Star Law analysis
The Artha Rin Adalat Ain/2003: A review
Syed Jahed Monsur
In our legal system, money lent by financial institutions/banks to individuals, private limited companies, public limited companies, corporations, partnership firms, societies, co-operatives, proprietorship firms etc. when due for default, is realised through money suits, suits for foreclosure, mortgage by instituting the same to competent civil courts. The civil courts were burdened with other businesses and such suits of banks consumed time for disposing of. The delay caused made the bank sector suffer for non-realisation of dues in time and the bankers gathered bitter experience in realising the same. To remove this difficulty, the government enacted a special piece of legislation named "The Artha Rin Adalat Ain, 1990" which had gone under some changes by way of amendments since its inception. The law brought changes to a great extent in the administration of justice delivery system for regulating those suits but it failed to fulfil the expectation of the legislators/bankers to recover the dues expeditiously from the defaulters. The thinkers on the subject gave second thoughts to frame a new law and ultimately the legislature passed "The Artha Rin Adalat Ain, 2003" (hereinafter Adalat) by repealing the earlier one.
The law came into force on 1st May 2003 except sections 46/47 which came into operation on 1st May 2004. Within a short span of time, the law has gone under an amendment by the Artha Rin Adalat (Amendment) Ain, 2004 which reflects weak draft of the law. The law begins with a preamble which speaks of the purpose of the law. The purpose of the law as it is visualised from the preamble is that the existing laws relating to recovery of loans of financial institutions/banks are needed to be amended and consolidated. The contents of the laws have been divided into six chapters having 60 sections. Chapter-1 deals with preliminary (sections 1-3); Chapter-2 deals with establishment of Adalat (section-4); Chapter-3 deals with power and jurisdiction of Adalat (section-5); Chapter-4 deals with institution of suit, practice and procedure of Adalat (sections 6-20), Chapter-5 deals with alternative dispute resolution (sections 21-25); Chapter-6 deals with execution (sections 26-39); Chapter 7 deals with appeal & Revision (sections 40-44) Chapter 8 deals with miscellaneous (sections 45-60).
I have been working as a Judge of the Adalat for more than two years. I have taken no pain to apply the laws during my business hours but at the same time I have seen that some provisions of the laws are acting as barriers in discharging my responsibilities. I shall make an endeavour to focus on those and other allied subjects in this writing.
In Chapter-1, under section 1 (2), the law has extended to the whole Bangladesh. It does not exclude the hill districts viz. Rangamati, Bandorban and Khagrachhari where the justice systems of the land are not applicable. No Adalat has been established in pursuance of section 4 of the law vide gazette notification dated 15-4-04 in the hill districts. Therefore, the hill districts should be excluded from applicability of the law in clear terms like family Court Ordinance 1985. The law has defined 'loan' under section 2 (ga) wherein compensation as claimed by Islamic banks has not been included. The Islamic banks have been claiming compensation along with profit. Under the law of the land, compensation can be claimed as a remedial measure of breach of contract. The laws should incorporate an explanation to this aspect. Section 3 has an overriding effect over other laws. In spite of that a practical problem has arisen with the Bankruptcy Court when it calls for records under section 33 of the Bankruptcy Act 1997. This inconsistency should be removed by incorporating appropriate provision in the laws.
In Chapter 2, the law has created and established the Adalat and made provisions for appointment of Judges thereto from amongst the Joint District Judges but it unnecessarily enacted section 4 (4) of the law wherein it is made provision that the Adalat shall be declared after abolishing or suspending the jurisdiction of the Court of Joint District Judges which is not recognised by the Civil Courts Act 1887. Section 6 (2) of the Civil Courts Act has authorised the Joint District Judges to perform such additional duties as devolved upon such courts. Instance may be cited from Environment Court Act, 2000 wherein Judges from amongst Joint District Judges have been appointed to the Environmental Courts. There is no such legal provision in the Environment Court Act, 2000 like the present one. Therefore section 4 (4) and section 4 (10) should be omitted, and the provisions if so omitted, there would be no practical difficulty to appoint the Joint District Judges to the Adalat like the Environmental Courts.
In Chapter 3, the law has conferred an exclusive jurisdiction upon the Adalat to try the Artha Rin Suits as registered under section 5 (8) of the law. It cannot try any Civil and Criminal cases. This embargo may reduce the ability of the Judges in conducting others suits/ appeals/sessions cases in near future. The district Judges should be given authority to retransfer the judges of the Adalat with the Joint District Judges under his control from time to time. Section 5 (5) has curtailed the jurisdiction of the Adalat up to Tk. 5.00 lac for the claim advanced by the Bangladesh Agriculture Bank, Rajshahi Agriculture Development Bank and state owned Banks without any explanation. The Adalat cannot also entertain any claim against the government.
In Chapter-4, the law describes the practice and procedure of the Adalat. Section 6 (3) of the law has enacted a provision for payment of court fees with the written statement. Generally no court fee is payable with the written statement but when a written statement sets up a counter claim or sets off, one must pay court fees with such written statement under Article 1 of the first schedule of the Court Fees Act 1870. Section 18 of the law prohibits any counter claim and set-off in the written statement. Therefore, provision for payment of court fees with the written statement is a redundant one. It is stipulated under Section 6(5) that in executing a decree, it must at first be applied against the property of the borrower defendant (principal judgment debtor) and then against the property of the third party mortgegor or guarantor. The inherent meaning of such language is clear and one can easily understand that the principle can be applied when the decree contains the property of both the borrower and the third party mortgegor or guarantor. But in practice, the situation is different. The decree in which only the property of the third party mortgegor is liable for debt, the mortgegor creates obstructiontaking advantage of the provisionand when unsuccessful, the mortgegor intends to go to the High Court Division under writ jurisdiction. An explanation should be added to remove the doubt from the section.
Section 19 has provided provisions for setting aside the ex parte decree but it does not make any provision for notifying the plaintiff bank like Order 9 Rule 13 of the Code of Civil Procedure 1908. As a result, the plaintiff remains ignorant about restoration of the suit. This anomaly should be removed by inserting appropriate provision. Section 20 of the law has given finality to the order, judgment and decree of the Adalat. In spite of that the defaulter(s)/borrower(s) is/are challenging the same in the writ jurisdiction of the High Court Division under Article 102 of the Constitution of the People's Republic of Bangladesh and obtaining stay orders from the High Court Division.
In a recent discussion on “Money Loan Court Act 2003” organised by the Association of Bankers, Bangladesh (ABB), the Governor of Bangladesh Bank asked the banks to take special measures to recover bad loans as the defaulters filed 1,768 writ petitions in the High Court for such loans amounting to Tk 6445 crore. He told that the banks cannot recover the loans due to stay orders from the court, and asked the monitoring cells of banks to take up these issues seriously and hire efficient lawyers to move the cases of loan default (The Daily Star dated June 2, 2006). It is observed from regular business of court that the banks have been refraining from taking any step against the stay orders in writ petitions. It is seen that the banks let them (the defaulters) do the same with consent. This attitude of the bank should be changed and effective steps should be taken to face the legal battle with the defaulters.
Chapter 5 has enacted provisions for settling the dispute through Settlement Conference or Mediation (Sections 21/22). This system has been introduced with the aim to resolve the dispute at the early stage of the suit so that both the parties may win the suit irrespective of their claims. The financial institutions/banks are not tolerant to bring a positive result at this level. They rather prefer to obtain a decree to create pressure upon the judgment debtor(s) through execution of proceedings and on pending hearing of the proceeding they sometimes compromise the dispute by rescheduling the loan illegally [because reschedule of payment is permissible prior to suit(s) and in accordance with sections 38/46 of the law allowing more instalments and time not approved under Section 49 of the law]. Apart from sections 21/22, any compromise under section 38/46 should be subjected under Section 49 of the law. On the contrary, the borrower(s) taking the advantage of this stage hold the suit(s) for the time given for and take a transfer of the suit to another Adalat. As a result, they drag the hearing of the suit(s). To change both sides' attitude the plaintiff banks and the defendant borrower(s) should state their position in their pleadings for acceptability or non-acceptability of Settlement Conference or Mediation and if any one reluctant to accept the process, shall lead the suit to the next stage. Provisions like this should be introduced in the relevant sections of the law.
In Chapter 6 of the law the financial institution(s)/bank(s) have given authority to receive certificate on the mortgaged property under Section 33(5) and 33(7) when the property remains unsold in auction under sections 33(1) and 33(4) of the law. After obtaining certificate a question arises as to how bank(s) would deal with the property when they are out of possession of the same. No prescription is given in the law as it prescribed in Section 12 of the law. Thus relevant provisions should be incorporated in this regard.
Chapter 7 has enacted provisions for appeal and revision but it is silent about review under Section 114 and Order 47 of the Code of Civil Procedure 1908. The defaulter(s) taking the provision of Section 26 of the law has/have been applying for review of orders, judgements and decrees of the Adalat but the decision published in BLD 14(1994) page 195 prohibits a review in Artha Rin Suits. So a clear and specific provision should be framed banning review in the law.
In Chapter 8, under Section 46, the law has framed a time limit for institution of suit and provided consequence for non-filing the suit within the given time to take disciplinary action against the officer of the bank(s) responsible for such non-filing. It does not make any provision for dismissal of suit or rejection of plaint. In most of the cases, the defaulters agitate the ground and when unsuccessful, go to the writ jurisdiction. This is the lamentable state of the law for the borrower(s) in which the purpose of the law of limitation has not been reflected in true sense. The provision may be amended in the spirit of the law of limitation.
Apart from the aforementioned barriers, the law has been playing a very vital role in realising the loan from the defaulter(s). Its achievement in loan recovery has been so immense that the scenario of defaulting loan has improved significantly with number of pending Artha Rin Suits reducing with expectancy rate. The loan defaulting culture would further be reduced if the barriers can be removed as soon as possible.
The writer is Judge, Artha Rin Adalat No. 4, Dhaka.