Bank Companies Act, 1991


Companies Act, 1991



the Memorandum and Articles of Association of BRAC Bank it appears that the paid
up capital is only Tk. 20 crores far less than one-half of the subscribed
capital. It may be argued that BRAC Bank has not yet commenced its business,
but the fact remains that after obtaining the no objection certificate and
completion of registration, the BRAC Bank has proceeded with the opening of its
office at Gulshan and fixed the date for it’s opening in a few days time.
Thereby process of commencement of business has already started without
satisfying the requirement.

Muzaffar Ahmed Vs Bangladesh Bank & others, 20 BLD (HCD) 235.



High Court division will only decide the legality of the notice under section
17 of the Act on perusal of the notice only and on no other supporting or
opposing materials.

Md. Saful
Alam alias Masudul Alam Chowdhury Vs Bangladesh Bank and others, 19 BLD (AD)



a close reading of section 17 of the Act, as amended up-to-date it appears that
since the said section is concerned with the subject matter of vacancy of the
office of directors which is an additional occasion for vacancy other than
those contained in the Companies Act, 1994 and since the entire scheme of the
said Act is to bestow upon the Bangladesh Bank a strong regulatory power over
the functioning and business of bank companies, it is enough if the offending
director is intimated in a notice under section 17 of the Act that he has a
personal liability to repay a loan of the kind described in section 17 and that
on the date of notice the loan remains unliquidated upon expiry of the
stipulated.. date of repayment of either the whole loan or an installment
thereof. It is not necessary to describe in the notice the nature and number of
document or documents on the basis of which the offending director is claimed
by the lender Bank to be personally responsible for repayment of a loan or an
installment. But if the offending debtor denies his personal liability to repay
the loan in his written representation the Bangladesh Bank may send for the
incriminating materials and confront the offending director with the same. It
is before respondent No. 1 that the offending director will place all his
grievances against the show cause notice and it is respondent No. I who will
determine the relevance, genuineness, connection between the lender Bank’s
documents and the loans in question and the liability or otherwise of the
offending director.

Md. Saiful
Alam alias Masudul Alam Chowdhury Vs Bangladesh Bank and others, 19 BLD (AD)

48D1R(AD)20; 45DLR(AD)20-Not applicable.



issuing the notices under section 17 of the Act the lender Bank acted neither
as a substantive authority nor as a Court nor as a tribunal. It acted purely in
an executive capacity under an authority granted by a statute if the show cause
notice is issued by an unauthorised or if the allegations in the show cause
notice on the face of it do not attract the mischief of section 17, a notice
under section 17 can certainly be challenged in the writ jurisdiction and
declared to have been issued without lawful authority and to be of no legal

Mr. A.S.F.
Rahman and others Vs Bangladesh Bank and others, 20 BLD (AD) 32.

Md. Saiful Alam alias Masudul Alam Chowdhury Vs. Bangladesh Bank and others, 19
BLD(1999)(AD)249—relied upon.



High Court Division simply does not have the jurisdiction to decide the
validity of a notice under section 17 of the Act upon adjudication of documents
both sides. The offending director may have a very good case to show that he
has no personal liability to the lender Bank at all. But it is not for the High
Court Division to determine or even hint at the offending director’s personal
liability or otherwise, except on admission, when the only us before it is
whether the notice under section 17 of the Act is legal or not.

Ahsan Vs Bangladesh Bank and others, 20 BLD (AD)260.

Md Saiful Alam @ Masudul Alam Chowdhury, Vs. Bangladesh Bank and others, 19 BLD
(AD) 249 [C.P.529 of 1 9991—relied.



view of the existence of the report and recommendation it cannot be said that
there was no material before the respondent No.1 to form the opinion concerning
the appellant or that the said opinion was merely fanciful. So the requirement
of formation of an opinion by the Bangladesh Bank has been made before
directing a Director, Chairman or Chief Executive of a banking company to
refrain from performing functions of his office during the pendency of the
enquiry proceedings against him for his removal from office under section 46 of
the Act. Such opinion must be formed on the basis of relevant materials on
record and not fancifully without any such material nor on the basis of
irrelevant materials.

Abdur Rahim
Chowdhury Vs Bangladesh Bank and others, 20 BLD (AD) 170.


and 47

there was sufficient good reason to form an opinion cannot be looked into by
the Court as that would be substituting the opinion of the Bangladesh Bank. The
Court cannot accept the contention that the Bangladesh Bank could not have
arrived at an opinion or satisfaction to suspend the petitioner on a single

Abdur Rahim
Chowdhury Vs Bangladesh Bank and others, 20 BLD (AD) 170.


and 65

relief to which one is not entitled to directly cannot be given to that person
indirectly. The winding up of a bank can only be done as provided under
sections 64 and 65 of the Bank Company Act 1991 and cannot be wound up at the
instance of the writ petitioner in an indirect manner. (Per Mahmudul Amin Choudhury,

Professor Mozaffar Ahmed and others, 22 BLD(AD)41




includes among others, ‘ … any other persons dependent of such person.’ In
the instant case ‘such person’ is BRAC and the rest of the subscribers are its
dependents. In other words BRAC itself holds 99.97% of the shares in the BRAC
Bank, the balance being subscribed and held by its employees and members of the
governing body.

Muzaffar Ahmed Vs Bangladesh Bank & others, 20 BLD(HCD)235


and 121

Waiver of

the restriction imposed under section 14A regarding holding of not more than
10% shares by a person, company, members of a family, was published on 3
February, 2000, after the issuance of the Rule in this writ petition on 12.12.1999.
By this gazette notification, an undue favouritism has been shown and
discrimination has been made, in favour of BRAC Bank, only to remove its
incapacity to operate, which the authority became aware of, after the issuance
of the Rule in which the letter of ‘no objection’ itself and the registration
of the bank and the certificate of incorporation have been challenged.
Apparently, on the days the letter of ‘no objection’ was issued i.e., 4 April
1999 and the Bank was registered on 20 May, 1999, there was no waiver and BRAC
Bank did not meet the initial requirement for incorporation.

Muzaffar Ahmed Vs Bangladesh Bank & others, 20 BLD (HCD) 235.