The loan recovery process

The Artha Rin Adalat Ain 2003 was enacted by the legislature of Bangladesh to address loan recovery process by financial institutions/banks. In our country, defaulter borrowers often challenge the Act of 2003 invoking writ jurisdiction through applying to the High Court Division (HCD) under Article 102 of the Constitution of Bangladesh. They stress on the issue that the Act of 2003 does not put financial institutions/banks and borrowers on equal footing.

Article 26 of the Constitution provides that any law inconsistent with the provision of Part III of the Constitution, which provides the list of fundamental rights, becomes void to the extent of inconsistency. Further it also imposes an obligation upon the state to not make any law inconsistent with any provision of Part III of the Constitution.

The defaulter borrowers often refer to two Articles, namely Article 27 and Article 31 to challenge the Act of 2003 in the HCD of Bangladesh under Article 102 of the Constitution. Article 44(1) of the Constitution, which itself is a fundamental right of a citizen, provides the right to a citizen to move the HCD in accordance with Article 102(1), for the enforcement of the rights conferred by Part III of the Constitution.  Therefore, if the fundamental rights of a citizen guaranteed under Articles 27 and 31 of the Constitution are breached then a citizen has the right to go to the HCD for enforcing these fundamental rights.  

Article 102 of the Constitution empowers the HCD to give directions or orders to any person or authority, including any person performing any function in connection with the affairs of the Republic, as may be appropriate, for the enforcement of any of the fundamental rights conferred by Part III of this Constitution, if satisfied that no other equally efficacious remedy is provided by law. 

Therefore, these constitutional provisions provide a floor to the defaulter borrowers to step forward in the process of challenging the Act of 2003.

However, the Act of 2003 ensures alternative efficacious remedy to the aggrieved borrowers as Section 19 of the Act of 2003 grants a right to a defaulter borrower to apply for setting aside an ex parte decree and Section 41 of the Act provides the special provisions relating to the filing of appeal and settlement by the defaulter borrower. Furthermore, the law recognizes that all persons are not alike and nothing can be a greater inequality than to treat an unequal as equal. This position has been upheld by the Appellate Division in the case of SA Sabur v Returning Officer (1989) 41 DLR (AD) 30.

Moreover, it has been observed by our judiciary that effective alternative remedy is a ground for refusing the exercise of this prerogative jurisdiction under Article 102 of the Constitution by the HCD.  Hence the Act of 2003 cannot be challenged in this way.

Further a writ jurisdiction can only be invoked when an authority acts without jurisdiction or to correct any error of law. In such a case, the defaulter borrowers usually fail to show that the financial institutions/banks acted without jurisdiction or that it had made an error of law. 

Defaulter borrowers resort to this remedy to restrain banks/financial institutions from proceeding with the execution case, to ultimately suffer loss and damage. This delaying tactic adopted by the defaulter borrowers misleads a court and has never been appreciated by our judiciary. Hence this kind of ill-motivated act is not expected from any citizen and should not be encouraged in any circumstance.

The writer is a Barrister-at-Law, Supreme Court of Bangladesh.