Whatsapp

" A FUNDAMENTAL FLAW IN THE BANKING COMPANIES (RECOVERY OF LOANS, ADVANCES, CREDITS AND FINANCES) ACT, 1997 A FUNDAMENTAL FLAW IN THE BANKING COMPANIES (RECOVERY OF LOANS, ADVANCES, CREDITS AND FINANCES) ACT, 1997   By   Sohaib Khalid Ishaque, Advocate, Sindh High Court   The Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was legislated by the Parliament to consolidate and re enact, with some modifications, the Banking Companies (Recovery of Loans) Ordinance, 1979 and the Banking Tribunals Ordinance, 1984.   Whereas the Special Banking Courts set up under the 1979 Ordinance had jurisdiction to deal with cases involving both interest and non‑interest based finance provided by banking companies, the 1984 Ordinance was promulgated to establish special banking tribunals to exclusively try cases involving non‑interest based finance. Under section 5(3) of the 1984 Ordinance, the jurisdiction of other Courts was barred with respect to any matter to which the jurisdiction of banking tribunals extended under the Ordinance.   The 1979 and 1984 Ordinances were enacted for the specific purpose of facilitating recovery of loans, credits and finance provided by banking companies as it was felt that the ordinary remedy of filing recovery suits before Civil Courts was not efficacious for such purpose. Both these Ordinances, obviously in view of the intention behind their promulgation, were heavily inclined in favour of the lenders, and contained drastic provisions in an attempt to provide effective and expeditious means of recovery for banking companies and financial institutions. The 1979 law followed the summary procedure laid down under Order XXXVII of the Civil Procedure Code which requires the defendant to seek…