Reply to Demand of Justice Notice 3

Mr. Z

Address….
 

Dear Sir,
 

Re:      REPLY TO DEMAND OF JUSTICE NOTICE

 

We act on behalf of Bank 1 (“BANK 1”). On 27.09.06 our clients have received your demand of justice notice dated 24.09.2006 issued on behalf of your client Company 1 (“Company 1”) and our clients have forwarded the same to us with instructions to give reply as follows:

  1. Except that Company 1 are required to prove that they have been conducting their business of readymade garments with sincerity and reputation, the matters alleged in paragraph 1 of your legal notice are matters of record and subject to proof.
  1. It is a fact that Company 1 availed credit facilities from BANK 1 but it is incorrect that Company 1 have fully reimbursed the credit facilities in favour of BANK 1. The liability position of Company 1 up to 30.09.2006, is as follows:

Nature of Loan

 Limit

BTB

 NIL
ABP NIL
PC Tk.  18.86 Lac
Loan (G) Tk.  27.47 Lac
SOD (EXP) Tk. 310.53 Lac
Total Tk. 356.86 Lac

It is also incorrect that the Branch Manager of BANK 1 delayed Company 1’s proposals without considering the feasibility and risks involved. The Branch Manager of BANK 1 considered every proposal of Company 1 with utmost diligence and sincerity. If, which is denied, there was any delay in considering the credit proposal that delay was due to the fault of Company 1, that is Company 1 failed to provide all relevant documents and additional collateral security. If, which Company 1 are required to prove, buyers of Company 1 cancelled their order and returned the documents for any delay and as a result Company 1 suffered loss to their business and some of their employees left for non-payment of remunerations, the liability of that loss is solely Company 1’s.

  1. Except that Company 1 applied to BANK 1 for disbursing credit facilities for an amount of BDT. 10,00,000.00 (Ten Lac), paragraph 3 of your legal notice is denied. It is specifically denied that in considering the credit facility BANK 1 wasted time on mere pretexts. The reason why BANK 1 could not consider the loan proposal is because Mr. X, Managing Director of Company 1, on being asked by BANK 1 to provide additional collateral security against the proposed credit of BDT 10,00,000.00, did not agree to provide the said security.
  2. Except that BANK 1 returned three L/Cs being number ………… dated 14.03.2006, FOBELVM dated 27.01.2006 and ICC 70165005 dated 01.02.2006, paragraph 4 of your legal notice is denied. It is specifically denied that BANK 1 returned the said three L/Cs on mere surmises and conjunctures. BANK 1 had strong valid reasons for returning the said L/Cs, these are:

(a)     Company 1 had previously failed to execute full export against many previous export L/Cs repeatedly. There had been short shipment of US$ 4,11,747.44 against 15 L/Cs during the period of 2004 to 1st quarter of 2006.

(b)    Some export documents have been returned unpaid by the issuer of some previous L/Cs and these are still lying outstanding. Company 1 was informed about the matter of return of the export documents well in time. Non-realisation of export proceeds within 120 days of shipment is a violation of the Foreign Exchange Regulation Act 1947. But the length of outstanding of export documents has already exceeded the limitation of 120 days. Details of the said expert documents are as follows:
 

SL No. Export L/C no. Date & Amount FDBC No. Date & Amount EXP No. Length of Outstanding as on 30.09.06 Status of Garments
1 01087/0800873200

Date 21.01.05 US$ 3,39,880.0021-5416-05 Date29-08-05 US$ 56,447.602013-05397 DaysLying at foreign port as informed by the exporter and the shipping company.2GER/HDI/NASS/01/005 Date 25.05.05 US$ 15,100.0021-5018-05 Date 22.06.05 US$ 14,988.001463-05466 DaysDo3XT04103597 Date 08.11.04 US$ 18,630.0021-4989-05 Date 18.06.05 US$ 14.009.69456-05470 DaysDo4TFP/MCK551235 Date 16.11.05 US$ 55,339.9021-4282-06 Date 26.02.06 US$ 19,534.68168-06217 DaysDo

Total

US$ 104,979.97  

(c)     Due to non-realisation of export proceeds and non-execution of export of full value of the export L/Cs, BANK 1 had to make payment of accepted bills against back-to-back L/Cs creating forced loan (SOD-Exp). The present outstanding of Company 1 owed to BANK 1 in relation to the forced loan is BDT 3,10,53,000 (Taka three crore ten lac and fifty three thousand). The said outstanding amount owed by Company 1 to BANK 1 is an absolutely negative sign for an export oriented garments industry like Company 1.

(d)    Because of this non-realisation of previous export proceeds and failure to execute shipment against previous export L/Cs and continuous increase of SOD (Exp) liabilities of Company 1 against which sufficient stock lot was not found available in Company 1’s factory/bonded warehouse when officials of BANK 1 visited the said warehouse, BANK 1 could not agree to extend further credit to Company 1 without realization of the proceeds of overdue export bills and adjustment/regularisation of overdue liabilities.

(e)     Company 1 was informed that the L/Cs would be returned.

  1. Paragraph 5 of your legal notice is denied. It is specifically denied that Company 1 have repaid the outstanding loan from the export proceeds; the total liability position of Company 1 as on 30.09.2006 towards BANK 1 is Tk. 356.86 Lac, as detailed in paragraph 2 of our reply.
  1. In paragraph 6 of your legal notice it is clearly stated by you that it is your client, Company 1 which have caused damages in respect of their own goodwill, we totally agree with this. Apart from this the rest of paragraph 6 of your legal notice is denied. This is because, as admitted by you, Company 1 have caused damages to their own goodwill and as such BANK 1 has no liability for any damages to Company 1’s goodwill.
  2. Except that it is admitted that Uniform Customs and Practice for Documentary Credits (“UCPDC”) governs the said three L/Cs, paragraph 7 of your legal notice is denied. This is because, in compliance with Article 14 (d) (i) & (ii) of UCPDC, BANK 1 vide their letter no. ……………. dated 04.03.2006 informed Company 1 about returning two L/Cs being no. FOBELVM dated 27.01.2006 and no. ICC 70165005 dated 01.02.2006; the grounds for returning the L/Cs were also mentioned in that letter. Moreover, export L/C no. FOBEALM 512779 dated 14.03.2006 was taken back by Mr. X in, Commercial officer of Company 1. So the allegation made by you is totally ill-founded; the return of the L/Cs was done in strict conformity of the provisions of UCPDC.

In the premises stated above, please inform your client to withdraw the legal notice served upon our client. Further, please advice your client to adjust their outstanding liabilities within 15 days of receipt of this reply. If they fail to do so then our client would take appropriate and necessary measures to recover the outstanding dues by enforcing the securities. Should your client intend to initiate legal proceeding on baseless grounds against our client it will be solely at their own risk and responsibility.
 

A copy of this reply is kept in our office for future reference.
 

Yours faithfully
 

………………….

For: “The Lawyers & Jurists”

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