The Court of Appeal has dismissed a writ application filed by Daya Group Limited and Daya Apparel Export (Pvt) Ltd challenging People’s Bank’s move to auction mortgaged properties under its parate execution powers, in a judgment delivered on June 19.
The court ruled that the state bank was legally entitled to proceed with the recovery process after the companies failed to settle outstanding loan obligations secured by mortgage bonds. The bank had been seeking to recover USD 1,420,829.26 together with additional interest, the petitioners disputing the amount on the basis that the bank had used an inflated exchange rate in calculating the dollar-denominated liability.
The petitioners also argued that the auction decision was unlawful, claiming that statutory notice requirements had not been followed and that properties belonging to Daya Group should not be subject to parate execution because they had been mortgaged to secure facilities obtained by a separate entity, Daya Apparel Export.
The court rejected the arguments, finding that the companies had been aware of the bank’s actions throughout, had engaged in rescheduling discussions and had sought repeated postponements of auction proceedings after defaulting on repayments. The judgment noted that Section 29D of the People’s Bank Act bars borrowers and related parties from challenging resolutions passed by the bank to recover debts through parate execution, and that the application had been filed after an unexplained delay of more than one year and eight months from the date of the bank’s resolution. Claims about exchange-rate calculations and interest disputes were dismissed as contractual matters not suitable for writ determination.
The court ordered the petitioners to pay Rs. 1 million in costs. The ruling reinforces the statutory shield that state and licensed commercial banks have used to push through parate auctions of distressed commercial borrowers, even where exchange-rate disputes arise, and follows a broader run of Q1 2026 profit recoveries at People’s Bank as the bank works through its post-restructuring loan book.
