SC directs borrowers who intend to make deposits pursuant to option No.1 must do so through pay orders/cheques to be deposited with the registrar of this court
Islamabad, August 09, 2018 (PPI-OT): On 30.06.2018, a two member bench, headed by Honourable Mr. Justice Mian Saqib Nisar, Chief Justice of Pakistan, and comprising Honourable Mr. Justice Munib Akhtar heard Suo Motu Case No.26 of 2007 with HR Cases and Constitution Petition No.64 of 2009 etc., regarding Deadbeats got loans of 54 billion written off and gave options to the borrowers i.e.
7. In view of the above, it is decided that in the first instance all of the borrowers included in the 222 cases identified by the Commission, be given an option (herein after the “first option”) to deposit with this Court an amount equal to 75% of the differential between the “amount sanctioned” and “amount recovered”. If a borrower deposits this amount within a timeframe and in a manner to be fixed by the Court, then no further proceedings will be taken against it. In the case of all those borrowers that do not avail the first option, their cases will be referred to the Banking Court (herein after the “second option”).
The Banking Court will then reconsider the entire case within such period as may be fixed by this Court, i.e., will consider whether the amount written off/waived (as identified by the Commission in relation to the said borrower in the subsequent columns of the table relating to it) was done in a lawful manner and not by way of any abuse of power or the law. For such purpose the Banking Court shall be entitled and bound to look behind the position as may have emerged in consequence of the application to Circular 29 that was issued by the State Bank of Pakistan in relation to written off loans.
More particularly, this exercise shall be carried out within the parameters laid down in section 8(1) of the Financial Institutions (Recovery of Finances) Ordinance 2001. It is clarified that since this exercise will be carried out under the directions of this Court in exercise of suo moto jurisdiction, sub-section (2) of section 8 shall have no application, and the same shall likewise apply in respect of any question of limitation. (There is in any case a requisite power in the Banking Court under the 2001 Ordinance.) Furthermore, the onus shall lie on the borrower to establish affirmatively that the written off/waived loans/ finances/ advances did not come within the parameters of section 8(1).
The Banking Court will be at liberty to issue notice to the concerned financial institution and/ or the State Bank (or any other person) if it so deems appropriate but it shall not be bound to do so. In case the borrower fails or refuses to appear before the Banking Court it shall proceed against it ex parte and in such a situation shall be entitled to assume that the waived off amount(s) come within the parameters of section 8(1). If the Banking Court concludes that any amount is recoverable, it shall make an appropriate order, which shall be deemed to be the decree of the court and shall be executable accordingly and also in terms as herein after stated.
8. In respect of any borrower that avails the second option, its properties and assets shall be deemed attached with immediate effect from such date as may be specified by this Court, as shall the properties and assets of all persons who are the directors or partners of the borrower and all persons having a majority or controlling interest therein (whether as shareholder or owner). In respect of any such borrower, if ultimately the Banking court concludes that any amount is recoverable, then in addition to such proceedings by way of execution that may be taken, any property or assets to which the order of attachment hereinabove may apply shall also be liable to be disposed off, and in such manner as the Banking Court may deem appropriate, in order to make full recovery.
This is however subject to one condition. If a borrower that chooses to avail the second option (or to which the latter applies) deposits with this Court the differential amount referred to above in relation to the first option (i.e., 75% of the difference between the “amount sanctioned” and “amount recovered”) within the stipulated period then such borrower may make an appropriate application to the Banking Court and on such application, if that Court is satisfied that the amount has been so deposited, it may make an order declaring that the order of attachment shall cease to operate in relation to such borrower and its directors/partners/controlling persons. The amount so deposited will be subject to adjustment or return, as the case may be, depending on the outcome of the proceedings before the Banking Court.
9. Learned counsel for some of the borrowers appearing before us have contended that their instructions are that the first option is not to be availed and the facts of their cases are such that the matter ought not to be regarded as falling within the second option. Such learned counsel shall be heard by this Court in relation to their respective cases but subject to following conditions. Firstly, the case sought to be made out by learned counsel must be so clear and obvious that it must be regarded as floating on the face of the record. No other case, which requires any deeper consideration of the record, will be entertained.
Secondly, if in relation to any borrower learned counsel fails to make out a case in this regard, then the case of the said borrower shall be deemed referred to the Banking Court in terms of second option, but in such case the borrower shall not have an opportunity of making a deposit in terms as aforesaid i.e. the order of attachment in such cases shall apply immediately and in full from the specified date and shall continue till the termination of the proceedings before the banking court.
On 02.08.2018, the case again came for hearing before a three member bench, headed by Honourable Mr. Justice Mian Saqib Nisar, Chief Justice of Pakistan, and comprising Honourable Mr. Justice Umar Ata Bandial and Honourable Mr. Justice Ijaz Ul Ahsan and the Honourable Bench passed the following order:
“The representatives of the banks, who were required to appear, are present. They state that the amounts contained in the report of the Commission are correct and they endorse the same. However, in order to find out how many out of the 222 cases of persons/organizations/companies which were recommended by the Commission to be fit for further investigation, are interested in exercising option No.1 mentioned in our previous order(s), a meeting was convened under our orders.
We have been informed that at present, only 26 out of the 222 borrowers are interested in exercising option No.1 (a list whereof has been placed on the record as mark ‘A’). We have however been apprised that some other borrowers may also be interested in availing the first option. Therefore, some more time may be granted to enable them to decide whether or not they wish to exercise option No.1. Accordingly, we grant one final opportunity to all those who wish to exercise option No.1 to apprise this Court of their final decision within 10 days’ from today.
2. It may be clarified that on the next date of hearing, we will consider the possibility of modifying the other two options to the extent that the outstanding amounts, as determined by the Commission, along with mark-up thereon, may be treated as decrees passed by Courts of competent jurisdiction. The amounts found payable by the Commission considering that the same were unlawfully got written off may be recovered from the borrowers as arrears of land revenue from the entities, the original borrowers and the guarantors. Such decree shall also be enforceable against mortgaged properties.
3. The borrowers who intend to make deposits pursuant to option No.1 must do so through pay orders/cheques to be deposited with the Registrar of this Court. He shall open a separate account for the said purpose and deposit the amount(s) therein. This order shall be publicized via press release in the print and electronic media.”
The Court has fixed the matter for hearing on 16.8.2018.
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