This edition of ‘From the Court Corridor’ curates the notable pronouncements of the Appellate Division (AD) and the High Court Division (HCD) of the Supreme Court (SC) of Bangladesh in December 2023.
SC orders postponement on National Bank AGM till 21 January 2024
The Annual General Meeting (AGM) of National Bank of Bangladesh, a private bank, has been postponed due to a legal dispute about the format of the meeting. A Chamber Judge from the SC imposed a status quo, prohibiting the bank from holding its originally scheduled December 2023 virtual AGM. This delay stemmed from a debate between a bank director and the bank’s management over whether the meeting should take place in person or online. The bank’s legal team objected to the HCD’s initial order favoring an in-person meeting, preferring to proceed with the virtual format.
Earlier, the HCD stayed the AGM following an application by a Director of the bank. Later, the bank moved to the AD against the HCD order. The Director demanded that the AGM be held in person, not digitally, according to the court sources. The Director also placed an application to the chairman of the Bangladesh Securities and Exchange Commission on 17 December 2023 seeking its steps to stop holding the AGM virtually, bringing some allegations of regularities against the bank authorities in appointing directors.
This adjournment came in between a significant number of financial struggles for the National Bank. The bank reported substantial losses in the first nine months of 2023, exceeding those of the previous year by a staggering 214%. This financial hardship is attributed to a surge in loans, where borrowers were unable to repay their debts. The bank had to classify a significant portion of its loans as defaulted due to a market liquidity crunch stemming from global and domestic inflation. Consequently, the bank’s profitability and EPS (earnings per share) have taken a major hit.
The bank’s financial difficulties date back longer. In 2022, it suffered significant losses due to loan defaults, resulting in no dividends paid to shareholders for two consecutive years. This alarming trend is evident in the bank’s high non-performing loan ratio, which stood the second highest among Bangladeshi private banks in September 2023.
This high default rate requires a significant increase in provisioning, or cash set aside by the bank to cover any loan losses. However, this provisioning requirement reduces the bank’s revenues, limiting lending capacity and potentially risking public funds. The case involving the AGM format gravely complicates the National Bank’s situation. According to the Banking Companies Act, 1991, the preferred form of meeting is an in person one. While the legal battle is addressed, the bank must address severe financial difficulties in order to regain stability and public confidence.
HCD summons ex-DUCSU VP and gives 4 weeks to explain
The HCD summoned former DUCSU Vice President Md Nurul Haque Nur to appear before it on 17 January 2024 in response to his alleged ‘derogatory comments about the court and judges.’ Additionally, the HCD issued a rule requiring Nur, currently the president of a faction called ‘Gono Odhikar Parishad’, to justify why he should not be held in contempt of court for these remarks.
The summons and rule were issued by the HCD bench consisting of Justice JBM Hassan and Justice Razik-Al-Jalil on a suo moto motion, following a report published in a Bangla daily newspaper. In the words of the Assistant Attorney General Kalipada Mridha, Nur made the alleged comments at a public gathering in Bijoynagar Water Tank on 7 December 2023.
Earlier, Chief Justice Obaidul Hassan referred the matter to the High Court bench for further hearing and necessary orders. In a subsequent development, the HCD gave four weeks to former DUCSU vice president Md Nurul Haque Nur to place his explanation over the said allegations, following Nur’s appearance before the High Court bench in compliance with its summons order.
As of the current status, the court has ordered him to give a written explanation to it by 15 February. This ruling showcases the court’s inherent power to defend its honor by issuing suo moto motions against incidents of contempt of court and further developments regarding this case will further clarify the court’s justification involving its action.
SC authorizes election on 7 January 2024
The SC has authorized the Election Commission (EC) to hold the 12th parliamentary election, which is set for 7 January 2024. Justice M Enayetur Rahim, chamber judge of the AD, upheld an HCD decision rejecting a petition challenging the constitutionality of the election schedule announcement.
The chamber judge also dismissed SC Advocate Md Eunus Ali Akond’s appeal challenging the HCD order. Akond had asked the Supreme Court to halt the election procedure scheduled on 7 January 2024. On 11 December 2023, the HCD rejected Akond’s plea, allowing the EC to proceed with election preparations. Akond initially filed the plea as a public interest action with the HCD on 29 November, seeking to suspend the election schedule established by the EC on 15 November. He also asked the EC to reschedule the election date.
In his appeal, Akond stated that Article 123(3) of the Constitution requires a general election to be called within 90 days of the dissolution of parliament. However, the EC scheduled the poll for 7 January, when the present parliament is still in session. The petition underlined that several members of the existing parliament, who get state salaries, are running in the upcoming election, which, according to the petition, should not be held while the current parliament is in place. Furthermore, the petition stated that the current political climate has prohibited many candidates from submitting nomination papers and afterwards the Court showed its authority in electoral affairs.
