Realty transactions through bank cheques: SC quashes govt rider

KATHMANDU, MAY 11 -

The Supreme Court (SC) on Tuesday quashed the government’s decision that had made it mandatory for realty developers and individuals dealing in property worth more than Rs 5 million to carry out transactions through bank cheques.

Responding to a writ filed by Dambar Prasad Sibakoti, a division bench of justices Tap Bahadur Magar and Bharat Bahadur Karki issued the final verdict. In the verdict, the apex court said the Cabinet decision contradicts the provision in the Article 19 (1) and (2) of the Interim Constitution-2007 and also the Article 8(2) of the Land Revenue Act.

The government had introduced the provision on the third of week of April 2010. It had also authorised land revenue offices (LROs) across the country to purchase land and houses if transactions were found undervalued. Both provisions had been pushed by the Ministry of Finance (MoF). The idea of imposing the provision of transaction through bank cheques was to address liquidity crunch in the banking sector and track sources and transfer of income.

The SC’s decision on Tuesday has given some relief to land and housing developers. With property transactions in Nepal still carried out in informal manner, there was fear among buyers that transactions through banks would help government agencies identify their properties and seek their income sources. “It is good that the provision has been scrapped. It had to be scrapped,” said Min Man Shrestha, general secretary of Nepal Land and Housing Developers’ Association. According to Shrestha, this provision had slowed down the realty business that was already hit by the income source disclosure provision. Shrestha said the SC decision is may not enough to eliminate the gloom in the realty market. “But it has given us a breather,” said Shrestha.

However, a central bank official said the SC decision might have a negative impact on the market in the long run. “The provision was brought to encourage banking practice in realty transactions,” said a senior NRB official. According to him, it may also create problems for Nepal, as it has been under pressure over its slow progress in anti-money laundering measures. “We are under immense pressure to declare illegal if someone holds a certain amount of cash,” said the official.

Source: The Kantipur Daily (May 11, 2011)

1Ropani