A brief summary of the notable judgments of the Supreme Court of Bangladesh in 2023 on commercial matters e.g. Company, Tax, Loan Recovery, etc.
Bangladesh Bank vs. People’s Leasing and Financial Services Ltd. & Others
Reference: 75 DLR (2023) HCD 61
Legal Provision: Section 278/331 of the Companies Act, 1994
Legal Question: Can the company court impose restrictive/prohibitive or injunctive orders to any party relating to the Company while winding up.
Held: The Company Court, in the process of winding up a company, is vested with onerous duties and armed with ample powers under sections 278 and 331 of the Act to summon the suspected persons/entities for the purpose of assessing the quantum of each person’s/entity’s liabilities and, thereby, pass appropriate orders/directions, including any restrictive, prohibitive, injunctive, and penal orders, upon them for securing the recovery of the money/assets of the company under liquidation.
Md. Jahirul Hoque Vs. Judge, Artha Rin Adalat, Chattogram & Others
Reference: 17 SCOB [2023] HCD 20
Legal Provision: Section 34 of the Artha-Rin Adalat Ain, 2003
Legal Question: Whether a judgment debtor against whom an order of civil imprisonment is imposed under the Artha-Rin proceeding, can be regarded as fugitive?
Held: “We consider that the petitioner’s civil liability was adjudicated by a civil Court under the Artha Rin Adalat Ain and the Code of Civil Procedure. Thereby he is determined as a Judgment Debtor and not an Accused or convict for criminal offence. According to section 34 of the Act, 2003, the civil detention has been awarded only for the purpose of compelling the judgment debtor to repay the decretal dues. As such, he does not require to surrender inasmuch as referred ratio requiring to surrender as laid down by our apex Court, is applicable only for the accused or convict in criminal proceeding.”
Biplob Bikash Shill vs. Destiny-2000 Ltd.
Reference: 28 BLC (2023) HCD 264
Legal Provision: Companies Act, 1994
Legal Question: Whether a company can halt commercial activities due to the absence of directors
Held: A company is a juristic person, which has got an independent legal identity, and it should normally be allowed to carry on its business, irrespective of the company’s directors; particular social, physical, mental, and financial condition(s). That is to say, when a single member or a number of the members of the Board of Directors of a company are dead or absconding or languishing in jail or unable to work for long because of illness, or if there is a death of members of the Board of Directors for some other reasons, a company’s business should not be ground to a halt for not holding its Board Meeting(s) or AGM(s) or due to long absence of its vital management officials.
Prof. Muhammad Yunus Vs. The State
Reference: 17 SCOB [2023] HCD 162
Legal Provision: Section 28 of the Companies Act, 1991
Legal Question: Whether nonprofit companies require to constitute a Labor Participation Fund;
Held: “The learned Advocate for the petitioner repeatedly submits that the GTC is a nonprofit company and registered under Section 28 of Companies Act. As such GTC is not liable to contribute 5% of the net profit to the Labor Welfare Fund. In support of above submission the learned Advocate produced the Memorandum and Articles and Association of the GTC. But there is no mention in above Memorandum that the GTC is a nonprofit company. On the contrary Article 71 of above Memorandum shows that GTC may earn profit but the profit shall be utilized for the advancement of the objectives as stated in the above Memorandum. Since the GTC is a profit earning company it is not understandable as to why the company will not contribute a very insignificant part of its net profit for the welfare of its labors. There is nothing in Section 28 of the Companies Act which exempts any Company registered under above provision from making above contribution to the Labor Welfare Fund.”
Kazi Abu Bakar Siddique Hannan vs. Md. Rafiqul Islam Bhuiyan
Reference: 28 BLC (2023) HCD 73
Legal Provision: Section 138 of the Negotiable Instruments Act, 1881
Legal Question: Can a proceeding u/s 138 of NI Act be quashed for the non-production of the original cheque that was dishonored.
Held: Proceedings under section 138 of the NI Act, 1881 cannot be quashed on the grounds of non-production of the original cheque at the time of taking cognizance.
Md. Mominul Islam Vs. Bangladesh & Others
Reference: 17 SCOB [2023] HCD 108
Legal Provision: Companies Act, 1994
Legal Question: Whether the Managing Director or CEO of a Company can take unilateral decisions without proper delegation by the Board of Directors
Held: “In the case in hand, the Managing Director and CEO of the Biman issued the impugned order retiring the petitioner from service without any decision of the board of directors. No power was delegated to him to take the decision. Therefore, he was not competent authority to retire the petitioner. For this reason coupled with the attending facts and circumstances of the case, the unauthorised exercise of power by the Managing Director and CEO of the Biman is also without jurisdiction, arbitrary and malafide.”
Md. Shahin Ikbal Vs. General Certificate Officer & Others
Reference: 17 SCOB [2023] HCD 168
Legal Provision: Section 5(5) of the Artha-Rin Adalat Ain, 2003
Legal Question: Whether a certificate case can be initiated to recover money instead of the Artha-Rin Suit
Held: “On meticulous and meaningful reading of the aforesaid provision of the Ain, 2003, it is as clear as day light that the legislature has consciously given option for shopping the forum either to file Artha Rin Suit or Certificate Case for speedy realization of the outstanding amount which does not exceed Tk. 5 lacs. The jurisdiction of the Certificate Officer is in addition but not in derogation to the jurisdiction of the Artha Rin Adalat; therefore, the certificate proceeding does not suffer from jurisdictional defect raised by the petitioner. Consequently, the issue stands decided in the negative.”
Md. Hossain vs. Hotel Ramna Ltd.
Reference: 75 DLR (2023) HCD 585
Legal Provision: Section 253 read with section 340 of the Companies Act, 1994.
Legal Question: Can a winding-up proceeding of a Company be stayed upon an application by the creditor, and can a court revoke a judicial dissolution within 2 (two) years.
Held: When a Company has gone into liquidation by the order of the Court but yet to be dissolved, and on the application of any creditor or ocontributor, the Court is satisfied that the winding up proceedings should be discontinued sine die or requires to be halted for a certain period, the Court is empowered to pass necessary orders/directions to suit the circumstances or compulsion. Section 253 of the Act may be invoked to stay the winding-up proceedings for a short or long period.
Further held that when a Company is fully dissolved as a sequential final consequence of being wound-up and two years of dissolution is yet to be expired, the Liquidator or any other interested person is competent to approach the Company Court for obtaining a declaration that the dissolution is void, and, pursuant thereto, if the Court is satisfied about the purpose of filing the application, it can restore the Company to its original position with necessary supplemental and consequential orders and directions.
Rupali Bank Ltd. vs. Mahmuda Jahan, daughter of Late Saidur Rahman
Reference: 75 DLR (2023) AD 225
Legal Provision: Section 34(3) of the Artha Rin Adalat Ain, 2003
Legal Question: Can the directors of a loan defaulter company be held liable for civil imprisonment under the provisions of the Act.
Held: According to section 34(3) of the Ain, if the borrower is a company, the natural person consisting of whom the company is deemed to have been formed, shall, severally and jointly be liable to confinement in civil prison.
COSCO Shipping (South East Asia) Pte Ltd. vs. COSCO (Bangladesh) Shipping Lines Ltd.
Reference: 28 BLC (2023) HCD 609
Legal Provision: Section 241 of the Companies Act, 1994
Legal Question: Whether a “deadlock situation” in a company can be a ground for winding up a Company?
Held: When a dispute among the Directors of a Company leads to a deadlock in the business of the company affecting the rights of the share-holders and the said dispute appears to be insoluble, it should be considered as a sufficient cause to order winding up of a company on ‘just and equitable’ ground.
Pankaj Roy vs. Tapan Krishna Podder
Reference: 28 BLC (2023) HCD 634
Legal Provision: Section 85(3) of the Companies Act, 1994
Legal Question: Whether a company court can decide the legality or validity of a particular board meeting of the Company
Held: It is well within the Court’s authority and jurisdiction to have entertained the application and determined the status of that particular meeting. The second board meeting is declared to be a nullity in the eye of the law, from which no legal consequence is found to have followed. All proceedings of the second board meeting and the business transacted therein are null and void. No legal consequences resultantly are to be deemed to have flown at any material time from the purported decisions taken at that meeting.
Bangladesh Freight Forwarders’ Association (BAFFA) vs. Registrar, Joint Stock of Companies (RJSC)
Reference: 75 DLR (2023) HCD 434
Legal Provision: Section 81, 85(3), and 396 of the Companies Act, 1994
Legal Question: Whether the deadline for holding Annual General Meetings can be extended by RJSC
Held: For all types of Companies, an AGM must be held for each of the Gregorian calendar year, and though the gap between holding of one AGM to holding another AGM may be a maximum of 15 (fifteen) months, but the latest date for holding the AGM for each calendar year is 31st December for the concerned calendar year. The RJSC is competent to extend the time for a maximum period of 90 days or up to 31st December of the concerned calendar year, whichever is earlier, subject to fulfilling the conditions that the application is filed before him well within thirty days of the expiry of the specified period.