ANALYSIS
OF LAW RELATING TO ESTABLISHMENT OF BANKING COURTS IN
By
MUHAMMAD
NAVEED CHOHAN
Advocate High
Court
LL.M. (International Business Law),
MUHAMMAD WAHEED CHOHAN
Advocate
KEY WORDS:
Establishment, Banking Courts,
Issues, Suggestions
ABSTRACT:
Banking Courts in
INTRODUCTION:
During global recession of this century financial sector of
This Paper overviews drawback in the law of establishment
of banking courts and suggests some reforms to improve its framework. First
part presents the precise history of establishment of banking courts in
ESTABLISHMENT OF BANKING COURTS:
Banking courts in
IMPEDIMENTS IN JUSTICE:
Initially FIO 2001 as a special law proved itself an
effective tool to recover long standing loans sanctioned by financial
institutions. But banking courts established under this law were totally
collapsed during 2003-06 due to introduction of consumer financing, policies of
finance for small and medium enterprises and growth in corporate financing.[2] This was an absolute
mismanagement and lack of sound governance because these policies were
introduced in the absence of strong legal framework. This negligence is still
affecting the financial sector as well as judicial sector of
On the other hand, High Court
Judges or District Judges preside in these courts but surprisingly they do not
have such pecuniary jurisdiction as they have in normal course. This poses a
question mark on their status. Usually District Judges and High Court Judges
have unlimited pecuniary jurisdiction. But jurisdiction to decide suit for
recovery of amount less than Rs 50,000,000 vested in
Issue of appointment of judges
also makes this law controversial. All appointments of judges and other staff
members in Banking Courts are made by federal government.[15]
Banking court judge is appointed for three years[16]
and privileges are decided by federal government[17].
These courts have special status but there is no provision for special and
specific qualification for the appointment of judges. In addition there is also
no provision to appoint specialist lawyers in this field as a judge in these
courts. Therefore sometime appointments of unexperienced
judges and having no qualification relating to banking matters create problems
and they cannot show their hundred percent performances which create backlog.
Before the National Judicial Policy (NJP) 2009 retired High Court Judges and
District Judges were working in these courts. But NJP 2009 banned these
appointments and made clear that acting Judges will preside in these courts.[18]
This is a very good step for the independence and dignity of judges but there
are many blank spaces which need to be filled.
Authority to appoint and decision
of privileges by federal government makes this law questionable. Normally, all
appointments of session judges, district judges and civil judges are in the
hand of judiciary. These appointments are made by on the basis of experience,
qualification, honesty, integrity and kipping in view various other factors.
Similarly judiciary decides their salaries and other privileges. Nevertheless
in the case of banking courts all these authorities vested in federal
government which is direct interference in the affairs of judiciary. On the
other hand complains against banking court judges and other staff members are
entrained by provincial High Courts and Superior Court. In addition, various
performance reports are also made to Higher Courts and Superior Courts. Banking
Court is a special court but element of subordination should be made clear
because there is no such provision in FIO 2001. On the basis of these factors
we can say status of
POSSIBLE SOLUTIONS: NEED OF NEW BASE
There is need to introduce effective structural changes in judicial framework relating to the banking and other financial institutions’ matters. There should be a single judicial forum with all powers of banker-customer disputes. It will diminish ambiguities and overcome burden on Higher Courts. There is need to increase number of courts in the cities where banking courts currently exists and need to establish in other cities (like Sialkot, Gujrat, Bahawalpur, Abbottabad and Islamabad etc) where there is no banking court but hundreds of branches of financial institutions’ are there. Increase in number of judges in banking courts is a must case to trounce the problems of ‘‘backlog’’ and ‘‘delays’’. In addition, classification of judges will be an effective tool in the administration of justice. There is need to classify banking judges in the categories of first class and second class on the basis of their experience and qualification. District Judges should be in first class category and in second class Additional District Judges (ADJs) should be appointed. Similarly for criminal jurisdiction of Banking Courts Session Judges (SJs) and Additional Session Judges (ASJs) should be appointed. Classification will remove the problem of shortage of district judges for special courts. In each territorial jurisdiction all these courts should have one head banking judge among these judges having special qualification and most senior in banking matters. He should be granted the jurisdiction to transfer matter from one banking court to other. These measures will help to shift various matters (relating to normal jurisdiction and jurisdiction to transfer of banking cases) to single forum from High Courts acting as banking courts. As discussed above when High Courts acts as banking court does not have status of High court which is clearly against the dignity of High Court. High court should have only appellate jurisdiction. Complete set up of these courts including the decision about privileges of these judges should be given under the concerned High court.[19] These courts should have same status as District and Session courts have. Federal government should not have any interference with the affairs of banking courts. Employees of banking court should have same status as employees have in other courts. All appointments should be made by judiciary. There should a specific provision to appoint specialist lawyers as judges of banking courts having experience not less than ten years because this is the same required experience to appoint as ADJ. It will help to provide a speedy justice due to their well versed qualification and experience.
CONCLUSION:
In conclusion we can say current
set up of banking courts is very confusing and deals banking matters under
narrow scope. It is necessary to lay a new foundation for strong judicial set
up for banker-customer disputes. State Bank of Pakistan (SBP) as a regulator is
doing excellent work to improve efficiency of financial institutions, to remove
concerns of customers and to recover long standing loans. But there is need to
remove hurdles as discussed in part second of this paper and to take immediate
steps by following suggests reforms in third part of this paper otherwise
financial sector of
[1] FIO 2001,
Section 10
[2] Banking
System Review 2006, at Page 16, available at
<http://www.sbp.org.pk/publications/bsr/bkg_system_review(2006).pdf>
[3] FIO 2001, Section 5 (1)
[4] The Constitution of the Islamic
[5] Ministry of Law, available at
<http://202.83.164.26/wps/portal/Moljhr/!ut/p/c0/04_SB8K8xLLM9MSSzPy8xBz9CP0os_hQN68AZ3dnIwMLN09zAyOfYDNTTwsTAwtzU_2CbEdFAHjnARI!/?WCM_GLOBAL_CONTEXT=/wps/wcm/connect/MoljhrCL/ministry/general/02banking+court>
[6] Population Census Organisation
of Pakistan, available at
<http://www.statpak.gov.pk/depts/pco/index.html>
[7] SBP, <
http://www.sbp.org.pk/publications/c_rating/Ratings%2001-Feb-2010.pdf>
[8] See supra
n.5
[9] Abdul Rehman Allana v. Citibank,
2003 CLD 1843 (b)
[10] Nazir Cotton Mills Limited v. Islamic Investment
Bank Limited, 2002 CLD 612 (b)
[11] FIO 2001,
Section 5(3)
[12] FIO 2001,
Section 22
[13] Altaf Hussain v.The State, PLD 1985 Lah.10
[14] NLR
[15] FIO 2001,
Section 5(4)
[16] FIO 2001,
Section 5(6)
[17] FIO 2001,
Section 5(7)
[18] National
Judicial Policy of Pakistan 2009, at
Page 11, available at
<http://www.supremecourt.gov.pk/njp2009/njp2009.pdf>
[19] See supra n.18, at Page 12