Re: Legal Opinion regarding encashment of a TDR A/C Mr. x & Mrs. A.
We refer to your letter dated May 24, 2007 on the above subject.
From perusal of your letter and the documents forwarded to us, it appears that Mr. x & Mrs. A purchased Term Deposit Receipt (“TDR”) under joint signature from Company 1 (“COMPANY 1”) bearing #COMPANY 1B/0125 dated 25.04.2006 of Tk. 62,00,000/- which matured on 25. 04.2007. The TDR application form was signed with the clause “either or survivor” and a nominee with 100% benefit was fixed. A loan of Tk. 8,75,000/- was availed by keeping the TDR under lien to COMPANY 1. In the meantime, COMPANY 1 has come to know that Mr. x has expired. Now the surviving client Mrs. A wants to encash the TDR.
In these circumstances, you have sought our legal opinion as to whether COMPANY 1 may encash the TDR to the survivor.
Normally COMPANY 1 would have been able to encash the TDR to the surviving client as the TDR contained the clause “either or survivor”. However, in the present situation, COMPANY 1 has a lien on the TDR of Tk. 8,75,000/- on account of the loan taken by the clients. [Please note that, we were not provided with copies of the letter of lien or any other documents in connection with the lien].
As such, as long as COMPANY 1 has lien on the TDR, COMPANY 1 may not encash the TDR to the surviving client. COMPANY 1 may give the following two options to Mrs. A:
a) COMPANY 1 shall set off the loan amount from the TDR, cancel the lien and then encash the remaining amount of the TDR to Mrs. A; OR
b) COMPANY 1 shall hold on to the TDR until the loan has been fully repaid by the client, then COMPANY 1 shall cancel the lien and encash the entire amount of the TDR to Mrs. A.
If you have any further query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”