Re: Legal Opinion regarding final settlement of Overdue Loan A/C. Company 1, Proprietress Ms. A
We refer to your letter No. ……………. dated 13.08.2002 on the above subject.
We understand that Ms. A, Proprietress of Company 1 (the “Client”) has classified loan of Tk. 1,99,53,806.00 as on 30.06.2001 with the Bank. After partial adjustment and partial waiver, the Client executed a Deed of Agreement with the Bank on 18.09.2001 by which she agreed to pay Tk. 1.00 crore in 6(six) equal quarterly instalments starting from March 2002. But the Client failed to pay the 1st and 2nd instalments in accordance with the terms of the Agreement.
Now, the Client has approached the Bank with a proposal to sell the mortgaged property at Tk. 1.20 crore to the concerned purchaser. The purchaser will pay Tk. 60.00 lac in cash at the time of execution of deed of sale in his favour out of which the client will receive Tk. 20.00 lacs and the balance Tk. 40.00 lac will be paid to the Bank towards partial adjustment of the liabilities of the Client. The remaining Tk. 60.00 lac of the sale price will also be adjusted with the balance liabilities of the Client by creating loan for Tk.60.00 lac in the name of the Purchaser against security of fresh legal mortgage of the property in question. The Purchaser will adjust the loan of Tk. 60.00 lac within June 2003 in instalments.
In short, the events are:
(i) The Bank’s claim is Tk. 1.00 crore after waiver of interest.
(ii) Mortgaged property will be sold by the Client at Tk. 1.20 crore.
(iii) The purchaser will pay Tk. 60.00 lacs now out of which Tk. 20.00 lacs will be paid to the Client and Tk. 40.00 lacs to the Bank for partial adjustment of the liabilities of the Client.
(iv) A loan of Tk. 60.00 lacs will be created by the Bank in favour the Purchaser for adjustment purposes only as security of which fresh legal mortgage will be created over the property in question.
In such a situation, you have sought our opinion on the following:
(i) Transfer of ownership
(ii) Loan Agreement
(iii) Creation of new loan of Tk. 60.00 lac and mortgage formalities for the same
We are of the view that in order to protect Bank’s interests in connection with settlement of the outstanding liabilities of the Client, the following steps should be taken:
(i) The Client will write a letter to the Bank stating that because of her financial difficulties she is unable to adjust her outstanding liabilities with the Bank. She would propose to the Bank that she wants to sell the property mortgaged with the Bank at an amount of Tk. 1.20 crore, out of which she will receive Tk. 20.00 lac and the remaining Tk. 1.00 crore will be paid to the Bank to adjust her outstanding liabilities with the Bank.
(ii) A Tripartite Agreement will be entered into between the Bank, the Client and the Purchaser of the property stating, inter alia, as follows:
(a) The Client is unable to adjust her outstanding liabilities with the Bank because of her financial difficulties;
(b) The Client has requested the Bank to redeem the mortgaged property so that she can sell the property at an amount of Tk. 1.20 crore, out of which she will receive Tk. 20.00 lac and the remaining Tk. 1.00 crore will be paid to the Bank to adjust her outstanding liabilities;
(c) The Purchaser has agreed to purchase the Property at an amount of Tk. 1.20 crore and he will pay Tk. 60.00 lac at the time of execution of the deed of sale to the Bank and for the remaining Tk. 60.00 lac, he will avail a loan from the Bank. The loan amount of Tk. 60.00 lacs will be adjusted by the Purchaser within June 2003 in instalments. As security of the loan, the Purchaser will create registered mortgage over the property in favour of the Bank.
(d) Upon consideration of the proposal of the Client and the Purchaser, the Bank has agreed to redeem the property mortgaged in its favour so that the sale proceeds can be utilised to adjust the Client’s outstanding liabilities with the Bank;
(e) All the parties agree that the Deed of Redemption, the Deed of Sale and the Deed of Mortgage will be registered simultaneous on the same day.
Please note that for protection of the Bank’s interests, it is imperative that the Deed of Redemption, Deed of Sale and Deed of Mortgage are registered simultaneously on the same day. The Bank should make payment of Tk. 20.00 lacs to the Client only after the registration formalities are completed. It is also advisable that the Bank executes a loan agreement with the Purchaser.
If you have any query, please do not hesitate to contact the undersigned.
For: “The Lawyers & Jurists”