2016 PLP 1084 (CLD)

SYED SAEEDUDDIN NASIR, J.

Through these Constitutional Petitions the petitioner has sought direction to the respondent No.1, the State Bank of Pakistan to remove the name of the petitioner from CIB/eCIB (Credit Information Bureau).

2. The grievance of the petitioner as stated in the memos of petition is that the name of the petitioner has been placed on CIB by the respondent No.1 upon instigation of respondent No.4 without affording any opportunity of being heard.

3. Mr. Sami Ahsan, the learned counsel for the petitioner has inter alia argued that on account of the fact that the name of the petitioner is appearing on CIB, all the Banks working under the respondent No.1 have stopped extending banking facilities to the petitioner and doing business with him, resulting in serious damage to the business and personal reputation of the petitioner, the business of the petitioner has come to a total standstill.

4. He next contended that the respondent No.1 did not serve a show cause notice upon the petitioner, and did not afford an opportunity to the petitioner of being heard before putting the name of the petitioner on the CIB. After receiving the report from the respondent No.4 bank about the account of the petitioner, the respondent No.1 arbitrarily put the name of the petitioner on CIB among the list of defaulters. The learned counsel for the petitioner relied upon 2006 CLD 1191 [Lahore] - M/s. Yousuf Sugar Mills v. Trust Leasing Corporation.

5. The learned counsel for the respondents Mr. S.M. Kazim, Advocate, while controverting the arguments of the learned counsel for the petitioner has submitted that the respondent No.4 is required to furnish the State Bank of Pakistan with the data and information about their customers whose over all liabilities to the bank exceed the prescribed limit by the State Bank of Pakistan. The statements are to be regularly submitted to the Director, Banking Control Department, State Bank of Pakistan, Central Directorate, Karachi. Therefore, by providing information about the corporate conduct of the petitioner and his liabilities towards the bank the respondent No.4 has not transgressed any legal or Constitutional provision.

6. He next contended that under section 9-A of the State Bank of Pakistan Act, 1956, as well as section 25-A of the Banking Companies Ordinance, 1962, the respondent No.1 can require the Banking Companies through BCD Circulars, to furnish the data and information about their customers and their financial status available with them so that the behavior of a delinquent customer could be made known to the Banking sector and such a customer could not defraud any other Banking Company.

7. The learned counsel for the respondents in order to substantiate his arguments has relied upon the case of M/s. Abdul Aziz Nawab Khan and Co. v. Federation of Pakistan reported in 2006 CLD 55, Karachi, which was upheld by the Hon'ble Supreme Court of Pakistan in the case of M/s. Abdul Aziz Nawab Khan and Co. v. Federation of Pakistan reported in 2006 CLD 1080. The learned counsel further placed reliance on Azam Wazir Khan v. IDBP reported in 2013 SCMR 678.

8. We have heard the learned counsel for the parties perused the material available on the record of the case and examined the case law with the able assistance of the counsel.

9. The main contention of the petitioner is that his name has been placed on the CIB by the respondent No. 1 upon details of his loan being provided by the respondent No. 4 bank to the respondent No.1, without affording the petitioner an opportunity of being heard. The case law relied upon by the learned counsel for the petitioner 2006 CLD 1191 [Lahore] supra, it is held that the name of the petitioner cannot be placed on CIB without affording him an opportunity of being heard, whereas the case law relied upon by the learned counsel for the respondents Mr. S.M. Kazim a contrary view has been adopted. Upon careful examination of judgment relied upon by the learned counsel for the petitioner we have observed that the facts and circumstances of the same were utterly different from the instant petitions.

10. In the aforesaid case law it was held that placing the name a defaulter of a Leasing Company on Credit Information Bureau List by the State Bank of Pakistan was illegal inasmuch as under section 25-A of the Banking Companies, 1962, it can collect information only from the Banking Companies and not from the Leasing Companies, on account of the fact that the Banking Company is under the control of State Bank of Pakistan, while the Leasing Company is under the control of Securities and Exchange Commission of Pakistan (SECP). Therefore, it was held that placing the name of the petitioner on CIB, who was a customer of a Leasing Company, by the State Bank of Pakistan, without any information being provided by the Leasing Company at the direction of (SECP) was illegal.

11. In the case of M/s. Abdul Aziz Nawab Khan & Co. v. Federation of Pakistan supra, which was upheld by the Hon'ble Supreme Court of Pakistan in 2006 CLD 1080, it was held that: "Circular No.6 did not encroach upon any of the fundamental rights of the petitioner. With regard to the contention that one sided information/intimation was given, it was observed that the same was the requirement of the Circular and no illegality or irregularity was committed by respondent No.4 in doing so."

12. In the case of Azam Wazir Khan v. IDBP supra it is held that "Main function of State Bank of Pakistan was to ensure and secure stability of the financial system in the country and for such purpose it issued guidance and advices from time to time in the shape of Banking Control Department (BCD) Circulars." "Such Circulars issued by the State Bank of Pakistan were binding upon all concerned." It is further held that the State Bank of Pakistan, under section 25-A of the Banking Companies Ordinance, 1962 has got the power to collect and furnish credit information from any Banking Company. For the sake of convenience the relevant clause 5 of BCD Circular No.6 of 1990 is reproduced as under: "Clause (5): Now, therefore, by virtue of the powers conferred upon the State Bank under section 25(A) read with section 3(A), of the Banking Companies Ordinance, you are directed to furnish the State Bank with data and information, as per Forms CIB-II annexed herewith. The first of the statements shall be as of 31-12- 1989. The statements shall be regularly submitted to the Director, Banking Control Department, State Bank of Pakistan, Central Directorate, Karachi on calendar quarterly basis and must positively reach the State Bank within 15 days of the close of the quarter concerned. Since the statements as of 31.12.1989 are the first of their kind involving collection of permanent data more than the normal time may be consumed in their compilation. The banks/NBFIs are, therefore, allowed to complete them in a period of one month form the date of receipt of this circular."

13. Upon careful examination of BCD Circular No.6 of 1990, which was issued by the respondent No.1 in exercise of its powers under Section 25-A of the Banking Companies Ordinance, 1962, read with Section 93(C) of the said Ordinance, which was followed by Circular No.4 of 2003 and Circular No.8 of 2013, we see that a mechanism has been devised by the respondent No.1, State Bank of Pakistan for collecting information from all Banks/NBFIs about their customers and their business status available with them. The sole purpose of aforesaid BCD Circular was to create one common source of information for all financial institutions from which they could collect the information about the financial status and conduct of transacting business of a particular customer/their customers with other Banks, in order to enable all the financial institutions/banks/NBFIs to adopt their future course of business transaction with regard to advancing finance facilities to such customers whose names appear on the CIB. The only requirement of BCD Circular No.6 of 1990, was to intimate the authorities about default and liabilities of borrowers, and that in no way can encroach upon any one of the fundamental rights of the petitioner envisaged by the Constitution of Pakistan, 1973.

14. In our view the respondent No.4 bank while informing the State Bank of Pakistan about financial status of the petitioner in compliance of clause 5 of BCD Circular No.6 of 1990, which was issued by the respondent No.1 in exercise of its powers under section 25-A of the Banking Companies Ordinance, 1962, read with section 93(C) of the said Ordinance, the respondent No.1 issued the aforesaid Circular, which was followed by Circular No.4 of 2003 and Circular No.8 of 2013, upon which the respondent No.1 had placed the name of the petitioner on CIB, had not violated any Constitutional provisions. For the aforesaid reasons, we hold that the instant petitions are misconceived and without any substance, therefore, we dismiss the same in limini at Katcha Peshi stage along with all listed applications, with cost of Rs.10,000/- for each petition, to be paid by the counsel for the petitioner, which shall be deposited with the Sindh High Court Bar Library for the purchase of law books. SL/W-4/Sindh Petition dismissed.