CLD 2003 Judgments

2003 C L D 131

[Appellate Bench Security and Exchange Commission]

Before Shahid Ghaffar, Commissioner (SM) and M. Zafar‑ul‑Haq Hijazi, Commissioner (CL)

Messrs GHARIBWAL CEMENT LIMITED and others‑‑‑Appellants

Versus

RASHID SADIQ, EXECUTIVE DIRECTOR (ENFORCEMENT AND

MONITORING), SECURITIES AND EXCHANGE COMMISSION OF

PAKISTAN‑‑‑Respondent

Appeal against Order dated 5‑12‑2001, decided on 2nd April, 2002.

(a) Maxi‑‑‑

‑‑‑‑"Cuilibet licet renuntiar juri prose introducto": Any one may waive or renounce the benefit of a principle or rule of law that exists only for his protection.

(b) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S. 208‑‑‑Words "under the authority"‑‑‑Meaning‑‑‑Such words mean having consent of the shareholders prior to investment‑‑‑Such an authority subsequently acquired cannot be termed as an act "under the authority".

Brooke Bond India Ltd. v. U.B. Ltd. (1994) 79 Comp. Cas. 346; East Indian Produce Limited v. Naresh Acharya Bhaduri (1988) 64 Comp. Cas.259; Bamford v. Bamford (1969) 1 All ER 969 (CA); Halsbury's Laws of England, Fourth Edn,. Vo1.7, para.726; Gower, LCB, Gower's Principles of Modern Company Law, at 177, Fifth Edn., 1992; Grant v. United Kingdom Switchback Railways Co. (1888) 40 Ch. D 135; Parmeshwari Prasad Gupta v. The Union of India AIR 1973 SC 2389; V.N. Bhajekar v. K.M. Shinkar AIR 1934 Bom.243; Manzoor Hussain v. Wali Muhammad PLD 1965 SC 425; McDermott v. Bear Film Co. 21'9 Cal. App. 2nd 607; Nishat Mills Limited v. Superintendent of Central Excise, Circle‑II and 3 others PLD 1989 SC 222; E.A.E Vans v. Muhammad Ashraf PLD 1964 SC 537; Vellayan Chettiar v. Government of the Province of Madras PLD 1947 PC 160 ref.

(c) Interpretation of statutes‑‑‑

‑‑‑‑ Words not provided for should not be read into a statute‑‑‑Word should be interpreted or a meaning can be assigned thereto only after seeing the context in which same is used.

(d) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S. 208‑‑‑Investments in associated company‑‑‑Prior permission of the shareholders‑‑‑Mandatory requirement‑‑­Doctrine of substantial compliance ‑‑‑Applicability‑‑­Investment made in associated company cannot be validated by virtue of subsequent ratification by shareholders‑‑‑Doctrine of substantial compliance cannot be resorted to where there has been a clear violation of mandatory provisions.

(e) Administration of justice‑‑‑

‑‑‑‑ Law must be followed‑‑‑Violation of law should not be judged in the light of results of the violation only, and, likewise if results are good, violations should not be altogether ignored.

(f) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S. 208‑‑‑Words "normal trade credit"‑‑‑Meaning and scope‑‑‑Such words suggest a credit given in normal course of business‑‑‑Trade credit would mean credit arising out from trade between parties and such credit extended should be a current liability for the receiver‑‑‑Open ended credit without specific purpose cannot be termed as "normal trade credit"‑‑‑Mere fact that parties have covered financial facilities by subsequently entering into a commercial trade agreement would not make already extended financial facilities fall within the ambit of "normal trade credit".

(g) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S. 208(1)(b)‑‑‑Return on investment in the form of loan‑‑­Determination of‑‑‑Return on loan under S.208(1)(b) of the Companies Ordinance is not to be less than the borrowing cost‑‑‑Such cost is to be the weighted average borrowing cost of investing company.

(h) Interpretation of statutes‑‑‑

‑‑Mandatory provision, violation of‑‑‑Commercial consideration cannot be treated as a justification to violate mandatory provisions of law.

(i) Words and Phrases‑‑‑

‑‑‑‑ "Criminal proceedings "‑‑‑Meaning.

Black's Law Dictionary, Seventh Edn. ref.

(j) Securities and Exchange Commission of Pakistan Act (XLVII of 1997)‑‑‑

‑‑‑‑S. 20(4) & Sched., Para. 36‑‑‑Companies Ordinance (XLVII of 1984), S.488‑‑‑Proceedings before Appellate Bench of the Commission‑‑‑Applicability of S.488 of the Companies Ordinance‑‑‑Principles.

Section 488 of the Companies Ordinance, 1984 is applicable only to criminal proceedings as opposed to civil proceedings.

Section 488 of the Companies Ordinance, 1984 would be attracted only to such proceedings, where criminal proceedings have to be initiated by Commission in Court of Session. The Commission has been empowered to grant relief under section 488 with the objective to provide protection against undue hardship in deserving cases and give relief from liability to a person, who though technically guilty of defaults, negligence ad breach of duty or breach of trust, is able to convince' that it has acted honestly and reasonably and having regard to the circumstances of the case ought fairly be excused from the charge, and that no criminal proceedings or complaint be initiated before the Court.

Dr. Parvez Hassan, Barrister Mujtaba Jamal, Zulfiqar A. Ch. and Ali Rashid Khan for Appellants.

Abdul Rafique Khan for Appellant No.3.

Ashfaq Ahmed Khan, Director, Abid Hussain, Deputy Director (Enf.) and Mubasher Saddozai, Deputy Director (Enf.) on behalf of Respondent.

Date of hearing: 5th March, 2002.

2003 C L D 26

[Karachi]

Before Shabbir Ahmed, J

M. SIKANDAR SULTAN‑‑‑Plaintiff

Versus

MASIH AHMED SHAIKH ‑‑‑Defendant

Civil Miscellaneous Application No.9449 of 1999 in Suit No. 1538 of 1999, decided on 16th March, 2000.

(a) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 10 & 21‑‑‑Distinctive trade mark‑‑‑Where words had a common suffix, but if earlier portion of those words was different and if 4hey did not conflict, they were distinctive.

(b) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 10, 21 & 73‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Suit against infringement of registered trade mark‑‑‑Temporary injunction, grant of‑‑‑Held, in deciding question of prima facie case, it had to be shown that plaintiffs case was primarily based on infringement of registered trade mark.

(c) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 10 & 21‑‑‑Infringement of registered trade mark‑‑­Registration of a person in register of proprietor of ‑a trade mark in respect of any goods would give to that person exclusive right to use that trade mark in relation to those goods‑‑‑Such right would be deemed to be infringed when other person would use a mark identical to registered trade mark or nearly resembling said registered trade mark so as to deceive or cause confusion in course of trade in relation to any goods in respect of which trade mark was registered.

Insaf Soap Factory v. Lever Brothers Port Sunlight Ltd. PLD 1959 (W.P.) Lah. 381; Ram Kumar Jalan v. R.J. Wood & Co. AIR 1941 Lah. 262; Muhammad Fazil v. Messrs Ashfaq Brothers, Karachi 1981 CLC 1519: Abdul Wahid v. Haji Abdur Rahim and another PLD 1973 SC 104 and (1920) 37 RPC 37 ref.

(d) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 10. 21 & 73‑‑‑Infringement of registered trade mark‑‑­Suit for‑‑‑Consideration which had to be kept in mind with regard to infringement of registered trade mark was whether a member of public buying products of defendant was likely to be deceived into believing that he was buying goods of plaintiff.

Bandenawaz Ltd. v. Registrar of Trade Marks, Karachi and another PLD 1967 Kar. 492 and Aristoc Ltd. v. Rysta Ltd. (1940) 62 RPC 65 ref.

(e) Trade Marks Act (V of 1940)‑‑‑

‑‑‑Ss. 7, 10, 21 & 73‑‑‑Infringement of registered trade mark‑‑‑Suit for‑‑‑Colourable imitation Trade Mark "AALI SHAN" was a colorable imitation of plaintiffs registered Trade Mark "SHAN"‑‑‑Get up, design and colour scheme of both trade marks were identical which could cause confusion in market to the consumer in general and amounting to a ,flagrant infringement of plaintiffs registered trade mark‑‑‑Such colourable imitation of plaintiffs registered trade mark, would constitute its infringement.

(f) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 10, 21 & 73‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2‑‑‑Suit against infringement of registered trade mark‑‑‑Grant of interim injunction‑‑ ‑Great resemblance existed between Trade Mark 'SHAN' registered for product of plaintiff and Trade Mark 'AALI SHAN' of the defendant‑‑­Resemblance between two marks was so striking and intention to infringe so obvious that balance of convenience was in favour of plaint‑‑Very strong prima facie case having been made out by plaintiff, defendant could not say that he ought to be allowed to continue to take advantage of his own wrong ‑‑‑Pendency of defendant's application for registration of his trade mark with Registrar of Trade Marks, would not disentitle plaintiff who was proprietor of a registered trade mark, to obtain injunction restraining infringement of his registered trade mark merely because person against whom injunction was sought had applied for registration of his trade mark‑‑‑Interim injunction earlier granted, was confirmed.

(g) Trade Marks Act (V of 1940)--‑‑

‑‑‑‑Ss. 10 & 21‑‑‑Registration of trade mark ‑‑‑Object‑‑­Registration of trade mark was not meant for benefit of trade, only, but it also would protect public‑at‑large and its main object was to secure free enjoyment of right of manufacturing and marketing of one's products and also to save general public from being deceived by acts of unscrupulous manufacturers and sellers of goods bearing fake trade mark of others‑‑‑For maintaining purity of trade mark and for safeguarding interest of public, it was duty of Court to put restraint on use of another's trade mark by a person who was not entitled‑to use it.

Sultan Ahmed Shaikh for Plaintiff.

Adnan Ahmed for Defendant.

2003 C L D 94

[Karachi]

Before M. Roshan Essani and Mushir Alum, JJ

Mst. TALAT NASREEN‑‑‑Appellant

Versus

UNITED BANK LTD. and others‑‑‑Respondents

First Appeals Nos. 10 and 19 of 2001, decided on 8th April, 2002.

(a) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.174‑‑‑Continuing security‑‑‑Pledge of Defence Saving Certificates with Bank against loan advanced to borrower‑‑­Borrower never demanded return of pledged certificates from Bank, which continued to extend loan facility to her against such security‑‑‑Effect‑‑‑Strong statutory presumption as to continuing security arose in favour of Bank under S.174 of Contract Act, 1872 in circumstances‑‑‑Such certificates would be deemed to have been offered as continuing security.

(b) Qanun‑e‑Shahadat (10 of 1984)‑‑‑

‑‑‑Art. 2(8)‑‑‑Statutory presumption, rebuttal of‑‑‑Burden of proof‑‑‑Party in whose favour statutory presumption is raised need not prove the fact on which the same is based‑‑­Onus to rebut statutory presumption lies on the party alleging a state of fact contrary to such presumption.

Jatindra Nath Malik v. Sushilendra Nath Palit AIR 1965 Cal. 328 ref.

(c) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S. 174‑‑‑Goods pledged as one time finance facility and riot as a continuing security‑‑‑Effect‑‑‑Such security could riot be used for any subsequent facility or financial accommodation.

(d) Contract Act (IX of 1872)‑‑‑

‑Ss. 172 & 177‑‑‑Pledged goods, wrongful sale of‑‑­Remedy of pledgor‑‑‑Pledgor could sue pledge for having converted pledged goods for his own use and claim recovery of its realizable value.

Mansoor Ahmad Khan, Azhar Farid and I.H. Zaidi for Appellant.

Muhammad Habib Khan for Respondents Nos.2(a) to 3(b).

Date of hearing: 1st October, 2001.

2003 C L D 119

[Karachi]

Before Ghulam Rabbani and S. Ali Aslam Jafri, JJ

Mrs. JAWAHAR AFZAL‑‑‑Appellant

Versus

Messrs UNITED BANK LIMITED‑‑‑Respondent

First Appeal No.42 of 2000, decided on 22nd November, 2001.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

--‑Ss. 9, 10 & 21‑‑‑Suit for recovery of amount‑‑‑Application for leave to defend suit‑‑‑Dismissal of application ‑‑‑Effect‑‑T­rial Court would be left with no option but to decree the suit.

Riaz Kadir Baloch for Appellant.

Masood Shehryar for Respondent.

Date of hearing: 22nd November, 2001.

2003 C L D 153

[Karachi]

Before Shabbir Ahmed, J

I. PURI TERMINALS LTD. ‑‑‑Plaintiff

Versus

PORT QASIM AUTHORITY and others‑‑‑Defendants

C.M.A. No.8190 in Suit No.1489 of 2001, decided on 16th January, 2002.

(a) Tender‑‑‑

‑‑‑‑ Inviting fresh tender‑‑‑Bidder had no right and/or authority to question wisdom of authority inviting fresh tender/bid/offer.

(b) Tender‑‑‑

‑‑‑‑ Mere submitting of bids does not constitute a right to a contract‑‑‑Basic parameters/criteria for selection/acceptance of proposal also included certain conditions of bidding like factors of "experience", best financial proposal and financial strength of bidders‑‑‑Authority after evaluating bids of parties has to take decision on long term basis including integrity and status of bidding parties.

(c) Tender‑‑­

‑‑‑‑ Duty of Government while awarding contract‑‑­Government must act fairly, reasonably, justly and not arbitrarily and in a discriminatory manner‑‑‑Entire process of tendering and subsequent award of contract should be transparent, fair and reasonable.

Pacific Multinational (Pvt.) Ltd. v. I.‑G. Police PLD 1992 Kar. 283; Dadabhoy Investment (Pvt.) Ltd. v. Federation of Pakistan PLD 1995 Kar. 33; Port Services (Pvt.) Ltd. v. Federation of Pakistan PLD 1995 Kar. 374; Arif Builders and Developers v. Government of Pakistan PLD 1997 Kar. 627; Balochistan Construction Company v. Port Qasim Authority 2001 YLR 2716; Petrosin Products Pakistan (Pvt.) Limited, Islamabad v. Federation of Pakistan 2001 CLC 1412 and Shir Hamainder Singh Arora v. Union of India and others AIR 1986 SC 1527 ref.

(d) Constitution of Pakistan (1973)‑‑‑

‑‑‑Art. 199‑‑‑Administrative acts‑‑‑Judicial review‑‑‑Duty of Court‑‑‑Scope‑‑‑Duty of Court is to confine itself to question of legality‑‑‑Concern of Court should be, whether a decision making authority had exceeded its powers, abused its powers, committed an error of law or a breach of rules of natural justice or had reached a decision, which no reasonable Tribunal would have reached.

Pak Shaheen Container Services (Pvt.) Ltd. v. Trustees of Port of Karachi and others PLD 2001 Kar.30; Ramana Dayaram Shetty v. International Airport Authority of India AIR 1979 SC 1628; Sterling Computers (Pvt.) Ltd. v. M & N Publication (Pvt.) Ltd. AIR 1996 SC 51 and TATA Cellular v. Union of India (1994) 6 SCC 651 ref.

(e) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art. 199‑‑‑Judicial review‑‑‑Administrative action, interference with‑‑‑Grounds, test and principles stated.

(f) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art. 199‑‑‑Award of contract by State functionary‑‑Judicial review ‑‑Scope‑‑‑State functionary in awarding contracts must act fairly, reasonably, honestly and justly‑‑­Court cannot substitute its opinion with that of State functionary, but certainly has power to judicially review administrative actions to check their reasonableness.

(g) Tender‑‑‑

‑‑‑‑Award of contract in a fair manner‑‑‑Essentials‑‑‑Tender must be made to proper person in proper form, at proper place and time‑‑‑Tender must conform to terms of obligation‑‑‑Tender must be of lull amount and unconditional‑‑‑Person making tender must be able and willing to perform his obligations.

(h) Words and phrases‑‑‑‑

‑‑‑ "Exception"‑‑‑Meaning.

(i) Words and phrases‑‑‑

‑ "Reservation"‑‑ ‑Meaning.

(j) Civil Procedure Code (V of 1908)‑‑‑‑

‑‑O. XXXIX, Rr. 1 & 2‑‑‑Specific Relief Act (I of 1877), Ss.42, 54 & 55‑‑‑Temporary injunction, prayer for‑‑‑Suit for declaration, temporary and mandatory injunction, compensation and damages‑‑‑Construction of liquid cargo terminal at Port Qasim on Build, Operate and Transfer basis‑‑‑Project was advertised‑‑‑Bid submitted by plaintiff was accepted, but Authority did not execute implementation agreement and re‑invited tenders‑‑‑Plaintiff again submitted rid, but same was not accepted‑‑‑Plaintiff filed suit and prayed for grant of temporary injunction to restrain authority from awarding contract to another contractor‑‑­Validity‑‑‑Liquid Cargo Terminal on Built, Operate and Transfer (BOT) basis had to be established, for which sponsors must be of sound financial position‑‑‑Plaintiff’s bid was conditional and from its own documents, its financial status was not sound‑‑‑Plaintiff’s plea that they could arrange finance from market, if accepted would put such project to uncertainty ‑‑‑NESPAK had examined in detail plaintiff’s proposal on the criteria laid down in tender documents‑‑‑All such factors had been again examined by Board of Authority‑‑‑Present case was not such, where a decision‑making authority had exceeded its power, committed an error of law, committed a breach of rules of natural justice and reached a decision which no reasonable person/Authority would have reached ‑‑‑Plaintiff had failed make out a prima facie case for grant of injunction‑‑­Balance of convenience did not lie in favour of grant of injunction as pubic project would be put in jeopardy for considerable period of time, during which possibility of rising of costs could not be ruled out‑‑‑Plaintiff itself had quantified the damages, thus, plea of irreparable loss was not available‑‑‑High Court dismissed application for temporary injunction in circumstances.

Tufail H. Ebrahim for Plaintiff.

Muhammad Arif Khan and Ghulam Muhammad Ebrahirn for Defendants.

2003 C L D 211

[Karachi]

Before Ghulam Rabbani and Saiyed Saeed Ashhad, JJ

Messrs AEROFLOT RUSSIAN INTERNATIONAL AIRLINES through

Manager‑‑‑Appellant

Versus

Messrs GERRY'S INTERNATIONAL (PRIVATE) LTD. ‑‑‑Respondent

High Court Appeal No. 151 of 2000, decided on 6th August, 2002.

(a) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.10, 305, 451 & 456‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑‑Winding‑up petition by foreign company against respondent‑company‑‑‑Court dismissed such petition for petitioner's failure to comply with provisions of S.451 of Companies Ordinance, 1984, thus, petitioner was found not entitled to maintain proceedings in view of bar under S.456, Companies Ordinance, 1984‑‑‑Intra‑Court Appeal against such order of Court‑‑‑Maintainability‑‑‑Respondent‑company had not been ordered to be wound up, but winding‑up petition had been dismissed‑‑‑Provisions of subsection (1) of S.10 of Companies Ordinance, 1984, would not be relevant, but provisions of subsection (2) thereof would be relevant‑‑­Intra‑Court Appeal was maintainable in circumstances.

China Annang Construction Corporation through Project Manager v. K.A. Construction Company through Attorney Haji Shah Zaman 2002 NLR 209; Messrs Mehboob Industries Ltd. v. Pakistan Industrial Credit and Investment Corporation Ltd. 1988 CLC 866; Brother Steel Mills Ltd. v. Mian Ilyas Mairaj PLD 1996 SC 543 and Agha Fakharuddin Khan v. Messrs Ruby Rice and General Mills Ltd. and another 2001 YLR 1798 ref.

(b) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑Ss. 10(2), 305, 451, 452 & 459‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑‑Winding‑up petition by foreign company against respondent‑company‑‑‑Dismissal of such petition for want of compliance of S.451 of Companies ordinance, 1984‑‑‑Contention of appellant was that during pendency of winding‑up proceedings, appellant had made compliance of requirements of S.451 of Companies Ordinance, 1984‑‑­Validity‑‑‑Appellant‑company for such failure would only incur liability under S.459 of Companies Ordinance, 1984‑‑­Two suits between parties had been filed; arbitration proceedings had been held, wherein award had been passed and made rule of Court followed by a decree; and appeal against decree was pending‑‑‑Parties having gone to that extent, non‑suiting the appellant would not be fair on objections raised in winding‑up proceedings particularly in peculiar circumstances, where requisite compliance was claimed to have been made‑‑‑Questions requiring further consideration were about the extent of penalties as provided by law; and whether compliance claimed fulfilled all the conditions‑‑‑High Court in circumstances accepted appeal, set aside impugned order and remanded case to Judge in Chamber to decide same afresh in accordance with law‑‑­Division Bench of High Court further clarified that such order would neither relax in all matters the imperative nature of requirements under Ss.451 & 452 of Companies Ordinance, 1984 nor it would be construed that any party would be allowed in future to institute proceedings without making compliance of requirements of S.451, Companies Ordinance, 1984.

Abdul Jameel v. Registrar of Trade Unions, West Pakistan, Lahore and another 1971 PLC 507 ref:

Shahid Anwar Bajwa for Appellant.

Javed Siddiqui for Respondent.

Date of hearing: 13th March, 2002.

2003 C L D 251

[Karachi]

Before Sabihuddin Ahmed and Syed Ali Aslam Jafri, JJ

PAK CONSULTING AND ENGINEERING (PVT.) LIMITED‑‑‑Appellant

Versus

PAKISTAN STEEL, MILLS CORPORATION (PVT.) LIMITED and

another‑‑‑Respondents

High Court Appeal No.289 of 2001, decided on 6th March. 2002.

(a) Contract Act (IX of 1872)‑‑‑

‑‑S.126‑‑‑Bank guarantee ‑‑‑Encashment of ‑‑Question of encashability of Bank guarantee would depend upon construction of document, terms of guarantee or bond in question.

(b) Civil Procedure Code (V of 1908)‑‑‑

‑‑O.XXXIX, R.1‑‑‑Contract Act (IX of 1872), S.126‑‑‑Specific Relief Act (I of 1877), S.54‑‑‑Refusal to grant temporary injunction for restraining respondent from encashing Bank guarantee‑‑‑Validity‑‑‑Bank guarantee appeared to be unconditional and did not stipulate that its encashability would in any manner be dependent on performance of a contract on the part of appellant‑‑‑High Court without commenting on merits of rival contentions dismissed appeal against refusal to grant temporary injunction in circumstances.

Mercury Corporation v. Pakistan Steel 2000 YLR 734 and Zeenat Brothers v. Aswan‑e‑Iqbal Authority PLD 1996 Kar.183 ref.

National Construction Limited v. Aswan‑e‑Iqbal Authority PLD 1994 SC 311 fol.

Raja Qureshi for Appellant.

M.G. Dastagir for Respondents.

Date of hearing: 6th March, 2002.

2003 C L D 272

[Karachi]

Before Khilji Arif Hussain, J

Mst. KAUSAR SAEED‑‑‑Plaintiff

Versus

Syed WAJAHAT HUSSAIN ‑‑‑Defendant

Suit No. 1439 of 2001, decided on 20th September, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑O. XXXVII, Rr. 2 & 3‑‑‑Negotiable Instruments Act (XXVI of 1881), S.118‑‑‑Suit for recovery of money‑‑‑Leave to appear and defend suit‑‑‑Plea of defendant was that promissory note, receipt and cheques were without consideration; and that same were got executed from him by force and under duress by plaintiffs husband on 23‑5‑2001‑‑‑‑Plaintiff produced photocopy as well as original passport of her husband for showing that her husband left Pakistan on 21‑5‑2001 and re‑entered on 12‑7‑2001, who during all such period remained abroad‑‑‑In view of such documents, defendant's entire story came to ground and could not be believed as plaintiffs husband was not in Pakistan on 23‑5‑2001‑‑‑Burden to, prove that the promissory note and cheques were without consideration, was on defendant, but he had failed to discharge the same‑‑‑Grounds taken by defendant being illusory leave to defend could not be granted on such illusory allegations‑‑­Court dismissed leave application and decreed the suit.

Haji Abdul Wahid v. Hoechst Pakistan Ltd. and others 1993 CLC 1291; Messrs National Security Insurance Co. Ltd. and others v. Messrs Hoechst Pakistan Ltd. 1992 SCMR 718 and Allied Bank of Pakistan v. Messrs Faiz Ahmad‑Manzar Ahmad and others PLD 1985 Lah. 188 ref.

Raja Mir Muhammad Khan for Plaintiff.

Bhajandas Tejani for Defendant.

Dates of hearing: 6th and 13th September, 2002.

2003 C L D 293

[Karachi]

Before Mushir Alam, J

ENGRO CHEMICAL PAKISTAN LIMITED‑‑‑Plaintiff

Versus

MUHAMMAD HUSSAIN DAWOOD and 5 others‑ ‑Defendants

Suit No.273 of 2000 decided on 22nd August, 2002.

(a) Specific Relief Act (I of 1877)‑‑‑

‑‑Ss. 42, 54 & 55‑‑‑Civil Procedure Code (V of 1908), S.9‑‑­Companies Ordinance (XLVII of 1984), S.263‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss.17 & 20‑‑‑Suit for declaration, injunction and rendition of accounts‑‑‑Acquisition of shares of plaintiff‑company by defendants‑companies in a bid of hostile take over of plaintiff‑‑‑Plaintiff filed suit challenging the legality and propriety of such acquisition of its shares‑‑‑Defendants objected to the maintainability of suit on the ground that plaintiff for such wrong could avail remedy provided under S.263 of Companies Ordinance, 1984‑‑‑Validity‑‑­Investigation into affairs of defendants‑‑‑Investigation of affairs of defendant‑companies could only be made by Securities and Exchange Commission, only at the motion of certain percentage of members of any particular company affairs of which were sought to be investigated or on report of Registrar of Companies‑‑‑Plaintiff‑company was neither holding any share in any of defendants companies nor there was any report by the Registrar‑‑‑Jurisdiction of Securities and Stock Exchange Commission under S.263 of Companies Ordinance, 1984 in such circumstances, could not be set in motion.

(b) Tort‑‑‑

‑‑‑‑ Wrong or breach of any penal law‑‑‑Remedy of person wronged or injured against wrong‑doer, stated.

A wrong or breach of any penal provision of law may give rise to both penal consequences as well as civil liability.

In some cases, one person may be personally liable for penal consequences, while other persons may be held vicariously liable for civil liability arising out of same wrong. Even a situation may arise, where a person wronged or injured may not be interested to prosecute wrongdoer for penal consequences, but may be interested to enforce civil liability. In such a situation, a person can neither be denied injunctive relief against apprehended wrong or repetition of wrong nor can be non‑suited and denied compensation and/or damages that might have been sustained as an aftermath or as a consequence of a wrong, which may otherwise also entail penal consequences.

(c) Specific Relief Act (I of 1877)‑‑‑

‑‑‑‑Ss.42, 54 & 55‑‑‑Civil Procedure Code (V of 1908), S.9‑‑­Companies Ordinance (XLVII of 1984), S.208‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997). Ss. 17 & 20‑‑‑Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970), S.20‑‑­Central Depositories Act (XIX of 1997), S.27‑‑‑Foreign Exchange Regulation Act (VII of 1947), S.23‑‑‑Suit for declaration, injunction and rendition of accounts‑‑­Acquisition of shares of plaintiff‑company by defendants companies in a bid of hostile take over of plaintiff‑‑‑Plaintiff filed suit challenging such acquisition of its shares as being violative of provisions of Companies Ordinance, 1984. Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance 1970, Central Depositories Act. 1997, Foreign Exchange Regulation Act, 1947 and Securities and Exchange Commission of Pakistan Act, 1997‑‑­Defendants objected to maintainability of suit on the ground that remedy of plaintiff was available before Securities and Exchange Commission of Pakistan and not through a civil suit‑‑‑Validity‑‑‑Remedy as against penal provisions indeed was available under such enactments, but there was no remedy against civil liabilities that had ensued as a consequence of breach of penal provisions to a party, who had suffered at the hands of wrongdoer‑‑‑Neither there was any legislation nor self‑regulatory code nor any regulations had been framed by Securities and Exchange Commission of Pakistan to regulate the issues and matters relating to or arising out of transactions relating to substantial acquisition of shares by one company in a bid to take over and/or to acquire management or control of another company‑‑‑Civil Court had jurisdiction to scrutinize legality and propriety of such transactions and resultant civil obligation and liabilities that might have been contracted by defendants out of transaction of acquisition of shares alleged to be in breach of various enactments ‑‑‑Suit was maintainable.

1999 CLC 1795; 1990 CLC 1008; 1988 CLC 1186: 1988 CLC 123; 1979 CLD 857; PLD 1949 Lah. 301: PLD 1978 Kar. 612; 1982 PLC 592: AIR 1963 SC 1547; AIR 1965 SC 338; AIR 1956 Bom. 649; PLD 1960 SC 113: PLD 1964 SC 673; Securities and Exchange Commission Pakistan v. Mian Nisar Ellahi and others Civil Petitions Nos.2502 to 2504 of 2001; PLD 1985 Kar. 481; PLD 1969 Kar. 474: 1999 CLC 795: Integrated Technologies and Systems Ltd. v. Interconnect Pakistan (Pvt.) Ltd. 2001 CLC 2019: PLD 1968 SC 381: PLD 1997 SC 3; 1999 CLC 1989; AIR 1947 Mad. 322 and AIR 1967 All. 118 ref.

(d) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S.9‑‑‑Specific Relief Act (I of 1877), S.7‑‑‑Jurisdiction of Civil Court could not be invoked to seek mere enforcement of penal laws.

(e) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S. 9‑‑‑Jurisdiction of Civil Court‑‑‑Scope‑‑‑Civil Court teas jurisdiction to decide all suits of civil nature.

(f) Specific Relief Act (Iof 1877)‑‑‑

‑‑‑‑S.7‑‑‑Civil Procedure Code (V of 1908), S.9‑‑‑Wrong or breach of a penal law‑‑‑Remedies available to aggrieved person‑‑‑Kinds of‑‑‑Jurisdiction of Civil Court‑‑‑Scope.

A wrong or breach of a penal law may entail both, a criminal liability as well as civil obligation. In case of penal or criminal liability, cognizance is taken and wrong‑doer is prosecuted and tried by specialized Courts, Authorities or Tribunals constituted or established under relevant enactments. In case, where a civil injury is sustained by a person on account of wrongful act or as an incidence of breach of penal provision committed by another then it is on account of resultant civil injury caused to a person or his property giving rise to civil liability against wrong‑doer, the jurisdiction of Civil Court rests. Civil Court will not take upon itself the responsibility to take cognizance, try and prosecute a penal offence, except a quasi criminal offence or wrong like contempt of Court. However, Civil Court will not hesitate to redress civil injury and enforce civil liability arising out of penal breach or wrong against a wrongdoer.

(g) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑Ss.7 & 152‑‑‑Civil Procedure Code (V of 1908), S.9‑‑­Securities and Exchange Commission of Pakistan Act (XLII 1997), S.20‑‑‑Complicated and disputed question‑‑‑jurisdiction of High Court‑‑‑Scope‑‑‑High Court on the strength of S.7 of the Companies Ordinance, 1984, had jurisdiction to adjudicate and decide controversies arising in relation thereto, in respect of which no jurisdiction was conferred on any other authority like Joint Registrar.

Registrar or Securities and Exchange Commission‑‑‑Where intricate questions of law and facts were involved, despite summary jurisdiction conferred, Civil Court would be competent to resolve such complicated and disputed question arising therefrom, such as issue relating to rectification of share register under S.152 of the Companies Ordinance, 1984.

Makhdoom Ali Khan for Plaintiff.

Abdul Hafeez Pirzada for Defendant No. 1.

Mr. Mujtaba for Defendant No.2.

Qazi Faez Essa for Defendant No.3.

Arshad Tayabally for Defendant No.4.

Zahid F. Ebrahim for Defendant No.5.

Aijaz Ahmad for Defendant No.6.

Dates of hearing: 23rd, 24th and 28th May, 2002.

2003 C L D 309

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and Zia Perwaz, J

SHIPYARD K. DAMEN INTERNATIONAL‑‑‑Appellant

Versus

KARACHI SHIPYARD AND ENGINEERING WORKS LTD. ‑‑‑Respondent

High Court Appeals Nos.16 and 17 in Civil Miscellaneous Applications Nos.86, 89, 143 and 144 of 2002, decided on 9th May, 2002.

(a) Arbitration Act (X of 1940)‑‑‑

‑‑‑‑S.20 & Second Sched.‑‑‑Sindh Chief Court Rules (O.S.), R.278)(1)‑‑‑Arbitration application‑‑‑Scope‑‑‑Interim order‑‑­Maintainability‑‑‑With institution of application under S.20 of Arbitration Act, 1940, registered as suit, in pursuance of R.278(1) of Sindh Chief Court Rules (O.S.), the Court has power to make the orders in respect of any of the matters set out in the Second Sched. to Arbitration Act,1940‑‑­Restraining application filed before the Court is maintainable in circumstances.

(b) Arbitration Act (X of 1940)‑‑‑

‑‑‑‑S. 20‑‑‑Code of Civil Procedure (Amendment) Ordinance (X of 1980), S.15‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑­Intra‑Court Appeal ‑‑‑Encashment of Bank guarantees‑‑‑Application under S.20 of Arbitration Act, 1940, was filed for determination of dispute through arbitrator‑‑‑Appellant filed application to restrain encashment of the guarantees‑‑­Judge in Chambers of High Court allowed the application under S.20 of Arbitration Act, 1940, but declined to restrain the encashment of the guarantees‑‑‑Validity‑‑‑Bank guarantees furnished were un-conditional and there were no prerequisite conditions or impediments for encashment in the guarantees for which the respondent had been made sole judge‑‑‑Respondent was a statutory organization of Federal Government and possessed sufficient assets to ensure payment of such amount under the decree determined as due and payable in pursuance of the arbitration proceedings, the award and decree‑‑‑Division Bench of High Court declined to interfere with the orders passed by the Judge in Chambers of High Court‑‑‑Appeal was dismissed in circumstances.

Messrs Jamia Industries Ltd. v. Messrs Pakistan Refinery Ltd., Karachi PLD 1976 Kar.644; Pakistan Engineering Consultants v. Pakistan International Airlines Corporation and others 1993 CLC 1926; Messrs Asadullah Khan & Co. Ltd. v. Karachi Shipyard and Engineering Works Ltd. and another 1979 CLC 625; Toyota Menka Kaisha Ltd., Tokyo, Japan v. Ferro. Alloys Pakistan Ltd. and another 1988 CLC 418; Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P.) Ltd. and another AIR 1997 SC 2477; Commissioner of Income‑tax, Peshawar Zone, Peshawar v. Messrs Siemen A.G. 1991 PTD 188 and Messrs National Construction Ltd. v. Aiwan‑e-Iqibal Authority PLD 1994 SC 311 ref.

Arif Khan for Appellant.

Aziz A. Shaikh for Respondent.

Liaquat Merchant for the ABN Amro Bank.

Date of hearing: 6th March, 2002.

2003 C L D 320

[Karachi]

Before Shabbir Ahmed, J

AAMIR IMPEX through Sole Proprietor and 2 others‑‑‑Plaintiffs

Versus

PRUDENTIAL COMMERCIAL BANK LIMITED‑‑‑Defendant

Suit No. 1464 of 1999, decided on 1st January, 2001.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑Ss. 9 & 15‑‑‑Civil Procedure Code (V of 1908), Ss.11, 12(2), 35‑A, 151 & O. VII, R. 11 ‑‑‑Suit for recovery of damages etc. against Bank‑‑‑Rejection of plaint‑Bank obtained consent decree for recovery of loan amount, whereby customers had agreed to pay decretal amount in instalments‑‑‑Customers instead of filing appeal against such decree filed application under S.12(2) read with S.151, C.P.C. as well as Constitutional petition, which were dismissed‑‑‑Customer challenging such decree then filed suit for damages etc.‑‑‑Bank's application seeking rejection of plaint on the ground that no cause of action had accrued to customers for filing such suit‑‑‑Validity‑‑‑Customers after having availed finance facility had defaulted not only in repayment thereof, but in also repayment of decretal amount after obtaining concession of instalments for its payment from Banking Court‑‑‑Customers (borrower and guarantor) had no cause of action to bring present suit against Bank, when they themselves were defaulter after availing full facility‑‑‑Present suit was also barred under S. 11 C.P.C. in view of such decree obtained by Bank‑‑‑Plaint was rejected with special costs of Rs.25,000.

Mirza Rafiq Beg for Plaintiffs.

Nadeem Akhtar for Defendant.

Date of hearing: 6th December, 2000.

2003 C L D 326

[Karachi]

Before Muhammad Roshan Essani and Muhammad Mujeebullah Siddiqui, JJ

KHAIRPUR TEXTILE MILLS LTD. and 7 others‑ ‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN and another‑‑‑Respondents

Special High Court Appeal No.263 of 2001, decided on 3rd September, 2002.

(a) Constitution of Paki tan (1973)‑‑‑

‑‑‑‑Arts. 189 & 201‑‑‑Decision of Supreme Court‑‑‑Binding effect as precedent‑‑‑Principles stated.

By virtue of provisions contained in Article 189 of the Constitution, any decision of Supreme Court to the extent that it decides a question of law or is based upon or enunciates a principle of law, shall be binding on all other Courts in Pakistan. Thus, the law declared by Supreme Court becomes the law of land and is binding on all Courts and all other forums. It is the duty of every authority, whether judicial or otherwise to give effect to the law laid down by Supreme Court. Apart from the Constitutional obligation imposed upon Courts, even the propriety demands that all the Courts including High Court must follow the law laid down by Supreme Court without any hesitation.

(b) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Arts. 185, 189 & 201‑‑‑Decision of Supreme Court‑‑­Jurisdiction of High Court to interpret such decision‑‑­Scope‑‑‑Where Supreme Court did not express final opinion on question at issue in appeal, but opinion expressed was tentative, then it would be open to High Court to interpret the law itself.

Afaquz Zubair v. Muhammad Idris PLD 1978 Kar. 984 fol.

(c) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Arts. 185(3), 189 & 201‑‑‑Decision of Supreme Court granting or refusing leave to appeal‑‑‑Binding effect as precedent‑‑‑Judgment of High Court remaining intact after refusal of leave to appeal by Supreme Court‑‑‑Status and binding force of such judgment of High Court‑‑‑Principles stated.

An order of Supreme Court merely granting leave to appeal or refusing leave to appeal by short order, without deciding a question of law does not have the binding force of a precedent. The judgment is binding on the parties only in that particular proceedings. Likewise, a decision of Supreme Court refusing leave to appeal, which is not based upon and does not enunciate a principle of law, does not have a binding effect as a precedent on all other Courts in Pakistan. In such situation, the sole effect of the order of Supreme Court would be that judgment of High Court shall remain intact and if any question of law has been decided by High Court, it shall be treated as a precedent pronounced by High Court having the force of precedent and of binding nature on all Courts subordinate to said High Court. The judgment of High Court left intact and attaining finality with the refusal of leave to appeal by Supreme Court shall not be treated as a precedent having the stamp of authority of Supreme Court.

Abdul Bari v. Malik Amir Jan and others PLD 1998 SC 50; Trustees of the Port of Karachi v. Muhammad Saleem 1994 SCMR 2213; Khairullah v. Sultan Muhammad 1997 SCMR 906 and Muhammad Riasat v. The Secretary of Education, N.W.F.P., Peshawar 1997 SCMR 1626 fol.

Refusal of leave to appeal does not have the effect of enhancing the status and binding force of judgment of High Court from the precedent of a High Court to that of decision of Supreme Court.

Abdullah v. The State 2001 MLD 1554 ref.

(d) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art. 189‑‑‑Judgments of Supreme Court‑‑‑Conflict between‑‑‑Decision of larger Bench also later in time would prevail and would have the force of a precedent.

Fazal Mehmood Chaudhari v. Ch. Khadim Hussain and others 1997 SCMR 1368; Khairullah v. Sultan Muhammad 1997 SCMR 906 and Muhammad Riasat v. The Secretary of Education, N.W.F.P., Peshawar 1997 SCMR 1626 fol.

(e) Constitution of Pakistan (1973)‑‑‑

‑‑Art. 201‑‑‑Division Bench of High Court‑‑‑Law laid down in earlier judgment of Division Bench‑‑‑Binding effect‑‑‑Such judgment is binding on later Division Bench of same High Court, which is obliged to follow such law.

(f) Precedent‑‑‑

‑‑‑‑ Law of precedent is delicate one‑‑‑Necessary before following a precedent to see as to what were the facts of the case, in which decision was given and what was the point, which was to be decided‑‑‑Too rigid observations to precedent may lead to injustice in a particular case and may also unduly restrict the proper development of law.

(g) Precedent‑‑‑

‑‑‑‑ Judges and lawyers should never be slave of precedent‑‑­Precedent should be a guide and not a dictator.

The Art of Judgment by Sir Henery Slessar ref.

(h) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S. 12(2)‑‑‑Application under S.12(2), C.P.C. without availing remedy of appeal against judgment and decree‑‑­Validity‑‑‑Such application could not be a substitute for an appeal‑‑‑Party allowing judgment and decree to become final after lapse of period of limitation could not be allowed to seek setting aside thereof by recourse to provisions contained in S.12(2), C.P.C. as it would certainly amount to circumvent the law.

(i) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss. 7(1)(a)(2)(4), 10(1), 17 & 27‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Ss. 7(1)(a)(2)(4), 15 & 27‑‑‑Banking Tribunals (Recovery of Loans) Ordinance (XIX of 1979), S.11‑‑‑Banking Tribunals Ordinance (LVIII of 1984), Ss.5 & 10‑‑‑Civil Procedure Code (V of 1908), Ss.12(2), 114 & O. XLVII, R. 1‑‑­Proceedings arising out of Banking Laws‑‑‑Applicability of provisions of Ss.12(2) & 114, C.P.C., to such proceedings‑‑­Scope‑‑‑Finality attached to orders and judgments of Banking Court was only qua Court other than a Banking Court‑‑‑Jurisdiction under Ss.114 & 12(2), C.P.C., was exercised by Banking Court itself‑‑‑Provisions of S.27 of Financial Institutions (Recovery of Finances) Ordinance, 2001, S.27 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, S. 11 of Banking Companies (Recovery of Loans) Ordinance, 1979 and S.10 of Banking Tribunals Ordinance, 1984, thus, would not have the effect of ousting provisions of Ss.12(2) & 114, C.P.C. from being applied to proceedings arising out of Banking Laws‑‑‑Provisions of S.12(2), C,P.C., were applicable to such proceedings in appropriate cases and application under such provisions would be maintainable.

Nasir Mehmood v. Doha Bank Limited C. M. No.601‑B of 1999, Suit No.47 of 1996; Mian Munir Ahmed v. United Bank Limited PLD 1998 Kar. 278; Messrs Tawakal Export Corporation v. Muslim Commercial Bank Ltd. 1997 CLC 1342; National Bank of Pakistan v. Khairpur Textile Mills Ltd. 2001 CLC 1187; Dadabhoy Cement Industries Limited v. Messrs National Development Finance Corporation 2002 CLC 166 and Messrs Dadabhoy Cement Industries Ltd. v. National Development Finance Corporation, Karachi PLD 2002 SC 500 ref.

Messrs Gold Star International v. Muslim Commercial Bank Limited 2000 MLD 421 distinguished.

United Bank Ltd. v. Canadian Apparel Company Ltd. PLD 1995 Kar. 577 fol.

Shahenshah Hussain for Appellants.

Gulzar Ahmed for Respondent No. 1.

Rizwan Ahmed Siddiqui for Respondent No.2.

Date of hearing: 6th August, 2002.

2003 C L D 363

[Karachi]

Before Shabbir Ahmed, J

BANK ALFALAH LIMITED---Plaintiff

Versus

IFTIKHAR A. MALIK ---Defendant

Suit No.B-92 of 2001, decided on 2nd October, 2002.

(a) Contract Act (IX of 1872)---

----Ss.124 & 126---Contract of guarantee or indemnity ---Such contract can be created either by parol or written instrument and need not necessarily be in writing, but may be oral--­Such contract may be expressed by words of mouth or may be tacit or implied and may be inferred from course of conduct of parties concerned.

Mathura Das and others v. Secretary of State and another AIR 1930 All. 848 and Nandlal Chanandas v. Firm Kishinchand-Butamal AIR 1937 Sindh 50 rel.

Law of Guarantees by Geraldine Andrews (Longman Publication), Chap.2, p.11; M.Iver v. Richardson (1813) 1 M & S 557 and Mt. Bittan Bibi and another v. Kuntu Lal and another AIR 1952 All. 996 ref.

(b) Interpretation of documents---

----Transaction between parties contained in more than one document---All such documents must be read and interpreted together and would have same legal effect for all purposes as if they were one document.

(c) Qanun-e-Shahadat (10 of 1984)-----

----Art. 114---Promissory estoppel, doctrine of---Such doctrine could be pressed against any person, who made any representation orally or in writing and while acting upon such representation, the other party changed his position, then person making such representation could not resile from same.

Mst. Nur Jehan Begum v. Syed Mujtaba Ali Naqvi 1999 SCMR 2300 and Pakistan through Minister of Finance Economic Affairs and another v. Fecto Belarus Tractors Limited PLD 2000 SC 208 ref.

(d) Civil Procedure Code (V of 1908)---

----O. VII, R.11---Plaint, rejection of---Duty of Court---While considering question of cause of action, Court should apply its mind to facts given in plaint and not to any other matter, and has to presume every allegations made therein as true---Plaint could be rejected, if Court came to the conclusion that if all allegations made in the plaint were proved, plaintiff would not be entitled to any relief whatsoever.

Seven Stars Goods Transport Co. v. The Administrator, Karachi Municipal Corporation PLD 1976 Kar. 21 fol.

(e) Civil Procedure Code (V of 1908)---

----O. VII, R.11---Plaint, rejection of---Vagueness in pleadings---Proper course not to reject plaint, but to direct party to remove vagueness.

Seven Stars Goods Transport Co. v. The Administrator, Karachi Municipal Corporation PLD 1976 Kar. 21 fol.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)----

----Ss.2(c), 7(4) & 9(1)---Suit before Banking Court--­Conditions precedent---Plaintiff must either be "customer" or "Financial Institution"---Such suit Faust arise from a default in fulfillment of any obligation with regard to any loan or finance---Where transaction was outside the scope of finance, then any default in fulfillment of obligation would not bring the suit within jurisdiction of Banking Court.

Avari Hotels Limited and others v. Investment Corporation of Pakistan and 6 others 2000 YLR 2407 and Ramzan Ali v. Javed Industries and others 1999 CLC 1294 ref.

(g) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)----

----Ss.2 (c), 7(4), 9 & 10---Civil Procedure Code (V of 1908), O. VII, R. 11---Suit by Bank for recovery of loan amount with prayer to direct the defendant to execute guarantee as undertook by him and then declare him liable as guarantor for loan amount---Plaintiffs plea was that defendant had failed to fulfill his promise to execute guarantee on future date---Validity---Such could be a default in promise---Default in promise to execute a guarantee would not bring the defendant within ambit of "customer" to bring a suit against him before the Banking Court--;Suit was not maintainable as relationship of Banker and Customer did not exist between the parties---Application for leave to defend had been accepted and treated as written statement and preliminary issue had been framed in terms of S. 10(10) of the Ordinance---Rejection of plaint, being not the proper exercise of jurisdiction, however, suit was dismissed on preliminary issue in circumstances.

National Bank of Pakistan v. Khalid Mehmood 2002 CLD 658 ref.

(h) Civil Procedure Code (V of 1908)----

----O.VII, R.11---Plaint, rejection of---Underlying principles stated.

Principles involved in Rule 11 of Order VII, C.P.C., are two folds. In the first place, it contemplates that a stillborn suit should be properly buried at .its inception, so that no further time is consumed on a fruitless litigation. Secondly, it gives plaintiff a chance to retrace his step at earliest possible moment, so that if permissible under the law, he may file a properly instituted case.

(i) Civil Procedure Code (V of 1908)-----

----O. VII, R.11---Grounds enumerated in O. VII, R.11, C.P.C., for„rejection of plaint are not exhaustive.

Rasheed Ahmed Rizvi for Plaintiff.

Mushtaq Ahmed Memon for Defendant.

Dates of hearing: 3rd, 4th and 5t4 September 2002.

2003 C L D 379

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and Wahid Bux Brohi, J

SARFARAZ AHMED ‑‑‑Appellant

Versus

NATIONAL BANK OF PAKISTAN and others‑‑‑Respondents

Ist Appeal No.32 of 2002, decided on 25th June, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance (XXV of 1997)‑‑‑---

‑‑‑‑Ss. 9, 11 & 16‑‑‑Sale of suit property‑‑‑Issuance of Sale Certificate‑‑‑Appeal against order of Trial Court‑‑‑Offer of appellant/ auction purchaser for purchase of suit‑property was accepted and sale certificate was ordered to be issued in favour of auction‑purchaser‑‑‑Auction‑purchaser moved an application before Banking Court to the effect that he alongwith other shopkeepers of suit property had formed a private limited Company with a view to purchase suit property in the name of said private limited Company and that after submission of bid, and acceptance thereof said private limited Company had been incorporated and certificate of incorporation had also been issued in that respect‑‑‑Auction‑purchaser in his said application had prayed that sale certificate be issued in favour of the Company as nominee of auction‑purchaser, but Banking Court rejected said. prayer and confirmed the sale in individual name of appellant/ auction‑purchaser‑‑‑Validity‑‑­Bank/decree‑holder had no objection of the sale certificate was issued in favour of the Company as the Bank was only concerned with recovery of amount advanced by it‑‑‑Even otherwise there would be no illegality in issuing Sale Certificate in favour of newly formed Company of which auction‑purchaser was one of the Directors‑‑‑Appeal was allowed by the High Court and order of Banking Court was modified to the extent that Banking Court would issue Sale Certificate in favour of Company as prayed for by appellant.

Zia Makhdoom for Appellant.

Date of hearing: 25th June, 2002.

2003 C L D 392

[Karachi]

Before Khilji Arif Hussain, J

PAKISTAN WATER AND POWER DEVELOPMENT AUTHORITY (WAPDA)‑‑‑Plaintiff

Versus

Messrs SEA GOLD TRADERS through Partners and 2 others‑‑‑Defendants

Suit No.21 of 1997, decided on 4thOctober, 2002.

(a) Civil Procedure Code (V of 1908)‑‑‑-

‑‑‑‑O.XXXVII, R.3‑‑‑Leave to defend the suit‑‑‑Grant of conditional or unconditional leave‑‑‑Scope‑‑‑Where triable issues arise for adjudication, leave is granted un­conditionally and where defence is patently dishonest or unreasonable, and cannot reasonably be expected to succeed, leave can be granted conditionally.

(b) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXVII, R.3‑‑‑Leave to defend the suit, grant of‑‑­Principles enumerated.

Following are the principles with regard to grant of leave to defend:‑‑

(i) Leave to defend in a suit instituted under Order XXXVII, rule 3, C.P.C. shall be granted by Court where the facts disclosed by the defendant on affidavit make out a case of shifting of onus on plaintiff.

(ii) Leave may also be granted on any other ground or facts which the Court considers sufficient to support the application for grant of leave.

(iii) Refusal to grant leave is a rare phenomena confined to cases where no defence at all is disclosed by the defendant.

(iv) No hard and fast rule can be laid down for grant of conditional or unconditional leave.

(v) Where facts disclosed in affidavit are such that it becomes necessary for the plaintiff to prove consideration of the instrument, leave to defend may be granted unconditionally.

(vi) Leave can be granted unconditionally where execution of the negotiable instrument is denied and from material on record it is not possible for Court to record a positive finding at the stage of consideration of application.

(vii) Where claim in suit on its face appears to be prima facie time‑barred, unconditional leave can be granted.

(viii) There can be other circumstances in which unconditional leave can be granted.

(ix) Where defence disclosed, is found by the Court illusory or lacking bona fides, leave can be granted conditionally.

(x) Where defence in the application are vague or intended to delay the proceedings without supporting material about the allegation of fraud, coercion, leave can be granted conditionally.

(xi) What should be terms and conditions for the grant of leave is at the discretion of the Court to be exercised keeping in view facts and circumstances of each case.

Fine Textile Mills' case PLD 1969 SC 163 ref.

(c) Civil Procedure Code (V of 1908)‑‑‑--

‑‑‑‑O.XXXVII, R.3‑‑‑Leave to defend the suit, grant of‑‑‑Serious questions of law and fact raised‑‑‑Defendants filed application for leave to defend the suit wherein it was alleged that minutes of the meeting signed by the parties constituted concluding contract‑‑‑Payments through the disputed cheques were in consideration of the minutes or subject to execution of contract‑‑‑Defendants further alleged that they were compelled to sign minutes of the meeting and disputed Cheques‑‑‑Validity‑‑‑Defendants had raised serious questions of law and fact which required adjudication by providing parties opportunities to prove ‑their respective case before suit could be finally decreed‑‑‑Leave to defend the suit was granted unconditionally in circumstances.

Messrs National Security Insurance v. Messrs Hoechst Pakistan Ltd. 1992 SCMR 718; Abdul Karim Jaffarani v. United Bank Ltd. and 2 others 1984 SCMR 568; Abdul Rauf Ghauri v. Mst. Kishwar Sultana and 4 others 1995 SCMR 925; Muhammad Arif v. Abdul Qayyum 1991 CLC 442; Mian Rafique Saiqol and another v. Bank of Credit and Commercial International PLD 1996 SC 749; PLD 1986 Kar. 157; Haji Abdul Wahid v. Hoechst Pakistan Ltd. 1993 CLC 1291; Hussain v. Raja Ali 1981 CLC 1; Hamidullah Khan v. Muhammad Nawaz Qasuri PLD 1982 Lah.203; Messrs Norwich Union Fire Insurance v. Messrs Zaitoon Textile Mills Ltd. 1990 ALD 246(2); Pakistan v. Deverfield 1990 ALD 247; Fine Textile Mills case PLD 1969 SC 163; Messrs Karachi Flour Mills' Union v. Province of Sindh PLD 1976 Lah. 623; Muhammad Matin v. Dino Manekji Chinori PLD 1983 Kar. 387; Dr. Fazal Din v. Municipal Committee, Lyallpur PLD 1956 (W.P.) Lah. 916 and A.R. Wright & Sons Ltd. v. Romford Corporation (1956) 3 All ER 785 ref.

Badar Alam for Plaintiff.

Mumtaz Ahmad Shaikh for Defendant.

Date of hearing: 24th September, 2002.

2003 C L D 407

[Karachi]

Before Anwar Zaheer Jamali, J

MERC & CO. ING. and others‑‑‑Plaintiffs

Versus

HILTON PHARMA (PVT.) LTD. ‑‑‑Respondent

Suit No. 855 of 2000, decided on 5th August, 2002.

(a) Patents and Designs Act (II of 1911)‑‑‑-

‑‑‑‑Ss.29‑‑‑Patents Ordinance (LXI of 2000), S.60‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2‑‑‑Qanun‑e­Shahadat (10 of 1984), Art. 122‑‑‑Action for infringement of registered process patents of a drug‑Burden of proof‑‑­Temporary injunction, grant of‑‑‑Defendant did not disclose manufacturing process of its product despite specific point raised by the plaintiff‑Defendant was only importer of such raw material from a foreign company, which had not issued any certificate/ document in favour of defendant denying claim of plaintiff that process used by them in preparation of disputed drug was not different from the one registered in favour of plaintiff in Pakistan‑‑‑Defendant by virtue of S.29(2) of Patents and Designs Act, 1911 and S.60(2) of Patents Ordinance, 2000, without filing separate proceedings, could take every ground in defence on which a patent could be revoked, but till such controversy was decided by the competent forum, the presumption of its validity and exclusive right of use would subsist in favour of plaintiff‑‑‑Plaintiff was, thus, within its right to seek assistance of Court to avoid infringement of its process patents by anybody else‑‑‑Defendant had deliberately withheld necessary information and material regarding its process of preparation of disputed drug, though such fact could only be in their knowledge‑‑‑Burden of proof of such facts was on the defendant, which they had failed to discharge‑‑‑Plaintiffs in order to show genuineness of their claim had offered to refer product of defendant to some expert for his opinion as to whether process of its preparation was different from that of plaintiffs patent process, but defendant had not responded‑‑‑Court in such circumstances drew adverse presumption against the defendant‑‑‑Pleas of prior use, knowledge, lack of novelty, use of different process, premature nature of suit and difference in pricing raised by defendant were on weak footing‑‑‑Plaintiff could not be non‑suited on such grounds‑‑­Plaintiff had succeeded to make out a prima facie case for interim relief‑‑‑Balance of convenience also existed in plaint ff s favour, who would suffer irreparable loss and injury, if defendant was not restrained from marketing its product‑‑‑Court allowed application for interim injunction in circumstance.

Smith Kline & French Laboratories Limited and another v. Pakistan Pharmaceutical Products Limited 1991 CLC Note 69 at p.?? Messrs Armor Textile Mills Ltd. v. Messrs Sh. Ishfaq and 2 others 1986 MLD 1535; Mst. Basri through L.Rs. and others v. Abdul Hamid through L. Rs. and others 1996 MLD 1123; Ferbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius & Burning a Corporation etc. v. Unichem Laboratories and others AIR 1969 Bom. 255; Glaxo Group Limited and 2 others v. Evron (Private) Limited and another 1992 CLC 2382; Smith Kline & French Laboratories Ltd. and another v. Feroze Sons Laboratories Ltd. and another 1992 MLD 2226; Glaxo Group Limited and 2 others v. Pakistan Pharmaceutical Products (Pvt.) Limited 1991 MLD 85; Sandoz Limited and another v. Pakistan Pharmaceutical Products Limited 1987 CLC 1571; Rexona Proprietary Ltd. v. Majid Soap Works PLD 1956 Sind 1; S. Muhammad, Din & Sons v. Sh. Nabi Bakhsh & Sons (Regd.) and others 1987 CLC 759; Messrs Tariq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090, Rohtas Industries Ltd. And others v. Indian Hume Pipe Co. Ltd. AIR 1954 Pat. 492; Parke Davis & Co. v. Allen ind Hanburys (1953) 7V RPC 123; Lallubhai Chakubhai Jariwala v. Chimanlal Chuniiar & Co. AIR 1936 Bom. 99; Tajuddin v. Haji Mushtaque and another 1985 CLC 2182; Messrs Bishwanath Prasad Radhey Shyam v. Messrs Hindustan Metal Industries AIR 1982 SC 1444; V. Manioka Thevar v. Messrs Star Pough Works, Melur AIR 1965 Mad. 327; Messrs Niky Tasha India Private Ltd. v. Messrs Faridabad Gas Gadgets Private Ltd. AIR 1985 Delhi 136; Messrs The Mont Balance Industry (Regd.) v. Abdul Aziz 1980 CLC 396; Atco Lab. (Pvt.) Limited v. Pfizer Limited and others '2002 CLD 120; Rexona Proprietary Ltd. v. Majid Soap Works PLD 1956 Sindh 1 and Silver Cotton Textile Mills Ltd. and another v. Bawany Violin Textile Mills 1963 PTD 79 ref.

(b) Patents and Designs Act (II of 1911)‑‑‑

‑‑‑S.29‑‑‑Civil Procedure Code (V of 1908), V.XXXIX, Rr. 1 & 2‑‑‑Action for infringement of patent‑‑‑Threatened action‑‑­Interim relief, grant of‑Court would not wait for actual infringement, but threatened action of infringement would also entitle patentee for grant of interim relief to safeguard his patent rights and to avoid its infringement.

(c) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑O.XXXIX, Rr. 1 & 2‑‑‑Temporary injunction, grant or refusal of‑‑‑Court at such stage had to make only a tentative assessment of parties case for enabling itself to see, whether three prerequisites for grant of injunction existed in favour of a party or not.

Moin Qamar and Hassan Irfan for Plaintiffs.

Makhdoom Ali Khan and Zain Sheikh for Defendant.

Dates of hearing: 13th February; 7th, 13th, 22nd, 27th March; 14th and 28th May, 2002.

2003 C L D 420

[Karachi]

Before Shabbir Ahmed, J

Messrs CHEMI VISCOFIBRE LTD. ‑‑‑Plaintiff

Versus

ING. A. MAURER S.A. and others‑‑‑Defendants

Suits Nos. 106 and 107 of 2002, decided on 14th June, 2002.

(a) Negotiable Instruments Act (XXVI of 1881)‑

‑‑‑‑Ss. 9, Expln. & 58‑‑‑Explanation to S.9 of the Negotiable Instruments Act, 1881‑‑‑Purpose and function‑‑‑Legislature enacted the, explanation with 'purpose to explain what otherwise would be doubtful or ambiguous‑‑‑Function of the explanation to the extent of explaining a stipulated situation was definitive clarifying or defining the legal position in a supposed state of facts‑‑‑Not correct to contend that the explanation only exemplified some of the defects in title, but not all kinds of defects enumerated in S.58 of the Act‑‑­Explanation explained a stipulated situation and pointed out the nature of defect in title in terms of S.58 of the Act, which enumerated the defects by reasons of fraud or for unlawful consideration.

Bhola Nath Aggarwal and another v. The Empire of India Life Assurance Co. Ltd. AIR 1948 Lah. 56; Messrs Rehmania Trading Company v. Messrs Eagle Star Insurance Company Ltd. PLD 1960 SC 202 and Messrs Brady & Co. Pakistan Ltd. v. Messrs Sayed Saigol Industries Ltd. 1981 SCMR 494 ref.

(b) Negotiable Instruments Act (XXVI of 1881)‑‑‑--

‑‑‑‑Ss.9 & 58‑‑‑Negotiable instrument‑‑‑Holder in due course‑ ‑‑Essential conditions.

In order to be a holder in due course, three conditions are necessary; the endorsee becomes the holder in due course, when it is for consideration he can be an indorsee before the amount mentioned in promissory note became payable; and that without having cause to believe that any defect existed in the title of person from whom he derived his title.

Braja Kishore Dikshit v. Purna Chandra Panda AIR 1957 Orissa 153 fol.

(c) Negotiable Instruments Act (XXVI of 1881)‑‑‑

‑‑‑‑Ss.9 & 58‑‑‑Holder in due course‑‑‑Post‑dated cheque‑‑­Third party, obligation of‑‑‑Post‑dated cheque drawn by a partner in his own. favour‑‑‑Endorsing such cheque for consideration in favour of a third party, who was aware of the fact that same had in fact been drawn by such partner in his own favour‑‑‑Such fact should make third party more diligent in the matter of making some further and independent inquiries about such cheque‑‑‑If third party neglected to do so, then he could not claim to be holder in due course.

Sunderdas Sobhraj v. Liberty Pictures AIR 1956 Bom. 618 fol.

(d) Negotiable Instruments Act (XXVI of 1881)‑‑‑

‑‑‑‑Ss.5, 9 & 58‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, RA‑Payment due under bill of exchange‑‑‑Jurisdiction of Court to stop payment‑‑‑Scope‑‑‑Court in exceptional cases could interfere with machinery of obligation under bill of exchange assumed by Banks‑‑‑Such cases would include, where demand for payment was clearly fraudulent or where there was a challenge to validity of bill on the ground akin to fraud or concealment of material facts.

Haral Textiles Limited v. Banque Indosuez Belgium, S.A. and others 1999 SCMR 591 rel.

Ajaz Anis v. Tariq Isa and 6 others 1999 CLC 259; Messrs U.D.L. Industries Ltd. v. Hongguang Electron Tube Plant and others PLD 1997 Kar. 553; Pan Ocean Enterprises (Pvt.) Limited v. Thai Rayon Company Limited and b others PLD 1990 Kar. 395; Messrs Kohinoor Trading (Pvt.) Ltd. v. Mangriani Trading Co. and 2 others 1987 CLC 1533; The State Trading Corporation of India Ltd. v. Jainsons Clothing Corporation and another AIR 1994 SC 2778; Syndicate Bank v. Vijay Kumar and others AIR 1992 SC 1066; General Electric Technical Services Company Inc. v. Messrs Punj Sons (P.) Ltd. and another AIR 1991 SC 1994; Centax (India) v. Inmar Impex Inc. and others AIR 1986 SC 1924; United Commercial Bank v. Bank of India and others AIR 1981 SC 1426; Messrs Synthetic Foams Ltd. v. Simplex Concrete Piles (India) (Pvt.) Ltd. AIR 1988 Delhi 207; Messrs Banerjee & Banerjee v. Hindustan Steel Works Construction Ltd. and others AIR 1986 Cal. 374; National Oils & Chemical Industries, Delhi v. Punjab & Sindh Bank Ltd., Delhi and another AIR 1979 Delhi 9; Braja Kishore Dikshit v. Purna Chandra Panda AIR 1957 Orissa 153; (Vatakkam Chirayil Parkum) Kurundaliammal v. T.P.E.N. Kunhi Kannan and others AIR 1930 Mad. 141; The Law of Bankers; Commercial Credits by the late H.C. Gutteridge and Maurice, 1984 Edn., Documentary Credits by Raymond Jack, 1993 Edn., Frey & Sons Incorporated v. E.R. Sherburne Company and The National City Bank of New York App. Div. Vol. CCCIII, November 12, 1920; Hamzed Malas & Sons v. British Imex Industries Ltd. (2) QBD 127; Discount Records Ltd. v. Barclays Bank Ltd. and another (1975) 1 All ER 1071; D.S. Aujla Company (Pvt.) Ltd. v. Kaluram Mahadeo Prosad and others AIR 1983 Cal. 106; Sirafi Trading Establishment v. Trading Corporation of Pakistan Ltd. 1984 CLC 381; Messrs Allied Industries Hub (Pvt.) Ltd. v. Messrs China National Metals and Mineral Import and Export Corporation and another 1989 MLD 2027; Sevenska Handelsbanken v. Messrs Indian Charge Chrome and others 1995 PSC 1276; Fine Textile Mills Ltd. v. Haji Umar PLD 1963 SC 163; SK. Abdul Aziz v. Mahommodul Hassan and others 2000 CLC 1967; State Associates v. Messrs Farben Industrial Development S.P.A. and another 1992 MLD 1007 and Col. (Rid.) Ashfaq Ahmed and others v. Sh. Muhammad Wasim 1999 SCMR 2832 ref.

(e) Negotiable Instruments Act (XXVI of 1881)‑‑‑--

‑‑‑‑Ss. 5 & 9‑‑‑Cbntract Act (IX of 1872), S.126‑‑‑Bill of exchange executed to respect of letter of credit ‑‑‑Value‑‑­Such bill stands on a higher pedestal than a simipliciter beneficiary under a letter of credit.

(f) Contract Act (IX of 1872)‑----

‑‑‑‑S.126‑‑‑Bank guarantee‑‑‑Nature and scope‑‑‑Duty of Bank to honour Bank guarantee free from interference by Court, except in case of fraud‑‑‑Principles.

A contract of Bank guarantee is a trilateral contract, under which Bank undertakes to unconditonally and irrevocably abide by the terms of contract. It is founded on an act of trust with full faith to facilitate free growth of trade and commerce in internal or international trade or business. Thus, bank must honour a bank guarantee free from interference by Courts, otherwise trust of any commerce, internal and international, would be irreparably damaged. If a bank guarantee is unconditional and irrevocable, the bank concerned must pay, when demand is made generally, it leas no defence except in case of fraud.

(g) Negotiable Instruments Act (XXVI of 1881)------

‑‑‑Ss. 4, 22 &, 55-A-Bank draft‑‑‑Maturity‑‑Interest of innocent parties holding drafts guaranteed by Bank should not be made to suffer on the ground that draft had not matured on account of modification of effective date after acceptance by drawer.

(h) Negotiable Instruments Act (XXVI of 1881)‑‑‑--

‑‑‑‑S.5‑‑‑Bill of exchange‑‑‑Stoppage of payment due thereunder‑‑‑Essentials‑‑‑Contracts involving bills of exchange must be preserved and its sanctity should not be lightly interfered with‑‑‑Payment under bill of exchange cannot be stopped/ restrained, unless there be a strong case of fraud, forgery or obtaining wrongful advantage from such contract.

(i) Negotiable Instruments Act (XXVI of 1881)‑---

‑‑‑‑Ss. 5 & 91‑‑‑Bill of exchange, generally could not be dishonoured, except when any demand for payment was fraudulent or where there was a challenge to its validity.

Muneer A.Malik for Plaintiff.

Khalid Rehman for Defendants Nos. 1 and 3.

Arshad Tayebally for Defendant No.2.

Date of hearing: 28th May, 2002.

2003 C L D 463

[Karachi]

Before Mushir Alam, J

ADAMJEE INSURANCE COMPANY LIMITED and 3 others‑‑‑Plaintiffs

Versus

MUSLIM COMMERCIAL BANK LIMITED, ISLAMABAD and 5 others‑‑‑Defendants

Suit No.347 of 2002, decided on 22nd August, 2002.

(a) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S.279‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.20(i)‑‑‑Transfer of shares‑‑‑Imposing restriction or prohibiting transfer of shares‑‑‑Powers of Court‑‑‑Scope‑‑‑Cases where no investigation was underway or where Authorities were oblivious of their responsibilities and duties‑‑‑Not appropriate for Court to pass any order under S.279 of the Companies Ordinance, 1984‑‑‑Securities Exchange Commission could impose restrictions on shares in certain cases, when during course of investigation in its opinion, such transaction would be prejudicial to public interest.

(b) Company‑‑‑

‑‑‑‑ Memorandum of Association‑‑‑Construction‑‑‑Company formed for attainment of a specified and specialized object‑‑­All other objects mentioned in Object Clause would be incidental and ancillary to such main object and would be pursued in furtherance of main and principal object clause, for which company was formed.

Golden Oraphies (Pvt.) Ltd. v. Director of Vigilance 1993 SCMR 1635 ref.

Commissioner of Income‑tax (Central), Karachi v. Messrs Habib Insurance Company Ltd., Karachi PLD 1969 Kar. 278 rel.

(c) Speck Relief Act (I of 1877)‑‑‑

‑‑‑‑Ss.42, 54 & 55‑‑‑Civil Procedure Code (V of 1908), S.9‑‑­Banking Companies Ordinance (LVII of 1962), Ss.5(b), 7 & 23‑‑‑Insurance Act (IV of 1938), S.35‑‑‑Insurance Ordinance (XXXIX of 2000), S.67‑‑‑Suit for declaration and injunction‑‑­Temporary injunction, prayer for‑‑‑Acquisition of majority shares of Insurance Company (plaintiff) by Banking company (defendants) in violation of law and public policy ­Suit by plaintiff against defendants for declaring their such act as illegal and for restraining them from exercising right of voting at shareholders' meeting or seeking election as Directors on Board of plaintiff and receiving benefit etc.‑‑­Prayer for interim relief to such effect‑‑‑Validity‑‑‑Principal business of Banking Company was to transact "Banking business" as per S.5(b) of Banking Companies Ordinance, 1962‑‑‑Prima facie Banking Company could not hold share more than 3096 of paid‑up capital in terms of S.23 of Banking Companies Ordinance, 1962, whereas shares in Insurance Company had been acquired against provisions of S.35 of Insurance Act, 1938‑‑‑Banking Company had admittedly . acquired controlling shares in Insurance Company against the mandate of law, which prima facie appeared to be a bid to take‑over Insurance Company through back door and amounted to "hostile take‑over"‑‑­Election of Directors of Insurance Company was due to be held in near future‑‑‑Right to elect directors, participate in management through elected representatives, to table and vote on resolution at a meeting of company and right to earn dividends and profits of shares were valuable rights, which were attached to any share‑‑‑Application under O.XXXIX, Rr.1 & 2, C.P.C., was allowed in circumstances.

Muhammad Sharif v. Government of Pakistan 1998 SCMR 2645; A. R. Khan v. P.N. Boga PLD 1987 SC 107 and Trustees of Port of Chittagong v. Saleem Navigation Co. Ltd. PLD 1965 SC 352 ref.

(d) Words and phrases‑‑‑

‑‑‑‑"Amalgamation"‑‑‑Meaning.

Black's Law Dictionary, Sixth Edn. ref.

(e) Words and phrases‑‑‑

‑‑‑‑ "Merger"‑‑‑Meaning.

Black's ‑Law Dictionary, Sixth Edn. ref, (f) Companies Ordinance (XLVII of 1984)‑‑‑-

‑‑‑‑S.284‑‑‑Banking Companies Ordinance (LVII of 1962), S.47‑‑‑Insurance Ordinance (XXXIX of 2000); S.68‑‑‑Scheme of amalgamation or merger of companies and take over bid‑‑‑Distinction‑‑‑Rights of various classes of shareholders are taken care of and receive statutory protection in such schemes as same are subject to approval and judicial scrutiny whereas in a takeover bid, such rights are not protected and secured under existing law.

(g) Words and phrases‑‑‑

‑‑‑‑ "Takeover bid "‑‑‑Meaning.

Black's Law Dictionary, Sixth Edn. ref

(h) Company‑‑‑

‑‑‑‑ Takeover cannot be employed as a means of merging or amalgamating of two or more companies, which are going concerns‑‑‑Reasons stated.

(i) Banking Companies Ordinance (LVII of 1962)‑‑‑

‑‑‑‑Ss.23(1) & 47‑‑‑Insurance. Ordinance (XXXIX of 2000), S.68‑‑‑Insurance Act (IV of 1938), S.35‑‑‑Amogarnation of a Banking Company with any other company not having object similar to that of Banking company‑‑‑Not permissible‑‑‑Banking Company cannot form a subsidiary company for a purpose other than set out in S.23(1) of Banking Companies Ordinance, 1962‑‑‑Arrrilgarnation of Insurance Company with a non‑Insurance company not permissible‑‑‑Objects of Banking ,Company and that of Insurance Company altogether different ‑and distinct, thus, neither of such companies can undertake business of other company‑‑‑Amalgamation of such companies or forming of subsidiary company specifically prohibited under Banking Companies Ordinance, 1962 and Insurance Ordinance, 2000.

(j) Practice and procedure‑‑

‑‑‑‑ What cannot be done directly, cannot be achieved indirectly.

Mian Muhammad Nawaz Sharif v. President of Pakistan and others PLD 1993 SC 473 fol.

(k) Insurance Ordinance (XXXIX of 2000)‑‑‑--

‑‑‑‑S.67‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.20‑‑‑Companies Ordinance (XLVII of 1984), Ss.93 & 94‑‑‑Acquisition of shareholding of more than 10% in an Insurance Company‑‑‑Essentials‑‑-Such acquisition would not proceed, unless on application by transferor approval was given by Commission‑‑‑Disclosure of such acquisition in return required to be filed under Companies Ordinance, 1984 would not be substantial compliance‑‑‑Requirement to obtain prior approval of Commission as mandated in S.67(1) of Insurance Ordinance, 2000 could not be dispensed with simply because no particular form of application had been prescribed‑‑­Requirement to seek such approval was separate and distinct requirement that might be necessary under provision of any other law‑‑‑Absence of prescribed form of application was no excuse to seek such approval‑‑­Provisions relating to form of application were merely enabling provision‑‑‑Failure to prescribe form of application would not render requirement to seek approval of Securities and Exchange Commission nugatory‑‑‑Absence of such approval would render acquisition of shares questionable.

(l) Insurance Ordinance (XXXIX of 2000)‑‑‑

‑‑‑‑S.67‑‑‑Acquisition of shares for common purpose by more than one person‑‑‑Effect‑‑‑Where there were number of purchasers and relationship inter se was apparently for common purpose, then all such transactions would be treated by one and the same person in terms of S.67 of the Ordinance.

(m) Words and phrases‑‑‑

‑‑‑‑‑‑ Investment"‑‑‑Meaning.

Black's Law Dictionary, Sixth Edn. ref.

(n) Income‑tax‑‑‑

‑‑‑‑"Business of investment" and "purchase and sale of investments by a person "‑‑‑Distinction stated.

Commissioner of Income‑tax (Central), Karachi v. Messrs Habib Insurance Company Ltd., Karachi PLD 1969 Kar. 278 ref.

(o) Practice and procedure‑‑‑

‑‑‑‑ When law provides a particular thing to be done in a particular fashion or manner, then same is to be done in such fashion and manner.

(p) Specific Relief Act (I of 1877)‑‑‑

‑‑‑‑Ss.42, 54 & 55‑‑‑Civil Procedure Code (V of 1908), S.9‑‑­Banking Companies Ordinance (LVII of 1962), Ss.5, 7 & 23‑‑‑Insurance Ordinance (XXXIX of 2000), S.67‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.20‑‑‑Suit for declaration and injunction‑‑‑Acquisition of majority shares of Insurance company (plaintiff) by Banking Company (defendants) in violation of law and public policy‑‑‑Suit by plaintiff against defendants for declaring their such act as illegal and for restraining them from exercising right of voting at shareholders' meeting or seeking election as Directors on Board of plaintiff and receiving benefit etc. ‑‑‑Maintainability‑‑‑When company affairs were under investigation, then Securities and Exchange Commission under given circumstances had authority to pass orders‑‑‑Commission was not seized of any investigation in matter which was subject‑matter of suit‑‑­Civil Court in such circumstances had jurisdiction to examine vires of transaction of acquisition of shares of Insurance company by Banking Company etc.

(1960) 1 All ER 768 In re: Bugloe Press Ltd. (1960) 3 All ER 791: Rolled Steel Products (Holdings) Ltd. British Steel Corporation and others (1982) 3 All ER 1057; Allexander Ewan Campbell v. Thomas Ernest Rofe AIR 1933 PC 39: Messrs G.M. Pfaff A.G. v. Sartaj Engineering Co. Ltd. and 3 others PLD 1971 SC 564; Mian Muhammad Nawaz Sharif v. President of Pakistan and others PLD 1993 SC 473 and Morgan Crucible Co. PLC v. Hill Samuel Bank Ltd. (1991) 1 All ER 148 ref.

Anwer Mansoor Ahmed Khan for Plaintiffs.

Khalid Anwer alongwith Mehmood Mandviwala for Defendants Nos. 1 and 2.

Raja Quireshi for MCB Employees' Pension Fund.

Fateh Ali Villani: Amicus curiae.

Dates of hearing: 29th, 30th April, 2nd and 3rd May, 2002.

2003 C L D 550

[Karachi]

Before Sabihuddin Ahmed and Syed Ali Aslam dafri, JJ

Dr. Mrs. ZULAIKHA MAHMOOD‑‑‑Petitioner

Versus

PRESIDING OFFICER, BANKING COURT. NO. 1, KARACHI and 4 others‑‑‑Respondents

Constitutional Petition No.2348 of 2001, decided on 14th April, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXI, Rr.84, 89, 90 & 91‑‑‑Provisions of O.XXI, Rr.89, 90 & 91, C.P.C.‑‑‑Applicability‑‑‑Such provisions would come into play after acceptance of an offer of sale of property by Court‑‑‑Expression "may apply to have the sale set aside" as used in O.XXI, R.89, C.P.C. clearly showed that there must be an order of Court, which was required to be set aside on certain grounds‑‑‑In absence of an order accepting bid of a person, no right could be deemed to have arisen in his favour.

Muhammad Arshad Iqbal for Petitioner.

Arshad Mobin for Respondents Nos.3 and 4.

Aftab Hussain Soomro for Respondent No.5.

2003 C L D 623

[Karachi]

Before Sabihuddin Ahmed and S. Ali Aslam Jafri, JJ

UNILEVER PLC‑‑‑Appellant

Versus

AL‑ALAMEEN INDUSTRIES‑‑‑Respondent

High Court Appeal No. 105 of 1997, decided on 13th March, 2002.

(a) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Preamble & S.10‑‑‑Trade mark, registration of‑‑‑Purpose stated.

The very purpose of enactment of Trade Marks Act, 1940, as it appears from ‑its preamble, is to provide effective protection to trade marks and that an unwary purchaser should not be deceived and a confusion should not arise in the mind of a common man so as to mislead him to purchase product of one manufacturer for the other considering it to be same, which he actually wanted to purchase. A plain reading of section 10 of the Trade Marks Act, 1940 clearly shows that no trade mark shall be registered in respect of same goods or description of goods, which is identical with a trade mark belonging to a different proprietor and/or already stands registered .in respect of same goods or description of goods or which so nearly resembles such trade mark as to be likely to deceive or cause confusion.

(b) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S. 10‑‑‑Trade mark, registration of‑‑‑Difference in dictionary meanings, spelling of pronunciation of two identical trade marks‑‑‑Effect‑‑‑An unwary customer was never expected to go through dictionary meaning of two identical, resembling and confusing trade marks of an item before purchasing same, if it had a similar type of name or packing‑‑‑Mere difference in spelling or pronunciation was immaterial.

Ekhlas Ahmad v. D.A.E., Health Laboratories Ltd., London and another 1980 SCMR 625 rel.

(c) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑S. 73‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Suit for infringement of trade mark etc.‑‑‑Temporary injunction, grant of‑‑‑Plaintiff was manufacturer and seller of soap under Trade Mark "Pears", while defendant's product under Mark "Peal's" had close resembling both visually and phonetically with that of plaintiffs trade mark‑‑‑Man of ordinary prudence and particularly unwary purchaser was likely to be deceived in view of common phonetic and visual name, get‑up and wrapper/carton of two soaps bearing Trade Mark "Pears" and . "Peal's"‑‑‑No distinction appeared at a first glance that two products could be found distinguishable from each other‑‑‑Difference in dictionary meaning of such two marks would not make any difference so far a common man and unwary purchaser was concerned‑‑‑Plaintiff had a strong prima facie case and balance of convenience was in its favour‑‑‑Plaintiff would suffer irreparable loss, if injunction prayed was not granted‑‑‑High Court granted interim injunction as prayed till disposal of suit.

A&F Pears Ltd. v. Ghulam Haider and another PLD 1959 (W.P.) Kar. 154; Bandenawaz Ltd. v. Registrar of Trade Marks, Karachi and another PLD 1967 Kar. 492; American Cynamide Company v. Arrow Trading Company Ltd. and another RLD 1992 Kar. 395; Messrs Chas A. Mendoza v. Syed Tausif Ahmed Zaidi and 2 others PLD 1993 Kar. 790; Ekhlas Ahmad v. D.A.E., Health Laboratories Ltd., London and another 1980 SCMR 625; A&F Pears Limited v. The Pearson Soap Company Limited 37 CLR 341; Lallubhai Amichand v. The Punjab Aluminium Factory, Gujranwala PLD 1960 (W.P.) Kar. 545; Aktiesolaget Jonkoping Valcan, Sweden v. Registrar of Trade Marks, Karachi and another PLD 1975 Kar. 478; Solosusice Narodni Podnik v. Sindh Match Works (Pvt.) Limited and another 1991 CLC 37; Pakistan Tobacco Company Limited v. West End Tobacco Company 1992 CLC 1728; Fisons Limited v. E.J. Godwin (Peat.) Industries Limited 1976 RPC 653; Hawkins & Tipson Ltd. (Proprietors of Green Brothers) v. Fludes Carpets Ltd. and British Floorchoth Coy. Ltd. RPC 57 at p.8; Johnson. & Son (Loughborough) Ltd. v. W. Puffer & Company Ltd. 1930 RPC 47 and The Shorter Oxford English Dictionary and Webster's Third New International Dictionary of the English Language (unabridged) ref.

(d) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S. 73‑‑‑Suit for infringement of trade mark‑‑‑Plea of defendant was that product of plaintiff was not being imported or sold in Pakistan‑‑‑Validity‑‑‑Such plea had no force as in presence of a registered trade mark of certain goods, import or sale thereof in market was neither necessary nor same would entitle defendant to copy plaintiff's trade mark, because by doing so, defendant was deceiving public into thinking that its products were the products of plaintiff.

Cooper's Incorporated v. Pakistan General Stores and another 1981 SCMR 1039 fol.

Kh. Mansoor for Appellant.

Nadeem Qureshi for Respondent.

Dates of hearing: 21st February; 12th and 13th March, 2002.

2003 C L D 637

[Karachi]

Before Anwar Mansoor Khan, J

NATIONAL DEVELOPMENT LEASING CORPORATION LIMITED---Plaintiff

Versus

Messrs NATIONAL FIBRES LIMITED and others---Defendants

Suit No.641 of 2000 (New No.B-49 of 2000), decided on 7th September, 2001.

Contract Act (IX of 1872)---

----Ss. 133, 134, 135 & 141---Civil Procedure Code (V of 1908), O.XXIII, R.3---Composition by creditor with debtor without consent of guarantor, effect of --Composition by creditor with debtor without consent of guarantor would discharge guarantee given by guarantor for payment of debt.

Federation of Pakistan v. National Bank of Pakistan 1981 CLC 847; Begum Zia Farhat Awan v. Islamic Republic of Pakistan 1993 CLC 365; Pirthi Singh v. Ram Charan Aggarwal AIR 1944 Lah. 428 and (1812) 128 ER 405 and 56 Mad. 652 ref.

A.H. Mirza for Plaintiff.

Ms. Sadaf Yousaf for Defendants.

2003 C L D 661

[Karachi]

Before Ghulam Nabi Soomro and Wahid Bux Brohi, JJ

Messrs DOHA BANK LIMITED---Appellant

Versus

PANGRIO SUGAR MILLS LIMITED and 2 others---Respondents

High Court Appeal No. 292 of 1999 decided on 17th July, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.21---Civil Procedure Code (V of 1908), O.XLI, R.1 --­Appeal not accompanied with copy of decree ---Effect--­Requirement of filing decree with appeal found place in O.XLI, R. 1, C.P.C. and not in S.21 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act 1997---Appeal was filed on 19-5-1999 annexing therewith certified copy of judgment, whereas decree was signed subsequently on 29-5-1999---Objection that there was no decree on the date of filing of appeal, thus, no appeal could lie on such date would not defeat appeal and pre-empt its decision on merits, when subsequently at a stage where decree had been signed, appeal was admitted by High Court on 1-11-2000 to regular hearing.

Baseer Ahmed Siddiqui v. Shama Afroz 1988 SCMR 892 ref.

(b) Qanun-e-Shahadat (10 of 1984)---

----Art. 129(e)---Judicial record---Presence of counsel of a party noted on top of judgment---Denial of such fact---Non­-filing of affidavit by concerned person-Effect---Such contention would lose its significance in absence of such affidavit---Such affidavit could at best hint at inadvertence on the part of Shorthand Writer/Private Secretary, who noted order on dictation of Judge but not against the Judge himself.

(c) Qanun-e-Shahadat (10 of 1984)---

----Art.129(e)---Judicial record---Text of judgment (statement of Judge)---Presumption of genuineness and truth attached to judgment---Principles---Affidavit by anybody controverting text of judgment---Admissibility.

Genuineness of judicial record cannot be sacrified at the altar of expediency of a litigant.

Abdullah v. Shaukat 2001 SCMR 60 fol.

Statement of a Presiding Judge, who presides at a trial, whether it be in a criminal or civil case, is at to what has taken place at the trial is conclusive, and neither the affidavits of by-standers nor of jurors nor the notes of counsel nor of Shorthand Writers are admissible to controvert the statement of the Judge.

Katta R. Venkatesayya v. Muhammad Ghouse Saheb AIR 1994 Mad. 45; AIR 1944 Mad. 450 and 10 Bom. HCR 75 fol.

If such affidavits are now received, it would be the first instance of such a practice and would cause greatest injury to the administration of justice.

AIR 1944 Mad. 450 fol.

Genuineness of the judicial record cannot be sacrificed for any extraneous reason. The sanctity attached to judicial record through illustration at clause (c) of Article 129 of Qanun-e-Shahadat shall not be injured or distorted. Affidavits filed by anybody in support of the text of judgment i.e. the statement of a Judge cannot be permitted to disfigure the above mentioned presumption of genuineness attached to judicial record. There shall, therefore, be no dispute about genuineness of what has been recorded in the judgment.

Muhammad Zaman v. Abdul Ghaffar PLD 1980 Lah.582 rel.

(d) Civil Procedure Code (V of 1908)---

----S.96(3) & O.XXIII, R.1---Qanun-e-Shahadat (10 of 1984), Art. 114---Appeal from consent decree---Conditions---Consent decree operates as an estoppel for the same is founded on agreement of parties, who would consciously give up their right of appeal in consequence of such agreement---In order to bring the cause within the fold of S.96(3) of C.P.C., in a judicial dispensation dealing with substantive rights of a party, the consent, if any, should be clear, express and unambiguous---Where there is no express and comprehensible consent on behalf of appellant, his appeal would not be hit by mischief of S.96(3), C. P. C.

(e) Contract Act (IX of 1872)---

----S.126---Bank guarantee---Nature---Restraining operation of Bank guarantee-- Essential conditions ---Encashment of Bank guarantee---Scope---Duty of banker and its remedy to seek money back--Exhaustively stated.

Bank guarantees are independent contracts and concerned parties must construe them independently as primary contract and encash them notwithstanding any dispute arising out of original contract between parties.

National Construction Limited v. Aiwan-e-Iqbal PLS 1994 SC 311 ref.

Indeed all secured financial dealings and business such as execution of a bank guarantee etc. are based on commercial morality and mutual trust and confidence, which should not be shaken by taking a turn much against the terms of guarantee itself. Bank guarantee is a tripartite contract of guarantee between the bank, the beneficiary and the person at whose instance, bank issues such guarantee. The Banker is not supposed to question the nature of accounts or liabilities between the other tow parties.

In order to restrain the operation of a bank guarantee, there should be a serious dispute and there equities in the form of preventing the irretrievable injustice, otherwise the very purpose of bank guarantee would be negatived and the fabric of trading operations would get jeopardized.

AIR 1981 SC 1426 and (1989) 65 Camp. Cas. 283 (SC) rel.

If a banker is allowed to resile from the contents of guarantee, it would seriously prejudice the sanctity and confidence attached to the bank guarantee.

If bank wants the money back, the right course is not to disintegrate the terms of guarantee itself, but to take appropriate steps and settle the accounts with party at whose instance bank issued guarantee.

Army Welfare Sugar Mills Ltd. v. Federation of Pakistan 1992 SCMR 1652 and Zahoor Textile Mill's case PLD 1999 SC 880 ref.

A. I. Chundrigar for Appellant.

Ilyas Khan Tanoli and Fariduddin for Respondents.

2003 C L D 683

[Karachi]

Before Maqbool Baqar, J

Messrs HABIB BANK LIMITED---Plaintiff

Versus

Messrs PAN ISLAMIC STEAMSHIP CO. LIMITED and others---Respondents

Suit No.366 of 1999, Civil Miscellaneous Applications Nos.299 of 2002 and 9128 of 2001, decided on 19th November, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.10---Qanun-e-Shahadat (10 of 1984), Arts. 59 & 84--­Leave to defend, application for---Defendant denied to have signed letter of guarantee annexed with plaint---Court itself could not form any opinion regarding genuineness of signatures of defendant by comparing his signatures on original passport and national identity card with those appearing on letter of guarantee---Court with consent of parties referred such matter to Handwriting Expert for his opinion.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.10---Leave to appear and defend suit, application for--­Defendant dented to have signed letter of guarantee annexed with plaint as he was abroad at the relevant time for medical treatment---Plaintiffs counsel conceded after examining original passport that same did not bear any entry showing that defendant was in Pakistan during the relevant time---Such matter required evidence to enable Bank to establish that letter of guarantee had to fact been signed by the defendant---Court granted to defendant unconditional leave to appear and defend suit with direction to parties to record their evidence on issue, whether letter of guarantee bore signatures of defendant.

A. R. Akhtar for Plaintiff.

Asim Mansoor for Defendant No.3.

Salam Ansari for Defendant No. 7.

2003 C L D 776

[Karachi]

Before Shabbir Ahmed, J

HABIB BANK LIMITED---Petitioner

Versus

DOMESTIC APPLIANCES (PVT.) LTD. and another---Respondents ORIX LEASING PAKISTAN LIMITED---Applicant

Judicial Miscellaneous No.15 of 1999, heard on 14th February, 2000.

Lease financing---

----Leasing company had leased a motor car to the lessee company for a period of 336 days on payment of monthly rent---Period of lease had expired but two instalments of rental remained due with the lessee company when the lessee company went into liquidation---Leasing company being the owner of the car and period of lease having expired, lessee was required to hand over the car to the lessor which was his property.

1st Appeal No.44 of 1998 applied.

Bashir Ahmad Khan Official Liquidator.

Bashir Ahmad Khan for Applicant.

Ismail Merchant, Advocate.

Date of hearing: 14th February, 2000.

2003 C L D 780

[Karachi]

Before Sabihuddin Ahmed and Ali Aslam Jafri, JJ

Messrs BURJOR ARDESHIR INDUSTRIES LTD. and others---Appellants

Versus

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION LIMITED---Respondent

High Court Appeals Nos. 215 and 216 of 1990, decided on 29th March, 2002.

(a) Foreign Currency Loans (Rate of Exchange) Order [P.O. No.3 of 1982)---

----Art. 3---Scope and application of Art.3---Rate of exchange applicable to foreign currency loans---Held, notwithstanding the overriding provisions of the Foreign Currency Loans (Rate of Exchange) Order, 1982, its applicability had to be restricted to cases where any part of foreign currency loan was outstanding against the latter---Measure of retrospective effect stipulated in the Foreign Currency Loans (Rate of Exchange) Order, 1982 could not have the effect of reviving or re-opening transactions which had become past and closed for all purposes---As long as the person's right to seek recovery (even if subject to certain conditions)' remained alive, it could not be assumed that the transaction had become past and closed---Terms of the settlement, however, would be required to be looked to determine as to whether the controversy between the parties had already been resolved on the date of the promulgation of the Presidential Order and no amount was outstanding as per terms of the settlement.

(b) Company---

----Winding-up---"Inability to pay its debts" which is a ground for winding-up of a company does not include a debt regarding which there is a bona fide dispute between the creditor and the company.

(c) Foreign Currency Loans (Rate of Exchange) Order [P.O. No.3 of 1982]---

----Art.4(2)---Bar of jurisdiction---Mere determination of liabilities even through a judgment validly pronounced by a competent Court would not take the matter outside the purview of the Foreign Currency Loans (Rate of Exchange) Order, 1982.

(d) Judgment---

---- Compromise judgment in different proceedings between different parties on the same question would not remain enforceable.

PLD 1984 Kar. 82 ref.

Iqbal Kazi for Appellants.

Ijaz Ahmed for Respondent.

Dates of hearing 21st February; 27th and 29th March, 2002.

2003 C L D 794

[Karachi]

Before Shabbir Ahmed, J

BAYER A.G. and another---Plaintiffs

Versus

MACTER INTERNATIONAL (PVT.) LTD. ---Defendant

Suits Nos.884 and 885 of 1996, decided on 19th November, 1999.

(a) Trade Marks Act (V of 1940)---

----Ss.2(c), 8(a), 10(1) & 21---Trade mark of a pharmaceutical product---Infringement---Test---Protection as against the infringement and passing off---Scope and extent---Element of deception or confusion---Relevance---Question as to mark used by the defendant as a whole was deceptively similar to that of registered mark of the plaintiff---Test---Phonetic similarity of trade name of pharmaceutical product ---Effect—Generic name of a pharmaceutical product could not function as a trade name to indicate the origin---Principles---Points to be considered by Court in arriving at the conclusion of fact as to whether deception or confusion was likely, enumerated.

The reading of sections 2(c), 8(A), 10(1) and 21 of the Trade Marks Act, 1940 would reveal that the registered proprietor of a trade mark has been given an absolute protection as against the infringement and passing off. In an infringement action, the issue is whether the defendant is using a mark which is the same as or which is a colourable imitation of the plaintiffs trade mark. In a passing off action, the issue is whether the defendant is selling the goods so marked as by design or calculated to lead the public to believe that they are the plaintiffs goods. The element of deception or confusion becomes irrelevant in this issue, as the same is implicit, inherent or presumed to be present, in an action for infringement of a trade mark. Relief shall not 1be granted to the plaintiff if the defendant establishes to the satisfaction of the Court that the use of the mark which the plaintiff complains is not likely to deceive or cause confusion or to be taken as indicating a connection in the course of trade between the goods in respect of which the trade mark is registered.

The ultimate test is whether the mark used by the defendant as a whole is deceptively similar to that of the registered mark of the plaintiff. The Court has to compare the two marks with the degree of resemblance which is necessary to exist to cause deception not being capable of definition by laying down objective standard. The persons who would be deceived are of course the purchasers of the goods and it is the likelihood of their being deceived that is the subject for consideration. The purpose of comparison is for determining whether the essential features of the plaintiffs trade mark are to be found used by the defendant. When two marks are not identical, the plaintiff would have to establish that the mark used by the defendant so nearly resembles with the plaintiffs registered trade mark that it is likely to deceive or cause confusion in relation to the goods in respect of which, it is registered.

The test for judging the case of infringement and/or passing off remains the same when applied to medicines and pharmaceuticals. However, a few additional considerations arise when dealing with cases of such drugs which cannot be sold except on prescription of a doctor and which are sold only by such persons who have special knowledge or expertise in the field. The manner in which trade in such medicines is carried on that is, the patients advised by doctors, chemists and druggists, these two facts assume significance and shall have to be kept in view by the Courts.

Test to be applied for judging an infringement action or action in the field of medicinal and pharmaceutical preparation remains the same as are applicable to other goods. However, in case of preparations trading whereof is governed by the statutory rules or regulations, additional considerations become relevant they are (i) manner in which trade is carried on, such as sales should have been made only by authorized or licensed vendor, who will be also having supplied all medicine, (ii) class of persons, who would be purchaser whether they would be accompanied by doctors prescription and would in all probability attached with the doctor.

A generic name of a product can never function as a trade mark to indicate origin. The terms "generic" and "trade mark" are mutually exclusive. Thus if, in fact given term is "generic", it can never function as a mark to identify and distinguish the product as a mark to identify and distinguish the products of only one seller. An abbreviation of a generic name which still conveys to the buyer the original generic connotation of the abbreviated name, is still generic.

Generic non-proprietary terms published by the General Medical Council in England and included in the British, Indian, American and other standard pharmacopoeia are open to the trade and no person could claim a. monopoly in any of them.

The Court must in the common case .be satisfied that the defendant's conduct is calculated to pass-off other goods as those of the plaintiff, or at least, to produce such confusion in the minds of probable customers or purchasers or other persons with whom the plaintiff has business relations as who would be likely to lead to the other goods being bought and sold for him. This is the foundation of the action.

In arriving at the conclusion of fact as to whether deception or confusion is likely, the Court will have regard to--

(i) the nature and extent of reputation relied upon;

(ii) the closeness or otherwise of the respective fields of activity in which the plaintiff and the defendant carry on business;

(iii) the similarity of the mark, name, etc. used by the defendant to that of the plaintiff;

(iv) the manner in which the defendant makes use of the name, mark, etc. complained of and collateral factors; and

(v) the manner in which the particular trade carried on the class of persons it is alleged is likely to be deceived and all other surrounding circumstances.

In all types of marks which are registered or unregistered, but are used by competing organizations and companies certain similarities are very much evident. These similarities may be in the form and style of the design or overall get-up or they may be phonetically similar to each other. In the present case, the claim is not on the word or design or the get-up but on the phonetic similarity between the marks of the plaintiff and the defendant. Even phonetic similarity is found only to the extent of word CIP and/or CIPRO. The suffix to this prefix is different not only in spelling but even phonetically.

The word "CIP/CIPRO" has been used in the field of medicinal preparation, which has the prefix of generic name of antibacterial medicine "CIPROFLAXIN" common to the trade describing the medicine preparation for antibiotic product. The generic name of a product can never function as trade name to indicate the origin. It has become public juris on which any one cannot claim proprietary right to exclusive use.

An abbreviation of generic name which still conveys to the buyer the original generic connotation of the abbreviated name is still generic.

Phonetically the word "XIN", "QUINE" and "CIDE" being totally dissimilar are not giving to create any confusion in the minds of user, specially in this case when the visual impression of the trade marks is completely different with different label, design, get-up and colour scheme.

There is no phonetic or visual resemblance. Moreover, nobody can claim exclusive right to use any abbreviation, which has become public juris. The rival marks "CIPROXIN", "CIPROQUINE" arid "CIPROCIDE" contain the common feature "CIPRO", which is not only descriptive but also public juris. Therefore, a customer will bend to ignore the common feature and will pay more to uncommon features i.e. "XIN", "QUINE" "CIDE", which cannot be said to have such phonetic similarity so as to make it objectionable.

The total sound effect of the words lacks any similarity. So also when these words are written down and compared. They do not have any similarity, which can deceive the eye of a lay man.

Trade Marks and Unfair Competition, 3rd Edn.; by Mc. Cathy; Trade Marks by Pnaryanan, 1963 Edn., p.101; Law of Trade Marks and Trade Names by Kerly 12th Edn.; Halsbury's Laws of England, 4th Edn., Vo1.48; Geigy A.G. v. Chelsea Drug and Chemical Co. Ltd. (1966) RPC 64; Indo Pharma Pharmaceutical Works Ltd. v. Farberf Abriken Buyer A.G. (1975) 545 and & B.L. Limited v. Himalya Drug Co. AIR 1998 Delhi 126 ref.

(b) Trade Marks Act (V of 1940)---

----S.8(1)---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Trade mark---Pharmaceutical product---Infringement--­Application for grant of injunction---Plaintiffs had claimed that they had introduced meaningless prefix "Cipro" to their product, though the same was prefix of generic term/name of "Cipro Floxcin"---Plaintiffs, in circumstances having not come to the Court with clean hands were not entitled to discretionary relief of grant of injunction.

Hasan Irfan for Plaintiffs.

Khalil Kazilbash for Defendants.

Dates of hearing: 2nd, 8th and 23rd September, 1999.

2003 C L D 815

[Karachi]

Before Shabbir Ahmed, J

ASSOCIATED BISCUITS INTERNATIONAL LIMITED --- Petitioner

Versus

ENGLISH BISCUITS MANUFACTURERS (PVT.) LTD. (EBM) and others---Respondents

Judicial Miscellaneous No.2 of 2000, decided on 10th February, 2003.

(a) Companies Ordinance (XLVII of 1984)---

----Ss.290 & 291---Scope of Ss.290 & 291 of the Companies Ordinance, 1984 with reference to the pre-conditions for the exercise of jurisdiction and limitation in exercise of such jurisdiction dilated upon.

Section 290, Companies Ordinance, 1984 shows that the power/jurisdiction of the Company Court can be invoked by--

(1) any member or members holding not less than twenty percent. of the issued share capital; or

(2) a creditor or creditors having interest equivalent in amount to not less than twenty percent. of the paid-up capital; or

(3) the Registrar when he is of the opinion, that the ground mentioned the section exists for seeking interference of the Court.

The causes which are to form basis of a petition under section 290 are;--

(a) That the affairs of the company are or are likely to be conducted in an unlawful or fraudulent manner;

(b) that the affairs of the company are being conducted in a manner not provided for in its memorandum;

(c) that the affairs of the company are being conducted in a manner oppressive to the member or any of the members or the creditors or creditors;

(d) that the affairs of the company are being conducted in a manner prejudicial to the public interest.

In addition to general power of the Court under section 290, an order under that section may invoke for--

(a) the termination, setting aside or modification of any agreement, however arrived at between the company and any director including the Chief Executive, Managing agent or other officer, upon such terms and conditions as may, in the opinion of the Court, be just and equitable in all the circumstances; (b) setting aside of any transfer, delivery of goods, payment, execution or other transaction not relating to property made or done by or against the company within three months before the date of application which would, if made or done by or against an individual, be deemed in his insolvency to be a fraudulent preference; and

(c) any other matter including a change in the management for which in the opinion of the Court it is just and equitable that provision should be made.

The remedy provided by section 290 is of, a preventive nature so as to bring to an end to oppression and mismanagement on the part of controlling shareholders and not to allow its continuance to the detriment of the aggrieved shareholders or the company. The remedy is not intended to enable the aggrieved shareholders to set at naught what has already been done by the controlling shareholders in the management of the company. The section does not confer any power on the Court to set aside or interfere with past or concluded transactions between a company and third parties which are no longer continuing wrongs. The provisions are essentially intended to control and prevent oppression of the rights of the minority shareholders and mismanagement by the majority, actually alternative to winding-up proceedings.

In order to invoke the jurisdiction of the Company Jude under section 290 it must be made out that the company's affairs are being conducted in a manner prejudicial to public interest or oppressive to any member or members of the company and the facts justify the making of a winding-up order, but at the same time, making such winding-up order would unfairly prejudice such member or members. The provisions are essentially intended against the tyranny of the majority, against the minority shareholders.

The power of the Court under sections 290 and 291, Companies Ordinance, 1984 cannot be read as subject to the provisions contained in other chapters which deal with normal corporate management of the company. An analysis of the sections contained in Chapter X of the Ordinance would also indicate that the powers of the Court under section 290 or 291 cannot be read as being subject to the other provisions contained in sections dealing with corporate management of the company in normal circumstances with exception to application of the provisions of the sections 410 to 417 of the Ordinance. The topic or subjects dealt by Chapter X are such that it becomes impossible to read any such restriction or limitation on the powers of the Court. Without prejudice to the generality of the powers conferred 'on the Court under section 290, section .291 proceeds to indicate what types of orders the Court could pass. Under clause (c) of section 291, the Court's order may provide for any other matter for which, in the opinion of the Court, it is just. and equitable that provision should be made. The only limitation can be impliedly read on the exercise of the power would be that nexus must exist between the order that may be passed there under and the object sought to be achieved by those sections and beyond this limitation, which arises by necessary implication, it is difficult to read any other restriction or limitation on the exercise of Court's power. Further section intended to avoid winding ­up of the company, if possible, and keep it going while at the same time relieving the minority shareholders from the acts of oppression and mismanagement or preventing its affairs from being conducted in a manner prejudicial to public interest and, with such objective, the Court has power to interfere with the normal corporate management of the company.

(b) Companies Ordinance (XLVII of 1984)---

----S.309---Partnership Act (IX of 1932), S.44---Winding-up of private limited company--Dissolution of a firm---Winding ­up of private. Limited company to be treated as a partnership firm to the extent as would justify the dissolution of a partnership firm under S.44, Partnership Act, 1932 and the grounds which were available to a partner for having a partnership firm dissolved, were also available to a shareholder for the winding-up private limited company under the just and equitable clause viz.; exclusion of a partner from the management of the firm, the existence of a state of deadlock between the partners and justifiable lack of confidence in the management---Company, in the present case, was a private limited company of three groups therefore, any attempt on the part of the other groups to oust one group from the company and or dilute its shareholding was bound to result into bitterness and justifiable lack of confidence in the, management and as a consequence thereof, the principles of just and equitable clause would apply as were applicable for the dissolution of a partnership firm.

Ladli Prasad Jaiswal v. The Karmal Distillery Co. Ltd. PLD 1965 SC 221; Kruddson Limited's case PLD 1972 Kar. 376; Messrs Nagina Films Ltd. v. Usman Hussain and others 1987 CLC 2263 and Iqbal Alam and another v. Messrs Plasticrafters (Pvt.) Limited and 4 others 1991 CLC 589 ref.

(c) Companies Ordinance (XLVII of 1984)---

----S.290---Oppressive acts---Company was a private limited company of three groups---Application for winding-up by one group on ground of oppression by the management group--­Decision to purchase the shares of a subsidiary company of one group at 100% premium was not an isolated act; earlier to that, said group tried to forcibly acquire the petitioner's shares on the plea of conflict of interest without recourse to the provisions of S.290, Companies Ordinance, 1984---Such act on the part of the said group lacked the degree of probity, which the petitioners were entitled to expect in the conduct of the company's affairs---Isolated act of oppression though may not necessarily and by itself support the inference that the commission/omission was mala fide or burdensome, harsh and wrongful, but a series of acts/omissions following upon one another, could, in the context, lead to justifiable conclusion that said acts/ omissions were a part of the same transaction of which the object was to cause or commit the oppression on persons against whom those acts were directed.

(d) Bias in a Judge---

---- Isolated order passed by a Judge which is contrary to law will not normally support the inference that he is biased, but a series of wrong or illegal orders to the prejudice of a party are generally accepted as supporting the inference of a reasonable apprehension that the Judge is biased and that the party complaining of the orders will not get justice at his hands.

(e) Companies Ordinance (XLVII of 1984)---

----S.290---Application for winding-up on the ground of oppression---Person complaining of oppression is to show that he has been constrained to submit to a conduct which lacks in probity, conduct which is unfair to him and which causes to him hardship in the exercise of his legal and proprietary rights as shareholders---Attempt on the part of Management group of shareholders to purchase the shares of the group of applicants for winding-up without recourse to the provisions of S.290, Companies Act, 1984 followed by purchase of shares of another company which was a subsidiary company of the Management group at 100% premium on valuation based on the forecast provided by the management group itself were sufficient to demonstrate that the conduct of the management group as directors was with purpose to oust the applicant group or dilute their share, lack that degree of probity, which the applicant shareholders were entitled to expect in the conduct of affairs of the company, more particularly when the management group had dual position, seller and purchaser, to achieve transparency, the process of valuation ought to have been done under the supervision of an independent body/ source---Once it was demonstrated that the affairs of the company were being conducted in manner oppressive to member of the company, a justification for a winding-up order on the ground of lack of confidence in the management arises, such winding-up order however would unnecessarily prejudice the members---High Court, in terms, disposed of the application with specific direction to the parties and appointed Official Assignee for implementation of the directions with power to appoint independent auditor and to ensure that all the materials, records, reports and assistance required by the auditor, in the said process were provided to the auditor by the management.

Shahbazud Din Chaudhry and 27 others v. Messrs Services Industries Textiles Limited PLD 1988 Lah. 1; Shanti Prasad Jain v: Kalinga Tubes Ltd. AIR 1965 SC 1535; N.I.I. Ltd. v. N.I.H. Ltd. AIR 1981 SC 1298; Rajahumundry Electric Supply Corporation Ltd. v. A. Nageshwara Rao and others AIR 1956 SC 213; Scottish Cooperative Wholesale Society Ltd. v. Meyer (1958) 3 All ER 66; Ebrahimi v. Westbourne Galleries Ltd. 1973 AC 360 (HL); Yenidji Tobacco Company Limited: In re (1916) 2 Ch. 426; Ladli Prasad Jaiswal v. The Karnal Distillery Co. Ltd. PLD 1965 SC 221; In re: Kruddson Limited PLD 1972 Kar. 376; Messrs Nagina Films Ltd. v. Usman Hussain and others 1987 CLC 2263; Iqbal Alam and another v. Messrs Plasticrafters (Pvt.) Limited and 4 others 1991 CLC 589; S.M. Ganpatram v. Sayaji Jubilee Cotton and Jute Mills Co. AIR 1965 Guj. 96 and Needle Industries (India) Ltd. others v. Needle Industries Newey (India) Holdings Ltd. others AIR 198 (sic) SC 1298 ref.

Zahid F. Ibraim for Petitioner.

Shaiq Usmani for Respondents.

Dates of hearing: 8th, 16th, 24th May and 16th 2002.

2003 C L D 852

[Karachi]

Before Zia Perwez, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Petitioner

Versus

Messrs MYFIP VIDEO INDUSTRIES LTD.----Respondent

Execution No. 183 of 2001 and Civil Miscellaneous Application No.142 of 2002, decided on 21st November 2002.

(a) Civil Procedure Code (V of 1908)---

----O. XXI, Rr.10 & 54---Execution of decree---Mortgaged property, attachment of---Validity---Execution of decree for mortgaged property would not call for order of attachment.

Australasia Bank Ltd. v. Messrs Juma Khan Agha Javed Corporation PLD 1976 Kar. 414 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19(7)---Execution of decree---Investigation of claims and objections in respect of mortgaged machines---Applicant (objector) claimed to have leased out machines to judgment ­debtor and on his failure to pay monthly rent, had obtained decree for its recovery---Decree-holder (Bank) could not substantiate its contention that applicant was not entitled to claim possession of machines or to show that decree obtained by applicant was for any money except for recovery of arrears of outstanding rent and payable by judgment-debtor to applicant---Applicant had placed sufficient material on record in shape of sale invoices and lease agreements etc., and there was no material to the contrary---Applicant, on the basis of such documents, was proved to be owner of such machines, and thus, was entitled to possession of the same---Application was allowed.

Mst. Razia Ghafoor v. Messrs Eastern General 1987 CLC 777 ref.

S. Mazhar-ul-Haque for the Decree-Holder.

Jaffer Sial for CIRC.

Juser Peshori for Applicant.

Date of hearing: 21st November, 2002.

2003 C L D 917

[Karachi]

Before S. Ahmed Sarwana and Muhammad Mujeebullah Siddiqui, JJ

MUHAMMAD IRSHAD and another---Petitioners

Versus

DEPUTY DIRECTOR ADJUDICATION and others---Respondents

Constitutional Petitions Nos. D-1051, D-2069, D-2070, D-2680, D-2681, D-2682, D-2683, D-2684,D-2085, D-2975 of 1992, 86 of 1993, D-1537, D-1538, D-1539, D-1540 of 1994; 1116, D-1117, D-1118, D-1119, D-1120, D-1121, , D-1122, D-1123, D-1124, D-1125, D-1126, D-1127, D-1128, 1129, D-1130, D-1131, D-1132, D-1133, D-1134, D-1135, D-1136, D-1137, D-1138, D-1139, D-1140, D-1175, D-1176, D-1.177, D-1178, D-1179, D-1180, D-1181, D-1182, D-1982, D-1983 of 1995, D-124, D-1131 of 1996; D-263, D-264, D-265, D-266, D-1201, D-1942 of 1997, D-206, D-207, D-208 of 1998, D-584, D-937 of 1999; D-541, D-1736 and D-1745 of 2000, decided on 30th January, 2003.

(a) Foreign Exchange Regulation Act (VII of 1947)---

----Ss. 12(1), 23-B(4) & 24(2)---Constitution of Pakistan (1973), Art.199---Constitutional petition---Payment of Foreign Exchange for exported goods within stipulated period--­Failure to make such payment---Imposition of penalty under S.23-B of the Act---Validity---Petitioners had given an undertaking to repatriate sale proceeds within prescribed time, but failed to do so and thus had patently contravened provisions of S.12(1) of the Act---Petitioners could and should have approached Pakistan Embassy Trade Mission, Foreign Chamber of Commerce or commenced legal proceedings for recovery of sale proceeds against buyer in country of export---If petitioners were unable to realize export proceeds, they should have proved in proceedings that same beyond their control as they had taken all possible steps for its recovery---Petitioners having failed to do so had made themselves liable to be prosecuted and penalized under S.23-B of the Act---Undertaking given by petitioners on Form "E" was simple and straightforward promise to deliver value of exported goods in foreign exchange to Bank---Such promise was an unilateral act---Not necessary for State Bank of Pakistan to prove any complicity of petitioners with any other person for proving contravention of understanding---Failure to fulfill undertaking by itself was a clear cut proof of contravention of promise---Provisions of S.24(2) of the Act would not apply to such case---Proceedings conducted by Adjudicating Officers appointed by State Bank of Pakistan for violation of S.12(1) of the Act by petitioners were within their jurisdiction under S.23-B of the Act and penalties awarded by them were valid---High Court dismissed Constitutional petitions with costs as being mala fide.

1994 SCMR 2123; 1998 SCMR 1404; 1998 SCMR 383; 2001 MLD 1554; State Bank of Pakistan v. S.K. Mahboob-ur-Rehman and others 1971 SCMR 642 and state Bank of Pakistan v. Abdus Sattar 1968 SCMR 283 ref.

Hoosen Dawood & Company v. Government of Pakistan Civil Petition No. 138-K of 1992 rel.

(b) Foreign Exchange Regulation Act (VII of 1947)---

----Ss. 23 & 23-B [as inserted by Finance Act (VI of 1987)]--­Punishments and procedure provided in Ss. 23 & 23-B of the Act---Different and distinct---Wordings of S.23 were couched in general terms making contravention of any provision of the Act a penal offence punishable with imprisonment, while those of S.23-B of the Act were very specific in nature making contravention of certain specified provisions of the Act subject to payment of penalty---Before insertion of S.23-B in the Act, any person contravening provisions of the Act was to be prosecuted under S.23 of the Act by Sessions Judge---After insertion of S.23-B, a person contravening provisions of S.12(1) would become liable to be prosecuted under S.23-B(4) by Adjudicating Officer entailing penalty.

A.R. Akhtar for Petitioner (in C.P. No.D-2293 of 1997):

Khalid Farooqui for Petitioner (in C.ps. Nos.D-1051 .of 1992, 1132 to 1140, 1175 to 1182 of 1995, 1736 and 1745 of 2000).

Abdul Qadir Khan for Petitioner (in C.P. No.D-1241 of 1997).

H.A. Rehmant, I.H. Zaidi and Abrar Hasan for Respondents.

Nadeem Azhar Siddiqui, D.A.-G. (on Court's Notice).

2003 C L D 956

[Karachi]

Before Sabihuddin Ahmed and Amir Hani Muslim, JJ

Messrs CHAWLA INTERNATIONAL---Appellant

Versus

HABIB BANK LIMITED and others---Respondents

High Court Appeal No.292 of 2002, heard on 12th December, 2002.

(a) Civil Procedure Code (V of 1908)---

----O.XXI, R.65---Sale in execution of decree ---Mode--­Contention that sale could only be made through public auction and in no other manner, held, not correct.

Brig. (Retd.) Mazhar ul Haq and another v. Messrs Muslim Commercial Bank Limited PLD 1993 Lah.706 ref.

Asma Zafarul Hassan v. United Bank Ltd. and another 1981 SCMR 108 fol.

(b) Administration of justice---

---- Courts are not to act upon the principle that every procedure is to be taken as prohibited, unless it is expressly provided for by the Code, but they are to act on the converse principle that every, procedure' is to be understood as permissible till it is shown to be-prohibited by the law--­Prohibition, as a matter of general principle, cannot be presumed.

Narsing Das v. Mangal Dnbey (1883) 5 All. 163 fol.

(c) Civil Procedure Code (V of 1908)---

----O.XXI, Rr.66, 67, 68 & 69---Proclamation, publication and conduct of sale---Non-compliance with provisions of C.P.C. is only a material irregularity, but not illegality rendering the sale in disregard of such provisions a nullity.

Manilal Mohanlal Shah v. Sardar Sayed Ahmed AIR 1954 SC 349 fol.

National Bank of Pakistan v. Nasir Industries 1982 CLC 388 and Syed Brothers v. District Council, Lyallpur PLD 1977 Lah. 542 ref.

(d) Civil Procedure Code (V of 1908)---

----O.XXI, R.84---Deposit of 25% of purchase money immediately was a strict requirement of O.XXI, R.84, C.P.C.---Omission to deposit, however, could only be treated as a material irregularity, but would not render the sale as nullity.

Rashad Ahsan v. Bashir Ahmed PLD 1989 SC 146 fol.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.84--­Sale in execution of decree---Deposit of 25% of purchase money---Executing Court granted one week's time to purchaser to make such deposit---Validity---Purchaser could not be penalized for mistake of Court---Deposit within such period and not immediately could not vitiate sale.

Rashad Ahsan v. Bashir Ahmed PLD 1989 SC 146 fol.

(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.85--­Sale in execution of decree---Executing Court granted one week's time to deposit 25% of purchase money---Purchaser failed to deposit entire amount of purchase money within 15 days of passing of such order due to passing of interim order in appeal---Effect---Requiring purchaser to fulfill a condition entirely beyond his control would be highly inequitable---Penalizing purchaser for an act of Court would neither be fair nor equitable.

Rashad Ahsan v. Bashir Ahmed PLD 1989 SC 146 fol.

(g) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.85—Sale in execution of decree---Court did not accept highest bid offered by appellant and directed official assignee to negotiate apart from bidders with any other party interested in buying property---Offer received from outsider in subsequent reference was highest, but appellant did not make improvement in his earlier bid---Court accepted offer of outsider ---Contention of appellant was that negotiations could, only be held, with bidders, but not through inviting fresh offers from outsider---Validity---Sale could be set aside, if same had 'caused prejudice to any of the parties--­ Decree-holder had not objected to acceptance of outsider's bid, whereas appellant duly represented at the time of hearing had expressed his unwillingness to match such bid---No ground for interfering with impugned order was found---High Court dismissed appeal in circumstances.

Abdul Hafeez Pirzada for Appellant.

Tasawar Ali Hashmi for Habib Bank Limited.

Ali Bin Adam Jafri for Respondent No.5.

Rizwan Ahmed Siddiqui and Izhar Muhammad for C.I.R.C.

Bashir Ahmed Official Assignee.

Dates of hearing: 11th and 12th December, 2002.

2003 C L D 971

[Karachi]

Before Anwar Mansoor Khan, J

NATIONAL BANK OF PAKISTAN---Plaintiff

Versus

Messrs GALAXY TEXTILE MILLS (PVT.) LIMITED and others---Defendants

Suit No.B-83 of 2002, decided on 14th May, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.9. & 10---Suit for recovery of amount---Application for leave to defend suit---Defendants/borrowers had not denied transaction of having availed loan facility of plaintiff-Bank--­Annexure filed by defendants to their application for leave to defend suit, itself was an acknowledgment of their liability and request had been made by defendants for re­structuring finances ---Letter was stated to have been issued by defendants for revival of sick unit which had shown that unit had become sick---Nothing, in the letters was available to show that any cause of loss was on account of any of default of the Bank and there was no allegation of defendants in any of said letters against the Bank---In absence of any genuine or bona fide dispute, leave to defend suit could not be granted---Two of the defendants having expired, their legal heirs who also were guarantors, were liable to pay the amount---One of the defendants who was neither borrower nor guarantor was not a "customer" within meaning of low and thus was not liable to pay the suit amount---Suit wrongly filed against the said defendant was dismissed, however, the suit was decreed against the defendants, who being guarantors were liable to pay the suit amount.

Muhammad Zubair Qureshi alongwith Muhammad Muzharul Haq, AVP of the Plaintiff-Bank (present).

Khawaja Shamsul Islam for Defendant No.9.

Date of hearing: 14th May, 2002.

2003 C L D 981

[Karachi]

Before Amanullah Abbasi and Dr. Ghous Muhammad, JJ

GHULZAR AHMED ---Petitioner

Versus

THE STATE---Respondent

Criminal Miscellaneous No.336 of 1992, decided on 17th June, 1998.

Companies Ordinance (XLVII of 1984)---

----Ss. 7 & 476(4)---Jurisdiction of the Courts under S.7, Companies Ordinance, 1984---Scope, nature and extent--­Forum of trial for all matters of criminal nature arising under the Companies Ordinance, 1984 is the one provided under S.476 of the Ordinance, which would mean that for offences entailing imprisonment or imprisonment in addition td fine, the Sessions Court under S.476(4) of the Ordinance having the territorial jurisdiction shall be the Court competent to try the criminal offence---Power of the Federal Government to confer the jurisdiction of the Company Judge under S.7(1), proviso of the Ordinance upon High Court has no nexus with the competence of the Sessions Court to try offence under S.476(4) of the Ordinance---Principles.

Section 7 of the Companies Ordinance, 1984 confers a special jurisdiction upon the High Court under the Ordinance, while reposing power in the Federal Government to confer such jurisdiction, through a notification, on any Civil Court.

The jurisdiction exercised by the. High Court under section 7 of the Companies Ordinance i.e. by the Company Judge is in the nature of a summary but original civil jurisdiction conferred by the statute. This jurisdiction has all the attributes of an original civil jurisdiction (i.e. summary in nature), which jurisdiction is in contradistinction to criminal jurisdiction.

Section 7 of the Companies Ordinance, 1984 proceeds on the assumption that the jurisdiction of the Court under this section is civil jurisdiction.

The jurisdiction exercised by the Company Judge under section 7 of the Companies Ordinance. 1984 is a jurisdiction of civil nature. In other words any jurisdiction which is not of a civil nature, but is of a criminal nature, even if arises out of the provisions of the Companies Ordinance, 1984 shall not be covered by or fall under the said section 7. Admittedly, the offences which are created by the provisions of the Companies Ordinance, 1984 including sections 230(7)(a), 245(1)(b) and 245(3) do not create a civil liability; the same essentially create offence of a criminal nature. Section 474 of the Companies Ordinance, 1984 lays down the methodology for taking cognizance of offences, while section 474(2) through a non obstante clause overrides the provisions of the Cr.P.C.; section 475 of the Companies Ordinance further spells out that every offence created by the Ordinance shall be deemed to be non-cognizable, notwithstanding anything contained to the contrary in the Cr.P.C. All such provisions i.e. sections 474 and 475 of the Ordinance further confirm that the offences created by the Ordinance are criminal in nature. On this score alone it can be safely said that the provisions of section 7 of the Companies Ordinance, 1984 do not extend to trial of offences under the Ordinance. In other words, the jurisdiction conferred upon the High Court under section 7 could not be extended to criminal offences under the Ordinance. Likewise the power of the Federal Government" under the proviso to section 7(1) to confer the jurisdiction under section 7 through notification to any Civil Court is also only in respect of civil jurisdiction and not criminal offences.

Section 475 of the Companies Ordinance provides the forum for trial and adjudication of criminal offences arising under the Ordinance. Section 476(1) and (2) provides for trial of offence by the Authority. Registrar or officer incharge of registration, whereas section 476(4) provides for the trial of offences by a Court not inferior to a Court of Session for offences which provide for imprisonment or imprisonment in addition to fine.

Sections 7 and 476 of the Companies Ordinance are distinct and independent and thug section 7 does not control or cover the field falling under section 476; section 7 deals exclusively with the civil jurisdiction whereas section 476 deals with the criminal jurisdiction arising under the Companies Ordinance; for all matters of civil nature arising or the Civil Court empowered through notification by the Federal Government shall have the jurisdiction i.e. under section 7; for all matters of criminal nature arising under the Companies Ordinance, the forum of trial is the one provided under section 476, which would mean that for offences entailing imprisonment or imprisonment in addition to fine, the Sessions Court under section 476(4) having the territorial jurisdiction shall be the Court competent to try the criminal offence; the power of the Federal Government to confer the jurisdiction of the Company Judge under the proviso to section 7(1) of the Companies Ordinance, 1984 has no nexus with competence of the Sessions Court to try offences under section 476(4).

Abdul Rahim Khan v. The State 1991 MLD 2448 affirmed.

Abdul Rahim Khan v. The State 1991 MLD 2448; Messrs Sunrise Textile Ltd. and others v. Mashriq Bank PSC and others PLD 1996 Lah. 1; Brother Steel Mills Ltd. and others v. Mian Ilyas Miraj and 14 others PLD 1996 SC 543; Chandra v. Kavindra Naravan Sinha and others AIR 1936 All. 830 and K. Venkata Rao v. State (1966) 36 CC 562 (Mys.) ref.

Azizullah K. Shaikh for Petitioner.

Fareed Ahmed Dayo and Abdul Hakeem A. Bijarani for Respondent.

S.M. Aamir Naqvi for Respondent No.2.

I.A. Hashmi & Co. for Appellant (in Criminal Miscellaneous No. 1176 of 1992).

Fareed Ahmad Dayo and Abdul Hakeem A. Bijarani for Respondent No. 1 (in Criminal Miscellaneous No. 1176 of 1992).

S.M. Aamir Naqvi for Respondent No.2 (in Criminal Miscellaneous No. 1176 of 1992).

Raja Qureshi & Co. for Applicant (in Criminal Miscellaneous No. 1193 of 1992).

Fareed Ahmed Dayo and Abdul Hakeem A. Bijarani for Respondent No. 1 (in Criminal Miscellaneous No. 1193 of 1992):

S.M. Aamir Naqvi for Respondent No.2 (in Criminal Miscellaneous No. 1193 of 1992).

2003 C L D 996

[Karachi]

Before Mushtaque Ahmad Memon, J

HYESONS SUGAR MILLS (PVT.) LTD.---Applicant

Versus

CONSOLIDATED SUGAR MILLS LIMITED and others---Respondents

Judicial Miscellaneous No.53 of 1997 in Suit No.985 of 1985, decided on 9th September, 1999.

(a) Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)---

----Ss.7 & 12(5)---Civil Procedure Code (V of 1908), S.12(2)--­Suit for recovery, of loan---Application against alleged fraud---Judgment-debtor, in application under S.12(2), C.P.C., had .sought recall of judgment and decree passed against the defendants---Defendant who had guaranteed the repayment of loan having failed to honour the guarantee, judgment-debtor/applicant had guaranteed the repayment of entire outstanding amount---Liability to repay amount having remained un-cleared, suit for recovery of loan was filed by the Bank against the defendants which was decreed---Judgment-debtor filed application under S.12(2), C.P.C. alleging fraud in decreeing the suit---Fraud alleged by the judgment-debtor could only be considered an internal matter between previous and new management of the judgment-debtor and could not afford a ground for intervention under S.12(2), C.P.C.---Provisions of S.12(2), C.P.C. could only be pressed into service when fraud had been practised upon the Court and judgment was obtained on basis of such fraud---Judgment-debtor had come into the picture much after the decree was passed in the suit--­Judgment-debtor having preferred appeal against judgment and decree in the suit, could not assail the same in proceedings under S.12(2), C.P.C.---Application filed by judgment-debtor was liable to be dismissed for the reason that judgment and decree in suit was passed under Banking jurisdiction and in view of negative provision contained in Banking Law, prohibiting review or revision of judgment, order or decree, passed under Banking jurisdiction, power under S.12(2), C.P.C. could not be invoked---Judgment-debtor was a limited Company and being a legal entity could not deny knowledge about proceedings to which it was party---Application filed under S.12(2), C.P.C. was dismissed, in circumstances.

National Commercial Bank Ltd., Karachd v. Muhammad Tufail and another PLD 1975 Kar. 671; Chief Settlement Commissioner, Lahore v. Raja Muhammad Fazil Khan and others PLD 1975 SC 331; Muhammad Younus Khan and others v. Government of N.-W.F.P. and others 1993 SCMR 618; Haji Abdullah Khan and others v. Nisar Muhammad Khan and others PLD 1965 SC 690; Khurshid Ali and others v. Shah Nazar PLD 1992 SC 822; Abdul Sattar and others v. Ibrahim and others PLD 1992 Kar. 323; Mst. Surraya Begum v. Aftab Ahmad Khan 1995 CLC 1603; Haral Textile Limited v. Banque Indosuez Belgium S.A. and others 1999 SCMR 591; Ghulam Sarwar v. Muhammad Hussain and others 1987 SCMR 1440 and Emirates Bank International Limited v. Messrs Osman Brothers and others PLD 1998 Kar. 338 ref.

(b) Contract Act (IX of 1872)---

----S.128---Guarantor's liability---Proceedings for recovery of loan could competently be filed against guarantor without joining the principal debtors---Existence of valid contract, of guarantee, however, was necessary in that case.

Messrs Platinum Insurance Company Limited, Karachi v. Daewoo Corporation, Sheikhupura PLD. 1999 SC 1 and City Bank v. Tariq Mohsin Siddiqi and others PLD 1999 Kar. 196 ref.

Maqbool Illahi Malik for Applicant.

Bashir Ahmed Khan for Plaintiff-Decree-Holder.

Muhammad Mazhar Ali for, K.M. Usman, K.M. Asif and K.M. Zaki former Director of Defendant, Judgment­, Debtor No.2.

2003 C L D 1007

[Karachi]

Before Anwar Mansoor Khan, J

HABIB BANK LIMITED---Plaintiff

Versus

AL-JALAL TEXTILE MILLS LTD.---Defendant

Suit No.617 of 2000, heard on 18th September, 2001.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 2(d)(e)---Term "obligation" as defined to the Ordinance---Scope---Restructuring, renewal or rescheduling of finance---Effect---"Obligation" would mean only an obligation relating to finance, and nothing more"---Neither word finance" contemplated any addition to a debt nor word "obligation" did grant any further return, but only referred to extension of time- ---Restructuring or renewal of finance would not be an increase in amount payable on the date of same being restructured, renewed or rescheduled--­Principles:

It is clear from the word "obligation" that it only refers to enlargement and extension of a. time. It is not provided in the definition of "obligation" that restructuring or renewal would be an increase in the amount payable on the date of its being restructured, renewed or rescheduled.

The word "obligation" does not grant any further return, but only allows "extension of time in repayment of a finance or for restructuring or renewal or for payment of extension of time in payment of any amount relating to finance or liquidated damages, which is the import of Aslam Khaki' case. It is clear that this only relates to either extension of time for repayment or restructuring of a schedule of payment, but has to be of "finance". Word "obligation" says "amounts relating to a finance". Under section 9 of the Ordinance, 2001, it is clear that Legislature uses the word "obligation with regard to any finance". This obligation would mean only an obligation vis-a-vis the "finance" and nothing more. The word "finance" does not contemplate any addition to a debt. It is only this amount that is due, therefore no addition or mark-up on mark-up can be allowed and roll over or rescheduling or restructuring can be done, but without any addition, of any amount on the debt payable under the first agreement.

UBL v. Gravure Packaging Suit No.493 of 1998 and Dr. M. Aslam Khaki v. Syed Muhammad Hashmi PLD 2000 SC 225 ref.

Tasawur Ali Hashmi for Plaintiff.

Adnan Iqbal for Munir A. Advocate

Salman Talibuddin for Defendants

Date of hearing: 18th September, 2001.

2003 C L D 1026

[Karachi]

Before Shabbir Ahmed, J

KARACHI ELECTRIC PROVIDENT FUND- --Plaintiff

Versus

NATIONAL INVESTMENT (UNIT) TRUST and others---Defendants

Suit No.B-106 of 2001, decided on 8th March, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.7(4) & 9(1)---Jurisdiction of Banking Court---Mandatory conditions---Such jurisdiction would be attracted only in case, where a customer or banker committed default in fulfilling any obligation with regard to any finance.

Qatar Airways PLC v. ANZ Grindlays Bank 2000 CLC 1455; Gharibwal Cement Ltd. v. English Leasiling Ltd. PLD 2001 Lah. 411 and Awari Hotels Limited and others v. Investment Corporation of Pakistan and 6 others 2000 YLR 2407 ref.

(b) Words and phrases---

-----"Unit Investment Trust"---Meaning.

Black's Law Dictionary ref.

(c) Words, and phrases---

---- "Finance "---Meaning.

Encyclopaedia of Banking and Finance, 10th Edn. by Charles, J. Woelfel ref.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 2(d)(e)---Suit for recovery of value of N.I.T. Certificates by its holder against National Investment Trust---Maintainability---Plaintiff being holder of unit certificates became sharer in the Trust, in which funds had been pooled---Position of plaintiff was, thus, of an investor---Defendant was a financial institution, but plaintiff could not be a customer as defined in S.2(e) of the Ordinance--­Fixation of price by Trust and right to purchase unit certificates would not bring the same within ambit of finance" as defined in the Ordinance---Unit certificates would remain an investment analogous to "share "---Such suit was not a suit in terms of S. 9 of the Ordinance as there existed neither relationship of "customer" and "banker" between parties nor any default with regard to any finance obtained by plaintiff as a consequence of such relationship---High Court treated such suit as ordinary " suit to be proceeded on its original side.

Zahid F. Ebrahim for Plaintiff.

Kazim Hasan for Defendant.

Date of hearing: 26th February, 2002.

2003 C L D 1070

[Karachi]

Before Anwar Zaheer Jamali, J

KARACHI ELECTRIC SUPPLY CORPORATION LTD. ---Appellant

Versus

NATIONAL INSURANCE CORPORATION---Respondent

Suit No. 136 of 1993, decided on 29th May, 2002.

National Insurance Corporation Act (XXIII of 1976)---

----S. 14---Dispute arising under insurance policy---Suit against Insurance Corporation with reference to armed robbery whereby the insured Department was deprived of a huge amount while the same was in transit from the Bank to the insured Department's office---Contention of the plaintiffs/Department was that they had purchased insurance policy from the Insurance Corporation of Pakistan to secure cash in transit which was valid on the relevant date and therefore they were entitled to recover the suit amount from the Insurance Corporation under the said Insurance Policy---Validity---Insurance Corporation had not disputed that the loss was covered by the Insurance Policy issued in favour of the plaintiff-Department which was valid as subsisting on the day of incident---Mere fact that one of the accused involved in the incident was employee of the insured of the plaintiff-Department, who was admittedly acquitted during the proceedings of the criminal case, would not absolve the Insurance Corporation of the liability to make good the cash loss suffered by the plaintiff-Department during the incident---Contention of the Insurance Corporation with reference to Condition No. 11 of the Insurance Policy and S.14 of the Act was repelled as same did not provide bar for the plaintiffs to institute the present suit.

Ikram Siddiqui for Plaintiff.

Abdul Rauf for Defendant.

2003 C L D 1075

[Karachi]

Before Mushir Alam, J

Messrs AEROFLOT RUSSIAN INTERNATIONAL AIRLINES through Manager---Applicant

Versus

Messrs GERRY'S INTERNATIONAL (PRIVATE) LTD. ---Respondent

Judicial Miscellaneous Application No.22-A of decided on 19th March, 2003.

(a) Companies Ordinance (XLVII of 1984)---

----S.305---Winding-up petition can be maintained by a creditor in terms of S.305, Companies Ordinance, 1984 on various grounds enumerated therein.

(b) Companies Ordinance (XLVII of 1984)---

----S.306---Company when deemed unable to pay its debts for the purpose of bringing a, winding-up petition---Deeming provision becomes- effective when a demand is made by a creditor to whom the Company is indebted in a sum specified in S.306 of the Ordinance---Such demand is to be duly given under the hands of the creditor or any person duly authorized by him requiring the Company to pay the sum so due and the Company has for thirty days thereafter neglected to pay the same, or to secure or compound for it to the reasonable satisfaction of the creditor.

(c) Companies Ordinance (XLVII of 1984)---

----S.314---Power of Court hearing petition for winding-up--­Scope---Court, in terms of S.314 of the Companies Ordinance, 1984, on hearing a winding-up petition may either dismiss the same with or without costs, or adjourn the hearing or make any interim order or an order for winding-up of the Company or any other order that it deems just---Winding-up order shall not be refused by the Court only on the ground that the assets of the Company are in excess .of its mortgaged liability or that the Company has no assets.

(d) Companies Ordinance (XLVII of 1984)---

----Ss.305 & 306---Petition for winding-up of Company--­"Inability of Company to pay its debts" and "unwillingness on the part of Company to pay its debts"---Distinction--­Principles.

There is a clear-cut distinction between inability of a Company to pay its debts and unwillingness on the part of the Company to pay its debts. Earlier mentioned condition if established may entail consequence of winding-up as contemplated under section .305(e) of the Companies Ordinance, whereas later situation does not warrant winding-up. Controversy as to when a "Company is said to be unable to pay its debts" the answer is provided under the Companies Ordinance, 1984 itself in section 306.

(e) Companies Ordinance (XLVII of 1984)---

----Ss.306(a) & 305---Petition for winding-up of Company-­Company when deemed unable to pay its debts---Petitioner, admittedly had a demand against the. Company exceeding the statutory amount, such demand was subject-matter of Arbitration proceedings which materialized in form of an Award---Demand of the petitioner withstood the test of objection to the Award and finally translated into a judgment and decree--Whatever bona fide dispute as to such demand was agitated, was finally determined---Held, decretal amount was "sum so due" within the contemplation of S.306(a) of the Companies Ordinance, 1984.

(f) Companies Ordinance (XLVII of 1984)---

----Ss.306(a) & 305---Petition for winding-up of Company--­Company when deemed unable to pay its debts---Once the creditor has successfully established all the three requirements of S.306(a), Companies Ordinance, 1984; by fiction of law, Company is deemed unable to pay its debts.

(g) Companies Ordinance (XLVII of 1984)---

----Ss.314, 306 & 305---Petition for winding-up of Company---Inability of Company to pay its debts---Power/discretion of Court to decide petition for winding-up--­Scope---Powers of the Court to wind-up a Company on the ground that it is unable to pay its debts is not circumscribed by the limitation as provided for winding-up orders on the grounds that it is just and equitable or that there is failure to comply with requirement of statutory report or statutory meetings---Contention that Company is a going concern or that it is a viable Company are not good defence in a case where winding-up is sought on the ground that Company is unable to pay its debts.

The jurisdiction to wind-up a Company is circumscribed by limitation laid down under section 314 of the Companies Ordinance, 1984 usually such discretion is to be exercised in extreme cases. Courts in the first instance try to find ways and means to remedy the wrong complained of and pass such orders as may be appropriate and that may be deemed just to regulate the conduct of affair of the Company. One should not be unmindful of the fact that in case where winding-up of the Company is sought on the ground that it is just and equitable, it is only then specifically provided for, in terms of subsection (2) to section 314 of the Companies Ordinance, 1984 that the Court may refuse to make an order of winding-up, if it is of opinion that, some other remedy is available to the petitioners and that, they are acting unreasonably in seeking to have the company wound-up instead of pursuing that other remedy. The Court will also refuse to exercise such discretion, when winding-up is sought on the ground of default in delivering statutory report or in holding the statutory meeting or any two consecutive annual General Meetings [section 305 (b)]. As such grievance could be effectively remedied under section 314(3) of the Ordinance, by directing the Company to deliver the statutory report or the requisite meeting be held as the case may be. The powers of the Court to wind­up a Company on the ground that it is unable to pay its debts is not circumscribed by the limitation as provided for winding-up orders on the ground that it is just and equitable or that there is failure to comply with requirement of statutory report or statutory meetings. Therefore, contention that Company is a going concern or that it is a viable Company are not good defence in a case where winding-up is sought on the ground that Company is unable to pay its debts, such inability in terms of deeming provision of section 306(1) of the Ordinance, in present case, has been established by the petitioner.

(h) Companies Ordinance (XLVII of 1984)---

----Ss.314(2) & 305---Petition for winding-up of Company--­Inability of company to pay its debts---Defence by the Company that other remedy by way of execution of decree passed against the Company is available is no defence at all ---Principles---Defaulting party cannot direct the complainant to adopt a particular course or remedy---Where more than one remedy is available and there is no bar or restriction imposed by law then it is the prerogative and discretion of the creditor to adopt a course or remedy that may be considered most suited by the creditor and defaulting party has no say in the matter.

Defence that other remedy (by way of execution) is available is no defence at all. Availability of other remedy is a statutory defence available under section 314(2) of the Companies Ordinance, 1984, where winding-up is sought on "just and equitable ground", otherwise a defaulting party cannot direct the complainant to adopt a particular course or remedy. Where more than one remedy is available and there is no bar or restriction imposed by law then it is the prerogative and discretion of the petitioner to adopt a course or remedy that may be considered most suited to the petitioner and defaulting party has no say in the matter.

(i) Companies Ordinance (XLVII of 1984)---

----Ss.306, 314 & 305---Civil Procedure Code (V of 1908), O.XLI, R.5(1)---Petition for winding-up of Company---Inability of Company to pay its debts--Creditor was armed with an arbitration award and decree against the Company--­Defence by the Company was that since the appeal was pending and the debts were not finally determined as the controversy before the Appellate Court would re-open the entire issue petition for winding-up should not proceed---Validity ---Such proposition might be true where the matter related to the appellate proceedings for the purpose of deciding the appeal but could not be extended for other collateral proceedings, more particularly, where the order appealed against had not been stayed by the Appellate Court---Merely filing of an appeal would not operate as suspension or stay of the judgment appealed against in view of O.XLI, R.5(1), C.P.C.---Filing of appeal, in circumstances, would not render the controversy exposed open or subject to determination as the debt had been determined and prima facie was due and payable.

(j) Companies Ordinance (XLVII of 1984)---

----Ss.306, 305 & 314---Petition for winding-up of Company---Inability to pay its debts by the Company--­Determination of---Relevant considerations detailed.

Liability, of the Company is further determined and crystallized on expiry of the notice in terms of section 306(1) of the Companies Ordinance, 1984 when the Company had "neglected to pay the sum due" or to offer any security to the "reasonable satisfaction of the creditor" to determine when a company is "deemed unable to pay its debts" under section 306(1), the satisfaction of the creditor has preference over the satisfaction of the Court. Conduct of parties is relevant consideration in winding-up petition. Likewise, bona fide dispute as regard the liability of a company could be gauged from the conduct of the parties.

It is an admitted position in the present case that the dispute as to the determination of the liability and dues of the Company has been set at rest by an Award followed by a decree. Section 305(e) gives independent right to a creditor to seek an order of winding-up provided conditions set out in section 306 are met. Even the neglect on the part of the company to pay the sum due by fiction of law (as embodied in section 306) company is deemed unable to pay debt for the purpose of section 305(e). Such neglect to pay sum due' furnishes a ground for winding-up of the Company. Irrespective of the fact that the company is a viable proposition and has other considerable assets and property more than its liability such being not the relevant consideration in view of section 314(1), of the Companies Ordinance, 1984 while considering the winding-up on the ground of inability to pay the debts. From the conduct of the Company, in the present case, it appears that the neglect to pay the debt is not premised on bona fide dispute. It appears that plea of bona fide dispute has been raised to avoid the liability. Thesum due' is not being paid in order to withhold it and to use and exploit it for its own benefit and advantage at the cost and detriment of the creditor. Very fact, that the Company had merely filed an appeal against the judgment and decree without obtaining any order for the suspension and stay of such judgment and decree at least reflects that Company is not interested to "secure or compound the debt to the reasonable satisfaction on the creditor as postulated under section 306(1) of the Companies Ordinance, 1984".

(k) Companies Ordinance (XLVII of 1984)---

----Ss.306, 305 & 314---Petition for winding-up of Company---Inability of Company to pay its debts---Creditor had arbitration award in his favour and a decree--­Contention of the Company was that since the Company was solvent, execution should have been filed by the creditor for the recovery of amount---Validity---Availability of the alternate remedy was not a bar on the winding-up petition on the ground of inability to pay its debts by the Company---Such could be a valid defence against winding-­up on ground of just and equitable clause which was independent ground to seek winding-up---Each ground enumerated under S.305, Companies Ordinance, 1984 was disjunctive rind independent of each other---Not necessary for a decree-holder to take recourse to execution, such demand could be raised under S.306(1) of the Ordinance.

(l) Companies Ordinance (XLVII of 1984)---

----Ss.306, 305 & 314---Petition for winding-up of Company---Inability of Company to pay its debts---Bona fide dispute---Test---Where a Company had no bona fide reason but some other motive to deprive the creditor of its due amount which had been prima facie established in a contentious legal proceedings and materialized into a decree, it could not be said that the Company's dispute was bona fide any' more.

(m) Companies Ordinance (XLVII of 1984)---

----Ss.306, 305 & 314---Petition for winding-up of Company---Inability of Company to pay its debts---Conduct of Company---Relevance---Company, which was neither interested to pay the sum due nor was interested to secure or compound the debt to the reasonable satisfaction of the creditor and was trying to drive the creditor to adopt legal proceedings by way of a protracted litigation, such was not reflective of a good conduct of the Company---If defaulting Company which neglected to pay and discharge legitimate demand was allowed to seek shelter behind a provision of law to retain benefit. which it was otherwise liable to restore, thereby depriving a rightful claimant and holder of a decree, its due sum, such conduct of the Company was nothing short of abuse of process of law which was deprecated by High Court ---Company though in the present case, was not able to show that the winding-up petition had been made either as a pressure tactic or for some ulterior motive, but discretion of Court in terms of S.314, Companies Ordinance, 1984 provided that even if the Court was of the opinion, that the facts justified making in a winding-up order, Court could pass other order as it may deem just--­High Court, in view of the facts and circumstances of the case, and in the interest of other creditors directed the Company to furnish solvent security in the sum of dedretal amount of the creditor together with cost of winding-up petition to the satisfaction of Nazir of the High Court within four weeks from the date of the order of the High Court and on failure to give such security within four weeks, Company was ordered to be wound-up; Official Assignee be appointed as liquidator to carry out the winding-up of the Company as provided under the Companies Ordinance, 1984 and such order then be communicated to the Registrar of the Companies as required under the Companies Ordinance, 1984---Security, so furnished by the Company shall be utilized for payment of the creditor debit/decretal amount and cost subject to the determination of the High Court---If the Company furnished solvent security as set out and as directed by the High Court, the winding-up petition be deemed to have been refused.

Amalgamated Properties of Rhodesia (1913) Limited (Chancery Division) C.A. 1917, page 115; W.T. Henley's Telegraph Works Co. Ltd., Calcutta v. Gorakhpur Electric Supply Co. Ltd., Allahabad AIR 1936 All. 840; National Bank of Pakistan v. The Punjab National Silk Mills Ltd. and others PLD 1969 Lah. 194; The United Bank Ltd. and others v. Messrs Pakistan Wheat Products Ltd. and others PLD 1970 Lah. 235; Mrs. Sabiha Shahid Raza v. Ahmad Construction Company (Private) Limited PLD 1990 Kar.191; Mulla Abdullabhai and 9 others v. Saria Rope Mills Ltd. PLD 1971 Kar. 597; Messrs Khyber Textile Mills Ltd. v. M/s. Allied Textile Mills Ltd. 1989 CLC 1167; Federation of Pakistan v. The Standard Insurance Company Ltd., Karachi PLD 1986 Kar. 409; Pakistan Industrial Credit and Investment Corporation Limited, Karachi v. Messrs Bawany Industries Limited, Karachi PLD 1998 Kar. 45; United Bank Limited v. Golden Textile Mills Limited PLD 1998 Kar.330; K. F. Development Corporation Ltd. v. Messrs Dawood Cotton Mills Ltd. 1999 MLD 3260; China Annang Construction Corporation through Project Manager v. K.A. Construction Co. through Attorney 2001 SCMR 1877; Messrs Taj Construction Company v. Federation of Pakistan and 9 others PLD 1982 Kar. 378; Usman and another v. Haji Omer Haji Ayub and others PLD 1966 SC 328; K.K.A. Ponnuchami Goundar v. Muthusami Goundar and another AIR 1942 Mad. 252; Messrs Shreeram Finance Corporation v. Yasin Khan and others AIR 1989 SC 1769; Abdul Jamil v. Registrar of Trade Unions, West Pakistan, Lahore and another 1971 PLC 507 ref.

(n) Companies Ordinance (XLVII of 1984)---

----Ss.306, 305, 314 & 452---Petition for winding-up of Company---Inability of the Company to pay its debts--­Preliminary objection to the maintainability of the winding­-up petition was taken by the Company to the effect that the creditor had failed to comply with the requirement of S.452, Companies Ordinance, 1984---Validity---Company had neither in arbitration proceedings, nor in suits had raised such objection nor appeal was founded thereon---Such objection having been raised for the first time at the stage of winding-up petition was set at rest in the High Court appeal, more so the requisite compliance had been made by the creditor---By entertaining such objection which had been set at rest in High Court appeal, Company Judge would be overstepping his jurisdiction.

Shahid Anwar Bajwa for Petitioner.

Kazim Hassan for Respondent.

Date of hearing: 26th February, 2003.

2003 C L D 1094

[Karachi]

Before Sabihuddin Ahmed and Ali Aslam Jafri, JJ

M. SALEEM SHEIKH---Petitioner

Versus

STATE BANK OF PAKISTAN through Governor and another---Respondents

Constitutional Petitions Nos.525 and 669 of 2002, decided on 11th November, 2002.

(a) Banking Companies Ordinance (LVII of 1962)---

----Ss. 41-C & 41-A---Power of State Bank of Pakistan to remove Directors or other managerial persons from the office of Banking Company---Limitations---No order under S.41-A, Banking Companies Ordinance, 1962 shall be made except by the Governor of the State Bank of Pakistan on a report by Standing Committee---Any person or Bank aggrieved by an order of the Governor of the State Bank of Pakistan under S.41-A of the Ordinance may appeal to the Central Board of Directors whose decision shall be final.

(b) Banking Companies Ordinance (LVII of 1962)---

----Ss.41-C & 41-A---Power of the State Bank of Pakistan to remove Directors or other managerial persons from office of Banking Company---Scope---Regulatory power to safeguard the interests of a Banking Company or its depositors to secure proper management of Banks in the public interest vests in the State Bank in terms of S.41-A of the Banking Companies Ordinance, 1962---Provisions of S.41-C of the Ordinance, however, deal with the manner of exercise of such power and postulate three things that Standing Committee set up by the State Bank of Pakistan is required to examine the affairs of a Bank and no order of removal can be passed in the absence of a report of such Committee; that thereafter an order of removal can be made by the Governor of the State Bank of Pakistan giving the person opportunity of being heard and that an order of removal is subject to the incidents of an appeal to the Central Board of Directors.

(c) Banking Companies Ordinance (LVII of 1962)---

----Ss.41-A & 41-C---Constitution of Pakistan (1973), Art. 199---Constitutional jurisdiction of High Court ---Scope--­Existence of alternate remedy---Requirements---Removal of Directors or other managerial persons of a Banking Company by the State Bank of Pakistan ---Validity--­Alternate remedy must be equally efficacious and even otherwise Constitutional petition was always entertainable if the necessary factual material upon which an administrative Tribunal could assume jurisdiction did not exist---Whenever an administrative Tribunal unlawfully assumes jurisdiction an aggrieved party could not be required to litigate his grievances in the hierarchy of such Tribunals---If, however, it could be shown that the factual or legal basis upon which jurisdiction was assumed by the State Bank of Pakistan did not exist or if such jurisdiction was assumed not for the purposes laid down in the Banking Companies Ordinance, 1962, but for some other collateral purpose, a petition under Art. 199 of the Constitution could be entertained---If the necessary material or pre-conditions for assumption of jurisdiction did exist but the order passed suffered from a wrong finding of fact or application of law, the aggrieved party would normally be required to avail the alternate remedy provided in the statute before approaching the High Court.

(d) Contract--

----Memorandum of Understanding---Not an enforceable contract, its weight as regards the intention of the parties, however, could not be overlooked.

(e) Banking Companies Ordinance (LVII of 1962)---

----S.41-A---Power of the State Bank of Pakistan to remove Directors or other managerial persons from office of Banking Company---Nature and scope---Provision of S.41-A, Banking Companies Ordinance, 1962 enables the State Bank of Pakistan to take both punitive and preventive, action in the interest of the Banking Company, its depositors or the public---Not necessary for State Bank of Pakistan to wait till a person actually causes loss and once it is shown that he had all the intentions of doing so the power to remove could be exercised in a proper case.

(f) Banking Companies Ordinance (LVII of 1962)---

----Ss.41-C & 41-A---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Shareholder of a Banking Company was always entitled to disinvest his shares at such price as may be offered to him and persons holding controlling shares in the Company are mostly found at certain premium over and above the price offered to ordinary shareholders---Employees purchasing the shares of the Bank, in the present case, were restrained from disposing them of for a period of five years from the date of privatization of the Bank---Memorandum of Understanding was admittedly signed after the said period and nothing was placed on record to show any prohibition or illegality in such a transaction---Fact that some shareholders might be able to secure a much higher price for their shares on account of their privileged position in the Banking Company might offend one's ethical susceptibilities but such was the rule in market economy and in the absence of any legal prohibition no objection to such transaction could be sustained---Nothing was available on the record to indicate that the action of the shareholders of the Banking Company holding privileged position and other Directors could have possibly led to a situation detrimental to the interests of the Banking Company or its depositors---No action on the basis of execution of "Memorandum of Understanding" could be taken, order against the employees of the Bank passed by the State Bank of Pakistan was accordingly set aside by the High Court with an observation that State Bank was at liberty to pass any appropriate order on the basis of relevant grounds and will take into consideration the extent of responsibility of each of the person and thereafter determine whether any action was warranted under S.41-A of the Ordinance.

(g) Banking Companies Ordinance (LVII of 1962)---

----S.41-A(1)(3)---Constitution of Pakistan (1973), Art.199, 4 & 23---Constitutional petition---Powers of State Bank of Pakistan to remove Directors or other managerial persons from office of Banking. Company---Provisions of S.41-A(1) & (3) of the Banking Companies Ordinance, 1962 confer a power upon the, State Rank of Pakistan not merely to remove a person from its existing employment but to prohibit him from taking part in the management of any other Banking Company which intends to deprive a person of his means of livelihood and therefore, must be construed very strictly--­Employees of the Bank who were also its shareholders and were in a privileged position in the Bank sold their shares at premium price---Effect---Action of State Bank of Pakistan under S.41-A, Banking Companies Ordinance, 1962, held, was not justified---Principles.

Section 41-A(1) and (3) confers a power upon State to remove a person from its existing to prohibit him from taking part in the any other Banking Company. It intends to deprive a person of his means of livelihood and therefore, must be construed very strictly. Moreover Article 4 of the Constitution guarantees that no person shall be prevented from or be hindered in doing that which is not prohibited by law and Article 23 guarantees a fundamental right to acquire, hold and dispose of property subject to the Constitution and any reasonable restriction imposed by law in the public interest. Therefore, a removal in the public interest under section 41-A of the Banking Companies Ordinance on the ground that the persons holding privileged position in the Banking Company sold their shares on premium price, could only be effected if a restriction on the transfer of shares had been imposed by law. Likewise the expression "otherwise undesirable" in section.41-A(1) (a) has to be read ejusdem generis with the earlier words detrimental to the interest of the Banking Company or its depositors and not public power of such drastic nature could be exercised on the ground that the Governor State Bank considers a person's association with the Bank to be undesirable for any subjective reasons. Impugned action could not be taken on the basis of the ground.

(h) Banking Companies Ordinance (LVII of 1962)---

---S.41-A(1)(3)---Constitution of Pakistan (1973), Art.199--­Constitutional petition-- Power of State Bank of Pakistan to remove Directors or other managerial persons from the office of a Banking Company---Pre-conditions---Material on record, in the present case, indicated that extremely liberal financing was granted to a Company .which had even earlier defaulted in payment of dues of the Bank and that such company purchased or agreed to purchase shares of the Bank held by some Directors and Senior Executives of the Bank at a price much higher than the normal price of such shares---Section 95, Companies Ordinance, 1984 prohibited a company from advancing loans or financial assistance or purchase of its own shares---Interests of the depositors, in circumstances, were being compromised by advancing loans to a defaulter for which some Directors and persons in the senior management obtained an advantage by exercising their management, powers---Relevant pre-conditions for exercise of power by the State Bank of Pakistan under S.41-A, Banking Companies Ordinance, 1962 did exist in respect of the allegations, in circumstances.

(i) Banking Companies Ordinance (LVII of 1962)---

----S.41-A---Constitution of Pakistan (1973), Art.199--­Constitutional petition---Power of State Bank of Pakistan to remove Directors or other managerial persons from the office of Banking Companies---Facts necessary for taking penal action under S.41-A, Banking Companies Ordinance, 1962 was established or otherwise was basically a question of fact and High Court, under its Constitutional jurisdiction did not normally enter into such controversies whenever alternate remedies were available---Contention of the petitioner was that the alternate remedy in terms of S.41-C, Banking Companies Ordinance, 1962 was only illusory as the Appellate Authority i.e. the Central Board of Directors of the State Bank of Pakistan was headed by the Governor himself who had passed the impugned order and the very concept of an appeal to a higher forum would be destroyed in case he was called upon to preside over a forum where his own decision was questioned: petitioner therefore urged that the Central Board of Directors was a fairly autonomous body after the enactment of State Bank of Pakistani (Amendment) Act, 1994, it would be appropriate that appeal against the impugned order be heard by the Central Board of Directors where the Governor should exclude himself from participating---Validity---High Court directed that, in case, the aggrieved persons were to invoke the appellate jurisdiction of the Central Board of Directors of the State Bank of Pakistan, the Governor of the State Bank of Pakistan will not participate in the hearings and decision ­making process of such appeals- --Interim order already passed by the High Court would remain operative subject to any decisions or modification of the interim order passed by the Supreme Court in C.P.L. 150 of 2002.

(j) Banking Companies Ordinance (LVII of 1962)---

----S.41-A(1)(3)--Constitution of Pakistan (1973), Art.199--­Constitutional petition-- Order of removal from service passed under S.41-A(1)(3) of the Banking Companies Ordinance, 1962 as a consequence of which the person removed also stood debarred under S.41-A(3) of the Ordinance from taking part in the management of any other Banking Company for the period not exceeding three years---If the period during which such persons had been debarred from being associated with the management of any Bank, had not been specified, the order suffered from lacuna---Principles.

Anwar Mansoor Khan for Petitioner (in C.P.D. No.525 of 2002).

Malik Muhammad Qayyom for Petitioner (in C.P.D. No.669 of 2002).

Khalid Anwar for Respondent No.1. (in both Petitions).

Shahid Anwar Bajwa for Respondent No.2 (in both Petitions).

Date of hearing: 11th November, 2002.

2003 C L D 1112

[Karachi]

Before Shabbir Ahmed, J

GULF COMMERCIAL BANK LIMITED---Plaintiff

Versus

SERENA TEXTILES (PRIVATE) LIMITED and others-- -Defendants

Suit No.B-208 of 2000, decided on 3rd December, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.7(6)---Civil Procedure Code (V of 1908), S.24---Transfer of a case---Pecuniary jurisdiction of High Court---Jurisdiction of High Court under S.24, C.P.C. cannot be equated with transfer of a case by operation of law---Once the suit under law stands transferred in view of S.7(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the same cannot be retained on the ground that conferment of jurisdiction at a higher level on High Court by Financial Institutions (Recovery of Finances) Ordinance, 2001, would not deprive the High Court of its power to proceed with the matter less than the lower pecuniary limit of High Court.

United Bank Ltd. v. Jaffer Flour Mills PLD 1985 Lah.541 and Jehangir Khan v. Banking Tribunal, Karachi 2002 CLD 1466 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.2(b)---Jurisdictional value of the suit ---Determination--­Factors---Jurisdictional value of the suit could not be set up on the counter claim through the application for leave to defend the suit which had not been allowed and fate of the counter claim was dependant on the result of the adjudication of said application, though the counter claim, for all purposes, was a separate claim/suit.

Arshad Tayabally for Plaintiff.

Qazi Faez Isa for Defendants.

Date of hearing: 9th December, 2002.

2003 C L D 1117

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and S. Ali Aslam Jafri, J

EXIDE PAKISTAN LIMITED, KARACHI---Appellant

Versus

PAKISTAN ACCUMULATOR (PVT.) LTD., ISLAMABAD and 3 others---Respondent

High Court Appeal No. 143 of 1995, decided on 27th January, 2003.

Trade Marks Act (V of 1940)---

----S. 25---Specific Relief Act (1 of 1877), Ss.73, 42, 54 & 55---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2--­Law Reforms Ordinance (XII of 1972), S.3---High Court appeal---Suit for permanent injunction, mandatory injunction, accounts and damages tentatively assessed at Rs. 500, 00, 000 was filed by the plaintiff with an application under O.XXXIX, Rr.1 & 2, C.P.C. seeking interim injunction against the defendants restraining them from manufacturing, selling and advertising the goods under the infringed "trade mark" or from using the word "Chloride Volta" or from using the word mark/name "Chloride" independently or in conjunction with any other word till pending decision of suit---Application for grant of injunction was dismissed by the High Court in its original jurisdiction on the grounds that there was no prima facie case in favour of the plaintiff who had failed to show that its case attracted the test laid down under the settled law on the subject to enforce its rights to a trade mark; that the plaintiff had also failed to show as to whether the defendant had deceived the public into thinking the products as those of the plaintiff or the public was likely to believe tote same, specially when the plaintiff had given up the user of said word and "Chloride" IBL had entered into such agreement with the defendant; that the application was also found to be suffering from laches and that the plaintiff had already prayed for damages hence where a party could be compensated monetarily, such loss could not be described to be irreparable---Validity---No efforts appeared to have been taken by the plaintiff either for early disposal of the appeal, objection to the adjournments or by making any other application for grant of interim relief since 21-11-1996, particularly when more than six years had passed and the appeal was at the same stage where it was filed---Such situation neither showed any urgency in the matter nor justification for grant of interim relief by way of a restraint order---While granting or refusing of an equitable relief the Court had to take into consideration the conduct of the parties as well ---Merits of the case also did not demand; at the present stage, exercise of discretion by -the Court in favour of the plaintiff as neither there appeared to be a prima facie case in his favour nor balance of convenience nor irreparable loss was likely to be caused to him as he had already claimed damages and assessed the alleged loss in terms of money---High Court, in circumstances, dismissed the appeal with the observation that defendants should cooperate with the plaintiffs for disposal of the pending suit at the earliest.

Khalil Kazilbash for Appellant.

Nadeem Akhtar for Respondents.

Date of hearing: 17th January, 2003.

2003 C L D 1129

[Karachi]

Before S. Ahmed Sarwana and M. Mujeebullah Siddiqui, JJ

MUHAMMAD YOUNUS---Petitioner

Versus

STATE BANK OF PAKISTAN and another---Respondents

Constitutional Petition No.2680 of 1992, decided on 31st January, 2003.

(a) Foreign Exchange Regulation Act (VII of 1947)---

----Ss.12(1) & 23-B---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Failure to repatriate sale proceeds within specified time---Proceedings against exporters---Jurisdiction of Adjudicating Officer---Exporters had given undertaking on Form 'E' that they would deliver to the State Bank of Pakistan, the Foreign Exchange proceeds of the goods exported, within four months from the date of the shipment/dispatch---Exporters did not approach Pakistan Embassy/Trade Mission, Foreign Chamber of Commerce for recovery of the sale proceeds nor commenced legal proceedings for recovery of the same against the buyer in the country of export---Adjudicating Officer initiated proceedings against the exporters under S.23-B of Foreign Exchange Regulation Act, 1947, and imposed penalty on them---Plea raised by the exporters was that in contravention of S.12(1) of Foreign Exchange Regulation Act, 1947, proceedings under S.24(2) of Foreign Exchange Regulation Act, 1947, were applicable---Validity---All proceedings conducted by the officers of State Bank of Pakistan for violation, of S.12(1) of Foreign Exchange Regulation Act, 1947, by exporters were within the jurisdiction of the officers appointed/designated by the State Bank under S.23-B of Foreign Exchange Regulation Act, 1947---Promise made by the exporters was to do certain act i.e. to deliver the value of the exported goods in Foreign Exchange to the State Bank of Pakistan--: Fulfilment of promise of delivery of Foreign Exchange was a unilateral act---To prove the contravention of the undertaking, it was not necessary for State Bank of Pakistan to prove any of the exporters with any other person---Failure to fulfil the undertaking by itself was a clear-cut proof of th9 contravention of the promise and the provisions of S.24(2) of Foreign Exchange Regulation Act, 1947, were not applicable to the circumstances of the case--exporters had contravened the provisions of S.12(1) Foreign Exchange Regulation Act, 1947, and were rightly proceeded against and penalized under S.23-B of Foreign Exchange Regulation Act, 1947---High Court in exercise of Constitutional jurisdiction declined to interfere with the penalty imposed by Adjudicating Officer---Petition was dismissed in circumstances.

1971 SCMR 642 and 1968 SCMR 323 distinguished.

1994 SCMR 2123; 1998 SCMR 1404; 1998 SCMR 383; 2001 MLD 1554 and Hoosen Dawood & Company v. Government of Pakistan Civil Petition No.138-K of 1992 ref.

(b) Foreign Exchange Regulation Act (VII of 1947)---

----Ss.23 & 23-B---provisions of Ss.23 & 23-B of Foreign Exchange Regulation Act, 1947---Distinction---Contravention of any provision of the former makes the same a penal offence punishable with imprisonment while those of the latter are very specific in nature and make the contravention of certain specified provisions of Foreign Exchange Regulation Act, 1947, subject to payment of penalty.

(c) Foreign Exchange Regulation Act (VII of 1947)---

----Ss.12(1), 23-B & 24(2)---Failure to repatriate sale proceeds within specified time---Proceedings against exporter---Procedure---Exporters giving an undertaking to repatriate the sale proceeds within the prescribed time as required by S.12(1), Foreign Exchange Regulation Act, 1947 and in case of any delay in receiving the remittance could and should have approached Pakistan Embassy/Trade Mission, Foreign Chamber of Commerce for recovery of the sale proceeds or commenced legal proceedings for recovery of the same against the buyers in the country of export---If the exporters were unable to realize the export proceeds, they should have proved in the proceedings that it was beyond their control by bringing on record evidence that they took all possible steps for recovery of the sale proceeds of the export---Effect---By not bringing in the sale proceeds within the prescribed time, the exporters contravened the provisions of S.12(1) of Foreign Exchange Regulation Act, 1947, which was liable to punishment as provided therein--­Exporters having not done so made themselves liable to be prosecuted and penalized under S.23-B of Foreign Exchange Regulation Act, 1947.

1971 SCMR 642 and 1968 SCMR 323 distinguished.

A.R. Akhtar for Petitioners (in C.P. No.D-2293 of 1997)

Khalid Farooqui for Petitioners (in C.Ps. Nos.D-1051 of 1992, 1132 to 1140 of 1995, 1175 to 1182 of 1995, 1736 and 1745 of 2000).

Abdul Qadir Khan for Petitioners (in C.P. No.D-124 of 1996).

H.A. Rehmani, I.H. Zaidi and Abrar Hassan for Respondents.

Nadeem Azhar Siddiqui, D.A.-G. (on Court's Notice).

Dates of hearing: 1st and 2nd October, 2002.

2003 C L D 1149

[Karachi]

Before Zahid Kurban Alavi, J

MUSLIM COMMERCIAL BANK LIMITED---Plaintiff

Versus

Messrs JUNAID COTTON MILLS LIMITED and others---Defendants

Suit No.255 of 1994, decided on 13th January, 2003.

Civil Procedure Code (V of 1908)---

----O.XXXIV & O.XXXVII, Rr.1, 2---Recovery of Bank loan--­Mortgage of property without consent of owner of the property---Bank had failed to break the evidence of the defendant owner of mortgaged property who had in turn succeeded to prove that the mortgage had been created on her property without her permission and knowledge--­Effect---Even an equitable mortgage could only be created by a person who was in position to obtain loan after submission of title documents of his or her own property by way of security---Property belonged to the defendant/owner who had not given any documentary consent to allow her property's title paper to be handed over to the Bank for creation of an equitable mortgage---Most of the statements made by the defendant/owner had gone unchallenged and un-rebutted---Suit was dismissed against the defendant/ owner in circumstances.

Rizwan Ahmed Siddiqui for Appellant.

Saleem Thandawalla for Respondent.

Date of hearing: 11th December, 2002.

2003 C L D 1159

[Karachi]

Before Sabihuddin Ahmed and Amir Hani Muslim, JJ

KIRAN SUGAR MILLS (PVT­.) LIMITED ---Appellant

Versus

BANKER EQUITY LIMITED and others---Respondents

High Court Appeals Nos.284 and 295 of 2002, decided on 29th November, 2002.

(a) Civil Procedure Code (V of 1908)---

---O.XXI, R.66---Proclamation of sale by public auction--­ shown in the proclamation of sale/public notice---Effect---Mere fit that reserve price was not shown, the same would not per se vitiate the sale.

Ghulam Abbas v. Zuhra Bibi and another PLD 1972 SC 337 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.22---Civil Procedure Code (V of 1908), O.XXI, Rr.66, 89, 90 & 92---Auction sale, setting ash of --Appellant claimed to be the highest bar and his grievance was that the auction was confirmed in favour of the Party who was lower in bid to the appellant---Offer made by the appellant was much higher, but he was willing to make payment only, through instalments to be staggered for a period of sixteen years---Net amount, the appellant was willing to pay was Rs.50 millions and he was not even prepared to furnish tangible security for the balance amount---Only securities offered were to the extent of Rs.100 millions in the form, of mortgage of agriculture property---Auction-purchaser had made cash offer for an amount of Rs.460 millions and he auction was confirmed in his favour---Validity---Object of auction sale is to facilitate payment of amounts due to decree-holders which would be substantially defeated if only a very insignificant amount is collected through auction sale to satisfy their debts---None of the decree-holders had questioned the sale-Order passed by Court was un­exceptionable and High Court declined to interfere with the same in appeal---Appeal was dismissed in circumstances.

Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited PLD 1993 Lah. 706 and Shahida Saleem v. Habib Credit and Exchange Bank Limited 2001 CLC 126 ref.

Khalid Javed Khan for Appellants (in H.C.A. No.284 of 2002).

Arshad Tayabally for Appellants (in H.C.A. No.295 of 2002).

Ali Bin Adam Jafri for Respondent No.5.

Rizwan Ahmed Siddiqui and Jaffer Sial for C.

Bashir Ahmed Official Assignee.

Date of hearing: 28th November, 2002.

2003 C L D 1185

[Karachi]

Before Ata-ur-Rehman, J

M. WAQAR MONNOO, MEMBER, CENTRAL MANAGING COMMITTEE---Plaintiff

Versus

ALL PAKISTAN TEXTILE MILLS ASSOCIATION through C. E.O. and 3 others---Defendants

Suit No. 1346 of 1999, decided on 7th January, 2000.

(a) Specific Relief Act (I of 1877)----

----Ss.42 & 54---Civil Procedure Code (V of 1908), O. VII, R.11---Arbitration Act (X of 1940), Ss.30, 32, 33 & 46--­Trade Organizations Ordinance (XLV of 1961), S.12---Suit for declaration and injunction---Rejection of plaint---Suit challenging election of zones of a trade body and validity of award passed by Arbitration Tribunal pending for making same a rule of Court---Validity---Plaint touched questions of election, which could only be resolved under provisions of S.12 of the Trade Organizations Ordinance, 1961 and not through suit---Reliefs sought by plaintiff in respect of award could only be questioned under Ss.30 & 33 of Arbitration Act, 1940 and not through suit---Relief seeking to declare award as illegal and mala fide was hit by S.32 of Arbitration Act, 1940---Defendant was a registered trade body under the Trade Organizations Ordinance, 1961 and plaintiff being member of the same under its Articles of Association it was bound by provisions of ,arbitration applicable to defendant---Plaintiff thus, could not agitate that he was not a party to arbitration proceedings before Arbitration Tribunal---All reliefs claimed in plaint were hit by S.12 of the Trade Organizations Ordinance, 1961 and S.32 of Arbitration Act, 1940---Plaint could not be rejected in part under O. VII, R.11, C.P. C. as reliefs sought were dependent on and connected with each other---High Court rejected plaint in circumstances.

Badrinarain Otherwala v. Pak Jute Balers Limited PLD 1970 SC 43; Awan Industries v. The Executive Engineer, Lined Channel Division and another 1992 SCMR 65; Province of Sindh v. Muhammad Sabir Khan 1987 CLC 668; Faiz & Sons Clearing and Forwarding Agents v. The Secretary to the Government of N.-W.F.P. 1988 CLC 1408; Abdul Razzak Rajwani v. Messrs M.Y. Industries Civil Appeal 13-K of 1986; Khalid Tawab and another Shaikh Maqbool Ahmed and others 1986 MLD 335; Abbasia Cooperative Bank (now Punjab Provincial Cooperative Bank Limited) and another v. Hakeem Hafiz Muhammad Ghaus and others PLD 1997 SC 3; Mst. Wazir Begum v. Muhammad Nazir and others 1999 SCMR 1299; Sardar M. Jamil Khan Leghari v. Sardar Zulfiqar Ali Khan Khosa PLD 1997 Lah. 250; Muhammad Rafiq Tarrar v. Justice Mukhtar Ahmed Junejo, Acting Chief Election Commissioner of Pakistan and others PLD 1998 Lah. 461; Aftab Shaban Mirani v. President of Pakistan and others 1998 SCMR 1863; Miss Benazir Bhutto v. Federation of Pakistan and another PLD 1988 SC 416; Election Commission of Pakistan v. Javaid Hashmi and others PLD 1989 SC 396; Bahar Khan Ghori v. Election Tribunal No. 1, Karachi and others 1998 CLC 1304; Mian Muhammad Shahbaz Sharif v. Ch. Muhammad Altaf Hussain, Governor of Punjab, Lahore and others PLD 1995 Lah. 541; Haji Tayab and others v. Eastern Textile Mills Limited, Chittagong and others PLD 1970 Kar. 357; Province of Balochistan through Secretary, Government of Balochistan, Communication and Works Department, Quetta and another v. Haji Muhammad Hassan and another 1988 CLC 1583; 1988 CLC 1592; Muhammad Unis Ellah Sethi and another v. Federation of Pakistan, Chamber of Commerce and Industries 1996 CLC 1226; Mst. Iqbal Begum v. S. Ashraf Pervaiz and others PLD 1978 Lah. 1253; Mumtaz Begum and another v. Hafiz Abdul Muqtadir and others PLD 1982 Kar. 783; Mst. Resham Jan v. Allah Ditta and others 1980 CLC 739 and Malik Umar Hayat Tiwana and others v. Malikani Sahibzadi Tiwana NLR 1979 Civil 75 distinguished.

(b) Trade Organizations Ordinance (XLV of 1961)---

----Ss.12 & 9(2)(e)---Provisions of S.12 of the Trade Organizations Ordinance, 1961--Scope and object---Word "election" used in S.12 of the Ordinance would mean any question pertaining to election of registered trade body--­Such question could be resolved through following procedure laid down therein---Not correct to contend that S.12 was confined to post election disputes as same were covered by S. 9(2)(e) of the Ordinance.

(c) Civil Procedure Code (V of 1908)---

----O. VII, R.11---Rejection of plaint in part---Scope---Plaint could not be rejected in part, where plaintiff was seeking reliefs which were dependent on and connected With each other.

(d) Arbitration---

---- Trend of registered associations/societies to resort to litigation instead of resolving disputes through procedure/forums prescribed by their Articles of Association, thus, frustrating very purpose for which associations/societies were formed---Such trend was deprecated.

Abdul Razzak Rajwani v. Messrs M.Y. Industries Civil Appeal No. 13-K of 1986 rel.

Muneer A. Malik and Ziaul Haq Makhdoom for Plaintiff.

Makhdoom Ali Khan and Khalid Jawed Khan for Defendant No. 1.

Khalid Jawed for Defendant No.2.

Nemo for Defendant No.3.

H.A. Rehmani for Defendant No.4.

Date of hearing: 4th December, 1999.

2003 C L D 1200

[Karachi]

Before Sabihuddin Ahmed and Amir Hani Muslim, JJ

KAISAR SHAFIULLAH---Petitioner

Versus

GOVERNMENT OF PAKISTAN through Secretary, Ministry of Commerce and others---Respondents

Constitutional Petition No.D-1322 of 2000, heard on 13th November, 2002.

(a) Imports and Exports (Control) Act (XXXIX of 1950)---

----S.3(1)---Past performance of exporter---Allocation of quota on the basis of past performance---Unlawful denial of available quota to exporter in previous year---Right of exporter to claim adjustment---Damage caused to business of exporter due to such denial---Remedy of exporter--­Principles.

An exporter would be entitled to quantum of quota earned on basis of past performance. At the same time, the quantum unlawfully denied need not be granted immediately upon declaration of denial invalid, but needs to be staggered over a reasonable period of time, so as to facilitate the authorities in making adjustments due to the overall limitation of available quota as well as to enable such exporter to procure the goods within a reasonable time. At the same time, when it is not possible to compensate the exporter for the damage caused to his business for proceedings like the present one, he may be free to move an appropriate Civil Court.

1994 SCMR 859 ref.

(b) Practice and procedure---

---- Person is not entitled to any premium over his wrongful acts.

(c) Administration of justice---

---- Public powers have to be exercised fairly and honestly.

(d) Administration of justice---

---- Act of Court should prejudice no one.

Shoukat Hayat for Petitioner.

Afsar Abidi for Respondents Nos. 1 to 3.

Khalid Jawaid for Respondent No.4.

Date of hearing: 13th November, 2002.

2003 C L D 1209

[Karachi]

Before Shabbir Ahmed, J

Inure: PFIZER LABORATORIES LTD. and another

Judicial Miscellaneous No. 29 of 2001, decided on 26th June, 2002.

(a) Companies Ordinance (XLVII of 1984)---

----Ss.284, 285, 286 & 287---Compromise or arrangement proposed between a company and its creditors or any class of creditors or between a company and its members or any class of members would also take in its sweep any scheme of amalgamation/ merger of one company with another--­Functions, powers and jurisdiction of Company Court, which was called upon to sanction such a scheme---Scope, nature of jurisdiction and its broad contours stated elaborately.

The provisions of the Companies Ordinance, 1984 show that compromise or arrangement can be proposed between a company and its creditors or any class of them, or between a company and its members or any class of them. Such a compromise would also take in its sweep any scheme of amalgamation/merger of one company with another. When such a scheme is put forward by company for the sanction of the Court, in the first instance the Court has to direct holding of meetings of creditors or class of creditors or members or class of members who are concerned with such a scheme and once the majority in. number representing three fourth in value of creditors or class of creditors, or members or class of members, as the case may be, present and voting either in person or by proxy at such a meeting accord their approval to any compromise or arrangement thus put to vote, and once such compromise is sanctioned by the Court, it would be binding to all creditors or class of creditors, or members, as the case may be, which would also necessarily mean that even to dissenting creditors or class of creditors or dissenting members of class of members such sanctioned scheme would remain binding. Before sanctioning such a scheme even though approved by a majority of the concerned creditors or members, the Court has to be satisfied that the company or any other person moving such an application for sanction under subsection (2) of section 284 has disclosed all the relevant matters mentioned in the proviso to subsection (2) of that section. So far as the meetings of the creditors or members, or their respective classes for whom the Scheme is proposed are concerned, it is enjoined by section 286(i)(a) that the requisite information as contemplated by the said provision is also required to be placed for consideration of the concerned voters so that the parties concerned before whom the scheme is placed for voting can take an informed and objective decision whether to vote for the scheme or against it. On a conjoint reading of the relevant provisions of sections 284 and 286, it becomes at once clear that the Company Court which is called upon to sanction such a scheme has not merely to go by the ipse dixit of the­ majority of the shareholders of creditors of their respective classes who might have voted in favour of the scheme by requisite majority but Court has to consider the pros and cons of the scheme with a view to finding out whether the scheme is fair, just and reasonable and is not contrary to any provisions of law and it does not violate any public policy. This is implicit in the very concept of compromise or arrangement which is required to receive the imprimatur of a Court of law. No Court of law would ever countenance any scheme of compromise or arrangement arrived at between the parties and which might be supported by the requisite majority if the Court finds that it is an unconscionable or an illegal scheme or it is otherwise unfair or unjust to the class of shareholders or creditor for whom it is meant. Consequently, it cannot be said that a Company Court before whom an application is moved for sanctioning such a scheme which might have got the requisite majority support of the creditors or members or any class of them for whom the scheme is mooted by the concerned company, has to act merely as a rubber stamp and must almost automatically put its seal of approval on such a scheme. It is true to say that once the scheme gets sanctioned by the Court it would bind even the dissenting minority shareholders or creditors. Therefore, the fairness of the scheme qua them also has to be kept in view by the Company Court while putting its seal of approval on the concerned scheme placed for its sanction. The question of voidability of the scheme will have to be judged subject to the rider that a scheme sanctioned by majority will remain binding to a dissenting minority of creditors or members, as the case may be, even though they have not consented to such a scheme and to that extent absence of their consent will have no effect on the scheme. It can be postulated that even in case of such a scheme of Compromise and Arrangement put up for sanction of a Company Court it will have to be seen whether the proposed scheme is lawful and just and fair to the whole class of creditors or members including the dissenting minority to whom it is offered for approval and which has been approved by such class of persons with requisite majority vote.

Courts certainly would not act as a Court of appeal and sit in judgment over the informed view of the concerned parties to the compromise as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The Court has neither the expertise nor the jurisdiction to dive deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requisite majority. The Company Court's jurisdiction to that extent is peripheral and supervisory and not appellate. The Court acts like an umpire who has to see that both the teams play their game according to the rules and do not overstep the limits. But subject to that how best the game is to be played is left to the players and not to the umpire.

Section 285, Companies Ordinance, 1984 deals with post-sanction supervision, but the said provision itself clearly earmarks the field in which the sanction of the Court operates. It is obvious that the supervisor cannot ever be treated as the author or a policy maker. Consequently, the propriety and the merits of the compromise or arrangement have to be judged by the parties who as sui juris with their open eyes and fully informed about pros and cons of the Scheme arrived at their own reasoned judgment and agree to be bound by such compromise or arrangement. The Court cannot, therefore, undertake the exercise of scrutinizing the scheme placed for its sanction with a view to finding out whether a better scheme could have been adopted by the parties. This exercise remains only for the parties and is in the realm of commercial democracy permeating the activities of the concerned creditors and members of the Company who in their best commercial and economic interest, by majority, agree to give green signal to such a compromise or arrangement.

In exercising its power of sanction the Court will see, first, that the provisions of the statute have been complied with, secondly, that the class was fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing the minority in order to promote interest adverse to those of the class whom they purport to represent and thirdly that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of its interest, might reasonably approve.

The Court does not sit merely to see that the majority is acting bona fide and thereupon to register the decision of the meeting, but at the same time, the Court will be slow to differ from the meeting, unless either the class has not been properly consulted, or the meeting has not considered the matter with a view to the interest of the class which it is empowered to bind, or some blot is found in the Scheme.

What the Court has to do is to see, first of all, that the provisions of that statute have been complied with; and, secondly, that the minority has been acting bona fide. The Court also has to see that the minority is not being overridden by a majority having interests of its own clashing with those of the minority whom they seek to coerce. Further than that, the Court has to look at the scheme and see whether it is one as to which persons acting honestly, and viewing the scheme laid before them in the interests of those whom they represent; take a view which can reasonably be taken by businessmen. The Court must look at the scheme, and see whether the Act has been complied with, whether the majority is acting bona fide, and whether they are coercing the minority in order to promote interests adverse to those of the class whom they purport to represent; and then see whether scheme is a reasonable one or whether there is any reasonable objection to it, or such an objection to it as that any reasonable man might say that he could not approve it.

Power of the Court is to be satisfied only whether the provisions of the Act have been complied with or that the class or classes were fully represented and the arrangement was such as a man of business would reasonably approve between two private companies may be correct and may normally be adhered to but when the merger is with a subsidiary of a foreign company then economic interest of the country may have to be given precedence.

Before giving its sanction to a scheme of arrangement the Court will see firstly that the provisions of the statute have been complied with; secondly that the class was fairly represented 'by those who attended the meeting and that the statutory majority is acting bona fide and is not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent, and, thirdly that the arrangement is such as a man of business would reasonably approve.

Courts normally are satisfied while sanctioning the scheme in respect of following matters:--

(i) The Court should be satisfied that the resolution is passed by the statutory majority in value and in number in accordance with section 284(2) of the Ordinance at a meeting or meetings duly convened and held. The factor is jurisdictional in the matter of confirmation of the Scheme. The Court should not usurp the right of the members or creditors to decide whether they approved the scheme or not. Therefore, if a class whose interests are affected by a scheme does not assent to the scheme or approves it at a meeting convened in accordance with the provisions of section 284, the Court will have no jurisdiction to confirm the scheme, even if it considers that the class concerned is being fairly dealt with or that it would approve the scheme.

(ii) The Court should satisfy itself that those who took part in the meeting are fairly representative of the class and that the statutory meeting did not coerce the minority in order to promote the adverse interest of those of the class whom they purport to represent.

(iii) There should not be any lack of good faith on the part of the majority.

The correct approach to the case is (i) to ascertain whether the statutory requirements have been complied with and (ii) to determine whether the scheme as a whole has been arrived at by the majority bona fide and in the interest of the whole body of shareholders in whose interests the majority purported to act, and (iii) to see whether the scheme is such that a fair and reasonable shareholder will consider it to be for the benefit of the company and for himself. The scheme should not be scrutinized in the way a carping critic, a hair-splitting expert, a meticulous accountant or a fastidious counsel would do it, each trying to find out from his professional point of view what loopholes are present in the scheme and what technical mistakes have been committed. It must be and tested from the point of view of an ordinary reasonable shareholder, acting in a businessman like manner, taking within his comprehension and bearing in mind all the circumstances prevailing at the, time when the meeting was called upon to consider the scheme in question. Whilst, in some rare and exceptional cases the Court may take into consideration the company or the shareholders, as a general rule, the circumstances which were in existence at the time when the scheme was formulated, deliberated upon and approved. If any other approach were to be made, then, in that case, there would be no sanctity about business contracts. In fact, such an approach may induce interested person to shape future events and circumstances in such a way as to convert a reasonable scheme into an unreasonable one.

While powers of the Court to approve or disapprove mergers are broad, they are neither unlimited nor arbitrary. Judicial pronouncements have highlighted some obvious constraints. At the outset, it is to be ascertained whether the necessary requirements of law have been satisfied. Thus, the Court has to see whether the resolution (s) have been passed by the requisite majority, taking into account the value as well as the number of the shareholding. Here it is to be ensured that the members participating in the meeting(s) and coming up with the resolution(s) were real representatives of the class to which they belonged. Equally, important is the determination that the majority, which came to register itself, acted bona fide and in the interests of the general body of shareholders and that the minority was neither coerced nor victimized. As to victimization, the Court is to cautiously address the question whether the merger is not calculated to neutralize and render toothless an effective minority, in contemplation of the various provisions of the Companies Ordinance, which expressly postulate a negative veto as also certain specific remedies, within the grasp of minimum percentage of minority shareholders and not of others. Correspondingly, the Court should be satisfied that the scheme is not only fair but also reasonable from the point of view of a neutral observer. Everything apart, in all schemes and proposals of corporate mergers larger interests of the society, as secured by the Constitution and law have to be safeguarded.

It is a matter for the shareholders to consider commercially whether amalgamation or merger is beneficial or not. The Court is really not concerned with the commercial decision of the shareholders until and unless the Court feels that the proposed merger is manifestly unfair to other shareholders. Whether the merged companies will be ultimately benefited or will be able to economize in the matter of expenses is a matter for the shareholders to consider. If three companies are amalgamated, certainly, there will be some economies in the matter of maintaining accounts, filing of returns and various other matters. However, the Court is really not concerned with the exact details of the matter and if the shareholders approved the scheme by the requisite majority then the Court only looks into the scheme as to find out that it is not manifestly unfair and/or is not intended to define or do injustice to the other shareholders.

The jurisdiction of the Court in sanctioning claim of merger is not to ascertain with mathematical accuracy if the determination satisfied the arithmetical test. A Company Court does not exercise an appellate jurisdiction.

Statute casts an obligation on the Court to be satisfied that the scheme for amalgamation or merger was not contrary to public interest. The basic principle of such satisfaction is none other than the broad and general principles inherent in any compromise or settlement entered between parties that it should not be unfair or contrary to public policy or unconscionable. In amalgamation of companies, the Courts have evolved the principle of prudent business management test or that the scheme should not be a device to evade law. But when the Court is concerned with a scheme of merger with a subsidiary of a foreign company then test is not only whether the scheme shall result in maximizing profits of employees and their interest was protected but it has to ensure that merger shall not result in impeding promotion of industry and shall not obstruct growth of national economy. Liberalized economic policy is to achieve this goal. The merger, therefore, should not be contrary to this objective.

The scope and ambit of the jurisdiction of the Company Court has clearly got earmarked. The following broad contours of such jurisdiction have emerged:--

(i) The sanctioning Court has to see to it that all the requisite statutory procedure for supporting the requisite meetings as contemplated by section 284(1) have been held.

(ii) That the scheme put up for sanction of the Court is backed up by the requisite majority vote as required by section 284(2).

(iii) That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class.

(iv) That all necessary material indicated by section 286(1(a) is placed before the voters at the concerned meetings as contemplated by proviso to section 284(1).

(v) That all requisite material contemplated by the proviso to subsection (2) of section 284 of the Ordinance is placed before the Court by the concerned applicant seeking sanction for such a scheme and the Court gets satisfied about the same.

(vi) That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is .not contrary to public policy. For ascertaining the real purpose underlying the Scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same.

(vii) That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising of the same class whom they purported to represent.

(viii) That the Court has to examine the scheme on its merits and is not bound to treat the scheme as a fait accompli. In doing so the Court would not be substituting its own judgment for the commercial judgment. Willingness on the part of majority in number representing 3/4th in value does not affect the jurisdiction of the Court to refuse sanction, though such fact would be a strong circumstance in favour of sanctioning the scheme by Court.

(ix) That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant.

Once the aforesaid broad parameters about the requirement of a scheme for getting sanction of-the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction.

Companies Act by Bucklay, 14th Edn.; In re: Alabama, New Oreans Texas and Pacific Junction Railway Company (1891) Ch. D 213; In re: Hoare & Co. Ltd. 1933 All ER Rep. 105 Ch. D; In re: Bugle Press Ltd. 1961 Ch. 270; In re: Anglo-Continental Supply Co. Ltd. (1992) 2. Ch. 723; In re: Lipton (Pakistan) Ltd. 1989 CLC 818; Sidhpur Mills Co. Ltd.'s case AIR 1962 Guj. 305; Brooke Bond Pakistan Ltd. v. Aslam Bin Ibrahim 1997 CLC 1873; Aslam Bin Ibrahim v. Monopoly Control Authority PLD 1998 Kar. 295; Mankam Investments Ltd. (1995) 4 Comp. LJ 330 (Cal.) and Hindustan Lever Employees' Union v. Hindustan Lever Ltd. (1995) 1 Supp. SCC 499 and AIR 1994 SCW 4701 ref.

(b) Companies Ordinance (XLVII of 1984)---

----S.284(1)---Companies (Court) Rules, 1997, R.55---Sindh Chief Court (O. S.) Rules, R. 953---Scheme of arrangement--­Classification of shareholders---Separate meeting---Sanction by the Company Court---Meeting of the members of the companies under the directions of Company Court Discretion of the Court---Scope---Where the objectors had failed to make out a case for holding separate meeting of dissenting minority equity shareholders represented by, them, their prayer to order the meeting of such members by the Company Court was not sustainable.

The objectors, in the present case, contended that the meeting of members under the direction of Court is mandatory in terms of section 284(1) read with Rule 55 of Companies (Court) Rules, 1997 and the same is the requirement of Rule 953 of Sindh Chief Court (O.S.) Rules as Court may give such direction as it thinks fit in respect of any of the following matters:--

(a) Fixing the time and place of meeting is to be held.

(b) Appointing the Chairman of the meeting and fixing the quorum.

(c) Mode of giving notice of the meeting by advertisement or by sending notice.

(d) The determination of the values of the members or creditors, as the case may be.

(e) Such other directions as the, Court may consider necessary in the circumstances of the case.

Held, expressions used in section 284(1) are that "the Court may on the application", in summary way of the company or of any creditor or member of the Company or in case of company "order a meeting" of members of the Company "to be called, held and conducted in such a manner as the Court directs". No doubt, such power is discretionary, it is not mandatory for the Court to give direction to convene meeting as contemplated under section 284(1). The application can be dismissed at the initial stage, if the Court thinks for any reason to dismiss the application for directions. It is also true that on application such direction is to be made ex pane but hearing of the application ex parte does not mean that the Court has not to apply its mind or be prima facie satisfied about the merit of the application. The language of section 284(1) is manifestly clear about the position that the discretion rests with the Court in granting application but surely the Court will not pass an order unless it is satisfied that it is a fit case to do so. Rule 55 of the Companies (Court) Rules, 1997 and Rule 954 of Sindh Chief Court (O.S.) Rules point out that the directions are to be given in respect of fixation of time, place of the meeting, appointment of Chairman fixation of quorum, the mode of giving notice of meeting, determination of value of members or creditors and such other directions as the Court may consider necessary in the circumstances. The objects of such directions are only to safeguard the interest of the shareholders.

The importance of the convening of the extra­ordinary general meeting cannot be easily overlooked. The primary organization through which the company functions is the meeting of the shareholders. It is by using their power at meetings that shareholders exercise control over directors. The resolution of the majority, voting at the general meeting, binds the company and its members. The shareholders have to act in accordance with the provisions of the Companies Ordinance as also the Memorandum and Articles of the Company, insofar as the provisions therein are not inconsistent with the Ordinance. The shareholder is not a creditor of the company nor a debenture holder thereof. His rights can only be exercised in accordance with the Ordinance. There may be occasions where the majority acts in a manner oppressive to the rights of the minority shareholders or of any particular shareholder. In such cases the Ordinance has made provision for protecting the rights of the minority or the individual shareholder. The principle upon which this is done is that the shareholders have a fiduciary responsibility to act not in the interests of a majority only but in the interests of the shareholders as a whole. Where this position is abused there is a fraud on the minority, as the term is understood in law, and there need not be necessarily fraud or deceit in the ordinary sense.

The nature of a shareholder's control over the affairs of a company has been the subject of much comment in recent discussions on the subject of company law reforms both in-this country and elsewhere.

The illusory nature of the control theoretically exercised by shareholders over directors has been accentuated by the dispersion of capital among an increasing number of small shareholders who pay little attention to their investments so long as satisfactory dividends are forthcoming, who lack sufficient time, money, and experience to make full use of their rights as occasion arises and who are, in many cases, too numerous and too widely dispersed to be able to organize themselves.

The assumption underlying existing legislation is that shareholders are able to take an active interest in the company's affairs and will always be able to use their voting power to the company's advantage. The assumption may have been justified in earlier days when the capital of the companies was largely in the hands of persons who knew enough about the business of the company to maintain an effective check on the activities of the directors they elected and were able to attend meetings to enforce their views. It is certainly not justified today when the shareholders in public companies are distributed over wide areas, and it is impossible that they can ever be gathered together in one place for attendance at company meetings.

In addition to the factors mentioned above some recent developments in corporate finance e.g. the growth of investment trust companies, have further tended to widen the gap between the ultimate investor and those in charge of the management of his investments, while circumstances in this country have imposed a special handicap on them. The comparative low standard of business knowledge and experience of the average investor, the absence of any well-informed and reliable financial press, and long distances which make it difficult for investors to combine for the exercise of, their rights, have rendered them particularly ineffective.

There are only two ways in which the company law can partially redress the balance in favour of shareholders ­first by the fullest possible disclosure of the facts relating to the promotion, formation and working of joint stock companies; and secondly, by enactment of such suitable provisions for the holding and conduct of company meetings as will enable active and competent shareholders to take an effective part in the business transacted in them.

When a Scheme under section 284 of the Ordinance is sponsored, at the very outset it must come before the Court as the Court has supervision over it at the earliest stage. When it is proposed, the Court can prima facie examine it while granting direction under section 284(1) for convening meeting(s) and the scheme cannot finally go through unless sanctioned under section 284(2). Such supervision cannot be exercised by the Court, unless the scheme is placed before the Court for its direction under section 284(1) for the presentation of the scheme to the members or the creditors, as the case may be, for their approval in a meeting convened under its direction.

The provisions of section 284(1) is not sign-post but check-post whereat it is duty of the Court to examine the scheme for itself. The obligation is greater because such application is ex parte and it is not practicable to give notice to the numerous members of the Company. Therefore, neither post facto approval for such meeting is desirable more particularly when the allegation is of non­disclosure of material facts nor statutory duty enjoins upon the Court can be dispensed with. Accordingly, the High Court upheld the objection, which was fatal to the arrangement.

It is necessary for at least, one class meeting to be held in order to give the Court jurisdiction for the purpose of scheme. Care must be taken in considering for what purpose of the scheme, constitute a class. If meetings of proper class have not been held the Court may not sanction the scheme. The Court has to classify members that their respective interests are taken care of.

One must give such a meaning to the term "class" as will prevent the section being so worked as to result in confiscation and injustice and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible 'for them to consult together with a view to their common interest.

Generally speaking, in order to constitute a "class", members belonging to the class must form a homogenous group with commonality of interest.

The Court has to order under section 284(1) a meeting of creditors or class of creditors, or members or class of members to whom the scheme of compromise or arrangement is offered by the Company.

On express language of section 284(1) it becomes clear that where a compromise or the arrangement is proposed between the company, its members or any class then meeting of all such members or class of members has to be convened. This clearly presupposes that if the scheme of arrangement or compromise is offered to the members as a class and no separate scheme is offered to any sub-class members which has separate interest and a separate scheme to consider, no question of holding separate meeting of such sub-class would at all survive. Consequently, when one of the same schemes is offered to the entire class of equity share for their consideration and without commercial interest of the objectors so far as scheme is concerned is common with other equity shareholders it would have a common cause that they either to accept or to reject the scheme from the commercial point of view. Consequently, there was no occasion that convening separate class meeting of the minority equity shareholders representing objectors and their group has tried to be suggested. It is also to be kept in view that it is not case of the objectors that any different terms of compromise were offered to persons holding equity shares.

The Court does not itself consider at this point what classes of creditors or members should be made parties to the scheme. This is for the company to decide, in accordance with what the scheme purports to achieve. For an order for meetings is a preliminary step, the applicant taking the risk that the classes which are fixed by the Judge, usually on the applicant's request, are sufficient for the ultimate purpose of the section, the risk being that if in the result, and we emphasize the words in the result, they reveal inadequacies, the scheme will not be approved. If, e.g. rights of ordinary shareholders are to be altered, but those of preference share are not touched, a meeting of ordinary shareholders will be necessary but not of preference shareholders. If there are different groups within a class the interests of which are different from the rest of the class, or which are to be treated differently under the scheme, such groups must be treated as separate classes for the purpose of the scheme. Moreover, when the company has decided what classes are necessary parties to the scheme, it may happen that one class will consist of a small number of persons who will all be willing to be bound by the scheme. In that case it is not the practice to hold a meeting of that class, but to make the class a party to the scheme and to obtain the consent of all its members to be bound. It is however, necessary for at least one class meeting to be held in order to give the Court jurisdiction under .the section.

Unless separate and different scheme of compromise is offered to sub-class of class of creditors or shareholders those were equally circumscribed to call no separate meeting of such sub-class of the main class of members or creditors required to be convened. The objectors have not been able to make out a case for holding separate meeting of dissenting minority equity shareholders represented by them. Therefore, the contention of objectors is not sustainable.

Mehmood Textile Mills v. Registrar, Joint Stock Companies NLR 1993 U.C. Civil 49; Amin Fabric's case 1989 MLD 1861; ACE Insurance Limited's case 2002 CLD 171; Southern Automotive Corporation (Pvt.) Ltd.'s case (1960) 30 Comp. Cas. 119; Sakamari Steel & Alloys Ltd. (1981) 51 Comp. Cas. 266; ICI Pakistan Ltd. v. Crescent Investment Bank Ltd. 1999 CLC 1037; 1989 CLC 1323; Elite D. Silva v. Dilawar Hussain 1993 CLC 361; Oil Gas Development Corporation v. Clough Engineering Ltd. 1990 MLD 254; Salahuddin v. Syed Manzoor Ali Shah 1997 SCMR 414; Muhammad Sadiq v. University of Sindh PLD 1996 SC 182; Indian Company Law Committee; The Millin Commission in South Africa; TR Srinivasa Aiyangar's Companies Administration, 1958; Gore-Brown's Handbook of Joint Stocks Companies, 41st Edn.; Sovereign Life Insurance Company v. Dodd (189) QB 573; Palmar on Company Law, 24 Edn.; In re: Hellenic & General Trust Ltd. (1975) 3 All ER 382 and In re: Hunza Textile Mills PLD 1977 Lah. 10 ref.

(c) Companies Ordinance (XLVII of 1984)---

----Ss.284 & 6---Scheme of arrangement---Where the provision of amalgamation was absent from the Memorandum of Association of the company, that would not affect the statutory power of the Company Court to sanction the arrangement.

In re: Oceanic Steam Navigation Co. (1939) 9 Comp. Cas. 229; Associated Services Limited's case PLD 1984 Kar. 225; E.I.T.A. India Limited and others' case AIR 1997 Cal. 208 and Dewan Salman Fibre v: Dhan Fibre PLD 2001 Lah. 230 ref.

(d) Companies Ordinance (XLVII of 1984)---

----S.203---Chief Executive of a public company shall not directly or indirectly engage himself in any business which is of the same nature and directly compete with the business carried on by the company of which he is Chief Executive or by subsidiary of such Company---Appointment of a person as Chief Executive of a company who was holding the same position in another company was not barred. ---Principles.

The perusal of the provisions of section 203 of the Companies Ordinance, 1984, reveal that Chief Executive of a public Company shall not directly or indirectly engage in any business which is of the same nature and directly compete with the business carried on by the Company of which he is Chief Executive or by subsidiary of such Company. The explanation to subsection (1) clarifies the position that a business shall be deemed to be carried on indirectly by the Chief Executive if the same is carried on by his spouse or any of his parent, children, brothers and sisters. The explanation to the section is enacted by the Legislature with purpose to explain what otherwise would be doubtful or ambiguous. To the extent, it explains a stipulated situation, its function is definitive inasmuch as it clarifies or defines the legal position in a supposed state of facts.

Therefore, the person being the Chief Executive of both petitioners it cannot be said that he directly or indirectly is engaged in the business of pharmaceutical. He is representing the Companies. No material has been placed to suggest remotely that Mr. Riazuddin is engaged in the same business personally or through persons mentioned in the explanation to the section. The interest must be personal. No provision has been referred to me either from the Ordinance or from memorandum, which bars the company, to appoint a person as its Chief Executive, who is holding the same position in another company. Therefore, in my view the objection is not tenable.

Bhola Nath Aggarwal and another v. Empire of India Life Assurance Co. Ltd. AIR 1948 Lah. 56; Messrs Rahmania Trading Co. v. Messrs Eagle Star Insurance Company Ltd. PLD 1960 SC 202 and Messrs Brady & Co. (Pakistan) Ltd. v. Messrs Sayed Saigol Industries Ltd. 1981 SCMR 494 ref.

(e) Contract Act (IX of 1872)---

----S.124---"Contract of indemnity"---Definition---Scope--­"Contract of indemnity" and "contract of guarantee"-­Distinction---Letter of indemnity from the indemnifier had promised to save the indemnified person from the potential tax liability amount of which had not been reflected in the balance-sheet---Validity---Indemnity provided by the indemnifier fulfilled legal requirements.

Section 124 of the Contract Act, 1872, defines the contract of indemnity "a contract by which one party promises to save the other from loss caused to him by the conduct of promisor himself or by the conduct of any other person". The difference between the contract of indemnity and contract of guarantee is as follows:--

For contract of guarantee or suretyship, there must be a tripartite agreement between the creditor, the principal debtor and the surety. In case of contract of indemnity it is not necessary for 'the indemnifier to act at the request of the debtor whereas in the case of contract of guarantee or surety it is necessary that the surety or guarantee should give the guarantee at the request of the debtor. In the former case it is direct agreement between the two parties thereto, whereas, in the latter, there are three parties, the creditor, the debtor and surety who undertake at the request of the debtor to answer the default of the debtor.

Section 124 deals only with one particular kind of indemnity which arises from the promise made by the indemnifier to save indemnified from the loss caused to him by the conduct of the indemnifier himself or by the conduct of any other person.

Letter of Indemnity executed by indemnifier had promised to save indemnified from the potential tax liability. The amount of such liability had not been reflected in the balance-sheet. Therefore, the indemnity provided fulfilled the legal requirement.

Gujanan Moreshwar v. Moreshwar Madan AIR 1942 Bom. 302; Habib Bank Ltd. v. Waheed Textile Mills PLD 1989 Kar. 371; Bank of New India Ltd. v. Govinda Prabhu AIR 1964 Ker. 267 and Parbhoot Chand v. Abdul Rehman PLD 1960 Dacca 983 ref.

(f) Companies Ordinance (XLVII of 1984)---

----S.284---Scheme of arrangement---Sanction by Company Court---Valuation report---If the valuation report was unfair and unreasonable then the same could not be taken to be fair and reasonable nor the principle of estoppel could be pleaded.

(g) Companies Ordinance (XLVII of 1984)---

----S.284---Scheme of arrangement---Sanction by Company Court-- -Valuation of shares---Factors and methods enumerated.

The valuation of shares is technical and complex problem which can be appropriately left to the consideration of expert in view of accountancy, unless the auditors have left something which should have been taken or vice versa a ground for rejection by Court.

Company law mentions four factors which are to be kept in mind in' evaluating the shares:--

(i) Capital cover.

(ii) Yield.

(iii) Earning capacity, and

(iv) Marketability.

For arriving at the fair value, three well-known methods are applied:--

(1) The manageable profit basis method (the Earning Per Share Method).

(2) The net Worth method or the break value method, and

(3) The market value methods.

Some or all of the following factors will have to be taken into account:--

(1) The Stock Exchange prices of the shares of the two companies before the commencement of negotiations or the announcement of the bid.

(2) The dividends presently paid on the shares of the two companies. It is often difficult to induce a shareholder, particularly an institution, to agree to a merger or a share for share bid if it involves a reduction in his individual income.

(3) The relative growth prospects of the two companies.

(4) The cover (ratio of after tax earnings to dividends paid during the year) for the present dividends of the two companies. The fact that the dividend of one company is better covered than that of the other is a factor which will have to be compensated for at least to some extent.

(5) In the case of equity shares, the relative gearing of the shares of the two companies. The gearing of an ordinary share is the ratio of borrowing to the equity capital.

(6) The values of the net assets of the two companies. Where the transaction is a thorough going merger, this may be more of a talking point then a matter of substance, since what is relevant is the relative values of the two undertakings as going concerns.

(7) The voting strength in the merged enterprise of the shareholders of the two companies.

(8) The past history of the prices of the shares of the two companies.

Evaluation could be impeached, not only for fraud but also for mistake or miscarriage of justice e.g. if the expert made an arithmetical error or took something into account which he ought not to have taken into account or vice versa, or interpreted the agreement wrongly, or proceeded on some erroneous principle; even if the Court could not point to actual error, nevertheless, if the figure itself was so extravagantly large or so inadequately small that the only conclusion was that the expert must have made some error; the Court would interfere, but on the facts, bearing in mind particularly the precarious nature of the company, tenure of its premises, it could not be said that the auditor had erred and, therefore, his valuation ought not to be disturbed.

Take-Overs by Weinberg and Blank and Dean v. Prince (1954) Ch. D. 749 ref.

In re: Lipton Pakistan Ltd. 1989 CLC 818; Atlas Autos Ltd, v. Registrar, Joint Stock Companies 1991 CLC 523; Lever Brothers (Pakistan) Ltd.'s case 1997 CLC 1837; Aslam Bin Abrahim, Advocate v. Monopoly Control Authority PLD 1998 Kar. 295; I.C.I. Pakistan v. Crescent Investment Bank 1999 CLC 1037; Commissioner of Gift Tax v. Kusumben D. Mahadevia (1980) 2 SCC 238; 1980 SCC (Tax) 239; Hindustan Lever Employees' Union v. Hindustan Lever Ltd. and others (1995). 1 Supp. SCC 499 and Dean v. Prince and others 1 ILR 479 distinguished.

(h) Companies Ordinance (XLVII of 1984)---

----S.284---Scheme of arrangement---Sanction by Company Court---Arm's length transaction---Meaning.

Habib Bank Ltd. v. Waheed Textile Mills PLD 1989 Kar. 371 and Bank of New India Ltd. v. Govinda Prabhu AIR 1964 Ker. 267 ref:

(i) Companies Ordinance (XLVII of 1984)---

----S.284---Scheme of arrangement---Sanction by Company Court---Valuation of shares ---Non-disclosure---Where the valuation of shares had been done keeping in view the interest of the majority shareholders which fact was reflective from the statement of the Auditors and circulation of such report had been restricted to the management of the Companies concerned, the same, was a case of non­disclosure.

(j) Companies Ordinance (XLVII of 1984)---

----S.284---Scheme of arrangement---Sanction by the Company Court---Jurisdiction of the Company Court was not an appellate jurisdiction---Court, could not shirk its responsibility from examining the scheme of merger and was not bound to treat the scheme as a fait accompli, but in doing so the Court would not be substituting its own judgment for commercial judgment---Principles.

The jurisdiction of the Court that such jurisdiction is not appellate jurisdiction simultaneously the Court cannot shirk its responsibility from examining the scheme of merger and is not bound to treat the scheme as a fait accompli, but in doing so the Court would not be substituting its own judgment for commercial judgment. The approval to scheme of arrangement approved by the majority of the shareholders specified in section 284 of the Companies Ordinance is subject to Court review. The Court has power to decline the approval even where such schemes have been approved by the requisite majority if it is not just fair and reasonable. It is for this reason that subsection (2) of section 284 of the Ordinance stipulates that a proposed scheme will have effect only when sanctioned by the Court.

(k) Companies Ordinance (XLVII of 1984)---

----S.284---Scheme of arrangement---Sanction by the Company Court---Scheme of amalgamation in the present case, was approved by the Board of Directors of the petitioners on the basis of valuation report of the auditors which was deficient on account of valuation having been done keeping the interest of the majority shareholders in mind---One company had not been taken by the auditors as an on-going concern, whereby tangible assets such as patent and trade mark and intangible assets (goodwill) had not been considered for the valuation of its assets---Such treatment of the matter could not be termed to be just, fair and reasonable and thus the scheme being oppressive to the interest of the minority shareholders, could not be approved---Approval of such a scheme, in circumstances, would amount to excluding the minority shareholders from a company without a reasonable offer to buy their shares or to make some other arrangement with them---Approval of the scheme was declined by the Company Court, in circumstances, with the directions to the petitioners that the exercise of valuation be conducted afresh through an independent auditor, who should evaluate the petitioners as ongoing concern and for the purpose of valuation the factors such as tangible and intangible assets and every factor that concerns the valuation be taken into consideration, on the basis of fresh valuation, by independent auditors, the minority shareholders who were willing to part with their shares on reasonable price and the scheme be put to the members in the extraordinary general body meeting for their approval to be convened under the Court directions.

Qazi Faez Isa for Petitioners.

Kazim Hasan and Shahanshah Hussain for Objectors.

Dates of hearing: 29th November; 11th December, 2001; 16th, 24th, 29th January; 8th, 26th February; 1st, 7th March; 9th, 19th, 25th and 30th April, 2002.

2003 C L D 1293

[Karachi]

Before Mushir Alam, J

WAJID RAFIQUE SHIEKH---plaintiff

Versus

CHAMBER OF COMMERCE AND INUDSTRY, KARACHI and 19 others---Defendants

Suit No.973 of 2002, decided on 4th December, 2002.

(a) Trade organizations Ordinance (XLV of 1961)---

----S. 9(f)---Amendment in Articles or Memorandum of Association by Trade Organization---Prior approval of appropriate Authority must be obtained for bringing any such change.

(b) Specific Relief Act (I of 1877)---

----Ss. 42 & 54---Civil Procedure Code (V of 1908), O. VII, R. 11--­Trade Organizations Ordinance (XLV of 1961), Ss. 9(e) & 12---Suit for declaration and injunction---Rejection of plaint---Suit impugning amendments in Articles of Association made by Trade Organization and participation of a candidate in its election--­Validity---Plaintiff was not a contesting candidate---Amendment in Articles of Association approved by Trade Organization could be challenged in terms of cl. (e) of S.9 of the Trade Organizations Ordinance, 1961---Plaintiff could challenge result of election within thirty days from the date of announcement and Director Trade Organization could annul election after being satisfied that any irregularity or illegality had been committed---Even interim injunction could be effectively solicited by Director Trade Organization---Plaintiff' having invoked provision of arbitration could effectively obtain remedy by pursuing same, thus, suit was barred under S.12 of the Ordinance---Bringing such matter in Court by member of registered association was deprecated---High Court rejected the plaint in circumstances.

Macsons v. Chambers of Commerce and Industries Suit No. 1344 of 1999 and Abdul Razzak Rajwani v. M.Y: Industries Civil Appeal No. 13-K of 1986 rel.

Abdul Razzak Rajwani v. Messrs M.Y. Industries R.A. No.87 of 1984; M. Waqar Mannoo v. All Pakistan Textile Mills Associate Suit No. 1346 of 1999; Messrs Macsons, Proprietorship Concern v. Chamber of Commerce and others Suit No.1264 of 2000; Muhammad Jamil Asghar v. The Improvement Trust, Rawalpindi PLD 1965 SC 698 and Hamid Hussain v. Government of West Pakistan and others 1974 SCMR 356 ref.

(c) Practice and procedure---

----Where law provides a particular mechanism for impugning a particular action, then such remedy be availed in the matter provided for under the law itself.

Khalid Hamid and Muhammad Yasin Azad for Plaintiff.

Khalid Javaid for Defendants.

Date of hearing: 1st October, 2002.

2003 C L D 1310

[Karachi]

Before Muhammad Roshan Essani, Anwar Zaheer Jamali, JJ

Chaudhry MUHAMMAD ASHRAF and others---Appellants

Versus

ARSHAD MALIK and 2 others---Respondents

First Appeal No.41 of 2002, decided 28th March, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--

----Ss.22 & 19(7)---Appeal---Maintainability---Execution of decree--­Aggrieved person---Deletion of name of appellant from the array of appellants---Effect---Said appellant being an aggrieved person, could maintain the appeal independently.

H. M. Saya & Co., Karachi v. Wazir Ali Industries Ltd. Karachi PLD 1969 SC 65 fol.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--

----S.19(7)---Civil Procedure Code (V of 1908), O.XXI, R. 58--­Execution of decree---Application before Banking Court with reference to the period of limitation prescribed under O.XXI, R.58, C.P.C.---No period of limitation having been prescribed for the purpose under S.19(7), Financial Institutions (Recovery of Finances) Ordinance, 2001 objection in this behalf was not sustainable.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--

----Ss. 19(7) & 22---Execution of decree---Cheque earlier issued in the name of appellant which could not be encashed due to stop payment under Court's order, was issued towards the satisfaction of decree in the suit instituted by the appellant and the intervenor jointly as two partners of a firm---Decretal amount, in circumstances, to be paid during the proceedings of execution application was presumed to be for the benefit of both the plaintiffs in that suit according to their respective shares--­Banking Court, was to have first decided the question as to whether the other cheque issued by the Nazir of the High Court in the name of the Nazir of the Banking Court in respect of the same amount was for the exclusive benefit of the appellant or the intervenor, being other plaintiff in another suit was also entitled for some share in the said amount---Mere issuance of earlier cheque in the exclusive name of the appellant, which was admittedly not encashed, was not sufficient ground of the fact that only the appellant was entitled for payment of such decretal amount or that the intervenor had no claim to the same---When there was no order from the High Court on merits directing payment to the intervenor and such sum was being paid to him under the orders of the Banking Court, it was necessary that before releasing such payment an enquiry should have been held to decide the claim of intervenor who, on the one hand was not a judgment-debtor before the Banking Court and on the other hand, had some prima facie interest in the decree passed in the suit, being one of the plaintiffs in that suit---View taken by the Banking Court that no enquiry was required to be held by it in this regard not only demonstrated patent illegality but also denial of fair and proper opportunity of hearing to the intervenor---Order of the Banking Court, in circumstances, was not sustainable--­High Court disposed of the appeal in the terms that Banking Court, shall, within 60 days of the receipt of the order of the High Court in appeal, hold proper enquiry with regard to the claim made by the intervenor, in his application before the Banking Court and other application under S. 19(7) of the Ordinance and decide the same accordingly---Till such enquiry was held by the Banking Court and the application of the intervenor was disposed of the payment of cheque released in favour of decree-holder shall remain invested in some profit bearing Scheme for the benefit of succeeding party---Documents regarding mortgaged properties available with the respondents shall not be released/discharged/redeemed till any further order in that regard was passed by the Banking Court.

PLD 1982 Kar. 577; PLD 1999 Kar. 196 and H.M. Saya & Co., Karachi v. Wazir Ali Industries Ltd., Karachi PLD 1969 SC 65 fol.

Shafi Muhammad and Salim Salam Ansari for Appellants.

Hamid Ali Shah for Respondent No.1.

Tassawar Ali Hashmi for Respondent No.2.

Gohar Iqbal for the Intervenor.

2003 C L D 1321

[Karachi]

Before Anwar Zaheer Jamali, J

A.M. FABRIC (PVT.) LTD. ---Plaintiff

Versus

I.D.B.P. and others---Defendants

Suit No. B-23 of 2002, decided on 4th February, 2003.

Civil Procedure Code (V of 1908)---

----Ss. 94, 151 & O. XXXIX, Rr. 1, 2---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9--­Application under Ss. 94, 151 & O.XXXIX, Rr. 1 & 2, C.P.C.--­Defendant, a Bank, had sanctioned finance facility in favour of the plaintiffs and thereafter without assigning any cogent reason and plausible justification declined to release such facility in their favour and further in their application under S. 10, Financial Institutions (Recovery of Finances) Ordinance, 2001, unfairly they had tried to shift the responsibility in this context on the plaintiffs, which fact was belied and exposed from further proceedings in the matter---Bank had not specifically denied the subsequent investments made by the plaintiffs in the project and the fact that existing assets," securities of the plaintiffs were muck higher in value than their outstanding liabilities---Plaintiffs, circumstances, had prima facie succeeded to show that the defendant Bank had acted uniustly and in an arbitrary manner by withholding payment of sanctioned finance facility, which was required by the plaintiffs for revival of their industrial project---Unilateral action of the defendant-Bank resiling from commitment without cause could not be approved by the Court---Defendant-Bank on not be allowed to take advantage for their own wrong and to cause harm to the interest of the plaintiffs due to Bank's indifferent attitude which was apparent from the case record---Conduct of the defendant-Bank had prima facie caused substantial prejudice to the interest of the plaintiffs and in such circumstances if some immediate interim arrangement was not made the plaintiffs were likely to suffer an irreparable loss and injury---Held, not only it would be just and convenient but also expedient in the interest of justice that the Court passes an interim order, restraining the Bank from committing breach of their contractual obligation by not providing running finance facility to the plaintiffs in terms of their commitment, or to make an alternate arrangement to redress the grievances of the plaintiffs which were of urgent nature---High Court disposed of the application with terms that the defendant shall release finance facility as sanctioned to the plaintiff within 30 days from the date of the order of the Court or in the alternative issue "No­ Objection Certificate" for another Bank/financial institution to extend the facility up to the amount sanctioned by the defendant to the plaintiffs against pari passu security of their assets.

Eman Textile Mills Ltd. v. I.D.B.P. 1999 CLC 1630; Rehman Feeds (Pvt.) Ltd. v. A.D.B.P. 2001 YLR 2240; Official Assignee. v. Loyds Bank Ltd. PLD 1969 SC 301; Hafeez Ullah v. Barkat Ali PLD 1998 Kar.274; Zasha v. A.D.B.P. PLD 1993 Lah. 914; Waqar Hussain v. National Refinery Ltd. 1993 CLC 2497; Haji Adam Ali v. Asif Hussain 1996 MLD 322; Agha Safiuddin v. Pak Suzuki Motors 1997 CLC 302; Salma Javed v. S.M. Arshad PLD 1983 Kar. 303 and Balgamwala Oil v. Shakarachi Trading PLD 1990 Kar 1 ref.

Umer Bandial for Plaintiff.

Salman Hamid for Defendant No 1.

Date of hearing: 13th January, 2003.

2003 C L D 1331

[Karachi]

Before Khilji Arif Hussain, J

Messrs UNITED BANK LIMITED---Plaintiff

Versus

Messrs SINDH TECH INDUSTRIES LTD. and others---Defendants

Suit No. 1718 of 1997, decided on 4th October, 2002.

(a) Civil Procedure Code (V of 1908)---

----S.12(2)---Judgment/decree/order, setting aside of---Fraud or misrepresentation, plea of---Duty of applicant---In order to attract S.12(2), C.P.C., burden heavily lay on applicant to establish from his own affidavit that judgment/decree/order had been obtained by fraud or misrepresentation.

(b) Civil Procedure Code (V of 1908)---

----S.12(2) & O.VI, R.4---Judgment/decree/order, setting aside of---Party alleging fraud and misrepresentation, must give full particulars thereof and not on basis of mere surmises, conjectures and suspicion.

Dadabhoy Cement Industries v. N.D.F.C. 2002 CLC 166 and 2002 SCMR 1761 rel.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.17---Civil Procedure Code (V of 1908), S.12(2)---Decree, setting aside of---Plea of applicant was that he had not executed letter of guarantee---Validity---All Directors of borrower-company were members of the same family--­Applicant had denied his signatures on letter of guarantee executed on a date, when he was one of the Directors of borrower-company---Other Directors had admitted their signatures on similar letter of guarantee on the same date--­If any Director of borrower-company had forged signatures of applicant on letter of guarantee, then fraud had not been practised in the proceedings of suit for obtaining judgment/decree---High Court dismissed application under S.12(2), C.P.C.

Begum Anwari Khanum Shaikh v. Messrs Passcon (Pvt.) Ltd. 1993 MLD 1557 and Rehmatullah v. Ali Muhammad 1983 SCMR 1064 rel.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9(5) & 10(2)---Service of summons by publication in newspaper---Validity---Such service was as good as personal service except in exceptional cases, where party could establish that in spite of publication of notice in newspaper,' service could, not be held good against him as for example, on the date when notices were published in newspaper, he was not residing in Pakistan.

Pakistan Insurance Corporation v. Grindlays Bank Ltd. 1987 CLC 2164 and Ahmed Autos v. Allied Bank of Pakistan Ltd. PLD 1990 SC 497 rel.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.10(2) & 9(5)---Civil Procedure Code (V of 1908, S.12(2)---Decree, setting aside of---Application under S.12(2), C.P.C., was filed on 9-1-2002, whereas applicant had got knowledge about decree on 2-12-2001---Plea of applicant was that since 1987, he was not living at address given in the plaint---Validity---Summons had been issued by all three modes---Applicant had not stated that at any time after he shifted from place K to place R, he had informed the plaintiff-Bank about change of his address---Applicant had not stated that plaintiff had deliberately made mis­statement by showing his wrong address and as such had misrepresented in Court to obtain judgment/decree--­Applicant could get the decree set aside on satisfying Court that he was prevented by sufficient cause from making application under S.10 of the Ordinance or that he was not duly served---Such application had to be made within thirty days from date of knowledge, but same had been made much after expiry of such period---High Court dismissed application under S. 12(2), C.P.C., in circumstances.

Altaf Hussain for Plaintiff.

G.M. Qureshi for Defendant No.6.

ORDER

The defendant No.6 filed application under section 12(2), C.P.C. and prayed to set aside the judgment dated 5-6-1998 and decree dated 27-2-1999 against defendant No.6 on the plea that the said defendant has neither executed guarantee nor executed "any loan document nor he has been served with the summons of the suit. In affidavit in support of the said application the defendant stated that on 2-12-2001 he was informed on telephone by the owner/landlord of House No.711, Street No.2, Chaklala Scheme No.2, Rawalpindi that a notice has been received at his address in his name in relation to Execution No.207 of 2000 in Suit No.1718 of 1997 from the High Court of Sindh, Karachi. It is stated that defendant has gone through the entire record of the suit as well as the execution application and found that his signature has been put by somebody as guarantor, which, in fact, has not been put by him. It is further stated that to the knowledge of the other defendants defendant No.6 has been living in Rawalpindi since 1987 and not at the address shown in the plaint. It is stated that defendant No. 6 has no interest in the affairs of defendant No. 1 Company except holder of one share. On the basis of these facts defendant No.6 prayed to set aside the judgment and decree passed on 5-6-1998.

The plaintiff filed counter-affidavit to the said application and categorically stated that the plaintiff has not received any intimation that the defendant No.6 has resigned from the directorship of defendant No. 1. It is stated that the defendant No.6 executed letter of guarantee on 3-2-1987 and the defendant No.6 remained director of the defendant No. 1 Company from 1984 to 1989. It is stated that being the director of defendant No. 1, defendant No.6 had knowledge about the finance used and utilized by the defendant No. 1 and the execution of all the documents including letter of guarantee executed by him. It is stated in the counter-affidavit that the signatures of the defendants Nos.2 to 8 including defendant No.6 were verified by the bank officers at the relevant time.

The defendant No.6 filed rejoinder affidavit and stated that he had strained relations with the other defendants and had no knowledge of the suit filed against him.

On the basis of these averments, the defendant No.6 prayed to set aside the decree passed by the Court.

Under section 12(2), C.P.C. a person can challenge the validity of judgment, decree or order on the plea of fraud, misrepresentation or want of jurisdiction by filing application to Court which passed final judgment; decree or order. In order to attract section 12(2), C.P.C. heavy burden lies upon the applicant to establish from his own affidavit that the judgment, decree or order has been obtained by fraud or misrepresentation. Fraud has been defined under section 17 of the Contract Act, which reads as under:--

"17. `Fraud' means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to include him to enter into the contract--

(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intent of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent."

Section 12(2), C.P.C. introduces new remedy to challenge the judgment, decree and order on the plea of fraud, misrepresentation or want of jurisdiction by filing application to Court, which has passed the judgment, decree or order instead of filing separate suit.

The party alleging fraud, misrepresentation has to give full particulars of the fraud and misrepresentation and not on the basis of mere surmises, conjectures and suspicion. My view finds support from the case of Dadabhoy Cement Industries v. N.D.F.C., reported in 2002 CLC 166. The order was authored by the Honourable Chief Justice Mr. Justice Saiyed Saeed Ashhad and has been approved by the Honourable Supreme Court, which is reported in 2002 SCMR 1761.

The defendant No.6 denied his signature on letter of guarantee executed on 3-2-1987, on which date admittedly he was one of the directors and all directors of defendant No. 1 have admitted their signatures on similar letter of guarantee executed on said date, and are members of same family. Be that as it may, even if anyone of director of defendant No.1 has forged the signature of defendant No.6 on letter of guarantee, fraud has not been practised in the proceedings of suit for obtaining judgment/ decree.

In the case of Begum Anwari Khanum Shaikh v. Messrs Passcon (Pvt.) Ltd. 1993 MLD 1557, M. Abdul Rehman Kazi, J. (as he then was, held that provision of section 12(2), C.P.C. apply where a fraud is played or mis­representation is made during proceedings of the suit in the Court and not anything done outside the Court.

In the case of Rehmatullah v. Ali Muhammad 1983 SCMR 1064, the Honourable Supreme Court, while dealing question of bar of filing suit under section 12, C.P.C., held that a suit is not barred as fraud and misrepresentation alleged from the appellant's side in that case is alleged to have been committed by the respondent, not in connections with the proceedings, but much before its initiation and that it is not connected with the proceedings in any manner whatsoever.

As regards service of summons, the defendant No.6 has not stated that at any time after he shifted from Karachi to Rawalpindi he informed plaintiff about change of his address. Summons were issued by all three modes, viz. through bailiff, registered post and publication of notice in newspapers. Service through publication is as good as personal service except in exceptional cases where party can establish that in spite of publication of notice in the newspapers service cannot be held good against him as for example on the date when notices were published in newspaper, party was not residing in Pakistan.

In the case of Pakistan Insurance Corporation v. Grindlays Bank Ltd. reported in 1987 CLC 2164, his Lordship Ajmal Mian, J. (as he then was), held service through publication in daily Urdu Newspaper Hurriyat as good service upon party although bailiff report was not available on record nor the undelivered covers.

In the case of Ahmed Autos v. Allied Bank of Pakistan Ltd. reported in PLD 1990 SC 497, the Honourable Supreme Court held that "underline object of rule 8 is to avoid the delay in the service of the summons".

The defendant No.6 has not stated that the plaintiff has deliberately made misstatement by showing wrong address of defendant No.6 and as such misrepresented in Court to obtain judgment/decree.

The Financial Institutions (Recovery of Finances) Ordinance, 2001, provides specific remedy to get decree set aside if he satisfies the Court that he was prevented by sufficient cause from making application under section 10 or that summons was not duly served. Such application has to be filed within thirty days from the date of knowledge.

Admittedly defendant No.6 got information about the decree on 2-12-2001, whereas application under section 12(2), C.P.C. has been filed on 9-1-2002, i.e. much after expiry of thirty days from the date of knowledge.

In view of above application under section 12(2), C.P.C. (C.M.A. No.275 of 2002) is dismissed. Consequently, application under Order XXXIX, Rules 1 and 2, C.P.C. (C.M.A. No.277 of 2002) is also dismissed.

S.A.K./U-29/K Application dismissed.

2003 C L D 1336

[Karachi]

Before Muhammad Roshan Essani and Anwer Zaheer Jamali, JJ.

Messrs JULANDAR (PVT.) LTD.---Appellant

Versus

OFFICIAL ASSIGNEE and 2 others---Respondents

High Court Appeal No.158 of 2001, heard on 19th February, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss. 18 & 21---Execution of decree---Auction---Sealed tenders were invited by the Official Assignee for the sale of Basmati Rice on "as is where is" basis---Lowest bid was accepted by the Court and intimation calling upon the bidder to pay the balance sum and to take the delivery of rice was received by him---Auction purchaser, not only failed to deposit the balance amount and lift the rice but also in collusion with the Bank managed to stop the payment of pay order delivered by, the auction purchaser towards earnest money on various pretexts---Amount of earnest money, however, was received by the Official Assignee after his reference and the order was passed by the Court in that respect---Official Assignee moved another reference in the Court seeking order for forfeiture of earnest money deposited by the auction purchaser and permission to invite fresh tenders through advertisement---Auction purchaser, in the meantime, submitted an application under S.151, C.P.C. before the Banking Court, praying therein for refund of his earnest money on the ground that as per the Test Certificate in respect of samples of rice obtained by him were not Basmati Rice, therefore, due to non-lifting of rice and non­payment of balance amount the auction purchaser could not be penalized---Validity---Offer of sale of Basmati Rice through advertisement in various newspapers was with clear condition that such Offer was on "as is where is" basis---Auction-purchaser, before offering the bid had taken the samples of the "Basmati Rice" and did not object to its quality etc. before offering the bid and it was only after the letter of official Assignee calling upon for payment of balance sum that the auction-purchaser set up the pretext of poor quality of rice---Auction-purchaser had failed to produce any explanation as to why after obtaining the samples and before giving his offer, he could not get the same tested from laboratory---Nothing was available on record to hold that the certificate provided by the auction­ purchaser related to the same samples of rice which were taken by him much before submitting his offer to the Official Assignee---Official Assignee had no personal interest in the matter as he was not to gain any benefit due to forfeiture of the earnest money of the auction-purchaser thus no mala fides, malice or ill-will could be attributed to hire---Order of the Court was well reasoned and self-explaining which was based on proper appreciation of material placed before the Court---Order for forfeiture of earnest money paid by the auction-purchaser was in conformity with the relevant provisions of law and needed no interference in appeal.

Province of West Pakistan v. Messrs Mistri Patel & Co. and another PLD 1969 SC 80; Fahd Munir v. Tehsil Government, Tehsil Phalia, District Mandi Bahauddin through Tehsil Nazim and others 2002 CLC 1593 and Ch. Muhammad Ashraf v. Punjab Privatization Board through Secretary, Government of Punjab and another 2002 MLD 550 distinguished.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)-----

----Ss. 18 & 21---Execution of decree---Auction---Phrase "as is where is"---Meaning, significance and import.

Phrase "as is where is" commonly used in such type of transactions though would not, ipso facto, absolve the seller of his own moral commitment, expected fair play and would not protect any misstatement or concealment of material facts on his part, but at the same time it has its own meaning, significance and import in the field of commercial activity as it warns customers/ buyers to be wary, prudent and to act at their own risk while giving their offer or entering into a transaction. In the given circumstances, if -the buyers acted in a negligent, imprudent and irresponsible manner then they had to bless their stars, but no fault can be attributed to the sellers.

(c) Words and phrases---

----"As is where is"---Meaning.

Tasawur Ali Hashmi for Appellant.

Respondent No. 1 in person.

Mansoorul Arfin for Respondent No.2.

Date of hearing: 19th February, 2003.

2003 C L D 1343

[Karachi]

Before Sabihuddin Ahmad and S. Ali Aslam Jafferi, JJ

GHARO ASSOCIATION OF TRADE AND INDUSTRY through Representative/ Secretary and 2 others---Petitioners

Versus

MINISTRY OF COMMERCE, FEDERAL GOVERNMENT OF PAKISTAN, ISLAMABAD through Secretary and 2 others---Respondents

Constitutional Petitions Nos.1989 to 1991 of 2001, decided on 26th October, 2001.

Trade Organizations Ordinance (XLV of 1961)-----

----Ss.3 & 12---Constitution of Pakistan (1973), Art.199--­Constitutional petition---De-affiliating membership--­Petitioners as members of Chamber of Commerce and Industry and holding licences granted by Government under S.3 of the Trade Organizations Ordinance, 1961 applied for renewal of membership---Managing Committee of Chambers through its resolution declined such request and de-affiliated membership of the petitioners---Director Trade Organizations on petitioner's representation passed order that they would remain affiliated with Chambers until Chambers got approval of .its resolution from its general body in extraordinary general meeting and the Federal Government ---Refusal of Chamber to act such directions of Director---Validity---According to Memorandum and Articles of Association of Chamber, general body had exclusive jurisdiction to de-affiliate a member---Action taken by Managing Committee, unless approved by general body by 3/4th majority of members present in meeting or through proxy as laid down in its Articles, would be illegal and of no legal effect---Managing Committee had neither given any notice to petitioners nor had heard them before passing impugned resolution---Such action was against the principles of natural justice--Without adopting procedure laid down in Memorandum and Articles of Association, no office-bearer or member of any committee of Chamber was authorised to de-affiliate or terminate membership of petitioners, whose names appeared as members in the Articles---Petitioners have prayed for implementation of order passed by Director in discharge of his statutory duties, which was binding on Chamber unless set aside by Competent Authority---Bar contained in S.12 of the Trade Organizations Ordinance, 1961 thus, would stand attracted to such a case---High Court accepted Constitutional petitions and declared impugned resolution to be illegal, arbitrary and without jurisdiction.

S. Saeeduddin Nasir and Khalid Latif for Petitioners.

S. Tariq Ali and Khalid Javed for Respondents.

Date of hearing: 18th September, 2001.

2003 C L D 1349

[Karachi]

Before Gulzar Ahmed, J

DADU CHAMBER OF COMMERCE AND INDUSTRY through Secretary---Applicant

Versus

Dr. ANWAR-UL-HAQUE, SECRETARY-GENERAL, FEDERATION OF COMMERCE AND INDUSTRY, KARACHI and 4 others---Respondents

Judicial Miscellaneous Application No.64 of 2002, decided on 19th December, 2002.

Arbitration Act (X of 1940)---

----S. 41---Trade Organizations Ordinance (XLV of 1961), S.12---Eligibility of candidate for posts of Vice-Presidents prescribed by Managing Committee of Federation of Pakistan Chambers of Commerce and Industry---Plaintiff challenged such eligibility through application under S.41 of the Act and sought interim relief to stay election--­Contention of defendants was that arbitration application filed by plaintiff claiming similar relief was pending before Arbitration Tribunal constituted under S.12 of the Trade Organizations Ordinance, 1961---Validity---Not possible for High Court to decide controversy within time due to pendency of arbitration proceedings before Arbitration Tribunal constituted under law---Interim order, if any, passed by High Court would disturb whole election process of the. Federation---High Court disposed of applications with directions to Arbitration Tribunal to take up matter and decide the same on the next day, so that plaintiff might have enough time at his disposal to file nomination, if allowed.

Shahenshah Hussain for Applicant.

Khalid Javed for Respondents Nos. 1, 2, 3 and 5

2003 C L D 1352

[Karachi]

Before Shabbir Ahmad, J

ALLIED BANK OF PAKISTAN LIMITED---Plaintiff

Versus

Messrs MODERN METALLIC SERVICES through Proprietor and 6 others---Defendants

Suit No.B-73 of 2000, decided on 8th October, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)----

----S.10---BCD Circular No. 13 dated 20-6-1984---Leave to defend suit, application for---Defendant's plea was that price and buy-back price were mentioned in agreement, but its column of mark-up was blank, thus, in absence of agreement for payment of mark-up, plaintiff-Bank was not entitled to charge mark-up---Validity---Agreement showed that transaction was Marahaba (Bai' Muajjal) or sale on deferred payment basis or agreement for sale on credit--­One of the modes of Trade Related Financing detailed in Annexure-I of BCD Circular 13, dated 20-6-1984 was purchase of goods by banks and their sale to clients at, appropriate mark-up in price on deferred payment basis--­Defendant had agreed to pay mark-up in price of goods on or before date specified in agreement---Plaintiff in absence of percentage was entitled for mark-up in price i.e. difference between sale and buy-back price.

(b) Contract Act (IX of 1872)---

----Ss.170 & 171---Lien of bankers---Bank has right to exercise lien, when its customer has breached agreement by not making payment as agreed.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.10---Leave to defend suit, application for--Availing of facility, execution of documents and liability to ay was not disputed by defendant---Defendant had failed tb make out a case for leave to defend by raising substantial questions of law and fact requiring evidence---High Court dismissed application in circumstances.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 10---Insurance and Muqadam charges claimed by Bank in terms of letter of pledge---Pledged goods were to be insured against fire, theft and other risks by customer (pawner) and in case of its failure by pawnee (bank)--­Customer's case was not that goods were insured, rather Bank had insured the same---Bank (pawnee) was thus, entitled for extraordinary expenses incurred by them in shape of insurance as well as by appointment of Muqadam.

Waqar Muhammad Khan Lodhi for Plaintiff.

Rasheed A. Rizvi for Defendant No. 1.

K.A. Wahab for Defendant No.5.

Iqbal Ahmed for Defendant No.7.

Date of hearing: 29th August, 2002.

2003 C L D 1364

[Karachi]

Before Sabihuddin Ahmed and S. Ali Aslam Jafferi, JJ

MUTAHIR SAEED CHAWLA and 16 others---Petitioners

Versus

CHAMBER OF COMMERCE AND INDUSTRY, KARACHI and 2 others---Respondents

Constitutional Petitions Nos.D-2026 and 2050 of 2001, heard on 21st September, 2001.

Trade Organizations Ordinance (XLV of 1961)---

----Ss.3(2), 9 & 12---Constitution of Pakistan (1973), Art. 199---De-affiliation of petitioners from membership of Karachi Chamber of Commerce and Industry---Contention of petitioners was that Director Trade Organizations has passed such order at their back without giving them an opportunity of showing cause against action proposed to be taken---Validity---Objections filed on behalf of Director Trade Organizations and Karachi Chamber of Commerce and Industry were not supported by counter-affidavit---Nothing was available on record to establish that petitioners had been issued any show-cause notices or they had been heard before passing impugned order by Director, Trade Organizations---Section 12 of the Trade Organizations Ordinance, 1961 provided for arbitration under given circumstances---Impugned order did not attract provisions of S.12 of the Ordinance so as to be settled through arbitration---De-affiliating of membership of trade groups could be given legal effect only in case Memorandum and Articles of Association of Chamber of Commerce were amended strictly in accordance with procedure laid down therein---High Court accepted Constitutional petition and set aside impugned order with direction to the Chamber of Commerce to keep vacant seat in Managing Committee till decision of question of membership of petitioners in accordance with requirements of Government's order after providing them adequate opportunity.

Khalid Latif for Petitioners (in C.P. No.D-2026 of 2001).

Khalid Jawed for Respondent No.1 (in C.P. No.D­-2026 of 2001).

S. Saeeduddin Nasir for Respondent No.2 (in C.P. No.D-2026 of 2001).

S. Tariq Ali for Respondent No.3 (in C.P. No.D-2026 of 2001).

Aminuddin Ansari for Petitioners (in C.P. NO.D-2050 of 2001).

S. Tariq Ali for Respondent No.1 (in C.P. No.D-2050 of 2001).

Khalid Jawed for. Respondent No.2 (in C.P. No.D-2050 of 2001).

Date of hearing: 21st September, 2001.

2003 C L D 1370

[Karachi]

Before Anwar Mansoor Khan, J

NATIONAL BANK OF PAKISTAN---Plaintiff

Versus

SHAHYAR TEXTILE MILLS LTD. ---Defendant

Suit No. 959 of 1990, decided on 25th May, 2001.

(a) Negotiable Instruments Act (XXVI of 1881)-----

----S. 5---"Bill of exchange"---Nature---Bill of exchange is a negotiable instrument as defined under S. 5 of the Act.

(b) Negotiable Instruments Act (XXVI of 1881)---

----S. 58---Defective title---When, a Bill of Exchange has been lost or has been obtained from any maker, drawer, acceptor or holder thereof by means of an offence or fraud or for an unlawful consideration, neither the person who finds or so obtains the instrument nor any possessor or endorsee who claims through such person is entitled to receive the amount due thereon from such maker, drawer, acceptor or holder unless such possessor or endorsee is or some person through whom he claims, was, a holder thereof in due course.

(c) Negotiable Instruments Act (XXVI of 1881)---

----S.30---Liability of the drawer---If the drawer of a Bill of Exchange drawing it, engages that on a due presentment, the same shall be accepted and paid according to its tenor and if it is dishonoured he will compensate the holder or endorser who is compelled to pay the same ---Drawee shall' not be liable till such time the same are accepted ---Drawee, on acceptance of 'the Bill of Exchange becomes liable discharging the drawer---Drawer shall and can only be made liable when it is shown as to which of the Bill of Exchange are dishonoured by non-payment---Dishonour could be by refusal to pay.

(d) Negotiable Instruments Act (XXVI of 1881)-----

----Ss. 30, 103 & 104---Liability of the drawer---If the drawee had not accepted the Bills, it ivas mandatory upon the holder to give a notice of dishonour to the drawer after protesting/noting---Notice to the drawer was of great importance and was mandatory in terms of S. 30 of the Act---Principles.

(e) Negotiable Instruments Act (XXVI of 1881)---

----Ss. 48 & 58---Negotiation by endorsement---Defective title---Subject to S. 58 of the Act where tree title is defective, a Promissory Note, Bill of Exchange or Cheque payable to order is negotiable by the holder by endorsement and delivery thereof---General effect of taking an instrument as additional payment is to suspend the right of action of the original debt during the currency of the instrument--­Principles.

Price v. Price 153 ER 1174; Stedman v. Gooch 1 Esp. 4 and Ramuz v. Crowe 151 ER 70 ref.

(f) Negotiable Instruments Act (XXVI of 1881)---

----S. 48---Negotiation by instrument---Bill of Exchange would be negotiable by the holder of endorsement and deliver---Only question would remain whether the Pill had a defective title.

(g) Negotiable Instruments Act (XXVI of 1881)---

----S. 45-A---Holder's right to duplicate of lost bill---Where the instrument had been lost appropriate measures were provided in S. 45-A of the Act---Principles.

(h) Negotiable instruments Act (XXVI of 1881)---

----S. 30---Liability of the drawer---Scope and extent.

(i) Negotiable Instruments Act (XXVI of 1881)---

----S. 30---Liability of the drawer---Dishonour by non ­acceptance or non-payment gives rise to an immediate right of recourse against the drawer of the Bills of Exchange--­Principles.

United Bank Limited v. Ch. Ghulam Hussain 1998 CLC 816; United Bank Ltd. v. Taj Seafood Industries PLJ 1975 Kar. 444; Kanhyalal and others v. Ramkumar and others AIR 1956 Raj. 129; Nenu Ram v. Shivkishen AIR 1950 Raj. 55; Jugjivan Mavji Vithalani v. Messrs Ranchhoddas Meghji AIR 1954 SC 554; Bank of Ireland v. Arche (1834) 11 M&W 383); Harvey v. Martin (1808) 1 Camp. 425 and Roscow v. Hardy 104 ER 170 ref.

M. Yousaf Leghari for Plaintiff.

Khawaja Shamas ul Islam for Defendants Nos. 1 to 3

S. Zaki Muhammad for Defendants Nos.5 and 6.

2003 C L D 1393

[Karachi]

Before Zahid Kurban Alavi, J

METRO MANAGEMENT (PVT.) LTD, through Director---Plaintiff

Versus

PRIVATIZATION COMMISSION OF PAKISTAN through Secretary, Ministry of Finance, Government of Pakistan, Islamabad and 5 others---Defendants

Suit No. 1296 of 2002, decided on 25th February, 2003.

Specific Relief Act (I of 1877)---

----Ss. 42, 12 & 55---Companies Ordinance (XLVII of 1984), Ss.86 & 87---Civil Procedure Code (V of 1908), O. XXXIX, Rr.1 & 2---Sale of shares owned by the lenders which were issued to them in lieu of their outstanding dues---Application under O.XXXIX, Rr. 1 & 2, C.P. C. seeking an. interim injunction restraining the defendants and the persons acting through them from handing over the possession of the factory to any third party or create any third party rights, interest in the suit property and shares of the company till final disposal of .the suit for declaration and specific performance---Shares, subject-matter of the original agreement and novation agreement, had not been transferred in the name of the plaintiff --Plaintiff had not brought on record anything to show that shares in favour of the lenders were not issued in accordance with the relevant provisions of the Companies Ordinance, 1984 nor the plaintiff had initiated any action under the Companies Ordinance, 1984---Assertion that plaintiff had right of first refusal for the purchase of shares being sold by the lenders, was not raised in the plaint and only a half-hearted attempt was made in the affidavit in rejoinder to introduce this agreement---Plaintiff had come to the Court after a lapse of six months of the advertisement for sale of shares by the lenders which was published in leading newspapers--­Plaintiff had stated in the plaint that it was shocked upon receiving credible information - from various sources but however had failed to disclose said sources which provided the information after a lapse of six months---Plaintiff had deliberately attempted to cause a false impression that it owned more than, 50% shares of the company and the shares being sold by the lenders included such shares--­Such conduct of the plaintiff alone would disentitle it from obtaining any equitable relief---Further, no possibility existed that plaintiff would be running the affairs of the concerned company as plaintiff's nominee directors had voluntarily withdrawn their nominations from the election of the Company Directors and had never shown any interest in the affairs of the Company; even if the shares subject­ matter of the original agreement and the novation agreement were transferred to the plaintiff, the same would only constitute a small minority in the currently paid-up capital of the Company---Held, plaintiff had failed to make out a prima facie case; the balance of convenience was also not in favour of the plaintiff nor the plaintiff had been able to show any irreparable loss that may be caused to it on account of sale of shares owned by the lenders which were issued to them in lieu of their outstanding dues---Application of the plaintiff was dismissed with costs.

Abid S. Zuberi and Asghar Farooqi, Advocates.

Khalid Anwar, Advocate.

Mansoorul Arfin, Advocate.

Khalid Javed, Advocate.

Arshad Mohsin Tayebaly, Advocate.

2003 C L D 1400

[Karachi]

Before Zahid Kurban Alavi, J

STANLEY THOMES PUBLISHERS LTD. and another---Plaintiffs

Versus

NATIONAL BOOK FOUNDATION and others---Defendants.

Suit No.729 of 2000, heard on 29th June, 2000.

(a) Copyright Ordinance (XXXIV of 1962)---

----Ss. 10(2)(2-A) & 80---National Book Foundation Act (XIX of 1972), S.6---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Reproduction of educational materials--­Application for registration of copyright---Interim injunction, grant of---Defendants, a statute of body, were selling books after incorporating on its opening page their own logo and words "Reproduced by National Book Foundation", while printing on its back page logo and name of National Book Foundation with names of various cities, where National Book Foundation was available---Defendant could not produce any document showing grant of permission by original owner to National Book Foundation or Federal Government to incorporate such name on books and sell them in, the market---Section 10(2-A) of the Copyright Ordinance, 1962 could not be read in isolation, rather the whole S. 10(2) had to be read, otherwise entire Ordinance would become redundant---In absence of any authority to the contrary available with Government, case for grant of injunction had been made out which was granted accordingly.

(b) Civil Procedure Code (V of 1908)---

----O.VII, R.11---Rejection of plaint---Essential considera­tions ---Necessity of recording evidence to arrive at just decision---Principles illustrated. Application under Order VII, Rule 11, C.P.C., can be entertained and looked into only after the plaint has been read. Rejection of plaint has to be based upon the plain reading of plaint. It has to appear on the face of it. The defence taken in written statement shall not be considered as basis for rejection of plaint. In cases, where in order to come to a just and fair decision, it is necessary to investigate the matter, then evidence has to be recorded.

Navin Merchant and Saleem Ghulam Hussain for Plaintiffs.

Hasan Irfan alongwith Hameed Iqbal for Defendants.

Date of hearing: 29th June, 2000.

2003 C L D 1429

[Karachi]

Before S. Ahmed Sarwana and M. Mujeebullah Siddiqui, JJ

MUHAMMAD HUSSAIN ---Appellant

Versus

DAWOOD FLOUR MILL and others---Respondents

High Court Appeal No. 255 of 1998 decided on 2nd April, 2003.

(a) Companies Ordinance (XLVII of 1984)---

----S. 290---Petition for regulating affairs of company on ground of fraudulent transfer of shares of petitioner--­Maintainability---Such petition would not fall within ambit of S.290 of the Companies Ordinance, 19.84 as same did not deal with a situation, where a member of company apprehended that his shares might be or had been transferred in an unlawful or fraudulent manner in favour of other person.

(b) Companies Ordinance (XLVII of 1984)---

----S. 305(f)(iii)---Winding up petition by a person not presently member of the company---Maintainability---Such petition could be filed only by a person, who owned at least one share of company and his name appeared in register of shareholders of company on the day of its filing, but not by a person, whose name was borne on such register prior to the date of its filing.

(c) Companies Ordinance (XLVII of 1984)-----

----S. 305---Winding up petition by person claiming to be minority shareholder---Maintainability---Such petition could be filed by minority shareholder i.e. holding not less than 20% of equity share capital of company.

(d) Companies Ordinance (XLVII of 1984)---

----Ss. 152 & 305---Winding up petition on ground of fraudulent transfer of petitioner's shares in favour of third persons---Maintainability---Remedy of petitioner was to file application under S.152 of Companies Ordinance. 1984 for rectification of register of members---Petition for winding up of company was patently not maintainable in law.

M. Ismail Kassim for Appellant.

Iqbal Haider for Respondent No. 1.

K.B. Bhutto for Respondents Nos.2 and 3.

Date of hearing: 7th March, 2003.

2003 C L D 1447

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and Ghulam Rabbani, J

M. A. KAREEM IQBAL---Petitioner

Versus

PRESIDING OFFICER, BANKING COURT NO.III and 4 others---Respondents

Constitutional Petition No.720 of 2002, decided on 31st December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.10 & 22(1)(3)---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Maintainability---Suit for recovery of loan amount---Refusal of Banking Court to grant leave to defend suit---Challenge to such order through Constitutional petition on the ground that same was patently illegal and void; and that remedy of appeal was inadequate, insufficient and illusory in view of condition of furnishing security or deposit of decretal amount for admission of appeal and grant of stay order, thus, petitioner was entitled to bypass same and approach High Court in its Constitutional jurisdiction---Validity---Provisions of S.22(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001 were not stringent and harsh, but were soft and easy---Pre-condition of furnishing of security, for which a reasoned order would have to be made by High Court in its capacity of Appellate Authority, would not automatically render remedy of appeal as nugatory, inefficacious and inadequate---Proviso' to S.22(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001 did not curtail or hinder right of appeal---Filing of Constitutional petition instead of seeking remedy of appeal provided under the statute, particularly when appellate forum was none other, but High Court, was disapproved---Principles.

The language of section 22(3) of Ordinance, 2001 is altogether different from language of section 21 of repealed Ordinance of 1979 and section 9 of repealed Ordinance of 1984, wherein specific condition for deposit of the amount claimed or due or decreed was provided for admission of appeal. The pre-condition provided in section 22(3) of Ordinance, 2001 for admission of appeal is much easier and softer than the provisions contained in section 12 of repealed Ordinance of 1979 and section 9 of repealed Ordinance of 1984.

Provisions of section 22(3) of Ordinance of 2001 are not as stringent and harsh as were in the earlier statutes relating to recovery of loans/advances of financial institutions and it cannot be said that pre-condition of furnishing of security, for which a reasoned order will have to be made by High Court in its capacity as Appellate Authority, would automatically render remedy of appeal as nugatory, inefficacious and inadequate. The provisions of section 22(3) have given vast power to Appellate Court for stating or declaring the reason and conditions for furnishing the security. Appellate Court after taking into consideration the facts and circumstances of each case and examining the extent of liability of aggrieved party will be absolutely free to determine easy and soft terms for furnishing of security.

Maintainability of the present Constitutional petition appears to be doubtful on another ground namely, where a statute provided a self-contained machinery for determination of questions arising under the statute and it also provides remedy by way of appeal or revision to another Tribunal or Court fully competent to give any relief, then an indulgence by High Court in accepting a Constitutional petition assailing impugned order passed by Tribunal or Court in contravention of the provisions made in the statute, will produce a sense of distrust in Appellate Forum/Court provided by the statute. In such circumstances, Constitutional petition would not be maintainable and it will be imperative for aggrieved party to resort to remedy of appeal provided under the statute.

Mst. Kaniz Fatima v. Muhammad Salim and 27 others 2001 SCMR 1493 fol.

This would be applicable with greater impact in the present case as appellate forum is none other, but High Court.

Ch. Muhammad Ismail. v. Fazal Zada PLD 1996 SC 246 fol.

Where appellate or revisional authority under a particular statute for filing an appeal or revisions against an order passed thereunder is High Court, then in such a situation, High Court will not allow its appellate or revisional jurisdiction to be side-tracked by entertaining a Constitutional petition by aggrieved party and will insist that the provision of statute for filing the appeal or revision be followed, notwithstanding the pre-condition or requirement of furnishing security or depositing the amount claimed or furnishing amount in Appellate Court.

Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881 fol.

With regard to contention that impugned order is unlawful, passed in illegal exercise of jurisdiction, contrary to material/ evidence on record and void ab initio, as a result of which it could be challenged directly by invocation of Article 199 of the Constitution in view of the principle enumerated in the case of Mst. Kaniz Fatima 2001 SCMR 1493, it is to be noted that such observation of Supreme Court was qualified by the condition that the controversial question be decided without any comprehensive inquiry into complicated, ticklish, controversial and disputed facts.

Mst. Kaniz Fatima v. Muhammad Salim and 27 others 2001 SCMR 1493 ref.

The provision for depositing decretal amount for granting stay contained in repealed Act of 1997 was similar to the like restrictions contained in Order XLI, Rule 5, C.P.C. Like or similar retractions contained in Order XLI, Rule 5, C.P.C. are in existence since a very long time, but such restrictions have never been held to be causing a hurdle or hindrance in the right of an aggrieved party preferring an appeal in accordance with the provisions of C.P.C. In these circumstances, the proviso to section 22(3) of Ordinance, 2001 can by no stretch of imagination be said to be curtailing or hindering the right of appeal, so as to enable petitioner to bypass the remedy of appeal provided under section 22 of Ordinance, 2001 and to invoke Constitutional jurisdiction of High Court for assailing an order, which otherwise will be assailable by way of appeal under section 22 of Ordinance, 2001.

Balochistan Trading Company (Pvt.) Ltd. And another v. National Bank of Pakistan and another 1998 SCMR 1899 fol.

Constitutional petition was found to be misconceived and not maintainable and was dismissed in limine in circumstances.

Syed Saghir Ahmed Naqvi v. Province of Sindh and another 1996 SCMR 1165; Ghulam Hussain and another v. Malik Shahbaz Khan and another 1985 SCMR 1925 and Messrs Tank Steel and Re-Rolling Mills (Pvt.) Ltd., Dera Ismail Khan and others PLD 1996 SC 77 and Shaikh Gulzar Ali Co. v. Special Judge S. Court of Banking 1991 SCMR 590 ref.

K. M. Samdani for Petitioner, Badar Alam for Respondent No.2.

2003 C L D 1487

[Karachi]

Before Ata-ur-Rehman and Muhammad Afzal Soomro, JJ

KARACHI PIPE MILLS LIMITED---Appellant

Versus

HABIB BANK LITD and another---Respondents

High Court Appeal No. 163 of 2002, decided on 22nd July, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLV1 of 2001)---

----S.22(6)---"Interlocutory order'---Meaning---Order which is incidental to or a step in aid of a final decision.

Pakistan Fisheries Ltd. v. United Bank Ltd PLD 1993 SC 109 fol.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----Ss.19 & 22(6)---Civil Procedure Code. (V of 1908), O.XXI, R.89---Execution of decree by sale of mortgaged property--­Appellant (judgment-debtor) was allowed to match highest bid of auction purchaser by depositing amount within specified time---Executing Court dismissed appellant's application seeking extensions of time---Appeal against such interlocutory order---Maintainability---Execution petition was still pending---Appeal was not maintainable as same had not been filed against any final order---Relief demanded in appeal could not be granted to appellant for not having filed application under O.XXI, R.89, C.P.C., before the Executing Court---High Court resolved grievance of appellant by granting him extension up to specified date, which he had not complied with up to date---Appellant was neither entitled for any further extension of time or leniency by High Court nor any purpose would be served by same---High Court dismissed the appeal in limine.

Pakistan Fisheries Ltd. v. United Bank Ltd PLD. 1993 SC 109 fol.

Syed Zaki Muhammad for Appellants.

Rasheed A. Razvi for Respondent No.2.

Fida Hussain, Litigation Officer of Habib Bank Limited.

Date of hearing: 22nd July, 2002.

2003 C L D 1497

[Karachi]

Before Muhammad Roshan Essani and Khilji Arif Hussain, JJ

Messrs AL AHRAM BUILDERS (PVT.) LIMITED---Appellant

Versus

PAKISTAN DEFENCE OFFICERS HOUSING AUTHORITY---Respondent

High Court Appeal No.48 of 2003, decided on 16th May, 2003.

(a) Civil Procedure Code (V of 1908)---

----O. VII, Rr.14, 18 & O.XXIX, R.1---Suit by a limited company---Duty of company to pass resolution authorizing some one to file the suit---No rule existed requiring filing of such resolution with the plaint---Filing such resolution copy of article of Association or power of attorney as part of plaint---Necessity emphasized.

For purpose of filing suit on behalf of a limited company, the company ought to have passed resolution to file suit and authorize some one to file same, this is however, subject to the provision of Articles of Association of company. As regards filing of such resolution 'alongwith plaint; no rule existed, which required that the person at the time of filing suit on behalf of the company should also produce Board resolution authorizing him to file the suit. While filing suit on behalf of the company, it is desirable that person filing suit, should place" on record such resolution as part of plaint or copy of Articles of Association or power of attorney executed in his/her favour to file the suit.

(b) Company---

----"Company" and "partnership firm"---Distinction--­Company is a juristic person---Functions of company are normally regulated by its Directors/ Secretary in terms of powers delegated to them by Articles of Association and/or by its Board of Directors unlike a partnership firm, where a partner can bind the firm by his act.

(c) Civil Procedure Code (V of 1908)---

----O.XIII, Rr.1, 2, O. VII, Rr.14, 18 & O.XXIX, R.1--­Resolution of company authorizing some one to file suit on its behalf sought to be produced after eleven years of framing of issues, five years of examination-in-chief of plaintiff and 1-1/2 months after his cross-examination--­Validity ---Court had not framed any specific issue as to whether suit had been filed by authorized person or not and/or whether the Board of Directors of company had passed any resolution in this regard or not---In absence of such issue, plaintiff was not required to produce such resolution---Defendant had not doubted authenticity of resolution passed by company---Application filed by plaintiff under O. XIII, Rr. 1 & 2, C.P.C., was granted.

(d) Civil Procedure Code (V of 1908)---

----O.XIII, Rr.1, 2 & O. VII, R.18---Official document sought to be produced after eleven years of framing of issues, five years of examination-in-chief of plaintiff and 1-1/2 months after his cross-examination---Validity---Authenticity of such document was beyond any shadow of doubt---Application was granted in circumstances.

(e) Administration of justice---

---- Technicalities have to be avoided for proper administration of justice, unless .it be essential to comply with them on ground of public policy"--Prime object of Court is to do justice among parties and not deny relief to parties on technicalities.

(f) Civil Procedure Code (V of 1908)---

----O.XIII, R.2---Object of O.XIII, R.2, C.P.C. stated.

Evidence should not be shut out to exclude documents generally, except where they are apparently suspicious, forged or fabricated, so as to prevent fraud. Object of Order XIII, Rule 2, C.P.C., is not to penalize parties for not producing document in time, but to provide an opportunity to produce evidence, which party for some good cause could not produce in time.

(g) Civil Procedure Code (V of 1908)---

----O. VII, Rr. 9, 14, Ss. 91, 92, O.XXIX, R. 1 & XXX, Rr.1, 2--­Duty of Presiding Officer or officer nominated to receive plaint---To see that whether documents on basis of which suit has been filed, are annexed with plaint; to satisfy about authority of person filing suit; that whether consent of Advocate-General has been taken in respect of matter relating to public nuisance or public charities as required under Ss.91 & 92, C.P.C. and if the suit is filed by a partnership firm, ask for certificate of registration of firm.

Khalid Jawed for Appellant.

Ch. Muhammad Jamil for Respondent.

Date of hearing: 15th April, 2003.

2003 C L D 1511

[Karachi]

Before Muhammad Roshan Essani and Anwar Zaheer Jamali, JJ

Chaudhry MUHAMMAD ASLAM and others---Appellants

Versus

Dr. ARSHAD MALIK and others---Respondents

First Appeal No.41 of 2002, decided on 9th April, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----S.22---Partnership Act (IX of 1932), S.69---Appeal by two persons, one of them was an unregistered firm--­Maintainability---Appeal on behalf of such firm was not maintainable, thus, High Court deleted its name from array of appellants- --Other appellant being aggrieved with impugned order could maintain appeal independently.

H. M. Saya & Co., Karachi v. Wazir Ali Industries Ltd., Karachi PLD 1969 SC 65 rel.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19(7)---Civil Procedure Code (V of 1908), O.XXI, R.58--­Execution proceedings---Filing objections to order of attachment---Limitation---No period of limitation having been prescribed for such purpose under S.19 (7) of Financial Institutions (Recovery of Finances) Ordinance, 2001, objection on such ground was also not tenable.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19(7)---Civil Procedure Code (V of 1908), O.XXI, R.58--­Partnership Act (IX of 1932), S.69---Execution proceedings--­Similar objections as raised by unregistered firm were also raised by the intervenor by moving separate application--­Banking Court without disposing of application of intervenor dismissed the objection petition filed by the firm---Validity--- Even if application of unregistered firm was not maintainable, Banking Court was bound to examine the merits of pleas raised by the intervernor.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.19(7) & 22---Civil Procedure Code (V of 1908), O.XXI, R.58---Execution of decree---Attachment of cheque lying with Nazir of High Court issued earlier in appellant's name (judgment-debtor) in execution of decree passed in a suit instituted by him and intervenor jointly as two partners of firm ---Intervenor objected to such attachment on the ground that he was having 90% shares in the firm, while appellant was having 10% shares---Banking Court dismissed objection petition on the ground that cheque was in exclusive name of the appellant, thus, Bank was entitled to its encashment towards satisfaction of its decree---Validity---Duty of Banking Court was to have first decided question as to whether such cheque was for exclusive benefit of appellant or the intervenor was also entitled to some share therein--­Issuance of cheque in exclusive name of appellant, admittedly not encashed, would not be sufficient proof of the fact that only he was entitled to its payment and that inverneror had no claim therein---Before releasing payment of cheque an enquiry should have been held to decide the claim of intervenor, who was on the one hand not a judgment-debtor before Banking Court and on the other hand as he had some prima facie interest in the decree passed in earlier suit as plaintiff---View taken by Banking Court in the impugned order that no enquiry was required to be held by it in that regard not only demonstrated patent illegality, but also denial of fair and proper opportunity of hearing to intervenor---High Court disposed of appeal with directions to Banking Court to hold proper inquiry with regard to claim of the intervenor.

PLD 1982 Kar. 577 and PLD 1999 Kar. 196 ref.

Shaft Muhammadi and Salim Salam Ansari for Appellant.

Hamid Ali Shah for Respondent No. 1.

Tassawar Ali Hashmi for Respondent No.2.

Gohar Iqbal for the Intervenor.

2003 C L D 1531

[Karachi]

Before Mushir Alam, J

PAKISTAN DRUG HOUSE (PVT.) LIMITED‑‑‑Plaintiff

Versus

RIO CHEMICAL COMPANY and another‑‑‑Respondents

Suit No.677 of 2001, decided on 23rd May, 2003.

(a) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.2(1)5 & 21‑‑‑Trade Marks Rules, 1963 Fourth Sched.‑‑‑Copyright Ordinance (XXXIV of 1962), Ss.42, 23 & 3‑‑‑Patents and Designs Act (II of 1911), S.12‑‑‑Registration of trade mark, copyright and patent and design‑‑‑Effect.

`Trade mark' is registrable in respect of some vendible goods in any' of the 34 classes detailed in 4th Schedule to the Trade Mark Rule. Trade mark, in fact, is relatable to or associated with any vendible goods. Such vendible goods acquire special significance when same are associated or reputed to be associated with any trade mark, such goods in commercial parlance may be referred as "Branded good". Indeed Trade mark, Copyright, a Patent and Design give monopolistic right to the registered owner thereof in the sense that such right holder has right to use and exploit such property to the exclusion of others.

However as far as trade marks are concerned such are meant to distinguish the goods of owner of the mark whether registered (or otherwise like prior user) from that of the other manufacturers or producers of goods. Such distinction is for the benefit of consumer of such goods, though it also benefits the manufacturers and producers of such goods as well. There is no corresponding provision to section 5 of the Trade Marks Act, under the Copyright Ordinance 1962. Copyright in terms of section 3 of the Ordinance, 1962 is an exclusive right in relation to literary, dramatic, musical, artistic work, in any tangible medium of comprehension either audio or visual in any form that could be copied reproduced, multiplied, communicated, transmitted, repeated, broadcast, telecasted, adopted in any form. Generally artistic work could be protected under the Copyright Ordinance, 1962. Copyright in such artistic work is not necessarily or directly associated with any vendible goods unless of course same is used or proposed to be used and is desired to be used for some vendible goods then in terms of section 14 of the Trade Marks Act, 1940 same are required to be registered as such. From the scheme of the Copyright Ordinance it appears to protect "copyright" in original work, by itself it is not relatable or associated with any vendible goods. The holder of such copyright in artistic work has exclusive right to produce and multiply such work. In terms of section 23 of the Copyright Ordinance, 1962 the holder of a copyright has exclusive right to reproduce the work in any form, to publish, to perform, to translate, to communicate, broadcast, telecast, perform, adopt. From the scheme of the Copyright Ordinance, 1962 it appears that such copyright work independently is capable of reproduction and reproduced copy is vendible independently and individually. It does not have any nexus with any other separate and independent vendible goods unless said artistic work otherwise is also used as a trade mark under the Trade Marks Act as discussed, above.

(b) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑S.21‑‑‑Exclusivity of use of a registered trade mark in relation to any vendible goods in respect of which the same was registered‑‑‑Conditions.

Section 21 of the Trade Marks Act, 1940 confers exclusivity of use of a registered trade mark in relation to any vendible goods in respect of which it is registered. Such exclusivity to use the registered mark can be gauged from the language of section 21 of the Act of 1940. Once it is demonstrated that a person is registered holder of a mark exclusivity is presumed. However, such exclusivity is subject to certain conditions namely (a) any condition or limitation entered on register at the time of registration by the Registrar as provided for under section 22; (b) prior user of the mark irrespective whether the same is registered or not as provided for tinder section 25; or (c) where the use of the name and description of the goods is used bona fide by a person of his name, place of business either of himself or of his predecessors, or, (d) honest and concurrent user of mark in terms of section 10(2). Defence based on any of the considerations set out above, may be considered formidable statutory defence against claim of infringement or passing off.

(c) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑S.14‑‑‑Any decision rendered in a collateral proceedings will not prejudice or affect the rights of either the plaintiff or of the defendants an proceedings before the Registrar, Trade Marks.

(d) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.21‑‑‑Registration of trade mark‑‑‑Disclaimer‑‑‑When one or more part of a mark were subject to disclaimer then the subject‑matter of registration would be distinctive manner, get‑up and colour scheme in which each of the constituting disclaimed parts or portions of mark were placed and arranged to give it the same distinction from the other mark using the same disclaimed part or portion of competing goods‑‑‑Registered holder of trade mark, who had disclaimed, any of the features of the mark either in word, device or get‑up or where such feature was claimed to be common to trade whatever the case may be‑‑‑Holder of the mark may claim monopoly in the manner in which such mark, device, word or any combination thereof was put to use to distinguish his product from the others‑‑‑Using a copyright material as a substitute for the trade mark was not the intent and purpose of Copyright Ordinance, 1962‑‑?Such copyright material independently could not be used or associated with any vendible or saleable goods unless, of course, such copyright was registered under the Trade Marks Act, 1940‑‑‑Principles.

(e) Copyright Ordinance (XXXIV of 1962)‑‑‑

‑‑‑‑S. 39‑‑‑Trade Marks Act (V of 1940), S.21‑‑‑ Using a copyright material as a substitute for the trade mark was not the intent and purpose of Copyright Ordinance, 1962‑‑?Such copyright material independently could not be used or associated with any vendible or saleable goods unless, of course, such copyright was registered under the Trade Marks Act, 1940.

(f) Copyright Ordinance (XXXIV of 1962)‑‑‑

‑‑‑‑S.39‑‑‑Gross misuse of registration of artistic work or other material under the Copyright Ordinance, 1962 by the unscrupulous traders with covert object deprecated by the High Court‑‑‑High Court desired the amendment to be made in S.39, Copyright Ordinance, 1962 in view of guidelines suggested in the judgment.

The Registration of artistic work or other material under the Copyright Ordinance, 1962 is being grossly misused by unscrupulous traders with covert object.

Such persons and traders have transgressed all moral values, they are not ashamed of even adopting artistic work in internationally reputed and world renowned/brand names. Such foreign artistic works which otherwise, are subject‑matter of trade mark, are got registered under the Copyright Ordinance, 1962. Such practice not only is seriously tarnishing image of our country but at the same time Copyright Law is being used as a cloak to usurp goodwill of holder of trade mark.

Due amendment has been made in section 39 of the Copyright Ordinance, 1962 and a proviso has been added to it.

From bare perusal of the proviso added to section 39, it appears that only objections are invited through publication in newspapers. Experience shows that unscrupulous traders get the artistic work sought to be copyrighted published in very innocuous newspapers having hardly any circulation. It appears that the proviso added to section 39 of the Ordinance, 1962 is not sufficient to check the malpractice and abuse of Copyright Ordinance.

Such tendency was effectively checked in India where a proviso was added as far back as in 1983, to section 45 of the (Indian) Copyright Act, 1957, which reads as follows:

Provided that in respect of an artistic work which is used or is capable of being used in relation to any goods, the application shall include a statement to that effect and shall be accompanied by a certificate from the Registrar of Trade Marks referred to in section 4 of the Trade and Merchandise Marks Act, 1958 (43 of 1958), to the effect that no trade mark identical with or deceptively similar to such artistic work has been registered under that Act in the name of or that no application has been made under that Act for such registration by any person other than the applicant.

The proviso added‑to the corresponding provision in Indian Copyright Act appears to be more effective in checking the menace of such abuse of copyright. The law makers may consider amending section 39 of Copyright Ordinance, 1962 in line with proviso to section 45 (Indian) Copyright Act, 1957.

(g) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.21‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Interim injunction‑‑‑Plaintiff had made out prima facie case that they were the registered holder of subject trade mark in terms of S.21 of the Trade Marks Act, 1940 to the exclusion of others‑‑‑Application of plaintiff under O.XXXIX, Rr.1 & 2 was allowed accordingly.

Salim Ghulam Hussain for Plaintiff.

Shakeel Abid and Ch. Tanveer Amjad for Defendants.

2003 C L D 1549

[Karachi]

Before Ata‑ur‑Rehman, J

UNIVERSAL TOBACCO (PVT.) LTD. and others‑‑Appellants

Versus

JAPAN TOBACCO INC. and others‑‑‑Respondents

Miscellaneous Appeals Nos.9, 10, 11, 13, 14 and 15 of 2000 and 15, 16, 17, 18 and 21 of 1999, decided on 24th March, 2003.

Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.15 & 14‑‑‑All pending applications/ oppositions should be decided by the Tribunal simultaneously to avoid conflict of decisions and multiplicity of proceedings‑‑‑If the identical matters were decided in different sets at different times, the decisions were likely to affect adversely the decision of the other set‑‑‑Three applications, in the present case, having duly been ordered to be advertised, were discussed in the impugned judgment of the Tribunal but had not been finally decided on merits‑‑‑Neither the judgment of the Tribunal in question disclosed any legal justification for bypassing the earlier order advertising the said three applications nor any provision of law to that effect was shown‑‑‑Once an application had been ordered to be advertised the same could not be left in abeyance without going through the process of advertisement‑‑‑Judgment of the Tribunal, in circumstances, was set aside by the High Court and all applications and oppositions covered by the appeals in the case were remanded to the Tribunal for fresh adjudication on merit alongwith the three said applications‑‑‑High Court, however, declined to discuss the case or adjudicate the same and directed that the Tribunal would be at liberty to decide the matters afresh in accordance with law.

Basra Soap, Factory v. Punjab Soap Factory PLD 1973 Kar. 279; Playboy Enterprise Inc. v. Registrar of Trade Marks and another 1986 MLD 1312; Iqbal Ahmed v. The Registrar of Trade Marks; Karachi 1988 CLC 1052; Messrs Dynasel (Pvt.) Ltd. v. The Registrar of Trade Marks, Karachi PLD 2000 Kar. 298; Assistant Registrar of Trade Marks v. Messrs Lackson Company Tobacco Ltd. 1992 SCMR 2323; Nahan Foundry v. Messrs Seth Muhammad Rafique Zarati Foundry and others 1994 MLD 2401 and National Detergents Limited v. Nirma Chemicals Works and another 1992 MLD 2358 ref.

Sultan Ahmed Sheikh for Appellants (in Appeals Nos.9, 10, 11, 13, 14 and 15 of 2000).

Zulfiqar Ahmed Khan for Respondents (in Appeals Nos.9, 10, 11, 13, 14 and 15 of 2000).

Salim Ghulam Hussain for Appellants (in Appeals Nos. 15, 16, 17, 18 and 21 of 1999).

Zulfiqar Ahmed Khan for Respondents (in Appeals Nos. 15, 16, 17, 18, and 21 of 1999).

2003 C L D 1559

[Karachi]

Before Zahid Kurban Alvi, J

SINDH FLOUR MILLING CORPORATION through Accounts Officer/ Principal Officer‑‑‑Petitioner

Versus

Messrs GOOD LUCK INDUSTRIES‑‑‑Respondent

Miscellaneous Application No. 157 of 1995, decided on 10th February, 2003.

Flour Milling Control and Development (Repeal) Ordinance (XXIX of 1977)‑‑‑--

‑‑‑‑S.7‑‑‑Industrial. Development Bank Ordinance (IV of 1961), Ss. 39 & 40‑‑‑Contract Act (IX of 1872), S.25(3)‑‑­Limitation Act (IX of 1908), S.19‑‑‑Federal Government Notification S.R.O.‑710(I)/76‑‑‑Time for filing suit for ­recovery of amount‑‑‑Limitation‑‑‑Computation‑‑‑Extension of time‑‑‑Acknowledgment of liability and offer to make the payment‑‑‑Time had to be extended and the acknowledgment had to be made before the expiry of limitation period from the date when such liability accrued‑‑­Application having been admittedly filed much after the period of limitation had expired, the matter was clearly time­ barred in circumstances‑‑‑Principles.

UBL v. Kurnool Muhammad Munir 1991 CLC 1758; Ghulam Haider v. Mst. Raj Bhari and 4 others PLD 1973 Lah. 372; National Bank of Pakistan v. Bawany Industries Ltd. and 3 others 1982 CLC 2625; Mst. Fattan Bi and others v. Fateh Muhammad and 6 others PLD 1974 Lah. 458; Bank of India v. Muhammad Ashraf and others PLD 1965 . Kar. 69; Government of West Pakistan v. Syed Zainul Ebad Rizvi PLD 1977 Kar. 297; Pakistan v. Messrs Aneejee Valeejee and Sons and another PLD 1978 Kar. 244; Habib Bank Limited v. Shamim. Qureshi PLD 1988 Kar. 481; Messrs Norwich Union Fire Ins. Society Limited v. Zakaria Industries, Karachi 1994 CLC 1280; Messrs United Bank Limited v. Messrs Bombay Frontier Old Tire Co. and another 1986 MLD 1613 and M. G. Kadir & Co. v. Abdul Latif PLD 1970 Kar. 708 ref.

Miss Rashida Siddiqui for Appellant.

Mrs. Navin Merchant for Respondent.

2003 C L D 590

[Karachi]

Before Khilji Arif Hussain, J

MUSLIM COMMERCIAL BANK LTD. ‑‑‑Plaintiff

Versus

Messrs AL‑FAHM TEXTILE MILLS LTD. and others‑‑‑Defendants

Suit No.674 of.1995, decided on 4th February; 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S. 9‑‑‑Suit for recovery of loan amount‑‑‑Failure of defendant to pay instalments on its due dates as per terms of loan agreement‑‑‑Plea of defendant was that suit was premature as on such dates, entire amount claimed had not become due or payable‑‑‑Validity‑‑‑Bank had an option can either to file suit for recovery of due instalments only or cancel facilities and demand immediate payment of entire loan‑‑‑Bank had rightly filed the suit.

(b) Banking Companies (Recovery of Loans, Advances Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 17(3)(4)‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 9 & 18(3)(4)‑‑­Qanun‑e‑Shahadat (10 of 1984) Art. 17(2)(a)‑‑‑Suit for recovery of loan amount‑‑‑Defendant alleged guarantee document, letter of hypothecation and deed of floating charge to be void for having been attested and executed prior to coming into force of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Validity‑‑‑Both Act, 1997 and Ordinance, 2001 had specifically saved documents required to be attested under Qanun‑e‑Shahadat, 1984, if same had been executed prior to enforcement thereof‑‑‑Attestation of guarantee and hypothecation by two witnesses not required under Ordinance, 2001‑‑‑Such documents executed in year 1988 could not be held void, inoperative and of no legal effect‑‑­Such plea was repelled being devoid of any legal force.

Anjum Ghani Khan for Plaintiff.

Syed Mamnoon Hassan for Defendants.

Date of hearing: 11th December, 2002.

2003 C L D 1601

[Karachi]

Before Anwar Zaheer Jamali, J

ARY TRADERS (PVT.) LTD.‑‑‑Plaintiff

Versus

MULSIM COMMERCIAL BANK LTD. ‑‑‑Defendant

Suit No. 151 of 1998, decided on 25th February, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 10‑‑‑Civil Procedure Code (V of 1908), O. VIII, R.11‑‑‑Suit against Bank not relating to loan or finance‑‑­Rejection of plaint‑‑‑Agreement executed between parties to suit and a foreign Bank was produced by plaintiff with counter‑affidavit in reply to defendant's leave application‑‑­Such agreement was neither referred to in plaint nor suit was based thereon‑‑‑Defendant did not dispute or deny agreement, but referred to same in written statement‑‑‑Held, such agreement could be considered at time of deciding application under O. VII, R.11, C.P. C.

1992 MLD 225; 1994 SCMR 826; 1993 MLD 2419; 2000 CLC 1620 and 2002 SCMR 338 ref.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 27‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 9 & 27‑‑‑Civil Procedure Code (V of 1908), O. VII, R.11‑‑‑Suit against Bank not relating to loan or finance‑‑‑Issue on jurisdiction of Banking Court was framed, but declined to be decided as preliminary issue‑‑‑Application by defendant seeking rejection of plaint on the ground that suit was barred under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 as same did not relate to loan or finance‑‑‑Validity‑‑­Framing of an issue as to jurisdiction would not denude Banking Court of its powers to entertain and decide application under O. VII, R.11 or 10, C.P.C., within parameters defined by law for such purpose‑‑‑Any order on such application would not amount to review of earlier order declining to decide such issue as preliminary issue.

AIR 1993 All. 762; 1990 MLD 1764; 1973 SCMR 62; PLD 1995 SC 362; 1999 SCMR 2353 and 2001 CLC 1363 ref.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss. 2(c)(d)(e)(f) & 9‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 2(c)(d)(e) & 9‑‑‑High Court of West Pakistan (Establishment) Order (XIX of 1955), para. 5‑‑‑Suit against Bank not relating to loan or finance‑‑­Jurisdiction of Banking Court‑‑‑Dispute raised by plaintiff was in respect of operation of their Foreign Currency Account at defendant‑Bank for not following their instructions and withholding of balance sum available in their account‑‑‑Such facts did not determine status of plaintiff as "borrower" or "customer", but only of a foreign currency account‑holder‑‑‑Such dispute could rot be considered as a dispute relating to some default in fulfillment of any obligation with regard to any loan or finance‑‑‑Such suit neither at the time of its institution nor at later stage could be proceeded under Banking Court's Jurisdiction ‑‑‑High Court directed office to treat such suit as a suit on its original civil jurisdiction side and be processed as such.

2000 MLD 1850; 1998 CLC 1781; 2000 YLR 2407; 1999 CLC 1294; 2001 YLR 905; PLD 2000 Lah. 168; PLD 1970 SC 1; 1992 SCMR 1748; 2001 CLC 1363; 2001 SCMR 103; 1998 CLC 1718; 1999 CLC 1953; 2002 CLC 658 and 2002 CLC 1455 ref.

Rasheed A Razvi for Plaintiff, Mansoorul Arfin for Defendant.

Dates of hearing 5th, 28th March, 2002; 10th September, 2002, 22nd October, 2002; 3rd January and 10th February, 2003.

2003 C L D 1612

[Karachi]

Before Khilji Arif Hussain, J

DIGITAL RADIO PAGING LTD. ‑‑‑Plaintiff

Versus

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION and others‑‑‑Defendants

Suit No. 59 of 1998, decided on 4th February, 2003.

(a) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S.9‑‑‑Jurisdiction of Tribunal‑‑Principles‑‑‑When Special Tribunal is constituted under a statute, its jurisdiction depends upon the specific provisions of the statute‑‑ Jurisdiction may be limited by conditions as to constitution, as regards persons whom or the offences which it is competent to try and as to the orders which it is empowered to make or by other conditions which the law makes essential to the validity of its proceedings and orders‑‑‑Where conditions required for invoking the jurisdiction of Tribunal are not available, then remedy lies to Civil Court under S.9, C.P.C.

(b) Interpretation of statutes‑‑‑

‑‑‑‑ Meaning of statute and duty of Courts‑‑‑Principles Statutes must prima facie be given their ordinary dictionary meaning however to arrive at the true meanings it is necessary to get an exact conception of aim, scope and object of the whole Act‑‑‑Where statute defines the limits for purposes of benefits a particular way, Courts are bound to give effect to show limitation without traveling outside those limits on a presumed intention of the Legislature, however, great the hardship might be to the parties, if any other course is followed.

(c) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Civil Procedure Code (V of 1908), O.II, R.2--­Damages, claim of‑‑‑Omission to sue for relief regarding damages‑‑‑Cause of action accrued on 10‑12‑1991 and suit for damages was filed on 16‑1‑1998‑‑‑Plaintiff claimed damages on account of breach committed by the defendant in providing finance which cause of action was available to the plaintiff at the time of filing of earlier suit ‑‑‑Effect‑‑­Plaintiff had to include the whole claim for which the plaintiff was entitled to make and by omitting not to sue in respect of such claim the plaintiff cannot afterwards sue in respect of portion so omitted or relinquished‑‑‑Plaintiff had a right to file suit for the recovery of damages, if any, suffered by him on account of breach of the obligation if any by the defendant before the Banking Court‑‑‑Plaintiff failed to avail the remedy available to him within the terminus quo prescribed under the Limitation Act, 1908‑‑‑Cause of action accrued on 21‑3‑1990 and finally on 10‑12‑1991, therefore, suit filed on 16-1‑1998 was barred by time‑‑‑Suit was dismissed in circumstances.

(d) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O. VIII, R.6‑‑‑Counter‑claim‑‑‑Limitation‑‑‑Counter‑claim and or additional claim, has to be filed within three years from the date of cause of action of the suit‑‑‑Suit filed after three years of the cause of action is liable to be dismissed.

Niamat Ali v. Jaitam Das PLD 1983 SC 5 ref.

(e) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O. VIII, R. 6‑‑‑Counter‑claim‑‑‑Scope‑‑‑Person not party to suit‑‑‑No counter‑claim can be made against such person.

Niamat Ali v. Jaitam Das PLD 1983 SC 5 ref.

Hisamuddin for Plaintiff.

Ejaz Ahmad Khan for Defendant No. 1.

Altaf Hussain for Defendant No.2.

Date of hearing: 10th December, 2002.

2003 C L D 1625

[Karachi]

Before Zahid Kurban Alavi, J

EAPOHIRE TEXTILE MILLS LTD. and others‑‑‑Plaintiffs

Versus

APL PAKISTAN (PVT.) LIMITED and others‑‑‑Defendants

Suit Nos. 175, 176 and 189 of 2002.

Monopoly and Restrictive Trade Practices (Control and Prevention) Ordinance (V OF 1970)‑‑‑

‑‑‑‑Ss.13, 14 & 15‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Application under O.XXXIX, Rr.1 & 2, C.P.C.‑‑‑Seeking a restraining order against the defendants from demanding or recovering directly or indirectly any amount by way of war risk charge‑‑‑Validity‑‑‑Provisions of Ss.13, 14 & 15 of the Monopoly and, Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 provided for interim order and that for all practical purposes a proper inquiry could be conducted and to that extent witnesses could be summoned and examined on oath and notices for production of documents for the purposes of recording of evidence, the issuing of commission for the examination of witnesses etc. were applicable for the purpose of coming to a fair and just conclusion‑‑‑If the plaintiff, in the present case, was of the feeling that there had been a violation‑ of the Ordinance, it would have been proper for him to have availed the remedy mentioned in the Ordinance and proceeded accordingly‑‑‑If it was alleged that war risk surcharge in question was void, and illegal and contrary to the provisions of the said Ordinance, seeking relief by way of suit was not proper remedy‑‑‑Monopoly and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 having provided the remedy for the plaintiff, his application under O.XXXIX, Rr.1 & 2, C.P.C. was not maintainable.

Munib Akhtar for Plaintiffs.

Shaiq Usmani, Sajid Zahid, M. Naeem and Aijaz Ahmed for Defendants.

2003 C L D 1630

[Karachi]

Before Sabihuddin Ahmed and Amir Hani Muslim, JJ

MASOOM AKHTAR‑‑‑Petitioner

Versus

SECRETARY, MINISTRY OF COMMERCE, GOVERNMENT OF PAKISTAN and another‑‑‑Respondents

C.P.D. No.2054 of 2002, decided on 3rd January, 2003.

(a) Imports and Exports (Control) Act (XXXIX of 1950)‑‑‑--

‑‑‑‑Ss.5‑A, 5‑B & 3‑‑‑Powers of the Government could not be exercised by the Export Promotion Bureau as the Legislature had treated the Export Promotion Bureau as a separate and distinct organization (if not a strict legal person from the Federal Government or the Ministry of Commerce)‑‑‑Rules of Business prepared under the Constitutional mandate could allow a Department or officer to discharge such functions‑‑‑ Principles.

Section 5‑A of the Imports and Exports (Control) Act, 1950 enables the Federal Government to constitute Commercial Courts and under subsection (2), such Courts headed by Judicial Member would comprise of one Officer of the Federal Government to be nominated by the Ministry of Commerce and another from amongst businessmen or executives out of a selected panel in consultation with the Federation of Pakistan Chamber of Commerce and Industry. Section 5‑B(1) provides that the contravention of an order under section 3 relating to export trade shall be tried exclusively by a Commercial Court and subsection (2) stipulates that such Court will take cognizance of an offence upon a complaint in writing made by the Chairman or Vice‑Chairman of the Export Promotion Bureau or an Officer authorized by them. It is evident from a plain reading of section 5‑B(2) that the Legislature has treated, the Export Promotion Bureau as a separate and distinct organization (if not a strict legal person from the Federal Government or the Ministry of Commerce). The contention that the powers of the Government could be exercised by the Bureau is, therefore, plainly misconceived.

In any event, even if it be assumed that the Bureau is merely a Department of the Ministry of Commerce of the Federal Government, it does not necessarily follow that all powers of the Government could be exercised by the Bureau or its officers or for that matter even by all officers in the Ministry unless it can be shown that the Rules of Business prepared under the Constitutional mandate allowed them to discharge such functions.

(b) Locus poenitentiae, doctrine of‑‑‑

‑‑‑‑Applicability‑‑‑Once a decision vesting certain rights upon a party read been taken and acted upon, the same could not be recalled‑‑‑Doctrine of locus poenitentiae would not apply when the original decision that was rescinded was made by a person not authorized to do so.

Talib H. Rizvi, for Petitioner.

Date of hearing: 3rd January, 2003.

2003 C L D 1655

[Karachi]

Before Shabbir Ahmed, J

PROCEEDING IN REM AGAINST THE VESSEL M.T. PORTOFINO and another‑‑‑Plaintiffs

Versus

M.T. PORTOFINO‑‑Defendant

Admiralty Suit No.11 of 2000, heard on 3rd September, 2002.

Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑--

‑‑‑‑Ss.4 & 5‑‑‑Admiralty suit‑‑‑Plaintiff had invoked the admiralty jurisdiction of the High Court against the defendant vessel by an action in rem ‑‑‑Contention was that documentary evidence showed that the proposed defendant was owner of the vessel who had filed written statement therefore his presence before the Court was necessary for proper adjudication‑‑‑Validity‑‑‑Action in personam could have been brought in. respect of damage, loss of life or personal injury as a result of collision‑‑‑Contention that since the written statement on behalf of the vessel had been filed by the proposed, defendant, it had submitted to the jurisdiction of the Court and thus should be asked to be present in the Court was repelled and application of the plaintiff was dismissed.

Naeem Ahmed for Plaintiffs.

Muhammad Naeem for Defendant.

Date of hearing: 3rd September, 2002.

2003 C L D 1666

[Karachi]

Before Amir Hani Muslim, J

ALFRED C. TOEPFER INTERNATIONAL GMBH----‑‑Plaintiff

Versus

PAKISTAN MOLASSES COMPANY and another‑‑‑Defendants

Suit No. 340 of 1996, decided on 26th February, 2003.

(a) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑Ss.2(2) [as added by Foreign Awards and Maintenance Orders Enforcement (Amendment) Ordinance (LIII of 1962), S.2) & 2(1)(c)‑‑‑Notification SRO 481(K) dated 20‑4‑1960‑‑‑Enforcement of foreign award‑‑‑Scope‑‑‑Enactment of Foreign Awards and Maintenance Orders Enforcement (Amendment) Ordinance, 1962 was not violative of the Constitution and was promulgated under the authority of the Government of Pakistan‑‑‑Government of Pakistan had privilege/prerogative to decide as to whether the Award given in a particular foreign country is to be enforced in Pakistan or not, notwithstanding that the country in which the Award had been given had not made any reciprocal arrangement for the enforcement of Awards given in Pakistan as contemplated in S.2 of the Arbitration (Protocol and Convention) Act, 1937‑‑‑Government of Pakistan having expressed its intention under S.2(2) of the Act (as amended), High Court would not decline to enforce the Award given in a foreign country‑‑‑Word "territory" used in S.2(2) referred to "country" which covered Conventions entered into or issued by Notification in British India and no further Notification was required in terms of S.2(1) (c) of the Act.

Yangtze (London) Ltd. v. Barlas Bros. (Karachi) PLD 1961 SC 573 distinguished.

PLD 1979 Kar. 762 and 1987 CLC 83 ref.

(b) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑--

‑‑‑‑Ss.7 & 2(2)‑‑‑Grain and Feed Trade Association (London) Rules, R.125‑‑‑Arbitration proceedings could not be defeated merely on the ground that the arbitration had not taken place either in Germany or in Pakistan as no rule existed creating such a bar.

(c) Trade Association (London) Arbitration Rules‑‑‑

‑‑‑‑R.4:7‑‑‑Arbitration‑‑‑Commercial dispute‑‑‑Public policy‑‑‑ Grain and Feed Trade Association (London) Arbitration Rules, R.4:7 not allowing the parties to be represented through a Solicitor/ Barrister, was not against public policy.

(d) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑--

‑‑‑‑S. 7‑‑‑Conditions for enforcement of Foreign Award‑‑‑High Court would only confine to examine the award within the provision of S.7(1) of the Act and the interference, if any, could only be warranted if the condition under S.7(2) of the Act surfaced‑‑‑High Court would not sit as an Appellate Court nor would go behind the Award to reappraise the evidence‑‑‑High Court, exercising powers under S.7 of the Arbitration (Protocol and 'Convention) Act, 1937, was an executing Court which could not travel beyond the Award save as expressly provided under S.7(2) of the said Act‑‑­Contention that Award given under R.4:7 of Grain and Feed Trade Association (London) Arbitration Rules ‑was contrary to Public Policy of Pakistan or to the principles of law of Pakistan in terms of Second Sched of Arbitration (Protocol and Convention) Act, 1937, was repelled.

(e) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑S.7(2)(b)‑‑‑Conditions for enforcement of Foreign Award‑‑­Interpretation of S.7(2)(b) of Arbitration (Protocol and Convention) Act, 1937‑‑‑Party against whom the award was sought to be enforced must be given notice of arbitration proceedings in sufficient time to enable him to present his case‑‑‑If the party was under some legal incapacity and was not properly represented then a Foreign Award shall not be enforced by the Court‑‑‑Other condition in cl. (b) of S.7(2) of the Act appearing after the word "or" which ex facie indicated that the conditions were disjunctive.

(f) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑--

‑‑‑‑S.7(1)‑‑‑Foreign Award may be enforceable if made in pursuance of an agreement for arbitration valid under the law by which the same was governed and had been made by a Tribunal provided in the agreement or constituted in the manner agreed upon by the party in conformity with the law governing the arbitration procedure in respect of a matter which may lawfully be referred to arbitration under the law of Pakistan and then the award had become final in the country in which it was made.

(g) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑Ss.5 & 7(2)‑‑‑Arbitration Act (X of 1940), Ss.30 & 35‑‑­Enforcement of Foreign Award‑‑‑Conditions‑‑‑Once the law under which the award had been given in conformity with the procedure laid down therein the Court in exercise of powers under S.5, Arbitration (Protocol and Convention) Act, 1937 would not travel beyond the Award to examine and scrutinize either the evidence or the material, once it had attained finality subject to the grounds provided under S.7(2) of the Arbitration (Protocol and Convention) Act, 1937‑‑‑Grounds of misconduct and the award having been improperly procured or was otherwise invalid, were not ,vailable under S. 7(2) of the Arbitration (Protocol and Convention) Act, 1937 as in case of Ss.30 & 35 of the Arbitration Act, 1940.

Rasheed Akhund for Objectors/ Defendants.

Arshad Tayebally for Respondents/ Plaintiffs.

Dates of hearing: 25th and 26th February, 2003.

2003 C L D 1729

[Karachi]

Before Sabihuddin Ahmed and Rana Bhagwandas, JJ

TECHNO POWERGEN (PVT.) LTD and others‑‑‑Appellants

Versus

AL‑ZAMIN LEASING MODARABA MANAGEMENT (PVT.) LTD. and another‑‑‑Respondents

Civil First Appeal No.44 of 1998, decided on 6th March 1999.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss. 7, 18 &, 21‑‑‑Lease of assets (machinery) on rentals‑‑­Default in payment of monthly rental by the lessee‑‑‑Suit for recovery was decreed by the Banking Court in the terms that, in case of default the entire decretal amount shall become due and payable at once and defendant shall be liable to return lease equipments to the plaintiff forthwith‑‑­Contention was that order by the Banking Court directing the return of the lease assets was unjust and inequitable‑‑­Validity‑‑‑Banking Court could not confer title or ownership of the leased assets when the agreement between the parties stipulated that title, ownership and right of property shall at all times remain vested in Modaraba and that at the end of the lease term the leased property would be returned by the lessee in good operating condition and working order‑‑‑Said agreement did not even bind the Modaraba to enter into agreement for sale of the leased property to the lessee‑‑‑Agreements, in the present case, was not claimed to be voidable on the ground of having been obtained through undue influence nor void for being opposed to public policy.

Anwar Muhammad Siddiqui for Appellants.

Anwar Mansoor for Respondents.

Date of hearing: 29th April, 1999.

2003 C L D 1740

[Karachi]

Before Sabihuddin Ahmed and S. Ali Aslam Jafri, JJ

ZAFAR MEHMOOD SHAIKH‑‑‑Appellant

Versus

PRUDENTIAL DISCOUNT AND GUARANTEE HOUSE LIMITED and 4 others‑‑‑Respondents

First Appeal No.95 of 2000, heard on 29th August, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss.14 & 10‑‑‑Finance facility against, inter alia, the security of mortgage by way of title deed on property comprising a house to cover the amount of the facility‑‑‑Suit for recovery of the amount by the financial institution‑‑­Applications for leave to defend by the defendants were dismissed by the Banking Court anti decree for the recovery of amount with costs and future mark‑up jointly and severally was passed against all the defendants (Directors of the Company)‑‑‑Contentions of the judgment‑debtors were that facility accorded in term of letter dated 9‑6‑1996 issued by the Financial Institution was valid up to 30‑4‑1997 and the appellant (Director of the Company) had resigned from the directorship of the Company on 2‑7‑1997 and had neither guaranteed nor was party to any subsequent facility granted to the Company by the Financial Institution as such he was not bound to discharge any liabilities of the Company existing at the date of filing the suit ‑‑‑Validity‑‑­Appellant (Director of the Company) had executed a continuing letter of guarantee whereby he assumed full responsibility for the liabilities of the Principal in terms of the facility (including mark‑up) and covenanted that it would remain in full‑ force and effect until determined as to future transactions through a prior notice from the guarantor but would remain fully effective in respect of any liabilities incurred by the Principal prior to such notice‑‑‑Suit was decreed only to the extent of the amount of the facility granted as a result of negotiations with the appellant as a Director of the Company and one year mark‑up at the agreed rate‑‑‑Nothing was available to indicate that the appellant served any notice upon the Financial Institute and in any event the liability related to a period prior to his resignation‑‑‑Contention of the appellant was repelled in circumstances.

(b) Transfer of Property Act (IV of 1882)‑‑‑--

‑‑‑‑S.58(f)‑‑‑Registration Act (XVI of 1908), S.17‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Ss.14 & 10‑‑‑Mortgage by deposit of title deeds‑‑‑Equitable mortgage‑‑‑Requirement of registration‑‑‑Contention was that the mortgage could not be enforced inasmuch as no transfer of interest had taken place and the memorandum of deposit of title deed was written merely on a document containing stamp paper of Rs.30 and had not been duly registered ‑‑‑Validity‑‑­Document purporting to transfer immovable property was required to be registered, nevertheless S.58(f), provided that there was no requirement of execution of a document for the purposes of creating an equitable mortgage which could be effected by mere deposit of title deed with the mortgagee—­Memorandum in question did not purport to create a mortgage but only confirmed the factum of the deposit of title deeds relating to the property‑‑‑Such a memorandum confirming a deposit having been made in the past, did not require registration.

Abdul Aziz Ghafoor Khan and another v. Commerce Bank Limited PLD 1978 Kar. 36 and Muhammad Farooq Khan v. Sulleman Punjwani and others PLD 1977 Kar. 88 rel.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss.14 & 10‑‑‑Transfer of Property. Act (IV of 1882), S.58(7)‑‑‑Finance facility against inter alia the security of mortgage by way of title deeds on property comprising a house to cover the amount of facility‑‑‑Original facility extended by the Financial Institute was got enhanced by the debtor company‑‑‑Suit for recovery of the amount .by the Financial Institute‑‑‑Applications for leave to defend by the defendants were dismissed by the Banking Court ,and decree for the recovery of the amount with costs and future mark‑up jointly and severally was passed against all the defendants (Directors of the Companies)‑‑‑Contention of the appellant (one of the Directors) who had deposited the title deed was that the original memorandum of deposit of title deed was executed at the time when the initial facility was granted and subsequently when the facility was sought to be enhanced the appellant executed the declaration conveying his no objection to the mortgage of the property in consideration of extension of any finance facility by the Financial Institute and the Financial Institute, at the time of enhancing the facility had not required the appellant to execute a fresh mortgage, therefore, appellant could only be confined to the amount of initial facility and not to the extent of the amount of enhanced facility‑‑­Validity‑‑‑When the enhanced facility was obtained by the appellant representing the Company, collateral of property in question being described as a security for the facility, the appellant could not be allowed to assert that the mortgage could not be treated as security for the facility.

(d) Transfer of Property Act (IV of 1882)‑‑‑--

‑‑‑‑S.58‑‑‑Registration Act (XVI of 1908), S.17‑‑‑ Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Ss.14 & 10‑‑‑Mortgage‑‑­Requirement of registration‑‑‑Scope‑‑‑When a mortgage or other form of transfer of property is effected through an instrument in writing, the same is compulsorily registrable, however, when a written document merely records a transfer having been made in the past no such registration is required.

United Bank of India v. Azirannessa Bewa PLD 1965 SC 274 and Muslim Commercial Bank v. Malik & Company 2002 CLD 606 ref.

(e) Transfer of Property Act (IV of 1882)‑‑‑--

‑‑‑‑S.58(7), proviso [as added by Finance Act (I of 1986), S. 2]‑‑‑ Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Ss.14 & 10‑‑­Mortgage by deposit of title deeds in favour of Banking Company‑‑‑Contention was that in view of the proviso added to S.58(f), Transfer of Property Act, 1882 by Finance Act, 1986, S.2, the equitable mortgage in favour of Banking Company could only be executed if the deposit of the title deeds was accompanied by an entry in the record of rights against the entry relating to such immovable property but in the present case, no such entry having been made there was no completed mortgage of immovable property‑‑­Validity‑‑‑Proviso to S.58(f), Transfer of Property Act, 1882 only stipulated an additional method of creation of equitable mortgage in favour of a Banking Company without affecting the existing modes of creation of such mortgages‑‑­Contention was repelled.

Shabbir Ahmed Shaikh for Appellant.

Nadeem Akhtar Khan for Respondent No.1.

Kamal Azfar for Respondent No.2.

Salim Salaam Ansari for Respondents Nos.3 to 5.

Dates of hearing: 26th and 27th September, 2002 and 29th August, 2003.

2003 C L D 1767

[Karachi]

Before Zahid Kurban Alavi, J

EJAZ HASSAN ‑‑‑Petitioner

Versus

SYNECTIV PAKISTAN (PVT.) LIMITED and others‑‑‑Respondents

Judicial Miscellaneous No.8 of 2‑002, decided on 19th December, 2002.

Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑S.305‑‑‑Winding-up of company‑‑‑Locus standi‑‑‑Petitioner was employee of the respondent‑Company and was also involved to another business‑‑‑Effect‑‑‑Petition was dismissed in circumstances.

Bilal A. Khawaja for Petitioner.

Ziauddin Nasir, Standing Counsel for Respondents.

2003 C L D 1774

[Karachi]

Before Zahid Kurban Alavi, J

Messrs ABDOUN OIL COMPANY S.A. ‑‑‑Plaintiff

Versus

M.T. CAMARO PRIDE and another‑‑‑Defendants

Admiralty Suits Nos.61 and 62 of 2002, decided on 20th December, 2002.

Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑--‑Ss.3 & 4‑‑‑‑Sindh Chief Court Rules (O.S.), R. 731‑‑‑Arrest of vessel‑‑‑Confirmation‑‑‑Monetary dispute between the parties‑‑‑Documents relied upon by the plaintiff were alleged by the defendant to be forged‑‑‑Effect‑‑‑Parties were litigating all over the world and each side was trying to gain advantage over the other‑‑‑Prima facie no case had been made out by plaintiff for confirmation of order of arrest of the disputed vessel‑‑‑Application was dismissed in circumstances.

Akhtar Ali Mehmood and Sibtain Mehmood for Plaintiffs.

Ms. Zafar Hadi Shah, Naim Ahmed and Muhammad Saleem for Defendants.

Dates of hearings: 12th and 13th December, 2002.

2003 C L D 1788

[Karachi]

Before Anwar Zaheer Jamali and Khilji Arif Hussain, JJ

Messrs HABIB BANK LIMITED‑‑‑Applicant

Versus

Messrs INDUS LENENTOSE (PVT.) LTD. and others‑‑‑Respondents

Civil Revision Applications Nos.2 and 3 of 2002, decided on 2nd April, 2003.

(a) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.I, R.10 & O.XXII, R.4‑‑‑Impleading legal heirs of deceased defendant as party to suit under O.I, R.10 & O.XXII, R.4, C.P.C.‑‑‑Criteria different.

(b) Civil Procedure Code (V of 1908)‑‑--

‑‑‑‑O.XXII, R.4‑‑‑Suit against dead person‑‑‑Validity‑‑‑Such defect could not be cured by bringing his legal heirs on record in terms of O.XXII, R.4, C.P.C.

(c) Civil Procedure Code (V of 1908)‑‑‑--

‑‑‑‑O.I, R.10 & O.XXII, R.4‑‑‑Suit against dead person for recovery of amount due against him‑‑‑Validity‑‑‑Such amount, if subject to other legal limitations, could be recovered from his legal heir(s), then independent of requirement. Of O.XXII, R.4, C.P.C., his legal heirs could be joined as party to suit in a similar manner as if when a proposed defendant to a suit had died before institution of suit, then such suit could be brought against him through his legal heirs.

Muhammad Yousaf v. Syed Ghayyur Hussain Shah and 5 others 1993 SCMR 1185 rel..

(d) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

--‑‑‑S. 9‑‑‑Civil procedure Code (V of 1908), O.I, R.10 & O.VI, R.17‑‑‑Suit for recovery of loan amount ‑‑‑Factum of demise of mortgagor‑defendant prior to filing of suit came into knowledge of Bank from leave to defend application filed by other defendants‑‑‑Applications by Bank seeking to implead legal heirs of deceased mortgagor and make corresponding amendments in plaint were dismissed by Banking Court‑‑­Validity‑‑‑After demise of mortgagor‑defendant, whatever right she had in mortgaged property, same had devolved upon her legal heirs‑‑‑Request of Bank for joining legal heirs in suit as necessary and proper party within scope of O.I, R.10, C.P.C. was legal and tenable‑‑‑Corresponding amendments sought to be made in plaint were neither going to change nature or character of suit nor by such amendments any prejudice was likely to be caused to opposite‑party ‑‑‑Impugned orders were suffering from illegality and material irregularity and without jurisdiction‑‑­High Court accepted revision petitions and set aside impugned orders.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑Ss.22(6) & 27‑‑‑Revision application against order/ judgment of Banking Court‑‑‑Scope‑‑‑In view of bar of filing review, revision or appeal against interlocutory order and‑ finality attached to order/judgment of Banking Court under S.27 of Financial Institutions (Recovery of Finances) Ordinance, 2001, revision application might not be maintainable against such order/judgment.

Mst. Afshan Ahmed v. Habib Bank Ltd. 2002 CLD 137; Central Cotton Mills Ltd. and others v. Atlas BOT Lease Co. Ltd and 2 others 1998 SCMR 2352; Bolan Bank Ltd. v. Capricorn Enterprise (Pvt.) Ltd. 1998 SCMR 1961; Pakistan Fisheries Ltd., Karachi and others v. United Bank Ltd. PLD 1993 SC 109; Muhammad Ayub Butt v. Allied Bank Ltd. PLD 1981 SC 359 and Shah Jewana Textile Mills v. United Bank Ltd. PLD 2000 Lah. 162 ref.

(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑Ss.2(b), 5 & 7‑‑‑.Findh Courts Act (VII of 1926), S.8‑‑‑High Courts (Establishment) Order (8 of 1970), Art.3‑‑‑Judge of Sindh High Court while dealing with matter under Financial Institutions (Recovery of Finances) Ordinance, 2001‑--­Jurisdiction‑‑‑Nature‑‑‑Such Judge acts as Banking Court and not in its ordinary jurisdiction.

Pakistan Industrial Credit and Investment Corporation Ltd., Peshawar Cantt. and others v. Government of Pakistan 2002 SCMR 496 fol.

Badar Alam for Applicants.

Azhar Faridi for Respondents.

2003 C L D 1797

[Karachi]

Before Sabihuddin Ahmed and Zia Perwez, JJ

SULEMAN and others‑‑‑Petitioners

Versus

MANAGER, DOMESTIC BANKING, HABIB BANK LTD. and another‑‑‑Respondents

Civil Petition No.D‑2537 of 2001, decided on 4th August, 2003.

(a) Constitution of Pakistan (1973)‑‑--

‑‑‑‑Art.199‑‑‑Constitutional petition‑‑‑Judgment not pronounced within 90 days after hearing the arguments‑‑­Matter was posted for rehearing.

(b) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXI, Rr. 1 & 2‑‑‑Suit by trustees‑‑‑Trustee not willing to join as a plaintiff can always be arrayed as defendant.

Luke v. South Kensington Hotel (1874) 80 All. ER 1293 fol.

(c) Composition‑‑‑--

‑‑‑‑ Interested party could not be bound by a composition operating to his detriment made in his absence.

(d) Trusts Act (II of 1882)‑‑‑

‑‑‑‑S.13‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Civil Procedure Code (V of 1908), O.XXXI, Rr.1 & 2‑‑­Constitutional petition involving trust property‑‑‑Parties to such petition‑‑‑Suit involving trust property must be filed by all trustees or all of them should be joined therein‑‑‑Such condition of procedural law would not necessarily apply to petition under Art. 199 of the Constitution‑‑‑Strict legal right in respect of trust property only vests in trustees acting jointly.

(e) Constitution of Pakistan (1973)‑‑‑--

‑‑‑Art.199‑‑‑Constitutional petition‑‑‑Locus standi‑‑‑Strict legal right need not be shown for maintaining Constitutional petition‑‑‑Sufficient legal interest in subject­ matter would be enough to confer locus standi upon petitioner.

Fazal Din v. Lahore Improvement Trust PLD 1969 SC 223 fol.

(f) Banking Companies Ordinance (L VII of 1962)‑‑‑

‑‑‑‑S. 41‑‑‑Trusts Act (II of 1882), S.13‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Freezing of Bank accounts of Trust‑‑Constitutional petition by one of they trustees‑‑‑Maintainability‑‑‑Strict legal right needs not be shown for maintaining Constitutional petition‑‑‑Sufficient legal interest in subject‑matter would be enough to confer locus standi upon petitioner‑‑‑No conflict of interest amongst trustees‑‑‑Outcome of such petition was not likely to have any prejudicial effect on interest of any one of them‑‑‑ Petitioner being one of the trustees, in whom trust property vested and was entitled to operate accounts alongwith other co‑trustee was held to have sufficient interest to maintain Constitutional petition.

Fazal Din v. Lahore Improvement Trust PLD 1969 SC 223 fol.

(g) Constitution of Pakistan (1973)‑‑‑--

‑‑‑‑Art.199(1)(a)‑‑‑Banks Nationalization Act (XIX of 1974), S. 3(a) & (b)‑‑‑Constitutional petition against Banking Company‑‑‑Maintainability‑‑‑Respondent‑company operating .under Banks Nationalization Act, 1.974 was substantially owned and controlled by Federal Government‑‑‑Such company could , be classified as a person performing functions in connection with affairs of Federation, thus, was amenable to Constitutional jurisdiction _ of High Court.

(h) Banking Companies Ordinance (LVII of 1962)‑‑‑--

‑‑‑‑S.41‑‑‑Constitution of Pakistan (1973), Arts. 199(1)(a)(c), 23 & 24‑‑‑Freezing of Bank accounts by Banking Company at, directions of State Bank of Pakistan‑‑‑Constitutional petition against such act of Banks by petitioner seeking enforcement of his Constitutional rights guaranteed under Arts.23 & 24 of the Constitution‑‑Maintainability‑‑‑Special distinction existed in language used in cls. (a) & (c) of Art.199 of the Constitution‑‑‑Not necessary under Art. 199(c) of the Constitution that person to whom directions were to be given, must necessarily be one performing functions in connection with affairs of Federation, a Province or a local authority‑‑‑Banking Company was bound by any direction of State Bank issued in exercise of statutory powers under S.41 of Banking Companies Ordinance, 1962‑‑‑State Bank was amenable to jurisdiction of High Court under Art. 199 of the Constitution and legality of its directions issued in purported exercise of statutory powers could always be examined in such proceedings‑‑‑Such directions, if found to be unlawful, then Banking Company would be bound to perform its obligation towards customers in accordance with law.

(i) Administration of justice‑‑‑

‑‑‑‑ Relief, grant, of‑‑‑Scope‑‑‑Court can always modify relief or grant some relief, which has not been prayed for, provided Court has jurisdiction to do so.

Sharaf Faridi v. Province of Sindh PLD 1989 Kar 404 fol.

(j) Banker and customer‑‑‑

‑‑‑-Deposits in a Bank account create only lender and borrower relationship between customer and Bank.

Foley v. Fletcher 1843‑1860 AER 953; London Joint Stock Bank v. McMillan and another 1918‑19 AER 330 fol.

(k) Banking Companies Ordinance (LVII of 1962)‑‑‑

‑‑‑S.41‑‑‑United Nations (Security Council) Act, 1948; S.2‑‑­Constitution of Pakistan (1973), Arts. 23, 24 & 199‑‑‑Anti­ Terrorism Act (XXVII of 1997), Ss. 11‑B, 11‑C, 11‑E, 11‑H, 11‑I, 11‑J & 25‑‑‑Constitutional petition‑‑‑Freezing of Bank accounts of Trust at directions of State Bank of Pakistan on alleged complicity of Trust in terrorist activities‑‑Validity‑‑­Neither possible nor proper for High Court to form independent opinion as regards such allegation‑‑‑No action against petitioner or his co‑trustee had been taken under Anti‑Terrorism Act, 1997‑‑‑In presence of such special law dealing with suppression of terrorism and conferring powers to freeze accounts reasonably suspected of being used for promotion of terrorist activities, resort to general provision to issue any direction to Banking Company in public interest would be entirely unwarranted‑‑‑When resort to general law would deprive affected party of right to seek review or appeal' to High Court, then such action would be treated as mala fide in law‑‑‑Resolution of Security Council of United Nations, particularly one adversely affecting fundamental rights of citizen, would not operate by its own force, unless given effect to by Federal Government by "order published in official Gazette"‑‑‑No such order of Government was placed on record‑‑‑No material of alleged suspicion of financing terrorist activities had been conveyed nor petitioner had been afforded opportunity to confront the same‑‑‑Such direction under S.41 of Banking Companies Ordinance, 1962 could not withstand test of reasonableness contemplated by Art.23 of the Constitution and could not be sustained on touchstone of Art.24 of the Constitution as no compensation for deprivation of use of property had been .offered to the Trust‑‑‑Such direction could not be upheld on yardstick of Art.23 of the Constitution as right to use or dispose of property had not been subjected to a reasonable restriction imposed by law in public interest‑‑‑‑Impugned direction had been issued beyond purview of lawful powers of the State Bank of Pakistan‑‑‑High Court allowed Constitutional petition and declared impugned directions as without lawful authority and of no legal effect with directions to Banking Company to honour cheque of the petitioner.

Federation of Pakistan v. Mushtaq Ali Mian PLD 1999 SC 1026; Muhammad Hussain and others v. State Bank' of Pakistan and another C.P.D. No.1786 of 1998; Universal Leasing Corporation v. State Bank of Pakistan 2002 CLD 102 and Council of Civil‑ Services Union v. Minister for Civil Service (1984) 3 AER 935 ref.

(l) United Nations (Security Council) Act, 1948‑‑‑

‑‑‑‑S.2‑‑‑Constitution of Pakistan (1973), Art.23‑‑‑Resolution of Security Council of United Nations‑‑‑ Not given effect to by Federal Government by "order published in the official Gazette"‑‑‑Validity‑‑‑Such resolution, particularly one adversely affecting fundamental rights of citizen, would not operate by its own force.

(m) Anti‑Terrorism Act (XXVII of 1997)‑‑‑

‑‑‑‑Preamble‑‑‑Terrorism is a fast going phenomena ‑‑‑Making laths and taking appropriate measures by all civilized States within their Constitutional system to combat terrorism would be in larger public interest.

(n) Public International Law‑‑‑

‑‑‑‑International obligations to the State ought to be duly honoured.

(o) Banking Companies Ordinance (LVII of 1962)‑‑

‑‑‑S.41(1)‑‑‑State Bank of Pakistan Act (XXXIII) of 1956), S.27‑‑‑Powers of State Bank to give directions to any Banking Company‑‑‑Scope‑‑‑Such powers must necessarily be confined to areas specifically relatable to basic functions of State Bank under State Bank of Pakistan, Act, 1956 and regulatory power available to same in respect of Scheduled Banks under Banking Companies Ordinance, 1962‑‑‑Clause (a) of , S.41(1) of Banking Companies Ordinance, 1962 must be read ejusdem generis with powers under cls. (b) & (c) thereof‑‑‑Directions in public interest can ,only be issued to protect interest of Banking Company and its depositor and to secure proper management of company‑‑‑State Bank does not have any unbridled powers to issue any direction in any area of public interest, particularly when law requires some other agency to do so.

(p) Administrative of justice‑‑‑

‑‑‑‑Natural justice, principles of‑‑‑Applicability‑‑‑Action in emergency situation‑‑‑Action in such situation might be required to be taken without affording an opportunity of prior hearing to affected party‑‑‑Such defect could be cured by providing a subsequent hearing.

(q) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art.23‑‑‑Right to acquire, hold and dispose of property‑‑­Imposition of restrictions on such right ‑‑‑Validity‑‑­Restrictions on Legislature power and action taken thereunder are laid down in the Constitution itself‑‑‑Such right can be regulated only through reasonable restrictions imposed by law in public interest‑‑‑Both validity of law and action taken become justifiable from standpoint of reasonableness as well as public interest‑‑‑If restriction to hold property imposed by law is found reasonable, Court would uphold the same.

(r) Judicial Review‑‑‑

‑‑‑‑Measures taken in respect of National Security‑‑­Constraints on power of judicial review enforced in U. K. are not applicable to the Constitutional system in Pakistan‑‑­Such measures in U. K., belong to area of Royal prerogatives and Courts are not inclined to sit in judgment, the moment a nexus with national security is shown‑‑‑No prerogative in Pakistan exists and all public power has to be exercised in accordance with Constitution and law.

(s) Banker and customer‑‑‑

‑‑‑‑ Bank account‑‑‑Rights and obligations of Bank and depositor‑‑‑Scope‑‑‑When a depositor opens an account with a Bank, there is always an implied contract to the effect that Bank would enable him to withdraw such moneys, which he desires subject to, specified condition of the contract‑‑‑Rights and obligations under such contract may be impaired by an overriding law, but executive directives of State Bank cannot be allowed to affect concluded contract.

M. Zafar Iqbal for Petitioner.

Makhdoom Ali Khan, Attorney‑General for Pakistan and Nadeem Azhar, D.A.‑G.

Mushtaque A. Memon and Kazim Hassan: Amicus curiae.

Qazi Faez Issa for Respondent No. 1.

Zahid Jamil for Respondent No.2.

Dates of hearing: 24th May, 1st and 2nd July, 2002 and 12th 9th and 26th May, 2003.

2003 C L D 1822

[Karachi]

Before Shabbir Ahmed and Gulzar Ahmed, JJ

MARHABA TEXTILE LTD. ‑‑‑Appellant

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Respondent

High Court Appeal No. 135 of 2003, decided on 21st August, 2003.

(a) Civil Procedure Code (V of 1908)‑---

‑‑‑‑O.XLV, R.4 & S.151‑‑‑Consolidation of proceedings—­Inherent powers of the Court‑‑‑No express provisions for consolidation of proceedings existed except under the provisions of O.XLV, R.4, C.P.C., for a specific purpose of pecuniary valuation and not for any other purpose‑‑‑Court had inherent power to consolidate the proceedings, provided other conditions were available.

Industrial Development Bank of Pakistan v. National Engineering Works and others 1983 MLD 1344 and Khairpur Textile Mills Ltd. v. National Bank of Pakistan 2003 CLD 326 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.7‑‑‑Industrial Development Bank of Pakistan Ordinance (XXXI of 1961), S.39‑‑‑Civil Procedure Code (V of 1908), S.151‑‑‑Consolidation of proceedings by Banking Court‑‑­Scope‑‑‑Civil Court or Tribunal, in absence of express provision in the Civil Procedure Code, 1908, was deemed to possess inherent power in its very constitution, which was necessary to do the right and undo a wrong in the course of the administration of justice‑‑‑Provisions of Civil Procedure Code, 1908 had been made applicable only for the matters in respect to which the procedure had not been provided for in the Ordinances‑‑‑ Court had inherent power to determine as to how its proceedings should be conducted.

Naresh Mohan Thakur and others v. Brij Mohan Misra and others AIR 1933 PC 43 ref.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.7‑‑‑Industrial Development Bank of Pakistan Ordinance (XXXI of 1961), S.39‑‑‑Civil Procedure Code (V of 1908), S.151‑‑‑Consolidation of proceedings‑‑‑Inherent power of Court‑Scope ‑‑‑Court, in the absence of express provisions, had inherent power, ex debito justitiae, to consolidate the proceedings.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑--Ss.7, 22 & 27‑‑‑Jurisdiction conferred on the High Court under Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Nature and scope‑‑‑Such jurisdiction is `Bunking jurisdiction' and while exercising the jurisdiction the High Court bears the fictional character, of a Banking Court' as defined in the Ordinance‑‑‑Judgment and orders passed by a Banking Court cannot be assailed before any forum except ‑in accordance with the provisions of S.22, Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Principles.

The jurisdiction conferred on the High Court under the Ordinance is Banking jurisdiction and while exercising .such jurisdiction the High Court bears the fictional character of a `Banking Court' as defined: in the Ordinance. It' is a fundamental rule that where an enactment creates a new jurisdiction, prescribes the manner in which that jurisdiction is to be exercised and further specifies the remedy, such remedy is exclusive and the party aggrieved of an order made in exercise of that jurisdiction must seek only such remedy and not others. The jurisdiction conferred by the Ordinance on the forums created thereunder, seems to have been jealously guarded by the Legislature. By virtue of subsection (4) of section 7 in all matters to which under the Ordinance, the jurisdiction of the Banking Court extends, no Court other than the Special Court can have jurisdiction to deal therewith. Furthermore, section 27 attaches finality to the orders and categorically lays down that subject to provision for appeal under section 22, no Court or other authority shall revise, review or permit to be called in question any proceeding, judgment, decree, sentence or order of Banking Court or legality or propriety of anything done or intended to be done by the Banking Court, save the correction of any clerical or typographical mistakes in any judgment, decree and sentence passed by it. Evidently, the Legislature in its anxiety to protect the orders of Banking Court, has gone to the extent of ordaining that no. Authority other than the appellate forum specified in section 22, shall even allow to throw a challenge to the validity of such order. Combined effect of these provisions is that judgment and orders passed by a Banking Court cannot be assailed before any forum except in accordance with the provisions of section 22.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.22‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Interim order‑‑‑Appeal‑‑‑Constitutional petition before High Court‑‑­Maintainability‑‑‑Statute excluding a right of appeal from the interim order cannot be bypassed by bringing under attack such interim order in Constitutional jurisdiction‑‑‑Party affected has to wait till it matures into a final order and then to attack the same in the proper exclusive forum created for the purpose of examining such order.

Syed Saghir Ahmad Naqvi v. Province of Sindh through Chief Secretary, S&GAD. Karachi and another 1996 SCMR 1165 ref.

(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.22‑‑‑Appellate power conferred on the High Court was only to the extent of entertaining appeal against the final order and jurisdiction of the Banking Court‑‑‑Principles.

The object of enacting the: Financial Institutions (Recovery of Finances) Ordinance, 2001 provides speedy measures for recovery of outstanding loans of the Banking Institutions as their recovery suits remained pending in the Civil Courts for years together. If the orders in the nature of interlocutory orders are brought under challenge before the High Court, the object for which the enactment was made would be frustrated. The appellate power conferred on the High Court is only to the extent of entertaining appeal against the final order and judgment of the Banking Court.

(g) Financial Institutions (Recovery of Finances) Ordinance (XLVII of 2001)‑‑‑

‑‑‑‑S.22‑‑‑Industrial Development Bank of Pakistan Ordinance (XXXI of 1961), S.39‑‑‑Appeal‑‑‑Scope‑‑‑Order of Banking Court consolidating the proceedings, being an interlocutory order, which had not decided the entire case, was not subject to the appeal in view of the bar contained in S.22(6), Financial Institutions (Recovery of Finances) Ordinance, 2001.

(h) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S.151‑‑‑Inherent power of Court under S.151, C.P.C.‑‑­Scope‑‑‑Consolidation of analogous proceedings‑‑‑Scope, purpose and effect‑‑‑Consolidation of the proceedings can be ordered by the Court in exercise of its inherent powers and the consent of the parties is not condition precedent for exercise of such powers‑‑‑Principles.

In administering justice as prescribed by Code, by passage of time, the Courts have experienced the following shortcomings in the Code:‑‑

There will always be cases and circumstances which are not covered by the express provisions of the Code wherein justice has to be done. The reason is that the. Legislature can foresee only the most natural and ordinary events and no rule can regulate for all times to come so as to make express provision against all inconveniences which are infinite in number and, so that their dispositions shall express all the cases that may probably happen.

The prescribed rule of procedure may be abused, or so used as to give a mere formality, the significance of substantive effect and thus obstruct, instead of facilitating the administration of justice.

Such power of Court to prevent abuse of the process of the Court is recognized to exist.

In a civilized society, legal process is the machinery for keeping order and doing justice. It can be used properly or it can be abused. It is used properly when it is invoked for the vindication of men's rights or the enforcement of justice claims. It is abused when it is diverted from its true course so as to serve extortion or oppression; or to exert pressure so as to achieve an improper end. When it is so abused, it is a tort, a wrong known to the law. The Judges can and will intervene to stop it. They will stay the legal process, if they can, before any harm is done. If they cannot stop it in time, and harm is done, they will give damages against the wrongdoer. Sometimes abuse can be shown by the very steps being taken in the Courts. Further, the ultimate object of all procedural rules is to ensure that there should be a fair trial according to law; the fair trial is not all one‑sided; it means fairness to both the parties.

The inherent power of the Court is recognized only to meet those cases for which no provision is made by the Code. It follows, therefore, that where there are express provisions of law applicable to particular case, there is no inherent power in the Court to override them. The words nothing in this Code shall be deemed to limit or otherwise affect' used in section 151 do not mean that the Code stands repealed where a Court decides to exercise its inherent powers ex debito justitiae to consolidate the proceedings. Such power can be exercised for the ends of justice.

Every procedure is to be understood as permissible till it is shown to be prohibited by Jaw‑.

Courts are not to act upon the principle that every procedure is to be taken as prohibited unless it is expressly provided for by the Code, but on the converse principle that every procedure is to be understood as permissible till it is shown to be prohibited by the law. As a matter of general principle prohibitions cannot be presumed.

In absence of prohibition in the Code, the Court has inherent power ex debito justitiae to consolidate the two proceedings to meet the ends of justice, to avoid likelihood of conflict of opinion, discourage multiplicity of proceedings, duplication of trial of same issue between the same set of parties, to expedite decision, avoid delay and inconvenience, provided the causes are between the same parties, before the same forum, point in issue, defence are substantially common in all such action, common evidence is to be recorded.

In deciding whether the two proceedings should by consolidated or not. The whole question is whether or not in along run it will be expeditious and advantageous to all concerned to have the two matters tried together as analogous cases. The consolidation of the proceedings neither affects the identity of the proceedings nor affects the rights of the parties provided under the law its effect is common trial, single decision, separate decrees. The consolidation facilitates the Court in trial as well as the parties.

The Court has inherent power ex debito justitiae to consolidate suits, where it is in the ends of justice to do so to avoid needless expense and inconvenience to parties. In deciding whether two or more suits should be consolidated or not, the whole question is whether or not, in the long run, it will be expeditious and advantageous to all concerned to have the two suits tried together as analogous cases. Where it appears that there is sufficient unity, or similarity in the matter in issue the suits or that the determination of the suits rests mainly on a common question, it is convenient to have them tried as analogous cases. Such power under, section 151 of the Code to consolidate suits is exercisable even without the consent of parties.

The consolidation of the suits can be ordered‑by the, Court in exercise of its inherent powers. The consent of the parties is not the condition precedent for exercise of such powers. The purpose of consolidation is to avoid multiplicity of litigation, to eliminate award of contradictory judgments and to prevent the abuse of the process of the Court. These purposes are merely illustrative and not exhaustive of the powers of the Court.

Messrs Pakistan Wires Products (Private) Limited and 5 others v. Industrial Development Bank of Pakistan 2003 CLD 59 distinguished.

Goldsmith v. Sperrings Ltd. (1977) 2 All ER 566; Narinsingh Das v. Mangal Dubey (83) 5 All. 163; Manzoor Ahmed v. Messrs Facto (Pakistan.) Ltd. and others 1996 MLD 265; Dr. Arslan Razzaq v. Ali Hussain PLD 1993 Lah. 97; Sain Muhammad and 4 others v. Muhammad Younis 1993 CLC 723; Harinarain Choudhary and others v. Ram Asish Shingh and others AIR 1957 Pat. 124. and Pakistan v. Agro Marketing Corporation Ltd. 1981 CLC 443 ref.

(i) Financial Institutions (Recovery of Finances) Ordinance (XLVII of 2001)‑‑‑--

‑‑‑‑S.22‑‑‑Industrial Development Bank of Pakistan Ordinance (XXXI of 1961), S.39‑‑‑Civil Procedure Code (V of 1908), S. 151‑‑‑Consolidation of proceedings‑‑‑Suit of the appellant against the respondent had been consolidated for the purpose of trial with a miscellaneous application by the respondent against the appellant by the Banking Court‑‑­Record showed that consolidated proceedings emanated from the provisions of two independent special enactments namely Financial Institutions (Recovery of Finances) Ordinance, 2001 and the Industrial Development Bank of Pakistan. Ordinance, 1961 (both Banking matters)‑‑‑Both the proceedings were short cause cases, former was analogous to the proceedings under O.XXXIV and O.XXXVII, C.P.C. with assertion variance, whereas the petition under S.39 of Industrial Development Bank of Pakistan were para materia to the proceedings under O.XXXIV & O.XXI, Rr.54, 58, C.P.C., both proceedings were pending before the same forum viz. Single Judge of High Court on the original side as Banking Court‑‑‑Validity‑‑‑While exercising the special jurisdiction conferred under the Financial Institutions (Recovery of Finances) Ordinance, 2001, the High Court bore fictional character of a Banking Court as defined in the Statute, whereas under the Industrial Development Bank of Pakistan Ordinance, 1961 the High Court also bore the fictional character of District Judge‑‑‑Judge of High Court acting as a "Banking Court" or as a "District Judge" was not a persona designate on whom the jurisdiction vested by law was conferred‑‑‑Leave to defend the suit, in the present case, had been granted, whereas in the miscellaneous application, the reply to show cause had been filed‑‑­Provisions of Civil Procedure Code, 1908 were applicable to the both proceedings and procedure for trial after the grant of leave in Banking suit and reply to show cause in miscellaneous application were also analogous‑‑‑Perusal of proceedings under appeal showed that both the, proceedings were analogous containing the same cause‑‑‑Evidence in both cases would be common‑between the same parties‑‑­Consolidation of the proceedings by Banking Judge, in exercise of inherent power to facilitate the trial and to avoid conflict of decision and multiplicity of proceedings, was not contrary to the law‑‑‑No exception could be taken to the impugned order even on merits.

Messrs Pakistan Wires Products (Private) Limited and 5 others v. Industrial Development Bank of Pakistan 2003 CLD 59 distinguished.

Karachi Water and Sewerage Board v. M. A. Majeed Khan and others 2002 CLC 566; Muhammad Ayub Butt v. Allied Bank Ltd, Peshawar PLD 1981 SC 359; Bolan Bank Limited v. Capricorn Enterprise (Pvt.) Ltd. 1998 SCMR 1961; Pakistan Fisheries Ltd. v. United Bank Ltd. PLD 1993 SC 109; Industrial Development Bank of Pakistan v. National Engineering Works and others 1983 MLD 1344; Khairpur Textile Mills Ltd. v. National Bank of Pakistan 2003 CLD 326; Naresh Mohan Thakur and others v. Brij Mohan Misra and others AIR 1933 PC 43; Syed Saghir Ahmad Naqvi v. Province of Sindh through Chief Secretary, S&GAD, Karachi and another 1996 SCMR 1165; Goldsmith v. Sperrings Ltd. (1977) 2 All ER 566; Narinsingh Das v. Mangal Dubey (83) 5 All. 163; Manzoor Ahmed v. Messrs Facto (Pakistan) Ltd. and others 1996 MLD 265; Dr. Arslan Razzaq v. Ali Hussain PLD 1993 Lah. 97; Sain Muhammad and 4 others v. Muhammad Younis 1993 CLC 723; Harinarain Choudhary and others v. Ram Asish Shingh and others AIR 1957 Pat. 124; Pakistan v. Agro Marketing Corporation Ltd. 1981 CLC 443; Pakistan Fisheries Ltd. v. United Bank Ltd. PLD 1993 SC 109 and State Bank of Pakistan v. Chiragh Sun Engineering Ltd. 2000 YLR 1198 ref.

Khawaja Shamsul Islam for Appellants.

A.I. Chundrigar for Respondents.

Dates of hearing: 5th and 6th August, 2003.

2003 C L D 1843

[Karachi]

Before Shabbir Ahmed, J

ABDUL REHMAN ALLANA‑---Plaintiff

Versus

CITIBANK ‑‑‑Defendant

Suit No. 1291 of 1999, decided on 10th September, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑--

‑‑‑‑S.9‑‑‑Banking Court, jurisdiction of‑‑‑Scope‑‑‑Jurisdiction of a Banking Court is only attracted where a customer or a financial institution commits a default in fulfillment of any obligation with regard to any finance then the suit in Banking Court can be instituted by presenting the plaint.

Syed Mushtaq Hussain Shah v Riaz Muhammad Hazarvi PLD 1978 Kar. 612 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑Ss.7(4) & 9‑‑‑Banking Court, powers and jurisdiction of—­Provision of S.7(4), Financial Institutions (Recovery of Finances) Ordinance, 2001 excludes the jurisdiction of any Court with regard to any matter to which the jurisdiction of Banking Court extends under the Ordinance including a decision as to the existence or otherwise of a matter of finance‑‑‑Section 7(4) of the Ordinance is controlled by S.9(1) of the Ordinance which contemplates the presence, of three preconditions for the exercise of jurisdiction by the Banking Court viz. that the plaintiff be either financial institution or the customer; that cause of action on default in fulfillment of any obligation and with regard to the finance i.e. subject ­matter.

(c) Damages‑‑‑--

‑‑‑‑ Breach of contract‑‑‑Commission of tort‑‑‑Principles—­Distinction between a contract and tort.

The damages' means pecuniary compensation determined by the Court according to circumstances of each case, payable by thewrongdoer' to the `wronged' for the injury, loss, or damage caused by one to the other by breach of legal duty, normally by breach of contract or commission of tort. There is a marked distinction between the damages arising out of a contract and a tort. Even the test by which the amount of damages is to be ascertained in contract and in tort may differ it is to be judged in the circumstances of the case. In tort the intention of wrongdoer is considered to be fair in assessing the quantum of damages. Likewise, in case arising out of breach of contract the evidence of malicious motive may be held not to be relevant but it is admissible in the case of tort.

A contract is founded upon consent: a tort is inflicted against or without consent. A contract necessitates privity between the parties: in tort no privity is needed. A tort must also be distinguished from a pure breach of contract. First; a tort is a violation of right in rem, i.e., of a right vested in some determinate person, either personally or as a member of the community, and available against the world at large: whereas a breach of contract is an infringement of a right in personam, i.e. of a right available only against some determinate person or body, and in which the community at large has no concern. The distinction between the two lies in the nature of the duty that is violated. In case‑of a tort the duty is one imposed by the law and is owed to the community at large. In the case of a contract, the duty is fixed by the will and consent of the parties, and it is owed to a definite person or persons.

The Law of Torts by Ratanlal and Dhiraj Law, edited by Justice (R) G.P. Singh, 23rd Edn., p.5 ref.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑-

‑‑‑‑Ss.9 & 7(4)‑‑‑Credit card issued by the Bank falls within the term of "finance" but the present case is based on the tort and not contract, where one party claims that the amount is unpaid and the other party claims repayment, nor the damages have been claimed in terms of S.73 of the Con‑tract Act, 1872, Banking Court, in circumstances, has no jurisdiction over the matters arising out of fulfillment of the obligation with regard to the finance between the Customer and the Banker (financial), excluding the suit for damages based on tort‑‑‑Such suit with the cause i.e. damages based on tort being a civil matter is triable in term of S.9, Civil Procedure Code, 1908‑--Claim of damages by the plaintiff, in the present case, is based on tortious act and not on contract, such suit does not fall within the jurisdiction of the Banking Court‑‑‑Principles.

Nasimuddin Siddiqui v. United Bank Limited 1998 CLC 1718 fol.

Liaquat Merchant for Plaintiff.

Mahmood A. Khan for Defendant.

2003 C L D 37

[Lahore]

Before Syed Zahid Hussain, J

MUHAMMAD FARRUKH and 2 others‑‑‑Petitioners

Versus

ALLIED BANK OF PAKISTAN through Manager and 12 others‑‑‑Respondents

Writ Petition No. 14160 of 1998, heard on 13th March, 2002.

(a) Transfer of Property Act (IV of 1882)‑‑‑

‑‑‑‑Ss. 54 & 58‑‑‑Sale of immovable property‑‑‑Charge on property sold‑‑‑Plots in question had been mortgaged with Bank since 1990, as security for financial facility‑‑­Purchaser of the plots claimed to be a bona fide purchaser for valuable consideration and relied upon sale‑deeds which were of latter date i.e. 24‑3‑1992‑‑‑Effect‑‑‑Property was encumbered at the time of sale in favour of the purchasers and was not free of charge‑‑‑Such transaction could not be claimed a bona fide as the purchaser on due inquiry would have ‑ known of the fact of mortgage and encumbrances‑­Purchaser did not act with due care in the matter in circumstances.

(b) Banking Companies, (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 18‑‑‑Civil Procedure Code (V of 1908), O.XXI R.58‑‑‑Constitution of Pakistan (19731) Art. l99‑‑­Constitutional petition‑‑Recovery of Bank loan‑‑‑Necessary parties‑‑‑Execution proceedings‑‑‑Objection under O.XXI, R.58, C.P.C.‑‑‑Petitioners claimed to be bona fide purchasers of properties mortgaged with the Bank on the basis of sale-­deeds‑‑‑Banking Court disallowed the objection filed by the petitioners‑‑‑Petitioners claimed to be necessary party in the proceedings initiated by Bank against the borrower as they were bona fide purchasers of the properties for valuable consideration and the decree was obtained by Bank without impleading them in the suit‑‑‑Validity‑‑‑Bank proceeded on the basis of record available with it according to which the disputed property was mortgaged with the Bank ‑‑‑ Any dealing by the mortgagor/borrower would not have come its knowledge unless disclosed by the mortgagor, borrower‑‑‑Bank had acted in accordance with law, in suing only the parties to the transactions with it ‑‑‑Mortgage of property and sale claimed by the petitioners being of a later date, no further investigation was warranted in the facts and circumstances of the case‑‑‑Banking Court had rightly dismissed the objection petition filed by the petitioners‑‑­Petition was dismissed in circumstances.

Malik Munsif Awan for Petitioners.

Respondent No. 10 in person.

Sh. Khalid Habib for Respondent No. 13.

Nemo for the Remaining Respondents.

Date of hearing: 13th March, 2002.

2003 C L D 39

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

UNITED BANK LIMITED through Attorney‑‑‑Appellant

Versus

Messrs BLESSED INTERNATIONAL (PVT.) LIMITED and 6

others‑‑‑Respondents

Regular First Appeals Nos.218 and 383 ~of 1995, heard on 6th July, 2002.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss. 6, 9 & 10‑‑‑Civil Procedure Code (V of 1908), S.96 & O.XLI, R. 22‑‑‑Banking Tribunal partly decreed the claim of the Bank‑‑‑Appeal by Bank in respect of its claim rejected by Banking Tribunal‑‑‑Cross‑objections by respondents under O.XLI, R.22, C.P.C., praying for dismissal of suit filed by Bank and decree for amount claimed by them as set off‑‑­Validity‑‑‑Judgment and decree passed by Banking Tribunal could not be challenged through any other mode/manner, except by way of appeal under S. 9 of the Banking Tribunals Ordinance, which too could be entertained after deposit of decretal amount‑‑‑Special law overrides the general law‑‑‑Banking Tribunals Ordinance, 1984 being a special statute overrides the provisions of C.P.C.‑‑‑Provisions of S. 96 of C.P.C. had not been made applicable to Banking Tribunals Ordinance, 1984‑‑‑Respondents had failed to adhere to the provisions of S. 9 of the Ordinance ‑‑‑Cross­-objections filed by respondents and converted into appeal being not entertainable were dismissed by High Court in circumstances.

(b) Appeal‑‑‑

‑‑‑‑ Right of appeal is the creation of a statute‑‑‑Such right is to be exercised according to that particular statute.

(c) Interpretation of statutes‑‑‑

‑‑‑‑ Special law overrides the general law.

(d) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss. 6 & 9‑‑‑Suit for recovery of loan amount‑‑‑Facility availed by defendants under Refinance Scheme of State Bank of Pakistan‑‑‑Plaintiff‑Bank paid amount of penalty imposed by State Bank for defendants' failure to ship the goods within prescribed period‑‑‑Defendants did not liquidate such liabilities ‑‑‑Bank claimed such amount with 20% mark‑up‑‑‑Banking Tribunal declined such claim of Bank‑‑‑Validity‑‑‑State Bank of Pakistan. under relevant regulations, in case of non‑shipment of goods within prescribed period, was authorised to impose penalty upon defaulting party‑‑‑Penalty, in the present case had rightly been imposed‑‑Plaintiff‑Bank had paid such amount to State Bank of Pakistan, which Banking Tribunal ought to have awarded to Bank being entitled to same‑‑‑Banking Tribunal had committed legal error in declining such relief to Bank‑‑‑No agreement was available on record showing that defendants had agreed to 20% rate of mark‑up‑‑‑Statement of accounts showed that Bank had periodically charged mark‑up @ 6% for period 22‑5‑1986 to 30‑12‑1986, but only on 30‑6‑1987 had charged mark‑up @ 20%‑‑‑Bank according to its own showing could have charged mark‑up only.@ 6%, which rate appeared to be an agreed rate of mark‑up between parties‑‑‑Findings of Banking Tribunal that Bank was entitled to charge mark‑up @ 6% were not open to exception‑‑‑High Court partially allowed appeal and modified impugned judgment and decree accordingly.

Khawaja Saeed‑ul‑Zafar for Appellant.

M. Shehzad Shaukat for Respondents.

Date of hearing: 16th July, 2002.

2003 C L D 46

[Lahore]

Before Mian Hamid Farooq and Abdul Shakoor Paracha, JJ

Mst. IRSHAD BIBI‑‑‑Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager and 3 of

others‑‑‑Respondents

Regular First Appeal No.533 of 2002, heard on 29th July, 2002.

(a) Transfer of Property Act (IV of 1882)‑‑‑

‑‑‑S. 58(f)‑‑‑Equitable mortgage‑‑‑Deposit of duplicate or second copy of the title deed ‑‑‑Validity‑‑‑Deposit of such documents would not create equitable mortgage.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss. 10(11), 17 & 22‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art. 84‑‑‑Civil Procedure Code (V of 1908), O.III, R.1, O.X, R.4 & O.IX, R.12‑‑‑Transfer of Property Act (IV of 1882), S.58(f)‑‑‑Decree for recovery of loan amount against customers and guarantor, though guarantor had denied execution of mortgage deed and documents regarding furnishing of security‑‑‑Validity‑‑‑Guarantor in order to secure finance facility availed by customers had executed registered mortgage deed, an irrevocable power of attorney, memo. of deposit of title deed, and had handed over to Bank original allotment order issued by City Development Authority‑‑‑Guarantor had not appeared in Court, though was summoned by Banking Court to get her thumb-­impression compared with those on original documents‑‑­Banking Court had itself made comparison of signatures on finance documents with guarantor's admitted signatures on other documents on record‑‑‑Banking Court had rightly rejected guarantor's application for leave to defend the suit and proceeded to decree the suit for her failure to raise any substantial question of law and facts needing trial of case‑‑­No exception could be taken to such judgment‑‑‑High Court dismissed appeal in circumstances.

Mst. Rabia Bai v. National Bank of Pakistan and mother NLR 1981 CLJ 371 ref.

(c) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O. III, R.1, O.X, R. 4 & IX, R. 12‑‑‑Personal appearance of a party ordered by Court ‑‑‑Non‑compliance of such order‑‑­Effect‑‑‑Court could proceed against such party under O.IX, R.12, C.P.C., which would also include passing of decree.

By virtue of proviso to Order III, rule 1, C.P.C., the Court can direct any person to appear in person. Personal appearance can be ordered under Order X, rule 4, C.P.C. and on his failure to do so, the Court can proceed under Order IX, rule 12, C.P.C., which also includes passing of decree.

Ayya Nadan v. Thanammal AIR 1920 Mad. 213 and Sri Prabhu v. Dwarka Prasad AIR 1919 Pat. 36 rel.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑Ss. 2(d), 7 & 18‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art.84‑‑‑Signatures on finance/banking documents, comparison of‑‑‑Powers of Banking Court‑‑‑Scope and purpose.

Banking Court had jurisdiction to compare signatures of a party on finance documents with his/her admitted signatures on documents on record.

Court in certain eventualities was enjoined with powers to itself compare signatures alongwith other relevant material to effectively resolve main controversy.

Waqas Enterprises v. Allied Bank of Pakistan 1999 SCMR 85 fol.

Muhammad Amin Sheikh for Appellant.

Ashar Ilahi for the Bank.

Nemo for the Remaining Respondents.

Date of hearing: 29th July, 2002.

2003 C L D 51

[Lahore]

Before Maului Anwarul Haq and Parvez Ahmad, JJ

HABIB BANK LIMITED‑‑‑Plaintiff

Versus

Messrs MEHMOOD SABRI BUSINESS CORPORATION and 2

others‑‑‑Defendants

Regular First Appeal No.359 of 1996, heard on 6th August, 2002.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑Ss. 6 & 9‑‑‑Civil Procedure Code (V of 1908), O. VI, R.17‑‑­Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.9‑‑‑Suit for recovery of loan amount‑‑‑Suit was decreed against two defendants, but was dismissed against third defendant‑‑‑Bank contended that all defendants were jointly liable to pay the suit amount and prayed for amendment of plaint‑‑‑Validity‑‑‑Banking Tribunal due to clerical error in plaint had not considered the matter properly‑‑‑Application contained particulars of such clerical errors in plaint vis‑a‑vis a reference to various defendants‑‑‑Proposed amendment, if allowed, would not change the nature and scope of suit and same was necessary for effective decision of entire controversy between parties‑‑‑High Court permitted Bank to amend plaint, accepted appeal, set aside impugned judgment/decree to the extent of third defendant and remanded case to Banking Court, where Bank would file amended plaint and a notice in terms of S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 would be issued to such defendant and matter would then be decided in accordance with law.

Shams Mehmood Mirza for Plaintiff.

Nemo for Respondents.

Date of hearing: 6th August, 2002.

2003 C L D 53

[Lahore]

Before Mian Hamid Farooq and Abdul Shakoor Paracha, JJ

Messrs ABDULLAH TEHSEEN TRADING COMPANY and 15 others‑‑‑Appellants

Versus

PLATINUM COMMERCIAL BANK LIMITED through Chief

Manager‑‑‑Respondent

Regular First Appeal No. 169 of 1999, decided on 31st July, 002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 15, 21 & 27‑‑‑Civil Procedure Code (V of 1908), O. VII, R.10‑‑‑Decree in favour of Bank in suit for recovery of loan amount‑‑‑Plaints in judgment‑debtors' suits for redemption of mortgaged property and recovery of damages filed against Bank were returned by banking Court under O.VII, R.10, C.P.C.‑‑‑High Court in Constitutional jurisdiction set aside order of return of plaints With observations that suits filed by judgment‑debtors would be deemed pending before Banking Court to be decided in accordance with law‑‑­Contention of judgment‑debtors was that impugned judgment/decree was illegal, because in view of such order of High Court, Banking Court cold not decide suit of Bank independent of other suits filed by judgment‑debtors‑‑­Validity ‑‑‑Such. contention was unfounded and misdirected as High Court had at no stage directed that‑suits filed by judgment‑debtors would be decided alongwith suit, wherefrom present appeal had arisen‑‑‑Judgment‑debtors had also conceded that no consolidation order had been passed by any Court at any stage‑‑‑Judgment‑debtors had not raised any other objection to passing of impugned judgment/decree in‑favour of Bank, thus; same would be deemed to be admitted‑‑‑Banking Court after dealing with each ground taken by judgment‑debtors had passed impugned judgment/decree in accordance with law, which did not call for interference by High Court in exercise of its appellate jurisdiction‑‑‑Appeal, .in the present case, also could not succeed for the reason that suits filed by judgment‑debtors had been dismissed, against which no appeal had been filed, thus, same had attained finality‑‑­High Court dismissed the appeal as being devoid of merits.

Manzoor‑ul‑Haq for Appellants.

Tariq Nawaz Bhatti for Respondent.

2003 C L D 57

[Lahore]

Before Jawwad S. Khawaja and Abdul Shakoor Paracha, JJ

Messrs NEW RAHAT ENGINEERING WORKS through Proprietor and 4

others‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN and another‑‑‑Respondents

Execution First Appeal No.534 of 2001, heard on 26tt June, 2002.

Banking Companies (Recovery of Loans, Advances, Credit: and Finances) Act (XV of 1997)‑‑‑

‑‑‑Ss. 18 & 21‑‑‑Civil Procedure ‑Code (V of 1908), S.12(2) 6 O.XXI. Rr. 90, 92 & 94‑‑‑Execution of decree‑‑‑Sale of mortgaged property‑‑‑Application for setting aside auction proceedings being based on fraud and having been conducted with material irregularity was dismissed by Executing Court and instead confirmed the sale and ordered to issue sale ‑certificate to auction‑purchaser ‑‑‑Judgment­-debtor thereafter filed application praying that he was ready to pay Rs.20 lacs in lump sum and regarding remaining amount instalments be made and mark‑up be written off ‑‑Validity‑‑‑Auction proceedings had taken place in presence of one of the judgment‑debtors, and‑ on his failure to pay decretal amount, property had been sold in execution of decree‑‑‑Execution having already been held, in circumstances, Executing Court could not go behind the decree‑‑Mere filing of application under S. 12(2), C.P.C., was no ground under law to set aside the auction‑‑‑High Court dismissed appeal in circumstances.

Maqbool Elahi Malik and Sh. Khalid Habib for Appellants.

Mian M. Qamar‑uz‑Zaman for Respondent No. 1.

Shahid Karim for Respondent No.2.

Date of hearing; 26th June, 2002.

2003 C L D 59

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Messrs PAKISTAN WIRES PRODUCTS (PRIVATE) LIMITED and 5

others‑‑‑Appellants

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Senior

Vice‑President‑‑‑Respondent

First Appeal from Order No.246 of 2000, heard on 9th July, 2002.

(a) Industrial Development Bank of Pakistan Ordinance (XXXI of 1961)‑‑‑

‑‑‑‑S. 39‑‑‑Qanun‑e‑Shahadat (10 of 1984), Arts. 30, 31 & 114‑‑‑Petition by Bank for recovery of loan amount by attachment and sale of mortgaged properties‑‑‑Show‑cause notice issued to appellants was made absolute by Trial Court‑‑‑Contention of guarantors‑appellants was that they had not admitted their liability as such and they being legal heirs of principal debtor had inherited nothing from him‑‑­Validity‑‑‑Guarantors‑appellants had not categorically denied or disputed their liability to make payment of loan facility availed by principal debtor‑‑‑Guarantors‑appellants had furnished joint guarantees, execution and signatures whereof had not specifically been denied by them in their reply or even at subsequent stage, thus, they could not deny their liability as such‑‑‑Appellants in memorandum of appeal signed by their counsel had admitted that they were Directors /principal shareholders and guarantors of principal debtor‑‑‑Guarantors‑appellants, in view of such clear admission made in memorandum of appeal,, were precluded from contending that they were not guarantors of principal debtor‑‑Appellants could not be allowed to approbate and reprobate in same breath‑‑‑Guarantors‑appellants were shirking from fulfilling their contractual obligations on flimsy grounds‑‑‑Impugned judgment was not open to exception and did not call for any interference by High Court‑‑­Appeal was dismissed being devoid of any merits.

(b) Industrial Development Bank of Pakistan Ordinance. (XXXI of 1961)‑‑‑

‑‑‑‑S. 39‑‑‑Banking Tribunals Ordinance (LVIII of 1984), Ss.3 & 5(3)‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art. 114‑‑‑Petition by Bank for recovery of loan amount‑‑‑Maxim: "secundum allegata et probata"‑‑‑Applicability‑‑‑Show‑cause notice issued to appellants was made absolute by Trial Court‑‑­Contention of appellants was that after promulgation of Banking Tribunals Ordinance, 1984, Trial Court had no jurisdiction to take cognizance of present petition‑‑Validity‑‑‑Jurisdiction of Civil Court was not ousted after coming into force of Banking Tribunals Ordinance, 1984 as provisions thereof were in addition to and not in derogation of any other law‑‑‑Provisions of Industrial Development Bank of Pakistan Ordinance, 1961, had not lost their enforceability despite promulgation of Banking Tribunals Ordinance, 1984‑‑‑Bank had concurrent remedies and they were authorised under law to seek those remedies even simultaneously as was evident from combined reading of S.3 and proviso to S.5(3) of Banking Tribunals Ordinance, 1984‑‑‑Not correct to contend that jurisdiction in present case only vested with Banking Tribunal‑‑‑Appellants had not raised such objection in their reply to main petition filed by Bank‑‑‑Such contention of appellants could be repelled in view of maxim "secundum allegata et probata‑‑‑Principle of estoppel would harshly operate against appellants as they were precluded from raising such plea for the first time before High Court‑‑‑Appeal was dismissed in circumstances.

(c) Industrial Development Bank of Pakistan Ordinance (XXXI of 1961)‑‑‑‑

‑‑‑‑S. 39‑‑‑Petition by Bank for recovery of loan amount by attachment and sale of mortgaged/ hypothecated properties‑‑‑Trial Court made absolute show‑cause notice issued to appellants‑‑‑Contention of appellants was that civil suit filed by them against Bank for recovery of amount pending in Civil Court was not consolidated with present petition in spit of their request‑‑‑Validity‑‑‑Proceedings out of which present appeal had arisen were of or attachment and sale of mortgaged/hypothecated properties, for which exclusive jurisdiction vested with District Judge under S.39(1) of the Ordinance, while alleged suit filed by appellants was' pending before Civil Court‑‑‑Two distinct causes pending before two separate forums could not be consolidated‑‑‑Neither record revealed that appellants had made any such application before District Judge nor they during arguments before High Court could produce any document to substantiate their such contention‑‑‑Appellants were precluded from raising such plea at appellate stage‑‑­Such contention of appellants was misdirected and unfounded‑‑‑High Court dismissed appeal in circumstances.

(d) Appeal‑‑‑

‑‑‑‑Pleadings‑‑‑Plea not raised in pleadings‑‑‑Effect‑‑‑Such plea could not be argued and that too at appellate stage.

(e) Qanun‑e‑Shahadat (10 of 1984)‑‑‑

‑‑‑‑Arts‑30, 31 & 114‑‑‑Admission made by party about his status as guarantor in memorandum of appeal signed by his counsel‑‑‑Effect‑‑‑Party could not be allowed to approbate and reprobate in same breath‑‑‑Such party would be estopped from denying his such status in view of such clear admission.

Iftikharullah Malik for Appellants.

Iftikhar Hussain Shah for Respondent.

Date of hearing: 9th July, 2002.

2003 C L D 67

[Lahore]

Before Muhammad Sair Ali, J

Messrs SIALKOT DAIRIES LTD. and 8 others‑‑‑Petitioners

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager, A.D.B.P. and 3 others‑‑‑Respondents

Transfer Application No.421‑C of 2001, decided on 12th March, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.2(b)(ii) & 5‑‑‑Civil Procedure Code (V of 1908), S.24‑‑­Transfer of case from Banking Court to High Court acting as Banking Court‑‑‑Pre‑conditions‑‑‑High Court as Banking Court cannot deal with "any other case" except those in which claim exceeds 50 million rupees‑‑‑In claims not exceeding 50 million rupees, jurisdiction has only been confined to the Banking Court established under S.5 of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Pre‑condition for transfer of a case from one Court to the other is that the transferee Court should also be competent and possessed with jurisdiction to try such case which principle is even embodied in S.24, C.P.C.‑‑‑Since High Court as Banking Court is not vested with jurisdiction to try a suit below the monetary slab of fifty million rupees under S. 2(b)(ii) of Financial Institutions (Recovery of Finances) Ordinance, 2001, which is a special statute, therefore, suit for recovery of amount less than 50 million rupees, cannot be transferred to High Court.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss. 2(b)(ii) & 5‑‑‑Civil Procedure Code (V of 1908), S.24‑‑­Transfer of banking case from Banking Court to High Court acting as Banking Court‑‑‑Consolidation of the two suits‑‑­Two suits against the borrower were pending adjudication one before Banking Court and the other in High Court acting as Banking Court‑‑‑Contention of the borrower was that the suit pending before Banking Court be transferred to High Court so that both the suits could be tried together‑‑‑Plea raised by the bank was that the suit pending before Banking Court had the value less than fifty million rupees therefore, High Court had no jurisdiction to adjudicate the same‑‑‑Validity‑‑‑Bar of competence/jurisdiction prescribed in S.24(1)(a) & (1)(b)(ii), C.P.C. applied only to intra subordinate Court transfers and not to High Court which upon withdrawing a case from a subordinate Court could try the same itself by assumption of such jurisdiction on transfer‑‑‑Such principle by analogy could not be employed to civil suit initiated and tried under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑If High Court under S.24, C.P.C. transferred a banking suit pending in a Banking Court to itself for trial, such suit, upon transfer might presumably had become triable by High Court but could not, upon transfer, had become triable by High Court as a Banking Court under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, because of the clear jurisdictional bar placed on High Court as Banking Court under S.2(b) of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Both the suits could not be tried together under the banking jurisdiction of High Court‑‑‑‑Power of High Court to transfer cases under S.5(3) of Financial' institutions (Recovery of Finances) Ordinance, 2001, was confined to exercising the same for transfer of cases from one Banking Court to the other as established under S.5(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, and defined in S.2(b)(ii) of the said Ordinance‑‑‑Such power could not, therefore, be enlarged to include transfer of a case from such Banking Court to High Court acting as Banking Court‑‑‑Power of transfer as provided to High Court in S.5(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was not available and could not be exercised to transfer of a case to High Court in its Banking jurisdiction‑‑‑High Court declined to, transfer the case pending before Banking Court to High Court acting as Banking Court‑‑‑Application was dismissed in circumstances.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S. 2(b)‑‑‑Civil. Procedure Code (V of 1908), S.24‑‑‑Transfer of case‑‑Jurisdiction of High Court‑‑‑Scope‑‑‑While acting under the Banking jurisdiction High Court acts as Banking Court and not as High Court‑‑‑Powers of transfer under S.24, C.P.C. are conferred on High Court or District Court only and the same does not apply to a Banking Court as constituted in High Court.

(d) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S. 24‑‑‑Financial Institutions' (Recovery of Finances) Ordinance (XLVI of 2001), S.2(b)‑‑‑Transfer of cases from Banking Court to High Court acting as Banking Court‑‑­Jurisdiction‑‑‑High Court under its general power of transfer under S.24 C.P.C. cannot transfer a banking case from a Banking Court to itself as High Court for trial‑‑‑High Court does not have jurisdiction in view of exclusivity of jurisdiction of Banking Courts established under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑For exercising powers of transfer qua suits filed under the Financial Institutions (Recovery of Finances) Ordinance, 2001, the provisions of S.24, C.P.C. are not applicable and are not available to High Court‑‑‑Only power that can be exercised for transfer of banking cases is the one granted to High Court under S.5(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001.

Hamid Khan for Petitioners.

Jehanzeb Khan Bharwana for Respondents.

2003 C L D 76

[Lahore]

Before Maulvi Anwarul Haq and Parvez Ahmad, JJ

FEDERATION OF PAKISTAN through The Government of Pakistan, Ministry of

Defence and 2 others‑‑‑Appellants

Versus

Messrs IPHCO INTERNATIONAL PHARMACEUTICAL CORPORATION

(REGD.), LAHORE‑SHEIKHUPURA ROAD, LAHORE through Managing

Partner‑‑‑Respondent

Regular First Appeal No.21 of 1990, decided on 28th March, 2002.

Sale of Goods Act (III of 1930)‑‑‑

‑‑‑‑Ss.55 & 56‑‑‑Supply of goods‑‑‑‑Rejection of supply‑‑‑Suit for recovery of damages‑‑‑According to contract of sale of 64,000 Kgs. Glucose Powder between parties said goods were to be supplied in instalments ‑‑‑Plaintiff/seller in first instalment supplied 52,000 Kgs. Glucose Powder, but last instalment of remaining quantity of Glucose Powder was rejected by defendants alleging that same had not passed test for "Foreign Sugars, Soluble Starch and Dextrins "‑‑‑Sample of the goods was sent to the National Institute of Health which after test of the same opined that sample was in accordance with requisite test, but despite that remaining quantity of goods in question was not accepted by the defendants‑‑‑Plaintiff continued to make repeated efforts for completion of contract, but defendants, despite a positive report from National Institute of Health, did not receive supply of goods in question‑‑‑Defendants on whom onus shifted after production of affirmative evidence by plaintiff about its quality did not produce any cogent evidence to prove that plaintiff was at fault and was not entitled to damages as claimed by plaintiff‑‑‑Trial Court, in circumstances, had rightly decreed suit holding plaintiff entitled to receive amount of goods supplied to defendants and damages suffered by them for non‑accepting supply of goods by defendants.

Muhammad Nawaz Bhatti for Appellants.

Sh. Ziaullah for Respondent.

Date of hearing: 28th March, 2002.

2003 C L D 80

[Lahore]

Before Mian Saqib Nisar and Mian Hamid Farooq, JJ

Mian SAJIDUR RAHMAN‑‑‑Appellant

Versus

Messrs GRANULARS (PRIVATE) LIMITED through Manager Commercial, Lahore‑‑‑Respondent

Regular First Appeal No.200 of 1994, heard on 9th May, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXVII, R.2‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art.30‑‑‑Suit for recovery of amount‑‑‑Execution of pronote and affidavit‑‑ Proof‑‑‑Implied admission of defendant‑‑‑Plaintiff supplied pesticides to defendant who, after receiving same, signed delivery challan in acknowledge of receipt of pesticides‑‑­Defendant who was to pay amount of pesticides, executed a pronote and affidavit‑‑‑Defendant having failed to make payment of pesticides received by him, plaintiff filed suit for recovery of amount against defendant‑‑‑Evidence on record had proved that defendant placed order on plaintiff for supply of pesticides which was delivered to him through delivery challan and defendant had not paid price of pesticides to plaintiff‑‑‑Defendant denied his signature on delivery challan and also denied execution of pronote and affidavit‑‑‑Comparison of signatures of defendant on other documents had proved that signatures on all documents in question were of the defendant‑‑‑Defendant, in cross‑examination of one of witnesses produced by plaintiff, had given suggestion to that witness that documents in question had been executed not at place L', but at placeK'‑‑‑Such suggestion was an implied admission on part of defendant for execution of pronote and affidavit etc.‑‑‑Supply of pesticides to defendant and non‑payment of price thereof by defendant to plaintiff having been proved, suit was rightly decreed by Trial Court.

C.M. Latif Rawan for Appellant.

Shaukat Ali Javaid for Respondent.

Date of hearing: 9th May, 2002.

2003 C L D 84

[Lahore]

Before Mian Saqib Nisar and Mian Hamid Farooq, JJ

WAQAS TRADERS through Sale Proprietor‑‑ ‑Appellant

Versus

M. NAWAZ‑‑‑Respondent

Regular First Appeal No.908 of 2001, heard on 5th June, 2002.

(a) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S.96 & O.XXXVII, Rr.2, 3‑‑‑Limitation Act (IX of 1908), S.5 & Art. l59‑‑‑Suit for recovery of amount‑‑‑Application for leave to appear and defend suit ‑‑‑Limitation‑‑‑Condonation of delay‑‑­Defendant who was served, though was represented before Court, but did not file application for leave to appear and defend suit within stipulated period of ten days and filed said application after three months of his service which being barred by time was dismissed and suit was decreed by Trial Court‑‑­Defendant had contended that written statement filed by him within ten days could be treated as application for leave to appear and defend suit‑‑‑Validity‑‑‑In view of mandatory provisions of O.XXXVII, Rr.2 & 3, C.P.C. whereunder obtaining leave to appear and defend suit within ten days was necessary and in default of obtaining such leave allegations in plaint would be deemed to be admitted and plaintiff would be entitled to a decree, written statement though was filed by defendant within ten days, but same would not conform with requirements of provisions of O. XXXVII, Rr.2 & 3, C.P.C. and same could not be treated as an application for leave to appear and defend suit‑‑­Trial Court had rightly decreed suit, especially when defendant had not filed application for condonation of delay in preferring application for leave to appear and defend suit.

(b) Limitation Act (IX of 1908)‑‑‑

‑‑‑‑S.5‑‑‑Delay‑‑‑Condonation of‑‑‑Period/time which had statutorily been fired, could not be extended/condoned by Court, unless "sufficient cause" for not preferring appeal or application, within parameters of S.5 of Limitation Act, 1908 had been shown by way of filing independent application.

Mian Arshad Mahmood for Appellant.

Kh. Muhammad Asif for Respondent.

Date of hearing: 5th June, 2002.

2003 C L D 88

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Mirza NASEEM AHMAD and 4 others‑‑‑Appellants

Versus

Dr. SADIQA SHARIF and 12 others‑‑‑Respondents

E. F.A. No.30 of 1995, heard on 11th July, 2002.

(a) Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)‑‑‑

‑‑‑‑Ss. 8 & 12‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr.58 & 95‑‑‑Execution of decree‑‑‑Auction of property‑‑­Objection petition‑‑‑Identification of auctioned property‑‑­Appellants' objection was that property in their possession was not covered by sale certificate issued in favour of auction‑purchaser‑‑‑Banking Court directed appellants to appear personally and produce proof of ownership of property, but on their failure to do so, objection petition was dismissed‑‑‑Validity‑‑‑Real question before Banking Court was regarding identification of property, which had been auctioned and purchased by auction‑purchaser ‑‑‑Auction-­purchaser was entitled to ownership rights and possession of that property, which had been auctioned and purchased by her, but under the garb of auction, properties belonging to others could not be given to her‑‑‑Banking Court ought to have provided an adequate and sufficient opportunity to appellants for establishing their claim as made out in objection petition‑‑‑Such was all the more necessary, when rights, title and interest of objectors had to be decided by Executing Court only and in this regard no separate suit could be filed under law‑‑‑Banking Court had not cared to investigate the claims of appellants in accordance with law, but had non‑suited them on erroneous grounds‑‑‑Objection petition should have been decided after framing issues and recording evidence of parties, whereby it could have been easily determined as to whether property statedly owned by appellants and allegedly possessed by their tenants was subject‑matter of auction or not‑‑‑Perfunctory manner in which the matter had been dealt with by Banking Court was violative of law and even against the principles of natural justice‑‑‑Tenor of impugned order amply manifested non­-application of judicial mind and no reasons had been assigned by Banking Court while dismissing objection petition‑‑‑High Court accepted appeal, set aside impugned order and remanded the case to Banking Court with direction to decide same afresh after hearing the parties, framing the issues and recording the evidence.

(b) Administration of justice‑‑‑

‑‑‑‑ Courts should be careful in deciding the causes as they always involved valuable rights of parties.

(c) Judgment‑‑‑

‑‑‑‑ Speaking order‑‑‑Judicial order must be a speaking order manifesting by itself that Court had applied its judicial mind to issues/points involved‑‑‑When reasons would not be forthcoming, then Appellate Court would be deprived of the view of subordinate Court‑‑‑Impugned judgment, if devoid of reasons and not a speaking order, would not be sustainable in law‑‑‑Passing of perfunctory order in causes involving valuable rights of parties not approved.

Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller, Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 Se 173 and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014 ref.

Abid Hassan Minto for Appellants.

Respondents Nos. 2, 8 to 13 and Legal Representatives Nos.5 and 6: Ex parte.

Nemo for the Remaining Respondents.

Date of hearing: 11th July, 2002.

2003 C L D 102

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

MUSLIM COMMERCIAL BANK LIMITED‑‑‑Appellant

Versus

Sh. ALTAF AHMAD‑‑‑Respondent

First Appeal from Order No.269 of 1994, heard on 24th May, 2001.

Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)‑‑‑

‑‑Ss. 8(3), 12 & 2(f) [as amended by Banking Companies (Recovery of Loans) (Amendment) Ordinance (II of 1983))‑‑­Petition for execution of decree passed by Civil Court after coming into force of Banking‑Companies (Recovery of Loans) (Amendment) Ordinance, 1983‑‑‑Special Judge, Banking Court dismissed such execution petition ‑‑‑Validity‑‑­Judgment‑debtor had not challenged in appeal such judgment and decree, which was a past and closed transaction and had become final qua him‑‑‑High Court accepted appeal and set aside impugned order, as a result whereof execution petition filed by decree‑holder would be deemed to be pending and would be decided in accordance with law.

F.A.O.No.14 of 1994; F.A.O. No.246 of 1994 and Habib Bank Limited v. Messrs Qadri Traders and another 1998 PCTLR 923 fol.

Zaheer Ahmad Saeed for Appellant.

Nemo for Respondent.

Date of hearing: 24th May, 2001.

2003 C L D 105

[Lahore]

Before Maulvi Anwarul Haq and Mian Hamid Farooq, JJ

AL‑HADAYAT TEXTILE through Proprietor and 2 others‑‑‑Appellants

Versus

SONERI BANK LIMITED‑‑‑Respondent

Regular First Appeal No.500 of 2001, heard on 4th July, 2001.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 10, 15 & 21‑‑‑General Clauses Act (X of 1897), S.24‑A (as added by General Clauses (Amendment) Act (XI of 1997))‑‑‑Decree for recovery of loan amount passed by Banking Court without adhering to questions raised in application for leave to defend the suit‑‑‑Validity‑‑‑Banking Court after narrating contentions of parties had not adverted to same and had decided leave application, in complete oblivion of its contents and contentions noted down by Court‑‑‑Impugned judgment was sketchy, slip‑shod and devoid of reasons and was not at all a speaking judgment and could not be called a judicial judgment within the parameters set up by law‑‑‑Banking Court had not assigned any reason in coming to the conclusion as to how Bank was entitled to a decree‑‑‑Appellants conceded their liability to the extent of Rs.4 millions, while regarding further amount as claimed by Bank, they sought leave to defend on the ground that they had not executed documents relied upon by Bank and had also objected to validity thereof‑‑‑Plea of over charging of mark‑up was found to be plausible‑‑‑High Court accepted appeal with observations that interim decree for recovery of Rs.4 millions would stand in favour of Bank, while regarding remaining amount, appellants were granted leave to defend the suit in the light of said observations‑‑‑Case was remanded to Trial Court for further proceedings.

(b) Judgment‑‑‑

‑‑‑‑Concept‑‑‑Speaking order‑ ‑‑Judicial order must be a speaking order manifesting by itself that Court had applied its judicial mind to issues/points involved‑‑‑When reasons would not be forthcoming, then Appellate Court would be deprived of the view of subordinate Court‑‑‑Impugned judgment, if devoid of reasons and not a speaking order, would not be sustainable in law‑‑‑Passing of perfunctory order not approved.

Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller, Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173 and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014 ref.

Sajid Mehmood Sheikh for Appellants:

Ishrat Mehmood Sheikh for Respondent.

Date of hearing: 4th July, 2001.

2003 C L D 109

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Messrs TAJ ZARAI INDUSTRIES through Sole Proprietor and

another‑‑‑Appellants

Versus

HABIB BANK LIMITED through Manager­ Sub‑Manager/General

Attorneys‑‑‑Respondent

Regular First Appeal No.97 of 1994, decided on 17th July, 2002.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss. 2(a), 6, 9 & 11(4)‑‑‑General Clauses Act (X of 1897), S.24‑A (as added by General Clauses (Amendment) Act (XI of 1997)]‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Decree for recovery of loan amount with liquidated damages‑‑‑Appellants submitted reply to show‑cause notices under S. 6(2) of the Banking Tribunals Ordinance, 1984 alongwith application for condonation of delay caused in filing such reply‑‑‑Banking Tribunal on finding such reply being time‑barred decreed the suit without passing any order on the said application‑‑­Validity ‑‑‑Appellants pursuant to show‑cause notices issued for 12‑12‑1993 appeared before Banking Court, but without filing reply sought adjournment‑‑‑Banking Tribunal instead of passing decree against appellants as required under S.6(4) of the Banking Tribunals Ordinance adjourned the case‑‑‑Appellants subsequently on 4‑1‑1994 filed reply to show‑cause notices alongwith application seeking condonation of delay, which was supported by affidavit‑‑­Neither reply to such application had been called from the Bank nor the Bank had filed its counter‑affidavit controverting the contents of application filed by appellants‑‑‑Banking Court had decreed the suit without deciding said application, which would be presumed to be till pending‑‑‑Bank was not entitled to recover the amount debited in appellant's account as liquidated damages‑‑­Banking Court without taking into account the statement of accounts which was the mainstay of the case of Bank, had proceeded to decree the suit‑‑‑Impugned judgment was sketchy, slip‑shod and devoid of reasons as the same was not at all a speaking order and could not be called a judicial order"‑‑ ‑Banking Court had completely misread the record and had not decided the case in accordance with law on the subject and had committed grave legal errors in decreeing the suit‑‑‑High Court accepted appeal, set aside impugned judgment/decree and remanded the case, directing that the suit, appellants' reply to show‑cause notices and their application for condonation of delay would be deemed to be pending before Banking Court.

Allied Bank of Pakistan Ltd., Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 fol.

(b) Judgment‑‑‑

‑‑‑‑Speaking order‑‑‑Judicial order must be a speaking order manifesting by itself that Court had applied its judicial mind to issues/points involved‑‑‑Where an order did not provide reasons, the Appellate Court would be deprived of the view of subordinate Court‑‑‑Impugned judgment, if devoid of reasons and not a speaking order, would not be sustainable in law‑‑‑Passing of perfunctory order in the causes involving valuable rights of the parties was not approved.

Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller, Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173 and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014 ref.

Sh. Farooq Rashid on behalf of counsel for Appellants.

Mian Nasir Mehmood for Respondent.

2003 C L D 114

[Lahore]

Before Jawwad S. Khawaja and Abdul Shakoor Paracha, JJ

Messrs KHAN MUHAMMAD TEXTILES (PVT.) LIMITED through Chief

Executive and 4 others‑‑‑Appellants

versus

NATIONAL DEVELOPMENT LEASING CORPORATION LIMITED through

Branch Manager‑‑‑Respondent

Regular First Appeal No.482 of 2601, heard on 10th June 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 10‑‑‑Suit for recovery of amount due in respect of lease finance‑‑‑Borrowers in leave application claimed profits in respect of lease key money deposited with Leasing Company‑‑‑Validity‑‑‑Deposit of lease key money was part of contractual arrangement between Leasing Company and borrowers‑‑‑Leasing arrangement between parties had not provided for any profit on lease key money‑‑‑If lease key money had been deposited against certificates of investment, then Leasing Company would have been obliged to pay profit thereon‑‑‑Leasing Company, in the absence of contract, could not be made liable to pay profit in respect of lease key money.

(b) Banking Companies (Recovery of Loans, Advances, Credits, and Finances) Act (XV of 1997)‑‑‑

‑‑‑Ss. 15 & 21‑‑‑Contract Act (IX of 1872), S. 74‑‑‑Decree for recovery of amount due in respect of lease finance‑‑‑Claim for penal interest by Leasing Company for delayed payment of lease rentals‑‑‑Contention of borrowers was that they were not liable to pay penal interest without proof of actual damages, if any, suffered by company‑‑‑Validity‑‑‑Such contention of borrowers had no relevance as no penal interest had been awarded to Company in the decree‑‑­Company had not filed any appeal or cross‑objection on such issue, thus, decision of Banking Court had attained finality‑‑‑High Court dismissed the appeal in circumstances.

Syed Hamid Ali Shah for Appellants.

Mian Mansoor Ali for Respondent.

Date of hearing: 10th June, 2002.

2003 C L D 128

[Lahore]

Before Jawwad S. Khawaja and Abdul Shakoor Paracha, JJ

Mian SALEEM RAFI‑‑‑Appellant

Versus

COUNTRY MANAGER, CITIBANK and 2 others‑‑‑Respondents

First Appeal from Order No.76 of 2002, heard on 10th April, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.9‑‑‑Qanun‑e‑Shahadat (10 of 1984), Arts.118 & 119‑‑­Recovery of Bank loan‑‑‑Fact of deposit of amount‑‑‑Onus of proof‑‑‑Borrower alleged that he had deposited the amount with one officer of the Bank and produced a receipt in proof of the same‑‑‑Neither the witnesses to the receipt were produced before the Banking Court nor signatures of the official matched with the other receipt issued by the same official‑‑‑Borrower, to prove the alleged payment, had also relied upon statement of the counsel for the Bank which was made on the basis that the parties had entered into an agreement where-under the borrower had made part payment of the decretal amount while the balance had to be paid in instalments‑‑‑Banking Court decided the matter against the borrower‑‑‑Validity‑‑‑Onus to prove the alleged payment lay heavily on the borrower as he had relied on the receipt and it was incumbent upon the borrower to prove the receipt‑‑‑Borrower could not rely upon the statement made by the counsel of the Bank‑‑‑Borrower had failed to discharge the onus of proof placed on him‑‑‑Bank had referred to various documents on record including an application by the borrower showing the borrower's admission that the decree had not been satisfied and also his intent to make payment of the decretal debt if time was allowed to him‑‑‑Banking Court had rightly passed the order against the borrower in circumstances.

Rai Tanveer Arshad for Appellant.

Shahid Ikram Siddiqui for Respondent.

Date of hearing: 10th April, 2002.

2003 C L D 198

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

CITIBANK N.A. through Manager‑‑‑Appellant

Versus

Lt.‑Col. ANWARUL HAQ ‑‑‑ Respondent

Regular First Appeal No. 276 of 2002, heard on 23rd September, 2002.

Financial Institutions [Recovery of Finances] Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss. 9, 10, 11 & 22‑‑‑Suit for recovery of Rs.16,31,522‑‑­Banking Court while relying on a letter written by defendant passed decree for recovery of Rs.5,31,280‑‑‑Contention of Bank was that Banking Court should have passed interim decree in terms of such letter and should have allowed Bank to prove rest of its claim‑‑‑Contention of defendant was that Banking Court had erroneously dismissed his leave application and passed decree for such amount as only a sum of Rs.99,500 was outstanding against him‑‑‑As both parties were not satisfied with the decree, High Court with their consent allowed appeal, set aside impugned decree, resultantly application for leave to defend suit filed by defendant stood accepted and suit would be deemed to be pending before Banking Court, which would decide the same after framing issues and recording evidence of parties within specified time.

Asher Elahi for Appellant.

Malik Imran Nazir Awan for Respondent.

Date of hearing: 23rd September, 2002.

2003 C L D 201

[Lahore]

Before Naseem Sikandar, J

ROHAIL HASHMI and others‑‑‑Petitioners

Versus

NABEEL HASHMI and others‑‑‑Respondents

C.O. No. 10 of 2000, decided on 17th May, 2002.

(a) Companies Ordinance (XLVII of 1984)‑‑‑

--‑Ss.152 & 290‑‑‑Application for rectification of register of hates‑‑‑Petitioners claiming to be owners of more than 20% of total share capital denied execution of document-witnessing transfer of shares from them in favour of respondents being result of fraud and fabrication as on such dates, appellants were not present in Pakistan respondents had filed civil suit questioning such denial by petitioners‑‑‑Genuineness of transfer of such documents in the light of petitioners' claim that they were not present in Pakistan on the date of its execution could not be resolved in summary jurisdiction‑‑‑High Court advised parties to approach Civil Court of competent jurisdiction for such purpose‑‑Once ownership of parties was established through findings of Civil Court, then they could always approach High Court in summary jurisdiction for a relief under S.152 as well as S.290 of Companies Ordinance. 1984‑‑‑High Court disposed of the petition in circumstances.

Zakir Latif Ansari and others v. Pakistan Industrial Promoters Limited and others 1988 CLC 1541 and Bhai Aziz‑ur‑Rehman and others v. Messrs Ghafur Textile Mills Limited, Karachi and others 1987 CLC 577 ref.

(b) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S. 152‑‑‑Petition for rectification of register of shares‑‑­Disputed questions of fact as to genuineness of documents could not be resolved in summary jurisdiction.

Zakir Latif Ansari and others v. Pakistan Industrial Promoters Limited and others 1988 CLC 1541 and Bhai Aziz‑ur‑Rehman and others v. Messrs Ghafur Textile Mills Limited, Karachi and others 1987 CLC 577 ref.

Hamid Ali Mirza for Petitioners.

Tariq Mahmood Khan for Respondents.

Date of hearing: 17th May, 2002.

2003 C L D 204

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

UMAR HAYAT‑‑‑Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑ ‑‑Respondent

Regular First Appeal No. 543 and Civil Miscellaneous Nos. 1‑C and 2‑C of 2001, decided on 23rd September, 2002.

Banking Companies (Recovery of Loans, Advance, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 15 & 21‑‑‑Banking Tribunals Ordinance (LVIII of 1984), S.6(2)‑‑‑Suit for recovery of loan amount‑‑‑Legal and factual pleas raised by defendant to reply to show‑cause notice issued to him under S.6(2) of Banking Tribunals Ordinance, 1984 were rejected and suit was decreed with mark‑up and costs‑‑‑High Court with consent of parties allowed appeal, set aside judgment/decree and remanded case to Banking Court for its decision afresh within specified time after treating reply to show‑cause notice filed by defendant before the then Banking Tribunal as application for leave to defend suit after hearing the parties.

Ch. Shahid Saeed for Appellant.

Nasir Mahmood for Respondent.

2003 C L D 206

[Lahore]

Before Maului Anwarul Haq and Parvez Ahmad, JJ

EQUITY PARTICIPATION FUND through Regional Office

Vice‑President‑‑‑Appellant

Versus

Messrs PAKISTAN WIRE PRODUCTS (PVT.) LTD. and 7 others‑‑‑Respondents

Regular First Appeals Nos. 38 and 263 of 1996, heard on 3rd September, 2002.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑Ss. 4, 6 & 9‑‑‑Appeal against decree passed on 3‑12‑1995 by Banking Tribunal‑‑‑Validity‑‑‑Constitution and appointment of Banking Tribunal had been declared to be void by Full Bench of Lahore High Court in the case reported as PLD 1996 Lah. 672‑‑‑Effect of observations made in said Full Bench judgment with regard to past and closed cases was considered by another Full Bench of Lahore High Court in the case reported as 2002 PLD 759, holding that where decrees passed by Banking Tribunal had been challenged by filing first appeals such decrees could not be said to be past and closed transactions‑‑‑Decree in the present case rendered by Banking Tribunal having no jurisdiction and being coram non judice could not be sustained‑‑‑High Court accepted appeal and set aside impugned decree, resultantly the suit would be deemed to be pending before competent Banking Court and would be proceeded with in accordance with law.

Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 and Syed Farasat Ali Shah v. Allied Bank of Pakistan Ltd. 2002 CLD 759 fol.

Mian Ataur Rehman for Appellant.

Iftikhar Ullah Malik for Respondents.

Date of hearing: 3rd September, 2002.

2003 C L D 208

[Lahore]

Before Maulvi Anwarul Haq and Parvez Ahmad, JJ

Messrs NICE 'N' EASY FASHION PRIVATE LIMITED through Chief Executive and 2 others‑‑‑Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED through General Attorneys and Principal Officers‑ ‑‑Respondents

First Appeal from Order No. 394 of 2002, decided on 4th September, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss. 19 & 22‑‑‑Execution of decree‑‑‑Sale of property‑‑­Executing Court fixed reserve price of factory at Rs.5 millions and of house at Rs. 9 millions‑‑‑Judgment‑debtors filed application complaining that such reserved price was low as Bank had earlier evaluated factory at Rs.6.96 millions and house at Rs.11.520 millions‑‑‑Executing Court dismissed application observing that judgment‑debtors could bring customer at the time of auction ‑‑‑Validity‑‑­Rupees 9 million had been fixed as proposed sale value of house, while in case of factory, some machinery items had been reported to have either been removed or replaced with items of lesser value‑‑‑No error was found in order of Executing Court while fixing such reserved price‑‑­Endeavour were being made by Executing Court to ensure that maximum price was fetched at sale‑‑‑No discrepancy was found in the. advertisement either in dates or time fixed for auction‑‑‑High Court disposed of appeal with observations that Executing Court would ensure conduct of sale in accordance with law and would not allow any one to abuse the process of Court.

Muhammad Sahhzad Shaukat for Appellants.

Ashar Elahi for the Respondent.

2003 C L D 224

[Lahore]

Before Nazir Ahmad Siddiqui and Muhammad Khalid Alvi, JJ

MUHAMMAD HANIF---Appellant

Versus

KISSAN DOST (PVT.) LIMITED ---Respondent

Regular First Appeal No.79 of 1990, heard on 6th May, 2002.

(a) Civil Procedure Code (V of 1908)---

----O. XXIX, R.1---Suits by or against Corporation---Plaint signed by directors of plaintiff Corporation---Validity---Such suit can either be signed and verified by its Secretary or by any Director or other principal officer of the Corporation--­Plaintiff-company was a private body corporate registered under Companies Ordinance, 1984, and the suit instituted signed and verified by its two Directors was a validly instituted suit.

(b) Negotiable Instruments Act (XXVI of 1881)----

---S. 4---Stamp Act (II of 1899), Ss. 12 & 36---Civil Procedure Code (V of 1908), O. XXXVII, R.2---Negotiable instrument--­Cancelling of stamps affixed on pronote---Object and scope---Defendant denied execution of pronote but accepted his signatures on the same---Trial Court decreed the suit in favour of the plaintiff---Plea raised by the defendant was that the stamps affixed on the pronote were not cancelled as required under S.12 of Stamp Act, 1899, therefore it was inadmissible document in evidence---Validity---All the adhesive stamps on the pronote were cancelled either making a line on them or through signatures of the defendants, therefore, the plea raised by the defendant had no force---As the pronote was admitted in evidence without objection by the defendant at the relevant time the same could not be kept out of consideration at the time of deciding of appeal---Stamp Act, 1899, was a revenue collecting law and the object of cancelling of stamps was only that the same might not be used again on any other document, therefore, the provisions of the law were not intended to deny vested rights of the parties---Suit was rightly decreed by the Trial Court in favour of the plaintiff on the basis of pronote and High Court declined to interfere with the judgment and decree passed by the Trial Court.

Khan Iftikhar Hussain Khan of Memdot v. Messrs Ghulam Nabi Corporation Ltd. PLD 1971 SC 550; National Bank of Pakistan v. Karachi Development Authority PLD 1999 Kar. 260; Friendship Textile Mills (Pvt.) Ltd. Government of Balochistan 1998 CLC 176; Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lah. 381; Jam Pallo v. Bashir Ahmad and another PLD 1993 Lah. 168; Government of the Punjab v. Prof. Mst. Jamida Malik 1991 MLD 824; Sheikhupura Central Cooperative Bank Ltd. v. Ch. Tawakkal Ullah and another PLD 1977 Lah.763: K.M. Munir v. Mirza Rashid Ahmad PLD 1964 (W.P.) Kar.172; Parshotam v. Ishwarbhai AIR 1971 Guj. 252; Govinda v. Haribhau and another AIR 1933 Nag. 391 and Benoy Bhusan Saha v. Muhammad Abdullah Samad alias Ladi Miah PLD 1956 Dacca 14 ref.

Mirza Manzoor Ahmad for Appellant.

Ch. Imdad Ali Khan for Respondent.

Date of hearing: 6th May, 2002.

2003 C L D 231

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

RAVI SPINNING MILLS LIMITED through Chief Executive and 8

others‑‑‑Appellants

Versus

AL‑TOWFEEK INVESTMENT BANK LIMITED through Branch

Manager‑‑‑Respondent

Regular First Appeal No.640 of 2001, decided on 3rd October, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss. 22 & 10‑‑‑Appeal against decree passed by Banking Court‑‑‑Appellant's counsel submitted his own affidavit in support of memo of appeal‑‑‑Respondent's counsel did not object to acceptance of appeal and setting aside of decree, provided Banking Court was, directed to decide petition for leave to defend/suit exeditiously‑‑‑High Court with consensus arrived at between counsel for the parties, accepted appeal and set aside impugned decree with direction to Banking Court to decide afresh at the first instance application for leave to defend suit within specified time.

Muhammad Naseem Kashmiri for Appellants.

Naeem Sahgal for Respondent.

2003 C L D 232

[Lahore]

Before Maulvi Anwarul Haq and Parvez Ahmad, JJ

Messrs ICEPAC LIMITED through Chief Executive and 6 others‑‑‑Appellants

Versus

ASIAN LEASING CORPORATION LIMITED through Attorney and 2

others‑‑‑Respondents

Regular First Appeal No.563 of 2000, decided on 9th May 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑S. 10‑‑‑Civil Procedure Code (V of 1908), O. XXXVII, R.3‑­Leave to defend‑‑‑Provisions of S.10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and O. XXXVII, R.3, C.P.C.‑‑ Distinguished‑‑‑Defendant is required under O.XXXVII, R.3, C.P.C. to show that some question of fact or law is to be decided in the suit‑‑‑Leave to defend is granted by Banking Court only if 'serious and bona fide dispute' is raised by means of application to be filed by defendant in a suit filed by Banking Company under S.9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997.

(b) Stamp Act (II of 1899)‑‑‑

‑‑‑‑S. 35‑‑‑Document not stamped‑‑‑Effect‑‑‑Document not bearing the requisite stamp duty is not a void document.

Union Insurance Company of Pakistan Ltd. v. Hafiz Muhammad Siddique PLD 1978 SC 279 ref.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 21‑‑‑Civil Procedure Code (V of 1908), S.96‑‑­Appeal‑‑‑Plea that suit not filed by duly authorized person‑‑­Application for leave to defend the suit was dismissed by Banking Court and suit filed by Bank was decreed against the borrower‑‑‑Plea raised by the borrower was that the suit was not filed by person duly authorized by Bank. and the plaint was bad as requirements of S.9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, had not been fulfilled‑‑‑Validity‑‑‑Plaint narrated that the Bank was suing through its duly authorized agent‑‑‑Such statement of the Bank was contained in the plaint and the power of attorney had also been placed on record‑‑‑Power of attorney was a registered document and it had authorized the attorney to file the suit‑‑‑Banking Court had rightly considered the objection regarding filing of the suit‑‑‑ Appeal was dismissed in limine.

S. Perumal Reddiar v. Bank of Baroda and others AIR 1981 Mad. 180; National Bank of Pakistan and others v. Karachi Development Authority and others PLD 1999 Kar. 260 and Fine Textile Mills Ltd., Karachi v. Haji Umar PLD 1963 SC 163 ref.

Salman Aslam Butt for Appellants.

2003 C L D 245

[Lahore]

Before Mian Hamid Farooq and Parvaiz Ahmad, JJ

Messrs WAHEED CORPORATION through Proprietor and another‑‑‑Appellants

Versus

ALLIED BANK OF PAKISTAN through Manager‑ ‑‑Respondent

Regular First Appeal No.59 of 2002, heard on 8th October, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.9, 10(8)(12) & 22‑‑‑Civil Procedure Code (V of 1908), O.VII, R.11‑‑‑Suit against Bank by its customer‑‑‑Application for leave to defend by Bank followed by amended application under S.10(12) of the Ordinance‑‑‑Plaintiff failed to reply such applications‑‑‑Banking Court without deciding such applications rejected plaint under O.VII, R. 11, C.P.C.‑‑­Validity‑‑‑Nowhere provided under S.10 of the Ordinance that while hearing application for leave to defend suit, Banking Court was competent to straightaway reject the plaint‑‑‑Banking Courts established under S.5 of the Ordinance were bound by provisions thereof‑‑‑Banking Court had. first to decide application for leave to defend on merits in either way‑‑‑If Banking Court was of the view that Bank had raised substantial questions of law and facts, then at best could grant leave to defend, but could not dismiss suit or reject plaint at that point of time as main suit was not fixed for hearing‑‑‑Bank was within its right to have filed application under O. VII, R. 11, C.P.C., after grant of leave and treating leave application as written statement‑‑­Banking Court could reject plaint after reaching at conclusion that case fell under any clause of O. VII, R.11, C.P.C., but in no way before grant of leave to defend suit,‑­Impugned judgment was clearly in conflict with express provisions of the Ordinance‑‑‑High Court accepted appeal, set aside. impugned judgment/decree, resultantly amended leave application filed by Bank would be deemed to be pending before Banking Court, which would be decided first.

Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394 and Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another 1997 MLD 1835 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S. 5‑‑‑Banking Court‑‑‑Creature of statute‑‑‑Bound by provision of Financial Institutions (Recovery of Finances) Ordinance, 2001 as established under S. 5 thereof.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S. 10‑‑‑Civil Procedure Code (V of 1908), O. XXXVII, R.3‑‑‑Interlocutory/ancillary application before grant of leave to defend, filing of‑‑‑Locus standi of defendant‑‑‑Defendant could not even file such application and had no right to defend suit, unless he was allowed by Court to defend suit.

Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394 and Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another 1997 MLD 1835 ref.

Asghar Hameed Bhutta for Appellants.

Waheed Mazhar for Respondent.

Date of hearing: 8th October, 2002.

2003 C L D 254

[Lahore]

Before Mian Hamid Farooq and Parvaiz Ahmad, JJ

Messrs QUETTA SILK CENTER through Sole Proprietor and 2

others‑‑‑Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Branch Manager/General

Attorney‑‑‑Respondent

First Appeal from Order No. 191 of 2002, decided on 19th September, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.9(5), 10(1), 12 & 22‑‑‑Ex parte decree for recovery of loan amount‑‑‑Refusal of Banking Court to set aside such decree on the ground that appellants had obtained knowledge of pendency of suit through publication of summons in newspapers‑‑‑Validity‑‑‑Record showed that Banking Court as per requirement of S.9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, had issued summons through all the modes of service including publication of summons in leading English and Urdu dailies‑‑‑Neither acknowledgement due showing receipt of registered letters containing summons by appellants was found on record nor such letters had been received back by Court undelivered‑‑‑Courier Agency had sent back to Court envelope containing summons with report viz. "out of our service area"‑‑‑Appellants had not been served through bailiff of Court nor through registered post acknowledgment due nor by courier service‑‑‑Urdu newspaper was not having wide circulation, but appeared to be newspaper having local circulation and that too within the relevant District, whereas addresses of appellants were that of the other District‑‑­Publication of summons in newspaper had not been made in accordance with law‑‑‑Banking Court had not sufficiently and adequately complied with provisions of S.9(5) of the Ordinance‑‑‑High Court accepted appeal, set aside it impugned judgment/ decree while allowing 10 days' time to appellants for filing application for leave to defend the suit before Banking Court.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.9(5)‑‑‑Service of summons through different prescribed modes simultaneously‑‑‑Object of such requirement‑‑‑Intention of Legislature in prescribing all the four modes and publication in newspaper with wide circulation was that defendant, wherever he might be living, must come to know through any of such modes about institution of suit‑‑‑Such was the reason why under S.9(5) of the Ordinance, ‑Banking Court was required to ensure publication of summons in newspaper with wide circulation.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.12, 9(5) & 10(1)‑‑‑Application for setting aside ex parte decree‑‑Objection of plaintiff was that such application was time‑barred‑‑‑Validity‑‑‑Proper service of defendants had not been effected through any of the prescribed modes of service‑‑‑Defendants, thus, could not be said to have knowledge of passing of decree prior to filing of such application‑‑‑Defendants had filed application within 21 days of their knowledge‑‑‑Application was within time‑‑‑Objection was repelled in circumstances.

Sajid Mehmood Sheikh for Appellants.

Mushtaq Ahmad Khan for Respondent.

Date of hearing: 19th September, 2002.

2003 C L D 259

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Messrs PAKISTAN INDUSTRIAL LEASING CORPORATION LIMITED through

A.V.P. and Manager‑‑‑Appellant

Versus

NOORANI INDUSTRIES (PVT.) LIMITED through Chief Executive and 5

others‑‑‑Respondents

E.F.A. No.576 of 2001, decided on 1st October, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑Ss.18 & 21‑‑‑Civil Procedure Code (V of 1908), Ss.2(2) & 96(3)‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art. 114‑‑‑Execution of consent decree‑‑‑Execution petition for recovery of unpaid amount under decree‑‑‑Claim of Judgment‑debtor for refund of certain amount debited in accounts of decree‑holder‑‑­Executing Court allowed such claim with mark‑up‑‑­Validity‑‑‑Such entry being a debit entry was made on 25‑10‑1992, while consent decree had been passed on 22‑2‑1999‑‑‑Executing Court could not go behind decree and was precluded to take notice of any entry in statement of accounts prior to passing of decree, as entire matter stood clinched with passing of consent decree‑‑‑Whatever amount the parties exchanged between themselves before 22‑2‑1999 had been finalized with passing of consent decree‑‑­Judgment‑debtors were estopped under law from agitating that any amount prior to passing of decree was not due against them‑‑‑Consent decree being not appealable under S.96(3), C.P.C., had attained finality and nobody could challenge terms thereof after its passing rather both parties were bound to execute decree as the same was‑‑‑After payments made as admitted by both parties, only a sum of Rs.83,857 remained payable by judgment‑debtors out of consent decree‑‑‑Executing Court was bound to execute consent decree to such extent‑‑‑High Court accepted appeal, Set aside impugned order, resultantly Executing Court would execute consent decree only to extent of the remaining payable amount of Rs.83,857.

(b) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑S.2(2) & O.XXI, R.10‑‑‑Execution of decree‑‑‑Executing Court could not go behind the decree.

(c) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑Ss.2(2), 96(3), O.XXI, R.1 & O.XXIII, R.3‑‑‑Consent decree, execution of‑‑‑Duty of parties‑‑‑Nobody could challenge terms of consent decree, which would attain finality after its passing as being not appealable under S.96(3), C.P.C.‑‑‑Both parties were bound to execute consent decree as the same was.

(d) Banking Companies (Recovery of Loans, Advances Credits and Finances) Act (XV of 1997)‑‑‑

--‑S.18‑‑‑Execution of decree‑‑‑Banking Court was under legal obligation to execute decree as the same, was and could not go behind the decree.

(e) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑S.18‑‑‑Consent decree for recovery of money, execution of‑‑‑Duty of Banking Court‑‑‑Banking Court is under legal obligation to execute decree as the same was‑‑‑Banking Court has to see only as to whether consent decree has been satisfied or not, and how much amount remains to be paid by judgment‑debtor‑‑‑Banking Court is concerned only with payments made after passing of decree and after deduction of such amount, Banking Court has to execute the remaining decree.

Sh. Maqbool Ahmad for Appellant.

Ijaz Feroze for Respondents.

2003 C L D 264

[Lahore]

Before Saqib Nisar and Muhammad Sayeed Akhtar, JJ

MUHAMMAD ISHAQ ‑‑‑ Appellant

Versus

ALTOWFEEK INVESTMENT BANK LIMITED through Manager and Assistant

Vice‑President and 11 others‑‑‑Respondents

E.F.As. Nos.323 and 481 of 2001, heard on 2nd October, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑Ss. 18 & 21‑‑‑Civil Procedure Code (V of 1908), O. XXI, R.90‑‑‑Execution of decree‑‑‑Auction proceedings‑‑‑Four bidders participated in auction of property and offered their bids, out of which three highest bidders withdrew their bids, whereas the lowest bidder remained in field‑‑‑Objection petition of judgment‑debtor was about inadequacy of price on account of lapse on the part of Court Auctioneer‑‑­Executing Court dismissed objection petition for judgment/debtors' failure to deposit 20% amount as required by O. XXI, R.90, C.P.C.‑‑‑Validity‑‑‑Executing Court had no power under law to accept offer of the lowest bidder in conducting some private auction in Court‑room, when highest bidders had already withdrawn their bids‑‑‑Duty of Executing Court in such circumstances was to have put the property for re‑auction as per requirement of law‑‑­Notwithstanding that judgment‑debtors had failed to deposit requisite amount of 2096 in terms of O. XXI, R.90, C.P.C., the order accepting offer of lowest bidder was void ab initio and illegal, which could not sustain‑‑‑High Court accepted appeal, set aside impugned order and annulled confirmation of sale made in favour of lowest bidder.

Muhammad Arif Raja for Appellant.

Shabbir Ahmad Khan and Khalid Naseem for Respondents.

Date of hearing: 2nd October, 2002.

2003 C L D 267

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

GHULAM MUHAMMAD ‑‑‑Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through

Manager‑‑‑Respondent

E.F.A. No.237 of 2002, heard on 3rd October, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss. 19(7) & 22(6)‑‑‑Execution of decree‑‑‑Appeal against order of Banking Court, dismissing objection petition filed by Judgment‑debtor ‑‑‑Maintainability‑‑‑Banking Court had dismissed objection petition in exercise of its powers under S.19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 thus, appeal under S.22(6) of the said Ordinance was competent.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑Ss. 19(7) & 22(6)‑‑‑Execution of decree‑ ‑‑Dismissal of objection petition disputing correctness of amount to be paid by judgment‑debtor as per directions of Executing Court‑‑‑Contention of judgment‑debtor was that he had paid a total sum of Rs.3,79,656 to the Bank, whereas decretal amount was Rs. 2, 48, 225, thus, Bank had received Rs. 1,31, 431 in excess of decretal amount‑‑‑Validity‑‑‑Bank could not be allowed to take even a single penny from judgment‑debtor in excess of decretal amount‑‑‑Bank through decree under execution was entitled to recover total sum of Rs.2,48,225 from judgment‑debtor‑‑Bank had admittedly received a total sum of Rs.3,24,115 from judgment‑debtor as against decretal amount of Rs.2,48,225‑‑‑Bank had, thus, recovered an excess amount of Rs.75,890, which it was not entitled to retain and judgment‑debtor was entitled to refund of such amount‑‑‑Such sort of highhandedness on the part of a financial institution could not be countenanced by any stretch of imagination‑‑‑Bank had raised objection regarding non‑maintainability of appeal only to swallow such amount excessively received from judgment‑debtor‑‑‑High Court accepted appeal and set aside impugned order while directing Bank to refund a sum of Rs.75,890 to judgment­-debtor within fifteen days as undertook by its Manager.

(c) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S. 2(2) & O. XXI, R. 10‑‑‑Execution of decree‑‑‑Executing Court could not go behind decree and was under legal obligation to execute decree according to its terms.

Malik Imran Nazir for Appellant.

Shaukat Umar Pirzada for Respondent.

Date of hearing: 3rd October, 2002.

2003 C L D 278

[Lahore]

Before Jawwad S. Khawaja and Abdul Shakoor Paracha, J

NATIONAL DEVELOPMENT FINANCE CORPORATION‑‑‑Appellant

Versus

Dr. QUDRATULLAH CHAUDHRY and 4 others‑‑‑Respondents

Regular First Appeal No.161 of 1996, heard on 11th September, 2002.

Banking Tribunals Ordinance (XLVIII of 1984)‑‑‑

‑‑‑‑Ss. 6 & 9‑‑‑Contract Act (IX of 1872), S.133‑‑‑Suit for recovery of loan amount‑‑‑Banking Court decreed suit against principal debtor, but disallowed the claim against respondents‑guarantors on the ground that plaintiff had got executed supplementary agreements relating to finances, thus, they were not liable to pay any amount on basis of such supplementary agreements‑‑‑Contention of plaintiff was that Banking Tribunal had fallen in error as record showed that respondents had executed personal guarantees to secure even supplementary agreements ‑‑‑Validity‑‑­Guarantees executed by respondents were very much part of record available to Banking Tribunal, but same had been overlooked‑‑‑No justification for failure, of Banking Tribunal to pass decree against respondents s prayed for in the plaint‑‑‑High Court passed decree against respondents in circumstances.

Syed Mansoor Ali Shah for Appellant.

Nasrullah Khan Baber for Respondents.

Date of hearing: 11th September, 2002.

2003 C L D 280

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

MUHAMMAD SALEEM‑‑‑Appellant

Versus

ALLIED BANK OF PAKISTAN and 12 others‑‑‑Respondents

E. F.A. No. 750 of 2001, decided on 1st October, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 18 & 21‑‑‑Civil Procedure Code (V of 1908), O. XXI, Rr. 58, 59 & 60‑‑‑Execution of money decree‑‑‑Objection of appellant seeking de‑attachment and release of disputed property was that he was neither a borrower nor judgment­debtor‑‑‑Banking Court dismissed objection petition‑‑­Validity‑‑‑Record showed that appellant was neither arrayed as defendant in the suit nor any decree had been passed against him‑‑‑Appellant had specifically asserted that he was neither judgment‑debtor nor guarantor nor customer nor had furnished title deed of property to the Bank‑‑‑Banking Court had not dealt with such matters, but had passed impugned order in a mechanical manner without considering the contentions raised by appellant in the objection petition‑‑‑Banking Court before passing impugned order ought to have investigated the claim and objections to attachment of property raised by appellant by providing sufficient opportunity to parties for establishing their respective claims through production of evidence‑‑­Impugned order was neither in conformity with record nor in consonance with law on the subject‑‑‑High Court accepted appeal, set aside impugned order, resultantly objection petition would be deemed to be pending before Banking Court, which would decide the same in accordance with law after affording adequate opportunity to parties to produce evidence to establish their respective claims.

Mst. Surayya Begum v. Muslim Commercial Bank Ltd. and 4 others PLD 1990 Lah. 4 ref.

(b) Banking Companies (Recovery of Loans, Advances, Credit and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑S. 18(6)‑‑‑Civil Procedure Code (V of 1908), O. XXI, Rr.58, 59 & 103‑‑‑Execution of decree‑‑‑Claims and objections raised in objection petition‑‑‑Determination of‑‑Recording of evidence‑‑‑Duty of executing Court‑‑‑Executing Court not bound to mechanically record evidence of objector in each and every case‑‑‑Duty of Executing Court is to see as to whether case warrants recording of evidence or not; and whether objection petition is genuine or same has been filed frivolously, contumaciously and, to delay execution proceedings‑‑‑Primary function of Executing Court is to see as to whether objection petition is to be decided after recording of evidence or only after hearing the parties.

Ijaz Feroz on behalf of Counsel for the Decree­-holder.

Irfan Masud Sheikh for Respondent No. 1.

Nemo for the Remaining Respondents.

2003 C L D 284

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Chairman and 2 others‑‑‑Appellants

Versus

Messrs RAVI ENTERPRISES through Chairman‑‑‑Respondent

First Appeal from Order No.355 and Civil Miscellaneous No. 1230‑C of 2002, decided on 1st October, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑Ss. 9, 10 & 22‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, R. 1‑‑‑Specific Relief Act (I of 1877), Ss. 42 & 55‑‑­Suit for rendition of accounts, declaration, damages and mandatory injunction ‑‑‑Plaintiff filed application for grant of mandatory injunction, when application for leave to defend the suit filed by Bank was pending‑‑‑Banking Court on plaintiffs application directed Bank to deliver him title documents‑‑‑Validity‑‑‑Banking Court after receipt of leave application was obliged under law to have decided same as per provisions of S.10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Leave application had not been decided after lapse of seven months, and for its tendency for such a long period, no plausible justification was found on record‑‑‑Banking Court before embarking upon deciding application for grant of interim relief ought to have decided application for leave to defend suit and thereafter to save proceeded to decide suit including miscellaneous applications‑‑‑Impugned order being perfunctory, slipshod and devoid of reasons also necessitated remand of case‑‑High Court accepted appeal and set aside impugned order, resultantly application for grant of temporary injunction would be deemed pending before Banking Court, which would in first instance decide application for leave to defend suit and would then decide application for grant of temporary injunction.

Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394; Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another 1997 MLD 1835; Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller; Import and Export and 2 others PLD 1970 SC 158; Mollah Ejabar Ali v. Government of East Pakistan and others PLD 1970 SC 173 and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014 ref.

Syed Haider Ali Shah for Appellant.

Ch. M. Masud Akhtar for Respondents.

2003 C L D 288

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

ABDUL MAJID‑‑‑Appellant

Versus

ALLIED BANK OF PAKISTAN and 11 others‑‑‑Respondents, E.F.A. No.749 of 2001, decided on 1st October, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss.18 & 21‑‑‑Civil Procedure Code (V of 1908), O. XXI, Rs.23‑A, 58, 59 & 60‑‑‑Execution of decree‑‑ ‑Objection petition by appellant seeking de‑attachment and release of disputed property‑‑‑Banking Court dismissed objection petition‑‑‑Validity‑‑‑Appellant in capacity of one of judgment­debtors had filed objection petition‑‑‑Banking Court had dismissed objection in a summary manner without directing appellant to comply with provisions of O. XXI, R.23‑A, C.P.C.‑‑‑Bank did not object to remand of case, if appellant was directed to pay decretal amount before entertaining of objection petition‑‑‑High Court accepted appeal, set aside impugned order with direction that Banking Court would entertain objection petition only after deposit of decretal amount by appellant and would then decide the same after affording adequate opportunity to parties to produce evidence to establish their claims; but if appellant failed to deposit decretal amount within stipulated time, then his objection petition would be deemed to have been dismissed.

Ijaz Feroz on behalf of Counsel for Appellant.

Irfan Masud Sheikh for Respondent No. 1.

Nemo for the Remaining Respondents.

2003 C L D 291

[Lahore]

Before Ch. Ijaz Ahmad and Syed Zahid Hussain, JJ

UNITED BANK LIMITED‑‑‑Appellant

Versus

TANVIR KHALID‑‑‑Respondent

Regular First Appeal No.51 of 1999, decided on 2nd October, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 21‑‑‑Civil Procedure Code (V of 1908), O. III, Rr. 1 & 2‑‑‑Suit for recovery of loan filed by Bank through its Branch Manager‑‑‑Banking Court while deciding leave application dismissed suit for not being filed through competent person‑‑‑Contention of Bank was that suit was filed through its Branch Manager, whose power of attorney given by Competent Authority was produced during arguments, but Banking Court refused to accept the same‑‑­Validity‑‑‑Mere reading of S.9 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 revealed that Branch Manager was competent to file suit against defendant‑‑‑Suit had been filed by Branch Manager of the plaintiff‑Bank, who had signed the plaint‑‑­Impugned judgment was not in accordance with law‑‑‑High Court accepted appeal, set aside impugned judgment and decree, resultantly suit filed would be deemed to be pending adjudication, which would be decided by Banking Court alongwith application for leave to defend in accordance with law.

Citibank N.A. v. Judge Baking Court IV and others 2001 CLC 171 and 1994 CLC 1233 ref.

Muhammad Iqbal Mian for Appellant.

Iftikhar Ullah Malik for Respondents.

2003 C L D 316

[Lahore]

Before Nazir Ahmed Siddiqui and Muhammad Khalid Alvi, JJ

GHULAM RASOOL‑‑‑Petitioner

Versus

THE JUDGE BANKING COURT NO.III, MULTAN and 3 others‑‑‑Respondents

Writ Petition No.4024 of 2002, decided on 3rd October, 2002.

(a) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art. 199‑‑‑Constitutional petition ‑‑‑Maintainability‑‑­Interim order‑‑‑Scope‑‑‑Such order cannot be interfered with in Constitutional Jurisdiction of High Court, particularly when the same also relates to an interim matter i.e. temporary injunction which too has yet not been disposed of finally.

(b) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art. 199‑‑‑Constitutional petition ‑‑‑Maintainability‑­Interim order‑‑‑Objection was filed ‑in execution proceedings of decree passed by Banking Court‑‑‑Grievance of the objection petitioner was that he had neither acquired loan from the Bank nor he was a guarantor and the property owned by him was also not mortgaged with the Bank, therefore, his property could not be attached in execution of the decree‑‑‑Executing Court passed interim injunction against execution of the decree subject to deposit of decretal amount by way of security‑‑‑plea raised by the objection petitioner was that the Executing Court could not impose condition for grant of temporary injunction‑‑‑Validity‑‑‑Matter of grant of temporary injunction was still before the Executing Court at initial stage and the Court was Justified to pass an injunctive order subject to the condition of depositing the decretal amount by way of security—­Condition was imposed by the Executing Court in the peculiar circumstances of the case by exercising its Jurisdiction judiciously‑‑‑Awarding a relief under Art‑199 of the Constitution was discretionary‑‑‑High Court declined to interfere with the condition imposed by the Executing Court‑‑‑Constitutional petition was dismissed in limine.

Abbasia Cooperative Bank (now Punjab Provincial Cooperative Bank Ltd.) through Manager and another v. Hakeem Hafiz Muhammad Ghaus and 5 others PLD 1997 SC 3 distinguished.

M. Saleem Iqbal for Petitioner.

Athar Hussain Khateran, Representative for Respondent No.2.

2003 C L D 349

[Lahore]

Before Mian Hamid Farooq, J

Mst. SHAKILA RIAZ‑‑‑Petitioner

Versus

JUDGE BANKING COURT and others‑‑‑Respondents

Writ Petition No.18093 of 2001, decided on 31st October, 2001.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑Ss. 27, 4, 9 & 18‑‑‑Constitution of Pakistan (1973), Art. l99‑‑‑Constitutional petition‑‑‑Execution of decree‑‑­Review of order‑‑‑Property of Judgment‑debtor was ordered to be auctioned in execution proceedings through Court auctioneer‑‑‑Reserve price of property was fixed as Rs.30 lacs, but on application of Judgment‑debtor reserve price thereof was increased to Rs.80 lacs‑‑‑When property could not be sold on said reserve price, Banking Court reduced reserve price from 80 lacs to Rs.60 Macs which was not objected to by Judgment‑debtor‑‑‑Court realizing that reserve price of Rs.60 lacs, also was too high, reduced the same from 60 lacs to Rs.50 lacs, which order had been questioned by judgment‑debtor through Constitutional petition contending that Banking Court had no Jurisdiction to review its earlier order‑‑‑Validity‑‑‑Banking Court by reducing reserve price of property sought to be auctioned had not reviewed earlier order and order reducing reserve price of property would not fall within scope of S.27 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑If such a harmless order could not be recalled by Banking Court then Banking Courts established for speedy disposal of Bank's recovery cases, could not Function and would standstill‑‑‑Judgment‑debtor did not raise any objection to recalling of previous two orders whereby reserve price of Rs.30 lacs was changed into 80 lacs and thereafter reserve price was reduced from 80 lacs to 60 lacs ‑‑‑Main purpose for establishment of Banking Courts was for expeditious disposal of cases relating to recovery of Bank dues‑‑‑Banking Courts could not handicapped by some unscrupulous Judgment‑debtors under threat of‑ S.27 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑Banking Court was to examine facts and circumstances of each and every case and then to decide the same on its merits as to whether case fell within the scope of 'reviewing' or 'recalling' of order‑‑‑Order of Banking Court in the present case did not fall within scope of 'review'‑‑‑Judgment‑debtor, in circumstances was not entitled for any discretionary and equitable relief in exercise of Constitutional Jurisdiction of High Court‑‑‑‑Constitutional petition was dismissed being devoid of merits.

Messrs Shah Jewana Textile Mills Ltd. v. United Bank of Pakistan through Attorney PLD 2000 Lah. 162 and Allied Bank of Pakistan Ltd. v. Digital Radio Paging (Pvt.) Ltd. and 4 others 2000 CLC 1153 ref.

Shahid Ikram Siddiqui for Petitioner.

Abdur Rahim Tariq Alvi for Respondents.

Date of hearing: 31st October, 2001.

2003 C L D 354

[Lahore]

Before Muhammad Nawaz Abbasi and Mansoor Ahmad, JJ

SAUDI‑PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY (PVT.) LTD., ISLAMABAD‑‑‑Appellant

Versus

ALLIED BANK OF PAKISTAN LTD., LAHORE and another‑‑ ‑Respondents

R.F.A. No.83 of 1996, heard on 11th January, 2002.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss. 6 & 9‑‑‑Appeal against Judgment of Banking Tribunal‑‑‑Plaintiff a financial institution had extended financial facilities to the defendant, through another scheduled Bank‑‑‑Amount received by the defendant was payable within 12 months together with mark‑up at the agreed rate and the said scheduled Bank issued guarantee‑‑‑Defendant having not paid amount after expiry of stipulated date, plaintiff invoked Bank Guarantee and filed claim with the guarantor Bank through a suit for recovery of amount‑‑‑Banking Tribunal found that plaintiff had failed to lodge its claim within stipulated date as provided by guarantor and that guarantor Bank was not liable to make payment under Bank guarantee‑‑‑Guarantor Bank had asserted that time for filing claim was specifically mentioned as 10‑3‑1991 in the Bank guarantee whereas claim had been lodged by the plaintiff on 18‑3‑1991‑‑­Validity‑‑‑Bank guarantee issued by the guarantor Bank on 18‑.3‑1990 was valid up to 15‑3‑1991 as amount was received by the plaintiff on 18‑3‑1990 for 12 months which was payable on 18‑3‑1991‑‑‑View taken by Banking Tribunal that claim was required to be filed by 10‑3‑1991 and thereafter no claim was entertainable was based on an erroneous assumption that validity period of guarantee was up to 10‑3‑1991‑‑‑Even if any date prior to validity period was mentioned in the Bank guarantee that would not discharge liability of guarantor under the guarantee before expiry of period of validity‑‑‑Filing of claim was merely a mode of convenience‑‑‑Bank guarantee being for a period of 12 months from 18‑3‑1990, liability of guarantor Bank could not be discharged before 18‑3‑1991‑‑‑Claim filed by plaintiff within a period of validity was proper and tenable‑‑­Guarantor Bank was legally bound to honour its commitment and obligation arising under guarantee issued by it and was liable to make payment to the plaintiff.

Allah Bakhsh and others v. Muhammad Ishaque and others PLD 1984 SC 47; House Building Finance Corporation v. Shahinshah Humayun Cooperative House Building Society and others 1992 SCMR 19; Ghazanfar Hussain v. Rehmat Bibi and others 1989 CLC 310: Mst. Iqbal Begum v. Abdul Ghaffar and others 1995 CLC 105; Radha Sundar Dutta v. Muhammad Jahadur Rahim and others AIR 1939 SC 24 and Forbes v. Gil and others AIR 1921 PC 209 ref.

Dr. Parvez Hassan, M. Bilal and Baber Bilal for Appellant.

Ehsan Ahmad Khawaja and Rat Muhammad Naim Kharal for Respondents.

Date of hearing: 21st December, 2001.

2003 C L D 359

[Lahore]

Before Mian Hamid Farooq and Abdul Shakoor Paracha, JJ

SHAHID ALI BABAR‑‑‑Appellant

Versus

CITIBANK HOUSING FINANCE COMPANY LIMITED, LAHORE‑‑‑Respondent

Regular First Appeal No.391 of 1996, heard on 29th July, 2002.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.9‑‑‑Limitation Act (IX of 1908), Ss.5 & 29‑‑‑Delay in filing appeal ‑‑‑Condonation of‑‑‑First appeal filed under S.9 of Banking Tribunals Ordinance, 1984 was barred by time and appellant had filed application for condonation of delay under S.5 of Limitation Act, 1908‑‑‑Period of 90 days had been prescribed under ordinary law for filing regular first appeal before High Court, while the present case was covered by provisions of Banking Tribunals Ordinance, 1984 which was a special law which had prescribed a period of 30 days for filing first appeal before High Court against decree passed by Banking Tribunal‑‑‑Special law having provided a different period of limitation, provisions of S.5 of Limitation Act, 1908 were neither applicable nor attracted in the case as provided under S.29 of Limitation Act, 1908‑‑­Appeal being barred by time was devoid of merits and was dismissed.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.9‑‑‑Suit for recovery ‑of amount‑‑‑Suit decreed with costs‑‑‑Banking Tribunal while decreeing the suit also awarded costs to the Bank, defendant had filed appeal against said order of Banking Tribunal‑‑‑Validity‑‑‑Awarding of costs being within discretion of Court, Banking Tribunal in exercise of its discretionary powers had rightly awarded the costs‑‑‑Banking Tribunal having not exercised discretion in an arbitrary or in a fanciful manner, order of Banking Tribunal could not be interfered with in appeal.

Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 ref.

Masood Gohar for Appellant.

Shahid Ikram Siddiqui for Respondent.

Date of hearing: 29th July, 2002.

2003 C L D 382

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs NEW RAHAT ENGINEERING WORKS through Proprietor and 4 others‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN and another‑‑‑Respondents

Execution First Appeal No.534 of .2001, decided on 28th October, 2002.

(a) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑Ss.11, 12(2), O.II, R.2 & O. XXI, R.90‑‑‑Setting aside of order‑‑‑Principle of res judicata‑‑‑Applicability‑‑‑Plea of fraud and misrepresentation‑‑‑Omission of such plea in earlier objection petition‑‑‑Effect‑‑‑Sale of attached property through auction was assailed in objection petition which was disallowed by Banking Court and appeal was also dismissed by High Court‑‑‑Judgment‑debtors filed application under S.12(2), C.P.C. on the ground that fraud was committed by the Court auctioneers and the auction was not conducted in the manner as the Banking Court had directed‑‑‑Such plea had already been dismissed by the High Court in appeal filed against the order of Banking Court whereby objection petition was dismissed‑‑‑Judgment‑debtors raised the plea that element of fraud had not been highlighted in the earlier proceedings and the dismissal of the earlier petition and appeal was not a clog to the maintainability of the present application ‑‑‑Validity‑‑­Principles of constructive res judicata were applicable to miscellaneous application also‑‑‑In the earlier application, the judgment‑debtors though broadly had taken the objection of fraud but had omitted to highlight the particular instances of fraud‑‑‑Such stance showed that such pleas were taken but were rejected by the Court‑‑‑If judgment‑debtors in earlier proceedings, had failed to set out the particular fact to base a relief thereupon, then they were to blame themselves as the principles of equity enunciated by O.II, R.2, C.P.C. could be applied to debar the judgment­ debtors in the matter‑‑‑Application was dismissed in circumstances.

(b) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S.12(2) & O.XXI, R.90‑‑‑Application under S.12(2), C.P.C.‑‑‑Necessary parties‑‑‑Sale through auction, assailing of‑‑‑Auction‑purchaser was not impleaded as necessary party‑‑‑Validity‑‑‑Auction‑purchaser who bought the property and in whose favour the sale had been confirmed was a necessary party to the application.

Kh. Saeed‑uz‑Zafar for Appellant.

2003 C L D 386

[Lahore]

Before Ch. Ijaz Ahmad and Syed Zahid Hussain, JJ

Messrs MASOOM INDUSTRIES through Appellants Nos. 2 to 5‑‑‑Appellants

Versus

HABIB BANK LIMITED and another‑‑‑Respondents

E.F.A. No. 143 of 2001, decided on 14th November, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑----

‑‑‑‑S.18‑‑‑Civil Procedure Code (V of 1908), S.11 & O.XXI, R.90‑‑‑Sale of property in execution of decree‑‑‑Principle of res judicata‑‑‑Applicability‑‑‑Objection petition was dismissed for non‑prosecution and the application for restoration was also dismissed by the Banking Court‑‑­Objectors did not challenge the orders of Banking Court any further‑‑‑Effect‑‑‑Orders of the Banking Court had become final between the parties on the principle of res judicate‑‑­High Court, on appeal, declined to interfere with the orders passed by the Banking Court.

Punjab Province (now Province of West Pakistan) v. Kh. Feroze Din Butt. and another PLD 1960 Lah.791; Brig. (Retd.) Mazhar‑ul‑Haq and another v. M/s. Muslim Commercial Bank Ltd., Islamabad and another PLD 1993 Lah.706; Messrs National Electric Company of Pakistan v. Allied Bank of Pakistan Ltd. and 2 others 1996 CLC 192; Abdul Samad and another v. Aslam Munshi and others AIR 1944 Cal. 381; Mst. Farida v. Mst. Sanjida and others 2000 SCMR 1264; Iltafur Rahman v. Bosten 1968 SCMR 1350; Shila Pal (minor) and others v. Comilla Banking Corporation Ltd. anal others AIR 1945 Ca1.434; Mst. Manzoor Jahan Begum and others v. Haji Hussain Bakhsh PLD 1966 SC 375 and Ghulam. Abbas v. Zohra Bibi and another PLD 1972 SC 337 distinguished.

Pir Bakhsh represented by his Legal Heirs and others v. The Chairman, Allotment Committee PLD 1987 SC 145 rel.

Mian Asghar Ali for Appellant.

Muhammad Saleem Sehgal for Respondents.

Nasim Mehmood for the Bank.

2003 C L D 451

[Lahore]

Before Maulvi Anwarul Haq, J

MAZHAR HUSSAIN ‑‑‑Appellant

Versus

Mian MUHAMMAD EJAZ‑‑‑Respondent

Regular First Appeal No.227 of 2001, heard on 14th May, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXII, Rr.2 & 3‑‑‑Suit for recovery of amount on basis of a pronote‑‑‑Application for grant of leave and defend suit‑‑‑Defendant had contended that pronote on basis of which suit was filed by plaintiff being under‑stamped, same was not admissible in evidence‑‑‑Defendant even in his application for leave to defend suit, had not denied execution of pronote‑‑‑Mere fact that document/pronote was unstamped or under‑stamped, would not make it invalid‑‑­Suit was rightly decreed and application for leave to appear and defend suit was rightly dismissed by Trial Court.

Union Insurance Company of Pakistan Ltd. v. Hafiz Muhammad Siddique PLD 1978 SC 279 ref.

Muhammad, Nawaz for Appellant.

Date of hearing: 14th May, 2002.

2003 C L D 453

[Lahore]

Before Mian Hamid Farooq and Pervez Ahmad, JJ

SUHAEL AHMED and others‑‑‑Appellants

Versus

MICRO ELECTRONICS INTERNATIONAL (PVT.) LIMITED and others‑‑‑Respondents

Regular First Appeal No.209 of 1994, heard on 17th July. 2002.

(a) Baking Tribunals Ordinance (LVIII of 1984)‑‑‑-

‑‑‑‑Ss.9 & 10‑‑‑Appeal/cross‑objections against judgment and decree passed by Banking Tribunal‑‑‑Limitation‑‑‑Any judgment and decree passed by Banking Tribunal had to be assailed only through filing of appeal, which too would be entertained after deposit of decretal amount‑‑‑Said judgment and decree would not be called in question through any other mode/manner, except by way of appeal‑‑‑Right of appeal was creation of Statute and was to be exercised according to provisions of that Statute‑‑ ‑Banking Tribunals Ordinance, 1984 was a special law and would override general law‑‑‑Banking Tribunals Ordinance, 1984, in circumstances, would override provisions of C.P.C.‑‑‑Period of limitation for filing first appeal before High Court, provided in a special law and general law were different as in case of decree passed by Banking Tribunal, an appeal was to be filed within thirty days, while under ordinary law, first appeal lay to High Court within a period of ninety days‑‑‑Provisions of S.96, C.P.C. had not been made applicable to provision of Banking Tribunals Ordinance, 1984‑‑‑If appellants were aggrieved from any order, judgment or decree passed by Banking Tribunal, they could have assailed the same through filing of appeal under S.9 of Banking Tribunals Ordinance, 1984 and that too after fulfilling the requirements, enunciated in the said section, necessary before entertaining the appeal‑‑‑Appellants having failed to adhere to provisions of S.9 of Banking Tribunals Ordinance, 1984, cross‑objections filed by them which were converted into appeal, were not maintainable.

(b) Appeal (civil)‑‑‑--------

‑‑‑‑Limitation‑-‑Right of appeal‑‑‑Periods of limitation for filing first appeal provided in a special law and general law­‑‑Right of appeal was a creation of statute and was to be exercised according to provisions of that particular statute‑‑­Periods of limitation for filing first appeal before High Court, provided in a special law and general law were different as in the case of decree passed by Banking Tribunal, an appeal was to be filed within thirty days while under ordinary law, first appeal lay to High Court within a period of ninety, days.

Iftikhar Ullah Malik for Appellants.

Sajid Mehmood Sheikh and Khalifa Shujaat Amin for Respondents.

Date of hearing: 17th July, 2002.

2003 C L D 457

[Lahore]

Before M. Javed Buttar and Syed Jamshed Ali, JJ

AL‑SAEED RESIN (PVT.) LIMITED and 6 others‑‑‑Appellants.

Versus

TRUST MODARABA through Trust Management Services Pvt., Lahore‑‑‑Respondent

E.F.A. No.493 of 2000, decided on 22nd July, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXI, Rr.10, 58 & S.47‑‑‑Execution of decree‑‑‑Objection to‑‑‑Decree‑holder sought execution of ‑ decree by sale of seven properties belonging to judgment‑debtor‑‑‑Said properties were attached and ordered to be put to auction to which objection was 'raised by judgment‑debtors contending that only three out of seven properties having been mortgaged in favour of decree‑holder, other four properties could not be put to auction‑‑‑Judgment‑debtors were bound to satisfy decree passed against them‑‑‑Mortgage was only a security and judgment‑debtors were not absolved of their liability to satisfy decree passed against them ‑‑‑Decree­ holder, in circumstances, could legitimately proceed against any property of judgment‑debtors irrespective of fact whether it was or was not mortgaged.

M. Abbas Mirza for Appellants.

Umar Mehmood Kasuri for Respondent.

Date of hearing: 22nd July, 2002.

2003 C L D 460

[Lahore]

Before Muhammad Sair Ali, J

KHALID NAWAZ‑‑‑Appellant

Versus

Chaudhry AHMED ALI ‑‑‑Respondent

Regular First Appeal No.926 of 2001, heard on 21st May, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXVII, Rr.2 & 3‑‑‑Limitation Act (IX of 1908), S.5‑‑‑Suit for recovery of loan‑‑‑Application for leave to appear and defend suit‑‑‑Limitation‑‑‑Application for leave to appear and defend suit was barred by one day and defendant neither had filed any application for condonation of delay nor had claimed exclusion of time‑‑‑Trial Court considered merits of application for leave to appear and defend suit and had justifiably found that defendant had no plausible defence‑‑­ Trial Court had properly and validly dismissed application of defendant for leave to appear and defend suit in absence of any cogent and plausible ground of defence‑‑‑Decree as passed by Trial Court, could not be interfered with in circumstances.

Mushtaq Ahmed Qureshi v. The State PLD 1984 Lah. 283 ref.

Ata‑ul‑Mohsin Lak for Appellant.

Abdul Latif Khan for Respondent.

Date of hearing: 21st May, 2002.

2003 C L D 506

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

UNITED BANK LTD. Through General Attorneys‑ ‑‑Appellant

Versus

Messrs HUMAYUN TRADERS and 2 others‑‑‑Respondents

Regular First Appeal No.328 of 1955, heard on 18th July, 2002.

Banking Tribunals Ordinance (LVIII of 1984)‑----

‑‑‑‑Ss.6(2) & 9‑‑‑Suit for recovery of amount ‑‑‑Deductions‑‑­Suit filed by' Bank against defendants for recovery of amount was decreed after deducting three amounts comprising liquidation damages; amount of excise duty and amount deposited by defendants‑‑‑Bank being not entitled to recover amount of liquidated damages, Banking Tribunal had rightly deducted amount of liquidated damages‑‑­Amount of excise duty was admittedly paid by Bank to Central Government which was validly levied under the law‑‑‑Said amount which could lawfully be recovered by Bank, could not be deducted from the suit amount‑‑‑Banking Tribunal, in circumstances, had illegally deducted said amount from suit amount‑‑‑Banking Tribunal was not Justified to deduct amount allegedly deposited by defendants, because statement of account had shown that defendants had never deposited said amount in their account‑‑‑Suit, in circumstances, should have been decreed only after deducting amount of liquidated damages for which Bank was not entitled‑‑‑Bank was entitled to decree of amount after deducting only amount of liquidated damages from the suit amount‑‑‑Decree passed by Banking Tribunal was modified accordingly.

Allied Bank of Pakistan Limited, Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref.

Mushtaq Ahmad Khan for Appellant.

M. Iqbal for Respondents.

Date of hearing: 18th July, 2002.

2003 C L D 511

[Lahore]

Before Maulvi Anwarul Haq, J

DEWAN SALMAN FIBRES LIMITED‑‑‑Petitioner

Versus

FEDERAL GOVERNMENT OF PAKISTAN through the Secretary, Ministry of

Commerce, Islamabad and 2 others‑‑‑Respondents

Writ Petition No.363 of 1994, heard on 6th November, 2002.

Import Policy Order, 1993‑‑‑

‑‑‑‑Para. 3.1‑‑‑S. R. O. 594 (I)/93‑‑‑S. R. O. 568(I)/ 93‑‑‑Import fee, charging of‑‑‑Validity‑‑‑Entire Import Policy Order did not reveal as to why such fee was to be paid by the registered importer‑‑‑Bank was paid charges for opening of letter of credit, whereas for purposes of registration, a fee was separately levied‑‑‑Import fee being charged without rendering any corresponding, services whatsoever in lieu thereof was void.

Ayaz Textile Mills Ltd. v. Federation of Pakistan through Secretary, Commerce and another PLD 1993 Lah.194 and Sri Gadadhar Ramanuj Das and others v. The Province of Orissa and another AIR 1950 Orissa 47 ref.

Tariq Javed for Petitioner.

Ch. Sultan Mansoor for Respondents.

Date of hearing: 6th November, 2002.

2003 C L D 521

[Lahore]

Before Muhammad Khalid Alvi, J

AZHAR HUSSAIN ‑‑‑Appellant

Versus

MUHAMMAD IQBAL‑‑‑Respondent

Regular First Appeal No. 19 of 1990, heard on 15th August, 2002.

(a) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXVII, Rr.1 & 2‑‑‑Negotiable Instruments Act (XXVI of 1881), S.118(a)‑‑‑Stamp Act (II of 1899), S.2(22)‑‑‑Suit for recovery of amount on basis of pronote‑‑‑Presumption as to negotiable instrument‑‑‑Section 118(a) of Negotiable Instruments Act, 1881 had given rise to a statutory presumption to every negotiable instrument that said. document was executed with consideration‑‑‑Defendant, in the present case had admitted to have signed pronote and receipt‑‑‑Once it was admitted that document/ negotiable instrument was executed between the parties, statutory presumption that document was with consideration would come into existence and plaintiff was no more required to lead any evidence to prove the consideration‑‑‑Said presumption, however, was rebuttable and defendant had every right to raise a plea of fraud or that instrument was not intended to be a negotiable instrument or for that matter he could raise any other plea, but such plea had to be raised in his written statement and then proved through evidence‑‑‑Defendant had raised only one plea that pronote and receipt were never executed‑‑‑Said plea was refuted by the defendant in his own statement by admitting execution of the document ‑‑‑Pronote, execution of which was admitted by the. defendant, was with consideration, in circumstances.

PLD 1987 Kar. 76 ref.

(b) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXVII, Rr.1 & 2‑‑‑Stamp Act (11 of 1899), S.2(22)‑‑­Negotiable Instruments Act (XXVI of 1881), S.4‑‑‑Suit for recovery of amount on basis of pronote‑‑‑Execution of pronote‑‑‑Liability of defendant to pay money‑‑‑Defendant had claimed that document executed by her was not pronote, but it was executed as a surety‑‑‑In view of enlarged definition of promissory note as contained in S.2(22) of Stamp Act, 1899, f a person would stand surety for somebody and promised to pay a certain amount on failure of that person and executed a document in furtherance of such promise, such document would definitely fall within definition of "promissory note" as promissor had undertaken to meet with such a condition or contingency i.e failure of third person to pay to the promissee‑‑‑If third person had failed to abide by his commitment, a condition or contingency had arisen where promissee could ask the promissor to fufil his obligation under instrument executed by him‑‑‑Even if defendant had stood surety and executed pronote and receipt as such, he still would be liable to pay money promised by him as a surety.

Muhammad Jahangir Arshad for Appellant.

Mirza Muhammad Saleem Baig for Respondent.

Date of hearing: 15th August, 2002.

2003 C L D 528

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Ms. BUSHRA KHANUM‑‑‑Appellant

Versus

HABIB BANK LTD. and 2 others‑‑‑Respondents

E.F.A. No.465 of 2000, heard on 25th November, 2002.

(a) Banker and customer‑‑‑--

‑‑‑‑ Recovery of loan amount‑‑‑Execution of decree‑Decree was passed in favour of Bank and property was attached and auctioned by the Executing Court subsequent to the stay order by the High Court in appeal‑‑‑Legality‑‑‑Petitioner moved an objection petition against the attachment of the property on the ground that the judgment‑debtor had executed the agreement to sell in his favour for the sale of the property and that he was also in possession thereof‑‑­Executing Court, dismissed the objections holding that the agreement to sell did not create any right or interest in the movable property and on the basis of mere agreement, objections could not be maintained‑‑‑Petitioner, aggrieved of the order of the Executing Court came up in appeal before the High Court whereupon auction of the property was stayed‑‑‑Executing Court being unaware of the said order of stay put the property to auction and respondent was declared as the highest bidder‑‑‑Validity‑‑‑Auction was conducted in violation of the stay order passed by the High Court‑‑‑"Stay order" issued by a superior Court against the order of the subordinate Court, even if not conveyed/ communicated or served upon the opposite side, or the Court below, shall operate from the moment, it had been passed, in contrast to the injunctive order would become effective when it was served and in certain cases when it came to the knowledge of the concerned person‑‑­Property having been put to auction, subsequent to the stay order, such auction was null and void.

(b) Banker and customer‑‑‑

‑‑‑‑ Recovery of loan‑‑‑Execution of decree‑‑‑Objection petition, dismissal of‑‑‑Appeal‑‑‑Events and developments occurring during the pendency of appeal‑‑‑Consideration of‑‑‑Appellate Court is empowered and has the authority to take into consideration, the events occurring during the pendency of appeal, especially those which have the nexus to the lis between the parties‑‑‑For ascertainment of the subsequent, events objection petition of the appellant, in the present case, required some factual inquiry and until and unless appropriate amendment was sought and allowed in the objection petition it was not proper to take into account the subsequent events, on the rule that no one was entitled to plead his case beyond the scope of his pleadings‑‑­Decree‑holder who‑‑,may feel affected on account of the decree, should have full and proper opportunity to defend its position in black and white‑‑‑High Court by allowing the appeal set aside the impugned order with the direction to the appellant to apply to the Court below for appropriate amendment in his objection petition, which if allowed, respondent/decree‑holder, shall be permitted to file his reply and thereafter, the objection petition, be decided afresh.

Sh. Izhar‑ul‑Haq for Petitioner.

Mukhtar Ahmed Rana and Masood Ahmed Bharwana for Respondents.

Date of hearing: 25th November, 2002.

2003 C L D 531

[Lahore]

Before Ch. Ijaz Ahmad and Syed Zahid Hussain, JJ

MUSLIM COMMERCIAL BANK LIMITED‑‑‑Appellant

Versus

Messrs KHABEER TRADING CORPORATION and 3 others‑‑‑Respondents

R.F.A. No. 130 of 1996, heard on 20th November, 2002.

(a) Civil Procedure Code (V of 1908)‑‑‑--

‑‑‑‑O.IX, R.2‑‑‑Banker and customer‑‑‑Suit for recovery of loan‑‑‑Transfer of case on account of change in law from one Banking Court to another Banking Court‑‑‑Notice to the parties by the transferee Banking Court vide order dated 21‑12‑1992 for 10‑2‑1993‑‑‑Presiding Officer of the Court was on leave on 10‑2‑1993 and the case was adjourned for 2‑5‑1993‑‑‑Banking Court issued notice to the defendants at the cost of the plaintiff for 7‑6‑1993 and plaintiff was directed to deposit the expenses of Talbana within a week‑‑­Said order was repeated by the Court till 4‑12‑1993, plaintiff failed to deposit the process fee within prescribed period i.e. 3 days in view of order dated 4‑12‑1993 and the case was adjourned to 7‑2‑1994‑‑‑Banking Court dismissed the suit as the plaintiff failed to deposit the process fee vide its order dated 9‑4‑1994‑‑‑Validity‑‑‑Service of the defendant was not effected in terms of the notice issued by the Court‑‑­When the notice was issued by the Court then the plaintiff was not supposed to deposit the process fee‑‑‑Subsequent order of the Banking Court after 21‑12‑1992 for issuance of notice to the defendant with a direction to the plaintiff to deposit process fee was not valid on the well founded principle of law that nobody should be penalised by the act of the Court‑‑‑Provision of O.IX, R.2, C.P.C. being not of imperative nature, rigid application thereof was not warranted and Court was not bound to pass order of dismissal‑‑‑Last order passed by the Banking Court to deposit process fee within 3 days was unwarranted, in law‑‑‑When the basic order was not sustainable in the eye of law then superstructure shall have to fall on the ground‑‑­Imposition of penalty prescribed under OJX, R.2, C.P.C. rested in the discretion of the Court which was to be exercised only in case of grave injustice and not in routine.

Aziz Ullah Khan and others v. Arshad Hussain and others PLD 1975 Lah. 879 and Rehmat Ali v. Fazal Hussain 1990 CLC 761 ref.

Mian Irshad Ali v. Government of Pakistan PLD 1975 Lah. 7; Crescent Sugar Mills v. Central Board of Revenue PLD 1982 Lah. 1; Ghaus Muhammad v. Nur Muhammad PLD 1965 Lah. 685 and Shamroze Khan v. Muhammad Amin PLD 1978 SC 89 rel.

(b) Civil Procedure Code (V of 1908)‑‑‑-

‑‑‑‑O.IX, R.2‑‑‑Dismissal of suit where summons not served in consequence of plaintiffs failure to deposit process fee‑‑­Provision of O.IX, R.2 C.P.C. being not of imperative, nature, rigid application thereof was not warranted and Court was not bound to pass order of dismissal.

Shamroze Khan v. Muhammad Amin PLD 1978 SC 89 ref.

(c) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.IX, R.2‑‑‑Dismissal of suit where summons not served in consequence of plaintiffs failure to pay costs‑‑‑Imposition of penalty prescribed under O.IX, R.2, C.P.C. rested in the discretion of the Court which was to be exercised only in case of grave injustice and not in routine.

Mrs. Aneeqa Mughees for Appellant.

Nemo for Respondents.

Date of hearing: 20th November, 2002.

2003 C L D 535

[Lahore]

Before Maulvi Anwarul Haq and Pervaiz Ahmad, JJ

GHEE CORPORATION OF PAKISTAN (PVT.) LIMITED through Secretary‑‑‑Appellant

Versus

PUNJAB OIL MILLS LIMITED‑‑‑Respondent

Regular First Appeal No. 16 of 1995, heard on 5th June, 2002.

(a) Sale of Goods Act (III of 1930)‑‑‑

‑‑‑‑S.11‑‑‑Stipulation as to time‑‑‑Scope‑‑‑Stipulation as to time of payment is not to be deemed to be the essence of contract of sale unless different intention appears.

(b) Sale of Goods Act (III of 1930)‑‑‑

‑‑‑S.54(2)‑‑‑Property in the goods already passed to buyer‑‑­Failure to give notice‑‑‑Effect‑‑‑Where property in the goods has already passed and in case of absence of notice, the buyer is not liable to pay any damages and is also entitled to profit, if any, on the resale.

(c) Sale of Goods Act (III of 1930)‑‑‑

‑‑‑‑Ss.46, 47 & 54‑‑‑Contract Act (IX of 1872), S.182‑‑­Unpaid seller‑‑‑Rights‑‑‑Goods imported for buyer‑‑­Principle‑‑‑Importer acts as an agent in the matter of the import of goods by the buyer and the transaction is subject to the incidence of agency governed by the relevant provisions of law of agency as contained in Contract Act, 1872‑‑‑Where importer paid import price and incurred other expenses in the matter, such importer had lien on the property of buyer and having financed the deal, could have acquired the goods but the same was subject to consent of buyer.

Purushotham Haridas and others v. Messrs Amruth Ghee Co. Ltd. and others AIR 1961 Andh. Pra. 143 ref.

(d) Sale of Goods Act (III of 1930)‑‑‑--

‑‑‑‑Ss.20, 46, 47 & 54‑‑‑Contract Act (IX of 1872), Ss.73 & 74‑‑‑Civil Procedure Code (V‑ of 1908), S.96‑‑‑Selling of goods by unpaid seller‑‑‑Damages claimed by buyer‑‑‑Seller imported the goods on behalf of the buyer and buyer failed to receive the goods after payment of full price‑‑‑Seller sold the goods on no profit and no loss basis‑‑‑Buyer claimed market price of the goods imported and sold by the seller—Trial Court decreed the suit in favour of the buyer‑‑‑Plea raised by the seller was that in case of non‑payment of the value of the consignments, the same would be sold at the risk and cost of the buyer‑‑‑Validity‑‑‑Goods, in the present cases, were to be sold in the market and the matter of risk and cost was to be determined accordingly in terms of Ss.73 & 74 of Contract Act, 1872‑‑‑Seller instead of resorting to the provisions of Ss.73 & 74 of Contract Act, 1871 proceeded to treat goods as belonging to the seller and to them on to the units owned by it on no profit and no‑Buyer who was the lawful owner of the goods entitled to compensation which was difference between the sale price and market price on which goods were passed on by the seller to the units without any authority in breach of the contract arrangement between the parties in the matter of import of the goods‑‑‑High Court modified the decree passed by the Trial Court accordingly.

Purushotham Haridas and others v. Messrs Ghee Co. Ltd and others AIR 1961 Andh. Pra. Gopaldas v. Thakurdas AIR 1957 Madh. Bha. 20; Chand‑Shib Dhan v. Sheo Mal. Sheo Parshad Lah. 666; Smt. Pani Bai and others v. Smt.Sire and others AIR 1981 Rajasthan 184 and N. another v. Union of India AIR 1955 Assam 33 ref.

Mian Tariq Sultan for Appellant.

Zahid Hamid for Respondent.

Dates of hearing: 3rd, 4th and 5th June, 2002.

2003 C L D 547

[Lahore]

Before Muhammad Sair Ali, J

MUHAMMAD SULEMAN‑‑‑Appellant

Versus

SIKANDAR HAYAT‑‑‑Respondent

Regular First Appeal No. 107 of 1994, heard on 25th May, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXVII, Rr.2 &. 3‑‑‑Suit for recovery of loan on basis of promissory note‑‑‑Application for leave to appear and defend suit‑‑‑Defendant in his application for leave to appear and defend suit had admitted execution of promissory note for principal amount received by him as loan from the plaintiff‑‑­Story of defendant with regard to adjustment of loan received by him and cancellation of promissory note proved to be untrue and unbelievable and was rejected by Trial Court‑‑‑Trial Court, in circumstances, had rightly decreed the suit refusing to grant leave to defendant to appear and defend suit‑‑‑In absence of any legal infirmity, judgment and decree passed by Trial Court could not be interfered with.

Abdul Sadiq Ch. for Appellant.

Nemo for Respondent.

Date .of hearing: 24th May, 2002.

2003 C L D 552

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Raja RIAZ AHMAD KHAN‑‑‑Appellant

Versus

UNITED BANK LIMITED and 7 others‑‑‑Respondents

First Appeals from Order Nos. 155 of 1998, 155 of 2000, Writ Petition No. 19655 of 2000 and E.F.A. No.189 of 2001, decided on 27th November, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑S.18‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr.99, 100, 101 & 58‑‑‑Transfer of Property Act (IV of 1882), Ss.53‑A, 53 & 54‑‑‑Execution of decree‑‑‑Auction by decree‑ holder of the mortgaged property‑‑‑Objection application‑‑­Maintainability‑‑‑Objector had entered into an agreement with the judgment‑debtor to purchase the mortgaged property‑‑‑Property in question was mortgaged by the alleged vendor/judgment‑debtor, in favour of the Bank, as a security for a financial facility obtained by him and the same could not be redeemed‑‑‑Property was still mortgaged in favour of the decree‑holder Bank for the realization of the decretal amount‑‑‑Permission to sell/purchase the said property was not obtained from the decree‑holder at the time of entering into agreement to sell‑‑‑Validity‑‑‑Mortgage of immovable property, being a charge against the property, would go with the property and not the person‑‑‑Reliance of objector on S.53‑A, Transfer of Property Act, 1882 therefore, was misdirected, untenable and dispelled‑‑‑Mere agreement to sell would not create any right title, or interest of the person, qua the property in question, claiming to be the beneficiary of such an agreement except to clothe him with a right to file a suit for specific performance of an agreement‑‑­Every transfer of immovable property made with intent to defeat or delay the claim of creditors of the transferor, was voidable at the option of any creditor so defeated or delayed; only exception created under S.53, Transfer of Property Act, 1882 was that the rights of the transferee in good faith and for consideration would not be impaired‑‑­Provisions of O.XXI, R.58, C.P.C. whereunder the objector had filed application being not applicable to the sale of mortgaged property, application so filed, was not competent which was rightly dismissed by the Banking Court‑‑­Principles.

In the present case the property was mortgaged by the alleged vendor/judgment‑debtor, in favour of the Bank, as a security for a financial facility obtained by him and the same could not be redeemed even uptil now. The said property still stood mortgaged in favour of the decree ­holder Bank and the same was the only security in the hands of the Bank for the realization of the decretal amount. The mortgage travels with the property and not the person. Even if the alleged agreement to sell was taken to be genuine and enforceable, the objector chose to purchase the mortgaged property and accepted the same with all its encumbrances. Undisputedly, outstanding decretal amount is a clear. charge over the mortgaged property and the same has to be recovered through the sale/auction of, the mortgaged property. Furthermore, even according to the stance of the objector, the parties did not obtain any permission from the decree‑holder at the time of entering into alleged agreement to sell. Admittedly, the objector was in the knowledge about the creation of mortgage on the said property in favour of the Bank. The objector had himself admitted, in the present case, that at the time of execution of the agreement to sell, it was agreed that the vendor will get the charge cleared from the Bank and then the sale‑deed would be executed.

The mortgage of immovable property, being a charge against the property, would go with the same even if the property in question had been alienated. The objector had agreed to purchase the suit property from the original owner, whereas the property was already mortgaged with the Bank and, thus, he had alternate remedy to file a suit against the original owner and‑had no remedy against the Bank.

Therefore reliance on section 53‑A of the Transfer of Property Act, 1882 was misdirected, untenable and was dispelled.

Mere agreement to sell does not create any right, title or interest of the person, qua the property in question, claiming to be the beneficiary. of such an agreement except to clothe him with a right to file a suit for specific performance of an agreement. Section 54 of the Transfer of Property Act, 1882 provides in clear terms that a contract of sale does not of itself, create any interest or charge on such property.

Section 53‑A of the Transfer of Property Act, 1882 provides that every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed. The only exception created under the said provision of law is that the rights of the transferee in good faith and for consideration shall not be impaired.

In the present case during the subsistence of the mortgage and most probably during the pendency of the suit, the alleged agreement to sell was entered into between the parties. It prima facie establishes that the said agreement was entered into only to defeat and delay the claim of the Bank, which is, undoubtedly, still a creditor. Record does not show any document by the objector, to indicate that the said transfer of the property was in good faith and for consideration.

The disputed property was mortgaged, the decree, under execution, was passed on the basis of the said mortgage and the Executing Court did not pass any attachment order regarding the said mortgaged property, as the same was not necessary under the law.

Now the question arises as to whether the provisions of Order XXI, rule 58, C.P.C. whereunder the objector filed the application, apply to the sale of the mortgaged property.

A plain reading of Order XXI, rule 58, C.P.C. shows that the provisions thereof are applicable only in case where the property is attached in execution of a decree but not to sale of mortgaged property in execution of a decree for sale of mortgaged property, for a mortgage decree contains, as it ought to contain, a direction for sale of the mortgaged property, the proceedings under such a decree by attachment is unnecessary.

The objection to the sale of mortgaged property under the provision of Order XXI, rule 58, C.P.C. would not be competent as the said provisions would not apply to a sale of mortgaged property in execution of the decree.

As the property was mortgaged, therefore, no objection petition under Order XXI, rule 58, C.P.C. was maintainable in law. The provisions of Order XXI, rule 58, C.P.C. are not at all attracted in the present case and the objection petition was rightly dismissed by the Banking Court.

The possession of the mortgaged property had lawfully been taken over by the decree‑holder Bank under the orders of the Banking Court and the Bank was still in possession of the said property. Present appeal, the primary object of which was to protect the possession of the objector qua the property in question, had itself become infructuous and on this count too could not be allowed.

Major Muhammad Tariq v. Citibank Housing Company Ltd. through Manager 2002 CLD 1090; Muhammad Ibrahim v. Secretary, Government of Pakistan and others PLD 1993 Kar. 4?8; Australasia Bank Ltd. v. Messrs Juma Khan Agha Javed Corporation and others PLD 1976 Kar. 414; Mahabir Prashad Singh v: Nogendra Nath Mandal AIR 1921 Cal. 479; Kundan Lal v. Allah Bakhsh AIR 1932 Lah.618; Balijepalli Ramakotl Suryanarayana Tandodar and others v. Kampalli Ramchandrudu and others AIR 1932 Marl. 716; Hafiz Mohomed Ibrahim v. Bhagwan Das AIR 1935 All. 897 and Kishwar Jehan and 2 others v. Muslim Commercial Bank Ltd. 1988 MLD 596 ref.

(b) Transfer of Property Act (IV of 1882)‑‑‑--

‑‑‑‑S.54‑‑‑Contract of sale does not by itself, create any interest or charge on such property.

Mere agreement to sell does not create any right, title or interest in the person, qua the property in question,, claiming to be the beneficiary of such an agreement except to clothe him with a right to file a suit for specific performance of an agreement. Section 54 of the Transfer of Property Act, 1882 provides in clear terms that a contract of sale does not by itself, create any interest or charge on such property.

(c) Transfer of Property Act (IV of 1882)‑‑‑

‑‑‑‑S.53‑‑‑Transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any ‑creditor so defeated or delayed‑‑‑Only exception created under S.53, Transfer of Property Act, 1882 is that the rights of the ‑ transferee in good faith and for consideration shall not be impaired.

(d) Civil Procedure Code (V of 1908)‑‑‑--

‑‑‑O.XXI, R.58‑‑‑Execution of decree‑‑‑Auction of mortgaged property‑‑‑Objection application under O.XXI, R.58, C.P.C.‑‑­Competence‑‑‑Provisions of O.XXI, R.58, C.P.C. are applicable only in case the property is attached in execution of a decree but not to the sale of mortgaged property in execution of a decree, for a mortgaged decree contains, a the same ought to contain, a direction for sale of the mortgaged property the proceedings under such a decree by attachment is unnecessary.

Australasia Bank Ltd. v. Messrs Juma Khan Agha Javed Corporation and others PLD 1976 Kar. 414; Mahabir Prashad Singh v. Nogendra Nath Mandal AIR 1921 Cal. 479; Kundan Lal v. Allah Bakhsh AIR 1932 Lah.618; Balijepalli Ramakotl Suryanarayana Tandodar and others v. Kampalli Ramchandrudu and others AIR 1932 Mad. 716; Hafiz Mohomed Ibrahim v. Bhagwan Das AIR 1935 All. 897 and Kishwar Jehan and 2 others v. Muslim Commercial Bank Ltd. 1988 MLD 596 ref.

(e) Banking Companies (Recovery of Loans, Advances, Credits and Finances) act (XV of 1997)‑‑‑---

‑‑‑‑S.18(3)‑‑‑Execution of decree‑‑‑Handing over the possession of mortgaged property to the decree‑holder by the Banking Court‑‑‑Legality‑‑‑Banking Court has been empowered to order for the delivery of possession to the decree‑holder‑‑‑When an application is made by a Banking Company complaining therein that the judgment‑debtor does not voluntarily give possession of the mortgaged property sold, or sought to be sold by the Banking Company, then the Banking Court shall put the Banking Company in possession of the mortgaged property‑‑‑Banking Court, in circumstances, would not be committing any illegality in ordering the handing over of the possession of the mortgaged property to the decree‑holder.

(f) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑S.18(3)‑‑‑Execution of decree‑‑‑Handing over the possession of mortgaged property to the decree‑holder by the Banking Court‑‑‑Where the judgment‑debtor or any person claiming through the judgment‑debtor does not voluntarily give possession of the property, the Banking Court has the power to put the Banking Company or the purchaser of the premises in possession of the mortgaged property in any manner deemed fit by the Banking Court.

Agha Attaullah v. Presiding Officer, Banking Court and others 2002 CLD 1550 ref.

(g) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑---

‑‑---S.27‑‑‑Review or recalling its order by the Banking Court‑‑‑Competence‑‑‑Banking Court has no powers of review or recalling of order passed by it‑‑‑Banking Court was also not competent to recall its order during the pendency of appeal before the High Court.

(h) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑-----

‑‑‑‑S.18(2)‑‑‑Execution of decree‑‑‑Sale of pledged or mortgaged property by the decree‑holder, with or without the intervention of the Banking Court, either by public auction or by inviting sealed tenders, and to receive the sale proceeds towards the satisfaction of the decree‑‑‑Principles.

The decree‑holder is empowered and competent to sell the pledged or mortgaged property, with or without the intervention of the Banking Court, either by public auction or by inviting sealed tenders, and to receive the sale proceeds towards the satisfaction of the decree. It manifests that, through the introduction of the said provisions of law, Banking Companies have been allowed to sell the pledged or mortgaged properties of their own accord and the discretion has been conferred upon such Banking Companies to sell those properties either with the intervention of the Banking Court or through a public auction. In the present case Banking Court, after going through the law on the subject and hearing the parties, had passed just, legal and fair order, thereby allowing the Bank to sell the mortgaged property in exercise of their option to sell the property of their own accord, to which no exception could be taken by the objector. Banking Court, while accepting the application filed by the decree‑holder, did not commit any illegality so as to warrant interference by High Court.

(i) Banking Companies (Recovery of Loans, Advances, Credit and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑S.18(2)‑‑‑Execution of decree‑‑‑Auction of mortgaged property by the decree‑holder during the operation of injunctive order‑‑‑Successful bidder, being no more interested' in purchasing the auctioned property, asking for the refund of the amount he had deposited for the purchase of the property‑‑‑Entitlement‑‑‑Held, if the auction‑purchaser was not interested in the purchase of the property for some reason in addition to that the property was sold during the operation of injunctive order, then he could not be pestered for the purchase of the property‑‑‑Bank was directed to refund the amount to the successful bidder without any mark‑up.

Malik Noor Muhammad Chandia for Appellant.

Rashdeen Nawaz Kastiri for Respondents.

Noman Akram Raja for Applicant.

Basheer Ahmad for Respondent No. 1.

Date of hearing: 7th November, 2002.

2003 C L D 571

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs MAQI CHEMICALS INDDUSTRIES (PVT.) LIMITED through Chief Executive and 3 others‑‑‑Appellants

Versus

HABIB BANK LTD. through Manager and 2 others‑‑‑Respondents

E.F.A. No.690 of 2002, heard on 14th November, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.19 & 19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr.85 & 69‑‑‑Execution of decree‑‑‑Auction of mortgaged property by decree‑holder through Court Auctioneer‑‑­Objection petition by the‑judgment‑debtors before the sale was confirmed , by the Court‑‑‑Procedure to be followed by the Court while determining the issues/claims/objection with regard to sale etc. ‑‑‑Judgment‑debtors moved objection petition on the ground that auction was not held/conducted by the Court Auctioneer at site on the date fixed; that the auction proceedings were fictitious and fraudulent; that no one including the Court Auctioneer or the Bank Staff had come to the site on the day fixed for the auction; that auction was not validly postponed; that entire proceedings with regard to auction 'were fabricated and that the purchaser had not deposited the balance 3/4th of the auction money within 15 days of the alleged auction, therefore the auction proceedings stood vitiated ‑‑‑Validity‑‑­Held, on account of non obstante clause of subsection (7) of S.19, Financial Institutions (Recovery of Finances) Ordinance, 2001, it was only the summary procedure that had to be followed by the Court while determining the issues/claims/objections with regard to sale but mandatory provisions of O.XXI, C.P.C. could not be dispensed with‑‑­Any, sale conducted and made absolute in violation of Rules provided in C.P.C. could be validly challenged, on that basis.

In the present case before the sale could be confirmed by the Court, the judgment‑debtors filed the objections to the auction, in terms of section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and other enabling provisions of law. It was specifically mentioned in the grounds of the objection petition that no auction was held/conducted by the Court Auctioneer at site; the auction proceedings were fictitious and fraudulent. No one including the Court Auctioneer and the Bank Staff had come to the site of auction and the auction was not validly postponed, entire proceedings in this behalf were fabricated; the purchaser had not deposited the balance 3/4th of the auction money within 15 days of the alleged auction, therefore, the auction proceedings stood vitiated.

The question whether under section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the objection petition filed by the judgment‑debtors. on the grounds taken therein, was incompetent, on account of the non obstante clause of subsection (7), it is only the summary procedure which has been permitted to be followed by the Court while determining the issues/claims/objections with regard to sale etc. But it was not well founded to argue that the objections to the very conduct; of sale as being violative of the mandatory provisions of Order XXI, C.P.C., had been dispensed with. It was only for the purpose of the adjudication of the issues mentioned in this subsection, that the lengthy procedure, provided in the C.P.C., for such determination had been given up. Because under the C.P.C., certain objections to the sale and the issues related thereto were treated as akin to a suit and tried in that manner. Under the Financial Institutions (Recovery of Finances) Ordinance, 2001 which was a special law. the Court has been empowered to decide the objections etc. on the basis of the material before it, which may include the affidavits, etc. without going in the regular trial. However the relevant substantive law part contained in C.P.C., for the sale of immovable property continues to be attracted; this is specially so in view of sections 7(a), 7(2) and 19(2) of the Ordinance, whereby the provisions of C.P.C. have been made applicable to all the nature of the proceedings before the Banking Court, and the decree has to be executed in accordance with the provisions of C.P.C., except where there is some other law on the subject or a different manner is adopted by the Court; any sale conducted and made absolute in violation of rules provided in C.P.C. could be validly challenged on the basis thereof.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑-

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.69‑‑­ Execution of decree‑‑‑Sale by auction of mortgaged property by the Court Auctioneer‑‑‑Adjournment of the sale—Procedure to be followed‑‑‑Principles‑‑‑When the adjournment of the sale was absolutely illegal, without jurisdiction, resultantly, any sale allegedly conducted on the adjourned date, shall be invalid and of no legal consequences and effect.

Order XXI, rule 69, C.P.C. deals wit the adjournment of the sale. The date when fixed by the Court for that purpose can either be adjourned by the Court or by the Court Auctioneer conducting the sale. Obviously, before the auction proceedings are finally concluded by the Court Auctioneer the Court in its discretion at any point of time, can adjourn the sale even without assigning any reasons. But where this power is to be exercised by the Court Auctioneer, it cannot be equated with power of the Court. Rather, the Court Auctioneer can only adjourn the sale, when he is physically present at the site of auction and either it is not possible to commence the proceedings or during the course of auction, a situation arises in which it becomes impossible to conduct or carry the sale, however, the Court Auctioneer unlike the Court has to give the reasons justifying the adjournment because such decision could be challenged before the Court. In the present case, it has not been proved on the record, that the adjournment was made by the Court Auctioneer through a reasoned order, as is the requirement of rule 69, C.P.C. on the date and the time of auction, at the site. No proof, which may have been in the forms of affidavits of the Court Auctioneer or the Bank Officer or any other person which in the light of the summary procedure, under, section 19(7) of the Ordinance, was permissible, was brought on the record, that the adjournment was made by the Court Auctioneer physically being present at the site and he fell seriously ill, that the postponement became imperative. Conversely when the objectors in their objection petition specifically stated that the Court Auctioneer did not visit the site on date of auction, the reply of both decree‑holders and purchaser is evasive, which is no denial in law and would mean that the Court Auctioneer did not come to the site on the date of auction. It was stated that the Court Auctioneer could not go to the site because of his serious indisposition. Today he has tried to shift his position by arguing that. the officer should be summoned to verify the position. The interim report filed by the Court Auctioneer showed that he was allegedly so seriously ill that he could not go to the site, therefore, the question of his adjourning the sale in terms of Order XXI, rule 69, C.P.C., does not arise for which his physical presence at the site was sine qua non.

An adjournment/ postponement of the event is always before the happening of the event; but if for any reason the happening of the event has lapsed or frustrated, that Court by the fiction of adjournment cannot postpone the event, which has not occasioned, In other words the Court vide Order XXI, rule 69, C.P.C. has no ex post facto power to adjourn a sale, which otherwise, could not take place on account of the alleged illness of the Court Auctioneer, therefore, any order of the Court affirming the postponement shall be illegal and without jurisdiction. The Court cannot retrospectively either adjourn the sale or endorse, the postponement made by the Court Auctioneer and it is not the intention of the Legislature behind Order XXI, rule 69, C.P.C. Therefore, when the adjournment of the sale was absolutely illegal, without jurisdiction, resultantly, any sale allegedly conducted on the said date; shall be invalid and of no legal consequences and effect.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑----

‑‑‑‑S.19(2)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.66‑‑­Execution of decree‑‑‑Sale of mortgaged property through Court Auctioneer‑‑‑Proclamation of sale by public auction‑‑­Essentials‑‑‑Place of sale must be specifically mentioned and the failure to do so, shall be a material irregularity, vitiating the sale.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑S.19(2)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.85 & S.148‑‑‑Execution of decree‑‑‑Sale of mortgaged property through Court Auctioneer‑‑‑Failure of auction‑purchaser to deposit 3/4th of amount within 15 days as per terms and conditions of sale‑‑‑Auction‑purchaser sought extension of time to deposit 3/4th amount which the Banking Court extended without giving notice to the judgment‑debtor and by completely ignoring the mandatory provision of O.XXI, R.85, C.P.C.‑‑‑Effect‑‑‑Order extending the time by the Banking Court, in circumstances, was absolutely illegal and without jurisdiction for the reason that the Court under S.148, C.P.C. could only extend such time which had been fixed by the Court itself‑‑-Where, however, time for doing an act, had been determined and fixed by the law, the Court had no power or authority to extend such time‑‑‑Provisions of O.XXI, R.85, C.P.C. which were mandatory in nature, provided that the full payment of the auction price by the purchaser, shall be paid before the close of 15th day from the sale of the property‑‑‑Such being a mandate of law, Court had no authority to enlarge the time.

(e) Act of Court‑‑‑

‑‑‑‑ Rule that no one shall be prejudiced on account of an act of Court, would only be applicable in the cases, where Court had the authority to pass the order but the order was erroneous‑‑‑Where, however, the Court lacked the authority and absolutely had no jurisdiction, notwithstanding such order having been passed by the Court, a person could not put a premium on void order.

Shahzad Masud for Appellants.

Shamsher Mahmood Mirza for Respondent No. 1.

Abdur Rauf for Respondent No.2.

Shahid Karim and Shahzad Shaukat for the Auction‑Purchaser.

Date of hearing: 14th November, 2002.

2003 C L D 584

[Lahore]

Before Jawwad S. Khawaja, J

Messrs MUNIR FLOOR MILLS through Chief Executive‑‑‑Petitioner

Versus

BANKING COURT NO.II, LAHORE and 7 others‑‑‑Respondents

Writ Petition No. 18959 of 2002, heard on 20th November, 2002.

Non‑Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance (LVIII of 2000)‑‑‑--

‑‑‑‑Ss.9 & 2(1), cl.(g), sub‑cls.(a), (b) & (c)‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑‑Constitutional petition‑ ‑‑"Non­ performing asset"‑ ‑‑Ingredients given in sub‑cls. (a), (b) & (c) of cl.(g) of subsection (1) of S.2 of the Non‑Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance, 2000 have to exist simultaneously if an asset on the books of a financial institution is to be treated as a "non‑performing asset"‑‑‑Benefits of S.9 of the Ordinance are available to Financial Institutions and their customers only in respect of "non‑performing assets" and not otherwise‑‑‑In order for any "non‑performing asset" to be dealt with under the Ordinance, the amount of such "non­ performing asset" should be more than thirty million rupees as stipulated in sub‑cl. (c), cl.(g) of S.2(1) of the Ordinance‑‑­Provisions of S.9 of the. Ordinance, therefore, can be available only if the amount involved is in excess of thirty million rupees.

Abid Aziz Sheikh for Petitioner.

Shoaib Zafar for Respondent No.2.

Kamran Babar for Respondent No.8.

Date of hearing: 20th November, 2002.

2003 C L D 588

[Lahore]

Before Ch. Ijaz Ahmad and Syed Zahid Hussain, JJ

Malik ISRAR SALIM ‑‑‑Appellant

Versus

CITIBANK N.A., LAHORE and another‑‑‑Respondents

First Appeal from Order No. 192 of 2002, decided on 25th November, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.22(6)‑‑‑Civil Procedure Code (V of 1908), O.XXXIX. Rr. 1 & 2‑‑‑Interlocutory order‑‑‑Appeal‑‑‑Maintainability‑‑‑Object of enacting laws relating to recovery of outstanding loans of Banking Companies being to provide speedy measures for recovery of such money, if the interlocutory orders were brought under challenge before the High Court in appeal the object for which the enactment was made would be frustrated‑‑‑Appeal in circumstances, being not maintainable, was dismissed by the High Court.

Pakistan Fisheries Ltd., Karachi and others v. United Bank Ltd. PLD 1993 SC 109 fol.

Province of the Punjab v. Dr. S. Muhammad Zafar Bukhari PLD 1997 SC 351 and Mst. Sajida Sultana v. A.D.B.P. Model Branch, Lahore 2002 CLD 592 distinguished.

Shah Babulal Khimji v. Jayaben D. Kania and another AIR 1981 SC 1786; Syed Qadar and others v. Muhammad Afzal and others PLD 1997 SC 859; Ghulam Hussain Shah v. Ghulam Muhammad PLD 1974 SC 344; Raja Muhammad Afzal v. Ch. Muhammad Altaf Hussain 1986 SCMR 1736; Messrs Huffaz Seamlen Pipe Industries Ltd. and 2 others v. Messrs Security Leasing Corporation Ltd. 2002 SCMR 1419; Messrs Tri‑Star Polyster Limited and another v. Citibank 2001 SCMR 410; Messrs Afshan Ahmed v. Messrs Habib Bank Limited 2002 CLD 137 and Pakistan Fisheries Ltd., Karachi and others v. United Bank Ltd. PLD 1993 SC 109 rel.

Malik Waqar Saleem for Appellant.

Israr Elahi for Respondents.

2003 C L D 592

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmed, JJ

Messrs PAKISTAN AGRO POWER (PVT.) LTD. through Director and 3 others‑‑ ‑Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Respondent

Regular First Appeals Nos.305 to 307 of 2001, heard on 3rd December, 2002, Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑----

‑‑‑‑Ss.10 & 20‑‑‑Applications for leave to defend the suits were dismissed by the Banking Court and decrees were passed in favour of the Bank‑‑‑Appeal‑‑‑Validity‑‑‑Banking Court, while deciding the leave applications, failed to attend comprehensively to the controversies between the parties as raised in the leave applications and replies filed by the Bank‑‑‑Court also failed to give any findings on any of the issues/points raised by the parties and the orders, refusing to grant leave to defend the suits and also the impugned judgments were sketchy, non‑speaking and could not be called a "judicial judgment" within the parameters set up by law‑‑‑No points of controversies were determined and no reasons had been assigned by the Banking Court in coming to the conclusions a$ to how and why the applicants were not entitled for the grant of leave to defend the suits‑‑­Effect‑‑‑Judgment which was not a speaking judgment and devoid of reasons, was not sustainable in law being in contravention of settled law‑‑‑Judgments, decrees and the orders, declining leave to defend the suit by the Banking Court, were set aside by the High Court and resultantly all the applications, for leave to defend the suits, were deemed to be pending before the Banking Court which was directed to decide the same, after hearing the parties and in accordance with law within a period of one month.

R.F.A. No.500 of 2001 ref.

Sajid Mehmood Sh. for Appellants.

Iftikhar Ullah Malik for Respondent.

Date of hearing: 3rd December, 2002.

2003 C L D 606

[Lahore]

Before Mian Hamid Farooq and Pervaz Ahmad, JJ

Sh. MUHAMMAD NAEEM and 3 others‑‑‑Appellants

Versus

HABIB BANK LIMITED, KARACHI and 4 others‑‑‑Respondents

Regular First Appeals Nos. 184 and 295 of 2000, heard on 3rd October, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss. 9 & 10‑‑‑Recovery of Bank loan‑‑‑Application for leave to appear and defend the suit, dismissal of‑‑‑Failure to afford any opportunity of hearing‑‑‑Defendants filed separate applications for leave to defend and plaintiff filed application for amendment of plaint‑‑‑Plaintiff did not file reply to the applications for leave to defend while the defendants filed replies to the application filed by the plaintiff ‑‑‑All the applications were fixed for arguments and consequently, the Banking Court dismissed the applications of the defendants and the suit was decreed in favour of the plaintiff‑‑‑Banking Court did not specify in any of the orders as to whether the arguments were to be addressed on the application for amendment of plaint, applications for leave to defend the suit or on all the applications‑‑‑Defendants contended that they were condemned unheard and the applications for leave to defend were dismissed without affording opportunity of hearing to them‑‑‑Validity‑‑‑Interim order passed by the Banking Court was vague and unspecified‑‑‑Banking Court after hearing the arguments only on the application for amendment of the plaint proceeded to decide all the applications under the erroneous perception that the Court had heard the arguments on all the applications, thus, the defendants were not afforded any opportunity of hearing on the applications‑‑‑ Validity‑‑­By not affording the opportunity of hearing to the defendants, their interests had been prejudiced as they had right to be heard by the Banking Court before saddling them to a colossal liability‑‑‑Judgment and decree passed by the Banking Court was set aside and the case was remanded to Banking Court to provide opportunity of hearing before deciding the application for leave to defend.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑S.10‑‑‑Application for leave to defend‑‑‑Non filing of reply to such application‑‑‑Effect‑‑‑When no reply to application for leave to defend and no counter‑affidavit were filed it could be presumed that there was no rebuttal on record by plaintiff to assertions made by defendants in their leave application‑‑‑Banking Court could have granted leave to defend the suit on such score alone‑‑‑Banking Court had misread the record of the case and proceeded to pass the decree in mechanical manner without application of judicial mind‑‑‑Judgment and decree passed by the Banking Court were set aside in circumstances.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 9 & 10‑‑‑Recovery of bank loan‑‑‑Statement of accounts, non‑considering of‑‑‑Passing of decree after dismissal of application for leave to defend‑‑‑Grievance of the defendants was that only on the basis of dismissal of applications for leave to defend, the Banking Court without even looking at the statement of accounts and without discussing the statement of accounts and even documents on record, had proceeded to decree the suit in favour of Bank‑‑‑Validity‑‑‑Defendants had annexed photocopies of certain credit advices with the applications for leave to defend and the same had not been taken into‑ consideration by the Banking Court before passing a decree for huge amount‑‑‑Defendants had a right that the documents relied upon by them with applications for leave to defend should be considered by the Courts before creating liability against defendants‑‑‑Banking Court had misread the documents on record and its approach was perfunctory and it had without discussing the documents on record and dealing with the contentions raised by the defendants, wrongly jumped to the conclusions that the documents appended with the plaint fully supported the claim of the plaintiff‑‑ ‑Judgment passed by the Banking Court was not a speaking judgment and was devoid of reasons‑‑‑High Court set aside the judgment and decree passed by the Banking Court and case was remanded to Banking Court for decision afresh.

Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller, Import' and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173 and Muhammad Ibrahim Khan v. Secretary Ministry of Labour and others 1984 SCMR 1014 ref.

Ijaz Feroze for Appellants.

Naseem Mehmood for Respondents.

Date of hearing: 3rd October, 2002.

2003 C L D 614

[Lahore]

Before Mian Saqib Nisar, J

YOUSAF SOAP FACTORY‑‑‑Appellant

Versus

DEPUTY REGISTRAR OF TRADE MARKS, , BRANCH TRADE MARKS REGISTRY, GOVERNMENT OF PAKISTAN and another‑‑‑Respondents

First Appeals from Order Nos. 302 to 305 of 2000, heard on 30th October, 2002.

(a) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑Ss. 8, 14 & 73‑‑‑Contract Act (IX of 1872), Ss. 23 & 24‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art. 114‑‑‑Registration of trade mark "Bhains Soap"‑ ‑‑Respondent filed opposition to appellant's such application and also sought registration of trade mark "Bhains Soap"‑‑‑Appellant's plea was that in a suit filed earlier by respondent for infringement of its registered trade mark "Gaey Soap" and "Gaey Super Stroke" and of passing off action, 'respondent through a compromise made therein had conceded to appellant's claim seeking, registration of Trade Mark "Bhains Soap", thus, respondent. was estopped by its conduct to file opposition‑‑­Validity ‑‑‑Registered trade mark of respondent contained picture of a Cow‑‑‑Cow, buffalo, Bhains were the species of same genies and not only difficult but impossible for an' ordinary person to differentiate from picture, whether same was a "Gaey" or a "Bhains"‑‑‑Registration of "Bhains Soap" in favour of appellant was likely to deceive and cause confusion in the mind of consumer public, which Registrar could not register‑‑‑Compromise between the parties in previous suit would not tantamount to overriding legal provisions‑‑‑Such agreement was unenforceable, thus, rule of estoppel would come into play‑‑‑Principle of res judicata' was not applicable to the present case as no conclusive determination of any issue between parties had been mad q in earlier litigation-‑‑Registrar of Trade Marks had factually found on the basis of evidence on record that Trade Mark "Bhains Soap" had been in use of, respondent much before appellant started use‑ the same‑‑‑Registrar had validly refused to grant registration of "Bhains Soap" in favour of appellant and had allowed same to respondent‑‑‑No error or illegality in impugned order was found‑‑‑High Court dismissed appeal in circumstances.

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss.23 & 24‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art. 114‑‑­Illegal contract‑‑‑Effect‑‑‑Parties by contract could not agree to something, which was prohibited by law and would tantamount to overriding legal provisions‑‑‑Such an agreement would be unenforceable and rule of estoppel would not come into play.

(c) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S.11‑‑‑ Res, judicata, principle of‑‑‑Where earlier, litigation ended on the basis of statements of parties, which at best was in the nature of compromise, and no conclusive determination of any of the issues between parties had been made, then principle of res judicata would have no application in subsequent litigation.

Muhammad Ayub Sheikh for Appellant.

Khalid Qazalbash and Sheikh Shahid Waheed for Respondents.

Date of hearing: 30th October,. 2002

2003 C L D 646

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Mian MUHAMMAD RAFIQ SAIGOL---Appellant

Versus

TRUST MODARBA through Trust Management Services (Pvt.) Ltd. ---Respondent

First Appeal from Order No.149 of 1999, heard on 21st October, 2002.

(a) Civil Procedure Code (V of 1908)---

----O. XXI, R.58---Objection petition---Inquiring the claim mentioned in objection petition---Executing Court, jurisdiction of---Scope---Objection petitioner contended that the disputed property did not belong to judgment-debtor who in fact had gifted the same to her as far back as 1992 and. therefore, the property could not be attached or sold in execution of the decree passed against the judgment­-debtor---Banking Court had neither adhered to the contentions/stances taken by the objection petitioner nor the documents produced by her were taken into consideration while dismissing the objection petition---Objection petition was dismissed by the Banking Court only for the reason that the petitioner had failed to produce any registered gift deed in support of her claim---Validity---Order of the Banking Court appeared to be based on the view that there was no other mode of gilt in Islamic Law except by way of registered gift deed---Such approach of Banking Court was perfunctory, not recognized by the established principle of law and was also against the principles of Islamic Law regarding gift---Banking Court, in the present case, without holding any inquiry and without adverting to the documents on record and in complete oblivion of the facts of the case and law on the subject immediately came to the conclusion that the acknowledgement regarding the gift seemed to be a sham as well as fictitious transaction just to frustrate the auction proceedings---Banking Court could not have come to such conclusion unless and until appropriate opportunity of producing evidence was afforded to both the parties--­Findings of the Banking Court while dismissing the, objection petition were set aside and objection petition was remanded to Banking Court for decision afresh.

Mst. Syrraya Begum v. Muslim Commercial Bank Ltd. and 4 others PLD 1990 Lah.4 ref.

(b) Civil Procedure Code (V of 1908)---

----O. XXI, R.58---Objection petition---Inquiry, conducting of--­Principles ---Executing Court is not under obligation to mechanically record the evidence of the objector in each and every case, the Court has to see in individual cases as to whether the case warrants the recording of evidence or not and-that the objection application has been filed frivolously, contumaciously and to delay the proceedings or it is genuine application---Primarily it is the function of Executing Court to decide as to whether the objection petition is to be decided after recording of evidence or only after hearing the parties.

(c) Islamic Law---

----Gift---Principles---Person having Muslim faith can make a valid gift by making an offer to the donee, acceptance of such offer by the donee and the subsequent delivery of possession of the property by the donor to the donee ---Pre­requisites of a valid gift under Muslim Law are declaration, offer by owner, acceptance of gift by donee and the delivery of possession of corpus and as soon as the three necessary inseparable ingredients are established, a valid gift comes into existence---Valid gift under Muslim Law can be effected orally the prerequisites are complied with---No written instrument is necessary under the Muslim Law nor instrument of gift is compulsorily registrable under the Registration Act, 1908.

Abdul Sattar Dadabhoy and another v. The Honorary Secretary, Pakistan Employees Cooperative Housing Society, Karachi PLD 1998 Kar. 291 and Mst. Hamida Bibi v. Wali Muhammad 1999 MLD 1687 ref.

(d) Transfer of Property Act (IV of 1882)---

----Ss. 123 & 129---Gift made under Islamic Law---Registration---Such gifts are expressly excluded from the operation of Transfer of Property Act, 1882---No writing of gift under Islamic Law is essential and the provisions of S.123 of Transfer of Property Act, 1882, do not apply to such gifts.

Mst. Umar Bibi and 3 others v. Bashir Ahmad and 3 others 1977 SCMR 154 ref.

(e) Civil Procedure Code (V of 1908)---

----S. 65 & O. XXI, R. 58---Auction-purchaser, claim of--­Filing of objection petition---Effect---Claim of auction­-purchaser swims or sinks with the result of objection petition---Rights of auction-purchaser are determined subject to the decision of objection petition.

Muhammad Akram Raja for Appellant.

Naseem Mahmood for Respondent No. 1.

Nemo for Respondent No.2.

Hamid Ali Shah for the Auction-Purchaser.

Date of hearing: 21st October, 2002.

2003 C L D 653

[Lahore]

Before Muhammad Sair Ali, J

NATIONAL BANK OF PAKISTAN (N.B.P.) and 5 others---Plaintiffs

Versus

PUNJAB ROAD TRANSPORT BOARD through Managing Director and 3 others---Respondents

Civil Original Suit No.41 of 2b00, decided on 24th September, 2002.

(a) Life Insurance (Nationalization) Order (10 of 1972)---

----Art. 14(2)(e)---Banking Companies Ordinance (LVII of 1962), S.7-A---Insurance Corporation, not a banking, company as defined under S.7-A of Banking Companies Ordinance, 1962---Banking company is empowered to be engaged in any one or more businesses defined in S.7-A of Banking Companies Ordinance, 1962---State Life Insurance Corporation, as regards its incorporation, establishment, approvals, licences, sanctions, functions, powers, business etc., is not a Banking Company falling within the provisions of Banking Companies Ordinance, 1962.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 9(1)(2)---Civil Procedure Code (V of 1908), O.I, R.10--­Bankers' Books Evidence Act (XVIII of 1891), Preamble--­Filing of suit in Banking Court by insurance company­Locus standi---Striking off unnecessary party---Joint suit was filed by certain banking companies in Banking Court--­State Life Insurance Corporation was also one of the plaintiffs alongwith the banking companies---Claim made in the plaint was settled among some of the plaintiffs and defendants and the suit so filed was dismissed as not pressed to the extent of such parties---Grievance of the defendants was that the State Life Insurance Corporation had no locus standi to file the suit before Banking Court as it was not a banking company as defined under Financial Institutions (Recovery of Finances) Ordinance, 2001--­Validity---No suit could be instituted through a plaint under S.9(1) & (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, without the support of a statement of account which was not duly certified under the Bankers' Books Evidence Act, 1891---As books of Insurance Corporation were not the books of Bank used in its ordinary business, therefore, the insurance company could not claim similar sanctity for its statement of account, as had been allowed to that of a Bank under the Bankers' Books Evidence Act, 1891---Insurance company could not institute a suit under S.9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, in absence of statutory authority to certify entries in its books under the Bankers' Books Evidence Act, 1891---Held, State Life Insurance Corporation had no locus standi to institute the suit under Financial Institutions (Recovery of Finances) Ordinance, 2001---Name of the insurance company and its claim were deleted and struck off the plaint under O.I, R.10, C.P.C. accordingly.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 2.-A(i)(ii)(iii)---Life Insurance (Nationalization) Order (10 of 1972), Art. 14(2)(e)---'Financial Institutions----State Life Insurance Corporation not a financial institution---Merely on the strength of S.14(2)(e) of Life Insurance (Nationalization) Order, 1972, allowing the Corporation to advance or lend money with or without security, it could not be said that the Corporation was one of the companies which could transact business of banking or that of a Modaraba, leasing, investment Bank or venture capital etc. to fall within the definition of financial institution.

Muhammad Raza Farooq for Plaintiffs.

Ahmad Awais, for Defendant No. 1.

Muhammad Asif Bhatti for Defendants Nos.2 and 3.

2003 C L D 658

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

HABIB BANK AG ZURICH through Manager---Appellant

Versus

MUSTAFA SHAMSUDDIN GHATILLA and 2 others---Respondents

First Appeal from Order No.123 of 2002, decided on 19th September, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance (XXV of 1997)---

----Ss. 9,10 & 21---Financial Institutions (Recovery ' of Finances) Ordinance (XLVI of 2001), S.3---Suit for recovery of amount---Application for leave to defend the suit---Entitlement to grant of costs of funds and costs of suit--­Plaintiff-Bank filed suit for recovery of outstanding amount against defendants---Defendants in their application for leave to defend the suit had stated that they had paid entire amount to the plaintiff-Bank---Plaintiff-Bank admitted statement of defendants with regard to payment of entire amount, but had claimed that despite payment of entire outstanding amount by defendants, plaintiff-Bank was entitled to grant of costs of funds and costs of suit---Trial Court ordered defendants to pay amount of court fee affixed on the plaint and professional fee of counsel for plaintiff only before specified date and plaintiff Bank was directed to issue Clearance Certificate to the defendants---Plaintiff ­Bank had challenged order of Trial Court in appeal contending that Trial Court had acted against law inasmuch as it was incumbent upon Trial Court to have granted all costs of funds---Validity---Plaintiff-Bank was not entitled to all costs of funds as claimed by it in the light of S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001 whereunder default would occur when a judgment had been rendered against customer and it was upon said judgment that a decree to be passed had to provide for payment of cost of funds---Judgment, in the present case, had not been passed under Financial Institutions (Recovery of Finances) Ordinance, 2001 against defendants as there was no occasion for passing of a judgment because entire amount had already been paid as admitted by plaintiff ­Bank itself ---No question of default could arise in circumstances.

Muhammad Rashid Qamar for Appellant.

2003 C L D 676

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

Messrs PAKISTAN KUWAIT INVESTMENT COMPANY (PVT.) LTD. ---Appellant

Versus

BANK AL-FALAH LIMITED and 11 others---Respondents

First Appeal from Order No.30 of 1998, heard on 1st October, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.l2, 15, 21 & 27---Civil Procedure Code (V of 1908), S.12(2)---Decree for recovery of Bank loan---Application under S. 12(2), C.P.C., for setting aside such decree--­Maintainability---Applicant claiming to be creditor of judgment-debtor raised plea that in its absence, decree could not be obtained---Banking Court dismissed such application---Validity---Applicant had not filed , appeal against decree, which had attained finality and could not be questioned---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was a special statute providing remedies to parties concerned including right of appeal under S. 21 and an application in the nature of S: 12 thereof as and when warranted by circumstances--­Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 took care of various situations itself, thus, application under general law i.e. S. 12(2), C.P.C., would not be competent---Decree-holder had filed suit against judgment-debtor for recovery of its outstanding loan amount---Neither obligatory nor a requirement of law for decree-holder to know and mention that judgment-debtor owed some amount to any other Bank (applicant) ---Decree-holder had neither committed fraud nor concealed facts--­Banking Court had rightly dismissed application under S.12(2), C.P.C., on merits---High Court dismissed appeal with costs on merits as well as being not maintainable.

Messrs Gold Star International and others v. Muslim Commercial Bank Limited 2000 MLD 421; United Bank Limited v. Messrs Zafar Textile Mills Ltd. 2000 CLC 1330; Emirates Bank International Ltd. v. Messrs Osman Brothers and others PLD 1998 Kar. 338; Mian Munir Ahmad v. United Bank Limited PLD 1998 Kar. 278; Pakistan Fisheries Ltd., Karachi v. United Bank Limited PLD 1993 SC 109; Messrs Shah Jewana Textile Mills Limited v. United Bank Limited PLD 2000 Lah. 162 and Messrs Dada Bhoy Cement. Industries Ltd. and others v. Messrs National Development Finance Corporation 2002 CLC 166 ref.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S. 15---Civil Procedure Code (V of 1908), S. 12 (2)--­Decree, setting aside of---Dismissal of application under S.12(2), C.P.C., without framing issues---Validity---Not obligatory for Banking Court to frame issues, where no substantial question of fact and law had been raised, which could be decided after framing of issues and recording of evidence.

Ghulam Muhammad v. M. Ahmad Khan and 6 others 1993 SCMR 662 ref.

M. Bilal for Appellant.

Ehsan Ahmad Khawaja for Respondents.

Date of hearing: 1st October, 2002.

2003 C L D 686

[Lahore]

Before Muhammad Zafar Yasin, J

MUHAMMAD IQBAL---Petitioner

Versus

Haji SHAUKAT ALI ---Respondent

Civil Revision No.400 of 2002, heard on 26th June, 2002.

(a) Civil Procedure Code (V of 1908)---

----O.VII, R. 2, O. XXI, R. 37 & S. 51---Suit for recovery of money on basis of negotiable instrument---Execution of decree---Arrest and detention of judgment-debtor--­Judgment-debtor had been appearing before the executing Court on certain dates but there was nothing on record to show that he was ever served with a show-cause notice as to why he should not be sent to jail or such notice had been dispensed with---Decree-holder had never prayed for the detention of the judgment-debtor in civil prison till the execution of the decree---Validity---Order of the executing Court was not sustainable in law---Order of the executing Court was set aside to the extent of arrest and detention of the judgment-debtor in civil prison till the compliance of the decree by the High Court.

(b) Civil Procedure Code (V of 1908)---

----S. 51, O. XXI, R. 37 & OXII, R. 2---Arrest and detention of judgment-debtor---Prerequisites---Show-cause notice, non service of---Effect-- Judgment-debtor can be arrested and sent to civil prison in execution of the money decree till the execution of the decree as contemplated under S. 51 read with O.XXI, R. 37, C.P.C.---Prerequisites however existed for such an arrest and detention---Nothing was available on record to show that the judgment-debtor had ever been served with a show-cause notice as to why he should not be sent to jail or such notice had been dispensed with as contemplated by law under S. 51 read with O.XXI, R.37, C.P.C.---Order of arrest and detention of the judgment­ debtor by the executing Court was set aside by the High Court as not sustainable in law.

Mian Arshad Latif for Petitioner.

Rao Aman Ullah Khan for Defendant.

Date of hearing: 26th June, 2002.

2003 C L D 689

[Lahore]

Before Muhammad Sair Ali, J

HABIB BANK LIMITED through Attorneys---Petitioner

Versus

Messrs REHMANIA TEXTILE MILLS (PVT.) LTD., JHANG ROAD, FAISALABAD

and 30 others---Respondents

Civil Miscellaneous No.764-B of 2002 in Execution Application No. 5-B of 1997, decided on 26th November, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

---S.19---Civil Procedure Code (V of 1908), S.2(2) & O.XXIII, R.3---Execution of decree, petition for---Modification of decree in terms of application under O.XXIII, R.3, C.P.C. by the High Court in appeal---Claim or suit of Industrial Development Bank was neither before the Appellate Bench of the High Court nor said claim wasadjudicated upon by the Bench to culminate into a decree as defined in S.2(2), C.P.C. and it was only upon compromise of the parties that reference, was also made to 4096 share of the Industrial Development Bank---Case or appeal before the Appellate Bench of the High Court had arisen out of a decree passed against the judgment-debtors in the suit of the decree-holder (Habib Bank) and not in the suit of Industrial Development Bank--Effect---Claim of Industrial Development Bank as sought to be part of modified decree by the judgment­-debtors could not be clubbed with the claim of the decree-­holder Bank (Habib Bank) to be executed by High Court through enforcement of modified decree in the present execution petition.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.2(b)(i), 5, 7(6) & 19---Terms "Banking Court", "claim" and "case"---Connotation-- Pecuniary jurisdiction of Court, determination of---Principles---Execution of decree--­Contention of the judgment-debtors was that definition of "Banking Court" given in S.2(b)(i) read with S.19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was to be read to mean that claim in the suit, originally filed was to determine the pecuniary jurisdiction of the Court---Validity---Word 'claim' as mentioned in S.2(b) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 related to "claim" of the "case" which, in the present case, was the "claim" of, the execution petition before the High Court---Word "claim" as used in S.2(b)(i) of the Ordinance had a direct reference to the term "case" employed in the said definition of the "Banking Court"--­"Case", of course, included an execution petition---Word "claim" had not been restricted to the claim of a decree-­holder-plaintiff in a suit---Term "case" thus could not be restricted to a suit only and claim of decree-holder in the execution petition would determine pecuniary limit of the relevant Court in terms of S.2(b)(i), Financial Institutions (Recovery of Finances) Ordinance, 2001---Principles.

The word 'claim' as mentioned in section 2(b) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 relates to the claim of the 'case' which in the present proceedings is the 'claim' in the execution petition before the High Court. The word claim' as used in section 2 (b) (i) of the Ordinance has a direct reference to the term 'case' employed in the said definition of the Banking Court.Case' of course, includes an execution petition. The word 'claim' has not been restricted to the claim of a decree­holder-plaintiff in a suit.

The word 'case' has consciously been used in this legislative instrument in order to be a determinative factor for the purposes of jurisdiction of the Banking Court as established under section 5 of the Ordinance of 2001 or Banking Court in the High Court. Term 'case' has a wider meaning and connotation than the word 'suit'. 'Case' includes all proceedings, suits, petitions, appeals, reviews, revisions and all other actions relating to or arising out of Its, causes or complaints between the parties.

The word 'case' has been defined as a general term for an action, cause, suit, or controversy, at law or in equity; a question contested before a Court of justice; an aggregate of facts which furnishes occasion for the exercise of the jurisdiction of a Court of justice. A judicial proceeding for the determination of a controversy between parties wherein rights are enforced or protected, or wrongs are prevented or redressed; any proceeding judicial in its nature.

The word 'case' has been described as particular occasion, situation or set of circumstances; an example; instance or occurrence; someone receiving some sort of treatment or care; a matter requiring investigation; a matter to be decided in a law Court.

Term 'case' cannot be restricted to a suit only. The word 'case' obviously includes execution petitions and proceedings undertaken therein. As such, the claim of the decree-holder in the execution petition will determine pecuniary limit of the relevant Court in terms of section 2(b)(i) of the Ordinance.

After decision of a suit by a Banking Court, it is the adjudicated claim as decreed by the Banking Court, which becomes the subject-matter of the case-claim in execution proceedings for the purposes of determination of pecuniary jurisdiction of the Court. In the present execution petition, the amount of amended decree sought to be enforced was Rs.4,36,06,891. As such, under section 7(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 read with section 2(b)(i) High Court did not enjoy the pecuniary jurisdiction to try and proceed with the present execution petition which in fact stood transferred to the Banking Court of competent jurisdiction.

Office was directed to remit the record of the present case alongwith all petitions thereto, to the Banking Court through special messenger at the expenses/costs of judgment-debtor. The execution petition shall be tried by the Banking Court of competent jurisdiction in accordance with law.

Black's Law Dictionary, Sixth Edn., by Henry Campbell Black, M.A. and Chamber's 21st Century Dictionary, Revised Edn. by Mairi Robinson ref.

(c) Words and phrases---

----"Case"---Connotation.

Black's Law Dictionary, Sixth Edn. by Henry Campbell Black; M.A. and Chamber's 21st Century Dictionary, Revised Edn. by Mairi Robinson ref.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.l9 & 2(b)(i)---Execution of decree---Procedure---Suit, on the pronouncement of judgment and decree by a Banking Court shall automatically be converted into execution proceedings and there shall be no need to file a separate execution application to seek enforcement of decree--­Conversion of the suit automatically into execution proceedings can, by no stretch, be taken to mean that it is the claim of the plaintiff in the suit which is to be enforced and executed against the judgment-debtors---Execution proceedings are continuation of the suit proceedings and claim of a decree-holder, in execution petition is the claim finally adjudged and settled in the suit by the Court--­Provision of S.19, Financial Institutions (Recovery of Finances) Ordinance, 2001 cannot be interpreted to limit the scope of the word "suit" or "case" to plaintiff-decree-holder's claim in the plaint---Principles.

Section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 does state that upon pronouncement of judgment and decree by a Banking Court, the suit shall automatically be converted into execution proceedings and there shall be no need to file a separate execution application to seek enforcement of the decree. Conversion of the suit automatically into execution proceedings can, by no stretch, be taken to mean that it is the claim of the plaintiff in the suit which is to be enforced and executed against the judgment­-debtors.

Cumulative reading of the entire section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 particularly subsection (2) emphasizes that decree of the Banking Court shall be executed in accordance with the provisions of Civil Procedure Code or any other law for the time being in force or in any such manner as the Banking Court may consider appropriate. Had Legislature intended to make initial claim in the suit as the determining jurisdictional amount, the term employed in the definition of section 2(b) (i) and section 19 of the Ordinance would have been the claim in the 'plaint' and not the 'claim' in the case or suit. The reason is obvious. Upon pronouncement of a judgment and decree, claim in the suit stands duly adjudicated upon and incorporated in the decree, which formally expresses the same in terms of definition of the decree contained in section 2(2) of the Civil Procedure Code. Furthermore, execution proceedings are continuation of the suit proceedings and claim of a decree-holder in execution petition is the claim finally adjudged and settled in the suit by the Court.

In view thereof, provisions of section 19 of the Ordinance appropriately employ the word 'suit' for conversion of the same into execution proceedings for the purposes of enforcement and execution of the decree passed in the suit. These provisions, therefore, cannot be interpreted to limit the scope of the word 'suit' or 'case' to plaintiff-decree-holder's claim in the plaint.

Muhammad Razzaq, Assistant Vice-President/Incharge Recovery Litigation on behalf of the Decree-holder Bank.

Sardar Sami Hayat for the Judgment-Debtors except Judgments-Debtors Nos. 8 and 10.

Kh. Saeed-uz-Zafar for the Judgment-Debtors Nos. 8 and 10.

2003 C L D 702

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

Mian AFTAB A. SHEIKH and 2 others---Appellants

Versus

Messrs TRUST LEASING CORPORATION LIMITED and another---Respondents

Regular First Appeal No. 486 of 1999, decided on 4th December, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.10 & 21---Contract Act (IX of 1872), S.135---Civil Procedure Code (V of 1908), S.12(2)---Rescheduling agreement---Discharge of surety---Guarantors in their petition for leave to defend had not raised the question of discharge of their obligations as guarantors upon, rescheduling agreement and raised the said question only after the decree against them by filing an application under S.12(2), C.P.C. before Banking Court or in the appeal before the High Court---Effect---Guarantors having failed to seek leave to defend the suit on the said ground, could not and should not be allowed to agitate said ground in appeal before the High Court or in their petition under S.12(2), C.P.C. before the Banking Court which validly dismissed the same and which order had neither been assailed in appeal nor had any arguments been addressed there against at the Bar.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

---Ss. 10 & 9---Contract Act (IX of 1872), S.135---Discharge from guarantee---Application for leave to defend the suit by the guarantors---Requirements---To plead guarantee, its existence had to be essentially General denial of guarantee could not be taken to mean that guarantee was once in existence but later stood revoked, this required specific pleadings as to execution of guarantee, its revocation, cancellation or discharge---Such ground had to be 'seriously' and 'plausibly' pleaded to be a serious, plausible and bona fide ground for leave, in terms of S.9, Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Terms "serious", "plausible or bona fide"---Connotation---Question could be considered a "serious" one only if the same revealed a substantial issue requiring resolution through a process of adjudication/trial upon administration of proof thereto---Assertions of general, bald and vague nature would not and could not give rise to a serious issue---"Plausible" or "bona fide" was a term of psychological connotation, employed in legal diction as prism a person's conduct---Plausibility entails righteousness consistency, honesty, fairness and credence--Non-plausibility is the anotonym of plausibility reflecting a bona fide, belying inconsistence and non­-credible conduct---No objective test is available to determine plausibility or bona fide---Facts of each case read in the particular case perspective provide due to litigants' good or bad conduct---To show and prove such conduct, facts must be definitely specified and particularly pleaded to be plausible and confidence-inspiring---Denial of the persons to be guarantors in the present case, was purportedly on the basis of non-execution of personal guarantee which fact was contradicted by the guarantors themselves in their appeal upon clear admission to be guarantors per guarantee of specified date---Effort of the guarantors at equating non­execution and non-existence of guarantee with that of the discharge of guarantee was far from being bona fide, honest, consistent and plausible to be a ground for grant of leave to the guarantors---Leave petition of the guarantors in circumstances, was validly dismissed by the Banking Court.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

---Ss. 10 & 21---Contract Act (IX of 1872), S.135--­Application for leave to defend the suit by the guarantors--­Appeal---Question of discharge of guarantee upon restructuring of finance was though not raised by the guarantors in their application for leave to defend, said question as raised in appeal needed to be attended to in the judgment in appeal.

(d) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)--

---Ss. 9, 10 & 21---Contract Act (IX of 1872), S.135--­Guarantee by the guarantors continues to bind them under the rescheduled arrangement as well.

(e) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)--

----Ss. 9, 10 & 21---Contract Act (IX of 1872), Ss. 133, 135, 138 & 141---Application for leave to defend the suit by guarantor---Plea of discharge of guarantee in appeal on the ground of variation, or composition of the loan or time etc.--­Validity---If variation or composition of the loan or time etc. as to its repayment was allowed by the creditor to the borrower and consent/assent in advance thereto was given by the guarantor in the letter of guarantee subsequent to the date of guarantee, such variation composition, extension, charge or indulgence being within the contemplation of the parties at the time of execution of guarantee did not effect discharge of the surety/guarantee from obligations under the guarantee, and as such surety continued to be bound by the terms of the guarantee despite moratorium; enlargement of time, composition and variations between the creditor and principal borrower--­Principles.

In the present case the object of clauses in the guarantee was to obtain release from the prior consent of the guarantors to any changes, variations, concessions, re­arrangements, alterations and modifications subsequently agreed upon between the Leasing Corporation and the Company (under liquidation).

These clauses were meant to allow and protect such subsequent changes, without, effecting release of guarantors in terms of sections 133 and 135 of the Contract Act, 1872 could such an effect be successfully gained or not.

Held, if variation or composition of the loan or time etc. as to its repayment was allowed by the creditor to the borrower and consent/assent in advance thereto was given by the guarantor in the letter of guarantee, subsequent to the date of guarantee, such variation, composition, extension, change or indulgence being within the contemplation of the parties at the time of execution of guarantee did not effect discharge of the surety/ guarantee from obligations under the guarantee. And as such surety continued to be bound by the terms of the guarantee despite moratorium, enlargement of time, composition and variations between the creditor and principal borrower.

A 'guarantor "could not claim discharge of his guarantee on the ground of indulgence alleged .to have been granted" by the creditor to the borrower, if the guarantee provided for grant of time or other indulgence to the borrower by the creditor subsequently and such grant of time and indulgence was met by the very terms of the letter of guarantee.

The test was that on terms of the bond if an indulgence or compromise was not excluded and matter was within such terms, the surety bond remains, un-discharged.

When the intention of the guarantor was manifest from the document there was no reason why it should not be enforced.

"A surety could not be held bound to something for which he had not contracted unless he had assented to the new terms".

When the guarantors had expressly given their advance consent in clear terms to be bound by any variation in the terms of the loan, therefore, having unequivocally expressed their consent to variation with full knowledge of its implications, they could not contend that the variation was without their consent and consequently they were discharged from the obligations. And section 133 of the Contract Act was not applicable as the variation in the contract was made with the clear consent of the guarantors given in the letter of guarantee.

Waiver of rights by a guarantor under sections 133, 134, 135, 139 and 141 of the Contract Act not to be opposed to public policy.

It was not necessary for the Legislature to provide the words in the absence of any contract in section 133 or 135 or 141 of the Contract Act, 1872 because the sections themselves speak of consent of the surety regarding variance in the terms of the contract between the principal debtor and the creditor and composition with the principal etc. In the presence of the words without the surety's consent', the words 'in the absence of any contract to the contrary' would have been surplus. Therefore, the rights conferred on the surety under section 133, 135 or 141 of the Contract Act could be waived by specific agreement in the deed of guarantee, as a matter of fact, such an agreement would amount to consent within the meaning of the aforesaid sections of the Act.

The words "unless it is otherwise provided in the contract" occurring in section 128 of the Contract Act will also govern the other provisions contained in the Chapter VIII of the Act and enable the surety to give up the rights available to him under sections 133, 134, 135 and 141 of the Act. A legal right can be given up provided such giving up of a legal right under any, contract is not hit by section 23 of the Act. Section 133 of the Contract Act makes it clear that any variance made in the contract between the principal debtor and the creditor without the consent of the surety, discharges the surety as to transactions subsequent to variance. This consent of the surety could be obtained either at the time of the contract was made between the principal debtor and the creditor to which the surety gave the guarantee, for making any change or alteration in the contract to be made or not to claim any right or benefit under Chapter VIII of the Act. In other words, in the sure-bond/guarantee-bond itself the surety could agree to waive his rights available to him under the various provisions contained in Chanter VIII of the Contract Act. Such waiving of his right by the surety was permissible under section 133 read with section 128 of the Act.

The rights available to the surety under Chapter VIII of the Act, could be waived by the surety. Therefore, such waiving of right by the surety was either intended to defeat nor did it defeat any provisions of law. Therefore it was also not possible to hold that the consideration and the object of the agreement of guarantee had the effect of defeating any provisions of law. A recital in the surety bond in question that surety will not be entitled to any of the rights conferred by section 133, 134, 135, 139 and 141 of the Act could not be held to defeat the provisions of Chapter VIII of the Act. The rights conferred on the surety under Chapter VIII were not inalienable rights nor those rights had anything to do with the public policy as such. Public policy was not to defeat the debt of the creditor, it was to ensure that the money of the creditor, was secured and was recoverable in accordance with law; and the debtor or the surety was not absolved from his liability to discharge the debt except in accordance with law.

Ram Ranjan Rakshit v. The Chief Administrator, Rehabilitation Finance Administration, New Delhi and others AIR 1960 Cal. 416; Chakkunny v. Viswanatha Iyer AIR 1961 Ker. 312: A.D.B.P. v. Pak. Green Fertilizer Company Ltd. 2000 MLD 1066; T. Raju Setty v. Bank of Baroda AIR 1992 Karnataka 108; Pearl Hosiery Mills's case AIR 1961 Punj. 281; Gitybank N.A. New Delhi v. Juggilal Kamalapat Jute Mills Co. Limited, Kanpur AIR 1982 Delhi 487: Hodges v. Delhi and London Bank Ltd. (1900) 27 Ind. App. 168 and A.R. Krishnaswami Ayyer v. Travancore National Bank Ltd. AIR 1940 Mad. 437 ref.

(f) Contract Act (IX of 1872)---

---Ss. 133, 134, 135, 139 & 141---Waiver of rights by a guarantor under Ss. 133, 134, 135, 139 & 141 of the Act is not approved to public policy.

(g) Words and phrases---

---- Terms "serious, plausible or bona fide "---Connotation.

(h) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

---Ss.10 & 9---Contract Act (IX of 1872), Ss. 135 & 133--­Discharge from guarantee---Rescheduling agreement--­Novation of agreement---Guarantors had expressly given their consent as per letter of guarantee and had assented to any subsequent composition of debt, enlargement of time and other variations between the loosing corporation and the Company (under liquidation)---Guarantee was a continuing guarantee, permitting the creditor and the principal debtor to vary the terms of the leasing agreement--­Effect---Guarantors had waived their prior right of consent or assent to such variance---Contracting parties had a right to contract out of the privilege of release or discharge by executing an agreement of waiver of prior consent/assent in the guarantee---Rescheduling Memorandum of Under­standing was within contemplation of clauses of the agreement and therefore, did not affect discharge of guarantors from their guarantee obligation and it will be hair splitting to state that the provisions of Ss. 133 or 135, Contract Act, 1872 visualized consent or assent of the guarantors at the time of variance only and the same could not be waived by the guarantors in. advance---Even f some of the terms of original contract could be stated to have been novated by Memorandum of Understanding, such novation still did not in any way absolve the guarantors of their obligations under the joint guarantee, as they had themselves consented in the letter of guarantor to variance of the original agreement between the leasing corporation and the company (under liquidation)---Only in absence of a surety's consent, a surety shall not be bound for the obligations under the novated agreement.

Partap Singh Mohalabahi v. Keshavlal Harilal AIR 1935 PC 21 ref.

(i) Banking Companies (Recovery of Loans, Advances Credits and Finances) Act (XV of 1997)---

---Ss. 10 & 9---Contract Act (IX of 1872), Ss. 135 & 133--­Discharge from guarantee---Rescheduling agreement--­Guarantors, upon signing rescheduling agreement had even otherwise given their assent to such rescheduling as the Memorandum of Understanding was signed by them in their capacity as Directors and/or Chief Executive and Chairman of the debtor company and the guarantee was also made and executed by them in the same capacity---Held, it could not be argued that consent/assent of said guarantors was separately required at the time of execution by them of the rescheduling agreement.

Syed Mansoor Ali Shah and Abbas Mirza for Appellants.

Syed Najam-ul-Hassan Kazmi for Respondent.

Dates of hearing: 30th September and 1st October, 2002.

2003 C L D 722

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

A. RASHID M. HANIF and 5 others---Appellants

Versus

Messrs FAISAL BANK LTD. through Manager and 3 others---Respondents

Regular First Appeal No.477 of 2002, heard on 16th December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.7 & 22---Suit for recovery of loan by the Bank--­Creditor Bank had arrayed certain persons as defendants only for the reason that at the relevant time when the loan facility was availed, they were also the Directors of the borrower company---Such persons were allowed to defend the suit in the first instance where they had pleaded that they were neither the principal debtors nor guarantors--­Banking Court, however, decreed the suit against all the defendants including the said persons---Contention of said persons before High Court, in appeal, was that their inclusion in the list of defendants in the plaint before the Banking Court was unjustified for the simple reason that they were neither the borrowers nor guarantors, and therefore, were not covered by the term "customer" as defined in law--Validity---Such persons admittedly being not guarantors of the, loan and plaint simply showing said persons as Director shareholders, they were neither a proper nor a necessary party to the proceedings before the Banking Court---Judgment and decree of the Banking Court were set aside by the High Court to the extent of said persons.

Syed Mansoor Ali Shah and Syed Zafar Ali for Appellants.

Syed Muhammad Hanif Bukhari for Respondent

Date of hearing: 16th December, 2002.

2003 C L D 724

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Malik SULTAN MEHMOOD---Appellant

Versus

SME BANK LTD. through Manager and another---Respondents

Regular First Appeals Nos. 814 and 815 of 2002, decided on 18th December, 2002.

Financial Institutions (Recovery of Finances), Ordinance (XLVI of 2001)---

----Ss.10 & 9(5)---Civil Procedure Code (V of 1908), O.VII, R.II---Application for leave to defend the suit---Rejection of plaint by the Banking Court under O.VII, R.11, C.P.C.--­Plaintiff s had filed separate suits for declaration, mandatory injunction and rendition of accounts before the Banking Court---Banking Court, after presentation of the plaint, issued summons to the defendants as provided under the law, in response thereto applications for leave to defend the suit were filed by the defendants and those applications were adjourned for filing replications and replies to the stay applications, which were submitted--­Cases, thereafter, were adjourned for hearing the arguments on the said applications, which were addressed on the dates fixed and applications were adjourned for the next date for announcement of the orders and on that date the plaints were rejected---Validity---Held, from the very inception, the main suit was never fixed for hearing and the entire proceedings were undertaken by the Banking Court on the said applications for leave to defend the suit---Main suit having not been fixed for hearing, Banking Court could not reject the plaint in circumstances ---High Court set aside the judgments and decrees with no order as to costs observing that suits shall be deemed to be pending before the Banking Court, who was directed to decide at the first instance, the applications for leave to defend the suit and if leave to defend the suit was granted then of course, the main suit would be decided by the Judge Banking Court in accordance with law.

R.F.A. No.185 of 2002; Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394 and Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another 1997 MLD 1835 ref.

Iftikhar Ullah Malik for Appellant.

Nemo for Respondents.

2003 C L D 729

[Lahore]

Before Mian Hamid Farooq, J

Mian MUHAMMAD SHAH and another---Appellants

Versus

GHEE CORPORATION OF PAKISTAN (PVT.) LTD. and 3 others---Respondents

Writ Petition No.6223 of 1995, heard on 7th August, 2002.

(a) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr.1 & 2---Constitution of Pakistan (1973), Art. l99---Constitutional petition---Interim injunction, grant of---Prima facie case and balance of convenience---Bank guarantee, encashment of---Plaintiffs provided Bank guarantee to the Bank for sanction of loan---Loanee failed to repay the loan and the Bank was arranging to encash the guarantee provided by the plaintiffs---Both the Courts below declined to grant interim injunction to the plaintiffs against encashment of guarantees ---Contention of the plaintiffs was that Bank guarantee could not be encashed as the Bank had failed to carry out joint audit and the accounts had not been settled---Validity---Parties were not consensus ad idem that the final accounts would be subject to joint audit---No provision in the agreement existed to the effect that the parties would carry out joint audit and thereafter, the calculated amount would be paid by the petitioners--­Contention of the plaintiffs was misconceived and mis­directed---Plaintiffs did not have prima facie case in their favour entitling them for grant of temporary injunction restraining the Bank from encashing the Bank guarantee and balance of convenience tilted in favour of the Bank--­Orders passed by both the Courts below were legal, unexceptional and did riot call for any interference by High Court in exercise of Constitutional jurisdiction, thus both the orders were maintained.

Messrs Jamia Industries Ltd. v. Messrs Pakistan Refinery Ltd., Karachi PLD 1976 Kar. 644; Sirafi Trading Establishment v. Trading Corporation of Pakistan Ltd. 1984 CLC 381; Attock Industrial Products Ltd. v. Heavy Mechanical Complex (Pvt.) Ltd. 1999 MLD 1876; Manzoor Textile Mills Ltd. v. Special Judge Banking, Lahore and others 1996 CLC 422 and Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311 ref.

(b) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr.1 & 2---Interim injunction, grant of--­Irreparable loss---Proof---Loss measurable in terms of money---Injunction was sought against encashing of Bank guarantee---Validity---Loss caused to plaintiffs on account of encashment of Bank guarantee was measurable in terms of money, therefore, in case of encashment of the Bank guarantee no irreparable loss would be caused to the plaintiffs---High Court declined to grant interim injunction in circumstances.

Tauseef Corporation (Pvt.) Ltd. v. Lahore Development Authority and others 2002 SCMR 1269 rel.

(c) Civil Procedure Code (V of 1908)---

----O.XXXIX, Rr.1 & 2---Constitution of Pakistan (1973), Art.199---Constitutional jurisdiction of High Court---Scope--­Interference in discretionary powers of the Courts below---Both the Courts below in exercise of discretionary powers refused to grant temporary injunction while taking into consideration the facts of the case and the law applicable thereto---Validity---Where discretion was exercised by both the Courts below in accordance with the recognized principles governing the exercise of discretion and the same had not been exercised arbitrarily, perversely or in a fanciful manner, High Court declined to interfere in the orders so passed.

(d) Constitution of Pakistan (1973)---

----Art. 199---Constitutional jurisdiction of High Court--­Scope---Public money, withholding of---Pursuant to execution of sale agreement, the petitioners took possession of premises and was in its continuous possession---Petitioners had been successful in withholding public money for the last more than 10 years on one pretext or the other and sought interim injunction against encashing of Bank guarantee provided by them---Validity---Petitioners, in the present case, could not be allowed to forestall the amount to cause further loss to the exchequer---Petitioners were not entitled to the relief in exercise of Constitutional jurisdiction---High Court declined to exercise the Constitutional jurisdiction in the matter which was otherwise discretionary and equitable in nature.

Muhammad Atif Amin for Petitioner.

Sher Zaman Khan, Deputy Attorney-General for Respondent.

Date of hearing: 7th August, 2002.

2003 C L D 738

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

EMIRATES BANK INTERNATIONAL---Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED and 6 others---Respondents

Regular First Appeal No.273 and Civil Miscellaneous No. 1329-C of 2000, decided on 21st October, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 9---Civil Procedure Code (V of 1908), O. XXIII, R. 3--- Recovery of Bank loan---Compromise between parties--Effect---Both the parties had settled their dispute through amicable settlement arrived at between the parties and the agreement had been entered into whereby claim as a whole had been adjusted through a lawful compromise---Effect—In view of the joint request of the parties the compromise was accepted as the same was to the satisfaction of High Court lawful and had adjusted whole of the claim—High Court recorded the compromise and had made the same as an integral part of the order—Appeal was allowed accordingly.

Asad Munir for Appellant.

Aneeqa Moghees Sheikh for Respondent No. 1.

Muhammad Nazir Sheikh for Respondents Nos. 2 to 7.

2003 C L D 740

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

GHULAM MUSTAFA---Appellant

Versus

MUSLIM COMMERCIAL BANK LTD. through Branch Manager-General and 2 others- --Respondents

E.F.A. No.674 of 2002, heard on 17th December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.66--­Sale of mortgaged property in execution of decree---Presence of judgment-debtor at the time of auction---Judgment-debtor objected to the sale on the ground that the property under auction was not properly described in the proclamation and judgment-debtor was wrongly marked present at the time of auction---Validity---Property had been sufficiently described in the proclamation which was in consonance with the mortgaged documents ---Property had been described by reference to its number and area and the same was the adequate compliance of O.XXI, R.66. C.P.C.---Judgment-­debtor failed to prove from independent evidence that he was not present at the time of auction---Absence of judgment-debtor at the time of auction even otherwise had no material effect upon the auction and the auction could not be declared fraudulent on such account.

Dr. Muhammad Akmal Saleemi for Appellant.

Mushtaq Ahmad Khan for Respondent No. 1.

Asim Akram for Respondent No.2.

Date of hearing: 17th December, 2002.

2003 C L D 742

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Messrs KOHINOOR LOOMS LIMITED through Chief Executive and 8 others---Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED and another---Respondents

Regular First Appeal No.52 of 2000, decided on 26th November, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.10---Application for leave to defend the suit--­Requirements---Defendants neither signed the application for the grant of leave nor furnished any affidavit nor signed/executed powers of attorney in favour of the counsel, nor any power of attorney showing that the chief executive of the company was authorised to file the leave application before the Banking Court---Effect---Defendants having failed to file any leave application, the findings of Banking Court were maintained by High Court in circumstances.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.10---Qanun-e-Shahadat (10 of 1984), Art.84--­Application for leave to defend---Allegation of forged signatures of defendant---Failure to compare the admitted signature by the Court itself---Banking Court dismissed the application for leave to defend on the ground that the application and affidavit filed by the defendant were forged---Such findings of the Banking Court had been rendered without calling upon the defendant either to admit or deny his signatures---Only after hearing the arguments and comparing the disputed signatures with the admitted signatures of the defendant by the Court itself---Elect--­Banking Court did not compare the signatures of the defendant with his admitted signatures, which was one of the permissible modes under the law, for arriving at the conclusion by the Court itself as to whether the signatures were genuine or forged, findings of the Banking Court were set aside---Application for leave to defend the suit should have been considered and decided on merits by the Banking Court before passing the judgment and decree against the defendants---Judgment and decree passed by the Banking Court was modified to the extent of the defendants who had filed application for leave to defend and the case was remanded to Banking Court for deciding the application afresh accordingly.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.10---Application for leave to defend, non filing of--­Defendant was a private limited company and it was sued through its chief executive---Chief executive was also one of the defendants who had signed and executed the affidavit--­Banking Court decreed the suit against the company for the reason that the Company had failed to file the application for leave to defend---Validity---Chief executive having signed all the relevant documents of the company, leave application was deemed to have been filed on behalf of the company--­Findings of Banking Court were set aside in circumstances.

Salman Akram Raja for Appellants.

Muhammad Aslam for Respondent No. 1.

Azhar Hussain for Respondent No.2.

2003 C L D 748

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

JAMSHED ANWAR and another---Appellants

Versus

NATIONAL BANK OF PAKISTAN---Respondent

Regular First Appeal No.350 of 2001, decided on 19th November, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)--

----Ss.9 & 10---Recovery of Bank loan---Conditional leave, grant of --Charging of illegal and exorbitant mark-up---Leave to appear and defend the suit was not granted and the suit was decreed in favour of the bank---Defendants admitted availing of the loan but disputed charging of mark-up--­Grievance of the defendants was that the mark-up had been charged illegally and exorbitantly and the same could not be recovered from them---Validity---Only dispute being about the charge of mark-up and not in respect of the principal amount, interest of justice would, therefore, adequately be secured if the defendants were granted leave to defend subject to deposit of principal amount in cash and the rest of the dispute might be allowed to be decided by the Banking Court---Banking Court had not adverted to the crucial aspect of the case and mechanically passed the impugned judgment and decree without attending to the contention raised by the defendants with regard to the .charging of mark-up---Judgment and decree passed by Banking Court was set aside, defendants were granted leave to defend the suit with a condition to deposit principal amount and the case was remanded to the Banking Court for decision afresh accordingly.

Ch. Sarfraz Ahmad and M. Anwar Sipra for Appellants:

Nadeem Saeed for Respondent.

2003 C L D 751

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

ABDUL BASIT and 3 others---Appellants

Versus

BANK OF PUNJAB---Respondent

Regular First Appeal No.204 of 2002, heard on 6th November, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)----

----Ss.9, 10 & 22---Recovery of Bank loan ---Estoppel, principle of---Applicability---Demanding mark-up against the amount settled between the parties ---Loanee did not deny availing of loan facility but contented that he had deposited the amount as the same was settled with the Bank but the Banking Court had wrongly awarded mark-up beyond the settlement---Validity---Amount paid by the loanee under the settlement was accepted by the Bank and credited towards payment of mark-up and principal in accordance with the terms set out in the settlement letter---Having accepted the payment and appropriated the same towards mark-up and principal according to the terms, the Bank was estoppel from denying the existence of the agreement which stood created and acted upon---High Court m6dified the decree passed by the, Banking Court and the suit was decreed excluding the mark-up beyond the settled period accordingly.

Syed Mohsin Abbas for Appellants.

Muhammad Aqeel Malik for Respondent.

Date of hearing: 6th November, 2002.

2003 C L D 756

[Lahore]

Before Maulvi Anwarul Haq, J

TRADEX (PVT.) LIMITED through Auhtorized Attorney---Appellant.

Versus

GOVERNOR, STATE BANK OF PAKISTAN and another---Respondents

Writ Petition No.881 of 2002, heard on 25th October, 2002.

(a) Constitution of Pakistan (1973)---

----Art.25---Equal protection of law---Principles---Reasonable classification and intelligible differentia enumerated.

Following are principles of law with regard to equal protection of law:--

(i) That equal protection of law does not envisage that every citizen is to be treated alike in all circumstances, but it contemplates that persons similarly situated or similarly placed are to be treated alike;

(ii) that reasonable classification is permissible but it must be founded on reasonable distinction or reasonable basis;

(iii) that different laws can validly be enacted for different sexes, persons in different age groups, persons having different financial standings, and persons accused of heinous crimes:

(iv) that no standard of universal application to test reasonableness of a classification can be laid down as what may be reasonable classification in a particular set of circumstances, may be unreasonable in the other set of circumstances;

(v) that a law applying to one person or one class of persons may be constitutionally valid if there is sufficient basis or reason for it, but a classification which is arbitrary and is not found on any rational basis is no classification as to warrant its exclusion from the mischief of Article 25;

(vi) that equal protection of law means that all persons equally placed be treated alike both in privileges conferred and liabilities imposed:

(vii) that in order to make a classification reasonable: it should be based--

(a) on an intelligible differentia which distinguishes persons or things that are grouped together from those who have been left out;

(b) that the differentia must have rational nexus to the object sought to be achieved by such classification.

I. A. Sharwani and others v. Government of Pakistan 1991 SCMR 1041 ref.

(b) Constitution of Pakistan (1973)---

----Art. 25--- Reasonable classification--- Principles enumerated.

Principles as to classification are as follows:

(a) A law may be Constitutional even though it relates to a single individual if, on account of some special circumstances, or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself.

(b) There is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the Constitutional principles. The person, therefore, who pleads that Article 25 of Pakistan Constitution has been violated, must make out that not only has he been treated differently from others but he has been so treated from persons similarly circumstanced without any reasonable basis and such differential treatment has been unjustifiably made. However, it is extremely hazardous to decide the question of the Constitutional validity of a provision on the basis of the supposed existence of facts by raising a presumption. Presumptions are resorted to when the matter does not admit of direct proof or when there is some practice, difficulty to produce evidence to prove a particular fact.

(c) It must be presumed that the Legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience, and that its discriminations are based on adequate grounds.

(d) The Legislature is free to recognise the degrees of harm and may confine its restriction to those cases where the need is deemed to be the clearest.

(e) In order to sustain the presumption of constitutionality, the Court may take into consideration matters of common knowledge, ratters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation.

(f) While good faith and knowledge of the existing conditions on the part of the Legislature are to be presumed, if there is nothing on the fact of the law or the surrounding circumstances brought to the notice of the Court on which the classification may reasonably be regarded as based, the presumption of the constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation.

(g) A classification need not be scientifically perfect or logically complete.

(h) The validity of a rule has to be judged by assessing its overall effect and not by picking up exceptional cases. What the Court has to see is whether, the classification made is a just one taking all aspects into consideration.

Constitution of India by V. N. Shuklq, 7th Edn. ref.

(c) Constitution of Pakistan (1973)---

----Arts.25 & 199---State Bank of Pakistan EDMD Circular No.4 dated 11-8-2001---Constitutional petition---Principle of equality---Applicability---Dispute was with regard to exchange of "Special U.S. Dollars Bond Certificate" issued on 26-3-1999 and to be matured on 26-3-2002 upon expiry of three years' maturity period---State Bank of Pakistan vide is notification EDMD Circular, No. 4 dated 11-8-2001, declared that the holder of bounds upon encashment in Pak Rupees would receive a "Rupee Redemption Bonus" of 5% of the total Rupee value of the bond---Later on State Bank of Pakistan vide another Circular, withdrew the bonus announced in the earlier Circular---Contention of the petitioner was that the withdrawal of the bonus was discriminatory as the similarly placed persons had been granted the benefit and the petitioner was excluded--­Validity---Bank was unable to state any reason as to why -the classification had been made between the similarly placed citizens of the country---Specification of the dates in the Circular was not based on intelligible differentia which was arbitrary and whimsical---Petitioner was discriminated against in the matter of application of the conditions mentioned in the Circular---Petitioner was discriminated against in the matter of application of the circular and he was entitled to the benefit of the circular upon fulfilling its conditions---Constitutional petition was allowed accordingly.

Muhammad A. Qayyum for Petitioner.

Raja Abdul Ghafoor for Respondent.

Date of hearing: 25th October, 2002.

2003 C L D 765

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

M. AFZAL---Appellant

Versus

ALLIED BANK OF PAKSITAN LTD. and another---Respondents

First Appeal from Order No.268 of 2001, heard on 20th November, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.9(3)---Valid service---Scope---Proclamation in news­paper is a valid service.

Messrs Ahmad Autos and another v. Allied Bank of Pakistan PLD 1990 SC 497 rel.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.9, 10 & 12---Ex parte decree, setting aside of--­Condonation of delay---Valid service on defendant-- -Filing of application for leave to defend within the prescribed period from the date of knowledge of ex parte decree---Application for setting aside ex parte decree was filed after a delay of more than seven months from the date of passing of decree---Address given in plaint and in summons Was true and correct address of the defendant and the summons were issued on the same correct address---Contention of the defendant was that he attained knowledge of decree through a letter posted to him by the Bank, therefore, the application was within time from the date of knowledge of the decree- --Banking Court dismissed the application being barred by limitation---Validity. --Defendant was properly and legally served and he neglected to file application for leave to defend the suit and filed application for setting aside ex parte decree after inordinate delay of- more than seven months---Defendant having duly been served as prescribed under the law, he had the knowledge of the passing of the decree, therefore, if the period of limitation was taken from the date of knowledge, even then the application under S.12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, was barred by time and had rightly been dismissed by the Banking Court--­Judgment and decree passed by the Banking Court did not suffer from any legal infirmity and the same did not call for any' interference by High Court---Appeal was dismissed in circumstances.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.12---Ex parte decree, setting aside of---Delay not explained---Defendant contended - that he had attained knowledge on 16-6-1998, through a letter posted to him by Bank informing about the ex parte decree and application for setting aside the decree was filed on 30-6-1998--­Effect---Delay till 30-6-1998 was unexplained 'in the application as under the law each day's delay was to be explained by the party seeking condonation of delay---Delay was not condoned in circumstances.

(d) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.22 (1)---Limitation Act (IX of 1908), S.5 --- Condonation Of delay---Provisions of Limitation Act, 1908---Applicability--­Application to set aside ex parte decree was filed with a delay of more than seven months and application under S.5 of Limitation Act, 1908, was also filed for condonation of delay---Validity---Application under S.5 of Limitation Act, 1908, having been filed before the Banking Court in the proceedings undertaken under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, therefore, perforce of the provisions of S. 22(1) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, the provisions of Limitation Act, 1908, were not attracted---Application under S.5 of Limitation Act, 1908, filed by the defendant was not competent and was rightly dismissed by the Banking Court in circumstances.

Iftikhar Ullah Malik for Appellant.

Nemo for Respondent.

Date of hearing: 20th November, 2002.

2003 C L D 771

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

FAKHAR HAYAT---Appellant

Versus

HABIB BANK LIMITED---Respondent

Regular First Appeal No.446 of 1998, heard on 5th November, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.21---Appeal---Order already attaining finality in Constitutional petition---Assailing such order further in higher forum---Validity---Effect---Appellant was precluded from agitating or assailing the, order in the appeal.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.9 & 10---Recovery of Bank loan under Prime Minister Transport Scheme---Application for leave to defend the suit, dismissal of---Liability of Insurance company to pay loan--­Loan was advanced to the defendant for purchase of vehicle which was duly insured with an insurance company--­Defendant failed to repay the loan for the reason that the vehicle was stolen and met an accident---Plea raised by the defendant was that as the vehicle was insured, therefore, the insurance company was to liquidate the dues of the Bank---Banking Court dismissed the application for leave to defend and the suit was decreed in favour of the Bank--­Plea raised by the defendant was that the mark-up was not charged in accordance with law and that he was not liable to pay the suit amount as the vehicle was insured--­Validity---Availing of the financial facility was admitted and there was no rebuttal on record to the statement of accounts furnished by the Bank---Defendant did not 'raise any plausible defence warranting the grant of leave to defend the suit---High Court declined to interfere with the judgment and decree passed by the Banking Court as the same was legal and unexceptionable---Appeal was dismissed in circumstances.

Hameed Malik for Appellant.

Syed Nazir Hussain for Respondent.

Date of hearing: 5th November, 2002.

2003 C L D 778

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Syed MARGOOB ALAM---Appellant

Versus

MUHAMMAD SHOAIB ANSARI and 2 others---Respondents

E.F.A. No. 162 of 2002, heard on 21st November, 2002.

Civil Procedure Code (V of 1908)---

----O.XXI, Rr. 89 & 90---Sale through auction---Preferential right of judgment-debtor to purchase the mortgaged property---Auction was assailed by one of the judgment-­debtors on the ground that he was owner of the mortgaged' property and intended to purchase the-property---Banking Court allowed the objection petition with the direction to the judgment-debtor to deposit the auction price and pay a sum equal to 5% of the purchased price to the auction-purchasers under O.XXI, R.89, C.P.C.---Auction-purchasers contended that the judgment-debtor had not complied with the orders of the Banking Court therefore, objection petition should be dismissed and sale in their favour be confirmed ---Validity--­If the judgment-debtor had not made the deposit in terms of the orders passed by Banking Court within the period prescribed in the order or had not sought extension in terms of the order, the objection petition would have been dismissed---High Court directed that if the judgment-debtor had not deposited the amount in terms of the order passed by the Banking Court his objection petition would be deemed to be dismissed and the auction-purchasers were entitled to confirmation of the sale.

Syed Almas Haider Kazmi for Petitioner.

Uzma Naheed for Respondent.

Date of hearing: 21st November, 2002.

2003 C L D 789

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

MUHAMMAD ANWAR KHAN---Appellant

Versus

HABIB BANK LTD. and 4 others---Respondents

E.F.A. No.11 of 2002, heard on 3rd October, 2002.

Banking Tribunals Ordinance (LVIII of 1984)---

----Ss.6 & 11---Civil Procedure Code (V of 1908), O.XXI, R.52---Execution of decree- -Objection petition, dismissal of---Factual controversy---Failure to record evidence--­Contention of the objector was that the attached property was never mortgaged in favour of the Bank and just to protect the interest of the judgment-debtor and original mortgagor, the property was attached whereas the original mortgagor was not even impleaded in the suit---Banking Court dismissed the objection petition without even recording the evidence---Validity---Contentions raised by the objector were not considered by the Banking Court and the same was decided only in view of the stand point of the Bank---Crucial question as to whether the property was mortgaged in favour of the Bank by the mortgagor needed determination through production of evidence---Without recording the evidence of the parties, such factual controversy could not be resolved on hearing the parties only---Banking Court was not bound to mechanically record the evidence of the objector in each and every case--­Banking Court had to see in individual cases as to whether a particular case warranted the recording of evidence or not and whether the objection petition had been filed frivolously, contumaciously or to delay the proceedings or it was a genuine application---Primarily it was the function of the Banking Court to decide as to whether the objection petition was to be decided after recording of evidence or only after hearing the parties---Present was a case where the objector should have been allowed an opportunity to produce evidence to establish his claim as put forth in his objection petition regarding attachment and sale of the property in execution of decree passed against the borrowers---Order passed by the Banking Court on objection petition was set aside and the matter was remanded to the Court below for decision afresh on the objection petition.

Mst. Surayya Begum v. Muslim Commercial Bank Ltd. and 4 others PLD 1990 Lah. 4 ref.

Kh. Abdul Qayyum for Appellant.

Mukhtar Muhammad Rana for Respondent No. 1.

Nemo for Respondents Nos.2 to 5.

Date of hearing: 3rd October, 2002.

2003 C L D 812

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

LAL KHAN---Respondent

Regular First Appeal No. 119 of 1997 and Civil Miscellaneous Application No. 1-C of 2002, decided on 6th November, 2002.

(a) Banking Tribunals Ordinance (LVIII of 1984)---

----S. 6---Recovery of mark-up beyond agreed period---Suit was decreed by Banking Tribunal in favour of Bank and mark-up awarded up to the period when the default was committed and the suit was filed---Contention of the Bank was that the agreement was to expire on 7-7-1997, therefore, the Bank was entitled to recover the mark-up to that date---Validity---Had no default been committed and the loanee was to make payment uptil 7-7-1997, then the Bank could have recovered the amount of mark-up uptil 7-7-1997---Default, in the present case, was committed by the loanee before the date of expiry of the agreement which culminated to the filing of the suit and the suit was decreed by the Banking Tribunal after taking into consideration all the aspects of the case and making the calculations from the very inception of the loan facility and such calculations were just, fair and legal---None of the documents filed by the Bank proved that the bank was entitled to recover the mark­up uptil 7-7-1997---High Court declined to award mark-up uptil 7-7-1997---Banking Tribunal had rightly awarded mark-up for cushion period and also insurance charges to the Bank thus all reliefs which could have possibly been passed were awarded to the Bank---Judgment and decree passed by the Banking Tribunal was legal, unexceptionable and did not call for any interference.

(b) Banking Tribunals Ordinance (LVIII of 1984)---

----Ss.5 & 6---Suit for recovery of Bank loan---Non-awarding of costs---Banking Tribunal, while exercising discretionary powers declined to award the amount of costs ---Validity--Awarding of costs was within the discretion of the Court ---Exercise of discretionary powers was neither arbitrary nor fanciful, therefore, High Court declined to interfere in the exercise of discretionary powers in circumstances.

Mian Nasir Mahmood for Appellant.

Malik Allah Yar for Respondent.

Date of hearing: 6th November, 2002

2003 C L D 845

[Lahore]

Before M. Javed Buttar and Syed damshed Ali, JJ

MUHAMMAD TUFAIL---Appellant

Versus

HABIB BANK LTD. and others---Respondents

First Appeal from Order No. 106 of 2000, decided on 20th November, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)-----

----Ss. 9(3) & 12---Ex parte decree, setting aside of--­Limitation---Starting point---Ex parte decree was passed against the judgment-debtor on 18-11-1997, and application to set aside the ex parte decree was filed on 7-2-2000---All the modes of service including press publication were adopted by the Banking Court before passing the, decree---Plea raised by the judgment-debtor for non-appearance was incorrect address of the judgment-debtor resulting in his having no knowledge of the proceedings---Banking Court dismissed the application being time-barred ---Validity--­Starting point for getting ex parte decree set aside under S.12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, was 21 days from the date of decree or when the summons were not duly served from the date of knowledge of the decree-- Judgment-debtor did not mention as to when the ex parte decree came to his knowledge in the application under S. 12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Publication of notice in the newspaper was a permissible mode of service in accordance with S.9(3) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, and was deemed to be due service ---All particulars of the judgment debtor i.e. his name, parentage and place of residence had correctly been given in the notices issued by Banking Court---Banking Court, was justified to dismiss the application under S.12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, as barred by time.

Sardar Mashkoor Ahmed for Appellant.

Nemo for Respondent.

2003 C L D 848

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Messrs MIAN FAKHAR & CO. and another---Appellants

Versus

UNION BANK LTD. ---Respondent

Regular First Appeal No.362 of 2002, decided on 27th November, 2002.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.10---Application for leave to defend the suit--­Encashment of Bank guarantees after the expiry of validity period---Suit for recovery of Bank guarantees was filed by the Bank against the guarantors---Guarantors had already filed a civil suit against the Government department in whose favour the guarantees were furnished---Dispute raised in the application for leave to defend the suit was whether the Bank could or could not encash the Bank guarantees, the period of which had already expired although the validity period of the guarantees had been extended from time to time and that too at the request of the guarantors---Effect of lodging the claims by the Government Department with the Bank for encashing the guarantees, validity period of encashment of which had remained suspended due to the litigation by the guarantors before the Civil Court, was get to be decided---Without deciding such questions, the Banking Court dismissed the application for leave to defend the suit---Validity---All the questions raised by the guarantors needed determination and consideration by the Banking Court for such purpose the guarantors had moved the application for leave to defend the suit---High Court allowed the application for leave to defend the suit with a condition to deposit the principal amount of all Bank guarantees---Judgment and decree passed by the Banking Court were set aside and the case was remanded to the Banking Court for decision afresh.

Asghar Hameed Bhutta for Appellants.

Kh. Aamer Farooq for Respondent.

Date of hearing: 28th October, 2002.

2003 C L D 856

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

NATIONAL ELECTRIC COMPANY OF PAKISTAN (PVT.) LIMITED---Appellant

Versus

PRIME COMMERCIAL BANK LIMITED---Respondent

First Appeal from Order No.200 of 1999, heard on 18th February, 2003.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss. 9 & 7---Banking Court ---Jurisdiction---Scope--­ Examination of plaint revealed that suit filed in the Banking Court was for recovery of damages on account of alleged defamatory act committed by the respondent--­Competence---Held, it was only breach of an obligation or upon commission of default in fulfilling any obligation under a loan or finance agreement that a suit would be competent before Banking Court---Alleged defamatory act committed had no nexus with any terms of the loan or finance or any obligation arising under the same---Principles.

In the present case suit filed was for recovery of damages on account of alleged defamatory act committed by the respondent.

Right to institute a suit in a Banking Court established under section 4 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 is conferred by section 9 of the said Act.

A bare reading of the said provision would show that a banking company, a borrower or customer may institute a suit in the Banking Court in the circumstances stated in section 9(1) of the said Act. These are:--

(i) A default in fulfillment of any obligation by a borrower, or customer or a banking company;

(ii) with regard to any loan or advance.

In the present 'case the plaint does not at all disclose that a default has been committed by the banking company i.e. the respondent in fulfilling any obligation with regard to any loan or finance.

Matter of loan or finance is governed by terms of the contract between customer or borrower on the one hand and Banking Company on the other. It is only upon breach of an obligation or to use words of the Statute, upon commission of default in fulfilling any obligation, that a suit would be competent before the Banking Court. The, alleged defamatory act committed has no nexus with any terms of the loan or finance or any obligation arising under the same.

The substantive right to file the suit has been conferred by section 9 of the Act. Section 7 defines powers of the Banking Court and obviously these powers in exercise of civil jurisdiction would be exercised while dealing with a suit which squarely falls within the meaning of section 9 of the Act. If arguments, that by virtue of section 7 the Banking Court stands converted into a Civil Court with plenary jurisdiction to entertain and try suits under section 9, C.P.C., are accepted the entire law so enacted is liable to become redundant.

Nasimuddin Siddiqui and another v. United Bank Limited and others 1998 CLC 1718; Oxford Companion to Law by David M. Walker; The Law of Torts by Ratanlal and Dhiraj Lal, 23rd Edn. ref.

Muhammad Akram Khawaja for Appellant.

Osama Siddique for Respondent.

Date of hearing: 18th February, 2003.

2003 C L D 868

[Lahore]

Before Ch. Ijaz Ahmad and Tanvir Bashir Ansari, JJ

LUBNA AFZAL---Appellant

Versus

UNION BANK LIMITED and 8 others---Respondents

E.F.A. No. 153 of 2002, decided on 8th January, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----Ss. 15(6)(1) proviso, Explns. (1) & 19(2)---Decree for sale of mortgaged property---Application under S.15(6)(1) proviso, Explanation(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 pending execution proceedings by occupant of the property ---Maintainability--­Ingredients---Property in question was mortgaged in favour of the Bank at the time of sanctioning the loan in favour of judgment-debtors in 1992---Unregistered rent deed was executed after the mortgage-for the period from 10-8-1999 to 10-8-2004---No proof was available on record qua the payment of advance rent for 5 years---Applicant, and judgment-debtors were close relatives i.e. applicant was wife of one of the judgment-debtors and sister-in-taw of another and thus did not fall within the conditions prescribed in S.15(6)(1), proviso, Explanation (1) of the Ordinance---Executing Court, had passed the order of dismissal of the application in view of S.15(6), proviso, Explanation of the Ordinance after the statement of the applicant and found that she did not execute the rent deed bona fide---Validity---Executing Court, after applying its independent mind had given finding against the applicant that she , was not a bona fide tenant which was in accordance with the law---Executing Court was well within its rights to adopt any procedure at the time of execution of decree in view of S. 19(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and provisions of Civil Procedure Code 1908 were not attracted in stricto senso.

Muhammad Younas v. Dr. S. Muzammil Ali 1981 CL-1 327; Fakhruddin v. Asad Ullah Shah PLD 1982 Kar. 790; S. Hafeezur Rehman v. Federal Land Commission 1983 CLC 2842; Mukhi Chatromal v. Khupenand 1988 CLC 1711; N.D.F.C. v. Fazal Sugar Mills 1993 CLC 642; A.M. Shahid v. S.A. Bashir 1993 CLC 148; Ghulam Mustafa v. Additional District Judge 1991 CLC 81 and Muhammad Amin v. Judge, Family Court, Multan 2001 MLD 52 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)----

----S. 15(6)(1), proviso, Explanation (1)---Ingredients prescribed qua- non-maintainability of application under S.15(6)(1), proviso Explanation (1) enlisted.

The Legislature has prescribed ingredients qua non­ maintainability of the application under section 15(6) in Explanation read with the proviso which are as follows:--

(i) Lease deed executed after execution of mortgage.

(ii) Duty cast upon Banking Court to see whether the lease was executed to adversely affect the value of mortgaged property or to prejudice the rights and properties of the Financial Institution.

(iii) It should be presumed that the lease is not bona fide unless otherwise proved.

(iv) Under a bona fide lease.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 15(6)(1), proviso, Explanation (1)---Expression "bona fide" occurring in S.15(6)(1) of the Ordinance ---Meaning--­Meaning of the expression is that an act was done or performed honestly, without fraud, collusion or participation in wrong doing---Presence of any of said - elements may render an act mala fide.

Muhammad Younas v. Dr. S. Muzammil Ali 1981 CLC 327; Fakhruddin v. Asad Ullah Shah PLD 1982 Kar. 790; S. Hafeezur Rehman v. Federal Land Commission 1983 CLC 2842; Mukhi Chatromal v. Khupenand 1988 CLC 1711; N.D.F.C. v. Fazal Sugar Mills 1993 CLC 642 and A.M. Shahid v. S.A. Bashir 1993 CLC 148, ref.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----S. 19(2) & (7)(a)---When the executing Court invokes S.19(2) then S.19(7)(a) is not attracted.

Hudabia Textile Mills v. A.B.L. PLD 1987 SC 512 ref.

(e) Interpretation of statutes---

----Section of a statute has to be read as a whole organic.

(f) Interpretation of statutes-----

----Proviso to a section---Function---Proviso to a section has an overriding effect and control over the whole section--­Function of a proviso is to exclude and take out certain cases from the rule to which it is a proviso and to that extent the proviso modifies the main provision of the enactment.

Muhammad Ashraf Khan v. The State 1990 PCr.LJ 169 and Messrs Hamdard Dawakhana v. Commissioner Income-tax PLD 1980 SC 84 ref.

(g) Interpretation of statutes---

----Explanation attached with a section of an Act ---Purpose--­Explanation is to enable the Court to understand the Act in the light of the Explanation.

Balaji Singh v. Chakka Gangamma and another AIR 1927 Mad. 85 ref.

Khalid Saleem for Appellant.

Ayesha Malik for Respondent No. 1.

Iftikhar Ullah Malik for Respondents Nos.2, 3, 6 and 8.

Abdul Sattar Chughtai for Respondent No.7.

2003 C L D 876

[Lahore]

Before Abdul Shakoor Paracha, J

Messrs K.K.P. (PVT.) LTD. ---Appellant

Versus

MANAGEMENT COMMITTEE, QUAID-E-AZAM UNIVERSITY STAFF HOUSING SCHEME through Vice-Chancellor/ Chairman and another---Respondents

First Appeal from Order No. 93 of 2000, heard on 11th December, 2002.

(a) Civil Procedure Code (V of 1908)---

----O. XXXIX, Rr.1, 2 & S.11---Temporary Injunction, grant of --Res judicata, principle of --Applicability---Second application for temporary injunction under similar circumstances was hit by principle of res judicata--­Principles of res judicata under S.11, C.P.C. were not applicable unless new circumstances had been pleaded or exigency of the case required that temporary injunction might be granted---Neither there were new circumstances nor pleaded as such, in the present case, second application on the same subject without seeking remedy of appeal was not maintainable.

(b) Civil Procedure Code (V of 1908)---

----O. XXXIX Rr.1, 2 & S.11---Arbitration Act (X of 1940), S.20---Contract Act (IX of 1872), S.126---Bank guarantee--­Plaintiff had assailed the order of the Trial Court whereby his application seeking restraining order regarding encashment of Bank guarantee had been dismissed--Validity---Bank had admittedly nothing to do with the progress of the work under the agreement executed between the parties or regarding the payment of any amount by the defendants to' the plaintiff as the said payment was regarding the contract between the parties to the contract--­Batik under contractual arid legal obligation under the terms of the agreement was bound to fulfill its commitment-­Discretion exercised by the Court in refusing to grant temporary injunction by restraining the defendants from encashing the Bank guarantees in respect of amount advanced to plaintiff could neither be deemed to be arbitrary nor fanciful---Defendant was rightly found entitled to encash Bank guarantees to the extent of the balance unadjusted amount---Temporary injunction for restraining defendant from encashing Bank guarantees was rightly refused in circumstances.

(c) Contract Act (IX of 1872)---

----S. 126---Bark guarantee and its nature---Bank guarantee is an independent contract and Bank Authorities must construe the same independent of the primary contract between the parties.

Messrs Hatta Construction Company (Pvt.) Ltd. v. Faisalabad Development Authority, Faisalabad , through Director and another 1995 CLC 1877; 1983 CLC 1292; AIR 1940 Lah. 39; .PLD 1963 (W.P.) Lah. 566: PLD 1994 SC 311: Messrs Printpac (Pvt.) Limited v. Rice Export Corporation of Pakistan Ltd. 1992 MLD 1161; Messrs Rafidian Bank, Iraq v. M.L. International (Pvt.) Limited, Karachi 1993 MLD 1234 and Haral Textiles Limited v. Banque Indosuez Belgium S.A. and others 1999 SCMR 591 ref.

Abdur Rashid Awan for Petitioner.

Muhammad Munir Paracha for Respondent.

Date of hearing: 11th December, 2002.

2003 C L D 882

[Lahore]

Before Muhammad Sair Ali, J

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION LIMITED---Plaintiff

Versus

ARIF NOOR and 2 others---Defendants

Civil Original Suit No.48 of 2000, P.L.As. No. 103-B of 2000 and 110-B of 2001, decided on 31st October, 2002.

Contract Act (IX of 1872)-----

----S. 126---Demand guarantee---Limitation---Period of limitation in such guarantee starts running upon demand made upon the guarantor by the beneficiary---Plaintiff, to the present cases in its own pleadings had admitted making repeated demands upon the guarantors to settle the outstanding liabilities of the plaintiff on the basis of their guarantees---Plaintiff, despite specifically asserting demands, had withheld the dates of demands made by it upon the guarantors---Effect---Plaintiff, in order to show that its claim as well as suit was within time against the guarantors, was obliged to bring all necessary and essential facts before the Court and to plead the same in its plaint--- Withholding of dates as well as record relating to demands, led to presumption against the plaintiff---Suit, in circumstances, was held to be beyond the period of limitation and the plaint was rejected---Principles.

National Bank of Pakistan v. General Tractor and Machinery Co. Ltd. and another 1996 CLC 79: Bradford Old Bank v. Sutcliffe (1918) 2 KB 833 and Comparative Law of Securities and Guarantees by Philip R. Wood, 1995 Edn. ref.

Nauman Akram Raja for Plaintiff.

Salman Aslam Butt for Defendant No.3

2003 C L D 888

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

MUSLIM COMMERCIAL BANK LIMITED---Appellant

Versus

Syed ATAULLAH SHAH and 2 others---Respondents

Regular First Appeal No. 133 of 1988, heard on 21st October, 2002.

Per Parvez Ahmed, J.

(a) Transfer of Property Act (IV of 1882)-----

----S. 41---Transfer by ostensible owner---Benefit of S.41 of Transfer of Property Act, 1882---Applicability---Principles--­Principle of transfer mentioned in S.41 of Transfer of Property Act, 1882, is based on principle of natural justice and equity which must be universally applicable---Where one man allows another to hold himself out as the owner of an estate and the third person purchases it for value from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out as such cannot be permitted to recourse to his secret title unless he can overthrow that of the purchaser by showing either that he had direct notice, or something which amounts to constructive notice of the real title or that there existed circumstances which ought ,to have put him upon inquiry that if prosecuted would have led to a discovery of the same as such the principle under S.41 of Transfer of Property Act, 1882, is a statutory application of the law of estoppel.

Khair Din and another v. Mst. Zenab Bibi and 2 others PLD 1973 Lah. 586 ref.

(b) Transfer of Property Act (IV of 1882)----

----S. 41---Protection under S.41 of Transfer of Property Act, 1882---Applicability---Necessary ingredients detailed.

Following are the necessary ingredients for protection under section 41, Transfer of Property Act, 1882:--

(a) The transferor is the ostensible owner;

(b) he is so by the consent, express or implied, of the real owner;

(c) the transfer is for consideration; and

(d) the transferee has acted in good faith, taking reasonable care to ascertain that the transferor had power to transfer.

Khair Din and another v. Mst. Zenab Bibi and 2 others PLD 1973 Lah. 586 ref.

(c) Civil Procedure Code (V of 1908)-----

----O.XXI, R.58---Transfer of Property Act (IV of 1882), S.41---Execution of decree---Transfer by ostensible owner--­Protection of S.41 of Transfer of Property Act, 1882--­Applicability---Original title documents not with the objector---Non-existence of necessary ingredients required for protection under S.41 of Transfer of Property Act, 1882--­In execution of ex parte decree passed by Banking Court in favour of Bank, objection petition was filed on the ground that the attached property had been purchased through registered sale deed by the objector bona fide from judgment-debtor with consideration without notice of the same being mortgaged---Objection petition was allowed by the Banking Court and the property attached was released---Validity---Property in question was urban immovable property, as such no revenue record in that regard was relevant---Proclamation in press was issued by wife of the objector and not by the objector---Nothing was available on record that the original documents of the title of the property were ever delivered by the judgment-debtors to the objector---Order passed by Banking Court was not in consonance with law which was set aside and objection petition under O.XXI, R.58, C.P.C. was dismissed by the High Court in appeal.

Per Mian Hamid Farooq, J.---

(d) Transfer of Property Act (IV of 1882)---

----S. 41---Civil Procedure Code (V of 1908), O.XXI, R.58---Execution of decree---Release of property attached, in execution proceedings- --Objection petition, filing of --­Claiming of protection under S.41 of Transfer of Property Act, 1882---Objector claimed to be bona fide owner of property attached by Banking Court in execution of decree passed in favour of Bank---Objector was not in possession of the original sale deed as according to the vendor/judgment-debtor the same was in possession of one of his brothers who might have mortgaged the property in question through deposit of title deed---Effect---Such assertion of the vendor/judgment-debtor would have been a sufficient indication for the objector to presume that; the original registered sale deed must have been used elsewhere by the vendor/judgment-debtor or his brother and the property was not free from encumbrances---Objector thus had not acted in good faith and failed to take reasonable care to ascertain that the vendor/judgment-debtor had a valid title and power to transfer the property in question to the objector---Objector, as a prudent person, before the purchase of the property, at least should have asked the vendor/judgment-debtor to show the original title deeds of the property, the subject-matter of the sale, and must have verified from the relevant quarters about the title/status of the property---Banking Court without taking into consideration the necessary inseperable ingredients of S.41 of Transfer of Property Act, 1882, and in complete oblivion of the law on the subject, had rendered the order, thereby depriving the Bank from the valuable property, obtained by it as security---Order passed by Banking Court was exceptionable and the same was set aside---Objection petition under O.XXI, R.58, C.P.C. was dismissed accordingly.

Industrial Development Bank of Pakistan through Deputy Chief Manager v. Saadi Asmatullah and others T999 SCMR 2874 ref.

(e) Mortgage---

----Mortgage travels with .the property and not the person---Transferee of the previously encumbered property steps into the shoes of the debtor.

Chief Land Commissioner v. Maula Dad and others 1978 SCMR 264 ref.

(f) Transfer of Property Act (IV of 1882)---

----S. 41---Registration Act (XVI of 1908), S.47---Civil Procedure Code (V of 1908), O.XXI, R.58---Execution of decree---Property attached in execution proceedings--­Registered mortgage deed---Claiming of protection under S.41 of Transfer of Property Act, 1882---Objector claimed to be bona fide owner of property attached by Banking Court in execution of decree passed in favour of Bank---Plea raised by the objector was that he had no notice of prior mortgage of the property---Validity---Mortgage deed in favour of the Bank was registered with Sub-Registrar thus, the same would be deemed to be a notice to the public at large--­Objector could not be allowed to plead that he had no notice about the creation of prior mortgage---Objector had not taken due care and caution and had not taken all necessary steps to ensure that the property was free from encumbrances before undertaking sale transaction---Protection under S.41 of Transfer of Property Act, 1882, was not available in circumstances.

Rahim Dad and 3 others v. Abdul Kareem and 3 others 1992 MLD 2111 ref.

Aniqua Mughis for Appellant.

Jehangir A. Jojha for Respondent.

Date of hearing: 21st October, 2002.

2003 C L D 898

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

MUHAMMAD ASLAM---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager, A.D.B.P., Kasur Branch and 14 others---Respondents

Regular First Appeal No.25 of 2002, decided on November, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----Ss. 9 & 10---Civil Procedure Code (V of 1908), O.IX, Rr.8 & 9---Dismissal of suit for non-prosecution---Suit not fixed for hearing---Pre-occupation of counsel---Case was fixed for arguments on application for leave to defend the suit, when due to absence of the plaintiff as well as his counsel, the Banking Court dismissed the suit for non-prosecution--­Application under O.IX, R.9, C.P.C. was filed by the-plaintiff to set aside the order but the same was dismissed and the suit was not restored---Contention of the plaintiff was that his counsel was busy in the High Court and in support of such assertion the counsel had filed his affidavit--­Validity---If the plaintiff or his counsel was absent on the day, at the best, the Banking Court could have accepted the application for leave to defend the suit but was not competent to dismiss the suit on that date, as the suit was not fixed for hearing---Date fixed was not a "date of hearing" as contemplated under the law thus the suit could not have been dismissed for non-prosecution---Banking Court, did not advert to the basic aspect of the case and proceeded mechanically to pass the dismissal order which was not sustainable in law, as the same had been passed without taking into consideration the law on the subject--­Banking Court failed to consider the plea raised by the plaintiff for the absence of his counsel, who was busy in the High Court and in support of that assertion he filed his own affidavit---Order passed by the Banking Court was not sustainable in law, as the same was passed in complete ignorance of the record of the case and law on the subject--­High Court set aside the order passed by the Banking Court and remanded the case to Banking Court for decision on merits.

Muhammad Javed Kasuri for Appellant.

Sardar Muhammad Hayat for Respondents.

ORDER

Appellant/ plaintiff, through the filing of the present appeal, has called in question orders dated 4-12-2001 and 10-12-2001, whereby appellant's suit was dismissed for non-prosecution and his application for the restoration of the suit was also rejected, respectively.

1. Precisely stated, the facts leading to the filing of the present appeal are that the appellant filed a suit for declaration and permanent injunction, against the respondents, wherein, after the completion of service, respondent No. 1 filed an application for leave to defend the suit, while the other respondents were proceeded ex parte. The appellant contested the said application and the case was adjourned to 4-12-2001 for addressing arguments on the application, on which date the learned Court after finding, that nobody represented the appellant dismissed the suit for non-prosecution. On 6-12-2001 the appellant filed an application under Order IX, rule 9, C.P.C, for the restoration of the suit, but the learned Banking Court dismissed the said application, even without calling upon the respondents, vide order dated 10-12-2001, hence the present appeal assailing the aforenoted two orders.

2. Nobody represented the legal heirs of respondent No.2, hence they are proceeded ex parte.

3. Learned counsel for the appellant has contended that both the impugned orders are not sustainable in law as the same were passed in complete oblivion of the facts of the case and law on the subject. Conversely, learned counsel for respondents, while supporting both the orders, has prayed for the dismissal of the appeal.

4. Upon the examination of the record, we find that on 13-11-2001, reply, on behalf of the appellant to an application for leave to defend the suit, was filed and the case was adjourned to 4-12-2001 for addressing arguments on the said application, but on the next date of hearing, the suit, itself, was dismissed for non-prosecution. It is evident from order dated 13-11-2001 that the main suit was not fixed for hearing on 4-12-2001 and- it was only the leave application, which was listed for hearing on 4-12-2001, thus, on the said date, the suit was not on the cause-list of the learned Banking Court. Although it has been pleaded by the learned counsel for the appellant that when the counsel for the appellant appeared before the Banking Court, he was told that arguments have been heard and the case is fixed for orders, yet notwithstanding the said assertion, it has been proved on record, as noted above, that the suit was not fixed for "hearing" on ,4-12-2001. If the appellant or his learned counsel was absent on 4-12-2001, at the best, the learned Banking Court could have accepted the application for leave to defend the suit but, in no way, was competent to dismiss the suit on the said date, as the suit was not fixed for hearing. The said date was not a "date of hearing" as contemplated under the law, thus, the suit could not have been dismissed for non-prosecution. Learned Banking Court, did not advert to this basic aspect of the case and proceeded to mechanically pass the order dated 4-12-2001, which, to our mind, is not sustainable in law, as the same has been passed without taking into consideration the law on the subject.

5. Now coming to the order dated 10-12-2001, we find from the record that in support of the application for the restoration of the suit, the learned counsel for the appellant has filed his own affidavit, but the learned Banking Court did not at all take into consideration the said affidavit, against which there was no rebuttal and the said affidavit stood uncontroverted. The learned Court even did not consider the plea, raised by the appellant, for the absence of his learned counsel, who was, statedly, busy in r this Court, and in support of that assertion he filed his own I affidavit. Even if the appellant was not able to produce his medical certificate, the suit could have been restored on the ground of pre-occupation of his learned counsel: We are of the firm view that this order is not even sustainable in law, as the same was passed in complete ignorance of the record of the case and law on-the I subject.

6. In the above perspective, we have examined both the orders and are of the view, as noted above, that those are not sustainable, thus, we are inclined to set aside both the orders.

7. Upshot of the above discussion is that the present appeal is allowed and orders dated 4-12-2001 and 10-12-2001 are set aside with no order as to costs. The result would be that the suit titled "Muhammad Aslam v. A.D.B.P. and others", filed by the appellant, shall be deemed to be pending before the learned Judge Banking Court, who shall, at the first instance, decide the application for leave to defend the suit, filed by the appellant, and thereafter shall proceed to decide the suit, of course, in accordance with law.

M.H./M-1599/L Case remanded

2003 C L D 902

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

SHAHID SIDDIQUE BHATTI---Appellant

Versus

UNION BANK LIMITED and 14 others---Respondents

First Appeal from Order No. 194 of 2002, heard on 9th December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss. 15(6) & 19---Civil Procedure Code (V of 1908), O.XXI, R.58---Execution of decree---Possession of mortgaged property---Recovery of decretal amount from sale of other properties mortgaged with Bank---Objector claimed to be bona fide purchaser of one of the mortgaged properties and had made thorough inquiries about the lawful title of the property---Objector contended that there were other substantial properties of the defendant mortgaged with Bank from which the decree in favour of the Bank could be fully satisfied---Parties, in order to settle, the matter had mutually agreed that the possession of the property in question be restored to the objector and the Bank. would first attempt to satisfy its decree by sale of the other mortgaged properties---Parties also agreed that in case the decree was not satisfied from the sale of the other properties, the objector would pay the balance decretal amount to the Bank---Effect---High Court directed the Bank to keep the objector informed about the position of sale of the other properties, so that transparency in the sale of properties could be maintained---High Court, on the other hand, restrained the objector from sale/alienation of the property in question till such time the decree passed by the Banking Court was fully satisfied---Order of delivery of possession of property in question passed by Banking Court in favour of the Bank was set aside accordingly.

Syed Najam-ul-Hassan Kazmi for Appellant.

Kh. Aamir Farooq for Respondent No. 1.

Date of hearing: 9th December, 2002.

2002 CLD 905

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Messrs YUSSRA TEXTILE CORPORATION and 2 others---Appellants

Versus

PICIC COMMERCIAL BANK LIMITED---Respondent

Regular First Appeal No.534 of 2002, heard on 9th December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 10---Leave to defend the suit---Illegal charging of mark­up---Failure to give finding on such plea---Principal amount was deposited by the defendants and they raised objections only with regard to charging of mark-up---Plea raised by the defendants was that the mark-up had been charged/ debited illegally against the recognized principles . of charging of mark-up and in violation of circulars issued by State Bank of Pakistan---Banking Court dismissed the application for leave to defend and decreed the, suit in favour of the Bank including the disputed amount of mark­up---Validity---Defendants had taken a specific plea regarding illegal charging of mark-up but judgment passed by Banking Court did not give any finding on such issue--­Banking Court was legally obliged to have rendered some findings on the question of charging of mark-up one way or the other as there were instructions /guidelines from the State Bank of Pakistan regarding the charging of mark-up--­Banking Court having failed to give findings on the issue of charging of mark-up, the defendants had made out a case for grant of leave to defend the suit---High Court granted leave to defend the suit on limited question of charging/ debiting of mark-up as the principal amount had been liquidated- --Judgment and decree passed by the Banking Court was set aside, application for leave to defend the suit was allowed and the case was remanded to Banking Court accordingly.

Jawad Mahmood Pasha for Appellant.

Muhammad Afzal Sandhu and Mehmood for Respondent.

Date of hearing: 9th December, 2002.

2003 C L D 908

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mst. NAZIRAN BIBI---Appellant

Versus

CITI BANK N.A. and another---Respondents

First Appeal from Order No.443 of 2002, heard on 21st November, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.69--­Specific Relief Act (1 of 1877), S.12---Execution of decree--­Sale of mortgaged property through auction---Stoppage of auction on the intervention of appellant---Locus standi of appellant---Suit for specific performance of agreement to sell, pendency of---Appellant had filed the suit alleging that the judgment-debtor had agreed to sell the mortgaged property to her and had received major portion of consideration amount with delivery of possession to her--­Appellant intended to deposit the decretal amount and had sought stoppage of auction under O.XXI, R.69, C.P.C.--­Judgment-debtor resisted the application and denied execution of any such agreement---Application under O.XXI, .R.69, C.P.C. was dismissed by the Executing Court on the ground that the appellant had no locus standi to file the same as no legal title had yet been transferred in favour of the appellant---Validity---If the suit of the appellant was decreed, the same would establish that the appellant was entitled to a conveyance of title in her favour as per the terms agreed between her and the judgment-debtor---As a consequence, the right to title would date back to the agreement even though the decree might be passed at a subsequent date---As ,the appellant had offered to pay off. the outstanding amount to satisfy the decree obtained by the Bank, the judgment-debtor could not have any objection, if the decretal debt was satisfied and the property was saved from auction--Respective rights of the appellant and the judgment-debtor in respect of disputed property would remain unaffected and would be decided by the Civil Court before whom the appellant's suit for specific performance was pending adjudication---Order of Executing Court was set aside and auction was stopped with a condition of deposit of decretal amount---Appeal was allowed accordingly.

Nadeem Siddiqui for Appellant.

Shahid Ikram Siddiqui for Respondent No. 1.

Syed Kazim Bokhari for Respondent No.2.

Date of hearing: 21st November, 2002.

2003 C L D 911

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUHAMMAD KHALID BUTT---Appellant

Versus

UNITED BANK LIMITED---Respondent

Regular First Appeals Nos.72-A, 69 and 70 of 2002, heard on 28th November, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 10---Specific Relief Act (I of 1877), Ss.39 & 42---Civil Procedure Code (V of 1908), O.VII, R.11 ---Leave to defend the suit, grant of-Rejection of plaint filed by borrower for cancellation of document and declaration---Bank was granted leave to defend the suit filed by the borrower--­Issues were framed and the case was fixed for evidence, when the Bank filed two suits for recovery of Bank loans--­Subject-matter of all the suits were the same documents--­Banking Court declined leave to defend the suit to the borrower and resultantly plaint filed by the borrower was rejected under O.VII, R.11, C.P.C. while that filed by the Bank were decreed---Contention of the borrower was that documents relied upon by the Bank were subject-matter of the earlier suit and the controversy could not be resolved without recording of evidence---Borrower further contended that his plaint could not be rejected only for the reason that in the suits filed by the Bank, leave to defend the suits was refused---Validity---In the earlier suit of the borrower and the subsequent suits of the Bank, the subject-matter, and the issues were directly and substantially the same---If the suit of the borrower was decreed, the Bank's suits were bound to fail and vice versa---When leave had been granted to the Bank in the first suit, on the principle of consistency and comity and for the administration of justice, the borrower was also entitled to leave to appear and defend---High Court directed that in order to avoid conflicting judgments, all the suits should be conducted and proceeded simultaneously and decided together---Banking Court had wrongly rejected the plaint of the borrower under OXII, R.ll, C.P.C. on the premises that the leave applications of the borrower in the suits filed by the Bank had been refused---Judgments and decrees passed by the Banking Court were set aside and the borrower was allowed leave to defend in both the suits---Cases were remanded to Banking Court accordingly.

Shaikh Ashar Waheed for Appellant.

Rashideen Nawaz Kasuri for Respondent.

Date of hearing: 28th November, 2002.

2003 C L D 914

[Lahore]

Before Mian Saqib Nisar and Parvez Ahmad, JJ

Messrs NIZAMUDDIN & COMPANY and 4 others---Appellants

Versus

THE BANK OF KHYBER ---Respondent

E.F.A. No.688 of 2002, decided on 21st November, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 19(3)(7)---Civil Procedure Code (V of 1908), Ss.36 & 51---Execution of decree---Mortgaged property- --Executing Court---Powers and functions---Rights of parties ---Scope--- Auction with or without intervention of Executing Court---To satisfy the decree, passed in favour of Bank, Executing Court allowed the Bank to auction the mortgaged property without intervention of the Court---Plea raised by judgment­ debtors was that they be allowed to sell the property of their own accord and then to satisfy the decree ---Validity--­Although the Bank had agreed to selling of the properties through judgment-debtors, yet the proper course would be to direct the Executing Court to sell/auction the properties under its supervision through Court auction as in such case neither of the parties would have an edge over the other--­Parties in execution proceedings were to be treated alike and the rights of decree-holder should not be preferred over the interest of Judgment-debtors---On one hand it was the function of Executing Court to execute decree but on the other hand, it was also the duty of Executing Court to protect the rights of judgment-debtors which were not to be jeopradised and sacrificed at the altar of execution of decree---In execution of decree, proper price should be fetched through the sale of properties and properties of judgment-debtors were not to be sold at throw away and paltry price with the connivance of unscrupulous persons, may be decree-holders or its representatives---High Court directed the Executing Court to sell the properties through Court Auctioneer---Order passed by Executing Court was set aside---Appeal was allowed accordingly.

Syed Haider Ali Shah for Appellants.

Abdul Hamid Chohan for Respondent.

2003 C L D 931

[Lahore]

Before Muhammad Sair Ali, J

BANKERS EQUITY LIMITED through Principal Law Officer and 5 others---Plaintiffs

Versus

Messrs BENTONITE PAKISTAN LIMITED and 7 others---Respondents

C.O.S. No.44 of 2002, heard on 13th March, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----Ss.10(3), (4), (5), (6) & (12)---Suit for recovery of loan amount---Amended application for leave to defend--­Defendants objected to debiting of undisbursed amounts and wrong charging of mark-up, but neither showed nor pleaded in leave application any account or tabulation qua specific mandate of S.10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Defendants' contention was that they had filed amended petition for leave under S.10(12) of Ordinance, 2001, thus, remaining subsections thereof would not apply to the same ---Validity--­Mandate of S.10(12) of the Ordinance, 2001 was that defendant, who had ,already filed leave application, would file amended leave application in accordance with provisions of said Ordinance---Section 10(12) of Ordinance, 2001 expressly made all provisions of the Ordinance including its subsections (3), (4), (5) & (6) applicable to amended leave petition---Non-submission of mandatory accounts as provided for in S.10(4) would attract penal consequences set out in subsection (6) thereof---High Court rejected leave application for non-compliance with mandatory provisions of S.10(3)(4) of Ordinance, 2001.

(b) Jurisdiction---

----Jurisdiction of a Court within whose territorial limit cause of action or a part thereof would arise, cannot be contracted out by parties.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----Ss. 2(c)(d), 7(4) & 9(1)(2)---Suit by financial institution against its customer---Assumption of jurisdiction by Banking Court---Prerequisites---"Default" of "customer" in fulfilling "obligation" with regard to any 'finance", which would involve accounting.

(d) Bankers Books Evidence Act (XVIII of 1891)---

----Ss.2(8) & 4---Certified copy of statement of accounts containing entries in books of Bank---Status of such entries and admissible thereof in evidence---Principles.

As per settled "Banking practices", every amount/ sum advanced or paid to a customer or sum expended/ incurred for and on behalf of a customer by a Banking Company is entered as 'debit' in the books of Bank and the money received from or on behalf of customer, is entered in these books, a customer's "credit" to arrive at a credit or debit balance. On the basis of entries in these books, a statement of accounts truly, faithfully and duly reflecting the entries is prepared by Bank for each account of all practical purposes. These statements of accounts bearing true account profile are to be regularly conveyed to customers to apprise them of their "obligations" towards the Bank or vice versa. These "statements of accounts" containing copies of entries in the books of a Bank, when certified as per section 2 of Bankers' Books Evidence Act, 1891 attain the status of prima facie evidence of the existence of such entries in the bankers' book under section 4 ibid, and become admissible in evidence in all legal proceedings of the matters, transactions and accounts therein recorded like the original entry.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----S. 9(2)---Bankers' Books Evidence Act (XVIII of 1891), Ss. 2(8) & 4---Suit by financial institution against its customer---Filing of statement of-accounts alongwith plaint--­Such requirement not a formality or technicality rather mandatory for plaintiff to support its plaint by a statement of accounts duly certified under Bankers' Books Evidence Act, 1891---Plaint would be incomplete and could not become a basis of such suit without strict compliance with provisions of S.9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Non filing thereof would amount to non-providing adequate, proper and reasonable opportunity of defence to customer.

(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 9(1)(2)---Bankers' Books Evidence Act (XVIII of 1891), Ss. 2(8) & 4---Suit by Bank against the customer--.-Non-filing of statement of accounts and documents alongwith plaint--­Effect---Plaint, statement of account and documents, though distinct, do not enjoy independent existence in terms of S.9(2), Financial Institutions (Recovery of Finances) Ordinance, 2001---Plaint cannot be structured, constructed, built or raised without foundation of a duly certified statement of account and requisite documents---No suit can be instituted by a Banking Company under S.9(1)(2) of Ordinance, 2001 through a plaint not supported by requisite statement of accounts and documents.

(g) Words and phrases---

----"Support"---Meaning.

Words and Phrases by John B Saunders Butterworth's Publications, 2nd Edn., Vol.5, 1970, pp.153, 1.54; Black's Law Dictionary, 5th Edn., 1979, p.1291; Chamber's 21st Century Dictionary, p.1420 and Concise Oxford Dictionary, 7th Edn., p.1072 ref.

(h) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----S. 9(1)(2)---Bankers' Books Evidence Act (XVIII of 1891), Ss. 2(8) & 4---Civil Procedure Code (V of 1908), S.151, OVII, Rr. 14, 17, 18, O. XI, R. 14 & O. XVIII, R.2---Suit by Bank against its customer---Production of documents along with plaint under C.P.C.---Plaint under S.9(1)(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 to be supported by duly certified statement of accounts and documents of finance---Distinction---Civil Procedure Code, 1908, allows a plaint independent of production of documents as consequence of non filing thereof is inadmissibility of such documents in evidence, if leave of Court is not obtained for its subsequent production--­Freedom of subsequent production of statement of accounts and documents of finance (not filed with plaint) is not available to plaintiff under S.9 of Ordinance, 2001, whereunder suit cannot be initiated through a plaint not supported by such statement and documents.

(i) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--

----S. 9(1)(2)---Bankers' Books Evidence Act (XVIII of 1891), Ss. 2(8) & 4---Civil Procedure Code (V of 1908), S.151 & O. VII, R. 11---Suit by Banks for recovery of loan amount--­Plaintiffs had filed alongwith plaint and relied upon Certificates or Schedule of Balances and not statement of accounts---Maintainability---Certificates or Schedules of Balances showed charging of mark-up at a fixed rate like interest, mark-up on mark-up, liquidate damages, expenses, costs, fees and penal interest---Debits were made in general in a consolidated form to reach total amount of claim of each plaintiff-Bank---Method/form of accounts or mark-up at fixed rate or, mark-up in advance or liquidated damages or expenses and fees were not debitable under law in a statement of accounts---Certificates or Schedules of Accounts not truly reflecting entries in Bankers' Books Accounts could not be held to be statements of accounts nor presumption of truth or correctness could be attached to them---Plaintiffs had not produced any books of accounts to support contents of such Certificates of Balances or amounts claimed in plaint---Plaintiffs had failed to comply with mandatory provisions of S. 9(1),(2) of Ordinance, 2001 to support plaint with `statements of accounts duly certified under Bankers' Books Evidence Act, 1891---Suit so filed was not only barred by law, but failed to disclose a cause of action in terms of S.9(1)(2) of Ordinance, 2001---High Court rejected plaint under O. VII, R.11 read with S.151, C.P.C.

(j) Bankers' Books Evidence Act (XVIII of 1891)----

----Ss. 2(8) & 4---Certified copy of statement of accounts--­Evidentiary value---Entries in statement of accounts, if dubious, objected to or challenged, could not alone be taken to be sufficient to prove Bank's claim or customer's liability thereto.

Messrs Muhammad Siddiq Muhammad Umer and another v. Australasia Bank Limited PLD 1966 SC 684 and Citi Bank N.A., A Banking Company v. Riaz Ahmad rel.

Rashid Nabi Malik for Plaintiffs.

Pervez Ahmad Khan Burkey for Respondents.

Date of hearing: 13th March, 2002.

2003 C L D 966

[Lahore]

Before Ch. Ijaz Ahmad, J

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through General Manager---Petitioner

Versus

ABDUL SATTAR KHAN---Respondent

Civil Revision No.2584 of 2002, decided on 10th January, 2003.

(a) Insurance---

----Premiums paid to Insurance company, suit for recovery of---Plea of Insurance company was that as per Cl. (5) of Insurance Policy, no written request for converting insurance policy into a paid-up policy was made by insured, thus, his policy had lapsed automatically---Trial Court dismissed suit, but Appellate Court decreed the same---Validity---Clause (5) of Insurance Policy revealed that condition of written request was not mandatory as no penal consequences were prescribed therefore---Contract between parties, thus, could not become void---Appellate Court had passed impugned judgment after applying its independent mind and properly appreciating evidence---Insurance Company had failed to point out any non-reading or misreading of evidence by Appellate Court or violation of principle laid down by superior Courts---High Court dismissed petition in circumstances.

Messrs S.M. Abdullah & Sons, Karachi v. Messrs Crescent Star Insurance Co. Ltd. 1993 MLD 1239 ref.

(b) Civil Procedure Code (V of 1908)---

----S.115---Error of law or fact committed by Subordinate Court---High Court not empowered to interfere except after satisfying itself upon certain matters---Such matters and conditions highlighted.

Section 115, C.P.C., empowers High Court to satisfy itself upon three matters: (a) that order of Subordinate Court is within its jurisdiction; (b) that the case is one in which the Court ought to exercise jurisdiction, and (c) that in exercising jurisdiction, the Court has not acted illegally; that is, in breach of some provision of law or with material irregularity, that is, by committing some error of procedure in the course of the trial, which is material in that it may have affected the ultimate decision. If High Court is satisfied upon these three matters, it has no power to interfere because it differs, however profoundly, from the conclusion of Subordinate Court upon questions of fact or law.

N.S. Venkatagiri Ayyangar and another v. The Hindu Religious Endowments Board, Madras PLD 1949 PC 26 and Board of Intermediate and Secondary Education, Lahore v. Syed Khalid Mahmood 1985 CLC 657 fol.

(c) Insurance---

----Clause (s) of Insurance Policy giving rise to two possible interpretations---Interpretation more beneficial to the insured would be preferred.

Taj Din Valliani and another v. State Life Insurance Corporation of Pakistan NLR 1984 Civil 492 fol.

C.M. Latif for Petitioner.

Nemo for Respondent.

2003 C L D 975

[Lahore]

Before Ch. Ijaz Ahmad, J

Messrs EJAZ BROTHERS COTTON GINNERS, GRAIN MARKET, SADIQABAD through Managing Director---Petitioner

Versus

FEDERATION OF ISLAMIC REPUBLIC OF PAKISTAN through Secretary, Ministry of Law and Parliamentary Affairs and 2 others---Respondents

Writ Petition No. 1581 of 2000/BWP, decided on 30th January, 2003.

(a) Constitution of Pakistan (1973)---

----Arts. 199 & 203-G---Constitutional petition---Repayment of loan demanded by Bank with interest--Petitioner claimed to have paid principal amount to, Bank, but demand of balance amount being interest was refused being against Injunctions of Islam---Validity---Petitioner and Bank had executed a contract of their own sweet Will---Seeking enforcement of contract through Constitutional jurisdiction was not permissible in law---High Court had no authority under law to determine matter of interest in view of Art.203-G of the Constitution---Petitioner had alternative remedy to file suit against Bank before Banking Court under provision of Banking law---Constitutional petition was held, not maintainable.

Mumtaz Masood's case 1994 SCMR 2287; Ch. Muhammad Ismail's case PLD 1996 SC 246; Tahir Mehmood's case 2001 CLC 1655; Muhammad Ramzan's case 2001 CLC 158; Mst. Aisan's case 2001 CLC 57; Muhammad Asif s case 200.1 YLR 1891; Muhammad Rashid's case 2001 YLR 651; Rafique Ahmad Tahir's case 2001 YLR 38; Manager, Ravi Rayan's case 2001 MLD 577; Mst. Farha-Nasir's case 2001 MLD 1657 and Sh. Muhammad Ikram's case 2001 MLD 1996 rel.

(b) Constitution of Pakistan (1973)---

----Art.2A---Declaration of provisions of law against Injunctions of Islam---High Court had no such jurisdiction on touchstone of Art.2A of the Constitution.

2000 SCMR 567 rel.

(c) Constitution of Pakistan (1973)---

----Art.199---Constitutional petition- --Subsequent events---High Court had jurisdiction to look into subsequent events at the time of deciding case.

Nasir Jamal v. Zubaida Begum 1990 CLC 1069 rel.

(d) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.15---Constitution of Pakistan (1973), Art. l99--­Constitutional petition---Repayment of loan demanded by Bank with interest---Petitioner being aggrieved with demand of interest contended that S.15 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was against Injunctions of Islam--­Validity---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 had since been repealed- --Preliminary decree had already been passed against petitioner in suit filed by Bank before Banking Court---Appeals against such decree were pending before High Court---Contents of Constitutional petition and application for leave to defend suit were verbatim copies of each others---High Court dismissed Constitutional petition having become infructuous.

Muhammad Hassan Mosa v. Sardar M. Javed Moosa 1997 SCMR 1982; Zaheer-ud-Din v. The State 1993 SCMR 1718; Fida Hussain v. Mst. Najma PLD 2000 Quetta 46; Rana Muhammad Shabbir Ahmad v. Federation of Pakistan PLD 2001 SC 18; Sh. Liaquat Hussain v. Federation of Pakistan PLD 1999 SC 504; Mst. Kaneez Fatima v. Wali Muhammad PLD 1993 SC 901; Wafaq Pakistan v. Public-at-Large 1988 SCMR 2041; Habib Bank v. Messrs Qayyum Spinning Ltd. 2001 MLD 1351; Anjuman Prize Bond Dealer v. Province of Punjab PLD 2001 Lah.129 and Habib Bank Ltd. v. A.B.M. Graner (Pvt.) Ltd. PLD 2001 Kar. 264 ref.

A.M. Farani for Petitioner.

Sh. Masood Ashraf for Respondents.

2003 C L D 992

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

Ch. MUHAMMAD SAEED---Appellant

Versus

RIAZ-UL-HAQUE---Respondent

Regular First Appeal No. 180 of 1995, heard on 25th July, 2002.

Civil Procedure Code (V of 1908)---

----O.XVII, R.3 & O.XXXVII, Rr.2, 3---Suit for recovery amount on basis of Promissory Note---Closing of evidence of defendant for non-production of evidence---After completion of evidence of plaintiff, case was adjourned for, evidence of defendant, but defendant despite obtaining several adjournments had failed to produce the evidence--­Defendant, on various adjourned dates of hearing, neither produced any evidence nor summoned any witness through process of Court and on the last date of hearing not only any witness of defendant was present, but defendant himself did not appear before the Court and on that date evidence of defendant was closed---Such conduct of defendant was not appreciable in any respect---Nothing was on record to show that on any of the dates of hearing, Presiding Officer of Court was on leave or case had been adjourned on any other reason ---Defendant despite providing sufficient opportunity had failed to produce his evidence---Trial Court, in circumstances, was left with no option, but to invoke provisions of O.XVII, R.3, C.P.C.--­Order closing evidence of defendant passed by Trial Court, could not be interfered with in circumstances.

1998 SCMR 1067 and PLD 1997 SC 73 ref.

Iqbal Ahmad Qureshi for Appellant.

Syed Misbah-ul-Hassan for Respondent.

Date of hearing: 25th July, 2002.

2003 C L D 1003

[Lahore]

Before Jawwad S. Khawaja and Abdul Shakoor Paracha, JJ

Haji MUHAMMAD SIDDIQUE---Appellant

Versus

Rana MUHAMMAD SARWAR---Respondent

Regular First Appeal No.701 of 2001, heard on 3rd June, 2002.

Civil Procedure Code (V of 1908)---

----S.148, O. VIII, R.10 & O.XXXVII, Rr.2, 3---Suit for recovery of amount on basis of Pronote---Application to defend suit--­On statement of plaintiff that he had no objection if application of defendant to appear and defend suit was accepted, Trial Court accepted application of defendant subject to furnishing security equal to suit amount until next date of hearing---Defendant despite several adjournments neither had submitted surety bond nor had filed written statement and Trial Court decreed the suit filed by plaintiff against defendant---Since order to accept application for leave to defend suit was conditional and condition therein having not been complied with despite several adjournments, Trial Court had rightly proceeded to decree suit filed by plaintiff--- Order VIII, R.10, C.P.C. had empowered the Court to pronounce judgment against defendant or make such order in relation to suit as it would think fit where party would fail to file written statement within time fixed by the Court---Rule 10 of O.VIII, C.P.C. being penal in nature it was within discretion of the Court to pronounce judgment even without recording evidence---Judgment and decree passed by Trial Court could not be interfered with in circumstances.

Siddiq Khan and 2 others v. Abdul Shakur Khan and another PLD 1984 SC 289: Sh. Abdus Saboor and Brothers v. Ganesh Flour Mills Ltd. PLD 1967 Lah. 779 and Mst. Hakumat Bibi v. Imam Din and others PLD 1987 SC 22 ref.

Rao Munawar Khan for Appellant.

Syed Ali Raza Rizvi for Respondent.

Date of hearing: 3rd June, 2002.

2003 C L D 1018

[Lahore]

Before M. A. Shahid Siddiqui, J

GHULAM HAIDER --- Appellant

Versus

ZAFAR ULLAH KHAN---Respondent

Regular First Appeal No.348 of 1995, heard on 6th 'September, 2002.

Civil Procedure Code (V of 1908)---

----O. XXXVII, Rr.2 & 3---Suit for recovery of amount on the basis of a promissory note---Leave to defend suit---Plaintiff had claimed that defendant had obtained suit amount from him on basis of a Promissory Note and had also executed an agreement in that respect---Defendant after obtaining leave to defend the suit filed written statement in which he refuted the claim of plaintiff---Trial -Court after taking into consideration evidence brought on record came to the conclusion that plaintiff had failed to prove that Promissory Note was with consideration and dismissed the suit--­Evidence of plaintiff with regard to payment of suit amount and execution of, Promissory Note being patently inconsistent, was rightly disbelieved by Trial Court and order dismissing the suit could not be interfered with.

Zahid Hussain Khan for Appellant.

C.M. Latif Rawn for Respondent.

Date of hearing: 6th September, 2002.

2003 C L D 1036

[Lahore]

Before Muhammad Khalid Alvi, J

Messrs RADIX CHEMICAL PRIVATE LIMITED through Director---Appellant

Versus

Messrs TOP GROWERS CHEMICAL NEWTWORK through Chief Executive and another---Respondents

First Appeal from Order No. 142 of 2002, heard on 22nd April, 2003.

Civil Procedure Code (V of 1908)---

----O. VII, R.2 & O.XXXIX, Rr.1, 2---Contract Act (IX of 1872), S.126---Bank guarantee---Suit for recovery of money with a prayer that the other parties be restrained to encash the Bank Guarantee till the final disposal of the suit ---Validity--­Bank guarantee being an independent contract from the original contract the same could not be restrained from being encashed to enforce the terms of an earlier contract.

Messrs Pioneer Cables Ltd. v. WAPDA and others 2000 UC 53 and Power Engineering and Construction Company Limited v. The Board of Trustees of the Port of Karachi 1996 UC 367 fol.

Muhammad Saleem Iqbal for Appellant.

Ch. Muhammad Masood Sabir for Respondent No.2.

Date of hearing: 22nd April, 2003.

2003 C L D 1037

[Lahore]

Before Ali Nawaz Chowhan, J

MUHAMMAD YOUNAS---Appellant

Versus

SHAUKAT ALI ---Respondent

First Appeal from Order No.234 of 2002, decided on 15th April, 2003.

(a) Trade Marks Act (V of 1940)---

----S. 76---Trade Marks Rules, 1963, R. 38---High Court (Lahore) Rules and Orders, Vol. V, Chap. VII, R.11---Civil Procedure Code (V of 1908), O.XLI---Appeal to High Court against the order of the Registrar Trade Marks--Whether such appeal to be treated alike the appeal from original decree under O.XLI, C.P.C.---Applicability of O.XLI, C.P.C.--­Extent---Appending the copy of impugned order with the appeal---Necessity---Dispensing with the filing of copy of such order with appeal by the Court---Scope---Principles.

Section 76 of the Trade Marks Act of 1940 relates to appeals. Which merely says that an appeal from a decision of the Registrar is to lie to the High Court and further says that subject to the provisions of the Act and of the Rules, the provisions of the Civil Procedure Code, 1908, were to apply to appeals before a High Court under the Act.

Section 76 of the Act empowers a High Court to make rules for conducting the proceedings before the sail Court under the Act.

The High Court Rules and Orders reflected in Volume V, Chapter VII, relate to the rules made under the Trade Marks Act, 1940 and Rule 11 states that in a case not provided for in the forgoing rules, the provisions of the Code of Civil Procedure, 1908, were to be applied mutatis mutandis to all proceedings under the Act. The Act also authorized the Federal Government under section 84 of the Act, to make rules and these rules are called as Trade Marks Rules of 1963.

Rule 38 of the Trade Marks Rules, 1963 does provide for a notice of hearing arguments.

Although Rule 38, Trade Marks Rules, 1963 relates to a notice of opposition but provides a guidance in respect of adjournment in si4ch-like cases. The notices given were shorter than a month. As section 76 of the Trade Marks Act, 1940, does not require the filing of a certified copy of the decision of the Registrar and the rules too are not explicit about it, Courts cannot enforce the provisions of Order XLI, Rule 1 stringently and are left to follow the provisions of the Civil Procedure Code principally.

No decree is to be drawn in respect of an order of the Registrar and the order itself is executable as a decree of a Civil Court. Yet it will not be a decree in the sense of Order XLI, C.P.C. and there is no compulsion of appending a copy of it with the appeal. But the appeal has to be accompanied by an impugned order which implies its certified copy.

The Court may expressly or impliedly dispense with the filing of the copy of the judgment.

The objection, that the appeal had to be accompanied by the impugned order, was more of technical nature after the appeal was admitted. High Court, therefore, declined to turn down the appeal after having heard it on such a technical ground.

Arshad Naseem v. The Registrar of Trade Marks and another 1988 CLC 262; Riasat Ali Khan v. Mehfooz Ali Khan and others AIR 1929 Lah. 771; Riasat Ali v. Muhammad, Jafar Khan and 2 others 1991 SCMR 496; Swar Khan and 2 others v. Noor Alam and another 1985 CLC 1082; Sarat Chandra Nag v. Rati Kanta Polley and others AIR 1939 Cal. 711; G.I.P. Railway Co. v. Radhakisan Jaikisan and another AIR 1926 Nag. 57; Messrs Yasin Sons Ltd., Multan v. The Water and Power Development Authority, West Pakistan, Lahore and 4 others PLD 1977 Lah.937; Mst. Safia Begum v. Taj Din and 2 others 1993 SCMR 882; Rana Allah Ditta v. Muhammad Shafi and others 1990 MLD 2094; Ghulam Rasool and 5 others v. Allah Bachaya and others 1985 SCMR 416; Baseer Ahmad Siddiqi v. Shama Afroz 1988 SCMR 892; Kabir Khan and others v. Mst. Raj Bibi and others 1991 CLC 858; Saida and 4 others v. Kala and 2 others 1990 MLD 1189; Jagat Dhish Bhargava v. Jawahar Lal Bhargava and others AIR 1961 SC 832 and Mst. Khurshid Bibi and another v. Ahmad and 2 others PLD 1979 Lah. 846 ref.

(b) Trade Marks Act (V of 1940)---

----S. 70---Trade Marks Rules, 1963, R. 78---Civil Procedure Code (V of 1908), O. V, Rr.10-A, 17, 18, 19 & 20---Powers and functions of Registrar of Trade Marks---Scope---Service of notice on the other party---Duty of the Registrar elaborated---Registrar was not to act perfunctorily in the absence of a party, rather he was to exert himself with respect to service of a notice on the other party so that all the parties were heard before a decision was given---Merely on the return of the notice un-served and that too only once the Registrar, in the present case, acted on the report of his office and passed the ex parte order without persevering to complete the service by using other modes or publishing a citation in the newspaper for substituted service envisaged by the Civil Procedure Code, 1908---Validity---Provision of C.P.C. being applicable in the cases where the Act itself or the Rules thereunder did not say otherwise, the provisions of O. V; C.P.C. as far as possible would be applicable in such cases---Principles.

The provisions of section 70 of the Trade Marks Act, 1940, reflect that a Registrar has not to act perfunctorily in the absence of a party, rather he has to exert himself with respect to service of a notice on the other party so that all parties were heard before a decision is given. Merely on the return of the notice unserved and that too only once the Registrar, in the present case, acted on the report of his office and passed the ex parte order without persevering to complete the service by using other modes or publishing a citation in the newspaper for substituted service envisaged by the Civil Procedure Code.

As the provisions of Civil Procedure Code are made applicable in cases where the Act itself or the rules made thereunder do not say otherwise; the provisions of Order V, C.P.C. as far as possible would be applicable in such cases.

As the service in this connection was through post, Order V, Rule 10-A was very much applicable.

There was no endorsement of refusal nor, an acknowledgment of service on back of the postal receipts, envisaged by Rule 10-A, Order V, C.P.C. In case of refusal, the provisions of Order V, Rule 17 read with the provisions of Rules 18 and 19, C.P.C. which required the affixation of a copy of the summons on the outer door or other conspicuous part of the house of the respondent, will apply which also required a serving officer to make an endorsement of having affixed the summons at the time and place endorsed by him at the back of the summons.

Where there was a note about the refusal, the serving officer was to be examined. And last of all the Civil Procedure. Code provides substituted service as laid down in Order V, Rule 20.

All these legal requirements of service were meant to eliminate possibility of fraud and misrepresentation to the detriment of the other side who had to be heard for just disposal of a matter.

The Registrar acting under the Trade Marks Act, 1940, although a persona designata, had also to perform judicial duties when he had to adjudge cases of parties at variance and while acting judicially he had to ensure that he follows the judicial norms sensibly, sincerely, impartially and accurately and it was further required of him to follow the rules faithfully.

In the present case the notice remained un-served and this was apparent on the file. Attributing refusal to accept the notice to the appellant was merely presumptuous and against the spirit of Trade Marks Act, 1940 and the Civil Procedure Code. Even otherwise the Registrar failed to communicate the impugned ex parte decision given by him to the appellant which was his bounden duty as required under Rule 78 of the Trade Marks Rules, 1963.

In view of the fact that the Registrar of the Trade Marks had to conduct an inquiry in such-like matters having special skills and had to appraise the evidence produced, the case was remanded to him by the High Court. The ex parte order which was impugned, was therefore, set aside. The parties were directed to appear before the Registrar of the Trade Marks on a specified date. The Registrar of the Trade Marks was directed to complete the proceedings within the next month after hearing all sides and to send a copy of his decision for information to the High Court through its Deputy Registrar (Judicial) immediately thereafter and without fail.

Dr. Abdul Basit assisted by Mian Mahmood Rashid for Appellant.

Ch. Imdad Ali and Hafiz Abdul Rehman Ansari for Respondent.

Dates of hearing: 31st March; 1st, 4th and 15th April, 2003.

2003 C L D 1052

[Lahore]

Before Mian Hamid Farooq and Muhammad Sayeed Akhtar, JJ

Messrs FEROZESONS PVT. LTD. ---Appellant

Versus

Dr. Col. Retd. K.U. KURESHI and others---Respondents

Regular First Appeal No.20 of 1995, decided on 10th March, 2003.

(a) Copyright Ordinance (XXXIV of 1962)---

----Ss. 39 & 42---Mere failure to get the copyright registered does not invalidate or impair the copyright nor destroys the right to sue for copyright infringement---Register of Copyright and index is prima facie evidence of the particulars entered therein and only raises a presumption that the person whose name is entered in the Register is the author of the Copyright but such presumption is not conclusive---Principles.

A bare reading of section 39 of the Copyright Ordinance, 1962 shows that the use of expression "may" is permissive and does not make it obligatory for an author to get the copyright registered. One cannot infer from the language of section 39 any meaning making the registration compulsory or mandatory for the enforcement of the copyright. The natural and ordinary meaning of the word "may" would make the registration optional and not compulsory. The words "may" and "shall" in legal parlance are interchangeable, depending upon the context in which they are used but legislative intent is to be seen and given effect to.

Similarly the phrase used in section 42 says that the Register of Copyrights and indexes shall be the prima facie evidence of the particulars entered therein. It only raises a presumption that the person whose name is entered in the register is the author of the copyright. It certainly does not make the presumption conclusive.

It is discretionary with any author of any work to apply for the registration of copyrights and registration as such does not confer any rights. There is no other provision at all which confers rights on account of registration of a copyright. Therefore, copyrights exist whether the registration is done or not and the registration is merely a piece of evidence as to when a certain author started claiming copyrights in some artistic or some other work.

The mere failure to get the copyright registered does not invalidate or impair the copyright, nor destroy the right to sue for copyright infringement. Registration is not a condition precedent to the securing and preserving of a copyright. This leaves no scintilla of doubt that the registration of the copyright with the Registrar is not mandatory for bringing a suit for infringement of the same.

Messrs Mishra Bandhu Karvalayua and others v. Shivratanlal Koshal AIR 1970 Madh. Pra. 261; S. Sibtain Fazli v. Star Film Distributors and another PLD 1964 SC 337; East Pakistan School Textbook Board v. Debabrata Chaki and others PLD 1968 Dacca 455; M. Yamin Qureshi v. Islamic Republic of Pakistan and another PLD 1980 SC 22; Government of Pakistan through the Secretary, P.W.D. (Irrigation Branch), Lahore v. Mian Muhammad Hayat PLD 1976. SC 202; Messrs Manojah Cine Productions v. A. Sundaresan and another AIR- 1976 Mad. 22; Stsang and another v. Kiran Chandra Mukhopadhyay and others AIR 1972 Cal. 523; Glax Operations U.K. Ltd. Middlesex (England) and others v. Samrat Pharmaceutical, Kanpur AIR 1984 Delhi 265; Dhjaram Dutt Dhawan v. Ram Lal Suri and others AIR 1957 Punjab Associated Publishers (Madras) Ltd. v. K. Bashyam alias `Alya' and another AIR 1961 Mad. 114; Syed Iqbal Hussain v. Mst. Sarwari Begum PLD 1967 Lah. 1138; 1991 SCMR 300; Muhammad Saleh v. The Chief Settlement Commissioner, Lahore and 2 others PLD 1972 SC 326; Qamaruddin v. Muhammad Sadiq and others 2001 CLC 848; Nav Sahitya Parkash and others v. Anand Kumar and others AIR 1981 All. 200 and 18 Corpus Juris Secundum, para.67 ref.

(b) Copyright Ordinance (XXXIV of 1962)---

----Ss. 56 & 60---Defendant had no knowledge and did not invade the copyright wilfully or acted mala fide in any way---Infringement of copyright by the defendant was squarely covered by S. 56(b), Copyright Ordinance, 1962--­Damages, assessment of---Relevant considerations for such assessment ---Principles.

The case of the plaintiff was squarely covered by clause (b) of section 56 of the Copyright Ordinance, 1962.

The damages are classified into general and special damages. General damages flow from the injury the plaintiff has complained. These damages must be averred and proved subsequently. Special damage is the item of loss which the plaintiff alleges to be the result of the defendant's infringement. The damages are further sub­divided into:--

(a) Non-pecuniary damages.

(b) Pecuniary loss.

All who united in the infringement are jointly and severally liable for the damages regardless of the profits realized by them. It is not necessary to give proof of specific damage. The damages are at large.

In an action for infringement of copyright it is not necessary to give proof of actual damage; the damages are at large. Even in a case where the only damage appearing is that the infringement complained of tends to vulgarize the plaintiff's work, the plaintiff is entitled to nominal damages and, costs. The damages assessed may, include in addition to the amount which would have by received by the plaintiff if he had himself been able to sell the copies sold by the defendant, a substantial sum for injury to trade by reason of the fact that the defendant's prices were lower than those usually charged by the plaintiff. Other relevant considerations in the assessment of damages are the profit which the plaintiff would have made and the licence fee that he would have charged.

The Court may award such additional damages as it may consider appropriate when it is satisfied that effective relief would not otherwise be available to the plaintiff having regard to the flagrancy of the infringement and any benefit shown to have accrued to the defendant by reason of the infringement.

As an alternative to damages a plaintiff may have an account of the profits made by the defendant by the use of his work; this remedy is an equitable remedy ancillary to an injunction, and the plaintiff must elect which remedy he will have. Damages may not be awarded where the infringement is shown to have been innocent.

Damages for infringement of copyright may be additional to damages in respect of some other cause of action arising from the same subject-matter.

It was contended that the plaintiff, who appeared as P.W. stated in his testimony that "the damages suffered by us on account of violation by the defendants were not less than Rs.25,00,000. He was not subjected to cross examination on this point, as such the amount should be taken as a gospel truth. Contention was repelled on the ground that the plaintiff must succeed on its own merits and not on the weakness of the defendant's case. In the present case the loss of earnings and profits were covered already granted to the plaintiffs. There was suffering by the plaintiffs. In the absence of any proof of loss as alleged by the plaintiffs, the figure claimed by him remained a wild guess.

The proviso to subsection (1) of section 60, Copyright Ordinance, 1962 clearly states that where the defendant proves that at the date of the invasion he was not aware that copyright subsisted in the work and had reasonable ground for believing that copyright did not subsist in the work, the plaintiff shall not be entitled to any remedy other than an injunction and a decree for whole or part of the profits made by the defendant by the sale of the infringing copies.

The assertion made by the plaintiff about the knowledge of the defendant was not corroborated from any other evidence documentary or otherwise on the record. Therefore the defendant had no knowledge of the copyright of the plaintiffs.

In the present case the defendant had no knowledge and did not invade the copyright wilfully or acted mala fide in any way.

The decree for the profits made by the defendant by the sale of the infringed copies could be granted under section 60 of the Copyright Ordinance, 1962.

High Court, in circumstances, granted decree for other reliefs of injunction and rendition of accounts etc. to the plaintiffs.

18 Corpus Juris Secundum, para. 135; Exchange Telegraph Co. v. Gregory & Co. (1896) 1 QB 147 and Fenning Flim Service Limited v. Wolver-Hampton, Walsall and District, Cinemas Ltd. (1914) 3 KB 1171 ref.

Khawaja Saeed-uz-Zafar and Nasrullah Khan Babar for Appellant.

Saleem Saigal for Respondents.

Date of hearing: 10th March, 2003.

2003 C L D 1122

[Lahore]

Before Maulvi Anwarul Haq and Mian Hamid Farooq, JJ

INSTITUTE OF CHARTERED ACOUNTANTS OF PAKISTAN and another---Appellants

Versus

RAHIM JAN---Respondent

Intra-Court Appeal No. 144 of 1976, heard on 6th February, 2003.

Chartered Accountants Ordinance (X of 1961)---

----Ss.20-D & 20-F (as added by Chartered Accountants (Amendment) Act (XV of 1983))---Removal of name of Member of the Institute---Conditions---When the Council intends to remove the name of the Member from the Register for a period exceeding five years or permanently, Council shall not make any Order but refer the case to the High Court with its recommendations thereon and then the case would be heard by the High Court in terms of S.20-F of the Chartered Accountants Act, 1961---High Court, in Intra­Court Appeal, directed the Investigation Committee of the Institute to conduct its proceedings, in the present case, in accordance with Ss.20E & 20F of the Act after a notice to the party of a date of hearing to be fixed in the matter and thereafter to proceed further in accordance with provisions of the Act.

M. Saleem Sehgal for Appellants.

M. R. Sheikh for Respondent.

Date of hearing: 6th February, 2003.

2003 C L D 1126

[Lahore]

Before Ch. Ijaz Ahmad and Abdul Shakoor Paracha, JJ

MAJID ALI KHAN and 3 others---Appellants

Versus

NATIONAL DEVELOPMENT LEASING CORPORATION LIMITED (NL), FAISALABAD through Branch Manager and 5 others

First Appeal from Order No.70 of 2003, decided on 7th May, 2003.

Civil Procedure Code (V of 1908)---

----S.52 & O.XXI, R.22---Suit for recovery of loan---Execution of decree---Father had given guarantee for obtaining loan by the debtors from a Leasing Corporation---Father (since dead) had given guarantee to the, Leasing Corporation for the loan to the debtors but the son had not given any surety or guarantee at the time of sanctioning of loan by the Corporation in favour of the debtors---Decree was passed against the debtors and the deceased father of the said 'son---Leasing Company failed to point out any property which was inherited by the son of his father after his death which aspect of the matter was not considered by the Banking Court---Son was only responsible to discharge the decree secured by the creditor Corporation against the debtors and father of the said person in case the Corporation had brought on the record any property inherited by the son from the property of his father---High Court, accepted first appeal from the order of the Banking Court and set aside the impugned order to the extent of the son subject to the condition that Leasing Corporation was well within its right to know that the son had inherited some property of his father---Appeals of the remaining appellants were not maintainable as no final order had been passed against them.

Tariq Mehmood Randhawa for Appellants.

Mian Mansur Ali for Respondent No. 1.

Muhammad Usman Subhani for Respondent No.4.

2003 C L D 1142

[Lahore]

Before Muhammad Sair Ali, J

HABIB BANK LIMITED---Plaintiff

Versus

RAMZAN BAKHSH TEXTILE MILLS LIMITED through Chief Executive and 22 others---Respondents

C.O.S. No.74 of 1997, heard on 7th January, 2003.

(a) Contract Act (IX of 1872)---

---S. 126---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 18---Contract of guarantee--­Concept---Essential ingredients---Contract of guarantee is a tri-partite agreement between the creditor, the principal debtor and the surety/guarantor---Surety, at the request of the principal debtor, agrees to answer the default of the debtor and undertakes, performance of the debtor towards the creditor ---Where neither the creditor had been specifically identified nor the principal debtor or his obligations towards the creditor had been specified, surety could not be imposed with the burden of performance of undefined ,obligations upon default of unspecified debtor--­Guarantee forms, therefore, did not give rise to any enforceable and binding agreement of guarantee between the parties.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 2(c)---Contract Act (IX of 1872), S. 126---Contract of guarantee---Blank guarantee forms filed by the plaintiff ­Bank were not valid and enforceable agreements of guarantee between the parties and will serve no purpose to keep the suit pending against the concerned defendants (guarantors) after granting them leave to appear and defend the suit---Said defendants, in circumstances; could not be said to be guarantors, sureties, indemnifiers or the "customers" of the plaintiff-Bank in terms of S. 2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Plaintiff-Bank, in the present case, had confirmed that the case of said defendants was only in their purported capacity as guarantors and not as mortgagors---Names of said defendants, in circumstances, were deleted from the array of defendants and were struck off as parties from the suit for not being guarantors for the finance of the defendant-Company---Names of the said defendants had been struck off by invoking the provisions of O.I, R.10, C.P.C. for the reason that the suit of the plaintiff-Bank was decreed in terms of compromise decree as against other defendants in the case and plaint in the suit could not be partly rejected for the said defendants who were not found to be the customers of the Bank.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S. 10---Suit for recovery of Bank loan---Civil Procedure Code (V of 1908), O. XXII, R.1 ---Non-impleading of heirs of deceased defendants---Suit does not abate upon death of a party even if his legal heirs are not impleaded in the suit--­Non-filing of amended petition for leave to defend the suit by the said defendants---Effect---Such defendants were deemed to have admitted the plaintiffs claim in the suit which was accordingly decreed against the said defendants as well.

Kh. Asif Mahmood for Plaintiff.

Ashtar Ausaf, A.G. for Defendants Nos.2, 3 and 14.

Date of hearing: 7th January, 2003.

2003 C L D 1154

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

MUZAFFAR-UD-DIN---Appellant

Versus

HABIB CREDIT AND EXCHANGE BANK LTD., LAHORE and 7 others---Respondents

First Appeal from Order No.26 of 2003, decided on 17th February, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.12---Power to set aside decree by the Banking Court--­Scope---Banking Court is empowered to set aside the decree upon the terms of costs or to impose the condition to deposit cash or to furnish security as the case may be---Words "relate to the suit in cash" or furnishing of security" relate to the suit amount or any portion thereof at the discretion of the Banking Court---Principles.

Banking Court has been empowered to set aside the ex parte decree upon such terms as to costs, deposit in cash or furnishing of security.

The Banking Court shall make an order setting aside the decree upon the terms of payment of costs, or deposit in cash or furnishing of security. The words i.e. "deposit in cash" or "furnishing of security" relate to the suit amount or any portion thereof at the discretion of the Banking Court. If a case is covered under section 12 of the, Ordinance, then the Banking Court shall set aside the' decree, subject to the conditions mentioned in the said provision within the discretion of Banking Court, who is also empowered to order for the deposit of amount in cash. The only discretion, which has been conferred upon the Banking Court in this regard, is either to order for the deposit of cash or furnishing of security in respect of the whole of the suit amount or a portion thereof. In the present case, Banking Court, in exercise of its discretionary powers, has restrained itself from directing the judgment-debtor to deposit the suit amount in cash and has ordered to furnish the security equal to the suit amount. Under the present set of circumstances the Banking Court has taken a lenient view, otherwise it was within its powers to direct to deposit the suit amount or a portion thereof in cash. Section 12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 empowers the Banking Court to set aside the decree upon the terms of costs or to impose the condition to deposit in cash or furnish security, as the case may be.

Banking Court, in the present case, in exercise of its discretionary powers, has imposed the condition of furnishing the security upon the judgment-debtor and subject to the said condition the decree has been set aside. Banking Court has not exercised its discretionary powers in an arbitrary or perverse manner and the same have bees exercised in accordance with the recognized principles governing the exercise of discretion, otherwise the Banking Court could have directed to deposit the decretal amount in cash. In such circumstances, High Court declined to interfere in the discretionary powers exercised by the Banking Court.

Saeeda Perveen v. United Bank Limited Civil Petition No. 1433-L of 2002 distinguished.

Iftikhar Ullah Malik for Appellant.

2003 C L D 1165

[Lahore]

Before Muhammad Sair Ali, J

Haji MUHAMMAD NAWAZ KHOKHAR---Plaintiff

Versus

UNITED BANK LIMITED, KARACHI through President and 3 others---Defendants

Civil Original Suit No.155 of 1998, decided on 22nd January, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.2(c)(d) & (9)---Civil Procedure Code (V of 1908), O.VII, R.10---Suit for declaration, injunction and damages---Return of plaint---Plaintiff sought decree against Bank and its officials for recovery of damages for his personal malicious prosecution/defamation, declaration against their acts and injunction to restrain them from creating any demand against him by considering him director/beneficiary or shareholder of borrower-company---Maintainability---Suit for recovery on basis of finance/loan could be filed only by a banking company against persons, who fell within definition of "customers" or "borrowers"---Plaint and its prayer showed that plaintiffs cause of action against Bank and its officials was in his personal capacity or as Director of company--­Capacity of Director or shareholder of a company could not be equated with capacity of a person as surety, indemnifier or guarantor of company---Person only in capacity of Director or shareholder of company would not fall within definition of a "customer" or "borrower"---Plaintiff had not sued Bank and its officials with regard to obligations arising out of finance---Suit did not arise out of finance or advance by Bank to borrower-company---Banking Court had no jurisdiction to entertain such suit---Plaint was returned for its presentation before competent Court.

Muhammad Khalid v. Civil Judge 2001 YLR 905; Settlement and Rehabilitation Commissioner, Hyderabad and others v. Mannu Khan and others 1973 SCMR 62; 1993 SCMR 2101 and 1990 SCMR 1630 ref.

(b) Civil Procedure Code (V of 1908)---

----O.VII, Rr.10 & 11---Absence of jurisdiction---Provisions invokable would be as contained in O.VII, R.10, C.P.C., and not in O. VII, R.11, C.P.C.

Mian Nisar Ahmad for Plaintiff.

Raja Muhammad Akram for Defendants.

2003 C L D 1178

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs ALI PAPER AND BOARD INDUSTRIES LTD. and another---Appellants

Versus

BANKERS EQUITY LTD. and 12 others---Respondents

Execution First Appeal No.55 of 2002, heard on 10th February, 2003.

(a) Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance (LVIII of 2000)---

----Ss.10, 5 & 6(1)---Limitation Act (IX of 1908), Art. 166--­Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S.15---Civil Procedure Code (V of 1908), O.XXI, Rr. 89, 90 & 92---Execution of decree--­Sale of property, setting aside of---Transfer of execution petition to High Court by virtue of S. 6(1) of the Non­-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance, 2000--­Auction held on 29-12-2001---Confirmation of sale in favour of successful bidder on 16-1-2002 i.e. before expiry of thirty days---Validity---In absence of procedure about confirmation of sale under the Ordinance, procedure provided in C.P.C. would apply---Any person mentioned in O.XXI, Rr. 89 & 90, C.P.C., including judgment-debtor could file objection petition seeking setting aside of sale within period of thirty days from date of sale as provided under Art. 166 of Limitation Act, 1908---Appellant (judgment-debtor) adversely affected by sale had been denied thirty days' period statutorily fixed for filing objection petition---High Court set aside impugned order being contrary to law allowing appellant to challenge sale within ten days.

Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 ref.

(b) Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance (LVIII of 2000)---

----S.5---Civil Procedure Code (V of 1908), S.141---Procedure to be followed by High Court---Provisions of C.P.C.--­Applicability---Provisions of special law would be applicable in case of inconsistency between provisions of special enactment and C.P.C.---Provisions of C.P.C., would be attracted, where special law did not provide any procedure in respect of a given situation.

(c) Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance (LVIII of 2000)---

----Ss.5 & 10(5)---Civil Procedure Code (V of 1908), O.XXI, Rr. 82 to 92---Execution of decree---Sale of property, setting aside of---Objection petition---Sale, confirmation of --- Absence of procedure in the Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance, 2000 about such matters--­Provisions of Rr.82 to 92 of O.XXI, C.P.C. provided procedure in respect of all such matters---No inconsistency or contradiction existed in such respect between provisions of the said Ordinance and C.P.C.---Provisions of C.P.C., would apply in all such matters.

Azmat Saeed for Appellants.

Hassan Tariq and Tariq Kamal Qazi for Respondents.

Date of hearing: 10th February, 2003.

2003 C L D 1195

[Lahore]

Before Ch. Ijaz Ahmed, J

Rana MUHAMMAD AKBAR ALI ---Petitioner

Versus

ADDITIONAL SESSIONS JUDGE, BHAKKAR and another ---Respondents

Writ Petition No.21696 of 2002, decided on 26th December, 2002.

(a) Civil Procedure Code (V of 1908)---

----O.XXXVII, R.3---Negotiable Instruments Act (XXVI of 1881), S.118---Constitution of Pakistan (1973), Art.199--­Constitutional petition---Suit for recovery of money on the basis of pronote---Trial Court had secured expert opinion qua fabrication of signatures of the defendant on the pronote in question, according to which defendant's signatures were forged---Plaintiff had impugned the report of the Handwriting Expert and the order of the Trial Court by which application of the plaintiff to secure second opinion from another Expert had been dismissed---Validity--­Handwriting Expert who was examined on interrogatories was a Court-witness and he had not appeared at behest of any of the parties, thus question of rebuttal would not arise---Only when evidence was led by a party or at his instance, the other party could claim right to rebut---Witness was examined by Court of its own motion, therefore, the plaintiff could not claim right to produce any other evidence---Plaintiff had also concealed material facts from the High Court as he had not attached statement of the Court-witness alongwith the writ petition---High Court refused to interfere with the impugned order and to exercise discretion in favour of the plaintiff as he had not come to the Court with clean hands.

Sirbaland v. Allah Loki 1996 SCMR 575; Zulfiqar Ali v. Ch. Munir Ahmad 1999 CLC 731;Ghulam Muhammad v. Munir Ahmad Shah 1994 CLC 14; Messrs Ilamuddin & Sons v. Asghar Ali and others 1970 SCMR 233; Abdul Rashid v. Pakistan and others 1969 SCMR 141; Rana Muhammad Arshad v. Additional Commissioner, Revenue 1998 SCMR 1462 and Nawab Syed Ronaq Ali v. Chief Settlement Commissioner PLD 1973 SC 236 ref.

(b) Qanun-e-Shahadat (10 of 1984)---

---Art. 59---Expert opinion---Evidentiary value---Opinion of, an expert is never binding on a Court---Such evidence is admitted in evidence only to help the Court in arriving at a correct decision but it does not follow that opinion of an expert is always correct.

Muhammad Naeem's case PLD 1950 Lah. 507; Muhammad Din's case 1991 MLD 1070 and Muhammad Abdul Rehman's case 1989 MLD 2002 ref.

(c) Qanun-e-Shahadat (10 of 1984)---

----Art. 59---Opinion of Handwriting Expert---Evidentiary value---Opinion of Handwriting Expert does not amount to conclusive proof but it is only an opinion and as such it is relevant fact and can be taken into consideration in conjunction with other circumstances to reject or to accept the opinion of the expert.

Abdul Majeed's case PLD 1976 Kar. 762; Naseem Ahmad's case 1992 MLD 620 and Ghulam Nabi's case PLD 1957 Lah.109 ref.

Ghulam Farid Sanotra for Petitioner.

2003 C L D 1318

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs RIPPLE JEWELLERS (PVT.) LTD. through Chief Executive and another---Appellants

Versus

FIRST WOMAN BANK through Officers/General Attorneys/Principal Officers and 6 others---Respondents

First Appeal from Order No.360 of 2002, decided on 20th Mach, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)--

----Ss. 19 & 22---Civil Procedure Code (V of 1908), O. XXI, Rr. 66 & 90---Execution of decree---Sale by public auction without issuing notices to judgment-debtors-- Effect---Nothing on record to show that such notices, though required by Executing Court by its order to be issued to judgment-debtors before sale, had been issued or served upon them---Before calling upon Court Auctioneer to conduct auction, duty of Executing Court was to have satisfied itself that its order had been implemented and mandatory notices had been issued to judgment-debtors---Such contravention of provisions of O. XXI, R.66, C.P.C. by Executing Court had vitiated entire proceedings including sale, which was nullity in eyes of law---High Court accepted appeal and set aside sale in favour of auction purchaser, resultantly execution petition would be deemed to be pending before Executing Court to process execution proceedings in accordance with law till recovery of decretal amount.

Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lah. 706 rel.

Tariq Mehmood Randhawa for Appellants.

Muhammad Ikram for Respondent No. 1.

Muhammad Saleem for Respondent No.2.

Nemo for the Remaining Respondents.

2003 C L D 1406

[Lahore]

Before Mian Hamid Farooq, J

BANK OF KHYBER ---Plaintiff

Versus

Messrs SPENCER DISTRIBUTION LTD. and 14 others---Defendants

Civil Original Suit No. 63 of 2001, decided on 30th July, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 10---Negotiable Instruments Act (XXVI of 1881), Ss.20 & 118---Contract Act (IX of 1872), S.233---Suit for recovery of loan amount---Application for leave to defend--­Defendants admitted signatures on letters of guarantees, but disputed the amount mentioned therein---Defendants in leave application did not disclose amount of finance. availed; amount paid by them; dates of payment; amount of finance and other amounts relating to finance payable by them to Bank; amount of finance and other amounts disputed by them---Effect---Defendants had neither complied with provisions of S.10(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 nor had shown sufficient cause for their inability to do so---No leave application, thus, would be deemed to be pending---Leave application filed was liable to be rejected as per mandatory provisions of S.10(6) of the Ordinance---Defendants had admitted availing of loan facilities by company (principal debtor) and their signatures on documents annexed with plaint---Bald denial of execution of documents by defendants was an attempt to wriggle out of their contractual obligations---No defence at all had been taken by company---If conceded that documents had been given blank, even then in view of Ss.20 & 118 of Negotiable Instruments Act, 1881, defendants were estopped to challenge legality, validity and genuineness thereof---In view, of execution of personal guarantees and other documents, defendants could not shirk from liquidating their liabilities as they were jointly and severally liable to liquidate liabilities of company under provisions of Contract Act, 1872---Defendants had failed to raise any serious and bona fide dispute warranting grant of leave to defend suit--­Leave application was dismissed being not maintainable and on merits as well.

Muhammad Sharif v. Muhammad Hashim Paracha and another PLD 1987 Kar. 76; S.K. Abdul Aziz v. Mahmoodul Hassan and 3 others 1988 CLC 337; Haji Karim another v. Zikar Abdullah 1973 SCMR 100; Allied Bank of Pakistan Ltd. v. Messrs Gujrat Friends Traders and others PLD 1988 Lah. 156; Messrs United Bank Ltd v. President, Bazm-e-Salat and another PLD 1986 Kar. 464; Bazm-e-Salat and others v. Messrs United Bank Ltd. PLD 1989 Kar. 150; Prudential Commercial Bank Ltd. v. Hydari Ghee Industries Ltd. and 9 others 1999 MLD 1694 and Messrs Bank of Oman Limited v. Messrs East Asia Trading Co. Ltd. and 4 others 1987 CLC 288 rel.

(b) Interpretation of statutes---

---- Mandatory or directory provisions---Determination of--­Provision of law couched with penal consequences would be considered as mandatory---Provision of law entailing no penal consequences for its non-compliance would be taken as directory.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.10(6)---Provisions of S.10(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 being mandatory, non-compliance thereof would entail penal consequences of rejection of leave application.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.10(3)(4)(5)(6)---Application for leave to defend ---Non­compliance with provisions of S.10(3)(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001--­Effect---Presumption would be that no application for grant of leave to defend suit was pending---Leave application filed by defendants would be liable to be rejected as perforce of S.10(6) of the Ordinance.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.9 & 10---Suit for recovery of loan amount---Application for leave to. defend---Defendants (guarantor) denied to have executed letter of guarantee and mortgage deed ---Validity--­Examination of such documents showed that defendant had signed personal guarantee, which was attested, by two witnesses, one of them- was her husband---Mortgage deed had been duly executed by defendant through her husband/ attorney and registered with Sub-Registrar--Defendant had executed memorandum of deposit of title deed---Defendant had not alleged that such documents or her signatures thereon had either been forged by Bank or its functionaries or by remaining defendants---Availing of loan by principal debtor not - denied---Defendant had not challenged statement of accounts or any entry thereof---Mere bald and vague denial of execution of documents without any prima facie proof, would not furnish a ground for grant of leave nor same would absolve defendant from liquidating liabilities incurred through execution thereof--­Defendant had failed to raise substantial question of law and facts to be tried by Court requiring recording of evidence---Leave application was dismissed being devoid of any force.

Ghazala Arif v. Union Bank Ltd: (Now Emirates Bank International, Lahore 2000 CLC 1201 rel.

(f) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.3(2), 9 & 10---Bankers' Books Evidence Act (XVIII of 1891), Ss.2(8) & 4---Suit for recovery of loan amount--­Dismissal of application for leave to defend ---Effect--­Allegations made in the plaint would be deemed to be admitted---Bank had produced photo copies of documents alongwith plaint, on which suit was based---Execution of such documents would be deemed to be admitted by defendants for not having denied their signatures thereon--­No serious infirmity had been alleged to statement of accounts duly certified under Bankers' Books Evidence Act, 1891 and to which presumption of correctness was attached---No rebuttal of such documents on record---Suit was decreed with costs and costs of funds to be determined under S.3(2) of the Ordinance in favour of Bank and against defendants jointly and severally.

Abdul Hameed Chohan for Plaintiff.

Kh. Asif Mehmood for Defendant No. 1

Imtiaz Rashid Siddiqui for Defendants Nos.2 and 3.

Mansoor Ali Shah for Defendants Nos.4, to 7.

Khalid Mehmood Khan for Defendant No. 10.

Defendants Nos. 8 and 11 to 15: Ex parte (on 7-12-2001).

Khalid Saleem for Defendant No.9.

Date of hearing: 19th July, 2002.

2003 C L D 1426

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

SHAMIN SHOES (PVT.) LIMITED through Chief Executive and others- --Appellants

Versus

HABIB BANK LIMITED---Respondent

Execution First Appeal No. 554 of 2001, heard 6n 18th February, 2003.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.18 & 21---Execution of compromise decree---Bank had alleged commission of default by judgment-debtor as per terms of compromise---Judgment-debtor denied such allegation and objected to maintainability of execution application---Dismissal of objection petition---Validity---No finding of Banking Court was found in the impugned order in respect of default/breach committed by judgment­ debtor---High Court allowed appeal, remanded case to Banking Court to decide, whether judgment-debtor' had committed default in payment of instalments as per agreed schedule.

Muhammad Atif Amin for Appellants.

Waheed Mazher for Respondent.

Date of hearing: 18th February, 2003.

2003 C L D 1442

[Lahore]

Before Muhammad Sair Ali, J

MUHAMMAD ASLAM JAVED and another---Appellants

Versus

Malik IJAZ AHMAD and another---Respondents

First Appeal from Order No. 12 of 2003, heard on 10th April, 2003.

(a) Civil Procedure Code (V of 1908)---

----O. VII, R.11, O.XLIII, R.1 & S.115---First appeal from order---Maintainability---Nature of order of remand passed in the present case, by the Appellate Court in fact was to set aside an order of Trial Court whereby plaint was initially rejected though termed as dismissal of the suit---Second appeal in circumstances was not maintainable and the only remedy was to file a civil revision under S.115, C. P. C. ---High Court, in the interest of justice and equity, treated the first appeal from order as civil revision accordingly.

(b) Specific Relief Act (I of 1877)---

----Ss.42, 39 & 54---Companies Ordinance (XLVII of 1984), Ss. 7, 152 & 9---Civil Procedure Code (V of 1908), S.9---Suit for declaration, cancellation of documents and perpetual injunction by Director of a Company against the other Director and Joint Registrar of Companies seeking cancellation of purported resignation and deeds of transfer of shares on ground of being forged and fraudulent, ineffective and invalid---Question arose whether in view of the allegations of forgery, fraud, invalidity and fabrication of documents etc. as pleaded by the plaintiff in his suit for declaration, cancellation of documents and perpetual injunction could the Civil Court entertain and try the said suit, in view of provisions of S.7 read with S.152 of the Companies Ordinance, 1984---Held, Company Judge of the High Court was required to proceed expeditiously upon an application by following a "summary procedure" under S.9, Companies Ordinance. 1984 and such summary procedure did not visualize holding of a trial or an inquiry through a detailed evidence upon allegations of fraud, forgery and fabrication of documents etc. as had been convassed in the civil suit---Such suit therefore, was triable under S.9, C.P.C. by a Civil Court which was a Court of general jurisdiction in all civil matters---Principles.

Messrs Chalna Fibre Company Limited, Khulna and others v. Abdul Jabbar and others PLD 1968 SC 381; Manzoor Ahmad Bhatti and others v. Haji Noval Khan and others 1986 CLC 2560; Akbar Ali Sharif and others v. Syed Jamaluddin and others 1991 MLD 203 and Syed Shafqat Hussain v. Registrar, Joint Stock Companies, Lahore and others PLD 2001 Lah. 523 ref.

Riaz Karim Qureshi for Appellants.

Syed Ijaz Qatab for Respondents.

Date of hearing: 10th April, 2003.

2003 C L D 1464

[Lahore]

Before Ch. Ijaz Ahmad and Abdul Shakoor Paracha, JJ

Messrs INTERNATIONAL TRADERS through Proprietorship and 3 others- --Appellants

Versus

UNION BANK LIMITED----Respondent

Regular First Appeal No. 648 of 2001, heard on 28th April, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.10 & 21---Plea not taken in application for leave to defend suit---Effect---Such. plea could not be taken at time of hearing of appeal before High Court.

Citibank N.A. v. Riaz Ahmad 2000 CLC 847 rel.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)-----

----Ss.9, 15 & 21---Bankers' Books Evidence Act (XVIII of 1891), S.4---Suit for recovery of loan amount decreed by Banking Court---Validity---Defendants had not denied availing of finance facility and execution of loan documents---Statement of accounts filed with plaint was duly verified by Bank in accordance with Bankers' Books Evidence Act, 1891---Presumption of truth attached to such statement of accounts had not been rebutted by defendants with cogent reasons orally or through documents--­Contention of defendants that blank documents were signed by them, thus, had no force---Defendants had failed to make out any plausible case for grant of leave to defend suit--­Banking Court was justified in refusing to grant leave to appeal and decreeing suit of Bank---No illegality or infirmity was found in the impugned judgment---High Court dismissed appeal with directions to Executing Court to consider at the time of deciding execution petition the defendants' contention qua depositing certain amount with Bank.

Ghulam Rasool's case PLD 1971 SC 376 and Allied Bank of Pakistan's case PLD 1990 SC 497 rel.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.17(1)---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.18(1)---Banking documents--­Signing a blank document would amount to creating or impliedly authorizing Bank to fill in any amount at a later point of time.

Messrs United Bank Ltd.'s case. PLD 1986 Kar. 464 rel.

Ch: Javed Mahmood Pasha for Appellant.

Khawaja Amir Farooq for Respondent.

Date of hearing: 28th April, 2003.

2003 C L D 1468

[Lahore]

Before Muhammad Sair Ali, J

NATIONAL BANK OF PAKISTAN through Zonal Chief---Plaintiff

Versus

Messrs SAIF NADEEM ELECTRO LIMITED and others---Defendants

Civil Original Suit No. 122 of 1999, decided on 20th February, 2003.

(a) Civil Procedure Code (V of 1908)---

----O.XXIII, R.1(1)(3)---Unconditional withdrawal of suit--­Effect---Bar contained in O.XXIII, R.1(3), C.P.C., would preclude second suit by the same plaintiff on the same subject-matter.

PLD 1959 SC (Pak.) 287; 1996 SCMR 1051 and PLD 1998 Lah. 441 rel.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)-----

----Ss.9 & 10---Civil Procedure Code (V of 1908), O.XXIII, Rr.1(3) & 3---Second suit for recovery o f loan amount after withdrawal of earlier suit---Application for leave to defend--­ Plea of defendants was that second suit was burred by O.XXIII, R. I (3), C.P. C., in view of dismissal of earlier' suit on the same subject-matter between the same parties as withdrawn in view of settlement between the par-lies---Pleas raised by Bank were that Bank had never requested for withdrawal of the suit and such order having been passed on its application seeking decree under O.XXIII, R.3, C.P.C., in terms of settlement was without jurisdiction, thus, such bar did not attract to the second suit, that applications filed by Bank for modification of such dismissal order and revival of suit had been dismissed being not maintainable and that second suit was maintainable having been filed on the basis of fresh cause of action upon breach of settlement by defendants---Validity---Defendants in leave application had not pleaded that Bank had ever made request for unconditional withdrawal of earlier suit---After recording factum of settlement, Court instead of decreeing suit, acting suo motu had dismissed suit as withdrawn without any request/prayer/application from the Bank---Such order had neither culminated in compromise decree under O.XXIII, R.3, C.P.C., nor same could be termed as an order for unconditional withdrawal under sub-rifle (1) nor same could be interpreted to impose bar of sub-rule (3) thereof---Such was in effect an order to dismiss suit as infructuous upon settlement between the parties---Defendants in reply to the Bank's application for revival of suit had conceded that Bank could maintain fresh suit upon breach of settlement as same would give rise to separate cause of action in favour of Bank---Second suit was maintainable and did not in any way attract bar of O,XXIII, R.1(3), C.P.C.

(c) Civil Procedure Code (V of 1908)---

----O.XXIII, R.1 (1) (3)---Withdrawal of suit or abandonment of claim---Unqualified right and privilege of plaintiff---Right to choose to continue or elect to discontinue suit absolutely and unambiguously vested in the plaintiff---No other person including defendant had a right to seek withdrawal of suit---Withdrawing suit or abandoning claim without any condition, reservation or rider would preclude plaintiff from instituting fresh suit in respect of the same subject-matter or such part of claim---Upon plaintiff's request to withdraw his suit, Court had no discretion to decline disposal/ dismissal of suit as withdrawn except in extraordinary and limited circumstances i.e. where rights had come to vest in defendant, third person or in general public etc.

(d) Civil Procedure Code (V of 1908)---

----O.XXIII, R.1 (2)---Withdrawal of suit with liberty to file fresh suit---Scope---Sub-rule 12) of O.XXIII, C.P.C., safeguards against situations of injustice, inequity or unfairness likely to be faced by plaintiff by losing a right to re-file suit on the same subject-matter, if earlier suit was bound to fail by reason of some formal defect or otherwise--­Said rule prevents technicalities from defeating the justice--­Only plaintiff has absolute right and privilege to unconditionally withdraw suit under sub-rule (1) of R.1 of O.XXIII, C.P.C. or to seek Court's permission to withdraw suit in situations and exigencies visualized in sub-rule (2) of the said order with liberty to re-file the same escaping bar imposed under sub-rule (3) of R.1, O.XXIII, C.P.C.--­Defendant or any other person has no right to seek withdrawal of plaintiff's suit and obtain Court's permission to re file same.

(e) Civil Procedure Code (V of 1908)---

----O.XXIII, R.1(1)(2)---Withdrawal of suit without or with permission of Court---Scope---Under O.XXIII, R.1(1), C.P.C., plaintiff can withdraw suit at any stage without order of Court---Under sub-rule (2) thereof; plaintiff has to obtain permission of Court for withdrawal---Court's power to permit withdrawal is limited to instances specifically mentioned in cls. (a) & (b) of said sub-rule (2).

Haji Abdul Rashid Sodagar v. S.M. Lalita Roy and others PLD 1959 SC (Pak.) 287 fol.

(f) Civil Procedure Code (V of 1908)---

----O.XXIII, R. 1(1)(2) ---Withdrawal of suit --- Suo Motu jurisdiction of Court---Scope---Until plaintiff so requests, Court has no jurisdiction or discretion under O.XXIII, R.1, C.P.C., to act suo Motu and dispose of or dismiss suit as withdrawn with or without permission to re file same.

(g) Civil Procedure Code (V of 1908)---

----O.XXIII, R.1(1)(3)---Unconditional withdrawal of suit--­Effect---Suit of same nature would not be barred, if filed on basis of fresh cause of action accruing to plaintiff against defendant.

(h) Contract Act (IX of 1872)---

----Ss.126, 129, 133 & 136---Continuing guarantee--­Variance in terms of contract---Effect---Where guarantor under personal guarantee pre-consented to changes without reference, recourse or notice to him, then he would be bound by guaranteed obligations, even if variations, concessions, time enlargements and indulgences were granted by creditor to principal debtor.

Mian Aftab A. Sheikh v. Messrs Trust Leasing Corporation R.F.A. No.486 of 1999 fol.

(i) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.2(d)(i) & 9---Suit for recovery of loan amount with mark-up---Statement of account annexed with plaint and updated statement -of accounts showed charging of mark-up beyond expiry period of finance agreement ---Validity---Bank no authority to charge mark-up beyond financing agreement---Mark-up charge for 210 days cushion period as per instructions of State Bank was allowed.

(j) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----Ss.3, 9 & 17---Bankers' Books Evidence Act (XVIII of 1891), S.4---Suit for recovery of loan amount---Bank filed such suit upon breach of terms of settlement dated 22-10-1997 by defendants---Defendants in settlement package admitted their liability of Rs.38,874,300---Debit entries in consolidated statement of account relating to finance account, mark-up up to finance agreement and 210 days mark-up for cushion period showed total amount due at Rs.37, 715, 062---Held: Bank had filed suit on the basis of its statements of accounts---Banking Court had no option but to pass decree on basis of figures given in the statement of accounts instead of said amount admitted by defendants---Suit was decreed with costs for sum of Rs.37,715,062 alongwith cost of funds of Bank certified by State Bank w.e.f. 22-10-1997 till payment by defendants.

Raja Muhammad Akram for Plaintiff.

Sh. Sajid Mahmood for Defendants.

2003 C L D 1492

[Lahore]

Before Ali Nawaz Chowhan, J

Messrs NESTLE MILKPAK LIMITED through Finance Control Manager---Appellant

Versus

Messrs ALLIED ENTERPRISES through Managing Director and another ---Respondents

First Appeal from Order No. 123 of 2002, heard on 28th April, 2003.

(a) Civil Procedure Code (V of 1908)---

----O. IX, R. 4 & S. 151---Dismissal of suit for non ­prosecution---Application for its restoration filed on the next day alongwith affidavit of counsel contending that the counsel had mistaken the date of hearing---Said application was dismissed by Trial Court---Validity---Trial Court ought not to have adopted the extreme measure of not restoring the suit just for one day's absence when an affidavit given by the plaintiff's counsel had explained such failure---High Court set aside the order and remanded the case to Trial Court for further proceedings on merits.

(b) Trade Marks Act (V of 1940)-----

----S.21---Infringement of trade mark---Procedure---Trade mark dispute ought to be decided after hearing all sides as the infringement of trade mark rights creates problems for the commercial world which are the back bone of the economy.

Mustafa Ramday for Appellant.

Respondent: Ex parte.

Date of hearing: 28th April, 2003.

2003 C L D 1494

[Lahore]

Before Muhammad Sayeed Akhtar, J

Sheikh MAZHAR ALI ---Petitioner

Versus

LASANI STRAW BOARD MILLS PVT. LTD. and 4 others---Respondents

Civil Original No. 54 of 2001, heard on 25th March, 2003.

Companies ordinance (XLVII of 1984)---

----Ss.305 & 309---Substratum of the Company--­Disappearance---Effect---Company had suspended its business and no reasonable hope existed that in future the object of trading with profit would be revived---Parties had misappropriated the funds/property of the company; assets of the company had been sold; balance-sheet of the company did not pertain to the company alone but a joint balance sheet with another concern; ledger showed irregularities in its maintenance; accounts of the company were never audited and thus substratum of the Company had disappeared---High Court found it just and equitable to pass order for winding-up of the company in circumstances.

Asad Javed for Petitioner.

Imran Nazir for Respondents Nos. 1 and 3.

Ch. Jawad Mahmood Pasha for Respondent No.2

Date of hearing: 25th March, 2003.

2003 C L D 1506

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaj, JJ

ABDUL HAMEED ---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Respondent

Execution First Appeal No 532 of 2002, heard on 17th December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

----S.22---Appeal against order of Executing Court, whereby appellant was ordered to be arrested in execution of decree---High Court while issuing pre-admission notice to Bank ordered that in the meanwhile appellant be not arrested---Appellant's counsel thereafter sought adjournment to obtain instructions from appellant as to time frame within which he would discharge total decretal debt--­Appellant did not provide such instructions to his counsel, who requested Court to hear appeal on merits--­High Court on being satisfied that appellant was taking undue advantage of interim relief dismissed his appeal.

Muhammad Maqbool Bhatti for Appellant.

Farrukh Mehmood. Solehria for Respondent.

Date of hearing: 17th December, 2002.

2003 C L D 1507

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

HASSAN MASOOD and 3 others ---Petitioners

Versus

EQUITY PARTICIPATION FUND and 6 others---Respondents

First Appeal from Order No. 196 of 1998, heard on 24th February, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss. 18(6) & 21---Execution of decree---Attachment of property---Dismissal of appellant's objection petition claiming to be owner of such property since year ,1981 through registered sale-deed---Validity---Loan was secured by pledge of shares of judgment-debtor---Loan agreement was made on 24-3-1982, whereas shares sale agreement and buy-back guarantee agreement were executed on 28-3-1982---Bank had prayed in plaint for giving directions to judgment-debtors to buy-back pledged shares--­ Judgment-debtors were not owners of property nor they could mortgage same with Bank as same had been sold to predecessor of appellant on 29-2-1981---Banking Court had passed impugned order without applying its mind as there was no mortgage---High Court accepted appeal, set aside impugned order and accepted objection petition with costs throughout direction to Banking Court to release property immediately.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S. 18(6)---Civil Procedure Code (V of 1908), O.XXI, Rr.54, 58 & 62---Execution of decree---Attachment of mortgaged property---Validity---Concept of attachment vis-a-vis a mortgaged property does not exist.

Nadeem-ud-Din Malik for Appellants.

Ata-ur-Rehman for Respondent No 1.

Nemo for the Remaining Respondents.

Date of hearing: 24th February, 2003.

2003 C L D 1519

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

BOLAN BANK LIMITED---Petitioner

Versus

ABDUL GHAFFAR---Respondent

Review Application No.25/C of 2001, heard on 20th January, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001) ---

----Ss.22 & 10---Civil Procedure Code (V of 1908), O.XLVII, R.1---Review of judgment passed in appeal---Amount required to be deposited by appellant for granting him leave to defend suit---High Court reduced such amount at appellant's request with observations that in case he failed to deposit same within specified time, then leave granted to him would" stand withdrawn.

Muhammad Shahzad Shaukat for Petitioner.

Bashir Ahmad for Respondent.

Date of hearing: 20th January, 2003.

2003 C L D 1521

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

LONG TERM VENTURE CAPITAL MODARABA‑‑‑Appellant

Versus

HANIF POLY PRODUCTS (PVT.) LTD. and another‑‑‑Respondents

First Appeal from Order No.198 of 2001, heard on 26th February, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑S.18(6)‑‑‑Civil Procedure Code (V of 1908), S.73(1)(b)‑‑­Execution of decree‑‑‑Property belonging to judgment‑debtor was attached and sold in public auction ‑‑‑Factum of respondent being mortgagee of such property before institution of suit was not denied‑‑‑Respondent joined execution proceedings and allowed such property to be sold without any objection‑‑‑Held, respondent had a right to claim sale proceeds of such property in view of S.73(1)(b), C.P.C.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss. 18(6) & 21(1)‑‑‑Civil Procedure Code (V of 1908), S.73(1)(b)‑‑‑Execution of decree‑‑‑Respondent (non‑party to suit) filed objection petition claiming to be mortgagee of property belonging to judgment‑debtor before institution of suit‑‑‑Property was sold and Bank (decree‑holder) withdrew amount of sale proceeds from Court‑‑‑Respondent as mortgagee of property filed application seeking payment of such sale proceeds to him‑‑‑Executing Court accepted such application and directed Bank to deposit such amount in Court for its onward payment to respondent‑‑‑Bank's application praying for recall of such order was dismissed by Executing Court‑‑‑Validity‑‑‑None of impugned orders fell within category of orders stated in S.21(1) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑High Court dismissed appeal being incompetent.

Aftab Hassan for Appellant.

Nauman Akram Raja for Respondents.

Date of hearing: 26th February, 2003.

2003 C L D 1524

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUHAMMAD SHAFIQUE‑‑‑Appellant

Versus

Messrs EMIRATES BANK INTERNATIONAL LIMITED and 2 others‑‑‑Respondents

Execution First Appeal No‑702 of 2001, heard on 10th March, 2003.

Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)‑‑--

‑‑‑‑Ss.8(3) & 12‑‑‑Civil Procedure Code (V of 1908), S.47 & O.XXI, Rr. 62, 90 & 94‑‑‑Limitation Act (IX of 1908), Arts. 166 & 181‑‑‑Execution of decree‑‑‑Sale of mortgaged property‑‑­Plea of appellant (non‑party to suit) raised in objection petition was that judgment‑debtor had sold away property long before the alleged mortgage in favour of Bank (decree­ holder), thus, he was not its owner at that time‑‑‑Dismissal of objection petition on ground of being time‑barred‑‑­Validity‑‑‑Banking Court should have framed issues and recorded evidence to resolve question, . whether such property was owned by judgment‑debtor at time of mortgage‑‑‑Tentative view being that of objection petition under O. XXI, R.90, C.P.C., was out of limitation, yet case was covered by S.47. C.P.C., for which limitation was governed by Art. 181 of limitation Act, 1908‑‑‑High Court left open for the Banking Court to decide after framing of issues and recording of evidence to determine point of time, when appellant had got knowledge of auction and should have filed objection petition; and under what provisions objections could be entertained‑‑‑Effect of confirmation of sale in favour of auction purchaser would be deter mined by Banking Court thereafter‑‑‑High Court accepted appeal and set aside impugned order with directions to Banking Court to decide objection petition afresh in accordance with law.

Syed Haider Ali Shah for Appellant.

Khawar Ikram Bhatti and Khalid Saleem for Respondents.

Date of hearing: 10th March, 2003.

2003 C L D 1527

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

SHAMS‑UL‑ISLAM and another‑‑‑Appellants

Versus

AL‑TOWFEEK INVESTMENT BANK LIMITED‑‑‑Respondent

Regular First Appeal No.380 of 2001, heard on 27th February, 2003.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑

‑‑‑‑Ss.10 & 21‑‑‑Leave to defend‑‑‑Proper opportunity of hearing‑‑‑Banking Court dismissed leave application and decreed suit on a date, when only main case was fixed for ex parte arguments‑‑‑Validity‑‑‑Appellant had not been given proper opportunity of arguing his leave application as same was not fixed for arguments on, such date‑‑‑Impugned judgment was without sufficient reason as same did not reflect application of mind by Banking Court to grounds set out in leave application‑‑‑High Court accepted appeal, set aside impugned judgment/decree and remanded case to Banking Court for decision on leave application.

Imran Aziz Khan for Appellants.

Khalid Saleem for Respondent.

Date of hearing: 27th February, 2003.

2003 C L D 1529

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mst. SHAMIM AKHTAR ‑‑‑Appellant

Versus

BANKING COURT No.5, LAHORE and 3 others‑‑‑Respondents

Execution First Appeal No.583 of 2000, decided on 14th: January, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.19 & 22‑‑‑Execution of decree‑‑‑Sale of mortgaged property‑‑‑Appellant claimed to have purchased, property from respondent (widow of deceased judgment‑debtor)‑‑­Contention of Bank was that initially widow sold property to deceased husband, who mortgaged same with Bank, but she later on by playing fraud sold same to appellant, when she was not its owner‑‑‑Banking Court dismissed objection petition‑‑‑Validity‑‑‑Widow had a disabled son, two young daughters, and a minor son, and was not in a position to pay balance decretal amount‑‑‑Widow requested for waiver of decretal amount by Bank except Rs.1,00,000, which was more than Rs.80,000‑‑‑Bank's counsel could not state the exact rate of mark‑up on the basis of which claimed amount had been calculated‑‑‑Record showed that widow had re­paid principal amount and Bank had excessively charged about Rs. 80, 000 from period of such repayment‑‑‑High Court disposed of appeal with observations that on payment of Rs.50,000 each by appellant and widow within specified period, whole decree would stand satisfied; but in case of appellant's failure to pay his share, entire decretal amount could be recovered by sale of property; but in case of widow's failure, appellant might pay her share in order to save property from auction, but could initiate proceedings against widow for committing fraud.

Muhammad Sharif Khokhar for Appellant.

Syed Fazal‑ur‑Rehman for House Building Finance Corporation.

Habib‑ur‑Rehman for Respondents Nos.3 and 4.

2003 C L D 1546

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

TAHIR TARIQ TEXTILE MILLS (PVT.) LTD. through Chief Executive and 2 others‑‑‑Appellants

Versus

NATIONAL DEVELOPMENT FINANCE CORPORATION‑‑‑Respondent

First Appeal from Order No.309 of 2001, heard on 26th June, 2003.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑S.9‑‑‑Civil Procedure Code (V of 1908), S.20 & O.VII, R.10‑‑‑Suit for damages by customer on account of alleged breach of finance agreement by Bank‑‑‑Return of plaint for its presentation before Court at place K‑‑‑Validity‑‑‑Such agreement executed at place K provided that Court at place K would be the proper Court to entertain all matters arising out of or under such agreement‑‑‑Such clause, wherein though words "only" or "exclusive" were not mentioned, clearly spelt out intention of parties that in case of dispute arising between them with regard to breach of finance agreement, which would include failure to disburse agreed facility or its recalling ,and every nature of dispute having nexus with finance agreements during their subsistence or even thereafter, would be tried by Court at place K, rather than any by any other Court‑‑‑Subsequent establishment of letters of credit at place L or refusal of Bank to disburse amount by its office at place L or rescission of agreement by its office at place L, by itself would not be a cause of action taking case out of ambit of such clause‑‑‑No error was found in impugned judgment‑‑‑High Court dismissed appeal.

2001 MLD 352; 1999 CLC 954 and PLD 2002 Kar. 420 distinguished.

(b) Jurisdiction‑‑‑

‑‑‑‑Two or more Courts having jurisdiction in matter‑‑‑Parties could validly agree for conferment of jurisdiction upon one of such Courts to the exclusion of other.

Syed Hamid Ali Shah for Appellants.

M. A. Zafar for Respondent.

Date of hearing: 26th June, 2003.

2003 C L D 1567

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs AL‑SHAFI (PVT.) LTD. through Chief Executive and 7 others‑‑‑Appellants

Versus

HABIB BANK LIMITED‑‑‑Respondent

Regular First Appeal No.60 of 12003, decided on 12th March, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑Ss.10, 17 & 22‑‑‑Decree for recovery of loan amount‑‑­Plea of appellant (Chief Executive of borrower company) was that he was not in Pakistan at the relevant time, thus, question of his having executed or affixed signatures on documents attributed to him by Bank did not arise and that Banking Court had passed decree on basis of such documents without finally determining their liability‑‑‑Both parties agreed that amounts outstanding against appellants could not be determined without in‑depth examination of record‑‑‑High Court with consent of parties set aside impugned judgment/decree and granted leave to appellants only to the extent of determining as to how much amount was due against them with clear understanding that they would not raise such plea before Banking Court, which would decide suit within specified time after recording evidence of parties and in accordance with law.

Hamid Khan for Appellants.

Afzal Sandhu and Syed Fazal Mehmood for Respondent.

2003 C L D 1570

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

RAFIQ AHMED SANAURI and 3 others ‑‑‑Appellants

Versus

UNION BANK LIMITED through Branch Manager and 5 others‑‑ ‑Respondents

Execution First Appeal No.111 of 2002, heard on 10th February, 2003.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss.18 & 21‑‑‑Civil Procedure Code (V of 1908), S.114, O.XXI, R.90 & O.XLVII, R.1‑‑‑Sale in execution of decree‑‑‑Objection petition‑‑‑Banking Court directed judgment‑debtor to deposit by specified date 20% of sale price in terms of O.XXI, R.90, C.P.C.‑‑‑Judgment‑debtor sought extension of time, which was granted to him‑‑‑Judgment‑debtor instead of depositing such amount made application on extended date for review of earlier orders, which was dismissed by Banking Court‑‑‑Validity‑‑‑Judgment‑debtor had challenged neither order requiring him to make such deposit nor order of extension of time‑‑‑Judgment-debtor applying for extension of time had accepted order of Court for deposit of amount, thus, he was precluded from filing review application against such order‑‑‑Scope, of review being very limited, judgment‑debtor had failed to establish ‑any error apparent on face of record, or error of like nature warranting review of earlier order‑‑‑High Court dismissed appeal.

Haq. Nawaz Chattha for Appellants.

Mushtaq Mehdi Akhtar for Respondent No. 1.

Sajid Mehmood Sheikh for Respondent No.6.

Date of hearing: 10th February, 2003.

2003 C L D 1573

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs COMBINED OIL EXTRACTION (PVT.) LIMITED and 2 others‑‑‑Appellants

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and 2 others‑‑‑Respondents

Regular First Appeals Nos.668 and 675 of 2001, heard on 13th January, 2003.

Industrial Development Bank of Pakistan Ordinance (XXXI of 1961)‑‑‑

‑‑‑‑S.39‑‑‑Suit for recovery of loan amount with mark‑up decreed‑‑‑Validity‑‑‑Appellant‑Company had not adhered to agreed terms for repayment of finance‑‑‑Initial period of financing stood modified at appellant's request through terms of re‑scheduling, thus, appellant was obliged to pay the agreed rate of return on amount overdue‑‑‑Claim of Bank had arisen on account of appellants' failure to repay finance in accordance with agreed terms‑‑‑Bank was, thus, not at fault for not filing its suit, when company had initially committed default in meeting its payment obligations‑‑­Appellant had not filed application for leave to appear and defend suit‑‑‑Statement of accounts showing various credit and debit entries had not been challenged by company‑‑‑Bank had reduced its claim from Rs.36, 91, 971 to Rs.31,24,000.17‑‑‑High Court allowed appeal and modified impugned decree accordingly.

Habib Bank v. Messrs Qayyum Spinning Ltd. 2001 MLD 1351 ref.

Haq Nawaz Chattha for Appellants.

Sultan Mehmood for Respondents.

Date of hearing: 13th January, 2003.

2003 C L D 1634

[Lahore]

Before Nasim Sikandar, J

In re: PAK WATER BOTTLERS (PVT.) LIMITED and 2 others

Civil Original No.47 of 2002, decided on 26th June, 2003.

(a) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.284, 285, 286 & 287‑‑‑Scheme for merger of Companies‑‑‑Approval of Company' Court‑‑‑Objection‑‑‑Swap ratio‑‑‑Determination of principle of arms length transaction‑‑‑Applicability‑‑‑Benefits expected from the merger of Companies, inter alia, were claimed to be an increase in profitability after removal of overlapping in management, marketing and distribution expenses; elimination of high cost of complexity behind the existing operations/set up; streamlining of operations by optimizing their energies in the areas of sales, distribution and administration; reduction of administrative costs, effective control and administration on account of coming into being a Single Board of Directors; the need to hold only one annual general meeting and issuance of only one set of annual/half yearly accounts, maintaining only one Register of Shareholders, only one set of books and records; only one administration office to manage the affairs of the merged/ amalgamated Company; exemption of capital gain on the sale of the shares of one of the three Companies becoming available to the shareholders of other two Companies coupled with, ready sale ability of shares of one of the three Companies as. a listed company‑‑‑Amalgamating Companies had claimed that they had obtained written consent from 94% of the creditors of one of the Companies, 98% of the creditors of the other and 96% of the creditors of the third Company‑‑‑General meeting of the said three Companies were convened under the supervision of a local commission appointed by the Company Court and Scheme proposed for merger and various arrangements in its execution were put before the members of the three Companies‑‑‑Local Commissioner had reported that said meetings by a majority of 90% and 98% had finally resolved that the scheme of arrangement between the three Companies and its members was considered by the meetings and was approved, adopted and agreed"‑‑­Representative of one of the Companies, however, made oral as well as written objection to the merger during the separate extraordinary general meetings of other two Companies‑‑‑Objector had very strong reservations to the proposed merger as allegedly it was calculated only to the benefit of one Company through and through and that the proposed swap ratio had no nexus with the true worth of other two Companies having not been valued by independent valuers‑‑‑Securities and Exchange Commission had not made any material objection to the preferred Scheme‑‑‑Validity‑‑‑Fact that the objector was the only shareholder in the first two Companies while; the Company in which the other Companies were being merged was holding the rest of the shares, would not make the objector to be of different class to be treated at par with the majority shareholders‑‑‑Numerical strength of the two shareholders was too wide to be ignored ‑‑‑Swap ratio was determined inter alia on the basis of the audited accounts of the first two Companies and the objector had not come up with his own figures as against those which were picked up by the valuer from the audited accounts‑‑‑Objector, being shareholder had access to every record and books of accounts of the Companies and therefore, in the absence of any counter figure, as opposed to those reflected in the balance sheet of the two Companies, a value challenge the said figures and the swap ratio could not by of any avail‑‑‑No rule of law required that valuation determination of swap ratio could not be mace by Chartered Accountants of the Companies sought to be amalgamated‑‑‑In the absence of an allegation of mala fides fraud or misrepresentation on the part of the valuer, objection of such kind could not be accepted on its face value‑‑‑Break‑up value, dividend earning capacity market value were the three factors which were relevant to determining the fair value of shares and consequently the swap ratio‑‑‑Objector had not been able to establish that valuation of shares was done only to protect the interest majority shareholders‑‑‑Principle of arms length transaction related more to an outright buy rather than a petition merger or amalgamation where the controlling shareholders would have an edge allowed to them under the law‑‑‑Held. Scheme could be disapproved only if the same appeared to be unfair, unreasonable and oppressive on the face of it to a certain class of shareholders which did not appear to be the case in the facts and circumstance of the merger/ amalgamation Scheme in the present case.

Re: Pfizer Laboratories Ltd. and another 2002 CLD 1209 distinguished.

The Analysis and Use of Financial Statements by Gerald I. White, C.F.A., Second Edn., pp.933‑34; How to Read Balance Sheets by Saeed Ahmed Qureshi, Financial Reporting Standard 7" of the Treatise on Fair Value in Acquisition Accounting, pp.67 to 79; Guide to Take Overs and Mergers by N.A. Sridharan and P.H. Arvindh Pandian Edn., 2002, pp.194 to 197; Amalgamations Mergers Takeovers and Acquisitions by L.M. Sharma published by Company Law Journal, New Delhi, pp.144 to 146; Weinberg and Blank on Takeovers and Mergers, Fifth Edn. by Laurence Rabinowitz 2063; Acquisitions, Mergers, Sales Buyouts and Takeovers; A Hand Book with Forms, Fourth Edn. by Charlas A Scharf, pp.71 to 97; re: O' Neil and another v. Phillips and others, decided on 20‑5‑1999; re North Holdings Limited v. Sourthern Tropics Limited' Nicholas Andrew Clarke: Lesley Ann Gale Clarke and Kasmare Limited (1999) EWCA Civ. 1612; re: Re Hellenic & General Trust Ltd. (1975) 3 All ER 382; Messrs Revlon v. Mac Andrews & Forbes SC of Delaware 506 A. 2d 173 (1965); re: Hanson Trust PLC etc. v. ML SCM Acquisitions Inc., 781 F. 2nd 264; re: Gift Tax Commissioner, Bombay .v. Kusumben AIR 1980 SC 769; re: W.T. Commissioner, Assam v. Mahadeo Jalan AIR 1973 SC 1023; Tata Oil Mills Co. Ltd. & Hindustan Lever Ltd (1994) 81 Comp. Cas. 754; Catex Petro Chemicals Ltd (1993) 2 Comp. LJ 383 (Mad.); Miheer H. Mafat Lal v. Mafat Lal Ind. Ltd. (1996) 4 Comp. LJ 124 (SC); Kamala Sugar Mills Ltd. & Tirumurti Mills Ltd. (1996) 4 Comp. LJ (Mad:); Bank of Baroda Ltd. v. Mahindra Ugine Steel Co. Ltd.; (1976) 46 Comp. Cas. 227 (Guj.); Kohinoor Raiwind Mills Ltd. v. Kohinoor Gujar Khan Mills Ltd. 2002 CLD 1314; Konihoor Raiwind Mills Ltd. 2002 CLD 1747; Charles M. Oberly and others v. Alan .P. Kirby and others 592 A. SD 445; In re: Lipton Pakistan Ltd. and another 1989 CLC 818;. Brooke Bond Pakistan Ltd. v. Aslam Bibi Ibrahim and another 1997 CLC 1873; In re: Companies Act, 1913 and another PLD 1983 Kar. 45 EITA India Ltd. and others AIR 1997 Cal. 208; re: Miheer H. Mafatlal v. Mafatlal Industries Ltd. (1996) 87 Comp. Cas. 792; Abdul Rahim v. UBL PLD 1997 Kar. 620; NBP v. KDA PLD 1999 Kar. 260; re: Tata Oil Mills Co. Ltd and Hindustan Lever Ltd. (1994) 3 Comp. LJ 46 (Bom.); Aslam Bin Ibrahim v. MCA PLD 1998 Kar. 295; In re: Messrs Pakland Cement Ltd. 2002 CLD 1392; In re: Manekchowk (1970) 40 Comp. Cas. 819; Dewan Salman Fibre Ltd. v. Dhan Fibres Ltd. PLD 2001 Lah. 230; Sussex Brick Company Ltd. (1960) All. ER 772; In re: Companies Ordinance 1984; Balanced Fund Ltd. and another 2002 CLC 1361 and Asian Coffee Ltd. (2000) 3 Comp. LJ 92 (AP) ref.

(b) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.284, 285, 286 & 287‑‑‑Scheme for merger of Companies‑‑‑Approval of Company Court‑‑‑Swap ratio, determination of‑‑‑Principles‑‑‑Objection was that swap ratio had been determined only to favour the majority shareholders‑‑‑Validity‑‑‑Every shareholder in the merged Company being entitled to the proposed advantages and disadvantages, the claim of adverse swap ratio to the minority would lose its force‑‑‑Objector, in the present case was looking at the transaction as an outright sale of its shares while the, nature of a merger/ amalgamation was altogether different‑‑‑Counter‑offer for purchase of majority shares, needed to be seen in that perspective‑‑‑Such an offer was entertainable only when the seller was completely parting with the equity while in case of merger every single shareholder was to become a part of the new entity.

(c) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss. 284, 285, 286 & 287‑‑‑Scheme for amalgamation of Companies‑‑‑Approval of Company Court‑‑‑Objection on the basis of "Business Judgment Rule"‑‑‑Validity‑‑‑"Business Judgment Rule" in essence meant that management was not liable for mistakes which resulted in loss if made in good faith in exercise of business judgment and free of elements such as conflict of interest or violation of law‑‑‑ "Business Judgment. Rule" was not applicable inasmuch as the present case was not that of management by outsider because the management of the three amalgamating Companies was admittedly already with the Company which was amalga­mating the other two and said two Companies were going in losses for the last some time and the claim of the objector that these were possessed with huge capital assets was not supported by any material on the record.

Charles A. Scharf, Edward E. Shea George C. Back ref.

(d) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.284, 285, 286 & 287‑‑‑Scheme for amalgamation of Companies‑‑‑Approval of the Company Court‑‑‑Object of Ss.284, 285, 286 & 287, Companies Ordinance, 1984‑‑­Scope‑‑‑Objector had objected to the Composition of the Boards of the first two Companies (which were being merged into the third) third Company which was owner of equity of 98% and 90% in the companies had a privilege under the law to dominate the Board through its nominees and it would be unnatural and rather illogical to think that these nominees would act in a manner which was prejudicial to the interest of the principal Company‑‑‑Such fact alone did not provide a ground of their impeachment in the perspective of the merger in question‑‑‑Purpose of the provisions of Ss. 284, 285, 286 & 287 of the Companies Ordinance, 1984 would stand defeated if a merger was denied on the sole ground that it was opposed or was otherwise not liked, as in the present case, by a small number of shareholders‑‑‑Even if the alleged nexus between the holding and Subsidiary Companies was assumed yet that factor did not, under any provision of law, require that majority shareholders should concede to the will of minority shareholders‑‑Only legal requirement was that the Scheme should not be oppressive, unreasonable and unjust‑‑­Objector being not specific as to the exact extent of adverse effect to its interest; the companies continuously being in losses while the shares of the third Company being transacted at the Stock Exchange at more than 20 times of its face value and the Scheme was based upon the swap ratio determined by a firm of reputed Chartered Accountants; could not be described to be unjust or unreasonable.

(e) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.284, 285, 286 & 287‑‑‑Scheme for amalgamation of Companies‑‑‑Approval of the Company Court‑‑‑Objector, in the present case, had negligible share in the total equity of 2% in one Company while in the other it had an interest of 8% only‑‑‑To disapprove the Scheme, or the alternate suggested by the objector, a direction for reconsideration of swap ratio, was not likely to improve the status of the objector‑‑‑Even otherwise to do so would amount to sitting in judgment as an Appellate Court to find out faults in the Scheme as well as the swap ratio which was not possible in the proceedings under Ss.284, 285, 286 & 287, Companies Ordinance, 1984 which conceded a, democratic right of 3/4th majority of the members of a Company to make a choice which the minority had been obliged to accept.

Re: Messrs Pakland Cement Ltd. 2002 CLD 1392 ref.

(f) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.284, 285, 286 & 287‑‑‑Scheme for amalgamation of Companies‑‑‑Approval of the Company Court‑‑‑Objection to the Scheme‑‑‑Powers and jurisdiction of Company Court‑‑­Scope and extent‑‑‑Principles.

A Court should see if the scheme was fair as a whole. However, for that purpose an in‑depth investigation and probe into every provision of the scheme of arrangement was not necessary.

The onus was on the objectors to show that the scheme was mala fide or unfair.

Unfairness should not be enough unless it was patent, obvious and convincing.

Court should not go into the commercial merits or viability of the decision reached by the majority.

Where majority was acting in a bona fide manner and the scheme was such as a fair minded person, reasonably acquainted with the facts of the case could regard it as beneficial for whom the majority sought to represent, then, unless there were strong and cogent reasons to show that the scheme was misconceived, designed or calculated to cause injuries to others, the Court would sanction it rather than reject it; the Court should prefer a living scheme to compulsory liquidation bringing about an end to a company.

Re: Messrs Pakland Cement Ltd. 2002 CLD 1392 and re: Manekchowk (1970) 40 Comp. Cas. 819 ref.

(g) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.284, 285, 286 & 287‑‑‑Scheme for amalgamation of Companies‑‑‑Approval of the Company Court‑‑‑Objection to the Scheme by minority shareholders‑‑‑Objection to the amalgamation was that the Company in which the other two Companies were being merged would have monopoly in the trade‑‑‑Validity‑‑‑Such an objection could not be a reason to deny the approval, as a different and distinct law namely Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 was available in the field and any violation thereof was a matter of independent probe and investigation which could not be undertaken in the present proceedings nor merger/ amalgamation could be refused on that ground‑‑‑Creation of alleged monopoly would rather be for the benefit of the shareholders of the principal Company after merger which would include the objector minority shareholders in the merged two Companies.

(h) Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑Ss.284, 285, 286 & 287‑‑‑Scheme for amalgamation of Companies‑‑‑Approval of Company Court‑‑‑Absence of a provision for amalgamation in the Memorandum and Articles of the Association of a Company would not affect the statutory' powers of the Court to allow the Scheme.

Re; Dewan Salman Fibre Ltd. v. Dhan Fibres Ltd. PLD 2001 Lah. 230 and Pfizer Laboratories Ltd. and another 2002 CLD 1209 ref.

Hamid Khan, Suleman Aslam Butt and Tariq Kamal Qazi for Petitioners.

Khawaja Saeed‑uz‑Zafar and Nasrullah Babar for SECP.

2003 C L D 1658

[Lahore]

Before Tanvir Bashir Ansari and Rustam Ali Malik, JJ

SILVER OIL MILLS (PVT.) LIMITED through Chief Executive and 13 others‑‑‑Appellants

Versus

Messrs UNION BANK LIMITED through Vice‑President and 4 others‑‑‑Respondents

Regular First Appeal No.3 of 2003, decided on 22nd May, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑S.10(11)‑‑‑Leave to defend the suit with condition attached‑‑‑When the defendant fails to fulfil the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favour of the plaintiff against the defendant.

Malik Gul Hasan and Company and 5 others v. Allied Bank of Pakistan 1996 SCMR 237; Abdul Rauf Ghouri v. Mrs. Kishwar Sultana 1999 SCMR 929; Abdul Karim Jaffarani v. U.B.L. and 2 others 1984 SCMR 568 and General Investment Limited v. Dubai Bank Limited 1984 SCMR 634 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑Ss.22 & 10‑‑‑Appeal‑‑‑Appellants cannot be permitted to re‑agitate the same question in appeal which has been effectively dealt with in their appeal filed earlier.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.10‑‑‑Civil Procedure Code (V of 1908), O.XXXVII, R.3(2)‑‑‑Leave to appear and defend suit‑‑‑Banking Court upon application by defendant is fully competent to grant leave to appear and defend the suit either unconditionally or subject to such terms as it thinks fit‑‑‑Such discretion to grant leave conditionally or unconditionally is left to the Court itself as contemplated under O.XXXVII, R.3(2), C.P.C. ‑‑‑Discretion so exercised is not to be interfered with lightly unless it is shown that the same was exercised in a fanciful or arbitrary manner.

(d) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.22 & 10‑‑‑Appeal‑‑‑Decree, in the present case, had been passed in favour of the Bank not on the basis of a trial before the Banking Court, but in consequence of failure of the appellants to fulfill the conditions imposed upon them by the Banking Court‑‑‑Contention of the appellants that as the High Court had dismissed the appeal as being incompetent, the other findings contained in the said judgment would be inconsequential qua the rights of the parties, was a feeble attempt to wriggle out of the effects of the said judgment.

Dad Muhammad v. Qazi Muhammad Hayat 1996 CLC 1705 distinguished.

(e) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑S.10‑‑‑Bank had filed suit for recovery of Rs.85,246,891‑‑­Defendant having failed to fulfil the conditions attached to the order of leave to appear and defend the suit, the suit was liable to be decreed in toto‑‑‑Banking Court, while decreeing the suit had passed a decree in the lesser sum which was not in accord with its earlier order‑‑‑High Court modified the judgment and decree of the Banking Court to be in the sum of Rs.85,246,891 with costs which was the total claim of the Bank.

Zulifiqar Khalid Maluka for Appellants.

Syed Iqbal Haider for Respondent No.1.

Date of hearing: 21st May, 2003.

2003 C L D 1685

[Lahore]

Before Muhammad Sair Ali, J

Messrs GRACE TEXTILE MILLS (PVT.) LTD. and another‑‑‑Plaintiffs

Versus

HABIB BANK LIMITED and 5 others‑‑‑Defendants

Civil Original Suit No.12 of 2000, decided on 14th May, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑Ss.2(a)(c) & 13‑‑‑Civil Procedure Code (V of 1908), O. VII, Rr.10 & 11‑‑‑Suit for recovery of amount as insurance claim alongwith damages and compensation against a Banking Company which had financed the plaintiffs‑‑‑Contention of the plaintiffs(customer) was that land, building and other assets of the plaintiffs there required to be insured under the finance agreement and on Bank's recommendation the plaintiffs obtained insurance from the recommended Insurance Companies which had failed to settle the claims of the plaintiffs in case of fire in their factory and plaintiffs had suffered loss due to non‑settlement of their insurance claim by the Insurance Companies‑‑‑Plaint of the suit had been structured to implead the Bank as defendant alongwith Insurance Companies‑‑‑Only bridge between the Bank and Insurance' Companies was the purported "recommendation" by the Bank to the plaintiffs to obtain insurance from the said Insurance Companies‑‑‑Insurance Policy was admittedly obtained by the plaintiffs themselves and the premium thereunder was also paid by them‑‑­Plaintiffs had not shown as to how mere recommendations by the Bank placed the burden of acts and omissions of Insurance Companies upon the Bank‑‑‑Plaintiffs had also failed to plead in the plaint that the recommendation of the Bank could bring into existence any contractual relationship between the Bank and Insurance Companies to make the Bank liable to pay the Insurance Companies upon their failure to settle the insurance claim of the plaintiffs‑‑‑No privities of interest or contract had been proved against the Bank to bring the Bank in the position of Insurance Company or to make the Bank liable to pay damages/ compensation to plaintiffs against the Insurance Companies‑‑‑Insurance Companies were not insurers of the plaintiffs obligations under the finance agreement towards the Bank‑‑‑.Said Companies had extended insurance against losses through fire or otherwise of building, machinery etc. under the contract of insurance between the plaintiffs and the companies‑‑‑Plaintiffs had not been able to show that financial obligations under the finance agreement between them and the Bank were undertaken by the Insurance Companies to be settled by them on default of the plaintiffs‑‑‑Insurance Companies, in circumstances, could not be said to be guarantors or indemnifiers to fall within the definition of "customers" under S.2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑­Insurance Companies also were not financial institutions in terms of S.2(a) or other provisions of the said Ordinance‑‑­"Banking Company" or a "customer" could bring a suit against each other for defaults arising out of the "finances "‑‑‑Default agitated in the present plaint thus did not arise out of the `finance"‑‑‑Plaintiffs' claim for damages and compensation had not arisen out of the "Finance" and no default under the Insurance Law had been committed by the Bank to indemnify the plaintiffs or to pay their insurance claim or otherwise any damages on that basis‑‑­Insurance claim was based upon indemnity of the Insurance Companies to the plaintiffs and not to the Bank‑‑‑High Court, in circumstances, had no jurisdiction to proceed with the present suit and pronounce judgment therein‑‑‑Any opinion on the other issues framed in the suit was declined be the High Court lest case of the parties was prejudiced by opinion of the Court, which lacked jurisdiction in the matter‑‑‑Case of the plaintiff fell within the scope of O. VII, R.10, C.P. C. and not within the ambit of R.11 of O. VII, C.P.C.‑‑‑Plaint was ordered to be returned for presenting the same, if so advised, to the Court of competent jurisdiction.

E.F.U. General Insurance Limited v. Chairman, Banking Tribunal No. 1 PLD 2001 Lah. 313 and Messrs United Bank Limited v. Messrs Adamjee Insurance Company Limited 1988 CLC 1660 ref.

Dr. Syed Shaukat Hussain for Plaintiffs.

Shamas Mehmood Mirza for Defendant No. 1.

Shah Muhammad Chaudhary for Defendant No.2.

M. Javed Iqbal for Defendant No.5.

2003 C L D 1693

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUHAMMAD HASSAN ‑‑‑Appellant

Versus

Messrs MUSLIM COMMERCIAL BANK LTD through Branch Manager and 3 others‑‑‑Respondents

Execution First Appeal No.200 of 2002, heard on 1st July, 2003.

(a) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXI, Rr.64, 65 & 66‑‑‑Execution of decree through sale of property‑‑‑Mandatory steps to be taken by Court before ordering sale of property by public auction ‑‑‑Highlighted‑‑­Contravention of mandatory provisions of R.66 of O.XXI, C.P.C., would render sale unlawful‑‑Principles.

Where a decree is to be executed and satisfied through sale of immovable property belonging to judgment­ debtor, there are three mandatory steps, which the Court in terms of Order 21, Rules 64 to 66 is required to take. Firstly, to pass a specific order for sale of property sought to be sold. Secondly, to appoint the officer who shall conduct sale. Thirdly, to effect the conduct of sale in the manner prescribed, in Order XXI, rule 66, C.P.C.

The provisions of Rule 66, Order XXI, C.P.C. are mandatory in nature and without settling and causing a proclamation of intended sale in terms of said Rule by the Court itself, no sale shall be considered to have been lawfully made. The word "cause", appearing in Rule 66, Order XXI, C.P.C. requires a specific order of Court, which produces the effect of drawing the proclamation envisaging the terms and conditions of sale. This include the settlement of conditions etc., by Court itself or to approve those filed by parties after hearing them.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.19 & 22‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.66‑‑‑Execution of decree by sale of mortgaged property‑‑­Objection as to sale of property‑‑‑Dismissal of objection petition and confirmation of sale‑‑‑Validity‑‑‑Two requisites of O.XXI, R.66, C.P.C., were met i.e. decision of sale of property and appointment of Court Auctioneer‑‑‑No order of Court available on record as to settlement of terms and conditions of sale and drawing of proclamation‑‑‑Court had not issued notice to judgment‑debtor for causing of proclamation‑‑‑Decree‑holder had not filed proposed terms and conditions of sale alongwith execution application or subsequently‑‑‑Court had neither delegated nor could delegate powers to Court Auctioneer to draw terms and conditions and issue proclamation‑‑‑Court Auctioneer, thus, on his own, could not issue proclamation of sale Publication of notice of sale by Court Auctioneer, thus, would be an unauthorised act and of no legal consequence‑‑­Such sale was void ab initio, which could not be protected by applying principle of avoiding technicalities or that act of Court shall not prejudice any party‑‑‑Such sale was liable to be set aside and could not be confirmed‑‑High Court allowed appeal and set aside impugned order and sale in favour of auction purchaser.

2001 CLC 2016; 2000 CLC 1425; PLD 2000 Kar. 186; 2000 CLC 1438; PLD 1987 SC 512 and PLD 1984 SC 146 ref.

(c) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXI, R.66‑‑‑Proclamation of sale‑‑‑Essentials‑‑‑Duty of Court to settle proclamation of sale itself‑‑‑Court cannot delegate such power to officer appointed by it ‑‑‑Knowledge of party about public notice issued by Court Auctioneer advertising sale would not be a substitute for proclamation envisaged by R.66, O.XXI, C.P.C.‑‑‑Sale made in violation of R 66, O.XXI, C.P.C. would be nullity in eye of law.

Brig. (Retd.) Mazhar‑ul‑Haq and another v. Messrs Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lah. 706 and Appu alias Subramania Patter v. O. Achuta Menon and others AIR 1926 Mad. 755 fol.

(d) Administration of justice‑‑‑

‑‑‑‑ No superstructure or legal rights could be based upon foundation, which was void in nature.

(e) Civil Procedure Code (V of 1908)---

‑‑‑‑O.XXI, Rr.65, 66(2)(a) & 90‑‑‑Execution of decree by sale of property‑‑‑Notice of sale issued by Court Auctioneer not containing accurate and adequate description of property (i.e. exact Khasra numbers of land)‑‑‑Effect‑‑‑Such was a serious and material irregularity in sale of property ‑‑‑ Sale on such score would be liable to be set aside under O.XXI, R.90, C. P. C.

(f) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXI, Rr.89 & 90‑‑‑Right of interested party to set aside sale‑‑‑Scope‑‑‑Right available to interested party under O.XXI, R.89, C.P.C. is optional and can be exercised, when he does not have a case for setting aside the sale under O.XXI, P.90, C.P.C., that he should pay 5% over and above purchase money to auction‑purchaser and get property released‑‑‑Where case of a party is duly covered by O.XXI, R.90, C.P.C., then he cannot be compelled to exercise option under O.XXI, R.89, C. P. C.

(g) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.66‑‑­"Power to execute decree in any manner as the Banking Court considers fit"‑‑‑Scope‑‑‑Such power can be exercised, where there is request by decree‑holder and Court by application of conscious mind comes to conclusion that decree cannot be executed by applying general rules as provided in C.P.C.‑‑‑Where there was no speaking order passed in terms of S.19 of Financial Institutions (Recovery of Finances) Ordinance, 2001, but Court had issued notice to. judgment‑debtor under O.XXl, R.66, C. P. C. then it would be deemed that Court had intended to execute decree according to provisions of C.P.C., rather than under special law.

(h) Civil Procedure Code (V of 1908)----------

‑‑‑‑O.XXI, R.90‑‑‑High Court (Lahore) Rules and Orders, Vol.1, Chap. 12‑L, R. 13‑‑‑Application for setting aside sale‑‑­Rule 13, Chap. 12‑A, Vol.I of High Court (Lahore) Rules and Orders requiring raising of objection to sale prior to conduct of sale, but not afterwards‑‑‑Applicability‑‑‑such Rule would have no application where time and date of sale had not at all been fixed by Court and Court Auctioneer had not given any notice to objector about date on which he intended to conduct sale.

Ahmad Waheed Khan and Waqar Mushtaq Ahmad for Appellant.

Mushtaq Ahmed Khan for Respondent No. 1.

Shahid Ikram Siddiqui for Auction‑Purchaser.

Date of hearing: 1st July, 2003.

2003 C L D 1703

[Lahore]

Before Mian Hamid Farooq, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Plaintiff

Versus

Messrs PAK PUNJAB CARPETS and others‑‑‑Respondents

C.O.S. No.44 of 2002, Civil Miscellaneous No.362‑B of 2003, P.L.A. Nos.100‑B, 104‑B of 2002 and Civil Miscellaneous No.712‑B of 2002, decided on 8th July, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑-

‑‑‑‑S.9‑‑‑Claim for recovery of liquidated damages by Bank‑‑­Validity‑‑‑Plaintiff‑Bank was not entitled to recover such amount‑‑‑Such claim of Bank being not entertainable was rejected in circumstances.

2001 MLD 1955 fol.

Shoaib Zafar for Plaintiff.

Syed Ali Zafar for Defendants Nos. 1 to 10.

Saleem Shehnazi for Defendants Nos. 11 to 13.

2003 C L D 1705

[Lahore]

Before Nasim Sikandar, J

MEHBOOB ALAM‑‑‑Petitioner

Versus

FEDERATION OF PAKSITAN through Secretary Finance and 2 others ‑‑‑Respondents

Writ Petitions Nos.16661, 16981, 16980 and 20806 of 2001, heard on 20th June, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), S.51 & O.XXI, Rr.37, 38, 39 & 40‑‑‑Execution of decree through arrest and detention of judgment‑debtor‑‑‑Provisions of S.51 read with O.XXI, Rr.37, 38, 39 & 40, C.P.C.‑‑‑Applicability‑‑‑Warrant of arrest, issuance of‑‑‑Import and essentials‑‑‑Issuance of warrants without complying with such mandatory provisions of C.P.C., would be offensive not only to such provisions of C.P.C., but also against guarantees enshrined in the Constitution‑‑‑No other law available to prescribe such mode of execution of decree, such provisions of C. P. C. would be attracted to proceedings before Banking Court‑‑­Holding otherwise would mean that judgment‑debtor in Banking Court is a lesser citizen not entitled to Constitutional guarantees, which idea is offensive to judicial mind.

Precision Engineering Ltd and others v. The Grays Leasing Ltd. PLD 2000 Lah. 290; Manhattan Pakistan (Pvt.) Ltd. v. Government of Pakistan and another PLD 2000 Kar. 322; Pakistan through Military Estates Officer, Rawalpindi v. Abdul Aziz and another 2001 CLC 1086 and, Ch. Harpal Sing and others v. Lal Hira Lal AIR 1955 All. 402 rel.

Ashtar Ausaf Ali for Petitioner.

Date of hearing: 20th June, 2003.

2003 C L D 1709

[Lahore]

Before Mian Hamid Farooq, J

Mian ABDUL KHALIQ‑‑‑Petitioner

Versus

MANAGER, SMALL BUSINESS FINANCE CORPORATION and others‑‑‑Respondents

Writ Petition No.9051 of 2002, decided on 29th May, 2002.

(a) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art.199‑‑‑Constitutional petition ‑‑‑Maintainability‑‑­Issuance of demand notice by the financial institute for the amount of loan advanced‑‑‑Validity‑‑‑Such notice cannot be called in question, through filing of Constitutional petition‑‑­Petition was not maintainable in circumstances.

Shagufta Begum v. The Income Tax Officer, Circle ­XI, Zone B, Lahore PLD 1989 SC 360 and Mir Nabi Bakhsh Khan Khoso v. Branch Manager, National Bank of Pakistan, Jhatpat (Dera Allah Yar) Branch and 3 others 2000 SCMR 1017 ref.

(b) Constitution of Pakistan (1973)‑‑‑--

‑‑‑‑Art. 199‑‑‑Constitutional petition ‑‑‑Maintainability‑‑­Contractual liability, enforcement of‑‑‑Petitioner availed financial facility from financial institution and executed agreements/ documents of his own free‑will ‑‑‑Effect‑‑­Enforcement of such agreements/ documents could not be enforced through filing of Constitutional petition‑‑‑Petition was not maintainable in circumstances.

Mumtaz Masud's case 1994 SCMR 2287 ref.

(c) Constitution of Pakistan (1973)‑‑‑--

‑‑‑‑Arts.199 & 203‑G‑‑‑Constitutional jurisdiction of High Court‑‑‑Charging of interest (Riba)‑‑‑Past and closed transaction‑‑‑Seeking of declaration of "interest" as un­ Islamic‑‑‑Validity‑‑‑High Court, in view of Art.203‑G of the Constitution had no power or jurisdiction under law to decide the matter.

Muhammad Ramzan v. Citibank N. A. 2001 CLC 158 and Dr. Muhammad Aslam Khaki v. Syed Muhammad Hashim and 8 others PLD 2000 SC 225 ref.

(d) Financial Institutions (Recovery of Loans) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑S. 9‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Maintainability‑‑‑Efficacious and adequate remedy‑‑‑Recovery of loan‑‑‑Charging of Riba (interest)‑‑‑Past and closed transaction‑‑‑Petitioner obtained loan from financial institution and failed to repay the same‑­‑Financial institution issued demand notice for the recovery of the same‑‑‑Plea raised by the petitioner was that charging of Riba (interest) in demand notice being un‑Islamic could not be claimed‑‑‑Petitioner further contended that the Financial Institution had not provided statement of accounts as he had already paid the principal amount ‑‑‑Validity‑‑­Although the interest/Riba was un‑Islamic yet past and closed transaction could not be re‑opened‑‑‑Petitioner was a 'customer', therefore, he could file a suit for the redressal of his alleged grievance before Banking Court under S.9 of Financial Institutions (Recovery of Loans) Ordinance, 2001, thus efficacious and adequate remedy was available to the petitioner‑‑‑Constitutional petition was hit by Art. 199(l) of the Constitution, therefore, the same was not maintainable‑‑‑High Court directed the petitioner to appear before Manager of the Financial Institution and the Manager was directed to provide facility of instalments and to give benefits/ concessions to the petitioner of the incentive schemes issued by the Financial Institutions off and on‑‑­Petition was disposed of accordingly.

Mumtaz Masud's case 1994 SCMR 2287; Muhammad Ramzan v. Citibank N. A. 2001 CLC 158 and Dr. Muhammad Aslam Khaki v. Syed Muhammad Hashim and 8 others PLD 2000 SC 225 ref.

N.A. Butt for Petitioner.

2003 C L D 1713

[Lahore]

Before Muhammad Sayeed Akhtar, J

CAPITAL ASSETS LEASING CORPORATION LTD.‑‑ Petitioner

Versus

INTERNATIONAL MULTI LEASING CORPORATION LTD.‑‑‑Respondent

Civil Original No.95 of 2002 and Civil Miscellaneous Nos.215/L and 225/L of 2003, decided on 12th June, 2003.

(a) Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑Ss. 284 & 287‑‑‑Petition for recall of order sanctioning scheme for amalgamation of companies‑‑‑Objection as to jurisdiction of Court to sanction scheme not raised in the petition‑‑‑High Court ignored such objection.

(b) Pleadings‑‑‑‑

‑‑‑‑Grounds not taken in petition could not be allowed to be urged during arguments.

(c) Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑Ss.282‑L, Part VIII‑A [Ss.282‑A to 282‑M] (as added by Companies (Second Amendment) Ordinance (CXXIII of 2002) w.e.f 15‑11‑2002] & 284‑‑‑Scheme for amalgamation of non­ Banking Finance Companies‑‑‑Jurisdiction of High Court‑‑­Scope‑‑‑Under S.282‑L of Companies Ordinance, 1984, for passing resolution approving such scheme, two third majority in value of shareholders was required, while under S.284 thereof, three fourth majority was required‑‑­Jurisdiction of High Court not taken away by Part VIII‑A of the Ordinance, but was still intact and could not be considered to have been ousted merely by implication.

Aftabuddin Qureshi and another v. Mst. Rachel Joseph and another PLD 2001 SC 482; Muhammad Bashir and 2 others v. Muhammad Firdaus and another PLD 1988 SC 232 and Governor, N.‑W.F.P. and another v. Gul Naras Khan 1987 SCMR 1709 ref.

(d) Jurisdiction—-

­

‑‑‑‑Exclusion of jurisdiction of Court not to be readily inferred‑‑‑Statute should not be construed as to oust or restrict jurisdiction of Court, unless very explicit words are used in statute itself in that behalf‑‑‑Such an intention should not normally be imputed to Legislature.

Muhammad Ismail and others v. The State PLD 1969 SC 241; A. Hamid v. Hussain Hyder, Chief Settlement and Rehabilitation Commissioner, West Pakistan, Lahore and another PLD 1971 Lah. 858; Muhammad Aslam v. The State PLD 1967 Lah. 810 and Raja Maula Dad Khan, Advocate v. West Pakistan Bar Council, Lahore and another PLD 1975 SC 469 rel.

(e) Companies Ordinance (XLVII of 1984)—­

‑‑‑‑Ss.284 & 287‑‑‑Expression "amalgamation"‑‑­Connotation‑‑‑Such expression includes in its fold an arrangement or compromise between company and its members or class of members for becoming shareholders in another undertaking‑‑‑True effect of amalgamation is that when two companies amalgamate and merge into one, transferor company loses its entity and ceases to have its business.

Saraswati Industrial Syndicate Ltd. v. C.I.T. Haryuana, Himachal Pradesh, Delhi‑II, New Delhi AIR 1991 SC 70 ref.

(f) Companies Ordinance (XLVII of 1984)—­

‑‑‑‑Ss. 284 & 287‑‑‑Term "arrangement"‑‑‑Connotation‑‑‑Such term is of wide import and cannot be given restricted meanings.

Hindusthan Commercial Bank Ltd. v: Hindusthan General Electrical Corporation Ltd. AIR 1960 Cal. 637 and In re: Patrakar Prakashan (Pvt.) Ltd. (1997) 13 SCL 33 ref.

(g) Words and phrases—­

‑‑‑‑"Amalgamation"‑‑‑Meaning.

Wild v. South African Supply and Cold Storage Co. (1904) 2 Ch. 268 and Halsbury's Laws of England, 4th Edn., para.1539. ref.

(h) Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑Ss.284 & 287‑‑‑Amalgamation/merger of companies‑‑­Two or more companies are fused into one by merger i.e. one is absorbed into another‑‑‑All amalgamations/ mergers take effect under Ss.284 & 287 of Companies Ordinance, 1984.

(i) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.284 & 287‑‑‑Scheme for amalgamation of companies‑‑­Jurisdiction of Court‑‑‑Scope‑‑‑High Court would neither act as a post office or conduit nor view such scheme with a view to find out, whether same was ideal scheme nor pick holes in scheme nor approach scheme in a carping spirit.

In re: Sidhpur Mills Co. Ltd. AIR 1962 Guj. 305 and Dewan Salman Fibre Ltd., Islamabad v. Dhan Fibre Ltd., Rawalpindi PLD 2001 Lah. 230 ref.

(j) Companies Ordinance (XLVII of 1984)‑‑‑-

‑‑‑‑Ss.284 & 287‑‑‑Qanun‑e‑Shahadat (10 of 1984), Arts.117, 118 & 119‑‑‑Scheme for amalgamation/ merger of companies.‑‑‑Essentials‑‑‑Burden of proof‑‑‑Such scheme must be reasonable, fair, bona fide and for economic benefit of merging companies‑‑‑Onus to prove unreasonableness or unfairness would be on those, who object to such scheme.

Hindusthan General Electric Corporation Ltd.'s case AIR 1959 Cal. 679 ref.

(k) Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑S.284‑‑‑Scheme for amalgamation of companies sanctioned by Court‑‑‑Objection of first company was that directors of second company had not disclosed to first company net value of shares of their company ‑‑‑Validity‑‑­Directors had a duty to company and its shareholders‑‑‑No concealment found in balance‑sheet and Auditor's report‑‑­Non‑disclosure of such fact would not detract from scheme in any way.

Federation of Pakistan v. Public at Large 1988 SCMR 2041; Johnson and Philips Pakistan Ltd. v. Shalimar Construction Co. 1991 MLD 841; In re: Lipton (Pakistan) Ltd. and another 1989 CLC 818; Brothers Steel Mills Ltd. and others v. Mian Ilyas Miraj and 14 others PLD 1996 SC 543 and Board of Intermediate and Secondary Education, Lahore through its Chairman and another v. Mst. Salina Afroze and 2 others PLD 1992 SC 263 ref.

(l) Company‑‑‑

‑‑‑‑ Resolution passed by Board of Directors‑‑‑Validity‑‑‑Such resolution could not override resolution passed by shareholders in general body meeting.

(m) Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑Ss.284(2) & 285‑‑‑Withdrawal/cancellation/revocation of order sanctioning scheme for amalgamation of companies‑‑­Scope‑‑‑Once an order sanctioning scheme had become effective, same would be binding on all members, creditors and company despite any defect or irregularity‑‑‑No provision for withdrawal, cancellation or revocation of order sanctioning such scheme‑‑‑After sanctioning such scheme, jurisdiction of High Court is confined only to matters detailed in S. 285 of Companies Ordinance, 1984.

Palmers's Company Law, 24th Edn. and Chief Commissioner of Pay Roll Tax v. Group Four Industries Pvt. Ltd. (1984) 1 NSWLR 680 rel.

(n) Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑--S.285‑‑‑Scheme for amalgamation of companies‑‑‑Powers of Court to enforce scheme and make modifications therein‑‑­Scope‑‑‑High Court is equipped with powers of widest amplitude to give necessary directions to parties to make arrangements for purpose of working of the scheme‑‑‑Court must make attempt to make scheme workable and find out modifications, if any, necessary to make scheme workable‑‑­Modifications include addition to scheme of amalgamation or omission therefrom for purpose of making same workable.

Farooq Amjad Mir for Petitioner (in C. M. No.215‑L of 2003).

Saleem Sehgal for Respondent (in C. M. No.225‑L of 2003).

2003 C L D 1734

[Lahore]

Before Jawwad S. Khawaja, J

MUHAMMAD KALEEM RATHORE‑‑‑Petitioner

Versus

INSTITUTE OF CHARTERED ACCOUNTANTS through President and 4 others‑‑‑Respondents

Writ Petition No.3582 of 2003, heard on 25th June, 2003.

(a) Companies Ordinance (LXVII of 1984)‑‑‑

‑‑‑‑S. 254‑‑‑Security and Exchange Ordinance (XVII of 1969), S.34(4)‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Appointment of external auditor‑‑­Prescribing additional qualifications for auditors‑‑­Jurisdiction of Security and Exchange Corporation of Pakistan‑‑‑Directive was issued by Security Exchange Corporation of Pakistan whereby certain restrictions were imposed on appointment of external auditors‑‑‑Petitioner being member of Institute of the Chartered Accountants was aggrieved of the said directive‑‑‑Plea raised by the petitioner was that classification which had been made by the Security Exchange Corporation of Pakistan and by Stock Exchanges was violative of S.254 of Companies Ordinance, 1984‑‑‑Validity‑‑‑Statutory provision under S.254 of Companies Ordinance, 1984, is couched in language which is negative and merely sets out the minimum qualification for an auditor in case of public company which may or may not be a listed company‑‑‑Nothing is contained in S.254 of Companies Ordinance, 1984, prohibiting the Security and Exchange Corporation of Pakistan or a Stock Exchange or for that matter any other private or public body from prescribing additional conditions for the appointment of auditors‑‑‑Stock Exchanges being independent entities incorporated under the Companies Ordinance, 1984 are competent to frame their own listing regulations‑‑‑Power to frame regulations is expressly conferred on Stock Exchanges under S.34(1) of Security and Exchange Ordinance, 1969, the only restriction being that the regulations must have prior approval of Security and Exchange Corporation of Pakistan and must be consistent with the rules framed under the provisions of Security and Exchange Ordinance, 1969‑‑‑Security and Exchange Corporation of Pakistan through its directive had imposed only an additional qualification on such members of the Institute of Chartered Accountants as were desirous of being appointed as external auditors of listed companies‑‑­No conflict existed between the directive and the provisions of S.254 of Companies Ordinance, 1984‑‑‑High Court declined to interfere with the directive passed by the Authorities‑‑‑Petition was dismissed in circumstances.

(b) Security and Exchange Ordinance (XVII of 1969)‑‑‑

‑‑‑‑Preamble‑‑‑Companies Ordinance (LXVII of 1984), Preamble‑‑‑Import, object and scope‑‑‑Companies Ordinance, 1984, is a general law which has been enacted for the purpose of regulating all matters relating generally to all types of companies including listed companies‑‑‑Scope of Securities and Exchange Ordinance, 1969, is much more limited and is confined to matters such as Stock Exchanges and the listing of companies by such Exchanges.

(c) Companies Ordinance (LXVII of 1984)‑‑‑

‑‑‑‑S.254‑‑‑Security and Exchange Ordinance (XVII of 1969), S. 34(4)‑‑‑Constitution of Pakistan (1973), Arts.18 & 25---­Appointment of external auditor‑‑‑Prescribing additional qualifications for auditors‑‑‑Directive was issued by Security Exchange Corporation of Pakistan whereby certain restrictions were imposed on appointment of external auditors‑‑‑Petitioner being member of Institute of Chartered Accountants was aggrieved of the directive‑‑‑Plea raised by the petitioner was that the directive was in conflict with the provisions of Arts. 18 & 25 of the Constitution, as the same had imposed restriction on ability of petitioner to engage in his profession as Chartered Accountant and also because it was discriminatory‑‑‑Validity‑‑‑Neither any impermissible restriction was imposed on the petitioner nor he was subjected to any invidious discrimination‑‑‑Petitioner could always act as an external auditor of a listed company by obtaining requisite certification from the Institute of Chartered Accountants, on meeting the standards prescribed by the Institute for satisfactory rating under its Quality Control Review Programme‑‑‑Plea was repelled in circumstances.

Khawaja Abrar Majal for Petitioner.

Anwar Kamal for Respondents Nos. 1 and 2.

Khawaja Saeed‑uz‑Zaman and Nasruallah Babar for Respondent No.3.

Mujtaba Ali Hamdani for Respondent No.5.

Date of hearing: 25th June, 2003.

2003 C L D 1751

[Lahore]

Before Maulvi Anwarul Haq and Mian Hamid Farooq, JJ

DELTA WEAVERS (PVT.) LIMITED‑through Director and 3 others‑‑‑Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED‑‑‑Respondent

First Appeal from Order No.405 of 2002, heard on 21st July, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.10, 17 & 22‑‑‑Civil Procedure Code (V of 1908), Ss.12(2), 151 & O.XIII, R.2‑‑‑Suit by Bank for recovery of loan amount‑‑‑Banking Court dismissed leave application and. decreed suit due to absence of defendant on 30‑10‑2001, when only application of Bank under O.XIII, R.2, C.P.C., was fixed for hearing‑‑‑Defendant's application under S.12(2), C.P.C., for setting aside of judgment/ decree was dismissed by Banking Court being incompetent‑‑­Validity‑‑‑Neither suit nor leave application had been called for hearing on 30‑10‑2001‑‑‑Rather only application of Bank seeking permission to produce additional documents was to be taken up for hearing on such date‑‑‑Order of dismissal of subsequent application showed that matter had been approached in a manner as if only a formality was being completed, which was not in consonance with law‑‑‑Mere mentioning of wrong provision of law would not make any lis incompetent‑-‑Such matter had to be dealt with under S.151, C.P.C., which incidentally found mention in the title of application under S.12(2), C.P.C.‑‑‑ Banking Court had acted without lawful authority while passing impugned judgment and decree‑‑‑High Court accepted appeal and set aside impugned judgment/ decree, resultantly application filed by Bank under O:XIII, R.2, C.P.C., and leave application alongwith suit would be deemed to be pending before Banking Court.

Qazi Muhammad Tariq v. Hasin Jahan and 3 others 1993 SCMR 1949 rel.

(b) Administration of justice‑‑‑

‑‑‑‑Mere mentioning of a wrong provision of law would not make any lis incompetent.

Tariq Masood for Appellants.

Mazhar Hakeem for Respondent.

Date of hearing: 21st July, 2003.

2003 C L D 1764

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

LAHORE DEVELOPMENT AUTHORITY, LAHORE through its Director General, L.D.A. and another‑‑‑Appellants

Versus

INVESTMENT CORPORATION OF PAKISTAN, KARACHI and others‑‑‑Respondents

Intra‑Court Appeal No.4‑L of 2002, decided December, 2002.

Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑Ss.10, 314 & 333‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑‑Winding up proceedings‑‑‑Plot allotted to company was cancelled by Authority (LDA) after its sale by Official Liquidator ‑‑‑Direction of Company Judge to Authority to give effect in its record to sale‑deed to be executed, by official liquidator in favour of auction‑purchaser ‑‑Intra‑Court Appeal against such order by Authority (LDA)‑‑­ Maintainability‑‑‑Company Judge had passed impugned order after passing of winding‑up order ‑‑‑Intra‑Court Appeal was incompetent in circumstances.

I.C.A. No.14‑L of 2001; C.P.L.A. No.765‑L of 2002; Agha Fakhruddin Khan v. Messrs Ruby Rice and General Mills Ltd. and others 2001 YLR 1797 and M. Suleman & Co. through Managing Partner v. Joint Official Liquidators and another 1997 CLC 260 rel.

Mian Muzzafar Hussain for Appellants.

Shamas Mahmood Mirza for Respondent No.3.

Haider Zaman Qureshi for Respondent No.8.

Date of hearing: 19th December, 2002.

2003 C L D 1779

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

ORIX LEASING PAKISTAN LIMITED through Attorney‑‑‑Appellant

Versus

NEW MALIK FOUNDRY AND ENGINEERING WORKS and 5 others‑‑‑Respondents

Regular First Appeal Case No.326 of 1996, heard on 11th March, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.6 & 9‑‑‑Suit for recovery of lea8e finance‑‑‑Bank claimed overdue lease money, additional lease rentals and agreed loss value of leased equipment‑‑‑Banking Tribunal decreed the suit, but declined to allow amount of agreed loss value‑‑‑Validity‑‑‑Amount of agreed loss value was meant only to secure Bank against any loss or damage to leased equipment‑‑‑Bank had not alleged any loss or damage to the leased equipment‑‑‑Banking Tribunal had rightly not allowed such amount‑‑‑High Court dismissed the appeal.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.6‑‑‑Suit for recovery of lease finance‑‑‑Claim for refund of security deposit by defendant‑‑‑Validity‑‑‑Security deposit was equivalent to residual value of leased equipment as set out in lease agreements‑‑‑Residual value of leased equipment was recoverable by Bank, in case defendant opted to retain the same‑‑‑Defendant could claim refund of security deposit, .if he opted to return leased equipment to Bank‑‑‑Statement of account filed by Bank did not show that such amount had been credited towards lease rentals‑‑­Defendant had already exercised its option to retain leased equipment, thus, Bank was entitled to adjust amount of security deposit towards residual value of leased equipment.

Muhammad Naeem Sehgal for Appellant.

Sheikh Muhammad Ismail for Respondents.

Date of hearing: 11th March, 2003.

2003 C L D 1783

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs A.M. RICE CORPORATION through Sole Proprietor and another‑‑‑Appellants

Versus

BANK OF PUNJAB through Branch Manager and another‑‑‑Respondents

E.F.A. No.79 of 2003, heard on 12th May, 2002.

(a) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.22‑‑‑Stay by Appellate Court‑‑‑Failure to comply with the direction of Appellate Court‑‑‑Appellants had filed stay application against execution proceedings alongwith appeal‑‑‑Appellate Court directed the appellants to deposit a sum of Rs.20,00,000 but they failed to comply with the direction of the Appellate Court‑‑‑Effect‑‑‑Such order of the Appellate Court was only confined to the stay of execution of decree and if the appellants had not deposited the amount, the execution could be carried on but no mala fides could be attributed to the appellants in circumstances.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑Ss.19 & 22‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.90‑‑‑Appeal‑‑‑Sale of mortgaged property, setting aside of‑‑‑Grievance of judgment‑debtor was that no sale was conducted at the site and all the proceedings in that behalf were fictitious and fraudulent‑‑‑Executing Court without framing of issues just on auction report dismissed the objection‑‑‑Validity‑‑‑Such question could not be resolved by the Executing Court without framing of issues and enabling' the parties to produce evidence‑‑‑Executing Court could not have rejected the objections of judgment‑debtor just on the basis of auction report‑‑‑ Sale' was set aside and the case was remanded to Executing Court with a direction to decide objection petition after framing of issues and .recording of evidence produced by parties‑‑‑Appeal was allowed accordingly.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.90‑‑­Setting aside of sale‑‑‑Inadequacy of sale price‑‑‑Bank at the time of mortgage of the property had got the property evaluated for a sum of Rs.1,04,27,000 but subsequently the reserve price was fixed for an amount of Rs.4,500,000 without taking the Executing Court in confidence and the property was sold for Rs.46,00,000‑‑‑Validity‑‑‑Mere inadequacy of sale price by itself was no ground for setting aside the sale‑‑‑Executing Court should have considered the sale on the basis of some material placed on record by the Bank to justify that the reserve price fixed was adequate and justified which apparently was not done‑‑‑Sale was set aside in circumstances.

Mian Sohail and Aish Bahadur Rana for Appellants.

Muhammad Shuja Babar and Muhammad Iqbal for Respondents.

Date of hearing: 12th May, 2003.

2003 C L D 123

[Peshawar]

Before Talaat Qayum Qureshi, J

Malik SUHBAT KHAN‑‑‑Petitioner

Versus

Malik AJAB KHAN and others‑‑‑Respondents

Civil Revision No.257 of 1999, decided on 28th June, 2002.

(a) Qanun‑e‑Shahadat (10 of 1984)‑‑‑

‑‑‑‑Arts. 79, 117 & 120‑‑‑Execution of document‑‑‑Onus to prove‑‑‑Plaintiff relied on partnership deed which was denied by defendant‑‑‑Plaintiff had neither produced scribe of the deed nor any marginal witness was examined to prove the contents of the deed‑‑‑Only witness produced in Support of the partnership deed was Registry Moharrir who stated about the registration of the partnership deed‑‑­Effect‑‑‑On the denial of the defendant regarding execution of the deed, burden to prove the document had shifted to the plaintiff‑‑Evidence of the Registry Mohirrir alone was not sufficient to prove the contents and execution of the deed between the parties‑‑‑Requirement of Art. 79 of Qanun‑e-­Shahadat, 1984, was not fulfilled by plaintiff in circumstances.

(b) Partnership Act (IX of 1932)‑‑‑

‑‑‑S. 69‑‑‑Specific Relief Act (I to 1877), S. 42‑‑‑Civil Procedure Code (V of 1908), S. 115‑‑‑Partnership in firm‑‑­Denial‑‑‑Non‑registration of partnership deed with Registrar of Firms‑‑‑Plaintiff claimed to be a partner in firm on the basis of partnership deed registered with the Sub‑Registrar but not registered with Registrar of Firms under S.69 of Partnership Act, 1932‑‑‑Only witness produced to prove the deed was Registry Mohirrir‑‑‑Neither scribe of the deed nor marginal witnesses were produced by the plaintiff to prove execution of the deed‑‑‑Trial Court dismissed the suit whereas the Appellate Court allowed the appeal and set aside the judgment and decree passed by the Trial Court‑‑­Validity ‑‑‑Effect of non‑registration of the firm with the Registrar of Firms would be that the partnership and its partners would suffer from legal disability in filing suit against the party and as against one another, therefore, suit filed by the plaintiff was hit by the provisions of S. 69 of Partnership Act, 1932‑‑‑Trial Court while appreciating the law applicable to the case had rightly dismissed the suit of the plaintiff‑‑‑Findings of the Appellate Court were not based on proper appreciation of law‑‑‑Judgment and decree passed by the Appellate Court were set aside and that of the Trial Court was restored.

Sh. Wazir Muhammad for Petitioner.

Muhammad Asif for Respondent No. 1.

Nazirullah Khan for Respondents Nos. 2 to 7.

Date of hearing: 28th June, 2002.

2003 C L D 1021

[Peshawar]

Before Shah Jehan Khan and Dost Muhammad Khan, JJ

FAZAL MUHAMMAD and others---Petitioners

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN and

others---Respondent

Writ Petitions Nos.848, 1042 and 1052 of 2002, decided on 14th January, 2003.

(a) Constitution of Pakistan (1973)---

----Ar.199---Circular No.RD/01/2002, dated 22-5-2002 issued by Agricultural Development Bank of Pakistan--­Constitutional petition---Loans obtained by farmers under policy of Bank formulated for calamity affected areas---Bank announced relief package through circular dated 22-5-2002 in view of drought prevailing in different parts of country giving concession to farmers in re-payment of loans and mark-up etc. ---Provincial Government by a notification declared areas belonging to petitioners as calamity hit areas for period from Kharif 2000 to Rabi 2000-2001---Such notification was amended through corrigendum, whereby such period was substituted by 1-7-2001 to 30-6-2002--­Bank denied to extend benefit of corrigendum to petitioners and demanded from them loans alongwith mark-up etc.--­Validity---Corrigendum had been given retrospective effect as period for purpose of calamity and drought was computed from 1-7-2001 to 30-6-2002---Corrigendum conferred benefits on petitioners as drought affectees--­Petitioners were entitled to relief granted through circular dated 22-5-2002---Denial of Bank to extend such benefit to petitioner was an act without jurisdiction and lawful authority---High Court accepted Constitutional petitions with observations that those petitioners having loan up to Rs.25,000 would be entitled to remission of interest/mark­up thereon, while those petitioners, who had availed loan up to Rs.1,00,000, would be entitled to 100% remission of outstanding amount of interest/mark-up, provided principal amount was re-paid to Bank within two months either in lump sum or in instalments.

(b) Notification---

---- Retrospective effect of---Scope---Notification taking awab existing rights or creating -new liabilities is always prospective and not retrospective---Notification conferring benefits on indiuidual(s) or class of individuals is always given retrospective effect.

Messrs Army Welfare Sugar Mills Limited and others v. Federation of Pakistan 1992 SCMR 1652; State Bank of Pakistan v. Messrs Faisal Spinning Mills Limited 1997 SCMR 1244 and Anoud, Power Generation Limited and others v. Federation of Pakistan and others PLD 2001 SC 340 fol.

Samiullah Jan for Petitioners.

Syed Mir Muhammad for Respondents Nos. 1 to 4.

Salah-ud-Din, Khan, D.A.-G. for Respondent No.5.

Dates of hearing: 18th and 19th December, 2002.

2003 C L D 1050

[Peshawar]

Before Nasir-ul-Mulk and Talaat Qayyum Qureshi, JJ

Malik IFTIKHAR AHMAD---Appellant

Versus

R.D.F.C.---Respondent

F.A.B. No.71 of 2002 and Civil Miscellaneous No.481 of 2002, decided on 27th February, 2003.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance (XXV of 1997)---

----Ss.7, 9 & 16---Suit for recovery of loan---Suit having been decreed, defendant had filed appeal against judgment of Banking Court in which he had claimed that he having resigned from the Directorship/Chief Executiveship of defendant-Company, was absolved of his liability as after his resignation he was no more guarantor---Execution of guarantee had not been denied by defendant/guarantor and only plea taken by him was that he had resigned from Directorship of defendant-Company---Guarantee executed by defendant had provided that guarantee would continue to be binding on him, and on his representatives in respect of the liabilities---Guarantee was executed by the defendant in his individual capacity and same was not conditional with the holding of his office as Director of defendant-Company--­Nothing was on record to indicate than after his resignation he had revoked/ withdrawn said guarantee or that plaintiff­-Corporation had cancelled same and had absolved the defendant of his liability as guarantor---Letter of guarantee being subsisting and valid, was enforceable---Banking Court, in circumstances, had rightly appreciated legal position while passing decree against the defendants---In absence of any illegality or perversity in judgment and decree passed by Banking Court, warranting interference, appeal against the judgment and decree of Banking Court was dismissed.

Muhammad Asif for Appellant.

2003 CL D 1171

[Peshawar]

Before Talaat Qayyum Qureshi, J

UNITED BANK LIMITED through Manager---Petitioner

Versus

KARIM DAD---Respondent

Civil Revision No.340 of 1996, decided on 24th March, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLV of 2001)---

----S.9---Civil Procedure Code (V of 1908), S.9---Suit for recovery of damages by the customer against Bank on the grounds that he had applied for grant of loan of Rs.5,00,000 but he was given a sum of Rs.2,56,000; that he had spent Rs.10, 000 for execution of documents in favour of the Bank and a huge amount for ensuring his factory; that although the Bank Authorities had verbally agreed to disburse the remaining amount of Rs.2,85,000 as I.D.A. loan but thereafter they did not sanction the said amount and that due to non-disbursement of the said amount, the plaintiff had sustained damages amounting to Rs.5,00,000--­Maintainability---Customer or a financial institution committing default in fulfilment of any obligation with regard to any finance, a financial institution or, as the case may be, the customer could institute a suit in the Banking Court under S.9, Financial Institutions (Recovery of Finances) Ordinance, 2001---Civil Court had no jurisdiction to entertain a suit for recovery of damages filed by the borrower against a Banking Company as it was the exclusive jurisdiction of the Special Judge Banking Court to adjudicate upon the matter.

Mst. Yasmin Neghat and others v. National Bank of Pakistan and others PLD 1988 SC 391; Messrs Grainsystems (Pvt.) Limited and 10 others v. Agricultural Development Bank 1993 SCMR 1996; Haji Nabiullah and others v. H.B.L. and 2 others PLD 1990 Pesh. 17; Messrs Shafiq Hanif (Pvt.) Limited, Karachi v. Bank of Credit and Commerce International (Overseas) Limited, Karachi PLD 1993 Kar. 107; State Bank of Pakistan v. Chiragh Sun Engineering Limited and another 2000 YLR 1198; Muhammad Nazir Afandi v. IDBP and 3 others PLD 1992 Pesh. 87 and Qayum Nawaz Khan and another v. The Regional Manager, Agricultural Development Bank of Pakistan, Dera Ismail Khan and 4 others PLD 1997 Pesh.72 ref.

Aamer Javed for Petitioner.

Mian Muhibullah Kakakhel for Respondent.

Date of hearing: 24th March, 2003.

2003 C L D 1581

[Peshawar]

Before Nasirul Mulk and Ijaz ul Hassan, JJ

Mst. ALLAH RAKHI‑‑‑Petitioner

Versus

GENERAL MANAGER, HOUSE BUILDING FINANCE CORPORATION, HEAD OFFICE KARACHI and another‑‑‑Respondents

Writ Petition No.582 of 2001, decided on 3rd April, 2003.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑---

‑‑‑‑S. 21‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Suit for recovery of amount or outstanding loan and dues against the petitioner‑‑Constitutional petition by the petitioner seeking that House Building Finance corporation be restrained from making any recovery of the outstanding dues under the decree from the petitioner without extending her the benefit of package announced by the prime Minister dated 23‑7‑1997‑‑‑Maintainability‑‑‑Remedy of appeal was available to the petitioner under S.21, Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 which she had not availed‑‑‑Petitioner had taken financial assistance from the Corporation in the year 1976 and had not discharged her liability and entire loan was outstanding against her‑‑‑Such conduct of the petitioner clearly disentitled her from invoking the Constitutional jurisdiction of High Court‑‑‑Constitutional petition could not be invoked where consent decrees could be passed‑‑­Principles.

Article 199 of the Constitution provided that no petition would lie if any other adequate, alternate remedy, was available. Remedy of appeal, was already available which had not been resorted to by the petitioner.

The High Court under its Constitutional jurisdiction could not take over the function of machinery provided by the statute. The course open to the petitioner was to have instituted appeal against the decree instead of invoking Constitutional jurisdiction of High Court.

Exercise of writ jurisdiction was discretionary which was to be used in good faith having a look to all the attending circumstances and relevant factors of the case. The same was to be used in just, fair and reasonable ways. The financial assistance was provided to the petitioner in the year 1976 for construction of a house on certain terms and conditions. The petitioner had not discharged her liability. The entire loan was outstanding against her. Above conduct of the petitioner clearly disentitled her from invoking the Constitutional jurisdiction of High Court. Even otherwise a writ petition was not maintainable where consent decrees were passed.

Sheikh Gulzar Ali & Co. Ltd. and others v. Special Judge, Special Court of Banking and another 1991 SCMR 590 fol.

Sheikh Gulzar Ali & Company and 2 others v. Special Judge, Special Court of Banking for Sindh at Karachi and another 1989 CLC 1958 ref.

Pir Muhammad for Petitioner.

Syed Qalbe Abbas for Respondent.

Date of hearing: 3rd April, 2003.

2003 C L D 1754

[Peshawar]

Before Talaat Qayyum Qureshi, J

MEHMOOD KHAN‑‑‑Appellant

Versus

MAKMA STEEL CRAFT (PVT.) LTD. ‑‑‑Respondent

F.A.B. No. 109 of 1999, decided on 30th May, 2002.

(a) Civil Procedure Code (V of 1908)‑‑‑--

‑‑‑‑O. VI, Rr.1, 14 & 15‑‑‑Signing and verification of pleading‑‑‑Essentials‑‑‑Word `pleading" means plaint or written statement‑‑Body of plaint not separate from its verification‑‑‑Verification is part and parcel of plaint‑‑‑Plaint as well as verification has to be signed by the same party.

(b) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑-S.9(1)‑‑‑Suit filed by Bank‑‑‑Non placing on record copy of special resolution or power of attorney authorising person, who signed the plaint‑‑‑Effect‑‑‑In absence of any material available on record, Court could not presume that such person had been duly authorized by Banking Company to file the suit.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss.9(1) & 7‑‑‑Civil Procedure Code (V of 1908), O. VI, R.15 & O.XXIX, R.1‑‑‑Suit filed by Bank ‑‑‑Verification, on plaint not done by authorized officer‑‑‑Effect‑‑‑Suit could not be dismissed due to defect of verification on plaint‑‑‑Omission to verify pleading by authorized officer would neither give rise to any penal consequences nor render the plaint absolutely void or a nullity, rather same was simply an irregularity‑‑‑Signing, verification and drafting of plaint in a particular manner were matter of mere procedure, thus, relevant provisions could not be strictly construed.

(d) Interpretation of statutes‑‑‑-

‑‑‑‑Mandatory provision‑‑‑Important test for showing that certain proceedings were a nullity, was to show that mandatory provisions of law had been violated.

(e) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss. 9(1) & 7‑‑‑Civil Procedure Code (V of 1908), O. VI, Rr.14, 15 & O.XXIX, R.1‑‑‑Defective signing or presentation of plaint by a person not holding authority/power of attorney‑‑‑Not violation of any specific provision of law‑‑­Such presentation or signing could not make plaint a nullity­‑‑Rules regarding verification and signatures on plaint, being matter relating to procedure, were to be liberally construed.

Ram Labhaya Mal and another v. Firm Chanchal Singh Jaswant Singh AIR 1932 Lah. 28; Wali Muhammad Khan v. Ishak Ali Khan and others AIR 1931 All. 507; Tula Ram Chaudhari v. B. Debi Datt Chaudhari AIR (36) All. 498; Bundi Portland Cement Ltd. v. Abdul Hussein Essaji AIR 1936 Bom. 418; Commerce Bank Ltd., Karachi v: Habib Bakhsh and another PLD 1978 Quetta 45 and Shafiq Metal Works and 5 others v. The Bank of Bahawalpur Ltd., Gujranwala PLD 1973 Note 33 at p.41 ref.

(f) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss. 9 & 15‑‑‑Suit for recovery of loan amount decreed by Banking Court‑‑‑Validity‑‑‑Statement of account annexed with plaint was not in accordance with agreement executed by parties‑‑‑Mark‑up had been charged over mark‑up, which Bank under law could not charge‑‑‑Statement of account did not show date of payment of loan amount and charging of mark‑up‑‑‑Fresh statement of accounts furnished by the Bank also showed charging of interest @ 19% rendering the same doubtful ‑‑‑No reliance could be placed on such statement of account, unless and until all its entries were proved by Bank‑‑‑High Court allowed appeal; set aside judgment/decree and remanded case to Banking Court with directions to record evidence of parties about all entries of statement of accounts and then decide same afresh within specified period.

(g) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss.9 & 7‑‑‑Civil Procedure Code (V of 1908), S.20‑‑‑Suit for recovery of loan amount by Bank‑‑‑Territorial jurisdiction of Banking Court at place "P"‑‑‑Factory of borrower was situated at place "S"‑‑‑Amounts were withdrawn and deposited at place "P"‑‑‑Held: Banking Court at place "P" would have jurisdiction to entertain such suit.

Khalid Mehmood for Appellant.

Hidayatullah Khan for Respondent.

Date of hearing: 30th May, 2002.

2003 C L D 1770

[Peshawar]

Before Nasir‑ul‑Mulk and Ijaz‑ul‑Hassan, JJ

Messrs AIMA INDUSTRIES (PVT.) LTD. and others‑‑‑Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED‑‑‑Respondent

F.A.B. No.54 of 2001, decided on 3rd April, 2003.

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss.7, 9, 10 & 21‑‑‑Suit for recovery of amount‑‑­Application for leave to defend suit‑‑‑Dismissal‑‑‑Defendant filed appeal against judgment of Banking Court whereby its application for grant of permission to appear and defend the suit was dismissed‑‑‑Availing of financial assistance and execution of documents by defendant in favour of Bank had not been denied by the defendant‑‑‑Grievance of defendant in main was that entries reflecting in statement of accounts were fictitious and bogus and that mark‑up claimed by Bank ran contrary to contracted rate etc. ‑‑‑Defendant had not been able to point out any wrong or bogus entry in the statement of accounts, creating doubt in one's mind regarding its authenticity‑‑‑Statements of accounts had been prepared in accordance with Bank record and it had been verified as required by law‑‑‑Mark‑up had been duly highlighted in sanction advice and it had been charged at contracted rate‑‑‑Mere assertion of defendant that loan was without mark‑up or that rate of mark‑up claimed by plaintiff ­Bank was exorbitant, without positive attempt on part of defendant to substantiate same, was of no consequence‑‑­Contention that plaint had not been filed by a competent person, was repelled as plaint had been duly verified and affirmed on Oath by Manager of plaintiff‑Bank‑‑‑Other objections raised by defendant were of no importance‑‑­Banking Court having dealt with matter in a proper manner, well reasoned judgment and decree passed by Banking Court was unexceptional and hardly called for interference in appeal before High Court.

Nisar Ahmad Khan for Appellants.

Qaisar Rashid for Respondent.

Date of hearing: 3rd April, 2003.

2003 C L D 440

[Quetta]

Before Raja Fayyaz Ahmed, C.J.

and Fazal‑ur‑Rahman, J

EHSAN ALI ALIBHOY and 2 others‑‑‑Appellants

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and 5 others‑‑‑Respondents

Civil Miscellaneous Application No. 15 of 2000, decided on 29th July, 2002.

(a) Practice and procedure‑‑‑-

-------Any party approaching Court has to succeed on the strength of his case and not on the weakness of the opponent's case.

(b) Industrial Development Bank of Pakistan Ordinance (XXXI of 1981)‑‑‑-

‑‑‑‑S.39‑‑‑Recovery of written off loan‑‑‑Attachment of property‑‑‑Trial Court passed ad‑interim order regarding attachment of the property and without asking the borrower to file written statement, they were called upon by means of notice regarding confirmation of ad‑interim order of attachment‑‑Validity‑‑‑Borrowers ought to have been allowed to file written statement as no one should be condemned unheard unless and until barred by law‑‑‑Before passing any order under S.39(3) or S.39(4) of Industrial Development Bank of Pakistan Ordinance, 1961, the Trial Court might have examined the person making the application‑‑‑Trial Court, in the present case, did not comply with provisions of law and had not thoroughly studied the record so as to reach the correct conclusion rather the Court had dealt with the matter in a cursory manner‑‑‑Claim of the Bank was not investigated by the Trial Court in accordance with the provisions of S.39(8) of Industrial Development Bank of Pakistan Ordinance, 1961, which should have passed a proper order as per such provisions‑‑‑Ad‑interim order passed by the Trial Court was set aside and the matter was remanded to the‑Trial Court for adjudication in accordance with law after providing opportunity of hearing to the parties‑‑‑Appeal was allowed accordingly.

(c) Limitation Act (IX of 1908)‑‑‑-

‑‑‑‑S.3‑‑‑Limitation‑‑‑Duty of Court‑‑‑Scope‑‑‑Even any party had not raised the plea of limitation, it was incumbent upon the Court to consider as to whether the suit was within time‑‑‑Court which was seized of the matter was to exercise jurisdiction keeping in view S.3 of Limitation Act 1908, notwithstanding the fact whether the defendant had sought dismissal of the suit by setting the plea of limitation.

(d) Limitation‑‑‑

‑‑‑‑Question of‑‑‑Issue of limitation being mixed question of law and fact cannot be resolved without giving opportunity to the parties to produce their respective evidence.

1998 CLC 353; 1999 YLR 123 and PLD 1985 SC 153 ref.

Syed Ayaz Zahoor for Appellants.

Muhammad Riaz Ahmed for Respondents.

Date of hearing: 15th April, 2002.

2003 C L D 497

[Quetta]

Before Amanullah Khan Yasinzai and Fazal ur Rehman, JJ

Mst. PARVEEN QASIM JAN and 2 others‑‑‑Appellants

Versus

HABIB BANK LIMITED‑‑‑Respondent

High Court Appeal No. 17 of 2002, decided on 22nd July, 2002.

(a) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑‑Ss. 9 & 10‑‑‑Civil Procedure Code (V of 1908), O. XXXII, Rr. 1 & 3‑‑‑Guardian and Wards Act (VIII of 1890), S.7‑‑­Recovery of Bank loan‑‑‑Suit against minors‑‑‑Appointment of guardian ad litem‑‑‑Requirement‑‑‑Father of the minors was duly appointed guardian by the Guardian Judge who appeared before the Banking Tribunal and submitted application for leave to defend the suits on his behalf and on behalf of the minors‑‑‑Banking Tribunal rejected the application and decreed the suit in favour of the Bank‑‑­Contention of the minors was that they were given no notice and the decree to their extent was void ‑‑‑Validity‑‑­When the application for leave to defend was filed, the father of the minors was still acting as guardian ad litem of the minors‑‑‑No objection having been raised for non­ appointment of guardian of the minors, the contention of the minors was repelled by the High Court.

(b) Banking Companies (Recovery of Loan, Advances, Credits and Finances) Act (XV of 1997)‑‑‑‑----

‑‑‑‑Ss. 9 & 21‑‑‑Transfer of Property Act (IV of 1882), S.58‑‑­Guardian and Wards Act (VIII of 1890), S.7‑‑‑Recovery of Bank loan‑‑‑Mortgage of property owned by minors„‑‑‑Against such mortgage, the Bank advanced loan to the borrower who was the father of minors and was duly appointed guardian by the Guardian Judge‑‑‑Permission for mortgage of the property owned by the minors to the extent of Rs.16 Lakh, for the purpose of loan, was granted by the Guardian Judge‑‑‑Borrower deposited the title documents of the property with the Bank, executed collateral mortgage deed and received a loan of Rs.90 Lakh‑‑‑Suit was decreed in favour of the Bank and the property owned by the minors was handed over to the Bank in execution of the decree ­Plea raised by the minors was that at the most the liability of the minors was to the extent of Rs,16 Lakh and not more‑‑‑Validity‑‑‑No permission was ever sought and grained by the Guardian Judge to create collateral mortgage or deposit of title deeds, therefore, father of the minors exceeded his powers as guardian‑‑‑At the time of deposit of title deeds, the bank did not ask the borrower for permission from the concerned Court‑‑‑Findings of Banking Court that since equitable mortgage deed was also created in favour of the Bank which covered the entire finance facility was in excess of jurisdiction as the borrower was legally bound to have obtained permission from the Guardian Judge regarding execution of collateral mortgage deed and deposit of title deeds‑‑‑Liability of the minors in the present case was only to the extent of Rs.16 Lakh in the mortgaged deed and not beyond that‑‑‑Decree by the Banking Court beyond Rs.16 Lakh was set aside by High Court as the excess decretal amount could not be recovered by the Bank from the property owned by the minors‑‑‑Appeal was allowed accordingly.

(c) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑‑------

‑‑‑‑S. 18‑‑‑Civil Procedure Code (V of 1908), S.52‑‑‑Banking decree, execution‑ of‑‑‑Attachment of property owned by sons of the judgment‑debtor‑‑‑Sons of the borrower contended that the decree could not be enforced against them as the property owned by them was not inherited by them‑‑­Banking Court attached the property on the pretext that the property owned by the sons was purchased by the judgment‑debtor, though much before the loan was, sanctioned‑‑‑Validity‑‑‑Decree could be executed against the deceased judgment‑debtor to the extent of the property left by him and legal representatives of the deceased could not be held responsible beyond the property let by the deceased‑‑‑Findings of the Banking Court were erroneous that the property was purchased by the deceased in the name of his sons, as there was nothing on record to support the findings of the Banking Court‑‑‑Even if the property was ,purchased by the deceased in the name of his sons, the same was done much prior to the execution of the mortgaged deed and the sons were owners of the property at the time of execution of the mortgage deed and the deceased judgment‑debtor never claimed to be the owner of, the property in dispute‑‑‑Entire property of sons could not be attached towards satisfaction of the entire decretal amount in circumstances.

(d) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑‑

‑‑‑‑S. 18‑‑‑Execution of decree‑‑‑Handing over possession of the mortgaged property to decree‑holder on oral request‑‑­While handing over possession, application was filed by the owners of the property that the value of the property be assessed‑‑‑Banking Court rejected the application and without getting the value of the property, transferred the same in the name of the decree‑holder‑‑‑Validity‑‑‑Such exercise of powers by the Banking Court, ignoring the law was without lawful authority and arbitrary‑‑‑Order of transfer of property was set aside in circumstances.

(e) Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑‑-

‑‑‑‑Ss. 9, 18 & 21‑‑‑Recovery of Bank loan‑‑‑Adjustment of mesne profits towards loan liability‑‑‑In execution of decretal amount, the property owned by the sons of the judgment‑debtor was handed over to the decree‑holder without complying with the provisions of S.18 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑Plea raised by the sons of the judgment‑debtor was that the possession of their property was wrongly handed over to the decree‑holder and for the period since when the possession was handed over, the rent regarding the property as mesne profits be adjusted to wards loan adjustment‑‑‑Validity‑‑‑Since the possession of the property was ,handed over to the decree‑holder on their oral request by the Banking Court in arbitrary manner and property 'had been in their use, owners were entitled to mesne profits‑‑‑High Court directed that the fair rent of the property be assessed at the market rate from the date the decree‑holder took possession till its delivery to the sons of the judgment‑debtor and amount calculated be adjusted towards the amount liable. to be recovered from the sons‑‑­Appeal was allowed accordingly.

Basharatullah and Adnan Basharat for Appellants.

K. N. Kohli for Respondent.

Date of hearing: 30th April, 2002.

2003 C L D 861

[Quetta]

Before Amanullah Khan Yasinzai, J

Messrs SECURITY LEASING CORPORATION LIMITED and 3 others---Petitioners

Versus

DIAMOND FOOD INDUSTRIES LTD.---Respondent

Civil Petition No.2 of 2002, decided on 14th January, 2003.

Companies Ordinance (XLVII of 1984)---

----Ss. 305 & 306---Petition for compulsory winding up of a company by its creditors which were financial institutions and had obtained decrees for recovery of their amounts advanced as loan to the said company which were pending execution---Petitioners contended that a huge amount was due against the debtor company which is unable to pay its debts, thus a request was made for compulsory winding up of the company---Notice of the petition was given to the company who filed counter-affidavit signed by the Chief Executive of the company wherein company had resisted the claim of petitioners and challenged the maintainability of winding up petition on the ground that execution proceedings being pending, petition was not maintainable and that the company had been closed for a temporary period as the company was not in position to pay all its debts---Petitioners, on the other hand, contended that since the company was a corporate,` body, therefore, could no orally authorise one of its members to sign the documents or pleadings which was in violation of the provisions of the company law; that no provision of sub-delegation of powers to any officer to sign such documents had been mentioned in the Memorandum and Articles of Association of the Company; that the Company having conceded that execution proceedings were pending same amounted to "admission" that Company was not in a position to pay its debts and that the company be ordered to be wound up compulsorily--­Validity---Held, Company being a Corporate Body the counter-affidavit filed by the Chief Executive of the Company was not entertainable and he was not competent to sign the said documents under the law and Memorandum of Association of the Company---Fact, that petitioners had filed separate suits for recovery of loan before the Banking Court, and the same had been decreed in favour of the petitioners and execution proceedings were pending, itself led to the conclusion that the Company was unable to pay its debts---Petitioners had served notice upon the Company as required under S.306, Companies Ordinance, 1984 but the Company had failed to pay its debts---High Court, in circumstances, accepted the petition for compulsory winding up of the Company.

Bankers Equity Ltd. through Attorney and 5 others v. Sunflo CIT RUSS Ltd. through Managing Director PLD 1999 Lah. 450; Messrs Taurus Securities Limited v. Arif Saigol and others 2002 CLD 1665 (Karachi); Rauf B. Kadri v. State Bank of Pakistan and another 2002 CLD 1794; Habib Credit and Exchange Bank Limited v. Sindh Sugar Corporation Limited 1999 CLC 1909; International Finance Corporation, Washington DC 20433 USA v. Hala Spinning Limited, Gulberg II, Lahore PLD 2000 Lah. 323; Pakistan Industrial Credit and Investment Corporation Limited (PICIC) v. Messrs Waseem Beverages Limited through Chief Executive 2000 MLD 660 and Hala Spinning Mills Limited v. International Finance Corporation and another 2002 SCMR 450 ref.

H. Shakil Ahmad and Irfan Haroon for Appellant.

Kamran Mullah Khail for Respondent.

Date of hearing: 16th December, 2002.

2003 C L D 1419

[Quetta]

Before Raja Fayyaz Ahmed, C.J. and Akhtar Zaman Malghani, J

Messrs HAQ TRADERS through Partners---Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager---Respondent

High Court Appeal No. 6 of 2002, decided on 26th February, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)------

----Ss. 7(6), 9 & 22---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Ss.2(b), 5, 9 & 22---Constitution of Pakistan (1973), Art.199--­Constitutional petition---Suit for declaration and 'settlement of accounts by borrower against Bank---Jurisdiction of Banking Court---Borrower disputed his liability under finance agreements with Bank by filing suit before Banking Court after dismissal of Constitutional petition by High Court with observations that his grievance being relatable to obligations of Bank under terms and conditions of finance, could be adjudicated by Banking Court---Banking Court dismissed suit for not having plenary powers of a Civil Court to deal with cases of ordinary civil jurisdiction either under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 or Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Banking Court without adverting to facts of the case, adhering to provisions of S.9 of Act, 1997 and S.7(6) of Ordinance, 2001 and attending to such order of High Court; had dismissed suit on an unsustainable ground---High Court accepted appeal, set aside impugned judgment/decree being nullity in eye of law and remanded case to Banking Court for its decision in accordance with law.

Nasimuddin v. United Bank Ltd. 1998 CLC 1718 ref.

Talat Waheed for Appellants.

K. N. Kohli for Respondent.

Date of hearing: 10th December, 2002.

2003 C L D 1

[Supreme Court of Pakistan]

Present: Javed Iqbal, Tanvir Ahmed Khan and Muhammad Nawaz Abbasi, JJ

SHIPYARD K. DAMEN INTERNATIONAL‑‑‑Petitioner

Versus

KARACHI SHIPYARD AND ENGINEERING WORKS LTD. ‑‑‑Respondents

Civil Petitions for Leave to Appeals Nos. 1120 and 1121 of 2002, decided on 11th July, 2002.

(On appeal from the judgment dated 9‑5‑2002 of the High Court of Sindh, Karachi, passed in H.C.As. Nos.16 and 17 of 2002).

(a) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss.126, 127, 10, 17 & 18‑‑‑Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2‑‑‑Bank guarantee and letter of credit‑‑‑Nature and effect‑‑‑Rights and liabilities of surety/Bank, principal debtor and creditor under Bank guarantee and principal contract, determination and enforcement of‑‑‑Temporary injunction, grounds for grant of ‑‑Action by creditor against guarantor‑‑‑Burden of proof‑‑­Liability of guarantor, when contract becomes unenforceable against principal debtor‑‑‑Bank guarantee is similar to an irrevocable letter of credit‑‑‑Bank guarantee is an independent contract between Bank and customer imposing absolute obligation on Bank to comply with its terms, irrespective of any dispute between parties to principal contract‑‑‑Bank guarantee becomes due on happening of a contingency on which same becomes enforceable‑‑‑Bank must .pay on demand, if so stipulated, without proof or ­conditions, in absence of any special equities or clear/established fraud‑‑‑Bank's obligation ends, once Bank guarantee is discharged‑‑‑Court should refrain from probing into nature of transactions between Bank and customer, which led to furnishing of Bank guarantee‑‑‑Unqualified terms of guarantee cannot be interfered with by Court irrespective of existence of dispute nor interim injunction restraining payment thereunder can be granted‑‑‑Remedy arising out of ex‑contract is not barred as cause of action for same was independent of enforcement of contract of guarantee‑‑‑Commitments of Banks must be honoured free from interference by Courts‑‑‑Theory of non‑interference by Courts in respect of Bank guarantee and letter of credit‑‑­Purpose, exceptions and considerations.

Performance of guarantee stands on the footing similar to an irrevocable letter of credit of Bank, which must be honoured according to its term irrespective of the fact whether the supplier is in default or not‑‑‑Bank must pay according to its guarantee all demand if so stipulated without proof or conditions. Only exception is when there is a clear fraud of which Bank has notice.

There is an absolute obligation upon the banker to comply with the terms and conditions as enumerated in the guarantee and to pay the amount stipulated therein irrespective of any disputes there may be between buyer and seller as to whether goods are up to contract or not.

The bank guarantee should be enforced on its own terms and realization against the bank guarantee would not affect or prejudice the case of contractor, if ultimately the dispute is referred to arbitration for the reason, once the terms and conditions of the guarantee were fulfilled, the bank's liability under the guarantee was absolute and it was wholly independent of the dispute proposed to be raised.

The contract of bank guarantee is an independent contract between the bank and the party concerned and is to be worked out independently of the dispute arising out of the work agreement between the parties and, therefore, the extent of the dispute and claims or counter‑claims were matters extraneous to the consideration of the question of enforcement of bank guarantee and were to be investigated by arbitrator.

Where bank had undertaken to pay the stipulated sum to respondent, "at any time, without demur, reservation, recourse, contest or protest, and without any reference to contractor, no interim injunction retraining payment under the guarantee could be granted.

Bank guarantee is an autonomous contract and imposes an absolute obligation on the bank to fulfil the terms and the payment on the bank guarantee becomes due on the happening of a contingency on which the guarantee becomes enforceable.

Bank cannot be prevented by the party at whose instance guarantee or letter of credit was issued, from honouring the credit guaranteed. The Court should not lightly interfere with a performance bond or guarantee, unless there is fraud of the beneficiary.

When once bank guarantee is discharged, the obligation of bank ends and there is no question of going behind such discharged bank guarantee. Courts should refrain from probing into the nature of the transactions between the bank and customer, which led to the furnishing of bank guarantee.

In the absence of any special equities and the absence of any clear fraud, the bank must pay on demand, it' so stipulated and whether the terms are such must be ascertained from the performance guarantee itself.

The unqualified terms of guarantee could not be interfered with by Courts irrespective of the existence of dispute.

Effect of injunction is to restrain bank from performing the bank guarantee. That cannot be done. One cannot do indirectly what one is not free to do directly.

An irrevocable commitment either in the form of confirmed bank guarantee or irrevocable letter of credit cannot be interfered with except in case of fraud or in case where question of apprehension of irretrievable injustice arises.

The commitments of banks must be honoured free from interference by Courts. Otherwise, trust in internal and international commerce would be irreparably damaged. Only in exceptional cases like that of fraud or to avoid irretrievable injustice, the Court should interfere.

There should be prima facie a case of fraud and special equities in the form of preventing irretrievable injustice between the parties. Mere irretrievable injustice without a prima facie case of established fraud is of no consequence in restraining the encashment of bank guarantee.

The rule is well‑established that a bank issuing a guarantee is not concerned with the underlying contract between the parties. Duty of bank under a performance guarantee is created by the document itself. Once the documents are in order, the bank giving the guarantees must honour the same by making payment. Ordinarily, unless there is an allegation of fraud or the like, the Courts will not interfere directly or indirectly to withhold payment, otherwise trust in commerce, internal and international, would be irreparably damaged. But that does not mean that parties to the underlying contract cannot settle their dispute with respect to allegations of breach by resorting to litigation or arbitration as stipulated in the contract. The remedy arising ex‑contract is not barred and the cause of action for the same is independent of enforcement of the guarantee.

In banking system, a bank guarantee has a dual aspect. In the case of a bank guarantee, banker is the promisor. It is a contract between bank and beneficiary by a third party. Now, it is a well‑known business transaction in the world of commerce and has become the backbone of banking system. Its enforceability depends upon the terms under which guarantor has bound himself. He cannot be made liable for more than what he has undertaken. Therefore, the bank guarantee is in the nature of a special contract depending upon the happening of a specific event and when once it is discharged, the guarantee comes to an end. Obligations arising under the bank guarantee are dependent of the obligations arising out of specific contract between parties.

It was only in exceptional cases that the Courts would interfere with the machinery of irrevocable obligations assumed by banks. They are the life blood of international commerce. The machinery and commitments of banks are on a different level. They must be allowed to be honoured free from interference by the Courts. Otherwise, trust in international commerce could be irreparably damaged.

As regards contract of guarantee, rights and liabilities of parties are to be determined with reference to terms and conditions of the guarantee. The guarantor cannot take advantage of any condition incorporated in the principal agreement, unless same is reflected in a contract of guarantee executed by guarantor, as, liabilities of the principal and guarantor, though arising from same transaction are distinct. In an action by a creditor against a guarantor, the former is only required to establish the liability of the principal debtor and occurrence of default or breach of the terms leading to the liability. The guarantor cannot resort to technicalities to defeat the claim of creditor. Even where the contract becomes unenforceable against the principal debtor, guarantor would still be liable under the surety bond he had executed, unless there was any covenant to the contrary.

Extraneous claims and counter‑claims do not bar the enforcement of bank guarantee. The enforcement depends upon its terms and conditions. If bank guarantees are unconditional, there is no other option for bank and more so, the bank would have no defence, when its guarantee is sought to be enforced. The guarantee as provided could be scanned to ascertain, whether it is conditional, unconditional or an autonomous, contract by itself or otherwise? If it is found unconditional, except in cases where a fraud has been alleged ‑and noticed by bank, the commitment is to be honoured. By enunciating the general‑ principle of non‑interference by Courts in respect of bank guarantee and letter of credit, the Courts only intended that international trade and commerce should function smoothly without interference from Court. At the same time, the Courts expected that merchants and traders in international trade and commerce would honour their respective commitments and the business honesty would be maintained. By theory of non‑interference, certainly the Courts did not intend that international trade and commerce should flourish by adopting dishonest unpleasant practice. These trade practices and commitments by banks are treated on a different level by Courts and are allowed to function without interference from Courts only with the view that the trust in international commerce is not damaged in any way and not for encouraging mala fide activities of unscrupulous traders. If so, fraud or special equity arising out of the peculiar situation of the‑ case could not have been made exception to the general principles of non‑interference by Courts.

Province of West Pakistan v. Mistry Patel & Co. PLD 1969 SC 80; W.J. Younie and others v. Tulsi Ram Jankiram and others AIR 1942 Cal. 382; Farr Smith & Company Ltd. v. Messers Limited (1928) 1 K B 397; Printpac (Pvt.) Ltd. v. Rice Export Corporation of Pakistan Ltd. 1992 MLD 1161; Messrs Jamia Industries v. Messrs Pakistan Refineries Limited Karachi PLD 1976 Kar. 644; Sirafi Trading Establishment v. Trading Corporation of Pakistan Limited 1984 CLC 381; Law Relating to Bonds and Guarantees by S.N. Gupta, Vol. II, 2nd Edn., p.288; United Commercial Bank v. Bank of India AIR 1981 SC 1426; National Construction Company Limited v. Aiwan‑e­-Iqbal PLD 1994 SC 311; MacDonald Layton & Co. Ltd. v. Pakistan Service Limited and others 1983 CLC 2252; Pakistan Engineering Consultants v. Pakistan International Airlines Corporation and BCCI and others 1993 CLC 882; Lord Denning, Edward Owen Engineering Ltd. v. Barclays Bank International Ltd. (1978) 1 AER 976; Punjab National Bank Ltd. v. Vikram Cotton Mills Ltd. (1970) 50 Comp. Cas. 927 (SC); United Commercial Banks v. Bank of India and. others AIR 1981 SC 1526; The Interads Advertising (P) Ltd. v. Palmex Enterprises (1983) 58 Comp. Cas. 550; Interads Advertising (P.) Ltd. v. Bentrex & Co. and others (1983) 53 Comp. Cas. 646; United Commercial Bank v. Hanuman Synthetics Ltd. and others (1987) 61 Comp. Cas. 245; Tarapore & Co. v: V/O Tractoroexport (1970) 40 Com. Cas. 447 (SC); Hamzeh Malas & Sons v. British Imex Industries Ltd. (1958) 2 QB 127 (CA); B.S. Aujla Co. (P.) Ltd. v. Kaluram Mahadev Prasad AIR 1983 Cal. 106; United Commercial Bank v. Bank of India (1982) 52 Comp. Cas. 186 (SC); Sztejn v. Henry Schroder Banking Corporation (1941) 31 NYS 2d (331; United Commercial Bank v. State Bank of India (1982) 52 Comp. Cas. 198 (SC); U.P. Cooperative Federation Ltd. v. Singh Consultants & Engineers (P) Ltd. JT 1987 (4) SC 406; Nangia Construction (India) (Pvt.) Ltd. v. National Buildings Construction Corporation Ltd. and others II (1990) 51 BC; 41 (1990) DLT 359; G.S. Atwal & Co. (Engineers) (Pvt.) Ltd. v. National Projects Construction Corporation Ltd. (1990) 69 SC 601; S.C.I.L. (India) Ltd. v. Indian Bank (1994) 79 Comp. Cas. 693; Suresh Arjundas Bekhtiani v. Union of India (1992) 74 Comp. Cas. 192 (Bom.); Hindustan Paper Corporation .Ltd. v. Keneilhouse Angami (1990) 68 Comp. Cas. 361 (Cal.); Jaipur Udyog Ltd. v. Punjab University (1980) 82 Punj. LR 597; State Bank of India v. Jaipur Udyog AIR 1986 Delhi 357; Taj Trade and Transport Co. Ltd. v. Oil and Natural Gas Commission (1994) 80 Comp. Cas. 740; Syndicate Bank v. Vijay Kumar (1992) 74 Comp. Cas. 597; The Law Relating To Bank Guarantees in India by Dr. Mohammad Akram Mir, The Banking Law in Theory‑and Practice, Third Edn., Vol. 2, by S.N. Gupta, John F. Dolan, Letters of Credit, Art.5 Warranties, Fraud and the Beneficiary's Certificate. The Business Lawyer, Vol. 41 No.2 pp. 186, 347; Michhal Stern, The independence Rule in Stand by Letters of Credit; The University of Chicago LR Vol. 52, 185; Nussbaum, Temporary Restraining Orders and Preliminary Injunctions; The Federal Practice, 26 SWLJ 265, 273 (1972) cited by Edward L. Symons, JR., Letters of Credit. Fraud, Good Faith and the Basis or Injunctive Relief Tulance Law R. Vol.54, 1979, p.380 (1980); National Thermal Power Corporation Limited v. Flowmore Private Ltd. and another (1995) 84 Comp. Cas. 97; Svenska Handelsbankjen v: Indian Charge Chrome (1994) 79 Comp. Cas. 589(SC); U.P. Cooperative Corporation Ltd. v. Singh Consultants and Engineers (Pvt.) Ltd. (1989) 65 Comp. Cas. 283 (SC); Hindustan Steel Works Construction Ltd. v. G.S. Atwal & Co. (Engineers) (Pvt.) Ltd. (decided on September 13, 1995); Larsen and Toubro Ltd. v. Maharashtra State Electricity Board and others (1996) 85 Comp. Cas. 214; State of Maharashtra and another v. Messrs National Construction Company, Bombay and another (decided on July 9, 1969); Hindustan Steel Works Construction Ltd. v. Tarapore & Co. and another (decided on January 6, 1996); (1982) 52 Comp. Cas. 1986; R. D. Harbottle (Mercantile) Ltd. v. National Westminster Bank (1977) 2 All ER 862; U.P. Cooperative Federation Ltd. v. Singh Consultants and Engineering (P.) Ltd. (1987) 8 Reports (SC) 567; Messrs Huffaz Seamlen Pipe Industries Ltd., Karachi v. Messrs Security Leasing Corporation Ltd., Karachi Civil Petition No.292‑K of 2001; The Law Relating to Bank Guarantees in India by Dr. Mohammad Akram Mir and C.P. No.383‑K of 2002 ref.

(b) Con tract Act (IX of 1872)‑‑‑

‑‑‑S.126‑-‑"Guarantee"‑‑‑Definition‑‑‑Guarantee is arc accessory contract, whereby promisor undertakes to be answerable to promisee for the debt, default or miscarriage of another person, whose primary liability to the promisee must exist or be contemplated.

Halsbury's Laws of England, Vol. 20, Fourth Edn., pp.49. 101 ref.

(c) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.126‑‑‑"Contract of guarantee"‑‑‑Origin, history and connotation.

The Law of Guarantees by De Colyar, 3rd Edn., 1897; Butterwirth & Co. 7 Fleet Street Law Publishers by Black Law Dictionary, 4th Edn., 833; Oxford Bank v. Haynes (1825) 25 Mass (8 Pick) 423, 428 and Law of Contract by Ansons ref.

(d) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.126‑‑‑Contract of guarantee‑‑‑Essential ingredients‑‑­Test to determine nature of guarantee and its effect‑‑­Guarantee contains the ingredients of "dedicated commitment", "absolute undertaking", "an unambiguous assurance", "unconditional willingness", "definite certainty", "compliance without objections", "sacred obligation" and "defined responsibility"‑‑‑Nature of guarantee and its binding effect can be well judged on the basis of such ingredients constituting a guarantee.

(e) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss. 126, 10, 17 & 18‑‑‑Contract of guarantee‑‑‑Grounds available for avoiding guarantee‑‑‑Guarantee once given cannot be avoided, except on the ground of fraud or misrepresentation.

(f) Contract Act (IX of 1872)‑‑‑

‑‑‑S. 126‑‑‑Bank guarantee‑‑‑Nature‑‑‑Liability of guarantor and surety‑‑‑Extent‑‑‑Bank guarantee in Banking system has dual aspect, same being a contract between Bank and beneficiary by a third party‑‑‑Enforceability of Bank guarantee depends upon the terms under which guarantor has bound himself, who cannot be made liable beyond what he has undertaken‑‑‑Obligations arising under Bank guarantee are independent of the obligations arising out of the specific contract between parties‑‑‑Bank guarantee comes to an end, once same is discharged.

(g) Words and phrases‑‑‑

‑‑‑‑"Guarantee"‑‑‑Definition.

Halsbury's Laws of England, Vol. 20, Fourth Edn., pp.49, 101 ref.

(h) Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXXIX, Rr. 1 & 2‑‑‑Contract Act (IX of 1872), S. 126‑‑­Arbitration Act (X of 1940), S.20‑‑‑Constitution of Pakistan (1973), Art. 185(3)‑‑‑Refusal of Court to restrain encashment of performance Bank guarantees while allowing application under S. 20 of Arbitration Act, 1940‑‑‑Validity‑‑‑Bank guarantee being an autonomous contract, imposed an absolute obligation on Bank to fulfil its terms and payment whereunder became due on happening of a contingency on which guarantee became enforceable ‑‑‑Encashment of Bank guarantee had no nexus with the spirit of contract executed between parties being an independent contract containing its own terms and conditions to be performed by concerned parties ‑‑‑Encashment of Bank guarantee had nothing to do with alleged dispute between petitioners and respondent, which must be decided independently on the basis of terms and conditions of that contract without involving the contract of Bank guarantee‑‑‑Demand for enforcing Bank guarantees had been made by respondent strictly in accordance with the terms as stipulated in the guarantees‑ itself‑‑‑Neither there was any allegation of fraud against beneficiary of which Bank had notice nor there was any special equity giving rise to a strong prima facie arguable case against enforcement of Bank guarantees‑‑‑Impugned judgment was strictly in accordance with settled law hardly calling for any interference‑‑‑Supreme Court dismissed the petition for leave to appeal being devoid of merits.

Messrs Jamia Industries Limited v. Messrs Pakistan refinery Limited PLD 1976 Kar. 644 distinguished.

(i) Constitution of Pakistan (1973)‑‑‑

‑‑‑Art. 185(3)‑‑‑Leave granting order passed by Supreme Court does not lay down a law to be followed.

M. S. Baqir, Bar‑at‑Law, Advocate Supreme Court and Imtiaz Muhammad Khan, Advocate‑on‑Record for Petitioners.

Nemo for Respondents.

Date of hearing: 11th July, 2002.

2003 C L D 183

[Supreme Court of Pakistan]

Present: Syed Deedar Hussain Shah, Hamid Ali Mirza and Abdul Hameed Dogar, JJ

UNITED LINER AGENCIES OF PAKISTAN (PVT.) LTD., KARACHI and 4

others‑‑‑Petitioners

Versus

Miss MAHENAU AGHA and 8 others‑ ‑‑Respondents

Civil Petition No.86‑K of 2000, decided on 10th July, 2002.

(On appeal from the judgment dated 13‑12‑1999 in H.C.A. No.17 of 1990 passed by the High Court of Sindh, 'Karachi).

(a) Companies Ordinance (XLVII of 1984)‑‑‑

--‑Ss. 26, 27 & 28‑‑‑Articles of association‑‑‑Object and Scope‑‑‑Articles of Association of a company are terms contract between the members and the terms are legally binding upon the members‑‑‑Such right is enforceable in law provided the terms are not forbidden bylaw.

Rayfield v. Hands and others (1958) 2 WLR 851 and In re: Hartley Baird Ltd. (1955) Ch. 143; (1954) 3 WLR 964; (1954) 3 All ER 695 ref.

(b) Companies Ordinance (XLVII of 1984)‑‑‑

-‑S. 2(28)‑‑‑Transfer of shares of private limited company‑‑‑Principles‑‑‑Transfer of shares in any manner otherwise pan that provided in Articles of Association would be valid and contrary to the terms of contract agreed upon by the members of the company/shareholders.

Hickman v. Kent and Romney Marsh Sheepbreeders' Association (1915) 1 Ch. 881 ref.

(c) Ordinance (XLVII of 1984)‑‑‑

‑‑Ss. 2(28) & 89‑‑‑Transfer of shares of private limited company‑‑‑Inclusion of pre‑emptive right for transfer and purchase of shares in Articles of Association ‑‑‑Validity‑--Such restriction is legal and valid covenant in the Articles of Association.

Ontario Jockey Club Ltd. v. Samuel McBrdie AIR 1928 PC 291; Introduction Company Law by L.H. Leigh, V. H. Joffe and D. Goldberg, Second Edn., p.266 and The Principles of Modern Company Law by LCB Gower, Third Edn., pp.392‑393 ref.

(d) Companies Ordinance (XLVII of 1984)‑‑‑

‑‑Ss. 2(28) & 89‑‑‑Constitution of Pakistan (1973), Art.185(3)‑‑‑Transfer of shares of private limited company­---Pre‑emptive right of existing shareholders/Directors of the company‑‑‑No objection by State Bank of Pakistan to sell the shares‑‑‑Defendants without offering his shares to the existing shareholders/Directors of the company sold the same to third party‑‑‑Plaintiffs assailed the sale of shares on the ground that they were willing to purchase the shares but no notice as required by Articles of Association of the company, had been given either to the Secretary of the company or to them‑‑‑High Court in exercise of original civil jurisdiction dismissed the suit but Division Bench of High Court allowed the appeal and suit was decreed in favour of the plaintiffs‑‑‑Plea raised by the defendants was that the shares were sold after having no objection from the State Bank of Pakistani‑‑‑Validity‑‑‑No reason existed to take different view with regard to the import and inference drawn in respect of the Articles of the Company that existing members of the Company having shown their willingness to buy the shares had pre‑emptive right who were not even offered to buy the shares at the fair value to be fixed in accordance with the provisions of Articles of Association, and had first right of refusal to purchase the same‑‑Mere fact that no objection was given by the State Bank of Pakistan to the transfer and purchase of shares in favour of transferor would not validate the transaction of purchase in favour of the buyers in respect of shares which otherwise in terms of the Articles of Association was invalid ‑‑‑Supreme Court declined to interfere with the judgment passed by Division Bench of High Court‑‑‑Leave to appeal was refuse.

Lal Khan v. Ghulam Muhammad 1973 SCMR 252 and Ladli Prasad Jaiswal v. The Karnal Distillery Co. Ltd. PLD 1965 SC 221 ref.

Kamal Azfar, Advocate Supreme Court with Ahmadullah Faruqi, Advocate‑on‑Record for Petitioners.

A.I. Chundrigar, Advocate Supreme Court and M.S. Ghaury, Advocate‑on‑Record for Respondents Nos. 1 and 2.

Date of hearing: 10th July, 2002.

2003 C L D 239

[Supreme Court of Pakistan]

Present: Jawed Iqbal, Sardar Muhammad Raza Khan and Falak Sher, JJ

Messrs UNION BANK LIMITED‑‑‑Petitioner

Versus

Messrs SILVER OIL MILLS LIMITED and others‑‑‑Respondents

Civil Petition for Leave to Appeal No‑1271 of 2002, decided on 18th September, 2002.

(On appeal from the order dated 24‑4‑2002 passed by Lahore High Court in R.F.A. 19 of 2002).

(a) Judgment‑‑‑

‑‑‑Interim order cannot be equated with a judgment‑‑necessary conditions for a judgment enumerated.

Following are the necessary conditions for a judgment:

(a) It should terminate proceedings in Court.

(b) It should determine the rights and liabilities of the parties.

(c) The determination of the rights and liabilities as envisaged in (b) above should be on merits and should further be final and conclusive so as to cover the entire range of substantive rights and liabilities which formed the subject‑matter of real controversy in the suit proceedings which initially gave rise to the dispute.

AIR 1963 Andh. Pra. 9; AIR 1961 All. 245; 1960 All WR (High Court) 5; ILR 2 All. 917; AIR 1953 Sau. 166; AIR 1958 All. 800; AIR 1957 All. 116 and AIR 1951 Pat. 25 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.22(2)‑‑‑Constitution of Pakistan (1973), Art.185(3)‑‑­Admission of appeal for regular hearing ‑‑‑Petition for leave to appeal‑‑‑Maintainability‑‑‑Interlocutory order‑‑‑Appeal under S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was not yet decided when the petitioner Bank filed the petition‑‑‑Plea raised by the Bank was that execution of decree was stayed and appeal was admitted to regular hearing without giving any cogent reason‑‑­Validity‑‑‑Appeal preferred on behalf of the borrower was pending adjudication and determination of the rights and liabilities were yet to be made and thus all the contentions as mentioned in the petition for leave to appeal could be agitated before the High Court where the matter was pending‑‑‑No verdict on the question of maintainability of appeal having been given by High Court, the petition for leave to appeal had been filed at premature stage‑‑­Entertainment of petition for leave to appeal against interim order and hearing of case piecemeal was not desirable‑‑­Although the contentions as agitated on behalf of the petitioner‑Bank were convincing and needed serious consideration yet at such stage Supreme Court was not to make any interference as the appeal of the borrowers was still pending adjudication on the merits in High Court and question of maintainability whereof was yet to be decided Leave to appeal was refused.

Said Khan v. Aya Khan 1979 SCMR 577; Zafarullah Khan v. Abdul Rehman 1971 SCMR 702; Amir Khan Fateh Khan 1978 SCMR 334; Rafique Saigol v. Bank of Credit and Commerce PLD 1996 SC 749; Fine Textile Mills Ltd. v. Haji Umer PLD 1963 SC 163; Abdul Karim Jaffarrni v. United Bank Ltd. PLD 1981 SC 106; Abdul Rauf Ghauri v. Mst. Kishwar Sultana 1995 SCMR 925; Karim v. Ziker Abdullah 1973 SCMR 100; Abdul Majeed v. UBL 1984 SCMR 1435 and Ark Industrial Management Ltd. v. Habib Bank Ltd. PLD 1991 SC 976 ref.

S. Iqbal Haider, Advocate Supreme Court, Muhammad Afzal Siddiqui and Ejaz Muhammad Khan, Advocate‑on‑Record for Petitioners.

Ch. Mushtaq Ahmad Khan, Advocate Supreme Court and M.S. Khattak, Advocate‑on‑Record for Respondents.

Date of hearing: 10th September, 2002.

2003 C L D 515

[Supreme Court of Pakistan]

Present: Sardar Muhammad Raza Khan and Falak Sher, JJ

AMERICAN MARBLES PRODUCTS LTD. ‑‑‑Petitioner

Versus

I.C.P. and others‑ ‑‑Respondents

Civil Appeal No. 1307 of 1995, decided on 2nd October, 2002.

(On appeal from the judgment dated 3‑10‑1995 passed by High Court of Sindh, Karachi in J. Miscellaneous No.315 of 1994).

Companies Ordinance (XLVII of 1984)‑‑‑--

‑‑‑‑Ss.305 & 309‑‑‑Winding‑up petition by the Investment Corporation having advanced loan to the Company‑‑­Winding‑up of Company for the same being unable to pay its debts and failure to commence its business since incorporation and appointment of Official Assignee as the Official Liquidator by the Company Judge‑‑‑‑Appeal before Supreme Court, was preferred solely using the plea of lack of competence viz. the respondents (Investment Corporation of Pakistan) being investors on profit and loss basis were not the creditors within the contemplation of the banked upon statutory provision and thus were not competent to moue the winding‑up petition when they had even failed to invest the covenanted sum‑‑‑Validity‑‑‑Conjunctive reading of the agreements, the demand promissory note, the trust deed and the registered mortgages, charges, hypothecations and the correspondence exchanged between the parties patently demonstrated the intendment of the parties and the nature of the arrangements made as to its juridical classification, a loan facility explicitly described as a loan in the agreement comprising long term PTC's and LFM refinancing by the syndicate secured through mortgage of all present and future movable and immovable assets, uncalled capital, continuing floating charges, to rank pari passu with the existing mortgages charges with other creditors at fixed rate of profit, payable bi‑annually to be credited as expenses in the profit and loss account of the company, restraining the company from alienating any of its assets, during subsistence of encumbrances or charges of mortgages in favour of the Syndicate in the event of default rendering the entire sum due and payable upon expiry of the notice period‑‑‑Such factum had been admitted even by the company in the reply to the notice rendering unambiguously clear beyond the realm of doubt that the availed facility by the Company from the Investment Corporation (Syndicate) for all interests and purposes was a loan fully secured through proper documentation and not investment simpliciter‑‑‑Company, admittedly since its incorporation nearly a decade ago, had not even commenced its business‑‑‑Contention of company as to failure of the Investment Corporation (Syndicate] to disburse the entire loan facility on time was ill founded since the term of agreement of the facility preconceived performance of the undertaking by the company which was lacking‑‑‑No exception, in circumstances, could be taken to the order of the High Court. asking winding up of the Company‑‑‑Appeal being .devoid of any substance was dismissed by the Supreme Court.

M. Bilal, Senior Advocate Supreme Court for Petitioner.

Rai Muhammad Nawaz Kharal, Advocate Supreme Court and ‑ M.A. Zaidi, Advocate‑on‑Record for Respondents.

Date of hearing: 2nd October, 2002.

2003 C L D 596

[Supreme Court of Pakistan]

Present: Nazim Hussain Siddiqui, Hamid Ali Mirza and Tanvir Ahmed Khan, JJ

SAUDI‑PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY (PVT.) LTD., ISLAMABAD‑‑‑Appellant

Versus

Messrs ALLIED BANK OF PAKISTAN and another‑‑‑‑Respondents

Civil Appeals Nos. 185 and 186 of 2002, decided on 27th November, 2002.

(On appeal from the judgment, dated 21‑12‑2001 of Lahore High Court, Lahore passed in R.F.A. No. 83 of 1996).

(a) Contract Act (IX of 1872)‑‑‑--

‑‑‑S.126‑‑‑Bank guarantee‑‑‑Default‑ ‑Liquidated damages‑‑­Interest‑‑‑Rights and liabilities of the parties‑‑­Determination‑‑‑Guarantee rights and liabilities of the parties, are determined with reference to the terms and conditions of the guarantee and a contract of guarantee is to be strictly construed in terms of the guarantee‑‑‑Guarantee in the present case unequivocally postulated that the total responsibility of the Bank was restricted to a specified amount‑‑‑Bank irrevocably and unconditionally undertook to pay the said amount to the plaintiff on demand‑‑‑Nothing was brought on record to show that the plaintiff had sustained damages on the ground of default ‑‑‑Effect‑‑­Liquidated damages as a rule, required the positive evidence to show that the actual loss was suffered by the party claiming the damages and even fixed amount stipulated for liquidated damages could not be recovered if the quantum of actual loss was not proved‑‑‑Plaintiff, in circumstances, was neither entitled to any interest nor to any amount as liquidated damages.

(b) Interpretation of document‑‑‑---

‑‑‑‑ Fundamental principle.

It is a fundamental principle of interpretation of documents and statutes that they are to be interpreted in their entire context following a full consideration of all provisions of the document or statute, as the case may be, that every attempt shall be made to save the document and for this purpose a difference between general statements and particular statements of the document be differentiated properly to save the document rather to nullify it that no provision of the document be read in isolation or in bits and pieces but the entire document is to be read as a whole to gather the intention of the parties, that the Court for this purpose can resort to the correspondence exchanged between the parties, that the Court shall lean to an interpretation which will effectuate rather than one which will invalidate an instrument.

Allah Bakhsh and another v. Muhammad Ishaque and another PLD 1984 SC 47; Societe Generale De Surveillance S.A. v. Pakistan 2002 SCMR 1694; Messrs Pakistan State Oil Company Limited v. Muhammad Tahir Khan and others PLD 2001 SC 980; Sandoz Limited and another v. Federation of Pakistan and others 1995 SCMR 1431; House Building Finance Corporation v. Shahinshah Hamayun Corporative House Building Society and others 1992 SCMR 19: Ghazanfar Hussain v. Rahmat Bibi 1989 CLC 310; Habib Bank Limited v. Malik Atta Muhammad and 4 others 2000 CLC 451; Haji Adam Ali Agaria v. Asif Hussain and 2 others 1996 MLD 322; Mst. Iqbal Begum v. Abdul Ghaffar and others 1995 CLC 105; Saeed Mahmood v. Halima Bat 1990 MLD 1789 and Najmul Hassan Farooqui v. Messrs United Carpets Limited 1990 ALD 412 ref.

(c) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.126‑‑‑Contract‑‑‑Contract of guarantee‑ ‑‑Principles of construction

The principles of construction governing contracts in general apply equally, to contracts of guarantee. Dealing with a guarantee as a mercantile contract, the Court does not apply to it merely technical rules but construes it so as to reflect what may fairly be inferred to have been the parties, real intention and understanding as expressed by them in writing so as to give effect to it.

Halsbury's Laws of England, 4th Edn., Vol. 20, para. 143 ref.

(d) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S. 126‑‑‑Bank guarantee‑‑‑Contention of the Bank was that the conduct of the plaintiff was mala fide, inasmuch as for about six years the plaintiff did not take any step towards recovery of decretal amount and that the plaintiff held 33% shares in the company‑‑‑Validity‑‑‑Responsibility of the Bank, in terms of the guarantee, would not become inoperative and it was the right of the plaintiff to seek remedy against the respondent, irrespective of its share, if any, in the company.

Dr. Parvaiz Hasan, Advocate Supreme Court, Umar Ata Bandial, Advocate Supreme Court, Zakaullah, Advocate Supreme Court, M.S. Khattak, Advocate‑on­ Record for Appellants (Respondents in C.A. No. 186 of 2002).

Raja Muhammad Akram, Advocate Supreme Court and Ejaz Muhammad Khan, Advocate‑on‑Record for Respondents (Appellant in C.A. No. 186 of 2002).

Dates of hearing: 19 and 20th September, 2002.

2003 C L D 621

[Supreme Court of Pakistan]

Present: Qazi Muhammad Farooq, Syed Deedar Hussain Shah and Abdul Hameed Dogar, JJ

DIAMOND INDUSTRIES LIMITED‑‑‑Petitioner

Versus

M. ZAFAR‑UL‑HAQ HIJAZI and 2 others‑‑‑Respondents

Civil Petition for Leave to Appeal No. 2813 of 2001, decided on 18th November, 2002.

(On appeal from the judgment, dated 11‑6‑2001 of the Peshawar High Court, Peshawar, passed in Company Case No. 13 of 2000).

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss. 265 & 10‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33‑‑‑Code of Civil Procedure (Amendment) Ordinance (X of 1980), S.15 ‑‑‑ Constitution of Pakistan (1973), Art. 185(3)‑‑‑Investigation of company's affairs‑‑‑Notice was issued to the company under S.265 Companies Ordinance, 1984 to show cause as to why Inspector should not be appointed to investigate the affair: of the company on various grounds including non‑payment of return to the shareholders, uncalled for heave expenditures, deviations from Memorandum of Association etc.‑‑‑Company assailed the said notice in appeal before the Appellate Bench of the Security and Exchange Commission of Pakistan which was rejected but subsequently maintained by the Company Judge of High Court‑‑‑Petition for leave to appeal to Supreme Court‑‑‑Maintainability‑‑‑All orders passed under S.10(2) of the Companies Ordinance 1984, in exercise of original civil jurisdiction of the High Court as per provisions of S.15, Code of Civil Procedure (Amendment) Ordinance, 1980 were appealable before a Division Bench of the High Court‑Order in the present case, being an interlocutory in nature was governed by S.15, Code of Civil. Procedure (Amendment) Ordinance, 1980 against which an intra‑Court appeal before a Division Bench was the only remedy Petition for leave to appeal being not maintainable was dismissed and leave refused by the Supreme Court.

Brother Steel Mills Ltd. and others v. Mian Ilyas Miraj and 14 others PLD 1996 SC 543 ref.

Irfan Qadir, Advocate Supreme Court for Petitioner.

M. Hamid Farooq Durrani, Advocate Supreme Court instructed by Ch. Akhtar Ali, Advocate‑on‑Record for Respondents.

Date of hearing: 18th November, F002.

2003 C L D 632

[Supreme Court of Pakistan]

Present: Syed Deedar Hussain Shah and Muhammad Nawaz Abbasi, JJ

Messrs KAPUR TEXTILE MILLS LIMITED---Petitioner

Versus

BANKERS EQUITY LIMITED---Respondent

Civil petition No.3076 of 2001, decided on 26th November.

(On appeal from judgment dated 8-10-2001, passed by the Lahore High Court, Lahore in F.A.O. No.294 of 2001).

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss. 12 & 9(4)---Civil Procedure Code (V of 1908), O.XXXVII, R.2---Constitution of Pakistan (1973), Art.185(3)--­Suit for recovery of money was decreed ex parte---Summons were issued to the judgment-debtor after filing the suit as required under the law and subsequently publication of the same was made in leading newspapers but none appeared---Record showed that on the date the decree was passed no one appeared before the Trial Court, nor any application for leave to defend the suit was filed, and the Banking Court decreed the suit as provided under S.9(4) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and O.XXXVII, R.2, C.P.C. as the averments made to the plaint were verified on oath and the suit was decreed as prayed---Application for setting aside the said decree on the ground that correct address of the defendant had not been given in the plaint, therefore, it was not served in accordance with law---High Court dismissed the application on the ground of limitation holding that the defendant had, in fact, been served---Defendant, inter alia, contended that the Courts below had not considered the case in its true perspective: that the application for setting aside the decree was in time and the judgment of the High Court had resulted in miscarriage of justice and that the defendant had intimated the plaintiff (Bank) about the change of the address---Validity---Essence of the facts clearly showed that Court had adopted proper course of service of the defendant in the suit and defendant in his own wisdom moved an application before the Court for setting aside the ex parte decree which was time-­barred---Judgment of the High Court was well-reasoned and was based on the proper appreciation of the material available on record---Neither question of misreading or non-­reading of the material was available nor question of general public importance was involved in the case---Petition being without merit and substance was dismissed and leave to appeal was declined.

Ali Sibtain Fazli, Advocate Supreme Court with Mahmood A. Qureshi, Advocate-on-Record for Petitioner.

Nemo for Respondent.

Date of hearing: 26th November, 2002.

2003 C L D 952

[Supreme Court of Pakistan]

Present: Tanvir Ahmed Khan and Khalil-ur-Rehman Ramday, JJ

Syed FARASAT ALI SHAH---Petitioner

Versus

ALLIED BANK OF PAKISTAN LTD. and others---Respondents

Civil Petition for Leave to Appeal No. 1092/L of 2002, decided on 7th May, 2002.

(On appeal from the judgment dated 14-2-2002 of the Lahore High Court, Lahore, passed in Writ Petition No. 12374 of 1999).

Banking Tribunals Ordinance (LVIII of 1984)---

----S.6---Civil Procedure Code (V of 1908), O.XXI, R.23-A & S.151---Constitution of Pakistan (1973), Art. 185(3)--­Recovery of Bank loan---Execution of decree---Objection to maintainability of decree---Non filing of appeal---Judgment and decree passed by Banking Tribunal had attained finality as the borrower did not file any appeal against the same---High Court had in other cases declared certain provisions of Banking Tribunals Ordinance, 1984, as unconstitutional---Objection was raised by the borrower during the execution proceedings, to maintainability of the decree on the basis of the judgment by the High Court--­Banking Court and High Court dismissed the objection petition filed by the borrower---Contention of the borrower was that since the judgments and decrees passed by the Tribunal constituted under Banking Tribunals Ordinance, 1984, were set aside as its very constitution was declared unconstitutional, therefore, the decree passed against the borrower was rendered coram non judice and execution proceedings could not proceed---Validity---Decree was passed as far back as 10-11-1993 after five years of institution of the suit for recovery---No appeal as provided under Banking Tribunals Ordinance, 1984, was filed by the borrower---Bank was well within its right to initiate execution proceedings against the borrower---Supreme Court declined to interfere with the orders passed by High Court--­Leave to appeal was refused.

Soneri Bank Limited through Mian Abdul Wajid, EVP and another v. Raja Weaving Mills Limited, and another KLR 1997 Civil Cases 742 ref.

Sh. Zia Ullah, Senior Advocate Supreme Court for Petitioner.

Nemo for Respondents.

Date of hearing: 7th May, 2002.

2003 C L D 990

[Supreme Court of Pakistan]

Present: Mian Muhammad Ajmal and Muhammad Nawaz Abbasi, JJ

AFZAL MAQSOOD BUTT---Petitioner

Versus

BANKING COURT, LAHORE NO.2 and others-- -Respondents

Civil Petitions Nos.3087 and 3088 of 2001, decided on 5th June, 2002.

(On appeal from the judgment of Lahore High Court, Lahore, dated 12-9-2001 passed in W.P. 23858 and 23859 of 1998 respectively).

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----S.21---Civil Procedure Code (V of 1908), O.XXI, Rr.87, 89 & 92---Constitution of Pakistan (1973), Art.185(3)--­Execution of decree---Re-auction of property---Failure to set aside earlier auction---Validity---Leave to appeal was granted by Supreme Court to consider, whether without setting aside the earlier auction, Banking Tribunal could competently issue fresh schedule of auction and whether the confirmation of sale in favour of the petitioner as a result of earlier auction was legal and valid and High Court in exercise of Constitutional jurisdiction was justified to set aside the sale and interfere in the matter.

Muhammad Akram Sheikh, Senior. Advocate Supreme Court and Ch. Muhammad Akram, Advocate-on­-Record for Petitioner.

Alamgir Advocate Supreme Court for Respondent No. 2.

Sh. Riazul Haq, Advocate Supreme Court and M.A. Zaidi, Advocate-on-Record for Habib Bank Ltd.

Sh. Maqbool Ahmed, Advocate Supreme Court for Pakistan Industrial Leasing Corporation.

Date of hearing: 5th June, 2002.

2003 C L D 1033

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhry and Mian Muhammad Ajmal, JJ

SIDDIQUE WOOLLEN MILLS and others---Petitioners

Versus

ALLIED BANK OF PAKISTAN---Respondent

Civil Petition No.2288/L of 2000, decided on 3rd July, 2001.

(On appeal from the judgment dated 18-5-2000 passed by Lahore High Court, Lahore in R.F.A. No.489 of 1998).

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---

----Ss.9 & 10---Constitution of Pakistan (1973), Art.185(3)--­Recovery of Bank loan---Leave to defend suit---Bona fide dispute---Scope---Retaining of goods of borrower by Bank--­Liability towards outstanding amount of the Bank was not denied by the borrowers, except raising the plea that the Bank had retained the goods of the borrowers unauthorisedly---Banking Court decreed the suit in favour of the Bank and the judgment and 'decree was maintained by High Court---Plea of the borrowers was that the raw material imported by them was retained by the Bank due to which the borrowers had suffered loss---Validity---Plea of the borrowers neither constituted a defence in their favour independently nor it gave rise to a bona fide - dispute between the parties because in such cases, the Court was required to examine the liability and its acceptance by the borrowers---Question of sustaining losses by the borrowers on account of conduct of the Bank could be sorted out in some other forum instead of claiming relief on such basis from Banking Court---Banking Court in exercise of its jurisdiction under S.10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 could only entertain defence of the borrower, if prima facie a bona fide dispute had been disclosed---Since the borrowers had not denied their liability towards the Bank, therefore, the Banking Court had rightly passed the judgment and decree which was maintained by High Court---Leave to appeal was refused.

Sahibzada Riaz Anwar, Advocate Supreme Court and Mahmud-ul-Islam, Advocate-on-Record (absent) for Petitioners.

Muhammad Aslam Ch., Advocate-on-Record (absent) for Respondent.

Date of hearing: 3rd July, 2001.

2003 C L D 1299

[Supreme Court of Pakistan]

Present: Rana Bhagwandas, Syed Deedar Hussain Shah and Muhammad Nawaz Abbasi, JJ

Messrs BURJOR ARDSHIR INDUSTRIES LIMITED---Petitioner

Versus

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION---Respondent

Civil Petitions Nos.857-K and 858-K of 2002, decided on 7th April, 2003.

(On appeal from the judgment of High Court of Sindh dated 10-5-2002 passed in H.C.As. Nos.215 and 216 of 1990).

Foreign Currency Loan (Rate of Exchange) Order [P.O. No. 3 of 1982]--

----Arts. 3 & 4(2)---Scope and application of Arts. 3 & 4(2) of the Order---Right of recovery if remained alive (even if subject to certain conditions), it could not be assumed that the transaction had become past and closed and the party would be liable to repay the loan under the Foreign Currency Loan (Rate of Exchange) Order, 1982 on the basis of rate of exchange on the foreign currency loan enforced on the date of actual payment.

It was provided in Article 3 of Foreign Currency Loan (Rate of Exchange) Order, 1982 that notwithstanding anything contained in any other law for the time being in force, the judgment of any Court or any agreement, contract or other instrument, the rate of exchange for repayment in respect of an outstanding foreign currency loan would be at the rate of exchange in force under section 23 of the State Bank of Pakistan Act, 1956 on the date of actual repayment to the financial institutions. Sub-Article (2) of Article 4 of the said Order, provided that any writ issued, judgment or decision given before or after commencement of the Order, inconsistent to the provisions of the Order, would be null and void and would have no consequence. However, this Order was not made applicable to the cases in which liability in respect of foreign currency loans towards financial institutions stood already discharged and loan was no more outstanding.

In the present case under the agreement, the petitioners were required to deposit an amount of rupees fifteen lacs inclusive of interest, penal interest, premium and charges payable by them within the time specified therein and this deposit was without prejudice to the right of respondents for claim of the balance amount which would ultimately become due and recoverable. The parties had agreed that in case of failure of the petitioners to deposit the amount of rupees fifteen lacs within the prescribed period, the winding up petition would be deemed to be allowed and if the payment would be made within the time fixed, the winding up petition would stand dismissed as withdrawn. The parties with a view to make amicable settlement of the dispute and to avoid the consequence of litigation and winding up of the Company willingly made the above arrangement before the Company Judge. The plain reading of the terms of agreement in the entirety incorporated in the joint statement of the parties would show that respondents reserved the right of claim of balance amount and neither expressly nor impliedly, abandoned any portion of their claim or made an offer for acceptance of the proposal of final settlement, rather the agreement would evidently suggest that the respondents agreed for the settlement to the extent of disposal of winding up petition subject to the deposit of amount in question as partial payment towards the discharge of financial liability and the balance was to be calculated on the basis of the decision of the High Court Appeal and thus it was provided in the agreement in an unequivocal terms that the final settlement would be made on a future date on the determination of the date of chargeability. The controversy between the parties was confined only to the extent of rate of foreign exchange chargeable either prevailing on the date when repayment was due or on the date of actual payment. The plea of the petitioners was that their total liability stood discharged on the confirmation of the verdict given by the High Court in appeal and there was nothing outstanding against them whereas the case of the respondents on the other hand, was that on the commencement of Presidential Order No. 3 of 1982, the judgment was nullified and in consequence thereto, the petitioners would be liable to repay the loan in terms of Article 3 of the Presidential Order on the basis of rate of exchange enforced on the date of actual payment.

The joint statement is divided into two parts. The first part contains the admission of petitioners qua their financial liability and in the second part, the right of the respondents for the claim of the balance amount was recognized. The first part relating to the payment of rupees fifteen lacs and the disposal of winding up petition was immediately acted upon and the implementation of the second part was kept pending till the disposal of the appeal by the High Court, therefore, the agreement would manifestly reveal that the claim of respondents, subject to decision of rate of foreign exchange, chargeable from the petitioners would be deemed to be­ outstanding and in absence of any apparent discrepancy appearing in the two parts of the agreement, no exception would be taken to the view expressed by the High Court to the effect that as long as respondent's right to seek recovery (even if subject to certain conditions) remained alive, it could not be assumed that the transaction had become past and closed. In the light of rule of adhering to the plain meanings of the words used in the statute being capable of depicting the intention of the Legislature, it could safely be held that the express provisions of Presidential Order No.3 of 1982 could not be construed subordinate to the consideration based on the agreement in question or any other instrument and thus the Presidential Order having overriding effect would remove all doubts in respect of rate of foreign exchange chargeable on foreign currency loans.

The agreement between the parties was conditional and final settlement in respect of the claim of the respondents would be subject to the determination of rate of exchange payment on the loan and therefore, the foreign currency loan obtained by the petitioners was still outstanding which would squarely fall within the ambit of Article 3 of Presidential Order No. 3 of 1982. The judicial verdict of the Courts in the matter was undoubtedly overruled by the Presidential Order No.3 of 1982 and in consequence thereto notwithstanding the agreement between the parties and the judgment of the High Court on the subject, the rate of exchange on foreign currency loans enforced under section 23 of the State Bank of Pakistan, 1956, on the date of actual payment would be charged. It is provided in the Presidential Order itself that it will only apply to outstanding foreign currency loans on the date of its commencement and having no retrospective effect would not be applicable to the loan already paid before its commencement but in the present case, the financial liability of the petitioners subject to certain conditions, was still determinable which was not finally settled, therefore, it was not a case of past and closed transaction and consequently, on the annulment of the judgment, the financial liability of the petitioners would necessarily be determined under Presidential Order No. 3 of 1982. The judgment to the extent of being contrary and inconsistent with the provisions of Presidential Order, would be null and void and in consequence thereto, the petitioners would be liable to repay the loan under the above Order on the basis of rate of exchange on the foreign currency loan enforced on the date of actual payment.

G.H. Malik, Advocate Supreme Court and Sher Muhammad Khan, Advocate-on-Record (absent) for Petitioners.

K.A. Wahab, Advocate-on-Record (absent) for Respondents.

Date of hearing: 13th January, 2003.

2003 C L D 1578

[Supreme Court of Pakistan]

Present: Muhammad Bashir Jehangiri, Nazim Hussain Siddiqui and Rana Bhagwandas, JJ

Messrs FIRST WOMEN BANK LIMITED‑‑‑Petitioner

Versus

THE REGISTRAR, HIGH COURT OF SINDH, KARACHI and 4 others‑‑‑Respondents

Civil Petition for Leave to Appeal No.1‑K of 2001, decided on 25th January, 2001.

(On appeal from Order of High Court of Sindh at Karachi, dated 4‑12‑2000, passed in Civil Transfer Application No. 17 of 2000).

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑---

‑‑‑‑S. 4‑Specific Relief Act (I of 1877), Ss. 42. & 54‑‑­Constitution of Pakistan (1973), Art. 185(3)‑‑‑Transferring of banking suit having value of less than thirty million rupees‑‑‑Jurisdiction of High Court‑‑Consolidation of two suits‑‑‑Bank filed a suit for recovery of Bank loan against borrower as well as guarantor and the same was pending before Banking Court‑‑‑Another suit was filed by the guarantor in High Court, alleging that fraud and forgery had been committed upon him as he did not create any lien on his accounts nor pledged his Bonds‑‑‑High Court transferred the suit pending in Banking Court to High Court for decision of both the suits together‑‑‑Plea raised by the Bank was that claim in banking suit did not exceed thirty million rupees, therefore, under S.4 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, trial of the suit before High Court would be without jurisdiction‑‑­Validity‑‑‑Trial of both the suits together would not only be expedient in the interest of justice but also in the interest of both the parties as joint trial of both the suits would obviate the possibility of a conflict of judgments‑‑‑Order passed by High Court was just, fair and equitable and it did not suffer from any inherent defect or error of jurisdiction‑‑‑Leave to appeal was refused.

Gul Hassan & Company v Allied Bank of Pakistan 1996 SCMR 244 distinguished.

Rizwan Ahmed Siddiqui, Advocate Supreme Court and Miss Wajahat Niaz, Advocate‑on‑Record (absent) for Petitioner.

Amir Hani Muslim , Advocate Supreme Court and M.S. Khattak, Advocate‑on‑Record for Respondent No. 2.

Date of hearing: 25th January, 2001.

2003 C L D 1585

[Supreme Court of Pakistan]

Present: Rana Bhagwandas and Tanvir Ahmed Khan, JJ

Rana MUHAMMAD SHAFI‑‑‑Petitioner

Versus

JAVED IQBAL SIDDIQUI and others‑‑‑Respondents

Civil Petition No.1556‑L of 2002, decided on 1st July, 2002.

(On appeal from the judgment dated 22‑3‑2002 passed by Lahore High Court, Lahore in W.P. No.4787 of 2002).

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑--

‑‑‑‑S. 19‑‑‑Constitution of Pakistan (1973), Arts. 185(3) & 199‑‑‑Recovery of Bank Loan‑‑‑Dispute with regard to deposit of amount with Bank‑‑‑Contention of the borrower was that he had paid a sum of Rs. 50, 000 to the Bank and the same had not been accounted or‑‑‑Validity‑‑‑Proper course for the borrower was to satisfy the decree or to submit relevant objection before the Executing Court instead of harassing the other party by filing successive Constitutional, petitions which were completely misconceived‑‑‑Leave to appeal was refused.

S.M. Rashid, Advocate. Supreme Court and Mehdi Khan Mehtab, Advocate‑on‑Record for Petitioner.

Nemo for Respondents.

Date of hearing: 1st July, 2002.

2003 C L D 1587

[Supreme Court of Pakistan]

Present: Mian Muhammad, Ajmal and Abdul Hameed Dogar, JJ

ISLAMABAD STOCK EXCHANGE (GUARANTEE) LIMITED, ISLAMABAD through Secretary‑‑‑Petitioner

Versus

FIRST PUNJAB MODARABA through Punjab Madaraba Services (Private) Limited, and 2 others‑‑‑Respondents

Civil Petition for Leave to Appeal No.595 of 2001, decided 9th July, 2001.

(On appeal from the judgment of the Lahore High Court, Lahore dated 19‑1‑2001 passed in Writ Petition No. 14502 of 2000).

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S. 60 & O.XXI, R.58‑‑‑Islamabad Stock Exchange Articles of Association, Arts. 19 & 20(o)‑‑‑Attachment of membership of stock exchange in execution of decree‑‑‑Rejection of objection petition without recording of evidence‑‑‑Grievance of the petitioner was that the Executing Court could not attach its membership of stock exchange in execution of decree passed against it‑‑‑Plea raised by the petitioner was that the properties enumerated in S.60, C.P.C, did not include membership of stock exchange and the Executing Court had wrongly dismissed the objection petition without recording of evidence‑‑‑Validity.‑‑‑Court of competent jurisdiction could attach membership as a property in execution of a decree under Art. 20(o) of Islamabad Stock Exchange Articles of Association‑‑‑No need arose to record evidence as the dispute related to membership of stock exchange and in that regard the Memorandum and Articles of Association was duly taken into consideration while, deciding the objections by the Executing Court as well as by the High Court‑‑‑No legal infirmity in the order of Executing Court was found, and the same did not warrant interference‑‑‑Leave to appeal was refused.

Abdul Rashid Awan, Advocate Supreme Court and M.A. Zaidi, Advocate‑on‑Record for Petitioner.

Ali Sibtain Fazli, Advocate Supreme Court for Respondents.

Date of hearing: 9th July, 2001.

2003 C L D 1599

[Supreme Court of Pakistan]

Present: Rana Bhagwandas and Tanvir Ahmed Khan, JJ

RAHEEL IKHLAS‑‑‑Petitioner

Versus

Messrs CITIBANK N.A.‑‑‑Respondent

Civil Petition No. 1833‑L of 2002, decided on 2nd July, 2002.

(On appeal from the judgment dated 21‑3‑2002 passed by Lahore High Court, Lahore in F.A.O. No.408 of 2001).

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑--

‑‑‑--S. 12‑‑‑Constitution of Pakistan (1973), Art. 185(3)‑‑‑Ex parte decree, setting aside of‑‑‑Constitutional jurisdiction of Supreme Court‑‑‑Factual inquiry‑‑‑Scope‑‑‑Despite service of notice in ordinary course as well as by publication, the borrower did not appear before Banking Court and instead moved application under S.12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑Application was dismissed and ex parte decree was maintained‑‑‑Validity‑‑‑Order passed by High Court was just, fair and equitable‑‑‑Supreme 'Court observed that' in case the borrower felt that, he was not liable to pay the decretal amount or that certain amount credited by him had not been adjusted by the Bank, he might agitate the same before Executing Court as Supreme Court could not embark upon an inquiry into facts in the exercise of its Constitutional jurisdiction‑‑‑Leave to appeal was refused.

Mahmood A. Qureshi, Advocate‑on‑Record for Petitioner.

Nemo for Respondent.

Date of hearing; 2nd July, 2002.

2003 C L D 1610

[Supreme Court of Pakistan]

Present: Muhammad Bashir Jehangiri and Munir A. Sheikh, JJ

Messrs MAROOF KNITWEAR (PVT.) LIMITED through Chief Executive and 8 others‑‑‑Petitioners

Versus

ALLIED BANK OF PAKISTAN LIMITED‑‑‑‑Respondent

Civil Petition for Leave to Appeal No.818 of 2000, decided on 24th May, 2002.

(On appeal from the judgment/order, dated 25‑4‑2000 of the Lahore High Court, Lahore passed in C.O.S. No.26 of 1999).

Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)‑‑‑---

‑‑‑‑S. 10‑‑‑Civil Procedure Code (V of 1908), O. VI, R.17‑‑­Constitution of Pakistan (1973), Art. 185(3)‑‑‑Amendment in application for leave to defend the suit‑‑Amendment sought to be made in the application was declined by Banking Court as well as by High Court‑‑‑Plea raised by the borrower was that the amendment in pleadings could be sought at any stage‑‑‑Validity‑‑‑Court was vested with the power to allow amendment in its discretion in pleadings at any stage of proceedings but it did not bind the Court to allow the amendment in all cases once application was moved‑‑­Discretion exercised by the Court for not allowing the amendment did not suffer from any illegality or arbitrariness‑‑‑Supreme Court allowed the borrower to use material available on record of the suit in support of and to substantiate the grounds raised in the original application for grant of leave to appear and defend the suit‑‑‑Leave to appeal was refused.

Sahibzada Anwar Hamid, Advocate Supreme‑Court for Petitioners.

Nemo for Respondent.

Date of hearing: 24th May, 2000.

2003 C L D 1620

[Supreme Court of Pakistan]

Present: Rana Bhagwandas and Hamid Ali Mirza, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN and another‑‑ ‑Petitioners

Versus

ABID AKHTAR and others‑‑‑Respondents

Civil Petition for Leave to Appeal No 382‑K of 2001 decided on 2nd December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)---

‑‑‑‑S.9‑‑‑Agracultura Development Bank of Pakistan Ordinance (IV of 1961), S. 25‑‑‑ West Pakistan Land Revenue Act (XVII of 1967), Ss. 79 & 80‑‑‑ Bank dues disputed by borrower‑‑Recovery as arrears of land revenue ‑‑‑Scope‑‑­Bank could not be equated with a proper judicial forum for determination of amount due against borrower, though under law having summary power of recovery of amount due‑‑‑In event of substantial dispute between parties procedure of recovery of amount by way of land revenue arrears would be available only where amount claimed was found due, ascertained and determined by a competent judicial forum.

Agricultural Development Bank of Pakistan v. Sanaullah Khan PLD 1988 SC 67; Abdul Latif v. Government of West Pakistan PLD 1962 SC 384; ARK Ocean Lines Ltd. v. Director of Industries and Mineral Development PLD 1976 Kar. 610, Hussain Ali v: Government of Pakistan 1989 MLD 4721; Grain System. (Pvt.) Ltd. v. ABDP 1993 MLD 1031; Abdul Karim v. Province of Sindh 2001 MLD 69 and Raj Kumar v National Bank of Pakistan 1994 CLC 206 rel.

Syed Ishrat Hussain Rizvi, Advocate Supreme Court and Miss Wajahat Niaz, Advocate‑on‑Record for Petitioners.

Abrar Hassan, Advocate‑on‑Record and Akhlaq Ahmad Siddiqui, Advocate‑on‑Record for Respondent No. 1.

Nemo for Respondents Nos. 2 to 4.

Date of hearing: 2nd December, 2002.

2003 C L D 1749

[Supreme Court of Pakistan]

Present: Munir A. Sheikh, J

Messrs ROYAL ENGINEER and others‑‑‑Petitioners

Versus

HABIB BANK LIMITED and others‑‑‑Respondents

Civil Miscellaneous Application No. 1340‑L of 2002 in Civil Petition No.3172‑L of 2001, decided on 22nd August, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XLI, Rr.5 & 8‑‑‑Constitution of Pakistan (1973), Art. 185(3)‑‑‑Stay of execution‑‑‑Deposit of half of decretal amount‑‑‑Suit for recovery of Bank loan was decreed after dismissal of application for leave to appear and defend the suit‑‑‑During pendency of appeal, the judgment‑debtor sought stay of execution of decree‑‑‑High Court allowed the stay of execution, with a condition to deposit half of the decretal amount‑‑‑Plea raised by the judgment‑debtor was that Manager of the Bank had unauthorisedly misappropriated amounts from his accounts and was later on dismissed from service on such act thus the Banking Court had wrongly dismissed his application for leave to defend the suit‑‑‑Validity‑‑‑If the Manager was found quality of misappropriation of the amount, the judgment‑debtor prima facie would not be liable to pay the amount‑‑‑Order of High Court regarding deposit of amount was suspended and execution proceedings were stayed‑‑‑Petition was allowed accordingly.

Azam Rasul, Advocate Supreme Court for Petitioner.

Date of hearing: 22nd August, 2002.