KARACHI (November 06 2003): The Sindh High Court has granted a stay order against the instructions of the American Express Bank compelling M/s Kohinoor Soap and Detergent (Pvt) Ltd and others for liquidation of credit facility granted against National Saving Certificates.
The plaintiffs approached the SHC for a stay order against the letters of instructions from the American Express Bank to pay off bank loans as the government had withdrawn the facility of taking loan after pledging National Savings Certificates or any other instrument of savings obtained from the Directorate of National Savings.
The bank had relied on the DNS circular dated June 14, 2003, which said the policy of the government allowing pledging of certificates as securities had been withdrawn and NSC were no more acceptable as security that too beyond one million rupees without the prior approval of the CDNS.
The plaintiffs had pledged their NSCs to take loans from the bank much before the issuance of fresh instruction of the CDNS.
They contended in their plaint that the instructions issued on June 14, 2003 were not operative with retrospective effect.
The court in its short order held the operation of circulars dated 14.6.2003 and 16.6.2003, issued by the government and the State Bank of Pakistan as suspended to the extent of plaint.