Artha Rin Adalat Ain, 2003

The Artha Rin Adalat Ain 2003 was enacted to help the Financial Institutions such as Banks to recover the
defaulted loans. Before enactment of the said Act ordinary money suits was not effective to recover the
defaulted loans for the financial institutions due to the long disposal period. Artha Rin Adalat Ain, 2003
has been amended in 2007 and 2010. The Artha Rin Adalat Ain 2003 contains VIII Chapters and 60
Sections.

Applicability of the Law: The act shall be applicable for recovery of loans given by the financial
institutions. Artha Rin Adalat Ain 2003 is a special law and the provisions of this act shall prevail over any
other law in this regard.

Establishment of Court: According to Section 4 of the said act, Government has established Artha Rin
Adalat in every district for trial of suits and carrying out the purposed of other matters related to this act. A
Joint District Judge shall be the Judge of the Artha Rin Adalat and shall be addressed as Judge, Artha Rin
Adalat.

Power & Jurisdiction of the Court: According to Section 5 the Artha Rin Adalat Ain 2003, Artha Rin
Adalat shall be deemed to be a Civil Court and it shall have all powers and jurisdiction of a civil court.

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:

• 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).

Limitation for filing suit:

As Artha Rin Adalat Ain, 2003 is a special Act, the Limitation Act, 1908 is not applicable for filing of the
suit under the said Act. There are specified provisions of Limitation in the Artha Rin Adalat Ain, 2003 and
it must be followed.

In case of filing of fresh Artha Rin suit section 46 of the Artha Rin Adalat Ain, 2003 must be followed.
Section 46 of the Artha Rin Adalat Ain, 2003 states as under.
Anything otherwise contained in the Limitation Act, 1908, a financial Institution (referred herein after as
“Bank”) shall file a suit after expiry of next one year, if a borrower fails to repay the loan according to the
terms of agreement after starting payment schedule as follows

i) In case of loan having time of more than 3 years:

(a) If borrower fails to repay at least 10% of the one year’s payable loan;

(b) If borrower fails to repay at least 15% of the two years’ payable loan;

(c) If borrower fails to repay at least 25% of the three years’ payable loan.

ii) In case of loan having repayment time not more than 03 years, if borrower fails to repay at least 20% of
the total payable loan within the time.

After expiry of the 01 year as mentioned above, the suit may be filed, but the Chief Executive Officer of
the Bank/Financial Institution shall have to take disciplinary and penal action against the official
responsible for delay and inform the Government & the court accordingly.

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:

Proceeding Stage:

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:

Trial Stage:

1) Peremptory Hearing:

a) Opening of the case

b) Examination in Chief

c) Cross-examination

d) Re-Examination

2) Arguments

Post-Trial Stage:

1) Judgement

2) Decree

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]

2) Arguments:

• 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:

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).

Prepared By
Md. Mutasim Billah Kandaker
Lecturer
Department of Law
Green University of Bangladesh