Kathmandu. KATHMANDU: The Supreme Court (SC) has ruled that the heirs cannot claim the land auctioned by the bank.

The Supreme Court passed the order on a writ petition filed by Suresh Kumar Shukla. Shiva Kumar Shukla had taken a loan from Nepal Bank against 3 kattha and 15 dhur land in Birgunj Municipality-14 of Parsa district.

He had taken a loan on June 27, 2039 by mortgaging the land. According to Section 47 (7) of the then Commerce Act, 2031, Nepal Bank had taken over the land on Chaitra 15, 1993 after Shukla failed to pay the principal and interest on time.

After 32 years of the bank’s land transfer, Suresh Kumar Shukla, a resident of Kathmandu Metropolitan City-13, Tahachal, had filed a writ petition at the Supreme Court demanding the return of the mortgage. A division bench of Justices Hari Prasad Phuyal and Bal Krishna Dhakal issued the verdict on Tuesday.

“As the petitioner’s father could not repay the principal and interest amount of the loan utilised by the bank on the stipulated date, the bank could not auction the collateral even after publishing the auction notice,” the court said. It is not appropriate for the court to intervene in a matter where it is not natural for the son to apply to the bank for the return of the mortgage after a long period of non-acceptance and it is not realistic to start the collateral repayment proceedings after a gap of 32 years and whether or not to return the property which is a non-banking property is decided by mutual consent between the concerned bank or the borrower and if the bank returns the property accepted by the bank after completing the legal process years ago without any basis of justification. The writ petition is liable to be dismissed as the petitioner is not in a position to issue a writ petition as there is no situation to issue a writ petition as per the demand of the petitioner as there is a negative impact on the entire banking system and the bank has not seen any impact on the rights guaranteed by the petitioner in the constitution. ”

Section 47 (a) (1) of the Commercial Bank Act, 2031 states that “if any person, institution or industry does not comply with the terms and conditions of the loan made with the bank or does not repay the loan of the bank within the terms of the instrument, the borrower may recover the principal and interest by auctioning the security deposited with the bank or by selling it or by making any other arrangement.”

It is evident from the documents attached to the file that the bank took action under the same legal authority to auction the auction.

Clause 47 (a) (7) of the same Act states that if the bank fails to accept the auction pursuant to this Section, the bank may take ownership of the property, and in such a situation, the concerned government offices shall register or cancel the deposit accordingly in the records maintained in its office as per the notice of the bank.

The court has ruled that the bank had transferred the real estate in its name on March 29, 2043 on the basis of the same legal provision, and it cannot be termed as an act against the law.

According to sub-section (1) of Section 57 of the Bank and Financial Institutions Act, 2073, which is in force, if the borrower does not comply with the loan transaction instrument or contract or the agreement related to the loan or does not pay the loan or the interest or damages thereon within the terms of the instrument or contract, or if it is found that the borrower has misused the loan for the purpose for which the borrower has taken the loan pursuant to Section 56, the borrower shall not have misused the loan for the purpose for which the borrower has taken the loan. The concerned bank or financial institution may recover its principal and interest by auctioning the security written or pledged to the institution or by making any other arrangement.

Sub-section (1) of Section 57 states that “if no one accepts any movable or immovable property in the course of auction pursuant to this Section, the bank or financial institution may take possession of such property as prescribed.”

Similarly, under Section 587 of the Civil Code, 2074, Sub-section (1) provides for the right of a person taking a loan against mortgage or collateral, if such a person does not repay the loan or its interest, if any, within the stipulated time, the person taking the collateral shall take action in accordance with the law and recover the amount to be recovered for the loan by selling or auctioning the collateral according to the prevailing market price. The order states that such collateral can be transferred to its ownership subject to the rule.