Pubali Bank\\\'s writ pending with HC for three years

A dispute over the legality of an IPO approval by the securities regulator has been pending for the last three years with the court in absence of 'necessary initiative' from the petitioner concerned, insiders said.
Pubali Bank Ltd filed the writ petition with the High Court (HC) challenging the Initial Public Offering (IPO) consent, given to Unique Hotel and Resorts Ltd, owner of The Westin Dhaka, before the 2010 share market debacle.
After hearing the writ, HC issued a rule in the middle of 2012 asking the Bangladesh Securities and Exchange Commission (BSEC) to explain as to why its consent to the IPO would not be declared illegal.
When contacted, Barrister Reshad Imam, a counsel of the petitioner, recently told the FE: "The respondent is yet to give reply to the HC rule."
Asked about the progress regarding disposal of the writ petition, Mr Imam also said, "No visible progress yet been noticed has since HC issued the rule in 2012."
As reason behind the case remaining pending for long he said, "After issuance of the HC rule, the petitioner did not give us instruction to take any step to move with the writ petition."
A section of the insiders, however, claimed of an 'undercover understanding' between the regulator and the petitioner behind unsettlement of such a sensitive legal dispute.
A senior official at BSEC said there can be many reasons behind non-progress of a legal dispute at HC.
"We (BSEC) are the respondent (at this case). If the petitioner does not take steps, disposal of a legal dispute generally takes time, as it is their (petitioner) headache."
Without specifying any reason, he also said the burden of a large number of pending cases at HC also causes delay in disposal of a case.
"Sometimes, the petitioners go to HC with ill motives. After securing stay order from it, they no longer bother to move with the case," the BSEC official added.
The letter of consent for IPO was accorded to Unique Hotel and Resorts Ltd on May 23, 2010, after a week of its application. The company started trading of its shares in the country's bourses on July 2, 2012.
Pubali Bank Ltd filed the writ petition with HC, alleging that the IPO approval was given negligently and without following necessary rules.
Allegations of failure in discharging statutory duties in regulating pre-IPO placement and protecting the investors' interests were also brought against the stock market regulator in the writ petition filed in June 2012.
In the writ, the bank also claimed that it suffered a loss of approximately Tk 42.5 million due to buying Unique Hotel's pre-IPO placement shares relying on BSEC's consent, accorded in 'undue haste'.
Allegations of violating Rule-3 of the SEC Issue of Capital Rules 2001 and having 'mala-fide motive' were also brought in the petition against BSEC in giving the IPO-consent.
The bank said relying on BSEC's consent, it acquired 0.5 million pre-IPO placement at Tk 160 each (including a premium of Tk 150), totaling Tk 80 million.
But, Unique Hotel obtained approval to issue 26 million ordinary shares at Tk 75 each (including a premium of Tk 65), determined through fixed-price method. Subsequently, the bank suffered a significant amount of loss, it claimed.
Responding to the writ petition, HC in its rule also wanted to know as to why a directive would not be given to the regulator to direct Unique Hotel and its respective issue manager to buy back the pre-IPO placement shares from Pubali Bank at the placement price of Tk 160 each with due interest.
The petitioner also said after a road-show on September 1, 2010, an abnormally high indicative price for the company's shares was fixed. Institutional investors' bidding for price discovery was set to take place from February 6 to 8, 2011 under book-building method.
In the meantime on January 20, 2011, BSEC suspended the method without giving any guidance to the bidding, which was about to be held. As a result, Unique Hotel also postponed its bidding, it also said.
In view of the uncertainty, Pubali bank on March 1, 2011 requested BSEC to direct Unique Hotel to either refund its investment or buy back the pre-IPO placement shares.
The bank later requested Unique Hotel three times to refund its investment. But none of them responded. Thereafter, the bank went to HC on June 17.
M A Halim Chowdhury, managing director and CEO (current charge) of Pubali Bank, told the FE on Tuesday, "We had sought stay order and a rule from the court (regarding the IPO of Unique Hotel). The court had issued a rule, but didn't give any stay order. After that, the matter didn't come to the hearing list."
"The company (Unique Hotel) is yet to give back the money (taken as extra price against its placement shares)."
Asked about allegation of giving no further instruction from the bank to its lawyers, he said, "I will inquire about it."
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