Banking disputes The debtor's liability for non-fulfillment and (or) improper fulfillment of an obligation occurs if there is fault and provided that nothing else is provided for by law or contract. The debtor is found innocent if he proves that he has taken all measures in his power to properly fulfill the obligation.

JSC "N" (hereinafter referred to as the Bank, the Mortgagee) filed a lawsuit against defendant K. (hereinafter referred to as the Defendant, Borrower, Mortgagor) on the recovery of: - the amount of debt in the amount of 9 507 879.87 tenge; - on foreclosure on the mortgaged property in the form of a 4-room apartment with a total area of 81, 80 sq.m., located at the address: Aktau city (hereinafter referred to as the Property). By the decision of the Aktau city Court No. 2 of the Mangystau region dated December 4, 2018, which was left unchanged by the decision of the judicial board for Civil Cases of the Mangystau Regional Court dated March 19, 2019, the claim was partially satisfied. The debt in the amount of KZT 9,465,597 and the cost of paying the state duty in the amount of KZT 283,968 were collected from the Borrower in favor of the Bank. The rest of the claim was denied. The Judicial Board for Civil Cases of the Supreme Court changed the judicial acts of local courts, canceled the judicial acts regarding the satisfaction of the claims of JSC "N" to K. for the recovery of the amount owed in the amount of 9,465,597 tenge and issued a new decision in this part to dismiss the claim. The rest of the judicial acts remained in force. The Court found that a bank loan agreement No. 239977PC851 dated December 26, 2007 (hereinafter referred to as the Loan Agreement) was concluded between the Bank and the Borrower. According to the terms of the Loan Agreement, the Bank provided the Defendant with a loan in the amount of USD 56,000, with a maturity until December 28, 2022. In order to ensure proper fulfillment of obligations under the Loan Agreement, the Bank and the Borrower concluded a pledge agreement dated December 26, 2007 No. 239977PC851 (hereinafter referred to as the Pledge Agreement), according to which the Pledgor pledged the Property belonging to him by right of ownership. The Supplementary agreement No. 1 signed between the parties on September 28, 2015 (hereinafter referred to as the Supplementary Agreement) amended the terms of financing the Loan Agreement. According to the terms of the Supplementary Agreement, the remaining debt under the Loan Agreement has been refinanced. For the principal debt – in the amount of KZT 10,523,754.89, with a maturity of up to October 7, 2030, with a 3% interest rate for the use of the loan. Due to the Borrower's violation of the terms of the Loan Agreement and the Supplementary Agreement, the Bank filed this lawsuit with the court.

The local courts, satisfying the Bank's demands regarding the early recovery of the remaining part of the loan item, proceeded from the fact that the Borrower had repeatedly violated the obligations assumed under the Loan Agreement and the Supplementary Agreement to repay the next part of the loan item. The refusal to satisfy the claim regarding foreclosure on the Borrower's collateral is motivated by the fact that it is the only housing of the Defendant. The Bank's claims in this regard were announced prematurely. At the same time, it is impossible to agree with the conclusions of the local courts regarding the early recovery of the entire remaining part of the loan, since they do not correspond to the established circumstances of the case and are based on the incorrect application of substantive and procedural law. The Bank's claims for early recovery of the entire remaining part of the loan subject and for foreclosure on the pledged Property are based on the provisions of paragraph 3 of Article 722 of the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code). It follows from the above rule of law that if the contract provides for the return of the loan item in parts (in installments), then if the borrower violates the deadline set for the return of the next part of the loan item, the lender has the right to demand early repayment of the entire remaining part of the loan item along with the remuneration due, as well as to satisfy its claims by foreclosing on the mortgaged property (subparagraph 4) of paragraph 2 of Article 321 of this Code). At the same time, the Bank's right to early recovery of the remaining part of the loan is not an unconditional basis for satisfying the claim, and the exercise of this right should not violate the rights and legally protected interests of the Borrower. The court's decision must be based on evidence that reliably attests to the Defendant's guilt in non-fulfillment of obligations.

This understanding of the law directly follows from paragraph 12 of the regulatory resolution of the Supreme Court of the Republic of Kazakhstan "On Judicial practice of Civil cases in Disputes arising from Bank Loan Agreements" dated November 25, 2016 No. 7 (hereinafter referred to as the Regulatory Resolution), which clarifies that not every default or improper fulfillment of obligations on the part of the borrower provides the lender the right to collect debts under a bank loan agreement and foreclose on mortgaged property. As a general rule, the debtor's liability for non-fulfillment and (or) improper fulfillment of an obligation occurs if there is fault and provided that nothing else is provided for by law or contract. The debtor is found innocent if he proves that he has taken all measures in his power to properly fulfill the obligation. Legislation or a contract may provide for other grounds for liability or exemption from it (Article 359 of the Civil Code). It follows from the case file that the terms of the Loan Agreement and the Supplementary Agreement regarding the payment of monthly payments were violated by the Borrower in October 2017. Notification of early repayment of the loan subject and declaration of default was sent to the Borrower on June 6, 2018, or more than 7 months later. Meanwhile, paragraph 15 of the Regulatory Resolution clarifies that in accordance with the Law on Non-Performing Loans and article 36 of the Law on Banks, as amended (effective January 1, 2016), the bank is obliged to notify the borrower of the need to make payments under the bank loan agreement. and the consequences of the borrower's failure to fulfill its obligations in the manner provided for in the bank loan agreement, within the time limits specified in this agreement, but not later than thirty working days from the date of the delay in fulfilling the obligation. If the requirements arising from the notification are not satisfied, the bank has the right to sue the borrower for the loan item (the remaining part of it). together with the remuneration due, which is consistent with the provisions of article 36 of the Law on Banks. The loan agreement and the Supplementary Agreement are civil law transactions and their terms are based on the recognition of equality of participants in legal relations. In other words, it is the Bank's responsibility to notify the Borrower within the time limits prescribed by law. Meanwhile, the case file has reliably established that the Bank has not fulfilled its obligations to send timely notification to the Borrower.

Banking disputes Debtor's liability for non-fulfillment and/or improper fulfillment of obligations

In turn, the Defendant repaid the overdue debt, determined according to the repayment schedule, from the moment the Bank's notification was received until the court of first instance issued a judicial act. This fact is reliably confirmed by incoming cash receipts from: - August 24, 2018 in the amount of 39,800 tenge; - October 16, 2018 in the amount of 905,000 tenge; - November 23, 2018 in the amount of 72,500 tenge. Paragraph 1 of Article 727 of the Civil Code stipulates that under a bank loan agreement, the lender undertakes to loan money to the borrower on the terms of payment, urgency, and repayment. Since the Borrower fulfilled the terms of the Loan Agreement and the Additional Agreement to it regarding the payment and repayment of the loan item, the local courts had no legal grounds to collect all remaining debts. In this regard, there are no legal grounds for foreclosure on the pledged Property. Considering these circumstances, the board came to the conclusion that the arguments of the Defendant's petition were justified. Since the case does not require the collection and investigation of new evidence, the circumstances of the case have been fully and correctly established by the courts, but violations have been committed in the application of substantive law, the contested judicial acts are subject to change with their cancellation in the part contested by the Defendant and with a new decision in this part to dismiss the claim. At the same time, the refusal to satisfy the Bank's claims for early recovery of the entire amount of debt, as well as foreclosure on mortgaged property, does not deprive them of the right to file a new claim if the Borrower repeatedly violates the terms of the Loan Agreement and the Additional Agreement to it. 

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