Banks can’t twist arms to recover dues: court

[LRE]

Banks can’t twist arms to recover dues: court



Tuesday, June 03, 2008
By Wajih Ahmad Sheikh

LAHORE

FINANCIAL institutions cannot hire services of any private party or individual for recovery of its property from the possession of a customer who was a defaulter, ruled Sialkot District and Sessions Judge Sohaib Ahmed Rumi.

The judge held this while dismissing bail applications of two officials of foreign bank’s branch at Sialkot against whom a customer registered an FIR with Muradpur police. The complainant, Maqbool Ahmad, submitted in the FIR that he was plying a car owned by Malik Arshad on June 1, 2007 when he was intercepted by another vehicle in which four armed persons were present.

He added that he was asked to hand over the car to the armed persons failing which he will be done to death. On his query, two of the armed men introduced themselves as Kamran Zafar and Khalid Aziz, employees of the foreign bank. They asked him that the car, which he was driving was obtained by Malik Arshad, employer of the complainant, on lease, ten instalments of which have not been paid by the lessee.

The complainant said he showed them receipts of the instalments deposited with the bank but the armed persons misbehaved and beat him up and snatched the car at gunpoint. They also snatched cash, cell phone and other valuables of the complainant.

On the other hand, counsel for the petitioners, the bank employees, argued that they were innocent and the vehicle’s owner, Malik Arshad had defaulted on payment of the instalments. The counsel added that so proceedings, under section 16(3) of Financial Institutions (Recovery of Finance) Ordinance 2001, were initiated against him.

The counsel stated that the bank under the law had entered into an agreement with M/S Mirza Associates, Chauburji Chowk, Lahore for recovery of vehicles from defaulting customers. Moreover, the company had taken into possession such a vehicle from the complainant. After hearing the arguments, D&SJ Sohaib Ahmed Rumi observed that the possession of the vehicle was forcibly obtained by M/S Mirza Associates on the directions of officers of bank on the pretext that certain instalments for the car were not paid.

However, default in payment of the instalments is seriously disputed by the owner of the vehicle who claimed that not only the instalments were duly paid but the amount of next instalments in advance too.

The judge observed that a question arose for determination in this case as to whether the act of snatching the vehicle in the way as mentioned in the FIR amounts to an offence or an act of the petitioners and the hired car grabbers employed by M/S Mirza Associates had no legal cover as claimed by the petitioners.

“Despite going through the Financial Institutions (Recovery of Finance) Ordinance 2001, I have approached the law departments of provincial as well as federal governments, but could not find the answer about the procedure adopted by the bank for the recovery of its property,” the judge observed. The judge ruled that financial institutions cannot be allowed to take law in their hands or adopt the procedure according to their sweet desire or whims.

The said the ordinance had delegated power to the financial institution to directly recover the immoveable property from a defaulting customer but the question arises as to whether a delegatee could further delegate this power to any other institution or individual. The answer is in negative, he observed.

Therefore, the judge ruled, the appointment of M/S Mirza Associates by the foreign bank for the recovery of the property from the possession of a defaulting customers does not find any legal cover. During the course of arguments, it was revealed that Rs 15,000 per vehicle was being paid to the private party for repossession of a vehicle from a customer. The petitioners, officers of the bank, on court’s query pointed out that the qualification of obtaining such an agency like M/S Mirza Associates as to have “strong muscles”.

In this way, the financial institutions, THE judge remarked, were trying to play havoc in the society to give popularity to the principle of “might is right”.

THE D&SJ held that the petitioners were directly responsible to determine the default and issue direction to the hired “Ghundas” like Mirza Associates, who on their direction launch quick action against a respectable customer only to justify their entitlement for Rs 15,000 by trampling all the rules of morality under their dirty feet and by causing immense insult to the person driving the vehicle.

This is high time that the authorities should step forward to curb this menace, which is rocking day by day by the financial institutions, which are causing illegal harassment to the respectable citizens of the white-collar class of the society, the judge further held.

One of the petitioner, the accused Khalid Pervez, went abroad without giving intimation to court during the time when the bail petition was pending. Resultantly the concession of bail granted to him was withdrawn and he was again granted this concession of bail.

The complainant was restrained by the armed persons who put him in fear of death and valuable property was snatched from him but these articles and the vehicle in question are yet to be recovered.

Moreover, the names of hired persons of Mirza Associates who accompanied the petitioners while taking possession of the vehicle are yet to be discovered for which the custody of the petitioners are necessarily required to the prosecution, the judge observed. Hence, the ad-interim pre-arrest bail already granted to the petitioners, the judge further observed while dismissing the bail application.

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