The Appellate Division’s Chamber Court has stayed a High Court order suspending proceedings in three cheque dishonour cases, paving the way for banks and financial institutions to pursue loan recovery and cheque dishonour cases simultaneously.
Attorney General Md Ruhul Quddus Kazal disclosed the matter on Monday after a Chamber Court bench headed by Justice Md Rezaul Haque passed the order.
The High Court, on September 28, had issued interim orders suspending proceedings in 11 loan-related cases. The Bangladesh Bank subsequently challenged the orders in three cases before the Supreme Court.
Following Monday’s hearing, the Chamber Court stayed the High Court’s interim orders barring the cheque dishonour proceedings from continuing.
Explaining the legal issue, the attorney general said the Money Loan Court Act, 2003, was enacted to facilitate the speedy recovery of defaulted loans from borrowers who fail to repay money taken from banks and financial institutions.
Bangladesh also has the Negotiable Instruments Act, 1881, under which Section 138 provides for criminal proceedings over dishonoured cheques.
“The question was whether a bank or financial institution could file a money loan recovery suit while simultaneously pursuing a criminal case under Section 138 if a cheque issued as security for the loan or a post-dated cheque was dishonoured,” Kazal said.
He noted that money loan recovery suits are civil proceedings, while cheque dishonour cases are criminal proceedings.
Some loan defaulters had argued that criminal cases under Section 138 should not proceed alongside civil recovery suits under the Money Loan Court Act, as the latter does not generally provide for imprisonment, he said.
However, the Supreme Court had ruled in several cases that the two proceedings could continue simultaneously because they involved separate offences, the attorney general added.
Despite those precedents, a High Court bench on March 19, 2025, declared it illegal and beyond the jurisdiction of financial institutions to file cases under both laws to recover defaulted loans. The verdict also cancelled proceedings in the cases concerned.
Kazal said the state later appealed to the Supreme Court, which granted leave to appeal on October 26, 2025, and stayed the operation of the High Court verdict.
He added that the latest Chamber Court order would allow banks and financial institutions to pursue civil suits for loan recovery under the Money Loan Court Act while simultaneously initiating or continuing criminal proceedings over dishonoured cheques under Section 138 of the Negotiable Instruments Act.
