… lender and borrower fined hefty sums, principal amount seized

Nima Wangdi 

The Supreme Court (SC) penalised both the lender and borrower embroiled in a private money lending case involving more than a million ngultrums and imposed hefty fines yesterday.

The court, for the first time, overturned the judgments of the lower courts and seized the principal amount. The court ordered the principal amount to be deposited in the government coffer.

The court has established the agreement between the parties drawn on the pretext of the land transaction was actually for private money-lending.

The judgment stated that the lender does not have a money-lending license and that lending money without a licence is an offence. The lender is asked to pay a penalty amount of Nu 675,000, which is the minimum daily wage for 15 years, and another Nu 45,000 as penalty for the misdemeanour.

He has to pay a total of Nu 720,000 and the court ordered him to pay it within a month from the day of judgment.

The penalty is in accordance with section 15 (A) of the Financial Act of Bhutan, 2011.

The section states that without a license required under this Act in an activity for which such is required, commits an offence and on conviction shall be fined the minimum wage at the time of the crime for a period extending from fifteen to thirty years and liable for misdemeanour.

The judgment also stated that lending money without a licence also violated section 11 of the Financial Act of Bhutan, 2011.

Section 11 of the Act says, “No person shall offer financial services as a business without obtaining the appropriate license under this Act or the regulations under it; nor shall any individual fulfill a function on behalf of a financial services business without the license.”

The borrower is also imposed an equal amount of penalties. The court also ordered the borrower to pay a fine of Nu 720,000 along with the Nu 1.2M principal amount she borrowed to the government coffer within a month from the date of the judgment.

The lender is also asked to return the ornamental valuables that the borrower had left as collaterals while borrowing the money.

The Thimphu dzongkhag court on May 31, last year ordered the borrower to pay back a total of Nu 1.69M to the lender in two installments. The amount includes the interest of 15 percent per annum on the amount borrowed at different occasions.

The court also asked the lender to return the ornamental valuables and asset to the borrower which were kept as collateral.

Dissatisfied with the lower court’s judgment, both parties appealed to the High Court.

The court on July 21, 2022 ordered the borrower to return the principal amount of Nu 1.2M without interest to the lender, and asked the lender to return the ornamental valuables taken as collaterals from the borrower as per the lender’s claim.

Both parties were asked by the High Court to pay Nu 11,250 each, calculated on the national minimum daily wage rate for three months at the time of money-lending. The penalty was for misleading the court by drawing up a fake land transaction agreement while it was a private money-lending case.

Both the parties appealed to the Supreme Court.