Last Updated: Thursday September 29, 2011

Mr. Wassi Zafar

Minister for Law & Parliamentary Affairs

Islamabad Civil Secretariat

Diplomatic Enclave


Phone Nos.: 0092-51-???.


Ref. No.

NNB/Misc/ 2007/021


April 10, 2007

Subject:         Removal of difficulties under section 26 of the Financial Institutions’ (Recovery of Finances) Ordinance, 2001[1].

Respected Sir,

Your kind attention is invited regarding some difficulties and errors crept in Financial Institutions (Recovery of Finances) Ordinance, 2001, (hereinafter referred to as the “Ordinance”), which are as under:---

1.                  The punctuation of apostrophe (’) may be put at the end of word “Institutions” in the title of the statute and wherever occur in the text of Ordinance. It makes the word sensible and satisfies the word “of” which is requirement of grammar.

2.                  The word “has” occurred after the word “summons” may be substituted with the word “have” in section 10 of the Ordinance.

3.                  Clauses “b” and “c” of sub-section 4 of section 10 of the Ordinance have no difference between them except to the words “amount” and “amounts” accordingly. Such difference is not understandable as to why two same provisions are inserted in the Ordinance. Clause “b” of sub-section 4 of section 10 either may be deleted or clarified as to what it requires?

4.                  The word “customer” has been used in the explanation in section 10(4) whereas the word “defendant” has been used in the all its clauses. It may be clarified as to why two different words have been used? Whether they are the same persons or different? It may either be clarified or amended accordingly.

5.                  Comma (,) may be put before and after the words “if any” in clause “d” of section 10(4).

6.                  Comma (,) may be put after the words “immovable property” in section 14.

7.                  The word “of” may be put after the word “disposing” in clause “a” of section 16(1).

8.                  The word “on” may be replaced in the words “Receivers of such property” in clause “d” of section 16(1).

9.                  Section 16(3)(a) and its provisio are so much inconsistent. Lawlessness has been legalized. No one can be given an authority to recover the property which is leased or against which financial facility has been extended. Only lawful sources, i.e., law enforcing agencies, may only be applied to take over the possession of the leased property where default has been committed. Please note that fate of customer may not be left at the mercy of Financial Institutions so far as commission of default is concerned. Intervention of Banking Court may be made compulsory. These provisions of law in Ordinance may either be omitted or suitably be altered brining them consistent.

10.              Section 18(1) has no penal consequences, which may be provided with an amendment in Ordinance.

11.              Section 18(4) is inconsistent, particularly with sub-section 2 of same section. Definitely consistent provision of law prevails whereas inconsistent is annulled. Either section 18(4) may be deleted or clarified appropriately.

12.              It may be noted that Banking Court cannot refuse to accept the document in evidence under sub-section 4 of section 18, which are in contravention of sub-section 2 of the same section. It may be clarified whether such accepted document may be implemented which are in contravention to sub-section 2 of section 18 or which are inconsistent?

13.              The Explanation under section 19 is reproduced as under:---

“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.”

Sub-section (2) of section 19 do not include the words “assets” and “properties”, whereas the same words are occurred in sub-section 1 of section 19 with slight alteration that the word “properties” has not be used but the word “property” has been used. It may be corrected accordingly. The word sub-section “(2)” in Explanation may be substituted with sub-section (1).

14.              Recall the provisio under section 19(7). It seems to be redundant and ambiguous. What will happen where Financial Institution does not give written undertaking? What are penal consequences? Whether written undertaking of Financial Institution is necessary? Whether such penal consequences cannot be provided under statue rather under written undertaking? Please clarify or amend the statue accordingly.

15.              Section 20(1)(b) is reproduced as under:---

“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”

Highlighted and underlined words make no sense, which may be amended accordingly making sense.

16.              It is notable that appeal is filed in High Court under section 22 of the Ordinance, whereas under sub-section 22(2), respondent is required to appear in Banking Court to contest the appeal. It is not understandable. The words “Banking Court” may be replaced with “High Court”.

17.              Provisio under section 22(3) is quite unreasonable in which appellant, i.e., customer may contest appeal where he deposits the amount equivalent to decreetal amount inclusive of costs. This condition may be amended to the surety only. Customer may not be exploited in a way to deposit amount as a condition precedent to contest appeal. Whether the same provisio, mutatis mutandis[2], is applicable on the Financial Institution, where appeal is preferred by the Financial Institution?

18.              The word “or” before the words “any interlocutory[3]” occurring in section 22(6) may be replaced with the word “and” to make the said sub-section reasonable.

19.              The word “lapse” occurring in section 22(7) may be replaced with the word “vacate” which is quite reasonable. Stay always vacates and not lapses.

20.              Section 22(7) is reproduced as under:---

“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 may enforce the security furnished by the judgment-debtor.”

The word “may” may also be replaced with the word “shall” which is quite reasonable.

What will ensue if the appeal is not decided within a period of six months without any fault of judgment-debtor?

Above sub-section may be revised to as where the respondent has deposited amount, the same shall be paid to decree-holder, and where respondent has furnished security, the same shall be enforced.

It is suggested that deposit of amount may be deleted and only furnishing of security may be allowed.


The above matters may be considered appropriately to give effect in the official Gazette so that difficulties and errors may be removed.

Hope for the best and with good wishes.


Yours faithfully,





Nasir Nazir Butt

Advocate High Court


c. c.:     The Secretary, Law & Parliamentary Affairs, Pakistan Civil Secretariat, Diplomatic Enclave, Islamabad.

            The Secretary, Law & Justice Commission of Pakistan, 2nd Floor, Supreme Court Building, Constitution Avenue, Islamabad. Phone: No. 051-9220483.

Following reply has been received:---




Manzoor Ahmed Shaikh,

Deputy Secretary,

Law and Justice Commission of Pakistan,

IInd Floor, Supreme Court Building,



Nasir Law Associates,

Advocates & Solicitors,

47-D, Islam St.5, Karnal Pura,

Shah Kamal, Near Mosque Aouqaf, Ichhra,



Reference:       Your letter dated the 10th April, 2007, addressed to Minister for Law and parliamentary Affairs, Islamabad, and copy of the same endorsed to the Secretary, Law and Justice Commission of Pakistan, Islamabad.


Dear Sir;

Your above referred letter which contains the proposals for amendments in the Financial Institutions (Recovery of Finance) Ordinance, 2001, received by this Secretariat and after careful perusal of the same, it is found that your proposals have weight and are liable to be worked out further in accordance with the scope of section 6 of the Law and Justice Commission of Pakistan Ordinance, 1979.

It is highly appreciated that your good self have suggested the amendments in the several provisions of the above referred Ordinance and we hope that in near future your good self send further proposals/suggestions to this Secretariat for amendments in other Laws, as well.

Waiting for your precious contribution.



Your Truly





Dated: 03/0/2007.


Deputy Secretary


Manzoor Ahmed Shaikh

Deputy Secretary

Law & Justice Commission

of Pakistan, Islamabad.

Wednesday September 04, 2007

[1] Gazette of Pakistan, 2001 is consulted while writing this letter.

[2] With necessary changes or slight alterations, accordingly.

[3] Pertaining to an interim order.

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