Facts:

The case of the Respondent (Claimant) at the High Court of Lagos State (trial court) that resulted in this appeal was that by an executed indemnity contract, the 1st Appellant undertook to indemnify the Respondent against all actions, claims or proceedings which may be brought or made against the Respondent by reason of clearing the third party cheques through the 1st Appellant’s account with the Respondent and also to pay the Respondent on demand, all payments, losses and expenses suffered by the Respondent arising therefrom. That upon the strength of the said indemnity, it cleared two bank drafts, upon presentation by the Appellants, in the value of ₦70,000,000.00 and ₦50,000,000.00 respectively made in favour of Oyo state Government to be cleared through the 1st Appellant’s account domiciled with it. Sometimes in November 2013, the Respondent received a complaint from the Economic and Financial Crimes Commission (EFCC) that the aforementioned cheques were cleared without the authorization of Oyo State Government and requesting the Respondent to furnish the commission with the instruction from Oyo State Government to clear the cheques. The Respondent responded to the EFCC, informing the commission that the cheques were cleared based on the indemnity executed by the Appellants in favour of the Respondent. The EFCC on this note demanded the Respondent to re-issue the sum of ₦70,000,000.00 and ₦50,000,000.00 respectively to the Oyo State Government, of which the Respondent unilaterally obtained its management’s approval and then re-issued the drafts in favour of Oyo State Government. That after the re-issuance of the draft, pursuant to the 1st Appellants indemnity, the Respondent debited the 1st Appellant’s account for the total sum of ₦120,000,000 and the 1st Appellant started the repayment of the indemnified sum by issuing cheques wherein the total amount of ₦15,000.000.00 (Fifteen Million Naira) was recovered, and which necessitated institution an action to recover the outstanding sum of ₦105,000,000.00 with interest.

The Appellants (Defendants) on the other hand alleged that there was an offer for the sale of shares by the Oyo State Government. The 1st Appellant being a stock broking company, delved into the offer and made a down payment of the sum of ₦1,100,000,000.00 (One Billion, One Hundred Million Naira Only), but due to certain circumstances, the Deputy Governor of Oyo State had to involve the EFCC (Economic and Financial Crimes Commission) to stalemate the transaction and this led to the arrest of the 2nd Appellant. In order to secure his release from the EFCC, the 2nd Appellant was made to pay the sum of ₦120,000,000.00 (One Hundred and Twenty Million Naira Only) to the Oyo State Government by issuing 2 (two) bank drafts in favour of Oyo State Government which led the Appellants to institute an action against the Oyo State Government wherein it sued as MACT Trust and Securities. Subsequently, the parties settled and the terms of settlement was adopted as judgment of the lower court. Part of the judgment of the lower court was that Oyo State Government was not entitled to any refund by the 1st Appellant. Upon the amicable settlement between Oyo State Government and the Appellants, the Appellants discovered that Oyo State Government had not realized the bank draft of ₦120,000,000.00. Thus, the 2nd Appellant had to repurchase the bank drafts from the issuing bank, AfriBank and paid it into the 1st Appellant account with the Respondent. The Appellants stated further that long after the payment of the bank draft, the Respondent alleged that it received a letter from the EFCC as to the circumstances surrounding the withdrawal and realization of ₦120,000,000.00 and that the Respondent purportedly acting under pressure from the EFCC unscrupulously debited the 1st Appellant account with it in the sum of ₦120,000,000.00 without its approval and allegedly paid same to Oyo State Government. That the Respondent after the said debit, further used the instrumentality of EFCC to arrest the 2nd Appellant in a bid to recover the said sum upon which the Appellants had to pay the sum of ₦15,000,000.00.

Upon consideration of the issues of parties, and the conclusion of trial, the trial court, gave judgment in favour of the Respondent. Dissatisfied by the decision of the trial court, the Appellant appealed to the Court of Appeal.