Banks cannot file cheque dishonour case: HC

In a verdict, the High Court (HC) on Wednesday said that banks and financial institutions (FI) cannot file cheque dishonour cases against any person for defaulted loans.

The HC bench also said that a bank or financial institution could file cases against responsible persons before the Artha Rin Adalat only in the manner described in the Artha Rin Adalat Act, 2003 in order to recover the loans.

The HC verdict also stayed all proceedings of those cheque dishonour cases, which were filed by banks or financial institutions, currently pending in the courts across the country.

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

The single bench of the HC comprised of Justice Md Ashraful Kamal delivered the verdict after the final hearing on an appeal filed over a cheque dishonour case of the BRAC Bank.

In its verdict, the HC bench said, “The cheque that the bank takes against the loan is a security, not a negotiable instrument. A cheque dishonor case cannot be filed against the cheque taken as security. Taking a blank cheque against a loan is illegal. Banks and financial institutions have been doing this illegal activity for a long time.”

It also observed that a loan from a bank or financial institution is taken through an agreement. Some corrupt and unscrupulous officers of the bank misuse cheque for their interests and to implement their hidden agendas.

The HC asked the lower court concerned across the country to summarily reject the cheque dishonour cases filed by the banks and financial institutions. It also asked the courts to send the parties directly to the Artha Rin Adalat.

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 installments out of 36. However, he was unable to repay the remaining loan later when his business conditions deteriorated. Then he gave the bank a cheque of Tk 0.295 million against the due, but it 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.

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.

In its verdict, the HC bench asked authorities concerned to return the money to Mohammad Ali, which he deposited while filing the appeal.

BRAC Bank’s lawyer Syfuzzaman said, “Now our outstanding due is Tk 0.972 million from the loan receiver. We will appeal against the judgment.”

Lawyers Abdullah Al Baki, Wahida Afroze Chowdhury and Md Asaduzzaman appeared on behalf of the appeal petitioner, while lawyer Syfuzzaman represented the BRAC Bank during the hearing on the petition.