For a breach of financial commitments, a banking litigation is/can be initiated against/by a customer, borrower, and/or a financial company. Section 2(e) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 lists certain obligations. Banking Courts will have all the powers conferred in a Civil Court under the Code of Civil Procedure 1908 and all the powers of a criminal court that a Sessions Court possesses under the Criminal Procedure Code, according to Section 7 of the Financial Institution Ordinance 2001. Ability to recall, examine execution processes, powers in auction procedure, power to give adjournment, temporary relief, and extra territorial injunction are some of the inherent powers of the Banking Courts.
Procedure of Banking Courts:
Where a borrower or a customer or a banking company commits a default in fulfilling any obligation with regard to any loan or finance the banking company or, as the case may be, the borrower or customer, may institute a suit in the Banking Court by presenting a plaint duly supported by a statement of account which shall be verified in oath in the case of a banking company by the Branch Manager or such other officer as the Board of Directors of a banking company may authorize in this behalf, Copies of the plaint shall also be filed along therewith in sufficient numbers so that there is one copy for each defendant and one extra copy.
The provisions of section 10 of the Code of Civil procedure, 1908, shall have no application for and in relation to suits filed hereunder.
On a plaint being presented to the Banking Court a summons in Form No.4 in Appendix 'B' to the Code of Civil Procedure (Act V of 1898), or in such other form as may, from time to time, be prescribed by rules, shall be served in the defendant through the bailiff or process-server of the banking court, by registered post acknowledgement due, by courier and by publication in one English language and one Urdu language daily newspaper and service duly affected on any one of the aforesaid modes shall deemed to be valid service for purposes of this Act. In the case of service of the summons through the bailiff or process-server a copy of the plaint shall be attached therewith and in all other cases the defendant shall be entitled to obtain a copy of the plaint from the office of the banking court without making a written application. The Court shall ensure that the publication of summons shall take place in newspapers with a wide circulation within its territorial limits.
Leave to defend. Subject to section 11, the Banking Court shall, upon an application made by a defendant within twenty-one days, give leave to defend the suit, if a serious and bona fide dispute is raised thereby.
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Section 9 of the financial Institution Ordinance 2001 specifies the procedure of the Banking Courts. Where a customer or a financial institution commits a default in fulfillment of any obligation with regard to any finance the financial institution or as the case maybe, the customer, may institute a suit in the Banking Court by presenting a plaint.
Further, as per Section 7(2) of 1908 in absence of a special procedure, the Banking court can follow the procedure in the CPC.