Dated:  …………….

Mr. X

Executive Vice President

National Bank Limited

Head Office

Law & Recovery Division

18, Dilkusha Commercial Area

Dhaka 1000


Dear  Sir,

We refer to your letter dated 24.10.2005 regarding the above subject.

It appears that National Bank Limited, Agrabad Branch (the “Bank”) filed an Artha Rin Suit against the captioned company for recovery of Tk. 22.74 crore (approximately). The matter was however disposed off in terms of the settlement reached between the parties under section 21 of the Artha Rin Adalat Ain and thereby formed part of the decree. Under the terms of the settlement, the borrower company was liable to pay Tk.10.00 crore in 2(two) instalments as full and final satisfaction of the entire claim amount.

It further appears that Mr. M. Nurul Islam, the then Director of the Bank, has executed personal guarantee against the loan availed by the captioned borrower.

Meanwhile, consequent upon default by the judgement debtors of the above suit in adjusting decretal amount, Bank has filed an Artha Jari Case against the judgement debtors for recovery of the entire outstanding amount.

The Head Office of the Bank thereafter, upon receipt of a letter from Bangladesh Bank communicating non-compliance of section 28 of the Bank Companies Act, 1991, has filed an  application for cancellation  of the decree. The application was subsequently allowed by the Court.

The defendant thereupon filed Writ Petition No. 5832 of 2005 impugning the above cancellation order  in the High Court Division of the Supreme Court. The Hon’ble Court thereupon was pleased to issue Rule and stayed further proceedings of the Artha Rin Suit No. 2 of 2003.

In such a situation, the Bank has sought our opinion as to whether the Bank should encash the guarantee the amount of which is covered under the claim of Artha Rin Suit No. 2 of 2003.

Our opinion:

First of all, note that, this  guaranteed liability being contingent liability of the Bank should not be included in the claim of the above Artha Rin Suit. As the suit now has been restored, the Bank may reduce the claim by way of amendment.

Alternatively, the Bank may  keep the matter as it is for the time being as the matter is now within  the seisin of the High Court Division of the Supreme Court. If the  cancellation order is set-aside by the Hon’ble Court, then the decree shall be restored in its previous position and which includes the amount of the guarantee.

Nevertheless, whatever the case may be, the Bank ultimately shall have to effect payment under the guarantee.  However, if the payment is made now, the defendant may have an opportunity to challenge the payment under the guarantee  in the pretext of the matter being  sub-judice.

Should you have any further query, please revert back to us.

Thanking you.

Yours faithfully,

Dated: …………………

For: The Lawyers & Jurists

M.L.Hotel Tower Ltd,

208,Shahid Syed Nazrul Islam Sarani,

Bijoy Nagar, Dhaka-1000.