A Landmark Judgment on Foreign Travel Restriction in Artha Rin Cases

 A Landmark Judgment on Foreign Travel Restriction in Artha Rin Cases

 19 SCOB [2024] HCD 76: Ali Imam Vs. The Judge, Artha Rin Adalat & Ors.

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Case Overview

- Court: High Court Division (Special Original Jurisdiction).
- Bench: Mr. Justice J.B.M. Hassan and Mr. Justice Razik-Al-Jalil.
- Case Type: Writ Petition No. 2191 of 2022.
- Judgment Date: August 4, 2022.
- Key Statutes Involved: Sections 6(5), 34(1), and 57 of the Artha Rin Adalat Ain, 2003; Article 36 of the Constitution of Bangladesh; Section 7(c) of the Bangladesh Passport Order, 1973.
 

Core Facts of the Case

- The Loan & Lawsuit: International Finance Investment & Commerce Bank Limited (IFIC) filed Artha Rin Suit No. 21 of 2012 against the petitioner (Ali Imam) and others to recover an outstanding loan of Tk. 61,03,31,623.97.

- The Bank's Application: During the pending suit, the Bank filed an application under Section 57 of the Artha Rin Adalat Ain, 2003 and Section 7(c) of the Bangladesh Passport Order, 1973, alleging that the defendants were planning to leave Bangladesh permanently to evade justice.

- Impugned Order: On January 25, 2022, the Artha Rin Adalat ordered the defendants (including the petitioner) to deposit their passports and restrained them from leaving the country.

- Petitioner’s Challenge: The petitioner, who was a third-party mortgagor rather than the principal borrower, challenged this order via a writ petition, claiming it violated his fundamental right to freedom of movement under Article 36 of the Constitution.

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Legal Issues & Arguments

1. Liability of a Third-Party Mortgagor

- Petitioner’s Argument: The petitioner argued that as a "mere mortgagor," his liability only arises after exhausting all recovery processes against the principal borrower. Since the suit was still pending, he claimed the passport seizure was premature.

- Respondent Bank’s Counter: The Bank argued that under Section 6(5) of the Act, principal borrowers, mortgagors, and guarantors are jointly and severally liable, and all become judgment debtors once a decree is passed.

2. Freedom of Movement vs. Public Interest

- Petitioner’s Argument: Article 36 of the Constitution guarantees the right to leave and re-enter Bangladesh. The petitioner argued that the Artha Rin Adalat Ain, 2003 contains no explicit provision allowing a court to seize a passport.

- Respondent Bank’s Counter: The Bank stated that freedom of movement is not absolute and is subject to reasonable restrictions in the public interest (protecting public money).

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The High Court Division's Findings & Reasoning

Equal Status of Mortgagors (Sections 6(5) & 34(1)):

The Court rejected the petitioner's attempt to escape liability based on being a mortgagor. Citing apex court precedent (Sekendar vs. Janata Bank Ltd.), the Court confirmed that three categories of persons—principal borrower, third-party mortgagor, and third-party guarantor—are jointly and severally liable. A mortgagor holds equal responsibility with the principal borrower and can face civil imprisonment under Section 34(1) if the decretal dues are not satisfied by the mortgaged property.

Inherent Powers of the Adalat (Section 57)

The Court ruled that Section 57 of the Artha Rin Adalat Ain, 2003 grants the Adalat inherent/supplementary powers to pass necessary orders to secure the ends of justice and prevent the abuse of court processes.

The Court explicitly identified Section 57 as the appropriate statutory authority enabling the Adalat to direct the deposit of a passport and restrain foreign travel where necessary to ensure realization of public money and prevent frustration of judicial proceedings.

Constitutional Context of Article 36

The Court held that the fundamental right to freedom of movement under Article 36 of the Constitution is not absolute and is subject to reasonable restrictions imposed by law in the public interest.
 

Since the Banks are the custodian of the public money and the plaintiff-Bank is in the run of realisation of public money from the loan defaulters, of course the anxiety of the Bank attracts the public interest as envisaged under Article 36 of the Constitution."»

The Court further observed that because the restriction was imposed through a judicial order under the supervision of the Artha Rin Adalat—not by an arbitrary executive action—it did not violate Article 36 of the Constitution.

Recognizing the prevailing socio-economic reality, the Court also noted that many loan defaulters leave Bangladesh after siphoning off public money, thereby frustrating recovery proceedings. In such circumstances, judicial intervention restricting foreign travel may be necessary to protect public interest.

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Final Decision

The High Court Division found no merit in the petitioner's arguments and discharged the Rule Nisi.

Accordingly, the judicial order directing the petitioner to deposit his passport and restraining him from leaving Bangladesh was upheld as lawful.

Considering that the Artha Rin Suit had remained pending since 2012, the High Court also directed the Artha Rin Adalat to dispose of the suit expeditiously in accordance with law.

  Why This Landmark Judgment Matters in the Current Banking Scenario

As the volume of classified loans and recovery litigation continues to increase, judicial interpretations have become as important as statutory provisions. A landmark judgment not only clarifies the law but also guides banks, NBFIs, lawyers, recovery officers, and borrowers on the proper application of legal principles. Understanding these precedents helps institutions reduce litigation risk, improve recovery strategies, ensure procedural compliance, and make legally sound decisions. In today's evolving banking environment, staying updated with significant High Court and Appellate Division decisions is no longer optional—it is an essential part of effective loan recovery and legal risk management.