Supreme Court stays verdict against cheque dishonour cases for due bank loans

The High Court issued the verdict saying banks cannot file cases of dishonoured cheque for due loans

Published : 1 Dec 2022, 05:16 PM
Updated : 1 Dec 2022, 05:16 PM

The Appellate Division of the Supreme Court has stayed for two months a High Court verdict that ordered banks and other financial institutions to stop filing cases of dishonouring of cheques for due loans. 

A panel of three judges, headed by Chief Justice Hasan Foez Siddique, passed the stay order on Thursday. 

Financial institutions use blank cheques signed by clients as a security to give them loans. If the customer fails to repay, the cheque is used to start cases over cheque dishonouring. 

Mohammad Ali, a businessman, filed a plea with the High Court after BRAC Bank had sued him in such a case. The High Court on Nov 23 passed a verdict in favour of the businessman, saying the financial institutions can file a case with the Money Loan Court under the Money Loan Court Act 2003 in the event of defaults. The bank then appealed against the verdict.    

Abdullah Al Baki, the lawyer for Ali, said the Appellate Division also upheld the bail granted by the High Court to his client. 

The full version of the High Court verdict was also published on Thursday. It ordered the banks and other financial institutions to detail ways to recover loans while sanctioning the credits. 

It also said the financial institutions can start cases over cheque dishonouring if the cheque is provided by the client from a buyer of their properties.

 “But [financial institutions] are not legally authorised to take cheques as security for loans and file cases over cheque dishonouring.” 

“The trial court shall directly reject such cases filed by the financial institutions.”

Toufique Imrose Khalidi
Editor-in-Chief and Publisher