RE: Legal Opinion on rescheduling of overdue loan liability at the written request of the client which bank has already published auction notice for sale of mortgaged property under section 12(3) of Artha Rin Adalat Ain 2003.
We refer to your letter no. ………… dated 13 December 2006 on the above subject.
From perusal of your letter it is apparent that Company 1, proprietor Mr. x (“Defaulter”) is a defaulter of BANK 1. (“the Bank”), with both its Principal Branch and its Agrabad Branch. The Defaulter’s liability with the Principal Branch and Agrabad Branch stands at Tk. 33,35,447.99 and Tk. 10,11,535.28 respectively making the total overdue liability of the defaulter to the tune of Tk. 43,46,983.27 (“Total Loan Liability”)as of 30.11.2006.
The Defaulter’s liability with both the Principal Branch and the Agrabad Branch is secured by registered mortgage of a residential apartment measuring 1,250 sft (3rd)floor along with proportionate share of undivided and un-demarcated land measuring 1.25 katha out of 5 katha located at ……………. (“the Mortgaged Property”). Mrs. A, wife of Mr. x is the owner/mortgagor of the property as well as the guarantor of the Defaulter’s loan liability.
Despite the Bank’s repeated requests, the Defaulter did not come forward to adjust their overdue liability with the Bank and the Bank published an auction notice, drafted by us, in the ‘NEWSPAPER NAME’ inviting prospective buyers to submit their bid for purchase of the Mortgaged Property. The last date of submission of bid is 21.12.2006.
The Bank has now received a letter dated 12.12.2006 from the Defaulter wherein the Defaulter has requested the Bank to reschedule their entire loan liability with the Bank by transferring their liability with the Bank’s Agrabad Branch to the Bank’s Principal Branch. The Defaulter has also informed that they would pay 20% of their Total Loan Liability as down payment and that the remaining liability will be adjusted in 24 equal monthly instalments.
In these circumstances, you require our legal opinion as to
1) whether the Bank may entertain the client’s request for rescheduling their liability with the Bank while auction notice has already been published and the procedure is still valid/under process; and
2) Whether transfer of the Defaulter’s liability from their Agrabad Branch to their Principal Branch may pose any legal complication in future should the client fail to comply with the terms and conditions of rescheduling arrangement.
The auction notice published by the Bank in the ‘NEWSPAPER NAME’ is only an invitation to treat and not an offer which is capable of being excepted by the bidders. Moreover clause 8 the auction notice states that without showing any reason Bank can either accept or reject any offer. However, under clause 9 of the auction notice the Bank will have to give back the deposited amount submitted by the bidders.
So it is our legal opinion that although the auction notice has already been published, nevertheless the Bank can, if it so desires, and if it considers that the offer of the Defaulter is genuine, it reschedule the Defaulter’s liability. However there has to be a separate agreement reflecting the revised arrangement.
In our opinion, there is no legal restriction restricting the Bank from transferring the Defaulter’s liability from the Bank’s Agrabad Branch to their Principal Branch because it (a) the loans have been disbursed by Trust Bank through its different branches located at Dhaka and Chittagong and (b) such transfer has been requested by the Defaulter vide their letter dated December 12, 2006 to do the same. But in order to protect the Banks future interest, the Bank should enter into Agreement as stated above. The Borrower and the Guarantor shall execute further fresh charge documents including personal guarantee.
If you have any further inquiries please do not hesitate to contact us.
For: “The Lawyers & Jurists”