Ch. Muhammad Iqbal, J. Through this single judgment, I intend to decide the titled writ petition alongwith Writ Petition No.7740/2022 as common questions of law and facts are involved in this case.
Writ Petition No.7737/2022
2. Brief facts of this case are that Muhammad Tariq, real son of the petitioner, obtained loan from U-Microfinance Bank, Bahawalpur. The borrower failed to return the loan amount. The Manager Recovery Entral-2, U Microfinance Bank, Bahawalpur made request to the Additional Deputy Commissioner (Revenue), Bahawalpur for recovery of the loan amount from the borrower, including the son of the petitioner, under Section 114 of the Land Revenue Act, 1967 [hereinafter referred to as "Act"]. On receipt of above request, the Additional Deputy Commissioner (Revenue), Bahawalpur vide order dated 05.01.2022 accorded sanction to recover the defaulted loan amount under Section 114 of the Act ibid. In consequence of the order dated 05.01.2022, the Tehsildar/Assistant Collector-I, Bahawalpur Saddar vide order dated 07.10.2022, while invoking provision of Section 82(5) of the Act ibid, sent Muhammad Tariq, son of the petitioner, to civil prison.
Writ Petition No.7740/2022
3. In this case, the Tehsildar/Assistant Collector-I, Bahawalpur Saddar vide order dated 07.10.2022, while invoking provision of Section 82(5) of the Act ibid, sent Muhammad Imran Akbar, son of the petitioner, to civil prison in compliance of the order dated 05.01.2022 passed by the Additional Deputy Commissioner (Revenue), Bahawalpur for recovery of the default amount of loan taken by him from U Microfinance Bank, Bahawalpur.
4. I have heard the arguments of learned counsels for the parties and have gone through the record with their able assistance.
5. Under Section 3 of the Microfinance Institution Ordinance, 2001, a microfinance institution is not deemed to be a banking company and the Banking Court has no jurisdiction to adjudicate the matter. The provision of Section 3 ibid is reproduced as under:- "3. Applications of other laws.__ (1) The provisions of this Ordinance shall be in addition to, and, save as hereinafter provided, not in derogation of, any other law for the time being in force.
(2) Save as otherwise provided in this Ordinance, the Banking Companies Ordinance and any other law for the time being in force relating to banking companies or financial institutions shall not apply to microfinance institutions licensed under this Ordinance and microfinance institution shall not be deemed to be a banking company for the purposes of the said Ordinance, the State Bank of Pakistan Act, 1956 (XXXIII of 1956), or any other law for the time being in force relating to banking companies.
(3) Save as expressly provided in this Ordinance, the provisions of this Ordinance shall have effect notwithstanding anything contained in any rules, regulations, memoranda or articles of association of a microfinance institution or in any resolution passed by such institution in its general meeting or by its Board of Directors, whether the same be applied, executed or passed before or after the commencement of this Ordinance and any provision contained in any rules, regulations, memoranda, articles or resolutions aforesaid shall, to the extent of its inconsistency become or be void and of no legal effect."
Thus, in case of any dispute/recovery of the loan amount, only the Civil Court has jurisdiction to adjudicate the matter. The respondent-U Microfinance Bank was established under the provisions of the Ordinance ibid, thus it cannot be termed as a banking-company and therefore a loan advanced by it cannot be termed as loan from a banking company. Reliance in this regard is placed on a judgment cited as Muhammad Tuseef and 4 others Vs. State Bank of Pakistan and 30 others (2018 CLD 1196) wherein this Court has held as under: "12. Admittedly, in both the petitions, the Petitioners availed services from the First Microfinance Bank Limited and FINCA Microfinance Bank Limited respectively, which have been established under the Microfinance Ordinance. From the above definitions provided in the Microfinance Ordinance, it is explicit that the Petitioners, being "customers", obtained the "microfinance services" from the "microfinance institutions" and/or the "microfinance banks", and accordingly, the Microfinance Banks and the Petitioners do not fall under definitions of the "financial institution" and "customer" provided in the Recovery Ordinance. Consequently, the case of the Petitioners does not fall within the domain of the Recovery Ordinance. Even otherwise, Section 3 of the Microfinance Ordinance has explicitly barred the applicability of any law relating to the banking companies or financial institutions to the microfinance institutions licensed under the Microfinance Ordinance.
Above Section 3 further clarifies that the microfinance institutions shall not be deemed to be the banking companies. Therefore, it can be safely held that the recoveries from the Petitioners of the loans obtained from the Microfinance Institutions cannot be made under the Recovery Ordinance through Banking Court. For this purpose, reliance can also be placed on the case titled Syed Itrat Hussain Rizvi v. Tameer Micro Finance Bank Limited through Attorney and another (2018 CLD 116 [Sindh]), in which the Honorable Sindh High Court has restrained the recovery of the loans obtained from the Microfinance Banks under the Recovery Ordinance and has allowed such recovery through summary suit under Order XXXVII of CPC, as under: "9. Besides above, a bare perusal of section 3(2) of Microfinance Institution Ordinance 2001, as reproduced in para No.2 above, clearly reflects that the Banking Companies Ordinance and any law for the time being in force relating to banking companies or financial institutions shall not apply to microfinance institutions licensed under the Ordinance and microfinance institutions shall not be deemed to be a banking company for the purposes of the said ordinance, the State Bank of Pakistan Act, 1956 (XXXIII of 1956) or any other law for the time being in force relating to banking companies.
10. From the above legal position, it appears that the summary suit filed by respondent No. 1/plaintiff against the appellant/defendant before respondent No.2 [District Judge, Karachi (Central)] was competent and was rightly decided by the said court."
Under Section 114 of the Act ibid, no authority / power has been given to the Revenue Officers to recover the loan amount of the microfinance institutions from the defaulters. For reference, aforesaid provision is reproduced as under: "114. Other sum recoverable as arrears of land-revenue.- In addition to any sums recoverable as arrears of land-revenue under this Act or any other enactment for the time being in force, the following sums may be so recovered, namely:-
(a) fees, fines, costs and other charges, including the Village Officers' cess payable under this Act;
(b) revenue due to Government on account of pasture or other natural products of land, or on account of mills, fisheries or natural products of water, or on account of other rights described in section 49 or section 50 in case in which the revenue so due has not been included in the assessm ent of an estate;
(c) fees payable under the law for the time being in force for the use or benefit derived from the construction and repair of embankments, and works for supply, storage and control of water for agricultural purposes, and for the preservation and reclamation of soil and drainage and reclamation of swa mps;
(d) sums leviable by or under the authority of Government as water-rates, or on account of the maintenance or management of canals, embankments or other irrigation works, not being sums recoverable as arrears of land-revenue under any enactment for the time being in force;
(e) sums payable to Government by a person who is surety for the payment of any of the foregoing sums or of any other sum recoverable as an arrear of land-revenue; and
(f) such further sums as the Government may consider necessary to recover in public interest.
6. The respondent-microfinance institution should have approached Civil Court for recovery of the defaulted loan amount from the defaulters instead of setting revenue hierarchy into motion and the Additional Deputy Commissioner (Revenue), Bahawalpur before passing the impugned order dated 05.01.2022 for according sanction to recover the default amount from the lendees should have gone through the provision reproduced above and acted strictly in accordance with law but it has been observed that the Additional Deputy Commissioner failed to do so and passed the impugned order by assuming the jurisdiction not vested to him. Similarly, the Assistant Collector- I/Tehsildar, Bahawalpur Saddar illegally and unlawfully as well as without any jurisdiction passed order dated 07.10.2022 for transmitting the defaulters (sons of petitioners in both writ petitions respectively) to civil prison.
7. As discussed above, the impugned orders dated 05.01.2022 and 07.10.2022 were passed without jurisdiction and it is settled law that any order passed by an authority without jurisdiction that would be illegal and void ab-initio. Reliance is placed on the cases reported as Khuda Bakhsh Vs. Khushi Muhammad and 3 others (PLD 1976 SC 208), Bashir Ahmad Vs. Meer Aslam Jan (2007 CLC 1544), Messrs East-West Insurance Company Ltd. through Chairman & Another Vs. Messrs Muhammad Shafi & Company through Managing Partner & 2 Others (2009 CLD 960) and an unreported judgment dated 18.04.2017 rendered by a learned Division Bench of this Court in case titled as Sultan Vs. Federation of Pakistan and 4 others (Writ Petition No.28756 of 2014) .
8. Resultantly, both these writ petitions are allowed. The orders dated 05.01.2022 passed by the Additional Deputy Commissioner (Revenue), Bahawalpur and order dated 07.10.2022 passed by Tehsildar, Bahawalpur Saddar being illegal and passed against the law are hereby set aside. The detainees (sons of petitioners in both these writ petitions) be set at liberty forthwith. Office is directed to transmit a copy of this order alongwith writ petitions as well as all the annexures to the Senior Member, Board of Revenue for initiation of disciplinary proceedings against the concerned Additional Deputy Commissioner (Revenue), Bahawalpur and Assistant Collector-I/Tehsildar, Bahawalpur Saddar.