In a significant development for Bangladesh’s real estate and corporate law landscape, the Appellate Division of the Supreme Court has upheld a decision of the High Court Division directing the winding up of a real estate developer company marking a rare and notable instance where such relief has been granted at the initiative of a landowner.
The dispute originated from a development agreement executed in 2002, under which a landowning family entrusted their property in Dhaka to a developer for the construction of a multi-storied building. Despite laying the initial foundation, the developer failed to carry forward the project and ultimately ceased operations, leaving the structure incomplete and the project abandoned.
Over time, the company became effectively inactive, with no meaningful business activity, while liabilities remained unpaid. The landowners were compelled to bear the financial burden, including settlement of outstanding utility dues and taking steps to secure the property.
Following the death of the original landowner in 2020 who was a recognised language warrior of Bangladesh the proceedings were pursued by his son, a medical professional based in the United States, who continued the legal battle on behalf of the family.
In 2018, the High Court Division, in Company Matter No. 33 of 2016, ordered the winding up of the developer company under the Companies Act, 1994, upon being satisfied that the company had become non-operational and had failed to perform its contractual obligations. The Appellate Division has now affirmed that order, bringing finality to the matter.
Significance of the Judgment
Traditionally, winding up proceedings under the Companies Act, 1994 are initiated by creditors, shareholders, or the company itself. Instances where an external party, such as a landowner in a development arrangement, successfully seeks the winding up of a developer company have been largely absent in reported jurisprudence.
This judgment therefore represents a notable expansion in the practical application of winding up jurisdiction. It recognises that where a developer company has ceased operations, abandoned its contractual obligations, and continues to exist only in form, affected landowners may, in appropriate circumstances, seek its winding up to prevent further injustice.
The decision is expected to have broader implications for Bangladesh’s real estate sector, particularly in addressing long-standing issues of stalled or abandoned development projects. It signals increased judicial willingness to intervene where corporate entities have become dormant or non-functional, and where continuation of such entities serves no legitimate commercial purpose.
The Petitioner was represented by Mahbub & Company, led by Barrister A.M. Mahbub Uddin Khokon, Senior Advocate and President of the Supreme Court Bar Association, along with Barrister Saqeb Mahbub, Advocate, Supreme Court of Bangladesh, and Barrister Rifat Rahman, Advocate, Supreme Court of Bangladesh.
