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Lending banks' liability in pledge loan

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Appellate Division :
Surendra Kumar Sinha CJ
Syed Mahmud Hossain J
Hasan Foez Siddique J
Mirza Hussain Haider J
Nimal Chandra Biswas ………….Petitioner
Sonali Bank, Dhaka and another ………..Respondents
March 20th, 2016
Artha Rin Adalat Ain (VIII of 2003)
Sections 40 and 44Ka
In case of pledge loan, firstly, the borrower has to furnish a certain amount as agreed between lender bank and the borrower as margin, which in this case was 30% of the loan amount; secondly, in case of pledge loan facility, pledge goods remain under the custody of lender bank. The Adalat rightly found that it could not legally compel the defendants to refund the pledge loan when pledged goods were misappropriated from the bank's custody. . ..... (13)
Probir Neogi, Senior Advocate, instructed by Taufique Hossain, Advocate-on-Record-For the Petitioner (In CP No. 818/12).
Khaled Ahmed, Advocate, instructed by Syed Mahbubar Rahman, Advocate-on-Record-For the Petitioner (In CP No. 950/12)
None Represented-For the Respondents (In CP No.818/12).
Probir Neogi, Senior Advocate, instructed by Taufique Hossain, Advocate-on-Record-For the Respondents (In CP No. 950/12).
Syed Mahmud Hossain J : Both the civil petitions for leave to appeal are directed against the judgment and order dated 24-8-2011 passed by the High Court Division in First Appeal No.42 of 2005 along with Cross Objection No.4 of 2009 dismissing the appeal and cross objection and affirming the judgment and decree dated 14-9-2004 passed by the learned Joint District Judge and Artha Rin Adalat No.2, Jhenaidah in Artha Rin Case No. 1 of 2002 decreeing the suit in part.
2. The facts, giving rise to these civil petitions for leave to appeal, in a nutshell, are:
The Sonali Bank (Kaligonj Branch, Jhenaidah) as the plaintiff filed Artha Rin Suit No.1 of 2002 in Artha Rin Adalat No.2, Jhenaidah against defendant No.1, Nimai Chandra Biswas and others, praying for a decree of Taka 1,17,70,424.67 as outstanding dues against CC hypothecation and CC Pledge loan. The plaint case, in a nutshell, was that defendant No.1 prayed for loan from the plaintiff-bank for the purpose of his business on 30-10-1995. The bank by a memo dated 20-11-1995 sanctioned loan of Taka 40,00,000 as pledge and Taka 10,00,000 as hypothecation in total Taka 50,00,000.
Defendant No.2 executed mortgage deed, Power of Attorney and other charge documents in favour of the plaintiff-bank. It was stipulated in the sanction letter that the said loan was to be repaid within one year. On 5-2-1997, the bank sanctioned another loan of Taka 10,00,000 as pledge and Taka 2,00,000 as hypothecation. After rescheduling of loan, the bank sanctioned Taka 20,00,000 as pledge and Taka 3,00,000 as hypothecation. Thus, the sanctioned amount rose to Taka 85,00,000 in total The plaintiff-bank wrote several letters to defendant and verbally asked to repay the loan money, and on 23-3-2000, a legal notice was served upon defendant No.1 who did not repay the loan money. Up to 30-3-2002 the total outstanding dues was Taka 19,46,667,67 as hypothecation and Taka 98,23,737 as pledge in total Taka 1,17,70,424.67. On 30-3-2000, the defendants refused to pay the outstanding dues, and hence, the suit.
3. Defendant No. 1 (petitioner in Civil Petition No.818 of 2012) contested the suit by filing written statement denying all the material statements made in the plaint, contending, inter alia, that the suit was not maintainable and a premature one. The substantive case of the defendants, in short, was that the plaintiff-bank sanctioned a loan on 12-12-1999 amounting to Taka 15,00,000 as hypothecation and Taka 70,00,000 as pledge and according to sanction letter, the plaintiff-bank received the entire goods from defendant No.1 against pledge loan and it was under lock and key of the plaintiff-bank, that is, the pledged goods were under the custody of the bank. The employees of the bank misappropriated the goods and replaced goods by the bran of paddy, and thereby misappropriated Taka 70,00,000. The Manager of the Bank filed a criminal case on 14-3-2000 against defendant No.1 being Kaligonj PS Case No.4/2000 (GR Case No.33/2000) under Sections 406/409/420 of the Penel Code and after investigation final report was submitted on 26-3-2000 in favour of defendant No.1. Thereafter, Md Habibur Rahman, Assistant General Manager, Sonali Bank, Regional Office, Jhenaidah as the informant lodged another case against three  bank employees and defendant No.1 which is under investigation. As such, the suit is liable to be dismissed.
4. The learned Joint District Judge and Artha Rin Adalat No.2, Jhenaidah by the judgment and order dated 14-9-2004 decreed the suit in part.
5. Against the judgment and decree of the Arthil Rin Adalat, the plaintiff-bank preferred First Appeal No 42 of 2005 and defendant No.1 also filed Cross Objection No.04 of 2009 before the High Court Division claiming the amount constituting 30% margin of the pledge loan deposited by defendant No.I. The learned Judges of the High Court Division, upon hearing the first appeal and the cross objection by the judgment and order dated 24-4-2011 dismissed the appeal and the cross objection.
6. Feeling aggrieved by and dissatisfied with judgment and order passed by the High Court Division, defendant No. 1 as the leave-petitioner filed Civil Petition No. 818 of 2012 and the plaintiff-bank as the leave-petitioner filed Civil Petition Appeal No. 950 of 2012 before this Division.
7. Mr Probir Neogi, learned Senior Advocate, appearing on behalf of the leave-petitioner of civil petition No. 818 of 2012 , submits that chapter 7 of the Artha Rin Adalat Ain, 2003 comprising Sections 40 to 44ka deal with appea1s and revisions, and section 40 provides that provisions of the Code of Civil Procedure shall apply in the proceedings of appeal and revision arising out of Artha Rin suits provided those are not inconsistent with any provisions of Artha Rin Adalat Ain. He further submits that there being nothing in Artha Rin Adalat Ain, 2003, which is in conflict with or contrary to the provision of Rule 22 Order XLI of the Code of Civil Procedure, the High Court Division was wrong in holding that the cross objection was not maintainable without assigning any reason whatsoever. He then submits that in a pledge loan the domination over the pledged goods remains with the pledgee, that is, in the instant case, the bank, which has been correctly found by the Artha Rin Adalat. But the Artha Rin Adalat in spite of such finding failed to pass the decree in appropriate terms directing the adjustment of the dues of defendant No.1 for 30% margin deposited by him in obtaining the pledge loan with the bank's dues against hypothecation loan as decreed. He also placed the judgment of Special Case No. 1 of 2003 wherein bank employees in charge of godown have been convicted and defendant No.1 was acquitted.
8. Mr Khaled Ahmed, learned Advocate, appearing on behalf of the leave-petitioner of Civil Petition No.950 of 2012, submits that the Artha Rin suit should have decreed the suit in full and that the cross-objection filed by defendant No.1 was not maintainable and the  High Court Division rightly dismissed the cross-objection.
9. We have considered the submissions of the learned Senior Advocate and the learned Advocate of both the civil petitions, perused the impugned judgment and the materials on record.
10. The petitioner in Civil Petition No. 818 of 2012 by an additional paper-book has brought on record the judgment and order passed by the learned Additional Sessions Judge, First Court and Special Judge, Jhenaidah in Special Case No.1 of 2003 which was delivered on 9-6-2014, that is, after delivery of the impugned judgment of the High Court Division on 24-8-2011. It appears from the judgment in Special Case No.1 of 2003 that defendant No.1 Nimai Chandra Biswas, who was accused No.1 in the said criminal case was acquitted of the charge along with accused No. 2 and two other accused, namely, Hayatur Rahman, godown-keeper and Nasiruddin, godown-chowkidar, both employees of the  bank were convicted and sentenced to 7 (seven) years rigorous imprisonment and to pay a fine of Taka 5,000 each, in default, to suffer simple imprisonment for 6 (six) months.
11. On consideration of the evidence on record, the Artha Rin Adalat came to a finding that the plaintiff-bank showed utter negligence in preserving and protecting the pledged goods and that the said fact is evident by the fact that an Assistant General Manager of the Bank filed a criminal case on 28-3-2000 against the Manager, the godown-keeper and the chowkider. The Artha Rin Adalat further found that while the pledged goods were in custody of the plaintiff-bank those were removed there from and that the plaintiff-bank could not return those goods to defendant No.1 The plaintiff-bank could not prove that defendant No. 1 stole or misappropriated or sold those pledged goods beyond the knowledge of the plaintiff-bank. The Artha Rin Adalat also found that at the hearing of the suit, the plaintiff-bank tried to implicate accused defendant No.1 by producing antedated and collusive documents.
12. Having considered the evidence of PW I, the High Court Division came to the finding that the pledged goods were under lock and key of the plaintiff and that the defendants did not remove it. The High Court Division, however, found that the learned Judge of the Artha Rin Adalat after calculation of the exhibits found that the plaintiff was entitled to
a decree of Taka 18,56,687.
13. It is an established banking practice that in case of pledge loan, firstly, the borrower has to furnish a certain amount as agreed between lender bank and the borrower as margin, which in this case was 30% of the loan amount; secondly, in case of pledge loan facility, pledge goods remain under the custody of lender bank.
So, we find that the Artha Rin Adalat rightly found that it could not legally compel the defendants to refund the pledge loan when pledged goods were misappropriated from the bank's custody. The Artha Rin Adalat also rightly held-
ÒAwaKšÍ †cøR F‡Yi 30% gvwR©b wnmv‡e 1 bs weev`xi †cøRK…Z gvjvgv‡ji g~‡j¨i Dci Zvnvi AwaKvi _vwKqv hvq|Ó
14. But the Artha Rin Adalat failed to pass the decree in proper terms for adjustment of defendant No. 1's dues as 30% margin of pledge loan with the bank's dues against hypothecation loan as decreed, although it legally and reasonably follows from the Adalat's own finding. The High Court Division totally failed to take notice of and address this vital aspect of the case.
15. In the light of discussion made above, we are of the view that the ends of justice would be met if the decree passed by the Artha Rin Adalat is modified to the effect that the 30% margin of pledge loan deposited by defendant No.1 shall be adjusted with the decretal amount of Taka 18,31,687.67, and the decree in question is modified accordingly.
Thus, Civil Petition for Leave to Appeal No. 818 of 2012 is disposed of and Civil Petition for Leave to Appeal No.950 of 2012 is dismissed. There will be no order as to costs.

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