Nepal Finance Wins Supreme Court Battle: A Landmark Legal Ruling
In a significant legal development impacting the finance sector in Nepal, the Supreme Court has delivered its verdict in favor of Nepal Finance Limited. This landmark ruling resolves a protracted loan-related collateral case that has been under judicial review since 2075 B.S. This decision has important implications for financial institutions and loan recovery processes within the Nepalese legal framework.
The Supreme Court‘s decision, delivered on Shrawan 15 (Thursday) by a joint bench of Justices Tek Prasad Dhungana and Bal Krishna Dhakal, overturns an earlier verdict from the High Court. This effectively sides with Nepal Finance Limited, providing clarity and support for their financial operations.
The case originated back in 2067 B.S., when the then Lalitpur Finance (now merged into Nepal Finance) disbursed a substantial loan of NPR 13 crore to an individual. The loan was secured using land registered in the name of another individual as collateral, as is standard practice in secured lending. This is a critical aspect of loan agreements and collateral management in the financial industry.
When the borrower defaulted on the loan repayment, including both the principal and interest, Nepal Finance initiated the process of auctioning the collateral to recover the outstanding dues. This is a common step in debt recovery cases. However, a legal complaint was filed at the Kathmandu District Court, challenging the auction due to the absence of a finalized agreement. This highlights the importance of proper documentation in banking regulations.
Despite this challenge, the District Court initially ruled in favor of Lalitpur Finance back in 2073/02/17. This initial ruling supported the finance company‘s position on the loan security. Dissatisfied with the decision, the opposing party then appealed to the High Court Patan, which ultimately sided with them.
Nepal Finance, seeking to protect its financial interests, subsequently escalated the matter to the Supreme Court, requesting a review of the High Court’s decision. After years of judicial proceedings and careful consideration of the legal arguments, the Supreme Court has now reversed the High Court’s ruling. This reversal confirms Nepal Finance’s legal standing and validates the company’s actions in recovering the loan. The Supreme Court decision reaffirms the importance of collateral in the financial system and provides a clear precedent for future loan recovery cases.
