RE: LEGAL OPINION REGARDING ENCASHMENT OF BANK GUARANTEE # TBL/SKBB/066/2006 DATED 27 JULY 2006 FOR BDT 1,40,00,000.00 FAVOURING Company 1.
Please refer to your letter being No. ………………on the above subject.
We have perused the papers/documents referred to us. We understand that, Bank 1 (“the Bank”), at the request of its client, Company 1 (“the Company”), has issued a Bank Guarantee No. ………………… for Tk.140,000,00.00 with the date of expiry on 26.07.2007 (“the Bank Guarantee”) in favour of Company 1, ………………. (“the Beneficiary”) and the Bank has undertaken to pay the aforesaid amount on demand in the event of failure of Company’s obligations under the General Sales Agency Agreement entered into between the Company and the Beneficiary on March 03, 2006.
The Beneficiary vide letters dated 28.12.2006, 03.01.2007 and 23.04.2007 has lodged its claim to the Bank for encashment of the Bank Guarantee.
From perusal of the provided documents it appears that, the Company as plaintiff had filed Title Suit No. 01 of 2007 in the Court of Joint District Judge, 1st Court against the Beneficiary and others and also filed an application in the said suit praying for an order of temporary injunction restraining the defendants not to encash the Bank Guarantee. The learned Joint District Court passed an order of status quo in respect of the Bank Guarantee on 10.01.2007.
On 24 April 2007 at 1.10 p.m., the Bank has received a photocopy of the certified copy of an order dated 11 April 2007 issued by Court of Joint District Judge, 1st Court from Cathay Pacific vide their letter dated 23 April 2007. Vide this order, the court had recalled and vacated the order of status-quo granted on 10.01.2007.
However, on 23 April 2007 the Bank has received a lawyer’s certificate issued by the Company’s lawyer, Mr. x Law House dated 23 April 2007 (“the Lawyer’s Certificate”) and received by the Bank on 23 April 2007. Vide this Lawyer’s Certificate the Bank was informed that the Company and another preferred an Appeal No. F.M.A.T No. 227 of 2007 in the Hon’ble High Court Division of the Supreme Court against the Beneficiary and others on 23 April 2007 in respect of rejection of status quo order and also rejection of temporary injunction by the learned Joint District Judge, 1st Court, Dhaka passed on 11 April 2007. The Hon’ble High Court Division was please to issue Rule and pass an order of status quo in terms of prayer of injunction petition in the pending appeal. The Bank has also sent us the certified copy of the said order vide their letter No. …………….. dated 26 April 2007, which corresponds with the Lawyer’s Certificate.
In such situation the matter has been referred to us with a request to provide opinion as to whether Bank should pay the value of the Bank Guarantee under this sub-judice state.
Our opinion is as follows:
We have perused the Lawyer’s Certificate of the Company’s lawyer and also the certified copy of the Hon’ble High Court Division wherein it appears that on 23 April 2007 the Hon’ble High Court Division in Appeal No. F.M.A.T No. 227 of 2007 passed an ad-interim order for maintaining status quo in respect of the encashment of the Bank Guarantee of Tk.1,40,00,000.00 only lying the Bank.
It is our opinion that, in light of the order of status quo, the Bank cannot consider the request of the Beneficiary vide their letter dated 23 April 2007 for encashment of the Bank Guarantee. The Bank should give a reply to the letter of Cathay Pacific dated 23 April 2007 and inform them about the order of the Hon’ble High Court Division (a copy of which should be enclosed with the reply). In the reply it should be stated that, in view of the order of Status quo by the Hon’ble High Court, the Bank is not in a position to honour the encashment claim of the Bank Guarantee.
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For: “The Lawyers & Jurists”