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Banking Suits

Banking suits is/can be filed against/by a customer, borrower and/or a financial company for a breach of their financial obligations. These Obligations are listed as under Section 2(e) of The Financial Institutions (Recovery of Finances) Ordinance, 2001. Under Section 7 of the Financial Institution Ordinance 2001, Banking Courts would have all the powers vested in a Civil Court under the Code of Civil Procedure 1908 and at the same time also has all the powers of a criminal court which a Sessions Court possesses under the Criminal Procedure Code. Some of the inherent powers of the Banking Courts include power to recall, examine execution proceedings, powers in auction procedure, power to grant adjournment, interim relief, and extra territorial injunction. A banking court has power to summon witnesses for further cross examination, jurisdiction to determine fraud and misrepresentation and it also has powers to punish anyone who commits contempt of the court or any other offence under the provision of the law.

Section 9 of the financial Institution Ordinance 2001 specifies the procedure of the Banking Courts. Where a customer or a financial institution commits a default in fulfillment of any obligation with regard to any finance the financial institution or as the case maybe, the customer, may institute a suit in the Banking Court by presenting a plaint.

Further, as per Section 7(2) of 1908 in absence of a special procedure, the Banking court can follow the procedure in the CPC.

 Procedure of Banking Courts:
  • Where a borrower or a customer or a banking company commits a default in fulfilling any obligation with regard to any loan or finance the banking company or, as the case may be, the borrower or customer, may institute a suit in the Banking Court by presenting a plaint duly supported by a statement of account which shall be verified in oath in the case of a banking company by the Branch Manager or such other officer as the Board of Directors of a banking company may authorize in this behalf, Copies of the plaint shall also be filed along therewith in sufficient numbers so that there is one copy for each defendant and one extra copy.
  • The provisions of section 10 of the Code of Civil procedure, 1908, shall have no application for and in relation to suits filed hereunder.
  • On a plaint being presented to the Banking Court a summons in Form No.4 in Appendix 'B' to the Code of Civil Procedure (Act V of 1898), or in such other form as may, from time to time, be prescribed by rules, shall be served in the defendant through the bailiff or process-server of the banking court, by registered post acknowledgement due, by courier and by publication in one English language and one Urdu language daily newspaper and service duly affected on any one of the aforesaid modes shall deemed to be valid service for purposes of this Act. In the case of service of the summons through the bailiff or process-server a copy of the plaint shall be attached therewith and in all other cases the defendant shall be entitled to obtain a copy of the plaint from the office of the banking court without making a written application. The Court shall ensure that the publication of summons shall take place in newspapers with a wide circulation within its territorial limits.
  • In any case in which the summons has been served in the defendant as provided for in sub-section (3) the defendant shall not be entitled to defend the suit unless he obtains leave from the Banking Court as hereinafter provided so to defend the same; and, in default of his doing so, the allegations of fact in the plaint shall be deemed to be admitted and the Banking Court may pass a decree in favour of the plaintiff in the basis thereof or such other material as the Court may require in the interests of justice
  • Leave to defend. Subject to section 11, the Banking Court shall, upon an application made by a defendant within twenty-one days, give leave to defend the suit, if a serious and bona fide dispute is raised thereby.
The professional team of Lawyers at Javed Qazi & Co. deal with all Banking matters comes under the Financial Institutions (Recovery of Finances) Ordinance, 2001

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