KARACHI (July 01 2003) : Sindh High Court has held that State Bank circulars are binding on, and are to be followed by, all banks.
SHC bench comprising Justice Mushir Alam and Justice Muhammad Mujeebullah Siddiqui disposed of a petition filed by Tri-Star Industries seeking implementation of scheme for settlement of defaulted loan in the light of guidance issued through SBP Circular 29 together with the instructions issued by Habib Bank.
Habib Bank said that it has already filed suits for recovery of outstanding amount against Tri-Star Polyester Limited, sister concern of the Petitioner, and so also against the Petitioner company, which cases are still sub judice before the Banking Court.
Abid S Zuberi, Advocate, said the petitioner meets the criteria as laid down in the circular.
He said the that in suit pending before the Banking Court, Respondent No 2 (HBL) acknowledged that “valuation of Tri-Star Industries will not be undertaken and the earlier valuation will be termed as final”.
He contended that if such valuation is considered the Petitioner qualifies the criteria under the scheme and is accordingly entitled to seek enforcement of such scheme in accordance with law.
“Indeed, the circular / scheme issued under the Banking Companies Ordinance, 1962, in view of Section 33-B has force of law as already held in the case of United Bank,” said Sindh High Court in a decision.
“Constitutional jurisdiction of this Court under Article 199 generally can not be invoked in presence of other adequate remedy available under the relevant law,” said the decision.
In case either customer or financial institution commits default in fulfilment of any obligation with regard to any finance, the financial institution or, as the case may be, the customer may institute a suit in the Banking Court by filing a plaint, said the decision.
“We are of the opinion that the enforcement of the scheme as sought by the petitioner comes within the definition of 'obligation' which could be effectively enforced by filing a suit,” said the decision.
The Court said that the controversy raised in this petition could only be thrashed out by adducing evidence.
“No exceptional circumstances exist to exercise extraordinary writ jurisdiction by the Court.
The petition may avail of the remedy as may be provided under the law,” said the decision.
“Accordingly, the petition stands disposed of in above terms along with the listed application,” the decision said.