960418

Firm sues SBP,

NBP for declaring

it defaulter

RECORDER REPORT

LAHORE: A local industry has moved the Lahore High Court through an application contending that the State Bank of Pakistan (SBP) could not publicise its name after declaring it defaulter without hearing, because it was a violation of Section 25(A) of the Banking Companies Act, 1962.

The learned court comprising Justice Tanveer Ahmad Khan of the LHC has issued notices to the SBP and National Bank of Pakistan for filing parawise comments on the writ petition within 10 days.

The local firm Knot Knot Private Limited had filed an application before the LHC contending that it had been dealing in export of cotton yarn to the US and other countries and all transactions were being done through both the respondent banks.

The firm had also been dealing in export through Mehran Bank Limited but the MBL failed to carry out its function as a bank and could not collect an amount of $14,442 and $57,778 on a Letter of Credit opened with Hanil Bank of New York.

The petitioner had been allowed 'Export Refinance Facility' to the tune of Rs. 22 million under an SBP scheme. The petitioner used only Rs. 12 million and MBL authorities issued a receipt of Rs. 10 million to the petitioner with an advice not to use remaining amount of Rs. 10 million because MBL officials allegedly wanted to use it for some other purpose, the petitioner's counsel submitted.

Later a penalty of Rs. 1.32 million was imposed on the petitioner company for not fully utilizing the provided facility.

The counsel argued that the NBP was the successor of the MBL which was scrapped because of fraudulent transactions, forged entries and misappropriations. Using the documents fabricated by the defunct MBL the successor NBP proceeded against petitioner and afterwards declared the company a defaulter which was not justified.

Following the directions of the SBP issued by its newly established Credit Information Bureau (CIB), the name of the petitioner company was circulated alongwith Sardar Enterprises, S. S. Industries, M. Industries, Imperial Pipe Industries, Progressive Carpet Industries, Progressive Photo Finishing Company, and ABM Grauvers Limited as defaulters.

Consequently all the financial institutions and banks declined to deal with the petitioner, causing an irreparable loss to the petitioner the counsel said.

It was prayed that the circular issued by the SBP declaring the petitioner a defaulter may been suspended and the 'import category passbook' of the petitioner be returned.