A brief summary of the notable judgments of the Supreme Court of Bangladesh in 2024 (up to June, 2024) on commercial matters e.g. Company, Tax, Loan Recovery, etc.
1. Ali Imam Vs. The Judge, Artha Rin Adalat & ors
Reference: 19 SCOB [2024] HCD 76
Legal Provision: Section 57 of the Artha-Rin Adalat Ain, 2003
Legal Question: Whether Artha-Rin Adalat have the power to order to deposit the passport of the mortgagor
Held: “Section 57 of the Act, 2003, in addition, authorizes the Adalat to pass any supplementary order to secure ends of justice, on consideration of the facts and circumstances under the proceedings. Therefore, we are of the view that section 57 is the appropriate provision incorporated in the statute (Act, 2003) authorizing the Adalat to pass the necessary order in order to ensure realization of the decretal dues. As such, in the public interest to ensure realization of public money, the Artha Rin Adalat exercised the statutory authority under section 57 of the Act, 2003 and by the impugned order directed the petitioner to deposit his passport. Hence, Article 36 of the Constitution has not been violated in passing the impugned order by the Adalat.” …(Para-25)
2. Abdus Salam & Anr Vs. RJSC & Ors
Reference: 76 DLR (HCD) 48
Legal Provision: Section 43 of the Companies Act, 1994
Legal Question: What constitutes ‘sufficient cause’ for the Company Court to order rectification of the share register of a Company
Held: “Section 43 of the Companies Act prescribes is that that the Company Court may order the concerned company to rectify its Share Register if the Company Court finds ‘sufficient cause’ to enter in or omit from the Company’s material Share Register the name of any transferee or transferor of a share. Nowhere in the Companies Act, the expression ‘sufficient cause’ has been defined. However, in a score of case-laws on the issue of transfer of shares, it has been decided that if the conditions as to transfer of shares as stipulated in section 38 of the Companies Act are met, upon carrying out necessary examination applying the power vested in the Company Court under section 43(3) of the Companies Act, the Company Court may arrive at a conclusion as to whether or not there is ‘sufficient cause’ to enter in or omit any person’s name from the Share Register of a company.
This Court under section 43 of the Companies Act may delve deep into the question of title on the shares in question by looking into other aspects, such as whether the consideration was paid or not, or whether the materials (evidence) of transfer of shares are available in the concerned State Office i.e. in the office of the RJSC, or whether the transfer of shares were at all approved in the meeting of the Board of Directors of the Company.” (para 27 and 32)
3. Pubali Bank Ltd. vs, Add. District Judge, Bankruptcy Court, Dhaka & Ors
Reference: 76 DLR (HCD) 73
Legal Provision: Section 9 and 10 of the Bankruptcy Act, 1997
Legal Question: Whether the heirs of a deceased guarantor to a loan can be declared bankrupt in a proceeding under the Act
Held: “The purpose of Bankruptcy Act, 1997 and that of the Artha Rin Adalat Ain, 2003 and the Bank Companies Act, 1991 are quite different. The purpose of Ain, 2003 is realization of loan from the defaulting borrower. The Ain in its section 6(5) clearly speaks of impleading the guarantor as defendant in the suit thereunder. In case of failure of the principal judgment debtor after decreeing an artha rin suit, a guarantor- debtor is also liable to repay the money and can be proceeded in an execution case. Whereas, the purpose of Bankruptcy Act is to discourage nonpayment of loan to a bank or an individual, and to curtail some civil and political rights of the citizen, who had taken loan and enjoyed the same, but did not repay its creditor. Although in different laws including the Bank Companies Act, both the defaulting borrower and guarantor against a defaulted loan are defined as debtor, they are not equal in all cases. A guarantor is a person who does not enjoy the loan money, but helps another in taking loan and takes the risk of being proceeded against, when the original borrower fails to repay. That is the reason the Bankruptcy Act does not include a guarantor in its sections 9 and 10. So the moral and legal status of a guarantor and borrower in the Bankruptcy Act is not the same as in the Artha Rin Adalat Ain and the Bank Companies Act. The harsher law i.e. the Ain, 2003 in its section 34(4) prohibits civil imprisonment of the heirs of a deceased debtor.
In a case, where the loanee dies keeping the loan unpaid, the creditor can at best sue his legal heirs and successors for recovery of money from his Estate/Property, which the heirs and successors inherit from him. But in other cases, there is no scope to curtail the political and civil rights of a citizen because of any wrong committed by his predecessor.” (para 12 and 13)
4. Miarul Haque vs. DHL Worldwide Express (Bangladesh) Limited and Others
Reference: 76 DLR (HCD) 155
Legal Provision: Section 183(1) of the Companies Act, 1994
Legal Question: Whether dividends can only be approved by the members of the Company on the AGM only, or it can also be approved in the EGM?
Held: “…. while a financial report is required to be laid before the company’s AGM, the same may also be placed before the company’s EGM if for any reason the company fails to lay before the company’s AGM in that all the provisions of the Companies Act, including its Schedule-1, state about general meeting in course of setting out the substantive and procedural laws regarding dividends. In other words, since section 81 of the Companies Act provides that one general meeting in one calendar year must be held as Annual General Meeting, secondly, since no provision of the Companies Act provides that dividend can only be declared in AGM, (e.g. section 210 of the Companies Act requires the company to appoint auditor in the AGM) and, finally, though section 183(1) of the Companies Act makes it obligatory for the Board of Directors of the company to lay the financial report before the company’s AGM, however, since in the Companies Act there is no such express provision prohibiting declaration of dividend in the company’s EGM, hence, declaring dividend in EGM in an exceptional circumstance is a valid action/decision of the company.” (Para 24)
Reference: 29 BLC (HCD) 74
Legal Provision: Section 33(7Ka) of the Artha-Rin Adalat Ain, 2003
Legal Question: Whether Artha-rin Adalat can interfere in a completed auction sale when the possession of the suit property has not been transferred to the bidder
Held: “Non delivery of possession to the auction purchaser, is not material in making the sale absolute and closed in the execution case. If the auction purchaser needs possession through Court in that case he can file proper application before the Adalat under section 33(7ka) of the Act and in that case the Adalat can pass appropriate order directing the judgment-debtor or possessor or the owner to hand over possession to the auction purchaser. But this position as to non-delivery of possession will no way help the petitioner to question the auction sale as well as to set-aside the auction sale when a right to property was accrued in favour of bonafide purchaser for value long back”
6. Nurul Hakim (Md) vs State
Reference: 29 BLC (HCD) 108
Legal Provision: Sections 5, 6, and 138 of the Negotiable Instruments Act, 1881
Legal Question: Whether cheques are required to be written/filled-up by the drawer
Held: “Reasons for imposing directions are innumerous, now-a-days we are dealing with hundreds/thousands of case under section 561A of the Code of Criminal Procedure are being filed before the highest judiciary in different pleas and different reasons. Most of the reasons are the cheques were not written or filled up by the drawer as mandated under sections 5 and 6. The directions are as follows:-
(1) We direct the cognizance court to receive an affidavit of facts specify that the drawer has filled up all spaces of the cheque and signed with the petition of complaint under section 138 of the Act.
(2) The cognizance must be satisfied on the contention of complaint petition.
If he signed a cheque he must ascertain what amount of money was written and in whose favour the strictly, as it is special law failing one of the conditions the drawer will be liable for criminal prosecution. Nothing should be written behind his back.”
7. AKM Lutful Kabir vs Neeshorgo Hotel & Resport Ltd.
Reference: 29 BLC (HCD) 194
Legal Provision: Section 233 of the Companies Act, 1994
Legal Question: What Company Court is competent to take oral evidence for the purpose of resolving the disputes
Held: “The Legislature intended to resolve all types of disputes or grievances arising out of the Company Act expeditiously through a higher rank of Court i.e. either the District Court or the High Court Division, in a summary manner so as to help smoothly flourish the business and commerce without experiencing protracted, time-consuming and complex procedures which are required to be followed/observed/applied by the Civil Courts and, therefore, most of the Company Matters relating to/arising out of/in connection with the grievance of any members of the company or debenture holder of the company are tried/adjudicated upon without taking any oral evidence. However, it does not necessarily mean that the Company Court is not competent to dispose of a company case by taking oral evidance, because there is no provision within the four corners of the Companies Act prohibiting the Company Court to take oral evidence. Rather, the expressions employed in section 233(3) of the Companies Act, “If after hearing the parties present on the date……”, implies that there may be petitioner witness/es (PW/s) or respondent witness/es (RW/s) or the Court witnesses/es (CW/s) if the facts and circumstances so warrant, inasmuch as this Court requires to form an opinion “If the Court is of the opinion”, (the wordings of section 233(3) of the Companies Act) for passing necessary Order and/or Direction.”