Updated: Sunday October 20, 2013/AlAhad
Thoul Hijjah 16, 1434/Ravivara
Asvina 28, 1935, at 07:02:18 PM
[1][1]The [2][2][Punjab] Usurious Loans Ordinance, 1959
(W.P. Ordinance XVIII of
1959)
[
An
Ordinance to consolidate the law relating to usurious loans in the Province of [3][3][the
Preamble.— WHEREAS it is expedient to consolidate the
law relating to usurious loans in the Province of [4][4][the
Now,
THEREFORE, in pursuance of the Presidential Proclamation of the 7th day of
October, 1958, and in exercise of all powers enabling him in that behalf, the
Governor of West Pakistan is pleased to make and promulgate the following
Ordinance:-
1. Short title and extent.— (1) This Ordinance may be called [5][5][the
[6][6][(2) It
extends to the whole of the Province of [7][7][the
2. Definitions.— In this Ordinance, unless the context
otherwise requires, the following expressions shall have the meanings hereby
respectively assigned to them, that is to say—
(a) “interest” means rate of interest and includes
the return to be made over and above what was actually lent, whether the same
is charged or sought to be recovered specifically by way of interest or
otherwise;
(b) “loan” means a loan whether of money or in
kind and includes any transaction which is in the opinion of the Court, in
substance a loan.
3. Application of the Ordinance.— This Ordinance shall apply to all suits
pending on or instituted after its commencement namely:-
(a) for the recovery of a loan made after the
twenty-second day of March, Nineteen Hundred and Eighteen;
(b) for the enforcement of any security taken or
any agreement whether by way of settlement of account or otherwise, made after
the twenty-second day of March, Nineteen Hundred and Eighteen, in respect of
any loan made either before or after the said date; and
(c) for the redemption of any security given after
the twenty-second day of March, Nineteen Hundred and Eighteen, in respect of
any loan made whether before or after the said date.
4. Re-opening of transactions.— (1) Notwithstanding anything in the Usury
Laws Repeal Act, 1855[8][8], where, in any suit to which this Ordinance
applies, whether heard ex parte or
otherwise, the Court has reason to believe—
(a) that
the interest is excessive; or
(b) that the transaction was, as between the
parties thereto, substantially unfair,
the Court shall exercise all or any of the
following powers:-
(i) re-open the transaction,
take an account between the parties, and relieve the debtor of all liability in
respect of any excessive interest;
(ii) notwithstanding any
agreement, purporting to close previous dealings and to create a new
obligation, re-open any account already taken between them and relieve the
debtor of all liability in respect of any excessive interest, and if anything
has been paid or allowed in the account in respect of such liability, order the
creditor to repay any sum which it considers to be repayable in respect
thereof;
(iii) set aside either wholly
or in part or revise or alter any security given or agreement made in respect
of any loan, and if the creditor has parted with the security, order him to
indemnify the debtor in such manner and to such extent as it may deem just:
Provided
that in the exercise of these powers, the Court shall not,---
(i) re-open
any agreement purporting to close previous dealings and to create a new
obligation which has been entered into by the parties or any persons from whom
they claim at a date more than twelve years from the date of the transaction;
(ii) do
anything which affects any decree of a Court.
Explanation— In the case of a suit brought on a series of
transactions the expression “the transaction” means, for the purposes of
proviso (i), the first of such
transactions.
(2) (a) In this section “excessive” means in
excess of that which the Court deems to be reasonable having regard to the risk
incurred as it appeared, or must be taken to have appeared, to the creditor at
the date of the loan;
(b) In
considering whether interest is excessive under this section, the Court shall
take into account any amount charged or paid, whether in money or in kind, for
expenses, inquiries, fines, bonuses, premia, renewals or any other charges, and
if compound interest is charged, the periods at which it is calculated and the
total advantage which may reasonably be taken to have been expected from the
transactions.
(c) In
considering the question of risk, the Court shall take into account the
presence or absence of security and the value thereof, the financial condition
of the debtor and the result of any previous transactions of the debtor, by way
of loan, so far as the same were known, or must be taken to have been known, to
the creditor.
(d) In
considering whether a transaction was substantially unfair, the Court shall
take into account all circumstances materially affecting the relations of the
parties at the time of the loan or tending to show that the transaction was
unfair, including the necessities or supposed necessities of the debtor at the
time of the loan so far as the same were known, or must be taken to have been
known, to the creditor.
Explanation— Interest may of itself be sufficient evidence
that the transaction was substantially unfair.
(e) The
Court shall deem interest to be excessive if it exceeds seven and a half per
centum per annum simple interest or is more than two per centum over the bank
rate, whichever is higher at the time of taking the loan, in the case of
secured loans, or twelve and a half per centum per annum simple interest in the
case of unsecured loans:
Provided that the provisions of this clause shall not
apply if the loan has been advanced by any bank which is a ‘scheduled bank’ as
defined in the State Bank of Pakistan Act, 1956[9][9], or any banking company registered under the Companies
Act, 1913[10][10], [11][11][* * *] or any Co-operative Society duly
registered under any law for the time being in force [12][12][, or credit institution to be notified by
Government in this behalf.]
(3) Whatever be the form of the suit this
section shall apply if such suit is substantially one for the recovery of a
loan or for the enforcement of any agreement or security in respect of a loan
or for the redemption of any such security.
(4) Nothing
in this section shall affect the rights of any transferee for value who
satisfies the Court that the transfer to him was bona fide, and that he had at the time of such transfer no notice
of any fact which would have entitled the debtor as against the lender to
relief under this section.
For
the purposes of this sub-section, the word “notice” shall have the same meaning
as is ascribed to it in section 4 of the Transfer of Property Act, 1882[13][13].
(5) Nothing in this section shall be
construed as derogating from the existing power or jurisdiction of any Court.
5. Insolvency
proceedings.— On any application relating to the admission or amount of a proof of a
loan in any insolvency proceedings, the Court may exercise the like powers as
may be exercised under section 3 by a Court in a suit to which this Ordinance
applies.
6. Repeal.— The enactments specified in the Schedule are
hereby repealed to the extent mentioned in the fourth column thereof.
SCHEDULE
|
Year |
No. |
Short
title |
Extent
of Repeal |
|
1 |
2 |
3 |
4 |
|
1918 |
X |
The Usurious Loans Act, 1918 |
The whole. |
|
1934 |
VII |
The |
Sections 5 and 6 |
|
1935 |
IV |
The Usurious Loans ( |
The whole. |
[1][1]This Ordinance was
promulgated by the Governor of West Pakistan on 31st March, 1959; published in
the West Pakistan Gazette (Extraordinary), dated Ist April, 1959, pages
225-259; saved and given permanent effect by Article 225 of the Constitution of
the Islamic Republic of Pakistan (1962).
[2][2]Substituted by the
[3][3]Ibid.
[4][4]Ibid.
[5][5]Ibid.
[6][6]Substituted by the
[7][7]Substituted by the
[8][8]XXVIII of 1855.
[9][9]XXXIII of 1956.
[10][10]VII of 1913.
[11][11]The words and commas “prior
to the first day of April, 1937” deleted by the West Pakistan Usurious Loans
(Amendment) Ordinance, 1960 (XX of 1960).
[12][12]Added ibid.
[13][13]IV of 1882.
Go to Index
| LL. B. – I | LL. B. – II
| LL. B. – III | LL. B.
Directory | Home