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By Aiman Rahman Khan

Let’s admit it; there have been countless times in our lives when people borrowed money from us. Thanks to some of our kindness, the lent money never made its way back. And when in times of financial crisis, that same borrower show symptoms of amnesia, realization strikes that you are truly helpless. You do not have the slightest bit of evidence that you lent him the money since it all happened in one casual meeting. You realize you are never getting it back. Some of us let it go while others resort to hostility. Often relationships disintegrate; friends turn to enemies, all for this practice of lending money. Such instances teach us a valuable life lesson – Don’t lend what you don’t mind losing. But what do you do, when you really want them to return you the money?

The smartest step one could take is to gather as much evidence to prove that the lending really did occur. Correspondence by mediums that allow recording should be the first step. Write them an email, send them a text or use social media to talk to them as politely as possible, stating the following information correctly in a formal manner:

  1. How much they owe you.
  2. When did the oral transaction occur? And what was the time that was set for the return of the amount?
  3. What loss have you suffered due to the lapse of time?
  4. Your prayer for the return of the money.

The information stated in this email/text shall form the contents of your legal notice. Their reply will adduced to contribute a major part of the suit you are going to file against them. It is however important to keep in mind that such conversation does not provide any hint of what you are willing to do. According to a popular website, NiDirect, It’s important to include information like:

  • who’s involved – the name and address of both you and the person who owes you money
  • dated copies of all paperwork relating to the debt
  • a date by which you expect payment (at least seven days)
  • a request for the debtor to put in writing any issue or dispute they have with your statement
  • details of the steps you’ll take if payment isn’t received [1]

Now is the time when your ‘legal rights’ hormone kicks in! You want to take things to the court and teach them a lesson. But the laws look like a complicated jumble for you to decipher. You decide to go to a lawyer, but even a small advice can cost you a lot. Hence this ultimate guide has been designed to answer all of your queries. Following are the 4 ways one can compel someone to pay back a loan legally in Bangladesh:

  1. By Out of Court Settlement
  2. If it’s a cheque: By filing a suit against a deposited cheque in the Criminal Court.
  3. By filing a money suit against the debtor in the Civil Court.
  4. By filing a suit against the debtor in the Artha Rhin Adalat (Money Loans Court)

Details of the processes are as follows:

  1. By ‘Out of Court’ settlement:

Loans can be recovered by an ‘Out of Court’ settlement between the debtor and creditor. In that case, the settlement can be done by in presence of locally reputed persons. The settlement may be carried out by those who were present at the time of the transaction. It is important that immediately after the arbitration; the issues in concern must be written down and signed by the witnesses present at the event. Or else, any of the parties could take advantage of an unsigned arbitration form.

  1. By filing a suit against a deposited cheque in the Criminal Court.

In a commercial transaction, the seller or the lender may keep the cheque signed by the buyer or the borrower or in many cases, handover a cheque that is accepted by the buyer or the borrower. In this regard, the money can be recovered from the buyer or borrower’s cheque, given that its validity is within 6 months, by the Negotiable Instruments Act (N.I. Act) 1881. The following are the steps:

  • Present the cheque as bounced to the bank within its validity
  • After the dishonour of the cheque, a legal notice must be sent to the borrower or the one who gave you the cheque via an advocate within 30 days. There is a misconception that the cheque must be dishonoured 3 times before doing so. However this is not true. Legal notice can be sent even if it is dishonoured only once.
  • The suit must be commenced within 60 days of sending the legal notice. But it must be kept in mind that the process of filing a suit against a company and filing a suit against individual regarding cheques is not the same. Or else the suit might be dismissed in terms of error while in proceeding.

One can also file suit against negotiable instrument in the civil court besides the criminal court. But bringing a case to the criminal court is better suggested than civil court.

  1. By filing a money suit against the debtor in the Civil Court.

This is the best way how anyone can sue another individual in order to make them repay a loan. Except for the negotiable instrument, be it commercial transactions or not, a suit can be filed in the civil court by producing all the necessary documents bearing the buyer or the borrower’s signature. The documents may be receipts or cash memo that support the fact that money was lent. Following are the steps one should take in order to bring his culprit to the court:

  • The lender must approach an advocate via whom a legal notice shall be sent to the borrower.
  • The lender must mention a stipulated time in the legal notice, within which he wishes to get back his money.
  • It must also be mentioned that failure to return the money within the stipulated time shall result in legal action to be brought against the borrower.
  • The legal notice must be sent to the borrower’s address via registered post.
  • If the borrower fails to pay within the stipulated time, the lender becomes eligible to bring legal action against him.
  • The lender must bring all the necessary documents as evidence to the court.
  • With the help of a lawyer, the lender may file a money suit against the borrower.
  • The standard Court Fee is with 15% vat and an Ad Valorem fee of 2.5% of the lent amount. That means, if the lent money is 10, 000 taka, the ad valorem fee will be (10, 000 x 2.5%) = 250 Taka.
  • After the suit has been brought and the defendant found guilty, the court may impose a fine on the borrower or certain decrees shall be passed. The decrees may be either borrower returning the original amount to the lender, paying the interest of the original amount to the lender or bearing the cost of the proceedings. The court may also at times order imprisonment to the borrower at times.
  1. By filing a suit against the debtor in the Artha Rhin Adalat (Money Loans Court)

The right to file a suit in the Artha Rhin Adalat is reserved for Banks and Non-Banking financial institutions only. Section 12 of the Artha Rin Adalat Ain 2003 empowers a financial institution to file a suit regarding the money obtained through the auction of a property.

According to s.12 of the Artha Rhin Adalat Act 2003, No financial institution is entitled to file an Artha Rin Mamla before the Adalat without adjusting the liability by selling the property (movable or immovable) under lien, pledge, hypothecation or registered mortgage of which the financial institution is lawfully authorized to sell by dint of irrevocable notarized power of attorney in case of movable property and registered power of attorney in case of immovable property.

For selling the above-mentioned property, the financial institutions shall follow the procedure of auction sale provided in Section 33 of the Ain so far as it is possible.

After selling the property in question, if the financial institution fails to make delivery of possession to the purchaser, it can take recourse to the District Magistrate and the District Magistrate or his nominated Magistrate of the First Class upon satisfaction of mortgage against debt, shall take necessary step to transfer the possession of the property to the concerned purchaser on behalf of the Financial Institution. [2]

E-Evidence?

As mentioned in the beginning of this article, it is always best to gather evidence to prove the transaction. Email or text has been suggested which might be used as E-Evidence. The Evidence Act, 1872, does not have any direct provision for electronic evidence; there are certain acts where electronic evidences are accepted as documents. Some of the laws that she mentioned are: Speedy Trial Tribunal Ain 2002 and Ain Sringkhola Bighnokari Aporadh Ain 2002, which in section 16 of the former and section 14 of the latter includes provisions for using camera for photographic and video recording as evidence. Also, Pornography Niyontron Ain 2012, which accepts all forms of electronic evidence and the Information and Communication Technology Act 2006, which also accepts E-evidence as evidence in court. Oporadh Shomporkito Bishoye Paroshparik Shohayota Ain 2012 (Mutual Legal Assistance in Criminal Matters Act, 2012), helps the foreign countries in investigating e-evidence in our country and vice versa. [3]

I dont have any evidence or documents to prove the lending. What do I do now?

In most occasions, we tend to lend money in a casual manner, to a friend or a relative. Requiring the borrower to sign any documents or receipt may be taken as an insult which many of us want to avoid. Be it conservatism or societal etiquette, many of us do not wish to go into such hassle. Therefore, when no evidence can be produced, no legal action can be brought. The oral agreement is still binding and doesn’t need proof so long you can prove money has shifted hands and that some have been returned. Two sections of the Evidence Act 1872 deals with ‘Oral Evidence’.

  1. Section 59 states that All facts, except the contents of documents, may be proved by oral evidence.
  2. Section 60 states that Oral evidence must, in all cases whatever, be direct; that is to say-

    – if it refers to a fact which could be seen, it must be the evidence of a witness who says he saw it;
    – if it refers to a fact which could be heard, it must be the evidence of a witness who says he heard it;
    – if it refers to a fact which could be perceived by any other sense or in any other manner, it must be the evidence of a witness who says he perceived it by that sense or in that manner;
    – if it refers to an opinion or to the grounds on which that opinion is held, it must be the evidence of the person who holds that opinion on those grounds;

Provided that the opinions of experts expressed in any treatise commonly offered for sale, and the grounds on which such opinions are held, may be proved by the production of such treatises if the author is dead or cannot be found, or has become incapable of giving evidence, or cannot be called as a witness without an amount of delay or expense which the Court regards as unreasonable; further provided that, if oral evidence refers to existence or condition of any material thing other than a document, the Court may, if it thinks fit, require the production of such material thing for its inspection. [4]

However, providing oral evidence is less encouraged than proving with written documents.

The law of contract is one of the major and vital parts of every transaction. We may not go or pass any day without applying contract. [5] A verbal contract can be oral or written. But an oral contract is any agreement that two or more parties make based entirely on spoken or orally communicated terms. [6] The Contract Act 1872, applicable in Bangladesh, outlines which agreements may amount to contracts. But it does not say anything about oral transactions. According to section 10, that all agreements are contracts if they are made with the free consent of parties competent to contract for a lawful consideration and with a lawful object, and are not expressly declared to be void.[7] However it is less likely that such transactions may be regarded as a binding contract in our court.

The provision that governs oral evidence in the Evidence Act 1872 must be amended to allow such oral transactions. A separate provision regarding oral transaction must be included in the Small Cause Courts Act 1887 as well. Societal practices and etiquettes merely allow one to take everything in writing. Thus the burden of proof lies on the sufferer. The intense pressure of producing written documents results in frustration in the lender and in turn stops him midway. It is understood that a provision allowing this in an Act may be subject to misuse, but this may also protect future lenders.


Aiman Rahman Khan is a Research Associate at Bangladesh Legal Aid and Services Trust (BLAST). He is currently pursuing his M.S.S with a major in Victimology and Restorative Justice from University of Dhaka. He completed his LLB from University of London and LL.M from Eastern University, Bangladesh.


References:

[1] Nidirect, government services, ‘Recover debts owed to you – a guide’ [available at: https://www.nidirect.gov.uk/articles/recover-debts-owed-you-guide]

[2] Amjonota Blog (2014), ‘The Artha Rin Ain 2003’ [available at: https://amjonotablog.wordpress.com/2014/03/06/the-artha-rin-ain-2003/]

[3] BRAC University (2016) ‘Seminar on E-Evidence in Bangladesh Court’ [available on: http://www.bracu.ac.bd/news/seminar-e-evidence-bangladesh-court]

[4] The Evidence Act 1872 (Act no.1 of 1872) [available at: http://bdlaws.minlaw.gov.bd/pdf_part.php?id=24]

[5] Assignment Point, ‘Law of Contract’ [available on: http://www.assignmentpoint.com/arts/law/lecture-on-the-law-of-contract-01.html]

[6] Thorne R, ‘Are Verbal Contracts Legal in Court?’ [available on: http://smallbusiness.chron.com/verbal-contracts-legal-court-58620.html]

[7] Kashmi J (2014) ‘Verbal Contract Killer’, Dhaka Tribune, [available at: http://archive.dhakatribune.com/weekend/2014/jul/12/contract-killer]

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