Loan securities: HC order that banned dishonoured cheque cases stayed

The Appellate Division has stayed a verdict that the High Court delivered recently placing a ban on dishonoured cheque cases by the financial institutions.

A five-member bench, headed by Chief Justice Hasan Foez Siddique, passed the order hearing a petition filed by the BRAC Bank. The development now cleared the way for filing cases if a cheque of loan securities bounces.

The High Court on 23 November granted the appeal of three people, including Mohammad Ali, a trader of Barail in Brahmanbaria who was sentenced by a trial court in a cheque bounce case, and imposed a ban on accepting dishonoured cheque cases.

The BRAC Bank later filed three separate petitions seeking stay on the HC verdict. The petitions were placed before a chamber court on 28 November, who referred those to the regular bench of the Appellate Division.

Lawyer AM Amin Uddin along with Minhajul Haque Chowdhury argued on behalf of BRAC Bank during the hearing on Thursday, while lawyer Abdullah Al Baki represented Muhammad Ali.

In a conversation with Prothom Alo, Minhajul Haque Chowdhury said the Appellate Division has stayed the HC verdict for two months. There is now no legal barrier to accept dishonoured cheque cases.

All the cases will continue as before, he said, adding a regular leave to appeal will be filed soon against the HC verdict.

The 23 November verdict contains some specific instructions for the Bangladesh Bank and the judges who received dishonoured cheque cases.

It said the cheques accepted by financial institutions as security against loans are not negotiable instruments. The court, hence, placed a ban on accepting such dishonoured cheque cases and said the trial courts shall dismiss all pending cheque bounce cases, declaring them to be beyond their jurisdiction.

In its instructions to the central bank, the High Court said the regulator will immediately issue instructions to the financial institutions by making insurance compulsory against every loan.