The bench seized with suo motu case of Rs 254 billion written off loans since 1971, issued notice to Indus Sugar Mills for not paying back Rs 82 billion loan. The counsel for Indus Sugar Mills was directed to submit statements of yearly accounts since the written off date and was also told that if they desired they could settle the issue with the bank.
Similarly, the bench asked its office to fix a plea on November 8 of the Mohib Textile against concerned bank's move to auction its property despite the fact that its owners showed willingness to meet the liability. The bench observed in its order that in response to notices served upon top fifty beneficiaries (companies/borrowers) no one came forward except ten. The bench noted that those who appeared claimed that the loans were written off legally.
At the outset of proceedings, Syed Iqbal Haider, counsel for SBP, apprised the bench that the SBP governor in pursuance of apex Court's direction held a meeting with heads of all private banks. He said a strategy had been adopted following procedure for effecting recovery of written off loans and to ensure that in future acceptable policy should be followed in this behalf keeping in view interests of the tax payers and stakeholders. He submitted a letter of Shahid H. Kardar, governor SBP, written to him. In the letter, governor SBP assured the apex Court about full assistance over the issue.
Winding up the whole issue the governor said due to sharp declining growth rate of the domestic economy, worsened by the recent catastrophic floods and the deep seated international recession that had afflicted the global economy since late 2007, was contributing to the deterioration of the asset base of all banks operating in Pakistan.
"This is bound to result in the banks' portfolio of non- performing loans building up. These peculiar conditions will lead to write-off a significant proportion of the banks' present portfolio of non-performing loans without there being any State Bank Circular like BPD 29 which was required eight years ago because of the particular circumstances that had remained unaddressed for an inordinately long time," he added.
The Chief Justice directed the counsel to share minutes of the meeting with the bench. Abdul Sattar of Dyco Company appeared and told the court that principal amount of Rs 20 million was written-off and the factory was closed. Salman Butt, counsel for Redco Textile, said that they had returned Rs 465 million in lieu of Rs 362 million.
Salman Akram Raja, counsel for banks consortium, apprised the court that a letter was received from the NAB at that time to facilitate Saifur Rehman, the owner of mills. The Chief Justice questioned about the NAB official who had written letter. He told the counsel if you had paid back the loan amount then what was the requirement to go for settlement. However, the counsel agreed to settle the issue with the concerned bank.
The Chief Justice addressing counsel and representatives of companies/factories remarked that it was national wealth and the nation should not be made to suffer on account of individual cases. "You have not suffered the losses but the nation underwent the loss because you were running your business on public money," he added. Addressing SBP counsel, he said now the general public interest was focussed on the recovery of public money.
"We do not fear while performing under the Constitution but you have the fears, we do not know from whom. Perform under the Constitution which has greater force," he added. He said the SBP should have taken the initiative to recover the loans or to halt the current trend. "Court will not steer you by holding your finger. Take steps by yourselves. Sorry to say SBP seemed not interested in the recovery," he added.
Justice Khalil ur Rehman Ramday said that SBP was a regulator. "If private banks plunder the public wealth and flee then what you will do! I do not want to mention names of those but they have embezzled huge money and the government has to pay for it." Mohammad Arshad Saigal for Mohib Textile stated that not a single penny was written off under Circular 29 as they got no relief under Circular 29.
He apprised the property of company was auctioned and he had to undergo imprisonment for four years. Abdul Hafeez Pirzada, appearing as amicus curiae, said that there was a culture of default or compulsion of default. He said that he had talked to the Governor SBP and found him committed and dedicated. He said they required help and guidance to deal with the issue. Justice Ramday observed that it was not a simple issue. "Everyone should think over it. Everyone wants to drill a hole in the boat he is riding. Where will they flee after plundering, even the Shah of Iran could not escape," he added.