CLD 2004 Judgments

2004 C L D 353

[Security Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Ins., SC & IT) and Abdul Rehman Qureshi, Chairman

ISLAMABAD STOCK EXCHANGE (GUARANTEE) LIMITED‑‑‑Appellant

Versus

PREMIER CAPITAL MANAGEMENT (PVT.) LIMITED and another‑‑‑ Respondents

Appeal No. 11 of 2003, decided on 9th April, 2003.

Securities and Exchange Commission of Pakistan Act (XLII of 1997)‑‑‑

‑‑‑‑Ss.20(4) & 33‑‑‑Securities and Exchange Commission Ordinance (XVII of 1969), Ss.5‑A, 7 & 22(1)(c) ‑‑‑ Brokers and Agents Registration Rules, 2001, Rr.5 & 7‑‑‑Appeal before Appellate Bench of the Commission‑‑‑Trading as broker by member of Stock Exchange during period after expiry date of certificate of registration and before getting the same renewed‑‑‑Failure of Stock Exchange to take cognizance of such illegal trading by broker‑‑‑Commissioner (Securities Market) imposed penalty on broker and Stock Exchange for violation of Rr.5 & 7 of Brokers and Agents Registration Rules, 2001 and S.5‑A of Securities and Exchange Commission Ordinance, 1969‑‑‑Validity‑‑‑Broker under Brokers and Agents Registration Rules, 2001 could not do trading after the expiry date of certificate of registration‑‑­Stock Exchange was supposed and required to protect investors within parameters defined by law and applicable rules, which could not be done by perpetuating and facilitating illegal trade by a member‑‑‑Record showed that Stock Exchange had once suspended trading by such broker, but had removed suspension on the same date thus, had facilitated the broker to undertake illegal trading‑‑‑Stock Exchange had failed to perform its duties as frontline regulator and had not acted bona fide‑‑­Commissioner had taken lenient view in the matter, who could have proceeded against Stock Exchange under S.7 of the Ordinance‑‑‑Appeal was dismissed in circumstances.

Mahmood A. Awan and Ahmed Noman for Appellant.

Muhammad Safdar, Chief Executive for Respondent No. 1.

Syed Aamir Masood, Director (S‑III), Ikram‑ul‑Haq, Joint Director (Law/SM), Imtiaz Haider, Joint Director (SE) and Murtaza Abbas, Assistant Director (SE) for Respondent No.2.

Date of hearing: 3rd April, 2003.

2004 C L D 104

[Karachi]

Before Muhammad Roshan Essani and Khilji Arif Hussain, JJ

Messrs SUPREME TRADING CORPORATION and others‑‑‑Appellants

Versus

HABIB BANK LTD. and another‑‑‑Respondents

First Appeal No.68 of 2001, decided on 25th March, 2003.

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

‑‑‑‑Ss.9 & 21‑‑‑Suit for recovery of amount ‑‑‑Appeal‑‑­Maintainability‑‑‑Defendant, a proprietorship concern, which was principal borrower had opened a current account with plaintiff Bank which was being operated by its General Manager‑‑‑Other defendants who were guarantors of principal borrower also maintained mutual current account in Bank which was also being operated by the same person who had signed documents to obtain finance from Bank for principal borrower‑Defendants/guarantors executed personal guarantees for the finance used and utilized by principal borrower and also created equitable mortgage by deposit of original title deeds in respect of properties‑‑‑Bank established letter of credit on behalf of principal borrower with guarantee of guarantors and on failure of principal borrower to pay amount under Letter of Guarantees as well as bill of exchange, filed suit against principal borrower and guarantors for recovery of amount which was decreed by Banking Court fixing extent of liabilities of guarantors with regard to amount payable to the Bank‑‑‑Principal borrower had not specifically denied availing of fiends and only guarantors had questioned their liabilities on the ground that documents were deposited in respect of facilities availed by them only and not in respect of facilities used and utilized by the principal borrower‑‑­Burden to prove that charge on properties was not created in respect of funds provided to principal borrower, heavily lay upon defendants/guarantors, but they had failed to discharge same‑‑­Banking Court, in circumstances, had rightly decreed suit and appeal against judgment and decree which was filed simply to prolong proceedings and to avoid payment of outstanding dues, was dismissed.

Miss Sofia Saeed for Appellants.

R. F. Virjee for Respondent No. 1.

Moin Azhar for Respondent No.2.

Date of hearing: 25th March, 2003.

2004 C L D 107

[Karachi]

Before Muhammad Roshan Essani and Khilji Arif Hussain, JJ

MUHAMMAD FAROOQ ANWAR ‑‑‑Appellant

Versus

HABIB BANK LTD. ‑‑‑Respondent

First Appeal No.52 of 2002, decided on 16th May, 2003.

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

‑‑‑‑Ss.9, 10 & 22‑‑‑Suit for recovery of amount‑‑‑Plaintiff--Bank allowed to defendant transport finance facility on mark‑up basis and defendant as a security for repayment, of amount executed agreement of Finance whereby he agreed to repay the said amount in instalments and Bank purchased vehicle for the defendant‑‑‑Defendant made some payment, but then failed to pay instalments according to terms of agreement despite various demands and notices by the Bank and Bank filed suit for recovery of amount against defendant and acquired/repossessed the vehicle‑‑‑Banking Court having decreed the suit, defendant had filed appeal against judgment and decree of Banking Court‑‑‑,tank had impounded vehicle in question and officers of Bank had misappropriated the same‑‑‑Bank, in order to claim amount in respect of vehicle for which finance had been provided, had to return the vehicle impounded, to defendant and or after disposing of said vehicle in accordance with law and adjusting the sale proceeds against outstanding dues, could claim for shortfall‑‑‑Bank which was neither in a position to return the vehicle impounded nor to adjust value of vehicle misappropriated by its Staff; could not maintain action against defendant‑Bank on the contrary was to reimburse defendant for the losses sustained by defendant due to its wrong and illegal acts, but since defendant had not filed counter‑claim, same could not be granted.

Muhammad Tamaz Khan for Appellant.

Amir Malik for Respondent.

Date of hearing: 23rd April, 2003.

2004 C L D 110

[Karachi]

Before Zahid Kurban Alvi, J

ALLIED BANK OF PAKISTAN LIMITED‑‑‑Plaintiff

Versus

Mrs. FAHMIDA and 2 others‑‑‑Defendants

Suit No.45 of 2000, decided on 5th June, 2003.

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

‑‑‑‑S.10‑‑‑Recovery of Bank loan‑‑‑Leave to defend the suit, grant of‑‑‑Defendants raised several preliminary objections as regards plaintiff's claim‑‑‑Defendants alleged that the claim of the plaintiffs 'was exaggerated and based on concocted pleas‑‑‑Defendants controverted and denied propriety, authenticity, admissibility and effectiveness of each document annexed to the plaint‑‑‑Rate of mark‑up was also disputed‑‑‑Leave to defend the suit was granted in circumstances.

Messrs Habib Bank Ltd. v. Messrs Schon Textiles Ltd. 2001 YLR 1244 and Agricultural Development Bank of Pakistan v. Jasarat Hussain 2002 CLD 93 rel.

A.I. Chundrigar for Plaintiffs.

Salim Thepdawala for Defendants.

2004 C L D 123

[Karachi]

Before S. Ahmed Sarwana and Muhammad Mujeebullah Siddiqui, JJ

METRO MANAGEMENT (PVT.) LTD. ‑‑‑Appellant

Versus

PRIVATIZATION COMMISSION OF PAKISTAN and 5 others‑‑‑Respondents

High Court Appeal No.42 of 2003, decided on 29th March, 2003.

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.86 & 87‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑‑High Court appeal‑‑‑Application under O.XXXIX, Rr.1 & 2, C. P. C: for grant of injunction in a suit for declaration, cancellation, permanent injunction and specific performance of agreement for sale of shares‑‑‑Crux of the plaintiffs case was that the lenders were selling 73.50% shares by calling bids through press advertisements; and such shares included 50.63% shares purchased by the plaintiff from the original buyer which had not yet been transferred in the name of the plaintiff‑‑‑Record showed that all the actions were taken when the directors nominated by the plaintiff were on the Board of the company including the person authorised to file the present suit‑‑‑Plaintifs assertions that the shares which were subject‑matter of the Original Agreement and Novation Agreement were part of the shares being sold by the lenders was patently false and that the plaintiff had right of first refusal for the purchase of shares being sold by the lenders, appeared to be equally baseless‑‑‑Memorandum of Understanding, as claimed, had not given any such rights to the plaintiff who, in any case, was not a party to the said Memorandum‑‑Shares, subject‑matter of the Original Agreement and Novation Agreement, having not been transferred in the name of the plaintiff; assertion of plaintiff that the lenders could not sell the shares without first offering the same to it was misconceived‑‑‑Plaintiffs claim that it was ready to operate the company and to improve the bid also appeared to be illusory in view of its own conduct in the past‑‑‑Plaintiffs nominee Directors voluntarily withdrew their nominations from the election of the company and had never shown any interest in the affairs of the company thereafter‑‑‑No possibility existed that the plaintiff could run the affairs of the company even if the shares, subject‑matter of the Original Agreement and the Novation Agreement, were transferred to it as the same would only constitute a small minority in the currently paid‑up capital of the company ‑‑‑Plaintiff had not brought anything to show that the shares in favour of the lenders were not issued in accordance with the provisions of the Companies Ordinance, 1984 nor the plaintiff appeared to have initiated any action under the Companies Ordinance, 1984‑‑Provision of S.86 of the Companies Ordinance, 1984 allowed the issuance of shares without issuance of right shares subject to certain conditions, similarly S.87 of the said Ordinance also allowed the issuance of share in lieu of the outstanding debts‑‑­Plaintiff; in the circumstances, had deliberately attempted to cause a false impression that it owned more than 50% shares of the Company and the shares being sold by lenders included such shares‑‑‑Plaintiff had failed to make out a prima facie case of commission of any mala fide act with malice or illegality in enhancement of the authorised capital of the Company and issuance of shares to the Bank by conversion of the outstanding balance of equity‑‑‑Such conduct of the plaintiff alone would disentitle it from obtaining any equitable relief ‑‑‑ Injunction application was rightly dismissed by the Court in circumstances.

Mst. Malik Sultan and others v. Twin Store (Pvt.) Limited 2003 CLC 695 and Ghulam Bibi v. Sersa Khan PLD 1985 SC 345 ref.

Anwar Mansoor Khan and Abid S. Zuberi for Appellant.

Khalid Jawaid for Respondent No. 1.

Khalid Anwar for Respondents Nos. 2 and 5.

Mansoor‑ul‑Arfain for Respondent No.3.

Afsar Abidi for Respondent No.4.

Asif Ali for Respondent No.6.

Dates of hearing: 7th, 12th 19th and 21st March, 2003.

2004 C L D 171

[Karachi]

Before Shabbir Ahmed, J

MAAZA INTERNATIONAL COMPANY L. L. C. ‑‑‑Plaintiff

Versus

POPULAR FOOD INDUSTRIES LTD. and another‑‑‑Defendants

Suit No.637 of 2003, decided on 16th June, 2003.

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

‑‑‑‑O.XXXIX, Rr.1 & 2‑‑‑Temporary injunction‑‑‑Grant or refusal of‑‑‑Basic principles.

The well‑settled temporary injunction are; firstly, whether the plaintiff has prima facie good case; secondly, whether the balance of convenience lies in favour of grant of injunction; and lastly, whether the plaintiff would suffer irreparable loss, if the injunction is refused. These principles are to be applied on the basis of facts and circumstances of the case.

(b) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.21‑‑‑Provision of S.21 of Trade Marks Act, 1940‑‑‑Scope‑‑­Section 21 provides remedy to owner of trade mark in case of its infringement in stated circumstances.

(c) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.21‑‑‑Party seeking to enforce his right to trade mark‑‑­Essential conditions to be satisfied highlighted.

A party seeking to enforce his right to a trade mark has to show: (1) trading in his own name with the mark; (2) a certain amount of popularity, which would persuade someone to disadvantage of its good reputation or popularity; (3) that another person uses a mark; (4) identical with it or so nearly resembling it as to be likely to deceive or cause confusion, in the course of trade, in relation to goods in respect of which it is registered; (5) in such manner as to render the use of that mark likely to be taken to import a reference to the proprietor of the mark or import a reference to goods with which a proprietor is connected in the course of a trade.

(d) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 21 & 25‑‑‑Adoption of trade mark of foreign origin by non­proprietor‑‑‑Scope‑‑‑Non‑selling of products by owner of foreign trade mark in Pakistan due to import restrictions would not entitle non proprietor to copy the same as by doing so, non­proprietor would be deceiving public into thinking that its products were products of the owner of foreign trade mark‑‑­Court has condemned adoption of foreign trade mark and such use would be taken as dishonest use.

Messrs Pakistan General Stores, Karachi v. Messrs Cooper's Incorporated, Karachi PLD 1973 Note 61 at p. 82 ref.

Cooper's Incorporated v. Pakistan General Stores and another 1981 SCMR 1039 and Unilever Plc. v. Al‑Alameen Industries 2003 CLD 623 fol.

(e) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.25‑‑‑Unregistered trade mark‑‑‑Right of prior user‑‑‑Scope‑‑­Right in trade mark created by prior use despite non‑registration is superior right under S.25 of Trade Marks Act, 1940.

Messrs Abdul Wasim v. Messrs Haico 2002 CLD 1623 and Messrs Furafoam (Pvt.) v. Messrs Vohra Enterprises (Pvt.) Ltd. 2002 CLD 1639 rel.

(f) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.21 & 25‑‑‑Infi‑ingement of trade mark‑‑‑Suit for injunction‑‑­Plea of prior user‑‑‑Defendant claimed to be in business since 1986, while its application seeking registration of disputed mark and Sales Tax Advices were of subsequent dates ‑‑‑Effect‑‑­Defendant had failed to show to be prior user of plaintiff's mark thus, could not claim protection of S.25 of Trade Marks Act, 1940.

(g) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.10(2) & 25‑‑‑Infringement of trade mark‑‑‑Plea of prior user‑‑‑Defendant claimed use of trade mark before issuance of search certificate‑‑‑Such defendant could not claim to be bona fide user of disputed trade mark.

Solo Susice Narodni Podnik v. Sindh Match Works (Pvt.) Limited and another 1991 CLC 37 and Lallubhai‑Michand v. Punjab Aluminium Factory PLD 1960 Kar. 545 ref.

(h) Words and phrases‑‑‑

‑‑‑‑ "Acquiescence"‑‑‑Meaning.

Indus Pencil Industries (Pvt.) Limited v. Vikar Industries (Pvt.) Limited PLD 1999 Kar. 281 and Black's Law Dictionary, 6th Edn., 1990, p.24 ref.

(i) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.21 & 25‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Suit against infringement of trade mark‑‑‑Temporary injunction, grant of‑‑‑Delay caused in bringing such action‑‑‑Effect stated.

Delay simpliciter may be no defence to a suit for infringement of a trade mark, but where a trader allows a rival trader to expend money over a considerable period in building up of a business with the aid of a mark similar to his own, he will not be allowed to stop his rival's business. If he is permitted to do so, great loss would be caused not only to the rival trader, but to those who depended on his business for their livelihood. No hard and fast rule can be laid down for deciding when a person has, as the result of inaction, lost the right of stopping another using his mark. Each case must depend on its own circumstances, but obviously a person cannot be allowed to stand by indefinitely without suffering the consequences.

Question of delay is immaterial for issuance of temporary injunction, where similar mark is used by defendant and when using a similar mark is motivated with the intention of fraud.

Normally delay in taking action is fatal, but where defendant's conduct appears to have been playing for time and putting off the plaintiff with promise to discontinue the infringement, delay would not matter, but where the infringement is fraud on the public, then interim injunction would be granted in spite of certain amount of delay.

McCAW Stevenson and Orr Ltd. v. Lee Bros. (1960) 23 RPC 1; S. Muhammad Din & Sons v. Sh. Nabi Bakhsh & Sons 1987 CLC 759; Tekronix Incorporated v. M. Abdul Mannan PLD 1973 Kar. 14 and Rexona Proprietary Ltd. v. Majid Soap PLD 1956 Sindh 1 fol.

(j) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S. 23‑‑‑Specific Relief Act (I of 1877), S.54, Expln.‑‑‑Registered trade mark‑‑‑Evidentiary value.

According to section 23, Trade Marks Act, 1940 the registration is prima facie evidence of validity in all legal proceedings relating to a trade mark and registered trade mark can be exclusively used by its proprietor till the registration continues. The trade mark is a property and the rights in it remained protected. Section 54 of Specific Relief Act, 1877 contains an express provision that a trade mark is a property and invasion of the right therein may call for a perpetual injunction. Salmond in his jurisprudence treated the trade mark as property and right in it as ownership and the property being incorporeal.

(k) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 21 & 25‑‑‑Action for infringement of trade mark‑‑­Pleadings ‑‑‑Plaintiff in such action need only to assert its registered title and alleged infringement.

(l) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 21 & 25‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Adoption of trade mark of foreign origin by non‑proprietor‑‑Suit for injunction‑‑‑Interim injunction, grant of‑‑‑Trade mark of plaintiff was being used by defendant on its product with slight variation in the get‑up‑‑‑Both marks were similar visually and phonetically‑‑‑Defendant had not shown any reason tenable at law to pick up for its goods trade mark of foreign company (plaintiff)‑‑‑Adoption of same mark phonetically and visually for same class of products was bound to create likelihood of confusion and deception to consumer of such goods‑‑‑Adoption of plaintiffs trade mark showed lack of bona fides of defendant‑‑­Intention to infringe was so obvious that arguments of balance of convenience would be of no avail to defendant‑‑‑Defendant could not be allowed or continued to take advantage of its own wrong by raising plea of balance of convenience‑‑‑High Court accepted plaintiff's application for interim injunction.

Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Mars Incorporated v. Pakistan Mineral Water Bottling Plant (Pvt.) Ltd. 2001 MLD 39; Mian Taj Din and another v. Tahir Shabbir 1988 MLD 460; National Detergents Limited v. MOD and International (Pvt.) Ltd. 1993 MLD 590; Rexona Proprietary Ltd. v. Majid Soap Works PLD 1956 Sindh 1; Irshad Sewing Machine Company v. Registrar of Trade Marks 1990 ALD 438(2); Dabur India Ltd. v. Hilal Confectionary (Pvt.) Ltd. PLD 2000 Kar. 139; Kamal Trading Company v. Gillette U.K. Ltd. 1988 IPLR 135; Cooper's Incorporated v. Pakistan General Stores and another 1981 SCMR 1039; Unilever Plc. v. Al‑Alameen Industries 2003 CLD 623; Formica Corporation v. Pakistan Formica Ltd. 1986 MLD 362 and Formica Corporation v. Pakistan Formica Ltd. 1989 SCMR 361 ref.

Abdul Jabbar and another v. Ahmed Jan PLD 1973 Kar. 289; Rexona Proprietary Ltd. v. Majid Soap Works PLD 1956 Sindh 1 and J. N. Nichols (Vimto) PLC v. Mehran Bottlers (Pvt.) Limited PLD 2000 Kar. 192 rel.

(m) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 21 & 25‑‑‑Infringement of trade mark‑‑‑Test.

In case of infringement of trade mark, the test is, whether the unwary purchaser is likely to be deceived into purchasing the goods of the person infringing the trade mark as the goods of the owner of the trade mark.

Abdul Jabbar and another v. Ahmed Jan PLD 1973 Kar. 289 fol.

(n) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 10, 21 & 25‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Suit for injunction to restrain infringement of registered trade mark‑‑‑Pendency of defendant's application for registration of trade mark‑‑‑Interim injunction, grant of‑‑‑Scope‑‑‑Plaintiff could not be denied such injunction merely on the ground that defendant had applied registration of his mark.

Abdul Jabbar and another v. Ahmed Jan PLD 1973 Kar. 289 fol.

(o) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 21 & 25‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Suit for injunction to restrain infringement of registered trade mark‑‑‑Interim injunction‑‑ ‑Balance of convenience‑‑‑Where plaintiff had made out a strong prima facie case, then defendant could not be permitted to take advantage of his own mischief by raising plea of balance of convenience.

J. N. Nichols (Vimto) PLC v. Mehran Bottlers (Pvt.) Limited PLD 2000 Kar. 192 rel.

Munawwar Ghani for Plaintiff.

Farogh Naseem for Defendant No. 1.

Dates of hearing: 5th and 6th, June, 2003.

2004 C L D 237

[Karachi]

Before Zia Perwaz and Khilji Arif Hussain, JJ

MUSLIM COMMERCIAL BANK LIMITED‑‑‑Appellant

Versus

MUHAMMAD MITHAL and others‑‑‑Respondents

First Appeals Nos. 22 to 55, 58 to 65, 69 to 81, 97 to 135, 141 to 180 and 184 to 190 of 2002, heard on 5th March, 2003.

Loans for Agricultural Purposes Act (XLII of 1973)‑‑

‑‑‑‑Ss. 3(d) & 4‑‑‑Transfer of Property Act (IV of 1882), S.100‑‑­Limitation Act (IX of 1908), Art. 132‑‑‑Agricultural loan‑‑‑Suit for recovery of such loan‑‑‑Limitation‑‑‑Loan was secured on personal guarantee‑‑‑"Charge" was created in pursuance of S.4(5), Loans for Agricultural Purposes Act, 1973‑‑‑Word "charge" was defined in S.100, Transfer of Property Act, 1882‑‑Creation of "charge", in circumstances, would constitute a simple mortgage and period of limitation for recovery in case of a "charge", in such cases, was provided under Art. 132, Limitation Act, 1908‑‑‑Where the Trial Court had failed to consider Art. 132, Limitation Act, 1908 which applied to the suit, High Court set aside the judgment and decree of the Trial Court and remanded the case for decision of the suits on merits after taking into consideration Art. 132 of the Limitation Act, 1908.

Nemo for Respondents.

Anwar Mansoor Khan, A.‑G. (on Court Notice).

Date of hearing: 5th March, 2003.

2004 C L D 246

[Karachi]

Before Zahid Kurban Alvi and Zia Perwaz, JJ

ADAMJEE INSURANCE COMPANY LIMITED through Attorney Syed Ziauddin Ahmed ‑‑‑Petitioner

Versus

FEDERAL INVESTIGATION AGENCY (F.I.A.) through Deputy Director, F.I.A., Karachi‑‑‑Respondent

Constitutional Petition No.D‑1181 and Miscellaneous No.2969 of 2002, decided on 21st November, 2003.

Insurance Ordinance (XXXIX of 2000)‑‑‑

‑‑‑‑Ss.59 & 60‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.29‑‑‑Penal Code (XLV of 1860), Ss.406, 468 & 471‑‑‑Federal Investigation Agency Act, 1974 (VIII of 1975), S.3 & Sched.‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Notice by Federal Investigation Agency to the petitioner Insurance Company, alleging that it had caused huge losses to the national exchequer through fake, fraudulent and bogus insurance claims which were submitted by the officials of the company to the Pakistan Insurance Corporation, and thus the officials of the Company committed offences punishable under Ss.406/468 & 471, P.P.C. which were given in the Schedule of the Federal Investigation Agency Act, 1974‑‑­Validity‑‑‑Held, Schedule attached to the Federal Investigation Agency Act, 1974 had excluded the Insurance Companies and S.29, Securities and Exchange Commission of Pakistan Act, 1997 had provided the powers to the Security and Exchange Commission of Pakistan for investigation into the matters of Insurance Companies which powers had also been given under Ss. 59 & 60 of the Insurance Ordinance, 2000‑‑­Federal Investigation Agency, in circumstances, had no jurisdiction in the matter to issue the notice to the Insurance Company because there was no complaint of any nature against the said Insurance Company‑‑‑Principles.

Schedule attached to the Federal Investigation Agency Act, 1974 excludes the Insurance Companies. Section 29 of the Securities and Exchange Commission of Pakistan Act, 1997 clearly provides powers to the Commission for investigation into the matters of Insurance Companies. The same powers are also given in the Insurance Ordinance, 2000.

In the present case no complaint of any nature had ever been lodged against the Insurance Company by any individual or company for fraud or embezzlement etc. The Federal Investigation Agency or the Police had powers only in respect of complaints. The Securities and Exchange Commission of Pakistan had the jurisdiction in the matter to look into any fraud etc. in the business of Insurance. No material had been placed on record to prove that the Insurance Company was involved in such type of business. The letters addressed by the F.I.A. had questioned the losses suffered by the Insurance Company on account of Motor Car claims. Surely it was beyond the jurisdiction of the F.I.A. A loss no matter howsoever high or low should be a matter of concern to the shareholders of the Company. A public limited company had its accounts audited and these being public documents were open to question and scrutiny by the members/shareholders at the Annual General Meeting. The Securities and Exchange Commission oversees the activities of the Insurance Companies and, therefore, could check any illegal activity as the guiding law was the Insurance Ordinance, 2000.

Sections 60 and 61 onwards of Insurance Ordinance, 2000 dealt with the powers of the Commission to give directions to the insurer etc.

Record showed that the Insurance Company was one of the largest Insurance Companies in Pakistan and it had been recognized for its performance both in Pakistan and abroad. The recognition of a Company's achievement at the highest level reflected the integrity of the working of the Company. Apparently the Company had enjoyed, right from its inception, an unblemished record.

Federal Investigation Agency had no jurisdiction in the matter to issue the notice to the Insurance Company because there was no complaint of any nature against the Company.

The notice was issued without any lawful authority and was of no legal effect.

Kamal Azfer for Petitioner.

Nadeem Azhar, D.A.‑G.

2004 C L D 257

[Karachi]

Before Mushir Alam and Muhammad Mujeebullah Siddiqui, JJ

TRISTAR INDUSTRIES (PVT.) LTD. ‑‑‑Petitioner

Versus

STATE BANK OF PAKISTAN and another‑‑‑Respondents

Constitutional Petition No. D‑729 of 2003, decided on 25th June, 2003.

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

‑‑‑‑S.33‑B‑‑‑Circulars/Schemes issued by State Bank of Pakistan‑‑‑Value‑‑‑Such Circulars/ Schemes, in view of S.33‑B of the Banking Companies Ordinance, had force of law and were binding.

United Bank Limited v. Messrs Azmat Textile Mills Limited 2002 CLD 542 ref.

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

‑‑‑‑Art.199‑‑‑Constitutional jurisdiction, invocation of‑‑‑Condition precedent‑‑‑To invoke Constitutional jurisdiction, condition precedent was non‑availability of alternate remedy‑‑­Constitutional jurisdiction of High Court generally could not be invoked in presence of other adequate remedy available under relevant law.

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

‑‑‑‑Ss.2(d), (e) & 9‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­CMistitictioizal petition‑‑‑‑Relationship between customer and financial institution‑‑‑Default in fulfilment of obligation‑‑­Institution of suit‑‑‑Factual controversy, resolution of‑‑‑Proper forum‑‑‑Petitioner/customer and respondent‑Bank, had a Banker and customer relationship and petitioner had availed financial facilities from the respondent‑Bank‑‑ Law regulating relationship between customer and financial institute was contained in Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Definition of finance' and `obligation' as provided under S.2(d)(e) of the said Ordinance, were wide enough to cover the dispute urged in Constitutional petition‑‑‑Where either the customer or financial institution would commit default in fulfilment of any obligation with regard to any finance, Financial Institution as the case may be, the customer could institute a suit in the Banking Court by filing a plaint‑‑‑Obligations in terms of State Bank of Pakistan Circular and instructions of respondent‑Bank, sought to be enforced, would come within purview of obligation envisaged under S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, which could be effectively enforced by filing suit‑‑‑Controversy raised in Constitutional petition could only be thrashed out by adducing evidence and such exercise could not be taken in exercise of Constitutional jurisdiction of High Court.

Abid S. Zuberi for Petitioner.

Nemo for Respondent No. 1.

Akber H. Mirza for Respondent No.2.

Date of hearing: 25th June, 2003.

2004 C L D 260

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and Ghulam Rabbani, J

NATIONAL DEVELOPMENT FINANCE CORPORATION‑‑‑Petitioner

Versus

WAFAQI MOHTASIB, ISLAMABAD and others‑‑‑Respondents

Constitutional Petition No. D‑721 of 1996, decided on 18th September, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.6‑‑Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Suit for recovery of loan by the Bank‑‑‑Borrowers, in their written statement, while praying for dismissal of the suit also made a counter‑claim of Rs.325 Million for the actual losses as well as damages for the loss of reputation and humiliation suffered by them due to the maladministration/negligent acts of the Bank and prayed for decree in the said amount‑‑‑Banking Tribunal in deciding tire suit of the Bank, would thus, be required to consider and decide the alleged acts of maladministration/negligence allegedly committed by the Bank while disbursing an interest based finance facility/loan as "Bai Muajjal"‑‑­Maladministration/negligence being acts of mala fides, if the Banking Tribunal could consider the issue of mala fides then it could also go into the question of maladministration/negligence‑‑‑Nothing else could be assumed except that the issue of alleged maladministration/negligence was linked with disbursement and utilization of the loan/finance facilities, charging mark‑up ,thereon and recovery of the amounts by the borrowers as per agreements arrived at between the parties.

Saudi‑Pak Industrial and Agricultural Investment Company (Pvt.) Ltd., Islamabad v. Messrs Allied Bank of Pakistan and another 2003 CLD 596 ref.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Banking Tribunal had the jurisdiction to consider the issue of damages and grant the same if evidence to prove them was laid before it.

Saudi‑Pak Industrial and Agricultural Investment Company (Pvt.) Ltd., Islamabad v. Messrs Allied Bank of Pakistan and another 2003 CLD 596 ref.

(c) Mala fides‑‑‑

‑‑‑‑ Meanings and scope ‑‑‑Mala fides has a much wider scope and would come within its definition the acts of maladministration and negligence.

"Mala fide" literally means in bad faith. An action taken with mala fides is an action taken maliciously for personal motives whether to hurt the person against whom action is taken or to benefit oneself. The term "mala fides" is equated with "bad faith".

A complete catalogue of types of bad faith is impossible to provide but the following types are among those which have been recognized in judicial decisions: evasion of the spirit of the bargain, lack of diligence and slacking off, wilful tendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party's performance.

The term "mala fide" or "mala fides" is assigned the meaning of bad faith and the term "bad faith" is defined as the antithesis of good faith; a state of mind affirmatively operating with a furtive design, with a motive of self‑interest or ill‑will, or for an ulterior purpose.

Mala fides has a much wider scope and would cover within its definition the acts of maladministration and negligence.

Black's Law Dictionary, Seventh Edn., p.967 Ballentine's Law Dictionary, Third Edn., p.766 quoted.

(d) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Suit for recovery of loan by the Bank‑‑‑Allegation of maladministration/ negligence by the borrower in its written statement ‑‑‑Maladministration/negligence by the Bank while disbursing the interest based finance facility/loan as "Bai Muajjal‑‑‑Mala fides‑‑‑Maladministration/negligence being acts of mala fides, Banking Tribunal could consider the issue of mala fides and could go into the question of maladministration/ negligence of the Bank‑‑‑Material available on record in the present case, conclusively established that the matter relating to maladministration/negligence was before the Banking Tribunal and was within the exclusive domain of the Banking Tribunal‑‑­No other Court or Tribunal would have jurisdiction to decide the issue in view of the provisions of S.5(3) of the Banking Tribunals Ordinance, 1984, under which the Bank had filed the suit for recovery of the amounts advanced by way of loans/finance facilities.

(e) Establishment of Office of Wafaqi Mohtasib (Ombudsman) Order (I of 1983)‑‑‑

‑‑‑‑Art.9(1)(a)‑‑‑Allegation of maladministration ‑‑‑Ground which prevailed upon the Mohtasib in entertaining the review petition and exercising review jurisdiction was that at the time when the complaint was filed before the Mohtasib the issue relating to maladministration/negligence was not sub judice inasmuch as the appeal by the complainant before the District Judge against the judgment of the Civil Court dismissing the suit wherein the issue relating to maladministration/negligence was raised, had been dismissed and, therefore, there was no bar for the Mohtasib to entertain the complaint and decide the same on merits‑‑‑Validity‑‑‑Issues involved in the suit filed by the complainant were decided against him when the Civil Court dismissed his suit and the appeal filed against the decree of the Civil Court was also dismissed‑‑‑Ground of said dismissal was that the Civil Courts had no jurisdiction to entertain a suit relating to the issue of maladministration/negligence alleged against the other party as it was the sole jurisdiction of the Banking Tribunal and no other Court had jurisdiction to entertain a suit or a matter in relation thereto‑‑‑Such finding of the District Judge was not assailed or challenged by way of a revision or any other manner before the High Court and after expiry of the limitation for filing the revision petition/ other proceedings, as the case might be, the same had attained finality‑‑‑Subsequent complaint or review petition before any other Forum or Authority for adjudication in relation to the issue of maladministration/negligence would be barred in view of the principle that where a party who had the right to assail or challenge an adverse order or finding pronounced against him by a competent Court of law had failed to do the same, then the order/judgment/finding would attain finality and would be unassailable even in the hierarchy of the Forum or Authority.

Allah Baksh's case 1987 SCMR 810; Khushi Muhammad and 9 others v. The Chief Land Commissioner, Sindh and 17 others PLD 1986 Kar. 623 and Muhammad Rafiq v. Additional Settlement Commissioner, Multan and others PLD 1966 Lah. 590 ref.

(f) Administration of justice‑‑‑

‑‑‑‑ Where a party who had the right to assail or challenge an adverse order or finding pronounced against him by a competent Court of law had failed to exercise the same, then the order/judgment/finding would attain finality and would be unassailable even in the hierarchy of the forum or Authority.

Allah Baksh's case 1987 SCMR 810; Khushi Muhammad and 9 others v. The Chief Land Commissioner, Sindh and 17 others PLD 1986 Kar. 623 and Muhammad Rafiq v. Additional Settlement Commissioner, Multan and others PLD 1966 Lah. 590 ref.

(g) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑‑

‑‑‑‑S.5‑‑‑Powers of Banking Tribunal‑‑-Scope and extent.

Section 5 of the Banking Tribunals Ordinance of 1984 confers all the powers of a Civil Court on the Banking Tribunal.

Banking Tribunal, in exercise of its civil jurisdiction in respect of a claim filed by a banking company against a customer in respect or arising out of a finance provided by it, shall have all the powers vesting in a Civil Court under the Civil Procedure Code.

A Special Court while exercising civil jurisdiction shall have all the powers vested in a Civil Court under the Civil Procedure Code and shall be competent to grant reliefs which Civil Court could grant under section 9 of the Civil Procedure Code, 1908.

Special Court while exercising jurisdiction in respect of a claim filed before it by banking company against borrower or by a borrower against banking company in respect of or arising out of a loan, would have all powers vested in a Civil Court under Civil Procedure Code, 1908.

Farooq Ali v. Banque Indusuez and 3 others 1985 CLC 630 and Muhammad Nazir Afandi v. Industrial Development Bank of Pakistan, Karachi and 3 others PLD 1992 Pesh. 87 applied.

(h) Review‑‑­

‑‑‑‑Scope‑‑‑Power of review of an order cannot be exercised by a Court or Tribunal or Forum unless specifically conferred on such Court, Tribunal or Forum.

Hussain Bakhsh v. Settlement Commissioner, Rawalpindi and others PLD 1970 SC 1 rel.

(i) General Clauses Act (X of 1897)‑‑­

‑‑‑‑S.21‑‑‑Power of Court to recall, rescind, modify or alter its order by virtue of S.21, General Clauses Act, 1897‑‑‑Scope and extent.

Such power can be exercised by a Court/Tribunal/Forum to set right an illegal and void order passed in exercise of the jurisdiction not vesting in it or found to be suffering from some other grave illegality or contrary to the material on record. In the present case, the original order was passed in exercise of the jurisdiction vesting in the Tribunal. It did not suffer from any other illegality nor was made contrary to or by misreading of evidence. It was a proper and valid order, in relation whereof power conferred by section 21 of the General Clauses Act, 1897 could not be exercised.

(j) Constitution of Pakistan (1973)‑‑­

‑‑‑‑Art.199‑‑‑Constitutional jurisdiction of High, Court ‑‑‑Scope‑‑­Constitutional petition under Art. 199 of the Constitution would be competent without exhausting all remedies if the impugned order was passed by a Court or Authority by exceeding its jurisdiction‑‑‑Principles.

Constitutional petition under Article 199 of the Constitution would be competent without exhausting all remedies if the impugned order was passed by a Court or Authority by exceeding its Jurisdiction.

Normally a party is required to have recourse to the forum and the remedy made available to it by a statute for assailing an order passed by a functionary/authority/forum exercising powers under the statute. However, if the order impugned appears to be so patently illegal, void or wanting in jurisdiction that any further recourse to an alternative remedy may only be counter‑productive and, by invocation of Article 199 the mischief can forthwith be nipped in the bud then in such matters neither the alternative remedy would be adequate nor bar of jurisdiction in the Sub‑Constitutional Legislation would come in the way of the High Court in exercise of its Constitutional jurisdiction.

Khalid Mehmood v. Collector of Customs 1999 SCMR 1881 and Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072 ref.

(k) Establishment of Office of Wafaqi Mobtasib (Ombudsman) Order (I of 1983)‑‑‑

‑‑‑‑Art. 9(1)(a)‑‑‑Constitution of Pakistan (1 973), Art. 199‑‑­Constitutional petition‑‑‑Ombudsman, in the present case, had passed orders in exercise of jurisdiction which did not vest in him and herd thus usurped the jurisdiction illegally‑‑‑Orders passed by the Ombudsman were patently illegal, in. exercise of illegal jurisdiction and were void‑‑‑Non‑exhausting of the remedy of representation before the President of Pakistan by the petitioner would not be a bar for the maintainability of Constitutional petition against such order‑‑‑Ombudsman had committed a grave and serious illegality in assuming jurisdiction by entertaining the review petition holding that there was maladministration on the part of the petitioner.

Khalid Mehmood v. Collector of Customs 1999 SCMR 1881 and Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072 ref.

Abdul Qadir Siddiqui for Petitioners.

S. Tariq Ali, Federal Counsel for Respondents.

Date of hearing: 10th September, 2003.

2004 C L D 279

[Karachi]

Before Shabbir Ahmed and Gulzar Ahmed, JJ

Messrs SAFA TEXTILE LTD. ‑‑‑Appellant

Versus

Messrs HABIB BANK LTD. and 3 others‑‑‑ Respondents

First Appeal No.97 of 2001, decided on 15th September, 2003.

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

‑‑‑‑Ss. 7 & 15‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑­Application under S.12(2),C.P.C. before Banking Court‑‑­Maintainability‑‑‑Jurisdiction of Banking Court‑‑‑Scope‑‑‑Allegation of order having been obtained by fraud or misrepresentation‑‑­Provisions of S.12(2),C.P.C. are applicable to the decrees passed by the Banking Court‑‑‑No provision of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 had provided that S.12(2), C.P.C. would not apply to the decrees under the said Act‑‑‑(Messrs Gold Star International and another v. Muslim Commercial Bank 2000 MLD 421 dissented from).

Messrs Gold Star International and another v. Muslim Commercial Bank 2000 MLD 421 dissented from.

Mian Muneer Ahmed v. United Bank Ltd. PLD 1998 Kar. 278; Tawakal Export Corporation and others v. Muslim Commercial Bank and another 1997 CLC 1342; National Bank of Pakistan v. Messrs Khairpur Textile Mills and others 2001 CLC 1187 Dadabhoy Cement Industries Ltd. v. Messrs N.D.F.C. 2002 CLC 166 and Dadabhoy Cement Industries Ltd. v. Messrs N.D.F.C. PLD 2002 SC 500 rel.

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

‑‑‑‑Art. 201‑‑‑Decision of High Court binding on subordinate Courts‑‑‑Conflicting views of two High Courts one the point‑‑‑Subordinate Court having not followed the view taken by the High Court of the Province and instead following view expressed by the High Court of the other Province had failed to follow the principles of judicial discipline which required that the law declared by the High Court had to be unreservedly followed by its subordinate Courts.

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

‑‑‑‑Ss. 7 & 15‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑­Application under S.12(2), C.P.C. before Banking Court for setting aside the decree contending therein that the plaintiff by suppressing the fact had ,obtained the decree on false and defective documents i.e. guarantees‑‑‑Maintainability‑‑‑Condition‑‑­Mere falsity of a claim to the knowledge of the person putting forward the claim, would not be a ground for setting aside the decree on the ground of fraud‑‑‑Plea of misrepresentation/fraud thus was not available to the applicant‑‑‑Provisions of S.12(2), C.P.C. would apply if the fraud or misrepresentation was alleged during the proceedings of the suit in Court and not anything done outside the Court.

Lal Din and another v. Muhammad Ibrahim 1993 SCMR 710 fol.

Saalim Salam Ansari for Appellant.

Nemo for Respondents.

2004 C L D 286

[Karachi]

Before Shabbir Ahmed and S. Ali Aslam Jafri, JJ

Messrs ABDOUN OIL COMPANY S.A. INCORPORATED UNDER LAWS OF THE REPUBLIC OF PANAMA, IN GREECE, WITH THEIR OFFICE AT 43‑45 PORTMAN SQUARE, London‑‑‑Appellant

Versus

"M/T ABDOUN DISCOVERY" A SHIP FLYING PANAMA FLAG PRESENTLY AT THE PORT OF PORT QASIM AUTHORITY, KARACHI, PAKISTAN and another‑‑‑Respondents

Admiralty Appeals Nos.24 and 125 of 2002, decided on 7‑1‑2003.

(a) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑‑‑Ss.6, 4 & 3‑‑‑Expression "maritime lien"‑‑‑Connotation‑‑‑Claims giving rise to the "maritime lien" enumerated‑‑‑Limitation for "maritime lien" stated.

The Bold Buccleuh (1851) 7,700 PC 267 and Tervaet (1922) 259 CA ref.

(b) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑‑‑Ss.3, 4 & 6‑‑‑Sindh Chief Court Rules (O. S.), R. 730‑‑‑Order of arrest of vessel‑‑‑Such order being an ex parte order could be contested on behalf of the res and if the Court came to the conclusion that the plaintiff had failed to make out a case for arrest, the warrant could be recalled.

Sui Gas Transmission Co. Ltd. v. M.V. Good Herald 1983 C L C 886; Arshad Corporation v. The Ship Maersk 'Astro' PLD 1988 Kar. 515 and Jaffer Brothers (Pvt.) Ltd. v. M.V. Eurobulker 2002 CLD 926 ref.

(c) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑‑‑Ss.3 & 4‑‑‑Action in rem, institution of‑‑‑Conditions‑‑ Action in rem can be instituted against the ship or the property on which maritime lien is claimed‑‑‑Court had to see if the plaintiff has maritime lien which is a privilege claim which a claimant exercises over the res (ship) in respect of which it arises and can be enforced by legal process‑‑‑Where it had been claimed that ship in question was purchased by the amount advanced as loan by a second party which claim was not borne out from the documents produced rather it was shown that the ship in question was purchased much before the alleged advance of loan, such second party, therefore, could not claim maritime lien over the vessel nor action in rem could be brought against the ship‑‑‑Principles.

An action in rem can be instituted against the ship or the property on which Maritime Lien is claimed. It is to be seen whether the plaintiff had Maritime Lien which is a privilege claim which a claimant exercises over the res (ship) in respect of which it arises and can be enforced by legal process. A Maritime Lien or his privileged claim or charge upon Maritime property in respect of the services rendered to it (repairs) or purchase or damage done to the ship, it occurs the moment, cause of action arises and attaches to the property to which the cause has accrued. It travels with the property secretly and unconditionally and can be enforced by an action in rem. The Maritime Property means, a ship, cargo and freight irrespective of the Nationality. The claim which is recognized as giving rise to the Maritime Lien seamen, Master's charged and disbursement, damage done by ship to the salvage and respondentia. The claim in the present case falls under respondentia, a legal term applied to Maritime contract mortgaging the ship and their cargo for money advanced. It is the case of the claimant that the amount was paid in instalment for purchase of the ship and for repayment, the claimant had created charge over the second party. From the documents produced, the ship was purchased much before the alleged payment. It has not been established that ship was purchased from the alleged loan, even the second party was not in existence as legal identity, therefore, the ship cannot claim maritime lien over the claimant vessel, nor the action in rem can be brought against the ship based on action in personam against the second party in terms of subsection (4) of section 4 of the Ordinance for the reason that the second party was not incorporated when the loan agreement was allegedly executed.

(d) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑‑‑Ss.3, 4 & 6‑‑‑Sindh Chief Court Rules (O.S.), R.731‑‑‑Civil Procedure Code (V of 1908), O. VI, R. 6‑‑‑Appeal against order under R.731, Sindh Chief Court Rules (O.S.)‑‑‑Applications were to be disposed of on the basis of affidavits which had been filed with documents and the same were to be considered ‑‑‑Principles.

Amir Jan and others v. Haji Ghulam Muhammad PLD 1997 SC 883; Sar Anjam v. Abdul Raziq 1999 SCMR 2167 and Moti Lal Poddar v. Judhistir Das Tear AIR 1916 Cal. 658 ref.

(e) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑‑‑3(2)‑‑‑Provisions of the Admiralty Jurisdiction of High Courts Ordinance, 1980 being a remedial in nature required liberal Interpretation, but exercise of such jurisdiction was not to be so harsh as to cause injustice to the other party or violence to the Statute.

Sui Gas Transmission Co. Ltd. v. M.V. "Good Herald" and 3 others 1983 CLC 886 fol.

(f) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑‑‑S.4(4)‑‑‑Invoking of admiralty jurisdiction of High Court as to whether the claim gave right to maintain lien on the ship or not by action in rem ‑‑‑Conditions detailed.

The position under the provisions of Admiralty Jurisdiction of High Courts Ordinance, 1980 is confined to cases convened by subsection (4) of section 4 of the Ordinance, that puts certain conditions for invoking the admiralty jurisdiction of the High Court whether the claim gives right to maritime lien on the ship or not by an action in rem against‑‑

(a) the ship if at the time when the action is brought, it is beneficially owned as respects majority share therein by that person; or

(b) any other ship which at the time when the action is brought is beneficially owned as aforesaid:

Provided it is shown that the claim in the suit falls in any one of the categories of cases mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3 of the Ordinance; a claim arises in respect of a ship; and on the date of accrual of the cause of action, the person who would be liable in action in personam was either owner or charterer of or in possession or in control of the ship.

Ahmed Investment Ltd. v. M.V. Sun Rise‑4 PLD 1980 Kar. 229 ref.

(g) Admiralty Jurisdiction of High Courts Ordinance (XLII of 1980)‑‑‑

‑‑‑‑S.6‑‑‑Limitation Act (IX of 1908), Ss.29(2) & 19‑‑‑Action to enforce a maritime lien‑‑‑Limitation‑‑‑Extension of‑‑‑Principles.

An action to enforce a maritime lien is to be commenced within two years from the date of damage occurring or the maritime lien arising. In the present case, it is not a case of damage but the maritime lien is based on agreement and in pursuance thereof the payment claimed to have been made through four bank debit advices. It is the appellants' own case that not a single penny has been paid. The loan agreement stipulates that any single event of default, in repayment of the loan amount and interest thereon by the Second Party, shall entail any legal action by the First Party against the Second Party, their assets, any and or all vessels owned by them, in any jurisdiction as the First Party deems fit and proper the Second Party unconditionally agreed to the first charge over the vessel in question and other vessels owned by them.

The extension in limitation has been pleaded through extension granted by the appellants in payments of instalments by putting themselves in duel position of creditor and debtor, on assertion that the appellants' company's. President is also shareholder to the extent of 33% in the Company of the Second Party.

Subsection (2) of section 29 of the Limitation Act, 1908 provides that where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed therefor by the First Schedule, the provisions of section 3 shall apply, as if such period were prescribed therefor in that Schedule, and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law‑‑

(a) the provisions contained in section 4, sections 9 to 18 and section 22 shall apply only insofar as, and to the extent to which, they are not expressly excluded by such, special or local law.

Therefore, section 19 of the Limitation Act, 1908 has been made applicable which provides that where before the expiry of period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by some person through whom he derives title or liability, a fresh period of limitation shall be computed from the time when the acknowledgement was signed. Subsection (2) further provides that where the writing containing the acknowledgement is undated, oral evidence may be given of the time when it is signed. Explanation II further explains the term `signed' to mean signed either personally or by an agent duly authorized in this behalf. Therefore, the extension as contended is neither provided under the law nor a case for condonation by Court has been pleaded with reasonable/justifiable grounds. If such law is in vogue in the country of respondents domicile, then such plea being based on foreign law must have been pleaded by the appellants as ruled by the apex Court in Atlantic Steamers Supply Company v. m.v. Titisee and others PLD 1993 SC 88, that there seems to be consensus of view that question, whether a particular foreign law is applicable in a particular foreign country, is a question of fact and it was further held that since the question, whether a particular foreign law in a particular foreign country is a question of fact, it is to be pleaded expressly as a material question of fact and as the fact constituting cause of in terms of the provisions of the C.P.C. No doubt the limitation is mixed question of law and fact but in case the pleading and the documents filed lead to the conclusion that the suit is barred, the question has to be addressed in terms of section 3 of the Limitation Act even if such plea has been raised.

No exception could be taken to the recalling of the warrant of arrest by impugned order.

Atlantic Steamer's Supply Company v. m.v. Titisee and others PLD 1993 SC 88 ref.

Akhar Ali Mahmud for Appellants.

Naeem Ahmed and Abdul Inam for Respondents.

Dates of hearing: 26th and 27th February, 2002.

2004 C L D 315

[Karachi]

Before S. Ahmed Sarwana and Muhammad Mujeebullah Siddiqui, JJ

NASEEM AHMED ‑‑‑Appellant

Versus

Messrs SAMIUDDIN RAMZAN KHAN and 2 others‑‑‑Respondents

High Court Appeal No.219 of 2002, decided on 24th December, 2003.

(a) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.21, 22, 23, 24, 25, 26, 8 & 10‑‑‑Registration of trade mark‑‑‑Right conferred by registration‑‑‑Scope and extent‑‑­Principles‑‑‑Application for registration, in the present case, was apparently examined by the Trade Mark Registry to ensure that the same meets the requirements of registration and that its registration was not prohibited under Ss.8 & 10, Trade Marks' Act, 1940‑‑‑No opposition to the registration of the trade mark, having been received, on the advertisement in the Trade Marks Journal, the Trade Marks Registry registered the mark in Class 16 and issued the certificate‑‑‑User on the said registration, acquired the exclusive light to use the registered trade mark in Class 16 in relation to the goods specified, thereby prohibiting and restraining every and all persons from using registered trade mark and S.21, Trade Marks Act, 1940 further declared that the said right shall be deemed to be infringed by any other person who, without the authority of the registered user, used any mark identical with it or so resembling it which was likely to deceive or cause confusion in the course of trade in relation to the goods in respect of which registered user's trade mark was registered‑‑‑Such right of the registered user was however, subject to the terms and conditions specified in Ss.22, 25 & 26 of the Trade Marks Act, 1940, legal effects of the registration and its renewal having been stated in Ss.23 & 24 of the said Act‑‑‑Registration certificate of the trade mark, was a prima facie evidence, in all legal proceedings relating to the relevant trade mark, to the effect that the registration was valid and after the expiration of seven years from the date of registration shall be taken to be valid and conclusive in all respects unless such registration was obtained by fraud or the trade mark offended against the provision of S.8, Trade Marks Act. 1940‑‑‑Held, after the registration of the trade mark of the applicant, by virtue of the Registration Certificate and its renewal, the registration of the trade mark became valid and conclusive in all respects unless it was proved to have been obtained by fraud or offended against S.8 of the Act.

1986 MLD 886 ref.

(b) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.22, 25, 26 & 75‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1, 2 & S.151‑‑‑Infringement of registered, trade mark‑‑‑Grant of injunction against the person infringing said trade mark‑‑‑Registered user of said trade mark had the right to obtain an injunction against the person who infringed his registered trade mark in the manner prescribed, merely on production of the Registration Certificate under S. 75, Trade Marks Act, 1940‑‑‑Provisions of S.26 of the said Act being not applicable, could be ignored‑‑‑Principles.

On registration and thereafter renewal of the mark certificate holder had acquired the exclusive right to the use of the trade mark in Class 16 and subject to the provisions of sections 22, 25 and 26 of the Trade Marks Act, he had the right to restrain all persons from using any mark similar, identical with or resembling his mark which was likely to deceive or cause confusion in the course of trade that the said goods had been produced by the certificate holder and he had the right to obtain an injunction against the person who infringed his registered mark in the manner described above merely on production of the Registration Certificate under section 75 of the Trade Marks Act. The right acquired to the exclusive use of the mark as stated in section 21 is, however, subject to the provisions of sections 25 and 26. The provisions of section 26 were not applicable in the circumstances of the case and could therefore be ignored.

(c) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss.46, 21, 23 & 25‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Registration of trade mark‑‑‑Saving of vested right of registered user‑‑‑Grant of interim injunction to the registered user‑‑‑Case put up by the objector to the registration of trade mark was that the trade mark in question did not originally belong to the registered user as the same was first used by a Foreign concern who got the same registered in its name in Taiwan in 1976 and in USA in 1977 and that the registered user in Pakistan had been importing the goods bearing the said trade mark from the said concern of foreign country which the latter produced under its own registration and that the registered user obtained the registration of the said trade mark in his name in Pakistan fraudulently‑‑‑Validity‑‑‑Registered user, in the present case, admittedly, was the proprietor of trade mark in Pakistan in Class 16, and in view of the registration of the trade mark in his name and its renewal after seven years, was entitled to the protection provided to him under the Act as long as his mark remained on the Register with the exception that any other person, who might have been using the mark prior to the registration of the mark in favour of the registered user, had the right to continue to do so‑‑‑If the objector was aggrieved by the registration of the mark in favour of the registered user he could have filed an application for rectification of the Register as provided in S.46, Trade Marks Act, 1940‑‑‑Neither the objector nor any other person had filed any application under S.46, Trade Marks Act, 1940 for correction of the Register of Trade Marks by cancelling or varying the registration of trade mark of the registered user‑‑‑Objector had not produced any single document to show that goods bearing the trade mark consisting the registered word printed on a circular loop had been imported by him or anyone else in Pakistan prior to its registration in favour of the registered user‑‑‑Neither the trade mark registered in Pakistan was an internationally well‑known mark, nor the objector had produced any evidence to show that goods bearing the trade mark imported by him enjoyed worldwide reputation and were recognized by the general public to be the product of the manufacturing concern abroad except two registrations in China in 1976 and in USA in 1977‑‑­Export of the goods by the said foreign manufacturer to other countries of the world did not confer any right on the objector to import the goods which infringed the registered trade mark in Pakistan‑‑‑Registered user, in circumstances, had made out a prima facie case for grant of temporary injunction and the balance of convenience was also in his favour as his trade mark had been registered and renewed‑‑‑Registered user, in circumstances, would continue to enjoy the right to use the registered trade mark exclusively until the renewal would expire subject to further renewal for another 15 years thereafter unless the mark was cancelled or varied under S.46 of the Act.

1986 MLD 886; Beecham Group and another v. Ahmed Ismail and another PLD 1987 Kar. 356 and Ghulam Muhammad Dossal & Company v. Vulcan Company Ltd. and another 1986 MLD 886 distinguished.

(d) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.21‑‑‑Customs Act (IV of 1969), S.15(e)‑‑‑Registration of trade mark‑‑‑Prohibition on import of goods under S.15(e), Customs Act, 1969‑‑‑Effect‑‑ Any goods, made or produced outside Pakistan and having trade mark of any manufacturer, dealer or trader in Pakistan cannot be brought in Pakistan unless the trade mark was accompanied by a definite indication that the goods had been made or produced in a place outside Pakistan and the name of the country in which the place of manufacture or production was situated, was shown in as large and as conspicuous letters as toe letters of the trade mark and in the same language as the trade mark‑‑‑Goods produced by the objector to the registration of trade mark, in the present case, did not contain any indication whatsoever that they had been made or produced outside Pakistan‑‑‑Because of apparent similarity between the goods produced by the registered user and those imported by the objector, no purchaser in the market would be able to distinguish the goods of objector from those of the registered user‑‑‑Effect‑‑‑Goods imported by the objector, held, fell within the mischief of S. 15(e) of the Customs Act, 1969 and the Customs Department would, prima facie, be justified in not allowing their clearance.

1986 MLD 886; Beecham Group and another v. Ahmed Ismail and another PLD 1987 Kar. 356 and Ghulam Muhammad Dossal & Company v. Vulcan Company Ltd. and another 1986 MLD 886 distinguished.

Mrs. Navin Merchant for Appellant.

Zulfiqar Ali Khan for Respondent No. 1.

Akhtar Hussain for Respondent No.2.

Dates of hearing: 21st, 25th February and 12th May, 2003.

2004 C L D 334

[Karachi]

Before Mushir Alam, J

Messrs HASAN ALI RICE EXPORT CO. through Sole Proprietor‑‑‑Plaintiff

Versus

FLAME MARITIME LIMITED and another‑‑‑Defendants

Suit No. 1051 of 1999, decided on 20th May, 2003.

(a) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.28, Exception 2‑‑‑Arbitration Act (X of 1940), S.2(a)‑‑­Arbitration agreement is exception to general rule that any agreement in restraint of legal proceedings is void.

(b) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.3‑‑‑Contract Act. (IX of 1872), S.28, Exception 1‑‑­Charter Party agreement containing foreign arbitration clause is saved and protected by Exception 1 of S.28 of Contract Act, 1872.

(c) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.3‑‑‑Arbitration Act (X of 1940), S.34‑‑‑Stay of legal proceedings‑‑‑Powers of Court under S.3 of Arbitration (Protocol and Convention) Act, 1937 and S.34 of Arbitration Act, 1940‑‑‑Distinction‑‑‑Obligatory on Court to stay suit under S.3 of Arbitration (Protocol and Convention) Act, 1937, while under S.34 of Arbitration Act, 1940, same is merely discretionary power of Court resting on condition laid down therein.

Messrs Manzoor Textile Mills Ltd. through Director v. Nichimen Corporation and 2 others 2000 MLD 641 fol.

(d) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.3‑‑‑Arbitration Act (X of 1940), S.34‑‑‑Civil Procedure Code (V of 1908), Ss. 10 & 11‑‑‑Specific Relief Act (I of 1877), Ss.21, proviso, 42 & 54‑‑‑Award made by arbitral Tribunal at London during pendency of, suit at Karachi seeking injunctive relief against enforcement of arbitration clause‑‑­Validity‑‑‑Arbitration proceedings had commenced much prior to filing of suit‑‑‑Plaintiff had defended claim before arbitrator by raising all issues including issue as to validity of arbitration clause as raised in the suit‑‑‑Existence of contract providing for reference of subject‑matter of suit to arbitration would bar such suit to the extent of matter covered by arbitration clause‑‑‑Seat of arbitration was at London, thus, its proceedings to all intents and purposes would be controlled and regulated by (English) Arbitration Act, 1996‑‑‑‑Proceedings in suit subsequent to award would be hit by doctrine of res sub judice enshrined in S.10, C.P.C.‑‑‑Findings recorded in earlier proceedings culminating into award during pendency of suit would be hit by doctrine of res judicata‑‑‑Award had been registered as suit and defendant had filed objections thereto, thus, such suit was covered by Expln. I of S.11, C.P.C. ‑‑­Conclusive award having been delivered in respect of subject‑matter of suit, trial of suit would be exercise in futility ‑‑‑High Court dismissed the suit.

Messrs Mitsue Bussan Kaisha Ltd., Karachi v. Messrs Tataram Bhagwandas and another AIR 1924 Sind 146; Firm Ghansham Dass and another v. Tek Chand AIR 1935 Lah. 916; Doleman & Sons v. Ossett Corporation 3 KBD 257; East and West Steamship Co., Georgetown, Madras v. S.K. Ramalingam Chettiar AIR 1960 SC 1058; G. M. Pfaff A.G. v. Sartaj Engineering Co. Ltd., Lah. and 3 others PLD 1970 Lah. 184; A. Merdith Janes Co. Ltd. v. Crescent Board Ltd. 1999 CLC 437; Arbitration between Dampskibsselskabet Nordon Aktieselskale v. Ahmed Shipping Lines Limited, Wallace Road, Karachi PLD 1983 Kar. 247; Petrocon (Pvt.) Ltd. v. Hyderabad Development Authority, Hyderabad 1990 MLD 1675; Messrs European Grain and Shipping Ltd. v. Messrs Polychem Company Ltd. PLD 1990 Kar. 254 and Oriental Maritime v. Hassan Ali Company Cotton (Pvt.) Ltd. Suit No. 1681 of 1998 ref.

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

‑‑‑‑S.21, proviso ‑‑‑Pendency of suit and arbitration proceedings in respect of same subject‑matter ‑‑‑Validity‑‑Continuation of parallel proceedings at the same time respecting same subject‑matter is neither intended nor contemplated by law.

(f) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.3‑‑‑High Court of West Pakistan (Establishment) Order (XIX of 1955), Art. 5‑‑‑Arbitration proceedings commenced in foreign country‑‑‑Such proceedings would be regulated and controlled by law applicable at the seat or venue of arbitration‑‑‑Karachi High Court in exercise of its original civil jurisdiction could have no control or domain over such foreign arbitration proceedings.

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

‑‑‑‑S.11‑‑‑Proceedings before parallel forums in respect of same subject-matter‑‑‑Principle of res judicata‑‑­Applicability‑‑‑When proceedings for any reason, were allowed to continue in parallel forum, then the proceeding, which, culminated deciding controversy one way or the other, would operate as res judicata.

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

‑‑‑‑S.11‑‑‑Arbitration Act (X of 1940), S.14‑‑‑Award made earlier in time would come in way of pending suit‑‑‑Finding recorded in earlier proceedings culminating into award during pendency of suit would attract the doctrine of res judicata.

(i) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.3‑‑‑Arbitration Act (X of 1940), S.34‑‑‑Matter agitated before Court was properly referred to arbitration by a party to suit and arbitration agreement‑‑‑Arbitrator in all fairness alone would be seized of such matter‑‑‑Assumption of jurisdiction by Court, thus, would be improper, unless conditions laid down in S.34 of Arbitration Act, 1940 or S.3 of Arbitration (Protocol and Convention) Act, 1937 were attracted.

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

‑‑‑‑S.11‑‑‑Principle of res judicata‑‑‑Applicable to pending suit as well as other proceedings including arbitration.

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

‑‑‑‑S.11‑‑‑Arbitration Act (X of 1940), S.2(a)‑‑‑Controversy covered by arbitration clause heard and decided‑‑‑Effect‑‑‑Such controversy between the same parties could not be adjudicated upon by Court in a suit pending adjudication as same would be hit by res judicata.

(l) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S. 7(3)‑‑‑Foreign award‑‑‑Remedy‑‑‑Such award could be challenged at the seat of arbitration in accordance with law applicable thereto.

Moulvi Yousaf for Plaintiff.

Khalid Rehman for Defendants.

Date of hearing: 20th January, 2003.

2004 C L D 343

[Karachi]

Before Mushir Alam, J

DIAMOND FOOD INDUSTRIES LIMITED‑‑‑Plaintiff

Versus

JOSEPH WOLF GmbH & CO. and another ‑‑‑Defendants

Suit No 759 of 2000, decided on 2nd October, 2002.

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

‑‑‑‑S.42‑‑‑Term "property" as used in S.42 of Specific Relief Act, 1877--‑Connotation, scope and illustrations‑‑‑Such term is of wide import having within its fold both tangible and intangible property‑‑‑Such term connotes exclusive right of possession or enjoying capability of being disposed of, assigned or transferred‑‑‑Such term comprises of bundle of rights, which a person is capable of enjoying to his advantage giving rise to some privilege, benefit or monetary gain by exercise of such right‑‑‑Property may be in shape of fixed assets or object or a right in intangible property, such as trade mark, goodwill or trade name, royalty etc.

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

‑‑‑‑Ss.12 & 42‑‑‑Easements Act (V of 1882), S.52‑‑‑Contract Act (IX of 1872); S.2(h)‑‑‑Suit for declaration and specific performance of licence‑‑‑Maintainability‑‑ Licence is a contract, between the parties to perform and assume certain obligations, privileges, benefits by claiming its due performance‑‑‑Privileges and benefits under such contract; broadly speaking, are "property"‑‑‑Person entitled to such benefits can claim due recognition and its corresponding performance by other‑‑‑Such suit would not be hit by S.42 of Specific Relief Act, 1877.

(c) Easements Act (V of 1882)‑‑‑

‑‑‑‑S.60‑‑‑Licence inherently revocable, unless shown to be coupled with interest.

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

‑‑‑‑S.12‑‑‑Contract Act (IX of 1872), Ss.2(e), 182 & 202‑‑­Specific performance of agency agreement‑‑‑Scope‑‑‑Such agreement cannot be specifically enforced, unless shown to be coupled with interest and still subsisting.

Messrs Baba Handicraft v. Civil Aviation Authority 1997 CLC 1005 and Muhammad Arif Affendi v. Egypt Air 1980 SCMR 588 ref.

Messrs World Wide Trading Co. v. Sanyo Electric Trading Co. Ltd. and another PLD 1986 Kar. 234 and Adamjee Paper and Board Mills Ltd. v. Maritime Agencies Ltd. 1984 CLC 440 rel.

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

‑‑‑‑S.12‑‑‑Easements Act (V of 1882), S.52‑‑‑Contract Act (IX of 1872), Ss.182 & 202‑‑‑Licence or agency agreement for fixed term‑‑‑Specific performance of such contract after expiry of its term‑‑‑Scope‑Such contract having come to an end could not be sought to be enforced or given life for any further extended period without concurrence of other party.

M. A. Naser v. Chairman, Pakistan Eastern Railways and others PLD 1965 SC 83; Messrs Baba Handi Craft and 3 others v. Civil Aviation Authority and another 1997 CLC 1005; Alavi Sons Ltd. v. The Government of East Pakistan and others PLD 1968 Kar. 222; Pakistan International Airlines Corporation and 5 others v. Muhammad Izharul Ahsan Qureshi PLD 1979 Kar. 640; Messrs Karsaz Construction Company through Partner Muhammad Hanif v. Pakistan through Secretary, Ministry of Defence, Islamabad and another 1999 CLC 1719 and Hyderabad Electronic Industries Ltd. v. Messrs Sony Corporation through Messrs Sony Gulf Company 1999 MLD 850 ref.

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

‑‑‑‑Ss.12 & 42‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Suit for declaration, specific performance of licence agreement and permanent injunction‑‑ Licence for use of trade mark and trade name of defendant's products by plaintiff‑‑‑Revocation of such licence by defendant‑‑­Prayer for temporary injunction to restrain defendant from interfering in licence 'facilities granted to plaintiff‑‑­Validity‑‑‑Plaintiff under agreement was bound to protect trade mark and trade name of defendant within territory of Pakistan, for using same he was granted licence‑Plaintiff by applying for registration of trade mark and trade name in his own right had claimed a hostile title against his principal (defendant)‑‑‑Plaintiff had not only failed to fulfil his corresponding obligations, but had attempted to deceive his principal by exploiting its goodwill and get its trade mark registered in his name‑‑‑Injunctive relief was equitable relief‑‑‑Person seeking equity must do equity‑‑­Plaintiff on account of such dishonest act was not entitled for injunctive relief‑‑‑Application for temporary injunction was dismissed.

(g) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss.2(d)(e) & 25‑‑‑No contract or agreement could be conceived without any consideration.

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

‑‑‑S.12‑‑‑Suit for specific performance of contract‑‑­Essentials‑‑‑Plaintiff has first to demonstrate that he is ready and willing to perform his part of obligation and has taken positive measure to fulfil the same before seeking performance of reciprocal obligation by defendant.

Muhammad Yaqub v. Muhammad Nasrullah Khan PLD 1986 SC 497 and Muhammad Ismail Baloch v. Rabia 1987 MLD 280 ref.

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

‑‑‑‑Ss.53, 54 & 55‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Injunctive relief is equitable relief‑‑­Person seeking equity must do equity.

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

‑‑‑‑S.12‑‑‑Contract Act (IX of 1872), Ss.2(e) & 182‑‑­Companies Ordinance (XLVII of 1984), S.284‑‑ Suit by agent for specific performance of agency agreement‑‑‑Acquisition of rights and interest of defendant‑Company by other company by way of merger‑‑‑Effect‑‑‑Plaintiff agent could not object to such acquisition or merger as same would not change his status.

Noorullah A. Maji for Plaintiffs.

Defendant No. 1 was, by consent struck off vide order dated 19th February, 2001.

Rasheed A. Razvi for Defendant No.2.

Dates of hearing: 8th May and 12th September, 2002.

2004 C L D 356

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and Ghulam Rabbani, J

Messrs INAYAT ENTERPRISES‑‑‑Petitioner

Versus

SECRETARY, MINISTRY OF COMMERCE and others‑‑‑Respondents

Constitutional Petition No.D‑2402 of 1994, decided on 16th July, 2003.

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

‑‑‑‑S.3‑‑‑S.R.O. 626(I)/79, dated 1‑7‑1979, para. 7(c)(d)‑‑­S.R.O.574(I)/92, dated 10‑6‑1992‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Import licence fee, refund of‑‑‑Petitioner established Letter of Credit in favour of supplier abroad for import of goods on basis of import licence issued under S.R.O. 626(I)/79, dated 1‑7‑1979‑‑­Government later on withdrew import licence fee by S.R.O. 574(I)/92, dated 10‑6‑1992‑‑‑Supplier refused to honour transaction through letters dated 13‑5‑1992 and 23‑6‑1992‑‑‑Petitioner claimed refund of import licence fee on the ground that after withdrawal of fee by S.R.O. dated 10‑6‑1992, he was not able to compete with other importers of goods for which he had placed import order‑‑‑Validity‑‑­For refund of import licence fee in terms of para. 7(c) of S.R.O. dated 1‑7‑1979, petitioner was bound to prove non-­establishment of Letter of Credit due to change in Government policy and submission of application for re-fiend of fee within 30 days of change in policy‑‑Petitioner could not explain as to how withdrawal of import licence fee had affected interest of his supplier‑‑‑Petitioner's failure to establish Letter of Credit with another supplier of goods was on account of his own shortcomings and limitations in failing to offer a competitive price for purchase of goods as offered by other importers on the same goods‑‑‑ Government by S.R.O. dated 10‑6‑190 had not banned import of goods, which could be validly imported‑‑‑lad import‑of goods been banned or brought on negative list, then petitioner's contention would have merited consideration that he could not import goods as a result of change in Government policy‑‑‑High Court dismissed the Constitutional petition.

(b) Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order (I of 1983)‑‑‑

‑‑‑‑Arts.11 & 32‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Maintainability‑‑‑Order passed by Ombudsman‑‑‑Non‑availing of remedy of making repre­sentation before President of Pakistan against impugned order as provided by Art.32 of Establishment of the' Office of Wafaqi Mohtasib. (Ombudsman) Order, 1983‑‑‑Effect‑‑­Order of Wafaqi Mohtasib would attain finality and could not be challenged under Constitutional jurisdiction, of High Court or before any forum.

Nazar Akber for Petitioners.

Sajjad Ali Shah, Standing Counsel for Respondents.

Date of hearing: 21st May, 2003.

2004 C L D 363

[Karachi]

Before Muhammad Roshan Essani and Khilji Arif Hussain, JJ

Messrs MUTUAL TRADING CO. (PVT.) and others‑‑‑Appellants

Versus

Messrs FAISAL BANK LTD. and another‑‑‑Respondents

First Appeal No. 103 of 2001, decided on 22nd April, 2003.

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

‑‑‑‑S.21‑‑‑Appeal against interlocutory order‑‑­Maintainability‑‑‑Application for leave to defend was refused by Banking Court‑‑‑Defendant assailed such order under S.21 of Banking Companies (Recovery of Loans; Advances, Credits and Finances) Act, 1997‑‑‑Validity‑‑‑Appeal under S.21 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, was maintainable only against a decree or an order refusing to set aside the decree or an order permitting or preventing the sale of property or a sentence passed by Banking Court‑‑‑Appeal in question having been filed against an interlocutory order and not against the final judgment and decree passed by Banking Court, was not maintainable which was dismissed in limine.

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

‑‑‑S.21‑‑‑Limitation Act (IX of 1908), S.5‑‑‑Appeal‑‑­Condonation of delay‑‑‑Unexplained delay of 39 days‑‑­Appellants applied for attested copy of order on 28‑7‑2000, i.e. after expiry of period meant for filing of appeal, attested copy was received on 4‑8‑2000 and appeal was filed on 24‑8‑2000‑‑‑Validity‑‑‑Appeal was filed after 20 days of receiving the certified copy and no explanation had been furnished by the appellants for not filing the appeal immediately after receiving the certified copy of the order‑‑­Appeal was dismissed as time‑barred in circumstances.

Amir Malik and Qazi Abdul Hameed Siddiqui for Appellants.

2004 C L D 437

[Karachi]

Before Zia Perwaz, J

ADIL MASOOD BUTT and others‑‑‑Petitioner

versus

Messrs COSSAR CARPETS (PVT.) LTD. ‑‑‑Respondent

Judicial Miscellaneous Application. No.38 of 2002 and Civil Miscellaneous Applications Nos.1649 and 1650 of 2003, decided on 13th August, 2003.

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S. 305(c,)‑‑‑Winding‑up of company on ground of not doing business for many years‑‑‑Validity‑‑‑Non‑cooperation between different groups of shareholders had created deadlock in the affairs of company‑‑‑Business o f company was at a standstill for many years and had suffered losses‑‑‑Company was neither commercially solvent nor was there any chance of its doing business in near future at profit‑‑‑Company was owned by three groups but estranged relationship between them had reached a point, where they could not work together for benefit of company‑‑‑Suspension of business by a company for more than a year and continuous incurring of liability would be a ,sufficient ground for passing order of its winding up‑‑‑High Court wound up company and appointed its Official Liquidator.

Punjab National Silk Mills Ltd. v. National Bank of Pakistan and another 1986 SCMR 1126; In re:` Synthetic Chemicals Co. Ltd. PLD 1985 Kar. 193; Investment Corporation of Pakistan and others v. American Marble Products Ltd. 1998 CLC 514; Pakistan State Oil Company Ltd. v. Pakistan Oil Pipelines Limited and others PLD 1993 Kar. 322; Qamar Lone and others v. Kashmirian (Pvt.) Ltd. and others PLD 1997 Kar. 376; Sh. Maqbool Ellahi and others v. Basul & Co. and others PLD 1970 Lah.539; Mrs. Sabiha Shahid Raza v. Ahmad Construction Company (Pvt.) Ltd. PLD 1990 Kar. 191; Mirza A. Rustom v. Karim Silk Mills Ltd. PLD 1975 Kar.40 and Ali Women Mills Ltd. v. I.D.R.P. PLD 1990 SC 763 ref.

Bashir Ahmed Khan for Petitioner.

Nadeem Azhar Siddiqui for Respondent.

N.C. Motiani for the Intevenor.

Date of hearing: 13th August, 2003

2004 C L D 603

[Karachi]

Before Shabbir Ahmed, J

TAHIR ZAMAN---Plaintiff

Versus

JIN WEI (M) SDN BHD and others- --Defendants

Suit No.715 of 2002, decided on 13th August, 2002.

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

----O. XXXIX, Rr.1 & 2---Interim injunction, grant of--­Essential conditions---Party seeking injunction must show existence of a prima facie case in his favour; Court must be satisfied that if injunction was, not issued, irreparable damage or injury would be caused to such party and that the balance of convenience was in favour of grant of injunction.

(b) Sale of Goods Act (III of 1930)---

----S. 2(4)---Party claiming title to cargo not holding original Bill of Lading with regard thereto---Effect---Original Bill of Lading was document of title with regard to cargo---Mere filing of In bond Bill of Entry on the basis of photocopies would not confer title to such party, who must be armed with original Bills of Lading duly endorsed in his favour.

(c) Sale of Goods Act (III of 1930)-----

----Ss. 4 & 58---Specific Relief Act (I of 1877), Ss.21(1) & 56(f)---Contract Act (IX of 1872), S.73---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Contract for sale of goods--­Interim injunction against breach of contract, grant of--­Entitlement---Such contract was not routinely a contract capable of being specifically performed---Permanent injunction could not be issued in relation. to contract not usually capable of being specifically performed---Where permanent injunction could not be issued, interim injunction would also not be issued---Compensation in terms of money would be adequate consideration in relation to such contract, unless otherwise shown and established---No element of irreparable loss, was likely to be caused if interim injunction was not granted.

Petro Commodities v. Rice Export Corporation of Pakistan PLD 1998 Kar. 1 fol.

Oil & Gas Development Corporation v. Shujjahuddin (Pvt.) Ltd. PLD 1970 Kar 332; V.N. Lakhani & Co. v. Government of Pakistan PLD 1975 Kar. 781; Sahaf Corporation (Pvt.) Ltd. v. K.P.T. 1989 MLD 616; Al Farooq Shipping Company (Pvt.) Ltd. v. Vasa Shipping Ltd. 1980 CLC 1228; Misbahul Hasan v. Director General of Supplies 1994 CLC 1129 and Dada Steel Ltd v Metal Exports 1985 CLG 1814 ref.

Sohail Muzaffar for Plaintiff.

Naeem Ahmed for Defendant No.3.

Mazhar 1. Lari for Defendant No.4.

2004 C L D 616

[Karachi]

Before Muhammad Moosa K. Leghari, J

MASOOD ASIF and others---Plaintiffs

Versus

UNITED BANK LTD and another---Defendants

Suit No. 1700 of 1999, decided on 30th May, 2003.

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

----O. VII, R.11(a)---Rejection of plaint for non-disclosing cause of action---Essential considerations highlighted.

It is well-settled that for deciding application under O.VII, R.11, C.P.C., the contents of plaint are to be looked into besides any other material available on record before Court, which is not disputed by plaintiff. However, plaint cannot be rejected by taking into consideration plea of defendant, which is disputed and denied by plaintiff.

No doubt, the plaint has to be rejected, in case the same does not disclose any cause of action. However, for this purpose, the averments made in the plaint are to be considered and plaint should not be rejected for the reason that formidable objections are raised in defence. Where the matter requires factual investigation, then plaintiff must be given an opportunity to substantiate his case.

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

-----Ss.9 & 10---Specific Relief Act (I of 1877), S.12---Civil Procedure Code (V of 1908), O.VII, R.11---Suit by borrower against Bank for specific performance of agreement and recovery of damages etc. ---Rejection of plaint---Bank through agreement initially granted time to plaintiff to liquidate agreed debt, but later on appointed Receivers of mortgaged properties, which resulted in loss of business to plaintiff--­Plaintiff in pleadings of such plaint alleged that Bank by making plaintiff to believe that Bank would abide by its representations and agreement prevented plaintiff from. raising finances through alternative sources and means--­Plaintiff in plaint also alleged that cause of action arose in its favour and against Bank, when such agreement was arrived at between parties---Allegations of fraud and misrepresentation were also made in plaint---Bank in application for leave to defend disputed most of the averments made in plaint---Factual inquiry in such matter was inevitable---Factual controversies could only be resolved by recording evidence after framing of appropriate issues and not otherwise---Plaintiff had a cause of action--­Application under O. VII, R.11, C.P.C., was rejected in circumstances.

M.A. Chaudhry v. Mitsui OSK Lines, Limited PLD 1970 SC 373; Muhammad Altaf and others v. Abdur Rehman Khan and others 2001 SCMR 953; Mumtaz Khan v. Nawab Khan and 5 others 2000 SCMR 53; Province of Punjab, through Chief Secretary arid 5 others v. Malik Ibrahim & Sons and 5 others 2000 SCMR 1172 and Hafiz Noor Muhammad and others v. Ghulam Rasul and others 1999 SCMR 705 ref.

Farogh Naseem and Sardar Ejaz for Plaintiffs.

Sajid Zahid for Defendants.

Date of hearing: 20th May, 2003.

2004 C L D 627

[Karachi]

Before Khilji Arif Hussain, J

Messrs INTERNATIONAL INDUSTRIES LIMITED---Plaintiff

Versus

Messrs REHMAN TRADERS and others---Defendants

Suit No.280 of 2002, decided on 25th September, 2003.

Trade Marks Act (V of 1940)---

----S.21---Suit for infringement of trade mark---Significance of trade mark---Damages and temporary injunction, grant of--­Powers of Court---Scope and considerations stated.

The trade mark not only identifies the product and its origin, but also guarantees its quality while creating an image of the product in the mind of public particularly consumers. By the passage of time, marks associated with goods come to acquire reputation and goodwill around them, which properties of marks are acquired by honest dealings and after huge advertisement. Infringement of right of property may result not in the shape of monitory loss, but may also cause irreparable loss and injury to goodwill, which proprietor of mark built up in years. While granting injunction in the matter where proprietor established his right of mark, Court can grant damages against the party, who infringed the trade mark, to compensate the proprietor against the harm caused to him.

Muhammad Nadeem Qureshi for Plaintiff.

Nemo for Defendants.

Date of hearing: 3rd September, 2003.

2004 C L D 631

[Karachi]

Before Anwar Zaheer Jamali, J

NATIONAL BANK OF PAKISTAN‑‑Plaintiff

Versus

Messrs SHOAIB CORPORATION and others‑‑ ‑Defendants

Suit No. B‑226 of 2000, heard on 24th October, 2003.

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

‑‑‑‑‑S.10‑‑‑Contract Act (IX of 1872), Ss.133, 139 & 141‑‑­Suit for recovery of loan amount‑‑‑Application by guarantor for leave to defend suit‑‑‑Plea of guarantor was that General Power of Attorney, Memo. of Deposit of Title Deed and guarantee documents had been fraudulently managed by the Bank in collusion with borrower; that goods pledged with the Bank had been removed without his knowledge in collusion with the Bank and borrower, thus, his liability stood discharged as per law and that terms of original contract of finance facility between the Bank and borrower had been altered without his knowledge and consent, thus, his liability stood discharged by virtue of S.133 of Contract Act, 1872‑‑‑Guarantor had made out a plausible case for grant of leave to defend suit‑‑‑Statement of guarantor's counsel that till final decision of suit, guarantor would not sell/encumber alleged mortgaged land, would be binding on the guarantor‑‑‑Application for leave to defend was allowed unconditionally.

PLD 1986 SC 83; PLD 1966 Lah. 1; PLD 1984 Kar. 211; 2000 CLC 819; AIR 1967 SC 1105; AIR 1944 Lah. 482; AIR 1938 Mad. 422 and Messrs Huffaz Seamlen Pipe Industries Ltd. and 2 others v. Messrs Security Leasing Corporation Ltd. 2002 SCMR 14,19 ref.

Zubair Qureshi for Plaintiff.

Muhammad Shafi Siddiqui for Defendant No.3.

Date of hearing: 24th October, 2002.

2004 C L D 640

Before Shabbir Ahmed, J

SHAHAMATULLAH QURESHI‑‑‑Petitioner

Versus

HI‑TECH CONSTRUCTION (PVT) LTD.‑‑‑Respondent

J. Miscellaneous No. 150 of 1955, decided on 6th February, 2004.

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

‑-------S. 309‑Petition for winding‑up of a company‑Requirements.

A careful reading of section 309, Companies Ordinance, 1984 would show that a petition for winding‑up of a company may be filed either:‑‑

(a) by the company; or

(b) by any creditor or creditors (including any contingent or prospective creditor or creditors); or

(c) by any contributory or contributories, provided in case of private limited company, the number of members is reduced to less than 2 or his name as member appears on the register for the period mentioned in the proviso (a)(ii) of section 309; or

(d) by all or any of the aforesaid parties, together or separately; or

(e) by the Registrar; or

(f) by the Authority or by a person authorized by the Authority in that behalf.

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

‑---S.305‑‑Circumstances under which a company may be wound up enumerated.

Section 305 of the Companies Ordinance, 1984 enumerates the circumstances, in which company may be wound‑up, as follows:‑‑

`305. Circumstances in which company may be wound up by Court.‑‑‑A company may be wound up by the Court‑‑

(a) if the company has, by special resolution, resolved that the company be wound up by the Court;

(b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting or any two consecutive annual general meetings;

(c) if the company does not commence its business within a year from its incorporation, or suspends, its business for a whole year;

(d) if the number of members is reduced, in the case of private company, below two or, in the case of any other company, below seven;

(e) if the company is unable to pay its debts;

(f) if the company is‑‑

(i) conceived or brought forth for, or is or has been carrying on, unlawful or fraudulent activities;

(ii) carrying on business not authorized by the memorandum;

(iii) conducted its business in a manner oppressive to any of its members or persons concerned with the formation or promotion of the company or the minority shareholders;

(iv) run and managed by persons who fail to maintain proper and true accounts, or commit fraud, misfeasance or malfeasance in relation to the company; or

(v) managed by persons who refuse to act according to the requirements of the memorandum or articles or the provisions of this Ordinance or fail to carry out the directions or decisions of the Court or the Registrar or the Authority given in the exercise of powers under this Ordinance;

(g) if, being a listed company, it ceases to be such company; or

(h) if the Court is of opinion that, it is just and equitable that the company should be wound up.

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

‑‑‑‑Ss.290, 305 & 309‑‑‑Petition for an appropriate order on allegation that the affairs of the company were being conducted in a manner oppressive to the, member or members‑‑­Maintainability‑Such petition was (maintainable by person(s) concerned with the formation or promotion of the company irrespective of his shareholding‑Principles.

A petition under section 290 of the Companies Ordinance, 1984 for an appropriate order on allegation that the affairs of the company are being conducted in a manner oppressive to the member or members may be filed provided the member or the members must have not less than twenty per cent of the issued share capital of a company, so the petition for winding‑up of a company on the ground enumerated in clause (iii) of subsection (f) of section 305 cannot be filed by the minority shareholders having less than twenty per cent of the equity. The rider clause contained in Explanation II to section 309 is relatable to clause (iii) provided the petition is filed by the minority shareholders, whereas the petition by person concerned with formation or promotion of the company is not subject to any rider clause. Therefore, the petition on such ground is maintainable by person(s) concerned with the formation or promotion of the company irrespective of his shareholding.

Petition for winding‑up of a company is not an appropriate proceeding for the determination of a dispute about the shareholding in the company.

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

‑‑‑‑Ss. 309 & 305‑‑Petition for winding up of company is not an appropriate proceeding for the determination of a dispute about the shareholding in the company.

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

‑‑‑‑S.309‑‑‑Petition for winding‑up of company‑‑Private limited company‑True character of the company‑Lifting the veil of incorporation‑‑‑Principles enumerated.

Following are the principles on the subject:

(1) That in a particular case, the principles of dissolution of partnership may be applied if the apparent structure of the company is not the real structure and on piercing the veil it is found that in reality it is a partnership.

(2) That simpliciter factum that some Directors having preponderating voting power have not allowed the other shareholders to join in the management of the company is no ground for winding‑up of the company.

(3) That the ground just and equitable' is not controlled by the grounds preceding it in section 305 of the Companies Ordinance and is also not confined to cases in which there are grounds analogous to those mentioned earlier.

(4) That in the absence of anything to the contrary in a partnership deed every partner is entitled under the Partnership Act to share in the management of the firm but a shareholder generally in a company, in the absence of a pre­ incorporation agreement/ understanding cannot claim any right to manage the company.

(5) That if a shareholder brings a petition for winding up of a company, the Court will, inter alia, consider the factum whether majority of shareholders and large number of creditors are opposing the petition.

(6) That while considering a petition for winding up the ground of lack of probity must be against the interest of the company itself and on behalf of the company and not in relation to the public exchequer.

(7) That there is a marked distinction between a private partnership firm‑at‑will, of which dissolution can be sought by a partner as a matter of right and a private limited company, of which winding up cannot be obtained by a share‑holder without any recognized justifiable ground.

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

‑‑‑Ss.305, 309 & 290‑‑‑Petition for winding up of company‑‑­Grounds for winding up of company taken by the petitioner were that the affairs of the company were being conducted in a manner oppressive to the petitioner; management had failed to maintain proper accounts and its funds were being misappropriated and that the statutory requirement was being violated‑‑‑Validity‑‑‑Removal of the petitioner in the Annual General Meeting, notice of which was received by the petitioner could not be termed as unlawful or in a manner oppressive to the petitioner‑‑‑Member of the company had no right for active participation as the management of private limited company, did not mean a right to manage the company's business only as Director, such right of participation in the management by member was by exercise of his voting right‑‑Term `oppression" having not been defined, it was left to the Court to decide on the facts of each case whether there existed oppression that may be called as ground of winding up‑‑‑Acts of misappropriation and mismanagement could not be the grounds to support application for winding up‑‑‑Mere illegal or irregular acts unless they were oppressive or prejudicial to the interest of the company or to the public interest would not support petition for winding up‑‑­Principles.

The grounds for winding up of company taken by the petitioner, in the present case, can be conveniently categorized as follows:‑

1. The affairs of the company are being conducted in a manner oppressive to the petitioner.

2. The management has failed to maintain proper accounts and its funds are being misappropriated;

3. The statutory requirement is being violated and lastly.

4. It is just and equitable to wind up the company on above grounds.

Reverting to the first ground that the affairs of the company were being conducted in the manner oppressive to the petitioner. The acts of oppressiveness had been alleged that the petitioner had been removed from the Directorship of the company in its meeting thus the petitioner had been excluded from the management of the company and the dividend had not been paid to any member including the petitioner. The petitioner admitted the service of notice of Annual General Meeting with agenda inter alia, for appointment of Directors for a period of three years under section 178(1) of the Ordinance. Except the term used `so‑called meeting', nothing had been said by the petitioner with regard to the lack of quorum, or want of mandatory notice for Annual General Meeting, wherein he was not elected as one of the Directors. The removal of the petitioner in the Annual General Meeting, notice of which was received by the petitioner could hardly be termed as unlawful or in a manner oppressive to the petitioner. Members had no right for active participation as the management of private limited company, did not mean aright to manage the company's business only as Director, such right of participation in the management by member is by exercise of his voting right.

The term `oppression' has not been defined. It is left to the Court to decide on the facts of each case whether there exists oppression that may be called as ground of winding up. Whether the conduct and affairs of the company by shareholder are oppressive or not depend upon facts of particular case. To make out a case for winding up order, it must be established that there is some lack of probity or fair dealing towards the one or more members. Acts of misappropriation and mismanagement cannot be the grounds to support an application for winding up. The denial of right of inspection or other rights of shareholders or failure to comply with formalities required in the matter of giving notice of general meeting or refusal to declare more profit or the dividend even if profit earned justified a higher rate may not be taken by themselves as amounting to oppression. Mere illegal or irregular acts unless they are oppressive or prejudicial to the interest of the company or to the public interest will not support petition for winding up.

In the present case, the notice of Annual General Meeting was served with agenda. The meeting was held, the election of Directors was conveyed to the Registrar, who also admitted the receipt of the return. Therefore, the Annual General Meeting wherein the Directors were elected except the petitioner cannot be held to be illegal, therefore, non‑election of the petitioner could hardly be termed as unlawful or in a manner oppressive to him.

Needle Industries (India) Ltd. and others v. Needle Industries Newey (India) Holdings Ltd. and others AIR 1981 SC 1298 ref.

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

‑‑‑‑Ss.305, 249 & 251‑‑Petition for winding up of company­ Allegation of non‑payment of dividend‑‑‑Dispute with regard to the shareholding of the petitioner being sub judice before Civil Court, non‑payment of dividend could not be the basis for winding up of the company in circumstances.

Section 249 of the Companies Ordinance, 1984 requires payment of dividend from the profit of the company to the registered share‑holder. There is no dispute, in the present case, that no profit was earned. Besides subsection (2) of section 251 caters situation wherein the dividend is declared by a company but has not been paid. It has penal consequences provided no offence: shall be deemed to have been committed where there is a dispute regarding the right to receive the dividend.

In the present case, the dispute with regard to the shareholding of the petitioner was already sub judice before the civil Court, therefore, in these circumstances, the non‑payment of the dividend could not be the basis for the winding up of the company.

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

‑‑‑‑Ss.305, 309 & 290‑‑‑Petition for winding up of company‑‑­Grounds for winding up of company taken by the petitioner were that no elections were held nor Annual General Meetings were held; that the Auditors and Chief Executive were not appointed as required under the Companies Ordinance, 1984 and the Articles of Association; no minutes books had been maintained; Articles of Association had been altered without approval of the Board and the audited accounts were presented to the members for adoption in the Annual General Meeting without Director's report‑‑‑Validity‑‑‑Petitioner had admitted that he signed all the statutory returns filed by the company but pleaded. that he signed all the statutory returns in good faith and trust in elder brother and that all the statutory returns right from the incorporation of the company were signed by him‑‑‑Petitioner had turned his gun on the occasion of the Annual General Meeting for election of Directors, wherein he was not elected as Director, which showed that there was no cause except some personal reason‑‑­Company, in such circumstances was correct in its plea that the petition for winding up was a counter‑blast to the suit filed by elder brother.

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

‑‑‑‑Ss.305 309, 290 & 9(3)‑‑‑Grounds for winding up of company taken by the petitioner were that the properties of the company had been sold without approval of the Board of Directors; that various amounts had been withdrawn/transferred to the personal account and utilized; the staff provident fund was not being managed properly and the Chief Executive of the company was maintaining two houses and drawing privileges in excess of his entitlement‑‑‑Validity‑‑‑Counter‑affidavit denied all such allegations thus making all such facts disputed‑‑‑Facts alleged and disputed by the other side would necessarily entail holding of detailed inquiry and recording of evidence in respect of such disputed factual assertions which could not be done by the Company Judge whose jurisdiction in such matters was summary in nature in terms of S.9(3) of the Companies Ordinance, 1984.

Saleh Muhammad v. Mst. Resham Bibi 1986 CLC 2561; Khurshid Ahmad Khan and another v. Pak Cycle Manufacturing Company Ltd., PLD 1987 Lah. 1; Muhammad Suleman v. Abdul Rashid and 13 others PLD 1987 Lah. 387; Salahuddin Khan v. Al‑Mansoor Limited and 2 others PLD 1987 Lah. 569; Shaheen Foundation v. Capital F.M. (Pvt.) Ltd. 2002 CLD 188 and Rajmundary Electric Supply Corporation v. A. Nageshwara Rao AIR 1956 SC 213 ref.

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

‑‑‑‑Ss.305, 309 & 290‑‑‑Petition for winding up of company‑­Allegations of misconduct of Directors; mismanagement of the company's affairs and of heavy losses in business of the company‑‑‑Non‑intervention of the Court‑‑‑Principles.

The first principle was that the Court will not intervene at the instance of shareholders in matter of internal management of the company by the Directors, so long as they were acting within the power conferred on them under the Articles of Association. The second principle was that where nothing more was established than that the Directors had misappropriated the funds of the company unless such misconduct had produced insolvency, an order for winding up under the just and equitable clause would not be made and the last principle approved was that if a private limited or public company which was in nature of private company and there was lack of confidence, that would be ground for an order for winding up but lack of confidence must arise not because the aggrieved party was in minority but must arise from the lack of probity.

The allegations relating to internal management or mismanagement of the company's affairs was a matter for the shareholders themselves to deal with and it was not a matter that would call for interference by the Court. A petition by a share‑holder for winding up stood on a different footing to a petition by a creditor. It should be scrutinized more carefully.

The misconduct of the Director or that the business has been carried on a heavy loss are even not a ground on which the Court would order for winding up. The Courts have laid down special rule in exercising their discretion in winding up a company on the petition of a shareholder. The Court has to bear in mind that the internal management of the company is its own concern, and it is a much better judge of business prospects of a trading venture than the Court can ever hope to be. If, therefore, the majority of the shareholders show confidence in the management of the company and have faith in its future prospects, the Court has rarely interfered.

Rajmundary Electric Supply Corporation v. A. Nageshwara Rao AIR 1956 SC 213 and In re: Pioneer Bank Ltd. AIR 1914 Bom. 190 ref.

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

‑‑‑‑Ss.305, 309 & 290‑‑‑Petition for winding up of company‑‑‑"Just and equitable" grounds for an order of winding up of a company enumerated.

The following grounds were just and equitable for winding up order:‑

(a) the company was commercially insolvent;

(b) it had assets but they were locked up and not immediately available;

(c) its business could only be run at a loss and insolvency was inevitable;

(d) all the company's capital was lost and the business had come to an end without any prospect of resurrection;

(e) it was a fraudulent company;

(f) the company had no bona fide desire to carry on business;

(g) there was justifiable lack of confidence in the conduct and management of the company's affairs:

(h) where substratum had gone or it is impossible to carry on business except at a loss or the liabilities were far in excess of existing and possible assets;

(i) there were grounds justifying dissolution of a partnership, in case of a private company.

European Life Assurance Society In re: (1869) L.R. 9 Eq. 122; British Oil Co., In re: 15 L.T. 601; Mahamandal Shastra Prakashak Samity Ltd. I.L.R. 39 All 334; In re. Diamond Fuel Co. (1879) Ch. D. 400; National Debenture and Assets Corpn (1891) 2 Ch. 505; London and County Coal Co. (1866) L. R.3 Eq. 355; Loch v. John Blackwood Ltd., (1924) AC 783; Seth Mohanlal v. Grain Chambers Ltd., AIR 1968 SC 772 and R. F. Jhunjhunwalla v. Hind Overseas (Pvt.) Ltd. (1970) 1 Comp. L.J. 213 quoted.

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

‑‑‑Ss.305, 309 & 290‑‑Petition for winding up of company‑‑­Grounds which were not "just and equitable" for an order of winding up of company enumerated.

Rajahmundry Elec. Supply Corpn. Ltd. v. A. Nageshwara Rao AIR 1956 SC 213; C.P. Gnanasambandam v. Tamilnadu Transport (Coimbatore) (P.) Ltd. 1971 41 Comp. Case 26; Bilasrai Juharmal AIR 1962 Bombay 133; Lokenath Gupta v. Credits Pvt. Ltd. (1968) 1 Comp. L.J. 253; Krishan Iyer & Sons v. New Era Mfg. Co. Ltd., (1965) 1 Comp. L.J. 179; Jagannath Gupta Mulchand Gupta AIR 1969 Calcutta 363 and W.R. Willcocks & Co., Ltd., (1973) 2 All E.R. 93 ref.

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

‑‑‑‑S.305‑‑‑Petition for winding up of company‑‑‑Powers of Court‑‑­Scope and extent.

The word may' used in the opening part of the section 305 of the Companies Ordinance, 1984 clearly indicates that it is the matter of discretion of the Court whether, in the circumstances of the case, it would be in the interest of justice to wind up the company. Although the power to wind up is discretionary, it has to be exercised judicially. This means that it is only where the balance of equities is shown by petition to tilt appreciably in favour of a winding up order that it will be madeex debito justitiae'. It is in this special sense that a petitioner relying on grounds contained in section 305 can get a winding up order as a matter of right. It is issued as a matter of right when it produces a compelling effect. It is not granted mechanically as a matter of course on proof of certain facts. In other words, equitable considerations have a decisive effect even when the power to wind up a company is involved under a clause of section 305 of the Ordinance.

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

‑‑‑‑S.305‑‑‑Petition for winding up of company by a member having 5% of equity share in the company and 95% share vested in majority shareholders, on the grounds of mismanagement or misappropriation of company's funds‑‑‑Validity‑‑‑Order of winding up of company could not be passed on lifting the veil of incorporation, on the concept of partnership‑at‑will, in absence of any agreement to participation in the management‑‑‑Principles.

In a petition by member having 5% of equity share in the company and 95% shares vest in majority shareholders, on the concept of partnership‑at‑will in absence of any agreement to participation in the management, an order for winding up cannot be made on lifting the veil of incorporation. Secondly the mismanagement or misappropriation of company's funds unless such misconduct or misappropriation has produced insolvency, the petition for winding up cannot be granted, such allegations relate to internal management or mismanagement of the company's affairs and that is a matter for the shareholders themselves to deal with and it is not a matter that would call for interference by the Court.

Consequently, the petitioner had failed to make out a case for winding up of the company. In the light of facts and circumstances of the case, at most a direction to the majority shareholders to purchase the share of the petitioner might have been an appropriate order but since the matter of shareholding was sub judice in Civil Court, such direction could not be issued. Petition was dismissed.

Anwar Mansoor Khan for Petitioner.

Muhammad Ali Sayeed for Respondent.

Dates of hearing: 4th March, 2002, 14th, 22nd, 23rd May, 2002, 16th August, 10th September, 25th November, 2002, 10th February, 17th March, 11th August, 8th September, 2nd, 23rd, 30th, 31st, October, 7th, 14th and 20th November of 2003.

2004 C L D 680

[Karachi]

Before Mushir Alam, J

GENERAL BISCUIT and another‑‑‑Plaintiffs

Versus

ENGLISH BISCUIT MANUFACTURERS (PRIVATE) LIMITED through Chief Executive/ Director/ Manager‑‑‑Defendant

Suit No.282 of 1999, decided on 2nd May, 2002.

(a) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑S.21‑‑Infringement of unregistered trade mark‑‑Remedy‑‑­Plaintiff could press his claim only for a passing‑off action.

(b) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑Ss.20 & 21‑‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Suit for infringement of unregistered trade mark‑‑­Temporary injunction, grant of‑‑‑Plaintiffs mark was Zeera Plus", while defendant with markGluco" added underneath the word Plus"‑‑‑Plaintiff claimed mark 'Plus" as an essential feature of its products, which defendant could not adopt alongwith the wordGluco'‑Validity‑Both marks after putting them together and viewing in totality were found quite dissimilar and distinctive‑‑‑Record showed parallel use of mark Plus" by both parties for same period‑‑‑Plaintiffs claim not founded on registered mark could be pressed only for a passing off action‑­Plaintiff had not shown sufficiently long use of such mark‑‑­ Plaintiff could not substantiate claim of deception allegedly practised by defendant‑‑‑Mark "Plus" was not reflective of distinctive feature reputed to be attached with plaintiffs markZeera'‑‑‑Both parties had been using mark "Plus" in laudatory and non‑distinctive sense referring to something more than general reputed or known to be contained in their respective pry‑plaintiff by using Zeera Plus' with its products had claimedZeera' to be more in quantity than generally was Defendant had used "Plus" to denote additional nutrient in its products Gluco Plus'‑Both marks were quite different and easily distinguishable, thus, there was no likelihood of confusion or deception from unwary purchaser's point of view­ Applications of both panties seeking registration were pending before Registrar‑Plaintiff had prima facie no case for grant of injunction Application for temporary injunction did not merit consideration on account of delay of 1‑½ years in filing suit after alleged use of markGluoo Plus' by defendant Application for temporary injunction was dismissed in cites.

Shahid Mirza v. Merloni Finanziaria S.P.A. and another PLD 1991 Kan 425; Zakauddin v. Muhammad Zahid and 2 others PLD 1993 Kar. 766; Century Traders v. Roshan Lal Duggar & Co. and others AIR 1978 Delhi 250; Multani Sohan Halva, Hussain Aghai Multan v. Registrar of Trade Marks, Karachi 1987 CLC 1448; Jamia Industries Ltd. v. Caltex Oil (Pak) Ltd. and another PLD 1984 3C 8; Bandenawaz Ltd. v. Registrar of Trade Marks, Karachi PLD 1967 Kar. 492; Messrs Khan Foundry and Workshop, Faisalabad through Proprietor v. The Registrar of Trade Marks Registry, Government of Pakistan, Karachi and another PLD 1994 Kar. 157; National Detergents Limited v. Mod International (Pvt.) Ltd. 1993 MLD 590; Riaz Ahmed Mansuri v. Abid Ali Qazi and others 1990 MLD 1788; Erven Warnink B.V. and another v. J. Townsend 7 Sons (Hull) Ltd. and another (1980) RPC 31; National Detergents Ltd. v. Assistant Registrar of TM 1989 MLD 1137; 1986 RPC 93; Tapal v. Lever Brothers 1997 MLD 1277; Aeg Telefunken Pakistan Ltd. v. Electric Concern Corporation 1985 CLC 155; Mst. Khurshed Bibi v. Province Punjab and another 1987 CLC 242 and Mst. Najma Rana v. S.M. Maroof and another 1989 MLD 1317 ref.

(c) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑S. 20‑‑‑Passing off action‑‑‑Basic idea behind such action‑­Essential characteristics for creating a valid cause of action for passing off; stated.

Erven Warnik BV v. J. Townend & Sons (Hull) Ltd. (1979) 2 All ER 927 (HL) and Hindustan Radiators Co. v. Hindustan Radiators Ltd. AIR 1987 Dehli 353 fol.

(d) Trade Marks Act (V of 1940)‑‑‑-

‑‑‑‑Ss.20 & 21‑‑‑Infringement of trade mark, determination of‑‑­Both marks would be adjudged in totality‑‑‑Overall impression would be the determining factor.

National Detergent Ltd. v. Assistant Registrar of Trade Mark 1989 MLD 1137 fol.

(e) Words and phrases‑‑‑

‑‑‑‑"Plus"‑‑‑Connotation.

(f) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑S.13‑‑‑Declaration of disclaimer‑‑‑Such declaration subject to limitation provided under S.13 of Trade Marks Act, 1940 would be decided by Registrar or Tribunal deciding such matter.

(g) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑Ss.2(1)(f) & 13‑‑‑Use of a mark as suffix to trade mark‑‑­Effect‑‑‑Such use would assume laudatory connotation and would invariably be disclaimed.

1986 RPC 93 and Tapal v. Lever Brothers 1997 MLD 1277 rel.

(h) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑Ss.20 & 21‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Infringement of trade mark‑‑‑Temporary injunction, grant of ‑‑‑Non filing of suit for infringement of trade mark promptly‑‑­Effect‑‑‑Temporary injunction would be declined.

Aeg Telefunken Pakistan Ltd. v. Electric Concern Corporation 1985 C L C 155; Mst. Khurshid Bibi v. Province of Punjab and another 1987 CLC 242 and Mst. Najma Rana v. S.M. Maroof and another 1989 MLD 1317 fol.

Abdul Hameed Iqbal for Plaintiffs.

Zain Shaikh for Defendant.

Date of hearing: 16th April, 2002.

2004 C L D 689

[Karachi]

Before Anwar Zaheer Jamali, J

NATIONAL BANK OF PAKISTAN‑‑‑Plaintiff

Versus

S.G. FIBRE LTD. and others‑‑‑Defendants

Suit No.B‑200 of 2000 and C.M.A. No.7619 of 2001, decided on 24th November, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑--

‑‑Ss.2(d) & 9‑Underwriting agreement‑‑Banking Court, jurisdiction of‑Plaintiff had underwritten to purchase un‑subscribed shares of defendant company wit any condition of buyback arrangement provided in it‑‑‑Such a management was not incorporated in the agreement as the def company could not legally buyback their own un‑subscribed shares from the plaintiff purchase of such shares of defendant company, the status of plaintiff was that of shareholder of defendant company‑‑‑investment so made by the plaintiff was in line with their underwriting agreement having particular features of getting return in the shape of dividends, chance to earn more profits or to suffer losses with .fluctuation of share prices, with further option to negotiate or sale of the shares in stock exchange‑‑‑Plea raised by the defendant was that underwriting agreement was not covered under the provision of finance under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, the suit was not maintainable‑‑‑Validity‑‑‑Though the definition of finance' as given under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was very exhaustive and covered wide range of transactions involving direct or indirect financial implications/interactions but it did not make any reference ofunderwriting agreement' or `shares' which were common terms used for specie intendment in the field of commercial activities‑‑‑Neither the act of underwriting nor the act of subscription of shares of a company by a financial institutions could be categorized as ,finance as visualized under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Suit filed by the plaintiff under Financial Institutions (Recovery of Finances) Ordinance, 2001, could not be entertained under the Banking jurisdiction of High Court‑High Court directed the office to treat it as a suit instituted in the original civil jurisdiction‑Suit was converted into ordinary civil suit accordingly.

Avari Hotels Limited and others v. Investment Corporation of Pakistan and six others 2000 YLR 2407 and Bank Al‑Falah Limited v. Iftikhar A. Malik 2003 CLD 363 ref.

(b) Words and phrases‑‑‑--

‑‑‑‑"Underwriting agreement' or "sharess‑Distinguished—Former has been defined as an agreement between corporation and underwriter covering terms and conditions of new issue of securities to be offered to public, while latter represents an equity or ownership interest in the corporation or joint Stock Company.

Black's Law Dictionary ref.

(c) Interpretation of statues‑‑‑

‑‑‑‑Language of provision of law‑‑‑Effect‑‑‑If the language is plain, free from a ambiguity and its meanings are clear then it should be regard d as conclusive‑‑‑Question, of speculation or intendment contra to such plain and clear meaning should not arise.

(d) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑--

‑‑‑‑Ss.2(d) & 9—Underwriting agreement‑‑‑Banking Court, jurisdiction of plaintiff underwritten to purchase un­ subscribed shares defendant company without any condition of buyback arrangement provided in it‑‑‑Plea raised by the plaintiff was that the undertaking executed by the defendants amounted to guarantee a and reach of such undertaking could be termed as default "Intent of obligation with regard to finance‑‑‑Validity‑‑‑Such undertaking did not amount to guarantee or created any relationship of financial institution and customer between the parties nor breach of such undertaking could be termed as default in fulfillment of any obligation with regard to any term as the same were preconditions under S.9 of Financial Institution (Recovery of Finances) Ordinance, 2001, for giving jurisdiction to the Banking Court to entertain a suit‑‑‑Suit was not maintainable before Banking Court in circumstances.

Karachi Electric Provident Fund v. National Investment (Unit) Trust 2003 CLD 1026; Avari Hotels Limited and others v. Investment Corporation of Pakistan and 6 others 2000 YLR 2407; Bank Al‑Falah limited v. Iftikhar A. Malik 2003 CLD 363 and Black's Law Dictionary rel

Mansoorul Arfin for Plaintiff.

Arshad Tayebal for Defendants.

Date of hearing 13th November, 2003.

2004 C L D 695

[Karachi]

Before Ata‑ur‑Rehman, J

CENTRAL INSURANCE COMPANY LTD and others‑‑‑Plaintiffs

Versus

M.T. TASMAN SPIRIT and others‑‑‑Defendants

Adm. Suit No. 20 and C.M.A. No. 1808 of 2003, decided on 30th December, 2003.

Admiralty Jurisdiction of High Courts Ordnance (XLII of 1980)‑‑‑

‑------S. 4(4)—Sindh Chief Court Rules (O.S.), R.731‑Release of ship‑‑Recovery of subrogated claim‑‑‑Unveiling of incorporation‑‑Plaintiff being an insurance company had insured the cargo being carried by one of the defendants‑‑‑Cargo, due to accident could not be delivered to the consignee‑‑‑Out of the total value of the cargo and freight, the plaintiff had paid partial claim to the consignee ‑‑‑Two ships were got arrested by the plaintiff for the recovery of the subrogated claim on the ground that both the ships were sister ships‑‑‑Two different companies having independent legal entities owned both the ships‑‑‑Plea raised by the plaintiff was that in fact both the companies were not two different entities‑‑Validity‑‑‑Natural persons own the shares of company whereas the company owns the properties‑‑‑Even if it was traced out as to who owned both the ships, the legal position would be that two companies were the owners of the two ships and not persons/individuals who owned the shares of the defendant companies‑‑‑Unveiling of the incorporation would only be required if there was any allegation of fraud and deceit on the part of any of the owner companies‑‑‑Plaintiff had not made any such allegation‑‑‑Plaintiff also admitted that both the companies were registered owners of both the ships‑‑‑In presence of the admission on the part of the plaintiff and the admission on the part of the companies that they were the registered owners of the two ships, no further investigation would be required to ascertain the ownership/beneficial ownership of the two scups‑‑High Court refused to discard and ignore the admitted position and relied upon the common factors of the two ships‑‑‑Both the ships were not sister ships of each other‑‑Ship arrested due to loss caused by the other ship was vacated‑‑ Application was allowed accordingly.

Trustees of Port of Chittagong v. Steam Navigation Co. Ltd. PLD 1965 SC 352; Belfry Marine Ltd. v. Palmpase Maritime SDN BHD (Case No.323 of 1998); South Africa and Defray Shipping Corporation v. Eridiana Spa (formerly Cereol Italia SRL (Appeal Case No. AR 598 of 1997); The Vessel M.T. Portofino and another v. M.T. Portofino 2003 CLD 1655; Principles of Maritime Law; Evpo Agnic (1988) Vol.2 of Lloyd's Reports 411 and Messrs Maratos & Co. v. Rice Trader and others PLD 1989 Kar. 94 ref.

Qazi Faez Isa for Plaintiff.

Muhammad Naeem for Defendants Nos. 1 to 4.

A. H. Mirza for Pakistan Refinery Limited the Intervenor.

Messrs Usmani and Iqbal for Karachi Port Trust, the Intervenor.

2004 C L D 736

[Karachi]

Before Khilji Arif Hussain, J

Captain AIJAZ HAROON AHMED ‑‑‑ Applicant

Versus

TRISTAR SHIPPING LINES LTD. and others‑‑‑Respondents

J. Miscellaneous No.59 of 2001, decided on 25th November, 2003.

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

‑‑‑‑S. 19‑‑‑Civil Procedure Code (V of 1908), S.12(2) & O.XXI, R.58‑‑Challenge to decree or order on plea of fraud and misrepresentation‑Execution proceedings‑Remedy under S.12(2), CP.C. eras attracted when an order, judgment or decree had been obtained by fraud and misrepresentation and any person aggrieved by said order, judgment and decree could invoke the same‑‑Provisions of O.XXI, R.58, C.P.C., had provided remedy to challenge the attachment order on the ground that property in dispute was not liable to be attached under decree‑‑­Under provisions of S.19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 it was for the Banking Court to investigate claims and objections in respect of attachment or sale of any property whether mortgaged or not and all questions concerning right, title or interest of person whether or not party to decree in attached property, had to be adjudicated upon and determined by Banking Court executing decree and not by any other Court.

Ejaz Ahmed for Applicant.

Allied Bank of Pakistan Ltd. called absent.

Tristar Shipping Lines Ltd. and others called absent.

Date of hearing: 14th November, 2003.

2004 C L D 881

[Karachi]

Before Shabbir Ahmed and Gulzar Ahmed, JJ

MUHAMMAD SARWAR KHAN‑‑‑Appellant

Versus

HABIB BANK LTD. and others‑‑‑Respondents

Spl. 1st Appeal No.2 of 2000, decided on 9th October, 2003.

(a) Mortgage‑‑‑

‑‑‑‑Second charge‑‑‑Right of mortgagee under second charge‑‑­Scope‑‑‑Creation of second charge in favour of the same mortgagee by the mortgagor does not affect the right of the mortgagee under the second charge.

(b) Registration Act (XVI of 1908)‑‑‑

‑‑‑‑S.17‑‑‑Transfer of Property Act (IV of 1882), S.58‑‑‑Mortgage deed, registration of‑‑‑Principles‑‑‑When document creates legal relationship of mortgagor and mortgagee in present and contains all the terms and conditions, then such document requires registration whereas if such document refers to a past transaction and mention of the deposit is in the past tense, then such intent at the time of deposit being in the past is capable of being proved.

Mst. Begum v. Mst. Patimabhat PLD 1961 Kar. 537; Messrs Eagle Star Insurance Co. Ltd. v. Messrs Usman Sons Ltd. and others PLD 1969 Kar. 123 and United Bank of India Ltd. v. Azirannessa Bewa PLD 1965 SC 274 ref.

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

‑‑‑‑S.17(4)‑‑‑Registration Act (XVI of 1908), S.49(c)‑‑‑Unregistered mortgage deed‑‑‑Acceptance of such deed in evidence‑‑‑Banking Court decreed the suit against the appellant on the basis of mortgage deed produced by the Bank‑‑‑Plea raised by the appellant was that in view of the provision of S.49(c) of Registration Act, 1908., the unregistered mortgage deed could not be accepted in evidence by the Banking Court‑‑‑Validity--‑Appeal had emanated from special law i.e. Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997; which contained an overriding provision in its S.17(4), under which Banking Court could not refuse to accept any document merely because the same had not been properly stamped or registered‑‑‑Special law had overridden the provisions of general law and not only had made the documents admissible but also created right in absence of registration‑‑‑Neither the execution of the documents, nor the amount due were disputed‑‑‑High Court declined to interfere with the judgment and decree passed by the Banking Court‑‑‑Appeal was dismissed in circumstances.

Mst. Begum v. Patimabhat PLD 1961 Kar. 537; Messrs Eagle Star Insurance Co. Ltd. v. Messrs Usman Sons Ltd. and others PLD 1969 Kar. 123 and United Bank of India Ltd. v. Azirannessa Bewa PLD 1965 SC 274 distinguished.

The Pakistan Employees Cooperative Housing Society Ltd., Karachi v. Mst. Anwar Sultana PLD 1969 Kar. 474 ref.

Syed Sami Ahmad for Appellant.

Hamza I. Ali for Respondent No. 1.

None for the rest of the Respondents.

Date of hearing: 9th October, 2003.

2004 C L D 894

[Karachi]

Before Muhammad Roshan Essani and Amir Hani Muslim, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN SINJHORO through Manager‑‑‑Appellant

Versus

MUHAMMAD ANWAR QURESHI‑‑‑Respondent

1st Appeal No.D‑36 of 2001, decided on 23rd September, 2003.

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

‑‑‑‑S.18‑‑‑Execution of decree‑‑‑Incentive scheme notified by State Bank of Pakistan‑‑‑Executing Court, as per terms of incentive scheme, allowed judgment‑debtor to pay outstanding decretal amount in instalments‑‑‑Refusal of decree‑holder/Bank to accept payment of instalment‑‑­Validity‑‑‑Decree‑holder including other Scheduled Banks were monitored and controlled by State Bank of Pakistan, thus, they were bound to show respect to policies notified by State Bank‑‑‑Conduct of decree‑holder was unfair‑‑‑Decree holder had no justifiable reason to prefer appeal against impugned order, which did not suffer any infirmity‑‑‑High Court dismissed appeal with direction to judgment‑debtor to make payment to Bank in terms of such incentive scheme.

(b) State Bank of Pakistan‑‑‑

‑‑‑‑Policies notified by State Bank of Pakistan‑‑‑Adoption by other banks‑‑‑Validity‑‑‑Schedule Banks are monitored and controlled by State Bank of Pakistan, thus, they are bound to show respect to such policies.

Haji Mukhtar Ahmed Bhatti for Appellant.

Aijaz Ali Hakro for Respondent.

Date of hearing: 23rd September, 2003.

2004 C L D 913

[Karachi]

Before Saiyed Saeed Ashhad, C J

NAZIMUDDIN‑‑‑Applicant

Versus

Messrs THE BANK OF KHYBER and another ‑‑‑Respondents

Civil Transfer Application No.5 of 2003, decided on15th September, 2003.

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

‑‑‑‑S.5(3)‑‑‑Civil Procedure Code (V of 1908), S.24‑‑‑Application for transfer (consolidation) of suit from Banking Court to the High Court exercising Banking jurisdiction where another suit between the same parties was pending wherein cause of action giving rise to the said suit was one and the same and similar and identical questions and issues were involved for adjudication‑‑­Contention of the respondent opposing toe transfer of the suit was that in one of the suits evidence of the applicant had been recorded cross‑examination had been completed and the matter was now fixed for the evidence of Bank's representatives whereas in the other suit application for leave to defend the suit had not yet been decided and in view of such a situation the respondent (Bank) was likely to suffer as consolidation of suits would result in inordinate delay in disposal of the Bank's suit‑‑­Validity‑‑‑Such were no grounds for refusing permission for two identical suits between the same parties before one and the same Court and situation stated could be brought to the notice of the Judge on the Banking side of the High Court and appropriate measures could be taken to ensure that the suit of the Bank was not unnecessarily delayed or prolonged‑‑­Application for transfer (consolidation) of suit was allowed accordingly.

Saalim Salam Ansari for Applicant.

Arshad Tayebaly for Respondent No. 1.

Khawaja Muhammad Amir for Respondent No.2.

2004 C L D 1023

[Karachi]

Before S. Ali Aslam Jafri, J

COGETEX S.A., A COMPANY DULY IN CORPORATED UNDER THE LAWS OF SWITZERLAND‑-‑‑Plaintiff

Versus

MAYFAIR SPINNING MILLS LIMITED, A PUBLIC LIMITED COMPANY INCORPORATED UNDER THE PAKISTAN COMPANIES ORDINANCE, 1984‑‑‑‑Defendant

Suit No.381 of 2001, decided on 7th May, 2004.

(a) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑S. 7(2)‑‑‑Enforcement of foreign award‑‑Once a foreign award is made it in fact amounts to a foreign judgment and the proceedings before the Court are merely for an affirmation of the award, and only limited objections as to the validity and enforceability thereof are permitted under S 7(2) of the Act.

Imtiaz Ahmed v. Ghulam Ali and another PLD 1963 SC 382; Manager Jammu and Kashmir Property in Pakistan v. Khudayar and another PLD 1975 SC 678; Mst. Begum and others v. Mst. Begum Kaniz Fatima Hayat and others 1989 SCMR 883; Jamil Ahmed v. Late Saifuddin 1997 SCMR 260 Nan Fung Textiles Ltd.'s case PLD 1982 Kar.619; B. Upendra Nath Basu v. B. Het Lal and others AIR 1933 All. 380; M. Imamuddin Janjua v. The Thal Development Authority PLD 1972 SC 123; Frederick E. Rose (Commodities) Limited v. Munsoor Ali Tanning Co. NLR 1981 UC 175 Karachi; Conticotton S.A. v. Farooq Corporation 1999 CLC 1018; Messrs European Grain and Shipping Ltd. v. Messrs Polychem Company Ltd. PLD 1990 Kar.254; Nan Fung Textiles Limited v. Sadiq Traders Limited PLD 1982 Kar.619; Alfred C. Toepfer International v. Pakistan Molasses Company 2003 CLD 1666 and A. Meredith Jones & Co. v. Usman Textile Mills Limited 2002 CLD 1121 ref.

(b) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑S. 8(1)‑‑‑Sindh Chief Court Rules, (O.S.), R.297‑Foreign award (Switzerland)‑Evidence‑Copy of the award had been authenticated by the competent authority of the Canton of Geneva and had been further authenticated to be a genuine document by the Embassy of Pakistan at Berne‑‑Such document did not suffer from any illegality or infirmity and was neither violative of S.8(1) of the Arbitration (Protocol & Convention) Act, 1937‑ nor Rule 297, Sindh Chief Court Rules (O.S.)‑‑Original copy of the award was available with counsel for the plaintiff, which he desired to place on record during the arguments and was directed to file the same day‑Rights of parties could not be allowed to be defeated on technicalities.

Manager Jammu and Kashmir Property in Pakistan v. Khudayar and another PLD 1975 SC 678; Mst. Begum and others v. Mst. Begum Kaniz Fatima Hayat and other 1989 SCMR 883 and Jamil Ahmed v. Late Saifuddin 1997 SCMR 260 ref.

(c) Precedent‑‑‑

---Laws are meant to foster justice and not to thawart the rights of the parties.

(d) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑Ss.5 & 6‑‑‑Enforcement of a foreign award‑‑‑Territorial jurisdiction of Court‑‑‑Determination‑‑‑Registered office of the defendant was in Karachi; Letter of credit was opened with Pakistani at Karachi and the defendant had themselves filed two suits against the present plaintiff at Karachi for certain claims in respect of the same dispute which was subject‑matter of Arbitration‑‑‑Contention that Court at Karachi had no territorial jurisdiction was repelled in circumstances.

(e) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.5‑‑‑Limitation Act (IX of 19081, Art. 120‑‑‑Application for enforcement of a foreign award‑‑‑Limitation‑‑‑Such application is to be registered as a suit and since no period has been fixed for filing such suits under the First Schedule to the Limitation Act, 1905, the application (suit) shall be governed under Art. 120 of the Limitation Act, 1908 which provides a period of six years for filing such suit.

(f) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.7(2)‑‑‑Enforcement of a foreign award‑‑‑Executing Court cannot go beyond the award except as provided under S.7(2) of the Arbitration (Protocol and Convention) Act, 1937‑‑‑Award in the present case was‑well reasoned dealing with the matter in controversy and the defendant had failed to assert and agitate all such points in appeal which though filed but was not pursued‑‑‑Objection regarding the arbitrators being guilty of misconduct had no legs to stand.

(g) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.7(2)‑‑‑Enforcement of a foreign award‑‑‑Court, in a foreign award is to act as an executing Court and cannot go beyond the award except as provided under S.7(2) of the Act‑‑Court cannot assume the role of an Appellate Court‑‑Contention that the Courts in Pakistan have no jurisdiction to enforce a foreign award as Pakistan is not a signatory to the convention and there is no reciprocal arrangement between the Government of Pakistan and Government of Switzerland is without substance as law was amended in Pakistan by Ordinance, LIII of 1962 to this effect.

Nan Fung Textiles Limited v. Sadiq Traders Limited PLD 1982 Kar. 619; Alfred C. Toepfer International v. Pakistan Molasses Company 2003 CLD 1666; A. Meredith Jones & Co. v. Usman Textile Mills Limited 2002 CLD 1121; Nan Fung Textiles Ltd. v. H. Pir Muhammad Shamasuddin PLD 1979 Kar 762 and Messrs Yangtze (London) Limited v. Messrs Barlas Brothers Karachi PLD 1961 SC 573 ref.

Qadir H. Sayeed and Yousuf Ali Sayeed for Plaintiff.

Munib Akhtar for Defendant.

Dates of hearings: 22nd March, 26th and 30th April, 2004.

2004 C L D 1040

[Karachi]

Before Amir Hani Muslim, J

QUINN CORPORATION and others‑‑‑Plaintiffs

Versus

COTTON EXPORT CORPORATION and others‑‑‑Defendants

Suits Nos. 731, 1583 of 1998, 275 of 1999 and 343 of 2000, decided on 27th March, 2004.

(a) Arbitration (Protocol and Convention)Act (VI of 1937)‑‑‑

‑‑‑‑S.7‑‑‑Contract Act (IX of 1872), S.56‑‑‑Enforcement of foreign award‑‑‑Foreign award which is sought to be made rule of the Court is subject to the provisions of Arbitration (Protocol and Convention) Act, 1937 and excludes application of Pakistan law as the terms of the contract are subject to the rules of Liverpool Cotton Association Limited‑‑‑Contention that Arbitration Tribunal having conducted proceedings under the laws of England, therefore, invocation of doctrine of frustration in terms of S.56, Contract Act, 1872 was available, was misconceived as the contract in the present case was not frustrated.

(b) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.7‑‑‑Enforcement of foreign award‑‑‑Doctrine of frustration, invocation of‑‑‑Conditions‑‑‑Jurisdiction of executing Court‑‑­Scope.

In order to invoke frustration of the contract, the party is required to establish physical impossibility on account of intervening act over which the vendor had no control and which it could not avoid with all due diligence whereas in the present case the defendant was pleading commercial impossibility which was distinct from the physical impossibility, therefore, the doctrine of frustration could not be pressed into service. Admittedly, defendant was a Government Organization and could have approached the Federal Government for lifting of the temporary ban to export raw cotton or after the lifting of the ban the defendant was in a position to supply cotton in terms of the contract. In order to invoke doctrine of frustration the party had to establish physical impossibility, for example, if a party entered into an agreement to sell a house to the other party, who died before its delivery, the party selling house could plead frustration of contract.. But present cases were completely on different footing and were not covered under the doctrine of frustration of contract as commercial losses or such other grounds fell outside its scope.

Moreover one could not lose sight of the fact that the award in question was a foreign award and the question of frustration of the contract even otherwise could have only been raised before the Arbitration Tribunal and not before the executing Court under the provisions of the Arbitration (Protocol and' Convention) Act of 1937. Executing Court could not examine the issue of frustration of contract even if the Arbitration Tribunal had taken an erroneous view on such an issue nor could this furnish a ground to refuse the enforcement of award, as it had become final according to English Law. Moreover, the contract was subject to the Rules of Liverpool Cotton Association Limited which clearly showed that the invoicing back of the contract would automatically take place the moment the contract was not performed regardless of the reasons of the non‑performance of the contract. The fact that the defendants had, agreed to the terms of Rules of Liverpool Cotton Association Limited would mean that they were now estopped from claiming that the contract could not be invoiced back.

Nan Fung Textiles Ltd., Hong Kong v. H. Pir Muhammad Shamasuddin PLD 1979 Kar. 762 and Conticotton S.A. Co. v. Farooq Corporation 1999 CLC 1018 fol.

(c) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S. 5‑‑‑Enforcement of foreign award‑‑‑Interest, award of‑‑­Principles.

The rule 253 of Liverpool Cotton Association Limited authorizes the Arbitrators to award interest on the claim, Admittedly, in the present case the arbitration had taken place under the rules of Liverpool Cotton Association Limited. Rule 3 of the Liverpool Cotton Association Limited provides that every contract, which was subject‑matter of the rules of the Liverpool Cotton Association Limited or subject to Liverpool Arbitration was to be considered and given effect to as a contract made in England and in accordance with the laws of England and was to be deemed in all respects same as provided in Para. 4 to be subject to the rules of the Liverpool Cotton Association Limited. The contracts in all these proceedings provided that they were subject to the rules and regulations of Liverpool Cotton Association Limited, England. Rule 312(2) of the Rules of Liverpool Cotton Association Limited provided that the arbitrator or umpire during hearing of the matter if he so thought fit might award interest on the whole or any part of the period between the date of the breach of contract or the date on which the cause of, action of the award was based arose and the date of the award 7 and also might grant interest on the amount of the award from its date to the date of payment thereof. In view of this rule, it was misconceived to urge that the Arbitrators and/or Appellate Forum were in error in granting interest and/or had no powers to grant interest.

Punjab Province v. Messrs Chauhan & Company PLD 2000 Lah. 314; Trading Engineers (International) (Pvt.) Ltd. v. WASA 2001 MLD 868; Nusrat Jehan Begum v. Karachi Municipal Corporation PLD 1980 Kar. 146; Ghulam Abbas v. Trustees of the Port of Karachi PLD 1987 SC 393 and 1999 YLR 295 distinguished.

(d) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S. 7‑‑‑Stamp Act (II of 1899), Preamble‑‑‑Enforcement of foreign award‑‑‑Stamp Act, 1899 has no application to the foreign award.

Judgotekstil Impex v. Shams Textile Mills Ltd. 1986 CLC 879 overruled.

Judgotekstil Impex v. Shams Textile Mills Ltd. 1999 MLD 857 ref.

(e) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.7‑‑‑Enforcement of Foreign award‑‑‑Court exercising jurisdiction under S.7(2) of Arbitration (Protocol and Convention) Act, 1937 would not sit in appeal nor would it examine the propriety of the foreign award as the scope, under the provisions of S.7(2) was limited‑‑‑Validity of an award could only be examined within the parameters of S.7(2) of the Act.

(f) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.7‑‑‑Enforcement of foreign award‑‑‑Executing Court could not invalidate the findings of the Arbitrators as the appellate forum on the ground that the award was without reasons ‑‑‑Foreign award even if it was unreasoned could not be refused to be enforced in terms of S. 7 of the Act.

A. Meredith Jones & Co. v. Usman Textile Mills Ltd. 2002 CLD 1121 fol.

(g) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S. 7‑‑‑Enforcement of foreign award‑‑‑Declaring a foreign award by the executing Court to be against the public policy was beyond the scope of S. 7 of the Act.

(h) Arbitration (Protocol and Convention) Act (VI of 1937)‑‑‑

‑‑‑‑S.7‑‑‑Stamp Act (11 of 1899), Preamble‑‑‑‑Contract Act (IX of 1872), Preamble‑‑‑Foreign award‑‑‑Definition‑‑‑Enforcement of foreign award‑‑‑Jurisdiction of Executing Court‑‑‑Scope and extent.

The scope of section 7 of the Arbitration (Protocol and Convention) Act of 1937 is very limited and Courts while exercising powers under section 7 would not sit in appeal against the award nor would they examine the validity on the ground that such foreign award was unreasoned, unstamped or outcome of contract which was frustrated or was violative of the provisions of Pakistani law except the grounds mentioned under section 7(1) of the Act of 1937. The language of section 7 of the Act of 1937 is distinct from the language of section 30 of the Arbitration Act, 1940. While exercising powers under section 5 of the Act of 1937 the Courts would not travel beyond the award to examine and scrutinize either the evidence or the material on the basis of which the foreign award was given by the Arbitrators once such award had attained finality subject, however, to the grounds specified under section 7 of the Act of 1937. The applicability of the provisions of Stamp Act, 1899 and/or the Contract Act, 1872, would riot extend to invalidate a foreign award as the foreign awards were pursuant to the terms of the contracts which were subject to the Rules of the Liverpool Cotton Association Limited.

Section 2 of the Arbitration (Protocol and Convention) Act of 1937 defines foreign award. In the present cases the arbitration had taken place under the Rules of Liverpool Cotton Association Limited. Rule provides that every contract, which was subject to by‑laws and the rules of Association or subject to Liverpool Arbitration is to be considered and given effect to as a contract made in England and in accordance with the laws of England and was deemed to be in all respects same as provided in para. 4 subject to the by‑laws and rules of the Association. The very provisions of section 3 of the Liverpool Cotton Association Limited exclude application of Pakistani Law. The Laws of England were applicable before the Arbitrators besides the fact that they had the power to grant interest, they were not obliged to allow the defendant to take refuge under section 56 of the Contract Act, 1872, applicable to Pakistani Courts, for the Arbitration Tribunals were permitted to make Limitation Act applicable to Pakistani Court. Therefore, the contention in regard to the applicability of the provisions of either the Contract Act, 1872 or Limitation Act or Stamp Act, in Pakistan, on foreign award was misconceived. Courts in Pakistan while making awards as rule of the Court would not allow the parties to reopen the issues already dealt with and finalized by the Tribunals having jurisdiction in this regard. The enforcement of the foreign awards are in the nature of execution proceedings and, therefore, Pakistani Courts, in exercise of powers under the Act of 1937, would not travel beyond the award subject, however, to limitation imposed under section 7 of the Act of 1937. The scope of section 7 of the Act of 1937 was limited and did not permit the Court to examine the award on other grounds urged by the counsel for the defendant. The scope of section 7 of the Act of 1937 is limited.

Alfred C. Toepfer International GmbH v. Pakistan Molasses Company 2003 CLD 1666 fol.

PLD 1993 Kar. 280; Messrs Judgotekstil Impex v. Messrs Shams Textile Mills Ltd. 1986 CLC 879; Messrs Barlas Bros. Karachi & Co. v. Messrs Yangtze (London) Ltd. PLD 1959 (W.P.) Kar. 423; Messrs Mansukhdas Bodaram v: Hussain Brothers Ltd. PLD 1980 SC 122; Messrs Jaffer Bros. Ltd. v. Islamic Republic of Pakistan PLD 1978 Kar. 585; Messrs A.Z. Company v. Messrs S. Maula Bukhsh Muhammad Bashir, PLD 1965 SIC 505; Ghulam Abbas v. Trustees of the Port of Karachi PLD 1987 SC 393; Messrs Millat Tractors Ltd. v. Millat Tractor House 1999 YLR 295; Conticotton S.A. Co. v. Farooq Corporation 1999 CLC 1018; A. Meredith Jones & Co. v. Usman Textile Mills Ltd., 2002 CLD 1121; Alfred C. Toepfer International GmbH v. Pakistan Molesis Company 2003 CLD 1 666; Nan Fung Textiles Ltd. v. Sadiq Traders Ltd. PLD 1982 Kan 619; Ralli Brothers and Coney Ltd. v. Muhammad Amin 'Muhammad Bashir Ltd. 1987 CLC 83; Petrocon (Pvt.) Ltd. v. Hyderabad Development Authority, Hyderabad 1990 MLD 1675; Nan Fung Textiles Ltd. Hong Kong v. H. Pir Muhammad Shamasuddin PLD 1979 Kar. 762; European Grain and Shipping Ltd. v. Messrs Polychem Co. Ltd. PLD 1990 Kar. 254; Meredith Jones & Co. Ltd. v. Quetta Textile Mills Ltd. 2002 CLD 1191; Kunar Khalid Younus v. Federation of Pakistan PLD 2003 Kar. 209; Judgotekstil Impex v. Shams Textile Mills Ltd. 1990 MLD 857; Secretary, Irrigation Department, Government of India v. G.C. Roy AIR 1992 SC 732; Dampskibsselskabat Norden Aktieselskale v. Ahmad Shipping PLD 1983 Kar. 247; AIR 1960 Bom. 1991; Punjab Province v. Messrs Chauhan & Company PLD 2000 Lah.314; Trading Engineers (International) (Pvt.) Ltd. v. WASA 2001 MLD 868 arid Nusrat Jehan Begum v. Karachi Municipal Corporation PLD 1980 Kar. 146 ref.

Anjum Ghani for Plaintiff (in Suit No.731 of 1998).

Mamnoon Hasan for Defendant (in Suits Nos.731, 1583 of 1998 and 343 of 2000).

A. H. Mirza for Plaintiff, (in Suit No. 1583 of 1998).

Abdul Aziz A. Munshi for Plaintiff (in Suit No.275 of 1999).

Noorullah A. Manji for Defendant (in Suit No.275 of 1999).

Arshad Tabebaly for Plaintiff (in Suit No.343 of 2000).

Dates of hearing: 9th, 10th, 11th and 15th March, 2004.

2004 C L D 1064

[Karachi]

Before Zahid Kurban Alvi, J

AMINUDDIN‑‑‑ Petitioner

Versus

Messrs AZAD FRIENDS & CO. ‑‑‑Respondent

Judicial Miscellaneous No.226 of 1996, decided on 6th April, 1999.

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss. 305 & 320‑‑Petition for winding up of company‑‑­Petitioner being share‑holder of company had filed petition for winding up of company on certain allegations‑‑‑Petitioner had alleged that he as well as his brother were Managing Director on paper only whereas respondent, who was share‑holder in the company, was actually running the company as de facto Managing Director and petitioner was not being associated with affairs of the company, that said share‑holder had diverted funds and had mismanaged the company, that company was going in loss and was unable to pay its debts and had also not declared dividends for the last nine years‑‑‑None of the creditors and share‑holders, had supported the winding up petition filed by the petitioner, it was therefore, difficult to prefer wishes of petitioner who was one of the share‑holders as opposed to remaining share‑holders having overwhelming majority of nearly 69%‑‑‑Petitioner had alleged that company despite owing substantial amount as contribution to the Employees Provident Fund, had not paid Provident Fund to the employees‑‑‑Employees Union which had filed application for impleading itself as party in the proceedings, had clearly opposed the winding up of the company in unequivocal terms and did not express any anxiety as to Provident Fund dues‑‑‑Validity‑‑‑Petitioner was unable to show that company was commercially insolvent or had been unable to pay its debts‑‑‑In absence of any material on record and any support from the creditors of the company, petitioner's allegation with regard to mismanagement and other charges, could not be considered for winding up of company‑‑‑Petitioner having been unable to make out case for winding up of company in terms of sub‑clause (iii) of Clause (F) of 5.305 of Companies Ordinance, 1984, his petition to wind up the Company, was dismissed.

Messrs Platinum Insurance Company Limited, Karachi v. Daewoo Corporation, Shaikhupura PLD 1999 SC 1; Habib Bank Limited v. Hamza Board Mills Limited and others PLD 1996 Lah. 633; PICIC v. Messrs Indus Steel Pipe Limited 1993 MLD 94; Tripura Administration v. Tripura State Bank Limited AIR 1959 Tripura 41; Re Tweed Garages Ltd. 1962 All ER 121; Pakistan Industrial Credit and Investment Corporation Ltd. v, Bawany Industries PLD 1998 Kar. 45; Muzaffar Abbas Malix and 2 others v. Messrs Pakistan PVC Ltd. PLD 1998 Kar. 71 United Bank Limited y Golden Textile Mills Limited PLD 1998 Kar. 330; Messrs Metito Arabia Industries Limited v. Messrs Gammon (Pakistan) Limited 1997 CLC 230; Investment Corporation of Pakistan v. Messrs Charagh un Engineering Limited PLD 1997 Kar. 504; Messrs Central Cotton Mills Limited v. Gulzar Ahmed and 8 others PLD 1992 Kar.29; Mrs. Sabiha Shahid Raza v. Ahmed Construction Company (Pvt.) Ltd. PLD 1990 Kar. 191; Ladli. Parsad Jaiswal v. The Kanal Distillery Ltd. PLD 1965 SC 221; Muhammad Shabbir Khan and others v. Muhammad Anwar 1988 CLC 1955; Messrs Nagina Limited v. Usman Hussain and others 1987 CLC 2263; Mansoor Ali Bandeali v. Narine Food Industries Limited 1985 CLC 1239: Feroz‑ud‑Din and 6 others v. Pakistan Hotel Developers Limited and 7 others PLD 1996 Kar. 300: in Re Alliance Motors (Pvt.) Limited 1996 CLC 525; Ulbricht's Wsw. GES M.B.H., Austria v. Ulbricht's (Pakistan] (Pvt.) Limited PLD 1992 Kar. 249; Rajahumndry Electric Supply Corporation Ltd, v. A Nageshwara Rao and others AIR 1965 SC 213; In re: Sulekha Works Ltd. AIR 1965 Cal. 98 and In re: Cine Industries and Recording Co. Ltd. AIR 1942 Bom. 231 ref.

Mansoorul Arfin for Petitioner.

M. A. Rehman for Respondent.

Date of hearing: 4th February, 1999.

2004 C L D 1084

[Karachi]

Before Muhammad Moosa K. Leghari and Khilji Arif Hussain, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN and others‑‑‑ Petitioners

Versus

YAR MUHAMMAD and others‑‑‑Respondents

C.P. Nos.D‑361 to D‑371 of 2003, decided on 12th February, 2004.

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

‑‑‑‑S.7(4)‑‑‑Civil Procedure Code (V of 1908), O. VII, R. 10 ‑‑‑ Suit for recovery of excess amount‑‑‑Return of plaint ‑‑‑ Plaintiffs borrowers filed suit before Banking Court for recovery of excess amount forcibly recovered from them by defendant Bank‑‑­Plaintiffs also claimed compensation damages for their illegal detention‑‑‑Defendant Bank filed application under, O. VII, R10, C.P.C. praying for return of plaint to be represented before a proper Court having jurisdiction‑‑‑Contention of defendant Bank was that after adjustment of finance/liabilities of plaintiffs/borrowers, Banking Court had no jurisdiction to entertain any claim even if same related to finance provided by defendant Bank‑‑‑Validity‑‑‑Under provisions of S.7(4) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, Banking Court had to exercise jurisdiction in respect to any matter to which jurisdiction of Banking Court had been extended under said Ordinance including as to existing or otherwise of the finance‑‑‑Banking Court in the present suit was required to determine about existence or otherwise of finance‑‑­Wherever terms "including" had been used, it always would mean to enlarge ordinary meaning of words‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, had conferred exclusive jurisdiction on Banking Court to deal with the matter relating to and arising out of matter within its jurisdiction including determination of existence or non­existence of Finance/Loan‑‑‑Suits, in circumstances were rightly filed in Banking Court.

(b) Interpretation of statutes‑‑‑

‑‑‑‑Wherever terms "including" occurred in the enactment had been used, it always would mean to enlarge ordinary meaning of words.

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

‑‑‑‑S.22‑‑‑Constititutiorn of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Maintainability‑‑‑Scope‑‑‑Provisions of S.22 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 prohibited an appeal, review or revision against an order accepting or rejecting an application for leave to defend or against an interlocutory order passed by Banking Court‑‑‑High Court, in view of said bar would also not interfere in exercise of its writ jurisdiction against interlocutory order as same could amount to frustrating specific provision of law which was incorporated for the purpose of speedy disposal of financial matters‑‑‑High Court, in exceptional circumstances, in order to meet the ends of justice, could exercise its Constitutional jurisdiction and entertain a petition, if it was satisfied that there was no other alternate remedy and to ask petitioner to wait till the final disposal of suit would result in miscarriage of justice.

Syed Jehanghir Hussain Shah for Petitioner.

Date of hearing: 12th February, 2004.

2004 C L D 1088

[Karachi]

Before Gulzar Ahmed, J

SALEEM RASHID ‑‑‑Plaintiff

Versus

Messrs PAK LIBYA HOLDING COMPANY (PVT) LTD. and others‑‑‑Defendants

Suit NO.B‑57 of 2002, decided on 22nd January, 2004

Financial Institution (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.9‑‑‑Civil Procedure Code (V of 1908), S.12(2) & O. VII, R. 11‑‑­Suit ‑‑‑Maintainability‑‑‑Two suits earlier filed by defendants against plaintiff alongwith others having been decreed, plaintiff in his suit filed under S.9 of Financial Institution (Recovery of Finances) Ordinance, 2001 had challenged said decrees alleging that the decrees had been obtained fraudulently‑‑‑Plaintiff had also sought to restrain defendants from enforcing said decrees and also claimed damages‑‑‑Validity‑‑‑If decrees against plaintiff were obtained by defendants fraudulently, remedy available to plaintiff was to file application under S.12(2), C.P.C. before Court which had passed said decrees‑‑‑Provisions of S.12(2), C.P.C. had clearly prohibited filing of a separate suit to challenge validity of a judgment, decree or order on ground of fraud, misrepresentation or want of jurisdiction‑‑‑Intention of Legislature in amending S.12, C.P.C. by adding subsection (2) was to provide a substitute for such a suit against judgment, decree or order obtained by fraud‑‑‑Provisions of S.12(2), C.P.C. were applicable with full force to the case of plaintiff‑‑‑Imperative for plaintiff to establish that suits filed by defendants against him were based on malice and that decrees obtained therein were based on fraud‑‑‑Other prayers of plaintiff with regard to compensation etc. were dependent on determination of first prayer of plaintiff with respect to fraud and it could not sustain itself independently‑‑­Suit filed by plaintiff was barred by S.12(2), C.P.C. and plaint filed by him was liable to be rejected under Order VII, R.II, C.P.C.

Bank of India v. Lakshmani Dass AIR 2000 SC 1172; Mst. Fareeda Begum v. Hafiz Muhammad Shamim 1997 CLC 343; Noor Muhammad v. Additional District Judge, Chakwal PLD 1994 Lah. 170; Peer Bukhsh v. The Chairman Allotment Committee PLD 1987 SC 145; Muhammad Yousaf v. Mst. Rafia Begum 2002 CLC 1996; Rahat Mehmood v. Tariq Rasheed PLD 1993 Kar. 648; Sardar Muhammad v. Chaudhry Muhammad Bashir 2000 CLC 1040; Ghazanfar Baig v. Muhammad Salam 2001 YLR 871; Khawaja Muhammad Naseem v. Shafiqur Rehman 1996 CLC 1460; Government of Sindh and another v. Ch. Fazal Muhammad and another PLD 1991 SC 197; Muhammad Akhtar and others v. Abdul Hadi and others 1981 SCMR 878; Abdul Majid and others v. Abdul Ghafoor Khan and others PLD 1982 SC 146; Asif Jah Siddiqui v. Government of Sindh and others PLD 1983 SC 446; Sarwar and 3 others v. Muhammad Saeed‑ud‑Din Klan alias Saadat‑ud‑Din Khan 1992 CLC 2323; Zafrullah and 3 others v. Civil Judge, Hafizabad and 3 others PLD 1984 Lah. 396; Sardar Bakhah v. Sahib Khatoon 1988 CLC 2037; Iqbal v. Mst. Jainan Babi 1991 CLC 553; Abdul Rauf and others v. Abdur Rahim Khan PLD 1982 Pesh. 172; Mst. Rukhsana Ansar and 2 others v. Mst. Raeesa Khatoon 1993 MLD 1319 ref.

Akhtar Ali Mehmood for Plaintiff.

Arshad Tayabally for Defendant No. 1.

Masood Anwar Ausaf for Defendant No.2.

Nemo for Defendant No.3.

Date of hearing: 22nd January, 2004.

2004 C L D 1097

[Karachi]

Before Gulzar Ahmed, J

GAP, INC. (A COMPANY ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE) through Authorized Signatory‑‑‑Applicant

Versus

SHAHID CORPORATION through Shahid Maqbool (Sole Proprietor) and 2 others‑‑‑Respondents

J. Miscellaneous No.31 of 2001, decided on 8th December, 2003.

Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 6, 8, 14, 37(1)(a)(b) & 46(2)‑‑‑Expunging/cancelling/removing/rectifying of trade mark‑‑‑Prior user of trade mark‑‑­Applicant was an international company using the trade mark all over the world‑‑‑Respondents got the same trade mark registered in their name in Pakistan‑‑‑Effect‑‑‑Respondents had not contested the matter and there was no opposition to the applicant's allegation that there was no bona fide intention on the part of the respondent for registration that it should be used in relation to the goods and that there had in fact been no bona fide use up to date‑‑‑Continuous period of five years or longer had elapsed during which there had been no bona fide use‑‑­Applicant had established that it was a proprietor and user of the disputed trade mark and desired it to be registered with the Registrar‑‑‑Applicant being obstructed and restricted from registration of its trade mark because of registration of respondents had made the applicant aggrieved person and its application maintainable‑‑‑High Court directed the Registrar to allow the entry of registration of the applicant and expunge/remove the trade mark from the name of the respondents‑‑‑Application allowed accordingly.

Abdul Aziz v. Seven‑Up Co., Karachi and another PLD 1978 Kar. 10; The Seven‑Up Company v. Abdul Aziz and another 1983 CLC 522; Chiswick Products Ltd. v. The Registrar of Trade Marks Karachi and another PLD 1975 Kar. 421; Sindh Match Works (Private) Limited v. The Deputy Registrar of Trade Marks and another 1991 CLC 47; and Culett, Peabody and Company Inc. v. Assistant Registrar of Trade Marks and another 1991 SCMR 921 ref.

Abdul Hameed Iqbal and Hasan Irfan for Applicant.

2004 C L D 1109

[Karachi]

Before Muhammad Moosa K. Leghari, J

ADDITIONAL REGISTRAR OF COMPANIES SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN, COMPANY REGISTRATION OFFICE, KARACHI‑‑‑ Petitioner

Versus

Messrs NORRIE TEXTILE MILLS LIMITED‑‑‑Respondent

J. Miscellaneous Application No.55 of 2003, decided on 21st May, 2004.

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

‑‑‑‑Ss.305 & 309‑‑‑Petition for winding up of Company‑‑­Requirements‑‑‑Registrar was not entitled to present a petition for winding up of the company unless prior sanction of the Authority had been obtained in that behalf‑‑‑No such sanction would be given by the Authority unless the company had first been afforded an opportunity of making a representation and being heard‑‑‑Where it could not be said with certainty that the statutory show‑cause notice issued by the Authority was actually served upon the company, in view of such lack of proof it could riot be concluded that the company was afforded a meaningful opportunity of being heard or to move a representation before necessary sanction was granted to the Registrar‑‑‑Service of show‑cause notice could not be ignored in the circumstances, where it attracted penal consequences on the analogy of the principle that penal provisions were to be construed strictly‑‑­Authority vested with quasi judicial powers connected with adjudication or determination of entitlement of rights of citizens must be vigilant and conscious while exercising its powers‑‑­Authority, in. the present case, seemed to have passed the order without ascertaining the fact of service of show‑cause notice upon the company, order of Authority whereby sanction was accorded to the Registrar for filing petition for winding up of the company was therefore, void ab initio and a nullity‑‑‑Petition for winding up as prayed thus could not be granted in view of said inherent infirmity.

Obedulah and 2 others v. Inspector General Frontier Crops, Quetta 1997 SCMR 1833 fol.

(b) Administration of justice‑‑‑

‑‑‑‑ Authority vested with quasi judicial powers connected with adjudication or determination of entitlement of rights of citizens must be vigilant and conscious while exercising its powers.

Obedulah and 2 others v. Inspector General Frontier Crops, Quetta 1997 SCMR 1833 fol.

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

‑‑‑‑Ss.305 & 309‑‑‑Petition for winding up of Company‑‑‑Service of show‑cause notice on the company‑‑‑Purpose‑‑‑Company having participated in the proceedings before the company Judge, the acts of omission and commission and violation of law allegedly committed by the company had been communicated to them and show‑cause notice, thus shall be deemed to have been served upon the Company‑‑‑Allegations/grounds urged and pressed for winding up of the Company had not been substantially and satisfactorily rebutted‑‑‑Registrar shall accordingly be required to submit a reply and may make a representation to the Commission within three weeks of the announcement of the present order by the Company Judge‑‑‑Company, then shall be provided an opportunity of hearing by the Authority viz. Commission, and after considering all the aspects, it shall pass an appropriate order‑‑‑If, however, the Commission, after considering the facts and circumstances was satisfied that the circumstances, warranted for preferring a petition for winding up, it shall be required to pass necessary sanction orders within six weeks, after the receipt of reply of show‑cause notice, if any, furnished by the Company after providing the opportunity of hearing to the Company.

S. M. Aamir Naqvi for Petitioner.

Jhamat Jethanand for Respondent.

Date of hearing: 12th May, 2004.

2004 C L D 1131

[Karachi]

Before Khilji Arif Hussain, J

ACER, INC. ‑‑‑Plaintiff

Versus

ACER COMPUTERS‑‑‑Defendant

Suit No. 766 of 2002, decided on 20th October, 2003.

Specific Relief Act (1 of 1877)‑‑‑

‑‑‑‑S.54‑‑‑Trade mark‑‑‑Suit for permanent injunction‑‑‑Plaintiff Company was using its corporate name, trade name and trade mark Acer' as well as website/domain name [www.acer.com](http://www.acer.com/) and E‑mail address had been used continuously over the years‑‑­ Grievance of plaintiff was that he had recently come to know that defendant had adopted the wordAcer' and commenced its business in the field of computers and had also started selling its goods and products using the word Acer'‑‑‑Defendant's initiate trade mark and trade nameAcer' was the same as plaintiffs corporate name, trade name and trade mark 'Acer'‑‑‑ Defendant had also registered a domain name as www.acer.com.pk by launching its website on internet ‑‑‑Plaintiff had alleged that adoption and use of initiate name Acer' as a trade mark by defendant on website or as internet domain name was deliberate, unauthorized, mala fide and act of fraud upon plaintiff and general public‑‑‑Defendant having not been served through bailiff, was served through publication, but he having failed to appear, matter was proceeded against him ex parte‑‑­Possibility that one, who was not fully conversant and could not call complete website address of plaintiff while searching with corporate nameAcer' could approach website created by defendant, could not be over‑looked‑‑‑Likewise the possibility that such person could place order to defendant who was dealing in same goods as that of plaintiff with the belief that he was purchasing the Acer' brand goods from the source wherefrom it had originated‑‑‑Since plaintiff was holding registered trademarkAcer' and hart acquired right in it by its long use, website of defendant could create possible confusion in the mind of ordinary purchaser and he could, through said website, purchase goods from defendant believing same to be originated from plaintiff‑‑­Plaintiff's suit was decreed against defendant accordingly.

Moeen Qamar for Plaintiff.

Nemo for Defendant.

Dates of hearing: 17th and 19th September, 2003.

2004 C L D 1163

[Karachi]

Before S. Ali Aslam Jafri, J

RABIA BAI---Plaintiff

Versus

ZEESHAN FAROOQI---Defendant

Suit No.89 of 2004, decided on 4th June, 2004.

(a) Words and phrases---

----"Passing off"---Meaning.

Blacks Law Dictionary ref.

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

---Ss.21 & 73---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for infringement of trade mark---Interim injunction, grant of---Essential conditions---Apart from balance of convenience, plaintiff must show that there was strong prima facie case in his favour and that he would suffer irreparable loss, if injunction was not granted---Each case has its own merits and law would be applied keeping in view the facts of each case.

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

----S.23---Copyright Ordinance (XXXIV of 1962), S.39--­Registration of trademark and copyright---Purpose stated.

The very purpose of registration of trademark and copyright is to protect the interest of a person, who has invented or prepared a particular item for sale to his customers under a particular trade name and has got registered a particular design or label under the Trade Marks Act or Copyright Ordinance as against a person, who wants to take undue advantage of the same in order to deceive the unwary purchasers.

"Law of Trademarks and Passing off" by P. Narayanan (Fourth Edition); J. N. Nichols (VIMTO) PLC v. Mehran Bottlers (Pvt.) Limited PLD 2000 Kar. 192; Pakistan Drug House (Pvt.) Ltd. v. Rio Chemical Company and another 2003 CLD 1531; Registrar of Trade Marks v. Ashok Chandra Rakhit LID AIR 1955 SC 558; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Seven-up Company v. Kohinoor Thread Ball Factory PLD 1990 SC 313; Messrs Mehran Ghee Mills Ltd. and others v. Ghiltan Ghee (Pvt.) Ltd. and others 2001 SCMR 967; Messrs Western Brand Tea, Karachi v. Messrs TAPAL Tea (Pvt.) Ltd. PLD 2001 SC 14; Coca Cola v. Koala Kola (1968) RPC 231; 1989 RPC 287 and 295 and CH. D. The Dagenham Girl Pipers v. The Famous London Girls Pipers (1952) 69 RPC 1 ref.

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

----Ss.21 & 73---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for infringement of trade mark---Sale of scented sweet supari (betel nuts) by plaintiff under trade mark "Tasty Gold"--­Sale of such material by defendant under trade mark and label design of "Gold Piece"---Prayer for interim injunction by plaintiff-Validity---Such material being sold by plaintiff and other sellers under various names with different wrappers and packaging was an item of common use---Word "Gold" was being used by a large number of manufacturers of such material---Wrappers, packaging, colour scheme and calligraphy of two labels being used by plaintiff and defendant were not identical in all respects---Defendant had registered his design, label and packaging with concerned authority, against which no appeal had been filed by plaintiff---Defendant had a lawful defence to resist prayer for grant of injunction---Plaintiff had no prima facie case in his favour---Balance of convenience was not in favour of plaintiff---Interim injunction was refused in circumstances.

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

----Ss.21 & 73---Suit for infringement of trade mark---Defence plea---Illegal and unlawful use of identical trade mark, wrappers or labels by so many other persons could not be deemed to be a valid defence.

Ms. Shazia Tasleem for Plaintiff.

Mrs. Navin S. Merchant for Defendant.

Date of hearing: 26th May, 2004.

2004 C L D 1198

[Karachi]

Before S. Ali Aslam Jafri, J

Messrs WALI OIL MILLS LTD. through General Manager---Plaintiff

Versus

Messrs FAISALABAD OIL REFINERY (PVT.) LTD. through Director and another---Defendants

Suit No.266 of 2004, decided on 22nd April, 2004.

(a) Registered Designs Ordinance (XLV of 2000)---

----Preamble & S.3(2)(3)---Rights of the parties are to be determined as per requirements of the Ordinance---Provision of S.3(2) of the Ordinance provides that subject to the provision of the Ordinance design shall not be registered, unless the same is new or original apart from other conditions specified therein--­Subsection (3) of S. 3 has laid down that for the purpose of novelty, any disclosure to the public of the industrial design shall not be taken into consideration if it accrued within 12 months preceding the filing date or where applicable, the priority date.

(b) Registered Designs Ordinance (XLV of 2000)---

----Ss. 8 & 3(3)---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2 & S. 151---Application for grant of temporary injunction pending disposal of the suit for infringement and passing off and for account, damages etc. restraining the defendants from infringing the registered design of plaintiffs company of plastic bottle, under the label of their trade mark which was duly registered---Plaintiffs had failed to show that they had a prima facie case and that their design was valid and same had been infringed---Design which was got registered by the plaintiffs did not appear to be new or novel and it was already in the market long before the filing of application for registration of the design--­Balance of convenience also did not appear to be in favour of the plaintiffs and no irreparable loss was likely to be caused to them if the injunction was refused as they had already sued for damages---No case for grant of temporary injunction having been made out as all the requirements for such relief viz. prima facie case, balance of convenience and irreparable loss were lacking in the case, application for injunction was dismissed.

Maniar Industries Ltd. v. Mobin Plastic Industries Karachi 1987 CLC 135 fol.

Jamshed Aslam Khan v. Mrs. Azra Jawed and 2 others 1995 CLC 436. J.N. Nichols (VIMTO) PLC v. Mehran Bottle (Pvt.) Limited, Karachi PLD 2000 Kar 192; Sat Paul Singh, Trading as Kakar Industries, Meerut v. S.P. Engineering Works, Meerut 1982 PTC 193- The Coca Cola Company v. A.G. Barr & Co. Ltd. Scotland 1961 Reports of Patent, Design and Trade Mark Cases 387; Castrol India Ltd. v. Tide Water Oil Co. (I) Ltd. 1996 PTC (16) 202 and Powell v. The Birmingham Vinegar Brewery Company Ltd. 1897 Reports of Patent, Design and Trade Mark Cases 720 distinguished.

Tajuddin v. Haji Mushtaq and another 1995 CLC 2182; Messrs Niky Tasha India Private Ltd. v. Faridabad Gas Gadgers Private Ltd. AIR 1985 Delhi 136; B.K. Plastic Industries v. Jayantilai Kalidas Sayani AIR 1972 Cal. 339; Maniar Industries Ltd. v. Mobin Plastic Industries Karachi 1987 CLC 135; Qadar Bakhsh v. Ghulam Mohammad AIR 1934 Lah. 709; Dwarkadas Dhanji Sha v. Chhotalal Ravicarnadas & Co. AIR 1941 Bom. 188, and Vredenburg's Registered Design No.788, 451 (Reports of Patent. Design, and Trade Mark Cases 52 RPC 7 ref.

Kh. Mansoor Nadeem Qureshi and Saleem Ghulam Hussain for Plaintiff.

Ms. Shazia Tasleem for Defendants.

Date of hearing: 12th April, 2004.

2004 C L D 1210

[Karachi]

Before Sarmad Jalal Osmany and Amir Hani Muslim, JJ

Rio CHEMICAL COMPANY and another---Appellants

Versus

PAKISTAN DRUG HOUSE (PVT.) LTD. ---Respondent

High Court Appeal No. 170 of 2003, decided on 18th May, 2004.

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

----Ss.21 & 73---Copyright Ordinance (XXXIV of 1962), Ss.39 & 41---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for infringement of trade mark and damages---Interim injunction--­Order granting injunction would not be erroneous, where damages were also claimed---Usurping of goodwill of trademark by defendant, who, prima facie, had no right under Copyright Ordinance, 1962, would be unjust.

Shahjehan Khan v. Muhammad Tariq 2002 CLC 571; Plasticrafters Ltd. v. Maniar Industries Ltd. 1980 CLC 812; Abdus Subhan v. Khurshid 2000 YLR 2.898 and Exide Pakistan Ltd. v. Pakistan Accumulator (Pvt.) Ltd. 2003 CLD 1117 ref.

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

----Ss.21 & 73---Copyright Ordinance (XXXIV of 1962), Ss. 39 & 41---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for infringement of trade mark---Interim injunction, grant, of--­Pendency of appeal preferred by defendant against order of Copyright Board would not restrict the Court from granting injunction, if plaintiff was otherwise entitled thereto---Person prima facie having no legal right could not be allowed to continue his business.

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

----Ss.21 & 73---Copyright Ordinance (XXXIV of 1962), Ss. 39 & 41---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for infringement of trade mark ---Pendency of appeal filed by defendant against acceptance of rectification application of plaintiff by Copyright Board---Order of the Court granting interim injunction to plaintiff---Effect---Such order Was tentative in nature and would not prejudice either party before Registrar, Trade Marks or before any forum---Defendants would be at liberty to lead evidence to establish their legal right to do business.

Muhammad Shakeel Abid for Appellants.

Saleem Ghulam Hussain for Respondent.

Date of hearing: 14th April, 2003.

2004 C L D 1220

[Karachi]

Before Muhammad Moosa K. Leghari and Khilji Arif Hussain, JJ

Mst. BAGHUL and 17 others---Petitioners

Versus

DEPUTY COMMISSIONER, THARPARKAR and 13 others---Respondents

Constitutional Petition No.D-176 of 1987, decided on 18th March, 2004.

(a) West Pakistan Cooperative Societies and Cooperative Banks (Repayment of Loans) Ordinance (XIV of 1966)---

----Ss.8-A & 8-B---Constitution of Pakistan (1973), Art.199-­Constitutional petition---Issuance of show-cause notice---High Court normally, would not like to interfere in exercise of its Constitutional jurisdiction to call in question a show-cause notice as a. matter of rule---Parties had to exhaust the remedy available to them under law and thereafter if felt aggrieved, could invoke the jurisdiction of High Court under Art. 199 of the Constitution--­However, if show-cause notice had been issued with mala fide intention and which on the face of it had been issued without any lawful authority, then even if alternate remedy was available, High Court could strike down such notice in exercise of its Constitutional jurisdiction, instead of asking the parties to undergo agony of departmental appeals, revisions, etc.

Muhammad Afzal Khan v. Karachi Development Authority PLD 1984 Kar. 114; Car Tunes v. Income Tax Officer, Circle V 1989 PTD 478; M.R. Sons v. I.T.O. 1989 PTD 1010; Rice Export Corporation v. Karachi Metropolitan Corp. PLD 1990 Kar. 186; Zeshan Builders v. Karachi Building Control Authority 1992 MLD 2259; Mian S.M. Yousuf Baghpatee v. Kar. Building Control Authority and others 1993 CLC 2491; Attock Cement Pak. Ltd. v. Collector of Customs, Quetta 1999 PTD 1892; Platinum Commercial Bank Ltd. v. Government of Sindh 2003 MLD 279 (Kar.); Shagufta Begum v. I.T.O. PLD 1989 SC 360 ref.

(b) West Pakistan Cooperative Societies and Cooperative Banks (Repayment of Loans) Ordinance (XIV of 1966)---

----S.8-B---Restriction on alienation of properties---Section 8-B of West Pakistan Cooperative Societies and Cooperative Banks (Repayment of Loans) Ordinance, 1966, had put restriction on alienation of properties by a person owing the loan immediately after the enforcement of said Ordinance---West Pakistan Co­operative Societies and Cooperative Banks (Repayment of Loans) Ordinance, 1966, had itself provided that alienation of property by defaulters would be as void and same could not transfer any right, title or interest in the property of debtors unless the loan due against debtor had been repaid.

Muhammad Ismail H. Memon for Petitioners.

Masood A. Noorani, Addl. A.-G. for Respondents Nos. 1 and 2.

Abdul Aziz Khan for Respondent No.3.

Abdul Sattar Kazi for Respondent No.7.

Date of hearing: 11th February, 2004.

2004 C L D 1232

[Karachi]

Before Shabbir Ahmed and Khilji Arif Hussain, JJ

ASIM SHAD and another---Appellants

Versus

MS. DINERS CLUB PAKISTAN (PVT.) LTD.---Respondent

1st Appeal No.66 of 2002, decided on 14th April, 2004.

Financial Institution (Recovery of Finance) Ordinance (XLVI of 2001)---

----Ss. 2(a) & 9---Suit for recovery of amount---Plaintiff, a Financial Institution--- Maintainability of suit---Defendants who fully utilized the charge card facility extended to them allegedly having failed to pay admitted outstanding amount, attorney of plaintiff filed suit for recovery of amount--Suit was resisted by defendants alleging that plaintiffs being not a Financial Institution as defined in S. 2(a) of Financial Institution (Recovery of Finance) Ordinance, 2001, suit filed by them was not maintainable---Validity-Plaintiff by virtue of being subsidiary of a Bank, could not assume the business of the holding company of Banking business, but its business would remain confined to the business for which it was formed as detailed in its Memorandum of Association---Contention that plaintiff being subsidiary of Bank, was a Banking Company was repelled---Plaintiff would not be a Financial Institution, unless it was covered by definition of "Financial Institution" contained in Cl. (a) of S. 2 of Financial Institution (Recovery of Finance) Ordinance, 2001—Agreement arrived at between plaintiff and the Bank showed that plaintiff had transferred/assigned all rights, title and interest with regard to the charged Book-debts to the Bank in the year 2000---Plaintiff subsequently filed suit in the year 2002 when it had no right, title and interest with regard to debts which were already assigned to the Bank-Plaintiff; in circumstances had no cause of action to bring suit for recovery of amount against defendants­ Party having no cause of action, could not bring suit in respect of assigned/transferred debt---Suit of plaintiff was dismissed.

Muhammad Shafi Siddiqui for Appellants.

Zubair Qureshi, Arshad Tayabally, Amicus Curiae for Respondents.

Dates of hearing: 30th March and 1st April, 2004.

2004 C L D 1254

[Karachi]

Before Muhammad Roshan Essani and Gulzar Ahmed, JJ

OVERSEAS INVESTORS CHAMBER OF COMMERCE AND INDUSTRY---Appellant

Versus

FEDERATION OF PAKISTAN through the Ministry of Communications and another---Respondents

C.P. No.D-1282 of 2003, decided on 14th November, 2003.

Karachi Port Trust Act (I of 1877)---

----Ss.7(1) & 158---Constitution of Pakistan (1973), Art.199--­Constitutional petition---Board of Trustees of Karachi Port Trust--­Representation in the Board---Name of the petitioner was changed from Chamber of Commerce and Industry Karachi to Overseas Investors Chamber of Commerce and Industry--­Representative of the petitioner was having a seat but was left vacant because the name of the petitioner did not appear in Karachi Port Trust Act, 1877---Validity---Objection of the authorities that the name of the petitioner did not appear in Karachi Port Trust Act, 1877, had no force for the reason that the Act had given right of representation on the Board of the Trust to the entity of Karachi Chamber of Commerce and Industry, Karachi---Change of name had not brought change in the entity of the Chamber ---Grounds on which trustee could vacate office were mentioned in S.158 of Karachi Port Trust Act, 1877---For vacating the office of trustee, it had to .be shown that Karachi Chamber of Commerce and Industry had dissolved or had ceased to exits--­None of the two eventualities had happened in case of Karachi Chamber of Commerce and Industry---Entity of Karachi Chamber of Commerce and Industry existed albeit with the changed name that of petitioner---Present was a case, merely of change in name of Karachi Chamber of Commerce and Industry to that of the petitioner otherwise it was one and the same entity--Petitioner was entitled to the rights, benefits and obligations in its own name flowing from Karachi Port Trust Act, 1877, to Karachi Chamber of Commerce and Industry---Notification dated 7-10-2003 was contrary to the provision of S.7(1) of Karachi Port Trust Act, 1877, and was struck down---Petition was allowed accordingly.

Messrs Central Insurance Company v. Central Board of Revenue, Islamabad 1993 SCMR 1232; Central Board of Revenue, Islamabad v. Shaikh Spinning Mills Limited, Lahore 1999 SCMR 1442; Muhammad Bhai v Islamic Republic of Pakistan, Islamabad PLD 1980 Kar. 166; M.D. Tahir, Advocate v. Federal Government through Secretary, Cabinet Division, Pakistan Secretariat, Islamabad PLD 2000 Lah. 251; Ali Muhammad H.K. Dada v. State Life Insurance Corporation of Pakistan PLD 1988 Kar. 279; Messrs Spinning Mills Limited v. Federation of Pakistan 2002 PTD 2959; C.P. No.1531 of 2002 Karachi Cotton Association v. Government of Pakistan and, another and Sikandar v. C.I.T. Group/Capital Equipment Financing Inc. PLD 2002 Kar. 395 ref.

Khalid Rehman for Petitioner.

Muhammad Sarfraz Sulehri for Respondent No.2.

Date of hearing: 29th October, 2003.

2004 C L D 1396

[Karachi]

Before Khilji Arif Hussain, J

INVESTMENT CORPORATION OF PAKISTAN‑‑‑Plaintiff

Versus

SHEIKHUPURA TEXTILE MILLS LTD. and others‑‑‑Defendants

Suit No.423 of 1998, decided on 25th November, 2003.

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

‑‑‑‑S.9‑‑‑Contract Act (IX of 1872), S.74‑‑‑Disbursement of additional finance, dispute of‑‑‑Liquidated damages‑‑­Recovery‑‑‑Borrowers disputed disbursement of addition finance against which, the bank sought for settlement of issues‑‑‑Borrower by its letter duly exhibited admitted and acknowledged the additional finance which was used for the adjustment of due instalments‑‑‑Such additional finance was also admitted by one of the witnesses of the borrower‑‑­No agreement of finance had been executed between the parties in respect of the additional finance‑‑‑Effect‑‑‑Bank could claim only purchase price from its customer alongwith other charges in terms of agreements between the parties which customers agreed to pay to banks‑‑‑As no agreement of finance had been executed between the parties in respect of additional finance, the bank was not entitled to claim mark‑up on such additional finance‑‑‑Borrowers were liable to pay apart from purchase price agreed under different agreements of finance, a further sum received as additional finance‑‑‑Liquidated damages could be recovered only if party claiming the same could prove the same‑‑‑Bank failed to adduce evidence regarding liquidated damages, thus was not entitled to the recovery of such damages‑‑‑After making the calculations and on the basis of the evidence it was proved that the borrowers had already paid more than the amount due to the bank‑‑‑Suit was dismissed in circumstances.

I.C.P. v. Chiniot Textile Mills Ltd. PLD 1998 Kar. 316; Bishambhar Das v. Katha Singh AIR 1933 Lah. 523; Fitzholmes v. The Bank of Upper India Ltd. AIR 1923 Lah. 548; Mati Lal Das v. Eastern Mortgage and Agency Co. Ltd. AIR 1921 PC 118 and Ehsan Ali Alibhoy and 2 others v. Industrial Development Bank of Pakistan and 5 others 2003 CLD 440 ref.

Anwar Muhammad for Plaintiff.

Mansoor‑ul‑Arfin for Defendants.

Dates of hearing: 6th and 10th November, 2003.

2004 C L D 1419

[Karachi]

Before Shabbir Ahmed and Gulzar Ahmad, JJ

Messrs SALMAN & CO., CHARTERED ACCOUNTANTS‑‑‑Applicant

Versus

INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN‑‑‑Respondent

Judicial Miscellaneous Application No. 11 of 2002, decided on 1st August, 2003.

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss. 255, 260 & 476‑‑‑Companies (General Provisions and Forms) Rules, 1985, Rr. 17‑A & 35‑‑‑Chartered Accountants Ordinance (X of 1961), Ss. 20‑A & 20‑D‑‑‑Conducting audit by auditor in violation of International Accounting Standard‑‑‑Effect‑‑‑Certain irregularities in observance of International Accounting Standard were found, on examination of accounts prepared by applicant/ auditor who audited accounts of a company‑‑‑Applicant/auditor in response to show‑cause notice issued to him admitted the lapse committed ,by him‑‑‑ Institution after hearing applicant, alongwith other fines etc. imposed punishment by suspending his membership for period of five years under S.20‑D of Chartered Accountants Ordinance, 1961‑‑­Validity‑‑‑Maintaining other fines and punishments imposed upon applicant/ auditor, period of suspension of his member­ship was reduced from five years to one year by the High Court.

Shahenshah Hussain for Applicant.

I. H. Zaidi for Respondent No.1.

Agha Faqir Muhammad for Respondents Nos. 2 and 3.

Raja Mir Muhammad Khan for Respondent No.4 called absent.

2004 C L D 1433

[Karachi]

Before S. Ali Aslam Jafri, J

A.F. FERGUSON & CO., CHARTERED ACCOUNTANTS‑‑‑Plaintiff

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and another‑‑‑Defendants

Suit No. 173 of 2004, decided on 18th May, 2004.

(a) Securities and. Exchange Ordinance (XVII of 1969)‑‑‑--

‑‑‑‑S.34(4)‑‑‑Companies Ordinance (XLVII of 1984), Ss.252 & 254‑‑‑Code of Corporate Governance, Item XLI & Cl. (vii)‑‑­Notification No.2(10)SE/SMD/2002, dated, 28‑3‑2002‑‑­Specific Relief Act (I of 1877), S.42‑‑‑Code of Corporate Governance, Item XLI & Cl.(vii), vines of‑‑‑Public interest litigation‑‑‑Scope‑‑‑Plaintiff being a registered partnership firm of Chartered Accountants was aggrieved of insertion of regulation in Code of Corporate Governance whereby all listed companies were required to change their external auditors every five years or the companies were required to rotate the partner incharge of its audit engagement after obtaining the consent of Security and Exchange Commission‑‑‑Plea raised by plaintiff was that Item XLI and Cl. (vii) of Code of Corporate Governance was ultra vices of S.34(4) of Securities and Exchange Ordinance, 1969, and Ss.252 & 254 of Companies Ordinance, 1984‑‑‑Validity‑‑­Plaintiff could not plead the cause of other companies who had neither filed suit nor preferred any appeal against insertion of such regulation, though such remedy was available. to them under the law and no such suit could be filed even by such companies without exhausting the remedy‑‑‑Larger public interest had always been of prime consideration before the Courts while examining a particular, piece of legislation at the touchstone of fundamental rights guaranteed under the Constitution‑‑‑Such type of legislation was introduced in many other countries and Pakistan had enforced such law after adopting proper procedure by the competent authority‑‑­Purpose of such amendment was to protect the interest of innocent share‑holders and stakeholders who, despite investing their hard earned savings, had no access to the accounts of a listed company‑‑‑Law enforced through such amendments being in public interest could not be deemed to be ultra vires the Constitution‑‑‑High Court refused to grant any declaration as sought for by the plaintiff‑‑‑Suit was dismissed in circumstances.

Hashwani Sales and Services Limited v. Karachi Building Control Authority and 15 others PLD 1986 Kar. 393; The Chairman, Railway Board, Lahore and others v. Messrs M. Wahabuddin & Sons PLD 1990 SC 1034; Messrs United Bank Ltd. Karachi v. Messrs Mohibali Tannery Ltd., Karachi and 8 others PLD 1994 Kar. 275; Mst. Fatima Bai Suleman and 5 others v. Pakistan. State Oil Company Limited and 2 others 1997 MLD 2155; Mirza Muhammad Iqbal and others v. Government of Punjab PLD 1999 Lah. 109; Kohinoor Textile v. The Federation of Pakistan 2002 PTD 121; Muhammad Kaleem Rathore v Institution of Chartered Accountants 2003 CLD 1734; Chaudhri Nazir Ahmed Asad v. Institute of Chartered Accountants of Pakistan and 2 others 2002 CLD 1835; Member's Hand Book Vo1.I, by Institute of Chartered Accountants of Pakistan (Chapter V‑A) and Clauses V & VI of the Schedule 1; Messrs East and West Steamship Company v. Government of Pakistan PLD 1958 SC 41; Malik Asghar and 3 others v. Government of Punjab PLD 2003 Lah. 73; Glass Chatons Importers and Users Association and others v. Union of India and others AIR 1961 SC 1514; Akadasi Padhan v. State of Orissa and others AIR 1963 SC 1047; Lahore Improvement Trust, Lahore v. The Custodian Evacuee Property, West Pakistan, Lahore PLD 1971 SC 81 1; Messrs Shahmurd Sugar Mills Ltd. v. Government of Sindh and others 2003 CLC 1078 and Rana Muhammad Arshad v. Additional Commissioner (Revenue), Multan Division and others 1998 SCMR 1462 ref.

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

‑‑‑‑Art.18‑‑‑Right of free trade, business and profession‑‑­Restriction, imposing of‑‑‑Principles‑‑‑Reasonable restrictions on a trade or profession are not violative of fundamental rights.

Zahid F. Ebrahim for Plaintiff.

Anwer Mansoor Khan for Defendants.

Date of hearing: 31st March, 2004.

2004 C L D 1452

[Karachi]

Before Mushir Alam and Gulzar Ahmed, JJ

Messrs UNICOM ENTERPRISES---Petitioner

Versus

BANKING COURT No.5, CITY COURT BUILDING, KARACHI and 2 others---Respondents

Constitution Petition No.D-99 of 2004, decided on 24th July, 2004.

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

----O. XXI, R. 92---Constitution of Pakistan (1973), Art. 199--­Constitutional petition---Auction of mortgaged property, in the present case, had taken place on 30-1-2003 against which the petitioner raised no objection---Sale was confirmed on 19-6-2003-- Auction purchaser had deposited sale price of the auctioned property in the Court and in term of O. XXI, R. 92, C.P.C. sale of mortgaged property had become. absolute and it could not be recalled---Letter dated 5-8-2003 of the State Bank of Pakistan settling the dispute between petitioner and respondent, being subsequent to the confirmation of sale, was of no consequence and could not affect confirmation of sale by the Court.

Hudaybia Textile Mills Ltd. v. Allied Bank of Pakistan PLD 1987 SC 512 fol.

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

----S. 22---Constitution of Pakistan (1973). Art. 199--­Constitutional petition---Maintainability---Auction by Court--­Validity---Provision of S. 22, Financial Institution (Recovery of Finances) Ordinance, 2001, having provided for challenging the judgment, decree, sentence, and, final order passed by the Banking Court within 30 days of such judgment, decree, sentence and final order to the High Court, Constitutional petition before the High Court was not maintainable.

Gohar Iqbal for Petitioner.

Salimuddin Nasir for Respondent No.2.

Respondent No.3 (Present in person).

Date of hearing: 20th July, 2004.

2004 C L D 1454

[Karachi]

Before Muhammad Moosa K. Leghari, J

BASIC TRADE MARK S.A. ---Applicant

Versus

KAPUR AND COMPANY and another---Respondents

J.Misc. Application No. 39 of 1999, decided on 31st May, 2004.

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

----Ss. 8(a), 10(1) & 46---Prohibition of registration of trade mark--­Scope---If certain trade mark is likely to deceive and/or cause confusion in the minds of the general public and goods purchased by them under such trade mark are of another proprietor and taking the same to be manufactured by another sound proprietor/ company, they purchase those goods, registration thereof shall be violative of the provisions of Ss. 8(a) and 10(1) of the Trade Marks Act, 1940 and in such a case an entry in respect of trade mark existing in the Register of trade marks in the name of such company/ arson, is liable to be expunged from the relevant Register, as subalated under S. 46 of the Act.

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

----Ss. 8(a), 10(1) & 46---Deception---Confiesion---Local markets and not the foreign markets are to be made basis to decide the question as to whether any deception or confusion is caused in the minds of the people---If in the markets of a particular country the products of only one manufacturer are sold under a specific trade mark and the goods of another manufacturer with the same or similar trade mark are not available in the markets of that country, no question of deception or confusion in the minds of the people of that country arises-- Applicant, in the present case, had itself admitted that "applicant also intends to market and sell its goods in Pakistan as it has been doing in several other countries of the world for the past many years" which clearly showed that till date they were not marketing and selling their goods in Pakistan but they intended to do so---Held, by using the trade mark in question by the respondent in Pakistan, no deception or confusion as contemplated in Ss. 8 & 10 of the Trade Marks Act, 1940 would be caused in the minds of the people of Pakistan---Application being devoid of merits was dismissed by the High Court.

Messrs Bengal Friends 8v Co., Dacca v. Messrs Gour Benode Shah 8y Co., Calcutta and another PLD 1969 SC 477; S.M. Taufiq and others v. National Biscuit Co., New York PLD 1962 (W.P.) Kar. 335; Aktiebolaget Jonkoping Valcan, Sweden v. Registrar of Trade Marks Karachi and another PLD 1975 Kar. 478; Solo Susice Narondi Pondik v. Sindh Match Works (Pvt.) Limited and another 1991 CLC 37 and Pakistan Soap Factory v. Chittagong Soap Factory and another PLD 1970 SC 460 fol.

PLD 1979 Kar. 83; 1981 SCMR 1039; AIR 1977 Del. 152; AIR 1958 Bom. 56 (V 45 C 21) and AIR 1965 Bom. 35 distinguished.

PLD 1978 Kar. 161; (1970) R.P.C. 435; (1978) R.P.C. 211; PLD 1975 Kar. 478; 1991 CLC 37 and 44 R.P.C. 335 ref:

Qazi Faez Isa for Applicant.

Muhammad Nadeem Qureshi for Respondents.

Date of hearing: 5th May, 2004.

2004 C L D 1472

[Karachi]

Before Gulzar Ahmed, J

NATIONAL BANK OF PAKISTAN‑‑‑Plaintiff

Versus

Messrs MAHMOOD (PVT.) LIMITED and others‑‑‑Defendants

Suit No.7 of 2001, decided on 10th June, 2004.

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

‑‑‑‑S.9‑‑‑Contract Act (IX of 1872), Ss.127 & 133‑‑‑Suit against guarantor for recovery of loan amount‑‑‑Plea of defendant was that guarantee given by him in consideration of original loan granted to principal borrower stood discharged after granting of fresh loan through subsequent agreement having no reference to original loan nor pleaded so in plaint‑‑‑Validity‑‑‑Record did not show that defendant had executed fresh personal guarantee‑‑‑Plaintiff neither produced original loan agreement nor referred to same either in plaint, affidavit‑in‑evidence of witnesses or documents produced by witnesses‑‑‑Guarantee of defendant was continuing one, but consideration on which same was based was original agreement‑‑‑Plaintiff in order to have such guarantee enforced in suit was required to prove that claim in suit had arisen out of original loan agreement, which facility had been renewed by subsequent agreement, thus, defendant was liable under his guarantee being continuing one‑‑‑Provisions of S.127 of Contract Act, 1872 fixes engagement of guarantor to things already done or promised to be done for benefit of principal debtor‑‑­Engagement of defendant as guarantor by guarantee was for benefit of principal borrower arising out of original agreement‑‑‑Claim in suit was based on subsequent loan agreement, in which engagement of defendant as guarantor had not been established‑‑‑Plaintiff had not established any nexus between original loan agreement and subsequent loan agreement, although there was a specific issue on the point‑‑‑Suit against defendant as guarantor was dismissed in circumstances.

Gulzar Ahmad v. Sindh‑Punjab Goods Transport Co. PLD 1966 Kar. 253; Abdul Ghani v. Mst. Zaheda Begum PLD 1982 Lah. 401 and National Commercial Bank Ltd. Karachi v. Muhammad Tufail PLD 1975 Kar. 671 ref.

Muhammad Mushtaq v. Bashir Ahmad Chaudhry PLD 1991 Lah. 400; Messrs Ruby Trading Company v. Mst. Zainab Khanum 1984 CLC 169; Samar Gul v. Central Government PLD 1986 SC 35; Muhammad Ayub v. Additional District Judge, Gujranwala 1985 CLC 1745; Muhammad Amin v. Member (Colonies), Board of Revenue, Punjab, Lahore 1987 CLC 1216; Mardan Ali v. Rab Nawaz 1991 CLC 82; Ghulam Mustafa v. Mst. Rehmat Bibi 1983 CLC 356; Suwalal Vemichand v. Fazle Hussain Rajabali Bohra AIR 1939 Nag.31; Province of West Pakistan v, Shamsuddin PLD 1966 Kar. 297; S. Chattanatha Karayalar v. The Central Bank of India Ltd. AIR 1965 SC 1856: United Bank Limited v. Haji Bawa Company Ltd. 1981 CLC 89; Emirates Bank International Limited v. Messrs Fair Commission Agency (Pvt.) Limited 1991 CLC 450; Allied Bank of Pakistan Limited v. Zia‑ul‑Qamar Bhatti 1989 MLD 366; National Construction Ltd. v. Standard Insurance Co. Ltd. 1984 CLC 286; National Commercial Bank Ltd. Karachi v. Muhammad Tufail PLD 1975 Kar. 671; Pakistan through Secretary to Government of Pakistan Ministry of Railways v. Messrs Rajastan Alloyes and Steel (Private) Limited PLD (sic) Lah. 157; Ali Muhammad v. Muhammad Hayat 1982 SCMR 816; Dr. Syed Ali Sajjad Bukhari v. Sabir Ali Shah 1987 CLC 229; Saiyed Ali Amir v. Messrs Dalmia Cement Ltd. PLD 1961 Kar. 255; Messrs Muhammad Anwar Muhammad Iqbal v. Collector of Customs PLD 1976 Kar. 253 and Budho v. Ghulam Shah PLD 1963 SC 553 distinguished.

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.127‑‑‑Civil Procedure Code (V of 1908), O. VI, R.4‑‑‑Consideration for guarantee not pleaded in plaint ‑‑‑Effect‑‑­Contract of guarantee must be based on consideration‑‑‑If consideration so specified was not brought on record, then Court could not assume such consideration and grant relief.

Asim Mansoor for Plaintiff.

Abdul Rauf for Defendant No.4.

Date of hearing: 14th January, 2004.

2004 C L D 1490

[Karachi]

Before Shabbir Ahmed and Gulzar Ahmed, JJ

NATIONAL BANK OF PAKISTAN‑‑‑Appellant

Versus

EMIRATES BANK INTERNATIONAL LTD. and others‑‑‑Respondents

H.C.A. No.240 of 1999, decided on 15th October, 2003.

(a) Maxim ‑‑‑

‑‑‑‑"Qui prior est tempore potior est jure" (He has a better title, who was first in point of time).

Bibhuti Bhusan Shome v. Baidya Nath Dey and another 40 C.W.N. 625 ref.

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.172‑‑‑Preferring charge of hypothecation over charge of pledge‑‑‑Scope‑‑‑Secured creditor had preferential right‑‑­Such right could not be defeated by un‑secured creditor.

The Bank of Bihar v. The State of Bihar and others AIR 1971 SC 1210; Bank of India v. Messrs Binod Steel Ltd. and another AIR 1977 Madhya Pradesh 188 and The State Bank of Hyderabad v. Sucheela and others AIR 1980 Andhra Pradesh 1 rel.

(c) Contract Act (IX of 1872)‑‑‑

‑‑‑‑‑S.172‑‑‑Pledge of goods‑‑‑Essential ingredients stated.

The essential ingredients of the pledge are (1) there must be bailment of goods as defined in section 148 of the Contract Act i.e. delivery of goods, (2) bailment must be by way of security, (3) Security must be for payment of debt or performance of promise.

In order to constitute a valid pledge, what is essential is that there must be a delivery of the article, either actual or constructive, to the pawnee. Possession is an equivocal term; it may mean either mere' manual possession or the mere right to possession. Constructive delivery will be adequate to constitute a pledge, and it applies to all those cases, where the pledgor remains in possession of the goods under the specific authority of the pledgee or for limited purposes.

Nadar Bank Ltd. Madurai v. Canara Bank Ltd. and others AIR 1961 Mad. 326; Martin v. Reed (1862) 142 ER 982; Chitty on Contracts, Volume II, 21st Edn, Para.130 at page 73 and Messrs Capital Farms, Islamabad v. National Development Finance Corporation PLD 1996 Lah. 99 ref.

(d) Contract Act (IX of 1872)‑‑‑

‑‑‑‑‑S.172‑‑‑Pledge and ownership‑‑‑Distinction.

Pledge is the delivery of goods by the pledgor to the pledgee by way of security upon a contract that they shall, when the debt is paid or the promise is performed, be returned or otherwise disposed of according to the directions of the pledgor. A pledge would, therefore, create an estate, which vests in the pledgee, which is distinguishable from ownership, since an owner owns (a) the right of possession, (b) the right of enjoyment and (c) the right of disposition. But a pledgee does not have the right of ownership, though he has the right of pledge, which includes only the right of possession, but not the right of enjoyment. A pledgee has the right of disposition, which is limited to disposition of pledgee's rights only and of a sale only after notice and subject to certain limitations, as is clear from the various provisions of the Contract Act.

(e) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.172‑‑‑"Pledge of goods" (i.e. key loan system) and "hypothecation of goods" (i.e. open credit system)‑‑­Distinction and validity stated.

Equivalent terms for pledge and hypothecation prevalent in mercantile world are "key loan system" and "open credit system". The loans are advanced by bank to its customers in. said forms. In key loan system, the goods pledged are under the lock of the pledgee and the pledgor has no access to them, whereas in the open credit system, the goods pledged are in actual possession of the pledgor and the pledgee has no constructive possession over them. In the former system, the pledgor cannot deal with the goods, unless the pledgee gives their possession to him, whereas in the latter system, he has freedom to deal with them. In the open credit system, however, the formal character of pledge is maintained. The loan advanced on the basis of key loan system is also called loan by pledge of goods and the loan advanced on open credit system is also called factory type loan or loan on the basis of hypothecation.

Hypothecation and mortgage of movables are not specifically mentioned in the Contract Act. The Courts of Sub‑Continent had decided the rights based on hypothecation according to justice, equity and good conscience based on English Law, wherever such law is applied and it is only under this principle that the hypothecation or mortgage of movable property, although not specifically provided for in the Contract Act, are valid.

Hypothecation is a right in rem and nearer to mortgage of movables.

There is no difference in law with regard to the right of pledgee and hypothecatee, both are of the same nature. In former, the bank retains the manual possession, whereas in latter case, the bank remains in constructive possession, whereas manual possession remains with the borrower as agent of the Bank.

Messrs. Gopal Singh Hira Singh, Merchants v. Punjab National Bank and another AIR 1976 Delhi 115; Sir Hari Singh Gour in Law of Transfer, Volume, II, Sixth Edition and Nadar Bank Ltd. Madurai v. Canara Bank Ltd. and others AIR 1961 Madras 326 rel.

(f) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.6‑‑‑Contract Act (IX of 1872), S.172‑‑‑Companies Ordinance (XLVII of 1984), S.121‑‑‑Suit for recovery of loan amount‑‑‑Sale proceeds of stock‑in‑trade, entitlement to‑‑­Hypothecation of stock‑in‑trade in favour of plaintiff‑Bank and subsequent pledge of same stock by borrower in favour of intervenor‑Bank ‑‑‑Rule of priority, application of‑‑‑Both such charges were registered under S.121 of Companies Ordinance 1984‑‑‑Court attached such stock in suit filed by plaintiff‑Bank ‑‑‑Intervener‑Bank as pledgee sold such stock and claimed sale amount thereof‑‑‑Validity‑‑‑Mortgage or charge once registered under S.121(1) of Ordinance, 1984, then any person acquiring any interest in property Would be deemed to have notice of such charge from date of registration‑‑‑Equity would follow law and equitable encumbrances would rank as a rule according to date of their registration‑‑‑First grantee was potior, that is potentior, he had a better and superior right because of prior, equity‑‑­Plaintiff‑Bank was first in point of time, while intervenor­-Bank had acquired interest in stock by pledge on later date with notice of prior charge of plaintiff‑Bank‑‑‑Principle of equity enshrined in maxim "Qui prior est tempore potior est jure" (He has a better title, who was first in point of time would give priority to plaintiff‑Bank, who had a better and superior right on account of prior equity‑‑‑Plaintiff‑Bank was, held, to be entitled to sale amount under rule of priority over subsequent charge holder (i.e. intervenor­-Bank).

Noor Din v. Abdul Qayyum and another PLD 1979 Rev. 39 ref.

Bibhuti Bhusan Shome v. Baidya Nath Dey and another 40 C.W.N. 625 and Beddes v. Shamo 137 Ch. 81 rel.

A.I. Chundrigar for Appellant.

Sajid Zahid for Respondents.

Date of hearing: 23rd September and 2nd October, 2003.

2004 C L D 1509

[Karachi]

Before Sarmad Jalal Osmany and Amir Hani Muslim, JJ

POPULAR FOOD INDUSTRIES LTD. ‑‑‑Appellant

Versus

MAAZA INTERNATIONAL COMPANY LL. C and another‑‑‑Respondents

H.C.A. No. 127 of 2003, decided on 4th June, 2004.

(a) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.25‑‑‑Vested rights of registered trade mark owners‑‑‑Savings‑‑‑Proof of prior user‑‑‑Appellant company asserted that it had been the prior user of disputed trade mark since 1997 but failed to establish the same‑‑‑Effect‑‑‑Appellant having prima facie failed to establish its being prior user, it could not seek benefit of exceptions provided under S.25 of Trade Marks Act, 1940.

(b) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑S.23‑‑‑Specific Relief Act (I of 1877), S.54‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Interim injunction, appeal against‑‑‑Registered trade mark, infringement of‑‑‑Adoption of foreign trade mark‑‑‑Visual similarity in appearance of trade marks‑‑‑Plaintiff company claimed to be the proprietor of trade mark "MAAZA" as the same had been registered in its name and sought injunction against defendant company for the use of the said trade mark‑‑‑High Court, in exercise of original civil jurisdiction, granted interim injunction in favour of plaintiff company‑‑­Plea raised by defendant company was that it had adopted foreign trade mark‑‑‑Validity‑‑‑Plaintiff company in support of its claim had placed on record material which prima facie established its ownership over the trade mark‑‑‑Registration of trade mark, under S.23 of Trade Marks Act, 1940, was prima facie evidence of validity in all legal proceedings related to a trade mark and the registered trade mark could be exclusively used by its owner as long as such registration under Trade Marks Act, 1940, remained intact‑‑­Registered trade mark was a property and its evasion could be restrained under S.54 of Specific Relief Act, 1877, by injunctive order‑‑‑Infringement of a registered trade mark was recognized in law, if a party ,approaching the Court could establish its registered title besides the alleged infringement‑‑‑Law did not recognize adoption of foreign trade mark by a local company, which in the present case, the defendant company had done‑‑‑Nothing was available on record which could reflect that the defendant company at any point of time was in the business of soft drink and was the user of disputed trade mark‑‑‑Plaintiff company had established its proprietorship and had also placed on record substantial material in order to prima facie show that it had all intent to use the trade mark as the plaintiff company had invested huge amounts and had established a factory in Pakistan‑‑‑Plaintiff company had made out a prima facie case, the balance of convenience also rested in its favour‑‑­Defendant company had failed to show that it was entitled to be allowed to use the disputed trade mark of plaintiff company which was visually similar in appearance‑‑‑If injunction was not granted in the cases of such a nature, the goods of defendant company were bound to create confusion and deception amongst the consumers resulting in wrongful loss to the plaintiff company which the law did not permit‑‑‑High Court had rightly granted interim injunction in favour of plaintiff company‑‑‑Appeal was dismissed in circumstances.

Shahid Mirza v. Merloni Finanziaria S.P.A. PLD 1991 Kar. 425; Formica Corporation v. Pakistan Formica Limited 1989 SCMR 361; Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corpn. Ltd PLD 1971 SC 550; Bolan Bank Limited v. Baig Textile Mills (Pvt.) Ltd. 2002 CLD 557; Abdul Qadir v. Muhammad Azim 1980 CLC 612; Abdul Wasim v. Haico 2002 CLD 1623; Durafoam (Pvt.) Ltd. v. Vohra Enterprises (Pvt..) Ltd. 2002 CLD 1639; Solo Susice National Podnik v. Sindh Match Works (Pvt.) Ltd. 1991 CLC 37 and S.M. Taufiq v. National Biscuit Company PLD 1962 Kar. 355 ref.

Ms. Navin Merchant for Appellant.

Monawar Ghani for Respondent No. 1.

Dates of hearing: 24th, 25th, 31st March 2004, 1st, 8th 15th April 2004, 11th and 13th May, 2004.

2004 C L D 1711

[Karachi]

Before Muhammad Roshan Essani and Khilji Arif Hussain, JJ

SINDH TANNERIES LTD. and others‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN‑‑‑Respondent

First Appeal No.34 and C.M.A. No.937 of 2002, decided on 16th August, 2003.

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

‑‑‑‑Ss.9 & 21‑‑‑Civil Procedure Code (V of 1908), S.34‑B, O.XXI, R.23(2) & O.XXIII, R.3‑‑‑Suit for recovery of loan‑‑­Compromise decree, execution of‑‑‑Entitlement to mark‑up‑‑­Suit having been compromised, compromise decree was passed whereby plaintiff‑Bank was not entitled to charge mark‑up for the first four months and beyond said period Bank was entitled to charge mark‑up upon outstanding amount at the rate of 0.45 paisas per thousand per day‑‑­Defendant/borrower according to terms of compromise was liable to pay amount and mark‑up amount within period of 12 months from date of compromise decree‑‑‑Defendant having failed to pay amount, plaintiff‑Bank filed execution application to execute decree‑‑‑Application filed by defendants under O.XXI, R.23(2), C.P.C. having been dismissed by Banking Court, they had filed appeal against such order‑‑‑Defendant borrowers had contended that since decree was silent about the payment of future mark‑up, plaintiff‑Bank was not entitled to claim the same from defendant‑‑‑Validity‑‑‑Defendant in his application under O.XXI, R.23(2), C.P.C. had not raised question about charging of mark‑up, but had raised said question first time in appeal before High Court‑‑‑Defendant having not raised the point with regard to charging of mark‑up in his said application, Banking Court had not passed any specific order in that regard as to whether plaintiff‑Bank could charge mark‑up on decretal amount‑‑‑Terms of compromise decree, however, having provided that defendant was liable to pay mark‑up excluding first four months on outstanding amount for remaining period, defendant was liable to pay and plaintiff‑Bank was entitled to recover decretal amount and outstanding amount of mark‑up of remaining period through sale of mortgaged property.

Messrs Saudi‑Pak IAIC (Pvt.) Ltd. v. Allied Bank of Pakistan 2003 CLD 596 ref.

Rizwan Ahmed Siddiqui for Appellants.

Shafqat Ali Mahesar, O. G. II for Respondent.

Date of hearing: 29th May, 2003.

2004 C L D 1723

[Karachi]

Before Muhammad Moosa K. Leghari, J

ADDITIONAL REGISTRAR OF COMPANIES, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN‑‑‑Petitioner

Versus

Messrs PAKISTAN NORTHERN INSURANCE COMPANY LIMITED‑-Respondent

J. Misc. Application No. 58 of 2003, decided on 21st May, 2004.

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

‑‑‑‑Ss. 305 & 309(b)(c)‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.20(4) & Sched. Clause 23‑‑‑Petition for winding up by Registrar of Companies‑‑‑Default in holding two consecutive Annual General Meetings, prolonged nonfunctioning of company and mounting of losses‑‑‑Commissioner granted sanction for filing such petition after service of show‑cause notice on Company and granting two adjournments to its Advocate, which were not availed of‑‑‑Validity‑‑‑Company, despite service of show‑cause notice, had neither opted to reply same nor availed opportunity provided by Commissioner‑‑­Company, thus, could not plead non‑providing of opportunity of hearing before passing such order, of sanction and absence of knowledge about allegations required to be clarified‑‑-Company had admitted charges levelled in show­-cause notice by advancing pretext of unavoidable circumstances‑‑‑Commissioner had passed order of sanction for filing such petition by giving cogent reasons after scrutinizing record and discussing affairs of company‑‑‑High Court directed company to be wound up in accordance with provisions of Companies Ordinance, 1984.

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

‑‑‑‑S. 309(b)(c)‑‑‑Petition for winding up by Registrar of Companies‑‑‑Sanction by Authority for filing such petition, grant of‑‑‑Prior service of show‑cause notice on company‑‑­purpose stated.

The purpose of serving a show‑cause notice and the logic behind that is manifestly to bring into the knowledge of, the person concerned the allegations; which he was required to explain and provide the person/party charged with certain acts of omissions and commissions, an occasion to enable it to vindicate its position vis‑a‑vis the charges/ allegations. In case a party is offered an opportunity of hearing and showing cause, but party itself chooses not to avail that opportunity, none else can be blamed and/or held responsible for the eventualities and the consequences.

S.M. Aamir Naqvi for Petitioner.

Jhamat Jethanand for Respondent.

Date of hearing: 12th May, 2004.

2004 C L D 1733

[Karachi]

Before Muhammad Moosa K. Leghari, J

INVESTMENT CORPORATION OF PAKISTAN and others‑‑‑Petitioners

Versus

Messrs AJAX INDUSTRIES‑‑‑Respondent

J.M. No. 143 of 1995, decided on 19th May, 2004.

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

‑‑‑‑Ss. 305(e) & 306(a)‑‑‑Failure of company to pay undisputed debts within 30 days of service of statutory notice of demand by creditor‑‑‑Condition precedent for passing order of winding up of company.

1990 CLC 1030; PLD 1973 Lah. 60; PLD 1985 Kar. 193; 1989 MLD 374; 1970 SCMR 184; 1997 CLC 230; PLD 1992 Kar. 249; 1989 CLC 1167 and PLD 1971 Kar. 597 ref.

PLD 1990 SC 768; 1992 SCMR 1006; re: Imperial Hydropathic Hotel Co. 49 IT 147 and re: European Life Assurance Society (1869) TX IR (Equity Cases) 122 rel.

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

‑‑‑‑Ss. 305(e) & 306(a)‑‑‑Notice by creditor demanding payment of debt from company‑‑‑Essential contents‑‑‑Service of notice on company‑‑‑Burden of proof‑‑‑Lack of service of notice or any defect in notice would render winding up proceedings non‑maintainable‑‑‑Principles.

In case of denial of debt by company, it is incumbent upon the creditor to prove the service of notice. Notice under section 306(a) of Companies Ordinance, 1984 is a highly formal and important document, which must be clear and unambiguous and should unequivocally state that the person sending the notice is a creditor of the company demanding as specific amount of money from the company. Any defect in the notice or lack of service of notice will render the winding up proceedings on this ground ab initio defective for a logical reason that it imposes a penal obligation upon the company and, therefore, has to be strictly construed. Where no demand notice is served upon company by its creditor, then petition for winding up would be rendered untenable.

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

‑‑‑‑S. 309‑‑‑Civil Procedure Code (V of 1908), O.XXIX, R.1‑‑­Petition for winding up of company by its creditor (a Banking Company)‑‑‑Nothing on record was available to show that Board of Director of petitioner's Bank had taken any decision to initiate such proceedings and that signatories of petition claiming to be officers of bank had been duly authorized by Bank to sign and verify pleadings and institute such petition on behalf of Bank‑‑­High Court dismissed such petition being not maintainable.

PLD 1971 SC 550; PLD 2003 Kar. 156; 2002 CLD 1665 and PLD 1991 Lah. 381 ref.

Abdul Razzak for Petitioners.

Raja Qasit Nawaz for Respondent.

Date of hearing: 26th April, 2004.

2004 C L D 1

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

INTERNATIONAL MULTI LEASING COMPANY‑‑‑Appellant

Versus

CAPITAL ASSETS LEASING CORPORATION LIMITED and another‑‑‑Respondents

Intra‑Court Appeal No. 14‑L of 2003, decided on 25th November, 2003.

(a) Appeal‑‑‑

‑‑‑‑ Appeal is only a step in the proceedings which is not a matter of mere procedure, but a substantive right which has to be presumed till the rest of the career in litigation‑‑‑Right of appeal becomes vested as soon as an action commences‑‑‑Such right can only be extinguished if the Legislature expressly so provides or the conclusion of extinction can be justified on the doctrine of necessary intendment.

Abdul Majid Ahmed Bawany v. III Sindh Labour Court PLD 1979 Kar. 549 ref.

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

‑‑‑‑Ss. 284 & 287‑‑‑Interpretation of Ss. 284 & 287, Companies Ordinance, 1984‑‑‑Arrangement in the nature of amalgamation/merger of companies‑‑‑Concept‑‑ Application for merger/amalgamation of two companies could be entertained under S.287 of the companies Ordinance, 1984 without meeting the requirements of S.284 of the said Ordinance‑‑‑Principles.

An arrangement in the nature of amalgamation is the result of an agreement between the amalgamating company and its members, as well as a corresponding agreement between the transferee‑company and its members, and the result of amalgamation is the absorption of one company with another, or by merger of the two to create the third. In other words, amalgamation of a company with another or an amalgamation of two companies to form a third is brought about by two parallel schemes of arrangements entered into between one company and its members and the other company and its members and the two separate arrangements bind all the members of the companies as well as the companies themselves, when sanctioned by the Court. Amalgamation is, therefore, an absorption of one company into another or merger of both to form a third, which is not a mere act of the two companies or their members but is brought about by virtue of a statutory instrument and to that extent has statutory genesis and character, and to that extent it is distinguishable from a mere bilateral arrangement to merge or join in a common endeavour, undertaking or enterprise. In the instant case, it was undoubtedly an arrangement between the transferee­ company and its members, because the transferee‑company was taking not only the assets and liabilities of the transferor­company, but also inducting more shareholders. As far as the question of amalgamation is concerned, both the companies stood on the same footing because the two companies were amalgamating and forming into one company, though with a different name. Doubtless, in view of the language employed in section 287, on the principle of legislation by reference, the words "its creditors or any class of them, or between the company and its members or any class of them" as used in section 284(1) must be imported into section 287(1) and substituted in place of the words "and any such person as are mentioned in that section" occurring between the word "company" and the word "and". Even after import of the said words of section 284 into section 287, the plain reading of section 287 means that any scheme of compromise or arrangement for amalgamation of any two or more companies must be between the company and its creditors or any class of them, or between the company and its members or any class of them. It is a cardinal principle of interpretation of statutes that if the language is clear and admits of neither any ambiguity nor more than one meaning, the same has to be given effect to without adding any words thereto or subtracting any words therefrom. The Legislature has not deemed fit to impose any limitation in terms, and there is no reason for implying any. There is inherent evidence in sections 284 and 287, read together, to find out who can move the Court to consider a scheme of compromise or arrangement, inter alia, for the purpose of merger/amalgamation of two or more companies. Subsection (1) of section 284, in no uncertain terms, provides that an application can be made by the company or a creditor of the company, or a member of the company, or, in the case of winding up, by the liquidator. The Legislature having carefully enacted sections 284 and 287 conferred power on specified persons to move the Court. If the Legislature wanted to disqualify two distinct companies from invoking jurisdiction of the Court under section 287, one would have expected clear exposition of legislative intendment in section 287. There being no ambiguity in the provisions of section 287, nothing more can be read in it than what is stated therein. Any attempt at mutilating it would tantamount to doing violence to the plain, clear and unequivocal language of section 287. Therefore, the contention that an application of merger/amalgamation of two companies could not be entertained under section 287 without meeting the requirement of section 284, has no merit.

(c) Interpretation of statutes‑‑‑

‑‑‑‑ If the language of the enactment is clear and admits of neither any ambiguity nor more than one meaning, the same has to be given effect to without adding any words thereto or substracting any words therefrom.

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

‑‑‑‑Ss.284 & 287‑‑‑Civil Procedure Code (V of 1908), O.I, R.1‑‑­Petition for merger/amalgamation of two companies‑‑‑Joint petition by both the companies for such purpose was competent.

Mohan Exports Lundai Ltd. In re: (1999) 95 Comp. Cas. 53 ref.

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

‑‑‑‑S.282‑L [as added by Companies (Second Amendment) Ordinance, 2002], Ss.284 to 287‑‑‑Petition for merger amalgamation of two companies‑‑‑Power conferred on Security Exchange Commission of Pakistan under S.282‑L, Companies Ordinance, 1984 is in addition to, and not in derogation of the powers of the "Court" under Ss.284, 285, 286 & 287 of the Companies Ordinance, 1984‑‑‑Jurisdiction of High Court remains intact, notwithstanding the insertion of S.282‑L, in the Companies Ordinance, 1984 by the Companies (Second Amendment) Ordinance, 2002‑‑‑In the absence of an express provision, or an obvious legislative intendment, that the proceedings already pending before the Company Judge of High Court stood transferred to the Security Exchange Commission of Pakistan, petition was rightly dealt with by the Company Judge‑‑‑Principles.

Ardheshir Cowasje and others v. K.B.C.A. and others 2001 YLR 2403; Asghar Ali v. Additional District Judge, Ferozewala 2003 YLR 1618; National Bank of Pakistan v. Taj Muhammad PLD 1984 Lah. 417; Muhammad Ali v. State PLD 1980 Lah. 195; Alaf Din v. Shaukat Ali PLD 1969 Pesh. 62; Muhammad Bashir and 2 others v. Muhammad Firdous and another PLD 1988 SC 232; Malik Gul Hassan & Co. v. Allied Bank of Pakistan 1996 SCMR 237; Muhammad Ishaq v. The State PLD 1956 SC 256, State v. Maulvi Muhammad Jamil and others PLD 1965 SC 681; Abdul Rehman v. Settlement Commissioner PLD 1966 SC 362; Adnan Afzal v. Capt. Sher Afzal PLD 1969 SC 187; Ch. Safdar Ali v. Malik Ikram Elahi & another 1969 SCMR 166; Hafiz Muhammad Abdullah v Imdad Ali Shah and another 1972 SCMR 173; Bashir v. Wazir Ali 1987 SCMR 978; Mst. Yasmin Nighat and others v. National Bank of Pakistan and others PLD 1988 SC 391; Habib Bank Ltd. v. Messrs Aulia Engineering and others 1993 CLC 154; Office Reference No. 259 of 1974 and others PLD 1994 Kar.258; Aftabuddin Qureshi and others v. Mst. Rachel Joseph PLD 2001 SC 482; The Colonial Sugar Refining Company Limited v. Irving 1905 AC 369; Joseph Suche & Company Limited (1875) 1 Ch. D. 48; State v. Maulvi Muhammad Jamil and others PLD 1965 SC 681 and Mst. Nasira Khatoon and another v. Mst. Aisha Bai and 12 others 2003 SCMR 1050 ref.

(f) Interpretation of statutes‑‑‑

‑‑‑‑ If the words of the Statute are in themselves precise and unambiguous, no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case, best declaring the intention of the Legislature‑‑­Language of a Statute cannot be strained to make it apply to a case to which it does not apply.

Ardheshir Cowasje and others v. K.B.C.A. and others 2001 YLR 2403 ref.

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

‑‑‑‑S. 282‑L [as added by Companies (Second Amendment) Ordinance, 2002]‑‑‑Object of enactment of S.282‑L, Companies Ordinance, 1984 detailed.

Incorporation of Leasing Companies, beyond a reasonable size, had to be taken care of, firstly by the Corporate Law Authority and then by the Security and Exchange Commission of Pakistan, by framing Rules regulating their working. Section 282‑L, appears to have been enacted so that in view of the increase in the paid‑up share capital of leasing companies to Rs.200 million, a large number of such companies may not be in a position to make good the deficiency and, per force, will have to resort to merge amalgamation with each other and to meet with the requirements of the Rules, another forum was provided. Such view is fortified by the fact that in the Amending Ordinance, there is no provision for transfer to the SECP the proceedings pending in the Court on 15th of November 2002 when Chapter VIII‑A, containing section 282‑L, was inserted in the Companies Ordinance, 1984.

There is yet another aspect of the matter. Whereas the regulatory and, if one may say so, disciplinary powers qua Non-­Banking Financial Companies, including leasing companies have been entrusted to the care of SECP, the more stringent powers of winding‑up of NBFCs, restoration of illegal benefits and gains derived and properties acquired by any person, being the Chairman, Director, Chief Executive, Official Liquidator or any officer of a NBFC whether in his own name or in the names of his family members, by mismanaging the affairs of the NBFC or misusing his position, and trial of offences and consequent punishment in the form of imprisonment or fine, still remain vested in the Court, particularly in view of the provisions contained in sections 282‑J(3) and 282‑K(1) and (3) of Chapter VIII‑A itself.

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

‑‑‑‑S.284(2)‑‑‑Amalgamation/merger of two companies‑‑‑Three fourth majority of the creditors or members prescribed by S.284(2), Companies Ordinance, 1984 has no reference to the total number of creditors or members, but is referable to those who are present at the meeting and are voting‑‑‑Even a member who, though present at the meeting does not vote for or against, but remains neutral, is not to be taken into consideration.

Hindusthan General Electronic Corporation Ltd. In re: AIR 1959 Cal. 1079 and Hindusthan Commercial Bank Ltd. v. Hindusthan General Electric Corporation Ltd. AIR 1960 Cal. 637 ref.

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

‑‑‑‑Ss.284, 287, 286(1) & 160(1)(b)‑‑‑Companies (Court) Rules, 1997, Rr.55, 56 & 58(b)‑‑‑Petition for merger/amalgamation of two companies‑‑‑Duty of Court‑‑‑Companies, in the present case had followed the procedure and taken all the steps in accord with the provisions of S.286, Companies Ordinance, 1984 and Rr.55, 56 & 58(b) of the Companies (Court) Rules, 1987‑‑‑When the Scheme for merger/amalgamation was approved by overwhelming majority of the members of the two companies, participating either personally or by proxies in the Extraordinary General Meetings convened separately of the two companies for the purpose of considering the Scheme, all that the Court was to examine was whether the provisions of the Companies Ordinance, 1984 and the Rules had been complied with that the statutory majority was acting bona fide; that the arrangement was reasonably fair and that the circumstances prevailing at the time when the members shareholders considered the scheme, justified approval thereof and there was no better option for them‑‑‑Court was not to examine the Scheme in the manner a businessman of astute power of judgment would do till such time the order was passed by the Court sanctioning the Scheme. In the present case, no one from the appellant‑company came forth to object to the Scheme on the ground of being not commercially sound, even when the application was filed the appellant could not lay hands on a shred of evidence, except bald allegations‑‑­Question as to how much shares should have been allotted by the transferee company to the existing members of the transferor company and in what ratio or proportion to their existing holding, under the Scheme of amalgamation, was a matter entirely between the two Companies and their members, there being no occasion for the Court to intermeddle with their affairs, once the Scheme was passed by the statutory majority more significantly when none had come forward to object to the same.

Madan Gopal v. Peoples Bank of Nothern India Ltd. AIR 1935 Lah. 779: Brook Bond Pakistan Limited and another v. Aslam Bin Ibrahim and another 1997 CLC 1873; Sidhpur Mills Co. Ltd., In re AIR 1962 Guj. 305 and Navjivan Mills Co. Ltd. Kolal, In re (1972) 42 Comp. Cas. 265 ref.

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

‑‑‑‑Ss. 284 & 287‑-Petition for amalgamation/merger of two companies ‑‑‑Difference in the market value of the shares of the two companies‑‑‑Determination‑‑‑Principle‑‑‑Where both the Companies were living and working Companies and their shares were quoted at the stock exchange, the price fluctuations would have been the indicator of commercial judgment of the community about the value of the shares of both the Companies‑‑‑If the transferor or transferee Company's shares had a Stock Exchange quotation, dealing price over a period shortly before the transferee company's offer was announced that would usually be taken as the measure of their value‑‑‑Suspicion, conjectures or mere surmises could not take the place of legal evidence of price of shares.

In re: Press Caps. Ltd. (1949) 1 All ER 1013 = (1949) Ch. 434 and Panningoton in his Company Law, Second Edn., p.59 ref.

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

‑‑‑‑Ss. 284 & 287‑‑‑Petition for amalgamation/merger of two companies‑‑‑Allegations of fraud and misrepresentation‑‑‑When fraud or misrepresentation is alleged in the pleadings; particulars thereof must be given so that the other party was put on guard to answer the same specifically‑‑‑Criteria to prove an allegation of concealment of material facts which may tantamount to fraud, laid‑‑‑Where there was nothing on record to bring home the allegation of fraud or misrepresentation to the respondent­ Company, plea of fraud and misrepresentation would fail.

When fraud or misrepresentation is alleged in pleadings, particulars thereof must be given so that the other party is put on guard to answer the same specifically. Criteria to prove an allegation of concealment of material facts which may tantamount to fraud supplied.

The concealment of material facts by a person having knowledge or belief of such facts may constitute fraud but the same must be proved through clear and convincing evidence and the burden of proof of fraud would lie on the party which alleges fraud except in a case in which the fraud is floating on the face of the record. The active concealment and suppression of facts in words and deeds is an essential ingredient of fraud which cannot be inferred by mere assertion rather it must be proved through strong, independent, clear and convincing evidence and the burden would be more heavier in the cases in which a long period has passed since passing of the decree or judgment under which valuable rights have accrued in favour of the opposite party; there can be no exception to the rule of law that without bringing the essential facts on the record and the evidence in proof of the fraud the plea of ignorance and lack of knowledge simpliciter would not be sufficient to constitute fraud and dislodge the sanctity attached with the official acts and judicial proceedings. The fraud undoubtedly vitiates solemn proceedings and time would not sanctify an action of fraud and misrepresentation but no inference of fraud can be drawn merely on the basis of an oral assertion in absence of any proof of the allegation of fraud. The party having taken plea of fraud was under heavy burden to substantiate the allegation of fraud through clear and convincing evidence.

Not an iota of evidence was available that the respondent‑Company had in any manner duped the appellant-­Company either by fraud, misrepresentation or by concealment of any relevant factor. Thus the plea of fraud and misrepresentation failed.

Mst. Nasira Khatoon and another v. Mst. Aisha Bai and 12 others 2003 SCMR 1050 and Dadabhoy Cement Industries Ltd. v. N.D.F.C: 2002 CLC 166 ref.

(l) Fraud‑‑‑

‑‑‑‑When fraud or misrepresentation is alleged in the pleadings, particulars thereof must be given so that the‑other party was put on guard to answer the same specifically‑‑‑Criteria to prove an allegation of concealment of material facts which may tantamount to fraud, laid.

Mst. Nasira Khatoon and another v. Mst. Aisha Bai and 12 others 2003 SCMR 1050 ref.

(m) Companies Ordnance (XLVII of 1984)‑‑‑

‑‑‑‑S.284‑‑‑Leasing Companies (Establishment and Regulation) Rules, 2000, Rr. 7 & 5‑‑‑Amalgamation/merger of two Companies‑‑‑Under an amalgamation, merger or take over, two or more companies are merged either de jure by a consolidation of their undertaking or de facto by the acquisition of a controlling interest in the share capital of one by the other or of the capital of both by the new Company‑‑‑Arrangements covered by S.284, Companies Ordinance, 1984 are of widest character ranging from simple composition or moratorium to an amalgamation of two or more Companies in one, including re‑organization of their share capital ‑‑‑Principles.

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

‑‑‑‑S.284‑‑‑Scheme for amalgamation/merger‑‑‑Such Scheme which had been approved by the requisite statutory majority of three fourth of the members present and voting could not be objected to by the members/shareholders participating in the meeting and voting in favour of the Scheme or even by a dissenting member/shareholder/creditor or by the company itself‑‑‑Held, that after the Scheme had been passed by a majority in number representing three fourth in value of the creditors or class of creditors, or members, as the case may be, present and voting either in person or, where proxies were allowed, by proxy at the meeting, then, irrespective of the question whether they had expressly consented to it or not, neither members/shareholders/creditors nor even the company could back out or go back upon the Scheme.

Dr. S. B. Mathur v. India Porcelain Ltd. and another (1956) 26 Comp. Cas. 161; Vasant Investment Corporation Ltd. v. Official Liquidator, Colaba Land and Mill Co. Ltd. (1981) 51 Comp. Cas. 20 and Centron Industrial Alliance Limited v. Pravim Kantilal Vakil and another (1984) 55 Comp. Cas. 731 ref.

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

‑‑‑‑S.284‑‑‑Scheme for amalgamation/merger‑‑‑Sanctity attached to such Scheme which has been validly sanctioned by the Court under Part IX, Companies Ordinance, 1984‑‑‑Extent‑‑‑When the Scheme is sanctioned by the Court, it does not merely operate as an agreement between the parties, and the matter goes beyond the domain of contract, it becomes an order of the Court, has the force of judicial pronouncement and it assumes statutory force and is binding not only on the members/creditors and the Company but also on the dissenting creditors and members, as the case may be.

Calgary and Edmonton Land Co. Ltd., In re: [(1975) All. ER 1046; Mahigang Loan Office Limited v. Behari Lal Chaki AIR 1937 Cal. 507; Krishna Nath v. Dinajpur Loan Office (1938) 8 Comp. Cas. 152; Srimati Premila Devi v. Peoples Bank of Northern India, Ltd. (on Liquidation) AIR 1938 PC 337; Navjivan Mills Co. Ltd., Kalol, In re: (1972) 42 Comp. Cas. 265; U.K. (Bombay) P. Ltd. v. New Kaiser‑I‑Hind Spg. & Wvg. Co. Ltd. and others (1970) 40 Comp. Cas. 689 and Vasant Investment Corporation Ltd. v. Official Liquidator, Colaba Land and Mill Co. Ltd. (1981) 51 Comp. Cas. 20 ref.

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

‑‑‑‑S.284‑‑‑Amalgamation/merger of two companies duly sanctioned by the Court‑‑‑Company, which merged into the new Company had lost its entity as a juristic person after the sanction of the Scheme of arrangement for its merger/amalgamation with the other company, and a third company having come into existence, in particular after the order of sanction had been filed with the Registrar of Companies, no proceedings could thereafter be instituted in the name of the merged company.

General Radio and Appliances Co. Ltd. and others v. M.A. Khader AIR 1986 SC 1218, Sarswati Industrial Syndicate Ltd. v. Commissioner of Income Tax, Haryana, Himachal Pradesh and Delhi III (1991) 70 Comp. Cas. 184 and Data Computer Services v. Northern Digital Exchanges Ltd. (1998) 92 Comp. Cas 362 ref.

(q) Jurisdiction‑-‑

---Party having himself approached the Court is debarred to challenge its jurisdiction after the decision had been rendered against him.

Muhammad Ali v. State PLD 1980 Lah.1 95; Riazuddin v. Haji Muhammad Aslam and 2 others PLD 1985 Kar. 411; Sajjad Hussain v. Musarrat Hussain Shah 1989 SCMR 1826; Ghulam Ali v. District Judge, Lahore and others 1994 MLD 720; Maulvi Noor Muhammad and 3 others v. State 2000 PCr.LJ 1583; Pir Sabir Shah v. Shad Muhammad Khan, Member, Provincial Assembly, N.‑W.F.P. and another PLD 1995 SC 66; Nazar Hussain v. Faqir Muhammad 1974 SCMR 188; Anwar‑ullah Khan (A. Khan) v. Chotey Khan 1978 SCMR 14; Haji Muhammad Asghar v. Malik Shah Muhammad Awan and another PLD 1986 SC 542; Federation of Pakistan through Secretary, Ministry of Works, Government of Pakistan, Islamabad v. Mrs. Musarrat Bokhari and another 1993 CLC 2519; North‑West Frontier Province, Peshawar through Collector, Abbotabad and another v. Abdul Ghafoor Khan through Legal Heirs and 2 others PLD 1993 SC 418; Ch. Haq Nawaz Chohan v. Ch. Tariq Azam and 43 others 1994 CLC 1530; Khooshamonai Tribe of Samagole, Tehsil Morkeh, District Chitral through representative v. Provincial Government of N.­W.F.P. through Additional Secretary, Government of N.‑W.F.P., Home and Tribal Affairs Department, District Courts, Peshawar and 3 others 2000 SCMR 1657; Federation of Pakistan v. Amir Hamza 2001 SCMR 1959 and Abdul Ali v. Haji Bismillah 2002 SCMR 2003 ref.

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

‑‑‑‑S.10‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑‑Intra‑Court appeal‑‑Limitation‑‑‑Appeal against original order being beyond limitation, appellant could not take advantage of the order passed in a miscellaneous application in the case.

Ghulam Hussain and another v. Kanwer Ashiq Ali Khan and another PLD 1980 SC 198; Lahore Development Authority v. Fahmeeda Khatoon and others 1986 SCMR 1478; Khawaja Muhammad Afzal and another v. Sh. Muhammad Sadiq and others 1988 SCMR 179; Cantonment Board, Rawalpindi v. Muhammad Sharif through Legal Heirs PLD 1995 SC 472 and Khurshid Alam and 2 others v. Government of the Punjab and 6 others PLD 1998 Lah. 189 ref.

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

‑‑‑‑Ss.284 & 10(3)‑‑‑Civil Procedure Code (V of 1908), Ss. 12(2) & 151‑‑‑Code of Civil Procedure (Amendment) Ordinance (X of 1980), S.15‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑­Amalgamation/merger of two Companies duly sanctioned by the Court‑‑‑Application alleging fraud and misrepresentation by one of the Companies so merged‑‑‑Contention of the respondent­-Company was that appeal against the order on the said application was not maintainable even if the said application was treated as review petition or an application under S.12(2), C.P.C. or the one‑under S.151, C.P.C.‑‑‑Validity‑‑‑Held, every Court, Tribunal or Authority, who had passed an order could recall the said order if the same lacked inherent jurisdiction or the same had been procured through fraud and misrepresentation ‑‑‑Appealability of an order was not to be seen with reference to the provisions of C.P.C. because of specific provision in the form of S.10(3) of the Companies Ordinance, 1984‑‑‑Even an interim order passed in exercise of original civil jurisdiction was appealable before a Bench of two Judges‑‑‑Order whereby application of the appellant‑Company was dismissed and application of the respondent‑Company was allowed was therefore; appealable under S.10(3) of the Companies Ordinance, 1984.

Muhammad Fazil v. Chief Settlement Commissioner PLD 1975 SC 331 ref.

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

‑‑‑‑Ss.285 & 284‑‑‑Petition for amalgamation/merger of two Companies‑‑‑Powers of Court‑‑‑Court sanctioning the Scheme of amalgamation/merger of the Companies was conferred with plenary powers not only to give directions, but it could also make modifications in the Scheme for its proper working.

S.M. Yusuf & Brothers v. Muhammad Mehdi Pooya PLD 1965 SC 15; Mahigang Loan Office Ltd. v. Behari Lal Chaki AIR 1937 Cal. 667; Comrade Bank Ltd. In re: PLD 1957 Dacca 554; Mansukhlal v. M. V. Shah, Official Liquidator, Liquidator of Hathising Mfg. Co. Ltd. (in, Liquidation) and others (1976) 46 Comp. Cas. 279; Ram Lal Anand v. Bank of Baroda and others (1976) 46 Comp.; Cas. 307; Dr. Ved Mitra v: Globe Motors Ltd. (1978) 48 Comp. Cas. 64; S.K. Gupta and another v. K.P. Jain and another (1979) 49 Comp. Cas. 342 and Mysore Electro Chemical Works Ltd. v. Income Tax Officer, Circle‑I, Bangolre (19821) 52 Comp. Cas. 32 ref.

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

‑‑‑‑Ss.284 & 285‑‑‑Amalgamation/merger of two Companies‑‑­Application for recalling of the order whereby the Scheme for merger/amalgamation of the two Companies was sanctioned‑‑­"Chief Executive" of the Company moving said application by means of resolution had not been authorized to file the application, therefore, he was only an eminense guise‑‑­Principles.

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

‑‑‑‑Ss.10, 284 & 287‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑‑Civil Procedure Code (V of 1908), O.XLI, R.27‑‑‑Intra‑Court appeal‑‑‑Amalgamation/merger of two Companies‑‑‑Dismissal of application for recalling the order of sanctioning the amalgamation/merger of the Companies on the ground of fraud and misrepresentation‑‑‑Production of fresh additional evidence at the Intra‑Court appeal stage‑‑‑Validity‑‑‑Appellant, in the present case, had ample opportunity of producing documents, which were indisputably in its possession, but it elected not to do so, rather rested its case on the application as it stood‑‑­Appellant, in circumstances, ought not be allowed to tender documents sought to be produced at the stage of Intra‑Court Appeal by means of miscellaneous application, at the fag end of the arguments‑‑‑Parties, under O.XLI, R.27, C.P.C. were not entitled to produce additional evidence, whether oral or documentary, in the Appellate Court‑‑‑Principles.

By means of miscellaneous applications, the appellant in the present case had attempted, during the course of hearing of intra Court appeal, to bring on record certain documents to show that after the impugned orders had been passed, the financial health of the respondent‑company had suffered adversely, as per latest Balance‑Sheet. If the appellant could be permitted to introduce fresh evidence, particularly the one which had come into existence after the decision by the Company Judge, it would be opening a Pandora's box and there will be no end to litigation.

Since the appellant, in the present, case, had ample opportunity of producing documents, which were indisputably in its possession, but it elected not to do so, rather rested its case on the application as it stood, he ought not to be allowed to tender documents sought to be produced now before the appeal Bench by means of miscellaneous applications, at the fag end of the arguments in the appeal. Parties are not entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. Additional evidence at appellate stage can be received only if it is deemed essential for pronouncing the judgment, and the material already on record being not sufficient to enable the Appellate Court to come to a definite conclusion.

If the evidence could have been tendered in the lower Court it was not a substantial cause for producing it in appeal.

When a person has not pleaded something and has not built up his case on the specific assertion before the Company Judge, he is precluded from taking such a plea before the Appellate Forum in Intra‑Court Appeal.

Kassowji Issur v. G.I.G., Railway 34 IA 115 and Hakim Ali v. Member, Power, WAPDA PLD 2002 Lah. 28 ref.

M. Saleem Sahgal for Appellant.

Munawar‑us‑Salam for Respondent No. 1.

Abid Hussain Chattha and Faisal Maalik Buttar for Respondent No. 2.

Dates of hearing: 16th September, 2nd, 6th, 9th, 13th, 15th, and 20th October, 2003.

2004 C L D 87

[Lahore]

Before Ch. Ijaz Ahmad and Bashir A. Mujahid, JJ

HABIB BANK LIMITED‑‑‑Appellant

Versus

IQTIDAR HUSSAIN SHAH and another‑‑‑Respondents

Regular First Appeal No.42 of 1997, heard on 10th September, 2003.

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

‑‑‑‑Ss.5, 9, 10 & 22‑‑‑Suit for recovery of amount decreed by Banking Tribunal‑‑‑Past and closed transaction‑‑‑Suit filed by plaintiff‑Bank against defendant borrower was decreed by Banking Tribunal on 9‑6‑1996‑‑‑Banking Tribunal having decreed the suit without granting mark‑up in terms of agreement arrived at between the parties, Bank filed appeal before High Court against the judgment and decree of the Banking Tribunal‑‑­Defendant resisted appeal filed by Bank contending that decree passed by Banking Tribunal was saved on the principle of "past and closed transaction" as held by Full Bench of High Court in PLD 1996 Lah. 672‑‑‑Validity‑‑‑Judgment and decree in the present case were passed before rendering of the judgment of Full Bench dated 21‑7‑1996 as the decree was passed on 9‑6‑1996 and was challenged by plaintiff through filing of appeal‑‑‑Decree under appeal, in circumstances did not fall within the terms past and closed transactions' and was not saved within ambit of the judgment of Full Bench‑‑ Appeal filed by the Bank was accepted and judgment and decree dated 9‑6‑1996 passed by Banking Tribunal was set aside with the result that suit filed by Bank would be deemed to be pending before newly‑constituted Banking Courts established under S.5 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and Banking Court would decide the suit afresh after hearing parties in accordance with provisions of the said Ordinance.

Messrs Chenab Cement Products (Pvt.) Limited and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672; Syed Farasat Ali Shah v. Allied Bank of Pakistan Limited 2002 CLD 759 and Aman Ullah Khan v. National Bank of Pakistan 2002 CLD 950 ref.

Mian Nasir Mahmood for Appellant.

Rai Muhammad Tufail Kharal for Respondent No. 1.

Nemo for Respondent No.2.

Date of hearing: 10th September, 2003.

2004 C L D 92

[Lahore]

Before Ch. Ijaz Ahmad and Bashir A. Mujahid, JJ

NAWAZISH LATIF BHATTI‑‑‑Appellant

Versus

ALLIED BANK OF PAKISTAN, LTD.,‑‑‑Respondent

Executive First Appeal No.356 of 2003, heard on 18th September, 2003.

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

‑‑‑‑S.19‑‑‑Stay of execution proceedings in view of incentive scheme announced by the Bank‑‑‑Validity‑‑‑Such Scheme was of a nature of a contemplated adjustment by lending Bank with a borrower under directive of the State Bank‑‑‑Execution proceedings could not be stayed only in contemplation of a settlement.

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

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), O. XXI, Rr. 54 & 66‑‑­Execution of decree‑‑‑Attachment and sale of property‑‑­Judgment‑debtor, after his service by affixation, executed agreement in favour of Bank, but he failed to satisfy decree as per its terms‑‑‑Banking Court dismissed objection petition of judgment‑debtor without requiring Bank to file reply thereto‑‑­Validity‑‑‑Process‑Server's report revealed that the notice had been pasted at outer door of the judgment‑debtor‑‑‑Provision of O.XXI, R.54 was not mandatory in nature and substantial compliance thereof had ,been made‑‑‑Banking Court, in view of conduct of judgment‑debtor, was justified not to direct Bank to file reply to objection petition‑‑‑High Court dismissed appeal in circumstances.

Narsingh Das v. Mangal Dubev and others ILR 5 All. 163; Gauri v. UDE and others AIR 1942 Lah. 153; Messrs Chawla International v. Habib Bank Ltd. 2003 CLD 956; Gopal Chandra v. Ramesh Chandra and another PLD 1961 Dhaka 492; Sikandar Ali v. The State 1999 MLD 212; Shaukat Ali Mian v. Trust Leasing Corporation through its Chief Executive and 4 others 2002 CLD 1071 and Messrs Ripple Jewellers Pvt. Ltd. v. First Women Bank 2003 CLD 1318 ref.

Ghulam Rasool's case PLD 1971 SC 376; Gopal Lal Chandra v. Amulya Kumar AIR 1933 Cal. 234; State Life Insurance Corporation of Pakistan Ltd. v. Dr. A.M.J. Sherazee and 9 others PLD 1983 Kar. 112 and Syed Ashad Ali Sadiq v. Pakistan International Airlines Corporation 1992 CLC 1323 rel.

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

‑‑‑‑O.XXI, R.54‑‑‑Provision of O.XXI, R.54, C.P.C., not mandatory in nature‑‑‑Substantial compliance thereof would be sufficient.

State Life Insurance Corporation of Pakistan Ltd. v. Dr. A.M.J. Sherazee and 9 others PLD 1983 Kar. 112 and Syed Ashad Ali Sadiq v. Pakistan International Airlines Corporation 1992 CLC 1323 rel.

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

‑‑‑‑Preamble‑‑‑Object of the Ordinance.

Object of enacting Bank Laws is to provide speedy measures for recovery of outstanding loans of Banking Companies as the recovery suits remained pending in Civil Court for years together. The special law has been enacted to improve the economical situation, which has arisen in the country on account of default in payment of loans and finances by the borrowers and customers of Banking Companies.

(e) Interpretation of statutes‑‑‑

‑‑‑‑ Special law would exclude general law.

Zia‑ur‑Rehman's case PLD 1973 SC 49; Ahmad Mureed Malik v. Presiding Officer, Banking Court 2002 CLD 577 and National Bank of Pakistan v. Effef Industries 2002 CLD 1431 rel.

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

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), S.51‑‑‑Execution of decree‑‑‑Mode of‑‑‑Executing Court is well within its right to adopt any mode for execution of decree.

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

‑‑‑‑S.19‑‑‑Execution of decree‑‑‑Mode of‑‑‑Court has discretion to execute decree either in view of provisions of C.P.C., or in any other mode, which Court may deem fit.

Agha Atta Ullah's case 2002 CLD 1550 rel.

(h) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Arts.189, 190 & 201‑‑‑Precedent‑‑‑Judgment of High Court, whether reported or unreported would have binding effect.

Azam Ali and others v. The Custodian of Evacuee Property, West Pakistan, Lahore v. Mst. Khem Bai alias Ghulam Fatima PLD 1968 Lah. 148 rel.

Syed Waqar Hussain Naqvi for Appellant.

Azhar Elahi for Respondent.

Date of hearing: 18th September, 2003.

2004 C L D 101

[Lahore]

Before Ch. Ijaz Ahmad and Bashir A. Mujahid, JJ

Mst. IMTIAZ AKHTAR and another‑‑‑Appellants

Versus

HABIB BANK LIMITED, SIALKOT and 5 others‑‑‑Respondents

Execution First Appeal No. 135 of 2003, decided on 16th September, 2003.

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

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑‑Execution of decree by sale of mortgaged property‑‑‑Judgment‑debtor claiming to be owner of such property on basis of decree dated 22‑9‑1975 mortgaged the same with Bank‑‑‑Bank secured decree on 1‑2‑2001 against judgment‑debtor ‑‑‑Interveners (sisters of judgment‑debtor) filed application under S.12(2), C.P.C., for setting aside decree dated 22‑9‑1975, which was accepted ex parte an 22‑5‑2002 due to subsequent non‑appearance of judgment‑debtor‑‑‑Banking Court dismissed objection petition of interveners claiming the judgment‑debtor to be co‑owners in such property ‑‑‑Validity‑‑‑Interveners had secured ex parte judgment dated 22‑5‑2002 in connivance with judgment‑debtor by filing application under S.12(2), C.P.C., after 28 years without impleading Bank therein ‑‑‑Interveners and judgment‑debtor were inter se nearest relations ‑‑‑Interveners had filed frivolous objection petition just to frustrate right of Bank against judgment­ debtor‑‑‑Banking Court had rightly ignored such ex parte judgment dated 22‑5‑2002‑‑‑High Court dismissed appeal in circumstances.

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

‑‑‑‑S.12(2)‑‑‑Limitation Act (IX of 1908), Art. 181‑‑‑Application under S.12(2), C.P.C.‑‑‑Limitation‑‑‑Period of limitation for filing such application not specifically provided‑‑‑Same would be governed by Art. 181 of Limitation Act, 1908.

Tanveer Jamshed and another v. Raja Ghulam Haider 1992 SCMR 917 and Muhammad Iqbal and another v. Muhammad Alamgir and others 1990 SCMR 1377 rel.

(c) Administration of justice‑--

‑‑‑‑Law must be on the sleeves of Judge.

Board of Intermediate and Secondary Education, Lahore v. Salma Afroz PLD 1992 SC 263 fol.

Iftikhar Ullah Malik and Mrs. Khalid Abid for Appellants.

2004 C L D 112

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

ZUBAIR MUHAMMAD ‑‑‑Appellant

Versus

UNITED BANK LIMITED‑‑‑Respondent

Regular First Appeal No.476 of 1998, heard on 30th September 2003.

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

‑‑‑‑Ss. 7(6)(7) & 9(3)(4)‑‑‑Specific Relief Act (I of 1877), S.12‑‑‑Civil Procedure Code (V of 1908), O. V, R.1, O. VII, R.11(a) & Appendix‑B, Form No.4‑‑‑Suit against Bank for specific performance of agreement of loan and in alternative for recovery of damages‑‑‑Rejection of plaint by Banking 'Court for lack of cause of action in absence of application by defendant for leave to appear and defend suit‑‑‑Validity‑‑‑Suit was originally filed before Banking Court, which had returned its plaint on ground of lack of jurisdiction‑‑‑Plaintiff thereafter had instituted suit in Civil Court, which, while treating same as ordinary suit, had called upon defendant to file written statement‑‑‑Defendant after filing written statement had filed application under O. VII, R.11, C.P.C., for rejection of plaint‑‑‑Suit stood transferred to Banking Court by operation of law while the same was at stage of arguments on such application‑‑‑ Banking Court was well within its right to have decided such application even without treating the same as an application for leave to appear and defend suit as stage for issuing summons in Form 4, Appendix B, C.P.C., had been over, long ago, and written statement had been filed‑‑‑Defendant had been served with ordinary summons under O.V, R.1, C.P.C., thus, provisions of S.9(4) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 would not be attracted‑‑‑ Banking Court had, in fact, treated such application under O. VII, R.11, C. P. C., as one for leave to defend suit‑‑‑High Court dismissed appeal with costs throughout.

Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another 1,997 MLD 1835; Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394; Sarfraz Ahmed Malik v. National Bank of Pakistan through Branch Manager 2002 CLD 1422 ref.

Mst. Bilqees Fatima v. Abdul Razzaq PLD 1986 Kar. 444 fol.

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

‑‑‑‑S. 9(3)(4)‑‑‑Civil Procedure Code (V of 1908), O.V. R. 1, O.XXXVII, R.1 & Appendix B, Form No. 4‑‑‑Suit for recovery of amount‑‑‑Leave to appear and defend suit‑‑‑Service of defendant with ordinary summons, but not with those in prescribed form‑‑­Effect‑‑‑Spirit behind S.9(3) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was similar to that of O.XXXVII, R.1, C.P.C.‑‑‑Defendant having not been served in accordance with provisions of S.9(3) of the Act, 1997, provisions of its subsection (4) would not he attracted­--Defendant in such a case would be required to file written statement without going through rigours of obtaining leave to appear and defend suit.

Messrs United Distributors Pakistan Limited v. Ahmad Zarie Services and another 1997 MLD 1835; Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394; Sarfraz Ahmed Malik v. National Bank of Pakistan through Branch Manager 2002 CLD 1422 ref.

Mst. Bilqees Fatima v. Abdul Razzaq PLD 1986 Kar. 444 fol.

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

‑‑‑‑S. 9(1)‑‑‑Suit by borrower against Bank‑‑‑Scope‑‑‑Such suit can be instituted only in case of default in fulfilling any obligation by Bank with regard to any loan or finance.

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

‑‑‑‑S. 9(1)‑‑‑Specific Relief Act (I of 1877), S.12‑‑‑Civil Procedure Code (V of 1908), O. VII, R.11(a)‑‑‑Suit against Bank for specific performance of agreement of loan and in alternative for recovery of compensatory damages‑‑‑Rejection of plaint by Banking Court‑‑‑Validity‑‑‑Bank had disbursed entire amount of loan to the plaintiff‑‑‑Bank had not defaulted in fulfilling its obligation, with regard to loan/finance‑‑‑Plaintiff having no cause of action to file suit, his plaint was rightly rejected‑‑‑High Court dismissed appeal with costs throughout.

Syed Asghar Haider for Appellant.

Ch. Muhammad Mansha for Respondent.

Date of hearing: 30th September, 2003.

2004 C L D 150

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mian AFTAB AHMED SHAIKH‑‑‑Appellant

Versus

Messrs TRUST MODARABA‑‑‑Respondent

Regular First Appeal No.466 of 1999, heard on 23rd January, 2003.

(a) Modaraba Companies and Modarabas (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.26(2)‑‑‑Limitation Act (IX of 1908), Art. 64‑A‑‑‑Civil Procedure Code (V of 1908), O.XXXVII, R. 1‑‑‑Suit filed by Modaraba‑‑­Limitation‑‑‑Provisions of O.XXXVII, C.P.C.‑‑‑Applicability‑‑­Summary procedure prescribed under O.XXXVII, C.P.C. has been incorporated in Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980, only by reference‑‑‑Suit filed by Modaraba, regardless of its nature, is not a suit filed under O.XXXVII, C.P.C.‑‑‑Provision of Art. 64‑A of Limitation Act, 1908, is not applicable to every suit filed by Modaraba.

(b) Modaraba Companies and Modarabas (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.26(2)‑‑‑Limitation Act (IX of 1908), Art.59‑‑‑Suit filed by Modaraba‑‑‑Limitation‑‑ Provisions of Art.59 of Limitation Act, 1908‑‑‑Applicability‑‑‑Modaraba finance which was subject-matter of the suit, in the present case, was not payable on demand but was to be paid by the principal debtor on specified dates‑‑‑Only in the event of default by the principal debtor, it was open to the Modaraba to require payment on demand‑‑‑Effect‑‑­Limitation for such suit was not covered under the provisions of Art. 59 of Limitation Act, 1908, in circumstances.

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

‑‑S.128(2)(f)‑‑‑Summary procedure‑‑‑Provisions of S.128(2)(f), C. P. C.‑‑‑Applicability‑‑ Provision of S.128(2)(f), C. P. C. is only an enabling provision which enables the High Court to frame rule of procedure for summary trial of certain categories of cases.

(d) Modaraba Companies and Modarabas (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.26(2)‑‑‑Limitation Act (IX of 1908), Art. 5‑‑‑Suit filed by Modaraba‑‑‑Limitation‑‑ Provisions of Art. 5 of Limitation Act, 1908‑‑‑Applicability‑‑‑No summary procedure has been prescribed in Civil Procedure Code, 1908, in respect of suits filed by Modaraba‑‑‑Limitation for such suits is thus not covered under the provisions of Art. 5 of Limitation Act, 1908.

(e) Modaraba Companies and Modarabas (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.26(2)‑‑‑Limitation Act (IX of 1908), Art. 120‑‑‑Suit filed by Modaraba ‑Limitation‑‑‑Scope‑‑‑In absence of any specific Article in the Schedule to Limitation Act, 1908, relating to suit filed by Modaraba, such suit would be governed by the provisions of Art. 120 of Schedule to Limitation Act, 1908.

(f) Modaraba Companies and Modarabas (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.26(2)‑‑‑Civil Procedure Code (V of 1908), O.XXXVII, Rr.2 & 3‑‑‑Affidavit‑‑‑Application for leave to defend the suit‑‑‑Failure to file affidavit‑‑‑Principal borrower filed application for leave to appear and defend but no affidavit was filed by the borrower‑‑­Leave to defend was refused and the suit was decreed in favour of Modaraba‑‑‑Validity‑‑‑Failure to file affidavit was sufficient for disregarding the grounds set out by the principal borrower in the application by way of defence‑‑‑No serious or bona fide defence was disclosed in the application for leave to appear and defend the suit‑‑‑Appeal was dismissed in circumstances.

Syed Iftikhar Hussain Shah and Muhammad Ahmed Qayyum for Appellant.

Naseer Ahmed Sheikh for Respondent.

Date of hearing: 23rd January, 2003.

2004 C L D 157

[Lahore]

Before Ch. Ijaz Ahmad, J

USMAN ASHRAF and 3 others‑‑‑Petitioners

Versus

DIRECTOR OF TRADE ORGANIZATION, ISLAMABAD and another ‑‑‑Respondents

Writ Petition No. 12808 of 2003, decided on 24th September, 2003.

Trade Organizations Ordinance (XLV of 1961)‑‑‑

‑‑‑‑Ss. 10 & 12‑‑‑Constitution of Pakistan (1973), Art.199‑‑­Constitutional petition‑‑‑Dispute regarding election in private Association‑‑‑Petitioners had prayed for direction to Director of Trade Organizations to give directives to the Association with regard to election in the Association‑‑‑Elections were held by Association after 1997 and petitioners or any other person had not challenged that Association had conducted elections in violation of directives of Director of Trade Organizations‑‑‑High Court had no jurisdiction to resolve the factual inquiry in Constitutional petition qua the voters list‑‑‑Petitioners haying more than one alternative remedies under provisions of Trade Organizations Ordinance, 1961, Constitutional petition, was not maintainable‑‑‑High Court had no jurisdiction to interfere in election process once the Election Schedule had been announced‑‑‑Petitioners were well within their right to avail the proper remedy under provisions of Trade Organizations Ordinance, 1961 which would be decided by Competent Authority in accordance with law.

Muhammad Younas Khan's case 1993 SCMR 618; Ch. Muhammad Ismail's case PLD 1996 SC 246; Javaid Hashmi's case PLD 1989 SC 396 and Mian Ijaz Iqbal and others v. Faisalabad Chamber of Commerce and another PLD 1983 Lah. 1 ref.

Arfan Qadir for Petitioners.

Sher Zaman Khan, Deputy Attorney‑General for Respondent No. 1.

Faisal Islam and Jawad Hassan for Respondent No.2.

2004 C L D 161

[Lahore]

Before Mian Saqib Nisar, J

PAHRIANWALI SUGAR MILLS LIMITED through Deputy Chief Executive and others‑‑‑Plaintiffs

Versus

PAK‑LIBYA HOLDING COMPANY (PVT.) LTD and others‑‑‑Respondents

C.O.S. No.3 of 2003, decided on 23rd May, 2003.

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

‑‑‑‑Ss.9 & 10‑‑‑Civil Procedure Code (V of 1908), O.VI, R.10‑‑­Banking Court, jurisdiction of‑‑‑Transfer of suit‑‑‑Plaintiffs filed suit on the ground that amounts had been paid to the defendant according to agreement arrived at between the parties and that no amount was due to the defendant‑‑‑Defendant in his petition for leave to defend the suit had raised objection with regard to jurisdiction of Banking Court at L contending that under one of the clauses of agreement, if any dispute arose jurisdiction for adjudication would vest with appropriate Court at K and according to said agreement only appropriate Court at K had the jurisdiction in the matter and Court at L would have no jurisdiction‑‑‑Plaint was returned under O.VII, R.10, C.P.C. to plaintiffs.

Salman Akram Raja for Plaintiffs.

Shahzad Mazher for Defendant No. 1.

Shoaib Zafar for Defendant No.3.

Shamas Mehmood Mirza for Defendant No.4.

Date of hearing: 23rd May, 2003.

2004 C L D 162

[Lahore]

Before Mian Saqib Nisar and Ch. Iftikhar Hussain, JJ

Haji FAZAL ELAHI & SONS through Muhammad Tariq‑‑‑Appellant

Versus

BANK OF PUNJAB and another‑‑‑Respondents

Regular First Appeal No.256 of 2002, heard on 18th September 2003.

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

‑‑‑‑Ss.9(2)(3) & 18‑‑‑Suit for recovery of loan amount with mark‑up/interest‑‑‑Finance, agreement was for a particular period of time on basis of mark‑up‑‑‑Bank in the statement of accounts charged mark‑up beyond contract period‑‑‑Validity‑‑‑In absence of any agreement or law allowing charging of mark‑up, claim of Bank for mark‑up beyond contract period, would be illegal and could not be awarded.

(b) Contract Act (IX of 1872)--‑‑

‑‑‑‑S.128‑‑‑Lahore Development Authority Act (XXX of 1975), Ss.6(3)(vii) & 22(1)‑‑‑Local Authorities Loans Act (IX of 1914), S.7‑‑‑Furnishing guarantee by Lahore Development Authority for loan provided by Bank to a third party‑‑‑Validity‑‑Authority was not prohibited from giving such guarantee by Lahore Development Authority Act, 1975 or Local Authorities Loans Act, 1914‑‑‑Authority under S.6(3)(vii) of Lahore Development Authority Act, 1975 could enter into contracts, thus, guarantee being one of the contracts, could be validly executed by Authority in favour of Bank rendering itself to be guarantor for repayment of finance provided to a third party‑‑‑Authority as guarantor would be jointly and severally liable for repayment of amount to Bank.

(c) Administration of justice‑--

‑‑‑‑What is not specifically prohibited would be permissible.

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

‑‑‑‑S.19‑‑‑Contract Act (IX of 1872), S.128‑‑‑Execution of decree for recovery of loan amount‑‑‑Procedure‑‑‑Where property was mortgaged for security of loan, then decree would first be satisfied from sale of such property, and if decree was not satisfied, only then principal borrower and guarantor would be jointly and severally responsible for satisfaction thereof.

Asghar Hameed Bhutta for Appellants.

Farooq Bedar for Respondent No. 1.

Zahid Hamid for L.D.A.

Masud Akhtar Khan and Muhammad Nawaz for Respondents.

Date of hearing: 18th September, 2003.

2004 C L D 195

[Lahore]

Before Ch. Ijaz Ahmad, J

UNITED BANK LTD., LAHORE‑‑‑Petitioner

Versus

JUDGE BANKING COURT NO.IV, LAHORE and 2 others‑‑‑Respondents

Amended Writ Petition No. 24830 of 1998, heard on 23rd October, 2003.

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

‑‑‑‑Ss.15(2)(3)(4)(5)(6)(7) & (8)‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XXV of 1997), S.18(2)(3)‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Suit for recovery of loan‑‑‑Execution of decree‑‑‑Preventing decree‑holder to sell property of judgment-­debtor through auction‑‑‑Loanee having failed to discharge his liabilities under agreement, Bank filed suit for recovery of loan which was decreed‑‑‑Application filed by judgment‑debtor under S.12(2), C.P.C. was dismissed by Banking Court, with certain observations, whereby the decree‑holder/Bank was prevented to sell property of judgment‑debtor through auction without permission of Court‑‑‑Decree‑holder aggrieved by said observation filed execution petition before Banking Court which appointed Court Auctioneer and directed decree‑holder to pay the fee to the Court Auctioneer alongwith legal expenses‑‑‑Decree-­holder filed Constitutional petition challenging order of Banking Court whereby decree‑holder was prevented to sell property of judgment‑debtor‑‑‑Order of Banking Court to restrain decree-­holder Bank to sell mortgaged property was not in accordance with mandatory provisions of S.18(2) & (3) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and was in violation of provisions of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Order/observation of Banking Court was set aside and order whereby decree‑holder was directed to pay fee to Court Auctioneer alongwith legal expenses, was also set aside and case was remanded to the Banking Court to decide the same afresh qua observation made by Banking Court in impugned orders after providing proper hearing to all concerned.

Muhammad Nazar Khan v. Express Commercial 1997 CLC 852; United Bank Limited v. Farah Hayat 1995 MLD 1895;­ Crescent Sugar Mills Ltd. v. Central Board of Revenue PLD 1982 Lah. 1 and Abdul Aziz, Lahore v. District Magistrate Lahore PLD 1958 SC (Pak.) 104 ref.

(b) Administration of justice‑‑‑

‑‑‑‑When the basic order was without lawful authority, then superstructure built on it would fall on the ground automatically.

Kh. Khalid Pervaiz for Petitioner.

Sher Zaman, Deputy Attorney‑General for Respondents.

Date of hearing: 23rd October, 2003.

2004 C L D 202

[Lahore]

Before Ch. Ijaz Ahmad and Bashir A. Mujahid, JJ

MUHAMMAD SIDDIQUE‑‑‑Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN, ISLAMABAD‑‑‑ Respondent

Regular First Appeal No. 465 of 1998, heard on 14th October, 2003.

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

‑‑‑‑Ss.9, 10 & 22‑‑‑Suit for recovery of loan‑‑‑Application for leave to defend suit‑‑‑Application for leave to defend suit had to be filed within period prescribed under law‑‑‑Loanee/defendant in case having not filed application for leave to defend suit within prescribed period, Banking Court was justified to decree the suit when loanee/defendant had no case on merits‑‑‑In absence of any infirmity or illegality in judgment of Banking Court, appeal against the same was dismissed by the High Court having no force.

Messrs Ahmad Autos v. Allied Bank of Pakistan Limited PLD 1990 SC 497 and Habib Bank Limited v. Cargo Despatch Company Ltd. and 4 others 1987 CLC 1002 ref.

Messrs Rana Muhammad Nawaz, Muhammad Siddique Mughal and Malik Shamim Ahmad for Appellant.

Malik Karamat Ali Awan for Respondent.

Date of hearing 14th October, 2003.

2004 C L D 207

[Lahore]

Before Ch. Ijaz Ahmad and Bashir A. Mujahid, JJ

TARIQ SHAHBAZ CHAUDHRY and 5 others‑‑‑Appellants

Versus

BANK OF PUNJAB through Attorney and 4 others‑‑‑Respondents

First Appeal from Order No. 245 of 1998, heard on 27th October, 2003.

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

‑‑‑‑S.47‑‑‑Execution of decree‑‑‑Powers of Executing Court‑‑­Executing Court could not go behind the decree sought to be executed.

(b) Pleadings‑‑‑

‑‑‑‑ Parties are bound by their pleadings.

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

‑‑‑‑S.22‑‑‑First appeal‑‑‑Points not raised earlier were raised before the Appellate Court‑‑‑Effect‑‑‑Contentions raised in appeal had not been raised by appellants in their application before Executing Court as well as in the memorandum of appeal before Appellate Court‑‑‑Appellants could not be allowed to raise said contentions for the first time in appeal before High Court.

Mst. Murid Begum v. Muhammad Rafiq PLD 1974 SC 322 ref.

(d) Guarantee‑‑‑

---Limitation in respect of guarantee would start from the date of cause of action when demand alas made or suit was filed.

Messrs United Bank Limited's case PLD 1968 Kar. 464 ref.

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

‑‑‑‑S.22‑‑‑Appellate jurisdiction, exercise of‑‑‑In absence of any infirmity or illegality in order passed by Banking Court, its judgment and decree could not be interfered with in appeal before High Court.

Messrs Chenab Cement Products (Pvt.) Ltd. v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672; Muhammad Ashraf v. Chairman, Banking Tribunal NLR 1998 Civil 18; Divalu Mal v. Nandu Shah Dev Rai and others AIR 1931 Lah. 691; PLD 1975 Kar. 61; PLD 1995 Lah. 295; E.A. Evans v. Muhammad Ashraf PLD 1964 SC 536; Hakim Muhammad Buta v. Habib Ahmad and others PLD 1985 SC 153; Nathu Mal­-Ram Das v. B.D. Ram Sarup AIR 1932 Lah. 169 and Jawahar Lal v. Mathura Prasad and another AIR 1934 All. 661 ref.

Mian Nisar Ahmed for Appellants.

Tariq Saleem for Respondents.

Date of hearing: 27th October, 2003.

2004 C L D 215

[Lahore]

Before Syed Zahid Hussain, J

UNITED BANK LIMITED‑‑‑Petitioner

Versus

DEFENCE HOUSING AUTHORITY thorough Secretary and another‑‑ Respondents

Writ Petition No. 12606 of 2003, heard on 7th November, 2003.

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

‑‑‑‑Ss.15 & 19‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Sale of mortgaged property in execution of decree without intervention of Court‑‑‑Refusal of Housing Authority to issue "No Demand Certificate" to the Bank and effect transfer in auction purchaser's name without providing Court order and completion of other formalities‑‑‑Validity‑‑‑Section 19(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 by reference incorporated certain provisions of S.15 thereof and made them applicable to sale of mortgaged property by Financial Institution‑‑‑Right in such property would vest in purchaser free from any charge after execution and registration of sale‑deed as envisaged by S.15(7)(8) of the Ordinance‑‑‑Banking Court, after passing such decree, continued to have seizen over the matter‑‑­Bank and auction purcharser had approached Housing Authority for necessary certification and transfer, when neither execution and registration of sale‑deed had effected nor transaction was completed nor its accounts had been submitted before Court‑‑­Sale was yet to be completed and was still inchoate‑‑‑Housing Authority was justified to call upon the Bank to complete legal formalities‑‑‑Constitutional petition was dismissed.‑‑‑Principles.

According to section 19(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, upon pronouncement of judgment and decree by Banking Court, the suit itself stands converted into execution proceedings and on expiry of 30 days, the Court is expected to proceed with the execution of decree. This period of 30 days obviously has been made available to judgment‑debtor to avail the remedy of appeal under section 22 of the Ordinance.

Subsection (5) of section 19 of the Ordinance by reference incorporates the provisions of subsections (5), (6), (7), (8), (9), (10), (11) and (12) of section 15 and make them applicable to sales of mortgaged, pledged or hypothecated properties by a Financial Institution. Reference to provisions of subsection (7) of section 15 makes it abundantly clear that execution and registration of sale‑deed is envisaged by the law, whereas legal consequences of such execution and registration are mentioned in subsection (8) and consequently all rights in such property vest in the purchaser free from all encumbrances.

The necessary result of adoption of a certain provision is to read the same into the adapting provision and consider as if the same has been written down or penned in the later provision.

Keeping in view this principle in view, the steps and formalities mentioned in section 15 had not yet been completed, when the Bank and auction‑purchaser approached Defence Housing Authority for issuance of certificate and urged for effecting transfer. Thus, as the sale was yet to be completed and was still inchoate, Housing Authority was prematurely approached to perform its function. In the series of steps and formalities to be completed under section 15, after the execution and registration of the sale‑deed, the Bank was required to file accounts of the sale proceeds in the Banking Court within 30 days of sale of the mortgaged property in terms of subsection (10) of section 15. It was also visualized by the Legislature that disputes relating to sale of mortgaged property may crop up for which purpose the forum specified was the Banking Court as per subsection (11) of section 15.

In case of any possible conflict and repugnancy i.e. section 19(3) and section 15 as adopted by section 19(5), the later in sequential order will prevail.

It shows that despite conferment of power upon Financial Institution (under section 19(3) of the Ordinance), the Court which passed the decree had continued seizin over the matter. This was not only necessary to obviate and ward off any misuse or arbitrary exercise of power, but also to safeguard the interest of judgment‑debtor/owner of the mortgaged property as possibility of sale of a mortgaged property at whimsical or throw‑away price could not be ruled out.

The Legislature while conferring such vast power as is claimed by virtue of section 19(3) of the Ordinance was not oblivious of such a situation that is why formalities provided by section 15 were made applicable to such a sale. It was with a view to keep check on exercise of such unbridled and arbitrary power that even after the sale, the Banking Court was empowered to examine the accounts of sale proceeds and to decide any dispute relating to sale (subsection (11) of section 15). Thus, harmonious reading and construction of adopted provisions of sections 15 and 19 of the Ordinance would lead to the conclusion that the role of Banking Court in the matter was not wholly ruled out. The position in the present case, however, was that neither the execution and registration of the sale‑deed had yet taken place nor the transaction was complete nor its accounts were submitted before the Court, when the Bank and auction‑purchaser approached Defence Housing Authority for necessary certification and transfer. It was in this context and circumstances that the Authority was Justified to call upon the Bank to complete legal formalities. In such a context, it can be held that Authority acted illegally.

In view of the matter, writ as prayed for, could not be granted, which was dismissed accordingly.

Raja Riaz Ahmad Khan v. United Bank Limited and 7 others 2003 CLD 552; Messrs Chawla International v. Habib Bank Limited and others 2003 CLD 956: Messrs Ali Paper and Board Industries Ltd. and another v. Bankers Equity Ltd. and 12 others 2003 CLD 1178; Board of Trustees through Chairman/Additional Secretary, Government of Pakistan, Islamabad and another v. Jamila Akhtar and another 2003 SCMR 1174; Messrs Nizamuddin & Company and 4 others v. The Bank of Khyber 2003 CLD 914 and Agricultural Development Bank of Pakistan and another v. Abid Akhtar and others 2003 SCMR 1547 ref.

(b) Interpretation of statutes‑‑‑

‑‑‑‑Legislation by reference‑‑‑Necessary result of adoption of a certain provision would be to read the same into adopting provision and consider as if same had been written down or penned in later provision.

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

---Ss.15 & 19(3)(5)‑‑‑Interpretation of S.19(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑In case of conflict between S.19(3) & S.15 as adopted by S.19(5) of the Ordinance, the later in sequential order would prevail.

(d) Interpretation of statutes‑‑‑

‑‑‑‑Construction which tends to advance; promote and serve cause of justice would be preferred.

Rashdeen Nawaz for Petitioner.

Khalid Mehmood Ansari for Respondent No. 1.

Tariq Masood and Azmat Saeed (on Court's call).

Date of hearing: 7th November, 2003.

2004 C L D 223

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

UNITED BANK LIMITED, BANK SQUARE BRANCH, LAHORE ‑‑‑Appellant

Versus

FATEH HAYAT KHAN TIWANA and 7 others‑‑‑Respondents

First Appeal from Order No. 189 of 1994, November, 2003.

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

‑‑‑‑S.8(3)‑‑‑Civil Procedure Code (V of 1908), S.48 & O.XXI, Rr.11(2), 13‑‑‑Limitation Act (IX of 1908), Art. 181‑‑‑Execution of decree‑‑‑Limitation‑‑‑Bank obtained decree on 20‑1‑1981‑‑‑First execution application was filed on 27‑6‑1983‑‑‑Bank during pendency of first execution, application withdrew miscellaneous application under O.XXI, R.13, C.P.C. on 23‑11‑1983 in order to file appropriate application‑‑‑Bank did not file any such appropriate application, but filed fresh execution application on 16‑1‑1989 under O.XXI, R.11(2), C.P.C. read with S.8(3) of Banking Companies (Recovery of Loans) Ordinance, 1979‑‑‑First execution application was consigned to record on 7‑2‑1989 at the request of Bank for having filed fresh execution application‑‑­Banking Court dismissed fresh execution application as being time‑barred for having been filed after eight years of passing of decree‑‑‑Validity‑‑‑Subsequent execution application was not in continuation of miscellaneous application withdrawn on 23‑11‑1983 as same was not main execution application having been consigned to record subsequently on 7‑2‑1989 at specific request of Bank to file fresh execution application‑‑­Subsequent execution application could not be equated with such miscellaneous application for both having different dimensions‑‑­First execution application was within time, but same having been withdrawn stood disposed of‑‑‑Subsequent execution application was barred by S.48, C. P. C.

Mahboob Khan v. Hassan Khan Durrani PLD 1990 SC 778 and National Bank of Pakistan v. Mian Aziz ud Din and 7 others 1996 SCMR 759 ref.

(b) Limitation‑‑‑

‑‑‑‑ Period of limitation statutorily fixed‑‑Court could ‑not enlarge or extend such period.

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

‑‑‑‑S.48‑‑‑Limitation Act (IX of 1908), Art. 181 ‑‑‑ First and subsequent execution application, filing of‑‑‑Limitation‑‑‑First application would be governed by residuary Art. 181 of Limitation Act, 1908 providing period of three years‑‑‑Any subsequent application would be governed by S.48, C.P.C., prescribing period of six years‑‑‑First application, if filed after expiry of three years, would be barred by time‑‑‑First application, if filed within time, then any number of subsequent applications could be filed within period of six years from date of decree as per force of S.48, C.P.C.‑‑‑Decree‑holder, while filing first application, could not avail benefit of extended period by S.48, C.P.C.

Mahboob Khan v. Hassan Khan Durrani PLD 1990 SC 778 and National Bank of Pakistan v. Mian Aziz ud Din and 7 others 1996 SCMR 759 rel.

M. Saleem Sehgal for Appellant.

Respondents: Ex parte.

Date of hearing: 6th October, 2003.

2004 C L D 232

[Lahore]

Before Syed Zahid Hussain, J

Messrs AGRO DAIRIES (PVT.) LIMITED through Director and 2 others‑‑‑Petitioners

Versus

Messrs AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager and 3 others ‑‑‑Respondents

Writ Petition No.2882 of 2003, heard on 8th October, 2003.

(a) Credit Manual‑‑­-

‑‑‑‑Vol. I, para.19.8(iii)‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­‑petition‑‑‑Banking dispute‑‑‑Term "dependent relative"‑‑‑Applicability‑‑‑Refusal to return security documents‑‑­Petitioners had executed guarantees and mortgage deeds in favour of the Bank‑‑‑Suit amount was deposited and the liability of the Bank was cleared‑‑‑Despite the suit having been dismissed, the Bank had retained and refused to return the security documents‑‑‑Plea raised by the petitioners was that liability outstanding against another commercial entity could not be made a ground to refuse the return of the security documents furnished by them‑‑‑Contention of the Bank was that some other loan was outstanding against some other persons who were "dependent relatives" of the petitioner‑‑Validity‑‑‑Mere relationship of brother and sister between the parties did not make them a dependent relative of the petitioners‑‑‑High Court directed the Bank to return the security documents of the petitioners‑‑‑Petition was allowed accordingly.

Mst. Sajida Sultana and 2 others v. Agricultural Development Bank of Pakistan through Qayyum Javed Khan, Manager, Agricultural Development Bank of Pakistan Model Branch, Lahore 2002 CLD 592 and National Bank of Pakistan through President and 4 others v. Khalid Mehmood 2002 CLD 658 ref.

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

‑‑‑‑Art.185(3)‑‑‑Petition for leave to appeal to Supreme Court pendency of‑‑‑Effect‑‑‑Mere filing or pendency of petition/appeal before the Supreme Court does not operate as a stay or restraint order.

Shahid Karim for Petitioners.

Muhammad Afzal Sindhu for Respondents Nos. 1 and 2.

Date of hearing: 8th October, 2003.

2004 C L D 239

[Lahore]

Before Ch. Ijaz Ahmad and Bashir A. Mujahid, JJ

Messrs EVERGREEN PRESS and 3 others‑‑‑Appellants

Versus

BANK OF PUNJAB‑‑‑ Respondent

Regular First Appeal No. 373 of 1998, heard on 14th October, 2003.

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

‑‑‑‑Ss.2(c), 9 & 10‑‑‑Suit for recovery of loan‑‑‑Application for leave to appear and defend the suit‑‑‑Defendant availed financial facilities from Bank by executing agreement and other loan documents including hypothecation deed‑‑‑Hypothecated goods were to be ensured for full value against fire and theft by defendant in the name of Bank, which were insured upon payment of premium by the defendant in the name of Bank for a period of one year accordingly‑‑‑Hypothecated stock lying at the godown was totally destroyed on account of short circuiting, and the defendant informed the plaintiff‑Bank about the said Incident‑‑‑Defendant, loanee, also filed application for impleading the Insurance Company as a party‑‑‑Said application was dismissed by the Banking Court and suit filed by Bank was decreed‑‑‑Defendant filed appeal against judgment of Banking Court‑‑‑Contention of the defendant was that as according to conditions of agreement, stock was to be insured by Insurance Company on Bank's approved list, said Insurance Company was necessary party to be impleaded in the suit‑‑‑Validity‑‑‑Insurance agreement between defendant and Insurance Company related to goods which had no nexus with finance facilities secured by the defendant from the Bank and no insurance policy was issued or agreement was executed between the Bank and defendant qua the loan secured by defendant from the Bank‑‑‑Insurance Company not falling within definition of `borrower' under S. 2(c) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was not proper and necessary party to be impleaded in the suit‑‑‑Applications of defendant were rightly dismissed, in circumstances‑‑‑Defendant having admitted his liabilities towards the Bank, on merits, suit was rightly decreed by Banking Court.

Khan Abdul Wali Khan's case PLD 1976 SC 57; Oum Prakash Tewari v. State Bank of India and others AIR 1949 All. 313; Messrs United. Bank Limited v. Adam Jee Insurance Company Limited 1988 CLC 1660; Messrs United Bank Limited v. Messrs Alamgir Insurance Co., 1988 CLC 1660; United Bank Ltd. v. Adam Jee Insurance Co. Ltd. and others 1988 CLC 1660; National Bank of Pakistan and 5 others v. Punjab Road Transport Board through Managing Director and 3 others 2003 CLD 653 and Juna Bunder Joint Venture, Karachi v. Board of Trustees of Port of Karachi and others PLD 1982 Kar. 13 ref.

(b) Administration of justice‑‑‑

‑‑‑‑Each and every case had to be decided on its own facts and circumstances.

Asad Munir for Appellant.

Muhammad Ali Butt for Respondent.

Date of hearing: 14th October, 2003.

2004 C L D 284

[Lahore]

Before Mian Hamid Farooq, J

HABIB BANK LIMITED‑‑‑Petitioner

Versus

Messrs CHANLITTY (P.V.T.)‑‑‑Respondent

Writ Petition No. 10475 of 2003, decided on 30‑7‑2003.

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

‑‑‑‑S. 15(12)‑‑‑Constitution of Pakistan (1973), Art.199‑‑­Constitutional petition‑‑‑Stay of execution proceedings‑‑‑When the auction schedule of the mortgaged property was accepted by the Executing Court and proposed sale of mortgaged property was underway, judgment‑debtors filed application for stay of execution proceedings and Executing Court accepting the said application stayed the auction proceedings‑‑‑Neither Banking Court nor the High Court under provisions of S.15(2) of Ordinance, 2001, could grant an injunction restraining the sale or proposed sale of mortgaged property‑‑‑Executing Court in view of said provisions of law ought to have refused to grant injunction restraining the proposed sale of mortgaged property‑‑‑Order passed in complete violation and derogation of the provision of law being without jurisdiction, was set aside by High Court in exercise of its Constitutional jurisdiction.

Rashideen Nawaz Kasuri for Petitioner.

Wasim Majeed Malik for Respondent.

Date of hearing: 30th July, 2003.

2004 C L D 366

[Lahore]

Before Ch. Ijaz Ahmad, J

Rao MUHAMMAD PERVAIZ‑‑‑Petitioner

Versus

JUDGE BANKING COURT‑II and 3 others‑‑‑Respondents

Writ Petition No. 8318 of 2000, decided on 19th May, 2003.

(a) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art. 199‑‑‑Constitutional jurisdiction of High Court‑‑­Scope‑‑‑High Court had ample powers to look into events‑‑­Occurring subsequently to filing of Constitutional petition.

Nasir Jamal v. Zubeida Begum 1990 CLC 1069 and Mst. Amina Begum and others v. Mehar Ghulam Dastgir PLD 1978 SC 220 rel.

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

‑‑‑‑S.18(6)‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Execution of decree‑‑‑Auction of mortgaged property‑‑‑Banking Court accepted respondent's bid of Rs.2,20,000 on petitioner's failure to deposit Rs.2,50,000‑‑‑Contention of petitioner was that land belonged to his forefather before its sale to judgment‑debtor; thus he was interested in purchasing his ancestral land and ready to deposit Rs.3,00,000‑‑‑Validity‑‑‑Petitioner in order to show his bona fides to purchase land had deposited such amount with the Deputy Registrar of the Court‑‑‑High Court set aside impugned order with directions to Banking Court to re-auction land by fixing base consideration as Rs.3,00,000, in case no bidder was ready to purchase land for higher amount, then petitioner would be entitled to purchase land for Rs.3,00,000.

Malik Amjad Pervaiz for Petitioner.

Khawaja Ashiq Pervaiz and Rana Nasrulah Khan for Respondents.

2004 C L D 369

[Lahore]

Before Ch. Ijaz Ahmad, J

MUHAMMAD ZAHOOR CHOHAN and 2 others‑‑‑Petitioners

Versus

Syed FARUKH ALI SHAH and 6 others‑‑‑Respondents

Writ Petition No.6224 of 2003, decided on 14th May, 2003.

(a) Criminal Procedure Code (V of 1898)‑‑‑

‑‑‑‑S.540‑‑‑Interpretation of S.540, Cr.P.C.‑‑‑Section 540, Cr.P.C. consists of two parts‑‑‑First part gives discretionary power to Court to summon any person or witness while the second part makes obligatory for the Court to summon, examine and recall any such person, if his evidence appears essential for just decision of case.

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

‑‑‑‑S.19‑‑‑Criminal Procedure Code (V of 1898), S.540‑‑­Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Complaint under S.19 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑Banking Court accepted application, filed by the complainant for summoning a witness, whose name did not find mention in complaint or list of witnesses attached thereto‑‑Validity‑‑‑Such witness was not in existence at the time of filing of complaint‑‑‑Evidence of such witness was necessary to resolve controversy between parties‑‑‑Banking Court had passed impugned order keeping in view provisions of S.540, Cr.P.C., which were fully applicable‑-­Substantial justice had been done between the parties‑‑­No infirmity or illegality was found in the impugned order‑‑‑High Court refused to exercise discretion in favour of petitioner and dismissed 'Constitutional petition.

Syed Saeed Muhammad and another v. The State 1993 SCMR 550; Muhammad Rauf Awan v. The State and others 1992 PCr.LJ 729; Muhammad Yousaf v. Ghulam Rafiq and 2 others 1989 PCr.LJ 1734; Imam Hanif v. Tufail and 3 others 1989 PCr.LJ 1518 and Nawab Syed Raunaq Ali's case PLD 1973 SC 236 rel.

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

‑‑‑‑Art.199‑‑‑Constitutional jurisdiction of High Court‑‑­Discretionary in character.

M.N. A. Butt for Petitioners.

Muhammad Hanif Khatana, Addl. A.‑G. (on Court's Call).

2004 C L D 373

[Lahore]

Before Muhammad Sayeed Akhtar, J

Lt.‑Gen. (Retd.) SHAH RAFI ALAM and others‑‑‑Petitioners

Versus

LAHORE RACE CLUB and others‑‑‑Respondents

Civil Original No. 5 of 2003, heard on 4th June, 2003.

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

‑‑‑‑Ss.161, 6 & 31‑‑‑Contract Act (IX of 1872), Chap. X [Ss.182 to 238]‑‑‑Proxies, nature of‑‑‑Right to vote by proxy‑‑­Scope‑‑Proxies are agents of shareholders and are governed by law of Agency‑‑‑Vote on a poll can be given either personally or by proxy‑‑‑Such right expressly conferred on a member under S.161(1) of Companies Ordinance, 1984 not available by virtue of its proviso to members of a company not having a share capital‑‑‑Memorandum and Articles under S.31 of Companies Ordinance, 1984, bind company and its members subject to provisions of the Ordinance-‑­Any provision contained in Memorandum and Articles, agreement or resolution to the extent of its repugnancy to provisions of the Ordinance would be void under S.6 thereof‑‑‑Section 161 of the Ordinance is a special provision excluding its application to companies not having share capital‑‑‑All other provisions being general provisions, cannot override special provisions applicable to a particular class of companies‑‑‑[Messrs Muzaffar Poultry Farm v. Pakistan Poultry Association and others PLD 1992 Kar.181 dissented from].

Messrs Muzaffar Poultry Farm v. Pakistan Poultry Association and others PLD 1992 Kar. 181 dissented from.

(b) Interpretation of statutes‑‑‑

‑‑‑‑ Proviso to section‑‑‑Cuts down meaning of such section‑‑‑Function of proviso‑‑‑To restrict, limit or qualify enacting part to which same is attached, but not to nullify enacting part or render it wholly inoperative.

Yousaf Ali Khan, Bar‑at‑Law v. Muhammad Javed Iqbal Cheema, Esq. Additional District Judge Lyallpur and 6 others PLD 1975 Lah. 1339; Syed Shabbar Raza Rizvi, Advocate v. The Government of the Punjab and 2 others PLD 1988 Lah. 501 and Mian Rafi‑ud‑Din and 6 others v. The Chief Settlement and Rehabilitation Commissioner and 2 others PLD 1971 SC 252 rel.

(c) Interpretation of statutes‑‑‑

‑‑‑‑Court itself could not add into or delete any word from any section of an enactment.

(d) Estoppel ‑‑‑

‑‑‑‑No estoppel against a statute.

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

‑‑‑‑S.160‑A‑‑‑Setting aside proceedings of meeting ‑‑‑Scope‑‑­Proceedings of meeting could be invaliaated, if there had been statutory infringement of a personal right of member‑‑­Categories of infringement; infringement of procedures contained in statute or Articles; and infringement of any personal right.

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

‑‑‑‑S.160‑A‑‑‑Declaring proceedings of Annual General Meeting as invalid on account of infringement of procedure‑‑­Scope‑‑‑Transaction intra vires, honest and beneficial to company could not be upset, even if assent of all corporators was given to same either simultaneously or at different times.

Parker and Cooper Limited v. Reading (1926) 1 Ch. 975; In re: Doumatic Ltd. (1969) 1 All ER 161 and In re: Bailey, Hay & Co. Ltd. (1971) 3 All ER 693 fol.

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

‑‑‑‑S.160‑A‑‑‑Declaring proceedings of Annual General Meeting as invalid‑‑Types of infringement giving personal cause of action to member to seek such relief depriving a member of his right to be heard; right to move amendments to resolutions; right to have Chairman correctly determine sense of meeting; right to have votes recorded; right to prevent improper votes being used right to have proper notice of meetings.

Wall v. London and Northern Assets Corporation (1898) 2 Ch. 469; Henderson v. Bank of Australasia (1890) 45 Ch. D. 330; Second Consolidated Trust Ltd. v. Ceylon Amalgamated Tea and Rubber Estates Ltd. (1943) 2 All ER 567; Cousins v. International Brick Co. Ltd. (1931) 2 Ch. 90; Shaw v. Tati Concessions Ltd. (1913) 1 Ch. 292; Kaye v. Croydon Tramways Co. (1898) 1 Ch. 358 and Baillie v. Oriental Telephone and Electric Co. Ltd. (1915) 1 Ch. 503 rel.

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

‑‑‑‑Ss.160‑A [as amended by Companies (Amendment) Ordinance (C of 2002)], 161, 178 & 179‑‑‑Declaring proceedings of Annual General Meeting as invalid‑‑‑Election to office of Stewards/Directors of respondent (Race Club)‑‑­According to minutes of Annual General Meeting, twenty‑two members including four petitioners offered themselves for Stewardship/Directors of Club‑‑‑Ten members proposed and seconded were elected, while others were ignored for not being proposed or seconded‑‑‑Validity‑‑‑No provision existed in Companies Ordinance, 1984 or Articles of Association of the Club about proposing and seconding of candidates‑‑‑ No notice as envisaged by S.178(3) of the Ordinance withdrawing candidature by members, who had offered themselves as candidates, was placed on record‑‑‑in absence of withdrawal of names by such members, they would remain as candidates‑‑‑Such was an irregularity in Annual General Meeting of Club giving personal cause to members‑‑‑In presence of special provision for declaring elections of Directors invalid, resort to general provisions for setting aside proceedings of Annual General Meeting could not be made‑‑‑For setting aside proceedings of general meeting, wherein infringement of personal right was alleged, voting power required for making a petition to Court was 10%, while for invalidating election of Directors, an application could be made under S.179 of the Ordinance by members holding not less than 20% of voting power‑‑­Petitioners were not holding 20% of voting power in company, thus, they could not be allowed to achieve which they could not do directly‑‑‑No suggestion of fraud having been made, no interference could be made in matters intra vires of company‑‑‑High Court dismissed the petition.

Haji Abdul Jabbar and others v. Haryana Asbestos Cement Industries 1987 CLC 726 ref.

(i) Interpretation of statutes‑‑‑

‑‑‑‑Enactment containing special provisions with respect to a particular subject‑matter or issue‑‑‑Such provisions would override general provisions of statute while dealing with a particular situation‑‑‑Where in a statute, there are two provisions, one of which is of specific character and the other general one, specific provision ought to be applied unfettered by general one.

The State v. Zia‑ur‑Rehman and others PLD 1973 SC 49; Sapphire. Textile Mills Ltd. v. Collector of Central Excise and Land Customs, Hyderabad 1990 CLC 456; Haji Kadir Bux v. Province of Sindh and another 1982 SCMR 582 and Muhammad Arshad Khan v. J. & P. Coates Pakistan Ltd., Karachi and 2 others PLD 1977 Kar. 83 rel.

(j) Practice and procedure‑‑‑

‑‑‑‑ Party cannot be allowed to achieve indirectly what it cannot do directly.

Imtiaz Rashid Siddiqui for Petitioners.

Aamer Raza A. Khan for Respondents.

Date of hearing: 4th June, 2003.

2004 C L D 385

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

BANK ALLAH LIMITED through Manager‑‑ ‑Appellant

Versus

RIAZ AHMED, PROPRIETOR, MESSRS FINE AGENCIES AND FINE INDUSTRIES, LAHORE‑‑‑Respondent

Regular First Appeal No. 173 of 2000, heard on 24th February, 2003.

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

‑‑‑‑Ss.3, 19 & 22‑‑‑Failure to discharge liability under incentive scheme availed during execution proceedings‑‑­Awarding costs of fiends to Bank‑‑‑Decretal amount was Rs.32,47,020‑‑‑Judgment‑debtor under incentive scheme was obliged to make payment of 1.4 million till 30‑6‑1999 in full and final satisfaction of decree‑‑‑Bank on judgment­debtor's failure insisted for execution of decree to the extent of entire decretal amount‑‑‑Judgment‑debtor's plea was that Bank had already withdrawn Rs.8,42,703 deposited with Court under some earlier orders and he had deposited balance amount of Rs.5,57,297 on 4‑1‑2000‑‑‑Banking Court accepted judgment‑debtor's plea‑‑‑Validity‑‑ Substantial amount of decree stood satisfied on account of deposit made by judgment‑debtor with Court and withdrawn by Bank‑‑­Bank had unnecessarily resisted judgment‑debtor's application seeking release and sale of one of his properties for repayment of balance amount‑‑‑If judgment‑debtor had been permitted to sell property, he could have easily made balance payment within stipulated time‑‑‑Bank would be adequately compensated, if costs of fiends on balance amount was awarded from 30‑6‑1999 till 4‑1‑2000 at the rate notified by State Bank‑‑‑High Court directed Banking Court to calculate costs of funds and direct judgment‑debtor to deposit same in Court within 15 days, otherwise entire decretal amount would become due to Bank.

Khalid Mehmood Khan for Appellant.

Respondent in person.

Date of hearing: 24th February, 2003.

2004 C L D 388

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Sheikh MUHAMMAD KASHIF ZIA and another‑‑‑Appellants

Versus

BANK OF PUNJAB through Constituted Attorney and another‑‑‑Respondents

Regular First Appeal No. 493 of 2002, decided on 6th February, 2003.

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

‑‑‑‑Ss.9, 10 & 22‑‑‑Civil Procedure Code (V of 1908), O.VIII, Rr.3 & 4‑‑‑Suit for recovery of loan amount‑‑‑Evasive denial of plea raised in leave application‑‑ Effect‑‑‑Defendant's plea was that an amount of Rs.1, 65, 000 from his account in another Branch of plaintiff‑Bank had been unauthorisedly withdrawn through bogus cheque‑‑‑Banking Court rejected application and passed decree in terms of suit ‑‑‑Validity‑‑­Bank had evasively denied such plea of defendant‑‑‑If such amount had been withdrawn from another account or Branch, plaintiff‑Bank was the key respondent in such matter‑‑‑Defendant was entitled to grant of leave‑‑‑High Court partly allowed appeal, set aside impugned decree to the extent of Rs.1,65,000 and granted leave to defendant and remanded case to Banking Court for trial of issue raised by defendant.

Mian Nasir Mehmood on behalf of learned Counsel for Appellants.

Shuja Ahmed Baba for Respondent‑Bank.

2004 C L D 389

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

BHATTI EXPORT PRIVATE LTD. through Managing Director‑‑‑Appellant

Versus

UNITED BANK LTD. through Attorney‑‑‑Respondent

Regular First Appeal No.127 of 1997, heard on10th February, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.6 & 9‑‑‑Suit for recovery or loan amount‑‑‑Failure of defendant to furnish required surety by specified date‑‑Application for extension of time to furnish surety was rejected and suit was decreed on basis of such failure‑‑­Validity‑‑Son of Managing Director of defendant‑Company had died at relevant time thus, during such mourning period, no one could be said to be negligent or deliberately non‑complying the order‑‑‑Bank had not rebutted or controverted defendant's plea raised in application to the effect that counsel could not inform Managing Director of defendant‑Company about such order‑‑‑Order refusing extension to defendant in facts and circumstances of case was harsh and illegal, which violated fundamental rules of justice‑‑‑Defendant had furnished surety under direction of High Court, thus, extension would be deemed to have been granted by High Court‑‑‑High Court allowed appeal, set aside impugned decree and remanded case or its decision in accordance with law.

Riyasat Ali Chaudhary for Appellant.

Rashdeen Nawaz Kasuri for Respondent.

Date of hearing: 10th February, 2003.

2004 C L D 391

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUHAMMAD IMTIAZ SHAFIQUE and another‑‑‑Appellants

Versus

UNION BANK LIMITED through Branch, Manager and 6 others‑‑‑Respondents

Regular First Appeals Nos. 187 and 179 of 2002, decided on 10th February, 2003.

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

‑‑‑‑Ss.17 & 22‑‑‑Appeal against decree for recovery of loan amount‑‑‑Appellant (Guarantor) stated that principal debtor had applied to Bank to write off balance decretal amount, and in case same was written off, then no further amount would be payable by appellant‑‑‑Counsel for Bank admitted such facts‑‑‑Appellant for time being did not press appeal and reserved his right that if balance was not written off to principal debtor, he might apply for revival of appeal to be decided on merits‑‑‑High Court disposed of appeal.

Haq Nawaz Chattha for Appellants.

Mushtaq Mehdi Akhtar for Respondent No. 1.

Sajid Mehmood Sheikh for Respondent No.5.

Nemo for the Remaining Respondents.

2004 C L D 393

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs SHEER PAK LIMITED through Managing Director and 6 others‑‑‑Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Respondent

First Appeal from Order No.321 of 2001, heard on 23rd January, 2003.

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

‑‑‑Ss. 9(3)(4) & 12‑‑‑Failure to issue summons in any one of prescribed modes‑‑‑Effect‑‑‑Summons must be issued through all four prescribed modes of service before deeming a service effected in any one of such modes to be a valid service‑‑‑If any one of such modes was lacking, then there would neither be proper compliance with mandatory provisions of S.9(3) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997) nor there would be a valid service for being violative of such provisions.

(b) Interpretation of statutes‑‑‑

‑‑‑‑Penal provisions of law would be construed very strictly.

Ch. Ihsanul Haque Bhalli for Appellants.

Pervaiz Ahmad Rana for Respondent.

Date of hearing: 23rd January, 2003.

2004 C L D 397

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

M. S. NAGI, ADVOCATE‑‑‑Appellant

Versus

UNITED BANK LIMITED, LAHORE and 2 others‑‑‑Respondents

Regular First Appeal No. 187 of 1999, heard on 13th January, 2003.

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

‑‑‑‑S.21‑‑‑Failure of Banking Court to decide issues of fact and law on basis of evidence on record and law applicable thereto‑‑‑Impugned judgment was absolutely sketchy and did not fulfil requirement of judicial adjudication‑‑‑High Court accepted appeal and remanded case for re‑writing of judgment after hearing the parties.

Barjees Nagi for Appellant.

Respondents: Ex parte.

Date of hearing: 13th January, 2003.

2004 C L D 399

[Lahore]

Before Syed Jamshed Ali, J

Sahibzada ANWAR HAMID‑‑‑Petitioner

Versus

Messrs TOPWORTH INVESTMENTS (MACAU) LTD. through Chairman and 5 others‑‑‑Respondents

Civil Revision No. 1604 of 1996, decided on 19th May, 2003.

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

‑‑‑‑O. VI, Rr.1, 15, 16 & O.XXXVII, R.3‑‑‑Application for leave to appear and defend, part of pleadings‑‑‑Non‑signing of the application and failure to verify the same ‑‑‑Effect‑‑­Pleadings as defined in O. VI, R.1, C.P. C. meant plaint or written statement‑‑ Such definition was exhaustive and. therefore, application under O.XXXVII, R.3, C.P.C. did not within the scope of such definition to attract the provisions of O. VI, Rr.14 & 15, C.P.C.

Muhammad Fayyaz and another v. Director, Procurement Army and others 1997 CLC 88; Muhammad Munshi and another v. Mst. Rakiya Bi 1990 CLC 301 and Ismail and another v. Mst. Razia Begum and 3 others 1981 SCMR 687 distinguished.

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

‑‑‑‑O.XXIX, R.1 & O.XXXVII, R.3‑‑‑Suit against company‑‑­Signing of Vakalatnama (power of attorney)‑‑‑Plea raised by the plaintiff was that the person who had signed the power of attorney did not disclose his capacity in which the same was signed ‑‑‑Validity‑‑‑Vakalatnama signed by a person who was Chairman, Chief Executive and Director of company, was validly executed in favour of the counsel‑‑­Application for leave to appear and defend the suit was validly filed in circumstances.

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

‑‑‑‑O.XXXVII, R.3‑‑‑Application for leave to appear and defend the suit‑‑‑More than one defendants‑‑‑Fling of affidavit by one defendant‑‑‑Non filing of affidavits by remaining defendants‑‑‑Effect‑‑‑Where there were more defendants then an affidavit of even one of the defendants alongwith application for leave to appear and defend was sufficient compliance of O.XXXVII, R.3, C.P.C.

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

‑‑‑‑O.III, R.2(b), O.XXIX, R.1 & O.XXXVII, Rr.2(2) & 3‑‑­Recognized agent‑‑‑Suit against foreign company‑‑‑Filing of application for leave to appear and defend the suit‑‑­Resolution of Board of Directors issued after filing of the application‑‑‑Chief Executive of the company filed the application‑‑‑Plaintiff filed application under O.XXXVII, R.2(2), C.P.C. on the ground that the suit be decreed as the same was not filed by duly authorized person‑‑‑Application filed by the plaintiff was dismissed by the Trial Court‑‑­Validity‑‑‑Authority to institute a suit by person on behalf of company is to be found either in resolution of Board of Directors or in Articles of Association‑‑‑Wisdom behind the same is that while initiating a suit on behalf of company, it should not be involved in unnecessary litigation‑‑‑While situation in a suit filed against the company is different because, the suit has to be defended by a duly authorized person i.e. Chief Executive of the company‑‑‑Chief Executive of the company, by virtue of Articles of Association of the company was fully competent to defend the suit on behalf of the company‑‑‑Chief Executive was qualified as a recognized agent of the company for the purpose of O.III, R.2(b), C.P.C.‑‑‑In view of time constraint for making an application for leave to appear and defend; the provisions of O.III, R.2(b), C.P.C. were required to be liberally construed since the provisions were beneficial and intended to safeguard the interest of foreign companies‑‑‑Chief Executive could act as a lawfully recognized agent‑‑‑High Court declined to interfere with the order passed by Trial Court‑‑‑Revision was dismissed in circumstances.

Ghulam Ali and 2 others v. Mst. Ghulam Sarwar Naqvi PLD 1990 SC 1; Aziz Khan Commander (E) v. The Government of Pakistan and others 1991 CLC 334; Muhammad Imran Barni v. Federation of Pakistan through Ministry of Communication and Information, Islamabad and 4 others 2001 YLR 2666; Bankers Equity Ltd. through Attorney and 5 others v. Sunflow CIT‑Russ Ltd. (formerly known as Sunflow, Juices Ltd.) through Managing Director PLD 1999 Lah. 450; F. Kanematsu & Co. Ltd. v. S. Nazir Hussain Puri PLD 195 7 (W.P.) Kar. 832; Bank of Baroda v. Messrs Surendra Udyog (1989) 2 CCC 132; Muhammad Umar Mirza v. Waris Iqbal and others 1990 SCMR 964: Murid Hussain and others v. Muhammad Sharif through his Legal Heirs 1996 CLC 161; Pakistan Cement Industries Ltd. Rawalpindi v. Teekayee Trading Co. PLD 1971 Lah. 522: Mst. Musarrat Bibi and 2 others v. Tariq Mahmood Tariq 1999 SCMR 799; Zia‑ud‑Din Siddiqui v. Mrs. Rana Sultana and another 1990 CLC 645; S.M. Khalil v. Biswanth Basak 1971 DLC (Rev.) 62; Manager, Jammu and Kashmir, State Property in Pakistan v. Khuda Yar and another PLD 1975 SC 678; Mst. Azra Begum v. Piran Ditta PLD 1967 Lah. 807; Mst. Karam Nishan v. Mehrban Ali Shah PLD 1959 (W.P.) Lah. 946; Abdul Wadud v. The State PLD 1964 Dacca 543; Ibrahim Ismail v. Brig. (Retd.) S.H.A. Gardezi PLD 1983 Kar. 154; Abdul Ghaffar v. Jamaluddin 1986 CLC 747; Khyam Films and another v. Bank of Bahawalpur Ltd. 1982 CLC 1275; State Life Insurance Corporation of Pakistan v. Mst. Maroof Jan and others PLD 1986 Pesh. 121; Australasia Bank Ltd. v. Abdul Aziz Jan and others PLD 1983 Pesh. 64; Imtiaz Ahmed v. Ghulam Ali and 2 others PLD 1963 SC 382; Lt.‑Col. (Retd.) P.G. Braganza v The Border Area Allotment Committee and another 1984 CLC 1479: Messrs Government Employees Cooperative Housing Society Ltd. and another v. Province of Punjab and others 1995 CLC 765; Mst. Aziza Begum and 5 others v. Muhammad Hussain Khan and 4 others 1995 CLC 1578; Toor Gul v. Mst. Mumtaz Begum PLD 1972 SC 9; Mst. Shanaz Begum and 4 others v. Ashiq Hussain Bhatti and 2 others 1995 CLC 327; Muhammad Khalia v. Abdullah Khan and 4 others 1997 CLC 1366 and Trustees of the Port of Karachi v. Muhammad Saleem 1994 SCMR 2213 ref.

Punjab Livestock Dairy and Poultry Development Board v. Sh. Muhammad Younus 1980 CLC 1932; Muhammad Hussain v. Bashir Ahmed and others PLD 1987 Lah. 392; Muhammad Mehrban v. Sadr‑ud‑Din and another 1995 CLC 1541; Qurban Hussain and 2 others v. Hukam Dad FLD 1984 SC (AJ&K) 157; Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lah. 381; Sheikh Muhammad Shafique v. Humayun Kabir and 3 others 1981 CLC 1248; Abubakar Saley Mayet v. Abbot Laboratories and another 1987 CLC 367; Azad Jammu and Kashmir Government through its Chief Secretary at Muzaffarabad and 4 others v. Sardar Muhammad Azad Khan 2000 YLR 2662; Notified Area Committee, Okara v. Kidar Nath and others AIR 1935 Lah. 345; Messrs Standard Hotels (Private) Ltd. v. Messrs Rio Centre and others 1994 CLC 2413; Khan Iftikhar Hussain Khan of Mamdot (represented by 6 Heirs) v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Messrs Ideal Life Insurance Co. Ltd. and another v. Mst. Khairunnisa A.G. Mirza 1980 CLC 1375; Devk Sports Ltd. v. Silver Stars Ltd. and others 1989 MLD 3493; O.A.P.R.M.A.R. Adaikappa Chattiar v. Thomas Cook & Son (Bankers) Ltd. AIR 1933 PC 78: National Bank of Pakistan and others v. Karachi Development Authority and others PLD 1999 Kar. 260; D. Sardar Singh v. Seth Pissumal Harbhagwandas Bankers AIR 1958 Andh. Pra. 107; Haji Yousuf v. Jalal-­ud‑Din and another.1986 CLC 363; Munir Hussain v. Mst. Mehrun Nisa (through her Legal Heirs) PLD 1982 Kar. 71; Board of Control for Cricket in Pakistan v. Karachi Development Authority through Director‑General and 51 others 1997 CLC 795; Walton Tobacco Company (Pvt.) Ltd. and others v. Azad Government of the State of Jammu and Kashmir and others 1993 CLC 66; Shahab‑ud‑Din and others v. Mst. Mariam Bibi and others 1995 MLD 45; Ghulam Qadir and another v. Abdul Sattar and another PLD 1984 SC 12 distinguished.

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

‑‑‑‑O.XXXVII, R.3‑‑‑Application for leave to appear and defend the suit‑‑‑Filing of power of attorney after period of limitation‑‑‑Chief Executive of the company had filed the application on his behalf and on behalf of remaining defendants‑‑‑Power of attorney of remaining defendants was executed in favour of the Chief Executive after filing of the application for leave to appear and defend the suit‑‑­Plea raised by the plaintiff was that the application was not maintainable as the power of attorney in favour of the Chief Executive was filed after the period of limitation‑‑‑Validity‑‑­Unless the principal disputes the authority of the attorney, even subsequent filing of power of attorney is only an irregularity‑‑‑Application for leave to appear and defend the suit was competently filed‑‑‑Plea raised by the plaintiff was repelled in circumstances.

(f) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.197‑‑‑Civil Procedure Code (V of 1908), O.XXXVII, R.3‑‑­Principal and agent, relationship of‑‑‑Ratification of act done prior to execution of power of attorney‑‑‑Application for leave to appear and defend the suit‑‑‑Filing of power of attorney after period of limitation‑‑‑Chief Executive of the company had filed the application on his behalf and on behalf of the remaining defendants‑‑‑Power of attorney of remaining defendants was executed in favour of the Chief Executive after filing of the application for leave to appear and defend the suit‑‑‑Plea raised by the plaintiff was that the power of attorney did not specifically ratify the act of filing of the application‑‑‑Validity‑‑‑Unless the principal had given notice of his dissent to the unauthorized act of the agent within a reasonable time, it raised presumption of ratification‑‑‑Principle of S.197 of Contract Act, 1872, was attracted in circumstances.

Punjab Zamindars Bank Ltd. v. Madan Mohan Singh and others AIR 1936 Lah. 321; Babu Muhammad Aslam v. Mst. Rehana Parveen PLD 1989 Pesh. 185 and Muhammad Munshi and another v. Mst. Rakiya Bi 1990 CLC 301 ref.

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

‑‑‑O.XIII, R.9‑‑‑Document‑‑‑Return after comparison‑‑‑Act of Court‑‑‑Original power of attorney was produced before Trial Court for inspection and was returned and copy thereof was retained on record‑‑‑Contention of the plaintiff was that the original power of attorney was not on the file and photocopy was not admissible in evidence‑‑‑Validity‑‑‑No objection was raised by the plaintiff at the time of return of the original power of attorney‑‑‑Defendants could not be penalized for the act of Trial Court in circumstances.

(h) Qanun‑e‑Shahadat (10 of 1984)---

‑‑‑‑Art. 17‑‑‑Document, attestation of‑‑‑Number of witnesses required to attest power of attorney‑‑‑Principle‑‑‑Power of attorney was not a document required by law to be attested by two witnesses, therefore, provision of Art. 17 of Qanun‑e‑Shahadat, 1984, was not applicable in circumstances.

(i) Qanun‑e‑Shahadat (10 of 1984)‑‑‑

‑‑‑‑Art.95‑‑‑Power of attorney, execution of ‑‑‑Presumption‑‑­Disputed power of attorney had notarial stamp but it was in language which was not understandable as the same was attested in a foreign country in a language other than English‑‑‑Principal did not object to the authority of agent based on the disputed power of attorney‑‑‑Validity‑‑‑Only a presumption is raised if attested in accordance under the provision of Art.95 of Qanun‑e‑Shahadat, 1984, but it does not require that a power of attorney to be valid must be attested by the persons mentioned in Art. 95 of Qanun‑e­-Shahadat, 1984‑‑‑Power of attorney was admissible, unless principal had disputed the authority of their attorney to represent him.

(j) Stamp Act (II of 1899)‑‑‑

‑‑‑‑S.35‑‑‑Power of attorney‑‑‑Non‑bearing of stamp‑‑­Validity‑‑‑Merely because the power of attorney did not bear the stamp, the same was not invalid and the defect was curable under S.35 of Stamp Act, 1899.

Sirbaland v. Allah Loke and others 1996 SCMR 575 rel.

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

‑‑‑‑Ss.451, 452 & 456‑‑‑Civil Procedure Code (V of 1908), O.XXXVII, R.3‑‑‑Suit against foreign company‑‑‑Non filing of documents and returns before Registrar as required under Ss.451 & 452 of Companies Ordinance, 1984‑‑‑Filing of application for leave to appear and defend on behalf of such company‑‑‑Plea raised by the plaintiff was that such company could not defend the suit‑‑‑Validity‑‑‑Foreign company which had not complied with the provisions of Ss.451 & 452 of Companies Ordinance, 1984, remained liable for any contract, dealing or transaction and was liable to be sued in respect thereof‑‑‑Such company under the provisions of Ss.451 & 452 of Companies Ordinance, 1984, can be sued but cannot sue or bring any 'legal proceedings in respect of any such contract, dealing or transaction‑‑­Application for leave to appear and defend the suit filed on behalf of the company did not amount to taking 'legal proceedings' within the meaning of S.456 of Companies Ordinance, 1984‑‑‑Instant was not a case where the company had instituted any legal proceedings in respect of Company was defendant in the suit and could legitimately defend it‑‑‑Making of an application for leave to appear and defend was step for defending the suit and did not amount to institution of any legal proceedings by the Company‑‑‑Application for leave to appear and defend the suit was maintainable in circumstances.

Mst. Karim Bibi and others v. Hussain Bakhsh and another PLD 1984 SC 344; Lahore Improvement Trust, Lahore through its Chairman v. The Custodian, Evacuee Property, West Pakistan, Lahore and 4 others PLD 1971 SC 811 and Pakistan Tanneries Ltd. v. Sardar Hidayat Ullah Mokal and 5 others PLD 1972 Lah. 880 distinguished.

(l) Qanun‑e‑Shahadat (10 of 1984)‑‑‑

‑‑‑‑Art.125‑‑‑Relationship of principal and agent, ceasing of‑‑‑Onus to prove‑‑‑When certain persons are principal and agent and they have been acting as such, the burden of proving that such relationship has ceased is on the person, who so asserts.

(m) Administration of justice‑‑‑

‑‑‑Technicalities‑‑‑Non‑compliance of procedural provisions‑‑­Effect‑‑‑While considering n matter the primary consideration for a Court should be whether non‑compliance of a procedural provision has caused any prejudice to the opposite‑party‑‑‑Where a party desires a technical knock‑out of the other party on the basis of technical and even hypertechnical objections, such objections defeat the ends of justice.

S.M. Almas Ali for Petitioner.

Ch. Ihsan‑ul‑Haq Bhalli for Respondents.

Dates of hearing: 15th, 17th, 22nd, 24th and 28th April, 2003.

2004 C L D 430

[Lahore]

Before Ali Nawaz Chowhan, J

Messrs MIRAGE MEHRA (PVT.) LIMITED‑‑‑Appellant

versus

ENERGIC BEVERAGES (PVT.) LIMITED through Director, Marketing/ Purchase and another‑‑ ‑Respondents

First Appeal from Order No.8 of 2004, decided on 30th January, 2004.

(a) Copyright Ordinance (XXXIV of 1962)‑‑

‑‑‑‑S. 3‑‑‑Copyright‑‑‑Meaning and definition..

Meaning of Copyright is well illustrated in section 3 of the Copyright Ordinance, 1962 where different acts pertaining to literary, dramatic, musical or cinematographic works relating to Copyright Ordinance are covered.

Copyright is usually defined as the exclusive right of printing or otherwise multiplying copies of an intellectual production and of publishing and vending the same; the right of preventing all others from doing so. As such rights can be enjoyed in their entirety only by virtue of statutory provisions, the term is synonymous with statutory copyright. Copyright may be accurately defined as the right granted by statute to the proprietor of an intellectual production to the exclusive use and enjoyment to the extent specified in statute.

Copyright in general may be defined as the exclusive right of multiplying copies of an original work or composition.

Corpus Juris Scandium quoted.

(b) Trade Marks Act (V of 1940)‑‑‑

‑‑‑‑Ss. 8(b) & 6(d)‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2‑‑‑Reficsal of temporary injunction by the District Judge during pendency of case‑‑‑Appeal to High Court‑‑‑High Court observed that applications for registration of the Trade Mark "Mecca Cola" on behalf of both the parties were already sub judice before the Registrar, Trade Marks, who was an expert in the relevant area, it was for him to see the consequences and the implication of the use of trade mark and while doing so he shall, without any prejudice, keep in view the observations of the High Court as to whether name of a famous city "Mecca" having an emotional attachment with the Islamic faith could be appropriated alongwith the word "Cola" as a trade mark as if the word was a coined word used alongwith a word descriptive of the goods and whether use of the word "Mecca" would be covered by the prohibition of S.8(b) of the Trade Marks Act, 1940 and what effect shall have S.6(d) of the Act against such a name‑‑‑"Mecca" was not an inventive word and "Cola" too did not appear to be a coined word‑‑‑While the decision of the Registrar, Trade Marks was awaited,, both the parties were restrained by the High Court from using the name "Mecca Cola" against their product and Registrar, Trade Marks was directed to expeditiously dispose of the applications of the parties for registration of trade mark and preferably within two months from the present order of the High Court while transmitting a copy of his decision to the High Court‑‑­District Judge shall also await the results from the Registrar, Trade Marks until those were received.

Wotherspoon v. Currie (1872) 27 LTR 393; Montgomery v: Thompson (1891) 8 PRC 361; Reddaway v. Banham (1896) 13 R‑PC 218; Powell v. Birmingham Vinegar Brevery Co. Ltd. (1897) 14 RPC 720; Faulder & Co. v. O. and G. Rushton Ltd: (1903) 20 RPC 477; California Fig Syrup Company (1909) 26 RPC 846; In re: Itala Fabbrica Automobili (1910) 27 RPC 493; Shields Ice & Cold Storage Co. Ltd.'s Application (1940) 40 RPC 197; Joseph Bancroft & Sons Co. v. Registrar of Trade Marks (1957‑58); Messrs Punjab Soap factory v. The Assistant Registrar of Trade Marks, Karachi PLD 1970 Kar.604 and Messrs Punjab Soap Factory, Lahore v. Assistant Registrar of Trade Marks, Karachi PLD 1970 Kar.444 ref.

Malik Waqar Saleem for Appellant.

Sh. Ijaz Nazir for Respondents.

Date of hearing: 23rd January, 2004

2004 C L D 435

[Lahore]

Before Muhammad Sair Ali, J

AL‑HADAYAT TEXTILES and 2 others‑‑‑Petitioners

versus

STATE BANK OF PAKISTAN and 2 others‑‑‑Respondents

Writ Petition No. 10939 of 2003, heard on 1st December, 2003.

State Bank of Pakistan Circular No. 29, dated 15‑10‑2002‑‑‑

‑‑‑‑Constitution of Pakistan (1973), Art 199‑‑‑Constitutional petition‑‑‑Application of borrower to the Bank to avail incentive scheme, offered under State Bank of Pakistan Circular No.29, dated 15‑10‑2002 was declined and matter was thus referred to the State Bank of Pakistan Committee for Resolution of Dispute established under the said circular which was also refused by the Committee to be considered‑‑‑Borrower had contended that neither the Bank nor the State Bank Committee had specified the reason for their decision against it‑‑‑Counsel of the parties jointly requested the High Court to declare the impugned order of State Bank of Pakistan Committee as without lawful authority and of no legal effect with direction to the State Bank of Pakistan Committee for Resolution of Disputes by stating specific reasons for borrower's purported ineligibility or otherwise in their decision‑‑‑High Court, in circumstances, treated the Constitutional petition as an admitted/pacca case and accepted the same in the terms of first request of the parties‑‑‑Impugned decision of the Committee was declared to be without lawful authority and of no legal effect with the direction by the High Court that the Committee should reconsider the matter after hearing representatives of the parties and state the reasons for any decision that they may arrive at.

Muhammad Aslam Chatha and Sajid Mahmood Sh. for Petitioners.

Rana Muhammad Asad Abbas for Respondent No.3.

Date of hearing: 1st December, 2003.

2004 C L D 444

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

Messrs FANCY MANUFACTURES LIMITED and another‑‑‑Appellants

versus

EQUITY PARTICIPATION FUND‑‑‑Respondent

Regular First Appeal No.266 of 1996, heard on 3rd December, 2002.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.2(a) & Sched.‑‑‑"Banking Company "‑‑‑Connotation‑‑­Company neither defined in Banks (Nationalization) Act, 1974 nor otherwise a `Banking Company" would be deemed to be a "Banking Company" within the meaning and scope of Banking Tribunals Ordinance, 1984, if its name had been specified in the Schedule to the Ordinance.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.2(a), 13 & Sched.‑‑‑Notification No.E.2(39)IF‑(RS)/83, dated 15‑2‑1987‑‑‑Name of "Equity Participation Fund" included in Schedule by Federal Government in exercise of its powers conferred under S.13 of Banking Tribunals Ordinance, 1984, same was, thus, a company within scope of the Ordinance.

(c) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.2(e)‑‑‑"Finance"‑‑‑Connotation‑‑‑Any accommodation or facility under the system not based on interest, would be ­included in definition of "finance".

(d) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.6 & 9‑‑‑Appeal against decree for recovery of loan amount‑‑‑Statement of accounts filed alongwith suit was nor disputed by appellant‑‑‑High Court on its own examined statement of accounts and found that respondent‑company had charged a sum of Rs.1,21,110 as premium @ 10% per annum for three years and 168 days‑‑‑No document was found authorizing respondent to charge/claim such amount from appellant‑‑‑Held, respondent was not entitled to such amount, thus, same was deleted from suit amount‑‑‑High Court partly allowed appeal and modified judgment/ decree.

'

(e) Words and phrases‑‑­

‑‑‑‑‑"Finance"‑‑‑Connotation.

Sh. Azhar Salam for Appellants.

Sadiq Hayat Lodhi for Respondent.

Date of hearing: 3rd December, 2002.

2004 C L D 449

[Lahore]

Before Nasim Sikandar, J

DEUTSCHE BANK A.G., LAHORE‑‑‑Petitioner

versus

Messrs FARM AIDS (PVT.) LTD. and 3 others‑‑‑Respondents

Civil Original No.32 of 1991, decided on 4th February, 2003.

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

‑‑‑‑Ss.306 & 306(a)‑‑‑Winding‑up of company‑‑‑Inability to repay loan received from Bank for import of harvesters‑‑­Company denied its liability to repay loan for three reasons: Bank (petitioner) had provided loan as a partner and not as a Banker; Bank had released fiend to exporters against instructions of company; and that company had filed suit for damages against Bank on account of its failure to provide finance for another project after initially having agreed‑‑‑ Validity‑‑‑Nothing was available on record to support such defences‑‑‑Registration of loan agreements with Registrar of Companies had proved that loan was based upon mark‑up to be repaid in terms contained therein‑‑‑Oral assertion that such agreements were not meant to be implemented, thus, would have no value‑‑‑Bank, after having issued Letter of Credit in favour of exporter, could not execute any contrary instruction‑‑‑Company had received harvesters under Letters of Credit‑‑‑Any misprint or wrong entry of a date in trust receipt was hardly of any significance‑‑‑Bank was not concerned with any fault in harvesters ‑‑‑Pendency of such suit had no nexus with liabilities already incurred by company qua the Bank‑‑‑Company had discharged neither its liability nor the burden to justify non‑payment of dues to Bank after having admitted receipt of loan and service of notice under S.306(a) of Companies Ordinance, 1984‑‑‑Such was not a case of mere unwillingness, but an inability to pay the debt‑‑‑Company was un-functional/insolvent according to its balance‑sheets‑‑‑Mere fact that value of mortgaged property exceeds loan liability would not, by itself, make subject project an on‑going concern or the one having hope of making profits in near future‑‑‑Movable or immovable assets of company were not of any assurance that same was in a position to repay loan‑‑‑Company was not in business for past many years and if same was not wound up, its losses would increase resulting in further depletion of security of creditors‑‑‑Company was ordered to be wound up forthwith.

Ali Woollen Mills v. I.D.B.P. PLD 1990 SC 763; PICIC v. National Silk and Rayon Mills PLD 1976 Lah. 1538; Habib Bank Ltd. v. Hamza Board Mills PLD 1996 Lah. 633; National Bank of Pakistan v. Punjab National Silk Mills PLD 1969 Lah.194; Platinum Insurance Co. Ltd v. Daewoo Corporation PLD 1999 SC 1; Sindh Glass Industries v. NDFC and others PLD 1996 SC 601; Hashmi Can Company Ltd. v. K. K. & Co. (Pvt.) Ltd. 1992 SCMR 1006; Punjab National Silk Mills v. N.B.P. 1986 SCMR 1126; Alliance Motors (Pvt.) Ltd. 1997 MLD 1966; U.B.L. v. Golden Textile Mills PLD 1998 Kar. 330; PICIC v. Bawany Industries PLD 1998 Kar. 45; Khyber Textiles Mills v. Allied Textile Mills Ltd. 1989 CLC 1167; Krishna Lyer Sons v. New Era Manufacturing Co. AIR 1965 Kar. 24; H.B.L. v. Golden Plastics (Pvt.) Ltd. NLR 1991 Civil 582 and Messrs Adage Advertising v. Messrs Shezan International 1970 SCMR 184 ref

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

‑‑‑‑S. 306(a)‑‑ Winding‑up of company‑‑‑Inability to pay debt‑‑‑Occurrence of losses in the past by itself would not be a sufficient ground to order winding‑up of a company but such defence would be available only to a company, which was still in business moving forward with sufficient working capital and credibility in market and possessing ability to produce higher profits in future.

Dr. Pervaiz Hassan and Jawad Hassan for Petitioner.

Uzair Karamat Bhandari for Respondents.

2004 C L D 460

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

TRAVEL KINGS (PVT.) LIMITED through Chief Executive and 4 others‑‑‑Appellants

versus

UNION BANK LIMITED and 2 others‑‑‑Respondents

Regular First Appeal No.930 of 2001, decided on18th February, 2003.

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

‑‑‑‑Ss.9, 10, 15 & 21‑‑.‑Suit for recovery of loan amounting to Rs.55,24,355.94‑‑‑Plea of defendants was that after the alleged payment of Rs.10 millions only Rs.3 millions were left payable and three cheques amounting to Rs.5 lacs each were delivered to respondents but as the Bank did not adhere to its commitment, payments of two cheques two cheques were stopped‑‑‑Banking Court dismissed leave application, and decreed suit against defendant‑‑‑Validity‑‑‑Neither alleged settlement nor any letter from Bank had been produced to show as a prima facie proof that certain arrangements had been arrived at‑‑‑Defendants themselves had committed default for not paying alleged agreed amount, thus, they could not complain that Bank had not adhered to terms of compromise/agreement‑‑‑Defendants had admitted availing of loan facilities and execution of all documents, on the basis of which suit had been filed against them‑‑­Entries in statement of accounts had not been denied‑‑­Defendants could not point out any legal infirmity in impugned judgment‑‑‑High Court dismissed appeal in limine.

Iftikhar Ullah Malik for Appellants.

2004 C L D 464

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

MUMTAZ AHMAD ‑Appellant

versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Respondent

Regular First Appeal No.811 of 2002, heard on 22nd January, 2003.

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

‑‑‑‑Ss. 10, 22 & 25‑‑‑Limitation .Act (IX of 1908), S.4‑­Dismissal of leave application being barred by one day from personal service of appellant‑‑‑Validity‑‑‑Appellant was served on 30‑8‑2002‑‑‑Leave application was filed on 30‑9‑2002 as 29‑9‑2002 was Sunday‑‑‑Section 4 of Limitation Act, 1908, does not extend period of limitation prescribed by law, rather same simply permits a suit, appeal or application to be filed on re‑opening of Court, if period of limitation expires on a day when Court is closed‑‑­Appellant should not be prejudiced by an act of Court namely its closure‑‑‑Banking Court had completely misdirected itself as to application of law‑‑‑High court accepted appeal, set aside impugned judgment/decree and remanded case to Banking Court to decide application for leave to defend suit in accordance with law.

Allah Bakhsh Gondal for Appellant.

Muhammad Yousaf Chughtai for Respondent.

Date of hearing: 22nd January, 2003.

2004 C L D 466

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs INTERCITY TRANSPORT SYSTEM and 3 others‑‑‑Appellants

versus

JUDGE, BANKING COURT NO.II, LAHORE and another‑‑‑Respondents

E.F.A. No. 522 of 2002, heard on 18th December, 2002.

Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)‑‑‑

‑‑‑‑S. 19‑‑‑Execution of decree‑‑‑Incentive scheme issued by Bank after passing of decree‑‑‑Judgment‑debtor claimed benefit of such scheme‑‑‑Validity‑‑‑Provisions of .any incentive‑ scheme did not have any relevance in execution proceedings‑‑‑Decree validly passed by Appellate Court had to be executed by Executing Court in accordance with its terms‑‑‑Executing Court had no power to go behind decree or modify same on basis of .any incentive scheme issued by Bank‑‑‑Decree was passed on 15‑1‑1995, but judgment debtor had not paid even a single rupee‑‑‑Judgment‑debtor was, thus, not entitled to claim benefit of incentive scheme; which required a borrower, as a condition precedent, to deposit amount required under incentive scheme within time stipulated therein.

Mian Javed Jalal for Appellants.

Syed Mansoor Ali Shah for Respondents.

Date of hearing: 18th December, 2002.

2004 C L D 469

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja. JJ

BASHIR AHMAD KHAN MANIKA and another‑‑‑Appellants

versus

HABIB BANK LTD., LAHORE and 11 others‑‑‑Respondents

E.F.As. Nos.18 and 19 of 2003, heard on 4th March, 2003.

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

‑‑‑‑Ss.l9 & 22‑‑‑Banking Companies Ordinance (XLVII of 1984), Ss.30S & 318‑‑‑Execution of decree‑‑‑Plea of appellants‑guarantors was that decree could not be executed against them, until goods pledged with Bank by borrower‑Company were sold‑‑‑Company had already been ordered to be wound up by Company Bench of High Court, which was competent forum to decide all questions relating to pledged goods‑‑‑High Court disposed of appeal with observations that both parties would be free to assert their respective contentions before Company Bench.

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

‑‑‑‑Ss.19 & 22‑‑‑Civil Procedure Code (V of 1908), S.51‑‑­Execution of decree‑‑‑Issuing warrants of arrest and detention of appellants‑guarantors without fulfilling requirements of S.51, C.P.C., being conditions precedent to their arrest‑‑‑Validity‑‑‑Decree passed against defendants including appellants was joint and several‑‑‑Such decree could be executed by all means available under law including execution through sale of properties of appellants and where justified, by detaining them in prison‑‑‑Banking Court had not made any factual determination that such conditions precedent existed to justify arrest of appellants‑‑­Such warrants of arrest were not in accordance with law‑‑­High Court disposed of appeal with observations that Banking Court could issue fresh warrants for arrest after coming to conclusion that conditions precedent for issuance thereof existed.

Azmat Saeed for Appellants.

Naseem Ahmad Khan and Shams Mehmood Mirza for Respondents.

Date of hearing: 4th March, 2003.

2004 C L D 472

[Lahore]

Before Mian Hamid Farooq and Parvaiz Ahmad, JJ

Messrs CONOCO INDUSTRIES (PVT.) LTD. and 3 others‑‑‑Appellants

versus

UNITED BANK LIMITED, LAHORE and another‑‑‑Respondents

E.F.A. No.47 of 2001, heard on 13th,November, 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.90, 92 & 94‑‑‑Limitation Act (IX of 1908), Ss.5, 14 & 29(2)‑‑‑Sale in execution of decree‑‑‑Executing Court on 28‑10‑1999 dismissed objection petition filed under O.XXI, R.90, C.P.C., confirmed sale and ordered for issuance of sale certificate‑‑‑Appeal filed by appellant against such order was withdrawn, but his Constitutional petition was pending before High Court without any temporary injunction, thus, Executing Court issued sale certificate‑‑­Appellant challenged order of issuance of sale certificate through another application, which was dismissed on 19‑1‑2001‑‑‑Appellant on 23‑1‑2001 filed appeal challenging thereby both such orders also claiming to be entitled under Ss.5 & 14 of Limitation Act, 1908 to exclusion of time spent in prosecuting earlier appeal and Constitutional petition‑‑­Validity‑‑‑Nothing was available on record to show that appellant had been prosecuting earlier appeal and Constitutional petition in good faith nor there was affidavit to that effect of his counsel, who had filed appeal/ Constitutional petition‑‑‑In absence of any injunctive order, Executing Court had rightly proceeded with matter‑‑‑Period of limitation provided by special law, being different from ordinary law, would take precedence as such appellant was not entitled to protection of Ss.5 & 14 of Limitation Act, 1908‑‑‑High Court dismissed appeal being grossly barred by time.

Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 and Bashir Ahmad and others v. Messrs Habib Bank Ltd.' 1990 CLC 1105 fol.

(b) Limitation Act (IX of 1908)‑‑‑

‑‑‑‑Ss.5 & 14‑‑‑Appeal‑‑‑Condonation of delay‑‑‑Provision of S.14 of Limitation Act, 1908 not applicable to appeals, but its application was confined to suits only‑‑‑If principle of said S.14 be made applicable to appeals, even then litigant was bound to show that he had been in "good faith" prosecuting another "civil proceedings" within meaning of said section and such circumstance might be treated as "sufficient cause' for condonation of delay within meaning of S. 5 of Limitation Act, 1908.

Masud Ahmad and 2 others v. United Bank Limited 1992 SCMR 424 fol.

(c) Limitation Act (IX of 1908)‑‑‑

‑‑‑‑S. 5‑‑‑Condonation of delay ‑‑‑Condition‑‑‑Party seeking condonation of delay has to explain each day's delay.

Ch. Anwar‑ul‑Haq for Appellants

Khalid Mehmood and Ras Tariq Chaudhary for Respondents.

Date of hearing: 13th November, 2002.

2004 C L D 481

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

IMTIAZ AHMAD and another‑‑‑Appellants

versus

PLATINUM COMMERCIAL BANK LIMITED through General Attorney and another‑‑‑Respondents

Regular First Appeal No.245 of 1998, heard on 11th December, 2002.

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

‑‑‑‑S.10‑‑Leave to defend suit‑‑‑Applicant‑defendant according to record had neither any connection with finances availed by other defendants nor had executed any guarantee or other security documents in favour of Bank‑‑­Memorandum of deposit of title deed recording deposit of original property documents with Bank was not signed by such defendant‑‑‑Held, application of such, defendant seeking leave to appear and defend suit merited acceptance and he was entitled to contest suit filed by Bank as a regular long cause.

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

‑‑‑‑Ss.10, 15 & 21‑‑‑Contract Act (IX of 1872), Ss.127 & 144‑‑‑Decree for recovery of loan amount after dismissal of application for leave to defend suit‑‑‑Appellant after admitting his signatures on personal guarantee and memorandum of title deed executed in favour of Bank contended that he signed such documents to secure house loan obtained by him from Bank as its employee; and that if personal guarantee was not accepted to be in respect of house loan, then same was unenforceable against him in view of S.144 of Contract Act,' 1872‑‑‑Validity‑‑‑Appellant had not placed on record either application for alleged loan or order of Bank sanctioning such loan‑‑‑Execution of guarantee and deposit of original title deed would have followed: the sanction of a loan and could not have preceded same‑‑‑Guarantee executed by appellant secured third party obligations, thus, there was no occasion for execution of guarantee by him to secure repayment of his own financial obligations to Bank‑‑‑Appellant was Assistant Vice‑President of Bank and was not layman unaware of legal implications of a personal guarantee‑‑‑Instrument of guarantee did not contain any stipulation of the nature set out in S.144 of Contract Act, 1872‑‑‑Banking Court had rightly dismissed leave application and passed impugned decree‑‑‑High Court dismissed appeal.

Muhammad Asghar and 5 others v. Mst. Jamila 'Chatoon 1979 CLC 367 ref.

Uzair Karamat Bhindhari for Appellants.

Tariq Nawaz Bhatti for Respondents.

Date of hearing: 11th December, 2002.

2004 C L D 486

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

ASAD TAJ represented by Legal Heirs‑‑ ‑Appellant

versus

NATIONAL BANK OF PAKISTAN through General Attorney and others‑‑‑Respondents

Regular First .Appeal No.96 of 1998, heard on 18th February, 2003.

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

‑‑‑‑Ss.10, 15 & 21‑‑‑Suit for recovery of loan amount‑‑‑Leave to defend suit‑‑‑Plea of defendant (son of borrower, who died on 13‑1‑1996) was that oral gift of mortgaged property in his favour was made by deceased in year 1975 and was acknowledged on 19‑3‑1990, thus, mortgage of same property by deceased in year 1994 was illegal; and that business concern alleged by Bank to have belonged to deceased borrower was in fact sole proprietorship of another son of deceased‑‑‑Banking Court refused to grant leave to defend and decreed suit‑‑‑Validity‑‑‑Defendant could neither produce acknowledgment dated 19‑3‑1990 nor gift‑deed alleged to be made on 3‑1‑1987‑‑‑Power of attorney executed by deceased in favour of Bank did not find mention in any of such documents, rather same empowered Bank to alienate such property‑‑‑Deceased, after adjusting all his liabilities on 11‑1‑1995, had obtained fresh cash limit from such date‑‑‑Defendant had himself placed on record copy of letter written by deceased to Bank on 11‑1‑1995 for renewal of limit up to 31‑12‑1995‑‑‑Statement of accounts starting from 11‑1‑1995 did not show any debit entry after 31‑12‑1995‑‑‑Copy of plaint in a suit filed by defendant for partition and rendition of accounts against his co‑heirs showed that business concern belonged to deceased borrower‑‑‑ Banking Court had, thus, not committed any error while accepting entries in statement of accounts and passing impugned judgment‑‑‑High Court dismissed appeal.

Qamar Riaz Hussain for Appellants.

Abdi Hussain for Respondent No. 1.

Saif‑ud‑Din Chughtai for the Remaining Respondents.

Date of hearing: 18th February, 2003.

2004 C L D 490

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

BANK OF OMAN LIMITED through Attorney ‑‑‑Appellant

versus

M. Y. MALIK & CO. and 2 others‑‑‑ ‑Respondents

Regular First Appeal No. 172 of 1995, heard on 16th January, 2003.

Transfer of Property Act (IV of 1882)‑‑‑

‑‑‑‑S. 58(f)‑‑‑Stamp Act (II of 1899), S.3 & Sched. I, ,Arts. 6 & 40‑‑‑Registration Act (XVI of 1908), S.17‑‑‑Mortgage by deposit of title deed‑‑‑When memorandum of deposit of title deeds finds mention delivery of title deed prior to its execution, then same would not be required to be registered or stamped as a mortgage deed‑‑‑Document creating a mortgage in praesenti would require registration and attract stamp duty applicable to mortgage deed.

Mulla's Treaties on the Transfer of Property Act; Master Abdul Ghafoor Khan and another v. Commerce Bank Ltd. PLD 1978 Kar. 861; Messrs Eagle Star Insurance Co. Ltd. v. Me'ssrs Usman Sons Ltd. and other PLD 1969 Kar. 123 and Messrs Bank of Oman Ltd. v. Messrs East Trading Co. Ltd. and others PLD 1987 Kar. 404 rel.

Muhammad Nawaz Kasuri for Appellant.

Muhammad Saleem Shahnazi for Respondents.

Date of hearing: 16th January, 2003.

2004 C L D 493

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

MUHAMMAD YUSUF‑‑‑Appellant

versus

ALLIED BANK OF PAKISTAN LTD. through Manager and 5 others‑‑‑Respondents

Execution First Appeal No.225 of 2000, heard on 19th February, 2003.

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

‑‑‑‑Ss.l8(6) & 21‑‑‑Execution of decree‑‑‑Sale of mortgaged property‑‑‑Appellant filed‑ objection petition claiming to be shareholder in mortgaged property‑‑‑Banking Court while issuing notice to respondent in objection petition imposed condition of deposit of decretal amount‑‑‑Validity‑‑‑According to S.18(6) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, objection petition ought to be investigated and decided within 30 days and in case at the end of inquiry/trial, same was found to be mala fide, a penalty could be imposed up to 20% of sale price of property for delay caused in execution of decree‑‑‑High Court allowed appeal and set aside impugned order with observations that auction/sale of property other than alleged share of appellant would proceed further in accordance with law.

Ch. Muhammad Amin Javed for Appellant.

Nemo for Respondents.

Date of hearing: 19th February, 2003.

2004 C L D 495

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

UNION BANK LIMITED‑‑‑Appellant

versus

Messrs BLUESKY TRAVELS (PVT.) LIMITED through Chief Executive and 3 others‑‑‑Respondents

Regular First Appeal No.251 of 1996, heard on 8th October, 2002.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.6(2)‑‑‑Default in observing arrangements made with the Bank and encashment of personal guarantees‑‑‑Demand of liquidated damages‑‑‑Banking Court had erroneously passed decree for lesser amount than what the Bank was entitled to recover‑‑‑Validity‑‑‑Bank was not entitled to recover liquidated damages‑‑‑High Court, in appeal, however, modified the decree accordingly.

Allied Bank of Pakistan Limited, Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref.

Tariq Kamal Qazi for Appellant.

Mumtaz Hussain Bokhari for Respondents.

Date of hearing: 8th October, 2002.

2004 C L D 499

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

ATTA ULLAH KHAN‑‑Appellant

versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager

and another‑‑‑Respondents

Regular First Appeal No.275 of 2002, decided on 22nd October, 2002.

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

‑‑‑‑S.9(5)‑‑‑Limitation Act (IX of 1908), S.4‑‑‑Suit for recovery of loan by Bank‑‑‑Application for leave to defend suit‑‑‑ Limitation‑‑‑ Delay‑‑‑ Condonation‑‑‑ Defendant was served through process‑server by affixation of notice on 14‑12‑2002; 13‑1‑2002 being Sunday, defendant filed the application for leave to defend the suit on 14‑1‑2002‑‑­Application for leave to defend the suit filed by the defendant on 14‑1‑2002 in circumstances, was not barred by time.

Ms. Tabinda Islam for Appellant.

Respondents: Ex parte.

2004 C L D 502

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

Messrs NAZIM POLY SACK (PVT.) LIMITED through Director and 3 others‑‑‑Appellants

versus

NATIONAL DEVELOPMENT FINANCE CORPORATION, KARACHI‑‑‑ Respondent

First Appeal from Order No.298 of 2001, heard on 16th October, 2002.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑O.XXI, Rr.23‑A, 58, 59 & 60‑‑‑Suit for recovery of Bank loan was decreed and property of the judgment‑debtor was ordered to be attached by the Banking Court ‑‑‑Judgment debtor filed an objection petition under O.XXI, Rr.58, 59 & 60, C.P.C. for release of movable and immovable properties from attachment‑‑‑Banking Court, directed the judgment debtor to deposit a sum of Rs.5, 00, 000 under O.XXI, R.23‑A, C.P.C. which was not deposited by the judgment‑debtor on which his objection petition was dismissed‑‑‑Bank, decree holder, resisted the objection petition by way of filing of the reply, wherein a preliminary objection was raised regarding, the non‑compliance of the provision of O.XXI, R.23‑A, C.P.C.‑‑‑Validity‑‑‑Banking Court, although directed the judgment‑debtor to deposit Rs. 5, 00, 000 in purported exercise of powers conferred under O. XXI, R.23‑A, C.P.C., yet no sufficient opportunity was granted to the judgment­debtor for the compliance of the said order, inasmuch as the impugned order was passed in absence of counsel of the judgment‑debtor‑‑‑Banking Court, in circumstances, should have waited for counsel of the judgment‑debtor or if the judgment‑debtor had failed to . comply with the terms of order under O.XXI, R.23‑A, C,P.C., it would have been in the fitness of things to have provided another opportunity for the deposit. of the said amount‑‑‑Judgment‑debtor, however, deposited the amount in question under the instructions of the High Court (in first appeal) thus order of Banking Court had substantially been complied with and there remained no impediment in setting aside the order of the Banking Court more so when the objection petition was mainly dismissed on account of the non‑compliance of the order regarding deposit of Rs. 5, 00, 000 without rendering its findings on the merits of the objection petition‑‑‑Order of the Banking Court, in circumstances, was not sustainable, in law as no sufficient opportunity was granted to judgment­debtor for the deposit of requisite amount‑‑‑Objection petition filed by the judgment‑debtor would be deemed to be pending before the Banking Court, which shall decide the same after hearing the parties in accordance with law.

Abdul Rahim Tariq Alvi for Appellants.

Nemo for Respondent‑Corporation.

Date of hearing: 16th October, 2002.

2004 C L D 506

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

NATIONAL BANK OF PAKISTAN through Head Office‑‑‑Appellant

versus

Messrs VICTORY STEEL RE‑ROLLING MILLS and others‑‑‑Respondents

Regular First Appeal No.512 of 1996, heard on 16th October, 2002.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.6(2) & 9‑‑‑Suit for recovery of loan amount by the Bank‑‑‑Entire transaction, as highlighted in the plaint, revolved around a "cash finance facility" which was secured through pledge of stocks and the mortgage of property‑‑­Plaint did not show that any amount of Bank guarantee was paid by the Bank on behalf of the debtor to any beneficiary or any such sum fell due against the debtors for the recovery of which the present suit was filed‑‑‑Amount of Bank guarantee being not the subject‑matter of the suit and suit pertaining only to the‑ transaction regarding "cash finance limit account", Banking Tribunal, completely misread the record while deducting the specified amount of Bank guarantee which resulted in passing the impugned judgment and decree‑‑‑Allowing the appeal decree was modified accordingly.

Qamar‑uz‑Zaman for Appellant.

Mahmood Shah Bokhari for Respondents.

Date of hearing: 16th October, 2002.

2004 C L D 510

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

GHAFOOR HUSSAIN and another‑‑‑Appellants

versus

NATIONAL BANK OF PAKISTAN through S.V. P. ‑‑‑Respondent

Regular First Appeal No.176 of 2002, heard on 17th December, 2002.

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

‑‑‑‑Ss.l2 & 22(5)‑‑‑Ex parte decree‑‑‑Dismissal of application for setting aside such decree‑‑‑Contention of appellants was that their address given in plaint was not correct; and that Bank could have taken their address from description of mortgaged property i.e. Khasra and Khata numbers of property‑‑‑Validity‑‑‑Process could not be served on basis of Khasra numbers‑‑‑Address given in plaint was exactly same as had been given by appellants in finance agreement and power of attorney executed in favour of Bank‑‑‑Appellants had also been served through citation‑‑‑High Court, in order to give a chance of hearing to appellants, accepted appeal subject to payment of Rs. 15, 000 as costs, set aside impugned order and remanded case to Banking Court where they would be entitled to file petition for leave to defend within ten days.

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

‑‑‑‑O. V, Rr.12 & 14‑‑‑Service of summons‑‑‑Process could not be served on basis of Khasra numbers.

Imtiaz Kaifi for Appellants.

Nadeem Saeed for Respondent.

Date of hearing: 17th December, 2002.

2004 C L D 512

[Lahore]

Before Ch. Ijaz Ahmad and Syed Zahid Hussain, JJ

Ch. MUHAMMAD ASLAM and 2 others‑‑‑Appellants

versus

NATIONAL BANK OF PAKISTAN through President and another‑‑‑Respondents

Regular First Appeal No.309 of 2001, heard or December, 2002.

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

‑‑‑‑Ss.9 & 22‑‑‑Specific Relief Act (I of 1877), S.55‑‑‑Civil Procedure Code (V of 1908), S.11‑‑‑Suit for mandatory injunction by customer after passing of decree in favour of Bank‑‑‑Dismissal of suit on ground of res judicata‑‑­Validity‑‑‑According to impugned judgment, there was no denial of fact that borrower‑Company was successor of partnership film, of which all plaintiffs were partners‑‑‑First plaintiff being Director of borrower‑Company was brother of second plaintiff and son of third plaintiff‑‑‑Decree obtained earlier by Bank had been upheld by High Court in appeal filed by plaintiffs herein‑‑‑Second suit by plaintiffs was hit by principle of res judicata in view of findings in impugned judgment and that of High Court in earlier appeal‑‑­Second suit by plaintiffs after passing of earlier decree against them was mala fide‑‑‑High Court dismissed appeal.

Pir Bakhsh v. Chairman, Allotment Committee and others PLD 1987 SC 145 rel.

Iftikhar Ullah Malik for Appellants..

Nemo for Respondents.

Date of hearing: 16th December, 2002.

2004 C L D 516

[Lahore]

Before Ali Nawaz Chowhan, J

MUHAMMAD JAHANGIR and another---Appellants

Versus

HASSAN QAISER and another---Respondents

First Appeal from Order No.258 of 2003 decided on 31st January, 2004.

Trade Marks Act (V of 1940)---

----Ss. 73, 21, 25 & 23---Copyright Ordinance (XXXIV of 1962), S.39---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1, 2 & S.151---Suit ,for infringement of trade mark and copyright with the prayer that the defendants be stopped from passing on their goods as goods of the plaintiff--­Admitted position was that the plaintiffs were holders of the trade mark and copyright registration in their favour, while the defendants were without these and the main ground urged by the defendants was that the plaintiffs had obtained the registration of the trade mark and copyright by suppression of true facts and defendants had been using the trade mark in question since long, whereas the plaintiffs had been using different other names while submitting tax returns etc.---Application of plaintiff under O.XXXIX, Rr.1 & 2 read with S.151, C.P.C. was granted by the District Judge and defendants were restrained from using of the trade mark in question till final decision of the suit ---Validity--­Fact that defendants had been using the trade mark in question before the registration of the trade mark and thus were protected. under S.25 of the Trade Marks Act, 1940 would have to be established during the course of evidence---Plaintiffs were the proprietors of the trade mark and a prima facie case was established in their favour--­High Court having not found any error with the basic findings of the District Judge while disposing of the application for injunction, declined to interfere---If the plaintiffs had obtained registration of trade mark and copyright by suppression of true facts, the matter be brought to the notice of the Registrar of Trade Marks and objections be filed before him in accordance with law---Until that was done, the plaintiffs would. remain the proprietors of the trade mark having a vested right---Finding no merits in the case, High Court dismissed the appeal with the observation that the present order of the High Court shall have no bearing, in case, any of the parties approached the Registrar, Trade Marks for adjudication nor on the ultimate decision at his end.

Messrs K.S. Sulemanji Esmailji & Sons v. Messrs M. Sulemanji & Company Ltd. 1986 CLC 775; Messrs Burney's Industrial & Commercial Co. Ltd. v. Messrs Rehman Match Works PLD 1983 Kar. 357; Abdul Jabbar and another v. Ahmad Jan PLD 1973 Kar. 289; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Messrs Tri-Star Industries (Pvt.) Ltd. v. Messrs Trisa Bursten Tabrik A.G. and others 1999 YLR 638; Standard Finis Oil Co. and others v. National Detergents Ltd. and two others 1984 CLC 781 and Messrs Chas A. Mendoza v. Syed Tausif Ahmad Zaidi and two others PLD 1993 Kar. 790 ref.

Malik Saeed Hussain and Syed Nisar Ali Shah for Appellants.

Miss Shaheen Kiran for Respondents.

Dates of hearing: 22nd and 23rd January, 2004.

2004 C L D 520

[Lahore]

Before Muhammad Sair Ali, J

MUHAMMAD JAVAID ANJUM---Petitioner

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Respondent

Writ Petition No.4095 of 2003, heard on 11th February, 2004.

Constitution of Pakistan (1973)----

----Art. 199---Contract Act (IX of 1872), S.62---Constitutional petition---Banker and customer---Bank had floated a Scheme known as "Mahana Munafa Certificate" inviting deposits for a fixed period against the promise of a fixed rate of profit/return every month to the depositors/customers---Mahana Munafa Certificates so issued to the petitioner contained acknowledgment of the deposited amount and the agreed terms of fixed deposits---Bank, in the present case, after a certain period, through a circular, informed the petitioner that owing to reduction in the lending rates, Bank was reducing the "profit rates" on the deposits---Contention of the petitioner was that the Bank being under a contract could not unilaterally reduce the rate of profit on the certificate---Bank failed to place on record the notifications or circulars issued by the State Bank of Pakistan on the change in the lending/ borrowing rates to enable the Court to examine as to whether change in rates was applicable prospectively or retrospectively and as to whether the notification and circulars of the State Bank of Pakistan could be applied to the already existing Deposit Schemes in the Bank---No law was cited to show that the alleged circulars and notifications issued by the State Bank of Pakistan could be legitimately set up as a ground for the alteration in the terms and conditions of the contracted deposit Schemes to the disadvantage of the depositors--­Bank had advanced vague and general arguments that upon the change of the rates by the State Bank of Pakistan, Bank was competent to unilaterally reduce the rates of profit in the existing Schemes and could thus with impunity cause a material loss to its customers---Neither any law was promulgated nor any amendment in the existing laws was introduced in this behalf---Validity---Held, in the absence of legal authority to alter the terms of the Scheme, Bank could only fall back upon the terms and conditions of the contract between the parties ---Mahana Munafa Certificates issued by the Bank to the petitioner did not contain any conditional or contingent agreements and was not designed or developed to allow unilateral power to the Bank to reduce or increase the rates of agreed profits or returns upon the happening or non-happening of any event(s)---Said Certificates were not tied to the market forces or the floating rates---Absence of a clear and express agreement reserving and stipulating the power in the Scheme or the Mahana Munafa Certificates to alter the agreed rates of return, could not enable the Bank to assume such a power to unilaterally alter the material terms of its offered Schemes and the concluded contracts--­Assumption and arrogation of such power to the Bank, in circumstances, was unlawful and arbitrary ---Principles--­Actions, circulars and letters of the Bank reducing the rates of return/profit were declared to be without lawful authority and of no legal effect by the High Court---Bank was directed to continue paying the profits on the agreed terms as per the Certificates to the petitioner till expiry of the agreed tenure of the Certificates---Arrears of unpaid amounts of the agreed monthly instalments, if outstanding, shall also be paid by the Bank within a period of thirty days to the petitioners.

The Bank admittedly floated a scheme known as "Mahana Munafa Certificate" (MMC) inviting deposits for a fixed period against the promise of a fixed rate of profit/return every month to the depositors/customers. The Scheme containing the terms/ representations was advertised to invite deposits from the general public. The petitioner, on absolute faith in the representations of the Bank, made deposits for a fixed period of 84 months at the given profit rate of 14% per annum. Upon receipt of the above deposits, the Bank issued MMCs.

Mahana Munafa Certificates (MMCs) so issued contained acknowledgment of the deposited amounts and the agreed terms of the fixed deposits. The Bank admitted that MMCs correctly represented the terms of the deposit; the rate of profit and the mode of payment as contended by the petitioners.

The duration of the deposit certificates was up to November, 2008 and the Bank continued making monthly payments of the profits upon agreed rate of return to the petitioner up to February, 2003.

On 7th February, 2003, the Bank A through a Circular informed the petitioner that owing to reduction in the lending rates, it was reducing the "profit rates" on the deposits from 14% to 12% with effect from 1st March, 2003.

Contention of the petitioner was that the Bank' being under a contract, could not unilaterally reduce the rate of profit on MMCs.

The Bank did not place on record the Notifications or Circulars issued by the State Bank of Pakistan on the change in the lending/ borrowing rates to enable the Court to examine as to whether change in rates was applicable prospectively or retrospectively and as to whether the Notifications and Circulars of the State Bank of Pakistan could be applied to the already existing Deposit Schemes in the Bank. The Bank also failed to produce any law or precedent to show that the alleged Circulars and Notifications issued by the State Bank of Pakistan could be legitimately set up as a ground for the alteration in the terms and conditions of the contracted deposit schemes to the disadvantage of the depositors. In absence of any material or law produced by the. Institution, High Court could not accept the vague and general argument that upon change of the rates by-the State Bank of Pakistan, it was competent to unilaterally reduce the rates of profit in the existing schemes and could thus, with impunity, cause a material loss to its customers. Had the terms of such-like schemes been altered or performance of the Bank excused through the promulgation of a law or by an amendment in the existing laws, the position would have been different. In appropriate cases, though the applicability and import of such laws would have been judicially reviewed by the Courts.

In absence of the legal authority in the Bank to alter the terms of the Scheme, it could only fall back upon the terms and conditions of the contract between the parties.

Terms under "SPECIAL NOTICE TIME DEPOSIT" are admittedly applicable to the Profit and Loss Sharing System (PLS) the conditions applicable to the Profit and Loss Sharing System or the PLS Accounts cannot be applied to the Mahana Munafa Certificates System (MMCs), for which other than those on the face of the Certificates, no special conditions had been specified in the Account Opening Form.

Fixed deposit for a fixed period on a fixed rate of profit on fixed mode of payment cannot be stretched to fall within the Profit and Loss Sharing System. The founding principles, the conceptual basis and the applicable rules in the two systems are different:

(i) The basic term on which MMC is founded is the undertaking or promise to pay a fixed return per annum i.e. 14% in the present case. In the Profit and Loss Sharing System/ Accounts, rate of return is calculated on the accrued profit and loss.

(ii) Rates of return in a PLS Account cannot be fixed in advance. At maximum future projections can be made on the provisional or expected rates. The amount and the rate of Bank's profit or loss cannot be definitively anticipated and agreed upon in advance. The actual rate of return is declarable only at the end of each closing. In MMCs, a definite arid prefixed rate of return has been agreed upon between the parties to ensure a given monthly income to the customer.

(iii) In PLS System of Account sharing the loss by the account holder with the Bank is a pre-condition. Under the schemes like MMC, customers are not made liable to share the loss and they only receive profits on the agreed rates.

(iv) Term 1 of SPECIAL NOTICE TIME DEPOSIT other­wise provides for the profit/return on Daily Product Basis. MMC provides for a fixed profit rate per annum and is not dependent upon the daily product calculations.

Mahana Munafa Certificate (MMC) is h specie of contract apart and different from the other contracts or Accounts. MMC contains a complete contract in itself. It is also a concluded contract. The respective rights and duties of the parties flow from the Certificates in absence of any other agreements. The, terms of the MMC thus bind the parties. Bank cannot unilaterally alter the promised and the contracted terms. Any alteration by one party without agreement of the other will be a material breach and a rescission of the contract. Bank has to be held to its commercial and financial contracts. Moreso because of the governmental ownership, control and participation in the Bank.

Frustration of the contract absolving Bank of its contractual duties or novation and discharge of the contract were not the defence or cannot be the defence of the Bank under the prevailing conditions.

Bank can formulate deposit schemes for the future but cannot claim power to unilaterally amend, alter or change the terms and conditions of the existing Certificates or Accounts in which the deposits were made by the citizens upon the faith, the express representations and promises of the Bank.

Mahana Munafa Certificates Scheme also did not contain any conditional or contingent agreements. It was not designed or developed to allow unilateral power to the Bank to reduce or increase the rates of agreed profits or returns upon the happening or non-happening of any event(s). It was not tied to the market forces or the floating rates. In absence of a clear and express agreement reserving and stipulating the power in the Scheme or the MMC to alter the agreed rates of return, Bank cannot assume such a power to unilaterally alter the material terms of its offered schemes and the concluded contracts. Assumption and arrogation of such power by the Bank is unlawful and arbitrary.

Given such power, the Bank could reduce the rates of return from 14% to "nil" even. Correspondingly, the Bank should also cede to the principle of increase in the rates of the return from 14% to 28% or above on changes in the economic graph. Such a gambit will be fatal to the contractual certainty and the financial credence of the deposit schemes offered by the Banks. On slight variations in the presumed assumptions, the Banks and their customers will chaotically rush on each other with unending financial claims and the consequent litigations. The obvious result will be the social and economic unrest in the State.

Actions, circulars and letters of the Bank reducing the rates of return/profit were declared to be without lawful authority and of no legal effect. The Bank shall continue paying the profits on the agreed terms as per the MMCs to the petitioner till expiry of the agreed tenure of 84 months. The arrears of unpaid amounts of the agreed monthly instalments, if outstanding, shall be paid by the Bank within a period of thirty days to the petitioner.

NDFC (Writ Petition No.9316 of 2001) distinguished.

Yousaf Kazmi for Petitioner.

Rashdeen Nawaz for Respondent.

Date of hearing: 11th February, 2004.

2004 C L D 532

[Lahore]

Before Maulvi Anwarul Haq, J

Sardar SHAKEEL MAHMOOD and another---Petitioners

Versus

JUDGE BANKING-COURT and another---Respondents

Writ Petition No.958 of 2001, heard on 22nd January, 2004.

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

----S. 10---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.10---Constitution of Pakistan (1973), Art.199---Constitutional petition---Interpretation of Financial Institutions (Recovery of Finances) Ordinance, 2001---Leave granting order, subject to conditions--­Legality---Trial Court had granted the petitioner leave to defend the suit subject to the condition that he furnishes a bank guarantee---Petitioner in Constitutional petition contended that a leave granting order could not be made subject to any condition---Validity---Section 10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 provided that where the Banking Court found that a serious and bona fide dispute had been raised in the application filed by the defendant within 21 days of service, it shall grant him leave to defend the suit---Banking Court was thus bound .to grant leave to defend in case the application was filed within 21 days and a serious and bona fide dispute was raised---Law does not impose any other condition nor does it authorize the Banking Court to impose any other condition upon grant of leave to defend--­Impugned order of the Trial Court to the extent of imposing the said condition was thus without lawful authority.

Agrosofter (Pvt.) Ltd. and 2 others v. Judge, Banking Court No.5, Karachi and another PLD 1999 Kar. 398 ref.

Ihsan Ahmad Khawaja for Petitioners.

Nemo for Respondents.

Date of hearing: 22nd January, 2004.

2004 C L D 535

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Messrs MACH KNITTERS (PVT.) LIMITED and 3 others---Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED through Manager---Respondent

Regular First Appeal No.88 of 1999, heard on 16th December, 2003.

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

----Ss. 2(e), 7 & 21---Financial Institutions (Recovery of Finances) Ordinance (XLVI -of 2001), Ss. 2(c), 7 & 22---Suit for recovery decreed in favour of the Bank---Plea of the certain appellants, who were alleged to have stood as guarantors for the financial facility availed by the principal debtor company was that they had never executed the guarantees and the same were forged and fake ---Validity--­Said appellants never denied the sanctioning and availing of the financial facilities and their signatures on other documents and the record showed that the charge document, letter of continuity, letter of instalment, letter of disbursement were executed by them---In the presence of the record showing the said appellant's signatures on other documents, their denial of execution of guarantees was without any legal foundation and basis, and was an attempt on their part to wriggle out of their contractual obligations to save themselves from the liabilities incurred through the execution of guarantees and other documents--­Appeal was dismissed.

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

----S. 20---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.18---Incomplete negotiable instrument---Under S.20 of Negotiable Instruments Act, 1881 where of stamped having written thereon an incomplete negotiable instrument, in order that it may be made, or completed into a negotiable instrument, he thereby gives prima facie authority to the person who receives that paper to make or complete it, as the case may be, into a negotiable instrument for any amount.

Mian Rafque Saigol and another v. Bank of Credit and Commerce International (Overseas) Ltd. and another PLD 1996 SC 749 ref.

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

----S. 118---Presumptions attached to negotiable? instru­ments---Certain presumptions are attached to negotiable instruments under S.118 of Negotiable Instruments Act, 1881 such as that the negotiable instrument was made or drawn for consideration and that every negotiable instrument bearing a date was made or drawn on such date.

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

----Ss. 20 & 118---Presumptions attached to incomplete negotiable instruments---Where the appellants came up with, the plea that they had signed blank documents for the bank, they were estopped to challenge subsequently the legality, validity and genuineness of the said documents under Ss.20 & 118 of the Negotiable Instruments Act, 1881.

Muhammad Sharif v. Muhammad Hashim Paracha and another PLD 1987 Kar.76; S.K. Abdul Aziz v. Mehmood Hassan and 3 others 1998 CLC 337; Haji Karim and another v. Zikar Abdullah 1973 SCMR 100; Allied Bank of Pakistan Ltd. v. Messrs Gujrat Friends Traders and others PLD 1988 Lah. 166 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 ref.

(e) Banker's Books Evidence Act (XVIII of 1891)-----

---S.4---Statement of accounts---Presumption of correctness--­Appellants had not raised any objection to the statement of accounts or any to entries - contained therein---Minor discrepancies in statement of accounts would not disentitle the bank from claiming the suit amount---No counter­statement of accounts were filed by the appellants---Where the statement of accounts produced by the bank was certified in accordance with the provisions of Banker's Book Evidence Act, 1891 and there was no rebuttal to the said statement of accounts a presumption of correctness would attach to such entries maintained by the bank.

Tariq Kamal Qazi for Appellants.

Zahid Ahmad for Respondent.

Date of hearing: 16th December, 2003.

2004 C L D 542

[Lahore]

Before Muhammad Ghani, J

MASHREQ BANK---Petitioner

Versus

Messrs NAZIR COTTON MILLS and others---Respondents

Execution Petition No.24-B of 2003, decided on 26th February, 2004.

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

----S.48---Banker and customer---Instalment decree, execution of---Instalment decree, in the present case, contained a penalty clause, giving option to the decree­ holder to invoke the same in case of default---Such clauses, doubtless, being for the benefit of the decree-holder, decree­ holder could take out execution of the decree for the full amount if there was a default in the payment of any instalment---Where, however, the decree-holder had elected not to refuse a delayed payment, and had received the same without objection, 'it would constitute waiver of his right--­Waiver meant forsaking the assertion of a right at the proper time an intentional relinquishment of a right man was entitled to "an intentional relinquishment of a known right"---Waiver might consist either of a positive act of relinquishment or of conduct such as would warrant an inference of relinquishment of a right---Waiver, thus was meant to forego, to waive a claim or right, or not to put forward the same---Decree-holder/Bank having not exercised its right by invoking the penalty clause in compromise deed, at the relevant time, was deemed to have waived its right, consequently the execution petition being not maintainable was dismissed by the High Court.

An instalment decree, containing a penalty clause, and giving option to the decree-holder to invoke the same in case of default, is doubtless for the benefit of the decree­ holder, and he can take out execution of the decree for the full amount if there is a default in the payment of any instalment. But, if he elects not to refuse a delayed payment and receives same without objection, it would constitute waiver of his right. The dictionary meaning of the word "waiver" is "to abandon, relinquish, desert, to relinquish (a right, claim or contention) either by express declaration or by some intentional act which by law is equivalent to this". "Waiver" is, inter alia, described to mean "forsaking the assertion of a right act at the proper time", "an intentional relinquishment of a right a man is entitled to"; "an intentional relinquishment of a known right"; "it may consist either of a positive act of relinquishment or of conduct such as would warrant an inference of relinquishment of the right". Thus the word "waiver" means to forego, to waive a claim or right, or not to put forward the same.

Bank having not exercised its right by invoking the penalty clause in the Deed of Compromise, at the relevant time, shall be deemed to have waived its right, consequently the execution petition, being not maintainable was dismissed accordingly.

Chunilal v. Shivram AIR 1950 Born. 188; Ganeshlal v. Ramgopal AIR 1955 Raj.17; Federation of Pakistan v. Bibi Shaidae Fatima PLD 1968 Kar. 31 and Bank of Credit & Commerce v. Messrs Global Produce 1998 MLD 1759 distinguished.

Norton v. Wood (1829) IR&M 178; Nilmadhub Jchuckerbutty v. Ramisodoy Ghose (1883) ILR Cal. 857; Radha Prasad Singh v. Bhagwan Raj (1883) ILR 5 All. 289; Nagappa v. Ismail (18891 12 Mad. 191; Kashiram v. Pandu (1902) ILR 27 Bom.l Easin Khan v. Abdul Wahab Sikandar 15 IC 10; Gopal Mal v. Gopal Singh Hira Singh AIR 1928 Lah.378; Hanmant Bhimrao v. Gururao Swamirao AIR 1943 Bom. 36; Salyauarayana v. Yelloji Rao AIR 1965 SC 1405; Najmuddin v. Zarnir Ahmad PLD 1982 Kar.l88; Yaqoob Ali. v. Ismail 1987 CLC 526; Halsbury's Laws of England, 3rd Edn., Vol.14, p.637 and Halsbury's Laws of England, 3rd Edn., Vol. 14, p.638 ref.

(b) Waiver-----

---- Connotation elaborated.

The dictionary meaning of the word "waiver" is "to abandon, relinquish, desert, to relinquish (a right, claim or contention) either by express declaration or by some intentional act which by law is equivalent to this". "Waiver" is, inter alia, described to mean "forsaking the assertion of a right act at the proper time"; "an intentional relinquishment of a right a man is entitled to"; "an intentional relinquishment of a known right"; "it may consist either of a positive act of relinquishment or of conduct such as would warrant an inference of relinquishment of the right". Thus the word "waiver" means to forego, to waive a claim or right, or not to put forward the same.

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

----S. 48---Limitation Act (IX of 1908), Art.181---Banker and customer---Instalment decree, execution of---Such decree contained a penalty clause and giving option to the decree­ holder to invoke the same in case of default ---Limitation--­Limitation, under Art. 181, Limitation Act, 1908, as a general rule, would commence to run when the first default was made---Exception to such general rule---Principles.

As a general rule, where a decree or order makes a sum of money payable by instalments on certain dates, and provides that, on default in payment of one of the instalments the whole of the money shall then become due and payable, and be recoverable in execution, then, under Article 181 of the Limitation Act, 1908 limitation commences to run when the first default is made. There has, however, been engrafted upon this general rule an exception in certain cases, the same being that if the right to enforce payment of the w1iole sum due upon default being made in the payment of an instalment has been waived by subsequent payment of the overdue instalment on the one hand and receipt on the other, then the penalty having been waived, the parties are remitted to the same position as they would have been as if no default had occurred.

In the present case, decree-holder Bank's own case is that the delay committed by the judgment-debtor in making payment of the instalments was ranging between 26 to 319 days, though the entire liability is stated to have been liquidated ahead of the last date fixed for payment of the last instalment, viz. 31st of December, 2000, the last instalment having been paid on the 3rd of December, 2000. The Bank discretely kept silent and deliberately did not choose to raise objection to the delayed payments of the instalments. The Bank appears to have been interested in first getting the settled. amount, and then to make an attempt to trip up the judgment-debtors. By receiving the amount of the delayed instalments, without any objection whatsoever, the Bank created an impression in the mind of the judgment-debtors, that it had adopted non-contentious attitude and a clear stance of no grievance. By its own conduct the Bank had waived its right, having acquiesced in the delayed payments. Therefore, on the principle of conscious waiver of its objection to the delayed payment of instalments, the Bank must be held to have given up its grievance and consequently the right to invoke the penalty clause. It is too late for the Bank to turn round and try to go behind it, and get out of its own conduct. Since the Bank had elected to take benefit under the settlement, it must also bear the burden created thereby on the well ­established principle of estoppel by acquiescence and waiver which is based on the oft-quoted expression that where a person had been silent when in conscience he ought to have spoken, he shall be debarred from speaking when conscience requires him to be silent.

The Courts would refuse to enforce contractual terms in a manner that would unjustly and in an unreasonable manner prejudice the borrower. In the Common Law this was done by the intervention of Equity. Its best-known example is the introduction of the "equity of redemption" in mortgage matters. In the field of contract law this was done by striking down the clauses by which "penalties" were incorporated to be paid by the borrower in case of certain named eventualities. Historically, equity would not impose harsher conditions on a borrower by the modalities of enforcement chosen by a lender which could have been avoided by a more open enforcement of the contractual rights available to such a lender. In England, Courts of Equity will, in cases which have become well defined, relieve against the rigours of the Common Law and for the purpose of this case, two heads of relief are relevant. A Court of Equity will relieve against a penalty, and will also, refuse to enforce strictly stipulations as to time where it is satisfied that the parties themselves did not intend those stipulations to be acted upon strictly. This approach was juridically justified by reliance on legal theories that in terrorem liability could not be imposed by contract.

Moreover, a Bank which has a clear fiduciary position with respect to a borrower if it does not act promptly and in accordance with its contractual rights at the appropriate time for enforcement of its claims when due, it cannot be permitted in good conscience to proceed against a borrower in stages with the aim of amassing the highest amount of money from the borrower. The Courts as guardians of the public under a Constitutional system of Government cannot allow such enforcement of penalties against the citizens. The law presumes that a public financial institution will act in good faith with vast resources at its command when seeking relief against the borrowers. Scrutiny of the steps the Banks take in such a process will be closely watched by the superior Courts to ensure that public authority is properly exercised, and is not misused.

The Bank cannot claim predetermined liquidated damages from its customer even though there might be a clause to that effect in the agreement, unless evidence is led to prove such loss suffered by the Bank from breach of contract committed by customer by delaying payment.

Bank having not exercised its right by invoking the penalty clause in the Deed of Compromise, at the relevant time, is deemed to have waived its right, consequently the execution petition, being not maintainable was dismissed accordingly.

Chunilal v. Shivram AIR 1950 Bom.188; Ganeshlal v. Ramgopal AIR 1955 Raj.17; Federation of Pakistan v. Bibi Shaidae Fatima PLD 1968 Kar. 31 and Bank of Credit and Commerce v. Messrs Global Produce 1998 MLD 1759 distinguished.

Jwala Ram v. Mathra Das AIR 1931 Lah. 696; Burjorji v. Madhavlal AIR 1934 Bom.370; Narayan Chandra v. Nath Bank Ltd. AIR 1967 Pat.124; Muslim Commercial Bank Ltd. v. Perwani Export and Import Trading Co. 1999 YLR 975; Agricultural Development Bank of Pakistan v. Jasarat Hussain 2002 CLD 93; Gopal v. Alagirisami AIR 1942 Mad. 581; Joti Prasad v. Sri Chand AIR 1928 All. 629; Ram Prasad Ram v. Jadunandan Upadhia AIR 1934 All. 534; Ranglal v. Syamlal AIR 1946 Ca1.500; Muhammad Ali v. China Silk House 1985 CLC 679; Norton v. Wood (1829) IR&M 178; Nilmadhub Jchuckerbutty v. Ramjsodoy Ghose (1883) ILR Cal. 857; Radha Prasad Singh v. Bhagwan Raj (1883) ILR 5 All. 289; Nagappa v. Ismail (1889) 12 Mad. 191; Kashiram v. Pandu (1902) ILR 27 Bom.1; Easin Khan 'v. Abdul Wahab Sikandar 15 IC 10; Gopal Mal' v. Gopal Singh Hira Singh AIR 1928 Lah.378; Hanmant Bhimrao v. Gururao Swamirao AIR 1943 Bom. 36; Salyauarayana v. Yelloji Rao AIR 1965 SC 1405; Najmuddin v. Zamir Ahmad PLD 1982 Kar.188; Yaqoob Ali v. Ismail 1987 CLC 526; Halsbury's Laws of England, 3rd Edn., Vol.14, p.637 and Halsbury's Laws of England, 3rd Edn., Vol. 14, p.638 ref.

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

----O. VI, R.1---Pleadings---Evidence on the matter extraneous to the pleadings could not be considered by the Court.

Ghulam Rasool v. Muhammad Khan 1999 MLD 883 ref.

Kh. Aamer Farooq for Petitioner.

Nomaan Akram Raja for Respondents.

Date of hearing: 16th January, 2004.

2004 C L D 587

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

Messrs C.M. TEXTILES (PVT.) LIMITED through Chairman and 5 others ---Appellants

Versus

INVESTMENT CORPORATION OF PAKISTAN---Respondent

Regular First Appeal No.147 of 2003, decided on 21st January, 2004.

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

----Ss. 4 & 9---Civil Procedure Code (V of 1908), O.XXXVII--­Suit for recovery of loan---Application for leave to defend--­Pleadings---Proper examination of---Duty of Court in case of failure to file written statement or leave to defend---Court was bound to consider and examine the plaint as well as the documents relied upon by the plaintiff forming basis of the pleadings before deciding the suit---Decree could not be passed by a Court in routine or in cursory manner just because defendant failed to file a written statement or a defendant, in a suit under O.XXXVII, C.P.C. or the suit by a banking company, failed to file an application for leave to defend or was unable to raise a triable issue and his application for leave was rejected.

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

----Ss. 4 & 9---Suit for recovery of loan----Pleadings---Plaintiff was duty bound to set out and formulate a plaint complying with mandatory requirements of the law---To succeed in the suit, the plaintiff had to prove his claim as raised and pleaded in the plaint---Where the suit was developed on documents, the plaintiff would be entitled to the relief only on showing the cause of action to arise from the documents sued upon---Pleadings before Special Court created under a special law---Principles---Requirement of exact adherence to the legal demands was more stringent for the plaintiff invoking jurisdiction of a Special Court under a special law when the conditions arid pre-requisites for resort to such jurisdiction had been specifically and expressly prescribed in the special law---Court in such matters would not presume plaintiffs assertions and pleadings to be correct and would apply the terms of the special law as also the requirement of proof---Courts created under special law would follow the word of law rather than to follow the words of plaint even in the absence of a contest from the defendant.

(c) Administration of justice---

---- Every Court was required to apply its mind to the facts and documents before it when passing any order, even in cases where no person had appeared before it to oppose the same or that the person who wanted to oppose was not allowed to oppose because he failed to fulfil the requirements of law.

Haji Ali Khan & Company v. Allied Bank of Pakistan Limited PLD 1995 SC 362 and United Bank Limited v. Ch. Ghulam Hussain 1998 CLC 816 ref.

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

----Ss. 4 & 9---Jurisdiction, invoking of---Exclusive jurisdiction of Banking Court could only be invoked by a Banking Company upon a customer's default under S.9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, through a suit, by presenting a plaint duly supported by a statement of account verified on oath by the Branch Manager of the Bank or an officer authorized in this behalf by the Board of Directors of the Banking Company---Upon such institution, special procedure for proceeding with the suit was set into motion in terms of Ss. 9 to 15 of the said Act.

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

----Ss. 9 & 21---Bankers' Books Evidence Act (XVIII of 1891), Ss. 2(8) & 4---Statement of account---Pre-requisites of--­Application for leave to defend---Dismissal of---Suit for recovery of loan amount decreed in favour of the Banking Company---Plea of the appellant that the Banking Company had failed to file a proper statement of account to support the plaint before the Banking Court---Banking Company had claimed the document showing entries of the debit balances to be a statement of account---Said document which was merely the Banking Company's Certificate of Balances could not be termed or defined as statement of account, as it should have shown each and every entry as pertaining in the ledger or account book of a Banking Company---Banking practices regarding the preparation of Statement of Account--- "Debit" and "credit", definitions of---Certified copy of statement of accounts containing entries in books of Banking Company---Status of such entries and admissibility thereof in evidence---Principles.

Bankers Equity Ltd. v. Bentonite Pakistan Ltd. 2003 CLD 931 ref.

(f) Banker and customer-----

------ Statement of Account "---Definition of.

Encyclopedia of Banking and Finance, Ninth Edn. ref.

(g) Bankers' Books Evidence Act (XVIII of 1891)---

----S. 4---Statement of Account---Entries contained therein--­Presumption of correctness---Banking Company had claimed the document showing entries of the debit balances to be a statement of account---Said document was merely the Banking Company's Certificate of Balances---In the absence of Statement of Account showing all debits, credits and dates thereof as entered by the Banking Company in the ledgers and books of accounts from the disbursement of loan amount till the date of the suit, no presumption of truth or correctness could be attached to the such mentioned Certificate of Balances to be admissible in evidence and to become basis of a suit or a decree.

I.D.B.P. v. Al-Mansoor Limited and 6 others PLD 1989 Pesh. 191 ref.

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

----S. 9(1) & (2)---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.9(1) & (2)---Plaint to be supported by Statement of Account---Mandatory provision---Basic condition of supporting the plaint by a Statement of Account, for the institution of the suit, was the same both in the Financial Institutions (Recovery of Finances) Ordinance, 2001 and the Banking. Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Mandatory for a Banking Company, in a suit against the customer, to support its plaint by a Statement of Account duly certified under the Bankers` Books Evidence Act, 1891, otherwise the plaint would be incomplete and would not become the basis of a suit under the law.

Bankers Equity Ltd. v. Bentonite Pakistan Ltd. 2003 CLD 931 ref.

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

----S. 9(1)---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.9(1) & (2)---Plaint shall be supported by a Statement of Account---Interpretation and significance of the word 'supported' employed in S.9(2) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Intention of the Legislature was that the suit could not be initiated through a plaint which was not supported by a Statement of Account.

Bankers Equity Ltd. v. Bentonite Pakistan Ltd. 2003 CLD 931 ref.

Syed Hamid Ali Shah for Appellants.

Bashir Ahmad for Respondent.

Date of hearing: 11th December, 2003.

2004 C L D 635

[Lahore]

Before Maulvi Anwarul Haq, J

NADEEM IQBAL ANSARI‑‑‑Petitioner

Versus

NATIONAL BANK OF PAKISTAN, RAWALPINDI through Manager‑‑‑Respondent

Writ Petition No. 1988 of 1999, heard on 22nd January 2004.

(a) Banker and customer‑‑‑

------Banker's lien, meaning of‑‑‑Banker's lien was a right of retaining things delivered into his possession as a banker if and so long as the customer to whom they belonged or who had the power of disposing them when so delivered was indebted to the banker on the balance of the account between them, provided the circumstances in which the banker obtained possession did not imply that he had agreed that this right shall be excluded‑Where securities or other properties of the customer were in the hands of the bank, the bank could exercise the right of retaining those securities or documents until the whole amount due to it was paid by the customer‑‑‑When a customer pays money into his bank's account, the amount ceases to be the property of the customer and becomes the property of the bank and the bank is thereafter under a contractual obligation to repay or give credit to the customer for the amount.

Chettinad Mercantile Bank Ltd. v. PL.A. Pichammai Achi and another AIR 1945 Mad. 447 and Hart's Law of Banking, 4th Edn., Vol. II, Chap. 6 ref.

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

‑‑‑‑Art. 199‑‑‑Constitutional petition‑‑‑Banker and Customer‑‑­Amount was deposited by the petitioner in his account with the Bank‑‑‑Bank withheld the said amount of the petitioner claiming to have exercised its right of set‑off against an overdraft facility extended to the petitioner‑‑‑Grievance of the petitioner was that the act of the Bank withholding the said amount was without lawful authority‑‑‑Bank, under the principles of banking was under an obligation to honour the said deposits of the petitioner.

Chettinad Mercantile Bank Ltd. v. PL.A. Pichammai Achi and another AIR 1945 Mad.447 and Hart's Law of Banking, 4th Edn., Vol. II, Chap. 6 ref.

Aftab Ahmad Gujjar for Petitioner.

Muhammad Rashid Qamar for Respondent.

Date of hearing: 22nd January, 2004.

2004 C L D 707

[Lahore]

Before Syed Jamshed Ali, J

RIO CHEMICAL COMPANY (REGD.)‑‑‑Appellant

Versus

PAKISTAN DRUG HOUSE (PVT.) LTD. and 2 others‑‑‑Respondents

F.A.O. No. 100 of 2000, heard on 4th April, 2002.

(a) Copyright Ordinance (XXXIV of 1962)‑‑‑

‑‑‑‑S. 41‑‑‑Trade Marks Act (V of 1940), Ss.23 & 35‑‑‑Rectification application by assignee of registered trade mark‑‑‑Aggrieved person‑‑‑Registration of trade mark with disputed label design in, favour of foreign company (its creator) and then its assignment in favour of respondent through its registration‑‑‑Validity‑‑‑‑It Registration of a trade mark was prima facie evidence of validity of its original registration and all subsequent assignments and transmissions thereof ‑‑Copyright Board could not go behind such assignment duly registered under provisions of Trade Marks Act, 1940‑‑‑Question with regard to validity of such assignment could only be gone into in proceedings under Trade Marks Act, 1940‑‑‑‑Respondent was, held, a "person aggrieved".

(b) Copyright Ordinance (XXXIV of 1962)‑‑‑--

‑‑‑‑S. 41‑‑‑Foreign made products ‑‑‑Un‑authorized copy of names, artistic work, design and colour scheme of such products was rightly deprecated by the Copyright Board.

Shakeel Abid for Appellant.

Saleem Ghulam Hussain for Respondent No. 1.

Dates of hearing: 3rd and 4th April, 2002.

2004 C L D 712

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

MUHAMMAD MUJTABA and 5 others‑‑‑Appellants

Versus

THE BANK OF PUNJAB‑‑‑Respondent

R.F.A. No. 199 of 1999, heard on 19th February, 2004.

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

‑‑‑‑Ss.9 & 10‑‑‑Bankers' Books Evidence Act (XVIII of 1891), S.4‑‑Civil Procedure Code (V of 1908), O. VI, R.7‑‑‑Suit for recovery of loan amount‑‑‑Leave to defend suit‑‑‑Plain not supported by loan documents and duly verified statement of accounts‑‑‑Banking Court decreed suit after dismissing leave application‑‑‑Validity‑‑­Bank had not pleaded its case on basis of documents attached with plaint‑‑‑Bank had not attached a single document relating to period mentioned in plaint‑‑‑Suit could not have been decreed in absence of documents pleaded in plaint and on basis of documents attached with plaint‑‑‑Statement of accounts not verified in terms of S. 4 of Bankers' Books Evidence Act, 1891, could not be used as evidence against defendant­ Defendant in leave application had not denied documents attached with plaint‑‑‑High Court accepted appeal and set aside impugned judgment/decree, resultantly suit and application for leave to defend would be deemed to be pending before Banking Court for its afresh decision after allowing parties to file documents in support of plaint and such application.

Messrs Jawed Rice Mills v. National Bank of Pakistan 1991 C L C Note 244 at p.190 rel.

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

‑‑‑‑O. VI, R. 7‑‑‑Departure from pleadings‑‑‑Effect‑‑‑Requirement of reasonable hearing would mean a fair opportunity to meet the case set up by other side‑‑‑Desire to administer justice, fair play and equity could not be achieved in a manner to ignore technicalities altogether‑‑‑Evidence brought on record, if found to be contrary or beyond the pleadings, was required to be discarded out of consideration.

Amir Ali v. Mrs. Alima Ahmad PLD 1981 Kar. 150 and Citibank v. Tariq Mohsin Siddiqui and others PLD 1999 Kar. 196 rel.

Azmat Saeed for Appellants.

Muhammad Aqeel Malik for Respondent.

Date of hearing: 19th February, 2004.

2004 C L D 716

[Lahore]

Before Mian Hamid Farooq, J

ALLIED BANK OF PAKISTAN LTD. through Iftikhar‑ul‑Haq and Khalid Ishaq‑‑‑Plaintiff

Versus

MOHIB FABRIC INDUSTRIES LTD. through Chief Executive‑‑‑Defendant

Civil Original Suit No. 123 of 1999, decided on 22nd January, 2002.

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

‑‑‑‑Ss.3(2), 9 & 10‑‑‑Bankers' Books Evidence Act (XVIII of 1891), S.4‑‑‑Suit for recovery of loan amount‑‑Amended application for leave to defend suit‑‑‑Such application was neither signed by any defendant except their counsel nor verified in accordance with law nor supported by affidavit nor disclosed any cause for inability to comply with such requirements‑‑‑Execution of documents filed with plaint were not denied by defendants in leave application‑‑‑Effect‑‑‑Such application due to non­compliance of provisions of S.10(3)(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 could not be considered as an application within parameters set up under S.10(12) thereof‑‑‑Defendants had failed to raise substantial questions of law and facts to be tried by Court‑‑‑Execution of documents filed with plaint was not denied in leave application‑‑‑Such documents would be deemed to have admitted by defendants‑‑­Presumption of correctness was attached to statement of account duly certified under Bankers' Books Evidence Act, 1891‑‑‑Nothing on record to rebut such documents‑‑‑High Court rejected leave application and decreed suit with costs as well as costs of funds to be determined under S.3(2) of the Ordinance.

(b) Interpretation of statutes‑‑‑--

‑‑‑‑Mandatory or directory provisions‑‑‑Test‑‑‑When a provision of law is couched with penal consequences, then same would be considered as mandatory‑‑‑When no penal consequences entail due to non‑compliance of a provision of law, then same would be taken as directory.

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

‑‑‑‑S. 10‑‑‑Amended application for leave to defend suit ‑‑‑Non­compliance with provisions of S.10(3)(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Effect‑‑­Provisions of S.10(12) of Ordinance, 2001 are mandatory in nature as its non‑compliance would entail penal consequences as provided under S.10(6) thereof‑‑‑Such application would be rejected, unless defendant discloses sufficient cause for his inability to comply with such requirements.

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

‑‑‑‑Ss. 10(6)(12)‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S.10‑‑‑Non­filing of amended application for leave to defend suit ‑‑‑Effect‑‑­Earlier application for leave to defend filed under S.10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 would be rejected in exercise of powers under S.10(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001.

(e) Financial Institutions (Recovery of Finances) Ordinance, (XLVI of 2001)‑‑‑

‑‑‑‑S. 9‑‑‑Suit for recovery of loan amount with liquidated damages ‑‑‑Amount of such damages was, not included in statement of account, but was claimed in prayer clause of plaint‑‑‑Validity‑‑‑Plaintiff would not be entitled to claim such damages‑‑‑High Court rejected claim qua liquidated damages.

Allied Bank of Pakistan Ltd., Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 rel.

Muhammad Naeem Saghal for Plaintiff.

Syed Haider Ali Shah for Defendants Nos. 1 and 3.

Defendant No.4 ex. parte.

Nemo for Respondent No.5.

Date of hearing: 22nd January, 2002

2004 C L D 726

[Lahore]

Before Ch Ijaz Ahmad, J

FALCON VENTURES PVT. LTD. through Chief Executive, Iftikhar Ahmad ‑‑‑Petitioner

Versus

PUNJAB BANKING COURT NO.II, LAHORE and another‑‑‑Respondents

Writ Petition No.22813 of 2000, heard on 10th March, 2004.

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

‑‑‑‑Preamble & S.10‑‑‑Civil Procedure Code (V of 1908), O. VII, R.11‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Leave to defend suit for recovery of loan‑‑‑Application seeking rejection of plaint before grant of leave to defend suit‑‑­Banking Court dismissed such application‑‑‑Validity‑‑Legislature in its wisdom had framed a special law for expeditious disposal of cases for recovery of dues of Financial Institutions‑‑‑Omission of word "appearance in S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 would not change character of S.10‑ As per dictionary meaning, word "defend" would include word "appear"‑‑‑Defendant could not even file interlocutory application in order to raise point of jurisdiction of Court till such time leave to defend was granted‑‑‑Defendant could not file application under O.VII, R.11, C.P.C, without securing leave to defend suit‑‑‑High Court dismissed Constitutional petition.

PICIC v. Frontier Ceramics Ltd. and others 2000 CLC 287; Habib Bank Ltd. v. Olympia Hosiery Works 1988 CLC 1340; Subhan Khan v. Nawal Khan PLD 1990 Lah. 302; National Bank Ltd. v. Tradewell Corporation 1991 CLC 1243; Syed Anwaar‑ul‑Hassan v. District Manager 2001 YLR 2741 and Grinnell Corporation v. Deputy Registrar of Trade Marks 1993 CLC 2201 ref.

Un‑reported judgment of D.B. of Lahore Court dated 25‑9‑2002 passed in R.F.A. No. 185 of‑ 2002; Messrs Waheed Corporation v. Allied Bank Ltd. 2003 CLD 245; Sh. Nazir Ahmad's case 2002 .CLD 1634; Sarfraz Ahmad Malik's case 2002 CLD 1422; Malik Sultan Mehmood's case 2003 CLD 724 and Messrs United Distributors v. Ahmad San Services etc. 1997 MLD 1835 rel.

(b) Precedent‑‑‑--

‑‑‑‑Judgment of Division Bench of High Court would be binding upon Single Bench.

(c) Words and phrases‑---------

‑-----`Obtain"‑‑Meaning.

Sk. Golam Mowla and another v. Chief Secretary, etc PLD 1963 Dacca 1049 and Sh. Mujibur Rehman and another v. The State PLD 1964 Dacca 330 rel.

(d) Words and phrases‑‑‑‑

‑--`Defend"‑Meaning.

Black's Law Dictionary rel.

(e) Words and phrases‑‑‑

‑--`Appear'‑Meaning.

Messrs Hindustan Steel Ltd. v. Parakash Chand Agarwal and another AIR 1970 Orissa 149 and Sikandar Ali's case AIR 1959 Calcutta 756 rel.

(f) Words and phrases‑‑‑

----"Appearance"---Meaning.

(g) Practice and procedure‑‑‑

‑When a thing is required to be done in a particular manner, then same must be done in that particular manner and not otherwise.

Atta Muhammad Qureshi v. the Settlement Commissioner, Lahore Division, Lahore and 2 others PLD 1971 SC 61 fol.

(h) Interpretation of statutes‑‑--

---Court has only power to interpret law and has no power to add any word in the provisions of law in the garb of interpretation.

(i) Interpretation of statutes‑‑‑--

‑--Duty of Court is to ascertain the real intention of legislature which must be obtained from all surrounding circumstances Such determination would not depend on the form of statute ­Court for such purpose must look to subject‑matter, consider importance of provision and relation thereof to general object intended to be secured by the Act.

Mafizullah v. Manaiullah and others PLD 1963 Dacca 318 rel.

Malik Waqar Saleem for Petitioner.

Hafiz Muhammad Tahir for Respondent.

Date of hearing: 10th March, 2004.

2004 C L D 732

[Lahore]

Before Abdul Shakoor Paracha and Pervaiz Ahmad, JJ

Messrs AWAN APPARELS (PVT.) LTD through Zahid Aziz Awan, Chief Executive and 4 others‑‑‑Appellants

Versus

UNITED BANK LIMITED through Murad Ali and Tariq Saeed General Attorney and Principal Officers‑‑‑Respondent

Regular First Appeal No. 228 of 1999, heard on 12th February, 2004.

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

‑‑‑‑S.10‑‑‑Leave to defend‑‑‑Defendant was served on 4‑2‑1998, but leave application was filed on 24‑4‑1998‑‑‑No application to condone delay in filing leave application was filed ‑‑‑Leave application was time‑barred.

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

‑‑‑‑Ss.9(3)(4) & 10‑‑‑Power of Banking Court to decree suit forthwith upon dismissal of application for leave to defend‑‑­Scope‑‑‑Such Powers are discretionary‑‑Where questions with regard to jurisdiction of Banking Court, limitation and nature of claimed amount are involved, the Court must first decide such questions and then decide suit‑‑‑Straightaway decreeing suit after dismissal of leave application without considering such important questions is not warranted by law.

Irshad Ullah Chatha for Appellants.

Nemo for Respondent.

Date of hearing: 12th February, 2004.

2004 C L D 743

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MAHMOOD HUSSAIN BAJWA‑‑‑Appellant

Versus

Messrs GULF COMMERCIAL BANK LIMITED and 9 others‑‑‑Respondents

First Appeal from Order No.136 of 2001, heard on 13th January, 2003.

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

‑‑‑‑Ss.9(4), 12 & 21‑‑‑Civil Procedure Code (V of 1908), O.V, R.25‑‑‑Ex parte decree‑‑‑Refusal of Banking Court to set aside decree‑‑‑Contention of appellant was that he was living abroad, thus, no decree could be passed against him except affecting his service according to provisions of O.V. R.25, C.P.C.; and that according to general power of attorney, his brother could mortgage property once, thus, subsequent charge created by him, was absolutely unauthorized‑‑‑Validity‑‑‑Appellant had been served through various modes including publication at permanent address of his family given by loanee guarantors and mortgagors to Bank‑‑‑In power of attorney itself, appellant was stated to be temporarily residing abroad, thus, his permanent address was that, which was given to Bank at the time of procurement of loan and execution of documents‑‑‑Appellant was, thus, not required to be served at address given in power of attorney‑‑‑Power of attorney envisaged procurement of loan against mortgage of joint family property, but was not containing any restriction that appellant's brother was authorized to create mortgage once‑‑‑High Court dismissed appeal.

Tahir Mahmood Khokhar for Appellant.

Mian M. Rafi‑ud‑Din for Respondent.

Date of hearing: 13th January, 2003.

2004 C L D 745

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Mst. GHULAM KUBRA and 7 others‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN through Manager and 2 others‑‑‑Respondents

Regular First Appeal No.326 of 2000, decided on 3rd February, 2003.

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

‑‑‑‑Ss. 15 & 21‑‑‑Decree for recovery of loan amount‑‑‑Plea of appellants (legal heirs of deceased mortgagee/ defendant) was that mortgage deed and personal guarantee were forged documents having been prepared after death of mortgagee ‑‑‑Validity‑‑‑Record showed that deceased defendant/ mortgagee after refusing to accept service through post on 11‑5‑1999 was served through newspapers on 30‑4‑1999 and 13‑5‑1999 and was then proceeded ex pane‑‑‑Mortgagee was reported to have died on. 17‑7‑1999, whereas mortgage was executed by him on 11‑12‑1991, when he was alive‑‑‑Copy of death certificate of deceased mortgagee was neither certified by Municipal Corporation nor signed by competent authority nor did show that as to on what date applicant applied for same and on what date same was prepared and supplied to him‑‑‑Even if personal guarantee was scored out of security documents the mortgage deed dated 11‑12‑1991, on which date deceased mortgagee was alive, would still hold field‑‑­Principal borrowers had not filed appeal‑‑‑Appellants alongwith principal borrowers, held, were jointly and severally liable‑‑‑High Court dismissed appeal in limine.

Pervaiz I. Mir for Appellant.

2004 C L D 748

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

JAVAID TANVEER MUGHAL ‑‑‑ Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager and 3 others‑‑‑Respondents

First Appeal from Order No.200 of 2002, decided on 29th October, 2002.

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

‑‑‑‑S. 21‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑­Appeal ‑‑‑Dismissal of application under S.12(2), C.P.C. by the Banking Court‑‑‑Appeal against such order was not competent.

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

‑‑‑‑S. 21‑‑‑Appeal‑‑‑Limitation‑‑‑Appeal had been filed on 8‑6‑2002 and computing the time from the date of delivery of the copy of order under appeal dated 24‑4‑2002, appeal was beyond the period of thirty days as prescribed under law‑‑‑No plausible explanation qua the delay in filing appeal within 30 days of obtaining copy of the order having been given, appeal was dismissed as time‑barred.

Muhammad Asghar Khan for Appellant.

Farrukh Mehmood Solehria for ADBP.

Muhammad Iqbal Akhtar for Respondents Nos. 2 to 4.

2004 C L D 752

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

SAKANDAR HAYAT‑‑‑Respondent

Regular First Appeal No.448 of 1996, heard on 11th March, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑--

‑‑‑‑Ss.6 & 9‑‑‑Civil Procedure Code (V of 1908), O. VIII, R.6‑‑­Suit for recovery of loan amount‑‑‑Banking 'Tribunal while decreeing suit directed Bank to refund Rs.1, 61, 911 to defendant excessively‑ received from him ‑‑‑Validity‑‑­Banking Tribunal had no jurisdiction to pass a decree for refund of such amount in a suit for recovery filed by Bank, particularly when no "counter‑claim" or `set‑off" had been claimed by defendant‑‑‑High Court partly accepted appeal by modifying impugned judgment/decree to the extent relating to refund of such amount to defendant.

Regular First Appeal No.385 of 1996 (Agricultural Development Bank of Pakistan v. Nawaz Akhtar) fol.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 11th March, 2003.

2004 C L D 755

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

KHALIL‑UR‑REHMAN and another‑‑‑Appellants

Versus

HABIB BANK LIMITED and 8 others‑‑‑Respondents

Regular First Appeals Nos.721 and 782 of 2001, decided on 29th January, 2003.

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

‑‑‑‑Ss.9, 15 & 21‑‑‑Civil Procedure Code (V of 1908), O.XXXIV, R.1‑‑‑Decree in suit for recovery of loan amount by sale of mortgaged property‑‑‑Necessary parties‑‑‑Contention of appellants (non‑parties to suit) was that they had purchased lease‑hold rights in two suit properties before institution of suit, but they were not impleaded in suit, although they were necessary parties in view of O.XXXIV, R.1, C.P.C., having an interest in mortgage security and rights of redemption, thus, impugned decree could not be executed against them; and that mortgage qua such properties allegedly created by judgment debtors­ defendants was in nature of equitable mortgage, but in original lease deed executed by Cantonment Board, there was specific clause that no encumbrance would be created on its property without its permission, thus, such mortgage was invalid having no adverse effect upon appellants rights‑‑‑Bank did not object to joining appellants as parties in suit, subject to maintaining ,impugned judgment and decree against judgment debtors‑‑‑High Court remanded case to Baking Court for its decision after allowing Bank to file within one month amended plaint by impleading appellants as defendants, and thereafter appellants would have a right to file leave application within 20 days, and impugned decree would remain intact against judgment­ debtors and in abeyance regarding such properties.

M. S. Baqir for Appellants.

Shams Mehmood Mirza for Respondent No. 1.

2004 C L D 757

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

KAMRAN BASHIR‑‑‑Appellant

Versus

CITIBANK N.A. through Branch Manager‑‑‑Respondent, Regular First Appeal No.674 of 2001, heard on 15th January, 2003.

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

‑‑‑‑Ss.10 & 21‑‑‑panun‑e‑Shahadat (10 of 1984), Art.84‑‑­Suit for recovery of amount of credit card‑‑‑Leave to defend suit‑‑‑Plea of defendant was that credit card issued by Bank was lost and its information was duly given to Bank, which did not stop its use and allowed somebody to 'make purchases on its basis in Singapore, while he was in Pakistan‑‑‑Banking Court dismissed leave application after finding that signatures on vouchers of purchases made in Singapore were that of defendant‑‑‑Validity‑‑‑Loss of credit card, intimation to Bank in this behalf, whether defendant went to Singapore, where card was used, were questions requiring proper inquiry, without which issues of facts involved could not be decided‑‑‑Substantial issues of facts had been raised in leave application, which could not be decided without framing of issues and recording of evidence‑‑‑Mere making visual comparison of signatures on purchase vouchers by itself would not be a proper course for Court to reject leave application‑‑‑High Court accepted appeal, set aside impugned judgment/decree and remanded case to Banking Court for its decision afresh with observations that in case of dismissal of suit, decretal amount paid to Bank during pendency of appeal would be returned to defendant with mark‑up at prevalent rate till its repayment.

Haq Nawaz Chattha for Appellant.

Ashar Elahi for Respondent.

Date of hearing: 15th January, 2003.

2004 C L D 760

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

LAHORE DEVELOPMENT AUTHORITY through Director General ‑‑‑Appellant

Versus

HABIB BANK LTD. and 7 others‑‑‑Respondents

First Appeal from Order No. 144 of 1996, heard on 17th March, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.6(8) & 9‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.62‑‑‑Land Acquisition Act (I of 1894), Ss.4, 11 & 16‑‑‑Sale in execution of decree‑‑‑Bank (decree‑holder) claimed that suit‑land was mortgaged with Bank on 12‑12‑1990 by judgment‑debtor, who was holding the same on basis of sale‑deed dated 29‑5‑1990‑‑‑Appellant‑Local Development Authority filed objection petition claiming to have acquired such land in year 1970 under Land Acquisition Act. 1894‑‑­Banking Tribunal dismissed objection petition ‑‑‑Validity‑‑­According to record, Notification of acquisition of such land was issued on 16‑2‑1968, and its award was issued and possession was taken over by Government in 1970‑‑‑Such land, thus, stood acquired and had vested in Government since the time its possession was taken over ‑‑‑Non­ incorporation of relevant entry in Revenue Record would not divest the Authority of its ownership‑‑‑No objection certificate, dated 4‑9‑1990 issued by Land Acquisition Collector stating that as per his record, such land had not been acquired, was of no avail, as he had no authority in law to issue any such certificate‑‑‑High Court accepted appeal, set aside impugned order and deleted such land from "fard taleeka" filed by Bank.

Nemo for Appellant.

Shamas Mehmood Mirza and Syed Mumtaz Hussain for Applicant/ Assignee.

Date of hearing: 17th March, 2003

2004 C L D 762

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

ZULFIQAR ALI MUMTAZ—Appellant

Versus

UNITED BANK LIMITED and 2 others‑‑‑Respondents

First Appeal from Order No.95 of 1994, decided on 17th December, 2002.

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

‑‑‑‑Ss.6 & 12‑‑‑Civil Procedure Code (V of 1908), O.IX, R.13‑‑­Limitation Act (IX of 1908), S.5‑‑‑Banking Companies (Recovery of Loans) Rules, 1980, R.8‑‑‑Ex parte decree, setting aside of‑‑‑Application for setting aside decree was filed after eight years alongwith application for condonation of delay on the ground that defendants did not receive ant) process about institution of suit, thus, they were unaware about its pendency or passing of decree‑‑‑Special Judge dismissed both applications‑‑‑Validity‑‑‑Special Judge had :issued process for service of defendants through all modes including publication in daily newspaper‑‑‑Rule 8 of Banking Companies (Recovery of Loans) Rules, 1980, provided that service in any of the modes would be deemed proper and valid for purposes of the Ordinance‑‑‑Service of defendants had been effected through publication in newspapers, thus, they could not contend that they were not served in suit‑‑­Defendants after having been duly served had neither appeared nor filed application for leave to appear/defend suit, thus, Special Judge had rightly passed ex parte decree against them‑‑‑Application for setting aside decree was grossly time‑barred, and for condonation of delay, no sufficient ground was shown‑‑‑High Court dismissed appeal being devoid of merits.

Messrs Ahmad Autos and another v. Allied Bank of Pakistan Limited PLD 1990 SC 497 rel.

Malik Muhammad Nadeem for Appellant.

2004 C L D 766

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULUTRAL DEVELOPMENT BANK OF PAKISTAN through Manager ‑‑‑Appellant

Versus

Mst. MUHAMMAD KHATOON and 2 others‑‑‑Respondents

Regular First Appeal No.442 of 1996, heard on 10th March, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑‑

‑‑‑‑Ss.6 & 9‑‑‑Suit for recovery of loan amount with liquidated damages and agreed return‑‑‑Refusal of Banking Tribunal to award liquidated damages and agreed return‑‑­Validity‑‑‑Bank was not entitled to amount of liquidated damages‑‑‑Banking Tribunals Ordinance, 1984 did not empower Banking Tribunal to award amount of return‑‑­Bank, according to Islamic Mode of financing was not entitled to claim further amount of return, which had already been debited to account of defendant‑‑‑Impugned judgment was in consonance with facts of the case and law on the subject‑‑‑High Court dismissed appeal.

Allied Bank of Pakistan Ltd. Faisalabad v. Messrs Aisha Garments 2001 MLD 1955 rel.

Mian Nasir Mehood for Appellant.

Nemo for Respondent.

Date of hearing: 10th March, 2003.

2004 C L D 768

[Lahore]

Before Mian Hamid Farooq, J

KASHIF YOUNAS ‑‑‑Appellant

Versus

ABDUL SATTAR and another ‑‑‑Respondents

First Appeal from Order No. 69 of 1996, heard on 31st January, 2003.

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

‑‑‑‑O.XXI, Rr.92 & 94‑‑‑Auction of property under orders of Executing Court‑‑‑Deposit of sale price by auction purchaser (highest bidder) and issuance of sale certificate in his favour‑‑‑Effect‑‑‑Such auction purchaser would get a vested right in auctioned property and to all intents and purposes would become full‑fledged owner thereof.

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

‑‑‑‑O.XXI, Rr.62, 92 & 94‑‑‑Sale of property in execution of decree‑‑‑Deposit of sale price by auction purchaser and issuance of sale certificate in his favour‑‑‑Objection petition by respondent that property sold was mortgaged with Bank, which was not impleaded as party‑‑‑Executing Court dismissed objection petition‑‑‑Contention of auction purchaser was that he was not heard as order of dismissal of objection petition had prejudiced his cause ‑‑‑Validity‑‑­Certain observations made in impugned order were bound to prejudice interest/cause of auction purchaser qua ownership of such property‑‑‑Duty of Executing Court was to afford an opportunity of hearing to auction purchaser, who at relevant time had become owner and had a vested right in property, which had been made subject to certain rights and liabilities by virtue of impugned order passed in his absence‑‑‑Condemning auction purchaser unheard was sufficient reason to set aside impugned order enabling him to plead his case before Executing Court‑‑‑High Court accepted appeal and set aside impugned order, resultantly, objection petition would be deemed to be pending before Executing Court to be decided afresh after hearing both parties.

Muhammad Shahid Khan, for Appellant.

Proceeded ex part vide order dated 29‑4‑2002.

Date of hearing: 31st January, 2003.

2004 C L D 771

[Lahore]

Before Mian Hamid Farooq and Pervez Ahmad, JJ

Messrs MAHMOOD BROTHERS through Mahmood Ahmed and another‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN through Manager and another‑‑‑Respondents

First Appeal from Order No.153 of 2001, heard on 22nd October, 2002.

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

‑‑‑‑Ss. 12, 9(3) & 10‑‑‑Civil Procedure Code (V of 1908), O. V, R.17‑‑‑Suit for recovery of loan‑‑‑Proper service of the defendants‑‑‑Affixation of summons on alleged refusal to receive the same by the defendants ‑‑‑Procedure‑‑­Applicability of O.V, R.17, C.P.C.‑‑‑Scope‑‑‑Banking Court issued summons to the defendants and directed that the summons shall be served through Process Server of the Court; by registered post acknowledgement due; by Courier Service and publication in Urdu Daily and in English Daily and the case was adjourned‑‑‑Court on next date of hearing after finding that no application for leave to defend the suit had been filed, passed an ex parte decree against the defendants‑‑‑Validity‑‑‑Report of the Process Server, which appeared on the back of the summons showed that the summonses were not received by either of the defendants‑‑­Report of the Process Server showed that although the defendants were present, `but they refused to receive the summonses and thus he affixed the summonses on the address given therein; notice so affixed was not witnessed by any of the persons of the locality and no affidavit had been given by the said Process Server in support of the refusal report‑‑‑Stamp of "Nazir" of the Banking Court on the summonses showed, that Process Server had sworn before the said Nazir but it was not clear as to what facts were shown by the said Process Server before the Nazir‑‑­Validity‑‑‑Alleged Swear of the Process Server was not in accordance with law as the Nazir of the Court was not competent Judicial Officer before whom swear could be administered under the law‑‑‑Banking Court, before proceeding ex parte had not satisfied itself that in fact the defendants purposely avoided service thereby attracting the provision of O.V, R.17, C.P.C.‑‑‑Record also did not show that the Process Server used all due and reasonable diligence to locate the defendants‑‑‑Process Server had not mentioned time as well as identity of the house visited by him‑‑‑Process Server, in circumstances, was not empowered to affix the summonses, even if the same were refused to be received by the defendants‑‑‑Nothing on the file was available to show that the summonses, sent through Courier Service or/and by registered acknowledgment due, were received by the defendants‑‑‑No reliance, therefore, could be placed on these modes of Service before saddling the defendant with such huge liabilities‑‑‑Summonses, in circumstances, were never served upon the defendants and the alleged reported affixation was not in accordance with law, on the basis of which the Banking Court had passed the ex parte decree.

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

‑‑‑‑S. 9(3)‑‑‑Modes of service‑‑‑Requirements of publication in one Urdu language daily and in one English language daily having wide circulation‑‑‑Mandatory‑‑‑Publication in the present case was made through the newspapers having a limited circulation‑‑‑Effect‑‑‑Held, it was incumbent upon the Banking Court to ensure that the publication was made in the newspapers having a wide circulation, so that the defendants could attain knowledge about the initiation of the suit through any of the modes of service, including the publication‑‑‑Two newspapers, in which the publication was effected, in the present case, could hardly be said to be having a wide circulation‑‑‑Banking Court, in circumstances, while ordering the publication of summons in the said newspapers, had negated the mandatory provisions of S.9(3) of the Act and had considered the legal requirement of publication of summons just a formality‑‑‑Publication, in circumstances, having not been effected in consonance with S.9(3) of the Act, it could not be said that either the publication of summonses had taken place in the newspapers having wide circulation or that the defendants were served through the prescribed mode of service.

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

‑‑‑‑Ss.12, 9(3) & 10‑‑‑Suit for recovery of loan‑‑‑Service of defendants‑‑‑Modes‑‑‑Defendants, in the present case, were not served through any of the modes provided under the law and the approach of the Banking Court that the defendants had been served through all the provided modes of service was perfunctory, in complete oblivion of the facts of the case and law on the subject‑‑‑High Court declined to maintain the order of the Banking Court passing ex parte decree against the defendants in circumstances.

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

‑‑‑‑Ss.10, 9 & 12(3)‑‑‑Application for leave to defend suit even if was time‑barred, Banking Court was obliged to decide the same was filed before the Banking Court, it was one way or the other.

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

‑‑‑‑Ss.10, 9 & 12(3)‑‑‑Leave to defend suit‑‑‑Defendants who were not properly served by the Banking Court and an ex parte decree was passed against them deposited a reasonable amount with the creditor Bank which showed their bona fides‑‑‑High Court, in circumstances, granted leave to defend the suit to the defendants and allowed them a period of ten days for filing the written statement and directed that if they failed to do so, then the application already on record for leave to defend the suit shall be treated as written statement on behalf of the defendants and Banking Court shall decide the suit, which shall be deemed to be pending after hearing the parties in accordance with law.

C.M. Sarwar for Appellant.

Sardar Muhammad Tariq Dreshak for Respondent.

Date of hearing: 22nd October, 2002.

2004 C L D 779

[Lahore]

Before Mian Hamid Farooq and Parvez Ahmad, JJ

BARKHURDAR‑‑‑Appellant

Versus

AGRICULTRAL DEVELOPMENT BANK OF PAKISTAN through Manager and another‑‑‑Respondents

First Appeal from Order No.176 of 1996, decided on 31st October, 2002.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑--

‑‑‑‑S.9‑‑‑Limitation Act (IX of 1908), S.5‑‑‑Appeal‑‑‑Dismissal for non‑prosecution‑‑‑Application for condonation of delay in filing the application for the re‑admission of the said appeal‑‑‑Contents of the application for condonation of delay were supported by the affidavit of the appellant; to which there was no rebuttal‑‑‑High Court, deeming the averments of the application constituting sufficient cause for the condonation of delay, allowed the application.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑--

‑‑‑‑Ss.11, 9 & 6‑‑‑Financial Institution (Recovery of Finances) Ordinance (XLVI of 2001), S.12‑‑‑Appeal‑‑‑Ex parte decree was passed against the debtor by the Banking Tribunal‑‑­Judgment‑debtor, on attaining knowledge about the said ex parte decree, filed an application for setting aside the same which was dismissed by the Banking Tribunal‑‑‑Counsel for the Bank, after addressing the arguments at length before the High Court, in appeal, submitted that he had no objection to acceptance of the appeal and for the remand of the suit to be decided afresh by the Banking Tribunal (Court)‑‑‑Such course of action was also accepted by the judgment‑debtor‑‑‑High Court, in circumstances, accepted the appeal, and set aside the order of the Banking Tribunal with no order as to costs with the result that application filed by the debtor, for setting aside the ex parte decree was also set aside; suit filed by the Bank against the debtor would be deemed to be pending before newly constituted Banking Court under the Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Debtor was allowed a period of 10 days, for filing an application for leave to defend the suit, as provided under S.12, Financial Institutions (Recovery of Finances) Ordinance, 2001 and the Banking Court was directed, at the first instance, to decide the said application within a period of two months‑‑‑If, however, no such application was filed by the debtor within the stipulated period, law would take its own course.

Malik Allah Yar for Appellant.

Mian Nasir Mehmood for Respondent.

2004 C L D 782

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs GENERAL PACKING INDUSTRIES through Zahid Sultan and 5 others ‑‑‑Appellants

Versus

Messrs HABIB BANK LTD. and 6 others‑‑‑Respondents

Regular First Appeal No. 18 of 2002, heard on 27th January, 2003.

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

‑‑‑‑Ss. 10(12) &22‑‑‑Suit for recovery of loan amount‑‑­Amended leave application not filed within 21 days was dismissed by Banking Court being time‑barred and suit was decreed in favour of Bank‑‑‑Validity‑‑‑Defendant was at liberty to have made statement before Court for treating his earlier previous application to be an application under Financial Institutions (Recovery of Finances) Ordinance; 2001‑‑‑To knock out defendant on such technical ground was most harsh and against rules for dispensation of justice‑‑‑Passing of decree on such account was unwarranted by law.

Iftikhar Ullah Malik for Petitioners.

Nisar Ahmad Nisar for Respondents.

Date of hearing: 27th January, 2003.

2004 C L D 785

[Lahore]

Before Mian Hamid Farooq and Maulvi Anwarul Haq, JJ

Mst. NUSRAT and 4 others‑‑‑Appellants

Versus

MUSLIM COMMERCIAL BANK LTD. and 4 others‑‑‑Respondents

First Appeal from Order No.229 of 1996, heard on 7th June, 2002.

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

‑‑‑‑S.12‑‑‑Civil Procedure Code (V of 1908), O.XXII, R.4‑‑‑ Appeal‑‑‑Non‑appearance on behalf of legal heirs of deceased respondents‑‑‑High Court could proceed with appeal notwithstanding death of such respondents.

(b) Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)‑‑‑­--

‑‑‑Ss.8 & 12‑‑‑ Civil Procedure Code (V of 1908), Ss.34(2), 151, 152, 153 & O.XXI, R.62‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art.114‑‑‑Execution of decree‑Further interest‑­Jurisdiction of Executing Court to award future interest not awarded in decree itself by way of correcting decree‑‑­ Scope‑‑‑Decree was passed on 14‑7‑1981‑‑‑Execution application was consigned to record on 30‑6‑1991 after release of attached property on payment of decretal amount by objectors‑appellants‑‑‑Bank on 27‑1‑1993 filed application under Ss.152/ 153/ 151, C.P. C., seeking relief of future interest by way of making corrections in decree alongwith anticipatory amended execution application‑‑­Court granted such relief after drawing amended decree on 16‑4‑1994 and proceeded with its execution in absence of fresh execution application‑‑‑Dismissal of objection petition filed by appellants‑‑‑Validity‑‑‑Order dated 16‑4‑1994 had been passed without notice to appellants, who was entitled to be heard before passing same‑‑‑Appellants after coming to know about passing of such order had filed appeal, which was not barred by time‑‑‑Such order was without jurisdiction as after passing of decree, Banking Court had become functus officio and could not entertain application under Ss.152/153, C.P.C., and that too being barred by time having filed after 11‑1/2 years of passing of decree‑‑­Banking Court while passing original decree had consciously not granted relief of interest, though same was prayed for in suit‑‑Provisions of Ss.152/153, C.P.C., were not applicable as relief sought by Bank could neither be termed as clerical/ arithmetical mistake in judgment/decree nor had arisen front accidental slip/omission‑‑Due to non filing of appeal against non‑awarding of interest presumption would be that Bank had acquiesced in the matter and was estopped by its conduct to raise such claim through ancillary proceedings, when decree stood finalized‑‑‑Banking Court had proceeded with execution of amended decree in absence of application for its execution as first application had been consigned to record, while second application filed on 27‑1‑1993 was premature‑‑­Banking Court had completely misdirected itself and had passed impugned orders in, complete oblivion of law and facts on record‑‑‑High Court allowed appeal and set aside impugned order, resultantly Bank's application for correction of decree stood dismissed.

Muslim Commercial Bank Ltd v. Continental Engineers Ltd. and others PLD 1992 Lah. 261; Banque Indo‑Suez v. Rchmani Brothers 1993 CLC 1527; Messrs M. Y. Malik & Company and 2 others v. Messrs Splendours International through M.D. 1997 SCMR 309 and Trade and Industry Publications Ltd. v. Universal Blocks 1986 CLC 1143 rel.

Muhammad Nawaz Kasuri for Appellants.

Sh. Shahid Waheed for Respondent No.1.

Respondent No.2 proceeded ex parte.

Date of hearing: 7th June, 2002.

2004 C L D 795

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

SHEHZAD NADEEM‑‑‑Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN, GUJRAT BRANCH through Manager/Attorney‑‑‑Respondent

First Appeal from Order No. 168 of 2002, decided on 20th February, 2003.

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

‑‑‑‑Ss.15, 18 & 21‑‑‑Execution of decree‑‑‑Future mark‑up on decretal amount claimed by Bank, though not awarded under the decree‑‑‑Banking Court dismissed objection of judgment debtor‑‑‑Plea of Bank was that judgment debtor had voluntarily deposited mark‑up, thus, he was not entitled to claim its refund‑‑‑Validity‑‑‑If stay order had not been granted by Court in appeal or by Executing Court, and judgment debtor had deposited amount voluntarily in order to save property from being auctioned pursuant to decree itself, then same would not tantamount to acceptance of payment of future mark‑up, which was not provided by decree‑‑‑High Court accepted appeal set aside impugned order and directed that amount of mark‑up deposited in execution by judgment debtor with Bank be refunded to him.

Muhammad Farooq for Appellant.

Zahoor Anwar for Respondent.

2004 C L D 797

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUHAMMAD MOHSIN NAZIR and 3 others‑‑‑Appellants

Versus

HABIB BANK LIMITED and 2 others‑‑‑Respondents

Execution First Appeal No.230 of 2002, heard on 28th January, 2003.

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

‑‑‑‑Ss. 19 & 22‑‑‑'Transfer of Property Act (IV of 1882), S.53‑‑­Execution of decree passed against principal borrower and his surety‑‑‑Attachment and sale of share of surety in shop‑‑‑Appellant filed objection petition claiming to be purchaser in good faith of whole shop inclusive share of surety, thus, same could not be attached or sold‑‑‑Banking Court directed appellant to deposit decretal amount, but on his failure to do so, dismissed the objection petition‑‑­Validity‑‑‑Nothing was available on record to show that the sale was made with object to defeat the right of creditor‑‑‑All co‑sharers of shop including surety had sold shop to appellant through registered sale‑deed for consideration‑‑­Banking Court was not justified to dismiss objection petition in absence of any material of mala fide intention or collusion between surety and appellant‑‑‑High Court accepted appeal, set aside impugned order and allowed objection petition.

Sh. Mazaffar Ahmed Zafar for Appellants.

Muhammad Aslam Bahleem and Mukhtar Muhammad Rana for Respondents.

Date of hearing: 28th January, 2003.

2004 C L D 800

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

ABDUL RASHEED and another‑‑‑Appellants

Versus

BANK OF PUNJAB through Branch Manager‑‑‑Respondent

Regular First Appeal No.709 of 2002, decided on 19th February, 2003.

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

‑‑‑‑S.22‑‑‑Limitation Act (IX of 1908), Ss.5 & 29(2)‑‑‑Appeal, time‑barred ‑‑‑Condonation of delay‑‑‑Provisions of S.5 of Limitation Act, 1908‑‑‑Applicability‑‑‑Financial Institutions (Recovery of Finances) Ordinance, 2001 was a special law‑‑­Period of limitation for filing first appeal before High Court against judgment of Banking Court as provided under said special law was different from that prescribed under ordinary law for regular first appeal‑‑‑Provisions of S.5 of Limitation Act, 1908, thus, would not be applicable and application under said provision would be incompetent and not maintainable.

Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 fol.

Appellant in person.

Tariq Saleem Sheikh for Respondents.

2004 C L D 802

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

MULSIM COMMERCIAL BANK LIMITED‑‑‑Appellant

Versus

Messrs GAFCOLOR (PAKISTAN) LIMITED and 7 others‑‑‑Respondents

Regular First Appeal No.302 of 1996, heard on 18th February, 2003.

Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)‑‑‑

‑‑‑Ss.6 & 12‑‑‑Civil Procedure Code (V of 1908), O.XVII, R.3‑‑­Suit for recovery of loan amount‑‑‑Dismissal of suit for non­-production of evidence‑‑‑Validity‑‑‑Record showed that after framing of issues, case was adjourned for evidence of parties‑‑‑Case on several subsequent dates had been put off to further dates at joint request of parties for production of their evidence‑‑‑Bank counsel was out of country on preceding date i.e. 17‑9‑1995, but one Officer of Bank was in attendance to be produced in evidence, who had not made request for adjournment, rather Banking Court on its own accord had adjourned case to 12‑12‑1995 for recording evidence of parties as last and final opportunity to them and on such date suit had been dismissed‑‑‑Validity‑‑‑Time had not been granted to Bank at its request, thus, provisions of O.XVII, R.3, C.P.C., were neither applicable nor attracted‑‑­Impugned judgment closing right of plaintiff to produce evidence and consequent dismissal of suit was not sustainable in law‑‑‑High Court accepted appeal, set aside impugned judgment/decree, resultantly suit would be deemed to be pending before Banking Court to be decided in accordance of law after recording evidence of parties.

Qutab‑ud‑Din v. Gulzar and 2 others PLD 1991 SC 1109 rel.

Miss Aniqua Mughis Sheikh for Appellant.

Muhammad Khalid Mehmood Khan for Respondents Nos. 1 to 3.

Date of hearing 18th February, 2003.

2004 C L D 806

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

NASIM IQBAL MALIK and another‑‑‑Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Chief Manager and 3 others‑‑‑Respondents

First Appeal from Order No. 105 of 2002, decided on 29th January, 2003.

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

‑‑‑‑Ss.10, 17 & 22‑‑‑Civil Procedure Code (V of 1908), S.152‑‑‑Consent decree, correction of‑‑‑Consent to decree in the suit in favour of Bank was given only by two defendants and not by appellants‑defendants, whose leave application was pending‑‑‑‑ Banking Court dismissed appellant's application seeking correction of decree passed against them illegally High Court set aside impugned decree to the extent of appellants with observations that their leave application would be deemed pending before Banking court to be decided after hearing parties, and that decree against rest of the defendants would remain intact.

Mian Arshad Mehmood for Appellants.

Mian Qamar‑uz‑Zaman for Respondents.

2004 C L D 808

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

Mrs. NAJMA PERVEEN and another‑‑‑Respondents

Regular First Appeal No.586 of 2001, heard on 17th February, 2003.

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

‑‑‑‑Ss. 9, 15 & 21‑‑‑Specific Relief Act (I of 1877), Ss.42 & 54‑‑‑Suit for declaration, injunction and rendition of accounts‑‑‑Bank issued notice to borrower showing his liability to tune of Rs.36,000‑‑‑Borrower filed suit seeking declaration that no such amount was payable to Bank‑‑­Bank filed fresh statement of accounts‑‑‑Banking Court decreed suit of Borrower and declared such notice illegal and void‑‑‑Contention of Bank was that according to terms of sanctioned letter coupled with relevant clauses of agreement, statement of accounts prepared by Bank was conclusive proof of liability of borrower‑‑‑Validity‑‑‑Such general clause in a cyclostyled document by itself would not be a sufficient proof of liability‑‑‑Bank had to justify by independent evidence entries in statement of accounts cogently disputed by borrower‑‑‑Bank could not explain the basis on which such amount had been calculated‑‑‑Entry made in statement of accounts did not reconcile with agreement between parties‑‑‑Bank could not establish from record liability of borrower to the extent of disputed amount‑‑‑Borrower had not defaulted in payment of agreed instalments of loan till the end of the contract‑‑‑High Court dismissed appeal.

Muhammad Shuja Baba for Appellant.

Sardar Mashkoor Ahmad for Respondents.

Date of hearing: 17th February, 2003.

2004 C L D 810

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

RAJANA COTTON FACTORY (PVT.) LTD. through Chief Executive and 6 others‑‑‑Appellants

Versus

BANK OF PUNJAB through Manager‑‑‑Respondent

First Appeal from Order No. 195 of 2002, decided on 21st January, 2003.

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

‑‑‑‑Ss. 17 & 22‑‑‑Decree for an amount in excess of what was claimed by Bank in plaint‑‑‑Contention of Bank was that its claim was exactly the same, which had been decreed; and that defendants had played fraud and interpolated record by inserting except first page, remaining pages of plaint of another suit relating to same branch of Bank filed by same counsel of defendants‑‑‑Held: Holding of appropriate enquiry by Banking Court was must to ascertain, whether pages of plaint had been changed or not‑‑‑High Court directed Banking Court to submit report within specified period.

Zaheer‑ud‑Din Babar for Appellants.

Khalid Pervaiz Khawaja for Respondent.

2004 C L D 811

[Lahore]

Before Mian Hamid Farooq and Pervez Ahmad, JJ

Messrs CHANCELLORS OVERSEAS and 4 others‑‑‑Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Branch Manager and another‑‑‑Respondents

Regular First Appeal No. 225 of 2002, heard on 7th October, 2002.

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

‑‑‑‑S.10(12)‑‑‑Application for leave to defend the suit‑‑‑Where an application for leave to defend has been filed, before coming into force of Financial Institutions (Recovery of Finances) Ordinance 2001, the defendant shall be allowed a period of 21 days for filing an amended application for leave to defend the suit‑‑‑Only prerequisites for filing of such application are that the defendant must have filed an application for leave to defend before coming into force of Financial Institutions (Recovery of Finances) Ordinance, 2001 and the same is pending at the time of coming into force of the said Ordinance‑‑‑Defendant can file an amended application for leave to defend if the said prerequisites are attracted‑‑‑Contention that only those defendants would be allowed to file the amended application for leave to defend the suit who had already filed an application for leave to defend the suit supported by the affidavits of all the defendants separately, was repelled‑‑‑If there was any defect in filing the original application for leave to defend the suit, the same stood rectified .by filing the amended application under S.10(12) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 inasmuch as the same was entertained by the Banking Court without raising objection.

Messrs U.B.L. v. Messrs Sindh Tech. Industries Ltd. 1998 CLC 1152 distinguished.

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

‑‑‑‑Ss.10, 7 & 13‑‑‑Application for leave to defend the suit‑‑­Judgment of the Banking Court was sketchy, slipshod and devoid of reasons and was not at all a speaking judgment‑‑‑Such judgment could not be called a "judicial order" within the parameters set up by law‑‑‑"Judicial order" must be a speaking order manifesting by itself that the Court had applied its judicial mind to the issues and points of controversy involved in the causes‑‑­Judgment, which was not a speaking judgment and devoid of reasons, was not sustainable being in contravention of law.

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.

Syed Najam‑ul‑Hassan Kazmi for Appellants.

Sh. Ashiq Pervaiz for Respondents.

Date of hearing: 7th October, 2002.

2004 C L D 817

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs FRIENDS INTERNATIONAL (PVT.) LIMITED through Director and 2 others—Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED through Manager and 5 others‑‑‑Respondents

Regular First Appeal No.352 of 2002, heard on 15th October, 2002.

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

‑‑‑‑Preamble‑‑‑Limitation Act (IX of 1908); S.5‑‑‑Provisions of S.5, Limitation Act, 1908 are inapplicable to the proceedings under Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

‑‑‑‑S.10(12)‑‑‑Application for leave to defend the suit had already been filed under the repealed law‑‑‑Pending case‑‑‑Section 10(12) of the Financial Institution (Recovery of Finances) Ordinance 2001 was not mandatory so far as the pending case was concerned‑‑‑Rationale behind S.10(12) of the Ordinance highlighted.

So far as the provisions of section 10(12) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 are concerned, those are not mandatory respecting the pending cases where the leave applications had already been filed by the defendants and were pending adjudication. The rationale behind the filing of fresh leave application in such cases, was that either the defendants may add some new grounds to the leave application, or for the reasons that these applications were to be treated as the written statements in the eventuality the leave was granted. However, if no leave application was moved, it is not the spirit of law, that the application already on the' record should be ignored and the suit be decreed. In such circumstances, the Court would deem the pending application as the one filed under the Ordinance and was supposed to decide the same in accordance with law

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

‑‑‑‑S.10(12)‑‑‑Application for leave to defend the suit‑‑‑Debtor applied for leave to appear and defend the suit‑‑‑Written reply to the said application was filed by the Bank and while the matter was still pending, the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 were enforced‑‑‑Debtor was granted permission by the Banking Court to file an amended application as provided under S.10(12) of the Ordinance which was filed with delay of one day and the Banking Court dismissed the application for leave to appear and defend and decreed the suit‑‑­Validity‑‑‑Provisions of S.10(12) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 being not mandatory in nature so far as the pending cases were concerned, Banking Court, in circumstances, had committed an illegality in straightaway striking off the defence of the debtors, considering as if no leave application had been filed by the debtors and automatically granted a decree in favour of the Bank‑‑‑High Court, in appeal set aside the judgment and decree and remanded the case with the direction to decide the application for leave to defend already pending.

Ch. Abdul Majid and Shahid Shaukat for Appellants.

Ashar Elahi for Respondent.

Ch. Muhammad Aslam Chatha and Haji Dildar Khan for Respondents Nos. 3 to 6.

Date of hearing: 15th October, 2002.

2004 C L D 821

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Lt.‑Col. (Retd.) MAHMOQD AKHTER‑‑‑Appellant

Versus

BANK OF PUNJAB through Manager ‑‑‑Respondents

Regular First Appeal No.399 of 2001, heard on 24th February, 2003.

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

‑‑‑‑Ss.9, 10, 15 & 21‑‑‑Civil Procedure Code (V of 1908), O.X, Rr.1 & 2‑‑‑Suit for rendition of accounts filed against Bank‑‑­Leave to defend was granted to Bank‑‑‑Banking Court dismissed suit before framing of issues, but after recording better statement of plaintiff finding that plaint did not disclose any cause of action‑‑‑Validity‑‑‑After granting leave to defendant, Banking Court was duty bound to frame issues and permit parties to produce evidence‑‑‑Examination of parties to lis under Order X, C.P.C., was for purposes of ascertaining real matter in controversy and such better statements could not be used as a means of trial‑‑‑ High Court allowed appeal, set aside impugned decree and remanded case to Banking Court for its decision in accordance with law.

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

‑‑‑‑O.X, Rr. 1 & 2‑‑‑Purpose of examination of parties to lis is to ascertain real matter in controversy‑‑‑Better statements cannot be used as a means of trial.

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

‑‑‑‑Ss.12 & 21‑‑‑Ex parte decree‑‑‑Refusal of Banking Court to set aside decree‑‑‑Validity‑‑‑Address of appellant as given in plaint and notices issued to him was that of his previous residence, which was on rent and he had vacated same‑‑­Latest address of appellant was available with Bank, on which statement of accounts and other correspondences were ' sent by Bank before filing of suit‑‑‑Bank did not controvert such factual position‑‑‑Service on previous address was no service in law, thus, appellant had not been served on his proper address‑‑‑High Court allowed appeal, set aside ex parte decree, and permitted appellant to file leave application within 30 days.

Khalid Jamil for Appellant.

Farooq Beedar for Respondent.

Date of hearing: 24th February, 2003.

2004 C L D 824

[Lahore]

Before Mian Hamid Farooq and Pervaiz Ahmad, JJ

HUNZA PACKAGES (PVT.) LIMITED through Chief Executive and 2 others‑ ‑‑Appellants

Versus

Messrs ORIX LEASING PAKISTAN LIMITED and others‑‑‑Respondents

Regular First Appeal No.711 of 2001, heard on 7th October, 2002.

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

‑‑‑‑S.18‑‑‑Contract Act (IX of 1872), S.74‑‑‑Breach of agreement‑‑‑Damages‑‑‑When the amount of damages is fixed in the contract itself, in case of breach of contract, such damages are to be assessed in ordinary way.

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

‑‑‑‑S.18‑‑‑Contract Act (IX of 1872), S.74‑‑‑Breach of agreement‑‑‑Levy of liquidated damages by the Bank‑‑­Principles‑‑‑Bank, in the present case, had neither pleaded in the suit nor produced any evidence in order to prove that on account of the non‑payment of the rentals, the Bank had suffered actual losses‑‑‑No document was produced by the Bank in that regard to prima facie show that on account of the alleged breach of contract by tile defendants, the Bank had suffered actual loss‑‑‑Bank, in circumstances, was not entitled to recover the amount charged as additional rental/liquidated damages‑‑‑Judgment passed by the Banking Court, calling for interference was modified accordingly.

Allied Bank of Pakistan Ltd., Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955; Habib Bank Ltd. v. Messrs Farooq Composit Fertilizer Corporation Ltd. and 4 others 1993 MLD 1571; Messrs Hitec Metal Plast (Pvt.) through Chairman, Hasan Parvaiz Sindhi, Muslim Housing Society, Karachi and 3 others v. Habib Bank Limited PLD 1997 Quetta 87 and United Bank Limited v. Messrs Novelty Enterprises Ltd. and others PLD 1998 Kar.199 ref.

Jehanzeb Khan Bharwana for Appellants.

M. Naeem Sahgal for Respondents.

Date of hearing: 7th October, 2002.

2004 C L D 830

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager‑‑‑Appellant

Versus

PERVEZ AKHTAR HUSSAIN ‑‑‑Respondent

Regular First Appeal No.322 of 1996, heard on 6th March, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S8.6 & 9‑‑‑Suit for recovery of loan amount with liquidated damages‑‑‑Plea of defendant was that entire liability had been cleared, and he produced letter of Manager of plaintiff‑Bank, who had admitted therein that defendant had paid all liabilities except liquidated damages‑‑‑Banking Tribunal disposed of suit as having been adjusted‑‑‑Validity‑‑‑ Banking Tribunal had not found any trial or further proceedings in suit necessary in view of such admission as to clearance of liability‑‑‑ Banking Tribunal had exercised discretion on sound principles in declining claim of liquidated damages‑‑‑High Court dismissed appeal.

Habib Bank Limited v. Messrs Farooq Compost Fertilizer Corporation Ltd. and 4 others 1993 MLD 1571; Allied Bank of Pakistan Limited, Faisalabad v. Messrs Asisha Garments through Proprietor and 2 others 2001 MLD 1955; Saudi‑Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170 and National Development Finance Corporation v. Messrs Millrock Quarring (Pvt.) Ltd. and 7 others 2002 CLD 1382 rel.

Mian Nasir Mehmood for Appellant

Nemo for Respondent.

Date of hearing: 6th March, 2003.

2004 C L D 832

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

HAMID ALI CHAUDHRY and another‑‑‑Appellants

Versus

CITIBANK N.A. through Branch Manager‑‑‑Respondent

Execution First Appeal 810 of 2002, decided on 26th February, 2003.

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

‑‑‑‑Ss.9, 19 & 22‑‑‑Suit for recovery of loan amount‑‑‑Plea of defendant was that amounts deposited with Bank had not been accounted for in statement of accounts‑‑‑Banking Court decreed entire claim of Bank and converted, suit into execution proceedings‑‑‑Banking Court dismissed objection petition filed by defendant contending that decree was not in accordance with revised statement of accounts filed by Bank‑‑‑Validity‑‑‑Bank admitted such payments made by defendant and stated that he would have no objection, if appeal was allowed‑‑‑High Court allowed appeal, set aside impugned judgment and accepted objection petition to the extent of such payments with directions that Banking Court would execute decree accordingly.

Dr. Ehsan‑ul‑Haq Khan for Appellant.

Shahid Ikram Siddiqui for Respondent.

Date of hearing: 26th February, 2003.

2004 C L D 834

[Lahore]

Before Ch. Ijaz Ahmad and Ali Nawaz Chowhan, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

Messrs DASTGIR COLD STORAGE IRRIGATION WORKSHOP and 4 others‑‑‑Respondents

Regular First Appeal No.80 of 1996, decided on 12th March, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑­

‑‑‑‑Ss.6 & 9‑-‑Suit for recovery of loan amount with liquidated damages and other charges‑‑‑Refusal of Banking Tribunal to grant liquidated damages and other charges‑‑­Contention of Bank was that such refusal was violative of mandatory provisions of law and agreement executed between parties‑‑‑Validity‑‑‑Proof of receiving notice by defendant was mandatory for grant of liquidated damages and other charges‑‑‑Bank had failed to produce on record any proof of receipt of notice by respondents irz terms of agreement and under the provisions if law‑‑‑Banking Tribunal had given findings of fact after proper appreciation of material on record, wherein no illegality or infirmity was found‑‑ High Court dismissed appeal.

Mian Nasir Mahmood for Appellant.

Farrukh Mahmood for Respondent.

Date of hearing: 12th March, 2003.

2004 C L D 836

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

Mst. BALQEES BEGUM and another‑‑‑Respondents

Regular First Appeal No.486 of 2001, heard on llth March, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.6 & 9‑‑‑Suit for recovery of Bank loan with liquidated damages and insurance charges‑‑‑Banking Tribunal decreed suit, but excluded amount of agreed return from claim of Bank as well as liquidated damages and insurance charges‑‑‑Validity‑‑‑Impugned judgment did not show any reason and logic for denying amount of agreed return and excluding same from decree‑‑‑High Court maintained view of Banking Tribunal as to denial of liquidated damages and insurance charges, and partially allowed appeal by remanding case for re‑consideration of only matter of "agreed return" after hearing parties.

Mian Nasir Mehmood for Appellant.

Nemo for Respondents.

Date of hearing: 11th March, 2003.

2004 C L D 838

[Lahore]

Before Ch. Ijaz Ahmad and Ali Nawaz Chowhan, JJ

TARIQ JAVED and another‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN‑‑‑Respondent

Regular First Appeal No.561 of 1999, heard on 27th February, 2003.

(a) Pleadings‑‑‑

‑‑‑‑ Party cannot be permitted to raise new ground of attack or defence by departing from its previous pleas.

Murad Begum's case PLD 1974 SC 322 fol.

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

‑‑‑‑S.10‑‑‑Leave to defend, grant of‑‑‑Failure to raise any serious and bona fide dispute‑‑‑Effect‑‑‑‑Banking Court would be justified to refuse to grant leave to defend and decree suit against defendant.

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

‑‑‑‑Ss.15 & 21‑‑‑Bankers' Books Evidence Act (XVIII of 1891), S.4‑‑‑Decree in suit for recovery of loan amount‑‑­Validity‑‑‑Defendants had admitted availing of loan facility and had not denied execution of all documents annexed with plaint or placed on record‑‑‑Bare assertion of incorrectness of statement of accounts could in no way be, given any weight or made basis for granting leave to defend suit‑‑‑Defendants had not rebutted presumption of correctness attached to statement of accounts certified under Bankers' Books Evidence Act, 1891‑‑‑Defendants were estopped to wriggle out from their liability on well­-known principle of estoppel and waiver‑‑‑Banking Court had given finding of fact against defendants after appreciation of documentary evidence‑‑‑High Court dismissed appeal in circumstances.

Messrs Chenab Limited Product (Pvt.) Ltd. and others v. Banking Tribunal Lahore and others PLD 1996 Lah. 672; PLD 1985 SC 365; PLD 1996 SC 684; 1999 CLC 137; Muhammad. Iqbal Fasih v. National Bank of Pakistan, Lahore PLD 1980 Lah. 38; Agricultural Development Bank of Pakistan v. Jasarat Husain 2002 CLD 93; Haji Muhammad Mirza v. Muslim Commercial Bank Limited through attorney Manager 2002 CLD 426; Friendship Textile Mills (Pvt.) Ltd. and others v. Government of Balochistan through Secretary, Local Government and Rural Development Quetta and others 1998 CLC 1767; Muhammad Ramzan v. Citibank N. A. 2001 CLC 158 and Central Bank of India v. Syed Muhammad Abdul Jalil Shah and others 1999 CLC 671 ref.

(d) Qanun‑e‑Shabadat (10 of 1984)‑‑‑

‑‑‑‑Arts. 18 & 30‑‑‑Admitted fact need not be proved.

Iftikharullah Malik for Appellant.

Akhtar Hussain Awan for Respondents.

Date of hearing: 27th February, 2003.

2004 C L D 845

[Lahore]

Before Maulvi Anwarul Haq and Abdul Shakoor Paracha, JJ

STANDARD CHARTERED BANK through Fareed Khan Verdag (Attorney of the Bank)‑‑‑Appellant

Versus

M. Y. MALIK & COMPANY and another‑‑‑Respondents

First Appeal from Order No. 18 of 1998, heard on 27th January, 2003.

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

‑‑‑‑Ss.18 & 21‑‑‑Execution of decree‑‑‑Bank guarantee, furnishing of‑‑‑High Court in earlier appeal filed against decree allowed Bank to execute same and recover decretal amount from judgment‑debtor after furnishing Bank guarantee for payment of amount so recovered in accordance with judgment in such appeal‑‑‑Bank applied for execution of decree, but furnished guarantee for one year‑‑­Objection of judgment‑debtor that guarantee was not in terms of order of High Court‑‑‑Executing Court overruled objection‑‑‑Validity‑‑‑Bank showed readiness to furnish guarantee in strict terms of such order‑‑‑High Court disposed of appeal with observations that Bank upon furnishing guarantee in terms of such order would be entitled to execution of decree and recover decretal amount from judgment‑debtor.

Asam Nazir for Appellant.

Salim Shehnazi for Respondent.

Date of hearing: 27th January, 2003.

2004 C L D 847

[Lahore]

Before Jawwad S. Khawaja, J

UNITED BANK LTD. ‑‑‑Plaintiff

Versus

Messrs HAFIZ BROTHERS LTD. and others‑‑‑Defendants

Civil Original Suit No.76 of 1998, decided on10th December. 2002.

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

‑‑‑‑S. 12‑‑‑Ex parte decree‑‑‑Setting aside of‑‑‑Contention was that judgment‑debtor was informed by the Bank (plaintiff) that ex parte decree had been issued against! him‑‑‑Validity‑‑‑Held: Such testimony alone, could not be relied upon, because the notice had to be issued by the Court and served through the process serving agency‑‑­Information given by the Bank about ex parte decree, in circumstances; could not be equated with notice to the judgment‑debtor‑‑‑Ex parte decree was set aside by the High Court.

Messrs Jawad Hasan and Muzammil Ashraf Qureshi for Plaintiff.

Ch. Muhammad Ashraf for Defendants.

2004 C L D 849

[Lahore]

Before Mrs. Fakhar‑un‑Nisa Khokhar, J

PAKISTAN AGRICULTURAL STORAGE‑‑‑Appellant

Versus

CRESCENT JUTE PRODUCTS‑‑‑Respondent

Regular Second Appeal No.59 of 1997, heard on 25th February, 2003.

(a) Words and phrases‑‑­

‑‑‑‑"Stipulation'‑‑‑Meaning.

Blacks Law Dictionary ref.

(b) Words and phrases‑‑‑

‑‑‑‑`Charges'‑‑‑Meaning.

(c) Sale of Goods Act (III of 1930)‑‑‑

‑‑‑‑S.64‑A‑‑‑Plaintiff entered into an agreement with defendant for delivery of goods at destination including all charges‑‑‑Goods were partly delivered when Government, through Notification imposed sales tax at ad veloram‑‑­Contention of plaintiff was that sales tax was to be paid by the defendant on the remaining goods‑‑‑Validity‑‑­No stipulation existed between parties as to the payment of sales tax at the time of execution of contract‑-‑Defendant had accepted delayed supply of goods‑‑‑Willingness on part of defendant and acceptance of delivery showed that there was implied acceptance that additional sales tax would be paid by the defendant in view of section 64‑A of Sale of Goods Act, 1930‑‑‑Concurrent findings of Courts below which were well reasoned, issue‑wise and based on true appreciation of evidence and law, were not interfered with by the High Court.

Muhammad Akram Kh. For Appellant.

Sajid Mahmood Sheikh for Respondent.

Date of hearing: 25th February, 2003.

2004 C L D 853

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

Syed MAHMOOD ZAFAR SAMEEN‑‑‑Appellant

Versus

CITIBANK N.A. and another‑‑‑Respondents

First Appeal from Order No. 174 of 2002, heard on 16th April, 2003.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XXI, Rr.89, 90 & S.11‑‑‑Limitation Act (IX of 1908), Art. 181‑‑‑Res judicata‑‑‑Principles‑‑‑Recovery suit decreed by Banking Court which was partly upheld up to the Supreme Court‑‑‑Mortgaged property was auctioned‑‑­Objection petition by judgment‑debtor‑‑‑Judgment‑debtor failed to deposit the required amount in Banking Court within time prescribed by High Court while granting interim order against confirmation of sale subject to deposit of said amount‑‑‑Banking Court, on failure to deposit the amount by the judgment‑debtor confirmed the sale and issued sale certificate‑‑‑Judgment‑debtor in view of the High Court's judgment which was upheld by Supreme Court was barred by principles of res judicata to raise the same questions in time‑barred objection petition.

Ch. Inayatullah for Appellant.

Shahid Ikram Siddiqui for Respondent.

Date of hearing: 16th April, 2003.

2004 C L D 857

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs AMMAR RICE DEALERS and 2 others‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN and others‑‑‑Respondents

First Appeal from Order No.186 of 2002, heard on 27th January, 2003.

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

‑‑‑‑Ss.10(1), 12 & 22‑‑‑Ex parte decree due to non­appearance of defendant after filing leave application‑‑­Application for setting aside decree under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 was dismissed by Banking Court‑‑‑Validity‑‑‑Defendant had been duly served and his application for leave to defend suit was pending‑‑‑Remedy under S.12 of the Ordinance was, thus, not available to defendant and his application before Banking Court was not maintainable‑‑‑ Banking Court had misdirected itself by proceeding to decide such application on merits‑‑‑High Court also dismissed appeal being not competent.

Muhammad Nawaz Khokhar for Appellants.

Farrukh Mahmood Sulehria for Respondents.

Date of hearing: 27th January, 2003.

2004 C L D 860

[Lahore]

Before Tassaduq Hussain Jilani and Pervaiz Ahmad, JJ

Messrs MODEL STEEL MILLS LIMITED‑‑‑Appellant

Versus

GOVERNMENT OF PAKISTAN through Secretary Commerce and 2 others ‑‑‑Respondents

I.C.As. Nos.505, 506, 554, 555 and 556 of 2000, decided on 4th March, 2004.

(a) Imports and Exports Control Act (XXXIX of 1959)‑‑‑

‑‑‑‑S.3‑‑‑Import of Goods (Price Equalization Surcharge) Act (III of 1967), S.7‑‑‑Notification No.36(66)/Import‑R, dated 25‑4‑1966 and Notification No.62(66)/Import‑R, dated 19‑8‑1966‑‑‑Law Reforms Ordinance (XII of 1972), S.3‑‑‑Intra‑Court appeal‑‑‑Vires of S.7 of Import of Goods (Price Equalization Surcharge) Act, 1967‑‑‑Chief Controller Imports and Exports directed the importers to pay in addition to the usual customs duties and charges an amount as price differential calculated on the basis of average landed cost based on the actual imports during the period from April, 1965 to March, 1966 and the actual landed cost of the imports‑‑‑Such demand was made in the exercise of power conferred on the competent authority under S.3 of Imports and Exports Control Act. 1959, and the Notifications issued pursuant thereto bearing No.36(66)/Import‑R, dated 25‑4‑1966 and No.62(66)/Import‑R, dated 19‑8‑1966‑‑­Notifications and the orders passed thereunder were validated through S. 7 of Import of Goods (Price Equalization Surcharge) Act, 1967‑‑‑Importers assailed in Constitutional petition, the provisions of S.7 of Import of Goods (Price Equalization Surcharge) Act, 1967, Notifications and the differential amount demanded‑‑‑Judge in Chambers of High Court dismissed the Constitutional petition‑‑‑Validity‑‑No factual controversy was raised before the High Court and no prayer was made to requisition the record‑‑‑Such controversy could not be raised in appeal and that too almost 37 years after the transactions ‑‑‑Intra‑Court appeal was dismissed.

Messrs Dada Limited Karachi v. Secretary to the Government of Pakistan, Ministry of Commerce and another PLD 1974 Kar. 254; Lever Brothers (Pakistan) Limited and 9 others v. Government of Pakistan, through Secretary, Ministry of Finance and 2 others 1984 CLC 227; Mir Ahmad Nawaz Khan Bughti v. Superintendent, District Jail, Layallpur and others PLD 1966 SC 357; The Federation of Pakistan through the Secretary Establishment Division, Government of Pakistan, Rawalpindi v. Saeed Ahmad Khan PLD 1974 SC 151; Federation of Pakistan and another v. Malik Ghulam Mustafa Khar PLD 1989 SC 26; Muhammad Sharif v. Muhammad Saeedua Zaman PLD 1968 Lah. 122; Zakaria H.A. Sattar Bilwani and another v. Inspecting Additional Commissioner of Wealth Tax, Range‑II, Karachi 2003 SCMR 271; Khan Asfandyar Wali and others v. Federation of Pakistan through Cabinet Division, Islamabad and others PLD 2001 SC 607; Government of Pakistan through Ministry of Finance and Economic Affairs and another v. Facto Belarus Tractors Limited 2000 SCMR 112; Pakistan through Ministry of Finance and Economic Affairs and another v. Facto Belarus Tractors Limited PLD 2002 SC 208 and Quality Steel Works Limited v. Islamic Republic of Pakistan through the Secretary to the Government of Pakistan, Ministry of Commerce, Islamabad and 3 others 1985 CLC 300 ref.

Quality Steel Works Limited v. Islamic Republic of Pakistan through the Secretary to the Government of Pakistan, Ministry of Commerce, Islamabad and 3 others 1985 CLC 300 distinguished.

(b) Legislature‑‑‑

‑‑‑‑Legislature has the authority to provide for retrospective application of an Act.

Malik Gul Hassan & Co. v. Allied Bank of Pakistan 1996 SCMR 237 rel.

A.K. Dogar for Appellant (in I.C. As. Nos.505 and 506 of 2000).

Mian Nisar Ahmad for Appellants (in I.C.As.Nos.554, 555 and 556 of 2000).

Sher Zaman Khan, Deputy Attorney‑General for Pakistan for Respondents.

Date of hearing: 18th and 19th February, 2004.

2004 C L D 868

[Lahore]

Before Maulvi Anwarul Haq, J

KOHAT CEMENT COMPANY LIMITED through Chief Executive‑‑‑Petitioner

Versus

MONOPOLY CONTROL AUTHORITY, GOVERNMENT OF PAKISTAN, ISLAMABAD‑‑‑Respondent

Writ Petition No.708 of 2004, decided on 17th March, 2004.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19(1)(a), 21 & 24‑‑‑Monopolies Control Authority (Supply of Information) Rules, 1995‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Monopolies Control Authority (Supply of Information) Rules, 1995, whether ultra vires of the Monopolies and Restrictive Trade Practices/ Control and Prevention) Ordinance, 1970‑‑‑Powers, in the present case stood vested in Monopoly Control Authority under S.21 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 to call for any information concerning the activities of' the undertaking and Monopolies Control Authority (Supply of Information) Rules, 1995 framed under S.24 of the Ordinance, only provided for the nature and form in which information was to be provided and Rules had been framed to carry out purpose of said Ordinance‑‑‑Petitioner had contended that Monopolies Control Authority (Supply of Information) Rules, 1995 were ultra vires of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, but he had been unable to substantiate his claim.‑‑‑Contention of petitioner was repelled and his Constitutional petition was dismissed in limine.

M. Saleem Sahgal for Petitioner.

2004 C L D 871

[Lahore]

Before Ali Nawaz Chowhan, J

WELCOME FABRICS‑‑‑Appellant

Versus

VICO FABRICS and others ‑‑‑Respondents

F.A.O. No. 111 of 2003, decided on 24th February, 2004.

(a) Copyright Ordinance (XXXIV of 1962)‑‑‑

‑‑‑‑Ss.41(2)(b) & 76‑‑‑Copyright Board exercising power under S. 41(2)(b) of Copyright Ordinance, 1962‑‑‑Nature‑‑‑Such power was more or less revisional power and not a power as in appeal.

(b) Copyright Ordinance (XXXIV of 1962)‑‑‑

Ss. 41(2)(b), 76 & 78‑‑‑Expunction of entry in Register of Copyright by Copyright Board while relying on affidavit without any cross‑examination for ascertaining truth‑‑‑Validity‑‑‑Parties before the Board had neither produced any document about age of their business and use of disputed labels nor filed income‑tax returns‑‑‑Board had refused appellant's application for production of additional evidence‑‑‑Mere reliance on respondent's affidavit was not safe as he had lost his case before Registrar on basis of material produced‑‑‑Such case deserved remand to Registrar for allowing parties to adduce by evidence about age of their business‑‑‑Findings of Board were to be based on material gathered by Registrar Copyrights‑‑‑Board by passing impugned order had violated provision of appeal‑‑­High Court accepted appeal, set aside impugned order and remanded case to the Registrar.

Shakeel Abid for Appellant.

Sh. Maqsood Ahmad Qadir for Respondents.

Date of hearing: 18th February, 2004.

2004 C L D 875

[Lahore]

Before Maulvi Anwarul Haq, J

WARRIACH PHARMACEUTICALS through Muhammad Owais and 5 others‑‑‑Petitioners

Versus

ELI LILLY & COMPANY through Authorised Signatory and 2 others‑‑‑Respondents

Civil Revision No.273 of 2003, decided on 4th March, 2004.

Patents Ordinance (LXI of 2000)‑‑‑

‑‑‑‑Ss.60 & 61‑‑‑Civil Procedure Code (V of 1908), Ss. 47 & 115‑‑­Patent, infringement of‑‑‑Executing Court, jurisdiction of‑‑‑Suit for injunction and damages filed by the respondents against the petitioners on the ground that the latter had been manufacturing and selling products containing "Olanzapine' which was patented in favour of the former‑‑‑Statement by the Court had proceeded to pass the impugned order imposing harsh penalties upon the petitioners without holding trial and recording evidence as to whether or not the decree had been disobeyed‑‑­Contention of the respondents that the relief in the form of injunction was granted in the said suit through a decree, the same was to be executed as it was, and for this the executing Court could not go behind the same‑‑‑Respondents objected that it was demonstrated before the executing Court that the decree was disobeyed by the petitioners and there was no necessity to record evidence in this regard‑‑‑Validity‑‑‑Suit was disposed of on the basis of a statement recorded for the parties, and the decree referred to such statement‑‑‑Examination of the, statement would not tantamount to be going behind the same‑‑‑Executing Court had proceeded as if the trial of the suit had .been conducted ‑‑‑Observations of the executing Court showed as if several facts had either been established or proved on record‑‑­Books referred by the petitioners supported their plea that the product manufactured by them was different, but the executing Court brushed aside the contents of the same without any cogent reasons treating them as wrong‑‑‑Impugned order of the executing Court was based on mere conjectures and surmises and, thus, could not be made basis of imposing punishments upon the petitioners‑‑‑Petition, in circumstances, was allowed and the impugned order of the executing Court was set aside.

Raja Talat Mahmood v. Ismat Ehtishamul Haq 1999 SCMR 2215; Hatim v. Shah Din PLD 1952 Lah. 77 and Bakhtawar and others v. Amin and others 1980 SCMR 89 ref.

Syed Najam‑ul‑Hassan Kazmi and Amjad Hameed Ghouri for Petitioners.

Farrukh Irfan for Respondent.

Dates of hearing: 9th September, 2003, 27th February and 4th March, 2004.

2004 C L D 886

[Lahore]

Before Mian Saqib Nisar and Ch Iftikhar Hussain, JJ

Messrs GRAIN MANAGEMENT SYSTEMS (PVT.) LTD. and 2 others‑‑‑Appellants

Versus

Messrs FIRST CRESCENT MODARABA through Crescent Business Management (Pvt.) Limited and another‑‑‑Respondents

Regular First Appeal Case No.625 of 2002, heard on 22nd September, 2003.

Modaraba Companies and Modarabas (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.25‑‑‑Civil Procedure Code (V of 1908), O.XXXVII, R.2‑‑­Musharka agreement, stipulations in ‑‑‑Mark‑up‑‑‑Modaraba Tribunal decreed the suit for less than the amount claimed‑‑­Agreement ‑was initially for a period of one month, but as per terms of agreement the same remained alive on quarterly basis until the time it was rescinded or annulled and for such extended period, addition to the repurchase sale price was agreed‑‑­Defendants, after adjusting the Musharaka, had correctly claimed the amount which was decreed by the Tribunal and was not found entitled to the charge of mark‑up‑‑‑Decree of the Modaraba Tribunal was modified to said extent in circumstances.

Azmat Saeed and Asim Hafeez for Appellants.

Shakeel Ahmed Awan for Respondents.

Date of hearing: 22nd September, 2003.

2004 C L D 889

[Lahore]

Before Ch. Ijaz Ahmad and Farrukh Latif, JJ

Messrs PAK. GREEN ACRES (PVT.) LTD. through Managing Director/Chairman and 13 others‑‑‑Appellants

Versus

UNITED BANK LIMITED through Manager/Attorney‑Holder‑‑‑Respondent

Regular First Appeal No.414 of 1998, heard on 6th April, 2004.

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

‑‑‑‑Ss. 9 & 11(2)‑‑‑Contract Act (IX of 1872), Ss. 73 & 74‑‑­Recovery of bank loan‑‑‑Decree in terms of admission of borrowers‑‑‑Failure to decide the issues raised by the borrowers‑‑‑Borrowers admitted liability to the extent of Rs.11, 71, 400 but denied the remaining liability being mark up over mark up and liquidated damages‑‑‑Banking Court decreed the suit in favour of the borrower on the basis of admission made by them and the decretal amount included the liquidated damages, mark‑up over mark‑up and also compound interest‑‑‑Validity‑‑‑Banking Court failed to discuss any evidence regarding the issues except the admitted amount, therefore, the Banking Court erred in law to decree the suit which was not in consonance with the law laid down by Supreme Court‑‑‑Banking Court did not advert to the case‑law on the subject and the judgment was slipshod and devoid of reasons qua all issues except one‑‑­Banking Court before saddling the borrowers with the colossal liability had not taken into consideration the record of the case and the pleadings of the parties‑‑‑High Court maintained the preliminary decree to the extent of admitted amount as there was no infirmity or illegality‑‑‑Judgment 'of the Banking Court on the remaining issues was set aside and the borrowers were directed to deposit the interim decretal amount to ,the extent of admitted amount‑‑‑High Court directed the Banking Court to proceed in the matter and decide the remaining issues afresh in accordance with law‑‑‑Appeal was decided accordingly.

Habib Bank v. Messrs Qayyum Spinning Ltd. 2001 MLD 1351; Habib Bank Ltd. v. Messrs Farooq Compost Fertilizer Corporation Ltd. and 4 others 1993 MLD 1571; Citibank N.A., a Banking Company through Attorney v. Riaz Ahmad 2000 CLC 847; National Bank of Pakistan v. Messrs West Pakistan Tanks Terminal (Pvt.) Ltd. 2000 CLC 896; PLD 2002 Kar.246; 2002 CLC 276; Barkhurdar v. Muhammad Razzaq PLD 1989 SC 749 and 1988 MLD 1126 ref.

PLD 1970 SC 1703 rel.

(b) General Clauses Act (X of 1897)‑‑‑

‑‑‑‑S. 24‑A‑‑‑Public functionaries, duties of‑‑‑Public func­tionaries are bound to decide matters after application of mind.

Messrs Airport Support v. The Airport Manager Quaid‑e‑Azam International Airport Karachi and others 1998 SCMR 2268 and Zain Yar Khan v. The Chief Engineer C.R.B.C. WAPDA Division 1998 SCMR 2419 rel.

Ch. Imam Ali for Appellants.

Khalid Mahmood Sheikh for Respondent.

Date of hearing: 6th April, 2004.

2004 C L D 897

[Lahore]

Before Amir Alam Khan, J

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION LTD. ‑‑‑Petitioner

Versus

SHAHDIN LIMITED and others‑‑‑Respondents

C.O. No‑23 of 199.6 and C.Ms. Nos.447‑L; 621‑L, 439‑L and 622‑L of 2000, decided on 10th April, 2001.

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss. 305, 319 & 338(5)‑‑‑Companies Court Rules, 1997, R.3‑‑‑Winding up of company‑‑‑Judicial sale of company‑‑­Applications for withdrawal of winding up order and recalling and setting aside sale order‑‑‑Company in question was wound up and joint official liquidators who assumed the charge of assets and properties of company, proceeded to sell the same under orders of the Court‑‑‑Highest bid was approved and all concerned agreed to sale price as offered by the bidder‑‑‑Applicant seeking withdrawal of winding up order and setting aside sale order, offered a scheme of rehabilitation and contended that one investor was prepared to take assets of company and was prepared to make down payment a certain amount and balance in 10 years in 20 equal bi‑annual instalments‑‑‑Sale of assets and properties of company was duly advertised, but nobody came forward to object thereto‑‑‑Sale having been confirmed and approved by the Court, could not be set at naught by suggesting or offering a restructuring scheme by a third party‑‑­Proceedings of judicial sales were held under the umbrella of the Court, all steps taken towards such a sale were taken under the orders passed by the Court‑‑‑Concept of stability of judicial sale reflected sanctity attached to the commitment of the Court‑‑‑Apart from the two contracting parties, in the matter of judicial sales, the interest of public at large and commercial morality was also to be considered for if the sale was to be set aside simply on basis of better offer, it would give leverage to all contracting parties to proceed to cancel or rescind their commitment if they got better offer than one settled/accepted by them‑‑‑Such a course definitely would lead to absurd results and would tend to develop a culture in the mind of common man that if the judicial sale could be set aside on receiving a better offer, why could not a common man refuse to abide by his commitment if a better offer was received by him‑‑‑One should remain bound by his commitment, be it a case of common man or a Court‑‑‑Total proceedings culminating in judicial sale, in case could not be set at naught, in circumstances‑‑‑Applications were dismissed in circum­stances.

Hudabia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 ref.

Azmat Saeed for Petitioner.

Zafar Iqbal Awan and Chaudhary Zafar for Respondent.

Noor Muhammad Khan Chandia for Respondent.

Date of hearing: 4th October, 2000.

2004 C L D 905

[Lahore]

Before Muhammad Muzammal Khan, J

JAVED HUSSAIN DAR‑‑‑Petitioner

Versus

LAHORE CHAMBER OF COMMERCE AND INDUSTRY and others‑‑‑Respondents

Writ Petition No. 13108 of 2003, decided on 4th December, 2003.

(a) Trade Organizations Ordinance (XL V of 1961)‑‑‑

‑‑‑‑Ss.9 & 15‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Constitutional petition‑‑‑Elections of Executive Committee of Chamber of Commerce and Industry‑‑‑Nomination papers, scrutiny of‑‑‑Nomination papers of three nominees, who were proposed for seat of Executive Committee, were scrutinized and no objection thereto was raised by any of contestants or by office itself‑‑‑Secretary, of the Chamber, thereafter issued list of validly nominated candidates consisting of said three names‑‑­Subsequently Director of Trade Organization, who was appointed to supervise election, directed second time scrutiny‑‑‑Role of the Director was to supervise and control the election of Chamber of Commerce and not to scrutinize the list of eligible candidates‑‑­Even otherwise Scrutiny Committee constituted on the direction of the Director consisted of members whose own papers would be scrutinized by said Committee‑‑‑Said Committee could not be allowed to stand on the principle that no one could be a Judge of his own cause‑‑Once membership lists of eligible voters and valid candidates, were scrutinized, no one could be permitted to undertake such scrutiny when no such Schedule had been given‑‑‑Respondents could not be given an authority to oust any member, candidate of office bearer under said garb of scrutiny which had already been done‑‑‑Constituting the Scrutiny Committee for its exercise in second round, was without lawful authority and not justified.

Khadim Hussain and another v. Director, Trade Organization, Ministry of Commerce, Islamabad and 4 others 1994 CLC 1860 and Ali Asghar Malik and 3 others v. Federation of Pakistan through Secretary, Ministry of Commerce, Prime Minister Secretariat, Islamabad and 9 others PLD 2000 Lah 143 ref.

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

‑‑‑‑Ss.9 & 15‑‑‑Constitution of Pakistan (1973), Art.199‑‑­Constitutional petition‑‑‑Maintainability‑-‑Alternative remedy, availability of‑‑Availability of alternative remedy, was only a matter of convenience of the Court and it would not exclude jurisdiction vested in Court under Art.199 of the Constitution‑‑­High Court out of convenience could say that party concerned could seek alternative remedy available at law, but said remedy; at its own strength, would not exclude jurisdiction of High Court to scrutinize acts/steps done/taken by the respondent.

S.M. Masud for petitioner.

Hamid Khan, Ijaz‑ul‑Ahsan and Kh. Saeed‑uz‑Zafar for Respondents.

Date of hearing: 27th October, 2003.

2004 C L D 915

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs AGHA FABRICS. (PVT) LIMITED and 3 others‑‑‑Appellants

Versus

UNION BANK LIMITED and another‑‑‑Respondents

Regular First Appeal Case No.452 of 2002, heard on 11th March, 2003.

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

‑‑‑‑‑Ss.7 & 22‑‑‑Decree for recovery of amount availed as cash finance facility‑‑‑Plea of the appellants was that the cash facility availed was without any legal or contractual basis‑‑‑Statements of account showed disbursements made by the Bank to the appellant company‑‑‑Letters found to be written by the appellant company to the Bank acknowledging its debt and asking for further time for repayment‑‑‑Cheques had also been issued by the appellant in favour of the Bank‑‑‑Non‑denial of the letters by the appellants, but taking plea that they were issued under duress‑‑‑Nature of duress, however, was not specified by the appellants either in arguments or earlier in the leave to defend before the Banking Court‑‑‑No legal proceedings either civil or criminal initiated by appellants to complain about duress or seek cancellation/ return of the cheques issued in favour of the Bank‑‑‑Record of the lower Court including the statement of account showed that there was not the slightest doubt that the appellant company did avail facility from the Bank which it had failed to repay‑‑‑Appeal was dismissed.

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑‑‑S.15‑‑‑Duress, defence of‑‑‑Plea taken by the appellants alleged to have availed cash finance facility from the Bank that they were subjected to duress in issuing letters acknowledging their debt towards the Bank‑‑‑Where the nature of duress was not specified by the appellants either in arguments or earlier in the leave to defend before the Banking Court and no legal proceedings either civil or criminal were initiated by the appellants to complain about the said duress, the defence of duress was not accepted by the High Court and appeal was dismissed.

Iftikhar Ullah Malik for Appellants.

Khawaja Aamer Farooq for Respondents.

Date of hearing: 11th March, 2003.

2004 C L D 918

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mehr ZULFIQAR ALI BABER and another ‑‑‑Appellants

Versus

BANK OF PUNJAB through Manager‑‑‑Respondent

Regular First Appeal Case No.383 of 2001, heard on 5th June, 2003.

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

‑‑‑‑Ss. 7 & 11‑‑‑Finance of a certain amount guaranteed by the respondent‑Bank to the appellants‑‑‑Bank, however, recovering from the appellants through the Banking Court an amount higher than the finance guaranteed‑‑‑Plea of the appellants was that Bank should not recover a higher amount than that financed‑‑­Bank's record showing a call by the third party of a lower finance amount than what was being recovered from the appellant‑‑‑Failure of the Bank to show any call by third party for any further finance‑‑‑Interim decree was passed in favour of the appellants making them liable to pay only the sum financed under the guarantee by the Bank and not more than that and case was remanded to the Banking Court and leave granted to the appellants to defend against the excess amount being recovered by the Bank.

Haq Nawaz Chatha for Appellants.

Muhammad Farooq Badar for Respondent.

Date of hearing: 5th June, 2003.

2004 C L D 922

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

UNITED BANK LIMITED‑-‑Appellant

Versus

Messrs ILAM DIN & COMPANY and 13 others ‑‑‑Respondents

Regular First Appeal No‑504 of 1996, heard on 19th March, 2003.

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

‑‑‑‑‑S.7‑‑‑State Bank of Pakistan Incentive Scheme (Circular No.36) applicability of State Bank of Pakistan Circular No.36‑‑‑Plea of appellant Bank was that it was entitled to simple and penal interest which was refused in the decree by the Banking Court‑‑‑Respondents were found entitled for the Incentive Scheme issued under Circular No.36 of State Bank of Pakistan to pay only principal amount plus 5%‑‑‑Respondents found to have deposited with the Bank an amount more than the said requirement under the Incentive Scheme‑‑‑Bank failed to show disability of respondents in qualifying for the Incentive Scheme‑‑­Held, the total debt of the respondents having been discharged in terms of the Incentive Scheme they were not required to make any further payment to the Bank‑‑‑Appeal was dismissed.

Mushtaq Ahmad Khan and Mian Nasir Mahmood for Appellant.

Nemo for Respondents.

Date of hearing: 19th March, 2003.

2004 C L D 924

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

SHERA ‑‑‑ Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Respondent

Regular First Appeal No. 17 of 2003, heard on 27th May, 2003.

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

‑‑‑‑‑S.24‑‑‑Limitation Act (IX of 1908), Ss.5 & 29‑‑‑Appeal‑‑­Limitation‑‑ Applicability of S.5, Limitation Act, 1908‑‑‑Ordinary law provided a time period of 90 days for filing appeal, whereas Financial Institutions (Recovery of Finances) Ordinance, 2001 which was a special law provided a period of 30 days for filing appeal‑‑‑Held, where in a special or local law different periods of limitation had been provided the provisions of S.5, Limitation would not be applicable.

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.

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

‑‑‑‑‑S.24‑‑‑Limitation Act (IX of 1908), Ss.5 & 29(2)‑‑‑Appeal‑‑­Application for condonation of delay‑‑‑Maintainability‑‑‑‑Section 5 of Limitation Act 1908 was not applicable in view of S.29(2) of Limitation Act 1908 where the ordinary and local law provided a. different time period for filing of 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.

Rana Abdul Hameed Khan for Appellant.

Nemo for Respondent.

Date of hearing: 27th May, 2003.

2004 C L D 927

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

SARWAR and 7 others‑‑‑Respondents

Regular First Appeal No.517 of 1996, heard on 28th May, 2003.

(a) Banking Tribunals Ordinance, 1984 (LVlII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7 ‑‑Amount asserted by the respondents as having been paid was not denied by the Bank‑‑‑Conceding to the said assertion and not controverting the same, would be deemed to be admission by the Bank‑‑‑Held, in the absence of any application filed by the Bank before the Banking Court to agitate the matter or any plea taken by Bank during the course of arguments, the claim of the Bank that the suit amount had not been properly adjusted was not admissible.

(b) Banking Tribunals Ordinance, 1984 (LVIII of 1984)‑‑‑

‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7‑‑‑Liquidated damages, award of‑‑Bank was not entitled to recover the amount of liquidated damages.

Allied Bank of Pakistan Ltd. Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref.

(c) Banking Tribunals Ordinance, 1984 (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7‑‑‑Future mark‑up, award of‑‑‑Held, it was a settled law as well as the basic concept of Islamic mode of financing, that the Bank was not entitled to claim future mark­up‑‑‑Banking Tribunals Ordinance, 1984 did not empower the Banking Tribunal to award future mark‑up.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 28th May, 2003.

2004 C L D 930

[Lahore]

Before Jawwad S. Khawaja, J

ZAHID MAHMOOD ‑‑‑Appellant

Versus

Mst. SABRINA IQBAL ‑‑‑Respondent

Regular Second Appeal No. 1 of 1995, heard on 12th June, 2003.

Negotiable Instruments Act (XXVI of 1881)‑‑‑

‑‑‑‑S.28‑‑‑Pro note‑‑‑Liability of "gent signing the pro note‑‑­Scope‑‑‑If there are words indicating that the person signing a promissory note did so for and on behalf of a principal or in a representative capacity, the person does not assume any personal liability by signing such promissory note.

Munawar‑ul‑Islam for Appellant.

Zulfiqar Ali Bhatti for Respondent.

Date of hearing: 12th June, 2003.

2004 C L D 934

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

KING TYRES INDUSTRIES LIMITED through Director and 7 others‑‑‑Appellants

Versus

UNION LEASING LIMITED through Manager and 2 others‑‑‑Respondents

Regular First Appeal Case No.450 of 2002, decided on 22nd October, 2003.

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

--‑S. 7‑‑‑Suit for recovery by a leasing company decreed by Banking Court‑‑‑Execution of documents was not disputed‑‑‑Full payments were alleged to have been made‑‑‑After adjusting the admitted payments made by the defendants under the two lease agreements and over draft finance facility, it was found that the Court had committed no error in awarding the decree against the other defendants and one defendant was found liable jointly and severally to pay the amount outstanding in respect of one transaction of demand finance facility to which she had stood as a guarantor‑‑‑Judgment and decree of the Trial Court only to the extent of said defendant were modified, and except such modification appeal was dismissed with ‑ costs throughout.

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

‑‑‑‑Ss.7 & 2(a)(b), (d), (e)‑‑‑Banking Court‑‑‑Jurisdiction‑‑‑Leasing company‑‑‑Contention was that Leasing Company could not grant the overdraft finance facility therefore agreement in this behalf was void‑‑‑Such was not "Finance" to bring the transaction within the jurisdiction of the Banking Court‑‑‑Definitions of "financial institution", "finance" and "customer" had clarified that the defendants were customers and recovery was sought for the finance, resultantly under special law,. Banking Court had the jurisdiction.

Iftikhar Ullah Malik and Mrs. Khalid Abid for Appellants.

Aysha Malik for Respondents.

Date of hearing: 22nd October, 2003.

2004 C L D 937

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

MUHAMMAD NAFEES‑‑‑Appellant

Versus

ALLIED BANK OF PAKISTAN LIMITED through Manager and another‑‑‑Respondents

Regular First Appeal No.313 of 2002, heard on 22nd October, 2003.

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

‑‑‑‑Ss. 5 & 6‑‑‑Suit for recovery‑‑‑Proof of execution of banking documents‑‑‑Bank claimed that the defendant availed the loan facility from the Bank and had not repaid‑‑‑Defendant denied the availing of loan facility and execution of documents‑‑‑Only one witness was produced by the Bank, who deposed about the execution of the documents‑‑‑Onus of issue about proving such documents was on the Bank‑‑‑Statement of the Bank was not corroborated and signatures of defendant were not proved through Handwriting Expert‑‑‑Banking Court thus, had erroneously relied upon such documents‑‑‑Appeal was allowed by the High Court and judgment and decree of the Banking Court were set aside in circumstances.

(b) Bankers' Books Evidence Act (XVIII of 1891)‑‑‑

‑‑‑‑Ss.2(3) & 4‑‑Statements of accounts‑‑‑Presumption of correctness‑‑‑Presumption attached to the statement of accounts is only to the extent that whatever figures are giver. or reflected therein are true and as per the book of account, there is no presumption that the defendant had obtained the loan.

Javed Jalal for Appellant.

Riaz Ahmad Rana for Respondents.

Date of hearing: 22nd October, 2003.

2004 C L D 940

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

JEHANZEB BURKI‑‑‑Appellant

Versus

REGIONAL DEVELOPMENT FINANCE CORPORATION and 3 others‑‑‑Respondents

Regular First Appeal No. 221 of 2000, heard on 3rd July, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.10 & 11‑‑‑Suit for recovery of loan against principal company and the guarantors‑‑‑Leave to defend the suit‑‑‑Grant of‑‑‑Banking Tribunal having not found the defendant's separate reply as satisfactory or disclosing good defence, decreed the suit‑‑‑No personal guarantee was available from the defendant to secure the finance availed by the principal debtor under the financing agreement nor there was on the record any concurrence given by the defendant for the liability of the company under the financing agreement‑‑‑Serious and bona fide defence to the suit having been disclosed in circumstances, unconditional leave to defend the suit was granted by the High Court.

Mst. Parveen Amir v. National Bank of Pakistan and 3 others 2002 CLD 509 ref.

Syed Hamid Ali Shah for Appellant.

Zahid Hamid for Respondent No. 1.

Mian Javed Jalal for Respondent No.2.

Pervez Ahmad Barki for Respondent No.3.

Shakil‑ur‑Rehman Khan for Respondent No.4.

Date of hearing: 3rd July, 2003.

2004 C L D 944

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

TARIQ RASHID ‑‑‑Appellant

Versus

FIRST PUNJAB MODARBA ‑‑‑Respondent

Regular First Appeal No.454 of 2000, heard on 1st July, 2003.

Modaraba Companies and Modarabas (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.25‑‑‑Civil Procedure Code (V of 1908), O.XXXVII, R.2‑‑‑Mark up‑‑‑Interest, charging of‑‑‑Compensation pendente lite ‑‑‑Suit was filed two years after expiry of the facility and mark up was charged from the date of expiry of the facility till date of the filing of the suit‑‑‑Decree was modified to the extent of amount of mark up holding the same as not payable‑‑‑Compensation pendente lite till realization of decree was maintained in circumstances.

Rana Muhammad Arshad Khan for Appellant.

Muhammad Aqeel Malik for Respondent.

Date of hearing: 1st July, 2003.

2004 C L D 947

[Lahore]

Before Mian Hamid Farooq, J

NADEEM RASHEED‑‑‑Petitioner

Versus

SMALL BUSINESS FINANCE CORPORATION through Manager and another‑‑‑Respondents

W.P. No.7483 of 2002, decided on 6th May, 2002.

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

‑‑‑‑‑S.9‑‑‑Negotiable Instruments Act (XXIVI of 1881), Ss. 79, 80, 114 & 117‑‑‑Civil Procedure Code (V of 1908), S.34‑‑‑Constitution of Pakistan (1973), Arts.199 & 203‑G‑‑‑Constitutional petition‑‑­Demand of outstanding loan amount with interest/mark‑up by financial institution‑‑‑Contention of customer was that he had paid more than principal amount, thus, balance amount claimed being "Riba" could not be recovered from him‑‑‑Validity‑‑‑High Court in view of Art.203‑G of the Constitution had no jurisdiction to determine validity of charging of interest/mark‑up‑‑‑Customer had executed different agreements/documents of his own free­will ‑‑‑‑Interest/Riba, no doubt was un‑Islamic. but past and closed transactions could not be re‑opened‑‑‑Customer could file suit for redressal of his grievance before Banking Court, which was efficacious and adequate remedy‑‑‑Constitutional petition was, therefore, not competent‑‑‑High Court directed the customer to discharge his liability strictly in terms of law, rules and terms of agreement by appearing before financial institution, who would settle matter within specified time strictly in accordance with law and rules after hearing and giving him benefits/concessions of incentive schemes, if applicable to his case, and respondent financial institution was directed not to take any action or coercive measure for recovery of outstanding amount till then.

Mumtaz Masud's case 1994 SCMR 2287; Muhammad Ramzan v. Citibank N.A. 2001 CLC 158 and Dr. Muhammad Aslam Khakhi v. Syed Muhammad Hashim and 2 others PLD 2000 SC 225 rel.

Nisar A. Mujahid for Petitioner.

2004 C L D 949

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

MUHAMMAD AFZAL‑‑‑Respondent

R.F.A. No. 138 of 1997, heard on 8th September, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Judgment, validity of‑‑‑Judgment passed under statutory provisions by the Banking Tribunal after the pronouncement of an earlier judgment by a superior Court declaring those statutory provisions as un-Constitutional, is a nullity and is to be set aside.

Messrs Chenab Cement Product Private Limited and others v. Banking Tribunal Lahore and others PLD 1996 Lah. 672 ref.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Powers and jurisdiction of Banking Tribunal‑‑‑Banking Tribunal has no jurisdiction to adjudicate upon any suit or pass any judgment where the superior Curt has earlier declared the appointment of the Presiding Officer of that Tribunal as un-Constitutional and without lawful authority.

Messrs Chenab Cement Product Private Limited and others v. Banking Tribunal Lahore and others P LD 1996 Lah.672 ref.

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

‑‑‑‑Art.201‑‑‑Decision of the High Court is binding upon the subordinate Courts‑‑‑Subordinate Courts lack jurisdiction in cases where notifications appointing their Presiding Officers have been declared un-Constitutional by the superior Courts‑‑­Subsequent judgments and decrees of the subordinate Courts in the such‑like cases are liable to be set aside.

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

‑‑‑‑S.5‑‑‑All suits deemed to be pending and to be decided afresh pertaining to matters falling under Financial Institutions (Recovery of Finances) Ordinance 2001 shall be entertained by Courts constituted and having jurisdiction under the said legislation.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 8th September, 2003.

2004 C L D 953

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

ABDUL WAHEED and 2 others‑‑‑Respondents

R. F. A. No. 145 of 1997, heard on 9th September, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑

‑‑‑‑S.5‑‑‑Fial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7‑‑‑Liquidated damages, award of‑‑Recovery suit was decreed by the Banking Tribunal without awarding, liquidated damages and future mark‑up to the Batik‑‑‑Plea of the Bank in appeal was that it was entitled to the award of liquidated damages and future mark‑up‑‑Validity‑‑‑Bank was not entitled to recover the amount of liquidated damages.

Allied Bank of Pakistan Ltd. Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7 ‑‑‑Future mark‑up, award of‑‑‑Bank was not entitled to claim future mark‑up in view of basic concept of Islamic mode of financing‑‑‑Banking Tribunals Ordinance, 1984 did not empower the Banking 7Wbunal to award future mark‑up.

Mian Nasir Mehood for Appellant.

Nemo for Respondent.

Date hearing: 9th September, 2003.

2004 C L D 956

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Appellant

Versus

ARSHAD ALI ‑‑‑Respondent

R.F.A. No. 141 of 1997, heard on 9th September, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance, (XLVI of 2001), S.7‑‑‑Liquidated damages, award of‑‑‑Recovery suit was decreed by the Banking Tribunal but declined to award liquidated damages and future mark‑up to the Bank ‑‑‑Validity‑‑­Bank was not entitled to recover the amount of liquidated damages.

Allied Bank of Pakistan Ltd. Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance, (XLVI of 2001), S.7‑‑‑Future mark‑up, award of‑‑‑Bank was not entitled to claim future mark‑up in view of basic concept of Islamic mode of financing‑‑‑Banking Tribunals Ordinance 1984 did not empower the Banking Tribunal to award future mark‑up.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 9th September, 2003.

2004 C L D 958

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

Mst. AMIRAN BIBI and 3 others‑‑Respondents

R.F.A. No. 139 of 1997, heard on 9th September, 2003.

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

‑‑‑‑S.7‑‑‑Suit for recovery was decreed while adjusting under the Prime Minister's Package Scheme the amount deposited by the respondents alongwith the amount claimed by the Bank‑‑‑Plea of the Bank in appeal was that the judgment of the Banking Tribunal was not sustainable in law‑‑‑In view of the pleadings of the parties before the Banking Tribunal and the payments made by the respondents to the appellant‑Bank, no such objection was ever taken by the Bank in the Banking Tribunal, which amounted to admission of the said amounts by the Bank‑‑‑No grave legal infirmity was pointed out by the appellant in the impugned judgment of the Banking Tribunal‑‑­Respondents had rightly liquidated the outstanding loan liability under the Prime Minister's Package Scheme in circumstances.

(b) Banker and customer‑‑‑

‑‑‑New plea‑‑‑Bank had not raised objections to certain averments and payments made by the respondent at any stage of the proceedings at the lower forum‑‑‑Held, the Bank was not allowed to raise a new plea before the appellate forum, which had not been agitated before the lower forum.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 9th September, 2003.

2004 C L D 961

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs S.B. ENGINEERING (PVT.) LIMITED through Chief Executive and 4 others ‑‑‑Petitioners

Versus

PRUDENTIAL COMMERCIAL BANK LIMITED through Manager‑‑‑Respondent

R.F.A. No. 63 of 2002, heard on 10th April, 2002.

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

‑‑‑‑Ss.11 & 17‑‑Suit for recovery was decreed against the appellants‑Plea of the appellants in appeal was that there was no mark up agreement with the Bank thus mark‑up charged by the Bank was illegal and that the appellants deposited a certain amount to discharge their liability towards the Bank, but that amount was not reflected in. the statements of account of the Bank‑‑Bank failed to identify the adjustment of the said amount in the statement of account but relied upon a letter issued through the Bank's official showing that adjustment had been duly made‑Said letter did not amount to a statement of account‑‑Judgment and decree of the Banking Court was upheld to the extent of amount arrived at after deducting the amount claimed by the appellants to be adjusted but subject to the deposit of the former amount within the prescribed period with the Bank failing which the appeal would be deemed to have been dismissed‑‑‑Disallowing the leave to the appellant to appear and defend the suit for determination of two issues, the case was remanded for decision according to law.

Waqar Mushtaq Ahmed for Petitioners.

Haq Nawaz Chatha for Respondent.

Date of hearing: 10th April, 2002.

2004 C L D 963

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

ATTA ULLAH KHAN‑‑‑Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager and another ‑‑‑Respondents

R.F.A. No.262 of 2003, decided on 9th October, 2003.

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

‑‑‑‑Ss.7, 10 & 22‑‑‑Application for leave to defend, dismissal of‑‑­Suit decreed against the appellant‑‑Plea of the appellant was that despite earlier directions of the High Court in the same suit to decide the application for leave to defend the suit after hearing the parties, the Banking Court had decided the said application without providing opportunity of hearing to the appellant‑‑a­ Validity‑‑‑Plea of the appellant had substance as no opportunity of hearing was provided to him by the Banking Court and he was condemned unheard‑‑Banking Court had also failed to comply with the directions of the High Court and it was violation of the principles of natural justice‑‑Impugned judgment and decree was set aside by the. High Court without direction that suit and the application would be deemed to be pending in the Banking Court.

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

‑‑‑Ss.7, 10 & 22‑‑‑Principles of natural justice, violation of­--Where the Banking Court dismissed the application for leave to defend and decreed the, suit against the appellant without providing him an opportunity of hearing despite the earlier directions of the High Court in the same suit that sufficient opportunity of hearing was to be provided to the parties, such decree was in violation of the principles of natural justice as the appellant was condemned unheard‑‑‑Impugned judgment and decree was set aside in circumstances.

Tabinda Islam for Appellant.

Malik Karamat Ali Awan for Respondents.

2004 C L D 966

[Lahore

Before Muhammad Akhtar Shabbir and Nasim Sikandar, JJ

Mian MUHAMMAD UNIS QAMAR‑‑‑Appellant

Versus

CITIBANK, N.A. through Manager‑‑‑Respondent

F.A.O. No.307 of 2000, decided on 9th June, 2003.

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

‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.66--­Execution of decree‑‑ Auction of mortgaged property‑Objection of the appellant was that the notice of the proclamation had not been issued to him under O.XXI, R.66 of C.P.C. and that auction schedule was not published‑Record of the Banking Court showed that notices under O.XXI, R.66, C.P.C were issued and the appellant had even filed an objection petition, but due to non-­prosecution the objection petition was dismissed and the Court-­auctioneer was appointed to submit the schedule for auction‑‑­Objections of the appellant were baseless in circumstances‑­Appeal was dismissed in limine.

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

‑‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.66--­Where the record of the Banking. Court showed that notices under O.XXI, R.66, C.P.C. were issued to the appellant and he had even filed an objection petition, but due to non prosecution the objection petition was dismissed and the Court‑auctioneer was appointed to submit the schedule for auction, objections of the appellant that the notice of the proclamation had not been issued to him under O.XXI, R.66, CP.C and also that auction schedule was not published, were baseless.

Irfan Masood Sheikh for Appellant.

Shahid Ikram Siddiqui for Respondent

2004 C L D 968

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

UNITED BANK LIMITED through Attorneys‑‑‑Appellant

Versus

Messrs ITTAFAQ TRADERS and 2 others ‑‑‑Respondents

R.F.A. No. 485 of 1996, heard on 3rd April, 2003.

Financial Institution (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

--‑‑Ss.3(2) & 7‑Suit for recovery decreed in favour of the Bank‑‑­Plea of the Bank in appeal that the Banking Court while passing the decree had erroneously declined to award interest from the late of disbursement of the principal amount to the respondents end had instead awarded it from the date of filing of the suit‑‑­Validity‑‑‑View taken by the Banking Court was not consistent with the pleadings of the parties and the statement of account on cord and appeared to be based on the mere assumption that the Bank was entitled to the decree from the date of filing of the suit‑‑‑Proper application of mind was not made by the Banking Court‑‑Matter was remanded to the Banking Court by the High Court.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 3rd April, 2003.

2004 C L D 970

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mst. PARVEEN KAUSAR BHATTI and others‑‑‑Petitioners

Versus

CITIBANK, N.A. and others‑‑‑Respondents

E. F. A. No. 331 of 2001, decided on 4th June, 2003.

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

‑‑‑‑S.19‑Civil Procedure Code (V of 1908), O.XXI, Rr. 89 & 90‑‑­Execution of decree‑‑‑Sale of property in auction‑‑Validity‑­Objections by appellants were that the sale had been made in violation of mandatory rules, as Court auctioneer unauthorizedly reduced in the proclamation of sale the reserved price fixed by the Court, proclamation was not affixed at the site and names of judgment‑debtors and description of the property were erroneously mentioned in the proclamation‑‑‑Offer to the Banking Court by the appellants to pay 5% of auction price in order to set aside the sale‑‑Acceptance of offer by Banking Court but failure of appellants to pay the price within the prescribed time‑­Objections of appellant dismissed by Banking Court and sale confirmed in favour of respondent‑‑Where a person had applied under O.XXI, R.89(2) of C.P.C. unless the application was withdrawn, he could not be permitted to take the benefit of O.XXI, R.89(2), C.P.C‑‑Appellants having given up their grounds of attack on the sale under O.XXI, R.90, C.P.C. and had taken recourse to offer for deposit of auction amount instead, in terms of O.XXI, R.89, C.P.C. there was no illegality in dismissing their objections and confirming the sale if they had failed to deposit the auction amount within the prescribed time‑‑‑Once having made offer to deposit the auction amount in terms of O.XXI, R.89, C.P.C. the appellants were deemed to have given up their plea of O.XXI, R.90, C.P.C.‑‑‑Appeal was dismissed by the High Court.

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

‑‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr.89 & 90‑‑­Executton of decree‑‑‑Sale of property in auction‑‑‑Validity‑‑­Where the appellants gave up their grounds of attack on the sale under O.XXI, R.90, C.P.C. and took recourse to offer for deposit of auction amount instead, in terms of O.XXI, R.89, C.P.C. there was no illegality in dismissing their objections and confirming the sale if they had failed to deposit the auction amount within the prescribed time‑‑‑Once having made offer to deposit the auction, amount in terms of O.XXI, R.89, C.P.C. the appellants were deemed to have given up their plea of O.XXI, R.90, C.P.C.‑­Appeal was dismissed.

Masood Gohar for Appellants.

Shahid Ikram Siddiqui for Respondent No. 1.

Ch. Muhammad Aslam for Respondent No.2.

2004 C L D 973

[Lahore]

Before Mian Hamid Farooq, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Attorney‑‑‑Plaintiff

Versus

Messrs PROMETALS LTD. and 9 others‑‑‑Defendants

Civil Original Suit No.59 of 2002, decided on 20th February, 2003.

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

‑‑‑‑‑S.10(1)‑‑‑Suit for recovery‑‑‑Failure to file leave to defend within the statutory period‑‑‑Consequence‑‑Where some of the defendants failed to file application for leave to defend the suit, as provided under the law, the allegations made in the plaint, shall be deemed to be admitted by the said defendants‑‑Suit was decreed in favour of the Bank and against the said defendants.

Messrs Ahmad Autos and another v. Allied Bank of Pakistan Limited PLD 1990 SC 497 and Messrs Qureshi Salt & Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi 1999 SCMR 2353 ref.

Shoaib Zafar for Plaintiff.

Ijaz‑ul‑Hassan and Khawaja Asif for Defendants Nos. 1 and 4 to 8.

Nemo for other Defendants.

2004 C L D 974

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

MUHAMMAD SHARIF & SONS through Proprietor and another‑ ‑‑Appellants

Versus

UNITED BANK LIMITED and another‑‑‑Respondents

Regular First Appeal Case No. 108 of 1997,heard on 16th October, 2003.

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

‑‑‑‑Ss.3(2) & 7‑‑‑West Pakistan Relief of Indebtedness Ordinance (XV of 1960), S.3‑‑‑,Suit for recovery was decreed‑‑‑Money decree passed in favour of Bank was based on promissory note‑‑‑Penal interest‑‑‑Legality in the absence of agreement‑‑‑Objection of appellants in appeal was that in the absence of an agreement for charging penal interest, the Bank could only have claimed simple interest and relying on S.3 of West Pakistan Relief of Indebtedness Ordinance 1960 the Bank could not have recovered double the amount from the appellants after having deducted the amount paid by the appellants‑‑Record showed that there was no agreement in which appellants undertook to pay penal interest nor it was ever acknowledged by the appellants‑‑‑Penal interest could not be charged without any express contract‑‑­Held, in the absence of any agreement to pay penal interest, the Bank had no authority to charge the penal interest‑‑Amount of penal interest was deducted from the decretal amount in circumstances.

National Bank of Pakistan v. Messrs Ch. Ram Din & Company and others PLD 1985 Lah. 117 and Allied Bank of Pakistan v. Masood Ahmad Khan 1994 MLD 1557 ref.

(b) West Pakistan Relief of Indebtedness Ordinance (XV of 1960)‑‑‑

‑‑‑Ss.3 & 2(b)‑‑‑Section 3 of West Pakistan Relief of Indebtedness Ordinance 1960, applicability of‑‑‑Suit for recovery was decreed‑‑‑Money decree passed in favour of Bank was based on promissory note‑‑‑One of the objections of appellants in appeal was that under S.3 of West Pakistan Relief of Indebtedness Ordinance, 1960 the Banking Court could not have passed a decree in respect of a debt for a larger sum than twice the amount of the sum found by the Court to have been actually advanced as loan deducting any amount already received by the creditor‑‑Interpretation of the word "debt" under S. 2(b) of West Pakistan Relief of Indebtedness Ordinance 1960‑‑‑Exclusion of banking companies and scheduled bank under S.3 of West Pakistan Relief of Indebtedness Ordinance 1960‑‑‑Section 3 of West Pakistan Relief of Indebtedness Ordinance, 1960 was not applicable to the Bank.

Samandar Khan v. Mst. Maqbool and others 1974 SCMR 388 ref.

(c) West Pakistan Relief of Indebtedness Ordinance (XV of 1960)‑‑‑

‑‑‑Ss.2(b) & 3‑‑Word 'debt' interpretation of‑‑‑Legislature has specifically excluded the debts of the banking companies and the scheduled banks from the application of S.3 of West Pakistan Relief of Indebtedness Ordinance, 1960‑‑Respondent was a banking company and a scheduled bank, thus S3 of West Pakistan Relief of Indebtedness Ordinance 1960 had no applicability on it.

Hafeez‑ur‑Rehman Mirza for Appellants.

Malik Imran Aziz for Respondents.

Date of hearing: 16th October, 2003.

2004 C L D 978

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Mrs. SHEHNAZ KHALID‑‑‑Appellant

Versus

CITIBANK, N.A. ‑‑‑Respondent

F.A.O. No. 189 of 2002, heard on 4th June, 2003.

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

‑‑S.18(6)‑‑‑Financial Institutions (Recovery of Finances) Ordinance, (XLVI of 2001), S.19(7)‑‑‑Decree for recovery of loan under car‑finance scheme ‑‑‑Car forcibly taken into possession by the Bank‑‑ Application by appellant for return of the car‑‑­Banking Court consigned the application of the appellant to record on the ground that the car in dispute was sold and Bank­ had adjusted the sale price to its claim‑‑Validity‑‑‑Held, impugned order was not a speaking order, application by the appellant could not be consigned to record merely on the ground that the car in dispute had been sold and the sale amount adjusted‑‑‑Banking Court was bound to decide the application of the appellant in accordance with law‑‑‑Impugned order was set aside by the High Court.

Iftikhar Ullah Malik for Appellant.

Ashar Elahi for Respondent.

Date of hearing: 4th June, 2003.

2004 C L D 980

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUHAMMAD MUNIR AKRAM alias MUHAMMAD AKRAM‑‑‑Appellant

Versus

NATIONAL BANK OF PAKISTAN and 8 others ‑‑‑Respondents

F.A.O. No. 360 of 2001, decided on 1st July, 2003.

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

‑‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr.58 & 62‑‑‑Execution of decree‑‑‑Sale of property under auction‑‑‑Appellant in objection petition had claimed ownership of the property based on a gift made to him orally by the judgment‑debtor and later executed through a registered memorandum of gift‑‑‑Dismissal of objection petition by Banking Court on the ground that the appellant had failed to place on record the gift document in his favour and also due to the absence of his name in the Revenue Record where some other person's name in the Jamabandi as well as the mutation was mentioned‑‑‑Subsequent placement of memorandum of gift on record by the appellant in the High Court‑‑‑Effect‑‑‑High Court dismissed the appeal of the appellant on the grounds that it was necessary to place on record the memorandum of gift earlier before the executing Court and also because the document did not pertain to the same property as the one under auction‑‑‑Simply mentioning of the same Khasra number without the specific number of the property was of no avail, and according to the Revenue Record the gift of the property was not in favour of the appellant but of someon6 else.

Mian Jamil Akhtar for Appellant.

Shamim Iqbal Butt for Respondents.

2004 C L D 982

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mian MUHAMMAD BAKHSH and another‑‑‑Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED and 2 others‑‑‑Respondents

F.A.O. No. 113 of 2002, decided on 1st July, 2003.

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

‑‑‑‑Ss. 7 & 19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr.58 & 62‑‑‑Execution of decree‑‑‑Sale of mortgaged property ‑ under auction‑‑‑No description as to location o f property was given in the proclamation of auction‑‑‑Appellants in the objection petition had claimed ownership of the property and described the same as an undivided one of which judgment‑debtor could not have been owner of a specific portion until and unless it was partitioned‑‑‑Questions raised by the parties required evidence to come to a correct finding‑‑‑Held, despite the absence of description of the property in the proclamation, no inquiry for the purposes of finding out the exact property that was subject-­matter of the mortgage and whether that was put to auction, was undertaken by the executing Court and the objection of the appellant was dismissed in a summary manner which was unwarranted‑‑‑Impugned order was set aside with direction to the Executing Court to determine factual controversy based on facts coming on record.

Khizar Abbas Khan for Appellants.

Mushtaq Ahmad Khan for Respondent No. 1.

Mukhtar Abbas for Auction‑Purchaser.

2004 C L D 984

[Lahore]

Before Tassaduq Hussain Jilani and Muhammad Sayeed Akhtar, JJ

Messrs RAVIANS PAPER AND BOARD INDUSTRIES LIMITED through Chief Executive‑‑‑‑Appellant

Versus

Messrs TAJ COMPANY LIMITED through Administrator‑‑‑‑Respondent

I.C.A. No.22‑L of 2000, heard on 28th April, 2004.

(a) Companies (Court) Rules, 1997‑‑‑

‑‑‑‑Rr.236 & 237‑‑‑Sale by Court‑‑‑When a bid is accepted a valid contract comes into existence between the parties and they are bound by the terms and conditions of the same‑‑‑Administrator of a company appointed by the Court, in the present case, entered into a contract with a party for the sale of properties of the company‑‑‑Terms and conditions of the sale were approved by the Company Judge‑‑‑Company Judge was empowered to sanction the sale of the property belonging to the company and every such sale was to be held by the Official Liquidator or if the Company Judge so directed, by an agent or an auctioneer approved by the Court, and subject to such terms and conditions including the fixation of a reserve price, if any, as may be approved by the Court.

(b) Companies (Court) Rules, 1997‑‑‑

‑‑‑‑Rr.236 & 237‑‑‑Contract Act (IX of 1872), Ss. 73 & 74‑‑‑Breach of contract‑‑‑Consequences‑‑‑Sale of property belonging to company was authorized by the Company Judge and was approved/confirmed by the Court‑‑‑Offer made by the party was approved by the Court subject to the condition that "in case any terms of sale were violated or the subsequent instalments were not paid on the due date this arrangement, shall stand cancelled and the sum of Rs. one crore shall sand forfeited"‑‑‑Party deposited Rs. 1 crore as down payment but defaulted in payment of further instalments as agreed upon and approved by the Court, and eventually made an application for refund of down payment of Rs.1 crore‑‑‑Company Judge having dismissed the said application of the party; party filed Intra‑Court appeal‑‑­Company Judge as well as Intra‑Court appeal Bench gave the fresh Schedule of payment to the party under the equitable principle because the bidder was let into possession of the property, but still he was unable and unwilling to perform the contract and clamoured for the return of the deposit ‑‑‑Validity‑‑­When a bid was accepted, a valid contract came into existence between the parties and they were bound by the terms and conditions of the same‑‑‑Agreement between the parties had not ceased to be a contract as the same bore the stamp of the Court‑‑‑Consequences of breach of contract were governed by Ss. 73 & 74 of the Contract Act, 1872‑‑‑Payment of Rs.1 crore was a "deposit" or "earnest" as a guarantee that the contract shall be performed as such was irrecoverable‑‑‑‑Party as a contract breaker was estopped by its conduct to claim the refund of the earnest‑‑‑Deposit made by the bidder was treated as earnest money, such stipulation could not be said to be in terrorem of the offending party and was not a "penalty"‑‑‑Principles‑‑‑Terms "penalty", "earnest money", "deposit", "damages" and "forfeiture" discussed.

When a bid is accepted a valid contract comes into existence between the parties and they are bound by the terms and conditions of the same. In the present case the Board of Administrators of Company entered into a contract with the appellant for the sale of properties of the Company. The terms and conditions of the sale were approved by the Company Judge. The Company Judge has been empowered under the Companies (Court) Rules, 1997 to sanction the sale of the property belonging to the Company and every such sale shall be subject to confirmation by the Court. Every such sale shall be held by the Official Liquidator or if the Judge so directs, by an agent or an auctioneer approved by the Court, and subject to such terms and conditions including the fixation of a reserve price, if any, as may be approved by the Court.

The Company Judge in the present case authorized the sale of the property of the Company and approved/confirmed the same. The agreement between the parties does not cease to be a contract because it bears the stamp of the Court. The offer made by the appellant was approved subject to the condition that "in case any terms of sale are violated or the subsequent instalments are not paid on the due date this arrangement shall stand cancelled and the sum of Rs.1 crore shall stand forfeited." The appellant deposited Rs.1 crore as down payment which stands forfeited as per terms of the contract. The consequences of breach of contract are governed by sections 73 and 74 of the Contract Act, 1872. Under section 73 on a breach of contract, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Section 73 of the Contract Act covers cases of breach of contract where no amount of compensation is stipulated in the agreement itself, and the compensation has to be assessed strictly on the basis of loss which has accrued to either of the contracting parties in the usual course of things on account' of such breach.

The Company Judge granted 15 days time to the party in order to make good his default. Second time Division Bench of High Court also gave the fresh schedule of payment under the equitable principle and rightly because he was let into possession. The party was still unable and unwilling to perform the contract and was clamouring for the return of the deposit. A deposit is a sum of money paid as a "guarantee that the contract shall be performed". It is distinguishable from the penalty, in that, it is payable before, and not after the breach. The only difference between "guarantee that the contract shall be performed" and a payment of money stipulated as in terrorem of the offending party lies in the emotive force of the words used. A penal deposit must be paid back. In contracts for sale of land, it is the normal practice for the purchasers to pay a certain 'deposit' or 'earnest money' and for the contract to provide for forfeiture of that deposit in the event of purchaser's default. The same is recoverable if it is unconscionable for the vendor to keep the money.

The deposit is a guarantee that the contract shall be performed. If the sale goes on, of course, not only in accordance with the words of the contract, but in accordance with the intention of the parties in making the contract, it goes in part-­payment of the purchase money for which it is deposited; but if on the default of the purchaser the contract goes off, that is to say, if he repudiates the contract, then he can have no right to recover the deposit.

It is not merely a part‑payment, but is then also an earnest to bind the bargain so entered into, and creates by the fear of its forfeiture a motive in the payer to perform the rest of the contract.

Earnest money is part of the purchase price when the transaction goes forward. It is forfeited when the transaction falls through by reason of fault or failure of the vendee.

Earnest money is a guarantee for the performance of the contract.

If the transaction goes forward it is part of the purchase price, but if it falls through on account of default of or breach by the vendee, it is forfeited. in the absence of a contract either express in its terms or to be inferred from the whole contract. If the purchaser says that the earnest has not to be forfeited, though the breach is on his part, he has to show that the agreement prevents the forfeiture. This he can do, if the contract says so in plain terms, or if the same be inferred from all the terms of contract itself.

There is a distinction between penalty for breach of contract and the forfeiture of a deposit of earnest money. While the latter is a payment actually made, the former is compensation sought for breach of contract. Section 74 of the Contract Act contemplates the case of recovery of compensation for breach of contract and not a case in which money has been paid by way of earnest.

Whether deposit is described as earnest money or as part payment is immaterial. The mere nomenclature "earnest" or "advance" in the document, or the absence of any forfeiture clause, may not be decisive and the character of a deposit or earnest money could be spelt out from the circumstances.

The Court may find that the amount of deposit or payment in advance is so great in comparison with the amount payable under the contract that the parties could not have intended it as a mere security for performance but a punishment for non‑performance. In such circumstances the Court will relieve against the penal clause and will not permit the party to keep the entire amount. The description does not matter it should be ascertainable with reasonable precision that when the parties entered into the agreement, it was understood by both of them that a specific amount must be paid by one of them to the other as guarantee of his performance of the contract and liable to be retained by the latter on breach by the former. It is the intention of the parties that governs which could be gathered from the express terms of the contract or by surrounding circumstances thereof. A penalty is in the nature of a threat held over to the other party in terrorem by reason of its burdensome or oppressive character.

Law on penalties applies to 'deposit' and to a clause 'forfeiting' money held on behalf of Contract‑Breaker.

In the absence of conduct amounting to a waiver or estoppel the Courts would not intervene to provide an equitable remedy. In cases of rescission of an ordinary contract of sale of property for failure to comply with an essential condition as to time, since the purpose of right to rescind was to free the property for resale and to enable the vendor to know with certainty that he was entitled to resell, which, in a rising market, could be both a valuable and volatile right. The deposit was an earnest of performance and liable to forfeiture on rescission.

It is clear that the forfeiture clause was accepted by the appellant.

The down payment of Rs.1 crore was a "deposit" or "earnest" as a guarantee that the contract shall be performed as such irrecoverable.

The bare reading of the agreement in the present case reveals that the deposit made by the Bidder was treated as earnest money. This stipulation cannot be held as in terrorem of the offending party and is not a penalty.

Forfeiture in the present case is not unconscionable and extravagant in particular when the purchaser is unable and unwilling to complete the contract. The appellant prayed for enlargement of the time which was granted twice, firstly by the Company Judge, secondly, by a Division Bench of High Court. Notwithstanding he has failed to perform his obligation under the contract and is a persistent defaulter. He did not pray for the refund of the "earnest" at the time of his earlier appeal. He cannot now be allowed to have a volte face and be heard to say that the said amount of Rs.10 million out of Rs.75 million is a penalty. He, as a contract breaker, is estopped by his conduct to claim the refund of the "earnest". After the disposal of I.C.As. the appellant, at no time, expressed readiness or ability to make further payments, but brought an application claiming the return of the deposit made under the agreement, on which the respondent claims the right to forfeit. The appellant has no equity in his favour. He remained in possession of the mill for a substantial length of time.

The argument that the amount of Rs.1 crore can be forfeited under Order XXI, rule 86, C.P.C. is devoid of any force. The said rule applies to the sale of the immovable property in execution of the decrees which is not the position in the instant case.

The Company Judge approved the offer of the appellant subject to payment of Rs.1 crore. The said amount could be called as damages for breach of contract as the same was fixed by the Court itself at the time of formation of contract and that being so, no further determination by the Court regarding exact amount of damages suffered by the respondent was necessary.

(c) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss. 73 & 74‑‑‑Breach of contract‑‑‑Consequences under Ss. 73 & 74 Contract Act, 1872 elucidated.

Section 74, Contract Act, 1872, has two limbs. The parties to the contract may agree before hand as to the amount payable by way of damages in the event of its breach. It will be covered by expression, "if the sum is named in the contract as the amount to be paid in case of such breach" and would entitle the party complaining of the breach to reasonable damages not exceeding the amount so named. The sum so mentioned in the contract may be genuine covenanted pre‑estimate of loss caused by the Contract‑Breaker to the other party. In English Common Law it is known as liquidated damages. Under the second head, i.e. "any other stipulation by way of penalty" may be in the nature of threat held over to the other party in terrorem. A sum of this nature is called a penalty. Section 74 provides for cases where a sum is named in the contract itself as the amount to be paid in the case of breach of the contract, or if the contract contains any other stipulation by way of penalty. Under this section whether actual loss or damage is proved or not the Court is unfettered in awarding reasonable compensation not exceeding the maximum fixed by the parties.

Section 74 of the Contract Act does not recognize the difference that exists in the English law between liquidated damages and penalty. Under the Common Law a genuine pre­estimate of damages agreed upon by the parties is regarded as liquidated damages. But a stipulation in a contract in terrorem is a penalty. In the case of liquidated damages the contract is binding upon the parties. In the case of penalty, however, the Court refuses to enforce it and awards to the aggrieved party reasonable compensation.

The argument that section 74 of the Contract Act deals only with the right to receive from the party who has broken a contract reasonable compensation and not the right to forfeit what has already been received by the aggrieved party, cannot be accepted in view of the terms of the section. The cases in which such a view has been taken appear to have ignored the expression "the contract contains any other stipulation by way of penalty" in the section. This expression is comprehensive enough to include cases of forfeiture of money or any property already delivered as well as cases of recovery of money or any property on the basis of a promise to pay.

Sections 73 and 74 Contract Act, 1872 can be explained as under:

(1) Terms of the contract are required to be taken into consideration before arriving at the conclusion whether the party claiming damages is entitled to the same.

(2) If the terms are clear and unambiguous stipulating the liquidated damages in case of the breach of the contract, unless it is held that since estimate of damages/ compensation is unreasonable or is by way of penalty, party who has committed the breach is required to pay such compensation and that is what is provided in section 73 of the Contract Act.

(3) Section 74 is to be read with section 73 and, therefore, in every case of breach of contract, the person aggrieved by the breach is not required to prove actual loss or damages suffered by him before he can claim a decree. The Court is competent to award reasonable compensation in case of breach even if no actual damages is proved to have been suffered in consequences of the breach of a contract.

(4) In some contracts, it would be impossible for the Court to assess the compensation arising from breach and if the compensation contemplated is not by way of penalty or unreasonable, Court can award the same if it is genuine pre­estimate by the parties as the measure of reasonable compensation.

It is for the Court to determine what amount would be reasonable compensation in the circumstances of the case. If the Court considers that the sum mentioned is not excessive or unreasonable, it shall allow it otherwise will reduce it to the figure it considers reasonable. If on the other hand the stipulated amount is, by reason, oppressive and burdensome in character and may operate in terrorem so as to drive the party to complete the contract, the stipulation is a penalty and the Court can relieve the party of the penalty clause.

If in making provision for breach of contract the promisee stipulates from the promisor on the breach only for such compensation as the Court would deem reasonable in the circumstances, then there is no penalty and the stipulation is not penal. But if, on the other hand, the Court would on a proper consideration come to the conclusion that the stipulation was put in not by way of reasonable compensation to the promisee but in order that by reason of its burdensome or oppressive character it may operate in terrorem over the promisor so as to drive him to fulfil the contract, then the stipulation is one by way of penalty.

The forfeiture clause stands on a different footing, the forfeited amount is generally not recoverable but if the condition of forfeiture carries with it an element of punishment, it will be in the nature of penalty.

Forfeited amount/ instalments cannot be retained by the seller if the same is unreasonable, exorbitant or extravagant and unconscionable.

A contract may provide that a sum already paid shall be forfeited upon breach by the party who paid it. The Courts have treated such a forfeiture clause‑ as different from a sum payable upon breach if under contract to purchase land by instalment payments, the purchaser defaults in payment of an instalment of the price. The Courts have exercised jurisdiction in a proper case to relieve him against a clause providing for forfeiture of instalments already paid, by granting him an extension of time within which he could pay the instalments due.

Equity has come to the rescue of purchaser and granted relief to him if he is able and willing to perform the contract after the agreed time.

It is doubtful whether it could be ordered in equity for payment of forfeited instalments to a vendee who is not able and willing to perform the contract. Relief against forfeiture is restricted to cases where the party in breach would be deprived of possessory rights.

The deposit is a guarantee that the contract shall be performed. If the sale goes on, of course, not only in accordance with the words of the contract, but in accordance with the intention of the parties in making the contract, it goes in part-­payment of the purchase money for which it is deposited; but if on the default of the purchaser the contract goes off, that is to say, if he repudiates the contract, then, he can have no right to recover the deposit.

It is not merely a part‑payment, but is then also an earnest to bind the bargain so entered into, and creates by the fear of its forfeiture a motive in the prayer to perform the rest of the contract.

Earnest money is part of the purchase price when the transaction goes forward. It is forfeited when the transaction falls through by reason of fault or failure of the vendee.

Earnest money is a guarantee for the performance of the contract.

If the transaction goes forward it is a part of the purchase price, but if it falls through on account of default of or breach by the vendee, it is forfeited, in the absence of a contract either express in its terms or to be inferred from the whole contract. If the purchaser says that the earnest has not been forfeited, though the breach is on his part, he has to show that the agreement prevents the forfeiture. This he can do, if the contract says so in plain terms, if the same can be inferred from all the terms of contract itself.

There is a distinction between penalty for breach of contract and the forfeiture of a deposit of earnest money. While the latter is a payment actually made, the former is compensation sought for breach of contract. Section 74 of the Contract Act contemplates the case of recovery of compensation for breach of contract and not a case in which money has been paid by way of earnest.

The expression "if the contract contains any other stipulation by way of penalty" widens the operation of the section so as to make it applicable to all stipulations by way of penalty, whether the stipulation is to pay an amount of money, or is of another character, as, for example, providing for forfeiture of money already paid.

Forfeiture of earnest money under a contract for sale of property, moveable or immoveable, if the amount is reasonable, does not fall within section 74. But if the forfeiture is of the nature of penalty, section 74 applies.

The provisions of section 74 of the Contract Act do not apply to the case of refund of earnest.

The following are the principles regarding "earnest":‑‑‑

(1) It must be given at the moment at which the contract is concluded.

(2) It represents a guarantee that the contract will be fulfilled or, in other words, "earnest" is given to bind the contract.

(3) It is part of the purchase price when the transaction is carried out.

(4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.

(5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest.

The payment of earnest money, as the expression itself shows, is intended to serve as a proof of bona fides of the vendee.

Whether deposit is described as earnest money or as part payment, is immaterial. The mere nomenclature "earnest" or "advance" in the document, or the absence of any forfeiture clause, may not be decisive if the character of a deposit or earnest money could be spelt out from the circumstances.

The crucial test is that a security payment of earnest money proper should be in accordance with the term of the contract to that effect. Whether it is written or oral, it should be ascertainable with reasonable precision that when the parties entered into the agreement, it was understood by both of them, that a specific amount must be paid by one of them to the other as guarantee of his performance of the contract and therefore, liable to be retained by the latter on a breach by the former. When the amount is paid at the time of the agreement itself, other things being the same, a condition of this nature is more probable than when the amount is paid some time afterwards. Similarly, when the amount is paid in lump, it is more probable that it is the earnest money guaranteeing performance. In the event of its being paid in two or more instalments, the probability is in the other direction. Of course, even when the payments are made sometime after the agreement, and in more than one instalments, any condition already in the agreement, that within such and such date, such and such amount should be paid in one or more specified instalments, would obviously and to the probability of its being earnest money. In all cases, one has to take all the circumstances into account, this is particularly so in the absence of a written instrument.

Earnest money or deposit is a payment actually made and penalty is compensation sought, and the fact that in this particular case the words 'in part payment' were used is ineffectual to attract the provisions of section 74, Contract Act. The fact that there was no forfeiture clause in the agreement, a point which is insisted on by the learned counsel for the appellant is attempting to draw a distinction, is immaterial as it is plain that the learned Judges held that the principle applied whether there was a forfeiture clause or not. Whether a deposit is described as earnest money or part payment is immaterial and the proportion that it bears to the sum contracted for, is equally irrelevant.

The Court may find that the amount of deposit or payment in advance is so great in comparison that the amount payable under the contract that the parties could not have intended it as a mere security for performance but a punishment for non‑performance. In such circumstances the Court will relieve against the penal clause and will not permit the party to keep the entire amount. The description does not matter, it should be ascertainable with reasonable precision that when the parties entered into the agreement, it was understood by both of them that a specific amount must be paid by one of them to the other as guarantee of his performance of the contract and liable to be retained by the latter on breach by the former. It is the intention of the parties that governs which could be gathered by the express terms of the contract or by surrounding circumstances thereof. A penalty is in the nature of a threat held over to the other, party in terrorem by reason of its burdensome or oppressive character.

Following are the principles:

(i) It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach.

(ii) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid.

(iii) It is no obstacle to the sum stipulated being a genuine pre‑estimate of damage that the consequences of breach are such as to make precise pre‑estimation an impossibility. On the contrary, that is just the situation when pre‑estimated damage was the true bargain between the parties.

(iv) Though the parties to a contract who use the words 'penalty' or 'liquidated damages' may prima facie be supposed to mean what they say, yet the expression used is not conclusive. The Court must find out whether the payment stipulated is in truth a penalty or liquidated damages.

The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine pre‑estimate of damage.

Law on penalties applies to 'deposit' and to a clause 'forfeiting' money held on behalf of Contract‑Breaker.

In order to entitle a plaintiff to relief from a penalty, it is necessary for him to show that there is some ground upon which it would be unconscionable in the defendants to retain the money or the whole of the money. It is difficult to see why, in a case of this kind, it should be unconscionable on the part of the vendor, who has contracted to part with his land on agreed terms, to enforce the contract if he so desires‑ There may be special circumstances in some cases, in which the Court would take the view that it was unconscionable, and that the plaintiff was accordingly entitled to relief, but unless Court car. be satisfied that in this case there is something unconscionable in what the defendants seek to do, Court has no jurisdiction to grant any relief whatsoever. This is not strictly a case of a penalty at all since the payment in question was an integral part of the principal contract.

The insistence by the vendor upon his contractual right to retain instalments of purchase money already paid did not, in itself constitute an unconscionable conduct.

In the absence of conduct amounting to a waiver or estoppel the Courts would not intervene to provide an equitable remedy. In cases of rescission of an ordinary contract of sale of property for failure to comply with an essential condition as to time, since the purpose of right to rescind was to free the property for resale and to enable the vendor to know with certainty that he was entitled to resell, which, in a rising market, could be both a valuable and volatile right. The deposit was an earnest of performance and liable to forfeiture on rescission.

The principles can be summarized as follows:‑‑

(i) The deposit' orearnest' money paid as "guarantee that the contract shall be performed" is generally irrecoverable unless the contract provides to the contrary.

(ii) A contract may provide that advance payment shall be made, without specifying what is to happen in the case of breach of the contract. The advance payment is generally recoverable.

(iii) Nomenclature used is immaterial. The phrases or expression generally used are advance',deposit' or `earnest'. The intention of the parties is to be ascertained from the circumstances.

(iv) The presence or absence of forfeiture clause in the agreement is irrelevant. The aforementioned principle applies.

(v) The sum forfeited must be reasonable, the same cannot be retained if it is extravagant and unconscionable.

(vi) The condition of forfeiture carrying with it an element of punishment will be in the nature of penalty.

Where the deposit is reasonable in relation to the loss likely to be suffered, it can be forfeited, particularly if the loss is such that it cannot be accurately assessed in advance.

Abdullah v. Karim Haider PLD 1975 Kar.385; Mst. Khalida Bai and others v. Muhammad and others PLD 1994 Kar.233; Raja Nasir Khan v. Abdul Sattar Khan and another PLD 1998 Lah.20; Province of West Pakistan v. Messrs Mistri Patel & Co, and another PLD 1969 SC 80: Syed Sibte Raza and another v. Habib Bank Ltd. PLD 1971 SC 743; Oil and Natural Gas Corporation Ltd. v. SAW Pipes Ltd. 2003 SOL Case No.175 Civil Appeal No.7419 of 2001: Messrs Khanzada Muhammad Abdul Haq Khan Khattak & Co. v. WAPDA through Chairman WAPDA and another 1991 SCMR 1436; Ramalinga Adaviar and others v. Meenakshisundaram Pillai and others AIR 1925 Mad.177; D.K. Aswathanarayanaish v.Nallapula Sanjeviah AIR 1965 Andh. Pra. 33 ; Munshi Lal and others v. Ahmad Mirza Beg and others AIR 1933 Oudh. 291; Clydebank Engineering and Shipbuilding Company, Limited and others v. Don Jose Ramos Yzquierdo Y Castaneda and others (1905) AC 6; Mussen v. Van Diemen's Land Co. (1938) Ch. 253; Stocklosrr v. Johnson (1954) 1 QB 476; Workers Trust of Mercant Bank Ltd. v. Dojap Investment Ltd. (1993) AC 573; Dharam Chand Soni and another v. Sunil Ranjab Chakrabarty and another AIR 1981 Cal. 323; The Trustees of the Port of Karachi v. Ghulamali Habib Rawjee PLD 1961 Kar. 623; Re Dagenham (Thames) Dock Co. (1873) LIZ 8 Ch. Appellant 1022; John H. Kilmer v. British Columbia Orchard Lands Ltd. (1913) AC 319; Steedman v. Drinkle (1916) 1 AC 275; Starside Properties Ltd. v. Mustapha (1974) 1 WLR 816; Scandinavian Trading Tanker Co. AB v. Flota Petrolera Ecuatoriana The Scaptrade (1983) 2 All ER 763; Workers Trust of Mercant Bank Ltd. v. Dojap Investment Ltd. (1993) 2 All ER 370; Howe v. Smith (1884) 27 Ch. D. 89; Chiranjit Singh v. Har Swarup AIR 1926 PC 1; Kirishna Chandra Rudrapal v. Khan Mamud Bepari and others AIR 1936 Calcutta 51; Dinanath Damodar Kale v. Malvi Mody Ranchhoddas & Co. AIR 1930 Bom.213; Pasumarti Seethanna v. Thammandra Yasikalappa AIR 1926 Mad.117; Desu Rattamma v. Kakaraparthi Krishna Murthi and another AIR 1928 Mad.326; Bhalchandra Pandurang Rajandekar v. Mahadeo Lazminarayan Shraogi and others AIR 1947 Nag.193; Kanpur Iron Brass Works and Flour Mills v. Banarsi Das and others AIR 1959 All.755; Ram Lal Puri v. Gokalnagar Sugar Mills Co., Ltd. AIR 1967 Delhi 91; Fateh Chand v. Balkishan Dass AIR 1963 SC 1405; Maula Bux v. Union of India AIR 1970 SC 1955; Shree Hanuman Cotton Mills and another v. Tata AIR Craft Ltd. AIR 1970 SC 1986; Bhagavathi Mudaliar v. N. Subramaniam AIR 1969 Mad. 317; Pye v. British Automobile Commercial Syndicate, Limited (1906) 1 KB 425; Chunnilal Onkarmal Ltd. and another v. Mohanlal Balkrishna Agarwal and another AIR 1964 MP 126; Dunlop Pneumatic Tyre Company, Limited v. New Garage and Motor Company, Limited (1915) AC 79; Scandinavian Trading Tanker Co. AB v. Flota Petrolera Ecuatoriana (1983) 2 AC 694; Union Eagle Ltd. v. Golden Achievement Ltd. (1997) 2 All ER 215; Galbraith v. Mitchenall Estates, Ltd. (1964) 2 All ER 653 ref.

Abdullah v. Karim Haider PLD 1975 Kar.385; Pye v. British Automobile Commercial Syndicate, Limited (1996) 1 KB 425 and Messrs Khanzada Muhammad Abdul Haq Khan Khattak & Co. v. WAPDA through Chairman WAPDA and another 1991 SCMR 1436 distinguished.

A. K. Dogar for Appellant.

Iqbal Mehmood Awan Assisted by Ch. Shahram Sarwarm for Respondent.

Date of hearing: 28th April, 2004.

2004 C L D 1073

[Lahore]

Before Mian Hamid Farooq, J

Mian FAZAL AHMAD‑‑‑ Petitioner

Versus

HABIB BANK LIMITED, MAIN MARKET, GULBERG, LAHORE and others‑‑‑Respondents

Writ Petition No.7868 of 1995, decided on 9th August, 2002.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑Ss.4 & 6‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Consti­tutional petition‑‑‑Banking Court passed decree on 2‑6‑1996‑‑­Instead of filing appeal against such decree, Constitutional petition was filed on 15‑9‑1994‑‑‑Contention of judgment‑debtor was that such decree stood set aside by virtue of judgment dated 21‑7‑1996 passed in Messrs Chenab Cement Product's case PLD 1996 Lah. 672‑‑‑Validity‑‑‑Such decree was saved and would fall within the term "past and closed cases" and had become final within meaning and scope of Para 12 of such judgment‑‑‑High Court dismissed Constitutional petition, resultantly such decree would be executed by Banking Court 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 Writ Petition No. 12374 of 1999 fol.

A. K. Dogar for Petitioner.

Abdul Rahim Tariq Alvi for Respondent No. 1.

Date of hearing: 23rd July, 2002.

2004 C L D 1077

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs P&B CARPETS (PVT.) LIMITED and others‑‑‑ Appellants

Versus

THE BANK ALFLAH LIMITED‑‑‑‑ Respondent

Regular First Appeals Nos. 255 to 257 of 1999, decided on 29th May, 2003.

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

‑‑‑‑Ss.9, 10 & 21‑‑‑Suit for recovery of loans‑‑‑Appeal‑‑‑Financial facilities, as mentioned in suits by Bank, were advanced to defendants, who executed relevant documents and creation of mortgage had not been denied by defendants who failed to liquidate outstanding liabilities‑‑‑Defendants had contended that foreign bills were routed through Bank to foreign corresponding Bank and as Bank had failed to realize proceeds of export bills, Bank was not entitled to recovery of suit amount‑‑‑Said contention which was neither taken by defendants in reply to show‑cause notices nor was urged before Banking Court could not be raised in appeal‑‑‑Case of Bank was duly supported by certified copies of statements of accounts, which had duly been verified as required by provisions of Banker's Books Evidence Act‑‑‑Defendants though had feebly stated in their replies to the show‑cause notices that statements of accounts were engineered documents, but they could not show as to how said documents were unreliable‑‑‑Suits filed by Bank, in circumstances were rightly decreed against defendants by Banking Court‑‑‑Judgment and decree passed by Banking Court could not be interfered with in appeal.

(b) New plea/ground‑‑

‑‑‑‑Person would be precluded from raising, altogether a new plea/ground before Appellate/Revisional Court which had not been raised before lower forum.

Talib H. Rizvi for Appellants.

Ashtar Ausaf Ali for Respondent.

Date of hearing: 29th May, 2003.

2004 C L D 1114

[Lahore]

Before Mian Hamid Farooq, J

Messrs UNITED BANK LIMITED‑‑‑ Petitioner

Versus

BANKING COURT NO.IV, LAHORE and others‑‑‑Respondents

Writ Petition No.22308 of 1998, decided on 5th December, 2003.

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

‑‑‑‑Ss.18(6) & 21‑‑‑Constitution of Pakistan (1973), Art.199‑‑­Constiiutional petition‑‑‑Execution of decree‑‑‑Sale of property-‑‑­Dismissal of objection petition‑‑Judgment‑debtor did not file appeal against such order, but instead filed Constitutional petition after expiry of period of limitation prescribed under law for filing of appeal‑‑‑Maintainability‑‑‑Legislature in addition to providing a right of appeal under S.21(1) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 had also allowed to file an appeal, review or revision against order passed under S.18(6) thereof‑‑‑Remedy of appeal against impugned order was provided, which was adequate and efficacious remedy‑‑‑Constitutional petition was, not maintainable under law.

Messrs Chenab Cement Product (Pvt.) Ltd and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 ref.

Rashideen Nawaz for Petitioner.

Nemo for Respondent No. 1.

Sh. Zia Ullah for Respondents Nos.2 to 4.

Date of hearing: 5th December, 2003.

2004 C L D 1117

[Lahore]

Before Muhammad Sair Ali, J

HABIB BANK LIMITED‑‑‑ Petitioner

Versus

SERVICE FABRICS LTD. and others‑‑‑Respondents

C.M. No.666‑B of 2001 in C.O.S. No.28 of 2000, decided on 4th July, 2002.

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

‑‑‑Ss.19 & 2(e)‑‑‑Execution of decree‑‑‑Judgment‑debtors had not denied that decree‑holder (Bank) had fulfilled its contractual obligation by rescheduling/ restructuring demand finance facility and by renewing working capital liability of the judgment­-debtors‑‑‑Upon grant of rescheduling, restructuring and renewal of said facilities, the executory clauses, if any, of the agreement/ decree were converted into final terms which did not in any way suffer in executability‑‑‑Contention of the objectors that the decree‑holder bank had failed to perform its reciprocal promises was repelled having no merit.

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

‑‑‑‑S.2(e)‑‑‑Renewal/rescheduling/restructuring of financial facilities which has been recognized as "obligation" as defined in S.2(e), Financial Institutions (Recovery of Finances) Ordinance, 2001 only ensues upon default, non‑payment, delayed payment or inability in payment of outstanding liability by a customer who normally seeks such concession upon admission and determination of liability‑‑‑Principles.

Renewal/rescheduling/restructuring of financial facilities only ensues upon default non‑payment, delayed payment or inability in payment of outstanding liability by a customer who normally seeks such concession upon admission and determination of liability. By soliciting rescheduling or restructuring, as the case may be, a customer, in essence, either requests postponement of repayment of a finance on renewed terms as agreed between the parties or asks for reorganization/ refurbishing of financial basis of a finance and its liquidation. By approving rescheduling/ restructuring/ renewal of a financial facility, the bank forgoes its immediate right of recovery and enforcement of securities against the customer. The effect of rescheduling, restructuring and renewal of finance facility is mutually agreed by the parties to be absorbed by future interest, mark‑up charges or commissions till the agreed date of liquidation of liability. Rescheduling, restructuring and renewal is also thus a facility or accommodation granted by the bank to a customer. This facility has been recognized as an "Obligation" defined in section 2(e) of Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

‑‑‑‑Ss. 3 & 9‑‑‑Duty of customer‑‑‑Default‑‑‑Effect‑‑‑Customer is duty bound to fulfil obligations to the Financial Institutions‑‑­Default in discharge of such "obligation" not only incurs the "cost of funds" under S.3(2) of the Ordinance but is also actionable under S.9, Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Judgment against a customer under the Ordinance is a pronouncement of default under S.3(3) of duty prescribed under S.3(1) of the Ordinance.

(d) Words and phrases‑‑­

‑‑‑‑"Grant"‑‑‑Connotation.

Word "grant" means the giving, bestowing or forwarding of a privilege, right, interest, benefit, subsidy, exemption, concession, approval, sanction or permission.

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

‑‑‑‑S.3‑‑‑Compromise decree‑‑‑Default‑‑‑Where the judgment­-debtors (Customers) were liable to pay instalments of Demand Finance Facility as specified between the Banker and Customer, non‑payment of the two consecutive instalments of the same amounted to an event of default entitling the decree‑holder (Bank) seeking execution of the compromise decree.

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

‑‑‑‑S. 19‑‑‑Execution of consent decree through enforcement of securities and other modes had been sought by the decree holder after reduction of the amount from the decretal money‑‑­Endeavours of the judgment‑debtors to go behind the decree and its amounts by, trying to calculate and recalculate the figures could not be allowed‑‑‑Judgment‑debtors were bound by their agreements and were debarred under law from going behind the decree passed by consent as compromise entered upon between the Banker and Customer had become final.

Azamat Saeed for Objectors/Judgment‑Debtors.

Shams Mahmood Mirza for Decree‑Holder‑Rank.

2004 C L D 1126

[Lahore]

Before Ch. Ijaz Ahmed, J

Messrs STILETTO (PVT.) LTD. Through Director and 6 others‑‑‑Petitioners

Versus

BANKING COURT NO.II, GUJRANWALA, CAMP AT SIALKOT and 5 others‑‑‑Respondents

Writ Petition No.3321 of 2003, decided on 15th April, 2004.

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

‑‑‑‑Ss.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.89‑‑­Limitation Act (IX of 1908), Art.166‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Application to set aside sale on deposit‑‑‑Execution of decree‑‑‑Suit for recovery filed by the Bank, against the petitioner, on the basis of a finance facility availed by the latter, was decreed‑‑‑Petitioner's application during the execution proceedings to pay part of the decretal amount was dismissed by the Executing Court after providing opportunities for depositing the said amount‑‑‑Constitutional petition was filed by the petitioner‑‑‑Objection of the Bank that the petitioner had filed application before the Executing Court under O.XXI, R.89, C.P.C., but had failed to deposit the said amount in terms of the said order within the prescribed period, which was a condition precedent in view of Art. 166 of Limitation Act, 1908‑‑‑Validity‑‑‑Petitioner had not deposited certain portion of the amount within the time prescribed by the law therefore, the petitioner had not approached the Court with clean hands‑‑­Constitutional jurisdiction was discretionary in character, and Court would decline to exercise its discretion in favour of the petitioner on account of his conduct before it as well as the Executing Court‑‑‑Such was a condition precedent to entertain the application of the petitioner subject to payment of a portion of said amount, which was not deposited by the petitioner‑‑­Executing Court was justified to dismiss the application of the petitioner in circumstances.

Nawab Syed Raunaq Ali's case PLD 1973 SC 236; Haji Saif Ullah's case PLD 1989 SC 166; Rana Muhammad Arshad's case 1998 SCMR 1462; National Bank of Pakistan's case 1990 MLD 258 and Rao Muhammad Suleman's case 1987 CLC 1338 ref.

Nauman Mushtaq Awan for Petitioners.

Ch. Farrukh Mehmood Sulehria for Respondents Nos. 1 and 4.

Mian Muhammad Saleem for Respondent No.2.

Nemo for Respondents Nos. 5 and 6.

2004 C L D 1146

[Lahore]

Before Maulvi Anwarul Haq and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

BAKHSH ---Respondent

R.F.A. No. 133 of 1997, heard on 29th July, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)---

----S.5--Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5-Powers and Jurisdiction of Banking Tribunal-Banking Tribunal had no jurisdiction to adjudicate upon any suit or pass any judgment where the superior Court had declared certain provisions of the Banking Tribunals Ordinance, 1984 and the notifications appointing the Presiding Officers of that Tribunal as un-Constitutional.

Messrs Chenab Cement Product Private Limited and others v. Banking Tribunal Lahore and others PLD 1996 Lah. 672 and Syed Farasat Ali Shah v. Allied Bank of Pakistan 2002 CLD 759 ref.

(b) Banging Tribunals Ordinance (LVIII of 1984)---

-----S. 7 Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S5--Past and closed cases-Declarations made in the case of Chenab Cement Product (PLD 1996 Lah 672) was not to affect cases past and closed or invalidate the judgments/decrees, which had become final--Where, however, the decree passed by the Banking Tribunal was not challenged in appeal but was called into question only through a writ petition which was subsequently disposed of, the decree passed by the Banking Tribunal would be considered to be past and closed case and final by virtue of the said judgment of Messrs Chenab Cement Product-When the decree passed by the Banking Tribunal was challenged in appeal and also by a writ petition and the latter was subsequently disposed of, the decree passed by the Banking Tribunal would not be considered to be past and closed case and would not be covered within the scope of the said judgment and would thus be set aside---Held, as the judgment and decree under appeal was passed after the rendering of the said judgment it did not fall within the terms of `past and closed cases' nor within the meaning and scope of the judgment in Chenab Cement Product---Decree was set aside anal suit for the recovery was deemed pending before the newly constituted Banking Court, established under S.5 of Financial Institutions (Recovery of Finances) Ordinance, 2001 to be decided afresh.

Messrs Chenab Cement Product Private Limited and others v. Banking Tribunal Lahore and others PLD 1996 Lah. 672 and Syed Farasat Ali Shah v. Allied Bank of Pakistan 2002 CLD 759 ref.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 29th July, 2003.

2004 C L D 1150

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

MUHAMMAD ANWAR ---Respondent

Regular First Appeal Case No. 142 of 1997, heard on 9th September, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)---

----S.5---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7--Liquidated damages, award of ---Recovery suit partly decreed by the Banking Tribunal that declined to award liquidated damages and _future mark-up to the Bank--­Plea of the Bank in appeal was that it was entitled to the award of liquidated damages and future mark-up---Validity---Bank was not entitled to recover the amount of liquidated damages.

Allied Bank of Pakistan Ltd. Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref.

(b) Banking Tribunals Ordinance (LVIII of 1984)---

----S.5---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7---Future mark-up, award of---Basic concept of Islamic mode of financing was that the bank was not entitled to claim future mark-up---Banking Tribunals Ordinance, 1984 did not empower the Banking Tribunal to award future mark-up.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 9th September, 2003.

2004 C L D 1152

[Lahore]

Before Maulvi Anwarul Haq and Mian Hamid Farooq JJ

Messrs MUNAAF IFTIKHAR & COMPANY and another---Appellants

Versus

JUDGE BANKING COURT No.3 LAHORE and 2 others ---Respondents

Regular First Appeal Case No.296 of 1997, heard on 22nd July, 2003.

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

---S.7--Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 7 & 10(8)--Suit for recovery decreed in favour of the Bank-Pleas of the appellants in appeal that during the pendency of suit in the Banking Court their application for settlement of disputes under Circulars Nos.19 and 20 Incentive Scheme of the State Bank of Pakistan was not decided in accordance with law despite the fact that the Banking Court was under an obligation to do so and moreover that a certain property of the appellants was impounded by the Bank during the pendency of suit but the sale proceeds were not credited to the account of the appellants-Validity-Record showed that the Banking Court had decided to settle the matter amicably under Circulars Nos. 19 and 20 of the State Bank of Pakistan and even appellants had agreed to pay a certain sum under State Bank of Pakistan Incentive Scheme but subsequently they failed to make the payments as calculated under the Incentive Scheme--­Appellants could not thus be allowed to take advantage of the said Circulars now as they had backed out from their earlier commitments by not making any payments to the bank as calculated under the Incentive Scheme---Contentions of the appellants were found to be devoid of merits---Bank, however, was directed to credit the amount of sale proceeds of the said sold property of the appellants in the account of the appellants, so that the said amount may be deducted from the decretal amount.

Azmat Saeed for Appellants.

Zaheer Ahmad Saeed for Respondent, No. 2.

Muhammad Amjad Butt for Respondent No.3.

Date of hearing: 22nd July, 2003.

2004 C L D 1157

[Lahore]

Before Syed Zahid Hussain and Maulvi Anwarul Haq, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and 2 others---Appellants

Versus

Messrs MUHAMMAD SHAFIQ TANNERIES (PVT.) LIMITED and 6 others ---Respondents

R.F.A. No.242 of 1997, heard on 24th June, 2003.

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

----Ss.10 & 21---Financial Institutions (Recovery of Finances) Ordinance, (XLVI of 2001), Ss. 10 & 22---Suit decreed treating the application to defend as barred by time---Plea of the appellant­-Bank was that notice was received on 15-5-1997 and reply to show cause was filed on 5-6-1997, thus application was within limitation---Validity---Record showed copy of notice issued on 5-5-1997 for 20-5-1997, bearing endorsement of Bank's official dated 15-5-1997---Necessary and effective party to the suit being the Banking Court had erroneously taken date 8-5-1997 of service of notice upon the defendants and for the purposes of limitation---Appellants Bank were not afforded proper opportunity to defend---Banking Court acted erroneously in rejecting the application of the bank---High Court observed that every Court was required to apply its mind before passing any order or judgment notwithstanding the factum that no person had appeared before it to oppose such an order or that the person who wanted to oppose was not allowed to oppose because he failed to fulfil the requirements of law---Appeal was accepted accordingly.

Haji Ali Khan & Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362 and Messrs Qureshi Salt & Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 ref.

Rashdeen Nawaz for Appellants.

Imran Nazir for Respondents.

Date of hearing: 24th June, 2003.

2004 C L D 1159

[Lahore]

Before Syed Zahid Hussain and Muhammad Akhtar Shabbir, JJ

MUHAMMAD ANWAR ---Appellant

Versus

UNION BANK LIMITED ---Respondent

Regular First Appeal Case No.451 of 1998, heard on 15th July, 2003.

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

---Ss.2(f) & 7-Powers and jurisdiction of Banking Court­ Amount credited twice in the account of the appellant due to clerical error by the Bank Appellant withdrawing the amount in excess of the balance of his credit-Effect-Appellant deemed to have asked for the loan and the Bank deemed to have advanced the same to the extent of excess amount-Plea of the appellant that the transaction was not covered by S.2(c), (d) and (f) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was repelled---Case of the appellant rightly fell under S.2(f) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Considerations of justice, equity and good conscience to prevail to preclude the appellant from denying liability in respect of such loan.

National Bank of Pakistan v. Muhammad Ashraf Sanik and another PLD 1987 Lah. 17 ref.

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

----S.7---Conduct of parties, effect of---Withdrawal of amount by appellant over and above the entitlement not denied---Payment of mark-up---Justification---Contributory conduct of Bank's functionaries by making credit entries twice and then encashing the cheque---Held, where the appellant made withdrawal of an amount in excess due to the clerical error by the bank, there being no agreement for the payment of mark-up, the bank was not entitled to claim the same.

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

----S.15---Powers of Court for purposes of S.15. of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997-Mark-up determination of---Question whether grant of mark-up/interest obligatory in view of S.15 of the Act-Held, reading of S.15 of the Act showed that the Court was not denuded of the power to examine and keep in view the peculiar circumstances of the case in order to determine whether to award mark-up or not to the Bank.

Kh. Saeed-uz-Zafar for Appellant.

Muhammad Khalid Mahmood Khan for Respondent.

Date of hearing: 15th July, 2003.

2004 C L D 1174

[Lahore]

Before Ch Ijaz Ahmad and Farrukh Latif, JJ

Mst. IFFAT SULTANA MALIK ---Appellant

Versus

TRUST MODARBA through Trust Management Services (Pvt.) Ltd. ---Respondent

R. F. A. No. 156 of 1999, heard on 29th April, 2004.

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

----Ss. 9 & 10---Civil Procedure Code (V of 1908), O. VI & R.17--­Pleadings, amendment of--Amended application for leave to defend---Plaintiff-Bank intended to include additional claim through amendment in plaint---Validity---Contents of application for amendment of plaint did not change the nature of the suit at all---Plaintiff-Bank through application for amendment claimed additional documents to be placed on record before the Banking Court, and the proposed amendment was just and necessary for the purpose of determining the real question in controversy between the parties in view of the settled law---High Court allowed the borrowers to put in additional grounds in applications for leave to defend to contest the amended suit--­Amendment sought by the bank was allowed in circumstances.

Keramat Ali and another v. Muhammad Yunus Haji and others PLD 1963 SC 191 and Mst. Ghulam Bibi and others v. Sarsa Khan and others PLD 1985 SC 345 rel.

Citibank N.A. A. Banking Company through Attorney v. Riaz Ahmad 2000 CLC 847; United Bank Ltd. v. Central Cotton Mills Ltd. and others 1999 CLC 1374; Abdul Ghani v. Abdul Ghafoor and others 1993 MLD 1643; Citibank v. Tariq Mohsin Siddiqi and others PLD 1999 Kar. 196; Habib Bank Ltd. v. Messrs Shields (Private) Limited through Managing Director and 3 others 1999 CLC 1643; N.D.F.C. v. Anwar Zaib White Cement Ltd. and others 1999 MLD 1888; Mst. Ghulam Bibi and others v. Sarsa Khan and others PLD 1985 SC 345; Sharif and others v. Muhammad Amir 1985 SCMR 1214; Muhammad Zahoor and others v. Lal Muhammad and 2 others 1988 SCMR 322; Muhammad Khan and 6 others v. Mst. Ghulam Fatima and 12 others 1991 SCMR 970; Mir Mashar v. Azim PLD 1993 SC 332; Qamar Din v. Muhammad PLD 2001 SC 518 and Ghulam Abbas v. Muhammad Ashraf 1993 SCMR 2289; Ismail and 5 others v. Mst. Umar Bibi and 12 others 1982 SCMR 871; Malik Riaz Ahmad Khan v. Inayat Ullah Qureshi 1989 MLD 244; Murchand v. Sint. Indra and others PLD 1985 Kar. 362; Atlantic Steamer Supply Co. v. M.V. Titsee PLD 1993 SC 88; Qaid Jauhar and others v: Mst. Hajiani Hajra Bai and another PLD 2002 Kar. 100; Chaudhry Muhammad Sidique and others v. Mian Abdul Haq 1991 MLD 1479; Mst. Imam Hussain v. Sher Ali Shah and others 1991 SCMR 2293; Shahsawar (Represented by his heirs) v. Syed Najamul Hassan etc. 1981 SCMR 730; Syed Ghulam Abbas v. The Chief Administrator, Auqaf 1981 SCMR 753; Bahoo Khan v. Municipal Committee Murree and another 1969 SCMR 29; C.J. Leach and Co. Ltd. and another v. MS Jardine Skinner and Co. PLD 1957 SC (India) 307; Raja Sher Ahmad v. Muhammad Abdullah and others 1991 SCMR 277; Syed Shaukat Ali Shah v. Addl. District Judge camp at Shakargarh PLD 2003 Lah. 192 and Bhagwanjee Morajee v. M.L. Big Chemical Pvt. Ltd. PLD 1948 PC 73 ref.

Nauman Akram Raja for Appellant.

Naseem Mahmood for Respondent.

Date of hearing: 29th April, 2004.

2004 C L D 1181

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Chaudhri MUHAMMAD QASIM and 7 others---Appellants

Versus

PRIME COMMERCIAL BANK LIMITED and 2 others---Respondents, R. F. A. No.275 of 2000, heard on 8th April, 2003.

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

-----S.10---Leave to defend the suit---Serious and bona fide defence, raising of ---Agreement between the parties--­Enforceability---Defendants asserted that there was an agreement between the bank and borrower company whereunder the bank had agreed to provide guarantee and letter of credit facilities to enable the company to perform its contract with Wetter and Power Development Authority---Grievance of the defendants was that the bank failed to provide the guarantee and the facility as agreed upon between the parties thus the company was prevented from performing the contract arrived at with the Water and Power Development Authority---Defendants, on such basis denied liability to pay claim of the bank---High Court refused leave to defend the suit and decreed the suit on the ground that the loan facilities availed by the company was not denied--­Validity---If the defendants were able to prove that the bank had committed, a breach of the agreement thereby preventing performance of the Water and Power Development Authority contract, then the defendants would be able to successfully resist the suit of the bank---Defendants had raised a serious and bona fide defence and the bank needed to prove its case through a regular trial---Judgment and decree passed by the High Court was set aside and leave to defend the suit was granted to the defendants---Appeal was allowed accordingly.

(b) Banker and customer---

---Running finance and counter-guarantee --- Scope---Material and qualitative difference exists between .a demand for repayment of running finance and a demand founded on a counter-guarantee or indemnity.

(c) Pleadings---

---- Arguments contrary to pleadings---Effect---Party cannot be allowed to argue a case which is contrary to its own pleadings.

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

-----S.10---Leave to defend the suit---Statement of official liquidators of borrower company---Effect---Any concession made by the liquidators does not bind the guarantors who have independent right to show that the bank did not have any valid or enforceable claim against the borrower company.

Salman Akram Raja for Appellant.

Dr. Pervez Hassan assisted by Faisal Islam for Respondent.

Date of hearing: 8th April, 2003.

2004 C L D 1207

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

Mian MUHAMMAD USMAN---Appellant

Versus

BANK OF OMAN LIMITED and 4 others---Respondents

E.F.As. Nos.413 and 441 of 1998, heard on 14th October, 2003.

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

---S.18(6)---Civil Procedure Code (V of 1908), O.XXI & R.58--­Execution of decree---Sale of mortgaged property---Appellant in objection petition claiming to be the owner of the mortgaged property on the basis of a sale-deed---Dismissal of objection petition by Banking Court relying on a Permanent Transfer Deed (PTD) issued by the Settlement Department in favour of someone else---Validity---Banking Court should have conducted an enquiry in order to determine the validity of transfer on PTD---Permanent Transfer Deed alone is no basis to determine that objectors had no locus standi to file objection petition---Proper enquiry is required to determine with certainty that the particular mortgaged property was allotted on PTD---High Court accepted appeal, set aside the impugned order and remanded case to Banking Court for holding proper inquiry and decide objection petition afresh in accordance with law.

Jehangir A. Jhoja for Appellant.

Muhammad Nawaz Kasuri for Respondent No. 1.

Nemo for other Respondents.

Date of hearing: 14th October, 2003.

2004 C L D 1213

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs ATLAS LEASE LTD. ---Appellant

Versus

Messrs PUNJAB STEELS (PVT.) LTD. and 3 others---Respondents

R.F.A. No.456 of 1999, heard on 5th June, 2003.

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

-----S.10---Contract Act (IX., of 1872), Ss.23 & 74---Recovery of additional lease rentals and liquidated damages---Non-speaking judgment---Contract against public policy---Application for leave to defend the suit was dismissed by Banking Court and the suit was decreed in favour of financial institution but additional lease rentals were declined simply by stating that the same was opposed to public policy---Validity---Whether Banking Court had in mind the provisions of Ss.23 or 74 of Contract Act, 1872, in support of its finding that additional lease rentals were against public policy or were not permissible in law, was a matter of conjecture---Even if the Banking Court had such statutory provisions in mind, a decision could not have been given without evidence---Question as to what constituted a public policy as envisaged by S.23 of Contract Act, 1872, and what constituted penalty under S.74 of Contract Act, 1872, were a mixed question of law and fact---Judgment and decree passed by the Banking Court was set aside to the extent of additional lease rentals denied to the financial institution and leave was granted to the borrower only to the extent of additional lease rentals---Case was remanded to Banking Court for decision on merits---Appeal was allowed accordingly.

Azmat Saeed for Appellant.

Ali Sibtain Fazli for Respondents.

Date of hearing: 5th June, 2003.

2004 C L D 1215

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs VICKY TRADING COMPANY and another---Appellants

Versus

BANK OF PUNJAB and 6 others---Respondents

R.F.A. Nos.235 and 354 of 2002 and E.F.A. Nos.48 and 150 of 2003, heard on 15th April, 2003.

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

----S.22---Appeal---Factual controversy---Investigation by High Court---Jurisdiction-- Suit for recovery of bank loan was filed against the borrowers---Borrowers had accepted the sanction of loan facility by the bank but it was alleged that the bank had failed to open letters of credit in terms of sanction letter--Borrowers placed on record certain pay-in-slips showing that for each letter of credit, the amount covered therein was deposited before the letters of credit could be opened-- Application for leave to appeal was dismissed by Banking Court and the suit was decreed in favour of the bank---Plea raised by the bank was that it could be proved from record that the payments were not made rather the amounts on the letters of credit were paid by the bank to the beneficiary---Validity---Duty of Banking Court was to look into the defence set up by the borrowers and to give its opinion, if the defence did disclose serious and bona fide dispute or not--Banking Court did, not advert to the real controversy while refusing leave to the borrowers---Judgment passed by the Banking Court was non-speaking judgment and the same could not be sustained--High Court declined to undertake such task in appellate jurisdiction-Judgment and decree passed by the Banking Court was set aside and case was remanded to Banking Court for re-deciding the application for leave to defend Appeal was allowed accordingly.

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

----S.22---Appellate jurisdiction of High, Court---Partial setting aside of judgment and decree-Two different appeals were filed by different defendants against same judgment and decree---One appeal was allowed. by High Court and the case was remanded to Banking Court---Bank, in the present appeal, had raised objection regarding its being barred by limitation--Validity---As judgment and decree had been set aside by High Court in other appeal, the same judgment and decree could not be sustained against the present appellants who were co-defendants and 3uarantors in the same suit--Appeal was allowed accordingly.

Muhammad Khalid Mehmood Khan for Appellants.

Muhammad Shujah Baba for Respondents.

Date of hearing; 15th April, 2003.

2004 C L D 1224

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

PUNJAB STEELS (PVT.) LIMITED and 3 others---Appellants

Versus

Messrs ATLAS LEASE LIMITED---Respondent

Regular First Appeal No. 510 of 1999, heard on 8th May, 2003.

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

----S.10---Recovery of loan---Leave to defend the suit, grant of--­Equipment lease agreement---Grievance of the borrower was that the financial institution had not disbursed the whole amount--­Plea raised by the financial institution was that in accordance with the instructions of the borrower, the un-disbursed amount was paid/deposited accordingly---Borrower did not at any point of time, prior to the filing of the suit by the financial institution, raised any such grievance---Banking Court declined leave to defend the suit -and decree was passed in favour of the financial institution---Validity---Borrower had accepted and was bound by the terms of the equipment lease agreement---Banking Court had rightly declined leave to defend the suit as the borrower had not raised any serious or bona fide dispute justifying grant of leave to appear and defend to the borrower---High Court declined to interfere with the judgment and decree passed by the Banking Court.

Ali Sibtain Fazli for Appellants.

Azmat Saeed for Respondent.

Date of hearing: 8th May, 2003.

2004 C L D 1227

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

MASOOD ALAM---Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager and 2 others---Respondents

Regular First Appeal No.107 of 2001, heard on 20th May, 2003.

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

----Ss.9(3) (4) & 10---Leave to defend the suit, grant of---Service off summons to defendant---Non-return of registered post--­Presumption---Change of address by defendant---Contention of the defendant was that if he was not available on the address available with the bank then it was duty of the bank to have ascertained and got his fresh address---Validity---If the defendant after incurring the financial obligations qua the bank chose to change his residence or place of business then it was his duty to furnish the Bank with his latest and correct address--­Established principle is that the debtor is to seek the creditor--­Defendant was duty bound to keep the bank informed about the latest position and his where-about---Summons were dispatched through registered letters but the same were not returned, served or un-served and the presumption would be that the defendant had received those letters---Defendant was not able to raise serious and bona fide dispute---Application for leave to defend the suit was neither supported by affidavit of the defendant no it was even signed by him---Banking Court had rightly dismissed the application for leave to defend-- Appeal was dismissed in circumstances.

Messrs Ahmad Autos and another v. Allied Bank of Pakistan Limited PLD 1990 SC 497 ref.

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

----Ss.9(3) & 10---Application for leave to defend the suit--­Limitation, computation of---Service through newspapers--­Effect---Limitation, in such case, for filing of the application for leave to defend the suit starts from the date of first publication of the summons in the newspaper.

Messrs Qureshi Salt and Species Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 ref.

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

----S. 10---Interim application for leave to defend the suit---Filing of detailed leave application---Principles---Detailed' leave application cannot be filed after expiry of period of 21 days from service of summons upon defendant.

Muhammad Ahsan Bhoon for Appellant.

Hassan Nawaz Makhdoom for Respondent No. 1.

Nemo for Respondent No.2.

Date of hearing: 20th May, 2003.

2004 C L D 1239

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

NATIONAL BANK OF PAKISTAN through Zonal Chief and others---Appellants

Versus

Messrs POWER TEXTILE INDUSTRIES LTD. through Chief Executive and others---Respondents

Regular First Appeals Nos. 307 and 336 of 2002, heard on 16th April, 2003.

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

---Ss.9 & 10--Recovery of bank loan-Leave to defend the suit, refusal of--Plea of fabricated loan documents--Defendants had not denied availing of loan facilities and also claimed to have paid certain amounts towards discharge of their liability but had denied execution of loan documents in vague and general terms by not raising any specific plea regarding fabrication or forgery of the documents-Defendants had also not denied execution of guarantees and mortgaging documents in favour of bank-­Effect---Allegations raised by the defendants were bald and had contradicted their case---Banking Court had rightly refused leave to defend the suit and the suit was rightly decreed in favour of bank---Appeal was dismissed in circumstances.

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

---Ss. 9 & 10---Leave to defend the suit, grant of-Amount deposited by defendants was disputed by the bank---Banking Court dismissed the application for leave to defend the suit and decreed the suit in favour of the bank after adjusting the disputed amount in favour of defendants---Effect---Deposit of disputed amount was an issue between the parties and instead of disallowing the amount to the bank, leave should have been granted to the defendants to the extent of the disputed amount--Such dispute should have been resolved after framing of issues and trial--Denial of the amount to the bank at leave granting stage was illegal and unlawful---Judgment and decree passed by the Banking Court to the extent of disputed amount was set aside Application for leave to defend the suit was allowed to the extent of amount deposited by the defendants-Case was remanded to the Banking Court for decision after trial Appeal was allowed accordingly.

Iftikhar Ullah Malik for Appellants.

Iftikhar Hussain Shah for Respondents.

Date of bearing: 16th April, 2003.

2004 C L D 1243

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Mian MUHAMMAD KHALID---Appellant

Versus

Messrs BANK OF PUNJAB and 2 others---Respondents

E. F. A. No.33 of 2002, heard on 11th June, 2003.

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

----S.18(6)---Execution of decree---Investigation of objections--Jurisdiction of Banking Court---Objector claimed to be owner in possession of property mortgaged in favour of bank---Plea raised by the objector was that the registered sale-deed deposited by the borrower, was a forged document---Executing Court dismissed the objection petition without investigation of objection--­Validity---Executing Court before dismissing the objection petition should have investigated the claims and objections against the attachment of the property, by providing sufficient opportunities to the parties for establishing their respective claims, through production of evidence---Order passed by Executing Court was neither in conformity with the record of the case nor in consonance with the law on the subject---Such order passed by Executing Court was set aside and case was remanded to Executing Court for decision afresh on objection petition---Appeal was allowed accordingly.

Mst. Surayya Begum v. Muslim Commercial Bank Ltd. and 4 others PLD 1990 Lah. 4 ref.

(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, R.58--­Attachment of property---Objections, investigation of---Recording of evidence---Jurisdiction of Executing Court---Scope---Executing Court is not under obligation, in each and every case, to mechanically record evidence of objector and to decide objection petition after hearing evidence---Executing Court has to see in individual cases as to whether particular case requires recording of evidence or/and that the objection petition has been filed frivolously, contumaciously and to delay proceedings.

Syed Haider Ali Shah for Appellant.

Imran Raza Khan for Respondents.

Respondents Nos.2 and 3 were proceeded ex parte.

Date of hearing: 11th June, 2003.

2004 C L D 1247

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

S.M.S. BOKHARI --- Appellant

Versus

CITI BANK N.A.---Respondent

Regular First Appeal Case No. 362 of 2001, heard on 21st April, 2003.

(a) Banker and customer----

---- Credit card facility---Services rendered by a bank discussed.

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

----S.9---Recovery of Credit card finance--Service charges included in such finance---Defendant admitted availing of such facility but disputed recovery of service charges being interest thereon---Validity---Bank had not only provided extensive services - at different stage, to the card-holder but in acknowledgment of such services, the holder had also agreed to pay a fixed service fee to the bank----Amount charged as service charges was not interest but a fee for the services rendered in terms of agreement between the parties---Judgment and decree passed by the Banking Court was maintained by High Court--­Appeal was dismissed in circumstances.

Khursheed Akhtar for Appellant.

Umar Atta Bandial and Asher Elahi for Respondent.

Dr. Pervaiz Hassan and Salman Akram Raja Amicus Curiae.

Date of hearing: 21st April, 2003.

2004 C L D 1250

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs PAK DUCK TEXTILE INDUSTRIES LTD through Director- --Appellant

Versus

Messrs UNITED BANK LIMITED through Attorneys/Officers---Respondent

R.F.A. No.250 of 1993, heard on 13th May, 2003.

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

----S.10---Leave to defend the suit, grant of---Imposing of condition---fate of interest, dispute of---Defendants disputed two entries by which interest had been charged to them---Bank failed to refer any supporting agreement or other document to justify the amount and rate, of interest charged to the defendants--­Effect---Record before the High Court (Banking Court) and statements of account filed by the bank were not sufficient to support the claim asserted against the defendants---Bank was to be put to prove its claim---Judgment and decree passed by High Court (Banking Court) was set aside---Defendants having availed the facility of loan as far back as 1982, High Court granted leave to appear and defend the suit, subject to deposit of a sum of Rs.20,00,000 with the bank; failing such payment, application of defendants seeking leave to appear and defend the suit would be deemed to have been dismissed---Case was remanded to the Banking Court accordingly.

Shahid Ikram Siddiqui for Appellant.

Khalid Mehmood Sheikh for Respondent.

Date of hearing: 13th May, 2003.

2004 C L D 1263

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

MUHAMMAD ALI RAZA SHAH and another---Respondents

R.F.A. No.578 of 1996, heard on 2nd April, 2003.

Banking Tribunals Ordinance (LVIII Of 1984)---

----S.6---Recovery of bank loan---Non-award of labour charges--­Banking Tribunal decreed the suit in favour of bank but declined to award labour charges on the ground that no documents regarding availing of such facility were available on record--­Observation made by Banking Tribunal was not consistent with the documents on record, rather the Tribunal had proceeded on assumption---Effect--Judgment and decree passed by Banking Tribunal was set aside and the case was remanded for decision afresh.

Habib Bank Ltd. v. Messrs Farooq Compost Fertilizer Corporation Ltd. and 4 others 1993 MLD 1571; Allied Bank of Pakistan Limited, Faisalabad v. Messrs Asisha Garments through Proprietor and 2 others 2001 MLD 1955; Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170 and National Development Finance Corporation v. Messrs Millrock Quarring (Pvt.) Ltd. and 7 others 2002 CLD 1382 ref.

Mian Nasir Mahmood for Appellant.

Nemo for Respondents.

Date of hearing: 2nd April, 2003.

2004 C L D 1266

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs HI LITE INDUSTRIES and 4 others---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED---Respondent

Regular First Appeals Nos.587 to 589 of 2000, heard on 8th July, 2003.

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

----Ss.7 & 9-Civil Procedure Code (V of 1908), S.20-Banking Court, territorial jurisdiction-Determination--Such jurisdiction is regulated by the provisions of Civil Procedure Code, 1908-­Territorial jurisdiction is conferred upon Banking Court, under the provision of S.20, C.P.C., where one of the defendants resides against all the defendants-Suit was filed at a place where one of the guarantors/defendants resided-Such suit was maintainable.

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

----Ss. 9 & 10--Recovery of bank loan-Leave to defend the suit, refusal of---Plea of borrower being that loan had been written off---Validity---No documentary evidence on record was produced by the defendants, to show that they had ever applied for writing off the loan or even any letter was conveyed by the bank to them showing that the loan had been written off--Plea raised by the defendants was that the loan of defendants had been shown to be written off in annual report of the bank---Validity--If only for the purpose of accounting in the annual report, the bank had shown the amounts as bad debt, would not mean that the loan was not recoverable---High Court set aside the future mark-up except for cushion period of 210 days---Judgment and decree passed by Banking Court was modified only to the extent of future mark-up---Appeal was dismissed accordingly.

Muhammad Khalid Sajjid Khan for Appellants.

Miss Aniqua Mughees Sheikh for Respondent.

Date of hearing: 8th July, 2003.

2004 C L D 1269

[Lahore]

Before Maulvi Anwarul Haq and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through MANAGER---Appellant

Versus

MUHAMMAD KHAN---Respondent

R. F. A. No.167 of 1997, heard on 30th July, 2003.

Banking Tribunals Ordinance (LVIII of 1984)---

-----S.9---Appeal---Principle of past and closed transaction--­Setting aside of judgment passed by Banking Tribunal on the basis of judgment passed by High Court in case titled Messrs Chenab Cement Product Private Ltd. and others v. Banking Tribunal Lahore and others, reported PLD 1996 Lah. 672--­Validity---Judgment and decree in the instant case was passed by Banking Tribunal before the date of rendering of the judgment in the case of Chenab Cement Products---Appellant had challenged the judgment through filing of present appeal, therefore, decree under appeal was not saved and the same did not fall within the term "past and closed cases"---Judgment and decree passed by Banking Tribunal was set aside and case was remanded to Banking Court constituted under S.5 of Financial Institutions (Recovery of Finances) Ordinance, 2001-- Appeal was allowed accordingly.

Messrs Chenab Cement Product Private Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 and Syed Farasat Ali Shah v. Allied Bank of Pakistan Writ Petition No. 12374 of 1999 rel.

Nemo for the Parties.

Date of hearing: 30th July, 2003.

2004 C L D 1281

[Lahore]

Before Muhammad Khalid Alvi and Mian Muhammad Akram Baitu, JJ

Messrs NOOR HAYAT INDUSTRIES (PVT.) LTD. through Chief Executive---Petitioner

Versus

JUDGE BANKING COURT NO.I, MULTAN and 5 others---Respondents

Writ Petition No.33 of 2003, heard on 2nd June, 2004.

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

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R. 19--­Constitution of Pakistan (1973), Art. 199---Constitutional petition---Interpretation of S. 19, Financial Institutions (Recovery of Finances) Ordinance, 2001---Execution of decree and sale of property with or without intervention of Banking Court---Applicability of O. XXI, R. 19, C.P.C.--­Scope---Objection/claim raised before the Banking Court was to be dealt with under S. 19(7), Financial Institutions (Recovery of Finances) Ordinance, 2001 to which C.P.C. was not applicable and the condition imposed by the Banking Court directing the objector to deposit a certain amount as 20% under O. XXI, R. 19, C.P.C. was illegal

According to subsection (2) of section 19, Financial Institutions (Recovery of Finances) Ordinance, 2001 the decree passed by the Banking Court is executable in accordance with the provisions of C.P.C. However, if a Financial Institution intends to sell the mortgaged property on its own under subsection (3) then permission can be granted by the Banking Court to do so. However, for that purpose, if some body has an objection to such an auction/sale then he can file objections/ claims under subsection (7) of section 19 of the Ordinance which clearly ousts the provisions of C.P.C. for the determination of such claims/objections which are to be dealt in a summary manner. Section 19 of the Ordinance also provides certain penalties for false claims on the one hand and a false or incorrect defence by the Financial Institution on the other side.

The objection/claim raised by the objector before the Banking Court should have been dealt under subsection (7) of section 19 to which C.P.C. was not applicable and the condition imposed by the Banking Court directing the objector to deposit a certain sum of money as 20% under Order XXI rule 19, C.P.C. was illegal.

2002 SCMR 496 applied.

Sardar Riaz Karim for Petitioner.

Shahid Mumtaz Piracha for Respondents.

Altaf Mehmood Qureshi for Respondent No.6.

Date of hearing: 2nd June, 2004.

2004 C L D 1286

[Lahore]

Before Nasim Sabir Ch., J

MUHAMMAD ASHRAF and another---Petitioners

Versus

ZARAI TARAQIATI BANK OF PAKISTAN through Director R.P. and D.C.D. and 3 others---Respondents

Writ Petition No.570 of 2004, decided on 8th June, 2004.

Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance (LX of 2002)---

----Ss. 4 & 5---Constitution of Pakistan (1973), Art. 199--­Constitutional petition---Petitioners, debtors of the Bank, sought direction of the High Court to the Zarai Taraqiati Bank to extend to them the benefit of the "Relief Package" announced by the Bank with further relief to return the Pass-Books and issue a clearance certificate and also to return the extra amount paid by the petitioners---Petitioners had fulfilled all the terms and conditions of the "Relief Package" announced by the Bank but the Bank refused to give relief to the petitioners on the pretext that the amount deposited by the petitioners was deposited by the Mobile Credit Officer of the Bank one day late and therefore the Bank had adjusted the amount deposited by the petitioners in the payment of loan---Petitioners however, had submitted to the High Court that they would not press the petition if a direction be issued to the Bank to consider the application of petitioners in view of the "Relief Package" strictly in accordance with law---Counsel of the Bank having no objection to the proposal of the petitioners, Constitutional petition was disposed of by the High Court with direction to the Bank that the concerned Bank functionary shall look into the matter personally and pass an appropriate order strictly in accordance with law after providing proper hearing to the petitioners.

Rana Muhammad Shakeel for Petitioner.

Muhammad Saleem Iqbal for Petitioner.

Rao Muhammad Javed for Respondents.

2004 C L D 1289

[Lahore]

Before Jawwad S. Khawaja, J

HABIB BANK LIMITED---Plaintiff

Versus

ORIENT RICE MILLS LTD. and others---Defendants

C.O. S. No.58 of 2000, decided on 8th June, 2001.

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

----Ss. 2(c) & 9---Letter of request for loan by borrower--­Effect---Borrower could not be, allowed to raise a plea contrary to its stance taken in its letter of request.

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

----S. 9---Qanun-e-Shahadat (10 of 1984), Art.45---Suit for recovery of loan amount---Verbal denial of defendant to have availed finance facility---Plaintiff-Bank based its claim on finance agreement, its statement of account, defendant's letter of request and financial statements of defendant duly audited by Chartered Accountant showing disputed amount to be due by defendant to Bank---Validity---Such audited accounts could be construed as admissions on the part of defendant, which admissions would not be conclusive and could be rebutted---In absence of any evidence to rebut contents of audited financial statements of defendant, mere verbal denial of defendant of having availed total loan or as claimed by Bank would not be sufficient for denying liability by defendant---Liability of Bank had been established from very strong corroborative evidence in the form of audited financial statements of defendant, in respect' of which there was no reasonable rebuttal by defendant--­Contention of defendant was repelled in circumstances.

Ahmed Khan v. Rasul Shah and others PLD 1975 SC 311; Barkhurdar v. Muhammad Razzaq PLD 1989 SC 749 and Pakistan Development Corporation Ltd. v. The Bank of Bahawalpur PLD 1960 Kar. 885 fol.

Mat. Hameeda Begum and others v. Khadim Hussain and others 2001 MLD 427; Citibank N.A. v. Riaz Ahmad 2000 CLC 847; Ram Narain v. Lt. Col. Hari Singh and another AIR 1964 Rajasthan 76 and Muthukaruppa Mudali and others v. Pr. Mu. Kathappudayan and others 25 IC 726 ref.

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

----Art. 45---Admission would only be relevant evidence, but not conclusive.

Ahmed Khan v. Rasul Shah and others PLD 1975 SC 311; Barkhurdar v. Muhammad Razzaq PLD 1989 SC 749 and Pakistan Development Corporation Ltd. v. The Bank of Bahawalpur PLD 1960 Kar. 885 fol.

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

----S. 9---Suit for recovery of loan amount---Denial of defendant to pay mark-up on enhanced amount of loan--­Finance agreement executed by defendant -set out its commitment to pay mark-up in respect of entire finance--­Held, defendant could not be allowed to resile from its commitment.

I.C.P. and others v. Messrs Chiniot Textile Mills Ltd PLD 1989 Kar. 316 distinguished.

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

----Ss. 9 & 18---Contract Act (IX of 1872), Ss.151, 152 & 176---Suit for recovery of loan amount secured by pledge of stock---Loss of pledged stock---Plea of defendant was that Bank could not enforce its claim in respect of cash finance facility in absence of pledged stock---Validity---Section 176, Contract Act, 1872, empowered Bank to file suit without selling pledged goods and treat the pledge as collateral security only---Matter relating to any shortfall in pledged stock and responsibility therefor could be determined in execution proceedings and at that time collateral security would be required to be accounted for and brought to sale--­Rights and obligations of the Bank as pledgee and those of defendant under Ss. 151 and 152 of Contact Act, 1872 could be determined at the time of realization of collateral security.

A.M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1966 (W. P.) Lah.1 ref.

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

----S. 9---No mark-up could be charged by Bank on accrued mark-up.

I.C.P. and others v. Messrs Chiniot Textile Mills Ltd. PLD 1989 Kar. 316 fol.

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

----S. 9---Suit for recovery of loan amount---Claim for mark­up by Bank---Validity---Mark-up could not be allowed to Bank without an agreement or statement of account disclosing commitment by defendant to pay mark-up.

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

----S. 17---Qanun-e-Shahadat (10 of 1984), Art.17(2)(a)---Transfer of Property Act (IV of 1882), S.59---Banking documents---Want of attestation of documents referred to in S.17 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 or Art. 17(2)(a) of Qanun-e­-Shahadat, 1984 or S.59 of Transfer of Property Act, 1882--­Effect---In absence of proper attestation of mortgage-deed, there could be no mortgage-deed and no rights in property would be transferred in view of provision of S.59 of Transfer of Property Act, 1882, even if execution thereof was acknowledged by its executant---Want of attestation of document referred to in S.17 of Act, 1997 or Art. 17(2)(a) of Qanun-e-Shahadat, 1984 would not render such document void or inadmissible in evidence---Principles.

Under section 59 of Transfer of Property Act, 1882, attestation of a mortgage-deed by at least two witnesses is an essential pre-requisite for the creation of a valid and enforceable mortgage. If the deed is not attested by two witnesses as required, the mortgage, in fact, does not come into existence. The necessary consequence, which follows from a want of proper attestation, is that no interest in the property is transferred to the putative mortgagee. On the other hand, the requirement for attestation of an instrument pertaining to financial or future obligations as set out in Article 17(2) of the Qanun-e-Shahadat Order, 1984, is materially and qualitatively different from the requirement of attestation set out in section 59 of the. Transfer of Property Act, Article 17 of the Qanun-e­-Shahadat Order requires attestation for the purpose of proof pertaining to financial or future obligations referred to in the said provision. The language employed in Article 17 of Qanun-e-Shahadat Order, 1984 is also, in material terms, different from that used in section 59 of the Transfer of Property Act. While section 59 by clear working stipulates that there can be no mortgage-deed (and thus no mortgage) in the absence of proper attestation by at least two witnesses, Article 17(2) of the Qanun-e­-Shahadat Order does not affect the validity of a document pertaining to financial or future obligation.

There is nothing in Article of the Qanun-e-Shahadat Order or in section 17 of the Act to even remotely suggest that want of attestation on any document referred to in Article 17 of the Qanun-e-Shahadat Order or in section 17 of the Act, will render such document void or inadmissible in evidence. In this material particular, the provisions of Article 17 of the Qanun-e-Shahadat Order and those of section 17 of the Act are significantly different from the provisions of section 59 of the Transfer of Property Act. The latter provision affects the mortgage-deed itself and results in the statutorily prescribed consequence that no rights in property stand transferred in the absence of proper attestation even where the executant of an instrument purporting to be mortgage-deed, acknowledges execution of such instrument.

Section 59 of the Transfer of Property Act does not present an analogy, which can be applied to the provisions contained in Article 17 of the Qanun-e-Shahadat Order or to section 17 of the Act.

Shamu Patter v. Abdul Kadir Ravuthan and others 39 Indian Appeals 218 and Mt. Hira Bibi and others v. Ram Hari Lal and others 1925 PC 203 ref.

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

----S. 17---Qanun-e-Shahadat (10 of 1984), Art.17(2)(a)--­Personal guarantee, execution of---Proof---Where execution of guarantee was admitted, then neither there would be need for proving its execution through attesting witnesses nor mere want of attestation would render same inadmissible in evidence.

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

---S. 17---Qanun-e-Shahadat (10 of 1984), Art.17(2)(a)--­Power of attorney relating to financial obligations, execution of---Proof---Where execution of such power-of-attorney was denied by its purported executant, then same would be inadmissible in evidence for want of attestation.

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

----S. 9---Contract Act (IX of 1872), S.128---Suit for recovery of loan amount---Guarantor claiming to be employee of defendant-Company and holding only nominal equity in company denied his liability to pay loan amount ---Validity--­Mere such fact could not absolve guarantor of his personal liability undertaken by him by executing personal guarantee to secure payment/ obligations of defendant-Company.

Shams Mehmood Mirza for Plaintiff.

Mansoor-ul-Arfin for Defendants Nos. 1 to 7.

Malik Asif Iqbal for Defendant No.8.

Date of hearing: 16th May, 2001.

2004 C L D 1313

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

Messrs RAINBOW PACKAGES LTD. through Chief Executive and 7 others‑‑‑‑Appellants

Versus

Messrs FIRST ELITE CAPITAL MODARABA‑‑‑‑Respondent

R.F.A. No. 500 of 1998, decided on 21st January, 2004.

(a) Modaraba Companies and Modaraba (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.24‑‑‑Limitation Act (IX of 1908), S.19 & Art.64‑‑‑Suit‑‑­Limitation‑‑‑Plaintiff Modaraba Company filed suit against the Public Limited Company and its 11 shareholders as real beneficiaries‑‑‑Trial Court decreed the suit‑‑‑Objection was that suit was barred by time‑‑‑Validity‑‑‑Finance agreement was executed on 6‑4‑1992 and demand promissory note was executed on 7‑5‑1992 while the suit was filed on 30‑7‑1997‑‑­Successive acknowledgments were pleaded by the plaintiff‑‑‑Last acknowledgment was dated 28‑11‑1996 as made by defendant­ Company‑‑‑Plea of limitation was not available to the company‑‑­Other defendants had not acknowledged the liability‑‑‑Suit against defendants was barred by limitation.

(b) Modaraba Companies and Modaraba (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑--

‑‑‑‑S.12‑‑‑Authority to sue‑‑‑Legal person ‑‑‑Modaraba Company being a legal person could sue and be sued‑‑‑Suit filed by management of the Company was in order.

(c) Modaraba Companies and Modaraba (Floatation and Control) Ordinance (XXXI of 1980)‑‑‑--

‑‑‑‑S.24‑‑‑Real beneficiaries‑‑‑Plaintiff sued limited Company and 11 others as real beneficiaries‑‑‑Validity‑‑‑Defendants had not executed finance agreement and neither stood as sureties nor indemnifiers nor in any manner undertook to discharge the liability‑‑‑Defendants, in circumstances could not be said to have derived any personal benefit or were real beneficiaries‑‑‑One defendant was Public Limited Company for which liability of the share holders was limited, appeal to that extent was accepted and case was remanded for fresh decision‑‑‑Defendants were allowed leave to defend the suit in circumstances and appeal was dismissed to the extent of one defendant.

Mian Nisar Ahmad for Appellants.

Haq Nawaz Chattha for Respondent.

Date of hearing: 21st January, 2004.

2004 C L D 1318

[Lahore]

Before Syed Zahid Hussain and Muhammad Akhtar Shabbir, JJ

Messrs KASHIF TRADERS and another‑‑‑‑Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED and 2 others‑‑‑Respondents

F.A.O. No.57 of 2003, heard on 9th December, 2003.

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

‑‑‑‑S.19(7)‑‑Civil Procedure Code (V of 1908), O.XXI, R.66‑‑­Auction of mortgaged property, validity of ‑‑‑Suit for recovery filed against the appellant was decreed ex parte in favour of the Bank‑‑‑Execution petition‑‑‑Sale of‑‑ mortgaged property by auction‑‑‑Objection petition filed by the appellant against auction of his property was dismissed by the Executing Court through impugned order‑‑‑Appeal was filed by the appellant against the impugned order‑‑‑Objections of the appellant was that the notice under O.XXI, R.66, C.P.C. was not issued to him before the auction of the property, the publication of sale was made in a different newspaper from the one that the Court had directed and the auction proceedings conducted by the Court and the auctioneer were fraudulent‑‑‑Validity‑‑‑Order to sell the property through auction was found to have been passed by the Executing Court after issuing notice under O.XXI, R.66, C.P.C. to the appellant, as the appellant had responded to it by filing an application for setting aside the ex parte decree‑‑‑Change of the publication in the newspaper by the Court auctioneer was not an illegality,, as the purpose of the publication was to bring the auction of the property to the knowledge of the public and it was well achieved‑‑‑Notice was also fixed at different conspicuous places and also sent by registered post to the appellant ‑‑‑ No fraud was found to have been committed in holding the auction not the Executing Court had gone outside the limits prescribed nor the Executing Court had one outside the limits law ‑‑‑Executing Court as well as the Court auctioneer had performed all the legal requirements to conduct the auction of the said property‑‑‑Appeal, in the circumstances, was dismissed.

Syed, Munir Hussain Gilani v. Habib Bank Limited, Township Branch, Lahore and another 2002 CLD 315 ref.

Zafar Iqbal Malik for Appellants.

Mushtaq Ahmed Khan for Respondent No. 1.

Zafar Iqbal Chauhan for Respondent No.2.

Date of hearing: 9th December, 2003.

2004 C L D 1322

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

Mst. JINDAN BIBI ‑‑‑‑ Appellant

Versus

MUHAMMAD NAWAZ and 3 others‑‑‑‑Respondents

Regular First Appeal No.603 of 1999, heard on 18th February, 2004.

Partnership Act (IX of 1932)‑‑‑

‑‑‑S.40‑‑‑Rendition of accounts‑‑‑Apportionment of repayable loan‑‑‑Plaintiffs filed suit for rendition of accounts in the Banking Court alleging that they and the defendant lady had obtained loan and purchased Tractor Trolly‑‑‑Agreement showed that they had to pay half share of the, loan‑‑‑Plaintiffs claimed that they had paid major portion of the loan due but the defendant had not done so‑‑‑Counsel of the plaintiffs made statement in the Court giving details about the total loan amount due, the amount repaid by the plaintiffs and amount repaid by the defendant and the amounts due from the plaintiffs and amount due from the defendant ‑‑‑Counsel of the defendant accepted the statement‑‑­Banking Court issued direction to the Bank not to recover any sum in excess to the apportioned amounts‑‑‑Validity‑‑‑Only .Bank could be aggrieved from the order‑‑‑Bank had not filed the appeal‑‑‑So executable order had been passed against the defendant‑‑‑Defendant had accepted the liability and Bank authorities were at liberty to recover according to law.

Sh. Naveed Shehryar for Appellant.

Khalid Ibrahim Khatana for Respondent No.1.

Nemo for Respondents Nos. 3 and 4.

Date of hearing: 18th February, 2004.

2004 C L D 1325

[Lahore]

Before M. Javed Buttar and Muhammad Muzammal Khan, JJ

AFZAL HUSSAIN ‑‑‑‑Appellant

Versus

Messrs HABIB BANK LIMITED through Manager‑‑‑‑Respondent

F.A.O. No.66 of 2003, heard an 29th January, 2004.

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

‑‑‑‑S.9(4)‑‑‑Civil Procedure Code (V of 1908), O.IX, R.13‑‑­Limitation Act (IX of 1908). Art.164‑‑‑Application for setting aside of ex parte decree‑‑‑Limitation‑‑‑Service of summons, legality of‑‑Suit for recovery filed by the Bank against the appellant was decreed ex parte‑‑Appellant filed an application for setting aside the ex parte decree, but the same was dismissed by the Trial Court through impugned order‑‑‑­Contentions of the appellant were that no personal service was effected for informing him of the date on which the suit against him was decreed ex parte, and he being an illiterate person could not have read the proclamation published in the newspaper; notice delivered to his servant could not be considered a lawful service and that he filed the said application as soon as he was informed of the decree‑Contention of the bank was that the application of the appellant was, barred by limitation and no application for condonation of delay was filed‑‑‑Validity‑‑‑Process for service of the appellant was issued simultaneously through different modes‑‑‑Appellant was not able to prove that he was illiterate or he was living with family members who were not literate or could not have read the newspaper to him‑‑‑Appellant had not denied that he was not informed by the servant who had received the notice through process server‑‑‑Notices issued under postal cover were received by someone at the residence of the appellant‑‑‑Appellant's application was found to be time‑barred' as he had failed to explain the delay caused in filing the same, from the date of his knowledge and further it was not accompanied by any application for condonation of delay‑‑­Appeal was dismissed, in circumstances.

Waqar Mushtaq Ahmad for Appellant.

Ms. Alia Neelum for Respondent.

Date of hearing: 29th January, 2004

2004 C L D 1328

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

MUSLIM COMMERCIAL BANK LIMITED‑‑‑‑Appellant

Versus

FAIR FAX TEXTILES and 4 others‑‑‑‑Respondents

E.F.A. No. 12 of 1996, heard on 9th February, 2004.

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

‑‑‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.66 ‑‑‑ Suit for recovery decreed in favour of the Bank‑‑‑Execution petition‑‑­Sale of properties by public auction‑‑‑Court auctioneer did not accept bids for certain properties and sent a reference to the Court in this regard‑‑‑Applications filed by the Bank before the Court to allow it to purchase said properties at' the price so reserved in their case and the sums be adjusted towards the decree, were rejected through impugned order‑‑‑Appeal was filed by the Bank against the impugned order‑‑‑Contention of the Bank was that the Court had erred in law in rejecting its applications without adverting to the mandatory provisions of O.XXI, R.66, C.P.C. and without deciding the application filed by it for setting aside the sale‑‑‑‑Validity‑‑‑Banking Court did not decide the application of the Bank for setting aside the sale of the properties‑‑‑Courts were obliged to decide the controversy between the parties after applying their independent mind‑‑­Appeal, in circumstances, was allowed.

Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173 ref.

(b) General Clauses Act (X of 1897)‑‑‑

‑‑‑‑‑Art.24‑A‑‑‑Public functionaries were under obligation to decide the controversy between the parties after application of mind.

Messrs Airport Support Services v. Airport Manager 1998 SCMR 2268 and Zain Yar Khan v. The Chief Engineer 1998 SCMR 2419 ref.

Kh. Haris Ahmad for Appellant.

Muhammad Siddiq Mughal for Respondent No. 1.

Syed Zafar Ali Shah for Respondent No.8.

Abid Aziz Sheikh for Respondent No.9.

Ashtar Ausaf Ali for Respondent No. 10.

Date of hearing: 9th February, 2004.

2004 C L D 1334

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

Haji SAGHIR AHMED ‑‑‑‑Appellant

Versus

UNITED BANK LIMITED‑‑‑‑Respondent

Regular First Appeal No.347 of 1998, decided on 26th January, 2004.

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

‑‑‑Ss. 7 & 22‑‑‑Suit for recovery was filed by the bank against the appellant on the basis of a facility of loan availed by the latter for purchase of a vehicle‑‑‑Application for leave to defend filed by the appellant was dismissed and the suit was decreed‑‑‑Appeal was filed by the appellant against the said decree on the plea that the grounds taken by him in the application for leave to appear and defend were not determined by the Trial Court‑‑‑Material plea of the appellant was that there was no outstanding liability, as he had received a defective .vehicle from the supplier and heavy expenditure was incurred oh, it, which was subsequently returned to the supplier under the direction of the bank‑‑­Validity‑‑‑Execution of security documents while availing the said facility and the quantum of the outstanding liability, was not disputed by the appellant‑‑No substantial documentary evidence was placed on record by the appellant to prove, that the vehicle was defective and heavy expenditure .was incurred to bring it into road worthy Condition‑‑‑Under the finance agreement it was found that the bank was not liable for any defect in the vehicle and the remedy of the appellant was against the supplier‑‑­Appeal, in circumstances, was dismissed.

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

‑‑‑‑‑S.9(1)‑‑‑Filing of suit by authorized persons‑‑‑Where the bank had placed copies of the power of attorneys of its duly constituted attorneys on record, the appellant was not entitled to take the objection that the suit was not filed by authorized persons.

Iftikhar Ullah Malik for Appellant.

Syed Fazal Mahmood for Respondent.

Date of hearing: 26th January, 2004.

2004 C L D 1338

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

UNITED BANK LIMITED‑‑‑‑Appellant

Versus

Messrs ILYAS ENTERPRISES through Proprietor Mr. Ilyas Malik and 2 others‑‑‑‑Respondents

Regular First Appeal No.268 of 1997, heard on 21st October, 2003.

(a) Banking Companies (Recovery of Loans) Ordinance, 1979‑‑‑

‑‑‑‑‑S.12‑‑‑Production of evidence‑‑‑Burden of proof, discharge of‑‑­Suits for recovery filed by the bank against the respondents were dismissed by the Trial Court on the ground that the bank had produced only one witness and a statement of account, in evidence which was insufficient to prove its case‑‑‑Appeals were filed by the bank against the said dismissal‑‑‑Contention of the bank was that suits could have been decreed only on the basis of the statements of accounts, which were admissible in evidence on their own force‑‑‑Validity‑‑Although the bank at the time of filing the suits, placed various documents with the plaint such as an irrevocable letter of credit, account opening form, specimen signature card and various letters to show that the respondents had entered into a loan transaction with it, however, at the time of recording of evidence, the bank did not produce the same in. evidence, except the statements of accounts‑‑‑Documents not produced during the evidence 'are not proved documents under the law and do not form part of the record‑‑‑Witness produced by the bank failed to ‑ prove the said transaction with the respondents and the contents of the plaint‑‑‑Bank was under an obligation to discharge the burden of proving that it was entitled to recover the suit amount from the respondents on the basis of the transaction, however, it failed to produce sufficient evidence in this regard‑‑‑Suits, in the circumstances, were .rightly dismissed by the Trial Court.

(b) Bankers Books Evidence Act (XVIII of 1891)‑‑‑

‑‑‑‑‑S.4‑‑‑Admission of statement of account, effect of‑‑‑Suit cannot be decreed merely on the basis of statement of account‑‑‑Section 4 of Bankers Books Evidence Act, 1891 provided that a certified copy of any entry in banker's book would be received as a prima facie evidence and would be admissible in evidence without any formal proof‑‑‑Mere admission of the statements of accounts in evidence did not mean that the suit of the‑ bank would necessarily be decreed, as in addition to the statements of accounts the bank was required to prove all the documents, relied upon by it and the loan transaction, as highlighted in the plaint.

Messrs Farid Sons Ltd. v. Messrs Ghulam Farid Muhammad Saeed and 13 others PLD 1972 Lah. 311 ref.

(c) Bankers Books Evidence Act (XVIII of 1891)‑‑‑

‑‑‑‑S.2(8)‑‑‑Incomplete statements of accounts, effect of‑‑­Statements of accounts produced by the bank were found to be incomplete and sketchy‑‑‑Validity‑‑‑Trial Court was right in not relying upon slipshod and sketchy statements of accounts for holding the respondents liable.

(d) Banker's Books Evidence Act (XVIII of 1891)‑‑‑--

‑‑‑‑S.2(8)‑‑‑Statement of accounts, certification of‑‑‑Certifications of the statements of accounts filed by the bank were found not to be in accordance with the definition of ‘certified copy' under S.2(8) of Bankers Books Evidence Act, 1891‑‑‑Validity‑‑‑Statements of the accounts, in the circumstances, were not to be treated as certified copies of the entries of the books of accounts.

Waqar Mushtaq Ahmad for Appellant.

Respondent proceeded: ex parte.

Date of hearing: 21st October, 2003.

2004 C L D 1344

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs STATE ENGINEERING CORPORATION LIMITED, ISLAMABAD, through Manager (Personnel) S.M. Akram Farhat ‑‑‑‑ Appellant

Versus

NATIONAL DEVELOPMENT FINANCE CORPORATION and another‑‑‑‑Respondents

Regular First Appeal No.62 of 1998, decided on 25th February, 2004.

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

‑‑‑‑‑S.22‑‑‑Contract Act (IX of 1872), Ss. 126, 128 & 139‑‑‑Contract of guarantee, nature of‑‑‑Surety's liability, discharge of‑‑‑Suit for recovery was filed by the respondent on the basis of finance facility availed by the borrower from it, in which the appellant was the guarantor‑‑‑Suit was partially decreed against the appellant through an interim decree‑‑‑Appeal was filed by the appellant against the said decree‑‑‑Contention of the appellant was that the respondent was bound to recover the amount from some other Authority in the first instance, but it committed a lapse in the performance of its obligation, therefore, appellant in terms of S.139 of Contract Act, 1872 stood discharged‑‑­Validity‑‑‑Guarantee was an independent contract between the parties‑‑‑Documents on the record showed that the appellant, through the contract of guarantee, had in clear, unequivocal and unambiguous terms guaranteed to stand as surety for whatever amount that was due to the respondent from the borrower‑‑‑As the borrower had defaulted in the payment of dues, therefore, the appellant was bound to discharge its surety obligation‑‑­Section .139 of the Contract Act, 1872, was not attracted in the circumstances.

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑‑‑Ss.126 & 128‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.22‑‑‑Contract of guarantee, conditions of‑‑‑Surety's liability, discharge of‑‑‑Contention of the appellant was that under the finance agreement, the disbursement of the finance made to the borrower, was to be on the basis of progress of supply orders, but the respondent in breach of this condition disbursed the financing in lump sum, therefore, the guarantee of the appellant, which was strictly on the basis of finance agreement could not be enforced ‑‑‑Validity‑‑­Appellant, irrespective of the finance agreement, stood surety for repayment of the amount due from the borrower and this obligation was not dependent upon any terms of the finance agreement‑‑‑Any deviation from the conditions of the finance agreement, in the circumstances, could not be equated to a breach of the contract, and could not absolve the appellant from its liability as a surety.

(c) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑--

‑‑‑‑‑S.2(e)‑‑‑Finance'‑‑‑Interpretation‑‑‑Scope‑‑‑Term finance' does not include the liquidated damages under the Banking Tribunals Ordinance, 1984‑‑‑Claim of the bank with regard to liquidated damages on the basis of finance availed ,by the borrower under a finance facility was refused.

Allied Bank of Pakistan Limited Faisalabad v. Messrs Asisha Garments through proprietor and 2 others 2001 MLD 1955 ref.

Sh. Javed Sarfraz for Appellant.

Tariq Kamal Qazi for Respondent No. 1.

2004 C L D 1348

[Lahore]

Before Ch Ijaz Ahmad and Mian Hamid Farooq, JJ

MUHAMMAD BOOTA and 4 others‑‑‑‑Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN and 3 others‑‑‑Respondents

R.F.A. No. 119 of 2000, heard on 12th February, 2004.

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

‑‑‑‑S.21(5)‑‑‑Interim order, appeal from‑‑‑Maintainability‑‑‑Suit for specific performance of contract alongwith recovery of amount was filed by the appellant against the bank‑‑‑Banking Court dismissed the application of the appellants in which it was prayed that suit be decreed as the bank had failed to file application for leave to appear and defend the suit‑Appeal was filed by the appellants against the dismissal of the said application‑‑‑Objection of the bank was that the impugned order was interim in nature therefore, the appeal was not maintainable‑‑‑Validity‑‑‑Under S.21(5) of the Banking Companies Act, 1997, appeal would not be maintainable against the interim order of the Trial Court‑‑‑Appeal of the appellants being against an interim order, was dismissed in circumstances.

Bolan Bank Limited v. Capricorn Enterprise (Pvt.) Ltd. 1998 SCMR 1961 and Messrs Qureshi Salt and Species Industries Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 ref.

Mrs. Zubaida Begum v. Mrs. S.T. Naqvi 1986 SCMR 261 and Abdul Qadir and others v. Haji Shakar Khan Barech 1987 CLC 1816 distinguished.

(b) Administration of justice‑‑‑

‑‑‑‑‑ Each case is to be decided on its peculiar circumstances.

(c) Interpretation of statutes‑‑‑

‑‑‑‑ Special law excludes the general law.

The State v. Zia‑ur‑Rehman and others PLD 1973 SC 49 ref.

Ch. Muhammad Bakhsh for Appellants.

Sh. Javaid Sarfraz for Respondents.

Date of hearing: 12th February, 2004.

2004 C L D 1351

[Lahore]

Before M. Javed Buttar and Muhammad Muzammal Khan, JJ

UNION BANK LIMITED through President and another‑‑‑‑Appellants

Versus

ABDUL REHMAN‑‑‑‑Respondent

R.F.A. No.790 of 2002, heard on 4th March 2004.

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

‑‑‑‑Ss.7 & 10‑‑‑Limitation Act (IX of 1908), S.14‑‑‑Leave to defend, grant of‑‑‑Suit for recovery was filed by the respondent against the bank as the latter had debited the amount of dishonoured demand draft to the respondent's account‑‑‑Application for grant of leave to defend was filed by the bank on the grounds that the suit was false and frivolous and there was no privity of contract as the bank had simply acted as an agent of the respondent who had entered into a transaction with a third party and deposited a demand draft for collection purposes and that the suit was barred by limitation‑‑‑Trial Court dismissed the said application of the bank and decreed the suit of the respondent‑‑‑Bank moved into appeal against the decision of the Trial Court‑‑‑Summary decision by the Trial Court, validity of‑‑‑Bank had only acted as an agent of the respondent for the collection of the demand draft, accepted by himself from a third party to which the bank had no participation‑‑‑Liability of the bank to pay amount under the said demand draft or adjusting payment made by it, out of the account maintained by the respondent, could not have been set at rest without recording of evidence‑‑‑Applicability of S.14 of Limitation Act, 1908, for bringing the suit within the period of limitation prescribed by a Financial Institutions (Recovery of Finances) Ordinance, 2001, which was a special statute required a full‑fledged trial and therefore, matter could not have been decided summarily‑‑‑Decree of the Trial Court was set aside and leave to defend was granted to the bank, in circumstances.

Shahid Karim for Appellants.

Rana Naeem Sarwar for Respondent.

Date of hearing: 4th March, 2004.

2004 C L D 1356

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

Messrs ITTEFAQ INDUSTRIES (REGD.) through Managing Partner and 2 others‑‑‑‑Appellants

Versus

BANK OF PUNJAB through Duly Constituted Attorney‑‑‑‑Respondent

R.F.A. No. 150 of 1998, heard on 4th November, 2003.

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

‑‑‑‑S.22‑‑‑Incomplete statement of accounts, validity of‑‑‑Suit for recovery was filed by the bank against the appellants on the basis of alleged default made by the latter against a finance facility availed from the former‑‑‑Application for grant of leave to defend was dismissed and the suit of the bank was decreed by the Trial Court‑‑‑Appeal was filed by the appellants against the said decree‑‑‑Contention of the appellants was that the statement of accounts submitted by the bank alongwith the suit was incomplete and the payments made by the appellants during the course of time to discharge their liabilities were suppressed‑‑­Validity‑‑‑Complete statement of accounts from the date of availing the finance facility till the date of filing the suit was not placed on the record by the bank‑‑‑Since, finance facility was based on mark‑up, the bank was not entitled to claim anything in excess of the amount outstanding against appellants‑‑‑Appellants were only liable to pay the outstanding amount after taking into consideration the payments made by them from the date of availing of the facility till the institution of the suit‑‑­Quantum of liability of the appellants was to be worked out on the basis of receiving evidence particularly the complete statement of accounts‑‑‑Appeal was allowed, in the circumstances.

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

‑‑‑‑S.10‑‑‑Bank of Punjab Act (XII of 1989), Ss. 9, 10,11(3) & 25‑‑­Leave to appear and defend‑‑‑Contention of the appellants was that the suit was instituted by the bank through a person, in whose favour the power of attorney was executed by the Managing Director, who was not competent to do so as it was only the Board of Directors who could appoint and constitute a valid attorney to act on behalf of the bank and therefore, suit, not having been filed through a duly constituted attorney, was liable to be dismissed‑‑‑Validity‑‑‑According to S.11(3) of Bank of Punjab Act, 1989 the Managing Director of the bank was the Chief Executive Officer and subject to bye‑laws in this behalf, could direct and control on behalf of the Board the affairs of the bank‑‑‑Section 25 of the said Act contemplated the powers of the Board to make bye‑laws‑‑‑Managing Director, although was empowered to direct and control the affairs of the bank, was not empowered to constitute someone as attorney to act on, behalf of the bank‑‑‑Such, contention required examination in details with reference to the bye‑laws, if any, framed under S.25 of the Act in this regard‑‑‑Case was made out, in the circumstances, to rant leave to defend to the appellants.

Mian Nasir Mahmood for Appellants.

Saqib Salim for Respondent.

Date of hearing: 4th November, 2003.

2004 C L D 1361

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

AKHTAR KALEEM‑‑‑‑Appellant

Versus

CITIBANK N.A. through Branch Manager‑‑‑‑Respondent

First Appeal No. 183 of 2003, decided on 9th December, 2003.

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

‑‑‑‑Ss.9(S) & 12‑‑‑Civil Procedure Code (V of 1908), O.IX, R.13‑‑‑Ex parte decree, setting aside of‑‑‑Service of summons, validity of‑‑­Suit for recovery was filed by the bank against the appellant on the basis of the latter's default in payment of outstanding dues in credit card account‑‑‑Suit of the bank was decreed ex pane against which the appellant filed applications for recalling the ex parte decree and seeking condonation of delay‑‑Said applications were dismissed by the Trial Court through impugned order, which was challenged by the appellant in appeal‑‑­Contention of the appellant was that he was never served with the summons and no copy of the plaint was ever supplied to him therefore, the suit could not have been decreed against him, and his application for setting aside the decree should have been accepted‑‑‑Validity‑‑‑Service of summons was effected in different modes‑‑‑Summons were affixed, were published in English and Urdu newspapers and were served through courier service‑‑‑Plea of the appellant that publication of summons in an Urdu newspaper was defective as the same was not widely circulated would be of no avail as a valid service was effected against him under different modes provided under S.9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

--------S.9(5)‑Civil Procedure Code (V of 1908), O.XXXVII‑‑Supply of copy of plaint, requirement of‑‑Contention of the appellant was that since no copy of the plaint was ever supplied to him suit could not have been decreed against him, and his application for setting aside the decree should have been accepted‑Validity‑‑If the appellant had not received the summons through ordinary modes of service, he could have obtained a copy of the plaint from the office of the Court upon the publication of the summons in the newspaper‑Provisions relating to the supply of the copy of plaint under S.9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, are a departure from the provisions contained in O.XXXVII, CP.C.

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

---‑S.24‑‑Limitation Act (IX of 1908), S.5‑Condonation of delay ­Application for setting aside the ex parte decree was not filed by the appellant within the time limitation‑‑Another application was simultaneously filed by the appellant to condone the delay­ Validity‑Section 5 of Limitation Act, 1908, was inapplicable to appeals filed under Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Application for condonation of delay in filing the appeal against the ex parte decree, in circumstances, was not maintainable and the appeal was thus barred by time.

(d) Limitation Act (IX of 1908)‑‑‑--

‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.24‑‑‑Applicability of S.5, Limitation Act, 1908‑‑­Scope‑‑‑Section 5 of Limitation Act, 1908, was inapplicable to appeals filed under Financial Institutions (Recovery of Finances) Ordinance, 2001.

Ch. Sardar Ali for Appellants.

Ashar Elahi for Respondent.

2004 C L D 1366

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

ZAFAR ABBAS ANSARI‑‑‑‑Appellant

Versus

BANK OF KHYBER through Branch Manager and 8 others‑‑‑‑Respondents

R.F.As. Nos.494 574, 575 and 576 of 2002, heard on 5th November, 2003.

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

‑‑‑‑‑Ss. 7, 10 & 22‑‑‑Leave to appear‑‑‑Substantial questions of law and fact, determination of‑‑‑Suit for recovery filed by the bank against the respondents was decreed by the Trial Court and to some extent also against the appellant who was a surety to the transaction in which finance facility was availed by the said respondents from the bank‑‑‑Appellant moved an appeal against the said decree‑‑‑Contentions of the appellant was that he was only a surety towards the letters of guarantee and ‑ not ‑ the demand ,finance, therefore, he was riot liable to pay any amount as a guarantor for the said finance facility, secondly, the cash margin was available with the bank but was not adjusted towards demand finance and thirdly, he had mortgaged on property with the bank in this regard and that the letters of guarantee were not properly executed as the said property had already been transferred and the power of attorney of one of the respondents, who was a co‑owner of the said property, had stood revoked and cancelled‑‑‑Validity‑‑ All the said contentions made by the appellant gave rise to substantial and significant questions of law and fact, which needed determination through evidence‑‑‑Application for leave to appear and defend was, therefore allowed and the Trial Court was directed to decide the suit after trial.

Fida Muhammad v. Pir Muhammad Khan through Legal Heirs and others PLD 1985 SC 341 ref.

Aish Bahadur Rana for Appellant (in R.F.A. No.494 of 2002).

Mirza Hafeez‑ur‑Rehman for Appellant (in R.F.A. No.574 of 2002).

Mian Hameed‑ud‑Din Kasuri for Appellant (in R.F.A. No.575 of 2002).

Ali Akbar Qureshi for Appellant (in R.F.A. No.576 of 2002).

Abdul Hameed Chohan and Khalid Pervaiz Khawaja for Respondent.

Date of hearing: 5th November, 2003.

2004 C L D 1371

[Lahore]

Before Ch Ijaz Ahmad and Mian Hamid Farooq, JJ

Messrs MADINA RICE MILLS through Managing Partner and 6 others‑‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN and 6 others‑‑‑‑Respondents

Regular First Appeal No. 159 of 1999, heard on 13th January, 2004.

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

‑‑‑‑Ss.7 & 11‑‑‑Estoppel, principle of‑‑‑Loan facility availed by the appellants from the bank‑‑‑Failure of the appellants to discharge their liability against the said facility led to a suit for recovery filed by the bank against them‑‑‑Interim decree was passed by the Trial Court followed by a final decree for recovery of the outstanding amount‑‑‑Appeal was filed by the appellants against the decision of the Trial Court‑‑‑Contention of the appellants was that the bank had illegally enhanced the rate of interest to pile up a colossal suit amount‑‑‑Validity‑‑‑No plea regarding enhancement of the rate of interest was raised by the appellants in the suit, therefore, they would be precluded from raising the same at the appellate forum‑‑‑Litigants are precluded from raising altogether a new plea before the Appellate Courts, which has not been agitated before the lower forums.

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

‑‑‑‑S.11‑‑‑Interim decree, finality of‑‑Appellants challenged the interim decree alongwith the final decree in appeal‑‑‑Objection of the bank that the interim decree passed against the appellant had attained finality and could not be challenged by the latter‑‑ Validity‑‑‑Section 17(2) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 7 997 provided that an interim decree to all intents and purposes would be deemed to be a decree passed under the said Act including the right of filing of appeal and initiation of execution proceedings‑‑‑Decree passed under S.11(2) of the Act was appealable under S.21 of the Act within a period of thirty days from such decree‑‑‑No appeal having been filed by the appellants against the interim decree within the prescribed period, the same had attained finality and was a past and closed matter, which could not be agitated while challenging the final decree‑‑‑Appellants, after passing of the interim decree, admitted the outstanding amount by filing an application seeking permission from the Trial Court for the payment of due amount under the said decree‑‑‑Appellants through such a conduct had thus acquiesced in passing of the interim decree and were estopped and precluded from challenging the correctness of the same.

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

‑‑‑‑‑S.21‑‑‑General Clauses Act (X of 1897), S.24‑A‑‑‑Misreading and non‑reading of evidence‑‑‑Non‑speaking order, effect of ‑‑‑Suit for recovery filed ‑by the bank against the appellants was decreed‑‑‑Appeal was filed by the appellant against the impugned judgment of the Trial Court‑‑‑Validity‑‑‑Impugned judgment was passed in a slipshod manner and was devoid of reasons‑‑‑Judgment was not a speaking order or .a judicial order within the parameters of law‑‑‑Under S.24‑A of General Clauses Act, 1897 it was provided that authorities were supposed to give reasons for making any order‑‑‑Trial Court had proceeded with the matter without considering the relevant record anal pleadings of the parties, therefore, the impugned judgment suffered from misreading and non‑reading or evidence‑‑‑Judgment and decree of the Trial Court, in circumstances, could not be maintained and the case was remanded for fresh decision.

Dr. Abdul Basit for Appellant.

Mian Qamer‑uz‑Zaman for Respondent.

Date of hearing: 13th January, 2004.

2004 C L D 1376

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

MUHAMMAD RAMZAN and 4 others‑‑‑‑Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Respondent

Regular First Appeals Nos. 120 to 122 of 2000, heard on 12th February, 2004.

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

‑‑‑‑‑S.9(1)‑‑‑Suit for recovery was filed by the bank against the appellants on the basis of their failure to discharge their liabilities against the loan facilities availed from the bank‑‑‑Suit was decreed in favour of the bunk‑ ‑‑Appellants moved in appeal against the said decree‑‑‑Appellants were found to have secured the loan from the Bank by executing certain security documents‑‑­Appellants, in circumstances, could not deny availing of loan facility from the bank and the outstanding amount against them.

Haji Ghulam Rasool and others v. The Chief Administrator of Auqaf, West Pakistan PLD 1971 SC 376 ref.

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

‑‑‑‑‑S.9(1)‑‑‑Filing of suit‑‑‑Competency‑‑‑Plea of the appellants was that the suit was not filed by a competent person ‑‑‑Validity‑‑­Suit was found to have been instituted by the branch manager of the Bank who was a competent person to file the same, as the Bank had executed power of attorney in his favour.

Muhammad Ramzan v. Citibank N.A. 2001 CLC 158 ref.

(c) Bankers' Books Evidence Act (XVIII of 1891)‑‑‑--

‑‑‑‑‑S.4‑‑‑Statement of accounts, presumption of truth‑‑‑Suit for recovery was based on statement of accounts, which were attached 'to the plaint and were duly verified under Bankers' Books Evidence Act, 1891 and were not rebutted by the appellants‑‑‑Statements of accounts had presumption of truth by virtue of S.4 of the said Act and as the appellants had failed to dislodge such presumption, they were liable to make repayment of loan.

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

‑‑‑‑‑S.10‑‑‑Civil Procedure Code (V of 1908), O.XXXVII‑‑‑Leave to defend, grant of‑‑‑Grant of leave to defend suit was not a matter of routine or matter of right‑‑‑Defendants were required to disclose plausible defence in the suit and if no substantial question of law or facts needing trial was involved and the defence set up was vague or sham, leave could be refused and the suit decreed‑‑‑No plausible defence was made out before the Trial Court and Appellate Court by the appellants‑‑‑Trial Court, in circumstances, was justified to reject the application for leave to defend of the appellants and decree the suit of the bank.

Messrs Ahmad Autos and another v. Allied Bank of Pakistan Limited PLD 1990 SC 497 and Hamidullah Khan v. Muhammad Nawaz Qasuri PLD 1982 Lah. 203 ref.

(e) Appeal‑‑‑

‑‑‑‑ Pleas not raised before the Trial Court could not be taken up at the appellate forum.

Government of the Punjab through Secretary, Department of Education, Lahore v. Prof. Mst. Jamida Malik and another 1991 MLD 824 and Safdar Ali through his Legal Heirs and 3 others v. Muhammad Malik and 4 others 1995 CLC 1751 ref.

Ch. Muhammad Bakhsh for Appellant.

Sh. Javaid Sarfraz for Respondent.

Date of hearing: 12th February, 2004.

2004 C L D 1407

[Lahore]

Before Ch. Ijaz Ahmad, J

ASLAM HASSAN QURESHI‑‑‑Petitioner

Versus

GOVERNOR, STATE BANK OF PAKISTAN and 4 others‑‑‑Respondents

Writ Petition No. 20872 of 2001, heard on 17th June, 2004.

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

‑‑‑‑S.41‑A‑‑‑Removal of directors or other managerial persons‑‑‑Powers of State Bank‑‑‑Object‑‑‑Provision of S‑41‑A of Banking Companies Ordinance, 1962, was introduced in order to maintain purity of Banking Institutions.

Drug Inspector v. F. A. Zuberi and others 1986 CLC 2197 rel.

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

‑‑‑‑Art.199‑‑‑Constitutional jurisdiction‑‑‑Alternate remedy‑‑­Availability‑‑‑Effect‑‑‑Where statute creates a right and also provides machinery for the enforcement of that right, the party complaining of breach of the statute must first avail himself of the remedy provided by the statute for such breach before he applies for a writ or order in the nature of writ.

Tariq Transport Company v. Bhera Bus Service Sargodha PLD 1958 SC (Pak) 437; Imtiaz Ahmad v. Ghulam Ali PLD 1963 SC 382; Anjuman Arhtian Khanpur v. Province of Punjab PLD 1990 Lah.32; Ch. Muhammad Sadiq v. Muhammad Nawaz 1980 CLC 952; Messrs Punjab Club v. EOABI 1991 PLC 72 and Postmaster General v. Custodian Evacuee Property Sindh 1990 CLC 861 rel.

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

‑‑‑‑Ss.41‑A & 41‑C‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional, petition‑‑‑Maintainability‑‑‑Alternate adequate remedy‑‑‑Petitioner was Regional Manager of a Bank and State Bank had issued show‑cause notice to him in exercise of powers under S.41‑A of Banking Companies Ordinance, 1962‑‑‑Show‑cause notice was assailed by the petitioner before High Court by invoking jurisdiction under Art.199 of the Constitution‑‑‑Contention of the authorities was that the petitioner had alternate remedy under S.41‑C of Banking Companies Ordinance, 1962‑‑‑Validity‑‑­Availability of adequate alternate remedy barred the Constitutional remedy under Art. 199 of the Constitution and absence of alternate remedy was a pre‑requisite for invocation of Constitutional jurisdiction‑‑‑High Court was to be satisfied that such projected adequate remedy was in reality an adequate one, in the sense of being equally expeditious, beneficial and efficacious‑‑‑Remedy of appeal to Central Board of Directors under S.41‑C (2) of Banking Companies Ordinance, 1962, was efficacious remedy consisting of highly qualified expert Directors of the Board‑‑­Petitioner having alternative remedy under the provisions of law, High Court declined to exercise .its Constitutional jurisdiction in his favour as the same was discretionary in character‑‑‑High Court following the principle laid down by Supreme Court in case of Aslam Traders reported as 2000 SCMR 65, condoned the period of limitation and directed the petitioner to approach the proper forum as mentioned under S.41‑C(2) of Banking Companies Ordinance, 1962‑‑‑Petition was disposed of accordingly.

C.P.Ds. Nos.525 and 669 of 2002; M. Hashim v. Provincial Election Authority 1985 SCMR 1338 and Nawab Syed Raunaq Ali's case PLD 1973 SC 236 rel.

Aslam Trader's case 2000 SCMR 65 fol.

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

‑‑‑‑Art. 199‑‑‑ Constitutional petition‑‑‑ Maintainability‑‑­Principles ‑‑‑Constitutional petition is maintainable in case the order is wholly without lawful authority.

(e) Question of law‑‑‑

‑‑‑‑Scope‑‑‑Such question can be raised at any stage of proceedings.

Haji Abdullah Khan's case PLD 1965 SC 690 and W.P. No.4174 of 1998 ref.

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

‑‑‑‑Art. 199‑‑‑ Constitutional petition‑‑‑ Maintainability‑‑­Factual controversy‑‑‑Petitioner was Regional Manager of a Bank and State Bank had issued show‑cause notice in exercise of powers under S.41‑A of Banking Companies Ordinance, 1962‑‑‑Show‑cause notice was assailed by the petitioner before High Court in exercise of jurisdiction under Art.199 of the Constitution‑‑‑Validity‑‑‑Case of the petitioner contained disputed question of fact and High Court had no jurisdiction to decide such question in Constitutional jurisdiction‑‑‑Petition was not maintainable in circumstances.

M. Hashim v. Provincial Election Authority 1985 SCMR 1338; Muhammad Younas Khan's case 1993 SCMR 618; Gul Muhammad v. Government of Sindh PLD 2004 Kar. 293; Funfair (Pvt.) v. Karachi Development Authority PLD 2004 Kar. 170 and Mst. Amina Begum and others v. Mehar Ghulam Dastgir PLD 2004 1978 SC 220 rel.

Muhammad Ahmad Qayyum for Petitioner.

Omer Soomro for Respondents Nos. 1 and 2.

Nauman Akram Raja for Respondents Nos.3 to 5.

Danishwar Malik, Deputy Attorney General on Court call.

Date of hearing: 17th June, 2004.

2004 C L D 1424

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

PUNJAB SMALL INDUSTRIES CORPORATION and 2 others‑‑‑Appellants

Versus

HAJI COLD STORAGE and another‑‑‑Respondents

F.A.O. No.97 of 2000, heard on 31st May, 2004.

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

‑‑‑‑Ss. 9(4) & 2(a)(i)‑‑‑Punjab Small Industries Corporation Act (XV of 1973), Ss. 3 & 18‑‑‑Banking Company‑‑­Definition‑‑‑Plain reading of Ss.3 & 18 of the Punjab Small Industries Corporation Act, 1973, and Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, S. 2(a)(i) in para materia makes it clear that "Small Industries Corporation" falls in the definition of "Banking Company".

Ghulam Sarwar v. S.H.O. 1999 Law Notes 560 rel.

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

‑‑‑‑S. 9‑‑‑Plaintiffs had filed suit for damages against the defendant Banking Corporation alleging that on account of failure on the part of defendant to advance loan of Rs.10 lacs plaintiffs had suffered a loss of Rs.50 lacs‑‑‑Banking Court dismissed application for leave to defend and passed ex parte decree‑‑‑Application for setting aside ex parte decree was dismissed‑‑‑Validity‑‑‑Trial Court had granted decree amounting to Rs. 50, 00, 000 to the plaintiffs without recording evidence in support of the contents of the plaint‑‑­Such act would perpetuate injustice as defendants got a decree against the plaintiffs for the huge sum, without proving quantum of damages allegedly suffered by them‑‑­Ex parte decree was set aside and leave granting order was recalled in circumstances.

Messrs Qureshi Salt and Species Industries Khushab v. M.C.B. 1999 SCMR 2353 and Haji Ali Khan & Company, Abbotabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbotabad PLD 1995 SC 362 quoted.

Mst. Zubaida A. Sattar and others v. Karachi Building Control Authority and others 1999 SCMR 243 and Muhammad Baran and others v. Member (Settlement and Rehabilitation), Board of Revenue, Punjab and others PLD 1991 SC 691 rel.

(c) Administration of justice‑‑‑

‑‑‑‑ Judge must wear all the laws of the country on the sleeve of his robe and failure of the counsel to properly advise judge was not a complete excuse in the matter ‑‑‑ Law includes judicial principles laid down from time to time by the superior Courts.

BISC v. Salma Afroze PLD 1992 SC 263 rel.

Obyar and another's case PLJ 1984 Lah. 167 quoted.

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

‑‑‑‑O. VII, R.10‑‑‑Limitation Act (IX of 1908), S.14‑‑‑Return of suit or appeal for presenting in proper Court‑‑‑Exclusion of time‑‑‑Application for setting aside ex parte decree was dismissed on 2‑7‑1999‑‑‑Constitutional petition was filed on 27‑9‑1999‑‑‑High Court disposed the said petition on 17‑4‑2000‑‑‑Appeal having been filed on 24‑4‑2000, question of limitation would not arise.

Shireen and others v. Fazal Muhammad and others 1995 SCMR 584 Quoted.

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

‑‑‑‑S. 21(1)‑‑‑Civil Procedure Code (V of 1908), O.IX, R.13‑‑­Application of the defendant for setting aside ex parte decree under O.IX, R.13 of C.P.C. was dismissed by the Trial Court‑‑‑First appeal against order filed by the defendant was competent under S.21(1) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑Appeal was accepted, ex parte decree was set aside under O.IX, R.13, C.P.C. and case was remanded for fresh. decision on application for leave to defend in circumstances.

Ijaz Ahmad Awan for Appellants.

Mirza Aziz‑ur‑Rehman for Respondents.

Date of hearing: 31st May, 2004.

2004 C L D 1462

[Lahore]

Before Tassaduq Hussain Jilani and Ch. Ijaz Ahmad, JJ

MUHAMMAD INAYAT---Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary of Law, Justice and Human Rights Division, Islamabad and 3 others---Respondents

W.P. No.3025 of 2003, decided on 29th December, 2003.

Contract Act (IX of 1872)---

----Ss. 31 & 32---Constitution of Pakistan (1973), Art. 199--­Constitutional petition---Replication---Contingent contract-­Repudiation---Petitioner claimed that her sister was insured with the Insurance Corporation and she had died and the Corporation had not paid the insurance amount and had wrongly repudiated the death claim ---Wafaqi Mohtasib had allowed the claim but Corporation appealed before the President of Pakistan who set aside the order of Wafaqi Mohtasib on the ground that it was not a case of maladministration to warrant interference by the Wafaqi Mohtasib---Validity---Pro forma filed by the insured included the query whether she had ever small pox, Heart disease, Diabetes, High Blood Pressure, T.B., Cancer, Nervous or Psychological disorder---Corporation in written reply placed before the High Court Photocopy of Chemotherapy treatment care of the deceased as she was suffering from carcinoma of the Breast---Such fact was not controverted through replication ---Insured's death claim was rightly repudiated by the Corporation---Constitutional petition was dismissed in circumstances.

Liaqat Ali Butt for Petitioner.

Ilyas Khan Awan for Respondents.

Date of hearing: 23rd December, 2003.

2004 C L D 1465

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Agha SAMIULLAH KHAN‑‑‑Appellant

Versus

REGIONAL DEVELOPMENT FINANCE CORPORATION through Managing Director and another‑‑‑Respondents

Regular First Appeals Nos. 310 of 2002 and 712 of 2001, heard on 27th April, 2004.

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

‑‑‑Ss. 9 & 21‑‑‑Civil Procedure Code (V of 1908), O.I, R. I ‑‑‑Parties to the suit‑‑‑Necessary party‑‑‑Plaintiff's suit was decreed and leave to defend was not granted‑‑‑Plaintiff 'had paid to the supplier of the machinery, which under the LMM Loan the company had required‑‑‑Objection was that the machinery was not received by the defendants and supplier was a necessary party and this was substantial question of law and fact and Trial Court had wrongly refused the leave‑‑‑Such plea was only for the joining of the supplier as party to the case who was not a necessary party in view of the special nature of jurisdiction of the special Court in relation to special persons mentioned in the law‑‑Objection was rightly discarded by the Court‑‑‑Appeal was dismissed in circumstances.

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

‑‑‑‑S. 9‑‑‑Civil Procedure Code (V of 1908), S. 20‑‑‑Place of suit‑‑­Jurisdiction‑‑‑Territorial jurisdiction‑‑‑Agreement‑‑‑Stipulation in the loan agreement was that in case of any dispute, litigation shall be instituted in Banking Court at Islamabad‑‑‑No Banking Court was constituted or functioning at Islamabad‑‑‑Section 20 of the Civil Procedure Code, 1908 provided that suit could be validly instituted where anyone or more of the defendants were actually and voluntarily residing.

Khalid Sajjad Khan for Appellant.

Abid Aziz Sheikh for Respondents.

Date of hearing: 27th April, 2004.

2004 C L D 1468

[Lahore]

Before Jawwad S. Khawaja, J

Sheikh SAEED ULLAH‑‑‑Appellant

Versus

Mst. MAHMOODA BEGUM MAUDOODI and 6 others.‑‑Respondents

Regular First Appeal No. 105 of 1991, heard on 25th May, 2004.

Copyright Ordinance (XXXIV of 1962)‑‑‑

‑‑‑‑S.60‑‑‑Assignee‑‑‑Licensee‑‑‑Exclusive licence‑‑‑Plaintiffs were found owners of copyright of the "work" created by their ancestor‑‑‑Defendants came with the plea that original owner had given exclusive licence to print the work to them‑‑‑Such licence was not in writing as required by law‑‑‑Judgment and decree passed in favour of the legal heirs was affirmed in circumstances.

Ismail and others v. Inayat and others 1989 CLC 447 and Shakeel Adilzada v. Pakistan Television Corporation and 2 others 1990 CLC 714 not relevant.

Munawwar‑ul‑Islam for Appellant.

Muhammad Ismail Qureshi for Respondents.

Date of hearing: 25th May, 2004.

2004 C L D 1480

[Lahore]

Before Tassaduq Hussain Jilani, J

NADEEM ANWAR ‑‑‑Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 3 others‑‑‑Respondents

Writ Petition No. 15865 of 1998, decided on 10th March, 2004.

Chartered Accountants Bye‑Laws, 1983‑‑‑

‑‑‑‑Bye‑Law 118‑‑‑Syllabus and Scheme of Education and Training for Foundation and Professional Examinations, 1995, Para. 9.2.4‑‑‑Chartered Accountants Ordinance (X of 1961), Ss.2(g) and 27(1)‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Intermediate Chartered Accountancy Examination in Group‑II ‑‑‑Chance to clear examination in failed subject‑‑‑Petitioner cleared all papers of old scheme, but failed to clear one paper of new scheme in two attempts‑‑‑Institution of Chartered Accountants refused to grant petitioner third chance and directed him to appear in all papers‑‑‑Third chance not available to petitioner under law was allowed to him by High Court through an interim order‑‑‑Validity‑‑‑Petitioner had cleared Group‑1 under old scheme, thus, his case would fall within ambit of Para.9 of Syllabus and Scheme of Education and Training for Foundation and Professional Examinations, 1995‑‑‑According to first and second proviso of Bye‑Law 118 of Chartered Accountants Bye‑Laws, 1983, two attempts were available to petitioner to clear one paper, which he had already availed‑‑‑Such Bye‑Law was in vogue when petitioner was registered under old scheme in year 1994‑‑Petitioner had not been taken by surprise and there was no question of retrospective application‑‑‑Such refusal of Institute was well within ambit of law‑‑‑Petitioner had availed third chance by an interim order of High Court‑‑­After passing of more than four years, Institute had neither applied for recalling of such interim order nor had approached a higher forum‑‑‑Petitioner by such act of Court and of the Institute was allowed to believe that he had legitimate expectancy to avail third chance‑‑‑Declaring chance so availed to be invalid at such stage would not only be harsh to deprive petitioner of the result of third attempt, but he would have to appear in all papers afresh‑‑‑High Court condoned such chance availed by petitioner and directed Institute to declare his result with observations that in case, he failed, then he would have to appear in all papers.

Riazul Haq v. Selection Committee Constituted for Admission to Bolan Medical College through Secretary Principal Bolan Medical College, Quetta and 6 others 1997 SCMR 1845; The Institution of Chartered Accountants of Pakistan Karachi and others v. Federation of Pakistan and others 1998 SCMR 2679; Akbar Ali Javed v. Principal, Quaid‑i‑Azam Medical College 1994 SCMR 532; Miss Farrukh Sohana Zaib v. University of the Punjab (Writ Petition No.4553 of 1997 and Miss Karima v. University o1 the Punjab through Vice Chancellor, Lahore and others 2001 MLD 1252 rel.

A. K. Dogar for Petitioner.

Anwar Kamal for Respondents.

Date of hearing: 26th February, 2004.

2004 C L D 1548

[Lahore]

Before Muhammad Muzammal Khan, J

ABDUL SATTAR‑‑‑Petitioner

Versus

JUDGE BANKING COURT NO.II, and 6 others‑‑‑Respondents

Writ Petition No.2160 of 2004, decided on 18th February, 2004.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O. XXI, R.90‑‑‑Constitution of Pakistan (1973), Art. 199‑‑­Sale in auction proceedings conducted under orders of Court‑‑‑Validity‑‑‑Application to set aside such sale‑‑‑Right of prospective bidder or unconcerned person to object to such sale by filing application or Constitutional petition‑‑‑Scope‑‑­Such application could be made only by decree‑holder and person entitled to any share in property or whose interest therein was affected by such sale by asserting some material irregularity or fraud in conduct of auction‑‑­Prospective bidder could neither object to auction proceedings under O.XXI, R.90, C.P.C., nor could invoke Constitutional jurisdiction of High Court‑‑‑Such sale being a commitment by Court in favour of highest bidder could not be annulled on frivolous applications‑‑‑Principles.

An application or an objection petition under Order XXI, Rule 90, C.P.C., can be filed by decree‑holder or by the person entitled to any share in the property or by any person whose interest in the property is affected by the sale and any of those persons who had asserted some material irregularity or fraud in the conduct of auction. The petitioner was undeniably none of those persons and being a simple prospective bidder objected to the auction. The petitioner on the one hand could not object to auction proceedings under Order XXI, Rule 90, C.P.C., and on the other hand being only a prospective bidder could not maintain Constitutional jurisdiction of High Court.

Auction proceedings through a mandate of the Court' have a sanctity and sense of security attached to those under its commitment to honour fair and lawful auctions. Provisions of Order XXI, rule 90, C.P.C. have a logic behind those, because if honest auction proceedings are not kept intact and are annulled on applications of unconcerned persons like the petitioner, it will damage the entire set up and public at large will not repose, confidence in such‑like proceedings. Application of petitioner appears to be ill motivated having been filed on behalf of judgment‑debtors and for their benefits, because there was another application by a descendant of judgment‑debtor, which was also disposed of simultaneously with application of petitioner. In order to give strength to sales under the cover of judicial process, such‑like applications have to be discouraged. Sale through auction under the orders of the Court is a commitment by the Court in favour of the highest bidder, which can in no manner be rescinded or annulled on frivolous applications.

High Court dismissed Constitutional petition filed by prospective bidder against order of trial Court, whereby his application under section 151, C.P.C., being in the nature and gist an objection petition under Order XXI, Rule 90, C.P.C. was dismissed.

Mst. Noor Jehan Begum v. Dr. Abdus Samad and others 1987 SCMR 1577 and Pakistan Industrial Credit and Investment Corporation Limited v. Shahdin Limited 2001 CLC 1267 rel.

Messrs Ch. Ehsan‑ul Haq Virk and Khawar Ikram Bhatti for Petitioner.

2004 C L D 1552

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs INTERNATIONAL BUSINESS CENTRE, through Managing Director and another‑‑‑Appellants

Versus

HABIB CREDIT AND EXCHANGE BANK LTD. ‑‑‑Respondent

R.F.A. No.406 of 2000, heard on 30th June, 2003.

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

‑‑‑‑‑S.24‑‑‑Limitation Act (IX of 1908), Ss.3 & 19‑‑‑Suit, time­barred‑‑‑Acknowledgement made after expiry of limitation‑‑­Effect‑‑‑Facility granted to appellant in the year 1980‑‑‑Suit filed in 1992‑‑‑Limitation for filing suit three years from the date it became due‑‑‑Date from which payment of loan became due not mentioned in plaint nor any acknowledgement brought on record within the limitation period to get benefit of S.19 of Limitation Act, 1908‑‑‑Held; once the limitation had expired and no acknowledgment had been made within the period of limitation, any acknowledgement made after the expiry of the limitation period, would not extend the time.

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

‑‑‑‑‑S. 7‑‑‑Limitation Act (IX of 1908), S.3‑‑‑Duty of Banking Court‑‑­Held, whether the leave application of the appellants was filed after the period of limitation or not filed at all, it was the duty of the Banking Court under S.3 of Limitation Act, 1908 to have examined whether the suit of the Bank was within time‑‑­Impugned decree was thus set aside and the case remanded to Banking Court to exercise powers under S.3, Limitation Act, 1908 keeping in view the principles of S.19 of the said Act in order to examine and decide from the contents of the plaint and attached documents whether the suit of the Bank was within time.

PLD 1993 SC 147 ref.

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

‑‑‑‑‑S.24‑‑‑Limitation Act (IX of 1908), Ss.3 & 19‑‑‑Once the limitation had expired and no acknowledgment had been made by the Bank within the period of limitation, any acknowledgement made after the expiry of the limitation period, would not extend the time.

Khawar Ikram Bhatti for Appellants.

Ch. Abdul Rauf for Respondent.

Date of hearing: 30th June, 2003.

2004 C L D 1555

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Khawaja MUHAMMAD BILAL‑‑‑Appellant

Versus

UNION BANK LIMITED through Branch Manager‑‑‑Respondent

Regular First Appeal No.556 of 2001, heard on 24th April, 2003.

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

‑‑‑‑‑S.9(3)‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.9(5), 10(2) & 12‑‑‑Service of notice by publication, legality of‑‑‑Service upon the appellant only by publication of notice in two newspapers‑‑‑Effect‑‑‑Service by any of the modes provided and effected under law, is sufficient service.

Messrs Ahmad Autos and another v. Allied Bank of Pakistan Limited PLD 1990 SC 497 ref.

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

‑‑‑‑Ss.7 & 15‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 7 & 17‑‑‑Erroneous charge of mark­up‑‑‑Plea of the appellant was that the mark‑up was erroneously charged by the Bank‑‑‑Validity‑‑‑Leave to defend having not been granted to the appellant by the Banking Court, the contents of the statement of account and the plaint as fled by the Bank would be deemed to be correct and ‑the Banking Court was right in awarding the decree on that basis.

(c) Court‑fee‑‑‑

‑‑‑‑Deficiency of court fee was made good subsequently ‑‑‑Effect‑‑‑Appellant cannot raise the question of court fee in a suit in which deficiency in the court fee, as ordered by the Court before passing of a decree, was made good by the respondent, thus, even if there was a defect, same stood cured under law.

Siddique Khan and 2 others v. Abdul Shakur Khan and another PLD 1984 SC 289 ref.

Mian Sarfraz‑ul‑Hassan for Appellant.

Kh. Aamer Farooq for Respondent.

Date of hearing: 24th April, 2003.

2004 C L D 1557

[Lahore]

Before Maulvi Anwarul Haq and Syed Zahid Hussain, JJ

FAZAL AHMAD through Hamidah Begum and others‑‑‑‑Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑‑Respondent

Regular First Appeal No.98 of 1997, heard on 26th June, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Powers and jurisdiction of Banking Tribunal‑‑‑Scope‑‑‑Banking Tribunal has no jurisdiction to adjudicate upon any suit or pass any judgment where the superior Court had declared certain provisions of the Banking Tribunals Ordinance, 1984 and the notifications appointing the Presiding Officers of that Tribunal as unconstitutional and without lawful authority.

Messrs Chenab Cement Product (Pvt) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 ref.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑‑S.7‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Past and closed cases‑‑‑Decree passed by the Banking Tribunal after the pronouncement of the judgment wherein the superior Court had declared certain provisions of the Banking Tribunals Ordinance, 1984 and the notifications appointing the Presiding Officers of that Tribunal as unconstitutional and without lawful authority, was not covered by the saving clause provided in the said judgment as according to the said clause of the judgment of superior Court was not to affect past and closed cases or invalidate the judgments/decrees, which had become final‑‑‑Case was remanded to the Banking Court.

Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 ref.

Imran Ahmad Ch. for Appellants.

Mian Nasir Mehmood for Respondent.

Date of hearing: 26th June, 2003.

2004 C L D 1560

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mrs. SALMA JAVAID‑‑‑‑Appellant

Versus

DEUTSCHE BANK A.G., LAHORE through Attorney and 4 others‑‑‑‑Respondents

F.A.O. No.207 of 2001, decided on 30th April, 2003.

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

‑‑‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr. 66, 67, 73 & 90‑‑‑Execution of decree‑‑‑Auction of property‑‑‑Objection petition of appellant that no auction at all was conducted and there were irregularities in proclamation and conduct of sale was dismissed by Banking Court without framing issues and calling evidence‑‑‑Held, where it was alleged that auction had not taken place, there would be no valid sale that could be confirmed and such matter could only be resolved by the Banking Court after framing of issues and enabling the parties to lead evidence.

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

‑‑‑‑‑O.XXI, Rr. 66, 67, 73 & 90‑‑‑ Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.19(7)‑‑‑Where it was alleged by the appellant that auction had not taken place, there would be no valid sale that could be confirmed by the Court until and unless the matter was resolved by the Court after framing of issues and enabling the parties to lead evidence.

Messrs Javaid Shaukat Malik and Nawab Saeed Ullah for Appellant.

Pervaiz Ahmad Barki for Respondents.

Iftikhar Ahmad Malik for Auction‑purchaser.

2004 C L D 1561

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUHAMMAD ASHRAF‑‑‑Appellant

Versus

HABIB BANK LIMITED through Attorneys‑‑‑Respondent

R.F.A. No.210 of 2002 heard on 23rd April, 2003.

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

‑‑‑‑‑S.7‑‑‑Question of law and fact‑‑‑Recording of evidence‑‑­Requirement‑‑‑Suit decreed against the appellant‑‑‑Plea of the appellant that certain amounts deposited with the respondent Bank had not been credited to the account of the appellant‑‑­Held, where statement of the accounts, available on the record made it apparent that certain amounts, as alleged by the appellant, had not been credited, the question whether the bank was entitled to recover the suit amount, was a serious matter which could not be resolved without recording the evidence‑‑­Decree was set aside.

Iftikhar Ullah Malik for Appellant.

Shams Mehmood Mirza for Respondent.

Date of hearing: 23rd April, 2003.

2004 C L D 1563

[Lahore]

Before Ch. Ijaz Ahmad and Ali Nawaz Chowhan, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager‑‑‑Appellant

Versus

Mst. SARWARI BEGUM and another‑‑‑Respondents

Regular First Appeals Nos.5 to 7 of 1996, decided on 11th March, 2003.

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

‑‑‑Ss.7 & 17‑‑‑Liquidated damages were not awarded‑‑­Misreading and non‑reading of material on record‑‑‑Effect‑‑‑Suits decreed without award of liquidated damages‑‑‑Plea of appellant that Banking Tribunal erred in law not to grant liquidated damages to the appellant‑‑‑Validity‑‑‑Appellant was supposed to send notices to the respondents in terms of the agreements executed between the parties and under the provisions of law‑‑­Since appellant failed to bring on record any material to show that the notices sent by the appellant were received by the respondents, the Banking Tribunal had passed the impugned judgments and decrees in accordance with the material on record and no illegality or infirmity had been committed by the Banking Tribunal.

Mian Nasir Mahmood for Appellant.

Malik Muhammad Imtiaz Mahl for Respondents.

2004 C L D 1565

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs ZAMIN CHEMICALS and another‑‑‑Appellants

Versus

BOLAN BANK LTD. ‑‑‑Respondent

F.A.O. No.39 of 2003, heard on 7th May, 2003.

Financial institutions (Recovery of Finances) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑S.9(5)‑‑‑Ex parte decree against the appellants‑-‑Service, legality of‑‑‑Plea of the appellants was that they were entitled to service of notice in each of the prescribed modes‑‑‑Advertisement in one of the newspapers did not fulfil the requirements of a notice on the appellants because of the mentioning of incorrect name in the same‑‑‑Held, appellants could not be non‑suited without first ensuring that proper notice in each of the prescribed modes had been issued to them‑‑‑Impugned order of the Banking Court was set aside and the appellants were found to be entitled to file petition for leave to appear and defend the suit.

Noor Muhammad Khan Chaudri for Appellants.

Bashir Ahmed for Respondent.

Date of hearing: 7th May, 2003.

2004 C L D 1567

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

MUSLIM COMMERCIAL BANK LTD., DHOLANWAL BRANCH, LAHORE‑‑‑Appellant

Versus

Messrs MM CHICKS through Proprietor and 4 others‑‑‑Respondents

F.A.O. No. 180 of 2002, heard on 9th April, 2003.

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

‑‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.100‑‑‑Execution of decree‑‑Auction of mortgaged flats‑‑‑Sale of one mortgaged flat was set aside after framing of issues and recording of evidence on the application of respondent who claimed to be its owner on the basis of a registered sale‑deed‑‑­Plea of appellant was that the sale of the flat in favour of the respondent was subsequent in time, therefore, auction could not be set aside on, the basis of such sale‑deed‑‑‑Validity‑‑‑Appellant was unable to show from any documentary evidence that the flat which was claimed by the respondent was the one which was mortgaged with the appellant‑‑‑Held, the respondent was the owner of the fat in his own right, which was an independent property and could not have been sold in execution and the Banking Court had rightly concluded on the basis of proper reading of the evidence on the record‑‑‑‑Appeal was dismissed.

Mian Muhammad Iqbal Bhutta for Appellant.

Khalid Pervaiz Khawaja for Respondents.

Date of hearing: 9th April, 2003.

2004 C L D 1569

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

RAJANA COTTON FACTORY (PVT.) LTD. through Chief Executive and 6 others ‑‑‑‑Appellants

Versus

THE BANK OF PUNJAB through Manager‑‑‑‑Respondent

F.A. O. No. 195 of 2002, heard on 25th June, 2003.

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

‑‑‑‑‑Ss. 9(5), 10(2) & 12‑‑‑Nature of service‑‑‑Legality‑‑‑Service by publication of notice in newspapers on 1‑3‑2002 and by way of summons through registered post on 13‑3‑2002‑‑‑Banking Court allowed suit as no leave to defend application was filed within requisite time‑‑‑Application under S.12 by the appellants contending that they were not properly served, was rejected by Banking Court holding that service of the defendant in a suit under Financial Institutions (Recovery of Finances) Ordinance, 2001, in any of the forms was proper and adequate service‑‑‑Plea that summonses were issued on 13‑3‑2002 and the requisite period of 30 days had not yet expired, when the decree was passed on 3‑4‑2002 was of no avail, as the publication in the newspapers had taken effect on 1‑3‑2002, thus the period for filing the application for leave to defend commenced from that date‑‑‑Appeal was dismissed accordingly.

Zaheer‑ud‑Din Baber for Appellant.

Khalid Pervaiz Khawaja for Respondent.

Date of hearing: 25th June, 2003.

2004 C L D 1571

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

HABIB BANK LIMITED through Attorneys‑‑‑Appellant

Versus

Messrs ALI INDUSTRIES (REGD.) and 3 others‑‑‑Respondents

Regular First Appeal No.317 of 1996, heard on 4th March, 2003.

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

‑‑‑‑‑Ss.7 & 17‑‑‑Liquidated damages‑‑‑Refusal by Court‑‑­Appellant‑Bank had failed to call upon the respondents to clear the outstanding liability before the institution of the suit Liquidated damages were thus refused ‑‑‑Validity‑‑‑Where the suit was decreed in favour of the bank after excluding the amount already deposited by the respondents in the Bank's account along with the liquidated damages being demanded by the bank against the respondents, the bank was not justified in claiming liquidated damages‑‑‑No illegality committed by Banking Tribunal in not granting liquidated damages td the bank.

Habib Bank Ltd. v. Messrs Farooq Compost Fertilizer Corporation Ltd. and 4 others 1993 MLD 1571; Allied Bank of Pakistan Limited, Faisalabad v. Messrs Asisha Garments through Proprietor and 2 others 2001 MLD 1955; Saudi‑Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170 and National Development Finance Corporation v. Messrs Millrock Quarring (Pvt.) Ltd. and 7 others 2002 CLD 1382 ref.

Ishraq Cheema for Appellant.

Nemo for Respondent.

Date of hearing: 4th March, 2003.

2004 C L D 1573

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs MUSHTAQ & CO. through Managing Partner and 3 others‑‑‑‑Appellants

Versus

Messrs NATIONAL BANK OF PAKISTAN‑‑‑‑Respondent

Regular First Appeal No.226 of 1997, heard on 18th September, 2003.

(a) Limitation Act (IX of 1908)‑‑‑

‑‑‑‑‑Ss.5 & 29‑‑‑Applicability of S.5‑‑‑Limitation Act, 1908‑‑­Ordinarily time under Limitation Act, 1908 for filing of appeal was 90 days, whereas Banking Tribunals Ordinance, 1984 being a special law had prescribed a period of 30 days for filing of appeal ‑‑‑Condonation of delay‑‑‑Where special law provides a different period of limitation than the ordinary law, S.5 of Limitation Act has no applicability in view of the provisions of S.29(2) of the Limitation Act.

Bashir Ahmed and others v. Messrs Habib Bank Ltd. 1990 CLC 1105 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 ref.

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

‑‑‑‑‑S.7‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑‑Section 12(2), Civil Procedure Code 1908 has no applicability to the proceedings arising out of the Banking Companies (Recovery of Loans, Advance, Credits and Finances) Act 1997‑‑‑Application by appellant under S.12(2), C.P.C. was misconceived, incompetent and not maintainable and was rightly dismissed by the Banking Court.

Asgher Hameed Bhutta for Appellants.

Nemo for Respondent.

Date of hearing: 18th September, 2003.

2004 C L D 1577

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

MUHAMMAD AJMAL KHAN‑‑‑Appellant

Versus

UNITED BANK LIMITED‑‑‑Respondent

Regular First Appeals Nos.264 of 1998 and 108 of 1999, heard on 17th September, 2003.

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

‑‑‑‑S.20‑‑‑Legality of an incomplete negotiable instrument‑‑‑Where some one signs and delivers to another a paper stamped in accordance with law, whether it is wholly blank or written as an incomplete negotiable instrument, in order that it may be made or completed into a negotiable instrument, it amounts to a prima facie authority to the person who receives that paper to make or complete it, as the case may be into a negotiable instrument of any amount.

Mian Rafique Saigol and another v. Bank of Credit and Commerce International (Overseas) Ltd. and another PLD 1996 SC 749 ref.

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

‑‑‑‑S.118‑‑‑Presumption as to negotiable instrument‑‑‑Section 118 attaches a presumption to every negotiable instrument that it was made and drawn for consideration and that every negotiable instrument bearing a date was made or drawn on such date.

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

‑‑‑‑S.120‑‑‑Estoppel, principle of‑‑‑Principle of estoppel works to bar a person from challenging the legality, validity and genuineness of a negotiable instrument that has earlier been endorsed or signed by him.

Muhammad Sharif v. Muhammad Hasim Paracha and another PLD 1987 Kar. 76; S.K. Abdul Aziz v. Mahmoodul Hassan and 3 others 1988 CLC '337; Haji Karim and another v. Zikar Abdullah 1973 SCMR 100; Allied Bank of Pakistan Ltd. v. Messrs Gujrat Friends Traders and others PLD 1988 Lah. 166; 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 ref.

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

‑‑‑‑S.21‑‑‑Modification of decree‑‑‑High Court can modify the decree by deducting from the decretal amount the sum subsequently received by the Bank from the sale of the vehicle of the judgment‑debtor.

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

‑‑‑‑S.21‑‑‑New plea‑‑‑Bank had not raised objections to certain averments at any stage of the proceedings at the lower forum but had done it at higher stage‑‑‑Held, it is a settled law that a litigant cannot be allowed to raise a new plea before the appellate or revisional forum, which has not been agitated before the lower forum.

Appellant in person.

Sh. Asif Feroz for Respondent.

Date of Hearing 17th September, 2003.

2004 C L D 1583

[Lahore]

Before Mian Saqib Nisar and Ch. Iftikhar Hussain, JJ

Messrs NAJAM IRON AND STEEL TRADERS through Proprietor and 2 others‑‑‑Appellants

Versus

HABIB BANK LTD. AG ZURICH through Chief Manager‑‑‑Respondent

Regular First Appeal No. 318 of 2003, heard on 23rd September, 2003.

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

‑‑‑‑S.18‑‑‑Banking documents‑‑‑Where the Letter of Credit is irrevocable at sight, irrespective of the error in the date of opening, the moment it is required to be negotiated, the Bank is under an obligation to pay the amount under the Letter of Credit.

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

‑‑‑‑‑S.7‑‑‑Where, in the absence of insurance documents no substantial question of fact or law regarding negotiation of Letter of Credit by the bank was raised by the appellants in the leave to defend application in the Banking Court, the argument regarding the necessity of insurance documents for negotiation of L/C by batik could not be entertained in appeal.

Muhammad Khalid Mahamood Khan for Appellants.

Shazada Mazhar for Respondent.

Date of hearing: 23rd September, 2003.

2004 C L D 1586

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

FRASAT JABEEN‑‑‑Appellant

Versus

UNITED BANK LTD through Manager and 2 others‑‑‑Respondents

F.A.O. No. 161 of 1995, heard on 9th October, 2003.

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

‑‑‑‑S. 19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr. 58 & 62‑‑‑Execution of decree‑‑‑Sale of property‑‑‑Appellant, in objection petition claiming ownership of the property on the basis of a registered sale‑deed‑‑‑Dismissal of objection petition by Banking Court on the ground that the property was mortgaged prior to the execution of sale‑deed in favour of the appellant‑‑­Held, the Banking Court, before passing the order of dismissal of objection petition should have investigated the claims and objections to the attachment of property, raised by the appellant, by providing sufficient opportunity to the parties for establishing their respective claims through production of evidence.

Mst. Surraya Begum v. Muslim Commercial Bank Ltd. and 4 others PLD 1990 Lah. 4 ref.

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

‑‑‑‑S.19(7)‑‑‑Executing Court is under no obligation to mechanically record the evidence of the objector in each and every case, however, it has to see in individual cases as to whether the case warrants the recording of evidence or not and the objection petition has been filed frivolously, contumaciously and to delay the proceedings or whether it is a genuine application.

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

‑‑‑‑Ss.7 & 19 (7)‑‑‑Objection petition‑‑‑Function of the Banking Court is to determine as to whether the objection petition is to be decided after the recording of evidence or only after hearing the parties.

Iftikhar Ullah Malik for Appellant.

Nemo for the Respondents.

Date of hearing: 9th October, 2003.

2004 C L D 1589

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Malik MUHAMMAD YASIN AWAN and 6 others ‑‑‑Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN and another‑‑‑Respondents

R.F.A. No.31 of 1995 and Writ Petition No. 14276 of 1994, heard on 24th September, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Powers and jurisdiction‑‑‑Banking Tribunal has no jurisdiction to adjudicate upon any suit or pass any judgment where the superior Court has declared certain provisions of the Banking Tribunals Ordinance, 1984 and the notifications appointing the Presiding Officers of that Tribunal as un-Constitutional‑‑‑Any decrees passed by the Banking Tribunal were to beset aside, in circumstances.

Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 and Syed Frasat Ali Shah v. Allied Bank of Pakistan Ltd. 2002 CLD 759 ref.

(b) Banking Tribunals Ordnance (LVIII of 1984)‑‑‑

‑‑‑‑S.7‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Past and closed cases‑‑‑Declarations made in the Chenab Cement Product judgment neither to affect cases past and closed nor invalidate the judgments/decrees, which had become final‑‑‑Where, the decree passed by the Banking Tribunal was not challenged by way of instituting the appeal but was called into question only through a Constitutional petition which was subsequently disposed of, the decree passed by the Banking Tribunal would be considered to be past and closed case and final‑‑‑When, however, the decree passed by the Banking Tribunal was challenged by way of instituting the appeal and was also called into question through a Constitutional petition, where the latter was subsequently disposed of, the decree passed by the Banking Tribunal would not be considered to be past and closed case and would thus be set aside‑‑‑Appellant's appeal was against the judgment and decree that was passed before the judgment in Chenab Product's case, and the same was challenged through filing of the appeal as well as Constitutional petition the decree under appeal did not fall within the terms of past and closed cases' accordingly, the suit for the recovery was to be deemed pending before the newly constituted Banking Court, established under S.5 of Financial Institutions (Recovery of Finances) Ordinance, 2001 to be decided afresh.

Messrs Chenab Cement Product (Pvt) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 fol.

Syed Frasat Ali Shah v. Allied Bank of Pakistan Ltd. 2002 CLD 759 ref.

Syed Azam Ali Shah for Appellants Nos. 3 and 4.

Azmat Saeed for Appellants Nos. 5, 6 and 7.

Muhammad Sarwar Chaudhan for Respondent.

Date of hearing: 24th September, 2003.

2004 C L D 1594

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs DELITE HOUSE (PVT.) LIMITED and 2 others‑‑‑Appellants

Versus

ISLAMIC INVESTMENT BANK LIMITED through Branch Manager‑‑‑Respondent

Regular First Appeal No.463 of 2002, heard on 29th September, 2003.

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

‑‑‑‑‑S.22‑‑‑Appellant had admitted his liability towards the principal amount and mark‑up‑‑‑Mark‑up amount had also been provided by the appellant in the account statement filed with the leave application‑‑‑Such being the only amount which the bank had claimed and nothing had been added over and above the such amount in the shape of compound mark‑up on this amount, the appellant was obliged to make payment of the said amount‑‑­Appeal for the reduction of appellant's liability towards the bank was dismissed, in circumstances.

Ahmed Waheed Khan for Appellants.

Haq Nawaz Chatta for Respondent.

Date of hearing: 29th September, 2003.

2004 C L D 1596

[Lahore]

Before Syed Zahid Hussain and Muhammad Akhtar Shabbir, JJ

Mst. RAZIA SULTANA ----Appellant

Versus

HOUSE BUILDING FINANCE CORPORATION through District Manager and

5 others ----Respondents

Execution First Appeal No.307 of 2003, heard on 17th September, 2003.

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

-----Ss.15(11) & 19(7)---Auction of mortgaged-property ---Appellant in objection petition claiming to be the bona fide owner of the mortgaged property in terms of a registered mortgage-deed in her favour by judgment-debtors---Held, mala fides on the part of the judgment-debtors to mortgage property in favour of appellant subsequent to mortgaging the same property in favour of the decree-holder was proved---Judgment-debtors were not competent to further alienate the property in favour of appellant through a mortgage-deed as the same was not free from encumbrances.

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

----Ss. 7, 19(7) & 22---Where an earlier objection petition filed by the appellant was dismissed and appeal against the said order had also met with failure, the order of the Banking Court had attained finality and a subsequent objection petition filed by the appellant on the same ground was not competent.

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

-----S.7 & 19---Failure of auction purchaser to deposit the sale price within the prescribed period is a matter between the decree-holder and the auction purchaser or the Court, and it does not give any vested right to the appellant who had filed objections against the auction of that property.

Sultan Mahmood Dar for Appellant.

Ch. Shafiq-ur-Rehman for Respondent No. 1.

Syed Sabahat Hussain Hamdani for Respondent No.4.

Date of hearing: 17th September, 2003.

2004 C L D 1600

[Lahore]

Before M. Javed Buttar and Muhammad Muzammal Khan, JJ

Raja AMIR KHAN‑‑‑Appellant

Versus

BANK OF PUNJAB through Manager and another‑‑‑Respondents

Execution First Appeal No.822 of 2002, heard on 16th October, 2003.

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

‑‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr. 58 & 62‑‑‑Registration Act (XVI of 1908), S.47‑‑‑Execution of decree‑‑­Sale of property‑‑‑Appellant in objection petition claiming ownership of the property based on a sale‑deed executed on 8‑2‑2001 and registered with Sub‑Registrar on 27‑10‑2001‑‑‑Dismissal of objection petition by Banking Court on the ground that the sale‑deed was executed after 9‑8‑1998 the date on which the decree in the suit of recovery was passed‑‑‑Under S.47 of Registration Act. 1908 the registered sale‑deed operates from the time it is executed and not from the time of its registration‑‑­Financial Institutions (Recovery of Finances) Ordinance, 2001 came into force on 30‑8‑2001 whereas the appellant became owner on 8‑2‑2001‑‑‑Effect was that the Ordinance would have no retrospective applicability and thus could not be used to attach property transferred after the promulgation of the Ordinance.

Al‑Haj Chaudhary Muhammad Bashir v. Citibank PLD 1996 Lah. 672 ref.

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

‑‑‑‑‑Preamble‑‑‑Ordinance having no retrospective applicability, could not be used to attach property transferred by the judgment­-debtor before promulgation of the Ordinance.

Al‑Haj Chaudhary Muhammad Bashir v. Citibank PLD 1996 Lah. 672 ref.

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

‑‑‑‑S.7‑‑‑Proof of authenticity of a document‑‑‑Where the sale‑deed is upon Stamp papers issued by the Treasury Office vide a specific serial number and bought from a general attorney of the vendor in the name of specific person for the purpose of execution of sale‑deed and the document contains an entry at the back of its page, made by the petition‑writer showing its date of execution‑‑‑It is difficult to believe that the document is a forged one.

(d) Registration Act (XVI of 1908)‑‑‑

‑‑‑‑S.23‑‑‑Provision of S.23, Registration Act, 1908 prohibits registration of a document executed earlier to four months from the date of its presentation for registration, but it does not invalidate a document registered in violation of the same.

(e) Registration Act (XVI of 1908)‑‑‑

‑‑‑‑S.23‑‑‑Provisions of S.23 of the Registration Act are merely directory and thus do not nullify the document, registered in violation of such provisions nor those can be a means of adjudging a sale transaction in collateral proceedings.

(f) Registration Act (XVI of 1908)‑‑‑

‑‑‑‑S. 47‑‑‑Sale‑deed‑‑‑Effective date‑‑‑Registered sale‑deed operates from the time it is executed and not from the time it is, registered.

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

‑‑‑‑Preamble‑‑‑Ordinance is not retrospective in operation.

Ch. Fawad Hussain and Muhammad Asif Ismail for Appellant.

Tariq Saleem Sheikh for Respondents.

Date of hearing: 16th October, 2003.

2004 C L D 1605

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

MUHAMMAD AFZAL‑‑‑Respondent

R.F.A. No. 138 of 1997, heard on 8th September, 2003.

(a) Banking Tribunals, Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7‑‑‑Judgment passed under certain statutory provisions by the Banking Tribunal after the pronouncement of an earlier judgment by a superior Court declaring those statutory provisions as unconstitutional is a nullity and is to be set aside.

Messrs Chenab Cement Product Private Limited and others v. Banking Tribunal Lahore and others PLD 1996 Lah. 672 ref.

(b) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S. 5‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.5‑‑‑Powers and jurisdiction of Banking Tribunal‑‑‑Scope‑‑‑Banking Tribunal has no jurisdiction to adjudicate upon any suit or pass any judgment where the supreme Court has earlier declared the appointment of the Presiding Officer of that Tribunal as unconstitutional and without lawful authority.

Messrs Chenab Cement Product Private Limited and others v. Banking Tribunal Lahore and others PLD 1996 Lah.672 ref.

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

‑‑‑‑Art.201‑‑‑Decision of the High Court is binding upon the subordinate Courts‑‑‑Subordinate Courts lack jurisdiction in cases where notifications appointing their Presiding Officers have been declared unconstitutional‑‑‑Subsequent judgments and decrees of such subordinate Courts in those cases are to be set aside.

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

‑‑‑‑S.5‑‑‑All suits deemed to be pending and to be decided afresh pertaining to a specific matter, shall be entertained by Courts constituted and having jurisdiction under the latest legislation.

Mian Nasir Mahmood for Appellant.

Nemo for Respondent.

Date of hearing: 8th September, 2003.

2004 C L D 1609

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bukhari, JJ

UNITED BANK LIMITED‑‑‑Appellant

Versus

Messrs KHAWAJA RADIO HOUSE through Proprietor and 2 others‑‑‑Respondents

Regular First Appeal No.466 of 2002, decided on 21st October, 2003.

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

‑‑‑‑‑Ss.7 & 10‑‑‑Dismissal of suit‑‑‑Court has no jurisdiction to dismiss the suit due to non prosecution on the date of hearing which was fixed for arguments on the application for grant of leave to appear and defend the suit.

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

‑‑‑‑S.22‑‑‑Appeal is competent against the order of the Court disallowing application for restoration of the suit when it is in consequence of the order that led to the dismissal of the suit due to non prosecution.

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

‑‑‑‑S.22(2)‑‑‑Civil Procedure Code (V of 1908), O.XLIII & R.3‑‑­Appeal‑‑‑Maintainability‑‑‑Notice of appeal is directory‑‑­Requirement of sending notice of appeal to the respondent under O.XLIII of C.P.C. 1908 is merely directory and not mandatory as no consequences have been provided entailing dismissal of appeal on that account.

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

‑‑‑‑S.24‑‑‑Limitation Act (IX of 1908), Art. 163‑‑‑In case of restoration of suit that was dismissed for non prosecution the time limitation for the purposes of appeal is to be reckoned from the date of the order when the subsequent application for restoration of that suit was dismissed rather than the date when the suit was dismissed.

Tariq Mehmood Mughal for Appellant.

Talat Farooq Sheikh for Respondents.

2004 C L D 1611

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs ASSOCIATED CONSTRUCTION ENGINEERING through Proprietor and 2 others‑‑‑Appellants

Versus

THE BANK OF PUNJAB through Branch Manager and another‑‑‑Respondent

Regular First Appeals Nos.581 AND 604 of 2002, heard on 8th October, 2003.

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

‑‑‑‑S.7‑‑‑Misreading and non‑reading of evidence‑‑‑When according to the Bank's own showings in its plaint a certain sum of money was paid on behalf of the appellant, the Banking Court cannot, by itself, read a higher amount merely relying upon a letter in which a higher amount was demanded from the bank by the third party.

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

‑‑‑‑S.7‑‑‑Misreading of record‑‑‑Where the Banking Court did not advert to the entries in the statements of accounts and gave a mechanical consideration to the whole record, the judgment would suffer from misreading of record of the case

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

‑‑‑‑S.7‑‑‑Recovery of liquidated damages‑‑‑Bank showing in the existing statement of accounts the liquidated damages with respect to the amounts to be recovered‑‑‑Bank is not entitled to recover such amount.

Allied Bank of Pakistan Limited Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 ref.

Syed Haider Ali Shah for Appellants.

Muhammad Aqeel Malik for Respondent No. 1.

Waqar Mushtaq Ahmed for Respondent No.2.

Date of hearing: 8th October, 2003.

2004 C L D 1616

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs MAJID & SONS, and another‑‑‑Appellants

Versus

NATIONAL BANK OF PAKISTAN through Manager and another‑‑‑Respondents

E. F. A. No.750 of 2002, decided on 9th June, 2003.

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.66 & 93‑‑‑Execution proceedings‑‑‑Sale by auction, setting aside of‑‑‑Void order‑‑‑Publication of proclamation prior to its approval by Executing Court‑‑‑After deposit of 25% auction price by the auction purchaser, judgment debtor deposited decretal amount under incentive scheme floated by the bank and decree was satisfied‑‑‑Judgment debtor filed objection petition on the ground that the auction was a result of fraud as the proclamation was published without approval of Executing Court ‑‑‑Petition was dismissed by the Executing Court‑‑‑Validity‑‑‑Proclamation of sale was not properly and legally approved and the same had rendered subsequent proceedings as nullity in the eye of law‑‑‑Basic order being not in accordance with law, all the subsequent proceedings and orders including the auction proceedings, report of Court auctioneer and dismissal of objection petition, would fall to the ground‑‑Order passed by the Executing Court was set aside as the Court had assigned no reasons for dismissal of the objection petition and even pleas raised by the judgment debtor were not adverted to‑‑‑High Court directed the judgment debtor to pay a sum equal to 5% of purchase money deposited by the auction purchaser‑­Appeal was allowed accordingly.

Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC (Pak) 104 fol.

Syed Haider Ali Shah for Appellants.

Iftikhar Hussain Shah for Respondent No. 1.

Abdul Hameed Butt for Respondent No.2.

2004 C L D 1620

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

S. A. HAMEED and others‑‑‑Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED and others‑‑‑Respondents

Regular First Appeals Nos.479 and 484 of 1998, heard on 5th June, 2003.

(a) Banker and customer‑‑‑

‑‑‑‑Documentary letter of credit, establishing of‑‑‑Duty of bank‑‑‑Scope‑‑‑Bank deals only with documents and not with underlying goods or services which may be subject matter of any agreement between a foreign supplier and a local importer of such goods or services ‑‑‑Opening of letter of credit by the Bank is only required to see the documents conforming to the letter of credit.

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

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑Ss. 128 & 146‑‑‑Liability of surety‑‑‑Extent‑‑‑Discharge of liability after entering of new surety‑‑‑Scope‑‑‑Guarantor had resigned from the Board of Directors of the principal debtor‑‑‑New Director had given personal guarantee in favour of bank to secure liabilities of the principal debtor‑‑­Former director did not apply to the bank for cancellation and return of his personal guarantee nor he sought any release or confirmation, showing discharge of the liability‑‑­Effect‑‑‑Such act of the former director could not by mere implication result in discharging the Director from his liability under the personal guarantee executed by him‑‑­Former director remained liable to repay the amounts owed by the principal debtor in circumstances.

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

‑‑‑‑Ss.9 & 10‑‑‑Recovery of bank loan‑‑‑Leave to defend the suit, refusal of ‑‑Disputes between two groups of share­holders of the borrower company‑‑‑Defendants were in litigation with each other before Civil Court and also before Companies Judge‑‑‑Effect‑‑‑Such legal proceedings had no bearing on the claim asserted by the bank in its suit against the defendants‑‑‑Leave to defend the suit was rightly refused and suit was rightly decreed by the High Court‑‑­Appeal was dismissed in circumstances.

Sardar Sami Hayat for Appellants.

Malik M. Pervaiz Akhter for Respondents.

Date of hearing: 5th June, 2003.

2004 C L D 1628

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs CRYSTAL ENTERPRISES through Proprietor and 2 others‑‑‑Appellants

Versus

Messrs BOLAN BANK LIMITED through President‑‑‑Respondent

R. F. A. No.612 of 2001, heard on 3rd June, 2003.

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

‑‑‑‑S.9‑‑‑Civil Procedure Code (V of 1908), S.99‑‑‑Recovery of loan‑‑‑Misjoinder of causes of action or of plaintiffs‑‑‑Suit, dismissal of‑‑‑Banking Court concluded that the suit could not proceed in the name of all plaintiffs but was maintainable in the name of any one of the plaintiffs‑‑­Despite having many opportunities, plaintiffs failed to give name of the plaintiff who was to conduct the proceedings‑‑­Banking Court thus dismissed the suit on account of such failure Validity‑‑Judgment passed by Banking Court had apparent contradiction as on one hand the Banking Court had itself held that the suit was not liable to be dismissed on account of misjoinder of causes of action or of plaintiffs and on other hand proceeded to dismiss the suit on the ground that plaintiffs had failed to proceed with the suit‑‑‑Judgment and decree passed by the Banking Court was set aside‑‑‑Case was remanded to Banking Court for decision afresh‑‑‑Appeal was allowed, in circumstances.

Muhammad Shahzad Shaukat for Appellants.

Muhammad Ahsan Rasool Chatha for Respondent.

Date of hearing: 3rd June, 2003.

2004 C L D 1632

[Lahore]

Before Muhammad Sair Ali, J

HABIB BANK LIMITED‑‑‑Appellant

Versus

Messrs PERAL FABRICS LTD. Through Chief Executive and 7 others‑‑‑Respondents

C.M. No.230‑B of 2003 in C.O.S. No.82 of 1998, decided on 18th April, 2003.

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

‑‑‑‑S.10(2)‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art.59‑‑‑Leave to appear and defend the suit, grant of‑‑‑Comparison of signatures‑‑‑Opinion of Handwriting, Expert‑‑‑Defendant denied his signatures on guarantee and sponsors' undertaking produced by bank‑‑‑Bank raised the plea of getting opinion of Handwriting Expert‑‑‑Validity‑‑‑Defendant was entitled to leave to appear and defend the suit and was allowed to file written statement‑‑‑Bank could file application for reference of signatures to Handwriting­ Expert, to have his opinion after issues were framed and case was fixed for evidence‑‑‑Application for leave to appear and defend the suit was allowed in circumstances.

2004 C L D 1635

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

HABIB BANK LIMITED‑‑‑Appellant

Versus

Mst. FARKHANDA and 13 others‑‑‑Respondents

F. A.O. No. 103 of 2003, heard on 3rd June, 2003.

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

‑‑‑‑S.19‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr.58 & 60‑‑‑Execution of decree‑‑Objection petition‑‑‑Investigation of objection‑‑‑Objector claimed to be the owner of attached property in her own right on the basis of unregistered "Iqrarnama"‑‑‑Plea raised by the objector was that judgment­-debtor being her husband had transferred the attached property vide "Iqrarnama" in lieu of her dower amount‑‑­Banking Court accepted the objection petition and released the property from attachment‑‑‑Validity‑‑‑Banking Court had accepted the petition merely on the basis of "Iqrarnama" and no other evidence was recorded‑‑‑In absence of any other evidence in favour of the objector, the objection petition could not have been accepted‑‑‑Genuineness/veracity of the document was not above board‑‑‑Objection petition was not decided in its true perspective‑‑‑Order passed by the Banking Court was set aside and case was remanded to Banking Court for deciding the same after framing of issue and recording of evidence of both the parties‑‑‑Appeal was allowed accordingly.

Waheed Mazhar for Appellant.

Syed Safdar Ali Shah for Respondents.

Date of hearing: 3rd June, 2003.

2004 C L D 1637

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs POLYMER INTERNATIONAL through Sole Proprietor and another‑‑‑Appellants

Versus

Messrs BOLAN BANK LTD. Through General Manager‑‑‑Respondent

E. F. A. No.209 of 2000, decided on 3rd June, 2003.

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

‑‑‑‑Ss.18 & 21‑‑‑Execution of decree‑‑‑Arrest of judgment­-debtor‑‑‑Title of pledged goods‑‑‑Banking Court did not decide application of judgment‑debtors regarding selling of goods pledged with the decree holder‑‑‑During pendency of the application filed by the judgment‑debtors the Banking Court passed order of arrest and detention of judgment­-debtors‑‑‑Validity‑‑‑Banking Court was obliged to initiate inquiry about the status of pledged goods and then to decide the application‑‑‑During pendency of the application, the Banking Court could not have issued warrants of arrest of the judgment‑debtors‑‑‑Judgment‑debtors had a right to ask the decree‑holder about the position of pledged goods and the decree‑holder was obliged to explain about the title of the same‑‑‑Order of issuance of warrant of arrest by the Banking Court was passed in ignorance of record of the case and such findings were not only against the record of the case but also in violation of law on the subject‑‑‑Such order of Banking Court was set aside and the case was remanded for decision afresh‑‑‑Appeal was allowed accordingly.

M.M. Alam for Appellants.

Muhammad Ahsan Rasool Chattha for Respondent.

2004 C L D 1640

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs GHULAM HUSSAIN & CO. through Managing Partner and 3 others‑‑‑Appellants

Versus

Messrs NATIONAL BANK OF PAKISTAN through Senior Vice‑President/Zonal Chief of Mandi Warburton Branch, holding Power of Attorney‑‑‑Respondent

Regular First Appeal No.37of 2002, heard on 2nd April, 2003.

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

‑‑‑‑Ss.9 & 10‑‑‑Recovery of bank loan‑‑‑Leave to defend the suit, dismissal of‑‑‑Signing of blank documents and cheques‑‑‑Defendant had denied receiving of any loan from bank‑‑‑Contention of the defendant was that the manager of bank had received the documents and cheques from him and he had withdrawn amount from bank thus the manager had committed fraud‑‑‑Validity‑‑‑As defendant had given blank cheques to the manager and amounts were withdrawn on the basis of those cheques, the manager was acting as agent for defendant‑‑‑If the manager had played any fraud upon the defendant, the bank could not be held responsible for the action and could not be prevented from recovery of amount disbursed on the basis of those cheques‑‑‑Leave to defend the suit was rightly refused by Banking Court‑‑‑Judgment and decree passed by the Banking Court included the amount already deposited by the defendant‑‑‑High Court modified the decree and the amount deposited by the defendant was adjusted in favour of the defendant‑‑‑Appeal was disposed of accordingly.

Waqar Mushtaq Ahmed for Appellants.

Sh. Asif Feroz for Respondents.

Dates of hearing: 18th December, 2002 and 2nd April, 2003.

2004 C L D 1643

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs ALLAHWALLAH PRINTERS through Managing Partner and 4 others‑‑‑Appellants

Versus

THE BANK OF PUNJAB through Manager‑‑‑Respondent

R. F. A. No.212 of 2002, heard on 21st May, 2003.

Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑S.11‑‑‑Interim decree to the extent of admitted claim‑‑­Claim of bank was partially admitted and was partially denied by the defendant‑‑‑Banking Court refused leave to defend and decreed the suit to the extent of whole amount as claimed by the bank in plaint‑‑‑Validity‑‑‑Case of defendant fell under the purview of S.11 of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Banking Court, instead of out-rightly dismissing the application for leave to defend the suit, should have decided the suit under S.11 of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Judgment and decree passed by the Banking Court was contrary to the provision of law and the same was set aside‑‑‑Application for leave to defend the suit filed by defendant and suit of bank were remanded to Banking Court for decision afresh‑‑‑Appeal was allowed accordingly.

Shahzad Mazhar for Appellants.

Muhammad Aqeel Malik for Respondent.

Date of hearing: 21st May, 2003.

2004 C L D 1645

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Sheikh MUHAMMAD KASHIF‑‑‑Appellant

Versus

ASKARI LEASING LIMITED through Manager/Chief Executive of Branch/Recovery Officer‑‑‑Respondent

R. F. A. No.52 of 2003, decided on 15th April, 2003.

Financial Institutions 'Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑S.10‑‑‑Civil Procedure Code (V of 1908), O.VII, R.11‑‑­Plaint, rejection of‑‑‑Non‑granting of leave to defend the suit‑‑‑Effect‑‑‑Application for leave to defend the suit was dealt with under S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, under which Banking Court was not empowered to straightaway reject the plaint‑‑‑If Banking Court was of the view that substantial questions of law and facts had been raised by defendant, then leave to defend the suit could have been granted to the defendant but the suit or the plaint could not have been dismissed/rejected‑‑­Defendants, after grant of leave, were within their right to file application under O. VII, R.11 C.P. C. and if the Court could have reached the conclusion that the case fell under any of the clauses' of O. VII, R.17, C. P. C., then the plaint could have been rejected‑‑‑Rejection of the plaint prior to grant of leave was in conflict with the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Order of Banking Court, whereby plaint was rejected prior to grant of leave to defend the suit, was set aside and the case was remanded to Banking Court for decision afresh‑‑‑Appeal was allowed accordingly.

Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394 ref.

Amir Farooq Neil for Appellant.

Sardar Mashkoor Ahmad Khan for Respondent.

2004 C L D 1649

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Appellant

Versus

ZAMAN ALI ‑‑‑Respondent

Regular First Appeal No.389 of 1996, heard on 6th March, 2003.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.6(2)‑‑‑Liquidated damages and future mark‑up, recovery of‑‑‑Decree passed by Banking Tribunal did not include such damages and mark‑up‑‑‑Validity‑‑‑Bank was not entitled to recover liquidated damages as per principle laid down in case titled Allied Bank of Pakistan Ltd., Faisalabad v. Messrs Aisha Garments etc., reported as 2001 MLD 1955‑‑‑Under Islamic mode of financing, the bank was not entitled to claim future mark‑up and Banking Tribunal was not entitled under the provisions of Banking Tribunals Ordinance, 1984, to award future mark‑up‑‑­Judgment and decree passed by the Tribunal was in accordance with facts and law and did not require any interference by High Court‑‑‑Appeal was dismissed in circumstances.

Allied Bank of Pakistan Ltd., Faisalabad v. Messrs Aisha Garments and others 2001 MLD 1955 fol.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 6th March, 2003.

2004 C L D 1652

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mst. ATIA ARSHAD‑‑‑Appellant

Versus

THE BANK OF PUNJAB and another‑‑‑Respondents

E.F.A. No.209 of 2002, heard on 5th May, 2003.

Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑S.19(7)‑‑‑Civil Procedure Code (V of 1908), S.11‑‑‑Second objection petition‑‑‑Principle of res judicata‑‑Applicability‑‑­Objector claimed to be owner in possession of the attached property‑‑‑Objector had agreement to sell in her favour executed prior to passing of attachment order‑‑‑After dismissal of first objection petition, the objector instead of assailing the same, had filed second objection petition on the same premises‑‑‑Banking Court dismissed the second objection petition also‑‑‑Validity‑‑‑When earlier order was not challenged, the same had attained finality‑‑‑Under the principle of res judicata, the second petition on the same premises was barred by law‑‑‑Husband of the objector had admitted deposit of amount on behalf of judgment‑debtor who had also issued certain cheques‑‑‑Such facts were cancealed from High Court‑‑‑Objector having purchased the property for a considerable amount and the decretal amount was not substantial, High Court granted two months time to the objector to satisfy the decree so as to save her property‑­Appeal was disposed of in above terms.

Asghar Hameed Bhutta for Appellant.

Muhammad Shuja Baba for Respondents.

Date of hearing: 5th May, 2003.

2004 C L D 1654

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

UNITED BANK LIMITED through General Attorneys/Principal Officers‑‑‑Appellant

Versus

Messrs GOLDEN CERAMIC INDUSTRIES and 5 others‑‑‑Respondents

Regular First Appeal No.491 of 1996, heard on 12th March, 2003.

Banking Companies (Recovery of Loans) Ordinance (XIX of 1979)‑‑‑

‑‑‑‑S.8(2)‑‑‑Recovery of interest on judgment‑debt‑‑‑Bank claimed recovery of interest on judgment debt from the date of default but the Banking Court granted the interest from the date of institution of the suit‑‑‑Validity‑‑‑Bank was not entitled under S.8(2) of Banking Companies (Recovery of Loans) Ordinance, 1979, to recover such interest from the date of default till the date of payment‑‑‑Judgment and decree passed by the Banking Court was in accordance with law and the same did not call for any interference by High Court‑‑‑Appeal was dismissed in circumstances.

Mushtaq Ahmad Khan for Appellant.

Nemo for Respondents.

Date of hearing: 12th March, 2003.

2004 C L D 1657

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager‑‑‑Appellant

Versus

ALLAH DITTA‑‑‑Respondent

Regular First Appeal No.388 of 1996 heard on 6th March, 2003.

Banking Tribunals Ordinance (VIII of 1984)‑‑‑

‑‑‑‑S. 6‑‑Civil Procedure Code (V of 1908), O. VIII, R.6‑‑­-Banking Tribunal‑‑‑Jurisdiction‑‑‑Non‑claiming of, set‑off‑‑‑­Direction to refund excess amount‑‑‑Suit was disposed of by Banking Tribunal as the total liability had been paid by the defendant‑‑‑Tribunal observed that defendant had paid excess amount, therefore, directed the bank to refund the excess amount‑l‑Plea raised by the bank was that, neither the Tribunal had any jurisdiction under Banking Tribunals Ordinance, 1984, to make such direction, nor the defendant had claimed any set‑off or counter‑claim in his written statement in this behalf‑‑‑Validity‑‑‑Banking Tribunal having no such jurisdiction and defendant also did not make counter‑claim or set‑off, the decree to the extent of such direction was set aside‑‑Appeal was allowed accordingly.

Agricultural Development Bank of Pakistan v. Nawaz Akhtar R.F.A. No.385 of 1996 ref.

Mian Nasir Mehmood for Appellant.

Nemo for Respondent.

Date of hearing: 6th March, 2003.

2004 C L D 1660

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Messrs ZAKAS (PVT.) LIMTED through Managing Director and others‑‑‑Appellants

Versus

THE BANK ALFLAH LIMITED--‑Respondent

Regular First Appeals Nos.255 to 257 of 1999, heard on 29th May, 2003.

(a) Appeal---

‑‑‑New plea, raising of‑‑‑Altogether a new plea/ground cannot be raised before appellate/ re visional Court, which has not been raised before lower forum.

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

‑‑‑Ss.9 &, 10‑-‑Recovery of bank loan‑‑‑Leave to defend the suit, refusal of‑-Failure to establish good prima facie case‑‑Banking Court refused the leave and suit was decreed in favour of bank‑‑‑Validity‑‑‑Financial facility; as mentioned in. the suit, was advanced to the defendant, who had executed the, relevant, documents and mortgaged his properties—­Execution of documents and creation of mortgage was not denied and the defendant had failed, to liquidate the outstanding liabilities‑‑‑Banking Court had rightly decreed the suit and High Court maintained the same‑‑‑Appeal was dismissed in circumstances.

Talib H. Rizvi for Appellants.

Ashtar Altsaf Ali for Respondent.

Date of hearing: 29th May, 2003.

2004 C L D 1664

[Lahore

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

AURANGZEB SHAAFI BURKI‑‑‑Appellant

Versus

REGIONAL DEVELOPMENT FINANCE CORPORATION and 3 others‑‑‑Respondents

Regular First Appeal No. 211 of 2000, beard on 3rd July, 2003.

(a) Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.6(2)‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S.10‑‑­Reply to show‑cause notice issued under S.6(2) of Banking Tribunals Ordinance, 1984‑‑‑Validity‑‑‑Such reply was treated as petition seeking leave to appear and defend the suit.

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

‑‑‑Ss.9 & 10‑‑‑Recovery of bank loan‑‑‑Application for leave to defend the suit‑‑‑Failure to provide opportunity to file reply to the leave application‑‑‑No such opportunity was provided to the bank and application was dismissed‑‑‑Suit was decreed by Banking Court in favour of bank excluding the claim of bank to the extent of mark‑up ‑‑‑Validity‑‑­Failure of Banking Court to adhere to the procedure had caused prejudice to the bank to the extent that it had not been able to substantiate its claim for mark‑up which had been debited to the account of defendant‑Company subsequent to the date of expiry of financing agreement‑‑­High Court passed interim decree to the extent of admitted amount‑‑‑Judgment and decree to the extent of disputed amount was set aside and matter was remanded to Banking Court for decision afresh after deciding application for leave to defend filed by the defendants‑‑‑Appeal was allowed accordingly.

Pervez Ahmed Burki for Appellant.

Zahid Hamid for Respondent No. 1.

Mian Javed Jalal for Respondent No.2.

Syed Hamid Ali Shah for Respondent No.3.

Shakeel‑ur‑Rehman Khan for Respondent No.4.

Date of hearing: 3rd July, 2003.

2004 C L D 1669

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

UNITED BANK LIMITED through Attorneys‑‑‑Appellant

Versus

AL‑HUSSAIN MEDICOS through Proprietor and another‑‑‑Respondents

Regular First Appeal No.509 of 1996, heard on 12th March, 2003.

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

‑‑‑‑S.12‑‑‑Appeal‑‑‑New plea, raising of‑‑‑Non‑award of penal interest‑‑‑Failure to claim such interest in pleadings‑‑‑Suit was decreed by Banking Court in favour of bank without awarding penal interest‑‑‑Validity‑‑‑Person cannot be allowed to raise a new plea before Court of appeal‑‑‑Bank was precluded from agitating the non‑award of penal interest at appellate stage when the defendant had already liquidated the total outstanding liabilities‑‑‑Penal interest could not be a6arded to Financial Institutions as the same amounted to penalty‑‑‑High Court declined to interfere with the judgment and decree passed by the Banking Court‑‑‑Appeal was dismissed in circumstances.

(b) Appeal (civil)‑‑‑

‑‑‑‑ Raising of new plea‑‑‑Altogether a new plea cannot be raised before Court of appeal.

Mian Nasir Mahmood for Appellant.

Nemo for Respondent.

Date of hearing: 12th March, 2003.

2004 C L D 1672

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs NAEEM ASSOCIATES, through Proprietor and 6 others‑‑‑Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED through Branch Manager‑‑‑Respondent

R.F.A. No.437 of 2002, heard on 3rd June, 2003.

(a) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑S.10‑‑‑Leave to defend the suit, grant of‑‑‑Excessive and unauthorized charge of mark‑up‑‑‑Borrowers disputed two entries in statement of account‑‑‑Was not clear if the disputed amounts corresponded to the rate of mark‑up agreed upon between the parties‑‑‑Was also not clear if the disputed amounts had been calculated keeping in view various deposits made by the borrowers from time to time‑‑­Effect‑‑‑For the resolution of such dispute of excessive and unauthorized charge of mark‑up, the borrowers had made out a case for grant of leave to defend the suit‑‑‑Judgment and decree passed by Banking Court to the extent of the disputed amount was set aside and case was remanded‑‑­Appeal was allowed accordingly.

(b) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑S.12‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑‑Decree, setting aside of‑‑‑Non‑service of summons‑‑‑Defendant was guarantor and he denied receipt of any summons‑‑­Judgment was passed against the borrowers hence leave to defend the suit was also refused to the guarantor and the suit was decreed against him also‑‑‑Validity‑‑‑Judgment and decree against the borrowers was set aside to the extent of disputed amount, therefore, the same was also set aside to the extent of guarantor‑‑‑High Court converted the application of guarantor as application under S.12(2), C.P.C. and directed the Banking Court to decide the same on its facts mentioned therein until the application was decided, decree against the applicant would remain suspended‑‑­High Court further directed that if application under S.12(2), C.P.C. of the guarantor would succeed, then the decree shall stand set aside against him and he would be entitled to file fresh leave application‑‑‑Appeal was allowed accordingly.

Shahid Ikram Siddiqui for Appellants Nos. 1 to 6.

Kh. Asif Mehmood for Appellant No.7.

Ch. Fazal Elahi for Respondent.

Date of hearing: 3rd June, 2003.

2004 C L D 1676

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

Malik KHALIL AHMAD‑‑‑Appellant

versus

HABIB BANK LIMITED and 2 others ‑‑‑Respondents

R.F.A. No.527of 1998 and R.F.A. No.45 of 1999, heard on 25th March, 2003.

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

‑‑‑‑S.10‑‑‑Dismissal of application for leave to defend the suit‑‑‑Failure to record reasons‑‑‑Defendants alleged that memorandum of deposit of title deed was blank qua quantum of guarantee and the suit was filed without any finance agreement‑‑‑Banking Court without discussing the pleas raised in the application, dismissed the same‑‑­Validity‑‑‑Whatever objections or grounds were raised/agitated by the defendants before the Banking Court, the same were to be discussed and were to be decided one way or the other‑‑‑Judgment passed by the Banking Court manifested non‑application of judicial mind inasmuch as even the points of controversies had not been dealt with in accordance with law‑‑‑Judgment and decree passed by Banking Court was set aside and case was remanded for deciding the application afresh‑‑‑Appeal was allowed accordingly.

Kh. Saeed‑uz‑Zafar and Azmat Saeed for Appellant.

S. M. Zamir Zaidi and Shams Mehmood Mirza for Respondent.

Date of hearing: 25th March, 2003.

2004 C L D 1680

[Lahore]

Before Muhammad Ghani, J

M.D. TAHIR, ADVOCATE‑ ‑Petitioner

Versus

DIRECTOR, STATE BANK OF PAKISTAN, LAHORE and 3 others‑‑‑Respondents

Writ Petition No. 13694 of 2003, decided on 9th March, 2004.

(a) State Bank of Pakistan Act (XXXII of 1956)‑‑‑

‑‑‑‑Preamble & S.3‑‑‑Establishment of State Bank of Pakistan‑‑‑Object‑‑‑State Bank is national monetary policy maker of the State‑‑‑State Bank was created as an independent agency to do such national job having no concern with law enforcement or revenue collection for the Administration‑‑‑Principles.

State Bank is not only the national policy maker of monetary policies of the State, but it was created as an independent agency to do this national job. In particular, this institution has no connection with either law enforcement or revenue collection for the Administration, for which by statutes other agencies exist. State Bank of Pakistan was created on the pattern of the Reserve Bank of India. The independent nature of any Federal Reserve Bank is the sine qua non for its existence as only then it can ensure the Government's adherence to an expert body's neutral evaluation of how it is best to regulate such national fiscal and monetary policies in the country.

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

‑‑‑‑Ss.33, 33‑A [as added by Banking Companies (Amendment) Act (XIV of 1997)], 41(1) & 41‑A‑‑‑State Bank of Pakistan Circular No.22, dated 30‑6‑2003‑‑State Bank of Pakistan Act (XXXII of 1956), S.3‑‑‑Constitution of Pakistan (1973), Arts.4, 9; 14, 25 & 199‑‑‑Constitutional petition‑‑­Direction of State Bank of Pakistan requiring Banks/ Financial Institutions to supply to Central Board of Revenue information regarding profit/return in excess of Rs. 10,000 paid to account‑holders/depositors along with their names, addresses, National Tax Numbers and National Identity Card Numbers‑‑‑Validity‑‑‑Seeking of such financial information, though privileged by normal banking practices, in respect of private accounts of ordinary depositors, would be in nature of "fishing expeditions" about anyone without any specific suspicion of any wrong doing of any specific person‑‑‑Such measure would destroy public confidence and normal banking practices recognized world over in civilized countries‑‑‑Such direction had been issued under assumed powers of State Bank under Banking Companies Ordinance, 1962 without citing any provision thereof, but not under State Bank of Pakistan Act, 1956 being parent statute creating such Institution‑‑‑Such vague basis of presumed powers of an extraordinary kind could not be allowed by Court‑‑‑State Bank by giving such direction was working as an instrument of Central Board of Revenue being an institution of Federal Government controlling revenue collection policies of Administration‑‑‑Such power to collect random data and information regarding individual citizen's accounts with Banking Companies did not exist in State Bank under State Bank of Pakistan Act, 1956 or State Bank of Pakistan Ordinance, 1962‑‑‑Impugned Circular neither claimed to have been issued "in the public interest" nor same found mention that State Bank before issuing same had satisfied itself that doing so would be "in the public interest"‑‑‑Such direction was not shown to be not detrimental to interest of depositors‑‑‑State Bank by issuing such direction had made Central Board of Revenue proverbial "whipping boy"‑‑‑Such direction was not within category of compulsion by law, thus, such disclosure by Banks to Central Board of Revenue would be wrongful‑‑­Impugned Circular had exempted from its operation "non-­remunerative accounts", which expression would cover current accounts, where no interest bearing formula was applied, though transactions in such accounts might cross billions of rupees daily‑‑‑Result of such exemptions would be to impinge upon saving habits of ordinary people being a necessary ingredient of a progressing community‑‑‑Taking of private information without any allegation of wrong doing of ordinary people would affect their life making them potentially vulnerable and insecure being an extraordinary invasion of fundamental right of privacy‑‑‑Such direction in the nature of subordinate legislation was illegal, bad on ground of unreasonableness, discriminatory being ultra vires of Arts.4 & 25 of the Constitution‑‑‑High Court accepted Constitutional petition and struck down impugned Circular being without lawful authority.

Abdul Ghafoor v. Crown PLD 1952 Lah.624; Maulvi Farid Ahmad v. Government of West Pakistan PLD 1965 (W.P.) Lah. 135; Syed Saeed Hasan v. Pyar Ali PLD 1976 SC 6; Khawaja Muhammad Sharif v. Federation of Pakistan PLD 1988 Lah.725; Messrs Universal Leasing Corporation Ltd. v. State Bank of Pakistan 2002 CLD 102; General Secretary v. The Director Industries 1994 SCMR 2061; Munn v. Illinois (1876) 94 U.S. 113 and M. Ismail Qureshi v. M. Awais Qasim 1993 SCMR 1781 rel.

(c) Practice and procedure‑‑‑

‑‑‑‑ Normal enforcement agencies invested with legal powers of enforcement cannot question everyone as a general practice, if they have no actual suspicion based on some material to do so.

(d) Jurisdiction‑‑‑

‑‑‑‑ Normally the powers and jurisdiction to perform any particular act must emanate from the powers or jurisdiction conferred upon or vested in a given Institution by its creating statute.

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

‑‑‑‑Preamble‑‑‑Object of Banking Companies Ordinance, 1962 was to provide general details and guidelines of how Banking Companies would have to operate business.

(f) Practice and procedure‑‑‑

‑‑‑‑ Excess, even of virtue is to be avoided.

(g) Interpretation of statutes‑‑‑

‑‑‑‑ Subordinate legislation, status of ‑‑‑ Test‑‑ ‑"Direction", if valid, would operate as a law, though not possessing the status of an Act‑‑‑Such direction would have the status of subordinate legislation, which would be normally tested on grounds both of jurisdictional ultra vires qua parent statute and recognized jurisprudential grounds of validity‑‑­Principles illustrated.

(h) Banker and customer‑‑‑

‑‑‑‑ Duty of banker to maintain secrecy as to its customer's affairs‑‑‑Exceptions‑‑‑Such duty of banker arising out of contract with its customer was legal one and not merely a moral one‑‑‑Such duty was not absolute, but qualified being subject to reasonable restrictions, such as compulsion by law; duty to public, Bank's own interest justifying disclosure and disclosure with customer's consent‑‑‑Danger to the State or public duty might supersede duty of agent to his principal‑‑‑Compulsion by law must be confined to regular exercise by proper officer to actual legal power to compel disclosure, thus, every enquiry made by Governmental functionary would not fall within its ambit‑‑­Breach of such duty, if resulted in substantial injury, would give rise to a claim of damages against Banker.

Tournier, v. National Provincial and Union Bank of England [(1924) 1 KB 461]; Halsbury's Laws of England 4th Edn., Vol.3, p.72, Article 97 and Libyan Arab Foreign Bank v. Bankers Trust Co. 1989 QB 728 = (1989) 3 All ER 252 fol.

(i) Banker and customer‑‑‑

‑‑‑‑"Non‑remunerative accounts"‑‑‑Connotation.

M. L. Tannan in his book titled "Banking Law and Practice in India" Third Edition ref.

(j) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Arts.9 & 14‑‑‑Right of privacy, interference in‑‑‑Scope‑‑­"Home", "Person" and "Life" itself had been granted Constitutional protection from State interference‑‑‑Such, in Constitutional terms, was protection of right of "privacy"‑‑­Taking of private information without any allegation of wrong doing of ordinary people would be an extraordinary invasion of fundamental right of privacy‑‑‑Taking of one's most private details would affect his life making him potentially vulnerable and insecure.

General Secretary v. The Director Industries 1994 SCMR 2061; Munn v. Illinois (1876) 94 U.S. 113 and M. Ismail Qureshi v. M. Awais Qasim 1993 SCMR 1781 rel.

(k) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Arts.9 & 14‑‑‑Security of person‑‑‑Inviolability of dignity of man‑‑‑Invasion of privacy of a woman of easy virtue‑‑­Right of privacy claimed by such woman‑‑‑Held Such woman was entitled to privacy and no one could invade her privacy as and when he liked‑‑‑Not open to any and even; person to violate her person as and when he wished‑‑‑Such woman was entitled to protect her person, if there was an attempt to violate same against her wish‑‑‑Such woman was equally entitled to protection of taw.

State of Maharashtra v. Madhukar Narayan Mardikar AIR 1991 SC 207 fol.

(l) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art.14‑‑‑Inviolability of dignity of man‑‑‑Telephonic conversation, tapping of‑‑‑Validity‑‑‑Conversation on telephone are often of an intimate and confidential character‑‑‑Telephone conversation is a part of modern man's life and is an important facet of one's private life‑‑­Right to hold a telephone conversation in privacy of one's home or office without interference can certainly be claimed as "right of privacy" being a Constitutionally protected right.

Akhtar Hamid Ghori v. Saima Estate Developers 1989 CLC 2173; Syed Ghayyur Hussain Shah v. Gharib Alam PLD 1990 Lah. 432 and People's Union for Civil Liberties v. Union of India AIR 1997 SC 568 rel.

(m) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art.9‑‑‑Security of person‑‑‑Word "life" used in Art. 9 of the Constitution‑‑‑Not merely limited to bodily restraint or confinement.

Kharak Singh v. State of U.P. AIR 1963 SC 1295 fol.

Petitioner in Person.

Khawaja Aamir Farooq for Respondents.

Date of hearing: 18th February, 2004.

2004 C L D 1703

[Lahore]

Before Mian Saqib Nisar, J

HABIB BANK LIMITED‑‑‑Plaintiff

Versus

MAHMOOD AHMED and 9 others‑‑‑Defendants

C.O.S. No.4 of 2003, decided on 6th September, 2004.

Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.9 & 10‑‑‑Recovery of bank loan‑‑‑Export refinancing‑‑­Recovery through buy‑back agreement‑‑‑Contention of the defendants in application for leave to defend the suit was that the consignments, subject‑matter of the financing, were dispatched against confirm orders and the consignments were to be delivered through banker of the consignee but the plaintiff‑Bank failed to repatriate the sale proceeds of the, exported goods through foreign bank‑‑‑Plea raised by the defendants was that the bank was not entitled to recovery of loan‑‑‑Validity‑‑‑When it was not shown that bank had ever agreed for discounting of bill of exchange, the bank did not lose its right to recover the amount in the specific manner as had been agreed between the parties at the time of financing‑‑‑No prohibition existed in any law or instructions of State Bank of Pakistan that export refinancing could not be made by the parties through buy­back agreement‑‑‑Such agreements/transaction would be protected on the principle that what was not prohibited by law, would be permissible‑‑‑Financing, in the present case, was not against the discounting of the bills but was as per the terms of FAFB and FAPC facilities that were published by the bank in its manual‑‑‑No requirement existed for the provision of the bills of exchange as the financing was in terms of the buy‑back agreements‑‑‑Application for leave to defend the suit was dismissed‑‑‑Suit was decreed in circumstances.

National Bank of Pakistan v. Messrs Elegzender and Company and 2 others PLD 1987 Lah. 290; Fine Textile Mills Ltd. Karachi v. Haji Umar PLD 1963 SC 163; Bankers Equity Limited and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931; United Bank Limited v. Ch. Ghulam Hussain 1998 CLC 816; Muhammad Iqbal and others v. The Aultralasia Bank Ltd. 1984 SCMR 919; Messrs Kohinoor Trading (Pvt.) Ltd. v. Mangrani Trading Co. and 2 others 1987 CLC 1533 and Messrs Pakistan International Airlines v. Messrs National Bank of Pakistan and another 1985 CLC 436 ref.

United Bank limited v. Messrs. Azmat Trading Co. (Pvt.) Ltd. and 5 others 2001 CLC 1172 and National Bank of Pakistan v. Shahyar Textile Mills Ltd. 2003 CLD 1370 distinguished.

Salman Akram Raja for Plaintiff.

Syed Hamid Ali Shah for Defendants.

Date of hearing: 2nd July, 2004.

2004 C L D 1714

[Lahore]

Before Muhammad Sayeed Akhtar, J

MUHAMMAD AKRAM CHAUDHARY‑‑‑Petitioner

Versus

STYLE ENTERPRISES (PVT.) LIMITED‑‑‑Respondent

C.O. No. 15 of 2003, decided on 5th June, 2003.

Companies (Court) Rules, 1997‑‑‑

‑‑‑‑R.78, Form 27‑‑‑Advertisement of petition in News­papers‑‑‑Petitioner, vide a preceding order was directed to make arrangements for advertising petition in two specified Newspapers and that if petition was not advertised before the next date of hearing, petition would stand dismissed‑‑‑Said order of the Court having not been complied with, petition was dismissed.

Nemo for Petitioner.

Mian Ijaz Ahmad for Counsel for respondent-­Company.

Sahibzada Anwar Hameed for Bank of Punjab.

2004 C L D 1715

[Lahore]

Before Muhammad Sayeed Akhtar, J

UNITED BANK LIMITED through Attorneys‑‑‑Plaintiff

Versus

Messrs AZIZ TANNERIES (PVT.) LTD. Through Chief Executive/Managing Director and 9 others‑‑‑Defendants

C. O. S. No. 13 of 2000, heard on 5th August, 2004.

(a) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.9 & 10(12)‑‑‑Recovery of bank loan‑‑‑Amended application for leave to defend the suit‑‑‑Time‑barred application‑‑‑Taking of loan was not denied by the borrower‑‑‑Suit was originally filed under the provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, but due to promulgation of Financial Institutions (Recovery of Finances) Ordinance, 2001, the Court directed the borrowers to file amended application for leave to defend the suit‑‑‑Borrowers did not file the application within time specified by the Court‑‑­Effect‑‑‑Such application was liable to be ignored and presumption would be that no application for grant of leave to defend the suit was pending‑‑‑Application for leave to defend the suit was dismissed and the case of the plaintiff stood proved by agreements‑‑‑Suit was decreed in circumstances.

Dr. Muhammad Munir‑ul‑Haq and others v. Dr. Muhammad Latif Chaudhry and others 1992 SCMR 215; Bolan Bank Limited through Attorneys v. Baig Textiles Mills (Pvt.) Limited through Chief Executive and 6 others 2002 CLD 557; Banque Indosuez v. Banking Tribunal for Sindh and Balochistan and others 1994 CLC 2272 and Habib Bank Ltd. v. Sarmast Cooking Oil Ltd. 2000 CLC 1502 ref.

(b) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑S.3‑‑‑Filing of suit in Banking Court‑‑‑Permission of State Bank of Pakistan‑‑‑Pre‑condition‑‑‑Validity‑‑‑No provision exists in Financial Institutions (Recovery of Finances) Ordinance, 2001, that the plaintiff should declare the customer as defaulter and refer the matter to State Bank of Pakistan seeking permission to file suit.

(c) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑S.9‑‑‑Corporate and Industrial Restructuring Ordinance (L of 2000), S.18‑‑‑Suit for recovery of bank loan‑‑‑Taking over of assets by Corporate and Industrial Restructuring Corporation‑‑‑Validity‑‑‑Acquisition/take‑over of properties by Corporate and Industrial Restructuring Corporation cannot be questioned in the suit filed for recovery of money.

(d) Contract Act (X of 1872)‑‑‑

‑‑‑‑S.62‑‑‑Novation of contract‑‑‑Scope‑‑‑Novation of contract takes place when for an existing contract some new contract is substituted either by the same parties or between different parties, consideration mutually being the discharge of old contract‑‑‑When the contract is novated a fresh contract comes into existence, directly or by implication in place of the original contract‑‑‑Effect of novation is that it extinguishes the original contact and replaces it by another.

Habib Bank Limited v. Al‑Jalal Textile Mills Ltd. 2003 CLD 1007; Habib Bank Ltd. v. Messrs Qayyum Spinning Lt6 2001 MLD 1351 and Dr. M. Aslam Khaki v. Syed Muhammad Hashmi PLD 2000 SC 225 ref.

Tariq Kamal Qazi for Plaintiff.

Asghar Hamid Bhutta for Defendants.

Date of hearing: 5th August, 2004.

2004 C L D 1728

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

SAHARA TRADING INTERNATIONAL (PVT.) LIMITED through Chief Executive and another‑‑‑Appellants

Versus

BANK ALFALAH LIMITED through Manager Credit and Chief Manager‑‑‑Respondent

R.F.A. No.61 of 2004, heard on 28th June, 2004.

Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.9 & 10‑‑‑Contract Act (X of 1872), S.128‑‑‑Recovery of bank loan‑‑‑Application for leave to defend the suit‑‑­Substantial question of law and facts, non‑raising of‑‑‑Non- impleading of co‑guarantor‑‑‑Suit, maintainability of‑‑­Defendant neither denied availing of loan facility, nor she denied her status of guarantor‑‑‑Plea raised by the defendant was that the loan was secured by the bank guarantee provided by another bank and the plaintiff‑Bank should have encashed the guarantee provided by the other bank, thus the suit was premature‑‑‑Defendant further raised the plea that without impleading the guarantor bank as a party the suit was not maintainable‑‑‑Validity‑‑‑General rule about joint and simultaneous obligation of principal debtor and surety/securities was enunciated in the provisions of S.128 of Contract Act, 1872‑‑‑If any such clause was otherwise agreed between the parties, the provisions of S.128 of Contract Act, 1872, would be inapplicable and the provisions of the contract would prevail‑‑‑Creditor could not be bound and compelled under S.128 of Contract Act, 1872, to always join in legal action only or all sureties of debt, besides the principal debtor, who under all circumstances, was primarily liable to pay the debt‑‑Was the choice and prerogative of the creditor to take recovery action against the principal debtor alone or join any of the guarantors and to leave the enforcement of the surety against any of the co‑sureties; specially when each of the guarantees of contract was independent in nature and had no overlapping effect on each other ‑‑‑Defendant­ Company did not file any application for leave to defend the suit and the defendant guarantor could not set out the plea that the suit of bank was either pre‑mature or the plaint did not disclose a cause of action‑‑‑Defendant guarantor failed to raise any substantial question of lain and facts which required recording of evidence‑‑‑Banking Court had rightly rejected, the application for leave to defend the suit and the suit was decreed in favour of the bank‑‑‑Appeal was dismissed in circumstances.

United Bank Ltd. v. Pakistan Industrial Credit and Investment Corporation Ltd. and others PLD 2002 SC 1100 and Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191 ref.

Malik Muhammad Azam Rasool for Appellants.

Rashdeen Nawaz Kasuri for Respondent.

Date of hearing: 28th June, 2004.

2004 C L D 1741

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

ZEESHAN ENERGY LTD. and 2 others‑‑‑Appellants

Versus

FAISAL BANK LTD. ‑‑‑Respondent

R.F.A. No.281 of 2003, decided on 6th September, 2004.

(a) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑S. 10(6)‑‑‑Expression sufficient cause'‑‑‑Scope‑‑­Application for leave to defend the suit was to be rejected under S.10(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001, for the failure of defendant to meet with the requirement of Ss. 10(3) & 10 (4) of Financial. Institutions (Recovery of Finances) Ordinance, 2001, as the provisions were mandatory in nature‑‑‑Cushion was available to the defendant, who failed in this behalf, to disclosesufficient cause' for his inability to meet the requirements.

(b) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.2(d), 9 & 10‑‑‑Recovery of bank loan‑‑‑Term finance'‑‑­Connotation‑‑‑Undue influence, coercion or illegality on part of the bank‑‑‑Proof‑‑‑Defendants in their application for leave to defend the suit, raised the plea that in fact the amounts claimed by the bank were not the finance' as the bank had agreed to enter into a partnership, with the defendants for the purpose of the project, on the basis of equity and such contribution towards equity participation was not the finance'‑‑‑Further plea raised by the defendants was that due to undue influence, coercion or illegality on part of the bank, the defendants were forced to sign finance agreements with the bank ‑‑‑Validity‑‑‑Plea was contradictory, because, it was the case of the defendants that the bank did not provide equity as committed, rather compelled the defendants for other kinds of the transactions, which admittedly were covered by the definition of finance given in law, therefore, equity which was not given, could not be pressed during the trial to avoid the consequences of failure to meet the conditions of S.10 of Financial Institutions (recovery of Finances) Ordinance, 2001‑‑‑High Court declined to hold the transaction as equity in partnership just for the reason that certain transactions were allegedly forced upon the defendants and they were compelled to enter into the transactions by the exercise of undue influence and financial coercion, by the bank‑‑­Assertion of the defendants that the bank backed out from equity participation and compelled the defendants to enter into leasing arrangement, was not supported by any contra document as required by S.10(5) of Financial Institutions. (Recovery of Finances) Ordinance, 2001-‑‑Such assertion could not be considered as `substantial questions of facts' to prove with some undisclosed and unspecified oral evidence‑‑‑In the light of large number of documents admittedly executed by the defendants and there being not even a single piece of paper or a word in writing that the defendants ever, at the relevant time, complained of any kind of undue influence, coercion or illegality on part of the bank, how on the basis of uncorroborated averments made in the application, the case of leave could be made out‑‑­Banking Court had rightly dismissed the application for leave to appear and defend the suit and the suit was rightly decreed in favour of the bank‑‑‑Appeal was dismissed.

Howes v. Bishop (1909) 2 K.B. 390; Bank of Credit and Commerce International S.A. v. Aboody (1990) 1.Q.B. 923; Goldsworthy v. Brickell (1987) Ch. 338, 401. Bullock v. Lloyd's Bank [1954] 3 All ER 726; William v. Johnson [1937] 4 All ER 34; Wright v. Carter [1903] 1 Ch.27; RP Brocklehurst (deceased) Hall and another v Robert. [1978] 1 All ER 768; Credit Lyonnais Bank Nederland N.V . v. Burch [1997] 1 All ER 144; TSB Bank PLC v. Camfield [1995] 1 All ER 951; National Westminster Bank. v. Morgan [1985] AC 686; The Commercial Bank of Australia v. Amadio [1983] 151 CLC 447; Multiservice Bookbinding Ltd. v. Marden [1979] Ch. 84; Westminster Bank PLC v. Morgan [1985] AC 486, 704; Barclays Bank PLC v. Coleman [2000] 1 ALL VR 385; Royal Bank of Scotland PLC v. Etridge (No.2) [2001] 4 All ER 449 and Cornish v. Midland Bank PLC (Humes, third party) [1985] 3 All ER 513 ref.

(c) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.9 & 10‑‑‑Civil Procedure Code (V of 1908), S.10‑‑‑Stay of suit‑‑‑Provisions of S.10 C.P.C.‑‑‑Applicability‑‑‑Pendency of suit filed by customers against bank‑‑‑Plea raised by customers was that in the former suit filed by them leave had been granted to bank, therefore, they should also be granted leave to appear and defend the suit ‑‑‑Validity‑‑­Subsequent suit filed by bank against customers could not be stayed as by virtue of S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, the provisions of S.10 C.P.C. had been made inapplicable to the proceedings under the special law‑‑‑Intention of the legislature was that if there was a situation, where two suits were filed, one filed by the customer against the bank and the other by the bank against the customer relating to the same finance, both suits, should be tried independently‑‑‑Leave in either case, as a matter of course, should not be granted, only for the reason of the institution, pendency, or the grant of leave in other case‑‑‑Rather for the leave purpose, the particular case should specifically be adjudged on its own merits and on the yardstick of the law stated in Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑If in both the matters, the Court independently found the case fit for leave, the matters could then be tried together for avoiding the conflicting decisions‑‑‑But if in one case, no case for leave was made out, the application for leave to defend the suit could be refused to follow the consequences and the other case should proceed on its own merits‑‑‑Suit filed by bank was not stayed in circumstances.

(d) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.2(d), 9 & 10‑‑‑Contract Act (X of 1872), S.23‑‑‑Recovery of bank loan ‑‑‑Morabaha transactions‑‑‑Object, or consideration of agreement‑‑‑Plea raised by the defendants was that the transactions of Morabaha were invalid, as no physical sale/purchase of goods, which was an essential condition for such transaction, took place, and therefore, it was hit by the provisions of S.23 of Contract Act, 1872‑‑­Validity‑‑‑Parties had entered into Morabaha agreements, in which sale/purchase of specific goods was mentioned‑‑­Defendants were party to such agreements, it was not their case that the agreements were interpolated, fabricated or procured through fraud and misrepresentation, therefore; they could not in law, be allowed to take up a plea, which was disproved by the documents executed by themselves‑‑­Leave to appear and defend the suit was dismissed in circumstances.

(e) Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.9 & 10‑‑‑Recovery of bank loan‑‑‑Charging of mark‑up beyond period of agreements‑‑‑Effect‑‑‑Bank could not charge mark‑up beyond the period of agreements, therefore, such amount was illegally and unauthorizedly claimed by the bank, which should not have been allowed by Banking Court‑‑‑Judgment and decree passed by Banking Court was modified to the extent of such amount which was excluded from decretal amount‑‑‑Remaining judgment and decree passed by Banking Court was maintained‑‑‑Appeal was dismissed accordingly.

Muhammad Akram Sh. for Appellant.

Ali Zafar for Respondent.

Date of hearing: 24th June, 2004.

2004 C L D 212

[Peshawar]

Before Shahzad Akbar Khan and Ijaz‑ul‑Hassan Khan, JJ

KARIM BAKHSH‑‑‑Appellant

Versus

HOUSE BUILDING FINANCE CORPORATION‑‑‑Respondent

F.A.B. No.31 and Civil Miscellaneous No. 287 of 2003, decided on 2nd October, 2003.

Financial Institutions (Recovery of Finances) Ordinance (LXVI of 2001)‑‑‑

‑‑‑‑Ss.9, 10 & 22‑‑‑Recovery of loan‑‑‑Application for leave to defend the suit, dismissal of‑‑‑Failure to disclose plausible defence‑‑‑Availing of loan and execution of documents was not denied by the borrower‑‑‑Performance of repayment by the borrower was not satisfactory as the financial facility was availed in the year 1989 and till 31‑12‑2000, a nominal payment of Rs. 5,000 had been made‑‑‑Entries incorporated in the statement of account were correct and no incorrect or fictitious entry had been pointed out‑‑‑Profit was claimed and the same was levied according to the agreed rate‑‑‑Banking Court dismissed the application for leave to defend the suit and the suit was decreed in favour of the financial institution‑‑‑Validity‑‑­Borrower seeking to appear and defend the suit must disclose a plausible defence or show that there were substantial questions of facts and law which need to be tried, otherwise leave had to be refused and decree to follow‑‑‑Application for lave to defend filed by the borrower did not disclose any plausible defence or suggested any triable issues‑‑‑Judgment and decree passed by the Banking Court was maintained‑‑‑Appeal was dismissed in limine.

Haji Ali Khan & Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Ltd. 1992 CLC 1906 ref.

Haji Zahir Shah for Appellant.

Date of hearing: 2nd October, 2003.

2004 C L D 1383

[Peshawar]

Before Tariq Parvez and Shahzad Akbar Khan, JJ

SOCIETE DES PRODUITS NESTLE S.A. ‑‑‑Appellant

Versus

FOOD INTERNATIONAL (PVT.) LTD. ‑‑‑Respondent

R.F.A. No. 100 of 2000, decided on 20th April, 2004.

(a) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑Ss.8(a), 10(1), 20 & 21‑‑‑Specific Relief Act (1 of 1877), S.54‑‑‑Right to use trade mark‑‑‑Misuse of registered Trade Mark‑‑‑Plaintiff had claimed that he was the owner of registered Trade Mark "MILO" which was registered in his favour since 1950 in relation to food products etc. and registered number was also given to him‑‑‑Plaintiff had also claimed that his goods under Trade Mark "MILO" were being offered and advertised in Pakistan for about last 20 year and goods produced under said trade mark were recognized by general public to be the products of plaintiff who had exclusive right to said trade mark‑‑‑Plaintiff had alleged that defendant was indulging in producing and marketing branded Bread' in the name of "MILO" which was patent infringement of right of plaintiff‑‑‑Contention of defendant thatBread' was not an item produced by plaintiff and that products of plaintiff were different than the product of defendant, was repelled‑‑‑Contention of defendant that word "MILO" was not an invention of plaintiff, but was a generic name signifying a kind of grain, was also of no substance because Bread' produced by defendant was not the product of Milo grains, but was made of wheat‑‑‑WordMILO'; with reference to grain, could not be made justification, for the use of registered trade mark of plaintiff ‑‑‑of Milo grain for products of bread, had been admitted by the defendant and it was not a case of violating the colour scheme or get‑up of plaintiff, but was virtually a misuse of registered Trade Mark `MILO' which obviously was exclusive ownership of the plaintiff—­Registered Trade Mark of plaintiff had been infringed and if such infringement was allowed to be continued, protection granted to plaintiff under Trade Marks Act, 1940 would become ineffective‑‑‑Impugned judgment and decree of Trial Court whereby suit filed by plaintiff was dismissed, being the result of speculative, artificial reasons and based on misinterpretation of evidence and misconception of law, were set aside and suit filed by plaintiff was decreed.

Seven‑Up Company v. Kohinoor Thread Ball Factory and 3 others PLD 1990 SC 313; Messrs Alpha Sewing Machine Company v. Registrar of Trade Marks and another PLD 1990 SC 1074; Kabushiki Kaisha Toshiba (also trading as Toshiba Corporation) v. Ch. Muhammad Altaf (trading as Murad Industries (Regd.) and another PLD 1991 SC 27; Unilever Limited v. Sultan Soap Factory and another PLD 1991 SC 939; Unilever PLC, A British Company of Port Sunlight Wirral Merseyside, England v. R.B. Oil Industries (Pvt.) Ltd., Karachi 1999 MLD 1447; Mars Incorporated v. Pakistan Mineral Water Bottling Plant (Pvt.) Ltd. through Chief Executive/Director/Secretary 2001 MLD 39; Bashir Ahmad v. Regd. Firm Hafiz Habibur Rehman Muhammad Ramzan 1980 CLC 1268; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090: National Detergents Limited v. Nirma Chemicals Works and another 1992 MLD 2357 and Standard Finis Oil Co. v. National Detergents Limited and 2 others 1984 CLC 781 ref.

(b) Trade Marks Act (V of 1940)‑‑‑--

‑‑‑‑Ss. 8, 10, 20 & 21‑‑‑Protection of registered trade mark‑‑­Law governing the trade mark, had jealously protected the registered trade mark for the growth of healthy competition in trade, commerce, industry and those who had invested their money, labour and skill for earning a remarkable reputation, should not be allowed to be exploited by rivals and to venture to take benefit of earned reputation by a registered trade mark‑‑‑Object/intention of the Legislature, while enacting Trade Marks Act, 1940, had been primarily focused towards elimination of chances of confusion and deception‑‑‑Trade Marks Act, 1940 emphasized on the language "likely to deceive or cause confusion" for which reference could be made to provisions of Ss. 20 & 21 of Trade Marks Act, 1940‑‑‑As a matter of law and public policy it would be the duty of the Court to ensure that once a trade mark had been duly registered and nurtured through advertisement and other means and had remained firmly stabilized for a long period, it should not be allowed to be abruptly eradicated by imitation of such trade mark‑‑‑If that sense of security was not guaranteed to an owner of a registered trade mark and if uncertainty about its future was allowed to remain, no productive growth, which was most desirable in every field of activity of a civilized society, would be possible.

Mueen Qamar for Appellant.

Asghar Khan Kundi for Respondent.

Date of hearing: 20th April, 2004.

2004 C L D 252

[Quetta]

Before Raja Fayyaz Ahmed, C.J. and Akhtar Zaman Malghani, J

Sh. ABDUL SATTAR LASI ‑‑‑Petitioner

Versus

FEDERATION OF PAKISTAN and another‑‑‑Respondents

Constitutional Petition No.321 of 2003, decided on 23rd July, 2003.

(a) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art.l99‑‑‑Constitutional petition‑‑‑Request to amend title of petition to implead branch of the petitioner's Bank was allowed by the High Court.

(b) Financial Institutions (Recovery of Finances) Ordinance (XLVII of 2001)‑‑‑

‑‑‑‑S.15‑‑‑Constitution of Pakistan (1973), Arts. 4, 23, 25, 175 & 199‑‑‑Constitutional petition‑‑‑Maintainability‑‑‑Sale of mortgaged property by financial institution without intervention of the Court‑‑‑Contention of petitioner was that unbridled absolute powers could not be conferred by any provision of statute in favour of any organization or authority to unilaterally determine liability of a party and itself enforce the same by selling property of mortgagor and acquire such rights in its own favour without intervention of the Court, thus, provisions of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001, to the extent of creating a parallel judicial system were contrary to provisions of Arts.4, 23, 25 & 125 of the Constitution‑‑‑High Court admitted Constitutional petition to examine the question.

Mehram Ali's case PLD 1998 SC 1445; 1996 CLC 539, 1995 CLC 1027 and 1985 SCMR 758 ref.

Waseem Sajjad, Ali Hassan Sajjad and Tallat Waheed for Petitioner.

K. N. Kohli, D.A.‑G.

Nafees Siddiqui for Respondent No.2.

Date of hearing: 23rd July, 2003.

2004 C L D 1100

[Quetta]

Before Amanullah Khan, J

NATIONAL BANK OF PAKISTAN‑‑‑ Petitioner

Versus

BALOCHISTAN WHEELS LIMITED and another‑‑‑Respondents

Civil Petition No.01 of 1999, decided on 10th April, 2002.

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

‑‑‑‑S.290‑‑Qbject and scope of 5.290, Companies Ordinance 1984‑‑‑Object and scope of 5.290 of Companies Ordinance, 1984 was that the affairs of the Company must be conducted in a lawful manner and strictly in accordance with Memorandum and Article of Association of the Company and it could be invoked by any share‑holder or creditor of the company‑‑‑Petition under S.290 of the Ordinance filed by Bank was not maintainable as Bank was neither member, nor creditor of the Company nor owned 20 per cent shares‑‑‑Bank having no locus standi to file petition, same was dismissed.

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

‑‑‑‑Ss.152 & 290‑‑‑Petition under S.290, Companies Ordinance, 1984 ‑‑‑Maintainability‑‑‑Serious questions of law and facts arose from the allegations made in petition and rejoinder filed by respondent, which could not be determined in summary proceedings and same required detailed enquiry, which could not be resolved in petition‑‑‑Summary jurisdiction of High Court was not to be invoked for resolution of disputes on complicated issues‑‑‑Proceedings under S.152 of Companies Ordinance, 1984 did not entail investigation to resolve whether forged duplicate shares had been issued by respondents as same required detailed enquiry‑‑‑Question of transfer of shares and question of limitation, was to be determined in a regular suit and under S.152 of Companies Ordinance, 1984‑‑‑Petitioner could file regular suit before competent forum for redress of his grievance‑‑­Petition otherwise being barred by laches, was liable to be dismissed.

Iftikhar Asghar for Petitioner.

Agha Faisal and Asghar Nadeem Farooq for Respondents.

Dates of hearing: 20th and 21st November, 2001.

2004 C L D 1445

[Quetta]

Before Amanullah Khan and Fazal‑ur‑Rehman, JJ

NATIONAL BANK OF PAKISTAN through President and another‑‑‑ Appellants

Versus

BASHARATULLAH and 3 others‑‑‑Respondents

High Court Appeal.No.3 of 2004, decided on 10th May, 2004.

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

‑‑‑Ss. 7 & 9‑‑‑Jurisdiction‑‑‑Where the Banking Court had the jurisdiction to adjudicate upon the matter, even a wrong judgment passed on a question of law or fact would not render the same without jurisdiction.

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

‑‑‑‑Ss.7 & 9‑‑‑Limitafion Act (IX of 1908). Ss.5 & 24‑‑‑Void order‑‑‑Limitation‑‑‑Limitation would run against a void order from the date of knowledge and aggrieved party should approach the competent forum for setting aside the void order from the date of knowledge.

M. Raz Khan v. Government of N.‑W.F.P. and another PLD 1997 SC 39 7 fol.

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

‑‑‑Ss. 22 & 24‑‑‑Limitation Act (IX of 1908), Ss.5 & 29‑‑­Appeal‑‑‑Limitation‑‑‑Application under S.5, Limitation Act, 1908‑‑‑Maintainability‑‑‑Period of limitation for appeal having been prescribed under Financial Institutions (Recovery of Finances) Ordinance, 2001; in view of S.29, Limitation Act, 1908, provision of S.5 of the said Act would not apply and application under‑ S.5 of the Limitation Act was not maintainable.

Bashir Ahmad and others v. Habib Bank Limited 1990 CLC 1105 ref.

Syed Ayaz Zahoor for Appellants.

Muhammad Aslam Chishti for Respondents.

Adnan Basharat for Respondents Nos.2 and 3.

Date of hearing: 30th March, 2004.

2004 C L D 275

[Supreme Court of Pakistan]

Present: Sh. Riaz Ahmad, C.J, Qazi Muhammad Farooq and Abdul Hameed Dogar, JJ

AL‑HASSAN FEEDS and another‑‑‑Petitioners

Versus

UNITED BANK LTD., JINNAH ROAD, ABBOTTABAD and 6 others‑‑‑Respondents

Civil Petition No.429 of 2001, decided on 2nd October, 2003.

(On appeal from the judgment dated 12‑9‑2000 of the Peshawar High Court Circuit Bench at Abbottabad, passed in F.A.B. No. 1 of 1999).

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O. XXI. Rr. 89 & 90‑‑‑Constitution of Pakistan (1973), Art. 185(3)‑‑‑Execution of decree‑‑‑ Auction sale, setting aside of‑‑­Objection against sale‑‑‑Non‑deposit of decretal amount alongwith 5% of auction money‑‑‑Extension o f time .for deposit of auction money‑‑‑Powers of Executing Court‑‑‑Auction purchaser could not deposit balance auction money in the due time and sought extension of time‑‑‑Executing Court extended the time‑‑­Petitioners sought setting aside of the sale but failed to deposit decretal amount alongwith 5% of auction money‑‑‑Executing Court confirmed the auction in favour of the auction‑purchaser‑‑­Validity‑‑‑Opportunity to the petitioner was granted by the Executing Court to deposit the decretal amount alongwith 5% of auction money but they failed to deposit the same ‑‑‑Auction‑purchaser deposited 1/4th of the auction money at the time of auction and the remaining 3/4th of the amount was deposited later on‑‑‑Petitioners having failed to comply with the mandatory provisions of law, the Courts below had rightly dismissed their objection petition‑‑‑Executing Court was competent to extend time for deposit of remaining auction amount‑‑‑Orders passed by Executing Court as well as by High Court were maintained‑‑‑Leave to appeal was refused.

Ch. Mushtaq Ahmad, Senior Advocate Supreme Court and Mehr Khan Malik, Advocate‑on‑Record for Petitioner.

Roohul Amin, Advocate Supreme Court for Respondent No. 1.

Syed Asghar Hussain Sabazwari, Advocate Supreme Court and Ch. Akhtar Ali, Advocate‑on‑Record for Respondent No.2.

Date of hearing: 2nd October, 2003.

2004 C L D 583

[Supreme Court of Pakistan]

Present: Javed Iqbal and Sardar Muhammad Raza Khan, JJ

ABDUL GHAFOOR---Appellant

Versus

Mst. HASSAN BIBI and others---Respondents

Civil Appeal No.355 of 1999 and Civil Petition No.456-L of 1999, decided on 14th November, 2003.

(On appeal from the judgment dated 26-1-1999 of the Lahore High Court, Lahore, passed in F.A.O. No. 177 of 1997).

Industrial Development Bank of Pakistan Ordinance (XXXI of 1961)-----

---S. 39---Civil Procedure Code (V of 1908), O.XXI, Rr.58, 89 & O.XXII, R.4---Constitution of Pakistan (1973), Art.185--­Suit for recovery of loan amount---Defendant died during pendency of suit---Bank did not implead all the legal heirs of deceased defendant, but impleaded only his two sons---Suit was decreed ex parte and mortgaged property was put to auction---Respondent (widow of deceased defendant) after coming to know of ex pane decree made application for deposit of decretal amount---Trial Court without deciding such application confirmed auction, but same was set aside by High Court ---Validity---No appeal for setting aside ex parte decree had been filed---Decretal amount alongwith 5% of purchase money had not been deposited---Bank had failed to bring legal heirs of deceased defendant on record, which was a mandatory requirement of law, thus, had deprived his legal heirs to defend the suit properly ---Non­impleadment of respondent and no decision on such application had caused serious prejudice to her (the widow)---Such was a serious illegality, which could not be ignored---Sale in such circumstances could not be confirmed---Provisions of O.XXI, R.89, C.P.C., could not be made applicable as such application remained undecided---Impugned judgment was well-reasoned and unexceptionable---Supreme Court dismissed appeal and petition filed by Bank.

Mian Nusratullah, Senior Advocate Supreme Court with Ozair Chughtai, Advocate-on-Record (absent) for Appellant.

M.A. Zafar, Advocate Supreme Court with Ch. Mehdi Khan Mehtab, Advocate-on-Record (absent) for Petitioner.

Ch. Abdul Wahid, Advocate Supreme Court for Respondents.

Date of hearing: 25th September, 2003.

2004 C L D 1037

[Supreme Court of Pakistan]

Present: Mian Muhammad Ajmal and Hamid Ali Mirza, JJ

ZAKAUDDIN ‑‑‑Petitioner

Versus

DASTGIR INVESTMENT AND MANAGEMENT LIMITED (IN LIQUIDATION), through The Official Assignee/ Liquidator, Sindh High Court, Karachi and 2 others‑‑‑Respondents

Civil Petition No.569‑K of 1999, decided on 15th March 2004.

(On appeal from the judgment of the High Court of Sindh, Karachi dated 23‑9‑1999 passed in H.C.A. No.73 of 1994).

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑S.10‑‑‑Constitution of Pakistan (1973), Art.185(3)‑‑‑Winding up of company ‑‑‑Intra‑Court Appeal‑‑‑maintainability‑‑‑Property offered for sale to petitioner by Official Liquidator‑‑‑Failure of petitioner to make payment within stipulated time‑‑‑Company Judge directed Official Liquidator to take control and management of property ‑‑‑Intra‑Court Appeal filed by petitioner was dismissed by High Court being non‑maintainable as appeal against such order would lie before Supreme Court‑‑­Supreme Court granted leave to appeal to examine the contentions that the High Court had erred in holding that the appeal against the judgment of the Company Judge was not competent before the Intra‑Court Bench and instead petition for leave to appeal to Supreme Court should have been filed.

Muhammad Bux v. Pakistan Industrial Credit Investment Corporation Limited and others 1999 SCMR 25 and Industrial Development Bank of Pakistan v. Messrs Valibhai Kamaruddin and others 2002 SCMR 415 ref.

M. Abdul Qadir Khan, Advocate Supreme Court for Petitioner.

Nemo for Respondents Nos. 1 and 2.

Rizwan Ahmad Siddiqui, Advocate Supreme Court for Respondent No. 3.

Date of hearing: 15th March, 2004.

2004 C L D 1081

[Supreme Court of Pakistan]

Present: Munir A. Sheikh, Javed Iqbal and Faqir Muhammad Khokhar, JJ

Mst. KHAIR‑UN‑NISA CHANNA‑‑‑ Petitioner

Versus

FEDERATION OF PAKISTAN and others‑‑‑Respondents

Civil Petition No. 1396‑L of 2003, decided on 9th June, 2003.

(On appeal from the order dated 5‑5‑2004 of the Lahore High Court, Lahore passed in Writ Petition No.12423: of 1999).

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

‑‑‑‑Ss. 10, 15 & 18‑‑‑Suit for recovery of loan amount decreed after dismissal of leave application‑‑‑‑Decree not challenged in appeal‑‑‑Sale of property in execution of decree‑‑‑Objection to decree that mark‑up over mark‑up had been allowed to Bank‑‑‑Validity‑‑‑Defendant could not legally object to such decree.

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

‑‑‑‑S. 18‑‑‑Contract Act (IX of 1872), S. 28‑‑‑Execution proceedings‑‑‑Auction of mortgaged property‑‑‑Statement by judgment debtor that she would pay decretal amount as per schedule, which if accepted, then she would not seek remedy against auction of property‑‑‑Judgment debtor backed out from her undertaking, over which Executing Court ordered for sale of property‑‑‑High Court dismissed Constitutional petition filed by judgment debtor‑‑‑Contention of judgment debtor was that her statement that she would not seek any remedy was void as no party could contract not to avail remedy under law ‑‑‑Validity‑‑­Consequence of backing out from such statement by judgment debtor was that Executing Court would execute decree and sell property for recovery of decretal amount‑‑‑Judgment debtor, if desired to seek any remedy against any order passed by Executing Court, she would be at liberty to do so in accordance with law, which would be decided on its own merits, irrespective of her undertaking not to avail any remedy‑‑‑Supreme Court dismissed petition and refused leave to appeal.

Abbas Mirza, Advocate Supreme Court and Mahmood A. Qureshi, Advocate‑on‑Record (Absent) for Petitioner.

Nemo for Respondents.

Date of hearing: 9th June, 2003.

2004 C L D 1105

[Supreme Court of Pakistan]

Present: Munir A. Sheikh and Falak Sher, JJ

Mian AFTAB A. SHEIKH and others‑‑‑ Petitioners

Versus

Messrs TRUST MODARABA and another‑‑‑Respondents

Civil Petition No.626‑L of 2003, decided on 22nd April, 2003.

(On appeal from the judgment of the Lahore High Court, Lahore, dated 23‑1‑2003 passed in R.F.A. No.466 of 1999).

(a) Modaraba Companies and Modaraba (Flotation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑S.2(a)‑-‑Limitation Act (IX of 1908), S.19 & Art. 5‑‑‑Suit for recovery of money provided from Modaraba fund to defendant company‑‑‑Limitation‑‑‑Contention of defendant was that suit was barred by time for having been filed after expiry of one year from the date when such amount had become recoverable‑‑­Validity‑‑‑Chief Executive of defendant company had acknowledged liability‑‑‑Suit having been filed within extended period was within period of limitation.

Fine Textile Mills Ltd. Karachi v. Haji Umar PLD 1963 SC 163 ref.

(b) Modaraba Companies and Modaraba (Flotation and Control) Ordinance (XXXI of 1980)‑‑‑

‑‑‑‑Ss. 2(a)(b) & 26(2)‑‑‑Civil Procedure Code (V of 1908), O.XXXVII‑‑‑Suit for recovery of money provided from Modaraba fund by Modaraba company for doing business to defendant with his skill‑‑‑Such suit would be exclusively triable by Tribunal established under Modaraba Companies and Modaraba (Flotation and Control) Ordinance, 1980‑‑‑Such suit was not a suit directly under O.XXXVII, C.P.C., in ordinary Court‑‑‑Tribunal was required to follow merely procedure of summary trial as provided under O.XXXVII, C.P.C.

Syed Iftikhar Hussain Shah, Advocate Supreme Court and Mahmudul Islam, Advocate‑on‑Record for Petitioners.

Sh. Naseer Ahmed, Advocate Supreme Court and Umer Mahmood Kasuri, Advocate Supreme Court and Ch. Talib Hussain, Advocate‑on‑Record for Respondents.

Dates of hearing: 21st and 22nd April, 2003.

2004 C L D 1136

[Supreme Court of Pakistan]

Present: Mian Muhammad Ajmal and Faqir Muhammad Khokhar, JJ

Ch. ABDUL MAJID‑‑‑‑Petitioner

Versus

SADAQAT SAEED MALIK and others‑‑‑‑Respondents

Civil Petition No. 738‑L of 2002, decided on 20th May, 2004.

(On appeal from the judgment dated 19‑11‑2001 of the Lahore High Court, Lahore, passed in R.F.A. No. 158 of 1990).

Banking Companies (Recovery of Loans) Ordinance (XLV of 1979)‑‑‑

‑‑‑‑Ss. 2(f), 3, 6(1)(a) & 8(3)‑‑‑Transfer of Property Act (IV of 1882), S.53 A‑‑‑Civil Procedure Code (V of 1908), O.XXI, Rr. 97, 100, 103 & O.XLIII, R.1(ii)‑‑‑Constitution of Pakistan (1973), Art.185(3)‑‑­Execution of decree for recovery of loan‑‑‑Auction sale by High Court as Special Court (Banking)‑‑‑Suit for specific performance of agreement to sell the property in question by third party‑‑­Maintainability‑‑‑Protection of provisions of S.53-A of the Transfer of Property Act, 1882 to such third party‑‑‑Scope and extent under O.XXI, 8.103, C.P.C.‑‑‑Party aggrieved by an order made by the Executing Court could not institute a suit as it could bring an appeal under O.XLIII, R.1(ii), C.P.C.‑‑‑Provisions of S.3, Banking Companies (Recovery of Loans) Ordinance, 1979 were not intended to permit a party to file a separate civil suit in disregard of the provisions, of O.XXI, R.103, C.P.C. and to frustrate the execution of decree passed by the Special Court (Banking)‑‑‑Third party could have pursued his objection petition before the Special Court to its logical conclusion but he was not entitled to institute a separate suit as his objections could be looked into by Special Court‑‑‑Suit property, in the present case, had already been mortgaged by the judgment‑debtor with the bank judgment passed by High Court did not suffer from any legal infirmity so as to warrant interference by Supreme Court--­Petition for leave to appeal was dismissed.

In the present case, the suit property was auctioned by the High Court in favour of the auction-purchaser. The third party himself had filed objection petition on the basis of his alleged agreement to sell in respect of the suit property. The same was dismissed by the High Court as withdrawn and the judicial sale of the suit property was confirmed in favour of the auction-purchaser by following the procedure as laid down in C.P.C. In the facts and circumstances of the case it could not be said that the third party could not seek his remedy before the High Court in terms of Order XXI, C.P.C. The provisions of Rule 103 of O.XXI, C.P.C. were amended by the Law Reforms Ordinance, 1972, whereby it was provided that all questions arising as to the title, right or interest, for possession of immovable property between the applicants under Rules 97 and 100 and the opposite party, would be adjudged upon and determined by the Court, and no separate suit would lie for the determination of any such matter. At the same time a corresponding amendment was also introduced in Order XLIII, Rule 1 (ii) C.P.C. whereby an order under Rule 103, C.P.C. was made appealable. The object of these provisions was to avoid multiplicity of litigation and to confer exclusive jurisdiction on the Executing Court to decide the objections in respect of the execution of decree. The case of Mohiuddin Molla (supra) is distinguishable from the facts of the present case.

Third party could not acquire a better title over the suit property than the judgment-debtor under whom he was claiming his inchoate rights. The protection of section 53-A of Act, 1882, was not available to such party the auction-­purchaser of the suit property which was sold to him by the High Court in execution of a decree. The auction-purchaser had nothing to do with the judgment-debtor and was not claiming his rights through or under him. The judgment-debtor was no more the owner of the suit property which had been auctioned in favour of the auction-purchaser. In these circumstances, the suit for specific performance of the agreements filed by the third party in respect of the suit property was barred by law. Section 53-A of the Transfer of Property Act, 1882, creates an estoppel between a transferor and a transferee of an immovable property. It does not bind a third party who does not claim under either of them.

Section 53-A of the Transfer of Property Act did not operate to create a form of transfer of property which was exempt from registration. It created no real right. It merely created rights of estoppel between the proposed transferee and transferor which had no operation against third persons not claiming under those persons.

The part performance under section 53-A of the Act, 1882, conferred upon the transferee the privilege of invoking the doctrine embodied therein only as a shield against any invasion of his rights by the transferor or person claiming under him.

By the provisions of sections 2(f) and 6(1)(a) of the Banking Companies (Recovery of Loans) Ordinance, 1979 as they stood at the relevant time, the High Court in exercise of its original civil jurisdiction was vested with all the powers of a Civil Court under the Code of Civil Procedure, 1908, in respect of a case in which the outstanding amount of the loan exceeded one million rupees. Subsection (4) of section 6 expressly provided that no Court other than a Special Court would have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Special Court extended under the Ordinance, including a decision as to the execution of a decree passed by a Special Court. It was further provided that all proceedings, including the proceedings for the execution of a decree within the jurisdiction of a Special Court, by whatever Court passed, pending in any Court would stand transferred to the Special Court. By virtue of section 8(3) of the Ordinance, as it originally existed, a Special Court was required, on the application of the decree holder, to pass an order for execution of the decree as arrears of land revenue or such other manner as it might deem fit. Therefore, there was nothing to prevent the Special Court to follow the procedure provided by the C.P.C. in appropriate cases, for execution of the decree.

Under Rule 103, Order XXI, C.P.C., a party aggrieved by an order made by the executing Court, could not institute a suit as it could bring an appeal under clause (ii) of Rule 1 of Order XLIII, C.P.C. the provisions of section 3 of the Ordinance were not intended to permit a party to file a separate Civil suit in disregard of the provisions of Rule 103 of Order XXI, C.P.C. and to frustrate the execution of decree passed by the Special Court (Banking). Third party could have pursued his objection petition before the Special Court to its logical conclusion. He was not entitled to institute a separate suit as his objections could be looked into by the Special Court. The suit property had already been mortgaged by the judgment-debtor with the bank Judgment passed by the High Court did not suffer from any legal infirmity so as to warrant interference by Supreme Court.

S.N. Banerji and another AIR 1941 PC 128; P&T Cooperative Housing Society Ltd., Karachi v. Ch. Manzoor Ahmed Sahi PLD 1961 Kar. 53; Yeditha Satyanarayanamurty and others v. Tadi Subrahmanyam and others AIR 1959 Andh. Pra. 534; Stuart & Co. v. C. Mackertich AIR 1963 Cal. 198 and Shamim Akhter v. Muhammad Rasheed PLD 1989 SC 575 ref.

Mian Fazal-e-Mehmood, Advocate Supreme Court and Ch. Akhter Ali, Advocate-on-Record for Petitioner.

Gulzarin Kiyani, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for-Respondent No.4.

Date of hearing: 20th May, 2004.

2004 C L D 1272

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhry, Khalil-ur-Rehman Ramday and Falak Sher, JJ

Messrs CENTRAL COTTON MILLS LTD.---Appellant

Versus

HABIB BANK LIMITED---Respondent

Civil Appeals Nos. 1694 and 1793 of 1996, decided on 11th May, 2004.

(On appeal against the order, dated 28-10-1996 passed by High Court of Sindh, Karachi, passed in J.M. No.38 of 1992).

Companies Ordinance (LXVII of 1984)---

----Ss. 305 & 306---Winding up of company--Bank defaulter-­Failure to clear the debts---Right of bank to initiate winding up proceedings against defaulter company---Providing additional securities to bank--Company failed to demonstrate that the Company was in a functional condition and was making profits--­Company further failed to prove that it was capable to discharge its liabilities to point out the debts owed to the bank as per record of the Company nor the company had come out with the statement showing how much amount could be deposited by it to discharge the liabilities of the bank---Company in written statement made no specific denial regarding liabilities towards the bank---Civil suits were pending between the parties against each other particularly one filed by bank for recovery of amount of loan---Company Judge concluded that the Company was not commercially viable unit and continued proceedings of winding up---Plea raised by the company was that the bank had instituted winding up proceedings for the recovery of its outstanding amounts and such proceedings could not be substituted for the recovery of amount and that the Company had assets more than the alleged outstanding dues ---Validity--­Demand of bank requiring the Company to pay the amount which was due, was neither fulfilled, nor the security was enhanced within the period of 30 days, therefore, on completion of period of 30 days, notwithstanding any development which had taken place later on, including the furnishing of security, would render the proceedings of winding up which had been initiated after furnishing of security, because it was construing strictly to the provisions of S.306(1)(a) of Companies Ordinance, 1984---Cause of action had accrued to bank of winding up--Company might be liabilities which it owed to the bank but fact remained that it was not in a running condition nor it was commercially viable because it could not show profit for the purpose of discharging its debts/ loans obtained by it from bank---Company Judge had rightly wound up the Company Appeal was dismissed.

Kamadenu Enterprises v. Vivek Textile Mills Pvt. Ltd. (1984) 55 Company Cases 68; Ambala Bus Syndicate P. Ltd. v. Bala Financiers P. Ltd. (1986) 69 Company Cases 838; Re. Dogulas (Griggs) Engineering Ltd. (All England Law Reports Vol. I, 498; Sindh Glass Industries Ltd. v. National Development Finance Corporation PLD 1996 SC 601; Platinum Insurance Co. Ltd. v. Daewoo Corporation PLD 1999 SC 1; Punjab National Silk Mills Ltd. v. National Bank of Pakistan and another 1986 SCMR 1126; Brush Rehman Ltd. v. Brush Electrical Engineering Co. Ltd. 1986 SCMR 1612 and Ali Woolen Mills Ltd. I. D. B. P. PLD 1990 SC 763 ref.

Muhammad Ali Syed, Advocate Supreme Court for Appellant (in C.A. No. 1694 of 1996 and Respondent in 1793 of 1996).

Abu Bakar Chundrigar, Advocate Supreme Court and M. Bilal, Sr. Advocate Supreme Court for Respondent (in C.A. No. 1793 of 1996 and Appellant in C.A. 1694 of 1996).

Date of hearing: 11th May, 2004.

2004 C L D 1505

[Supreme Court of Pakistan]

Present: Munir A. Sheikh, Iftikhar Muhammad Chaudhary and Rana Bhagwandas, JJ

NATIONALIANKER COMPANY (PVT.) LIMITED and another‑‑‑Appellants

Versus

FEDERAL GOVERNMENT OF PAKISTAN‑‑‑Respondent

Civil Appeal No. 1231 of 1998, decided on 10th December, 2003.

(On appeal from judgment of High Court of Sindh, Karachi dated 3‑3‑1998 passed in C.P. No.639 of 1995).

Companies Profits (Workers Participation) Act (XII of 1968)‑‑‑

‑‑‑‑S. 3 & Sched., para. 4(d)‑‑‑Workers Welfare Fund‑‑­Profits‑‑‑Board of Trustee, non‑establishment of‑‑‑Petitioner company was neither granted refund of Workers Welfare Fund, nor profit on the same‑‑‑Validity‑‑‑High Court was justified in law in not granting the relief of refund of the amount on account of non‑compliance of the provisions as to constitution of the Board of Trustees and intimation of their names to the Government and other formalities‑‑‑Amount and profit on the amount was to be paid to the workers of the company after compliance with the provisions of Companies Profits (Worker's Participation) Act, 1968‑‑­Judgment passed by High Court in exercise of Constitutional jurisdiction was modified to the extent that the profit on the Fund would be given to the Board of Trustees for distribution to the workers in compliance of the provisions of Companies Profits (Workers Participation) Act, 1968‑‑‑Appeal was allowed accordingly.

Syed Haider Ali Pirzada, Advocate Supreme Court for Appellants.

Mrs. Naheeda Mehboob Ellahi Standing Counsel Chaudhry Akhtar Ali, Advocate‑on‑Record for Respondent.

Date of hearing: 10th December, 2003.

2004 C L D 1507

[Supreme Court of Pakistan]

Present: Tanvir Ahmed Khan and Khalil‑ur‑Rehman Ramday, JJ

Ch. MUHAMMAD YOUSAF‑‑‑Petitioner

Versus

UNITED BANK LIMITED‑ ‑‑Respondents

C.P.L.A. No.910‑L of 2000, decided on 4th March, 2003.

(On appeal from order dated 22‑2‑2000 passed in F.A.O. No.39 of 2000 of the Lahore High Court, Lahore).

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

‑‑‑‑S.21‑‑‑Constitution of Pakistan (1973), Art.185(3)‑‑­Appeal‑‑‑Limitation‑‑‑During execution proceedings, appellant filed objection before Executing Court which was dismissed on 10‑9‑1999‑‑‑Application for obtaining certified copy of the order was filed on 8‑2‑2000, i.e. after the expiry of prescribed period for filing appeal under S.21 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑Appeal was time‑barred and the appellant failed to point out any sufficient cause for condonation of delay‑‑‑High Court dismissed the time‑barred appeal on the ground that nobody should be allowed to get benefit of his own misdeed/negligence‑‑‑Validity‑‑‑Appellant failed to show any illegality or infirmity in the judgment calling interference by Supreme Court‑‑‑Leave to appeal was refused.

Sh. Azhar Salam, Advocate Supreme Court for Petitioner.

Nemo for Respondent.

Date of hearing: 4th March, 2003.

2004 C L D 1522

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhary, Javed Iqbal and Falak Sher, JJ

SAHARA TRADING INTERNATIONAL (PVT. LTD. and others‑‑‑Petitioners

Versus

BANK ALFALAH LTD. ‑‑‑Respondent

Civil Petition No.2409‑L of 2004, decided on 20th July, 2004.

(On appeal from judgment/order dated 28‑6‑2004 passed by Lahore High Court, Lahore in R.F.A. No.61 of 2004).

(a) Financial Institutions (Recovery of Finance) Ordinance (XLVI of 2001)‑‑‑

‑‑‑‑Ss.10 & 9(5)‑‑‑Constitution of Pakistan (1973), Art.185(3)‑‑‑Suit for recovery‑‑‑Leave to defend the suit‑‑­Defaulter company had not filed application for leave to defend the suit but guarantor prayed for leave to appear and defend the suit‑‑‑Banking Judge declined to grant relief to the guarantor on the premises that no bona fide dispute had been pointed out and no tenable explanation had been offered and the application to appear and defend the suit was dismissed as a result whereof the suit was decreed in favour of the Bank and against the Defaulter‑Company and the guarantor‑‑‑Order of the Banking Judge was affirmed by the High Court‑‑‑Contention of the Defaulter‑Company was that the Company had availed the finance facility through the guarantor being its Chief Executive as per the documents relied upon by the Bank itself therefore, application to appear and defend the suit by the guarantor should have been treated by the Banking Judge as well as the High Court on behalf of both of them in the interest of justice and Company may not have been non‑suited merely for technical reasons‑‑‑Validity‑‑‑Decree having been passed by the Banking Judge after‑ taking into consideration the material available on the record, and Company being the principal borrower in its own juristic capacity/status, had not applied for leave to defend, according to S.10 of the Financial Institutions (Recovery of Finance) Ordinance 2001, after receiving summons issued by the Banking Court under S.9(5) of the Ordinance, therefore, the application which was submitted by the guarantor having a distinct and different status, being a guarantor, shall not be deemed to be application for leave to defend on behalf of the principal borrower as well, and in such view of the matter, Banking Court had rightly decreed the suit and guarantor in her capacity as guarantor could not challenge the legality or otherwise of the decree‑‑‑Principles.

Admittedly the Company was a Private Ltd. Company under the Companies Ordinance 1984. It got its own independent juristic character. As far as the guarantor was concerned, she enjoyed statedly authority of its Chief Executive but simultaneously she also stood guarantor for reimbursing the finance facility by furnishing the bank guarantee from a Bank, therefore, in dual capacity she had got her independent legal character/status to perform under different provisions of law, as according to sanction advice while acting on behalf of the Company she had to discharge her obligations in accordance with terms and conditions noted therein being one of the contracting party whereas, as a guarantor she had to play a different role, in pursuance whereof she managed Bank‑guarantee in favour of the plaintiff‑Bank on independent conditions, as well as the contract which was to be performed separately as per the terms and conditions mentioned therein in detail. A perusal of these conditions reveal that guarantor enjoyed a distinct status comparing to the principal debtor therefore, on having made distinction, Court was to examine as to whether the Company being principal borrower, without seeking permission to appear and defend the suit, at a subsequent stage either at appellate or before the Supreme Court, by filing a Constitution petition or petition for leave to appeal, could question the validity of decree passed by the Banking Court? Admittedly summons .were issued by the Banking Court under section 9(5) of the Ordinance but no request was made by it for leave to defend the suit, therefore, as per the mandate of section 10 of the Ordinance, it would be deemed that facts mentioned in the plaint had been admitted by the Company, therefore, by default, in not filing application for leave to defend, Company as a principal borrower shall be precluded to question the validity of the decree which essentially had been passed by the Banking Court, after having taken into consideration the material/ documents attached with the plaint.

Decree had been passed by the Banking Court after taking into consideration the material available on record, therefore, Company being the principal borrower in its own juristic capacity/status, had not applied for leave to defend, according to section 10 of the Ordinance, after receiving summons issued by the Banking Court under section 9(5) of the Ordinance, therefore, the application which was submitted by guarantor having a distinct and different status being a guarantor shall not be deemed to be application for leave to defend on behalf of the Company as well and in such view of the matter, the Banking Court had rightly decreed the suit.

Undoubtedly guarantor submitted an application for leave to defend the suit as guarantor. A perusal of the contents of the application showed that no substantial question of law and fact was raised, requiring determination of the claim of the guarantor, therefore, High Court had rightly declined to interfere in the judgment of the Banking Court.

As far as the guarantee furnished by the guarantor to facilitate the Company to enjoy the financial facility was concerned, it created a separate contract between creditor as well as guarantor or the Bank, which had furnished the guarantee and guarantor, after having consented to furnish guarantee from another Bank, had no authority to challenge the claim of the plaintiff‑Bank independently on merits embodied in the plaint because plaintiff could encash the bank‑guarantee furnished by said Bank, if the amount due against the company was not reimbursed.

As the Company had failed to adjust the financial facility availed by it, therefore, the Bank, who had agreed to furnish Bank guarantee, had to waive his rights of subrogation and proof in any liquidation of the principal debtor until and unless all sums owing to the Bank by the principal debtor had been paid to the Bank in full, therefore, in view of such categorical commitment, guarantor had no case to challenge the validity of the decree and in such circumstances, High Court in the impugned judgment had rightly observed that it was not available for guarantor to set out the plea that the suit of the plaintiff Bank was pre‑mature or without cause of action.

Ali Khan & Co. v. Allied Bank of Pakistan Ltd. PLD 1995 SC 362; Messrs National Construction Co. Ltd. v. Aiwan‑e‑Iqbal Authority PLD 1994 SC 311; Pak. Consulting and Engg. (Pvt.) Ltd. v. Pakistan Steel Mills 2002 SCMR 1781 and Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191 ref.

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.126‑‑‑Bank guarantee‑‑‑Status of furnishing Bank guarantee.

The 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 the occurrence of which the guarantee becomes enforceable.

Messrs National Construction Co. Ltd. v. Aiwan‑e­-Iqbal Authority PLD 1994 SC 311; Pak. Consulting and Engg. (Pvt.) Ltd. v. Pakistan Steel Mills 2002 SCMR 1781 and Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191 ref.

Tariq Mahmood, Advocate Supreme Court and Mahmood‑ul‑Islam, Advocate‑on‑Record for Petitioners.

Nemo for Respondents.

Date of hearing: 20th July, 2004.

2004 C L D 1530

[Supreme Court of Pakistan]

Present; Hamid Ali Mirza and Sardar Muhammad Raza Khan, JJ

BOLAN BEVERAGES (PVT.) LIMITED‑‑‑Appellant

Versus

PEPSICO INC. and 4 others‑‑‑Respondents

Civil Appeal No.1356 of 1999, decided on 12th. August, 2004.

(On appeal from the order dated 1‑10‑1999 of the Lahore High Court, Lahore in F.A.O. No. 122 of 1999).

(a) Contract Act (IX of 1872)‑‑­

‑‑‑‑S. 202‑‑‑Franchise‑‑‑Definition.

Franchise is defined as "a privilege granted or sold, such as to use a name or to sell products or service. The right given by a manufacturer or supplier to a retailer to use his product and name on terms and conditions mutually agreed upon." In its simplest terms, a franchise is a licence from owner of trademark or trade name permitting another to sell a product or to serve under that name or mark. Precisely this definition is more akin to a licence rather than an agency.

Black's Law Dictionary 6th Edn., p.658 ref.

(b) Contract‑‑‑

‑‑Nature of agreement‑‑‑Determination of‑‑‑Headings or the captions of the agreement cannot exclusively determine the nature of a contract yet the various clauses thereof would be material in determining the real nature of the agreement.

(c) Contract‑‑‑

‑‑‑‑Agreement between the parties defined the role of parties where was purchaser of goods while P was the seller thereof‑‑‑Prima facie there appeared to be a relationship of seller and buyer between the parties.

(d) Contract Act (IX of 1872)‑‑‑

‑‑‑Ss. 182 & 211‑‑‑"Agent" and "principal"‑‑‑Agent is appointed by a principal to do any act for the principal or to represent the principal in dealings with the third person‑‑­Agreement between the parties made it clear that B while dealing with third persons did not represent P, but after purchasing the goods from P, B were engaged in a business which was purely their own and the returns thereof were completely enjoyed by them‑‑‑All the losses as well as the profits being that of B and not capable of being shared by P except for the sale of goods of which the price was fixed and duly paid to P by B, in terms of the provisions of Ss. 182 & 211 Contract Act, 1872, prima facie the agreement between the parties did not constitute an "Agency".

(e) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S. 211‑‑‑Provision of S. 211 Contract Act, 1872 presupposes the belonging of the business to the principal while the conduct thereof to the agent.

(f) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.213‑‑‑Agent's account‑‑‑Agent is bound to render proper accounts to his principal on demand.

(g) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S. 216‑‑‑Principal's right to benefit gained by the agent dealing on his own account in business of agency‑‑‑Where the whole business was that of B which was run on its own account and not at all for P, that prima facie indicated the absence of agency.

Section 216 of the Contract Act explains the principal's right to benefit gained by agent dealing on his own account in business of agency. It elaborates that if an agent without the notice of a principal, deals in the business of agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have accrued to him from the transaction. In the present case, the whole business was that of B which was run on its own account and not at all for P. This also prima facie was indicative of the absence of agency.

(h) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss. 217 & 218‑‑‑Agent and principal‑‑‑Provisions of Ss.217 & 218 Contract Act, 1872 lay down certain conditions on which the agent is bound to pay to his principal all sums received on his account‑‑‑B in the present case had never received from the third persons any amount or account on behalf of or for P‑‑‑Agreement between B and P, viewed in the light of the text law, prima facie, indicated the existence of no agency.

(i) Qanun‑e‑Shahadat (10 of 1984)‑‑‑

‑‑‑‑Art. 103‑‑‑Proof‑‑‑Once an agreement has been reduced in writing, oral evidence was to be excluded while proving the terms thereof as against the terms specifically reduced in writing.

Hazratullah v. District Council Haripur 1997 SCMR 1570 ref.

(j) Contract Act (IX of 1872)‑‑‑

‑‑‑Ss.182, 211, 213, 216, 217 & 218‑‑‑Agent and principal‑‑­Agent is a hyphen that joins and a buckle that binds the relation between the principal and the third party‑‑‑Where an agent is not a link between the principal and a third party, the institution of agency is not created‑‑‑Where a person is not liable to the principal for the submission of accounts such person cannot be dubbed as agent‑‑‑In the present case, the product was sold to _ the third party as the property of B without any control of P‑‑‑B had not received any commission for the sale, rather, they received the entire amount of sale consideration as well as the profits and were also likely to sustain losses as well‑‑‑Agreement between the parties, prima facie, lacked the necessary ingredients of an agency.

(k) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.202‑‑‑Interpretation and applicability of S.202, Contract Act, 1872‑‑‑Creation of "interest in the subject‑matter‑‑­Scope elaborated.

The close examination of section 202 of the Contract Act would show that it can be split up into two parts. The first part contemplates that the interest of the agent himself should exist in the property that forms the subject-­matter of agency. The second part of the section is that when such an interest is created, it cannot be terminated to the prejudice of agent unless it is expressly provided in the contract.

The first portion of the section is clearly indicative of the fact that either the agent must have an interest pre­existing in the property or creation of such interest should be the direct result of the agreement itself. Any interest, either not pre‑existing or not forming subject‑matter of the agreement but created subsequent to the agreement in any related matter, would not be called as the creation of interest of the agent. In the present case, the subject-­matter of the agreement is the sale of product to the B. The interest of the parties is only to the extent of sale by one and purchase by the other. Everything comes to an end the moment the sale is completed. The case of the B was that after such agreement the B constructed offices, built a vast infrastructure, employed numerous persons and hence a clear interest was created. This, would not be a proper definition of interest because such interest was created independent of the agreement which was only for sale of product. All the infrastructure which had been constructed and prepared by B was for the expansion and promotion of his own business which he commenced in order only to earn his own profits which were never to be shared by the P.

In case of the sale by one person of a product belonging to the other and having purchased from that other, the agency is not created. The indispensable ingredient of agency in such cases is missing because when the so‑called agent deals with the third person, such dealings do not bind the so‑called principal.

Only that agency is irrevocable which is created with adequate consideration and is designed to serve as security for some interest of the agent. Any expenditure in setting up office and necessary infrastructure for carrying on business of agency does not tantamount to the creation of interest of agent in the subject‑matter. To elaborate, creation of tenancy or the grant of lease is tantamount to the creation of agency because a tenant or lessee by virtue of the very agreement of lease or tenancy becomes directly interested in the subject‑matter of lease etc. The creation of no such right is contemplated through the agreement in the present case. The scenario can further be elaborated by furnishing the example of a debtor who authorizes his creditor to sell the property and to recover his debt. In such an agreement the creditor‑agent has a direct interest in the subject‑matter of sale to the extent of his right to recover the debt. The interest of a person is created only where the authority is given for the purpose of being a security or is a part of the security and not to cases where such authority is independent and the interest of donee is created afterwards and incidental to the factum of sale etc. An' act of sale of consumer goods does not create an authority coupled with interest. In view of the law coupled with the terms of agreement it does not create an interest of the purchaser by itself and hence prima facie the provisions of section 202 of the Contract Act are not attracted.

In the present case the very existence of agency or franchise is denied by the opposite party. Thus, in case of denial, Court has to refer only to the text law on the subject appreciated in the light of agreement between the parties.

Messrs Caltex Oil (Pakistan) Ltd., Karachi v. Sheikh Rehan‑ud‑Din PLD 1957 Lah. 998 ref.

Muhammad Aref Effendi v. Egypt Air 1980 SCMR 588 distinguished.

(l) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S. 202‑‑‑Principal and agent‑‑‑If the relationship between the parties is determined to be that of principal and agent, the provisions of S.202 of the Contract Act would be attracted, otherwise not.

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

‑‑‑‑Ss. 21(a) & 56(f)‑‑‑Civil Procedure Code (V of 1908), O.II, R.2‑‑‑Contract Act (IX of 1872), S.202‑‑‑Contract not specifically enforceable‑‑‑Refusal to grant ‑injunction‑‑‑Money reliefs like claim of compensation and damages are brought about by the plaintiff mostly to avoid the mischief of O.II, R.2, C.P.C. yet the calculation of such amount and the claim thereof would automatically give an impression that such loss or damage is reparable in terms of money‑‑‑Loss, in the present case, being not irreparable in case the decree for ­compensation and damages etc. as claimed by the plaintiff was ultimately granted, in the light of S. 21(a) read with S. 56(f) Specific Relief Act, 1877 same was not a fit one for the grant of temporary injunction.

Hameedullah v. Headmistress 1997 SCMR 855 ref.

(n) Trade Marks Ordinance (XIX of 2001)‑‑‑

‑‑‑‑S. 46‑‑‑Contract Act (IX of 1872), S. 202‑‑‑Specific Relief Act (I of 1877), Ss.21(a) & 56(f)‑‑‑Trade mark ‑‑‑Violation‑‑­Temporary injunction, grant of‑‑‑Scope‑‑‑Agreement of Pepsi Cola Company with a Bottler Company to bottle, sell and distribute their product known as and sold under the trademarks "Pepsi Cola" and "Pepsi", solely within the limits of a provincial territory‑‑‑Pepsi Cola Company had referred to various tests conducted qua the product sold in the market whereafter it transpired that the Bottlers had been using the concentrate of "RC Cola" and were selling it under the name, style and trade mark of "Pepsi Cola", which was alleged to be a serious violation of the trade mark in selling a product available for half the price of Pepsi Cola‑‑‑Background of sale of concentrate of Pepsi Cola having been purchased by the Bottlers had remained reasonable and constant during early years of the agreement but for six months next before the institution of suit no concentrate of `Pepsi Cola' had at all been purchased by the Bottlers, while the product was constantly being sold in the market and it was not known as to how could the product be marketed, as genuine, when no concentrate of "Pepsi Cola" at all was purchased‑‑‑Effect‑‑‑Obvious conclusion, prima facie, would be that some spurious product was marketed and the same was accepted as well in some of the despatches on record‑‑‑If a temporary injunction, in circumstances, was granted, what assurance would there be that no spurious or unhygienic material shall be sold during the existence of the injunction‑‑‑In that case the Court shall have no source to check all such failings and shortcomings and would rather be thrusting an agreement over a party (Pepsi Cola) which had already revoked the contract‑‑‑Grant of temporary injunction would virtually amount. to the grant of relief prayed for but without a decree in favour of the Bottlers ‑‑‑Grant of relief, if amounted to resurrection of contract in its full form and effect, which stood cancelled by the party concerned, had to be discouraged‑‑‑When the Court was not in position to grant relief against oppressive consequences of the injunction, same should be refused.

(o) Trade Marks Ordinance (XIX of 2001)‑‑‑

‑‑‑‑S. 46‑‑‑Contract Act (IX of 1872), S. 202‑‑Specific Relief Act (I of 1877), S. 56‑‑‑Allegation of serious infringement of trade mark by selling spurious goods of substandard quality adversely affecting the goodwill of original company which was considered to be irreparable‑‑‑Application for grant of temporary injunction by the alleged seller of the product‑‑­Provisions of S.202, Contract Act, 1872 were not attracted taking in view all the ingredients for the issuance of a temporary injunction and the alleged Seller had no prima facie case‑‑‑Irreparable loss in case of grant of injunction, in circumstances, would be that of the original company and not the alleged seller‑‑‑Grant of temporary injunction was refused in circumstances.

(p) Ad interim injunction‑‑‑

‑‑‑‑ Injunction was originally granted with direction that the case be heard at the earliest possible date but injunction continued for a long time since 1999‑‑‑Supreme Court deprecated the continuation of ad interim injunction for such a long time specially in view of the important nature of the case, the magnitude of the stakes and the quantum of finances involved‑‑‑Party should not be allowed to benefit from a situation so created as the contract created in 1993 had been terminated in the year 1998 but still, under the force of ad interim injunction, the party was in complete enjoyment of the business not sanctioned and desired by the company.

Tariq Mehmood, Advocate Supreme Court with Mehr Khan Malik, Advocate‑on‑Record for Appellant.

Khalid Anwar, Advocate Supreme Court with M.S. Khattak, Advocate‑on‑Record for Respondents.

Dates of hearing: 3rd, 4th and 7th June, 2004.