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Saturday, January 19, 2019

Defaulter would not be appointed or remain as bank director

High Court Division :
(Special Original Jurisdiction)
Zinat Ara      J
Kazi  Md Ejarul Haque Akondo   J
 Abdul Awal Patwary Dhaka Bangladesh…………Petitioner
                       VS
People's Republic of Bangladesh represented by the Secretary Ministry of Finance and Planning Bangladesh Dhaka and others………………………Respondents

Judgment
March 22nd, 2018

Bank Company Ac (XIV of 1991)
Section 17
The intention of the legislature is that the provision of Section 17 of the Ain, applies to a director  of a bank company irrespective of the fact as to whether the loan was obtained or guarantee  was executed to pay an amount as a  director or not. The main ratio is whether such Director is a person who fails to repay any advance or loan installment or loan interest or any amount of which he is guarantor for repayment. …………………(17)
Bank Company Act (XIV of 1991)
Section 17
Section 17 of the Ain, does not speak that the loan has to be obtained or the guarantee has to be executed for payment of an amount while a person was a director of a bank company. There cannot be any such intention of the legislature that a defaulter would be appointed as a director of a bank company and such person would continue to remain as a director of a bank company and only the person who obtained loan or executed guarantee as a director of a bank company would fall within the ambit of Section 17 of the Ain. The directors of bank companies are to regulate and manage the affairs of the bank.  …………… (17)
Moudud Ahmed with Abdullah-al-Mahmud. Advocates-For the Petitioner.
Foyez  Uddin Ahmed  with Nahid  Mahtab. Advocates-For Respondent No. 2.
Md. Abdur Rahman Hawlader, Advocate-For Respondent No. 4.
Judgment
Zinat  Ara J : On an application made by petitioner-Abdul Awal  Patwary, a rule nisi has been issued by a Division Bench comprising  Mr. Justice Quamrul Islam Siddique and Mr. Justice Razik-al-Jalil in the following terms:-
"Let a Rule Nisi issue calling upon the respondents to show cause as to why the impugned Memo vide m~ÃŽ t weAviwcwW (Avi-2) 651/9(36)M/2016-2112 dated 3-4-2016  (Annexure-G) issed by the respondent No.3 declaring that the post of directorship of the petitioner in the Social Islami Bank Ltd. has vacated since 1-4-2016 and in realizing the dues of the Bangladesh Krish Bank, Section 17(5) of the Bank Companies Act, 1991 shall be applicable and Memo No. m~ÃŽ t weAviwcwW (Avi-2) 651/9(36)M/2016-1831 dated  21-3-2016  (Annexure-F) directing  the petitioner to comply with the instruction contained in the notice vide Memo No.  m~ÃŽ t weAviwcwW (Avi-2)651/9(36)M/2016-692  dated  28-1-2016   (Annexure-B) Purportedly issued under Section 17 of the Bank Companies Act, 1991 by the Respondent No. 3 to the effect that if the petitioner fails to repay Taka 2973 lac as mentioned in the notice vide  cÖKv/‡µt wet- 1/12(10)/2015-16/541 dated 21-1-2016 (Annexure-B1) within  2 (two) months from the issuance of the  said notice his post of directorship in the Social Islami Bank Limited will stand vacated as per Section 17 of the Bank companies Act, 1991 should not be declared to have been made without any lawful authority and is of no legal effect and/or such other or further order or orders passed as to this Court may seem fit and proper".
2. At the time of issuance of the rule, an ad-interim order of stay was passed for a period of six months. However, the petitioner was directed to settle the matter within six months with respondent No.4.
Case of the Petitioner
3.    Petitioner, Abdul Awal Patwary, is a businessman and he is engaged in various businesses. He is the Managing Director of M/S. Patwary Cold Storage Limited (hereinafter stated as the Company). The Company obtained loan from respondent No.4, Bangladesh Krishi Bank, Motijheel Commercial Area, Dhaka (shortly, Krishi Bank) vide loan sanction letter No.   FY bw_ bs 1 (cÖKí) 94-95/2819 dated 8-11-1994 as project loan of Taka 5 crores. The Company had mortgaged its landed properties as a security against the said Joan and all the directors of the Company including the petitioner executed personal guarantees for repayment of loan. The Company repaid Taka 1, 34,054 out of the said loan amount, but failed to repay the original loan or extended amount thereof. The Board of Directors of Krishi Bank decided to re-schedule the principal amount of the loan of various companies by waiving the interest accrued thereon provided the principal amount is fully paid up as per the re-schedulement of loan. It was further decided that until the principal amount is paid, the interest amount will be kept in a suspense account and it would be waived finally.  When all the installments of principal amount of the loan will be finally adjusted: The Company applied for re-schedule of the loan and Krishi Bank informed the Company vide Memo No. FY 1 (cÖKí) 5-6/4781/ dated 15-12-2005 about waiver of 57% interest upon reschedule of Joan. The Company by letters dated 20-12-2005 and 16-72006 requested for 100% waiver of interest with names of some other borrowers whose 100% interest was waived. But Krishi Bank did not allow it and informed the Company to pay its loan a in five installments in the manner as stated in Krishi Bank's letter. Krishi Bank allowed 100% waiver of interest to some other borrowers, but it did not allow 100% waiver of interest in case of the Company. Krishi Bank, by its Memo dated 219-2006, directed the Company to pay the first installment by 31-12-2006 and also informed that in default, the Company would be classified as a defaulting-borrower. Where upon, the Company flied Writ Petition No.  11384 of  2006. Upon hearing, the rule issued in the said writ petition. was discharged by judgment and order dated 28-1-2010. The Company then filed Civil Petition for Leave to Appeal (CPLA) No. 675 of 2010, which was dismissed by the Appellate Division by order dated 16-2-2015. Then the Company filed  Civil Review Petition No. 64 of 2016, which is stil pending before the Appellate Division Meanwhile, respondent No.3. General Manager Bangladesh Bank has issued a notice vide Memo No. m~ÃŽ t weAviwcwW (Avi-2) 651/9(36)M/2016-692 dated 28-01-2016 purportedly under Section 17 of the e¨vsK †Kv¤úvbx AvBb 1991 (hereinafter referred  to as the Ain, 1991) stating that if the Company fail to pay the entire amount of the loan i.e. Taka 297: lacs as contained in Memo No. cÖKv/‡µtwet-1/12(10)/2015-16/541 dated 21-1-2016 within two  months from the date of issuance of the said notice, the post of directorship of the petitioner is  Social Islami Bank Limited (shortly, SIBL) sha stand vacated as per the provision of Section 17  the Ain 1991. Thereafter, the Company tried to settle the matter amicable with Krisi Bank by way of negotiation and a decision was taken for amicable settlement of the matter for waiver of some interest. The petitioner has sent a reply to Bangladesh Bank on 28-2-2016 informing about negotiation process between the parties and also about review petition. Thereafter, Krishi Bank, Divisional Officer, Comilla sent a letter dated 10-3-2016 to the Head Office, of Krishi Bank to allow six months time to the petitioner, but without any result Bangladesh Bank issued a letter to the petitioner vide Memo No. m~ÃŽ t weAviwcwW (Avi-2) 651/9(34)M/2016-1831 dated 21-3-2016 clearly stating that respondent No. 4, Head Office of Krishi Bank has not recognized the petitioner's statements and thereby directed the petitioner to comply with the instruction contained in the notice dated 28-01-2016 and also informed that if the petitioner fails to pay Taka 2973 lacs as mentioned in notice dated 21-1-2016  with two months from the date of issuance of the notice, the petitioner's post of directorship in SIBL shall stand vacated as per provision of Section 17 of the Ain , 1991. Thereafter, by Memo No. m~ÃŽ t weAviwcwW (Avi-2) 651/9(36)M/2016-2112 dated 3-4-2016 Bangladesh Bank informed the petitioner that his post of directorship in SIBL stands vacated since 1-4-2016 due to his failure to pay the amount as mentioned in the notice within two months and that the provision of  Section 17 (5) of the Ain, 1991 shall be applicable in his case for recovery of loan (cvIbv)    of  Krishi Bank. Hence, this writ petition.
Case of Respondent No.2
4. Respondent No. 2, Bangladesh Bank contested the rule by filing an affidavit-in opposition supporting the impugned orders and denying the material averments made in the writ petition contending inter-alia, that the writ petition has become in fructuous, as the petitioner has already resignsed from the post of directorship in SIBL on 16-1-2018 and the resignation letter of the petitioner was taken up for discussion on the 410th meeting of the Board of Directors of SIBL and after Discussion, the Board unanimously accepted the resignation of Abdul Awal Patwary from the office of director of SIBL with immediate effect.
Case of Respondent No.4
5. Respondent No, 4, Head Office. Krishi Bank, also contested the rule by filing an affidavit-in-opposition denying the material averments made in the writ petition contending. Inter-alia, that as per BRPD Circular No. 1.5 dated 23-9-2012, every borrower has to submit adequate down payment, proper security, statements of stock lot, cash flow, audited balance-sheet, income statements, statements of capabilities of payment of loans as well as the causes for becoming loan defaulter. On  analysis of every condition and position of the borrowers the bank has to take decision in the matter. The Company/the petitioner never falls within the category to get the benefit of 100% waiver of interest. Krishi Bank never violated the provisions of laws, rules and regulations. On the other hand, the petitioner is capable to pay the outstanding loan, but has always applied tactful device to avoid payment of the outstanding loan. The petitioner is a habitual defaulter.  He after obtaining loan from Krishi Bank invested the said money in SIBL and became a director of the said bank. But, now the petitioner is demanding the benefit of 100% waiver of interest unlawfully, therefore, the Company as well as the petitioner is not entitled to have waiver of 100% interest on the principal amount of the loan. The loan of the Company/the petitioner was classified due to failure of payment of the loan installment after re~ schedule thereof. Therefore, there is no malafide   or illegal act on the part of Krishi Bank. The petitioner/the Company, was classified as a defaulting-borrower (†Ljvcx   FY MÖnxZv) for failure to repay the loan in view of the provision of section 5(gaga) of the Ain, 1991. The petitioner is a defaulting-borrower and admittedly he failed to repay the loan installment, interest, etc. to Krisi Bank of which he is an admitted personal guarantor. The notice under Section 17(1) of the Ain, 1991 was lawfully served upon the petitioner to repay the outstanding loan within two months. But the Company/the petitioner failed to repay the loan amount within the stipulated time. Accordingly, Bangladesh Bank, on analysis of the reply of the petitioner, reminded him that if the petitioner fails to repay the loan, his post of directorship in SIBL would stand vacated as per provision of Section 17 of the Ain, 1991. The petitioner took loan in the name of the Company of which, the petitioner is the Managing Director. The petitioner signed the mortgaged deed, other documents and gave personal guarantee for the loan. In the circumstances, the impugned Memos are all lawful and the rule is liable to be discharged.
 (To be continued)