THE WEST PAKISTAN USURIOUS ORDINANCE, 1959.

(W. P. ORDINANCE No. XVIII of 1959)

CONTENTS

PREAMBLE

SECTIONS —

1. Shot title and extent.
2. Definitions.
3. Application of the Ordinance.
4. Re-opening of transactions
5. Insolvency proceeding
6. Repeal

SCHEDULE

THE WEST PAKISTAN USURIOUS LOANSORDINANCE, 1959.

(W.P. OrdNo.XVIII of 1959)

                                                                                                [1st April, 1959]
AN

ORDINANCE

to consolidate the law relating to usurious loans in the Province of West Pakistan.

            the Court shall exercise all or any of the following powers:—

(i)     re-open the transaction, take an account between the parties, and relieve the debtor of all liability in respect of any excessive interest;

(ii)   Notwithstanding any agreement, purporting to close previous dealings and to create a new obligation, reopen any account already taken between them and relieve the debtor of all liability in respect of any excessive interest, and if anything has been paid or allowed in the account in respect of such liability, order the creditor to repay any sum which it considers to be repayable in respect thereof;

(iii) set aside either wholly or in part or revise or alter any security given or agreement made in respect of any loan, and if the creditor has parted with the security, order him, to indemnify the debtor in such manner and to such extent as it may deem just:

      Provided that in the exercise of these powers, the Court shall not —

(i)     re-open any agreement purporting to close previous dealings and to create a new obligation which has been entered into by the parties or any persons from whom they claim at a date more than twelve years from the date of the transaction;

(ii)   doanything which affects any decree of a Court. 

Explanation,—In the case of a suit brought on a series of transactions the expression “the transaction” means, for the purposes of proviso (i) the first of such transactions.

 (2)  (a)  In this section “excessive” means in excess of that which the Court                                   deems to be reasonable having regard to the risk incurred as it                              appeared, or must be taken to have appeared, to the creditor at the                                   date of the loan.

(b)   In considering whether interest is excessive under this section, the Court shall take into account any amounts charged or paid, whether in money or in kind, for expenses, inquiries, fines, bonuses, premia, renewals or any other charges, and if compound interest is charged, the periods at which it is calculated and the total advantage which may reasonably be taken to have been expected from the transactions.

(c)    In considering the question of risk, the Court shall take into account the presence or absence of security and the value thereof, the financial condition of the debtor and the result of any previous transactions of the debtor, by way of loan, so far as the same were known, or must be taken to have been known, to the creditor. 

(d)   In considering whether a transaction was substantially unfair, the Court shall take into account all circumstances materially affecting the relations of the parties at the time of the loan or tending to show that the transaction was unfair, including the necessities or supposed necessities of the debtor at the time of the loan so far as the same were known, or must be to have been known, to the creditor.

            Explanation. —Interest may of itself be sufficient evidence that the transaction was substantially unfair.

(e)    The Court shall deem interest to be excessive if it exceeds seven and a half per centum per annum simple interest or is more than two per centum over the bank rate, whichever is higher at the time of taking the loans, in the case of secured loans, or twelve and a half per centum per annum simple interest in the case of unsecured loan:

                        Provided that the provisions of this clause shall not apply if the loan           has been advanced by any bank which is a ‘schedule bank’ as defined in the      State Bank of Pakistan Act, 1956, or any banking company registered under       the Companies Act, 1913, [3][* *  *   *] or any Co-operative Society duly             registered under any law for the time being in force [4][, or any credit            institution to by notified by Government in this behalf].

             (3)  Whatever be the form of the suit this section shall apply if such suit is substantially one for the recovery of a loan or for the enforcement of any agreement or security in respect of a loan or for the redemption of any such security.
           

            (4)   Nothing in this section shall affect the rights of any transferee for value who satisfies the Court that the transfer to him was bona fide, and that he had at the time of such transfer no notice of any fact which would have entitled the debtor as against the lender to relief under this section.

            For the purposes of this sub-section, the word “notice” shall have the same meanings as is ascribed to it in section 4 of the Transfer of Property Act, 1882.

            (5)  Nothing in this section shall be construed as derogating from the existing power or jurisdiction of any Court.

SCHEDULE