Write Petition Challenging Auction Order in Artha Rin Suit

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Write Petition Challenging Auction Order in Artha Rin Suit

Case Title:

Akash Sarker vs. Artha Rin Adalat No. 2, Dhaka & Others Writ Petition No. __ of 2024 Supreme Court of Bangladesh, High Court Division (Special Original Jurisdiction)

Background:

Petitioner: Akash Sarker, Managing Director of CTE Development Company Limited

Respondents:

Artha Rin Adalat No. 2,
Dhaka Al-Arafa Islami Bank Limited (Head Office)
Branch Manager, Al-Arafa Islami Bank Limited, Khamarbari Branch
ETC Marketing Company Limited

Facts:

Loan Availment: CTE Development Company Limited secured a loan of BDT 60,00,000 from AlArafa Islami Bank Limited in 2013. The loan was guaranteed by Akash Sarker and the Chairman of the company.
Default: Due to business losses, the company failed to repay the loan, leading to an overdue amount of BDT 2,05,20,800.
Artha Rin Suit: Al-Arafa Islami Bank filed Artha Rin Suit No. 425 of 2019 for recovery of BDT 2,05,20,800. The suit resulted in a decree of BDT 2,05,20,800 on 10.07.2022.
Execution Case: An execution case (No. 31 of 2023) was filed on 01.02.2023 for recovery of BDT 2,29,09,904.

Procedural History:

Auction Orders:

Order No. 05 dated 15.04.2023: First auction scheduled for 21.05.2023 but failed due to lack of bidders.
Order No. 06 dated 13.06.2023: Rescheduled auction for 10.12.2023.
Petitioner’s Application (10.12.2023): The petitioner requested the court to halt the auction, allow repayment in installments, and waive interest.
Order No. 07 dated 20.12.2023: The Artha Rin Adalat rejected the petitioner’s application, continuing with the auction process

Legal Issues:

Legality of Auction Process: Whether the auction process should continue despite the petitioner’s application to repay the loan in installments.
Violation of Fundamental Rights: Whether the rejection of the petitioner’s application infringes on fundamental rights under Articles 27, 31, and 42 of the Constitution.

Legal Precedents:

Ratan Kumar Ghosh vs. Artha Rin Adalat: The Supreme Court held that procedural fairness must be maintained in loan recovery processes, and debtors should be given reasonable opportunity to repay (Civil Appeal No. 25 of 2016).
Kazi S. A. Karim vs. Bangladesh Bank: Court emphasized that auctioning of mortgaged property must consider the debtor’s ability to repay and the actual value of the property (Writ Petition No. 4471 of 2010).
Sayed Shahadat Hossain vs. Bank: Recognized the debtor’s right to request alternative arrangements for loan repayment if the terms are unreasonable (Civil Review Petition No. 398 of 2019).

Regulatory Framework:

Artha Rin Adalat Ain, 2003 (Act No. 36 of 2003): Governs the process of recovery of loans and the procedures for auctions.

Section 33: Provides the process for auction of mortgaged property.
Section 49: Allows for applications to the court to stay auction and request alternative repayment arrangements.

2 . Regulatory Circulars:

Bangladesh Bank Circular No. 07 dated 15.01.2021: Stipulates guidelines for handling non-performing loans and provides flexibility in loan repayment options.

Arguments:

Petitioner’s Argument: The auction process is unjust as it does not consider the petitioner’s intention to repay the loan and the impact of selling the property. The petitioner has deposited part of the amount and requests an opportunity to repay the remainder in installments.
Respondent’s Argument: The auction process is legally compliant and necessary for recovering the outstanding amount, as per the Artha Rin Adalat Ain, 2003.

Relief Sought:

Rule Nisi: To declare the Order No. 07 dated 20.12.2023 illegal and without lawful authority.
Stay Order: To halt the auction process until the petitioner is allowed to repay the loan as per the application.
Further Orders: To provide alternative arrangements for repayment and ensure the protection of the petitioner’s fundamental rights.

Conclusion

The petitioner seeks judicial intervention to halt the auction and allow repayment of the loan in installments. This case underscores the balance between enforcing debt recovery and ensuring fair treatment of debtors under the law.

Recommendations

Review and Reconsideration: The High Court Division should review the order rejecting the petitioner’s application, considering the principles of fairness and the petitioner’s bona fide intention to repay the debt.
Stay on Auction: A stay on the auction proceedings pending a full review could prevent undue harm to the petitioner and ensure that all options for debt repayment are exhausted.
Equitable Relief: The court should consider equitable relief options, including restructuring the repayment terms, to facilitate a fair resolution of the debt recovery process.

Project Info

Legal Issues

Regulatory Authority of Bangladesh Bank: The petitioner challenges the inaction of the Bangladesh Bank in exercising its jurisdiction under sections 45 and 49(1) (Cha) of the Bank Companies Act, 1991.
Compliance with BRPD Circular: The petitioner argues that the failure to reschedule the loan as per BRPD Circular No. 16 (2022) violates the petitioner’s rights and regulatory norms.

Relevant Legal Precedents

Bangladesh Bank v. National Bank Ltd. (2019) 71 DLR (AD) 161-Summary: This case affirmed the Bangladesh Bank’s role in regulating and issuing
directives to commercial banks. The court emphasized that the Bangladesh Bank has
a supervisory role over compliance with regulatory circulars.
M.A. Hossain v. Bank of Bangladesh (2018) 70 DLR (HCD) 132-Summary: The court addressed the obligations of banks to follow directives issued by Bangladesh Bank, affirming that borrowers are entitled to relief under such directives
if banks fail to comply.
Nashit & Co. v. Agrani Bank (2020) 72 DLR (HCD) 80: Summary: This case discussed the applicability of BRPD circulars in loan rescheduling
matters and the role of regulatory authorities in enforcing these circulars.
Faridpur Sugar Mills Ltd. v. Sonali Bank Ltd. (2021) 73 DLR (HCD) 56-Summary: The court examined the terms of loan settlements and the bank’s
responsibilities under regulatory guidelines, reinforcing that banks must adhere to
directives issued by regulatory bodies.
Jamaluddin Ahmed v. United Commercial Bank Ltd. (2017) 69 DLR (HCD) 165-Summary: The court reviewed the remedies available to borrowers when banks fail to follow regulatory directives regarding loan rescheduling.

Relevant Regulatory Circulars and Acts

Regulatory Authority of Bangladesh Bank: The petitioner challenges the inaction of the Bangladesh Bank in exercising its jurisdiction under sections 45 and 49(1) (Cha) of the Bank Companies Act, 1991-Summary: This circular provides guidelines for the rescheduling of loan liabilities,
including provisions for a five-year repayment period with a one-year grace period.
The petitioner’s request was based on this circular.
Bank Companies Act, 1991-Sections 45 and 49 (1) (Cha): These sections outline the Bangladesh Bank’s authority
to regulate and supervise commercial banks, including issuing directives related to
loan management and rescheduling

Legal Analysis

The petitioner’s claim rests on the Bangladesh Bank’s failure to act on his application for loan rescheduling as per BRPD Circular No. 16 of 2022. This failure potentially infringes upon the petitioner’s rights under the Constitution, particularly regarding the principles of fairness and equality in financial dealings. The petitioner argues that the Bangladesh Bank’s inaction is arbitrary and contrary to established regulatory norms, as evidenced by the aforementioned legal precedents. The case is likely to hinge on whether the Bangladesh Bank’s inaction constitutes a failure to fulfill its regulatory duties and whether the petitioner’s request for loan rescheduling under the specified circular is legally enforceable.

Conclusion

The petitioner, Abdur Rahim, a prominent industrialist and former Commercially Important Person (CIP), is seeking judicial intervention for rescheduling his loan liabilities due to adverse business conditions. The petitioner’s application, dated 01.01.2024, was made under BRPD Circular No. 16 of 2022, which provides guidelines for rescheduling loan liabilities. The Bangladesh Bank, however, has failed to address the application, prompting the petitioner to seek relief from the High Court Division.

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