KARACHI, July 11: A division bench of the Sindh High Court restored on Thursday the licence of the Indus Bank Limited (IBL) by setting aside the order of the Governor of State Bank dated September 21, 2000 by which he had cancelled the Bank’s licence.
However, the division bench, comprising Justice Sabihuddin Ahmed and Justice Zia Parvaiz, did not go further and restricted itself without commenting on the issue of winding up of the Bank.
The IBL, incorporated under the Companies Ordinance, was wound up by the Peshawar High Court on the sole ground that the licence granted to the IBL on January 13, 1992 had been cancelled under section 27 of the Banking Companies Ordinance of 1962 and without informing the IBL an application was filed before the Peshawar High Court for winding it up.
In the meantime, 75 per cent of the shareholders filed a petition with the Sindh High Court, being CP No D-1506 of 2000, challenging the cancellation of the licence on the ground that it was cancelled due to malice and that there was no occasion or default in any manner whatsoever to occasion the cancellation of the licence of the Bank.
It was also urged in the petition that where other remedies were available with the State Bank of Pakistan such an extreme step was uncalled for.
Counsel for the petitioners Anwar Mansoor Khan, advocate, argued, by giving details, why the order for cancellation of licence was not attracted by the provisions of section 27 (4) of the Banking Companies Ordinance of 1962.
The allegations in the order for cancellation of licence were that Khurshid Sohail acted as chairman and chief executive, when he had not obtained permission from the State Bank of Pakistan. The State Bank also alleged that the IBL had failed to give complete information to the inspectors appointed by it.
It was also alleged that the paid-up capital was not increased up to Rs500 million up to the date which was fixed for such purpose, but subsequently it was increased to the required level. It was also alleged that the IBL placed funds with Franklin Credit and Investment Corporation which amounted to mismanagement.
The order of the Governor of the State Bank also had in it that the IBL was given sufficient opportunities to comply with the conditions of the licence, but they did not do so, and that the IBL management made personal allegations of mala fide against Rasheed Akhtar Chughtai, Deputy Governor of the State Bank, which were found to be unwarranted and unjustified.
All these allegations were met by the counsel for the petitioners who went through the record and showed that none of the allegations made in the order passed by the SBP Governor could be substantiated.
In fact, it was said before the passing of the order, under section 27 (4) of the Banking Companies Ordinance of 1962, five appeals were pending decision for refund of unlawfully imposed penalties, but the SBP Governor had not bothered to listen and decide the said appeals.
It was also urged that there was no refusal by the IBL management to give information. In fact the reply filed by the State Bank to the suit filed earlier by the IBL against the State Bank there was no allegation by the SBP that any information was withheld by the IBL.
Barrister Chaudhry Mohammed Jamil, in his arguments, tried to meet the points raised in the petition, and contended that the petition was not maintainable because the shareholders and petitioners were not Pakistani companies and were registered abroad, wherefore under the provisions of section 456 of the Banking Companies Ordinance, they were barred from filing the petition.
He also stated that the attorney of the petitioners, Yousuf Hasan, was not a duly constituted attorney, so the petition should fail. He further stated that the SBP Governor had absolute authority and that the review provided under section 27 of the Banking Companies Ordinance of 1962 not having been filed, the petition was misconceived.
He also argued that, in fact, show-cause notices and time were given and to the IBL, but it did not rectify the issue or it did not care to do so.
After hearing the parties, the court allowed the petition, restored the licence given to the IBL by setting aside the order of the SBP Governor dated September 21, 2000 by which the SBP Governor had cancelled the Bank’s licence.
