The High Court (HC) delivered a verdict on Wednesday that no bank or financial institution (FI) can file cheque-dishonour case against any person for defaulted loan.
A bank or FI can file a case in the Artha Rin Adalat only in the manner described in the Artha Rin Adalat Act 2003 for recovery of loan.
Besides, proceedings of all the check dishonour cases - filed by banks or FIs - currently pending in the courts across the country would be stayed, the court also ruled.
The HC also directed the Bangladesh Bank to issue a guideline for keeping insurance coverage against all kinds of loans - granted by banks and FIs.
The HC bench of Justice Md Ashraful Kamal delivered the verdict after hearing an appeal petition - filed over a cheque dishonour case of BRAC Bank Ltd.
Lawyers Abdullah Al Baki, Wahida Afroze Chowdhury and Md Asaduzzaman appeared in the court hearing on behalf of the appeal petitioner, while lawyer Syfuzzaman represented the bank.
According to the case documents, Mohammad Ali, a businessman from Nabinagar upazila under Brahmanbaria district, took a loan of Tk 0.4 million from BRAC Bank's Nabinagar branch in 2011.
He paid Tk 0.319 million in 22 installments of the total 36 installments. However, he was unable to repay the remaining loan later when his business conditions deteriorated. Then he gave a cheque of Tk 0.295 million to the bank against the due, but it was bounced.
In this circumstance, BRAC Bank filed a case in 2015 with a magistrate court in Brahmanbaria for recovery of the remaining loan. Following filing of the case, the judge of the Additional District and Sessions Judge's Court in Brahmanbaria handed down a sentence of six-month prison to Mohammad Ali and fined him Tk 0.295 million.
Mohammad Ali later filed an appeal petition against the lower court verdict. The HC admitted the appeal on October 8, 2018 and after the hearing, it delivered the verdict on Wednesday (November 23, 2022).
BRAC Bank's lawyer Syfuzzaman said, "Now our outstanding due from the loan receiver is Tk 0.972 million. We will appeal against the judgment."
The HC asked the government bodies concerned to return the money to Mohammad Ali, which he deposited during filing the appeal.
The court said, "The check that the bank takes against loan is a security, not a negotiable instrument. A check dishonour case cannot be filed against the check taken as security. Taking blank check against loan is illegal. The banks and FIs have been doing this illegal activity for a long time."
The court said a loan from a bank or FI is taken through an agreement. Some corrupt and unscrupulous officers of the bank misuse checks for their own interest to implement their hidden agendas, it has been observed.
The HC asked the lower court concerned across the country to summarily reject the cheque dishonour cases - filed by banks and FIs. It also asked the courts to send the parties concerned to the Artha Rin Adalat directly.
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