High Court Division
(Special Original Jurisdiction)
Md Ashfaqul Islam J
Md Ashraful Kamal J
Shafi A Choudhury …….
……………… Petitioner
vs
Government of Bangladesh and others ………… Respondents
Judgment April 9th, 2014.
Bank Companies Act (XIV of 1991)
Section 2
When the provisions of the Act will be in derogation to other provisions of other laws, then the provisions specifically provided in the Act shall have to be followed only. .. ….(15)
Bank Companies Act (XIV of 1991)
Sections 5 KaKa and 27 KaKa
If all these provisions are read together one and only inference that could be made is that if any person or a company is indebted to in any manner with any financial institution and the debt remains unpaid, it is the duty of the Bangladesh Bank in its turn to enlist the name of the incumbent in the CIB list nothing more nothing less. With the amendment of Section 5 GaGa the definition as it could be found now contains a wider version of the category of persons to be included as defaulter borrower……. ( 18)
Bangladesh Bank Order (PO 127 of 1972)
Section 42
By bringing the elementary principle of company law as it has been stated the settled provision of Banking Companies Act cannot be given a go by. .. …. (19)
Company Law and Banking Law-There is no denying that the elementary principle of company law is that the company is a legal entity distinct from of its members. We distinctly observe that though the Company Law governs its field with all the trappings of its own but at the same time the Banking Companies Act is also an independent Special law that rules with authority altogether the different aspect related with the banking matter and stands absolutely on a different footing. ….. (14)
Belal Hossain vs Kazi Jane Alam and others, 13 MLR (AD) 74 ref.
Rafique-ul-Hoque, Senior Advocate with Muhammad Saifullah Mamun, Advocate-For the Petitioner.
Md Mamunur Rashid, Advocate-For the Respondent No.4.
Judgment
Mri Ashfaqul Islam J: At the instance of the petitioner, Shafi A. Choudhury, this Rule Nisi was issued in the following terms:
“Let a Rule Nisi be issued calling upon the respondents to show cause as to why report of Credit Information Bureau (CIB) Bangladesh Bank classifying the petitioner as a defaulter borrower under borrower Code No.913 and Serial No. 323 in respect of a Loan granted by the Respondent Pubali Bank Ltd. in favour of the Pro-forma Respondent No-5 [M/S Albert Davit (Bangladesh Ltd) should not be declared to have been made without lawful authority and is a nullity.
2. The fact leading to the Rule, in short, is that Respondent No.5 [M/S Albert Davit (Bangladesh Ltd) is a private limited company established on 21-10-1950. By President Order No.27 the said company was declared as an abandoned property by the government and vested upon Bangladesh Chemical Industries Corporation (BCIC). On 5-11-1971 the Eastern Mercantile Bank (presently Respondent Pubali Bank Ltd.) granted a credit facility under CC (Pledge) and CC (Hypo) for the amount of Taka 65 lakh and 5 lakh respectively in favour of the said company. In the year 1984 Government under its “Disinvestments Policy” decided to hand over the said Company to the private sector.
Accordingly, the Government published tender notice to sell the said Company. The petitioner as a businessman, along with six other family members participated in a tender floated by the Ministry of Industries for the purchase of shares of the said Company. The said tender was awarded to the petitioner and his family members at Taka 13.77 crores. An agreement for sale was executed on 7-4-1984 between the Ministry of Industries for transfer of shares in the said Company subject to joint audit and verification of all assets including liability to the Respondent Nos.3 and 4 (hereinafter referred to as the Pubali Bank). The shares of the said Company were never transferred to the petitioner and his family members. As such the petitioner and his family members do not hold any shares in the said Company.
3. On 31-10-1992 the petitioner sent a letter to the Pubali Bank for holding necessary audit to determine the actual liability of the said Company. The respondent Pubali Bank, on the other hand, by several letters asked the petitioner to clear up the outstanding dues and requested the respondent – Bangladesh Bank to write off amount of Taka 53,79,627 from the interest account and Taka 39,92,742 from the interest suspended account.
4. The Pubali Bank vide its letter No.7893 dated 5-9-1995 informed the company that the liability of said company stood at Taka 1,15,03,916.25 and the same amount is payable in two year installments. This liability was determined by the management of the Pubali Bank and approved by its Board of Directors. The respondent Pubali Bank stated in its letter dated 5-91995 that for waiver of interest the permission of Bangladesh Bank would be required since the petitioner was a director of Pubali Bank Limited. The Pubali Bank failed to realize that the petitioner merely acted as an authorized representative/agent or the said company. He had no shares in the said company nor was a director of the same. The respondent wrongly associated the petitioner with the debts and liabilities of the said company. So the petitioner is not a defaulter.
5. Thereafter several years have gone passed but no solution could be reached between the petitioner and writ respondents for different reasons. In paragraphs 35 to 37 regard have been taken on several decisions of the Appellate Division and this Division to highlight that the petitioner company is a artificial person and the loan was taken by an artificial person and in the event of default by such artificial person in repayment of the loan, such default of the company would not ipso facto render any member or director of such artificial person a defaulter. Under the said circumstances the petitioner being aggrieved by the enlistment of his name in the CIB list moved this Division and obtained the present Rule and order of injunction as aforesaid.
6. Mr Rafique-ul-Hoque, the learned Senior Advocate appearing with Mr Muhammad Saifullah Mamun, the learned Advocate for the petitioner after taking us with the petition and the relevant Annexures thereto mainly contends that although the petitioner has been acting as ex-officio Chairman and Managing Director of the Albert Davit (BD) Ltd. but without holding any share of the said company he cannot be held personally liable to pay dues of the Company since he did not give any personal guarantee or undertaking to pay the said liability. The shares of the said company have not yet been transferred in the name of the petitioner. The petitioner has just been acting as the designated Chairman and Managing Director of the said Company for mere management purpose and he is not the proprietor or owner of the same as mentioned above. The shares of the said Company are still lying with the Ministry of Industries. In such situation, the debts and liability of the said Company cannot legally be attributed to the petitioner and hence he is not a defaulter borrower. He further argued that the Company paid Taka 115,03,916.25 to the Pubali Bank as full and final settlement of liability of the company according to the decision taken in the 252nd and 683rd Board of Directors Meeting of Pubali Bank.
7. Mr Hoque further submits that enlistment of the name of the petitioner in CIB report showing him as defaulter borrower cannot be sustained in that the elementary principle of Company law is that the company is a legal person and the director is not liable for any debt of the company. Therefore, the learned Senior Counsel concludes that for the aforesaid reasons the petitioner’s name appearing in the list of CIB showing him as a defaulter borrower should be declared to have been done illegally having no legal effect.
8. Mr Md Mamunur Rashid, the learned Advocate, on the other hand, by filing affidavitin-opposition on behalf of respondent No.4 Pubali Bank Ltd. opposes the Rule. Mr Syed Hasan Zobair, the learned counsel by filing affidavit-in-opposition also opposes the Rule appearing on behalf of respondent No.2-Bangladesh Bank. In supplementary affidavit filed by the respondent Pubali Bank the other version of the case has been depicted in that admittedly the petitioner took loan over the company Albert David (Bangladesh) Ltd. from the Government along with its assets and liabilities vide agreement dated 7-4-1984. Since inception of taking over the company, it had loan liability with the respondent bank. After execution of agreement the petitioner took over the company vide Ref: No.ADLIGM/83-84 dated 74-1984. The petitioner after taking over the company applied to the respondent bank on 21-1-1985 for renewal and enhancement of L/C limit of the company pursuant to which loan was renewed and enhanced vide sanction letter dated 9-4-1985. Subsequently the loan was renewed and enhanced/reduced on several times. As security against the loan the petitioner executed various charge documents such as DP Note, Letter of continuity, Stock delivery letter, Stock ownership declaration etc. The petitioner also executed personal guarantee as security against the loan.
9. The Ref: No.ADL/GM/83-84 dated 7-4-1984 application dated 20-1-1985 for renewal and enhancement of loan, renewal of loan vide sanction letter dated 9-4-1985, charge documents and personal guarantee have been annexed to the petition and marked as Annexure- 3, 3(a), 3(b), 3(c), 3(d), 3(e), 3(t) and 3(g).
10. It has been submitted that on application of the petitioner the liabilities of the company was rescheduled vide HO/CD/56 14/2001 dated 28-8-2001 which was communicated to the petitioner vide respondent bank’s letter No.PBL/HO/ CD/6034/2001 dated 12-9-2001. The petitioner having accepted the reschedulement submitted a cheque for Taka 1,03,53,524.62. Regarding the cheque respondent bank wrote a letter to the petitioner on 27-8-2001 informing him that his cheque would have been accepted by the bank had he given an undertaking in writing that the cheque amount was for down payment against its total liabilities of Taka 4,69,54,072.62 as on 31-3-2001. Thereafter, the petitioner confirmed that cheque for Taka 1,03,53,524.62 was made as down payment of liabilities of Albert David (Bangladesh) Ltd.
11. The learned counsel further submits that existence of the company could not be imagined of without the petitioner. The petitioner was all in all of the Albert Davit (Bangladesh) Ltd. He took over the company being a successful bidder along with its assets and liabilities. After taking over the company its loan was renewed, enhanced and rescheduled on his application. He deposited the down payment after reschedulement. All the loan amount used to be drawn by cheque under his own signature. So he is wholly & solely responsible for the defaulted loan liabilities of the company. In law a company is an artificial juristic person. If it is so, then Albert Davit (Bangladesh)
Ltd. may be considered as a body of which the petitioner Mr. Shafi· A. Choudhury is its heart/soul. The respondent bank filed Artha Rin Suit No.45/2003 in the Artha Rin Court, No.3, Dhaka against the company Albert Davit (Bangladesh) Ltd. impleading the petitioner as its sole responsible person. The suit has been decreed on 25-4-2012 against the petitioner. As such it has been established by the Court’s verdict that the petitioner is the only person wholly and solely responsible for repayment of liabilities of the company.
12. Therefore, on the basis of above submissions the learned counsel for the respondent Pubali Bank as well as Bangladesh Bank by summing up their arguments unequivocally submit that according to Article 43 and 44 of Chapter IV of the Bangladesh Bank Order 1972, Bangladesh Bank is empowered to collect credit information from banks and financial institutions. On the basis of the credit information provided by the concerned Bank or financial Institution, Bangladesh Bank prepares the cm report of the concerned persons and organizations in good faith in order to discharge its statutory obligations. However, exact information supplied by the Banks. Financial Institutions is contained in the CTB data base without any amendment or alternation in terms of the statute. In the instant petition, the issue whether the writ petitioner was a defaulter or not, whether he was guarantor or not, whether he was a director or not can be determined only through evaluation of the facts and circumstances of the case which is best known to the lender Bank who is the relevant party in the petition. As per the statute Bangladesh Bank is empowered to discharge its duty which they did in the present case and there is no illegality in that respect on the part of Bangladesh Bank and, as such, the instant Rule is liable to be discharged so far as it relates to the Bangladesh Bank.
13. We have heard the learned counsel of both sides and considered their submissions carefully. We have gone through the entire Annexures of the petition and affidavit-in-oppositions filed by the respondents with precision. At the outset we want to refer to the agreement for sale entered into between the Government of Bangladesh the 1st party and M/S. Albert Davit (Bangladesh) Ltd. as the 2nd party.
In the said agreement the petitioner Shafi A. Choudhury put his signature on behalf of the 2nd party i.e. the Company. Let us refer to a pertinent portion of the said agreement dated 7-4- I 984, which is as under:
“NOW, THEREFORE, this indenture witnessed as follows:-l. THE FIRST PARTY agrees to sell and the shareholders and the highest bidder of the SECOND PARTY agree to purchase of the demised enterprise on “AS IS Where Is Basis” on the 7th April, 1984 on the terms and conditions set out in the following paragraph.”
(To be continued)
