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Present: Ms. Justice Nazmun Ara Sultana and Mr. Justice Md. Ruhul Quddus

Writ Petition No.4971 of 2009 Nasim Anwar Hossain ... Petitioner -VsBangladesh Bank and others ... Respondents

Mr. M. Moksadul Islam with Mr. Asaduzzaman Siddiqui, Advocates ... for the petitioner Mr. Md. Mizanur Rahman appearing for Mr. Ziaul Hassan, Advocate ... for the respondents Heard on 2.12. 2010 Judgment on 7.12. 2010

Md. Ruhul Quddus, J: This Rule Nisi, at the instance of the writ petitioner Nasim Anwar Hossain, share holder of a private limited company, was issued calling in question the inclusion of her name in the report published and circulated by the Credit Information Bureau (in brief CIB) of Bangladesh Bank showing her name as related with Ben-Lub Pte Ltd., a defaulting borrower company against borrower code No.56421.

The petitioners case in short is that she is a share holder to the extent of 15% in the said Ben-Lub Pte Ltd. In course of its business,

the said company took loan from two banks namely Dhaka Bank Ltd. and Bank Asia Ltd. The petitioner was also a personal guarantor against the said loans. Due to financial strain the company defaulted in payment of the loan within the stipulated time, for which the said banks reported to Bangladesh Bank (respondent No.1) describing the said company as a defaulting borrower. Although the petitioner did not take the loan in her personal capacity and having only 15% shares in the borrower company, still her name appeared in the report of CIB. Such inclusion in the CIB report had disqualified her to enjoy credit facilities from any other bank or financial institutions, hence she was aggrieved. In order to substantiate her contention, the petitioner annexed certified copy of the Memorandum and Article of Association of Ben-Lub Pte Ltd. (vide annexe-A to the writ petition) showing her shares to the extent of only 15% therein.

Mr. M. Moksadul Islam, the learned Advocate for the petitioner submitted that according to section 5 (GaGa) of the Bank Companies Act, 1991 the petitioner does not come within the definition of defaulting borrower inasmuch she did not take loan in person and her shares in the company do not exceed 20% of the total shares and as such she is not a person having interest in the company. The Company being a juristic person is a separate entity, which took loan from the banks for which a share holder of it, having less than 20% of its shares, cannot be included in the CIB report. She is neither a

defaulting borrower nor a person having interest in the company and therefore the respondent banks are not supposed to report the petitioners name to Bangladesh Bank describing her as a defaulting borrower within the scope of section 27 KaKa of the Bank Companies Act, 1991.

The learned Advocate further submits that the writ petitioner being a personal guarantor, is only a debtor and not a defaulting borrower, and therefore her name cannot be included in CIB report. In support of his submission the learned Advocate made reliance on the cases of Major Monjur Quader (Rtd) Vs- Bangladesh Bank and others reported in 59 DLR, 451; Mahmudur Rahman and another VsBangladesh Bank and others in same DLR at page 540, and the case of Md. Mostafa Kamal and others Vs- Bangaldesh Bank and others reported in 11 MLR, 377.

On the other hand, Mr. Md. Mizanur Rahman, learned Advocate appearing for the respondent-banks opposed the Rule and without filing any affidavit-in-opposition, submitted that since the writ petitioner is a guarantor against the loan taken by the defaulting borrower company, there is nothing wrong in inclusion of her name in the CIB report and as such, the Rule is liable to be discharged. However, the learned Advocate for the respondents did not deny the writ petitioner as a share holder in the borrower company to the extent of 15% of its total shares. He also positively affirmed the authenticity of the

Memorandum and Article of Association of Ben-Lub Pte Ltd., that has been annexed with the writ petition.

The points of controversy in the present writ petition are whether the name of a person having 15% share in a defaulting borrower company, and a personal guarantor against a loan, can be included in the CIB report. We have perused the writ petition and the papers submitted therewith, considered the submissions of the learned Advocates for both the parties, and carefully examined the law and decisions cited by the learned Advocate for the petitioner. Section 5 (GaGa) of the Bank Companies Act, 1991 defines defaulting borrower with provisos, as follows:
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Section 27 KaKa of the said Act provides that every creditor bank or financial institution shall send a list of its defaulting borrowers to Bangladesh Bank from time to time, upon which the latter bank will prepare a list of the said defaulting borrowers and send it to all banks and financial institutions, so that they refrain from extending credit facilities to them (defaulting borrowers).

In 59 DLR, 451 the petitioner being share holder Managing Director of a private limited company having less than 20% shares in the defaulting borrower company, and also a personal guarantor against the loan received by the company, challenged inclusion of his name in the CIB report on the ground that the definition of defaulting borrower as given in the statute was not attracted in his case, since he had only 2.5% share, and that he had merely provided personal guarantee to the creditor bank to repay the loan money which at best could made him a guarantor and not a defaulting borrower. The High Court Division, after exhaustive hearing and on examination of the relevant sections/articles respectively in the Bank Companies Act, 1991; Bangladesh Bank Order, 1972 and Artha Rin Adalat Ain, 2003, held:
22. ... The petitioners name, even if he is indebted to one of the respondents as a guarantor, cannot be included in the CIB list. It

should however, be noted that the respondent creditor bank is at liberty to file case against the petitioner in the Artha Rin Adalat for recovery of the unpaid loan amount as per terms of the personal guarantee provided by the petitioner

The same view was upheld in the case of Mahmudur Rahman and another Vs- Bangladesh Bank and others reported in the same DLR at page 540, where a share holder director of a defaulting borrower company had already transferred his shares, but

subsequently was included in the CIB report in capacity of personal guarantor.

In 11 MLR, 377 under similar facts and circumstances, another bench of the High Court Division held:
17. The underlying purpose for including the names of the

defaulting borrower companies or individual defaulting borrowers in the report of the Credit Information Bureau of Bangladesh Bank is to inform the financial institutions and the bank companies about the defaulting borrowers so that the financial institutions and banks do not make any loan or financial accommodation to them as envisaged under section 27 KaKa (3) of the Bank Companies Act, 1991. In view of the aforesaid legal position, the names of the aforesaid three defaulting borrower companies were only liable to be included in the report of the Credit Information Bureau of Bangladesh Bank and not the names of the petitioners. In other words, the names of the

petitioners were not liable to be included in the report of the Credit Information Bureau of Bangladesh Bank.

We also find the case of Quazi Nasibul Hasan (Sunnu) VsBangladesh Bank and others reported in 61 DLR, 96, where on conflicting decisions between two benches, a larger bench of the High Court Division was constituted to resolve the issue: whether the petitioner (Quazi Nasibul Hasan), as a guarantor of loan liability of the borrower company, covered by his personal guarantee in force, not having any subsisting interest in such borrower company can be termed as borrower and, for that matter, in case of default in repayment of such loan liabilities by the borrower-company such guarantor can be termed as a default-borrower having regard to the provisions of sections 5 GaGa and 27 KaKa of the Bank Company Act, 1991, as amended, read with Articles 42, 43, 44 and 46 of the Bangladesh Bank Order, 1972 as amended. The larger bench in a comprehensive judgment resolved the issue as under:
20. Considering the aforesaid provisions of sections 5 GaGa, 5 (Chha) and 27 KaKa of the Bank Company Act, 1991, quoted hereinbefore, and Article 42 (a) and (b) of the Bangladesh Bank Order, 1972, quoted herein above, we are of the view that the word guarantor cannot be tagged with the definition of borrower, and particularly having regard to the definition of defaulter-borrower (Ljvcx FY MnxZv) as per section 5 GaGa of the Act, and that the requirement for sending the information of defaulter-borrowers to the

Bangladesh Bank has been detailed in section 27 KaKa of the Act, on the basis of which the CIB list is prepared. The impugned inclusion of name of the petitioner, not being a defaulting borrower, as per the definition of section 5 GaGa of the Act, in the CIB report in reference is illegal and arbitrary and an act of negligence and non-application of mind and has caused loss and injury to the petitioner

In view of the above discussion and long line of decisions as referred hereinbefore, the petitioner in the present writ petition, does not appear to be a defaulting borrower or a person having interest in the defaulting borrower company for the purpose of inclusion of her name in the CIB report, and as such we find substance in the Rule. Accordingly, the Rule is made absolute and the inclusion of the petitioners name in report dated 31.7.2008 published and circulated by the Credit Information Bureau of Bangladesh Bank as related with Ben-Lub Pte Ltd., a defaulting borrower company against borrower code No.56421 (evident from annexe-B to the writ petition) is hereby declared to have been done without lawful authority and is of no legal effect.

Nazmun Ara Sultana, J: I agree.