Reply to Demand Notice 3

Mr. Z

Address….

Dear Sir,

Re:      REPLY TO DEMAND OF JUSTICE NOTICE

We act on behalf of Bank 1 (“BANK 1”). BANK 1 has forwarded us the Legal Notice dated 24.09.2006 issued by you on behalf of your client Company 1 (“Company 1”), with instructions to reply as follows:

  1. Except that it is denied that Company 1 have been conducting their business of readymade garments with sincerity and reputation, the matters alleged in paragraph 1 of your legal notice are matters of record and as such admitted. Company 1 have not been conducting their business prudently and legally. Bank officials of BANK 1 on 13.07.06 and 06.09.06 visited the factory of Company 1, and Company 1 could not show the stock lot, and this is because Company 1 because Company 1 have illegally disposed off the duty free imported fabrics and accessories and also the locally procured fabrics and accessories without the knowledge of BANK 1. Moreover, Company 1 has leased their factory and machinery to a third party without the knowledge/permission of BANK 1 though the factory and machineries are under mortgage/1st charge with BANK 1. Such activities of Company 1 is clearly against the law.
  2. It is admitted that Company 1 availed credit facilities from BANK 1 but it is denied that Company 1 have fully reimbursed the credit facilities in favour of BANK 1. The liability position of Company 1 up to 30.09.2006, is as follows:

Nature of Loan

Limit
BTBNIL
ABPNIL
PCTk.  18.86 Lac
Loan (G)Tk.  27.47 Lac
SOD (EXP)Tk. 310.93 Lac
TotalTk. 357.26 Lac

It is also denied that the Branch Manager of BANK 1 delayed Company 1’s proposals without considering the feasibility and risks involved. The Branch Manager of BANK 1 considered every proposal of Company 1 with utmost diligence and sincerity. If, which is denied, there was any delay in considering the credit proposal that delay was due to the fault of Company 1, that is Company 1 failed to provide all relevant documents and additional collateral security. If, which Company 1 are required to prove, buyers of Company 1 cancelled their order and returned the documents for any delay and as a result Company 1 suffered loss to their business and some of their employees left for non-payment of remunerations, the liability of that loss is solely Company 1’s. Apart from these, paragraph 2 of your legal notice is denied.

  1. Except that Company 1 requested BANK 1 for credit facility of BDT 10,00,000.00 (Taka Ten Lac), paragraph 3 of your legal notice is denied. During the discussion regarding the said loan, BANK 1 asked for additional collateral security from Company 1, but Mr. X, Managing Director of Company 1 did not agree to provide additional collateral against the proposed credit of BDT 10,00,000.00 and as such BANK 1 could not consider the proposal and decided not to disburse the asked credit facilities in favour of Company 1.
  2. Except that, BANK 1 returned 3 (three) L/Cs being numbered FOBEALM 512779 dated 14.03.2006, FOBELVM dated 27.01.2006 and ICC 70165005 dated 01.02.2006, paragraph 4 of your legal notice is denied. It is specifically denied that BANK 1 returned the said L/Cs on mere surmises and conjunctures, BANK 1 had strong grounds for returning the said L/Cs which are as follows:

(a)     Company 1 have repeatedly failed to execute full export against many previous export L/Cs. There has been short shipment of US$ 4,11,747.44 against 15 L/Cs during the period of 2004 to the 1st quarter of 2006.

(b)    Some export documents were returned unpaid by the issuer of the L/Cs. Company 1 were informed about the matter of return of documents well in time. Non-realization of export proceeds within 120 days of shipment is a violation of the Foreign Exchange Regulation Act 1947. But the length of outstanding of export documents exceeds the limitation of 120 days. The Details of the export documents are as follows:

SL No.Export L/C No., Date & AmountFDBC No., Date & AmountEXP No.Length of outstanding as on 30.09.06Status of Garments
101087/0800873200 Date 21.01.05

US$ 3,39,880,00

21-5416-05 Date 29.08.05 US$ 56,447.602013-05397 daysLying at foreign port as informed by the exporter and the shipping company.
2GER/HDI/NASS/01/005 Date 25.05.05 US$ 15,100.0021-5018-05 Date 22.06.05 US$ 14,988.001463-05466 daysDo
3XT04103597 Date 08.11.04 US$ 18,630.0021-4989.05 Date 18.06.05 US$ 14,009.69456-05470 daysDo
4TFP/MCK551235 Date 16.11.05 US$ 55,339.9021-4282-06 Date 26.02.06 US$ 19,534.68168-06217 daysDo
Total
US$ 104,979.97

(c)     Due to non-realisation of export proceeds and non-execution of full value of the export L/Cs, BANK 1 had to make payment of accepted bills against Back to Back L/Cs by creating forced loan (SOD-Exp) in the name of Company 1 and the present outstanding of the said forced loan is BDT 310,93,000.00 (Taka Three Crore Ten Lac Ninety Three Thousand). An outstanding forced loan of the said amount is absolutely a negative sign for an export oriented garments company like Company 1.

(d)    Due to non-realisation of previous export proceeds and non-execution of full value of previous export L/Cs and continuous increase of liabilities of Company 1, BANK 1 could not agree to extend further credit to Company 1 without realization of the proceeds of overdue export bills and adjustment/regularization of overdue liabilities.

(e)     For the above given reasons, BANK 1 had to return the three said L/Cs without opening back to back L/Cs in favour of Company 1.

  1. Paragraph 5 of the legal notice is denied. It is specifically denied that Company 1 have repaid the outstanding loan from the outstanding credit facilities. Because it can be seen clearly from paragraph 2 of our reply that Company 1 has Tk. 357.26 Lac outstanding liability with BANK 1 as on 30.09.2006.
  2. In Paragraph 6 of the legal notice you have clearly stated that it is your client, Company 1, which has caused damages in respect of their own goodwill and we admit that. Apart from this, paragraph 6 of you legal notice is denied. This is because as you have stated that Company 1 has cause the damages to their own goodwill, BANK 1 has no liability to pay any damages.
  3. Except that Uniform Customs and Practice for Documentary Credits (UCPDC) governs the said three L/Cs, paragraph 7 of your legal notice is denied. This is because in accordance with UCPDC, BANK 1 vide their letter No. MK/FEX/BR/105/06 dated 04-03-2006 informed Company 1, the beneficiary, about the returning of the three L/Cs; the grounds/reasons for returning the L/Cs were also mentioned in that letter. Moreover, L/C No. FOBEALM 512779 dated 14.03.2006  was taken back by Mr. y, Commercial officer of Company 1. As such the conduct of BANK 1 was entirely in compliance with the provisions of UPCDC, ICC publication 500, Article 12 (d) (1) & (2).
  4. The statements made in your legal notice are totally baseless, concocted, misconceived and as such denied by our clients. Your legal notice has been issued on the incorrect facts provided to you by your client.

In the premises stated above, you are requested to advise your client to withdraw the legal notice served upon our clients, within 15 days from the date of this reply, failing which we have clear instruction from our client to take legal actions against you in the proper Court of Law, in case any such legal action is taken by our clients, your client shall be responsible for the cost and consequences of such actions. Should your client intend to initiate legal proceeding against our client it will be solely at their own risk and responsibility.

A copy of this reply is kept in our office for future reference.

Yours faithfully

………………….

For: “The Lawyers & Jurists”

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