LEGAL OPINION REGARDING ENCASHMENT OF BANK GURANTEE NO. 101TS318LG05 DATED 28.09.2005 LODGED BY COMMISSIONERS OF CUSTOMS, A/C. Company 1.

Mr. Z

Address….

Dear Sir,

RE:     LEGAL OPINION REGARDING ENCASHMENT OF BANK GURANTEE NO. 101TS318LG05 DATED 28.09.2005 LODGED BY COMMISSIONERS OF CUSTOMS, A/C. Company 1.

Please refer to your letters dated 10.06.2007, 11.06.2007, 12.06.2007 and 02.10.2007 and our letter dated 11.06.2007 and 12.06.2007 on the above subject.

From perusal of your letter and the provided documents/papers appears that, Assistant Commissioner of Customs on behalf of the Commissioner of Customs, Custom House (“the Commissioner of Customs”) vide a letter dated 30/09/2007 (“the Letter”) has asked Bank 1 (“the Bank”) to encash Bank Guarantee No. ……………. dated 28.09,2005 for Tk. 12,71,91,267.95 (“the Bank Guarantee”) and issue pay order/ demand draft  for Tk 12,71,267.95 in their favour within 3 (three) working days from the date of receipt of the Letter. They also cautioned that, failing which they will take action as per Section 202 of the Customs Act 1969.

In the above circumstances, you have requested us to provide our legal opinion as to what should be the Bank’s next course of action.

Our opinion is as follows:

As stated in our previous opinion dated 12.06.2007, the Bank Guarantee is unconditional and continuous in nature and the Bank has undertaken to pay the guaranteed amount to the Commissioner of Customs without any reference to COMPANY 1 (“the Importer”). The Bank Guarantee was issued on the basis of the interim order dated 13.09.2205 passed in Writ Petition No. 6990 of 2005 and reference was made to the said interim order in the Bank Guarantee. The said interim order was issued for the period of pendency of the Rule. The Rule is still pending and no further order has been made by the court in this regard. Further, nothing has been sated in the Bank Guarantee as to whether encashment of the Bank Guarantee can be demanded before disposal of the Rule or without any reference of any further order of the Court in the Writ Petition.

Therefore, in our previous opinion, we advised the Bank not to encash the Bank Guarantee without the necessary order from the Court, as there is a possibility of facing charge for committing contempt of Court.

However, the Commissioner of Customs vide the Letter, has asked the Bank to encash the Bank Guarantee and issue pay order/ demand draft  for Tk 12,71,267.95 in favour of the Customs House within 3 (three) working days from the date of receipt of the letter. The Commissioner of Customs has also cautioned that, failing which the Customs House shall take action as per Section 202 of the Customs Act 1969 including non-acceptance of all bank guarantees, demand drafts/pay order issued by the Bank.

In the above circumstances, we are of the opinion that, the Bank, in order to protect the interests of its general customers (i.e. exporters/importers), may encash the Bank Guarantee in favour of the Customs House, Chittagong, provided that the Bank first gives a written notice to the Importer, informing the Importer about the contents of the Letter of the Commissioner of Customs and requiring the Importer within three days of the date of the bank’s notice to obtain and deliver to the Bank an injunction order of the court restraining the encashment of the Bank Guarantee, otherwise the Bank shall encash the Bank Guarantee in favour of the Customs House, Chittagong after the stipulated period. Alternatively Bank may ask the Customer to take up the matter through Customer’s lawyers directly with the Customs Authority. If nothing is done within the stipulated period, then the Bank may encash the Bank Guarantee.

Should you have any further query, please revert back to us.

The papers/documents referred to us are returned herewith.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

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