Anwar Karim and others (Petitioner)
Bangladesh Bank and others (Respondents)
High Court Division
(Special Original Jurisdiction)
Kazi Ebadul Hoque J
Md. Muzammel Hossain J
Judgment : June 2, 1999.
Case Referred To-
Chandpur Jute Suppliers vs. Subordinate Judge 2 BLC 49 (7)
Syed Ishtiaque Ahmed with Rokonuddin Mahmud, Shah Newaz Akand and Adilur Rahman, advocates—For the Petitioners.
Tawfique Newaz with Muhammad Feroze, Mrs. Azra Nasreen Rahman, Advocates—For the respondents.
Writ Petition No.278 of 1999.
Kazi Ebadul Hoque J.- This Rule was issued at the instance of the petitioners, Anwar Karim and Afzal Karim as well as Focus Fashion Limited, calling upon the respondent Nos.1-3 to show cause as to why inclusion of the names of the petitioner Nos.1 and 2 as defaulters in the CIB (Credit Information Bureau) report of Bangladesh Bank for the liability of the respondent No.5, Jaba Textile Mills Ltd. under Borrower Code No.9187 (Annexure-A1 and A2) should not be declared to have been made without any lawful authority and of no legal effect.
2. Learned Advocate for the petitioners after placing the petition and other materials on record submitted that when the loan in question was taken by the respondent No.5 company petitioners were not its directors and before they became directors of the said company on 20-11-91 the said loan was classified and they having resigned the directorship of the said company on 22-3-95 inclusion of their names in the said report for the year ending 31-12-89 (Annexure-A1) and continuation of the same for the year ending 31-12-94 (Annexure-A2) are wholly illegal. He further submitted that names of the petitioner Nos.1 and 2 were included in the said report without giving them any opportunity to be heard and thereby violating the principle of natural justice though by such inclusion they were debarred from getting loan for their other business.
3. Learned Advocate for the respondent No.1 after placing the affidavit-in-opposition and other materials on record and referring to the definition of defaulting borrower in section 2(ga) and restriction on the director of a defaulter company from transferring his shares and resigning from directorship without the permission of the creditor bank under section 27 Ka and provisions of section 27 (Ka) (Ka) regarding list of defaulting borrowers submitted that transfer of the shares and resignation of the directorship of petitioner Nos.1 and 2 having been done without the permission of the creditor bank the same has no force in the eye of law and the names of the said petitioners are being legally continued in the CIB report.
4. On consideration of materials on record we find that respondent No. 5 Jaba Textile Mills was granted cash creditor loan limit of Taka 35 lakh on 2-5-88 from the respondent No.6 IFIC Bank and the said loan was granted for a short period up to 30-9- 88 on hypothecation of goods. The amount with interest was increased to Taka 121 lakh and remained overdue even after 30-9-88 and, as such, the same was classified on 31-12-89 under borrowers code No.9187. Petitioner Nos.1 and 2 purchased shares and became directors of the respondent No.5 company on 20-11-91 and thereafter transferred their shares and resigned from the directorships on 22-3-95. During their directorship on 31-12-94 under the aforesaid borrowers code No.9187 the said loan increased to Taka 141 lakh and again the same was classified on 31-12-94. Thus it is clear that the classified loan as on 31-12-89 was brought forward with interest on 31-12-94 and, as such, the petitioner Nos.1 and 2 cannot be held liable for borrowing the amount and non-payment of the same within the due date. It appears from other materials on record that as soon as petitioner Nos.1 and 2 became directors of the respondent No.5 company some of the directors of the said company filed Title Suit No.249 of 1992 in the 3rd Court of Subordinate Judge, Dhaka against petitioner Nos.1 and 2 and two other new directors for the declaration of their appointment as directors of the said company as illegal and void. On the basis of a compromise the said suit appears to have been withdrawn and petitioner Nos.1 and 2 transferred their shares and resigned from the directorship of the said company. It further appears from a copy of the Judgment and Order dated 12-3-98 passed by a Company Judge of this court in Company Matter No.37 of 1998 that permission was granted to hold annual general meeting for the years 1988 to 1997 within 6 months from the date of drawing up of the said order. Thus it appears to us that the petitioner Nos.1 and 2 could not participate in the management of the respond No.5 company due to the aforesaid litigation. We also find from materials on record that the company was non-functioning for the aforesaid period.
5. By Act No.11 of 1997 Bank Company Act, 1991 was amended with effect from 13-3-97. Section 2(ga)(ga) inserted by such amendment provides that a defaulting borrower means any person or institution advance, loan or part of same or interest accrued thereon granted in favour of whom or institution in which he has interest has become over due as per the definition issued by the Bangladesh Bank. Section 27 Ka inserted by the said amendment provides that notwithstanding anything contained in any other law for the time being in force no director of a borrower company shall be allowed to transfer or sell his shares and resign from the directorship of such company, without the permission of Board of Directors the Creditor Bank shall be effective. Section 27 inserted by the said amendment provides that every bank, company or financial institution from time to time shall send a list of defaulting borrowers to Bangladesh Bank. Bangladesh Bank on receipt of such list shall send the same to all bank companies and financial institutions of the country. No bank company or financial institution shall allow any loan facility in favour of any such defaulting borrower. Notwithstanding anything contained in any other law for the time being in force creditor bank company or financial institution, as the case may be, shall file suit according to the law in force against the defaulting borrower.
6. From the above amended provisions it is clear that legislature has taken measures to prohibit granting of loan to defaulting borrowers and made provisions to take legal action against them and also to prohibit director of defaulting borrower company from transferring his shares and resigning from directorship without the permission of the Board of Directors of the creditor bank.
7. In the case of Chandpur Jute Suppliers vs Subordinate Judge reported in 2 BLC 49 it has been held that defaulting borrowers themselves form into a separate and distinct class and legislature can make stringent law against them and such law is not violative of the fundamental rights guaranteed under Articles 27 and 31 of the Constitution. In view of the same we find that classification of the defaulting borrowers into a separate category and prohibition of giving loan to them under the aforesaid provisions are not violative of the aforesaid Articles of the Constitution.
8. Though a director of defaulting borrower company can not transfer his share and resign from the directorship without the consent of the Board of Directors of the creditor bank under the provisions of section 27Ka of the said Act petitioner Nos. 1 and 2 having become directors of the borrower company on 20-11-91 and the loan in question having been taken on 2-5-88 long before their becoming directors and the same having been classified on 31-12-89 also before their becoming directors inclusion of names of the petitioner Nos.1 and 2 for the aforesaid outstanding loan in the CIB report, in our view, is beyond the contemplation of the aforesaid provision to classify the directors of a borrower company due to whose mismanagement borrower company has become a defaulter. It is not the intention of aforesaid provision to classify a director who was not instrumental in taking the loan and responsible for mismanagement of the affairs of the company to classify him as the defaulting borrower.
9. We have already noticed that the petitioner Nos.1 and 2 could not participate in the management of the borrower company even after loan was classified and till the date of transfer of their shares and resignation of their directorship due to the litigation. Though transfer of shares and resignation of the petitioner Nos. 1 and 2 from the directorship of the respondent No.5 borrower company are not valid for their failure to obtain consent of the Board of Directors of the creditor bank under the provisions of section 27Ka of the said Act in the facts and circumstances of the case and reasons stated above inclusion of their names in the CIB report in our view is without lawful authority and of no legal effect. We, therefore, find merit in this Rule.
In the result, the Rule is made absolute without any order as to costs. Inclusion of the names of petitioner No.1 Anwar Karim and petitioner No.2 Afzal Karim in the CIB report of Bangladesh Bank for liability of respondent No. 5 under the borrower code No.9187 is declared to have been made without lawful authority and of no legal effect.
Source : 52 DLR (HCD) (2000) 1