More Woes for Evans Medical, to Pay N71m in 30 Days

By Modupe Gbadeyanka

It is not the best of times for Evan Medical Plc, a company on the stock exchange battling for survival because of some issues staring at it.

To compound its woes, a Lagos Judicial Division of the National Industrial Court has asked the healthcare firm to pay the sum of N71 million within 30 days.

The amount, precisely N70.977 million, is outstanding salaries, allowances, gratuity and pension contributions of eight former employees of the company for their years of service.

Justice Ikechi Nweneka, who ordered Evans Medical to make the payment, held that the various documentary evidence tendered by the ex-employees were not disputed and the sums claimed were equally not seriously contested and the evidence of their entitlements remains largely unchallenged.

Business Post gathered that from facts, the claimants had submitted that the 2nd-defendant, FBNQuest Trustees appointed the first defendant, Mr Seyi, as receiver/manager and took over the assets, liabilities and undertakings of the firm on October 9, 2017; which assets were subsequently sold to the fourth defendant and promised to pay their outstanding salaries, entitlements and other benefits which promise remains unfulfilled.

The defendants denied any indebtedness to the claimants and stated that assuming without conceding, the firm was indebted to the claimants that such claims are unsecured and cannot be enforced against the firm until the secured lenders realize their indebtedness from the assets of the firm and urged the court to discountenance the submission for not supported by any credible evidence.

The 1st, 2nd and 3rd defendants filed a preliminary objection that the court lacks jurisdiction to entertain the suit on the grounds that the 3rd defendant was under receivership, that the question relating to who or whether the receiver can pay them is within the rubric of operations of the Companies and Allied Matters Act and does not lie within the powers of the court to adjudicate.

Counsel to the defendants also objected that the 1st and 3rd defendants, Evans Medical Plc are not proper and/or necessary parties before the court, given that there was no employer/employee relationship between the claimants and the 2nd and 4th defendants.

In response, counsel for the claimants, Mr Olaniran Obele, submitted that the argument that the court lacks jurisdiction because the subject matter borders on the operation of the Companies and Allied Matters Act, bankruptcy and insolvency is not only wrong but an attempt to mislead the court.

It was also argued that the mere fact that 3rd defendant was under receivership does not mean it is dead or has lost its legal personality, urging the court to dismiss the preliminary issues.

Delivering judgment, Justice Nweneka affirmed the court jurisdiction and held that the thrust of the suit was not receivership, insolvency or winding up of the 3rd defendant, but strictly for payment of earned salaries and benefits which, owing to the mutation of the 3rd defendant, that the 1st defendant is a receiver/manager does not take the matter out of the competence of the court.

The judge thereafter, struck out the 2nd and 4th defendants as they were improperly joined in the suit.

“The terms of sale of the assets and liabilities of the 3rd defendant to the 4th defendant are not before me to determine if the entitlements of the claimants were transferred to the 4th defendant. There is, therefore, no basis to hold the 4th defendant liable for the debts of the 3rd defendant.

“It is the law that appointment of a receiver/manager does not annihilate the company, the company does not lose its legal personality and title to the goods in receivership and does not terminate the contract of the employees.

“I equally found that the 1st and 5th claimants were still in the employment of the 3rd defendant when the 1st defendant took over the 3rd defendant and their employment did not terminate automatically,” Justice Nweneka ruled.

The court declared that the Evans Medical Plc is liable to pay the claimants their outstanding salaries, allowances, gratuity and all pension contributions for their years of service in the employment of the firm.

The judge then directed Evans Medical Plc to pay 2nd, 3rd, 4th, 6th, 7th, 8th, 9th and 10th claimants the sum of N15,447,346.68; N2,275,182.49; N4,503,915.27; N16,192,746.74; N16,471,043.99; N3,303,283.53; N3,866, 388.53; and N8,916,639.00 respectively with cost of N500,000 within 30 days.