The Constitutional Bench of the Supreme Court has ruled that Section 12 (f) of the Land Act, 2021 will be null and void. A five-judge bench including Acting Chief Justice Sapana Pradhan Malla delivered the verdict. The Constitutional Bench comprising Acting Chief Justice Malla, Justices Kumar Regmi, Hari Prasad Phuyal, Manoj Kumar Sharma and Nahakul Subedi delivered the verdict on Monday.

The Supreme Court has ruled that the provision of Section 12(f) added to the Land Act, 2021 through the Act to Amend Certain Nepal Acts Relating to Investment Facilitation, 2081, makes it mandatory for banks and financial institutions to sell non-banking assets seized by the government in the course of loan recovery within three years and to obtain the approval of the Government of Nepal if the sale is not made within that period. This provision will adversely affect banking transactions, loan recovery, the interests of investors and depositors and will be declared invalid and void to the extent of the conflict, stating that the provision conflicts with the business and property rights guaranteed by Articles 17(2)(f), 18 and 25 of the Constitution.

After hearing the writ filed by Advocate Sagar Adhikari, the Constitutional Bench issued the writ as per the demand of the writ petitioner.

The Constitutional Bench has decided to annul Section 12(f) of the Land Act, 2021. Section 12(f) states that the land that has been approved by the government must be sold. If a bank, financial institution or cooperative society auctions land that has been secured as collateral for a loan and the auction is not approved by the bank, financial institution or cooperative society itself, and the amount exceeds the limit, such land must be sold within three years from the date of approval.