Re: Legal Opinion in respect of recovery of lease financing facility A/C. Mr. x.
We refer to your letter dated 30/03/2004 on the above.
We have perused the contents of the letter along with all other papers and documents. It appears from your letter that Mr. x (the ‘Borrower’) availed a lease finance facility of Tk. 5,00,000.00 from the Main Branch of the Bank for procuring and use of one unit Toyota Microbus on 05.12.2001. As per sanction terms and condition the loan was repayable by 36 equal monthly rentals of Tk. 18,000.00 each but the Borrower did not repay the monthly rentals as per sanction terms. As a result the Bank rescheduled the lease finance liability of Tk. 4,23,000.00 with condition that the borrower is to repay the loan by 24 monthly rentals of Tk. 21,000.00 each from 01.10.2003. Despite verbal and & written request by the Bank for repayment of the outstanding dues the Borrower did not pay any heed to that request, at last the account to be going to be classified on 31st March, 2004. The present outstanding liability of the Borrower is Tk. 4,36,131.12 out of which Tk. 1,26,000.00 is overdue. The Borrower has an MBDR for Tk. 25 lac with Dhanmondi Branch of the Bank and has been availing credit facility in the form of SOD against the pledge of said MBDR with a letter of lien. The present outstanding balance in the SOD account is Tk.5.00 lac. In this situation, the Bank has sought our opinion whether it can adjust the overdue instalments or the entire outstanding of lease finance facility by debiting the SOD account or by encashing the MBDR of the Borrower.
Since the MBDR is pledged along with a letter of lien with the Bank, we are of the opinion that the Bank has the right to adjust such amounts against any debt due to it from the Borrower. The purpose of the lien in such cases is attained by the application of the principal of set-off, which obtains between persons occupying the relation of debtor and creditor, and between whom there exist mutual demands.
In the above premises, we are of the opinion that, the Bank can liquidate the debt due to it by transferring moneys there from and can adjust the overdue instalments or the entire outstanding of lease finance facility by debiting the SOD account or by encasing the MBDR of the Borrower. However, for the sake of natural justice, the Bank may give a notice to the Borrower to adjust his outstanding dues within a stipulated time. If the Borrower fails to adjust his liabilities, the Bank may set-off his account or encash the MBDR.
Should you require any further clarification, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”