Law: Financial Institutions (Recovery of Finances) Ordinance, 2001

Section: 2(a),2(c),7,10

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---   ----Ss. 2(a), 2(c), 7 10---Suit for recovery---’Financial Institution’--- Definition--- ‘Customer’, definition of---Scope----’Finance’ and ‘investment’, distinction---Jurisdiction of Banking Court---Application for leave to defend was dismissed and suit was decreed ---- Contention of the defendant was that the amount disbursed by the plaintiff House Building Finance Corporation in its favour was not a ‘finance facility’ as the plaintiff House Building Finance Corporation was not competent to lend money according to its mandate and said disbursement was in fact an investment made by the plaintiff in the business of the defendant and therefore no relationship of ‘customer’ and ‘financial institution’ existed between the parties, hence the suit was not maintainable---Held, that issuance of letter by the defendant to the plaintiff accepting terms of borrowing and disbursement, amounted to sanction of a finance facility covered under the Financial Institutions (Recovery of Finances) Ordinance, 2001---Burden of proof as to whether disbursement was merely an investment and not a finance facility, rested upon the defendant, who could not discharge the same---Defendant in its documents had itself shown the amount as borrowing from a financial institution, and therefore, transaction in the present case was between a ‘customer’ and a ‘financial institution’---Word ‘investment’ in common parlance meant an expenditure to acquire property or assets to produce revenue or to contribute capital in the business carried by someone on profit or loss; whereas in the present case no such expenditure had been made by the plaintiff to acquire any asset/property; therefore such disbursement could not be termed as an ‘investment’---Impugned order of Banking Court could not be interfered with---Appeal was dismissed, in circumstances.    Karachi Electric Provident Fund v. National Investment (UNIT) Trust and others 2003 CLD 1026; National Bank of Pakistan v. S.G. Fibre Limited and others 2004 CLD 689; Messrs Speedway Fondmetall Pakistan Ltd. v. NIB Bank Ltd. (Formerly PICIC) 2010 CLD 896 and…

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