This edition of ‘From the Court Corridor’ curates the notable pronouncements of the High Court Division (HCD) and the Appellate Division (AD) of the Supreme Court (SC) of Bangladesh in November 2022.
High Court Division questions the legitimacy of Nagad’s license
Following a writ petition, a bench of Justices comprising Md. Mozibur Rahman Miah and Kazi Md. Ejarul Haque Akondo issued a ruling that questioned the legality of Nagad’s license as a mobile money provider affiliated with the Bangladesh Post Office. The judges asked why Nagad’s business operations would not be deemed illegal under 2018 and 2022 regulations. Given that, since 2019 Nagad had been carried out “illegally and without approval” after receiving a temporary license from the central bank as a provider of mobile finance. The High Court’s bench also questioned the decision to keep Nagad’s temporary registration in effect.
Supreme Court lawyers Md Abu Bakar Siddiquee and Md Hasanuzzaman filed the petition in the public interest on Oct 27. Advocate Kamal Hossain Meahzi moved for the writ petition while Deputy Attorney General Arabindo Kumar Roy presented the state. The secretary of the Financial Institutions Division, the Bangladesh Bank governor, the director general of the Payment System Department (PSD) of the central bank, the director general of Bangladesh Post Office, the managing director of Nagad Limited, and three others were asked to respond to the ruling within four weeks.
Later, Advocate Kamal articulated that the MFS regulations of 2018 require a company to be an associate entity of a commercial bank to provide such services, which Nagad was not. According to Kamal, a change in the regulations this year allowed service-providing companies to be part of a financial institution or any government organization or agency, in addition to being associated with a bank. Nagad had yet to associate itself with any of these, and its activities as a mobile financial services (MFS) provider with temporary approval from the central bank since the start of its business in 2019 have been unauthorized and illegal under the provisions of the Bangladesh MFS Regulations, 2018 and 2022.
According to the Bangladesh Bank’s MFS Regulations, only scheduled commercial banks are authorized to run the MFS as a product of the bank or by constructing a subsidiary company with at least 51% of the share held by the bank and control of its board. Following the regulations, some commercial banks in Bangladesh introduced MFS on a regular basis. Nagad had persisted with MFS business since its inception, branding itself as an entity of the Bangladesh Post Office without the permission of the central bank. In 2020, the central bank issued a directive instructing all commercial banks not to provide services to any unauthorized MFS provider. In that case, the Bangladesh Post Office obtained provisional permission from the Bangladesh Bank to allow Nagad to operate the MFS in the country.
Since Nagad was not any bank-led entity within the meaning of regulation of the MFS Regulations, the introduction of Nagad and continuation with the MFS business by Nagad Limited was unauthorized and illegal in view of the provisions of the said regulations. Because there is no provision in the law, as outlined in the MFS Regulations, to grant a temporary license for MFS business upon request of a government entity, the subsequent approval by the Bangladesh Bank on a temporary basis in response to the request of the Bangladesh Post Office to permit Nagad Limited to proceed with its business is also illegal in the eyes of the law.
Following the petition, Nagad’s MFS business is not presided over by the Bangladesh Bank, and the central bank does not influence Nagad’s operations. Additionally, the Bangladesh Bank extended a temporary license in Nagad’s favour, which is against the rules that apply to MFS businesses, allowing Nagad to continue operating its MFS business in violation of the applicable norms and regulations and thus, there is a serious security risk to the deposits of millions of customers held in Nagad accounts.
High Court Division orders authorities to shut all illegal brick kilns in seven days
On 13th November after hearing a writ petition, the High Court Division’s bench of Justice Md Ashfaqul Islam and Justice Md Shohrowardi asked the concerned bodies of the government to take necessary steps to shut down all illegal brick kilns across the country and to stop using wood as fuel for brick kilns in seven days. It asked the Cabinet Secretary, Environment Secretary and Senior Secretary of the Public Administration Ministry to issue effective instructions to the Deputy Commissioners (DCs) of all the districts within seven days so that they shut down all illegal brick kilns in their respective areas and stop using wood as fuel for brick kilns. The secretaries have also been asked to submit a compliance report to the court within two weeks over their steps regarding the issue. Human Rights and Peace for Bangladesh (HRPB), a rights organization, filed the petition with the High Court on November 13 annexing a news report. Lawyer Manzill Murshid appeared in the court hearing on behalf of the HRPB, while Deputy Attorney General Barrister Kazi Maynul Hassan represented the state.
The court also mandated the government’s concerned bodies to explain in four weeks why their passivity in preventing unlawful brick kilns across the country and in prohibiting the use of wood as fuel in brick kilns should not be declared illegal. It further requested that the Director General of the Department of Environment, as well as the Director and Divisional Commissioners of the department, form a monitoring team for their respective districts within one week. They have also been disseminated for two weeks to provide a compliance report on their actions.
According to the Brick Kilns Establishment (Control) Act of 2013, brick kilns cannot be constructed without a license, and the law restricts the use of wood as fuel in brick kilns. However, illegal brick kilns have begun operations around the country ahead of the winter season, and those brick kilns have made plans to use wood as fuel.
HCD slams ACC over inaction against Basic Bank scam and warns of legal action if ACC fails to finish Basic Bank probe in three months
The High Court Division (HCD) has expressed its displeasure with the Anti-Corruption Commission’s (ACC) failure to complete even an investigation of the 56 complaints submitted in the Basic Bank scam over the last seven years. The ACC was directed by the HCD to conclude its investigation of all 56 cases filed in connection with the Basic Bank scandal and submit a report to it within three months. Otherwise, the HCD warned, the anti-graft authority would face appropriate judicial action.
The High Court bench of Justice Md Nazrul Islam Talukder and Justice Khizir Hayat issued the directive while ruling on three bail petitions filed by accused Mohammad Ali, former manager of Basic Bank’s Shantinagar branch, in three separate instances related to the scandal. The court also discharged the rulings given regarding Mohammad Ali’s bail.
According to a Bangladesh Bank inquiry, approximately Tk 45.0 billion was stolen from Basic Bank between 2009 and 2013, when Sheikh Abdul Hye Bacchu presided over the bank’s board of directors. A total of 56 cases were filed in connection with the Basic Bank frauds. However, the ACC was unable to present a charge sheet in any of the cases over the last seven years. Meanwhile, the ACC has been investigating the cases filed in connection with the scam for a long time, according to a recent report. One of the causes for the delays in the cases’ investigation is that the whereabouts of the embezzled money in the cases were concealed by withdrawing money totally in cash. During the hearing, lawyer Abul Hossain represented the accused, while lawyer Khurshid Alam Khan represented the ACC and Deputy Attorney General AKM Amin Uddin Manik represented the state. While hearing three bail petitions filed by an accused of corruption cases filed in connection with the Basic Bank scams the court said, “Just like a drama. We are watching a drama. Millions of eyes are looking. No work is being done. Why are they (ACC) silent? Billions of money will be plundered. We will only see.”
Despite the passage of more than seven years, the Anti-Corruption Commission has yet to produce charge sheets in the cases filed for Basic Bank loan schemes. As a result, the trials in the cases were unable to proceed.
SC stays verdict barring banks, and financial institutions to file cheque dishonour cases against the loan
The Appellate Division of the Supreme Court has stayed for two months a High Court verdict that ruled no bank or the financial institution (FI) can file a cheque dishonour case against any person for defaulted loans. A five-member bench of the Appellate Division headed by Chief Justice Hasan Foez Siddique passed the order after hearing three separate petitions filed by BRAC Bank against the High Court verdict. The apex court, however, asked the BRAC Bank to file a regular appeal petition against the verdict by this time. It also upheld the bail order granted to the borrower by the High Court.
Delivering the verdict after hearing an appeal petition filed over a cheque dishonour case of the BRAC Bank, the High Court Division( HCD) also ruled that banks or other financial institutions can only bring a lawsuit in the Artha Rin Adalat for recovery of loans in the ways specified in the Artha Rin Adalat Act, 2003 when it came to hearing an appeal petition filed over a BRAC Bank case involving a cheque dishonour. To collect on defaulted loans, the HCD directed banks and financial organizations not to initiate instances of check dishonour against borrowers. Besides, it gave lower courts instructions to dismiss these cases and send them straight to the Artha Rin Adalat, or Money Loan Court. And the HCD also ruled that, since bank money is people’s money, they have the right to know to which person or organisation the bank or the financial institution is giving public money. The HCD bench of Justice Md Ashraful Kamal passed the order after disposing of an appeal by Mohammad Ali who was sued by Brac Bank and received a sentence of six-month imprisonment and a Tk2.95 lakh penalty in a trial court. Five days after this verdict, BRAC Bank filed a petition with the Chamber Court of the SC to stay the HCD verdict. Later, the Chamber Court sent the petition of BRAC Bank to the regular bench of the Appellate Division, fixing the hearing date on 1 December.
In the case of a cheque dishonour, the client is readily persuaded to negotiate, and debt recovery can be completed in a relatively short period of time. A loan from a bank or financial institution is obtained through an agreement. However, some unethical and unscrupulous bank personnel utilize the cheque to further their own secret ambitions. As the HCD stated, banks and financial entities file cheque dishonour charges instead of going to the Money Loan Court, rendering our criminal justice system essentially ineffectual. We hear about banks letting off defaulted loans of thousands of crores of taka, but we never hear of a poor man’s debt being forgiven. Banks were supposed to be a friend of the poor, but instead, they are now sucking the blood out of the poor.