Legal opinion regarding sale of mortgage property of a public limited company A/c Company 1, a delinquent client of the branch

Mr. Z

Address….

Dear Sir

Re: Legal opinion regarding sale of mortgage property of a public limited company A/c Company 1, a delinquent client of the branch

We refer to your letter no…………….. dated May 2007 on the above subject.

From the facts it appears that the Company 1 (the “COMPANY 1”), a public limited company, had been enjoying a composite investment facility from the Bank 1(the “BANK 1”) since 2002. Subsequently, the COMPANY 1 became defaulter in paying their dues. Despite repeated requests, the COMPANY 1 did not adjust their liabilities which in turn led the accounts as non-performing.

In these circumstances, you require our legal opinion regarding whether the BANK 1 can sell the said machineries and mortgaged property owned by the COMPANY 1 for the adjustment of their overdue liabilities.

OUR OPINION:

If the BANK 1 is given irrevocable general power of attorney (“IGPA”) to sell the mortgaged or hypothecated property of the COMPANY 1, then the BANK 1 should sell the said properties before filling the Artha Rin Suit as per Section 12(3) of the Artha Rin Adalat Ain 2003. If BANK 1 were not given such IGPA then they can file the Artha Rin Suit straightway. However, in both cases, before filling the Suit, we would advise you to issue a legal notice to the COMPANY 1 stipulating 15 days time to repay the dues, though such notice is not required by the Artha Rin Adalat Ain 2003. If they do not respond positively, in that case, our advice would be to publish auction notice or file the Artha Rin Suit as the case may be.

The BANK 1 as a banking institution has a lien on all Sponsor Share Certificates deposited in it. Although those Share Certificates were not kept as security against the investment facilities and the share transfer form 117 was not signed, nevertheless, the BANK 1 may hold those share certificates until the filling of the case and then try to attach the shares.

The two criminal cases regarding the dishonour of Cheques which are now in hearing stage do not make any hindrance legally to file the Artha Rin Suit by the BANK 1.

We understand the COMPANY 1 is a public limited company. Is it publicly listed? If so, before proceeding legally to sell the assets, notice may also be given to DSE and CSE to suspend trading of the shares so that no complication arises once Bank proceeds to sell the assets by auction. Similarly notice may also be given to SEC and CDBL if the shares of the COMPANY 1 are de-materialised.

If you have any further inquiries please do not hesitate to contact us.

Thanking you.

Yours Sincerely,

………………….

For: “The Lawyers & Jurists”

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