(1) In cases where the court orders for initiating the process of mandatory liquidation of any bank or financial institution, the order shall result in the following on the following matters:-
a. In cases where statuary limitations have expired as to any claim or right of the bank or financial institution, the statuary limitations of such claims or rights shall ipso facto be extended for upto six months from the date of issuing an order by the court to initiate the process of mandatory liquidation.
b. Except in circumstance as provided for in Clause (c), if any property or asset of a bank or financial institution has been withheld for any reason whatsoever, or such property has been mortgaged against any credit made available to the bank or financial institution, such property or asset shall ipso facto be released.
c. The functions concerning accepting deposits and lending credits shall ipso facto be stopped.
d. Case proceedings against the bank or financial institution in any court shall ipso facto be stopped and unless otherwise ordered by the court, court proceedings against such bank or financial institution shall not be revived:
Provided that in cases where there is any case sub-judiced at the Supreme Court as to the bank or financial institution, or it is necessary to seek clearance from the Supreme Court, the Rastra Bank shall file an application to that Court.
e. No interests or any type of additional charge shall be levied on the liabilities of the bank or financial institution.
f. Shares of such a bank or financial institution may not be transferred, mortgaged or stroke out its title:
. Provided however that the act of transfer, mortgage or striking out may be carried out with prior approval of the Rastra Bank.
(2) If it comes to the knowledge of a Liquidator from any source that any action carried out before six months from the date of issuing an the order by the court to initiate the process of mandatory liquidation may harm or cause loss to the interests of the depositors or creditors of the bank or financial institution, the Liquidator shall submit to the court an application about it and information thereof shall also be given to the Rastra Bank.
(3) In cases where the court finds from the application submitted pursuant to Sub-Section (2) by a Liquidator that any of the following actions was carried out, the court may declare such an action null and void:-
a. If a decision was made to offer a gift,
b. If any act that cause may harm to the rights and interests of the creditors or depositors was committed,
c. If payment was made or transferred before repayment of credits or the collateral was released, transferred or stroke out the title before the expiration of the term of the credit,
d. If a contract was executed with a view to imposing additional liabilities on the bank or financial institution that the ones normally prevailing practice in the course of operating any business,
e. If any agreement or transaction, other than those regular banking or financial transactions permissible under this Act, is found to have been executed,
f. If a contract was made with a view to providing employment to the relevant persons.
(4) In cases where any bank or financial institution is subjected to mandatory liquidation, the following transactions shall be void:-
a. Preferential transactions made immediately before six months of the initiation of the process of mandatory liquidation or within the period of six months after initiation of the process,
b. Preferential transactions made with the relevant persons immediately before one year of the initiation of the process of mandatory liquidation or within the period of one year after initiation of the process,
c. Transaction as a result of which a bank or financial institution is subjected to mandatory liquidation, with a lower price immediately before one year of the initiation of the process of mandatory liquidation and other transactions made with low a lower price made within one year after initiation of the process;
d. Fraudulent transactions made immediately before two years of the initiation of the process of mandatory liquidation or within the period of two years after initiation of the process;
(5) The Liquidator shall have to file an application to the court to cause to make transactions referred to in Sub-Section (4) as void.
(6) If the court is satisfied that certain transaction are void, the court may issue the following order:-
a. To order the concerned person to pay to the Liquidator all or some of the amount the payment of which made by the bank or financial institution with regard to such transactions,
b. To order the concerned person to handover the assets so transacted or to pay the equivalent value to the Liquidator,
c. To issue an order to exempt or release, in whole or in part, the credit the bank or financial institution has availed, the security or collateral pledged by the bank or financial institution against that credit,
d. To issue an order to make any executed pardon, surrender or agreement concluded between the bank of financial institution and another person as void, ineffective or implementable as a result of the voidable transaction,
e. If additional order is required to be given for the execution of the order given under this Sub-Section, the court shall issue such an order as well.
(7) In cases where any Director, office bearer, employee or any other person is found to have committed the acts referred to in Sub-Section (3) or (4) and the bank or financial institution has been suffering any loss or damage, they shall be liable to bear the compensation personally for such harm or damage.