Section 10: Verification Committees

10. Verification Committees.—(1) For the purposes of this Ordinance and before taking any action thereunder, the Corporation shall, having regard to the facts and circumstances of a case, refer a question of bona fide dispute relating to liability of the obligor in respect of the non­performing assets or cases relating thereto, including the cases of fraud, misrepresentation, and breach of any provision of law, rule, regulation and circulars of the State Bank, regarding the calculation, existence and repayment of a financial obligation or outstanding loan, mark­up or interest claimed against an obligor, to the Governor State Bank for verification and correct determination and calculation by the Verification Committee as hereafter provided: Provided that the Corporation may in appropriate cases and having regard to the facts and circumstances of a case require the Governor State Bank to include one or more suitable persons including an expert or consultant to be member of the Verification Committee. (2) The verification, determination and calculation of matters referred to in sub­section (1) shall be made in accordance with the existing law, rules, regulations and circulars of the State Bank in the manner provided herein in regard to the principal amount of loan, mark up, interest and ancillary financial matters relating to the financial institutions as claimed by or against the financial institution or the Corporation, as the case may be, in respect of the non­performing assets and the liability of the obligor. (3) Save as provided in this Ordinance, the provisions of sub­sections (1) and (2) shall not affect the validity, continuance and enforcement of an order of winding up of a company under the Companies Ordinance, 1984, which has been made before the commencement of this Ordinance except for the purpose of calculating the payment of any financial obligation or verified claim to the creditor or contributory or liability of the guarantor or any other person. (4) Where a matter is referred to the Governor State Bank under sub­sections (1) and (2), he may constitute one or more Verification Committees for the purposes of this Ordinance. (5) The Verification Committee shall consist of a nominee of the Governor State Bank being a senior officer of the State Bank who shall be the Chairman of the Committee, two Chartered Accountants, to be nominated by the Governor State Bank and one Chartered Accountant to be nominated by the Council of the Institute of Chartered Accountants of Pakistan, Karachi, such nomination to be obtained by the Governor State Bank and such other person as the Corporation may require. (6) The Chairman of the Verification Committee shall convene the meetings, conduct proceedings of the Committee, maintain record including the evidence submitted before him by the parties and their statements and on their request supply authenticated copies of the record to them. (7) The Verification Committee after examination of the record of the concerned lending financial institution and the obligor and after due notice by courier service, fax, U.M.S. or any other effective mode to both parties and affording them reasonable opportunity to explain their position and hearing them in person and through their chartered accountants shall make correct determination, verification and calculation of liability and matters referred to in sub­sections (1), (2) and (3) in accordance with the law, rules, regulations and circulars of the State Bank. (8) Where a party after due notice under sub­section (7) does not appear in person or through chartered accountant before the Verification Committee, it may proceed ex­parte: Provided that nothing contained herein shall prevent such party from appearance before the Verification Committee before the conclusion of the proceedings. (9) The Verification Committee shall submit its finding and report with recommendations to the Governor State Bank within thirty days of the commencement of the proceedings or such extended period as the Governor State Bank may allow for reasons to be recorded in writing. (10) The Governor State Bank shall consider the findings and report and recommendations submitted to him by the Verification Committee under sub­section (9) and may accept or modify the same or may, for reasons to be recorded, make such other appropriate recommendations and findings in respect thereof as he may deem fit. (11) The Governor State Bank shall forward his recommendations and findings made under sub­section (10) alongwith the finding, report, recommendations and record of the Verification Committee to the Corporation and the parties will be entitled to obtain copies thereof from the Corporation. (12) The recommendations and findings of the Governor State Bank made on the basis of finding, report and recommendations of the Verification Committee in regard to calculation of liability of obligor shall be final and have presumption of truth unless found to contain manifest error or contrary to law, but the same shall be subject to orders of the High Court. (13) The Corporation after considering the recommendations and findings of the Governor State Bank forwarded to it under sub­section (11) will take appropriate action under this Ordinance having regard to the facts of each case. (14) In the event of failure either of the Verification Committee to conclude the reference within thirty days of the commencement of the proceedings or such extended period referred to in sub­ section (9) or the failure of the obligor or the financial institution to accept the recommendations and findings of the Governor State Bank, the Corporation may proceed in respect of the non­performing asset under this Ordinance. (15) Notwithstanding anything contained in any other law for the time being in force, the final recommendations and findings by the Governor State Bank and the finding, report and the recommendations of the Verification Committee under sub­section (11) shall constitute admissible evidence for any legal proceedings. Explanation.— For the purpose of this Ordinance any instructions given by the State Bank to any bank or financial institution for writing off any debt for the purpose of accounting of any such bank or financial institution shall not be construed as satisfaction of any debt payable by the obligor.

Effective date: 2000-01-01

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