Dear Brothers and Sisters,
Assalamu A’laikum Wa Rahmatullahi Wa Baraqatuh. This series known as ‘Laws of Bangladesh’ is introduced in order to enrich ourselves with the knowledge regarding laws of Bangladesh. I will try to put important information regarding different statutes or case laws containing procedural and legal provisions and commentaries. Sometimes, comparative analogy will be drawn in order to find out the distinctions and/or solutions. Please bear in mind that this is an initiative taken for the benefit of all of us who can be lawyers, law students or totally naïve about law. So, don’t worry, join and share your views.
This part 1 is on ‘Artha Rin Adalat 2003’ and this issue I is about the scope of the statute and procedures to be followed for filing cases under Artha Rin Adalat Ain 2003. I give special thanks to my student ‘Hasan Ali Ruman’ who inspired me in writing this note. Thank you Hasan Ali. Jazak ALLAHU Khair.
Artha Rin Adalat Ain (ARAA) 2003
Matters covered by this statute, its scope and jurisdiction of Artha Rin Adalat:
• Matters regarding recovery of loans by financial institutions are covered by this statute. This is apparent from the preamble of this statute given at the very beginning of this Act prior to section 1 and also from the section 5. Please note that, these matters are regarded as matters of civil nature (section 11(5) of ARAA).
• Irrespective of Public Demand Recovery Act (PDRA) 1913, if the loan is recoverable under ARAA then it has to be recovered using the Artha Rin Adalat no matter whether this loan is considered as ‘Public/Government Loan’ [section 5(5) of ARAA].
• However, cases involving claims by Bangladesh Krishi Bank and Bangladesh Krishi Unnoyon Bank and other state-owned financial institutions not exceeding the amount of taka 5 lacs can be filed as certificate case using the PDRA 1913 instead of filing in Artha Rin Adalat [section 5(5) of ARAA].
• If there are special provisions for recovering loan by financial institutions established by special law, then the ARAA provisions will be counted as additional to those provisions. However, if that financial provision files a case in Artha Rin Adalat for recovering loans, then the ARAA will be applicable [section 5(6) of ARAA]
• Loans given to the Government by the following institutions [section 2Ka (12-17)] are not recoverable by the Artha Rin Adalat:
International Finance Corporation
Commonwealth Development Corporation
Islamic Development Bank
Asian Development Bank
International Bank for Reconstruction and Development
International Development Association
• However, appropriation of money by the officers or employees of a financial institution can not be entertained with this act (section 18(1) of ARAA).
• Mortgage suit for sale or foreclosure of immovable property in pursuant to section 67 of The Transfer of Property Act 1882 and Order XXXIV of CPC has to be filed in the Artha Rin Adalat and the procedures laid down in CPC and ARAA have to followed in combination, so far as it is possible [section 5(2) of ARAA]
• The loan-receiver cannot file a case against the financial institutions under this statute. Neither he can counterclaim or put any claim of set off against the financial institution while filing the written statement (section 18(2) of ARAA).
• Any case pending in any other court by the loan receiver being plaintiff cannot be heard analogously with the case filed by the financial institution against that loan receiver in Artha Rin Adalat and vice versa. Neither it is possible to stay the case under Artha Rin Adalat on that ground (section 18(3) of ARAA).
Relevant court: All the matters under this statute, as long as it is regarding recovery of loans by financial institutions, has to be entertained by Artha Rin Adalat of the relevant district. The judge of the Artha Rin Adalat is a Joint District Judge (Section 4 & 5)
Procedures to be followed for filing and running cases under this statute: It must be borne in mind that as the matters covered by this statute are of civil nature, therefore, the Code of Civil Procedure (CPC) is the prime code that has to be followed regarding procedural issues. If this is so, then the relevant steps for a civil case/suit under CPC are to be complied with for cases under Artha Rin Adalat Ain 2003. The normal steps for a civil suit that are to be followed for cases under Artha Rin Adalat Ain 2003 are:
I) Issue of Plaint/ Institution of Suit:
2) Issue of Summons/Process:
3) Service of Summons:
4) Return of summons and filing of written statements:
5) First Hearing and Court’s Examination of the Parties:
6) Section 30 steps:
7) Framing Issues:
8) Settling a date for hearing:
These days, the abovementioned stages 5, 6 & 8 are not the norms. Normally on the day of framing issues the court fix a date for final or peremptory hearing and then the trial stage begins without the need for fixing a separate date for settling a date for hearing.
1) Peremptory Hearing:
a) Opening of the case
b) Examination in Chief
Now, we have to see that what additions, differences or explanations the Artha Rin Adalat Ain (ARAA) 2003 has made with the procedures laid down in CPC. It has to be seen because if there is anything contradictory in the ARAA 2003 then the provisions of ARAA 2003 will have to be followed (section 6). Now, all the ARAA says about procedures are laid down in fourth chapter within section 6-20.
The additions or differences or explanation regarding procedures are:
Regarding Proceeding Stage:
1) Issue of Plaint:
• If any property is given in mortgage or pledge or lien then before filing the plaint the financial institution has to sell the property and adjust the loan or has to fail after trying to sell the property. Please note that the financial institution has to have the lawful right or been given the right to sell the property [section 12 (1) and (3) of ARAA]. If the plaint has already been filed without the property being sold, then the plaintiff has to sell the property and adjust the loan and inform the court in written form [12(2) of ARAA].
• Any third party mortgagors or third party guarantors involved with the loan, if there is any, are to be made as opposite parties/defendants of the plaint along with the principal debtor (section 6(5) of ARAA).
• The contents that are to be included within the plaint and the relevant formalities to be followed are mentioned in section 8 of the ARAA.
• ARAA 2003 says that the plaint should be supported by Affidavit and Ad Valorem court fees has to be paid with the plaint (section 6(2) of ARAA).
• However, these are mentioned concisely in rule 3 order XIX of CPC and rule 1 Para (2) of Order XLVIII.
• This plaint supported by affidavit will be counted as substantial evidence and the court, in case of default or summary judgment, can give order or judgment by solely relying on the plaint without examining any witness (section 6(4) of ARAA)
2, 3 and 4) Issue, Service and Return of Summons:
• Explanation regarding Issue, Service and Return of summons is given in section 7 of ARAA.
• For example, summon has to be personally served and returned within 15 of days of issue. If the summon returns without being served then within the next 15 days from the date of return, the court, if considers just, will serve the summon by advertising it in a popular national and a local newspaper, if there is any. In this way the court can get rid of the requirement of serving personally as in many cases the address of the defendant is wrong or something unexpected occurs [section 7(2) of ARAA].
4) Filing of written statement:
• The contents to be included within the written statement and the relevant formalities to be followed are mentioned in section 8 of the ARAA.
• The written statement has to be submitted within 40 days after the defendant first appears in the court in order to answer the summon (section 11(1) of ARAA).
• ARAA 2003 says that the plaint should be supported by Affidavit and Ad Valorem court fees has to be paid with the plaint (section 6(3) of ARAA).
• However, these too are mentioned concisely in rule 3 order XIX of CPC and rule 1 para (2) of Order XLVIII.
• This written statement supported by affidavit will be counted as substantial evidence and the court, in case of default or summary judgment, can give order or judgment by solely relying on the written statement without examining any witness (section 6(4) of ARAA)
• If the plaintiff wants to give an additional written statement in reply to the written statement of the defendant then he has to file it within 15 days of the filing of the written statement by the defendant (section 11 of ARAA)
7) Framing issues:
• If the parties are not at issue on any question of law or fact, irrespective of their presence or absence at court, the court may at once pronounce judgment or order after the submission of written statement or at any stage of the trial if it appears to the court upon scrutinising the plaint and written statement (Section 13(1), (2) and (3) of ARAA). In CPC the rules 1 and 2 of Order XV are almost of same effect.
• If the defendant admits the statement of the plaint whether by written statement or any other way, the court can at once pronounce judgment or order by ignoring other pending issues awaiting to be disposed of.
8) Settling a date for hearing:
• The date settled for hearing can be stayed only once upon application of any of the parties (section 14(1) of ARAA)
• However if a party applies for staying the settled date again by paying an amount (between 1000-3000 Tk) before a due date, the court can again allow to stay the settled date for hearing (section 14(2) of ARAA)
Regarding Trial Stage:
1) Peremptory or final hearing:
• If the defendant is absent on any date of final hearing the court can ex parte dispose of the case by giving ex parte decree [section 19(1) of ARAA].
• In this case, the defendant can vacate the ex parte decree by applying within 30 days of the date of passing of the decree or the date of his getting notified about the decree by depositing 10% of the decreed amount in the court or in the financial institution [section 19(2) and (3) of ARAA].
• If the plaintiff is absent on any date or fails for any reason, the court cannot strike out the plaint. In this case the court has to scrutinise the papers and dispose of the matter accordingly [19(6) of ARAA]
• It is not obligatory for the judges to hear oral arguments before pronouncing judgment (section 15(1) of ARAA).
• Within five days of the completion of peremptory hearing (i.e. after examining all the witnesses), the parties or any of them can submit written arguments to the court after notifying the court in writing and supplying copies of the written arguments to all other parties. There is no option to answer the arguments in written form (section 15(2) of ARAA).
• The court can order the parties to give oral arguments for/against the written arguments if it considers necessary (section 15(3) of ARAA).
Regarding Post-Trial Stage:
1, 2) Judgment and Decree:
• Within 10 days of completion of peremptory hearing the court has to pronounce judgment. However, if the court admits written or oral arguments then it has to pronounce judgment within 10 days of completion of written or oral arguments.
• The decree given by court is to be counted as final decree in all respect except in case of mortgage suit for foreclosure of immovable property under section 5(2). In this case, the decree given by the court is to be counted as preliminary decree [section 5(3) of ARAA]. This decree will become a final decree after the auction sale of the immovable property [section 5(4) of ARAA].
Some important procedural provisions:
1) Regarding selling the properties under mortgage, lien or pledge etc:
• We have already seen above under the heading of ‘issue of plaint’ that selling the properties under mortgage or hypothecation [12 (2)] or lien or pledge [12(1)] is a pre-condition for filing a plaint. Now, if getting the possession of the property by the financial institution or transferring the possession to the purchaser is necessary for complying with those sections then the defendant will have to transfer the possession to the financial institution or to the purchaser. The financial institution has to request the defendant in written form for the transfer. If the defendant rejects the request then the financial institution will have to apply to the district magistrate having the territorial jurisdiction to recover the possession and transfer the same to it or to the purchaser [section 12(5) and (5Ka)]
• Auction sale:
Where a financial institution sells a property under mortgage or hypothecation in compliance with section 12(3) of ARAA, then it has to follow the procedure of auction sale, so far as it is possible, as written within section 33(1) to (3) of ARAA. Please note that, these procedures of auction sale are normally applied during the execution of decree (জারী).
• The court by its own initiative or upon application of the defendant, if the financial institution has not sold the property yet, has to adjust the loan with the amount of the property give the decree accordingly. Please note that, the court will not sell the property, it will just adjust the loan with the value of the property. It will know the value from the financial institution’s estimate or from sub-registrar [section 12(6) of ARAA].
• In this regard, if the financial institution wants to get the ownership of the property then upon his written application to the court, the ownership of the property will be transferred to the financial institution through a court’s certificate [section 12(7) and 33(7)]
• If the property under mortgage etc. is being sold to a purchaser then this will create a legal title in favour of the purchaser. Nothing can challenge the purchase irrespective of whatever is written in other Acts [section 12(8) of ARAA]. However, if there is any irregularity in the sale, then the defendant can claim damages from the financial institution [section 12(8) of ARAA].
2) Exclusivity of order given by Artha Rin Adalat:
• No question about the judgment, decree, order or proceedings of Artha Rin Adalat can be questioned in any court or authority without observing the provisions of ARAA. Nor any remedy can be sought in any court without ignoring the provisions of ARAA (section 20 ARAA).