The Artha Rin Adalat Ain, 2003 (Money Loan Court Act, 2003) is the primary legal instrument dealing with bank and non-bank financial institutions’ (NBFI) loan defaulters, which prescribes mechanisms for the banks and financial institutions (FIs) to get reimbursed. The Act provides for the establishment of a separate court for dealing with money loan cases, which can only be filed by a bank or an NBFI. The Act obliges the banks and NBFIs to auction the mortgaged property before approaching the Money Loan Court and empowers the Court to give ex parte decrees (by hearing only one party) provided that summons have been duly served. The whole legislation carries the spirit of resolving loan default matters as quickly as possible since the objective of this law is to ensure fast repayment.
Even though the legislation was made to benefit banks and NBFIs, the trend is to use this legislation to delay the reimbursement process. It is now a usual practice for defaulters to not show up during the trial and let the Court pass ex parte decrees by only hearing the plaintiffs, followed up with writ petitions to the High Court Division (HCD) of the Supreme Court of Bangladesh seeking a stay order. Rarely is the intention of the defaulters to get the ex parte decrees thrown out; instead, they seek to delay the process for as long as possible, which allows the defaulters more time to do business with the credited amount and pressurise the banks to decrease the interest rate. This is one of the many ways to delay the repayment process. Because of this, many are advocating to amend the Act.
Although I agree that the legislation is far from perfect, I do not think amending the law is the only available way of redress in this situation. We live in a common law system where the judgments of the Judges of the Supreme Court are binding. One attractive characteristic of the common law system is the adaptability it offers. The legislative process is rigorous and in Bangladesh, they are enacted by a unicameral body. The lack of adaptability of legislations is compensated by the decision making power of the judiciary. The Judges have the power to develop the legal system. Noting the propensity of filing writs against the special provisions of the Artha Rin Adalat Ain, 2003, the Supreme Court, from time to time has given judgments to limit the scope of misusing the legal technicalities regarding loan repayment methods. If they are followed stringently, amending the law will become unnecessary.
For example, defaulters tend to include the government as the primary respondent just to invoke the writ jurisdiction of the HCD granted in Article 102 of the Constitution, such as in Mamun-ur-Rashid (Md) v Secretary, Ministry of Law and others (2013), where the petitioner filed a writ petition challenging the auction proceeding initiated by the bank under Section 12 of the Act when the petitioner defaulted his loan. In this case the HCD found that the government was made a party to the petition just as a cunning device to attract the writ jurisdiction, and held, ‘‘[w]rit petition is not maintainable against the private bank and if in such a case to attract the jurisdiction under Article 102 a device is taken by impleading the government a party that would be only a futile exercise.” [para. 6] Upholding this precedent set by the Court will automatically bar unwarranted writs, put a stop to the floodgate of writs filed with the same intention, and save a lot of precious time.
Instead of filing an application to set aside an ex parte decree or lodge an appeal, the defaulters often file writ petitions, looking for a stay order to buy some time. To block this, the Appellate Division of the Supreme Court held in Gazi M Towfic v Agrani Bank and others (2002), “[s]ince specific provision for appeal has been made against the judgement and decree passed by the Artha Rin Adalat no application under Article 102 lies against such judgment and decree.” To block any writ petition against the auction proceeding provided for in the Act the Appellate Division held in Banesa Bibi v Senior Vice President (2011) that “In case of an auction held illegally or with irregularity, the same cannot be challenged.”
So it is clear that many Judges of the Supreme Court have been aware of the misuse of the Artha Rin Adalat Ain armed with the writ jurisdiction and have developed jurisprudence to combat this misuse. If these precedents are followed properly and the writs filed with mala fide intentions are discharged quickly, this trend of embezzlement can be somewhat restrained. The lawyers have a big role to play here as they suggest these mechanisms to the defaulters fully knowing that the writ will ultimately be discharged.
The author is a Research Associate, Sattar & Co.