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

Section: 2

(a) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)---Ss. 2(d) & 9-Underwriting agreement--Banking Court, jurisdiction of-Plaintiff had underwritten to purchase un-subscribed shares of defendant company wit any condition of buyback arrangement provided in it---Such a management was not incorporated in the agreement as the def company could not legally buyback their own un-subscribed shares from the plaintiff purchase of such shares of defendant company, the status of plaintiff was that of shareholder of defendant company---investment so made by the plaintiff was in line with their underwriting agreement having particular features of getting return in the shape of dividends, chance to earn more profits or to suffer losses with .fluctuation of share prices, with further option to negotiate or sale of the shares in stock exchange---Plea raised by the defendant was that underwriting agreement was not covered under the provision of finance under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, the suit was not maintainable---Validity---Though the definition of `finance' as given under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was very exhaustive and covered wide range of transactions involving direct or indirect financial implications/interactions but it did not make any reference of `underwriting agreement' or `shares' which were common terms used for specie intendment in the field of commercial activities---Neither the act of underwriting nor the act of subscription of shares of a company by a financial institutions could be categorized as ,finance as visualized under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Suit filed by the plaintiff under Financial Institutions (Recovery of Finances) Ordinance, 2001, could not be entertained under the Banking jurisdiction of High Court-High Court directed the office to treat it as a suit instituted in the original civil jurisdiction-Suit was converted into ordinary civil suit accordingly. Avari Hotels Limited and others v. Investment Corporation of Pakistan and six others 2000 YLR 2407 and Bank Al-Falah…

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