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LHC Rules FIA Cannot Prosecute Bank Customers for Wilful Default

November 5, 2026 • 3 hours ago •

LAHORE: The Lahore High Court (LHC) has ruled that the Federal Investigation Agency (FIA) is prohibited from prosecuting bank customers for ‘wilful default’ until a banking court first assesses the allegations in civil proceedings. This decision follows petitions filed by Qaiser Shabbir and others challenging FIA notices issued in response to complaints from financial institutions.

The division bench, comprising Justice Jawad Hassan and Justice Abid Hussain Chattha, emphasized that the FIA’s actions must not proceed unilaterally. The petitioners argued that the civil and criminal remedies outlined in the Financial Institutions (Recovery of Finances) Ordinance 2001 are interconnected, necessitating a prior determination of wilful default by the banking court.

This ruling has significant implications for the banking sector and customers alike, as it clarifies the procedural requirements before criminal action can be taken against alleged defaulters. Legal experts suggest that this decision may protect customers from premature criminal charges while civil disputes are still unresolved.

Moving forward, the banking court will need to address the pending cases to establish whether wilful default has occurred, which could influence how financial institutions approach recovery processes in the future.

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