X Bank Limited -Versus- Y Foam Leather Limited

IN THE BANKRUPTCY COURT, DHAKA

BANKRUPTCY CASE NO OF 1999

X Bank Limited

Dilkusha Branch

48 Dilkusha Commercial Area

P.S. Motijheel

Dhaka-1000

PLAINTIFF/CREDITOR

-Versus-

1. Y Foam Leather Limited

65 Dilkusha Commercial Area (4th floor)

P. S. Motijheel

Dhaka-1000

2. Mr. A

Son of ____________________

Managing Director

YFoam Leather Limited

65 Dilkusha Commercial Area (4th floor)

P. S. Motijheel

Dhaka-1000

3. Mr. B

Son of ____________________

Director

YFoam Leather Limited

30 Banga Bandhu Avenue

P. S. Motijheel

Dhaka-1000

4. Mrs. C

Wife of ___________________

Director

Y Foam Leather Limited

28 Tallabagh

P. S. ___________

Dhaka

5. Mrs. D

Wife of ___________________

Director

Y Foam Leather Limited

16 New Circular Road

P. S. __________

Dhaka

6. Mr. E

Son of ____________________

Director

Y Foam Leather Limited

11 DOHS, Dhaka Cantonment

P. S. __________

Dhaka

DEFENDANTS/DEBTORS

SUIT FOR ADJUDGING/DECLARING THE DEFENDANTS/DEBTORS AS BANKRUPT UNDER BANKRUPTCY ACT, 1997

SUIT VALUED AT TK. AS ON 31.05.99.

The plaintiff/creditor above named states as

FOLLOWS:

1. That the plaintiff/creditor is a banking company incorporated under the Companies Act, 1913 having its Head Office at 18 Dilkusha Commercial Area, Dhaka-1000. It carries on banking business within the territory of Bangladesh through its various branches including the Dilkusha Branch, Dhaka, address of which is given in the cause title (hereinafter referred to as the plaintiff/creditor Bank.

2. That the defendant/debtor No. 1 is a private company limited by shares incorporated under the relevant Companies Act. It carries on various business from the address given at the cause title. Defendant/debtor Nos. 2 to 6 are the Directors of the company and also stood as guarantors of defendant/debtor No. 1 by executing personal guarantees in favour of the plaintiff/creditor Bank.

3. That the defendant/debtor No. 1 in course of its business opened Current Account No. 3700-2444 on ____________ with the plaintiff/creditor Bank. Thereafter at the request of the defendant/debtor No. 1 vide its letter dated __________ the plaintiff/creditor Bank sanctioned Cash Credit facility of Tk. ____________________ in favour of the defendant/debtor No. 1 vide Sanction Advice No. _____________ dated 07.12.91 with validity up to 06.12.94.

4. That as security for repayment of the said loan the defendant/debtor No. 2 mortgaged his property at Sonargaon, Narayangonj fully described in the schedule below in favour of the plaintiff/creditor Bank and executed Memorandum of Deposit of Title Deeds in favour of the plaintiff/creditor. The defendant No. 1 executed various charge documents. The defendants/creditors Nos. 2 to 6 executed personal guarantees in favour of the plaintiff/creditor Bank.

5. That the defendant/debtor No. 1 availed the credit facility in full but did not repay the loan within the validity, i.e. 06.12.94, as per the sanction letter. As such the plaintiff/creditor vide its various letters requested the defendant/debtor No. 1 to adjust its overdue liability.

6. That considering the predicament of business of the defendant/debtor No. 1 the plaintiff/creditor Bank vide its letter No. SUC/WING-19(96) dated 11.01.96 communicated to the said defendant/debtor an arrangement of consolidation. Under the said arrangement the liability of the said defendant/debtor was supposed to be consolidated with its 3 other sister concerns namely (1) M/S Islam Salt Industries, (2) M/S Nazrul Islam and (3) Wahid’s Enterprise Limited. And after waiver of interest of Tk. 4,35,00,000.00 only the total amount repayable by the defendant/debtor No. 1 and its 3 other sister concerns were set at Tk. 5,13,78,000.00 only. The waiver of interest was conditional upon acceptance and compliance of the arrangement by the defendant/debtor No. 1.

7. That the defendant/debtor No. 1 accepted the arrangement, but despite repeated request and reminders of the plaintiff/creditor Bank did not come forward to repay the loan pursuant to the said arrangement. At last the defendant/debtor No. 1 vide its letter dated 28.07.98 acknowledged the liability and undertook to settle all liabilities by 31.12.98, but the defendant/debtor failed to fulfil its undertaking. Accordingly, on failure of the defendant/debtor No. 1 to adjust its liabilities under the consolidation arrangement, the indulgence given to the said defendant/debtor by the plaintiff/creditor Bank by way of waiver of interest stood withdrawn.

8. That despite repeated reminders and requests of the plaintiff/creditor the defendants/debtors failed to repay the dues of the plaintiff/creditor Bank. It is quite apparent from the conduct of defendants/debtors that they are unable to repay their outstanding dues.

9. That the defendants/debtors have no bona-fide intention to adjust their huge outstanding dues. The plaintiff/creditor Bank, in the mean time, exhausted all its possible means and efforts to settle the matter amicably, but of no avail. As a result the outstanding liability of the defendant/debtor No. 1 stands at Tk. 3,18,36,188.47 (Taka three crore eighteen lac thirty six thousand one hundred eighty eight and Paisa forty seven) only inclusive of interest and charges as on 30.09.97.

10. That in view of the failure of the defendants/debtors in liquidating the total outstanding liability the plaintiff/creditor Bank was constrained to issued notice under section 9(1)(i) of the Bankruptcy Act, 1997 on 16.02.99 under registered post upon all the defendants/debtors giving 90 days time from the date of service of the formal demand to adjust their debt amounting to Tk. 3,18,36,188.47 (Taka three crore eighteen lac thirty six thousand one hundred eighty eight and Paisa forty seven) only inclusive of interest and charges as on 30.09.97. The notice was duly served on 28.02.99. But even after receiving the notices the defendants/debtors failed to pay the money demanded from them. Since the defendants/debtors failed to comply with the requirements of the formal demand within the stipulated 90 days period, the defendants/debtors have committed an act of bankruptcy within Bangladesh and within the jurisdiction of this Court.

11. That from the statement made above it is clear that the defendants/debtors are unable to pay their debts. As such they are liable to be adjudged as bankrupt.

12. That the plaintiff/creditor Bank is an “eligible creditor” within the meaning of Bankruptcy Act, 1997. The registered office or the place of business of the defendant/debtor No. 1 company is situated at Dilkusha, Dhaka (detailed address of which is given at the cause title) and the act of bankruptcy has been committed within the period specified in Section 12(1)(c) of the Bankruptcy Act, 1997. As such, the defendant/debtor No. 1 Company vis-a-vis defendant/debtor Nos. 2 to 6 are subject to bankruptcy proceedings. Hence, being an “eligible creditor” the plaintiff/creditor Bank is lawfully entitled to obtain an “order of adjudication” from this Court adjudging the defendants/debtors as bankrupt.

13. That the defendant/debtor No. 2 who is also a Director of the defendant/debtor No. 1 Company has mortgaged his property described in the schedule-2 of the plaint in favour the plaintiff/creditor Bank against the aforesaid credit facility granted to the defendant/debtor No. 1 company, although the said property is not adequate to satisfy the liability of the defendants/debtors with the plaintiff/creditor. As such, the plaintiff/creditor Bank is “secured creditor” within the meaning of the Bankruptcy Act and has interest in the said property. Since an act of bankruptcy has been committed, the debtors are liable to be adjudged as bankrupts by this Court and the scheduled property is subject to be taken over by a Receiver/interim Receiver appointed by the Court for realisation of sale proceeds. This Court may allow the mortgaged property described in the schedule-2 below to be sold for exclusive adjustment of this creditor’s claim and may allow the creditor to share rateably with other creditors the sale proceeds of other properties of the debtors which are supposed to be in the hands of Receiver/interim Receiver.

14. That the claim of the creditor Bank inclusive of interest and charges as on 31.05.99 is as follows:

Cash Credit facility – Tk. ________________

So, the claim of the plaintiff/creditor Bank stands at Tk. _____________ (Taka ___________________________________________) only inclusive of interest and charges as on 31.05.99 as per schedule of claim (i.e. schedule No. 1) which the defendants/debtors are jointly and/or severally liable to pay to the plaintiff/creditor Bank. The defendant/debtor No. 1 is liable to pay as principal debtor. The defendant/debtor No. 2 is liable to pay as mortgagor as well as guarantor and the defendants/debtors Nos. 3 to 6 are liable as guarantors. Hence the defendant/debtor No. 1 as principal debtor and the defendant/debtor Nos. 2 to 6 as mortgagor/guarantors are liable to be adjudged as bankrupts unless they liquidate the liability immediately.

15. That the cause of action under Bankruptcy Act has arisen on 28.02.99 when the notice under section 9(1)(i) was duly served and on 29.05.99 when the notice period was expired.

Wherefore the plaintiff/creditor Bank prays for:

(a) An order of adjudication of the defendants/debtors as bankrupt;

(b) A declaration that the defendants/debtors are jointly and/or severally liable to pay Tk. ____________ (Taka _______________________) only inclusive of interest and charges as on 31.05.99 with interest and other charges to the plaintiff/creditor Bank.

(b) Compensation @ ___% per annum from 01.06.99 till realisation.

(c) Appointment of Receiver/interim Receiver to take custody of the properties of the debtors.

(d) Direction upon the receiver to allow the mortgaged property to be sold in order to adjust the sale proceeds exclusively against the claim of the plaintiff/creditor Bank as soon as possible.

(e) Direction upon the receiver for the balance amount of the claim of this creditor, if any, to allow this creditor Bank to recover from the sale proceeds of the other properties of the debtors.

(f) Civil imprisonment of the debtors if the sale proceeds are not sufficient to meet the liabilities.

(g) Cost of the proceedings.

(h) Any other relief or reliefs as your honour may deem fit and proper.

SCHEDULE-1

(Claim of the plaintiff/creditor)

As per the statements of account the amount payable by the defendants/debtors to the plaintiff/creditor Bank is Tk. _______________ (Taka ________________) only inclusive of interest and charges as on 31.05.99.

Name of the creditor: X Bank Limited

Dilkusha Branch

48 Dilkusha Commercial Area

Dhaka-1000

SCHEDULE-2

All that piece and parcel of land measuring 10 decimals situated within District Narayangonj, P. S. Sonargaon, Mouza _________, C. S. Khatian No. ____, C. S. Dag No. ______, S. A. Khatian No. ______, S. A. Dag No. _____, R. S. Khatian No. ______, R. S. Dag No. _____, along with _____ storied building constructed thereon with any other structure or structures constructed or to be constructed thereon, together with all rights, interests, easements, titles, benefits etc. attached or appertaining thereto.

The estimated value of the property is Tk. 27,00,000.00 (Taka twenty seven lac) approximately.

VERIFICATION

That the statement made herein above are true to our knowledge and belief and in witnesses whereof we sign this verification on this the ______th day of June, 1999.

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