Yashodha Holdings loses case against People’s Bank
Company sought to prevent bank from recovering overdue facilities
The Supreme Court recently allowed People’s Bank to proceed with disposing of the mortgaged property belonging to a benefitted director of Yashodha Holdings (Pvt.) Ltd., which was mortgaged to the bank as security for a facility granted to Yashoda Holdings by the bank, People’s Bank noted in a statement.
The particular case had been filed by Yashodha Holdings challenging the acquisition of the mortgaged property in terms of People’s Bank Act No. 29 of 1961 (as amended).
Having considered the legal arguments from both the parties, the Supreme Court decided to permit the People’s Bank to proceed with the disposal of the mortgaged property. This judgement, by lifting the corporate veil, further confirmed that a director cannot hide under the disguise of the company name and a property of a benefitted director of a company, which is mortgaged to a bank, is also subject to parate execution, the bank further noted.
“While this judgment enables People’s Bank to recover a part of the debt which had been defaulted by Yashodha Holdings (Pvt.) Ltd. for over two decades, banking experts are of the view it is also a remarkable judgment for all commercial banks, for it will act as a deterrent against willful defaulters who seek to hide from their debt liabilities towards banks,” the statement added.