LEGAL OPINION REGARDING ENCASHMENT OF BANK GUARANTEE A/C Company 1.


Mr. Z

Address….

Dear Sir,

RE:      LEGAL OPINION REGARDING ENCASHMENT OF BANK GUARANTEE A/C Company 1.

We refer to your letter Ref. ……………… dated February 10, 2008 on the above subject.

From perusal of your letter and the provided documents it appears that, Company 1 have been engaged in importation and marketing of different drugs. Two Letters of Credit being No……………… dated 10.10.2004 and ……………… dated 25.11.2004 were opened, upon the application of Company 1, for importing medicine. After arrival of goods, Customs Authority raised an objection regarding H.S. Code and related customs duties and other taxes and agreed to retire the goods upon submission of bank guarantee(s). Bank 1 (“BANK 1”), then at the request of Company 1, issued two bank guarantees bearing No. ……………. dated 21.12.2004 and ……………… dated 01.02.2005 (“the Bank Guarantees”) in favor of the Assistant Commissioner of Customs, Dhaka Customs House, Dhaka and then Company 1 released the goods on production of the Bank Guarantees and send the matter to the national Board of revenue for their decision.

Later on, Company 1 had requested the Commissioner of Customs vide their letters dated 10.06.2007 and 13.12.2007, to release the Bank Guarantees, but the Customs Office, instead of releasing the Bank Guarantees, served notice upon BANK 1 vide their letter No. 5 – Cus – 12 (157) Group 1/2007 dated 24.01.2008 and letter No. 5 – Cus – 12 (235) Group 1/2007 dated 22.01.2008 (“the Encashment Notices”), to encash the aforesaid Bank Guarantees.

Upon receiving the Encashment Notices, BANK 1 informed Company 1 about the same and requested them to arrange required funds to honor the said notice. However, BANK 1 have been informed by Company 2 vide their letter dated 07.02.2008 that Company 1 was going to file a writ petition in the High Court Division of the Supreme Court against the Encashment Notices of the Customs House, Dhaka and they also requested BANK 1 not to encash the Bank Guarantees without an order of Court.

In the meantime, BANK 1 have received a letter dated 10 February 2008 from Company 2 though facsimile, from which it appears that on 10 February 2008 the High Court Division of the Supreme Court in Writ Petition No. 1168 of 2008 has issued Rule and stayed the Encashment Notices.

In the circumstances stated above, you require our legal opinion regarding what shall be the next course of action for BANK 1 and whether BANK 1 should encash the Bank Guarantees or whether BANK 1 should follow the stay order of the court.

OUR OPINION:

If we accept the authenticity of the information provided by the letter dated 10 February 2008 of  Company 2, the lawyer of Company 1, then there is an order of the Honourable High Court Division of the Supreme Court in Writ Petition No. 1168 of 2008 staying the Encashment Notices.

BANK 1 should immediately send a letter to Company 1 asking them to provide BANK 1 with the certified copy of the order dated 10 February 2008 of the Honourable Court given in Writ Petition No. 1168 of 2008 within 3 (three) days failing which BANK 1 shall encash the Bank Guarantees in favour of the Customs House. However, BANK 1 should ensure that Company 1 actually receives this letter and are allowed 3 (three) days to provide the said certified copy of the order, or else BANK 1 may be liable for Contempt of Court.

BANK 1 should also inform the Customs Office that BANK 1 has received a letter from Company 2, the lawyer of Company 1, from which it appears that there is an order of the High Court Division staying the Encashment Notices and provide them with a copy of the letter sent by Company 2. BANK 1 should inform the Customs Office that since there apparently is an order of the High Court Division staying the Encashment Notices, BANK 1 is unable to encash the Bank Guarantees until BANK 1 receives the certified copy of the court order, for the production of which, BANK 1 has given Company 1 3 (three) days time.

Please note that the above opinion is given on the basis of information given in the letter of Company 2, the lawyer of Company 1. However, a complete opinion can only be given upon perusal of certified copy of the order dated 10 February 2008 of the Honourable Court given in Writ Petition No. 1168 of 2008.

If you have any further query, please do not hesitate to contact us.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”