Part- 1
The banking sector of Bangladesh plays a critical role in the country's economic development. Over the years, significant legal reforms have been introduced to strengthen regulatory frameworks, improve financial stability and promote inclusive banking. Despite these improvements, several challenges persist that could impact the sector's future prospects.
Several laws in Bangladesh protect banks in legal proceedings. Key among these are the Bank Company Act, 1991, and the Bangladesh Bank Order, 1972. Additionally, the Negotiable Instruments Act, 1881, Artha Rin Adalat Ain, 2003 and the Bankers' Book Evidence Act, 1891, provide further legal support.
The Artha Rin Adalat in Bangladesh is a special court established under the Artha Rin Adalat Ain, 2003 to deal specifically with the recovery of defaulted loans by banks and financial institutions.
In Bangladesh, the jurisdiction of the Artha Rin Adalat depends on the amount of the loan dispute. If the disputed amount is up to 50 lakh Taka, the case is handled by the District Judge's Court. For disputes involving more than 50 lakh Taka, the case falls under the jurisdiction of the High Court Division. Furthermore, financial institutions are not required to deposit any money or provide security when appealing a judgment or order issued by the Artha Rin Adalat. The case must be filed in the district where the bank or financial institution has a branch, the borrower lives or does business, or the mortgaged property is located.
The Artha Rin Adalat holds comprehensive powers to adjudicate loan-related disputes under the Artha Rin Ain, subject to the procedural framework of the Code of Civil Procedure, 1908. It possesses the authority to summon parties, examine witnesses, and try civil suits. The court can issue orders for the attachment of both movable and immovable properties of the defendant, including preliminary attachments before judgment to secure the claim. It is empowered to pass both preliminary decrees-declaring the defendant's liability-and final decrees-permitting the creditor to auction mortgaged or attached properties for recovery of dues. The court also has execution powers, enabling it to carry out its own decrees and authorize auction sales. Moreover, it can allow banks or appointed persons to take possession of and sell mortgaged properties. For any non-compliance, submission of false affidavits, or contempt of court, the Adalat may impose penalties.
Appeals against its decisions can be made to the High Court Division of the Supreme Court, although no appeal lies against interlocutory orders unless they result in a final judgment. Lastly, cases must be filed within the period set by the Limitation Act, 1908-generally three years for loan recovery suits unless otherwise extended.
As per Section 12 of the Artha Rin Adalat Ain, before filing a loan recovery suit, the creditor (bank or financial institution) is required to serve a notice to the debtor, providing a minimum of 15 days for repayment of the outstanding dues. This notice serves as a final opportunity for the debtor to settle the loan outside court. If the debtor fails to repay within the given time, the creditor must obtain a certificate of non-repayment and attach it with the plaint at the time of filing the case. This certificate acts as proof that the debtor did not comply with the repayment notice, thereby justifying the legal action.
Under the Artha Rin Adalat Ain, 2003, the court holds the authority to encourage and facilitate the resolution of disputes through Alternative Dispute Resolution (ADR) mechanisms before proceeding with the full trial. This approach is designed to ensure faster, less costly, and mutually agreeable settlements between financial institutions (such as banks) and borrowers.
Under Section 4 of the Artha Rin Adalat Ain, 2003, the Artha Rin Adalat (Money Loan Court) holds exclusive jurisdiction to try and adjudicate cases that involve the recovery of loans provided by banks and financial institutions. This special court is empowered to hear matters related to both secured loans (backed by collateral or mortgage) and unsecured loans (without collateral). No other civil or criminal court can entertain, try, or decide such loan recovery cases, ensuring a streamlined and specialized judicial process for financial institutions to recover defaulted loans efficiently. This exclusivity helps to reduce delays and backlog in ordinary civil courts and facilitates faster resolution of banking disputes.
(To be continued)
The writer is a Ph.D. Researcher and Corporate Lawyer, Supreme Court of Bangladesh
