CLD 2005 Judgments

2005 C L D 10

[Karachi]

Before Mushir Alam, J

PETROMARK (PVT.) LTD. ---Plaintiff

Versus

ALI TRADERS and others---Defendants

Suit No.250 of 2004, decided on 30th June, 2004

Trade Mark Act (V of 1940)---

----Ss.6, 13, 21, 22, 25 & 26---Specific Relief Act (1 of 1877), S.54---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1, 2 & 4--­Exclusive right of particular trade mark---Interim injunction, grant and vacation of---Plaintiff claimed to be the registered proprietor of trade mark E-4' in respect of oil and lubricants with peculiar get-up and style---Plaintiff had alleged that defendant had adopted its trade mark E-4' with similar label, design, logo, colour scheme to deceive public in a calculated manner and was passing -off spurious goods as the goods of plaintiff and was trading on the good will and reputation of the plaintiff---Plaintiff had prayed for permanent injunctive relief against defendant from infringing Trade Mark E-4; its label, colour scheme and get­up etc.---Ad interim orders, in terms of injunctive relief was granted to the plaintiff---Defendant had filed application seeking recall of ad interim order and had denied claim of plaintiff with regard to disputed Trade Mark E-4' contending that Trade Mark adopted by defendant was not counterfeit mark of plaintiff as such mark was common in trade of Motor-cycle lubricants as E' denotes Engine' and4' refers to four stroke---Plaintiffs Mark ,was advertised before acceptance in the Trade Mark Journal, but subject to disclaimer---Exclusive or monopolistic rights of registered Trade Mark holder in terms of S.21 of Trade Mark Act, 1940 were not absolute, but were circumscribed by limitations and exceptions provided for in Ss. 22, 25 and 26 of the said Act--­Registration of plaintiffs mark was subject to disclaimer in respect of various parts including features identified as E-4' device of motor-cycle and container---Feature E-4' in Mark of plaintiff beside being disclaimed, was not distinctive rather it was descriptive as to the character or quality of goods and such description was in common use by lubricant manufacturer and traders ---plaintiff neither was able to demonstrate any exclusivity nor distinctiveness nor non-descriptiveness in his label---Plaintiff having failed to bring on record any material to refute defence material produced by defendant through counter-affidavit, he could not obtain confirmation of injunctive relief-- Application/ suit of plaintiff was dismissed.

Sayyed Engineering v. Tristar Industries (Pvt.) Ltd. 2001 CLC 1368; Messrs' Mehran Ghee Mills (Pvt.) Limited v. Messrs. Chiltan Ghee Mill (Pvt.) Limited 2001 SCMR 967; J. N. Nichols (Vimto) PLC A Company Incorporated in the United Kingdom v. Mehran Bottlers (Private) Limited, Karachi PLD 2000 Kar. 192; Registrar of Trade Marks v. Chandra Rakhit Ltd. AIR 1955 SC 558; Pakistan Drug House (Pvt.) Ltd. v. Rio Chemical Company 2003 CLD 1531 and Registrar of Trade Marks v. Ashoe Chandra Rakhit Ltd. AIR 1955 SC 358 ref.

Saleem Ghulam Hussain for Plaintiff.

Khurram Ghori for Defendant No 1.

Date of hearing: 1st April, 2004.

2005 C L D 61

[Karachi]

Before Sarmad Jalal Osmany, J

Messrs PAK. FERTILIZER CO.---Applicant

Versus

GOVERNMENT OF SINDH---Respondent

J. Misc. N6.24 of 1982, decided on 11th May, 2004.

Transfer of Property Act (IV of 1882)-----

----Ss. 7 & 57---Companies Ordinance (XLVII of 1984), Ss.328 & 329---Sindh Registration Rules, 1940, Rr.135 & 149 (X VI) (X VII)---Registration Act (XVI of 1908), S.69---Sindh Chief Court Rules, (O.S.), R.844---Sale of property of Liquidated Company ---Refiusal to issue "No Objection Certificate "---Company having been liquidated, its property consisting of 70 acres, was put to auction and bid of auction purchaser/ applicant had been confirmed and sale certificate was issued to the applicant---Applicant/auction purchaser thereafter entered into agreement to sell 60 acres from said land with other person---Applicant paid all dues including ground rent on said property to Collector Central Excise and Sales Tax---Applicant after completing all formalities demanded "NOC" and Deh Form 2 from concerned Authorities and Mukhtiarkar, which was refused---Issuance of NOC was refused on ground that applicant had violated three clauses of lease-deed, namely, relating, to payment of ground rent of property and that land in question could only be used for purpose of erecting a Fertilizer Factory as on that basis the land was leased out to the liquidated company---Liquidated company having never established any such Factory, it was contended on part of respondents that land should revert to Excise and Taxation Department--­Validity---When Government being owner of property leased out to company for specific purpose of setting up a Fertilizer Factory which company was liquidated at the behest of Government, then to enforce clause of lease-deed against applicant/ auction purchaser, certainly would be unjust, especially when Government never made attempt to redeem property after expiry of three years from the date of lease--­Said clause of the lease-deed would become redundant--­Lease-deed in question had prohibited lessee from assigning or, letting property or any part thereof to any person or creating charge thereon without previous consent in writing of Government---Property in question having been auctioned by Government itself, applicant auction purchaser could get said sanction from Government---Application was allowed subject to permission of Government for sale in question.

Province of Punjab v. Muhammad Yaqoob 1992 CLC 2065 ref.

Raja Qureshi along with Akhtar Hussain for Applicant.

Abdul Mujeeb Pirzada for Excise and Taxation Department.

Ziauddin Nasir, Standing Counsel for Government of Pakistan on Court Notice.

Ahmed Pirzada Addl A.-G. for the Government of Sindh.

Dates of hearing: 10th, 16th, 19th, 20th February, 2004, 9th, 16th, 19th, 24th and 25th March, 2004.

2005 C L D 74

[Karachi]

Before Khilji Arif Hussain, J

PEMCON INTERNATIONAL CONSTRUCTORS (PVT.) LTD. ---Plaintiff

Versus

HUBEI MACHINERY IMPORT/EXPORT COROPORATION---Respondent

Suit No.203 of 1993, decided on 12th November, 2003.

(a) Company-----

----Institution of suit or taking legal action by a company--­Authorisation---Memorandum and Articles of Association--­Nature and status---If a Director has been authorized specifically by the Memorandum and Articles of Association to manage the business of the Company and to institute the, legal proceedings then there is no need to pass a separate resolution by the Board of Directors for instituting the suit and authorizing the same person who has already been authorized by Memorandum and Articles of Association to institute the suit---Principles.

A company, which is a juristic person and not natural person, can administer its business affairs by its Board of Directors. A company can institute the suit by passing a resolution and by authorizing any of its officers/ directors to file, sign and verify the same. However, even if any person or director has been authorized to institute suit, sign and verify plaint by Articles of Association, still instituting suit, company ought not to have passed fresh resolution in this regard.

In the present case the Chief Executive of the plaintiff-Company had been authorized by the Memorandum and Articles of Association with almost all the powers to manage the affairs of the company including powers to control the management of the business of the company with full power to do all acts, deeds and things deemed necessary, proper and expedient for carrying on the business and concerns of the company and to exercise all powers, authorities and discretions of the company except only such of them as by the Companies. Ordinance for the time being in force, were expressly directed to be exercised by the Board of Directors.

To institute a suit or take legal action for the recovery of outstanding debts of the company is also one of the main affairs of the company and if a director has been authorized specifically, by the Memorandum and Articles of Association to manage the business of the company and to institute the legal proceedings then there is no need that a separate resolution ought to have been passed by the Board of Directors for instituting the suit and authorizing the same person who has already been authorized by Memorandum and Articles of Association, to institute the suit.

The Articles of Association have a contractual force between the company and its members as also between members inter se in relation to other rights as such members and accordingly parties are bound, by such contractual obligations, however, in case there is any conflict between any provision of Memorandum and Articles of Association and Companies Ordinance itself, then the Ordinance would override provision in the Memorandum or Articles to the extent of repugnancy between the two.

The Memorandum and Articles of Association is like a constitution of the company and all the directors of the company have to act within the parameters fixed by it and if certain powers have not been conferred expressly by the Memorandum and Article's of Association, then the Board of Directors can in their meeting, take decision in this regard, and if decided, can delegate powers to any director or any other person of their choice and in- some case decision can be taken in the general meeting of shareholders. However, if any person already has such authorities or powers under Memorandum and Articles of Association, then there is no need of again delegating the same powers by resolution.

2003 CLD 1497; PLD 1997 Kar.62; PLD 2003 Kar.156; PLD 1999 Kar. 260; PLD 1991 SC 550; PLD 1959 SC 258; PLD 1969 SC 684 and 1987 CLC 367 ref.

(b) Company----

---- Memorandum and Articles of Association---Nature and Status elaborated.

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

----Ss. 42 & 54---Contract Act (IX of 1872), S. 73---Suit .for declaration, injunction and damages---Burden of proof--­Plaintiff having failed to produce any evidence that he suffered any damages due to cancellation of contract, suit for damages was not maintainable.

Rizwan Ali Dodani for Plaintiff.

Zia-ul-Haq Makhdoom for Defendant No.1.

Date of hearing: 30th October, 2003.

2005 C L D 93

[Karachi]

Before S. Ali Aslam Jafri, J

In the matter of: A AND J APPAREL (PVT.) LIMITED and another---Petitioners

J. Miscellaneous No.67 of 2003, decided on 1st September 2004.

Companies Ordinance (XLVII of 1984)---

----Ss.284 & 287---Companies (Court) Rules, 1997, R.55--­Sindh Chief Court Rules (OS), 8.953---Petition for sanction of Court for merger/amalgamation of companies---Compliance of the directions of the High Court before considering the proposed amalgamation appeared to have been fulfilled and nobody had come forward to object to same despite due publicity given to such proposal amalgamation/ merger scheme---High Court accepted the petition accordingly.

Faisal Kamal Alam and Naveed Anwar Siddiqui for Petitioners.

Date of hearing: 1st September, 2004.

2005 C L D 114

[Karachi]

Before Zia Perwez, J

TANYA KNITWEAR (PVT.) LTD. ---Plaintiff

Versus

UNITED BANK LIMITED and others ---Defendants

Suit No.B-86 of 2001, decided on 2nd September, 2004.

(a) Corporate and Industrial Restructuring Corporation Ordinance (L of 2000)-----

----Ss.10(1) & 19---Banking Companies Ordinance (LVII of 1962), Ss.2 & 25---Reference of dispute to Verification Committee by Corporate and Industrial Restructuring Corporation (CIRC)---Scope---CIRC, incorporated as a Corporation could not act as Banking Company for carrying on its business, but provisions applicable to borrowers of respective Banks would continue to apply thereto--­Principles.

Muhammad Haroon v. The Crown PLD 1951 FC 118 and Inspector General of Police v. Mushtaq Ahmed Warraich PLD 1985 SC 159 rel.

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

----S.25---Circular of State Bank---Validity---Such circular would have force of law.

Hashwani Hotels Limited v. Federation of Pakistan and others PLD 1997 SC 315 fol.

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

---Ss.15(11) & 27---Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), Ss.10(1) & 19---State Bank of Pakistan BPD Circular No.29, dated 15-10-2002, Cls. 7 & 9(iii)---Suit by borrower against Bank---Reference of dispute by Banking Court to Corporate and Industrial Restructuring Corporation (CIRC) for its settlement in terms of State Bank Circular No.29 dated 15-10-2002---Expiry of time for approaching and availing benefit under "CIRC Settlement Scheme"---Effect---CIRC through such Scheme had invited f6r settlement against non-performance assets in line with State Bank Circular No.25---Once policy was announced and advertised through public notice, then all subsequent matters would have to be dealt with in line with such Circular---Question of pick and choose would not arise with regard to respective clauses of Circular, which would be applied in its entirety---Plaintiff had taken steps necessary to avail benefit under such Circular within time prior to expiry of date for availing benefit---Plaintiff had shown his bona fides by depositing 10% amount in Court--­Such Scheme specifically referred to action in line with said Circular---Delay, if any, was not attributable to plaintiff, who would be dealt with in same manner and in accordance with same guidelines, whether application was made to Bank or CIRC, both parties to suit---Plaintiff could not be deprived of benefit under such Scheme---In order to avoid further dispute between parties, appointment of Valuer might be made by State Bank in pursuance of S.10(1) of Corporate and Industrial Restructuring Corporation Ordinance, 2000 in line with State Bank Circular No.25--­CIRC might withdraw such amount of 10% within 30 days of finalization of valuation or earlier, if agreement for settlement under such Scheme was arrived at and executed between parties---Banking Court modified its order of reference of dispute to CIRC accordingly.

Faisal Arab for Plaintiff.

Abdul Qayoom Abbasi for Defendant No. 1.

Rizwan Ahmed Siddiqui for Defendant No.2.

Date of hearing: 2nd September, 2004.

2005 C L D 122

[Karachi]

Before Anwar Zaheer Jamali and S. Ali Aslam Jafri, JJ

Messrs LONG TERM VENTURE CAPITAL MODARABA---Appellant

Versus

Messrs STATE LIFE INSURANCE CORPORATION OF PAKISTAN---Respondent

First Appeal No.91 of 2002, decided on 1st April, 2004.

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

----Ss.3, 17, 21 & 22---Suit for recovery of amount---Award of costs and funds--- Suit filed by respondent-Corporation in the capacity of customer of appellant/financial institution was decreed in full with costs and costs of funds from the date of default till realization---Grievance of appellant financial institution was only in respect of awarding of costs of funds which, according to it, could not have been awarded by Banking Court---Validity---Banking Court under S.3(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was empowered to award costs of funds in favour of financial institutions and such privilege or benefit had not been conferred by statute to customer---Impugned judgment and decree of Banking Court to the extent of awarding of costs of funds in favour of respondent/customer, was liable to be set aside, however, to meet the ends of justice case was .remanded to Banking Court to decide within specified period whether in addition to money decree and costs of suit which was maintained, respondent/ customer was also entitled for any further sums towards compensation/mark-up/interest from date appellant had committed default in fulfillment of other obligations or for any other period.

Muhammad Rashid Khan for Appellant.

Sultan A. Allana for Respondent.

2005 C L D 133

[Karachi]

Before Shabbir Ahmed and Azizullah M. Memon, JJ

C.V. `LAMON BAY' and others---Appellants

Versus

SADRUDDIN and others---Respondents

Admiralty Appeals Nos.8 and 9 of 2003, decided on 30th March, 2004.

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

----Ss.3 & 7---Appeal against judgment passed in Admiralty suit---Stay of suit sought in appeal on plea of forum of convenience---Validity---Such plea would not be available at appellate stage for not having been raised during trial--­Such remedy, if not availed and trial of suit concluded, then such plea would not be available.

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

----Ss.3; 4 & 5--Non-accrual of cause of action within territorial jurisdiction of High Court---Effect---Admiralty jurisdiction could be invoked by an action in rem ---Once claim was entertainable under Admiralty jurisdiction, then irrespective of the fact that cause of action had arisen within territorial jurisdiction of High Court or not an action in rem could be entertained in Admiralty jurisdiction of High Court.

Global Shipping Co. (Pvt.) Ltd. v M.V Sea Elite and others 1985 CLC 1569 fol.

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

----S.3(2)(h)---Bill of lading---Agreement relating to carriage of goods.

Compagnie Continentale (France) S.A. v. Pakistan National Shipping Corporation and 2 others PLD 1986 Kar. 447; The Eschershim (1976) 2 Lloyds Law Reports 1; The Antonis P. Lemos (1983) Lloyds Law Reports 310 and Dada Steel Mills (Pvt.) Limited, Karachi v. M.V.I, Van and 2 others PLD 1992 Kar. 444 ref.

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

----S. 4(4)---Cause of action against offending ship and sister ship---Pre-conditions for invoking Admiralty jurisdiction--­Facts necessary to be pleaded by plaintiff highlighted.

Lord Dening in I Congreso del Parlido (1981) 1 All England Law Reports 1092 rel.

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

----Ss.3 & 4---Action in rem against ship---Plea for sister ship not pleaded between offending ships---Effect---In absence of such plea, claim with regard to offending ship could not be entertained in an action in rem against sister ship--­Ownership of offending ship not contested by defendant--­Consignor could maintain action in rem against offending ship in respect of claim arising out of consignment shipped thereon---Principles.

The Atlantic Star 1973 Vo1.2 All ER 175; Spiliada Maritime Corp. v. Cansulex Ltd. 1986 Vol. 3 All ER 843; M. V. Sea Success I v. Liverpool and London Steamship Protection and Indemnity Association Ltd. and another AIR 2002 Bom. 151 and The Permina 108 I Lloyds Law Report 308 ref.

R.F. Virjee for Appellants

Abul Inam for Respondents

Dates of hearing: 4th and 9th March, 2004.

2005 C L D 169

[Karachi]

Before Sabihuddin Ahmed and Muhammad Afzal Soomro, JJ

P.Q. CHEMICALS---Applicant

Versus

A.W. BROTHERS and others- --Respondents

H.C. A. No.97 of 2004, heard on 5th July. 2004.

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

----Ss.22(6), 15(11) & 19(7)(c)---Appeal---Scope---Sale of mortgaged property---Execution of decree---Provision of S.22(6) Financial Institutions (Recovery of Finances) Ordinance, 2001 restricts the right of appeal but is ex facie not- applicable to orders passed under S.15(11) or 19(7) of the Ordinance---Section 15(11) explicitly refers to disputes relating to sale of mortgaged properties while S.19(7)(c) stipulates that the Banking Court, may, in its discretion, proceed with the sale of mortgaged property if in its opinion the interest of justice so required---Such an order being a final order would be appealable.

(b) Review---

----Scope---Power of review, if available, is not dependant upon the absence of right to appeal.

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

----S.27---Civil Procedure Code (V of 1908), O. XXI, R.90 & S.12(2)---Banking Court could set aside a sale under O.XXI, R.90, C.P.C. notwithstanding the bar of S.27, Financial Institutions (Recovery of Finances) Ordinance, 2001--­Principles.

Baghpotee Services (Pvt Ltd v. Allied Bank Ltd 2001 CLC 1363 ref.

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

----Ss.27, 15 & 19---Civil Procedure Code (V of 1908), O.XXI, R.90 & O.XLVII---Execution of decree for sale of mortgaged property---Review application---Provision of O.XXI, R.90, C.P.C. provides that an application can only be entertained when the applicant deposits such amount as may be directed by the Court---By moving the Court under O.XLVII, C.P.C. the applicant in the present case, successfully avoided such order of deposit being made and-neither the application nor the impugned order nor the memo of appeal itself showed that at any stage such deposit was volunteered---Fact that a wrong provision of law was invoked due to bona fide error was doubtful, Court therefore was .justified in treating the application as one of review simpliciter under O.XLVII, C.P.C.---Mere reference to a wrong provision of law was inconsequential and the Court was always expected to consider the substance rather than mere form of the application.

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

----Ss.15, 19 & 27---Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), S.32---Civil Procedure Code (V of 1908), O.XXI, R.90---Execution of decree--Sale of mortgaged property---Application under O.XXI, R.90, C.P.C.---Rights and remedies of Corporate and Industrial Restructuring Corporation---Scope--Exclusive jurisdiction of Banking Court could be invoked in such matter. -

Subsection (1) of section 32 of Corporate and Industrial Restructuring Corporation Ordinance, 2000 provides that in respect of any Non Performing Assets, held by the Corporation it shall be entitled to exercise all rights and remedies available under several laws relating to Banking and the Companies Ordinance and its subsection (3) provides that all acts in exercise of the powers under the Ordinance and the remedies available thereunder shall be performed and pursued in accordance with the provisions of law mentioned in subsection (1). Moreover subsection (2) explicitly declares that the Corporation shall -be entitled to the rights, interest, benefits and privileges of the financial institutions and will also be subject to the legal liability, if any, of such institutions. Exclusive jurisdiction of a Banking Court in such matters could be invoked.

(f) Non-Performing Assets And Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance (LVIII of 2000)------

----Ss.4, 5, 6 & 8---Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), Preamble---Civil Procedure Code (V of 1908), O.XXI, R.90---Application under O.XXI, R.90, C.P.C.---Procedure and powers of High Court--­Scope.

Under section 4 of Non Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance, 2000 all proceedings relating to matters to which the Corporate and Industrial Restructuring Corporation Ordinance, 2000 applied were exclusively triable by the High Court and under section 6 even execution proceedings pending before a Banking Court were liable to be transferred to the High Court. It does. not necessarily mean that the High Court can only exercise its original civil jurisdiction and the provisions of the -Banking Laws would not apply. Section 5 which deals with the powers and procedure of the High Court explicitly mentions in clause b(iii) that in exercise of its Banking jurisdiction it will follow the procedure and have the powers of a Banking Court under the Banking Companies (Recovery of Loans, Advances, Credits and Finances), Act, 1997 (which now stands replaced) by the Financial Institutions (Recovery of Finances) Ordinance 2001. Moreover section 8 requires that when proceedings are transferred to the High Court under section 6 they are to be pursued under the respective laws under which they were originally filed.

(g) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)-----

----Ss.7(6) & 2(b)---Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance (LVIII of 2000), S.8---,Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), S.32---Prior to the promulgation of ,Corporation and Industrial Restructuring Corporation Ordinance, 2000 the matter in the present case was proceeding under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and fair assumption was that non performing assets were taken over by the Industrial Restructuring Corporation---Such proceedings continued under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 in view of S.32, Corporate and Industrial Restructuring Corporation Ordinance, 2000 and S.8 of the Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance, 2000 and upon the promulgation of Financial Institutions (Recovery of Finances) Ordinance 2001 such proceedings were deemed to be transferred to the Banking Court under S. 7(6) of the said Ordinance--­Expression "Banking Court" under S.2(b) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 includes a High Court in respect of claims exceeding Rs.50 Million, therefore the proceedings were always pending before the High, Curt, but in exercise of its Banking Court jurisdiction.

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

----Ss.7, 12, 15, 17 & 27--Civil Procedure Code (V of 1908), O.XXI, R.90---Execution of decree--Sale of mortgaged property---Application under O.XXI, R.90, C.P.C.---Scope--­Irregularity in the sale was noticed inasmuch as separate sealed tenders were invited but eventually both the properties were sold on the basis of single consolidated. offer---Question was whether the irregularity was material and of such nature which would vitiate the sale---Held, every sale was not liable to be set aside on account of fraud or irregularity, sale could be set aside only when it had been shown that the irregularity was material and had caused serious injury to the applicant---Any deviation from the terms of public notice, in circumstances, was justified.

Asma Zafarul Hassan v. UBL 1981 SCMR 108 ref.

(i) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----Ss.7, 15 & 27---Civil Procedure Code (V of 1908), O.XXI, R.90---Confirmation of sale of mortgaged property--­Application under O.XXI, R.90, C.P.C.---Court, apart from protecting interests of the decree holders and judgment debtors is - also required to protect the interests of third parties acquired before confirmation of sale---Such sale could not be declared to be void ab initio for want of notice to the applicant, there being no statutory provision in that regard.

Asma Zafarul Hassan v. UBL 1981 SCMR 108.; Collector of Sahiwal v. Muhammad Akhtar 1971 SCMR 681 and Sindh Employees Social Security Institution v. Dawood Cotton Mill PLD 1977 SC 177 ref.

Anwar Mansoor Khan and I.H. Zaidi for Applicant.

M. Ilyas Khan and Shoukat Hayat for Respondent No.1.

Nemo for Respondent No.2.

Dates of hearings: 14th, 26th 28th May 1st June and 5th July, 2004.

2005 C L D 186

[Karachi]

Before Sarmad Jalal Osmany and Amir Hani Muslim, JJ

Mst. IRSHAD YAMIN---Appellant

Versus

CITI BANK N.A. and 2 others---Respondents

First Appeal No. 55 of 2004, decided on 18th November, 2004.

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

-----Ss.19(7) & 22(2)---Civil Procedure Code (V of 1908), O.XXI, R.58 & O.XLI, R.5---Enough evidence in the shape of receipts had been filed before the Banking Court to show the ownership of attached movable property---Prima facie, such property belonged to the appellant and Banking Court did not have any power or lien to take action against such property---High Court directed that Banking Court shall not take further action regarding such property till the next date of hearing.

Salim Salam Ansari for Appellant.

Nemo for Respondent No. 1.

2005 C L D 187

[Karachi]

Before Anwar Zaheer Jamali and S. Ali Aslam Jafri, JJ

SAADAT HAYAT KHAN---Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED and others---Respondents

Ist Appeal No.24 of 2001, decided on 18th February, 2004.

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

----S.21---Limitation Act (IX of 1908), S.5---Appeal--­Limitation---Condonation of delay---Suit file was kept by the Presiding Officer of the Banking Court in his Chambers for more than eight months and thereafter, without any notice of any date of hearing in the suit or intimating the parties concerned about pronouncement of judgment, same was announced after eight months---In circumstances which were borne out from the record duly supported by the assertion of the appellant in his supporting affidavit and the rejoinder thereto, appellant had succeeded to make out his case for condonation of delay in filing appeal---No party shall be made to suffer due to the act or omission of the Court in the performance of its duties.

(b) Act of Court---

---- No party shall be made to suffer due to the act or omission of the Court in the performance of its duties.

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

----Ss.15, 18 & 21---Suit was decreed against the defendants including the appellant---Appellant was neither the guarantor nor he had executed any document in his personal capacity, to share the liability of the company­ Letters of hypothecation and letter of memorandum of deposit of title deeds were signed by the Directors of the company including the appellant---Such documents, indeed had been signed by the appellant but in his capacity as Director of the, Company, therefore, on the basis of said two documents the liability of the company could not be shifted to appellant in his personal capacity---Liability of the company could not ipso facto fall upon its Directors, who had no personal liability upon execution of documents on behalf of the company unless they had stood guarantors or executed other documents undertaking such liability as their personal liability in any capacity---Judgment and decree, to the extent it created any liability against the appellant, was set aside by the High Court---Rights created in favour of the decree-holder Bank on the basis of letter of hypothecation and memorandum of deposit of title deeds however shall remain enforced.

Abdul Sattar Pingar for Appellant.

Masood Shahreyar for Respondent No. 1

Salman Hamid for Respondent No.5.

2005 C L D 192

[Karachi]

Before Shabbir Ahmed and Khilji Arif Hussain, JJ

AHMED CONSTRUCTION COMPANY through ATTORNEY---Petitioner

Versus

HABIB BANK LTD., KARACHI and 2 others---Respondents

C. P. No.629 of 2003, decided on 12th May, 2004.

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

----Ss.7 & 9---Civil Procedure Code (V of 1908), O.XVII, R.1--­Constitution of Pakistan (1973), Art. 199---Grant of adjournment---Discretion of Court---Banking Court had discretion to grant adjournment either conditional or unconditional---Witness, in the present case, having come from Rawalpindi to Karachi, adjournment was rightly granted conditionally subject to costs to meet traveling expenses of witness---Discretion having properly been exercised by the Court, same could not be disturbed under Constitutional jurisdiction of High Court.

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

----Ss.7 & 9---Civil Procedure Code (V of 1908), S.12(2)--­Application under S.12(2), C.P.C.---Maintainability--­Application under S.12(2), C.P.C. was maintainable in proceedings emanating from Financial Institutions (Recovery of Finances) Ordinance, 2001.

Ch. Muhammad Iqbal for Petitioner.

K.B. Bhutto for Respondents.

Zia Kiyani for Respondents.

Ismail Merchant for Respondents.

Date of hearing: 12th May, 2004.

2005 C L D 193

[Karachi]

Before Zahid Kurban Alvi, J

BILAL SPINNING MILLS LTD. ---Plaintiff

Versus

BANK ALFALAH LIMITED through Chief Executive---Defendant

Suits Nos.375 of 2000 and B-16 of 2001, decided on 21st March, 2003.

Contract Act (IX of 1872)---

----S.52---Breach of contract---Suit fog damages by customer against Bank---Plaintiff had claimed that the failure of the Bank to abide by the Financial Settlement Agreement was a material breach that went to the very root of the restructuring and the consideration thereof and such breach by the Bank of the Financial Settlement Agreement had resulted in substantial losses to the plaintiff and it sought various reliefs in that behalf---Validity---Obligations of the customer, specified in the Agreement Were conditions precedent to the performance of any obligations on the part of the Bank---Order in which said obligations were to be performed was very clearly specified in the Agreement--­Agreement also laid down the time frame in which the customer was required to comply with the said conditions precedent---Provision of S.52, Contract Act, 1872 provided that reciprocal promises had to be performed in the order in which it was expressly fixed by the contract---Customer had failed to comply with the conditions precedent and therefore the question of the Bank allowing any concession to the customer under the Agreement did not arise--Bank, in circumstances, was within its rights not to allow the creation of the charge or to open the L/C---Bank could not unilaterally abide by the terms of the Agreement when the customer had committed repeated acts of default of the Agreement---Bank had already restructured the facility twice before and present was the third restructuring agreed in term of the Financial Settlement Agreement---Main principle for the award of damages was that the same should be proved with certainty which the customer had failed to do---Suit of the customer was dismissed in circumstances.

Macgregor on Damages 14th Edn., paras.861 and 862; Law of Damages and Compensation by C. Rao 3rd Edition Page.676; Unreported judgment dated 4-12-2000 in suit No.753 of 1995; Azeem. Food Industries Ltd. v. IDBP 1999 CLC 1915; S.L.I. Corp. Pak v. Bibojee Services Ltd. 1999 MLD 2750; Messrs Vinder Textile Mills Ltd. v. IDBP 1999 YLR 1188; Federation of Pakistan v. Messrs Al-Farooq Flour Mills Ltd. 2000 CLC 215; W.P. LDC v. Aziz Qureshi PLD 1973 SC 222; Muhammad Shafi v. Allah Dad Khan PLD 1986 SC 519; Sandoz Limited 1995 SCMR 1431; Syed Ahmed Saeed Kirmani v. MCB Ltd. 1993 SCMR 441 and Bashir Hussain Siddiqui v. Pan Islamic Steamship Co. Ltd. PLD 1967 222 ref.

Mushtaq A. Memon for Plaintiff.

Rashed A. Razvi for Defendant.

Dates of hearing: 14th, November, 12th, December, 2002, 14th, 16th, 30th, and 31st January, 2003.

2005 C L D 206

[Karachi]

Before Mushir Alam, J

BANK ALFALAH LTD. ---Applicant

Versus

Messrs BILAL SPINNING MILLS LTD. and another---Respondents

Execution Application No.16 of 2003, decided on 22nd April, 2003.

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

----Ss.27, 22 & 4---Civil Procedure Code (V of 1908), S.152—Finality of order of Banking Court---Amendment of judgments, decrees orders---Scope---Banking Court,, in terms of proviso to S.27 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, could only correct the clerical and typo-graphical mistake---Financial Institutions (Recovery of Finances) Ordinance, 2001 being a special law would have precedence over the general provision of law in terms of S.4 of the said Ordinance---Powers contained in S.152, C.P.C. being general law, provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001 would have overriding effect notwithstanding anything inconsistent contained in any other law for the time being in force---Even error of law or non-consideration of any particular provision by a Banking Court while rendering any decision, order, judgment or sentence could not be revisited by the Banking Court in view of limitation to exercise the jurisdiction as laid down under S.27 of the Ordinance--­Principles.

From a bare perusal of the proviso to section 27 of Financial Institutions (Recovery of Finances) Ordinance, 2001, it is crystal clear that the Banking Court may, do its own accord or on application of any party, "correct any clerical or typographical mistake in any judgment, decree, sentences or order passed by it". It is only the clerical and' typographical mistake that could be corrected by the Barking Court in terms of proviso referred to above. However, section 152, C.P.C. authorizes Court to correct "error arising from any accidental slip or omission" besides clerical or arithmetical mistake in the judgment, decree or order.

Financial Institutions (Recovery of Finances) Ordinance, 2001 is a special law, special provisions have precedence over the general provisions of law and in terms of section 4 of the Ordinance, 2001, provisions of the Ordinance, 2001 have overriding effect notwithstanding anything inconsistent contained in any other law for the time being in force. The power to correct the judgment decree or order as contained in section 152, C.P.C. being general law, in presence of proviso to section 27 of the Ordinance, 2001 which is special law, cannot be resorted to. The powers to correct judgment, order or sentence by a Banking Court, as can be seen from the provisos are confined to clerical or typographical mistake as against power to correct "error arising therein from any accidental slip or omission" available to Court under general law. As far as the powers of Banking Court are concerned, same are circumscribed by the provision of Ordinance, 2001 and even authority to revise, review, call or permit to be called in question any proceeding, judgment, decree, sentence or order of the Banking Court or the legality or, propriety of anything done or intended to be done by the. Banking Court could not be challenged or questioned except by resort to the Appellate Jurisdiction under section 22 of the Ordinance, 2001. Even error of law or non-consideration of any particular provision by a Banking Court while rendering any decision, order, judgment or sentence cannot be revisited by the Banking Court in view of limitation to exercise the jurisdiction as laid down under section 27. When the Legislature deliberately has placed a limitation on exercise of such powers, same cannot be drawn, extended or stretched by invoking provisions of general law as such exercise will defeat the very purpose of the Banking Ordinance, 2001.

Sher Muhammad v. Khuda Bux PLD 1961 (WP) Lah. 579 distinguished.

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

----Ss.19, 14 & 15---Execution of decree---No distinction for the purpose of execution in mortgage or money decree exists--Contention that money decree could not be executed by executing it against the mortgaged was repelled.

United Bank Limited v. Kyoto Capital Goods Fund (Pvt.) Ltd. Execution No.35 of 2001 ref.

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

----Ss.19, 7, 4 & 27---Civil Procedure Code (V of 1908), Ss.39, 51 & 152---Execution of decree---Jurisdiction of Banking Court---Scope and extent---No embargo exists in S.39, C.P.C. on the jurisdiction of the Banking Court to execute a decree or cause attachment in respect of properties falling outside its territorial jurisdiction--­Contention in respect of the properties which were beyond the territorial jurisdiction was barred in view of S.39, C.P.C. was repelled---Principles.

The jurisdiction of the Banking Court to execute the judgment and decree is exercisable in terms of section 19 of the Ordinance, 2001 "read with provisions of Code of Civil Procedure or any other law for the time being in force or in such manner as the Banking Court may, at the request of decree-holder, consider appropriate". Section 39, C.P.C. is merely enabling and procedural provision. It does not take away the jurisdiction of executing Court. It only outlines procedure of convenience to be employed by the executing Court to effectively execute the decree. In reading of the provision of section 39 of C.P.C., such powers are to be exercised either on the application of decree-holder or by the Court on its own motion and, not on the application of judgment-debtor. -There is nothing on record to suggest that the decree-holder had made any request for the transfer of a decree in respect of properties situated outside limits of the jurisdiction of the Banking Court. In terms of section 51, C.P.C. even the Court which had passed the decree may cause attachment and sale of any property of the judgment-debtor. There is no embargo in section 39;C.P.C. on the jurisdiction of the Banking Court to execute a decree or cause attachment in respect of properties falling outside its territorial jurisdiction. Even if it had been so, lapse could be corrected by invoking section 152 of C.P.C. as powers of Banking Court to correct the judgment and decree in terms of proviso to section 27 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 is limited to the correction of arithmetical or clerical mistake. Lapse, if any, of the Banking Court to consider any, provision of law while rendering order, judgment or sentence cannot be said to be clerical or typographical mistake, such lapse could not be corrected by invoking section 152,C.P.C. which, provision, in view of the overriding effect given to provisions of Banking Ordinance, 2001, in terms of section 4 of the Ordinance, 2001 cannot be invoked.

Muhammad Nazir v. Qaiser Ali Khan 2003 SCMR 436 distinguished.

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

----Ss.19(2) & 23(2)--Purported mistakes as to quoting S.19(2) of the Ordinance while the reference was intended to S.23(2) of the Ordinance was apparently a typographical error.

Rasheed A. Razvi for Applicant.

Mushtaq A. Memon for Respondents.

Dates of hearing: 10th and 11th April, 2003.

2005 C L D 214

[Karachi]

Before Ghulam Nabi Soomro and Ata-ur-Rehman, JJ

Messrs NATIONAL MOTORS LTD. ---Appellant

Versus

ALLIED BANK OF PAKISTAN---Respondent

Spl. H. C.A. No.2 of 2001, decided on (?).

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

----Ss.14, 15, 18 & 20---Civil Procedure Code (V of 1908), O.XXI, Rr.66, 64 & 22---Execution of decree---One of the properties (mentioned in the decree) which was owned by the judgment-debtor but was not mortgaged with the bank was subjected to execution---Court was to decide under O.XXI, R.62, C.P.C. as to what properties would be subjected to execution for the satisfaction of the decree--­Court under O.XXI, R.22, C.P.C. was legally bound to issue a notice to the judgment-debtor but it depended upon the facts and circumstances whether a notice was necessary or not---Court, in the present case, had not initially issued such notice but the subsequent order showed that the Executing Court was already conscious of the fact that substantial points were involved in the matter in respect of the properties attached and to be sold and therefore, Court provided an opportunity to the judgment-debtor to fill rejoinder, and place this case---Purpose of service of notice thus had, been served and no prejudice had' been caused to the judgment-debtor---Decree holder had not filed statement under O.XXI, R.66, C.P.C. giving approximate value of the attached properties to be sold---Judgment-debtor had stated that mortgaged properties were more than sufficient to satisfy the decree---Both parties had made claims and counter-claims in respect of the value of the ,mortgaged 'it properties but none had brought any evidence to show even the approximate value of the property---Executing Court, before passing an order of sale of the property which was not mortgaged should have under O.XXI, R.64, C.P.C. been satisfied that the other properties mortgaged by the judgment-debtor would not fetch sufficient amount to satisfy the decree which point, was not discussed in the impugned order---High Court, in appeal, ordered that the properties which were mortgaged be put to sale first and in case the sale proceeds were not sufficient to satisfy the decretal amount then the proceedings for sale of property not mortgaged be carried out---Such exercise to be undertaken by the Executing Court keeping in view the requirements of O.XXI, R. 64, C. P. C.

Takkaseela Pedda Subba Reddi v. Pujari Padmavathamma AIR 1977 SC, 1789; P. Samasundaram v. Ponnusamy and others AIR 1992 Mad. 71; Balu v. Periasami and others AIR 1988 Mad. 114 and Moirangthem Rajedra Singh v. The Manipur Administration and another AIR 1963 Manipur 47 ref.

Rasheed A. Razvi for Appellant.

Mansoorul Arifin for Respondent.

2005 C L D 219

[Karachi]

Before Ghulam Nabi Soomro and Ata-ur-Rehman, JJ

ZAFAR A. MALIK through Attorney---Appellant

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and 8 others---Respondents

High Court Appeal No. 166 of 1996, decided on (?).

Industrial Development Bank of Pakistan Ordinance (XXXI of 1961)-----

----S.39---Transfer of Property Act (IV of 1882), S.6--­Enforcement of claim by Bank---Attachment of property of guarantor---Transferable estate---When personal bond was executed by the guarantor she was not entitled to create any charge on the estate or to declare any part thereof as her own, at best she had an expectancy of inheriting the share in the property from her father who was still alive---Such an expectancy was not a transferable estate in view of S.6, Transfer of Property Act, 1882---Provision of S.39, Industrial Development Bank of Pakistan Ordinance, 1961 would apply to "property"­ Guarantor in the present case having no property interest in the attached property, .x.39 was not attracted---Case of the guarantor would not be affected by the fact that the other legal heirs had not approached the Court against attachment orders because her case was to be seen on its own merits---Appeal was allowed by the High Court, with observation that the Bank would be at liberty to proceed for the recovery of loans against the guarantor, in respect of any other property owned by her if so permitted by law.

Rasheed A Razvi and Ziaul Haq Makhoodm for Appellant.

A.I. Chundrigar along with Aziz ur Rehman for Respondents.

2005 C L D 264

[Karachi]

Before Shabbir Ahmed and Azizullah M. Memon, JJ

ENGLISH BISCUITS MANUFACTURERS (PVT.) LTD. and another‑‑‑Appellants

versus

MONOPOLY CONTROL AUTHORITY and others‑‑‑Respondents

M.A. No.7 of 2003, decided on 30th March, 2004.

(a) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.11 & 14‑‑‑Initiation of "proceedings" and "inquiry" contemplated under Ss. 11 & 14(2) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 respectively‑‑‑Object, pre‑conditions and distinction‑‑‑Such proceedings were conditioned with the satisfaction of Authority with regard to contravention of S.3 of the Ordinance and necessity of action in "public interest"‑‑‑Purpose of such proceedings was to check unreasonable monopoly power or unnecessary restrictive trade practices in public interest‑‑-Term "public interest" would mean something in which public at large had some interest or by which their rights or liabilities were affected, but would not mean interest of a particular person‑‑­Authority could conduct inquiry either of its own motion or upon reference of Federal Government or written complaint of not less than 25 persons‑‑‑Authority, if of opinion after conducting inquiry as to necessity of action in public interest, could initiate proceedings under S.11 of the Ordinance‑‑‑Expressions "proceedings" and "enquiry" neither defined in the Ordinance nor synonymous, rather latter was a step for the former‑‑‑Both such "proceedings" and "inquiry" were not meant for redressal of individual grievances, but could be initiated in "public interest".

(b) Words and phrases‑‑‑

‑‑‑‑"Enquiry"‑‑‑Meaning.

Judicial Dictionary, 13th Edition by K.J. Aiyar ref.

(c) Words and pbrases‑‑‑

‑‑‑‑"Proceedings"‑‑‑Meaning.

Judicial Dictionary, 13th Edn., by K.J. Aiyar and Black's Law Dictionary, page 1204 ref.

(d) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.11, 12, 14 & 20‑‑‑Initiation of enquiry on complaint‑‑­Dropping of enquiry and recall of show‑cause notice by Authority‑‑‑Appeal against such order ‑‑‑Maintainability‑‑­Order passed by Authority on complaint under S.14(2) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 could not be branded as an order, under S.11 thereof‑‑‑Statutory proceedings under S.11(1) and special enquiry contemplated under S.14(2) of the Ordinance were not same‑‑‑Orders passed under S.12, on conclusion of proceedings, were appealable in terms of S.20 on the point of law‑‑‑Impugned order was not an appealable order‑‑‑Appellant was neither an aggrieved person nor competent to file complaint being short of required number for filing complaint‑‑‑High Court dismissed appeal being not maintainable.

(e) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑S.14‑‑‑Complaint‑‑‑Aggrieved person‑‑‑Such complaint, if taken as information laid before Authority for initiation of proceedings, would not brand such informer as "aggrieved person".

(f) Words and phrases‑‑‑

‑‑‑‑‑" Aggrieved person"‑‑‑Meaning‑‑‑Such expression means a person, who has got a legal grievance i.e. a person, who is deprived of anything to which he is legally entitled and not merely a person, who suffered some sort of disappointment.

Shaiq Usmani for Appellants.

Zahid F. Ibrahim for Respondents.

Muneer A. Malik for Respondent.

Dates of hearings: 12th and 25th February, 2004..

2005 C L D 303

[Karachi]

Before Mushir Alam, J

Lt. Col. (Retd.) RIAZ MOHIUDDIN and others‑‑ ‑Plaintiffs

versus

KARACHI GYMKHANA CLUB and others‑‑‑Defendants

Suit No.451 of 2003, decided on 10th November, 2003

Karachi Gymkhana Club Rules‑‑‑

‑‑‑‑ Rr.12 & 17‑‑‑Election of President‑‑‑Both contesting candidates secured equal number of votes‑‑‑Annual General Election Body divided one year tenure of Presidential Office between such candidates equally for six months each‑‑­Validity‑‑‑Such decision was not alleged to be mala‑ fide or violative of principles of natural justice-‑‑Such decision of General Body would amount to relaxing, if not to varying R.12(7)(a)(vii) of Karachi Gymkhana Club Rules‑‑‑Right to repeal, vary or add to any rule or frame new Rules by virtue of R.17(e)(iii) was prerogative of Annual General Body Meeting, thus, no exception could be taken to such decision.

Sultan Ali v. Mst. Khatija Bai 1995 CLC 1441; Dr. Abu Baker Mumal v. Karachi Gymkhana Club and another 1990 MLD 1708; Abbas Khaleeli and others v. Saifuddin Valika and others PLD 1969 Kar. 692; Madina Masjid Committee and 3 others v. Anjuman Ghulaman‑e‑Mustafa through President and others 1993 CLC 2227; Muhammad Yousuf Qureshi v. Government of Sindh and others 1999 YLR 1224; Muhammad Yasin Fecto and another v: Muhammad Raza Fecto and 3 others 1998 CLC 237; D.M. Malik v. Jockey Club of Pakistan and others PLD 1960 (W.P) Kar. 325 and Raja Bahadur v. Mujtaba Hussain A Division Bench in AIR 1941 Oudh 422 ref.

Fais Arab for Plaintiffs

M. Zubair Qureshi for Defendants Nos and 2

Muhammad Saleem Mangrio for Defendant No.3

Ms. Sana Minhas for Defendant No.4.

Date of hearing: 29th May, 2003

2005 CLD 327

[Karachi]

Before S. Ali Aslam Jafri, J

NATIONAL BANK OF PAKISTAN ("NBP") and another‑‑‑Plaintiffs

versus

NORTHERN POLYETHYLENE LIMITED ("NPL") and others‑‑‑Defendants

Suit No. 1222 and C.M.A. No.9606 of 1999, decided on 25th August, 2004.

Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)‑‑‑

‑‑‑‑S.10(3)(4)(5)(12)‑‑‑Failure to file amended application for leave to defend suit within time specified under S.10(12) of Financial Institutions (Recovery of Finances) Ordinance, 2001 in accordance with requirements of subsections (3), (4)(a) to (d) and (5) thereof‑‑‑Effect‑‑‑Compliance of requirements for filing of amended application were mandatory in nature as non‑compliance thereof would entail penal consequences of rejection of leave application‑‑­Defendant having failed to file amended application without showing any plausible explanation therefore, would stand relegated to the same position as that of defendant, who had not filed such application.

Bankers Equity Limited and another v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931; Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406; Saudi‑Pak Industrial and Agricultural Investment Company (Pvt.) Limited v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170; Messrs Crystal Enterprises and 6 others v. Platinum Commercial Bank Limited and ,2 others 2002 CLD 868 and National Bank of Pakistan v. First Tawakkal Modaraba and others 2002 CLD 1018 rel.

Messrs Pakistan Industrial Credit and Investment Corporation v. Syed Ali Azher Naqvi and others in Suit No.B‑74 of 2000 ref.

Asif Fateh Shaikh for Plaintiffs

Mansoorul Arfin for Defendants Nos. l, 2 and 4

Izhar Mohammad for CIRC

R.F. Virjee for Defendant No. 12

Khuram Bashir for Defendant No. 16

2005 C L D 406

[Karachi]

Before Sarmad Jalal Osmany, J

JAHANGIR SIDDIQUI and 2 others‑‑‑Plaintiffs

versus

DALLAH ALBARAKA (U.K.,) LIMITED and 7 others‑‑‑Defendants

Suit No.886 and C.M. Nos.4424, 5284 of 2003, decided on 4th October, 2004.

(a) Central Deposit Company Act (XIX of 1997)‑‑‑

‑‑‑‑Ss.4(5) & 11‑‑‑Specific Relief Act (I of 1877), 5.12‑‑‑Civil Procedure Code (V of 1908), O.XXXIX, Rr.1, 2 & 4‑‑‑Contract Act (IX of 1872), S.2(b)‑‑‑Interim injunction, grant of‑‑­Necessary ingredients‑‑‑Specific performance of agreement‑‑­Interim stay, setting aside of‑‑‑Parties were shareholders in one company and dispute among the parties was with regard to sale and purchase of shares of the company at a specified price‑‑‑Claim of plaintiffs was that as per Shareholders Agreement between the parties, the shares of the company could not be sold by defendants to a third party and the same were to be sold to them at a specified price‑‑‑Validity‑‑‑Agreement between the parties revealed that where two parties would agree on the price of the shares which were to be disposed by one in favour of the other, it would have to be with the concurrence of the third party since its right of pre‑emption was involved‑‑­Concurrence of the third party was missing and there was nothing on record to establish that a route other than the provisions of Shareholders Agreement was adopted by the parties in order to create any right in favour of one of the plaintiffs for purchase of the shares‑‑‑Binding agreement was to consist of an offer, acceptance and consideration and unless all of such ingredients were present no one could claim a binding agreement against any other person‑‑­Correspondence exchanged between the parties did not amount to an agreement as the offer given to one of the plaintiffs was not acceptable to the defendant‑‑‑In order to obtain an injunction there must be a prima facie case, it must be shown that unless such injunction was granted it would result in irreparable damage to the plaintiffs and the balance of convenience should be in favour of granting the same‑‑‑Where any of such ingredients was missing the injunction could not be granted‑‑‑Plaintiffs did not have any prima facie case in their favour for the grant of injunction‑‑‑Interim injunction was not granted in circumstances.

Hysons Steel Mills Limited v. Trading Corporation of Pakistan PLD 1971 Kar. 492 and Pakistan State Oil Co. Ltd. v. Burmah Oil Co. Ltd. 1987 CLC 272 distinguished.

Bank of India Ltd. and others v. Jamsethji A.S. Chinoy and others AIR (37) 1950 PC 90; Jainarayan Ram Lundia v. Surajmull Sagarmull and others AIR (36) 1949 FC 211; Bindeshawar Narayan Singh and others v. Managing Committee, Shri Sundar Lai Hindi High School and others AIR 1982 Guhati 69; Shaikh Muhammad Taqqi v. Muhammad Anwar Khan Ghori 1983 CLC 1085; M/s. Muhammad Siddiq Muhammad Umer v. Australasia Bank PLD 1966 SC 648; Abdul Rahim v. U.B.L. PLD 1977 Kar.62; Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation Ltd. PLD 1971 SC 550; Sanwarmal Goenka v. Soumyendra Chandra Gooptu AIR 1981 Cal. 37; Khyam Films v. Bank of Bahwalpur Ltd. 1982 CLC 1275; Muhammad Rafique v. Bawany Sugar Mills Ltd. 1999 MLD 3273; Fazal Rehman v. Khursheed Ali 2004 CLC 359 and Manager Jammu and Kashmir, State Property v. Khuda Yar PLD 1975 SC 678 ref.

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

‑‑‑‑O.XXIX, R.1‑‑‑Suits by or against Corporations‑‑­ Authority‑‑‑ Scope‑‑‑ Competence/authority of a person to file suits/written statement before the Court has not been addressed in O.XXIX, RA C.P.C.‑‑‑Where the authority is challenged, the person claiming to have authority must establish the same‑‑‑Normally the same is done by production of a power of attorney from the board of directors of a company as authorized by Articles of Association to deal with all legal matters including filing/ defending of suits and other proceedings in a Court of law.

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

‑‑‑‑O.XXIX, R.1‑‑‑Suit against Corporation‑‑‑Authority of representative of corporation, assailing of‑‑‑Prima facie it had been established that the person appearing on behalf of defendant corporation had the authority from its directors to file written statements on their behalf and so also could swear counter affidavits in Court‑‑‑As the objection regarding the authority had been taken by the plaintiffs, it would only be just and proper to frame issue in such regard and an opportunity be given to the defendants to lead evidence in order to prove such authority in their favour.

Muhammad Ali Saeed for Plaintiff No. 1.

Iqbal L. Bawany for Plaintiffs Nos.2 and 3.

Sajid Zahid for Defendants Nos. l to 3.

Nadeem Azhar Siddiqui for Defendants Nos. l to 6.

Farhatullah holding brief and Rasheed A. Rizvi for Defendant No.7.

Dates of hearing: 15th, 18th, 22nd, 26th, 30th March and 2nd, 9th, 28th April and 31st May, 2004.

2005 C L D 422

[Karachi]

Before Mushir Alam, J

NATIONAL BANK OF PAKISTAN‑‑‑Decree‑holder

versus

Messrs PAKSACO LIMITED‑‑‑Judgment‑debtor

C.M.A. No. 188 of 2004 in Execution Application No.75 of 2002, decided on 4th June, 2004.

(a) Corporate and Industrial Restructuring Corporation Ordinance (L of 2000)‑‑‑

‑‑‑‑S.18‑‑‑State Bank of Pakistan BPD's Circular No.29 of 2002‑‑‑Corporate and Industrial Restructuring Corporation had offered a scheme for amicable settlement of non-­performing assets in line with State Bank of Pakistan BPD Circular No.29 of 2002, dated 1 S‑10‑2002 with immediate effect‑‑‑Paragraph 12 of the BPD Circular Nb.29 revealed that, borrower availing the incentive scheme was required to make at least 10% cash down payment of settled amount at the time of signing of agreement and the remaining amount had to be paid rte, instalments at least on quarterly basis within a maximum period of 3 years from the date of signing of agreement‑‑‑Impact‑‑‑Once the Corporation had invited borrowers to avail the incentive settlement scheme representing to be in line with BPD Circular No.29, then in all fairness, equity and under law Corporation was bound by the offer made by it and accepted by the judgment-debtor/borrower, more particularly when the borrower without reservation paid 10% down payment of the forced sale value as demanded‑‑‑Payment of 10% cash down payment of settled amount was condition precedent to enter into an agreement‑‑‑When such payment was made by the borrower and accepted by the Corporation a binding contract came into existence and as per the Scheme remaining amount could be paid in instalments at least on quarterly basis within a maximum period of 3 years from the date of signing of agreement‑‑‑Corporation could not be allowed to go hot and cold in the same breath‑‑‑When the Scheme by the Corporation was represented to be in line with BPD Circular No.29 then Corporation could not be allowed to follow the part of clause 12 of the said Circular that suited it and refuse to follow the part that favoured or facilitated the borrower in liquidating his liability‑‑‑If the Corporation did not adhere to the commitment and representation made by it in its incentive scheme that would not only shatter the confidence of the distress enterprises that opted for the Scheme but would also be in negation of the declared object and purpose of the Corporate and Industrial Restructuring Corporation Ordinance, 2000‑‑­Corporation was directed by the High Court to follow the agreement in terms and in consonance with BPD Circular No.29 within 2 months setting out Schedule of payment of the remaining amount in instalments at least on quarterly basis within a maximum period of 3 years from the date of signing' of agreement ‑‑‑Judgment debtor was to pay remaining amount as may be determined by the Corporation in line with BPD Circular No‑ 29.

(b) Interpretation of statutes‑‑‑

‑‑‑‑ Incorporation or adoption by reference of certain statutory provisions, stipulations, terms and conditions of other statutory or commercial instruments‑‑‑Object and impact illustrated.

It is accepted norm and practice in the Legislative as well as in commercial instruments that certain statutory provisions, stipulation, terms and conditions of other statutory or commercial instruments are incorporated or adopted by reference. Such is ‑for the sake of convenience to avoid repetition and verbosity and to keep the Legislative or commercial instruments precise and of convenient length. Adopted provision of the statutory or commercial instrument is reckoned very much part of the principal instrument in which it is adopted by reference. Terms and conditions of the adopted provisions or the instrument have the same force and could be enforced as the terms and conditions of the principal instrument itself. Adoption by reference of other instruments or any part thereof is generally made where such instrument by and large is acceptable and generally followed. Best example that could be cited is in cases of mediation clause in commercial transaction by reference rule of arbitration of various regional and internationally acknowledged trade bodies and associations are not only adopted but enforced by the parties as well as by the Court. For instance parties may agree by reference to follow model rules and regulations of `Arbitration Courts of Chamber of Commerce and Industry, Geneva', London Maritime Arbitration Association Terms, PNI Club, ICC International Court of Arbitration etc. to name a few. (p. 427) B

(c) Corporate and Industrial Restructuring Corporation Ordinance (L of 2000)‑‑‑

‑‑‑‑Preamble‑‑‑Object and scope of the Ordinance.

The Corporate and Industrial Restructuring Corporation Ordinance, 2000 is a beneficial legislation, promulgated in the public interest to deal with financial institutions and their assets. To assist the business sector by dealing with distressed enterprises and to promote the rehabilitation of national economy by making provisions for the acquisition, restructuring, rehabilitation, management disposition and rationalization non-­performing loans and other assets of various banks and financial institutions and for matters ancillary thereto. In case CIRC does not adhere to the commitment arid representation made by it in its incentive scheme, it would not only shatter the confidence of the distress enterprises that opted for the scheme but would also be in negation to the declared object and purpose of the Ordinance, 2000.

(d) Corporate and Industrial Restructuring Corporation Ordinance (L of 2000)‑‑‑

‑‑‑‑Ss.35, 39 & 18‑‑‑Corporation, in terms of S.35 of the Ordinance has a life of six years from the date of Corporate and Industrial Restructuring Corporation Ordinance, 2000 which may be extended by the Federal Government by law‑‑‑No provision exists in the Ordinance which restrains the Corporation from undertaking any task or business as specified under S.18 thereof that may materialize or spread over a period beyond its life‑‑‑In terms of S.39 of the Ordinance, to meet any such exigency reservation of the authority with the Federal Government to remove the same by order published in the official Gazette is purposeful‑‑­Contract entered by and between the parties when they are competent to do so is not only binding on the parties concerned but also binds their successors‑‑‑Even in terms of winding up of the Corporation vesting of its assets and liabilities is provided for in terms of S.35 of the Ordinance.

Khalid Javed for CIRC.

Ms. Soofia Saeed and Jehangir Kazi for Judgment debtor.

Date of hearing: 4th June, 2004.

2005 C L D 430

[Karachi]

Before Sabihuddin Ahmed and Muhammad Afzal Soomro, JJ

ENGLISH BISCUITS MANUFACTURERS (PRIVATE) LIMITED (EBM) and 6 others‑ ‑‑Appellants

versus

ASSOCIATED BISCUITS INTERNATIONAL LIMITED through Attorney‑‑‑Respondent

H.C.A. No.59 of 2003, heard on 7th May, 2004.

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

‑‑‑‑Ss.290 & 86‑‑‑Valuation of shares‑‑‑Allegation was that purchase of shares which was being made at an' exorbitantly high price was fraudulent and intended to oppress minority shareholders‑‑‑Validity‑‑‑Company Judge could not declare the decision of Board of Directors with regard to further issue of shares to finance the acquisition of shares and all actions in pursuance thereof to be illegal and of no legal effect‑‑‑High Court, in appeal against directions by the Company Judge, took no exception in principle to directions of the Company Judge that valuation of shares be made afresh through independent valuator/ auditor to be engaged at the expenses of the Company, and on the basis of valuation fixed by the auditor, the shares be purchased from the finance obtained by issuance of right shares, the appellants be offered to purchase shares in terms of S. $6, Companies Ordinance, 1984 and in case the appellants wished to acquire right shares (after the revised valuation) they need to put to terms for the time being; that the appellants deposited an amount on the basis of specified price per share by way of an interim measures which would be adjusted against the final price of shares determined after fresh valuation, such deposit was ordered to be made within 30 days from the date of present judgment‑‑‑Division Bench of High Court further modified the order of the Company Judge to the effect that the Official Assignee would cause a fresh valuation by appointing suitably qualified and independent Auditors/Accountants to carry out the valuation of shares and determine fair market value without interference from any of the parties in appeal; in case any information or document was required by the Official Assignee or Accountants/ Auditors from the appellant Company or from any other source, proper notice would be given to the parties to enable them to examine the information furnished and object to its authenticity/ correctness‑‑‑Valuation would be carried out as expediously as possible preferably within three months and that respondent would deposit 75% (15/20) of the amount claimed by the original Company for financing right shares with the Nazir of the Court within thirty days from the date of present judgment.

(b) Contempt of Court Ordinance (V of 2003)‑‑‑

‑‑‑‑S.7‑‑‑Companies Act (XLVII of 1984). Ss.290 6s 86‑‑­Contempt of Court‑‑‑Order passed by the Court by way of an effort to ensure the proper functioning of the Company, not complied with‑‑‑Penalty was imposed for contempt by the Company Judge‑‑‑Validity‑‑‑High Court, in appeal, expressed strong disapproval of such conduct and observed that it might not be desirable in circumstances, to impose any sentence of imprisonment and set aside the penalty imposed for contempt.

Muhammad Sadiq Leghari's case PLD 2002 SC 1033 fol.

Muhammad Shaiq Usmani for Appellants Nos. 1 and 7.

Aziz A. Munshi for Appellants Nos.2, 4 and 5.

Syed Sharifuddin Pirzada for Appellants Nos. 3 and 6.

Zahid F. Ibrahim for Respondents.

Date of hearing: 7th May, 2004.

2005 C L D 444

[Karachi]

Before Anwar Zaheer Jamali and Gulzar Ahmed, JJ

MUSHTAQ AHMED VOHRA‑‑‑Appellant

versus

CRESCENT INVESTMENT BANK LIMITED‑‑‑Respondent

First Appeal No.59 of 2002, decided on 15th June, 2004.

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

‑‑‑‑Ss.18 & 22‑‑‑Documents on record revealed that three separate loan accounts were being maintained by the three Sponsor Directors of Company in their respective names and they were separately disbursed the amount of facility by the Bank and that they had also signed and executed separate agreement and security documents for respective facility allowed to them‑‑‑Contention of the defaulting Director was that all three accounts be considered as one transaction and the payment made against such three transactions be considered as payment of total dues to the Bank and Bank having received amount in excess to what was found due in settling the account of one of the Directors, the Director in default was entitled to adjustment from said excess payment in the account of other Director‑‑‑Validity‑‑‑Held, three accounts of the Sponsor Directors could not be considered as one transaction and that one Director was not entitled to adjustment from the alleged excess payment in the account of one Director‑‑‑Bank had not filed suit against the said other Director and there was no lis before the Court in respect of her loan‑‑‑No principle of law existed on the basis of which the amount in one account could be transferred for the settlement of another account more so when conscious payments had been made in specific account.

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

‑‑‑‑Ss.9 & 22‑‑‑Facility of finance, in the present case, was granted for a period of six months which as per Bank's own pleadings was maturing on 16‑6‑1994 and the amount payable on maturity by the borrower to be the Bank was to Rs.3, 759, 795 inclusive of all charges‑‑‑Breakup of the account filed by the Bank showed that the Bank had continued to charge mark‑up beyond the agreed period and it also reflected charging of mark‑up over mark‑up--- Validity‑‑‑Held, charging of mark‑up beyond agreed period and mark‑up over mark‑up were not allowed by law, similarly no extension roll over or renewal was allowed law without actual disbursement and such extension, over or renewal was without consideration and thus void.

Textile Management (Pvt.) Limited v. N.I.T. 2002 CLD 276; Agricultural Development Bank of Pakistan v. Jasarat Hussain 2002 CLD 93; Allied Bank of Pakistan Limited, Faisalabad v. M/s. Aisha Garments and others 2001 MLD 1955; National Bank of Pakistan v. Punjab Buildings Products Ltd. PLD 1998 Kar. 302; United Bank Limited v. Ch. Ghulam Husaain 1998 CLC 816; United Bank Ltd. v. M/s. Gravure Packaging (Pvt.) Ltd. 2001 YLR 1549 and Habib Bank Limited v. M/s. Qayyum Spinning Limited 2001 MLD 1351 ref.

Faisal Arab for Appellant.

Mehmood Ahmed Khan for Respondent.

Date of hearing: 5th March, 2001.

2005 C L D 454

[Karachi]

Before Shabbir Ahmed and Muhammad Mujeebullah Siddiqui, JJ

A.F. FERGUSON & CO. through Partner‑‑‑Appellant

versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN through Chairman and another‑‑‑Respondents

High Court Appeal No.102 of 2004, heard on 29th September, 2004.

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

‑‑‑‑S.34(4)‑‑‑Companies Ordinance (XLVII of 1984), Ss.252, 253 & 254‑‑‑Code of Corporate Governance, Item XLI [Securities and Exchange Commission's Notification No.2(10)SE/SMD/2002, dated 28‑3‑2002]‑‑‑Securities and Exchange Commission's Directive No.13/SEC/CSM/2001 dated 10‑5‑2002, Cl. (vii)‑‑‑Civil Procedure Code (V of 1908), O.XIV, Rr. l & 3‑‑‑Specific Relief Act (I of 1877), Ss.42 & 54‑‑­Constitution of Pakistan (1973), Art.18‑‑‑Vires of directive issued by Securities and Exchange. Commission of Pakistan relating to requirement of changing external auditors every five years by the listed companies‑‑‑Suit for declaration and mandatory injunction‑‑‑Contentions of the plaintiff, a partnership firm of Chartered Accountants, were that Item NO.XLI of the Code of Corporate Governance and CI. (vii) of the Directive of the Commission dated 10‑5‑2002 were ultra vires of S.34(4) of the Securities and Exchange Ordinance, 1969 and also in violation of Ss.252, 253 & 254, Companies Ordinance, 1984; that the operation of Item XLI of the Code of Corporate Governance and Cl.(vii) of the Directive by the Commission ‑be suspended being, ultra vires of S.34(4) of the Securities and Exchange Ordinance, 1969 and in contravention of Ss.252, 253 & 254, Companies Ordinance, 1984 and that a permanent mandatory injunction be issued restraining the Commission from directly or indirectly restraining the client of the plaintiff from exercising its rights guaranteed under Art.18 of the Constitution‑‑‑Suit was dismissed and application for injunction was rejected‑­Contentions of the plaintiff in the High Court appeal, inter alia, were that the Single Judge had failed even to consider the plain language, scope and intent of S.34(4) of the Securities and Exchange Ordinance, 1969 to ascertain whether Item No.XLI of the Code was intra vires/ultra vires and had concluded that the law enforced was in public interest and therefore could not be deemed to be ultra vires the Constitution or any other provisions of Companies Ordinance, 1984; that Single Judge had examined the state of affairs in several other countries which was not required to be considered in the suit and that Single Judge had failed to consider or to give effect to the consequences arising from the Commission's failure to file any counter‑affidavit or written statement in the suit‑‑‑Held, normal course specified in the law had been deviated in the present case which had resulted in the grievance that the main controversy and contentions had been overlooked and the suit had been decided on extraneous considerations‑‑‑Record showed that the matter had been decided in undue haste‑‑‑No counter affidavits or written statements had been filed by the Commission and the Stock Exchange‑‑‑No preliminary issue was formed before the hearing of final arguments with the result that the situation was fluid and the arguments were mainly addressed on the point whether the impugned direction was in public interest and was beneficial to the shareholders of the Company/ Stakeholders and what were the measures taken in several other countries for protecting interests of shareholders‑‑‑Main issue alleged by the plaintiff/ appellant, to wit, the Item No.XLI of the Code was ultra vires the provisions contained in S.34(4) of Securities and Exchange Ordinance, 1969 was totally eclipsed‑‑‑If the normal course had been adopted, written statements had been filed by the defendants and thereafter preliminary issues on the point of law had been framed, then such situation would not have arisen‑‑‑Wisdom in the procedure provided in law has stood the test of time which should not be deviated from otherwise consequences were bound to take place as in the present case which, in circumstances, was a fit case which should be remanded to the Single Judge with the direction that the defendants be directed to file their written statements, whereafter the issue of law be framed and then arguments be heard afresh which should be confined to point raised in the pleadings‑‑‑No extraneous contentions be considered so that the focus of attention was the point which was alleged in the pleadings and on which the parties were at variance which was imperative for the right decision on the point requiring adjudication‑‑‑Impugned judgment of Single Judge and decree was set aside and case was remanded to the Single Judge for fresh proceedings in the manner directed in the present judgment.

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

‑‑‑‑O.XIV, Rr.1, 2 & 3‑‑‑Decision of entire suit on preliminary issues‑‑‑‑Guidance provided in O.XIV, C.P.C. elucidated.

The provisions in Civil Procedure Code, permit decision of entire suit on preliminary. issues of law but for that purpose also guidance have been provided in Order XIV, C.P.C. It is provided in rule 1(4) of Order XIV, C.P.C. that issues are of two kinds; (a) issues of fact, (b) issues of law. It is provided in Order XIV, rule 1(5) that, at the first hearing of the suit the Court shall, if after reading the plaint and the written statements, if any, and after such examination of the parties as may appear necessary, ascertain upon what material propositions of fact or of law the parties are at variance, and shall thereupon proceed to frame and record the issues on which the right decision of the case appears to depend. It is further provided in Order XIV, rule 2 that, where issues both of law and fact arise in the same suit, and the Court is of opinion that the case or any of its part can be disposed of on the issues of law only, it shall try those issues first.

Perusal of Order XIV, rules 1, 2 and 3, C.P.C. shows that the allegations made on oath by the parties or by any person present on their behalf or made by the pleader of such parties, or allegations made in the pleadings and the contents of documents produced by either party, may form basis for framing the issues.

Zahid F. Ibrahim for Appellant.

Anwar Mansoor Khan and Asim Mansoor for Respondents Nos.1 and 2.

Date of hearing: 29th September, 2004.

2005 C L D 463

[Karachi]

Before Zia Perwaz, J

REGISTRAR OF COMPANIES‑‑‑Petitioner

versus

PAKISTAN INDUSTRIAL AND COMMERCIAL LEASING LIMITED and 30 others‑‑‑Respondents

J. M. No. 52 of 2001, decided on 24th November, 2003.

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

‑‑‑‑Ss.290, 291, 292, 293, 294, 295, 230(7) & 492‑‑‑Leasing Companies (Establishment and Regulation) Rules, 2000, Rr.7(1)(ix), (2)(xii) & 19‑‑‑Prevention of oppression and mismanagement‑‑‑Petition was moved by Registrar of Firms, in his capacity as an officer of the Securities and Exchange Commission of Pakistan, against a Leasing Company alleging that special audit report had revealed that affairs of the Company were being conducted in unlawful and fraudulent manner and in a manner oppressive to the members and creditors and prejudicial to the public interest, that the approval of new Directors of the company had not been accorded by the Registrar and in that connection three show‑cause notices were issued to the company under various provisions of the Companies Ordinance, 1984; that the company had failed to take corrective measures; that before invoking the jurisdiction of High Court under 5.290 Companies Ordinance, 1984, the company teas provided all the opportunities required under the provisions of the relevant Rules; that the company had violated R.19 of Leasing Companies (Establishment and Regulation) Rules, 2001 which provided for information to be furnished to the Registrar; sections 230(7) and 492, Companies Ordinance, 1984 had also been invoked whereby the petitioner had sought the orders of the High Court under 5.290 of the Companies Ordinance, 1984; that present case being the first of its nature the Registrar had exercised restraint in not proceeding for the winding up of the company with the object to encourage growth of economic and financial activities and thus had made the prayers that Board of Directors, including the Chief Executive, of the Company be superseded to vest all powers of the Board of Directors and Chief Executive of the Company in a person appointed by the High Court to be competent/ qualified to handle the affairs of the company (the Administrator); that direction be issued that all assets, documents, records and instruments of the company be given under the custody and control of the Administrator to ascertain the true position relating thereto and to ascertain the true ownership of the majority shares of the company and that pass such consequential orders as may from time to time be required in order to regulate the affairs of the company and to terminate/set aside any and all arrangements/ contracts which might have been prejudicial to the interest of the members and creditors of the company‑‑‑Validity‑‑‑All the allegations levelled by the Registrar were not denied by the company and it had simply stated that all the allegations pertained to the period when the present management had no concern whatsoever with any of the allegations‑‑‑If a series of violations were committed and were not redressed on the pointation of the relevant authority, then it would mean that the affairs of the company were deliberately being conducted in an unlawful and fraudulent manner as well as in a manner not provided for in the Memorandum and Articles of the Company‑‑‑Affairs of the company and not the management were relevant; if a set of persons was replaced by another set of persons, the same would not validate all the invalid acts committed by the outgoing persons ‑‑‑Sufficient material was available on record to show the continuous and flagrant violations of the Rules‑‑‑Mere fact that the penalties as provided for breach and non‑compliance of such rules might be a valid objection in case of a solitary or few isolated violations rectified in time but could not be set up as a defence to a petition filed by the Registrar in exercise of his powers in a case of continuing violations of the said rules and compounded by successive changes in the management, one after the other, each one of which was without prior approval of the competent authority‑‑‑Such a case called for an effective action and the Registrar would be failing in his duties if not approaching the Court for necessary remedial action as provided by the law in appropriate cases‑‑‑Held, present petition was maintainable and the action provided for the violation of the conditions regarding the imposition of various fines and penalties for specific violations did not bar the institution of proceedings in the nature of the present petition in cases involving repeated violations‑‑­Present case, however, involved increase in the paid‑up capital of the company which might not be possible for the appointed Manager/Administrator to accomplish under the normal circumstances and the steps and procedure involved the issuing of the relevant notice, holding of meetings with the shareholders, if necessary, and obtaining the requisite permission‑‑‑High Court in circumstances, allowed time to the company for compliance of all the formalities complained of in the present petition and to bring the affairs of the company strictly in accordance with the Rules within a period of 12 months from the date of present judgment at the same time, Registrar might take appropriate steps to move the High Court after expiry of the period of 12 months without indulging afresh in the exercise of issue of show­cause notice if no satisfactory progress was made during the period.

Sabur Rehman and another v. Government of Sindh and others PLD 1996 SC 801; Robin Hollington, Minoritv Shareholders' Rights, Second Edition, Sweet and Maxwell, London, 1994 p.46; Shahbazuddin Chaudhry v. Service Industries Textile Limited PLD 1988 Lahore 1; Re Five Minute Car Wash Service, Ltd. (1996] 1 All. ER 242; Shanti Prasad Jain v. Kalinga Tubes Ltd. (1965) 35 Company Cases 351; Muhammad Anwar Manoo v. Muhammad Waqar Manoo 1987 CLC 1943; Shaheen Foundation v. Capital F.M. (Pvt.) Ltd. 2002 CLD 188; Muhammad Fikree v. Fikree Development Corporation Ltd. 1992 MLD 668; V.M. Rao v. Rajeswari Ramakrishnan (1987) 61 Company Cases 20; Palghat Exports v. T.V. Chandran (1994) 79 Company Cases 213; Rajahmundrl, Electric Supply Corportion v. Nageshwara Rao AIR 1956 SC 213; Rohtas Industries Ltd. v. S.D. Agarwal and another AIR 1969 Supreme Court 707, (V 56 C 135) and Pakistan WAPDA and others v. Kot Addu Power Co. Ltd. PLD 2000 Lah. 461 ref.

Muhammad Fikree v. Fikree Development Corporation Ltd. 1992 MLD 668 distinguished.

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

‑‑‑‑S.290‑‑‑Prevention of oppression and mismanagement‑‑ Application to Court‑‑‑Order under S.290 of the Companies Ordinance, 1984 can only be made when the application/petition does not raise any disputed questions of fact and highly complex matters and cases of a highly technical nature are not required to be determined and adjudicated under S.290‑‑‑Order under S.290 must therefore, only be made in the clearest of cases‑‑‑Where the allegations against the company were rebutted, such case was not the clearest one.

Muhammad Anwar Manoo v. Muhammad Waqar Manoo 1987 CLC 1943; Shaheen Foundation v. Capital F.M. (Pvt.) Ltd. 2002 CLD 188 and Muhammad Fikree v. Fikree Development Corporation Ltd. 1992 MLD 668 ref.

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

‑‑‑‑ Ss.290 & 305‑‑‑Prevention of oppression and mismanagement‑‑‑Application to Court‑‑‑Order under S.290 Companies ordinance, 1984 cannot be passed unless the facts proved are such that they would also justify the passing of order for winding up of the company‑‑‑Provision of 5.305 Companies Ordinance, 1984 enumerates the grounds on which a company may be wound up.

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

‑‑‑‑S.305‑‑‑Winding up of company‑‑‑Ground‑‑‑Provisions of 5.305, Companies Ordinance, 1984 reveal that a company may be wound up if the company is carrying on unlawful or fraudulent activities in the conduct of its business.

(e) Leasing Companies (Establishment and Regulation) Rules, 2000‑‑‑

‑‑‑‑Rr.7(1)(ix), (2)(xii) & 19‑‑‑Incumbent on a leasing company to obtain prior approval of the Securities and Exchange Commission if it wants to bring any changes in its Board of Directors or change the Chief Executive‑‑‑Contention that the Registrar had "not rejected the approval" for the appointment of new Directors was illogical as it was for. the company to obtain approval from the Registrar prior to the appointment and not afterwards‑‑‑Chief Executive of the company having not been approved by the Securities and Exchange Commission, could only be said to be unlawfully occupying his position.

(f) Companies Ordinance (XL VII of 1984)‑‑‑

‑‑‑‑S.290‑‑‑Prevention of oppression and mismanagement‑‑­Application to Court‑‑‑Intent of legislature seems to be that where an isolated breach of a provision of the Companies Ordinance, 1984 occurs, the violator would be punished by the penalty provided for such gross violation‑‑‑If, however, a series of violations are committed and are not redressed on the pointation of the relevant authority, then it would mean that the affairs of the company are deliberately being conducted in an unlawful and fraudulent manner as well as in a manner not provided for in the Memorandum and Articles.

(g) Companies Ordinance (XLV1I of 1984)‑‑‑

‑‑‑‑S.290‑‑‑Object of S.290, Companies Ordinance, 1984‑‑­Provision of S.290 Companies Ordinance, 1984 is intended to avoid winding up, if possible, and keep the company going while, at the same time, taking remedial measures to cure mismanagement of the company.

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

‑‑‑‑S.290‑‑‑Prevention of oppression and mismanagement‑‑‑Locus standi to file petition under S.290, Companies Ordinance, 1984‑‑­Scope.

A perusal of the provisions of the section 290 of the Companies Ordinance reveals that it confers right on three persons, namely, (i) Member or members, holding not less than twenty per cent of the issued share capital of a company, (ii) creditor or creditors, having interest equivalent in amount to not less than twenty per cent of the paid‑up capital of the company, and (iii) the registrar, to make an application to the Court under this section. And if the Court finds it that the allegations contained in the application are correct, then the Court, with a view to bring to an end the matter complained of, can take following steps: (i) make such order as it thinks fit for regulating the conduct of the company's affairs in future, or (ii) for the purchase of the shares of any members of the company by other members of the company, or (iii) such purchase of shares by the company.

Thus, section 290 of the Ordinance, envisages that three persons, namely (i) a shareholder, (ii) a creditor, or the Registrar, can file an application under this section.

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

‑‑‑‑5.290‑‑‑Prevention of oppression and mismanagement‑‑­Application to Court‑‑‑Held, it was the affairs of the company which were relevant and not the management‑‑‑If a set of persons was replaced by another set of persons, the same would not validate all the invalid acts committed by the outgoing persons.

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

‑‑‑‑S.290‑‑‑Prevention of oppression and mismanagement‑‑­Application to Court‑‑‑Scope‑‑‑Petition filed under S.290, Companies Ordinance, 1984 in the present case, was not affected by the manner of shareholders or creditors but it was filed by the Registrar on account of the violations of Rules, as such the provision as to 20% of creditors had no bearing on the merits of the petition.

Qazi Faez Isa for Petitioner.

Arshad Tayebaly for Respondent No. 1.

Nadeem Akhtar for Respondents Nos.2 to 30.

Yawar Farooqui for Respondent No. 31.

Date of hearing: 26th August, 2003.

2005 C L D 491

[Karachi]

Before Muhammad Sadiq Leghari, J

HABIB BANK LTD. ‑‑‑Plaintiff

Versus

ALI MUHAMMAD ‑‑‑Defendant

Suit No.76 of 2003, heard on 4th November, 2004.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑Ss. 9 & 20‑‑‑Suit related to transactions having taken place in a foreign country under the law of that State and default was also committed there but after plaintiffs' failure to get the decree of foreign Court satisfied there, cause of action accrued to him for suing the defendant (guarantor) in Pakistan as by that time he had shifted to Pakistan‑‑‑Validity‑‑‑Held, transaction in question was governed by the law of the foreign country/State and forum to enforce the rights and obligations in consequence of the transaction, was also available there and Court in Pakistan had no jurisdiction to entertain the present suit for the only reason that the defendant had allegedly shifted to Pakistan‑‑‑Foreign Courts did not lose their authority or competency to proceed with the suit against him nor the Courts of Pakistan had jurisdiction over the matter for that reason‑‑‑Principles.

Admittedly the transaction/contract had taken place in a foreign country and the alleged default also occurred there. Even the plaintiff had filed a suit there under the law of that State and obtained a judgment, thus there could be no denial of the fact that the transaction was governed by the law of that country/State and forum to enforce the rights and obligations in consequence of the transaction was also available there.

Civil Procedure Code, 1908 extends upto the territories of Pakistan as a procedural enactment. It cannot take place of substantive laws on a particular subject. Obviously the transactions and acts governed by the procedural as well as substantive law of any other State or country, do not come within the scope of Civil Procedure Code. Nor the Courts at Pakistan have jurisdiction to decide the causes and issues governed by the law of any other country or State applying sections 9 and 20 of Civil Procedure Code, 1908 which relate to the cases and matters within the cognizance of Courts in Pakistan.

As the contract/ transactions which is the subject­-matter of present suit is governed by procedural and substantive laws of foreign country and statutory forum to decide the controversy and enforce the rights under those transactions is also available there, Pakistan Court had no jurisdiction to entertain the present suit for the only reason that the defendant had allegedly shifted to Pakistan. Courts of foreign country do not lose their authority or competency to proceed with the suit against defendant. Nor the Courts at Pakistan have the jurisdiction over the matter for that reason.

The plaintiff had not stated the actual terms of the contract of credit facility in the plaint nor he had produced the documents containing the terms of the contract. Also, plaintiff did not size the guarantor while filing suit/claim against the principal borrower. It is not known what prevented it from suing the guarantor, whether there was any impediment in its way under the relevant laws of the State. The effect of omission to sue the guarantor is also not known: Thus the present suit is also not a fair and bona fide exercise on the part of the plaintiff.

Nadeem Ghani v. United Bank Limited and others 2001 CLC 1904 dissented from.

Hamza I. Ali for Plaintiff.

Defendant in person.

Date of hearing: 4th November, 2004.

2005 C L D 510

[Karachi]

Before Syed Ali Aslam Jafri, J

MASROOR AHMED ANSARI‑‑‑Plaintiff

Versus

Messrs PAKISTAN EXPORT FINANCE GUARANTEE AGENCY (PEFGS)‑‑‑Defendant

Suit No. Nil of 2004, decided on 18th November, 2004.

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

‑‑‑‑Ss. 2(a)(c) & (d) & 15‑‑‑"Financial institution"‑‑­"Customer"‑‑‑Defendant, a public limited company had provided Shipment Export Finance Guarantees (which was its business) to the plaintiff which the plaintiff failed to pay back‑‑‑Defendant had stood guarantee for the plaintiff as against mortgage of his property made by the plaintiff through deposit of title deeds‑‑‑Plaintiff had not alleged that defendant company was not authorized to carry on such business‑‑‑Contention of the plaintiff was that it was not a "customer" and the Export Finance Guarantee Agency was not financial institution" as defined in the Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑­Validity‑‑‑Held, under S.2(a)(iii), Financial Institutions (Recovery of Finances Ordinance, 2001, Financial institution" included any company authorized by law to carry on any similar business as the Federal Government might, by notification in the official Gazette, specify‑‑­Provision of S.2(d)(iii) of the said Ordinance related to facility of guarantees, indemnities, letters of credit or any other financial engagement which a financial institution might give, issue or undertake on behalf of the customer with corresponding obligation by the customer to the financial institution‑‑‑Defendant company, in circumstances, was afinancial institution" and the plaintiff was "customer" within the meaning of Financial Institutions (Recovery of Finances) Ordinance, 2001.

National Bank of Pakistan v. Punjab Road Transport Board 2003 CLD 653 distinguished.

Mahmood Habibullah for Plaintiff.

Aijaz Ahmed for Defendant.

Date of hearing: 20th September, 2004.

2005 C L D 515

[Karachi]

Before Sabihuddin Ahmed and Khilji Arif Hussain, JJ

Mrs. MUBARAK SHAH‑‑‑Petitioner

Versus

THE BANKING COURT JUDGE NO.III and others‑‑‑Respondents

C.P. No.D‑1405 of 2000, decided on 12th November, 2004.

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

‑‑‑‑Ss.18(3) & 3‑‑‑Constitution of Pakistan (1973), Art.199‑‑­Constitutional petition‑‑‑Execution of decree‑‑‑Mortgaged property‑‑‑Rights and obligations of tenant‑‑‑Banking Court or an auction purchaser can be put in possession of the mortgaged property only when judgment‑debtor or a person acting on his behalf cannot do so‑‑‑Provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 do not contain a clear and specific provision regarding rights and obligations of a tenant of a mortgaged property‑‑‑Tenant of such property enjoys independent legal rights and cannot be treated as person acting on behalf of landlord/judgment‑debtor‑‑‑Provision of S.3, Banking Companies/Recovery of Loans, Advances, Credits and Finances) Act, 1997 stipulates that its provision shall be in addition to and, save to the extent expressly provided in the Act, not in derogation of any law for the time being in force‑‑‑In absence of any explicit provision the legislative intent, cannot be so construed as to deprive tenants of their rights to occupy property guaranteed under law.

C.P.L.A. No.97‑K of 1987 ref.

S. Sami Ahmad and M.A. Baig for Petitioner.

Nemo for Respondents.

Date of hearing: 12th November, 2004.

2005 C L D 518

[Karachi]

Before Syed Ali Aslam Jafri, J

ALLIED BANK OF PAKISTAN LTD. ‑‑‑Plaintiffs

Versus

Messrs PAKSACO LIMITED and others‑‑‑Defendants

Ex. No.235 of 2000, heard on 16th August, 2004.

State Bank BPD Circular No. 29 dated 15‑10‑2002‑‑‑

‑‑‑‑Civil Procedure Code (V of 1908), S.151‑‑‑Judgment­debtors had moved an application under S.151, C.P.C. praying therein that they be allowed to sell/dispose of their property/commercial building and a portion of another property and decree‑holder be directed to release the original documents of the said properties for the said purpose, and consider the amount deposited by the buyer with the decree‑holder bank directly, as payment against the instalments‑‑‑Validity‑‑‑Record showed the material as a result whereof a settlement was arrived at between the parties and according to said agreement relief under BPD Circular No.29 of State Bank of Pakistan dated 15‑10‑2002 was granted to the judgment‑debtors, and as against Rs.117 million they were asked to pay only Rs.49.327 million for which all the judgment‑debtors jointly and severally agreed to pay‑‑‑Terms and conditions as agreed upon by the parties clearly showed that the properties as mentioned in the Schedule including the present properties stood duly mortgaged with the decree‑holder bank and title deeds were to be released in respect of all the properties together only if the instalment payments had been made as per terms of the contract‑‑‑Decree‑holder bank having declined to accept the proposal made on behalf of the judgment‑debtors, did not want to deviate from the terms and conditions of the agreement between the parties, appli­cation by the judgment‑debtors was dismissed.

Asim Mansoor Khan and Bashir Ahmed Khan along with Khurshid Ahmed, Executive Vice‑President, Allied Bank of Pakistan Ltd. for Plaintiffs.

Ms. Sofia Saeed for J.Ds.

Date of hearing: 16th August, 2004.

2005 C L D 521

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and Mushir Alam, J

MUHAMMAD ALI ENTERPRISE‑‑‑Petitioner

Versus

SPECIAL BANKING COURT NO.III and another‑‑‑Respondents

C.P. No. D‑2044 of 2001, decided on 29th June, 2004.

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

‑‑‑‑S.10‑‑‑Leave to defend‑‑‑Banking Court shall give leave to defend the suit, if a serious and bona fide dispute was raised‑‑‑Banking Court, in the present case, had arrived at the conclusion that "it appears that in the affidavit the defendant has shown prima facie defence in order to obtain leave to defend" but granted leave to defend application "conditionally subject to deposit of the suit amount, within 10 days"‑‑‑Validity‑‑‑Legislature, in its wisdom had not attached any condition under S.10, Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, on the exercise of discretion of Banking Court while granting leave to defend the suit, provided that a serious and bona fide dispute was raised by the defendant‑‑‑Once the case was found fit for granting leave no condition of furnishing security could be attached, as that would tantamount to reading more than what actually the Legislature had mentioned in the provision‑‑‑Banking Court was accordingly directed to decide the suit‑-Principles.

Agrofoster (Pvt.) Ltd. and 2 others v. Judge, Banking Court No. 5, Karachi and another PLD 1999. Kar 398 fol.

Salim Thapdawala for Petitioner.

Tasawar Ali Hashmi for Respondents.

Date of hearing: 12th April, 2004.

2005 C L D 529

[Karachi]

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

Messrs SAKRAND SUGAR MILLS and others‑‑‑Petitioners

Versus

Messrs STATE BANK OF PAKISTAN and others‑‑‑Defendants

C. Ps. Nos. D‑2276; D‑2277 and D‑2278 of 1992, heard on 23rd April, 2003.

(a) State Bank of Pakistan Scheme For Financing/Purchase of Locally Manufactured Machinery, 1985‑‑‑

‑‑‑‑State Bank of Pakistan Circular No. 1 dated 13‑3‑1988‑--­Constitution of Pakistan (1973), Art: 199‑‑‑Constitutional petition‑‑‑Machinery‑‑‑Definition‑‑‑Machineries/ equipments to be included in the locally manufactured machinery‑‑­Scope‑‑‑Only those machineries/equipments which were to be used or were involved in the sugar manufacturing process could be included in the Scheme‑‑‑If machineries/equipments did not form .part of the sugar manufacturing process, then irrespective of the fact that any machinery was essential for erecting or setting up a sugar processing plant, would not bring the machineries within the scope of the Scheme and finance could not be provided therefor‑‑‑Contention that in the absence of the three items of machineries/equipments the sugar manufacturing plant could not be set up on account of which then three items had assumed great importance requiring to be financed under the LMM Scheme was without any substance‑‑‑Cost of erection and commission charges were not to be financed under the LMM Scheme and finance facility therefore was not in accordance with the Scheme‑‑‑State Bank of Pakistan had not acted illegally and in contravention of the provisions of law in excluding the machinery/equipments from the Scheme withdrawing the finance facility from the Scheme and converting the same to LCY‑GTF mark‑up in respect of said machinery /equipments; and imposition of fine‑‑­Certificate issued by the Heavy Mechanical Complex would not in any manner establish that any machinery /equipment was integral part of the manufacturing process without which manufacturing of sugar would not have been possible‑‑‑Principles.

The question to be decided in the present case is as to what machineries/equipments were to be included in the LMM Scheme (Scheme For Financing Purchase of Locally Manufactured Machinery). From a bare perusal of the provisions of the scheme, it is to be noted that finance was to be provided for purchase of locally Manufactured plant and machinery, including accessories thereof, which were used or involved in the actual manufacturing process in the manufacturing industries under LMM Scheme. In order to include the machineries/equipments under LMM Scheme, it was incumbent for the manufacturer to establish that they were integral or essential part or were involved in the sugar manufacturing process. It is also clear that erection and commission charges were not to be financed under LMM Scheme and a provision was made whereby in case of turnkey projects, manufacturers were required to give separately the erection charges for their exclusion from financing under the LMM Scheme. From the above, it is absolutely clear that only those machineries/equipments which were to be used or were involved in the sugar manufacturing process could be included in the LMM Scheme. If these machineries/equipments did not form part of the manufacturing process, then irrespective of the fact that they were essential for erecting or setting up a sugar processing plant, would not bring them within the scope of the scheme and finance could not be provided for them. The Certificates issued by HMC do not in any manner establish that these three machineries/equipments were integral part of the manufacturing process without which manufacturing of sugar would not have been possible. What can be made out from the Certificates issued by HMC is that these three machineries/equipments were essential for erection or setting up of a sugar manufacturing plant. The contention that in the absence of the three items of machineries/equipments the sugar manufacturing plant could not be set up on account of which these three items of machineries/equipments had assumed great importance requiring to be financed under the LMM Scheme, is without any substance. The requirements of the scheme are very clear and unless the machineries/ equipments formed part of the manufacturing process in manufacturing industries they could not be financed under the LMM Scheme irrespective of the fact that in the absence of the three items of machineries/equipments the sugar manufacturing plant could not be set up and commissioned. From a perusal of the Scheme, it is also beyond any doubt that cost of erection and commission charges were not to be financed under the LMM Scheme and finance facility therefore was not in accordance with the LMM Scheme.

State Bank of Pakistan had not acted illegally and in contravention of the provisions of law in excluding the three machineries/equipments from the LMM Scheme, withdrawing the finance facility from the LMM Scheme and converting the same to LCY‑GTF mark‑up in respect of the three machineries/equipments; and imposition of fine.

HBFC v. Shehinshah Humayun Cooperative House Building Society and others 1992 SCMR 19; Zaman Cement Company Private Limited v. Central Board of Revenue 2002 SCMR 312; Pakistan through the Secretary, Ministry of Finance v. Muhammad Himayatullah Farukhi PLD 1969 SC 407; The Engineer‑in‑Chief, Branch and another v. Jalaluddin PLD 1992 SC 207; Abdul Haque Indhar and others v. Province of Sindh through Secretary Forest, Fisheries and Livestock Department Karachi and 3 others 2000 SCMR 907; Muhammad Mumtaz Masud and 2 others v. House Building Finance Corporation and 2 others 1994 SCMR 2287; Mst. Saboohi v. Ghulam Dastagir 1995 MLD 1402 and Messrs Airport Support Services v. The Airport Manager, Quaid‑e‑Azam International Airport Karachi and others 1998 SCMR 2268 ref.

(b) Interpretation of documents‑‑‑

‑‑‑‑Document containing terms and conditions and laying down a policy and the agreement entered into between the parties‑‑‑Principles of interpretation.

The Courts while interpreting and examining the terms and conditions of a document laying down a policy and the agreement entered into between the parties are required to give plain meaning to the language and words used in the policy document/agreement for determining the intention of the framers of the policy/parties to the agreement. It is not the job of the Courts to give or imply a meaning or anything which cannot be supported by the language and the words of the document merely because one of the parties thought that it would be unreasonable, illogical and unjust to imply the meaning sought by the party who had framed the policy.

In construing the deeds; the words are to be taken in their literal, plain and ordinary meaning. Such plain and ordinary meaning is to be avoided only if it leads to ambiguity or absurdity enabling the Court to modify the ordinary and plain meaning to avoid such ambiguity and absurdity.

In construing contracts the real question was the meaning of the language and further that grammatical meaning was the meaning to be adopted unless there was reason to the contrary.

HBFC v. Shehinshah Humayun Cooperative House Building Society and others 1992 SCMR 19 and Zaman Cement Company Private Limited v. Central Board of Revenue 2002 SCMR 312 ref.

(c) State Bank of Pakistan Scheme For Financing/Purchase of Locally Manufactured Machinery, 1985‑‑‑

‑‑‑‑State Bank of Pakistan Circular No.1 dated 13‑3‑1988‑‑­Interpretation of the Scheme.

The plain and ordinary meanings of the words used in the State Bank of Pakistan Scheme For Financing/Purchase of Locally Manufactured Machinery, 1985 do not result in any ambiguity or absurdity. It was the clear and unambiguous intention of the framers of the scheme not to include the items of machineries/equipments which did not form integral part of the manufacturing process and such interpretation does not operate against the rules of interpretation of documents. The contention that it would be very unreasonable, illogical and unrealistic to exclude the three items of machineries/ equipments from being financed under the LMM Scheme as in their absence sugar processing plant could not be erected or set up carries no weight as while interpreting the contents of the documents, the Courts are required to ascertain the intention from the words used therein and it is not open to them to see the reasonableness logic or the advantages which would have accrued to a party if the interpretation sought by it had been accepted. The fact, that the framers of the LMM Scheme did not include the above three items of machineries/equipments for being financed under the LMM Scheme does not create or amount to absurdity or unreasonableness as it was a policy decision which is clearly spelt out from the words used in the policy document as well as from the contents of the agreement entered into between the manufacturer and the financial institution.

HBFC v. Shehinshah Humayun Cooperative House Building Society and others 1992 SCMR 19 and Zaman Cement Company Private Limited v. Central Board of Revenue 2002 SCMR 312 ref.

(d) State Bank of Pakistan Scheme For Financing/ purchase of Locally Manufactured Machinery, 1985‑‑‑

‑‑‑‑State Bank of Pakistan Circular No. 1 dated 13‑3‑1988‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑ Machinery‑‑‑ Definition‑‑‑Amendment in the definition by State Bank of Pakistan Circular No. 1 dated 13‑3‑1988 for which the financial facility could be granted‑‑­Contention of the manufacturers was that finance facility for the machinery in question was duly allowed to other such‑like manufacturers which had been declined to them‑‑‑Locus poenitentiae, principle of‑‑‑Applicability‑‑‑Manufacturers availing the Scheme (as amended) could not claim the benefit of the principle of locus poenitentiae‑‑‑Principles.

Abdul Haque Indhar and others v. Province of Sindh through Secretary Forest, Fisheries and Livestock Department Karachi and 3 others 2000 SCMR 907 ref.

(e) Locus poenitentiae, principle of‑‑­

‑‑‑‑Applicability‑‑‑Principles.

Principle of locus poenitentiae is the power of rescinding till a decisive step was taken emphasizing that it was not a rigid principle of law that an order once passed became irrevocable and past and closed transaction. For this concept to be applicable it is a requirement that the order or decision in respect of which irrevocability is claimed must have been a legal and valid order. In respect of an illegal order the principle of locus poenitentiae would not be available.

(f) State Bank of Pakistan Scheme For Financing/Purchase of Locally Manufactured Machinery, 1985‑‑‑

‑‑‑‑State Bank of Pakistan Circular No.1 dated 13‑3‑1988‑‑‑Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Maintainability‑‑‑Grievance of the petitioners was violation of the Policy/Scheme made by the State Bank of Pakistan as well as violation of agreement entered into between them and the Financial corporation which was an official functionary and the grievance of the petitioners was on account of violation of the Scheme/Policy as well as the terms and conditions of the agreements, which did not require minute and detailed inquiry or examination and could be decided on the basis of the documents/material on record‑‑‑Constitutional petition was assailed on the ground that the grievances/disputes involved were the outcome of violation of the terms and conditions of agreements entered into between the parties and submitted that it was settled principle of law that violation of the terms and conditions of agreement or the grievances/ disputes arising out of the agreements entered into between the parties would not entitle the aggrieved party to invoke the Constitutional jurisdiction of High Court for redress of his grievances/disputes‑‑‑Validity‑‑‑Held, while routine contractual disputes between private parties and public functionaries were not open to scrutiny under the Constitutional jurisdiction, breaches of such contracts, which did not entail inquiry into or examination of minute or controversial questions of fact, if committed by Government, Semi‑Government or Local Authorities or like controversies if involving declaration of obligations, flowing from a Statute, rules or instructions, could adequately be addressed to for relief under the Constitutional jurisdiction‑‑‑Constitutional petition was maintainable.

Messrs Airport Support Services v. The Airport Manager, Quaid‑e‑Azam International Airport, Karachi and others 1998 SCMR 2268 fol.

Muhammad Mumtaz Masud and 2 others v. House Building Finance Corporation and 2 others 1994 SCMR 2287 and Mst. Saboohi v. Ghulam Dastagir 1995 MLD 1402 ref.

(g) Constitution of Pakistan (1973)‑‑‑

‑‑‑‑Art. 199‑‑‑Constitutional jurisdiction of High Court‑‑­Contractual obligations‑‑‑Maintainability of Constitutional petition‑‑‑Scope.

Messrs Airport Support Services v. The Airport Manager, Quaid‑e‑Azam International Airport, Karachi and others 1998 SCMR 2268 fol.

Muhammad Farid for Petitioners (in C. Ps. Nos.D‑2277 and D‑2278 of 1992).

Abrar Hasan for Respondent No.1 (in all Petitions).

Altaf Hussain for Respondent No.2 (in C.P. No.2276 of 1992).

Masood Anwar Ausaf for Respondent No.2 (in C.P. No.2277 of 1992).

Nemo for Respondent No.2 (in C.P. No.2278 of 1992).

Date of hearing: 23rd April, 2003.

2005 C L D 565

[Karachi]

Before Muhammad Mujeebullah Siddiqui, J

S.M. YAQOOB‑‑‑Applicant

Versus

PAK SUZUKI MOTOR CO. LTD. through Managing Director/ Chief Executive, Karachi‑ ‑‑Respondent

Civil Revision Application No.238 of 2000, decided on 10th January, 2005.

(a) Interpretation of statutes‑‑‑

‑‑‑‑Fiscal statutes‑‑‑Not applicable to past and closed chapter and concluded transactions‑‑‑Such statutes are prospective in nature, unless specifically provided otherwise‑‑‑Principles illustrated.

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

‑‑‑‑S.9‑‑‑Enhancement or reduction in price after supply of car to the buyer‑‑‑Effect‑‑‑Neither seller in case of enhancement would have right to claim difference in price from buyer nor buyer in case of reduction would be entitled to claim such benefit‑‑‑Any subsequent change in price would not affect such transaction.

S.M. Yaqoob for Applicant.

Aamir Maqsood for Respondent.

Date of hearing: 28th October, 2005.

2005 C L D 626

[Karachi]

Before Mushir Alam, J

Messrs HABIB BANK LIMITED---Plaintiff

versus

Messrs PAN ISLAMIC STEAMSHIP CO. LIMITED and 6 others---Defendants

Suit No.366 of 1999, C.M.As. Nos.6245, 9127 of 2001, 299, 300 and 301 of 2002, decided on 17th January, 2005.

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

----S. 10---Suit for recovery of loan---Grant of leave to defend the suit---Defendant had sought unconditional leave to defend the suit urging that she being widow of the deceased guarantor, who was alleged to have executed the personal guarantee, no personal liability could be foisted on his legal heirs---Held, such controversy could only be resolved and decided at trial after looking at the guarantee---Unconditional leave to defend the suit was granted accordingly.

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

----S. 10---Suit for recovery of loan---Grant of leave to defend the suit---Defendant, a guarantor, had challenged the maintainability of the suit against him and disputed his signature on the letter of guarantee---In order to adjudicate the issue raised and to resolve factual and legal controversies leave to appeal was granted unconditionally.

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

----S. 10---Suit for recovery of loan---Grant of leave to defend the suit---Contention of the defendant was that his signatures on the letter of guarantee were forged and sought unconditional leave to defend the suit---Reports of Handwriting Experts were also on the record which created a doubt on the guarantee---Held, issue in question could only be determined and adjudicated at the trial---Defendant was granted leave to defend the suit accordingly.

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

----S. 10---Suit for recovery of loan---Grant of leave to defend the suit---Contention of the defendants was that legal heirs were not liable under the purported guarantee which was alleged to have been executed by their father---Held, such an issue could be decided at trial---Matter in question being pending for quite some time for consideration, leave to appear and defend the suit was granted to the defendants accordingly.

A. R. Akhter, Saalim Salam Ansari, Saadat Yar Khan, Aasim Mansoor and Sumiya Usmani, Advocates.

Walid Ansari holding brief for Qazi Faez Issa, Advocate.

2005 C L D 647

[Karachi]

Before Amir Hani Muslim, J

NAZIMUDDIN ---Plaintiff

versus

Messrs THE BANK OF KHYBER and another---Defendants

Suits Nos.B-20 of 2002 and B-39 of 2003, decided on 19th January, 2005.

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

----S. 9---Suit for recovery of loan---Common issue in both the suits (one by the bank and the other by defendants) was about the accounts with the assertions that borrowers had made excess payments to the bank and in that regard both the parties had led evidence in both the suits while the Bank had claimed that the borrowers had to pay certain amounts for which the Bank had filed the suit for recovery in the Banking Court which was at the stage of hearing of application for leave to defend by the defendants (borrowers)---Counsel of both the parties suggested to the High Court that a Chartered Accountant be appointed to take accounts of both the parties and determine their respective liabilities---Prayers in both the suits would now be confined to the accounts and rest of the prayers would not be pressed by both the parties except with regard to the properties mortgaged by the Bank which too would be subject to the proposed report of the Chartered Accountants---High Court, by consent, appointed Chartered Accountants to undertake exercise of determination of liability of the parties after taking accounts from both the parties and to submit their report within two months from the date of communication of the order.

Saalim Salam Ansari for Plaintiff (in Suit No.-B-20 of 2002) and Saalim Salam Ansari for Defendant (in Suit No.-B-39 of 2003).

Arshad Tayebaly for Plaintiff (in Suit No.-B-39 of 2003) and Arshad Tayebaly for Defendant (in Suit No.-B-20 of 2002).

2005 C L D 659

[Karachi]

Before Mushir Alam, J

ZAFAR MAHMOOD SHAIKH---Petitioner

versus

Messrs AHMED FOOD INDUSTRIES (PVT.) LTD.---Respondent

Judicial Miscellaneous No.66 of 2003, decided on 11th January, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss. 305, 306 & 309---Petition for winding up of Company---Contention of the petitioner was that he had been exposed to financial liability on account of default by the company, therefore, in terms of S. 305 read with S.309 of the Companies Ordinance, 1984 he was contingent creditor and entitled to seek winding up of the company to set off the liability to which he might be exposed---Validity---Held, in terms of S. 309(d), Companies Ordinance, 1984, contingent creditor, to maintain such petition, was required to furnish security under S. 309(d) of the Ordinance---Petitioner, in circumstances, was directed in the first instance to furnish security in the sum of Rs. 25,000 to the satisfaction of the Nazir of High Court within two weeks.

Ehsanullah Tarar v. Messrs Hafizabad Straw Board Mills Ltd. and 3 others PLD 1994 Lah. 160 fol.

Shabbir Ahmed Shaikh for Petitioner.

Saalim Salam Ansari for Respondent.

2005 C L D 678

[Karachi]

Before Mushir Alam, J

Messrs SHAHNAWAZ ENGINEERING (PVT.) LTD., KARACHI through Chairman---Plaintiff

versus

Messrs NATIONAL INSURANCE CORPORATION through Executive Director (F&A), Karachi ---Defendant

Suit No.84 of 2003, decided on 18th August, 2004.

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

----S.64-A---Increase in duty/taxes---Effect---In case of any increase in duties or excise or taxes after the contract is executed between the parties the seller is entitled to claim and recover excess amount paid on account of such increase and the buyer is liable to reimburse the seller---Likewise where there is decrease in duty, excise or taxes on account of reduction in taxes or duties the seller is liable to pass on the benefit to the buyer---Equal protection both to the buyer and seller is provided in S.64-A of Sale of Goods Act, 1930.

Ch. Brothers v. Province of Punjab 1993 MLD 2437; Gulshan v. Government of Pakistan 1998 MLD 2436; S.S.A. Moeed v. Ebraheem Alibhai Charitable Trust 1987 MLD 308 and Army Welfare Trust v. Federation of Pakistan 1992 SCMR 1652 rel.

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

----S.64-A---Devaluation of local currency---Recovery of difference of exchange rate---Plaintiff agreed to supply air conditioning and ventilation equipment to defendant---Equipment to be supplied was to be imported and price agreed between the parties was based upon a specified rate of exchange of foreign country against Pakistani currency---Before the supply of equipment, exchange rate increased due to certain policies of Government of Pakistan resulting into increase in price of equipment---Equipment was supplied by the plaintiff on assurance of defendant that escalation would be considered favourably---Later on, after the equipment was supplied, the defendant refused to pay the increase in exchange rate---Validity---Purchaser, unless agreed otherwise, could not be allowed to take away the statutory right of a seller under S.64-A of Sale of Goods Act, 1930, to recover the excess amount paid in respect of new imposition and or increase in duty, excise, or taxes after the execution of contract---Defendant was liable to pay the difference in the price of goods effected on account of devaluation or depreciation of Pak Rupee against the foreign currency after the execution of the contract, moreso where the contract price was quoted on the basis of exchange rate on the date of contract---Phenomenon of devaluation or depreciation of local currency, against the foreign currency having occurred as a result of act or policy of the State or on account of international financial and economic repercussion, plaintiff had no control over such factors---As the plaintiff had no control or influence over devaluation or depreciation of local currency, or as it was not shown that such difference occurred on account of delay or default of the plaintiff, therefore, the plaintiff could not be made liable to bear the excess amount incurred in procuring the imported goods at excessive price on account of devaluation of local currency---Claim of the plaintiff to the extent of escalation of price of goods as a result of devaluation and depreciation of Pak Rupee and consequential increase in duty and taxes, was allowed---Suit was decreed accordingly.

Habib and Company v. Chief Controller of Purchases PLD 2001 Lah. 521 rel.

Nadeem Azher Siddiqui for Plaintiff.

Defendant ex parte.

Date of hearing: 27th February, 2004.

2005 C L D 688

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Mujeebullah Siddiqui, JJ

MULTAN EDIBLE OIL EXTRACTION LIMITED---Appellant

versus

NATIONAL BANK OF PAKISTAN and 2 others---Respondents

High Court Appeal No.365 of 2003, decided on 16th February, 2005.

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

-----Ss. 9, 15 & 19---State Bank of Pakistan BPD Circular No.29 dated 15-10-2002---Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), S. 18---Auction of property---Confirmation of auction sale and order for handing over vacant possession of the auctioned property to the highest bidder by the Court---Connected miscellaneous applications, however, were adjourned---Plea of the appellant that his Advocates were present in Court till 1-30 p.m. and the Judge returned from Division Benches to his chambers at 2-00 p.m. and took up the execution application at that time and passed the said order in the absence of advocate for the appellant had gone unrebutted---Effect---Such fact alone was sufficient to set aside the impugned order for the reason that the matter was taken up after the Court time was over which, he could do so with the consent of both the parties and not otherwise, except in urgent cases---Impugned order also militated against the principle contained in the maxim “audi alteram partem”---Appellant had been condemned unheard and the order adjourning the miscellaneous applications had been rendered ineffective with the passing of impugned order----Once the sale was confirmed and the property owned by the appellant was handed over to the auction-purchaser, nothing would be left thereafter to be decided through the pending applications and order adjourning the application became redundant, as the same could not be acted upon in the changed circumstances---State Bank’s BPD Circular No. 29 dated 15-10-2002 enforced during the pendency of the execution application and the Scheme floated thereunder giving a valuable right to the appellant, was denied by the passing of the impugned order---Held, the propriety required that when interlocutory applications were pending and they were of such a nature, which might go to the root of the case, then before passing the final order such applications should have been heard and disposed of---Impugned order, in circumstances, was not sustainable in fact and law which was set aside in High Court appeal---Matter was remanded to the Court and parties were directed to appear before the Court on specified date---Court was to hear the applications and decide the same before passing of the order for the confirmation of sale.

(b) Administration of justice---

----Propriety required that when interlocutory applications were pending and they were of such a nature, which might go to the root of the case, then before passing the final order such applications should have been heard and disposed of.

Faisal Arab for Appellant.

Ijaz Ahmad for Respondent No.2.

Muhammad Zaki Ahmed for Respondent No.3.

Date of hearing: 16th February, 2005.

2005 C L D 705

[Karachi]

Before Sabihuddin Ahmed and Khilji Arif Hussain, JJ

NATIONAL BANK OF PAKISTAN---Petitioner

versus

WAFAQI MOHTASIB (OMBUDSMAN)---Respondent

Constitutional Petitions Nos.3145 and 3146 of 1993, decided on 19th November, 2004.

(a) Banker and customer---

----Damages against bank---Acts and deeds of branch managers---Responsibility of bank---Different branches or branch office of a bank are not separate or distinct personality and they cannot be considered as a separate entity---All officers of a banking company transacting business at any particular branch or branch office are acting on behalf of the banking company which is answerable for their acts while they are acting in normal course of duties---Bank is vicariously liable for the acts of its officers and cannot evade responsibility for damages---No exception can be taken to the acts where it can be established that the complaining party himself is a privy to forgery or beneficiary and had knowledge of the same.

(b) Banker and customer---

----Non-clearance of bank cheque---At the time of issuance of cheque, the payee got endorsement from Bank Manager with regard to availability of amount in the account---Bank Manager also endorsed that the cheque was good for payment---Later on, at the time of presentation of the cheque, the bank refused to encash the same---Payee invoked jurisdiction of Wafaqi Mohtasib, who directed the Bank to release the amount mentioned in the cheque to the payee---Plea raised by the Bank was that the Manager was not competent to make such endorsement on the cheque---Validity---Branch Manager, who was the highest officer in the branch, and was supposed to deal with all the affairs of the branch, not only endorsed on the reverse of the post dated cheque “good for payment” but also put seal of the Bank on it---Branch Manager also gave assurance on the letterhead of the Bank that the cheque would be certainly encashed on the date mentioned thereon---Endorsement on the back of the cheque alongwith the assurance given by the Bank on its letterhead for the encashment of the cheque on due date was a guarantee given by the Bank that the cheques would be encashed on the date, irrespective of whether amount would be available in the account or not---Plea of the Bank that the officer, who made the endorsement was not authorized by the Bank, was not acceptable---Every prudent businessman had to take reasonable care while dealing with any individual and a businessman in normal course had to rely upon the Manager of the branch who was holding the highest post in the branch and to accept his commitment as a commitment on behalf of the Bank---Bank could not deny its liability towards its customers who deal with the officers of the Bank by taking the plea that the officer was not authorized by the Bank as it was not possible for a customer that on each and on every occasion he should ask from officer of the Bank about his authority---Bank did not allege that the payee was party to the alleged or unauthorized acts of its Manager---It was normal course of events and perfectly reasonable for a businessman to rely upon a representation made by a Manager of the Bank rather to investigate the extent of the powers of the Manager---Manager was expected to be conscious of the limits of his authority---Jurisdiction of High Court under Art.199 of the Constitution being discretionary, interference could be refused even if the order was illegal but otherwise just and fair---High Court declined to interfere with the order passed by Wafaqi Mohtasib in favour of the payee---Constitution of Pakistan (1973), Art.199.

Ch. Muhammad Nawaz v. Province of West Pakistan PLD 1975 Baghdad-ul-Jadid 11; Value Gold Ltd. and 2 others v. United Bank Limited PLD 1999 Kar.1 and Bank of Baroda, Ltd. v. Punjab National Bank Ltd. and others AIR (31) 1944 PC 56 ref.

A.I. Chundrigar for Petitioner.

Riaz Ahmed Khan for Respondent No.2.

Dates of hearing: 13th and 27th August, 2004.

2005 C L D 737

[Karachi]

Before Saiyed Saeed Ashhad C.J. and Maqbool Baqar, J

GHULAM HAIDER ---Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 3 others---Respondents

Constitutional Petition No.D-906 of 2003, decided on 2nd February, 2005.

Chartered Accountants ordinance (X of 1961)---

----Ss. 20A, 20B, 20C, 9 & Sched. I, Part 4, Cl. (5)---Constitution of Pakistan (1973), Art.199---Constitutional petition---Allegation of professional misconduct against a Chartered Accountant on account of getting an advertisement published in the daily newspaper----Initiation of proceedings by the Institute of Chartered Accountants of Pakistan---Procedure---Institute in initiating the disciplinary proceedings against the petitioner committed a grave and serious illegality in overlooking the provisions of Ss.20A &. 20B of the Chartered Accountants Ordinance, 1961 and in violation thereof issued show-cause notice and the investigation Committee proceeded to Investigate/ inquire into the guilt of the petitioner---Such conduct/procedure was not proper irrespective of the fact that the material on record might have made out a prima facie case against the petitioner of being guilty of professional misconduct--­Institute in circumstances, had failed to proceed in accordance with law against the petitioner and the proceedings for professional misconduct initiated against him were defective being in contravention and violation of statutory provisions---Principles---High Court accepted the Constitutional petition and set aside the inquiry proceedings pending against the petitioner being contrary to law and illegal---High Court, however, observed that the Institute would be at liberty to initiate fresh proceedings against the petitioner for professional misconduct in accordance with the relevant provisions of the Ordinance.

In the present case the petitioner, who is a Chartered Accountant, got published an advertisement in the daily newspaper for expressing thanks and gratitude to the Chairman, Securities and Exchange Commission of Pakistan for implementing the decision of introducing the rotation of auditors and putting bar on the award of consultancy assignment to the auditors of listed companies. The advertisement further contained that the above decision provided an even playing field to the smaller firms of Chartered Accountants who will get rid of the so­-called big five Accounting Firms from their monopoly/Clout.

When the above advertisement came to the notice of the Institute of Chartered Accountants of Pakistan by its letter called upon the petitioner to show cause why action under section 20B of the Chartered Accountants Ordinance, 1961 for professional misconduct be not taken against him.

From a bare perusal of section 20A of the Chartered Accountants Ordinance, 1961, it reveals that the requirements spelt out from the language are that the Secretary of the Institute, any member or any aggrieved person is required to lay before the Investigation Committee any fact indicating that any member of the Institute was, prima facie, guilty of any professional misconduct specified in Schedule I or Schedule II. Subsection (2) of section 20A of the Ordinance deals with a situation where a complaint is received by the Institute against any member of the Institute or student of being guilty of professional misconduct then such complaint with the relevant and necessary facts shall be laid before the Investigation Committee. From the provisions of section 20A it is absolutely clear that initially any fact or a complaint relating to professional misconduct against a member of the institute or student is to be laid before the Investigation Committee as envisaged in section 20A of the Ordinance. By virtue of the provisions of section 20B of the Ordinance the Investigation Committee is required to consider the facts or complaint laid before ii and in case it is of the opinion that such facts or complaint required investigation then it shall, after giving a notice to the member of the Institute, hold an inquiry, on conclusion whereof the Investigation Committee is required to submit its report relative to the result of the inquiry to the Council constituted under section 9 of the Ordinance of 1961, Section 20B lays down the procedure to be followed by the Council in cases where the Investigation Committee finds a member or student guilty of professional misconduct.

The proceedings for professional misconduct against the petitioner were not initiated in accordance with the provisions of the Ordinance of 1961. There is nothing on record to indicate that the factum of publication of the advertisement was placed or laid by the Secretary of the Institute before the Investigation Committee or that any member or any aggrieved person had brought to the notice of the Investigation Committee the alleged professional misconduct in getting published the advertisement. From the letter of the institute it is to be inferred that without resorting to the provisions of the Ordinance of 1961, the Manager of the Institute issued the said letter purporting to be a show-cause notice requiring the petitioner to show cause as to why proceedings be not initiated against him by the Investigation Committee under section 20B of the Ordinance of 1961. As a matter ­fact, the advertisement in the daily newspaper was required to be placed before the investigation Committee by the Secretary in accordance with the provisions of section 20A of the Ordinance of 1961 but the said requirement was not complied with. Provisions of section 20B were also violated inasmuch as before placing or laying the advertisement before the Investigation Committee for holding an inquiry and preparing a report of the result of the inquiry, a show-cause notice was issued to the petitioner.

If a Statute requires a thing to be done in a particular manner or lays down the manner in which it is to be done or accomplished then it is obligatory on the part of the person concerned to follow the provisions of the Statute in letter and spirit and that all methods/manners in doing or accomplishing the object are followed. The provisions of the statute are to be adhered to strictly and no provision is to be left as surplus, redundant or naugatory. Institute in initiating the disciplinary proceedings against the petitioner committed a grave and serious illegality in overlooking the provisions of sections 20A and 20B of the Ordinance of 1961 and in violation thereof, issued a show-cause notice and the Investigation Committee proceeded to investigate/inquire into the guilt of the petitioner. Such conduct/procedure cannot be held to be legal and proper irrespective of the fact that the material on record might have made out a prima facie case against the petitioner of being guilty of professional misconduct. In the circumstances, the Institute had failed to proceed in accordance with law against the petitioner and the proceedings for professional misconduct initiated against him were defective being in contravention and violation of Statutory provisions.

The inquiry proceedings pending against the petitioner were set aside as being contrary to law and illegal. The Institute, however, will be at liberty to initiate fresh proceedings against the petitioner for professional misconduct in accordance with the relevant provisions of the Ordinance of 1961.

Syed Sami Ahmed and M.A. Baig for Petitioner.

Syed Zaki Muhammad, D.A.-G.

I.H. Zaidi for Respondent No.2.

2005 C L D 747

[Karachi]

Before Ata-ur-Rehman, J

RAUF BAKSH KADRI and others---Appellants

Versus

M/s. NATIONAL TECHNOLOGY DEVELOPMENT CORPORATION LTD. and others---Respondents

J. Miscellaneous Nos. 48 of 2000, 3 and 23 of 2001, 1 of 2002 and C.M. No.1587 of 2003, decided on 10th August, 2004.

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

----Ss. 9, 290, 291, 292, 305, 309, 152, 161 & 233--­Companies (Court) Rules, 1997, R.7---Civil Procedure Code (V of 1908), O.I, R.1---Five different petitions/applications were filed before the High Court one under Ss.290, 291 & 292, Companies Ordinance, 1984 for rendition of accounts/division of assets and properties of the company praying therein for directions to respondent to make payment of dividends declared in past as well as payment of future dividends to the petitioner, and not to restrain them from entering the factory premises and inspect its accounts and operations etc; second petition under S. 309 read with S.305, Companies Ordinance, 1984 was filed for winding up of Company, inter alia, praying therein for appointment of a Liquidator to take over the assets and accounts of the company including alt assets of the respondents that had been secured and made from the funds of the Company; third application was moved under O.I, R.1, C.P.C. by the first petitioner on similar grounds praying to be joined in as an intervener; fourth petition was filed under S.152, Companies Ordinance, 1984 by a Company for rectification of the Register of the Members and for entering their names as Member claiming to be the holder of 1,800,000 shares having purchased the same and fifth petition was filed under Ss. 161 & 152 read with Ss.290 & 233, Companies Ordinance, 1984 praying therein for directions to convene an Extraordinary General Meeting of the Members for holding election of the Directors on the basis of their share holding, and for rectification of the Register of Members in line with last filed Form A by the respondent based on the transactions recorded in the petition---Respondents raised a common plea that the disputes involved in the present cases were intricate questions of facts which could only be decided in a full-fledged inquiry in a civil suit and not through such petitions and applications which were to be adjudicated in a summary procedure under S.9(3), Companies Ordinance, 1984; that S.9 of the Ordinance provided that all proceedings were taken to be in summary manner and as a result the question raised by the petitioners/intervenors could not be decided merely on the pleadings submitted by the parties and that under the Companies Ordinance, 1984 evidence was not to be recorded and no in-depth inquiry, like a civil suit, could be conducted---Validity---Held, Summary procedure appearing in S.9, Companies Ordinance, 1984 did not exclude the consideration by the Court of controversial facts nor did it restrict it from deciding such controversies---No legal impediment existed in the Companies Ordinance, 1984 for the Court entering into any inquiry, framing the points of determination, requiring oral evidence or evidence through affidavits---Purpose of the Companies Ordinance, 1984 was to consolidate and amend the law relating to the Companies and certain other associations for the purpose of the healthy growth of the corporate enterprises, protection of investors and creditors, promotion of investment and development of economy and matters arising out of or connected therewith---Purpose of the Companies Ordinance, 1984 was to adjudicate all matters falling under the Ordinance finally to achieve the results for which the Ordinance had been enforced and there was no limitation on the powers of the Court in regard to the manner in which the powers had to be exercised under the Companies Ordinance, 1984 and the power should be liberally exercised without driving the parties to agony by ordering the litigation to be carried out before some other forum---Present cases, were covered by the Companies Ordinance, 1984 and the factual controversies raised therein were to be adjudicated by the High Court---Controversies, however, were of the nature, which could not be decided without an investigation/inquiry or by recording evidence---High Court in view of such situation found it necessary to first determine the disputed points and thereafter call for evidence---Matters were adjourned on the next date of hearing when the High Court would determine the controversial points involved in the matters---Principles.

Per Ata-ur-Rehman, J

"In view of the submissions of the Counsel for the Respondents, as and when any dispute or controversy as to the facts had been raised by the Respondents, High court had no option but to dismiss the petition and to direct the parties to approach the Civil Court. High Court observed that invariably in all cases presented to the Court, one or the other fact was always disputed or controversial; which meant that High Court, without applying its mind and entering into inquiry/investigation in regard to those disputed facts, was to direct the parties to first get a decree from the Civil Court and its hierarchy which would take a period of two to three decades, and then to come back to High Court for the redressal of their original grievance. If this proposition was to be accepted, it would result in a serious contradiction, as on the one hand there is an Ordinance, comprising of 514 sections, which has been enacted exclusively for dealing, with controversies and disputes between the members and members and companies etc. as early as possible but not later than 90 days under section 9, while on the other hand almost in every matter where the facts were controverted by the other side, the Court would retract its jurisdiction from the matter, and refer it to the Civil Court. Keeping the above incongruity in mind, High Court framed the following questions:-

1. What is the scope of section 9(3) vis-a-vis the other sections of the Ordinance, namely 152, 290 and 506 etc., while the Court adjudicates the matter on the basis of facts?

2. Whether in summary proceedings the Court can embark upon recording evidence and decide the question of title of share-holders in a petition under section 152 of the Ordinance, or should it direct the parties to have the same decided through civil suit?

3. What is the import of the cases of Latif Ansari and another vs. Pakistan Industrial Promoter Ltd. 1988 CLC 1541 and Industrial Development Bank of Pakistan v. Sarelo Cement Ltd: Company 1993 CLC 1540?"

"With utmost respect to my learned brother Judges who have held that the disputed and controverted question can only be decided by a Civil Court and not by the Company Judge, it is observed that to substantiate their view, no legal basis or provision of Law has ever been quoted; all relevant judgments were based on the proposition that the proceedings under the Company Law are summary in nature and that the Courts always subscribed to this view. It is further observed that the Courts while ousting their own jurisdiction in matters where disputed questions of fact were involved, have omitted to take into consideration certain directions of the various provisions of the Ordinance whereby the Court is empowered to decide even complicated questions which are discussed hereinafter."

"At this point I would like to refer to some of the relevant provisions of the Ordinance. The sub-clause (a) of subsection (1) of section 152 provides that if the name of any person is substituted fraudulently or without sufficient cause entered in or omitted, the Court may order for the rectification of register of members (ROM). In subsection (3) ibid the Court is empowered to decide any question relating to the title of any person when an application is made under subsection (1). Under section 290 of the Ordinance the Court is to first satisfy itself that the Applicant is a member and not holding less than twenty percent shares. In the same section the Court is empowered to pass any fit order in case it is found that the affairs of the company are being conducted or are likely to be conducted in an unlawful or fraudulent manner or in a manner not provided for in its memorandum or in a manner oppressive to the members or any of the members etc. Section 305, while empowering the Court to wind-up the Company, the conditions for which are enumerated in clauses (a) to (h), its sub-clause (f) ibid and its sub­-clauses, state that the Court is required to be satisfied before ordering the winding-up."

"From the preamble of the Ordinance, it is apparent that the purpose of the Ordinance is to consolidate and amend the law relating to the companies and certain other associations for the purpose of the healthy growth of the corporate enterprises, protection of investors and creditors, promotion of investment and development of economy and matters arising out of or connected therewith. The purpose of the Ordinance obviously is to adjudicate all matters falling under the Ordinance finally to achieve the results for which the Ordinance has been enforced.

The question arises that how the Court can, without entering into a detailed inquiry pertaining to the provisions of sections 152, 290 and 305, referred above, satisfy itself and adjudicate the matter finally resolving the disputes between the parties? Can the Court without entering into in-depth investigation by recording evidence, give any finding as to 'fraudulent' action or 'sufficient' cause as provided under section 152(1)(a)? Can the Court under section 152(3) decide the question of title for any person without determining the points to that effect and recording the necessary evidence? Where, under section 290(1) the Applicant can claim himself to be the member holding not less than 20% shares and the same is denied by the other side, can the Court give any finding in affirmative or negative without entering into a detailed investigation, which will again require evidence? Whether the Court, without entering into the investigation and recording evidence, can opine under subsection (2) of section 290 that the company's affairs are being conducted in an unlawful and fraudulent manner or in the manner not provided for in its memorandum or in a manner oppressive to the members etc. as provided under subsection (1) of section 290. Similarly under section 305 without in-depth inquiry including the recording of evidence, can the Court be satisfied for winding-up the company if the case falls, amongst others, under sub-clauses (ii), (iii) and (iv) of clause (f) ibid."

"Therefore, the obvious answer to the above questions would be in the negative. Final adjudication of the controversies indicated hereinabove can only be made after framing the points for determination and recording the evidence where serious disputes as to the documents etc. arise between the parties. It is, however, correct that in all cases the investigation may not be in-depth but can be conducted by looking into the documents and evidence filed along with the pleadings."

"With due respect to the learned Judges deciding those cases, in my humble opinion this can never be the intention of the legislature while directing the Courts to adopt summary procedure under section 9 ibid. Obviously, the Court is not to follow the same complicated procedure as in a civil suit and its technicalities but is required to adjudicate the same expeditiously in a manner it deems fit and appropriate in the circumstances of each case.

The sum-up of the dictionary meanings of 'summary proceedings' referred above is that the case is to be disposed of promptly in simple manner out of the regular course of the common law. Nowhere is there a restriction on the forum in recording the evidence for final conclusion. If the matter can be decided by apparent perusal of the pleadings, it may be done so and if the Court deems necessary to frame point of determination and record evidence, the Court must not-hesitate to do the needful on the ground that intricate and complex questions of facts are involved."

"I am of the considered view that there is no limitation on the powers of the Court in regard to the manner in which the power has to be exercised under the Ordinance; and that the power should be liberally exercised without driving the parties to agony by ordering the litigation to be carried out before some other forum."

"The upshot of the above is as follows:--

(a) The summary procedure appearing in section 9 of the Ordinance does not exclude the consideration by the Court of controversial facts nor does it restrict it from deciding such controversies.

(b) There is no legal impediment in the Ordinance for the Courts entering into any inquiry, framing the points of determination, requiring oral evidence or evidence through affidavits."

"The cases in hand, in my opinion, are covered by the Ordinance and the factual controversies raised therein are to be adjudicated by this Court. The controversies, however, are of the nature, which cannot be decided without an investigation/inquiry or by recording evidence. I, therefore, find it necessary to first determine the disputed points and thereafter call for evidence."

"All these matters are adjourned and on the next date of hearing, this Court will determine the controversial points involved in the matters."

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

----S.9(3)---"Summary Procedure"--Connotation.

With due respect to the learned Judges deciding those cases, in my humble opinion this can never be the intention of the legislature while directing the Courts to adopt summary procedure under section 9 ibid. Obviously, the Court is not to follow the same complicated procedure as in a civil suit and its technicalities but is required to adjudicate the same expeditiously in a manner it deems fit and appropriate in the circumstances of each case.

The dictionary meanings of 'summary proceedings' is that the case is to be disposed of promptly in simple manner out of the regular course of the common law. Nowhere is there a restriction on the forum in recording the evidence for final conclusion. If the matter can be decided by apparent perusal of the pleadings, it may be done so and if the Court deems necessary to frame point for determination and record evidence, the Court must not hesitate to do the needful on the ground that intricate and complex question of facts are involved."

Latif Ansari and another v. Pakistan Industrial Promoter Ltd. 1988 CLC 1541; Industrial Development Bank of Pakistan v. Sarelo Cement Ltd. Company 1993 CLC 1540; Punjab Lamp Works Limited v. Investment Corporation of Pakistan 1988 CLC 2127; The Code of Criminal Procedure, Volume II, Revised and Enlarged Edn., 2000, p.1319 by Shaukat Mahmood and Nadeem Shaukat; Black's .Law Dictionary (Sixth Edn., p.1204, Second Column); P. Ramanatha Aiyar's The Law Lexicon (2nd Edn., Reprint 2002, p.1835; Palmer's Company Law, 24th Edn., Vol.1, at p.809; Muhammad Aslam Javed and another v. Malik Ijaz Ahmad 2003 CLD 1442; Rohail Hashmi and others v. Nabeel Hashmi and others 2003 CLD 201; Syed Shafqat Hussain v. Registrar, Joint Stock Companies, Lahore PLD 2001 Lah. 523; Akbar Ali Sharif v. Syed Jamaluddin and 2 others 1991 MLD 203; Salahuddin Khan v. Al-Mansoor Limited PLD 1987 Lah. 569; Mushtaq Ahmed v. Shaukat Soap Factory 1987 CLC 2079; Khurshid Ahmad Khan v. Pak Cycle Manufacturing Company Limited PLD 1987 Lah. 1.; Ammonia Supplies Corporation Private Ltd. v. Modern Plastic Containers Pvt. Ltd. and others (1994) 79 Comp. Cases 163; Mrs. E.V. Swaminathan v. K. M. M. A. Industries and Roadways Private Limited and others (1993) 76 Comp Case 1 and Khairuddin and others v. Settlement Commissioner and others 1998 SCMR 988 ref.

(c) Words and Phrases---

---"Summary procedure "---Connotation.

[As to the written notes of amicus curate submitted to the Court, please see paras. 11 to 14]

Naraindas Motiani for Petitioner (in J. Miscellaneous No. 3 of 2001).

Nadeem Azher Siddiqui for Respondent (in J. Miscellaneous No.3 of 2001).

Badaruddin Vellani Amicus Curaie (in J. Miscellaneous No.3 of 2001).

Anwar Mansoor Khan for Petitioner (in J. Miscellaneous No. 1 of 2002 and C.M.A. 1587of 2003).

Naraindas Motiani for Intervenor (in J. Miscellaneous No. 1 of 2002 and C.M.A. 1587of 2003).

Rasheed A. Razvi for Respondent (in J. Miscellaneous No. 1 of 2002 and C.M.A. 1587of 2003).

Badaruddin Vellani, Amicus Curaie (in J. Miscellaneous No. 1 of 2002 and C.M.A. 1587of 2003).

Iqbal Bawany for Petitioner (in J. Miscellaneous No.23 of 2001).

Mansoorul Arfeen for Respondents Nos. l and 3 to 12 (in J. Miscellaneous No.23 of 2001).

Rauf Buksh Quadri the Respondent in person (in J. Miscellaneous No.23 of 2001).

Badaruddin Vellahi Amicus Curate (in J. Miscellaneous No.23 of 2001).

Rauf Buksh Quadri the Petitioner in person (in J. Miscellaneous No.48 of 2000).

Mansoorul Arfeen for Respondents Nos.1 to 5 (in J, Miscellaneous No.48 of 2000).

Iqbal Bawany for Intervenor (in J. Miscellaneous No.48 of 2000).

Badaruddin Vellahi, Amicus Curaie (in Miscellaneous No.48 of 2000).

2005 C L D 802

[Karachi]

Before Muhammad Sadiq Leghari, J

FEDERAL MOGUL PRODUCTS, INC. U.S.A. through Authorized Signatory---Plaintiff

Versus

TAHA INDUSTRIES through Proprietor and 2 others---Defendants

C.M.As. Nos.2176 and 5565 of 2004 in Suit No.332 of 2004 heard on 31st January, 2005, Trade Marks Act (V of 1940)----

----Ss. 10(2) & 21---Copyright Ordinance (XXXIV of 1962) S. 39--- Specific Relief Act (I of 1877), S. 54---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Plaintiff had brought suit against defendants for restraining them from using then Trade Marks 'Wagner', 'Lockheed', '21' and 'Sunburst Logo with specified colour scheme, design and get-up for packaging which was property of plaintiff since long plaintiff had claimed that use of Trade Mark and copyright plaintiff by defendants for their products of brake fluid was clear infringement of their right and title and that defendants be restrained perpetually from using the same­--Plaintiff together with plaint had also filed an application for temporary injunction restraining defendants from using the Trade Mark, Colour Scheme, design and get-up of packaging/label till the decision of the suit---Defendants diet not dispute use of Trade Mark in dispute and also did not deny registration of Trade Mark and copyright of plaintiff it Pakistan as claimed by plaintiff in suit, but had pleader' that they had adopted and used said Trade Mark since 1994 and had acquired proprietary rights therein-­Defendants had not filed income returns relating to their business concern for the year 1994 and onward---Non filing returns had led to the inference adverse to the defendants---Use of trade marks in question claimed by defendants was much later in point of time than its use and registration by plaintiff in Pakistan---Plaintiff, who had exclusive right to use the trade mark in question since long prior to defendants, had a strong prima facie case---In use of plaintiff's trade mark by defendants great possibility was misleading the purchasers and they could be deceived-- -where use of trade mark by defendants had potential to affect the image and goodwill acquired by plaintiffs, balance of convenience would be on the side of plaintiff as it would suffer irreparable loss in case temporary injunction prayed for by it was refused---Plaintiff having made out a case for temporary injunction same was granted till decision of suit.

Toshiba Corporation's case PLD 1991 SC 27 and Messrs Wagner Electric Corporation v. Paramount Oil and Chemical Co. PLD 1973 Kar. Note 68 at p.91 ref.

Hassan Irfan Khan and Moin Qamar for Plaintiff.

Khurrum Gul Ghory for Defendants.

Dates of hearing: 6th, 18th, 25th and 31st January, 2005.

2005 C L D 822

[Karachi]

Before Mushir Alam, J

RIZWAN SHAHID ---Plaintiff

Versus

TARIQ ABDULLAH ---Defendant

Suit No. 178 of 2004, heard on 22nd April, 2004.

Trade Marks Act (V of 1940)---

----Ss.21, 25 & 26--- Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2--- Specific Relief Act (I of 1877), S. 54--­Plaintiff, who claimed to be proprietor of Trade Mark "GRANITTO" registered in his name, had sought restraining order against defendant from infringing and/or passing off his products using the said trade mark---Plaintiff had also filed application under O.XXXIX Rr.1 & 2, C.P.C. for grant of temporary injunction---Defendant, who claimed that he was importing goods and was using trade mark "GRANITTO" since last many decades much prior to adoption of said mark by plaintiff, could not produce any documents in proof of his claim---Defendant could successfully resist injunctive order provided he was able to produce documents to show that he had statutory defence recognized under Trade Marks Act, 1940 but he failed to produce the same---In absence of any such defence, injunction could not be refused to the plaintiff--Application for grant of temporary injunction was granted as prayed for by plaintiff.

Khurram Ghori for Plaintiff.

Asghar N. Farooqui for Defendant.

Date of hearing: 22nd April, 2004.

2005 C L D 824

[Karachi]

Before Mushir Alam, J

TRUSTEES OF THE PORT OF KARACHI---Plaintiff

Versus

Messrs POLEMBROS SHIPPING LIMITED and 9 others---Defendants

C.M.As. Nos.534 and 5541 of 2004 in Suit No.1167 of 2003, decided on 8th November, 2004.

(a) Karachi Port Trust Act (V of 1886)---

----S. 89---Suit by Karachi Port Trust against vessel for causing a number of damages to the Port etc.--Provision of S.89, Karachi Port Trust Act, 1886 imposes statutory responsibility jointly and severally on the Master, agent and owner of the defaulting vessel---Word "responsibility" and expression "severally and jointly be responsible" as used in S.89, Karachi Port Trust Act, 1886---Meanings---Master of the vessel being proper and necessary party for determination of the controversy in the suit, could not be exonerated from the statutory liability created under S.89, Karachi Post Trust Act, 1886---Principles.

Responsibility to bear the damage to the Port or its servants, consequences of sinking or grounding of vessel in the port limits or approaches and liability to pay penalty for misdeclaration, are imposed under section 89 of the K.P.T. Act, 1886 on the master, agent and owner of the vessel.

Section 89 of the Karachi Port Trust Act, 1886 imposes statutory responsibility jointly and severally on the master, agent and owner of the defaulting vessel for:

(a) Any damage caused to the property and servants of the Port, whether within Port's limit or in the approaches.

(b) Any misdeclaration of particulars of a vessel and for disobeying the parameters specified for handing of vessels in Karachi Harbour.

(c) Damage to any other vessel in the Port limits or approaches caused on account of the sinking or grounding of any vessel.

Defaulting vessel could also be detained till such time the costs of the damage as may be determined by the Board are paid. Master, agent and owner are also responsible for removal of the vessel at their own risk and cost failing which the Board may salvage or remove such vessel out of the Port's limit and the cost of such removal shall be recoverable from the sale proceeds of such vessel(s).

The responsibility of the master, agent and the owner of the vessel under section 89 of the Karachi Port Trust Act is joint and several. Statutory responsibility to answer the claim and reimburse the damage caused to the third party imposed by law on the owner, agent and master is individual as well as co-extensive.

The word 'responsibility' as used in section 89 of the Karachi Port Trust Act is not defined in the Act.

From the definition of the Word responsibility, it seems that it is synonymous to liability, Phrase "severally and jointly be responsible" as used in section 89, means that the owner, master and agent of the vessel are individually and collectively responsible to the third party for the wrongful act of the vessel or its servant. The liability to be legally answerable for an act done, and to repair or otherwise make restitution for any injury that may have been caused by the defaulting vessel or her servant, is statutory and not contractual. It is an obligation imposed by law, neither of three can seek exoneration from the responsibility to answer and satisfy the lawful claim of the Port for the damages arising out of wrongful act of the defaulting vessel. Therefore in view of said legal position contention that in presence of owner of the vessel, master of the vessel cannot be held responsible, cannot be sustained.

In the present case the plaintiff - has claimed damages on various heads of accounts. Under head number one, damages are claimed on account of (i) Off shore cleaning, (it) Beach cleaning, (iii) Removal of polluted sediments and other material from back water (iv) Disposal of dredging spoil and lastly (v) Damages to marine structure, cleaning and repair of marine structure of the port and removal of polluted stone pitching. Under last sub-head a sum of Rs.500 million has been claimed.

The master of the vessel is jointly and severally liable for any damage caused to the property and servants of the Port or any other vessel within the port limits or its approaches. There can be no dispute as regards the claim of damages contained in the last sub-head (v) is squarely covered by clause (a) of section 89. As regards claim against other sub-heads (i) to (iv) same are subject to detailed examination, before it could conclusively be help to be damages caused to the property of the Port. Claire under the sub-head (v) is Rs.500 million. Amount that has been realized by the official assignee from the sale of shipwreck is only Rs.100 million. Therefore, contention that Rs.100 million could be set off against the claim of damages cannot be sustained; as the amount realized i­s far below than the claim of damages even under the last mentioned head.

In view of the legal position Master is proper and necessary party for determination of the controversy in suit. He cannot be exonerated from the statutory liability created under section 89 of the Act.

(b) Words and phrases---

Responsibility"---"Responsible"---Meaning.

Black's Law Dictionary Sixth Edition (1990) at page 1312 ref.

Shaiq Usmani for Plaintiff.

Khursheed Jawaid, Advocate.

Naeem Ahmed for Defendants Nos. 1, 2, 3 and 5.

Kamal Asfar and Nadeem Azhar Siddiqui, Deputy Attorney General for Defendant No.4.

Aurangzaib Amin for Defendants Nos.6 and 7.

Yousuf Moulvi for Defendant No.7.

Muhammad Hassan Akbar for Defendant No.9.

Date of hearing: 8th November, 2004.

2005 C L D 836

[Karachi]

Before Mushir Alam, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Plaintiff

Versus

Messrs ZAMCO (PVT.) LIMITED and 9 others---Defendants

C.M.As. Nos.2548 and 2424 of 2004 in Suit No.B-101 of 2000, decided on 17th February, 2005.

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

----S. 7---Civil Procedure Code (V of 1908), O. I, R.10--­Impleading of a necessary party---Creation of charge on property by the defendant---Dispute as to when the defendant who created the charge died was indeed a question that required consideration for the purpose of determination of the validity of the charge by the defendant---Person who was successor (husband) of the said defendant and was to step into her shoes and might avail the plea, that would have been availed by the deceased defendant, was ordered to be arrayed as newly added defendant.

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

----S. 7(2)---Civil Procedure Code (V of 1908), O.VI, R.17 & S.151---Amendment of pleadings---Where the plea raised is supplementary and not destructive that could be allowed to be raised and even the limitation would not come in way to raise such plea---Only consideration should be that the plea should not be inconsistent or divergent to the pleas raised in the plaint earlier.

A.I. Chundrigar for Plaintiff.

Rizwan Ahmed Siddiqui for Defendant No. 1.

Nadeem Akhtar for Defendants Nos.6, 8 and 9.

Qazi Faez Isa for the Remaining Defendants.

Muhammad Zia Kiyani, Advocate.

2005 C L D 840

[Karachi]

Before Mushir Alam, J

Syed MEHMOOD ALI ‑‑‑Plaintiff

Versus

NETWORK TELEVISION MARKETING (PVT.) LTD. and another‑‑‑Defendants

Suit No. 91 of 1998, decided on 11th November, 2004.

(a) Defamation‑‑‑

‑‑‑‑Concept‑‑‑Defamation is insinuating representation or image disseminated or conveyed to a third person through any tangible medium of perception, may it be print, oral, audio or visual media or devices or any combination thereof causing harm, and impairment to the reputation, goodwill or estimation of a person, vocation or goods.

(b) Tort‑‑

‑‑‑‑Defamation‑‑‑Innuendo, in the context of action for tort of defamation, means oblique subtle or indirect implication in words or expression usually reckless, insolent and derogatory ensuing harm, injury and damage to the reputation, goodwill, and estimation of a person, goods or vocation.

Tolley v. J.S. Fry and Sons Ltd. 1931 AC 333 and Charlston v. News Group Newspapers Ltd. (1995) 2 AC 65 ref.

(c) Tort‑‑‑

‑‑‑‑Defamation‑‑‑Compensation‑‑‑Conditions‑‑‑Generally a class or particular section or group of people cannot claim to be defamed as a class, section, group or community nor an individual can claim to be defamed by general reference to the class, section, group or community to which he belonged‑‑‑Exception to this generality could be claimed where it is demonstrated that the maligning or offensive defamation was directed, or innuendo angled or obliquely aimed towards a particular individual, person and/or concern or few identifiable individual, persons, goods or vocation‑‑‑Once the case is brought within the exception, action for libel or innuendo could be maintained by affected persons to vindicate the honour, compensate the loss and restore the image.

Knupffer v. London Express Newspaper Ltd. 1944 AC 116; Aspro Travel Ltd. v. Owners Abroad Group (1995) 4 All ER 728 C.A.; Hassan Razzaqi v. Mst. Mehrun Nisa Meher 1972 PCr.LJ 1175; Mst. Hussain Bibi v. Saleem Muhammad PLD 1996 Lah. 50 ref.

(d) Defamation‑‑‑

‑‑‑‑Burden of proof‑‑‑Damages‑‑‑Entitlement‑‑‑Tenor of evidence on record showed that documentary films telecasted, in the garb of general insinuations against the vendors of an edible product, the plaintiffs business concern (shop) was focused in particular; images of said business concern of the plaintiff were shown in the background and in the foreground people were shown commenting on plaintiffs edible product‑‑‑Average person with ordinary prudence would be led to believe, as if the documentary was specifically aimed at insinuating the plaintiffs concern and his product‑‑‑ "Documentary" would leave a detestable aversive and damaging impression, as regards the product of the plaintiff‑‑Initial burden; to prove that defamatory material or innuendo was pointed towards the plaintiff or his product was on the plaintiff to show that the documentary was obliquely aimed at the plaintiff’s concern or his product‑‑‑Plaintiff had successfully demonstrated that in the documentary, shop of the plaintiff was shown, customers interviewed commented about the plaintiffs product, therefore, ordinary viewer reasonably would be led to believe that the documentary was about the plaintiffs product‑‑‑Plaintiff had also successfully demonstrated that, the damaging, maligning and offensive defamation telecasted and aired twice, was directed, referable or aimed towards the plaintiffs concern, the insinuating innuendo was covertly angled towards the plaintiffs product‑‑‑Burden to establish that the "Documentary" carried the true story or for that matter it was not aimed or focused toward the plaintiff was on the defendants, which burden was not discharged‑‑‑One of the defendants had failed to prove that the story in the documentary film shown twice as mentioned in the plaint by one of the defendants, was correct in respect of the plaintiff‑‑‑Defendants, held, were liable for consequence of defamation and plaintiff was entitled to claim damages both special as well as general.

(e) Defamation Ordinance (LVI of 2002)‑‑‑

‑‑‑‑Ss. 3, 4 & 9‑‑‑Penal Code (XLV of 1860), S. 499‑­Defamation‑‑Suit for damages‑‑Promulgation of Defamation Ordinance, 2002 has made defamation actionable under statute law (Ss.3, 4 and 9 of Defamation Ordinance, 2002)‑‑­Once it is established that the libel has been committed, injury or damage to the reputation, and goodwill is presumed‑‑‑Such principle has now been assimilated in S.4, Defamation Ordinance, 2002‑‑‑Defendant, in the present case, had admitted that the impugned documentary film containing insinuation conveyed innuendo at the plaintiffs concern and product was telecast but, pleaded justification‑‑‑Plea of justification, fair comment or any other admissible defence in like action, would not wipe out the effect of defamation altogether but could be considered as an exonerating and/or mitigating circumstance‑‑Defendant (since defunct) though had pleaded justification, no evidence was led either by the other defendant, who was stated to be the author of the script, or by the defendant (since defunct) the suit abated against it‑‑‑Held, once defamation was proved; damage, injury and impairment to the reputation, goodwill or estimation of a person, vocation or goods as the case may be, was invariably presumed‑‑‑Documentary film telecast was not true, therefore there was no difficulty to arrive at a conclusion that the insinuating Documentary that was telecast twice, harmed and impaired the estimation, reputation arid goodwill of the plaintiff and his product‑‑­Converse to the criminal liability, the civil liability foe libel, slander or innuendo would not depend on the intention of the offender but on the fact of defamation.

Cassidy v. Daily Mirror Newspapers Ltd. (1929) 2 KB 331 ref.

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

‑‑‑‑S. 350‑‑‑Dissolution of company under S. 350, Companies Ordinance, 1984‑‑‑Effect‑‑‑Company which had been dissolved, no longer existed as a separate juristic person or legal entity, capable of holding any property or being sued in any Court; as against the company in liquidation, which retains its corporate existence, as during liquidation, its administration and management converges into liquidator‑‑‑If the winding up is revoked, company revives.

Employer's Liability Assurance Corporation v. Sedgwick Collin & Co. AIR (1927) AC 95 and Travancore National and Quilong Bank Ltd. AIR 1939 Mad. 318 at 332 ref.

(g) Tort‑‑‑

‑‑‑‑Defamation‑‑‑Claim of damages‑‑‑Defendant, a defunct company having been dissolved under the Court's order for more than 2 years had passed‑‑‑Maxim: actio personalis moritur cum persona (cause disappeared and extinguished with the death of wrong doer or the party wronged‑‑­Applicability‑‑‑Where the right of action is personal in nature or arising out of action in tort excepting tort against the estate, then in the case of death (i.e. dissolution) of corporate or juristic person such right of action abates, as it abates on the death of a `natural person‑‑‑Defendant company, in the present case, was no more in existence, suit to all intents and purposes stood abated as against the company‑‑‑Cause of action to the plaintiff as against the defendant, f any, disappeared 'and extinguished with the death of wrong doer, viz. the defendant company (since dissolved)‑‑No damages, in circumstances, could be awarded against the company that was no more in existence as nothing remained to follow it.

Muhammad Yousuf v. Ghayyuyr Hussain Shafi 1993 SCMR 1185 ref.

(h) Tort‑‑‑

‑‑‑‑Defamation‑‑‑Suit for 'damages‑‑‑Publisher/telecaster of insinuating material‑‑‑Both publisher/telecaster and the author were jointly and severally liable for the act of defamation.

(i) Tort‑‑

‑‑‑‑Defamation‑‑‑Suit for damages was filed against more than one tortfeaser‑‑‑Abatement of suit against one of the tortfeasers, which was a company and was dissolved under the Court's order‑‑‑One defendant published (the defendant company) telecast the insinuation authored by the other defendant‑‑‑Both the telecaster and the author were jointly and severally liable for the act of defamation‑‑‑Abatement of suit as against one of the tortfeasers, (the telecaster) would not relieve the other (surviving tortfeaser) from the liability or consequences thereof‑‑‑Surviving defendant, who was stated to be the author of the libellous material and innuendo being joint tortfeaser, was equally responsible for the consequences‑‑‑Said defendant had not defended the claim of the plaintiff, there was no defence plea on the record, libel was established, therefore, on account of the contents of telecast material the liability squarely fell upon the said author/defendant‑‑‑Once the defamation was proved against the defendant, general damages were presumed‑‑‑High Court, in circumstances, awarded ;general damages to the plaintiff, to the extent of Rs.50,000 as against the surviving defendant/author‑‑‑Plaintiff having not led any evidence to substantiate special damages, same was disallowed.

(j) Defamation Ordinance (LVI of 2002)‑‑‑

‑‑‑‑S. 5‑‑‑Libel‑‑‑Suit for damages‑‑‑Plea of fair comment‑‑­Scope‑‑‑Provision of S.5, Defamation Ordinance, 2002 gives statutory backing to defence available to libeller as enumerated in the said section‑‑‑Person accused of libel may defend the action on the plea of fair comment on a matter of public good or interest, absolute or qualified privilege or if it is shown to be with the permission or consent of the injured and aggrieved person‑‑‑Defendant, the author of the libellous material in the present case, had sought refuge behind the plea of fair comment on the matter of public interest, but before any evidence could be led in support of defence plea the other defendant‑company which had made documentary film of the said material and telecast the same twice was dissolved by the order of the Court‑‑‑Defendant, being author of the insinuating documentary film chose not to appear in the proceedings before the Court‑‑‑Burden to prove the issue which was on the defendants, in circumstances, was not discharged‑‑‑Telecast of the impugned material therefore, was not privileged‑‑‑Suit of plaintiff, in circumstances, was decreed to the extent of general damages, in the sum of Rs.50,000 as against the defendant/author only, as suit against the company which had telecast the material stood abated on the dissolution of the defendant company on Court's order.

Manzoor‑ul‑Arifin for Plaintiff.

Defendant No. 1 (since dissolved).

Nemo for Defendant No.2.

Date of hearing: 11th November, 2004.

2005 C L D 879

[Karachi]

Before Zia Perwaz, J

COMMERCIAL UNION GENERAL INSURANCE COMPANY PLC---Petitioner

Versus

EAGLE STAR INSURANCE COMPANY LIMITED---Respondent

J.M. No. 126 of 2003, heard on 26th August, 2004.

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

----S.444---Petition under S.444(1)(iii) & S.444(3) of Companies Ordinance, 1984 for winding up of an unregistered company including a foreign company--­Maintainability---Essential requirements highlighted.

For maintaining a petition for winding up of an unregistered company (including a foreign company) for any one or more of the grounds mentioned in section 444(1)(iii) of Companies Ordinance, 1984, it is not required that concerned company should have been carrying on business in Pakistan or had an office or a place of business in Pakistan. However, for maintaining a winding up petition of a foreign company under section 444(3) of Companies Ordinance, 1984, it is required that concerned foreign company had been carrying on business in Pakistan. There is no such requirement, if petition for winding up is made on any of the grounds mentioned in section 444(1)(iii) as no such requirement is spelt out from its wordings.

Messrs James Finlay P.L.C. v. Messrs Hellenic Lines Limited and another 1986 CLC 2933 fol.

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

----Ss. 305 & 444---Winding up of Insurance Company merged in a foreign company (i.e. petitioner)---Insurance Company ceased to carry on its business in Pakistan since 1975 and its licence was cancelled after refund of required deposit by Controller of Insurance---Petitioner undertook to make alt claims, liabilities and demands, if set against Insurance Company---High Court ordered winding up of Insurance Company while observing that its liability would not be extinguished, if any and would be satisfied by petitioner in view of such merger and undertaking.

Messrs James Finlay P.L.C. v. Messrs Hellenic Lines Limited and another 1986 CLC 2933 rel.

Abdul Wajid Wyne for Petitioner.

2005 C L D 893

[Karachi]

Before Mushir Alam, J

BELA AUTOMOTIVES LIMITED---Plaintiff

Versus

HABIB BANK LIMITED---Defendant

Banking Suit No.90 and C.M.A. No.8669 of 2001, heard on 12th may, 2004.

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

----S.9(2)---Bankers Books Evidence Act (XVIII of 1891), S.4---Suit for accounts and damages by borrower---Non filing of statement of accounts along with plaint ---Effect---Break­up of statement of plaintiffs claim given in body of plaint quantifying mark-up illegally charged by Bank---Validity--­Purpose of S.9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was to inform defendant either by way of incorporating statement of account in body of plaint or in a conventional manner by filing along with plaint---Where plaintiff with sufficient details gave such break-up in body of plaint, then such purpose of S.9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 would be substantially served---Statement of borrower/customer would not be authenticated in terms of Bankers Books Evidence Act, 1891 as in the case of financial institution.

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

----Ss.9(2) & 10---Suit for accounts and damages by borrower---Objections raised by Bank as to maintainability of suit on various counts---Validity---Banking Court might embark upon to hear merit of such objections only after leave to defend suit was obtained by Bank.

Muhammad Yousaf v. ADBP 2002 CLD 1270; Baba Fareed Ghee Industries (Pvt.) Ltd. through Chief Executive and 3 others v. National Bank of Pakistan 2002 CLD 669 and Banker Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Ltd. and 7 others 2003 CLD 931 rel.

S. Mamnoon Hassan for Plaintiff.

Badar Alam for Defendant.

Date of hearing: 12th May, 2004.

2005 C L D 907

[Karachi]

Before Amir Hani Muslim, J

PAKISTAN CARPET MANUFACTURERS AND EXPORTERS ASSOCIATION and others---Applicants

Versus

MOHIUDDIN ANSARI and others ---Respondents

Judicial Miscellaneous Application Nos.21 and Suit No. 1232 of 2004, heard on 24th February, 2005.

Trade Organization Ordinance (XLV of 1961)--­

----S.12---Arbitration Act (X of 1940), Ss. 15, 16, 17, 18, 30, 31 & 33---Making award rule of the Court---Objection to-­Constitution of Arbitration Tribunal---Powers of Managing Committee---Basic questions in the present proceedings were, as to whether award, which was objected to on the basis of lack of jurisdiction, was filed in the Court to be made rule of the Court and no objection was made or filed against such award by the parties on the ground of non-service of notice or want of knowledge of such award having been filed in the Court; the Court without examining the legality of impugned award, was obliged to make it rule of the Court---Held, normally, in such eventuality, after issuance of notices to the parties, the award was made rule of the Court, but once it was brought to the notice of the Court that Arbitration Tribunal which had given the award, had no authority in law to conduct arbitration proceedings in such matter, the Court was obliged to examine legality of such issue besides the authority of Tribunal which had given the award, irrespective of the ground whether' objections to award were filed by the parties within 30 days or not---Courts could not overlook the legality of Arbitration Tribunal which had given award under the garb that parties had not filed objection to such a award within 30 days-­Provisions of S.12 of Trade Organization Ordinance, 1961 had barred filing of suit between the members in respect of issues covered therein---Any suit even if filed, would not restrict the Court from passing order in terms of Ss. 15 to 18 of Arbitration Act, 1940---Article and Memorandum of Association had not empowered Managing Committee to delegate its, powers to any person to appoint Arbitration Tribunal---Resolution of Managing Committee authorizing President and office-bearers of the Federation to appoint Arbitration Tribunal was unauthorized, in circumstance--­Impugned award having been passed against language of Trade Organization Ordinance, 1961 and in violation of Rules and Memorandum and Articles of Association, was nullity in the eyes of law and was set aside accordingly.

H.M. Saya and others v. Wazir Ali Industries Ltd. PLD 1969 SC 65 ref.

Khalid Javed for Applicants.

S. Abid Shirazi for Respondent No.4.

Date of hearing: 24th February, 2005.

2005 C L D 1182

[Karachi]

Before Anwar Zaheer Jamali and S. Ali Aslam Jafri, JJ

Brig. (Retd.) KI-IALID MAHMOOD---Appellant

Versus

HABIB BANK LIMITED and 5 others---Respondents

First Appeal No.45 of 2002, decided on 12th February, 2004.

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

----S.12(2)---Ex parte decree, setting aside of---Service of summons/notices issued in suit through bailiff, courier service and other modes not denied by defendant---Publication of summons of suit in various newspapers particularly in newspapers where defendant was residing---Application for setting aside of decree was dismissed in circumstances.

M. Rasheed Khan for Appellant.

Badar Alam for Respondent No.1.

2005 C L D 1191

[Karachi]

Before Saiyed Saeed Ashhad, C.J. and Maqbool Baqar, J

PRUDENTIAL DISCOUNT AND GUARANTEE HOUSE LTD.---Appellant

Versus

PAKLAND CEMENT LIMITED---Respondent

C.M.As. Nos.309 and 312 of 2005 in High Court Appeal No.58 of 2005, decided on 29th March, 2005.

(a) Law Reforms Ordinance (XII of 1972)---

----S.3---Limitation Act (IX of 1908), Art.164---Intra-Court appeal---Limitation---Impugned order passed without notice to appellant---Effect--Period of limitation would be computed from the date on which impugned order came to knowledge of appellant---Principles illustrated.

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

----S. 284---Compromise/settlement between creditors and members---Issuance of notice to parties for 17-1-2005---Joint application by creditors except appellant for ante-dating case from 17-1-2005 to 23-12-2004---Acceptance of application on 23-12-2004 ante-dating case to 23-12-2004---Disposal of matter by Company on 23-12-2004 in absence of appellant---Validity---Company Judge had proceeded with matter in great haste without ensuring the representation of all creditors and providing them an opportunity of hearing to submit their claims---Appellant as one of the creditors, though entitled to notice of such application, had not been given such notice---Disposal of matter in absence of appellant had violated principles of natural justice, which would be equated with a violation of law rendering impugned order illegal and void ab initio---High Court, in High Court appeal set aside impugned order with directions to Company Judge to dispose of case after providing an opportunity of hearing to appellant to submit its claim and put forward its case.

(c) Natural justice, principles of---

----Violation of principles of natural justice would be equated with a violation of law rendering impugned order illegal and void ab initio.

Nadeem Akhtar for Appellant.

Respondents called absent.

2005 C L D 1208

[Karachi]

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

Messrs RAZO (PVT.) LIMITED---Petitioner

Versus

DIRECTOR, KARACHI CITY REGION EMPLOYEES OLD AGE BENEFIT INSTITUTION and others ---Respondents

Constitutional Petition No.D-572 of 1990, decided on 21st October, 2003.

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

----S. 196---Contract Act (IX of 1872), Ss. 196. 197, 198 & 199---Civil Procedure Code (V of 1908), O. XXIX, R.1---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Powers of Director of company to conduct proceedings---Scope---Powers of ratification of wrong and illegal act---Board of Directors of a company could confer authority/power on Director or officer or Secretary of a private limited company in pursuance of resolution of Board of Directors in a meeting duly convened with prospective effect, but such power/authority could not be conferred retrospectively nor there was any provision in law which could enable the Board of Directors to confer such authority/power retrospectively and also to ratify the acts, wrongfully or illegally done, by Director/Principal Officer/Secretary of a private limited company---Provision of ratification as envisaged in the Contract Act, 1872 were not attracted in the present case as in Contract Act, 1872, the power of ratification had to be specifically conferred on a principal by virtue of which he could rat f y act of his duly authorized agent which at the time of performance the agent was not empowered or authorized to undertake or perform---Ratification essentially presupposed the existence of relationship of principal and agent and no such relationship existed between petitioner-Company and its Director---Action of ratification of Board of Directors in ratifying the acts of its Director in filing Constitutional petition without authority/power, would have no basis unless it would be established that Director had been empowered or authorized by Articles of Association of Company to ratify illegal or unauthorized act of Director, Secretary or Principal Officer:

Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881; Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072; Moulvi Nur-uz-Zaman Chowdhury v. The Secretary, Education Department, Government of East Pakistan and 2 others PLD 1967 Dacca 179; Rawalpindi Improvement Trust, Rawalpindi v. The Government of Pakistan through the Secretary, Ministry of Rehabilitation and Works, Rawalpindi and others PLD 1970 Lah. 760; Sarfraz Ahmad v. Government of Sindh and others 1992 CLC 1367; Pakistan Medical and Dental Council v. Dr. Roza Muhammad Khan 1992 SCMR 1621; Messrs Muhammad Siddique Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1966 SC 684; Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd. PLD 1971 SC 550 and Abdul Rahim and 2 others v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar. 62 ref.

(b) Administration of justice---

----When law required the doing of a thing in a particular manner then it could be done in that manner only and no other manner of doing such an act could be resorted to.

Hakim Ali v. Muhammad Saleem and others 1992 SCMR 46 ref.

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

----S. 196---Civil Procedure Code (V of 1908), O. XXIX, R.1---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Maintainability ---Constitutional petition was filed by a person who was not authorized/empowered to file same on behalf of petitioner-Company as he was not duly authorized/ empowered by means of a Resolution of the Board of Directors passed in a proper meeting of Board of Directors---Illegal/ unauthorized act of Director of petitioner-Company in filing/instituting petition without authority or power, could not be ratified or clothed with legality by a subsequent Resolution by the Board of Directors conferring on him the authority to file/institute, defend, compound or abandon the legal proceedings.

M. L. Shahani for Petitioner.

M.A.M. Namazie and Sajjad Ali Shah, Standing Counsel for Respondents.

Date of hearing: 15th August, 2003.

2005 C L D 1235

[Karachi]

Before Rahmat Hussain Jafferi, J

MUHAMMAD YOUNUS SHAIKH---Plaintiff

Versus

COREX ENTERPRISES and another ---Respondents

Suit No.347 of 2005, decided on 26th May, 2005.

Trade Marks Ordinance (XIX of 2001)---

---Ss. 46, 117 & 129---Civil Procedure Code (V of 1908), S. 79 & O. VII, R. 11---Constitution of Pakistan (1973), Art. 189---Suit for injunction against infringement of trade mark, passing of; damages and account of profits-Plaintiff, impleaded the party alleged to be infringing the trade mark and the Collector of Customs (Appraisement) but failed to implead Federal Government in the suit---Validity---If a suit was filed against the Government, the suit should have been filed in the name of Federal Government as per provision of S.79, C.P.C.---Suit, in circumstances, without making the Federal Government or Provincial Government as party was not maintainable and was violative of S. 79, C.P.C. and Art. 189 of the Constitution---Suit . being hit by the said provisions of law, plaint was rejected under O. VII, R.11, C.P.C.

Province of Punjab v. Muhammad Hussain PLD 1993 SC 147 and Haji Abdul Aziz v. Government of Balochistan 1999 SCMR 16 fol.

Nemo for Plaintiff.

Ms. Sofia Sultana for Defendant No. 1.

Raja Muhammad Iqbal for Defendant No.2.

2005 C L D 1330

[Karachi]

Before Anwar Zaheer Jamali and S.AIi Aslam Jafri, JJ

Dr. S.M. RAB---Appellant

Versus

NATIONAL REFINERY LTD.---Respondent

High Court Appeals Nos.6 and 10 of 2001, decided on 24th February, 2005.

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

----O. XLI, R. 27 & S. 151---Production of additional evidence---High Court, in the interest of justice and all the parties concerned allowed applications for production of additional evidence so that documents now placed on record may he taken into consideration by High Court to record just and equitable conclusion in respect of controversy involved in the appeals.

Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Limited PLD 1966 SC 684 and Zar Wali Shah v. Yousaf Ali Shah 1992 SCMR 1778 fol.

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

----S. 32---Suit by company---Authority to sue---Plaint in the suit filed on behalf of the Company was signed by its Assistant Manager Legal and it was nowhere mentioned in the plaint that how and in what manner Assistant Manager was legally authorised on behalf of the Company without a proper Board Resolution for the purpose---Plaint was however appended with an authority from the Managing Director of the Company to file suit bu the Assistant Manager Legal which again had nowhere disclosed/mentioned as to how the Managing Director of the Company could exercise power of delegation of authority on behalf of the Company, unless he was so empowered by the Articles of Association of the Company or there was some Board Resolution in his favour for the purpose with farther power of delegation of powers on behalf of the Company---Non-conferring of proper authority on behalf of the Company through Board Resolution in favour of the Assistant Manager legal who had instituted the suit on behalf of the Company, in circumstances, would result in incompetence of suit and thus same was not maintainable.

Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Limited, Lahore PLD 1971 SC 550 ref.

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

----S. 42---Suit for declaration, possession, mesne profits and damages---Plaintiff had claimed mesne profits at the rate of Rs.30,000 per month from the defendant-Company for their unauthorized occupation of suit plot---Such statement of the plaintiff though remained undisputed in cross-examination and further no evidence had been adduced by the defendant or the Development Authority to rebut the said position but in cross-examination of a witness on behalf of the defendant, plaintiff himself had suggested the rental value of suit plot @ Rs.10,000 per month---High Court, in view of the locality where the suit plot was situated and considering the fact that. it was an open plot in an area which had not yet been fully developed considered it just, equitable and fair to award mesne profits to the plaintiff Rs.10,000 per month---Plaintiff was entitled for restoration of possession and for recovery of mesne profits from the company @ Rs.10,000 per month from July, 1995 (date of unauthorized possession by the Company) till delivery of vacant possession of suit plot to him.

Abul Inam and Ainuddin Khan for Appellant. Arif Khan for Respondent No.1. Muzaffar Imam for Respondent No.2.

Dates of hearing: 8th October, 5th and 24th November, 2004.

2005 C L D 1352

[Karachi]

Before Wahid Bux Brohi, J

Messrs PEL APPLIANCES LIMITED---Applicant

Versus

UNITED BANK LIMITED---Respondent

C. Revision Application No.96 of 2004, decided on 2nd February, 2005.

(a) Administration of justice---

----Incidental observation was not sustainable.

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

----S. 9---Procedure of Banking Court---Scope---Provision of S.9, Financial Institutions (Recovery of Finances) Ordinance, 2001 provided that there should be a default in fulfilment of an "obligation" essentially by a "customer" or by a "Financial Institution" with regard to any "Finance" and only then the cause was to be adjudicated upon and decided by the Banking Court constituted under the Ordinance.

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

----S.2(c)---"Customer"---Definition---Provision of S.2(c), Financial Institutions (Recovery of Finances) Ordinance, 2001 defines the customer as a person to whom finance has been extended by a financial institution and includes a person on whose behalf a guarantee or letter of credit has been issued by a financial institution as well as a surety or an indemnifier---Section 2(c) of the Ordinance also refers to a person to whom "Finance" has been extended.

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

----S.2(d)--- "Finance"---Definition---Provision of S.2(d) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which defines finance" contains six clauses yet it is not exhaustive owing to the use of word "includes"; nevertheless, in examining the scope of "finance", focus is to be laid on the said clauses unless any other situation emerges from the Ordinance itself :.

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

----S.2(e)---"Obligation"-Definition---Term obligation defined in S.2(e), Financial Institutions (Recovery of Finances) Ordinance, 2001 would revolve around matters incidental/ancillary to finance and duties of customer.

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

----Ss.9 & 2(c)(d)(e)(i)---Civil Procedure Code (V of 1908), S.9---Encashment of cheque of plaintiff, a limited company, containing one signature alone, although it was agreed practice that a cheque of the plaintiff-Company was to be honoured only when it was signed by two authorized signatories and in consequence of such encashment Rupees one lac was drawn from the Bank---Agreed practice of encashment on the basis of two signatures and the fact that Rupees one lac had been drawn from the account of the plaintiff-Company was not disputed---Serious contest, however, was on the point that the matter essentially fell within the jurisdiction of Banking Court and the suit before a, Civil Court was not competent---Validity---Held, no accommodation or facility as contemplated under S.2(d)(i) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, could be spelt out from the subject-matter and even other clauses of S.2 of the Ordinance were not attracted since neither the dispute related to facility of guarantor etc. or financial enjoyment given by the financial institution on behalf of the customer nor a Benami loan or facility of credit or charge cards was involved--Plaintiff f was not borrower nor had he obtained a loan within the meaning of the Ordinance---None of said factors was attracted to the subject-matter, for the case simply related to negligence on the part of the Bank by overlooking the agreed and settled principle that the cheque could only be encashed when it was signed by two authorized signatories, irrespective of the fact that it was presented by a culprit or a gentleman---On the whole it led to an inevitable conclusion that definition of `finance" was not attracted to the cause of action in the present case---Term "obligation" defined under S.2(e) of the Ordinance would again revolve around matters incidental/ancillary to finance and duties of a customer, but the plaintiff-Company did not fall within the jurisdiction of "customer"---Present matter, therefore, did not fall within the jurisdiction of Banking Court but was wholly out of the scope of Banking laws and jurisdiction of Civil Court for the matter would not be effected---Suit, in circumstances, was maintainable in the Civil Court and did not fall within the jurisdiction of Banking Court constituted under the Financial Institutions (Recovery of Finances) Ordinance, 2001.

Nadeem Ghani v. United Bank Limited 2001 CLC 1904; Karachi Electric Provident Fund v. National Investment (Unit) Trust 2003 CLD 1026; Bank Alfalah Limited v. Iftikhar A. Malik 2003 CLD 363 and Nasimuddin Siddiqui v. United Bank Limited 1998 CLC 1718 ref.

Ishrat Alavi for Applicants.

Zubair Qureshi for Respondent.

2005 C L D 1377

[Karachi]

Before Zia Perwaz, J

Messrs QAYYUM SPINNING (PVT.) LTD.---Petitioner

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

J. Miscellaneous No.9 of 2004, heard on 4th October, 2004.

Companies Ordinance (XLVII of 1984)---

----Ss.309 & 305---Companies (Court) Rules, 1997, R.55---Voluntary winding up of company---Company was closed on suffering of losses and an extraordinary general meeting of the shareholders of the Company resolved to voluntarily wind up the Company---Company incurred liability of huge amount of Bank and towards demand of Income-tax Department---Bank's amount was agreed to be paid in instalments in terms of compromise---Notices of the winding up were advertised in pursuance of R.55 of the Companies (Court) Rules, 1997 in daily newspapers---Registrar of Joint Stock Companies filed objections disclosing charge entered against the Company with respect to certain liabilities of Banks---Counsel of the petitioner-Company stated that these liabilities had already been cleared and paid off and filed a statement followed by a certificate of the Company confirming the liability and further stated on behalf of the proposed company that in case of such claim or liability, the same would be due, and payable by the said company---Held, such f acts, coupled with the reasons that company had ceased to carry on business and the undertaking given at the Bar, petition for winding up was allowed and liquidator appointed.

Aga Faqir Muhammad for Petitioner.

Date of hearing: 4th October, 2004.

2005 C L D 1383

[Karachi]

Before Rahmat Hussain Jafferi, J

Messrs VICTOR ELECTRONICS APPLIANCES INDUSTRIES (PVT.) LIMITED---Plaintiff

Versus

HABIB BANK LIMITED and another---Defendants

Suit No.1221 of 2002, decided on 18th April, 2005.

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

----O.XXIX, R.1---Subscription and verification of pleadings---Company---Articles of Association of the Company contained a clause authorizing the Chief Executive/Director of the Company to sign and verify the plaint-Chief Executive under OXKJX, R.1, C.P.C. was authorized to sign and verify the plaint.

Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation Limited PLD 1971 SC 550 ref.

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

--S.9-Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.9---Suit for compensation and damages--Plaintiff, a company had applied to the Bank for opening of Letters of Credit; Bank charges were paid by the plaintiffs including the swift charges; plaintiffs were informed by the Bank that the letters of credit were opened and the copies of the relevant documents there provided to the plaintiffs; plaintiffs communicated the required information of letters of credit to the suppliers abroad, but the suppliers informed the plaintiffs that they had not received the letters of credit---Plaintiffs brought the facts to the Bank's notice mentioning the numbers of letters of credit in their letter and further told the Bank that the plaintiffs would be put to severe damage and their business would be affected---Evidence available on record showed that in spite of payment of all charges the letters of credit were not opened by the Bank, but copies of fake letters of credit were given to the plaintiffs----Plaintiffs could not fulfil their promises to the foreign suppliers as they had supplied the information received from the Bank to the foreign suppliers that the letters of credit were opened and the goods be sent---Bank having not opened letters of credit as admitted by the Bank, the plaintiffs had suffered loss to their reputation, business and goodwill due to acts of the Bank and thus they were entitled to compensation and damages---Plaintiffs, however, could not produce any evidence showing the specific financial loss of business because of the acts of the Bank, but had suffered loss of reputation and goodwill---Plaintiffs, therefore, were entitled to damages and compensation as claimed---High Court, in view of all the circumstances, decreed the suit for Rs.100,00,000 as damages to meet the ends of justice.

Kh. Naveed Ahmed for Plaintiff.

Khalil Ahmed for Defendants.

Date of hearing: 12th April, 2005.

2005 C L D 1477

[Karachi]

Before Zia Perwaz and Ata-ur-Rehman, JJ

Mst. IRSHAD YAMIN---Appellant

Versus

CITIBANK N.A. and others---Respondents

First Appeal No.55 of 2004, decided on 11th February, 2005.

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

----S.19(7)---Civil Procedure Code (V of 1908), S.47 & O.XXI, Rr. 58. 60---Execution proceedings---Objection petition---Banking Court. instead of making an investigation into assertions made by applicant, dismissed objection petition on extraneous considerations and personal assumptions---High Court accepted appeal, set aside impugned order and remanded case to Banking Court for its decision afresh.

Salim Salam Ansari for Appellant.

M. A. Khan for Respondent No. 1.

Nemo for Respondents Nos.2 and 3.

Date of hearing: 11th February, 2005.

2005 C L D 1529

[Karachi]

Before Syed Zawwar Hussain Jaffery, J

REEMTSMA CIGARA HENFABRIKEN--- Appellant

Versus

KOREA TOBACCO AND GINSENG CORPORATION---Respondent

M.A. No.31 of 2004, decided on 28th April, 2005.

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

----S. 8(a)---Trade Marks Ordinance (XIX of 2001), S.114---Appeal to High Court---Prohibition of registration of certain matters---Contentions of the appellants were that respondent had applied for registration of Trade Mark "Zest" which was confusingly and phonetically similar to appellant's trade mark "West" and covered all the goods and thus, if the trade mark "Zest" was allowed to be registered, side by side with the appellants' trade mark "West", it was likely to cause confusion and deception amongst the trading community and the purchasing public and that Registrar, Trade Marks, did not appreciate the contents of notice of opposition and passed the impugned order and disallowed the appellant's notice of opposition and permitted respondent's application for registration---Validity---Held, words "Zest" and "West" were neither phonetically similar nor caused confusion and deception amongst the trading community and the purchasing public---Both the trade marks were in use for the last several years in number of countries and no evidence was brought on record which had caused physical damage to any of the parties---Trade mark "Zest", therefore. was not to deceive or cause confusion amongst the users---Registrar Trade Marks, in circumstances, had rightly allowed the proceedings for trade mark "Zest" under S.8(a), Trade Marks Act, 1940---No error in using the discretion by the Registrar Trade Marks in passing the impugned order having been found, High Court declined to alter/amend or to set aside the same as the order was neither perverse nor suffered from any infirmity or illegality---High Court, however, deprecated the situation that Trade Mark Registrar had taken years to years for registration of trade mark and observed that such type of practice of Registry cannot be appreciated and directed the Registrar of Trade Marks to dispose of the application for registration within three years positively and in case of delay disciplinary action against concerned officer should be initiated or reasons for delay be given in their proceedings.

Aspro v. Dispro PLD 1973 Note 60 at p.82; Rem v. Mem 1987 CLC 1539; Abdul Wahid v. Haji Abdul Rahim and others PLD 1973 SC 104 and Giorgio Beverly Hillsi Inc. v. Colgate Palmolive Pakistan Ltd. (formerly known National Detergents Limited) 1999 MLD 3173 ref.

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

----S. 8(3) & (15)---Notice of opposition---Registration of trade mark--Attorney of foreign company, filed in the capacity of opponent a notice of opposition before the Registrar, Trade Marks---Validity---Case being that of registration of trade mark, attorney, who was not counsel of the opponent, could file the notice of opposition as in all fairness, in each case the parties or their agents or attorneys should file art affidavit in support of the case and not the counsel.

Giorgio Beverly Hills Inc. v. Colgate Palmolive Pakistan Ltd. (formerly known National Detergents Limited) 1999 MLD 3173 ref.

Muhammad Fazil Bharucha for Appellant.

Amna Salman Ahmed for Respondent.

Date of hearing: 17th March, 2005.

2005 C L D 1546

[Karachi]

Before Mushir Alam, J

Messrs ADT SERVICES AG through Attorney and another--- Plaintiffs

Versus

Messrs ADT PAKISTAN (PTV.) LTD. through Promoter and Director and 4 others---Defendants

Suit No.605 of 2004, decided on 24th March, 2005.

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

----Ss. 37 & 38---Trade Marks Ordinance (XIX of 2001) S.2 (xviii)---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Prohibition of certain names---Application for grant of injunction---Where deceptive name has been adopted and it comes to notice of the Company it may apply for the change in name or even the Securities and Exchange Commission of Pakistan is competent to order for rectification of deceptive name---Court, in appropriate cases, may pass injunctive order against the defendants restraining them from adopting and or to carry on trade and business under the name and style deceptively identical or similar to that of other company already carrying on business under a particular name---Defendant-Company, in the present case was directed by the Court to take steps and measures to seek rectification of its name within one month from the date of the present judgment---Court further observed that in case no steps were taken within time allowed, the Securities and Exchange Commission of Pakistan in terms of S.38, Companies. Ordinance, 1984, having jurisdiction in the matter, might direct the defendant-Company to rectify its name to obviate deception and confusion on account of similarity of its name with that of plaintiff and its trade mark.

Progressive Consultants (Pvt.) Ltd. v. Corporate Law Authority 2002 CLD 726 and Muhammad Baksh & Sons Ltd. v. Azhar Wall Muhammad 1986 MLD 1870 ref.

(b) Copyright Ordinance (XXXIV of 1962)----

----Ss. 10, 11 & 62---Civil Procedure Code (V of 1908)---O. XXXIX, Rr.1 & 2--Application for grant of injunction by the plaintiff-Impugned artistic work in the name, style and colour scheme of artistic work claimed to have been created by the defendant existed much before the defendant had sworn affidavit to such effect and was being used by the plaintiff extensively---None other than the defendant was dealing as supplier of service under trade or service mark of the plaintiffs, under dealership agreement---Copyright subsisting in original, in literary, dramatic or artistic works, does not require formal registration---Title in copyright is not dependent on registration, the moment artistic work is created or expressed in any tangible medium of expression, unless otherwise so agreed by the author or created in terms of contract if any, with third party and the moment it is shown that the claim based on the registration is founded on fraudulent misrepresentation; such right could be successfully defeated and defended by the author of the work or his representative---Defendant was not only morally, ethically, but also legally committed not to appropriate property comprising trade and service marks vesting in the plaintiffs---Defendant, directly or indirectly could not be allowed to misappropriate the property of his master or Principal---If such tendency was encouraged, it would be devastating for the corporate and commercial trade and practice in Pakistan and will deter foreign entrepreneurs to enter and make investments in Pakistan---Plaintiffs, in circumstances, had made out a prima facie good case for the grant and confirmation of injunctive relief.

Ferozesons (Pvt.) v. K.U. Kureshi 2003 CLD 1052 and Pakistan Drug House (Pvt.) Ltd. v. Rio Chemical Co. 2003 CLD 1531 ref.

(c) Trade Marks Ordinance (XIX of 2001)---

--S. 46---Civil Procedure (V of 1908), O.XXXIX, Rr.1 & 2---Copyright Ordinance (XXIV of 1962), S.9---Infringement of Trade Mark---Application for grant of injunction---Provision of S.46, Trade Marks Ordinance, 2001 recognizes right of action against any person for passing off goods of another person or services as services provided by another person or the remedies in respect thereof---Likewise in case of copyright, right or jurisdiction to restrain breach of trust or confidence cannot be defeated, where a person is shown to have obtained or claims copyright in breach of trust or confidence---Plaintiffs, in the present case, had been able to demonstrate that they had adopted the trade mark in question in Pakistan on 7-10-1997 when they first applied for its registration---Irrespective of the fact that mark had not yet received registration, fact remained that plaintiffs had not only made out a case of "passing off' under S.46(2) of the Trade Marks Ordinance, 2001 `and so also case of breach of trust and confidence in terms of S.9, Copyright Ordinance, 1962---Copyright cannot be used as a substitute or alternate for the trade or service marks---High Court, while expressing anguish over the copy culture and growing tendency of piracy and misuse of copyright as a substitute to trade mark, suggested amendment in the Copyright Ordinance, 1962--- Defendant was not only morally, ethically, but legally committed not to appropriate property . comprising trade and service marks vesting in the plaintiffs---Defendant, directly or indirectly could not be allowed to misappropriate the property of his master or Principal---If such tendency was encouraged, it would be devastating for the corporate and commercial trade and practice in Pakistan and will deter foreign entrepreneurs to enter and make investments in Pakistan---Plaintiffs, in circumstances, had not only made out a prima facie but good case for the grant and confirmation of injunctive relief.

Pakistan Drug House (Pvt.) Ltd.'s case 2003 CLD 1513 ref.

(d) Copyright Rules, 1967---

----R. 4---Person applying for copyright has to file an application in terms of R.4, Copyright Rules, 1967, containing declaration as to ownership and use of the artistic work together with affidavit of the intended user and author of artistic work---Such person is also required under R.4(3) to send a copy of the application to every other person "interested" in the copyright of the work---Record did not show anything that the defendants, while applying for the registration of copyright had sent any copy of application for the registration to the plaintiffs with whom defendants had dealership agreement under the questioned trade mark---Defendants, in the present case, under the dealership agreement with the plaintiffs were "service provider" under the trade mark, therefor, for all practical purposes the plaintiffs were "interested" persons entitled to intimation as to the hostile claim of the defendants of their service and trade mark.

(e) Copyright Ordinance (XXXIV of 1962)---

------Ss. 12 & 69---Copyright Rules, 1967, R.4---Trade Marks Ordinance (XIX of 2001), S.1---Patents and Designs Act (II of 1911), S.43---Application for registration of copyright---Artistic work may, at times, be registered under Patents and Designs Act, 1911 and in order to avoid clash of interests, rights and remedies under Copyright Ordinance, 1962 and Patents and Designs Act, 1911, S.12 of the Copyright Ordinance, 1962 provides solution---Copyright does not subsist under the Copyright Ordinance, 1962, in any design the moment it is registered under the Patents and Designs Act, 1911---High Court observed that law-makers may consider to provide similar provision as regard Trade and Service Marks are concerned by analogous provision and it may be provided that copyright may cease to exist the moment copyright, that is capable of registration as a trade mark under the Trade Marks Ordinance, 2001, is registered---Such amendment, may save many from expensive litigation and at the same time save lot of Court time---High Court in order to curb piracy and copy culture, till the law is amended, provided directions to the Registrar Copyrights to be followed and complied with while entertaining applications for registration of copyright in any artistic work---High Court further directed that copy of the present judgment may be sent to Securities and Exchange Commission of Pakistan, as well as to the Registrar Copyrights, to follow and comply with the directions contained in the judgment---Copy of the judgment was also directed to be sent to the Ministry as well as to Secretary Law, Justice and Parliamentary Affairs, to examine the amendment proposed in the Copyright Ordinance, 1962 for suggesting the same to the law framers.

Artistic work may at times be registered under Patents and Designs Act, 1911. In order to avoid clash of interest, right and remedies under Copyright Ordinance, 1962 and Patents and Designs Act. Section 12 of the Copyright provides solution. The copyright does not subsist under the Ordinance, in any design the moment it is registered under the Patents and Designs Act, 1911. Law-makers may consider to provide similar provision. So far as Trade and Service Marks are concerned. By analogous provision it may be provided that copyright may cease to exit the moment copyright, that is capable of registration as a trade mark or service mark under the Trade Marks Ordinance, 2001 is registered. Such amendment may perhaps save many from expensive litigation and at the same time save lot of Court time. Till such time law is amended, in order to curb piracy and copy culture it is desirable, that the Registrar Copyright, from onwards, while entertaining applications for the registration of Copyright in any artistic work, may ensure that, the Affidavit of the applicant and author of artistic work must also contain a declaration to the effect, that The Artistic work, applied for registration, is original creation and is neither copy nor imitation of work of any other author nor is copy or imitation of any design, trade mark or service mark". In terms of sub-rule (3) of Rule 4 of Copyright Rules, 1967, declaration must also contain, statement to the effect. "To the best of my knowledge there is no other person who is interested in the copyright of the work". And where there be any person interested a statement to the effect "A copy of the application has been sent to every other person interested in the copyright of the work. In proof thereof, copy of the Acknowledgement Due is also enclosed". Undertaking may also contain further declaration to the effect that "In case above declaration is found to be false or incorrect, copyright, if granted, is liable to be cancelled, in addition to any other action permissible under law including but not limited to blacklisting the author in future artistic work". Perhaps for fear of legal action, in case declaration is found false or incorrect, it may not altogether abolish piracy or copy culture but surely will serve as a deterrent or remedy for the vice and malady of piracy and copy culture rampant in Pakistan. In fact section 69 of the Copyright Ordinance, 1962 provides two years punishment for making false statement or statement knowing to be false for the purposes of deceiving or influencing any authority or officer in the performance of any of his functions under any of the provisions of the Ordinance.

Copy of the High Court order may be sent to Securities and Exchange Commission of Pakistan, as well as to the Registrar Copyrights, to follow and comply with the directions contained above. Copy may also be sent to the Ministry as well as to Secretary Law, Justice and Parliamentary Affairs, to examine the amendment proposed in the Copyright Ordinance, 1962 for suggesting the same to the law-framers.

Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Dabur India Ltd. v. Hilal Confectionery (Pvt.) Ltd. PLD 2000 Kar. 139; Messrs Ferozesons Pvt. Ltd. v. Dr. Col. Retd. K. U. Kureshi 2003 CLD 1052; Maaza International Company L.L.C. v. Popular Food Industries Ltd. 2004 CLD 171; Messrs Mehran Ghee Mill Pvt. (Ltd.) v. Messrs Chiltan Ghee Mill (Pvt.) Ltd. 2001 SCMR 967; Pakistan Drug House (Pvt.) Limited v. Rio Chemical Company and another 2003 CLD 1531; Tapal Tea (Private) Limited v. Shahi Tea Company 2002 CLD 1113; Progressive Consultants (Pvt.) Ltd. v. Corporate Law Authority 2002 CLD 726; Muhammad Baksh & Sons Ltd. v. Azhar Wali Muhammad 1986 MLD 1870; and Pakistan Drug House (Pvt.) Ltd.'s case 2003 CLD 1513 ref.

Raja Qasit Nawaz for Plaintiffs.

Akhtar Ali Mahmud and T. Sibtain Mahmud for Defendants.

2005 C L D 1571

[Karachi]

Before Ata-ur-Rehman and Zia Perwaz, JJ

NAZIR AHMED VAID and others---Appellants

Versus

HABIB BANK AG ZURICH---Respondent

I.A. No.35 of 2004, decided on 17th March, 2005.

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

----Ss. 11 & 22---Interim decree--Appeal---Competence---Limitation---Provision of S.11 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, specifically refers to that part of the claim which is undisputed between the parties---In the present case the principal amount was admitted by the defendant in his application and on the strength of the admitted documents the Trial Court ordered for payment of specified amount---Such order was passed on the admission made in writing in the application moved by defendant himself and based on the admitted documents---Said order was only with respect to the admitted amount while the remaining claim was kept pending for further adjudication---Order of the Trial Court, in such a situation, fell within the definition of "interim decree" as envisaged by S.11(2) of the Ordinance and attracted the said provision and thus was an appealable order---Order of Trial Court attained finality and could not be disturbed in appeal presented by circumventing the period of limitation, after moving a subsequent application during proceedings in execution and then approaching the High Court in appeal---Appeal against such order was to be filed within 30 days as provided under S.22, Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

-------S. 22---Appeal---Maintainability---Interlocutory order---Impugned order passed by the Banking Court in execution application whereby the Court allowed attachment of the property of the appellant could not be treated as a final order" as envisaged under the provisions of S.22(1)(6) of the Ordinance and no appeal lies against such an interlocutory order.

Riaz Kadir Brohi for Appellants.

Nasir J.R. Shaikh for Respondent.

Date of hearing: 17th March, 2005.

2005 C L D 1577

[Karachi]

Before Muhammad Sadiq Leghari, J

CHINA NATIONAL MACHINERY IMPORT AND EXPORT CORPORATION---Plaintiff

Versus

TUFAIL CHEMICAL INDUSTRIES LTD.---Defendant

Suit No.396 of 2001, decided on 1st April, 2005.

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

----S. 2---Arbitration Act (X of 1940), S.14---Civil Procedure Code (V of 1908), S.151---Award---Suit for judgment and decree with prayer for making the award rule of Court---Maintainability---Company incorporated under the law of China having its office in China and a company incorporated in Pakistan entered into a contract whereby plaintiff (the Chinese Company) agreed to sell and respondent (Pakistan Company) agreed to purchase machinery/ equipment, know-how and design as per terms and conditions of the contract---Article of the said contract provided for arbitration in China in English to be conducted by China International Economic and Trade Arbitration Commission in accordance with the letter, rules, and procedure in case of any or all disputes arising from the execution of or in connection with the said contract with the provision that (he arbitration of the Commission would be final and binding upon both the parties---Necessary notification as required under S.2(b)(c) of the Arbitration (Protocol and Convention) Act, 1937 was never issued by the Federal Government in respect of China, so the award could not be treated as foreign award---Such award, though not being foreign award or domestic award was not enforceable in Pakistan in the manner as an award was to be enforced under the Arbitration (Protocol and Convention) Act, 1937 or under Arbitration Act, 1940, yet it could be enforced the way the awards made by the foreign Arbitrators were being enforced before coming in force of the said Acts---Contract having been signed in Pakistan and defendants residing in Pakistan and carrying on business here, the plaintiff could enforce the award by filing suit in Pakistan---Present suit, though was under a special law, but substantially it was a suit for enforcement of an award and for recovery of the claim awarded in the arbitration proceedings---Plaintiff, could not be non-suited for technical reasons that the award could not be enforced under the provisions of Arbitration (Protocol and Convention) Act, 1937 and Arbitration Act, 1940; it would be proper to treat the same as a regular suit exercising powers under S.151, C.P.C.---Such an order was not barred by any provision of law---High Court, therefore, treated the suit of the plaintiff as regular suit for enforcement of the award---Court had the powers even to convert the proceedings of one kind to the proceedings of other kind when necessary for doing justice between the parties.

Messrs Yangtze (London) Ltd. v. Messrs Barlas Brothers PLD 1961 SC 573; Province of West Pakistan v. Mustafa R.C.C. Works PLD 1977 Kar. 397; Sait Pamandas Singaram's case AIR 1960 Andh. Pra. 59 and Ahmedullah Malik's case PLD 1964 SC 236 ref.

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

----S. 2---Foreign award---Requirements for treating an award as 'foreign award" enlisted---If the notification as required by S.2(a)(b) of Arbitration (Protocol and Convention) Act, 1937 had not been issued by the Federal Government of Pakistan the award could not acquire the status of foreign award.

Before treating an award as a foreign award under the Arbitration (Protocol and Convention) Act, 1937 it must be shown:

(i) To have been made in respect of differences between persons who are subject to the jurisdiction of powers which have been declared by notification published in the official Gazette by the Central Government to be parties to the Convention mentioned in the Act, and

(ii) to have been made in a territory which has been similarly declared to be a territory to which the said convention applies.

If notification as required by clauses (a) and (b) of section 2 of the Act has not been issued by the Central Government of Pakistan the award cannot acquire the status of foreign award.

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

----O. VI, R.17---Amendment/alteration of pleadings---Permission to alter/amend the plaint could be considered through regular application, proposing the amendments and such request was to be considered in accordance with law after providing the other side with an opportunity of hearing.

Ch. Muhammad Jamil for Plaintiff.

Munir A. Malik for Defendant.

Date of hearing: 9th March, 2005.

2005 C L D 1608

[Karachi]

Before S. Ali Aslam Jafri, J

MALCOLM M. DALAL and another---Plaintiffs

Versus

KARACHI STOCK EXCHANGE (GUARANTEE) LIMITED and another---Defendants

Suit No.941 of 1999, decided on 22nd December, 2004.

(a) Interpretation of statutes---

----Retrospective effect of a statute---No statute would be construed so as to give it a retrospective effect, unless its language was so plain to require such construction and in absence of any specific intention of legislature, a statute could not have retrospective operation---Rights created in favour a party, could riot be demolished through amendment in law.

(b) Securities and Exchange Commission Rules, 1971---

----R.3(c)(i)---Pakistan Citizenship Act (II of 1951), S.14---Specific Relief Act (I of 1877), Ss.42 & 54---Suit for declaration and injunction---Retrospective effect of notification---Plaintiff who acquired membership. of Stock Exchange in 1955, had acquired citizenship of U.S.A. in 1959, but his name continued to appear in the list of members published in 1997---Subsequently vide resolution passed in a meeting held on 8-4-1999, plaintiff through a letter was informed that he being a citizen of U.S.A. could not retain dual nationality and that his name had been removed from membership register---Subsequently vide notification issued on 29-8-2004 by Government in exercise of power under S.14(3) of Pakistan Citizenship Act, 1951, plaintiff had become entitled to dual Citizenship i.e. of Pakistan and U.S.A.---Said notification was retrospective in operation and resolution dated 8-4-1999 whereby plaintiff could not retain dual nationality and his name was removed from membership, was passed when said notification was not in field---Under provision of R.3(c)(i) of Securities and Exchange Commission Rules, 1971, powers which could be exercised by defendant were to the extent of suspension of membership of a member, as proviso to said rule had clearly provided that membership in case of Stock Exchange functioning immediately before commencement of said rule, would become suspended on commencement of such rules and would remain so suspended until said member became a citizen of Pakistan---Termination of membership of plaintiff, in circumstances was void ab initio as in view of notification, dated 29-8-2002 his membership stood revived.

Umar Ahmad Ghumman v. Government of Pakistan PLD 2002 Lah.521; Alsamraz Enterprise v. Federation of Pakistan 1986 SCMR 1917; Chief Land Commissioner, Sindh and others v. Ghulam Haider Shah and others 1988 SCMR 715; Pakistan Steel Mills Corporation v. Muhammad Azam Katper 2002 SCMR 1023; Malik Asad Ali and others v. Federation of Pakistan PLD 1998 SC 161; Mehreen Zaibunnissa's case PLD 1975 SC 397 and Molassess's case 1993 SCMR 1905; Army Welfare's case 1992 SCMR 1652 and Gatron Industries v. Government of Pakistan 1999 MLD 1994 ref.

Ms. Sana Minhas for Plaintiffs.

Ms. Lubna Aman for Defendant No.1.

Dates of hearing: 19th August and 22nd December, 2004.

2005 C L D 1640

[Karachi]

Before Muhammad Sadiq Leghari, J

C.I.T. GROUP/CAPITAL EQUIPMENT FINANCING INC.---Plaintiff

Versus

M.T. EASTERN NAVIGATOR and another---Defendants

Adm. Suit No. 123 of 1996, decided on 17th March, 2005.

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

----S. 3(2)(r) ---Civil Procedure Code (V of 1908), O.III, R.4---Constitution of Pakistan (1973), Art. 175(2) --- Suit cinder Admiralty Jurisdiction of High Court---Application by a law firm with the prayer that the applicant's fee be paid out of the sale proceeds lying in the hands of the official Assignee, held as security for satisfaction of the judgment and decree passed in favour of the interveners---Maintainability---Claim of a legal firm or an Advocate for the services rendered by it/him in connection with admiralty suit/proceedings was not among the claims mentioned specifically in S.3(2)(r) of the Admiralty Jurisdiction of High Courts Ordinance, 1980---Bringing such a claim within the scope of S.3(2)(r) would amount stretching it far from its original scheme---Object behind the condition of leave by the Court under OXI, R.4, C.P.C. is not to recover fee of an Advocate or get it refunded from him to a party---Such an exercise would be beyond the scope of suit/proceedings---Applications being not maintainable was dismissed---Principles.

Clause (2) of Article 175 of the Constitution of Islamic Republic of Pakistan expressly provides that no Court shall have any jurisdiction save as is or may be conferred on it by the Constitution or by or under any law. In view of the clear embargo the principles of common law or equity and good conscience cannot confer jurisdiction on the Courts in Pakistan which has not been conferred upon them. In view of the above legal position the principles based on common law or equity cannot be accepted unless jurisdiction in the matter in issue has been conferred upon the Courts by the law.

A bare look at section 3(2)(r) of the Admiralty Jurisdiction .of High Courts Ordinance, 1980 gives out that it being a residuary provision has specified the claims in respect whereof the jurisdiction under the Ordinance can be exercised. A claim of a legal firm or an Advocate for the services rendered by it/him in connection with admiralty suit/ proceedings is not among the claim mentioned specifically in the provision. Bringing such a claim within the scope of the provision would amount stretching it far from its original scheme. No provisions of the Merchant Shipping Act (XXI of 1923) or any other law which conferred jurisdiction on the High Court As the Court of' Admiralty jurisdiction immediately before the commencement of Ordinance conferred jurisdiction upon the Admiralty Court in respect of the claims relating to the service charges of the legal firm in the admiralty proceedings. Therefore, the dispute regarding charges of' the services rendered by the legal firm or Advocates claimed through present application does not come within the scope of any of the provisions of section 3 of Admiralty Jurisdiction of High Courts Ordinance, 1980. No provision of the Ordinance recognizes the said charges as charges upon the ship/the subject-matter of the suit.

As regards the Order III, rule 4 of C.P.C. it is procedural provision relating to the continuity and termination of a written appointment of an Advocate signed by his client for representing him in a civil proceedings. There can be no doubt about the fact that relationship of client and counsel is perfectly at choice. No one can be compelled to appoint. a particular Advocate for representing him in a particular suit not any Advocate can be compelled to represent a particular person in a suit. Same way a party or its counsel have right to terminate the appointment: However, the appointment is deemed to be in force till the Court grants leave to the party or an Advocate for terminating the same. The object behind this condition is not to thrust an Advocate upon a party or a party upon an Advocate. The scheme of the rule seems to be only to check move of termination of the appointment with ulterior motives. There can be such a move for disrupting the regular and smooth progress in the proceedings under the colour of the written termination of appointment. Sometimes for the purpose of delaying the proceedings and sometimes for averting and adverse order on account of failure to perform an act, the parties use the termination of appointment as a device. To check such an activity the law provides that the appointment will be deemed to be in force till the termination thereof is allowed by the Court. However, such a device or activity can, at the most be defused in respect of the proceedings of the first day when the termination of appointment is filed. It does not seem appropriate to withhold the leave thereafter as it may amount interference with the right of a party to be represented only by an Advocate whom he/it trusts and/or compelling an Advocate to represent a party whom he does not want to represent any more.

Object behind the condition of leave by the Court is not to recover fee of an Advocate or get it refunded from him to a party. Such an exercise would be beyond the scope of the suit/ proceedings. Sometimes it takes shape of another suit within a suit. For instance, if there is controversy about the quantum of fee agreed or` about the amount actually paid to the Advocate then it cannot be decided without evidence. Even after determination of the entitlement and/or liability either way there will be a question of implementation of that order. Thus, to recover the fee of an Advocate representing a party in a suit or get it refunded to the client is not the scheme of' Order III, rule 4, C.P.C. Moreover, the claims advanced through present miscellaneous application are the charges for the services rendered in more than one cases. Such claims of fee are governed by Legal Practitioners Fee Act, 1926. Section 4 of the Act specifically provides for filing legal proceedings for the recovery of legal practitioners fee.

Principles of Maritime Law by Christopher Hill, page 521; Maritime Liens by Thomas Vol. 14 of British Shipping Laws Vol. 14, paragraph 458 p.260; The Paris (1896) Probate 77-80 and Hitachi Ltd. and others's case 1998 SCMR 1618 ref.

Union of India v. Radhesham AIR 1979 Rajhistan 137 dissented.

(b) Administration of justice---

----Single Judge in the High Court though had rendered finding that application in the suit was maintainable but the observations recorded by the Appellate Bench, clearly showed that the question of maintainability of application had been left open treating the decision of Single Bench in that respect as tentative and not final --- Appellate Bench had not discussed the question of maintainability at all, it simply dismissed the appeal treating same as superfluous with observations that the matter be argued before the Single Bench for of final decision on the issue whereafter the aggrieved party would be at liberty to assail the same by way of ail appeal---Question of maintainability of" the application, in circumstances, was to be finally decided by the Single Bench.

Qamar Abbas and Muhammad Arif for Plaintiff.

Muhammad Ali Sayeed for Defendant No. 1.

Muhammad Safdar for Defendant No.2.

Dates of hearing: 10, 15th and 16th February, 2005.

2005 C L D 1794

[Karachi]

Before Sarmad Jalal Osmany and Azizullah M. Memon, JJ

IRSLAN SIDDIQ and 3 others---Applicants

Versus

THE STATE and another---Respondents

Criminal Revision Application No.120 of 2004, decided on 28th June, 2005.

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

----S. 20---Criminal Procedure Code (V of 1898), Ss.439 & 561-A---private complaint---Offence under S.20, Financial Institutions (Recovery of Finances) Ordinance, 2001---Before any prosecution can be launched against persons of said offence, it would have to be shown that said persons were involved in the offence in question viz. violation of the letter of hypothecation etc. and leasing out of the mortgaged properties and that the persons with a guilty mind had indulged in such offence---Nothing, in the present case, was available on record to establish as much and when the persons (accused) had already resigned as directors of the Company before the offence in question was committed, they could not be implicated in the same---High Court, in circumstances, quashed the proceedings under the private complaint against the said persons---Principles.

Section 20(1)(a) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 which creates the offence in question provides that whoever dishonestly commits a breach of the terms of a letter of hypothecation, a trust receipt or any other instrument or document executed by him as security of repayment of finance, shall be punished with imprisonment of either description. Similarly, section 20(1)(c) provides that whoever subsequent to the creation of a mortgage in favour of a Financial Institution dishonestly alienates or parts with the possession of the mortgaged property without permission of the Financial Institution shall also be similarly punished. In the present case, admittedly the applicants had resigned as Directors of the Company much before the alleged offences under section 20(1)(a) of the Ordinance were committed after the private complaint. Similarly it would be seen that section 20(5) of the Ordinance clearly stipulates that where the person guilty of an offence is a Company or other body corporate, the Chief Executive or by whatever name he be called and any director or officer involved shall be deemed to be guilty of such offence and shall be liable to be prosecuted and punished accordingly. Before any prosecution can be launched against the such persons, it would have to be shown that they were involved in the offence in question viz. violation of the letter of hypothecation etc. and leasing out of the mortgaged properties. Needless to say it would further have to be shown that the applicants with a guilty mind had indulged in such offence. There is nothing on the record to establish as much and indeed when the applicants had already resigned as directors of the Company before the offence in question was committed, they could hardly be implicated in the same.

Tehmina Bashir v. Abdul Rauf 1995 CLC 973; Taj Muhammad v. The State PLD 1979 Quetta 176 and Muhammad Ibrahim v. Muhammad Hanif 1983 PCr.LJ 1051 ref.

Ahmed Hassan Rana for Applicants.

Muhammad Rasheed Khan and S. Mehmood Alam Rizvi, Standing Counsel for the State.

Dates of hearing: 6th and 27th April, 2005.

2005 C L D 1805

[Karachi]

Before Sabihuddin Ahmed, C.J. and Khilji Arif Hussain, J

ROOMI ENTERPRISES (PVT.) LTD.--- Appellant

Versus

STAFFORD MILLER LTD. and others---Respondents

High Court Appeals Nos.242 and 243 of 2002, decided on 9th May, 2005.

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

----Ss. 39, 28, 33 & 76---Trade mark---Agreement of user---Cancellation of---There can be only one trade mark, one source and one proprietor and cannot have two origins---Registered trade mark can be assigned with or without goodwill of the business concerned while the unregistered trade mark cannot be assigned except along with the goodwill of the business concerned---Appellant, in the present case, is not claiming assignment of trade mark to him nor he is claiming any right in it by way of its user for last many years, but his claim is based upon the "agreement of user", which, in any event, cannot be said or termed as assignment of trade mark to him---Appellant, in the present case, admittedly had licence to manufacture and sale of product of the registered trade mark of the respondent---Agreement of user of trade mark, executed pursuant to license to manufacture and sale, as per appellant's own showing was not registered as required under S.39 of the Trade Marks Act, 1940---Appellant could not be said to be a registered user of the trade mark---Even if said agreement of user was registered with the Registrar of Trade Marks, such registration was for a specified period of time, and appellant could not be allowed to use the same without the consent of proprietor of trade mark either expressly or impliedly thereafter---Any use of such trade marks, after the expiry of period of user, without the consent of proprietor of the trade mark, would make a case of passing off or infringement against its user as the case may be---When the appellant himself was claiming right of user for the trade mark and right to manufacture it through the respondent, paying licence fee to him, appellant could not deny the right claimed by the respondent in respect of trade mark and the right of its proprietor---Appellant, in circumstances, had failed to establish any right to use the trade mark and/or manufacture the products under the trade mark, in the absence of a valid agreement of user and manufacture either with the respondent or with the proprietor---To allow the appellant to use the same, would tantamount to allow use of property owned by someone else without any lawful justification.

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

----Ss. 202 & 205---Trade Marks Act (V of 1940), Ss.39 & 76---Termination of agency where agent has interest in subject ­matter---Compensation for revocation by principal, or renunciation by agent---Phrase "in the absence of any express contract as used in S.202, Contract Act, 1872"---Significance---Even if an agency, due to any reason, creates an interest in the property which forms the subject-matter of agency and agreement itself provided for termination and cancellation of such agreement of agency, S.202, Contract Act, 1872 cannot be invoked---Section 205 of the said Act further stipulated that even where there is an agency for any period of time and if it is terminated before the expiry of period so stipulated in the agreement, compensation is to be paid for the loss suffered, if any, by him due to such termination by the principal or agent, as the case may be if such termination was without sufficient cause---Making of substantial investments in business of agency does not make the agency irrevocable and interest of the agent, forming subject-matter of the agency, is to be some sort of an adverse nature qua the principal---Section 202, Contract Act, 1872 is split up in two parts, first portion of the section is clearly indicative of the fact that either the agent must have an interest pre-existing in the property or creation of such interest should be the direct result of the agreement itself and any interest either not pre-existing or not forming subject-matter of the agreement but created subsequent to the agreement in any matter would be called as the creation of interest of the agent---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.

Messrs Burnis Computing International (Pvt.) Ltd. v. IBM World Trade Corporation 1997 CLC 1908; World Wide Trading Company v. Sanio Trading Company PLD 1986 Kar. 234 and Bolan Beverages (Private) Limited v. Pepsicola 2004 CLD 1530 = PLD 2004 SC 860 ref.

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

----Ss. 76 & 39---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Mandatory injunction, grant of---Interlocutory stage--Interference by Appellate Court---Scope---Principles---Mandatory injunction at an interlocutory stage is issued in very rare cases and normally Court passes order to maintain status quo in respect of subject-matter which does not mean that in appropriate case Court cannot grant injunction in mandatory form---Agreement of manufacturing the product as user of trade mark---In the present case, agreement had been revoked by the agent of the proprietor of the trade mark alleging that the user, in violation of terms of agreement, was engaged in a business rival to the business of the proprietor and promoting his business against the proprietor---Such circumstances had shown that balance of convenience lay in favour of proprietor and further grant of injunction to the user would result in depriving the proprietor to use his own property which would cause irreparable loss and injury to him---Prayer for grant of interlocutory injunction at a stage when existing of the legal right asserted by one party and its violation by them contested and remained uncertain till they were established at the trial on evidence, the Court at such stage acts on the principles of administration in this form of interlocutory remedy which is both temporary and discretionary---Once such discretion has been exercised by the Trial Court the Appellate Court normally will not interfere with the exercise of discretion of Court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the Court has ignored certain principles regulating grant or refusal of interlocutory injunction---Appellate Court is not required to reassess the material and seek to reach a conclusion different from one reached by the Court below solely on the ground that had the lower Court considered the material at the trial stage it would have come to a contrary conclusion---If the discretion has been exercised by the Trial Court reasonably and in a judicial manner, same should not be interfered in exercise of appellate jurisdiction---High Court observed that practice of filing appeals against interlocutory orders results in delaying the decision of matters pending before the Trial Court and such practice should not be appreciated.

Afzal Siddiqui and Ms. Naveen S. Merchant for Appellant.

Qazi Faez Essa for Respondents.

Date of hearing: 2nd May, 2005.

2005 C L D 1825

[Karachi]

Before Anwar Zaheer Jamali and S. Ali Aslam Jafri, JJ

UNITED BANK LIMITED--- Appellant

Versus

SAKEENA and another---Respondents

I.A. No.53 of 1996, decided on 9th April, 2005.

Banking Tribunals Ordinance (LVIII of 1984)---

----Ss. 5, 6 & 9 --- Qanun-e-Shahadat (10 of 1984), Art.84---Suit for recovery against the borrower and guarantor---Guarantor denied to have stood guarantor of the borrower or to have executed and signed the guarantee papers and alleged that guarantee documents were result of forgery and fraud on the part of bank---Alleged guarantor stated to have no connection with the borrower personally or with her business and further raised objection that in such cases the bank was expected to assess and verify the credibility and financial worth oj' the alleged guarantor before accepting him as such but the bank did not bother to do the same---Alleged guarantor took a specific plea that it was unbelievable that lie would execute alleged guarantee on 13-8-1985 after expiry of the maturity date viz. 26-12-1984 by which date amount due from the borrower on account of L.Cs. opened on her request was to be repaid---Guarantor also pleaded that it looked incredible that he would execute one and the same guarantee in respect of two finances, the subject-matter of two suits and that stamp papers used for guarantee appeared to have been purchased on 8-3-1986 whereas the date of alleged guarantee on the said stamp papers was shown to be 13-8-1985 which itself was sufficient to show the falsehood of the claim of the bank---Validity---Held, that plaintiff had failed to prove the case justifying a decree against the alleged guarantor particularly in view of specific plea taken by him that he neither executed the guarantee documents nor stood as guarantor for repayment of the loan obtained by the borrower, having no means to stand as guarantor, it was under the circumstances necessary for the bank to have examined his wroth before accepting him as a guarantor---Nothing was available on record to rebut the plea of the guarantor that he was an employee in a private firm on a monthly salary of Rs.4,500 and had no other moveable or immovable property---Mere fact that the borrower was paternal-aunt of the alleged guarantor was not sufficient to establish that he stood as a guarantor for the borrower---Banking Tribunal should have taken the burden upon itself of comparing the admitted signatures of the alleged guarantor on his identity card, passport and affidavit filed in Court with the disputed signatures on the form of guarantee---Expert opinion had its own importance, nevertheless under Art.84, Qanun-e-Shahadat, 1984, Court was not prohibited or debarred from comparing the admitted and disputed signatures under the particular circumstances of a case---Appreciation of the facts and circumstances of the case had led the Banking Tribunal to rightly hold that Bank had not been straightforward in explaining the circumstances in which the alleged guarantor had allegedly executed guarantee on behalf of the borrower---Claim for liquidated damages, in absence of any evidence and proof as required under the law, was also rightly declined by the Banking Tribunal---No illegality or material irregularity having been found by the High Court in the findings recorded by the Banking Tribunal, appeal was dismissed.

Mst. Fatima v. Abdul Razzak 1988 SCMR 1449 fol.

A.I. Chundrigar for Appellant.

Nemo for Respondent No. 1.

Shoukat Hayat for Respondent No.2.

Date of hearing: 10th November, 2004.

2005 C L D 1834

[Karachi]

Before Saiyed Saeed Ashhad C.J. and Maqbool Baqar, J

Messrs SARA CORPORATION and others--- Appellants

Versus

Messrs HABIB BANK LIMITED---Respondent

I.A. No.52 of 2004, heard on 25th November, 2004.

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

----Ss. 9 & 2---Suit for recovery of loan---Banking Court in its judgment had remarked that "in spite of failure of the plaintiff to prove any issue, Court had to act on the principles of equity which demanded justice; that record produced in Court had shown including loan ledgers and bounded computerized statements though ruled out of consideration, but still in addition to the already produced documents clearly showed that borrower had benefited itself from the finances provided by the bank; that though the other issues had failed but the advances could not be denied by the borrower; that execution of documents had not been denied but had been shrouded; that by being shrouded, the execution of documents could not be thrown aside; that factum of availing advances could not be disputed by virtue of lack of or improper statements; that statements though irregularly prepared, could not give scot free licence to the borrowers to gallop the public money and that plaintiff was not entitled to claim any mark-up or liquidated damages and that bank was entitled to the principal amount"---Validity---Held, from perusal of the judgment of the Banking Court, it was absolutely clear that the Trial Court had committed grave illegalities---Impugned judgment was full of contradictions, arbitrary, whimsical and against the principles of administration of justice as the same had been written in a careless manner inasmuch as the conclusions drawn and findings given on the issues framed and the relief granted could not have been granted being absolutely contrary to the evidence and findings---High Court allowed the appeal, set aside the judgment and remanded the case to Trial Judge for re-writing the judgment in accordance with law of evidence and Banking laws after providing opportunities to the parties.

M. Salim Thepdawala for Appellants.

A.R. Akhtar for Respondent.

Date of hearing: 25th November, 2004.

2005 C L D 1

[Lahore]

Before Mian Saqib Nisar and Tanvir Bashir Ansari, JJ

AJKSUN INTERNATIONAL MANUFACTURERS AND EXPORTERS through Partners and 2 others---Appellants

Versus

HABIB BANK LIMITED through Attorneys Vice­ President and Chief Manager and others---Respondents

E.F.A. No.400 of 2003, heard on 16th September, 2004.

Civil Procedure Code (V of 1908)---

----O.XXI, Rr.84, 65, 54 & 12---Recovery of Bank loan--­Attachment of mortgaged property---Auction sale---Confirmation of sale and issuance of sale certificate by the Banking Court--­Validity ---Auction purchaser had not deposited 25% of the purchase money nor the balance was paid in accordance with the provisions of O.XXI, R.84, C.P.C.---If the payment was not made within the period as mandatorily provided by O.XXI, R.84, C.P.C., the defaulting purchaser shall forfeit all claims to the property and non-deposit of the purchase money would render the sale void---Confirmation of sale and issuance of sales certificate by the Banking Court was declared to be without lawfully authority---High Court, while taking strong exception to the conduct of the respondents in the manner they had conducted the proceedings before the Judge Banking Court, strongly deprecated the same and burdened the respondent with special costs of Rs.50,000 payable to the appellants---Sale proceedings were directed to be conducted by the Executing Court in the light of observations by the High Court in accordance with law.

Manilal Mohanlal and others v. Sardar Syed Ahmad and another AIR 1954 SC 349 and Brig. (Retd.) Mazhar-ul-Haq and another v. The Muslim Commercial Bank and another PLD 1993 Lah.706 ref.

Mian Atir Mehmood and Ch Khurshid Ahmed for Applicants.

Tehseen Ullah Butt for Respondent-Bank, Date of hearing: 16th September, 2004.

2005 C L D 20

[Lahore]

Before M. Bilal Khan and Sh. Abdur Rashid, JJ

AAMER KHURSHID MIRZA---Petitioner

Versus

THE STATE---Respondent

Crl. Misc. No.98-Q of 2004, heard on 26th July, 2004.

Banking Tribunals Ordinance (LVIII of 1984)-----

----Ss.5 & 7---Offences in Respect of Banks (Special Courts) Ordinance (IX of 1984), Preamble & S.7---Criminal Procedure Code (V of 1898), S.561-A---Penal Code (XLV of 1860), Ss.406/420---Recovery of loan---Bank made a complaint to Federal Investigation Agency (Commercial Circle) against the borrower company and its directors alleging therein that they had misappropriated and removed the hypothecated goods or had caused some one else to do the same/or converted the same to their own use; F.I.R. was registered under Ss.406/420, P.P.C. against the company and its Directors---Application under S.561-A, Cr.P.C. was brought by the petitioner (Director of the Company) for quashing of proceedings as challan was pending before the Special Court, Offences in Respect of Banks (Special Courts) Ordinance, 1984---Validity---Banking Tribunals Act, 1984 was a complete Code unto itself and provided machinery for dealing with the matter of recovery of money and it related to matters including offences created with regard to an effort at thwarting the recovery---Provisions of Banking Tribunals Act, 1984 would prevail over any other law and any criminal act falling within the definition of offence contained in S. 7 of the said Ordinance, would fall within the exclusive domain of the Banking Tribunals Act, 1984 and that too in the manner provided i.e. that the offence would not be cognizable and that the cognizance thereof would be taken by the Banking Tribunals on a written complaint by the Bank which would be bailable as also compoundable ---Principles---High Court, in circumstances, allowed the petition and the proceedings against the petitioner arising out of F.I.R. under Ss.406 & 420, P.P.C., pending before the Special Court in Respect of Offences in Banks, were ordered to be quashed.

In the present case the occurrence is alleged to have taken place, according to the F.I.R. itself in 1991 and according to the State counsel in 1993. The Bank filed the suit for recovery in 1995 and the same was decreed on 31-1-1996. The complaint was made by the Bank on 27-7-1998 i.e. 2-1/2 years after the suit had been decreed.

The Offences in Respect of Banks (Special Courts) Ordinance, 1984 is a law which essentially provides for speedy trials for offences mentioned in its schedule. The said provisions do not create any new offence except the one contained in its section 7 which prohibits transfer or creation of -a charge over property owned by an accused without the permission of the Special Court. On the other hand the Banking Tribunals Ordinance (Ordinance No.LVIII of 1984) was promulgated on 31-12-1994 which was much later than the Offences in Respect of Banks (Special Courts) Ordinance, (Ordinance No.IX) of 1984.

Section 5(3), Banking Tribunals Ordinance, 1984 goes on to say that no Court other than a Banking Tribunal shall have or exercise any jurisdiction with respect to any matter to which the jurisdiction of a Banking Tribunal extends under this Ordinance, including a decision as to the existence or otherwise of finance and the execution of a decree passed by the Banking Tribunal.

The wisdom of providing machinery for the recovery of money under the Banking Tribunals Ordinance, 1984 becomes evident by a joint reading of the sections 5 and 7. The legislature was cognizant of the fact that in some of the cases there would be customers who would try to defeat the Bank's efforts for recovery of its money. This is why this offence had been created and the same forum which was involved in adjudication of the matter of recovery had been vested with the powers to punish. The legislature is presumed to be cognizant of the existing law, therefore, one cannot lightly and easily ignore the expression of legislative will as has been manifestly expressed in the provisions of the Banking Tribunal Ordinance. The presumption is that the legislature does not make any mistake. The Banking Tribunal Ordinance is a special law relating to the recovery of money from delinquent/ defaulting borrowers. It is a complete Code unto itself and provides machinery for dealing with the matter of recovery of money and it relates to matters including offences created with regard to an effort at thwarting recovery. The provisions of the Banking Tribunals Ordinance, 1984 will prevail over any other law and any criminal act falling within the definition of offence contained in section 7 of the Ordinance will fall within the exclusive domain of the Banking Tribunal and that too in the manner provided i.e. that the offence will not be cognizable and that the cognizance thereof will be taken by the Tribunal on a written complaint by the Bank. It will be bailable as also compoundable.

Petitioner in the present case was being sought to be prosecuted under the general law but only before the special Forum. Offences in Respect of Banks (Special Courts) Ordinance, 1984 only provided a different forum and did not create a new offence as was the case under Banking Tribunals Ordinance, 1984.

So far as the import of the words "without prejudice to any other action which may be taken against him under this Ordinance or any other law for the time being in force" which occur in section 7 of the Banking Tribunals Ordinance, 1984 is concerned, the Legislature cannot be presumed to have envisioned punishing an offender under this law and then to allow proceedings against him under the general law as well. Attending to the facts of the case F.I.R. having been recorded even after the suit by the complainant Bank was decreed on 31-1-1996 it is noticed that it was admitted and accepted by the counsel for the complainant Bank and the State that the suit was decreed on 31-1-1996.

It is not the Bank's case that their rights have not been finally adjudicated by the decree in their favour. It thus follows that the Bank was satisfied by what is contained in the decree. Even otherwise the Bank never wanted the Banking Tribunal to have proceeded against the Company and the petitioner. The Bank appears to have deliberately chosen not to proceed against the petitioner. The decree dated 31-1-1996 put an end to all matters regarding recovery.

The provisions of the Banking Tribunals Ordinance, 1984 will prevail over the general law, therefore, it was held that the offence complained of had to be dealt with in the manner provided in the Banking Tribunals Ordinance, 1984 and that the registration of F.I.R. by F.I.A. and the consequent prosecution of the case before the Special Court was without jurisdiction.

Petition was allowed and the proceedings against the petitioner arising out of F.I.R. under sections 406 and 420, P.P.C., now pending before the Special Court in Respect of Offences in Banks, were quashed and the petitioner was acquitted of the charges against him.

Nayyar Islam's case PLD 2001 Lah.533 fol.

Naveed Rasool Mirza for Petitioner.

Muhammad Jahangir Wahla Standing Counsel.

Tariq Saleem Sheikh for U.B.L.

Date of hearing: 26th July, 2004.

2005 C L D 30

[Lahore]

Before Ali Nawaz Chowhan, J

Maj. Rtd. SAEEDUZ ZAMAN---Petitioner

Versus

LAHORE RACE CLUB---Respondent

Civil Original No.36 of 2004, decided on 7th October, 2004.

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

----Ss. 152 & 42---Petitioner seeking rectification of Register of Membership of a Club functioning under S.42, Companies Ordinance, 1984 through re-entry of the name of the petitioner which had been earlier deleted allegedly on the ground of non­payment of subscription of Club for two years---Petitioner was duly served with notices before taking the action of deleting his name---Contention of the petitioner was that he had received no notice and even if any notice was sent, it was sent at wrong address and further attributed mala fides to the management of the Club in this connection---No proof to show that the petitioner had paid the subscription of the Club for two years having been made available, action taken against the petitioner for non­payment of the subscription thus remained unrebutted---Question for determination was whether the address previously given continued to be the address of the petitioner or he had left that address; on this point, there was silence on his side rather such fact that he also continued to have the address on which the notices were sent at another address, was not denied ---Effect--­Prima facie, the present case was the one where the striking of the name was done because of the non-payment of the dues; allegation of mala fides and oblique collateral considerations resulting in the removal of his name involved a factual inquiry and the controversy whether the notice was actually received by him or not prior to the termination giving him an opportunity of depositing the subscription, involved resolution of a factual inquiry---Section 152, Companies Ordinance, 1984 involved a summary jurisdiction where only prima facie facts were resolved in a summary way and the complicated and doubtful cases were meant to be referred to the plenary Court of civil jurisdiction---Petitioner, for purposes of resolution of such controversy, will have to seek remedy, if so advised, from the Civil Court of competent jurisdiction---Management of the club, prima facie, had established its having taken action under the provisions of Articles of Association---Petition under S.152, Companies Ordinance, 1984 was dismissed by the High Court.

Bajaj Auto Limited v. N.K. Firodia AIR 1971 SC 321; Khurshid Ahmad Khan and another v. Pak Cycle Manufacturing Company Ltd. Shahdara and 4 others PLD 1987 Lah. 1; Waqar Ahmad Malik v. Bisvil Spinners (Pvt.) Ltd. and 11 others 1991 CLC Note 110 at p.89; Sh. Mushtaq Ahmad v. Shaukat Soap Factory and others 1987 CLC 2079 ref.

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

----Ss. 152 & 42-Rectification of Register---Discretion of Directors of Company---Scope---Principles.

Following principles have been laid down which structure discretion on the part of the Directors/ Stewards in the matter of rectification: firstly, whether they acted in the interest of the company, secondly-whether they acted on any wrong principle and thirdly, whether they acted with an oblique motive or for a collateral purpose. On the basis of this criterion, Court has to see whether the discretion used by the Directors/ Stewards pursuant to Articles of Association was based on just and proper considerations and in the paramount interest of the company.

Bajaj Auto Limited v. N.K. Firodia AIR 1971 SC 321 fol.

M. Iqbal for Petitioner.

Syed Hamid Ali Shah for Respondent.

Date of hearing: 27th September, 2004.

2005 C L D 36

[Lahore]

Before Muhammad Muzammal Khan, J

Messrs SHAKARGANJ MILLS LIMITED and another---Petitioners

Versus

CRESCENT UJALA LIMITED---Respondent

C.O. No.41 6f 2004, decided on 1st October, 2004.

Companies Ordinance (XLVII of 1984)---

----Ss.284 & 289---Merger/amalgamation of two companies inter se---Approval by Court---Scheme of merger had been approved by the shareholders of both the companies in a general meeting presided over by the Local Commissioners appointed by the Court---Objector held only 0.01 % of the total share holding of one company---Validity---Objector, in circumstances, could not be given a right to disapprove the scheme or to suggest any alternative method by holding so a small share holding--­Principles---High Court approved the amalgamation accordingly.

The objector, in the present case held only 0.01% of the total share holding of one company whereas sections 284, 285 and 287 of the Companies Ordinance, 1984 only acknowledge right of 3/4th majority of the members of the company to make a choice of handling the affairs of the company. 99.99 shares holders of the one company and 85.47% shareholders of the other company had concurred to the proposed scheme of merger. This ratio was so high that it was a command for the small shareholders, like the objector who opposed with a small share in the equity of one company. If the objections were accepted it would amount to allowing him to sit in judgment against the wishes of shareholders, in excess of the ratio given by sections 284, 285 and 287 of the Companies Ordinance, 1984 i.e. 3/4th and thus, this course was not either lawful or justifiably on the basis of any canon known for administration of justice. The objector could not be given a right to disapprove the scheme or to suggest any alternative method by holding so a small share holding.

Court while considering the scheme of merger, had to see it as a whole and to determine whether it was just and fair. During this exercise, deeper investigation into every limb of scheme was not required and the objector had to show mala fides and unfairness of the scheme and those pre-requisites should be fair. In the present case, the objector could not show his right to control the affairs of a company with his small share holding, in opposition to the will of 85.47% shareholders. It was too late in the day to say that audit reports of the two Chartered Accountants were fake and that too, without any basis logic and proof. Such bald objections, without complaint against the Chartered Accountants before any competent forum and without raising any such objection in the general meeting of the companies, could not be allowed to sustain. Increase in the value of share of one company in anticipation of merger of both the companies in spite of depression in the stock markets, was a proof of the fact that there was nothing bad in the proposed merger. High Court, in circumstances, turned down the objections of a small shareholder.

Joint Registrar, SECP had filed parawise comments to the petition wherein they principally agreed to the merger proposed. Creditors and Bankers of both the companies had no objections to the scheme under consideration and the material on record including the report of the local commissioners, who chaired the joint meeting of both the companies, after a public notice, creation of single company after merger, would thrust upon business of the company more effectively would save the administrative expenses/over-head charges, will enhance their profit, will improve the functioning/ operations of manufacturing of production and will also make the credit arrangement even more smoother. In this manner, reorganization of capital through amalgamation will be to the advantage of the shareholders, creditors and employees jointly, as well as, severally. High Court sanctioned the proposed scheme of merger/ amalgamation of both the companies and in result thereof, the one company (petitioner No.2) shall stand dissolved and will cease to exist from this date as independent entity, as prayed.

Petition was accordingly accepted and an order of merger/ amalgamation of the petitioner No.2 in petitioner No.1 was passed.

Messrs Pakistan Cement Limited 2002 CLD 1392; Kohinoor Raiwind Mills Limited through Chief Executive v. Kohinoor Gujar Khan Mills and others 2002 CLD 1314 and in the matter of Pakistan Water Bottlers (Pvt.) Limited and 2 others 2003 CLD 1634 ref.

Imtiaz Rashid Siddiqui with Imran Anjam Alvi for Petitioners.

Umar Farooq and Muhammad Kaleem Khurshid, Advocates/Local Commissioners.

M.H. Khan in person.

2005 C L D 42

[Lahore]

Before Syed Jamshed Ali and Muhammad Sayeed Akhtar, JJ

TAJAMAL HUSSAIN ---Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED through Attorney and 10 others---Respondents

F.A.O. No.77 of 2000, heard on 4th October, 2004.

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

-----Ss.18, 7 & 21----Execution of decree---Sale of property through public auction---Issuance of sale certificate and order of "Qufal Shikni" of the house---Application objecting to the sale by auction inviting the attention of the Banking Court to a patent illegality amounting to fraud that the entire house was sold through auction on the initiative of the decree-holder Bank as if the entire house belonged to the guarantor although the facts established on the record, and the documents submitted by the decree-holder Bank, were to the contrary---Not only the decree-holder Bank, procured the sale of the entire house by misrepresentation but it was a case where the Court had also committed error apparent on the face of record---Executing Court dismissed the application on the sole ground that the Court could not review its order--­Validity---Executing Court was under a duty to have retraced its wrong steps without any constraint---Court must see that the Rules of Procedure were not allowed to operate as tyrant master so as to perpetuate an illegality committed by Court--­High Court allowed the appeal, set aside the sale along with the sale certificate in respect of the disputed property and directed that decree-holder Bank shall be at liberty to seek execution of the decree to the extent of the share of the guarantor (judgment-debtor) in the disputed property and Bank shall refund the sale proceeds of the house to the auction purchaser.

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

----Ss.18(6) & 21(6)---Appeal---Maintainability---Appeal does not lie against an interlocutory order but as far as an application objecting to the sale of property by auction under the orders of the Court was concerned its dismissal was a `final order"--Appeal lies under S.21(6), Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 against the order passed under S.18(6) of the said Act and said application objecting to the sale clearly fell within the scope of S.18(6)(a) and an order passed therein was appealable.

According to section 21(6) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 an appeal does not lie against an interlocutory order. But as far as the application of objecting to the sale of disputed property was concerned, its dismissal was a final order. Even according to section 21(6) of the said Act, an appeal lies against the order passed under section 18(6) of the said Act. Clause (a) of subsection (6) of section 18 contemplates investigation of claims and objections in respect of attachment or sale of any property whether mortgaged or not. The, application in the present case clearly fell within the scope of clause (a) of section 18(6) of the Act. and an order passed therein was appealable.

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

----S.18---Civil Procedure Code (V of 1908), S.47 & O.XXI, Rr.89 & 90---Execution of decree--Duty of Court---Auction of mortgaged property---Application objecting to the sale of property by auction---Applicant, in the present case had not incurred any liability in his personal capacity other than as a guarantor--­Inaction of the applicant not to seek setting aside of the decree or to take any steps against the attachment of the disputed property, could not deprive him of his property, particularly in view of the fact that he stood surety for a maximum amount of Rs.1,32,000 and by sale of the property an amount of Rs.2,60,000 had already been realized---Decree had to be interpreted in the light of the averments of the plaint in which the liability was fixed on the applicant to the extent of the property mortgaged and for a determined amount---While litigant is required to be vigilant, an Executing Court is also not absolved of its duty to ensure that the property being sold could be lawfully put to sale---Application objecting to the sale by auction in circumstances did not attract O.XXI, Rr.89 & 90, C.P.C. but squarely fell under S.47, C.P.C. because the application related to the execution, discharge and satisfaction of the decree.

Al Saeed Resin (Pvt.) Ltd. v. Trust Madarabia through Trust Management Service (Pvt.) Ltd., Lahore 2003 CLD 457 ref.

Taqi Ahmed Khan for Appellant.

Mushtaq Mehdi Akhtar for Respondents.

Date of hearing: 4th October, 2004.

2005 C L D 49

[Lahore]

Before Nasim Sikandar, J

SABIR AHMAD and another---Petitioners

Versus

Messrs NAJMA SUGAR MILLS LIMITED---Respondent

C.M. No.1-L of 2002 in C.O. No.11 of 2002, decided on 27th September, 2004.

Companies Ordinance (XLVII of 1984)---

----Ss.325, 306 & 309---Application for appointment of provisional manager---Inability of the company to meet its current demands having become commercially and technically insolvent and contention that substratum of the company had gone and that it was not meeting current demands, were relevant to the final disposal of the winding up proceedings and it was not appropriate for the Court to make a direction for appointment of provisional manager merely for the reason that a company was going in loss as all such aspects would be considered at the time of final arguments---Application for appointment of provisional manager of the company, in circumstances, was declined.

PICIC v. National Silk and Rayon Mills Limited PLD 1976 Lah. 1538; Maqbool Elahi v. Rasul & Co. Limited PLD 1970 Lah.539; United Bank Limited v. Pak Wheat Products Ltd. PLD 1970 Lah. 235; National Bank of Pakistan v. Punjab National Silk Mills Ltd. PLD 1969 Lah.194 and Muhammad Ismail Ali Charan v. Pak Por Creamic Limited PLD 1973 Kar. 491 ref.

Dr. Parvez Hassan and Jawad Hassan for Petitioners.

Zahoor Bashir Ansari for Respondent.

2005 C L D 50

[Lahore]

Before Nasim Sikandar and Mian Hamid Farooq, JJ

RUBINA JAMSHED---Appellant

Versus

UNITED BANK LIMITED----Respondent

R.F.As. Nos.461 of 1999, 71 98, 99, 100, 101, 102, 155, 156, 157, 158, 159 and 160 of 2000, heard on 15th July, 2004.

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

----S. 9(1)---Institution of suit by Bank ---Competence--­Legally a Branch Manager is competent and empowered to institute suit by presenting a plaint, which shall be verified on oath by him, before the Banking Court---Any other Officer of the Bank, who is duly authorized by the Board of Directors of the Banking Company, can also institute the suit.

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

----Ss. 2(a)(c)(d), (e) & 9(1)---Institution of suit in Banking Court---Competence---"Banking Company", "Borrower", "Customer"---Definition---Provision of S.9(1) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 empowers a "borrower" or a "customer" or a "Banking Company" to institute suit in the Banking Court by presenting a plaint---Nobody else, except the said three categories of persons, could file a suit before the Banking Court---Person who had neither advanced nor availed the finance would not fall within the definition of either "Banking Company", or the "borrower" or the "customer" and thus could not be legally impleaded in the suit.

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

----S. 10---Suit for recovery of loan--Public transport financing---Application for leave to defend suit---Bank, in support of the plaints, had annexed different documents, including promissory notes, mark-up agreements, letters of hypothecation, letters of authorities and undertakings/ declarations etc said to have been executed by the applicants---Photocopies .of Registration Books in the joint names of the parties had been placed on, record---Applicants had neither denied their signatures on the said documents, nor the execution of the documents and had only made a bald assertion that the said documents were not executed in accordance with the provisions of Qanun-e-Shahadat, 1984---Applicants had not denied the availing of the financial facility and the deposit of certain amounts, including the amount of 10% equity---Documents produced by the bank showed that the vehicles were jointly registered in the names of the Bank and the applicants---Held, applicants were not entitled to leave to defend the suit, in circumstances.

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

----Ss. 7 & 9---Suit for recovery of loan---Public transport financing---Denial of execution of documents by the borrowers---Borrowers had admitted the sanctioning and availing of financial facility, initial deposit of 10% of equity amount by them, joint registration of the vehicles in the names of borrowers and the Bank and that the vehicles were parked with certain dealers---All such admissions would not commensurate with the assertion of denial of execution of documents by the borrowers---Mode adopted by the Banking Court, for itself comparing the signatures, was in accordance with law---Banking Court was empowered, under the circumstances, to itself compare the signatures of the borrowers with the material available on record for resolving the controversy---When the Banking Court had itself compared the signatures and came to the conclusion that the signatures of the borrowers were similar on all the documents, in that case, there was no need to send the documents to the Handwriting Expert, as evidence of the Handwriting Expert was neither the only nor the best method of proving the handwriting or signature of a person and was at best opinion evidence---Banking Court thus, had rightly declined to send the signatures of the borrowers, for comparison, to the Handwriting Expert and no legal error had been committed by the Banking Court, while comparing the signatures itself.

Messrs Waqas Enterprises and others v. Allied Bank of Pakistan and ,2 others 1999 SCMR 85; Ch. Abdul Hamid v. Deputy Commissioner and others 1985 SCMR 359 and Syed Shabbir Hussain v.. The State 1968 SCMR 1126 fol.

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

----Ss. 10, 9, 7 & 21---Suit for recovery of loan---Denial of guarantor to have signed the letters of guarantee--­Application for leave to defend the suit---Guarantor had simply denied his signatures on the letters of guarantee without placing on record any prima facie proof to that effect, which could furnish a valid ground for the grant of leave to defend the suit to him---Mere bald denial by the guarantor of his signatures on the letters of guarantees was not a. sufficient ground for the grant of leave to defend the suit or acceptance of his appeals, unless it was shown on record that the documents were forged and fabricated and by whom.

Ghazala Arif v. Union Bank Ltd. (Now Emirates Bank International), Lahore 2000 CLC 1201 fol.

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

----Ss. 10 & 21---Leave to defend the suit---Where the applicants had comprehensively failed to raise in their leave applications, serious and bona fide disputes whereby warranting unconditional leave to defend the suits within the parameter set up under the law, Banking Court, in circumstances, while declining to grant leave to defend the suits to the applicants, did not commit any legal error, which required rectification by High Court in exercise of appellate jurisdiction.

Ghulam Nabi Bhatti for Appellant.

Muhammad Arshad Qureshi for Respondent.

Date of hearing: 15th July, 2004.

2005 C L D 83

[Lahore]

Before Nasim Sikandar, J

ASKARI LEASING LTD., RAWALPINDI ---Petitioner

Versus

NATIONAL FIBERS LTD. and others---Respondents

C.Ms. Nos.54-B, 55-B, 52-B, 62-B, 75-B and 86-B of 2004 in Execution Petition No.2 of 2004 in C.O.S. No.9 of 1997, decided on 10th November, 2004.

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

----Ss.7(a)(b) & 19---Civil Procedure Code (V of 1908), O.XXI, Rr.97 & 99---Recovery suit---Execution of decree--­Applications by judgment-debtors and third party seeking recalling the order of High Court whereby their property was directed to be put to sale through auction and praying for suspension of said order and stay of proceedings in the main execution petition, which was accepted---Decree-holder filed application for vacation of stay order---Validity---High Court, after recording detailed reasons, observed that judgment-debtors were trying to use the process of law and of Court only, to defeat the judgment and decree earlier passed against them on their admission of liability--­Applications so filed were frivolous and were intended to obstruct rather to advance or assist the process of law and justice and were liable to be dismissed---Third party, if at all had any right in the property in question same shall only be subject to and after payment and recovery of the decretal amount to the decree-holder---Decree-holder was allowed its prayer to compete in the auction proceedings subject to the condition that its bid will not be less than the amount it had earlier conveyed to the Court auctioneers as reserve price--­Court auctioneers will proceed to issue a fresh auction schedule and put the suit property to auction recovery of decretal amount.

Malik Qamar Afzal for Petitioner.

Hamid Khan for Respondents.

Amir Iqbal Basharat for Judgment-debtors 2 to 4.

2005 C L D 99

[Lahore]

Before Muhammad Muzammal Khan, J

AALIA KHATTAK and others---Plaintiffs

Versus

MUSLIM COMMERCIAL BANK---Defendant

C.O.S. No.38 of 1989, decided on 27th July, 2004.

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

----Ss.6 (l)(a) & 14---Damages, recovery of---Locus standi----Relationship of banker and borrower---Non-appearance of plaintiffs in witness box---Effect---Plaintiffs filed suit for recovery of damages against bank and borrower on the ground that their property was wrongly attached in execution of decree passed against the borrower---Plea raised by the bank was that the suit was not maintainable as the plaintiffs were neither borrowers nor customers--­Validity---Borrower/customer or banking company could only file a suit, .arising out of default in fulfilling any obligation with regard to any loan/finance---First requirement for suit for damages was that the parties should either be borrower/ customer or banking company—­Plaintiffs suit did not arise out of any dispute with banking company in fulfilling any obligation with regard to any loan or finance availed by them, thus .Banking Court had no jurisdiction to entertain the suit---Plaintiffs being not the borrowers of the bank could not maintain the suit for damages under S.6 (l) (a) of Banking Companies (Recovery of Loans) Ordinance, 1979, before Banking Court---Borrower had no grievance like the one voiced by the plaintiffs and at the same time the borrowers could not hold the brief of plaintiffs---No suit, prosecution or other legal proceedings could have been filed against banking company for anything lone in good faith---All plaintiffs were judgment-debtors in the decree passed by Banking Court and the bank with a bona fide intention of executing the decree and for recovery of decretal amount bona fidely included the property of plaintiffs in Fard Taliqa filed by the bank---Plaintiffs were required to appear in witness box to support their claim of personal damages but except one plaintiff no other had appeared in the witness box which negatively reflected on their claim---Plaintiffs failed to establish on record any conspiracy between the bank and the borrower allegedly hatched to harm the plaintiffs, thus the bank was not liable to pay damages as claimed by the plaintiffs---Bank being indemnified/ immune under S.14 of Banking Companies (Recovery of Loans) Ordinance, 1979, the suit for damages was not maintainable---Neither malicious prosecution was proved by the plaintiffs nor sustaining of any loss by them or quantum thereof could be established--­Suit was dismissed in circumstances.

PLD 1954 SC 38; Ch. Muhammad Aslam v. Aman Ullah and others PLD 1990 Lah. 330; Messrs Marine Management Company through Proprietor v. Government of Pakistan through Secretary, Ministry of Defence, Rawalpindi and 2 others PLD 2000 Kar. 214; PLD 1996 SC 737; Pervez Ahmad Khan Burki and 3 others v. Assistant Commissioner, Lahore Cantt. And 2 others PLD 1999 Lah.31; Haji Nabi Ullah and another v. Messrs Habib Bank Ltd., through President Bank, Head Office, Karachi and 2 others PLD 1990 Pesh. 17; Messrs Grain Systems (Pvt.) Ltd. and 10 others v. Agricultural Development Bank 1993 SCMR 1996; 1998 PLC 1718; Atlantic Carpets through Partner v. Messrs Emirates Bank International and others 2000 MLD 1950; PLD 2004 Lah. 101; M. Moosa v. Mahomed and others PLD 1959 Kar. 378; Dr. Syed Haider Bokhary v. North Frontier Province and 5 others 1984 CLC 1280; Adeeb Javedani Printer and Publisher, Moon Digest Lahore v. Yahya Bakhtiar 1995 CLC 246; Siddiqui Woollen Mills and others v. Allied Bank of Pakistan 2003 SCMR 1156; Naed Shaha v. Sham-ud-Din PLD 1964 Dacca 111 and Muhammad Mumtaz-ud-Din v. Shamas ur-Rehman PLD 1964 Dacca 618 ref.

(b) Damages---

---- Suit for damages---Principle---In suit for damages, each plaintiff has to show his own loss or sufferance.

(c) Words and phrases---

---Attachment"---Connotation---Ordinary meanings of attachment are legal seizure',to hold' or `to keep under holding/ seizing of property so that it may remain intact till recovery of decretal amount'---Property, subject of attachment continues to be owned/ vested in the owner and he is only restrained from alienating any interest therein contrary to the order of attachment.

Mohiuddin Molla v. The Province of East Pakistan and 2 others PLD 1962 SC 119 ref.

(d) Malicious prosecution---

----Suit for malicious prosecution---Malicious prosecution--­Meaning and necessary ingredients stated ---Judgment­ debtors filed suit for malicious prosecution against defendant/bank who being decree-holder included the property of judgment-debtors in Fard Taliqa for the execution of decree---Necessary ingredients/ elements to test malicious prosecution were, that the plaintiff was prosecuted by the defendant; that the prosecution ended in plaintiffs favour; that the defendant acted without reasonable and probable cause; that the defendant was actuated by malice; that the proceedings had interfered with plaintiffs liberty and had also affected his/her reputation; and finally; that the plaintiff had suffered damages--­"Malicious prosecution" according to dictionary means prosecution intended to harm the person against whom it was initiated with malice—Judgment debtors against whom a decree had attained finality could not claim prosecution as malicious only for the reason that the decree holder attempted to recover the decretal amount from their persons or property.

Muhammad Akram v. Mst. Farman Bi PLD 1990 SC 28 ref.

Sardar Sami Hayat and Manzoor-ul-Haq for Plaintiffs.

Mirza Muzaffar Ahmad for Defendant No. 1.

Syed Hamid Ali Shah for Defendant No.2.

Date of hearing: 27th July, 2004.

2005 C L D 126

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Messrs SUN RISE TEXTILE LTD and 7 others---Appellants

Versus

PRIME COMMERCIAL BANK LTD. through Vice-President---Respondent

R.F.As. Nos. 104 to 107 of 1999, heard on 6th September, 2004.

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

----Ss.7, 9 & 21---Bdnking Tribunals Ordinance (LVIII of 1984), Ss.5, 6 & 9---Contention of the appellant was that suits were filed by the Bank before an incompetent Tribunal (Banking Tribunal), therefore the same could not be transferred by operation of law before the Banking Court, as such judgments and decrees of the Banking Court are without 'lawful authority---Validity---Held, parties were bound by their pleadings---Appellant having not taken a single ground in the grounds of appeal before the High Court that Banking Court had no jurisdiction to take cognizance of the matter, plea of the appellant was not sustainable.

Mst. Murid Begum v. Muhammad Rafiq PLD 1974 SC 322 fol.

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

----Ss.15, 21, 10, 7 & 9---Appeal---Operative part of the judgment and decree of the Banking Court along with grounds of application for leave to appear and defend the suits made it clear that the Banking Court had passed the impugned judgment and decrees without application of mind which was condition precedent that the judicial officer had to pass the judgments and decrees after application of mind---High Court accepted the appeals, set aside the impugned decrees and remanded the cases to the Banking Court to decide the same afresh in terms of directions accordingly.

Chenab Cement's case PLD 1996 Lah. 572; Soneri Bank Ltd. v. Raja Weaving Mills KLR 1997 CC 742; U.B.L. v. Hinna Export Company 1998 PSC 7,8; Messrs Sind Tech. Industries v. Messrs Investment Corporation 1998 SCMR 1533; A. Habib Ahmad v. Hongkong Banking Company 1999 CLC 1953; Syed Farasat Ali Shah v. A.B.L. 2002 CLD 759; Muhammad Umar Tarar v. Judge Banking Court 2002 CLD 1663; Equity Participation Fund v. Messrs Pakistan Mobile 2003 CLD 206; Syed Farasat Ali Shah v. A.B.L. 2003 CLD 952; Tri-Star Polyester Ltd. v. Citibank 2001 PSC 57; Pakland Cement Company v. Citibank 2001 SCMR 1341; Muhammad Umar v. Muqarab Khan 1968 SCMR 983; Fine Textile Mills Ltd. v. Haji Umar PLD 1963 SC 163; Muhammad Ramzan v. Citibank NA 2001 CLC 158; Ghazala Arif v. Union Bank 2000 CLC 1201; Messrs U.B.L. v. Redco Textile Ltd. 2000 CLC 968; M.C.B. Ltd. v. Rizwan Textile Mills 1998 MLD 529; National Bank of Pakistan v. Muhammad Ashraf Sanik PLD 1987 Lah. 17; U.B.L. v. Central Cotton Mills Ltd. 2001 MLD 78; U.B.L. v. Mian Aftab Ahmad 2001 MLD 1332; Ghulam Sarwar v. National Bank 2001 CLC 522; ANZ Grindlays Bank v. Saadi Cement Company PLD 2001 Kar. 2017; Qatar Airways PLC v. ANZ Grindlays Bank 2000 CLC 1455; First Grindlays Modaraba v. Pakland Cement 2000 CLC 2017; National Bank of Pakistan v. Messrs West Pakistan Tanks 2000 CLC 896; Mst. Murid Begum v. Muhammad Rafiq PLD 1974 SC 322; Tariq Shahbaz Chaudhry v. Bank of Punjab 2004 CLD 207; Gouranga Mohan Sikdar v. The Controller of Import and Export PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan . PLD 1970 SC 173; PLD 1970 SC 158; PLD 1970 SC 173; Messrs Airport Support Services' Case 1998 SCMR 2268; Agrofoster (Pvt.) Ltd. v. Judge Banking Court PLD 1999 Kar. 398; Citibank v. Tariq Mohsin PLD 1999 Kar. 196; Messrs Habib Bank Ltd. v. Messrs Marvi Laboratories 1999 MLD 3456; National Bank of Pakistan v. Punjab Buildings PLD 1998 Kar. 302; Nasimuddin Sidiqui v. U.B.L. 1998 CLC 1718; U.B.L. v. Sind Tech Industries 1998 CLC 1152; A.B.L. v. Mehran Oils Mills PLD 1988 Kar. 360; A.B.L. v. Messrs Kassam Corporation 1987 MLD 742; Haji Ali Khan v. A.B.L. 1992 CLC 1996 and Trustees of Port of Karachi v. Muhammad Saleem 1994 SCMR 2213 ref.

(c) General Clauses Act (X of 1897)---

----S.24-A---Public functionaries are obliged to pass the order even on the executive side with reasons.

Messrs. Airport Support Services' case 1998 SCMR 2268 ref.

(d) Administration of justice---

---- Each and every case is to be decided on its own facts and circumstances.

Trustees of Port of Karachi v. Muhammad Saleem 1994 SCMR 2213 ref.

Mian Nisar Ahmad for Appellants.

Jawad Hassan for Respondent.

Date of hearing: 6th September, 2004.

2005 C L D 151

[Lahore]

Before Ali Nawaz Chowhan, J

SABIR AHAMAD and others---Petitioners

Versus

NAJMA SUGAR MILLS ---Respondent

C.O. No.11 of 2002, decided on 21st October, 2004.

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

----Ss.305, 306, 309 & 325--Petition for winding up of company by Court---Grounds; taken for winding up of the company were that the company was unable to discharge its liabilities in fulfillment of a contract inter se the parties; that according to the balance sheet of the company, it was not operateable; that the company was commercially insolvent and, therefore, a Liquidator was to be appointed for taking over the assets of the company and for selling the same, so that the liabilities of the company could be met from the sale proceeds of the company; that company remained nonfunctional and it was during the last year that the same had started operating empirically and the balance sheet reflected that there was a loss of Rs.4 crore; that the company in the years 2002 and 2003 had been securing bridge finance loans from Bank and a comparison showed that the loan had been increased in the year 2003 and there was nothing on record to suggest any repayment done against said loans by the company; that on the basis of the figuration, company was no longer a viable project and the substratum had gone and that a statutory notice having been given, there was presumption of truth attached regarding the inability to pay which the company had failed to discharge the onus to rebut---Company resisted the petition by stating that the petition had been moved because of mala fides and referred to a civil suit for specific performance of a contract against the petitioners and for recovery of damages and prayed that until the suit was adjudicated the matter for winding up of the company be kept pending---Validity---Pendency of civil suit for specific performance of contract by the company against the petitioner was no bar for the order of winding up of the company by the Court---High Court allowed the petition under S.305, Companies Ordinance, 1984 and appointed the Official Liquidators with specific directions for compliance by the Liquidators.

Pervaiz Hussain with Jawad Hassan for Petitioners.

Nemo for Respondent.

Dates of hearing:19th, 20th and 21st October, 2004.

2005 C L D 159

[Lahore]

Before Ali Nawaz Chowhan and Rustam Ali Malik, JJ

NAZIR MUHAMMAD ---Appellant

Versus

CUSTOMS CENTRAL EXCISE AND SALES TAX (APPELLATE) TRIBUNAL, ISLAMABAD and another---Respondents

Custom Appeals Nos.12 to 20 of 2004, heard on 28th October, 2004.

(a) Protection of Economic Reforms Act (XII of 1992)-----

----S.4(2) (as amended by Protection of Economics Reform (Amendment) Ordinance (XXI of 1999)]---Customs Act (IV of 1969), S.196---Freedom to bring, hold, sell and take out foreign currency---Scope---No bar existed against the possession of currency which may have been purchased from sources other than prescribed, under S.4(2), Protection of Economic Reforms Act, 1992 [as amended]---Onus to establish any infringement of law was fully on the department and even if the person infringing the law failed to indicate the sources, the best evidence to whittle away his case was through production of some evidence to establish that foreign currency was purchased from one of the sources referred to in S.4(2), Protection of Economic Reforms Act, 1992 (as amended), otherwise the benefit had to be given to the said person by presuming that the currency might have been purchased from the open market, if not from an authorized money changer; such a purchase too would have not attracted the penal clause of Protection of Economic Reforms Act, 1992.

Irshad Ahmad Shaikh v. The State 2000 SCMR 814 fol.

(b) Protection of Economic Reforms Act (XII of 1992)---

----S.4(2) [as amended by Protection of Economic Reforms Act (Amendment) Ordinance (XXI of 1999)]--Customs Act (IV of 1969), Ss.194-A, 194-B, 194-C & 196---Appeal to Appellate Tribunal---Scope---Appellate Tribunal had failed to appraise evidence as was required of it as it had to give its own opinion on the factual side, which was not done at the stage of second appeal---Tribunal, who had also to give its views with respect to the fact that in case the appellant failed to establish having purchased the foreign currency from an authorized money changer or from on authorized dealer, what effect would this have on the case of appellants--­Validity---Findings of the Tribunal, in circumstances, being infirm, High Court accepted appeal and remitted the case to the. Tribunal for decision afresh on the basis of the observations made by the High Court and the relevant law and parties were also ordered to be heard afresh and if any new point was raised, same was also to be allowed.

Athar Minallah for Appellant.

Majeeb-ur-Rehman Warraich for Respondents.

Date of hearing: 28th October, 2004.

2005 C L D 165

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

MUHAMMAD ANWAR KHAN---Appellant

Versus

HABIB BANK LTD. and 4 others---Respondents

E.F.A.O. No.415 of 2004, decided on 12th October, 2004.

Transfer of Property Act (IV of 1882)---

----S.41---Civil Procedure Code (V of 1908), O.XXI, R.52--- Execution of decree----Bona fide purchaser---Onus to prove---Purchase of property without original documents---Effect---Disputed property was mortgaged with bank on 30-12-1985 and the same was purchased by the objector on 26-4-1987 from the owner---During execution proceedings, the objector filed objection on the ground that he was the bona fide purchaser of the property---Objection petition was dismissed by Executing Court---Plea raised by the objector was that the protection of S.41 of Transfer of Property Act, 1882, was available to him---Validity---Objector had purchased the property without obtaining the original title documents from the owner thus he failed to prove that the property was purchased in good faith and without making reasonable inquiries in order to get valid title qua the property in question---Case of the objector did not fall under the provisions of S.41 of Transfer of Property Act, 1882---It was the duty of objector to prove that the transfer was for consideration and transferee had acted bona fide and in good faith---All such ingredients must concomitantly exist otherwise principle enunciated in S.41 of Transfer of Property Act, 1882, could not apply---Protection of S.41 of Transfer of Property Act, 1882, was available to transferee of the property who purchased the same after reasonable care---High Court declined to interfere with the order passed by Executing Court ---Appeal was dismissed in limine.

Tarachand Mondal and others v. Hazari Shaikh and another PLD 1967 Dacca 203; Syed Sajid Ali Asif through legal heirs v. Mumtaz Ahmad and 3 others PLD 1993 Kar. 520; Sattar Muhammad and 2 ethers v. Hussain and 3 others PLD 1988 Pesh. 48; Ilahi Bakhsh and others v. Hassan Khan and others PLD 1966 (W.P.) Lah. 654; Riazul Hassan v. Muhammad Ayub Khan and another 1991 SCMR 2513; Ilam Din and others v. Member (Revenue), Board of Revenue, Punjab, Lahore and 4 others 1984 CLC 221 and Mst. Noor-un-Nisa and another v. Ghulam Sarwar and 6 others 1994 SCMR 2087 ref.

Khawaja Abdul Qayyum, Advocate.

2005 C L D 183

[Lahore]

Before Sh. Hakim Ali, J

Syed MANZOOR HUSSAIN ---Petitioner

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager and another---Respondents

Writ Petition No.2455 of 2002, decided on 23rd September, 2004.

Agricultural Development Bank of Pakistan Ordinance (XXXI of 1961)-----

----Ss.27 & 4---Constitution of Pakistan (1973), Art.199—­Agricultural Development- Bank of Pakistan Circular No.RD/9/2000 dated 17-10-2000 Clause ii---Circular/letter RD/8/2000 dated 4-12-2000---Constitutional petition--­ Loan---Relief Package---Offer and acceptance---Petitioners had obtained loan of Rs.2, 51, 000 for purchase of Tractor and Trolly ---Petitioners had paid Rs. 2,57,200---Bank circulated relief package through Circular No. RD/9/2000 dated 17-10-2000---Agricultural Development Bank held the case of petitioner to fall within the relief package, received an amount Rs.27,104 and closed the account of petitioner---Bank alleged that the case' of petitioner was out of relief package due to Circular Letter No. RD/8/2000 dated 4-12-2000 and an amount of Rs.2,49,590 was payable by the petitioner ---Validity--­Relief/incentive package was advertised by Bank through Circular letter dated 17-10-2000---Such offer was accepted by the loanees---Payment of the amount in compliance of that offer had created a valuable vested, right in the loanee-­-Bank could not be permitted to turn turtle and adopt a new version or demand or make any other claim contrary to that relief package---Circular letter dated 4-12-2000 could not be permitted to apply to those loanees who had acted upon Circular of 17-10-2000---Bank was directed not to claim any more amount and to close the case of the petitioner.

Sardar Muhammad Akram Khan Patafi for Petitioner.

Waseem-ur-Rehman for Respondents.

Abdul Sattar Hashmi, Manager, Zarai Taraqiati Bank, Muzaffargarh.

2005 C L D 236

[Lahore]

Before Syed Jamshed Ali and Muhammad Sayeed Akhtar, JJ

Messrs ASIF BROTHERS, JHANG SADDAR through Sole Proprietor and another---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager and 3 others---Respondents

F.A. O. No. 115 of 2003, heard on 10th November, 2004.

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

----Ss.14, 15 & 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66, 69, 89 & 90---Execution of decree---Auction of mortgaged property---Application under O.XXI, Rr.89 & 90, C.P.C. by the Judgment-debtors---Consideration of such application by the executing Court ---Principles--­Proclamation, though did not specify the amount to be recovered yet the judgment-debtors had deposited in shape of a Bank draft of the amount which was claimed in execution petition---Judgment-debtors had also undertaken to pay any additional amount due as determined by the executing Court under the decree and had also undertaken to deposit 5% of the bid money---Such an application, held, lay as a matter of right and the only constraint to consider the application was that the judgment-debtor had also moved an application under O.XXI, R.90, C.P.C. and in accordance with the provisions of O.XXI, R.89, C.P.C., the judgment-debtors were not entitled to prosecute the application under R.90 of O.XXI, C.P.C. but were entitled to a choice to prosecute one of the two applications---Even if the application under O.XXI, R.89, C.P.C. was deficient insmuch as, that with the said application 5% of the bid moneys for payment to the purchaser was not deposited, in the peculiar circumstances of the case, when another property of the judgment-debtors had already been sold for a sum Which was not disputed, the judgment-debtors were prepared to discharge the entire liability in accordance with orders of the Court and their bona fides to discharge the entire liability, consideration of the said application could be deferred till the deposit of 5% of the sale price by the judgment-debtors and the executing Court could direct deposit of 5% of the purchase money as offered by the judgment-debtors---Such an application could even be considered under the inherent powers of the Court---Under O.XXI, R.69, C.P.C., an executing Court had, in its discretion, necessary power to adjourn the sale and such a power would be available to an Executing Court, even After the sale before the same was confirmed for the simple reason that a Court sale unless confirmed remained inchoate---All the rules in C.P.C. were intended to secure proper administration of justice, it was therefore, imperative that said Rules should be made to serve and be subordinate to that purpose rather than be allowed to operate as a tyrant master.

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

----Ss.14, 15 & 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 90---Execution of decree---Auction of mortgaged property---Application under O.XXI, R.90, C.P.C. by the judgment-debtors---Issuance of proclamation and dispatch of notice to the judgment-debtors under O.XXI, R.66, C.P.C.--­Necessity---Neither there was any copy of the notice on the record nor there was any postal receipt therein---No proclamation was drawn up by the Court as required under O.XXI, R.66, C.P.C., there was an unsigned paper in the record of the Trial Court describing the conditions of the auction which was a printed pro forma and blanks had been filled in, in ink which was not signed by the Trial Judge---Provisions of O.XXI, R.66, C.P.C., in circumstances, were not complied with.

(c) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)-----

----Ss.14, 15 & 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 90---Execution of decree---Auction of mortgaged property---Issuance of proclamation---Public notice of the auction by the Court auctioneers had to be issued in a newspaper of the place where the property was situated.

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

----Ss.14, 15 & 19---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 90---Execution of decree---Auction of mortgaged property--Issuance of proclamation---Amount to be recovered by the sale of property was not indicated in the public notice by the Court auctioneer---Effect.

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

----Ss.14, 15 & 19---Civil Procedure Code (V of 1908), O.XXI, Rr. 90 & 60---Execution of decree---Auction of mortgaged property---Application by judgment-debtors under O.XXI, R.90, C.P.C. supported by a number of affidavits to the effect that the Court auctioneers did not visit the spot and auction was conducted at the places which were not mortgaged with the Bank (decree-holder)---Banking Court had taken the view that since the proceedings of the Court auctioneers were signed by one of the judgment-debtors, auction must have been held at the spot---Validity---Such a matter being a seriously disputed matter could only be resolved by the recording of evidence and not summarily as was done by the executing Court.

Syed Sajjad Hussain Rizvi for Appellants.

Mushtaq Ahmed Khan for Respondent No.1.

Tasawar Hussain Qureshi and Ghulam Shabbir Thaheem for Respondents Nos. 2 and 3.

Dates of hearing: 8th and 10th November 2004.

2005 C L D 244

[Lahore]

Before Ali Nawaz Chowhan and Rustam Ali Malik, JJ

Messrs TAXILA COTTON MILLS LTD and 10 others---Appellants

Versus

ALLIED BANK OF PAKISTAN LTD. and 4 others---Respondents.

R.F.A. No. 119 of 2003, heard on 2nd November, 2004.

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

----S.10---Leave to defend---Court had to be guided by main rationale behind the law and not to oust defendant from the trial when he had an arguable case---If there is any dearth of material or lapse on the part of serious contender of an arguable case, in the absence of any format of any application for leave to defend, the dictates of justice will require that he be confronted with the question of showing a sufficient cause and if he does not, Court is then obliged to proceed in refusing to grant the leave, but not otherwise--­Principles---Where the Banking Court had passed a decree without fulfilling the envisaged judicial requirements in requiring the defendant to show a sufficient cause, High Court in appeal set aside the decree and directed that the defendant be allowed leave to defend and remitted the case to the Banking Court for proceeding further on merits and in accordance with law.

According to section 10(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 in case of failure in complying with the requirements of sections 10(3), 10(4) and 10(5) of the said Ordinance petition for leave to defend is to be rejected. But there is also a proviso in the words that in case the defendant discloses a sufficient cause explaining his inability to comply with such requirement the application under S.10(6) is not to be rejected summarily. This obviously means that a Court has not to come to the conclusion with respect to the non-fulfillment of the conditions laid in section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 on the basis of what may be prima facie but has also to look at the defendant's sufficient cause.

In the Civil Procedure Code where suits are instituted upon bills of exchange, promissory notes etc. and under the provisions of Order XXXVII the procedure for leave to defend a suit is given in Order XXXVII, rule 3 which lays down the requirements both legal and formal for this purpose by referring to the form given in the appendix to the Civil Procedure Code.

The Financial Institutions (Recovery of Finances) Ordinance, 2001, does borrow the idea of a summary trial in financial matters from Civil Procedure Code. But its author, failed to persevere in providing a format to be followed on the procedural side for purposes of filing a petition for leave to defend. Consequently it was left for the case-law to fill in the needs as the law developed. This is the main reason why we have to view the provisions of "sufficient cause" reflected in section 10(6) of Ordinance most seriously.

The stage when a leave to defend is being sought is not a stage where an action is being tried. A Court at such a stage is required to see whether there was a bona fide allegation of a triable issue, which was not illusory and was plausible.

One cannot attribute an intention to the legislature of creating a discrimination between Banking Company and a borrower on laying down conditions as are required under sections 10(3) and 10(4) with a blindfold because the intention of the legislature is manifest and its purpose is clear in curbing the trial of illusory, sham and frivolous allegations now quite common in the litigious system. The legislature gave a prescription for weeding out this at the very outset in financial matters because a major portion of financial transaction as covered by Financial Institutions (Recovery of Finances) Ordinance, 2001 was to be backed by proper documentation.

Therefore, at the stage of leave to defend whereas, the Court has to be guided by main rationale behind the law. It is not to oust a defendant from the trial when he has an arguable case.

If there is any dearth of material or lapse on the part of a serious contender of an arguable case, in the absence of any format of an application for leave to defend, the dictates of justice will require that he be confronted with the question of showing a sufficient cause and if he does not a Court is then obliged to proceed in refusing to grant the leave, but not otherwise.

Banking Court had passed a decree without fulfilling the envisaged judicial requirements in requiring the defendant to show a sufficient cause, High Court, in appeal set aside the decree and directed that the defendant be allowed the leave to defend and remitted the case to the Banking Court for proceeding further on merits and in accordance with law.

Messrs C.M. Textile Mills Limited v. Investment Corporation of Pakistan 2004 CLD 587; Fine Textile Mills Ltd., Karachi v. Haji Umar PLD 1963 SC 163; Muhammad Anwar v. Hoechst Pharmaceutical Pakistan (Pvt.) Ltd. and others 1989 MLD 171; Muhammad Arif v. Abdul Qayyum 1991 CLC 442; Sarang v. Haji Mahmood NLR 1994 AC 658; Messrs ARK Industrial Management Ltd. v. Messrs Habib Bank Limited PLD 1991 SC 976; Messrs National Security Insurance Company Limited and others v. Messrs Hoechst Pakistan Limited and others 1992 SCMR 718; Messrs Kohinoor Textile Mills Limited v. Messrs Gliaro ,Textile Mills Limited PLD 1986 Kar. 157(2); Fateh Lal v. Sunder Lal AIR 1980 Rajasthan 220; Anil Gupta v. Messrs Sant Ram Dhuper and Co. and another AIR 1977 Del. 164; Santosh Kumar v. Bhai Mool Singh AIR 1958 SC 321 (V 45 Complainant 52) and K. V. Periyamiyana Marakayar and Sons v. P.K. Subramania Aiyar and others AIR 1924 Mad. 612 ref.

Khalid Anwar and Kh. Saeed-uz-Zafar for Appellants.

Muhammad Rashid Qamar for Respondents.

Date of hearing: 2nd November, 2004.

2005 C L D 255

[Lahore]

Before Muhammad Sayeed Akhtar, J

HABIB BANK LIMITED‑‑‑Plaintiff

versus

Messrs CONTRACT MANAGEMENT SERVICES through Proprietor and another‑ ‑‑Respondents

Civil Original Suit No 113 of 1998, heard on 21st October, 2004.

(a) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss.2(d) & 25(1)(2), (3)‑‑‑Contract without consideration is void unless it comes under any of the exceptions set out in S.25(1)(2)(3) of the Contract Act, 1872‑‑‑Encashment of the guarantees can form consideration under S.2(d) of the Contract Act, 1872‑‑‑Past consideration is no consideration.

Habib Bank Limited v. Shamim Qureshi PLD 1988 Kar.481; Anwarul Haq v.‑ State Oil Company Limited 1993 CLC 1565; Abdul Karim Jaffarani v. United Bank Limited and 2 others 1984 SCMR 568; Pervaiz Akhter and another v. The Additional District Judge, Rawalpindi and 4 others PLD 1990 SC 681; Messrs Tribal Friends Co. v. Province of Balochistan 2002 SCMR 1903 and Ghulam Ali and 2 others v. Mst. Ghulam Sarwar Naqvi PLD 1990 SC 1 ref.

(b) Contract Act (IX of 1872)‑‑‑

‑‑‑‑S.25‑‑‑Promise‑‑‑Consideration‑‑‑Conditions necessary to constitute a promise enlisted‑‑‑Provision of S.25, Contract Act, 1872 does not require that in the writing itself the consideration should be described as past service or past debt, when in fact it was such past service or past debt and was rendered or paid as such.

The conditions necessary to constitute a promise within section 25 of the Contract Act, 1872 are:‑

(a) that it should be in writing, (b) be signed by the person to be party therewith, (c) be a promise to compensate a person wholly or in part who has already voluntarily done something for the promisor.

(d) be a promise to pay wholly or in part a debt, of which the creditor might have enforced payment but for the law on the limitation of suits.

It does not require that in the writing itself the consideration should be described as past service or past debt, when in fact it was such past service or past debt and was rendered or paid as such.

Kasturchand Jiwaji v. Manekchand Devchand AIR 1943 Bom. 447 ref.

(c) Contract Act (IX of 1872)‑‑‑

‑‑‑‑Ss.25(2) & 2(d)‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.3(2) & 7‑‑‑Payment made on guarantee by the Bank‑‑‑Scope of 5.25(2), Contract Act, 1872‑‑‑Provision of S.25(2) covers cases where a person without the knowledge of the promisor, or otherwise than at his request, does the latter some service and the promisor undertakes to recompense him for it‑‑‑In such cases promise does not need a consideration to support it‑‑‑Promise does not revive a dead right but resuscitates the remedy to enforce payment by suit‑‑‑Right of the lender to receive payment and obligation of the borrower to repay never dies by lapse of time‑‑‑Payment made by the Bank in the present case was an, act "voluntarily done" for the guarantors which connotes something performed or done of‑one's own free‑will and choice and not constraint, or prompted by another‑‑­Guarantors had made request for an additional amount which was also made‑‑‑Guarantors having accepted the liability, they were estopped by conduct from having volte face and say that agreement was devoid of consideration‑‑­Suit _ was decreed in favour of Bank and against the defendants to the tune of the payment made on guarantees jointly and severally with costs and cost of funds as envisaged in S.3(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 from the date of institution of the suit.

Shams Mehmood Mirza and Adil Nisar Khan for (CIRC) Plaintiff.

Azmat Saeed for Defendants.

Date of hearing: 21st October, 2004.

2005 C L D 281

[Lahore]

Before Ch. Ijaz Ahmad, Actg. C.J. and Syed Shabbar Raza Rizvi, J

MUBASHAR MANZOOR ALAM and 6 others‑‑‑Appellants

versus

MUSLIM COMMERCIAL BANK LIMITED and 2 others‑‑‑Respondents

F.A.O. No.479 of 2002, heard on 6th December, 2004.

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

‑‑‑‑Ss.9, 10, 13, 19 & 22‑‑‑Civil Procedure Code (V of 1908), O.XXII, Rr.4(1)(3)(4), 9(2) & O.VIIl, R.13‑‑‑Suit for recovery of loan‑‑‑Loan was secured by respondents and predecessor-­in‑interest of the appellants from the Bank under credit scheme for their partnership firm‑‑‑Bank secured mortgage deeds from the borrowers‑‑‑Borrowers failed to discharge their liabilities to terms of the agreement with the Bank‑‑ Predecessor‑in‑interest of the appellants and respondents filed joint application for leave to defend before the Banking Court‑‑‑Predecessor‑in‑interest of appellants died during pendency of the suit‑‑‑Banking Court decreed the suit against respondents and predecessor‑in‑interest of the appellants‑‑‑Bank filed execution petition before the Banking Court wherein the Bank impleaded the appdllants as defendants being legal heirs of the deceased borrower‑‑­Appellants filed application for setting aside the decree which was dismissed‑‑‑Validity‑‑‑Predecessor‑in‑interest of the appellants and respondents were real brothers; they had filed joint application for leave to defend; they had admitted the claim of the Bank and it was in, the knowledge of respondents qua the death 'of the predecessor‑in‑interest of the appellants‑‑‑Respondents, in circumstances, were duty bound to intimate the Banking Court and submit list of legal representatives along with the application for leave to defend which was a statutory duty under O. VIII, R.13, C.P.C.‑‑‑Appellants, in view of such facts had not filed the application within the prescribed period and it was not believable that it was not in their knowledge qua the pendency of suit in question as their real uncles (respondents) were party in the suit‑‑‑Appellants had not challenged the impugned decree before the High Court in appeal‑‑‑Failure to bring on record legal heirs of a dead party in a pending proceeding was not fatal to such proceedings‑‑‑No clash of interest between respondents and predecessor‑in‑interest of appellants existed in the present case‑‑‑No prejudice had been caused to the appellants‑‑­Appeal was dismissed as having no merits in circumstances.

Syed Ghias Haider v. Mst. Allah Rakhi 1986 SCMR 853 distingusihed.

Hafiz Brothers v. PICIC 2001 SCMR 1; Sohaj Khan v. The Registrar 1988 CLC 973; Bibi Khudeja v. Pir Sarwaruddin Shah 1992 MLD 490; Allah Wasaya v. Irshad Ahmad 1992 SCMR 2184; Syed Ghias Haider v. Mst. Allah Rakhi 1986 SCMR 853; Trustee of the Port of Karachi v. Muhammad Saleem 1994 SCMR 2213; Gul Muhammad Khan's case 1998 MLD 2110; Sultan Ahmad's case NLR 1999 AC 748; Muhammad Yaqub's case 1994 MLD 1843 and Abdul Ghafoor's case 2001 MLD .1797 ref.

Muhammad Asghar Khan for Appellants

Sh. Ashiq Pervaiz and Ch. Muhammad Yasir Bhatti for Respondents.

Date of hearing: 6th December, 200

2005 C L D 287

[Lahore]

Before Mian Saqib Nisar and Abdul Shakoor‑Paracha, JJ

Messrs AL‑MADAN COAL COMPANY (PVT.) LIMITED through Managing Director and 2 others‑‑‑Petitioner

versus

REGIONAL DEVELOPMENT FINANCE CORPORATION‑‑‑Respondent

Regular First Appeal No.403 of 1999, heard on 31st May, 2004.

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

‑‑‑‑Ss. 4 & 21‑‑‑Qanun‑e‑Shahadat (10 of 1984), Art. 84‑‑Communication during ordinary course of business‑‑‑Visual comparison‑‑‑Banking Court rejected the leave application and decreed the suit of the plaintiff of sanctioned advice, execution of the finance agreement, the floating charge, the pronote and creation of equitable mortgage were not denied‑‑‑Payment to supplier Company was disputed‑ Collective reading of the letters written in ordinary course of business proved that payments were made after full satisfaction about the supplied machinery and letters of request to the Bank to make payments‑‑‑Visual examination tallied the signatures of the defendant with admitted signatures‑‑‑Judgment of the Court below was upheld in circumstances.

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

‑‑‑‑O. VI, R. 6 & O. VIII, R. 4‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Ss.4 & 21‑‑‑Evasive denial‑‑‑Condition precedent‑‑­Presumption‑‑‑Misstatement‑‑‑Defence set up was evasive, illusionary, improbable and set up just to prolong the matter‑‑‑Appeal was dismissed in circumstances.

Asghar Hameed Bhutta for Appellants.

Zia‑ud‑Din Kasuri for Respondent.

Date of hearing: 31st May, 2004

2005 C L D 292

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

HABIB BANK LIMITED‑‑‑Appellant

versus

Messrs THE ENGLISH ENGINEERING COMPANY and 2 others‑‑‑Respondents

R.F.A. No‑595 of 1999, heard on .4th June, 2004.

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

‑‑‑‑Ss.9 & 21‑‑‑Civil Procedure Code (V of 1908), O.VII, R.11‑‑‑Plaint rejection of‑‑‑No cause of action‑‑‑Absence of written finance agreement between the parties‑‑‑Without deciding the application for leave to defend the suit, Banking Court rejected the plaint for the reason that the plaintiff did not produce written finance agreement with plaint‑‑‑Plea raised by the plaintiff was that the absence of agreement was not a proof of absence of cause of action‑‑­Validity ‑‑‑Averments of plaint which should be deemed correct while considering, if disclosed cause of action or otherwise, and only for the reason that there was no written agreement of finance between the parties, the plaint could not have been rejected‑‑‑In the application for leave to defend the suit, it was not disputed by the defendants that the finance facility was not granted to them‑‑‑Defendants had raised question of written agreement only with regard to mark‑up and not about availing the finance‑‑­Banking Court had erroneously applied the provisions of O. VII, R.11, C.P.C. thus the order of rejecting the plaint was set aside and the case was remanded to Banking Court, for deciding matter afresh‑‑‑Appeal was allowed accordingly.

Ahsan Rasool Chattha for Appellant

Mian Asif Mumtaz for Respondents

Date of hearing: 14th June, 2004

2005 C L D 295

[Lahore]

Before Maulvi Anwarul Haq and Syed Sakhi Hussain Bokhari, JJ

MUHAMMAD ZAMAN and 3 others‑‑Appellants

versus

AGRICULTURAL DEVELOPMENT BANK LIMITED, PHALIA BRANCH through Manager‑‑‑Respondent

F.A.O. No. 166 of 2003, heard on 17th May, 2004.

Financial Institutions (Recovery of Finances) Ordinance (LX VI of 2001)‑‑‑

‑‑‑‑S. 12‑‑‑Ex pane decree‑‑‑Application for setting aside ex parte decree‑‑‑Restoration‑‑‑Application for setting aside ex parte decree was dismissed for non‑prosecution‑‑‑Borrowers failed to give any reasons for their non‑appearance or that of their counsel‑‑‑Effect‑‑‑No cause or reason was made out for the absence of borrowers or their counsel‑‑‑Borrowers also failed to explain the reason of such absence which they were supposed to explain‑‑‑High Court declined to restore the application and did not interfere with the judgment and decree passed by the Banking Court‑‑‑Appeal was dismissed in circumstances.

Qazi Imran Zahid for Appellants.

Malik Karamat Ali for Respondent.

Date of hearing: 17th May, 2004

2005 CLD 312

[Lahore]

Before Maulvi Anwarul Haq and Sardar Muhammad Aslam, JJ

Mst. RUKHSANA BUTT‑‑‑Appellant

versus

JUDGE, BANKING COURT and others‑‑‑Respondents

F.A.O. No. 117 of 2003, decided on 28th April, 2004.

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

‑‑‑‑S. 19‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.58‑‑­Transfer of Property Act (IV of 1882), Ss.41 & 52‑‑‑Execution of decree‑‑‑Equitable mortgage‑‑‑Doctrine of lis pendens‑‑­Applicability‑‑‑Sale of mortgaged property during pendency of suit filed by bank‑‑‑Appellant filed objection during execution proceedings, on the ground that the mortgaged property was sold to him by the owner and protection of S.41, Transfer of Property Act, 1882, was available to him‑‑­Validity‑‑‑Equitable mortgage was created by deposit of title deeds with the bank‑‑‑Appellant purchased the property on 7‑3‑1995, when the suit was pending adjudication in a competent Court of law‑‑‑Sale in favour of appellant was hit by doctrine of lis pendens as contained in S.52 of Transfer of Property Act, 1882‑‑‑Appellant failed to make out a case of his being bona fide purchaser, therefore, he could not seek protection of S.41 of Transfer of Property Act, 1882‑‑­Appellant had to be vigilant and was obliged to take full care and caution to ascertain the transferor's power‑‑‑No indication was found on the record that the appellant required his transferor to produce the original title deed for his inspection‑‑‑Even .otherwise the transfer made in favour of the appellant during the pendency of the suit was hit by principle of lis pendens‑‑‑Appellant was not entitled to the protection under S.41 of Transfer of Property Act, 1882‑‑­Appeal was dismissed in circumstances.

Babar A. Khilji for Appellant.

Mazhar‑ul‑Haque for Respondents.

2005 CLD 314

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

MUHAMMAD ASHRAF‑‑‑Appellant

versus

MUSLIM COMMERCIAL BANK LIMITED through GENERAL ATTORNEY and others‑‑‑Respondents

R.F.A. No.42 of 2000, heard on 14th January, 2004

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

‑‑‑‑Ss. 9 & 10‑‑‑Contract Act (IX of 1872), 5.135‑‑‑Recovery of bank loan‑‑‑Application for leave to defend the suit‑‑­Property of minors as surety‑‑‑Property under surety in the name of minors was discharged under S.135 Contract Act, 1872, by Wafaqi Mohtasib and no appeal was‑filed, that order‑‑‑In application for leave to defend the suit, the guarantor raised such plea but the application for leave to defend was dismissed by the Banking Court and the suit was decreed against the guarantor‑‑‑Validity‑‑‑Surety of properties of minors could not have at all been given by the guarantor,. even if he was their natural guardian and legal guardian‑‑‑ Transaction to the extent of the property in the name of minors was void ab initio and had been rightly so held by Ombudsman‑‑‑As the Ombudsman had discharged the guarantor under S.135 of Contract Act, 1872, and the order had not been challenged, the same had become final‑‑­What could not be done directly, that could not be done indirectly=‑‑Even while deciding application for leave to appear and defend the suit, the Banking Court indirectly could not ignore or violate the order of Ombudsman, which, if done, would mean the exercise of jurisdiction, excluded by express provisions of law‑‑‑Judgment and decree passed by Banking Court was set aside and application for leave to appeal was allowed and matter was remanded to Banking Court for decision afresh‑‑‑Appeal was allowed in circumstances.

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

‑‑‑‑Art. 29‑‑‑Order passed by Wafaqi Mohtasib‑‑‑Validity‑‑­Such order, under the provisions of Art.29 of Establishment of Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, cannot be called in question and determined by any Court including Banking Court.

Atif Amin for Appellant.

Javed Jalal for Respondent No. 1.

Abdur Rehman Madni for Respondent No.3.

Date of hearing: 14th January, 2004

2005 C L D 323

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

MUHAMMAD HUSSAIN ‑‑‑Appellant

versus

SME BANK LIMITED and another-‑‑Respondents

R.F.A. No.442 of 2003, decided on 29th January, 2004.

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

‑‑‑‑Ss. 9 & 10‑‑‑Civil Procedure Code (V of 1908); O. Vii, R.11‑‑‑Rejection of plaint‑‑‑Cause of action ‑‑‑Determination‑‑­Application for leave to appear and defend the suit, non­-deciding of‑‑‑Effect‑‑‑Suit for rendition of accounts was filed by appellants against respondent‑Bank wherein application for leave to appear and defend the suit was filed by the bank‑‑‑Banking Court without deciding the application for leave to defend the suit, rejected the plaint filed by the appellant on the ground that the plaint did not disclose any cause of action‑‑‑Validity‑‑‑While rejecting plaint for non­disclosure of cause of action, ordinarily the facts stated in the plaint were to be considered as correct and no data and material provided by defence should be looked into‑‑‑As the Banking Court had not allowed the leave application, the plaint could not have been rejected‑‑‑Order passed by Banking Court was set aside and the case was remanded to Banking Court for decision on leave application‑‑‑Appeal was allowed in circumstances.

Irfan Masood Sheikh for Appellant.

Sardar Muhammad Tariq Khan Dareshak for Respondents.

2005 C L D 343

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

SHAHNAWAZ and others‑‑‑Appellants

versus

ZARI TARAKIATI BANK OF PAKISTAN (ADBP) through Manager‑‑‑Respondent E.F.A. No.439 of 2003, decided on 21st January, 2004.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑Ss.2(2), 47, 0.1, R.10 & O.XXI, R.11‑‑‑Decree, execution of‑‑‑Objection‑‑‑Necessary parties, non‑impleading of‑‑­Original loanee died and suit for recovery of bank loan was filed‑‑‑Bank failed to implead all the legal heirs of the deceased loanee‑‑‑Suit was decreed by Banking Court in favour of bank‑‑‑Objection filed by the appellants before Banking Court was that although they were the legal heirs but they were not impleaded in suit as defendants so decree could not be executed against them‑‑‑Objection petition was dismissed by Banking Court‑‑‑Validity‑‑‑Banking Court failed to follow, not only the law provided under the special statute but also the Civil Procedure Code, 1908, providing as to who were the necessary parties, in a suit against whom a valid decree could be passed‑‑‑Banking Court had also violated the rule of natural justice by passing a decree against persons who were not even party to the suit and such decree was neither executable against them nor the defect could be removed in execution proceedings‑‑‑Order passed by Banking Court was set aside‑‑‑Appeal was allowed in circumstances.

Malik Imran Nazir Awan for Appellants.

Haider Ali Shah for Respondent‑Bank.

2005 C L D 347

[Lahore]

Before Muhammad Sayeed Akhtar, J

UNITED BANK LIMITED‑‑‑Appellant

versus

Messrs HAFIZ BROTHERS and others ‑Respondents

Suit No.77 of 1998, decided on 3rd August, 2004

Financial Institutions (Recovery of Finances) Ordinance (LX VI of 2001)‑‑‑

‑‑‑‑Ss.9 & 10‑‑‑Recovery of bank loan‑‑‑Liquidated damages‑‑‑Proof‑‑‑Misappropriation of goods imported by defendants against Letter of Credit‑‑‑Suit for damages filed by defendants against bank, pending disposal‑‑‑Defendants admitted opening of Letter of Credit and availing of finance facility‑‑‑Goods were imported and' duly reached Pakistan‑‑­Plea raised by the defendants was that the plaintiff bank had misappropriated the goods‑‑‑Validity‑‑‑Question whether the goods were misappropriated by the bank or were sold by the defendants could not be gone into in the present suit‑‑‑Bank had lodged F.I.R. against defendants for the theft of the goods and the defendants had filed suit for recovery of damages‑‑‑If the suit for recovery of damages would be decreed, the defendants could recover the amount‑‑‑Finance obtained by the defendants was duly secured by separate documents‑‑‑Application for leave to defend the suit was dismissed‑‑‑High Court refused to give liquidated damages as the same were not proved‑‑‑Suit was decreed accordingly.

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

Jawad Hassan and Muzamil Ashraf Qureshi for CIRC

Ch. Muhammad Ashraf and M.A. Ghaffar‑ul‑Haq for Defendants Nos. l to 4.

2005 C L D 361

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

Messrs MUHAMMAD ALI AND BROTHERS through Managing Partner and 2 others‑‑‑Appellants

Versus

HABIB BANK LIMITED‑‑‑Respondent

R.F.A. No.849 of 2001, heard on 11th February, 2004.

Banking Tribunals Ordinance (LVIII of 1984)‑‑‑

‑‑‑‑S.6(6)‑‑‑Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act. (XV of 1997), Ss.4 & 7(6)‑‑‑Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.5, 6 & 7(6)‑‑‑Recovery suit‑‑­Order of Banking Tribunal dated 18‑5‑1989 directing defendant to deposit certain amount in cash and furnish security for remaining amount‑‑‑Banking Court on defendant's failure to comply with such directions decreed suit on 1‑10‑2001 under S.6(6) of Banking Tribunals Ordinance, 1984‑‑‑Validity‑‑‑Full Bench of High Court in Messrs Chenab Cement's case [PLD 1996 Lahore 672] had struck down S.6(6) of Banking Tribunals Ordinance, 1984; for being ultra vires the Constitution, after repeal of Ordinance, 1984, all cases pending thereunder stood transferred to Banking Courts established under S.4 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997‑‑‑Cases pending under Act, 1997, after its repeal stood transferred to Banking Courts established under S.5 of Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Banking Court could not validly pass impugned decree after repeal of Ordinance, 1984 and without considering the effect of judgment of the Full Bench‑‑‑High Court accepted appeal, set aside impugned decree and remanded case to Banking Court for its decision afresh in terms of Ordinance, 2001.

Messrs Chenab Cement Product (Pvt.) Limited and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 rel.

Col. Muhammad Iqbal for Appellants.

Abdul Rahim Alvi for Respondent.

Date of hearing: 11th February, 2004.

2005 C L D 369

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

MUMTAZ AHMAD‑‑‑Applicant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Chairman and another‑‑‑Respondents

R.F.A. No.319 of 2000, decided on 6th September, 2004.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑O.XLI, R.19‑‑‑Limitation Act (IX of 1908), S.5 ‑‑‑Appeal dismissed for non‑prosecution ‑‑‑ Restoration‑‑‑Condonation of delay‑‑‑Illness of counsel‑‑‑Suit was decreed and property was auctioned in execution of decree‑‑‑Appeal was dismissed by High Court due to non‑prosecution‑‑‑Plea raised by judgment‑debtor was that his counsel could not appear on account of illness‑‑‑Validity‑‑‑Judgment‑debtor did not attach any prescription or medical certificate along with application to show that his counsel had become ill al of a sudden‑‑‑Although the counsel of judgment‑debtor had filed affidavit in support of the contents of his application, yet affidavit alone was of no avail to him‑‑‑Superior Courts did not consider the ground of illness as a good ground for restoration or re‑admission of appeal‑‑‑Judgment debtor also failed to give any cause of his non‑appearance on the date of dismissal of appeal‑‑‑High Court declined to condone the delay and restore the appeal in circumstances.

Mst. Fatima and another v. Mst. Rehmat Mai 1989 SCMR 1202; Mst. Zubaida Mumtaz v. Mst. Ikram Jehan 1999 SCMR 1025; Haji Ghulam Sarwar v. Daya Ram 1975 SCMR 179; JURIO v. Nawab Nabi Bukhsh 1993 CLC 187; Hussain Khan v. Ghanno Bibi and others 1997 CLC 1324; Allah Bachai and others v. Fida Hussain and others 2004 SCMR 615; WAPDA v. Messrs Dada Bhoy Cement Indst. 2004 SCMR 1481 ref.

JHANDA v. Maqbool Hussain and others PLJ 1981 SC 297 rel.

Muhammad Akhtar Rana for Applicant.

Syed Najam‑ul‑Hassan Zaidi for the Respondents.

2005 C L D 373

[Lahore]

Before Syed Jamshed Ali and Muhammad Sair Ali, JJ

BASHIR BEGUM and 5 others‑‑‑Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN‑‑‑Respondent

Regular First Appeal No. 113 of 1999, heard on 6th April, 2004.

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

‑‑‑‑Ss.2(e) & 9‑‑‑Recovery suit‑‑‑Sanction of loan on buy back arrangement"‑‑‑‑Mark‑up, charging of‑‑‑Bank could not charge mark‑up beyond agreed date and over and above agreed mark‑up amount.

National Bank of Pakistan v. Messrs West Pakistan Tanks Terminal (Pvt.) Limited 2000 CLC 896 and ICP v. Messrs Chiniot Textile Mills Ltd. PLD 1998 Kar. 316 ref.

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

‑‑‑‑Ss.2(e) & 9‑‑‑Recovery suit‑‑‑Bank had claimed exaggerated amount of mark‑up in suit‑‑‑Effect‑‑‑Claim of Bank for future mark‑up would be declined in circumstances.

Zafar Iqbal Chaudhry for Appellants.

Ch. Farrukh Mahmood Sulehrya for Respondent.

Date of hearing: 6th April, 2004.

2005 C L D 378

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

BANK ALFALAH LIMITED ‑‑‑Appellant

Versus

Miss NAIMA SAEED through Guardian and 7 others‑‑‑Respondents

E.F.A. No.205 of 2002, heard on 17th February, 2004.

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

‑‑‑‑S.19(7)(a)‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.58‑‑Execution of decree‑‑‑Objection application, decision of‑‑‑Non‑recording of evidence‑‑‑Gift of mortgaged property‑‑­Objectors claimed that the mortgaged property had been transferred to them through gift in year, 1989‑‑‑Mortgage of disputed property was created in favour of decree‑holder ­bank in year, 1987‑‑‑Banking Court without recording of evidence, accepted the objection application‑‑‑Plea raised by decree‑holder bank was that the mortgage was prior to the gift and the same was binding on objectors (donees) who had stepped into the shoes of the mortgagor (donor)‑‑­Validity‑‑‑Banking Court should have held inquiry into the matter to ascertain, if factually any valid gift was made in favour of the objectors (donees)‑‑‑Such was important factual issue involved in the matter and the same could not be resolved without enabling the parties to produce evidence‑‑‑Order passed by Banking Court accepting the objection application was set aside and the case was remanded to Banking Court for decision afresh‑‑‑Appeal was allowed accordingly.

Syed Ali Zafar and Azhar Hussain Sheikh for Appellant.

Rizwan Mushtaq for Respondent.

Date of hearing: 17th February, 2004.

2005 C L D 380

[Lahore]

Before Ch. Ijaz Ahmad and Farrukh Latif, JJ

IJAZ AHMED and another‑‑‑Appellants

Versus

ZARI TARAQIATI BANK OF PAKISTAN through Manager‑‑‑Respondent

R.F.A. No.530 of 2003, decided on 29th April, 2004.

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

‑‑‑‑S. 25‑‑‑Circular issued by State Bank of Pakistan‑‑­Validity‑‑‑State Bank could issue instructions to financial institutions including enhancement of interest‑‑‑Such circular would have prospective and not retrospective effect.

Hashwani Hotels Limited v. Federation of Pakistan and others PLD 1997 SC 315; Federation of Pakistan and others v. Shaukat Ali Mian and others PLD 1999 SC 1026 and Pakistan through Secretary, Ministry of Commerce and 2 others v. Salahuddin and 3 others PLD 1991 SC 546 rel.

(b) Interpretation of statutes‑‑‑

‑‑‑‑Instructions issued by authorities would always have prospective and not retrospective effect‑‑‑Law framed by Legislature could not be taken to have retrospective effect, unless so mentioned specifically in the law itself by Legislature.

Pakistan through Secretary, Ministry of Commerce and 2 others v. Salahuddin and 3 others PLD 1991 SC 546 and Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan 1992 SCMR 1652 rel.

(c) Administration of justice‑‑‑

‑‑‑‑ Duty of Court‑‑‑Courts are duty bound to decide controversy between parties after judicial application of mind.

Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 1739 rel.

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

‑‑‑‑S. 24‑A‑‑‑Provisions of S.24‑A of General Clauses Act, 1897‑‑‑Nature of‑‑‑Such provisions are procedural in character, thus, have retrospective effect‑‑‑Duty of public functionaries under S.24‑A of General Clauses Act, 1897; is to decide controversy between parties after application of judicial mind with reasons.

Messrs Airport Support Services 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, D.I. Khan 1998 SCMR 2419 rel.

Awan Muhammad Hanif Khan for Appellants.

Muhammad Hassan Chohan for Respondent.

2005 C L D 384

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

CITIBANK N.A. through Manager‑‑‑Appellant

Versus

MUHAMMAD AKBAR and 3 others‑‑‑Respondents

E.F.A. No.43 of 2002, heard on 14th January, 2004.

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

‑‑‑‑S. 18‑‑‑Civil Procedure Code (V of 1908), O.XXI, R.60‑‑­Execution of decree‑‑‑Objection‑‑‑Charge over mortgaged property‑‑‑Principles‑‑‑Transfer of mortgaged property‑‑‑Bona fide purchasers, plea of ‑‑Objectors had purchased vide registered sale‑deed, the properties mortgaged with the bank‑‑‑Plea raised by the objectors was that they were the bona fide purchasers of the mortgaged property‑‑‑Banking Court allowed the objection and released the properties from attachment‑‑‑Validity‑‑‑Once the property was mortgaged, even though, it could be transferred, but such alienation was subject to the charge of mortgage‑‑‑Persons purchasing mortgaged property, could not take the "equitable rule" by avoiding the charge and claiming the transfer to be free from encumbrance‑‑‑Properties in question which were equitably mortgaged, were purchased by the objectors much thereafter‑‑‑ Objectors could not frustrate and defeat the mortgage rights of the bank on the ground of being "Bona fide Purchasers"‑‑‑Title documents were not with the sellers (judgment debtors), which fact was sufficient to hold that, the objectors had bought the properties subject to the risk of mortgage‑‑‑Order passed by Executing Court was set aside and the Court below was directed to execute the decree against the mortgaged properties‑‑‑Appeal was allowed accordingly.

Mst. Nasiban Bibi v. The Australasia Bank, Lahore 11970 SCMR 657; Mrs. Tehmina Bashir v. Abdul Rauf and another 1995 CLC 973; Tarachand Mondal and others v. Hazari Shaikh and another PLD 1967 Dacca 203; Shukri and 3 others v. Ch. Muhammad Shafi Zaffar and 2 others PLD 1975 Lah. 619 and Habib Bank Limited v. Ajma Corporation 2000 CLC 1425 rel.

Rehman Shah v. Muhammad Shah and others 1974 SCMR 255 distinguished.

Shahid Ikram Siddiqui for Appellant.

Nemo for Respondents.

Date of hearing: 14th January, 2004.

2005 C L D 389

[Lahore]

Before Ch. Ijaz Ahmad and Farrukh Latif, JJ

NAEEM YASIN‑‑‑Appellant

Versus

UNITED BANK LIMITED through MUHAMMAD NASEEM, MANAGER and another‑‑‑Respondents

R.F.A. No.495 of 1999, decided on 28th April, 2004.

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

‑‑‑‑S. 7‑‑‑General Clauses Act (X of 1897), S.24‑A‑‑‑Powers of Banking Court‑‑‑Scope‑‑‑Duty of Banking Court is to decide case with application of judicial mind, which is condition precedent‑‑‑Under S.24‑A, General Clauses Act, 1897, public functionaries are duty bound to decide controversy between the parties with reasons‑‑‑Section 24‑A of Act, 1897 is procedural in nature and has retrospective effect.

Mollah Ejahar Ali's case PLD 1970 SC 173; Messrs Airport Support Services v. The Airport Manager 1998 SCMR 2268 and Zain Yar Khan v. The Chief Engineer 1998 SCMR 2419 rel.

Mian Nusrat Ullah for Appellant.

Sheikh Asif Feroze for Respondents.

2005 C L D 393

[Lahore]

Before Syed Jamshed Ali, J

Messrs RAVI ASSOCIATE (PRIVATE) LIMITED through Director and 10 others‑‑‑Appellants

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Senior Vice‑President‑‑‑Respondent

R.F.A. No.385 of 1998, heard on 22nd June, 2004.

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

‑‑‑‑Ss. 9 & 10‑‑‑Bankers' Book Evidence Act (XVIII of 1891), S.2‑‑‑Recovery of bank loan‑‑‑Suit filed by person not duly authorized‑‑‑Treating 'Recovery Certificate' as statement of account‑‑‑Application for leave to defend the suit filed by defendants was dismissed by Banking Court and the suit was decreed‑‑‑Plea raised by the defendants was that the plaint was filed by a person who did not have any authority in that respect and no statement of account was filed by the bank‑‑‑Validity‑‑‑High Court, after careful examination of record, did not find any authorization in favour of the person through whom suit was filed and counsel was engaged to represent the bank‑‑‑Such important ground had not been adverted to by the Banking Court in the judgment passed against the defendants‑‑‑Banking Court had wrongly treated the Recovery Certificate as statement of account although same did not qualify as a statement of account‑‑‑If at all the Recovery Certificate did so qualify, it was not verified in accordance with the provisions of Bankers' Book Evidence Act, 1891‑‑‑Judgment and decree passed by Banking Court was set aside and application of defendants for leave to appear and defend the suit was deemed to be pending before Banking Court‑‑‑Appeal was allowed accordingly.

Bankers Equity Ltd. through Attorney and 5 others v. Sunflo Cit‑Russ Ltd. PLD 1999 Lah. 450 and R.F.A. No.380 of 1994 ref.

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

‑‑‑‑S. 10‑‑‑Application for leave to appear and defend the suit, dismissal of‑‑‑Non‑speaking order‑‑‑Banking Court disposed of objection of defendants by observing that "they are of casual and routine type and need not any discussion" and dismissed the application‑‑‑Effect‑‑‑Such finding of Banking Court was not a judicial dispensation because the Court was required to attend the objections raised in the application and if the Court was not persuaded, the reasons should have been recorded.

Shahid Ikram Siddiqui for Appellants.

Nemo for Respondent.

Date of hearing: 22nd June, 2004.

2005 C L D 396

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs CHAUDHRY STEEL MILLS through Managing Partner and 2 others‑‑‑Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Attorney‑‑‑Respondents

F.A.O. No. 77 of 2004, decided on 21st June, 2004.

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

‑‑‑‑S. 12‑‑‑Ex parte decree, setting aside of‑‑‑Imposition of condition‑‑‑Deposit of costs‑‑‑Extension of time‑‑‑Grievance of defendant was that Banking Court had set aside ex parte decree passed in favour of bank, subject to deposit of Rs.50,000‑‑‑Validity‑‑‑Court at the time of setting aside ex parte decree, had ample power under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001, to impose condition‑‑‑Banking Court was justified in exercising its discretion according to law and there was no defect in the order calling for interference‑‑‑Time fixed by Banking Court for deposit of costs had already elapsed, therefore, High Court in exercise of appellate jurisdiction granted 10 days time for deposit of costs fixed by Banking Court‑‑‑Appeal was dismissed accordingly.

Muhammad Asghar Khan for Appellants.

Ch. Farrukh Mehmood Sulehria for Respondents.

2005 C L D 398

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager‑‑‑Appellant

Versus

MUHAMMAD MUNIR LODHI and 16 others‑‑‑Respondents

R.F.A. No.557 of 2002, decided on 21st October, 2003.

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

‑‑‑‑Ss. 9 & 17‑‑‑General Clauses Act (X of 1897), S.24‑A‑‑­Suit for recovery of loan amount‑‑‑Partial ex parte decree for Rs.98,260 as against suit amount of Rs.3,10,507‑‑­Validity‑‑‑Neither record showed nor Banking Court had mentioned or referred to any document in impugned judgment that on basis of which document Rs.98,260 had been found to be die from defendant‑‑‑Impugned judgment did not show that how amount of Rs.98,260 had been worked out, and why sum of Rs.2,12,241 had been deducted from suit amount nor statement of accounts had been referred to‑‑‑Impugned judgment was silent as to why Bank was not entitled to recover total suit amount‑‑­Impugned judgment was sketchy, slip‑shod and devoid of reasons, which could not be called a 'judicial order"‑‑‑Even an executive authority was bound to give reasons for making order as per S.24‑A of General Clauses Act, 1897‑‑­Passing of such perfunctory order was deprecated‑‑‑High Court accepted appeal, set aside impugned judgment/decree, resultantly suit would be deemed to be pending before Banking Court for its decision afresh in accordance with law.

(b) Judgment‑‑‑

‑‑‑‑Sketchy and slip‑shod judgment‑‑‑Validity‑‑‑Judgment, which was sketchy, slip‑shod and devoid of reasons would not at all be a speaking judgment and could not be called a judicial order" within parameters set up by law‑‑‑Passing of perfunctory order was disapproved‑‑‑Such judgment would not be sustainable in law, thus, would be liable to be set aside.

Mian Nasir Mehmood for Appellant.

Nemo for Respondents.

2005 C L D 401

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

AFTAB SALEEM CHOUDHARY and another‑‑‑Appellants

versus

SONERI BANK LIMITED through ATTORNEYS‑ ‑‑Respondents

E.F.A. No.510 of 2003, heard on 9th February, 2004.

Civil Procedure Code (V of 1908)‑‑‑

‑‑‑‑S. 51 & O.XXI, R.37‑‑‑Execution of decree‑‑‑Warrant of arrest, issuance of‑‑‑Pre‑conditions‑‑‑Banking Court refused to withdraw the warrant of arrest on the ground that the property mortgaged by judgment‑debtor could not be auctioned‑‑‑Plea raised by the judgment‑debtor was that the Banking Court had issued warrant of arrest without justification‑‑‑Validity‑‑‑Pre‑conditions under S.51 C.P.C. for issuance of warrant of arrest were that judgment‑debtor should be proved to have made attempt to leave the limits of Court to obstruct the decree of execution thereof or dishonestly transferred the property after the institution of the suit to avoid the decree or had the means to pay the decree and neglected to do the same‑‑­Without satisfaction of said pre‑conditions no mechanical order for detention in prison could be passed‑‑‑Property mentioned in Fard Taleeka filed by decree‑holder bank was sufficient to satisfy the decree‑‑‑Banking Court had issued the warrant of arrest without any justification and the same was set aside‑‑‑Appeal was allowed in circumstances.

Precision Engineering Limited and others v. The Grays Leasing Limited PLD 2000 Lah. 290 rel.

Muzammal Akhtar Shabbir for Appellants.

Azhar Maqbool Shah for Respondents.

Date of hearing: 9th February, 2004.

2005 C L D 404

[Lahore]

Before Maulvi Anwarul Haq and Sardar Muhammad Aslam, JJ

Messrs FINE TEXTILE INDUSTRIES through Managing Partner and 7 others‑‑‑Appellants

versus

HABIB BANK LIMTIED, FAISALABAD ‑‑‑Respondent

R.F.A. No.397 of 2003, decided on 22nd April, 2004.

Financial Institutions (Recovery of Finances) Ordinance, (XL VI of 2001)‑‑‑

‑‑‑‑Ss. 9 & 10‑‑‑Recovery of bank loan‑‑‑Conditional grant of leave to defend the suit‑‑‑Non fulfilment of condition imposed by Banking Court‑‑‑High Court acting as Banking Court allowed application for leave to appear and defend the suit subject to deposit of certain amount within a specified date‑‑‑Borrowers did not deposit the amount, resultantly the leave granting order was withdrawn by the Banking Court‑‑‑Validity‑‑‑Neither before Banking Court, nor before Division Bench of High Court even a word had been stated by the borrowers as to why the condition imposed by Banking Court was not complied with‑‑‑Borrowers also failed to give any reason whatsoever for the non‑compliance of the condition‑‑‑Judgment and decree passed by High Court did not have any error of law or fact‑‑‑Appeal was dismissed in limine.

Mian Ijaz Hussain for Appellants.

Abid Aziz Sheikh for Respondent No. 1.

2005 C L D 436

[Lahore]

Before Ch. Iftikhar Hussain, J

Mian ASIM FARID and another‑‑‑Petitioners

versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and 4 others‑‑‑Respondents

Writ Petition No. 1181 and C.M. No.2 of 2004, decided on 23rd December, 2004.

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

‑‑‑‑S.7(4)‑‑‑Penal Code (XLV of 1860), Ss.379/406/420‑‑­Constitution of Pakistan (1973), Art.199‑‑‑Constitutional petition‑‑‑Quashing of F.I.R.‑‑‑F.I.R. registered with police on written application of one of the officers of the Bank was sought to be quashed on the ground that case could not be registered against petitioner as according to S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, cognizance of offence under the said Ordinance could only be taken by a Banking Court and that too on the complaint in writing of person authorized by the bank in that behalf‑‑‑Validity‑‑‑Registration of case with the police on written application of Bank's Officer, was not in accordance with law on the subject because cognizance of offence in case could only be taken by Banking Court and that too on the complaint in writing by a person authorized by the Financial Institution/Bank‑‑‑Continuance of F.I.R. in the case would amount to nothing, but mere abuse of process of law ‑‑‑F.I.R., was quashed, in circumstances.

Sajid Mahmood Sheikh for Petitioners.

Shoaib Zafar for Respondents Nos. 1 and 4.

Ch. Jamshaid Hussain, A.A.‑G. for Respondents Nos.2 and 3.

Ijaz Ahmad, S.‑I. with Record.

2005 C L D 438

[Lahore]

Before Sayed Zahid Hussain and Muhammad Sair Ali, JJ

Dr. ASAD PERVAIZ SHEIKH‑‑‑Appellant

versus

NATIONAL BANK OF PAKISTAN‑‑‑Respondent

F.A.O. No.283 of 2003, decided on 14th December, 2004.

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

‑‑‑‑Ss.19 & 12‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑­Agency, principles of‑‑‑Execution of decree ‑‑‑Limitation‑‑­Application under S.12, Financial Institutions (Recovery of Finances) Ordinance, 2001 read with S.12(2) , C.P.C. during execution proceedings, for recalling of the decree on the ground that the applicant was unaware of the suit and decree and was fraudulently kept out of the proceedings by the Bank with whom the applicant's address at Canada was available and that he came to know of the decree from his general attorney who was Director of the borrower company also‑‑‑Applicant had filed the application with a delay of about 18 months‑‑‑Banking Court dismissed the application on merits as well as for being barred by limitation‑‑‑Validity‑‑‑Held, Provisions of S.12(2), C.P.C. were not applicable to the proceedings under Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑­Applicant, however, had not been able to show or prove the plea of fraud or misrepresentation‑‑‑Provision of S.12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 provided period of 21 days from the date of decree o from date of the knowledge of the decree, for the application seeking an order to set aside the decree, as such by applicant's own admission that his general attorney was aware of the proceedings and only from him he had come to know about them, his application under S.12 of the financial Institutions (Recovery of Finances) Ordinance, 2001 was beyond period of limitation as he could not be presumed to be unaware of the proceedings against him as under the principles of Agency, knowledge of a duly appointed agent was the knowledge of his principal and vice versa.

M/s. Dadabhoy Cement Industries Limited and 6 others v. National Development Finance Corporation, Karachi PLD 2002 SC 500; M/s. Dadabhoy Cement Industries Limited and others v. National Development Finance Corporation 2002 CLC 166; M/s. Gold Star International and another v. Muslim Commercial Bank Limited 2000 MLD 421; M/s. Pakistan Kuwait Investment Company (Pvt.) Limited v. Bank Al‑Falah Limited and 11 others 2003 CLD 676; M/s. Mushtaq & Co. through Managing Partner and 3 others v. M / s. National Bank of Pakistan 2004 CLD 1573; United Bank Ltd. v. M/s. Zafar Textile Mills Ltd. 2000 CLC 1330 and Life Paper Store through Managing Partner Sh. Ghulam Hussain and 3 others v. Bank of Punjab and 3 others 2001 YLR 77 ref.

M/s. Dadabhoy Cement Industries Limited and 6 others v. National Development Finance Corporation, Karachi PLD 2002 SC 500 distinguished.

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

‑‑‑‑Preamble‑‑‑Civil Procedure Code (V of 1908), S.12(2)‑‑­Provisions of S.12(2), C.P.C. have no applicability to the proceedings arising under the Financial Institutions (Recovery of Finances) Ordinance, 2001.

M/s. Dadabhoy Cement Industries Limited and 6 others v. National Development Finance Corporation, Karachi PLD 2002 SC 500 distinguished.

M/s. Dadabhoy Cement Industries Limited and 6 others v. National Development Finance Corporation, Karachi PLD 2002 SC 500; M/s. Dadabhoy Cement Industries Limited and others v. National development Finance Corporation 2002 CLC 166; M/s. Gold Star International and another v. Muslim Commercial Bank Limited 2000 MLD 421; M/s. Pakistan Kuwait Investment Company (Pvt.) Limited v. Bank Al‑Falah Limited and 11 others 2003 CLD 676; M/s. Mushtaq &, Co. through Managing Partner and 3 others v. M/s. National Bank of Pakistan 2004 CLD 1573, United Bank Ltd. v. M/s. Zafar Textile Mills Ltd. 2000 CLC 1330 and Life Paper Store through Managing Partner Sh. Ghulam Hussain and 3 others v. Bank of Punjab and 3 others 2001 YLR 77 ref.

Syed Waqar Hussain Naqvi for Appellant.

2005 C L D 451

[Lahore]

Before Mian Saqib Nisar and Sh. Azmat Saeed, JJ

Messrs BERRY FOOD INDUSTRIES and others‑‑‑Appellants

versus

MUSLIM COMMERCIAL BANK LIMITED-‑‑Respondent

R.F.A. No.318 of 2004, heard on 13th December, 2004.

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

‑‑‑‑S.12(2)‑‑‑Application under S.12(2), Financial Institutions (Recovery of Finances) Ordinance, 2001 for setting aside the decree was accepted and applicants were required to file the leave application within ten days; case for the pronouncement of the order on the said application, though was fixed for 19‑11‑2003, but according to the applicant, for certain reason, file of the case was kept by the Presiding Officer till 2‑12‑2003, when he signed the judgment and the copy of the order thereafter delivered to the applicant, who had applied for the certified copy of the order on 19‑11‑2003‑‑‑Applicant, filed the leave application within 10 days of the said date but was rejected by the Banking Court, on the ground that it was barred by time, being beyond 10 days of the order dated 19‑I1‑2003‑‑‑Contention of the applicant was that the order was not announced on 19‑1,1‑2003 as it was not signed the same day, and the Presiding Officer, cleared the file on 2‑12‑2003 and therefore, the time shall run from that date‑‑‑Validity‑‑‑High Court, on appeal, summoned the record for verification but the same was not of much assistance‑‑‑Possibility therefore, could not be ruled out that the Presiding Officer, though had fixed the case for pronouncement of the order on 19‑11‑2003, but he might have dictated the order subsequently and signed the same on 2‑12‑2003, whereafter, copy was supplied to the applicants the next day‑‑‑High Court, while declining to hold an inquiry, which might include the recording of the statements of the Presiding Officer and also of the other staff of the Court, applied the rule of probability, that the applicants had applied for the copy on the next date i.e. 20‑11‑2003, which was supplied to them on 2‑12‑2003‑‑‑Applicants, therefore learnt about the acceptance of their application, on that date and thus the time of the leave application shall commence from that date‑‑‑Application of the applicants, in circumstances, was within time and therefore, the impugned order was liable to be set aside‑‑‑Applicants having also been somewhat negligent in the matter as they could have approached the Presiding Officer through their counsel to know about the situation, High Court imposed a fine of Rs.10, 000, which as conceded by the counsel of the Bank, should be deposited by the applicants with Shaukat Khanum Memorial Hospital.

Syed Waqar Hussain Naqvi for Appellants.

Hassan Nawaz for Respondent.

Muhammad Ashraf Reader and Muhammad Iqbal Wahla Ahlmad Bank with Record.

Date of hearing: 13th December, 2004.

2005 C L D 503

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Mrs. TANIS AKHTAR ‑‑‑Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN, through Manager and others‑‑‑Respondents

Regular First Appeal No.508 of 2000, heard on 14th December 2004.

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

‑‑‑‑Ss. 9 & 21‑‑‑Companies Ordinance (XLVII of 1984), S.316(1)‑‑‑Recovery of bank loan‑‑‑Failure to seek permission from Company Judge‑‑‑Bank filed suit against defendant company and its Directors/guarantors for recovery of bank loan‑‑‑Defendant company was wound up by Company Judge and Provisional Manager was appointed‑‑‑Company Judge permitted bank to file application for seeking permission to continue proceedings before Banking Court against the defendant company for recovery of bank loan but no such application was filed by the bank‑‑‑Suit was decreed by Banking Court in favour of the bank‑‑‑Plea raised by Directors/guarantors was that without seeking permission as mentioned in S.316(1) of Companies Ordinance, 1984, the Banking Court could not pass any decree‑‑‑Validity‑‑‑When winding up order was made or Provisional Manager was appointed, the proceedings in the suit or other legal proceedings would remain stayed only against company under S.316 (1) of Companies Ordinance 1984, and could not further proceed except with the leave of the Court‑‑‑If any party wished to commence or continue with the proceedings, then it had to file .application under S.316(1) of Companies Ordinance, 1984, before Company Judge Seeking his permission to commence, proceed and continue with the proceedings against the company and the Court might grant such permission, subject to certain terms‑‑‑Company Judge granted permission to the bank and the Banking Court which was seized of the suit for recovery, to continue and proceed with the proceedings, thus the Banking Court was justified in passing the judgment and decree against the defendants‑‑‑Proceedings could not commence or proceed only against the defendant company, while the proceedings against the other persons arrayed in the suit as defendants in the capacity of guarantors/mortgagors/beneficiaries, apart from the company, could be commenced proceeded with and continued even without the leave of the Court‑‑­Directors/guarantors had failed to make out a case calling for interference by High Court in exercise of its appellate jurisdiction in the judgment and decree passed by Banking Court‑‑‑Judgment and decree was legally passed by the Banking Court, having the jurisdiction in the matter‑‑‑High Court did not find any legal infirmity in the judgment and decree passed by Banking Court, thus the same was maintained‑‑‑Appeal was dismissed in circumstances.

Syed Farooq Hassan Naqvi for Appellant.

Malik Karamat Ali Awan for Respondents.

Nemo for Respondents Nos.2 to 4.

Date of hearing: 14th December, 2004.

2005 C L D 551

[Lahore]

Before Ch. Ijaz Ahmad and Muhammad Khalid Alvi, JJ

WAHEED CORPORATION (REGD.) through Chief Executive‑‑‑Appellant

Versus

CAPITAL DEVELOPMENT AUTHORITY, ISLAMABAD, through Chairman and 4 others‑‑‑Respondents

I.C. A. No.915 of 1998, heard on 10th January, 2005.

(a) Interpretation of documents‑‑‑

‑‑‑‑Document must be read as a whole in order to determine its true nature, import and scope.

Sahibzada Mansoor Ahmad's case 1993 MLD 2529 and Abdur Razzaq's case 1995 SCMR 1489 ref.

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

‑‑‑‑S.64‑A‑‑‑Applicability‑‑‑Agreement between the parties revealed that the same was a building contract‑‑­Section 64‑A Sale of Goods, Act, 1930 was not attracted as the ingredients of said section were not applicable---Principles.

State of Madras v. Messrs Gannon Dunkeley and Company AIR 1958 SC 560 fol.

Mian Nisar Ahmad for Appellant.

Malik Muhammad Nawaz for Respondents.

Date of hearing: 10th January, 2005.

2005 C L D 558

[Lahore]

Before Ali Nawaz Chowhan, J

ALAMGIR ELAHI‑‑‑Petitioner

Versus

Messrs ELAHI ENTERPRISE (PRIVATE) LIMITED, through Chief Executive ‑‑‑Respondent

Civil Original No.85 of 2002, heard on 14th January, 2005.

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss. 305, 306 & 9‑‑‑Petition for winding up of company‑‑‑ Past history of the case was that the dispute had arisen inter se the parties on multiple issues, and three persons were appointed from their brotherhood to settle the dispute who gave their award and as a sequel to the said verdict, an agreement came about where there was no specific date given with respect to that and yet another agreement was also on the record which related specifically to the alienation made by the petitioner of what belonged to him‑‑­Statements of the Chartered Accountants and the Chief Financial Officer of the company showed that the assets as shown distributed by the two documents, had in fact been distributed and as was evident from their statements the petitioner had received what was due to him on the basis of the said documents‑‑‑Petitioner, however, had stated that after he had sold his assets he asked for the return of the loan which he had given to the company‑‑‑Validity‑‑‑Parties did enter into a settlement and when there had been a subsequent agreements in which senior members of the family participated for resolution of the dispute then it no longer remained a matter simplicitor under the provisions of S.305(e), Companies Ordinance. 1984 whereas High Court under the jurisdiction, of the Companies Ordinance, 1984 was governed by S.9 of the Ordinance ‑‑‑Held so far as the petition under the companies jurisdiction was concerned, on the basis of what was prayed in the relief part of the petition same could not proceed any further: however, for pressing his relief the petitioner might have to find out the remedy under the general law.

Abdur Rasheed v. Messrs Nippon Robbin Company Pakistan Ltd. and 6 others PLD 1982 Lah. 103; Hashmi & Company Limited v. K.K. & Co. (Private) Limited 1992 SCMR 1006; Messrs Adage Advertising, Lahore v. Messrs Shezan International Ltd., Lahore 1970 SCMR 184 and Habib Bank Ltd. v. Hamza Board Mills and others PLD 1996 Lah. 633 ref.

Asim Nazeer and Usman Aziz Mir for Petitioner.

Sulman Aslam Butt for Respondent.

Date of hearing: 14th January, 2005.

2005 C L D 569

[Lahore]

Before Syed Jamshed Ali and Umar Ata Bandial, JJ

Messrs UNITED DAIRIES FARMS (PVT.) LIMITED and 4 others‑‑‑Appellants

Versus

UNITED BANK LIMITED‑‑‑Respondent

Regular First Appeal No.311 of 2004, heard on 13th December, 2004.

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

‑‑‑‑S. 9(2)(3)‑‑‑Customer had admitted having availed financial facilities but denied their aggregation as presented by the Bank‑‑‑Transfer entries seen in the statements of accounts neither showed the accounts wherefrom these originated nor the accounts to which the transfers were directed‑‑‑Statement of account was a basic document that was filed by a financial institution in discharge of its statutory duty under S.9(2), Financial Institutions (Recovery of Finances) Ordinance, 2001‑‑‑Filing of such a document was not a formality alone but the performance of a mandatory obligation to support the claim made in the plaint‑‑‑Format in a statement of account was also necessitated by S.9(3) of the Ordinance which also required the plaint to specifically state the particulars namely amount of finance availed, amount repaid, dates of payment, and outstanding amounts of finance and other amounts payable by a Customer‑ ‑‑Presentation of a fully integrated picture of the transactional history in a customer's account was meant to enable a Banking Court to transparently determine the correct financial liability of a customer who, as in the present case, had admitted having availed financial facilities but denied their aggregation as presented by the Bank‑‑‑Principles.

Record in the present case showed that the transfer entries seen in the statements of accounts neither showed the accounts wherefrom these originated nor the accounts to which the transfers were directed. Furthermore, as the statements of account lacked headings and proper column spacing, therefore these transfer entries became indistinguishable between credits and debits. In a recovery suit the statement of account is a basic document that is filed by a financial institution in discharge of its statutory duty under section 9(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001. The filing of such a document is not a formality alone but the performance of a mandatory obligation to support the claim made in the plaint. This document should be laid out in a format that is comprehensible to any reasonable person reading it in the ordinary course. It must be set out in a mode that clearly describes the nature of the account entries arranged in a manner that distinguished the various categories of amounts, for example credits, debits or amounts outstanding. The clarity of the format in a statement of account is now also necessitated by the provisions of section 9(3) of the Ordinance. That provision requires the plaint to specifically state the particulars namely amount of finance availed, amount repaid, dates of payment, and outstanding amounts of finance and other amounts payable by a customer. It appears to be the statutory scheme that the foregoing contents of the table under section 9(3) of the Ordinance that are derived from the accounts of the Bank must be verifiable with reference to its statement of account furnished under section 9(2) of the Ordinance. The presentation of a fully integrated picture of the transactional history in a customer's account is meant to enable a Banking Court to transparently determine the correct financial liability of a customer who, as in the present case, had admitted having availed financial facilities but denied their aggregation as presented by the respondent‑Bank.

Messrs. C.M. Textile Mills (Pvt.) Limited v. I.C.P. 2004 CLD 587 ref.

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

‑‑‑‑S.9(2)(3)‑‑‑Statement of account filed in a Court Legal status and effect.

Mere production of a certified copy of the account was not by itself sufficient to charge a person with liability. The copy produced was tantamount however, to production of entries from the original books of account. Those entries could have been admissible in evidence only for the purposes mentioned under the Qanun‑e‑Shahadat and to the extent therein provided. Qanun‑e‑Shahadat 'requires that corroboration is necessary of the entry to charge a person with liability, but as to what should be the nature or the extent of the corroboration no hard and fast rule can be laid down, for, that must depend on the circumstances surrounding each transaction and the reliability of the manner in which the account has been kept.

If the statement of account is presented in a disorganized and incomprehensible manner then it becomes necessary that its contents should have strong corroboration, before the account may receive judicial acceptance. Statutory provisions of sections 9(2) and 9(3) of the Ordinance clearly indicated legislative intent that the statement of account constitutes 'a fundamental document to sustain a bank's financial claim. To fulfil this role the contents of a statement must possess clarity, detail and completeness. These attributes would also serve the evidentiary presumption given by the Bankers Books Evidence Act, 1891. Needless to say the foregoing emphasis is necessary to facilitate expeditious and transparent determinations by the Banking Courts on the important question of quantum of liability that invariably arises in cases where liability as claimed in a suit is disputed by the customers.

Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Limited PLD 1966 SC 684 ref.

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

-----S. 9(4) ‑Civil Procedure Code (V of 1908) S.10----Banking suit‑‑‑Doctrine of sub judice‑‑‑ Applicability‑‑‑Scope‑‑­Provision of S. 9(4), Financial Institutions (Recovery of Finances) Ordinance, 2001 expressly excludes the application of the doctrine of sub judice enshrined in S.10. C.P.C.‑‑‑Effect of such exclusion is that a prior suit between the parties filed before a Banking Court or elsewhere does not impact upon the progress of a subsequent suit between the same parties although common questions of fact and law arise for determination‑‑‑Clear implication of S. 9(4) of the Ordinance is to exclude the consideration of conflicting findings from the array of criteria used to control and guide the progress and prosecution of suits under the Ordinance.

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

‑‑‑‑S. 9(4)‑‑‑Plea of consolidation of suit for damages with Banking suit‑‑‑Not tenable‑‑‑Principle.

In a suit for damages against a financial institution the grant of leave to defend follows as a matter of course on the substantial question of fact whether the loss claimed is proved by evidence. On the other hand a substantial question of law or fact does not readily arise in a banking claim unless the customer shows, inter alia, consideration or consent to be lacking or the entries in a statement of account to require corroboration. Therefore unless leave is granted in the banking suit as a whole consolidation of two disparate proceedings would operate not to facilitate the adjudication of the two suits but rather to retard progress of one for the sake of the other. This is against the statutory scheme for early disposal of suits filed by financial institutions under Financial Institutions (Recovery of Finances) Ordinance, 2001.

There is no provision in the Financial Institutions (Recovery of Finances) Ordinance, 2001 empowering the Banking Court to order consolidation of proceedings. Such an order can only be passed in the exercise of the inherent jurisdiction of a Banking Court upon considerations that are discretionary in nature and that 'would clearly vary from case to case. In the present case no ground was made out for Banking Court to have directed consolidation of the proceedings pending before it.

Malik Jehangir Khan v. Banking Tribunal No. 1.

Karachi Division, Karachi and 4 others 2002 CLD 1466: First Women Bank Limited v. Registrar, High Court of Sindh Karachi and others 2004 SCMR 108 and Trustees of the Port of Karachi v. Muhammad Saleem 1994 SCMR 2213 distinguished.

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

‑‑‑‑S. 2(c)‑‑‑Customer includes a surety or indemnifier‑‑­Objection based on the status of a mortgagor does not bear any relevance.

Muhammad Khalid Mehmood Khan for Appellants.

Muhammad Akram Pasha for Respondent.

Date of hearing: 13th December, 2004.

2005 C L D 581

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs MOHIB EXPORTS LTD., and 4 others‑‑‑Appellants

Versus

TRUST LEASING CORPORATION LTD. through Chief Executive‑‑‑Respondent

R.F.As. Nos.325 and 326 of 1999, decided on 10th January, 2005.

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

‑‑‑‑Ss.10 & 21‑‑‑Application for grant of leave to defend the suit‑‑‑New plea‑‑‑Defendants were not allowed to raise altogether a new plea which was not the subject‑matter of their applications for the grant of leave to defend suit, for the first time before the High Court.

Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 and Amir Shah v. Ziarat Gul 1998 SCMR 593 ref.

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

‑‑‑‑Ss.10 & 9‑‑‑Application for leave to defend the suit‑‑­Defend had raised a specific plea that plaintiff had charged mark‑up on mark‑up which was illegal and against the directives of the State Bank of Pakistan ‑‑‑‑Impugned judgment showed that although the said plea was raised by the defendant before the Banking Court yet the Court failed to give any findings on the statements of account; rather the said crucial plea had been brushed aside by the Banking Court by merely observing that "moreover presumption of truth is attached with the statements of account‑‑‑‑Effect‑‑­Held, it was legal obligation of the Banking Court to have rendered some findings on the question of charging mark‑up one way or the other: it appeared that Banking Court, without the application of its judicial mind and in complete oblivion of the impact of the objection, had, in a stereo type manner, observed that the presumption was attached to the statements of account‑‑‑Entries in the statements of account if dubious and challenged by the other party could not be taken as sufficient to prove bank's claim and no presumption of truth or correctness could be attached to such types of copies of statements of account‑‑‑Impugned judgment of the Banking Court could hardly be called and termed as judicial order/judgment within the parameters set up by law and was in violation of the principles laid down on the subject and it definitely suffered from misreading of the record of the case‑‑‑High Court set aside the impugned judgments and remanded the cases to the Banking Court on the limited question of charging of mark‑up over mark‑up in the accounts of the defendants.

Gouranga Mohan Sikdar v. The Controller of Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173; Messrs Yussra Textile Corporation and 2 others v. PICIC Commercial Bank Limited 2003 CLD 905; Messrs Associated Construction Engineering through Proprietor and 2 others v. The Bank of Punjab through Branch Manager and another 2004 CLD 1611 and Muhammad Ashraf v. Habib Bank Limited through Attorneys 2004 CLD 1561 ref.

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

‑‑‑‑Ss.10 & 21‑‑‑Application for leave to defend suit‑‑­Defendant had asserted that the Financial Institution had recovered the total decretal amount in one case and decree stood partially satisfied in other case and had charged mark‑up over the mark‑up‑‑‑Defendant, in circumstances, had been able to make out a case for the grant of leave to defend the suit only on the limited question of charging/debiting of mark‑up over mark‑up in the accounts‑‑‑High Court as such granted unconditional leave to defend the suit to the defendants on the limited question as to whether Financial Institution had charged mark‑up over mark‑up in the accounts of the defendants‑‑‑Suits filed by the Financial Institution shall be deemed to be pending before the Banking Court, constituted and established under the Financial Institutions (Recovery of Finances) Ordinance, 2001 which was directed to be decided afresh only on the questions formulated after giving opportunities to the parties to produce evidence in accordance with law within a period of three months.

Imran Raza Khan for Appellants.

Abdul Hameed Chauhan for Respondent.

Dates of hearing: 22nd and 23rd December, 2004.

2005 C L D 588

[Lahore]

Before Muhammad Sair Ali, J

Sheikh MUHAMMAD AYUB---Petitioner

versus

MUHAMMAD YOUSUF---Respondent

Civil Revision No.1381 of 2003, decided on 14th January, 2005.

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

----O. XXXVII, R.3---Suit for recovery---Leave to defend the suit by the defendant---Imposition of terms on the leave---Principles.

Principles settled for the leave and the imposition of terms on the leave are following:

(i) The Court should consider the facts disclosed in the affidavit filed by a defendant along with application for seeking leave to appear and defend the suit;

(ii) If such facts show a plausible defence or a substantial question of fact or law needing trial or investigation, the defendant will be entitled to the leave to defend the suit;

(iii) If the defence set-up is vague or unsatisfactory or doubtful or not genuine, leave should not be refused altogether but the applying defendant should be put on terms either to furnish security or to deposit the amount claimed; or

(iv) If the allegations in the affidavit are illusory or improbable not raising a triable issue as to the consideration for the Bill, leave can be refused by the Court.

Despite the finding of existence of a “plausible defence” or a “substantial question of fact or law” or a “triable issue” in the case, the Court could subject the grant of leave on the term of cash deposit in the Court by the defendant for the reason that “conduct of the defendant was not entirely free from suspicion.”

Fine Textile Mills Ltd. Karachi v. Haji Umer PLD 1963 SC 163 fol.

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

----O. XXXVII, R.3---Suit for recovery---Leave to defend suit---Grant or refusal---Basis---Facts and the questions as disclosed in the affidavit and application to seek leave to appear and defend the suit, form the basis for grant or refusal of the leave and/or to allow the leave upon terms or otherwise---Imposition of a term is the Court’s discretion to be exercised judiciously upon the facts of the case before it---Such exercise should not be arbitrary, perverse or unduly harsh so as to amount denial of the defence to a deserving defendant---Principles.

Agrofoster (Pvt.) Ltd. and 2 others v. Judge Banking Court No.5, Karachi and another PLD 1999 Kar.398; Haji Abdul Wahid v. Hoechst Pakistan Limited and another 1993 CLC 1291; Ehsanul Haq Kiani v. Allied Bank of Pakistan, Karachi and 2 others 1984 SCMR 963; Fine Textile Mills Ltd. Karachi v. Haji Umar PLD 1963 SC 163; Haji Karim and another v. Zakir Abdullah 1973 SCMR 100; Mian Rafique Saigol and another v. Bank of Credit and Commerce International (Overseas) Ltd. and another PLD 1996 SC 749; Messrs Ark Industrial Management Ltd. v. Messrs Habib Bank Ltd. PLD 1991 SC 976; Haji Sh. Muhammad Hussain & Co. Ltd. and 9 others v. City Bank N.A. Alfalah Building Lahore 1985 CLC 2467 and Messrs National Security Insurance Co. v. Messrs Hoechst Pakistan Ltd. and others 1992 SCMR 718 ref.

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

----O. XXXVII, R.3---Negotiable instruments Act (XXVI of 1881), S.118---Suit on the basis of dishonoured cheque---Application for leave to defend suit by the defendant---Defendant in his application and affidavit had admitted that the parties had a business relationship whereunder the plaintiff invested a certain amount in cash with the defendant and the defendant had also admitted the amount of balance payable by him to the plaintiff---Defendant claimed issuance of the cheques in question “as security for the amount invested”---Cheques were admittedly dishonoured as not arranged for by the defendant and his son had issued more cheques in favour of the plaintiff in order to satisfy plaintiff’s business creditors---Execution, issuance and the dishonouring of the cheques thus ceased to be the litigated questions upon admission of the defendant---Trial Court as such concluded that defendant’s defence deserved a trial and while exercising its discretion, in view of the facts, granted leave conditionally upon his furnishing of a surety bond for the suit amount---Validity---Defendant having not produced any document in support of his plea of the investment by the plaintiff in business transaction, examining the record to assess whether exercise of discretion of subjecting the leave to a condition by the District Judge, was improper, perverse and arbitrary---Plea of defendant, in fact, proved the existence of a financial transaction between the parties by admitting payment of money by the plaintiff---Issuance of cheques by the defendant was also a proof that the plaintiff’s money was backed by the defendant’s cheques---Nature and the value of the defence plea terming the cheques as securities and the effect thereof could only be determined upon investigation in a trial particularly in the perspective of the admitted execution and issuance of cheques by the defendant and dishonouring the same---Blank and unsubstantiated oral pleas of the defendant were not adequate at the revision stage to displace the initial presumption attached under S.118, Negotiable Instruments Act, 1881 that the negotiable instruments were made, drawn, accepted or endorsed for a consideration---Defendant had yet to discharge his onus of proof that the cheques made and drawn by him were not for consideration---Trial Court, in circumstances, validly and reasonably exercised the discretionary powers vesting in it to grant leave to defend the suit conditionally upon the submission of surety bond equal to the disputed amount by the defendant and was justified to reject the review application against said order---Such order of the Trial Court did not deserve interference by the High Court in revision---High Court allowed another opportunity of a trial to the defendant to furnish a surety bond for the suit amount by granting further time uptil 31-1-2005 and modified the order of the Trial Court accordingly and if the defendant failed to furnish surety bond up to the specified date, order of the Trial Court would remain in the field and Trial Court shall proceed to decide the suit expeditiously in accordance with law.

Agrofoster (Pvt.) Ltd. and 2 others v. Judge Banking Court No.5, Karachi and another PLD 1999 Kar.398; Haji Abdul Wahid v. Hoechst Pakistan Limited and another 1993 CLC 1291; Ehsanul Haq Kiani v. Allied Bank of Pakistan, Karachi and 2 others 1984 SCMR 963; Fine Textile Mills Ltd. Karachi v. Haji Umar PLD 1963 SC 163; Haji Karim and another v. Zakir Abdullah 1973 SCMR 100; Mian Rafique Saigol and another v. Bank of Credit and Commerce International (Overseas) Ltd. and another PLD 1996 SC 749; Messrs Ark Industrial Management Ltd. v. Messrs Habib Bank Ltd. PLD 1991 SC 976; Haji Sh. Muhammad Hussain & Co. Ltd. and 9 others v. City Bank N.A. Alfalah Building Lahore 1985 CLC 2467 and Messrs National Security Insurance Co. v. Messrs Hoechst Pakistan Ltd. and others 1992 SCMR 718 ref.

Muhammad Yousaf Kazmi for Petitioner.

Hamid Ali Mirza for Respondent.

Date of hearing: 24th November, 2004.

2005 C L D 602

[Lahore]

Before Mian Saqib Nisar, J

HABIB BANK LIMITED---Applicant

versus

Messrs ZUCHINI INDUSTRIES PAKISTAN (PVT.) LIMITED and 6 others---Respondents

C.Ms. Nos.299-B and 308-B of 2004 in C.O.S. No.23 of 2004, decided on 14th December, 2004.

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

----Ss. 7, 9 & 16---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for recovery of loan against borrower and the guarantors---Bank moved application for grant of interim relief regarding appointment of the Local Commission for the preparation of inventory of the machinery, fixtures, stocks, etc. which was allowed but the request for attachment of the properties of the defendants had not been pressed by the Bank’s counsel---Bank had confined itself to the relief that defendant be restrained from alienating all those properties, which were mortgaged/pledged and hypothecated with the Bank and guarantors be restrained from encashing two TDRs mentioned in the applications---Held, as far as the restraint about the sale of the mortgaged/pledged properties/assets belonging to defendant was concerned, applicant/Bank had a prima facie case, because admittedly, said properties were the securities for the repayment of the finance, and thus if during the pendency of suit, those were allowed to be alienated, the Bank shall be exposed to irreparable loss and the balance of convenience also lay in favour of the Bank and against the defendant, therefore, defendant was restrained from alienating the said properties in any manner whatsoever, without first obtaining the permission of the High Court---No details of properties of the guarantors having been furnished by the Bank, the Bank could not be clothed with the omnibus order, restraining the guarantors from transferring/alienating any of their properties/assets, therefore to that extent, the relief claimed by the Bank was declined---Property/assets of the defendant (borrower) being quite sufficient rather more than the claim of the Bank, relief against the guarantors was declined by the High Court.

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

----Ss. 7, 9 & 16---Civil Procedure Code (V of 1908), Ss.94(e), 151 & O.XXXIX, Rr. 1 & 2---Suit for recovery of loan by Bank against principal borrower and guarantors---Bank moved application seeking relief to the effect that guarantors be restrained to encash the TDRs issued by a foreign branch of the plaintiff bank---Said TDRs did not belong to the guarantors rather were owned by some other foreign company who was not party to the lis and the TDRs in question were not shown to be under the lien of the plaintiff Bank for repayment of the finance in issue---Issue for determination was whether, in circumstances, Pakistani Court, while exercising its special jurisdiction under the Financial Institutions (Recovery of Finances) Ordinance, 2001 or in the exercise of its general powers conferred by C.P.C., could issue an extra territorial injunction, restraining the defendants from the encashment of the TDRs issued by plaintiff’s branch at Dubai which were lying there---Principles.

The claim of the plaintiff in the present case is that the TDRs are under the lien of the bank for the repayment of the finance and if the guarantors during the pendency of the suit, are allowed to encash, the TDRs, the Bank shall be exposed to irreparable loss and balance of convenience also tilted in its favour. In reply to the above, it has been explained by guarantors that these TDRs do not belong to them, rather are owned by a company registered in the Ireland and is operating inter alia in Dubai, for the last ten years. These TDRs are not under the lien of the plaintiff/bank for the repayment of the aforesaid finance, but those have been furnished as security by the aforesaid company against counter guarantees for some other company.

The important legal point, which has cropped up in the present matter is, whether High Court, while exercising its special jurisdiction under the Financial Institutions (Recovery of Finances) Ordinance, 2001, or in the exercise of its general powers conferred by C.P.C., can issue an extra territorial injunction, restraining the defendants from the encashment of the TDRs issued by the plaintiff’s branch at Dubai, and are lying there.

On the principle of ex debito justitiae, which means, in accordance with the requirement of justice, the Pakistani Courts in appropriate cases, can grant interim relief in the nature of extra territorial jurisdiction, under its inherent jurisdiction to do justice, however, the propriety thereof, shall be dependent upon the facts and circumstances of each case. But before such power should be exercised, the rules of International Law; the principles of the conflict of laws; the Municipal law of the country, where the subject matter about which injunction is being sought and issued and whether such an injunction shall command respect and enforceability in the country, where it has to take the effect, should also be necessarily kept in view.

Such an interim relief/injunction thus can be issued, in “personam” against a persoone, who has been validly and properly joined and arrayed as a party to the legal proceeding, pending before the Courts in Pakistan, and under the law, the Courts otherwise have the jurisdic-tion over the party. It can undoubtedly be issued against a party, who is legally joined and has also submitted to the jurisdiction of Pakistani Courts, such a person/party can obviously be directed through an injunctive order to perform or restrain from performing any act, related/ connected to a subject matter, which even is outside the jurisdiction of the Courts in Pakistan.

The TDRs in question are not shown to be owned by guarantors, rather by a company registered in the Ireland and is operating inter alia in Dubai, and is not a party to the present lis; even on the principle of injunction in personam, it cannot be issued to such a company, which is the owner of the TDRs, but not a defendant to the case. Secondly, it is not prima facie proved on the record that the said TDRs are under the lien of the bank for the satisfaction of the finance in issue. No letter of lien in this regard has been placed on record. Even otherwise, it has been explained by the defendant’s side that the claim of the bank stands substantially reduced, as against the value of the project, which remains to be the prime security for the discharge of the liability by defendant. Moreover Manager of the Assets and Recovery of plaintiff/bank, has candidly conceded that the value of the land and building of the defendant presently shall be around 40 million and if the machinery etc. is added, it shall increase to 144/145 million. Thus the above property/assets of the principal debtor seem quite sufficient, rather more than the claim of the plaintiff/bank. Therefore, a prima facie case for the grant of an interim injunction has not been made out and in the facts of the case, the applicant also failed to establish in its favour the other two essential ingredients, requisite for the grant of the interim relief. The application of the bank in this behalf was dismissed.

Balagamwala Oil Mills (Pvt.) Ltd. v. Shakarchi Trading A.G. and 2 others PLD 1990 Kar. 1 fol.

Republic of Haiti v. Duvlier (1990) 1 OB 202 (C.A); Derby & Co. Ltd. v. Weldon (1990) Chy. 48 (C.A.); Deby & Co. Ltd. v. Weldon (No.6) (1990) IWLR 1139, 1149; and Babanaft International Co. S.A. v. Bassame (1990) Ch. 13 at 38.41 (C.A.) ref.

Salman Akram Raja for Applicant.

Amir Iqbal Basharat for Respondents Nos.1 to 4 and 7.

Qasir Javed for Respondents Nos. 5 and 6.

Zafar Iqbal, Manager of Assets and Recovery in person.

2005 C L D 610

[Lahore]

Before Syed Zahid Hussain and Syed Sakhi Hussain Bokhari, JJ

MUHAMMAD JAMEEL and another---Appellants

versus

CITIBANK N.A. and 3 others---Respondent

E.F.A. No. 319 of 2003, heard on 25th January, 2005.

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

----Ss. 14, 15, 18 & 21---Civil Procedure Code (V of 1908), S.151---Suit for recovery of bank loan---Borrower had mortgaged his property as security and the title deeds were in the possession of the Bank---Banking Court granted decree to the Bank which attained finality and the mortgaged property was sold in execution thereof through open auction---Auction sale was confirmed and total price was paid by the auction purchaser and sale certificate and warrant for possession had also been issued by the Court---Application under S. 151, C.P.C. was filed by the objectors claiming that the judgment debtor was not owner of the property on the date when the property was mortgaged with the Bank, the mortgage itself was illegal and invalid and that they were vendees of the title of the property for valuable consideration in good faith and prayed for setting aside the auction---Banking Court found that the sales claimed by the objectors to have been made in their favour had been brought about in collusion with the judgment debtor who supported them at the bar---Validity---Held, contention of the objectors impugning the validity of the mortgage had no tenability as the objectors had no locus standi to agitate the matter nor in the process of execution of the decree the Court could go behind the decree---Had the objectors made due inquiry and demanded the title documents of the property from the judgment debtor they would have learnt about the mortgage and had not gone ahead for the purchase of the same as the original title documents were still lying with the decree holder/Bank---Plea of bona fide purchase was not placed on a sound footing as the inquiry made by the objectors about the title of the suit property should not have been confined merely to the examination of the revenue papers---Banking Court in dismissing the application of the objectors had acted in consonance with the law and no illegality had been committed in passing the impugned order---Appeal was dismissed by the High Court.

Mst. Nasiban Bibi v. The Australasia Bank, Lahore and 2 others 1970 SCMR 657 fol.

Muslim Commercial Bank Limited v. Messrs Malik & Company through Proprietor Malik Naim Ahmad and 2 others 2002 CLD 606; National Bank of Pakistan v. Messrs M.M. Agencies and 5 others 1991 CLC 1763; Zarif Khan and others v. Muhammad and others PLD 1983 Pesh. 58; Messrs United Bank Ltd., Karachi v. Mst. Asma Zafarul Hassan 1980 CLC 565; Alamanayakunigari Nabi Sab v. Murukuti Papiak and others AIR 1915 Mad. 972; Mst. Nasiban Bibi v. The Australasia Bank, Lahore and 2 others 1970 SCMR 657 and Muslim Commercial Bank Limited v. Syed Ataullah Shah and 2 others 2003 CLD 888 ref.

Khawar Ikram Bhatti for Appellants.

Ashar Elahi for Respondent No.1.

Shahid Ikram Siddiqui for Respondent No.4.

Date of hearing: 25th January, 2005.

2005 C L D 615

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

JAVED AHMAD and another---Appellants

versus

UNITED BANK LIMITED and 12 others---Respondents

R.F.A. No.95 of 2000, decided on 12th January, 2005.

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

----Ss. 10, 12 & 21---Dismissal of application for leave to defend suit for non-prosecution as neither the defendants nor their counsel entered appearance to prosecute the application---Neither in the grounds of appeal nor at the time of hearing of appeal the appellant (defendant) had pleaded any cause not to talk of “Sufficient Cause” for the non-appearance of the defendants or their counsel---No application under S.12, Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1979, seeking restoration of their leave application and explaining the causes for non-appearance and absence of their counsel had been moved---Banking Court, in circumstances, had committed no legal error, while passing the impugned judgment and decree, qua the appellants (defendants) which were maintained by the High Court.

Syed Ikhtisar Ahmed for Appellants.

2005 C L D 619

[Lahore]

Before Syed Jamshed Ali and Umar Ata Bandial, JJ

Messrs BUKHARI AGRITEK (PVT.) LIMITED through Director and 3 others---Appellants

versus

AGRICULTURAL BANK OF PAKISTAN---Respondent

Regular First Appeal No.826 of 2002, heard on 14th December, 2004.

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

----Ss. 9, 7, 3 & 22---Buy back agreement---Charge of mark-up---Principles---Banking Court, while decreeing the suit for recovery, had not taken into consideration the payments made by the judgment debtors before the institution of the suit---Judgment of the Banking Court was based on the statement of accounts placed on the record by the Bank itself which supported the contention of the judgment debtors that the outstanding amount against them was not Rs.9,84,651---Contention of the Bank that the Bank was entitled to 15% mark-up on the basis of the sanctioned advice was not acceptable for the reason that the “buy back agreement” was in the nature of “Bai-Muajjal” therefore, claim to mark-up was not sustainable and the liability of the judgment debtors was to be determined according to the “buy-back agreement” which gave out a schedule according to which the total amount payable by the judgment debtor was Rs.75,42,952 which included an amount of Rs.27,17,952 over and above the principal sum---Bank, in circumstances, was not entitled to recover anything beyond the said amount.

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

----Ss.9, 7, 3 & 22---Banking Tribunals Ordinance (LVIII of 1984), S.5---Buy-back agreement---Award of cost of funds---Principles---Suit for recovery of dues, in the present case, was filed when the Banking Tribunal Ordinance, 1984 was in force which did not contain any provision for accrual of further liability outside the terms of the “buy back agreement” as visualized by the cost of funds in terms of S.3 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Suit was filed long before the promulgation of the said Ordinance while finance in the present case was extended pursuant to a buy back agreement executed on 15-2-1987---Held, neither under the buy back agreement executed in the case nor under the Banking Tribunals Ordinance, 1984, whereunder proceedings were initiated for recovery of dues there was room for awarding cost of funds---Provisions of S.3, Financial Institutions (Recovery of Finances) Ordinance, 2001 were not procedural in nature because said provisions imposed a pecuniary burden on a defaulting customer/ judgment debtor which amounted to a substantive obligation---Nothing in the express provisions of S.3 of the Ordinance suggested retrospective application nor did the law favour substantive obligation---Provisions of S.3, Financial Institutions (Recovery of Finances) Ordinance, 2001 being not retrospective, in effect, costs of fund provision had no application to the present case.

Sajid Mahmood Sheikh for Appellants.

Naseer Ahmad for Respondent.

Date of hearing: 14th December, 2004.

2005 C L D 624

[Lahore]

Before Ch. Ijaz Ahmad and Muhammad Khalid Alvi, JJ

Dr. MUHAMMAD ASHRAF---Appellant

versus

THE BANK OF PUNJAB through Manager and 9 others---Respondents

Regular First Appeal No.111 of 2003, decided on 17th January, 2005.

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

----Ss. 9, 10, 18 & 21---Suit for recovery of loan---Defendants had not filed applications for leave to appear to defend the suit---Banking Court dismissed the suit ex parte and also decreed against the defendants---Bank and defendants, during pendency of appeal before the High Court, arrived at an agreement to allow the defendants to discharge their liabilities in easy instalments---Defendants had paid two instalments to the Bank along with down payments which they had mentioned in the agreement arrived at between the parties---Relevant documents were placed on record---Contention of the defendants was that in view of the subsequent events the decree against them had become redundant as the Bank had settled the dispute with them and High Court had ample jurisdiction to look into the subsequent events at the time of deciding the case between the parties---Bank contended that defendants had not settled the dispute with the Bank therefore, appeal had not become redundant---Validity---High Court had ample jurisdiction to look into the subsequent events at the time of deciding the case---Bank, after having secured the decree had settled the dispute by way of agreement, therefore, appeal of defendants was accepted---No one could be allowed to approbate and reprobate---Bank, however, was well within its rights to secure the decretal amount from the defendants in terms of the agreement arrived at between the parties---If the defendants failed to honour their commitment the Bank would be at liberty to avail appropriate remedy under the law.

Nasir Jamal v. Zubaida Begum 1990 CLC 1069 and Mst. Amina Begum v. Mehr Ghulam Dastigir PLD 1978 SC 220 ref.

Mian Muhammad Rafi-ud-Din for Appellant.

Tariq Shamim along with Muhammad Khalil, Mananger Bank of Punjab.

2005 C L D 629

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

KHALID SHAHBAZ CHAUDHRY and 4 others---Appellants

versus

PRIME COMMERCIAL BANK LTD. through Vice-President---Respondent

Regular First Appeals Nos.104 to 107 of 1999, heard on 6th September, 2004.

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

----Ss. 7, 9 & 21---Suit for recovery of loan filed before Banking Tribunal under Banking Tribunals Ordinance, 1984---Contention of the defendants was that suits were filed before incompetent Tribunal, therefore same could not be transferred by operation of law before the Banking Court and thus judgments and decrees of the Banking Court were without lawful authority---Validity---Defendants had not taken any ground in the grounds of appeal before the High Court that the Banking Court lacked jurisdiction in the matter---Defendants (appellants), in circumstances were not allowed to raise the plea that Banking Court had no jurisdiction to take cognizance of the matter.

Mst. Murid Begum v. Muhammad Rafiq PLD 1974 SC 322 and Tariq Shahbaz Chaudhry v. Bank of Punjab 2004 CLD 207 ref.

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

----Ss. 7, 9, 10 & 15---General Clauses Act (X of 1897), S.24-A---Operative part of the judgments and decrees of the Banking Court along with grounds of application for leave to defend the suits clearly showed that Banking Court had passed the impugned judgments and decrees without application of mind which was condition precedent for the Judicial Officer to pass the judgments and decrees after application of mind---High Court accepted the appeals, set aside the impugned decree and remanded the cases to the Banking Court to decide the same afresh according to law---Principles.

Gouranga Mohan Sikdar v. The Controller of Import and Export PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173 and Messrs Airport Support Services’ case 1998 SCMR 2268 ref.

Chenab Cement’s case PLD 1996 Lah.572; Soneri Bank Ltd. v. Raja Weaving Mills KLR 1997 CC 742; U.B. L. v. Hinna Export Company 1998 PSC 78; Messrs Sind Tech. Industries v. Messrs Investment Corporation 1998 SCMR 1533; A. Habib Ahmad v. Hongkong Banking Company 1999 CLC 1953; Syed Farasat Ali Shah v. A.B.L. 2002 CLD 759; Muhammad Umar Tarar v. Judge Banking Court 2002 CLD 1663; Equity Participation Fund v. Messrs Pakistan Mobile 2003 CLD 206; Syed Farasat Ali Shah v. A.B. L. 2003 CLD 952; Tri-Star Polyester Ltd. v. Citibank 2001 SCMR 410; Pakland Cement Company v. Citibank 2001 SCMR 1341; Muhammad Umar v. Muqarab Khan 1968 SCMR 983; Fine Textile Mills Ltd. v. Haji Umar PLD 1963 SC 163; Muhammad Ramzan v. Citibank N.A. 2001 CLC 158; Ghazala Arif v. Union Bank 2000 CLC 1201; Messrs U.B.L. v. Redco Textile Ltd. 2000 CLC 968; M.C.B. Ltd. v. Rizwan Textile Mills 1998 MLD 529; National Bank of Pakistan v. Mohammad Ashraf Sanik PLD 1987 Lah. 17; U.B.L. v. Central Cotton Mills Ltd. 2001 MLD 78; U.B.L. v. Mian Aftab Ahmad 2001 MLD 1332; Ghulam Sarwar v. National Bank 2001 CLC 522; ANZ Grindlays Bank v. Saadi Cement Company PLD 2001 Kar. 2017; Qatar Airways PLC v. ANZ Grindlays Bank 2000 CLC 1455; First Grindlays Modaraba v. Pakland Cement 2000 CLC 2017; National Bank of Pakistan v. Messrs West Pakistan Tanks 2000 CLC 896; Agrofoster (Pvt.) Ltd. v. Judge Banking Court PLD 1999 Kar. 398; Citibank v. Tariq Mohsin PLD 1999 Kar. 196; Messrs Habib Bank Ltd. v. Messrs Marvi Laboratories 1999 MLD 3456; National Bank of Pakistan v. Punjab Buildings PLD 1998 Kar. 302; Nasimuddin Sidiqui v. U.B.L. 1998 CLC 1718; U.B.L. v. Sindh Tech Industries 1998 CLC 1152; A.B. L. v. Mehran Oil Mills PLD 1988 Kar. 360; A.B.L. v. Messrs Kassam Corporation 1987 MLD 742; Haji Ali Khan v. A.B. L. 1992 CLC 1906 distinguished.

Mian Nisar Ahmed for Appellants.

Jawad Hassan for Respondent.

Date of hearing: 6th September, 2004.

2005 C L D 636

[Lahore]

Before Ali Nawaz Chowhan, J

Ch. MUHAMMAD HUSSAIN--- Petitioner

versus

KHIALI PAPER AND BOARD MILLS (PVT.) LTD.---Respondent

C.Os. Nos.69 of 2000 and 67 of 2001, decided on 11th February, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss. 290 & 305---Petition for winding up---Oppression, mismanagement and loss of mutual trust inter se the parties (Directors of the company) causing inharmonious working of the company---Relief against---Requirements---Petitioner, in order to get relief under S. 290, Companies Ordinance, 1984 had to show that the conduct of the management lacked in probity, and was prejudicial to the interest of the petitioner in the exercise of the legal and proprietary rights as share holders---Order for winding up of a company was not to be taken as a readily available relief, object being that the industry should flourish instead of getting same close down creating multiple problems pertaining to income and employment---High Court, in order to ensure that the mismanagement, which was being commonly reported was curbed and the company functioned democratically according to norms, its Articles of Association, inoffensively and its interest and property were fully safeguarded, directed the appointment of Ome Bueno or an Ombudsman for the company to be a check in the way of management, to be a catalyst for smooth and democratic functioning of the Board of Directors, to act as a buffer inter se the Directors (brothers) and for safeguarding the interest of company vis-a-vis its land and property and for reporting back to the High Court any act of tort on the part of the management or Directors---Specific directions were also issued to the said person for performance of his function.

The order for winding up should not be taken as a readily available relief. The desire being that the industry flourished instead of getting close down creating multiple problems pertaining to income and employment.

For a relief under section 290 of the Companies Ordinance, 1984, it has to be shown that the conduct of the management lacked in probity and it was prejudicial to the interest of the petitioner in the exercise of the legal and proprietary rights as share holders.

In the present case there was a loss of mutual trust inter se the parties and this was causing inharmonious working of the Company and the purpose of the law is to put an end to oppression and mismanagement in the interest of the share holders of the Company.

So, High Court was to ensure that the mismanagement, which was being commonly reported, was curbed and the Company functioned democratically, according to norms and its Articles of Association, inoffensively and its interest and property were fully safeguarded.

On one hand, High Court wishes the management to flourish and to stand on its feet and resolve its dispute in a corporate style, but on the other hand the Court sees past failures, quarrels and bitterness between the brothers, (Directors) therefore, a person be appointed in the shape of a “Ome Bueno” or an “Ombudsman” for the Company to be a check in the way of mismanagement, to be a catalyst for smooth and democratic functioning of the Board of Directors, to act as a buffer inter se the Directors and for safeguarding the interest of the Company vis-à-vis its land and property and for reporting back to the Court any act of tort on the part of the management or Directors.

The person so appointed would visit the Company Office after duly informing the Directors, inspect the record and advise the Directors to proceed in accordance with law. He shall also toe the line of accounts of the assets of the Company and inspect its books and will listen to the complaints of the Directors and try to resolve issues domestically between the Directors. The Ome Bueno shall report any misdeed or abuse of authority or commission of any act of oppression by anyone to the Court.

The Registrar Joint Stock Companies shall render all assistance to him for performance of his function. In case he needed any police help, this too shall be afforded by the authorities.

Needle Industry (India) Ltd. AIR 1981 SC 1298; Daulat Makanmal Luthria v. Keshav S. Naik, (1992) 3 Comp. LJ 119 (CLB) and Narain Dast (K.) v. Bristol Grill P.P. Ltd. (1997) 90 Com Cases 79 (CLB-N. Delhi) ref.

Mian Sarfraz-ul-Hassan for Petitioner.

Tariq Kamal Qazi for Petitioner in C.O. No.67 of 2001.

Haq Nawaz Chattha for Respondent.

2005 C L D 643

[Lahore]

Before Mian Saqib Nisar and Tanvir Bashir Ansari, JJ

MUHAMMAD NAEEM BHATTI and others---Appellants

versus

UNITED BANK LIMITED and 2 others---Respondents

Regular First Appeals Nos.80 and 82 of 2003, heard on 4th October, 2004.

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

----Ss. 9, 10, 14 & 22---Suit for recovery of loan against principal borrower and the guarantors---Guarantors had created mortgage by the deposit of title documents, and the execution of the registered mortgage-deed---Finance was further secured by the hypothecation of certain paddy stocks lying in the godown of one of the guarantors---Hypothecated stock was destroyed by fire and Bank invoked the insurance clause but the insurance company refused the claim challenging the bona fides of the fire incident---Effect---Claim under the insurance clause was an independent and separate agreement, which could not be made the basis to restrict the Bank to recover the amount only through the said process, especially when the insurance company had refused to pay the insurance claim on the ground that the incident of fire was a manoeuvred one and the claim was not bona fide---Contention that because of the Act of God, the principal borrower was exonerated from the liability and thus the guarantors stood discharged as sureties/mortgagors, was repelled.

Messrs United Bank Limited v. Messrs Adamjee Insurance Company Ltd. 1988 CLC 1660 and Messrs Agro Food Limited through Chief Executive and 4 others v. Agricultural Development Bank of Pakistan through Manager 2002 CLC 1290 fol.

Malik Azam Rasool for Appellant.

Mushtaq Mehdi Akhtar for Respondent.

Date of hearing: 4th October, 2004.

2005 C L D 649

[Lahore]

Before Maulvi Anwarul Haq, J

NATIONAL BANK OF PAKISTAN through General Attorney---Plaintiff

versus

Messrs MUBARAK TEXTILE MILLS LTD. through Managing Director/Chief Executive and 7 others ---Defendants

C.O.S. No.11 of 2000 and C.M. No.1518 of 2004, decided on 6th December, 2004.

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

----Ss. 9 & 19(1)---Civil Procedure Code (V of 1908), O.XXI, R.2---Suit for recovery of amount---Execution of decree---Suit was decreed in terms of compromise between the parties---Both parties had stated that amount due under the decree had been paid by judgment-debtor to decree-holder Bank subject to condition that all or any payment under insurance claims filed by judgment-debtors against Insurance Companies would be recovered by decree-holder-Bank---Nothing was due from judgment-debtors to decree-holder-Bank under the decree---Payment of decretal amount subject to said condition of recovery by decree-holder from Insurance Companies was recorded in terms of O.XXI, R. 2, C.P.C. and guarantees and securities would stand discharged and document would be returned to judgment-debtor by decree-holder-Bank---Decree had been satisfied accordingly.

Ehsan Ahmad Sandhu for Plaintiff.

Malik M. Tariq Rajwana for Defendants.

2005 C L D 650

[Lahore]

Before Sardar Muhammad Aslam and Sh. Azmat Saeed, JJ

BABAR ALI---Appellant

versus

MUHAMMAD ASHRAF and 8 others ---Respondents

F.A.O. No.263 of 2004, decided on 11th January, 2005.

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

----Ss. 12 & 22---Power to set aside decree by the Banking Court---Scope---Banking Court, on an application under S.12, Financial Institutions, (Recovery of Finances) Ordinance, 2001 by defendant, may set aside a decree passed upon the failure of such defendant to move an application for leave to defend within the prescribed period, in the eventuality that the summonses were not served or there were other sufficient grounds for the failure to file an application for leave to defend---Leave to defend in the present case, was in fact filed, which failed to find favour with the Court ---Said application showed no allegation that the summonses were not served or there was any other reason or cause for non-filing of an application for leave to defend which, in fact ,had been filed---Plea that defendant being minor at the time of the execution of the mortgage deed in favour of the Bank, the deed was void and his property could not be put to auction having been belied by the record and being beyond the ambit of S. 12, Financial Institutions (Recovery of Finances) Ordinance, 2001, was not tenable and was a sufficient ground for dismissal of the application and appeal.

Ch. Muhammad Ashraf Walah for Appellant.

Mushtaq Ahmad Khan for respondent No.8.

2005 C L D 653

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MANZOOR AHMAD and another---Appellants

versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager Nankana Sahib Branch and 3 others---Respondents

R.F.A. No.488 of 2001, heard on 25th January, 2005.

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

----S. 9---Procedure of Banking Court---Scope---Borrower or a customer or Banking Company may institute a suit in the Banking Court by presenting a plaint and thereupon the defendants be served through bailiff, by registered acknowledgment due notice, by courier and by publication in the newspapers---If the defendant, after the service of summons, does not obtain leave from the Banking Court, he shall not be entitled to defend the suit and in default of doing so the allegations of fact in the plaint shall be deemed to be admitted and Banking Court may pass a decree in favour of the plaintiff.

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

----S. 9---Procedure of Banking Court---Defendant-bank had failed to file any application, seeking leave to defend the suit and Banking Court, instead of proceeding against the Bank, for not filing the leave application penalized the plaintiffs by rejecting their plaint---Validity---Held, Banking Court did not adopt the procedure, as prescribed in the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and had in fact, gone outside the scope of S. 9(4) of the said Act---Approach of the Banking Court was perfunctory and casual as S. 9(4) of the Act provided that defendant shall not be entitled to defend the suit, unless he obtained leave from the Court---Banking Court, in the present case, instead of giving premium to the plaintiffs for the neglect of the Bank, for not filing leave application, rejected the plaint in complete oblivion of the facts of the case and law on the subject---Banking Court therefore, had completely by-passed the procedure, as provided under S. 9 of the Act and had evolved its own procedure---Banking Court, which was creation of a Statute; was bound by the provisions of that Statute---Impugned judgment of the Banking Court was set aside by the High Court in appeal being contrary to the provision of the Act.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/ Recovery Officer 2004 CLD 1645 ref.

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

----S. 9---Civil Procedure Code (V of 1908), O. VII, R.11---Procedure of Banking Court---Record, in the present case, revealed that the suit was not fixed for “hearing” as contemplated under the law and only the matter regarding the deposit of certain money and the production of receipts thereto was fixed before the Court---Plaint of the plaintiff, in circumstances, could not have been rejected by the Banking Court on the date so fixed---Judgment of the Banking Court was set aside by the High Court in appeal.

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

----S. 9---Civil Procedure Code (V of 1908), O. VII, R. 11---Procedure of Banking Court---Rejection of plaint---Scope---Banking Court was not completely divested of exercising the powers under O.VII, R. 11, C.P.C.---Such powers could not be exercised before deciding the application for leave to defend the suit.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/ Recovery Officer 2004 CLD 1645 ref.

Muzammal Akhtar Shabbir for Appellants.

Nemo for Respondents.

Date of hearing: 25th January, 2005.

2005 C L D 660

[Lahore]

Before Mian Saqib Nisar and Sh. Azmat Saeed, JJ

BANKERS EQUITY LIMITED through Manager---Appellant

versus

ALLIED BANK LIMITED and 12 others ---Respondents

F.A.O. No.247 of 2003, heard on 28th January, 2005.

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

----Ss. 9, 16 & 22---Civil Procedure Code (V of 1908), O.XXI, Rr. 100, 101, O.XLIII, Ss. 63 & 104---Property attached in execution of decrees---Section 63, C.P.C. makes it clear that the provision thereof applied where property is under attachment in the execution of decrees of more Courts than one---Spirit and the purpose embodied in S. 63, C.P.C. is motivated to preclude and avoid conflicting decisions over the divergent claims and the objections filed by various persons, qua the same property, which was under attachment of different Courts---Question of choice of forum would only arise if at the relevant time the property stood attached by two different Courts in execution of two separate decrees---Record, in the present case, showed that on the date of the passing of the impugned order and filing of the applications by the appellant, the property was attached only by the Banking Court in the execution of one decree and order of attachment passed by the High Court was no longer in the field on withdrawal of the execution proceedings---Banking Court, in circumstances, could not abdicate its jurisdiction to adjudicate upon the applications filed by the appellant---Impugned order was set aside by the High Court in appeal and case was remanded to the Trial Court for adjudication of all the applications filed by the appellant on their own merits

Trust Modaraba through Trust Management Services, Lahore v. Trust Leasing Corporation Ltd. through Chief Executive and 4 others PLD 2005 Lah. 5 fol.

Shahzad Mazhar for Appellant.

Irfan Mehmood Sheikh, Muhammad Waheed Hussain and Ijaz Ahmad Chadhar for Respondents.

Date of hearing: 28th January, 2005.

2005 C L D 663

[Lahore]

Before Ch. Ijaz Ahmad and Muhammad Khalid Alvi, JJ

MUHAMMAD IQBAL and 2 others---Appellants

versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Respondent

F.A.O. No.348 of 2002, decided on 3rd February, 2005.

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

----Ss.12, 10 & 7---Civil Procedure Code (V of 1908), O.IX, R.13---Suit for recovery of loan---Applications for leave to defend suit---Setting aside of ex parte decree---Record revealed that case was adjourned by the Banking Court directing the plaintiff/Bank to file replies to the applications of the defendants---Bank failed to file replies to the applications for leave to defend the suit on that date---Banking Court, in circumstances, erred in law to pass the ex parte decree against the defendants on the said adjourned date which was not a date of hearing---Subsequent order of dismissal of application by defendants for setting aside the ex parte decree therefore, was not sustainable in the eye of law---When the basic order was without lawful authority, then the superstructure built on it would fall on the ground automatically---High Court, in appeal, set aside the ex parte decree meaning thereby, that the applications by defendants for leave to defend and suit of the Bank would be deemed to be pending adjudication before the Banking Court.

Messrs Kapur Textile Mills Limited through Chief Executive v. Bankers Equity Limited through Chief Executive 2002 CLD 298; Khalid Pervaiz v. United Bank Limited 2002 CLD 399 and M. Afzal v. Allied Bank of Pakistan Ltd. and another 2003 CLD 765 distinguished.

Crescent Sugar Mills and Distillery Ltd., Faisalabad v. Central Board of Revenue, Islamabad and 2 others PLD 1982 Lah. 1; Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC (Pak.) 104; Manager, Jammu and Kashmir State Property in Pakistan v. Khuda Yar and another PLD 1975 SC 678; Irshad Ali’s case PLD 1975 Lah. 7 and Trustees of the Port of Karachi v. Muhammad Saleem 1994 SCMR 2213 ref.

Mian Sarfraz-ul-Hassan for Appellants.

Ch. Majid Hussain for Respondents.

2005 C L D 668

[Lahore]

Before Mian Hamid Farooq, J

NAZEER AHMAD---Petitioner

versus

HOUSE BUILDING FINANCE CORPORATION, KARACHI through Managing Director and 2 others---Respondents

Writ Petition No.26478 of 1997, decided on 28th January, 2005.

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

----O. IX, R.6---Qanun-e-Shahadat (10 of 1984), Art.129(e)---Constitution of Pakistan (1973), Art.199---Constitutional petition---Non-appearance of respondent and his counsel in response to notices issued to them---Office report confirmed issuance of the notices---Effect---Presumption would be that notices had been served upon such persons---High Court proceeded ex parte against respondent.

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

----S. 37---Civil Procedure Code (V of 1908), S.50---Pecuniary liabilities/obligations of deceased debtor arising out of contract---Right of creditor to enforce such contract against legal heirs of deceased debtor---Scope and extent---Legal heirs would not be personally liable to liquidate liabilities of their predecessor-in-interest---Coercive measures for recovery of outstanding amount could not be adopted against a person who had not secured loan himself---Pecuniary obligations undertaken by deceased would bind his legal heirs to the extent of estate of deceased inherited by them---Amount due in the account of deceased debtor could be recovered from mortgaged property, if any, or/and from the estate left by him---Amount outstanding against deceased could not be recovered from his son under threat of arrest and adoption of other coercive measures---Such recovery, if made, would be illegal and creditor would be liable to refund recovered amount to the son of deceased debtor---Principles illustrated.

Agricultural Development Bank of Pakistan v. Sanaullah Khan and others PLD 1988 SC 67fol.

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

----S. 126---Guarantor/surety---Affidavit of a party stating therein to be guarantor---Evidentiary value---Such affidavit, if denied by its signatory and not proved in accordance with law, would be of no help to creditor---Person by simply executing an affidavit would not become guarantor, unless he executed letter of guarantee within contemplation of law of guarantee---Principles.

Petitioner in person.

Nemo. for Respondents.

2005 C L D 711

[Lahore]

Before Muhammad Sayeed Akhtar, J

BANKERS EQUITY LIMITED---Appellant

Versus

QAND GHAR LIMITED and others---Respondents

Ex. A. No.50-B of 1999, decided on 20th September, 2004.

Corporate and Industrial Restructuring Corporation Rules, 2001---

----R. 3.2---High Court (Lahore) Rules and Orders Vol. I, Ch.12-L, R.21---Court Auctioneers fee---Where the Corporate and Industrial Restructuring Corporation or its nominee was appointed as Court Auctioneer on its own application, Corporation was not entitled to any fee as Court Auctioneer, having already received 2% of the gross recoveries for the services rendered---Two per cent. of the total recoveries as Court Auctioneers’ remuneration to the Corporation were disallowed by the High Court---Court Auctioneers were further directed to make the payment of the said amount to the Secured Creditors in the ratio already determined.

Shahzada Mazhar for Appellant.

Muzammil Ashraf Qureshi for Respondent.

2005 C L D 713

[Lahore]

Before Muhammad Sayeed Akhtar, J INVESTMENT CORPORATION OF PAKISTAN and others---Petitioners

versus

SUNSHINE JUTE MILLS LIMTIED---Respondent

C.M. No.83-L of 2005 in Civil Original No.33 of 1995, decided on 7th March, 2005.

Companies Ordinance (XLVII of 1984)----

----Ss. 319, 320, 421, 422, 284, 285 & 429---Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), Preamble---State Bank of Pakistan, BPD Circular No.29 of 2002---Non-performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance (LVIII of 2000), Ss.3 & 4---Power of Court to recall winding up order of the company and to issue direction to the liquidator to handover the possession of the assets of the company free from all encumbrances---Scope---Limitation---Company, in the present case, was ordered to be wound up in 1997---Company/appellant in the year, 2005, contended that the creditor Consortium had arrived at a Settlement/ Compromise under BPD Circular No.29 of 2002 by the State Bank of Pakistan and according to the compromise/ settlement the applicants/ company were required to pay the forced-sale-value to the creditors; that some additional payments were also paid; that all the creditors had been paid; that the litigation against Corporation and Industrial Restructuring Corporation pending in the Supreme Court had also been withdrawn; that compromise between the parties had already been acted upon and prayed that the winding up order dated 29-9-1997 may be recalled and the liquidator be directed to handover the possession of the assets of the company free from any encumbrance to the applicant company---Creditor Consortium had admitted that it had no objection if application of the Company was allowed and that “the existing changes/encumbrances on the assets, may be allowed to be redeemed by the company on its own cost and expense in accordance with law---Corporate and Industrial Restructuring Corporation also admitted the facts and stated that the Corporation had received the payments as per settlement and had no objection to recall of the winding up order---Industrial Development Bank had also stated that it had no objection to the recall of the winding up order as it had received all the payments---Validity---Held, High Court under S.422, Companies Ordinance, 1984, in all matters relating to winding up of a company, shall have regard to the wishes of creditors or contributories of the Company; all the creditors having been paid the compromise/arrangement entered into between the creditors and the company was, therefore, sanctioned by the High Court---Time limit of three years prescribed under S.319, Companies Ordinance, 1984 was directory and not mandatory as the violation thereof had not been visited with any consequence or penalty---Principles.

Under section 319 of the Companies Ordinance, 1984, High Court may at any time not later than three years after an order for winding up, on the application of any creditor or any contributory or of the Registrar or the Authority or a person authorized by it, and on the proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, withdrawn, cancelled or revoked, make an order accordingly, on such terms and conditions as the Court thinks fit. Under subsection (2) of the same section, the Court may, before making an order, require the Official Liquidator to furnish to the Court a report with respect to any facts or matters which are in his opinion relevant to the application. Under section 320 of the Ordinance High Court shall, as to all matters relating to a winding up, have regard to the wishes of the creditors or contributories.

Under section 421(1)(ii) of the Companies Ordinance the Liquidator may, with the sanction of the Court when the company is being wound up make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim present or future, whereby the company may be rendered liable. In the present case the Corporate and Industrial Restructuring Corporation being itself the creditor and Liquidator had entered into a compromise/arrangement for payment to the creditors. High Court under section 422 of the Ordinance, in all matters relating to the winding up of a company, shall have regard to the wishes of creditors or contributories of the company. Since all the creditors had been paid the compromise/arrangement entered into between the creditors and the company was, sanctioned.

The only hindrance seemed to be the time limit of three years prescribed in section 319 of the Companies Ordinance, 1984. This provision is directory and not mandatory as the violation has not been visited with any consequence or penalty. High Court while exercising the powers under sections 284 and 285 of the Companies Ordinance, 1984 has also the power, in the case of a company being wound up to sanction any compromise or arrangement. In the present case the applicant company has paid all the creditors including the petitioner, who moved the winding up petition. The petitioner in the winding up petition did not want to pursue the winding up proceedings any more.

Under section 429 of the Ordinance, where the company has been dissolved, within two years of the date of dissolution, on an application being made by the Liquidator or by any other person who appears to the Court to be interested, make an order, upon such terms as the Court thinks fit, declaring dissolution to have been void and thereupon such proceedings may be taken as might have been taken if the company had not been dissolved. It is thus, clear that even the order dissolving the company can be declared void within a period of two years of the date of the dissolution. There appears to be no reason why the winding up order cannot be revoked.

Corporate and Industrial Restructuring Corporation has been established by Corporate and Industrial Restructuring Corporation Ordinance, 2000 for the acquisition, restructuring, rehabilitation, management, disposition and realization of non-performing loans and other assets. Under section 3 of the Non-Performing Assets and Rehabilitation of Industrial Undertakings (Legal Proceedings) Ordinance, 2000 the provisions shall have effect, notwithstanding anything contained in any other law for the time being in force. Under section 4 of the same Ordinance High Court has the exclusive jurisdiction to adjudicate and decide all claims, legal proceedings, cases for recovery of non-performing assets, outstanding amount against obligor and matters relating to or arising in connection with the Corporate and Industrial Restructuring Corporation Ordinance. The Preamble of the Non-performing Assets and Rehabilitation of Industrial undertakings (Legal Proceedings) Ordinance, 2000 shows that the object of the Ordinance is to make the non-performing assets attractive for profits and to promote national economy by making provisions for restructuring rehabilitation of the same. High Court is not powerless to take into account subsequent events. The compromise/ arrangement will revive the project. It will promote the national economy and create jobs. During the winding up, the company is not dead. It is alive for all practical purposes. The purpose of the aforementioned two Ordinances is to promote the revitalization of nation’s economy and Rehabilitation and Restructuring of Industrial Undertaking. The objects of the two said Ordinances will be met if the winding up order is recalled. No prejudice will be caused to any of the creditors, contributories or any other person.

The Corporate and Industrial Restructuring Corporation was directed by the High Court to hand over the possession of the assets of the Company to the applicant and release all the security documents to the Company and its Directors.

Bashir Ahmad for Petitioners.

Tariq Kamal Qazi for CIRC.

Muzamil Ashraf Qureshi for Liquidator.

Syed Mansoor Ali Shah for Respondent.

Shoaib Zafar for IDBP.

2005 C L D 808

[Lahore]

Before Ali Nawaz Chowhan, J

Messrs DARSON INDUSTRIES (PVT.) LTD. ---Appellant

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and others---Respondents

Commercial Appeal No.16 of 2002, decided on 21st March, 2005.

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

----Ss.37 & 38---Registered name of company---Similarity in name of companies---Criteria---Company should not be registered by a name identical with that by which a company in existence is already registered, or so nearly resembling that name as to be calculated to deceive public--­Such criteria is to protect persons, who may be coming in contact with such company, from believing that the source and origin of the new company was that of an existing company and that no confusion in that regard is caused---In case of many companies some portion of similarity in name has been allowed to co-exist and the determining factor in each case is one of the facts depending on the amount of confusion involved---For such similarity, each case has its own history and merits---There are many corporations which are household words, manufacturing different types of goods and indulging in various kinds of trades---Such corporations may have common names and may have uncommon names---Corporations with common names can be shown laxity provided their name is prefixed and suffixed with certain other identity which may reduce the chance of deception---In case of uncommon name, the chances of deception are larger and customer can always be deceived from the name rather than from what the company may be trading in.

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

----Ss. 8(a) & 10(1)---Registered name of company--­Similarity in name of companies---Criteria---Similarity in trade mark should not be such that an unwary purchaser should not be allowed to believe that the goods of a party and the opposing party came from the same source­.

(c) Security and Exchange Commission of Pakistan Act (XLII of 1997)---

----S.34---Companies Ordinance (LXVII of 1984), Ss.37 & 38---Resemblance in names of companies---Permissible extent---Principles---Appellant company was registered under the name of Messrs Darson Industries (Pvt.) Ltd. whereas the respondent company was registered subsequently under the name of Messrs Darson (Pvt.) Ltd.--­Both the companies were in different business---Appellant company was aggrieved of the similarity in the name of the respondent company registered subsequently---Tribunal of Company Law Administration Division decided the matter with the observation that uncommon names in respect of two different trades would not cause any deception and directed the respondent company to change its name from Messrs Darson (Pvt.) Ltd. to Messrs Darson Securities (Pvt.) Ltd.---Validity---High Court recorded concern over what appeared to be ostensible and prima facie and if that was misleading and gave an impression of a common origin High Court could term such a company as undesirable and had to stop it from further misleading---There could be certain names so common in the society where Courts might have to allow existence of common names along with other added names in the matter of registration of a company--­Where the names were unusual, unpopular and uncommon, a strict view had to be adopted---Name Darson was falling in the category of unusual name and, therefore, even if used with another trade, it could deceive a person with respect to source and origin of respondent company with the source and origin of previously registered company---Word "Dar" reflected a Kashmiri caste but added together with word son, it had made an uncommon name, unlike Ali, Umar etc.---Word "Darson" had a potential of causing deception, therefore the Tribunal stating that uncommon names in respect of two different trades would not cause any deception, was not well explained nor was based on circumstances and logic---High Court set aside the decision of Tribunal---Appeal was allowed accordingly.

1923 Bom. 119; (1899) 16. R.P.C. 12; Lloyd's v. Lloyd's (Southamption) Ld. In (1912) 29 RPC, 433 Lloyd's Bandenawaz Ltd. v. The Registrar of Trade Marks PLD 967 Kar. 492; Messrs Irshad Sewing Machine Company Registrar of Trade Marks and Messrs Tokyo Shibaura Denki Kabusiki Kaisha (sic); Society of Motor Manufacturers and Traders Limited v. Motor Manufacturers and Traders Mutual Insurance Co. Ltd. (1925) 1. Ch. 675 and Jeep's case PLD 1969 Kar. 376 ref.

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

----S.38---Registered name of company---Similarity in name of companies---Rectification---Import, object and scope--­Company is perceived as an artificial entity in the sense that like a vehicle it is driven along with a corporate route by the management and membership---Concept of registration of a company took birth in the middle of 19th Century---Whereas from the 17th Century onwards and with the growth in the world shipping trade, Chartered Joint Stock Companies were developed which comprised association of members contributing capital towards specific trade venture and it was rather sophisticated form of partnership which ultimately led to an enactment of Joint Stock Companies Act, 1844 in U.K., which created a limited liability---Said Act was later substituted by Companies Act, 1985, in U.K.---One of the rationale for the new Act was to counter potential danger which floated from the production of registered company and the benefits of limited liability--­With the creation of limited Company, it became increasingly important for a third party advancing credit to be aware that it had a monitory risk which should limit the Company fall--­Company name has, therefore, assumed importance and even a small variation in the name entailed penalty under the law and there is rationale behind S.38 of Companies Ordinance, 1984.

Syed Zafar Ali Shah for Appellant.

Mujtaba Jamal for Respondents Nos. 1 and 2.

Nasrullah Khan for Respondent No.3.

Dates of hearing: 14th, 15th and 16th February, 2005.

2005 C L D 833

[Lahore]

Before Umar Ata Bandial, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN ---Plaintiff

Versus

FRIENDS SPINNING MILLS (PVT.) LIMITED through Chief Executive and 10 others---Defendants

C.M. No. 13-B of 2005 and C.O.S. No.34 of 2002, decided on 22nd February, 2005.

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

----Ss. 8 & 7---State Bank of Pakistan BPD Circular No.29 of 2002, dated 15-10-2002, Cl.17---State Bank of Pakistan BPD Circular Letter No.8 of 2003 dated 10-3-2003, Cl.3--­Recovery of Loan---Decision of SBP Committee on dispute between the plaintiff-Bank and the defendant borrower--­Scope---Decision of the SBP Committee constitutes a binding resolution between the plaintiff-Bank and the defendant borrower in terms of para.3 of BPD Circular Letter No.8 of 2003 dated 10-3-2003---Said Circulars issued by the State Bank of Pakistan had the force of law with binding effect on the banks---Once the dispute has been resolved and terms of settlement have been specified by the SBP Committee then by the provision of Clause 3 of State Bank BPD Circular Letter No.8 of 2003, then reference to BPD Circular No.29 of 2002 is pointless exercise---Decision of the SBP Committee, in the present case was clear in stating that the security documents which included shares, were to be returned to the defendant upon full payment of the settlement amount--­Realization by sale of said shares prior to any event of default by the Bank, was contrary to the decision of SBP Committee---Demand by the plaintiff-Bank based upon the premature threat of sale of shares as security without the commission of default by the defendant was in derogation of settlement terms decided by the SBP Committee and. therefore unlawful---Bank could not become nudge in its own cause to unilaterally modify the decision of the Committee--­If the Bank was aggrieved thereby its grievance could be determined by a competent forum---No such action having been taken by the Bank, in the present case, the SBP Committee's decision was binding on the Bank.

Hashwani Hotels Ltd. v. Federation of Pakistan and others PLD 1997 SC 315; United Bank Ltd. v. M/s. Azmat Textile Mills Ltd. 2002 CLD 542 and Tristar Industries (Pvt.) Ltd, v. State Bank of Pakistan and another 2004 CLD 257 fol.

Shazib Masud for Applicant.

Asif Mehmood Butt for Plaintiffs/Respondents.

2005 C L D 854

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

HABIB BANK LIMITED---Appellant

Versus

Messrs ESS EMM ESS CORPORATION PAKISTAN LIMITED through Chairman and

5 others---Respondents

R.F.A. No.209 of 1997, heard on 10th March, 2005.

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

----S.9---Civil Procedure Code (V of 1908), O.III, R.4, O.VI, Rr.14, 15 & O.VII, R.11---Suit by Bank for recovery of amount---Non-recording in plaint the names of principal officers and general attorney of Bank---Non-verification of plaint by any officer of Bank---Non-signing of Wakalatnama by any officer of Bank--Application by Bank seeking removal of such defects---Banking Court rejected plaint treating institution of suit as nullity---Validity---Such defects were merely irregularities and could not entail maximum penalty of dismissal of suit or rejection of plaint---Such defects could be remedied at any stage of proceedings--­Banking Court upon filing of appropriate application ought to have allowed Bank to cure such defects by calling upon concerned attorney of Bank instead of non-suiting it on such irregularities---Banking Court had wrongly dismissed such application and committed grave legal error in passing impugned judgment---High Court accepted appeal and set aside impugned judgment directing Banking Court to allow Bank to cure such defects by calling concerned officer/attorney to put signatures on relevant documents and then decide suit in accordance with law.

Ismail and another v. Mst. Razia Begum and 3 others 1981 SCMR 687; Muhammad Sarwar alias Feroze Ali v. Abdul Ghani and 7 others 1980 CLC 946; Ghulam Mohy-ud-Din and another v. Noor Dad and 4 others PLD 1988 SC (AJ&K) 42; Toor Gul v. Mst. Mumtaz Begum PLD 1972 SC 9 and Liaqat Hayat and 5 others v. Muhammad Sarwar alias Feroze Ali and 2 others 1985 SCMR 1386 ref.

Mian Tahir Maqsood for Appellant.

Nemo for Respondents.

Date of hearing: 10th March, 2005.

2005 C L D 857

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

PROTEIN AND FATS INTERNATIONAL (PVT.) LIMITED through Chief Executive and 2 others---Appellants

Versus

CAPITAL ASSETS LEASING CORPORATION LIMITED through Manager---Respondent

Regular First Appeal No.441 of 2004, decided on 24th January, 2005.

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

----S.22---Limitation Act (IX of 1908), Ss.5, 29(2) & Art. 156--­Appeal before High Court against judgment/decree of Banking Court ---Condonation of delay---Application under S.5 of Limitation Act, 1908---Maintainability---Under ordinary law,' period of 90 days was prescribed under Art.l56 of Limitation Act, 1908 for filing first appeal before High Court---Present appeal was governed by provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, which was a special law and S.22(1) thereof prescribed a period of 30 days for filing such appeal---Such special law had provided different period of limitation than ordinary law for filing present appeal---Held: S.5 of Limitation Act, 1908 would not apply to present appeal---Such application was, thus, misconceived and not maintainable.

Allah Ditta v. Farooq Ahmad and 3 others PLD 1979 Lah. 917; Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 rel.

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

----S.22(1)---Limitation Act (IX of 1908), S.5---Civil Procedure Code (V of 1908), O.XLI, R.3---High Court (Lahore) Rules and Orders, Vol. V, Chap. 1, R.4---Appeal---Condonation of delay of 2-1/2 years---Decree was passed on 3-12-2001--Appeal was filed on 26-1-2002, which, after return by Office, was re filed on 29-1-2002, but Office on same date raised objection for removal of already raised objection-- Appeal was re filed on 30-10-2004 after removal of objection---Plea raised by appellant in application under S.5 of Limitation Act, 1908 was that he was not informed by Office and on 23-10-2004, when he contacted Office, he was informed that case was in objection, over which lie made application for condonation of delay---Validity---Office had raised objection for second time on 29-1-2002, but appellant had not inquired about fate of his case for approximately 2-1/2 years---If office did not inform appellant about objection raised in his case, even then he was grossly negligent as he waited for more than 2-1 /2 years to be intimated by Office---Record did not show return of appeal to appellant on 23-1-2004 as mentioned in such application---No sufficient cause for condonation of delay had been made out---High Court dismissed such application, resultantly appeal was dismissed being barred by time.

1993 SCMR 465 and Naheed Ahmad v. Asif Riaz and 3 others PLD 1996 Lah. 702 ref.

Syed Ahmad Saeed Kirmani for Appellants.

Aisha Malik for Respondent.

2005 C L D 861

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD NAWAZ --- Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Respondent

Regular First Appeal No.312 of 2002, decided on 26th January, 2005.

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

----S. 22---Limitation Act (IX of 1908), Ss.5, 29(2) & Art. 156--­Appeal before High Court against judgment/decree of Banking Court---Condonation of delay---Application under S.5 of Limitation Act, 1908---Maintainability---Under ordinary law, period of 90 days was prescribed under Art. 156 of Limitation Act, 1908 for filing first appeal before High Court---Present appeal was governed by provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, which was a special law and S.22(1) thereof prescribed a period of 30 days for filing such appeal---Such special law had provided different period of limitation than ordinary law for filing present appeal---Section 5 of Limitation Act, 1908 would not apply to present appeal--­Such application was, thus, misconceived and not maintainable.

Allah Ditta v. Farooq Ahmad and 3 others PLD 1979 Lah. 917; Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 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.22(1)---Limitation Act (IX of 1908), S.5---Appeal--­Condonation of delay of more than 3 months---Plea of appellant was that respondent with his conscious mala fide effort who kept secret service to appellant; and that Banking Court without recording a declaration regarding due service of appellant passed impugned judgment/decree ---Validity--­Such plea would not disclose sufficient cause for not preferring appeal within period prescribed under law and for condonation of delay within parameters set up under S.5 of Limitation Act, 1908---High Court dismissed such application---Resultantly appeal was dismissed being barred by time.

Malik Abdul Wahid for Appellant.

Nemo for Respondent.

2005 C L D 865

[Lahore]

Before Muhammad Sayeed Akhtar and Muhammad Sair Ali, JJ

Messrs RAINBOW PACKAGES LIMITED through Managing Director and 4 others---Appellants

Versus

CRESCENT INVESTMENT BANK LIMITED---Respondent

Regular First Appeal No. 101 of 2002, heard on 11th January, 2005.

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

----Ss.2(c), 9, 17 & 22---Suit for recovery of loan amount against borrowing company and its guarantors---Banking Court decreed suit against defendants jointly and severally---Parties at appeal stage jointly sought modification of Judgment/decree upon the terms that defendants-guarantors were neither guarantors nor indemnifiers nor mortgagors and they did not fall within definition of a "customer", thus, neither Bank could maintain suit against them` nor impugned decree could be competently passed against them; that Bank was not competent to receive mark-up from borrowing company after expiry of period of finance, and such amount recovered by Bank illegally and unlawfully would be reduced from decretal amount; and that decree be passed for agreed amount---Validity---Such joint request was reasonable and in accordance with law---High Court accepted appeal upon such terms, decreed suit for agreed amount against borrowing company with mark-up from date of suit till its recovery with costs of suit and dismissed suit against other defendants.

Mian Nisar Ahmad for Appellants.

S.M. Baqar for Respondent.

Date of hearing: 11th January, 2005.

2005 C L D 868

[Lahore]

Before Maulvi Anwarul Haq and Syed Sakhi Hussain Bukhari, JJ

ZAFAR & COMPANY through Sheikh Riaz-ud-Din and another---Appellants

Versus

ALLIED BANK OF PAKISTAN through Manager---Respondent

Regular First Appeal No.291 of 1998, heard on 16th September, 2004.

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

----Ss.9 & 10---Suit for recovery of loan amount---Bank at the request of borrowing company opened Letter of Credit for import of goods, while other defendant stood guarantor for repayment of amount---Goods arrived in Pakistan, but defendants, did not repay the amount---Banking Court decreed suit after dismissing leave application of defendants---Plea of defendants was that goods were of perishable nature, which perished due to delay in its arrival, thus Bank could not claim amount from them--­Validity---Bank had paid amount to corresponding Bank abroad and goods had reached Pakistan---As per documents placed on record, defendants as principal and surety respectively were bound to pay suit amount to Bank upon demand---Constitutional petition appended with appeal showed that goods were not released on account of tripartite dispute between defendants inter se and Customs Department, which claimed that goods belonged to another person, who owed money to Department---Such Constitutional petition was decided with consent, whereby guarantor-defendant agreed to release of goods to borrowing company---Department had consented to such arrangement on basis of letter addressed to Bank requesting for release of goods to borrowing company---High Court dismissed appeal in circumstances.

Dr. Abdul Basit for Appellants.

Akhtar Hussain Awan for Respondent.

Date of hearing: 16th September, 2004.

2005 C L D 870

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SIKANDAR HAYAT---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Respondent

Regular First Appeal No. 124 of 2002, decided on 26th January, 2005.

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

--S.22---Limitation Act (IX of 1908), S.5---Appeal--­Condonation of delay---Ex parte decree was passed on 10-12-2001---Appeal was filed on 25-2-2002---Plea raised by appellant in application under S.5 of Limitation Act, 1908 was that he came to know about decree on 20-2-2002 and he filed appeal immediately after obtaining necessary documents---Validity---Such plea did not disclose sufficient cause for not preferring appeal within prescribed period of limitation and for condonation of delay within parameter set up under S.5 of Limitation Act, 1908---High Court dismissed such application being devoid of merits and also appeal being time-barred.

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

----S.22---Limitation Act (IX of 1908), Ss.5, 29(2) & Art. 156--­Appeal before High Court against judgment/decree of Banking Court---Condonation of delay---Application under S.5 of Limitation Act, 1908---Maintainability---Under ordinary law, period of 90 days was prescribed under Art. 156 of Limitation Act, 1908 for filing first appeal before High Court---Present appeal was governed by provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, which was a special law and S.22(1) thereof prescribed a period of 30 days for filing such appeal---Such special law had provided different period of limitation than ordinary law for filing present appeal---Section 5 or Limitation Act, 1908 would not apply to the present appeal---Application under S.5, Limitation Act, 1908 was thus, misconceived and not maintainable.

Allah Ditta v. Farooq Ahmad and 3 others PLD 1979 Lah. 917; Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 rel.

Malik Abdul Wahid for Appellant.

Ch. Farrukh Mehmood Sulehria for Respondent.

2005 C L D 874

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs INDUS VALLEY RICE MILLS (PVT.) LIMITED through Chief Executive and 4 others---Appellants

Versus

HABIB BANK LIMITED through Attorneys---Respondent

C.M. No. 1 of 2005 in F.A.O. No.35 of 2002, decided on 7th March, 2005.

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

----S.22---Appeal---Settlement between parties regarding Subject-matter of appeal---Effect---Appeal had become infructuous as no Live issue was left to be decided---High Court disposed of appeal with observation that if appellant felt that some issues were still undecided, then he could make application within a period of 3 months to reactivate proceedings in appeal.

A.K. Dogar for Appellants.

Shamas Mehmood Mirza for Respondent.

2005 C L D 875

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs M.A. CHAUDHRY and 3 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN, FAISALABAD through General Attorney ---Respondent

F.A.O. No.267 of 2004, decided on 28th February, 2005.

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

---Ss. 7, 10, 12 & 22---Limitation Act (IX of 1908), S.5--­Appeal---Appellants had filed application under S.5, Liimitation Act, 1908 for condonation of delay, which application was not decided by the Banking Court earlier through a separate order---Said application had completely been blacked out from the proceedings---Effect---Held, if any miscellaneous application was filed by the parties; it was incumbent upon the Court to decide the said application, either way, through a specific order and then to decide the main case---Failure of Court to decide such application accordingly would vitiate the main judgment.

Pak Carpet Industries Limited v. Government of Sindh and 2 others 1993 CLC 334; Muhammad Yaqub v. Baqir and 2 others 1993 CLC 1319; Khair Deen v. Rehm Deen and 4 others 1996 CLC 1731 and Gul Muhammad through Legal Heirs v. Karachi Development Authority and another 1998 MLD 150 ref.

(b) Administration of Justice---

----If any miscellaneous application was filed by the parties, it was incumbent upon the Court to decide the said application, either way, through a specific order and then to decide the main case---Failure of Court to decide such application accordingly would vitiate the main judgment.

Pak Carpet Industries Limited v. Government of Sindh and 2 others 1993 CLC 334; Muhammad Yaqub v. Baqir and 2 others 1993 CLC 1319; Khair Deen v. Rehm Deen and 4 others 1996 CLC 1731 and Gul Muhammad through Legal Heirs v. Karachi Development Authority and another 1998 MLD 150 ref.

Khadim Hussain Qaiser for Appellants

Shamim Iqbal Butt for Respondent.

Date of hearing: 28th February, 2005.

2005 C L D 884

[Lahore]

Before Mian Saqib Nisar, Tanvir Bashir Ansari and Muhammad Sayeed Akhtar, JJ

STATE BANK OF PAKISTAN through Governor---Appellant

Versus

SHAHTAJ SUGAR MILLS LIMITED and another---Respondents

I.C.A. No. 11 of 2002 in Writ Petition No.26347 of 1998, decided on 30th March, 2005.

(a) State Bank of Pakistan F.E. Circular No.68 dated 19-9-1984---

----Contract Act (IX of 1872), Ss. 14, 19, 23 & 31---Qanun-e­Shahadat (10 of 1984), Art. 115---Foreign Private Loans for Financing Foreign Currency Cost of the Project covered by Government of Pakistan Industrial Policy Statement, 1984--­Agreements for Foreign Private Loans which conformed to the Standard terms as set out in the Annex II of the Policy Statement, 1984, were to be automatically approved and registered by the State Bank of Pakistan---Vital condition for registration of the agreement was that the foreign exchange shall be used for the import of plant and machinery---Record showed that foreign currency loan obtained from the foreign lenders was surrendered to the State Bank of Pakistan and not used for the import of plant and machinery---Letter of credits were not opened in the currency borrowed, the foreign exchange loans were not utilized for the import of plant and machinery---Letter of credits were retired by the company from their own sources on cash basis and foreign currency of the State was utilized---State Bank of Pakistan had been consistently urging for observance of the said condition---Effect---Held, principle of promissory estoppel was not available to the company---No representation or inducement was made by the State Bank to the company nor any steps were taken consequent thereto so as to irrevocably commit the property or the reputation of the party invoking it---Party which had indulged in fraud or collusion for obtaining some benefits under the representation could not be rewarded by the enforcement of the promise as fraud and deceit vitiate the most solemn proceedings- -Principles.

Government of Pakistan N. Premier Sugar Mills and others PLD 1991 Lah. 381: Khan Iftikhar Hussain Khan of Mamdot (represented by 6 others] v. Messrs Ghulam Nabi Corporation Ltd. Lahore PLD 1971 SC 550; Muhammad Farooq and another v. Mst. Mussarat 2001 YLR 2660; Pakistan through Ministry of Finance Economic Affairs and another v. Fecto Belarus Tractors Limited PLD 2002 SC 208; Fatima Enterprises Ltd. v. The Chief Manager, State Bank of Pakistan, Deposit Account Department, Multan and 4 others 1999 SCMR 1497 Gatron (Industries) Limited v. Government of Pakistan 1999 SCMR 1072; Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan 1992 SCMR 1652; Muhammad Sadiq Khan v. Federation of Pakistan PLJ 1983 FSC 25; Muhammad Afzal and others v. Riaz Mahmood, Additional District Judge, Lahore PLD 2004 Lah. 115, Brig. Muhammad Bashir v. Abdul Karim and others PLD 2004 SC 271; Tata Cellular v. Union of India AIR 1996 SC 11; Messrs Pfizer Laboratories Limited v. Federation of Pakistan and others PLD 1198 SC 64 and Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi and others 1998 SCMR 2268 ref.

(b) Law Reforms Ordinance (XII of 1972)---

----S. 3---Constitution of Pakistan (1973), Art.199---Intra­-Court appeal---Contention of the appellant was that Constitutional petition for enforcement of the contract was not maintainable---Point having not having been urged before the Single Judge, same could not be allowed to be raised for the first time in Intra-Court appeal.

Sahibzada Anwar Hameed for Appellant.

Salman Aslam Butt for Respondent.

Date of hearing: 19th February, 2005.

2005 C L D 904

[Lahore]

Before Maulvi Anwarul Haq and Muhammad Nawaz Bhatti, JJ

Messrs NEW QURESHI AGRO TRADERS through Managing Partner and 2 others---Appellants

Versus

MUSLIM COMMERCIAL BANK LTD. ---Respondent

R.F.A. No.404 of 2002, heard on 8th February, 2005.

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

----Ss.10 & 22---Suit for recovery of loan---Application for leave to appear and defend the suit---Defendants, who had obtained loan from the plaintiff-Bank, had brought nothing on record with the application for leave to defend the suit to show that the Bank had suppressed any material fact--­Branch Manager of the Bank had signed the plaint on behalf of the Bank, who was authorized to sign the plaint under the law---Banking Court had rightly drawn inference that the entire amount claimed by the Bank stood established as payable as execution of finance agreement had not been denied and signatures on any of the documents annexed with the plaint had also not been denied---Banking Court, held, had rightly found that no substantial questions of law or facts were raised in the application for leave for defend for which evidence was needed.

Ch. Muhammad Manzoor-ul-Haq for Appellants.

Khushbakht Khan for Respondent.

Date of hearing: 8th February, 2005.

2005 C L D 912

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SHAHZAD HASSAN BHATTI and 6 others---Appellants

Versus

PLATINUM COMMERCIAL BANK LIMITED through Branch Manager and 2 others---Respondents

R.F.As. Nos.454 and 455 of 2004, heard on 23rd February, 2005.

(a) Limitation Act (IX of 1908)---

----Ss.5 & 12(2)---Appeal---Delay of 2-1/2 years, condonation of---Impugned judgment/ decree was passed on 7-2-2002--­Appellant applied for certified copies thereof on 14-2-2002, which were prepared on 21-2-2002 and delivered to him on 27-9-2004---Appeal was filed on 9-10-2004---Time consumed till date of delivery of such copies sought to be excluded in computation of period of Limitation---Validity---No material had been placed on record to show that Copying Agency, in fact, did not give any actual date for delivery of such copies---Appellant had not appended with appeal receipt issued by Copying Agency at the time of receiving "Sawal Form", which was the only prima facie evidence to indicate as to whether any actual date was given or not---Limitation period for filing of appeal, would not be computed from date of delivery/ collection of such copies---Appellant would not be entitled to exclusion of period consumed between preparation of copies till delivery thereof---High Court dismissed appeal being grossly barred by time.

Province of Punjab through Secretary, Health Department, Punjab, Lahore v. Dr. Muhammad Afzal Shah Hashmi 1991 MLD 806 ref.

Muhammad Nawaz v. Abdus Salam and another PLD 1997 SC 563 rel.

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

----S.22---Limitation Act (IX of 1908), Ss.5 & 29(2)---Appeal--­Condonation of delay---Application under S.5 of Limitation Act---Not competent.

Allah Ditta v. Farooq Ahmad and 3 others PLD 1979 Lah. 917; Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Messrs Conoco Industries (Pvt.) Ltd. and 3 others v. United Bank Limited, Lahore and another 2004 CLD 472; Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645; Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 rel.

Nemo for Appellants.

Malik Muhammad Rashid Awan for Respondent No. 1.

Sheeba Aslam for Respondents Nos.2 and 3.

Date of hearing: 23rd February, 2005.

2005 C L D 918

[Lahore]

Before Syed Zahid Hussain and Syed Sakhi Hussain Bokhari, JJ

THE BANK OF PUNJAB through Branch Manager---Appellant

Versus

Messrs S.A. CORPORATION through Managing Partner and 2 others---Respondents

F.A.O. No.243 of 2003, decided on 23rd February, 2005.

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

---S.19---Dismissal of execution application due to non­ appearance of decree-holder and his counsel---Plea for restoration of such application was that counsel of decree­ holder was busy before High Court---Banking Court disallowed application for restoration ---Validity--­Appearance before another Court or even before Higher Court would never be treated as a good ground for non­ appearance before another Court, where case was fixed--Where counsel had other engagements before High Court, then some alternate arrangements should have been made to appear before Banking Court---No representative of decree-holder was present before Banking Court on relevant date---Banking Court in such circumstances was fully justified to dismiss application for restoration---High Court dismissed appeal.

Aqeel Malik for Appellant.

Irfan Masood Sheikh for Respondents.

2005 C L D 920

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

M. SHAHID SAIGOL---Appellant

Versus

AL-TOWFEEK INVESTMENT BANK LTD. through Branch Manager---Respondent

R.F.A. No.475 of 1999, decided on 8th March, 2005.

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

----Ss.9 & 10---Suit for damages---Dismissal of suit without deciding leave application---Validity---Duty of Banking Court was to decide leave application on its own merits before embarking upon the suit---If Banking Court was of the view that substantial questions of law and facts were raised by defendant-Bank, then at best leave to defend could have been granted to Bank, but in no way suit could have been dismissed at such point of time---Impugned judgment was violative of provisions of S.10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997)---High Court accepted appeal and set aside impugned judgment, resultantly suit and leave application would be deemed to be pending before Banking Court, which shall decide firstly Leave application and thereafter suit in accordance with law.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645 rel.

Sameer Akbar Ghauri for counsel for Appellant.

Shakeel Awan for Respondent.

2005 C L D 923

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MONIM MANSAB BOKHARI and 4 others---Appellants

Versus

HABIB BANK LIMITED through Manager---Respondent

R.F.A. No. 500 of 1999, heard on 17th February, 2005.

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

----S.9---Civil Procedure Code (V of 1908), O.IX, R.7---Suit for recovery of loan amount---Non-appearance of defendant, when case was fixed for plaintiffs evidence---Banking Court, without proceeding ex parte against defendant, recorded plaintiff's evidence and decreed suit---Validity--­Banking Court ought to have passed ex parte order against defendant before recording plaintiffs evidence either on same day or on succeeding date---Defendant had been denied unlawfully his right to cross-examine plaintiffs witness and lead his affirmative/ rebuttal evidence--­Banking Court had also not decided all issues involving question of jurisdiction---Banking Court should have provided at least one opportunity to defendant to produce evidence---Banking Court had committed legal error while passing impugned decree---Defendant had been condemned unheard---High Court accepted appeal and set aside impugned judgment/decree with directions to Banking Court to decide suit afresh after providing opportunity to defendant to cross-examine plaintiff's witness and produce his evidence.

Ch. Abdul Ghaffar for Appellants.

Muhammad Ahsan Asghar for Respondent.

Date of hearing: 17th February, 2005.

2005 C L D 927

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Mst. TAHIRA YASMEEN and another---Appellants

Versus

MUSLIM COMMERCIAL BANK through Branch Manager and 6 others---Respondents

F.A.O. No.44 of 2005, decided on 8th March, 2005.

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

----Ss.10(1) & 12---Ex parte decree due to non-appearance of defendant after filing application seeking leave to defend suit---Application for setting aside such decree under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Not maintainable in law.

Mst. Saeeda v. Habib Bank Limited and others 2002 CLD 1739 distinguished.

Messrs Ammar Rice Dealers and 2 others v. National Bank of Pakistan and others 2004 CLD 957 rel.

Shahid Ikram Siddiqui for Appellants.

2005 C L D 930

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD ASLAM TAHIR---Appellant

Versus

UNION BANK LIMITED through Branch Manager and another---Respondents

R.F.A. No.375 of 2004, heard on 8th March, 2005.

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

----Ss.9 & 10---Specific Relief Act (I of 1877), Ss. 42 & 54---Suit for declaration and permanent injunction---Failure of defendant to appear before Banking Court, or file leave application or refusal of 'Banking Court to grant leave to defend suit---Passing of decree on such failure of defendant---Validity---Claim for declaration could not be equated with a suit founded on a negotiable instrument--­Decree in such-like suit could not be passed straightaway--­On defendant's failure to apply for leave to defend suit, Banking Court would be legally obliged to decide suit after calling upon plaintiff to produce evidence in support of his claim---Where defendant did not appear or he was not granted leave, Banking Court would not be absolved of its duty to apply its mind to the facts and circumstances of each case.

Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 rel.

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

----S.10-Civil Procedure Code (V of 1908), O.XXXVII, Rr.2 & 3---Qanun-e-Shahadat (10 of 1984), Art. 133---Failure of defendant to file application for leave to defend suit--­Effect---Defendant would not be allowed to lead his own evidence, but he would be entitled to cross-examine plaintiff's witnesses.

Iftikhar Ullah Malik for Appellant.

Nemo for Respondent No. 1.

Muhammad Azeem Malik for Respondent No.2.

Date of hearing: 8th March, 2005.

2005 C L D 934

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

AAMIR ALI AHMAD and others---Appellants

Versus

HABIB BANK LIMITED through Attorneys---Respondent

Regular First Appeal No.76 of 1998, heard on 17th February, 2005.

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

----Ss. 10 & 17---Civil Procedure Code (V of 1908), O.XXIX, R.1---Suit for recovery of loan amount---Pleas raised by defendant in leave application were that he had signed blank documents; that Bank had charged excessive mark­up; that Bank had not .filed suit through authorized person; and that he would make application to Bank for settlement of loan---Banking Court decreed the suit with costs and mark-up after rejecting leave application---Validity---Neither execution of documents nor availing of financial facility had been denied by the defendant---Defendants had executed loan documents on 7-4-1993 i.e. before coming into force of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Such documents would be valid and legal as perforce of S.17(3) of the Act even if certain columns thereof were left blank at relevant time---Bank had placed on record photo copy of power of attorney authorizing its attorney to institute suit, which, prima facie, established that attorney, who had signed plaint and instituted suit, had lawful authority to undertake such acts--Defendant had not rebutted such authority---Impugned judgment did not suffer from any legal errors/defects---High Court dismissed appeal.

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

----S. 10---Civil Procedure Code (V of 1908), O.XXIX, R. 1 --­Suit for recovery of loan amount--Availing of financial facility and execution, of documents admitted by defendant---Plea of defendant was that Bank had not filed suit through authorized person---Validity---Bank could not be non-suited on the said ground in view of such admission.

Iftikhar Ullah Malik for Appellants.

Nemo for Respondent.

Date of hearing: 17th February, 2005.

2005 C L D 938

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

Messrs FRESH JUICES LTD. through Director/Chief Executive and 14 others ---Respondents

R.F.A. No. 506 of 1999, heard on 9th February, 2005.

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

----S.21---Limitation Act (IX of 1908), Ss. 5, 29(2) & Art. 156--­Appeal---Time barred appeal---Condonation of delay--­Application under S.5 of Limitation Act, 1908--­Maintainability---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 being a special law and having provided a different period of limitation for filing first appeal before High Court against judgment/decree of Banking Court, such application would be incompetent and not maintainable---High Court dismissed appeal being barred by time.

Allah Ditta v. Farooq Ahmad and 3 others PLD 1979 Lah. 917; Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 rel.

Qaiser Javed Mian for Appellant.

Nemo for Respondents.

Date of hearing: 9th February, 2005.

2005 C L D 941

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Mst. RIFFAT JEHAN and another---Appellants

Versus

HABIB BANK LIMITED and 10 others---Respondents

R.F.A. No.768 of 2002, decided on 28th April, 2005.

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

----Art. 84---Visual comparison of disputed signatures by the Court in the absence of counsel for the parties and without their association with the task of assisting the Court in such comparison was contrary to law.

Dr. Major Abdul Ahad Khan through his legal representatives v. Muhammad Iqbal through his legal representative PLD 1989 Kar. 102 ref.

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

----Ss. 7, 10 & 21---Qanun-E-Shahadat (10 of 1984), Arts. 84 & 59---Application for grant of leave and defend the case--­Allegation of fraud about signatures and thumb impressions on the documents by the defendants---Visual comparison of disputed signatures and thumb impressions by Court without the opinion of expert and assistance of counsel of the parties---Effect---If the Court does not seek the opinion of an expert, it should express so in the order and the decision must reflect, the adequate skill, expertise, competence and knowledge of the Court in the field, on the basis of which, the comparison has been made and the conclusion drawn is rested---Expertise of examining the finger prints (thumb impressions) is ordinarily not a skill of Judge and therefore, necessarily, the opinion of the expert should have been resorted to, but the Court, in the present case, has absolutely ignored the request of defendants to seek the opinion of the expert vis-a-vis their signatures and thumb impressions upon the disputed documents---Such omission on the part of the Court has resulted into injustice to the case of the defendants, who, at the leave granting stage, have been beseeching the Court in that behalf---Attending circumstances of the case required that the defendants should have been given some opportunity to establish that a fraud has been committed with them and no presumption in law in the nature of negative proof could have been raised against them before that---Questions involved in the case were substantial questions of law and facts, falling within the domain of serious and bona fide dispute as well, resultantly the Court, should have proceeded with the matter and adjudicated the case, after having granted the leave to appear and defend the suit to the defendants--­Judgment and decree of the Banking Court, to the extent of the defendants was set aside by the High Court in appeal and the defendants were granted leave to appear and defend the suit.

Under Article 84 of the Qanun-E-Shahadat, 1984, the Court is entitled to make an independent comparison of the hand writing, apart from the opinion of an expert and in every case, it is not necessary that the matter should be referred to an expert. There is also no denying the legal position that the evidence of a hand writing expert is a weak and decrepit and therefore, must yield to the positive evidence. However, the provisions of Article 59 of Qanun-e-Shahadat still enable the opinion of the persons, who have the necessary study, skill and the expertise in a specific field of knowledge, and their views are relevant to resolve the proposition of science, art, hand writing, finger impressions, etc. Obviously, the Article is incorporated in the Order, 1984, with a definite object to facilitate the job of the Court, while analyzing and evaluating the question relating to a specialized study/area, which includes the hand writing issues.

Though the opinion of the expert is not binding upon the Court, yet it shall be helpful for the Courts in understanding the niceties and the implications of the subject, so that, in the light of such supporting material, as may be provided by an expert, in the shape references, charts, graphs and the enlargements, with the specific identification about the similarities and dissimilarities of the writing, that enables the Court to form a fair view as far as possible. However, if the Court is not pleased to seek the opinion of an expert, then it should express so and the decision must reflect, the adequate skill, peritus, competence and knowledge of the Court in the field, on the basis of which, the comparison has been made and the conclusion drawn is rested. Because in the modern times, the forging of the handwriting has become, a sophisticated art and at times, the forgery is so accurately done that a person may be deceived and become doubtful of his own writing. Therefore, it shall be highly unsafe, rather may lead to miscarriage of justice, if the Court without the competence and adequate skill, renders its decision on the basis of visual comparison alone, without there being even the assistance of the counsel for the parties. Therefore, the decision of the Court about the disputed signatures could not sustain.

The study relating to the finger prints has acquired nearly the status of an exact science. Number of countries of the world, are regulating their immigration system on the basis of the prints. And by now, it is authentically opined by the experts on the subject that no two human beings have the same finger prints. Thus by using this special knowledge, it can safely be ascertained, whether the finger print of a person on a document, pertains to him, or not. The expertise of examining the finger prints is ordinarily not a skill of a Judge and therefore, necessarily the opinion of the expert, should be resorted to. But the Court, had absolutely ignored the request of the appellants to seek the opinion of the expert, vis-a-vis their thumb­-impression upon the disputed documents. The omission on part of the Court had resulted into injustice to the case of the appellants, who, at the leave granting stage, had been beseeching the Court in this behalf. But only on account of the assumption about the similarity of the signatures on the mortgage/guarantee documents, by comparing those with the power of attorney in favour of the counsel the entire case had been decided and the plea of the appellant had been repelled. The attending circumstances of the case, the appellants should have been given some opportunity to establish that a fraud had been committed with them. For the reason, that the appellants were identified by J.C., D.C. Office at the time of the registration of the mortgage deeds, and that his affidavit had not been produced and procured by the appellants, no presumption in law in the nature of negative proof could have been raised against them. In fact, if the matter was tested at the trial, it obviously should have been the first duty of the respondent/bank to prove the documents in any of the modes permissible under the law.

In the circumstances, there were the questions involved in the matter, which were substantial questions of law and fact, falling within the domain of serious and bona fide dispute as well, resultantly, the Court, should have proceeded with the matter and adjudicated the case, only after having granted the leave to the appellants.

The judgment and decree of the Banking Court, to the extent of the appellants was set aside, the appellants were granted leave to appear and defend the suit.

Messrs Chenab Cement Product (Pvt.) Ltd. v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672; Zar Wali Shah v. Yousaf Ali Shah and 9 others 1992 SCMR 1778; Ch. Riayasat Ali v. Mst. Hakim Bibi and others 2000 YLR 2789; Noor Ahmed v. Meraj Bibi 1994 CLC 479; Dr. Major Abdul Ahad Khan v. Muhammad Iqbal PLD 1989 Kar. 102; Muhammad Kabiruddin v. Muhammad Muniruddin 1993 CLC 747; Muhammad Anwar v. Hafizuddin 1984 CLC 2871; Muhammad Ali Hemani v. Mst. Altaf Fatima 1987 CLC 282; Abdul Razzak. v. Mst. Fatima Bai 1981 CLC 1083; Sarojini Dassi v. Hari Das Ghose AIR 1922 Cal. 12; Vadrevu Annapurnamma v. Vardrevu Bhima Sankararao AIR 1960 A.P. 359; Nadir Ali and others v. Muhammad Adam Khan 1985 CLC 373; Nazir Cotton Mills Limited v. Islamic Investment Bank Limited 2002 CLD 612; Matwarli Khan v. Shah Zaman PLD 1965 AJ&K 26; Abdul Hamid v. H.M. Qureshi PLD 1957 SC 145; Mistri Muhammad Hassan v. Haji Said Muhammad 1986 CLC 1241; Muhammad Hussain v. Secretary of State and others AIR 1939 Lah. 330; Teja Singh v. Firm Kalyan Das Chet Ram and others 1925 Lah. 575; Messrs Ram Copal Jiwan Singh v. Sardar Gurbux Singh Jiwan Singh and others AIR 1955 Punjab 215; National Bank of Pakistan v. Mrs. Abida Mustajab Hasan and others 1985 CLC 1074; Ch. Abdul Hamid v. Deputy Commissioner and others 1985 SCMR 359; Ghulam Siddique v. Mst. Ajhaib and others 2002 CLC 1244; Syed Ali Nawaz Shah Gardezi v. Lt.-Col. Muhammad Yusuf Khan PLD 1962 Lah. 558; Muslim Commercial Bank Ltd. v. Amir Hussain and another 1996 SCMR 464; S.M. Zahir v. Pirzada Syed Fazal Ali Ajmeri 1974 SCMR 490 and Ali Ahmed alias Ali Ahmed Mia v. The State PLD 1962 SC 102 ref.

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

----Ss. 7, 10 & 21---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Preamble---Application for grant of Leave to defend the suit---Allegation of unauthorized amendment by the plaintiff (Bank) in the plaint being a serious and substantial question of fact, had far reaching and serious implication i.e. about the very power of the Court to adjudicate the matter and pass the impugned decree---Such question though could be raised at any stage of the proceedings, because consent of the parties could neither confer nor oust the jurisdiction, but any decree passed without jurisdiction was nullity in eyes of Law---Such aspect of the matter had not been dealt with by the Banking Court, when an objection in this behalf, had been categorically taken in the application for leave to defend, after the promulgation of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Held, substantial questions of law and facts were involved in the case falling within the domain of serious and bona fide dispute as well---Banking Court, in circumstances should have proceeded with the, matter and adjudicated the case, only after having granted leave to defendants.

Salman Aslam Butt for Appellants.

Zahid Hamid and Abid Aziz Sheikh for Respondents.

Date of hearing: 12th January, 2005.

2005 C L D 953

[Lahore]

Before Muhammad Muzammal Khan, J

ZARAI TARAQIATI BANK LIMITED (ZTBL) through Branch Manager---Plaintiff

Versus

Messrs ZASHA LIMITED and 7 others---Defendants

C.O.S. No. 17 of 2000, decided on 19th April, 2005.

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

----Ss. 9 & 21---State Bank of Pakistan SBP Circular No.29 of 2002---Civil Procedure Code (V of 1908), O.IX, R.8 & S.151--­Limitation Act (IX of 1908), Art. 181---Suit for recovery of outstanding loan---Pending petition for leave to defend the suit by the defendants, they applied for amicable settlement of repayment of their outstanding loan by availing State Bank of Pakistan Circular No.29 of 2002, re-structuring package with concurrence with the parties whereunder a specific amount was paid by the defendants---High Court (Banking Court) had been adjourning the suit awaiting settlement between the parties out of Court and ultimately the suit was dismissed on account of lack of instructions to its counsel regarding settlement of repayment of the loan---Banking Court while dismissing the suit had observed that in case of restoration of the suit, all the applications filed by the defendants shall be deemed to be pending and shall be reactivated automatically---Bank moved petition for revival of the suit on account of default of defendants and to stick to repayment Schedule, as settled---Contentions of the Bank were that with the concurrence of the parties, the

outstanding loan was restructured by giving Schedule for its repayment in instalments by which the defendants did not abide hence, the suit be ordered to be revived and that since dismissal of the suit was on account of lack of instructions, it was not under O.IX, R.8 C.P.C., hence its revival, be ordered under S.151, C.P.C. which would be governed by residuary Art. 181, Limitation Act, 1908 whereunder Limitation was three years from the date of knowledge---Validity---Held, an incorrect order of dismissal of suit, could be rescinded/recalled by invoking the jurisdiction by the Court under S.151, C.P.C. keeping aside the technicalities---Dismissal of suit being not legally justified and dismissal of the suit being not under O.IX, R.8 C.P.C., and for revival of suit, invoking the jurisdiction of S.151, C.P.C., there being no controlling provision in the Limitation Act, 1908, the residuary Article 181 of the Limitation Act, 1908 would be applicable which provided a period of three years from the date of knowledge---Original cause of action which accrued to the Bank on non-payment of the finance facility availed by the defendants, was not only recurring but also remained undecided, as the suit was dismissed incorrectly---Non-observance of repayment of 'schedule gave the Bank cause for revival of the suit which in itself was sufficient for restoration of the suit--defendants could not be permitted to take benefit of then: own default by saying that the suit be not revived-Principles.

A Qazi Muhammad Tariq v. Hasin Jahan and 3 others 1993 SCMR 1949 Muhammad Afzal v. Small Business Finance Corporation and 4 others 1997 CLC 1080; Muhammad Bakhsh and others v. Ghulam Yasin and others 2000 MLD 466; Muhammad Sadiq v. Mst. Bashiran and 9 others PLD 2000 SC 820 and Haji Ahmad Associates v Cotton Export Corporation of Pakistan Limited 200T YLR 126 ref.

Jahan Zaib Bharwana for Plaintiff.

Asim Hafeez for Defendants Nos. 1, 2 (i) 4 and 5.

Waseem Majeed Malik for Defendant No.3.

2005 C L D 958

[Lahore]

Before Mian Saqib Nisar and Sh. Azmat Saeed, JJ

UNION LEASING LIMITED---Appellant

Versus

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION LIMITED through Deputy Managing Director and 8 others---Respondents

F.A.O. No.272 of 2004, decided on 15th December, 2004.

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

----Ss. 15 & 19---Transfer of Property Act (IV of 1882), S.58--­Judgment-debtor, in the present case, had mortgaged the property in favour of Leasing Company for the purpose of securing finance facility and had executed memorandum of delivery of title deeds coupled with physical deposit of title documents of the property with the said Leasing Company--­Said mortgage was also acknowledged with the SCCP and Form X in that behalf was also on record---Leasing Company for the recovery of its finances brought a suit against the Company and the mortgagor, which was decreed by the Banking Court---Leasing company had moved an application under S.15, Financial Institutions (Recovery of Finances) Ordinance, 2001 for procuring the possession of the property which application was not yet disposed of rather the Banking Court had directed for the sale of the property through a Court-auctioneer, who was also appointed--­Another Bank, had also obtained a decree against the judgment-debtor in a case wherein she had stood as a guarantor/surety for another company for repayment of the finance by the said company---Said Bank, for seeking the execution of its decree filed petition and the property mortgaged with the Leasing Company was attached by the Court---Leasing company filed objection to the said attachment which was dismissed---Validity---Held, irrespective of the dates of the two decrees, the property was mortgaged in favour of the Leasing Company and while considering the objections, the effect of the mortgage including its validity should have been kept in view by the Court, rather than the timing of the decrees---Rights of mortgagee should have priority in the cases where the owner of that property had also stood as a simple surety--­Where another financial institution had also filed a suit against the common defendant/judgment-debtor, but only in the capacity as a simple surety/guarantor and had procured a decree against him/her, such a decree had to give way to the rights of mortgagee/decree-holder under the general as also the special law, and should await execution till such time the rights of mortgagee under the law as well as under the decree, were first satisfied---Court in execution of another decree, could not attach the mortgaged property, causing prejudice to the rights of the mortgagee and preventing him from enforcing his rights by way of the sale of the property, particularly through the process of execution---High Court in appeal, approved the order of the Banking Court for sale of the mortgaged property through public auction and directed that if there was any surplus in the proceeds of sale after the satisfaction of the decree in favour of the Leasing Company, such surplus amount shall remain attached and shall be paid to the Bank---Principles.

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

----Ss. 15 & 19---Transfer of Property Act (IV of 1882), S.58--­Mortgage---Effect of mortgage and legal consequences which flow therefrom stated.

Under the general law i.e. section 58 of the Transfer of Property Act, "the mortgage" creates a specific interest in the immovable property, providing security for the performance of a duty or the payment of a debt, as against none in favour of a person who only is a surety or the guarantor simpliciter. Thus, where the law has ordained to create an interest of the mortgagee in the mortgaged property, it means that such interest shall have full legal effect and the consequences and shall be enforceable as a right. Moreover, in the cases pertaining to the mortgages created for the purpose of securing the finances allowed by the financial institutions, section 15 of the Financial Institutions (Recovery of Finances) Ordinance No.XLVI of 2001, has created a further right in favour of the mortgagee.

Besides, certain rights of the mortgagee are further recognized by section 19 subsections (3)(4)(5) and (6) of the said Ordinance.

These rights undoubtedly, are conferred by the special law upon a mortgagee of a property and cannot be nullified and defeated, for the reason that another financial institution has also filed a suit against the common defendant/judgment-debtor, but only in the capacity as a simple surety/guarantor and has procured a decree against him. Such a decree has to give way to the rights of the mortgagee/decree-holder under the general as also under the special law, and should await execution, till such time, the rights of the mortgagee, under the law as well as under the decree, are first satisfied. If these aspects of the case have not been kept into view by the Court while passing the impugned order, the same is liable to be set aside.

The Court in execution of another decree, cannot attach the mortgaged property, causing prejudice to the rights of the mortgagee and preventing him from enforcing his rights by way of the sale of the property, particularly through the process of execution.

Ms. Ayesha Malik for Appellant.

Muhammad Raza Qureshi for Respondents.

Date of hearing: 15th December, 2004.

2005 C L D 978

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

RASHID-UR-REHMAN---Appellant

Versus

Mian IQBAL HUSSAIN ---Respondent

R.F.A. No.204 of 1999, heard on 15th March, 2005.

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

----Ss.4 & 13---"Promissory note" ---Impugned document, execution whereof though had been admitted by the executant; but promise to pay the sum mentioned in the document, was subject to foregoing the rights of appeal in the litigation---Effect-Undertaking to pay in the said document being conditional, the Trial Court had rightly held that the document was not covered within the definition of "promissory note" as contemplated in Ss. 4 & 13, Negotiable Instruments Act, 1881.

Mrs. Doreen Barkat Ram v. Abdul Hakim Khan 1974 SCMR 84; Muhammad Yousaf v. Abdul Majid PLD 1993 Lah. 244; Muhammad Rafique v. Muhammad Nawaz 2001 CLC 318 and Bherulal v. Ram Rikh AIR (38) 1951 Ajmer 71 ref.

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

----S. 28---Civil Procedure Code (V of 1908), O.XXXXVII, R.2--­Negotiable Instruments Act (XXVI of 1881), S.4---Suit for recovery of amount on the basis of promissory note---Promissory note revealed that the sum was agreed to be paid, to forego the rights in appeal in the litigation---Intention of the parties, when the document was executed, was to cause restraint on the payee to pursue the appeal in the litigation was evident from the perusal of evidence which was adduced during the trial ---Effect--­Agreement in restraint of legal proceedings was void and suit under O.XXXVII, R.2, C.P.C. was incompetent on such contract--­Agreement which restricted a party, from enforcing his rights under or in respect of such-contract by the usual proceedings in the ordinary Tribunals of the country, would to that extent, be void unless protected by Exceptions to S. 28, Contract Act, 1872--­Document, in the present case being neither a promissory note nor a valid agreement, no suit on the basis of void agreement lay and the Trial Court had rightly dismissed the same.

Mrs. Doreen Barkat Ram v. Abdul Hakim Khan 1974 SCMR 84; Muhammad Yousaf v. Abdul Majid PLD 1993 Lah. 244; Muhammad Rafique v. Muhammad Nawaz 2001 CLC 318 and Bherulal v. Ram Rikh AIR (38) 1951 Ajmer 71 ref.

Ch. Mubasher Nisar Khan for Appellant.

Iftikhar Ullah Malik for Respondent.

Date of hearing: 15th March, 2005.

2005 C L D 982

[Lahore]

Before Ch. Ijaz Ahmad and Mian Saqib Nisar, JJ

Malik MUHAMMAD AMIN --- Appellant

Versus

ZAHID MEHMOOD---Respondent

R.F.A. No.411 of 2004, heard on 10th May, 2005.

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

----O.XXXVII, Rr. 1 & 2---Limitation Act (IX of 1908), Art. 73--­Negotiable Instruments Act (XXVI of 1881), S.118---Suit for recovery of amount on the basis of promissory note---Defendant had not taken the stance in the application for leave to defend the suit that the suit of the plaintiff was time-barred---Parties were bound by their pleadings---Objection qua the Limitation taken by the defendant in the written statement being an afterthought, Trial Court was justified not to frame issue with regard to the preliminary objection that the suit was time­-barred---Pro note in the present case was allegedly executed on 9-5-1999 and the suit was filed on 8-5-2002 and according to Art 73, Limitation Act, 1908, the suit was not time-barred.

Mst. Murad Begum and others v. Muhammad Rafiq and others PLD 1974 SC 322 ref.

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

----O. XXXVII Rr. 1 & 2---Contract Act (IX of 1872), S.16---Suit for recovery of amount on the basis of promissory note---Defendant had taken stand in the application for leave to defend as well in the written statement, that the pro note was executed by the defendant in favour of plaintiff under coercion, therefore, it was moral obligation of the defendant to prove the fact that the pro note was executed under coercion in view of S.16 of the Contract Act, 1872---Defendant had accepted the execution of the pro note receipt with the objection that the same was executed under coercion, meaning thereby that the execution of document was admitted by the defendant but could not prove the incident of coercion---Defendant having failed to produce a single witness to prove the alleged coercion, said issue was rightly decided against the defendant by the Trial Court.

Muhammad Rafiq v. Muhammad Nawaz 2001 CLC 318; Muhammad Sharif v. Muhammad Hashim Paracha and another PLD 1987 Kar. 76; Shabbir Anwar v. Sh. Tariq Mehmood and 2 others 2002 CLC 1102 and Farid Akhtar Hadi's case 1993 CLC 2015 ref.

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

----S. 118---Civil Procedure Code (V of 1908), O.XXXVII, Rr. 1 & 2-­Suit for recovery of money on the basis of promissory note---Initial presumption under S.118, Negotiable Instruments Act, 1881 is that negotiable instrument is made, drawn, accepted and endorsed for consideration---Such presumption although is rebuttable, yet onus is on the person denying consideration to allege and prove the same---Defendant was obliged to prove that promissory note/receipt was without consideration which he failed to discharge, which is condition precedent in view of S.118, Negotiable Instruments Act, 1881---Defendant's claim that no payment was made before the witnesses, was of no consequence inasmuch as the pro note can be executed to secure the payment of monetary obligation---Decree of the Trial Court against the defendant was not interfered with by the High Court in appeal.

Haji Karam's case 1973 SCMR 100; Muhammad Boota's case 1979 SCMR 465; Muhammad Rafique's case 2001 CLC 318 and Muhammad Yousaf;s case PLD 1993 Lah. 244 ref.

Malik Tariq Ali Jadran for Appellant.

Azeem Sarwar for Respondent.

Date of hearing: 10th May, 2005.

2005 C L D 987

[Lahore]

Before Umar Ata Bandial, J

BADAR TEXTILES MILLS (PVT.) LTD. ---Appellant

Versus

STATE BANK OF PAKISTAN and others---Respondents

Writ Petition No.4735 of 2004, decided on 11th May, 2005.

(a) State Bank of Pakistan BPD Circular No.29 of 2002 dated 15-10-2002---

---Para. 17---State Bank of Pakistan BPD Circular No.8 of 2003 dated 12-3-2003---Constitution of Pakistan (1973), Art.199--Constitutional petition---Valuation of securities provided for the outstanding amount to the creditor Bank---Valuation had been made by professional approved valuators engaged by the Bank which valuation was affirmed by the State Bank of Pakistan Committee formed under para. 17 of the BPD Circular No.29 of 2002---Validity- -Decision of State Bank of Pakistan Committee was binding on the parties under BPD Circular No.8 of 2003 and the Committee had acted strictly in accordance with BPD Circular No.29 of 2002 and there was nothing on record to dislodge the view taken by the Committee.

(b) State Bank of Pakistan BPD Circular No.29 of 2002 dated 15-10-2002---

----Paras.10 & 17---Constitution of Pakistan (1973), Art. 199--­Constitutional petition---Valuation of securities provided for the outstanding amount to the creditor Bank---Contention of the petitioner was to the effect that terms of Circular No.29 of 2002 set out in para.10 were unreasonable anal arbitrary and it was urged that classification operated to the petitioner's prejudice, because its FSV was marginally less than the outstanding amount which disentitled the petitioner to pay 75% of the outstanding amount in settlement---Contention of the petitioner had come as a surprise to the Court because the same was not set out in the petition---Nevertheless, the argument was facile--­Where the forced sale value (FSV) of the security was less than the outstanding amount, then to effect settlement a sum equal to FSV was to be recovered from the customer in cash---If FSV was higher than the outstanding amount then the customer would have to pay 75% or more of the outstanding amount to reach settlement---Where, however, the FSV was higher than the outstanding amount, the SBP Committee had discretion to order settlement at higher than 75% of the outstanding amount---In fact the floor percentage would come into active consideration where the disparity of FSV over the outstanding amount was substantial, rather than marginal as in the present case---In all cases of classification it was common that difficulty, was experienced in cases on borderline between separate classes, but that did not mean that the classification was illegal---So long as rational criteria distinguished the classes that were formed with nexus to the object of the law, the classification so made was valid---So too was the classification done by BPD Circular No.29---Present dispute was lingering for more than one year after the SBP Committee decision whereas the object of BPD Circular No.29 was to conclude settlements speedily rather than drag matters---Petitioner was directed by the High Court to pay the amount of FSV less the disputed valuation amount of pledged stock to the Bank within two weeks---Failing settlement for the petitioner's default, Bank shall be entitled to also recover the disputed amount from the petitioner in accordance with law.

(c) State Bank of Pakistan BPD Circular No.29 of 2002 dated 15-10-2002--

-----Paras. 17 & 10---Constitution of Pakistan (1973), Art 199--­c:onstitutional petition---Valuation of securities provided for the outstanding amount to the creditor Bank---Petitioner, the borrower had questioned the value ascribed to pledged goods--­Valuators had described the pledged goods as scrap and value determined was said to be excessive---Such point sought an adjustment rather than revision of value, however it raised a question of fact which could not be examined by the High Court in. Constitutional jurisdiction---Bank and the borrower were thus directed to revisit the matter and settle the issue by mutual consent keeping in view the hardship encountered by the petitioner being a border line case due to. FSV amount.

Ch. Jawad Mehmood Pasha for Petitioner.

Shehram Sarwar Chaudhry for Respondent No.2.

Zahid Waheed Khan, Vice-President, I. D. B. P.

2005 C L D 990

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Ch. MUHAMMAD HUSSAIN---Appellant

Versus

NATIONAL BANK OF PAKISTAN through City Branch, Gujranwala and 4 others---Respondents

R.F.As. Nos.607 and 704 of 2002, heard on 3rd December, 2003.

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

----S. 10---Leave to appear and defend the suit---Plea of being a sleeping partner---Validity---Such plea was rightly rejected by Banking Court and the suit was rightly decreed in favour of bank---Appeal was dismissed.

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

----S. 9---Recovery of bank loan ---Decreeing of suit straightaway--­Plea raised by the defendants was that after dismissal of application for leave to appear and defend the suit, the Banking Court had straightaway decreed the suit in favour of bank--­Validity---Instead of decreeing the suit straightaway, at least an opportunity should have been provided to the defendants to contest the matter on merits and decree should not have been passed as a matter of course without adverting to the record and looking into the defence of defendants---With the consent of the counsel of bank, the judgment and decree was set aside and the matter was remanded to Banking Court for decision afresh.

Mian Sarfraz-ul-Hassan for Appellant.

Muhammad Zafar Iqbal and Tariq Kamal Qazi for Respondents.

Date of hearing: 3rd December, 2003.

2005 C L D 993

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Messrs GHULAM HUSSAIN & COMPANY and 6 others---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED---Respondent

Regular First Appeal No. 39 of 1999, heard on 19th May, 2004.

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

----S. 9---Recovery of bank loan---Amount deposited by defendants, non-adjustment of---Father of defendants died on 17-3-1996 who had secured loan facility from plaintiff-bank--Statement of account revealed that amount outstanding against the father of defendants on 31-3-1996 was Rs.4,53,071.86---Statement of account also revealed that on 19-9-1997, the defendants had deposited Rs.65, 000 in the account of their father under incentive scheme---Defendants also deposited Rs.2,00,000 in obedience of order of High Court---Effect---Banking Court erred in law not to give benefit of Rs.65,000 deposited by the defendants under the incentive scheme---Judgment and decree passed by Banking Court was modified after deducting the amounts already deposited by the defendants-- Appeal was disposed of accordingly.

Muhammad Afzal for Appellants.

Zaheer Ahmed Saeed for Respondent.

Date of hearing: 19th May, 2004.

2005 C L D 995

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

IMTIAZ SALEEM AHMAD---Appellant

Versus

CITIBANK through Branch Manager---Respondent

R.F.A. No.792 of 2002, heard on 31st May, 2004.

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

----Ss. 9, 10 & 17---General Clauses Act (X of 1897), S.24-A--­Decree passed by Banking Court without application of mind--­Validity---Such decree was not in consonance with law---After addition of S.24-A in the General Clauses Act, 1897, public functionaries were bound to decide controversy between parties after application of mind with reasons---High Court accepts appeal and set aside decree, resultantly suit and leave application would be deemed to be pending before Banking Court for decision afresh after application of mind in accordance with law.

Mollah Ejahar Ali's case PLD 1970 SC 173 and Messrs Airport Support Service's case 1998 SCMR 2268 rel.

Muhammad Ghani for Appellant.

Ashar Elahi for Respondent.

Date of hearing: 31st May, 2004.

2005 C L D 998

[Lahore]

Before Maulvi Anwarul Haq and Sardar Muhammad Aslam, JJ

Messrs SUNRISE TEXTILE LIMITED through Chief Executive and 7 others---Appellants

Versus

DOHA BANK LIMITED through BRANCH MANAGER---Respondent

Regular First Appeal No.636 of 1999, heard on 20th April, 2004.

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

----Ss. 9 & 10---Recovery of bank loan---Factual controversy--­Loan for a sum of Rs.5 million was secured by the defendants but the bank claimed recovery of Rs.29 million ---Banking Court dismissed the application for leave to defend the suit and the suit was decreed to the extent of Rs.29 million---Bank failed to explain as to how a claim of Rs.29 million had been raised against the defendants when the mark-up had been separately calculated---Counsel for the bank conceded that evidence would be required to support the claim of the bank---Plea raised by the defendants was that facility of Rs.5 million was availed and the same had been repaid---Effect---Banking Court had proceeded in the matter without even examining the plaint---High Court in view of the admission of defendants passed interim, decree for recovery of Rs.5 million with proportionate mar-up at the agreed rate---Leave to appear and defend the suit was allowed to the defendants for the remaining amount-- Judgment and decree passed by the Banking Court was set aside and the matter was remanded to Banking Court for decision afresh.

Malik Imran Nazir Awan for Appellants.

Kh. Muhammad Saeed for Respondent.

Date of hearing: 20th April, 2004.

2005 C L D 1001

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Pirzada AHSAN-UD-DIN---Appellant

Versus

BANK OF PUNJAB and 6 others---Respondents

F.A.O. No. 180 of 2000, decided on 18th February, 2004.

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---Objection application, dismissal of---Non­-reading of evidence-- Effect---Banking Court decided application of objector without application of mind, as the documents attached by decree-holder bank in the suit as well as in the reply of objection application were not mentioned by Banking Court in its order---Courts were bound to decide the cases after application of independent mind---Order passed by Banking Court not containing any such reason, the same was set aside--­ Application was remanded to Banking Court for decision afresh--­Appeal was disposed of accordingly.

Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173 rel.

Iftikhar Ullah Malik for Appellant.

Muhammad Aqeel Malik for Respondents.

2005 C L D 1003

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

SONERI BANK LIMITED through Duly Authorized Attorneys ---Appellant

Versus

IDREES AHMAD SIDDIQI and another---Respondents

E.F.A. No.16 of 2002 in E.P. No.76 of 1997, heard on 23rd June, 2004.

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

---Ss. 15 & 18---Execution of decree---Decree also awarded to decree-holder benefit of S.15 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Judgment-debtor applied for return of security documents after paying decretal amount with costs---Executing Court through an interim order refused to give benefit of S.15 of the Act as same was not attracted to such case, and finally directed decree-holder to return documents to judgment-debtor---Validity--Any error or illegality in such decree could not be termed so as to render same nullity or void or inexecutable in eye of Law---Executing Court could not go behind decree and nullify same, which had attained finality for having not been challenged in appeal---No appeal was allowed under special law against such interim order, which decree-holder could challenge in appeal against final order affecting its rights---High Court accepted appeal, set aside impugned order with directions to Executing Court to determine liability of judgment-debtor in terms of such decree and after payment of amount so determined, judgment-debtor would be entitled to return of security documents.

Fakir Abdullah and others v. Government of Sindh through Secretary to Government of Sindh, Revenue Department and others PLD 2001 SC 131 ref.

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

---S. 51 & O.XXI, Rr.10, 17---Execution of decree---Jurisdiction of Executing Court---Scope---Executing Court could refuse to execute decree, which was void, nullity, inexecutable or passed without Jurisdiction.

Ali Zafar for Appellant.

Khawaja Saeed uz Zafar for Respondents.

Date of hearing: 23rd June, 2004.

2005 C L D 1006

[Lahore]

Before Syed Zahid Hussain and Muhammad Akhtar Shabbir, JJ

UNITED BANK LIMITED---Appellant

Versus

Messrs SHIFA MEDICO and another---Respondents

Regular First Appeal No. 14 of 1998, heard on 27th October 2003.

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

----S. 9---State Bank of Pakistan Circular No. 19, dated 5-6-1997--­Recovery of bank loan---Incentive scheme---Wrong calculation by bank---During pendency of suit filed by bank, the defendants deposited the amount under 'Incentive Scheme' issued by State Bank of Pakistan vide its Circular No. 19, dated 5-6-1997---After the amount had been deposited by the defendants, the bank raised additional claim on the ground that at the time of settlement of loan under the scheme, less liability was calculated inadvertently---Validity---Defendants were invited by the Bank to avail of the benefit of incentive scheme---Defendants in response to the scheme, made a settlement with the Bank---As a consequence of the settlement the defendants had deposited the amount in terms thereof and after performance of their part of settlement, the Bank could not claim any further amount from them due to its own mistake---Banking Court had committed no illegality while passing the judgment and decree and High Court declined to interfere in the same--Appeal was dismissed in circumstances.

Tariq Saleem Sheikh for Appellant.

Sh. Zia Ullah for Respondents.

Date of hearing: 27th October, 2003

2005 C L D 1009

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

BANK OF PUNJAB through Attorney---Appellant

Versus

BANKING COURT IV, LAHORE and others---Respondents

R.F.A. No.58 of 1999, heard on 13th January, 2004.

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

----S. 15---State Bank of Pakistan Circular No. 32, dated 26-2-1995---Decree---Mark-up for cushion period of 210 days--­Public functionaries, acts of--Grievance of bank was that Banking Court in its decree passed in favour of the bank did not grant mark-up for cushion period of 210 days---Validity---Bank was entitled to the mark-up from the date of institution of the suit to payment---Bank did not file the suit immediately after the cut off date as mentioned in finance agreement, therefore bank was responsible not to agitate the matter before the Banking Court well in time---No body should be allowed to get the benefits of his misdeeds and no body could be penalized by the inaction of public functionaries---Judgment and decree passed by Banking Court was in consonance with S.15 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, and there was no infirmity or illegality in the same-appeal was dismissed in circumstances.

Rahim Bux and others v. The State PLD 1998 Kar. 119 and Ahmad Latif Qureshi v. Controller of Examination, Board Intermediate and Secondary Education, Lahore and another PLD 1994 Lah. 3 ref.

Muhammad Aqeel Malik for Appellant.

Nemo for Respondents.

Date of hearing: 13th January, 2004.

2005 C L D 1011

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

SAULAT ALI and another---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Chief Manager---Respondent

F.A.O. No. 10 of 2004, heard on 17th June, 2004.

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

----S. 12---Ex parte decree, setting aside of---Limitation---Judgment debtor filed application after having knowledge about decree from his friend, but omitted to mention name and particulars of his friend therein---Banking Court for such omission dismissed application as being time-barred ---Validity---Presumption drawn by Banking Court on basis of such omission was illegal and unwarranted---Question of limitation was a mixed question of law and fact --If judgment-debtor had to be non-suited on such ground, then Banking Court should have enabled parties to lead their evidence-- High Court accepted appeal, set aside impugned order and remanded matter to Banking Court for decision of question of limitation after recording evidence of parties.

(b) Limitation---

----Question of limitation is a mixed question of law and fact--­Before non-suiting a party on such ground, Court should allow parties to lead their evidence.

Syed Ijaz Qutab for Appellants.

Mian Abdul Sattar for Respondent.

Date of hearing: 17th June, 2004.

2005 C L D 1014

[Lahore]

Before Muhammad Sayeed Akhtar, J

UNITED BANK LIMITED---Plaintiff

Versus

HAFIZ BROTHERS and others---Defendants

Suit No. 76 of 1998, decided on 5th August, 2004.

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

----Ss. 9 & 10---Recovery of bank loan--Liquidated damages--­Proof---Buy-back price agreement---Availing of finance facility was admitted by the defendants---Statement of accounts showed the withdrawal of loan amount by the defendants out of sanctioned amount from time to time---Effect---Finance facility being buy-back amount included the mark-up charged by the bank on the principal amount---High Court allowed the amount of buy-back but the sum exceeding the buy-back and liquidated damages were not allowed---Suit was decreed accordingly.

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

Jawad Hassan and Muzamil Ashraf Qureshi for C.I.RC.

Ghaffar-ul-Haq for Defendants Nos. 1 to 4.

2005 C L D 1019

[Lahore]

Before Mian Saqib Nisar and Abdul Shakoor Paracha, JJ

MUNEER FLOUR MILLS (PRIVATE) LIMITED and 4 others- --Appellants

Versus

NATIONAL BANK OF PAKISTAN through Chief Manager and 2 others---Respondents

First Appeal from Order No. 135 of 2004, decided on 24th May, 2004.

(a) Civi1 Procedure Code (V of 1908)---

----O. XVII, R.5---Adjournment of case for a particular purpose by Reader of the Court, when Presiding Officer was on leave--­Validity---Case for a particular purpose could either be fixed by Court itself or by any duty Judge---Reorder, under C.P.C., or Special Law, had no power to adjourn case for any particular purpose.

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

----S. 12---Civil Procedure Code (V of 1908), O.XVII, R.5---Ex parte decree, setting aside of---Adjournment of case by Reader of the Court on a date, when Presiding Officer was on leave and application was fixed for hearing---Dismissal of application by Court on such adjourned date---Banking Court dismissed application seeking restoration of earlier application---Validity--­Reader under C.P.C., or Special Law had no power to adjourn case for any particular purpose---Case for a particular purpose could either be fixed by Court itself or by any duty Judge---Such adjourned date being not a date of hearing of application under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001, same could not be dismissed for non prosecution---High Court accepted appeal, set aside impugned order, allowed application for restoration of application under S.12 resultantly application under S.12 would be deemed pending before Banking Court for decision.

Mujtaba Jamal for Appellants.

Kamran Babar for Respondent No. 1.

Shoaib Zafar for the I.D.B.P.

2005 C L D 1021

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Mst. SADIA BIBI and 2 others---Appellants

Versus

Messrs ALLIED BANK OF PAKISTAN LIMITED---Respondent

Regular First Appeal No. 148 of 1999, decided on 15th December, 2003.

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

----Ss. 9 & 10---Recovery of bank loan---Death of original loanee--­Liability of legal heirs of deceased loanee-- Application for leave to defend the suit---Arguable plea, non-raising of---Suit for recovery of loan was filed against the legal heirs of the original loanee as he had died---Suit was decreed by the Banking Court in favour of the bank---Validity---Loan was secured by the original loanee, therefore, the legal heirs were not in a position to deny execution of documents by the original loanee---Legal heirs had inherited the property of the original loanee and they had not raised any arguable plea before Banking Court in their application for leave to defend the suit---Banking Court had rightly dismissed the application anal the suit was rightly decreed in favour of the bank as no infirmity or illegality was committed by the Banking Court---Appeal was dismissed in circumstances.

Hafiz Khalil Ahmad for Appellant.

2005 C L D 1023

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

ALLAH RAKHA---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager- --Respondent

Regular First Appeal No.637 of 2002, heard on 10th November, 2003.

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

----Ss. 9 & 10---Recovery of bank Loan---Fraud committed by bank manager, allegation of---Loan was availed by the defendant for purchase of tractor---Grievance of the defendant was that the manager had misappropriated the tractor---Defendant approached High Court in Constitutional jurisdiction wherein High Court arrived at the conclusion that he had applied for purchase of tractor which was duty sold to him---High Court, in exercise of Constitutional jurisdiction, also found that invoice was given to the defendant which was signed by him and according to the gate pass, the defendant himself took the tractor out of factory premises, thereafter the defendant sold the tractor to another person and the sale receipt was also signed by him--­Defendant had raised the same contentions in his application for leave to defend the suit---validity----Constitutional petition was dismissed by High Court and no appeal was filed against that judgment which had become final and conclusive---Not open to the defendant to raise the same contention before the Banking Court in his leave petition as that matter stood finally and conclusively decided---Banking Court had rightly rejected the application of the defendant for leave to defend the suit and the suit was rightly decreed against the defendant---Appeal was dismissed in circumstances.

Muhammad Farooq Qureshi Chishti for Appellant.

Sultan Tanvir Ahmad for Respondent.

Date of hearing: 10th November, 2003.

2005 C L D 1040

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

KASHIF YOUNIS BUTT---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager and 7 others---Respondents

R.F.A. No.468 of 1999, decided on 18th December, 2003.

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

----S.18---Execution of decree---Objection petition---Dismissal for non-prosecution--- Plea raised by the objector was that the date on which the petition was dismissed was not a date fixed for hearing---Validity---Executing Court had erred in law to dismiss the application of the objector as the same was not the date of hearing in terms of law laid down by Supreme Court in case titled Manager, Jammu and Kashmir, State Property in Pakistan v. Khuda Yar and another, reported as PLD 1975 SC 678---Order of dismissal of objection petition was set aside and the case was remanded to Executing Court for decision afresh---Appeal was allowed in circumstances.

Messrs Aziz Flour Mills, Bahawalpur and 2 others v. The Industrial Development Bank of Pakistan 1990 CLC 1473 ref.

Manager, Jammu and Kashmir, State Property in Pakistan v. Khuda Yar and another PLD 1975 SC 678 fol.

(b) Void order---

---- When basic order is unlawful, the superstructure built on it would fall to the ground automatically.

Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC (Pak) 104 rel.

Taqi Ahmad Khan for Appellant.

Farrukh Mehmood Salehria for Respondents.

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2005 C L D 1053

[Lahore]

Before M. Javed Buttar and Muhammad Muzammal Khan, JJ

UNITED BANK LIMITED---Appellant

versus

FOUNTAIN DAIRY FARM through Proprietor and others---Respondents

R.F.A. No.373 of 1996, heard on 10th September , 2003.

Banking Tribunals Ordinance (LVIII of 1984)---

----S.6---Suit for recovery of loan amount---Banking Tribunal decreed suit partly, but refused to allow liquidated damages and compound interest---Validity---Impugned decree was strictly according to statement of accounts of defendant maintained by Bank itself---High Court dismissed appeal in circumstances.

Ghulam Haider Alghazali for Appellant.

Aftab Gull for Respondents.

Date of hearing: 10th September, 2003.

2005 C L D 1067

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

CHARTERED BANK, SHARE QUAID-I-AZAM, LAHORE through Mr. T.H. Bokhari, Attorney of the Bank ---Appellant

Versus

M. Y. MALIK & COMPANY through Managing Partner and another---Respondents

Regular First Appeals Nos.195 and 234 of 1995, heard on 24th February, 2004.

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

----S.6---Civil Procedure Code (V of 1908), O.VIII, Rr.6 & 7---Suit for recovery of loan amount---Claim of set-off---Defendant based its claim on damage caused to, misappropriation of and tampering with pledged stocks by Bank; and that Bank had received excess amount in pledged account---Proof---Pledged stock was in custody of Bank and was stored in a godown under its control---Defendant's witnesses deposed that at the time of delivery, certain stocks were short, while remaining stocks were replaced and damaged and that damage was caused due to negligence of the Bank---Receipt of delivery of stock showed that stock delivered to defendant was damaged and short---Bank in its letter had admitted damage caused to pledged stock---According to witness of Bank, defendant had given note about "damage" on receipt of delivery---Statement of defendant's witness about excess payment to Bank remained unchallenged during his cross-examination---Evidence on record showed that defendant had suffered business loss also---Bank had failed to produce any worthwhile evidence---Defendant through letter had demanded compensation from Bank---Set-off claimed by defendant was awarded in circumstances.

Usman Aziz for Appellant.

Muhammad Saleem Shahnazi for Respondents.

Date of hearing: 24th February, 2004.

2005 C L D 1076

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

FAISAL RAUF MALIK and 2 others---Appellants

Versus

Messrs CITIBANK N.A.---Respondent

R.F.A. No.247 of 1998, heard on 5th November, 2003.

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

----Ss.9 & 10---Suit for recovery of loan amount---Leave to defend suit, application for---Plea of defendant was that suit had not been filed by a duly authorized person; and statement of accounts was not correct---Banking Court dismissed leave application---Validity---Suit could only be filed through a duly authorized person---Bank had not placed on record power of attorney allegedly executed in favour of person named in plaint---Basis of debit entries in statement of accounts were terms and conditions of credit card, which was not before the Banking Court---Banking Court had not recorded any clear finding on averments made in leave application---High Court accepted appeal, set aside impugned judgment/decree, allowed leave application unconditionally and remanded suit to Banking Court for fresh decision in accordance with law.

Ch. Ikram-ul-Haq Nasim for Appellants.

Aamir Sana for Respondent.

Date of hearing: 5th November, 2003.

2005 C L D 1083

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs MALIK ISRAR SALIM & BROTHERS through Proprietor---Appellant

Versus

ALLIED BANK OF PAKISTAN LTD. and 2 others---Respondents

R.F.A. No.486 of 2002, heard on 24th November, 2003.

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

----S.9---Civil Procedure Code (V of 1908), O.VII, R.11---Declaratory suit---Rejection of plaint---Application for leave to appear and defend the suit, non-deciding of---Borrowers filed suit for declaration alleging that the bank did not disburse the amount as claimed by it---Banking Court without granting leave to the bank, rejected plaint for the reason that it did not disclose any cause of action---Validity---Banking Court had erroneously applied the provisions of O.VII, R.11 C.P.C. and the order passed by Banking Court suffered from serious infirmity, and the same could not be sustained, resultantly the same was set aside---Matter .was remanded to Banking Court where the application of bank for leave to appear and defend the suit would be deemed to be pending and the Banking Court would decide such application---High Court allowed that Banking Court might also consider the question about maintainability of declaratory suit if raised by the bank--Appeal was allowed accordingly.

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

----Ss.9 & 10---Recovery of bank loan---Leave to appear and defend the suit, grant of---Pendency of declaratory suit filed by borrowers against the bank---Plea raised by the bank was that on account of grant of leave to the bank in declaratory suit, the borrowers were not entitled to grant of leave automatically---Validity---It was for the Banking Court to apply its independent mind to both the cases and decide the matter in accordance with law---Any order passed by High Court in declaratory suit filed by borrowers would not affect the case of the bank in circumstances.

Malik Waqar Saleem for Appellant.

Asher Elahi for Respondent.

Date of hearing: 24th November 2003.

2005 C L D 1088

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Mst. BILQEES KHANUM and 5 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN---Respondent

F.A. O. No.88 of 1995, decided on 12th January, 2004.

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

----S.12---Limitation Act (IX of 1908), Ss.5 & 29---Appeal---Limitation---Condonation of delay---Provisions of Limitation Act, 1908---Applicability---Appeal was filed after the period of limitation and along with application under S.5 of Limitation Act, 1908, was filed for condonation of delay-Plea raised by the respondent was that the appeal was filed under S.12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, which was a special statute, therefore, provisions of Limitation Act, 1908, were not applicable---Validity---Appeal was filed under the provisions of special law. wherein specific period had been prescribed---In view of the provisions of S.29 of Limitation Act, 1908, the delay could not be condoned under S.5 of Limitation Act, 1908---Appeal was dismissed in circumstances.

Messrs A.D.B. P. v. Messrs Bio-Tech 2002 CLD 1772 ref.

Allah Dino and another v. Muhammad Shah 2001 SCMR 286 rel.

Ch. Inayat Ullah for Appellants.

Mian Qamar-uz-Zaman for Respondents.

2005 C L D 1094

[Lahore]

Before Mian Saqib Nisar and Abdul Shakoor Paracha, JJ

TALAT TEXTILES (PVT.) LIMITED through Chief Executive and 5 others---Appellants

Versus

ALTOWFEEK INVESTMENT BANK LTD. Through Manager, Vice-President and Attorneys and 4 others ---Respondents

R.F.A. No.413 of 1999, heard on 31st May, 2004.

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

----Ss.9 & 10---Recovery of bank loan---Application for leave to appear and defend the suit, dismissal of---Defendants contented that they did not mortgage their property in favour of bank and mortgaged instruments were fake and were result of collusion between bank and borrowers---Banking Court dismissed their application and the suit was decreed in favour of the bank---Validity---Banking Court had only considered the question about mortgage of property by borrowers and there was no application of mind to the case of the defendants---Banking Court did not consider whether the defendants had mortgaged their property and if substantial proof was available on record, leave should have been refused---Judgment and decree passed by Banking Court was set aside and the case was remanded to Banking Court for deciding the application for leave to appear and defend the suit filed by the defendants---Appeal was allowed accordingly.

Mushtaq Ahmed Khan for Appellants.

Shakeel Ahmad Awan for Respondents.

Date of hearing: 31st May, 2004.

2005 C L D 1098

[Lahore]

Before Maulvi Anwarul Haq and Farrukh Latif, JJ

Messrs F.S. TRADERS, LAHORE and another---Appellants

Versus

HABIB BANK LIMITED---Respondent

R.F.A. No.427of 2000, heard on 6th May, 2004.

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

--Ss.9 & 10---Suit for recovery of loan amount-Leave. to defend suit, application for---Defendant claimed to have adjusted entire loan amount---Banking Court dismissed leave application---Validity---Banking Court had referred to an overdraft facility in impugned judgment, but had not examined statement of accounts showing same having been adjusted on a date, when credit balance was also recorded---Banking Court was bound to call upon Bank to explain as to how an overdraft had been given after adjustment of earlier facility to defendant against whom a criminal case had been registered a few days earlier by same officers named in plaint, who had made entries in statement of accounts accusing her of fraud and misappropriation---High Court accepted appeal, set aside impugned judgment/decree, allowed leave application, resultantly defendant would file written statement.

Fauzia Sultana Appellant No.2 in person.

Abdur Rahim Tariq for Respondent.

Date of hearing: 6th May, 2004.

2005 C L D 1104

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

ABDUL HAFEEZ ---Appellant

Versus

MUHAMMAD NADEEM and another---Respondents

Execution First Appeal No.187 of 2002, heard on 14th June, 2004.

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

----Ss.15(1) & 19---Civil Procedure Code (V of 1908), Ss.141& 151---Execution of decree-Auction of mortgagee land--Entitlement of auction-purchaser would extend to land owned by judgment-debtor and mortgaged with decree­-holder---Possession of land obtained by auction-purchaser in excess of his entitlement would be liable to be restored to its owner---Principles illustrated.

Sh. Naveed Shaharyar for Appellant.

Ch. Hamid-ud-Din for Respondent.

Date of hearing: 14th June, 2004.

2005 C L D 1108

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs SHALIMAR METAL INDUSTRIES (PVT.) LIMITED through Chief Executive and 3 others---Appellants

Versus

HABIB BANK LIMITED---Respondent

R.F.A. No.267of 2000, heard on 10th November, 2003.

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

---Ss.9 & 10---Recovery of bank loan---Plea not raised in application for leave to appear and defend the suit---Loan facility was availed by defendants on 7.7.1993 and mother of appellants mortgaged her property as a security of loan availed by defendants---Application for leave to appear and defend the suit was dismissed by Banking Court and the suit was decreed in favour of bank---Plea raised by appellants was that their mother had died on 6.2.1988, the mark-up was overcharged, the loan facility was enhanced and one of the appellants was abroad during the relevant period---Validity---No death certificate of the mother of appellants was placed on record to prima facie show that she died on 6.2.1988, resultantly simple allegation in that regard was unfounded---Allegation of overcharging of mark-up was not raised in leave application, therefore, High Court did not consider the allegation---Regarding enhancement of loan facility, there was a letter available on record whereby the enhancement was requested and was sanctioned by the bank---Appellant claiming to be abroad, did not place on record any documentary evidence showing his absence from the country---Banking Court had rightly concluded that the appellants had failed to raise any bona fide dispute and therefore, were not entitled to seek the leave to appear and defend the suit---Application was properly dismissed by the Banking Court and the judgment and decree had been passed, which did not suffer from any legal or factual infirmity calling for interference in appeal---Appeal was dismissed in circumstances.

Dr. Shaukat Hussain for Appellant.

Shamas Mahmood Mirza for Respondent.

Date of hearing: 10th November, 2003.

2005 C L D 1111

[Lahore]

Before Maulvi Anwarul Haq and Farrukh Latif, JJ

Messrs ADAN STEEL CASTING and 3 others---Appellants

Versus

UNITED BANK LIMITED and another---Respondent

E.F.A. No.572 of 1999, heard on 6th May, 2004.

Civil Procedure Code (V of 1908)---

----O.XXI, Rr.89 & 90---Applications to set aside auction sale on deposit of amount and on ground of irregularity---Disposal of---Relief under O.XXI, R.89, C.P.C. could not be claimed, unless application under R.90 thereof had been withdrawn.

Muhammad Nazir Sheikh for Appellants.

Iftikhar Ullah Malik for Respondents.

Date of hearing: 6th May, 2004.

2005 C L D 1114

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

NATIONAL BANK OF PAKISTAN through Manager-Appellant

Versus

Messrs FOOTCARE (PVT.) LIMITED through Chief Executive and

others---Respondents

Regular First Appeal No.264 of 2002, heard on 16th April, 2003.

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

----S.3---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S.9---Recovery of bank loan--- Charging of mark-up not agreed in finance agreement---Awarding of cost of funds---Retrospective effect---Banking Court decreed the suit in favour of bank but disallowed the mark-up and costs of fund to the bank---Validity---Provision of costs of fund in Financial Institutions (Recovery of Finances) Ordinance, 2001, would not have retrospective effect to the suits which were instituted before the repealed law---Bank had failed to show if the mark-up was chargeable under arty agreement or agreement between the parties---If there was no agreement for the charge of mark-up, the bank was not entitled to claim the same---Banking Court had rightly refused the claim of mark-up to the bank and no illegality was committed in the judgment passed by Banking Court---Appeal was dismissed in circumstances.

Sardar Mashkoor Ahmad for Appellant.

Jahangir Sarwar for Respondents Nos.2 to 4.

Ch. Hamid Nazir for Respondents Nos.1, 5 and 6.

Date of hearing: 16th April, 2003.

2005 C L D 1116

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Messrs AL-KASHMIR TRADERS and 6 others---Appellants

Versus

UNITED BANK LIMITED through Muhammad Jarar---Respondent

Regular First Appeal No.619 of 1999, heard on 3rd June, 2004.

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

----Ss.10 & 21---Qanun-e-Shahadat (10 of 1984), Art.114---Leave to defend suit, application for---Plea not raised in such application before Banking Court---Effect---Parties would be bound by their pleadings---Fresh plea raised by appellant before High Court during arguments would not be sustainable in the eye of law in view of principles of estoppel and waiver.

Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lah. 381; Messrs Standard Hotels (Private) Ltd. v. Messrs Rio Centre and others 1994 CLC 2413 and National Bank of Pakistan and others v. Karachi Development Authority and others PLD 1999 Kar 260 ref.

Mst. Murad Begum and others v. Muhammad Rafiq and others PLD 1974 SC 322 rel.

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

----S.9(1)---Institution of suit on behalf of Bank---Branch Manager of concerned Bank would be competent to file such suit.

Muhammad Ramzan's case 2001 CLC 158 ref.

Nawab Saeed Ullah Khan and Khawaja Muhammad Fazil for Appellants.

Respondent proceeded ex parte.

Date of hearing: 3rd June, 2004.

2005 C L D 1119

[Lahore]

Before Abdul Shakoor Paracha and Farrukh Latif, JJ

SHABBIR AHMAD---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Branch Manager---Respondent

F.A.O. No.7 of 2004, heard on 13th July, 2004.

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

----Ss.9(5), 10 & 12---General Clauses Act (X of 1897), S.27---Ex parte decree, setting aside of---Defendant denied to have been served through any mode adopted by Banking Court, and that two days after obtaining knowledge about decree from a Bank official, he filed application for its setting aside---Banking Court dismissed application as being time-barred and also on the ground that substituted service had been effected on defendant through publication in English and Urdu newspapers and through bailiff of Court and also by assuming that summons through registered post A/D had been delivered to defendant irrespective of return of A/D receipt thereof---Validity---Banking Court had passed ex parte order without adopting all the four modes of service mentioned in S.9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Impugned order did not show that defendant had been served through courier---Banking Court had not ordered for service of defendant through affixation in view of bailiff's report that personal service had not been effected---Affidavit of defendant denying receipt of summons through registered post A/D had not been rebutted by counter-affidavit of plaintiff---In such situation, there was no reason to disbelieve defendant and presume otherwise particularly in absence of return of A/D receipt by Post Office----Defendant had claimed to be not well-educated and conversant with English language---Newspaper in Urdu language had no circulation in the village, where defendant was residing---Banking Court had not satisfied itself that substituted service through publication in newspapers was sufficient by ensuring that newspapers had been dispatched by office of concerned newspapers at defendant's address under postal certificate and that such certificate was available on record---Defendant's application ex facie was within time and he was not required to file application of condonation of delay---Bank official could not take risk of giving an affidavit likely to be used in litigation against Bank---High Court accepted appeal and set aside ex parte decree with observations that defendant could file before Banking Court application for leave to defend suit within ten days.

Nazir Ahmad Javed for Appellant.

Syed Haider Ali Shah for Respondent.

Date of hearing: 13th July, 2004.

2005 C L D 1123

[Lahore]

Before Mian Saqib Nisar and Ch. Iftikhar Hussain, JJ

ATLAS INVESTMENT BANK LIMITED---Appellant

Versus

Messrs PLASTIC BAGS PACKING (PVT.) LIMITED and 3 others ---Respondents

R.F.AS. Nos.92, 93, 351 and 398 of 2003, heard on 9th June, 2004.

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

----Ss.9, 10 & 11---Civil Procedure Code (V of 1908), O.XLI, R.23---Recovery of bank loan---Interim decree---Entitlement of financial institution---Determination---Remand of case for deciding factual controversy---Banking Court refused leave to appear and defend the suit and decreed the suit in favour of financial institution---Validity---High Court with the consent of parties passed interim decree in favour of financial institution and remanded the case to Banking Court for deciding three issues involving factual controversy---Entitlement of the financial institution would be determined on the basis of the evidence available or led by the parties---Appeal was disposed of accordingly.

Azmat Saeed for Appellant.

Nasar Ahmad and Shahid Ikram Siddiqui for Respondents.

Date of hearing: 9th June, 2004.

2005 C L D 1126

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

GUL-E-RANA and 4 others---Appellants

versus

CITIBANK N.A., LAHORE through Manager and another---Respondents

R.F.A. No.380 of 1998, heard on 25th September, 2003.

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

---S.9 ---Civil Procedure Code (V of 1908), O.XXIX, R.1---Recovery suit instituted by a person, who was neither a Bank Manager nor authorized by Board of Directors---Maintainability---Plaintiffs plea was that such person was its duly constituted attorney, but had not pleaded that he was also a Manager of Bank---Nothing on record was available to show that such person was authorized by Board of Directors to institute such suit on behalf of Bank---Suit instituted by incompetent person would be liable to be dismissed---High Court accepted appeal and set aside decree of Banking Court with directions to examine other issues after first determining, whether suit had been instituted through a duly authorized person.

Khan Iftikhar Hussain Khan of Mamdot (represented by 6 heirs) v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Abubakkar Saley Mayet v. Abbot Laboratories and another 1987 CLC 367; Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lah. 381; Messrs Standard Hotels (Private) Ltd. v. Messrs Rio Centre and others 1994 CLC 2413 and Bankers Equity Ltd. through Attorney and 5 others v. Sunflo Cit-Russ Ltd. (formerly known as Sunflo Juices Ltd.) through Managing Director PLD 1999 Lah. 450 rel.

(b) Precedent---

----Decision on an objection raised in a case had to be taken with reference to material available on record of such case, and for such purpose, material on record of any other case could not be imported to be relied upon.

Imran Nazir Awan for Appellant.

Shahid Ikram Siddiqui for Respondents.

Date of hearing: 25th September, 2003.

2005 C L D 1129

[Lahore]

Before Nasim Sikandar and Mian Hamid Farooq, JJ

Messrs POLYMER INTERNATIONAL through Proprietor and another---Appellants

Versus

Messrs BOLAN BANK LTD.---Respondent

R.F.As. Nos.299 and 300 of 1999, heard on 15th April, 2004.

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

----Ss.9, 10 & 18---Contract Act (IX of 1872), S.176---Civil Procedure Code (V of 1908). S.47---Suit for recovery of loan amount---Pledged goods---Application for leave to defend suit---Defendant's plea was that Bank being a Pawnee was not entitled to recover suit amount till return of pledged goods---Banking Court dismissed leave application and decreed suit---Validity---Case of Bank was based on agreements for irrevocable documentary credit, letter of credit, invoices and bill of lading coupled with statement of accounts---Bank had neither pleaded nor filed any document along with plaint to .show pledge of imported goods by defendant with Bank---Defendant could not establish on record, even prima facie, that goods had been either taken over by Bank or were pledged with Bank either with or without consent of defendant---Such plea would not be sufficient to entitle defendant for grant of leave to defend suit---Banking Court had rightly refused leave to defend suit---Executing Court in view of S.47, C.P.C., could determine all questions arising between parties and relating to execution, discharge or satisfaction of decree-Questions as to whether goods were pledged or not and that what was the status of goods, could be decided by Executing Court, if raised by defendant---High Court dismissed appeal in circumstances.

A.M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1966 (W.P.) Lah. 1; Prudential Commercial Bank Ltd. v. Hydari Ghee Industries Ltd. and 9 others 1999 MLD 1694 and Muslim Commercial Bank Ltd. v. Tayab Sharif 1975 SCMR 393 ref.

Messrs Waqas Enterprises and others v. Allied Bank of Pakistan and 2 others 1999' SCMR 85 rel.

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

----S. 10---Qanun-e-Shahadat (10 of 1984), Art.84---Suit for recovery of loan amount-Application for leave to defend suit---Defendant denied to have executed finance documents alleging same to be forged---Validity---Admitted signatures of defendant on various documents were compared by Court with his signatures on disputed document and found same to be those of defendant---Defendant, in order to wriggle out of contractual obligation, had frivolously disowned finance documents--Such a bald assertion would be of no avail to defendant in view of other documents on record, which had not been denied by him-Held: Such plea had no substance.

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

---Ss. 9 & 17---Qanun-e-Shahadat (10 of 1984), Art.17(2)(a)---Suit for recovery of loan amount---Loan documents executed in year 1996 i.e. before promulgation of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Non-attestation of such documents by two witnesses---Effect---Such non-attestation would not invalidate any document as per force of S.17(3) of the Act.

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

---Ss.9 & 15---Suit for recovery of loan amount based on deficient statement of accounts---Decree passed in favour of Bank on basis of such statement of accounts---Validity--Amounts allegedly deposited by defendant did not find mention in statement of accounts---Bank had neither explained the amount debited in the account of defendant from available record nor produced any supporting documents---Banking Court had mechanically passed decree without determining actual liability---High Court partly accepted appeal in view of sketchy entries in statement of accounts with directions to Banking Court to pass fresh decree after calling upon Bank to explain entries therein and taking into account any deposit made by defendant and not accounted for in statement of accounts and then finally determine liability of defendant.

M.M. Alam Chaudhry for Appellants.

Bashir Ahmad for Respondent.

Date of hearing: 15th April, 2004.

2005 CLD 1142

[Lahore]

Before Maulvi Anwarul Haq and Farrukh Latif, JJ

Malik MUHMAMAD AZAM and others---Appellants

Versus

AL BARKA ISLAMIC BANK B.S.C. (EC) A BANKING COMPANY SHAHRAH-E-AIWAN-E-TIJARAT, LAHORE, through Chief Manager and others---Respondents

Regular First Appeals Nos.86 and 179 of 2003, heard on 10th May, 2004.

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

----Ss. 9 & 10----Contract Act (IX of 1872), S. 208---Suit for recovery of loan amount---Application for leave to defend suit---Termination of agent's authority-Bank claimed that defendant had executed mortgage deed through his general attorney---Defendant's plea was that he had revoked authority of his attorney through registered document prior to execution of mortgaged deed by attorney-Validity---Defendant had not raised pleas or defence being raised on such lines, defendant could not be permitted to prove something, which he had not against attorney or Bank.

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

----Ss.9 & 10---Contract Act (IX of 1872), Ss.133 & 135---Qanun-e-Shahadat (10 of 1984), Art.84---Suit for recovery of loan amount---Application by guarantor for leave to defend suit---Guarantor not only denied his signatures on guarantee and mortgage documents, but raised plea to the effect that after subsequent increase in finance facility, he stood absolved of his original liability of Rs.20 million---Banking Court passed decree for Rs.32, 211, 284 against guarantor and principal debtor jointly and severally--Validity---Maximum limit of security or guarantee as mentioned in memorandum of deposit of title deeds, guarantee letter and mortgage deed was Rs.20 million---Amount secured or guaranteed to be paid to Bank, thus, would be up to limit of Rs.20 million---Guarantor had executed such documents and his signatures thereon did appear to a naked eye to be similar to his signatures on leave application---Point requiring determination was as to whether there was some evidence on record to bind guarantor to the extent of suit amount---High Court partly accepted appeal by keeping intact impugned decree as against principal debtors while passing interim decree for Rs.20 million as against guarantor and also granting him leave to defend suit to the extent of remaining suit amount with direction to Banking Court to frame issues and proceed further in the matter.

Mian Aftab A. Sheikh and 2 others v. Messrs Trust Leasing Corporation Limited and another 2003 CLD 702 fol.

M. Khalid Mahmood for Appellants.

Khalid Saleem for Respondent No 1.

Nemo for other Respondents.

Date of hearing: 10th May, 2004.

2005 C L D 1151

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

HABIB BANK LIMITED---Appellant

Versus

Mirza NASIM BAIG and another ---Respondents

R.F.A. No.613 of 1999, decided on 15th December, 2003.

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

----S.7---General Clauses Act (X of 1898), S.24-A---Powers of Banking Court---Scope---Banking Court was duty bound to decide case after applying its independent mind.

PLD 1970 SC 173 rel.

(b) Interpretation of document---

----Agreement would be read as a whole and not piece-meal.

Iqbal Hameed-ur-Rehman for Appellant.

Imran Nazir for Respondents.

2005 C L D 1162

[Lahore]

Before Ch. Ijaz Ahmad and Mian Saqib Nisar, JJ

MUHAMMAD RAFIQ---Appellant

Versus

UNITED BANK LIMITED and another----Respondents

C.M. No.646-C of 2002 in E.F.A. No.215 of 2001, decided on 17th May, 2005.

(a) Compromise---

----Decision of matter on the basis of compromise/agreement between the parties---Status--When a lis is disposed of by the Court on the basis of a compromise between the parties, the order/judgment shall not be the one passed by the Court on the merits of the case, which always is based upon proper adjudication of the Court about the factual and legal controversy involved in the matter; such decision has altogether a different status, sanctity and legal value---Where, however, the case is decided on account of an agreement/compromise between the parties, even if approved by the Court, the validity of the order/judgment remains dependent upon its being the lawful agreement---Agreement/compromise, therefore, if challenged as being invalid and if it is so adjudged by the Court, such decision of the Court based upon the agreement shall automatically sink along with the annulment of the agreement/compromise.

(b) Contract---

----Contract shall only be valid inter se the parties and no stranger thereto can be bound by the terms of the contract until and, unless such stranger has expressly or by necessary implication accepted the contract.

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

----O.XXI, R.30---Execution of decree for payment of money---Mortgaged property of a judgment-debtor cannot be sold through private negotiation by the decree holder, in favour of a third party, even if such party claims any prior agreement of sale with the judgment-debtor.

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

---O.XXI, Rr. 65 & 66---Execution of decree---When the Executing Court, has decided to attach and sell the property of a judgment debtor under O.XXI, R.65, C.P.C. the sale has to be conducted, if it is not prescribed otherwise, through a public auction---When the Executing Court, in the present case, had taken a conscious decision to sell the property by auction and notice under O.XXI, R.66, C.P.C. was issued to the judgment, debtor, which had neither been suspended nor set aside by the High Court, in the appeals of the other respondents, the Bank under the law had no power to circumvent the authority and the mode chosen by the Executing Court for the disposal of the property and to agree for selling the same in favour of other respondents, through private means.

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

----S. 18---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.19----Execution of decree---Sale of mortgaged property under S.18 Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 or S.19, Financial Institutions (Recovery of Finances) Ordinance, 2001 though is permissible and can be made by the decree holder, with or without the intervention of the Court, but subject to essential conditions that the sale should be either through the sealed tenders, or by public auction---Purpose behind the conditions is that no room should be left to defraud and cause prejudice to the rights of the judgment-debtor, who is the owner of the property and the sale proceeds are to be appropriated to his debt and credit---Sale made on the basis of the compromise between the parties was not covered by S.18 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 or S.19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

----S. 12(2)---Case of the applicant squarely fell within the purview of S.12(2), C.P.C. inasmuch as the order of the Court had been procured by the concealment and also not putting the Court to the full facts that the private sale could not be negotiated between the Bank and the other respondents, which agreement was unlawful and therefore, any order based thereupon shall not be within the jurisdiction of the Court---Resultantly, the order was set aside with the result that the main appeals stood restored.

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

----Ss. 18 & 21---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 19 & 22---Execution of decree---Appeal---Main grouse/complaint in the appeals were that though the appellants had entered into an agreement of sale with the judgment-debtors/owners of the property, yet in violation of the terms under the agreement, the property was being put to auction and when they brought these objections before the Executing Court, the Court had absolutely ignored the same and directed for the auction of the property---Validity---Such action of the Court obviously tantamount to condemning the appellants unheard and therefore, such order being violative of the principles of natural justice, could not sustain---Appeals were accepted by the High Court, the matter was sent to the Banking Court, where the objections of the appellants, shall be deemed to be pending, with the direction to decide the same in accordance with law---Appellants had paid certain amount to the decree holder, when the said order had been set aside, the decree holder/Bank was obliged to return that amount to the appellants, which should be done within three weeks from the date of the present judgment.

Ch. Muhammad Aslam Zia for Applicant.

Muhammad Iqbal for Appellant (in E.F.A.).

Ch. Naseem Mahmood for Respondent.

Date of hearing: 17th May, 2005.

2005 C L D 1173

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

MUHAMMAD AKHTAR Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN---Respondent

E.F. Appeal No.334 of 2001, decided on 28th April, 2005.

Banking Tribunals Ordinance (LVIII of 1984)---

----Ss. 12 & 11---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Ss. 18 & 22---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 19 & 24---Limitation Act (IX of 1908), Art. 181---Execution of decree passed under Banking Tribunals Ordinance, 1984 on 1-12-1994--- Bank brought the execution application on 17-5-2000---Limitation---Contention of the appellant was that the provisions of the Banking Companies (Recovery of Loans. Advances. Credits and Finances) Act. 1997 having no retrospective effect. under S.22 of the said Act, no fresh period of limitation shall be available to the decree-holder for filing an execution petition, which earlier had not been filed within three years and the decree in question was already barred by time---Validity---Held, with a view to protect and safeguard the rights and the interest of those, who, under the Banking Companies Ordinance, 1984, had unlimited period to initiate and pursue their cases, but might get affected because of S.22(2) of the Banking Companies (Recovery of Loans, Advances, Credits, and Finances) Act, 1997, if proviso was not there, the same was added---With such legal consequences, the cases falling' within the purview of Banking Companies Ordinance, 1984, were termed as "past transaction" and by fiction of law a fresh cause of action was deemed to have accrued in their favour for the purpose of Limitation Act, 1908---Case of the Bank was squarely covered by proviso to S.22(2) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and a fresh period of limitation i.e. three years under Art. 181, Limitation Act, 1908 shall be available to the Bank to file the execution application---Principles.

Under section 12 of the Banking Companies Ordinance No.LVIII of 1984, the application of the Limitation Act, 1908 was excluded qua any suit, application or other proceedings filed by the banking companies under the Ordinance, with the result that there shall be no limitation for seeking the execution of a decree under the above Ordinance. Therefore, if the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 had not come in force, the decree holder could avail unlimited period to initiate the execution process. And it is well-settled, that once a vested right has been created to a litigant at the time of the commencement of the lis, such right cannot be taken away except by the express provisions of the law. Now if the contention of the appellant is accepted, that the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (No XV of 1997) is inapplicable, the legal consequences would be that the execution application shall never be barred by time.

The correct legal position is, that the Banking Companies (Recovery of Loans) Ordinance, 1979 (XIX of 1979) and the Banking Tribunals Ordinance, 1984 (LVIII of 1984), have been repealed by the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (No.XV of 1997), and all the cases pending before the defunct forums stand transferred to the "Banking Court" constituted under the Act. By virtue of section 22(1) of the Act 1997, the Limitation Act, 1908 remains excluded for any suit, application or the proceedings, which are so transferred to the latter forum. But under subsection (2), the Limitation Act, 1908 shall apply to all the cases which are instituted or filed in the "Banking Court" after the coming into force of the Act, however with the exception regarding those cases, which are covered by the proviso to subsection (2), i.e. in relation to the past transactions, for which, a fresh cause of action is deemed by law to have accrued in favour of the concerned party to initiate their cause/case within the period prescribed by the Limitation Act of 1908. The true import of section 22(2) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, when read along with its proviso, therefore, is that for all the cases, instituted before a Banking Court after the commencement of the Act 1997, which undoubtedly includes an execution application, the Limitation Act, 1908 shall apply. However, with a view to protect and safeguard the rights and the interest of those, who under the Ordinance LVIII of 1984, had unlimited period to initiate and pursue their cases, but may get affected because of subsection (2) of section 22, if the proviso was not there, that the same was added. With such legal consequences, the cases falling within the purview of the Ordinance, 1984, were termed as the "past transaction" and by fiction of law a fresh cause of action is deemed to have accrued in their favour for the purpose of the Limitation Act, 1908.

The case of the Bank is squarely covered by proviso to subsection (2) of section 22 and a fresh period of limitation i.e. three years under Article 181 of the Limitation Act, shall be available to the Bank to file the execution application. Admittedly, the Act 1997 came into force on 31-5-1997 and the application was filed on 17-5-2000, which was within time.

Khalid Qureshi and 5 others v. United Bank Limited 2001 SCMR 103 and National Bank of Pakistan v. Messrs Fakir Spinning Mills 1998 CLC 812 ref.

Muhammad Yaqoob Pannun for Appellant.

Mian Nasir Mehmood for Respondent.

Date of hearing: 28th April, 2005.

2005 C L D 1177

[Lahore]

Before Umar Ata Bandial, J

TAHIR UMAR---Appellant

Versus

SUN COLOUR GARMENTS and others---Respondents

Civil Original No. 15 of 2004, heard on 13th May, 2005.

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

-----S. 439(6)---Striking off a defunct company by the Registrar from the Register of Companies---Scope---Petition for revival of the company---Petitioner sought relief under S. 439(6), Companies Ordinance, 1984 claiming himself to be one of the sponsor share-holders and directors alleging that he was not party to the proceedings of the Board of Directors and description of its resolution as being unanimous in the application for seeking the dissolution of the company was utterly fraudulent, baseless and liable to be set aside---Validity---In order to grant relief prayed, the Court must, under the applicable provisions, be satisfied that the company, whose name had been struck off, had been doing business and therefore, deserved to be revived---Petitioner had not been able to establish an ongoing business of the company nor to show the existence of any assets of the company---Petitioner had not brought on record any audited accounts of the company nor any document showing either its ownership of any assets or its outstanding financial liability owned to creditors---Petitioner has also failed to explain his own default of 9 years after his ouster from the management and affairs of the company, to assert his personal rights as share-holder, sponsor or director of the company or to seek relief for protection and promotion of the business of the company---No merit in the petition under S.439(6) having been found, High Court dismissed the same.

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

----S. 439---Striking off a defunct company by the Registrar from the Register---Scope---Name of the company was struck off on the ground that it was not carrying on any business and lacked both assets and liabilities---No objection having been received, Registrar struck off the name of the company from the Register of Companies---Contention of the petitioner, who claimed himself to be one of the sponsor share-holders and Directors was that he was not party to the proceedings of the Board of Directors and description of its resolution as being unanimous in the application for seeking the dissolution of the company was utterly fraudulent, baseless and liable to be set aside---Validity---Petitioner appeared to have been perturbed by the attribution of his consent in the allegedly "unanimous" resolution of the Directors of the Company---Prima facie the alleged resolution did make a false claim of unanimity but fact of the matter was that even if there was no resolution the Registrar still had authority under S.439(1), Companies Ordinance, 1984 to strike off the name of the company from the Register, where he had reasonable cause to believe that the company was not carrying on business or was not in operation---Registrar had reported in the written statement that the management of the company had not filed any statutory return including Form A and Form 29 from 1991 onward---Registrar, had got published notices in the Gazette inviting objections to striking off the company name---Such notices were published twice in the official Gazette, once under S.439(3) of the Ordinance and again under S.439(5) of the Ordinance whereafter the company was dissolved---Petitioner might not have received personal notice from the Registrar but he was deemed to have been served with notice by publication---Petitioner in fact had never disputed the resolution of the company at that time nor had he shown any ground to justify the conditions necessary for an order of restoration of the name of the company to be passed---Petition, in circumstances, having no merits for the relief prayed for in terms of S.439(6) of the Ordinance, was dismissed by the High Court.

Arshad Nazir Mirza for Appellant.

Sheikh Zia Ullah for Respondents.

Muhammad Yunus, Asst. Registrar SECP.

Date of hearing: 13th May, 2005.

2005 C L D 1186

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs ICEPAC LIMITED and 2 others---Appellants

Versus

Messrs PAKISTAN INDUSTRIAL LEASING CORPORATION LTD.---Respondent

R.F.A. No.354 of 2000, heard on 29th March, 2005.

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

---S.9-Bankers' Books Evidence Act (XVIII of 1891), S.4---Suit for recovery of loan amount---Leave application raising objections qua statement of accounts i.e. neither showing disbursement of amount nor executed and verified in according with Banker's Books Evidence Act, 1891, rather containing incorrect and bogus entries---Banking Court decreed suit without rendering any finding on statement of accounts---Validity--Defendant had not admitted claim of Bank---Statement of account being sketchy, brief, devoid of details, contrary to law and not indicating disbursement of amount---High Court accepted appeal and set aside impugned judgment/decree with direction to Bank to file complete and detailed statement of accounts regarding account of defendant before Banking Court, who would decide suit in accordance with law.

Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931 and Messrs C.M. Textile Mills (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587 rel.

Salman Aslam Butt for Appellants.

Rashdeen Nawaz Kasouri for Respondent.

Date of hearing: 29th March, 2005.

2005 C L D 1194

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs G.A. STEEL RE-ROLLING MILLS through Managing Partner and another---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED, through Registered Office---Respondent

R.F.A. No.418 of 2001, heard on 5th April, 2005.

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

---S.9---General Clauses Act (X of 1897), S.24-A---Suit for recovery of loan amount---Leave application---Defendant's plea was that documents filed with plaint including finance agreement were fake and bogus, and statement of accounts was incorrect---Banking Court dismissed leave application and decreed suit without dealing with defendant's pleas---Validity---Banking Court was obliged under law to deal with and decide such pleas through a reasoned judgment---Bank had not properly documented suit---As per directive of High Court, Bank placed on record additional documents including approval of finance, sanction advice and complete statement of accounts---Banking Court while deciding leave application had been deprived of examination of such documents---Had such documents been on record earlier, fate of leave application and suit might have been different---High Court accepted appeal and set aside impugned judgment/decree with directions to Banking Court to decide case afresh in accordance with law after considering such additional documents and those, if filed by defendant.

Malik Muhammad Azam Rasool for Appellants.

Pervaiz I. Mir for Respondent.

Date of hearing: 5th April, 2005.

2005 C L D 1198

[Lahore]

Before Syed Zahid Hussain and Muhammad Akhtar Shabbir, JJ

SMOOTH PHARMACEUTICALS (PVT.) LIMITED through Chief Executive, and 3 others ---Appellants

Versus

BANK OF KHYBER through Chief Manager---Respondent

Regular First Appeal No.64 of 2003, decided on 9th December, 2003.

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

----S.10---Recovery of bank loan---Leave to appear and defend the suit, grant of---Non-deciding of application for production of cheques---Running finance facility of Rupees One Million availed by defendants was enhanced to Rupees Two Million---Defendants had executed agreement of finance, promissory notes, guarantees, letters of hypothecation. and letter of continuation as required by bank---In suit for recovery of bank loan filed by bank, defendants along with application for leave to appear and defend the suit, also filed another application for production of cheques---Banking Court without deciding application for production of cheques, dismissed application for leave to appear and defend the suit and passed decree in favour of bank---Validity---Sanctioning and availing of finance facility was not disputed and liability so established could not escape defendants---There was no serious "and triable issue for which leave could be granted by Banking Court---Even non-decision of application for production of cheques, besides competency of any such application at that stage, was of no material effect in presence of claim of bank supported by other documents brought on record---No illegality was committed by Banking Court in dismissing application for leave to appear and defend the suit and passing decree in favour of bank---Appeal was dismissed in circumstances.

Messrs Taj Zarai Industries through Sole Proprietor and another v. Habib Bank Limited through Manager-Sub-Manager/General Attorneys 2003 CLD 109; Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014; T.R. Pratt (Bombay) Ltd. v. E.D. Sasson & Co. Ltd. and another AIR 1936 Born. 62; A.R. Mohamed Siddik and others v. The Trans Oceanic Steamship Co. Ltd. and another 1988 CLC 299 and Trading Corporation of Pakistan Limited v. Messrs Amin Hayat Corporation Ltd. and 2 others 1992 SCMR 783 ref.

Sh. Azhar Islam for Appellants.

Syed Najam-ul-Hassan Kazmi for Respondent.

2005 C L D 1201

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

NATIONAL BANK OF PAKISTAN through Zonal Head and Constituted Attorney---Appellant

Versus

Messrs SURAJ GHEE INDUSTRIES LIMITED through Executive Director

and 5 others---Defendants

R.F.A. No.394 of 1998, heard on 13th April, 2005.

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

---Ss.9 & 10---Civil Procedure Code (V of 1908), O.VII, R.11---Recovery of bank loan---Rejection of plaint---Non-deciding of application for leave to appear and defend the suit---Plaint filed by bank was rejected under O. VII, R.11, C.P.C., without first deciding the application---Validity---Banking Court did not adopt procedure as prescribed in Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, and had gone outside the scope of provisions of law---Banking Courts, which were created and established under special law, were creature of the statute and were bound by the provisions and procedure prescribed under the particular statute---Without deciding leave application, Banking Court was not empowered to reject the plaint or dismiss the suit---Judgment passed by Banking Court was violative of S.9(4) read with S.10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, and had bypassed the procedure prescribed for Banking Court---High Court set aside the judgment passed by Banking Court remanded the matter to Banking Court for decision of application for leave to appear and defend the suit first and then the suit---Appeal was allowed accordingly.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645 rel.

Dr. Shaukat Hussain for Appellant.

Respondents proceeded ex parte.

Date of hearing: 13th April, 2005.

JDUGMENT

MIAN HAMID FAROOQ, J.---Appellant/plaintiff, through the filing of the present first appeal, under section 21 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, has called in question judgment dated 9-9-1998, whereby the learned Judge Banking Court rejected the plaint in appellant's suit for recovery.

1. Facts leading to the filing of the present appeal are that the appellant-Bank, on 10-1-1998, filed the suit for recovery of Rs.18.299 Million, along with mark-up and other charges etc. against the respondents, before the Judge Banking Court, Lahore. Pursuant to the receipt of summons. respondents Nos. 1 to 4 filed a petition seeking leave to defend the suit, however, respondents Nos.5 and 6 did not file any such application and their defence was struck off. The contesting defendants filed two applications, one for stay of the proceedings before the Banking Court and the other for impleading Ghee Corporation of Pakistan in the suit. The learned Judge Banking Court, after hearing the parties, dismissed both the applications through separate orders, both dated 25-5-1998. Subsequently the learned Judge Banking Court, without deciding the leave application, either way, in purported exercise of powers under Order VII, rule 11, C.P.C., proceeded to reject the plaint in appellant's suit for recovery, vide impugned judgment dated 9-9-1998, hence the present appeal.

2. Respondents were proceeded ex parte by this Court, vide order dated 17-1-2005.

3. Learned counsel for the appellant has contended that on the one hand application filed by defendants Nos. 1 to 4, for impleading Ghee Corporation as defendant in the suit, was rejected and on the other hand appellant's plaint was rejected while holding that the plaintiff has only cause of action against Ghee Corporation. He has further submitted that Suraj Ghee Industries, is a separate legal entity and the impugned judgment is not sustainable.

4. We have heard the learned counsel and examined the available record. We find from the summoned record that respondents Nos.1 to 4/defendants Nos.1 to 4, on 25-2-1998, filed a petition seeking leave to defend the suit, which was replied by the appellant-Bank, but the same was not decided by the learned Banking Court either through a separate order or by the impugned judgment. Under the law, the learned Banking Court was obliged to decide the leave application on its own merits, either way, before embarking upon the suit. If the learned Banking Court was of the view that serious and bona fide questions were raised by the contesting respondents, then, at best, leave to defend could have been granted to the said respondent. To our mind, at that point of time, the learned Banking Court, without deciding the leave application, was not empowered to reject the plaint or dismiss the suit. The impugned judgment is violative of the law laid down by this Court in the cases of Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645.

5. Placing the aforenoted facts in juxta-position with the provisions of section 9(4) read with section 10 of Act XV of 1997, it is evident that the learned Banking Court did not adopt the procedure as prescribed in the said statute and has, in fact, gone outside the scope of said provisions of law. It has, inter alia, been held in the aforenoted judgments that the Banking Courts, which were created and established under a special law, are creature of the statute and, of course, are bound by the provisions and procedure prescribed under the particular statute. Admittedly, the contesting respondents did file the application for leave to defend the suit, but the learned Banking Court failed to decide the said application, thus, the same shall be deemed to be pending. The impugned judgment is thus, violative of the said provisions of law and the learned Banking Court has completely bypassed the procedure prescribed for Banking Court, as noted above.

6. In the above perspective, we have examined the impugned judgment and find that the same is not sustainable in law, inasmuch as the same is violative of law laid down in the aforenoted two cases, thus, we are inclined to set it aside.

Upshot of the above discussion is that the present appeal is allowed and the impugned judgment dated 9-9-1998, is set aside with no order as to costs. Resultantly, the appellant's suit for recovery (titled National Bank of Pakistan v. Messrs Suraj Ghee Industries Limited and others) and respondents Nos. 1 to 4's application for leave to defend the suit shall be deemed to be pending before the learned Judge Banking Court, who shall firstly decide the said application and then the suit, after hearing the parties, and, of course, in accordance with law.

M.H./N-36/L Case remanded.

2005 C L D 1204

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

MUHAMMAD LATIF---Appellant

Versus

HABIB BANK LIMITED, through General Manager and another---Respondents

F.A.O. No.83 of 2004, decided on 7th April, 2005.

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

----Ss.9, 12 & 22---Appeal---Ex parte decree, setting aside of---Limitation---Appellant being guarantor was proceeded against for recovery of bank loan---Notices to appellant and borrower were directed to be issued by Banking Court through four different modes---Bailiff deputed to execute summons, effected the service through fixation---Summons. sent under postal cover acknowledgement due were refused to be accepted but those dispatched through private courier service were delivered---Publication in press was not only published in two newspapers but were also dispatched at the address of appellant---No proof was available on file that appellant or his family members did not read the notices so published, in spite of receipt of those newspapers at his residence---Banking Court passed ex parte decree on 26-1-2002 against the borrower and appellant---Contention of the appellant was that during execution proceedings, he came to know about the decree on 8-5-2002, and application for setting aside the decree was filed on 1-6-2002---Banking Court dismissed the application being barred by limitation---Validity---Period of limitation provided under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was 21 days--Appellant was required to explain each day's delay, which was not done by him by giving reasons therefor--No application seeking condonation of delay along with affidavit swearing correctness of reasons for the condonation of delay was filed by appellant---Appellant was not only personally served but. he was also aware of the pendency of the suit against him and he intentionally avoided appearance before Banking Court where he was supposed to file a petition seeking leave to defend the suit within ten days of summons---Application of appellant for setting aside ex parte decree was correctly dismissed as the same did not furnish sufficient cause in support of the relief prayed for---Banking Court correctly concluded the lis and did not commit any illegality---High Court declined to interfere in the judgment and decree passed by the Courts below---Appeal was dismissed in circumstances.

Mian Muhammad Nawaz for Appellant.

Shamas Mehmood Mirza for Respondents.

2005 C L D 1220

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs SHAFI BONZER INDUSTRIES (PVT.) LIMITED through Chief Executive

and 3 others---Appellants

Versus

HABIB BANK LIMITED and another---Respondents

Regular First Appeal No.210 of 2001, heard on 7th April, 2005.

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

----S.21---Pleas agitated in appeal neither raised nor pleaded before Banking Court---Effect---Such pleas would be deemed to have been relinquished.

(b) Pleadings---

----Pleas/grounds not agitated before lower forum---Effect---Litigant could not be allowed to raise such pleas/grounds before Appellate or Revisional Court.

PLD 1996 SC 684 and Messrs United Dairies Farms (Pvt.) Limited and 4 others v. United Bank Limited 2005 CLD 569 rel.

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

----Ss.9 & 10---Suit for recovery of loan amount---Plea of defendant was that suit amount was not due from him---Validity---Defendant in leave application had admitted availing of finance facility, acknowledged principal amount of facility, a portion of mark-up amount and execution of documents---Such plea was not available to defendant.

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

----S.21---Appeal---Plea qua inaccuracy of statement not raised before Banking Court-Effect-Appellant would be precluded from raising such plea before High Court.

Iftikhar Ullah Malik for Appellants.

Abid Aziz Sheikh for Respondents.

Date of hearing: 7th April, 2005.

2005 C L D 1229

[Lahore]

Before Nasim Sikandar, J

FAYYAZ AHMAD---Appellant

Versus

MUHAMMAD SARFRAZ GHUMMAN and 2 others-Respondents

Appeal No.7 of 2002, decided on 30th May, 2005.

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

----S. 34---Civil Procedure Code (V of 1908), S. 100---Appeal to High Court---Scope---Allegation of default by member of Stock Exchange in selling the shares---Concurrent findings of the Single as well as Division Bench of the Securities and Exchange Commission before whom all relevant documents were produced which were duly considered and discussed by them---None of the documents or signatures of (he appellant thereupon produced before the Commission in original as well as before Appellate Authority was ever disputed by the appellant and these documents which were maintained by the Stock Exchange or its members in usual course of business were rightly given due credit by the Commission---Appeal to High Court under S.34, Securities and Exchange Commission of Pakistan Act, 1997 being a second appeal, its scope was governed by S.100, C.P.C.---Principles---Concurrent findings of fact by a Tribunal of exclusive jurisdiction as specialized agency appointed by the Government could not be interfered with in second appeal merely for the reason that on re-appraisal of certain documents or factual submissions, a different decision could have possibly been taken---Ending of fact by a specialized Tribunal, except of course which were patently without any. material available on record, could not be disturbed in second appeal nor a fresh re-appraisal of the evidence brought on record could be undertaken unless one of the three conditions as contained in S.100, C.P.C. were answered---Appellant having failed to agitate the impugned decision on any of the three grounds warranting interference in second appeal by High Court, his appeal was dismissed.

Mian Mahmood Rashid for Appellant.

Abid Aziz Sheikh for Respondent No. 1.

Abid Hussain Chatta for Respondent No.3.

Date of hearing: 5th May, 2005.

2005 C L D 1237

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD ARSHAD and another---Appellants

Versus

CITIBANK, N.A. through Attorney Muhammad Shariq Butt, Manager---Respondent

Regular First Appeal No.923 of 2001, heard on 30th March, 2005.

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

----S.9---Negotiable Instruments Act (XXVI of 1881), Ss.20 & 118---Recovery of bank loan---Blank documents---Effect---Borrowers denied restructuring/renewal of original financial facility and also objected to the documents filed by bank on the ground of being blank---Validity---According to restructured schedule borrowers were to pay total outstanding liabilities in 60 instalments and they had paid 10 such instalments---Bank at the time of filing of suit reduced the liability of borrowers by adjusting the amount paid in those 10 instalments---Such fact was sufficient to indicate that the agreement was not only executed and signed by borrowers but the same was also implemented by depositing the agreed instalments in their account---High Court declined to hold that borrowers did not execute the agreement with bank---Even if f it be taken that the documents were signed, when those were blank, borrowers in view of Ss.20 and 118 of Negotiable Instruments Act, 1881, were estopped from challenging legality, genuineness and enforceability of those documents-Judgment and decree passed by Banking Court did not suffer from any legal error and the same was maintained by High Court---Appeal was dismissed in circumstances.

Mushtaq Ahmad Vohra v. Crescent Investment Bank Limited 2005 CLD 444 and Habib Bank Ltd. v. A.B. M. Graner (Pvt.) Ltd. PLD 2001 Kar. 264 distinguished.

Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406; Muhammad Sharif v. Muhammad Hashim Paracha and another PLD 1987 Kar. 76; S.K. Abdul Aziz v. Mahmoodul Hassan and 3 others 1988 CLC 337; Haji Karim 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 Limited v. President Bazm-e-Salat and another PLD 1986 Kar. 464; Bazm­e-Salat and others v. Messrs United Bank Limited PLD 1989 Kar. 150; Prudential Commercial Bank Ltd. v. Hydari Ghee Industries Ltd. and 9 others 1999 MLD 1964 and Messrs Bank of Oman Limited v. Messrs East Asia Trading Co. Ltd. 4 others 1987 CLC 288 ref.

Waqar Mushtaq Ahmad for Appellants.

Shahid Ikram Siddiqui for Respondent.

Date of hearing: 30th March, 2005.

2005 C L D 1242

[Lahore]

Before Ch. Ijaz Ahmad, Actg. C.J. and Muhammad Khalid Alvi, J

Messrs RISING SUN COMPANY through Partner Mr. Farooq Ahab and

another---Appellants

Versus

BANK OF OMAN LTD., LAHORE through General Manager and 3 others---Respondents

Regular First Appeal No.480 of 1999, heard on 19th April, 2005.

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

----S.9---Limitation Act (IX of 1908), Ss.19 & 21---Suit for recovery of bank loan---Maintainability---Acknowledgement of liability---Contention of defendants was that the stamps were not crossed thus the suit was barred by limitation---Validity---Defendants in their letter had accepted and acknowledged the liability of bank---Suit was not time-barred on the basis of Ss.19 and 21 of Limitation Act, 1908.

Muhammad Ramzan's case 2001 CLC 158 rel.

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

----S.10---Recovery of bank loan---Leave to appear and defend the suit, grant or-Factual controversy---Bank did not bring anything on record so as to show that any written request was made by defendants for delivery of goods or any receipt from defendants so as to show that the goods were handed over to them---Such factual dispute was raised in application for leave to appear and defend the suit---Banking Court dismissed the application and decreed the suit in favour of bank---Validity---Factual controversy was not decided by Banking Court and there was no document on the record on the basis of which High Court could decide the factual controversy with regard to the goods whether they were given back to defendants on their request by bank or not---Judgment and decree passed by Banking Court was set aside and defendants were granted conditional leave---Matter was remanded to Banking Court for decision afresh---Appeal was allowed accordingly.

Gouranga Mohan Sikdar v. Controller of Import and Export and 2 others PLD 1970 SC 158 and Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173 rel.

Mian Irshad Mehmood for Appellants.

Manzoor-ul-Haq for Respondent No. 1.

Nemo for Respondents Nos.2 and 3.

Date of hearing: 19th April, 2005.

2005 C L D 1247

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs SAHARA MOTORS (PVT.) LIMITED through Managing Director---Appellant

Versus

HABIB BANK LIMITED through General Attorneys and 2 others---Respondents

Regular First Appeal No.501 of 1998, heard on 7th April, 2005.

Banking Tribunals Ordinance (LVIII of 1984)---

----S.6(2)--41nancial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.9 & 10---Recovery of bank loan---Notice under S.6 (2) of Banking Tribunals Ordinance, 1984 was given to borrower which was replied by borrower but the suit was decreed against borrower on 2-10-1996---Plea raised by borrower was that the judgment was passed by Banking Tribunal, after certain provisions of Banking Tribunals Ordinance, 1984, had been declared un-Constitutional by High Court in case titled Messrs Chenab Cement Products (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others, reported as PLD 1996 Lah. 672---Effect---As the judgment was passed by Banking Tribunal when the notification appointing presiding officers of Banking Tribunals were declared un-Constitutional and without lawful authority, therefore, at the time of passing of judgment, the Banking Tribunal had no jurisdiction---Judgment and decree passed by Banking Tribunal was set aside and the case was remanded to Banking Court constituted under Financial Institutions (Recovery of Finances) Ordinance, 2001---Appeal was allowed accordingly.

Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 fol.

Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104 rel.

Ch. Muhammad Amin Javed for Appellant.

Khalid Mahmood Khan for Respondents.

Date of hearing: 7th April, 2005.

2005 C L D 1251

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

ZUBAIR AHMED---Appellant

Versus

HABIB BANK LIMITED, KARACHI through Chairman and another---Respondents

F.A.O. No.161 of 2004, decided on 7th April, 2005.

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

----Ss. 9, 10 & 12---Ex parte decree, setting aside of-Scope--wrong noting of date of hearing---Non framing of issues---Suit was decreed ex parte as the defendant or his counsel failed to appear before the Court on the date of hearing---Defendant filed application for setting aside the decree on the ground that date of hearing was wrongly noted---Application was dismissed by Banking Court---Validity---Stance taken by the defendant and his counsel did not support each other besides the fact that no proof regarding incorrect noting of date by the counsel was appended with the application i.e. file of brief or daily diary kept for entry of daily cases by counsel and no affidavit of clerk of counsel was brought on record---Affidavit of counsel was in clear contradiction to the judicial file of Banking Court wherein case was adjourned in presence of the same counsel---Plea of misunderstanding of the date fixed or its incorrect information to the defendant was not only fake, but was also fabricated/afterthought and was not enough to restore his application and that too, after the period of limitation---Defendant failed to give any sufficient cause or plausible reason for his or his counsel's absence on the date-In view of contradiction between the stance in application, to the one taken by his counsel in his affidavit, the Banking Court correctly did not feel necessity to further process the petition by framing of issues and recording of evidence---Order passed by Banking Court was justified and being in consonance with the record deserved no interference by High Court---Appeal was dismissed in circumstances.

Mian Muhammad Nawaz for Appellant.

Ch. Muhammad Arshad Mahloo for Respondents.

2005 C L D 1255

[Lahore]

Before Ali Nawaz Chowhan, J

FIRST CAPITAL SECURITIES CORPORATION LTD.---Appellant

Versus

COMMISSIONER (SECURITIES MARKET DIVISION) S.E.C.P. and another---Respondents

Commercial Appeal No.12 of 2004, decided on 2nd June, 2005.

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

----Ss. 224 & 485---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 34---Object and scope of S.224. Companies Ordinance, 1984---Word "vest" occurring in S.224 of the Ordinance---Connotation---Trading activity of sale and purchase of the issuer's shares by the beneficial owner and the issuer---Appeal to High Court---Securities Exchange Commission of Pakistan in the present case, accused the beneficial owner of indulging trading activity of sale and purchase of the issuer's shares within a period of 6 months resulting in a gain and also accused the beneficial owner of violating the terms of S.224(2), Companies Ordinance, 1984 but not tendering the gain so received to the issuer---Issuer too was accused by the Commission of failing to make a demand in terms of S.224(2) of the Ordinance---Securities and Exchange Commission of Pakistan, therefore contended that the accruing gain now vested with the Commission and demanded the same-Validity-Provisions of S.224(2). Companies Ordinance, 1984 had burdened both the beneficial owner and the issuer with a responsibility, in case of failure to act, both were deprived of the gain which then vested with the Commission---Principles and procedure elaborated.

The rationale behind the enactment of section 224, Companies Ordinance, 1984 is to discourage trading between a "beneficial owner" and an "issuer", both having fiduciary relationship of such a kind where exploitation and wrongful gains were possible. The purpose of law was to deprive a "beneficial owner" of the gains which according to the intention of law were to be returned to the issuer. In case the gain through trading activity rather than serious investment is not remitted to the issuer within a period of 6 months from the date of the earning of the profit and there being no demand trade by the issuer, this amount vests with the S.E.C.T.

The beneficial owner has to tender the amount within 6 months' period provided from the date of the accrual or upon the demand being made by the issuer, in which case the "beneficial owner" has to remit the gain within 60 days of the making of the demand whichever is later.

The question is whether the period of 60 days is to run concurrently with the sixty days period as has been observed by the Appellate Bench of the Commission or consecutively as has been observed by the Commissioner or this is open to some other interpretation. If the periods of 6 months and 60 days were intended to run concurrently, the splitting of the period as such in this section was not required and a fixed time could have been given as eight months for this purpose.

If one goes on the "concurrent" interpretation and if a demand is made within 6 months' period by the issuer, the 60 days' period may elapse before the expiry of 6 months' period. If before the expiry of 6 months' period a demand is made, the unexpired period of 6 months will get extended by 60 days.

But the question is, what happens when a demand is made by an issuer later than 6 months from the date of the accrual and beyond 8 months? Will it be hit by limitation and, therefore, his remedy to recover shall cease?

The interpretation of section 224(2) is not exhaustive. The period of 60 days has been given for purposes of making a demand in case there is a suppression of fact and thus lack of knowledge at the end of the issuer. In which eventuality he can make a demand within a period of 60 days from the date of his knowledge, otherwise, the gain is to vest in the Commission. Obviously, section 224(2) is burdening both the beneficial owner and the issuer with a responsibility. In case of failure to act, both are deprived of the gain which then vests with the S.E.C.P.

So, a 60 days' period is also given to the issuer from the date of knowledge so that he could make a demand and pursue action for recovery. Fixing of six months' period for the beneficial owner was obvious because he is supposed to be actuated with the knowledge of the transaction and the gain, which knowledge the issuer may be lacking depending on case to case basis.?

Section 224 does not use the words "vest" and "belong" but merely the words "vest" and "belong" which have variable meanings and a correct meaning is to be ascribed to it according to the situation given in section 224.

Therefore, several situations may arise and for covering the situations, the periods of "6 months after accrual" or "60 days of a demand" have been given. The requirement that after the lapse of afore-mentioned period, the gain shall vest in the Commission, will mean that its control and possession shall go to the Commission and issuer would be entitled to make a demand upon proof of innocence, lack of collusion, lack of knowledge, non-commission of any act of fraud etc. for return of the amount within 60 days from the knowledge.

?

Thus the primary aim of the S.E.C.P. is to protect the interest of the issuer, discourage exploitative trading and to punish the beneficial owner with the penalty while also becoming seizin of the gain. And the issuer is to be deprived of the property only on account of its indolence even after knowledge during the 60 days' period prescribed which may start from the date of knowledge and not otherwise.

?

In the present case the issuer has remitted the gains after about 20 months. The issuer accepts the receipt. This money in fact belongs to the issuer in the absence of any proof of collusion between the two. The factum of any collusion in this case, however, remains unresolved and shrouded.

Since the purpose of section 224 is to discourage frauds and collusive transactions meant to usurp the gains through the forbidden trading activity, the Commissioner or the Appellate Bench of the S.E.C.P. are required to establish the factum of collusion and fraud for determining a case under section 224 which is hit by the limitation clause and this is essential prelude before the S.E.C.P. decides as to whom the gain shall belong and short of that it shall always be considered as a custodian of the amount and not its owner.

?

Board of Foreign Missions of the Presbyterian Church in the United States of America through Lahore Church Council v. The Government of the Punjab 1987 SCMR 1197; The Black's Law Dictionary; Fruit and Vegetable Merchants Union v. The Delhi Improvement Trust AIR 1957 SC 344; The Trustees of the Port of Karachi v. Messrs Muhammad Bakhsh & Sons PLD 1959 (W.P.) Kar. 658 and Noor Muhammad v. Sardar Khatoon and others PLD 1951 Sindh 1 ref.

(b) Words and phrases----

---"Vest"---Connotation.

?The Black's Law Dictionary; Fruit and Vegetable Merchants Union v. The Delhi Improvement Trust AIR 1957 SC 344; The Trustees of the Port of Karachi v. Messrs Muhammad Bakhsh & Sons PLD 1959 (W.P.) Kar. 658; Board of Foreign Missions of the Presbyterian Church in the United States of America through Lahore Church Council v. The Government of the Punjab 1987 SCMR 1197 and Noor Muhammad v. Sardar Khatoon and others PLD 1951 Sindh 1 ref.

Imtiaz Rashid Siddiqui assisted by Imran Anjum Alvi for Appellant.

Suleman Aslam Butt for Respondents.

Dates of hearing:29th and 30 May, 2005.

2005 C L D 1291

[Lahore]

Before Ali Nawaz Chowhan, J

Mian JAVID AMIR and others---Petitioners

Versus

UNITED FOAM and others---Respondents

C.O. No.3 of 2005, decided on 7th June, 2005.

Companies Ordinance (XL VII of 1984)---

----Ss. 305, 152, 265 & 76---Petition , for winding up of company and rectification of the register of share-holders---Parties had placed material on record in support of their accusations, which called for a detailed inquiry which might also require production of evidence and which was not possible under the summary procedure of High Court--Serious accusations had been made against each other by the parties and there were questions involved, inter alia, to the effect whether the petitioner did sell his shares or was withholding the same cleverly and whether the rectification of the register of share-holders had been effected bona fide and whether the affairs of the Company could be conducted in the future smoothly under S.265 of the Companies Ordinance, 1984---Effect---Public limited companies were required to work within a corporate morality and when such-like accusations were made by the members of the Company itself, it damages the image of the Company and its actors and accusations were required to be enquired into and action taken in accordance with the spirit of the Companies Ordinance, 1984 High Court, in circumstances, asked the Securities and Exchange Commission of Pakistan to act under S.265, Companies Ordinance, 1984. by appointing a reputable inspector to investigate into the grievances raised by both the parties and to return its report to High Court thereafter while also suggesting whether a case under S.305 of the Ordinance was, under the circumstances, made out or whether the case was merely a case covered by S. 76 of the Companies Ordinance, 1984---Inspector would also point out the areas where corrections in the working of the Company was required and also point out whether that was possible---Matter having been referred to the Commission, the petition before the High Court stood disposed of---Matter shall be re-agitated by the parties after the report of the Commission was available and favourable to the petitioner and not otherwise.

?

Uzair Karamat Bhindari for Petitioner.

Shahid Wahed, Mian Nisar, Umar Alvi for Respondents.

Muhammad Younas, Assistant Registrar.

Date of hearing: 3rd June, 2005.

2005 C L D 1359

[Lahore]

Before Muhammad Sayeed Akhtar, J

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager-Plaintiff

Versus

Messrs MALIK FOOD INDUSTRIES LIMITED through Director/Chief Executive/Share-holder and 13 others---Defendants

C.O.S. No.4 of 1994, heard on 18th May, 2005.

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

----Ss. 2(c), 9 & 10---Contract Act (IX of 1872), S. 128---Suit for recovery of loan---Petition for leave to defend suit---Customer---Definition---Guarantor---Liability---Scope---Suit can be instituted against the defendant if he falls within the definition of "customer"---Liability of the guarantor/surety is co-extensive with that of principal debtor, unless it is otherwise provided by the contract---Guarantor and principal debtor are jointly and severally liable to pay the outstanding amount to the creditor---Guarantor cannot shirk from the liabilities incurred by him through the execution of documents---In the absence of specific stipulation in the contract of loan or any consideration of equity, a guarantor cannot take up the plea that the Bank should enforce the liability against the principal debtor before proceeding against the guarantor; reason being that the Bank grants loan . only on the guarantee and in absence of letter/contract of guarantee. the Bank may not have sanctioned the loan---Availing of finance was not denied; finance was secured by the finance agreement, promissory note, personal guarantees and other documents, execution of which, was also not denied---Personal guarantees of the predecessor-in-interest of defendants, in the present case, were appended with the plaint---Defendants being the customers as defined in S.2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, suit against them was maintainable---Petition to appear and defend the suit of defendants was, therefore, dismissed.

Rafique Hazquel Masih v. Bank Alfalah Ltd. and others 2005 SCMR 72 and Messrs Platinum Insurance Company Limited, Karachi through Managing Director v. Daewoo Corporation, Sheikhupura through Director Administration and Finance PLD 1999 SC 1 ref.

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

---Ss. 9(2) & 10---Civil Procedure Code (V of 1908), O.VII, R.14 & O.XIII, Rr. 1 & 2---Suit for recovery of loan by Bank---Plaintiff had failed to show any good cause for not appending the personal guarantee allegedly executed by the predecessor-in-interest of defendants---Defendants could not be taken by surprise---Mere inadvertence of the plaintiff Bank was no ground for receiving the document---Such document could not he looked into at such stage---Petition for leave to defend the suit, in circumstances, was allowed---Principles.

In the present case personal guarantee was not appended with the plaint nor the same was relied upon in the list under Order VII, rule 14, C.P.C. Documents may be filed either under Order VII rule 14, C.P.C. along with the plaint or under Order XIII, rule 1, C.P.C. at the first hearing of the suit or under Order XIII, rule 2, C.P.C. at a subsequent hearing. The plaintiff had neither appended the copy of the personal guarantee of deceased defendant with the plaint nor relied upon the same in the list filed under Order VII, rule 14, C.P.C. Under section 9(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 the plaint shall be supported by the statement of account and all other relevant documents relating to the grant of finances. Copies of the plaint, statement of account and other relevant documents are to be filed with the Banking Court. The personal guarantee of deceased defendant had been filed at a belated stage. His signatures on the personal guarantee could not be compared with his actual signatures as he was dead. Under Order XIIL, rule 1, C.P.C. the parties or their pleaders have to produce at the first hearing all the documentary evidence of every description in their possession or power on which they intended to rely and which had not been filed in the Court. Under rule 2 of the same Order no documentary evidence in possession or power of any party, which should have been produced, shall be received at any subsequent stage of the proceedings unless good cause is shown. Private documents were ordinarily not allowed to be produced at belated stage. The genuineness of the documents was also not beyond doubt and the specimen signatures of the defendant for comparison could not be obtained since he was dead.

In the present case the plaintiff in fact had failed to show any good cause for not appending the personal guarantee allegedly executed by the predecessor-in-interest of defendants. The defendants could not be taken by surprise. Mere inadvertence of the plaintiff was no ground for receiving the document. It could not be looked into at this stage. In this view of the matter the petition for leave to defend the suit was allowed.

?

Allah Bakhsh v. Mst. Fathe Bibi 1994 SCMR 1945 ref. Shahid Karim for Plaintiff.

Naeem Sultan Khan for Defendants Nos.6 to 9.

Muhammad Ramzan Wattoo for Defendants Nos.2 to 4 and 11 to 14.

Mian Asghar Ali, for Defendant No. 10.

Date of hearing: 18th May, 2005.

2005 C L D 1372

[Lahore]

Before Umar Ata Bandial, J

BILAL YAMEEN and 4 others---Petitioners

Versus

SECRETARY, CO-OPERATIVES, GOVERNMENT OF PUNJAB, LAHORE and 3 others---Respondents

Writ Petition No.7573 of 2005, decided on 9th May, 2005.

Punjab Provincial Co-operative Bank Limited Byelaws---

----Byelaw No.34---Banking Companies Ordinance (LVII of 1962), Ss.5(1) & 41---State Bank of Pakistan Act (XXXIII of 1956), S.37---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Bank was in a state of financial distress and was surviving upon roll-overs by the State Bank of Pakistan given upon the financial guarantee furnished by the Provincial Government---Withdrawal of extended period of tenure of the Board of Directors of the Pun jab Provincial Co-operative Bank Ltd. by the Registrar, Co-operatives, specially to facilitate the restructuring in compliance of the directions of the Government of the Punjab and State Bank of Pakistan---Contention of the petitioners (Directors) was that Registrar Co-operatives did not have power to retract the extension granted to the petitioners and, therefore, the impugned order was alleged to be arbitrary, unlawful and passed without lawful authority ---Petitioners further pointed out that the Provincial Government had no equity in the Bank but it was nevertheless developing a strategy for restructuring of the Bank whereas it had no right to interfere in the Bank's affairs---Validity---State Bank of Pakistan was the principal regulator of all financial institutions in the country---Unless the mandate and requirements prescribed by the State Bank of Pakistan were met, the Bank would face threat of its de-Scheduling by the State Bank of Pakistan which action would mean the closure of the banking services and business of the Bank---Steps recommended by the State Bank of Pakistan represented careful deliberations which must be adopted, with or without modifications as were approved by the State Bank of Pakistan, in order to save the Bank, which was the objective of the order of the Registrar of Co-operatives---Financial exposure of the Provincial Government as a guarantor of the borrowings made by the Bank, left no doubt that by virtue of its obligation as surety, the Provincial Government was the only entity accountable for performance of financial obligations of the Bank and therefore, had a direct interest in its sound financial health and hence restructuring and revival---Petitioners, by their present status were not even representative of the membership body of the Bank; they were merely transitional caretakers continuing for administrative convenience at the grace and pleasure of the Provincial Government and extension in their time in office conferred no vested right---Extension. was therefore, revocable and could be terminated without facing any bar or estoppel or locus poenitentiae---Any action taken by the Provincial Government in tandem with State Bank of Pakistan in this behalf, could not be faulted either on the ground of jurisdiction and authority or on the basis of motives and mala fides---No reason or material being available on record to disagree with the object of the impugned action of the Registrar of Co-operatives, High Court declined interference---High Court, however observed that the restructuring proposals for the Bank that were finally formulated in consultation with the State Bank of Pakistan must contain provisions to safeguard the interest of the equity holding Co-operative Societies that were members of the Bank, which would not mean that the criteria of competence, integrity and professional accomplishment could not be laid down as qualifications for the office of directors of the Bank as appeared to be intended by the impugned order and it would make good sense if such qualifications were spelled out and implemented through elections at the earliest so that competent input and consultation might be rendered on behalf of the equity holders with respect of the restructuring proposals---Principles.

Syed Zulfiqar Abbas Naqvi for Petitioners.

Muhammad Ilyas Khan for Respondents.

2005 C L D 1379

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs 3-A TRADE IMPEX through Partner and 2 others---Appellants

Versus

ASKARI COMMERCIAL BANK LTD. through Branch Manager---Respondent

F.A.O. No.294 of 2004, decided on 19th April, 2005.

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

----S.51---Execution of decree---Detention of judgment-debtors---Pre-requisites---Detention of judgment-debtors in execution of decree cannot be ordered unless and until pre-requisites of S.51, C.P.C. viz. the judgment-debtor is likely to abscond or leave the local limits of jurisdiction of the Court; to obstruct the decree has transferred the property; the judgment-debtor has no means to pay the amount of decree and refuses or neglects to pay and that the decree is for a sum for which the judgment-debtor is bound in a fiduciary capacity to account to the satisfaction of the Executing Court, are proved.

Ghulam Hussain v Riaz Ahmed 1987 CLC 1227; Munsif Dad v. WAPDA PLD 1991 AJK 8; Muhammad Nawaz v. Barkat Ali PLD 2004 Lah. 21; Syed Shaffat Hussain v. Kamran Khokhar 2000 MLD 801; Precision Engineering Ltd. and others v. The Grays Leasing Limited PLD 2000 Lah. 290 and Muhammad Anwar v. Shaukat Ali and another 2000 CLC 1086 rel.

(b) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S. 19---Civil Procedure Code (V of 1908), S.51 & O.XXI, R37---Execution of decree---Detention of judgment-debtors-Banking Court in execution of decree passed in favour of bank had issued warrants of arrest against judgment-debtors on the basis of affidavit filed by bank---Validity---Banking Court while issuing warrants of arrest of judgment-debtors, had completely ignored the law---Banking Court, instead of adhering to the provisions of proviso to S.51, C.P.C. and in complete oblivion of the law on the subject, proceeded to issue warrants of arrest of judgment-debtors only on the basis of affidavit-Judgment-debtors were not provided any opportunity to contradict the contents of affidavit---Without satisfaction of conditions laid down in S.51, C.P.C., no mechanical order for detention of judgment-debtor in prison could be passed---Order of issuance of warrants of arrest of judgment-debtors was not sustainable in law and the same was set aside---Appeal was allowed accordingly.

(c) Affidavit---

----Admissibility of affidavit-Procedure-Affidavit, ipso facto, is not admissible in evidence and its contents cannot be accepted without cross-examination of deponent.

A.K. Dogar for Appellants.

Sh. Ashiq Pervaiz and Ch. Muhammad Yasir Bhatti for Respondent.

2005 C L D 1391

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

UNITED LEATHER EXPORTS through Haji Muhammad Iqbal and 4 others ---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Branch Manager---Respondent

E.F.A. No.562 of 2000, heard on 22nd March, 2005.

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

----S.6(4)---Execution proceedings---Future mark-up on decretal amount not awarded in decree---Executing Court demanded such mark-up and counsel for judgment-debtor undertook to pay same---Validity---Executing Court could not go behind the terms of decree, which had attained finality---Admission made on wrong point of fact or ignorance of a legal right would have no binding effect on person making same---Judgment-debtor could not be compelled to pay such mark-up merely on statement of his counsel---High Court accepted appeal and set aside impugned order.

Messrs Asian Associated Agencies Ltd. Karachi v. Pakistan through Secretary, Ministry of Industries Government of Pakistan 1999 MLD 2825; Barkhurdar v. Muhammad Razzaq PLD 1989 SC 749; Shahzadi Sharaf Sultan and another v. Brig. Shahzada Sher Muhammad Jan PLD 1963 (W.P.) Lah. 606 and Ahmad Khan v. Rasul Shah and others PLD 1975 SC 311 rel.

(b) Execution---

----Executing Court could not go behind the terms of decree.

Messrs Asian Associated Agencies Ltd. Karachi v. Pakistan through Secretary, Ministry of Industries Government of Pakistan 1999 MLD 2825 rel.

(c) Banking, Tribunals Ordinance (LVIII of 1984)---

----Ss.6 &. 9--Recovery of Bank loan---Future mark-up, award of---Scope---Banking Tribunal had no power to award such mark-up at the time of passing decree.

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

----Art.31---Admission made on wrong point of fact or in ignorance of a legal right---Evidentiary value---Such admission would have no binding effect on person making same.

Barkhurdar v. Muhammad Razzaq PLD 1989 SC 749; Shahzadi Sharaf Sultan and another v. Brig. Shahzada Sher Muhammad Jan PLD 1963 (W.P.) Lah. 606 and Ahmad Khan v. Rasul Shah and others PLD 1975 SC 311 rel.

Shahid Ikram Siddiqui for Appellants.

Nemo for Respondent.

Date of hearing: 22nd March, 2005.

2005 C L D 1394

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs RAVI INTERNATIONAL TRADERS through Sole Proprietor and another-Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED through Manager/Attorney---Respondent

E.F.A. No.28 of 2005, decided on 1st March, 2005.

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

----S.18---Execution of decree---Rejection of execution petition sought by judgment-debtor on the ground that he had liquidated entire liability under incentive scheme of 1997---Banking Court dismissed such application, against which no appeal was filed, thus, such order had attained finality-Second application by judgment-debtor that he had liquidated liability under incentive scheme of 2001---Plea of Bank was that judgment-debtor had jailed to adhere to stipulations of second incentive scheme to pay determined amount in two equal instalments---Executing Court dismissed second application---Validity---Executing Court had not committed any legal error while passing impugned order---High Court dismissed appeal.

Agricultural Development Bank of Pakistan through Manager v. Mst. Amiran Bibi and 3 others 2004 CLD 958 and United Bank Limited v. Messrs Ilam Din & Company and 13 others 2004 CLD 992 distinguished.

Malik Imran Nazir for Appellant.

Muhammad Jamil Awan for Respondent.

2005 C L D 1397

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs AWAN CONSTRUCTION COMPANY, GOVERNMENT CONTRACTORS (AS THEN WERE) through Mahmood-ul-Alvi and

another---Appellants

Versus

UNITED BANK LIMITED through Manager---Respondent

E.F.A. No.149 of 2001, heard on 25th April, 2005.

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

----S.21---Limitation Act (IX of 1908), S.5---Appeal---Limitation---Condonation of delay---Ordinary and special law---Distinction---Provisions of Limitation Act, 1908---Applicability---Appeal was barred by limitation and appellants sought condonation of delay under S.5 of Limitation Act, 1908---Validity---Under the ordinary law, a period of 90 days had been prescribed under Art.156 of Limitation Act, 1908, for filing of appeal before high Court---Present case was governed by a special law and S.21(1) of Banking Companies (Recovery of Loans, Advances, Credits and Finances), Act, 1997, had prescribed a period of 30 days for filing first appeal before High Court against judgment and decree passed by Banking Court---As special law had provided different period of limitation for filing first appeal in high Court Man the ordinary law, therefore, S.5 of Limitation Act, 1908, was neither applicable nor attracted---Application filed by appellants under S.5 of Limitation Act, 1908, for condonation of delay was incompetent and not maintainable, thus was dismissed---With the dismissal of application, the appeal was barred by time and could not proceed further- having been filed beyond the period of limitation prescribed under the relevant law---Appeal was dismissed accordingly.

Allah Ditta v. Farooq Ahamd and 3 others PLD 1979 Lah. 917; Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Messrs Conoco Industries (Pvt.) Ltd. and 3 others v. United Bank Limited, Lahore and another 2004 CLD 472; Sheikh Muhammad Kashil v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645; Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 ref.

Iqbal Mehmood Awan for Appellant.

Mian Irshad Mehmood for Respondent.

Date of hearing: 25th April, 2005.

2005 C L D 1400

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD HUSSAIN & CO. RICE DEALERS through Muhammad Hussain and 8 others ---Appellants

Versus

HABIB BANK LIMITED through Attorneys and 2 others---Respondents

E.F.A. No.701 of 2002, heard on 20th April, 2005.

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

----Ss. 15(11), 19(7) & 22---Appeal---Interim order of Executing Court passed either under Ss.15(11) or 19(7) of Financial Intuitions (Recovery of Finances) Ordinance, 2001---Appeal against such orders would be competent---Principles.

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

----Ss.10 & 19(7)---Civil Procedure Code (V of 1908), S.47---Execution of decree passed on account of non-filing of leave application---Objection petition regarding pledged stocks---Bank produced letters showing admission of judgment-debtor to have taken delivery of pledged stocks-'-Judgment-debtor alleged such letters to be forged and fabricated---Executing Court dismissed objection petition on basis of such letters---Validity---Executing Court had not considered properly and legally such plea of judgment-debtor in its true perspective---Documents produced by both parties needed to be deeply examined and proved---Executing Court without. holding an inquiry, examining legality, validity and genuineness of such documents and in complete oblivion of facts of the case had rendered impugned order---Executing Court could not have decided objection petition without affording reasonable opportunities to both parties for producing evidence---Judgment-debtor had been condemned unheard---High Court accepted appeal, set aside impugned order and remanded case to Executing Court for its decision after affording reasonable opportunities to both parties to establish their respective claims.

Mst. Syrraya Begum v. Muslim Commercial Bank Ltd. and 4 others PLD 1990 Lah. 4 ref.

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

----S. 19(7)---Civil Procedure Code (V of 1908), S.47---Execution proceedings-Investigation of claims and objections---Recording of evidence---Necessity---Not an obligation of Executing Court to record evidence in each and every case---Duty of Executing Court to see and decide in individual cases as to whether same warranted recording of evidence or not or was capable to be decided after hearing parties; and that objection petition was filed frivolously, contumaciously and to delay proceedings or same was a genuine application.

Mian Muhammad Rafi-ud-Din for Appellants.

Tahseen Ullah Butt for Respondent.

Date of Hearing: 20th April, 2005.

2005 C L D 1405

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN, KHUDIAN BRANCH, DISTRICT, KASUR through Manager---Appellant

Versus

Mst. BEGUM and 33 others---Respondents

E.F.A. No.331 of 2002, heard on 18th April, 2005.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.11(2)(i)---Execution of decree---Property mortgaged with Bank by judgment-debtor---Objection petition---Objector claimed to be allottee of property after cancellation of allotment made earlier in favour of judgment-debtor---Dismissal of execution petition after acceptance of objection petition---Validity--Statement of Patwari supporting such plea of objector could not be discredited by bank during cross-examination---Bank could not produce sufficient evidence to rebut statement of Patwari---Execution petition could not be dismissed as same could be executed through other modes provided under law---Banking Court should have allowed fair chance to Bank to get decree executed---High Court partly accepted appeal and set aside impugned order qua dismissal of execution petition.

Syed Haider Ali Shah for Appellant.

Waqar Azeem for Respondents Nos.2 to 34.

Date of hearing: 18th April, 2005.

2005 C L D 1408

[Lahore]

Before Muhammad Sayeed Akhtar and Sh. Azmat Saeed, JJ

Sheikh MUHAMMAD ALAMGIR---Appellant

Versus

BANK OF PUNJAB and another---Respondents

E.F. A. No.10 of 2005, decided on 7th June, 2005.

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

----Ss. 17 & 19---Civil Procedure Code (V of 1908), S. 47---Suit for recovery of loan was decreed---Execution proceedings---Judgment-debtor filed application under S.47, C.P.C. raising grievance that in view of the terms and conditions agreed inter se the parties for the grant of finance facility, the balance amount due under the decree was recoverable from the Bank and the executing Court had not calculated the amount and fixed the liability of the Judgment-debtor---Such application was dismissed by the Banking Court---Validity---Liability of the judgment-debtor as well as that of the Bank was finally adjudicated upon by the Court passing the decree---Executing Court could not go behind the decree and judgment-debtor could not raise issues, on the basis of the original transaction which were adjudicated upon by way of the judgment of the said Court---Only exercise, now required to be undertaken, was the calculation of the amount due from the judgment-debtor in terms of the judgment of the Court passing decree---Bank had submitted a statement evidencing the amount due from the judgment-debtor in terms of judgment of the Court---Objection to be raised before the executing Court would be limited to the deviation, if any, from the judgment passed by the said Court---Executing Court could decide the objection, if any, thereby determining the amount due from the judgment-debtor before proceeding further in the matter.

Asghar Hamid Bhutta for Appellant.

Farooq Bedar for Respondent-Bank.

Abid Aziz for L.D.A.

2005 C L D 1411

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs RAVI ENTERPRISES through Proprietor and 2 others-Appellants

Versus

ALLIED BANK OF PAKISTAN---Respondent

R.F.A. No.480 of 2000, heard on 17th March , 2005.

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

----Ss.9 & 10---Civil Procedure Code (V of 1908), Ss.10 & 11---Suit. for recovery of money by Bank---Leave application-Pendency of suit for damages previously instituted by defendant against Bank, wherein matter in issue in Bank's suit was directly and substantially in issue---Dismissal of leave application and passing of decree in favour of Bank---Validity---Sections 10 & 11, C.P.C., would not apply to such case---Provisions of S.9(2) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 excluded applicability of S.10, C.P.C., in relation to suits filed under the Act---High Court set aside decree passed in favour of defendant in suit for damages---Defendant had admitted availing of finance and execution of documents, but had claimed to have liquidated liabilities---No case was made out for grant of leave to defend suit---Bank had filed suit for recovery of Rs.84, 71, 000 wherein principal amount was Rs.5,100 Million---In view of pendency of suit for damages, High Court granted conditional leave and to secure principal amount directed defendant to furnish bank guarantee to the tune of Rs.2. Millions and submit surety bond for sum of Rs.3.1 Millions within two months---High Court accepted appeal, set aside impugned judgment/decree and granted such conditional leave directing Banking Court to decide suit after fulfilling such condition by defendant, otherwise leave application would be deemed to be dismissed.

Muhammad Aamer Sohail for Appellants.

Shamas Mehmood Mirza for Respondent.

Date of hearing: 17th March , 2005.

2005 C L D 1414

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ADIDAS INTERNATIONAL B.V. through Attorney and another---Appellants

Versus

PRIMA SPORTS (PRIVATE) LIMITED through Director/Chief Executive/Manager and another---Respondents

Regular First Appeal No.241 of 1998, heard on 17th January, 2005.

Trade Marks Act (V of 1940)---

----Ss.21 &. 25---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for infringement of trade mark---Application for temporary injunction---Trial Court as interim relief restrained export of disputed goods---Trial Court thereafter firstly rejected plaint and then such application---Validity---high Court with consent of both parties set aside impugned judgment/decree and remanded case to Trial Court for its fresh decision with observations that injunctive order passed in appeal would remain operative for a period of one month in the interest of justice.

Hassan Irfan Khan for Appellants.

Syed All Zafar for Respondent No. 1.

Mian Muhammad Khalid for Respondent No.2.

Date of hearing: 17th January, 2005.

2005 C L D 1417

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

AZRA MANZOOR QURESHI---Appellant

Versus

FAYSAL BANK LIMITED and 2 others---Respondents

R.F.A. No. 249 of 1998, heard on 15th March, 2005.

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

----Ss.10 & 15---Suit for recovery of loan amount---Time-barred leave application---Condonation of delay, application for---Banking Court decreed suit after refusing leave to defend without deciding condonation application---Validity---Condonation application was crucial in nature, which should have been decided by Banking Court through a reasoned order and in accordance with law---Banking Court had committed legal error as there was no findings in final judgment on condonation application---High Court accepted appeal, set aside impugned judgment and remanded case to Banking Court with directions to decide both such applications and suit through reasoned order after hearing parties.

Pak Carpet Industries Limited v. Government of Sindh and 2 others 1993 CLC 334; Muhammad Yaqub v. Baqir and 2 others 1993 CLC 1319; Khair Deen v. Rehm Deen and 4 others 1996 CLC 1731 and Gul Muhammad through Legal Heirs v. Karachi Development Authority and another 1998 MLD 150 rel.

(b) Administration of justice-------

--Non-disposal of pending miscellaneous application while deciding main case---Effect---Duty of Court was first to decide such application through a specific order and then main case---Failure to decide such application would vitiate main judgment.

Pak Carpet Industries Limited v. Government of Sindh and 2 others 1993 CLC 334; Muhammad Yaqub v. Baqir and 2 others 1993 CLC 1319; Khair Deen v. Rehm Deen and 4 others 1996 CLC 1731 and Gul Muhammad through Legal Heirs v. Karachi Development Authority and another 1998 MLD 150 rel.

Munawar Islam for Appellant.

Tariq Kamal Qazi for Respondents.

Date of hearing: 15th March, 2005.

2005 C L D 1421

[Lahore]

Before Nasim Sikandar and Jawwad S. Khawaja, JJ

NUSRAT TEXTILE MILLS LTD. and 8 others---Appellants

Versus

UNITED BANK LTD. through Attorney---Respondent

R.F.A. No.400 of 1998, heard on 11th May, 2005.

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

----S.10---Leave to appear and defend the suit, grant of --Bona fide defence-Payment in excess of liability---Banking Court dismissed the application for leave to appear and defend the suit and resultantly, suit was decreed in favour of bank---Contention of defendants was that they had paid in aggregate an amount in excess of their liability,---Validity---Claim of bank, as set out in plaint, appeared to be in excess of the sum justified by the agreements filed with plaint---Bank wanted to file certain documents before High Court but the defendants has no opportunity for controverting or commenting on the documents in their application for leave to appear and defend the suit---Filing of such application by bank indicated that the plaint and documents filed therewith were not sufficient to justify the passing of a decree as prayed for in the plaint---Defendants had disclosed a bona fide defence in their application seeking leave to appear and were, therefore, entitled to grant of leave to defend the suit---Leave to appear and defend the suit was granted in circumstances.

Salman Akram Raja for Appellants.

Syed Ali Zafar for Respondent.

Date of hearing: 11th May, 2005.

2005 C L D 1425

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs RAVI ENTERPRISES through Proprietor and another---Appellants

Versus

ALLIED BANK OF PAKISTAN through Provincial Chief and 3 others---Respondents

R.F.AS. Nos.902 and 901 of 2001, heard on 17th March, 2005.

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

----Ss.9 & 10---Qanun-e-Shahadat (10 of 1984), Art.133---Suit for damages---Dismissal of leave application---Refusal of Court to allow defendant to cross-examine plaintiff's witnesses and to object to admissibility of documents produced in evidence---Suit decreed partially on basis of such ex parte evidence---Validity---Defendant could not be treated as dead person for the remaining proceedings in the suit---After dismissal of leave application, defendant could not file written statement and was precluded from producing his own witnesses, but he was entitled to cross-examine plaintiffs witnesses---Banking Court, on its own, ought to have allowed defendant to cross-examine plaintiff's witnesses and to object to admissibility and enforceability of documents proposed to be produced by plaintiff---Defendant had been condemned unheard---Impugned judgment suffered from serious legal defects---High Court accepted appeal and set aside impugned judgment/decree with directions to Banking Court to decide suit afresh after calling upon plaintiff to produce evidence in support of his claim and providing adequate opportunity to defendant to cross-examine plaintiff's witnesses and raise objection regarding admissibility and authenticity of documents, if produced by plaintiff; however, defendant for failing to seek leave to defend suit would not be allowed to lead evidence or produce any document.

Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353; Haji Usman v. Haji Shafi-ur-Rehman 1988 CLC 1443 and Muhammad Ishaq and others v. Muhammad Ismail and others PLD 1989 Lah. 193 rel.

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

----O. VIII, R.10---Qanun-e-Shahadat (10 of 1984), Art.133---Striking off defence of defendant for failure to file written statement---Effect---Defendant would still have right to participate in the remaining proceedings in the suit. and would be entitled to cross-examine plaintiffs witnesses.

Haji Usman v. Haji Shaft-ur-Rehman 1988 CLC 1443 and Muhammad Ishaq and others v. Muhammad Ismail and others PLD 1989 Lah. 193 rel.

Aarner Sohail for Appellants.

Shamas Mehmood Mirza for Respondents.

Date of hearing: 17th March, 2005.

2005 C L D 1432

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

NATIONAL BANK OF PAKISTAN---Appellant

Versus

Messrs FUJI RUBBER INDUSTRIES (PVT.) LTD. through Chief Executive and 3 others-Respondents

E.F.A.No.92 of 2005, heard on 12th April, 2005.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)--

----S.22(3)---Civil Procedure Code (V of 1908), S.141 & O.VI, R.14---Execution of decree---Objection petition, non-signing of---Property was auctioned in execution of decree but decree-holder objected to the sale price same being less---Objection petition was dismissed by Banking Court for the reason that the same had not been signed by decree-holder---Plea raised by the decree-holder was that it was a curable irregularity---Validity---Power of attorney in favour of counsel for decree-holder who appeared before Banking Court was duly signed by the authorized person and was available on record---Non-signing of objection petition either by any duly authorized representative of decree-holder or by duly appointed counsel was just an irregularity which occasioned due to inadvertence---Non-signing of objection petition was not intentional/deliberate and Executing Court should have allowed one chance to decree-holder for curing the defect by allowing decree-holder to sign the objection petition already pending or to file fresh objection petition duly signed for its determination on merits---To all proceedings of civil nature, under the provisions of S.141, C.P.C., the provisions of Civil Procedure Code, 1908; were applicable---Defect of non-signing of objection petition could be cured under O.VI, R.14, C.P.C., being bona fide omission and same- was not tainted with bad faith---Order passed by Banking Court was set aside and the case was remanded to Banking Court for decision afresh---Appeal was allowed accordingly.

?

Ismail and another v. Mst. Razia Begum and 3 others 1981 SCMR 687; Ghulam Mohi-ud-Din and another v. Noor Dad and 4 others PLD 1988 SC (AJ&K) 42; Taj Muhammad v. Muhammad Azam Sattar and another 1998 CLC 787; Ali Muhammad and 2 others v. Gulfam and another PLD 1983 Kar. 99 and Messrs Pakland Scientific Production v. Messrs Pioneer Insurance Company Ltd. and another PLD 1991 Kar. 414 ref.

Faqir Muhammad and others v. Mst. Muhammad Bibi and others PLD 1991 SC 590 rel.

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

----S.22(3)---Execution of decree---Objection petition-Procedure--Sum motu powers of Executing Court-Non-signing of objection petition by decree-holder---Effect---No specific form for raising objections had been laid down under S.22(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001---By filing objection petition not signed by decree-holder, there was no violation of law---Sale of mortgaged property in absence of any of the parties to the suit through alleged fraudulent auction could have been objected to verbally without any written application whereas the Executing Court was competent to take suo motu notice and could competently examine the legality or otherwise of auction proceedings.

Mian Muhammad Qamar-uz-Zaman for Appellant.

Ch. Fawad Hussain for Respondent No4.

Date of hearing: 12th April, 2005.

2005 C L D 1437

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs ROYAL ENGINEERING through Sole Proprietor and 3 others---Appellants

Versus

Messrs HABIB BANK LTD. through Manager---Respondent

R.F.A. No.551 of 2001, heard on 12th April, 2005.

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

-------S.10-Application for leave to appear and defend the suit--Non-filing of complete documents---Defendants alleged that amounts already paid by them were not adjusted by Baltic and were included in the liability---Defendants further alleged that manager of the branch of the Bank had misappropriated their finances---Documents relating to such allegations were not appended with application for leave to appear and defend the suit filed before Banking Court, hence the application was dismissed--Validity--Defendants should have placed all the documents before Banking Court as in their- absence, the Banking Court, while deciding application of defendants, of examination of those documents appropriate was stage---Had those documents been before Banking Court, it was appropriate possible that Banking Court might have been persuaded to grant the leave to appear and defend the suit to defendants---Defendants should have filed all the documents along with their leave application, which they failed to do so-High Court, in the interest of justice, declined to penalize the defendants on account of such error---Such documents gained more importance in view of the allegations of defendants that upon filing a complaint by them, the manager was dismissed from service and F.I.R. was registered on those charges---Pay-in-slip produced by defendants showed that they had deposited some amount and the same had not been adjusted in their account-high Court set aside the order passed by Banking Court and remanded the matter to Banking Court for deciding application for leave to appear the suit afresh---Appeal was allowed accordingly.

(b) Administration of justice---

----Courts of law are expected to be more vigilant conscious and considerate while deciding the valuable rights of parties.

Syed Haider Ali Shah for Appellants.

Mukhtar Muhammad Rana for Respondent.

Date of hearing: 12th April, 2005.

MIAN HAMID FAROOQ, J.--------Appellants/ judgment debtors, through the filing of the present first appeal have called in question judgment and decree dated 13-6-2001 whereby the learned Judge Banking Court after finding that the "defendants have failed to establish any ground for the grant of leave to defend the suit". Dismissed their leave application and consequently passed a decree for recovery of Rs.9,13,172 together with costs and mark-up jointly and severally against the appellants.

1. Precisely stated, the facts of the case are that the respondent-Bank, on 1-2-2001, filed the suit for recovery of Rs. 1,009,772.00, against the appellants, before the Banking Court, inter alia, pleading that a running finance facility for a sum of Rs.7,00.000, which was subsequently enhanced to Rs.10,00,000 , on the request of defendants Nos.1 and 2, was sanctioned in favour of defendant. No.1 ; the defendants executed the documents in favour of the Bank; defendants Nos.3 and 4 stood guarantors and also mortgaged the property; finance facility was availed, the appellants committed default in fulfilling their contractual obligations and their failure to liquidate the outstanding liability necessitated the filing of the suit. The appellants filed the application seeking leave to defend the suit on the grounds that the suit has not been instituted by duly authorized persons, the suit is without cause of action and one Saqib Mehmood, the Manager of the respondent-Bank, fraudulently misappropriated appellant's cheque of Rs.4,50,000 and also illegally withdrew the amount of Rs.2,00,000 from their account and fraud has been reported to the F.I.A., which is investigating the matter. The learned Banking Court, after hearing the parties, dismissed their leave application and passed a decree for recovery of Rs.9,13,172, together with costs and mark-up, jointly and severally, against the appellants, vide impugned judgment dated 13-6-2001, hence the present appeal.

2. Learned counsel for the appellants has contended that Saqib Mehmood, the Manager of the respondent-Bank, misappropriated a sum of Rs.7,50,000 from the account of the appellants, for which F.I.R. was lodged. He has further submitted that although financial facility of Rs.7,00,000 was sanctioned and availed by the appellants, yet the said facility was never enhanced to Rs.10,00,000, as alleged by the respondent-Bank. He, while referring to photocopy of pay-in?-slip dated 18-12-1999, has submitted that an amount of Rs.1,00,000, deposited by the appellants, has not been credited in their account. Conversely, the learned counsel for the respondent-Bank, while refuting the aforesaid contentions, has submitted that the Bank is not responsible for the alleged private transaction, which was undertaken between the appellants and the Manager of the respondent-Bank. He has further submitted that the appellants did not lodge any complaint and even failed to bring this fact to the notice of the appellant at the appropriate stage. He has added that financial facility was enhanced from Rs.7,00,000 to Rs.10,00,000 at the specific request of the defendant No.2 and letter whereof has been placed on record.

3. On a query raised by this Court, the learned counsel for the appellants has admitted the availing of financial facility of Rs.7,00,000 and the execution of documents on the basis of which the respondent-Bank filed the suit.

4. We have heard the learned counsel for the parties and perused the summoned record. Although the appellants, in their application for leave to defend the suit, did raise the plea that the Branch Manager of the respondent-Bank, namely Saqib Mehmood, was the real beneficiary of the whole finance and he misappropriated a sum of Rs.6,50,000 by misusing two cheques, however, the appellants did not produce any documentary evidence. The learned Banking Court has dealt with the said plea and decided it against the appellants primarily on the ground that they failed to place any documentary proof on record in this regard. It is true that the appellants did not produce any documents in support of their said assertion before the learned Banking Court, however, while filing the instant appeal, they submitted photocopies of two cheques dated 4-1-2000 (sic) and 29-9-1999 and pay-in-slip dated 18-12-1999. Admittedly, these documents were not before the learned Banking Court at the time of rendering the impugned judgment. We feel that the appellants should have placed all the documents' before the learned Banking Court. On account of lack of production of these documents, the learned Banking Court, while deciding appellant's application seeking leave to defend the suit, was deprived of the examination of these documents at the appropriate stage. If the said documents were before the learned Banking Court, it is possible that the Banking Court might be persuaded to grant the appellants leave to defend the suit. The appellants ought to I' have filed all the documents along with their leave application, which they failed to do so, however, we feel that in the interest of justice they should not be penalized on account of the said error. I-Iad those documents been on record, the fate of appellant's application and the suit might have been different. These documents gain more importance in view of the allegation of the appellants that upon filing a complaint by the appellants, aforesaid Saqib Mehmood was dismissed from service and an F.I.R. on these charges was registered against him.

5. There is another aspect of the case. We find from the record that the learned Banking Court, without dealing with and deciding all the pleas raised on behalf of the appellants, non-suited them taking the matter causally and in a cursory way. The Courts of law are expected to be more vigilant, conscious and considerate while deciding the valuable rights of the parties. To our mind, the learned Banking Court was obliged under the law to deal and decide the pleas raised by the appellants before it. Even it has been enjoined upon an executive authority, as per section 24(A) of General Clauses Act, 1897 (inserted by General Clauses (Amendment Act:, 1997, Act No.XI of 1997) to give reasons for making the order.

6. We have also examined pay-in-slip dated 18-12-1999, in juxtaposition with the statement of accounts, and find that it prima facie shows the deposit of Rs.1,00,000 but the same has not been credited in the account of the appellants. However, we have refrained from giving our findings on this issue, as we are inclined to remand the case to the learned Banking Court.

7. In the above perspective, we have examined the impugned judgment and find that the same is not sustainable in law and we are inclined to set aside the same.

8. Upshot of the above discussion is that the present appeal is decided in the following terms:

(i)???????? The appeal is allowed and the impugned judgment and decree dated 13-6-2001 are set aside.

(ii)??????? Resultantly, appellant's application seeking leave to defend the suit and respondent-Bank's suit shall be deemed to be pending before the learned Banking Court.

(iii)?????? Appellants are allowed to file the additional documents, including copies of those documents, which have been placed on record of the appeal, before the learned Banking Court.

(iv)?????? Respondent-Bank is also permitted to place on record documents, if so advised.

(v)??????? The learned Banking Court shall decide appellant's leave application, afresh, alter hearing the parties and of course in accordance with law, without being impressed by any of the observations made by this Court.

(vi)?????? After the acceptance or dismissal of appellant's leave application, as the case may be, the learned Banking Court shall re-decide Bank's suit in accordance with law.

2005 C L D 1442

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

EHSAN ULLAH---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED (ZTBL) through Manager---Respondent

R.F.A.No.278 of 2004, heard on 5th April, 2005.

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

----Ss.9 & 10---Recovery of Bank loan---Leave to appear and defend the suit, grant of---Raising of triable issues---Banking Court dismissed application of borrower for grant of leave to appear and defend the suit without giving any reason---Borrower had raised number of triable issues like charging of compound interest and denial of liability to repay entire finance amount instantly, without timeframe as provided in the original finance agreement---Validity---Plaint filed by financial institution narrated total amount of finances advanced to borrower as Rs.4,44,400 and suit for recovery of Rs.5,01,110 without adjusting the amount of Rs.2,42,220 repaid by borrower and without working out interest/mark-up payable, was not at all justified-Borrower had made out triable issues which required recording of evidence---Order dismissing application of borrower by Banking Court, holding that the same was liable to be dismissed under S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was not only sketchy and non-speaking but also did not furnish a lawful basis for refusal of the relief prayed without going into the stance canvassed by the borrower in his application---Borrower had made out a case for grant of leave to defend the suit, judgment passed by Banking Court was set aside and leave to appear and defend the suit was granted unconditionally---Case was remanded to Banking Court for its decision in accordance with law---Appeal was allowed accordingly.

Nazir Ahmed Javed for Appellant.

Mian Subah Sadiq Klasson for Respondent.

Date of hearing: 5th April, 2005.

2005 C L D 1445

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs CHAUDHRY WEAVING FACTORY and 2 others through Partner---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Vice-President/General Attorney

and another---Respondents

E.F.A.O. No.97 of 2001, decided on 29th March, 2005.

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

----O.XXI, R.90---Limitation Act (IX of 1908), Art.166---Objection petition---Limitation, extension of ---Period of thirty days from the date of sale have been provided under Art.166 of Limitation Act, 1908, for filing of objection under O.XXI, R.90, C.P.C.---Executing Court has no power to extend the time for doing an act which has been determined and fixed by law.

Messrs Maqi Chemicals Industries (Pvt.) Limited through Chief Executive and 3 others v. Habib Bank Ltd. through Manager and 2 others 2003 CLD 571 rel.

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

----S.18---Civil Procedure Code (V of 1908), O.XXI, R.90---Limitation Act (IX of 1908), Art.166---Execution of decree---Objection petition---Non-deposit of 20% of auction money---Failure to arrange 20% of auction money within specified period---Effect---Judgment-debtors filed objection petition against auction of mortgaged property but failed to deposit 20% of auction money as mandated under O.XXI, R.90, C.P.C.---Banking Court dismissed the objection petition for non-deposit of such amount within the specified period---Plea raised by the judgment-debtors was that Executing Court did not extend the period for deposit of such amount as they could not arrange the amount within the period specified by the Executing Court---Validity---Executing Court directed judgment debtors to deposit 20% of auction money within specified date, despite that judgment-debtors could not take advantage of the extended period and failed to deposit the requisite amount---No valid and legal ground was put forth by the judgment-debtors before Executing Court for extension of time---Even according to the stance of judgment-debtors, they could not arrange for the amount to be deposited---Such plea could not be considered as valid and legal ground for extension of time---Deposit of amount of 20% was sine qua non for entertaining the objection petition---Judgment-debtors were precluded from raising the pleas, which they took in their objection petition, as the petition was not entertained by Executing Court on account of their own acts and omissions and they could blame nobody except themselves---Order passed by Executing Court did not suffer from any legal defect/error and the same was maintained---Appeal was dismissed in circumstances.

Messrs Dawood Flour Mills and others v. National Bank 1999 MLD 3205 and Messrs Noor Hayat Industries (Pvt.) Ltd. through Chief Executive v. Judge Banking Court No.1, Multan and 5 others 2004 CLD 1281 distinguished.

Ehsan ul Haq Bhalli for Appellants.

Shamim Iqbal Butt for Respondents.

2005 C L D 1450

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

ASKARI COMMERCIAL BANK LIMITED through Attorneys-Appellant

Versus

IMPERIAL HOSIERY (PVT.) LIMITED through Chief Executive and 11 others---Respondents

R.T.A. No.364 of 2004, heard on 29th March, 2005.

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

----Ss.10 &. 17---Recovery of bank loan---Partial decree---Entitlement to mark-up for the period of rescheduled facility--Application for leave to appear and defend the suit, non-deciding of-Suit filed by hank was decreed by Banking Court partially without deciding application of defendant for leave to appear and defend the suit--Contention of bank was that decretal amount could not have been reduced without any just cause/reason and hank was entitled to recover mark-up beyond initial period of 362 days as the facility was rescheduled and availed by defendants---Validity---Under law in case of acceptance of application of defendant, the controversy between the parties was to he put to issues and in case of its rejection. the suit of hank was to be decreed to the extent it (bank) was entitled to the amount--Bank had claimed in the plaint that after expiry of fixed period, for which the finance was advanced, the same was rescheduled and defendants had been taking. benefits of the same---Repayment by defendants during the period beyond the time frame of original finance was enough proof of rescheduling of finance facility availed by them-Documents along with plaint included reply of defendants through their counsel to the legal notice issued by bank, acknowledging their outstanding liability which was prayed by them to be adjusted within the time prayed to be extended by the bank---All such matters remained undecided by Trial Court including non-determination of liability of defendants to liquidate their liability, in spite of repeated notices by the bank---Banking Court did not opt a lawful procedure for decision in the case and under misconceived manner/view of deciding the lis, disposed of the same through non-speaking/sketchy judgment---Judgment and decree passed by Banking Court was set aside and matter was remanded to Banking Court for decision afresh---Appeal was allowed accordingly.

Tariq Kamal Qazi for Appellant.

Nadeem Ahmed Sheikh for Respondents.

Date of hearing: 29th March, 2005.

2005 C L D 1454

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD IFTIKHAR through Special Attorney---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Chairman and another---Respondents

R.F.A. No.426 of 2004, decided on 11th April, 2005.

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

----Ss.9 & 10---Civil Procedure Code (V of 1908), O.IX, R.8---Dismissal of suit---Date not fixed for hearing---Borrower filed suit against financial institution and the same was dismissed for non-prosecution on the date when it was fixed for reply on the application for leave to appear and defend the suit---Validity---Date which was fixed for filing of reply of application for leave to appear and defend the suit was not the date fixed for hearing---Suit could not be dismissed on the dale which was not a 'date of hearing'---Banking Court proceeded to dismiss the suit in complete oblivion of the established legal position on the subject---Banking Court committed legal errors, while dismissing suit of borrower on the date when it was fixed for filing of reply to application for leave to appear and defend the suit.---Order passed by Banking Court was not sustainable in law as the same suffered from legal defects---High Court restored the suit filed by the borrower and remanded the case to Banking Court for deciding application for leave to appear and defend the suit afresh-Appeal was allowed accordingly.

(b) Void order---

----When basic order is illegal and void, all the ensuing orders will have no legal effect.

Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104 ref.

Ch. Nasir Ali Kamboh for Appellant.

Malik Karamat Ali Awan for Respondents.

2005 C L D 1457

[Lahore]

Before Mian Saqib Nisar and Sh. Azmat Saeed, JJ

SHAHEEN CALICO PRINTING WORKS (REGD.) through Partner and 3

others ---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED---Respondent

Regular First Appeal No.365 of 2004, decided on 16th December, 2004.

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

----Ss.9 & 10---Contract Act (IX of 1872), Ss.126 & 128---Suit for recovery of amount of bank guarantee---Issuance of bank guarantee to ensure payment to creditor of defendant---Bank on demand of creditor paid amount 2overed by guarantee---Plea of defendant was that bank guarantee had expired much before its encashment was claimed by creditor---Banking Court dismissed leave application of defendant and decreed suit---Validity---Creditor had claimed encashment of bank guarantee within time---Matter had remained pending with Bank for some time, but as contract of bank guarantee was independent in nature, Bank had to encash the same---Bank under terms of guarantee was obliged to enforce same irrespective of existence of any dispute between defendant and his creditor---Bank guarantee had been encashed within period/life of guarantee and even the claim lodging date---High Court dismissed appeal in circumstances.

M. Iqbal for the Appellants.

Sh. Ashiq Pervez and Ch. Muhammad Yasir Bhatti for Respondent.

2005 C L D 1459

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs WAQAR CORPORATION and through Sole Proprietor 2 others---Appellants

Versus

NATIONAL BANK OF PAKSITAN through Manager---Respondent

R.F.A. No.698 of 2002, decided on 21st March, 2005.

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

-----Ss.15 & 21---Decree for recovery of loan amount with mark-

up---Sole plea raised by defendant. before High Court was that Bank was not entitled to recover amount for cushion period of 210 days---Validity---Amount for cushion period, though claimed by Bank, had neither been added in statement of accounts nor Banking Court had decreed same---Defendant raised further plea that mark-up could not be granted till realization of suit amount---Held: not open to defendant to raise such further plea after having admitted that his only grievance was regarding charging of amount of cushion period---Such further plea was devoid of merits---Banking Court had not committed any illegality while passing impugned judgment---high Court dismissed appeal.

Qaiser Javed Mian for Appellants.

2005 C L D 1462

[Lahore]

Before Mian Saqib Nisar and Sh. Azmat Saeed, JJ

ABDUL HAMEED & COMPANY through Sole Proprietor---Appellant

Versus

BANK OF THE PUNJAB and another---Respondents

Regular First Appeal No.293 of 2003, decided on 23rd December, 2004.

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

----Ss.9 & 10---Suit for recovery of loan amount---Allotment of plot to principal borrower by Development Authority---Bank allowed finance for construction of shop to be raised by the Development Authority which stood guarantor for its repayment---After payment of finance, said Authority cancelled such allotment---Principal borrower denied his liability to repay such amount on the ground that after construction of shop, he was to be delivered its possession which had not been done by the Authority---Banking Court dismissed leave application filed by principal borrower and decreed the suit---Validity---Execution and validity of loan agreement and security documents had not been denied---Principal borrower along with the Authority had mortgaged shop for purpose of securing finance from Bank---Principal borrower had to discharge such liability---Dispute between principal borrower and the Authority about cancellation of such allotment, if any, would not prevent Bank to demand and recover its finance---High Court upheld impugned decree with modification that decree though joint and several with the Authority would first be satisfied from sale of mortgaged property, if same was not fully satisfied, only then principal borrower and the Authority, would be jointly and severally liable to repay the remaining amount of decree.

Shazib Masud for Appellant.

Farooq Bedar for Bank along with Ahmed Amin, Law Officer of the Bank of Punjab.

2005 C L D 1464

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUSLIM COMMERCIAL BANK LIMITED through Manager and Attorney---Appellant

Versus

Messrs MALIK CARPET INDUSTRIES and 2 others---Respondents

E.F.A. No.577 of 1999, heard on 29th March, 2005.

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

----S.21---Limitation Act (IX of 1908), Ss.5, 29(2) & Art.156---Appeal before High Court against judgment/decree of Banking Court---Condonation of delay---Application under S.5 of Limitation Act, 1908---Maintainability---Under ordinary law, period of 90 days was prescribed under Art.156 of Limitation Act.1908 for filing first appeal before High Court---Provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 being a special law would govern the appeal, and S.21(1) thereof prescribed a period of 30 days for filing such appeal---Such special law had provided different periods of limitation than ordinary law for filing the appeal---Held: S.5 of Limitation Act, 1908 would not apply to the present appeal---Such application was misconceived and not maintainable.

Allah Ditta v. Farooq Ahmad and 3 others PLD 1979 Lah. 917; Bashir Ahmad and another v. Messrs Habib Bank Ltd. 1990 CLC 1105; Messrs Conoco Industries (Pvt.) Ltd. and 3 others v. United Bank Limited, Lahore and another 2004 CLD 472; Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645 and Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 rel.

Syed Zaheer Saghir for Appellant.

Nemo for Respondent.

Date of hearing: 29th March, 2005.

2005 C L D 1468

[Lahore]

Before Syed Zahid Hussain and Farrukh Lateef, JJ

MATLOOB AHMED---Appellant

Versus

NATIONAL BANK OF PAKISTAN and 2 others---Respondents

Execution First Appeals Nos.283 and 313 of 2004, decided on 22nd March, 2005.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.58, 59, 89 & 91---Transfer of Property Act (V of 1882), Ss.41 & 54---Execution of decree---Sale of mortgaged property---Objection petition by holder of agreement to sell claiming to be bona fide purchaser of such property---Dismissal of objection petition---Validity---Mere assertion of right on basis of agreement to sell would not furnish adequate basis and locus standi to objector to claim any indefeasible right in such property---Objector, before entering into such agreement, had neither claimed/inspected original title documents of property nor explained that how and when objector acquired any interest in such property---Judgment-debtor had not raised objection to sale by auction---Court sale would never attain finality, if same was allowed to be assailed and annulled on such flimsy claims---Any judgment-debtor could induce any one to enter into agreement to sell in order to frustrate decree or sale conducted in execution thereof---Objector had not complained that he was not afforded opportunity to establish his claim or he wanted to produce any evidence or further investigation was required in the matter---Objector could not be regarded as bona fide purchaser of property---Objection petition had been rightly dismissed---High Court dismissed appeal.

Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. PLD 1987 SC 512 rel.

Shaukat Ali Mian v. Trust Leasing Corporation Ltd. through Chief Executive and 4 others 2002 CLD 1071 distinguished.

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

----S.19----Civil Procedure Code (V of 1908), O.XXI, R.89---Execution proceedings---Objection to sale of property---Amount deposited by objector along with objection petition---Dismissal of objection petition---Banking Court ordered return of such money to objector with mark-up---Validity---Decree-holder-Bank had made use of such amount---Impugned order was just and equitable---High Court dismissed appeal.

Mian Muhammad Kashif for Appellant.

Muhammad Amjad Butt for Respondents.

2005 C L D 1471

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SHABBIR AHMED MALIK---Appellant

Versus

SMALL BUSINESS FINANCE CORPORATION, OKARA, through Manager ---Respondent

R.F.A. No.493 of 2001, heard on 7th April, 2005.

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

----S.9---Civil Procedure Code (V of 1908), O. VII, R.11 & O.X, Rr.1, 2---Suit for rendition of accounts against Finance Corporation---Rejection of plaint---Filing of written statement and statement of accounts by Corporation after granting of leave to defend suit.---Rejection of plaint after recording better statement of plaintiff--Validity-Banking Court after filing of written statement ought to have framed issues and called upon parties to produce evidence in support of their respective claims---Banking Court had deviated from procedure provided under law-High Court set aside impugned judgment/decree with directions to Banking Court to decide suit after framing issues and recording evidence of parties in accordance with law.

Lt.-Col. (Retd.) Mahmood Akhtar v. Bank of Punjab through Manager 2004 CLD 821 fol.

Irfan Masood Sheikh for Appellant.

Nemo for Respondent.

Date of hearing: 7th April, 2005.

2005 C L D 1473

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs PRIME ROAD WAYS through Manager and 2 others---Appellants

Versus

UNITED BANK LTD. through Regional Chief and Authorized Attorneys and 2 others---Respondents

R.F.A. No.529 of 1999, heard on 28th March, 2005.

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

----Ss.9 & 10---Suit for recovery of amount provided by Bank for purchase of vehicles---Leave to defend suit, application for---Defendant pleaded non-performance of contract on the part of Bank due to non-supply of vehicles by distributor---Banking Court dismissed leave application and decreed suit while observing that Bank had disbursed amount of finance by crediting same in the name of distributor, who had to supply vehicles to defendant---Validity---Banking Court for supply of vehicles, though placed total responsibility upon distributor, but had not impleaded him in suit---For non filing of documents before Banking Court, though filed along with appeal, defendant would not be burdened with liability of costs of vehicles, possession whereof was not prima facie delivered to him---Banking Court had decided leave application in complete oblivion of real aspect of the case---High Court accepted appeal and remanded case to Banking Court for its decision afresh.

Tariq Shamim for Appellants.

Nemo for Respondents Nos. 1 and 3.

Waqar Mushtaq for Respondent No.2.

Date of hearing: 28th March, 2005.

2005 C L D 1479

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs OVERSEAS BLUE STAR GHEE MILLS LIMITED through Chief Executive/Managing Director and others---Appellants

Versus

UNITED BANK LIMITED through Principal Officers/ Managers/General Attorneys and others---Respondents

Regular First Appeal No.639 of 2002 and C.M. No.1-C of 2004, decided on 14th March, 2005.

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

----S.22---Appeal against decree for recovery of Bank loan---Joint request of parties for decision of appeal in terms of compromise agreement---Such compromise to satisfaction of High Court was according to law and adjusted entire claim in appeal---High Court disposed of appeal in terms of such compromise while making same as integral part of its order.

Ch. Arshad Mehmood for Appellants.

Masood Ashraf Sheikh for Respondent No.1.

2005 C L D 1480

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs Haji MUHAMMAD BOOTA through Sole Proprietor and 3 others---Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED through Manager---Respondent

Regular First Appeal No.302 and C.Ms. Nos.3-C, 4-C of 2004, heard on 24th March, 2005.

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

----S.47---Questions to be determined by Court executing decree---Scope---Executing Court had power to decide all questions between parties relating to execution, discharge or satisfaction of decree.

Mian Sohail Ahmad for Appellants.

Nemo for Respondent-Bank.

Tassawar Hussain Qureshi for Applicant (in C.Ms. Nos.3-C and 4-C of 2004).

Date of hearing: 24th March, 2005.

2005 C L D 1481

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ABDUL SATTAR RANA---Appellant

Versus

MANAGER, NATIONAL BANK OF PAKISTAN and 3 others---Respondents

Regular First Appeal No.253 of 2001, heard on 24th March, 2005.

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

----Ss.9 & 10---Civil Procedure Code (V of 1908), O.XIV, R.2---Qanun-e-S ha had at (10 of 1984), Art.133---Suit for declaration, permanent injunction and damages---Leave application, non-filing of---Framing of preliminary issue qua maintainability of suit on basis of objection raised in written statement by Bank---Dismissal of suit as being non-maintainable in its present form---Validity---Defendant, after service, would neither be entitled to defend suit nor be permitted to submit written statement as of right, unless he obtained leave from Court to defend suit by filing leave application---Bank, in the present case could file written statement only after obtaining leave to defend suit---Claim for declaration could not he equated with suit based on a negotiable instrument---On such failure of Bank, Banking Court instead of receiving written statement from Bank, ought to have called upon plaintiff to produce evidence in support of his claim as in such suit decree could not he passed straightaway---Issue of maintainability of suit could not be decided without calling upon plaintiff to produce evidence-Impugned judgment suffered from serious legal defects---High Court accepted appeal and set aside impugned judgment with directions to Banking Court to decide suit afresh after calling upon plaintiff to produce evidence in support of his claim and also providing opportunity to Bank to cross-examine plaintiffs witnesses and raise objections regarding admissibility and authenticity of documents, if any, produced by plaintiff ; but Bank, for its such failure, would not be entitled to lead evidence or produce any document.

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

----Ss.9 & 10---Qanun-e-Shahadat (10 of 1984), Art.133---Suit for declaration and permanent injunction---Failure of defendant to file leave application and obtain leave from Court to defend suit-Effect-Decree in such suit could not be passed straightaway as claim for declaration could not be equated with suit based on a negotiable instrument---On such failure of defendant, Banking Court would be obliged to decide such suit after calling upon plaintiff to produce evidence in support of his claim---Defendant, for such failure, would not be entitled to lead evidence or produce any document, but could cross-examine plaintiffs witnesses and raise objections as to admissibility and authenticity of documents, if any, produced by plaintiff---Principle illustrated.

Agha Abul Hassan Arif for Appellant.

Nemo for Respondents.

Date of hearing: 24th March, 2005.

2005 C L D 1486

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs ABDUL SATTAR COTTON AND OIL INDUSTRIES (PVT.) LTD.---Appellant

Versus

ALLIED BANK OF PAKISTAN through President and 2 others---Respondents

Regular First Appeal No.728 of 2002, heard on 14th March, 2005.

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

----S.9--Suit by borrower for declaration, rendition of accounts and permanent injunction---Suit by Bank for recovery of loan amount---Banking Court through a consolidated judgment decreed Bank's suit and in view of such decree dismissed borrower's suit---Validity---Both such suits had never been consolidated---Banking Court was bound to render separate findings, though in single judgment, on each case separately---Banking Court while dismissing borrower's suit in such manner without rendering indel3endent findings had committed legal error---High Court accepted appeal, set aside impugned judgment regarding dismissal of borrower's suit, which would be deemed to be pending before Banking Court for its decision in accordance with law.

(b) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----Ss.9 & 10---Suit by borrower against Bank---Application for leave to defend suit by Bank---Dismissal of suit without deciding leave application---Validity---Banking Court was obliged to decide leave application on its merits before embarking upon merits of suit---Impugned judgment was violative of provisions of S.10 Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court accepted appeal, set aside impugned judgment, resultantly suit along with leave application would be deemed to be pending before Banking Court for its decision in accordance with law.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Brach/Recovery Officer 2004 CLD 1645 rel.

Ch. Bashir Hussain Khalid for Appellant.

Nemo for Respondents.

Date of hearing: 14th March, 2005.

2005 C L D 1489

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SHAHID FAROOQ SHEIKH---Appellant

Versus

ALLIED BANK OF PAKISTAN LIMITED through Manager---Respondent

Regular First Appeal No.14 of 2004, decided on 14th March, 2005.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S.10---Leave application together with written statement, filing of---Grounds for grant of leave to defend suit were that justice could only be done by hearing both parties---Complicated questions of law and fact were involved in the case and contention raised in written statement would call for thorough probe---Banking Court decreed suit after dismissing leave application for lacking requisite information under S.10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Provisions of S.10(6) of the Ordinance were mandatory---Leave application not complying with requirements of S.10(3)(4) & (5) of the Ordinance, would not he taken/treated as leave application and presumption would be that no leave application had been filed---Impugned judgment did not suffer from any legal defect/error---High Court dismissed the appeal.

Mst. Alam Bibi v. Akbar Ali and others 2001 MLD 2007; Haji Ali Khan & Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362 and Province of the Punjab through Member, Board of Revenue, (Residual Properties), Lahore and others v. Muhammad Hussain through Legal Heirs and others PLD 1993 SC 147 ref.

Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406 rel.

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

----Ss.9 & 10---Written statement, filing of---Pre-conditions---Written statement could be filed only after grant of leave to defend suit---Leave application would be in the form of written statement, but not written statement---Banking Court after granting leave application would treat same as written statement---Written statement filed without grant of leave to defend suit could [not be considered---Banking Court while deciding suit would take into consideration only contents of leave application.

(c) Discretion---

----Discretionary orders of Subordinate Courts could not be interfered with, unless found fanciful and. arbitrary.

Shahzada Muhammad Umar Beg v. Sultan Mahmood Khan and another PLD 1970 SC 139 fol.

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

----Ss.10 & 22---Plea not raised in leave application before Banking Court---Effect---Such plea could not be raised before High Court in appeal.

Ch. Muhammad Masud Akhtar Khan for Appellant.

Masud Ashraf Sheikh for Respondent.

2005 C L D 1494

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ASKARI COMMERCIAL BANK LTD.---Appellant

Versus

SEHRISH TEXTILE MILLS LTD. through Chief Executive---Respondent

Regular First Appeal No.497 of 2004, decided on 25th May, 2005.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S.10(1)---Written statement, filing of---Non filing of application for leave to appear and defend the suit---Effect---Defendant throughout the proceedings did not file any application seeking leave to defend the suit---Defendant was not granted leave to defend the suit at any stage. yet it filed written statement, which under the law, could only be filed when a defendant was granted leave to defend the suit.

(b) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S.10---Application for leave to defend, non filing of-Whether written statement to be treated as application for leave to defend---After service on defendant had been effected, he would not be entitled to defend the suit unless he had obtained from the Court leave to defend the suit through filing application as provided under S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Application for leave to defend only in that eventuality, would be treated as written statement---When defendant was served, he was only required to file application for leave to defend the suit within the prescribed period and he was not permitted to submit the written statement as of right---Under the statute, the defendant was not required to file written statement straightaway---Written statement filed by defendant could not be entertained and considered as leave application and the defendant was not entitled to grant of leave to defend the suit-Banking Court had rightly refused to grant defendant leave to defend the suit---Judgment passed by Banking Court was maintained by High Court---Appeal was dismissed accordingly.

(c) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

--Ss.9 & 10---Recovery of bank loan---Leave to defend the suit, refusal of---Passing of decree without recording of evidence---Banking Court did not grant leave to defend the suit to defendant as no such application was filed---Suit was straightaway decreed in favour of bank, without recording of evidence---Validity---When the defendant failed to file the requisite application for grant of leave to defend the suit within the prescribed period, Banking Court instead of receiving written statement, should have called upon the Bank to prove its case by producing evidence---Decree could not have been passed straightaway, as in suit for declaration and permanent injunction, as claim of declaration could not be equated with the suit founded on negotiable instruments---Banking Court deviated froth the procedure provided under the statute, forgetting that Banking Court being the creature of the statute was bound by the provisions of that statute---Judgment and decree passed by Banking Court without recording of evidence was set aside and the case was remanded to Banking Court for decision afresh after recording of evidence produced by bank only---Appeal was allowed accordingly.

Citibank v. Tariq Mohsin Siddiqi and others PLD 1999 Kar. 196; Allied Bank of Pakistan Ltd. through Iftikhar-ul-Haq and Khalid Ishaq v. Mohib Fabric Industries Ltd. through Chief Executive 2004 CLD 716; Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931 and Messrs Huffaz Seamless Pipe Industries Ltd. Karachi v. Allied Bank of Pakistan Limited, Karachi 2001 CLC 713 ref.

Ghulam Farid-ud-Din for Appellant.

Shahzib Masood for Respondent.

2005 C L D 1500

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs AWAN CONSTRUCTION COMPANY, GOVERNMENT CONTRACTORS (AS THEN WERE) through Mahmood-ul-Alvi and another---Appellants

Versus

UNITED BANK LIMITED through Manager---Respondent

E.F.A. No.148 of 2001, heard on 25th April, 2005.

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

----S. 21---Limitation Act (IX of 1908), Ss.5, 29 & Art.156---Appeal---Limitation---Condonation of delay---"Ordinary" and "special law"---Distinction---Provisions of Limitation Act, 1908---Applicability---Appeal was barred by limitation and appellants sought condonation of delay under S.5 of Limitation Act, 1908---Validity---Under the ordinary law, a period of 90 days had been prescribed under Art.156 of, Limitation Act, 1908, for filing of appeal before High Court:--Present case was governed by a special law and S.21(1) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, had prescribed a period of 30 days for filing of first appeal before High Court against judgment and decree passed by Banking Court---Special law having provided different period of limitation for filing first appeal in High Court than the ordinary law, S.5 of Limitation Act, 1908, was neither applicable nor attracted---Application filed by appellants under S.5 of Limitation Act, 1908, for condonation of delay was incompetent and not maintainable, thus was dismissed---With the dismissal of application, the appeal was barred by time and could not proceed further having been filed beyond the period of limitation prescribed under the relevant law---Appeal was dismissed accordingly.

Allah Ditta v. Farooq Ahmad and 3 others PLD 1979 Lah. 917; Bashir Ahmad and others v. Messrs Habib Bank Ltd. 1990 CLC 1105; Messrs Conoco Industries (Pvt.) Ltd. and 3 others v. United Bank Limited, Lahore and another 2004 CLD 472; Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645; Ali Muhammad and another v. Fazal Hussain and others 1983 SCMR 1239 and Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 rel.

Iqbal Mehmood Awan for Appellants.

Mian Irshad Mehmood for Respondent.

Date of hearing: 25th April, 2005.

2005 C L D 1503

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD JAMIL CHAUDHERY---Appellant

Versus

HABIB BANK LIMITED through Manager and 8 others---Respondents

E.F.A. No.127 of 2005, heard on 18th April, 2005.

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

----Ss.18 & 19(7)---Execution of decree---Objection petition---Attachment of property---Non-application of judicial mind---Contention of objector was that he was bona fide purchaser of property attached in execution proceedings---Objection petition was dismissed by Banking Court under S.18 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Banking Court misconstrued S.18 of Financial Institutions (Recovery of Finances) Ordinance, 2001, which was neither attracted nor applicable in circumstances of the case---Banking Court while dismissing the objection petition did not read the provisions of S.18 of Financial Institutions (Recovery of Finances) Ordinance, 2001, on the basis of which objection petition was dismissed---Such course exhibited the non-application of judicial mind and Banking Court should have at least read the provisions of S.18 of Financial Institutions (Recovery of Finances) Ordinance, 2001, and had applied the correct law on the facts and circumstances of the case---Although it was pleaded by objector that he was bona fide purchaser of the property, yet the plea was neither dealt with nor decided by Banking Court---No finding of Banking Court, was available in the order regarding the plea raised by the objector---Banking Court ought to have dealt with the plea and decided the same, either way, in accordance with law---Order passed by Banking Court was set aside and the case was remanded to Banking Court for deciding the objection petition afresh---Appeal was allowed accordingly.

Tariq Mehmood Randhawa for Appellant.

Shams Mehmood Mirza for Respondents.

Date of hearing: 18th April, 2005.

2005 C L D 1506

[Lahore]

Before Ch. Ijaz Ahmad and Mian Saqib Nisar, JJ

Messrs ARSH MASROOR PAKISTAN (PVT.) LTD. through Chief Executive---Appellant

Versus

Messrs ALLIED BANK OF PAKISTAN LIMITED through Manager and 3 others---Respondents

Regular First Appeal No.512 of 2002, heard on 2nd June, 2005.

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

----S.9---Specific Relief Act (I of 1877), S.42---Declaration of title---Dismissal of suit---Failure to give reasons---Pendency of suit for recovery of bank loan---Borrower filed declaratory suit in Banking Court, prior to the suit filed by bank against the borrower---Banking Court dismissed the suit of borrower on the ground that he could seek any relief from the Court where the suit for recovery of bank loan was pending against him by way of submission of application for grant of leave under S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Banking Court had passed the judgment without application of mind, therefore, the judgment passed by Banking Court in suit filed by borrower was not sustainable in the eyes of law---Judgment and decree passed against the borrower was set aside and the case was remanded to Banking Court for decision afresh in accordance with law---Appeal was allowed accordingly.

Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173 rel.

S. M. Nasim for Appellant.

Mian Nasir Mehmood for Respondent No.1.

Farzana Khan for Respondents Nos.2 and 3.

Date of hearing: 2nd June, 2005.

2005 C L D 1508

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

SME BANK LTD. (FORMER REGIONAL DEVELOPMENT FINANCE CORPORATION) through Branch Manager---Appellant

Versus

Messrs CONTINENT LEATHER (PVT.) LTD. through Director and 3 others---Respondents

E.F.A. No.511 of 2003, heard on 26th May, 2005.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.103---Execution of decree---Objection during execution---Factual controversy-Determination-Non-framing of issue---Objection petition was filed on the ground of bona fide purchasers of the property mortgaged with financial institution---Executing Court, without framing of issues, just on the basis of verification from the Development Authority, allowed the objection petition---Validity---All questions as to the title, right and interest etc. in immovable property between decree-holder and opposite party, should be adjudged and determined by Executing Court under O.XXI, R.103, C.P.C. and fresh suit in that behalf was barred---If there was any question of fact, which was involved in the matter, the same should have been resolved, by Executing Court in the manner as was the subject-matter of the suit---Questions which needed resolution by Executing Court were whether defence of bona fide purchasers was applicable to the objectors, if so, whether the objectors in fact were the bona fide purchasers, particularly in the situation when they did not obtain the order inquiring about the original title documents---Executing Court did not advert to such aspects of the matter and had allowed the objection petition only on the basis of some verification by the Development Authority---Such verification was insufficient to give the benefit of bona fide purchaser, if it was otherwise available to the objectors under the law---Executing Court had disposed of the matter in the manner not permissible under the law---Order passed by Executing Court was set aside and the matter was remanded to Executing Court for decision afresh after framing of issues and recording of evidence---Appeal was allowed accordingly.

Nadeem Ahmed Sh. for Appellant.

Waqar Mushtaq Ahmed for Respondent.

Date of hearing: 26th May, 2005.

2005 C L D 1511

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

NASIR MUSHTAQ SHEIKH---Appellant

Versus

PLATINIUM COMMERCIAL BANK LTD. through General Attorney and 6 others---Respondents

E.F.As. Nos.33 of and 34 2004, decided on 16th May, 2005.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.90---Execution of decree---Setting aside of sale---Factual controversy---Failure to record evidence---Judgment-debtor objected sale through auction on the ground that no auction was held at the spot and the property was sold at a very low price---Banking Court summarily disposed of objection petition and without any material/evidence available on record had abruptly concluded that market value of the property was more and it was sold at throw away price---Validity---Findings of Banking Court that objection petition required summary disposal and the property was sold at a very low price, were not supported and substantiated by record and it was not discernible from the order or material available on record on what material the Banking Court found that the property was worth more than that on which it was auctioned---Figure quoted by judgment-debtor was denied by the decree-holder as well as the auction purchaser---Banking Court while taking the plea of judgment-debtor as gospel truth, without any evidence on record, erroneously came to the conclusion that the market value of the property was not less than the amount quoted by judgment-debtor---Order of Banking Court was devoid of reasons and was passed without due application of judicial mind---Banking Court neither adverted to nor decided the actual controversies raised by the parties through filing objection petition and their replies---Barking Court could not have decided the objection petition, unless and until reasonable opportunity for producing evidence was afforded to both the parties---Banking Court ought to have investigated claims of the parties and decided their objections to the sale of property by providing sufficient opportunity to the parties and decided their objections to the sale of property by providing sufficient opportunity to the parties for establishing their respective claims through production of evidence---Order passed by Banking Court was set aside and the matter was remanded to Banking Court for decision afresh after recording of evidence adduced by parties---Appeal was allowed accordingly.

Punjab Province (now Province of West Pakistan) v. Kh. Feroze Din Butt and another PLD 1960 (W.P.) Lah. 791; Brig. (Retd.) Mazhar ul Haq and another v. Messrs Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lah. 706; Syed Munir Hussain Gilani v. Habib Bank Limited, Township Branch, Lahore through Attorney and another 2002 CLD 315; Messrs Dawood Flour Mills and others v. National Bank of Pakistan 1999 MLD 3205; Messrs S.P.R.L. Rehman Brothers and another v. Judge Banking Court No.II, Lahore and another 2000 MLD 1957; Messrs Majid & Sons and another v. National Bank of Pakistan 2002 CLD 1742 and Mrs. Shahida Saleem and another v. Habib Credit and Exchange Bank Limited and 4 others 2001 CLC 126 ref.

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

----O.XXI, R.90---Sale through auction---Objection petition, decision of---Procedure---Recording of evidence---Principles---Executing Court is not under obligation to mechanically record evidence of objector in each and every case when objection petition is brought before it---Executing Court has to see in individual cases whether the case warrants recording of evidence or not and that the objection application has been filed frivolously, contumaciously and to delay the proceedings or it is a genuine application---Executing Court was to decide as to whether the objection petition is to be decided after recording the evidence or only after hearing the parties.

Iftikhar Ullah Malik for Appellant.

Mujtaba Jamal for Respondent No.1.

Muhammad Almas for Respondent No.3.

Ali Baqir Najfi for Respondent No.6.

Respondents Nos.2, 4, 5 and 7 ex parte.

2005 C L D 1517

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

NAZEER SULIMAN STEEL CASTING (PVT.) LTD. and 2 others---Appellants

Versus

NETWORK LEASING CORPORATION LTD.---Respondent

E.F.A. No.201 of 2004, heard on 7th April, 2005.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S. 19---Qanun-e-Shahadat (10 of 1984), Art. 114---Civil Procedure Code (V of 1908), S.47---Execution of decree---Principle of acquiescence and estoppel---Applicability---Contradictory pleas---Scope---Consent decree was passed between the parties in year, 1996, and none of the parties filed any appeal---Execution petition remained pending for approximately 6 years, when on 29-5-2003, the judgment-debtors for the first time raised objection that the decree was passed without jurisdiction---Judgment-debtors also raised the objection that they had satisfied the decree in terms of compromise---Executing Court dismissed the objection petition---Validity---Judgment-debtors acquiesced over the passing of decree for a considerable delay of seven years and after protracted silence for such a long period, the judgment-debtors ,filed objection petition---Principle of acquiescence would operate against the judgment-debtors in addition to the applicability of principle of estoppel, as the judgment-debtors, after having consented to passing of consent decree, allowed it to be partially executed---Having raised no objection despite joining execution, the judgment-debtors could not be allowed to turn around at such stage and say that the decree was not executable---Executing Court could not go behind the decree sought to be executed---Two pleas taken by judgment-debtors that the decree under execution suffered from lack of jurisdiction and that they had satisfied the decree in terms of compromise were contradictory---Such pleas were not alternative pleas---Litigant could not be allowed to take contradictory pleas and was estopped to below hot and cold in the same breath---Banking Court did not give any finding regarding plea of satisfaction of decree th terms of compromise---Order passed by Executing Court was devoid of reasons which was set aside and the matter was remanded to Executing Court for decision afresh only on the question of satisfaction of decree in terms of compromise---Appeal was allowed accordingly.

Ghulam Muhammad v. Agricultural Development Bank of Pakistan through Manager 2003 CLD 267; Syed Farasat All Shah v. Allied Bank of Pakistan Ltd. and others 2003 CLD 952 and Tariq Shahbaz Chaudhry and 5 others v. Bank of Punjab through Attorney and 4 others 2004 CLD 207 rel.

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

----Ss.39, 40 & 42---Transfer of decree---Executing Court, powers of---Judgment-debtors raised objection that the decree had been satisfied in terms of compromise arrived at between the parties---Objection was dismissed by Executing Court on the ground that the same should have been raised before the Court which had passed the decree---Validity---Executing Court had erroneously brushed aside the contention of judgment-debtors by merely observing that the same could be raised before Banking Tribunal which had passed the decree---Decree was transferred to Executing Court and it was under obligation to execute the decree and also to decide all the related questions and objections raised by the parties having interest therein---Order passed by Executing Court was set aside in circumstances.

Muhammad Asghar Khan for Appellants.

Abdul Hamid Cheema for Respondent.

Date of hearing: 7th April, 2005.

2005 C L D 1523

[Lahore]

Before Karamat Nazir Bhandari, J

ABDUL QAYYUM and others---Petitioners

Versus

DIRECTOR-GENERAL (EPA) and others---Respondents

Writ Petition No.4101 of 1995, decided on 6th April, 1999.

Pakistan Environmental Protection Act (XXXIV of 1997)----

---Ss. 11 & 17---Constitution of Pakistan (1973), S. 199---Constitutional petition---Petitioners had alleged that respondents were running their industrial units in the area which predominantly was residential; that noise and other emissions from the running of industries was above permissible limits; that authorities were repeatedly approached by inhabitants of locality asking them to intervene and to perform their legal obligations but despite initial surveys and some reports, no positive action had been taken and that lives of petitioners as well as other inhabitants had become miserable---Petitioners had relied on provisions of Pakistan Environmental Protection Act, 1997 to contend that authorities should be directed to proceed to use its powers under said provisions of law---Provisions of Pakistan Environmental Protection Act, 1997, were comprehensive and agencies and authorities created under said Act had also been given powers to lay down necessary standards and also to enforce same by invoking penal provisions in accordance with law---Discharges and emissions were not lawful more than prescribed limit---Such an omission could be corrected by issuing a writ of mandamus---High Court disposed of the petition with direction that authorities would entertain representation made by petitioners and proceed to deal with same in accordance with provisions of law after affording opportunity of hearing to the persons likely to be adversely affected.

Sajjad Mehmood Sheikh for Petitioners Nos 1 and 2.

Muhammad Amin Lone, Assistant Advocate-General, Punjab for Respondents Nos. 1 to 3.

Khurshid Ahmed Chaudhry for Respondents Nos.4, 6 and 8.

Date of hearing: 6th April, 1999.

2005 C L D 1525

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

ASAD PERVAIZ and another---Appellants

Versus

HABIB BANK LTD. through Manager---Respondent

R.F.A. No.6 of 2002, heard on 20th March, 2003.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Application for leave to appear and defend suit---Appellants had contended that though under agreement, Bank was liable to make disbursement of the whole amount of facility, but same was not made in lump sum but in instalments and that they had been making certain payments to and deposits with the Bank but same were not adjusted against their liability according to payments made by them which was an example of lapses and omissions on the part of the Bank---Bank could not controvert said position---Bank could not satisfactorily explain as to what mark-up could be charged for that period when amount was not disbursed---Allowing the appeal, impugned judgment was set aside---Leave was granted to appellants and matter was remanded to Trial Court accordingly.

Syed Samar Hussain for Appellants.

Shabbir Ajmal Jaffery for Respondent.

Date of hearing: 20th March, 2003.

2005 C L D 1527

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

CITIBANK, N.A. through Branch Manager---Appellant

Versus

MAJID NAEEM---Respondent

R.P.A. No.817 of 2002 and C.M.A. No.2-C of 2005, decided on 21st June, 2005.

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

----Ss. 9 & 22---Suit for recovery of loan ---Application for passing consent decree in terms of agreement and to modify decree passed by Trial Court---Bank in its application had prayed that consent decree could be passed in terms of agreement by modifying decree passed by Trial Court---Submission of Bank was that instead of dismissal of appeal, consent decree in terms of settlement agreement be passed---Upon filing of copy of settlement agreement, appeal was dismissed as no live issues were left to be decided---Applicant's case was not that some issues in appeal were still undecided, after dismissal of appeal, that too in presence of counsel of parties, no consent decree as prayed ,for, could be passed when no appeal was pending before High Court as it stood dismissed.

Ashar Ellahi for Appellant.

Muhammad Yousaf Chaudhary for Respondent.

2005 C L D 1537

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager---Appellant

Versus

SHAH JEHAN---Respondent

Regular First Appeal No. 267 of 2002, heard on 6th May, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan---Claim of mark-up---Suit filed by Bank was decreed by including mark-up from date of institution of suit till realization of decretal amount---Amount of mark-up claimed by Bank after expiry of agreement till institution of suit, was excluded---Grievance of Bank was that mark-up should have been included because there was a stipulation in the agreement between parties for payment of mark-up---Bank, however had not been able to show the time from which the respondents were obliged to pay mark-up after expiry of agreement---Effect---Mark-up could not be allowed without any specific stipulation in the agreement in that behalf---In absence of any error in the judgment of Court below, appeal against said judgment, was dismissed.

Iftikhar Ullah Malik for Appellant.

Nemo for Respondent.

Date of hearing: 6th May, 2003.

2005 C L D 1539

[Lahore]

Before Ali Nawaz Chowhan and Umar Ata Bandial, JJ

ZARI TARAQIATI BANK LTD. through Manager---Appellant

Versus

Syed NUSRAT ALI SHAH and others---Respondents

E.F.A. No.150 of 2005, heard on 1st June, 2005.

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

----Ss. 9, 19 & 22---Suit for recovery of loan---Execution of decree---Mark-up---Claim for---Suit filed by Bank was decreed with mark-up at stipulated rate till realization of decretal amount---Decree passed in favour of Bank appeared to be destitute of factum of mark-up, but appellant had claimed that decree had made a mention of it---Executing Court, had to remain within the periphery of decree and could not go beyond the same---Executing Court could summon record for inspection and ascertaining whether full part of judgment i.e. including portion relating to mark-up had been reflected by Banking Court in its decree sheet and if not, then refrain from taking any further action in the matter confining itself to what was stated in the decree---Case of judgment-debtors was that they had paid the amount reflected in the decree sheet; if that was so then they had fulfilled requirement of decree until decree was amended---Bank should choose to move Banking Tribunal for purposes of amendment in the decree, the judgment-debtors would also have the opportunity of addressing the Court in that connection so that the ends of natural justice were met.

Iftikhar Ullah Malik for Appellant.

Mian Nusrat Ullah for Respondents.

Date of hearing: 1st June, 2005.

2005 C L D 1543

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

GHULAM MURTAZA and another---Respondents

Regular First Appeal No.321 of 1996, heard on 6th March, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan.---Banking Court decreed suit, but declined to award liquidated damages to the Bank---View taken by Chairman, Banking Tribunal in his judgment was not shown to have been suffering from any misreading of record or same was contrary to law---Tribunal, in declining liquidated damages, had exercised discretion on sound principles---No justification was available to interfere with the judgment of Chairman, Banking Tribunal.

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 Mehmood for Appellant.

Rab Nawaz Niazi for Respondents Nos. 1 and 2.

Date of hearing: 6th March, 2003.

2005 C L D 1544

[Lahore]

Before Ch. Ijaz Ahmad and Ali Nawaz Chowhan, JJ

Chaudhary ATHAR ZAHOOR--- Appellant

Versus

JUDGE BANKING COURT NO.2, LAHORE and 3 others---Respondents

F.A.O. No.30 and C.M. No.3-C of 2003, decided on 24th March, 2003.

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

----Ss. 9, 19 & 22---Civil Procedure Code (V of 1908), Ss. 145, 151, O.XXI & O.I, R.10---Limitation Act (IX of 1908), S. 14---Suit for recovery of loan---Execution proceedings---Impleading of party, application for---Appellant had challenged application filed by Bank under 0.1, R.10, C.P.C. to implead appellant in execution proceedings contending that 0.1, R.10, C.P.C. was not applicable in execution proceedings---Validity---Provisions of 0.1, R.10, C.P.C. were not applicable in execution proceedings---Impugned order was set aside---Bank, however, was well Within its rights to file an application against appellant under S. 145, C.P.C. read with S. 151, C.P.C. and Banking Court would decide the same in accordance with law---Application for condonation of delay in filing appeal was allowed in view of S.14 of Limitation Act, 1908.

Ramchandra Barik and others v. Dibakar Das AIR 1944 Patna 278; Rasib Khan v. Abdul Ghani PLD 1995 SC (AJ&K) 83; Dr. Maj. Abdul Ahad Khan v. Muhammad Iqbal PLD 1989 Kar. 102; Sherin v. Fazal Muhammad 1995 SCMR 584 and Bashir Ahmad v. Muhammad Sharif PLD 2001 SC 228 ref.

Mian Ahmad Mahmood for Appellant.

Haq Nawaz Chatha for Respondents.

2005 C L D 1562

[Lahore]

Before Syed Zahid Hussain and Muhammad Akhtar Shabbir, JJ

HABIB BANK LIMITED through Attorneys---Appellant

Versus

MUHAMMAD ARIF NAZIR---Respondent

R.F.A. No.194 of 1997, heard on 14th October, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan---Return of plaint---Judgment passed by Chairman Banking Tribunal whereby plaint filed by Bank was ordered to be returned, had been assailed by Bank in first appeal---Validity---Impugned judgment was not maintainable because Tribunal and law under which it was functioning, had ceased to be operative---Banking Court, presently were functioning under the prevailing law-Appellant should have made a move before Banking Court for proceedings in the suit which was to heard and decided by it 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 Limited 2002 CLD 759 ref.

Mian Nasir Mahmood for Appellant.

Ch. Muhammad Ikram Zahid for Respondent.

Date of hearing: 14th October, 2003.

2005 C L D 1564

[Lahore]

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

UNITED BANK LIMITED through Manager and Attorney---Appellant

Versus

Messrs SHAFIQUE PLASTIC and another---Respondents

Regular First Appeal No.86 of 1997, heard on 15th September, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan---Claim for mark-up---There being no buy-back agreement between the parties, Banking Court was justified not to grant Mark-up to Bank---No infirmity and illegality was found in impugned judgment and decree, furthermore by efflux of time same had already been satisfied---Appeal having no merit, was dismissed.

Malik Amjid Pervaiz for Appellant.

Nemo for Respondents.

Date of hearing: 15th September, 2003.

2005 C L D 1565

[Lahore]

Before Nazir Ahmad Siddiqui and Muhammad Nawaz Bhatti, JJ

Messrs KHALID OIL MILLS through Sole Proprietor and 2 others--- Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager/Attorney---Respondent

R.F.A. No.188 of 2004, decided on 4th July. 2005.

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

----Ss.10 & 22---Suit for recovery of loan---Application for leave to defend the suit---Availing the facility of loan was not denied by the defendants---Only ground urged by the defendants for grant of leave to defend was to the effect that stocks of the defendants pledged with the Bank lying in the godown were stolen/ misappropriated at the instance of the Bank Manager---Defendants had been nominated as accused in the criminal case got registered in connection with the misappropriation/ theft of stocks and they were on bail-Such plea of defendants thus, could not advantageously be used by them with reference to the recovery of the amount in question through the suit of the Bank which had been decreed by the Trial Court on refusal to grant leave to defend the suit---Validity---Judgment of the Trial Court showed that the defendants were quite lethargic and indolent towards pursuing their application for leave to defend the suit which otherwise did not disclose any triable issue---Trial Court had examined the matter in its true perspective with reference to the material available on the file and rightly passed the impugned judgment and decree, to which no exception could be taken---Bank, however, submitted that the house of the defendants shown to be mortgaged with the Bank shall not be put to auction and the decretal amount will be firstly attempted to be realized from auctioning the other property of the defendants duly mortgaged with the Bank .and in case the decretal amount was not satisfied from said auctioning, then and then only house of the defendants shall be put to auction---Said statement of the Bank was made part of the order of the High Court.

Syed Zammurad Hussain Shah for Appellants.

Muhammad Irfan Wyne for Respondent.

2005 C L D 1567

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

MUHAMMAD IQBAL and others--- Appellants

Versus

BOLAN BANK LIMITED---Respondent

E.F.A. No.285 of 2002, heard on 5th November, 2003.

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

----Ss. 9, 19 & 22---Suit for recovery of loan---Execution of decree---Suit by Bank was decreed and decree-holder had sought execution of decree by arrest and detention of appellants/ judgment-debtors as they did not appear despite they were served through registered post and it was reported that two judgment-debtors were living in Karachi and one of them had died and two judgment-debtors were employed abroad---Appeal to the extent of deceased judgment-debtor had become infructuous-Appeal was not pressed to the extent of two judgment-debtors who were working abroad---Only one of the judgment-debtors, who was Chief Executive of Company, was available who would appear before Executing Court in response to show-cause notice---Decree-holder had no objection provided said judgment-debtor would furnish adequate security to the satisfaction of Executing Court for his appearance---Appeal was disposed of with consent of parties in terms that said judgment-debtor would appear before Executing Court within specified period, and would submit security to the satisfaction of Executing Court for his appearance when required.

Shahid Ikram Siddiqui for Appellants.

Bashir Ahmad for Respondent.

Date of hearing: 5th November, 2003.

2005 C L D 1569

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs A.M. RICE CORPORATION through Sole Proprietor and another---Appellants

Versus

BANK OF PUNJAB through Manager as Attorney---Respondent

Regular First Appeal No.23 of 2002, decided on 12th May, 2003.

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

----Ss. 9 & 10---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 3---Suit for recovery of loan---Application for leave to appear and defend suit---Charging of mark-up---Appellant had admitted liability to pay amount, but his grievance was qua the rest of the decretal amount which had been awarded by Banking Court as mark-up---Appellant had contended that decree had been passed under S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001 which did not provide for allowing mark-up, rather only costs of funds could have been awarded to the Bank---Contention of appellant was repelled because suit had been brought by the Bank under Provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 wherein Court had ample power to grant mark-up from date of institution of suit till realization of amount---Provisions of S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001 which was a subsequent Legislation, were inapplicable to the case.

Mian Sohail for Appellants.

Muhammad Shuja Baba for Respondent.

Date of hearing: 12th May, 2003.

2005 C L D 1574

[Lahore]

Before Maulvi Anwarul Haq and Syed Sakhi Hussain Bokhari, JJ

Haji ABDUL REHMAN and 5 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN---Respondent

R.F.A. No.250 of 1999, decided on 15th September, 2004.

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

----Ss. 9 & 22---State Bank of Pakistan BPD, Circular No.29 of 2002---Suit for recovery of loan---Appeal to High Court---Judgment and decree passed by Banking Court in favour of Bank, had been challenged by appellants in appeal contending that Bank had illegally compounded the mark-up---Only objection regarding mark-up taken by appellants was to the effect that same was against Injunctions of Islam and that they had moved State Bank of Pakistan under the incentive scheme and matter was under active consideration and some amount had been deposited as well---Validity---High Court declined to consider the contention about mark-up and observed that if the appellant had applied to the State Bank of Pakistan to get the benefit of-Incentive Scheme, the Executing Court would duly consider said matter before proceeding to execute decree.

Iqbal Hameed-ur-Rehman for Appellants.

2005 C L D 1576

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Mst. PARVEEN KAUSAR and 6 others---Appellants

Versus

BANK OF PUNJAB through Authorized Officer---Respondent

E.F.A. No.358 of 2002, heard on 23rd June, 2003.

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

----Ss. 9, 19 & 22---Suit for recovery of amount---Execution proceedings---First appeal---Original owner of property in question having died, his property devolved upon his widow, four sons and two daughters---Widow of deceased inherited 1/8th share while sons and daughters had inherited their due shares according to Islamic Law of inheritance--Property in question, in circumstances could not be sold as a whole and the Court should have determined shares of appellants/share-holders and only could have put on sale shares of those appellants against whom decree was passed, and not the entire property---Impugned order was set aside and matter was sent back to Banking Court for determining exact share of each appellant.

Ahmad Awais for Appellants.

Muhammad Aqil Malik for Respondent.

Date of hearing: 23rd June, 2003.

2005 C L D 1586

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs WARRIOR CHEMICAL (PVT.) LTD. and 5 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN---Respondent

Appeal No.418 and Regular First Appeal No.419 of 2002, heard on 4th December, 2003.

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

---Ss. 9, 10 & 22---Suit for recovery of loan---Leave to appear and defend suit---Application filed by appellants for leave to appear and defend suit by Bank, was dismissed by Banking Court for non-prosecution on date which was fixed for reply and for arguments thereon and suit was accordingly decreed---Until and unless reply was filed and appellants had the knowledge of position taken by Bank in reply, it was not possible for appellants to argue their leave application---As matter was fixed for the reply of respondent and leave application was not fixed for hearing, application could not be dismissed for non-prosecution on said date---Impugned judgment and decree were set aside and application of appellants for leave to appear and defend suit would be deemed pending before Banking Court.

Ch. Ras Tariq for Appellants.

Kh. Muhammad Farooq for Respondent.

Date of hearing: 4th December, 2003.

2005 C L D 1588

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN---Appellant

Versus

NADIR alias NADIR ALI and 2 others---Respondents

Regular First Appeal No.515 of 1996, heard on 12th March, 2003.

Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----Ss. 9 & 22---Suit for recovery of loan---Claim for liquidated damages---Suit for recovery of Rs. 1, 79, 200 and for liquidated damages at the rate of 20% instituted by Bank was disposed of by Banking Tribunal in view of adjustment having already been made under Prime Minister Package Scheme---Appellant-Bank had contended that claim for liquidated damages had illegally been declined by Banking Tribunal---As against a sum of Rs.1,10,000, which had been availed by respondents as loan, a sum of Rs.1,17,625 had been deposited by them---Taking the view that Prime Minister's Package was attracted and covered the situation, the rest of the claims made by appellant-Bank were declined by Banking Tribunal---No illegality had been committed by Banking Tribunal in that regard.

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 Respondent.

Date of hearing: 12th March, 2003.

2005 C L D 1603

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Syed KHALID HASSAN and another--- Appellants

Versus

NATIONAL BANK OF PAKISTAN and 12 others---Respondents

R.F.As. Nos.532 of 1999 and 913 of 2001, heard on 2nd April, 2003.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Leave to defend suit---Appellants were impleaded as guarantors on the basis of personal guarantees executed by them to secure the liability of principal debtor---Case of appellants was that they had not issued any personal guarantees to secure the liability owed to Bank by principal debtor---Such fact was not denied by the Bank---Appellants having raised a serious and bona fide defence to suit filed by Bank, application of appellants seeking leave to appear and defend suit could not have been dismissed---Allowing appeal, appellants were allowed leave to defend suit filed by the Bank accordingly.

Syed Hamid Ali Shah for Appellants.

Rana Imtinan Saeed for Respondent No.1.

Asher Elahi for Respondents Nos.9 to 12.

Rasheen Nawaz for Appellant (in R.F.A. No.913 of 2001).

Date of hearing: 2nd April, 2003.

2005 C L D 1605

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

Messrs THE JHANG TEXTILE INDUSTRIES (PVT.) LTD. through Chief Executive of the Company and others---Appellants

Versus

NATIONAL BANK OF PAKISTAN---Respondent

R.F.A. No.309 of 1998, decided on 15th January, 2004.

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

----Ss. 9 & 22---Suit for recovery of loan---Original counsel of appellants having died, they requested to make alternate arrangement---Another counsel appointed by appellants having been elevated to the Bench, case was adjourned and office was directed to send notices to appellants directly as well as through agency of Senior Civil Judge concerned and notices were sent accordingly to the parties---Some of appellants were served according to report of process server, whereas some of the appellants had left their place of residence---Despite service appellants did not enter appearance---Appeal was dismissed for non-prosecution.

Nemo for Appellants.

Muhammad Nawaz Bhatti for Respondent.

2005 C L D 1606

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs RASOOLAN BIBI and 5 others---Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Joint Director ---Respondent

R.F.A. No.510 of 2002, heard on 15th January, 2004.

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

----Ss. 9, 10, 22 & 24---Limitation Act (IX of 1908), Art. 132(c)---Suit for recovery of loan---Limitation---Leave to appear and defend suit---Appellants had contended that suit filed by Bank was barred by time as period of limitation was three years, but suit had not been filed before expiry of said period---Bank had referred to Art. 132(c) of Limitation Act, 1908 and had submitted that where immovable property was charged by way of deposit of title documents with the object to enforce the payment of money, the limitation was 12 years and that Bank had sanctioned the loan of appellant on deposit of Pass Book---Said Pass Book was not the title document of the nature envisaged in Art. 132 of Limitation Act, 1908 to attract the provision---Appellants having raised a substantial question of law and fact i.e. limitation, for determination of that, they were entitled to grant of leave---Impugned judgment and decree, were set aside and leave to appear and defend suit was granted and appellants were allowed to file written statement within specified period and case was remanded to Banking Court for deciding same, in accordance with law.

Ras Tariq Ch. for Appellants.

Syed Haider Ali Shah for Respondent.

Date of hearing: 15th January, 2004.

2005 C L D 1620

[Lahore]

Before Iftikhar Hussain Chaudhry, J

Messrs AL-RAIEE TRADERS through Sole Proprietor---Petitioner

Versus

ALLIED BANK OF PAKISTAN through Officer/ Manager/Attorney and another---Respondents

T.A. No.4-C of 2004, decided on 15th January, 2004.

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

----S. 9---Suit for recovery of loan---Transfer of suit---Petition for---Petition submitted for entrustment of two suits between parties to one Banking Court was allowed---Suit pending before Banking Court was withdrawn from that Court and was entrusted to another Banking Court so that suit filed by petitioner against Bank and one filed by Bank against petitioner, should be heard together.

Zafar Iqbal Chohan for Petitioner.

Nemo for the Respondents.

2005 C L D 1621

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

SHAUKAT HUSSAIN---Appellant

Versus

HABIB BANK LIMITED---Respondent

Regular First Appeal No. 600 of 1996, heard on 3rd April, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan---Delay in filing appeal---Condonation of---Appellant filed application for obtaining copy of impugned judgment of Banking Court at a time when period of limitation for filing appeal had already run---Even thereafter appeal was not filed promptly and considerable time was allowed to elapse---Hardly any ground was made for seeking condonation of delay---Section 5 of Limitation Act, 1908, being not applicable to the appeal, same was liable to be dismissed being clearly time-barred.

Muhammad Aamer Nawaz Bhatti for Appellant.

Mian Nasir Mehmood for Respondent.

Date of hearing: 3rd April, 2003.

2005 C L D 1622

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

ABDUR RAUF and another---Appellants

Versus

HABIB BANK LTD. through Manager and 6 others---Respondents

F.A.O. No. 113 of 2003, heard on 27th October. 2003.

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

----Ss. 9, 12 & 22---Suit for recovery of loan---Suit filed by Bank having been decreed ex parte, appellant: moved application under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 claiming that they were neither loanees, guarantors nor mortgagers because the property which was allegedly shown to have been mortgaged by them as sureties/mortgagers was not owned by appellants at the time, when alleged mortgage was claimed to have been created and that they had already sold mortgaged property and documents in that behalf were forged by respondent (attorney), who though earlier had the power of attorney, but because of sale of entire property by appellants such power of attorney stood cancelled by accomplishment of the job---Question whether appellants were owners of property in question and whether property could be mortgaged by respondent (attorney) required evidence, but Court below without framing of issues and holding trial in that behalf, had summarily rejected application which order was not in consonance with law---Impugned order was set aside and matter was remanded to the Court below for decision afresh upon application of appellants filed under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 by framing issues and recording of evidence.

Mahmood-ul-Haq Thanvi for Appellants.

Muhammad Afzal Sindhu for Respondents.

Date of hearing: 27th October, 2003.

2005 C L D 1633

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

SHAFQAT MAHMOOD---Respondent

Regular First Appeal No.226 of 1996, heard on 10th March, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan---Facility extended to respondent was for a sum of Rs.4,52,000 and he had paid Rs. 70, 000---By adjusting said amount, Banking Court, proceeded to decree suit for Rs.5,18,313 and declined to decree the insurance charges and claim for liquidated damages---Validity---Nothing was brought on the file to prove insurance cover/claim---Discretion so exercised by Banking Court hardly called for interference by Appellate Court.

Habib Bank Ltd. v. Messrs Farooq Compost Fertilizer Corporation Ltd. and 4 others 1993 MLD 1571; Allied Bank of Pakistan Limited Faisalabad v. Messrs Aisha 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 Mehmud for Appellant.

Nemo for Respondent.

Date of hearing: 10th March, 2003.

2005 C L D 1634

[Lahore]

Before Nazir Ahmad Siddiqui and Muhammad Nawaz Bhatti, JJ

ABDUL WAHAB and another--- Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Chairman and 4 others ---Respondents

R.F.A. No. 175 of 2002, heard on 4th July, 2005.

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

---- Ss. 9 & 22---Civil Procedure Code (V of 1908), O. VII, R. 11---Rejection of plaint---Appeal---Appellants/alleged borrowers had instituted a suit seeking a declaration against the Bank to the effect that they had not taken any loan and any entry in that regard in the Bank record was liable to be ignored as being based on forgery and fraud---Plaint of appellants was rejected by the Banking Court---Validity---Plaint of the appellants, prima facie, did disclose a cause of action, thus O.VII, R.11, C.P.C. could not have been applied to the same---Rejection of plaint by the Banking Court could not be blessed with sanctity and impugned judgment was set aside---Case was remanded to the Banking Court for disposal according to law.

Sahibzada Mehboob Ali Khan for Appellants.

Muhammad Shakeel Akhtar Hashmi for Respondents.

Date of hearing: 4th July, 2005.

2005 C L D 1636

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

PEARL AND BEADS MANUFACTURING COMPANY through Chief Executive---Appellant

Versus

UNION BANK LIMITED through Branch Manager and 3 others---Respondents

Execution First Appeal No.805 of 2002, decided on 24th June, 2003.

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

---- Ss. 9, 19 & 22---Suit f or recovery of loan---Execution of decree---Appellant who had admitted to discharge liability under decree passed against it, had requested that instead of delivering possession of property in question, it be permitted to pay decretal amount in instalments to save valuable property and its business over said property which was the only means of its subsistence---Appellant was allowed to make payment in instalments accordingly with the observation that in case there was default in payment of any single instalment, respondent would be entitled to take over possession of property in question.

Shahid Ikram Siddiqui for Appellant.

Aamar Farooq for Respondents.

Sh. Atif Murad, Relationship Manager, Union Bank Ltd.

2005 C L D 1638

[Lahore]

Before Tanvir Bashir Ansari and Muhammad Sair Ali, JJ

MUHAMMAD SHARIF and 6 others---Appellants

Versus

Sheikh RAB NAWAZ and 3 others---Respondents

F.A.O. No.239 of 2004, heard on 23rd December, 2004.

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

----Ss. 9, 15, 19 & 22---Civil Procedure Code (V of 1908), S. 12(2), & O.XXI Rr.90, 97, 99 & 103---Suit for recovery of amount---Execution of decree---Sale of mortgaged property---Appeal against judgment of Banking Court---Suit was decreed and decretal amount was recovered by sale of mortgaged property and sale certificate was also issued---Appellants had filed application for setting aside judgment and decree of Banking Court and also sought to assail sale of mortgaged property on ground that certain mortgaged property was owned by them---Appellants had also claimed that they were in uninterrupted possession of suit property and had also matured their title---Appellants had failed to show any bona fide legal interest in mortgaged property which could substantiate their claim---Appellants did not object to proceedings either at the time of creation of mortgage or at time of filing of suit by respondent-Bank or at time of execution proceedings---Appellants had not been able to put forward any legal basis for the claim except that they claimed to be in possession of property, mortgaged land---Appellants having failed to indicate any infirmity in the impugned order, appeal against said order was dismissed.

Khan Khizar Abbas Khan for Appellants.

Ch. Zubair Ahmad Farooq for Respondents.

Date of hearing: 23rd December, 2004.

2005 C L D 1651

[Lahore]

Before Ali Nawaz Chowhan and Umar Ata Bandial, JJ

SHABBIR AHMAD---Appellant

Versus

NATIONAL BANK OF PAKISTAN through Chief Manager and 2 others---Respondents

E F.A. No. 139 of 2005, decided on 13th April, 2005.

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

----Ss. 9 & 22---Suit for recovery of amount---Determination of value of hypothecated goods by Banking Court---Appellant had contended that definite value of hypothecated goods as determined by Banking Court, did not find support from the report of Local Commissioner and that Banking Court ought to have asked for list of hypothecated goods from Bank itself, but that having not been done, there had been misreading of record and matter called for re-consideration---High Court agreeing with the contention of appellant, remitted case to Banking Judge with directions to re-determine such aspect of case in the light of record and in the alternative Bank was directed to pass on hypothecated goods so that there was no infirmity left in giving effect to the orders through execution proceedings---Banking Court was allowed one month's period for purposes of determining said issue and until then execution proceedings against appellant would be kept in abeyance.

Muhammad Khalid Mehmood for Appellant.

Ch. Mehboob Alam for Respondents.

2005 C L D 1654

[Lahore]

Before Syed Jamshed Ali and Muhammad Sayeed Akhtar, JJ

HABIB BANK LIMITED---Appellant

Versus

AWAN TEXTILE MILLS LIMITED through Chief Executive and others---Respondents

Regular First Appeal No. 161 of 1999, heard on 14th September, 2004.

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

----Ss. 9 & 22---Suit for recovery of loan---Appeal to High Court---Suit filed by Bank was decreed by Banking Court observing that two defendants having not inherited anything from the deceased ex-Managing Director of the Company, they had no personal liability especially when they were neither guarantors nor had they signed any document---Grievance of Bank was against that part of judgment and decree which had restricted liability of said two defendants to the property inherited by them from deceased ex-Managing Director---Judgment and decree impugned in appeal were 'based on consent of counsel for the Bank---Concession in question purely related to a question of fact---As far as liability of the two defendants to satisfy decree was concerned, it was a consent decree, which was not appealable.

Shams Mehmood Mirza for Appellant.

Respondents Nos.7 and 8 ex parte.

Nemo for other Respondents.

Date of hearing: 14th September, 2004.

2005 C L D 1655

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

ZAFAR IQBAL KHAN---Appellant

Versus

UNITED BANK LIMITED through Manager and duly Authorized Attorney and 2 others---Respondents

F.A.O. No.218 of 2001, decided on 10th April, 2003.

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

---- Ss. 9, 19 & 22---Suit for recovery of 'loan---Execution of decree---Suit by Bank was decreed and in satisfaction of decree, three mortgaged flats were directed to be put to auction---Appellant and respondents filed objections that they had already purchased flats being unaware that those were under lien of the Bank---Objection had been dismissed and Court, without giving any reason had directed to sell one of the flats through auction which belonged to the appellant---Appellant had stated that such order was discriminatory and would cause prejudice to rights of appellant who was at par with other objectors---No reason was shown on basis of which flat of appellant could be directed to be put to auction first--- Court should have directed the objectors, either to deposit decretal amount proportionately to save their property or properties belonging to all of them should have been put to auction simultaneously---High Court accepting appeal set aside impugned order and remanded matter to Banking Court for passing a fresh order with regard to execution of decree.

Amir Zahoor Chauhan for Appellant.

Niaz Ahmad Shahid, AVP Manager, UBL.

2005 C L D 1657

[Lahore]

Before Syed Hamid Ali Shah, J

In the Matter of: AUTO OILS (PRIVATE) LIMITED through Liquidator

Civil Original Nos.35 to 38 of 2005, decided on 17th June, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss.387(5) & 359---Voluntary winding up of company---Time prescribed for completion of winding up proceedings---Extension of such time---Scope---Prescribed period of one year for completing the winding up of the company can be extended by the Court, on application of the liquidator, for one month at one time and that too for the reason, that if' any proceedings for or against the company, were pending in a Court, such extension cannot exceed from six months in all---Where the application for extension of time was filed almost after one year, of the expiry of the statutory period on the grounds which fell outside the purview of S.387(5), Companies Ordinance, 1984, High Court dismissed the application --- Principles.

Voluntary winding up of the applicant company, by virtue of section 359 of the Companies Ordinance, 1984, is deemed to have commenced when the special resolution to this effect was passed. The winding up proceedings were required to be completed according to section 387(5) of the Ordinance, within a period of one year from the date of the commencement of the winding up. In case of inability to complete the winding up process, the liquidator was under a legal obligation to move to the court for the extension of time under section 387(5) of the Ordinance. The applicant was entitled to the grant of extension by one month, at a time but this extension was not liable to exceed a period of six months in view of the aforementioned provisions of law. Admittedly, in the present case, no such application was moved at the expiry of the period of one year. The present application was filed after the lapse of almost 1 year and 11 months.

The language of section 387(5) is very clear and does not need any scholarly interpretation. It provides that extension can be granted for one month at a time, in all for a period of six months and that too for the reason, that any proceedings for or against the company, are pending in a Court. The word, "shall" is mentioned in section 387(5), which makes the direction mandatory and disobedience entails serious consequences amounting to the invalidity of the act done in disobedience to the provisions of law. Period, prescribed for completing the winding up of the company, can be extended for one month at one time, and such extension cannot exceed from six months in all.

The present application had been filed almost one year, after the expiry of the statutory period. No extension was sought at the relevant time. Additionally, the permission for extension of time was sought on the grounds, which fall outside the purview of section 387(5) of the Ordinance. Such application had no merits, the extension sought for was declined. Application was accordingly dismissed.

Ch. Muhammad Saleem v. Combined Industries (Pvt.) Ltd. Lahore PLD 1994 Lah. 125 fol.

Irfan Sadaat Khan for Petitioner.

2005 C L D 1660

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs AWAN ELECTRONICS (PVT.) LIMITED through Chief Executive and 2 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Branch Manager and another---Respondents

F.A.O. No. 372 of 2001, heard on 21st April, 2003.

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

----Ss. 7, 9, 10 & 12---Suit for recovery of loan---Application for leave to defend suit---Ex parte decree, setting aside of---Suit by Bank, was decreed ex parte against defendants---Application filed by defendants under S.12 of Banking Companies (Recovery of Loans, Advances, Credits & Finances) Ordinance, 1997 for setting aside ex parte decree was rejected by Court holding that Court had no jurisdiction to review its own order, judgment or decree---Validity---Present was not the case of review, rather it was for setting aside ex parte decree and defendants on showing "sufficient cause" for their non-appearance, could seek its setting aside---Non-appearance of defendants on date of hearing was not deliberate, but was of a bit of negligence on their part in pursuing their application for leave to appear and defend and for such negligence, awarding a decree for colossal amount would be too harsh---Allowing appeal, application for setting aside ex parte order was accepted with the result that ex parte judgment and decree would also stand set aside---Leave application was directed to be decided within specified period.

Mian Muhammad Javed and Farooq Azam for Appellants.

Ali Ahmed Awan for Respondents.

Date of hearing: 21st April, 2003.

2005 C L D 1662

[Lahore]

Before Mian Hamid Farooq, J

MUHAMMAD YASIN---Petitioner

Versus

ALLIED BANK OF PAKISTAN LTD. through Zonal Chief and 2 others---Respondents

Writ Petition No. 11139 of 1999, heard on 11th June, 2003.

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

---S. 9---Constitution of Pakistan (1973), Art. 199--- Constitutional petition---Competency---Petitioner had raised factual controversy in the Constitutional petition, which could not be undertaken by High Court in exercise of said jurisdiction---Appropriate forum for redressal of grievance of petitioner was the Court of plenary jurisdiction, which was competent to resolve factual controversy, after calling upon parties to prove their respective claims after recording evidence---Petitioner being a customer, could file suit for redressal of alleged grievance before Banking Court under S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Efficacious and adequate remedy being available to petitioner, Constitutional petition, was not competent.

Nemo for Petitioner.

Ashar Ellahi for Respondents.

Date of hearing: 11th June, 2003.

2005 C L D 1663

[Lahore]

Before Maulvi Anwarul Haq and Ijaz Ahmad Chaudhry, JJ

Messrs SUN RISE INDUSTRIES PVT. LTD. through Chief Executive and others---Appellants

Versus

TRUST LEASING CORPORATION LTD. and others---Respondents

Regular First Appeal No. 128 of 2001, heard on 18th April, 2005.

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

---- Ss. 10, 2(d), 9 & 21---Appeal---Application for leave to defend the suit---Dismissal of such application on valid reasons while discarding the agreement which was executed between the judgment-debtors but the Corporation (plaintiff being not party to the same was not bound by it to accept the liabilities determined by the judgment-debtors in the said agreement---After the admission of the claim of the plaintiff/corporation by the judgment-debtors, High Court, in appeal, declined to set aside the impugned judgment and modify the decree to the extent of six judgment-debtors (as per the agreement) alone as no such claim was raised in the application for leave to defend the suit but was raised for the first time before the High Court in appeal.

Sohail Iqbal Bhatti for Appellants.

Ch. Saleem Iqbal for Respondent. No.1.

Date of hearing: 18th April, 2005.

2005 C L D 1667

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

ABDUL RAZZAQ--- Appellant:

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Branch Manager---Respondent

Regular First Appeal No.687 of 2002, heard on 26th June, 2003.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Leave to appear and defend suit---Defendant sought leave to appear and defend suit---Defendant had been unable to raise any defence which could justify grant of leave to appear and defend suit---Judgment and decree of Banking Court, were not open to exception---Application to appear and defend suit was rightly dismissed by Banking Court.

Ch. Nisar Ahmed Dhillon for Appellant.

Ch. Majid Hussain for Respondent.

Date of hearing: 26th June, 2003.

2005 C L D 1669

[Lahore]

Before Syed Zahid Hussain and Syed Sakhi Hussain Bokhari, JJ

MUSLIM COMMERCIAL BANK LIMITED through General Attorney/Principal Officer---Appellant

Versus

SHAFI'S PAK ASSOCIATES (PVT.) LIMITED through Chief Executive and others---Respondents

Regular First Appeal No.62 of 1997, heard on 2nd June, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan---Bank had filed appeal alleging that suit was wrongly dismissed by Court below against first defendant---Chairman Banking Tribunal taking note of stance of defendant: that no documents whatsoever had been executed/signed by him, recorded findings that it was other defendant who was beneficiary of finances and first defendant had nothing to do with any transaction---Court in circumstances had taken the view that no liability could be created qua first defendant---Suit was accordingly decreed against defendants except first defendant ---Validity---Such was a finding of fact to which no exception was possible, in circumstances---High Court, without making any further comments, observed that appeal filed by Bank was bereft of any merit.

Sana Ullah for Appellant.

Nemo for Respondents.

Date of hearing: 2nd June, 2003.

2005 C L D 1670

[Lahore]

Before Ali Nawaz Chowhan, J

SARDAR KHAN NIAZI---Petitioner

Versus

BAREX LAHORE LTD.---Respondent

C.O. No. 14 of 2004, decided on 28th June, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss. 290 & 265---Petition under 5.290, Companies Ordinance, 1984 complaining that the affairs of the company were being conducted unlawfully, in a fraudulent manner and in a manner oppressive to the members and prejudicial to the public interest and that the present management was not maintaining the Register of members, Register of Transfer of shares, the Minutes Book etc. honestly and thus acting fraudulently---Respondents contended that the petition was only meant to cause harassment and to reopen the matters already settled with the old administration, which fact had been denied---Validity---Held, keeping in view the allegations and counter-allegations made in respect of a public limited company, it could be concluded that the investigation of company's affairs had become essential in the public interest---Since S.265(ii) of the Companies Ordinance, 1984 provided an efficacious remedy, under the circumstances, High Court directed the Securities and Exchange Commission of Pakistan to appoint Inspectors for the purposes of investigation of the affairs of the company in the light of allegations made---Inspectors shall associate representatives of both the parties for purposes of investigation and will submit: a report to the High Court within a period of 3 months from the date of present judgment using the commission as the channel.

Irfan Ahmad Sh. for Petitioner.

Tariq Kamal Qazi and Iqbal Mehmood Awan for Respondent.

Date of hearing: 27th June, 2005.

2005 C L D 1676

[Lahore]

Before Mian Saqib Nisar and Jawwad S. Khawaja, JJ

Messrs GREEN OIL MILLS through Managing Partner and 4 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN and another---Respondents

Regular First Appeal No.214 of 2002, heard on 6th May, 2003.

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

----Ss. 3, 9, 19 & 22---Suit for recovery of loan---Grant of mark­up---According to Financial Institutions (Recovery of Finances) Ordinance, 2001, mark-up could not have been granted by Court, rather it could grant only cost of funds determined under S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Lower Court having committed error in that behalf, High Court modified judgment and decree of Banking Court to the effect that instead of grant of mark-up, Bank was entitled to the cost of funds as per S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Executing Court, at time of execution of decree, would calculate exact amount of cost of fund awarded.

Iftikhar Ullah Malik for Appellants.

Rana Imtinan Saeed for Respondents.

Date of hearing: 6th May, 2003.

2005 C L D 1678

[Lahore]

Before Ch. Ijaz Ahmad and Mian Hamid Farooq, JJ

BANK OF PUNJAB--- Appellant

Versus

AMJAD LATIF RANA and another---Respondents

Regular First Appeal No. 645 of 2002, heard on 23rd November, 2004.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL V1 of 2001)---

----Ss. 3, 9 & 22---Suit for recovery of loan---Defendant secured loan from Bank amounting to Rs.2, 50, 000 which was payable in 72 equal monthly instalments---After grace period of 3 months defendant having failed to discharge his liability, Bank filed suit for recovery amounting to Rs.365,835.53 in which Bank had claimed mark-up amounting to Rs.1,56,080---Banking Court decreed suit without granting mark-up of Rs.156,080 as claimed and instead mark-up of Rs.6503 was only granted---Validity---Bank was entitled to claim mark-up only in case parties had executed buy-back agreement in terms of sanctioned letter, which was neither relied upon nor produced before Trial Court by the Bank---Defendant having not executed any agreement, Banking Court, in circumstances had rightly not granted mark-up as claimed by Bank---In absence of any illegality or infirmity in impugned judgment of Banking Court, appeal was dismissed.

(b) Administration of justice---

----Party could not be permitted to raise an altogether new ground of attack or defence by departing from its previous pleadings.

Mst. Murad Begum and others v. Muhammad Rafiq and others PLD 1974 SC 322 ref.

Khalid Pervaiz Khawaja for Appellant.

Nemo for Respondents.

Date of hearing: 23rd November, 2004.

2005 C L D 1680

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Ch. MUHAMMAD SADIQ--- Appellant

Versus

SMALL BUSINESS FINANCE CORPORATION through Regional Manager and 2 others---Respondents

R.F.A. No. 196 of 2001, heard on 21st June, 2005.

Specific Relief Act (I of 1877)---

----S. 42---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.2(c) & 9---Contract Act (IX of 1872), S.128---Recovery of bank loan---Guarantor, liability of---Plaintiff being guarantor of principal debtor had some dispute and filed declaratory suit in Banking Court---Plaintiff contended that the outstanding loan against principal debtor should be recovered from sale of mortgaged property---Suit filed by plaintiff was rejected by Banking Court under O.VII, R.11, C.P.C.---Validity---Neither the principal debtor nor the surety liquidated the outstanding dues of financial institution and some amount was outstanding for recovery---Liability of surety, in view of S.128 of Contract Act, 1872, was co-extensive with that of the principal debtor unless it was otherwise provided in the contract---Plaintiff being surety had provided sufficient lever in the hands of financial institution to initiate recovery proceedings against him as well---Even the guarantor fell within the definition of customer as given in S.2(c) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Judgment and decree passed by Banking Court did not suffer from any legal error and the same did not call for any interference by High Court---Appeal was dismissed in circumstances.

Rafique Hazquel Masih v. Bank Alfalah Ltd. and others 2005 SCMR 72 fol.

Malik Sarfraz Hussain for Appellant.

Sheikh Nadeem Anwar for Respondents.

Date of hearing: 21st June, 2005.

2005 C L D 1683

[Lahore]

Before Maulvi Anwarul Haq and Syed Sakhi Hussain Bokhari, JJ

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Appellant

Versus

Chaudhry REHMAT ALI through Legal Heirs and others---Respondents

Regular First Appeals Nos. 103 to 108 of' 2004, heard on 14th October, 2004.

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

----Ss. 9 & 22---State Bank of Pakistan Circular No. 19 dated 5-6-1997---Suit for recovery of loan---Appeal to High Court---In the matter of one of the appeals, appellant-Bank had very candidly conceded that respondents having made a deposit in accordance within the terms of State Bank's Circular No. 19 dated 5-6-1997 it had neither filed any suit nor undertaken any recovery proceedings---Appellant-Bank had filed suits for recovery of loan amounts against respondents, whereas respondents had filed suits for injunctions against appellant-Bank---Case of respondent was that State Bank's Circular No. 19 dated 5-6-1997, in terms had applied to Chairman of the Bank, who had allowed settlement and that respondents were directed to deposit principal amount plus 5% in each case and said amounts were deposited---Banking Court dismissed suits filed by the Bank and decreed suits of respondents---Contention of Bank was that Chairman, A.D.B.P., had no jurisdiction in the matter inasmuch as loans did not quaky for said relief and that only seven years' old loan could be settled in said manner---All loans in case were seven years old on 5-6-1997 which was the date of Circular No. 19 and period of seven years was to be counted from dates of disbursements---No other points having been urged all appeals filed by Bank, were dismissed, in circumstances.

Muhammad Iqbal Khan for Appellant.

Waseem Majeed Malik for Respondents.

Date of hearing: 14th September, 2004.

2005 C L D 1685

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Ch. MUHAMMAD ASHRAF and another---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through its Manager---Respondent

R.F.A. No. 795 of 2002, heard on 16th June, 2005.

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

----Ss.9 & 22---Appeal---New plea, raising of---Borrowers did not raise the plea before Banking Court that they had made the payments according to the finance agreement, nothing was due against them and the bank could not go beyond the agreement of finance---Bank pleaded that at the end of agreement period, it was automatically renewed and remained enforced until such time till it was terminated by the Bank by notice to the customer---Validity---Borrowers did not urge the plea which had now been raised before High Court for the first time---Litigant could not be allowed to raise altogether a new and different plea before appellate/revisional Court, which had not been raised before lower forums---Borrowers were precluded from raising the solitary ground before High Court for the first lime--Judgment and decree passed by Banking Court was not open to exception and the Court did not commit any illegality in passing the same---Appeal was dismissed in circumstances.

Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 and Amir Shah v. Ziarat Gul 1998 SCMR 593 rel.

Iftikhar Ullah Malik for Appellant.

Nemo for Respondent.

Date of hearing: 16th June, 2005.

2005 C L D 1688

[Lahore]

Before Syed Jamshed Ali and Umar Ata Bandial, JJ

MAZHAR IQBAL and another---Appellants

Versus

ZARAI TARAQIATI BANK LTD. (ZTBL) --- Respondent

R.F.A. No.361 of 2004, decided on 11th January, 2005.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Leave to defend suit---Application for leave to defend suit was submitted 33 days after service on defendants through notice in the newspapers---Application for leave to defend suit was dismissed being barred by time because period of 30 days was available to defendants---Application seeking condonation of delay was not filed by defendants---Process server had reported that defendants being not available, service was effected through fixation and it was not believable that registered notice had taken 20 days to reach the defendants---In absence of any illegality in the impugned judgment and decree, same would not warrant interference in appeal.

Syed Aftab Sherazi for Appellants.

Zahoor Anwar Malik for Respondent.

2005 C L D 1689

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

BASHIR AHMAD MUGHAL --- Appellant

Versus

S.M.E. BANK LIMITED through General Manager and 2 others---Respondents

Regular First Appeal No. 52 of 2005, heard on 18th April, 2005.

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

----S.9---Contract Act (IX of 1872), Ss. 128 & 135---Recovery of bank loan---Guarantor, liability of---Principles---Compromise between the bank and principal debtor---Appellant being guarantor of principal debtor contended that as the matter had been compromised between the bank and principal debtor, therefore, his liability as guarantor stood discharged in view of S.135 of Contract Act, 1872---Validity---Appellant was precluded from taking advantage and benefit of S.135 of Contract Act, 1872---Banking Court had rightly found that in view of S.128 of Contract Act, 1872, the liability of borrower and the guarantor was co-extensive---Judgment passed by Banking Court was legal, apt to the facts and circumstances of the case and Banking Court did not commit any legal error/defect justifying the interference by High Court---Judgment and decree passed by Banking Court was maintained by High Court in exercise of appellate jurisdiction---Appeal was dismissed in circumstances.

Federation of Pakistan v. National Bank of Pakistan, Karachi and another 1981 CLC 847 ref.

Mian Muhammad Nawaz Dhuddi for Appellant.

Nemo for Respondent No.2.

Sardar Muhammad Tariq Dreshak for Respondents Nos. 1 and 3.

Date of hearing: 18th April, 2005.

2005 C L D 1692

[Lahore]

Before Syed Zahid Hussain and Syed Sakhi Hussain Bokhari, JJ

Mst. SHAMSHAD AKHTAR and 4 others---Appellants

Versus

DOHA BANK LIMITED and 2 others---Respondents

E.F.A. No. 131 of 2000, heard on 10th January, 2005.

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

---Ss. 19 & 22---Execution of decree---Order dismissing objection petition before Executing Court had been assailed by appellants Bank had candidly stated that objection petition filed by appellants could be heard and decided by Executing Court after affording opportunity of hearing to the appellants---Impugned order, was set aside, in circumstances with the result that objection petition filed by appellant would be deemed pending which would be heard and decided afresh in accordance with law.

Nadeem Ahmad Sh. for Appellants.

Rashdeen Nawaz for Respondents.

Date of hearing: 10th January, 2005.

2005 C L D 1693

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs AL-ATTAR SPORT DRESSES TRADING through Chief Executive and another---Appellants

Versus

HABIB BANK LIMITED---Respondent

R.F.A. No.751 of 2002, heard on 16th June, 2005.

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

----S. 10---Recovery of bank loan---Leave to defend the suit, grant of---Triable issue---Territorial jurisdiction of Banking Court---Borrower in his application for leave to defend the suit contended that the loan was disbursed by the bank in a foreign country, therefore, the Banking Court in Pakistan had no jurisdiction---Bank did not deny disbursement of the loan in foreign country but asserted that the borrower had permanently returned to his hometown, therefore, the Banking Court had jurisdiction---Leave application was dismissed and the suit was decreed in favour of the Bank---Validity---Plea of jurisdiction raised by the borrower was specifically denied by the bank and thus the material controversy between the parties emerged which was necessarily to be decided by Banking Court---Banking Court by not touching the dispute of jurisdiction and ignoring to give any finding on the issue, had committed grave legal error---Judgment and decree passed by Banking Court was set aside and the case was remanded to Banking Court for decision afresh---Appeal was allowed accordingly.

M.M. Alam Chaudhary for Appellants.

Muhammad Khalid Mehmood for Respondent.

Date of hearing: 16th June, 2005.

2005 C L D 1697

[Lahore]

Before Muhammad Sair Ali, J

SARGODHA TEXTILE MILLS LTD. through General Manager---Petitioner

Versus

HABIB BANK LIMITED through Manager and others---Respondents

Review Petition No.61 of 2004, decided on 21st June, 2005.

Civil Procedure Code (V of 1908)---

----O. XLVII, R.1---Constitution of Pakistan (1973), Art.199 ---Review of judgment---Constitutional jurisdiction of High Court---Scope---Seeking two remedies simultaneously---Principle---Withdrawal of civil suit after dismissal of Constitutional petition---Constitutional petition was dismissed by High Court for the reason that the petitioner had elected to avail the remedy of civil suit and it could obtain adequate and effective relief in the suit---Constitutional petition and civil suit were proceeding between the same parties and on identical subject-matter---After dismissal of the Constitutional petition, the petitioner withdrew the civil suit and sought review of the judgment passed by High Court in exercise of Constitutional jurisdiction---Validity---Subsequent withdrawal of civil suit was not a ground to seek review of judgment---Petitioner, in appropriate circumstances could avail of extraordinary remedy under Art.199 of the Constitution as well as the alternate remedy---High Court declined to consider the petitioner entitled to discretionary relief under Art.199 of the Constitution, while availing the remedy of civil suit wherein effective and adequate relief could be obtained by the petitioner---Petition was dismissed in circumstances.

Municipal Committee Multan through its Chairman v. Burmah Shell Storage and Distributing Co. of Pakistan Ltd. and another PLD 1976 Lah. 726 ref.

Salman Akram Raja for Petitioner.

Shams Mehmood Mirza for Respondent No. 1.

Rehan Nawaz for Respondent No.2.

2005 C L D 1700

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs ZAHEER ASSOCIATES through Sole Proprietor and 2 others---Appellants

Versus

ALTOWFEEQ INVESTMENT BANK LTD.---Respondent

Civil Appeal No. 506 of 2001, decided on 22nd March, 2005.

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

---S. 22---Appeal against judgment of Banking Court---Bank while placing on record photocopy of compromise, had stated that claim of Bank stood settled---Subject-matter of appeal having amicably been settled between parties, and no live issues were left to be decided by High Court, appeal thus had become infructuous---If appellants felt that some issues were still undecided, in that case they could file appropriate application to re-activate proceedings in appeal within specified period.

Nemo for Appellants.

Falak Sher for Respondent.

2005 C L D 1701

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

YASIR CHAUDHRY---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED (ADBP) through Branch Manager---Respondent

R.F.A. No. 198 of 2005, decided on 26th May, 2005.

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

---Ss.9, 10 & 22---Appeal---New plea, raising of---Recovery of bank loan---Time-barred application for leave to defend the suit---Borrower admitted availing of two loan. facilities and also admitted outstanding amount which he was prepared to liquidate---Proclamation was published in press on 30-1-2004 and application to defend the suit was filed by borrower on 10-3-2004---Banking Court, instead of dismissing the application being time-barred, decided the application on merits and dismissed the same, resultantly the suit was decreed in favour of bank---Plea raised by the borrower was that no proper statement of accounts in support of plaint was placed on record by bank---Validity---Application of borrower deserved to be dismissed on the short ground that the same was filed out of time---Banking Court had adverted to every aspect of the case and rightly came to the conclusion that the borrower failed to raise substantial question of law and facts. in which evidence needed to be recorded---Borrower failed to make out a case for grant of leave to defend the suit and the Banking Court rightly dismissed his application---Litigant could not be allowed to raise altogether a new and different plea before appellate/ revisional Court, which plea had not been raised before the lower forums---Plea raised by the borrower was neither mentioned in the application for leave to defend the suit nor the same was raised before the Court below---Banking Court did not commit any legal error in passing the decree and High Court declined to reverse the judgment and decree passed by Banking Court---Appeal was dismissed in circumstances.

Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770; Amir Shah v. Ziarat Gul 1998 SCMR 593 rel.

Shahid Ikram Sidiqui for Appellant.

2005 C L D 1705

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ARSHAD AHMED and 2 others---Appellants

Versus

TRUST COMMERCIAL BANK LIMITED through Manager---Respondent

Regular First Appeal No. 144 of 2005, heard on 18th April, 2005.

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

----Ss. 9(5) & 10---Recovery of bank loan---Application for leave to defend the suit---Computation of limitation period---Application filed by borrowers was dismissed being barred by limitation---Plea raised by the borrowers was that service effected through publication should not be taken into consideration for the purpose of computing period of limitation for filing leave application---Validity---Such plea was misconceived as S.9 (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided that service duly effected in any one of the modes mentioned therein would be deemed to be valid service and it could neither be urged nor held that leave application filed by borrowers was within time---Banking Court did not commit any illegality in passing the judgment and decree against the borrowers---Appeal was dismissed in circumstances.

West Pakistan Water and Power and Development Authority v. Sohrabji & Sons and another 1986 CLC 2593; Faiz Muhammad and 2 others v. Ramzan Ali and 3 others 1989 MLD 2525; Messrs Simnwa Polypropylene (Pvt.) Ltd. and others v. Messrs National Bank of Pakistan 2002 CLD 1510 and Khawaja Muhammad Bilal v. Union Bank Limited through Branch Manager 2004 CLD 1555 ref.

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

----S. 9---Limitation Act (IX of 1908), Art.120---Suit for recovery of bank loan---Maintainability---Limitation---Contention of borrower was that compromise was effected between the parties on 22-3-2001, and the suit was filed on 23-10-2004, thus the suit was time-barred---Validity---Suit filed from the date of accrual of cause of action was not out of time---Suit was maintainable in circumstances.

Khawar Ikram Bhatti for Appellants.

Ashar Ellahi for Respondent.

Date of hearing: 18th April, 2005.

2005 C L D 1710

[Lahore]

Before Sh. Azmat Saeed, J

PAKISTAN PETROLEUM LIMITED---Appellant

Versus

BBJ PIPE INDUSTRIES (PVT.) LIMITED and another---Respondents

F.A.O. No. 94 of 2005, decided on 21st July, 2005.

Contract Act (IX of 1872)---

----S.126---Specific Relief Act (I of 1877), S.54---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Performance guarantee, encashment of---Interim injunction---Plaintiff was awarded tender for supply of goods to defendant---Plaintiff submitted to defendant performance guarantee issued by Bank---Defendant sought encashment of performance guarantee by the Bank on the ground that the plaintiff failed to comply with the terms of sale order---Plaintiff assailed such act of defendant: in civil suit and trial Court granted interim injunction against encashment of performance guarantee---Validity---Bank guarantee was an independent contract between Bank and a party in whose favour the guarantee was issued---Encashment of irrevocable guarantee could not be restrained by way of grant of temporary injunction on the ground that there was a dispute inter se the parties to the main agreement---Plaintiff had itself sought a decree for the amount: of performance guarantee thereby itself asserting pecuniary loss that might be occasioned by its encashment, hence, denuding itself of the right to seek and obtain injunction---No allegation of fraud, no special equities had been pleaded or prima facie established in the plaint---Plaintiff was not entitled to grant of temporary injunction---Order passed by trial Court was set aside---Appeal was allowed in circumstances.

Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191; Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Ltd., Islamabad v. Messrs Allied Bank of Pakistan PLD 2003 SC 215; Sahara Trading International (Pvt.) Ltd. and others v. Bank Al- Falah Ltd. PLD 2004 SC 925; Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. 2003 CLD 1; Pak Consulting and Engineering (Pvt.) Limited v. Pakistan Steel Mills Corporation (Pvt.) Ltd. and another 2003 CLD 251; Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311; Pak Consulting Engineering (Pvt.) Ltd. v. Pakistan Steel Mills and another 2002 SCMR 1781; United Bank Ltd. v. Pakistan Industrial Credit and Investment Corporation Ltd. and another PLD 2002 SC 1100; Heavy Mechanical Complex (Pvt.) Ltd., Taxila v. Attock Industrial Products Ltd., Rawalpindi PLD 2003 SC 295; Pakistan Engineering Consultants v. PIA 1989 SCMR 379; Province of West Pakistan v. Messrs Mistri Patel & Co. and another PLD 1969 SC 80; Al-Khan Construction Company (Private) Limited v. Pak-American Fertilizers Limited 2003 CLC 1053; Petrosin Products v. Government of Pakistan 2000 MLD 785; Muhammad Amin v. PAS+ R 2002 CLD 671; Mercury Corporation v. Pakistan Steel Mills 2000 YLR 734; Zeenat Brother (Pvt.) Ltd. v. Aiwan-e-Iqbal Authority PLD 1996 Kar. 183; Pakistan Engineering Consultants v. PIA 1993 CLC 1926; International Civil Engineering v. Karachi Shipyard 1988 CLC 1555; MacDonald Layon v. Pakistan Services Limited 1983 CLC 2252 and Jamia Industries v. Pakistan Refinery PLD 1992 Kar. 17 ref.

Asad Munir and Shahid Karim for Appellant.

Pervaiz Hussan for Respondent.

Jawwad Hassan and Ali Hassan Sajjad, Advocate

2005 C L D 1718

[Lahore]

Before Muhammad Jehangir Arshad, J

SHEHZAD MUJAHID---Petitioner

Versus

ADDITIONAL SESSIONS JUDGE, and others---Respondents

Writ Petition No.3001 of 2004, decided on 1st June, 2005.

(a) Pakistan Environment Protection Ordinance (XXVII of 1997)---

----Ss. 17/24---Criminal Procedure Code (V of 1898), S.133---Constitution of Pakistan (1973), Art. 199--- Constitutional petition---Premises detailed in the complaint were directed to be sealed by the Magistrate being source of nuisance for the residents of the locality---Validity---Petitioner being not a party in the proceedings before the Magistrate, he was not an aggrieved person and the Constitutional petition filed by him was not competent---Judicial Magistrate had no jurisdiction to entertain the complaint and pass the impugned order after enforcement of Pakistan Environment Protection Ordinance, 1997, whereby only the Senior Civil Judge-cum-Judicial Magistrate had been notified as Environmental Magistrate by the High Court in terms of Ss. 17 and 24 oj' the said Ordinance---Order passed by the Judicial Magistrate directing the property to be sealed was ab initio void and being coram non judice was annulled---Consequently the order passed by the Sessions Court in exercise of its revisional jurisdiction also fell on the ground having been based on an unlawful order---However, High Court could not sit as an idle spectator over the situation created by the petitioner which had caused mental and physical inconvenience, annoyance and discomfort by way of nuisance in the vicinity by installing shoes manufacturing factory in the residential area---Such act of the petitioner or his father could not be approved by throwing out the complaint of the respondents on the excuse of want of jurisdiction by the Judicial Magistrate---Complaint filed by the respondents, therefore, would be deemed to be pending before the Senior Civil Judge-cum-Judicial Magistrate , who would decide the same afresh on merits within a specified period after hearing both the parties.

Abdul Latif and 2 others v. Additional Sessions Judge, Sahiwal and others 2001 CLC 1139; Allah Ditta and others v. Muhammad Ramzan and others 2005 YLR 650; Muhammad Ramzan v. Member (Rev.)/CSC and others 1997 SCMR 1635 and Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104 ref.

(b) Jurisdiction---

----Conferment of---Neither Court nor consent of parties can confer jurisdiction on any person if the same is not conferred on him under the law.

Muhammad Ramzan v. Member (Rev)/CSC and others 1997 SCMR 1635 rel.

Naveed Farhan and M. Karim Joiya for Petitioner.

Tariq Watto for Respondents Nos.3 to 5.

Shaheen Masud Rizvi, A.A.-G.

Sadiq Mehmood Khuram as Amicus Curiae.

Date of hearing: 1st June, 2005.

2005 C L D 1723

[Lahore]

Before Syed Jamshed Ali and Muhammad Ghani, JJ

CENTRAL BANK OF INDIA LIMITED, LAHORE through Assistant Custodian of

Enemy Property (Banks) State Bank of Pakistan, Lahore--- Appellant

Versus

Messrs Haji Sheikh FAIZ MUHAMMAD DIN MUHAMMAD, IMPORTERS AND

EXPORTERS through Managing Partner and 4 others---Respondents

Regular First Appeal No.63 of 1995, heard on 27th October, 2003.

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

---- Ss. 22 & 13---Limitation Act (IX of 1908), Art.85 & S.19---Banker and customer---Suit for recovery of amount by Bank through Custodian of Enemy Property---Limitation---Parties were maintaining a mutual open and current account---Suit was governed by Art.85 of the Limitation Act, 1908 and the prescribed period of limitation was three years commencing from the close of the year in which the last item admitted or proved was entered in the account---Statement of accounts, in the present case, showed that the last transaction between the parties was made on 4-9-1965 and, thus limitation for the suit commenced on 1-1-1966, therefore the suit filed on 26-6-1974 was patently time ­barred---Documents, execution of which was doubtful, could not constitute an acknowledgment so as to extend the period of limitation because same had already expired on 1-1-1969---Section 19, Limitation Act, 1908 provided an acknowledgment to be valid having the effect of extending limitation which must be made before expiration of the period prescribed for the suit.

Saeed-uz-Zafar Khawaja for Appellant.

M. Naeem Sadiq for Respondents Nos.2 and 5.

Date of hearing: 27th October, 2003.

2005 C L D 1728

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

BASHIR AHMAD---Appellant

Versus

JUDGE BANKING COURT-I, GUJRANWALA DIVISION GUJRANWALA and another---Respondents

E.F.A. No.168 of 2005, heard on 7th July, 2005.

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

---- Ss. 15, 19 & 22---Civil. Procedure Code (V of 1.908), S.51 & O.XXI, R.37---Powers of Court to enforce execution---Scope---Decree-holder/Bank initiated execution proceedings and judgment debtor's property was put to auction which could not be sold---Banking Court issued notice to the judgment-debtor under O.XXI, R.37, C.P.C., which was succeeded by warrants of arrest of the judgment-debtor---Judgment-debtor filed an application for the withdrawal of the warrants of arrest, but the said application was dismissed---Validity---Banking Court, while issuing the warrants of arrest of the judgment-debtor, had completely ignored the settled law and without adhering to the provisions of S.51, proviso, C.P.C. and in complete oblivion of the law on the subject proceeded to issue warrants of arrest of the judgment­ debtor---Banking Court, without satisfaction of conditions laid down in S.51, C.P.C., could not issue mechanical order for detention of a judgment-debtor in prison---High Court, in appeal set aside the order of Banking Court to the extent of issuance of warrants of arrest of the judgment-debtor and observed that in case the Bank's application, under S.51, C.P.C. for arrest and detention of judgment-debtor, was pending or filed in future, the same shall be decided by the Banking Court in accordance with law and on its own merits in view of the provision of S.51, C.P.C.

Haji Fazal Elahi & Sons through Muhammad Tariq v. Bank of Punjab and another 2004 CLD 162; Mirza Shahid Baig v. National Bank of Pakistan and 8 others 2002 CLD 623; Muhammad Anwar v. Shaukat Ali and another 2000 CLC 1086 and Precision Engineering Ltd. and others v. The Grays Leasing Limited PLD 2000 Lah. 290 ref.

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

----S.51, proviso---Powers of Court to enforce execution---Prerequisites.

Proviso to section 51, C.P.C. envisages that execution by detention in prison shall not be ordered unless Execution Court is satisfied that the judgment-debtor had means to pay the decretal amount and he has refused to pay the amount or that he is leaving the territorial limits of the Court or would defeat decree by transferring the property during the pendency of the lis. The detention of a judgment-debtor, in execution of the decree, cannot be ordered unless and until the said prerequisites of section 51, C.P.C. are proved.

Ghulam Hussain v. Riaz Ahmad 1987 CLC 1227; Munsif Dad v. WAPDA PLD 1991 Azad J&K 8; Syed Shaffat Hussain v. Kamran Khokhar 2000 MLD 801; Precision Engineering Ltd. and others v. Grays Leasing Limited PLD 2000 Lah. 290 and Muhammad Anwar v. Shaukat Ali and another 2000 CLC 1086 ref.

(c) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S.22---Appeal---Plea not raised before the Banking Court and said Court having not dealt with and decided the said plea, appellant was precluded from agitating the same before the High Court in appeal---Litigant could not be allowed to raise altogether a new and different plea before the appellate or revisional Court which was not raised before the lower forums.

Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 and Amir Shah v. Ziarat Gul 1998 SCMR 593 ref.

Muhammad Yousaf Chaudhary for Appellant.

Nemo for the Respondents.

Date of hearing: 7th July, 2005.

2005 C L D 1733

[Lahore]

Before Muhammad Sayeed Akhtar and Mian Hamid Farooq, JJ

ASHAR ELAHI--- Appellant

Versus

UNITED BANK LTD. through President and 2 others---Respondents

R.F.A. No.796 of 2001, heard on 27th October, 2003.

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

----Ss.9 & 22---Suit for recovery of loan---Suit filed by plaintiff had been decided in a cursory manner merely on the plea raised by widow of deceased defendant which appeared to be inconsistent with defence earlier raised by her deceased husband---Defendant, while he was alive, had also filed an application for leave to appear and defend suit wherein he stated that f inane facility was obtained with consent of the plaintiff; but real beneficiary was someone else and said application filed by the deceased had also not been decided---Judgment of Banking Court being devoid of any reason, was set aside and case was remanded for decision afresh in accordance with law.

Appellant in person.

Nemo for Respondents.

Date of hearing: 27th October, 2003.

2005 C L D 1735

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Haji MUHAMMAD KHADIM--- Appellant

Versus

CITIBANK, N.A. through Branch Manager---Respondent

R.F.A. No.26 of'2004, heard on 28th April, 2004.

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

----Ss. 9, 10, 15 & 22---Suit for recovery of loan---Leave to appear and defend suit---Appellant, primarily aggrieved of action of Bank under S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 putting property of appellant on sale, had instituted suit seeking declaration and in that suit Bank filed leave application which was -allowed and preliminary issue with regard to maintainability of suit was framed---Banking Court dilating on that, had rejected plaint of appellant, primarily on ground that appellant had earlier filed a suit of same nature in which relief of declaration sought in present matter was not claimed though same was available to him at that time and that second suit was barred under provisions of O.II, R.2, C.P.C.---Appellant had filed the present appeal---Bank had contended that it had also filed a suit against appellant for recovery of its dues and that Bank would not invoke and pursue provisions of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Appellant, in such view of the matter had sought permission of Court to withdraw the suit---Said withdrawal was allowed and suit filed by appellant was dismissed as withdrawn accordingly.

Waqar Mushtaq Ahmad for Appellant.

Ashar Elahi for Respondent.

Date of hearing: 28th April, 2004.

2005 C L D 1737

[Lahore]

Before Muhammad Muzammal Khan, J

UNITED BANK LIMITED---Appellant

Versus

CRESCENT SPINNING MILLS---Respondent

C.O. No.113 of 1999, and C.Ms. Nos.796-L, 857-L of 2004, decided on 10th December, 2004.

Auction---

----Every bidder would have right to raise his offer earlier to offer acceptance of any other by Court.

Muhammad Afzal Sindhu for Petitioner.

Rashdeen Nawaz Kasuri for Citibank.

Syed Fazal Mehmood for U.B.L.

Umer Sharif, Advocate (in C.M. No.796-L of 2004).

Riaz Malik, Advocate

Syed Mansoor Ali Shah for Highest Bidder and Messrs Accro Textile Mills Limited.

Shahzada Mazhar, Advocate O.L.

Mirza Muzaffar Hussain for M.C.B.

Naeem Ahmmd Sheikh for Crescent Jute Product Ltd.

Danish Mand, Advocate (in C.M. 857-L of 2004).

2005 C L D 1739

[Lahore]

Before Maulvi Anwarul Haq and Sardar Muhammad Aslam, JJ

Messrs SHAHID IMRAN, LEATHER INDUSTRY and 3 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Vice-President and General Attorney---Respondent

Regular First Appeal No.460 of 1999 and C.M. No.407 of 2002, decided on 21st April, 2004.

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

----Ss. 9 & 22---Suit for recovery of loan---Compromise between parties---Counsel for parties had stated that an agreement had been arrived at between parties and said agreement had been filed before Executing Court which had been partly acted upon and would be fully implemented in terms stated therein---Appeal was disposed of in terms of said agreement.

Abid Farooq for Petitioner/Appellant.

Abid Hussain for Respondent.

2005 C L D 1740

[Lahore]

Before Mian Saqib Nisar and Abdul Shakoor Paracha, JJ

GHULAM RASOOL--- Appellant

Versus

ZARAI TARAQIATI BANK LIMITED (ZTBL) through Branch Manager---Respondent

R.F.A. No.200 and C.M. No.438-C of 2004, heard on 26th May, 2004.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Application for leave to appear and defend suit---Dismissal of application--.-Son of defendant appeared before the Court on the date fixed for hearing the application for leave to appear and defend suit but his presence was not marked and leave application was dismissed for non-prosecution and suit by plaintiff was decreed---Validity---Son of defendant was verbally authorized to appear on behalf of defendant and only request was made by him to keep matter pending till counsel for defendant would come and argue leave application, but Court had hastily turned down the request and passed decree--- Court, in circumstances, should have kept matter pending and should not have hastily dismissed leave application for non-prosecution when son of defendant was present in the Court---Said application could have been adjourned subject to payment of costs, and no harsh action should have been taken---Judgment and decree passed by Banking Court was set aside and order of dismissal of leave application for non-prosecution was also set aside---Leave application of defendant was to be deemed pending which would be decided in accordance with law.

Nazir Ahmad Javed for Appellant.

Malik Karamat Ali Awan for Respondent.

Date of hearing: 26th May, 2004.

2005 C L D 1742

[Lahore]

Before Abdul Shakoor Paracha and Pervaiz Ahmad, JJ

Messrs REDCO TEXTILES LIMITED and 7 others--- Appellants

Versus

UNITED BANK LIMITED---Respondent

Regular First Appeal No.616 of 1999 and C.M. No.1-C of 2004, decided on 11th February, 2004.

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

----Ss. 9 & 22---Suit for, recovery of loan---Compromise---Parties having compromised, filed application that appeal be decided in terms of said compromise---High Court accepting said application, modified judgment and decree passed by Banking Court in terms of said compromise and compromise was made a part of the decree.

Salman Aslam for Appellants.

Salman Akram Raja for Respondent/Applicant.

2005 C L D 1743

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

MUHAMMAD RAMZAN JAVED and another--- Appellants

Versus

HABIB BANK LIMITED and 2 others---Respondents

F.A.O. No.211 of 2002, decided on 22nd March, 2004

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

----Ss.9 & 22---Suit for recovery of loan---Appellants during course of hearing had made offer to compensate respondent-auction ­purchaser in lieu of his giving up sale and stated that appellants would pay Rs.2,00,000 to auction-purchaser as compensation and said auction-purchaser would also be entitled to withdraw amount of 4,50,000 deposited by him with the Court, besides that appellants would also satisfy the decree by paying decretal amount to decree-holder---Said offer had been accepted by auction-purchaser as well as the Bank---Appellants were to deposit amounts according to their offer within specified period and in case said amounts were not deposited appeal would be deemed to have been dismissed.

Ghulam Nabi Bhatti for Appellants.

Syed Nazir Hussain Shah for Respondent No. 1.

Muhammad Afzal Khan for Respondent No. 2.

2005 C L D 1745

[Lahore]

Before Nasim Sikandar and Mian Hamid Farooq, JJ

Messrs PLASTIC CRYSTAL through Sole Proprietor and another---Appellants

Versus

Messrs BOLAN BANK LIMITED through General Manager---Respondent

E.F.A. No.239 of 2000, decided on 15th April, 2004.

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

----Ss. 9, 19 & 22---Suit for recovery of loan---Execution of decree---Suit by Bank was decreed by Banking Court and decree holder (Bank) initiated execution proceedings through arrest and detentions of appellants/judgment-debtors---Executing Court issued warrants of arrest of appellants/judgment. debtors---Appeal was partially allowed and Appellate Court, after setting aside judgment and decree of Banking Court, remanded case to Banking Court with certain directions---As judgment and decree, out of which execution petition arose, was set aside, the execution petition had become infructuous and orders passed therein whereby warrants of arrest of appellants/judgment­ debtors were issued, had lost their efficacy and in that perspective, present appeal had become infructuous and could not proceed.

M. M. Alam Chaudhary for Appellants.

Bashir Ahmad for Respondent.

2005 C L D 1746

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Messrs AMTUL REHMAN INDUSTRIES (PVT.) LTD. through Chief Executive/ Managing Director and 2 others--- Appellants

Versus

HABIB BANK LIMITED---Respondent

R.F.A. No.382 of 2001, heard on 30th June, 2005.

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

----S.9---suit for recovery of loan amount with marls-up---Amount availed by borrower was less than what was mentioned in Finance Agreement. --Held: Mark-up amount would stand reduced proportionately.

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

----Ss.9 & 10---Banker's Books Evidence Act (XVIII of 1891), S.4---Suit for recovery of loan amount-Application for leave to appear and defend suit---Discrepancies in statement of account.---Effect---Determination of actual amount due would not be possible without recording evidence---Granting leave to defend to defendant would be necessary for ascertainment of accounts---Such application was accepted in circumstances.

Asghar Hameed Bhutta for Appellants.

Abdul Hameed Butt for Respondent.

Date of hearing: 30th June, 2005.

2005 C L D 1749

[Lahore]

Before Mian Saqib Nisar and Abdul Shakoor Paracha, JJ

CHIC TEXTILE MILLS (PVT.) LIMITTED through Chief Executive---Appellant

Versus

ALLIED BANK LIMITED---Respondent

F.A.O. No. 105 of 1999, heard on 3rd June, 2004.

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

----Ss.9 & 22---Suit for recovery of loan---Dismissal of suit---Suit having been dismissed for non-prosecution, plaintiff filed application for restoration of suit, but said application was disallowed and plaintiff had filed appeal against the dismissal order---Date on which suit was dismissed being not the date of hearing, suit could not have been dismissed---Possibility of noting a wrong date as claimed by plaintiff could not be ruled out---If the Court wanted to non-suit: plaintiff; it should have made some inquiry and at least plaintiff or clerk of counsel of plaintiff who was informed about the date, should have been examined---Negligence though being on the part of plaintiff, suit was restored with costs---Suit would be deemed pending for retrial at the stage when it was dismissed.

Ijaz-ul-Hassan for Appellant.

Abid Aziz Sheikh for Respondent:

Date of hearing: 3rd June, 2004.

2005 C L D 1751

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD MUSHTAQ and others---Appellants

Versus

Messrs UNITED BANK LIMITED and others---Respondents

Regular First Appeals Nos.36 and 163 of 1998, heard on 25th May, 2005.

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

----S. 17---Negotiable Instruments Act (XXVI of 1881), Ss.20 & 118---Blank and semi blank banking documents, signing of---Borrower neither denied his signatures on such documents nor execution thereof, but raised plea that he was made to sign them under undue influence---Validity---Borrower, in view of S.20 read with S.118 of Negotiable Instruments Act, 1881, was estopped to challenge legality, genuineness and enforce- ability of such documents---Such plea was repelled---Principles.

Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406; Muhammad Sharif v. Muhammad Hashim Paracha and another PLD 1987 Kar. 76; S.K. Abdul Aziz v. Mahmoodul Hassan and 3 others 1988 CLC 337; Haji Karim 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 Limited v. President Bazm-e-Salat and another PLD 1986 Kar. 464; Bazm­-e-Salat and others v. Messrs United Bank Limited PLD 1989 Kar. 150; Prudential Commercial Bank Ltd. v. Hydari Ghee Industries Ltd. and 9 others 1999 MLD 1964 and Messrs Bank of Oman Limited v. Messrs East Asia Trading Co. Ltd. and 4 others 1987 CLC 288 fol.

(b) Pleadings---

---Litigant could not be allowed to raise before Appellate/ Revisional Court altogether a new and different plea, which had not been raised before lower forums---Principles illustrated.

Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 and Amir Shah v. Ziarat Gul 1998 SCMR 593 rel.

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

----S.9---Suit for mandatory injunction by borrower/customer against Banking Company---Maintainable.

S.M. Masbod for Appellants.

Zaheer Ahmed Saeed for Respondent No. 1.

Iftikhar Ullah Malik for Respondent No.2.

Date of hearing: 25th May, 2005.

2005 C L D 1760

[Lahore]

Before Ch. Ijaz Ahmad and Muhammad Khalid Alvi, JJ

RABIA IKRAM and 5 others---Appellants

Versus

BANK OF PUNJAB---Respondent

E.F.A. No.55 of 2003, heard on 29th June, 2005.

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

----S. 19---Execution of money decree---Sale of car for satisfaction of decree---Plea of decree-holder Bank was that disputed car purchased by deceased judgment-debtor in his daughter's name after institution of suit by Bank was a benami transaction---Daughter claiming to be real owner of car produced statement of account showing payment of its price through cheque to Modaraba Company and its Registration Book standing in her name---Banking Court declared such transaction to be benami---Validity---Deceased judgment-debtor in his letters addressed to Modaraba Company, after institution of suit, had stated that he owned no vehicles, thus, wanted to purchase car for his own use, but wanted its transfer in his daughter's name---Statement of account produced by daughter related to her Foreign Currency Dollar Account, which did not reconcile with cheque issued by her in local currency---Nothing on record to show that daughter had ever negotiated with Modaraba Company either in writing or orally to show her intention of purchasing disputed car---Such circumstances indicated that disputed car in fact had been purchased by deceased for his own use---High Court dismissed appeal in circumstances.

Jane Margrete Willian v. Abdul Hamid Mian 1994 CLC 1437 and Muhammad Sajjad Hussain v. Muhammad Anwar Hussain 1991 SCMR 703 ref.

Ali Sibtain Fazli for Appellants.

Abid Hussain Chatha for Respondent.

Date of hearing: 29th June, 2005.

2005 C L D 1764

[Lahore]

Before Sh. Azmat Saeed, J

PAKISTAN WATER AND POWER DEVELOPMENT AUTHORITY (WAPDA) through Authorized Signatory---Plaintiff

Versus

AMERICAN EXPRESS BANK LIMITED---Defendant

P.L.A. No.11-B and C.O.S. No.3-B of 2005, decided on 25th April, 2005.

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

----Ss.2(e)(d), 9 & 10---Suit against Bank for recovery of amount---Refusal of bank to encash bank guarantee issued in plaintiffs favour---Application for leave to defend suit---Plea of Bank was that plaintiff was neither its customer nor issuance of such guarantee would constitute 'finance" as defined in S.2 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Definition of "customer" as given in Ordinance, 2001 included a person on whose, behalf a guarantee was issued, but omitted therefrom the person in whose favour guarantee was given---Defendant had raised substantial question of law and fact entitling it leave to defend suit---Defendant was granted leave to defend suit on furnishing its own guarantee ensuring satisfaction of decree, if passed against it.

Karachi Electric Provident Fund v. National Investment (Unit) Trust and others 2003 CLD 1026; National Electric Company of Pakistan (Pvt.) Limited v. Prime Commercial Bank Limited 2003 CLD 856; Messrs National Motors Ltd. v. Messrs Muslim Commercial Bank Ltd., Karachi 1982 CLC 236 and Qatar Airways PLC v. ANZ Grindlays Bank 2000 CLC 1455 ref.

Umer Sharif for Plaintiff.

Asad Munir for Applicant/ Defendant.

2005 C L D 1768

[Lahore]

Before Syed Hamid Ali Shah, J

Khawaja TAHIR JAMAL --- Plaintiff/Applicant

Versus

Messrs A.R. REHMAN GLASS---Defendant/Respondent.

C.M. No.1 of 2005, decided on 25th July, 2005.

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

----Ss.3, 5, 9, 10 & 12---Patents Ordinance (LXI of 2000), S.60--Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Scheme and process of registration under the Patents and Designs Act, 1911---Remedy to a patentee to file a suit: for infringement or counterfeiting the patent---Grant or refusal of interim relief---Paramount considerations.

The application for the grant of a patent is required to be filed on a prescribed form under section "3 of the Act, 1911. It is essential for the applicant to file the declaration that applicant is in possession of an invention. The Controller, on receipt of application, refers the matter to Examiner for his report under section 5 of the Act. The Examiner has to examine that the invention is properly described and ascertained in complete specification, the specification and drawings have been prepared in a prescribed manner, the title does sufficiently indicatl the subject-matter, of the invention and that the invention claimed is, prima facie, a new manufacture or improvement and if he is satisfied that these requirements are met, the application is accepted. The acceptance of application is advertised with specification, claims and drawings and is made open to the inspection of public. The patent, at this juncture, becomes a public record and any person can lodge opposition to the grant of patent by giving notice at the patent office by paying prescribed fee, within a period of four months from the date of advertisement. Section 9 prescribes the grounds on which a patent can be opposed. Provisions of this

section provide further that patent cannot be opposed on any

other ground. In the instant case the attack on the invention

was available under sub-clauses (c) and (d) of section 9 which

provide that the nature of invention or manner it is to be

performed is not sufficiently and fairly described and the invention has been publically used in any part of Pakistan or the same is publically known in any part of Pakistan. The patent is granted and sealed, on the basis of the report of the Examiner and also for the reason that the same is not opposed in response to advertisement under section 10 of the Act, 1911. The patent sealed confers on the patentee the exclusive privilege of making, selling and using the invention throughout: Pakistan by virtue of section 12 of the Act. The remedy to a patentee to file a suit for infringement or counterfeiting the patent was made available under the provisions of section 29 of the Act, 1911. Such right is now provided under section 60 of the Patents Ordinance, 2000. Paramount consideration, to resolve the issues or controversy between the parties, is required to be given to scheme and policy of the statute. The question of grant: or refusal of the interim relief, has to be adjudged according to the policy of the statute. The mischief against the rights, granted by the statute, is to be redressed, rather suppressed. The grant of interim relief in the instant matter cannot be weighed on monetary balance as against the statutory balance. When right or liability is created by a statute which also provides the special remedy for enforcing it, the remedy provided by that statute must be followed.

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

----S. 9---Patents Ordinance (LXI of 2000), S.2(i)---"Novelty" and "invention"---Concept---Opposition to grant of patent---Question of "novelty and invention" has to be seen and judged, keeping in view the provisions of S.2(i) of Patents Ordinance, 2000---Where the "invention" is defined to mean as new and useful product or process in any field of technology; and includes any new and useful improvement of, either of them---Section 9(10)(d) of Patents and Designs Act, 1911 provided attack on invention is such patent has been granted in respect of invention which has been used in any part of Pakistan or has been made publicly known in Pakistan---Section 9 of the Patents and Designs Act, 1911 has provided opposition on a patent. on five grounds only and it has been specifically mentioned at the end of S.9(i) "but no other grounds "---Language employed in S.9 thus makes it manifestly clear that a patent can be challenged only on grounds (a) to (e) of S.9(i) of the Patents and Designs Act, 1911---Words "invention". "publicly used" or publicly known as used in S.9, Patents and Designs Act, 1911 are restricted to Pakistan only---Rights under the law are territorial and such rights will extend within the boundaries o/' a country---Principles.

Jamshed Aslam Khan v. Mrs. Azra Jawed and 2 others 1995 CLC 436; Azra Jawed and another v. Jamshed Aslam Khan 1996 MLD 1203; Merc & Co. Ing. and others v. Hilton Pharma (Pvt.) Ltd. 2003 CLD 407; Standard Finis Oil Company and others v. National Detergents Ltd. and 2 others 1984 CLC 781; Silver Cotton Textile Mills Ltd. v. Bawany Violin Textile Mills Ltd. PLD 1963 (W.P.) Kar. 79; Glaxo Group Ltd. and 2 others v. Evron (Private) Ltd. 1992 CLC 2382; F.H. and B. Corpn. v. Unichem Laboratories AIR 1969 Bombay 255; Ardeshir Cowasjee and others v. Messrs Multiline Associates PLD 1993 Kar. 237; Fawad Fiaz v. General Manager (Zonal Head) and others 1999 YLR 2123; Federal Mogul Products v. Taha Industries and 2 others 2005 CLD 802; Taj-ud-Din v. Ilaji Mushtaq and others 1985 CLC 2182; Messrs D. Mont Blanc Industry Regd v. Abdul Aziz 1980 CLC 396; Lallu Bhai Chakubhai Jariwala v. Chimanlal Chunilal and Company AIR 1936 Bom 99; Manleka Thevar v. Messrs Star Plough Work Melur AIR 1965 Mad 327; Messrs Gorey International through Proprietor Feroza Khatoon v. Colgate Palmolive Pakistan 2000 MLD 8; Karachi Transport Corporation v. Qaiser Ali and another 2000 CLC 121; Messrs Bishwanth Prasad Radhey Shayam v. Messrs Hundustan Metal Industries AIR 1982 SC 1444; Patents in Chemistry and Biotechnology by Philip W. Grubb European Patent Attorney; Lakhpat Rai and others v. Sri Kishan Das AIR 1918 All. 24; Lallu Bhai Chakubhai Jarvivala v. Shamaldas Sankalchand Shah AIR 1934 Born. 407 and Smith Kline and French Laboratories Ltd. and another v. Ferozesons Laboratories Ltd. and another 1992 MLD 2226 ref.

(c) Patents and Designs Act (II of 1911)------

-----S.2(11)----Patent---Definition.

A patent is a monopoly right granted to a person who has invented a new and useful article or an improvement of an existing article or a new process of making an article. It consists of an exclusive right to manufacture the new article invented or manufacture an article according to the invented process for a limited period. After the expiry of the duration of patent, anybody can make use of the invention.

A patent being a creation of statute is territorial in extent. A patent granted in one State cannot be enforced in another State unless the invention concerned is also patented in that State.

P. Narayanan in his Book Intellectual Property Law 3rd Edition quoted.

(d) Patents and Designs Act (II of 1911)---

----S.9---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Opposition to grant of patent---Temporary injunction, grant of ---Balance of convenience---Principles---Plaintiff, in the present case, was granted the patent in 1993 which had remained unchallenged throughout this period until the time defendant had filed the counter-claim---Grant of the patent and sealing thereof was a process concluded after the compliance of all the formalities and the same was published in the official Gazette---No objections from any corner, local or foreign, after the publication of the advertisements, were filed ---Plaintiff; therefore, had the prima facie case in his favour for the purpose of temporary injunction, so long the registration in its name was not cancelled---Principles.

Sandoz Ltd. and another v. Pakistan Pharmaceutical Products Ltd. and another 1987 CLC 1571; Glaxo Group v. Pakistan Pharmaceutical Products 1991 MLD 85; Glaxo Group Ltd. v. Evron Pvt. Ltd. 1992 CLC 2382, Smith Kline and French Laboratories Ltd. and another v. Ferozesons Laboratories Ltd. and another 1992 MLD 2226; Azra Javed v. Jamshed Aslam Khan 1996 MLD 1203, Popular Food Industries v. Maaza International Company 2004 CLD 1509; Muhammad Jahangir v. Hassan Qaiser 2004 CLD 516; Jamshed Alam Khan v. Azra Javed and 2 others 1995 CLC 436; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090 and Telephone Soap v. Messrs Lever Brothers 1994 CLC 2135 ref.

Muhammad Ghani for Applicant.

Syed Najam-ul-Hassan Kazmi for Respondent.

2005 C L D 1781

[Lahore]

Before Maulvi Anwarul Haq and Ijaz Ahmad Chaudhry, JJ

ADIEU (PVT.) LIMITED through Directors/ Chief Executives---Appellant

Versus

PLATINUM COMMERCIAL BANK LIMITED through President/Chairman/Chief Executive/ Managing Director and 3 others---Respondents

F.A.O. No.8 of 2005, heard on 4th July, 2005.

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

----Ss. 9 & 22---Civil Procedure Code (V of 1908), O. VII, Rr. 10 & 11---Suit for recovery of damages against Bank and insurance company---Return of plaint.---Appellant. had claimed that lie availed various financial facilities from Bank and in that regard he pledged his stock of 'pesticides as primary security which remained under control and possession of the Bank and that said shock was insured with the Company approved by the Bank after making payment of premium amount---Appellant had alleged that said stock was stolen against which F.I.R. was registered, but claim or appellant with regard to stolen stock, was declined by the Insurance Company without any justification---Application of Insurance Company for deletion of its name from array of respondents was dismissed---Bank filed application for rejection of plaint under O. VII, R.11, C.P.C. and Banking Court allowed said application vide impugned order and returned plaint to appellant holding that Banking Court had no jurisdiction to adjudicate upon matter of damages claimed by appellant---Validity---Loan facility provided by the. Bank, was availed by appellant and Insurance company had nothing to do for recovery of said loan facility---Suit filed by Bank against appellant for committing default in return of said finance facility had already been decreed---Insurance Policy in respect of goods, which were to be imported against L/C opened by the Bank on behalf' of borrower, was not covered by definition of "Borrower" as given in. Financial Institutions (Recovery of Finances) Ordinance, 2001 and an indemnifier was not an indemnifier in the sense in which it had been used in the definition of word "borrower"---Banking Court, had no jurisdiction to entertain claim of appellant as it was not the case of appellant that Bank had committed any default in discharge of finance facility to appellant: or any obligation thereto---Damages having not been claimed by appellant on the basis of default in finance facility provided to him, Banking Court had rightly found that it had no jurisdiction in the matter---In absence of any infirmity or illegality in impugned order passed by Banking Court, same was maintained and appeal against was dismissed by the High Court.

1988 CLC 1969; PLD 2001 Lah. 313; 2003 CLD 1843; 2004 CLD 239 and 1988 CLC 1668 ref.

Muhammad Suleman Bhatti for Appellant.

Muhammad Irfan Wain for Respondents Nos. 1 and 2.

Mazhar Imtiaz Lari for Respondents Nos.3 and 4.

Date of hearing: 4th July, 2005.

2005 C L D 1787

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs MENAHIL TEXTILE MILLS (PVT.) LTD. through Chief Executive and 3 others---Appellants

Versus

MUSLIM COMMERCIAL BANK LTD.---Respondent

R.F.A. No.79 of 2000, heard on 28th March, 2005.

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

----Ss. 10 & 21---Suit for recovery of loan---Leave to defend suit---Total sanctioned loan was not disbursed and the Bank unilaterally reduced the finance of Rs.19.900 million to 5.99 million ---Un disbursed amount was recalled---Bank invited quotations for supply and manufacture of machinery, the quotation of one party was accepted by the Bank and the amount was directly disbursed to the manufacturer---Contentions of the borrowers carried weight that the relationship of the lender and borrower was governed by financing agreement and the mark-up etc., could only be claimed when there was actual sale and purchase---Nothing was available on record to prove as to who was responsible for non-delivery of the machinery---Banking Court, while passing the impugned decree had failed to attend to questions as to whether delay caused in mare facture of the machinery, was attributable to the Bank's non-disbursement, or the borrower's neglect and whether any actual transaction took place between the parties---Commitment charges could be claimed only when a party failed to honour its commitment under a contract---Borrowers, in the present case, were willing to avail the finance and perform their contractual obligations but the Bank recalled its undisbursed finance---Partial disbursement to manufacturer who had not delivered the machinery to the borrowers, could not make the borrowers liable to pay, unless it was proved that the borrowers were responsible, due to their non-performance of contractual obligation, for non-delivery of machinery---Such questions were sufficient for the grant of leave to defend the suit, as the controversy between the parties needed to be resolved, after proper trial---Banking Court, while passing the impugned decree, had not discussed all such questions at all---Leave to defend the suit, in circumstances, had to be granted to the borrowers---High Court allowed the appeal and set aside the decree of 'the Banking Court and granted leave to defend the suit subject to the condition that a sum of Rs.8,00,000, already deposited by the borrowers, shall remain as security---Trial Court was directed to decide the suit within a period of three months positively.

Ali Sibtain Fazli for Appellants.

Muhammad Nazir Shaheen for Respondents.

Date of hearing: 28th March, 2005.

2005 C L D 1790

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs AMJAD POLYTHENE BAG INDUSTRIES through Sole Proprietor---Appellant

Versus

PUNJAB SMALL INDUSTRIES CORPORATION through Managing Director---Respondent

F.A.O. No. 183 of 2005, heard on 20th July, 2005.

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

----Ss.2, 9 & 10---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, (XV of 1997), Ss.2, 9 & 10---Punjab Small Industries Corporation was not only covered under the definition of the 'Banking Company" as given in Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, but also fell in the definition of "Financial Institution" as provided under Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court, in the present case, had returned the plaint in the suit against the Corporation holding that Banking Court could not deal with the case against Punjab Small Industries Corporation, same being not a `Banking Company "---Validity---Held, Banking Court had committed grave legal error in rendering said judgment, which needed to be rectified---High Court allowed the appeal, set aside the judgment of Banking Court and observed that appellant's suit for redemption and the corporation's application for the grant of leave to defend the suit shall be deemed to be pending before the Banking Court, which shall decide after hearing the parties and in accordance with law.

Punjab Small Industries Corporation and 2 others v. Haji Cold Storage and another 2004 CLD 1424 fol.

Waqar Mushtaq Ahmad for Appellant.

Nemo for Respondent.

Date of hearing: 20th July, 2005.

2005 C L D 1799

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs TERMIZI OIL INDUSTRIES (PVT.) LIMITED through Director and 3 others---Appellants

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Senior Vice-President Regional Office, Lahore---Respondent

Regular First Appeal No.572 of 2001, heard on 18th April, 2005.

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

----Ss.12 & 6---Suit for recovery of loan---Limitation---Law of limitation did not apply to the suits filed under Banking Tribunals Ordinance, 1984.

Muhammad Ramzan and 4 others v. Agricultural Development Bank of Pakistan 2004 CLD 1376 ref.

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

----Ss.6 & 9---Suit for recovery of loan---Three Directors of the borrowing Company had executed various documents at the time of availing of the loan, including the personal guarantees of said three Directors of the borrowing Company---Said three Directors were sued as such, in their personal capacity---Company's failure to liquidate their liabilities, resulted into institution of suit for recovery against them---Leave to defend the suit was granted to defendants---None of the three Directors, had appeared as a witness---Solitary witness from the borrowers' side was one who was a stranger to the transaction and his statement had no evidentiary value---Said witness had shown his inability to tell the area of the borrowers' Mills, the number of Directors of the borrower Company or the source from where the funds for the establishment of the Mills were arranged---Said witness, in his statement, had admitted that he had once visited the city where the Company was located that too a year earlier---Bank, on the other hand, had produced three witnesses who had produced all the relevant documents in original in support of the assertions made in the plaint---Banking Tribunal had passed the decree after considering all these facts and High Court did not find any infirmity in the judgment and decree of the Tribunal and dismissed the appeal.

Khawar Ikram Bhatti for Appellants.

Ch. Shehram Sarwar for Respondent.

Date of hearing: 18th April, 2005.

2005 C L D 1802

[Lahore]

Before Syed Hamid Ali Shah, J

In the matter of AUTO OILS LTD.

C.Os. Nos.35 to 38 of 2005, decided on 17th June, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss.387(5) & 359---Voluntary winding up of company---Powers and duties of liquidator in voluntary winding up---Scope---Application by liquidator for extension of time for submission of dissolution/liquidation report after lapse of almost one year and eleven months---Validity---Provision of S.387(5), Companies Ordinance, 1984 was mandatory and disobedience entailed serious consequences amounting to invalidity of the act done in disobedience to the provision of law---Application in question was filed almost one year after the expiry of the statutory period; no extension was sought at the relevant time and the permission for extension of time was sought on the grounds which fell outside the purview of S.387(5), Companies Ordinance, 1984---High Court declined to grant extension sought for and dismissed the application---Principles.

In case of inability to complete the winding up process, the liquidator was under a legal obligation to move to High Court for the extension of time under section 387(5) of the Companies Ordinance, 1984. The applicant was entitled to the grant of extension by one month, at a time but this extension was not liable to exceed a period of six months in view of the aforementioned provisions of law. Admittedly, in the present case, no such application was moved at the expiry of the period of one year. The present application was filed after the lapse of almost 1 year and 11 months.

The language of section 387(5) of the Ordinance is very clear and does not need any scholarly interpretation. It provides that extension can be granted for one month at a time, in all for a period of six months and that too for the reason, that any proceedings for or against the company, are pending in a Court. The word, "shall" is mentioned in section 387(5), which makes the direction mandatory and disobedience entails serious consequences amounting to the invalidity of the act done in disobedience to the provisions of law. Period, prescribed for completing the winding up of the Company, can be extended for one month at one time, and such extension cannot exceed six months.

The present application has been filed almost one year, after the expiry of the statutory period. No extension was sought at the relevant time. Additionally, the permission for extension of time is sought on the grounds, which fall outside the purview of section 387(5) of the Ordinance. Application having no merits, the extension sought for was declined.

Ch. Muhammad Saleem v. Combined Industries (Pvt.) Ltd. Lahore PLD 1994 Lah. 125 rel.

Irfan Sadaat Khan for Applicant.

2005 C L D 1818

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ANJUMAN BHAHBOOD-E-MUTASSRIN TAJ COMPANY LIMITED (REGISTERED) through President---Appellants

Versus

REGISTRAR OF COMPANIES and another--- Respondents

I.C.A. No.9-L of 2003 in C.O.No.9 of 1998, heard on 6th April, 2005.

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

----Ss.284, 285, 286 & 287---Law Reforms Ordinance (XII of 1972), S.3---Intra-Court Appeal---Scheme for re-arrangement---Protecting rights of only one class of creditors at the cost of others---Holding meeting of creditors---High Court appointed a Chairman for meeting of creditors and voting was conducted for seeking approval of scheme for re-arrangement with regard to the management of the company---Voters, who were thousands in number came from various parts of the country to attend the meeting, they were given ballot papers, after proper scrutiny of papers and were allowed to cast their votes---There was unruly crowd., who disrupted polling but it was the ideal arrangement of the Chairman that situation was handled and polling continued till the end of the day---Meeting was conducted by the Chairman in the manner as directed---Creditors did not approve the scheme by simple majority therefore, High Court rejected the scheme and dismissed application in that respect---Plea raised by appellant was that the Chairman did not hold the meeting in terms of directions and guidelines imposed by High Court---Validity---Meeting was held in the best possible manner, in the existing circumstances and appellate Bench of High Court did not find any justification to set at naught the whole proceedings of the meeting simply on the ground that there was slight or negligible deviation---There were other classes of creditors in the company and proposed scheme was silent with regard to rights and interests of other class---Scheme protecting rights and interest of only one class at the altar of interests of other classes in company was not required to be approved---Such scheme was unfair and unreasonable and appellate Bench of High Court declined to interfere in the judgment passed by High Court ---Intra-Court Appeal was dismissed in circumstances.

Empire Mining Company (1890) 44 Ch.D 402; Barrow Haemalite Stell Company 39 Ch. D 582 and Griffith v. Paget 5 Ch. D 894 rel.

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

----Ss.284, 285, 286 & 287---Scheme for re-arrangement, approval of---Role of Companies Judge---Scope---Court does not sit merely to register the decision of meeting but before sanctioning a scheme it has to examine and satisfy itself whether the proposed scheme is fair and reasonable, taking into consideration all the material facts, interest of all classes and bona fides of parties.

Lipton Pakistan Ltd.'s case 1989 CLC 818 rel.

Khurram Saeed for Appellant.

Nemo for Respondents.

Date of hearing: 6th April, 2005.

2005 C L D 1823

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Syed RASHID HUSSAIN--- Appellant

Versus

BANK OF PUNJAB through Managing Director and another---Respondents

F.A.O. No.327 of 2000, heard on 22nd June, 2004.

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

----Ss.10 & 21---Suit for recovery of loan---Application for leave to defend the suit---Said application was dismissed for non-prosecution and, simultaneously, the decree was passed in favour of the Bank---Defendant did not file any appeal but moved an application for setting aside ex parte decree on the ground that the date was erroneously. noted as 14-10-1998 instead of 24-9-1998; along with application, affidavit of the counsel of the defendant was also filed---Banking Court had dismissed the application, primarily, misconceiving that there was no affidavit of the above fact---Validity---Whether the date was erroneously noted or otherwise was a question of fact, and if there was any doubt in the mind of the Court that the plea of the appellant, was not fully substantiated from the available record, even, on account of the affidavit of the counsel to the above effect, the Court should have allowed the parties to produce the evidence---Considering the contents of the application accompanied by the affidavit of the counsel, which had not been positively controverted by the Bank, a sufficient cause for the restoration of the application for leave to appear and defend, was made out by the appellant and his application in this behalf should have been allowed---High Court, in circumstances, allowed the appeal, set aside the order of the dismissal of the appellant's application for leave to defend the suit for non-prosecution, with the result that the ex parte decree of the Banking Court also stood set aside---Application of the appellant should be deemed pending before the Banking Court which would be decided in accordance with law.

Syed Haider Ali Shah for Appellant.

Nadeem Saeed for Respondents.

Date of hearing: 22nd June, 2004.

2005 C L D 1830

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SAYID PAPER MILLS (PRIVATE) LIMITED through Chief Executive and

2 others---Appellants

Versus

TRUST INVESTMENT BANK LIMITED through Chief Executive---Respondent

Regular First Appeal No.292 of 2004, heard on 19th April, 2005.

(a) Financial Institutions (Recovery of Finances) Ordinance (XL VI of 2001)---

----S. 9---Contract Act (IX of 1872), S.8---Suit for recovery of balance amount under decree of Banking Court---Defendant for availing finance facility from other Bank offered to plaintiff-Bank during execution of decree to accept payment of Rs.40 million in satisfaction of its claim---Plaintiff accepted such offer and sent letter dated 17-I0-2002 to other Bank confirming its assent to release security documents subject to payment of Rs.40 million---Other Bank through letter dated 22-10-2002 forwarded to plaintiff pay order for Rs.40 million as full and final settlement of liabilities of defendant---Plaintiff encashed pay order, released security documents and issued NOC for vacation of charge---Plaintiff ; thereafter, filed suit on the ground that plaintiff, through letter dated 19-10-2002, had informed defendant regarding issuance of its letter to other Bank on the express condition that defendant would pay residual balance of Rs.3.20 million within 12 months---Validity---Nothing on record was available to show that defendant had accepted claim of plaintiff conveyed through letter dated 19-10-2002---Such letter would carry no weight as the same could, at the most, be considered a. proposal without its acceptance in express terms---Acceptance of any consideration offered with proposal, would amount to acceptance---Plaintiff by accepting conditional offer, getting pay-order encashed and releasing documents unconditionally had abandoned its claim for residual amount and right to recover same stood waived---Suit was dismissed in circumstances.

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

----S.8---Acceptance of any consideration offered with proposal would amount to acceptance.

Abid Hussain Chatha for Appellant.

Rashdeen Nawaz Kasuri for Respondent.

Date of hearing: 19th April, 2005.

2005 C L D 1837

[Lahore]

Before Mian Saqib Nisar and Tanvir Bashir Ansari, JJ

Ch. FEROZ DIN and another---Appellants

Versus

HOUSE BUILDING FINANCE CORPORATION and another --- Respondents

R. F.A. No.303 of 2004, heard on 13th September, 2004.

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

----S.9---Civil Procedure Code (V of 1908), O. VII, R. 11--- Rejection of plaint---Cause of action, absence of---Deficiency in court-fee---Payment of fixed court-fee --- Scope --- Suitfor rendition of accounts was filed by borrowers against financial institution---Banking Court rejected the suit on the ground that the borrowers having admitted their liability, there was no cause of action left and deficiency in court fee was not provided---Validity---Borrowers were only required and liable to pay that much amount to which the financial institution was entitled, according to the terms of the agreement between the parties and so truly reflected in statement of accounts---If it was otherwise, there was no obligation of the borrowers to pay the amount only because same was mentioned in the accounts statement---Such was the complaint of borrowers before Banking Court, which was not attended to in accordance with law---Banking Court should have considered the contents of the plaint in terms of the agreement and only then had decided the competency or validity of suit or institution of the same with oblique motive---On the suit for rendition of account, fixed court fee was payable---If it was so affixed, there was no question of any deficiency, resulting into the rejection of plaint---Judgment and decree passed by Banking Court was set aside and the case was remanded to Banking Court for decision afresh---Appeal was allowed.

Rashdin Nawaz Kasuri for Appellants.

Dil Afroz Subhani for Respondents.

Date of hearing: 13th September, 2004.

2005 C L D 1845

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

IMTIAZ BEGUM and 5 others--- Appellants

Versus

FIRST ELITE CAPITAL MODARBA and another---Respondents

Regular First Appeal No.42 of 1999, heard on 13th May, 2004.

Modaraba Companies and Modarabas (Flotation and Control) Ordinance (XXXI of 1980)---

----S.30---Suit for recovery of money---Director of Company was also arrayed as defendant not as mortgagor or guarantor, but as real beneficiary---Plea of Director not to be liable for facility provided to Company---Validity---Defendant-Company was a legal. entity and juristic person, to whom facility was granted---Liability of Director could, in no way, be created in such transaction---Suit against Director was dismissed in circumstances.

Ladli Prasad Jaiswal v. The Kanial Distillery Co. PLD 1965 SC 221 ref.

Asghar Haider for Appellants.

Muhammad Riaz Malik for Respondents.

Date of hearing: 13th May, 2004.

2005 C L D 1847

[Lahore]

Before Syed Jamshed Ali and Muhammad Sair Ali, JJ

Messrs MUDASSAR WEAVING FACTORY through Sole Proprietor and another---Appellants

Versus

BANK OF PUNJAB through General Manager---Respondent

Regular First Appeal No.344 and C.M. 2-C of 1998, heard on 30th March, 2004.

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

----S. 21---Limitation Act (IX of 1908), Ss.5 & 29(2)---Appeal---Condonation of delay---Provision of S.5 of Limitation Act, 1908 not applicable to an appeal under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997.

Siddiq M. Malik and others v. Al-Baraka Islamic Investment Bank, B.S.C. and another 2002 CLD 1694 and Majeed Akbar Farooqi v. Bank of Punjab 2002 CLD 778 rel.

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

----S. 21--- Appeal---Condonation of delay---Judgment/decree were passed on 25-6-1998---Application for certified copies was made on 16-9-1998, which were supplied on 21-9-1998---Appeal was filed on 26-9-1998---Plea of appellant was that he met with an accident on 2-6-1998 and was advised bed rest from 21-6-1998 for six weeks and then from 2-8-1998 for another seven weeks; and that bar oj' limitation would not operate as impugned judgment/ decree were void---Validity---Had appellant met with an accident on 2-6-1998 resulting into fracture of his three ribs, then he should have been in hospital on 2-6-1998---Two certificates of private medical practitioners did not show hospitalization of appellant and if so, for what period---Copies of judgment/decree were made available on 21-9-1998, but there was no explanation of period from 21-9-1998 to 26-9-1998---Judgment1decree passed by a Court of law could not be ignored by raising a plea that same being void, thus, bar of limitation would not apply---High Court dismissed appeal as barred by time.

Messrs Conforce Ltd. v. Syed Ali Shah and others PLD 1977 SC 599 rel.

(c) Limitation---

----Void judgment/decree---Bar of limitation---Applicability---Judgment/decree passed by a Court of law could not be ignored by raising a plea that same being void, bar of limitation would not operate.

Messrs Conforce Ltd. v. Syed Ali Shah etc. PLD 1977 SC 599 rel.

Syed Azhar Ali Shah Bukhari for Appellants.

Muhammad Shujah Baba for Respondent.

Date of hearing: 30th March, 2004.

2005 C L D 1850

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

ALLIED BANK OF PAKISTAN LIMITED---Appellant

Versus

GUL BADEEN and another---Respondents

E. F.A. No.255 of 2004, heard on 15th July, 2004.

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

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.30---Money decree, execution of---Payment in instalments---Scope---Executing Court could not allow judgment debtor to pay decretal amount in instalments.

Sheikh Anwar-ul-Haq for Appellant.

Amjad Farouck Bismell Rajpout for Respondents.

Date of hearing: 15th July, 2004.

2005 C L D 1852

[Lahore]

Before Umar Ata Bandial, J

Mian FAROOQ AHMED SHEIKH and 8 others---Plaintiffs

Versus

PRIVATIZATION COMMISSION through Chairman and 3 others---Defendants

C.O.S. No.2 and C.Ms. Nos.438-L and 1 of 2005, decided on 18th July, 2005.

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

----O. VII. R.I I---Privatization Commission Ordinance (LII of 2000), Ss.28 &. 29---Suit under Ss.28 &. 29, Privatization Commission Ordinance, 2000 in the High Court---Rejection of plaint---Principles---Application for rejection of plaint is to be considered and decided on the assumption that whatever is stated in the plaint is true, therefore, the defects that. may be made a ground of decision. by the Court must float: on the surface of plaint or the plaintiffs case as presented to the Court---Where the plaintiffs, for dearth of their own record, had relied on the documents attached with the written statement filed by the defendant, High Court examined the plaint and documents filed therewith and also the documents attached with the written statement in order to comprehend the case of the plaintff s and also to assess the defects alleged therein.

(b) Privatization Commission Ordinance (LII of 2000)----

----Ss.28 & 29---Transfer of Managed Establishments Order [P.O.12 of 1978], Schedule---General Rules for Estimating Break-up Value of Industrial Projects, para. A---Suit under Ss.28 & 29 of Privatization Commission Ordinance, 2000 by the previous owner of the company with application for injunction against further action by the Privatization Commission inviting expression of interest: from the public about the sale of shares of the company---"Specified persons" (previous owners)---Right of "specified persons" described in Schedule of Transfer of ` Managed Establishments Order, 1978 and grant: them a right to match the highest bid received by the Federal Government for the transfer of shares or proprietary interests of the managed establishment. relevant to them---Application of plaintiffs for revision/adjustment of' matching price on the ground that value of shares of the company had deteriorated considerably after the highest bid per share which was received in 1991---Validity---Held, at a practical level of 'appreciation and resolution of claim of the plaintiffs, the most obvious way to evaluate/assess the alleged diminution in the value of the assets and/or shares of 'the company was to put them up for bidding by interested third parties---Bids would bring out the real value of' such assets or shares and vindicate or disprove the stand taken by the plaintiff s---Prayer made in the stay application and the suit however, showed that the plaintiffs were averse to such a course of action; and an injunction was sought against further action by the Privatization Commission inviting expression of interest from the public about the sale of shares or the company---Blocking the bidding for the said shares by any interested party shall have the effect of preventing market valuation of the shares and/or assets of the company and further delaying sale of 'the shares until an undefined accounting exercise for valuation was agreed, initiated, undertaken and completed---If so allowed, the pendency of the suit might have the effect of both depriving the Privatization Commission of new buyers for the shares or assets of the company apart from compelling it to accede the demands of the plaintiffs---If such a situation was allowed to be created that would constitute an abuse of the process of Court---Plaintiffs were asserting a legal right to pre-empt the sale of' the company's shares which right could not be exercised in a manner that blocked the sale without making a deposit of the price, inter alia, by disputing the same on hitherto new and untested grounds---To maintain their pre-emptive claim, the plaintiffs must demonstrate their seriousness to honour and capacity to carry out the sale' transaction---High Court, in circumstances, directed the plaintiffs to make down payment of earnest money of Rupees seventy-five million representing about 9% of the total sale consideration payable by the plaintiffs at the matching price of the share of the company---To make a down payment of the said amount would be a minimal evidence of the plaintiffs' bona fides and capacity to pursue its objections---Said amount shall be deposited by the plaintiffs with the Deputy Registrar of the High Court within two weeks of a certified copy of present order becoming available to the parties---Said amount shall, in consultation with the counsel for the parties, be invested in an income yielding scheme till further orders---High Court observed that direction for deposit in Court was given to the plaintiffs as an interim measure to secure the interests of the parties---Sale proceedings of the shares of the company offered by the Privatization Commission pursuant to its public notice shall continue for the determination of the highest bid---Such bid shall be convened to the high Court for bringing on record the market valuation of the shares of the company and in the meanwhile the present suit would progress for the determination of the existence of the plaintiffs' claimed right to adjustment of the matching price for the shares under sale of the company and whether such right, if at all in existence, was lost by virtue of the Supreme Court judgment or otherwise by any bar under law or by the efflux of time---Such questions might not require an elaborate enquiry yet they did require determination which was not possible to be done summarily---Pleadings of the parties having already been filed, High Court directed the parties to propose preliminary issues that arose for determination by the High Court with respect to the existence or otherwise of the necessary conditions for the continuation of the present suit---Principles.

Mian Farooq Ahmed Sheikh and others v. Federation of Pakistan and others Civil Appeals Nos.512 and 513 of 1994 ref.

Raja Muhammad Akram for Applicant/ Defendant No.1 (in C.M. No.438-L of 2005).

Imtiaz Rashid Siddiqui for Respondent/ Plaintiff No.1 (in C.O.S. No.2 of 2005).

Abid Aziz Sheikh for Defendants Nos.2 and 3.

2005 C L D 1864

[Lahore]

Before Mian Saqib Nisar and Sh. Azmat Saeed, JJ

Chaudhry KHALID MAHMOOD---Appellant

Versus

Chaudhry SAID MUHAMMAD---Respondent

Regular First Appeal No.269 of 2002, decided on 5th September, 2005.

Stamp Act (II of 1899)---

----Ss. 35, proviso (a) & 36---Promissory note not duly stamped---Raising such objection. in written statement and framing of an issue thereon---Admission of such promissory note in evidence without objection by defendant---Validity---Such promissory note though not invalid would be inadmissible in evidence as defect of deficiency of stamps thereon not curable---Suit based on such promissory note, thus, would be liable to be dismissed---Provisions of S.36, Stamp Act, 1899 were mandatory and had an effect to override S.35 imposing complete bar to question admissibility of a document including such promissory note once admitted in evidence rightly or wrongly, thus, no Court could reject and exclude same from its consideration, rather same would be read as a valid piece of evidence and such issue would become redundant---Principles.

An insufficiently stamped pro note shall be inadmissible in evidence, it cannot be made admissible by impounding and paying the penalty, and the suit based upon such a pro note shall be dismissed.

According to the law, a deficiently stamped document including a pro note is not invalid, but the only vice and the disability attached to such a document under section 35 of the Stamp Act, 1899, is about its inadmissibility in evidence or that it cannot be acted upon, unless duly stamped. Proviso (a) to the section 35, however, provides the mechanism, as to how and subject to what conditions, the defect can be cured, but with the exception of certain documents including a pro note. This means that the defect of deficiency of stamps on a pro note is incurable and it remains to be inadmissible in evidence. This is the ultimate purport of section 35 of the Stamp Act, 1899 when construed along with the first proviso.

The above section 35 is followed by section 36, which provides that "where an instrument has been admitted in evidence, such admission shall not, except as provided by section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped." This is a very comprehensive and a powerful provision with the command that if an instrument deficiently stamped is once admitted into evidence, except for the cases falling under section 61, the admission of' a document cannot be called into question. A deficiently stamped pro note is not covered by section 61 and section 36 by itself has not created any exception for such a pro note. Section 36 is mandatory in nature, which has the clear effect of overriding section 35 and imposes a complete bar to question the admissibility of a document once it has been admitted into evidence rightly or wrongly and this includes all such documents falling under proviso (a) to section 35.

The provisions of section 36 are mandatory and once a document including an insufficiently stamped pro note, is rightly or wrongly admitted in evidence and is marked as an exhibit, it is impermissible for the Court of first instance, or in appeal or revision etc., to reject and exclude from its consideration such document, which shall be read as a valid piece of evidence, notwithstanding its deficiency. In the present case the promissory note, forming part of the evidence as Exhibit without any objection of the defendant would be read into evidence and in such situation the Issue would become redundant, and Court cannot dismiss suit, which was decreed in circumstances.

Cap. (Retd.) Muhammad Arshad and another v. Asad Munir and another 2003 YLR 2955; Rehmat Ali v. Wahid Bux NLR 1979 Civil SC 809; Sardar Muhammad Ramzan v. Muhammad Yahya Khan 2000 CLC 296; Abdul Hashem v. Serajul Haque and others PLD 1961 Dacca 596; Amin Jute Bailing Co. Ltd. v. Aminpur Union Cooperative Multi-purpose Society Ltd. PLD 1961 Dacca 102; Muhammad Hanif v. Kissan Dost (Pvt.) Limited 2003 CLD 224; Farid Akhtar Hadi v. Muhammad Latif Ghazi 1993 CLC 2015; Samiullah v. Muhammad Ahmed and 6 others PLD 1977 Kar.49; Eskandar Ali v. Mst. Alhamra Begum and others PLD 1969 Dacca 214; Ch. Muhammad Saleem v. Muhammad Akram and others PLD 1971 SC 516; Javer Chand and others v. Pukhraj Surana AIR 1961 SC 1655; Mangala Lakshmappa v. Pathala Masud Sahib AIR 1934 Mad. 700; Ganga Ram v. Het Ram and others AIR 1965 Rajasthan 47; Mian Sher Rehman v. Muhammad Sharif Khan and others PLD 1984 Pesh. 2; Shankar Dattatraya Prabhavalkar and others v. Municipal Corporation of the City of Bombay and another AIR (33) 1946 PC 53; Chandra Sekhar Misra v. Gobinda Chandra Das AIR 1966 Orissa 18; Jatindra Mohan Deb Laskar v. Khara Singh and others AIR 1964 Assam 138; K.M. Muneer v. Mirza Rashid Ahmed PLD 1964 (W.P.) Kar. 172; K.M. Muneer v. Mirza Rashid Ahmad PLD 1963 (W.P.) Kar.905. Mt. Bittan Bibi and another v. Kuntu Lal and another AIR 1952 Allahabad 996 and Muhammad Ashiq and another v. Niaz Ahmad and another PLD 2004 Lah.95 rel.

Atif Amin for Appellant.

Ali Akbar Qureshi for Respondent.

Syed Mansoor Ali Shah: Amicus Curiae.

Date of hearing: 7th July, 2005.

2005 C L D 1875

[Lahore]

Before Umar Ata Bandial, J

SAGHIR AHMED SOOFI---Petitioner

Versus

Messrs SAGA SPORTS (PVT.) LIMITED and 8 others---Respondents

Civil Original No.63 of 2004, heard on 6th May, 2005.

(a) Companies Ordinance (XL VII of 1984)---

----S.2(21)--- Member"---Definition---Definition of "member" as provided in S.2(21), Companies Ordinance, 1984 specifies the attributes that qualify a person to be a member of a Company.

Muhammad Anwar Monoo v. Muhammad Waqas Manoo 1997 CLC 1943 and Pennington's Company Law Fifth Edition, Butterworths 1985 ref.

(b) Islamic La w---

----Inheritance---Devolution of property forming the estate of a deceased to his heirs in their ordained shares occurs automatically at the moment propositus dies.

Pennington's Company Law Fifth Edition, Butterworths 1985 ref.

(c) Companies Ordinance (XL VII of 1984)---

----Ss.2(21), 31, 302 & 152---Petitioner, whose legal title of shares of the Company had passed to him on the demise of Chief Executive of the Company through inheritance as one of the heirs, in his petition under S. 152, Companies Ordinance, 1984 had sought the setting aside of transfer of shares made by Chief Executive, of a family owned private limited Company, in favour of persons who, at that point of time were non-members of the Company---Petitioner had asserted that such transfers were in violation of the Company's Articles of Association which conferred a right upon its members to pre-empt transfer of shares of the Company proposed in favour of non-members---Question with reference to the present controversy was whether and if so, what member's rights had created such a legal interest for the petitioner---Held, reliance on the provisions of Ss.31 & 302, Companies Ordinance, 1984 by the petitioner was analogically inappropriate and petitioner could not benefit from the rule expressed by Ss.31 & 302 of the Ordinance---Petitioner was claiming entitlement to a member's right as a legal heir of a deceased member rather than seeking to assume obligations of deceased member---In the absence of clear statutory intendment to the contrary, the express requirements of S.2(21), Companies Ordinance, 1984, setting out the essential attributes of a member, could not, therefore, be disregarded---In order to become a member of a Company, a holder of the shares of such a Company must also have his name entered on the register of its members---Although a legal heir of a deceased member by virtue of his legal interest had become the holder of shares in a Company, he did not become a member of that Company until his name was entered in the register of its members---By assuming a deceased member to be a deemed member, Court protected the vested rights of legal heirs, however, the time for grant of such rights to a legal heir occurred when he became a member of the Company---Definitional element of a "member" contained in S.2(21); Companies Ordinance, 1984 might not be applied strictly in cases where the Controllers of a Company were delinquent in granting or recognizing the rights of legal heirs of a deceased member---Petitioner, in the present case, was asserting a claim to exercise a personal right available to a member for pre-empting a sale of shares that occurred before the petitioner became a member of the Company---To exercise the option to pre-empt a sale of shares under Articles of Association one had to exercise a choice which was time bound to the date of specific transaction which, unless pre-empted timeously, could lawfully be finalized---Company had a duty under law and its Articles to notify pre­emptible transaction to persons who were its members---Petitioner's claim expected the Company to also inform persons who merely had the prospect of becoming members of the Company---Such an expectation would place a speculative and impossible obligation upon the Company apart from involving strangers in the internal affairs of the Company, who might, in fact, never choose to become its members---Notice by the Company to non-members was neither contemplated by law nor was a practicable measure---Time bound rights which had to do with the personal choice of a member fell into a category that was completely distinct from matters involving pecuniary and proprietary rights of a member---Petitioner, who was not known to the Company as its member at the time of impugned transaction of shares by the Chief Executive, option to pre-empt those transactions which was available at that point of time had expired---Right of pre-emption could not be accumulated or reserved for the petitioner to exercise after he was recorded in the books of the Company as a member---Petitioner had not alleged oppression or delinquency against the management of the Company to make out a case on equitable grounds---When the petitioner became member of' the Company subsequently, there was no reason for the right under the Articles of Association of the Company to be resurrected for him to reopen a past and closed transaction made by the Chief Executive of the Company---Petitioner, in circumstances, did not have any right under the Articles of the Association of the Company to pre-empt transactions of sale of shares of the Company entered prior to his becoming a member of the Company.

Mst. Ameeran Khatoon v. Mst. Shamim Akhtar and others 2005 SCMR 512; United Liner Agencies of Pakistan (Pvt.) Ltd., Karachi and 4 others v. Miss Mahenau Agha and 8 others 2003 SCMR 132; Muhammad Anwar Monoo v. Muhammad Waqas Manoo 1997 CLC 1943; Pennington's Company Law Fifth Edition, Butterworths 1985; Ghulam Ali and others v. Mst. Ghulam Sarwar PLD 1990 SC 1; Government of Pakistan v. Indo-Pak Corporation Limited and others PLD 1979 SC 723; New Zealand Gold Extraction Company (Newberyvautin Process) Limited v. Peacock (1894) 1 QB Ch. 622; James v. Auena Ventura Nitrate Grounds Syndicate Limited (1896) 1 Ch. 456; Muhammad Fikree v. Fikree Development Corporation PLD 1988 Kar. 446 and In re: Jermyn Street Turkish Baths Ltd. (1971) 3 All ER 57 ref.

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

----Ss.31 & 302---Scope and application of' Ss.31 & 302, Companies Ordinance, 1984---Provisions of Ss.31 & 302, Companies Ordinance, 1984 recognize that it is the status of a member that creates rights and obligations between the Company and its shareholders---Sections 31 & 302 of the Ordinance, however, carve an exception to that principle by directing expressly that the liabilities of a deceased member shall bind his estate although no person has replaced and succeeded the deceased as a member---Such exceptional treatment is given by the statute to the liabilities of the deceased member but not to his rights---Statutory rule contained in Ss.31 & 302 of the Ordinance relieves a Company from facing the objection that the legal heirs of a deceased member, who are not registered with the Company, shall not discharge the obligation or debts of the deceased members towards the Company, otherwise, such an objection would leave in limbo the unperformed obligations that accrue in the name of a dead member---Sections 31 & 302 of the Ordinance, therefore, have limited application meant to protect the interests of a Company.

Ghulam Ali and others v. Mst. Ghulam Sarwar PLD 1990 SC 1 and Government of Pakistan v. Indo-Pak Corporation Limited and others PLD 1979 SC 723 ref.

(e) Companies Ordinance (XL VII of 1984)---

----S.2(21)---Member of Company---Essential attributes---In order to become a member of a Company, a holder of the shares of such a Company must also have his name entered on the register of' its members---Legal heir of a deceased member, although by virtue of his legal interest becomes the holder of shares in a Company, he does not become a member of that Company until his name is entered in the register of its members---In the absence of clear statutory intendment to the cor,rary, the express requirements of S.2(21), Companies Ordinance, 1984, setting out essential attributes of a member cannot be disregarded.

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

----S.2(21)---Member of Company---Financial rights of legal heir of a deceased member of the Company --- Scope --- Rights to receive dividends or rights shares that arise f rom 11w statute cannot be defeated only because a legal heir of a deceased member is not registered as a member---Common feature of such pecuniary or proprietary rights is that they are amenable to accumulation for the benefit of a legal heir---By assuming a deceased member to be a deemed member the Court: protects the vested rights of legal heirs---However the time for the grant of such rights to a legal heir occurs when he becomes a member of a Company.

New Zealand Gold Extraction Company (Newberyvautin Process) Limited v. Peacock (1894) 1 QB Ch. 622 ref.

(g) Companies Ordinance (XL VII of 1984)---

------S.2(21)---Member of Company---Rights of legal heirs of a deceased member of Company---Notwithstanding the fact that legal heirs are not registered members of a Company, Courts extend them recognition so that they may secure their statutory and other legal rights in a Company.

James v. Auena Ventura Nitrate Grounds Syndicate Limited (1896) 1 Ch. 456 ref.

(h) Companies Ordinance (XL VII of 1984)---

----S.2{21)---Scope and application of S.2(21), Companies Ordinance, , 1984---Legal heirs of a deceased member of Company---Definitional element of a member contained in S.2(21) of the Companies Ordinance, 1984 may not be applied strictly in cases where the Controllers of ' a Company, are delinquent in granting or recognizing the rights of - legal heirs of a deceased member.

Muhammad Fikree v. Fikree Development Corporation PLD 1988 Kar. 446 ref.

(i) Companies Ordinance (XL VII of 1984)---

----S. 2(21)---Member of'. Company, rights of---Time bound rights which have to do with the personal choice of 'a member, fall into a category that is completely distinct from matters involving pecuniary and proprietary rights of a member.

Muhammad Anwar Monoo v. Muhammad Waqas Manoo 1997 CLC 1943 ref.

(j) Companies Ordinance (XL VII of 1984)---

----Ss.2(21) & 165---Member---Right to vote---Right to vote available to a member is a personal right of choice for which he should be duly registered with his Company according to the criteria of its membership---Unlike a pecuniary or proprietary right of a member, the right to vote cannot be accumulated and is time bound for exercise at the meeting convened for the purpose whereafter this right expires.

Muhammad Anwar Monoo y. Muhammad Waqas Manoo 1997 CLC 1943 ref.

(k) Companies Ordinance (XL VII of 1984)---

--S.2(21)---Member of Company, right of--Person, who was not known to the Company at relevant time, as its member when transactions of transfer of shares by the Chief Executive of the Company were made, option to such person, who subsequently became member of the Company, to pre-empt said transaction which was available at that point of time had expired---Right of pre-emption could not be accumulated or reserved for such person to exercise after he was recorded in the books of the Company as a member---When such person did become member of the Company subsequently, there was no reason for the right under Articles of Association to be resurrected for him to re-open a past and closed sale transaction made by the Chief Executive of the Company---Such person, in circumstances, did not have right to pre-empt transactions of sale of shares of the Company entered prior to his becoming member of the Company.

Haq Nawaz Chatha for Petitioner.

Hamid Khan and Salman Aslam Butt for Respondents.

Date of hearing: 6th May, 2005.

2005 C L D 290

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs CHILTAN GHEE MILLS (PVT.) LIMITED

File No.2(277)ENO/(DD‑R&I)/MCA/99, decided on 25th November, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19(1)(a) & 21‑‑‑Non‑submission of document regarding annual audited accounts‑‑‑Imposition of penalty‑‑‑Authority allowed one month's time to Undertaking for 4ubmission of annual audited accounts for relevant year, but Undertaking having failed to do so, was served with a show‑cause notice under S.19(1)(a) of Monopolies and Restriction Trade Practices (Control and Preventions) Ordinance, 1970‑‑­Undertaking vide its letter requested for allowing it submission of .required documents after completion of financial year‑‑‑Authority accepted request of undertaking and fixed date of hearing but on due date neither Undertaking nor its duly authorized representative appeared‑‑‑Authority considered the fact that Undertaking remained under control of "Receiver" in compliance with orders of Banking Court and matter was pending before Banking Court for decision in respect of liabilities and losses sustained by Undertaking during Receiver's period‑‑­Authority after considering all facts decided that request for further extension in submission of audited account was not reasonable‑‑‑Authority imposed penalty of Rs.20, 000 under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Nemo for Respondent.

Date of hearing: 26th July, 2003.

2005 CLD 310

[Monopoly Control Authority].

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs KOHAT CEMENT COMPANY LIMITED

F. No.8(849)/INV/(CCAO‑R&I)/MCA/2002, decided on 25th November, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19(1)(a)(2) & 21‑‑‑Non‑compliance of order of Authority‑‑‑Imposition of penalty‑‑‑Authority by an order passed under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, imposed a penalty of Rs.50, 000 on Undertaking and amount of penalty was to be deposited under relevant head of account by specified date‑‑‑Undertaking having defaulted and having not paid penalty by due date, Authority vide its order imposed a penalty of Rs.10, 000 per day on Undertaking from date of alleged default under S.19(2) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970‑‑‑Undertaking having failed to pay penalty within given time, matter was referred to District Collector for recovery of outstanding amount as arrears of land revenue‑‑‑Undertaking vide a letter informed that principal amount of penalty of Rs.50, 000 was paid and also requested for waiver of additional penalty and/or an opportunity of being heard‑‑‑On date of hearing representative of Undertaking could not give cogent reason in support of his pleadings‑‑‑Authority, informed representatives of Undertaking that after passing impugned orders, Authority had become functus officio and was not in a position to review its orders under law and that Undertaking was attempting to reopen a closed matter whereas proper course of action should have been to file an appeal within, the time limit prescribed in Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 which it had failed to do.

Fazal Karim Khattak, General Manager (Planning) and Muhammad Saleem Sahgal, Advocate Supreme Court of Pakistan for Respondent.

Dates of hearing : 9th January and 23rd August, 2003

2005 C L D 326

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs ESSA CEMENT INDUSTRIES LIMITED

File No.2 (287) /VII/ Enq/ (Chief‑R&I) / MCA/ 2003, decided on 25th September, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19(1)(c) & 21‑‑‑Failure of Undertaking to supply requisite information‑‑‑Imposition of penalty‑‑‑Undertaking was asked to supply ex factory price per ton/bag as on 25‑3‑2003‑‑‑Undertaking was also asked to regularly supply said information on weekly basis along with production and dispatches of each day of week‑‑‑Reasons for any change of price were also required to be submitted‑‑‑Undertaking having failed to supply requisite information to Authority, show‑cause notice was served upon Undertaking‑‑‑In response to said notice Undertaking supplied requisite information vide its letter dated 27‑6‑2003‑‑‑Undertaking submitted that it was sending required dispatch reports from 13‑6‑2003 onward‑‑‑On date fixed for hearing authorized representative appeared on behalf of Undertaking, but he could not give any cogent reason for not furnishing information for period prior to 13‑6‑2003 as required by Authority‑‑‑Authority noted that since Undertaking was submitting requisite information regularly with effect from 13‑6‑2003, taking lenient view with regard to past default, it ordered to impose penalty on Undertaking under S.19(1)(c) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Muhammad Zaheer for Respondent.

Date of hearing: 25th August, 2003.

2005 C L D 341

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs LUCKY CEMENT LIMITED

File No.2(287)/V/Enq/(Chief‑R&I)/MCA/2003, decided on 24th September, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19(1)(a) & 21‑‑‑Failure of Undertaking to supply required information‑‑‑Imposition of penalty‑‑‑Undertaking was asked to supply ex factory price per ton/ bag as on 25‑3‑2003 and also to regularly supply said information on weekly basis along with production and dispatches of each day of the week‑‑‑Reasons for any change of price were also requited to be submitted‑‑‑Undertaking; however, having failed to supply requisite. information to Authority, show­cause notice was served upon it‑‑‑In response to said show­cause notice, Undertaking gave certain reasons for non­supply of complete requisite information on specified date‑‑­Authority, after hearing representative of Undertaking, decided that reasons given for non‑supply of complete information up to specified date, despite clear‑cut directions of Authority, were not convincing‑‑‑Authority imposed penalty upon Undertaking under S.19(1)(c) of Monopolies and Restrictive Trade Practices (Control & Preventions) Ordinance, 1970.

Muhammad Humayun Khan, General Manager (GR&A) for Respondent.

Date of hearing: 25th August, 2003.

2005 C L D 345

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs DADABHOY CEMENT INDUSTRY LIMITED

File No.2(287)/IX/Enq/(Chief‑R&I)/MCA/2003, decided on 30th September, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.l9(1)(a) & 21‑‑‑Failure to supply requisite information on specified date‑‑‑Imposition of penalty‑‑‑Undertaking concerned was asked to supply ex factory price per ton/bag as on specified date‑‑‑Undertaking was also asked to regularly supply said information on weekly basis along with production and dispatches of each day of week‑­Reasons for any change of price were also required to be submitted‑‑‑Undertaking failed to supply requisite information to Authority‑‑‑Undertaking in response to show cause notice served on it, had supplied partial information after specified date‑‑‑On date fixed for hearing neither undertaking nor any authorized representative appeared before the Authority‑‑‑Authority, after considering all facts of the case, observed that Undertaking had failed to provide requisite information pertaining to months of March and April, 2003 despite clear‑cut directions of Authority‑­Authority ordered to impose penalty upon Undertaking under S. 19(1)(c) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Nemo for Respondent. Date of hearing: 25th August, 2003.

2005 C L D 367

[Monopoly Control Authority]

Present: Tariq Farooq, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs MAPLE LEAF CEMENT FACTORY LIMITED

File No.2 (287)/IV/(Enq)/(Chief‑R&I)/MCA/2003, decided on 3rd November, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19(1)(a) & 21‑‑‑Failure of Undertaking to supply requisite information ‑‑‑Imposition of penalty‑‑‑Undertaking was asked to supply ex factory price per ton/bag on specified date and to regularly supply said information through fax on weekly basis along with production and dispatches of each day of the week‑‑‑Reasons for any change of price and new prices per bag/ton were also required to be submitted‑‑‑Undertaking, however failed to supply requisite information to the Authority and instead supplied partial information in bulk after due date‑‑‑On serving notice, Undertaking again supplied partial information‑‑‑On date of hearing representative of Undertaking could not give any cogent reason for failure to comply with direction of Authority and tendered apology and requested Authority to take a lenient view‑‑­Undertaking having failed to provide required complete information on specified date, Authority ordered to impose penalty under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Salman Akram Raja for Respondent.

Date of hearing: 25th August, 2003.

2005 C L D 376

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs D.G. KHAN CEMENT COMPANY LIMITED

File No.2(287)/IX/(Enq)/(Chief‑R&I)/MCA/2003, decided on 3rd November, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19(1)(a) & 21‑‑‑Failure of Undertaking to supply requisite information‑‑‑ Imposition of penalty‑‑‑Undertaking was asked to supply ex factory price per ton/bag as on 25‑3‑2003 and to regularly supply through fax said information on weekly basis along with production and dispatches of each day of a week‑‑‑Reasons for any change of price and new prices for bag/ton were also required to be submitted, but Undertaking failed to supply complete requisite information to the Authority‑‑‑In response to show-­cause notice, Undertaking supplied partial information‑‑­Authorized representative of Undertaking who appeared on the date of hearing, could not give any cogent reason for failure to supply complete information‑‑‑Authority ordered to impose a penalty under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 for failure to supply requisite complete information.

Salman Akram Raja for Respondent.

Date of hearing 25th August, 2003.

2005 C L D 387

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs DEWAN KHALID TEXTILE MILLS LIMITED

File No. 8(267)INV/(DD‑R&I)/MCA/84, decided on 6th September, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)‑‑‑

‑‑‑‑Ss.19 & 21‑‑‑Failure of Undertaking to furnish required information‑‑‑Imposition of penalty‑‑‑Undertaking was asked to supply required information/documents vide letter up to specified date, but the Undertaking failed to do so despite issuance of reminder to it‑‑‑Authority noted that the Undertaking was liable to supply information prescribed under Monopoly Control Authority (Supply of Information) Rules, 1995 for the year ending in September, 2001 by 21st March, 2002, but it failed to do so‑‑‑Undertaking also failed to supply information called under S.21 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970‑‑‑Authority, in circumstances ordered for imposing penalty on Undertaking under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Barrister Qasim Ali Chowhan, General Manager of the Undertaking and Syed Nasik Ijaz Gilani for Respondent.

Dates of hearing: 21st November, 2002, 13th, 15th January, 19th June and 22nd July, 2003.

2005 C L D 1042

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs RAJA INSURANCE COMPANY LIMITED

File No.47/INF/L.O./MCA/2003, decided on 28th August 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.19 & 21---Failure of Undertaking to furnish required information---Imposition of penalty---Undertaking was asked to supply information/documents under S.21 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, but it failed to do so despite Undertaking was reminded vide several letters--- Undertaking was served with show-cause notice but same was not responded--­Authority considered and concluded that Undertaking had wilfully failed to supply requisite information/documents or to respond to show-cause notice and also to appear before the Authority---Authority decided matter ex parte and imposed penalty on the Undertaking under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Nemo for Respondent.

Date of hearing: 25th July, 2003

2005 C L D 1056

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs NUTRIPAK FOOD INDUSTRIES LIMITED

File No.2(277)/Enq/(DD-R&I)/MCA/98, decided on 28th August, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

---Ss.19 & 21---Failure of Undertaking to furnish required informations---Imposition of penalty---Undertaking concerned was asked to supply information/documents concerning activities of Undertaking, including information relating to its organization, business, trade practices and management etc., but Undertaking failed to do so despite it was reminded by Authority vide its letter---Undertaking was served with show-cause notice, but it did not respond. to said show-cause notice---Authority considering all aspects of case, held that default of Undertaking in furnishing information; was wilful---Authority ordered for imposing a penalty under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 on Undertaking.

Rehan A. Khan for Respondent.

Dates of hearing: 20th November, 2002, 11th January, 19th June (Adjourned) and 22nd July, 2003.

2005 C L D 1079

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs INVESTEC SECURITIES LIMITED

File No.52/INF/L.O./MCA/2002, decided on 29th August, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.19 & 21---Failure of Undertaking to furnish required information---Imposition of penalty---Undertaking concerned was asked to supply information/documents under S.21 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Undertaking having supplied partial information, was asked to furnish remaining information, but it failed to do so despite issuing reminder to it---Show-cause notice issued to Undertaking also remained un-responded---Authority decided matter ex parte and imposed penalty under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 on Undertaking.

Nemo for Respondent.

Date of hearing: 26th July, 2003.

2005 C L D 1086

[Monopoly Control Authority]

Present: Tariq Farook, Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar, Members

In the matter of: Messrs RUPALI POLYESTER LIMITED

File No.2(291)Enq/(DD-R&I)/MCA/2002, decided on 2nd September, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.19 & 21---Failure of Undertaking to furnish requisite information---Imposition of penalty---Undertaking was asked to supply required information/documents vide letter, but the Undertaking failed to comply same within stipulated period---In response to show-cause notice served on Undertaking by Authority, Undertaking had submitted that information having been supplied, show-cause notice be withdrawn---Required information was supplied by Undertaking with delay of eight days and reasons given by Undertaking for such delay of eight days, were not convincing---Authority imposed penalty on Undertaking under S.19(1)(a) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Abdul Hayee, Director Finance, Rupali Polyester Ltd. for Respondent.

Date of hearing: 21st July, 2003.

2005 C L D 1096

[Monopoly Control Authority]

Present: Tariq Farook Chairman, Muhammad Arshad Parwaiz and Abdul Ghaffar Members

In the matter of: Messrs ZEAL PAK CEMENT FACTORY LIMITED

File No.2(287)/I/Enq/(Chief R&I)/MCA/2003, decided on 12th September, 2003.

Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.19 & 21---Failure of Undertaking to furnish information up to specified date---Imposition of penalty--Undertaking was asked to supply ex factory price per ton/ bag as on 25-3-2003---Undertaking was also asked to regularly supply said information on weekly basis along with production and dispatches of each day of the week---Reasons for any change in the price were also required to be submitted, but the Undertaking. failed to supply requisite information to Authority--In response to show-cause notice, Undertaking supplied requisite information vide its letter dated 4-7-2003---Authority after considering all facts of the case and arguments of authorized representative of Undertaking. decided that reasons given for delay in furnishing requisite information, were not convincing and ordered to impose penalty upon Undertaking under S.19(i)(c) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Tanveer Ahmed Qureshi for Respondent.

Date of hearing: 25th August, 2003.

2005 C L D 898

[Peshawar]

Before Tariq Parvez Khan and Muhammad Saleem Khan, JJ

Brig. (Retd.) HAMID-UD-DIN---Appellant

Versus

ASKARI LEASING LIMITED and others ---Respondents

F.A.Bs. Nos. 54 to 56 of 2004, decided on 7th April, 2005.

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

----Ss. 2(c)(d), 7, 9 & 22---Suit for recovery of difference of profit amount due and agreed upon between the customer (plaintiff and leasing company (defendant) on the certificates of investment---"Customer" and 'finance"--­Definitions-Certificates of investment issued to the customer in themselves were promissory notes/or instruments/participation term certificates on one side, and on the other side those were financial engagements with the Leasing Company for which the company had undertaken on behalf of the "Customer" to indemnify him, and, therefore, the plaintiff (customer) was covered by the definition of "customer" to that extent under S.2(c), Financial Institutions (Recovery of Finances) Ordinance, 2001--­Certificates of investment issued by the company were financial engagements of the customer with the company, his amount was utilized by the company and company had undertaken to either pay the amount with profit or to indemnify the customer to the extent of his rights on the basis of said certificates---Banking Court, therefore, had the jurisdiction; to take the case of the parties to its logical conclusion and to do justice to the parties in accordance with law, specially in circumstances that the parties had consented to the jurisdiction of the Banking Court---High Court on appeal, remanded the case to the Banking Court with direction that it shall proceed with the cases, from the stage immediately before the stage of passing of the impugned order (holding that it had no jurisdiction in the matter) till its final end.

(b) Jurisdiction---

---- Court of law has to assume jurisdiction regarding a cause when its territorial/financial jurisdiction is clearly mentioned in the law and in such circumstances, no other Court or any other forum has the jurisdiction to deal with such a cause- --Principles.

A Court of law has to assume jurisdiction regarding a cause when its territorial/financial jurisdiction is clearly mentioned in a law and in such circumstances, no other Court or any other forum has the jurisdiction to deal with such a cause. It is, however, the basic duty of a Court of law to do justice to the parties in the light of the circumstances of a case. A party may acquiesce in the jurisdiction of a Court for certain matter which has been brought to that Court by the opposite party, although the Court may not accept its jurisdiction for that matter. But when the jurisdiction of the Courts/forums is not clear, in the circumstance of a case, and one Court/forum has refused to assume jurisdiction and has declared that any other Court/forum has the jurisdiction for such matter, the latter Court/forum may seriously consider the question of jurisdiction at the very start of the proceedings and may decide the question of its jurisdiction in clear terms, without leaving the parties to a dispute in darkness for later stages of the Court/forum without any objection to it. It becomes the duty of such Court/forum to do justice to the parties and to right a wrong on the basis of the merits of a case, as the Courts are established for doing the justice and undoing the wrong.

Mian Fazal Wahab for Appellant.

Hashim Raza and Asim Riaz Awan for Respondents.

Date of hearing: 7th April, 2005.

2005 C L D 1367

[Peshawar]

Before Ejaz Afzal Khan and Muhammad Raza Khan, JJ

MUHAMMAD ASHRAF---Appellant

Versus

HABIB BANK LIMITED---Defendant

F.A.B. No.2 of 2005, decided on 21st March, 2005.

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

----S.10---Leave to defend, grant of---Requirements---Leave to defend cannot be granted mechanically in each case and even if the leave to defend is granted, it has to be restricted to the specific issue raised by the defendant in his application for leave to defend---Concept of leave to defend requires that the defendant should come up with a positive defence of a particular fact which has to be supported by certain documentary evidence to convince the Court that there was sufficient ground for granting leave to defend---Mere denial of the execution of a deed will not be sufficient for the exercise of such discretion by the Court---Principles.

Financial Institutions (Recovery of Finances) Ordinance, 2001 is a special statute and the Banking Courts are bound to follow summary procedure which is otherwise supported by the time tested Order XXXVII of the C.P.C. The leave to defend cannot be granted mechanically in each case and even if the leave to defend is granted, it has to be restricted to the specific issue raised by the defendant in his application for leave to defend. Negotiable Instruments Act, 1881 specifies certain special rules of evidence comprising of certain presumptions in favour of the plaintiffs and estoppels against the defendants. The concept of leave to defend requires that the defendant should come up with a positive defence of a particular fact which has to be supported by certain documentary evidence to convince the Court that there was sufficient ground for granting leave to defend. The mere denial of the execution of a deed will not be sufficient for the exercise of such discretion by the Court. Had there been any positive fact alleged in the application for leave to defend, the Court would have required the defendant to prove such fact but the mere denial required negative evidence and the negative proof of fact is difficult. The verbal denial of the agreement was disproved by the documentary evidence produced by the Bank and thus, the documentary evidence negated and nullified the oral negative assertion. The Courts have the authority in such cases to compare, prima facie, the signatures of the persons appearing on the loan documents and there, the Court had exercised the said discretion effectively.

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

----Ss.22 & 24---Appeal---Condonation of delay---Impugned judgment was passed on 22-9-2004 and the certified copies were issued on 9-12-2004 whereas the appeal was filed on 8-1-2005 which means that the appeal was filed on 31st day after the receipt of certified copies---Allegation that the application for copies was submitted on 22-9-2004 and not on 27-9-2004 was not supported by any documentary evidence except an affidavit and that too, by the counsel for the appellant, that the contents of the application were correct and nothing had been concealed from the Court---Any documentary proof or the copy of the application containing the date of application should have been produced which could indicate the date of receipt of application and the probable date on which the copy was likely to be ready---No such documentary evidence was furnished---Appellant, had to prove the delay of each single day to be entitled for condonation but in the present case, there were mere statements or denials, without any proof which could not be relied upon---Appeal was dismissed in circumstances.

Muhammad Iqbal Kundi for Appellant.

Khuda Bakhsh Baloch for Defendant/Respondent.

Date of hearing: 21st March, 2005.

2005 C L D 1367

[Peshawar]

Before Ejaz Afzal Khan and Muhammad Raza Khan, JJ

MUHAMMAD ASHRAF---Appellant

Versus

HABIB BANK LIMITED---Defendant

F.A.B. No.2 of 2005, decided on 21st March, 2005.

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

----S.10---Leave to defend, grant of---Requirements---Leave to defend cannot be granted mechanically in each case and even if the leave to defend is granted, it has to be restricted to the specific issue raised by the defendant in his application for leave to defend---Concept of leave to defend requires that the defendant should come up with a positive defence of a particular fact which has to be supported by certain documentary evidence to convince the Court that there was sufficient ground for granting leave to defend---Mere denial of the execution of a deed will not be sufficient for the exercise of such discretion by the Court---Principles.

Financial Institutions (Recovery of Finances) Ordinance, 2001 is a special statute and the Banking Courts are bound to follow summary procedure which is otherwise supported by the time tested Order XXXVII of the C.P.C. The leave to defend cannot be granted mechanically in each case and even if the leave to defend is granted, it has to be restricted to the specific issue raised by the defendant in his application for leave to defend. Negotiable Instruments Act, 1881 specifies certain special rules of evidence comprising of certain presumptions in favour of the plaintiffs and estoppels against the defendants. The concept of leave to defend requires that the defendant should come up with a positive defence of a particular fact which has to be supported by certain documentary evidence to convince the Court that there was sufficient ground for granting leave to defend. The mere denial of the execution of a deed will not be sufficient for the exercise of such discretion by the Court. Had there been any positive fact alleged in the application for leave to defend, the Court would have required the defendant to prove such fact but the mere denial required negative evidence and the negative proof of fact is difficult. The verbal denial of the agreement was disproved by the documentary evidence produced by the Bank and thus, the documentary evidence negated and nullified the oral negative assertion. The Courts have the authority in such cases to compare, prima facie, the signatures of the persons appearing on the loan documents and there, the Court had exercised the said discretion effectively.

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

----Ss.22 & 24---Appeal---Condonation of delay---Impugned judgment was passed on 22-9-2004 and the certified copies were issued on 9-12-2004 whereas the appeal was filed on 8-1-2005 which means that the appeal was filed on 31st day after the receipt of certified copies---Allegation that the application for copies was submitted on 22-9-2004 and not on 27-9-2004 was not supported by any documentary evidence except an affidavit and that too, by the counsel for the appellant, that the contents of the application were correct and nothing had been concealed from the Court---Any documentary proof or the copy of the application containing the date of application should have been produced which could indicate the date of receipt of application and the probable date on which the copy was likely to be ready---No such documentary evidence was furnished---Appellant, had to prove the delay of each single day to be entitled for condonation but in the present case, there were mere statements or denials, without any proof which could not be relied upon---Appeal was dismissed in circumstances.

Muhammad Iqbal Kundi for Appellant.

Khuda Bakhsh Baloch for Defendant/Respondent.

Date of hearing: 21st March, 2005.

2005 C L D 1541

[Peshawar]

Before Ijaz-ul-Hassan Khan and Ejaz Afzal Khan, JJ

HABIB BANK LIMITED---Plaintiff

Versus

HAZRAT HUSSAIN---Respondent

F.A.B. No.36 of 2003, heard on 30th June, 2005.

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

----Ss. 9, 10 & 22---Civil Procedure Code (V of 1908), O.XVII, R.3---Suit for recovery of loan---Leave to defend suit---Dismissal of suit---Defendant was granted leave to defend suit and plaintiff Bank was directed to file reply, but plaintiff failed to comply with direction of the Court---Omission on part of plaintiff Bank to comply with Court's order, led Trial Court to proceed under O.XVII, R.3, C.P.C. against plaintiff Bank and suit filed by plaintiff Bank was dismissed---Validity---Order XVII, R.3, C.P.C. was permissive and not mandatory and Court was supposed to proceed to decide suit on merits in the light of material on record---Decision under O.XVII, R.3, C.P.C. must be a decision on merits on consideration of entire material on record and after hearing arguments of the parties---Impugned judgment and order was the result of hasty decision which was not only deficient in its contents, but also bad in law---Law favoured decision of case on merits and not on mere technicalities---Interest of justice required the decision to be based on merits---Accepting appeal, impugned judgment and order were set aside and case was remanded to Trial Court to decide afresh on merits.

Government of N.-W.F.P. and others v. Fazal Maula and others PLD 1993 Pesh. 192 ref.

Alamzaib Khan for Plaintiff.

Respondent proceed ex parte.

Date of hearing: 30th June, 2005.

2005 C L D 1840

[Peshawar]

Before Ijaz-ul-Hassan Khan, J

ADIL JAMSHED--- Appellant

Versus

MUHAMMAD UBAIDULLAH---Respondent

First Regular Civil Appeal No.2 of 2004, decided on 15th September, 2005.

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

---- O.XXXVII, Rr.2 & 3 & O. XX, R.5---Suit for recovery of money on the basis of pro note---Execution of pro note in question had been satisfactorily proved through independent and reliable witnesses---Said witnesses were subjected to lengthy and searching cross-examination, but their integrity could not be shattered---Mere assertion of defendant that he had not executed said pro note and no consideration changed hands, without a positive attempt on his part to substantiate same, was of no consequence---Initially execution of pro note had been denied by defendant, but at the trial, he admitted the same but with a different story about a dispute over purchase of goods---Earlier denial and subsequent admission on the part of defendant clearly exhibited his conduct and indicated that he had no regard for truth---Person who asserted/alleged a particular fact and wanted the Court to believe that such fact existed, was required to prove existence of such a fact---Trial Court had embarked upon issues involved in the case, appreciated evidence on record in its true perspective and had reached proper conclusions which were not open to exception---Findings rendered by Trial Court were not only in consonance with law on the subject, but also in harmony with evidence on record---Finding was recorded by Trial Court on consideration of evidence in its totality---No misreading or non-reading of any material piece of evidence was pointed out which could render findings of the Trial Court unworthy or illegal---Trial Court had duly taken into consideration all material facts of the case and, after having done so, had recorded a detailed and well-reasoned judgment which was result of proper application of mind---Objection of defendant regarding non-compliance of provisions of O.XX, R.5, C.P.C., was misconceived---Appeal against judgment of Trial Court, was dismissed, in circumstances.

Salar Abdur Rauf v. Mst. Barkat Bibi 1973 SCMR 332; Muhammad Yaqoob and others v. Naseer Hussain and others PLD 1995 Lah. 395; United Bank Limited v. Ch. Ghulam Hussain 1998 CLC 816 and Jehangir Nasim Khan v. Habibur Rehman Tanoli (Advocate) 2002 AC 833 ref.

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

----Ss. 24 & 25---Negotiable Instruments Act (XXVI of 1881), S.118---Civil Procedure Code (V of 1908), O.XXXVII, Rr.2 & 3---Void contract---Negotiable instrument---Presumption---Suit for recovery of money---Contract without consideration was void---person suing on a contract, must allege and prove considera­tion--Under S.118 of Negotiable Instruments Act, 1881, presumption in the case of all negotiable instruments was that those were made, drawn, accepted or endorsed for considera­tion---Once the signature was proved or admitted, production of the document itself, would shift the burden on to the maker and it could not be said that when there was a denial of execution of a pro note, plaintiff was bound to prove not only execution, but also the consideration---Once the document was proved, presumption would apply---Presumption was a statutory and mandatory presumption---Section 118 of Negotiable Instruments Act, 1881 raised a presumption that there was consideration for even/ negotiable instrument---Presumption would continue until it was rebutted and the only way it could be rebutted, was by proving the contrary; viz. that negotiable instrument was without consideration---Where plaintiff admitted to prove a particular consideration, mere fact that he failed to prove such a consideration, would not in any way relieve defendant from his obligation in law to establish the contrary of presumption---Where defendant denied any dealing with plaintiff ; onus would lie on plaintiff to prove both execution and passing of consideration---To discharge the burden of proof of absence of consideration it was not necessary for defendant to produce any definite evidence on his own behalf, he could rely on facts and circumstances of the case and also refer to flaws in evidence of plaintiff.

(c) Negotiable Instruments Act (XXVI of 188.X)---

----S. 118(c)---Statutory presumption---Court would presume under S.118(c) of Negotiable Instruments Act, 1881 that negotiable instrument was made for consideration---Person who wished to dispel such presumption, must furnish proof to the contrary---Statutory presumption under S.118(c) of Negotiable Instruments Act, 1881 in favour of existence of a consideration for every negotiable instrument, would continue until contrary was proved by person who alleged want of consideration.

Zain-ul-Abidin for Appellant.

Sanaullah Shamim for Respondent.

Date of hearing: 14th September, 2005.

2005 C L D 693

[Quetta]

Before Iftikhar Muhammad Chaudhry and Raja Fayyaz Ahmed, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Manager---Petitioner

versus

FIDA ALI ALLIBHOY and 11 others---Respondents

C.P. No.268 of 1998, decided on 31st May, 1999.

Industrial Development Bank of Pakistan Ordinance (XXXI of 1961)---

----S.39---Banking Companies (Recovery of Loans) Ordinance (XIX of 1979), Ss. 6(4)(a), Proviso & 2(f)(i)---Banking Companies (Recovery of Loans, Advances, Credits and Finances Act (XV of 1997), S. 2(f)(i)---Recovery of loan---Right of Industrial Development Bank of Pakistan, a Banking Company, to apply to the District Judge for the recovery of the loan advanced to an industrial concern was expressly saved by Proviso to S. 6(4)(a) of Banking Companies (Recovery of Loans) Ordinance, 1979 and therefore the jurisdiction of Special Court constituted under S. 2(f)(i), Banking Companies (Recovery of Loans) Ordinance, 1979 and the jurisdiction vesting in Special Court under Proviso to S. 6(4)(a) of the said Ordinance would not affect the jurisdiction of the District Judge to which the Banking Company had applied for the recovery of the loan etc.---Principles.

Yousaf Ali Khan, Barrister-at-Law, Lahore v. Messrs Hong Kong Shangai Banking Corporation, Karachi and another 1994 SCMR 1007; Industrial Development Bank of Pakistan v. Messrs Nadeem Flour Mills and others 1981 SCMR 143 and Mst. Yasmeen Nighat and other v. National Bank of Pakistan and others PLD 1988 SC 391 ref.

Muhammad Riaz Ahmed for Petitioner.

S.A. Zahoor for Respondents Nos.1 to 11.

Dates of hearing: 24th November of 1998 and 8th April, 1999.

2005 C L D 723

[Quetta]

Before Amanullah Khan and Fazal-ur-Rehman, JJ

Messrs QASIM & CO. through L.Rs.---Appellant

versus

Messrs BOLAN BANK LIMITED through Manager---Respondent

R.F.A. No.58 of 1999, decided on 14th December, 2004.

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

----S.9---Civil Procedure Code (V of 1908), O.XXXVII, Rr.1 & 2---Suit for recovery of amount---Father of appellants opened an account with Bank and appellants were also allowed to operate said account---Father of appellants died and appellants continued operating said account and at their request said account was converted in the name of company with the name and style of their late father and huge transactions were carried out in said account---Prior to death of father of appellants, a construction company/Principal Debtors was awarded a contract for development of a Housing Scheme and said Company/Principal Debtors furnished a Performance Guarantee in favour of Authority under control of which Housing Scheme was to be developed, which was issued by Bank on behalf of Principal Debtors---Father of appellants who at the relevant time was alive, stood guarantor for Principal Debtors and executed Guarantee Bond---Subsequently certain cheques issued by appellants were dishonoured by the Bank and on inquiry appellants were informed that suit amount had been deducted from their account on account of liability towards Principal Debtors as their late father stood guarantor thereof---Suit for recovery of said deducted amount filed by appellants having been dismissed by the District Judge, appellants filed appeal before High Court which was allowed and Bank was directed to make payment of amount deducted from account of appellants along with interest---On filing petition for leave to appeal, Supreme Court remanded case to High Court with direction to determine question of jurisdiction of Banking Court---Transaction i.e. the act of deduction of amount by Bank from account of appellants not falling within definition of ‘Loan’ or ‘Finance’ for which a suit under S.9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 could be filed---Banking Court, in circumstances had no jurisdiction in the matter---Contention that since account in question was opened by late father of appellants, Bank had a lien over same, was repelled because neither late father of appellants nor appellants had authorized the Bank to deduct from their account---Account in question was operated by appellants in their personal capacity and nothing was on record that any amount was left by deceased---Merely because appellants were doing business in the name of Company, it could not be held that amount belonged to their deceased father---If any pecuniary obligation arose out of a contract by deceased it would only bind legal representatives to the extent of estate left by deceased---Where a security was delivered to a Bank for specific purpose, if it was inconsistent with the right of lien and impliedly if it was an agreement to the contrary, a Bank could not exercise lien over such property---Deduction of amount by the Bank from account of appellants, was illegal as neither the Bank had a lien over the money belonging to appellants nor they could be held responsible for personal acts of their late father---Appellants would be entitled to disputed amount with mark-up from date of institution of suit till date of realization of decretal amount.

PLD 1980 Kar. 115; AIR 1960 Punjab 632; AIR 1966 Madras 265; Chettinad Mercantile Bank Ltd., by its Agent and Secretary T. Subramania Ayyar v. PLA Pichammai Achi and another AIR 1945 Mad. 447; Fancy Investments Ltd. Karachi v. United Bank Limited and 2 others PLD 1982 Kar. 200; Sh. Abdul Majid v. Syed Akhtar Hussain Zaidi PLD 1988 SC 124 and Muhammad Abdullah Sufi v. Messrs Muhammad Bux & Son and others PLD 1957 (W.P.) Karachi 445 ref.

Syed Ayaz Zahoor for Appellant.

H. Shakeel Ahmed for Respondent.

Date of hearing: 13th October, 2004.

2005 C L D 275

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Abdul Rehman Qureshi, Commissioners

LAHORE STOCK EXCHANGE (GUARANTEE) LIMITED, KARACHI‑‑‑Appellant

versus

COMMISSIONER (SECURITIES MARKET), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN, ISLAMABAD and another‑‑‑Respondents

Appeal No.9 of 2004, decided on 30th July, 2004.

Companies Ordinance (XLV1I of 1984)

‑‑‑‑S.58‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33‑‑‑Securities and Exchange Commission Ordinance (XVII of 1969), Ss. 9(5)(6) & 10 ‑‑‑De­listing of Company from Stock Exchange‑‑‑Application for‑‑­Appeal against order of Commissioner‑‑‑Application of respondent‑Corporation for de‑listing it from both Lahore Stock Exchange and Islamabad Stock Exchange, having been accepted by Commissioner, Appellant/ Lahore Stock Exchange had filed appeal against order of Commissioner‑‑­De‑listing of respondent‑Corporation was challenged on ground that de‑listing was wholly unjustified as respondent­Corporation in its application for de‑listing did not take into consideration the protection of investors as required by S.9(5) of Securities and Exchange Commission Ordinance, 1969‑‑‑Respondent‑Corporation claimed that there was not even a single investor who was dealing in Corporation's share through Lahore Stock Exchange and Islamabad Stock Exchange‑‑‑Respondent‑Corporation had further pleaded that interest of investors was protected as respondent­-Corporation would remain listed on Karachi Stock Exchange‑‑‑Appellant/Lahore Stock Exchange was duty bound by law to either approve or reject an application for de‑listing of Corporation solely on the ground of investor protection and for such purpose, appellant could impose conditions on the respondent‑Corporation while de‑listing‑‑­Appellant's argument with regard to harm being caused to investors if respondent‑Corporation was de‑listed from it, was not supported by the fact that no investors were currently dealing in respondent‑Corporation's share through Lahore Stock Exchange or Islamabad Stock Exchange‑‑‑Appellant was directed to de‑list respondent-­Corporation from its exchange within specified period.

Arif Saeed and Ahmad Hassan Khan for Appellant.

Syed Aamir Masood, Director SEC for Respondent No. 1

Arif Saeed for Respondent No.2.

Date of hearing: 24th June, 2004

2005 C L D 297

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Insurance and SCD) and Abdul Rehman Qureshi, Commissioner (Enforcement)

Mrs. ABIDA SALAH‑UD‑DIN and others‑‑‑Appellants

versus

SALIM CHAMDIA SECURITIES (PRIVATE) LIMITED, CORPORATE MEMBER and others‑‑ ‑Respondents

Appeals Nos. 1 and 4 of 2003, decided on 9th April, 2003.

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

‑‑‑S.33‑‑‑Securities and Exchange Commission Ordinance (XVII of 1969), S.22(I)(c)‑‑‑Securities and Exchange Rules, 1971, Rr.4(4) & 8(g)‑‑‑Investment of money‑‑‑Imposition of fine‑‑‑Appeal to Appellate Bench‑‑‑Appellant had contended that she had invested her money with the respondent‑Company for Badla' investment through Branch Manager of Company and not for trading activities‑‑‑Appellant had alleged that the manager of Company had enticed appellant to invest money and he promised her fixed rate of return of her investment‑‑‑Director (Security Market) after providing opportunity of personal hearing to parties, rejected plea of appellant regardingBadla' investment and promise of guaranteed profits by Manager of the respondent­-Company‑‑‑Director, however, imposed fine on respondent-­Company under S.22(1)(c) of Securities and Exchange Commission Ordinance, 1969 for violating R.4(4) read with R.8(g) of Securities and Exchange Rules, 1971 for not providing written confirmation of transaction to investor within 24 hours‑‑‑Being dissatisfied with findings of Director, both parties had filed appeals‑‑‑No document was on record which could support claim of appellant/ investor for `Badla' financing and not for trading in securities‑‑­Ledger statement and purchase and sales bills pertaining to appellant's account had shown that she was actively trading in securities through her account‑‑‑Though it was possible that signatures of appellant were obtained on a blank account opening form, but responsibility of due diligence lay with the customer herself‑‑‑Appellant had admitted that money was given to Manager after she signed the form which form was clearly showing that account which was to be opened was for trading purposes and not for fixed return investment‑‑‑Plea of appellant was rightly rejected by Director‑‑‑Fine was also rightly imposed on the respondent‑Company for not providing written confirmation of transaction to appellant/ investor within 24 hours, because law required that written confirmation must be provided to the customers‑‑‑Orders of Director could not be interfered with in appeal.

Nazir Siddiqui, Mrs. Abida Salah‑ud‑Din and Salah­ud‑Din Khawaja for Appellants (in Appeal No. 1 of 2003).

Younus Mohiuddin for Respondent No. 1 (in Appeal No. 1 of 2003).

Abbas Kizilbash, Director (SM), Syed Amir Masood, Director (SM) and Aly Osman, Joint Director (SM) for Respondent No. 2 (in Appeal No. 1 of 2003).

Younus Mohiuddin for Appellants (in Appeal No.4 of 2003)

Abbas Kizilbash, Director (SM) Syed Amir Masood, Director (SM) and Aly Osman, Joint Director (SM) for Respondent No. I (in Appeal No.4 of 2003).

Nazir Siddiqui, Abida Salah‑ud‑Din and Salah‑ud­Din Khawaja for Respondent No.2 (in Appeal No.4 of 2003).

Date of hearing: 24th March, 2003.

2005 CLD 317

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Insurance and SCD) and Abdul Rehman Qureshi, Commissioner (Enforcement)

SALMAN SERVICES (PVT.) LTD. and others‑‑‑Appellants

versus

EXECUTIVE DIRECTOR (SECURITIES MARKET) SEC, ISLAMABAD and others‑‑‑Respondents

Appeals Nos.37 and 46 of 2003, decided on 22nd March, 2004.

Brokers and Agents Registration Rules, 2001

‑‑‑‑IIIrd Sched, Clauses, Al, A2 & A5‑‑‑Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33‑‑­Securities and Exchange Rules, 1971, R.8‑‑‑Imposition of penalty‑‑‑Appeal‑‑‑Appellant/Complainant in his complaint had alleged that he had been defrauded by Company through false paper transaction whereas no real trading took place in his account‑‑‑Complainant had prayed for the return of amount which he had paid . to Company for purchase of shares‑‑‑Executive Director, after hearing parties accepted plea of appellant/ complainant and directed the Stock Exchange to release amount of Rs.404, 000 to appellant which was deposited by Company with it in pursuance of order of Commissioner, in addition, fine was also imposed on the Company for violation of Rules‑‑­Executive Director also ordered a fill audit of said Brokerage house‑‑‑Dissatisfied with bindings of. Executive Director, both parties had preferred appeals‑‑‑Evidence produced on record and investigation carried out by Securities Market Division had clearly established that Company had failed to fulfill the legal requirements laid down by Securities and Exchange Rules, 1971 and Broker and Agent Regulation Rules, 2001 and resultantly had caused loss to its investors‑‑‑Company had failed to produce proper documents evidencing or supporting transactions despite repeated opportunities provided by Executive Director‑‑‑Fine was rightly imposed on Company and full audit of Company was also rightly ordered by Executive Director‑‑‑Appellant/Complainant, however, had failed to convince that actual shares ought to have been restored to him‑‑‑Appellant's primary allegation against Company was that no real trading took place in his account‑‑‑Appellant, in circumstances, could not be allowed to argue that Company should restore those shares to him which according to him were never bought by Company on his behalf‑‑‑Amount representing value of shares given by him to Company, had already been paid to him‑‑‑Ledger statement and cash receipt produced had proved that payment of Rs.1,60,000 was actually made by appellant‑‑‑Company was directed to pay said amount to appellant within specified period.

Salman Masud for Appellants (in Appeal No.37 of 2003)

Syed Amir Masood, Director (SM) and Tehnia Hayat, Junior Executive (SM) for Respondents (in Appeal No.37 of 2003).

Tariq Dar for Appellants (in Appeal No.46 of 2003).

Syed Amir Masood, Director (SM) and Tehnia Hayat, Junior Executive (SM) for Respondent No. l (in Appeal N6.46 of 2003).

Nemo for Respondent No.2 (in Appeal No.46 of 2003)

Dates of hearing: 30th October, 5th December, 2003 and 10th February, 2004.

2005 C L D 333

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar, Commissioner and Dr. Tariq Hassan, Chairman/ Commissioner

Shaikh JALALUDDIN F.C.A.‑‑‑Appellant

versus

COMMISSIONER (ENFORCEMENT AND MONITORING) SEC‑‑‑Respondent

Appeal No.57 of 2003, heard on 13th May, 2003.

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.255, 260 & 476‑‑‑Companies (General Provisions and Forms) Rules 1985, R.17‑A‑‑‑Securities And Exchange Commission of Pakistan Act (XLII of 1997), S.33‑‑‑Imposition of penalty‑‑‑Appeal‑‑‑Penalty was imposed on appellant/ statutory auditors after issuing show‑cause notice on allegation that appellants had committed violation of law by not disclosing material facts to the members of the Company of which appellants were statutory auditors as required by S.260 of Companies Ordinance, 1984 and had not prepared the audit report in conformity with requirements of S.255 of Companies Ordinance, 1984‑‑‑Appellant had failed to disclose number of employees of Company concerned in their report; had failed to disclose staff liability separately; had failed to express an adverse opinion on the going concern assumption and also failed to modify report so as to express a qualified, disclaimer or an adverse opinion‑‑­Effect‑‑‑Appellants were obligated to audit the account of Company concerned according to `International Accounting Standards' as well as International Standards on Auditing' as applicable in Pakistan which had clearly laid down the requirements on auditors to disclose number of employees in addition to required disclosure of employee benefit­---Appellants could not argue that they used their discretion in not reporting the number of employees or employees liabilities in their report‑‑‑Plea of appellants that same were not material facts, was unacceptable‑‑‑With regard to issue of appellant's failure to qualify their report, argument that report should be considered as qualified as it was not unqualified, was untenable‑‑‑Where the auditor gave a qualified opinion, they were required to express clearly the nature of qualification along with the reasons for such qualification and express their opinion subject to reservations that they had‑‑‑Auditors should not leave it to the shareholders to determine the facts by making diligent inquiry and as professional Accountants and statutory auditors appointed by shareholders, there was a fiduciary duty cast upon the appellants‑‑‑Characteristically, the fiduciary was required to have greater knowledge and expertise about the matters being handled‑‑‑If the requirements of law on a particular matter were clear, it was totally wrong for the fiduciary to claim that he did not deem the requirements to be necessary‑‑‑Appellants having wilfully committed a default punishable under S.260 of Companies Ordinance, 1984, they had committed a breach of their fiduciary duty with knowledge and intent‑‑‑Penalty was rightly imposed on appellants‑‑‑Order of Commissioner, was upheld.

London and General Bank Ltd.'s case (1895) 2 Ch. 166; (1960) 30 Com. Cas. 523; IYLR 1988 TD 11; Burton v. Bevan (1908) 2 Ch. 240 and City Equitable Fire Insurance Co. Ltd. Re 1925 Ch. 407 ref.

Shaikh Jalaluddin F.C.A. in person

Ms. Sumaira Siddiqui, Deputy Director (EMD) and Mubasher Saeed, Joint Director (EMD) for Respondent.

Date of hearing: 13th May, 2004.

2005 C L D 350

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Insurance and SCD) and M. Zafar‑ul‑Haq Hijazi, Commissioner (Company Law)

HASSAN AFTAB, EX‑DIRECTOR, HASHIMI CAN COMPANY LTD. and others‑‑‑Appellants

versus

EXECUTIVE DIRECTOR (EMD) SEC ;Respondent

Appeals Nos.7, 8 and 9 of 2003, decided on 9th April, 2003

Companies Ordinance (XLVII of 1984)‑‑‑

‑‑‑‑Ss.227, 229, 472 & 473‑‑‑Securities and Exchange Commission of Pakistan Act (XLIl of 1997), S.33‑‑‑Provident fund of employees‑‑‑Irregularities in payment of contributions to provident fund‑‑‑Imposition of penalty‑‑­Appeal‑‑‑Provident fund of employees, part of which was deducted from their hard earned salaries, was a sacred trust with the appellant‑Companies and its trustees‑‑­Company and its officers had admitted in their pleadings that Company was unable to pay contributions to Provident fund‑‑‑Record had also shown the same position‑‑‑Company, its officers and Directors in circumstances were violating subsection (3) of S.227 of Companies Ordinance, 1984‑‑­Filing of accounts by Company with Commission would not amount to discharge of Company from defaults committed by it nor could it be argued that delay by Commission to take notice of such defaults, would discharge the offenders‑‑‑Not acceptable that the paid and nominee Directors of a Company were not responsible for contravention committed by Company as law did not differentiate between the position of nominee directors and other directors in that regard‑‑‑Appellants who were Executive Directors and Trustee of Company having contravened S.227(3) of Companies Ordinance, 1984 for not paying contribution money to the Fund within specified time, were rightly imposed penalty‑‑‑Management of Company and all powers relating thereto, were vested exclusively in the Board of Directors‑‑‑Board, in circumstances was collectively responsible for that management unless law expressly prescribed otherwise‑‑‑Proper show‑cause notice having not been issued to appellant‑Company, direction given to Company by respondent/ Executive Director .in impugned order with the instruction to proceed with matter by giving notice under subsection (1) of S.472 of Companies Ordinance, 1984, .was set aside‑‑‑Decision of Trustees of the Fund to encash Defence Savings Certificates before maturity date in order to provide funds to the Company, was a clear violation of provisions of S.227(2) of Companies Ordinance, 1984‑‑‑Trustees, in circumstances had made themselves liable for penalty specified under 5.229 of Companies Ordinance, 1984‑‑‑Penalty imposed by Executive Director upon Trustees for encashing Defence Savings Certificates owned by Fund before maturity date, was upheld‑‑­Appellants were directed to deposit penalties detailed in the order in designated Bank account of Securities and Exchange Commission of Pakistan within specified period.

Mian Aftab A. Sheikh for Appellants (in Appeal No.7 of 2003).

Ashfaq Ahmed Khan, Director SEC, Mubasher Saeed, Joint Director SEC and Ms. Wajiha Farooqi, Asstt. Director SEC for Respondent (in Appeal No.7 of 2003).

Nadeem Akhtar for Appellants (in Appeal No‑8 of 2003)

Ashfaq Ahmed Khan, Director SEC, Mubashe.r Saeed, Joint Director SEC and Ms. Wajiha Farooqi; Asstt. Director SEC for Respondent (in Appeal No.8 of 2003).

Nadeem Akhtar for Appellants (in Appeal No.9 of 2003)

Ashfaq Ahmed Khan, Director SEC, Mubasher Saeed, Joint Director SEC and Ms. Wajiha Farooqi, Asstt. Director SEC for Respondent (in Appeal No.9 of 2003).

Date of hearing: 26th March, 2003.

2005 C L D 500

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Abdul Rehman Qureshi, Commissioners

AMIR RASHEED and another‑‑‑Appellants

Versus

LAHORE STOCK EXCHANGE (GUARANTEE) LTD. through Managing Director and 2 others‑‑Respondents

Appeal No.31 of 2004, heard on 22nd December, 2004.

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

‑‑‑‑S.33‑‑‑Security and Exchange Ordinance (XVII of 1969), S.21,‑‑­Omission to conduct inquiry‑‑‑Appeal before Appellate Bench‑‑­High Court vide its order had directed that Security and Exchange Commission should take due proceedings and dispose of matter in dispute within specified period‑‑‑In pursuance of order of High Court proceedings were held before Director who rejected claim of appellants‑‑‑Appellants being aggrieved by such order filed appeal under S.33 of Security and Exchange Commission of Pakistan Act, 1997 before Appellate Bench‑‑­Appellate Bench, during arguments noted that a proper inquiry as provided under S.21 of Security and Exchange Ordinance, 1969, had not been conducted by Commission as directed by High Court‑‑‑Appellate Bench had taken serious notice of the matter that instructions of High Court had not been followed in letter and spirit‑‑‑Matter was remanded to Securities Market Division for an independent inquiry under S.21 of Security and Exchange Ordinance, 1969 in compliance of order of High Court‑‑‑Competent Authority was directed to order an inquiry under S.21 of Security and Exchange Ordinance, 1969 and appoint an independent Inquiry Officer within 10 working days.

Amir Mahmood for Appellants.

Amir Zareef Khan for Respondent No. 1.

Abid Hussain for Respondent No. 2.

Murtaza Abbas, Assistant Director SEC for Respondent No.3.

Dates of hearing: 30th November and 22nd December, 2004.

2005 C L D 1029

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Insurance and SCD) and M. Zafar-ul-Haq Hijazi, Commissioner (Company Law)

PRUDENTIAL INVESTMENT BANK LIMITED and 4 others---Appellants

Versus

EXECUTIVE DIRECTOR (E&M) SEC---Respondent

Revision No.68 of 2002, decided on 11th April, 2004.

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

----Ss.205, 476(1)(a) & 484---Security and Exchange Commission of Pakistan Act (XLII of 1997), Ss.10 & 20--­S.R.O.323(I)/2002, dated 14-6-2002---Order imposing penalty by Executive Director (E&M) of the Commission--­Executive Director imposed a cumulative penalty of Rs. 75,750 upon the Companies under subsection (5) of S.205 of Companies Ordinance, 1984 for contravention of provisions of subsection (2) of S.205 of the Ordinance---Such imposition of penalty had been challenged on ground of jurisdiction, contending that Executive Director did not have jurisdiction to pass the impugned order---Validity---Powers and functions of Commission though had been delegated to the Executive Directors by Commission under S.R.O. 323(I)/2002 dated 14-6-2002, but Executive Director had not been delegated the powers to impose fine for violation of S.205 of Companies Ordinance, 1984---Relevant Para. 3 of said S.R.O. which specified relevant section of laws and nature of powers and functions exerciseable by Executive Director, did not include S.205 of Companies Ordinance, 1984---Subsection (5) of S.205 of Companies Ordinance, 1984 was to be read with subsection (1) of S.476 of Companies Ordinance, 1984 while imposing fine provided in subsection (5) of S.205---Under provisions of S.476(1)(a) of Companies Ordinance, 1984 when any contravention or default in complying with any provisions of the Ordinance was committed, where maximum fine provided was less than Rs.5000 and daily fine was less than Rs.200, power to impose fine was to be exercised by officer incharge of the registration office where company was registered and not by the Executive Director---Order imposing fine by Executive Director, was set aside in revision by the Commission.

(b) Interpretation of statutes---

----One of principles of statutory interpretation was "Expressio Unius Est Exclusio Alterius", that specific expression of one thing implies the exclusion of the other.

Tariq M. Khokhar and M. Aslam Arian for Appellants.

Ashfaq Ahmed Khan, Director SEC, Mubasher Saeed, Joint Director SEC and Abid Hussain, Joint Director SEC for Respondent.

Date of hearing: 20th March, 2004.

2005 C L D 1036

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Insurance and SCD) and Abdul Rehman Qureshi, Commissioner (Enforcement)

FIRST CAPITAL SECURITIES---Appellant

Versus

COMMISSIONER (SECURITIES MARKET) SEC, ISLAMABAD---Respondent

Appeal No. 14 of 2003, decided on 24th April, 2003.

Companies Ordinance (XLVII of 1984)---

----Ss.221(2) & 224---Companies (General Provisions and Forms) Rules, 1985, R.16---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Making gain by purchase and sale of securities---Failure to deposit said gain---Appellant made gain in purchase and sale transaction as beneficial owner of 'Insurance Company "(Issuer)"---Said, sale transaction resulted in gain of Rs.1,157,450.00 to the appellant, but same was not tendered to Issuer within period specified in S.224(2) of Companies Ordinance, 1984---Show-cause notice was issued by Securities and Exchange Commission to appellant to show cause as to why gain made by it in the transaction, should not be tendered by it in favour of Commission as provided in S.224(2) of Companies Ordinance, 1984--­Opportunity of personal hearing was granted to appellant, but Commission being not satisfied by arguments of appellant, directed appellant to tender Rs.822, 974 to the Commission---Appellant in his appeal against order of Commission had contended that Commission had misdirected itself in law holding that Joint Venture Agreement was not an agreement to sell as contended by appellant, but in fact was a sale agreement---Appellant had further contended that another Insurance Company had given a "Put Option" in Joint Venture Agreement which it could exercise after two years from the date of execution of Joint Venture Agreement which would mean that sale transaction was completed on expiry of "Put Option" period of two years---Claim of appellant was that purchase and sale transactions were not executed within six months as required by S.224 of Companies Ordinance, 1981--­Contention of appellant was repelled because that was only an option available with the other Insurance Company to sell back shares purchased by it---In case that, option was indeed exercised by the other Insurance Company, that transaction would have amounted to a separate transaction---Impugned order passed by Commission, could not be interfered with in appeal.

Mian Saifullah, F.C.A. and Kashif Aziz Jahangiri, A.C.A. for Appellant.

Jahanara Sajjad, Joint Director (SM), Ikram-ul-Haq, Joint Director (SM) and Muhammad Farooq, Deputy Director (SM) for Respondent No. 1.

Date of hearing: 15th April, 2003.

2005 C L D 1044

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Insurance and SCD) and Abdul Rehman Qureshi, Commissioner (Enforcement and Monitoring)

BRR INTERNATIONAL MODARABA---Appellant

Versus

COMMISSIONER (SECURITIES MARKET) SEC and another---Respondents

Appeal No. 13 of 2003, decided on 24th April, 2003.

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

----S.33---Listing Regulations, Regln. 21(2)---Application for de-Listing of Modarba from Stock Exchange--Appellant, a Modarba applied for de-Listing from Stock Exchange--­Previously, appellant had written to Stock Exchange and informed it of its decision to discontinue its membership as a Listed Modarba---Stock Exchange refused to accept decision of appellant saying that it was not bound to do so and directed the appellant to pay listing fee---Appellant refused to pay listing fee and applied to the Commission for its de-Listing---Commission directed the Stock Exchange to de-List the appellants from its Exchange within fifteen days from the date of approval by appellant's share-holders and that appellants to pay fee and penalties imposed by Stock Exchange for violating provisions of Regln. 21(2) of Listing Regulations for not providing required information to the Stock Exchange---Appellant not satisfied with order of Commission preferred appeal before Appellate Bench--­Validity---No justification existed for forcing appellant to remain listed on Stock Exchange---Stock Exchange acceded to direction of Commission to de-list the appellant---Only reason for not de-Listing appellant was that Stock Exchange had not received the approval of the Board of Management Company of the appellant---Appellant was directed to provide requisite approval to Stock Exchange upon which Stock Exchange would de-list appellant from its Exchange without delay---Directions given by Commissioner to appellant for payment of fee and penalties imposed by Stock Exchange for violation of Regln. 21(2) of Listing Regulation beyond the, year 2000, were set aside.

Naveed Altaf Hussain and Naseem Ahmed for Appellant.

Syed Amir Masood, Director (SMD), Abbas Hassan Kizilbash, Director (SMD) and Mrs. Musarat Jabeen, Deputy Director (SMD) for Respondent No. 1.

Ahmed Hassan Khan for Respondent No.2.

Date of hearing: 16th April, 2003.

2005 C L D 1058

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar Commissioner (Securities Market) and Etrat H. Rizvi, Commissioner (Insurance)

SERVICE INDUSTRIES TEXTILE LIMITED---Appellant

Versus

COMMISSIONER (COMPANY LAW) SEC---Respondent

Appeal No.60 of 2003, decided on 21st January, 2004.

Companies Ordinance (XLVII of 1984)---

----S.265---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Appointment of Inspector to investigate the affairs of company---Commissioner, after giving appellant-Company an opportunity of hearing, proceeded to pass impugned order whereby an Inspector was appointed under S.265 of Companies Ordinance, 1984--Appellant had contended that Commissioner had based his decision of appointment of Inspector solely on central issue, namely, sale of appellant-Company of certain obsolete machinery in year 1999 which consisted of 18,700 spindles having a book value of Rs.120 million, but was sold by appellant-Company for Rs.27 million only---Claim of appellant-Company was that machinery was not just obsolete, but was scrap and that sale of machinery was authorized by the Board of Directors and was approved by share-holders in the Annual General Meeting---Validity---Appellant-Company had itself admitted that agreement of sale of said machinery was executed about five months prior to approval given by shareholders and that actual sale of machinery had commenced before their approval---Sale of machinery amounted to disposal of a sizable part of the assets for which approval was required under cl.(a) of subsection (3) of S.196 of Companies Ordinance, 1984---Sale of machinery was not only the sole reason for appointment of Inspector, but there were number of other matters which necessitated a fact finding exercise to establish that affairs of appellant-Company were being run in accordance with sound business principles and in a prudent manner and not to the detriment of shareholders---Appellant-Company had admittedly not laid down annual accounts before shareholders since 2001 and it had also not filed its quarterly accounts as required by law, which itself was a grave violation of the rights of share-holders guaranteed by law---Accounts of the year 2001, had depicted a sorry state of affairs of appellant-Company---Accumulated losses for year ending September 30, 2001 stood at Rs.422.072 million resulting in negative equity of Rs.342.580 million and its current liabilities exceeded the current assets by Rs.167.767 millions---Appellant-Company had not declared any dividend for several years---Auditors had already expressed their concern on the price differential which could only be verified by an independent investigator---Price differential, manner in which sale transaction of machinery had been executed and opinion of auditors, all such things had pointed out towards the need of an independent investigation---In view of said circumstances, it could not be said that impugned order of appointment of Inspector to investigate the affairs of Company, had been passed in disregard of relevant facts and law on the subject---Facts, prima facie, pointed to supposition that affairs of appellant-Company were not being managed in accordance with sound business principles and prudent commercial practices, which necessitated a fact finding exercise to confirm or reject said charges---Impugned order was upheld, in circumstances.

Chanra Prabha (Smt) v. Hotel Shweta (P.) Ltd. (1995) 4 Comp. LJ 540 ref.

Noman Akram Raja and Ralph Nazirullah, Company Secretary for Appellant.

Ashfaq A. Khan, Director (EMD) and Mubasher Saeed, Joint Director (EMD) for Respondent.

Date of hearing; 12th January, 2003.

2005 C L D 1071

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, and Shahid Ghaffar, Commissioners

Brig. (Retd.) N. HUMAYUNE, CHIEF EXECUTIVE---Appellant

Versus

EXECUTIVE DIRECTOR (EMD) SEC---Respondent

Appeals Nos.30, 54 and 55 of 2003, heard on 9th April, 2004.

Companies Ordinance (XLVII of 1984)---

----Ss.158, 245 & 246---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of penalties---Appellants who were Chief Executives of Companies concerned, were imposed penalties in their individual capacities for violating provisions of Ss.158,245 & 246 of Companies Ordinance, 1984 after giving them opportunity of hearing by the Executive Director---In one case appellants had failed to hold Annual General Meeting for the calendar year by specified date and in other two cases appellants had failed to prepare and transit quarterly accounts for relevant years up to specified dates---On date of hearing of appeal appellants dilated upon financial problems faced by concerned Companies and contended that financial constraints were the real reason behind their defaults and no wilful intention was on part of Managements to commit statutory defaults-Validity--Financial constraints could not be allowed to become an excuse for violating law---Companies and their Managements, including appellants were very much aware of their responsibility under the law and being listed companies said responsibilities took the added meaning and consequence---Contention of appellants that defaults were not wilful, were repelled---Executive Director had already taken a lenient view because of financial positions of companies and had not penalized all Directors, but had imposed token penalties on appellants in their individual capacities which were to be borne by them and not the shareholders of the Companies---No reason having been shown to interfere with orders of Executive Director imposing penalties on appellants, appeals were dismissed.

Brig. (Retd.) N. Humayune and Ali Raza Rizvi for Appellant.

Date of hearing: 9th April, 2004.

2005 C L D 1090

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar, Commissioner (Securities Market) and Etrat H. Rizvi, Commissioner (Specialized Companies)

SCHON TEXTILE MILLS LIMITED---Appellant

Versus

COMMISSIONER (ENFORCEMENT AND MONITORING) SEC---Respondent

Appeal No.32 of 2003, heard on 21st April, 2004.

Companies Ordinance (XLVII of 1984)---

----Ss.305 & 309---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Winding up of Company---Appeal---Appellant-Company had failed to hold its Annual General Meetings from 1997 onwards, its business had also been suspended since 1997 and it had not filed any statutory returns with the CRO ever since---Various fines imposed on Company for violation of different provisions of law, had not been deposited by Company---In the light of said facts Registrar approached the Commission for grant of sanction in terms of cl. (b) of S.309 of Companies Ordinance 1984 for winding up of appellant-Company---Show-cause notice was issued to Company and opportunity of hearing was also given to it, but no one appeared on its behalf on the date of hearing before Commissioner and consequently sanction was granted to Registrar by Commissioner for winding up of Company---Contention of appellant-Company that statutory defaults could be regularized and same were not as serious to invite such harsh penalty of compulsory winding up, was repelled as Company had been in constant default as to the mandatory Statutory requirements---Further contention on part of Company was that Management intended to revive the Company, but no plan for such revival had been presented even after filing of petition for winding up against Company---Order passed by Commissioner for winding up Company, could not be interfered with in appeal.

Maqsood Raza, F.C.A for Appellant.

Mubasher Saeed, Joint Director SEC for Respondent.

Date of hearing: 21st April, 2004.

2005 C L D 1137

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, Commissioner (Specialized Companies) and Shahid Ghaffar, Commissioner (Securities Market)

ABDUL MAJEED, CHIEF EXECUTIVE and 7 others---Appellants

Versus

COMMISSIONER (EMD) SEC---Respondent

Appeal No.50 of 2003, decided on 22nd March, 2003.

Companies Ordinance (XLVII of 1984)---

----Ss.158 & 246---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of penalties---Appellant-Company failed to hold Annual General Meeting even within extended period of time and held said meeting with a delay of five months and twenty-one days---Company also failed to prepare and transmit its quarterly accounts for the period ending on 31-3-2002---Penalties for said defaults were imposed on Chief Executive and. Directors of Companies after providing opportunity of hearing to Company and Chief Executive and Directors---Plea of appellants that they had taken over the management of Company in June, 2001 when technical default under S.158 of Companies Ordinance, 1984 for not holding Annual General Meetings for the year concerned had already occurred, carried weight---Said default had occurred on part of old management of the Company and not the new one and in circumstances it would be unfair to penalize new management---Penalty imposed by Commissioner under S.158 of Companies Ordinance, 1984, was set aside, in circumstances---As far as default under S.246 for not transmitting quarterly accounts ending on 31-3-2002 was. concerned, new management could not take similar plea as' it had ample time to prepare and submit said accounts---Contention of appellants that said default was not committed wilfully or intentionally, did not appear to be cogent---Post default record of Company was not convincing---Keeping in view appellant's assurance to be compliant in future, taking lenient view, penalties imposed were reduced---Fine imposed under S.246 of Companies Ordinance, 1984 calculated at Rs.100 per day for a period of 210 days, was reduced to Rs.50 per day for said period of 210 days---Appellants were directed to deposit said reduced fine within specified period.

Abdul Majeed, Chief Executive/Authorized Representative for Appellants.

Mubasher Saeed Saddozai, Joint Director (EMD) and Miss Khalida Parveen, Junior Executive (EMD) for Respondent.

Date of hearing: 23rd December, 2003.

2005 CLD 1153

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi, and Shahid Ghaffar, Commissioners

MANSUR KHALID BAGHPATEE and 6 others---Appellants

Versus

COMMISSIONER (EMD) SEC---Respondent

Appeal No.41 of 2003, heard on 14th April, 2004.

(a) Securities and Exchange Commission of Pakistan Act (XLII of 1997)---

----Ss.4 & 33---Civil Procedure Code (V of 1908), S.20---Appeal---Place of hearing---Determination of---Appellants had stated that they requested the Commissioner that hearing of their case be conducted at Karachi as Company and appellants could not afford to travel to Islamabad and pleaded that right place for hearing was Karachi as cause of action had arisen there, main office of Company was there and appellants were also residents of Karachi---Appellants had referred to S.20 of Code of Civil Procedure, 1908 in support of their plea---Validity---Arguments of appellants with regard to place of cause of action and reliance on Code of Civil Procedure was misconceived because C.P.C. did not apply to proceedings before Appellate Bench of Commission---In any case, proceedings before Commission or any of its Officers were quite dissimilar to the ones before the Civil Courts and it was discretion of Commission or adjudicating officer to decide whether to hear parties at the Commission's headquarter or any other regional office---Parties could not demand hearing at a particular place as a matter of right.

(b) Securities and Exchange Commission of Pakistan Act (XLII of 1997)---

----S.33---Companies Ordinance (XLVII of 1984), Ss.158, 233, 245 & 246---Failure to hold Annual General Meeting, prepare and transmit annual accounts, half yearly accounts and quarterly accounts-Imposition of penalty--Appeal---Penalties were imposed on appellant-Company and its Directors including Chief' Executive after issuing them show-cause notice and providing them opportunities of hearing on their defaults in holding Annual General Meeting, in preparing and transmitting annual, half yearly and quarterly accounts---Appellants having failed to appear, ex parte order was passed against them---Contention of appellants that impugned order was biased as the Commissioner took a strict view, being not supported by any evidence. was invalid---With regard to penalty imposed for violation of S.158 of Companies Ordinance, 1984 Circulars were issued, but it was not clear as to which of the legal requirements provided in said Circulars had been violated by the Company and appellants---Notice for Annual General Meeting for relevant year was indeed published in two newspapers---Was necessary to specify the exact violation committed by appellants and then impose penalty after considering merits---Order imposing penalty on appellants for violation of S.158 of Companies Ordinance, 1984 was set aside in circumstances---With regard to Company's failure to prepare and transmit annual accounts, appellants had produced covering letter addressed to Executive Director showing submission of accounts, for relevant year-Penalty imposed by Commissioner under S.233 of Companies Ordinance, 1984 was set aside---Appellants could not produce any evidence to prove that they had prepared and submitted quarterly accounts even within extended period---Appellants had also failed to prove that said default was not wilful---Penalty imposed on appellants under S.246 of Company Ordinance, 1984, was upheld---Half yearly accounts were not submitted within prescribed time which was violation of law, but as delay in preparing and submitting said accounts being not significant and appellant-Company having been wound up ever since, penalty imposed on appellants under S.245 of Companies Ordinance, 1984 was reduced accordingly---Appellants were directed to deposit imposed fine within specified period.

Asad Iqbal Siddiqui for Appellants.

Date of hearing: 14th April, 2004.

2005 C L D 95

[Supreme Court of Pakistan]

Present: Faqir Muhammad Khokhar and Tassaduq Hussain Jilani, JJ

RAFIQUE HAZQUEL MASIH---Petitioner

Versus

BANK ALFALAH LTD. and others- --Respondents

Civil Petition No. 233-L of 2003, decided on 4th August, 2004.

(On appeal from the Order dated 14-11-2002 passed by Lahore High Court, Lahore, in E.F.A. No.758 of 2002).

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

----S. 19---Contract Act (X of 1872), S.128---Constitution of Pakistan (1973), Art.185(3)---Execution of decree---Liability of guarantor--Petitioner being guarantor was aggrieved of execution proceedings initiated against him---Plea raised by the petitioner was that before first proceeding against the principal debtor, no proceedings should have been initiated against him---Validity---Having given undertaking regarding guarantee, it was not open for the petitioner to wriggle out of it and raise such plea---Liability of surety under S.128 of Contract Act; 1872, was co-extensive with that of the principal debtor, unless it was otherwise provided by the contract--In absence of any specific stipulation in the contract of loan or any other consideration of equity a guarantor could not take up the plea as raised by the petitioner---Bank had granted loan only on the guarantee and in absence of letter/contract of guarantee the bank might not have sanctioned the loan---Leave to appeal was refused.

Ghulam Mustafa. Jatoi v. Additional District and Sessions Judge/Returning Officer, N.A. 158 Naushero Feroze and others 1994 PSC 751 and The Bank of Bihar Ltd., v. Dr. Damodar Prasad and another AIR 1969 SC 297 distinguished.

United Bank Ltd. v. Haji Bawa Company Ltd. and 3 others 1981 CLC 89; National Bank of Pakistan v. F.S. Aitzazuddin and 2 others PLD 1982 Kar. 577; Messrs. U.B.L. v. Messrs Sindh Tech. Industries Ltd. and others 1998 CLC 1152; Mrs. Muhammad Shafi through Agent v. Sultan Ahmed 2000 CLC 85 and Habib Bank Limited v. Malik Atta Muhammad and 4 others 2000 CLC 451 ref.

Ch. Muhammad Amin Javed, Advocate Supreme Court and Mahmud-ul-Islam, Advocate-on-Record for Petitioner.

Syed Ali Zafar, Advocate Supreme Court and Tanvir Ahmed, Advocate-on-Record for Respondents.

Date of hearing: 4th August, 2004.

2005 C L D 120

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhry and Faqir Muhammad Khokhar, JJ

SMOOTH PHARMACEUTICALS (PVT.) and others---Petitioners

Versus

BANK OF KHYBER ---Respondent

Civil Petition No. 332-L of 2004, decided on 8th July, 2004.

(On appeal against the judgment dated 09-12-2003 passed by Lahore High Court, Lahore, in R. F.A. No.64 of 2003).

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

----Ss.10 & 17---Constitution of Pakistan (1973), Art. 185(3)--­Suit for recovery of loan amount--Liability to pay outstanding claim of Bank not denied by defendant in application for leave to defend, suit---Suit decreed by Banking Court was upheld by High Court---Plea of defendant was that claim of Bank was based on blank papers, which were inadmissible in evidence under law, thus, no decree could be based thereon ---Validity--­Defendant in leave application had not denied his liability to satisfy claim of Bank---Non-disputing liability by defendant would be sufficient to draw conclusion that decree had been passed on admissible documents---Payment of 50% decretal amount by defendant would show that he had started satisfying decree---No point of public importance was involved in case---Supreme Court dismissed petition.

Jahangir A. Jhoja, Advocate Supreme Court and C.M. Latif, Advocate-on-Record for Petitioners.

Tanveer Ahmed, Advocate-on-Record for Respondent.

Date of hearing: 8th July, 2004.

2005 C L D 224

[Supreme Court of Pakistan]

Present: Nazim Hussain Siddiqui, C.J., Abdul Hameed Dogar and Faqir Muhammad Khokhar, JJ

ADAMJEE INUSRANCE COMPANY LIMITED and others---Petitioners

Versus

MUSLIM COMMERCIAL BANK LIMITED and others---Respondents

Civil Petitions Nos.2437 and 2438 of 2002, decided on 24th March, 2004.

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

-----S.178---Banking Companies Ordinance (LVII of 1962), S.23---Insurance Ordinance (XXXIX of 2000), S. 67---Specific Relief Act (1 of 18771. Ss. 42 & 54---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Constitution of Pakistan (1973), Art.185(3)---Interim injunction grant of---Election of Board of Directors---Defendant-Bank having a share of 29.37% in plaintiff company was not satisfied with the management of plaintiff company---Defendant-Bank had been making necessary declaration and other reports to Securities and Exchange Commission of Pakistan and to State Bank of Pakistan as required by law---Term of office of the Directors of plaintiff company had already expired but they continued to occupy their office---Defendant-Bank had participated in meetings of plaintiff company through its nominee without any protest by the plaintiff company Judge in suit filed by plaintiff in High Court, in exercise of original civil jurisdiction, passed interim injunction restraining the defendants from exercising their rights to seek election for them on the Board of Directors of the plaintiff company--­High Court in exercise of appellate jurisdiction set aside the injunction order---Validity---Balance of convenience would lie in holding elections of Directors of plaintiff company as required by the provisions of S.178 of Companies Ordinance, 1984---Plaintiff company was found to have sustained huge losses with the result that it had to wind up its business in foreign countries---Defendants had validly and lawfully acquired the shares and they could not be restrained from exercising their voting and other rights as share-holders and from taking part in the affairs of the plaintiff company---Defendant-Bank did not have controlling interest in the plaintiff company and it did not have such share-holding which could make it more powerful than all other share-holders, to control the course of general meeting of plaintiff company---Judgment of High Court was just and fair which did not suffer from any legal infirmity so as to warrant interference by Supreme Court---Order passed by High Court under its original jurisdiction did not take the correct view of the matter and had resulted in usurpation of the office of Directors of plaintiff company by such persons whose term had already expired thereby depriving the share-holders to exercise their vested rights in accordance with law---Plaintiff company had failed to make out a prima facie case in its favour and was not able to satisfy the other essential ingredients such as balance of convenience and irreparable loss so as to entitle them to grant of temporary injunction---Leave to appeal was refused.

Union Council, Ali Wahan, Sukkur v. Associated Cement (Pvt.) Limited 1993 SCMR 468; Fauji Foundation v. Shamimur Rehman PLD 1983 SC 457; The President v. Mr. Justice Shaukat Ali PLD 1971 SC 585; Rattan Chand Hira Chand v. Askar Nawaz Jung (deceased) by L.Rs. and others 1991 (3) SCC 67; Gammon India Ltd.'s case (1990) 3 Comp. LJ 89; Distilleries Company of Sri Lanka Limited, No.110, Norris Canal Road, Colombo v. Ganganath Amaraweera Kariyaawasam and 2 others passed in C.A. L. No.163 of 2001; Sri Lanka and GAF Corporation v. Paul Milstein and others Lexsee 453 F.2d. 799; Mercantile Traders (Pvt.) Ltd. v. State Bank of Pakistan 2002 SCMR 250; Mian Muhammad Nawaz Sharif v. President of Pakistan and others PLD 1993 SC 473; American Cyanamid Co. v. Ethicon Ltd. (1975) All E.R. 504; Sui Gas Transmission Company v. Sui Gas Employees Union 1977 SCMR 220 and Mrs. Dino Manekji Chinoy and 8 others v. Muhammad Matin PLD 1983 SC 693 ref.

Syed Sharifuddin Pirzada, Senior Advocate Supreme Court, Anwar Mansoor Khan, Advocate Supreme Court, Waqar Rana, Advocate Supreme Court and Mehr Khan Malik, Advocate-on-Record for Petitioners.

Khalid Anwar, Senior Advocate Supreme Court and M.S, Khattak, Advocate-on-Record for Respondents Nos.1 and 2.

Raja Muhammad Akram, Senior Advocate Supreme Court and Ejaz Muhammad Khan, Advocate-on-Record for Respondents Nos.2 and 4.

Date of hearing: 24th March, 2004.

2005 C L D 495

[Supreme Court of Pakistan]

Present: Ifikhar Muhammad Chaudhry, Rana Bhagwandas and Hamid Ali Mirza, JJ

DILSHAD HUSSAIN and another‑‑‑Appellants

Versus

ISLAMIC REPUBLIC OF PAKISTAN through Secretary, Ministry of Labour Manpower and Overseas Pakistanis, Islamabadand another‑‑‑Respondents

Civil Appeal No. 1340 of 1999, decided on 7th January, 2005.

(On appeal from the judgment/order, dated 4‑11‑1998 passed by Lahore High Court, Lahore in I.C.A. No.26 of 1994).

Companies Profits (Workers Participation) Act (XII of 1968)‑‑‑

‑‑‑‑Ss. 2, 3, 4 & Schedule (Scheme), Paras 4 & 2(7)‑‑‑Amount of profit accrued on the allocated fund had to be paid to the workers of the company, after compliance with the provisions of Companies Profits (Workers' Participation) Act, 1968‑‑‑Relief of refund of such amount could not be granted on account of non­compliance of S.4 of Companies Profits (Workers' Participation) Act, 1968 read with Para.4 of the Scheme given in the Schedule appended to the said Act, wherein it was provided that for the purpose of management of funds, after its establishment by a company, a Board of Trustees had to be constituted and procedure had been prescribed for the purpose of distribution of benefits to the workers.

Civil Appeal No. 1231 of 1998 fol.

National Tanker Company (Pvt.) Ltd. v. Federal Government of Pakistan 1999 YLR 650 ref.

Sadiq M. Warraich, Advocate Supreme Court and Ejaz Muhammad Khan, Advocate‑on‑Record (absent) for Appellants.

Nasir Saeed Sheikh, Dy. A.‑G. and Ch. Akhtar Ali, Advocate‑on‑Record for Respondent No. 1.

Respondent No.2: Ex parte.

Date of hearing; 4th November, 2004.

2005 C L D 674

[Supreme Court of Pakistan]

Present: Nazim Hussain Siddiqui, C.J., Javed Iqbal and Abdul Hameed Dogar, JJ

Messrs BRITISH BISCUITS COMPANY (PVT.) LIMITED---Appellant

versus

Messrs ATLAS INVESTMENT BANK LIMITED---Respondent

C.M.A. No.2 of 2005 in Civil Petition No.2883 of 2004, decided on 5th January, 2005.

(On appeal from the judgment of the Lahore High Court, Rawalpindi Bench, Rawalpindi, dated 28-10-2004 passed in E.F.A. No.24 of 2004).

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

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.90---Execution of decree---Auction of property---Objection petition by judgment-debtor under S.19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 alleging fraud and glaring irregularities during auction proceedings without depositing 20% of amount realized at sale---Banking Tribunal dismissed application filed by Bank under O.XXI, R.90, C.P.C. being non-maintainable in view of S.19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court in appeal set aside order of Tribunal and dismissed objection petition being not maintainable without such deposit---Confirmation of auction in favour of Bank (decree-holder) by Tribunal after passing of judgment by High Court---Validity---Auction could not be deferred, when no objection petition was pending before Court after passing of impugned judgment---Sale could be confirmed by Banking Tribunal at such particular moment---Supreme Court neither granted stay order nor suspended operation of impugned judgment, thus, question of suspension of execution proceedings would not arise---Conduct of judgment-debtor was not above board for having made every effort to get proceedings prolonged on one pretext or the other---Supreme Court refused to exercise discretion in such-like case and grant leave to appeal.

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

----Art. 185(3)---Leave to appeal, granting or refusal of---Principles---Granting of leave was a matter of discretion and not of right---Provisions of Art.185(3) of Constitution did not impose any limitation as to circumstances, which would justify or warrant grant of leave to appeal---Discretionary jurisdiction to grant or refuse leave to appeal on account of conduct of petitioner---Such conduct would have substantial bearing on question of grant of leave to appeal or otherwise.

Dauran Khan v. Naseer Muhammad Khan PLD 1964 SC 136; W.H. King v. Emperor AIR 1950 Bom. 380; Jai Singh and others v. State AIR 1952 All. 991; Mst. Hassan Bano v. Mrs. Mumtaz Younus PLD 1989 SC 346; Deen Carpets Limited v. Iqbal Ghuman PLD 1989 SC 516 and Mst. Tilawatunnisa v. Settlement Commissioner 1978 SCMR 225 rel.

M. Naeem Bokhari, Advocate Supreme Court with Muhammad Rashid Qamar, Advocate Supreme Court and Ijaz Muhammad Khan Advocate-on-Record (absent) for Petitioner.

Syed Najmul Hassan Kazmi, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Respondent.

Date of hearing: 5th January, 2005.

2005 C L D 720

[Supreme Court of Pakistan]

Present: Javed Iqbal and Tanvir Ahmed Khan, JJ

Sh. MUHAMMAD IRFAN and others---Petitioners

versus

SITARA COMMISSION SHOP and others---Respondents

Civil Petition for Leave to Appeal No.1273/L of 2002, decided on 13th May, 2002. (On appeal from the judgment dated 1-4-2002 of the Lahore High Court, Multan Bench, Multan passed in R.F.A. No.384 of 2001).

Companies Ordinance (XLVII of 1984)---

----S.32---Civil Procedure Code (V of 1908), O. XXXVII, Rr.2 & 3---Suit for recovery of amount upon cheque---Disputed cheque was issued by a Company registered under Companies Ordinance, 1984, but suit was filed against its directors without impleading the Company as party---Defendants/Directors did not deny issuance of cheque, but they were granted conditional leave to appear and defend suit----Suit decreed by Trial Court was upheld by High Court---Validity---Defendants were admittedly Directors/shareholders of the Company---Non-mentioning of the name of Company as a party in the plaint was not fatal as defendants had admitted their liability---Maintainability of suit could have been objected to after abiding by leave granting order---Leave granting order had attained finality for having been upheld by High Court in revision filed by defendants---No illegality had been committed by High Court in maintaining judgment/decree of Trial Court---Supreme Court dismissed petition and refused leave to appeal.

Col. (Retd.) Ashfaq Ahmed and others v. Sh. Muhammad Wasim 1999 SCMR 2832 ref.

Muhammad Iqbal Khan, Advocate Supreme Court with S. Abul Aasim Jafri, Advocate-on-Record for Petitioners.

M. Akram Khawaja, Advocate Supreme Court for Respondents.

Date of hearing: 13th May, 2002.

2005 C L D 967

[Supreme Court of Pakistan]

Present: Javed Iqbal and Muhammad Nawaz Abbasi, JJ

AFZAL MAQSOOD BUTT---Appellant

Versus

BANKING COURT No.2, LAHORE and 8 others---Respondents

Civil Appeals Nos.873 and 874 of 2002 decided on 21st March, 2005.

(On appeal from the judgment dated 12-9-2001 passed in Writ Petitions Nos.23858 and 23859 of 1998 by Lahore High Court, Lahore respectively).

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

-----S.18---Civil Procedure Code (V of 1908), O.XXI, Rr.84 & 85---Constitution of Pakistan (1973), Art.185(3)---Leave to appeal was granted by Supreme Court to consider; .whether without setting aside the earlier auction, Banking Tribunal could competently issue fresh schedule of auction; and whether confirmation of sale in favour of petitioner, as a result of auction held was legal and valid and High Court in exercise of its Constitutional jurisdiction was justified to set aside the sale and interfere in the matter.

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

-----S.18---Civil Procedure Code (V of 1908), O.XXI, Rr.84 & 85---Sale price, non-deposit of---Condoning default in deposit of sale price---Holding of two auctions---Appellant was successful bidder of suit property but sale was not approved in his favour, therefore, he did not deposit money in terms of O.XXI, R.84, C.P.C.---Subsequently appellant was directed to deposit the entire amount by a specified date---Appellant issued a cheque which was dishonoured--­Fresh schedule of auction was published and auction was held but in the meanwhile appellant with the permission of Banking Court deposited the amount of dishonoured cheque in cash---Banking Court confirmed the auction in favour of appellant and also issued sale certificate---Highest bidder of subsequent auction assailed the confirmation of sale in favour of appellant and High Court in, exercise of Constitutional jurisdiction set aside that sale---Validity---In case purchaser failed to deposit sale price in full in terms of O.XXI, Rr.84 & 85, C.P.C., the sale became invalid and Banking Court was under obligation to resell the property forthwith---Appellant having failed to deposit sale price, had lost the right of purchase---Banking Court in such circumstances could not justifiably exercise its discretion to condone the default and permit the appellant to deposit the sale price---Payment of sale price under the provisions of O.XXI, R.85, C.P.C. was mandatory and Banking Court in normal circumstances was not supposed to extend the time for deposit of sale price beyond the time provided under the law---Failure of auction-purchaser to deposit the entire sale price within the prescribed time or within the time allowed by Banking Court, would render the sale invalid---Banking Court in circumstances had no opinion except to resell the property---In normal circumstances, after confirmation of sale, it was not set aside but if the sale itself had become invalid, its confirmation would also be invalid---Supreme Court keeping in view the illegalities and irregularities committed by Banking Court in the matter did not take any exception to the judgment of High Court but in the given circumstances held that both the auctions were violative of law and Banking Court was under legal obligation to resell the property as per requirement of law---Supreme Court directed the Banking Court to hold fresh auction of the property for satisfaction of the decrees---Appeal was allowed accordingly.

(c) Auction---

---- Bid in auction---Status and effect---Bid in auction is only an offer and without confirmation of sale, it does not create any right in the property in favour of successful bidder---Confirmation of sale cannot be claimed as of right.

Muhammad Akram Sheikh, Senior Advocate Supreme Court and Ch. Muhammad Akram, Advocate-on-­Record for Appellant.

Alamgir, Advocate Supreme Court for Respondent No.2.

Respondents Nos. 1, 3 to 6 ex parte.

Nemo for Respondents Nos.7 and 9.

M. A. Zaidi, Advocate-on-Record for Respondent No. 8.

Date of hearing: 12th January, 2005.

2005 C L D 976

[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 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.

2005 C L D 1026

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhry, Rana Bhagwandas and Sardar Muhammad Raza Khan, JJ

MEHR TEXTILE MILLS LTD.---Appellant

Versus

INVESTMENT CORPORATION OF PAKISTAN and others---Respondents

Civil Appeal No.650 of 1997, and Civil Petition No. 1371 of 1998, decided on 2nd April, 2002.

(On appeal from the judgment/order dated 22-9-1998 and 5-5-1997 passed by Lahore High Court, Rawalpindi Bench at Lahore in Writ Petition No. 1835 of 1998 and C.M. No.1186-1 of 1997, respectively).

Companies Ordinance (XLVII of 1984)---

----Ss.305 & 309---Companies (Court) Rules, 1997, R.76--­Winding up of company---Notice, service of---Change of address of registered office of company-- Administration of justice---Grievance of appellants was that the notices for winding up of the company were not served on the changed address of registered office of the company---Contention of the respondents was that the appellants were duly served through publication in two daily newspapers besides issuing direct notices to the company as per R.76 of Companies (Court) Rules, 1997---Validity---As per changed address of the registered office of the company, notices were required to be sent to it at the company office by ordinary post and, thereafter publication in newspapers of the area where the appellants run their business ordinarily---No such notice was served upon the appellants at the changed address---Decisions of the cases on merits were encouraged by the Courts instead of granting or refusing relief to litigants on technical points---Injustice had been caused to appellants by -not affording them proper opportunity to defend proceedings of winding up against it---Judgment passed by Companies Judge was set aside and the matter was remanded to Companies Judge for decision afresh---Supreme Court specified a date on which the parties would appear before the Company Judge without issuance of fresh notice to them---Appeal was allowed.

Ch. Afrasiab Khan, Advocate Supreme Court and Ch. Akhtar Ali Advocate-on-Record for Petitioner (in C.P. 1371 of 1998).

Ashtar Ausaf Ali, Advocate Supreme Court and Ch. Akhtar Ali, Advocate-on-Record for Appellant (in C.A. 650 of 1997).

Respondents not represented (in C.P. No.1371 of 1998).

M.A. Zaidi, Advocate-on-Record and Hamid Farooq Durrani, Advocate Supreme Court (in C.A. 650 of 1997).

Date of hearing: 2nd April, 2002.

2005 C L D 1034

[Supreme Court of Pakistan]

Present: Nazim Hussain Siddiqui, Javed Iqbal and Hamid Ali Mirza, JJ

HAMZA BOARD MILLS LIMITED and 7 others- --Appellants

Versus

HABIB BANK LIMITED and another---Respondents

Civil Appeal No.511 of 1995, decided on 22nd October, 2001.

On appeal from the judgment dated 3-5-1995 of Lahore High Court, passed in C.O. No. 133 of 1994).

Companies Ordinance (XLVII of 1984)---

----Ss.305 & 309---Winding up of company---Liability of bank, adjustment of---Restoring the pervious status of company---Company was ordered to be wound up as the liabilities of bank were not paid---Company had adjusted all its liabilities with the bank and from the date when the winding up order was passed, the financial rights and obligations of the company remained the same as were on that date---Plea raised by the company was that the winding up order of the company was liable to be set aside and the company was entitled to function as it was doing before---Validity---There was nothing on record substantiate the plea raised by the company and it was not clear whether other creditors of the company would be affected or not by restoring the previous status of the company---Order of winding up of the company passed by Companies Judge was set aside by Supreme Court and the matter was remanded to High Court for decision afresh on merits regarding restoring the previous status of the company or otherwise---Appeal was disposed of accordingly.

Ashtar Ausaf Ali, Advocate Supreme Court for Appellants.

K.M.A. Samdani, Senior Advocate Supreme Court for Respondent No. 1.

Date of hearing: 22nd October, 2001.

2005 C L D 1170

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhry and Falak Sher, JJ

Messrs ABDUR RAZZAQ & COMPANY, through Mian Abrar Ahmed---Petitioner

Versus

BANK OF PUNJAB and others---Respondents

Civil Petition No.2278-L of 2004, decided on 28th July, 2004.

(On appeal from the judgment, dated 17-6-2004 passed by the Lahore High Court, Multan Bench in F.A. O. No.50 of 2004).

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.89---Constitution of Pakistan (1973), Art.185(3)--Execution of decree---Setting aside of sale---Judgment-debtor filed application under O.XXI, R.89, C.P.C. but failed to deposit the amount due even within extended time---Effect---Even the application which was submitted under O.XXI, R.89, C.P.C. was not competent as the amount due against judgment-debtor was not deposited by him---High Court had rightly dismissed the appeal filed by judgment­-debtor---Sale having been confirmed and such fact had been conceded by judgment-debtor, therefore, judgment-debtor was not entitled to any relief under Art.185(3) of the Constitution---Leave to appeal was refused.

Farooq Zaman Qureshi, Advocate Supreme Court and Muhammad Rafi Siddiqui, Advocate-on-Record for Petitioner.

Khalid Pervaiz, Advocate Supreme Court and Tanvir Ahmed Advocate-on-Record for Respondents.

2005 C L D 1301

[Supreme Court of Pakistan]

Present: Mian Muhammad Ajmal, Sardar Muhammad Raza Khan and Faqir Muhammad Khokhar, JJ

MOHIB TEXTILES MILLS LIMITED through Director/Share-holder/Representative, Former Management of the Company and others---Petitioners

Versus

NATIONAL BANK OF PAKISTAN, KARACHI and others---Respondents

Civil Appeal No.1540 of 2000 and C.P.L.A. No.124-L of 2001, decided on 25th April, 2005.

(On appeal from order dated 22-9-2000 of the Lahore High Court, Lahore, passed in C.M.No.769 of 2000 in C.O. No.100 of 1998 and Order dated 10-11-2000 passed in C.Ms. Nos.873-L of 2000 and 882-L of 2000 in C.O. No. 100 of 1998).

Per Faqir Muhammad Khokhar, J,; Sardar Muhammad Raza Khan, J. agreeing; Mian Muhammad Ajmal, J., Contra---[Majority view]---

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

----Ss. 33(f) & 305---Winding up of company---Auction of assets of company by official liquidators-Confirmation of sale and transfer of bid right in favour of another party---Objection petition by the Company alleging that property was sold at. a price entirely disproportionate to the actual value and bid could not be transferred without registration of sale in favour of original bidder---Validity---Sanctity to judicial sale of property is to be maintained as far as possible, however, the Courts have also a duty to ensure that such sales should be seen to have been made in the most fair, transparent, judicious manner and above any suspicion so that the interests of all the stake holders are properly safeguarded---Court cannot ascertain the genuineness or otherwise of the offer---When a bid was withdrawn and Company Judge had made it clear that the said bid could not be considered alive, thereafter there were no valid reasons or exceptional circumstances for the revival and acceptance of the offer of same bidder with a nominal increase and to confirm the sale---Matter of' withdrawal of bid by the bidder had become a past and closed transaction---Objection taken by the petitioners against the confirmation of sale in favour of the said bidder and its subsequent transfer of the bid rights in favour of another party were not attended to in their proper perspective---Such transfer could not be made without the registration of sale in favour of the said bidder---Auction-purchaser had sold his rights without payment of entire sale price and thus without becoming the owner---Proceedings of re-auction of the assets of the Company by the joint official liquidators suffered from the same defects and infirmities which was noticed by the High Court in respect of earlier auction and re-auction was ordered---Orders of confirmation of sale by the High Court were not sustainable at law in circumstances-Case was remitted to the High Court for a re-sale---Reasons.

Per Faqir Muhammad Khokhar, J.---

In the present case Chief Executive of the Company was behind the bars on account of criminal proceedings initiated by the National Accountability Bureau. It appears that the other share-holders/Directors of the Company had either gone into hide or had left the country. There was no one else who could safeguard their interests effectively in the matter of sale of assets of the Company through auction. In such a situation, the joint official liquidators were required to exercise due diligence and to take utmost care for ensuring fair and transparent sale of the mills. The joint official liquidators did not fix any reserve price keeping in view the value of the assets to be sold.

?

The Company Judge made it clear that a particular bid could not be considered to be alive. Thereafter, there were no valid reasons or exceptional circumstances for the revival and acceptance of the offer of the same bidder with a nominal increase of 10 million rupees and to confirm the sale. In the present case, the matter of withdrawal of bid by the bidder had become a past and closed transaction.

?

One bidder had made an offer of Rs.25,00 million for the purchase of total project of the Company with a down payment of Rs. 150 million. The said consortium was directed by the High Court to tender the earnest money in the Court on the next date of hearing. Thus reasonable time was not given to the said consortium to tender the earnest money.

The joint official liquidators did not carry out the order by the High Court in its letter and spirit for conducting the auction of the Company. The available record would not show that any independent valuer of high repute and integrity with necessary expertise in the relevant field was appointed to carry out the valuation of assets of the mills before putting the same to auction. The mere publication on one occasion in two English newspapers and one urdu daily newspaper was not sufficient to ensure the widest possible participation of the prospective bidders. The project to be sold was not a small entity. Therefore, the advertisement was also to be placed in newspapers with an international circulation. The desirability of circulating the invitation through Stock Exchange was also to be considered. The publication in the newspapers of national circulation on at least two occasions with not less than seven days interval might have attracted more participants for the bidding.

?

Sanctity to judicial sale of property is to be maintained as far as possible. However, the Courts have also a duty to ensure that such sales should be seen to have been made in the most fair, transparent, judicious manner and above any suspicion so that the interest of all the stake-holders are properly safeguarded. Court cannot ascertain the genuineness or otherwise of the offer. But the fact remains that the bidder had offered a bid of Rs.2500 million for purchase of assets with a down payment of Rs. 150 million. Even some other bidder had offered the bids for the purchase of three units separately which came to be higher than that of the respondent. Another bidder had also offered a bid of Rs.2001 millions.

The official liquidator is vested with power under section 333(1)(f) of the Companies Ordinance, 1984 "to sell the movable and immovable property and things in action of the Company by public auction or private contract, with power to transfer the whole whereof to any person or company or to sell the same in parcels" under the said section, the Court has been vested with complete discretion to sanction the sale or not. Such discretion must be exercised judiciously having regard to the interest of the Company and its creditors.

Moreover, the objections taken by the petitioners against the confirmation of sale in favour of respondent and its subsequent transfer of the bid rights in favour of another party were not attended to in their proper perspective. The proceedings of re-auction of the assets of the Company by the joint official liquidators suffered from the same defects and infirmities as were noticed by the High Court in respect of earlier auction of the Company. Orders passed by the Company Judge of the High Court were not sustainable at law.

?

Supreme Court allowed the appeal, consequently, the impugned orders were set aside and the case was remitted to the High Court, for a re-sale of the assets of the Company in accordance with law, as expeditiously as possible. The Company Judge shall be at liberty to make such arrangements and to take such measures for the management and administration etc. of the mills during the interregnum as it may consider appropriate in the best interest of the Company and the creditors.

Messrs Sarbaz Cement Ltd. v. Bankers Equity Ltd. and others 1996 SCMR 88; Hudaybia Textile Mill Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512; Messrs Ittehad Cargo Service v. Messrs Syed Tasneem Hussain Naqvi PLD 2001 SC 116; S.Sounderajan and others v. Kaka Mahomed Ismail Saheb of Messrs Roshan & Co. AIR 1940 Mad. 42; United Bank Limited v. Messrs A.Z. Hashmi (Pvt.) Ltd. 2000 CLC 1438 and Pakistan Industrial Credit and Investment Corporation Ltd. v. Shandin Limited 2001 CLC 1267 ref.

Per Sardar Muhammad Raza Khan, J.---

.

The main point that falls for determination is as to whether the impugned auction in favour of respondent and thereafter its transfer in favour of another party been made in a fair and transparent manner. Whether serious efforts had been made by the auctioneer or by the Court to fetch maximum price of the assets, keeping in view the larger interest of creditors as well as the Company under liquidation.

Coming to the events related to auction proceedings, it was contended that according to the Joint Official Liquidators report the highest bid of rupees 3000 million of one bidder and rupees 2.001 billion of another bidder was ignored and that of rupees 1.01 billion was recommended. In the given conditions, the objections raised by the former management were accepted by the Court holding that the sale price was not acceptable and wider publicity needed to be given.

In the second auction vide report the bid offered by a joint venture was accepted for a sum of rupees 1.071 billion and due to negotiations after the sale, the bid was increased to 1.08 billion i.e. 108 crores of rupees.

To this also the former management/ appellant raised serious objections that (i) wide publicity was not given (ii) no publication was made through APTMA, Stock Exchange, Gulf News Magazine and other commercials on Electronic Media (iii) the offer again was disproportionate to the actual value (iv) this report also suffered from exactly the same illegalities committed in earlier report disapproved by the Court (v) offer of highest bidder as 2001 million and rupees 1800 million was ignored illegally (vi) even NAB Authorities addressed a letter to the official liquidator informing that the value of assets was five billion and it should not be sold at throwaway price (vii) no reserve price was ever fixed before auction (viii) Court never made any assessment of value of assets before inviting bids (ix) interest of share-holders not at all considered (x) the amount of liabilities and the interest of all the creditors was not taken into consideration.

?

A huge concern like the one in dispute, before auction, was not sufficiently advertised and publicized. No reserve price was ever fixed by the Court meaning thereby that it did not even attempt to determine the approximate value of company by judicial application of mind. The Experts submitted their report which was confirmed by Chartered Accountants holding the approximate value of the Company at Rs.3.2 billion. The Bank also assessed the value at Rs.4.00 billion. All these references should have guided the Court, as different pieces of evidence, to fix the value of the Company at some approximate level and to have fixed the same as reserve price. It was not so done.

There was a nominal difference between the price obtained in the first auction and then in the second auction. Similar objections were available in the second auction on the basis of which the first auction was set aside by accepting such objections as valid. While going through the process of auction and ultimately while accepting the same, the main consideration before the Court was to abide by some procedure in routine and no primary consideration was about market value. The valuation by NAB Authorities might not be taken as an absolute evidence towards market value yet it was rupees five billion which could have persuaded the Court to think twice before accepting an offer of rupees 1.081 billion, totally disproportionate to other expected prices.

All the four bidders withdrew their bids. The withdrawal of earnest money was also admitted. At this stage when once all the bidders had withdrawn including the highest bidder of rupees 1.071 billion, there was no reason to allow the bidder to re-enter the arena, not by auction but by negotiations.

The fresh offer of the bidder of rupees 1.081 billion given after withdrawal, ought to have been made in presence of the other bidders, if best way of re-auction was not selected. The conditions of this last offer are such that it amounted altogether to new bid. Former management was not allowed sufficient time to fulfil terms of offer or highest bid while, on the other hand the bidder was given convenient terms by allowing 30 days for initial deposit of 25% while against the offer of former management they were directed to deposit rupees 125 million in 2 to 7 days. Bidder was allowed five years to repay though under Order XXI, Rr.84 and 85, C.P.C. total auction price needs to be deposited within 15 days.

No time was allowed to one bidder for practically justifying her offer of rupees 250 crores. Official Liquidators excluded two bidders on the plea that the earnest money was offered partly through cheque and partly through draft despite the fact that the genuineness of such payments could have been ascertained through the Bank. Payment by cheques and Bank drafts can be accepted with the only reservation that the auctioneer or the Court should verify the genuineness thereof from the Bank. No such effort was made in the present case.

?

The transfer of rights by the bidder in favour of another party could not be made without the registration of sale in favour of the said bidder. The auction-purchaser had sold his rights without payment of entire sale price and thus without becoming the owner. The transferee was a young company incorporated on 20-10-2000 and financially not sound. The arguments qua further transfer in its favour are mostly of academic nature because once it is held that the bid in favour of the said auction-purchaser was not valid and proper, the transfer automatically goes therewith.

?

If the Company is sold at the given price and the Court did not act in the best interest of all the persons interested in the property and the assets of the Company under liquidation are not kept under consideration, then the purpose is not served and no breaches can be condoned.

?

The impugned orders were set aside and the case was remanded to the High Court with direction that the assets of the Company be put to resale through auction. The Company Bench shall keep the market value in view and the same, in the given attending circumstances, shall be fixed as reserve price. It shall of course, be at liberty to make such arrangements and take such measures for management and administration etc. of the Mills during interregnum as it may consider appropriate for the best interest of the Company and the creditors.

?

Sagar Mahila Vidyalaya's case AIR 1991 SC 1826; Messrs Ittehad Cargo Service's case PLD 2001 SC 116 and Mst. Asima Zafarul Hassan's case 1981 SCMR 108 distinguished.

Messrs Sarbaz Cement Ltd. v. Bankers Equity Ltd. and others 1996 SCMR 88; Hudaybia Textile Mill Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512; Messrs Ittehad Cargo Service v. Messrs Syed Tasneem Hussain Naqvi PLD 2001 SC 116; S.Sounderajan and others v. Kaka Mahomed Ismail Saheb of Messrs Roshan & Co. AIR 1940 Mad. 42; United Bank Limited v. Messrs A.Z. Hashmi (Pvt.) Ltd. 2000 CLC 1438; Pakistan Industrial Credit and Investment Corporation Ltd. v. Shandin Limited 2001 CLC 1267; Mubarak Ali Khan's case PLD 1982 SC 315; K. Saraswathy's case AIR 1989 SC 1553; Specialty Trader's case 1987 CLC 2109; Chemicals and Allied Product's case 1988 Company Cases 842 and Messrs H.P. Financial Corporation 1990 ISJ (Banking) 395 ref.

Per Sardar Muhammad Raza Khan, J. agreeing with Faqir Muhammad Khokhar, J.

(b) Letters Patent (Lahore)------

------Cl. 26---Point of difference or for making reference to one or more Judges---Form---Clause 26, Letters Patent in terms does not provide for any form stating point of difference or for making reference to one or more Judges---Point or points of difference can well be found out by the Referee Judge or Judges upon perusing judgments of dissenting Judges and final decision of the case rests on opinion of all Judges hearing the case.

?

Mubarak Ali Khan's case PLD 1982 SC 315 ref.

Per Mian Muhammad Ajmal, J., Contra----[Minority view].

Syed Najmul Hassan Kazmi, Advocate Supreme Court and Mahmood A. Qureshi, Advocate-on-Record for Petitioners (in both Cases).

Raja Muhammad Akram, Senior Advocate Supreme Court for Respondent No.1.

Malik Muhammad Hussain, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Respondent No.2(i).

Syed Ali Zafar, Advocate Supreme Court and Imtiaz Muhammad Khan, Advocate-on-Record for Respondents Nos. 4 and 5.

Date of hearing: 19th April, 2004.

2005 C L D 1589

[Supreme Court of Pakistan]

Present: Nazim Hussain Siddiqui, C.J., Faqir Muhammad Khokhar and Nasir-ul-Mulk, JJ

MUHAMMAD IKHLAQ MEMON---Appellant

Versus

ZAKARIA GHANI and others---Respondents

Civil Appeal No.670 of 2002, decided on 27th June, 2005.

(On appeal from judgment dated 7-3-2002 of the High Court of Sindh at Karachi, passed in Special H.C.A.No.94 of 2001).

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

--------S. 18(2)---Execution of decree---Sale of pledged or mortgaged property---Provision of S.18(2), Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, provides the mode and procedure of execution of decree by the Banking Court and for the recovery of the decretal amount by following the provisions of C.P.C. or any other law and in such other manner as it may deem fit---Banking Court, therefore, can, in an appropriate case, make a departure from the provisions of C.P.C. while executing the decree---Section ,18(2) of the Act permits the Banking Court to sell a pledged or mortgaged property with or without intervention of the Court either by public auction or by inviting sealed tenders.

Ch. Abdul Majeed v. Sadaqat Ali and others 2004 SCMR 1325 and Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. PLD 1987 SC 512 fol.

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

----S. 18---Civil Procedure Code (V of 1908), O.XXI, Rr.84, 85, 92, & S.65---Execution of decree---Sale of pledged or mortgaged property---Legal rights and interests of auction-purchaser---Banking Court, in the present case, had itself given a period of one month to the auction-purchaser to deposit the balance of purchase money which was extended by the Court---Auction ­purchaser made the requisite payment to the Court accordingly---Auction-purchaser, in circumstances, could not be penalized merely on the ground that he had failed to make such deposit within a period of 15 days as stipulated in O.XXI, R.85, C.P.C.---Banking Court however, had decided to follow the procedure, by making a reference to O.XXI, R.85, C.P.C. for the first time, while extending the date of deposit by the auction-purchaser---Properties in dispute were put to sale four times through proper advertisements in the Press by inviting sealed tenders---Banking Court did not receive any bid on three occasions---Auction­ purchaser was the only person who had made the offer on the fourth occasion by making deposit of initial amount and also raised the bid---Higher bid, if any, did not find place in the Court's order---Negotiated offer made by the auction-purchaser having been accepted by the Banking Court, auction-purchaser had acquired legal rights and interests in the properties purchased by him---Once payment of the sale price by the auction-purchaser, in compliance with the orders of the Court, had been made, it was the duty of the Court to confirm the sale as required by O.XXI, R.92, C.P.C.---Even where the Court had failed to pass an order of confirmation of sale that would not lead to de priviation of right of auction-purchaser or cause prejudice to him and in such a case, it would be deemed that the sale stood confirmed and purchaser would be deemed to have become absolute in his title by virtue of S.65, C.P.C. which would relate back to the date of sale---High Court, in capacity as Banking Court sold the properties to the auction-purchaser in a just, fair and transparent manner to which no exception could be taken---Held, sale which was otherwise validly made in favour of the auction-purchaser could not be set at naught merely for the reason that the Banking Court had fixed the period of one month and had extended it further to enable purchaser to deposit the balance amount which was beyond the period of 15 days as fixed by O.XXI,R. 85, C.P.C.

Rashid Ehsan and others v. Bashir Ahmad and another PLD 1989 SC 146; Messrs Masoom Industries and others v. Habib Bank Ltd. 2005 SCMR 746; Dar Okaz Printing and Publishing Limited Liability Company v. Printing Corporation of Pakistan Private Limited PLD 2003 SC 808; Imtiaz Ahmed v. Muhammad All PLD 1963 SC 382; Sajawal Khan v. Wali Muhammad 2002 SCMR 134; Fida Hussain v. The State PLD 2002 SC 46; Ghulam Hussain v. Jamshaid Ali 2001 SCMR 1001; Imran Ashraf v. The State 2001 SCMR 424; State v. Asif Adil 1997 SCMR 209; Iftikhar Baig v. Muhammad Azam 1996 SCMR 762; Sherin v. Fazal Mehmood 1995 SCMR 584; Abdur Rashid v. Abdul Salam 1991 SCMR 2012; Fateh Khan v. Bozemir PLD 1991 SC 782; Muhammad Hanif v. Muhammad PLD 1990 SC 859; Ghulam Haider v. Raj Bharri PLD 1988 SC 20; Abdul Ghani v. Rasool PLD 1977 SC 102 and Janak Raj's case AIR 1967 SC 608 ref.

(c) Estoppel---

----No estoppel against statute---Mere concession on a question of law by a party would not operate as an estoppel; it is the duty of the Court to interpret and apply the law correctly regardless of any concession made by a party or its counsel.

Imtiaz Ahmad v. Ghulam Ali PLD 1963 SC 382; Ikram Bus Service and others v. Board of Revenue, West Pakistan PLD 1963 SC 564; Shahul Hameed v. Tahir Ali 1980 SCMR 469; Haji Abdullah Khan and others v. Nisar Muhammad Khan and others PLD 1965 SC 690 and Government of West Pakistan through Secretary, P.W.D (Production Branch,), Lahore, v. Mian Muhammad Hayat PLD 1976 SC 203 ref.

Syed Sharifuddin Pirzada, Senior Advocate Supreme Court, Rana Waqar Ahmed, Advocate, and Mehr Khan Malik, Advocate-on-Record for Appellants.

Muhammad Akram Sh., Senior Advocate Supreme Court for Respondents Nos. 1 to 5.

M.A. Zaidi, Advocate-on-Record for Respondent No.6.

Muhammad Afzal Sandhu, Advocate Supreme Court for Applicant.

Date of hearing: 27th May, 2005.

2005 C L D 1624

[Supreme Court of Pakistan]

Present: Sardar Muhammad Raza Khan and Muhammad Nawaz Abbasi, JJ

IBRAHIM SHAMSI and 2 others---Petitioners

Versus

BASHIR AHMED MEMON and another---Respondents

Civil Petition No. 319-K of 2005, decided on 28th June, 2005.

(On appeal from the order, dated 18-4-2005 and 4-4-2005 passed by the Sindh High Court, Karachi in Judicial Miscellaneous No.37 of 2003).

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

----S. 10---Appeal against Court orders---Interpretation of S.10,Companies Ordinance, 1984---Orders falling within the ambit of S. 10(1) of the Companies Ordinance, 1984 are appealable before the Supreme Court while all other orders under S.10(2) of the said Ordinance are challengeable through an Intra-Court Appeal---Section 10(1) of the Ordinance includes the winding up order as well as any order or decision in proceedings where the Company has already been ordered to be wound up-- Any order passed or decision made by Company Judge after the winding up of the Company, shall be appealable before the Supreme Court in the manner and under the conditions described in S.10(1) itself --- Order passed after winding up proceedings, petition before Supreme Court, is maintainable---Principles.

A close perusal of section 10 of the Companies Ordinance, 1984, would indicate, under subsection (1) thereof, that whether the Company ordered to be wound up has a paid-up capital of not less than one million rupees, or whether it is less than one million rupees, the resort shall have to be made to the Supreme Court with the only difference that in the former case it would be a direct appeal and in the later case it would be a petition for leave to appeal. The order of winding up is included in subsection (1) of the section. Any other order that does not fall within the ambit of subsection (1), would be considered under subsection (2) thereof and appeal against such order would lie in the same manner in which and subject to the same conditions under which appeals lie from any order or decision of the Court. This refers to all orders passed in exercise of original civil jurisdiction of a High Court which under section 15 of Code of Civil Procedure (Amendment) Ordinance, 1980, would be appealable before a Division Bench of a High Court. To simplify, the orders falling within the ambit of section 10(1) of the Ordinance are appealable before the Supreme Court while all other orders under section 10(2) of the Ordinance are challengeable through an Intra-Court Appeal.

A casual reading of section 10(1) of the Companies Ordinance, 1984 gives an impression that it pertains to the order of winding up alone which is appealable before the Supreme Court. Had it been the intention of Legislature, it could have conveniently used singular term of winding up, to the effect that, any judgment whereby the Company is ordered to be wound up, shall be appealable before the Supreme Court in the manner and under the conditions already described. Contrary to the use of single term, the use of multiples like "order", "decision" or "judgment" certainly covers a wider ambit and points to a scenario where different types of orders, not necessarily of winding up, might be challenged in appeal.

Another important characteristic of this subsection is the use of word "where the Company ordered to be wound up". These terms visualize the passage of any "order" or "decision" passed or made at a time when the Company has already been wound up. Had the Legislature an intention to make a mere reference to an order or decision passed or made during the pendency of a winding up proceedings, it could have used the words "where the Company is sought 'to be wound up" instead of the words "where the Company is ordered to be wound up". So it includes any order passed after the winding up order. The wisdom is apparent because after the winding up order, the Legislature did not seem to have intended to prolong the matters by allowing an intermediary remedy of Intra-Court Appeal.

Section 10(1) includes the winding up order as well as any order or decision in proceedings where the Company has already been ordered to be wound up. Any order passed or decision made by Company Judge after the winding up of company, shall be appealable before the Supreme Court in the manner and under the conditions described in the subsection itself. As the impugned order is passed after winding up proceedings, the petition before Supreme Court, is maintainable.

Appeal under section 10, is competent only where an order or decision has been made in proceedings when the Company has already been ordered to be wound up. The terms to be appreciated are, any "proceedings" when the Company has "already been ordered to be wound up". It gives a clear indication that once a company-has already been ordered to be wound up, any order passed or decision made in proceedings thereafter can be challenged before the Supreme Court under section 10(1) of Ordinance, 1984.

Once a winding up order has been passed, all orders passed in proceedings thereafter shall fall under section 10(1) of the Ordinance and be appealable before the Supreme Court.

S. Muhammad Din and Sons' case 1992 SCMR 1795 and Muhammad Farooq's case PLD 1999 Kar. 246 ref.

Mehboob Industries v. P.I.C.I.C. 1988 CLC 866;

Brother Steel Mills Limited v. Mian Ilyas Meraj PLD 1996 SC 543 and Diamond Industries' case PLD 2003 SC 124 distinguished.

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

----S. 10---Winding up of company---Direction of Court to Official Assignee to sell the Company's assets---Petition for leave to appeal to Supreme Court---Record showed that by the time Second Reference was prepared and made by the Official Assignee, the highest bid till such time was of the petitioners and it was on or up 0 21-3-2005 which came up before the Court on 4-4-2005 when the expectation of still higher bid was expressed---Court made order to make afresh Reference, to be heard along with Second Reference on 11-4-2005---Before the said date of hearing, the objections were filed and early hearing was sought---Instead of shortening the period of hearing from 11-4-2005, the Court ordered the hearing of all the pending References, applications and objections, for 3-5-2005---As against its own fixation, Court suddenly, on 18-4-2005, an intervening date, took up the hearing of Third Reference, passed the impugned order altogether ignoring Second Reference, which, through the said order, was again left at the mercy of Official Assignee despite the fact that same was already submitted by the latter for approval or otherwise, by the Court---Said order was definitely passed at the back of the bidders declared highest in the Second Reference---Such order violating the basic principles of natural justice held, was not sustainable in law---Petition for leave to appeal before the Supreme Court was converted into appeal by the Supreme Court, appeal was accepted and order dated 18-4-2005 was set aside and the case was remanded to the Company Judge with directions to decide Second Reference and Third Reference along with all the objections and applications of the parties, after hearing all the parties concerned keeping in view, the larger interest, in accordance with law of the Company under liquidation as well as the creditors---Company fudge was further directed to decide the matter within 15 days from the receipt of present order of the Supreme Court.

Muhammad Ibrahim Satti, Advocate Supreme Court With Ch. Muhammad Akram, Advocate-on-Record and Moulvi Syed Iqbal Haider for Petitioners.

Nemo for Respondent No. 1.

Syed Sami Ahmed, Advocate Supreme Court with Suleman Habib Khan, Advocate-on-Record for Respondent No.2.

Date of hearing: 25th May, 2005.