SC stays verdict barring banks, FIs to file cheque dishonour case against loan

The Appellate Division of the Supreme Court has stayed for two months a High Court verdict that ruled no bank or the financial institution (FI) can file cheque dishonour case against any person for defaulted loans.

A five-member bench of the Appellate Division headed by Chief Justice Hasan Foez Siddique passed the order on Thursday after hearing three separate petitions filed by BRAC Bank against the High Court verdict.

The apex court, however, asked the BRAC Bank to file a regular appeal petition against the verdict by this time. It also upheld the bail order granted to the borrower by the High Court.

Attorney General AM Amin Uddin who appeared on behalf of the BRAC Bank said they will file a regular appeal petition against the High Court verdict.

Delivering the verdict on November 23 this year the High Court also ruled that banks or financial institutions can file a case in the Artha Rin Adalat only in the manner described in the Artha Rin Adalat Act, 2003 for recovery of the loans.

Besides, proceedings of all the check dishonour cases filed by banks or financial institutions currently pending in the courts across the country will be stayed, the court also ruled in the judgment.

The HC also directed the Bangladesh Bank to issue a guideline for keeping insurance coverage against all kinds of loans granted by banks and financial institutions.

The High Court bench of Justice Md Ashraful Kamal delivered the verdict after hearing an appeal petition filed over a cheque dishonour case of the BRAC Bank.

According to the case documents, one 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 instalments out of 36 instalments. 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 in 2015, filed a case with a magistrate court in Brahmanbaria for recovery of the remaining loan. Following the case, the judge of the Additional District and Sessions Judge’s Court in Brahmanbaria handed down a sentence of six month’s prison to Mohammad Ali and fined him Tk 0.295 million.

Mr Mohammad Ali later filed an appeal petition against the lower court verdict. The HC admitted the appeal on October 8 in 2018 and after the hearing, it delivered the verdict on November 23 in 2022.

The High Court asked the concerned bodies of the government to return the money to Mohammad Ali which he deposited during filing the appeal.

The court said that a loan from a bank or financial institution is taken through an agreement. Some corrupt and unscrupulous officers of the bank misuse checks for their own interests and to implement their hidden agendas, it also observed.

Five days after this verdict, BRAC Bank filed a petition with the Chamber Court of the SC to stay the HC verdict. Later, the Chamber Court sent the petition of BRAC Bank to the regular bench of the Appellate Division fixing the date of hearing on December 1.

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