Friday, February 01, 2008

SC no to stay on loan default cases

In its order to curtail financial irregularities in the banking sector, the Supreme Court has upheld the authority of the banking institutions to take strong action against the bank loan defaulters.Revealing its full text judgment of May 4 verdict, a division bench of Justices Bala Ram KC and Tahir Ali Ansari also curtailed the authority of appellate courts to issue stay order in favour of bank defaulters. The bench told the lower courts to keep in mind the loss to the banks while settling such cases.The text of judgment was issued while acting on a writ petition filed by Chairman of Fulbari Resort Pyush Bahadur Amatya against the Nepal Rastra Bank, the Nepal Bank Limited and the consortium banks. Amatya Group invested over Rs 600 million 13 years ago in the Fulbari Resort and moved the apex court when the NRB and the consortium banks initiated action against them. The bench also told the Amatya Group to pay back Rs 1.86 billion to the consortium banks.The Rastriya Banijya Bank, which was the lead bank of the consortium, had recommended the Credit Information Bureau (CIB) to blacklist the Amatya Group following several calls to the group to clear the loan in 2004 as per Clause 88 of the Nepal Rastra Bank Act 2058. However, challenging the CIB’s decision to blacklist it, the group moved apex court.The bench observed that issuance of a stay order in favour of bank defaulters made the apex court more sensitive.“The Appellate Court issued stay orders without analysing balance of convenience and without caring for the loss to the affected party,” the text stated.Stating that issuance of a stay order encourages the defaulters not to pay back the loans, the bench told the court of appeals to be sensitive while issuing stay order.

Ananta Raj Luitel/ himalayatimes

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