FIRST DAWOOD INVESTMENT BANK LTD vs BANK ISLAMI PAKISTAN LTD
This petition challenged a High Court judgment upholding a Banking Court's decree against the petitioner. The core legal question was whether a suit filed by a financial institution is maintainable when the power of attorney authorizing the filing officer mentions that the authorization is on behalf of specific departments (Credit Administration and Legal) rather than explicitly stating it is on behalf of the bank itself. The petitioner argued this violated Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, which requires authorization by the Chief Executive Officer. The Supreme Court dismissed the petition, holding that the power of attorney was executed by the Chief Executive Officer of the bank and authorized the officers to file suits for the recovery of money. The Court ruled that the references to specific departments in the recitals were merely explanatory and did not invalidate the authorization. The key principle established is that a power of attorney executed by the Chief Executive Officer of a financial institution is valid under the Ordinance even if it contains descriptive references to internal departments, provided the intent to authorize legal proceedings on behalf of the institution is clear.
- Does a power of attorney executed by a Chief Executive Officer on behalf of specific internal departments of a bank satisfy the requirements of Section 9 of the Financial Institutions (Recovery of Finances) Ordinance 2001?
- Are descriptive references to internal departments in a power of attorney fatal to the maintainability of a suit filed by a financial institution?
- Can a power of attorney be considered valid if it is executed by the Chief Executive Officer of a bank despite containing explanatory recitals regarding internal departments?
- Section 9, Financial Institutions (Recovery of Finances) Ordinance 2001
SARMAD JALAL OSMANY , J.---This Petition impugns the Judgment of the learned High Court of Sindh (Sukku r Bench) in 1st Appeal No. 17 of 2012 filed by the Petitioner whereby same was dismissed and the Judgment and Decree of the Learned Banking Court in the suit filed by the Respondent Bank against the Petitioner was upheld.
2. Mr. Abdul Hafeez Lakho, learned ASC appearing for the Petitioner has only raised one issue i.e. as to the maintainability of the suit of the Respondent against the Petitioner . In this regard he has referred to the two powers of attorney given by the Respondent's Chief Executive Officer to Ms. Talat Shamim Naz, an officer of the Respondent Bank and Mr. Mansoor Ahme d, another officer of the Respondent Bank for the purpose of filing of suits etc. and conducting legal proceedings on behalf of the said bank. Learned ASC's contention is that in the said powers of attorney although they have been executed by the Chief Executive Officer of the bank per Section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 but they are not on behalf of the bank but "on behalf of the credit administration departm ent of the bank located at the head office, Karachi and "on behalf of the Legal Department". According to learned ASC the words 'on behalf of the credit administration department of the bank" are mentioned in the opening paragraph/recitals of the powers of attorney and hence control the remaining part." Consequently the same are not in accordance with section 9 of the Ordinance which categorically provides that a financial institution can file a suit in the banking Court by presenting a plaint which shall be verified on oath in the case of a financial institution by the Branch Manager or such other officer of the financial institution as may be duly authorized in this behalf by the Chief Executive Of ficer of the Bank.
3. In support of his submission, learned ASC has relied upon Trading Corporation of Pakistan Ltd. v . Haji Khuda Bux Amir Umar Ltd. (2007 YLR 1741), Ediga Seshanna and another v. R. Venkataramana Rao (AIR 1941 Madras 60), Notified Area Committee, Okara v. Kidar Nath and others (AIR 1935 Lahore 345) and Messrs Muhammad Siddiq Muhammad Umar and another v . The Australsia Bank Ltd. (PLD 1966 SC 684 ).
4. On the other hand, Mr. Muharram G. Baloch, learned ASC appearing for the Respondent has fully supported the impugned Judgment whereby this technical objection has been overruled.
5. We have heard both the learned ASCs and perused the impugned Judgment as well as the record with their assistance.
6. In our opinion, Mr. Abdul Hafeez Lakh o's contention that the powers of attorney were issued on behalf of the credit administration department and the Legal Department and not by the bank itself, is negated on the face of the same as they have been executed by the Chief Executive Officer of the bank and authorizes the two officers of the bank to file suits etc. for recovery of money and other purposes before the Courts in Pakistan and hence the words appearing in the power of attorney In the recitals i.e. on behalf of the legal department or the credit administration department are merely explanatory . Insofar as the cases cited by the learned ASC are concerned, we find that they are not at all relevant to the facts of the instant case.
7. For all the foregoing reasons, this Petition is dismissed and Leave declined.