EXTRAORDINARY
PUBLISHED
BY AUTHORITY
Government of
AND
PARLIAMENTARY AFFAIRS
(
Law, Justice and Human Rights Division )
F. No. 2(1)/2001-Pub.The
following Ordinance promulgated by the
President
is hereby published for general information :-
ORDINANCE No. XLVI of 2001
an
AND
WHEREAS the President is satisfied that circumstances
exist which render it necessary to take immediate action;
NOW
THEREFORE, in pursuance of the proclamation of Emergency of the
fourteenth day of October, 1999 and Provisional Constitution Order No.1
of 1999, read with the Provisional Constitution (Amendment) Order No.9
of 1999, and in exercise of all powers enabling him in that behalf,
the President of the Islamic Republic of Pakistan is pleased to make
and promulgate its following Ordinance :-
1. Short
title, extent and commencement.-
(1) This Ordinance may be called the Financial
Institutions (Recovery of Finances) Ordinance, 2001.
(2) It extends to the whole of
(3) It shall come into force at once.
2. Definitions.-
In this Ordinance unless there is anything repugnant in the subject
or context ---
a) financial
institution means and includes ---
(i) any company whether incorporated within or outside Pakistan which
transacts the business of banking or any associated or ancillary business
in Pakistan through its branches within or outside Pakistan and includes
a government savings bank, but excludes the State Bank of Pakistan;
(ii) a modaraba or modaraba management company, leasing company, investment
bank, venture capital company, financing company, unit trust or mutual
fund of any kind and credit or investment institution, corporation or
company; and
(iii) any company authorized by law to carry on any similar business, as
the Federal Government may by notification in the official Gazette,
specify;
(b)
(i) in respect of a case in which the claim does not exceed fifty million
rupees or for the trial of offences under this Ordinance, the Court
established under section 5; and
(ii) in respect of any other case, the High Court.
(c) customer
means a person to whom finances has been extended by a financial institution
and includes a person on whose behalf a guarantee or letter of credit
has been issued by a financial institution as well as a surety or an
indemnifier;
(d) finance
includes ---
(i) an accommodation or facility provided on the basis of participation
in profit and loss, mark-up or mark-down in price, hire-purchase, equity
support, lease, rent-sharing, licensing charge or fee of any kind, purchase
and sale of any property including commodities, patents, designs, trade
marks and copy-rights, bills of exchange, promissory notes or other
instruments with or without buy-back arrangement by a seller, participation
term certificate, musharika, morabaha, musswama, istisnah or modaraba
certificate, term finance certificate;
(ii) facility of credit or charge cards;
(iii) facility of guarantees, indemnities, letters of credit or any other
financial engagement which a financial institution may give issue or
undertake on behalf of a customer, with a corresponding obligation by
the customer to the financial institution;
(iv) a loan, advance, cash credit, overdraft, packing credit, a bill discounted
and purchased or any other financial accommodation provided by a financial
institution to a customer;
(v) a benami loan or facility that is, a loan or facility the real beneficiary
or recipient whereof is a person other than the person in whose name
the loan or facility is advanced or granted;
(vi) any amount due from a customer to a financial institution under a decree
passed by a civil court or an award given by an arbitrator; any amount
due from a customer to a financial institution which is the subject
matter of any pending suit, appeal or revision before any court; any
other facility availed by a customer from a financial institution.
(e) obligation
includes ---
(i) any agreement for the repayment or extension of time in repayment
of a finance or for its restructuring or renewal or for payment or extension
of time in payment of any other amounts relating to a finance or liquidated
damages; and
(ii) any and all representations, warranties and covenants made by or on
behalf of the customer to a financial institution at any stage, including
representations, warranties and covenants with regard to the ownership,
mortgage, pledge, hypothecation or assignment of, or other charge on
assets or properties or repayment of a finance or payment of any other
amount relating to a finance or performance of an undertaking or fulfillment
of a promise; and
(iii) all duties imposed on the customer under this Ordinance; and
(f) rules
means rules made under this Ordinance.
3. Duty
of a customer.-
(1) It shall be the duty of a customer to fulfil
his obligations to the financial institution.
(2) Where the customer defaults in the discharge
of his obligation, he shall be liable to pay, for the period from the
date of his default till realization of the cost of funds of the financial
institution as certified by the State Bank of Pakistan from time to
time, apart from such other civil and criminal liabilities the he may
incur under the contract or rules or any other law for the time being
in force.
(3) For purposes of this section a judgment against
a customer under this Ordinance shall mean that he is in default of
his duty under sub-section (1) and the ensuing decree shall provide
for payment of the cost of funds as determined under sub-section (2).
4. Ordinance
to override other laws.-
The
provisions of this Ordinance shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the time being
in force.
5. Establishment
of
(1)
The
Federal Government may, by notification in the official Gazette, establish
as many Banking Courts as it considers necessary to exercise jurisdiction
under this Ordinance and appoint a Judge for each of such Courts and
where it establishes more Banking Courts than one, it shall specify
in the notification the territorial limits within which each of the
Banking Courts shall exercise its jurisdiction.
(2) Where more Banking Courts than one have been
established to exercise jurisdiction in the same territorial limits,
the Federal Government shall define the territorial limits of each such
court.
(3) Where more Banking Courts than one have been
established in the same or different territorial limits, the High Court
may, if it considers it expedient to do so in the interest of justice
or for the convenience of the parties or of the witnesses, transfer
any case from one Banking Court to another.
(4) A Judge of a Banking Court shall be appointed
by the Federal Government after consultation with the Chief Justice
of the High Court of the Province in which the Banking Court is established
and no person shall be appointed a Judge of a Banking Court unless he
has been a Judge of a High Court or is or has been a District Judge.
(6) A Judge of a
(7) The salary, allowances and other terms and
conditions of service, of a person appointed as a Judge of a
(8) The Banking Court may, if it so requires,
be assisted in technical aspects of banking transactions involved in
any case by an amicus curiae who has at least ten years experience of
banking at a senior management level in a Financial institution of repute
or the State Bank of Pakistan and has the following qualifications,
namely:-
(i) a degree in Commerce and Account or in Economics;
or
(ii) has completed a course in banking from the
(9) Remuneration of the amicus curiae and the
party or parties by whom it will be payable will be determined by the
6. Resignation
and removal of Judges.-
(1)
A
person not being a District Judge, appointed as a Judge of a
(2) A person appointed as a Judge of a
7. Powers
of Banking Courts.-
(1)
Subject
to the provisions of this Ordinance a
(a) in the exercise of its civil jurisdiction
have all the powers vested in a civil court under the Code of Civil
Procedure, 1908 (Act V of 1908);
(b) in the exercise of its criminal jurisdiction,
try offences punishable under this Ordinance and shall, for this purpose
have the same powers as are vested in a Court of Sessions under the
Code of Criminal Procedure, 1898 (Act V of 1898):
Provided
that a
(2) A Banking Court shall in all matters with
respect to which the procedure has not been provided for in this Ordinance,
follow the procedure laid down in the Code of Civil Procedure, 1908
(Act V of 1908), and the Code of Criminal Procedure, 1898 (Act V of
1898).
(3) All proceedings before a Banking Court shall
be deemed to be judicial proceedings within the meaning or sections
193 and 228 of the Pakistan Penal Code (Act XLV of 1860), and a Banking
Court shall be deemed to be a Court for purposes of the Code of Criminal
Procedure 1898 (Act V of 1898).
(4) Subject to sub-section (5), no court other than a Banking Court shall have or exercise any
jurisdiction with respect to any matter to which the jurisdiction of
a Banking Court extends under this Ordinance, including a decision as
to the existence or otherwise of a finance and the execution of a decree
passed by a Banking Court.
(5) Nothing in sub-section (4) shall be deemed
to affect ---
(a) the right of a financial institution to seek any remedy before any
court or otherwise that may be available to it under the law by which
the financial institution may have been established; or
(b) the powers of the financial institution,
or jurisdiction of any court such as is referred to in clause (a); or
require
the transfer to a Banking Court of any proceedings pending before any
financial institution or such court immediately before the coming into
force of this Ordinance.
(6) All proceedings pending in any Banking Court
constituted under the Banking Companies (Recovery of Loans, Advances,
Credits or Finances) Act, 1997 (XV of 1997), including suits for recovery
of loans that Act shall stand transferred
to, or be deemed to be transferred to, and heard and disposed of by,
the Banking Court having jurisdiction under this Ordinance. On transfer
of proceedings under this sub-section the parties shall appear before
the
(7) In respect of proceedings transferred to a
Banking Court under subsection (6),
the Banking Court shall proceed from the stage which the proceedings
had reached immediately prior to the transfer and shall not be bound
to recall and re-hear any witness and may act on the evidence already
recorded or produced before the Court from which the proceedings were
transferred.
8. Suit
for recovery of written off finances, etc.-
(1)
Subject
to sub-section (2), and notwithstanding anything contained in the Limitation
Act, 1908 (IX of 1908) or any other law, a financial institution may,
within three years from the date of coming into force of this Ordinance,
file a suit for the recovery of
any amount written off, released or adjusted under any agreement, contract,
or consent, including a compromise or withdrawal of any suit or legal
proceedings or adjustment of a decree between a financial institution
and a customer on any day on or after the first day of January, 1990
and before the coming into force of this Ordinance, if it can establish
that the amount was written off, released or adjusted for political
reasons or considerations other than bona fide business considerations.
No suit under sub-section (1)
shall be filed unless its filing has been approved by
The Board of Directors, in
the case of a financial institution incorporated within
9. Procedure of Banking Courts.-
(1) Where a customer or a financial
institution commits a default in fulfillment of any obligation with
regard to any finance, the financial institution or, as the case may
be, the customer, may institute a suit in the Banking Court by presenting
a plaint which shall be verified on oath, in the case of a financial
institution by the Branch Manager or such other officer of the financial
institution as may be duly authorized in this behalf by power of attorney
or otherwise.
(2) The plaint shall be supported by a statement of
account which in the case of a financial institution shall be duly certified
under the Bankers Books Evidence Act, 1891 (XVII of 1891), and all other
relevant documents relating to the grant of finance. Copies of the plaint,
statement of account and other relevant documents shall be filed with
the
(3) The plaint, in the case of a suit for recovery
instituted by a financial institution, shall specifically state ---
(a) the amount of finance availed by the defendant from the financial institution;
(b) the amounts paid by the defendant to the financial institution and
the dates of payment; and
(c) the amount of finance and other amounts relating to the finance payable
by the defendant to the financial institution upto the date of institution
of the suit.
(4) The provisions of section 10 of the Code of Civil
Procedure, 1908 (Act V of 1908), shall have no application for and in
relation to suits filed hereunder.
(5) On a plaint being presented to the Banking Court,
a summons in Form No.4 in Appendix B to the Code of Civil Procedure,
1908 (Act V of 1908) or in such other form as may, from time to time,
be prescribed by rules, shall be served on the defendant through the
bailiff or process server of the Banking Court, by registered post
acknowledgement due, by courier and by publication in one English language
and one Urdu language daily newspaper, and service duly effected in
any one of the aforesaid modes shall be deemed to be valid service for
purposes of this Ordinance. In the case of service of the summons through
the bailiff or process server, a copy of the plaint shall be attached
therewith and in all other cases the defendant shall be entitled to
obtain a copy of the plaint from the office of the Banking Court without
making a written application but against due acknowledgement.
The
10. Leave to defend.-
(1) In any case in which the summons
has been served on the defendant as provided for in sub-section (5)
of section 9, the defendant shall not be entitled to defend the suit
unless he obtains leave from the Banking Court as hereinafter provided
to defend the same; and, in default of his doing so, the allegations
of fact in the plaint shall be deemed to be admitted and the Banking
Court may pass a decree in favour of the plaintiff on the basis thereof
or such other material as the Banking Court may require in the interest
of justice.
(2) The defendant shall file the application for leave
to defend within thirty days of the date of first service by any one
of the modes laid down in sub-section (5) of section 9.
Provided that where service
has been validly effected only through publication in the newspapers,
the
(3) The application for leave to defend shall be in
for form of a written statement, and shall contain a summary of the
substantial questions of law as well as fact in respect of which, in
the opinion of the defendant, evidence needs to be recorded.
(4) In the case of a suit for recovery instituted
by a financial institution the application for leave to defend shall
also specifically state the following ---
(a) the amount of finance availed by the defendant from the financial institution;
the amounts paid by the defendant to the financial institution and the
dates of payments;
(b) the amount of finance and other amounts relating to the finance payable
by the defendant to the financial institution upto the date of institution
of the suit;
(c) the amounts of finance and other amounts relating to the finance payable
by the defendant to the financial institution upto the date of institution
of the suit;
(d) the amount if any which the defendant disputes as payable to the financial
institution and facts in support thereof;
Explanation.- For the purposes of clause (b)
any payment made to a financial institution by a customer in respect
of a finance shall be appropriated first against other amounts relating
to the finance and the balance if any, against the principal amount
of the finance.
(5) The application for leave to defend shall be accompanied
by all the documents which, in the opinion of the defendant, support
the substantial questions of law or fact raised by him.
(6) An application for leave to defend which does
not comply with the requirements of sub-sections (3), (4) where applicable
and (5) shall be rejected, unless the defendant discloses therein sufficient
cause for his inability to comply with any such requirement.
(7) The plaintiff shall be given an opportunity of
filing a reply to the application for leave to defend, in the form of
a replication.
(8) Subject to section 11, the
(9) In granting leave under sub-section (8), the
(10) Where the application for leave to defend is
accepted, the Banking Court shall treat the application as a written
statement, and in its order granting leave shall frame issues to the
substantial questions of law or fact, and, subject to fulfillment
of any conditions attached to grant of leave fix a date for recording
of evidence thereof and disposal of the suit.
(11) Where the application for leave to defend is
rejected or where a defendant fails to fulfill the conditions attached
to the grant of leave to defend, the
(12) Where an application for leave to defend has
been filed before the coming into force of this Ordinance, the defendant
shall be allowed a period of twenty-one days from the date of coming
into force of this Ordinance, or from the date of first hearing thereafter,
whichever is later, for filing an amended application for leave to defend
in accordance with the provisions of this Ordinance.
11. Interim Decree.-
(1) If the Banking Court on a consideration
of the contents of the plaint, the application for leave to defend of
the defendant and the reply thereto, is of the opinion that the dispute
between the parties does not extend to the whole of the claim, or that
part of the claim is either undisputed, or is clearly due or that the
dispute is mainly limited to a part of the principal amount of the finance
or to any other amounts relating to the finance, it shall, while granting
leave and framing issues with respect to the disputed amounts, pass
an interim decree in respect of that part of the claim which relates
to the principal amount and which appears to be payable by the defendant
to the plaintiff.
(2) The interim decree passed under sub-section (1)
shall, for all purposes including appeal and execution be deemed to
be a decree passed under this Ordinance, and any amount covered thereby
or recovered in execution thereof shall be adjusted at the time of the
final decree:
Provided that it shall be open to the
Provided further that neither the Banking Court nor the High Court
acting under sub-section (3) of section 22 shall stay execution
of an interim decree unless the judgment-debtor deposits in cash with
the Banking Court the amount or amounts admitted by the judgment-debtor
to be payable to the financial institution under clause (c) of sub-section
(4) of section 10, and furnishes security for the balance decreetal
amount if any, inclusive, in the case of a suit filed by a financial
institution, of cost of funds determined under section 3, and other
costs.
12. Power to set aside decree.-
In any case in which a decree
is passed against a defendant under sub-section (1) of section 10 he
may, within twenty-one days of the date of the decree, or where the
summons was not duly served when he has knowledge of the decree, apply
to the Banking Court for an order to set is aside and if he satisfied
the Banking Court that he was prevented by sufficient cause from making
an application under section 10, or that the summons was not duly served,
the Court shall make an order setting aside this decree against him
upon such terms as to costs, deposit in cash or furnishing of security
or otherwise as it thinks fit and allow him to make the application
within ten days of the order.
13. Disposal of suit.-
(1) A suit in which leave to defend has been granted
to the defendant shall be disposed of within ninety days from the day
on which leave was granted, and in case proceedings continue beyond
the said period the defendant may be required to furnish security in
such amount as the Banking Court deems fit, and on the failure of the
defendant to furnish such security, the Banking Court shall pass an
interim or final decree in such amount as it may deem appropriate.
(2) The requirement of furnishing security under sub-section
(1) shall be dispensed with if, in the opinion of the
(3)
Suits before a Banking Court shall come up for regular hearing as expeditiously
as possible except in extraordinary circumstances and for reasons to
be recorded, a Banking Court shall not allow adjournments for more than
seven days.
(4) Where leave to defend is granted
and evidence is to be recorded the parties may file affidavits in respect
of the examination-in-chief of any witness who is not to be summoned
through the Banking Court and where such affidavits are filed, the Banking
Court shall give notice thereof to the other contesting parties and
on the date fixed for recording evidence shall subject to such modifications
as may be required for purposes of production and exhibiting of documents
or otherwise in accordance with law treat the affidavit as examination-in-chief
and allow the contesting parties an opportunity for cross-examination
on the basis thereof.
14. Decree in suits relating
to mortgages.-
Where the suit filed by a financial
institution before the Banking Court is for the enforcement of a mortgage
of immovable property the Banking Court will not be required to pass
a preliminary decree as provided in Order XXXIV of the First Schedule
to the Code of Civil Procedure, 1908 (Act V of 1908), but shall directly
pass an interim or final decree for foreclosure or sale.
15.
(1) In this section unless there is anything repugnant
in the subject or context. ---
(a) mortgage means the transfer
of an interest in specific immovable property for the purpose of securing
the payment of the mortgage money or the performance of an obligation
which may give rise to a pecuniary liability;
(b) mortgage money means any
finance or other amounts relating to a finance, penalties, damages,
charges or pecuniary liabilities, payment of which is secured for the
time being by the document by which the mortgage is effected or evidenced,
including any mortgage deed or memorandum of deposit of title deeds;
and
(c) mortgaged property means
immovable property mortgaged to a financial institution.
(2) In case of default in payment
by a customer, the financial institution may send a notice on the mortgagor
demanding payment of the mortgage money outstanding within fourteen
days from service of
the notice, and
failing payment of
amount within due date,
it shall send a second notice of demand for payment of the amount within
fourteen days. In case the customer on the due date given in the second
notice sent, continuous to default in
payment, financial institution
shall serve a final
notice on the mortgager demanding the payment of the mortgage money
outstanding within thirty days from service of the final notice on the
customer.
(3) When a financial institution serves a notice of
demand, all the powers of the mortgagor in regard to recovery of rents
and profits from the final mortgaged property shall stand transferred
to the financial institution until such notice is withdrawn and it shall
be the duty of the mortgagor to pay all rents and profits from the mortgaged
property to the financial institution.
Provided that where the mortgaged
property is in the possession of any tenant or occupier other than the
mortgagor, it shall be the duty of such tenant or occupier on receipt
of notice in this behalf from the financial institution to pay the rent
or lease money or other consideration agreed with the mortgagor to the
financial institution.
(4) Where a mortgagor fails to pay the amount as demanded
within the period prescribed under sub-section (2), and after the due
date given in the final notice has expired, the financial institution
may, without the intervention of any court, sell the mortgaged property
or any part thereof by public auction and appropriate the proceeds thereof
towards total or partial satisfaction of the outstanding mortgage money.
Provided that before exercise of its powers under this sub-section,
the financial institution shall cause to be published a notice in one
reputable English daily newspaper with wide circulation and one Urdu
daily newspaper in the Province in which the mortgaged property is situated,
specifying particulars of the mortgaged property, including name and
address of the mortgagor, details of the mortgaged property, amount
of outstanding mortgage money, and indicating the intention of the financial
institution to sell the mortgaged property. The financial institution
shall also send such notices to all persons who, to the knowledge of
the financial institution, have an interest in the mortgaged property
as mortgagees.
(5) The financial institution shall be entitled, in
its discretion, to participate in the public auction, and to purchase
the mortgaged property at the highest bid obtained in the public auction.
(6) Where the mortgagor or his agent or servant or
any person put in possession by the mortgagor or on account of the mortgagor
does not voluntarily give possession of the mortgaged property sought
to be sold or sought to be purchased
or purchased by
the financial institution, a Banking
Court on application of the
financial institution or purchaser shall put the financial institution
or purchaser, as the case may be, in possession of the mortgaged property
in any manner deemed fit by it:
Provided that the Banking Court may not order eviction of a person
who is in occupation of the mortgaged property or any part thereof under
a bona fide lease, except on expiry of the period of the lease, or on
payment of such compensation as may be agreed between the parties or
as may be determined to be reasonable by the Banking Court.
Explanation.- (1) Where the lease is created after the date of the mortgage and it appears
to the Banking Court that the lease was created so as to adversely affect
the value of the mortgaged property or to prejudice the rights and remedies
of the financial institution, it shall be presumed that the lease is
not bona fide unless proved otherwise.
(7) For purposes of execution and registration of
the sale deed in respect of the mortgaged property, the financial institution
shall be deemed to be the duly authorized attorney of the mortgagor
and a sale deed executed and presented for registration by duly authorized
attorneys of the financial institution shall be accepted for such purposes
by the Registrar and Sub-Registrar under the Registration Act, 1908
(XVI of 1908).
(8) Upon execution and registration of the sale deed
of the mortgaged property in favour of the purchaser all rights in such
mortgaged property shall vest in the purchaser free from all encumbrances
and the mortgagor shall be divested of any right, title and interest
in the mortgaged property.
(9) Net sale proceeds of the mortgaged property, after
deducting all expenses of sale or expenses incurred in any attempted
sale, shall be distributed ratably amongst all mortgagees in accordance
with their respective rights and priorities in the mortgaged property.
Any surplus left, after paying in full all the dues of mortgagees shall
be paid to the mortgagor.
(10) A financial institution which has sold mortgaged
property in exercise of powers conferred herein shall file proper accounts
of the sale proceeds in a
(11) All disputes relating to the sale of the mortgaged
property under this section including disputes amongst mortgagees in
respect of distribution of the sale proceeds, shall be decided by the
(12) Neither the
(a) it is satisfied that no mortgage in respect of the immovable property
has been created; or
(b) all moneys secured by mortgage of the mortgaged property have been
paid; or
(c) the mortgagor or objector deposits in the
(13) The rights and remedies provided under this
section are in addition to, and not in lieu of, any other rights or
remedies a financial institution may have under this Ordinance.
(14) The provisions contained in this section shall
have effect notwithstanding anything contained in this Ordinance.
16. Attachment before judgment,
injunction and appointment of Receivers.-
(1) Where the suit filed by a financial
institution is for the recovery of any amount through the sale of any
property which is mortgaged, pledged, hypothecated, assigned, or otherwise
charged or which is the subject of any obligation in favour of the financial
institution as security for finance or for or in relation to a finance
lease, the Banking Court may, on application by the financial institution,
with a view to preventing such property from being transferred, alienated,
encumbered, wasted or otherwise dealt with in a manner which is likely
to impair or prejudice the security in favour of the financial institution,
or otherwise in the interest of justice ---
(a) restrain the customer and any other concerned person from transferring,
alienating, parting with possession or otherwise encumbering, charging,
disposing or dealing with the property in any manner;
(b) attach such property;
(c) transfer possession of such property to the financial institution;
or
(2) An order under sub-section (1) may also be passed
by the
(3) In cases where a customer has obtained property
or financing through a finance lease, or has executed an agreement in
connection with a mortgage, charge or pledge in terms whereof the financial
institution is authorized to recover or take over possession of the
property without filing a suit, the financial institution may, at its
option:
(a) directly recover the same if the property is movable; or
(b) file a suit hereunder and the
Provided that in the event the financial institution wrongly or
unjustifiably exercises the direct power of recovery hereunder it shall
be liable to pay such compensation to the customer as may be adjudged
by the Banking Court in summary proceedings to be initiated on the application
of the customer and concluded in thirty days.
(4) Nothing in sub-sections (1) to (3) shall affect
the powers of the Banking Court under Order XXXVIII Rules 5 and 6 of
the Code of Civil Procedure, 1908 (Act V of 1908) to attach before judgment
any property other than property mentioned in sub-section (1).
17. Final Decree.-
(1) The final decree passed by
a Banking Court shall provide for payment from the date of default of
the amounts found to be payable on account of the default in fulfillment
of the obligation and for costs including in the case of a suit filed
by a financial institution cost of funds determined under section 3.
(2) The
18. Banking Documents.-
(1) No financial institution shall
obtain the signature of a customer on banking document which contains
blanks in respect of important particulars including the date, the amount,
the property or the period of time in question.
(2) Finance agreements executed by or on behalf of
a financial institution and a customer shall be duly attested in the
manner laid down in Article 17 of the Qanun-e-Shahadat Order, 1984 (P.
O. 10 of 1984);
(3) Nothing contained in sub-section (1) and (2) shall
affect the validity of any document executed prior to the date of enforcement
of this Ordinance;
(4) Notwithstanding any thing contained in this section
or any other law, the Banking Court shall not refuse to accept in evidence
any document creating or purporting to create or indicating the creation
of a mortgage, charge, pledge or hypothecation in relation to any property
or assumption of any obligation by a customer, guarantor, mortgagor
or otherwise merely because it is not duly stamped or is not registered
as required by any law or is not attested or witnessed as required by
Article 17 of the Qanun-e-Shahadat Ordinance, 1984 (P. O. 10 of 1984)
and no such document shall be impoundable by the Banking Court or any
other court or authority:
Provided that nothing contained in this sub-section shall operate
to defeat the legal rights of a bona fide purchaser for
value without notice of a document which ought to have been registered.
19. Execution of decree and
sale with or without intervention of
(1) Upon pronouncement of judgment
and decree by a
Provided that if the record of the suit is summoned at any stage
by the High Court for purposes of hearing an appeal under section 22
or otherwise, copies of the decree and other property documents shall
be retained by the Banking Court for purposes of continuing the execution
proceedings.
(2) The decree of the Banking Court shall be executed
in accordance with the provisions of the Code of Civil Procedure, 1908
(Act V of 1908) or any other law for the time being in force or in such
manner as the Banking Court may at the request of the decree-holder
consider appropriate, including recovery as arrears of land revenue.
Explanation.- The term assets or properties in sub-section (2) shall include any assets
and properties acquired benami in the name of an ostensible owner.
(3) In cases of mortgaged, pledged
or hypothecated property, the financial institution may sell or cause
the same to be sold with or without the intervention of the
(4) Where a financial institution wishes to sell mortgaged,
pledged or hypothecated property by inviting sealed tenders, it shall
invite offers through advertisement in one English and one Urdu newspaper
which are circulated widely in the city in which the sale is to take
place giving not less than thirty days time for submitting offers. The
sealed tenders shall be opened in the presence of the tenders or their
representatives or such of them as attend:
Provided that the financial institution shall be entitled in its
discretion, to purchase the property at the highest bid received.
(5) The provisions of sub-sections (5), (6), (7),
(8), (9), (10), (11) and (12) of section 15 shall, mutatis mutandis,
apply to sales of mortgaged, pledged or hypothecated property by a financial
institution in exercise of its powers conferred by sub-section (3).
(6) The
(7) Notwithstanding anything contained in the Code
of Civil Procedure 1908 (Act V of 1908), or any other law for the time
being in force. ---
(a) the Banking Court shall follow the summary procedure for purposes
of investigation of claims and objections in respect of attachment
or sale of any property, whether or not mortgaged, pledged or
hypothecated, and shall complete such investigation within
30 days of filing of the claims or objections;
(b) if the claims or objections are found by the
(c) the
Provided that the financial institution gives a written undertaking
that in the event the objections are found to be valid, or are sustained,
it shall in addition to compensating the aggrieved party by the payment
of such amount as may be adjudged by the Banking Court also pay a penalty
upto twenty percent of the sale proceeds and such amount shall be recoverable
from the financial institution in the same manner as in execution of
decrees passed hereunder.
20. Provisions relating to certain
offences.- (1) Whoever ---
(a) dishonestly commits a breach of the terms of a letter of hypothecation,
trust receipt or any other instrument or document executed by him whereby
possession of the assets or properties offered as security for the re-payment
of finance or fulfillment of any obligation are not with the financial
institution but are retained by or entrusted to him for the purposes
of dealing with the same in the ordinary course of business subject
to the terms of the letter of hypothecation or trust receipt or other
instrument or document or for the purpose of effecting their sale and
depositing the sale proceeds with the financial institution; or
(b) makes fraudulent mis-representation or commits a breach of an obligation
or representation made to a financial institution on the basis of which
the financial institution has granted a finance; or
(c) subsequent to the creation of a mortgage in favour of a financial institution,
dishonestly alienates or parts with the possession of the mortgaged
property whether by creation of a lease or otherwise contrary to the
terms thereof, without the written permission of the financial institution;
or
(d) subsequent to the passing of a decree under section 10 or 11, sells,
transfers or otherwise alienates or parts with possession of his assets
or properties acquired after the grant of finance by the financial institution,
including assets or properties acquired benami in the name of an ostensible
owner shall, without prejudice
to any other action which may be taken against him under this Ordinance
or any other law for the time being in force, be punishable with imprisonment
of either description for a term which may extend to three years and
shall also be liable to a fine which may extend to the value of the
property or security as agreed or the market value whichever is higher
and shall be ordered by the Banking Court trying the offence to deliver
up or refund to the financial institution, within a time to be fixed
by the Banking Court, the property or the value of the property or security.
Explanation.- Dishonesty may be presumed where a customer has not deposited the sale
proceeds of the property with the financial institution in violation
of the terms of the agreement between the financial institution and
the customer.
(2) Whoever knowingly makes a statement which is false
in material respects in an application for finance and obtains a finance
on the basis thereof, or applies the amount of the finance towards a
purpose other than that for which the finance was obtained by him, or
furnishes a false statement of stocks in violation of the terms of the
agreement with the financial institution or falsely denies his signatures
on any banking document before the Banking Court, shall be guilty of
an offence punishable with imprisonment of either description for a
term which may extend to three years, or with fine, or with both.
(3) Whoever resists or obstructs, either by himself
or on behalf of the judgment debtor, through the use of force, the execution
of a decree, shall be punishable with imprisonment which may extend
to one year, or with fine, or with both.
(4) Whoever dishonestly issues a cheque towards re-payment
of a finance or fulfillment of an obligation which is dishonoured on
presentation, shall be punishable with imprisonment which may extend
to one year, or with fine or with both, unless he can establish, for
which the burden of proof shall rest on him that he had made arrangements
with his bank to ensure that the cheque would be honoured and that the
bank was at fault in not honouring the cheque.
(5) Where the person guilty of an offence under this
Ordinance is a company or other body corporate, the chief executive
by whatever name called, and any director or officer involved shall
be deemed to be guilty of the offence and shall be liable to be prosecuted
against and punished accordingly.
(6) All offences under this Ordinance shall be bailable,
non-cognizable and compoundable.
21. Application of fines and
costs.-
(a) payment of costs of all or any proceedings under this Ordinance; and
(b) payment of compensation to an aggrieved party.
(2) An order under sub-section (1) shall be deemed
to be a decree passed under this Ordinance for purposes of execution.
22. Appeal.-
(1) Subject to sub-section (2),
any person aggrieved by any judgment, decree, sentence, or final order
passed by a Banking Court may, within thirty days of such judgment,
decree, sentence or final order prefer an appeal to the High Court.
(2) The appellant shall give notice of the filing
of the appeal in accordance with the provisions of Order XLIII Rule
3 of the Code of Civil Procedure (Act V of 1908) to the respondent who
may appear before the Banking Court to contest admission of the appeal
on the date fixed for hearing.
(3) The High Court shall at the stage of admission
of the appeal, or at any time thereafter either suo motu or on the application
of the decree holder, decide by means of a reasoned order whether the
appeal is to be admitted in part or in whole depending on the facts
and circumstances of the case, and as to the security to be furnished
by the appellant:
Provided that the admission of the appeal shall not per se operate
as a stay, and nor shall any stay be granted therein unless the decree-holder
has been given an opportunity of being heard and unless the appellant
deposits in cash with the High Court an amount equivalent to the decretal
amount inclusive of costs, or in the case of an appeal other than an
appeal against an interim decree, at the discretion of the High Court
furnishes security equal in value to such amount; and in the event of
a stay being granted for a part of the decreetal amount only, the requirement
for a deposit in cash or furnishing of security shall stand reduced
accordingly.
(4) An appeal under sub-section (1) shall be heard
by a bench of not less than two Judges of the High Court and, in case
the appeal is admitted, it shall be decided within 90 days from the
date of admission.
(5) An appeal may be preferred under this section
from a decree passed ex-parte.
(6) No appeal, review or revision shall lie against
an order accepting or rejecting an application for leave to defend,
or any interlocutory order of the Banking Court which does not dispose
of the entire case before the Banking Court other then an order passed
under sub-section (11) of section 15 or sub-section (7) of section 19.
(7) Any order of stay of execution of a decree passed
under sub-section (2) shall automatically lapse on the expiry of six
months from the date of the order whereupon the amount deposited in
court shall be paid over to the decree-holder or the decree-holder my
enforce the security furnished by the judgment-debtor.
23. Restriction on transfer
of assets * properties.-
(1) After publication of summons
under sub-section (5) of section 9, no customer shall, without the prior
written permission of the Banking Court transfer, alienate, encumber,
remove or part with possession of any of his asset or property furnished
to the financial institution as security by way of mortgage, pledge,
hypothecation, charge, lien or otherwise pending final decision of the
suit filed by the financial institution under this Ordinance and any
such transfer, alienation, encumbrance or other disposition by the customer
in violation of this sub-section shall be void and of no legal effect:
Provided that the customer may sell any such asset or property
which has been retained by or entrusted to him for purposes of dealing
with the same in the ordinary course of business subject to the terms
of the letter of hypothecation or trust receipt or other instrument
or document executed by him, or for purposes of effecting their sale
and depositing the sale proceeds with the financial institution:
Provided further that the customer before making the sale shall
file in the
(2) After pronouncement of judgment and decree by
the Banking Court, including in interim decree under section 11, no
judgment-debtor shall without the prior written permission of the Banking
Court transfer, alienate, encumber or part with possession of any assets
or properties and any such transfer, alienation, encumbrance or other
disposition by a judgment-debtor in violation of this sub-section shall
be void and of no legal effect.
(3) The provisions of sub-section
(1) shall also apply to a person who has furnished any security on behalf
of a customer to the financial institution on the basis of which finance
was granted, provided such person is a defendant in the suit filed under
section 9 or is added as a defendant thereafter.
24. Application of the Limitation
Act, 1908 (Act IX of 1908).-
(1) Save as otherwise provided in this Ordinance,
the provisions of the Limitation Act, 1908 (Act IX of 1908) shall apply
to all cases instituted or filed in a Banking Court after the coming
into force of this Ordinance.
(2) A suit under section 9 may be entertained by a
Banking Court after the period of limitation prescribed therefore, if
the plaintiff satisfies the Banking Court that he had sufficient cause
for not filing the suit within such period.
25. Power to make rules.-
The Federal Government may,
by notification in the official Gazette, make rules for carrying out
the purposes of this Ordinance.
26. Removal of difficulties.-
If any difficulty arises in
giving effect to any of the provisions of this Ordinance, the Federal
Government may, by notification in the official Gazette, make such provisions
as it thinks fit for removing such difficulties.
27. Finality of order.-
Subject to the provisions of
section 22, no court or other authority shall revise or review or call,
or permit to be called, into question any proceeding, judgment, decree,
sentence or order of a Banking Court or the legality or propriety of
anything done or intended to be done by the Banking Court in exercise
of jurisdiction under this Ordinance:
Provided that the Banking Court may, on its own accord or on application
of any party, and with notice to the other party or, as the case may
be, to both the parties, correct any clerical or typographical mistake
in any judgment, decree, sentence or order passed by it.
28. Indemnity.-
No suit, prosecution or other
legal proceeding shall lie against the Federal Government or a Banking
Court or a financial institution or any person for any thing which is
in good faith done or intended to be done under this Ordinance or any
rule made thereunder.
29. Repeal.-
(1) The Banking Companies (Recovery
of Loans, Advances, Credits and Finances) Act, 1997 (Act XV of 1997)
is hereby repealed.
(2) Notwithstanding the repeal of the (Recovery of
Loans, Advances, Credits and Finances) Act, 1997 (Act XV of 1997) and
the provisions of this Ordinance, decrees in cases relating to interest-bearing
loans which have not been converted into finance shall be passed in
accordance with the provisions of section 15 of the said Act.
General
ERVEZ MUSHARRAF,
President.
____________________
Mr. Justice
FAQIR MUHAMMAD KHOKHAR.
Secretary.
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