Court rejects bank's plea to obligate a client to pay remaining Dhs1.2m of Dhs2.5m loan amount
- 04 Feb 2023
Aya El Deeb, Staff Reporter
The Abu Dhabi Court of First Instance rejected a lawsuit filed by a bank against a client, demanding that he pay Dhs1,242,000, the remaining amount of a loan the bank gave to him and 5% annual interest as of the date of filing the lawsuit until full payment.
The bank also demanded that the client be obligated to pay the fees and expenses of the lawsuit and the lawyer’s fees.
The bank said the client refused to pay the installments decided. The court indicated that the bank did not take adequate safeguards.
The bank indicated that, 9 years ago, the client obtained a loan of Dhs2,574,000, pledging to pay it in 360 monthly installments at a value of Dhs7,150 per installment, but he refused to pay the installments and remained in debt to the bank for Dhs1,242,000.
When the case was referred to the court, Dhs286,000 were transferred from the Defaulters' Debt Payment Committee fund to the client's account in the bank, and the amount was deducted from the rest of the loan installments.
The court required the bank to submit a clear copy of the loan application and a detailed statement of its guarantees. Emphasising that, according to Federal Law No. 23 of 2022, financial institutions must obtain adequate guarantees for all types of facilities provided to clients, in accordance with the client’s income.
The court also pointed out that the bank did not take any guarantees except the client’s salary which was Dhs17,000, according to the copy of the salary certificate attached to the case papers.
The court considered that the client’s salary was not commensurate with the value of the loan, indicating that it found that there was no other income for the client or any other guarantees.
The legislator enacted not accepting lawsuits of financial institutions when a client fails to pay the value of a loan in the event of not obtaining sufficient guarantees, court stated, and then rejected the lawsuit and obligated the bank to pay the fees and expenses and the lawyer’s fees.
