PESHAWAR: Peshawar High Court has ruled that Federal Investigation Agency (FIA) has no jurisdiction to investigate offences falling in the domain of banking court, functioning under the financial institution law.

A bench consisting of Justice Shakeel Ahmad and Justice Syed Arshad Ali accepted a petition filed by a steel mills and declared as illegal freezing of its accounts by FIA in 2023 and pacing names of its directors in Exit Control List (ECL) and Passport Control List (PCL) by federal government.

The petitioner Aitamad Steel Furnace and Re-rolling Mills, Chakdara, had challenged inquiry started by FIA against it on complaint of a private bank accusing the petitioner of obtaining a financial facility (loan) on basis of fake documents of a mortgaged property.

Advocate Alamzeb Khan appeared for the petitioner and stated that admittedly there were banking relations between the parties since long and the matter in the issue related to providing of alleged forged documents as a collateral security against the said finance.

Rules FIA can’t interfere in banking court’s domain

He argued that if the respondent-bank had to take any action against the petitioner, it could file a complaint under section 20 of Financial Institutions (Recovery of Finance) Ordinance, 2001, hence FIA had no jurisdiction to initiate an inquiry against the petitioner-company.

Lawyers appearing for the respondents including FIA and federal government contended that the offence, which the agency had been investigating was a scheduled offence under FIA Act of 1974, therefore it had jurisdiction to inquire and investigate into the matter.

The bench ruled that section 4 of Financial Institutions (Recovery of Finance) Ordinance, 2001, clearly envisaged that it had an overriding effect over all other laws.

“No doubt, the offences for which the petitioners are charged are scheduled offences to Act of 1974 (FIA Act) and FIA has the jurisdiction to investigate the same.

However, at the same time, section 20, sub-section (b) as well as sub-section (2) of section 20, also deal with the making of fraudulent, misrepresentation to a banking company for obtaining a finance or knowingly makes statement in an application for finance obtains a finance on the basis thereof, are offences punishable under section 20 o0f the Ordinance of 2001 (Financial Institutions Ordinance),” the bench observed.

The bench further observed that section 7 (4) of the Ordinance clearly stipulated that no court other than a banking court should have or exercise jurisdiction with respect to any matter to which the jurisdiction of the banking court extended.

“Similarly, proviso to section 7(a) and (b) also envisages that the Banking Court shall not take cognizance of any offence punishable under this ordinance except upon a complaint in writing made by a person authorized in this behalf by the financial institution in respect of which the offence was committed,” the bench observed in its nine-page detailed judgment authored by Justice Syed Arshad Ali.

“The holistic reading of sections 7, 4 and 20 of the Ordinance of 2001 would clearly reveal that the offence for which the petitioners have been charged are exclusively triable by the banking court established under section 20 of the Ordinance of 2001 and the banking court can only take cognisance of such offences on the complaint filed by the authorised officer of the financial institution,” the bench ruled.

Referring to a 2017 judgement of Supreme Court, the bench observed that the law was now settled that in case of conflict between a general and a special law, the latter would be applicable.

The bench ruled that in view of the said judgement of the apex court, proceedings initiated by FIA in the present case were obviously without lawful authority.

Published in Dawn, February 20th, 2025