Dr Bipin Adhikari
The provisions regarding debtor-creditor relationship is scattered all over Muluki Ain. There is no specific chapter in the Muluki Ain which deals with relationship between creditor and debtor. The present Bill keeping that in mind has made an attempt to compile all the provisions relating to debtor-creditor relationship into one single chapter.
There is definition of debtor-creditor relationship in Section 495 of the Bill. It is defined as the relationship between two or more people in lieu of exchange for money or goods. Further, Section 496 slightly deviates from existing provisions when it defines any liability in terms of money or goods to create relationship of debtor and creditor.
The provisions of the Draft Code seem to be reader friendly and usage of simple language has made the understanding of law more comprehensible to laymen.
The present provisions builds on the old and existing provisions of the Muluki Ain. The provisions are refurbished in a simpler language without conducting any scientific study about the problems and the challenges faced during the implementation of the present provisions. There is a fear that the existing problems in the laws have not been properly addressed by the present Draft Bill.
It is wrong to believe that the Draft Code will revolutionalize the Nepalese legal system. The provisions do not fully address the prevailing loopholes in the law. For example, there is a provision attempting to regulate interest. It is well within its right to regulate interest rates when one of the parties is State but interest amongst the private parties should be left upon their discretion. Private parties must be free to determine their own interest rates.
The parties especially Creditor tends to keep the interest rate ambiguous by using various phrases such as ‘interest rate as per the market rate’. This kind of practice has led many Debtors being victimized. The Draft Code should strictly ask the parties to enter into a written agreement which clearly states the interest rate and duties of the parties. Section 508 of the Draft Code states the Karta/Head of the Family may enter into an agreement wherein the common property may be kept as collateral with the Creditor. However, the term karta or head of the family is not defined in the Draft Code. The Draft Code should clearly state who can be termed as a head of the family and what are his/her duties towards the property against which loan amount is secured.
The usage of term ‘competence’ and ‘quasi competence’must also be clear.
