Artha Rin Adalat: Some facts, figures and reality
The Money Loan Court (popularly known as Artha Rin Adalat) was set up in 2003 to boost up the resolution of disputes between banks and their clients over loan repayment but now it was found as overburdened. This court is failing to meet the very objectives behind their formation, to a large extent.
According to the recently disclosed Bangladesh Bank (BB) data, a total of 62,204 cases were awaiting disposal in the money loan courts across the country until June 2019 against a sum of Tk 1176.14 billion is stuck up with these cases as a non-performing loan (NPL).
It also mentioned that a total of 165 cases are awaiting disposal by the Bankruptcy Courts which involved in those cases is Tk 5.21 billion. A total of 157088 cases are pending in Certificates Courts, involving a sum of Tk 5.33 billion. A total of 35514 cases are now pending in other courts of the country involving funds worth Tk 420.54 billion. Besides, a total of 9363 cases have been referred to the alternative dispute resolution (ADR) system that involved in these cases is Tk 55.76 billion.
But these figures mismatch maintained by the Supreme Court (SC) data that mentioned until June 2019, at least 21,849 cases were awaiting disposal in the money loan courts across the country and out of those cases, 1592 have remained pending for over five years.
The fact is that a large number of cases have remained pending for many years, mainly due to the weakness of the existing laws, lack of required number of judges, courtrooms and complexities in case management. Banks and financial institutions are failing to get out of this vicious cycle. The size of the NPL stuck up in these cases is also huge and increased tremendously. In most of the cases, money loan courts are failing to complete trial within the stipulated time (maximum 120 working days) mandated by the money loan court act of 2003.
It is also true that many high profile borrowers have filed writ petitions with the High Court against money loan court verdicts. In most cases, the writ petitioners get stay order in favour of them. That is why banks and other financial institutions are not being able to recover their money from the borrowers. And, at the same time, the borrowers legally couldn't be identified as loan defaulters.
The top bankers see these writ petitions as the biggest obstacle to recovering the defaulted loans.
The above disclosed report that is really a praiseworthy effort by BB to catch up the attention of concerns parties both bankers, lawyers and defaulter clients. Here I would like to share my some practical points of Artha Rin Suit view while dealing with some suits in my banking experience.
First, as most of the bankers are come from various disciplines, the relevant bank officials have a serious lack of sufficient knowledge regarding dealing of Artha Rin suit and kills some time in the very beginning stage of the suit. In the same way, some lawyers initially shows their very interest to deal the suit positively but lack of knowledge shows while preparing draft and conducting the suit in the respective court. In this case, experience officials as well as lawyer are the pillar of success in case of Artha Rin suit.
Second, most of the banks arrange any training course neither for the respective officials nor relevant lawyers to train up the technical points and time frame of the laws. As a result, finally fruitful results don't come out from the suit and banks feel serious discomfort in some cases while defeated with the clients in the court final judgement.
Third, due to the lack of sufficient knowledge, both the bank officials and lawyers don't follow the specific time frame of final notice, legal notice, auction notice, attaching required documents with suit draft and finally the suit faces serious faults in the final arguments by the opponent client's lawyer.
Forth, due to these faults in the suit draft, the opponent client's lawyer has a better chance to file a writ petition in the High Court challenging Artha Rin Suit.
Fifth, bank officials have a negative attitude to vacate the High Court writ petition considering either own lack of sufficient knowledge or high fees of the higher court panel lawyers.
Sixth, it has an allegation that some lawyers and bank officials are dishonest while conducting the suit and they are used to take kickback in connaivance with the clients to linger the suits and recover the bank dues.
Seventh, bidders have a negative attitude to the bank mortgages property while the banks call auction in the newspaper as they have a general perception that it is a difficult job to purchase land from bank rather than directly purchase from the clients and most of the cases, no bidders drop any bid while bank publishes the auction notice repeatedly in the newspaper to sell out the mortgage property. Then banks are bound to go to the court for recovery of bank's dues and it kills huge time to recover the bank dues.
Eighth, the Artha Rin law has mentioned the specific time frame for conducting and dismissed the suit in time and have some scopes to extend the time frame considering the prevailing situation but the problems is that the judge who conducts the suit, when s/he goes to long time vacation either maternity leave or serious illness, then the court adjourned for long time. The incharge judge usually reluctants to hear the case and lingering for final dismissal of the suit. As a result, the suit kills long time to recover the bank's dues.
Nineth, some inexperienced lawyers have a tendency to linger the suit for more professional fees as repeated presence in the court earns him more remuneration. Ultimately it increases the cost of the suit and burden of the clients.
Tenth, bank has the chance to obtain the ownership of the mortgage properties through court judgement but the problems is that in some areas of country, physical value of the land is less than the government mouza value, as a result, bank legally can't sell out the mortgage property after final ownership in the bank's name.
Eleventh, the rate of disposal of cases by the money loan courts is comparatively low. So, the banks and financial institutions concerned need to be more serious in recovering their non-performing loans. They have to appoint efficient lawyers and monitor the cases regularly."
But if the government is genuinely eager to reduce the amount of defaulted loans in the interest of the economy, then some initiatives have to be taken on urgent basis. Capacity of the courts needs to be improved and it is needed more money loan courts and judges. Lengthy process of trial system should be stopped. The main way to reduce the amount of the bad loans is expeditious disposal of cases pending with the money loan courts.
The wilful loan defaulters should be handed down tough punishment through required amendment of the concerned flaws of laws as they have tainted the image of the business community in home and abroad and affected the banking sector as a loophole.
The writer is banker