Legal effects of Documents:

Documentation & Consequences of defective

Documentation with special reference to Legal
Action.
Presentation by:
Jagadish Chandra Debnath.
Principal
NCC Bank TI

08/04/15

Jagadish

What is Documents
Documents means any matter expressed or
described on any substance by means of letters
figures or marks or by more than one of those
means intended to be used for or which may be
used for the purpose of recording that matter .

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Meaning of Documentation
Documentation
documents in
manner.

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is the execution of
right form & lawful

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Legal Impact of Document

Documents are the physical embodiment of
the existence of loans & advances.
Documentation forms a permanent record of
the rights responsibilities and obligations of the
executants that the borrowers and guarantors
towards the lender (Bank).

Documents must be considered, firstly- In

regards to the admissibility as evidence in
proceeding and secondly - With a view to
statement interpretation.
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Legal Impact of Document

Mainly three questions may be examined when documents are
produced in the Court these are: I.

Are the documents genuine?

II.

What are the contents?

III.

Are the statements in the document True?

Original Document is said to be primary evidence &

certified copy true copy, photocopy, carbon copy of
documents is said to be Secondary evidence.

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CHARGE DOCUMENTS
Meaning of Charge:
To impose a duty, responsibility or obligation on or to
hold financially liable, right to demand payment from a
person. Such formation CONSTRUCTIVE RIGHTS of
a lender on borrower and his offered security is the

charge.
The documents by which such rights are to be
established on offered security is called

Charge

Document.
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Rights on Security

Sue Right
Sale Right
Possession Right
Holding or Retain Right
Exchange Right
Enjoyment Right
Interest Right
Right Transfer
Set -off Right
Personal Right

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TITLE RIGHT it is never transferred

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Mode of Charging over the Security :

Sue Right
Sale Right
Possession Right
Holding or Retain Right
Exchange Right
Enjoyment Right
Interest Right

Right Transfer
Set -off Right
Personal Right

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Debt Contract
Sale of Goods Act.
Pledge ( Cont. -172)
Lien ( cont -171)
Bailment ( Cont-148)
Sale of Goods Act.
Hypothecation/ Mortgage
( TP act. Sec-58 )
Assignment ( TP Sect-132)
Contract Act-39
P. Note ( NI -4) Guarantee
( Contract Act- 126)
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STEPS IN DOCUMENTATION
1. Preparation of deed- Banks Printed Forms set
as per Terms and condition and nature of
advances.
2. Legal Opinion- as per latest circular from the
panel legal adviser /advocate of Bank.
3. Executants and Execution- Signature capacitystyle stamp.

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STEPS IN DOCUMENTATION
4. Witnessing- Signature capacity- style.
5. Stamping of Documents as per Stamp Act 1899,
Amendment 1998 Stamp Schedule. (amendment -2004)
6. Registration

as

per

Registration

Act

-1908.

(amendment -2004)
7. Safe Keeping / Preservation.

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Documentation Based on:

Before starting documentation bank officer who takes

documents must consider the following preconditions:-

Nature of Advance and purpose

Nature of Borrower (s)
Nature of Security and Mode of Charging
Sanction Advice Terms & Conditions regarding Charge creation
Charge requiring registered or not
Charge documents to be stamped or not, If stamped amount and
types of stamp.
Capacity of Executants and signing Capacity
Banks supplied printed Documents sets and their contents.
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Nature of Advances

Secured Overdraft (SOD)

FO Financial Obligations / Advances against Shares/ FDR/PSP/BSP/

WDB/ Life Insurance policy
Secured Overdraft (SOD -RE) against Work Order.

Loans - Short terms and Long terms

Short term Loan- personal loan/ consumer credit

Loan against imported Merchandise (LIM)
Loan against Trust Receipt (LTR)
Long Term Loan ( Project Loan)

Continuous Credit:

Cash Credit (C.C) Hypo/ Pledge of stocks / Inventories for Working

Capital
ECC - Export Cash Credit.
PC- Packing Credit

Bill Purchase:

Inland Bill Purchase-IBP/Foreign Bill Purchase- FBP

Credit Card

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Nature of Borrower While execution of Documents

against advances the mode of charging over the offered
security varies from case to case according to their
constitution

of

Personal Capacity ( Signature)

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Individual
Joint borrower
Proprietorship
Partnership

Firms.

Official Capacity (Signature)

Autonomous body /
Club/ Society
Statutory Co.
Limited Company.

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Nature of Security and mode of charging

Person security

Movable
Stock / Goods in trade
Inventories
Machine & equipments

Immovable
Land / building

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Financial papers/
Instruments

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General Guide line for Documentation.

A bank officer must adopt a strict professional approach in
the execution of documents
Selection proper forms (Banks printed forms) of documents
set as per banks requisites and sanction terms.
The execution of documents should be done in the
presence of officer responsible obtaining documents,
The documents should be got completed in one sitting in
the same handwriting using the same ink and pen.
The borrower must be asked to sign in full signatures in the
same style throughout the documents the documents does
not carry initial or marks,
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General Guide line for Documentation.

All types of additions, alternations, insertions cuttings, overwriting
erasing, interlineations, declaration etc. must be authenticated by
the borrower
Date & Place of execution in each document: should be mentioned
invariably (Co- borrower / different place).
The document should not be double dated as 2/3 or 6/8 etc.
Documents if run several pages borrowers put his Signature on
each pages and on the last end of documents.
Where borrower is an illiterate person content of the documents
should be explained with the help of Lawyer or a respectable
persons.
Interest clause must be correctly mentioned as linked with
Bangladesh Bank Rate.
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When Documents Invalid.

Alteration and interlineations in documents if it is
done after execution.
The misstatement /mislead delivers deed.
If the party is blind or illiterate and if the documents
are read falsely.
The party
competent.

executing

the

documents

is

not

Improper stamping / under stamping.

Want of Attestation or witnessing if necessary.
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When Documents are Invalid.

Failure to Registered with competent authority within
specific time.
Ambiguous Schedule of the offered security.
Forgery, tempering deleting of documents.
Deed executed as a result of undue influence or
forcefully.
Instrument executed in blank (amount, security,
liability) with a bad intention.
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Charge Creation through

Execution of Documents

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Charge creation on Borrowers/ Guarantor

(Personally)

Demand Promissory Note - Adv-11, Adv-12,

(NI Act sec. 4 (singly/ jointly/ jointly and severally)
Letter of Guarantee adv-14
Letter of Guarantee (third party) adv-15
Letter of Ownership (Plegde) Adv-20
Letter of Guarantee (in case of Limited Co.)
Counter Guarantee Adv-17
Letter of Declaration Adv-18
Letter of Ownership (Pledge) -20
Letter of Arrangement (general) Adv-10
Letter of disbursement (in case of Loans) Adv-13

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Charges on offered Security

(Movable goods)..

Letter of Hypothecation Adv-25( of Stock in Trade)

Letter of Hypothecation of bills Adv-21

Letter of Pledge (goods Pledged) Adv-22

Letter of Lien Adv-19(/ securities/certificates /PSP/BSP ------) Third Party

Letter of Lien Adv-39 (FDR/ Call Deposit SB/CD/ Margin/ Special Deposit)

Letter of Lien Against Stock/ shares Adv. 23

Letter of Lien Adv (security offered by third Party) Adv-24

Letter of Right of set off

Letter of Assignment (Life Insurance Policy-LIP)

Irrevocable Power of Attorney in favour of Bank,

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Charges on offered Security (Movable

goods)..
Letter of undertaking and indemnity
Letter of Trust Receipt Adv- 06
Letter of Packing Credit (exch.)
Details of Guarantee Bond Adv-28
Transfer of Shares Adv-26
Revival Letter Adv-29
Agreement for Pledge of Securities Adv-35
Debit Balance Certificate Adv-36
Stock Report (Pledge) Adv-37
Stock Report (Hypothecation) Adv-38
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Charges on offered Security (Immovable)

Mortgage by registered Deed
Mortgage by deposit of Original Title Deeds
Adv-27 (Equitable Mortgage)
Irrevocable Power of Attorney in favour of
Bank regarding Mortgaged property.
Deed of Agreement

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Contributory Charge Documents

Letter of Partnership
Deed of Partnership (registered)
Resolution of the Board of Directors (seeking advances)
Deed of Agreement of Hypothecation of vehicles before
purchase
Agreement of Hypothecation of vehicles after purchase
Affidavit (on Non- Judicial Stamp) in addition to nonencumbrances Certificate.

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DEMAND PROMISSORY NOTE

( for Individual & Proprietary Concern )
DEMAND PROMISSORY NOTE
TK................................................

Date....................

I promise to pay on demand NCC Bank Limited, or order, the sum of

Tk.................Taka..................................................................................................
...............for value received with interest there on , from this date, at the
rate of ..................... percent over the published Bank Rate of Bangladesh
Bank with minimum of ................% per annum with.........................rests

Revenue stamps

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DEMAND PROMISSORY NOTE

TK.=5,00.000/-

Date. August 12, 2008.

I promise to pay on demand NCC Bank Ltd or order, the

sum of Tk = 5,00,000/-. (Tk Five Lac Only) for value
received with interest there on, from this date, at the rate
of 8%.... percent over the published Bank Rate of
Bangladesh Bank with minimum of .....13%...@. per annum
with quarterly ..rests

Revenue stamps

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DEMAND PROMISSORY NOTE ( for Company )

DEMAND PROMISSORY NOTE

TK................................................

Date....................

We promise to pay on demand NCC Bank Limited, or order, the sum of Tk........
Taka.. .............................................................................................................for
value received with interest there on , from this date, at the rate of .....................
percent over the published Bank Rate of Bangladesh Bank with minimum
of ................% per annum with.........................rests

Revenue stamps

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DEMAND PROMISSORY NOTE

(For Partnership & Joint Borrowers)
DEMAND PROMISSORY NOTE

TK................................................

Date....................

We jointly and severally promise to pay on demand NCC Bank Limited, or

order, the sum of Tk........
Taka.. .for
value received with interest there on , from this date, at the rate of .....................
percent over the published Bank Rate of Bangladesh Bank with minimum
of ................% per annum with.........................rests

Revenue stamps

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Letter of Disbursement
Place.
Date.
The Manager
National Credit and Commerce Bank Limited
.

Dear Sir,
Ref Loan for Tk---------------------------------------------------------------With reference to the above demand loan availed by me/ us today in respect of
which I/we have this day signed a Demand Promissory Note for Tk. .
Please disburse the amount of the loan by crediting the same to
.
Yours faithfully

.
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Letter of Arrangement
The Manager
NCC Bank Ltd

Date..

Dear Sir
Ref: Loan / Overdraft/ Cash Credit Limit Granted by you in /my/ our favour
Tk.. ( Taka..)
With reference to the above limit granted in favour of
.. For which I/we have this day executed Pro-Note and other necessary documents.
I/we hereby acknowledge your right to cancel the facility at any time with or without intimation
to us.
In the event of facility being cancelled by you . I/we undertake to pay you all dues together with
all other charges due from me/ us immediately on demand.
Yours faithfully
..

( signatures of all borrowers)

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Letter of Continuity
National Credit & Commerce Bank Limited
. Branch
--------------------------------

Special
Adhesive
Stamp

Dear Sir,
I/we encose herewith a Demand Promissory Note for Taka
(Taka..) only signed by me/us which given to you as
security for the payment of nay loan/ cash credit which is present
outstanding /// ///////////////////// Tk. ////////////// that said Promissory Note not
withstanding the fact that by payment maid into the said loan/ cash credit account//////
may be at credit
Although the said loan/ CC WES/ LIM account in the name of --------------------------------------------------------------------------------- and will operated upon only the said
------------------------------------- all of us shall be liable jointly and severally as aforsaid.
Yours faithfull
Date -----08/04/15

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Letter of Hypothecation
NCC BANK LIMITED
HYPOTHECATION OF GOODS TO SECURE A DEMAND
CASH CREDIT/ OVERDRAFT /LOANACCOUNT
No.-----------------------Amount Tk...................................(Taka...............................................)
Margin........................%
Interest.......................%(........................) above the published rate of the

Bangladesh Bank

Minimum..................% (.......................)
"Name
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------NCC
Bank Limited (hereinafter called "the Bank ") having at the request
of------------------------------------------------------------------------------------------------------------------------------------------------------------ (hereinafter called "the Borrowers") opened or agreed to
open in books of the of the Bank at a Cash Credit ..........................................
Security : ------- godowns at------------------------"
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Letter of Lien

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Q& A
Thank You all

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