Assessing the Performance of Banking Courts

ASSESSING THE PERFORMANCE OF BANKING COURTS

By Sayyed Qalb-e-Abbas Kazmi, Deputy Head-Legal Affairs Division, Bank Al-Habib Limited, Karachi*

The Document discusses Banking Courts operating in Pakistan, their role and performance. Besides, the Document analyzes the causes of delay in disposal of cases lying pending in Banking Courts, and gives Recommendations for improving the laws, system and working of Banking Courts so as maximum Non-Performing Loans (NPLs) are recovered and financial health of the Banks is restored on one hand and the customers complaints are resolved on other.

(1) Establishment of the Courts

(a) The Financial Institutions (Recovery of Finances) Ordinance, 2001 has been promulgated to redress the issues relating to the Banking Companies loans, advances, credits, finances and recoveries, etc.

(b) Under section 5 of the said Ordinance the Federal Government may establish as many courts as it considers necessary to exercise jurisdiction in respect of cases in which the claim does not exceed one hundred million rupees or for the trial of offences under this Ordinance.

(c) A Judge of Banking Court shall be appointed by the Federal Government after consultation with the Chief Justice of the High Court of the Province in which the Banking Court is established and no person shall be appointed a Judge of Banking Court unless he is or had been or is qualified to be a District Judge.

(2) Procedure of the Courts

(a) A Banking Court shall in all matters with respect to which the procedure has not been provided under this Ordinance, follow the procedure laid down in the Code of Civil Procedure, 1908 and the Code of Criminal Procedure, 1898.

(b) Where a borrower or customer or a financial institution commits a default in fulfillment of any obligation with regard to any finance, the financial institution or, as the case may be, the customer may institute 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 power of attorney or otherwise.

(c) The plaint shall be supported by a statement of account which, in the case of a financial institution, shall be duly certified under the Bankers' Books Evidence Act, 1891 (XVII of 1891), and all other relevant documents relating to the grant of finance. Copies of the plaint, statement of account and other relevant documents shall be filed in the Banking Court in sufficient numbers so that there is one set of copies for each defendant and one extra copy.

(3) Consolidated Statement of Cases disposed of by Banking Courts

(a) There are 29 courts operating in Pakistan under The Financial Institutions (Recovery of Finances) Ordinance, 2001.

(b) The performance of these courts can be assessed, from the following Table, for the calendar year ending on 31-Dec-2014.

Number of CourtsPendency on 1.1.2014Institution During the yearTotal Cases for DisposalDisposal During the YearBalance on 31.12.2014% Pending Cases
2941,55022,47464,02426,77237,25258%

(c) Although the above statistics are outdated (as of 31-Dec-2014), however, it can be seen from the above Table that the disposal ratio is just 42% for the year, whereas 58% of the cases remained un-decided in the courts.

(d) Besides above, there is no data available from Law and Justice Commission of Pakistan indicating the aging analysis of the pending court cases.

(4) Status of Pending Litigation in Banking Courts in Pakistan:

(a) As stated earlier, the Secretariat of Law and Justice Commission of Pakistan prepares the data of cases being tried in Banking Courts in Pakistan, but it is outdated and whatever is available for review, it does not indicate aging of pending litigation cases in Banking Courts.

(b) State Bank of Pakistan collects data of pending litigation regarding NPL of all banks and financial institutions on half-yearly basis. Lastly available data in this regard is of 31-Dec-2016, from which following summary is derived and consolidated:

Pending Litigation Cases of Banking Sector regarding recovery of NPL

Status as of 31-12-2016

#PeriodNumber of CasesAmount (Rs. Million)
Banking CourtsHigh CourtsTotal%Banking CourtsHigh CourtsTotal%
Recovery Suits:16,53694817,484100%49,446,557190,879,799240,326,356100%
1Less than one Year3,8821244,00623%8,340.36619,531.47927,871.84512%
21 - 3 Years5,1012365,33731%13,610.14247,140.08060,750.22225%
33 - 5 Years3,1192013,32019%11,899.61046,100.22857,999.83824%
45 - 10 Years3,6202873,90722%12,979.83058,932.37971,912.20830%
5More than 10 Years8141009145%2,616.61019,175.63421,792.2439%
Executions:31,11987531,994100%71,630.224121,193.339192,823.563100%
1Less than one Year3,0801253,20510%5,016.23725,650.59230,666.82916%
21 - 3 Years7,5132557,76824%17,084.15235,568.18952,652.34127%
33 - 5 Years6,4551156,57021%15,247.00416,165.17331,412.17716%
45 - 10 Years11,03916711,20635%23,301.54314,832.62538,134.16720%
5More than 10 Years3,0322133,24510%10,981.28728,976.76139,958.04821%
Grand Total:47,6551,82349,478100%121,076.78312,073.139433,149.919100%
1Less than one Year6,9622497,21115%13,356.60445,182.07158,538.67414%
21 - 3 Years12,61449113,10526%30,694.29482,708.269113,402.56326%
33 - 5 Years9,5743169,89020%27,146.61462,265.40189,412.01521%
45 - 10 Years14,65945415,11331%36,281.37273,765.003110,046.37625%
5More than 10 Years3,8463134,1598%13,597.89748,152.39561,750.29214%

(c) As of 31-Dec-2016, Banks and Financial Institutions in Pakistan are having NPL of Rs: 619 billion, whereas an amount of Rs: 433 billion (70% of this portfolio) is in the shape of recovery suits and executions lying pending in the Banking Courts all over Pakistan.

(d) It is an alarming situation that an amount of Rs: 172 billion (which is 39% of the total pending litigation) of these suits are not resolved despite of passing a period more than 5 years.

(e) Further, devastating situation that an amount of Rs: 62 billion (which is 14% of the total pending litigation) of these suits are not resolved despite of passing a period more than 10 years.

(5) Justice delayed is a justice denied

(a) 'Justice delayed is justice denied' is a very common adage in the judicial domain. It is one of the most burning problems in the administration of justice. This system of justice is so ambiguous and miserable for the people that it cannot be explained in a word.

(b) There are many instances that people who went to court to address their grievances after selling off their lands and property to meet the expenses of the court, but did not get justice in their lifetime. At present, the only demand of people is the speedy approach to justice. Certainly 'speedy approach to justice' is gradually getting the status of an important human right which is also denied by some administrators in justice and the underprivileged people continue to be dominated by them.

(c) This day, the judiciary organ is an independent organ in our country from the executive. So, it is high time to adopt effective steps to dispense our justice as early as possible.

(d) How much pain the delay process of justice involves need not be explained. This picture of justice is very much dreadful for our poor citizens. It is generally seen that a case is still hanging in court, which began more than one decade ago. There are many victims who don't easily think of going to court seeking justice because they know it will take years to prove a clearly visible wrongdoer is the actual criminal.

(e) Moreover, the impact of this unusual delay in disposal of cases falls on the victims. Due to delay in litigation, people become annoyed to obtain proper justice at any stage and also develop a negative outlook in their mind about the total judiciary schemes including judges, lawyers, associates and the administration of justice etc.

(f) The process of delay in litigation is equally known to all and nevertheless it may sound inconsistent with due process of law. The fact remains that the very cases are misused and abused in order to delay cases for an indefinite period and ultimate success in the cause often proves false. Now, law is an effective weapon in the hands of the state to mitigate the social needs by ensuring proper justice in time. Such effort of law is liable if justice fails to mitigate the misery of the mass people due to delay in litigation only and the faith in justice can never be instilled in the mass people if the state doesn't ensure the speedy process of justice.

(g) In the field of justice, delay in litigation is traditionally practiced in our country as like at the same time as denying due process of law. The result is that cases are piled up in all the courts hugely day by day. Basically, the delay in litigation is incredibly practiced in civil courts. Our civil courts are governed by the Civil Procedure Code 1908 which was enacted during the British reign. But, after the independence, the government of Pakistan had taken an attempt to accelerate the civil procedure system.

(h) Delay in litigation is still prevailing in the field of civil justice. On the other hand in criminal area, it is usually seen that a person, from the date of arrest, is in custody without any trial for many days though it is not proved whether he is an offender or not. Crime increases only when the justice is delayed or do not take place. So, it is obviously a vital issue to change the present scheme of our legal procedure. A number of causes seem to be responsible for creating this crippling situation in the way of our justice. An attempt has been made here to pinpoint some of the causes and suggest measures to remove them. It appears that the main causes of delay are:

(i) Lack of good lawyers.

(ii) The attitude of some of the lawyers is also to some extent responsible for delay.

(iii) Accumulation of cases.

(iv) Insufficient number of judges.

(v) Lack of proper observation of the provisions of the Codes.

(vi) A large number of cases that come before the Supreme Court cannot be concluded hastily due to interpretation of legislative enactment in question.

(vii) Delay in proper investigation or inquiry in a litigation.

(viii) Variety of laws on a particular issue.

(ix) Inadequate office equipment and machinery.

(x) Unreasonable absence of witnesses.

(xi) Cumbersome execution procedure of decrees in civil cases.

(xii) Lack of utilization of modern technology in keeping records and documents.

(i) The delay in litigation is practiced in our judicial domain for many days. So, it can't be removed in a day. But, it is as much crucial an issue that our Government has to take immediate steps to diminish this problem.

However, following steps can be adopted to change the current character of administration of justice:

(i) The atmosphere of justice must be corruption free.

(ii) Adequate number of judges should be ensured.

(iii) Justice administration system should be easy and not much expensive. Although the Constitution guaranteed equal right.

(6) Impact of delay in disposal of cases lying pending in Banking Courts:

(a) As per Prudential Regulations issued by the State Bank of Pakistan, the Banks are required not to book the mark-up recoverable on this portfolio to income of the Banks; and in addition, it is required to build a reserve for the NPL portfolio keeping in view the aging of the loan and securities available to the Bank against these loans.

(b) Keeping in view the above, it is a matter of utmost importance to provide a mechanism and judicial support to the Banks for speedy recovery of the NPLs so as financial health of the Banks is restored, depositors' money is protected and banks are assisted in performing the role of trustee for public deposit, so as depositors are paid principal sum as well as appropriate profit thereon accordingly.

(7) Causes of delay in disposal of cases lying pending in Banking Courts:

(a) Delay in dispensing justice is number one problem:

In any literature on the legal system of Pakistan, delay in dispensing justice is considered as the number one problem that hinders the access to justice. There are some civil cases which were filed during the life of grandfather litigants and are still under trial. Too much time, often results into too much money.

(b) Deficiencies in The Financial Institutions (Recovery of Finances) Ordinance, 2001:

(i) Interim Decree:

(1) Section 11(1) of F.I.O., 2001 has been amended through Financial Institutions (Recovery of Finances) (Amendment) Act, 2016.

(2) A comparative sketch of the Section before and after the amendment is narrated hereunder:

Before AmendmentAfter Amendment
If the Banking Court on a consideration of the contents of plaint, the application for leave to defend of the defendant and the reply thereto , is of the opinion that the dispute between the parties does not extend to the whole of the claim, or that part of the claim is either undisputed, or is clearly due, or that the dispute is mainly limited to a part of the principal amount of the finance or to any other amounts relating to the finance, it shall, while granting leave and framing issues with respect to the disputed amounts, pass an interim decree in respect of that part of the claim which relates to the principal amount and which appears to be payable by the defendant to the plaintiff.If the Banking Court on a consideration of affidavit under oath by the customer supported by certificate of a Chartered Accountant on the approved panel of the State Bank of Pakistan under Section 35 of the Banking Companies Ordinance, 1962 (LVII of 1962) ^11^, is of the opinion that the dispute between the parties does not extend to the whole of the claim, or that part of the claim is either undisputed, or is clearly due, or that the dispute is mainly limited to a part for the principal amount of the finance or to any other amounts relating to the finance, it shall, while granting leave and framing issues with respect to the disputed amounts, pass an interim decree in respect of that part of the claim which relates to the principal amount and which appears to be payable by the defendant to the plaintiff.

(3) As seen from above comparative study, the interim decree prior to amendment was based on judicial mind of the court for awarding interim decree for an amount after considering:

(a) the contents of plaint,

(b) the application for leave to defend of the defendant, and

(c) the reply thereto,

(4) But, after the amendment, now the court is restricted to consider the amount of interim decree based an amount for which:

(a) An affidavit of the customer is provided; and

(b) The amount is supported by the certificate given by a Chartered Accountant.

(5) As the Customers are always seeking extended time for prolonging the recovery suits of the Bank, no customer be willing to provide affidavit for any amount for award of interim decree by the Banking Courts against them.

(6) The aforesaid amendment is totally lopsided in favour of the customer. It neither takes the judicial approach of the court into account, nor a viewpoint of the Bank (regarding amount of interim decree) is heard.

Hence, the amended law will drastically affect the recovery of NPL of the Banks.

(ii) One Common Security with multiple lending banks:

(1) Presently if a customer avails some finance from different Banks (say 3 or 4) against the same security, which is shared by the finance providing banks, in case of default of the customer in repayment of finance, each Bank has to file separate recovery suit against the default customers.

(2) In such like situation, default should be considered against all the creditors and recovery suit filed by any one creditor must be resulting into a decree in favour of all creditors.

(iii) Registration of pleading documents:

(1) The Registrar of the Banking Court ensures that all suits, leave to defend applications, applications, replications, appeals, criminal complaints being filed with the Banking Court by any party are compliant of requirements of the Ordinance especially the requirements of section 9(1), (2) and (3) in case of a suit and section 10(2), (3), (4) and (5) in case of leave to defend application and he endorses an office note on each and every such document presented for filing stating findings of his scrutiny and date of presentation of such document.

(2) If such a Note is made by Registrar, it must be construed a certificate from the Court that pleading documents are in compliance of the Law. Later on, either of the litigating party must be barred to raise an objection against it.

(3) Presently, despite of registration of these documents, adversarial objections are made by the litigating parties and substantial time is wasted in objecting, replying, arguing and deciding on these objections by the Banking Courts.

(iv) The Panel of Amicus Curie:

(1) As per section 5(8), the Banking Court may, if it so requires, be assisted in technical aspects of banking transactions involved in any case by an amicus curiae who has at least ten years experience of banking at a senior management level in a financial institution of repute or the State Bank of Pakistan and who has the qualifications of Commerce, Account or in Economics; or in Business Administration; or who has completed a course in banking from the Institute of Bankers, Pakistan.

(2) Despite of clear wording of the aforesaid Section, the Banking Court always hire Chartered Accountants at heavy costs as an amicus curie.

(3) The panel of amicus curiae must also contain some bankers, preferably law graduates having experience in management of Non-Performing Loans (NPLs).

(v) Furnishing of Security:

(1) In case the Banking Court grants leave to defend to the customer and the case is not decided within the time frame as envisaged in section 13(1) of the Ordinance then if the Banking Court, after examining the court diary, is satisfied that the delay is mainly attributed to the customer, it shall record its findings and shall forthwith pass an order for furnishing of security and in case of non-compliance by the customer the Banking Court shall proceed to pass a decree as mentioned in section 13(1) of the Ordinance.

(2) The security to be furnished must be a fresh security in the shape of immovable property or cash or otherwise.

Already mortgaged, hypothecated or pledged property or goods shall not be considered as security.

Presently, the Banking Courts accept the property (which is subject matter of suit) as sufficient security while granting the stay, which is against the spirit of law.

(vi) Realization of Decree:

It is well saying that, "Miseries of the litigant starts, once he gets the decree is in his hands". Over the time, the collateral available with the Bank has been devalued. No genuine bidder comes to purchase the property because of disclosure of actual sale price and stamp duties etc. Even if it is sold in auction through bidding, it is very hard and lengthy process to take the possession of the property.

(c) Suit for rendition of accounts:

(i) It is a routine matter in the Banking Courts that Courts are adjudicating suits for rendition of accounts filed by the customers against the financial institutions.

(ii) It is asserted that in case of partnership firms, registered firms (being the customer) can file the suits for rendition of accounts against the financial institutions, whereas unregistered firms are barred by law to do so under the provisions of section 69(2) of the Partnership Act, 1932.

(iii) It is a matter of concern that banking courts are adjudicating suits for rendition of accounts filed by unregistered firms (which is barred by law) and sometimes Banks' recovery suits are clubbed with these suits, which results into wastage of time and cost for the Banks.

(d) Loopholes in the civil and criminal Laws:

Leakage of civil and criminal procedure codes allows the cases to be lengthy. Lawyers in some cases also play their part in delay because more delay will ensure more earning for them.

(e) Litigation Database Management:

(i) In Pakistan, all superior courts (Supreme Court and High Courts) as well as subordinate courts have moved towards automation of court files whereby cause list and case information is available online. The progress in the pending litigation as well as the reasons for pendency can be checked by any one and at any time. Similarly, the present status of the case as well as next date of hearing can be checked from the websites.

(ii) It is unfortunate to state that despite of automation of the aforesaid courts, the banking courts are not yet automated. It is strongly recommended to automate these courts at the earliest.

(f) Insufficient Judicial Resources:

The lack of a sufficient number of judges and courts force a judge to deal with two to three thousand cases in a year.

(g) Outdated Procedures:

(i) Even after justice is delivered, it cannot be forced until the confrontational parties receive a written copy of the judgment.

(ii) In some cases, the judges ordered immediate issuance of the court order and signed it at once but in most cases, this whole process took a lot of time.

(h) Delays by assisting agencies:

(i) Criminal cases are delayed due to two reasons: The delay in submission of police report and the delay in court. Police takes long to submit an investigation report due to shortage of manpower and excessive workload as well as corruption in a police station. When a final charge sheet is submitted to the court, it becomes the place where justice is stuck.

(ii) On average, 40% to 60% of the cases are charge sheeted yearly but only 25% of these cases are put on trial. Following this rate, every year cases are accumulated causing a huge backlog.

(i) Non-availability of Judges:

(i) Dissolution of a Bench stops the procedure of the cases entrusted to that Bench.

(ii) Later, when that particular Bench gains its jurisdiction again, the suspended cases are re-opened from the very first stage. As a result, justice is not delivered in time and a backlog is created.

(j) Components of delay in civil cases:

(i) A great deal of delay occurs in summon service, processes filed by the parties are not promptly sent to the Nazir for service; unduly long adjournments are frequently granted as a matter of course for filing deficit court fees on plaints, process-fees, cost, commissions etc.

(ii) Tardy practices are made in filing written statement; amendment of pleading even at belated stage; substitution of parties also causes delay of disposal of suits.

(iii) Want of skilled lawyer and indifferent court is also a contributing device for causing delay of disposal of suits.

(k) Components of delay in criminal cases:

(i) Absence of witnesses in the criminal cases even after repeated issuance of summons and warrants; driving out of the witnesses of the criminal case by the defense side in a collusive venture and connivance; absence of prosecutor and defiance lawyer; non-production of accused persons by the jail authority are the key component hindering speedy disposal of cases.

(ii) Failure of producing the accused persons by the jail authority outside the districts on grounds of their involvement and being wanted in other criminals of the said districts for shortage of police escorts; ascendance of the accused persons and their voluntary surrender before the court in the middle of trial seeking for recalling of the witnesses already examined which cause the delay.

(iii) Splitting up of the criminal records for simultaneous trial of the adult as well as juvenile offenders at two separate court; frequent hearing to the bail matters for the same accused persons; non-appearance of the magistrate recording the confessional statements of the accused persons even after repeated issuance of summons and processes; non-arrival of the Investigation officer even after exhaustion of all the process; non-compliance of warrants by the police personnel; non-appearance of the expert witnesses for proof of the expert reports and dilatory tactics of the defense lawyer etc. are the usual components of delay in the disposal of criminal cases. These are the common causes of delay, which are generally faced by the Sessions, Special and Tribunal Judges during the trial of criminal cases. Court supervision and monitoring a consensus has emerged that a docket can be current only when a judge supervises the scheduling and progress of all steps of the case with systematic case management.

(iv) Once a litigant invokes the jurisdiction of the court, the court has the responsibility of pressing the lawyers and litigants to prepare the case for adjudication without delay. The court's loss of control over the litigation invariably leads to procedural inactivity. In reality, each case is to be supervised throughout its life with no unreasonable interruption in its procedural development.

(v) Monitoring can play the pivotal role for improved court administration and case management. In terms of monitoring, the District and Sessions Judges may hold the key position in the lower judiciary and as such their responsibility to enhance improved court management is a must.

(l) Outdated Laws:

(i) In the case of laws, some of the primary legislations are almost 150 years old. The British heritage still plays an important role and the judiciary still follows some statutes, the sole purpose of which is to restrict the movement of the unprivileged litigating parties.

(ii) Ignoring the dynamicity of law is placing it in a static position where laws are not keeping pace with the changing pattern of crime of modern nature in financial sector.

(m) Politicization of the Legal Sector

(i) Legal sector has usually been considered as the utmost source of accountability. However, in recent years, the particular phenomenon-politicization has touched this very sector. There is little doubt in the fact that the courts are often politicized.

(ii) Lack of accountability is paying its price. Bribery is quite common, even certain documents can be "lost", if proper amount of money is spent. Also, the High Court and the Supreme Court are not beyond its reach.

(iii) Superior Courts (High Courts and Supreme Court) are much focused in disposal of political cases, filed or defended by opposition (political parties) against the government.

(n) Case Management

(i) In Pakistan, lack of a systematic delegation of authority in court management makes the judges overburdened. There is no database about the number and status of cases dealt by a court.

(ii) Though Law and Justice Commission of Pakistan prepared a central database to monitor the number of pending cases function of judges, but it is always outdated. The report is prepared by the Commission on yearly basis and last available report is for the year ending on 31-Dec-2014.

(o) Low Quality of Judges and Court Staff

(i) For adversarial system to work, efficient and qualified lawyers are an essential precondition. During the British period, there was a provision that to practice law, a person had to be on one year probation in court and in the chamber of a senior lawyer.

(ii) Long times ago, in order to enroll in the High Court, a lawyer had to practice five years in lower courts. However, in 1962, President Ayub Khan simplified this provision that after two years of practicing in lower courts, a lawyer could enroll in High Court.

(iii) Besides, we have observed that judges are sometimes appointed on political consideration without considering their educational background and training received. However, political appointments of public prosecutors are unavoidable, but such appointment will not work if the appointees don't know the law.

(iv) In addition, renowned lawyers are reluctant in taking up the job of judges, as it would limit their income.

(p) Shortage of Manpower

(i) With the increase of the population of the country, the number of litigations has increased as well. However, the number of courts and judges and other personnel involved in the system has not been increased sufficiently.

(ii) It is found that almost about thousands cases are filed every day. Under the circumstance, it necessitates to enhance the number of court and judges for speedy disposal of the cases filed every day.

(q) Ineffective Law Enforcement Authority

(i) There are many flaws in the law enforcement mechanism of both criminal and civil justice system. In the criminal cases, police reports are the foundation of criminal justice. The police arrests, frames the case, investigates and submits charge sheet to the court. Police does all the preliminary work of justice, based on which judgment is delivered from the court.

(ii) As the police are the framer, investigator and reporter of the case, there is huge scope for manipulation. In some cases, charge sheet depends on the amount of the bribe. Sometimes they even manipulate the murder case by tampering evidence.

(iii) Justice is affected due to corrupt practices of police. They make weak charge sheets with an attempt to weaken the case they get bribes from the offenders.

(iv) Moreover, police personnel are often used by the ruling political party. The ruling party also appoints police personnel from the party cadre. As such, police normally cannot work independently.

(r) Corruption

(i) According to 2016 results of Corruption Perception Index of Transparency International, Pakistan ranks 116th place out of 176 countries with its previous score of 127 out of 175 in 2013

(ii) In 2002, in a report titled "Nature and Extent of Corruption in the Public Sector", Transparency International (TI) Pakistan reported that the highest amounts of bribery were spent on people affiliated with the judiciary.

Later in 2010, TI Pakistan presented a breakdown of the various actors in the judicial system involved in corruption. A majority of the participants reported that they, or someone in their household, have been subjected to an act of corruption while interacting with someone from the judiciary. When asked of the actors involved, 33.62% people said court employees, 23.73% said public prosecutors, 14.12% said witnesses, 12.43% said judges, 8.19% said opponent lawyer, and 4.52% said magistrates while 3.39% mentioned others.

(iii) In a 2011 survey, TI Pakistan identified judiciary as the most corrupt institution in Pakistan alongside police.

(iv) Nevertheless, with the proceedings of some high-impact corruption cases against government officials, including the prime minister, the Supreme Court demonstrated its positive role in tackling corruption.

Where the apex court was being hailed for its anti-corruption efforts in 2013, Mehmoodul Hassan, a member of the Sindh Bar Council, alleged that nepotism and corruption were still "rampant" in the lower judiciary, particularly high courts and the lower courts, where people were unlawfully promoted within the judiciary.

(s) Lack of Indigenization

(i) We have so far failed to indigenize the judiciary. Instead, it is still operating on the basis of British laws and systems. For instance, given the huge backlogs of cases mainly due to shortage of judges, three months' vacation in the High Court is quite ridiculous.

(ii) In fact, during the colonial days, judges coming from European countries needed three months' yearly holiday to visit home, but in the present scenario these long holidays are quite unnecessary and it only undercuts the performance of justice sector further.

(iii) During these three months' vacation witnesses may forget the case, evidence may be distorted, litigating parties, advocates and judges may die or many other unpredictable things may happen.

(iv) The philosophical, psychological, systemic and procedural barriers together create a negative attitude and reservations towards formal courts for the poor. The suspicion and distrust about the formal legal system is colossal. This negative attitude has been translated through the cultural system, and it is now a matter of disgrace to go to court. As a saying goes, "only those people go to court who are bad and dangerous". Another says; "in arbitration you have no other way but truth, and in court you have no other way but to tell lies". Therefore, it is a matter of shame and dishonor, for which a few are prepared to embrace. In some extreme cases, the same attitude goes even further and to protect the honor of the local community, all the local community masses are prohibited or even barred from going to court.

(8) Recommendations:

(a) Recommendation for amendments in The Financial Institutions (Recovery of Finances) Ordinance, 2001:

(i) In cases, where multiple finances are provided by different Banks against the common security offered by the Customer, default of the customer with any one Bank should be considered as a default against all the creditors. A recovery suit filed by any one creditor must be decided and resulting into a decree in favour of all creditors.

(ii) If Registrar of Banking Court makes a Note on pleading documents that documents are presented in compliance to provisions of FIO, it must be construed as a certificate from the Court that pleading documents are in compliance of the Law.

Later on, either of the litigating party must be barred to raise an objection against it. It will save the time and result into early disposal of cases.

(iii) Instead of focusing on Chartered Accountants, the panel of amicus curiae must also contain some bankers, preferably law graduates.

(iv) Presently, the Banking Courts accept the property (which is subject matter of suit) as sufficient security while granting the stay, which is against the spirit of law.

Already mortgaged, hypothecated or pledged property or goods shall not be considered as security.

(v) Presently, recovery suits of Rs: 100 million are filed in the Banking Courts, whereas the suits involving an amount exceeding Rs: 100 million is filed in the High Court (having the jurisdiction of the Banking Court).

When a recovery suit is of Rs: 110 million and it is under trial in the High Court (having the jurisdiction of the Banking Court), if the Customer is found of committing a criminal offence, the Bank has to file the Criminal Complaint under section 20 of FIO in the Banking Court and not in the High Court.

In such situation, the file of recovery suit is with the High Court who has fully cognizant of the facts; but criminal complaint is to be decided by the Banking Court.

It is suggested that in such a situation, the High Court must decide the criminal complaint and it should not be entrusted to Banking Court.

(vi) All special courts like as customs, tax and Labor Courts, there is a concept of Bench having judicial and technical members.

Normally, technical members are from the relevant departments. In case of Banking Courts, it is suggested that bankers having law background should be hired as technical members. If done so, it will result in early resolution of the litigation and speedy disposal of the cases.

(b) Quarterly sitting arrangement:

Interaction with Bar in respect of related matters; coordination with the Judges of subordinate court; Monitoring in terms of providing logistic support. Here logistic support includes skilled staff, necessary Stenographer Typist, accommodation of office and residence and transport facility of the judges.

(c) Introduction of informal justice system:

(i) Alternative Dispute Resolution (ADR) system can be strongly recommended to overcome those setbacks and delays beside the formal justice system in order to eliminate the endless sufferings of the litigants. This new device can be developed by practicing dispensation of justice in traditional methods like mediation, conciliation and arbitration.

(ii) For the first time in our legal system the provisions with regard to ADR have been introduced by amending the Code of Civil Procedure. Certainly, this concept is novel in our civil justice delivery system and case categorization system.

(iii) For the purpose of filing and record, cases will be classified according to subject matter type and possibly also value and age. This could help with the consolidation of similar types of cases for hearing and disposal by the judge at the same time and assist the case tracking and case flow management finally resulting in expeditious disposal of suits and cases.

(d) Effective legal aid system:

(i) The main objective of legal aid system is to promote access to justice and ensure justice for all, without any discrimination. By providing legal aid system, a good number of suits and cases can be disposed of at its earliest.

(ii) A large section of justice seeking people is being hindered to proceed with their cases for financial constraints. In this circumstance, the effective legal aid system can play a vital role to minimizing the number of suits cases pending before the court of law.

(e) Comprehensive legal reforms:

(i) The government has already introduced Alternative Dispute Resolution (ADR) in judicial system by amending the Civil Procedure Code. ADR introduced earlier in family courts, as pilot project has been proved successful.

(ii) Another reform as to formation of monitoring cell to discuss and highly sensational cases for quick disposal has also proved effective.

(iii) The government is the major litigant in this country, either as plaintiff or defendant. In many cases the government does not make any appearance. The government is thus responsible in many cases to prolong the litigation.

(iv) Major reforms in our legal system are necessary for ensuring speedy justice. The fundamental aim or motto of the judiciary is to ensure justice within shortest possible time. Judiciary plays a co-ordination role between other two organs of the state. Its role is not limited therefore merely in settling disputes within the four walls of the court room in between two disputants. The judiciary cannot be oblivious of the social consequence that may follow from what it decides and how it decides.

(v) Finally, it may be pointed out that no solution of the problems will ever be effective unless and until the parties including their advocates and also the judges come forward with all sincerity to end litigation in due time. Only then the maxim of equity which goes to say that "justice should not only be done but must be shown to have been done" will come into reality.

(f) Mediation

(i) The most common type of ADR is mediation. Although the word "conciliation" is also used in ADR terminology, there is virtually no distinction between mediation and conciliation, because mediation includes conciliation.

(ii) In Pakistan, at pre-trial stage, Family Courts ascertain the precise points of controversy between the parties and attempt to effect compromise between the parties. If reconciliation fails, the Family Court immediately passes a decree for dissolution of marriage and, in case of dissolution of marriage through khula, the court directs the wife to surrender up to 50% of her deferred dower or up to 25% of her admitted prompt dower to the husband.

(iii) It is generally recognized that when parties come to a stage of litigation when the trial is imminent, alternative dispute resolution is too late a procedure to induce the parties to divert themselves to a different procedure, because by that time the parties had already spent a substantial amount of money, time and energy in the litigation. It is then too late to take an interest in a cost saving or timesaving procedure. Attitudes had also hardened mutually on both sides.

(iv) It is desirable that after the defendants file their written statements, the presiding judge should read both the plaint and the written statements and call the parties and their lawyers, if any, to impress upon them the desirability of settling their disputes through mediation or non-binding arbitration. If the parties agree the case is adjourned for three months, within which they have to obtain either a settlement or a failure of it from either the mediator or the arbitrator. In the event of failure to settle, the court will proceed to try the case, according to a time-calendar for each case, and the adversarial system will resume.

(g) Court-Directed Mediation Proceedings

(i) Mediation is a completely voluntary and non-binding process of settlement of disputes between parties. It is an informal, flexible, confidential, non-adversarial and consensual procedure in which the Code of Civil Procedure or any law of evidence does not apply. The proceedings are immune from disclosure in any court of law. An impartial, disinterested and neutral person acts as a mediator.

(ii) Mediation may be either (1) Direct or (2) Facilitative.

(1) In Direct Mediation, the mediator applies all methods of squeezing into the heads of the parties as his own idea of a settlement.

(2) In Facilitative Mediation the mediator facilitates settlement negotiations, improves communication between the parties, helps the parties to articulate their respective interests and stakes in the litigation and helps each party to understand the interests and stakes of their opponent in the litigation. He probes the relative strengths and weaknesses of each party's legal position, identifies areas of agreement and helps to generate options amongst the parties themselves to arrive at a mutually acceptable resolution of their disputes.

(iii) The lawyers of each party are entitled as of right to take part in the mediation proceedings, but the mediator in an informal and flexible proceeding of this kind, may like to sit alternately with the plaintiffs or the defendants, with or without their lawyers.

(iv) The parties may disclose many things to the mediator not articulated in the plaint or written statements, but the mediator must maintain the confidentiality of these disclosures and tell the other side so much of the disclosures as he has been expressly authorized to disclose.

(v) He must not lean on any side and both sides must have confidence and trust in his impartiality and neutrality unto the end, even if there is no settlement. If the decision makers of a dispute in respect of payment of legal fees to the parties or in respect of execution of the court's decree are operating from behind using the plaintiffs or the defendants as proxies, the mediator has the right to call and listen them too.

(vi) At a trial the judge's hands are more restrained. It may so happen that the mediator generates so much of a spirit of compromise between the parties that they even agree to withdraw other civil suits pending against each other in other civil courts or compromise compoundable criminal cases pending against each other in various criminal courts. The final settlement is thus not limited to the prayers in the plaint.

(vii) In a formal trial, a judge cannot go beyond the prayers in the plaint if the suit is decreed.

(viii) In court-sponsored mediation the terms of settlement may travel beyond the scope of pleadings. When signed by the parties, their lawyers and the mediator, the presiding judge will pass a decree in terms of the settlement.

(ix) If other civil and criminal cases are also compromised in the document of settlement, the parties will have to approach the other courts to pass a compromise decree or compound a compoundable criminal offence.

(x) If one party fails to do so, the other party may sue for specific performance of contract or may claim damages for breach of contract, because the written settlement operates as a binding contract between the parties. There is no appeal or revision against a settlement of this nature.

(xi) Hence if all parties adhere to the terms of settlement several cases are finally disposed of and go out of the pending list. When a court directs mediation, it means facilitative mediation.

Bibliography

(1) Statutes:

(a) The Financial Institutions (Recovery of Finances) Ordinance, 2001

(b) The Family Courts Act, 1964

(c) The Partnership Act, 1932

(d) The Code of Civil Procedure, 1908

(e) The Code of Criminal Procedure, 1898

(2) "Administrative Tribunals and Special Courts, Annual Report 2014", issued by The Secretariat of Law and Justice Commission of Pakistan

(3) State Bank of Pakistan, "Compendium on Banking", Karachi, as of 31-Dec-2016.

(4) Prudential Regulation R-8 issued by State Bank of Pakistan.

(5) Transparency International Pakistan, "Nature and Extent of Corruption in the Public Sector"

(6) "Police, judiciary among most corrupt institutions in Pakistan". NDTV aired on 29 December 2011.

(7) Boone, Jon (15 January 2013). "Pakistan Supreme Court orders arrest of prime minister on corruption charges". Islamabad, Pakistan: The Guardian.

(8) "'No merit, only corruption qualifies for a promotion in the judiciary". Published in "The Express Tribune" on 17 June 201

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