Mrs. Bakul Akter Vs. Bangladesh and others, 18 BLT (AD) (2010) 282

Case No: Civil Petition for Leave to Appeal No. 245 of 2009

Judge: A. B. M. Khairul Haque,

Court: Appellate Division ,,

Advocate: Md. Nawab Ali,,

Citation: 18 BLT (AD) (2010) 282

Case Year: 2010

Appellant: Mrs. Bakul Akter

Respondent: Bangladesh and others

Subject: Company Matter,

Delivery Date: 2010-03-10

Supreme Court of Bangladesh
Appellate Division
(Civil)

 
Present:
Mohammad Fazlul Karimm, CJ.
Md. Abdul Matin, J.
ABM Khairul Haque, J.
Md. Muzammel Hossain, J.
 
Mrs. Bakul Akter
………………………Petitioner
Vs.
Bangladesh and others
……………………….Respondents
 
Judgment
March 10, 2010.
 
Artha Rin Adalat Ain, 2003
 Section 8(1)
Code of Civil Procedure, 1908
Order-1, Rule 10(2)
A company incorporated under the Companies Act is a juristic person. A share-holder is not the owner of the companies or its assets. The company itself owns its properties. A share-holder is only entitled to the dividends, if declared. On winding up however, after payment of its debts, he is entitled to participate in the distribution of its assets. The liability of a share holder, whether he is the Chairman of the Board of Directors, or a director, is only to the extent of the face value of the shares he holds, nothing more than that. But if he guarantees repayment of the loan, enjoyed by the company or mortgages his property to the creditor, to ensure repayment of the loan by the company, then on the failure of the company to make such repayment, he becomes liable, not as a share-holder but as a guarantor or mortgagor or both as the case may be. …….. (6)
 
Lawyers Involved:
Md. Nawab Ali, Advocate on-Record-For the Petitioners.
Not represented-the Respondents.
 
Civil Petition for Leave to Appeal No. 245 of 2009
 
JUDGMENT
ABM Khariul Haque J.
 
This is a petition for leave to appeal in respect of the judgment and order dated 08.06.2008, passed by the High Court Division, in Writ Petition No. 4092 of 2008, rejecting the petition summarily filed under Article 102 of the Constitution.
 
2.       The facts leading to the filing of the writ petition are that the Agrani Bank Limited filed a suit under the provisions of the Artho Rin Adalat Ain, 2003, against M/S. Oyester Fashion Limited and others, praying for a decree for Tk. 1,90,11,342.00. The defendant No. 3, the petitioner herein, filed a written statement on 01.04.2008, denying all material averments and also prayed for dismissal of suit against her. Another application under Order 1 Rule 10(2) of the Code of Civil Procedure was also filed on her behalf on 01.04.2008, praying for striking out of her name as a defendant.
 
3.       The learned Judge, Artho Rin Adalat, Chittagong, by Order No. 11 dated 01.04.2008, rejected the petition of the defendant No. 3. Being aggrieved, the petitioner filed the instant writ petition. The High Court Division, also summarily rejected the petition.
 
4.       Md. Nawab Ali, the learned Advocate-on-Record appearing on behalf of the petitioner, submits that the correct principle of law has not been reflected in the order passed by the High Court Division.
 
5.       We have heard the learned Advocate-on-Record, and perused the Order passed by the High Court Division and the Artho Rin Adalat.
 
6.       A company incorporated under the Companies Act is a juristic person. A share­holder is not the owner of the company or its assets. The company itself owns its properties. A share-holder is only entitled to the dividends, if declared. On winding up however, after payment of its debts, he is entitled to participate in the distribution of its assets. The liability of a share-holder, whether he is the Chairman of the Board of Directors, or a director, is only to the extent of the face value of the shares he holds, nothing more than that. But if he guarantees repayment of the loan, enjoyed  by the company or mortgages his property to the creditor, to ensure repayment of the loan by the company, then on the failure of the company to make such repayment, he becomes liable, not as a share-holder but as a guarantor or mortgagor or both as the case may be.

7.      In the present case, the petitioner is a necessary party in the suit because the company enjoyed the loan when she was its Chairman, as such, the suit should be disposed of in her presence. However, her liability is not dependent on her status as the Chairman or share-holder of the company unless it is found on evidence that she executed the charge documents in favor of the bank or mortgaged her property in its favor in order to ensure repayment of the loan. Only in that case she will be liable.
 
With these observations, this petition is dismissed.
 
Ed.