The Court of Appeal has dismissed a writ application filed by Daya Group Limited and Daya Apparel Export (Pvt) Ltd challenging People’s Bank’s move to auction mortgaged properties under its parate execution powers.
In a judgment delivered on 19 June, the Court ruled that People’s Bank was legally entitled to proceed with the recovery process after the companies failed to settle outstanding loan obligations secured by mortgage bonds.
The case centred on an outstanding debt of USD 1.42 million, with People’s Bank seeking to recover USD 1,420,829.26 together with additional interest. The petitioners disputed the amount, arguing that the bank had used an inflated exchange rate in calculating the liability.
The petitioners also argued that the bank’s decision to auction the properties was unlawful, claiming that statutory notice requirements had not been properly followed and that properties belonging to Daya Group had been mortgaged to secure facilities obtained by Daya Apparel Export, and therefore should not be subjected to parate execution.
However, the Court found that the companies had been aware of the bank’s actions, had engaged in discussions to reschedule the facilities, and had sought repeated postponements of auction proceedings after defaulting on repayments.
The judgment noted that Section 29D of the People’s Bank Act prevents borrowers and related parties from challenging resolutions passed by the bank to recover debts through parate execution. The Court also held that the application had been filed after an unexplained delay of more than one year and eight months from the date of the bank’s resolution.
The Court further rejected claims relating to exchange rate calculations and interest disputes, ruling that such matters involved contractual issues that were not suitable for determination through writ proceedings.
Accordingly, the Court dismissed the application and ordered the petitioners to pay costs of Rs. 1 million. (Newswire)