Section 83: Effects of Order Relating to Liquidation

1) In case the court orders for initiating the process of mandatory liquidation of any bank or financial institution, the order results in the following on the following matters:-

(a) In case any limitation is expired as to any claim or right of the bank or financial institution, the limitations of such claims or rights shall ipso facto be deemed to be extended for six months from the date of issuing the order by the Court to initiate the process of mandatory liquidation.

(b) Except in the situation as mentioned in Clause (c), if any property or assets of the bank or financial institution has been under impediment for any reason whatsoever, or such property is pledged for any credit availed to the bank or financial institution, such property or asset shall ipso facto be released.

(c) The functions concerning accepting deposits and lending credits shall ipso facto be stopped.

(d) Case proceedings against the bank or financial institution in any court shall ipso facto be stopped, and unless otherwise ordered by the Court, court proceedings against such bank or financial institution shall not be revived.

Provided that in case there is any case sub-juiced at the Supreme Court as to the bank or financial institution, or it is necessary to seek clearance from the Supreme Court, the Rastra Bank shall file an application to that Court.

(e) No interests or any type of additional charge shall be levied on the liabilities of the bank or financial institution.

(f) Share of such bank or financial institution shall not be transferred, mortgaged or alienated.

Provided, however, that the Act of transfer, mortgage or alienation may be done with prior approval of the Rastra Bank.

2) In case the Liquidator comes to know from any source that any action carried out before six months from the date of passing the order by the Court to initiate the process of mandatory liquidation causes harm or loss to the interests of the depositors or creditors of the bank or financial institution, the Liquidator shall submit an application about it to the Court and information thereof shall also be given to the Rastra Bank.

3) In case the Court finds from the application submitted pursuant to sub-section (2) that any of the following actions were carried out, the Court may declare such action null and void:-

(a) If the decision to offer presents is made,

(b) If any act causing loss to the rights and interests of the creditors or depositors is committed,

(c) If payment is made or transferred before repayment of credits or the collateral is released, transferred or alienated before the expiry of the term of the credit,

(d) If the bank or financial institution has to suffer more liability in the course of any transaction or contract than that is normally prevailing practice,

(e) If any agreement or transaction, other than those regular banking or financial transactions permissible under this Act, is found to have been made,

(f) If a contract has been made for providing employment to the relevant persons.

4) In case any bank or financial institution is subjected to mandatory liquidation, the following transactions shall be null and void:-

(a) Preferential transactions made immediately before six months of the initiation of the process of mandatory liquidation or within the period of six months after initiation of the process,

(b) Preferential transactions made with the relevant persons immediately before one year of initiation of the process of mandatory liquidation or within the period of one year after
initiation of the process,

(c) The bank or financial institution is subjected to mandatory liquidation as a result of any transaction made with a low price immediately before one year of the initiation of the process of mandatory liquidation and other transactions with a low price made within one year after initiation of the process;

(d) Fraudulent transactions made immediately before two years of the initiation of the process of mandatory liquidation or within the period of two years after initiation of the process;

5) The Liquidator shall have to file an application to the Court to get the transactions referred to in sub-section (4) invalidated.

6) In case the Court is satisfied with the invalidity of any transaction, the Court may issue the following order:-

(a) To issue an order to the concerned person to pay to the Liquidator all or some of the amount the payment of which has been made by the bank or financial institution with regard to such transactions,

(b) To issue an order to the concerned person to handover the assets so transacted or to pay the value equivalent to thereof to the Liquidator,

(c) To issue an order to exempt or release, fully or in part, the credit the bank or financial institution has availed, the security or collateral pledged by the bank or financial institution against that credit,

(d) To issue an order to invalidate, inactivate or declare as non-implementable the agreements between the bank or financial institution and another person executed for pardon or
surrender,

(e) If an additional order is required to be given for execution of the order under this Sub-Section, the Court shall issue such an order as well.

7) In case any Director, official, employee or any other person is found to have committed the acts referred to in sub-section (3) or (4) and the bank or financial institution has been facing any loss or damage, they shall be liable to bear the compensation personally for such loss or damage.