Legal opinion in respect of recovery of lease financing facility.

Mr. Z

Address….

Dear Sir,

Re:      Legal opinion in respect of recovery of lease financing facility A/C Mr. X.

We refer to your letter dated 30.03.2004 and 06.04.2004 on the above subject.

We have perused the contents of the letter along with all other papers/documents referred to us. It appears from your letter that Mr. x (the ‘Borrower’) availed a lease finance facility of Tk. 5,00,000.00 from the Bank for procuring and use of one unit Toyota Microbus on 05.12.2001. The Borrower defaulted in repaying the lease finance facility in terms of the sanction letter and subsequent reschedule arrangement. The present outstanding liability of the Borrower is Tk. 4,36,131.12 out of which Tk. 1,26,000.00 is overdue.

It also appears that the Borrower has an MBDR for Tk. 25.00 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 such situation, the Bank has sought our opinion whether the Bank 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.

OUR OPINION

We have perused the format of Letter of Lien. The Letter of Lien does not empower the Bank to apply the proceeds under lien for adjustment of any other loan account of the Borrower with the Bank.

However, legally where money is placed in a bank as fixed deposit the ownership of the money passes to the bank and therefore the bank which is itself the owner of the money cannot exercise any lien over the said money. But the bank has right to adjust such amounts against any debt due to it from the customer. The purpose of the lien in such cases is attained by the application of the principal of set-off.

In view of the above we are of the opinion that the Bank has a right to adjust its dues from the proceeds of MBDR by the application of the principal of set-off. Bank may adjust its dues by giving the Borrower 7 (seven) days notice to the effect that in the event the Borrower fails to adjust his liability within the prescribed period, Bank shall adjust the same from the proceeds of the MBDR.

With regard to debiting the SOD account we are of the opinion that without express consent of the Borrower, the Bank cannot debit the SOD account for adjustment of another loan account.

Should you have any further query, please do not hesitate to contact the undersigned.

Thanking you,

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

Disclaimer:

The information contains in this web-site is prepared for educational purpose. This site may be used by the students, faculties, independent learners and the learned advocates of all over the world. Researchers all over the world have the access to upload their writes up in this site. In consideration of the people’s participation in the Web Page, the individual, group, organization, business, spectator, or other, does hereby release and forever discharge the Lawyers & Jurists, and its officers, board, and employees, jointly and severally from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage, loss or injury, which hereafter may be sustained by participating their work in the Web Page. This release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability and the consequences thereof, as well as those now disclosed and known to exist.  The provisions of any state’s law providing substance that releases shall not extend to claims, demands, injuries, or damages which are known or unsuspected to exist at this time, to the person executing such release, are hereby expressly waived. However the Lawyers & Jurists makes no warranty expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, apparatus, product or process disclosed or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product process or service by trade name, trade mark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favouring by the Lawyers & Jurists. The views and opinions of the authors expressed in the Web site do not necessarily state or reflect those of the Lawyers & Jurists. Above all, if there is any complaint drop by any independent user to the admin for any contents of this site, the Lawyers & Jurists would remove this immediately from its site.