Section 41 : Power of the State Bank to give directions
2023 PLC(CS) 1111 LAHORE-HIGH-COURT-LAHORE
UNITED BANK LIMITED VS MUHAMMAD USMAN ARSHAD
S.41—Constitution of Pakistan, Art. 199—Law Reforms Ordinance (XII of 1972), S.3—Intra Court Appeal—Private bank—Terms and conditions of service—Constitutional jurisdiction of High Court—Scope—Appellant / bank was aggrieved of direction to decide departmental representation of respondent / employee—Validity—State Bank of Pakistan was a regulatory authority for all banks operating in Pakistan—Functions of State Bank of Pakistan were contemplated under Banking Companies Ordinance, 1962, with respect to activation and operation of banks and for carrying out purpose of Banking Companies Ordinance, 1962 and matter ancillary thereto—No statuary duty and obligation of State Bank of Pakistan in Banking Companies Ordinance, 1962 to direct private bank to perform its functions in respect of its employees’ terms and conditions of service—Constitutional petition could only be filed for enforcement of fundamental rights—In order to obtain a writ or an order or direction in the nature of mandamus, petitioner was to satisfy the Court that he had a legal right towards performance of a legal duty by the party against whom mandamus was sought—Such order or direction could only be granted subject to provision of relevant law— Neither appellant / bank was amenable to Constitutional jurisdiction as was a private bank nor State Bank of Pakistan had any statutory role or jurisdiction in respect of terms and conditions of service of employees of private Banks like respondent—Division Bench of High Court set aside direction to decide representation of respondent / employee as it could not be issued by Single Judge of High Court—Intra Court Appeal was allowed, in circumstances.
2022 PTD 310 KARACHI-HIGH-COURT-SINDH
HONG KONG SHANGHAI BANKING CORPORATION LTD. VS DEPUTY COMMISSIONER OF INCOME TAX
Ss.61, 62, 135 & 136—Banking Companies Ordinance (LVII of 1962), Ss.41, 83(5) & 91-A—Loan to employees—Factual controversy—Appellant/taxpayer was a Banking Company and dispute was with regard to amounts advanced to its employees as loan—Validity—Income Tax Appellate Tribunal ignored examination of factual aspect that whether any expenditure was incurred by appellant/taxpayer or not in providing loan to its employees at concessional rate—Appellant/taxpayer claimed that amounts so given to employees were from non-interest bearing account or current account or reserve account, which required a factual examination of the matter—No such exercise was made in such behalf as until and unless it was shown or proved that amounts of concessional loans given to employees had any nexus with diversion of expenditure, it could not be claimed that a benefit was provided either at concessional rate or free of cost to the employees, when it was claimed by appellant/taxpayer that amount so advanced to employees was from separate identifiable funds either from current account or reserve accounts— High Court remanded the matter to Income Tax Appellate Tribunal, as the matter pertained to ascertainment of factual controversy— Appeal was allowed accordingly.
2020 CLD 147 LAHORE-HIGH-COURT-LAHORE
ABDUL WALI VS STATE BANK OF PAKISTAN
- 41—Offences in Respect of Banks (Special Courts) Ordinance (IX of 1984), S. 5—Punjab Overseas Pakistanis Commission Act (XX of 2014), S. 2(i)—Constitution of Pakistan, Arts. 4, 5, 9, 18, 23, 24 & 260—“Overseas Pakistani”—Grievance, non-redressal of—Petitioner was an overseas Pakistani from whose Pakistani Bank account, significant amount was embezzled—Plea raised by petitioner was that State Bank of Pakistan did not proceed with the matter despite many complaints—Validity—If petitioner was an “overseas Pakistani” as defined under S. 2(i) of Punjab Overseas Pakistanis Commission Act, 2014 then being citizen of Pakistan he had inalienable rights defined under Arts. 23 & 24 of Constitution, i.e., right to acquire, hold and dispose property and its protection—Every citizen had an inalienable right under Art. 4 of Constitution wherever he was and of every other person for the time being within Pakistan to enjoy protection of law and to be treated in accordance with law—High Court directed State Bank of Pakistan to inquire/examine matter and record in detail as per Banking Companies Ordinance, 1962 and after hearing parties, if case was made out against the Bank then grievance of petitioner was to be redressed—Constitutional petition was disposed of accordingly.
2019 CLD 595 LAHORE-HIGH-COURT-LAHORE
UNITED BANK LIMITED VS MUHAMMAD MANZOOR
- 41—Power of State Bank to give directions—Scope—Employee of a private bank—Pensionary benefits—State Bank could not decide the service matters between a Bank and its employees—State Bank could not decide the matters with respect to pensionary benefits of employees of the Banking companies.
2016 SCMR 2026 SUPREME-COURT
AKBAR ALI VS STATE BANK OF PAKISTAN
Ss. 25 & 41—State Bank of Pakistan SMEFD Circular No. 1/2011 dated 02.02.2011—Write off of loans in certain areas affected by terrorism—Beneficiaries of such scheme—Scope—In order to rehabilitate business and industrial activities severely affected by the acts of terrorism in certain parts of the country, the Federal Government announced a relief package for such areas—Pursuant to such announcement, the State Bank of Pakistan issued SMEFD Circular No. 1/2011 dated 02.02.2011 (“the Circular”)—In terms of said Circular, loans that were extended by financial institutions for their utilization in certain areas and had remained outstanding as of 31.12.2009 were to be written-off on certain conditions—Impact of such right-off on the financial institutions was to be borne by the Federal Government in the shape of providing subsidy to the affected financial institutions—Employees of the financial institutions located in the areas covered by the Circular claimed that they be also extended the benefit of the write-off scheme as they were also working in the areas to which benefit of the scheme had been extended—Validity—Circular of State Bank was followed by a clarificatory letter describing the scope of its application—Said letter provided that the loans extended by the financial institutions to their employees were not eligible for write-off under the Circular—Any category of persons who were excluded from the grant of benefit could not seek a write-off of its financial liability even if it related to the period or the areas covered under the scheme—Write-off package was intended to rehabilitate the business and industrial community of certain specified areas that were badly affected by terrorism, possibly for the reason that they may not close their businesses and shift to other areas, as such shifting might result in a decrease in commercial and industrial activities and an increase in unemployment ratio in the affected areas—Thus the whole purpose of the write-off scheme was to encourage business and industrial activities in such affected areas—Employee of a financial institution located in the affected areas, who had obtained loan from his financial institution, he being already gainfully employed could not be said to have been adversely affected by the hostile business or industrial environment—Claim of employees of financial institutions as borrowers, by no stretch of imagination fell within the object and scope of the write-off scheme—Appeal was dismissed accordingly.
2016 CLD 2102 SUPREME-COURT
AKBAR ALI VS STATE BANK OF PAKISTAN
Ss. 25 & 41—State Bank of Pakistan SMEFD Circular No. 1/2011 dated 02.02.2011—Write off of loans in certain areas affected by terrorism—Beneficiaries of such scheme—Scope—In order to rehabilitate business and industrial activities severely affected by the acts of terrorism in certain parts of the country, the Federal Government announced a relief package for such areas—Pursuant to such announcement, the State Bank of Pakistan issued SMEFD Circular No. 1/2011 dated 02.02.2011 (“the Circular”)—In terms of said Circular, loans that were extended by financial institutions for their utilization in certain areas and had remained outstanding as of 31.12.2009 were to be written-off on certain conditions—Impact of such write-off on the financial institutions was to be borne by the Federal Government in the shape of providing subsidy to the affected financial institutions—Employees of the financial institutions located in the areas covered by the Circular claimed that they be also extended the benefit of the write-off scheme as they were also working in the areas to which benefit of the scheme had been extended—Validity—Circular of State Bank was followed by a clarificatory letter describing the scope of its application—Said letter provided that the loans extended by the financial institutions to their employees were not eligible for write-off under the Circular—Any category of persons who were excluded from the grant of benefit could not seek a write-off of its financial liability even if it related to the period or the areas covered under the scheme—Write-off package was intended to rehabilitate the business and industrial community of certain specified areas that were badly affected by terrorism, possibly for the reason that they may not close their businesses and shift to other areas, as such shifting might result in a decrease in commercial and industrial activities and an increase in unemployment ratio in the affected areas—Thus the whole purpose of the write-off scheme was to encourage business and industrial activities in such affected areas—Employee of a financial institution located in the affected areas, who had obtained loan from his financial institution, he being already gainfully employed could not be said to have been adversely affected by the hostile business or industrial environment—Claim of employees of financial institutions as borrowers, by no stretch of imagination fell within the object and scope of the write-off scheme—Appeal was dismissed accordingly.
2016 CLD 1202 KARACHI-HIGH-COURT-SINDH
BANK ALFALAH LIMITED VS CALLMATE TELIPS TELECOM LTD.
- 41—State Bank of Pakistan Prudential Regulations—“Tangible security”—Connotation—Tangible security as defined in prudential regulations means readily realizable assets i.e., mortgage of land, plant, building, machinery and other fixed assets.
2016 CLD 1202 KARACHI-HIGH-COURT-SINDH
BANK ALFALAH LIMITED VS CALLMATE TELIPS TELECOM LTD.
- 41—State Bank of Pakistan Circular—Violation—Effect—State Bank of Pakistan in its capacity as regulatory body issues circulars, guidelines and prudential regulations which are not only binding on Banks/DFIs but also need to be followed strictly—Any violation or circumvention of the circulars/instructions and prudential regulations render Banks/DFIs and concerned officers liable for penalties under Banking Companies Ordinance, 1962.
2016 CLD 1202 KARACHI-HIGH-COURT-SINDH
BANK ALFALAH LIMITED VS CALLMATE TELIPS TELECOM LTD.
- 41—State Bank of Pakistan Regulations Nos. III & XVIII—Negligence—Responsibility—Officer of Bank who is also responsible for disbursement, if acts negligently or omits to take enough care in extending/advancing finance facilities by ignoring State Bank of Pakistan’s regulations applicable at the time of advancing finance facility, then such officer is liable to suffer—Bank would be justified in taking appropriate and lawful action against responsible officials pertaining to recovery of losses/or taking action for commission of guilt of a criminal breach of trust.
2015 CLD 1644 LAHORE-HIGH-COURT-LAHORE
HABIB BANK LIMITED, DEIRA BRANCH, DEIRA DUBAI UAE VS W.R.S.M. TRADING COMPANY, L.L.C.
- 5—Contract Act (IX of 1872), S. 23—Banking Companies Ordinance (LVII of 1962), Ss. 3-A, 25 & 41—BCD Circulars by State Bank of Pakistan—Jurisdiction of Banking Court—Scope—BCD Circulars are issued by State Bank of Pakistan in exercise of powers under Ss. 3-A, 25 & 41 of Banking Companies Ordinance, 1962, and have force of law—Any contract or agreement executed in violation to BCD circular comes within the mischief of S. 23 of Contract Act, 1872, being contrary to law and therefore, is not enforceable by Banking Court established under section 5 of Financial Institutions (Recovery of Finances) Ordinance, 2001.
2015 CLD 1439 LAHORE-HIGH-COURT-LAHORE
MUHAMMAD FAROOQ AZAM VS BANK AL-FALAH LIMITED
Ss. 9, 10 & 22—Contract Act (IX of 1872), Ss. 73 & 74—Banking Companies Ordinance (LVII of 1962), Ss. 3A, 25 & 41—State Bank of Pakistan BCD Circular No.13 of 1984 dated June 20, 1984—State Bank of Pakistan BCD Circular No.32 of 1984 dated November 26, 1984— Mark-up beyond original contractual period/additional sum/penalty for delay in payment by customer— Principles—Car/automobile finance facility— Plaintiff filed suit seeking redemption/clearance of vehicle from defendant Bank, on the ground that finance facility availed by plaintiff for the said vehicle was re-paid completely but defendant Bank refused to issue the NOC—Suit was dismissed by Banking Court on the ground that plaintiff was under contractual obligation to pay late payment charges—Held, that with introduction of State Bank of Pakistan BCD Circular Nos.13 of 1984 dated June 20, 1984 and BCD Circular No.32 of 1984 dated November 26, 1984, all Financial Institutions in Pakistan had been prohibited from charging any additional sum on account of delay caused by the customer in re-payment of its obligation created under an agreement based on mark-up and such obligation under a mark-up based agreement, once fixed could not be enhanced, so as to entitle a Financial Institutions charge any sum over and above original contractual amount—Mark-up beyond the original contractual period or any late payment charged, claimed by the Financial Institution was in violation of the restrictions contained in the said State Bank of Pakistan Circulars and any clause incorporated in a finance agreement for charging any additional mark-up or penalty would violate the said Circulars and was therefore, void ab initio—Penalty or damages at fixed rate was opposed to the provisions contained in Ss.73 & 74 of the Contract Act, 1872 and general principles for granting compensation when beneficiary alleged breach of contract were regulated by Ss.73 & 74 of the Contract Act, 1872 and without proving the actual loan, even a fixed amount, if stipulated for liquidated damages, did not become automatically payable—If a clause existed in the agreement for finance regarding late payment charges and penalties, the same could be disregarded by the courts being against the Islamic system of finance, and for being unconscionable and against the law—Order and decree of Banking Court was set aside and suit of plaintiff was decreed and defendant Bank was directed not to withhold issuance of clearance certificate in favour of plaintiff—Appeal was allowed, accordingly.
2015 CLD 1439 LAHORE-HIGH-COURT-LAHORE
MUHAMMAD FAROOQ AZAM VS BANK AL-FALAH LIMITED
Ss. 3-A, 25 & 41—State Bank of Pakistan Circulars—Nature and scope—Obligations of Financial Institutions/Banking Companies—Circulars, issued by the State Bank of Pakistan, were in the nature of instructions/directions to the Financial Institutions—Commercial Banks, whether private or government owned, were bound by such instructions and all banking companies were under obligation to follow the instructions given by the State Bank of Pakistan in contemplation of Ss.3-A, 25 & 41 of the Banking Companies Ordinance, 1962.
2015 CLD 173 LAHORE-HIGH-COURT-LAHORE
J.S. DEVELOPERS through Chief Executive VS STATE BANK OF PAKISTAN
Ss. 25-A, 41(2) & (3)—State Bank of Pakistan Act (XXXII of 1956), S.3—Constitution of Pakistan, Art. 199—Constitutional petition—Alternate remedy—Written off loans—Credit Information Bureau (CIB) list—Petitioners availed financial facilities from bank and during litigation the same were settled between the parties without payment of markup—Petitioners were aggrieved of inclusion of their names in CIB list maintained by State Bank of Pakistan—Validity—Petitioners on one hand were not going to make payment of markup, which had been written off by the bank, at the same time they wanted that their names should not be included in list indicating such defaulters to be maintained by CIB in State Bank of Pakistan—Petitioners had no right to ask for such illegal withholding of information from financial institutions just in order to put at guard the banks/financial institutions for any future transaction to be carried out with them—High Court noted it with serious concern that bona fide account holders were not being extended any due benefit of such banking system, rather privileged classes were being extended undue benefits resultantly economy had become termitarium and main causes for such disaster were those undue benefits which were being extended to so called aristocracy, which class was behind our economy—High Court observed that it was high time to eradicate such menace—State Bank of Pakistan must deal with such elements and also banks/financial institutions, who were proved to be hands in gloves with such defaulters, with strong hands to put all such stakeholders in a discipline—Remedy of representation provided under S.41(3) of Banking Companies Ordinance, 1962, whereunder, State Bank could, on representation make to it or on its own motion, modify or cancel any direction issued under S.41(1) of Banking Companies Ordinance, 1962—Petitioners had alternate remedy to represent against inclusion of their names in list maintained by CIB and without availing such remedy constitutional jurisdiction of High Court was not competent—Petition was dismissed in circumstances.
2015 PLC(CS) 468 LAHORE-HIGH-COURT-LAHORE
NOOR BADSHAH VS UNITED BANK LIMITED
- 41—Constitution of Pakistan, Art.199—Constitutional petition—Maintainability—Resolution of dispute of private character—Scope—Petitioners were retired employees of a Bank in different grades—Withholding of grade increment in the completed year and recalculation of retirement/pensionary benefits—Functions of State Bank of Pakistan—Nature—Functional test for determining the status of the employer Bank—Effect—Plea of the Bank was that same being a private bank was not performing functions with respect to affairs of Federation, Province or any other statutory body and that the employees of the bank were not governed under the statutory rules, therefore, the constitutional petitions were not maintainable—Validity—Employer Bank being a private entity and not performing functions in connection with Province, Federation or any statutory authority, Constitutional petitions were not maintainable—Where service grievance was agitated before High Court in terms of Art.199 of the Constitution, by a person/employee, who was not governed by statutory rules of service, such petition would not be maintainable—Service Rules of Employer Bank being not statutory, constitutional petition was not maintainable for enforcement of said Rules—Dispute between the petitioners and the bank was not covered under the provisions of Banking Companies Ordinance, 1962 and that such regulatory role and control of State Bank of Pakistan did not clothe the Bank with the status of “person” or “authority” performing function in connection with affairs of Federation—Petitioners had not referred any statutory provision under which the State Bank of Pakistan, being a regulator, had a statutory duty and obligation to direct the private Bank to perform functions in respect of its employees’ terms and conditions of service—State Bank of Pakistan having not failed to perform any of its statutory obligation towards petitioners (employees) was not a necessary party in the petition and no direction could be issued to State Bank of Pakistan for release of increments or recalculation of pensionary benefits of the petitioners—Constitutional petitions being incompetent and not maintainable were dismissed.
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.
2011 PLC(CS) 65 LAHORE-HIGH-COURT-LAHORE
MUHAMMAD IQBAL KHATTAK VS FEDERATION OF PAKISTAN
Ss. 3(1)(b) & 11(3)(a)—Banking Companies Ordinance (LVII of 1962), S.41—State Bank’s Prudential Regulations for Corporate/ Commercial Banking—Constitution of Pakistan, Art.199(I)(b) (ii)—Constitutional petition—Writ of Quo Warranto—President of Bank—Appointment and qualification—Petitioner assailed appointment of respondent as President, Zarai Taraqiati Bank Limited on the ground that he did not have required qualification for the post—Validity—Respondent had no experience in banking and he never held any position of a banker in any capacity—Experience of respondent was confined to sugar industry where he was regarded as an expert analyst and an authority on the subject and had also been office-bearer of an association—Respondent did not have any degree in banking, finance, economics or business administration, and did not meet the fit and proper test in terms of qualification and experience laid down by State Bank of Pakistan which also explained refusal of State Bank of Pakistan to clear or approve his appointment as President of Zarai Taraqiati Bank Limited—Appointment of respondent as President Zarai Taraqiati Bank Limited was unlawful for having been made in violation of provisions of section 41 of Banking Companies Ordinance, 1962, State Bank’s Prudential Regulations for Corporate/Commercial Banking and section 11(3)(a) of Banks (Nationalization) Act, 1974, as neither the approval or clearance was given by State Bank of Pakistan nor he otherwise qualified to be appointed as President Zarai Taraqiati Bank Limited , as he. was sans any banking experience—High Court declared that appointment of respondent to the post of President Zarai Taraqiati Bank Limited was made unlawfully and could not be sustained—Respondent failed to show any authority of law to High Court, under which he was holding the posh of President Zarai Taraqiati Bank Limited—Notification of appointment of respondent as President Zarai Taraqiati Bank Limited was without lawful authority and of no legal effect—Petition was allowed in circumstances.
2010 CLD 1572 LAHORE-HIGH-COURT-LAHORE
MUHAMMAD IQBAL KHATTAK VS FEDERATION OF PAKISTAN
Ss.3(1)(b) & 11(3)(a)—Banking Companies Ordinance (LVII of 1962), S.41—State Bank’s Prudential Regulations for Corporate/Commercial Banking—Constitution of Pakistan 1973, Art.199(1)(bXii)—Constitutional petition—Writ of Quo Warranto—President of Bank—Appointment and qualification—Petitioner assailed appointment of respondent as president Zarai Taraqiati Bank on the ground that he did not have required qualification for the post—Validity—Respondent had no experience in banking and he never held any position of a banker in any capacity—Experience of respondent was confined to sugar industry where he was regarded as an expert analyst and an authority on the subject and had also been office bearer of an association—Respondent did not have any degree in banking, finance, economics or business administration, and did not meet the Fit and Proper Test in terms of qualification and experience laid down by State Bank of Pakistan which also explained refusal of State Bank of Pakistan to clear or approve his appointment as President Zarai Taraqiati Bank—Appointment of respondent as President Zarai Taraqiati Bank was unlawful for having been made in violation of provisions of section 41 of Banking Companies Ordinance, 1962, State Bank’s Prudential Regulations for Corporate/Commercial Banking and section 11(3)(a) of Banks (Nationalization) Act, 1974, as neither the approval or clearance was given by State Bank of Pakistan nor he otherwise qualified to be appointed as President Zarai Taraqiati Bank , as he was sans any banking experience—High Court declared that appointment of respondent to the. post of President Zarai Taraqiati Bank was made unlawfully and could not be sustained—Respondent failed to show any authority of law to High Court, under which he was holding the post of President Zarai Taraqiati Bank—Notification of appointment of respondent as President Zarai Taraqiati Bank was without lawful authority and of no legal effect—Petition was allowed in circumstances.
2010 CLD 338 LAHORE-HIGH-COURT-LAHORE
M.C. B BANK, LTD., through Authorized Representative VS STATE BANK OF PAKISTAN through Governor
S.41—Protection of Economic Reforms Act (XII of 1992), S.10—Contract Act (IX of 1872), S.23—Constitution of Pakistan (1973), Art.199(1) & (5)—Constitutional petition–Maintainability—Contractual liability—Scope—Grievance of petitioner/retired employees association was that its members were entitled to certain pensionary benefits which were being denied to them under the garb of Revised Pay Package enforced by employer bank—Validity—Alteration of contractual/financial commitment/obligation was restricted under S.10 of Protection of Economic Reforms Act, 1992, to the disadvantage of beneficiaries—No prohibition existed in S.10 of Protection of Economic Reforms Act, 1992, that alteration/novation of contract could be made with the concurrence of employees, rather from clear meaning and interpretation of S.10 of Protection of Economic Reforms Act, 1992, it was open for stakeholders to agree and substitute any agreement/ commitment notwithstanding that the agreement already entered into–Members of petitioner association during the time when they were in employment of the bank subscribed/assented to Revised Pay Package which was acted upon and they derived all benefits on account of such package, which was not shown to be the one hit by provisions of S.23 of Contract Act, 1872–Members of petitioner/retired employees association were estopped by their own conduct to challenge Revised Pay Package; besides rules of acquiescence and waiver were also attracted to discard their stance in such behalf—High Court, in exercise of constitutional jurisdiction, could not declare Revised Pay “Package to be void or voidable nor High Court could enforce agreement between the parties—Directions contemplated by S.41(2) of Banking Companies Ordinance, 1962, were with respect to activities and operations of banks and institutions for carrying out purpose of Banking Companies Ordinance, 1962, and matters ancillary thereto—Grievance of petitioner association was not covered by S.41(2) of Banking Companies Ordinance, 1962, and no direction under constitutional jurisdiction could be given to State Bank of Pakistan for further directing employer bank to perform any of the acts as were mentioned in the section—Employer bank was not “person” within the meaning of Art.199(5) of the Constitution and was not performing any functions with affairs of Province, Federation or any statutory body to which a writ could be issued—Constitution petition was dismissed in circumstances.
2009 CLD 1250 LAHORE-HIGH-COURT-LAHORE
MUHAMMAD ASHRAF VS UNITED BANK LIMITED through President
- 41—Constitution of Pakistan (1973), Arts.199 & 18—Constitutional petition—Theory of State action and `doctrine of public trust’—Applicability—Scope—Banker and Customer—withdrawal of rate of profit at agreed rate and unilateral reduction of return by Bank on Profit Scheme—Grievance of the depositors was not only that Banking Company had breached the terms of contract but the contract involved the public interest and Bank and under the cover of act of omission on the part of State Bank of Pakistan, was running the banking business detrimental to the interest of public as well as the depositors—Whenever it was found that a banking company was conducting its affairs in a manner, detrimental to the interest of its depositors, the State Bank of Pakistan being regulatory body, was bound to issue directions in the public interest—Transaction of banking business, by a company licensed by State Bank of Pakistan to do so, was a “public purpose”, and a Bank was performing this function-Delayed action or inaction on the part of State Bank of Pakistan, in the affairs of such companies could be judicially reviewed in the exercise of powers conferred under Art.199 of the Constitution—Principles.
2009 CLD 1250 LAHORE-HIGH-COURT-LAHORE
MUHAMMAD ASHRAF VS UNITED BANK LIMITED through President
S.41—Constitution of Pakistan (1973), Art. 199—Constitutional petition—-Banker and Customer—Withdrawal of rate of profit at agreed rate and unilateral reduction of return by Banks on “Profit Schemes”—Conditions contained in the Certificates of schemes were concluded contract and the obligations of parties were to be performed according to these conditions—Depositors in the schemes, could invest without being an account-holder, which fact, by itself, signified that conditions contained in the Account Opening Form” had no application to the investments under the Scheme—Fixed deposit for a fixed period on fixed rate of profit on fixed mode of payment, could not be stretched to fall within the “Profit and Loss Sharing System” of the Banks—Principles.
2009 CLD 1250 LAHORE-HIGH-COURT-LAHORE
MUHAMMAD ASHRAF VS UNITED BANK LIMITED through President
- 41—Constitution of Pakistan (1973), Art.199—Constitutional petition—Maintainability—Bank under effective control of the State Bank of Pakistan, so far its banking business is concerned, discharges pub is functions, receives and transacts in public money in trust for public interest—Such functions of the Bank in substance are instrumentalities and functions of the State/Federation and are thus, subject to judicial review of High Court in its constitutional jurisdiction.
2009 CLD 361 LAHORE-HIGH-COURT-LAHORE
PETROSIN VS FAYSAL BANK
Ss.3-A, 25 & 41—Circulars issued by State Bank—Binding effect stated.
2004 CLD 1680 LAHORE-HIGH-COURT-LAHORE
M.D. TAHIR, ADVOCATE VS DIRECTOR, STATE BANK OF PAKISTAN, LAHORE
—Ss.33, 33-A [as added by Banking Companies (Amendment) Act (XIV of 1997)], 41(1) & 41-A—State Bank of Pakistan Circular No.22, dated 30-6-2003–State Bank of Pakistan Act (XXXII of 1956), S.3—Constitution of Pakistan (1973), Arts.4, 9; 14, 25 & 199
2003 SCMR 837 SUPREME-COURT
ASLAM HASSAN QURESHI VS GOVERNOR, STATE BANK OF PAKISTAN
—-S.41(A)—Constitution of Pakistan (1973), Art.185(3)—Employee of a .private Bank—Termination from service–Proceedings under S.41(A) of Banking Companies Ordinance, 1962—Failure to fix period during which the Bank employee was to remain dissoci
2003 CLD 1797 KARACHI-HIGH-COURT-SINDH
SULEMAN VS MANAGER, DOMESTIC BANKING, HABIB BANK LTD.
—-S.41—Constitution of Pakistan (1973), Arts. 199(1)(a)(c), 23 & 24—Freezing of Bank accounts by Banking Company at, directions of State Bank of Pakistan—Constitutional petition against such act of Banks by petitioner seeking enforcement of his Co
2002 CLD 102 KARACHI-HIGH-COURT-SINDH
MESSRS UNIVERSAL LEASING CORPORATION LTD. VS STATE BANK OF PAKISTAN
—-S.41—Constitution of Pakistan (1973), Art. 199–Constitutional petition—Banking Company—Directions issued by State Bank of Pakistan in exercise of powers under S.41 of the Banking Companies Ordinance, 1962–Legality—Directions issued by State
2001 MLD 1955 LAHORE-HIGH-COURT-LAHORE
ALLIED BANK OF PAKISTAN LIMITED, FAISALABAD VS ASISHA GARMENTS
Banking Companies Ordinance 1962 —-Ss. 41 & 42—State Bank of Pakistan Circular No. 32, dated 26-11-1984—Islamisation of banking system—Mark-up on mark-up, charge. of—Mark-up over mark-up cannot be charged/claimed by Bank, under Circular No.32, dated 26-11-1984, issued by State Bank of Pakistan, under Islamic mode of financing.
2001 YLR 2259 KARACHI-HIGH-COURT-SINDH
MUHAMMAD HUSSAIN VS MUHAMMAD AFSAR
Banking Companies Ordinance 1962 —-S.41—Civil Procedure Code (V of 1908), S.11 & O. VII, R.11—Specific Relief Act (I of 1877), Ss. 42 & 54—Res judicata—Proof–Suit for declaration and perpetual injunction—Maintainability—Suit was sought to be dismissed on the ground that Constitutional petition earlier filed by the plaintiff alongwith others for the same relief and on the same cause of action having been dismissed, suit filed by the plaintiff on the same cause of action was barred under S.11 of C. P. C. being hit by principles of res judicata—In dismissal order of earlier Constitutional petition the main ground was non-inclination of the High Court to enter into factual controversies as partially displayed in said petition and the rights and liabilities of the parties as contemplated in the relevant section of the Banking Companies Ordinance, 1962 including S.41 thereof were not adjudicated by the High Court in said petition and mere certain observations were given therein—Said observations by no stretch of imagination could amount to adjudicate the rights and liabilities of the parties in terms of S.11, C. P. C.
2001 YLR 1549 KARACHI-HIGH-COURT-SINDH
UNITED BANK LTD., KARACHI VS GRAVURE PACKAGING (PVT.) LTD.
Banking Companies Ordinance 1962 —-Ss.41 & 42—BCD Circular No. 13, dated 20-6-1984—Introduction of the Circulars by State Bank of Pakistan—Islamisation of Banking System in Pakistan—Commencement of transitional period—Judgment by Supreme Court in case of Dr. M. Aslam Khaki reported as PLD 2000 SC 225—Applicability—Laws by which the Banking business was to be conducted was set moving from the year 1962, and a concrete law was enforced from 1-1-1985—BCD Circular No.l3, dated 20-6-1984, had stated the transitional period given to the Banks for the purpose of transition from old system of banking into the Islamic System of Banking—Contention that the judgment by the Supreme Court ix case of Dr. M. Aslam Khaki would be operative from the date mentioned in it as regards the banking transition was repelled.
2001 YLR 81 KARACHI-HIGH-COURT-SINDH
HABIB BANK LIMITED VS BALOCHISTAN GUM INDUSTRIES (PVT.) LIMITED
Banking Companies Ordinance 1962 —-Ss. 41 & 42—B.C.D. Circular No.32, dated 26-11-1984 by State Bank of Pakistan—Expression “interest wherever charged”, as used in B. C.D. Circular No. 32, dated 26-11-1984—Meaning—Such expression means all interest, whether it be on foreign loan or otherwise.
2001 MLD 1351 KARACHI-HIGH-COURT-SINDH
HABIB BANK VS QAYYUM SPINNING LTD.
Banking Companies Ordinance 1962 —-Ss.41 & 42—BCD Circular No.13, dated 20-6-1984—BCD Circular No.32, dated 26-11-1984—Introduction of Circulars by the State Bank of Pakistan—Object and scope- –Circulars required the shifting of the then banking system based or. ‘Interest’ into banking based on Islamic mode of financing—Concept of BCD Circular No.13, dated 20-6-1984 was that the same was for the purpose of Islamisation of Banks which was part of the global change in Pakistan for Islamisation of the economy in generality–BCD Circular No. 13, thus, came into existence to place the Banks in line for their transformation.
1999 SCMR 1229 SUPREME-COURT
FEDERATION OF PAKISTAN VS SHAUKAT ALI MIAN
—-Preamble—Banking Companies Ordinance (LVII of 1962), Ss. 25, 41 & 91-A—State Bank of Pakistan Circular No.23 dated 2-7-1998—Constitution of Pakistan (1973), Arts. 185 (3) 2, .2A, 4, 7, 15 to 19, 24, 25 & 150–Modification of rules, relating to t
1999 PLD 1026 SUPREME-COURT
FEDERATION OF PAKISTAN VS SHAUKAT ALI MIAN
Banking Companies Ordinance 1962 S. 2—Protection of Economic Reforms Act (XII of 1992), S.5(4)—Banking Companies Ordinance (LVII of 1962), Ss.25 & 41—State Bank Circular No.23 dated 2-7-1998—Restriction on withdrawal of foreign exchange from foreign currency account by account holders—Effect—State Bank of Pakistan had no power under S.25 or S.41, Banking Companies Ordinance, 1962 to direct the foreign currency account holders whose foreign currency deposits were accepted. as collateral security against the local loans by the various Banks to provide fresh security in place of foreign currency deposits or to liquidate the liability–Relevant portion of State Bank of Pakistan Circular No.23 dated 2-7-1998 being confiscatory in nature interfering with contractual rights and obligations under the concluded contracts, inasmuch as that prohibited the use of the foreign currency deposits within Pakistan as a security which was already accepted by the Banks against the loans prior to the issuance of Circular No.23 dated 2-7-1998, without acquiring the foreign currency deposits under appropriate provisions of law against the payment of compensation, could not sustain.
1999 PLD 139 LAHORE-HIGH-COURT-LAHORE
ZAHOOR AHMAD VS FEDERATION OF PAKISTN
Ss. 25 & 41—Foreign Exchange Circular No.23 of 1998 dated 2-7-1998–Protection of the Economic Reforms Act (XII of 1992), Preamble—Constitution of Pakistan (1973), Arts. 199, 4 & 2A—Vires of Foreign Exchange Circular No.23 of 1998 dated 2-7-1998 issued by State Bank of Pakistan—Provisions of Ss.25 & 41, Banking Companies Ordinance, 1962 are controlling and regulatory in nature—Power of State Bank to control advances by Banking Companies and to give directions—Controlling powers of State Bank of Pakistan includes giving of the instructions of the nature of Foreign Exchange Circular No.23 of 1998 dated 2-7-1998—Word “control” is a term of art and the power to control includes the power to prohibit, to restrict or to check—Circular No.23 of 1998 dated 2-7-1998 issued by State Bank of Pakistan having been validly and lawfully issued actions taken through said circular were covered by the provisions of the Banking Companies Ordinance, 1962—Principles.
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.
1997 MLD 3006 LAHORE-HIGH-COURT-LAHORE
FALAK SHER VS NATIONAL BANK OF PAKISTAN
—-Ss. 28 & 41—Constitution of Pakistan (1973), Art. 199—State Bank of Pakistan, Policy Instructions, Art. 12—Constitutional petition—Closure of a branch by a nationalised Bank which was not profitable—Validity—Petitioner did not come within
1995 CLC 963 LAHORE-HIGH-COURT-LAHORE
RAEES AZAM KHAN VS KHALID LATIF
Ss. 83 (1-A) & 41 (A)—Constitution of Pakistan (1973), Art. 199–Petitioners seeking direction of High Court to State Bank of Pakistan to make complaint in writing to High Court for trial of Chief Executive of the Bank in question, for having misused his office for gaining undue benefits for himself and members of his family—Governor State Bank of Pakistan to whom complaint was addressed by petitioners had stated in his order that material placed before him by petitioners had fully been considered but conditions prescribed by law were not satisfied entitling and empowering State Bank to take action in the matter—Manifestly it was not for High Court to make such direction, and that “too in a premature manner—Petitioners, for such purpose should first approach State Bank for the fact that their earlier application was made under S. 41-A, Banking Companies Ordinance, 1962 and the Governor had taken cognizance thereof, under that section and not under S. 83 of the Ordinance—Petitioners would be at liberty to address such complaint afresh within 2/3 weeks, and Governor State Bank would make a well-considered, objective and honest determination, in accord with the larger interests of the institution and the State, within a stipulated period—In case of default in performance of statutory duty, patent on record on the part of the Governor, petitioners, if they felt aggrieved and were really wronged, and were not actuated by malice and ill-will, or were not prompted or propelled by vested interests or evil designs, could again approach the High Court for redress of their grievance, if any.
1982 PLD 513 KARACHI-HIGH-COURT-SINDH
SHAMS TEXTILE MILLS LTD. VS FEDERATION OF PAKISTAN
S– 3-A [as inserted by Banking Companies (Amendment) Act (XXX of 1972)] & Ss. 25 & 41-Application of Ss. 25 & 41 of Ordinance LVII of 1962 to financial institutions-Section 3-A of Ordinance LVII of 1962 having given State Bank effective control over banking companies and empowered State Bank to give banking companies directions by applying Ss. 25 & 41 and Pakistan Industrial Credit and Investment Corporation Ltd. being a financial institution, such Corporation as well as other financial institutions, held, equated with banking companies for purposes of financial and administrative control of State Bank.