ISLAMABAD: Chief Justice of Pakistan Iftikhar Muhammad Chaudhry on Thursday hinted at ordering initiation of judicial proceedings against the defaulters of bank loans through banking courts if the State Bank of Pakistan (SBP) failed to recover written off amount.
He made these remarks while heading a two-member bench that resumed hearing of a suo motu related to waiving off around Rs256 billion bank loans during the period from 1971 to 2009.
He further warned that direction would be issued for filing of criminal cases against these defaulters.
He observed that the SBP was not playing its due role in recovery of loans.
The loans worth billions of rupees had been written off by the private and national banks by misusing Circular 29 which should be stopped, he added.
He observed that governor SBP Shahid Kardar was a prudent man and he would utilize his authority before any judicial order.
During course of proceedings, the Chief Justice observed that despite the fact that Circular 29 had ended on April 14, 2003 but the banks were still writing off loans.
Iqbal Haider, counsel for SBP, presented the reports on Redco Textil Mills and Indus Sugar Mills, a two defaulters, and said that SBP Governor had contacted justice (retd) Saleem Akhtar to examine written off cases.
He apprised that Rs1116 million relief was given to the Mills.
He informed that in a number of cases, the banks were reluctant to register criminal cases against the borrowers for wilful default.
He said on one hand, the banks declared the RTM wilful defaulter and on the other hand, it continued its commercial function till the banks filed a reference against the Mills with NAB that arrested its directors Saif-ur-Rehman and Mujeeb-ur-Rehman.
But after securing bails, Saif-ur-Rehman went to Dubai and after that money of the Mills started following out the country, he added.
Counsel for Redco Textile Mills (RTM) Salman Butt rejected his stance and informed that his client did not owe any money to the banks.
The Chief Justice said: "We are sure that identical situation prevails in many other cases of write-off."
He said it was a single case but there could be others. In US and UK they had strict laws over written off loans and there was a need to frame such laws in the country.
Ali Zafar, counsel for Indus Sugar Mills, contended that they had not only returned the principal amount but also the doubled mark up amount.
The Chief Justice remarked that Mills was running despite being defaulter and earning huge profits.
Khawaja Haris, appearing as amicus curiae, briefed about the suggestions which they had prepared and forward to the SBP governor.
The bench directed the Governor to submit his response over the suggestions.
Further hearing was adjourned till March 14, 2011.
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