Kathmandu. KATHMANDU: The Supreme Court (SC) has issued an interim order against the government not to implement the amended provision of Clause 12 (F) of the Land Related Act, 2021 that allows banks and financial institutions to sell their non-banking properties within three years and if they fail to sell them within the stipulated period, they can sell only with the approval of the Government of Nepal.
Chief Justice Prakash Man Singh Raut and Justices Kumar Regmi, Hari Prasad Phuyal and Dr. Dr. Manoj Kumar Sharma A five-member constitutional bench including Nahakul Subedi issued the interim order in response to a writ petition filed by the Confederation of Bank and Financial Institutions, Nepal (CBFIN) on November 23, 2002 naming the government, Ministry of Land Management, Cooperatives and Poverty Alleviation as the defendants. With the issuance of the order, the way has been opened for the sale of non-banking assets registered in the name of banks and financial institutions for more than 3 years without the approval of the Government of Nepal.
The Investment Facilitation Act, 2081 published a notice in the Nepal Gazette on July 9, 2081 by adding Section 12 (f) to Section 12 of the Land Act, 2021 by adding Section 12 (f) to Section 12 of the Land Act, 2021 and if the concerned bank or financial institution or co-operative organization auctions the land taken as collateral for security of credit, if the concerned bank or financial institution or cooperative organization accepts the land on its own without accepting the auction, the limit is exceeded within 3 years from the date of acceptance of such land. The government has to take permission from the Government of Nepal to sell such land if it is not sold within that period. Prior to the amendment, there was no such time limit in the Land Act for the sale of non-banking assets in the name of banks and financial institutions.
Cibfin had filed a writ petition before the Constitutional Bench of the Supreme Court seeking to nullify the amended provisions of Section 12 (f) of the Land Act as it contradicted the Article 17 (2) (f) and Article 25 of the Constitution of Nepal regarding the right to property. Hearing the same writ petition, the Constitutional Bench of the Supreme Court ruled that since the banks or financial institutions are compelled to keep the non-banking assets as they cannot auction the security held by them, it is evident that the investment of the bank would be at risk if the Government of Nepal does not give permission to sell the non-banking assets after three years. “If the provisions of Section 12 (f) of the Act are implemented, the banks and financial institutions will suffer irreparable loss and in view of the convenience and balance, an interim order has been issued in the name of the respondents in the name of the Supreme Court (Operation of Constitutional Bench) Rules, 2072 in accordance with Sub-rule (4) of Rule 19 of the Rules 19 of the Rules, 2072,” reads the order.
After this order, due to the economic contraction seen in the country, the recovery of loans of banks has been affected and there is some relief to manage the sale and sale of non-banking assets in the name of banks and financial institutions.
