ORDINANCE NO. XLVI OF 1961
2nd December, 1961
An Ordinance to provide for the registration
and control of voluntary social welfare agencies.
WHEREAS it is expedient to provide for the registration and control of voluntary social welfare agencies, and for matters ancillary thereto;
Now, THEREFORE, in pursuance of the Proclamation of the seventh day of October, 1958, and in exercise of all powers enab¬ling him in that behalf, the President is pleased to make and promulgate the following Ordinance:—

1. Short title, extent and commencement. —(1) This Ordinance may be called the Voluntary Social Welfare Agencies (Registration and Control) Ordinance, 1961.

(2) It extends to the whole of Pakistan.

(3) It shall come into force on such date as the Provincial Government may, by notification in the official Gazette, appoint in this behalf.

2. Definitions. In this Ordinance, unless there is anything repugnant in the subject or context,—

(a) “agency” means a voluntary social welfare agency, and includes any branch of such agency;

(b) “governing body” means the council, committee, trustees or other body, by whatever name called, to whom, by the constitution of the agency, its executive functions and the management of its affairs are en¬trusted;

(c) “prescribed” means prescribed by rules made under section 19;

(d) “register” means the register maintained under section 4, and “registered” shall mean registered under this Ordinance;

(e) “Registration Authority” means 2 an officer authorized by the (Provincial Government, by notification in the official Gazette, to exercise all or any of the powers of the Registration Authority under this Ordinance;

(f) “voluntary social welfare agency” means an organiza¬tion, association or undertaking established by persons of their own free will for the purpose of ren¬dering welfare services in any one or more of the fields mentioned in the Schedule and depending for its re¬sources on public subscriptions, donations or Govern¬ment aid.

3. Prohibition against establishing or continuing an agency without registration. No agency shall be established or continued except in accordance with the provisions of this Ordinance.

4. Application for registration, etc. —(1) Any person intending to establish an agency, and any person intending that an agency already in existence should be continued as such, shall, in the prescribed form, and on pay¬ment of the prescribed fee, make an application to the Regis¬tration Authority, accompanied by a copy of the constitution of the agency, and such other documents as may be prescribed.

(2) The Registration Authority may, on receipt of the app¬lication, make such inquiries as it considers necessary, and either grant the application, or, for reasons to be recorded in writing, reject it.

(3) If the Registration Authority grants the application, it shall issue, in the prescribed form, a certificate of registration to the applicant.

(4) The Registration Authority shall maintain a register, containing such particulars as may be prescribed, of all certi¬ficates issued under sub-section (3).

5. Establishment and continuance agency. —(1) An agency not in existence on the coming into force of this Ordinance shall be established only after a certificate of registration has been issued under sub-section (3) of section 4.

(2) An agency already in existence shall not be continued for more than six months from the date on which this Ordinance comes into force, unless an application for its registration has, within thirty days of such date, been made under sub-section (1) of section 4.

(3) Where an application as aforesaid has been made in res¬pect of an existing agency, and such application is rejected, then, notwithstanding the period of six months provided in sub-section

(2), the agency may be continued for a period of thirty days from the date on which the application is rejected, or if an appeal is preferred under section 6, until such appeal is dismissed.

6. Appeal. If the Registration Authority rejects an application for registration, the applicant may, within thirty days from the date of the order of the Registration Authority, prefer an appeal to the Provincial Government, and the order passed by the Provincial Government shall be final and given effect to by the Registration Authority.

7. Conditions to be complied with by registered agencies. —(1) Every registered agency shall—

(a) maintain audited accounts in the manner laid down by the Registration Authority ;
(b) at such time and in such manner as may be prescribed, submit its Annual Report and audited accounts to the Registration Authority and publish the same for general information ;
(c) pay all moneys received by it into a separate account kept in its name at such bank or banks as may be ap¬proved by the Registration Authority ; and
(d) furnish to the Registration Authority such particulars with regard to accounts and other records as the Registration Authority may from time to time require.

(2) The Registration Authority, or any officer duly authorized by it in this behalf, may at all reasonable times inspect the books of account and other records of the agency, the securities, cash and other properties held by the agency, and all documents relat¬ing thereto.

8. Amendment of the constitution of registered agency. —(1) No amendment of the constitution of a registered agency shall be valid unless it has been approved by the Regis¬tration Authority, for which purpose a copy of the amendment shall be forwarded to the Registration Authority.

(2) If the Registration Authority is satisfied that any amend¬ment of the constitution is not contrary to any of the provisions of this Ordinance or the rules made thereunder, it may, if it thinks fit, approve the amendment.

(3) Where the Registration Authority approves an amend¬ment of the constitution, it shall issue to the agency a copy of the amendment certified by it, which shall be conclusive evidence that the same is duly approved.

9. Suspension or dissolution of governing bodies of registered agencies. —(1) If, after making such inquiries as it may think fit, the Registration Authority is satisfied that a registered agency has been responsible for any irregularity in respect of its funds or for any maladministration in he conduct of its affairs or has failed to comply with the provisions of this Ordinance or the rules made thereunder, it may, by order in writing, suspend the governing body.

(2) Where a governing body is suspended under sub-section (1), the Registration Authority shall appoint an administrator, or a caretaker body consisting of not more than five persons, who shall have all the authority and powers of the governing body under the constitution of the agency.

(3) Every order of suspension under sub-section (1) shall be placed by the Registration Authority before a Board, consisting of not more than five persons, constituted by the Provincial Government for the purpose, which shall have the power to make such order as to the re-instatement, or the dissolution and reconstitution, of the governing body, as it may think fit.

(4) The governing body against whom an order of dissolu¬tion and reconstitution is made under sub-section (3) may appeal to the Provincial Government, within thirty days from the date of such order, and the decision of the Provincial Govern¬ment shall be final and shall not be called in question in any court.

10. Dissolution of registered agency. —(1) If at any time the Registration Authority has reason to believe that a registered agency is acting in contravention of its constitution, or contrary to any of the provisions of this Ordinance or the rules made thereunder, or in a manner pre¬judicial to the interests of the public, it may, after giving such opportunity to the agency of being heard as it thinks fit, make a report thereon to the Provincial Government.

(2) The Provincial Government, if satisfied after considering the report that it is necessary or proper to do so, may order that the agency shall stand dissolved on and from such date as may be specified in the order.

11. Voluntary dissolution of registered agency. —(1) No registered agency shall be dissolved by the governing body or members thereof.

(2) If it is proposed to dissolve any registered agency, not less than three-fifths of its members may apply to the Provincial Government, in such manner as may be prescribed, for making order for the dissolution of such agency.

(3) The Provincial Government, if satisfied after consider¬ing the application that it is proper to do so, may order that the agency shall stand dissolved on and from such date as may be specified in the order.

12. Consequences of dissolution. —(1) Where any agency is dissolved under this Ordinance, its registration thereunder shall stand cancelled on and from the date the order of dissolution takes effect, and the Provincial Government may—

(a) order any bank or other person who holds moneys, securities or other assets on behalf of the agency not to part with such moneys, securities and assets without the previous permission in writing of the Provincial Government;
(b) appoint a competent person to wind up the affairs of the agency, with power to institute and defend suits and other legal proceedings on behalf of the agency, and to make such orders and take such action as may appear to him to be necessary for the purpose ; and
(c) order any moneys, securities and assets remaining after the satisfaction of all debts and liabilities of the agency to be paid or transferred to such other agency, having objects similar to the objects of the agency, as may be specified in the order.

(2) Orders made by the person appointed under clause (b) of sub-section (1) shall, on application, be enforceable by any Civil Court having local jurisdiction in the same manner as a decree of such Court.

13. Inspection of documents, etc. Any person may, on payment of the prescribed fee, inspect at the office of the Registration Authority any document relating to a registered agency, or obtain a copy of or an extract from any such document.

14. Penalties and procedure. —(1) Any person who—

(a) contravenes any of the provisions of this Ordinance, or any rule or order made thereunder ; or
(b) in any application for registration under this Ordinance, or in any report or statement submitted to the Regis¬tration Authority or published for general information thereunder, makes any false statement or false re¬presentation ; shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both.

(2) Where the person committing an offence under this Ordinance is a company, or other body corporate, or an associa¬tion of persons, every director, manager, secretary and other officer thereof shall, unless he proves that the offence was committed without his knowledge or consent, be deemed to be guilty of such offence.

(3) No Court shall take cognizance of an offence under this Ordinance except upon complaint in writing made by the Regis¬tration Authority, or by an officer authorized by it in this behalf.

15. Indemnity. No suit, prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or intended to be done under this Ordinance.

16. Power to amend Schedule. The Provincial Government may, by notification in the official Gazette, amend the Schedule so as to include therein or exclude therefrom any field of social welfare service.

17. Power to exempt. The Provincial Government may, by notification in the official Gazette, exempt any agency or class of agencies from the operation of all or any of the provisions of this Ordinance.

18. Delegation of powers. The Provincial Government may, by notification in the official Gazette, delegate all or any of its powers under this Ordinance, either generally, or in respect of such agency or class of agencies as may be specified in the notification, to any of its officers,

19. Rules. The Provincial Government may, by notification in the official Gazette, make rules for carrying into effect the provi¬sions of this Ordinance.

THE SCHEDULE
See section 2 (f)

(i) Child welfare.
(ii) Youth welfare.
(iii) Women’s welfare.
(iv) Welfare of the physically and mentally handicapped.
(y) Family planning.
(vi) Recreational programs intended to keep people away from anti-social activities.
(vii) Social education, that is, education of adults aimed at developing sense of civic responsibility.
(viii) Welfare and rehabilitation of released prisoners.
(ix) Welfare of juvenile delinquents.
(x) Welfare of the socially handicapped.
(xi) Welfare of the beggars and destitutes.
(xii) Welfare and rehabilitation of patients.
(xiii) Welfare of the aged and infirm.
(xiv) Training in social work.
(xv) Co-ordination of social welfare agencies.

PART II
BUSINESS OF BANKING COMPANIES

7. Forms of business in which banking companies may engage. — (1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely:—

(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of ex¬change, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, travelers cheques and circular notes; the buying, selling and dealing in bullion and species; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the living of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;
(b) acting as agents for any Government or local authority or any other person or persons; the carrying on of agency business of any description including the clear¬ing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a managing agent or treasurer of a company;
(c) contracting for public and private loans and negotia¬ting and issuing the same;
(d) the effecting, insuring, guaranteeing, underwriting, participating in managing and carrying out of any issue, public or private, Government, municipal or other loans or of shares, stock, debentures, or deben-ture stock of any company, corporation or association and the lending of money for the purpose of any such issue;
(e) carrying on and transacting every kind of guarantee and indemnity business;
(f) managing, selling and realising any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims;
(g) acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security;
(h) undertaking and executing trusts;
(i) undertaking the administration of estates as executor, trustee or otherwise;
(j) establishing and supporting or aiding in the establish¬ment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the company or the dependents or connections of such persons; granting pensions and allowances and making payments towards insurance; subscribing to or guaranteeing moneys for charitable or benevolent objects or for any exhibition or for any public, general or useful object;
(k) the acquisition, construction, maintenance and altera¬tion of any building or works necessary or convenient for the purposes of the company;
(l) selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or turning into account or otherwise dealing with all or any part of the property and rights of the company;
(m) acquiring and undertaking the whole or any part of the business of any person or company, when such business is of a nature enumerated or described in this sub-section;
(n) doing all such other things as are incidental or con¬ducive to the promotion or advancement of the busi-ness of the company;
(o) any other form of business which the Central Govern¬ment may, by notification in the official Gazette, specify as a form of business in which it is lawful for a banking company to engage.

(2) No banking company shall engage in any form of business other than those referred to in sub-section (1).

8. Use of the word “Banking” or any of its derivatives. After the expiry of two years from the commencement of this Ordinance every company carrying on the business of banking in Pakistan shall use the word “bank”, or any of its derivatives as part of its name and no company other than a banking company shall use in its name any word calculated to indicate that it is a banking company:

Provided that nothing in this section shall apply to— (a) subsidiary of a banking company formed for one or more of the purposes mentioned in sub-section (1) of section 23 whose name indicates that it is a subsidiary of that banking company; and

(b) any association of banks formed for the protection of their mutual interests and registered under section 26 of the Companies Act, 1913.

9. Prohibition of trading. Notwithstanding anything contained in section 7 or in any contract, no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it. or engage in any trade or buy, sell or barter goods for others otherwise than in connection with bills of exchange received or collection or negotiation or with such of its business as is referred to in clause (i) of sub-section (1) of section 7:

Provided that this section shall not apply to any such business as aforesaid which was in the course of being transacted on the commencement of this Ordinance, so however, that the said business shall be completed before the expiry of one year from such commencement.
Explanation.—For the purposes of this section, “goods” means every kind of movable property, other than actionable claims, stocks, shares, money, bullion and specie, and all instru¬ments referred to in clause (a) of sub-section (1) of section 7.

10. Disposal of non-banking assets. Notwithstanding anything contained in section 7, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Ordinance, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be:
Provided that the banking company may, within the period of seven years as aforesaid, deal or trade in any such property for the purpose of facilitating the disposal thereof:
Provided further that the State Bank may in any particular case extend the aforesaid period of seven years by such period not exceeding five years where it is satisfied that such extension would be in the interests of the depositors of the banking com¬pany.
Explanation.—For the purpose of this section property, a substantial portion of which is in use by banking company for its own genuine requirements shall be deemed to be property for its own use.

11. Prohibition of employment of managing agents and restrictions on certain forms of employment. — (1) No banking company—

(a) shall employ or be managed by a managing agent; or
(b) shall employ or continue the employment of any person—

(i) who is, or at any time has been, adjudicated insol¬vent, or has suspended payment, or has com¬pounded with his creditors, or who is, or has been, convicted by a criminal court of an offence involving moral turpitude; or
(ii) whose remuneration or part of whose remuneration takes the form of commission or of a share in the profits of the company:
Provided that nothing contained in sub-clause (ii) shall apply to the payment by a banking company of—

(a) any bonus in pursuance of a settlement or award arrived at or made under any law relating to industrial disputes or in accordance with any scheme framed by such banking company or in accordance with the usual practice pre¬vailing in banking business; or
(b) any commission to any broker (including guarantee broker), cashier-contractor, clearing and forwarding agent, auctioneer or any other person, employed by the banking company under a contract otherwise than as a regular member of the staff of the company; or
(c) shall be managed by any person—

(i) who is a director of any other company not being a subsidiary company of the banking company or a company registered under section 26 of the Companies Act, 1913, except with the previous approval of the State Bank; or
(ii) who is engaged in any other business or vocation; or
(iii) who has a contract with the company for its manage¬ment for a period exceeding five years at any one time:

Provided that any contract with the company for its manage¬ment may be renewed or extended for a further period not ex¬ceeding five years at a time if and so often as the directors so . decide:

Provided further that nothing in this clause shall apply to a director, other than the managing director, of a banking com¬pany by reasons only of his being such director.

(2) Where a person holding the office of a chairman or director or manager or chief executive officer (by whatever name called) of a banking company is, or has been found by any tribunal or other authority (other than a criminal court) to have contra¬vened the provision of any law and the State Bank is satisfied that the contravention is of such a nature that the association of such person with the banking company is or will be detrimental to the interests of the banking company or its depositors or other¬wise undesirable, the State Bank may make an order that that person shall cease to hold the office with effect from such date as may be specified therein and thereupon, that office shall, with effect from the said date, become vacant.

(3) Any order made under sub-section (2) in respect of any person may also provide that he shall not, without the previous permission of the State Bank in writing, in any way, directly or indirectly, be concerned with, or take part in the management of, the banking company or any other banking company for such period not exceeding five years as may be specified in the order.

(4) No order under sub-section (2) shall be made in respect of any person unless he has been given an opportunity of making a representation to the State Bank against the proposed order:
Provided that it shall not be necessary to give any such opportunity if, in the opinion of the State Bank, any delay would be detrimental to the interests of the banking company or its depositors.

(5) Any decision or order of the State Bank made under this section shall be final for all purposes.

12. Restrictions on removal of records and documents. No banking company shall remove from Pakistan to a place outside Pakistan, any of its records and documents relating to its business at its branches, whether they are functioning or not, without the prior permission in writing of the State Bank.
Explanation.—In this section the term “records” means ledgers, day-books, cash books, accounts books and all other books used in the business of a banking company and the term “documents” means vouchers, cheques, bills, pay orders, secu¬rities for advances and any other documents supporting entries in the books of, or claims by or against, a banking company.

13. Requirement as to minimum paid up capital and reserves. — (1) Notwithstanding anything contained in section 103 of the Companies Act, 1913, no banking company in existence on the commencement of this Ordinance shall, after the expiry of two years from such commencement, if it is incorporated in Pakistan and of six months if it is incorporated outside Pakistan, carry on business in Pakistan, and no other banking company shall, after the commencement of this Ordinance commence or carry on business in Pakistan, unless it has paid-up capital and reserves of such aggregate value as is hereinafter required by this section:
Provided that the State Bank may, if it thinks fit in any parti¬cular case, extend the period referred to in this sub-section by a further period not exceeding one year in the case of banking companies incorporated in Pakistan and six months in the case of banking companies incorporated outside Pakistan.

(2) In the case of a banking company incorporated in Pakis¬tan the aggregate value of its paid-up capital and reserves shall not be less than—

(i) if it has places of business in both the Wings of Pakistan one or more of which is or are situated in the City of Karachi or Lahore, or Dacca or Chittagong, ten lakhs of rupees;
(ii) if it has places of business in both the Wings of Pakis¬tan none of which is situated in the City of Karachi or Lahore or Dacca or Chittagong, five lakhs of rupees;
(iii) if it has places of business either in West Pakistan or in East Pakistan,—

(a) if one or more of its places of business is or are situated in the City of Karachi or Lahore or Dacca or Chittagong, five lakhs of rupees;
(b) if none of its places of business is situated in the City of Karachi or Lahore or Dacca or Chittagong, two and a half lakhs of rupees;

(iv) if it has only one place of business either in West Pakis¬tan or East Pakistan,—

(a) if the place of business is situated in the City of Karachi or Lahore or Dacca or Chittagong, five lakhs of rupees;
(b) if the place of business is situated in a City other than Karachi or Lahore or Dacca or Chittagong, one lakh of rupees.

(3) In the case of a banking company incorporated outside Pakistan the aggregate value of its paid-up capital and reserves shall not at the close of any day be less than twenty lakhs of rupees or an amount representing 5 per cent. of the total demand and time liabilities of such company in Pakistan as at the close of the last working day of the previous calendar year, whichever is higher:

Provided that no such banking company shall be deemed to have complied with the provisions of this sub-section unless it deposits and keeps deposited with the State Bank an amount not less than what is required to be maintained under this sub-section, either in cash or in unencumbered approved securities or partly in cash and partly in such securities:

Provided further that a deposit so made with the State Bank shall be by transfer of funds by the banking company from out¬side Pakistan or in the form of assets acquired by the banking Company out of remittable profits made by it from deposits in Pakistan.

(4) Any amount deposited and kept deposited with the State Bank under the proviso to the sub-section (3) by any banking company incorporated outside Pakistan shall, in the event of the company ceasing for any reason to carry on banking business in Pakistan, be an asset of the company on which the claims of all the creditors of the company in Pakistan shall be a first charge.

(5) For the purposes of this section—

(a) “place of business” means any office, sub-office, sub-pay office and any place of business at which deposits are received, cheques cashed or moneys lent;
(b) “value” means the real or exchangeable value, and not the nominal value which may be shown in the books of the banking company concerned.

(6) If any dispute arises in computing the aggregate value of the paid-up capital and reserves of any banking company, a determination thereof by the State Bank shall be final for the purposes of this section.

14. Regulation of paid-up capita, subscribed capital and authorized capital and voting rights of share holders. — (1) No banking company incorporated in Pakistan shall carry on business in Pakistan unless it satisfies the following conditions, namely:—

(i) that the subscribed capital of the company is not less than one half of the authorized capital and the paid-up capital is not less than one half of the subscribed capital and that if the capital is increased it complies with the conditions prescribed in this clause within such period not exceeding two years as the State Bank may allow;
(ii) that the capital of the company consists of ordinary shares only;
(iii) that, subject to the provisions contained in clause (iv), the voting rights of any one shareholder are strictly proportionate to the contribution made by him to the paid-up capital of the company;
(iv) that the voting rights of any one shareholder, except those of the Central Government or a Provincial Government, do not exceed five per cent. of the total voting rights of all the shareholders.

(2) Notwithstanding anything contained in any law for the time being in force or in any contract or instrument no suit or other proceeding shall be maintained against any person registered as the holder of a share in a banking company on the ground that the title to the said share vests in a person other than the registered holder:

Provided that nothing contained in this sub-section shall bar a suit or other proceeding—

(a) by a transferee of the share on the ground that he has obtained from the registered holder a transfer of the share in accordance with any law relating to such trans¬fer; or
(b) on behalf of a minor or a lunatic on the ground that the registered holder holds the share on behalf of the minor or lunatic.

(3) Every chairman, managing director or chief executive officer by whatever name called of a banking company shall furnish to the State Bank through that banking company returns containing full particulars of the extent and value of his holding of shares, whether directly or indirectly, in the banking company and of any change in the extent of such holding or any variation in the rights attaching thereto and such other information relating to those shares as the State Bank may, by order, require and in such form and at such time as may be specified in the order.

15. Election of new directors. —(1) The State Bank may, by order, require any banking
company to call a general meeting of the shareholders of the company within such time, not less than two months from the date of the order, as may be specified therein or within such further time as the State Bank may allow in this behalf, to elect in accordance with the voting rights permissible under this Ordinance fresh directors, and the banking company shall be bound to comply with the order.

(2) Every director elected under sub-section (1) shall hold office until the date up to which his predecessor would have held office, if the election had not been held.

(3) Any election duly held under this section shall not be called in question in any court.

16. Restrict ion on commission, brokerage, discount, etc., on sale of shares. Notwithstanding anything to the contrary in sections 105 and 105-A of the Companies Act, 1913, no banking company shall pay out directly or indirectly by way of commission, broke¬rage, discount or remuneration in any form in respect of any shares issued by it, any amount exceeding in the aggregate two and one-half per cent. of the paid-up value of the said shares.

17. Prohibition of charge on unpaid capital. No banking company shall create any charge upon any unpaid capital of the company and any such charge, if created, shall be invalid.

18. Prohibition of floating charge on assets. —(1) Notwithstanding anything contained in section 7 no banking company shall create a floating charge on the undertaking or any property of the company or any part thereof, unless the creation of such floating charge is certified in writing by the State Bank as not being detrimental do the interests of the depositors of such company.

(2) Any such charge created without obtaining the certificate of the State Bank shall be invalid.

(3) Any banking company aggrieved by the refusal of a certificate under sub-section (1) may, within ninety days from the date on which such refusal is communicated to it, appeal to the Central Government.

(4) The decision of the Central Government where an ap¬peal has been preferred to it under sub-section (3) or of the State Bank where no such appeal has been preferred shall be final,

19. Restrictions as to payment of dividend. —(1) No banking company shall pay any dividend on its shares until all its capitalised expenses (including preliminary expenses, organisation expenses, share-selling commission, brokerage, amounts of losses incurred and any other item of expenditure not represented by tangible assets) have been com¬pletely written off.

(2) Notwithstanding anything to the contrary contained in sub-section (1) or in the Companies Act, 1913, a banking company may pay dividends on its shares without writing off—

(i) the depreciation, if any, in the value of its investments in approved securities in any case where such deprecia¬tion has not actually been capitalised or otherwise accounted for as a loss ;
(ii) the depreciation, if any, in the value of its investments in shares, debentures or bonds (other than approved securities) in any case where adequate provision for such depreciation has been made to the satisfaction of the auditor of the banking company ;
(iii) the bad debts, if any, in any case where adequate pro¬vision for such debts has been made to the satisfaction of the auditor of the banking company.

20. Prohibition of common directors. —(1) Except with the permission of the State Bank, no banking company incorporated in Pakistan shall have as a direc¬tor any person who is a director—

(i) of any other banking company ; or
(ii) of companies which among themselves are entitled to exercise voting rights in excess of twenty per cent. of the total voting rights of all the shareholders of the banking company.

(2) If immediately before the commencement of this Ordinance any person holding office as a director of a banking company is also a director of companies which among them¬selves are entitled to exercise voting rights in excess of twenty per cent. of the total voting rights of all the shareholders of the banking company he shall, within such period from such com¬mencement as the State Bank may specify in this behalf—

(a) either resign his office as a director of the banking com¬pany ; or
(b) choose such number of companies as among them¬selves are not entitled to exercise voting rights in excess of twenty per cent. of the total voting rights of all the shareholders of the banking company as companies in which he wishes to continue to hold the office of a director and resign his office as a director in the other companies.

21. Reserve Fund. —(1) Every banking company incorporated in Pakistan shall create a reserve fund and unless the amount in such fund together with the amount in the share premium account is not less than its paid-up capital, shall, out of the balance of profit of each year as disclosed in the profit and loss account prepared under section 33 and before any dividend is-declared, transfer to the reserve fund a sum equivalent to not less than twenty per cent. of such profit.

(2) Where a banking company appropriates any sum or sums from the reserve fund or the share premium account, it shall, within twenty-one days from the date of such appropriation, report the fact to the State Bank explaining the circumstances relating to such appropriation :

Provided that the State Bank may, in any particular case, extend the said period of twenty-one days by such period as it thinks fit or condone any delay in the making of such report.

22. Cash Reserve. Every banking company, not being a scheduled bank, shall maintain by way of cash reserve in cash with itself, or in current account opened with the State Bank or its agent or partly in cash with itself and partly in such account or accounts a sum equivalent to at least two per cent. of its time liabilities in Pakistan and five per cent. of its demand liabilities in Pakistan and shall submit to the State Bank before the fifteenth day of every month a return showing the amount so held on Friday of each week of the preceding month with particulars of its time and demand liabilities in Pakistan on each such Friday or if any such Friday is a public holiday under the Negotiable Instruments Act, 1881, at the close of business on the preceding working day.

Explanation.—In this section and in section 29, “liabilities in Pakistan” shall not include the paid-up capital or the reserves or any credit balance in the profit and loss account of the bank¬ing company or the amount of any loan taken from the State Bank.

23. Restriction on the nature of subsidiary companies. — (1) A banking company shall not from any subsidiary company except a subsidiary company formed for one or more of the following purposes, namely :—

(a) the undertaking and executing of trusts,
(b) the undertaking of the administration of estates as executor, trustee or otherwise,
(c) the providing of safe deposit vaults,
(d) with the previous permission in writing of the State Bank, the carrying on of the business of banking exclusively outside Pakistan, or
(e) such other purposes as are incidental to the business of banking.

(2) Save as provided in sub-section (1), no banking com¬pany shall hold shares in any company whether as pledgee, mortgagee or absolute owner, of an amount exceeding thirty per cent. of the paid-up share capital of that company or thirty per cent. of its own paid-up share capital and reserves, whichever is less :

Provided that any banking company which is on the date of commencement of this Ordinance holding any shares in contra¬vention of the provisions of this subsection shall not be liable to any penalty therefor if it reports the matter without delay, to the State Bank and if it brings its holding of shares into con¬formity with the said provisions within such period, not exceed¬ing two years, as the State Bank may think fit to allow.

(3) Save as provided in sub-section (1) and notwithstanding anything contained in sub-section (2), a banking company shall not, after the expiry of one year from the date of commencement of this Ordinance hold shares, whether as pledgee, mortgagee or absolute owner, in any company in the management of which any managing director or manager of the banking company is in any manner concerned or interested.

24. Restrictions on loans and advances. —(1) Notwithstanding anything to the contrary con¬tained in section 54A of the Companies Act, 191-3, no banking company shall make any loans or advances on the security of its own shares or grant unsecured loans or advances to any of its directors or to firms or private companies in which it or any of its directors is interested as partner or managing agent, or to any individuals, firms or private companies in cases where any of the directors is a guarantor.

(2) No banking company shall make loans or advances to any of its directors or to individuals, firms, or companies in which it or any of its directors is interested as partner, director, manag¬ing agent or guarantor, as the case may be, without the approval of the majority of the directors of that banking company, ex¬cluding the director concerned.

(3) Every banking company shall, before the close of the month succeeding that to which the return relates, submit to the State Bank a return in the prescribed form and manner, showing parti¬culars of—

(a) all unsecured loans and advances granted by it to com¬panies, private as well as public in which it or any of its directors is interested as a director; and
(b) all unsecured loans and advances granted by it to public companies in which it or any of its directors is interested as managing agent or guarantor.

(4) If on examination of any return submitted under sub¬section (3) it appears to the State Bank that any loans or ad¬vances referred to in that sub-section have been granted to the detriment of the interests of the depositors of the banking com¬pany, the State Bank may, by order in writing, prohibit the banking company from granting any such further loans or advances or impose such restrictions on the grant thereof as it thinks fit, and may, by like order, direct the banking company to secure the repayment of any such loans or advances within such time as may be specified in the order.

25. Powers of state Bank to control advances by banking companies. —(1) Whenever the State Bank is satisfied that it is necessary or expedient in the public interest so to do, it may determine the policy in relation to advances to be followed by banking companies generally or by any banking company in particular and when the policy has been so determined, all bank¬ing companies or the banking company concerned, as the case may be, shall be bound to follow the policy as so determined.

(2) Without prejudice to the generality of the power vested in the State Bank under sub-section (1), the State Bank may give directions to banking companies either generally or to any banking company or group of banking companies in particular, as to the purposes for which advances may or may not be made, the margins to be maintained in respect of secured advances and the rates of interest to be charged on advances and each banking company shall be bound to comply with any directions as so given.

26. Power of central Government to Prohibit acceptance of deposits by banking companies incorporated outside Pakistan. The Central Government may, by notification in the official Gazette, order that any banking company or any class of banking companies or all banking companies incorporated outside Pakistan shall from a date to be specified in the noti¬fication—

(1) discontinue to accept any interest bearing deposits or accept such deposits only upon such terms and under such conditions as may be specified in the notification:

Provided that no such notification shall be made earlier than three years after the commencement of this Ordinance and the date specified in the notification shall not be earlier than six months after the date of the notification; or

(2) discontinue to accept any deposits or accept deposits only upon such terms and under such conditions as may be specified in the notification:

Provided that no such notification shall be made earlier than three years after the commencement of this Ordinance and the date specified in the notifica¬tion shall not be earlier than one year from the date of the notification.

27. Licensing of banking companies. —(1) Save as hereinafter provided, no company shall carry on banking business in Pakistan unless it holds a licence issued in that behalf by the State Bank and any such licence may be issued subject to such conditions as the State Bank may think fit to impose.

(2) Every banking company in existence on the commence¬ment of this Ordinance, before the expiry of six months from such commencement, and every other company before com¬mencing banking business in Pakistan, shall apply in writing to the State Bank for a licence under this section:

Provided that nothing in sub-section (1) shall be deemed to prohibit a banking company in existence on the commencement of this Ordinance from carrying on banking business until it is granted a licence in pursuance of this section or is by notice in writing informed by the State Bank that a licence cannot be granted to it:

Provided further that the State Bank shall not give a notice as aforesaid to a banking company in existence on the commen¬cement of this Ordinance before the expiry of the period of two years in the case of banking companies incorporated in Pakistan and of six months in the case of. banking companies incorporated outside Pakistan referred to in sub-section (1) of section 13 or of such further period as the State Bank may under the proviso to that sub-section think fit to allow.

(3) Before granting any licence under this section, the State Bank may require to be satisfied by an inspection of the books of the company or otherwise that all or any of the following condi¬tions are fulfilled, namely :—

(a) that the company is or will be in a position to pay its present or future depositors in full as their claims accrue;
(b) that the affairs of the company are not being or are not likely to be conducted in a manner detrimental to the interests of its present or future depositors;
(c) that, in the case of a company incorporated outside Pakistan, the Government or law of the country in which it is incorporated provides the same facilities to banking companies registered in Pakistan as the Go¬vernment or law of Pakistan grants to banking com¬panies incorporated outside Pakistan and that the company complies with all the provisions of this Ordinance applicable to banking companies incorporated outside Pakistan.

(4) The State Bank may cancel a licence granted to a bank¬ing company under this section,—

(i) if the company ceases to carry on banking business in Pakistan; or
(ii) if the company at any time fails to comply with any of the conditions imposed upon it under sub-section (1) ; or
(iii) if at any time, any of the conditions referred to in sub¬section (3) ceases to be fulfilled:
Provided that before canceling a licence under clause (ii) or clause (iii) of this sub-section on the ground that the banking company has failed to comply with or has failed or ceased to fulfil any of the conditions referred to therein, the State Bank, unless it is of opinion that the delay will be prejudicial to the interests of the companies depositors or the public, shall grant to the company on such terms as it may specify, an opportunity of taking the necessary steps for complying with or fulfilling such condition.

(5) Any banking company aggrieved by the decision of the State Bank canceling a licence under this section may, within thirty days from the date on which such decision is communi¬cated to it, appeal to the Central Government.

(6) The decision of the Central Government where an appeal has been preferred to it under sub-section (5) or of the State Bank where no such appeal has been preferred shall be final.

28. Restrictions on opening of new, and transfer of existing, places of business. —(1) No banking company shall open a new place of business in any part of Pakistan or change, otherwise than within the same city, town or village the location of an existing place of business situated in any part of Pakistan and no banking company incorporated in Pakistan shall open a new place of business outside Pakistan or change, otherwise than within the same city, town or village in any country or area outside Pakistan, the location of an existing place of business situated in that country or area without first obtaining the prior permission in writing of the State Bank.

(2) Nothing in this section shall apply to the opening for a period not exceeding one month of a temporary place of business within a city, town or village or the environs thereof within which the banking company already has a place of business, for the pur¬pose of affording banking facilities to the public on the occasion of an exhibition, a conference or a mela or any other like occasion:

Provided intimation of such opening is given to the State Bank within one week of the date of opening.

Explanation.—For the purpose of this section—

(a) “place of business” includes any sub-office, pay-office, sub-pay office and any place of business at which de¬posits are received, cheques cashed or moneys lent;
(b) “new place of business” includes a place of business which is reopened after being temporarily closed.

(3) The State Bank may, before giving the permission referred to in sub-section (1) of this section to any banking company, require to be satisfied by an inspection under section 40 or otherwise regarding such aspects of the companies affairs as the State Bank may deem necessary.

29. Maintenance of liquid assets. —(1) Every banking company shall maintain in Pakistan in cash, gold or unencumbered approved securities valued at a price not exceeding the current market price, an amount which shall not at the close of business on any day be less than twenty per cent of the total of its time and demand liabilities in Pakistan.

Provided that the requirements of sub-section (1) as to the maintenance in Pakistan of cash, gold or unencumbered approved securities may from time to time, by notification in the official Gazette, be varied by the Central Government..

Explanation.—For the purposes of this section, “unencum¬bered approved securities” of a banking company shall include its approved securities lodged with another institution for an advance or any other credit arrangement to the extent to which such securities have not been drawn against or availed of.

(2) In computing the amount provided for in sub-section (1), any deposit required under the proviso to sub-section (3) of section 13 to be made with the State Bank by a banking com¬pany incorporated outside Pakistan and any balances maintained in Pakistan by a banking company in current account with the State Bank or its agent or both, including in the case of a schedul¬ed bank the balance required to be so maintained under sub¬section (1) of section 36 of the State Bank of Pakistan Act, 1956, shall be deemed to be cash maintained.

(3) Every banking company shall, before the close of the month succeeding the month to which the return relates, furnish to the State Bank a monthly return in the prescribed form and manner showing particulars of the companies assets maintained in accordance with this section and its time and demand liabilities in Pakistan at the close of business on each Friday during the month, or if any Friday is a public holiday under the Negotiable Instruments Act, 1881, at the close of business on the preceding working day.

30. Assets in Pakistan. —(1) At the close of business on any day the assets in Pakistan of every banking company shall not be less in value than an amount representing such percentage of its time and demand liabilities in Pakistan as may be prescribed by the State Bank from time to time provided that the percentage so pres¬cribed shall not exceed eighty five per cent.

(2) Every banking company shall, before the close of the month succeeding that to which the return relates, furnish to the State Bank, in the prescribed form and manner a monthly return showing particulars of the companies assets maintained in accor¬dance with this section and its time and demand liabilities in Pakistan at the close of business on every Friday or if any Friday is a public holiday under the Negotiable Instruments Act, 1881, at the close of business on the preceding working day.

(3) For the purposes of this section—

(a) “assets in Pakistan” shall be deemed to include export bills drawn in, and import bills drawn on and payable in, Pakistan and expressed in such currencies as the State Bank may from time to time approve in this behalf and also such securities as the State Bank may approve in this behalf notwithstanding that all or any of the said bills or securities are held outside Pakistan, but shall exclude such assets as in the opinion of the State Bank cannot properly be regarded as assets;
(b) “liabilities in Pakistan” shall not include the paid-up capital or the reserves or any credit balance in the profit and loss account of the banking company.

31. Return of unclaimed deposits. Every banking company shall, within thirty days after the close of each calendar year, submit a return in the prescribed form and manner to the State Bank as at the end of such calendar year of all accounts in Pakistan which have not been operated upon for ten years, giving particulars of the deposits standing to the credit of each such account:

Provided that in the case of money deposited for a fixed period the said term of ten years shall be reckoned from the date of expiry of such fixed period.

32. Half-yearly returns and power to call for other returns and information. — (1) Every banking company shall, before the close of the month succeeding the half-year to which the return relates submit to the State Bank a half-yearly return in the prescribed form and manner showing its assets and liabilities in Pakistan as they stood at the close of business on the thirtieth day of June in the first half and the thirty-first day of December, in the second half of the year.

(2) The State Bank may, at any time, by notice in writing, require banking companies generally, or any banking company in particular to furnish it within the time specified therein or such further time as the State Bank may allow, with any state¬ment or information relating to the business or affairs of such banking company or companies (including any business or affairs with which such banking company or companies is or are con¬cerned) and, without prejudice to the generality of the foregoing power, may call for information, at such intervals as the State Bank may deem necessary, regarding the investments of banking companies and the classification of their advances in respect of industry, commerce and agriculture.

33. Power to publish information. The State Bank, if it considers it in the public interest so to do, may publish any information obtained by it under this Ordinance in such consolidated form as it thinks fit.

34. Accounts and balance sheet. — (1) At the expiration of each calendar year every banking company incorporated in Pakistan, in respect of all business transacted by it, and every banking company incor¬porated outside Pakistan, in respect of all business transacted through its brandies in Pakistan, shall prepare with reference to that year a balance sheet and profit and loss account as on the last working day of the year in the forms set out in the Second Sche-dule or as near thereto as circumstances admit.

(2) The balance sheet and profit and loss account shall be signed:—

(a) in the case of a banking company incorporated in Pakistan, by the manager or the principal officer of the company and where there are more than three directors of the company, by at least three of those directors, or where there are not more than three directors, by all the directors, and
(b) in the case of a banking company incorporated out¬side Pakistan by the manager or agent of the principal office of the company in Pakistan and by another officer next in seniority to the manager or agent.

(3) Notwithstanding that the balance sheet of a banking company is under sub-section (1) required to be prepared in a form other than the form marked F in the Third Schedule to the Companies Act, 1913, the requirements of that Act relating to the balance-sheet and profit and loss account of a company shall, in so far as they arc not inconsistent with this Ordinance, apply to the balance-sheet or profit and loss account, as the case may be, of a banking company.

(4) The State Bank may, after giving not less than three months notice of its intention so to do, from time to time by a notification in the official Gazette, amend the forms set out in the Second Schedule.

35. Audit. — (1) The balance sheet and profit and loss account prepared in accordance with section 34 shall be audited by a person duly qualified under Chartered Accountants Ordinance, 1961, or any other law for the time being in force to be an auditor of companies.

(2) The auditor shall have the powers of, exercise the func¬tions vested in, and discharge the duties and be subject to the liabilities and penalties imposed on, auditors of companies by section 145 of the Companies Act, 1913.

(3) In addition to the matters which under the aforesaid Act the auditor is required to state in his report, he shall also state—

(a) whether or not the information and explanations re¬quired by him have been found to be satisfactory;
(b) whether or not the transactions of the company which have come to his notice have been within the powers of the company;
(c) whether or not the returns received from branch offices of the company have been found adequate for the purposes of his audit;
(d) whether the profit and loss account shows a true balance of profit and loss for the period covered by such account;
(e) any other matter which he considers should be brought to the notice of the shareholders of the company.

36. Submission of returns. The accounts and balance-sheet referred to in section 34 together with the auditors report as passed in the Annual General Meeting shall be published in the prescribed manner, and three copies thereof shall be furnished as returns to the State Bank within three months of the close of the period to which they relate:

Provided that the State Bank may in special circumstances extend the said period of three months for the furnishing of such returns by a further period not exceeding three months.

37. Copies of Balance sheets and accounts to be sent to registrar. Where a banking company in any year furnishes its balance-sheet and accounts in accordance with the provisions of section 36 it may, or when it is a private company, shall, at the same time send to the registrar three copies of such balance-sheet and accounts and of the auditors report, and where such copies are so sent, it shall not be necessary for the company, to file copies of the balance sheet and accounts with the registrar as required by sub-section (1) of section 134 of the Companies Act, 1913, and such copies so sent shall be chargeable with the same fees and shall be dealt with in all respects as if they were filed in accordance with that section.

38. Display of audited balance sheet by banking companies incorporated outside Pakistan. Every banking company, incorporated outside Pakistan shall, not later than the first Monday in August of any year in which it carries on business, display in a conspicuous place in its principal office and in every branch office in Pakistan, a copy of its last audited balance sheet and profit and loss account prepared under section 34 and shall keep it so displayed until replaced by a copy of the subsequent balance sheet and profit and loss account so prepared and every such banking company shall in addition display in like manner copies of its complete audited balance sheet and profit and loss account relating to its banking business as soon as they are available and shall keep the copies so dis¬played until copies of such subsequent accounts are available.

39. Accounting Provisions of this Ordinance not retrospective. Nothing in this Ordinance shall apply to the preparation of accounts by a banking company and the audit and submission thereof in respect of any accounting year which has expired prior to the commencement of this Ordinance, and notwith¬standing the other provisions of this Ordinance such accounts shall be prepared, audited and submitted in accordance with the law in force immediately before the commencement of this Ordinance.

40. Inspection. — (1) Notwithstanding anything to the contrary contained in section 138 of the Companies Act, 1913, the State Bank may, at any time, and, on being directed so to do by the Central Govern¬ment, shall, inspect any banking company and its books and accounts.

(2) The inspection shall be carried out by such officers of the State Bank as the State Bank may direct.

(3) The State Bank shall supply to the banking company a copy of its report on the inspection made under this section.

(4) It shall be the duty of every director or other officer of the banking company to produce to any officer, hereafter in this section called the inspecting officer, making an inspection under this section, all such books, accounts and other documents in his custody or power and to furnish him with such statements and information relating to the affairs of the banking company and within such time as the inspecting officer may require.

(5) The inspecting officer may examine on oath any director or other officer of the banking company in relation to its business and may administer an oath accordingly.

(6) The State Bank shall, if it has been directed by the Central Government to make an inspection, and, in any other case, may, submit a report to the Central Government on any inspection made under this section and the Central Government, if it is of opinion, after considering the report that the affairs of the banking company are being conducted to the detriment of the interests of its depositors, may, after giving such opportunity to the bank¬ing company to make a representation in connection with the report as, in the opinion of the Central Government, seems reasonable, by order in writing—

(a) prohibit the banking company from receiving fresh deposits;
(b) direct the State Bank to apply under section 49 for the winding up of the banking company:
Provided that the Central Government may defer, for such period as it may think fit, the passing of an order under this sub¬section, or cancel or modify any such order, upon such terms and conditions as it may think fit to impose.

(7) The Central Government, may, after giving reasonable notice to the banking company, publish, on the advice of the State Bank, the report submitted by the State Bank or such portion thereof as may appear necessary to the Central Govern¬ment.

Explanation.—For the purposes of this section, the expres¬sion “banking company” shall include—

(i) in the case of a banking company incorporated outside Pakistan, all its branches in Pakistan; and
(ii) in the case of a banking company incorporated in Pakistan—

(a) all its subsidiaries formed for the purpose of carry¬ing on the business of banking exclusively outside Pakistan; and
(b) all its branches whether situated in Pakistan or outside Pakistan,

41. Power of the state Bank to give directions. — (1) Where the State Bank is satisfied that—

(a) in the public interest; or
(b) to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or
(c) to secure the proper management of any banking company generally; it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions.

(2) The State Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub¬section (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modi¬fication or cancellation shall have effect.

42. Further powers and functions of the state Bank. — (1) The State Bank may—

(a) caution or prohibit banking companies generally or any banking company in particular against entering into any particular transaction or class of transactions, and generally give advice to any banking company;
(b) require banking companies generally, or any banking company in particular, to refrain from taking such action as it may specify in relation to any matter rela¬ting to the business of such banking company or companies, or to take such action in relation thereto as the State Bank thinks fit;
(c) on a request from the banking companies concerned and subject to the provisions of section 59 assist as intermediary or otherwise, in proposals for the amalga¬mation of such Banking companies;
(d) during the course, or after the completion, of any inspection of a banking company under section 40, by order in writing and on such terms and conditions as may be specified therein—

(i) require the banking company to call a meeting of its directors for the purpose of considering any matter relating to or arising out of the affairs of the banking company, or require an officer of the bank¬ing company to discuss any such matter with an officer of the State Bank;
(ii) depute one or more of its officers to watch the pro¬ceedings at any meeting of the Board of Directors of the banking company or of any committee or of any other body constituted by it; require the banking company to give an opportunity to the officers so deputed to be heard at such meetings and also require such officers to send a report of such proceedings to the State Bank;
(iii) require the Board of Directors of the banking company or any committee or any other body constituted by it to give in writing to any officer specified by the State Bank in this behalf at his usual address all notices of, and other communica¬tions relating to, any meeting of the Board, com¬mittee or other body constituted by it;
(iv) appoint one or more of its officers to observe the manner in which the affairs of the banking com-pany or of its offices or branches are being con¬ducted and make a report thereon;
(v) require the banking company to make, within such time as may be specified in the order, such changes in the management as the State Bank may consider necessary in consequence of the state of affairs disclosed during or by the inspection.

(2) The State Bank shall make an annual report to the Central Government on the trend and progress of banking in the country, with particular reference to its activities under sub¬section (2) of section 17 of the State Bank of Pakistan Act, 1956, including in such report its suggestions, if any, for the streng¬thening of banking business throughout the country.

43. Certain provisions of the Ordinance not to apply to certain banking companies. — (1) The provisions of section 13, sub-section (1) of section 14, and sections 21, 22, 29 and 30 shall not apply to a banking company—

(a) which has been refused a licence under section 27, or prohibited from accepting fresh deposits by a com¬promise, arrangement or scheme sanctioned by a court or by any order made in any proceeding relating to such compromise, arrangement or scheme, or prohibited from accepting deposits by virtue of any alteration made in its memorandum; or (b) whose licence has been cancelled under section 27.

(2) Where the State Bank is satisfied that any such banking company as is referred to in sub-section (1) has repaid, or has made adequate provision for repaying all deposits accepted by the banking company, either in full or to the maximum extent possible, the State Bank may, by notice published in the official Gazette, notify that the banking company has ceased to be a banking company within the meaning of this Ordinance, and thereupon all the provisions of this Ordinance applicable to such banking company shall cease to apply to it, except as respects things done or omitted to be done before such notice.

PART III
SUSPENSION OF BUSINESS AND WINDING UP OF BANKING
COMPANIES.

44. High Court defined. In this Part and in Part IV “High Court”, in relation to a banking company, means the High Court exercising jurisdic¬tion in the place where the registered office of the banking com¬pany is situated or, in the case of a banking company incorporated outside Pakistan, where its principal place of business in Pakistan is situated.

45. Restriction on stay order. — (1) The High Court may, on the application of a bank¬ing company which is temporarily unable to meet its obligations make an order staying for a fixed period on such terms and con¬ditions as it may think fit the commencement or continuance of all proceedings against the company and may from time to time extend the period so however that the total period including the period of any stay order granted under the proviso to sub-section (2), shall not exceed six months.

(2) Except as hereinafter provided no order of stay shall be granted upon such application unless it is accompanied by a report of the State Bank showing that in the opinion of the State Bank the banking company will be able to pay its debts if the applica¬tion is granted:

Provided that in the case of an application not so accom¬panied the High Court may, if it thinks fit, grant stay for a period of not more than thirty days in the aggregate, and, if such stay is granted, shall call for a report from the State Bank on the affairs of the banking company, on receipt of which it may either rescind an order already passed or pass such further orders as it may consider just and proper in the circumstances.

(3) The High Court shall forward to the State Bank a copy of every stay order made under this section.

(4) When an application is made under sub-section (1), the High Court may appoint a special officer who shall forthwith take into his custody or under his control all the assets, books, documents, effects and actionable claims to which the banking company is or appears to be entitled and shall also exercise such other powers as the High Court may deem fit to confer on him, having regard to the interests of the depositors of the banking company.

(5) Where the State Bank is satisfied that the affairs of a banking company in respect of which an order under sub-section (1) has been made, are being conducted in a manner detrimental to the interests of the depositors, it may make an application to the High Court for the winding up of the company, and where any such application is made, the High Court shall not make any order extending the period for which the commencement or continuance of all actions and proceedings against the company were stayed under that sub-section.

(6) The special officer appointed by the High Court under sub-section (4) of this section shall continue to hold office until he is removed from office, or until the bank resumes business, or until a liquidator is duly appointed to wind up the business of the bank.

46. Restriction on compromise or arrangement between banking companies and creditors. — (1) Notwithstanding anything contained in any law for the time being in force, no High Court shall sanction a com¬promise or arrangement between a banking company and its creditors or any class of them or between such company and its members or any class of them unless the compromise or arrange¬ment is certified by the State Bank in writing as not being in¬capable of being worked and as not being detrimental to the interests of the depositors of such banking company.

(2) Where an application under section 153 of the Companies of Act, 1913, is made in respect of a banking company, the High 3, Court may direct the State Bank to make an inquiry in relation to the affairs of the banking company and the conduct of its directors and when such a direction is given, the State Bank shall make such inquiry and submit its report to the High Court.

47. Power of state bank to apply to central Government for suspension of business by a banking company and to prepare scheme of reconstruction or amalgamation. — (1) Notwithstanding anything contained in the provi¬sions of this Part or in any other law or any agreement or other instrument, for the time being in force, where it appears to the State Bank that there is good reason so to do, the State Bank may apply to the Central Government for an order of moratorium in respect of a banking company.

(2) The Central Government, after considering the applica¬tion made by the State Bank under sub-section (1), may make an order of moratorium staying the commencement or continuance of all action and proceedings against the company for a fixed period of time on such terms and conditions as it thinks fit and proper and may from time to time extend the period so however that the total period of moratorium shall not exceed six months.

(3) Except as otherwise provided by any directions given by the Central Government in the order made by it under sub-section (2) or at any time thereafter, the banking company shall not during the period of moratorium make any payment to any depositors or discharge any liabilities or obligations to any other creditors.

(4) During the period of moratorium, if the State Bank is satisfied that—

(a) in the public interest; or
(b) in the interests of the depositors; or
(c) in order to secure the proper management of the bank¬ing company; or
(d) in the interests of the banking system of the country as a whole, it is necessary so to do, the State Bank may prepare a scheme—

(i) for the reconstruction of the banking company, or
(ii) for the amalgamation of the banking company with any other banking institution (in this section referred to as the transferee bank”).

(5) The scheme aforesaid may contain provisions for all or any of the following matters, namely:—

(a) the constitution, name and registered office, the capital, assets, powers, rights, interests, authorities and privileges, the liabilities, duties and obligations, of the banking company on its reconstruction or, as the case may be, of the transferee bank;
(b) in the case of amalgamation of the banking company, the transfer to the transferee bank of the business, properties, assets and liabilities of the banking company on such terms and conditions as may be specified in the scheme;
(c) any change in the Board of Directors, or the appoint¬ment of a new Board of Directors, of the banking company on its reconstruction or, as the case may be, of the transferee bank and the authority by whom, the manner in which, and the other terms and condi¬tions on which, such change or appointment shall be made and in the case of appointment of a new Board of Directors or of any director, the period for which such appointment shall be made;
(d) the alteration of the memorandum and articles of association of the banking company on its reconstruc¬tion or, as the case may be, of the transferee bank for the purpose of altering the capital thereof or for such other purposes as may be necessary to give effect to the reconstruction or amalgamation;
(e) subject to the provisions of the scheme, the continua¬tion by or against the banking company on its recon¬struction or, as the case may be, the transferee bank, of any actions or proceedings pending against the banking company immediately before the date of the order of moratorium;
(f) the reduction of the interest or rights which the mem¬bers, depositors and other creditors have in or against the banking company before its reconstruction or amalgamation to such extent as the State Bank con¬siders necessary in the public interest or in the interests of the members, depositors and other creditors or for the maintenance of the business of the banking com¬pany;
(g) the payment in cash or otherwise to depositors and other creditors in full satisfaction of their claim—

(i) in respect of their interest or rights in or against the banking company before its reconstruction or amalgamation; or
(ii) where their interest or rights aforesaid in or against the banking company has or have been reduced under clause (/), in respect of such interest or rights as so reduced;

(h) the allotment to the members of the banking company for shares held by them therein before its reconstruction or amalgamation, whether their interest in such shares has been reduced under clause (f) or not, of shares in the banking company on its reconstruction or, as the case may be, in the transferee bank and where any members claim payment in cash and not allotment of shares, or where it is not possible to allot shares to any members, the payment in cash to those members in full satisfaction of their claim—

(i) in respect of their interest in shares in the banking company before its reconstruction or amalgama¬tion; or
(ii) where such interest has been reduced under clause (/), in respect of their interest in shares as so reduced;
(iii) the continuance of the services of all the employees of the banking company, excepting such of them who, not being workmen within the meaning of the Industrial Disputes Ordinance, 1959, are specifically mentioned in the scheme, in the banking company itself on its reconstruction or, as the case may be, in the transferee bank at the same remuneration and on the same terms and conditions of service, which they were getting or, as the case may be, by which they were being governed, immediately before the date of the order of moratorium:

Provided that the scheme shall contain a provision that—

(i) the banking company shall pay or grant not later than the expiry of the period of three years from the date on which the scheme is sanctioned by the Central Government, to the said employees the same remuneration and the same terms and con¬ditions of service as are applicable to employees of corresponding rank or status of a comparable banking company to be determined for this pur¬pose by the State Bank whose determination in this respect shall be final;
(ii) the transferee bank shall pay or grant not later than the expiry of the aforesaid period of three years, to the said employees the same remuneration and the same terms and conditions of service as are applicable to the other employees of corresponding rank or status of the transferee bank subject to the qualifications and experience of the said employees being the same as or equivalent to those of such other employees of-the transferee bank:
Provided further that if in any case under clause (ii) of the first proviso any doubt or difference arises as to whether the qualification and experience of any of the said employees are the same as or equivalent to the qualifi¬cations and experience of the other employees of corresponding rank or status of the transferee bank, the doubt or difference shall be referred to the State Bank whose decision thereon shall be final;
(j) notwithstanding anything contained in clause (i) where any of the employees of the banking company, not being workman within the meaning of the Industrial Disputes Ordinance, 1959, are specifically mentioned in the scheme under clause (;), or where any employees of the banking company have by notice in writing given to the banking company or, as the case may be, the transferee bank at any time before the expiry of one month next following the date on which the scheme is sanctioned by the Central Government, intimated their intention of not becoming employees of the bank¬ing company on its reconstruction or, as the case may be, of the transferee bank, the payment to such em¬ployees of compensation, if any, to which they are entitled under the Industrial Disputes Ordinance, 1959, and such pension, gratuity, provident fund and other retirement benefits ordinarily admissible to them under the rules or authorizations of the banking com¬pany immediately before the date of the order of moratorium;
(k) any other terms and conditions for the reconstruction or amalgamation of the banking company ;
(l) such incidental, consequential and supplemental matters as arc necessary to secure that the reconstruc-tion or amalgamation shall be fully and effectively carried out.

(6) A copy of the scheme prepared by the State Bank shall be sent in draft to the banking company and also to the trans¬feree bank and any other banking company concerned in the amalgamation, for suggestions and objections, if any, within such period as the State Bank may specify for this purpose.

(7) The State Bank may make such modifications, if any, in the draft scheme as it may consider necessary in the light of the suggestions and objections received from the banking com¬pany and also from the transferee bank, and any other banking company concerned in the amalgamation and from any members, depositors or other creditors of each of those companies and the transferee bank.

(8) The scheme shall thereafter be placed before the Central Government for its sanction and the Central Government may sanction the scheme without any modifications or with such modi¬fications as it may consider necessary; and the scheme as sanctioned by the Central Government shall come into force on such date as the Central Government may specify in this behalf :

Provided that different dates may be specified for different provisions of the scheme.

(9) Upon the coming into operation of the scheme or any provision thereof, the scheme or such provision shall be binding on the banking and any other banking company concerned in the amalgamation and also company or, as the case may be, on the transferee bank and any other banking company concern¬ed in the amalgamation and also on all the members, depositors and other creditors and employees of each of those companies and of the transferee bank, and on any other person having any right or liability in relation to any of those companies or the transferee bank.

(10) On such date as may be specified by the Central Gov¬ernment in this behalf, the properties and assets of the banking company shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vest in, and the liabilities of the banking company shall, by virtue of and to the extent pro¬vided in the scheme, stand transferred to, and become the liabi¬lities of, the transferee bank.

(11) If any difficulty arises in giving effect to the provisions of the scheme, the Central Government may by order do anything not inconsistent with such provisions which appears to it neces¬sary or expedient for the purpose of removing the difficulty.

(12) Copies of the scheme or of any order made under sub¬section (11) shall be laid on the table of the Legislature, as soon as may be, after the scheme has been sanctioned by the Central Government, or as the case may be, the order has been made.

(13) Where the scheme is a scheme for amalgamation of the banking company, any business acquired by the transferee bank under the scheme or under any provision thereof shall, after the coming into operation of the scheme or such provision, be carried on by the transferee bank in accordance with the law governing the transferee bank, subject to such modifications in that law or such exemptions of the transferee bank from the operation of any provisions thereof as the Central Government, on the recom¬mendation of the State Bank, may, by notification in the official Gazette, make for the purpose of giving full effect to the scheme:

Provided that no such modification or exemption shall be made so as to have effect for a period of more than seven years from the date of the acquisition of such business.

(14) Nothing in this section shall be deemed to prevent the amalgamation with a banking institution by a single scheme of several banking companies in respect of each of which an order of moratorium has been made under this section.

(15) The provisions of this section and of any scheme made under it shall have effect notwithstanding anything to the contrary contained in any other provisions of this Ordinance or in any other law or any agreement, award or other instrument for the time being in force.

(16) In this section, “banking institution” means any banking company and includes the National Bank of Pakistan.

48. Procedure for amalgamation of banking companies. —(1) Notwithstanding anything contained in any law for the time being in force, no banking company shall be amal¬gamated with another banking company, unless a scheme con¬taining the terms of such amalgamation has been placed in draft before the shareholders of each of the banking companies con¬cerned separately, and approved by a resolution passed by a majority in number representing two thirds in value of the share¬holders of each of the said companies, present either in person or by proxy at a meeting called for the purpose.

(2) Notice of every such meeting as is referred to in sub-sec¬tion (1) shall be given to every shareholder of each of the banking companies concerned in accordance with the relevant articles of association, indicating the time, place and object of the meeting, and shall also be published at least once a week for three con¬secutive weeks in not less than two newspapers which circulate in the locality or localities where the registered offices of the bank¬ing companies concerned are situated, one of such newspapers being in a language commonly understood in the locality or locali¬ties.

(3) Any shareholder, who has voted against the scheme of amalgamation at the meeting or has given notice in writing at or prior to the meeting to the company concerned or the presiding officer of the meeting that he dissents from the scheme of amalga¬mation, shall be entitled, in the event of the scheme being sanc¬tioned by the State Bank to claim from the banking company concerned, in respect of the shares held by him in that company, their value as determined by the State Bank when sanctioning the scheme and such determination by the State Bank as to the value of the shares to be paid to the dissenting shareholder shall be final for all purposes.

(4) If the scheme of amalgamation is approved by the re¬quisite majority of shareholders in accordance with the provisions of this section, it shall be submitted to the State Bank for sanc¬tion and shall, if sanctioned by the State Bank by an order in writing passed in this behalf be binding on the banking companies concerned and also on all the shareholders thereof.

(5) Where a scheme of amalgamation is sanctioned by the State Bank under the provisions of this section, the State Bank shall transmit a copy of the order sanctioning the scheme to the registrar before whom the banking companies concerned have been registered and the registrar shall, on receipt of any such order, strike off the name of the company thereinafter in this section referred to as the amalgamated banking company) which by rea¬son of the amalgamation will cease to function.

(6) On the sanctioning of a scheme of amalgamation by the State Bank, the property of the amalgamated banking company shall, by virtue of the order of sanction, be transferred to and vest in, and the liabilities of the said company shall, by virtue of the said order be transferred to and become the liabilities of the banking company which under the scheme of amalgamation is to acquire the business of the amalgamated banking company, subject in all cases to the terms of the order sanctioning the scheme.

49. Winding up by High court. — (1) Notwithstanding anything contained in section 153, section 162 and section 271 of the Companies Act, 1913, but without prejudice to its powers under sub-section (1) of section 45 of this Ordinance, the High Court shall order the winding up of a banking company—

(a) if the banking company is unable to pay its debts ; or
(b) if an application for its winding up has been made by the State Bank under section 45 or this section.

(2) The State Bank shall make an application under this sec¬tion for the winding up of a banking company if it is directed so to do by an order under clause (6) of sub-section (6) of section 40.

(3) The State Bank may make an application under this sec¬tion for the winding up of a banking company—

(a) if the banking company—

(i) has failed to comply with the requirements speci¬fied in section 13 ; or
(ii) has by reason, of the provisions of section 27 become disentitled to carry on banking business in Pakistan ; or
(iii) has been prohibited from receiving fresh de¬posits by an order under clause (a) of sub-section (6) of section 40, or under clause (b) of sub-section (5) of section 36 of the State Bank of Pakistan Act, 1956 ; or
(iv) having failed to comply with any requirement of this Ordinance other than the requirements laid down in section 13, has continued such failure, or, having contravened any provision of this Ordinance has continued such contravention be¬yond such period or periods as may be specified in that behalf by the State Bank from time to time, after notice in writing of such failure or contravention has been conveyed to the banking company ; or

(b) if in the opinion of the State Bank—

(i) a compromise or arrangement sanctioned by a Court in respect of the banking company can¬not be worked satisfactorily with or without modifications ; or
(ii) the returns, statements or information furnished to it under or in pursuance of the provisions of this Ordinance disclose that the banking company is unable to pay its debts ; or
(iii) the continuance of the banking company is pre¬judicial to the interests of its depositors.

(4) Without prejudice to the provisions contained in section 163 of the Companies Act, 1913, a banking company shall be deemed to be unable to pay its debts if it has refused to meet any lawful demand made at any of its offices or branches within two working days, if such demand is made at a place where there is an office, branch or agency of the State Bank, or within five working days, if such demand is made elsewhere, and if the State Bank certifies in writing that the banking company is unable to pay its debts.

(5) A copy of every application made by the State Bank under sub-section (1) shall be sent by the State Bank to the registrar.

(6) Notwithstanding anything contained in the Companies Act, 1913, no Court shall entertain an application for winding up of a banking company by the Court unless such application is accompanied by a certificate in writing from the State Bank certifying that it has no objection to the making of such applica¬tion.

50. Court Liquidator. — (1) When, having regard to the number of proceedings for the winding up of banking companies or the extent of the work involved in such proceedings, in any Province or at any place in any Province, the Central Government is of the opinion that it is necessary or expedient to attach a Court Liquidator to the High Court of that province it may, in consultation with the State Bank, appoint a Court Liquidator, for the Province or at a place in the Province, and for such time as the Central Govern¬ment may think fit, for the purpose of conducting all proceedings for the winding up of banking companies and performing such duties in reference thereto as the High Court may impose.

(2) Where there is a court liquidator attached to a High Court and an order is passed by the High Court for the winding up of any banking company, then, notwithstanding anything contained in section 171A or section 175 of the Companies Act, 1913, the court liquidator shall become the official liquidator of the banking company.

(3) Where there is a court liquidator attached to a High Court and any proceeding, for the winding up of a banking company in which any person other than the State Bank or the court liquidator has been appointed as official liquidator, is pending before the High Court immediately before the com¬mencement of this Ordinance or the date on which the court liqui¬dator is so attached to the High Court, whichever is later, then, notwithstanding anything contained in section 176 of the Com-f panics Act, 1913, the person appointed as official liquidator shall, on such commencement or, as the case may be, on the aforesaid date, be deemed to have vacated his office as such and the vacancy so caused shall be deemed to be filled up by the appoint¬ment of the court liquidator as the official liquidator:

Provided that where the High Court, after giving the Court liquidator and the State Bank an opportunity of being heard, is of opinion that the appointment of the court liquidator would be detrimental to the interests of the depositors of the banking company, it may direct the person appointed as the official liquidator to continue to act as such.

51. State Bank to be official liquidator. Notwithstanding anything contained in section 50, of or in section 175 of the Companies Act, 1913, where in any proceeding for the winding up of a banking company by the High Court the State Bank applies for an order appointing the State Bank or any individual as the official liquidator of the banking company in that proceeding, the application shall ordinarily be granted and the liquidator, if any, functioning in such proceeding shall vacate office upon such appointment.

52. Application of companies Act to liquidators. — (1) All the provisions of the Companies Act, 1913, 13. relating to a liquidator, and so far as they are not inconsistent with this Ordinance, shall apply to or in relation to a liquidator appointed under section 50 or section 51.

(2) Any reference to the “official liquidator” in this Part and Part IV shall be construed as including a reference to any liquidator of a banking company.

53. Stay of proceedings. Notwithstanding anything to the contrary contained of in section 173 of the Companies Act, 1913, the High Court shall not make any order staying the proceedings in relation to the winding up of a banking company, unless the High Court is satisfied that an arrangement has been made whereby the com¬pany can pay its depositors in full as their claims accrue,

54. Preliminary report by official liquidator. Notwithstanding anything to the contrary contained in section 177B of the Companies Act, 1913, where a winding-up order has been made in respect of a banking company whether before or after the commencement of this Ordinance, the official liquidator shall submit a preliminary report to the High Court within two months from the date of the winding-up order or where the winding-up order has been made before such commen¬cement, within two months from such commencement, giving the information required by that section so far as it is available to him and also stating the amount of assets of the banking company in cash which are in his custody or under his control on the date of the report and the amount of its assets which are likely to be collected in cash before the expiry of that period of two months in order that such assets may be applied speedily towards the making of preferential payments under section 230 of the Companies Act, 1913 and in the discharge, as far as pos¬sible, of the liabilities and obligations of the banking com¬pany to its depositors and other creditors in accordance with the provisions hereinafter contained; and the official liquidator shall make for the purposes aforesaid every endeavour to collect in cash as much of the assets of the banking company as practi¬cable:
Provided that the High Court may, if it thinks fit in any particular case, extend the period of two months referred to in this section by a further period of one month.

55. Notice to preferential claimants and secured and unsecured creditors. — (1) Within fifteen days from the date of the winding-up order of a banking company or where the winding-up order has been made before the commencement of this Ordinance, within one month from such commencement, the official liqui¬dator shall, for the purpose of making an estimate of the debts and liabilities of the banking company (other than its liabilities and obligations to its depositors), by notice served in such man¬ner as the State Bank may direct, call upon—

(a) every claimant entitled to preferential payment under section 230 of the Companies Act, 1913, and
(b) every secured and every unsecured creditor, to send to the official liquidator within one month from the date of the service of the notice a statement of the amount claimed by him.

(2) Every notice under sub-section (1) sent to a claimant having a claim under section 230 of the Companies Act, 1913, shall state that if a statement of the claim is not sent to the official liquidator before the expiry of the period of one month from the date of the service, the claim shall not be treated as a claim entitled to be paid under that section in priority to all other debts but shall be treated as an ordinary debt due by the banking company.

(3) Every notice under sub-section (1) sent to a secured creditor shall require him to value his security before the expiry of the period of one month from the date of the service of the notice and shall state that if a statement of the claim together with the valuation of the security is not sent to the official liqui¬dator before the expiry of the said period, then the official liqui¬dator shall himself value the security and such valuation shall be binding on the creditor.

(4) If a claimant fails to comply with the notice sent to him under sub-section (1), his claim will not be entitled to be paid under section 230 of the Companies Act, 1913, in priority to all } other debts but shall be treated as an ordinary debt due by the banking company; and if a secured creditor fails to comply with the notice sent to him under sub-section (1), the official liquida¬tor shall himself value the security and such valuation shall be binding on the creditor.

56. Power to dispense with meetings of creditors, etc. Notwithstanding anything to the contrary contained , in sections 178-A and 183 of the Companies Act, 1913, the High 3. Court may, in the proceedings for winding-up a banking com¬pany, dispense with any meetings of creditors or contributories or with the appointment of a committee of inspection if it con¬siders that no object will be secured thereby sufficient to justify the delay and expense.

57. Booked depositors credits to be deemed proved. In any proceeding for the winding-up of a banking company, every depositor of the banking company shall be deemed to have filed his claim for the amount shown in the books of the banking company as standing to his credit and, notwithstanding anything to the contrary contained in section of 191 of the Companies Act, 1913, the High Court shall presume. such claim to have been proved, unless the official liquidator shows that there is reason for doubting its correctness.

58. Preferential payments to depositors. — (1) In every proceeding for the winding-up of a bank¬ing company where a winding-up order has been made, whether before or after the commencement of this Ordinance, within three months from the date of the winding-up order or where the winding-up order has been made before such commence¬ment, within three months therefrom, the preferential payments referred to in section 230 of the Companies Act, 1913, in respect of which statements of claims have been sent within one month from the date of the service of the notice referred to in section 55, shall be made by the official liquidator or adequate provision for such payments shall be made by him.

(2) After the preferential payments as aforesaid have been made or adequate provision has been made in respect thereof, there shall be paid within the aforesaid period of three months—

(a) in the first place, to every depositor in the savings bank account of the banking company a sum of two hundred and fifty rupees or the balance at his credit, whichever is less; and
(b) in the next place, to every other depositor of the bank¬ing company fifty per cent. of the balance at his credit subject to a maximum of two hundred and fifty rupees, in priority to all other debts from out of the remaining assets of the banking company available for payment to general creditors:
Provided that the sum total of the amounts paid under clause (a) and clause (b) to any one person who in his own name (and not jointly with any other person) is a depositor in the savings bank account of the banking company and also a de¬positor in any other account, shall not exceed the sum of two hundred and fifty rupees.

(3) Where within the aforesaid period of three months full payment cannot be made of the amounts required to be paid under clause (c) or clause (b) of sub-section (2) with the assets in cash, the official liquidator shall pay within that period to every depositor under clause (a) or, as the case may be, clause (b) of that sub-section on a pro rata basis so much of the amount due to the depositor under that clause as the official liquidator is able to pay with those assets; and shall pay the rest of that amount to every such depositor as and when sufficient assets are collected by the official liquidator in cash.

(4) After payments have been made first to depositors in the savings bank account and then to the other depositors in accordance with the foregoing provisions, the remaining assets of the banking company available for payment to general creditors shall be utilised for payment on a pro rata basis of the debts of the general creditors; and of the further sums, if any, due to the depositors; and after making adequate provision for payment on a pro rata basis as aforesaid of the debts of the general creditors, the official liquidator shall, as and when the assets of the company are collected in cash, make payment on a pro rata basis as aforesaid, of the further sums, if any, which may remain due to the depositors referred to in clause (a) and clause (b) of sub-section (2).

(5) In order to enable the official liquidator to have in his custody or under his control in cash as much of the assets of the banking company as possible, the securities given to every secured creditor may be redeemed by the official liquidator—

(a) where the amount due to the creditor is more than the value of the securities as assessed by him or, as the case may be, as assessed by the official liquidator, on payment of such value; and
(b) where the amount due to the creditor is equal to or less than the value of the securities as so assessed, on payment of the amount due:
Provided that where the official liquidator is not satisfied with the valuation made by the creditor, he may apply to the High Court for making a valuation.

(6) When any claimant, creditor or depositor to whom any payment is to be made in accordance with the foregoing provi¬sions, cannot be found or is not readily traceable, adequate provision shall be made by the official liquidator for such pay¬ment.

(7) For the purposes of this section, the payments specified in each of the following clauses shall be treated as payments of a different class, namely:—

(a) payments to preferential claimants under section 230 of the Companies Act, 1913;
(b) payments under clause (a) of sub-section (2) to the depositors in the savings bank account;
(c) payments under clause (b) of sub-section (2) to the other depositors;
(d) payments to the general creditors and payments to the depositors in addition to those specified in clause (a) and clause (b) of sub-section (2).

(8) The payments of each different class specified in sub¬section (7) shall rank equally among themselves and be paid in full unless the assets are insufficient to meet them, in which case they shall abate in equal proportion.

59. Restriction on voluntary winding up. Notwithstanding anything to the contrary contained in section 203 of the Companies Act, 1913, no banking company which holds a licence granted under section 27 may be voluntarily wound up unless the State Bank certifies in writing that the company is able to pay in full all its debts to its creditors as they accrue, and without prejudice to the provisions contained in sections 218 and 220 of that Act, the High Court shall, on application of the State Bank, order the winding up of the com¬pany by the High Court if at any stage during the voluntary winding up proceedings the company is not able to meet such debts as they accrue.

PART IV
SPECIAL PROVISIONS FOR SPEEDY DISPOSAL OF WINDING UP PROCEEDINGS.

60. Part IV to override other laws. The provisions of this Part and the rules made there¬under shall have effect notwithstanding anything inconsistent therewith contained in the Companies Act, 1913, or the Code of Civil Procedure, 1908, or the Code of Criminal Procedure, 1898, or any other law for the time being in force or any instru¬ment having effect by virtue of any such law; but the provisions of any such law or instrument in so far as the same are not varied by, or inconsistent with, the provisions of this Part or rules made thereunder shall apply to all proceedings under this Part.

61. Power of High court to decide all claims in respect of banking companies. The High Court shall, save as otherwise expressly provided in section 62, have exclusive jurisdiction to entertain and decide any claim made by or against a banking company which is being wound up (including claims by or against any of its branches in Pakistan) or any application made under section 153 of the companies Act, 1913, by or in respect of a banking company or any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in the course of the winding up of a banking company, whether such claim or question has arisen or arises or such application has been made or is made before or after the date of the order for the winding up of the banking company or before or after the commencement of this Ordinance.

62. Transfer of pending proceedings. — (1) Where a winding up order is made or has been made in respect of a banking company, no suit or other legal proceeding, whether civil or criminal, in respect of which the High Court has jurisdiction under this Ordinance and which is pending in any other court immediately before the commence¬ment of this Ordinance or the date of the order for the winding up of the banking company, whichever is later, shall be proceeded with except in the manner hereinafter provided.

(2) The official liquidator shall, within three months from the date of the winding up order or the commencement of this Ordinance whichever is later or such further time as the High Court may allow, submit to the High Court a report containing a list of all such pending proceedings together with particulars thereof.

(3) On receipt of a report under sub-section (2), the High Court may, if it so thinks fit, give the parties concerned an oppor¬tunity to show cause why the proceedings should not be transfer¬red to itself and after making an inquiry in such manner as may be provided by rules made under section 79, it shall make such order as it deems fit transferring to itself all or such of the pending proceedings as may be specified in the order and such proceedings shall thereafter be disposed of by the High Court.

(4) If any proceeding pending in a court is not so transferred to the High Court under sub-section (3), such proceeding shall be continued in the court in which the proceeding was pending.

(5) Nothing in this section shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.

63. Settlement of list of debtors. — (1) Notwithstanding anything to the contrary contained in any law for the time being in force, the High Court may settle in the manner hereinafter provided a list of debtors of a banking company which is being wound up.

(2) Subject to any rules that may be made under section 92, the official liquidator shall, within six months from the date of the winding up order or the commencement of this Ordinance, whichever is later, from time to time, file to the High Court lists of debtors containing such particulars as are specified in the Third Schedule:

Provided that such lists may, with the leave of the High Court, be filed after the expiry of the said period of six months.

(3) On receipt of any list under sub-section (2), the High Court shall, wherever necessary, cause notices to be issued on all persons affected and after making an inquiry in such manner as may be provided by rules made under section 79, it shall make an order settling the list of debtors:

Provided that nothing in this section shall debar the High Court from settling any such list in part as against such of the persons whose debts have been settled without settling the debts of all the persons placed on the list.

(4) At the time of the settlement of any such list, the High Court shall pass an order for the payment of the amount due by each debtor and make such further orders as may be necessary in respect of the relief claimed, including reliefs against any guarantor or in respect of the realisation of any security.

(5) Every such order shall, subject to the provisions for appeal, be final and binding for all purposes as between the banking company on the one hand and the person against whom the order is passed and all persons claiming through or under him on the other hand, and shall be deemed to be a decree in a suit.

(6) In respect of every such order, the High Court shall issue a certificate specifying clearly the reliefs granted and names and descriptions of the parties against whom such reliefs have been granted, the amount of costs awarded and by whom, and out of what funds and in what proportions, such costs are to be paid; and every such certificate shall be deemed to be a certified copy of the decree for all purposes including execution.

(7) At the time of settling the list of debtors or at any other time prior or subsequent thereto, the High Court shall have power to pass any order in respect of a debtor on the application of the official liquidator for the realisation, management, protection, preservation or sale of any property given as security to the banking company and to give such powers to the official liquidator to carry out the aforesaid directions as the High Court thinks fit.

(8) The High Court shall have power to sanction a com¬promise in respect of any debt and to order the payment of any debt by installments.

(9) In any case in which any such list is settled expert as against any person, such person may, within thirty days from the date of the order settling the list, apply to the High Court for an order to vary such list, so far as it concerns him, and if the High Court is satisfied that he was prevented by any sufficient cause from appearing on the date fixed for the settlement of such list and that he has a good defence to the claim of the banking company on merits, the High Court may vary the list and pass such orders in relation thereto as it thinks fit:

Provided that the High Court may, if it so thinks fit, enter¬tain the application after the expiry of the said period of thirty days.

(10) Nothing in this section shall—

(a) apply to a debt which has been secured by a mortgage of immovable property, if a third party has any in¬terest in such immovable property; or
(b) prejudice the rights of the official liquidator to recover any debt due to a banking company under any other law for the time being in force.

64. Special provisions to make calls on contributories. Notwithstanding that the list of contributories has not been settled under section 184 of the Companies Act, 1913, the High Court may, if it appears to it necessary or expedient so to do, at any time after making a winding up order, make a call on and order payment thereof by any contributory under sub-section (1) of section 187 of the Companies Act, 1913, if such contri¬butory has been placed on the list of contributories by the official liquidator and has not appeared to dispute his liability.

65. Documents of banking company to be evidence. — (1) Entries in the books of account or other documents of a banking company which is being wound up shall be admitted in evidence in all proceedings by or against the banking company; and all such entries may be proved either by the production of the books of account or other documents of the banking company containing such entries or by the production of a copy of the entries, certified by the official liquidator under his signature and stating that it is a true copy of the original entries and that such original entries are contained in the books of account or other documents of the banking company in his possession.

(2) Notwithstanding anything to the contrary contained in the Evidence Act, 1872, all such entries in the books of account or other documents of a banking company shall as against the directors of the banking company in respect of which the winding up order has been made before the commencement of this Ordinance, be prima facie evidence of the truth of all matters purporting to be therein recorded.

66. — (1) Where an order has been made for the winding up of a banking company, the official liquidator shall submit a report whether in his opinion any loss has been caused to the banking company since its formation by any act or omission (whether or not a fraud has been committed by such act or omission) of any person in the promotion or formation of the banking company or of any director or auditor of the banking company.

(2) If, on consideration of the report submitted under sub¬section (1), the High Court is of opinion that any person who has taken part in the promotion or formation of the banking company or has been a director or an auditor of the banking company should be publicly examined, it shall hold a public sitting on a date to be appointed for that purpose and direct that such person, director or auditor shall attend thereat and shall be publicly examined as to the promotion or formation or the conduct of the business of the banking company, or as to his conduct and dealings, in so far as they relate to the affairs of the banking company:

Provided that no such person shall be publicly examined unless he has been given an opportunity to show cause why he should not be so examined.

(3) The official liquidator, shall take part in the examination and for that purpose may, if specially authorized by the High Court in that behalf, employ such legal assistance as may be sanctioned by the High Court.

(4) Any creditor or contributory may also take part in the examination either personally or by any person entitled to appear before the High Court.

(5) The High Court may put such questions to the person examined as it thinks fit.

(6) The person examined shall be examined on oath and shall answer all such questions as the High Court may put or allow to be put to him.

(7) A person ordered to be examined under this section may, at his own cost, employ any person entitled to appear before the High Court who shall be at liberty to put to him such ques¬tions as the High Court may deem just for the purpose of enabling him to explain or qualify any answer given by him:
Provided that if he is, in the opinion of the High Court, exculpated from any charges made or suggested against him, the | High Court may allow him such costs in its discretion as it may deem fit.

(8) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person exa¬mined and may thereafter be used in evidence against him in any proceeding, civil or criminal, and shall be open to the inspection of any creditor or contributory at all reasonable times.

(9) Where on such examination, the High Court is of opinion (whether a fraud has been committed or not)—

(a) that a person who has been a director of the banking company is not fit to be a director of a company, or (A) that a person who has been an auditor of the banking company or a partner of a firm acting as such auditor is not fit to act as an auditor of a company or to be a partner of a firm acting as such auditor, the High Court may make an order that that person shall not, without the leave of the High Court, be a director of, or in any way, whether directly or indirectly, be concerned or take part in the management of any company or, as the case may be, act as an auditor of, or be a partner of a firm acting as auditors of, any company for such period not exceeding five years as may be specified in the order.

67. Special provisions for assessing damages against delinquent directors, etc. — (1) Where an application is made to the High Court , under section 235 of the Companies Act, 1913, against any pro¬moter, director, manager, liquidator or officer of a banking com¬pany for repayment or restoration of any money or property and the applicant makes out a prima facie case against such person, the High Court shall make an order against such person to repay and restore the money or property unless he proves that he is not liable to make the repayment or restoration either wholly or in part:

Provided that where such an order is made jointly against two or more such persons, they shall be jointly and severally liable to make the repayment or restoration of the money or property.

(2) Where an application is made to the High Court under , section 235 of the Companies Act, 1913, and the High Court has reason to believe that a property belongs to any promoter, direc¬tor, manager, liquidator or officer of the banking company, whether the property stands in the name of such person or of any other person as the ostensible owner, the High Court may, at any time, whether before or after making an order under sub-section (1), direct that attachment of such property or of such portion thereof as the High Court may think fit, and when the property so attached stands in the name of an ostensible owner, it shall remain subject to attachment unless the ostensible owner can prove to the satisfaction of the High Court that he is the real owner and the provisions of the Code of Civil Procedure, 1908, relating to attachment of property shall, as far as may be, apply to such attachment.

68. Duty of directors and officers of banking company to assist in the realisation of property. Every director or other officer of a banking company which is being wound up shall give such assistance to the official liquidator as he may reasonably require in connection with the realisation and distribution of the property of the banking com¬pany.

69. Special provisions for punishing offences in relation to banking companies being wound up. — (1) The High Court may, if it thinks fit, take cognizance of and try in a summary way any offence punishable under this Ordinance or under the Companies Act, 1913, alleged to have been committed by any person who has taken part in the pro¬motion or formation of the banking company which is being wound up or by any director, manager or officer thereof.

(2) When trying any such offence as aforesaid, the High Court may also try any other offence not referred to in sub-sec¬tion (1) which is an offence with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial.

(3) In any case tried summarily under sub-section (1), the High Court—

(a) need not summon any witness, if it is satisfied that the evidence of such witness will not be material;
(b) shall not be bound to adjourn a trial for any purpose unless such adjournment is, in the opinion of the High Court, necessary in the interests of justice;
(c) shall, before passing any sentence, record judgement embodying the substance of the evidence and also the particulars specified in section 263 of the Code of Criminal Procedure, 1898, so far as that section may be applicable; and nothing contained in sub-section (2) of section 262 of the Code of Criminal Procedure, 1898, shall apply to any such trial.

(4) All offences in relation to winding up alleged to have been committed by any person specified in sub-section (1) which are punishable under this Ordinance or under the Companies Act, 1913, and which are not tried in a summary way under sub¬section (1) shall, notwithstanding anything to the contrary con¬tained in that Act or the Code of Criminal Procedure, 1898, or in any other law for the time being in force, be taken cogni¬zance of and tried by a Judge of the High Court other than the Judge for the time being dealing with the proceeding for the winding up of the banking company.

(5) Notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1898, the High Court may take cognizance of any offence under this section without the accused being committed to it for trial and all such trials shall be without the aid of a jury.

70. Public examination of directors and auditors etc., in respect of a banking company under scheme. — (1) Where an application for sanctioning a compro¬mise or arrangement in respect of a banking company is made under section 153 of the Companies Act, 1913, or where such sanction has been given and the High Court is of opinion, whether on a report of the State Bank or otherwise, that any person who has taken part in the promotion or formation of that banking company or has been a director or auditor thereof should be publicly examined, it may direct such examination of such person and the provisions of section 66 shall, as far as may be, apply to such banking company as they apply to a banking company which is being wound up.

(2) Where a compromise or arrangement is sanctioned of under section 153 of the Companies Act, 1913, in respect of a banking company, the provisions of section 235 of that Act and of section 67 shall, as far as may be, apply to such banking com¬pany as they apply to a banking company which is being wound up as if the order sanctioning the compromise or arrangement were an order for the winding up of that banking company.

(3) Where a scheme of reconstruction or amalgamation of a banking company has been sanctioned by the Central Government under section 47 and the Central Government is of opinion that any person who has taken part in the promotion or formation of that banking company or has been a director or auditor thereof should be publicly examined, that Government may apply to the High Court for the examination of such person and if on such examination the High Court finds (whether a fraud has been committed or not) that that person is not fit to be a director of a company or to act as an auditor of a company or to be a partner of a firm acting as such auditors, the Central Government shall make an order that that person shall not, without the leave of the Central Government, be a director of, or in any way, whether directly or indirectly, be concerned or take part in the manage¬ment of any company or, as the case may be, act as an auditor of, or be a partner of a firm acting as auditors of, any company for such period not exceeding five years as may be specified in the order.

(4) Where a scheme of reconstruction or amalgamation of a banking company has been sanctioned by the Central Govern¬ment under section 47, the provisions of section 235 of the Com¬panies Act, 1913, and those of section 67 shall, as far as may be, apply to the banking company as they apply to a banking com¬pany which is being wound up as if the order sanctioning the scheme of reconstruction or amalgamation, as the case may be, were an order for the winding-up of the banking company; and any reference in the said section 235 to the application of the official liquidator shall be construed as a reference to the application of the Central Government.

71. Special provisions for banking companies working under schemes of arrangement at the commencement of the Ordinance. Where any compromise or arrangement sanctioned in respect of a banking company under section 153 of the Com¬panies Act, 1913, is being worked at the commencement of this Ordinance, the High Court may, if it so thinks fit, on the applica¬tion of such banking company—

(a) excuse any delay in carrying out any of the provisions of the compromise or arrangement; or

(b) allow the banking company to settle the list of its debtors in accordance with the provisions of section 63 and in such a case, the provisions of the said section shall, as far as may be, apply to the banking company as they apply to a banking company which is being wound up as if the order sanctioning the compromise r arrangement were an order for the winding up of the banking company.

72. Appeals. — (1) An appeal shall lie from any order or decision of the High Court in a civil proceeding under this Ordinance when the amount or value of the subject-matter of the claim exceeds five thousand rupees.

(2) The High Court may by rules provide for an appeal against any order made under section 69 and the conditions subject to which any such appeal would lie.

(3) Subject to the provisions of sub-section (1) and sub¬section (2) and notwithstanding anything contained in any other law for the time being in force, every order or decision of the High Court shall be final and binding for all purposes as between the banking company on the one hand, and all persons who are parties thereto and all persons claiming through or under them or any of them, on the other hand.

73. Special period of limitation. — (1) Notwithstanding anything to the contrary con¬tained in the Limitation Act, 1908, or in any other law for the time being in force, in computing the period of limitation pres¬cribed for a suit or application by a banking company which is being wound up, the period commencing from the date of the presentation of the petition for the winding up of the banking company shall be excluded.

(2) Notwithstanding anything to the contrary contained in the Limitation Act, 1908, or section 235 of the Companies Act, 1913, or in any other law for the time being in force, there shall be no period of limitation for the recovery of arrears of calls from any director of a banking company which is being wound up or for the enforcement by the banking company against any of its directors of any claim based on a contract, express or implied; and in respect of all other claims by the banking com¬pany against its directors, the period of limitation shall be twelve years from the date of the accrual of such claims or five years from the date of the first appointment of the liquidator, which¬ever is longer.

(3) The provisions of this section, in so far as they relate to banking companies being wound up, shall also apply to a banking company in respect of which a petition for the winding up has been presented before the commencement of this Ordinance.

74. State Bank to tender advice in winding up proceedings. Where in any proceeding for the winding up of a bank¬ing company in which any person other than the State Bank has been appointed as the official liquidator and the High Court has directed the official liquidator to obtain the advice of the State Bank on any matter (which it is hereby empowered to do),

It shall be lawful for the State Bank to examine the record of any such proceeding and tender such advice on the matter as it may think fit.

75. Power to inspect. — (1) The State Bank shall, on being directed so to do by the Central Government or by the High Court, cause an inspec¬tion to be made by one or more of its officers of a banking company which is being wound up and its books and accounts.

(2) On such inspection, the State Bank shall submit its report to the Central Government and the High Court.

(3) If the Central Government, on consideration of the report of the State Bank, is of opinion that there has been a substantial irregularity in the winding up proceedings, it may bring such irregularity to the notice of the High Court for such action as the High Court may think fit.

(4) On receipt of the report of the State Bank under sub¬section (2) or on any irregularity being brought to its notice by the Central Government, under sub-section (3) the High Court may, if it deems fit, after giving notice to and hearing the Central Government in regard to the report, give such directions as it may consider necessary.

76. Power to call for returns and information. The State Bank may, at any time by notice in writing, require the liquidator of a banking company to furnish it, within such time as may be specified in the notice or such further time as the State Bank may allow, any statement or information rela¬ting to or connected with the winding up of the banking company;
and it shall be the duty of every liquidator to comply with such requirements.

Explanation.—For the purposes of this section and section 75, a banking company working under a compromise or arrange¬ment but prohibited from receiving fresh deposits, shall, as far as may be, be deemed to be a banking company which is being wound up.

77. District Magistrate to assist official liquidator in taking charge of property of banking company being wound up. — (1) For the purpose of enabling the official liquidator or the special officer appointed under sub-section (4) of section 45 to take into his custody or under his control, all property, effects and actionable claims to which a banking company, which has been ordered to be wound up, is or appears to be entitled, the official liquidator or the special officer as the case may be, may if he deems it necessary in the interest of speedy liquidation, request in writing the District Magistrate, within whose jurisdic¬tion any property, books of account or other documents of such banking company may be situated or be found, to take possession thereof, and the District Magistrate shall, on such request being made to him, take possession of such property, books of account or other documents and forward them to the official liquidator or the special officer.

(2) For the purpose of securing compliance with the pro¬visions of sub-section (1), the District Magistrate may take or cause to be taken such steps and use or cause to be used such force as may, in his opinion, be necessary.

78. Enforcement of orders and decisions of high court. — (1) All orders made in any civil proceeding by a High Court may be enforced in the same manner in which decrees of such court made in any suit pending therein may be enforced.

(2) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908, a liquidator may apply for the execution of a decree by a court, other than the one which made it, on production of a certificate granted under sub-section (6) of section 63 and on his certifying in writing the amount re¬maining due or relief remaining unenforced under the decree.

(3) Without prejudice to the provisions of sub-section (1) or sub-section (2), any amount found due to the banking company by an order or decision of the High Court may, with the leave of the High Court, be recovered in the same manner as an arrear of land revenue.

79. Power of high court to make rules. The High Court may make rules consistent with this Ordinance and the rules made under section 92 prescribing :

(a) the manner in which inquiries and proceedings under Part III or Part IV may be held

(b) the offences which may be tried summarily ;

(c) the authority to which, and the conditions subject to which, appeals may be preferred and the manner in which such appeals may be filed and heard ; and

(d) any other matter for which provision has to be made for enabling the High Court to effectively exercise its functions under this Ordinance.

80. References to directors, etc., shall be construed as including references to past directors, etc. For the removal of doubts it is hereby declared that any reference in this Part to a director, manager, liquidator, officer or auditor of a banking company shall be construed as including a reference to any past or present director, manager, liquidator, officer or auditor of the banking company.

81. Part II not to apply to banking companies being wound up. Nothing contained in Part II shall apply to a banking company which is being wound up.

82. Validation of certain proceedings. Notwithstanding anything contained in section 61 or any other provision of this Part, no proceeding held, judgement delivered or decree or order made before the commencement of this Ordinance, by any Court other than the High Court in res¬pect of any matter over which the High Court has jurisdiction under this Ordinance shall be invalid or be deemed ever to have been invalid merely by reason of the fact that such proceeding, judgement, decree or order was held, delivered or made by a court other than the High Court.

PART V
MISCELLANEOUS

83. Penalties. — (1) Whoever in any return, balance-sheet or document or in any information required or furnished under or for the purposes of any provision of this Ordinance willfully makes a statement which is false in any material particular, knowing it to be false, or willfully omits to make a material stiral, shall be punishable with imprisonment for a term may extend to three years and shall also be liable to fine.

(2) If advances are made by a banking company in contra¬vention of the provisions of sub-sections (1) and (2) of section 24, every director or other officer of the banking company who is knowingly a party to the contravention shall be punishable with imprisonment which may extend to three years and with fine not exceeding twenty thousand rupees.

(3) If any person fails to produce any book, account or other document or to furnish any statement or information which under sub-section (4) of section 40 it is his duty to produce or furnish, or to answer any question relating to the business of a banking company which he is asked by an officer making an inspection under that section, he shall be punishable with a fine which may extend to two thousand rupees in respect of each offence, and if he persists in such refusal, to a further fine which may extend to one hundred rupees for every day during which the offence continues.

(4) If any deposits are received by a banking company in contravention of an order under clause (a) of sub-section (6) of section 40, every director or other officer of the banking company unless he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent it, shall be deemed to be guilty of such contravention and shall be pu¬nishable with a fine which may extend to twice the amount of the deposits so received.

(5) If any other provision of this Ordinance is contravened, or if any default is made in complying with any requirement of this Ordinance or of any order, rule or direction made or condi¬tion imposed thereunder ; every director, liquidator and other officer of the company and any other person who is knowingly a party to the contravention or default shall be punishable with – fine which may extend to two thousand rupees, and where a contravention or default is a continuing one, with a further fine which may extend to one hundred rupees for every day during which such contravention or default continues.

84. Cognizance of offences. No court shall take cognizance of any offence pun¬ishable under section 83 except upon complaint in writing made by an officer of the State Bank generally or specially authorized in writing in this behalf by the State Bank, and no court inferior to that of a Magistrate of the First Class shall try any such offence.

85. Application of fines. A court imposing any fine under this Ordinance may direct that the whole or any part thereof shall be applied in or towards payment of the costs of the proceedings, or in or towards the rewarding of the person on whose information the fine is re¬covered.

86. Special provision for private banking companies. The exemptions, whether express or implied, in favour of a private company in sections 17,77, 83B, 86H, 91B and 9 ID, of and sub-section (5) of section 144 of the Companies Act, 1913, shall not operate in favour of a private company which is a bank¬ing company.

87. Restriction on acceptance of deposits withdrawable by Cheques. No person other than a banking company, the State Bank, the National Bank of Pakistan or any other banking ins¬titution notified by the Central Government in this behalf shall accept from the public deposits of money withdrawable by cheque:

Provided that nothing contained in this section shall apply to any savings bank scheme run by the Government.

88. Change of name by a banking company. Notwithstanding anything contained in section 11 of the Companies Act, 1913, the Central Government shall not signify its approval to the change of name of any banking com-pany unless the State Bank certifies in writing that it has no ob¬jection to such change.

89. Alteration of memorandum of a banking company. Notwithstanding anything contained in the Companies Act, 1913, no application for the-confirmation of the alteration of the memorandum of a banking company shall be maintainable unless the State Bank certifies that there is no objection to such alteration.

90. Certain claims for compensation barred. No person shall have any right, whether in contract or otherwise, to any compensation for any loss incurred by reason of the operation of any of the provisions contained in sections 11, 15, 20, 41, 42, 47 and 58 or by reason of the compliance by a banking company with any order or direction given to it under this Ordinance.

91. Application of certain provisions to banking company incorporated by special enactments of the central legislature. In the case of a banking company incorporated by a Central Act and not liable to be wound up under the Companies Act, 1913, the provisions of sections 11, 16 to 19, 21, 23 to 25, 28 to 33, 34 excluding sub-section (3), 36, 39, 40, 42, 45, 46, 83, 84, 85, 90, 92 and 93 shall, without prejudice t» the provisions of such Central Act, apply so far as may be, to and in relation to such banking company.

92. Power of central Government to make rules. — (1) The Central Government may, after consultation with the State Bank, make rules to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Ordinance and all such rules shall be published in the official Gazette.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for the details to be included in the returns required by this Ordinance and the manner in which such returns shall be submitted and the form in which the official liquidator may file lists of debtors to the Court having jurisdiction under Part III or Part IV and the particulars which such lists may contain and any other matter which has to be, or may be prescribed.

(3) All rules made under this section shall be subject to the condition of previous publication, and the date to be specified under clause (3) of section 23 of the General Clauses Act, 1897, shall not be less than six months from the date on which the draft of the proposed rules was published :

Provided that in respect of the first occasion on which rules are made under this section, the provisions of this sub-section shall not apply.

(4) The Central Government may, by rules made under this section, annul, alter or add to, all or any of the provisions of the Third Schedule.

93. Power to exempt in certain cases. The Central Government may, on the recommendation of the State Bank, declare, by notification in the official Gazette, that any or all of the provisions of this Ordinance shall not apply to any banking company or to any class of banking companies either generally or for such period as may be specified.

94. Protection of action taken in good faith. No suit or other legal proceeding shall lie against the Central Government, the Provincial Government, the State Bank or any officer of such Government or Bank for anything which is in good faith done or intended to be done in pursuance of this Ordinance or of any rules or orders made thereunder, or for any damage caused or likely to be caused by any thing done or intended to be done as aforesaid!.

95. Repeals. — (1) The enactments mentioned in the third column of the First Schedule shall be repealed to the extent specified in the fourth column thereof.

(2) Notwithstanding the repeal under sub-section (1) anything done or any action taken, in the exercise of any power conferred by any enactment or any provision thereof so repealed, shall for all purposes be deemed to have been done or taken in the ex¬ercise of powers conferred by this Ordinance as if this Ordinance had been in force on the day such thing was done or such action was taken.

THE
FIRST SCHEDULE
(See Section 95)
REPEAL
Year No. Short Title Extent of repeal
1 2 3 4
1913 VII The companies act, 1913 ….. …. ….. ….. The whole of Part XA.
1946 IV The Banking Companies (Inspection ) Ordinance, 1946 The whole.
1946 XXVII The Banking Companies (Restriction of Branches) Act., 1946. The Whole.
1948 XXII The Banking Companies (Control Act, 1948. The Whole.

THE
SECOND SCHEDULE
(See Section 34)
Form A
Form of Balance Sheet.
Sr. No. Capital and Liabilities. Rs. Ps. Rs. Ps. Sr. No. Property and Assets. Rs. Ps. Rs. Ps.
1. Capital : (a)
Authorised Capital ……. Shares of Rs. ……………. each ………………….. 1 CASH.
In land and with state Bank and National Bank of Pakistan (including foreign currency notes) … …. …
Issued Capital …………… shares of Rs. …………… each …………………… 2 BALANCES WITH OTHER BANKS.
(showing whether on deposit or current account):
(i) In Pakistan … … … ..
(ii) Outside Pakistan. …
Subscribed Capital ……. Shares of Rs……………… each ………………………… 3 MONEY AT CALL & SHORT NOTICE
Amount called up at Rs………… per share……. 4 INVESTMENTS
(stating mode of valuation, e.g., cost or market value):d
(i) Securities of the central and Provincial Governments and other trustee securities, including Treasury Bills of the central and Provincial Governments.
(ii) Shares (classifying into preference, ordinary, deferred and other classes of shares and showing separately shares fully paid up and partly paid up.
(iii) Debentures or Bonds
(iv) other investments (to be classified under proper heads).
(v) Gold. .. .. ..
Less Calls unpaid .. .. ..
Add forfeited shares.
2. RESERVE FUND AND OTHER RESERVES.
3. DEPOSITS & OTHER ACCOUNTS: .. ..
Fixed Deposits.
Savings Bank Deposits.
Current accounts, contingency Accounts etc.
4. Borrowings from other banking companies, agents etc.
(i) In Pakistan .. .. ..
(ii) Outside Pakistan. ..
Particulars.
(i) Secured (stating the nature of securities)
(ii) Unsecured. .. .. .. 5 ADVANCES.
(other than bad and doubtful debts for which provision has been made to the satisfaction of the auditors.)
(I) Loans, Cash Credits, overdrafts, etc.;
(i) In Pakistan .. … …. …..
(ii) outside Pakistan .. .. .. ..
(iii) Bills Discounted and purchased: (excluding treasury Bills of the central and provincial Governments.):
(i) Payable in Pakistan
(ii) Payable outside Pakistan.
Particulars of ADVANCES:
(i) Debts considered good in respect of which the banking company is fully secured. .. ..
(ii). Debts considered good for which the banking company holds no other security than the debtors personal security. .. ..
(iii) Debts considered good secured by the personal liabilities of one or more parties in addition to the personal security of to debtors.
(iv) Debts considered doubtful or bad, no provided for.
(v) Debts due by directors or officers of the banking company or any of them either severally or jointly with any other persons.
(vi) Debts due by companies or firms in which the directors of the banking company are interested as directors, partners or managing agents or in the cases or private companies, as members.
(vii) Maximum total amount of advances, including temporary advances made at any time during the year to directors or managers or officers of the banking company or any of them either severally or jointly with any other persons : (e)
(viii) Maximum total amount of advances, including temporary advances granted during the year to the companies or firms in which the directors of the banking company are interested as directors, partners or managing agents or, in the case of private companies, as members: (e)
(ix) Due from banking companies.
5 BILLS PAYABLE
6 BILLS FOR COLLECTION
BILLS RECEIVABLE AS PER CONTRA:
i. Payable in Pakistan ……
ii. Payable outside Pakistan. .. .. .. ..
7 OTHER LIABILITIES: (b)
8 ACCEPTANCES, ENDORSEMENTS AND OTHER OBLIGATIONS PER CONTRA.
9 PROFIT AND LOSS:
Profit as per last balance sheet.
Less appropriations .. ..
Add profit for the year brought from the profit and loss account.

10 CONTINGENT LIABILITIES: (C)
6 BILLS RECEIVABLE BEING BILLS FOR COLLECTION AS PER CONTRA :
(i) Payable in Pakistan
(ii) Payable outside Pakistan.
CONSTITUENTS LIABILITIES FOR ACCEPTANCES, ENDORSEMENTS AND OTHER OBLIGATIONS PER CONTRA.
8 PREMISES LESS DEPRECIATION: (f)
9 FURNITURE AND FIXTURES LESS DEPRECIATION: (f)
10 OTHER ASSETS, INCLUDING SILVER (to be specified ) : (g)
11 NON-BANKING ASSETS ACQUIRED IN SATISFACTION OF CLAIMS (stating mode of valuation): h
12 Profit and loss .. ..
Total : Total :

(Second Schedule)
NOTES
(a) Capital.—

(i) The various classes of capital, if any, should be distinguished,
(ii) Shares issued as fully paid-up pursuant to any contract without pay¬ments being received in cash should be stated separately.
(iii) Where circumstances permit, issued and subscribed capital and amount called up may be shown as one item, e.g.. Issued and Subscribed Capital………………….Shares of Rs……………….paid-up.
(iv) In the case of banking companies incorporated outside Pakistan the amount of deposit kept with the State Bank of Pakistan under sub-section (3) of section 13 of the Banking Companies Ordinance, 1962, should be shown under this head; the amount, however, should not be extended to the outer column.

(b) Under this heading may be included such items as the following; pension or insurance funds, unclaimed dividends, advance payments and unexpired discounts, liabilities to subsidiary companies and any other liabilities.

(c) These should be classified under the following categories:—

(i) Claims against the banking company not acknowledged as debts.
(ii) Money for which the banking company is continently liable showing separately the amount of any guarantee given by the banking company on behalf of directors or officers.
(iii) Arrears of cumulative preference dividends.
(iv) Liability on Bills of Exchange re-discounted.
(v) Liability on account of outstanding Forward Exchange Contracts.

(d) Where the value of the investments shown in the outer column of the balance sheet is higher than the market value, the market value shall be shown separately in brackets.

(e) Maximum total outstanding balance in all such accounts as a unit on any day during the year should be given under this heading.

(f) Premises wholly or partially occupied by the banking company for the purposes of business should be shown against “Premises less depreciation”. In the case of fixed capital expenditure, the original cost, and additions thereto and deductions therefrom during the year should be stated, as also the total depreciation written off. Where sums have been written off on a reduction of capital or revaluation of assets, every balance sheet after the first balance sheet subsequent to the reduction or revaluation should show the reduced figures with the date and amount of the reduction made. Furniture, fixtures and other assets which have been completely written off need not be shown la the balance sheet.

(g) Under this heading may be included such items as the following, which must be shown under headings suitably described; preliminary, for¬mation and organisation expenses, development expenditure, commission and brokerage on shares, interest accrued on investments but not collected, invest¬ments in shares of subsidiary companies and any other assets.

(h) Value shown shall not exceed the market value and in cases where the market value is not ascertainable, the estimated realisable value. General Instructions.—The corresponding figures (to the nearest rupee, if so desired) for the year, immediately preceding the year to which the profit and loss account relates should be shown in separate columns.

Form B
FORM OF PROFIT AND LOSS ACCOUNT
Profit and Loss Account for the year ended………………………………………….. December.
Sr. No. Expenditure Rs. Ps. Sr. No. Income.
(Less provisions made during the year for bad and doubtful debts and other usual or necessary provisions) Rs. Ps.
1 Interest paid on deposits, borrowings etc. 1 Interest and discount.
2 Salaries and allowances and provident fund (showing separately salaries and allowances to managing director, manager or chief executive officer) 2 Commission, exchange and Brokerage. . .. …..
3 Directors and local committee members fees and allowances .. .. 3 Rents … … …
4 Rent, Taxes, insurance, lighting, etc. 4 Net profit on sale of investments, gold and silver, land, premises and other assets (not credited to reserves or any particular fund or account) .. .. . ..
5 Law Charges .. .. 5 Net profit on revaluation of investments, gold and silver, land, premises and other assets (not credited to reserves or any particular fund or account)
6 Postage, Telegrams and stamps … .. 6 Income from non-banking assets, and profit from sale of or dealing with such assets .. ..
7 Auditors fees .. .. … .. .. 7 Other receipts. .. .. ..
8 Depreciation on and repairs to the banking companies property … …. .. 8 Loss (if any)
9 Stationery, printing, advertisement, etc. .. ..
10 Loss from sale of or dealing with non banking assets
11 Other expenditure .. .. .. ..
12 Balance of profit .. .. .. .. ..
Total Rs. Total Rs.

THE
THIRD SCHEDULE
See section 63 (2)
List of Debtors
1. The official liquidator shall, from time to time, submit lists of debtors to the High Court, each list being verified by an affidavit.

2. Every such list shall contain the following particulars :—

(a) names and addresses of the debtors ;
(b) amount of debt due to the banking company by each debtors;
(c) rate of interest, if any, and the date up to which such interest has been calculated in the case of each debtor; –
(d) description of papers, writings and documents, if any, relating to each debt;
(e) relief or reliefs claimed against each debtor.

3. (a) In every such list, the official liquidator shall distinguish between the debts for which the banking company holds any security other than a personal security and the debts for which no security or only a personal security is given ;

(b) In the case of secured debts, particulars of the securities claimed by the banking company, and whenever possible their estimated value, and the names and addresses of person or persons, if any, having an interest in the securities or the right of redemption therein

(c) In case the debt is guaranteed by any person or persons, the name and address of the guarantor or guarantors with parti¬culars as to the extent to which the debt is guaranteed and descrip¬tion of documents, papers or writings in support of such guarantee.

4. If the debtor is adjudged insolvent either before or after he has been included in any such list, but before such list is settled, the name and address of the assignee or the receiver of his estate, as the case may be, should be stated in, or added to, the list.

5. If the original debtor dies either before or after he has been included in any such list, but before such list is settled, there shall be substituted in his place the names and addresses of his legal representatives as far as the official liquidator is able to ascertain-