Fairtech Limited & ors. Vs. Bangladesh Shilpa Bank

Fairtech Limited & ors. (Petitioners)


Bangladesh Shilpa Bank (Respondent)


Supreme Court

Appellate Division



Shahabuddin Ahmed J

MH Rahman J

ATM Afzal J


July 10, 1989.

he Bangladesh Shilpa Bank Order, 1972 (PO No. 129 of 1972), Article 34(1)

The Bangladesh Shilpa Bank (Direct Sale of Mortgaged Property) Rules, 1980, Rules 3, 4 & 7(3)

Mere irregularity in holding the sale by public tender, particularly as alleged in the present case, does not divest the Bank of its power to sell the property by private negotiation. The High Court Division rightly held that irregularity in the sale notice calling for public tender or non-compliance with other rules (in case of sale by private negotiation) have no effect on the impugned sale………………(8)


Dr. Kamal Hossain, Senior Advocate (Mahmudul Islam, Advocate with him) instructed by Kazi Ebadul Hoque, Advocate-on-Record—For the Peti­tioners. SR Pal, Senior Advocate instructed by Shamsul Hoque Siddique, Advocate-on-Record—For the Re­spondent No.1.

Not Represented—Represented Nos. 2-3,5.

Civil Petition for Leave to Appeal No. 30 of 1989.

(From the Judgment and Order dated 6-6-1989 passed by the High Court Division, Dhaka in Writ Pe­tition No. 74 of 1989.)

JUDGEMENT ATM Afzal J. – This petition is from the judgment and order dated 6 June, 1989 passed by the High Court Division Dhaka discharging the Rule in Writ Petition No. 74 of 1989.

2. Material facts of the case, briefly, are that the petitioners acquired two cargo carrying vessels Fairtech I and II, from Japan having taken foreign currency loan of US $ 6,30,000,00 from the Bangla­desh Shilpa Bank, respondent no. 1 on 30.12.78 for the said purpose. Under an agreement with the Bank, the vessels were mortgaged/hypothecated with it and the petitioners undertook to repay the entire foreign and local currency loans in 16 equal half-yearly in­stalments commencing from 13.9.81. The vessels arrived in Bangladesh and started operating from 1980-81. It appears that the petitioners paid the Bank a total amount of Tk. 72,10,349 but then there were defaults made in making the payment. On 10.11.87 the Bank issued notice to the petitioners under Arti­cle 34 of the Bangladesh Shilpa Bank Order, 1972 (PO 129/72) stating that as on 13.9.87 the outstanding amount due to the Bank was Tk. 2,22,53,815 and that the Bank had decided to take over possession of the vessels and sell them on 5.12.87. The peti­tioners sent a reply to the said notice which was found to be unsatisfactory by the Bank. The petition­ers offered an amount of Tk.85 lakh by a post dated cheque and asked for final adjustments.

3. On 8.1.88, the Bank issued sale notice as provided in the Bangladesh Shilpa Bank (direct sale of Mortgaged Property) Rules 1980 by publication in the daily newspapers inviting lenders to be sub­mitted by 27.1.88. The response to the calling of tenders in spite of a second publication was not sat­isfactory. The Bank informed, the petitioners in reply to their approaches for an amicable settlement that if they made a payment of Tk. 30 lakhs by 30.4.88 their proposal for adjustment of the outstanding amount might be considered, but the petitioners made no response to the same.

4. As no satisfactory bidder came forward even after a third publication of tender notice on 8.8.88, the Bank decided to sell the vessels by direct negotia­tion. Ultimately they have been sold to respondent no. 4 at a total price of Tk. 1,28,00,000/— payable in 4 instalments. On 29.12.88 the respondent no. 4 paid the first instalment of Tk. 25 lakhs and the Bank delivered possession of the two vessels to it on 5.1.89. The petitioners called in question the sale of the vessels, in the writ petition, as aforesaid raising various grounds as to violation of the provisions of the B.S.B. Order 1972 and the relevant Rules. The High Court Division, however, in a lengthy judg­ment rejected all the contentions raised and dis­charged the Rule issued earlier.

5. Dr. Kamal Hossain, learned Counsel for the petitioners, seeking leave to appeal from the im­pugned judgment, firstly, submitted that the High Court Division was wrong in not holding that under Art. 34(1) of the BSB Order, the taking over of the management and administration of the industrial con­cern is a pre-condition for selling the mortgaged property of the concern to secure its liability to the Bank. Secondly, he submitted that the rules relating to public auction and public tender having not been complied with, the High Court Division was wrong in not holding that Rule 7(3) permitting sale by pri­vate negotiation could not have been resorted to. Lastly, Dr. Hossain submitted with reference to the terms of the impugned sale and the offers made by the petitioners for settlement of the outstanding dues of the Bank that there was an arbitrariness in the whole proceeding which not only destroyed the enter­prise of the petitioners but at the same time failed to achieve the interest of the Bank itself and that the pe­titioners had not been given a fair deal.

6. As to the last submission, it may be ob­served that it appears from the record that the Bank did not go for selling the vessels all at once but gave due notice and other opportunities to the petitioners to settle the outstanding dues. It is on record that the Bank even in its letter dated March 31, 1988 offered to examine the petitioner’s proposal for rephasement of overdues/loan outstanding subject to your pay­ment of Tk.30 lakhs by 30 April, 1988, but the pe­titioners made no response to the same. The High Court Division upon a scrutiny of the correspon­dence clearly found that there was neither any mala-fide nor arbitrariness on the part of the Bank.

7. As to the contentions on the basis of Art. 34(1) of the BSB Order and the Rules, we do not think that they are well-founded in law. It is not dis­puted that the Bank has jurisdiction to sell the mort­gaged property of the borrower directly under Art. 34 of the Order. Although the powers of the Bank to take over the management and administration of the industrial concern and to sell its property have been set out in Art. 34(1) with the conjunction “and”, we have no manner of doubt that they are independent and alternative powers to enforce repayment of the loan. The Article read as a whole leaves no room for doubt as to the true import of sub-Article (1). It is necessary, however, for practical reasons to take over the industrial concern before putting it to sale but that docs not mean that the taking over cannot lake place afterwards before completion of the sale as in the present case.

8. Similarly, mere irregularity in holding the sale by public tender, particularly as alleged in the present case, does not divest the Bank of its power to sell the property by private negotiation. Mr. Pal ap­pearing for the Bank has referred to rules 4 and 5 of the aforesaid Rules and submitted that the procedure for selling by public auction or by calling public tender or otherwise are alternative methods and any defect in one procedure does not vitiate the other. The High Court Division has rightly interpreted the rules in holding that the irregularity in the sale no­tice calling for public lender or non-compliance with other rules (in case of sale by private negotiation) have no effect on the impugned sale.

The petition is dismissed.


Source : 42 DLR (AD) (1990) 216