The State Bank of Pakistan, the petitioner, established under the State Bank of Pakistan Act, 1956 and is having the powers, responsibility and duty of regulating in monitoring the performance of the Banking Companies under the Banking Companies Ordinance, 1962; hereinafter referred to-as B.C.O., has filed the instant application under section 49 of the B.C.O. For winding-up of the respondent-Bank, the Indus Bank Limited and which has been incorporated under the Companies Ordinance, 1984 (hereinafter referred to as Ordinance), on the ground:--
(i) That the licence of the respondent-Bank granted to it has already been cancelled by the petitioner on 21-9-2000 under section 27(4) of the B.C.O. And it has become disentitled to carry on Banking business.
(ii) That the continuance of the respondent-Bank is prejudicial to the interest of its depositor.
An application for interim relief with a prayer for the appointment of official liquidator, with the name suggested thereto, to take immediate control of all the assets of the Bank as the petitioner was apprehending the removal and tampering of the record and transfer of funds by electronic means detrimental to the interest of the depositor and customer was also moved.
2. After hearing the learned counsel for the petitioner at some length, it was deemed proper that pre-admission notices be issued to the respondent in view of judgment Packages Ltd. v. Khyber Electric Lamps Manufacturing Company Limited PLD 1984 Peshawar 133 whereby issuance of notice to the respondents, before its publication in the newspaper was considered necessary. Meanwhile the request of the petitioner for the grant of interim relief vide order dated 12-3-2000 was allowed, subject to notice, to the extent of appointment of the Provisional Manager with certain directions with regard to taking of control of the assets of the bank in view of the, apprehension expressed by the petitioner.
3. In pursuance of the pre-admission notice in the main petition and notice in the C.M., the application for interim relief, the respondent made its representation through counsel who was heard at the preliminary stage. After hearing the learned counsel for the parties the petition was admitted to regular hearing. Notices were ordered to be issued to all concerned/interested persons and which were also ordered to be published in the newspaper both Urdu and English having wide circulation and also in the official gazette.
4. I have heard the learned counsel for the parties i.e. For the petitioner as well as for the respondent-Bank. They have reiterated almost the same contention which they have made at the time of preliminary hearing.
5. Learned counsel for the petitioner has submitted that since the licence of the bank has already been cancelled by the State Bank of Pakistan and that its continuance is, prejudicial to the interest of the depositor and requires its winding-up.
6. Learned counsel for the respondent has made two fold-submissions (i) That this Court i.e. Company Bench constituted under the Companies Ordinance, 1984 has got no jurisdiction to entertain the winding-up petition filed under the B.C.O. By elaborating his view point he has contended that according to section 49 of the B.C.O. Under which the winding-up order will have to be passed, it would be only the High Court competent to do so and not Company Bench constituted under section 7 read with section 8 of the Ordinance. According to the counsel, these are two different fora and the Company Bench is a persona designate and cannot be considered as a High Court referred to under section 49 of the B.C.O. In this respect, reliance was placed in Khadim Mohyuddin and Mrs. S. Mahmud v. Ch. Rehmat A.I Nagra and Mst. Aziz Begum PLD 1965 Supreme Court 459; Bolan Bank Limited v. Capricorn Enterprises (Pvt.) 1998 SCM R 1961 and Khan Bahadur A.G. Khan v. Shujauddin Qureshi and others PLD 1961 SC 1.
7. None of his contentions are tenable. According to section 7 of the Companies Ordinance, 1984 the Court having jurisdiction under the Ordinance:-- "shall be the High Court having jurisdiction" to entertain the petition under the Ordinance. For the sake of convenience section 7(1) is reproduced:-- "7. Jurisdiction of the Courts--- (1) The Court having jurisdiction under this Ordinance shall be the High Court having jurisdiction it the place at which the registered office of the company is situated."
According to section 8 of the Companies Ordinance, 1984 it would be the Honourable Chief Justice of the Hi eh Court who will constitute the Company Bench to exercise jurisdiction vested in the High Court under section 7. Section 8 reads as follows:--
8. Constitution of Company Benches---There shall in each High --Court be one or more Benches, each to be known as the Company Bench, to be constituted by the Chief Justice of the High Court to exercise the jurisdiction vested in the High Court under section 7.
This has left no doubt as the High Court will be the Court of having jurisdiction and the Company Bench constituted by the Chief Justice amongst the Judges of the High Court shall exercise jurisdiction vested in the High Court. So for all intents and purposes the Company Bench will exercise the jurisdiction of the High Court in the matter of the Company cases, a mechanism so established for the speedy and expeditious disposal keeping in view the fact of comparative expertise and the fact that the same Bench being well-acquainted with the date-wise proceedings of the case. His another submission with regard to the jurisdiction of the Court is that according to the notification issued by the Honourable Chief Justice under section 8 for the constitution of the Company Bench is to empower only the Bench for the disposal of matters coming under the said Ordinance and not cases filed under other acts/laws. The notification reads as under:- NOTIFICATION Dated Peshawar, the 30th June, 1997.
No. In exercise of the powers conferred on him under section 8 of the Companies Ordinance, 1984 (Ordinance No.XLVII of 1984) and all the powers enabling him in that behalf, Honourable the Chief Justice, Peshawar High Court, Peshawar has been pleased to constitute a Company Bench on part-time basis consisting of Mian Shakirullah Jan, Judge, Peshawar High Court, Peshawar for the disposal of matters of N.W.F.P., except Abbottabad and D.I. Khan coming under, the said Ordinance in place of Mr. Justice (Retd.) Jalaluddin Akbarji.
To reinforce his contention, learned counsel for the respondent has submitted that per section 2 of B.C.O. The provision of the Ordinance has been excluded and if the winding-up petition has been filed under the B.C.O. Then it would be only the provision of B.C.O. Read with Banking Companies (Peshawar High Court) Rules, 1972 framed under section 79 of the B.C.O. Which would be followed and the provisions of Companies Ordinance have got no application. Section 2 of B.C.O. Reads:--
(2) Application of other laws not barred.--- The provisions of this Ordinance shall be .In addition to, and not, save as hereinafter expressly provided, in derogation of the Companies Act, 1913 (VII of 1913), and any other law for the time being in force."
He while making a reference to the afore-quoted section has interpreted the words:-- "Save as hereinafter expressly provided" means that unless the application of the Companies Act has not been expressly provided then the provision of the Companies Act cannot be resorted to. His this interpretation while reading the section as a whole is not correct. The words which have been couched in the section have unambiguously provided the application of the Companies Act, 1913, unless there is express bar, for its application. By virtue of section 8 of the General ` Clauses Act, the Companies Ordinance being a successor statute of the Company Act, 1913 would be read in place of Companies Act, 1913.
Section 8 of the General Clauses Act reads as follow:--
8. Construction of the references to repealed enactments.--- (1) Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provision so re-enacted."
8. Learned counsel for the respondent has also argued that according to section 79 of B.C.O. It is the High Court which shall make rules consistent with the Ordinance prescribing the manner in which enquiry and proceedings under Parts III and IV may be held and section 49 falls in Part IV. In this respect the Peshawar High Court, Peshawar has framed rules, which are cited as "the Banking Companies, Peshawar High Court Rules, 1972. According to rule 2(iv) "Court means the Peshawar High Court, Peshawar" and from which he was deriving a conclusion that the winding-up proceedings which fall in part IV of B.C.O. Would be conducted by the Peshawar High Court and not a Company Bench. Since, it has already been held above, that Company Bench so constituted by the Chief Justice will exercise the powers of the High Court.
9. Moreover, according to section 503 of the Ordinance the provisions of the Ordinance had been made applicable to the Banking Companies except in so far as the said provisions are consistent with the provisions of the Companies Ordinance, 1962. Similarly according to section 52 of B.C.O.
The provisions of Companies Act relating to liquidators have also been made applicable:
10. It is also worth-mentioning that the present petition has been filed in the Peshawar High Court, Peshawar (original Company jurisdiction) as evident fronm the petition and after filing in the High Court the same was placed before this Court for disposal.
11. The accumulative effect of sections 7, 8 and 503 of the Ordinance and sections 2, 49 and section 52 of the B.C.O. Read with notification issued by the Chief Justice for the constitution of the Company Bench, is that this Court has got the jurisdiction to adjudicate the instant application. The authority referred to by the learned counsel for the respondent has no application in the instant case and distinguishable in view of the different provisions in the relevant statutes.
12. With regard to his other contention that the licence has not been cancelled by the State Bank of Pakistan but by the Governor of the State Bank of Pakistan and who could not do so, and in this context a reference was made to section 27(b) of the B.C.O. Whereby in case of cancellation of the licence the powers of review has been given to the Central Board of the State Bank and from which he derived a conclusion that the review is competent only before the authority which has passed the order and hence, it ' would be the, Central Board of the State Bank having the jurisdiction to cancel the licence and not the Governor of the Bank. His this submission also has no force and no base to stand upon. Section 10 of the State Bank of Pakistan Act, 1956 empowering the Governor of the Bank to control the whole affairs of the Bank on behalf of the Central Board and which section reads: "Governor and Deputy Governor.-- (1) The Governor of the Bank shall be the Chief Executive Officer and shall, on behalf of the Central Board, direct and control the whole affairs of the Bank."
13. Once the licence of the respondent-Bank has been cancelled by the ' State Bank of Pakistan under section 27(4) of the Banking Companies Ordinance, 1962 and also if in the opinion of the State Bank the continuance of the Banking Company is prejudicial to the interest of its depositor then it become obligatory for the Court to pass the winding-up order, as is evident from the relevant portion of section 49(1) "the High Court shall order the winding-up of the Banking Court." If, 49(3)(a) the Banking Company--
(i) ................................................................................
(ii) has by reason of the provisions of section 27 become disentitled to carry on banking business in Pakistan; Section 49(3)(b) in the opinion of the State Bank-- (i)...................................................................................
(ii)...................................................................................
(iii) the continuance of the Banking Company is prejudicial to the interests of its depositors.
"It must not be overlooked that the winding-up of a Banking Company takes place before the High Court and under the process of law. The judicial process is excluded only in respect of the momentous decision whether a winding-up order should be made or not. This opinion is left to the Reserve Bank, and the Court merely passes an order according to the Reserve Bank's opinion, and then proceeds to wind-up the Banking Company according to law."
"The second matter on which counsel on both sides are agreed is that, once the Reserve Bank makes an application subsection (1) of section 38 makes it obligatory on the Court to order winding-up..."
14. In view of what has been discussed above, the winding-up order of the respondent-bank is hereby passed. Consequent to the passing of winding---up order and in the light of suggestions by the petitioner's counsel Messrs Hamid Farooq Durrani, Advocate, Peshawar. Amjad Aziz son of Abdul Aziz Ex-President and Managing Director of the Banker Equity Limited resident of Lahore and Shoaib Ahmad son of Muhammad Ahmad, Chartered Accountant, Additional Director State Bank of Pakistan, Karachi are hereby appointed as joint official liquidators to wind-up the affairs of the respondent Banking Company. Each of the liquidators so appointed shall enter into recognizance by furnishing security bonds in the sum of Rs.10 millions with two sureties to the satisfaction of Additional Registrar of this Court. It would not be out of place to mention that Mr. Aslam Sethi, appointed earlier as Provisional Manager shall, under the provisions of section 325(4) of Companies Ordinance, 1984, hereinafter cease as per his request to hold the office. The erstwhile Provisional Manager shall hand over or cause to be handed over to the J.O.L. The entire record pertaining to the affairs of the respondent-company, as available with him.
15. The joint official liquidators are directed to open the liquidation account in National Bank of Pakistan Saddar Branch, Peshawar which shall be operated jointly by them. The petitioner shall deposit a sum of Rs.2 lacs in the liquidation account for meeting the expenses of liquidation. The amount so deposited by the petitioner, shall be payable on preferential basis out of the assets of the company at the appropriate stage.
16. The Joint Official Liquidators shall submit a budgetary proposal qua the liquidation expenses for an initial period of three months for the approval and sanction of this Court. The necessary expenses incurred towards the liquidation proceedings during the intermediate period shall be realisable from the liquidation account. Each of the two Joint Official Liquidators namely Hamid Farooq Durrani Advocate, Peshawar and Amjad Aziz son of Abdul Aziz; Ex-President and Managing Director of the Banker's Equity Limited (as they are not Salaried Officer of the Government) shall be entitled to receive allowance to a maximum of Rs.10,000 per month, initially f6r a period of six months. The amount so received by the J.O.L. Shall be deducted from their' respective remuneration allowable to them under the prescribed rules. However, the provisions of section 323(4) shall be invoked in case any of the J.O.L. Cease to hold office before the conclusion of winding-up proceedings.
17. The J.O.L. Shall under section 330 of Ordinance take into their custody or under their control the assets of respondent-Company, and also the deposits held by or entrusted to it. They shall also exercise, with the sanction and approval of this Court, all the powers as envisaged under section 333 of the said Ordinance read with section 52 and other enabling provision of the Banking Companies Ordinance, 1962. The J.O.L. Are further directed to submit a preliminary report under section 54 of the Banking Companies Ordinance, 1962 on next date.
18. In the meantime the ex-management of the respondent-company shall submit the statement of affairs of the company to the J.O.L. If not already supplied to the outgoing Provisional Manager.
The J.O.L, are hereby also directed to proceed with the winding-up of the respondent-Company in the light of provisions and rules prescribed for the purpose and not inconsistent with the requirements of Banking Companies Ordinance, 1962.
19. The petitioner is directed to advertise the order of winding-up in the Dailies Mashriq, the News, Islamabad and Jhang, Karachi and also the official gazette. The Registrar of Companies (Security and Exchange Commission of Pakistan) also be intimated. Intimation of the order be served upon the Joint Official Liquidators and all others as required under the rules. To come-up for further proceedings on 12-2-2001.