RE: Legal opinion regarding on MTDR (Fixed Deposit) for Tk. 20.00 lac on account of deceased Mr. x.
We refer to your letter dated 26.04.2007 on the above subject matter.
We have perused all the documents sent to us with regards to the captioned subject. It appears that due to the death of Mr. x, his legal heirs became the owner of the legal estate of the deceased and as such are owner of the Mudaraba Term Deposit Receipt (MTDR) for Tk. 20.00 lac which presently stands at Tk. 59,53,340.67. The heirs of Late Mr. x are Directors of the Company 1(the “Borrower”) and the Borrower has liability with the Bank 1. In such situation the matter has been referred to us and we are requested to provide legal opinion whether the Bank can adjust the liability of Company 1 by encashing the said MTDR.
After late Mr. x’ s demise, his legal heirs will receive the proceeds of the MTDR as the MTDR is only in the name of late Mr. x. In order to ascertain the legal heirs, Bank will request the heirs to produce succession certificate from the competent Court wherein the Court will show how this amount with interest will be distributed. The heirs will be entitled to the proceeds as per the ratio given by the Court.
The next issue is the liability of Company 1. If the heirs are only directors of Company 1then this fact will not disentitle them to receive their respective shares out of the proceeds of the MTDR. However if all or any of the heirs is/are guarantor(s) of the loan taken by Company 1only then the Bank will not be obliged to pay the heirs in accordance with their respective shares. Bank will then withhold the shares of the proceeds of the guarantors. As the heirs are not debtors, Bank can not set off the amount with the liability of Company 1. But if the Bank had already filed suit, then the Bank will either attach the proceeds in the said suit or seek Court permission in the said suit to set off the amount. Until then Bank will hold the proceeds in an interest bearing sundry account. If the Bank has not filed
any suit, still then it shall withhold shares of guarantors as security for the loan (provided the loan is non-performing).
Should you have any query, please do not hesitate to contact us.
For: “The Lawyers & Jurists”