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, !!"# WHEREAS it is e$pedient to repeal and with certain modifications, re-enact the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, !!", for the p%rposes hereinafter appearing& AND WHEREAS the 'resident is satisfied that circ%mstances e$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 $#% &o''!#&!'!#t.( ( ) .his )rdinance may *e called the Financial ,nstit%tions (Recovery of Finances) )rdinance, /00 # (/) (1) 2. ,t e$tends to the whole of 'akistan# ,t shall come into force at once# 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

$)

(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& (%) (i) 3finance3 incl%des 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) (iii) facility of credit or charge cards& 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

or any other financial accommodation provided *y a financial instit%tion to a c%stomer& (v) (vi) (vii) (viii) (e) (i) a *enami loan or facility that is, a loan or facility the real *eneficiary or recipient whereof is any amo%nt d%e from a c%stomer to a financial instit%tion %nder a decree passed *y a any amo%nt d%e from a c%stomer to a financial instit%tion which is the s%*2ect matter of any other facility availed *y a c%stomer from a financial instit%tion# :o*ligation; incl%des any agreement for the repayment or e$tension of time in repayment of a finance or for a person other than the person in whose name the loan or facility is advanced or granted& Civil Co%rt or an award given *y an ar*itrator& any pending s%it, appeal or revision *efore any Co%rt&

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) (f) ,. all d%ties imposed on the c%stomer %nder this )rdinance& and 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# (/) <here the c%stomer defa%lts in the discharge of his o*ligation, he shall *e lia*le to pay, for the period from the date of his defa%lt till reali6ation of the cost of f%nds of the financial instit%tion as certified *y the 4tate Bank of 'akistan from time to time, apart from s%ch other civil and criminal lia*ilities that he may inc%r %nder the contract or r%les or any other law for the time *eing in force# (1) For p%rposes of this section a 2%dgment against a c%stomer %nder this )rdinance shall mean that he is in defa%lt of his d%ty %nder s%*-section ( ), and the ens%ing decree shall provide for payment of the cost of f%nds as determined %nder s%*-section (/)#

/. Or%i#$#&! to o0!rri%! oth!r $1*.( .he provisions of this )rdinance shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time *eing in force# 2. E*t$+ 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# (/) Co%rt# (1) <here more Banking Co%rts than one have *een esta*lished in the same or different territorial limits, the 8igh Co%rt may, if it considers it e$pedient to do so in the interest of 2%stice or for the convenience of the parties or of the witnesses, transfer any case from one Banking Co%rt to another# (>) A =%dge of a Banking Co%rt shall *e appointed *y the Federal 5overnment after cons%ltation with the Chief =%stice of the 8igh Co%rt of the 'rovince in which the Banking Co%rt is esta*lished and no person shall *e appointed a =%dge of a Banking Co%rt %nless he has *een a =%dge of a 8igh Co%rt or is or has *een a ?istrict =%dge# (7) (@) (") A Banking Co%rt shall hold its sitting at s%ch places within its territorial 2%risdiction as may A =%dge of a Banking Co%rt, not *eing a ?istrict =%dge, shall *e appointed for a term of .he salary, allowances and other terms and conditions of service of a person appointed *e determined *y the Federal 5overnment# three years from the date on which he enters %pon his office# as a =%dge of a Banking Co%rt shall *e s%ch as the Federal 5overnment may determine (A) .he Banking Co%rt may, if it so re9%ires, *e assisted in technical aspects of *anking transactions involved in any case *y an amic%s c%riae who has at least ten years e$perience of *anking at a senior management level in a financial instit%tion of rep%te or the 4tate Bank of j <here more Banking Co%rts than one have *een esta*lished to e$ercise 2%risdiction in the same territorial limits, the Federal 5overnment shall define the territorial limits of each s%ch

'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# $#% r!'o0$ 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. 9o1!r* o) 3$#4i#5 Co-rt*.(

( ) 4%*2ect to the provisions of this )rdinance, a Banking Co%rt shall (a) in the e$ercise of its civil 2%risdiction have all the powers vested in a civil Co%rt %nder the Code of Civil 'roced%re, !0A (Act B of !0A)& (*) in the e$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, A!A (Act B of A!A)'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, !0A (Act B of !0A), and the Code of Criminal 'roced%re, A!A (Act B of A!A)# (1) All proceedings *efore a Banking Co%rt shall *e deemed to *e 2%dicial proceedings within the meaning or sections !1 and //A of the 'akistan 'enal Code (Act CLB of A@0), and a

Banking Co%rt shall *e deemed to *e a Co%rt for p%rposes of the Code of Criminal 'roced%re, A!A (Act B of A!A)# (>) 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) (a) 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, !!" (CB 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$ed# (") ,n respect of proceedings transferred to a Banking Co%rt %nder s%*section (@), the Banking Co%rt shall proceed from the stage which the proceedings had reached immediately prior to the transfer and shall not *e *o%nd to recall and re-hear any witness and may act on the evidence already recorded or prod%ced *efore the Co%rt from which the proceedings were transferred# :. S-it )or r!&o0!r. o) 1ritt!# o)) )i#$#&!*, !t&.( +othing in s%*-section (>) shall *e deemed to affect 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&

( ) 4%*2ect to s%*-section (/), and notwithstanding anything contained in the Limitation Act, !0A (,C of !0A) 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

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*.( ( ) <here a c%stomer or a financial instit%tion commits a defa%lt in f%lfillment of any o*ligation with regard to any finance, the financial instit%tion or, as the case may *e, the c%stomer, may instit%te a s%it in the Banking Co%rt *y presenting a plaint which shall *e verified on oath, in the case of a financial instit%tion *y the Branch Danager or s%ch other officer of the financial instit%tion as may *e d%ly a%thori6ed in this *ehalf *y power of attorney or otherwise# (/) .he plaint shall *e s%pported *y a statement of acco%nt which in the case of a financial instit%tion shall *e d%ly certified %nder the Bankers Books (vidence Act, A! (CB,, of A! ), and all other relevant doc%ments relating to the grant of finance# Copies of the plaint, statement of acco%nt and other relevant doc%ments shall *e filed with the Banking Co%rt in s%fficient n%m*ers so that there is one set of copies for each defendant and one e$tra copy# (1) .he plaint, in the case of a s%it for recovery instit%ted *y a financial instit%tion, shall specifically state (a) the amo%nt of finance availed *y the defendant from the financial instit%tion& (*) the amo%nts paid *y the defendant to the financial instit%tion and the dates of payment& and (c) the amo%nt of finance and other amo%nts relating to the finance paya*le *y the defendant to the financial instit%tion %pto the date of instit%tion of the s%it# (>) .he provisions of section 0 of the Code of Civil 'roced%re, !0A (Act B of !0A), shall have no application for and in relation to s%its filed here%nder# (7) )n a plaint *eing presented to the Banking Co%rt, a s%mmons in Form +o# > in Appendi$ EBE to the Code of Civil 'roced%re, !0A (Act B of !0A) 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-

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 Frd% 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!$0! 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&

(c)

the amo%nt if any which the defendant disp%tes as paya*le to the financial instit%tion and

facts in s%pport thereofE"< $#$tio#.( For the p%rposes of cla%se (*) any payment made to a financial instit%tion *y a c%stomer in respect of a finance shall *e appropriated first against other amo%nts relating to the finance and the *alance, if any, against the principal amo%nt of the finance# (7) .he application for leave to defend shall *e accompanied *y all the doc%ments which, in the opinion of the defendant, s%pport the s%*stantial 9%estions of law or fact raised *y him# (@) An application for leave to defend which does not comply with the re9%irements of s%*sections (1), (>) 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# (A) 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 (A), 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 to deposit of cash or f%rnishing of sec%rity# ( 0) <here the application for leave to defend is accepted, the Banking Co%rt shall treat the application as a written statement, and in its order granting leave shall frame iss%es relating to the s%*stantial 9%estions of law or fact, and, s%*2ect to f%lfillment of any conditions attached to grant of leave, fi$ a date for recording of evidence thereon and disposal of the s%it# ( ) <here the application for leave to defend is re2ected or where a defendant fails to f%lfill the conditions attached to the grant of leave to defend, the Banking Co%rt shall forthwith proceed to pass 2%dgment and decree in favo%r of the plaintiff against the defendant# ( /) <here an application for leave to defend has *een filed *efore the coming into force of this )rdinance, the defendant shall *e allowed a period of twenty-one days from the date of coming into force of this )rdinance, 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 )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# 12.9o1!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

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*<o*$ o) *-it.( ( ) A s%it in which leave to defend has *een granted to the defendant shall *e disposed of within ninety days from the day on which leave was granted, and in case proceedings contin%e *eyond the said period the defendant may *e re9%ired to f%rnish sec%rity in s%ch amo%nt as the Banking Co%rt deems fit, and on the fail%re of the defendant to f%rnish s%ch sec%rity, the Banking Co%rt shall pass an interim or final decree in s%ch amo%nt as it may deem appropriate# (/) .he re9%irement of f%rnishing sec%rity %nder s%*-section ( ) shall *e dispensed with if, in the opinion of the Banking Co%rt, the delay is not attri*%ta*le to the cond%ct of the defendant# (1) 4%its *efore a Banking Co%rt shall come %p for reg%lar hearing as e$peditio%sly as possi*le and e$cept in e$traordinary circ%mstances and for reasons to *e recorded, a Banking Co%rt shall not allow ad2o%rnments for more than seven days# (>) <here leave to defend is granted and evidence is to *e recorded, the parties may file affidavits in respect of the e$amination-in-chief of any witness who is not to *e s%mmoned thro%gh the Banking Co%rt, and where s%ch affidavits are filed, the Banking Co%rt shall give notice thereof to the other contesting parties and on the date fi$ed for recording evidence, shall, s%*2ect to s%ch modification as may *e re9%ired for p%rposes of prod%ction and e$hi*iting of doc%ments, or otherwise in accordance with law, treat the affidavit as e$amination-in-chief and allow the contesting parties an opport%nity for cross-e$amination on the *asis thereof# 1/.D!&r!! i# *-it* r! $ti#5 to 'ort5$5!*.( <here the s%it filed *y a financial instit%tion *efore the Banking Co%rt is for the enforcement of a mortgage of immova*le property the Banking Co%rt will not *e re9%ired to pass a preliminary decree as provided in )rder CCC,B of the First 4ched%le to the Code of Civil 'roced%re, !0A (Act B of !0A), *%t shall directly pass an interim or final decree for foreclos%re or sale# 12. S$ ! o) 'ort5$5!% <ro<!rt..( ( ) ,n this section, %nless there is anything rep%gnant in

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) <hen a financial instit%tion 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 instit%tion %ntil s%ch notice is withdrawn and it shall *e the d%ty of the mortgagor to pay all rents and profits from the mortgaged property to the financial instit%tion# 'rovided that where the mortgaged property is in the possession of any tenant or occ%pier other than the mortgagor, it shall *e the d%ty of s%ch tenant or occ%pier, on receipt of notice in this *ehalf from the financial instit%tion, to pay the rent or lease money or other consideration agreed with the mortgagor to the financial instit%tion# (>) <here a mortgagor fails to pay the amo%nt as demanded within the period prescri*ed %nder s%*-section (/), and after the d%e date given in the final notice has e$pired, the financial instit%tion may, witho%t the intervention of any Co%rt, sell the mortgaged property or any part thereof *y p%*lic a%ction and appropriate the proceeds thereof towards total or partial satisfaction of the o%tstanding mortgage money-

'rovided that *efore e$ercise of its powers %nder this s%*-section, the financial instit%tion shall ca%se to *e p%*lished a notice in one rep%ta*le (nglish daily newspaper with wide circ%lation and one Frd% daily newspaper in the 'rovince in which the mortgaged property is sit%ated, specifying partic%lars of the mortgaged property, incl%ding name and address of the mortgagor, details of the mortgaged property, amo%nt of o%tstanding mortgage money, and indicating the intention of the financial instit%tion to sell the mortgaged property# .he financial instit%tion shall also send s%ch notices to all persons who, to the knowledge of the financial instit%tion, have an interest in the mortgaged property as mortgagees# (7) .he financial instit%tion shall *e entitled, in its discretion, to participate in the p%*lic a%ction, and to p%rchase the mortgaged property at the highest *id o*tained in the p%*lic a%ction# (@) <here the mortgagor or his agent or servant or any person p%t in possession *y the mortgagor or on acco%nt of the mortgagor does not vol%ntarily give possession of the mortgaged property so%ght to *e sold or so%ght to *e p%rchased or p%rchased *y the financial instit%tion, a Banking Co%rt on application of the financial instit%tion or p%rchaser shall p%t the financial instit%tion or p%rchaser, as the case may *e, in possession of the mortgaged property in any manner deemed fit *y it'rovided that the Banking Co%rt may not order eviction of a person who is in occ%pation of the mortgaged property or any part thereof %nder a *ona fide lease, e$cept on e$piry of the period of the lease, or on payment of s%ch compensation as may *e agreed *etween the parties or as may *e determined to *e reasona*le *y the Banking Co%rt# E"< $#$tio#.( ( ) <here the lease is created after the date of the mortgage and it appears to the Banking Co%rt that the lease was created so as to adversely affect the val%e of the mortgaged property or to pre2%dice the rights and remedies of the financial instit%tion, it shall *e pres%med that the lease is not *ona fide, %nless proved otherwise# (") For p%rposes of e$ec%tion and registration of the sale deed in respect of the mortgaged property, the financial instit%tion shall *e deemed to *e the d%ly a%thori6ed attorney of the

mortgagor and a sale deed e$ec%ted and presented for registration *y d%ly a%thori6ed attorneys of the financial instit%tion shall *e accepted for s%ch p%rposes *y the Registrar and 4%*-Registrar %nder the Registration Act, !0A (CB, of !0A)# (A) Fpon e$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# $#% $<<oi#t'!#t o) R!&!i0!r*.( ( )

<here the s%it filed *y a financial instit%tion is for the recovery of any amo%nt thro%gh the sale of any property which is mortgaged, pledged, hypothecated, assigned, or otherwise charged

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) (d) (/) transfer possession of s%ch property to the financial instit%tion& or appoint one or more Receivers of s%ch property on s%ch terms and conditions as it may An order %nder s%*-section ( ) may also *e passed *y the Banking Co%rt in respect of

deem fit# 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$ec%ted an agreement in connection with a mortgage, charge or pledge in terms whereof the financial instit%tion is a%thori6ed to recover or take over possession of the property witho%t filing a s%it, the financial instit%tion may, at its option(a) (*) Co%rt'rovided that in the event the financial instit%tion wrongly or %n2%stifia*ly e$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 CCCB,,, R%les 7 and @ of the Code of Civil 'roced%re, !0A (Act B of !0A) to attach *efore 2%dgment any property other than property mentioned in s%*-section ( )# 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

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$ec%ted *y or on *ehalf of a financial instit%tion and a c%stomer shall *e d%ly attested in the manner laid down in Article " of the Gan%n-e-4hahadat )rder, !A> ('#)# 0 of !A>)& (1) (>) +othing contained in s%*-section ( ) and (/) shall affect the validity of any doc%ment +otwithstanding any thing contained in this section or any other law, the Banking Co%rt e$ec%ted prior to the date of enforcement of this )rdinance& 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 otherwise merely *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, !A> ('#)# 0 of !A>) 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!! $#% *$ ! 1ith or 1itho-t i#t!r0!#tio# o) 3$#4i#5 Co-rt.( ( ) Fpon prono%ncement of 2%dgment and decree *y a Banking Co%rt, the s%it shall a%tomatically stand converted into e$ec%tion proceedings witho%t the need to file a separate

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, !0A (Act B of !0A) 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"< $#$tio#.( .he term assets or properties in s%*-section (/) shall incl%de any assets and properties ac9%ired *enami in the name of an ostensi*le owner# (1) ,n cases of mortgaged, pledged or hypothecated property, the financial instit%tion may sell or ca%se the same to *e sold with or witho%t the intervention of the Banking Co%rt either *y p%*lic a%ction or *y inviting sealed tenders and appropriate the proceeds towards total or partial satisfaction of the decree# .he decree passed *y a Banking Co%rt shall constit%te and confer s%fficient power and a%thority for the financial instit%tion to sell or ca%se the sale of the mortgaged, pledged or hypothecated property together with transfer of marketa*le title and no f%rther order of the Banking Co%rt shall *e re9%ired for this p%rpose# (>) <here a financial instit%tion wishes to sell mortgaged, pledged or hypothecated property *y inviting sealed tenders, it shall invite offers thro%gh advertisement in one (nglish and one Frd% newspaper which are circ%lated widely in the city in which the sale is to take place giving not less than thirty days time for s%*mitting offers# .he sealed tenders shall *e opened in the presence of the tenderers or their representatives or s%ch of them as attend'rovided that the financial instit%tion shall *e entitled in its discretion, to p%rchase the property at the highest *id received# (7) .he provisions of s%*-sections (7), (@), ("), (A), (!), ( 0), ( ) and ( /) of section 7 shall,

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 !0A (Act B of !0A), 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. (a) 9ro0i*io#* r! $ti#5 to &!rt$i# o))!#&!*.( ( ) <hoever dishonestly commits a *reach of the terms of a letter of hypothecation, tr%st receipt or

any other instr%ment or doc%ment e$ec%ted *y him where*y possession of the assets or properties offered as sec%rity for the re-payment of finance or f%lfillment of any o*ligation are not with the financial instit%tion *%t are retained *y or entr%sted to him for the 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 or for the p%rpose of effecting their sale and depositing the sale proceeds with the financial instit%tion& or (*) makes fra%d%lent mis-representation or commits a *reach of an o*ligation or representation made to a financial instit%tion on the *asis of which the financial instit%tion has

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"< $#$tio# - ?ishonesty may *e pres%med where a c%stomer has not deposited the sale proceeds of the property with the financial instit%tion in violation of the terms of the agreement *etween the financial instit%tion and the c%stomer# (/) <hoever knowingly makes a statement which is false in material respects in an application for finance and o*tains a finance on the *asis thereof, or applies the amo%nt of the finance towards a p%rpose other than that for which the finance was o*tained *y him, or f%rnishes a false statement of stocks in violation of the terms of the agreement with the financial instit%tion or falsely denies his signat%res on any *anking doc%ment *efore the Banking Co%rt, shall *e g%ilty of an offence p%nisha*le with imprisonment of either description for a term which may e$tend to three years, or with fine, or with *oth# (1) <hoever resists or o*str%cts, either *y himself or on *ehalf of the 2%dgment de*tor, thro%gh the %se of force, the e$ec%tion of a decree, shall *e p%nisha*le with imprisonment, which may e$tend to one year, or with fine, or with *oth# (>) <hoever dishonestly iss%es a che9%e towards re-payment of a finance or f%lfillment of an o*ligation which is dishono%red on presentation, shall *e p%nisha*le with imprisonment

which may e$tend to one year, or with fine or with *oth, %nless he can esta*lish, for which the *%rden of proof shall rest on him, that he had made arrangements with his *ank to ens%re that the che9%e wo%ld *e hono%red and that the *ank was at fa%lt in not hono%ring the che9%e# (7) <here the person g%ilty of an offence %nder this )rdinance is a company or other *ody corporate, the chief e$ec%tive *y whatever name called, and any director or officer involved shall *e deemed to *e g%ilty of the offence and shall *e lia*le to *e prosec%ted against and p%nished accordingly# (@) All offences %nder this )rdinance shall *e *aila*le, non-cogni6a*le and compo%nda*le#

21.

A<< i&$tio# o) )i#!* $#% &o*t*.( ( ) A Banking Co%rt may direct that the whole or part

of any fine or costs imposed %nder this )rdinance shall *e applied in or towards (a) (*) payment of costs of all or any proceedings %nder this )rdinance& and payment of compensation to an aggrieved party#

(/) An order %nder s%*-section ( ) shall *e deemed to *e a decree passed %nder this )rdinance for p%rposes of e$ec%tion# 22. A<<!$ .( ( ) 4%*2ect to s%*-section (/), any person aggrieved *y any 2%dgment,

decree, sentence, or final order passed *y a Banking Co%rt may, within thirty days of s%ch 2%dgment, decree, sentence or final order prefer an appeal to the 8igh Co%rt# (/) .he appellant shall give notice of the filing of the appeal in accordance with the provisions of )rder CL,,, R%le 1 of the Code of Civil 'roced%re (Act B of !0A) 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

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) $**!t* > <ro<!rti!*.( ( ) After p%*lication of s%mmons %nder s%*-section (7) of section !, no c%stomer shall, witho%t the prior written permission of the Banking Co%rt transfer, alienate, enc%m*er, remove or part with possession of any of his asset or property f%rnished to the financial instit%tion as sec%rity *y way of mortgage, pledge, hypothecation, charge, lien or otherwise pending final decision of the s%it filed *y the financial instit%tion %nder this )rdinance, and any s%ch transfer, alienation, enc%m*rance or other disposition *y the c%stomer in violation of this s%*-section shall *e void and of no legal effect'rovided that the c%stomer may sell any s%ch asset or property which has *een retained *y or entr%sted to him for p%rposes of dealing with the same in the ordinary co%rse of *%siness s%*2ect to the terms of the letter of hypothecation or tr%st receipt or other instr%ment or doc%ment e$ec%ted *y him, or for p%rposes of effecting their sale and depositing the sale proceeds with the financial instit%tion-

'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 , no 2%dgment-de*tor shall witho%t the prior written permission interim decree %nder section

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%dgmentde*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<< i&$tio# o) th! Li'it$tio# A&t, 1;0: (A&t IX o) 1;0:).( ( ) 4ave as otherwise provided in this )rdinance, the provisions of the Limitation Act, !0A (Act ,C of !0A) shall apply to all cases instit%ted or filed in a Banking Co%rt after the coming into force of this )rdinance# (/) A s%it %nder section ! may *e entertained *y a Banking Co%rt after the period of limitation prescri*ed therefor, if the plaintiff satisfies the Banking Co%rt that he had s%fficient ca%se for not filing the s%it within s%ch period# 22. 9o1!r to '$4! r- !*.(.he Federal 5overnment may, *y notification in the )fficial 5a6ette, make r%les for carrying o%t the p%rposes of this )rdinance# 26. R!'o0$ o) %i))i&- ti!*.( ,f any diffic%lty arises in giving effect to any of the provisions of this )rdinance, the Federal 5overnment may, *y notification in the )fficial 5a6ette, make s%ch provisions as it thinks fit for removing s%ch diffic%lties# 28. Fi#$ it. o) or%!r.( 4%*2ect to the provisions of section //, no Co%rt or other a%thority shall revise or review or call, or permit to *e called, into 9%estion any proceeding, 2%dgment,

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$ercise of 2%risdiction %nder this )rdinance'rovided that the Banking Co%rt may, on its own accord or on application of any party, and with notice to the other party or, as the case may *e, to *oth the parties, correct any clerical or typographical mistake in any 2%dgment, decree, sentence or order passed *y it# 2:. I#%!'#it..( +o s%it, prosec%tion or other legal proceeding shall lie against the Federal 5overnment or a Banking Co%rt or a financial instit%tion or any person for anything which is in good faith done or intended to *e done %nder this )rdinance or any r%le made there %nder# 2;. R!<!$ .(.he Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, !!" (Act CB of !!") is here*y repealed# (/) +otwithstanding the repeal of the (Recovery of Loans, Advances, Credits and Finances) Act, !!" (Act CB 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#