Seeking to set aside a decree's outcome

Section 41(1) of the Artha Rin Adalat Ain, 2003 (ARAA) provides that either party to a suit filed under the ARAA who may be aggrieved by a decree of the money loan court, if the decreed money is up to five million taka may prefer an appeal to the District Judge Court (DJC) and if the decreed money is above five million taka may prefer an appeal to the High Court Division (HCD) of the Supreme Court. Appeals to the DJC must be made within 30 days and appeals to the HCD must be made within 60 days from the decree. Section 41(2) of the ARAA provides that for preferring an appeal, the appealing party must deposit 50 per cent of the decreed amount. However, Section 41(4) of the ARAA waives financial institutions from this requirement of making a deposit as a pre-condition for preferring any legally admissible appeal.

In Dr Md Asadullah and Another v Sonali Bank Ltd. and Others (2010) 62 DLR (HCD) 474, a parcel of land which was mortgaged as security for a loan was sold by auction in execution of an ex parte decree (on contest against Bangladesh House Building Finance Corporation who had prior charge over the same property). Sonali Bank, the decree holder filed an execution suit and the parcel of land was sold by an auction held in pursuance of the decree. The petitioners claimed that when the auction purchaser took steps to gain possession of the land, only then they could know about the decree. They filed a petition for setting aside the ex parte decree which was ultimately rejected. They then preferred an appeal to the DJC. The DJC rejected the appeal petition on the ground that as the mandatory security deposit has not been made, the petition is inadmissible.

Going by the wordings of the statute, it can be seen that the dismissal of the appeal petition by the DJC is perfectly legal. But quite surprisingly, upon revision against the order of the DJC, the HCD held that the petitioners were not required to make the deposit as they were not applying for setting aside the decree; rather they accepted the decree and only applied for setting aside the auction sale in order to retain the property. The HCD noted that the deposit is mandatory only when a party is aggrieved by a decree and wants to challenge that decree (be that passed on contest or ex parte). But when a judgement debtor would only challenge the auction sale keeping the decree intact, no deposit is required as the debtor is not aggrieved by the decree.

The above findings of the HCD is curious and seems to pay no attention to the express wordings of Section 41(3) of the ARAA which unmistakably provides that when an appellant makes a deposit, it has to be made to the decree-holder financial institution in partial recognition of the decree and if the decree is not accepted, then the deposit would be made as a security in favour of the decree awarding court. This provision of the law clearly covers both situations in which a judgement debtor may prefer an appeal against a decree that is irrespective of whether she/he acknowledges the decree or not.

In this case, the auction sale has occurred in pursuance of a decree and the judgement debtors were a party to the original suit and being so, they were bound by the decree. If the petitioners were not a party to the suit, they could have raised an argument that the decree was not binding on them. Such a situation could arise, when for instance, someone fraudulently mortgages a parcel of land without any knowledge of its owner and then the owner becomes aware of the decree only when the execution proceeding commences.  However, this not being the case here, the scope for such an argument is non-existent. Again, in this case, the auction sale itself has taken place in pursuance of a decree of a court of competent jurisdiction. Had there been no decree, there could be no question of the auction sale taking place. In reality, challenging the auction sale amounts to challenging the outcome of the decree.  Thus, it is difficult to understand how challenging the auction sale without challenging the decree is possible.

Thus, it would not probably be improper to respectfully put forward that by setting aside the order of the DJC on this point (though not on other points raised in this suit); the HCD has disregarded the letter of the law. This could give a defaulter more breathing space than that is apparently envisaged by the Parliament. Clearly the objective behind the requirement of payment of security for preferring a legally admissible appeal is to discourage filing of frivolous appeals and waving the requirement of deposit of security would act against that scheme of the Parliament. This type of a lenient approach to defaulters may encourage some of them to try to evade the service of summons simply to waste time and wait until the execution suit begins and the property gets sold.

The writer is an Assistant Professor of Law, BRAC University.