The Public Debt Act, 1944

1. Short title, extent and commencement. -

(1) This Act may be called the Public Debt Act, 1944.

(2) It extends to the whole of Pakistan.

(3) It shall come into force on such date as the Federal Government may, by
notification in the official Gazette, appoint in this behalf.

2. Definitions. -

In this Act, unless there is anything repugnant in the subject or extent, --

(1) “the Bank” means the State Bank of Pakistan;

(1A) “Government”, in relation to Government security means the Federal or

Provincial Government by whom the security is created.and issued; Added
vide Ex. Ordinance Gazette dated 3-5-61 Ordinance No.VII of 1961.

(2) “Government security “ means—

(a) a security, created and issued, whether before or after the

commencement of this Act, by the Government for the purpose of
raising a public loan, and having one of the following forms,
namely: -

(i) stock transferable by registration in the books of the Bank;

or

(ii) a promissory note payable to order ; or

(iii) a bearer bond payable to bearer; or

(iv) a form prescribed in this behalf; or notified by Government

from time to time.

(b) any other security created and issued by the Government in such
form and for such of the purposes of this Act as may be prescribed;

(3) “prescribed” means prescribed by rules made under this Act;

(4) “promissory note” includes a treasury bill.

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3. Transfer of Government securities.---

(1) Subject to the provision of section 5, a transfer of a Government

security shall be made only in the manner prescribed for the
making of transfer of securities of the class to which it belongs,
and no transfer of a Government security @[which, in the case of a
security issued by the Federal Government is made after the
thirtieth day of April, 1946 and in the case of a security issued by a
Provisional Government, is made after the commencement of the
Public Debt (Federal Government) (Amendment) Ordinance,1961]
shall be valid if:---added vide Ex. Ord. Gazette dated 3-3-61.

(a) it does not purpose to convey the full title to the security,
or

(b) it is of such a nature as to affect the manner in which the

security was expressed by the Government to be held.

(2) Nothing in this section shall affect any order made by the Bank
under this Act or any order made by a Court upon the Bank.

4 Transfer of Government securities not liable for amount thereof. —

Notwithstanding anything contained in the Negotiable Instrument

Act, 1881 (XXVI of 1881), a person shall not, by reason only of
his having transferred a Government security, be liable to pay any
money due either as principal or as interest thereunder.

5. Holding of Government securities by holders of public offices. ---

(1) In the case of any public to which the Federal Government may, by
notification in the official Gazette, declare this sub section to
apply, a Government security in the form of stock or of a
promissory note may be held in the name of the office.

(2) When a Government security is so held, it shall be deemed to be

transferred without any or further endorsement or transfer deed
from each holder of the office to the succeeding holder of the
office on and from the date on which the latter takes charge of the
office.

(3) When the holder of the office transfers to a party not being his
successor in the office a Government security so held, the transfer

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 shall be made by the signature of the holder of the office and the
name of the office in the manner and subject to the conditions laid
down in section 3.

(4) This section applies as well to an office of which there are two or
more joint holders as to an office of which there is a single holder.

6. Notice of trust not receivable. ---

(1) No notice of any trust in respect of any Government security shall

be receivable by the Federal Government, be bound by any such
notice even though expressly given, nor shall the Government be
regarded as a trustee in respect of any Government security.

(2) Without prejudice to the provisions of sub –section (1), the Bank
may, as an act of grace and without any liability to the Bank or to
the Federal Government record in the books such directions by the
holder of the stock for the payment of interest on, or of the
maturity value of, or the transfer of, or such other matters relating
to the stock as the Bank thinks fit.

7. Persons whose title to a Government security of a deceased sole holder

may be recognized by the Bank.---

Subject to the provisions of section 9 the executors or

administrators of a deceased sole holder of Government security
and the holder of a succession certificate issued under Part X of the
succession Act, 1925 (XXXIX of 1925) shall be the only person
who may be recognized by the Bank as having any title to the
Government security.

Provided that nothing in this section shall bar the recognition by

the Bank of the manager or the sole surviving male member of a
Hindu undivided family governed by the Mitakshara Law as
having a title to a Government security when the security appears
to the Bank to stand in the name of a deceased member of the
family and an application is made by such manager or sole
surviving member for recognition of his title and is supported by
a certificate signed by such authority and after such inquiry as may
be prescribed to the effect that the deceased belong to a Hindu
undivided family governed by the Mitakshara law, that the
Government security formed part of the joint property of the
family, and that the applicant is the managing or sole surviving
male member of the family.

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 Explanation. --- The expression “Hindu undivided family governed
by the Mitakshara Law” shall, for the purposes of this section be
deemed to include a Malabar tarwad.

8. Right of survivors of joint holders or several payees. ---

Notwithstanding anything contained in section 45 of the Contract

Act, 1872 (IX of 1872), ---

(a) when a Government security is held by two or more

persons jointly and either or any of them dies, the title to
the security shall vest in the survivor or survivors of those
persons, and

(b) when a Government security is payable to Two or more

persons severely and either or any of them dies, the security
shall be payable to the survivor or survivors of these
persons or to the representative of the deceased or to any of
them:

Provided that nothing contained in this section shall affect

any claim, which any representative of a deceased person
may have against the survivor or survivors under or in
respect of any security to which this section applies.

Explanation. ---

For the purposes of this section a body incorporated under

the Indian Companies Act, 1913 (VII of 1913), or the
Cooperative Societies Act, 1912 (II of 1912), or any other
enactment for the time being in force whether within or
without Pakistan, relating to the incorporation of
associations of individuals, shall be deemed to die when it
is dissolved.

9. Summary procedure on death of holder of Government securities not

exceeding five thousand rupees face value.---

Notwithstanding anything contained in section 7, if within six

months of the death of a person who was the holder of a
Government security or securities the face value of which does not
in the aggregate exceed five thousand rupees probate of his will or
letters of administration of his estate or a succession certificate

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 issued under Part X of the Succession Act, 1925 (XXXIX) of
1925), is not produced to the Bank, or proof to the satisfaction of
the Bank that proceedings have been instituted to obtain one of
these is not furnished, the Bank may determine who is the person
entitled to the security or securities, or to administrator the estate
of the deceased and may make an order vesting the security or
securities in the person so determined..

10. Government securities not exceeding five thousand rupees face value
belonging to minor or insane person. ---

When a Government security or securities belong to a minor or a

person who is insane and incapable of managing his affairs and the
face value of the security or securities does not in the aggregate
exceed five thousand rupees, the Bank may make such order as it
thinks fit for the vesting of such security or securities in such
person as it considers represents the minor or insane person.

11. Issue of duplicate securities and of new securities on conversion,

consolidation, sub-division or renewal. ---

(1) If the person entitled to a Government security applies [not being

security in a form notified in pursuance of paragraph (iv) of sub
clause (a) of clause (2) (of section 2] to the Bank alleging that the
security has been lost, stolen or destroyed, or has been defaced or
mutilated, the Bank may, on proof to its satisfaction of the loss,
theft, destruction, defacement or mutilation of the security, subject
to such conditions and on payment of such fees as may be
prescribed, order the issue of a duplicate security payable to the
applicant.

[“(I-A) If a Government Security in any of the forms notified in

pursuance of paragraph (iv) of sub-clause (a) of clause (2) of
section 2 has been defaced or mutilated, the holder thereof may, in
such manner, and subject to such conditions and on payment of
such fees, if any, as may be notified by Government, apply for the
issue of a duplicate security, or for the refund of its value]: -

(Provided that, where such Government security is in the form of

Prize Bond, the holder thereof may apply only for the refund of its
value.”)

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 (2) If the person entitled to a Government security applies to the Bank
to have the security converted into a security of another form, or
into a security issued in connection with another loan or to have it
consolidated with other like securities or to have it sub-divided,
or to have it renewed, the Bank may, subject to such conditions
and on payment of such fees as may be prescribed, cancel the
security and order the issue of a new security or securities.

(3) The person to whom a duplicate security or a new security is

issued under this section shall be deemed for the purposes of
section 19 to have been recognized by the Bank as the holder of
the security and a duplicate security or new security so issued to
any person shall be deemed to constitute a new contract between
the Federal Government and such person and all persons deriving
title thereafter through him.

12. Summary determination by the Bank of title to Government security

in case of dispute.---

(1) If the Bank is of opinion that a debt exists as to the title to a

Government security, it may proceed to determine the person who
shall for the purposes of the Bank be deemed to be the person
entitled thereto.

(2) The Bank shall give notice in writing to each claimant of whom it
has knowledge, stating the names of all other claimants and the
time when and the officer of the Bank by whom determination
of the Bank will be made.

(3) The Bank shall give notice in writing to each claimant of the
result of the determination so made.

(4) On the expiry of six months from the issue of notices referred to
in sub-section (3), the Bank may make order vesting in the person,
found by the Bank to be entitled to the security, the security and
any unpaid interest thereon.

13. Law applicable in regard to Government securities. ---

Notwithstanding that as a matter of convenience the Federal

Government may have arranged for payments on a Government
security to be made elsewhere than in Pakistan, the rights of all
persons in relation to Government securities shall be determined in

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 connection with all such questions as are dealt with by this Act by
the law and in the courts of Pakistan.

14. Recording of evidence. ---

(1) For the purpose of making any order which it is empowered to

make under this Act, the Bank may request a District Magistrate or
in a State that has acceded to Pakistan the Political Agent to record
or to have recorded the whole or any part of such evidence as any
person whose evidence the Bank requires may produce. A District
Magistrate so requested may himself record, or may direct any
Execution Magistrate and empowered in this behalf by general or
special order of the Provincial Government to record the evidence,
and shall forward a copy thereof to the Bank.

(2) For the purpose of making a vesting order under this Act this Bank
may direct one of its officers to record the evidence of any person
whose evidence the Bank requires or may receive evidence upon
affidavit.

(3) A Magistrate or an officer of the Bank acting in pursuance of this

section may administer an oath to any witness examined by him.

15. Postponement of payments and registration of transfers pending the

making of a vesting order.---

Where the Bank contemplates making an order under this Act to

vest a Government security in any person, the Bank may suspend
payment of interest on or the maturity value of the security or
postpone the making of any order under section 11 or the
registration of any transfer of the security until the vesting order
has been made.

16. Power of Bank to require bonds. ---

(1) Before making any order, which it is empowered to make under

this Act, the Bank may require the person in whose favour the
order is to be made to execute a bond with one or more sureties in
such form as may be prescribed or to furnish security not
exceeding twice the value of the subject matter of the order, to be
held at the disposal of the Bank, to pay to the Bank or any person
to whom the Bank may assign the bond or security in furtherance
of sub-section (2) the amount thereof.

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 (2) Court before which a claim in respect of the subject matter of any
such order is established may order the bond or security to be
assigned to the successful claimant who shall thereupon be
entitled to enforce the bond or realise the security to the extent of
such claim.

17. Publication of notices in official Gazette.---

Any notice required to be given by the Bank under this Act may be
served by post, but every such notice shall also be published by
the Bank in the Gazette of Pakistan or the official gazette of a
Province, according as the notice relates to a security issued by the
Federal Government, or a Provincial Government and on such
Publication shall be deemed to have been delivered to all persons
for whom it is intended.

18. Scope of vesting order. ---

An order made by the Bank under this Act may confer the full
title to a Government security or may confer a title only to the
accrued and accruing interest on the security pending a further
order vesting the full title.

19. Legal effect of orders made by the Bank. ---

No recognition by the Bank of a person as the holder of a

Government security, and no order made by the Bank under this
Act shall be called in question by any Court so far as such
recognition or order affects the relations of the Federal
Government or the Bank with the person recognized by the Bank
as the holder of a Government security or with any person
claiming an interest in such security and any such recognition by
the Bank of any person or any order by the Bank vesting a
Government security in any person shall operate to confer on that
person a title to the security subject only to a personal liability to
the rightful owner of the security for money had and received on
his account.

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20. Stay of proceedings on order of Court.---

Where the Bank contemplates making with reference to any

Government security any order which it is empowered to make
under this Act, and before the order is made the Bank receives
from a Court in Pakistan an order to stay the making of such order
the Bank shall either---

(a) hold the security together with any interest unpaid or

accruing thereon until the further orders of the Court are
received, or

(b) apply to the Court to have the security transferred to the

Official Trustees appointed for the Province in which such
Court is situated, ending the disposal of the proceedings
before the Court.

21. Cancellation by the Bank of vesting proceedings. ---

Where the Bank contemplates making an order under this Act

vesting a Government security in any person the Bank may, at any
time before the order is made, cancel any proceedings already
taken for that purpose and may, on such cancellation, proceed a
new to the making of such order.

22. Discharge in respect of interest on Government securities---

Save as otherwise expressly provided in terms of a Government

security, no person shall be entitled to claim interest on such
security in respect of any period which has elapsed after the
earliest date on which demand could have been made for the
payment of the amount due on such security.

23. Discharge in respect of bearer bonds.---

The Federal Government shall be discharge from all liability on a

bearer bond or on any interest coupon of such a bond on payment
to the holder of such bond or coupon on presentation on or after
the date when it becomes due of the amount expressed therein,
unless before such payment an order of a Court of Pakistan has

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 been served on the Federal Government restraining it from making
payment.

24. Period of limitation of Federal Government’s in respect of interest. ---

Where no shorter period of limitation is fixed by any law for the

time being in force, the liability of the Federal Government in
respect of any interest payment due on a Government security shall
terminate on the expiry of two years from the date on which the
amount due by way of interest became payable.

25. Inspection of documents.---

No person shall be entitled to inspect, or to receive information

derived from any Government security in the possession of
custody of the Federal Government or from any book, register, or
other document kept or maintained by or on behalf of the Federal
Government in relation to Government securities or any
Government security, save in such circumstances and manner and
subject to such conditions as may be prescribed.

26. The Bank and its officers to be deemed public officers.---

For the purposes of section 124 of the Evidence Act, 1872 (I of

1872), the provisions of the Part IV of the Code of Civil Procedure,
1908 (V of 1908), relating to suits by or against public officers in
their official capacity, and the provisions of rule 27 of order V and
rule 52 of Order XXI of the said Code, the Bank aid any office of
the Bank acting in his capacity as such shall be deemed to be a
public officer.

27. Penalty. ---

(1) If any person, for the purpose of obtaining for himself or for any
other person any title to a Government security, makes to any
authority under this Act in any application made under this Act or
in the course of any inquiry undertaken in pursuance of this Act
any statement which is false and which he either knows to be false
or does not believe to be true, he shall be punishable with
imprisonment for a term which may extend to six months, or with
fine or with both.

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 (2) No Court shall take cognizance of any offence under sub-section
(1) except on the complaint of the Bank.

28. Power to make rules. ---

(1) The Federal Government may, (subject to the condition of previous

publication, by notification in the official Gazette,) make rules to
carry out the purposes of this Act.

(2) In particular and without prejudice to the generality of the

foregoing power such rules may provide for all or any of the
following matters, namely:-

(a) the forms in which Government securities may be issued ;

(b) the form of the obligations referred to in clause (iv) of sub-

clause (a) of clause (2) of section 2;

(c) Omitted.

(d) the manner in which different forms of Government

securities may be transferred;

(e) the holding of Government securities in the form of stock

by the holders of offices other than public offices, and the
manner in which and the conditions subject to which
Government securities so held may be transferred;

(f) the manner in which payment of interest in respect of

Government securities is to be made and acknowledged;

(g) the conditions governing in grant of duplicate, renewed,

converted, consolidated and sub-divided Government
securities;

(h) the fees to be paid in respect of the issue of duplicate

Government securities and of the renewal , conversion,
consolidation and sub-division of Government securities.

(i) the form in which receipt of a Government security

delivered for discharge, renewal, conversion, consolidation
or sub-division is to be acknowledged;

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 (j) the manner of attestation of documents relating to
Government securities in the form of stock;

(k) the manner in which any document relating to a

Government security or any endorsement on a promissory
note issued by the Government may, on the demand of a
person who from any cause is unable to write, be executed
on his behalf;

(l) the form of the bonds referred to in sub-section (1) of

section 16;

(m) the circumstances and the manner in which and the

conditions subject to which inspection of Government
securities, books, registers and other documents may
allowed or information therefrom may be given under
section 25;

(n) the procedure to be followed in making vesting orders;

(o) the authority by whom the certificate referred to in the

proviso to section 7 is to be granted and the manner of
making the inquiry therein mentioned;

(3) A copy of all rules under this section shall be laid on the table of
the legislature as soon as may be after they are made.

29. Act X of 1920 not to apply to Government securities.---

The Securities Act, 1920 (X of 1920), shall cease to apply to

Government securities to which this Act applies, and to all matters
for which provision is made by this Act.

Suggestions / feedback may reach us by 31st August, 2004

E-mail address: muhammad.arif@sbp.org.pk

waseem rehan@sbp.org.pk

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