BANGLADESH BANK Vs. SK. ABUL HOSSAIN

JUDGEMENT

(1.) This petition for leave to appeal is directed against the judgment and order dated 9.8.2004 passed by the High Court Division in Matter No. 106 of 2003 directing that within 120 days from the date of drawing up of the order, the 20th Annual General Meeting (AGM) of City Bank Ltd, the respondent No. 2, is to be held excluding the agenda regarding election of directors.

(2.) The respondent No.1, on 1st November 1994, filed an application under sections 81(2) and section 85(3) of the Companies Act 1994, which was registered as Matter No.106 of 2003, praying for holding the 20th Annual General Meeting of the respondent No.2, hereinafter referred to as the company, for the calendar year 2003 after condoning the delay contending, inter alia, that he is a share-holder of the company; the 19th Annual General Meeting of the company for the calendar year 2002 was held on 23.03.2002; as per provision of law and its Articles of Association the company convened it's 20th Annual General Meeting on 28.4.2003 by a notice dated 7.4.2004 and also took all preparations for holding the said Annual General Meeting on 28.4.2003 at Hotel Sonargaon, Dhaka; there is no restriction in the Companies Act, 1994 regarding the tenure of directors of a public limited company or their re-election except the provisions of Section 91(2) which provides that not less than one third of the whole number of directors of a public company shall retire by rotation in a general meeting; the Bank Company Act 1991 also did not contain any such restriction with regard to the tenure and re-election of the directors of a banking company; by Bank Company (Amendment) Act 1003 (2003), on 10th March 2003 section 15(Ka Ka) was inserted in the Bank Company Act 1991 and sub-section (1) of the above section 15 (Ka Ka) provided that no person shall be a Director of a Banking Company for more than six consecutive years in two terms, except the chief executive officer by whatever name he may be called and sub- section (2) thereof provide that notwithstanding the provisions of sub-section (1), a sponsor Director who is holding the post will not cease to be a Director despite being a Director for six consecutive years in two terms in the event such vacation of office by him reduces the number of sponsor Directors to less than half of the total number of Directors, thus providing no impediment for a Director to remain as a Director in a banking company for three consecutive terms if the situation as stated above arises and sub-section (3) thereof provided that if any sponsor Director is liable to vacate the office, which one of them shall do so will be determined by drawing of a lottery; an explanation to the said section 15 (Ka Ka) further provided that a half term is considered as a full term in order to fulfill the provisions of the said section, on 26.04.03 Bangladesh Bank, the respondent No. 3, by BRPD Circular No. 8 dated 26.4.03 issued a new interpretation to the above section 15 (ka ka) relating to the tenure of the office of the Directors to be elected from amongst the Sponsor Directors to the effect that those Directors of a banking company who have been the Directors for six consecutive years or more will cease to be the Directors of a Banking company in the next annual General Meeting; on the same date Bangladesh bank, in exercise of its powers under section 45 (1) of the Bank Companies Act, 1991, issued another circular being BRPD Circular letter No. 12 dated 26.4.03 notifying certain restrictions in the composition of Board of Directors and also in respect of qualifications to become eligible for appointment as a director of a Banking Company to the effect that the Board of Directors of banking companies shall consist of not more than thirteen directors subject to the condition that in those banking companies where the Board consists of more than thirteen Directors, they will be able to continue their posts up to the end of their tenure but however as regards election/ re- election in their posts the provisions of section 15 (Ka Ka) of the Bank companies act, 1991 will apply and further not more than one member of a family will be entitled to be a Director of a banking company and that member of a family means the Directors husband/wife, father/mother, son/daughter, brother/sister, and the dependants of the Director; the aforesaid circulars of Bangladesh Bank caused confusion and contradictions for which the 20th Annual General Meeting of the company could not be held on the date scheduled; the aforesaid BPRD Circulars Nos. 8 & 12 of the Bangladesh Bank as well as Section 15 (Ka Ka) of the Bank Company Act have been challenged in several writ petitions out of which some have already been disposed of declaring that the above Section 15 (Ka Ka) and BPRD Circular No. 12 of Bangladesh Bank are of no legal effect and those were issued without any lawful authority; against the above judgments Bangladesh Bank moved the Appellate Division in civil petitions for leave to appeal which are pending for hearing but interim orders of stay having been granted by the Appellate Division in civil miscellaneous petitions the company be allowed to hold its 20th Annual General Meeting with necessary ancillary and consequential orders. The respondent No. 1 did not file any affidavit in opposition. Bangladesh Bank filed affidavit-in-opposition contending, inter alia, that no restriction has been put by the aforesaid circulars regarding the tenure and re-election of Directors in respect of public limited companies and those are controlled by Section 91 (2) of the Companies Act, 1994; Bangladesh Bank issued the BPRD Circular Nos. 8 & 12, both dated 26.04.03 with lawful authority being empowered by Section 45 of the Bank Company Act, 1991 to secure interest of the depositors and to ensure the proper management of the Banks and by those circulars the Bangladesh Bank has given the guide-lines only and there is no contradictions as alleged; the High Court Division in the meantime having disposed of some writ petitions by judgments dated 20.1.04 declaring the above section 15(Ka Ka) and the BRPD Circular No. 12 as invalid, Bangladesh Bank filed civil miscellaneous petitions in which the Appellate Division by interim orders dated 24.1.04 stayed operation of the judgments passed by the High Court Division and the stay orders are in force; under the provisions of section 6 of the Bank Company Act, 1991 any provision of the Memorandum and Articles of Association of a banking company stands void if the same contradicts with any of the provision of the Bank Company Act, 1991 and further section 45 of the Bank Company Act 1991 empowers the Bangladesh Bank to issue direction for securing proper management of any banking company and therefore the directions issued by the Bangladesh Bank by BRPD circulars Nos. 8 and 12 are lawful; except the agenda relating to the election of Directors, in the 20th Annual General Meeting the order agendas can be decided in the meeting and thus excepting the agenda of election of Directors there is no restriction in holding 20th the Annual General Meeting of the company.

(3.) As it appears before the High Court Division the learned Advocate appearing for the shareholder/petitioner, the respondent No.1 herein, contended that in of view of the existence of the above section 15(Ka Ka) and BRPD Circular Nos. 8 and 12, the 20th Annual General Meeting of the company could not be held as the existing Board of Directors of the company found it difficult to hold the 20th Annual General Meeting as the aforesaid Bangladesh Bank Circulars were in force and because of that the share-holders of the company, in general, are suffering loss inasmuch as the dividend could not be declared; after the High Court Division declared that the provisions of the section 15(Ka Ka) and the BRPD Circular letter No.12 were issued without lawful authority, Bangladesh Bank filed civil petitions for leave before the Appellate Division challenging the aforesaid judgments of the High Court Division and the said civil petitions are pending for hearing but there being an stay order in Civil Miscellaneous Petition Nos. 40-44 of 2004 the 20th Annual General Meeting may be allowed to be held without the agenda of election of directors after condoning the delay and that there was no willful default on the part of the company. The learned advocate for Bangladesh Bank, the petitioner herein, on the other hand submitted before the High Court Division that against the judgments passed by the High Court Division declaring the section 15 (Ka Ka) and BRPD Circular No. 12 dated 26.4.2003 are without lawful authority, Bangladesh Bank moved the Appellate Division by filing Civil Miscellaneous Petition Nos. 40-44 of 2004 and obtained orders of stay; Bangladesh Bank will have no objection in respect of holding the 20th Annual General Meeting of the company and there is also no default on the part of the company and or its Directors or Managers/Officers concerned in not holding the 20th Annual General Meeting of the company within time. In the background of the above submissions the High Court Division passed the impugned judgment and order dated 9.8.2004.