Legal reform, specialised courts needed for quick justice in loan and tax cases

Our economy is experiencing rapid growth, and an efficient judicial system is crucial to sustain this momentum. Unfortunately, the current backlog of cases in the judiciary, particularly in loan and tax matters, poses a significant obstacle to economic development. To address this challenge, comprehensive judicial reforms are urgently needed.

In Bangladesh, issues related to taxes and loans are addressed through legal frameworks and judicial proceedings. The Constitution of the People's Republic of Bangladesh, being the supreme law of the land that ensures the right to a fair trial and access to justice, forms the foundation of legal procedures.

The Artha Rin Adalat Ain, 2003 was enacted for loan recovery by financial institutions and banks. However, the act does not put institutions and borrowers on an equal footing. For example, any individual or company aggrieved by the financial institution does not have any scope to get any relief under the law. 

In Bangladesh, defaulters often challenge the Artha Rin Adalat Ain, 2003 invoking writ jurisdiction before the High Court Division under Article 102 of the Constitution of Bangladesh. Article 102 of the Constitution empowers the High Court Division to give directions or pass orders to any person or authority, including any person performing any function in connection with the affairs of the republic, as may be appropriate, for the enforcement of fundamental rights, if satisfied that no other equally efficacious remedy is provided by law. 

Therefore, these constitutional provisions provide a floor to the defaulter borrowers to step forward in the process of challenging the Act of 2003. Defaulting borrowers' resort to this remedy to restrain financial institutions from proceeding with the execution case, to ultimately suffer loss and damage. 

This delaying tactic adopted by the defaulter borrowers misleads a court and has never been appreciated by our judiciary. Hence this kind of ill-motivated act is not expected from any citizen and should not be encouraged in any circumstance. Specific laws such as the Financial Institutions Act and the Artha Rin Adalat Ain regulate financial activities and should facilitate the speedy recovery of loans. 

Financial institutions or banks often file complaints under Section 138 of Negotiable Instrument Act, 1881 against security cheques instead of filing a suit under Artha Rin Adalat Ain, 2003. However, in Mohammad Ali v. Brac Bank and another, the High Court Division ordered banks and financial institutions not to file cheque dishonour cases against borrowers to realise their default loans. 

It also instructed the lower courts to dismiss such cases and transfer them to the Artha Rin Adalat, or Money Loan Court, directly. 

At the same time, the High Court stayed the proceedings of all cheque dishonour cases filed by banks and financial institutions pending in different courts, which has been stayed by Appellate Division. 

Sometimes, financial institutions or banks file both complaints under Negotiable Instrument Act and file suits under Artha Rin Adalat Ain for recovering loan amount, although it is a double jeopardy. 

But in Eastern Bank Limited v. Md Sirajuddin, the Appellate Division stated that criminal and civil cases run together and pendency of a civil suit will not hinder proceeding of a criminal case and vice versa. Currently, courts of Joint Sessions Judge, especially courts of Dhaka Metropolitan Joint Sessions Judge are overloaded with Negotiable Instrument Act cases and take ages to resolve.

Imagine getting stuck in a super slow line for years, just to fix a problem in court. That is what going to court feels like in Bangladesh. Everything takes ages, costs a fortune, and makes you want to pull your hair out. There are barely enough judges for all the cases, so millions of people just sit and wait, hoping their turn will come someday that leaves everyone frustrated and exhausted. Moreover, a substantial amount needs to be deposited before filing a case or appeal. 

Alongside, some good things are also happening, like special courts that solve loan issues faster and modification of the country's Code of Civil Procedure, 1908, by adding a mandatory window of Alternative Dispute Resolution (ADR). But regular courts, especially for smaller loans, are still slow and make people feel stuck. 

Law in Bangladesh regarding revenue matters or recovery of customs, duties and taxes is much stronger than recovery of loan amount. Regarding revenue matters, there are several special laws, tribunals, appellate tribunals, and have a time-frame to dispose of said matters. 

However, the main challenge is to prevent corruption.Sometimes, tax officials with mala-fide intentions harass individuals or companies for unfair advantages, which needs to be prevented by any means. 

While the Artha Rin Adalat Ain, 2003 aims for prompt resolution of loan disputes within 120 days, which is stated in Section 17, reality is completely different. When it comes to loans, family members who are not involved in the business can end up facing legal issues because creditors misuse the Negotiable Instrument Act, 1881 regarding bounced cheques against companies. 

These innocent shareholders, who do not know much about the company's money matters, may get arrested or face travel bans for debts they did not create. To protect these people, recovery cases should be sent through special money loan courts. These courts work quickly, look for fair solutions, and do not punish innocent vulnerable shareholders. 

Another problem is that many suspect banks get away with criminal schemes that harm people, but current laws leave victims stuck in slow, uncertain civil suits which do not deliver justice. 

In contrast, the Income Tax Ordinance prioritises revenue collection through its appeals process. Section 156 compels commissioners to dispose of appeals within 150 days, with failure resulting in the appeal being automatically allowed and the government losing revenue. 

This strict accountability ensures timely resolution of all appeals, unlike in loan cases. The contrast highlights the need for a similar consequence-driven approach in the Artha Rin Adalat system to expedite loan dispute resolutions.

We need legal reform: specialised courts to tackle financial crimes by banks, stronger investigative powers, and clearer laws against these harmful practices. Decade-old cases clog the courts, and the mandatory ADR procedure, intended to fast-track solutions, often gets sidelined further delaying justice. To address the comprehensive challenges, a strategic overhaul of the judicial system is imperative, with unique and practical suggestions tailored to the current legal framework. 

First, the government must allocate adequate resources to the judiciary to appoint more judges, recruit supporting staff, and improve infrastructure. Along with this, they should establish dedicated fast-track courts for complex matters like loan and tax cases with trained judges in these specific areas so judges can navigate the intricate details of financial cases with precision. 

The case management system must be developed by embracing cutting-edge technology. Developing online platforms for case management, scheduling hearings, and accessing court documents can improve access to justice and expedite case proceedings. 

Encouraging early resolution methods like mediation and arbitration is a proactive way to ease the burden on the legal system. Incentivising parties to choose these options, especially for cases that can be resolved outside of court, speeds up the process and helps decongest the courts. Creating rewards for choosing pretrial resolution also promotes a culture of alternative dispute resolution. 

To protect innocent shareholders in loan disputes, it is crucial to review and amend laws like the Artha Rin Adalat Ain. Ensuring robust protection for shareholders and differentiating between active participants and passive shareholders in debt recovery cases helps target legal actions appropriately. 

Establishing a specialised tribunal is necessary to tackle Negotiable Instruments Act cases. Giving the tribunal broader jurisdiction and empowering it with swift actions like freezing assets accelerates justice for victims. Educating the public on legal processes and options through awareness campaigns and financial literacy programs empowers citizens to navigate legal complexities effectively. 

To enhance efficiency and transparency in the judiciary, introducing performance metrics and accountability measures is essential. Setting clear timelines for case resolution and evaluating the efficiency of judges and court processes fosters a culture of accountability. Collaboration between the judiciary and financial institutions is vital for addressing systemic challenges. 

Establishing regular communication channels and protocols for sharing financial information streamlines the judicial process. By implementing these provisions and embracing technological advancements, Bangladesh can create a more efficient and responsive judiciary. This will not only expedite justice delivery and clear the backlog of loan and tax cases but also promote economic growth, attract investment, and create a more conducive environment for business activity.

MD Hosne Mobarak. Illustration: TBS

The author is a Barrister-at-Law and an Advocate of the Supreme Court of Bangladesh.