Artha Rin Adalat Ain - 2003

(With Latest Amendment)

&
The Limitation Act - 1908

Background: After introduction of Loan Classification and

Provisioning vide BCD Circular No.34/1989 and subsequent BCD
circular No.20/1994, BRPD Circular No.16/1998, master Circular
No. BRPD-05/2006, BRPD Circular No.07 dated June 14,2012
and Master Circular No.14 dated 23/11/2012 the increased NPL
became growing concern for the industry and considered major
challenge to the bank- based economy.
There had been no separate law for loan recovery other than
“The Civil Procedure Code-1908” as Money Suits and Public
Demand Recovery Act-1908.It took huge time for settlement of
loan recovery suits as the civil courts were overburdened with
other business suits.
Considering the defaulted loan situation in banking sector, Govt.
introduced “The Commercial Court Act” in 1984.

Contd...2)
 Page-2

Introduction: Govt. enacted a special piece of legislation under the

Title” Artha Rin Adalat Ain-1990” which contains 9 sections only. To make
it more effective for loan recovery it required more amendments.

Meantime Govt. introduced “The Bankruptcy Act-1997” which came into

force on 3rd Dec. 1997 for recovery of defaulted loan. This law also not
effective to recover the huge defaulted loan.

Based on the under performance of the aforesaid laws for recovery of

defaulted loans Govt. introduced “Artha Rin Adalat Ain-2003” by
addressing the shortcomings of “Artha Rin Adalat Ain-1990” and the said
law came in force on May 01 2003. The section 46 & 47 came in to
operation from May 01, 2004.

Till date the following amendments made to the law:

• (a)Artha Rin Adalat (Amendment) Ain -2004.

• (b) Artha Rin Adalat (Amendment) Ordinance –2007 (Repealed)
• (C) Artha Rin Adalat (Amendment) Ain -2010.
• Basic changes of ARAA-2003 over ARAA-1990
• The Money Loan Court Act-2003, addressed quite effectively some of the
problems of the old Act, namely MLC Act-1990 by incorporating a lot of
new provisions to speed up the judicial process.

• The new Act has concentrated on the following areas:

• Further codification of the Civil Procedure-1908 i.e. simplification of the

procedure for filing of suit and awarding judgment within a minimum
stipulated time schedule.
 • Emphasis on documentary evidence and less importance on verbal
argument before the court.

• Alternative Dispute Resolution through settlement conference or

mediation between the lenders and borrowers. Changes in the Limitation
Act-1908.

• Changes in the doctrines of finality.

Main Features of Artha Rin Adalat Ain – 2003

Artha Rin Adalat Ain – 2003 contains 8 chapters and 60 sections.
Main features of Artha Rin Adalat Ain – 2003 are stated below:

Section 3: Act to override

The provision of this Act shall have effected notwithstanding anything

inconsistent in any law for the time being in force.

Section 5: Sole jurisdiction of the Court

All the suits those are relating to recovery of loan of the financial
institutions shall be filed in the Artha Rin Adalat.

Section 6(2): Trial Procedure

(a) A Plaint and an affidavit in favour of the plaint must be
submitted.
(b) Documentary evidence need to be attached. (c) Ad
Valorem Court fee must be deposited.

6(5): During filing the suit against the Principal Debtor, the Bank/FI’s
shall include third party mortgagor and the third party guarantor
simultaneously.

Section 7: Provisions relating to service of Summon.

Section 8: Plaint

8(1): A financial institution shall file a suit through plaint submission;

amongst other matters the following matters shall be included in that
plaint they are furnished below:

(a) The plaintiff’s name, address, working place etc.;

(b)Defendant’s name, address, working place, residence etc.;
 (c) All the events related to the claim;
(d)Incident from which the cause of action of the suit arises,
including the place and date thereof;
(e) Valuation of the suit for the serving purpose of making deposit of
the court fee; contd...3)
Page-3

8(2): The plaintiff shall also include in the plaint in addition to the matter
that in mentioned in the aforesaid sub-section:-

(a) A schedule ,where it shall be set-

I. Original lending sanction to the defendant or, as the case
may be, the amount of money invest;
II. Amount of taka imposed as normal interest or in the case
of demands necessary, profit or rent;
III. Amount of taka imposed as penal interest;
IV. Amount of taka imposed upon defendant due to other
matters;
V. Amount of taka deposited to the plaintiff/financial
institution as payment of lending or due as per last
account drawn before filing the suit;
VI. Description of comparative of total amount given and
fixed by the plaintiff and total amount that paid by the
defendant;
(b) A schedule of the immovable and movable property shall be given against of
which lending has been received by the defendant, through mortgage or security
and detail identification, description of the related mortgaged or security
instrument and financial evaluation if done, shall be showed.

8(3): If the plaintiff mentions any document in support of him that is in

his possession, he shall submit that document or its attested copy or
photocopy incorporating a list with the plaint.

8(4): If the plaintiff depends on a document that is not in his possession,

in this respect he shall submit a list of document mentioning the
possession of that document.

8(5): As an exception to the provisions under sub-section (2) & (3), if the
plaintiff submits any documents afterwards, without having reasonable
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excuse and payment of expenses the Court shall not accept it; and the due
expenses shall be deposited to the proper head of account as government
revenue.

8(6): The plaintiff shall mention in a clause of the plaint who will conduct
the suit of his behalf.
8(7): In failing to submit the schedule of the property of the defendant,
the plaintiff pray for this to the Court, the Court on receiving prayer of the
plaintiff shall direct the defendant to submit his account of movable and
immovable properties along with his affidavit and receiving such
direction, the defendant shall submit a list of the immovable and movable
properties, if any, having written document to the Court.

8(8): A financial institution shall submit so many copies of plaints and

along with relevant papers, which are relevant to the total number of
defendants.

Section 10 (1): Appearing before the court, the defendant shall submit a written
statement. Otherwise, the court shall dispose the matter ex-parte.

Section 10(2): The court may extend the time for 20 days on payment of
Tk.2000-5000 as compensation/expense.

Section 11: The Plaintiff Bank/FI may furnish an additional statement against
the written statement.

Section 12: Right to sell certain securities by the Bank/FI

12 (1&3): Bank shall not file a suit in the Artha Rin Adalat without
selling out the property of the defendant which is kept under its control
for lien, pledge, hypothecation or mortgage and without adjustment of the
sale process on account of repayment of lending.
 12 (4): At the time of selling such property, Bank shall the procedure
stated in section 33(1), (2) & (3).

Section 13: Court shall fix up a certain date and frame the points/issues of the
case on hearing the parties. If Court finds no issue to be framed, Court
shall immediately pronounce the judgement. (Contd...5)

Page-5

If one or both parties remain absent on fixed date, Court shall frame the
points/issues of the case considering the plaint & written statement and
shall immediately pronounce the judgement.

Section 14 (1): Court shall not adjourn the hearing of the suit more than once on

prayer of any of the party.

Section 14 (2): But Court may allow the adjournment for more than once on
payment of expense tk 1000-3000, without making breach of the time
limit fixed by this Act.

Section 15: It is not mandatory for the court to hear oral argument before
delivering the judgement. But on application of the parties, Court may
allow to submit written argument within 5 days.

Section 16: Provision relating to Delivery of Judgement

16 (1): Court shall deliver the judgement within 10 days of recording of
evidence.

16 (2): But where any party has submitted written argument or court hears
oral argument, 10 days time will be counted from that date.

Section 17 (1): Provision relating to Time Limit for Disposal of the Suit.

17 (1): If the defendant does not appear before the court after serving
summon, Court shall dispose of judgement within 30 days.

17 (2): If the defendant submits written statement, Court shall

dispose of judgement within 90 days.
Section 18: Special provision for filing of suits and hearing

(a) Bank cannot file any suit under this law for recovery of money
which is appropriated by its officer or employee.
(b)A debtor cannot file any suit under this law against any
Bank/FI for seeking any relief which is arising out of any
matter relating to lending operation.
(c) Court shall not arrange analogous hearing with any other suit
filed by the debtor in different courts. (Contd...6)
 Page-8

Section 19: Ex-parte Decree

Court shall dispose the case ex-parte if the defendant remains absent
on date of hearing. But within 30 days of receiving the information of
exparte decree, defendant may apply to the court for re-hearing by
depositing 10% of decreetal amount.

Section 22: Arbitration

Subject to provision of section 24 withholding further proceeding, after of

submission of written statement, Court may send the suit for arbitration.
But if the parties on mutual consent apply to the court for arbitration
process, it shall be mandatory.

Such arbitration council shall be presided over by a neutral lawyer, retired

judge, retired banker or any other person on mutual understanding of the
parties. Conditions of settlement should be written down in the shape of
agreement and the Court shall pass necessary order as per Order 23 of
CPC 1908 within 60 days but it may be extended up to 90 days. No party
is allowed to the right of appeal or revision in Higher Court against the
order of such conference.

But if the attempt for settlement of the dispute through arbitration fails,
the Court shall start the legal proceeding again.

Section 25: If the suit value exceeds more than 5.00 crore, the court shall
inform the Chief Executive of the Bank/FI in writing about the settlement
conference or arbitration.

Section 27: Court of Execution

Any order of decree proclaimed by the Artha Rin Adalat shall be
executed by the court itself or by another court where it is sent for the
purpose of execution.

(For example: If the property situated in Chittagong is mortgaged to the

bank situated in Dhaka, Artha suit shall be filed in Dhaka Court but for
the purpose of execution, the court may transfer the execution suit to
Chittagong by itself or on application of the Plaintiff Bank.)
(Contd...7)
Section 28: Time Limit to File Suit for Execution.
 Page-9

The decree holder shall file the execution suit within maximum one
year of the date of decree.

But if the Court fixes any time limit for payment under section 29,
the time will be counted from the expiring date.

If the court fixes some instalment for payment under section 29, the
time will be counted as soon as the judgement-debtor fails to comply
with the order.

Execution suits filed after one year shall be barred by limitation and
Court shall directly reject the application/ execution suit.

Section 28(4): Where any new suit for execution is submitted after 6
years of expiry of first execution suit, the same shall be barred by
limitation and the court shall directly dismiss the suit directly.

(Bank can file as many execution suits as it requires for recovery of

the loan. But no execution suit can be filed after six year of filing the
1st execution suit. For example: If 1st execution suit is filed on
01.01.2011, the 2nd or 3rd or 4th execution suit cannot be filed after
31.12.2016)

Section 31: Stay of Excution Process

Where any suit (arising out of Artha Rin Suit) is under trial in
Higher Court, the proceeding of Artha Rin Suit will not be
automatically stayed. If the Higher Court directly gives a direction of
stay order, the proceeding of Artha Rin Suit will be stayed.

Section 32: Objection against Execution

Any party aggrieved by any order and decree of Artha Rin execution
suit may file an application/misc. case by depositing 10% of the
decreetal amount.

Section 33: Auction Sale Procedure (By Court).

33(1): The Court shall invite sealed tender through a national bangla
daily. Court may publish auction notice in a local daily also.
(Contd...8)
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33(2): The bidder/tenderer shall deposit a pay order of specific value

according to this section. The highest bidder (if bid is accepted by the
court) will deposit the rest amount of money within 90 days. But
Court can extend this time for more 60 days.

But if the decree-holder considers the value very low, irregular,

insufficient or inadequate shall apply to the Court for rejecting the
auction price and the Court may discharge the offered value. (But
Court is not bound to discharge)

33(3): If the highest bidder fails to deposit the rest amount under
section 33(2), his initial deposit will be forfeited and Court will give
this opportunity to 2nd highest bidder and so on.

33(4): 2nd Auction Sale. If the property could not be sold under
section 33(1), (2) & (3), Court shall arrange 2 nd auction following the
same process.

33(5): If auction sale is not possible under section 33 (1), (2), (3) and
(4), court shall vest the possession of the property to the decree-
holder and issue a certificate for the same purpose which has the
following effects:

(a) The decree-holder shall be entitled to the possession and

enjoyment of the property until the realization of full dues.

(b) The decree-holder shall be entitled to sell the property

through auction and realize the dues.

(c) If the sale proceed is insufficient to adjust the dues, the

decree holder shall be entitled to file another execution suit
to realize the rest amount.

(d) If the sale-proceed is excess comparing to dues, the decree

holder must return to the Judgement-debtor.
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(e) The decree-holder can acquire the possession of the property

with the help of the executing Court.

(Contd...9)
33(6): The ownership of the property will be automatically vested on
the decree-holder after expiry of 6 years of obtaining certificate
under section 33(5). However, if decree-holder desires to obtain the
ownership before 6 year, he needs to apply in written before the
Court.

33(7): Despite the provision of section 33(4) & (5), Decree-holder

Bank can apply to the Court for the certificate under section 33(7).
But without complying the provisions of 33 (1), (2) & (3), Decree-
holder is not entitled to get the certificate under section 33(7).

The certificate issued by the Court under section 33(7) has the
following effects:
(a) Such Certificate shall be treated as the ‘Documents of Title’.

(b) The Court shall send a copy of such certificate to the local Sub
Registrar office.

(c) The decree-holder can acquire the possession of the property

with the help of the executing Court under section 33(7A).

(d) The decree-holder becomes the owner, both in legal and

practical meaning; of the property i.e. he can sell, transfer,
enjoy the outcome of the property and keep it subject to the
provision of section 10 of the Banking Company Act- 1991.

(e) In respect of sale, if the sale-proceed is insufficient, he cannot

claim the rest amount to the judgement-debtor.
 Page-12

(f) If the sale-proceed is excess, decree-holder can enjoy it with

full right.

(g) As per rule of the Apex court (Appellate Division) of the

country, certificate issued under section 33(7) cannot be
cancelled by executing Court of High Court Division.

33(7 KA): Delivery of Possession

When the Court has issued the certificate under section 33(5) & (7),
Decree holder Bank can file an application for delivery of
possession. The Court will take necessary steps for delivery of
possession.

(Contd...10)
Section 34: Civil Jail

34(1): On application of the decree-holder, the court can send the

judgement-debtor to civil jail for a period of 6 months.

34(2): The provision of Civil Jail shall not be applicable to the heirs of
the Judgement-debtor in case of his death.

34(9): The Court shall not send the judgement-debtor to civil jail until at
least one auction sale is held.

34(12): Where a judgement-debtor has been detained for a full term (6

months), he cannot be detained again.

Section 37: Limitation of time for disposal of execution proceedings

Section 38: Settlement during execution amicably

Section 41: Appeal

If the decreetal amount is up to 50.00 lac, an appeal may be preferred

to District Judge Court within 30 days of the decree but if the amount
exceeds 50.00 lac, an appeal may be preferred to Honourable High
Court Division of the Supreme Court within 60 days of the decree.
 Page-13

If the lonee/mortgagor/guarantor is the appellant, he needs to

deposit 50% of the decreetal amount to the court as security. But if
the Bank is appellant, according to section 41(4), no security is
required.

Section 42: Revision

If the loanee/mortgagor/guarantor files the Revision (For the

purpose of Artha Rin Adalat Ain, Revision means 2nd appeal and it
must be filed before the Honourable High Court Division of the
Supreme Court) suit, he needs to deposit 75% of the decreetal
amount to the court as security. But if the Bank files the Revision, no
security is required as well as Appeal.

(Contd...11)
Section 44:Ad-interim Order

No ad-interim order arising out of Artha Rin Adalat Ain shall be called
in called in question in any higher court in the form of Appeal or
Revision. (It is to be noted that Artha Rin Adalat Ain does not contain
any provision for Appeal or Revision against any order of the Artha Rin
Suit or Execution Suit. So, Filing Writ Petition may be the only relief)

Section 45: Amicable Settlement of Suit

At any stage of suit, the parties can settle the dispute amicably

Section 46: Special Procedural and Time Limit about Filing of Case

Notwithstanding anything contained in the Limitation Act – 1908,

Bank shall file a suit if it is unable to realize as per repayment
schedule
(a) Minimum 10% of the recoverable amount in the first year.
(b) Minimum 15% of the recoverable amount in the first two
years.
(c) Minimum 25% of the recoverable amount in the first three
years.
 Page-14

46(3): If the repayment schedule is less than three years and recoverable
amount is less than20%, Bank shall file the suit within the next one year.
If loan is re-scheduled, the time limit will be ascertained on the basis of
new repayment schedule.
46(5): If suit is not filed following the provision of this Act, the Court
shall inform the Chief Executive Officer in writing and the appropriate
authority shall take disciplinary action.

Section 47: Limitation on imposing claim

Bank cannot claim more than 200% interest of the principal amount
while filing the Artha Rin Suit i.e. (principal 100 tk + interest 200 tk)
= 300 tk.

(Contd...12)
Section 48: Counting Days

Only the working days of the Judge shall be counted in respect of

counting days.

Section 57: The inherent power of the Court

For the purpose of the ends of the justice and checking misuse of the
proceedings, Court can pass necessary complimentary order using its
inherent power.

Section 59: In respect of contradiction, this Act (in Bangla) shall prevail.

Some important amendments made in 2010

In 2007, the last ‘Care Taker Government’ made some important amendments
and promulgated an ordinance namely ‘Artha Rin Adalat (Amendment)
ordinance – 2007’. But it was automatically repealed in 2008, as the newly
formed government did not approve it in the parliament within 30 days. Later
on, in the light of that repealed ordinance, some important amendments were
made in 2010. Some major amendments are discussed in the following briefly:-
 Page-15

(a) Banks/FI’s can sell the mortgage property under section 12(3), though
the Power of Attorney has not been offered.

(b) The suit can be amicably settled through arbitration, under section 22,
at any stage of the suit. It can be settled even in execution or appeal
stage.

(c) Execution suit must be filed within one year (Instead of 180 days) of
the decree under section 28(1).

(d) The court shall publish the notice aforesaid in such a newspaper which
is directed by the decree-holder lodging a written petition before the
court. (Section 30).

(Contd...13)

(e) The amount to be deposited in case of objection in execution suit has

been made 10% (Instead of 25%) in section 32.

(f) In case of auction sale under section 33, every bidder shall deposit
20% of the quoted value, if it is maximum 10.00 lac.
15% of the quoted value, if it is between 10.00 lac to
50.00 lac.
10% of the quoted value, if it is more than 50.00 lac.
But it was 25% in all slabs. The time limit for payment of the rest
amount has been fixed for 30 days, 60 days and 90 days. Even the
time may be extended to more 60 days on application of the bidder.

(g) The time for filing appeal in the High Court Division has been
extended to 60 days. (Section 41)

(h) The interest on the decretal amount has been increased from 8% to
12%. In case of appeal/revision, it will be 16% and in case of
appeal/revision against the order of Higher Court, it will be 18%.
 Page-16

Where any writ petition has been filed challenging any order or decree
and is discharged, interest will be charged at the rate of 25%.

............

(Contd...14)
The Limitation Act - 1908
Introduction: The law of Limitation was first introduced in the
Subcontinent in 1793 in partially. Then, in 1859, the Law of Limitation was passed
and later on it was amended in 1877. Finally, the Limitation Act - 1908 was
promulgated which includes the law relating to limitation for Suits, Appeals and
Applications etc. It has come into force on January 01, 1909.

Object of this law: Law is the back-bone for the standing of peaceful and
live society. It changes with the change in the society. Mortality is the fate of every
life. So, would be the fate with the litigations because there is no good to the
society in keeping them to be live for sine-die-period.

The main object of the Law of Limitation is to prevent disturbance or

deprivation may have been acquired in equity and justice by long enjoyment or
what may have been lost by a party’s own inaction, negligence or lacks. It provides
the time period in which case can be brought in the court of law. Negligence in
 Page-17

institution of suit with period prescribed causes the suit time barred, thus not
maintainable in the court of law. Violation of one’s right gives rises to cause of
action. One should not sleep over his night. No negligence on accrual of right or
interest is permitted. Law aids the vigilant and not the indolent. Vigilance grants
the relief. Enforcement of rights upon its infringement is got made through court.
Right is extinguished when it is not litigated within the time prescribed for it.

The object of this Act is not to create or define cause of action but simply to
prescribe the period which the existing rights can be enforced in court of law. The
principle of this Act is not to enable suits to be brought within certain period but to
forbid them being brought after certain period.

The Limitation Act – 1908 contains 29 Sections. The main sections of this Act are
given below:

Section 3: Dismissal of Suits after period of Limitation.

Section 4: When the court is closed, when period expires. (When the court
is closed, the Suits/appeals/applications may be instituted on the day the
court re-opens).

Section 5: Extension of period in certain cases: - Any appeal or

application of revision or a review of judgement or for leave to appeal or any
other application to which the section made applicable by or under any enactment
for the time being in force may be admitted after the period of limitation prescribed
thereof, when the appellant or applicant satisfies the court that he has sufficient
cause for not preferring the appeal or making the application within such period.

Section 9: Continuous running- Where once time has begun to run, no

subsequent disability or inability to sue stops it.

Section 12: Exclusions of time in legal proceedings. The time requisite for
obtain a copy of judgment/ decree shall be excluded.

Section 14: Exclusion of time of proceeding bona fide in court without

jurisdiction.

Section 15: Exclusion of time during which proceedings are suspended.

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Section 19: Written acknowledgement of liability: - before the expiration

of the period prescribed for the suit or application in respect of any property
or right, an acknowledgement of liability in respect of such property or right
has been made in writing signed by the party, such period of limitation shall
be computed from the time when the acknowledgement was signed.

Section 20: Effect of payment on account of debt or of interest on

legacy: - before the expiration of the prescribed periods, due to payment a
fresh period of limitation shall be counted from the period of payment made.
Section 28: Extinguishment of right to property after 12 years.

Section 29: Nothing in this Act shall affect section 25 of the Contract Act –
1872.

At present, Bank/Financial Institutions file suits under the Artha Rin Adalat
Ain–2003 and latest amendment in 2010. This law has been promulgated only for
the Bank/Financial Institutions for recover their defaulted money. Since Artha Rin
Adalat Ain -2003 is a special/ overriding law, the provision of Limitation Act –
1908 is not generally applicable.

In the Artha Rin Adalat Ain – 2003, section 28 and 41 provides the grounds
of limitation. Section 28 of this Ain provides for the time limit to file suit for
execution and section 41 provides for special provision in respect of filing
Appeals.
(Contd...16)

As per section 28, The decree holder shall file the execution suit within
maximum one year of gaining decree. Execution suits filed after one year
shall be barred by limitation and Court shall directly reject the
application/ execution suit.

Where any new suit for execution is submitted after 6 years of expiry of
first execution suit, the same shall be barred by limitation and the court
shall directly dismiss the suit directly.

For Example: Bank can file as many execution suits as it requires for
recovery of the loan. But no execution suit can be filed after six year of
filing the 1st execution suit. For example: If 1st execution suit is filed on
01.01.2011, the 2nd or 3rd or 4th execution suit cannot be filed after
 Page-19

31.12.2016.

As per section 41, If the decreetal amount is up to 50.00 lac, an appeal

may be preferred to District Judge Court within 30 days of the decree but
if the amount exceeds 50.00 lac, an appeal may be preferred to
Honourable High Court Division of the Supreme Court within 60 days of
the decree. Otherwise, such appeal shall be barred by limitation. ***

Compiled by:
Md Ali Hossain Prodhania
Supernumerary Professor/BIBM