Tanjib-ul Alam

There are ways for online shoppers to get back their money stuck with some e-commerce platforms under the existing laws. But they will have to abandon the hope of retrieving all of their funds, said a legal expert.

Tanjib-ul Alam, a noted lawyer on company laws, says if a victim files a wind up petition with the High Court, the company may be shut if it can't repay its debts.

"Seeking for winding up is appropriate because you know the company's debts are bigger than assets," he told The Daily Star in an interview.

Alam is regarded as one of the leading corporate law experts in Bangladesh. He has vast experience in dealing with cases related to banking, syndication, telecommunication, project financing, securitisation, and listing of public companies.

His interview came as thousands of customers in Bangladesh are facing deep uncertainty to receive the deliveries of products worth thousands of crores of taka as the concerned e-commerce firms are not in a position to make the deliveries or refund despite getting the payments in advance. 

Winding up is the legal process of dissolving a company. There are six grounds to file the application.

If the legal course is sought on the fifth and sixth grounds, the court can appoint a provisional liquidator or administrator to run the company. There could be a panel of provisional liquidators, according to Alam.

If a company is wound up, it ceases to do business as usual. Its sole purpose remains to sell the stock, pay off creditors, and distribute any remaining assets among partners or shareholders.

When the winding-up procedure starts, the court gets the responsibility of the company. Then, it has the right to appoint a provisional liquidator and can retain the management of the company.

Alternatively, the court can employ an administrator. The liquidator or administrator can start running the company.

Alam said the first responsibility of the administrator or liquidator would be to pinpoint the company's assets and liability. For that, they can appoint an auditor under the supervision of the court.

The auditor will trace the money, and if someone receives any funds from the company illegally, he can ask them to return it.

"None of the money belongs to the company. This is the money of the buyers. So, the liquidator can ask for the return of the funds," he added.

After recovering the money, the liquidator or administrator distributes it on a pro-rata basis among the victims. The pro-rata basis means assigning an amount to one person according to their share of the whole.

Suppose, Evaly has a liability of Tk 1,000 crore. After selling its assets and brand value, and recovering funds from various sources, the amount stands at Tk 500 crore. The money will be divided among the victims proportionately on the basis of their investment.

If the liquidator or administrator thinks that it would be better to continue running the company, it can decide to do so, Alam said.

"The brand value of a company can be sold, and the new owner can start anew and will not bear the current liability."

Alam says the victims of financial scams do not follow proper laws to ensure proper justice, and many in Bangladesh have misunderstood it.

"Whenever we raise the issue of recovering the money, it is discussed by denying facts."

"In most cases, the advice for recovering money sounds like assuring a baby who has just lost his father by saying: your papa is coming tomorrow. Now, take this lollipop."

He said if there was a serious fraud office, it could instantly try to recover the money from various sources.

The head of the Tanjib Alam and Associates, a law firm based in Dhaka, suggested tracing money outlined in the existing law.

"We never talk about tracing the money because if we pursue it, some big fishes might be found to be linked with the fraud."

According to the noted lawyer, there should not be any attempts to recover the money through criminal cases. Criminal cases can continue, but money has to be recovered through the winding up.

He stressed winning back the confidence of online shoppers.

"It's very important for the market to operate with people's trust because 80 per cent of the sustainability of the market economy depends on the trust of people."

If anything bad affects the reliability and integrity of the market, it is taken seriously in the West, and they remain concerned so that there is no systemic impact on the market.

"So, regulatory authorities should be more vigilant in preventing the elements that destroy trust and reliability in the market because the ripple effects of frauds don't remain confined to victims only. It has a widespread effect on the entire system," Alam said.

In Bangladesh, philosophical understanding about the impact of fraudulent incidents is absent.

"So, important things are left out in our policy framework."