The Supreme Court has delivered a significant split judgment concerning the withheld local government allocations for Osun State, simultaneously reprimanding the Federal Government for unlawfully seizing the funds and faulting the Osun State Government for initiating the suit on behalf of the 30 councils without proper authorization. This ruling has been widely seen as a pivotal moment for judicial authority and constitutional order in Nigeria.

In its majority judgment, the Apex Court unequivocally declared that the Federal Government acted unlawfully by withholding Osun State’s local government funds, deeming the action a "grave breach of the 1999 Constitution." Justice Mohammed Idris, delivering the lead judgment, stated that the Federal Government's conduct was constitutionally indefensible, noting that "the hand of the federal government was soiled" in its decision. The Court admonished the Federal Government to ensure that allocations are "directly channeled to local accounts" and dismissed the Attorney-General of the Federation’s contempt allegations against Osun State, asserting that the AGF was "in more contempt than Osun by not paying the fund as required by law."

Despite this strong condemnation of the Federal Government, the Supreme Court simultaneously criticized the Osun State Government for instituting the action without proof of consent from the local councils. Justice Idris ruled that because "there was no evidence that Osun Attorney General was briefed by the local governments, he ought not to have filed the case on their behalf," emphasizing that only "those who won the local government election and having been inaugurated are the jurisdict persons that can sue and be sued directly." In a minority judgment, Justice Emmanuel Agim dissented, arguing that the Osun Attorney General did possess the authority to file the suit and that the Federal Government’s action was unacceptable and capable of crippling council activities.

The Osun State chapter of the Peoples Democratic Party (PDP) hailed the Supreme Court’s judgment, particularly viewing it as a clear affirmation of the rule of law and a major reproach to the Attorney-General of the Federation, Mr. Lateef Fagbemi. The State Chairman, Sunday Bisi, stated that the apex court’s pronouncement "lifted the veil over the unconstitutional and erroneous directives" issued by the Attorney-General to the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance. The PDP had previously warned that the crisis was a needless confrontation fueled by directives compelling sacked chairmen, produced through a flawed process, to open bank accounts despite subsisting court rulings. The party recalled that the Court of Appeal in Akure had earlier upheld the validity of the February 22, 2025, local government election conducted by OSSIEC in Osun State.

The PDP maintained that despite this judicial clarity, the Attorney-General still authorized payments to individuals "who had no legal mandate, simply because they were members of the APC." By inference from the Supreme Court’s decision, the PDP asserted that the bank accounts opened in the United Bank for Africa (UBA) for the sacked chairmen were now "inoperable and criminal," with the process leading to their opening effectively declared illegal. Bisi reiterated that the judgment exposed "the illegalities and partisan arrogance" that guided the Attorney-General’s actions, restoring constitutional clarity to the matter.

The controversy surrounding the non-release of funds stemmed from the conduct of a local government election in the state in February 2025, a move faulted by the All Progressives Congress (APC), which controls the Federal Government. SaharaReporters previously reviewed Federal Allocation Account Committee data, revealing that a total of ₦73.7 billion had been withheld from Osun State as of August 2025, covering a six-month period from March to August 2025. Specific monthly figures included ₦11.9 billion for March, ₦11.2 billion for April, ₦11.7 billion for May, ₦12.1 billion for June, ₦12.8 billion for July, and ₦14 billion for August.

Earlier legal maneuvers included an interim order issued by a High Court of Justice, Oyo State, sitting in Ibadan, on September 26, 2025, in Suit No. I/1149/25. This order restrained UBA Plc from releasing statutory funds belonging to the 30 local governments in Osun State. The claimants, the Attorney General of Osun State and the Osun State Local Government Service Commission, sought interim protection over these allocations, requesting orders to prevent UBA from paying any of the statutory local government funds to any person or entity pending the determination of the Motion on Notice for an interlocutory injunction. Justice A.L. Akintola ruled that the claimants had made a strong case for urgent intervention, citing the risk of "irreversible harm, injury or situation of helplessness" if delayed.

The PDP urged all stakeholders to abide by the Supreme Court’s ruling and avoid manipulation by "desperate APC elements bent on derailing democracy." The party commended the Awotunde-led Association of Local Governments Of Nigeria (ALGON) in Osun State for its resilience and patriotism. Bisi maintained that the only legally recognized council chairmen in Osun are those elected on February 22, 2025, whose mandate had been affirmed by the Court of Appeal. He called on security agencies to avoid taking illegal sides and warned that offering protection to individuals removed by court orders is a direct invitation to anarchy.