, the minting of money’. Accordingly, both dictionaries referred to, recognize the power of the Central Bank to mint money and to withdraw same (call-in). The second question relates to what happens when the Central Bank calls in any of its notes or coins. It is fair to surmise that what the Central Bank Act contemplates is that before calling in its notes or coins, the Central Bank must give reasonable notice. 

It is generally accepted in law that the test of reasonableness may in some circumstances be subjective or objective. In the context of the piece of legislation under review, my opinion is to the effect that reasonableness as contemplated under the Act must be objective and conducive to common sense and reason. 

Having regard to the fact that we have a predominantly cash-carrying economy and taking significant cognizance of the fact that this is an election year in which all the executive offices are being contested, (elections being a cash and carry concern), will the notice covering the period between October 2022 and February 10, 2023 be considered ‘reasonable’ for the purpose of withdrawing existing currency and injecting the new notes into the economy? 

In addition, taking into account the outrage engendered by the scarcity of the new notes which the withdrawal of the preferred currency denominations have presented, the proverbial reasonable man will be entitled to the conclusion that the notice has not been reasonable. On the other hand, it may be argued that anyone who has nothing to hide must for all intents and purposes, be able to return currencies in the denominations of ?200, ?500 and ?1,000, respectively, to the bank within the time allowed. 

Disserting CBN directive 

However, I am worried by what, in my belief, is contemplated by Section 20(3) of the Central Bank Act which, as quoted above, requires the ‘call in of any of its notes or coins’ to be ‘on payment of the face value thereof’. The question at this juncture then is: did any Nigerian deposit his or her money in exchange for its face value? 

The simple answer is that Nigerians were directed to deposit whatever they had, withdraw from the banking hall and to proceed to an Automated Teller Machine,ATM, to withdraw or access a miserly sum in the estimation of many. This is what infuriated the public, raised anxiety levels, and created resentment against both the banking system and the government. 

This brings us to the third question which is; can the actions of the Central Bank be questioned after the call in and the expiration of the notice contemplated by its enabling legislation. This question is intriguing and is, apparently, a channel for the grievances of the states that have approached the Supreme Court for redress. Without dwelling on the subject matter of the case which is presently active, the most relevant question is whether once the Central Bank has called in its notes or coins and the relevant section has crystalised, a court can have any leeway in granting the relief. 

The answer may be found not only within the boundaries of Section 20(3) of the Central Bank Act aforesaid, but also within the circumference of the prevailing circumstances. Having regard to the section of the Central Bank Act under consideration, it is clear that once the notice given by the Central Bank has expired, the ‘note or coin with respect to which a notice has been given… shall, on the expiration of the notice cease to be legal tender…’

Futility of cases in court

If that provision is taken together with the last broadcast made by President Muhamadu Buhari on this matter, (being February 16, 2023) it would seem futile to remain in court; even though a few other matters have since been instituted. On the one hand, when currency ceases to be legal tender, it is deemed to be legally unusable and of no use. Furthermore, the President’s broadcast seems to have put the final nail on the coffin housing the ?500 and ?1,000 denominations of the ‘called in’ currency. 

The food for thought is whether the President can, without any further action, re-awaken the ?200 notes which are presumed dead, having regard to what the President has directed. The word ‘dead’ now wears a different toga in line with what the Supreme Court said in P D P v. INEC [1999] 11 NWLR (Pt.626) 200. The Court in that case said: “In Collins English Dictionary Thesaurus in A-Z, 2nd Colour Edition, at p. 182, the word ‘die’ is given as synonymous with ‘breath  one’s last, deceased, depart, expire, finish, decay, decline, disappear, dwindle, ebb, end, fade, lapse, vanish, wane, wilt, wither, fizzle out: The meaning given by these words (as italicized) to the word ‘die’ is wide enough, in my opinion to embrace what Alhaji Atiku Abubakar did in relinquishing his mandate to occupy the office of Governor of Adamawa State.” 

Accordingly, it is my respectful view that once the notice pursuant to Section 20(3) of the Central Bank Act expired, the Naira denominations, subject matter of the notice, all died and neither the President nor the Central Bank could revive them. In that connection, let it be recalled that there are several persons who are angry and some of that anger has taken heated proportions resulting in suits at the Federal High Court as well as the Supreme Court.

Key factors in deciding suit

For the purpose of deciding the Court that is more suited for hearing matters concerning the Naira redesign dispute, one must bear in mind that Section 251 (1) (d) of the Constitution provides that: “the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters… connected with or pertaining to banking, banks, other financial institutions, including any action between one bank and another, any action by or against the Central Bank of Nigeria arising from banking, foreign exchange, coinage, legal tender, bills of exchange, letters of credit, promissory notes and other fiscal measures.”  

As has been mentioned and at the time of this writing, there are one or two matters presently pending at the Supreme Court the centrality of which has arisen from the Naira redesign policy. Bearing in mind the context of the original jurisdiction granted to the Federal High Court with regard to the length and breath of that policy, which portion of it will lend a dispute between the States and the Federal Government? In order not to upset the delicate nature of the raging contentions on all sides in the Supreme Court it seems advisable to keep our gun powder dry at this time.