Updated: Sunday December 09, 2012/AlAhad
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Agrahayana 18, 1934, at 06:51:37 PM
Ordinance XIX of 1979
An
Ordinance to repeat and with certain modifications, re‑Enact the Banking
Companies (Recovery of Loans) Ordinance, 1978
[Gazette of
No.
F.17 (1)/79‑Pub.‑The following Ordinance made by the President is
hereby published for general information:‑
Whereas
it is expedient to repeal and, with certain modifications, re‑enact the
Banking Companies (Recovery of Loans) Ordinance, 1978 (XXIII of 1978);
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 the fifth day of July 1977, read
with the Laws (Conti, nuance in Force) Order, 1977 (C. M. L. A. Order No. 1 of
1977), and in exercise of all powers enabling him in that behalf, the President
is pleased to make and promulgate the following Ordinance;
1. Short
title, extent, application and commencement.‑(1) This Ordinance may be called the Banking Companies
(Recovery of Loans) Ordinance, 1979.
(2)
It extends to the whole of
(3)
It applies to all Banking Companies except the Agricultural Development Bank of
(4)
It shall come into force on such date, not being earlier than the first day of
April 1979, as the Federal Government may, by notification in the official
Gazette, appoint in this behalf.
2.
Definitions.‑In this Ordinance,
unless there is anything repugnant in the subject or context,‑--
(a) "banking company" means a bank as defined in the Banks
(Nationalisation) Act, 1974 (XIX of 1974), and includes, a banking company
incorporated outside Pakistan and transacting banking business in Pakistan and
a financial institution which the Federal Government may, by notification in
the official Gazette declare to be a banking company for the purposes of this
Ordinance, but does not include the State Bank of Pakistan;
(b) "borrower" means a person who has obtained a loan from a banking
company and includes a surety or an indemnifier;
(c)
"commencing day" means the day on which this Ordinance comes into
force;
(d)
"loan" includes,---
(i)
an advance, cash credit, overdraft, packing credit, a bill discounted and
purchased or any other financial accommodation provided by a banking company to
a borrower;
(ii)
a guarantee, indemnity, letter of credit or any other financial engagement
which a banking company may give, issue or undertake on behalf of a borrower;
(iii)
a benami loan, that is, a loan the real beneficiary or recipient whereof is a
person other than the person in whose name the loan is advanced or granted;
(iv)
any amount due from any borrower to a banking company under a decree passed by
a civil Court or an award given by an arbitrator; and
(v)
any loan due from any borrower to a banking company which is the subject‑matter
of any pending suit, appeal or revision before any Court;
(e)
"rule" means rule made under this Ordinance; and
(f)
"
3. Ordinance not to derogate from other laws.‑The provisions of this Ordinance shall be
in addition to and, save as hereinafter expressly provided, not in derogation
of any other law for the time being in force.
4.
Securing and repayment of loan due on the
commencing day.‑(1) This section applies only to loans outstanding on
the commencing day.
(2)
A loan or part thereof outstanding on the commencing day shall, unless secured
or repaid earlier, be secured and repaid as provided in this section
notwithstanding the fact that the period of limitation within which a suit for
the recovery of the loan or part thereof could have been or may be filed
expired' or expires on or after the first day of January 1974.
(3) Where, in the opinion of a banking company, a loan was, or has become
or is discovered to be, unsecured or insufficiently secured, the borrower shall
provide sufficient security therefor within one hundred and eighty days from
the date of the notice served by the banking company on the borrower in any of
the under‑mentioned modes; namely, by being,---
(a) given or
tendered to him, or
(b) sent by registered post to his last known address on the record of the
banking company, or
(c)
affixed on a conspicuous part of his last address known to the banking
company, or
(d)
published in a newspaper.
(4)
Where a loan is not, or has not become, sufficiently secured under subsection
(3), the banking company may apply, to the
(5) Where the loan is,
or has become, sufficiently secured under sub‑section (3), the
outstanding amount shall, unless a different schedule of repayment is drawn by
the bank, be repaid in accordance with the schedule of repayment agreed to at
the time of sanction of the loan.
(6)
The decision of the bank in fixing the schedule of repayment under subsection
(5) shall not be questioned in any Court.
5. Establishment of Special Courts.‑(1)
The Federal Government may by
notification in the official Gazette, establish as many Special Courts as it
considers necessary, and where it establishes more than one Special Court,
shall specify in the notification the territorial limits within which each one
of them shall exercise jurisdiction under this Ordinance.
6. Powers of Special Court.‑(I)
(a)
in the exercise of its civil jurisdiction, have, in respect of a claim filed by
a banking company against a borrower or by a borrower. against a banking
company in respect of, or arising out of, a loan 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 the offences punishable
under this Ordinance and shall, for that purpose, have the same powers as are
vested in the Court of an Assistant Sessions Judge under the Code of Criminal
Procedure, 1898 (Act V of 1898) Provided that, for the purpose of a ,trial
before a Special Court, the provisions of Chapter XVIII of the said Code shall
not apply Provided further that a Special Court shall not take cognizance of
any offence punishable under this Ordinance except upon complaint in writing
made by a person authorised in this behalf by the banking company in respect of
which the offence was committed; and
(c) exercise and
perform such other powers and functions as are; or may be, conferred upon, or
assigned to it by or under this Ordinance.
(2) Notwithstanding
anything contained in subsection (I), a
(a) the outstanding
amount of the loan does not exceed one lac rupees ;
(b) arbitration
proceedings in ‑ respect of the loan are pending before an arbitrator; or
(c) the loan was
sanctioned under an agreement between the banking company and the borrower
which provides for a dispute between the parties being referred to arbitration.
(3) All proceedings
before a Special Court shall be deemed to be judicial proceedings within the
meaning of sections 193 and 288 of the Pakistan Penal Code (Act XLV of 1860),
and the Special Court shall be deemed to be a Court for the purposes of
sections 480 and 482 of the Code of Criminal Procedure, 1898 (Act V of 1893).
(4) No Court other
than a Special Court shall have or exercise .any jurisdiction with respect to
any matter to which the jurisdiction of a Special Court extends under this
Ordinance, including decision as to the existence or otherwise of a loan and
the execution of a decree passed by a Special Court; and all proceedings,
including proceedings following the filing of an arbitration award and
proceedings for the execution of a decree within the jurisdiction of a Special
Court, by whatever Court passed, which may be pending in any Court immediately
before the commencing day shall stand transferred to the Special Court.
(5) In respect of
proceedings transferred to a Special Court by virtue of subsection (4), the
said Court shall not, by reason of the said transfer, be bound to recall and re‑hear
any witness who has given evidence before the transfer and may act on the
evidence already recorded by or produced before the Court from which the
proceedings are so transferred.
6-A
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7. Procedure of Special Court.‑(1)
Suits before the Special Court shall
come up for regular hearing as expeditiously as possible and, except in extraordinary
circumstances and on grounds‑ to be recorded a Special Court shall not
allow adjournment.
(2) In the exercise of
its civil jurisdiction, the Special Court shall in all suits before it,
including suits based on mortgages of all kinds on statement of accounts for
recovery of money paid to, or to the order of, the defendant, follow the
summary procedure provided for in Order XXXVII in the First Schedule to the
Code of Civil Procedure, 1908 (Act V of 1908).
8. Judgment and decree.‑
(2) The decree shall
provide for interest on the judgment debt from the date of decree till payment
at the contracted rate or at the rate of two per cent. above the bank rate,
whichever is the higher.
Explanation.‑In
this subsection "bank rate" means the bank rate determined and made
public under the provisions of the State Bank of Pakistan Act, 1956 (XXXIII of
1956).
(3) The
9.
Provisions relating to certain offences.‑(1)
Whoever dishonestly commits breach of the terms of letter of hypothecation
or trust receipt or such other instrument or document executed by him whereby
the possession of the property offered as security for the loan is not with the
banking Company but is retained by or entrusted to him for the purpose of
effecting sale and paying over the sale proceeds thereof, shall be punishable
with imprisonment of either description for a term which may extend to three
years, or with fine, or with both.
(2) Whoever knowingly
makes a false statement in an application for loan, or applies the amount of,
the loan towards purposes other than those for which the loan is availed of by
him, shall be punishable with imprisonment of either description for a term
which may extend to three years, or with fine, or with both.
(3) All offences under
this Ordinance shall be bailable, non‑cognizable and compoundable.
(4) 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 every director, manager,
secretary and other officer thereof shall, unless he proves that the offence
was committed without his knowledge or that he exercised all due diligence to
prevent the commission of such offence, also be deemed to be guilty of the
offence and shall be liable to be proceeded against and punished accordingly.
10‑
Application of fines.‑‑The Special Court imposing any fine under
this Ordinance may direct that the whole, or a part thereof shall be applied in
or towards,---
(a)
payment of costs of the proceedings; and
(b)
payment to a banking ,company of compensation for any loss caused by the
offence.
11. Finality of orders.‑Subject to the provisions for appeal in section 12 ' no Court or
other authority shall call or permit to be called in question any order,
judgment or sentence of a Special Court or the legality or propriety of
anything done or intended to be done by the Special Court under this Ordinance.
12.
Appeals.‑(I) Any person aggrieved by any order, judgment, decree or
sentence of a Special Court may, within thirty days of such order, judgment,
decree or sentence, prefer an appeal to the High Court within whose
jurisdiction the order, judgment, decree or sentence is passed;’
Provided that no
appeal shall lie from an interlocutory order which does not dispose of the
entire case before the
(2) An appeal under
subsection (1) shall be on any one of the following grounds, namely,---
(a) the decision being
contrary to law or to some usage having the force of law, or
(b) the decision
having failed to determine a material issue of law or usage having the force of
law, or
(c)
a substantial error apparent in the procedure provided by or under this
Ordinance, which may possibly have produced error in the decision on merits.
(3)
An appeal may be preferred under this section from a decision made ex parte.
(4)
An appeal under this section shall be heard by a Bench of not less than two
Judges.
(5)
No appeal shall be admitted for hearing unless the appellant deposits in cash
with the High Court an amount equivalent to the judgment debt or, at the
discretion of the High Court, furnishes security equal in value to such amount.
13. Pending cases and appeals.‑Notwithstanding anything
contained in section 12,‑--
(a)
any case pending at the commencement of this Ordinance before a High Court in
the exercise of its original jurisdiction shall continue to be heard, and shall
be decided, by the High Court;
(b)
any appeal pending before the Supreme Court or a High Court at the commencement
of this Ordinance from an order which disposes of the entire case shall
continue to be heard, and shall be decided, by the Supreme Court or, as the
case may be, the High Court;
(c)
any appeal pending before the Supreme Court or a High Court at the commencement
of this Ordinance from an interlocutory order which does not dispose of the
entire case shall stand transferred to the Special Court ; and
(d)
any appeal on any of the grounds specified in subsection (2) of section 12
which is from an order which disposes of this entire case and which may be
pending before a District Judge at the commencement of this Ordinance shall
stand transferred to the High Court.
14. Indemnity.‑No suit, prosecution or other legal proceeding shall lie
against the Federal Government or a Special Court or a banking company or any
other person for anything which is in good faith done or intended to be done
under this Ordinance or any rule made thereunder.
15.
Power to make rules.‑The
Federal Government may, by notification in the official Gazette, make rules for
carrying out the purposes of this Ordinance.
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16.
Repeal.‑The Banking Companies (Recovery of Loans) Ordinance, 1978 (XXIII
of 1978), is hereby repealed and shall be deemed never to have come into force.
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