the financial institutions recovery of finance ordinance
TRANSCRIPT
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THE FINANCIAL INSTITUTIONS (RECOVERY OF FINANCES)
ORDINANCE, 2001
ORDINANCE NO. XLVI OF 2001
AN
ORDINANCE
to repeal, and, with certain modifications, re-enact, the Banking Companies (Recovery of
Loans, Advances, Credits and Finances) Act, !!"#
WHEREASit is e$pedient to repeal and with certain modifications, re-enact the Banking
Companies (Recovery of Loans, Advances, Credits and Finances) Act, !!", for the p%rposes
hereinafter appearing&
AND WHEREASthe 'resident is satisfied that circ%mstances e$ist which render it necessary to
take immediate action&
NOW, THEREFORE,in p%rs%ance of the 'roclamation of mergency of the fo%rteenth day of
cto*er, !!! and 'rovisional Constit%tion rder +o# of !!!, read with the 'rovisional
Constit%tion (Amendment) rder +o# ! of !!!, and in e$ercise of all powers ena*ling him in that
*ehalf, the 'resident of the slamic Rep%*lic of 'akistan is pleased to make and prom%lgate the
following rdinance-
Short tit!, !"t!#t $#% &o''!#&!'!#t.() .his rdinance may *e called the Financial
nstit%tions (Recovery of Finances) rdinance, /00#
(/) t e$tends to the whole of 'akistan#
(1) t shall come into force at once#
2. D!i#itio#*.n this rdinance, %nless there is anything rep%gnant in the s%*2ect or
conte$t
$) 3financial instit%tion3 means and incl%des
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(i) any company whether incorporated within or o%tside 'akistan which transacts the
*%siness of *anking or any associated or ancillary *%siness in 'akistan thro%gh its *ranches
within or o%tside 'akistan and incl%des a government savings *ank, *%t e$cl%des the 4tate Bank
of 'akistan&
(ii) a modara*a or modara*a management company, leasing company, investment *ank,
vent%re capital company, financing company, %nit tr%st or m%t%al f%nd of any kind and credit or
investment instit%tion, corporation or company& and
(iii) any company a%thorised *y law to carry on any similar *%siness, as the Federal
5overnment may *y notification in the official 5a6ette, specify&
+) 3Banking Co%rt3 means
(i) in respect of a case in which the claim does not e$ceed fifty million r%pees or for the trial of
offences %nder this rdinance, the Co%rt esta*lished %nder section 7& and
(ii) in respect of any other case, the 8igh Co%rt#
(&)3c%stomer3 means a person to whom finance has *een e$tended *y a financial instit%tion
and incl%des a person on whose *ehalf a g%arantee or letter of credit has *een iss%ed *y a
financial instit%tion as well as a s%rety or an indemnifier&
(%) 3finance3 incl%des
(i) an accommodation or facility provided on the *asis of participation in profit and loss,
mark-%p or mark-down in price, hire-p%rchase, e9%ity s%pport, lease, rent-sharing, licensing
charge or fee of any kind, p%rchase and sale of any property incl%ding commodities, patents,
designs, trade marks and copy-rights, *ills of e$change, promissory notes or other instr%ments
with or witho%t *%y-*ack arrangement *y a seller, participation term certificate, m%sharika,
mora*aha, m%sawama, istisnah or modara*a certificate, term finance certificate&(ii) facility of credit or charge cards&
(iii) facility of g%arantees, indemnities, letters of credit or any other financial engagement
which a financial instit%tion may give, iss%e or %ndertake on *ehalf of a c%stomer, with a
corresponding o*ligation *y the c%stomer to the financial instit%tion&
(iv) a loan, advance, cash credit, overdraft, packing credit, a *ill disco%nted and p%rchased
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or any other financial accommodation provided *y a financial instit%tion to a c%stomer&
(v) a *enami loan or facility that is, a loan or facility the real *eneficiary or recipient whereof is
a person other than the person in whose name the loan or facility is advanced or granted&
(vi) any amo%nt d%e from a c%stomer to a financial instit%tion %nder a decree passed *y a
Civil Co%rt or an award given *y an ar*itrator&
(vii) any amo%nt d%e from a c%stomer to a financial instit%tion which is the s%*2ect matter of
any pending s%it, appeal or revision *efore any Co%rt&
(viii) any other facility availed *y a c%stomer from a financial instit%tion#
(e) :o*ligation; incl%des
(i) any agreement for the repayment or e$tension of time in repayment of a finance or for
its restr%ct%ring or renewal or for payment or e$tension of time in payment of any other amo%nts
relating to a finance or li9%idated damages& and
(ii) any and all representations, warranties and covenants made *y or on *ehalf of the
c%stomer to a financial instit%tion at any stage, incl%ding 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
amo%nts relating to a finance or performance of an %ndertaking or f%lfillment of a promise& and
(iii) all d%ties imposed on the c%stomer %nder this rdinance& and
(f) 3r%les3 means r%les made %nder this rdinance#
. D-t o $ &-*to'!r.
() t shall *e the d%ty of a c%stomer to f%lfil his o*ligations to the financial instit%tion#
(/)
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/.Or%i#$#&! to o!rri%! oth!r $*..he provisions of this rdinance shall have effect
notwithstanding anything inconsistent therewith contained in any other law for the time *eing
in force#
. E*t$+i*h'!#t o 3$#4i#5 Co-rt.
() .he Federal 5overnment may, *y notification in the fficial 5a6ette, esta*lish as many
Banking Co%rts as it considers necessary to e$ercise 2%risdiction %nder this rdinance and
appoint a =%dge for each of s%ch Co%rts and where it esta*lishes more Banking Co%rts than
one, it shall specify in the notification the territorial limits within which each of the Banking Co%rts
shall e$ercise its 2%risdiction#
(/)
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'akistan and has the following 9%alifications, namely-
(i) a degree in Commerce and Acco%nt or in conomics& or
(ii) a degree in B%siness Administration& or
(iii) has completed a co%rse in *anking from the nstit%te of Bankers, 'akistan#
(!) Rem%neration of the amic%s c%riae, and the party or parties *y whom it will *e paya*le,
will *e determined *y the Banking Co%rt, keeping in view the circ%mstances of each case#
6. R!*i5#$tio# $#% r!'o$ o 7-%5!*.
() A person, not *eing a ?istrict =%dge, appointed as a =%dge of a Banking Co%rt %nder section
7 may, *y notice in writing %nder his hand addressed to the Federal 5overnment, resign from his
office#
(/) A person appointed as a =%dge of a Banking Co%rt %nder section 7 may *e removed from
office in cons%ltation with the Chief =%stice of the 8igh Co%rt#
8. 9o!r* o 3$#4i#5 Co-rt*.
() 4%*2ect to the provisions of this rdinance, a Banking Co%rt shall
(a) in the e$ercise of its civil 2%risdiction have all the powers vested in a civil Co%rt %nder the
Code of Civil 'roced%re, !0 (Act of !0)&
(*) in the e$ercise of its criminal 2%risdiction, try offences p%nisha*le %nder this rdinance and
shall, for this p%rpose have the same powers as are vested in a Co%rt of 4essions %nder the
Code of Criminal 'roced%re, ! (Act of !)
'rovided that a Banking Co%rt shall not take cogni6ance of any offence p%nisha*le %nder this
rdinance e$cept %pon a complaint in writing made *y a person a%thori6ed in this *ehalf *y the
financial instit%tion in respect of which the offence was committed#
(/) A Banking Co%rt shall in all matters with respect to which the proced%re has not *een
provided for in this rdinance, follow the proced%re laid down in the Code of Civil 'roced%re,
!0 (Act of !0), and the Code of Criminal 'roced%re, ! (Act of !)#
(1) All proceedings *efore a Banking Co%rt shall *e deemed to *e 2%dicial proceedings within
the meaning or sections !1 and // of the 'akistan 'enal Code (Act L of @0), and a
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Banking Co%rt shall *e deemed to *e a Co%rt for p%rposes of the Code of Criminal 'roced%re,
! (Act of !)#
(>) 4%*2ect to s%*-section (7), no Co%rt other than a Banking Co%rt shall have or e$ercise any
2%risdiction with respect to any matter to which the 2%risdiction of a Banking Co%rt e$tends %nder
this rdinance, incl%ding a decision as to the e$istence or otherwise of a finance and the
e$ec%tion of a decree passed *y a Banking Co%rt#
(7) +othing in s%*-section (>) shall *e deemed to affect
(a) the right of a financial instit%tion to seek any remedy *efore any Co%rt or otherwise that
may *e availa*le to it %nder the law *y which the financial instit%tion may have *een esta*lished&
or
(*) the powers of the financial instit%tion, or 2%risdiction of any Co%rt s%ch as is referred to in
cla%se (a)& or
re9%ire the transfer to a Banking Co%rt of any proceedings pending *efore any financial
instit%tion or s%ch Co%rt immediately *efore the coming into force of this rdinance#
(@) All proceedings pending in any Banking Co%rt constit%ted %nder the Banking Companies
(Recovery of Loans, Advances, Credits or Finances) Act, !!" ( of !!"), incl%ding s%its for
recovery of :loans; as defined %nder that Act shall stand transferred to, or *e deemed to *e
transferred to, and heard and disposed of *y, the Banking Co%rt having 2%risdiction %nder this
rdinance# n transfer of proceedings %nder this s%*-section, the parties shall appear *efore the
Banking Co%rt concerned on the date previo%sly fi$ed#
(") n respect of proceedings transferred to a Banking Co%rt %nder s%*section (@), the
Banking Co%rt shall proceed from the stage which the proceedings had reached immediately
prior to the transfer and shall not *e *o%nd to recall and re-hear any witness and may act on the
evidence already recorded or prod%ced *efore the Co%rt from which the proceedings were
transferred#
:. S-it or r!&o!r o ritt!# o i#$#&!*, !t&.
() 4%*2ect to s%*-section (/), and notwithstanding anything contained in the Limitation Act, !0
( of !0) or any other law, a financial instit%tion may, within three years from the date of
coming into force of this rdinance, file a s%it for the recovery of any amo%nt written off, released
or ad2%sted %nder any agreement, contract, or consent, incl%ding a compromise or withdrawal of
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any s%it or legal proceedings or ad2%stment of a decree *etween a financial instit%tion and a
c%stomer on any day on or after the first day of =an%ary, !!0 and *efore the coming into force
of this rdinance, if it can esta*lish that the amo%nt was written off, released or ad2%sted for
political reasons or considerations other than *ona fide *%siness considerations#
(/) +o s%it %nder s%* section () shall *e filed %nless its filing has *een approved *y
(a) the Board of ?irectors, in the case of a financial instit%tion incorporated within 'akistan,
(b) or the chief e$ec%tive (*y whatever name called or designated) of the financial instit%tion in
'akistan, in the case of a financial instit%tion incorporated o%tside 'akistan#
;. 9ro&!%-r! o 3$#4i#5 Co-rt*.
() ) .he provisions of section 0 of the Code of Civil 'roced%re, !0 (Act of !0), shall
have no application for and in relation to s%its filed here%nder#
(7) n a plaint *eing presented to the Banking Co%rt, a s%mmons in Form +o# > in Appendi$ EBE
to the Code of Civil 'roced%re, !0 (Act of !0) or in s%ch other form as may, from time to
time, *e prescri*ed *y r%les, shall *e served on the defendant thro%gh the *ailiff or process-
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server of the Banking Co%rt, *y registered post acknowledgement d%e, *y co%rier and *y
p%*lication in one nglish lang%age and one rd% lang%age daily newspaper, and service d%ly
effected in any one of the aforesaid modes shall *e deemed to *e valid service for p%rposes of
this rdinance# n the case of service of the s%mmons thro%gh the *ailiff or process-server, a
copy of the plaint shall *e attached therewith and in all other cases the defendant shall *e
entitled to o*tain a copy of the plaint from the office of the Banking Co%rt witho%t making a
written application *%t against d%e acknowledgement# .he Banking Co%rt shall ens%re that the
p%*lication of s%mmons takes place in newspapers with a wide circ%lation within its territorial
limits#
10. L!$! to %!!#%.
() n any case in which the s%mmons has *een served on the defendant as provided for in s%*-
section (7) of section !, the defendant shall not *e entitled to defend the s%it %nless he o*tains
leave from the Banking Co%rt as hereinafter provided to defend the same& and, in defa%lt of his
doing so, the allegations of fact in the plaint shall *e deemed to *e admitted and the Banking
Co%rt may pass a decree in favo%r of the plaintiff on the *asis thereof or s%ch other material as
the Banking Co%rt may re9%ire in the interests of 2%stice#
(/) .he defendant shall file the application for leave to defend within thirty days of the date of
first service *y any one of the modes laid down in s%*-section (7) of section !-'rovided that where service has *een validly effected only thro%gh p%*lication in the
newspapers, the Banking Co%rt may e$tend the time for filing an application for leave to defend if
satisfied that the defendant did not have knowledge thereof#
(1) .he application for leave to defend shall *e in the form of a written statement, and shall
contain a s%mmary of the s%*stantial 9%estions of law as well as fact in respect of which, in
the opinion of the defendant, evidence needs to *e recorded#
(>) n the case of a s%it for recovery instit%ted *y a financial instit%tion the application for
leave to defend shall also specifically state the following
(a) the amo%nt of finance availed *y the defendant from the financial instit%tion& the amo%nts
paid *y the defendant to the financial instit%tion and the dates of payments&
(*) the amo%nt of finance and other amo%nts relating to the finance paya*le *y the defendant
to the financial instit%tion %pto the date of instit%tion of the s%it&
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(c) the amo%nt if any which the defendant disp%tes as paya*le to the financial instit%tion and
facts in s%pport thereof
E") where applica*le and (7) shall *e re2ected, %nless the defendant discloses
therein s%fficient ca%se for his ina*ility to comply with any s%ch re9%irement#
(") .he plaintiff shall *e given an opport%nity of filing a reply to the application for leave to
defend, in the form of a replication#
() 4%*2ect to section , the Banking Co%rt shall grant the defendant leave to defend the
s%it if on consideration of the contents of the plaint, the application for leave to defend and the
reply thereto it is of the view that s%*stantial 9%estions of law or fact have *een raised in
respect of which evidence needs to *e recorded#
(!) n granting leave %nder s%*-section (), the Banking Co%rt may impose s%ch conditions
as it may deem appropriate in the circ%mstances of the case, incl%ding conditions as todeposit of cash or f%rnishing of sec%rity#
(0)
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this rdinance#
11.I#t!ri' D!&r!!.
() f the Banking Co%rt 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 disp%te *etween the
parties does not e$tend to the whole of the claim, or that part of the claim is either %ndisp%ted, or
is clearly d%e, or that the disp%te is mainly limited to a part of the principal amo%nt of the finance
or to any other amo%nts relating to the finance, it shall, while granting leave and framing iss%es
with respect to the disp%ted amo%nts, pass an interim decree in respect of that part of the claim
which relates to the principal amo%nt and which appears to *e paya*le *y the defendant to the
plaintiff#
(/) .he interim decree passed %nder s%*-section () shall, for all p%rposes incl%ding
appeal and e$ec%tion, *e deemed to *e a decree passed %nder this rdinance, and any
amo%nt covered there*y or recovered in e$ec%tion thereof shall *e ad2%sted at the time of the
final decree
'rovided that it shall *e open to the Banking Co%rt notwithstanding the pendency of any appeal,
to modify, in part or in whole, or reverse, the terms of the interim decree at the time of the final
disposal of the s%it and pass s%ch order as it may deem 2%st and proper'rovided f%rther that neither the Banking Co%rt nor the 8igh Co%rt acting %nder s%*-section (1) of
section // shall stay e$ec%tion of an interim decree %nless the 2%dgment-de*tor deposits in cash
with the Banking Co%rt the amo%nt or amo%nts admitted *y the 2%dgment-de*tor to *e paya*le to
the financial instit%tion %nder cla%se (c) of s%*-section (>) of section 0, and f%rnishes sec%rity for
the *alance decretal amo%nt if any, incl%sive, in the case of a s%it filed *y a financial instit%tion, of
cost of f%nds determined %nder section 1, and other costs#
12.9o!r to *!t $*i%! %!&r!!.n any case in which a decree is passed against a defendant
%nder s%*-section () of section 0 he may, within twenty-one days of the date of the decree, or
where the s%mmons was not d%ly served when he has knowledge of the decree, apply to the
Banking Co%rt for an order to set it aside& and if he satisfies the Banking Co%rt that he was
prevented *y s%fficient ca%se from making an application %nder section 0, or that the s%mmons
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was not d%ly served, the Co%rt shall make an order setting aside the decree against him %pon
s%ch terms as to costs, deposit in cash or f%rnishing of sec%rity or otherwise as it thinks fit and
allow him to make the application within ten days of the order#
1.Di*)
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the s%*2ect or conte$t
(a) :mortgage; means the transfer of an interest in specific immova*le property for the
p%rpose of sec%ring the payment of the mortgage money or the performance of an o*ligation
which may give rise to a pec%niary lia*ility&(*) :mortgage money; means any finance or other amo%nts relating to a finance, penalties,
damages, charges or pec%niary lia*ilities, payment of which is sec%red for the time *eing *y
the doc%ment *y which the mortgage is effected or evidenced, incl%ding any mortgage deed
or memorand%m of deposit of title deeds& and
(c) :mortgaged property; means immova*le property mortgaged to a financial instit%tion#
(/) n case of defa%lt in payment *y a c%stomer, the financial instit%tion may send a notice on
the mortgagor demanding payment of the mortgage money o%tstanding within fo%rteen days
from service of the notice, and failing payment of the amo%nt within d%e date, it shall send a
second notice of demand for payment of the amo%nt within fo%rteen days# n case the
c%stomer on the d%e date given in the second notice sent, contin%es to defa%lt in payment,
financial instit%tion shall serve a final notice on the mortgager demanding the payment of the
mortgage money o%tstanding within thirty days from service of the final notice on the
c%stomer#
(1)
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'rovided that *efore e$ercise of its powers %nder this s%*-section, the financial instit%tion shall
ca%se to *e p%*lished a notice in one rep%ta*le nglish daily newspaper with wide circ%lation
and one rd% daily newspaper in the 'rovince in which the mortgaged property is sit%ated,
specifying partic%lars of the mortgaged property, incl%ding name and address of the
mortgagor, details of the mortgaged property, amo%nt of o%tstanding mortgage money, and
indicating the intention of the financial instit%tion to sell the mortgaged property# .he financial
instit%tion shall also send s%ch notices to all persons who, to the knowledge of the financial
instit%tion, have an interest in the mortgaged property as mortgagees#
(7) .he financial instit%tion shall *e entitled, in its discretion, to participate in the p%*lic
a%ction, and to p%rchase the mortgaged property at the highest *id o*tained in the p%*lic
a%ction#
(@)
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mortgagor and a sale deed e$ec%ted and presented for registration *y d%ly a%thori6ed
attorneys of the financial instit%tion shall *e accepted for s%ch p%rposes *y the Registrar and
4%*-Registrar %nder the Registration Act, !0 ( of !0)#
() pon e$ec%tion and registration of the sale deed of the mortgaged property in favor of the
p%rchaser all rights in s%ch mortgaged property shall vest in the p%rchaser free from all
enc%m*rances and the mortgagor shall *e divested of any right, title and interest in the
mortgaged property#
(!) +et sale proceeds of the mortgaged property, after ded%cting all e$penses of sale or
e$penses inc%rred in any attempted sale, shall *e distri*%ted rata*ly amongst all mortgagees
in accordance with their respective rights and priorities in the mortgaged property# Any s%rpl%s
left, after paying in f%ll all the d%es of mortgagees, shall *e paid to the mortgagor#
(0) A financial instit%tion which has sold mortgaged property in e$ercise of powers conferred
herein shall file proper acco%nts of the sale proceeds in a Banking Co%rt within thirty days of
the sale#
() All disp%tes relating to the sale of the mortgaged property %nder this section incl%ding
disp%tes amongst mortgagees in respect of distri*%tion of the sale proceeds, shall *e decided
*y the Banking Co%rt#
(/) +either the Banking Co%rt nor the 8igh Co%rt shall grant an in2%nction restraining the sale
or proposed sale of mortgaged property %nless
(a) it is satisfied that no mortgage in respect of the immova*le property has *een created& or
(*) all moneys sec%red *y mortgage of the mortgaged property have *een paid& or
(c) the mortgagor or o*2ector deposits in the Banking Co%rt in cash the o%tstanding mortgage
money#
(1) .he rights and remedies provided %nder this section are in addition to, and not in lie% of,
any other rights or remedies a financial instit%tion may have %nder this rdinance#
(>) .he provisions contained in this section shall have effect notwithstanding anything
contained in this rdinance#
16.Att$&h'!#t +!or! =-%5'!#t, i#=-#&tio# $#% $
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or which is the s%*2ect of any o*ligation in favo%r of the financial instit%tion as sec%rity for
finance or for or in relation to a finance lease, the Banking Co%rt may, on application *y the
financial instit%tion, with a view to preventing s%ch property from *eing transferred, alienated,
enc%m*ered, wasted or otherwise dealt with in a manner which is likely to impair or pre2%dice
the sec%rity in favo%r of the financial instit%tion, or otherwise in the interest of 2%stice
(a) restrain the c%stomer and any other concerned person from transferring, alienating,
parting with possession or otherwise enc%m*ering, charging, disposing or dealing with the
property in any manner&
(*) attach s%ch property&
(c) transfer possession of s%ch property to the financial instit%tion& or
(d) appoint one or more Receivers of s%ch property on s%ch terms and conditions as it may
deem fit#
(/) An order %nder s%*-section () may also *e passed *y the Banking Co%rt in respect of
any property held *enami in the name of an ostensi*le owner whether ac9%ired *efore or after
the grant of finance *y the financial instit%tion#
(1) n cases where a c%stomer has o*tained property or financing thro%gh a finance lease,
or has e$ec%ted an agreement in connection with a mortgage, charge or pledge in terms
whereof the financial instit%tion is a%thori6ed to recover or take over possession of the
property witho%t filing a s%it, the financial instit%tion may, at its option
(a) directly recover the same if the property is mova*le& or
(*) file a s%it here%nder and the Banking Co%rt may pass an order at any time, either
a%thorising the financial instit%tion to recover the property directly or with the assistance of the
Co%rt
'rovided that in the event the financial instit%tion wrongly or %n2%stifia*ly e$ercises the direct
power of recovery here%nder it shall *e lia*le to pay s%ch compensation to the c%stomer as
may *e ad2%dged *y the Banking Co%rt in s%mmary proceedings to *e initiated on the
application of the c%stomer and concl%ded in thirty days#
(>) +othing in s%*-sections () to (1) shall affect the powers of the Banking Co%rt %nder rder
R%les 7 and @ of the Code of Civil 'roced%re, !0 (Act of !0) to attach *efore
2%dgment any property other than property mentioned in s%*-section ()#
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18.Fi#$ D!&r!!.() .he final decree passed *y a Banking Co%rt shall provide for payment
from the date of defa%lt of the amo%nts fo%nd to *e paya*le on acco%nt of the defa%lt in
f%lfillment of the o*ligation, and for costs incl%ding, in the case of a s%it filed *y a financial
instit%tion cost of f%nds determined %nder section 1#
(/) .he Banking Co%rt may, at the time of passing a final decree, also pass an order of the
nat%re contemplated *y s%*-section () of section @ to the e$tent of the decretal amo%nt#
1:.3$#4i#5 Do&-'!#t*.() +o financial instit%tion shall o*tain the signat%re of a c%stomer
on *anking doc%ment which contains *lanks in respect of important partic%lars incl%ding the
date, the amo%nt, the property or the period of time in 9%estion&
(/) Finance agreements e$ec%ted *y or on *ehalf of a financial instit%tion and a c%stomer
shall *e d%ly attested in the manner laid down in Article " of the Gan%n-e-4hahadat rder,
!> ('## 0 of !>)&
(1) +othing contained in s%*-section () and (/) shall affect the validity of any doc%ment
e$ec%ted prior to the date of enforcement of this rdinance&
(>) +otwithstanding any thing contained in this section or any other law, the Banking Co%rt
shall not ref%se to accept in evidence any doc%ment creating or p%rporting to create or
indicating the creation of a mortgage, charge, pledge or hypothecation in relation to any
property or ass%mption of any o*ligation *y a c%stomer, g%arantor, mortgagor or otherwisemerely *eca%se it is not d%ly stamped or is not registered as re9%ired *y any law or is not
attested or witnessed as re9%ired *y Article " of the Gan%n-e-4hahadat rdinance, !>
('## 0 of !>) and no s%ch doc%ment shall *e impo%nda*le *y the Banking Co%rt or any
other Co%rt or a%thority
'rovided that nothing contained in this s%*-section shall operate to defeat the legal rights of a
*ona fide p%rchaser for val%e witho%t notice of a doc%ment which o%ght to have *een
registered#
1;.E"!&-tio# o %!&r!! $#% *$! ith or itho-t i#t!r!#tio# o 3$#4i#5 Co-rt.
() pon prono%ncement of 2%dgment and decree *y a Banking Co%rt, the s%it shall
a%tomatically stand converted into e$ec%tion proceedings witho%t the need to file a separate
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application and no fresh notice need *e iss%ed to the 2%dgment-de*tor in this regard#
'artic%lars of the mortgaged, pledged or hypothecated property and other assets of the
2%dgment-de*tor shall *e filed *y the decree-holder for consideration of the Banking Co%rt and
the case will *e heard *y the Banking Co%rt for e$ec%tion of its decree on the e$piry of 10
days from the date of prono%ncement of 2%dgment and decree
'rovided that if the record of the s%it is s%mmoned at any stage *y the 8igh Co%rt for
p%rposes of hearing an appeal %nder section // or otherwise, copies of the decree and other
property doc%ments shall *e retained *y the Banking Co%rt for p%rposes of contin%ing the
e$ec%tion proceedings#
(/) .he decree of the Banking Co%rt shall *e e$ec%ted in accordance with the provisions of
the Code of Civil 'roced%re, !0 (Act of !0) or any other law for the time *eing in force
or in s%ch manner as the Banking Co%rt may at the re9%est of the decree-holder consider
appropriate, incl%ding recovery as arrears of land reven%e#
E")
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m%tatis m%tandis, apply to sales of mortgaged, pledged or hypothecated property *y a
financial instit%tion in e$ercise of its powers conferred *y s%*-section (1)#
(@) .he Banking Co%rt and the financial instit%tion shall *e entitled to seek the services and
assistance of the police or sec%rity agency in the e$ercise of powers conferred *y this section#
(") +otwithstanding anything contained in the Code of Civil 'roced%re !0 (Act of !0),
or any other law for the time *eing in force
(a) the Banking Co%rt shall follow the s%mmary proced%re for p%rposes of investigation of
claims and o*2ections in respect of attachment or sale of any property, whether or not
mortgaged, pledged or hypothecated, and shall complete s%ch investigation within 10 days
of filing of the claims or o*2ections&
(*) if the claims or o*2ections are fo%nd *y the Banking Co%rt to *e malafide or filed merely
to delay the sale of the property, it shall impose a penalty %pto twenty percent of the sale price
of the property#
(c) the Banking Co%rt may, in its discretion, proceed with the sale of the mortgaged, or
pledged or hypothecated property if, in its opinion the interest of 2%stice so re9%ire
'rovided that the financial instit%tion gives a written %ndertaking that in the event the
o*2ections are fo%nd to *e valid, or are s%stained, it shall in addition to compensating the
aggrieved party *y the payment of s%ch amo%nt as may *e ad2%dged *y the Banking Co%rt
also pay a penalty %pto twenty percent of the sale proceeds and s%ch amo%nts shall *e
recovera*le from the financial instit%tion in the same manner as in e$ec%tion of decrees
passed here%nder#
20. 9roi*io#* r!$ti#5 to &!rt$i# o!#&!*.()
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granted a finance& or
(c) s%*se9%ent to the creation of a mortgage in favo%r of a financial instit%tion, dishonestly
alienates or parts with the possession of the mortgaged property whether *y creation of a
lease or otherwise contrary to the terms thereof, witho%t the written permission of the financial
instit%tion& or
(d) s%*se9%ent to the passing of a decree %nder section 0 or , sells, transfers or otherwise
alienates, or parts with possession of his assets or properties ac9%ired after the grant of
finance *y the financial instit%tion, incl%ding assets or properties ac9%ired *enami in the name
of an ostensi*le owner shall, witho%t pre2%dice to any other action which may *e taken against
him %nder this rdinance or any other law for the time *eing in force, *e p%nisha*le with
imprisonment of either description for a term which may e$tend to three years and shall also
*e lia*le to a fine which may e$tend to the val%e of the property or sec%rity as decreed or the
market val%e whichever is higher and shall *e ordered *y the Banking Co%rt trying the offence
to deliver %p or ref%nd to the financial instit%tion, within a time to *e fi$ed *y the Banking
Co%rt, the property or the val%e of the property or sec%rity#
E"
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which may e$tend to one year, or with fine or with *oth, %nless he can esta*lish, for which the
*%rden of proof shall rest on him, that he had made arrangements with his *ank to ens%re that
the che9%e wo%ld *e hono%red and that the *ank was at fa%lt in not hono%ring the che9%e#
(7)
(/) .he appellant shall give notice of the filing of the appeal in accordance with the provisions
of rder L R%le 1 of the Code of Civil 'roced%re (Act of !0) to the respondent who
may appear *efore the Banking Co%rt to contest admission of the appeal on the date fi$ed for
hearing#
(1) .he 8igh Co%rt shall at the stage of admission of the appeal, or at any time thereafter
either s%o mot% or on the application of the decree holder, decide *y means of a reasoned
order whether the appeal is to *e admitted in part or in whole depending on the facts and
circ%mstances of the case, and as to the sec%rity to *e f%rnished *y the appellant
'rovided that the admission of the appeal shall not per se operate as a stay, and nor shall any
stay *e granted therein %nless the decree-holder has *een given an opport%nity of *eing
heard and %nless the appellant deposits in cash with the 8igh Co%rt an amo%nt e9%ivalent to
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the decretal amo%nt incl%sive of costs, or in the case of an appeal other than an appeal
against an interim decree, at the discretion of the 8igh Co%rt f%rnishes sec%rity e9%al in val%e
to s%ch amo%nt& and in the event of a stay *eing granted for a part of the decretal amo%nt
only, the re9%irement for a deposit in cash or f%rnishing of sec%rity shall stand red%ced
accordingly#
(>) An appeal %nder s%*-section () shall *e heard *y a *ench of not less than two =%dges
of the 8igh Co%rt and, in case the appeal is admitted, it shall *e decided within !0 days from
the date of admission#
(7) An appeal may *e preferred %nder this section from a decree passed e$-parte#
(@) +o appeal, review or revision shall lie against an order accepting or re2ecting an
application for leave to defend, or any interloc%tory order of the Banking Co%rt which does not
dispose of the entire case *efore the Banking Co%rt other than an order passed %nder s%*-
section () of section 7 or s%*-section (") of section !#
(") Any order of stay of e$ec%tion of a decree passed %nder s%*-section (/) shall
a%tomatically lapse on the e$piry of si$ months from the date of the order where%pon the
amo%nt deposited in Co%rt shall *e paid over to the decree-holder or the decree-holder may
enforce the sec%rity f%rnished *y the 2%dgment-de*tor#
2.R!*tri&tio# o# tr$#*!r o $**!t* > the prior written permission of the Banking Co%rt transfer, alienate, enc%m*er, remove or part
with possession of any of his asset or property f%rnished to the financial instit%tion as sec%rity
*y way of mortgage, pledge, hypothecation, charge, lien or otherwise pending final decision of
the s%it filed *y the financial instit%tion %nder this rdinance, and any s%ch transfer, alienation,
enc%m*rance or other disposition *y the c%stomer in violation of this s%*-section shall *e void
and of no legal effect
'rovided that the c%stomer may sell any s%ch asset or property which has *een retained *y or
entr%sted to him for p%rposes of dealing with the same in the ordinary co%rse of *%siness
s%*2ect to the terms of the letter of hypothecation or tr%st receipt or other instr%ment or
doc%ment e$ec%ted *y him, or for p%rposes of effecting their sale and depositing the sale
proceeds with the financial instit%tion
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'rovided f%rther that the c%stomer *efore making the sale shall file in the Banking Co%rt a
statement s%pported *y affidavit, containing f%ll partic%lars of s%ch asset or property, and
within three days after the sale shall s%*mit a f%ll acco%nt thereof to the Banking Co%rt and the
financial instit%tion#
(/) After prono%ncement of 2%dgment and decree *y the Banking Co%rt, incl%ding an
interim decree %nder section , no 2%dgment-de*tor shall witho%t the prior written permission
of the Banking Co%rt transfer, alienate, enc%m*er or part with possession of any assets or
properties and any s%ch transfer, alienation, enc%m*rance or other disposition *y a 2%dgment-
de*tor in violation of this s%*-section shall *e void and of no legal effect#
(1) .he provisions of s%*-section () shall also apply to a person who has f%rnished any
sec%rity on *ehalf of a c%stomer to the financial instit%tion on the *asis of which finance was
granted, provided s%ch person is a defendant in the s%it filed %nder section ! or is added as a
defendant thereafter#
2/.A
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decree, sentence or order of a Banking Co%rt or the legality or propriety of anything done or
intended to *e done *y the Banking Co%rt in e$ercise of 2%risdiction %nder this rdinance
'rovided that the Banking Co%rt may, on its own accord or on application of any party, and
with notice to the other party or, as the case may *e, to *oth the parties, correct any clerical or
typographical mistake in any 2%dgment, decree, sentence or order passed *y it#
2:.I#%!'#it.+o s%it, prosec%tion or other legal proceeding shall lie against the Federal
5overnment or a Banking Co%rt or a financial instit%tion or any person for anything which is in
good faith done or intended to *e done %nder this rdinance or any r%le made there %nder#
2;.R!
Act, !!" (Act of !!") is here*y repealed#
(/) +otwithstanding the repeal of the (Recovery of Loans, Advances, Credits and Finances)
Act, !!" (Act of !!") and the provisions of this rdinance, decrees in cases relating to
interest-*earing loans which have not *een converted into finance shall *e passed in
accordance with the provisions of section 7 of the said Act#