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Striking features of Money Loan Court Act-2003
Md. Atiar Rahman Mollah

          IT is now known to all that the lion's part of stuck-up and classified loans is not being paid by only 20 big borrowers in 15 banks. This is, no doubt, alarming for the banking sector and also for the economy of the country as a whole. The big borrowers are, of course, elite citizens of the country and know fully well the impact of non-payment of loan not only on the liquidity of the banks and financial institutions but also on the good borrowers.
The Money Loan Court Act-1990 had been enacted with a view to recovering classified loans from the defaulted borrowers. But unfortunately the progress in recovery through Court cases under the Money Loan Court Act-1990 was found to be totally unsatisfactory. It was revealed that the cases remained unsettled for years together. A large number of suits were piled up in the Court since the Judges of the Court were to deal with several other cases. Besides, suits continued, because of delays in "service" return, resulting in procrastination of settlement of cases and increase in the amount of classified loans and advances.
However, to overcome the limitations and ineffectiveness of Money Loan Court Act-1990, the incumbent government passed/enacted a new law -- called "Money Loan Court Act-2003" by replacing the earlier Law. The new law came into force on May 01, 2003. Under it, the officials of financial institutions have been given some powers, responsibilities, and liabilities. A number of provisions in the new Law relating to recovery of loans are included and consolidated under this law in order to get effective and prompt results. Some of the provisions of this law are worth mentioned here.
Thus, a separate 'Money Loan Court' has been established and the Judge of the Court is to try exclusively the cases relating to recovery of loan. The Judge is not meant for trying any sort of other cases. Besides, the Court has been given enormous powers by including provisions like overriding effect and finality of the order. Specific time limit has been fixed for each level of action resulting in settlement of cases promptly.
Under section 6(2) & 4 of the Act, the financial institutions are to file suits along with an affidavit in support of the plaints and relevant documents and the suits may be contested by the defendants through written replies along with affidavits. Both sorts of affidavits are regarded as substantive evidences. As a result, the court can pass judgment promptly without examination of any witness.
Furthermore, the financial institutions under this Act have been empowered to take necessary actions for disposal of all types of securities as finality for adjustment of loan and file suit for the rest of the amount, if any. Such sale will create valid title of the buyer and will not be questioned/disputed in any manner.
Due to fixation of time limit for settlement of cases, the Court under this law has been empowered not to allow adjournment of hearing for several times. This is intended to arrest the intention of making delays by the defendants.
The provision of the new Act stipulate that the borrower in his written reply shall not include set-offs or counter-claims and the Court will not allow analogous hearing.
Under this Act, the time limit for execution of suit has been reduced to a greater extent and, as such, the suit can be settled without much delay, unlike the cases earlier.
Besides, the officials of financial institutions have been made responsible and liable under this law for not filing suits in time and limitations have been imposed for claiming not more than three times of the amount of the loans including interest accruals thereon. This is aimed to help filing of suits without delay and reducing the overburden of stuck-up loan cases.
Another special feature of this Act is arbitration through settlement conference or mediation outside the court. This measure is intended to help getting effective results for recovery of loans.
Under this Act, appeal has been discouraged by imposing provisions for depositing 50% of the related amounts at the time of appeal and 75% of the decreed amount for revision and for charging higher rate of interest.
A provision of civil imprisonment has been included under this act as a means towards compelling the debtor under the proceedings for judgment to repay the decreed amount.
To sum up, the Money Loan Court Act-2003 has concentrated on a number of specific areas, providing the exclusivity of the jurisdiction of Court for settlement/judgment of loan recovery cases. Such areas relate to powers given to the banks and financial institutions to sale securities as finality; simplification of the procedure for filing suit and awarding judgment within a minimum stipulated time schedule; emphasis on documentary evidence and less importance on verbal argument before the Court; alternative dispute resolution through settlement conference or mediation between the lenders and borrowers; changes in the limitation Act-1908 under which banks will not suffer from the law of limitation as timing of filing cases by the lending institutions has been fixed; time schedule for every step from filing suit to settlement; changes in the doctrines of finality; limit on the claim amount i.e. suit value, which are, under the provisions of this law, to be equivalent to the principal and only twice the amount of principal as interest; discouraging appeal against the decree, and restrictions on filing of writs before the High Court, etc.
The writer is faculty member, Bangladesh Institute of Bank Management and former deputy general manager of Agrani Bank. The views expressed here
are the writer's own


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