Lahore High Court’s Landmark Judgment on Deceased’s Debt – Legal Heirs Not Personally Liable

LAHORE : Lahore High Court has delivered an important judgment regarding repayment of a deceased person’s loan, setting a new legal precedent that the legal heirs of the deceased are not personally liable to repay the loan.

A two-member bench comprising Justice Chaudhry Sultan Mahmood and Justice Tanveer Ahmed Sheikh announced the decision on an appeal filed by MCB Bank. The 4-page judgment was authored by Justice Chaudhry Sultan Mahmood.

*Key Points of the Judgment:*

– Personal liability cannot be imposed on heirs on the basis of loan renewal documents prepared after the death of the deceased
– The personal liability of heirs and the legal status of mortgaged property received in inheritance are two separate matters
– Mortgaged property does not become free from mortgage upon the death of the deceased
– The bank can recover the loan from the property mortgaged during the lifetime of the deceased
– Since the loan renewal documents were prepared after the death of the deceased, the heirs cannot be made personally liable for payment

The court held that the appeal of MCB Bank is partly allowed and the bank has the right to recover the loan from the property under the original mortgage deed.

Lahore High Court has partially modified the decision of the Banking Court.