Section 27 : Licensing of banking companies
2021 PLC 209 ISLAMABAD
ZARAI TARAQIATI BANK LIMITED VS FULL BENCH NATIONAL INDUSTRIAL RELATIONS COMMISSION, ISLAMABAD
Regln. 2(4)—Industrial Relations Act (X of 2012), Ss.2(xxxiii) & 33—Banking Companies Ordinance (LVII of 1962), S.27(B)—Absence from duty for couple of days—Major penalty—Termination from service—Misconduct—Scope—Plea of the petitioner/bank was that the termination orders of employees-respondents were wrongly set aside by National Industrial Relations Commission (NIRC) as they (respondents)held general body meeting of CBA during office hours—Validity—Petitioner-bank had treated the absence(allegation) as the violation of S.27(B) of the Banking Companies Ordinance, 1962, whereas there was no charges of inefficiency, indiscipline, dishonesty or wilful negligence while performing official duties for the petitioner-bank—No allegation of misconduct as defined in Regln. 2(4) of Agricultural Development Bank of Pakistan Officer Service (Efficiency and Discipline) Regulations, 1975 were made against the respondents, whereas they were terminated on the allegation of absence from the duty for participating in trade union activities —Dispute between the parties was, thus, an industrial one and not an individual dispute—National Industrial Relations Commission (NIRC) had validly exercised the jurisdiction in entertaining the grievance petition filed by the respondents under S.33 of Industrial relations Act, 2012—No illegality or irregularity was found in the concurrent judgments passed by NIRC—Constitutional petition was dismissed, in circumstances.
2013 CLD 1895 LAHORE-HIGH-COURT-LAHORE
MCB BANK LTD. VS STATE BANK OF PAKISTAN through Governor
Ss. 27(4)(i)(ii)(iii) & 41— Constitution of Pakistan, Art.199— Constitutional petition— Banking licence, cancellation of—Executive order—Retrospective effect—Petitioner was a banking company and it was aggrieved of circular issued by State Bank of Pakistan cancelling banking licence of petitioner—Validity—State Bank of Pakistan was enjoying powers to cancel banking licence of any banking company, if banking company’s case fell in the mischief of provision under S.27(4)(i)(ii)(iii) of Banking Companies Ordinance, 1962—No such situation was prevailing in the case of petitioner as provided under S.27(4)(i)(ii)(iii) of Banking Companies Ordinance, 1962—Petitioner had only applied for change of name that too after proper permission under the law, so action of authorities to cancel licence of petitioner was patently without any jurisdiction and was void ab initio—State Bank of Pakistan through circular in question introduced new terms in concluded and fully performed agreement with the purchasers of shares of petitioner bank, who were not sponsors of petitioner bank—Circular in question was beyond the powers conferred upon State Bank of Pakistan under S.41 of Banking Companies Ordinance, 1962, as petitioner bank was an independent juristic entity and its shareholders were enjoying separate juristic status— Order of State Bank of Pakistan cancelling banking licence of petitioner and issuance of new banking licence was illegal and without lawful authority—High Court declared that original banking licence of petitioner would be deemed effective and circular in question was not applicable against shareholders of petitioner/Bank and that all circulars and orders of State Bank of Pakistan directing petitioner to comply with circular in question were without lawful authority and were of no legal effect— Petition was allowed in circumstances.
2010 SCMR 121 SUPREME-COURT
STATE BANK OF PAKISTAN VS FRANKLIN CREDIT AND INVESTMENT COMPANY LTD. through Attorney
27(4)—State Bank of Pakistan Prudential Regulation No.XXI for Fund Management Services—Banking company—Cancelling of licence–Governor State Bank—Powers and duties—Mismanaging of affairs—Siphoning of funds—Chief Executive of Bank, appointing of—Approval of State Bank—Respondent-Bank was involved in mismanagement of affairs of bank and misuse of position by Directors of Bank for their own benefit—Huge amount of bank was siphoned off to the detriment of interest and rights of depositors in collusion with foreign companies in which Directors of the Bank had substantial interests—Chairman of Board of Directors acted as de facto Chief Executive of Bank without approval of State Bank—Governor State Bank, in exercise of powers under S.27(4) of Banking Companies Ordinance, 1962, cancelled licence of respondent-Bank— Validity—Governor State Bank, while dealing with matter of cancellation of licence was not required to hold full-dress trial like a Court of law—Charges against respondent-Bank were serious enough to warrant cancellation of licence—Governor State Bank had acted fairly and reasonably by observing principles of natural justice and statutory requirements on the basis of relevant material—High Court was not expected to substitute its judgment for that of State Bank as if it was exercising an appellate jurisdiction—In the presence of relevant material including inquiry report of chartered accountants, Governor State Bank of Pakistan was perfectly justified in forming opinion that affairs of respondent-Bank were being conducted in a manner detrimental to the interest of depositors—Governor State Bank had necessary expertise in relevant field and he arrived at a conclusion which a reasonable man in his place would do—Once licence was granted, it became a matter of serious concern to cancel the same—Judgment passed by High Court was not sustainable at law and moreso when matter of winding up of respondent-Bank had already attained finality with dismissal of appeal and review petition by Supreme Court—Fact of acquittal of Directors of respondent-Bank from charges of criminal misconduct would not per se nullify order of cancellation of licence passed by Governor State Bank in exercise of his statutory powers conferred under S.27(4) of Banking Companies Ordinance, 1962—Judgment passed by High Court against order passed by Governor State Bank was set aside—Appeal was allowed.
2009 CLD 1542 SUPREME-COURT
STATE BANK OF PAKISTAN VS FRANKLIN CREDIT AND INVESTMENT COMPANY LTD. through Attorney
S.27(4)—State Bank of Pakistan Prudential Regulation No.XXI for Fund Management Services—Banking company—Cancelling of licence—Governor State Bank—Powers and duties—Mismanaging of affairs—Siphoning of funds—Chief Executive of Bank, appointing of—Approval of State Bank—Respondent-Bank was involved in mismanagement of affairs of bank and misuse of position by Directors of Bank for their own benefit—Huge amount of bank was siphoned off to the detriment of interest and rights of depositors in collusion with foreign companies in which Directors of the Bank had substantial interests—Chairman of Board of Directors’ acted as de facto Chief Executive of Bank without approval of State Bank—Governor State Bank, in exercise of powers under S.27(4) of Banking Companies Ordinance, 1962, cancelled licence of respondent-Bank—Validity—Governor State Bank, while dealing with matter of cancellation of licence was not required to hold full-dress trial like a Court of law—Charges against respondent-Bank were serious enough to warrant cancellation of licence—Governor State Bank had acted fairly and reasonably by observing principles of natural justice and statutory requirements on the basis of relevant material—High Court was not expected to substitute its judgment for that of State Bank as if it was exercising an appellate jurisdiction—In the presence of relevant material including inquiry report of chartered accountants, Governor State Bank of Pakistan was perfectly justified in forming opinion that . affairs of respondent-Bank were being conducted in a manner detrimental to the interest of depositors—Governor State Bank had necessary expertise in relevant field and he arrived at a conclusion which a reasonable man in his place would do—Once licence was granted, it became a matter of serious concern to cancel the same—Judgment passed by High Court was not sustainable at law and more so when matter of winding up of respondent-Bank had already attained finality with dismissal of appeal and review petition by Supreme Court —Fact of acquittal of Directors of respondent-Bank from charges of criminal misconduct would not per se nullify order of cancellation of licence passed by Governor State Bank in exercise of his statutory powers conferred under S.27(4) of Banking Companies Ordinance, 1962—Judgment passed by High Court against order passed by Governor State Bank was set aside—Appeal was allowed.
2009 CLD 761 LAHORE-HIGH-COURT-LAHORE
INTERNATIONAL FINANCE CORPORATION VS SARAH TEXTILES LTD.
Ss.2(a) & 9—Banking Companies Ordinance (LVII of 1962), S.27—Banking Court—Jurisdiction—Plea raised by defendants was that in view of bar of S.27 of Banking Companies Ordinance, 1962, plaintiff company did not qualify to be a financial institution” as described under S.2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, suit filed by plaintiff company was not maintainable—Validity—Plaintiff was an. investment institution duly recognized by Government of Pakistan—Bar of S.27 of Banking Companies Ordinance, 1962, was inapplicable as the enactment was not restricted to transacting banking business only but also covered ancillary or associated business—Agreement inter se parties permitted plaintiff to sue under Financial Institutions (Recovery of Finances) Ordinance, 2001—Suit was maintainable in circumstances.
2006 CLD 1548 KARACHI-HIGH-COURT-SINDH
Messrs SINDH SMALL INDUSTRIES CORPORATION VS SHAHZADO KHAN
–Ss.2(a)(iii), 7(2) & 22—Sindh Small Industries and Handicraft Development Corporation Act, (XXVI of 1972)—Banking Companies Ordinance, (LVII of 1962), Ss.5(b)(c) & 27(1)—Civil Procedure Code (V of 1908),O.VII, R.10—Court Fees Act (VII of 1870),
2005 CLD 114 KARACHI-HIGH-COURT-SINDH
TANYA KNITWEAR (PVT.) LTD. VS UNITED BANK LIMITED and others
—Ss.15(11) & 27—Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), Ss.10(1) & 19—State Bank of Pakistan BPD Circular No.29, dated 15-10-2002, Cls. 7 & 9(iii)—Suit by borrower against Bank—Reference of dispute by Banking Co
2003 PLC 378 NATIONAL-INDUSTRIAL-RELATIONS-COMMISSION
MUSLIM COMMERCIAL BANK LIMITED VS MAHMOOD ALAM NIAZI
—-Ss.22-A(8)(g)—Banking Companies Ordinance (LVII of 1962), S.27(b)–Petition against unfair labour practice—Disciplinary proceedings were initiated against respondent who was working as an Assistant in the Bank and he was dismissed from service aft
2002 SCMR 250 SUPREME-COURT
MST. AISHA BIBI VS MST. PERMILA CLAMENCE
Banking Companies Ordinance 1962 —-S.27(1)[as amended by Banking Companies (Amendment) Ordinance (LVI of 1979)]—Licensing of banking companies—Object-,-Object of S.27(1) of Banking Companies Ordinance, 1962, was to effectively check the growing trend of illegal banking business by various investment companies, which were defrauding the public by offering high rate of interest up to 5 to 7% per month.
2002 CLD 1473 SUPREME-COURT
MERCANTILE TRADERS (PVT.) LTD. VS STATE BANK OF PAKISTAN
Banking Companies Ordinance 1962 —-S.27(l) (as amended by Banking Companies (Amendment) Ordinance (LVI of 1979))—Licensing of banking companies–Object—Object of S.27(1) of Banking Companies Ordinance. 1962, was to effectively check the growing trend of illegal banking business by various investment companies, which were defrauding the public by offering high rate of interest up to 5 to 796 per month.
2002 CLD 805 KARACHI-HIGH-COURT-SINDH
STATE BANK OF PAKISTAN VS Syed AKBAR HUSSAIN RIZVI
Banking Companies Ordinance 1962 —-Ss.27(1), 43-A & 83(1-C)—Appreciation of evidence—Benefit of doubt—Prosecution had failed to prove its case against accused beyond any reasonable doubt—Benefit of doubt was extended to accused and they were acquitted from the charge.
2001 CLC 1833 PESHAWAR-HIGH-COURT
STATE VS MUHAMMAD AMIN
Banking Companies Ordinance 1962 —-S. 27(b)—State Bank of Pakistan Act (XXXIII of 1956), S.10—Licence of Banking Company, cancellation of—Jurisdiction of Governor, State Bank—Contention of the Banking Company was that the Governor, State Bank could not cancel the licence as under the provisions of S-27(b) of Banking Companies Ordinance, 1962, Central Board of State Bank had powers to review and only the Board could cancel the licence —Validity–When the Governor, State Bank in exercise of powers under S.10 of State Bank of Pakistan Act, 1956 could control the affairs of the Bank on behalf of the Central Board, the licence was rightly cancelled by the Governor, State Bank.
1998 PLD 287 LAHORE-HIGH-COURT-LAHORE
ASIF SAIGOL VS FEDERATION OF PAKISTAN
Art. 199—Penal Code (XV of 1860), Ss. 382 & 406—Federal Investigation Agency Act (VIII of 1975), Preamble & S.3—Banking Companies Ordinance (LVI1 of 1962), Ss. 27, 40, 41, 47, 83 & 84—State Bank of Pakistan Act (XXXIII of 1956), Ss. 9, 9-A & 36—Constitutional petitibn—Quashing of case—Case was registered by Federal investigating Agency against petitioner under Ss.382 & 406, P.P.C. for theft and misappropriation of cotton stock lying in mill premises of petitioners as bank security—Quashing of the case had been sought by petitioner contending firstly, that Federal Investigating Agency had no jurisdiction to register and investigate a case in which private persons were arrayed as accused and that it could register and investigate a case only where an offence was committed in relation to a company owned by Federal Government; secondly, that matter was of civil nature as respondent-Bank had filed a civil suit in Banking Court which was pending and thirdly, that vide S.R.O. No.826-I-97, the Schedule attached with Federal Investigation Agency Act, 1975 had been substituted and Ss.382 & 406, P.P.C. under which case was registered, had been deleted, thus, leaving Federal Investigating Agency with no jurisdiction to proceed in the matter—Contentions of petitioners were repelled because respondent-Bank, being a scheduled Bank, was under control and supervision of State Bank of Pakistan, and authority of Federal Government would, thus, extend to respondent-Bank—Any offence committed in relation to scheduled Bank, thus, would be an offence committed in connection with matters concerning Federal Government and for matters connected therein which would fall within mischief of Preamble of Federal Investigation Agency Act, 1975—In the Schedule attached with Federal Investigation Agency Act, 1975, besides certain offences under Penal Code offences under Banking Companies Ordinance, 1962 were also scheduled offences—Contention of petitioners that allegations levelled against them disclosed civil liability, prima facie, was against record and premature as Federal Investigating Agency had yet to finalize investigation—Argument that Ss.382 & 406, P.P.C. having been deleted from Schedule of the Federal Investigation Agency Act, 1975, Federal Investigating Agency had no jurisdiction to proceed with investigation, was also not tenable for two reasons, firstly, that matter was still under investigation and it would be for Investigating Officer to finally conclude as to what specific offences were made out and secondly, when alleged offences were committed, Ss.382 & 406, P.P.C. were in Schedule of Federal Investigation Agency Act, 1975—Petition for quashing of case was dismissed having no merit.
1992 MLD 546 KARACHI-HIGH-COURT-SINDH
STATE BANK OF PAKISTAN VS CAPITAL TRADING COMPANY
Banking Companies Ordinance 1962 —-Ss.27(1), 43-A & 83(1-c)—Appreciation of evidence—Charge against accused was that they being partners of a Trading Company, when called upon by complainant, State Bank of Pakistan, under S.43-A of Ordinance, 1962, through directive, to furnish information, documents or record respecting their business to fund out if they were doing banking business is contravention of S.27(1) of Ordinance, they had failed to do so—Accused were charged for committing offence punishable under S.83(1-C) of the Ordinance—Directive, defiance of which was alleged, was issued to accused, soon after formation of Trading Company by accused, thus they were unable to produce relative record to the State Bank—Accused admittedly invited representatives of complainant to inspect their office as and when desired—None of authorised officers of the State Bank was examined by prosecution to prove that accused avoided or refused to produce relevant record—Even Senior Deputy Director of State Bank, had not visited office of accused at any time—Complainant admittedly lead failed to produce evidence to satisfy Court that case was of deliberate defiance of directives issued by State Bank—Prosecution having failed to prove case against accused beyond any reasonable doubt, they were acquitted of charge extending benefit of doubt.
1992 MLD 142 KARACHI-HIGH-COURT-SINDH
STATE BANK OF PAKISTAN VS SALMAN ASSOCIATES (PVT.) LTD., KARACHI
Banking Companies Ordinance 1962 —-Ss. 27(1) & 83(1-C)/43-A—Appreciation of evidence—Contravention of S.27(1)—State Bank of Pakistan had sufficient material to initiate an action under S. 43-A of the Banking Companies Ordinance, 1962 and accused were found to have ignored the directives issued by State Bank in that behalf under S.43-A—Accused were consequently convicted under S. 83(1-C) of the Ordinance for violation of S.43-A and sentenced accordingly.
1990 PCRLJ 854 KARACHI-HIGH-COURT-SINDH
STATE BANK OF PAKISTAN VS ZAHEER AHMED
Banking Companies Ordinance 1962 —-Ss. 27(1), 43-A & 83(1-c)—Appreciation of evidence—Authorised Inspecting officer did not speak about any effort made by him to search the premises of accused for seizing record—Record did not show that accused had resisted any such attempt of search of his premises—Accused had all along pleaded that he had no such records and he was prosecuted only because he could not file affidavit in support of his statement which was not a legal requirement and accused could not be penalised for the same—Accused, held, had not contravened provisions of S.43-A of the Ordinance and was acquitted in circumstances.
1989 MLD 4288 KARACHI-HIGH-COURT-SINDH
AIM INTERNATIONAL: IN RE VS AIM INTERNATIONAL
Banking Companies Ordinance 1962 —Ss. 27(1) & 43-B–Petitioner after complying with all the requirements of the Ordinance issued declaration to the effect that the firm had contravened the provisions of S. 27 (1) of the Ordinance–Such declaration was duly published in terms of S. 43-B(2) in the daily newspapers–Case was not contested by the firm-Orders for winding up of the firm as unregistered company and appointment of an Official liquidator were passed by the High Court in circumstances.
1989 MLD 3552 KARACHI-HIGH-COURT-SINDH
STALE BANK OF PAKISTAN VS AIM INTERNATIONAL
Banking Companies Ordinance 1962 —Ss. 27 & 43–Winding up of firm–Respondent firm which admittedly neither was established for banking business nor was registered as a banking company, was suspected doing banking business illegally–State Bank of Pakistan after serving directive upon said firm, inspected its registered office and after inspection of record of the firm concluded that firm was really doing banking business illegally–Show-cause notice was served on the firm, but its reply was not found to be satisfactory–State Bank after complying with all legal requirements, issued and published declaration to the effect that the firm was transacting banking business illegally–Case having not been contested by the firm, it was ordered to be wound up as an unregistered company and liquidator appointed accordingly.
1989 MLD 398 KARACHI-HIGH-COURT-SINDH
IN RE: BANKING COMPANIES ORDINANCE, 1962 VS IN RE: BANKING COMPANIES ORDINANCE, 1962
—Ss. 27(1), 43-AA & 43-B [as amended by Banking Companies (Amendment) Ordinance (III of 1989)]–Declaration against Banking Company–Extension of time–Essentials–Petitioner/State Bank properly explained circumstances and gave cogent reasons for not is
1988 CLC 1438 KARACHI-HIGH-COURT-SINDH
OVERSEAS PAK CREDIT AND INVESTMENT CORPORATION (PVT.) LTD. VS GOVERNOR STATE BANK OF PAKISTAN
Banking Companies Ordinance 1962 S. 27–Limited liability Company–Meaning and scope of–Prohibition to transact banking business–Limited liability company is a distinct and separate legal entity from directors, shareholders and firms constituted by such shareholders/directors–Manner and arrangement under which money was being collected from public and invested by company would fall within ambit of banking and ,would be hit by provisions of S.27 of Banking Companies Ordinance, 1962, thus imposing prohibition of carrying on of banking business on such company.
1988 MLD 67 KARACHI-HIGH-COURT-SINDH
In re: BANKING COMPANIES ORDINANCE VS In re: BANKING COMPANIES ORDINANCE
Banking Companies Ordinance 1962 —Ss. 27 (1) & 43-F (4)–Insolvency (Karachi Division) Act (III of 1909), Ss. 58 to 60–Petition for insolvency–Respondent transacting business of banking in contravention of Banking Companies Ordinance–Petitioner making petition in Court for declaring respondent as insolvent–Proof of averments made by petitioner in memo of petition had not been controverted in spite of adequate opportunities granted to respondent–Counsel filed power of attorney on behalf of respondent but no objection or counter-affidavit was filed on his behalf-Counsel also did not appear on subsequent dates in spite of notice–Petitioner had made out a case under provisions of Ordinance LVII of 1962 for passing an adjudication order against respondent as insolvent–Respondent was adjudged as insolvent and official assignee was directed to act in pursuance of adjudication order according to provisions of Insolvency (Karachi Division) Act, 1909 for administration and distribution of the property of insolvent.
1987 MLD 2907 LAHORE-HIGH-COURT-LAHORE
ADAMJEE INTERNATIONAL FINANCE LTD. IN RE VS ADAMJEE INTERNATIONAL FINANCE LTD. IN RE
Banking Companies Ordinance 1962 —Ss.27,43-B & 57–Banking Company, status of–Declaration as contemplated by S.43-B of Ordinance LVII of 1962 made by State Bank of Pakistan in respect of Banking Company, would be conclusive for purpose of Part II-B of the Ordinance–Plea, that respondent company could not be termed and treated as “Banking Company” within meaning of S.27 of Ordinance (LVII of 1962) for non-grant of licence and for non-fulfilment of other requirements of law as company because of being under liquidation and as such did not transact banking business, held, was misconceived.
1987 MLD 2853 KARACHI-HIGH-COURT-SINDH
GHOUS MAHNOOR CORPORATION (PVT.) LTD. VS PAKISTAN through Secretary, Ministry of Finance, Islamabad
—Art.199–Banking Companies Ordinance (LVII of 1962),S.27(1) & 43-A–Constitutional petition–Petitioner Corporation got published an advertisement on basis of which it could be said that provisions of S.43-A of Banking Companies Ordinance, 1962 were pr
1986 CLC 2197 LAHORE-HIGH-COURT-LAHORE
HAIDERJ INTERNATIONAL FINANCE LTD. VS STATE BANK
Banking Companies Ordinance 1962 Ss. 27(1) & 43-A–Business transaction, in contravention of–State Bank can requisition from a company or person requisite information and documents if such company or person in its view was transacting business in contravention of S. 27(1) of Banking Companies Ordinance, 1962–If State Bank after making enquiry found such transaction of business to be in contravention thereof, it could. held, issue declaration to that effect, after giving such company or person opportunity of showing cause against proposed action.