Moazzam Hossain Vs. Bangladesh Bank and others, IV ADC (2007) 870

Case No: Civil Appeal No. 111 of 1999

Judge: Md. Tafazzul Islam ,

Court: Appellate Division ,,

Advocate: Mr. Habibul Islam Bhuyan,,

Citation: IV ADC (2007) 870

Case Year: 2007

Appellant: Moazzam Hossain

Respondent: Bangladesh Bank and others

Subject: Notice, Banking,

Delivery Date: 2005-4-4

Supreme Court of Bangladesh
Appellate Division
(Civil)
 
Present:
Md. Ruhul Amin, J.
M.M. Ruhul Amin, J.
Md. Tafazzul Islam, J.
 
Moazzam Hossain
..........Appellant
Vs.
Bangladesh Bank and others
.........Respondents
 
Judgment
April 4, 2005.
 
The Bank Companies Act, 1991
Section 17
In the background of the facts and the letter dated 17.9.1998 Annexure-A, intimating the Board of Director of National Bank Ltd that the appellant ceased to be a Director of National Bank Ltd that the appellant ceased to be a Director of the above on the expiry of the period of two months since receipt of the notice issued under section 17 (1) of the Act on 9.9.1995, is not legally sustainable. ..... (10)
 
 
Lawyers Involved:
Habibul Islam Bhuiyan, Senior Advocate, instructed by Md. Nawab Ali, Advocate-on-Record- For the Appellant.
Tawfiq Newaz, Advocate, instructed by Md. Aftab Hossain, Advocate-on-Record-For Respondent Nos. 1-2.
Not represented-Respondent No.3.
 
Civil Appeal No. 111 of 1999
(From the Judgment and order dated 10th May, 1999 passed by the High Court Division in Writ Petition No. 3006 of 1998).
 
JUDGMENT
Md. Tafazzul Islam J.
 
1.       This appeal, by leave, arises out of the judgment dated 10.5.1999 passed by the High Court Division in Writ Petition No. 3006 of 1998 discharging the Rule obtained against the order dated 17.9.98 (Annexure A) issued by the respondent No.2, General Manager of Bangladesh Bank, the respondent No.1, under sec­tion 17(1)(c) of the Bank Companies Act, 1991 (Act XIV/1991) informing National Bank Ltd, the respondent No.3, that the directorship of the appellant in that Bank has been automatically vacat­ed on the expiry of two months from 9.9.95.
 
2.         The appellant obtained the above Rule on the averments that on 3.9.95 National Bank Ltd. through Bangladesh Bank, issued a notice upon him under section 17 of Act 1991 directing him to settle his outstanding liability with National Bank Ltd within 2 months from the date of receipt of the above notice failing which the appellant would be deemed to have vacated his post as director of above Bank; in the said notice the appellant was shown liable for loan of Tk. 51.76 lacs against the A/C of Md. Amanullah though the appellant was merely a guarantor for the loan availed by said Md. Amanullah in the year 1983 and further the said loan being fully adjusted in the year 1989 there was no liability of the appellant against the said loan on the; date of issuance of the notice dated 3.9.95; other liabilities as shown in the above notice were against C C Loan of Tk. 17.70 lacs in the A/C of Emjad Enterprise and loan of Tk. 93.13 lacs, SOD of Tk. 29.44 lacs and PC of Tk. 5.59 lacs shown against A/C of York Garments Ltd. which were in fact the liabilities of Mosharraf Hossain, his elder brother, who is an independent business man for the last 30 years and the appellant had no business or monetary connection whatsoever with the said Emjad  Enterprise and/or York Garments Ltd and the above position was already confirmed by National Bank Ltd. in their letter dated 3.3.96 (Annexure-B); the appellant by reply dated 4.9.95 informed Bangladesh Bank the above position but even then the Bangladesh Bank by notice dated 10.10.95 informed the appellant that his explanation was unacceptable; the appellant thus realizing that the proceeding initiated against him under section 17 of the Act 1991 would not be withdrawn filed Writ Petition No. 2297 of 1995 whereupon Rule was issued and, after hearing, the High Court Division by judgment dated 1.7.97 discharged the Rule holding that though against the liabilities as shown on account of Emzad Enterprise and York Garments Limited, the appellant, being merely a family member of Mosharaff Hossain, will not incur disqualification under section 17 of Act 1991 but against the A/C of Md. Amanullah, the guarantee given by the appellant being a continuing one, his liability against the loan continued as there was outstanding in the above A/C on 3.9.95. Being aggrieved the appellant moved the Appellate Division and obtained order dated 2.7.75 in CMP No. 258 of 1997 staying the operation of the above judgment dated 1.7.97 of the High Court Division and the above order of stay remained in force up to 26.4.1998 and consequently the operation of the notice dated 3.9.95, which was impugned in the above writ petition, also remained stayed till 26.4.1998, during the pendency of the above stay order the liability against the A/C of Md. Amanullah, for which the appellant stood as guarantor, deign fully adjusted, National Bank Ltd by letter dated 23.11.97 sought the approval of  Bangladesh Bank to release the appellant from his liability as guarantor and in  terms of the above Bangladesh Bank, by letter dated 4.12.97 (Annexure-C), absolved the appellant from his liability as guarantor and the appellant was also informed accordingly and in that view of  the matter the appellant did not press for  further extension of the stay order which  was in force up to 26.4.98 and Civil  Petition No. 15 of 1997 which in the  meantime was filed by the appellant was  also dismissed on 29.4.98 as the appellant did not press the same. But in spite of the above, Bangladesh Bank issued the impugned order dated 17.9.98 (Annexure A).
 
3.         The respondent Nos. 1 and 2 opposed the above Rule by filing affidavit-in- opposition.
 
4.         The High Court Division, after hearing, by order dated 10.5.99 discharged the Rule holding as follows:-
 
       "Moazzem Hossain, petitioner of Writ Petition No. 3006 of 1998, would have vacated the office of the director of the respondent No. 3, National Bank Ltd. on the expiry of two months from 9.9.95, the date of service of notice on him under section 17(1) of the said Act. But the vacancy could not occur due to the order of stay in the earlier Rule and leave petition. It appears from respondent No. 3's letter dated 4.12.97 (Annexure-C) that Bangladesh bank given no objection to releasing the petitioner from the lia­bility of Amanullah for whose loan he executed a guarantee bond. It was done during pendency of CP No. 125 filed by him and operation of the order of stay and as such his disqualification under sub-section (6) of section 17 of the said Act could not start till dismissal of his leave petition on 29.4.98. But he having continued to function as director of respondent No.3 in spite of discharge of the earlier Rule and dismissal of leave petition respondent No. 1 had no option but to bring the matter to the notice of the Chairman of Board of Directors of respondent No.3 by the impugned notice. On consideration of law we find no illegality in the impugned notice dated 17.9.98 (Annexure-A) which was an intimation of the effect of notice u/s 17(1) of the said Act after discharge of the Rule in writ petition No. 2297 of 1995. So we find no merit in this Rule."
 
5.         Leave was granted on the submissions that-         
 
       "While the petitioner's liability to the National Bank Limited was absolved during the pendency of the order of stay of operation of the notice under section 17(1) of Act 1991, the petitioner received a notice on 17.9.1998 under section 17(1) (c) of the said Act informing him that his directorship in the National Bank Limited ceased. He challenged the said notice dated 17.9.1998 by the instant Writ Petition No. 3006 of 1998 on 20.9.1998. But the Rule nisi was discharged on 10.5.1999. Mr. Habibul Islam Bhuiyan, learned counsel for the petitioner, submits that the High Court Division did not apply its mind to the facts and circumstances of the petitioner's case and failed to appreciate that the petitioner in compliance with the notice under Section 17(1) has fully repaid the guaranteed amount to the National Bank Limited during the sub­sistence of the order of stay of operation of the notice under Section 17(1) and therefore, the impugned notice dated 17.9.1998 is illegal and cannot be sus­tained."
 
6.         The learned counsel for the appellant submitted that the Appellate Division by order dated 2.7.97 passed in CMP No. 258 of 1997 having stayed the operation of the order dated 1.7.97 passed by the High Court Division in Writ Petition No. 2297 of 1995, the above order of stay took effect from 5.11.95 when the High Court Division in the above Writ Petition No. 2297 of 1995 stayed further proceeding started against the appellant under section 17(1) of Act 1991 and fur­ther the above order of stay dated 2.7.97 having remained in force till 26.4.98 and in the meantime the outstanding against the A/C of Md. Amanullah being repaid on 20.10.97, National Bank Ltd by letter dated 23.11.97 sought the approval of Bangladesh Bank for release of the per­sonal guarantee of the appellant against the above loan and Bangladesh Bank by letter dated 4.12.97 not only gave "no objection" to the above release but by letter dated 28.12.97 also informed the legal adviser of the appellant that the lia­bility of the appellant with National Bank Ltd has been absolved and during the subsistence of the aforesaid order of stay dated 2.7.97 there was also no legal bar on the part of the appellant, to be elected as director of National Bank Ltd in the Annual General Meeting of National Bank Ltd held on 17.12.1996 and further the Bangladesh Bank, by letter dated 4.12.97 gave "no objection" to release the appellant from his liability as guarantor, the issuance of impugned order dated 17.9.98, Annexure A, is illegal and is of no legal effect.
 
7.         The learned counsel appearing for Bangladesh Bank submitted that the appellant, without paying his outstanding dues and misusing the order of stay dated 5.11.95 passed by High Court Division in Writ Petition No. 2297 and also misusing the order of stay dated 2.7.97 passed by the Appellate Division in C.M.R No. 258 of 1997, did not repay the loan within sixty days as directed in the notice dated 3.9.95 and during this period he illegally functioned as a director of National Bank Ltd and so the High Court Division rightly discharged the Rule holding that the appellant failed to show that he has been absolved of the guarantee upon full payment of his liabilities within two months after receipt i of the notice dated 3.9.95 and he having repaid his dues only during the period of stay granted on 2.7.97 his disqualification  continued and the High Court Division correctly held that the appellant took advantage of the stay order dated 2.7.97 to meet his liability and accordingly there was  no illegality in the impugned order which is merely an intimation of the effect of notice dated 3.9.95 under section 17 of Act, 1991 after discharge of the Rule issued in Writ Petition No. 2297 of 1995.
 
8.         As it appears from the materials on record the appellant, on 9.9.1995, received the notice dated 3.9.1995 served under section 17 of the Act. He then, on 5.11.1995, challenged the legal­ity of the said notice by filing Writ Petition No. 2297 of 1995 and obtained an order of stay therein on the same day. The Rule obtained in the aforesaid writ petition was discharged on 1.7.1997 and as against that the appellant filed C M.P. No. 258 of 1997 and obtained order of stay on 2.7.1997 and the said order of stay continued till 26.4.97. It thus appears that the order of stay in Writ Petition No. 2297 of 1995 was obtained at a time when period of two months, as was specified in the notice dated 3.9.1995 (received on 9.9.1995), was yet to be over and further order of stay was also obtained in the CMP No. 258 of 1997 at a time when the period of two months was still to be over. The records also show during the pendency stay order dated 2.7.97 passed in C.M.P. No. 258 of 1997 Md. Amanullah adjusted his liabilities with the National Bank Ltd having decided to release the bank guar­antee furnished by the appellant against the above loan of Md. Amanullah sought the approval of Bangladesh Bank. The case of Bangladesh Bank is that because of the stay order obtained in Writ Petition No. 2297 of 1995 and the C.M.P No. 258 of 1997, the operation of notice dated 3.9.1995 was stayed and during this period the loan of Md. Amanullah, in respect whereof the appellant stood as guarantor, being adjusted, National Bank Ltd. released the guarantee after obtaining approval of Bangladesh Bank only on 4.12.1997 and thus payment as against the above liabilities having been made beyond 60 days as was specified in the notice dated 3.9.1995, the impugned letter dated 17.9.1998, Annexure-A, was issued intimating the Board of Director of National Bank Ltd that the post of the appellant as Director of National Bank Ltd had ultimately been vacated upon the expiry of two months from 9.9.1995, is quite legal.
 
9.         We are of the view that since the lia­bility against the A/C of Md. Amanullah was adjusted at a time when the period of two months specified in the notice dated 3.9.1995 issued under section 17 of the said Act was yet to be over because of the orders of stay dated 5.11.95 granted by the High Court Division and also the order of stay dated 2.7.97 granted by the Appellate Division, as such, even though National Bank Ltd released the guarantee after obtaining approval of the Bangladesh Bank on 4.12.1997, it cannot be said that the appellant did not adjust his liabilities within the period of two months as was specified in the notice dated 3.9.1995. Since in compliance of the terms of the notice dated 3.9.1995 the liability against the A/C of Md. Amanullah was adjusted within the period of two months and upon such adjustment the appellant was absolved from his liability as guar­antor against the said A/C and then National Bank Ltd sought approval of Bangladesh Bank of release of the above bank guarantee and Bangladesh Bank also on 4.12.97 gave no objection to the release of the above bank guarantee and further the period consumed in between the period for adjustment was well with in the period of two months as was spec­ified in the notice dated 3.9.1995 and moreover the period consumed by the respondent Nos. 2 and 1 for release of the bank guarantees, was for the comply­ing with the formalities for the purpose of finally releasing the bank guarantee of the appellant after adjustment of liabili­ties in the A/C of Md. Amanullah and as such the said period can not be comput­ed for finding the appellant as the defaulter in the adjustment of his liabili­ties by the time specified in the notice dated 3.9.1995.
 
10.       In the background of the facts as stated above the letter dated 17.9.1998, Annexure-A, intimating the Board of Director of National Bank Ltd that the appellant ceased to be a Director of the above on the expiry of the period of two months since receipt of the notice issued under section 17(1) of the Act on 9.9.1995, is not legally sustainable.
 
11.       So the appeal is allowed without any order as to costs.
 
Ed.