Facts:

The dispute leading to this appeal, arose from a loan agreement entered into between the 2nd respondent (then a going concern) and 1st appellant who obtained from it a loan for the purchase of a ship named M.V. Adama. Pursuant to that loan agreement, the 2nd respondent in the capacity of a banker opened a loan account No.1671 in favour of the 1st appellant and solely funded same. Other than the sum total of the loan facilities granted to the 1st appellant, neither the 1st appellant nor any other person paid in a sum into that account. Therefore, the totality of the funds that stood to the credit of the 1st appellant were directly gotten from the 2nd respondent.

In furtherance of the cumulative loans granted, the parties entered into deeds of mortgage and covenant to ensure that the loan and the interest thereto were repaid by the 1st appellant. It was specifically stipulated in the deeds of mortgage and covenant that the loans and interest would be repaid by the appellant within six months from the date of the registration of the ship in Nigeria. Further to the foregoing, the duty of registering the ship was then specifically designated to the 1st appellant without any reservation whatsoever. But as it panned out, the appellants did not honour any of their obligations under the deeds. They neither registered the ship nor repaid any part of the loans granted to them and the interest assured thereon. In a bid to recover the loan/accrued interest which had increased to N1,640,837.42, and in exercise of its power of seizure under the deeds of mortgage and covenant, the 2nd respondent seized the ships, Adalmal, six years after its arrival in Nigeria and advertised it for sale. Following the seizure of the ship, the 1st appellant sued the 2nd respondent together with its staff at the Federal High Court in Suit No. FHC/CA/CS/3/83 further to which the 2nd respondent counterclaimed for an order of foreclosure or in the alternative, an order for payment by the 1st appellant of the sum of N1,640,837.42. In its judgment, the trial court found in favour of the 1st appellant and non-suited the 2nd respondent’s counterclaim. In entering judgment in favour of the 1st appellant, the learned trial Judge awarded the sums of N2,436,000.00 and N1,500,000.00 as special and general damages respectively in its favour.

Dissatisfied with the above decision, the 2nd respondent appealed in Appeal No. CA/E/80/83. The Court of Appeal, Enugu Division Coram: their Lordship Oguntade, Kutigi, Katsina-Alu, JJCA (as they then were) on the 4th day of May, 1990, allowed the appeal, dismissing the 1st appellant’s claims at the trial court while granting the 2nd respondent’s counterclaim for an order of foreclosure. The judgment is reported as Mercantile Bank of Nigeria Ltd. v. Adalma Tanker & Bunkering Services Ltd. (1990) 5
NWLR (Pt. 153) 747.

The 1st appellant herein being dissatisfied with the above judgment exercised its right of appeal to this honourable court in Appeal No. SC/46/1993 which was dismissed by this court on the 22nd day of February, 1995 the effect being that the judgment of the court below in Appeal No. CA/E/80/83 remains binding and subsisting.

Meanwhile, immediately the Court of Appeal set aside the judgment in Suit No. FHC/CA/CS/3/83 in Appeal No.CA/E/80/8, the 1st appellant initiated Suit No: FHC/CA/4/87 claiming declaratory and monetary reliefs. In reaction, the respondent on record at the material time joined issues with the appellant and also raised the plea of res judicata, relying on the judgment of the Court of Appeal in Appeal No. CA/E/80/88.The matter went into full hearing. When hearing resumed, the respondents did not appear in court. They stayed away consistently until the trial court delivered judgment granting the reliefs claimed by the appellants. The appellants then took steps to enforce the judgment. It was at that stage that the respondents filed applications to set aside the Judgment and declared it a nullity. The 2nd and 3″ respondents did not attend the court to argue their applications. The court after hearing arguments thereon dismissed the application.

The 1st, 2nd and 3rd respondents appealed against the judgment granting the appellants’ claims. The Court of Appeal, in allowing the appeal, referred to the earlier court proceedings between the parties and held that the proceedings in the case should have abated immediately judgment in Appeal No. CA/E/80/88 was delivered on the 4th of May 1990, and especially when the appeal to the Supreme Court in Appeal No. SC46/93 had been abandoned and dismissed on 22nd February 1995. The Court of Appeal went further to hold that the appeal of the respondents raised the defence of res judicata and it ought to have been sustained. It held further that the proceedings and the judgment in Suit No. FHC/CA/4/87 delivered on 20th January 1998 were incompetent and accordingly struck them out. The court further held that the only valid judgment subsisting was that in respect of the operation of Account No. 1671 which was the judgment in Appeal No.CA/E/80/88.

Dissatisfied with the judgment of the Court of Appeal, the appellants appealed to the Supreme Court.