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

Section: 3

  Core Summary This case concerns the execution of a banking decree and the correct calculation of the "cost of funds" under Section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The Executing Court directed that the cost of funds should be calculated only on the decreed principal amount of Rs. 9.69 million. Allied Bank challenged this order, arguing that the cost of funds should instead be calculated on the outstanding liability at the date of default (28-02-2014) as required by law and the original decree. The Islamabad High Court held that although the impugned order was interlocutory, it affected the decree-holder's substantive rights. Therefore, the Court exercised its supervisory jurisdiction, converted the appeal into a Civil Revision, and examined the legality of the order. The High Court found that the Executing Court had misinterpreted Section 3, exceeded its jurisdiction by effectively modifying the decree, and wrongly recalculated the cost of funds. Consequently, the High Court set aside the Executing Court's order and allowed the Civil Revision. It also directed the Member Inspection Team (MIT) to examine the conduct of the Executing Court due to serious procedural irregularities. Core Legal Points 1. Nature of Cost of Funds Cost of funds accrues from the date of default until realization under Section 3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. It is linked to the customer's obligation existing on the date of default, not merely the amount eventually decreed. 2. Powers of Executing Court An Executing Court cannot modify, vary, or rewrite a decree. Its duty is only to execute the decree as passed. 3. Appeal Against Execution Order Although Section 22(6) bars appeals against interlocutory orders, this bar does not apply where an execution order affects substantive rights granted by the decree. 4. Supervisory Jurisdiction The High Court relied upon: Section 115 CPC (Revisional Jurisdiction) Section 151 CPC (Inherent Powers) Article 203 of the Constitution These powers allow correction of jurisdictional errors committed during execution proceedings. 5. Procedural…