2005 PLP 1790 (CLD)

MIAN HAMID FAROOQ, J.

Instant appeal proceeds against judgment dated 14-5-2005, whereby the learned Judge Banking Court, after finding that the Banking Court "cannot deal with the case against Punjab Small Industries Corporation", returned the plaint in the appellant's suit to be presented before the Court of competent jurisdiction.

2. Facts in brief are that the appellant filed suit for redemption, against the respondent-Corporation, before the learned Judge Banking Court, who issued summons, as required under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred as Ordinance, 2001). Pursuant to the summons, the respondent-Corporation filed application seeking leave to defend the suit. The learned Judge Banking Court, after hearing the parties on the said application, found that the respondent-Corporation does not fall within the definition of "financial institution", therefore, the Banking Court has no jurisdiction to adjudicate upon the suit, returned the plaint to be presented before the Court of competent jurisdiction, vide impugned judgment dated 14-5-2005, hence the present appeal.

3. Despite service of the respondent for today, none has entered appearance to defend this appeal, hence it is proceeded ex parte.

4. Learned counsel for the appellant submits that Punjab Small Industries Corporation falls within the definition of "financial institution", therefore, the impugned judgment is not sustainable in law. He has relied upon Punjab Small Industries Corporation and 2 others v. Haji Cold Storage and another 2004 CLD 1424.

5. We have heard the learned counsel and examined the available record. We find from the impugned judgment that the sole ground, on the basis of which the plaint was returned, is that the respondent-Corporation cannot be termed as Investment Bank within the meaning of section 2(a) (ii) of Ordinance, 2001, therefore, the Banking Court cannot deal with the case of Punjab Small Industries Corporation. The Division Bench of this Court in the case of Punjab Small Industries Corporation (ibid), relied upon by the learned counsel for the appellant, after reproducing the provisions of Banking Companies (Recovery of Loans, Advance. Credits and Finances) Act, 1997 and Punjab Small Industries. Corporation Act, 1973, has held that Punjab Small Industries Corporation is a "Banking Company". It appears appropriate to reproduce the relevant portion of the judgment, which reads as follows:-- "Mere reading of aforesaid provisions of the two Acts in paramateria makes it crystal clear that appellant No.1 is covered under the definition of section 2(a)(i) of Act XV of 1997. We are fortified by the law laid down in Ghulam Sarwar v. S.H.O. 1999 Law Notes

560. Therefore, contention of the learned counsel of the appellants that appellant No.1 is not mentioned in the schedule issued under section 2(a)(iii) has no force. It is pertinent to mention here that the Competent Authority has mentioned certain exceptions in schedule issued under section 2(a)(iii) of course of the categories which are not covered under section 2(a)(i) and section 2(a)(ii)." For the reasons recorded and the findings given in the said judgment we are also persuaded to hold that Punjab Small Industries Corporation is a "financial institution" and we are not inclined to take a contrary view.

6. It can be argued that the said judgment was rendered in view of the provisions of Act XV of 1997, wherein the term "Banking Company" has been defined, whereas the present case is governed by the provisions of Ordinance No.XLVI of 2001. In the later Ordinance the term "Banking Company" has not been defined and instead thereof the definition of "financial institution" has been given. At this juncture it appears necessary to reproduce the definitions of "Banking Company" under section 2(a) of Act XV of 1997 and of "financial institution" as envisaged in section 2(a) of Ordinance, 2001, which reads as follows:

2(a) "banking company" means:- (i) Any company whether incorporated within or beyond Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan and includes a Government savings bank; (ii) A modaraba or modaraba management company, leasing company, investment bank, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company, whether industrial, agricultural or development; and (iii) Any company authorized by law to carry on any similar business specified in the Schedule to this Act". (a) "Financial institution" means and includes:-. (i) Any company whether incorporated within or outside Pakistan which transacts the business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan and includes a Government saving bank, but excludes the State Bank of Pakistan; (ii) A modaraba or modaraba management company, leasing company, investment bank, venture capital company, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company; and (iii) Any company authorized by law to carry on any similar business as the Federal Government may by notification in the official Gazette, specify;" It is evident from the perusal of the definitions of "Banking Company", as given in section 2(a) of Act XV of 1997, and "financial institution" as contained in section 2(a) of Ordinance No.XLVI of 2001, as reproduced above, that these definitions are almost identical and there is no substantial difference between the two. In view whereof the judgment in the case of Punjab Small Industries Corporation (ibid) is also applicable in the facts and circumstances of the present case.

7. In the above perspective, we are persuaded to hold that the respondent-Corporation was not only covered under the definition of the "Banking Company" as given in Act XV of 1997, but also falls in the definition of "Financial Institution" as provided under Ordinance No.XLVI of 2001.

8. In the above backdrop, we have examined the impugned judgment and find that the learned Judge Banking Court has committed grave legal error in rendering the said judgment, which needs to be rectified, thus, we are inclined to interfere in the impugned judgment. Upshot of the above discussion is that the present appeal is allowed and the impugned judgment dated 14-5-2005, is set aside with no order as to costs. Resultantly the appellant's suit for redemption and the respondent's application for the grant of leave to defend the suit shall be deemed to be pending before the learned Judge Banking Court, who shall decide the both after hearing the parties and of course, in accordance with law. M.B.A./A-572/L Case remanded.