Md. Shahid Ullah Vs. Jubilee Bank Ltd. & others, (Md. Rezaul Hasan, J.)

Case No: Company Matter No. 315 of 2017

Judge: Md. Rezaul Hasan, J

Court: High Court Division,

Advocate: Mr. Md. Kamrul Alam, Advocate. Mr. Md. Imam Hossain with Mr. Tushar Kanti Roy, Advocates.,

Citation: 2019(1) LNJ

Case Year: 2017

Appellant: Md. Shahid Ullah

Respondent: Jubilee Bank Limited and others

Subject: Companies Act

Delivery Date: 2019-11-26

 

HIGH COURT DIVISION

(STATUTORY ORIGINAL JURISDICTION)

Md. Rezaul Hasan, J

 

Judgment on

07.12.2017

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Md. Shahid Ullah

. . .Petitioner

-Versus-

Jubilee Bank Limited and others

. . .Respondents

Companies Act (XVIII of 1994)

Sections 183 and 184

These statutory duties, as described in sections 81(1) and 183 of the Act, cast upon the board of directors, are to be strictly complied with inasmuch as these are not matters left to the discretion, caprice or whims of the Board of Directors. These are the mandatory requirements of law to be complied with by every company, so that the affairs of the company should be managed and run transparently and in accordance with the provisions of the Companies Act, 1994, under which the company (bank) has been incorporated. It has to be made clear by this Court that a company itself owns its business, not of it’s directors or shareholders.  . . . (12)

Bank Company Act, (XIV of 1991)

Section 14Ka (1)

Benami shares (i.e. the shares held in the name of other persons) in the banking company is not legally permissible inasmuch as that will render ineffective the restrictions imposed under sub-section (1) of section ‘14Ka’ of the Banking Companies Act, 1991 (BCA) as regards the maximum limit of shares that a person can hold in a banking company and that will render the intent and purport of section ‘14Ka’ a total nullity.           ... (18)

Bank Company Act, (XIV of 1991)

Section 14Ka

The clear intent and purport of law is not to allow holding any benemi share in any bank, scheduled as well as non-scheduled. Therefore, the persons (if any) who are holding 85,000 or any number of benami shares shall not be entitled to attend in the aforesaid AGMs, since, Court should not allow anybody to indirectly exceeded the limit fixed by section ‘14Ka’ of the Bank Companies Act, 1991, to secure unlawful advantage by frustrating the law or by committing fraud on statute.         . . . (19)

Bank Company Act, (XIV of 1991)

Section 14Ka

Forfeit the shares of Mr. M.B.I. Munshi and of any other person, who is /are holding shares, in the said bank, in excess of the statutory maximum fixed by section ‘14Ka’of the Bank Companies Act, 1991, subject to the amendment (if any) and only after issuing a notice upon the persons concerned, asking him/them to show cause as to why the said excess shares (as reported) shall not be forfeited and sold or as to why the title in those shares shall not be vested in the Government.      . . . (21)

Companies Act (XVIII of 1994)

Sections 85(3)

This is not a petition under section 43 of the Act. Rather as per provisions of sub-section (3) of section 85, this Court can suo-moto pass an order for holding all these AGM afresh. Hence, the question of locus-standi of the petitioner is not relevant, nor required to be decided in passing any judgment and order under section 85(3) of the Companies Act, 1994.                         . . .(25)

Mr. Md. Kamrul Alam, Advocate.

…For the petitioner.

Mr. Md. Imam Hossain with

Mr. Tushar Kanti Roy, Advocates.

. . . For the respondent No. 1.

JUDGMENT

Md. Rezaul Hasan, J. This is an application under sections 81(2) read with section 85(3) of the Companies Act, 1994, filed by the petitioner for condonation of delay in holding the 96th to 103rd AGMs for the calendar years 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016 of the Jubilee Bank Limited (a public company).

2.             This matter has been taken up for hearing simultaneously along with Contempt Petition No. 7 of 2017.

3.             It has been stated in the petition that, the petitioner is a share holder of Jubilee Bank Limited, a public company limited by shares, which was initially formed during British period in 1913, bearing Registration Number 2313, and later on, after emergence of Bangladesh as an independent state, it has also been registered with the Registrar of Joint Stock Companies and Firms (RJSC) on 26.01.1987, under the provisions of the then Companies Act, 1913, as Jubilee Bank Limited (hereinafter called “the company”) and the company has also obtained a certificate for the commencement of business on the same date. The respondent No. 2 is the Registrar of the Joint Stock Companies and Firms (RJSC); that the objects for which the company was formed are set out in Clause-III of the Memorandum of Association of the Company; that the Jubilee Bank Ltd. got Bangladesh Bank’s license in the year 1984 and was registered, being Registration No. 2384, and continued its function smoothly since 1987, that this company is the second oldest Bank in the country, which has started banking business during the British regime in 1913, at the very inception of Company Act 1913, and has been continuing its operation till date, with vigorous profit, inspite of continuous disturbance of some ex-members of the Company; that after its fresh incorporation in 1987, the company held all Annual General Meetings (AGMs) of the Company in due time. But, the Annual General Meetings of the Company for the calendar years 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016, being the 96th to 103rd Annual General Meetings, could not be held owing to non compliance of the High Court’s judgment and order dated 16.09.2014 by its Ex-Chairman Mr. M.B.I Munshi and for this reason the normal function of the company has been seriously disrupted; that the original Memorandum of Association, which was initially submitted to RJSC in 1987 was not found available in the vault of the RJSC Dhaka. So, the petitioner had to submit repeated applications to RJSC and to the Ministry of Commerce, to get the certified copy of Memorandum of Association. The RJSC, Dhaka, finally advised the petitioner to submit a notarized copy of the Memorandum of Association and of the Articles of Association and all necessary documents that were not found available in the vault of RJSC; that the petitioner has accordingly submitted all necessary papers to RJSC, such as the notarized copy of the Memorandum of Association and of the Articles of Association, the up to date shareholders list, yearly returns and other documents signed by the competent persons and Ex-Managing Director, then finally the RJSC issued the certified copy of Memorandum of Association and of the Articles of Association, under scrutiny (submission No. 2012144968, issue No. 38751 dated 21.05.2012); that, the Ex-Chairman M.B.I. Munshi has been operating the company without any registered Memorandum or Articles of Association, and in this regard some letters were addressed to the Governor Bangladesh Bank, Secretary, Ministry of Commerce, RJSC; that one M.B.I Munshi claiming himself as the Chairman of the company filed Company Matter No. 61 of 2012 before the High Court Division praying for condonation of delay in holding the Annual General Meetings for the years 2009 to 2014 and the present petitioner was added as a party in the said matter on 7th May, 2012 as respondent No. 2 and that, after hearing, the Court was pleased to allow the Company Matter No. 61 of 2012 and condoned the delay and allowed to hold AGM for the calendar years 2009 to 2014, subject to compliance of certain directions, vide the judgment and order dated 16.11.2014 (Annexure-C), that in this connection a Civil Miscellaneous Petition No. 1233 of 2014 was filed before the Appellate Division, but it was dismissed due to not filing the regular leave petition within time; that due to non compliance of the judgment and order dated 16.09.2014, passed by the High Court Division in Company Matter No. 61 of 2012, the company as well as all the share holders have been prejudiced; that the Ex-Chairman M.B.I Munshi took steps to create some forged and fake documents regarding compliance of the said judgment and order dated 16.09.2014 and the petitioner, after knowing about the same, had sent a demand of justice notices to the Registrar of the Joint Stock Companies and Firms (RJSC) and to Bangladesh Bank, on 22.11.2016, with request not to accept any forged and fake documents (Annexure-“D” and “D-1” respectively); that the Ex-Chairman M.B.I. Munshi is the grandson of Mia Abdur Rashid, the Ex-Chairman of the Bank (From 1984 to 1996) who was also the Co-Chairman of the Freedom Party and Mia Abdur Rashid had allotted 85,000 shares of the said company in the name of one Colonel S. Faruk Rahman and Colonel Rashid, the 2 murderers of the father of the nation Bangabandhu Sheikh Mujibur Rahman and subsequently one of them was given death sentence by the Court; that one of the shareholders of the company informed the matter of holding of 85,000 shares by the above two murderers to RJSC, Ministry of Finance, Bangladesh Bank and the Ministry of Commerce and the Bangladesh Bank has seized their 85,000 shares of Jubliee Bank Limited; that at present the shares position of the said Company stands as follows:

  1. Total paid up shares of the company 4,00,000 shares.
  2. Forfeited shares of 2 murderers 85,000 shares
  3. Inactive shares of the company (who are not contacting with the Bank for long time) are approximately 55,000.
  4. Presently active shares of the company are approximately 2,60,000 shares; that the said MBI Munshi is holding approximately 55,000 or more shares which is in breach of section 15(a) and 15(b) of the Bank Companies Act, and also according to Bangladesh Bank’s Rule that any shareholder cannot hold more than 10% of the shares in any Bank; that the said M.B.I Munshi did not comply with the directions passed by the Court on 16.09.2014 and ultimately the judgment and order of the Court has already been made infructuous and, thereafter, the present petitioner Md. Shahid Ullah sent demand of justice notice to the Registrar, Joint Stock Companies and Firms, requesting him not to accept or to approve the forged and fraudulent documents regarding 96th to 101st AGM of Jubilee Bank Limited, as the judgment and order of Court dated 16.09.2014 was ineffective due to noncompliance of the said directions, and that in this situation, the AGM of 96th to 101st AGM of the Company for the calendar year 2009 to 2014 have not been held which is prejudicial to the interest of the company.

4.             Hence, this petition for condonation of delay in holding the 96th to 101st AGMs of the company (Bank).

5.             The respondent No. 1 has filed an affidavit-in-opposition denying all material allegations made in the petition and further stating that, in compliance with the said direction of the Court, the respondent No. 1 herein had served notices upon the shareholders of the company on 31.03.2015, regarding holding of 96th to 101st AGMs, due for the calendar years 2009 to 2014, to be held on 14.04.2015 and accordingly at Euro Asian Ramna Green Restaurant and Party Centre, Dhaka, those Annual General Meetings were held on the basis of set agenda and that, on 29.04.2015, the respondent No. 1 sent all the necessary documents as sought for by its agent; that on 18.05.2015, the respondent No. 1 sent the photocopies of resolutions book of the 96th to 101st AGMs and the board resolution to its agent Pinaki and Associates, Ahsandel Apartments, 302 (2nd floor), 2/A Mymensingh Road, Shahbag, Dhaka-1000, to take necessary steps, which were duly received by the said agent; that on 01.09.2015 the respondent No. 1 submitted all the returns for the years 2009 to 2014 to respondent No. 9, through the said Pinaki and Associates; that the respondent No. 1 herein has also paid Tk. 1,25,000/= for submitting the said return and to obtain certified copy thereof and the RJSC office has acknowledged the same; that Bangladesh Bank never seized the said 85,000 shares of JBL belonging to Colonel S. Faruk Rahman and Colonel Rashid till date; that in compliance with the judgment and order dated 16.11.2014 of this Court, the respondent No. 1 sought to appoint a Managing Director, but using informal channels so as not to alert the petitioner who may attempt to have a Managing Director appointed using deceit and fraudulent means as originally occurred with dismissed Managing Director Mr. Jahangir Alam; that at the same time since 2010, the petitioner and others have, through threats, harassment and disruption of legitimate operations of JBL, has caused immense financial loss to the bank amounting to Tk. 20 crore and so, if the bank is compelled to appoint a Managing Director it will cause irreparable damage; that on 22.12.2012 and 04.12.2016, the respondent No. 1 wrote to Bangladesh Bank informing that due to the financial hardship it could not afford to provide salary for a Managing Director to the tune of at least @ Tk. 50,000/= only per month and other benefits and had sought for guideline of Bangladesh Bank in this regard; that for the aforementioned reasons, the respondent No. 1 could not appoint a new Managing Director of the Bank. This respondent prayed for dismissal of this petition.

6.             Learned Attorney General Mr. Mahbubey Alam and learned Deputy Attorney General Mr. Khizir Hyat have appeared on behalf of the State, with leave of this Court. The learned Attorney General submits that the respondent No. 1 is a banking company, though non-scheduled. Nonetheless, it has clear statutory duties to be complied with, which it did not. Besides, there are some shares held in this bank by the self-proclaimed murderers of the father of nation Bangobandhu Sheikh Mujibur Rahman, and this present Chairman and other disguised or benami shareholders may use this bank to finance terrorism and they are needed to be identified by the law enforcing agencies. Learned DAG, in continuation of his submissions on behalf of the State, further submits that 85,000 shares are held by the self-proclaimed murderer of the father of nation and that needs to be forfeited and the bank must be rescued from the hands of the delinquent directors and shareholders who have forcibly seized the bank and are controlling the bank by deliberately resorting to fabricated and forged minutes and documents to show that the 96th to 101st AGMs of the bank were held. He, then, has prayed for passing proper direction in the facts and circumstances of the case, in substance, supporting the petition.  

7.             Learned Advocate Mr. Md. Kamrul Alam has appeared for the petitioner and, having placed the petition, he submits that the Company could not hold 96th to 103rd AGMs for the calendar years 2009, 2010, 2011, 2012, 2013, 2014, 2015 and 2016. Subsequently, one Mr. M.B.I. Mushi, claiming himself as the Chairman of the company, had filed a petition for condonation of delay in holding the aforesaid AGMs which was registered as Company Matter No. 61 of 2012 and, in that matter, the delay was condoned and the company was allowed to regularize its statutory meetings for the aforesaid years, vide judgment and order dated 16.09.2014 (Annexure-C). But, the respondent No. 1 did not hold any of those outstanding AGMs, rather Mr. M.B.I. Munshi and his associates have resorted to forgery by creating fake minutes and documents concerning the 96th to 101st AGMs. Hence, the said 96th to 101st AGMs are still outstanding and he prays that, the delay in respect of the said AGMs may be condoned, appropriate directions may be given accordingly and the respondent No. 1 may be punished for contempt of Court.

8.             Learned Advocates Mr. Imam Hossain has appeared alongwith Mr. Tushar Kanti Roy on behalf of the respondent No. 1. They submit that, in compliance with the direction given in Company Matter No. 61 of 2012, the respondent No. 1 has served notices upon the shareholders of the company on 31.03.2015, for holding of 96th to 101st AGMs for the calendar years 2009 to 2014, all that  were scheduled to be held on 14.04.2015 and accordingly those AGMs were held as per law. They further submit that on 18.05.2015, the respondent No. 1 sent the photocopies of resolution book of the said AGMs and of the board resolutions to its agent Pinaki and Associates, Ahsanul Apartments, 302, (2nd Floor), 2/A, Mymensingh Road, Shahbag, Dhaka-1000 to take necessary steps, and that on 01.09.2015, the respondent No. 1 has submitted all statutory returns for the years 2009 to 2014 to respondent No. 9, RJSC, through Pinaki and Associates, on payment of fees amounting to Tk. 1,25,000/= that was required for submitting the said returns and to obtain certified copies thereof and the RJSC has acknowledged the same. They also submit that, the petitioner is not a shareholder (member) of the company and he has no locus-standi to file this petition under section 81(2) of the Act and that the petitioner was not willing to allow the company (bank) to hold the outstanding AGMs and, therefore, he had challenged the judgment and order dated 16.09.2014, passed in Company Mater No. 61 of 2012, by filing a Civil Miscellaneous Petition No. 1233 of 2014, that was rejected by the Appellate Division and thus he has caused further delay in holding the said AGMs. He further submits that, the petitioner and his associates are hatching conspiracy to grab the Board of the bank and, that, by suppressing the actual facts the petitioner has filed this petition. However, the learned Advocates has frankly conceded that, any Managing Director could not be appointed in the respondent bank as per direction of this Court, given in judgment and order dated 16.09.2014, and that was due to misconception in writing a letter to Bangladesh Bank for their guidance in appointing a Managing Director for the bank. He prays for dismissal of the petition. 

9.             I have heard the learned Advocates appearing for the state and for the parties, perused the petition, the affidavit-in-opposition, the documents submitted therewith and also with the contempt petition heard simultaneously, as well as the report submitted by Bangladesh Bank and the RJSC as per this Court’s direction.

10.         Minutes of the 96th , 97th and 98th AGMs, claimed to have been held for the calendar years 2009 to 2011, have been annexed as Annexure -X(1) to the supplementary affidavit filed on 05.12.2017, with the Contempt Petition No. 7 of 2017, by the petitioner. I have examined these minutes dated 14.04.2015, in which 3(three) AGMs are shown to have been held on the same date and at the same time i.e. at 10.00 a.m. Similarly, in another minutes dated 14.04.2015, the 99th 100th and 101st AGMs are shown to have been held on the same date and at the same time i.e. at 11.30 a.m.

11.         Having considered the minutes of the 96th to 101st AGMs, I find that the said purported Annual General Meetings were not held separately, at separate times, leaving no scope or room to separately consider, by the shareholders, the agenda of these meetings, namely, the audited balance sheet and the profit and loss account, the auditor’s report, the board of directors report, the confirmation of the agenda of each previous AGMs, appointment of auditor and fixation of their remuneration, retirement of directors by rotation and election of directors etc.

12.         The Chairman and the directors of the Jubilee Bank Limited (the bank), were legally bound to call and hold the AGMs of the bank for the calendar years 2009 to 2014 (i.e. 96th to 101st  AGMs), as mandated by section 81(1) of the Act and also to place, separately, in each AGM, the duly audited balance sheet, the profit and loss account and the Auditor’s Report as required under section 183 of the Act, along with the board of director’s report as stipulated by section 184. These statutory duties, cast upon the board of directors, are to be strictly complied with inasmuch as these are not matters left to the discretion, caprice or whims of the Board of Directors. These are the mandatory requirements of law to be complied with by every company, so that the affairs of the company should be managed and run transparently and in accordance with the provisions of the Companies Act, 1994, under which the company (bank) has been incorporated. It has to be made clear by this Court that a company itself owns its business, not of it’s directors or shareholders.

13.         A company is neither a proprietorship concern, nor a partnership firm of its director(s), so that they can indulge themselves into a practice not permitted by the Companies Act, 1994 and the Bank Companies Act, 1991.

14.         Hence, I am constrained to hold that these 96th to 101st AGMs are no AGM in the eye of law. Rather, these conducts of the directors (defecto or dejure) amounts to fraud on statute and these are clear evidence of breach of the statutory and fiduciary duties by the Chairman and other board members of Jubilee Bank Limited. However, whether these conducts also amount to contempt of Court will be taken up for decision in the course of disposal of the Contempt Petition No. 7 of 2017.

15.         Hence, the minutes of these 96th to 101st AGMs of the bank, shown to have been held on 14.04.2015 alongwith the balance sheet filed under section 190 of the Act are hereby declared void and are of no legal effect and all these 96th to 10st Annual General Meetings should be held afresh under an Independent Chairman, as permitted by section 85(3) of the Companies Act, 1994.

16.         I have also taken for consideration the question regarding the disputed 85,000 shares and other related allegations/issues. It appears from the documents filed by Bangladesh Bank that, it had sent a two-member inspection team consisting of Mr. Tonmoy Shaha (Deputy Director, BRPD) and Md. Iqbal Hossain (Deputy Director, BRPD), pursuant to the direction given by the Ministry of Finance, vide their letter No. 589 dated 14.06.2016. After their inspection, a report was submitted by them to Bangladesh Bank and the Bangladesh Bank has submitted a copy of the said report to this Court, as annexure to its affidavit-in-compliance dated 06.11.2017 (entry No. 5065), as per direction of this Court. Relevant portion of the said report has been reproduced herein below:-

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(emphasis added)

17.         What action Bangladesh Bank or the Finance Division of the Ministry of Finance has taken, on the basis of this recommendation or what is/are the subsequent developments (if there were any) have not been placed before this Court. Nor this Court is informed whether any action, as per the recommendation quoted above, has at all been taken or not.

18.         Be that as it may, benami shares (i.e. the shares held in the name of other persons) in the banking company is not legally permissible in as much as that will render ineffective the restrictions imposed under sub-section (1) of section ‘14Ka’ of the Banking Companies Act, 1991 (BCA) as regards the maximum limit of shares that a person can hold in a banking company and that will render the intent and purport of section ‘14Ka’ a total nullity. Whereas, sub-section (2) of section ‘14Ka’ of the BCA, that has made the intent more clear, reads as follows:

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19.         The clear intent and purport of law is not to allow holding any benemi share in any bank, scheduled as well as non-scheduled. Therefore, the persons (if any) who are holding 85,000 or any number of benami shares shall not be entitled to attend in the aforesaid AGMs, since, Court should not allow anybody to indirectly exceeded the limit fixed by section ‘14Ka’ of the Bank Companies Act, 1991, to secure unlawful advantage by frustrating the law or by committing fraud on statute.

20.         Therefore, the RJSC should be directed to hold an inspection in respect of all relevant records lying with it and the share register of the said bank and shall submit a report to the Independent Chairman alongwith a list of shareholders (members), separately showing the ‘benami shares’ and name of the ‘benami shareholders’(as reported). Notice of any AGM of the bank shall not be sent to the ‘benami shareholders’ (as per list of RJSC), but to all other shareholders.

21.         Bangladesh Bank may, as per the report quoted above, forfeit the shares of Mr. M.B.I. Munshi and of any other person, who is /are holding shares, in the said bank, in excess of the statutory maximum fixed by section ‘14Ka’of the Bank Companies Act, 1991, subject to the amendment (if any) and only after issuing a notice upon the persons concerned, asking him/them to show cause as to why the said excess shares (as reported) shall not be forfeited and sold or as to why the title in those shares shall not be vested in the Government.

22.         The newly elected board shall nominate 3(three) competent persons as Managing Director of Jubilee Bank Limited and shall send the name to Bangladesh Bank for their approval within 30(thirty) days of the first meeting of the newly elected board of directors. Bangladesh Bank may also appoint an “Observer” for the Jubilee Bank Limited.

23.         Bangladesh Bank, as soon as possible, but not exceeding 30(thirty) days of drawing up of this judgment and order, shall decide, having regard to the authority vested in it under sections 45, 46 and 47 of the Bank Companies Act, 1991 (BCA), if the present board of directors shall continue to function till holding of the outstanding AGMs or if the existing Board should be dissolved or any director should be removed.

24.         Bangladesh Bank shall also ascertain and give direction, as permitted by section 45(1) of the Bank Companies Act, 1991, if a fresh balance sheet, profit and loss account, board report, and audit report for holding the 96th to 101st AGM will be required or not.

25.         As regards the objection raised about the locus-standi of the petitioner, I am of the opinion that, this is not a petition under section 43 of the Act. Rather as per provisions of sub-section (3) of section 85, this Court can suo-moto pass an order for holding all these AGM afresh. Hence, the question of locus-standi of the petitioner is not relevant, nor required to be decided in passing any judgment and order under section 85(3) of the Companies Act, 1994.

26.         The persons already found guilty for committing contempt of Court is hereby declared disqualified to be candidate in 96th to 103rd AGMs, since they have committed gross violation of their statutory and fiduciary duties and should not be placed in the position of trust in or agent for the bank. Similarly, if it is proved before the independent Chairman that, the petitioner is a shareholder, then only he can participate in the AGM/election, not otherwise. The AGMs should be held within 60 (sixty) days of submitting list of members by the RJSC to the independent Chairman.

R D E R:

In the result the application is allowed with the following direction.

(1)    The 96th to 101st AGM are hereby declared not to have been held properly, or as per law, hence minutes of the said AGMs and all notices (if issued), the returns and the balance sheet filed with the RJSC shall stand cancelled.

(2)    The entire period of delay that has occurred in holding the 96th to 101st AGMs for the calendar years 2009, 2010, 2011, 2012, 2013, and 2014, is hereby condoned. Since, in the meantime the AGMs for the subsequent years have also been delayed, therefore, the delay in respect of the AGMs due for the years 2015, 2016 and 2017 is hereby condoned as well.

(3)    Since, there is a dispute admitted by the parties in respect of share holding position as well as ‘benamai shares, therefore, the respondent No. 9 RJSC is directed to hold an inspection of the records of the said company, either by himself or through other competent officials/team of the said office.

(4)    In the light of the inspection result, the RJSC shall prepare an upto date list of shareholders (having original share certificates), separately showing name of those shareholders who are holding shares in their own name and the holders of the benami shares (if any) and shall also address such other issues as may be required to arrive at a proper decision upon consideration of proper and relevant materials and they should submit their report within 3(three) months of receiving this judgment and order.