RE: Legal Opinion regarding the encashment of bank guarantees issued by the Bank 1.
We refer to your letter no. ……………. dated February 25, 2007 on the above subject.
On perusal of your letter, it appears that the Khulna Branch of BANK 1 (“the Bank”) issued the following bank guarantees:
1. BG-04/2000 dated 05.03.00 of Tk. 59,53,750.00 A/C Company 1
2. BG-18/1999 dated 28.10.99 of Tk. 59,00,039.12 – A/C Mr. x.
3. BG- 14/2000 dated 02.05.00 of Tk. 22,34,493.67 A/C Mr. y.
4. BG- 15/2000 dated 02.05.00 of Tk. 11,98,501.10 A/C Mr. y.
5. BG- 03/2000 dated 21.10.00 of Tk. 48,73,946.00 A/C Mr. y.
6. BG- 20/1999 dated 28.11.99 of Tk. 13,34,954.25 A/C Company 1.
7. BG- 21/1999 dated 01.12.99 of Tk. 26,19,908.52 A/C Company 1.
in favour of Company 2 (“COMPANY 2”) against writ petitions on account of the above customers (“the Bank Guarantees”). The writ petitions were discharged by the High Court Division of Honourable Supreme Court of Bangladesh. The customers have lodged appeal in the Appellate Division of the Supreme Court of Bangladesh against the order of the High Court Division which is pending for hearing. Application for stay of the High Court order was moved on 14.11.2001 before the Honourable Chamber Judge and stay was granted till 13th January 2002 by Justice Mr. A and subsequently the stay order has been extended several times.
It has been informed by Ms A, Advocate-on-Record, vide her letters all dated 24.02.07 that, the last application for extending the stay order restraining the respondents, i.e. the customs authority, from encashing the Bank Guarantees was filed before the expiry of the stay order and the application is pending for hearing.
As per Office Order of the Appellate Division of the Honourable Supreme Court dated 17.10.2006, if an application for the extension of a stay order is made before the expiry of the order and such an application is pending for hearing then the earlier order of stay shall be deemed to be still in force. As such pursuant to the said office order in applications for extension of the stay orders were filed before expiries of the stay orders as claimed by the lawyer of the Appellant, then the stay orders passed earlier by the Appellate Division of the Honourable Supreme Court restraining COMPANY 2 from encashing the Bank Guarantees shall be deemed to be still in force. Therefore, the Bank cannot encash the Bank Guarantees because if they do they will act in contempt of court.
It is our opinion that, the Bank should inform COMPANY 2, about the current circumstances in writing. They should also make it clear to COMPANY 2 that if COMPANY 2 still wants to encash the Bank Guarantees while the stay order of the Appellate Division of the Honourable Supreme Court is in force then COMPANY 2 shall solely be responsible for consequences (contempt of Court) of such demand.
Should you have any further query, do not hesitate to revert to us.
For: “The Lawyers & Jurists”