A brief summary of the notable judgments of the Supreme Court of Bangladesh in 2022 on commercial matters (Company, Tax, Loan Recovery, etc.)
MAHBUB ALI VS. ARTHA RIN ADALAT-1, CHITTAGONG & OTHERS
Reference: 27 BLC (2022) HCD 77
Legal Provision: Section 6(5) of the Artha-Rin Adalat Ain, 2003
Legal Question: Can a shareholder of a private company be held liable for the debts of the Company under the Artha Rin Adalat Ain, 2003?
Held: Admittedly the Petitioner was neither a borrower and even not a mortgagor relating to the loan liability and therefore he’s not liable for the repayment of the loan inasmuch as the petitioner does not come within the purview of section 6(5) of the Act.
AGRANI BANK LTD. VS. JUDGE, ARTHA RIN ADALAT, 1ST COURT, DHAKA
Reference: 27 BLC (2022) HCD 10
Legal Provision: Section 33(7) of Artha-Rin Adalat Ain, 2003
Legal Question: Can the Artha Rin Adalat approve an auction sale at an abnormally low price, especially where the auction took place outside of the jurisdiction of the mortgaged property in question?
Held: Since fraud has been appeared in conducting the auction within a short span of time and by submitting bids, the total Auction process is a nullity and cannot sustain in the eyes of law. … To get the maximum price on the property for the benefit of the decree-holder Bank as well as the borrower, the auction process under the Act has to be conducted within the jurisdiction of the property concerned.
BANGLADESH VS CONFIDENCE CEMENT LTD. & OTHERS
Reference: 12 LM (2022) AD 229
Legal Provision: Rule 31Ka of the VAT Rules, 1991 and section 55(1) of the VAT Act, 1991
Legal Question: Can the sub-contractor of a party to an international work order / tender attain the VAT benefit of “deemed export”?
Held: the goods supplied by the writ petitioner companies as sub-contractors cannot be assessed as “deemed export” under the rules concerned.
TAHMINA BEGUM VS PRIO NIBASH BUILDERS LTD.
Reference: 74 DLR (HCD) 132
Legal Provision: Section 36 of the Real Estate Development and Management Act, 2010
Legal Quesiton: Can the parties proceed to file a suit without initiating arbitration as per the Act.
Held: Without exhausting the proper form of arbitration or at least taking initiative to do so the suit is not in maintainable in limine.
MONOWARA BEGUM VS. REGISTRAR, JOINT STOCK COMPANIES
Reference:27 BLC (2002) HCD 323
Legal Provision:Section 85(3) of the Companies Act, 1994
Legal Question: Company did not conduct any meeting since the day of incorporation for lack of corporate knowledge, and was unable to complete its regulatory obligations as the managing director passed away, leaving the company with one shareholder (and director only). Can it be condoned?
Held: Whenever it will come to the notice of the Company Court that an incorporated company is experiencing any difficulty in calling or in holding or in conducting any Board Meeting or Annual General Meeting or Extraordinary General Meeting or to carry out all these two or three actions as part of the requirements of the Articles of Association or in compliance with the provisions of the Act, this court is competent to appoint a single independent director where two directors are required as part of the law for calling, holding and conducting board meeting/AGM/EGM or to appoint the entire board of directors of the company, if the situation so warrants or to pass any other kind of necessary orders and directions from the company or any government non-government individual or authority for enabling the company to call, hold and conduct the necessary meetings.
MANIK (MD) VS THE STATE
Reference:27 BLC (2022) HCD 747
Legal Provision:Section 138(1)(b) of the Negotiable Instruments Act, 1881
Legal Question: Wheather a legal notice sent without signature is valid for the purpose of cheque dishonour cases under the NI Act?
Held: No one signing the legal notice is a mere irregularity. It does not create any cause to the accused to be prejudiced. It is, whether by this mistake of non-signing the legal notice was sent within the time by registered post with acknowledgment to the proper address of the recipient, and particulars of the cheque in question were described regarding the return of the cheque as unpaid from the bank as described in section 138(1)(b) of the Act.
FGS DENIM WEAR LTD. VS. NATIONAL BOARD OF REVENUE, DHAKA AND OTHERS
Reference: LEX/BDHC/0028/2022
Legal Provision: Section 59 of the VAT Act, 1991
Legal Question: Can the Revenue Authority suspend/withhold the BIN number of one company for unpaid VAT dues of the 3rd party?
Held: This is a case, and inescapably so, of a personal liability of a sui juirs corporate entity. Indeed it suffices to note at the outset that the revenue has in the facts confused the very nature of such liability by blurring the distinction in law between a corporate and a natural person. Addressing that misconception, this Court is, therefore, constrained to set the revenue straight about so fundamental a distinction. The impugned action is wholly misconceived as it ignores the very basic rubric of company law and the manner in which corporate entities as juristic personalities incur liability under the law including fiscal law. It needs to be flagged for the Respondents at the outset that a juristic person or a juridical person is a non-human legal entity or a legal person that is not a single natural person but an organization recognized by law as a fictitious person such as inter alia a company or a corporation entitled to rights and duties in the same way as a human being in law. There are two kinds of legal entities: human and non-human. In legal parlance, a human person is called a natural person (sometime also a physical person). On the other hand a non-human person is called a juristic person (sometime also a juridic, artificial or legal person. … We find that there is nothing in section 59 that entitles the revenue to do so. Instead, all the fundamental principles of corporate law have been callously set aside or ignored by the Respondents to recover outstanding dues from the defunct and bankrupt Pro forma Respondent No. 4 and illegally attach such liability to the Petitioner entity. … In the present circumstances, such action as has manifested in locking and stopping the Petitioner’s BIN is found to be wholly unlawful and arbitrary. The Respondents in this case may well pay heed to the fact that the only avenue open to them at recovery of outstanding revenue, and that too from the Pro forma Respondent No. 4, FGS Knitwear Limited, is to place itself in the position of an unsecured creditor and possibly seek recovery from the assets of a possibly bankrupt Pro forma Respondent No. 4 gone out by business through a winding up proceeding before an appropriate judicial forum in keeping with the provisions of the Companies Act, 1994. Revenues, taxes and cesses and rates payable to the state can only be recovered from a defunct and bankrupt company’s assets upon winding up proceedings being initiated under the relevant winding up provisions of the law. It is futile for the revenue to conjure any other mechanism of recovery from any other person whether natural or legal, human or non-human as they have purported to do in this case which can only be termed by this Court as a misadventure. A recovery from the erstwhile managing director personally, of the Pro forma Respondent No. 4 by lifting the veil of incorporation is another avenue but which is not an issue, as indicated by this Court at the very outset, neither agitated by either party in this case nor one considered by this constitutional court as one to be properly raised in this forum absent any statutory sanction for the same in the relevant provisions of the law.