The Appellate Division of the Supreme Court of Bangladesh considered whether BRAC, a charitable society registered under the Societies Registration Act, 1860, could lawfully sponsor and own shares in BRAC Bank Limited. The litigation began as a public interest writ petition filed by Professor Mozaffar Ahmed, who challenged Bangladesh Bank's "no objection" certificate permitting the incorporation of BRAC Bank, as well as the bank's incorporation itself. He argued that BRAC's charitable status did not authorize it to establish or control a commercial bank, that such investment was ultra vires the Societies Registration Act, and that allowing a charitable society to operate a banking enterprise would undermine the country's legal and financial framework.
Dr. Kamal Hossain, appearing as Senior Advocate for BRAC, played a central role in the appeal. He argued that the writ petition was not maintainable as a public interest litigation because the petitioner had failed to demonstrate any infringement of a fundamental right or any injury to a vulnerable or disadvantaged class. Dr. Hossain further contended that neither the Societies Registration Act nor any other law prohibited a registered charitable society from investing its surplus funds in a commercial enterprise, provided that the resulting profits were devoted to charitable purposes. He emphasized that BRAC's Memorandum of Association expressly empowered it to invest its funds, that the High Court had incorrectly treated BRAC as though it were a trust governed by the Trusts Act, and that there was no legal basis for lifting the corporate veil of BRAC Bank or questioning its valid incorporation.
The Appellate Division accepted these submissions. It first held that Professor Mozaffar Ahmed lacked the necessary locus standi to maintain the writ petition as a public interest litigation. The Court found that the petition was essentially aimed at protecting the interests of prospective bank promoters rather than vindicating the rights of disadvantaged persons or the public at large, and therefore did not satisfy the principles governing public interest litigation established in Dr. Mohiuddin Farooque v Bangladesh.
On the merits, the Court held that the High Court had fundamentally erred by applying principles of the Trusts Act to BRAC. It ruled that a society registered under the Societies Registration Act is governed by its own Memorandum of Association, not by the Trusts Act, and that BRAC's Memorandum expressly authorized it to invest surplus funds. The Court reasoned that a charitable organization does not lose its charitable character merely because it engages in income-generating investments; earning profits as a means of financing charitable activities is legally distinct from carrying on business for private profit. It further observed that preventing NGOs from making productive investments would leave them perpetually dependent on donations, contrary to government policy encouraging financial self-reliance.
Accordingly, the Appellate Division allowed the appeals, overturned the High Court's judgment, and upheld the legality of BRAC's sponsorship and investment in BRAC Bank. The decision remains an important authority on the powers of charitable societies under the Societies Registration Act, the distinction between societies and trusts, and the limits of public interest litigation challenging commercial decisions involving non-governmental organizations.
Footnotes
BRAC v Professor Mozaffar Ahmed and Others 54 DLR (2002) 36