A Borrower's Dilemma
There is a Latin dictum—interest reipublicae ut sit finis litium—meaning, there must be a ceiling on the time frame within which all litigations should end. This was written, as many others, for the same cause: to ensure equity and justice and to ensure that it is done within a reasonable time. In our country, however, this is hardly the case. In fact, a good lawyer would advise one not to go for litigation if an alternate remedy like ADR or mediation is available which would be more efficacious.
This is the true story of a young, educated businessman, Mr Mubarak (not his real name), who wanted to start a CNG Filling Station business. In 2008, Mr Mubarak got the nod from the Gas company and he paid the required fees for it. For this particular kind of business, he needed the official approval of various other authorities like the Department of Environment, Fire Department, Roads and Highways, NOC from the local government authority, and the Deputy Commissioner and other authorities. In addition to this, he had to obtain loan from a bank by mortgaging valuable property to import the required machinery and also for the working capital. He opened a letter of credit and imported the machinery. Now, he thought, the business would finally take off. But as luck would have it, Mr Mubarak managed to obtain almost everything except the gas connection.
There was a government circular issued after he had taken all the above steps, which basically said that no new gas connection would be given to anyone. It was a huge blow to his business plans and Mr Mubarak was in shock, to say the least.
In the meantime, he found that some of the others in his shoes were going to the High Court for a solution. So, he too joined the club and filed a writ petition, and a few years later, in 2017, the Court granted his prayer. He won in the High Court and thought he would get the gas connection now and start his business. But the Gas company filed an appeal against the High Court verdict and, although there was no order of stay, refused to give gas connection. Mr Mubarak contested the matter and won the battle in the Supreme Court in 2018. But this was not the end of the matter. The Gas company, knowing full well that there was no merit to it, filed a Review Petition and prolonged the matter further. Towards the end of 2018, the Gas company finally gave up and now it seemed that Mr Mubarak could start his business that was supposed to start ten years ago.
In the meantime, the bank had initiated a case against Mr Mubarak who couldn't pay the bank dues on time. He couldn't pay obviously because he couldn't start his business. The bank was notified of the peculiar predicament in which he was, that he couldn't start up the business due to a government policy decision, that he duly complied with all legal formalities, that he was not at fault in any way. But it fell into deaf ears and the bank continues with its case and now Mr Mubarak is not only unable to start his long-cherished business, but is on the verge of losing all his mortgaged property.
To make things worse, the bank, by a letter, tried to illegally and unilaterally include the only apartment in which Mr Mubarak lives into the mortgage arrangement. This was illegal and totally against the banking practices and norms of the land. This forced Mr Mubarak to go to the Court once again. And again, the same story was repeated. The bank lost the writ in the High Court and then filed an appeal before the Appellate Division. Recently, the bank's appeal was also rightly dismissed. But the future of the CNG Filling Station business seems to be bleak with the pending case filed by the bank, where the interest is growing exponentially every day.
How many such cases will it take for us to realise the pitfalls of the legal process for borrowers? Why are Courts entertaining such cases? Why is it always assumed that a borrower who can't pay his dues to a bank is solely responsible for the failure? More regrettably, why are we not even hearing the case of the borrowers?
In the case filed by the bank against Mr Mubarak, the bank has made a huge claim charging a high rate of interest, and the unfortunate situation that led to Mr Mubarak's particular predicament (decision not to give gas) is not being taken into account by the Courts. The Artha Rin suit is still pending and without a starting-up flow of cash, Mr Mubarak is not getting the gas connection yet. Several attempts to settle the dispute have failed and the bank is not budging from its position to continue with the case and sell the property in auction.
I think legal reforms have to take place in this field. Our parliament has introduced Alternate Dispute Resolution, Mediation and Arbitration by incorporating them in our Civil Procedure Code and other laws like the Arbitration Act. But in reality, even arbitration does not always produce the intended result, and because of certain draconian laws, borrowers are not exactly encouraged to take loans and go for business.
Barrister Rehan Husain is a practicing lawyer at the Supreme Court of Bangladesh.