CLD 2006 Judgments

2006 C L D 52

[Karachi]

Before Rahmat Hussain Jafferi, J

Messrs MAKRAN FISHERIES (PVT.) LIMITED---Petitioner

Versus

PLATINUM CO.---Respondent

Civil Miscellaneous Application No.8611 of 2004 in Suit No. B-66 of 2001, decided on 19th October, 2005.

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

----Ss. 27 & 22---Civil Procedure Code (V of 1908), O.IX, R.9 & S.151---Dismissal of suit by Banking Court for non-prosecution as the plaintiff and his counsel were absent ---Plaintiff filed application under O.IX, R.9, C.P.C. read with S.151, C.P.C. before the High Court for recalling the said order---Maintainability---Provision of S.27, Financial Institutions (Recovery of Finances) Ordinance, 2001 are subject to S.22 of the Ordinance under which an appeal is provided against final order of the Banking Court, therefore, the procedure has been provided in the Ordinance itself to deal with the final order---Procedure as laid down in OJX, R.9 read with S. 151, C.P.C. was not applicable---Banking Court, in the present case had finally disposed of the suit as dismissed for non-prosecution, as such after passing said order, the suit was no more pending before the Banking Court---Order of the Banking Court being final order, same should have been challenged before the Appellate Court and not before the High Court---Application of the plaintiff under O.IX, R.9 read with S.151, C.P.C. was not maintainable which was dismissed by the High Court.

Date of hearing: 11th October, 2005.

2006 C L D 55

[Karachi]

Before Ata-ur-Rehman and Zia Perwaz, JJ

Messrs ABDUL AZIZ NAWAB KHAN & COMPANY---Petitioner

Versus

FEDERATION OF PAKISTAN, MINISTRY OF FINANCE and others---Respondents

C.P. No.D-870 of 2004, decided on 9th March, 2005.

Banking Companies Ordinance (LVII of 1962}-

----Ss.3(a) & 25(A)---State Bank of Pakistan BCD Circular No.6 of 1990, cl. (5)---Constitution of Pakistan (1973), Art.199---Constitutional petition---Information to State Bank of Pakistan---Grievance of petitioner was that State Bank of Pakistan had provided information to his Bank, which was collected in response to BCD Circular No.6 of 1990, resulting serious damage to his business---Validity---State Bank of Pakistan had developed a mechanism for collecting information from all Banks/NBFI's pertaining to their customers and their status available with them---Purpose of BCD Circular No.6 of 1990, was that from one source any financial institution might in its turn collect information about the financial status of a customer/their customers with other Banks enabling them to decide the course of their business transaction with them---Such mechanism could save financial institutions falling prey to defaulters and axis only aimed at to conduct transparent business and to provide financial institutions, who were holding depositor's funds, `to took before they leap' with regard to financial commitment---Practice of collecting such information was in existence in number of countries---Only requirement of BCD Circular No.6 of 1990, was to intimate the authorities about default and liabilities of borrowers vis-à-vis Bank and not vice versa---Bank while informing State Bank of Pakistan, about financial status of petitioner, had not violated any provisions of the Circular---Constitutional petition axis dismissed in circumstances.

Gohar Iqbal for Petitioner.

A.R. Akhtar for Respondents.

Date of hearing: 9th March, 2005.

2006 C L D 63

[Karachi]

Before Muhammad Sadiq Leghari, J

Messrs UNIVERSAL ENGINEERING COMPANY---Appellant

Versus

Messrs HUSSAIN STEEL INDUSTRIES and another---Respondents

Civil Miscellaneous Appeal No.36 of 1997, decided on 15th September, 2005.

Trade Marks Act (V of 1940)---

----Ss.8, 10, 12, 21, 22, 25, 26 & 76---Registration of Trade mark --Element of deception and misleading the purchaser shall always remain present, if the same trade mark is used in respect of the identical or same kind of goods; in presence of such possibility the user, even if honest, is disentitled to any protection by Court of justice---Where deception and confusion are the grounds of opposition, honesty of intention in user cannot be of any avail---Principles.

Toshiba Corporation's case PLD 1991 SC 27 fol.

Zahid Jamil for Appellant.

Sultan Ahmed Shaikh for Respondents.

Date of hearing: 15th September, 2005.

2006 C L D 85

[Karachi]

Before Rahmat Hussain Jafferi, J

NATIONAL INSURANCE CORPORATION and others--- Plaintiffs

Versus

PAKISTAN NATIONAL SHIPPING CORPORATION and others---Defendants

Suit No.221 of 1990, decided on 17th September, 2005.

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

----O.XXIX, R.1---Suit by Corporation---Person entitled to sue---Principal Officer---Interpretation---Who can sue on behalf of corporation---Suit for recovery was filed by the plaintiff against the defendants on the ground that the consignment booked by the plaintiff on behalf of the consignee with the defendant did not reach the destination, therefore, the defendant being the owner of the vessel was liable to pay the claim amount---One of the main objections of the defendant was that the suit was not maintainable as the same had been filed by an unauthorized person---Validity---Plaints was a statutory corporation created under National Insurance Corporation Act, 1977, and the Civil Procedure Code, 1908 provided a special provision to deal with cases of such statutory corporations as well as companies incorporated under the Companies Ordinance, 1984---Plaintiffs had rightly sued under lava in their corporate name---Under O.XXIX, R.1, C.P.C. in suits by or against a corporation, any pleading was to be signed and verified on behalf of a corporation by the Secretary or Director or other principal officer of the corporation who was able to depose about: the facts of the case---Person who signed the plaint on behalf of the plaintiff was neither the Secretary nor the Director but was an Assistant Manager of the plaintiff--Whether such a person as an Assistant Manager could come under the definition of "principal officer" as mentioned in O.XXIX, R.1, C.P.C.---Word "principal officer", interpretation of---Assistant Manager of the plaintiff was not holding the post of highest or foremost in importance, moreover, he was not the chief or holding the position of presiding rank and he was simply assisting other higher officers of the plaintiffs (corporation)---Such person, therefore, did not come within the definition of 'principal officer" as mentioned in O.XXIX, R.1, C.P.C.---Even under the Companies Ordinance, 1984, the suit on behalf of a corporation or company was to be filed by an officer authorized under the Articles of Association of the Company or through a resolution passed by the Board of Directors, but this was not done in the present case---Plaint was thus nullity and non-existent in the eyes of laur--Suit was dismissed being not maintainable.

Sir. Stuart Samuel's case 19 I.C. 765.768 (PC); Anderson v. Anderson (1895) I.Q. B. 749, American Heritage Talking Dictionary; Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation Limited PLD 1971 SC 550 and Siddique Muhammad Umar v. Australasia Bank Limited PLD 1966 SC 684 ref.

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

----O.XXIX, R.1---Scope of O.XXIX, R.1, C.P.C.---Person entitled to sue on behalf of Corporation---Order XXIX, R.1, C.P.C. provided that in suits by or against a Corporation, any pleading may be signed and verified on behalf of a Corporation by the Secretary or by any Director or other principal officer of the Corporation who is able to depose to the facts of the case---Order XXIX, R.1, C.P.C. only permits persons mentioned in it to sign and verify the pleadings and it does not deal with the frame of the suit nor authorizes the institution of suits.

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

----O.XXIX, R.1---`Principal officer" --Connotation---Word 'principal officer" was to be read with the other words used in O.XXIX, R.1, C.P.C. such as "Secretary" or "Director" on the doctrine of ejusdem generis---By applying this doctrine the 'principal officer" should be the chief or the highest or foremost in importance or rank or one who holds position of presiding rank or having a leading or starring role.

(d) Interpretation of statutes---

----Ejusdem generis---Doctrine of---Special words that immediately followed or were closely associated with general words, their meaning was to be limited to preceding words.

Sir Stuart Samuel's case 19 I.C. 765.768 (PC); and Anderson v. Anderson (1895) 1 Q.B. 749 ref.

(e) Words and phrases---

---`Principal"---Definition of---Principal denotes first, highest and foremost in importance, rank, worth or degree.

American Heritage Talking Dictionary ref.

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

----S. 29---Civil Procedure Code (V of 1908), O.XXIX, R.1---Institution of a suit by a company---Authorization of a person, requirement of---Business of a corporation or company was to be carried on under its Articles of Association---Under the law the suit on behalf of a corporation or company was to be filed by an officer authorized under the Articles of Association or through a resolution passed by the Board of Directors---Where the plaintiffs, in order to prove that the authorized officer had instituted the suit, had not filed such documents, it was established beyond doubt that an unauthorized person had filed the suit on behalf of the plaintiffs, who also could not have signed or verified the plaint as required under O.XXIX, R.1 of the Civil Procedure Code, 1908.

?

Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation Limited PLD 1971 SC 550 and Siddique Muhammad Umar v. Australasia Bank Limited PLD 1966 SC 684 ref.

Wali Dad Khan and Shoeb Ali Khan for Plaintiffs.

Imtiaz Agha for Defendants.

Date of hearing: 31st August , 2005.

2006 C L D 97

[Karachi]

Before Rahmat Hussain Jafferi, J

INDEPENDENT MEDIA--- Plaintiff

Versus

ALI SALEEM and anothers---Defendants

Suit No.956 of 2005, decided on 15th August, 2005.

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

----Ss.3(1)(a) & 56---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Infringement of copyright---Interim injunction, grant of---Failure to fulfil the conditions for the grant of interim injunction---Copyright in an idea, legality of---Suit along with an application for obtaining interim injunction under O.XXXIX, Rr.1 & 2, C.P.C. was filed by the plaintiff to restrain the defendants from committing the act of piracy by producing, making, releasing or copying the plaintiff's work---Claim of the plaintiff was based on the fact that one of the defendants, who had been working with it in developing an idea for a television programme, had subsequently, , in collusion with the other defendant, infringed the copyright of the plaintiff in the said programme---Contention of the defendants was that the plaintiff did not have any copyright in the said programme as it was conceived and developed by the defendants---Question before the Court was whether there axis a copyright in the idea conceived by the plaintiff to prepare the programme---Validity---An idea cannot be the subject-matter of copyright---Copyright does not protect an idea, but only the expression of the idea---Law does not recognize property rights in abstract ideas and does not accord the author or proprietor, any protection of his ideas, which the law does accord to the proprietor of personal property ---Plaintiff had to show that it was the owner of the copyrighted work and without such proof no copyright could be created in his Plaintiff, in the present case, was even unable to prove that the idea of the programme was conceived by one of its employees ---Plaintiff had failed to prove prima facie case in its favour and it was found that great inconvenience would be caused to the defendants if the injunction was granted---Loss calculated by the plaintiff could be expressed in terms of money, therefore, no irreparable loss would be caused to the plaintiff the injunction axis refused---Conditions for the grant of interim injunction having not been found not in favour of the plaintiff, the application was dismissed.

Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693; Book on Copyright 11th Edition; American Jurisprudence; Donoghus v. Allied Newspapers Limited (1937) 3 All ER 503; Shipman v. R.K. O. Radio Pictures (1808) 100 F. 2d 533; N.T. Raghunathan v. All India Reporter Ltd., Bombay AIR 1971 Bom. 48 and R.G. Anand v. Delux Films AIR 1978 SC 1613 ref.

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

----O.XXXIX, Rr.1 & 2--- Interim injunction, grant of---Conditions for grant of interim injunction, non fulfilment of---Application for obtaining interim injunction under O. XXXIX, Rr.1 & 2, C.P.C. was filed by the plaintiff to restrain the defendants from committing the act of piracy by producing, making, releasing or copying the plaintiffs work---Plaintiff failed to prove prima facie case in its favour and it was found that great inconvenience would be caused to the defendants if the injunction was granted---Loss calculated by the plaintiff could be expressed in terms of money, therefore, no irreparable loss would be caused to the plaintiff if the injunction was refused---Conditions for the grant of interim injunction having not been fulfilled by plaintiff, application for the grant of interim injunction was dismissed.

Khurram Gul Ghori along with Ms. Shazia Tasleem for Plaintiffs.

Sajjad Ali Shah for Defendant No. 1.

Abid S. Zuberi for Defendant No.2.

2006 C L D 149

[Karachi]

Before Zia Perwaz, J

Messrs N.A. INDUSTRIES ---Appellant

Versus

Messrs ALPHA INSURANCE CO. LTD.---Respondent

First Appeal No.51 of 1991, decided on 24th November, 2005.

(a) Insurance Act (IV of 1938)---

----S. 3-C(4) [as inserted by Insurance (Amendment) Act (XXVII of 1958)]---Collection of premium---Requirement for payment of premium is not restricted to payment of cash at the time of issuance of policy but S.3-C(4) of Insurance Act, 1938 provided for the conditions set forth in the section to be complied with, and one of the conditions therein was that guarantee for suchpayment constituted a valid condition of enforcement of contract---Guarantee or the manner of tendering of such guarantee had not been specified and had been left open to the parties to the transaction to be determined according to their own satisfaction---Insurer, in the present case, accepted to issue the guarantee in consideration of the premium being paid in three instalments out of which first was realized by cheque at the time of issue of cover note or immediately thereafter and the remaining two cheques provided sufficient guarantee for recovery of balance amount of premium---Cheques issued, had constituted sufficient undertaking to make the payment for the contract on the basis of which the insurance company was satisfied and the cover note was issued.

Trans Ocean Asia v. Alpha Insurance Company Ltd. 1981 CLC 1028 distinguished.

(b) Words and phrases-----

--"Guarantee"---Meaning.

Chambers 20th Century Dictionary Edition of 1983 quoted.

Appellant in person.

I.H. Zaidi for Respondent.

Date of hearing: 24th November, 2005.

2006 C L D 153

[Karachi]

Before Gulzar Ahmad, J

ISLAMIC REPUBLIC OF IRAN SHIPPING LINES through Attorney---Plaintiff

Versus

HASSAN ALI & CO. COTTON (PVT.) LIMITED---Defendant

Suit No.889 of 2000, decided on 14th November, 2005.

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

----S.2(2) [as added by Foreign Awards and Maintenance Orders Enforcement (Amendment) Ordinance (LIII of 1962), S.2]---Enforcement of foreign award---Scope---Provision of S.2(2) of the Act provided that arty notification issued under S.2 of the Arbitration (Protocol and Convention) Act, 1937 by late Government of India before the 15th day of August, 1947 and in force on that day for the purpose of enforcement of foreign awards in British India, declaring any power to be a party to the said Convention or any territory to be the territory to which the Convention applied, shall be deemed to be a notification issued by the Federal Government for the purpose of enforcement of foreign awards in Pakistan.

Nan Fung Textiles Ltd. v. H. Pir Muhammad Shamsuddin PLD 1979 Kar.762 and Cogetex S.A. v. Mayfair Spinning Mills Ltd. 2004 CLD 1023 fol.

(b) Carriage of Goods by Sea Act (British) 1971---

----Sched., Art.III, R.6 & Art.IV, R.1---Scope and application of Art.III, R.6 & Art.IV, R.1 of the Schedule of Carriage of Goods by Sea Act, 1971 (British).

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

----Ss.8 & 7---Enforcement of foreign award---Evidence---Party seeking to get the award enforced had either to produce the original award or authenticated copy of the award in the manner as provided in S.8 of Arbitration (Protocol and Convention) Act, 1937---Plaintiff, in the present case, had filed the original award and only objection raised was that the plaintiff had not filed the authenticated copy of the award---Validity---Held, provisions of S.8, Arbitration (Protocol and Convention) Act, 1937 provided for producing either the original award or its authenticated copy---Plaintiff by producing the original award, had fulfilled the condition laid down in S.8 of the Act.

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

----Ss.8 & 7---Enforcement of foreign award---Defendant had contended that the Arbitrator had no jurisdiction and that award was contrary to the law and public policy in Pakistan and that the Arbitrator was guilty of misconduct---Validity---Defendant, in the first place did not defend the proceedings before the Arbitrator and consequently did not take the objection that the Arbitrator had no jurisdiction to arbitrate in the matter---No reason was assigned by the defendant for questioning the jurisdiction of the Arbitrator---Existence of arbitration clause in the charter-party, dispute having arisen, notice of dispute, appointment of Arbitrator, making of claim to arbitrator and Arbitrator issuing various notices, fax, and letters to the defendant, who chose not to defend and award being given, were not disputed---Bare assertion of the defendant in its objections was that the award was without notice to it but the notices, letters and fax of various specific dates as mentioned in the award were not denied to have been received by the defendant---Defendant's counsel, in the arguments before the High Court had not raised the plea of award being without notice---Bare assertion that the Arbitrator had no jurisdiction to arbitrate was not sufficient unless some plausible ground was given to substantiate said plea---No material in that respect was urged before the High Court---Similar was the case with regard to the objection that the award was contrary to law and public policy of Pakistan---No law or public policy was cited to show that the award violated the same---Objection of the defendant, in circumstances, had no merit which was repelled by the High Court.

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

----Ss.7 & 8---Enforcement of foreign award---Court while considering the enforcement of foreign award merely acts as an Executing Court and while doing so it cannot go behind the award and sit as an appellate Court and make reappraisal of evidence--Award which could have been challenged in the foreign appellate Court was not challenged---Objector/defendant by its own conduct allowed the award to become final in terms of S.7(1)(d) of the Arbitration (Protocol and Convention) Act, 1937---Where there was nothing to show that the award did not fulfil the conditions as provided in S.7(1) of the Act or there was anything to the satisfaction of the Court in terms of S.7(2) of the Act that the award was not enforceable, High Court made the award rule of the Court---Principles.

Khalid Rehman for Plaintiff.

Anjum Ghani for Defendants.

Date of hearing: 7th September, 2005.

2006 C L D 163

[Karachi]

Before Gulzar Ahmad, J

Shaikh KAMRAN MAQBOOL---Applicant

Versus

BOLAN BANK LIMITED through Manager and another---Respondents

C.M.A. No.1439 of 2004 in Suit No.B-25 of 2002, decided on 29th August, 2005.

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

----Ss. 7(2), 9 & 27---Civil Procedure Code (V of 1908), S.151, O.IX, R.9 & O.XVII, R.3---Suit for recovery of loan---Dismissal of suit for non-prosecution---Closing of evidence---Application for restoration of suit---Suit was dismissed for non-prosecution and application was filed by plaintiff for recalling of order of dismissal of suit ---Validity---Suit was adjourned on many dates and on last date of hearing suit was dismissed as plaintiff on the said date remained absent and he failed to file affidavit-in- evidence---Procedure to decide suit in the manner provided in O.XVII, R.3, C.P.C. was available with Banking Court and order passed by Banking Court, could only be attacked by filing an appeal and not otherwise since S.27 of Financial Institutions (Recovery of Finances) Ordinance, 2001, had specifically barred Banking Court from revising or reviewing its own order, in particular when order would operate as decision of suit in terms of O.XVII, R.3, C.P.C.---Impugned order though was passed on account of non-appearance of plaintiff, but such order being clothed with mandatory provisions of O.XVII, R.3, C.P.C., it would amount only to considering of merits of impugned order which exercise could only be undertaken in appeal---Application filed by plaintiff for recalling of order of dismissal of suit and restoring suit dismissed for non-prosecution by plaintiff, was dismissed.

Shahid Hussain v. Lahore Municipal Corporation PLD 1981 SC 474; Messrs Baghpatte Services (Pvt.) Ltd. v. Allied Bank Limited 2001 CLC 1363; Rahim Bux and 2 others v. Mst. Nasir Khanum and another 1980 CLC 595; Nila v. Punun AIR 1936 Lah. 385; Har Dayal v. Ram Golan AIR 1944 Oudh 39 = AIR 1936 Lah. 385 and Lal Chand v. Kaka Ram AIR 1927 Lah.562 ref.

Ms. Fouzia Rasheed for Applicant.

Amanullah Khan for Respondent No.1.

Khawaja Shamsul Islam for Respondent No.2.

2006 C L D 169

[Karachi]

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

Messrs HABIB BANK LTD---Appellant

Versus

Messrs BELA AUTOMOTIVES LTD---Respondent

Sp. H.C.A. No.175 and C.M. No.1349 of 2004, decided on 1st April, 2005.

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

----Ss.9(2) & 22---Law Reforms Ordinance (XII of 1972), S. 3---High Court appeal---Maintainability ---Bank had filed appeal against order whereby Single Judge of High Court while granting leave to defend suit filed by Company against Bank for accounts, injunction, declaration and damages had framed issues---Maintainability of said appeal was objected to on the ground that in terms of S.22(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001 an appeal could only be filed against a judgment, decree, sentence or a final order, passed by a Banking Court and not against interim order---Single Judge, through impugned order had merely granted to the appellant leave to appear and defend suit and had framed issues for final adjudication of the suit---Said order passed by Single Judge, could not be said a final order"---In view of provisions of S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001 which had placed a clear bar on filing of an appeal against an interlocutory order which did not dispose of entire case before Banking Court, appeal being not maintainable was dismissed.

Badar Alam for Appellant.

Syed Mamnoon Hassan for Respondent.

2006 C L D 191

[Karachi]

Before Faisal Arab, J

Messrs SAKHI DATTAR COTTON INDUSTRIES AND OIL MILLS through Authorized Partner---Plaintiff

Versus

Messrs MAHMOOD PVT. LTD. And 4 others---Defendants

Suits Nos.1002, 1003 and 1004 of 2000, decided on 22nd December, 2005.

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

----S.2(8)---Civil Procedure Code (V of 1908), O.VII, R.2---Suit for recovery of money on account of purchases made by the company---Word "limited" used in S.2(8), Companies Ordinance, 1984 means that the liability of shareholders for the debts or any other obligation of the Company is limited to the extent contributed by them in the share capital---Shareholder cannot be made liable beyond the extent of his contribution towards the share capital---For any unsettled liability, it is only the assets of the Company which can be proceeded against by an unpaid creditor or claimant---Shareholders cannot be treated as principals for the Company and Company cannot be treated as agent of the shareholders so as to make the shareholders liable for the transactions entered into by the Company---Managing Director of a Company, therefore, cannot be made liable for the obligations of Company simply because he was its Managing Director---Word "we" used in a correspondence by the Managing Director on the letter head of the Company in his capacity as "authorized signatory" refers to the Company as normally a Company addresses itself in plural---Unpaid creditor therefore, cannot maintain his claim against the Managing Director and make him personally liable for the claim by signing the correspondence---Cause of action shown in the plaint for suit for recovery of unpaid money on account of purchases made by the Company could be only directed against the Company, and Managing Director being a Director of the Company could not be made personally liable for the liabilities of Company---Application of Managing Director for dismissing the suit for recovery against him in respect of money due from the Company was granted and suit against the Managing Director was dismissed by High Court.

AIR 1994 Orissa 98; Rundan Singh v. Moga Transport Company Private Limited (1987) 62 Com Cases 600 (P&H) and Surinder Nath Khosla v. Excise and Taxation Commissioner, Punjab (1995) 4 Comp LJ 343 (Punj.) ref.

(b) Company---

----Situations in which Courts have lifted the corporate veil enlisted.

The law is not static but is ever changing process. The task of judicial interpretation is not always to reiterate but also to create with rigorous discipline in harmony with the statute law and its previous growth. The doctrine of piercing the veil of incorporation is the product of judicial interpretation necessitated by the exigencies of modern commercial practices. However while resorting to the doctrine of piercing the corporate veil the Courts have always been cautious and circumspect. Through the device of liberal interpretation the very object of providing statutory protection to a shareholder of a limited liability cannot be defeated on every occasion when a company defaults. It would then certainly defeat and not advance the very object of statutory protection.

Following are situations in which Court can lift the corporate veil.

(i) Where the companies are in relationship of holding and subsidiary companies or where there is a group of companies working under a common control.

(ii) Where the company continued to carry on business by its members, well after it ceased to exist and thereafter its members attempted to use their sheltered position of limited liability.

(iii) Prohibition of trading with the enemy is circumvented by using corporate cover of a Company.

(iv) Matters pertaining to taxation laws, where the question of controlling interest is in issue.

(v) Merging of companies with each other.

(vi) Formation of new company by members holding absolute majority in an existing company solely for the purpose of expropriating the shares of the minority shareholders in the existing company.

(vii) Transfer of company's assets to another company or entity to avoid liabilities of transferor company.

(viii) Members using corporate structure for hiding their crimes in order to avoid criminal punishment to them.

Salomon v. Salomon & Co. 1897 AC 22 ref.

(c) Company---

----Lifting of the corporate veil---Meaning and scope---Doctrine of lifting of the corporate veil does not mean that shareholders are also to be made equally liable with the Company; it only means that any undue benefit drawn by a shareholder or any other entity to the detriment of a Company is to be returned back to Company so that its creditors could successfully settle their account with the Company which they otherwise would not have---When a property was not purchased by Managing Director of the Company from the funds of the Company, said property could neither be attached so that in case any decree was passed, the same could be satisfied from its sale nor would call for the invocation of doctrine of lifting of the corporate veil.

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

----O.VII, R.11---Rejection of plaint---Scope---Where suit is not maintainable against one of the defendants, suit should be dismissed against such defendant and plaint cannot be rejected.

Imran Raza Shaikh v. Zarina Gul 2003 YLR 943 ref.

Yawar Faruqui for Plaintiff.

Muhammad Ali Saeed for Defendant No.2.

Dates of hearing: 6th and 7th December, 2005.

2006 C L D 224

[Karachi]

Before Mushir Alam and Syed Zawwar Hussain Jafery, JJ

ORIX LEASING PAKISTAN LIMITED---Appellant

Versus

MUHAMMAD HANEEF and another---Respondents

First Appeal No.31 of 2003, heard on 7th October, 2005.

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

--S.10-Application for leave to defend suit---Dismissal of application---Effect---Duty of Banking Court.

When leave to defend application is dismissed in a suit filed by a banking company, then the allegation of facts in the plaint are to be deemed to be true and Banking Court may pass decree in favour of plaintiff on the basis thereof. However, Banking Court in the interest of justice may require any other material to satisfy itself of claim in suit.

Asim Mansoor Khan for Appellant.

Nemo for Respondents.

Date of hearing: 7th October, 2005.

2006 C L D 232

[Karachi]

Before Sabihuddin Ahmed, C.J. and Zia Perwaz, J

MARIANNE KHAN---Appellant

Versus

NATIONAL BANK OF PAKISTAN and others---Respondents

First Appeal No.41 of 2005, heard on 13th July, 2005.

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

--S.19-Execution of decree---Sale of mortgaged property---Suit by mortgager to declare such property as not mortgaged in favour of Bank---Dismissal of mortgagor's suit by Trial Court remained upheld up to Supreme Court---Mortgagor's objection as to non-existence of mortgage---Executing Court rejected such objection and confirmed sale in favour of purchaser---Validity---Controversy as to existence or otherwise of mortgage had been finally resolved at the level of Supreme Court---Executing Court was justified in not allowing mortgagor to raise such issue de novo---Decree under execution had been passed jointly and severally against all defendants including mortgagor---Factum of mortgage having been recognized, misdescription in decree regarding mortgagors would be a clerical mistake---High Court dismissed appeal in circumstances.

Asim Mansoor Khan for Appellant.

2006 C L D 244

[Karachi]

Before Rahmat Hussain Jafferi, J

HABIB BANK LIMITED---Plaintiff

Versus

Messrs SABCOS (PVT.)---Defendants

Suit No.B-71 of 2000, decided on 7th November, 2005.

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

----S.10(12)---Non filing of amended leave application within period specified in S.10(12) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Effect---No consequence provided for such omission---Such provision could be treated as directory.

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

--Preamble-Object of Financial Institutions (Recovery of Finances) Ordinance, 2001 stated.

Scheme of the Financial Institutions (Recovery of Finances) Ordinance, 2001 is that suits involving financial matters between financial institutions and customers should be decided expeditiously in a summary manner, and all vexatious and mala fide pleas of defence should be curtailed so that proceedings may be completed within shortest possible time. In order to achieve the scheme, section 10 has been framed to put check upon the defence led by the defendant.

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

----S. 10(3)(4)(5)(6)---Non-compliance with requirements mentioned in S.10(3)(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Effect---Such provisions were mandatory and non-compliance thereof would entail rejection of application for leave to defend suit---Principles.

(d) Interpretation of statutes---

----Where a statute enables a person to take legal proceedings under certain specified circumstances, then statute demands that such circumstances must be accurately obeyed.

?

Statutory Laws by Craies 6th Edition at page 226 rel.

(e) Interpretation of statutes---

----Non-compliance with requirement of a plain statutory enactment, prescribing how a thing is to be done, would invalidate thing if done in any other manner, provided such enactment is absolute, but not if same is merely directory.

(f) Interpretation of statutes---

----Mandatory or directory provision---Test---If non-compliance of provision entails a penal consequence, then same would be mandatory, otherwise same would be directory.

?

Niaz Muhammad v, Fazl Raqib PLD 1974 SC 134 rel.

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

--S.9---Suit for recovery of loan amount---Agreement between parties allowing concession to defendant subject to the condition that in case of his failure to make two agreed quarterly payments during a year, such package would stand withdrawn along with all concessions in mark-up and Bank would be entitled to claim entire outstanding amount including penal interest etc.---Failure of defendant to make such agreed payments---Defendant seeking enforcement of such agreement---Validity---Such agreement would not be enforceable as defendant had not complied with its terms.

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

---S.10-Defence ----S.10---Defence of defendant before grant of leave to defend suit---Validity---Defendant could not move Court to decide any of his rights of defence before grant of such leave---Principles.

Before grant of any leave to defend suit, defendant cannot move the Court to adjudicate upon any of his rights of defence. The law specifically prohibits taking into consideration the defence of defendant before leave to defend is granted, because a specific procedure has been provided under the law that the defence of any nature involving legal or factual controversy pertaining to the case can be considered only after fulfilling the conditions of section 10 of the Ordinance. Thus, before grant of leave to defend, the application would not be - maintainable and would be liable to be dismissed.

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

----S.10(11)-Application for leave to defend suit, rejection of---Contents of plaint verified on oath and supported by documents---Suit to be decreed.

Sayed Mazhar-ul-Haq for Plaintiff.

Sajjad Ali Shah for Defendants.

Date of hearing: 18th October, 2005.

2006 C L D 258

[Karachi]

Before Sabihuddin Ahmed, C.J. and Z. Perwaz, J

Sahibzadi SHAH BANO KHAN---Appellant

Versus

Messrs CITIBANK N.A.---Respondent

First Appeal No.40 of 2005, heard on 2nd August, 2005.

(a) Limitation Act (IX of 1908) -

----S.19-Acknowledgement in writing of liability after expiry of limitation---Validity---Such acknowledgement would not be of any consequence.

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

----S.8-Applicability of provision of S.8 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Bank by virtue of said provision could effect recovery of finance from borrower, which had been written off or adjusted for political reasons other than bona fide business transaction.

(c) Limitation Act (IX of 1908) -

----S. 5---Time barred appeal-Non-filing of application for condonation of delay under S.5 of Limitation Act, 1908---Effect---Time barred appeal could not be entertained in absence of such application---Appellant not choosing to make such application, could not be allowed to put a premium on his negligence.

Asim Mansoor Khan for Appellant.

Mehmood Ahmed Khan for Respondent.

Date of hearing: 2nd August, 2005.

2006 C L D 265

[Karachi]

Before Gulzar Ahmed, J

BOSICOR CORPORATION LIMITED---Plaintiff

Versus

AMAN-UR-RAHMAN and 2 others---Defendants

Suit No.68 and C.M.A. No.219 of 2004, decided on 6th January, 2006.

Sale of Goods Act (III of 1930)-

---S.2(7)-Specific Relief Act (I of 1877), S.42---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2 & O.VII, R.11---Limitation Act (IX of 1908), Art.120---Suit for declaration---Limitation---Rejection of plaint---Issuance of shares of company by sponsors as joining incentive to defendant who had joined the company as Chief Executive Officer-Application of plaintiff-Company with prayer to restrain the defendant (transferee) from selling/ transferring or agreeing to sell/transfer the suit shares to any third party or from dealing with aforesaid shares in any manner whatsoever that defeated or intended to defeat the plaintiff's right, title or interest in the said shares and also to restrain the other defendant from registering the sale/transfer of the said shares in the name of transferee/ defendant or in the name of any person claiming any right, title or interest in the said shares through or under the transferee/defendant---Counter-affidavit to the application had been filed by all the defendants separately and no rejoinder was filed by the plaintiff-Company---Question which needed determination was whether prima facie the defendant/transferee of shares had acquired title to the said shares or they continued to vest in the plaintiff-Company---Held, shares being "goods" as defined in S.2(7), Sale of Goods Act, 1930, property in the shares passed in the same manner as was provided in the Sale of Goods Act, 1930 for the passing of Property in the goods---On delivery of share certificates along with blank transfer deeds comprising the said shares to the transferee, the property in the said shares stood transferred by sponsors to the transferee---Sponsors had no lien or jus in re (a right in a thing) in the said shares and could not seek their return but could sue the transferee merely for its consideration---Other defendant would have a right of first refusal to purchase the shares---Word "purchase" was of much significance as it provided for payment of consideration for the shares by the buyer to the transferee as owner of the said shares---Plaintiff-Company having filed the suit for declaration that legal and beneficial right, title and interest in the shares vested in it and not in the transferee/defendant, such relief of declaration would be governed by Art.120 of the Limitation Act,1908 which provided six years when right to sue accrued---Right to sue had accrued to the plaintiff on 30-8-1996 when the transferee of shares/defendant took a categorical stand that he had already carried sign-up bonus---Period for filing of suit for declaration had thus expired on or about 31-7-2002---Plaintiffs stand that the limitation period should be counted from the date i.e. 22-12-2003 on which the transferee wrote his letter offering right of first refusal to purchase the said shares to the other defendant was repelled as said letter by the transferee only complied with his own contractual obligation as contained in the letter of the plaintiff to the transferee dated 1-3-1994---Title to shares stood acquired by the transferee when they were delivered with blank transfer deed in or about June, 1995 and even if any claim was to he made by the plaintiff in respect of the said shares against. the transferee the same had to commence within 6 years from 30-8-1996, the date on which not only the transferee resigned from the position of Chief Executive Officer of the Company but also asserted that he had earned the said shares---Suit of plaintiff filed on 15-1-2004 was therefore, time-barred---Application under O.XXXIX, Rr.1 & 2, C.P.C., in circumstances, was misconceived and not maintainable and liable Co be dismissed---Plaint, at the same time was also hit by O.VII, R.11, C.P.C. for the reasons that the plaintiffs remedy was only to sue for consideration of the shares in question and not in respect of the said shares and that the suit was time-barred---Plaint in the suit was therefore, rejected by the High Court.

Muhammad Buta v. Habib Ahmed PLD 1985 SC 153; Zeba v. Member-III Board of Revenue 1986 CLC 233; M. Y. Corporation (Pvt.) Ltd. v. Messrs Erum Developers and 2 others PLD 2003 Kar.222; Iqbal Ahmed v. Col. Abdul Kabir 2005 YLR 1916; Mst. Khurshid Bibi v. Province of Punjab and another 1987 CLC 242; Messrs Petrocommodities (Pvt.) Ltd. v. Rice Export Corporation of Pakistan PLD 1998 Kar. 1; Haji Abdul Sattar Chapri v. Secretary, Karachi Grains and Seeds Merchants Group and another 1991 MLD 2697; Muhammad Saeed v. Syed Munawar Shah and 5 others PLD 1973 Pesh. 80; Farmanullah and others v. Qalandar and 5 others 1999 YLR 1610; Kamud Ranjan Banerjee v. Manabendra Banerjee AIR 1974 Cal. 342 (V 61 C 890); Official Assignee, Bombay v. Madholal Sindhu AIR (34) 1947 Born. 217 (C.N. 67); Sardar Muhammad and 2 others v. Haider Zaman and 3 others PLD 1993 Pesh. 81; Muhammad Ali and 7 others v. Sakar Khanoo Bai PLD 1984 Kar. 97; Wali and 10 others v. Akbar and 5 others 1995 SCMR 284; Adamjee Insurance Company Limited and others v. Muslim Commercial Bank Ltd. 2005 SCMR 318 and Maneckji Pestonji Bharuch v. Wadilal Sarabhai & Company AIR 1926 PC 38 ref.

Salman Talibuddin for Plaintiff.

Munib Akhtar for Defendant No.1.

Nemo for Defendants Nos.2 and 3.

Date of hearing: 23rd December, 2005.

2006 C L D 394

[Karachi]

Before Anwar Zaheer Jamali and Mrs. Yasmeen Abbasi, JJ

Messrs UNITED BANK LIMITED---Appellant

Versus

Messrs M. ESMAIL AND COMPANY (PVT.) LIMITED and 2 others---Respondents

Appeal No.11 of 1992, decided on 22nd November. 2005.

(a) Banking Tribunals Ordinance (LVIII of I984)---

----Ss.6 & 9---Contract Act (IX of 1872), Ss.73 & 74-Suit for recovery of loan amount and liquidated damages---Claire for liquidated damages was solely based on the terms of the loan agreement executed between the parties---No assertion had been made in the plaint about the nature of losses or actual damages suffered by the Bank due to non-fullfilment of obligation by the borrower or violation of the terms of the loan agreement executed by the borrower in favour of the Bank---Effect---Whole claim of the Bank regarding liquidated damages against the borrower was based on the breach of the terms of loan agreement and no other particulars or actual losses or damages had been unfolded in the plaint---Party could not be permitted to lead evidence `beyond its pleadings and even if some evidence was recorded beyond the pleadings or contrary to the pleadings same could not he looked into or considered for granting relief---Non-awarding of claim of liquidated damages, which was solely based on the breach of terms of loan agreement was fully justified in circumstances---Principles.

Messrs Khanzada Muhammad Abdul Haq Khan Khattak & Co. v. WAPDA through Chairman WAPDA and another 1991 SCMR 1436; Messrs H1TEC Metal Plast (Pvt.) Ltd. v. Habib Bank Limited PLD 1997 Quetta 87; Saudi Pak Industrial and Commercial Investment Company (Pvt.) Ltd. v. Allied Bank Limited 2003 CLD 596; 1987 CLC 158; 1998 CLC 1017 and Habib Bank Ltd. v. Farooq Compost Fertilizer Corporation Ltd. and 4 others 1993 MLD 1571 ref.

(b) Pleadings----

----Party could not be permitted to lead evidence beyond its pleadings and even if some evidence was recorded beyond the pleadings or contrary to the pleadings, same could not be looked into for granting relief.

1987 CLC 158; 1998 CLC 1017 ref.

Abdul Haleem Siddiqui for Appellant.

2006 C L D 440

[Karachi]

Before Nadeem Azhar Siddiqui, J

PICIC COMMERCIAL BANK LIMITED---Petitioner

Versus

SPECTRUM FISHERIES LIMITED---Respondent

J. Miscellaneous Petition No.21 of 2004, decided on 17th January, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss.306 & 305---Petitions for winding up of a company by a Banking Company filed through its attorney---Competence of person filing such petition---Determining factors-Burden to prove that person filing the petition was authorised in that behalf ---Scope---Petition for winding up of company filed by Bank (Banking Company) against a company which had availed syndicate finance but failed to pay back the loan---Contention of the company was that petition for winding up was filed by unauthorized person as no resolution passed by the Board of Directors of the Bank (filing the petition) had been placed on record and objected to the filing of the resolution and the power of attorney at hearing stage-Validity-Held, objection regarding competence to institute the proceedings could only be decided after reference to the Articles of Association of the Company (Bank) front where it had to be seen as to whether the person delegating the power was competent to delegate such powers to the persons instituting the proceedings---Company (Bank) had to act in accordance with the Articles of Association and it was the provisions of Articles of Association which told as to which person had the power to institute legal proceedings---When a company was instituting legal proceedings it had to establish that proceedings had been instituted competently and authorisedly---Even in case of persons instituting the proceedings having power of attorneys in their favour had to prove that they were duly authorsied to institute the proceedings and this could only be done by referring to the Articles of Association-Reference to Articles of Association was necessary to determine whether the powers were conferred on real person or artificial person or body---Burden to show that the petition for winding up of the company was filed by the authorized attorney was upon the Banc which it failed to discharge---Where there was any defect in the institution of the winding up proceedings i.e. same having been instituted unauthorisedly and incompetently, the said defect was incurable---Neither any resolution passed by the Board of Directors of the Bank had been produced nor Articles of Association had been filed, in the present case, to scrutinize whether. the power of attorney was properly executed conferring the powers as claimed---Petition for winding up of company, in circumstances, having been filed by incompetent person, was not maintainable and was liable to be dismissed---High Court observed that petitioner (Bank) would, not in any manner, he prevented from pursuing other remedies if available to there under the law before the appropriate forum---[Banque Indosuez v. Jet Travels Limited and 4 others 1991 CLC 446 dissented from].

Banque Indosuez v. Jet Travels Limited and 4 others 1991 CLC 446 dissented from.

Messrs Taurus Securities Limited v. Arif Saigol and others 2002 CLD 1665; National Bank of Pakistan and others v. Karachi Development Authority and others PLD 1999 Kar. 260; Investment Corporation of Pakistan and others v. Messrs Ajax Industries 2004 CLD 1733 and Abdul Rahim and 2 others v. Messrs United Bank Limited of Pakistan PLD 1997 Kar.62 fol.

Pakistan Industrial Credit and Investment Corporation Limited v. Messrs Indus Steel Pipe Limited 1993 MLD 94: Messrs Aeroflot Russian International Airlines through Manager v. Messrs Sgerry's International (Private) Ltd. 2003 CLD 1075; Muzaffar Abbas Malik and 2 others v. Messrs Pakistan I'VC Ltd. PLD 1998 Kar.71; Industrial Development Bank of Pakistan v. Modern Poultry Farm Limited 1990 CLC 1030; Parke Davis and Co. Ltd. Karachi v. Bliss and Co. Ltd. Karachi PLD 1982 Kar. 94; Trade and Industry Publications Limited v. Industrial Development Bank of Pakistan PLD 1990 SC 768; Habib Bank Ltd. v. Hamza Board Mills and others PLD 1996 Lah. 633; Messrs Industrial Development Bank of Pakistan v. Messrs Sarela Cement Limited Company 1993 CLC 1540: International Finance Corporation, Washington D.C. 20433 USA v. Hala Spinning Ltd. Gulberg-II, Lahore PLD 2000 Lahore 323; Messrs Sindh Glass Industries Ltd. Karachi v. Messrs National Development Finance Corporation Karachi and 2 others PLD 1996 SC 601; Federation of Pakistan v. The Standard Insurance Company Ltcf. Karachi PLD 1986 Kar. 409; Banque Indosuez v.? Jet Travels Limited and 4 others 1991 CLC 446; Khan Iftikhar Hussain Khan of Manufot v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Messrs Taurus Securities Limited v. Arif Saigol and others 2002 CLD 1665; National Bank of Pakistan and others v. Karachi Development Authority and others PLD 1999 Kar. 260; Investment Corporation of Pakistan and others v. Messrs Ajax Industries 2004 CLD 1733; Messrs Gulf Air v. Messrs Shakil Air Express (Pvt.) Ltd. PLD 2003 Kar.156; Abdul Rahim and 2 others v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar. 62; Government of Pakistan v. Premier Sugar Mills and others PLD 1991 Lah. 381; Messrs Adage Advertising, Lahore v. Messrs Shezan International Ltd. Lahore 1970 SCMR 184; Mulla Abdullabhai and 9 others v. Saria Rope Mills Ltd. PLD 1971 Kar. 597; Messrs Khyber Textile Mills Ltd. v. Messrs Allied Textile Mills Ltd. 1989 CLC 1167; Messrs Menlo Arabia Industries Limited v. Messrs Gammon (Pakistan) Limited 1997 CLC 230; Investment Corporation of Pakistan v. Messrs Charagh Sons Engineering Limited PLD 1997 Kar. 504; Bank of Credit and Commerce International v. Duty Free Shops (Pvt.) Ltd., Karachi 1999 MLD 3260; Messrs Habib Bank Ltd. v. Messrs Golden Plastic (Pvt.) Ltd. 1991 MLD 124; Ehsan Ullah v. Zarai Taraqiati Bank Limited 2005 CLD 1442; Mushtaq Ahmed Vohra v. Crescent Investment Bank Limited 2005 CLD 444 and Messrs Industrial Development Bank of Pakistan v. Messrs Sarela Cement Limited 1993 CLC 1540 ref.

Arshad Tayebaly for Petitioner.

Ahmed Hussain Rana for Respondent.

Date of hearing: 23rd November, 2005.

2006 C L D 466

[Karachi]

Before Gulzar Ahmed, J

MCDONALD'S CORPORATION-Appellant

Versus

MAXFOOD (PRIVATE) LIMITED and another---Respondents

M.As. Nos. 1 and 2 of 2002, heard on 19th March, 2004.

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

--Ss. 6, 7, 10, 14 & 76---Registration of trade stark---Decision of Registrar of 'Prude Marks showed that opponent had categorically stated before the Registrar of Trade Marks that it had no objection to the registration of word "MAX" for biscuits and wafers in favour of applicants but had objected to the registration of logo "M" of applicant's trade mark---Opponents. in appeal before the High Court, when confronted with the decision of the Registrar had contended that such concession was not made by it before the Registrar and Registrar had based his decision in respect of trade mark "MAX" on some misapprehension---Validity---Opponent in its memo. of appeal had not taken the ground that the concession made by it. as per decision of the Registrar, was based on some misapprehension--Record also did not show that opponent had not conceded to tine registration of the trade murk "MAX" by the applicant---Objection of the opponent, in circumstances, could not be considered in view of the concession made by itself before the Registrar.

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

----Ss. 14(1), 7(2), 8(2) & 10(1)---Registration of trade mark--Objection-Registrar of Trade Marks, in the impugned decision, had found that letter "M" of applicant was similar to that of letter "M" of the opponent and that its disclaimer was subjected to substantially as was shown in the representation: that the trade mark of opponent was introduced in Pakistan a few years back and it had gained its popularity and created distinctiveness in Pakistan and applicant must be knowing the importance of opponent's mark "M" and had taken benefit and advantage of such mark which was already on the Register; that the actual creator of the mark "M" in special manner belonged to the opponent and once such mark was on the Register, the applicant having not raised objection to such trade marls being on the Register, was not entitled to the adoption of similar trade marls and that opponent was in actual business with its trade mark in Pakistan for last number of years arid that it could justifiably raise objection to the registration of lire trade mark of the applicant---Registrar, pursuant to such findings, had exercised his discretion under S.14(1), Trade Marks Act, 1940 and allowed the application of the applicant for registration of its trade mark minus the letter M"---Validity---Held, there was no dispute between the parties that applicant started business with its trade marls in the year 1996 whereas opponent commenced its business in Pakistan with their trade mark in the year 1997---Visual examination of the letter "M" of applicant was similar to that of the opponent inasmuch as it copied distinctive character of logo "M" of the opponent---Although the colour scheme was different, but S.7(2) of 11w Trade Marks Act, 1940 provided that where the trade mark was registered without limitation of colour, it shall be deemed to be registered for all colours, opponent's trade mark being already registered with certain colour scheme was therefore, good for all colours---Section 8(a) of the Act provided that no trade mark nor part of a trade mark shall be registered which consisted of, or contained, any scandalous design or arty matter the use of which would. by reason of its being likely to deceive or to cause confusion or otherwise, be disentitled to protection in Court of justice---Section 10(1) of the Trade Marks Act, 1940 provided that save as provided in subsection (2) of said section, no trade stark shall be registered in respect of any goods or description of goods which was identical with a trade murk belonging to a different proprietor and either already on the Register or already registered in any of the acceding State in respect of the same goods or description of goods or which so nearly resembled such trade mark as to be likely to deceive or cause confusion---Where dominant feature of registered trade mark having been incorporated in competing trade mark, there was not only possibility but probability of deception and confusion being caused and where similarities of competing trade mark being so striking that an unwary purchaser would be exposed to reasonable probabilities of confusion and deception, the registration of competing trade mark would come within the mischief and prohibitions of Ss.B(a) & 10(1) of the Trade Marks Act, 1940---Opponent, through evidence had established that it was the one who had invented its trade mark logo "M" having distinctive character and for being a proprietor of a trade mark, law would not require that it should also be a user of it within Pakistan---Trade mark used or proposed to be used sufficiently protected the right of the proprietor of such trade stark---Opponent had registered its trade mark with logo "M" as proposed to be used and it will sufficiently safeguard the interest of opponent as a proprietor of such trade mark in terms of S.14(1) of the Act---Items of trade mark falling in different class of goods but there being likelihood of confusion and deception "with regard to their source" disentitled the applicant to registration.

Jamia Industries Ltd. v. Caltex Oil (Pak) Ltd. and another PLD 1984 SC 8 and Alpha Sewing Machine Company v. Registrar of Trade Marks PLD 1990 SC 1074 fol.

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

-----S. 14(1)-Application for registration of trade stark---Contention of the opponent was that once the Registrar of Trade Marks had come to the conclusion that applicant was not entitled to the use of logo "M" with its trade mark, the Registrar had no power to allow it to use its labels with logo "M" for a specified period---Validity---Held, under the provisions of S.14(1) of the Trade Marks Act, 1940, the Registrar had not been given such a discretion to allow the use of any infringing trade mark even though for a specified period after he had arrived at a conclusion that to such trade mark the applicant was not entitled.

Khawaja Mansoor Ahmed for Appellant.

Muhammad Aslam and Sofia Sultana for Respondent.

Date of hearing: 19th March, 2004.

2006 C L D 484

[Karachi]

Before Gulzar Ahmed, J

NAEEM-UD-DIN KHAN---Plaintiff

Versus

ALLIED BANK OF PAKISTAN through President and 2 others---Defendants

Suit No.442 of 2004, decided on 15th February, 2006.

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

----S. 9---Civil Procedure Code (V of 1908), O. VII, Rr.11 & 10---State Bank of Pakistan Circular No.29 dated 15-10-2002---Suit for recovery of loam was decreed and on execution the mortgaged property was auctioned---Judgment-debtor filed civil suit for damages or in the alternative for possession on the ground that the Bank had not settled the matter in terms of State Bank of Pakistan Circular No.29 dated 15-10-2002---Validity---Matter, apparently related to finance granted by the Bank in which the judgment-debtor was a guarantor and had also mortgaged his property---Section 9, Financial Institutions (Recovery of Finances) Ordinance, 2001 provided that where a customer or financial institution had committed default in fulfilment of obligation with regard to any finance, the financial institution or as the case may be, the customer might institute suit in Banking Court---'Customer' has been defined to be a surety or an indemnifier and 'obligation' includes warranties and mortgages---Judgment-debtor-(plaintiff), in the present case, being a customer and mutter being in relation to obligation, the jurisdiction of Banking Court in terms of S.9 of the Ordinance was attracted to the case---Forum for the suit for damages etc., filed by the judgment-debtor (plaintiff) being the Banking Court, the plaint for the said suit could not be rejected but it could be returned to the judgment-debtor (plaintiff) for presentation before the proper Court---High Court, in circumstances, treated the application of the Bank for rejection of plaint of the plaintiff (judgment-debtor) as one to be under O. VII, R.10. C.P.C. and allowed the same---Plaint was ordered to be returned to the plaintiff accordingly.

Nemo for Plaintiff.

Syed Salimuddin Nasir for Defendants Nos. 1 and 2.

M. Shafi Rajpoot for Defendant No.3.

2006 C L D 491

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

Mrs. NIGHAT JAVED---Appellant

Versus

UNITED BANK LIMITED and 4 others ---Respondents

First Appeal No.46 of 2005, decided on 2nd February, 2006.

Banking Tribunals Ordinance (LVIII of 1984)---

----S. 6(8) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.22---Transfer of Property Act (IV of 1882), S.41---Civil Procedure Code (V of 191)8), O.XXXIV, S.14---Sale of mortgaged properly---Appeal to High Court---Decree passed by Bunking Court---Scope---Passing of decree by the Banking Court under Banking Tribunals Ordinance. 1984, impliedly covered the final decree for sale of mortgaged properly in terms of O.XXXIV. C.P.C.---By enacting subsection (8) of S.6 of the Banking Tribunals Ordinance. 1984, the effect of O.XXXIV, R.14, C.P.C. had been diluted in the Banking cases---Banking Court while passing its judgment, in the present case, had not refused the prayer of final mortgaged decree made in the plaint by the decree-holder Bank---Any conclusion to the contrary could not be inferred from the language of such judgment. and preparation of decree by the office in line of such judgment could not be questioned on that account---Judgment-debtor at appellate stage, brought to the notice of the Court contents of the mortgage deed to show that mortgage created through the said deed was only to the maximum limit---High Court observed that such objection, if raised, could be looked into by tire Banking Court at the time of further proceedings in tire execution application.

Industrial Development Bank of Pakistan through Deputy Chief Manager v. Saadi Asmatullah and others 1999 SCMR 2874 ref.

Ziaul Haq Makhdoom for Appellant.

S. Salimuddin Nasir for Respondents.

Nemo for other Respondents.

2006 C L D 494

[Karachi]

Before Mushir Alam and Syed Zawwar Hussain Jaffery, JJ

Messrs PAKLAND CEMENT LIMITED---Appellant

Versus

Messrs AMERICAN EXPRESS BANK N.A. and another ---Respondents

First Appeal No.75 of 2004, heard on 20th September, 2005.

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

----Ss. 9, 10 & 22---Civil Procedure Code (V of 1908), O.I.R.1---Suit for recovery of amount relating to corporate charge card by Bank---Joining of proper parties---Contention of the plaintiff Bank was that "Corporate Charge Card" was issued on the guarantee of the company, to its corporate Director whosoever it might be and the company was bound to honour such liability incurred---Material placed on record showed that "Corporate Charge Card" in fact. was issued to be used by Corporate Director of the Company, who was Finance Manager of the Company and who utilized the card as Was apparent from the statement of accounts and even the legal notice had been issued by name to the said person calling upon him to reimburse the liability followed by the suit---Pleadings nowhere showed that the company was made party to the suit nor even such case appeared to have been made out in the plaint, as was being urged by the Bank (at appellate stage) that "Corporate Charge Card" was issued to tine company for the use of its Director Finance---Pleadings, thus lacked in material particulars and even proper parties were not added or joined---Effect---Held, under O.I.R.1, C.P.C., all persons may be joined in one suit against whom any right or relief in respect of or arising out of the same act or transaction or series of acts or transactions was alleged to exist---Company, a separate legal entity having not been joined as party to the proceedings, there appeared to be misrepresentation as to the liability of the party by the Bank-High Court allowed the appeal of the company and granted its application under S.12(2), C.P.C.---Bank was directed to add the Director Finance by name who had availed "Corporate Charge Card" and the company as necessary party in the plaint. before the Banking Court within specified time---Bark undertook to waive notice before the Banking Court and filed leave to defend application within specified period under the Financial Institutions (Recovery of Finances) Ordinance, 2001 before the Banking Court, which application would be decided by the Banking Court according to law.

Saalim Salam Ansari and Mukhtiar Ahmed Kober for Appellant.

Syed Salimuddin Nasir for Respondent No. 1.

Nemo for Respondent. No.2.

Date of hearing: 20th September, 2005.

2006 C L D 497

[Karachi]

Before Khilji Arif Hussain, J

Messrs TRAVEL AUTOMATION (PVT.) LTD. through Managing Director---Plaintiff

Versus

ABACUS INTERNATIONAL (PVT.) LTD. through President and Chief Executive

and 2 others---Defendants

Suit No.1318 of 2004, decided on 14th February, 2006.

(a) Recognition and Enforcement of (Arbitration Agreements and Foreign Arbitral Awards) Ordinance (XX of 2005)---

----Ss. 3 & 4---Arbitration Act (X of 1940), S.3---Arbitration (Protocol & Convention) Act (VI of 1937), S.3---Contract Act (IX of 1872), Ss.20 & 56---United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. 1958---Discretion of Court under S.34, Arbitration Act, 1940 to stay or not to stay legal proceedings despite arbitration clause between the parties---Scope---Effect of Recognition and Enforcement of (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2005, elucidated---Comparison of S.4(1) of the Recognition and Enforcement of (Arbitration Agreements and Foreign Awards) Ordinance, 2005 with S.34, Arbitration Act, 1940---Provision of S.4(2) of the Ordinance has taken away discretion of the court whether or not to stay the proceedings in terms of arbitration agreement, even on the ground of inconvenience etc. except where the arbitration agreement itself is null and void, inoperative or incapable of being performed---Principles.

In terms of section 34 of the Arbitration Act, 1940 where any party to arbitration agreement or any person claiming under him commenced any legal proceedings against any other party to the agreement or person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other step in the proceedings, can apply to the court before which the proceedings are pending to stay the proceedings, and the court if satisfied that there is no sufficient reason why the matter should not be referred to in accordance with arbitration agreement, may make an order staying file proceedings. Discretion has been given under section 34 of Arbitration Act. 1940 to court to stay or not to stay legal proceedings that is to say that the proceedings, despite arbitration clause between the parties, court on its satisfaction that there was no satisfactory reason for making an arbitration and substantial miscarriage of justice would take place or inconvenience would be caused to the parties, if stay was granted, can refuse to refer the matter for arbitration in terms of arbitration clause agreed by the parties.

While dealing with the matter under Recognition and Enforcement of (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2005, such discretion is not available with the court. Subsection (1) of section 4 provided that a party to arbitration agreement against whom legal proceedings have been brought in respect of the matter which is covered by the arbitration agreement may, upon notice to the other party to the proceedings, apply to the court to stay the proceedings insofar as it concerned the matter.

On comparing subsection (1) of section 4 with section 34 of the Arbitration Act, 1940 one can see that under section 34 of the Arbitration Act, 1940 any party to arbitration agreement or person claiming under hire in any legal proceedings commenced against any other party to the agreement in respect of the matter agreed to refer, before filing of the written statement or taking any other step in the proceeding, can apply to the court. and if court is satisfied that there is no sufficient reason why matter should not be referred in accordance with arbitration agreement, may make order staying the proceedings whereas under subsection (1) of section 4 of Ordinance, 2005 a party to arbitration agreement against whom legal proceeding has been brought in respect of the matter which is covered by the arbitration agreement, upon notice to the other party to the proceedings can apply to the court in which proceedings have been brought to stay the proceedings insofar as it concerned the matter. In other words a suit can be partly stayed to the extent of the relief which is covered by the arbitration clause and/or to which relation to party to a suit applied for stay of the proceedings.

Subsection (2) of section 4 of the Ordinance, 2005 has taken away discretion of the court whether or not to stay the proceeding in terms of the Arbitration Agreement, even on the ground of inconvenience etc except where the arbitration agreement by itself is null and void, inoperative or incapable of being performed.

In the matter under Ordinance XX of 2005, court has no discretion but to stay the proceedings under sari arbitration agreement between the parties except where the arbitration agreement is null and void, inoperative, and/or incapable of being performed.

?

After the enforcement of Ordinance XX of 2005 radical changes have been made in law and discretion of court which was available under section 34 of the Arbitration Act, 1940 apparently is no more available to court. The question on which earlier, while exercising discretion under section 34 of the Arbitration Act about convenience or inconvenience of the parties, availability of evidence on a place other than the place of arbitration, whether to stay proceedings or not, was within the discretion of the court. However, while dealing with the matter under section 4 of the Ordinance XX of 2005 court has no such discretion except where cases fall within exception categories mentioned in the section itself. It is interesting to note that section 3 of the Ordinance, 2005 opens with the non? obstante clause that notwithstanding anything contained in any other law for the time being in force the court shall have exclusive jurisdiction to adjudicate and settle matter related to or arising from the Ordinance. On reading subsection (2) of section 4 with Article II of United Nations Convention, it is clear that on filing of an application by any party to the proceeding the court has to stay the proceeding unless it finds that the agreement is null and void or inoperative or incapable of being performed.

In the present case clause of arbitration agreement provided that all disputes arising out of or in connect ion with this agreement including any question regarding its existence, or termination, shall be referred to and to be finally resolved by arbitration in Singapore in accordance with Arbitration Rules of Singapore International Arbitration Centres. The said clause is widely worded. The plaintiff by this suit questioned the termination of the agreement, or its validity. Plaint ill has asked for declaration that the agreement is still operative acid further mandatory injunction in the form to direct the defendant to restore the agreement i.e. to say to declare termination notice is unlawful. Such dispute is fully covered under the arbitration clause and arbitrators have exclusive jurisdiction to decide the same and contention of the plaintiff that arbitration clause is inoperative because there is no dispute or incapable of being performed is without any force.

From perusal of the record it appears that the plaintiff also questioned the arbitration clause on the ground that on 16-5-1997, the date of agreement there was no coded law of arbitration in Singapore and that arbitration clause is also silent as to the law of the country to be applied to the proceedings. The defendant through his rejoinder affidavit placed on record legal opinion of the law forming in Singapore wherein it is specifically stated that Singapore have coded law of arbitration on 16-5-1997 and International Act Chapter 143E has been enforced in Singapore since 27-1-1996 and the law of Singapore being the governing law of distributorship agreement applicable to arbitration agreement. The plaintiff has not denied the contention of the defendant nor placed on record any document in rebuttal.

Objection of the Plaintiff that defendants Nos.2 and 3 are not party to the arbitration agreement and as such application for stay of the proceedings cannot be granted. From the perusal of the record it appears that the plaintiff is not asking any relief against defendants Nos.2 and 3 and the only relief asked is that distributorship agreement dated 16-5-1997 executed between the plaintiff and defendant No.1 is valid binding and fully operative and enforceable agreement against defendant No.1 and is irrevocable coupled with interest and defendant No.1 cannot revoke or assign or grant by defendant No.1 to any person including defendant No.2 adverse to the interest of or the prejudice of the Plaintiff.

Under section 4(2) of the Ordinance, 2005 pre-condition for refusing stay, the proceeding is that arbitration agreement is null and void inoperative or incapable of being performed.

?

On reading section 20 of Contract Act (Agreement void where both parties are under mistake as to matter of facts) along with section 56 of the Contract Act, one can say that in case when at the time of execution of the Arbitration Agreement same was void or became void subsequently by some reason or some event such as by an act of the Government, the performance of a contract becomes impossible or by change of law contract becomes incapable of being performed, in that event, Court can refuse stay of the proceedings.

Plaintiff has failed to bring the case within the exceptions provided under subsection (2) of section 4 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance, 2005, so as to refuse to stay the proceedings.

Svenska Handelsbanken and others v. Messrs Indian Charge Chrome and others AIR (1994) 2 SC Cases 155; 'Messrs Srivenkateswara Construction and others v. The Union of India AIR 1974 Andhra Pradesh 278; Muhammad Hanif v. Eckhard & Co. PLD 1983 Kar. 613; Eckhardt & Co. v. Muhammad Hanif PLD 1986 Kar. 1398; Eckhardt & Co. v. Muhammad Hanif PLD 1993 SC 42; Muhammad Amin and Muhammad Bashir v. PAS+R and others 2002 CLD 671; Muhammad Hanif v. Messrs Eckhard & Co. Marine GmbH and two others PLD 1983 Kar. 613; PLD 1986 Kar. 138; Gas Authority of India Ltd. v. SPIE CAPAG, S.A. and others AIR 1994 Delhi 75; Messrs Manzoor Textile Mills Ltd. v. Nichimen Corporation and two others 2000 MLD Kar. 641 and Roomi Enterprises (Pvt.) Ltd. v. Stafford Miller Limited and others, I ICA No.242 of 2002 ref.

(b) Recognition and Enforcement of (Arbitration Agreements and Foreign Arbitral Awards) Ordinance (XX of 2005)---

----S. 4(2)---Stay of proceedings---Precondition for refusing stay, under S.4(2), Recognition and Enforcement of (Arbitration Agreements and Arbitral Awards) Ordinance, 2005 is that arbitration agreement is null and void, inoperative or incapable of being performed---Words "null and void and inoperative or incapable of being performed" have to be read keeping in view the rule of ejusdum generis i.e. when a particular word pertaining to class, category or genus is followed by general words, the general words are construed as limited to things of the same kind as those specified.

(c) Recognition and Enforcement of (Arbitration Agreements and Foreign Arbitral Awards) Ordinance (XX of 2005)---

----Ss. 3 & 4---Contract Act (IX of 1872). Ss.20 & 56---Stay of proceedings---Court can refuse stay of the proceedings if at the time of execution of the arbitration agreement same was void or becomes void subsequently, by some reason or some event such as by an act of the Government the performance of the contract became impossible or by change of law contract became incapable of being performed.

(d) Arbitration---

----Party to proceedings cannot be allowed to defeat arbitration clause by way of joining a party not a party to arbitration agreement---When any party does so, court while dealing with such matter, has to see whether arty retie/' has been asked against such defendant or not.

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

----S. 202---'Termination of agency---When the agreement itself was for a fixed period of time and provided stipulation for the cancellation and termination of the same, S.202, Contract Act, 1872 was not applicable---Principles.

Roomi Enterprises (Pvt.) Ltd. v. Stafford Miller Limited and others, HCA No.242 of 2002 ref.

Jawed Ahmed Siddiqui and Abid Shirazi for Plaintiff.

Sajid Zahid along with Taha Alizai for Defendants Nos.1 and 3.

Muhammad Tasneem for Defendant No.2.

Dates of hearing: 23rd December, 2005, 18th, 24th January and 1st February. 2006.

2006 C L D 522

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

SABAH SHIPYARD (PAKISTAN) LTD ---Appellant

Versus

RIAZ AHMED, SAQIB, GOHAR & CO. ---Respondent

H.C.A.No.265 of 2004, decided on 7th February, 2006.

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

---O.XXIX, R.1---Suit by company through its Chief Executive--Competency---Articles of Association of Company delegated power to Chief Executive to institute suit on its behalf, but "subject to any resolution or decision of Board of Directors"---Plea of defendant was that only Board of Directors could have delegated such powers to Chief Executive through prior Board Resolution---Validity---Articles of Association provided that Board of Directors had powers to do or concur in doing all or any of the acts and things detailed therein, but without prejudice to or in any way restricting/limiting general powers heretofore conferred by Articles of Association or Companies Ordinance, 1984 to any other official of company---Language of the Articles of Association of Company showed that company by its insertion had intended to confer all powers provided therein including institution of suit to its Chief Executive, but subject to supervision and control of Board of Directors, for which they might pass any resolution or take decision for further defining the limits of powers and acts to be performed by Chief Executive---Language of Articles of Association provided protection to powers of Chief Executive so conferred---Suit filed by Chief Executive of company was competent in circumstances.

Abdul Rahim and 2 Others v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar.62; Messrs Taurus Securities Limited v. Arif Saigol and others 2002 CLD 1665; Cementation Intrafor and others v. Indus Valley NLR 1989 CLJ 555 and All India Reporter Ltd. and another v. Ramchandra Dhondo Datar AIR 1961 Bonn, 292 rel.

(b) Interpretation of documents---

----No redundancy can be attributed to any word, phrase, section, article or clause provided in a statute/document by its author, unless it creates an absurd or irreconcilable position.

Salman Tabibuddin for Appellant.

Muhammad Akram Zuberi for Respondent.

Date of hearing: 3rd February, 2006.

2006 C L D 528

[Karachi]

Before Sabihuddin Ahmed, C.J. and Maqbool Baqar, J

GHULAM MUSTAFA BUGHIO and another---Petitioners

Versus

JUDGE BANKING COURT NO.4, KARACHI and another-Respondents

C.P.No.587 of 2003, decided on 8th April, 2005.

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

----S. 22---Constitution of Pakistan (1973), Art.199---Constitutional petition---Maintainability---Judgment and decree of Banking Court was assailed through a constitutional petition---Validity---Judgment, decree and trial order of the Banking Court being appealable before the High Court under S.22, Financial Institutions (Recovery of Finances) Ordinance, 2001, petitioner could not invoke the jurisdiction of High Court under Art.199 of the Constitution in the presence of an alternate and efficacious remedy.

Messrs Unicorn Enterprises v. Banking Court No.5, City Court Building, Karachi and 2 others 2004 CLD 1452 ref.

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

----S.22---Constitution of Pakistan. (1973), Art.199---Appeal to High Court against judgment of the Banking Court---Limitation---Constitutional jurisdiction cannot be allowed to be invoked to circumvent the law of limitation and if the petitioner fails to avail the alternate and efficacious remedy available under law in time through his own negligence he cannot seek relief under Art.199 of the Constitution---No explanation for the delay having been offered, constitutional petition was dismissed.

Petitioner in person.

Syed Saleemuddin Nasir for Respondent No.2.

2006 C L D 530

[Karachi]

Before Zawwar Hussain Jaffery and Maqbool Baqar, JJ

ABDUL SHAFIQUE and another---Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN and 3 others---Respondents

First Appeal No. 17 of 2005, decided on 31st January, 2006.

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

----Ss. 19 & 22---State Bank of Pakistan B.P.D. Circular No.29 dated 15-10-2002---Execution of decree---Sale of mortgaged property---Application by Judgment-debtors for allowing them to pay off these dues to the Bank as determined by the State Bank of Pakistan in terms of its B.P.D. Circular No.29 of 2002---Judgment-debtors, despite several extensions of time, failed to deposit even the 10% down payment of the amount that they were required to pay in terms of the State Bank Circular No.29---Application of judgment-debtors was rightly dismissed by the Banking Court in circumstances.

Ms. Soofia Saeed for Appellants.

Syed Zaki Muhammad for Respondents Nos.2 and 3.

Sanaullah Noor Ghouri for Respondent No.1.

2006 C L D 546

[Karachi]

Before Faisal Arab, J

Messrs MEHRAN PLASTIC INDUSTRIES (PVT.) LTD.---Petitioner

Versus

REGISTRAR OF DESIGNS and another---Respondents

Judicial Miscellaneous No. 17 and Suit No.959 of 2004, decided on 24th February. 2006.

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

----Ss. 3(2), 2(e) & 10---Registration of design---Scope---Law of designs is based upon the elementary rule that a design, which is unique in its character, should be protected and not allowed to be infringed by anyone to the disadvantage and detriment of the owner of the design---Where, however, the design is not novel or original, then in such eventuality permitting registration of such design would create ownership in person or entity which is not its lawful owner---Section 10 of the Registered Designs Ordinance, 2000 entitles any interested person to get a registered design cancelled, inter alia, on the ground that the person in whose name the design is registered has no right to it.

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

----Ss. 2(e) & 3(2)---Design---Definition---New or original design---Determination---Design' means such finished article, which appeals to the eye to be new and original---Law makes the eye to be the judge.

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

----S. 3(2)---Registration of design---Scope---Only novel and original design should be protected and the monopoly of the trade in respect of a common design be discouraged---Principles---Novelty or originality of design---Slight variation in the placement of design of an article cannot constitute novelty of design---Provision of S.3(2), Registered Designs Ordinance, 2000 clearly provides that where a design of an article differs only in immaterial details or in features or shape which are variants commonly used in trade that too cannot be registered---If the design in question is already known to the world and already exists prior to the registration, claim of owner of novelty of design is not established.

Messrs Western Brand Tea, Karachi v. Messrs Tapal Tea (Pvt.) Ltd. PLD 2001 SC 14; Western Engineering Co. v. Paul Engineering Co. AIR 1968 Calcutta 109; Messrs Chas A. Mendoza v. Syed Tausif Ahmed Zaidi and another PLD 1993 Kara 790; White Hudson & Co. Limited v. Asian Organization Ltd. (1964) 1 WLR 1466; Whitworths Foods Limited v. Hunni Foods (International) Ltd. and Reckitt & Colman Products Limited v. Borden Inc. Except for the Calcutta AIR 1968 Cal 109 ref.

Abdul Hameed Iqbal for Petitioner.

Liaquat Merchant for Respondents.

Date of hearing: 21st February, 2006.

2006 C L D 565

[Karachi]

Before Faisal Arab, J

ALLIED BANK OF PAKISTAN LIMITED---Plaintiff

Versus

NORTHERN POLYETHYLENE LIMITED and others---Defendants

Suit No. B-20 of 2004, decided on 6th December, 2005.

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

----S.9---Recovery of bank loan---Failure to seek leave to defend the suit---Defendants, in spite of due service, failed to seek leave to defend the suit, thus the suit was proceeded ex parte---Effect---Statement of account showed that no repayments had been made and therefore, the entire buyback price was recoverable from defendants---Bank, in addition to buyback price, was entitled to recover cost of funds from the date of default of each instalment till realization of entire buyback price---Defendant company created an equitable mortgage by way of deposit of title documents over its immovable property together with the buildings and structure constructed thereon---Equitable mortgage was evidenced by Memorandum of Deposit of Title Deeds---Defendants also executed their personal guarantees to secure the facilities---High Court in exercise of Banking jurisdiction, decreed the suit with mark-up and applicable rate of cost of funds to be recovered from defendants who were jointly and severally liable---Claim of liquidated damages was rejected---High Court directed to recover decretal sum through sale of mortgaged properties and assets of defendants---Suit was decreed accordingly.

Naveed-ul-Haque for Plaintiff.

Date of hearing: 1st December, 2005.

2006 C L D 580

[Karachi]

Before Maqbool Baqar, J

TELEBRANDS CORPORATION through Attorney---Plaintiff

Versus

TELEBRANDS PAKISTAN (PVT.) LIMITED through Chief Executive and another---Defendants

Suit No.1163 of 2005, decided on 27th February, 2006.

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

----Ss. 42 & 55---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2 & S.10---Trade Marks Act (V of 1940), Ss.73 & 16---Registration of Trade Mark---Suit for declaration, injunction and damages---Maintainability---Defendants, in the present case, had claimed that they were operating only from their main office in "I" and had no office in "K", however they had not denied that the marketing and sale of their goods was being conducted by them through Internet and various television channels which reach the consumers in "K" and had also not contended that they did not supply/dispatch their goods to the consumers in "K"---Defendants had also not denied the fact that the various television channels through which they advertised their products and sought orders from the consumers, were watched in "K" or that they did not supply their goods to the consumers in "K", whereas the plaintiffs in their plaint had specifically stated that the cause of action had accrued to the plaintiff in the present suit at "K", due to substantial illegal marketing and sale made by the defendants at "K" including but not limited to widespread television/internet advertising directed at consumers in "K" which assertion had not been rebutted by the defendants and as such the defendants' objection to the maintainability of the plaintiffs suit at "K" on the ground of lack of jurisdiction, was untenable and frivolous---When the present suit was filed, suit filed by the defendants before the Additional District Judge at "I" stood dismissed and the bar envisaged by S.10, C.P.C. did not apply to the present suit of the plaintiff-Plaintiffs suit, at "K" therefore, was maintainable and was also not liable to be stayed.

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

--Ss. 16, 22 & 73---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Specific Relief Act (I of 1877), Ss.42 & 55---Suit for declaration---Infringement of trade mark---Application for grant of injunction against defendants---Not only the defendants were using the plaintiffs trade mark but it was crucial to note that its products were identical to those developed/produced and marketed by the plaintiff and even the pictures and graphics being used by the defendants for depicting, advertising and marketing the said products were in fact copies of such photographs, descriptions and graphics as used by the plaintiff and as such by marketing and setting such counterfeit, the defendants were in fact confusing the buyers into believing that the defendants' products originated from the plaintiff and as such the defendants were clearly infringing upon the rights of the plaintiff and were not only illegally diverting the plaintiffs customers/business to them but were also putting the plaintiffs goodwill into jeopardy---High Court granted plaintiffs application under O.XXXIX, Rr.1 & 2, C.P.C. restraining the defendants from illegal use of the plaintiffs trade mark and advertising or marketing any goods under the said trade mark till the disposal of the suit and subject to final adjudication of the matter after recording evidence---Principles.

Zahid F. Ibrahim for Plaintiff.

Aamir Abdullah Ansari for Defendant.

2006 C L D 606

[Karachi]

Before Nadeem Azhar Siddiqi, J

HABIB BANK LIMITED---Plaintiff

Versus

Messrs USMANIA CORPORATION (PVT.) LIMITED and others---Defendants

Summary Suit No.1182 of 1999, decided on 17th January, 2006.

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

----S.9---Qanun-e-Shahadat (10 of 1984), Art.84---Recovery of Bank loan---Factual controversy---Dispute about signatures---Comparison of signatures by Court---One of the defendants denied his being director of the borrower company and also denied having executed any document in favour of bank---Plea raised by the contesting defendant was that his signatures on the documents were forged---Validity---Evidence of the witness of bank was not confidence-inspiring---Such witness was not aware of the facts of the case and had deposed on the basis of record available with him---No officer, who was dealing with the matter, was examined---Such witness, in his cross-examination deposed that the guarantees were not executed before him and he was not witness to the transaction and was not aware whether the person visited the bank or not---None of the documents produced by the bank were prepared in his presence---Disputed signatures of the defendant were not similar to admitted signatures---Flow of both the signatures were different, style was different and characteristics and the way, particularly alphabets were altogether different---Even if report of Handwriting Expert was ignored, the evidence of bank was not sufficient to prove execution of documents by the defendant---Documents filed by bank with plaint were not executed by the defendant and he was not liable for the amount claimed in the suit---Suit was dismissed against the defendant in circumstances.

Anwar Khan v. Mst. Nafis Bano 2005 SCMR 152; Anwar Khan v. Mir Wall PLD 58 Lah. 447 and M. Umar Shah v. Bashir Ahmed 2004 SCMR 1859 ref.

Shakeel Pervaiz for Plaintiff.

Mazher Lari for Defendant No.4.

Nemo for other Defendants.

Date of hearing: 17th January, 2006.

2006 C L D 674

[Karachi]

Before Mushir Alam and Amir Hani Muslim, JJ

AL-ABBAS SUGAR MILLS LIMITED---Petitioners

Versus

MANAGING DIRECTOR, KARACHI WATER AND SEWERAGE BOARD and 2 others---Respondents

Constitution Petition No.D-1149 of 2005, decided on 22nd November, 2005.

(a) Constitution of Pakistan (1973)---

----Art.199---Constitutional petition---Writ of mandamus---Scope---If action of public functionary in awarding contract lacks transparency, writ of mandamus would lie.

Pacific Multinational {Pvt.) Limited v. I.-G. Police PLD 1992 Kar. 283 rel.

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

----Art. 199---Constitutional petition---Interpretation of document---Awarding of contract---Use of word 'may' in guidelines to bidding---Technical and financial aspects of bids---Evaluation---Petitioner-Company was declared pre-qualified for bid of the project and after short-listing, petitioner and respondent-Company submitted their bids with necessary documents---After evaluation of the documents by the consultants of the project, contract was awarded to respondent-Company---Plea raised by petitioner was that tt was the lowest bidder and specific clauses of post bid process were completely overlooked by the Authorities while awarding contract to respondent-Company---Validity---Word used in the relevant paragraph of the guidelines for bidding was 'may' which did not make it obligatory on the part of the Authorities to hold post bid meeting with the contesting parties---Authorities had rightly relied upon evaluation report, which dealt with all aspects and opinion of the Authorities---After evaluation report of committee, holding post bid meeting was insignificant for want of technical expertise---Report of Evaluation Committee ran into 50 to 60 pages and each and every aspect of bid documents submitted by the parties was examined---Mere non-inviting petitioner to post bid meeting would not nullify recommendations of Evaluation Committee---Even otherwise nature of the terms contained in bid were procedural/directory in nature and would, in no way, be termed as mandatory in nature to nullify award of contract in favour of respondent-Company---Project of such nature was dependent on expertise and professionalism which could only be examined by experts---Consultant had sufficient experience in such projects and it having recommended award of contract in favour of respondent-Company, High Court, in writ of mandamus, would not nullify such award of contract for want of compliance of the terms, which ex facie, were procedural in nature and had no substantial bearing on award of contract---High Court did not find lack of transparency in the award of contract to respondent-Company---Petition was dismissed in circumstances.

1971 SCMR 533; 1973 SCMR 342; 1974 SCMR 337; 1997 CLC 1288 and 2005 SCMR 445 ref.

Shaeq Usmani for Petitioner.

Abrar Hassan for Respondent No.1.

2006 C L D 697

[Karachi]

Before Mrs. Qaiser Iqbal, J

Messrs FLAME MARITIME LIMITED---Plaintiff

Versus

Messrs HASSAN ALI RICE EXPORT---Defendant

Suit No.272 of 2000, decided on 23rd January, 2006.

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

----Ss.4, 5, 6 & 7---Foreign award, making rule of Court---Misconduct by arbitrator---Ex parte award---Appraisal of evidence by Court making award rule of the Court---Awarding interest on amount determined by arbitrator---Dispute was referred to arbitrator for determination on the basis of agreement of arbitration between the parties---Despite issuance of notices by arbitrator, defendants did not appear before him thus ex parte award was made by the arbitrator against defendants---Plea raised by defendants was that passing ex parte award was a misconduct and arbitrator granted the claim without taking into consideration the facts constituting the claim of plaintiff--Defendants also contended that awarding of interest on amount determined by arbitrator was against the injunctions of Islam---Validity---Contention of defendants that award was based upon misconduct on the part of arbitrator, as he had proceeded ex parte without affording him opportunity to contact, was not borne out from record---Ample evidence on record to suggest that defendants were duly served and all facts were taken into consideration before arriving at final conclusion by arbitral tribunal--Arbitrator as well as Swedish Club had left no stone unturned to apprise defendants to participate in arbitration proceedings---Arbitrator did not commit any misconduct by holding ex parte proceedings against defendants---Defendants failed to make out a case that Addendum was result of coercion and pressure on the part of plaintiffs---Award rendered by Arbitrator Tribunal constituted under the agreement was not challenged in appeal, therefore, it had attained finality and could not be questioned on factual aspects---Enforcement of interest in Pakistan was repugnant to the Injunctions of Islam, therefore, enforcement of interest as awarded would be against the law prevailing in Pakistan---Award had become final in England where it was made enforceable under the provisions of Arbitration (Protocol and Convention) Act, 1937---Defendants failed to make out any ground to nullify the award---Objections raised by defendants were rejected---Award was made rule of the Court accordingly.

Nan Fung Textiles Ltd. v. Nichimen & Co. (Pakistan) Limited 1999 YLR 2232; Ralli Brothers and Coney Ltd. v. Muhammad Amin Muhammad Bashir Ltd. 1987 CLC Kar. 83; Nan Fung Textiles Ltd. v. Sadiq Traders Limited PLD 1982 Kar. 619 and Messrs European Grain and Shipping Ltd. v. Messrs Polychem Company Ltd. PLD 1990 Kar. 254 ref.

M. Aslam Khaki v. Muhammad Hashim PLD 2000 SC 225 fol.

Khalid Rehman for Plaintiff.

Yousaf Moulvi for Defendant.

Date of hearing: 13th December, 2005.

2006 C L D 716

[Karachi]

Before Mrs. Qaiser Iqbal, J

SMITH KLINE BEECHAM CORPORATION and others---Plaintiffs

Versus

PHARMA EVO (PVT.) LTD.---Defendant

Suit No.1288 of 2005, decided on 16th February, 2006.

Patents Ordinance (LXI of 2000) ---

----Ss.30 (4), 60 & 61---Patents and Designs Act (II of 1911), S.12---Qanun-e-Shahadat (10 of 1984), Art.129 (g)---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Interim injunction, grant of---Exclusive marketing rights under Black Box Patent application---Failure to disclose manufacturing process---Presumption---Plaintiff-Company claimed to have exclusive marketing rights under Black Box Patent application with regard to medicine in question and sought injunction against defendant-Company restraining it from manufacturing, importing, formulation or offering for sale and selling medicine in question in the form of any of its pharmaceutical products with addition to any other pharmaceutical ingredients---Validity---Process of manufacturing of medicine which was registered patent in favour of plaintiff and that of the of defendant were one and the same---Plaintiff s patent had novelty in use much prior to its registration---Defendant did not disclose its manufacturing process, which gave presumption in favour of plaintiff against defendant---Plaintiff, after chemical trials as was demanded by Government of Pakistan, Health Department, protected their rights pertaining to the process patent registered in Pakistan--Plaintiff had placed on record the process of preparation of the pharmaceutical and had incurred billions of US Dollars upon the invention, process of manufacturing and its marketing---Balance of convenience and irreparable loss was therefore, in favour of plaintiff, if defendant was not restrained from infringing the patent right of plaintiff by marketing the product in question---Presumption of exclusive right of use subsisted in favour of plaintiff as the defendant's rectification obligations were sub judice---Prima facie defendant sought imitation of patent process arisen out of process patent registered in Pakistan---On account of infringement of the patent pieces, plaintiff was entitled to grant of relief of injunction---No controversy existed on the point that defendant's product was registered with Health Department, Government of Pakistan---Question of infringement of patent was altogether a distinct question, which required to be adjudicated under the related law---Plaintiff enjoyed exclusive right of making, selling and using novel invention throughout Pakistan, which had reached the point of turning high business---Balance of convenience and irreparable loss was also in favour of plaintiff---Interim injunction was granted in circumstances.?

Smith Kline and French Laboratories Limited v. Pakistan Pharmaceutical Products Limited 1991 CLC 69; Messrs Annor Textile Mills Ltd. v. Messrs Sh. Ashfaq and 2 others 1986 MLD 1535; Farbwerke Hoechst Aktiengesellschaft Vormals Meister Lucius and Bruning a Corporation and others v. Unichem Laboratories and others AIR 1969 Born. 255; Glaxo Group Limited and others v. Averon (Private) Limited 1992 CLC Kar. 2382; MERC & Co. Ing. and others v. Hilton Pharma (Pvt.) Ltd. 2003 CLD 416; Messrs Plasticrafters Ltd. Karachi v. Messrs Maniar Industries Ltd. 1980 CLC 826; ATCO Lab. (Pvt.) Limited v. Pfizer Limited and others 2002 Kar. CLD 120 and Tajuddin v. Haji Mushtaq and others 1985 CLC 2182 ref.

Moeen Qamar for Plaintiffs.

Abdul Hameed Iqbal for Defendant.

Date of hearing: 19th January, 2006.

2006 C L D 734

[Karachi]

Before Sarmad Jalal Osmany and Amir Hani Muslim, JJ

AL-MADINA ELECTRIC STORE, DAHARKI, through Proprietor---Appellant

Versus

HABIB BANK LIMITED---Respondent

Civil Appeal No.D-30 of 2003, decided on 16th February, 2006.

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

----Ss. 9, 10 & 21---Suit for recovery of loan---Application for leave to defend suit---Dismissal of application---Leave to defend application pleaded that appellant did apply for sanction of loan and did execute a number of inchoate documents in order to avail facility of loan and loan though was sanctioned, but was never disbursed to appellant and that amount of loan was disbursed to another person by the Bank Manager against which complaints were made by appellant to different high-ups, but no action was taken against the Manager of the Bank---Appellant had further contended that an amount of Rs.6,00,000 was deposited by him on account of threats of arrest to him and his family members---Trial Court relying upon copies of two documents allegedly executed by appellant, dismissed leave to defend application and decreed suit filed by the Bank---Appellant had impugned said order and decree of Trial Court in appeal---Said two documents, were never produced by the Bank with plaint and appellant had not been provided opportunity to either rebut or explain his position in regard to said documents which were filed by the Bank---Relying upon such documents, without providing opportunity to appellant to either rebut or explain his position in regard to said documents, ex facie was contrary to the procedure---Order dismissing application of appellant to defend suit and impugned judgment, which were nullity, were set aside with the direction that matter would be heard afresh by the Banking Court.

Mukesh Kumar G. Karara for Appellant.

Bhajandas Tejwani for Respondent.

Date of hearing: 31st January, 2006.

2006 C L D 746

[Karachi]

Before Zia Perwaz, J

AZIZULLAH SHEIKH and another---Plaintiffs

Versus

UNION BANK LTD.---Defendant

Suit No.B-55 of 2002, decided on 10th March, 2006.

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

----S.73, illustration (n)---Breach of contract---Damages---Quantum, ascertaining of---Principles---General damages arising in usual course of events from breach of contract are recoverable in ordinary circumstances---Special damages are awarded in cases, as may reasonably be supposed to have been in contemplation of both parties at the time of contract---Law does not record consequential damages arising of delay in respect of money.

Hadley v. Baxendale (1854) 9 Exch. 341; Banco de Portugal v. Waterlow and Sons Ltd. (1932) A.C. 452; Commell Lairds & Co. v. Manganese Bronze and Brass Co. (1993) 2 K B. 141; Graham v. Campbell (1877) 7 Ch. D.494; Urquhart Lindsay & Co. v. Eastern Bank Ltd. (1922) 1 K.B. 318 and Syed Ahmad Saeed Kirmani v. Messrs Muslim Commercial Bank Ltd. 1993 SCMR 441 rel.

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

----S.9 (1)---Contract Act (IX of 1872), S.73, illustration (n) ---Recovery of damages---Breach of contrast---Plaintiffs were holding credit cards issued by defendant-Bank---Grievance of plaintiffs was that on their visit abroad, when they presented the cards at different places, despite availability of credit in their accounts, the cards were not accepted and they were humiliated---Plaintiffs claimed damages on such act and negligence of the bank as they suffered mental agony due to refusal of payment on the cards---Validity---After the cards were refused at the first place, the plaintiffs had learnt that the cards were not in operation-Plaintiffs themselves presented the card at different places knowing fully that they were not activated and refusal was likely, therefore, humiliation as claimed of reputation was only a consequence of deliberate act of plaintiffs-Had the plaintiffs been more cautious, they might not have used the cards after refusal once or the second time but it appeared that they continued to present the same wherever they visited---Though plaintiffs suffered mental torture, agony and humiliation but claim of plaintiffs for damages was hit by the provisions of S.73 of Contract Act, 1872, as elaborated in illustration (n) thereto---As the breach of contract was established, suit was decreed in favour of plaintiffs only to the extent of amount paid by them to defendant for availing the facility---Suit was decreed accordingly

Dr. Professor Haroon Ahmed v. Messrs British Airways and others PLD 2004 Kar. 439 and Messrs Victor Electronics Appliances Industries (Pvt.) Limited v. Habib Bank Limited and another 2005 CLD 1383 distinguished.

(c) Contract Act (IX of 1872)-

--S.73---Banker and customer---Breach of contract---Credit card, use of---Principles---Transaction involving use of credit card.: contemplates payments against goods purchased or service rendered to the card holder---Company issuing the card makes payment on behalf of the card holder---Respective amounts are then debited to the account of card holder who is allowed specific period for payment as per contract---In case of deferred payments by instalments interest may be payable on the outstanding amount, which may also include additional incentives to the card members to encourage use of credit cards-As such it basically makes the transaction one of a promise to pay money against future unforeseen transactions for purchase of goods or services under agreement between the issuer of the card and its holder.

(d) Words and phrases---

----Ruin---Meaning.

Chambers 20th Century Dictionary, Edition 1983 and New Shorter Oxford Dictionary ref.

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

----S.73---Breach of contract---Damages, determination of---Totally ruined---Effect---In a situation as described by the words `totally ruined' such a consequence cannot be anticipated without loss of reputation and consequent mental torture, agony, humiliation in addition to financial losses that may be suffered as a result of failure to meet financial obligations because of breach of promise to make payment on which promissee relied to meet his obligation---Law expressly bars award of damages in such an eventuality.

Iqbal Kazi for Plaintiffs.

S. Salim-ud-Din Nasir for Defendant.

Dates of hearing: 16th October, 6th November, 2003, 13th March, 2004 and 24th November, 2005.

2006 C L D 766

[Karachi]

Before Sarmad Jalal Osmany and Amir Hani Muslim, JJ

SHAHID HUSSAIN MALIK---Appellant

Versus

HABIB BANK LIMITED through Manager and another---Respondents

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

----Ss. 19 & 22---Auction of judgment-debtor's property--Appeal to High Court---Appeal had been directed against the order passed by Banking Court whereby auction of judgment-debtor's property was confirmed in favour of appellant while rejecting condition of his bid that property should be free from all taxes, liabilities, utilities, dues and charges, as said sale was conducted on "as was where was" basis---Sale certificate was directed to be issued in favour of appellant on foregoing lines ---Proclamation of sale specifically providing condition of as was where was' basis, ordinarily would mean that all charges, taxes, dues, would have to be paid by auction purchaser---Banking Court, could not of its own accord change the conditions attached to appellant's bid---Appellant had, by not immediately lodging his protest with Banking Court, waived the conditions attached to his offer---Appellant had also not filed appeal against impugned order soon after obtaining a certified copy of order--Appeal being without merits, was dismissed.

United Bank Limited v. Akbar Cotton Mills Ltd. 1993 CLC 1560 and I.D.B.P. v. Maida Ltd. 1994 SCMR 2248 ref.

Appellant in person.

Syed Salim-ud-Din Nasir for Respondents.

Date of hearing: 27th October, 2004.

2006 C L D 771

[Karachi]

Before Munib A. Khan, J

NATIONAL BANK OF PAKISTAN ---Decree-holder

Versus

Messrs DHARAMDAS and 2 others---Judgment-Debtors

Suit No.439 of 1998 and Execution Application No.59 of 2000, decided on 16th March, 2006.

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

---S.23---Civil Procedure Code (V of 1908), O. XXI, Rr.13 & 64---Restriction on sale of attached property through auction---Conveyed Nazir of the Court, at time when he was conducting auction of property in compliance of the order of Court, was informed that property had already been sold out---Decree­ holder had filed objection to the effect; firstly that property could not be sold out being hit by S.23(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001) secondly that property was mortgaged with decree-holder and could not be transferred and thirdly the Court proceedings were pending and during the pendency no transfer could take place without permission of the Court---Purchaser of the property contended that he had purchased the property without knowledge of any litigation and the title had been registered in his name---Validity---Contention of purchaser was repelled in presence of said strong legal objections---Transfers of rights in favour of all transferees through document, was recalled and was set aside and it was declared that property would remain in position before it was sold out.

2006 CLD 6 ref.

S. Saleem-ud-Din Nasir for Decree-holder.

Zaheer Minhas for J.D. No.1.

Asghar Farooqui for Purchaser.

2006 C L D 829

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

MUBARAK ALI---Appellant

Versus

FIRST PRUDENTIAL MODARABA through Chief Executive---Respondent

First Appeal No. 15 of 2006, decided on 22nd March, 2006.

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

----S.12---Ex parte decree, setting aside of---Defendant alleged to be permanent resident of Village "H" as shown in NIC and voter list, not knowing English except putting his signatures, and not having knowledge about decree---Validity---Defendant while dealing with Bank gave address of Flat at place "K", on which summons in suit were issued to him through prescribed modes---Defendant, after alleged change of address had not informed Bank about his new address---Defendant in his application had not disclosed that in what capacity he was occupying Flat at place "K"; when did he vacate the Flat; who occupied Flat and in what capacity---In normal course of behaviour, if one shifts from premises in his occupation (whether rented or self-owned), particularly while facing disputes and litigation, he would inform new occupant of premises about his new address, so that important letters/notices may either be redirected to him on new address or at least his new address may be disclosed to the carrier---Defendant for having concealed all such material facts could not take benefit of his own casual attitude---Defendant in earlier appeal showed his address as mentioned in the title of suit---Firmness and fluency of defendant's signatures on his NIC and other documents executed in favour of Bank made his plea to be false that he could not read and write English---Held: No case was made out by defendant for getting the ex parte decree set aside.

Neel Keshav for Appellant.

Date of hearing: 22nd March, 2006.

2006 C L D 832

[Karachi]

Before Mushir Alam and Syed Zawwar Hussain Jafery, JJ

Messrs IRISMA INTERNATIONAL and 3 others---Appellants

Versus

UNITED BANK LIMITED, KARACHI and another---Respondents

Ist Appeal No. 6 of 2005, decided on 13th December, 2005.

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

---Ss. 9, 18 & 21---Civil Procedure Code (V of 1908), O.XXI, R.65---Auction under order of the Banking Court---Once a bid has been accepted, and no objections are filed within given time, the auction is to be deemed to have been confirmed under O.XXI, R.65, C.P.C.---Courts cannot be turned into auction house---Bid had been sanctified in High Court appeal coupled with the fact that objector had already withdrawn his bid amount prior to filing of appeal before the High Court and had not disclosed such fact---Procedure adopted by the Banking Court did not suffer from any illegality or perversity---High Court having found no merit in the appeal, dismissed the same.

Muhammad Akhlaq Memon v. Zakaria Ghani PLD 2005 SC 819 and 2005 SCMR 1237 fol.

Abul Inam for Appellants.

Aziz-ur-Rehman for Respondent No.1.

Rasheed A. Razvi and Shaikh Munir-ur-Rehman for Respondent No.2.

2006 C L D 842

[Karachi]

Before Faisal Arab, J

HABIB BANK LTD.---Appellant

Versus

KARACHI PIPE MILLS LTD.---Respondent

Execution No. 68 of 1999, decided on 31st March, 2006.

(a) State Bank of Pakistan BCD Circulars Nos.13 & 32 of 1984-

----Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.3---Banking systems---Interest based and mark-up based---Distinction---Salient features---Prior to introduction of Islamic system of financing in year, 1984, bank financing was purely based on interest---Borrower's liability was calculated simply by applying agreed rate of interest to the duration borrower retained the loaned amount---Interest based financing was purely time related---With introduction of Islamic system of financing through BCD Circulars Nos.13 and 32 issued by State Bank of Pakistan in year, 1984, interest based financing was abolished with effect from year, 1985 and permissible modes of financing, including mark-up in price was introduced; only exception being that where it was a case of on-lending of foreign loans by financial institutions, interest was allowed to be charged-As a result of introduction of mark-up based financing in year, 1984, under BCD Circulars 13 and 32, all financial institutions in Pakistan were prohibited from charging any additional sum on account of delay caused by customer in repayment of its obligation created under an agreement based on mark-up---Even where financial institutions had themselves extended time of repayment with the consent of its customer, it was unlawful to charge additional mark-up for such extended period---Obligation under mark-up based agreement once fixed could not be enhanced so as to entitle a financial institution to charge any sum over and above the original contracted amount---Mark-up beyond original contractual period or charging of mark-up upon mark-up both being in the nature of interest and violative of restrictions contained in BCD Circulars Nos. 13 and 32 were invariably declared by Courts as unlawful---Only original contracted marked up price was allowed to be recovered---After introduction of Islamic system of financing, whenever there was any attempt on the part of a financial institution to charge additional mark-up in violation of restrictions contained in both the Circulars of State Bank of Pakistan, the same was declared by Courts as unlawful and it was on account of such restrictions that BCD Circular No.32 contained an advice to all financial institutions to initiate recovery proceedings of their stuck up finances without loss of time as any delay would not bring any financial benefit to financial institutions---As a result of such new system of financing, financial institutions were prevented from charging any additional sum to which they were earlier entitled under interest based financing---Any delay in repayments did not bring any monetary gain to financial institutions.

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

--S.3---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S.15---Banking Tribunals Ordinance (LVIII of 1984), S.6---Recovery of loans---Powers of Courts---Comparison---Grant of mark-up over mark-up---Courts were empowered to grant mark-up over and above contractual liability under both Banking Tribunals Ordinance, 1984 and Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, which was a source of further return to financial institution on their finances, whereas Financial Institutions (Recovery of Finances) Ordinance, 2001, withdrew power of Courts to grant mark-up with the power to award only "Cost of Funds"---Such "Cost of Funds" meant only to compensate financial institutions for the cost that they had to bear for their stuck up finances---Replacing Court's power to award mark-up with power to award "Cost of Funds" was intended to get rid of perception that by allowing mark-up beyond contracted period in reality was reintroduction of interest based financing---Apparently for such reason, Financial Institutions (Recovery of Finances) Ordinance, 2001, took away power of Courts to grant mark-up beyond contracted period and replaced it with power to award only 'Cost of Funds'---Position which emerged after promulgation of Financial Institutions (Recovery of Finances) Ordinance, 2001, is that in addition to contractually chargeable mark-up, a financial institution cannot now claim from Court any additional mark-up except the cost which it had to bear for its finance stuck up with its defaulting customer---Concept of earning further income in shape of mark-up was replaced with the concept of compensating financial institution with 'Cost of Funds' and that too is determinable by State Bank of Pakistan as envisaged by S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Change in law i.e. withdrawal of Court's power to award mark-up beyond contracted period under provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, with award of 'Cost of Funds' under Financial Institutions (Recovery of Finances) Ordinance, 2001, was clearly intended to remove perception that award of mark-up beyond contracted mark-up is in the nature of interest.

(c) 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.3---Execution of decree---Recovery of Cost of Funds-Relief not granted in decree---Jurisdiction of Executing Court---Decree against judgment-debtor was passed at the time when Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, I997, was in force---Grievance of judgment-debtor was that instead of recovery of continuous mark-up beyond contracted mark-up, Executing Court should recover 'Cost of Funds' as provided in S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Notwithstanding harshness of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, which permitted award of continuous mark-up beyond contracted mark-up, Executing Court could not extend benefit of new law by replacing mark-up awarded by Court under the existing law at the time of passing of decree, with award of only 'Cost of Funds' permitted under Financial Institutions (Recovery of Finances) Ordinance, 2001---Such replacement would amount to empowering Executing Court to amend the decree---Appeal was disposed of accordingly.

?

AIR 1927 Lah. 659; AIR 1933 All. 252; AIR 1938 Sind 185; AIR 1943 Sindh 247; AIR 1943 Pesh. 33; AIR 1946 Sindh 150; AIR 1977 MP 112; AIR 1985 Punjab & Haryana 143; AIR 1942 Mad. 442 and PICIC v. Government of Pakistan 2002 SCMR 496 ref.

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

----S.18---Civil Procedure Code (V of 1908), O.XXI, Rr.82, 84 & 85---Execution of decree---Sale through auction---Delay in deposit of sale price---Contention of judgment-debtor was that delay in deposit of sale price by unction-purchaser could not be attributed to him and mark-up for such period should not be included in decretal amount---Validity---Once assets of judgment-debtor were sold in Court proceedings and time was prescribed for auction-purchaser to deposit sale proceeds in Court, then any delay on the part of auction-purchaser to deposit purchase price for any reason not attributable to judgment-debtors, could not be made basis to call upon judgment-debtor to pay any mark-up also for such delayed period---No principle of law had permitted such recovery---Stipulated period within which auction-purchaser ought to have deposited balance sale consideration was to be regarded as the period on which recovery of decretal amount was effected---Any indulgence to unction-purchaser with active or passive consent of decree-holder would not make judgment-debtor liable to pay mark-up beyond the date when auction-purchaser was required to deposit money into Court---Mark-up was to be charged from judgment-debtor from date of filing of suit till the date when auction-purchaser was required to make payment of entire sale consideration---Bank was not entitled to recover from judgment-debtor, mark-up for the period of delay caused by auction-purchaser in circumstances.

Hamza L. Ali for Appellant.

Syed Zaki Muhammad for Respondent.

Aziz-ur-Rehman for Intervenor.

Dates of hearing: 16 February, 2nd, 8th and 16th March, 2006.

2006 C L D 889

[Karachi]

Before Mrs. Qaiser Iqbal, J

Dr. MUHAMMAD TARIQ SIDDIQUI---Plaintiff

Versus

UNION BANK LTD.---Defendant

Suit No. B-21 and C.M.A. No.8680 of 2005, heard on 18th January, 2006.

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

----Ss. 10 & 11---Leave to defend suit---Agreement between Bank and customer existed about the finance facility, followed by the finance agreement, executed by the parties along with irrevocable general power-of-attorney, which resulted in exchange of letters between the parties and due to non-compliance of some of the legal formalities, the matter could not be finalized and the loan was not disbursed by the Bank---Valuable rights of the defendant (Bank) were involved which required adjudication on the issue as to whether on account of acts and omission by the defendant, the plaintiff (customer) had sustained damages as claimed in the suit---Defendant (Bank), in circumstances, was entitled to the relief of unconditional leave to defend the suit of the customer and application of the defendant under S.10, Financial Institutions (Recovery of Finances) Ordinance, 2001 was to be treated as written statement of the defendant.

Zaheer Minhas for Plaintiff.

Naveedul Haq for Defendant.

Date of hearing: 18th January, 2006.

2006 C L D 895

[Karachi]

Before Mushir Alam, J

CARAVAN EAST FABRICS LIMITED---Petitioner

Versus

ASKARI COMMERCIAL BANK LTD., AL-BARAKA

ISLAMIC BANK LTD.---Objectors

J.M. No. 54 of 2002, decided on 25th April, 2006.

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

----Preamble---Object of the Companies Ordinance, 1984 appears to be to protect the interest of the creditors and investors and promotion of investment and development of economy and matter arising out of or connected therewith.

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

----S.284---Compromise or arrangement---Scope and extent---Petition to seek approval of the Scheme, whereby it was proposed that the principal dues of both secured or unsecured creditors may be converted into equity, and that all the creditors shall waive mark-up---Objection application made by creditor Banks who had obtained mortgage decrees against the company and executions had been filed---Other creditors had also filed as many as seven suits and except one pending before the Banking Court, all were pending in the High Court---Proceedings in execution, as well as in suits, had been stayed under S.284(5) of the Companies Ordinance, 1984 in the present proceedings---Creditor---Connotation---Class of creditors---Determination of---Principles---Interest of whole class of creditors to be dealt with on the same footing---Function, powers and discretion to sanction or otherwise a scheme---Principles.

The petitioner has filed the petition to seek approval of the scheme, whereby, it is proposed that the principal dues of both secured and unsecured creditors may be converted into equity, and that all the creditors shall waive mark-up. The objector Banks have obtained mortgage decree against the petitioner, executions have been filed. It also appears from the record that, other creditors have also filed as many as seven suits, except one pending before the Banking Court, all are pending in High Court, proceedings in executions, as well as in suits, have been stayed under S.284(5), Companies Ordinance, 1984 in instant proceedings.

Section 284 of the Companies Ordinance, 1984, is a compete code in itself. It provides a mechanism whereby a company in order to restructure or reorganize itself or its shares and capital or to achieve the object of amalgamation or merger with any number of companies or demerger or bifurcate its operation into two or more entities, may with the sanction of the Court, enter into any scheme of compromise or arrangement with all or any set of stakeholders or any class thereof as specified in section 284 namely:

(i) Between a company and its creditors or any class of them, (ii) Between the company and its members or any class of them.

In case of a company being wound up, then liquidator with the sanction of Court, may enter into any scheme of compromise or arrangement with all or any set of stakeholders specified above.

Companies Ordinance, 1984 does not define compromise or arrangement as used in section 284 though extended meaning is assigned to 'arrangement'. It appears that, the Courts have adopted progressive and dynamic approach of what should be included in the scheme of compromise or arrangement. Progressive approach was necessary to accommodate diversity of situations with flexibility to facilitate variety of compromise or arrangement ranging from a complex merger of number of business entities demerger or bifurcation of one business entity into two or several restructuring, conversion or variation of share and share capital including a re-organization of the share-capital of the company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both those methods. Compromise or arrangement may also envisage composition either with shareholders or class of shareholders or with creditors or any class of creditors as may be conducive for the well being, survival, progress and/or to rescue the company. Scheme of compromise or arrangement between company and creditors may envisage for debt restructuring. Whatever the nature of scheme may be, foremost and preliminary step is to make application to the Court, seeking direction to call a meeting of specified class of stakeholders or interest groups to consider and approve or otherwise the proposed scheme with or without any modification. Usually the Court, at the motion of persons interested to seek enforcement of proposed scheme, may call the meeting of specified class of persons. It is necessary that, meeting of concerned categories of stakeholders, interest group or persons and or class of persons that might be affected by the proposed scheme of reorganization, settlement, compromise, amalgamation, merger or demerger, as the case may be, is called. Applicant seeking sanction and approval of the Court has to be careful while requesting a meeting of the concerned stakeholders, interest groups or class of persons. If applicant chooses to call a meeting of a particular class of persons leaving out other class of persons whose rights or interest is affected or where joint meeting of person having diverse or conflicting interests is called to secure statutory majority, then applicant runs possible risk of rejection of petition. Commonality of interest constitutes a separate class. It is for the applicant to indicate class to which scheme is proposed. Where the classes are not properly formed, the sponsor of the scheme runs the risk of the Court refusing its sanction. A wholly owned subsidiary was a separate class, it is the responsibility of the applicant to see that, the class meetings are properly constituted. The majority shareholder being a wholly owned subsidiary of the outside purchaser for the shares, constituted a separate class, from the other shareholders in proceedings under section 284. What constitutes a class, invariably is a moot question. Company Court is required to examine the case of divergent stakeholders in a Company, may it be shareholders or creditors; or any class of either of them. Court has to find out if there is different classes' inter se. Before sanctioning the scheme, Court must examine whether respective interest, of all the classes are taken due care of in equitable, just and fair manner. Broadly speaking and seemingly creditors may form one class and shareholder another. Language of section 284 demonstrates that, law recognized different classes amongst creditors and shareholders inter se. Each class of shareholders and or creditors may have different level and nature of rights and interest vis-a-vis company and even against each other. Creditors composing the different classes must show to the satisfaction of the Court that they have different and or conflicting interest distinct from the other.

Term 'creditor' is of wide connotation. In corporate parlance creditor is a class of person to whom company is indebted or owes a sum of money. Creditors may be preferential creditors, secured creditors and unsecured creditors. In the case in hand, it appears that last two categories of creditors are pitched against each other. The objections based on classification, jurisdiction or otherwise must be raised at the very earliest opportunity. Objections rose immediately on receipt of notice of proposed scheme of compromise or settlement are usually given due consideration. In case objections are not raised at the first available opportunity, same may not be considered by the Court.

"Class" in common parlance means a homogeneous section of people, grouped together, may be on account of common trade and common attribute, such as status, rank, and position or like. Person belonging to one class has number of common characteristic, which bind or classify them to form a kind of unit on account of commonality of interest. Creditor is a term of wide connotation, there may be various categories of creditors. For the purposes of section 284 there is no distinction between the unsecured creditors who may have filed ? suits or obtained decrees and other unsecured creditors who may not have filed any proceeding nor obtained any decree.

It could be said for the purposes of section 284 that 'secured creditors' also constitute a separate and distinct class. Irrespective of the fact, whether they have filed suits or obtained decrees and other secured creditors who may not have filed any proceeding nor obtained any decree.

Not only in winding up, the interest of whole class of secured creditors would have to be dealt with on the same footing. After securing State revenue, salaries/wages/dues of the employees and insurance respectively, secured creditors have precedence over general or unsecured creditors. Even in cases where the assets of a company are sold whether under money or a mortgage decree, 'secured creditors' have priority after the State Revenue (see section 405 of the Companies Ordinance, 1984, Order XLIV, rule 13 read with section 73, C.P.C.). Thus it could be seen that, interest of secured creditors are common, irrespective of the time when charge on the property of the company was created or whether they have filed suit and obtained decree or not, interest of all the secured creditors is usually alike and common.

Objector Banks having first charge of hypothecation of stock and plant and machinery and a registered charge on land and building indeed they are secured creditor and thus form a distinct class.

As regard the function power and discretion of the Court to sanction or otherwise a scheme, the following broad contours of such jurisdiction have emerged:

(1) The sanctioning Court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by law have been held.

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

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

(4) That all necessary material indicated by law is placed before the voters at the concerned meetings.

(5) That all the requisite material contemplated by law is placed before the Court by the concerned applicant seeking sanction for such a scheme and the Court gets satisfied about the same.

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

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

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

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

When scheme of any compromise or arrangement is placed before the Court for sanction, it is clear that, the Court is not merely to sit idol and pass order mechanically. It is function of the sanctioning Company Judge to see and he satisfies that, (a) all the requisite statutory procedure for supporting proposed scheme of settlement or compromise has been duly observed. (b) That the requisite meetings of the concerned class of stakeholders within the contemplation of section 284(1) of the Companies Ordinance, 1984 have been held and conducted in accordance with law. (c) That all necessary material referred in proviso to subsection (2) of section 284 ibid was laid before the target class of stakeholders at the statutory meetings and so also before the sanctioning Court. (d) That the proposed Scheme has been approved by the statutory majority in number representing 3/4th (75%) in value of the concerned stakeholder or class thereof, as envisaged by subsection (2) of section 284 ibid. (e) That the majority decision of the concerned class of stakeholder is just, fair and equitable and in good faith to the class of stakeholder as a whole so as to legitimately bind the dissenting members of that class of stakeholder. (1) That the proposed Scheme does not infringe any provision of law and is not against public policy.

In event joint meeting of broad-spectrum of stakeholders of divergent interest inter se is called and held, then it is duty of Court to see that meeting was not called with aim to assert and win over 75% of statutory majority as a whole, to earn sanction of scheme to the deteriment of minority sub-class of stakeholders within that particular class of stakeholders, having otherwise conflicting interest.

Once the sanctioning company Court is satisfied that all the requirements of law as noted above, are complied with, then hardly any justification or discretion remains with Court to refuse sanction to the proposed scheme.

Guha and Manikganj Trading and Banking Company v. Madhabendra Kumar Shakla and another AIR 1936 Cal. 162; Kohinoor Raiwand Mills Ltd. v. Kohinoor Gujar Khan Mills 2002 CLD 1314; Re-Hunza Central Textile and Woollen Mills Ltd. PLD 1976 Lah. 851; Hunza Central Asian Textile and Woollen Mills Ltd. PLD 1976 Lah. 850; Hamadul Haq v. Taj Company 1991 MLD 841; Re: Lipton Pakistan Ltd. 1991 CLC 818; Re: BTR PLC BCLC i.e. Butterworth Company Law Cases (1999) 2 Ch. D. page 675 at 690; Empire Mining, (1890) L.r. Ch.D. 402; Re: Messrs Pakland Cement Limited through Director Shamim Musheq Siddiqui, 2002 CLD 1392; Re: Messrs Saddi Cement Limited through Director, Shamim Musheq Siddiqui, 2002 CLD 1352; Messrs Shakarganj Mills Limited and another v. Crescent Ujala Limited 2005 CLD 36; Capital Assets Leasing Corporation Ltd. v. International Multi Leasing Corporation Ltd. 2003 CLD 1713: International Multi Leasing Company v. Capital Assets Leasing Corporation Limited and another 2004 CLD 1; New Swadeshi Mills of Ahmedabad Ltd. v. Dye-Chem Corporation (1986) 59 Corn. Cases 183 [Gujrarat High Court]; Sudarsan Chits (India) Ltd. v. Sukumaran Pillai and others (1985) 57 Corn. Cases 85 [Kerala High Court]; Re: Pak Water Bottlers (Pvt.) Limited and 2 others 2003 CLD 1634; ACE Insurance Limited, In the matter of Judicial Miscellaneous No.19 of 2001, 2002 CLD 171; Messrs Platinum Insurance Company Limited, Karachi through Managing Director v. Daewoo Corporation, Sheikhupura through Director, Administration and Finance, PLD 1999 SC 1; Messrs. Habib Bank Ltd. V. Messrs Golden Plastic (Pvt.) Ltd. 1991 MLD 124; International Finance Corporation, Washington D.C. 20433 U.S.A. v. Hala Spinning Ltd., Gulberg II, Lahore PLD 2000 Lah.323; Rauf B. Kadri v. State Bank of Pakistan and another PLD 2002 SC 1111; Hala Spinning Mills Ltd. v. International Finance, Corporation and another, 2002 SCMR 450; A.C.K. Krishnaswami W. Stressed Concrete Constructions Private Ltd. (1964) 34 Corn. Cases 6 [Madras High Court]; S. Krishnamurthy, Registrar of Companies, Punjab v. Rohtak Hissar Transport Company (P.) Ltd. (1966) 36 Co. Cases 9 [Punjab High Court at Chandigarh]; Re: Alliance Motors (Pvt.) Ltd. 1997 MLD 1966; Messrs United Bank Limited v. Messrs Taj Company Limited and 2 others 1996 CLC 890; Registrar of Companies, Punjab v. Ajanta Lucky Scheme and Investment Company Private Ltd. and others (1974) 43 Corn. Cases 314 [Punjab and Haryana High Court]; Kohinoor Textile Mills Ltd. through Company Secretary v. Monopoly Control Authority through Chairman, Government of Pakistan, 2002 CLD 1844; Messrs Industrial Development Bank of Pakistan v. Messrs Sarela Cement Limited Company 1993 CLC 1540; Messrs Shakarganj Mills Limited and another 2005 CLD 36; Heron International RE. VN (1994) BCLC 664 Ch.D.; Commerz Bank AG v. Arvind Mills Ltd. (2002) 110 Comp. Cases 539 [Guj.); Helenic and General Trust Ltd. (1975) 3 All ER 382; Alstan Power Bottlers Ltd. v. State Bank of India (2002) 112 Comp. Cases 674; Jalpaiguri Banking and Trading Company Ltd. RE: (1935) 5 Company Cases 335; Hari Charan Karanjia v. Ulipur Bank Ltd. (1942) 12 Comp. Cases 110 = AIR 1942 Cal. 442; Premier Motors (Pvt.) Ltd. (1971) 41 Com. Cases 656 and Miheer H. Mafatlal v. Mafatlal Industrial Ltd. AIR 1997 SC 507 ref.

(c) Companies Ordinance (XLVII of 1984)-

----S.284---Petition seeking approval of the scheme of arrangements was refused by the High Court on account of same being patently not only unfair and unjust but mala fide attempt to deprive the secured creditors of the finance---Reasons and factors resulting in refusal to approve the scheme by Courts, recorded.

Asim Mansoor for the Petitioner.

Arshad Tayebally for the Objectors.

Dates of hearing: 21st, 22nd and 28th March, 2006.

2006 C L D 927

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

MUBARAK ALI---Appellant

Versus

FIRST PRUDENTIAL MODARABA through Chief Executive---Respondent

1st Appeal No. 42 and C.M.A. No.936 of 2004, heard on 21st April, 2006.

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

----Ss.14, 12, 9 & 22---Transfer of Property Act (IV of .1882), S.56---Civil Procedure Code (V of 1908), 0.11, R.2, 0.XXXIV, R.14 & S.11---Appellant. in the present case, was not party to the suit and respondent had never relinquished any part of its claim against the appellant at the time of institution of said suit---Mere fact that at the time of institution the respondents had not impleaded/arrayed the present appellant as one of the defendants in the suit, would not justify a conclusion that the claim against the appellant based on equitable mortgage vis-a-vis the memorandum of deposit of title deeds executed by him was relinquished---Creation of equitable mortgage and execution of deed and deposit of title documents had given an independent ca ise of action to the respondents for obtaining a decree against the appellant for sale of mortgaged property---Provisions of 0.11, R.2 and S.11, C.P.C. would have no relevancy or applicability to the facts of the present case---Decree passed in earlier suit being not a money decree against the appellant the respondent had independent right against him to file a separate suit for recovery of decretal amount from him to the extent of equitable mortgage created by him in its favour, if it so chose---Plea with reference to O.XXXIV, R.14, C.P.C. would also be not relevant in circumstances.

Hussain Bakhsh v. Settlement Commissioner, Rawalpindi and others PLD 1970 SC 1;Hudaybia Textile Mills Ltd. v. Allied Bank of Pakistan PLD 1987 SC 512; National Bank of Pakistan v. S.A. Sattar and others PLD 1962 Kar. 271; Hatimbhai v. Karimbhai 1993 MLD 988; Abdul Hakim and 2 others v. Saadullah Khan and 2 others PLD 1970 SC 63; Aziz Ahmad and others v. Mst. Hajran Bibi and another 1987 SCMR 527: M.K. Abbasi v. United Bank Ltd. 1983 CLC 482; Allah Dad v. Mehmood Shah 1990 CLC 33; Azirannessa Bewa v. United Bank of India Ltd. PLD 1963 Dacca 13; Messrs Eagle Star Insurance Co. Ltd. v. Messrs Usman Sons Ltd. and others PLD 1969 Kar. 123; Maqsood Ahmed and others v. Salman All PLD 2003 SC 31; Bank of Credit and Commerce International (Overseas) Ltd. v. The Banking Tribunal for Sindh and Balochistan and two others 1990 MLD 309; Phani Bhusan Mukherjee and others v. Rajendra Nandan Goswami and another AIR 1947 Calcutta 11; Saadullah Khan and six others v. Mir Piayo Khan and 14 others PLD 1970 Pesh. 150; Rafia Begum v. Mirajuddin and others PLD 1959 W.P. (Lahore) 890; Muhammad Tariq v. Bank of Punjab and another 2004 CLD 162; Muhammad Sarwar Khan v. Habib Bank Ltd. 2004 CLD 881; First Grindlays Modaraba v. Pakland Cement Ltd. and two others 2000 CLC 2017; Abdul Basit Zahid and another v. Modaraba Al-Tijarah and another 2002 CLD 46 and National Bank of Pakistan v. First Tawakal Modaraba 2002 CLD 1018 ref.

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

----S.8---Banking Companies (Recovery of Loans, Advances Credits and Finances) Act (XV of 1997), S.9---Modaraba Ordinance (XXXI of 1980), S.25---Suit for recovery of loan by a Modaraba company---Special and subsequent amendment (Financial Institutions (Recovery of Finances) Ordinance, 2001), supersedes the provisions of earlier special enactment (Banking Companies (Recovery of Loans, Advances. Credits and Finances) Act, 1997)---Plaintiffs, therefore. had the option to file suit for recovery under S.9(1) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act. 1997 (now S.8(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001), in addition to the right available to them under S.25 of the Modaraba Ordinance, 1980.

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

----S.17---Financial Institutions (Recover) of Finances) Ordinance (XLVI of 2001), S.18---Registration Act (XVI of 1908), Ss.17 & 49---Banking documents---Recovery of loan---Section 17, Banking Companies (Recovery of Loans. Advances. Credits and Finances) Act, 1997 a special law, contains an overriding provision in its subsection (4) affecting all the provisions of general law providing therein that notwithstanding anything contained in any other law, the Banking Court shall not refuse to accept in evidence any document creating, or purporting to create, or indicating the creation of mortgage, charge, pledge or hypothecation in relation to property merely because it is improperly stamped or is not registered and no such document shall be impoundable by Banking Court---Memorandum of deposit of title deeds therefore, would not be affected by the provisions of S.17 read with S.49 of the Registration Act, 1908 due to its non-registration, as equitable mortgage was created on deposit of original title deeds of the property with the Modaraba and Memorandum of deposit of title deeds executed between the parties later on carried only a recital of such fact.

Muhammad Sarwar Khan v. Habib Bank Ltd. 2004 CLD 881 fol.

Jhamat Jethanand for Appellant.

Nadeem Akhtar for Respondent.

2006 C L D 938

[Karachi]

Before Mrs. Yasmeen Abasey, J

MANAGER, MUSLIM COMMERCIAL BANK LIMITED and another---Applicants

Versus

BABAR---Respondent

R.A. No.21 of 2001, decided on 21st March, 2006.

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

----S. 13---Cheque, a negotiable instrument---Scope---Term negotiable instrument as defined in Negotiable Instruments Act, 1881, means a promissory note, bill of exchange or cheque payable either to order or to bearer---Term 'cheque' has been expressed as 'bill of exchange- drawn on a specified branch and not expressed to be payable otherwise than on demand.

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

----O.XXXVII, Rr.2 & 3---Recovery of amount on the basis of cheque---Conditional leave to defend the suit---Deposit of indemnity bond as bank guarantee---Validity---Condition of furnishing surety in the form of indemnity bond as ,bank guarantee having a firm identity was more than what was required, because purpose of execution of indemnity bond was to oblige the indemnifier against loss sustained by him from the conduct of person for whom he stood surety---Whereas in the present case it was yet to be determined as to where the fault lay---Order of Trial Court was modified to the extent that defendant was not required to furnish surety in the form of indemnity bond---High Court allowed the defendant to defend the suit as already leave had been granted to him but without any condition---Revision was allowed accordingly.

Naved-ul-Haque for Applicants.

Date of hearing: 23rd January, 2006.

2006 C L D 940

[Karachi]

Before Zia Perwaz, J

PRIME COMMERCIAL BANK LIMITED---Plaintiff

Versus

AGRICIDE (PRIVATE) LIMITED and others---Defendants

Suit No.B-40 of 2002, decided on 23rd October, 2004.

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

----Ss.3 (2) & 9---Recovery of bank loan---Mark-up beyond agreed period---Cost of funds---Loan facility was advanced from one branch of the bank and subsequently transferred to its head office---Bank claimed amount beyond mark-up chargeable on principal over and above the period for which the amount was originally sanctioned---Validity---Such claim of mark-up was not recoverable---Mere transfer of liability from branch to main account of borrower at head office did not constitute a fresh transaction based on appropriate sanction with agreed mark-up but was a mere book entry from one account to another---Such transfer of account did not entitle bank to claim mark-up accrued at initial bank beyond the agreed period of sanction and claim for recovery of additional amount was not maintainable---While bank was not entitled to recover mark-up/interest at a fixed rate for the years, it would be unjust if bank was deprived of cost of funds and the claim was rejected outright---Cost of funds was incurred on the amount advanced to borrowers and was to be determined by State Bank of Pakistan after taking into consideration all necessary factors involved in such regard---Accordingly the cost of funds for the years before promulgation of Financial Institutions (Recovery of Finances) Ordinance, 2001, could also be determined by State Bank of Pakistan---Bank was entitled to recover the amount of cost of funds so determined by State Bank of Pakistan on the principal amount---Suit' was decreed accordingly.

Aijaz Ahmad and Naveed-ul-Haq Chaudhry for Plaintiff.

S. Afaq Ali and S. Hamid Ali for Defendants.

Dates of hearing: 6th and 21st September, 2004.

2006 C L D 960

[Karachi]

Before Khilji Arif Hussain, J Syed AKBAR ALI---Petitioner

Versus

MAMUN ALI BUMASUK (PVT.) LTD. and others---Respondent

J. Misc. No. 16 of 2004 and C.M.A. No.1254 of 2005, decided on 16th May, 2006.

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

----S. 152---Petition under 5.152, Companies Ordinance, 1984 alleging that name of a person was fraudulently or without sufficient cause entered in or omitted from the register of company---Power of Court to ratify the Register---Scope.

In a petition under section 152 of the Companies Ordinance, 1984 the Court has to make all efforts to decide all the questions arising in the petition to give finding whether the transfer of the shares from the name of the petitioner was fraudulent or not, instead of asking the aggrieved party to get the same decided by a Civil Court instead by the High Court in exercise of its Company Jurisdiction as question involved is intricate question of law and fact. The legislature intended to rectify register of the company if the name of any person is fraudulently or without sufficient cause entered in or omitted from the register of members and Court while dealing with the application has to decide the question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register. The question "whether name of any person is fraudulently or without sufficient cause entered in or omitted from the register?" is a question which can normally be answered on the basis of evidence and such evidence can be recorded in the form of affidavit or otherwise, dependent upon the nature of each case, but merely because matter required recording of evidence, the parties can be deprived of their rights which otherwise can be granted to him to redress his grievance in summary manner under the Companies Jurisdiction instead of asking him to go under a lengthy civil litigation.

Jawahar Mills Ltd. Salem v. Shah Mulchand and Co. Ltd. AIR 1951 Mad. 572; Syed Shafqat Hussain v. Registrar, Joint Stock Companies, Lahore PLD 2001 Lah. 523; The New Jhelum Transport Co. Ltd. (In Liquidation), Jhelum v. Malik Nazir Ahmed PLD 1977 Lah. 217; Rohail Hashmi v. Nabeel and others 2003 CLD 201; Akbar Ali Sharif v. Syed Jamaluddin 1991 MLD 203; Zakir Latif Anwari and others v. Pakistan Industrial Promoters Ltd. 1988 CLC 1541 and Muhammad Mohsin Butt v. Muhammad Inayat Butt 2005 CLD 747 ref.

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

----S. 152---Limitation Act (IX of 1908), Arts.120, 181 & S.3---Petition under S.152, Companies Ordinance, 1984 calling in question title of shares and of omitting name of petitioner from the register of company---Remedies---Limitation---Where the petitioner had failed to give any reason, what to say a cogent reason, for not questioning the transfer of shares from his name for eleven long years the petitioner was not entitled for discretionary relief under S.152, Companies Ordinance, 1984 and petition was liable to be dismissed---Principles.

A party, who called in question title of the shares and of omitting his name fraudulently from the register of Company, has two remedies i.e. by filing a suit for declaration before the civil Court and/or by filing an application under section 152 of the Companies Ordinance, 1984 but such remedies ought to have been invoked within the period of limitation provided and if no period is specifically provided then within reasonable period of time. Without going into the question whether Article 120 of the Limitation Act and/or Article 181 of the Limitation Act is applicable to the petition under section 152 Companies Ordinance, 1984 or not as such petition is neither a suit nor an application under section 3 of the Limitation Act, the petitioner cannot be allowed to call in question transfer of shares at his own sweet-will. Once a remedy of Civil Suit has become barred by time then only in exceptional circumstances a party can be allowed to avail other remedy if available in law. Since the petitioner in the present case had failed to give any reason what to say cogent reason for not questioning the transfer of shares from his name for 11 long years he was not entitled to discretionary relief under section 152 of the Companies Ordinance, 1984---Petition was dismissed.

Aga Faquir Muhammad for Petitioner.

Riazuddin for Respondents.

2006 C L D 967

[Karachi]

Before Zahid Kurban Alvi, J

MUHAMMAD RAHIM and 28 others---Petitioners

Versus

Messrs THARPARKAR SUGAR MILLS LTD., through Chief Executive and 10 others---Respondents

J.M. Nos. 27 and 47 of 2000, heard on 13th November, 2000.

Companies Ordinance (XLVII of 1984)--

----Ss. 292 & 290---Tremendous financial problems had crept up which had created a situation where all the creditors of the company were demanding their money---Having failed to release the outstanding, creditors had resorted to litigation and suits had been filed before competent Court of jurisdiction---Liability of the company had gone up tremendously---Certain justifications and excuses were being given on behalf of the company for the delay in the commencement of the project which had resulted in a squeeze on the liquidating resulting in the present situation---Petition under S.292, Companies Ordinance, 1984 was moved by the creditors seeking the relief that Company and Financial Institutions which had financed the company may appoint a receiver, administrator and manager to run the company in consultation with its Directors; that the re-scheduling and restructuring be done and in the interim period a moratorium be observed and that High Court should declare that the financial Institutions were not entitled to any interest and/or mark-up---Validity---High Court, declined to grant relief as prayed for holding that there was no justification for appointment of an administrator and further observed that petitioners should have approached the Restructuring and Re-Scheduling Committee appointed by the Government of Pakistan in concurrence with the State Bank of Pakistan, who can investigate the feasibility of the Company and may issue directions for the restructuring and re-scheduling.

Farooq H. Naek for Petitioner.

Muhammad Farogh Nasim, Salimuddin Nasir and Sajjad Ali Shah for Respondents.

Date of hearing: 13th November, 2000.

2006 C L D 976

[Karachi]

Before Muhammad Sadiq Leghari, J

SPECTRUM FISHERIES LTD.---Petitioner

Versus

PICIC COMMERCIAL BANK---Respondent

J. Misc. Nos. 21 and 31 of 2004, decided on 3rd March, 2005.

Companies Ordinance (XLVII of 1984)--

----Ss. 284 & 288--Application under Ss.284 and 288 of the Companies Ordinance, 1984 submitting therewith scheme for discharging the liability of the creditors---High Court, in view of mandatory requirement of approval of the scheme by 3/4th of the creditors, appointed official Assignee as the Chairman of the meeting and fixed 60% of the creditors as quorum of the meeting---Official Assignee after holding the meeting of creditors submitted a report expressing therein that the creditors had opposed the scheme---Petitioner's counsel did not dispute the position as given by the official Assignee---High Court, in view of the fact that scheme was not approved by the creditors as required by law, dismissed the petition.

Mansoorul Arfin for Petitioner.

Arshad Tayebally for PICIC.

M. Shahid and M. Rasheed Khan for Bank Al-Falah.

Junaid Faruqui for Karachi Fisheries.

Syed Saleemuddin Nasir for Saudi Pak Commercial Bank Ltd.

2006 C L D 982

[Karachi]

Before Maqbool Baqar, J

SAUDI-PAK COMMERCIAL BANK LTD. through duly Constituted Attorney---Plaintiff

Versus

PROGRESSIVE INSURANCE COMPANY LIMITED through Chief Executive---Defendant

Suit No. B-33 of 2003 and C.M.A. No.4829 of 2005, decided on 28th September, 2005.

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

----S. 9---Suit for recovery of loan---Cost of fund, award of---Scope---Commissioner appointed by Court had determined the outstanding liability of the defendant company in terms of finance agreement executed between the parties as Rs.29,479,061 out of which an amount of Rs.25.341.588.42 was determined to be outstanding towards the principal amount whereas a sum of Rs.4.137,437 constituted the mark up for the period as agreed between the parties---Contention of the Bank's counsel was that defendant company in their balance sheet pertaining to the years in question had shown an amount of Rs.37,160,064 as outstanding against the defendant company towards the plaintiff Bank---Effect---Held. such entry/admission was of no consequence as admittedly in terms of the finance agreement between the parties. only an amount of Rs.29.479.061 was due and payable by the defendant--Plaintiffs suit therefore was decreed against the defendant in the sum of Rs.29,479,061 with cost of funds payable by the defendant for the period commencing from 1-7-2003 till the payment/realization---Such cost shall be paid by the defendant in the specified amount as determined by the Court year-wise.

Syed Salimuddin Nasir for Plaintiff along with Jahangir Ahmed, Assistant Vice-President of the Plaintiff Bank.

Arshad Tayebaly for Defendant.

2006 C L D 987

[Karachi]

Before Shabbir Ahmed and Khilji Arif Hussain., JJ

NAJAM-US-SAQIB---Appellant

Versus

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

First Appeal No.12 and C.M.A No.431 of 2001, decided on 13th April, 2004.

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

----Ss. 10 & 22---Appeal---Only point canvassed before the High Court was that the Banking Court discriminated the appellant/guarantor by refusing the leave to defend the suit when in similar circumstances leave was granted when the respondent/Bank had also initiated criminal proceedings---Validity---Civil liability and criminal liability were distinct and separate, and each case was to be dealt with on its own facts and circumstances---Guarantee executed in the present case, was not disputed---No contentious point of fact and law having been raised by the appellant, Banking Court had rightly dismissed the application for leave to defend the suit and granted the decree in, favour of the Bank.

Shaikh Liaquat Hussain for Appellant.

Sardar Jannat Hussain for Respondent No. 1.

2006 C L D 1082

[Karachi)

Before Muhammad Moosa K. Leghari, J

MUHAMMAD LAEEQ and others---Petitioners

Versus

SINDH ALKALIS LTD.---Respondent

J. Miscellaneous No. 37 of 2003 and Civil Appeal No.1071 of 2005, decided on 17th May, 2006.

Auction---

----Company---Auction of assets of company by Official Assignee---Bid, in an auction is only an offer and without the confirmation of sale, it does not create any right in the property in favour of successful bidder and confirmation of sale cannot be claimed as of right.

Afzal Mahmood Butt v. Banking Court No.2, Lahore PLD 2005 SC 470 fol.

Noor Naz Agha. Junaid Farooqui, Choudhry Rasheed Ahmed, Zubair Qureshi, Faisal Kamal,Raja Muhammad Ibrahim Setti for Petitioners.

Ahmed Pirzada, Addl. A. G. for Respondent.

Kadir Bux Umrani, Official Assignee.

2006 C L D 1099

[Karachi]

Before Sabihuddin Ahmed, C.J. and Ali Sain Dino Metlo, J

Messrs EURO-PLUS MONS BELGIUM through Country Chief---Appellant

Versus

Messrs KIRAN SUGAR MILLS LTD. through Nauman Shaikh and 8 others---Respondents

H.C.As. Nos. 1 and 2 of 2006, decided on 25th May, 2006.

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

----Ss. 19(2) & 22---Civil Procedure Code (V of 1908), O.XXI, Rr.85, 89, 65, 66 & 67---State Bank of Pakistan

2002---High Court appeal---Decree for sale of property by auction with order of the Court---Execution of decree---Award of compensation to purchaser of judgment-debtor's property---Order of Single Judge of High Court, exercising Banking jurisdiction in execution proceedings setting aside sale of judgment-debtor's assets to appellant on the ground that appellant had failed to deposit the balance 75% amount of the purchase money within time and that the parties i.e. the creditors (including the decree holders) and the judgment-debtor were interested to settle their dispute under the State Bank of Pakistan BPD Circular No.29--Validity-Held, order providing for the deposit of money within 15 days was suspended before the expiry of the period and continued to remain so till it was set aside by the Supreme Court and, therefore, the appellant could not be said to have violated the order and committed default in making the payment---Court was also competent to extend the time prescribed by it particularly when matter was still pending before it---Sale, in circumstances was not liable to be set aside on the ground for non-deposit of balance amount---State Bank of Pakistan BPD Circular No.29 of 2002 had a statutory force and when the decree-holders were also willing for a settlement with the judgment-debtor (and on being given a chance they had reportedly settled the matter), it was fair to afford them a chance to do so---Purchaser/appellant at the same time also needed to be compensated and it would be highly unjust to push the appellant out without any fault on its part---If the judgment-debtor wanted to save his property from being sold, it must compensate the purchaser/appellant---Order XXI, R.89, C.P.C. also provided for compensation for the purchaser at the rate of 5% of the amount deposited by it---Judgment-debtor accordingly was directed by the High Court to deposit 5% of the amount deposited by the appellant, within one month from the date of present judgment, to be paid to the appellant---Amount deposited by the appellant (25% of the negotiated price) had been invested by the official Assignee, which shall also be returned to it along with the profit---If the judgment-debtor failed to deposit the amount within the stipulated period of one month, the appellant/purchaser shall deposit the balance amount of the purchase mow 'ii within 15 days thereof and the sale shall be confirmed in its name---Principles.

S. Ali Bin Adam Jafri for Appellant.

Aitezaz Ahsan along with Uzair Bin Adam and Abid S. Zubairi for Respondent No.1.

Tasawwar Ali Hashmi for Respondent No.2.

Aziz-ur-Rehman for Respondent No.4.

Izhar Muhammad for Respondent No.5.

Rana Ikramullah for Respondent No.7.

Date of hearing: 1st March, 2006.

2006 C L D 1109

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Ather Saeed, JJ

Messrs PLATINUM PHARMACEUTICALS COMPANY (PRIVATE) LIMITED---Appellant

Versus

STAND PHARM PAKISTAN (PRIVATE) LIMITED and 3 others---Respondents

High Court Appeal No.36 of 2005. decided on 17th February, 2006.

Trade Marks Ordinance (XIX of 200I)---

----Ss.39 & 81---Specific Relief Act (I of 1877), S.54---Civil Procedure Code (V of 1908), O.XXX1X, Rr. 1 & 2---High Court appeal---Interim injunction, grant of---Registered trade mark---Prior use and acquiescence---Effect---Similarity in trade mark---"Zanifiex" was the trade mark of the medicine registered in the name of plaintiff but subsequently defendant got its medicine registered against Trade Mark "Zanaflex" and marketed the same---High Court declined to grant interim injunction to plaintiff on the ground that plaintiff approached the Court with delay and that product of defendant had come into the market prior to that of the plaintiff---Validity---Observation of High Court that delay in filing of suit by plaintiff provided sufficient time to defendant to manufacture and sell their drugs in market and to establish their business under the name and style of "Zanaflex" did not hold water as within a few days of the start of manufacturing and marketing activities by defendant, Ministry of Health had directed the defendant to change its name due to its similarity with the name of plaintiff's product, despite such notice, defendant continued to carry on its business activities---Plaintiff being the first to apply for registration of Trade Mark "Zan flex" before Registrar of Trade Marks and also its drug being registered earlier than that of defendant before Ministry of Health, was entitled to the first use of the Trade Mark "Zaniflex"-All three ingredients required for the issuance of an interim injunction under O.XXXIX, Rr.1 & 2, C.P.C., i.e. presence of prima facie case, balance of convenience and irreparable damages were in favour of plaintiff---Defendant coulI1 not be granted any bonus for its own deliberate persistence in continuing with the use of its trade mark---Division Bench of High Court, in exercise of appellate jurisdiction, set aside the order passed by the single Judge of High Court---Interim injunction was allowed in circumstances.

T.G. Balaji Chettar v. Hindustan Lever Ltd. Bombay AIR 1967 Mad. 148; Abdul Aziz v. Seven Up Co. Karachi and another PLD 1978 Kar. 10; Kabushiki Kaisha Toshiba (also Trading as Toshiba Corporation) PLD 1991 SC 27; Mohan Goldwater Breweries (Private) Ltd. v. Khoday Distilleries Private Ltd. and another (Trade Mark Opposition, High Court Mad.) IPLR v2 n2 July, 77; Glaxo Laboratories Ltd. England v. Assistant Registrar, Trade Marks, Karachi PLD 1977 Kar. 858; The Sanitas Co. Ltd. v. Condy 4 RPC 530; Ruston and Honrby Ltd. v. Zamindara Engineering Co. AIR 1970 SC 1649; Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. AIR 2001 SC 1952; The Welcome Foundation Ltd. v. Karachi Chemical Industries (Pvt.) Ltd. 2000 YLR 1376; Sandoz Ltd. v. Pakistan Pharmaceutical Products Ltd. 1987 CLC 1571; Kabushiki Kaisha Toshiba v. Ch. Muhammad Altaf PLD 1991 SC 27; Dawood Cotton Mills v. Registrar of Trade Marks, Karachi PLD 1960 (WP) Kar. 547; Seven Up Co., Karachi and others PLD 1978 Kar. 10; Sivakami Chi v. Narayana Chettiar AIR 1939 Mad. 495; Messrs. Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Ferozuddin v. Muhammad Shafi PLD 1975 Kar. 486 and Halsbury's Laws of England, Third Edition, Volume XXXVIII at page 594 ref.

CIBA Ltd. Basle Switzerland v. M. Ramalingam and S. Subramaniam Trading in the name of South Indian Manufacturing Co. Madura and another AIR 1958 Bom.56 fol.

M. Fazil Bharucha for Appellant.

Farooq Amjad Meer and M. Masood Khan for Respondents.

Najmus Saqib, FID (K) for Respondent No.3.

Raj Kumar, Asst. I/C (DCA) K for Respondent No.4.

2006 C L D 1414

[Karachi]

Before Mrs. Yasmin Abbasey, J WELLA AKTIENGESELLSCHAFT---Appellant

Versus

SHAMIM AKHTAR and others---Respondents

Miscellaneous Appeals Nos.2, 3 and 4 of 1989, decided on 19th April, 2006.

Trade Marks Act (V of 1940)--

----Ss. 8(a), 14, 19(1), 28, 37 & 46(2)---Trade mark, registration of---Appellant got registered trade mark of his company as "WELLAFORM" on 19-7-1971 for goods falling in class 3 i.e. soap, perfumery etc., but due to restriction of import on said items, vide Import Policy Orders issued from 1979 to 1985, appellant was not able to do business in Pakistan under the said registered trade mark---Respondent, who was using trade mark "WELLA" since 1984 applied for its registration in clause 3 and by impugned order application of respondent was allowed---Validity---Under provisions of S.14 of Trade Marks Act, 1940 person claiming to be the proprietor of a trade mark used or proposed to be used by him and was desirous of registration, could apply for its registration to the Registrar---Terms 'used' or 'proposed to be used' in S.14 of Trade Marks Act 1940, indicated to the manufacturing and business carried out by the proprietor of goods in that particular class and mark sought to be registered---Person could apply for registration of trade mark, if he had been using that trade mark for his products or proposed to use same in future---Appellant, after getting trade mark "WELLAFORM" registered was not using the same since the day of its registration on the ground of imposition of ban on import of products---Steps taken by respondent by moving application for rectification that as appellants were not using their trade marks for more than five years, same he removed from register of Registrar, appeared to be within the framework of law---Even if the period when there were restrictions, was excluded while counting the period of non-use, then also appellant was not using same since the date of its registration, would bring appellant within the ambit of S.37 of Trade Marks Act, 1940 for non-using the same for more than five years---Appellant having not been able to establish that they were ever a bona fide user of trade mark since, 1971, order passed by Registrar, Trade Marks, was in accordance to circumstances prevailing in the matter and that appellant was admittedly non-user of its trade mark for the last five years.

1988 CLC 252; 1969 SC 477; 1981 SCMR 1039; 16 RPC 411 and PLD 1962 Kar. 355 ref.

Zafar Alam for Appellant.

Khalil Kizilbash for Respondent No. 1.

Date of hearing: 15th February, 2006.

2006 C L D 1491

[Karachi]

Before Munib Ahmed Khan, J

METROPOLITAN STEEL CORPORATION LTD. ---Plaintiff

Versus

MACSTEEL INTERNATIONAL U.K. LTD.---Defendant

Suit No.1369 of 2004 and C.M.A. No.1299 of 2005, decided on 7th March,. 2006, (a) Civil Procedure Code (V of 1908)---

----O. VII, R. 2 & S.151---Electronic Transactions Ordinance (LI of 2002), Ss.3 & 4---Arbitration (Protocol and Convention) Act (VI of 1937), S.3---Arbitration Act (X of 1940), S.34---Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Ordinance (XX of 2005). S. 4---Qanune-Shahadat (10 of 1984), Art.2(e)---Suit for recovery of amount---Defendant, according to sales contract, was to supply 1,600 M.T. steel rods, but it supplied only 500 M.T. of steel rods---Plaintiff filed suit claiming damages against defendant in respect of balance 1,100 M.T. of steel rods---Defendant filed application for stay of plaintiffs suit seeking direction from the Court to order plaintiff to refer the dispute to arbitration as the parties by the very said contract had agreed to settle all disputes by arbitration---Claim of plaintiff was that sate transaction was based on pro forma invoice, purchase order and correspondence by faxes and E, mails and that plaintiff had never entered into any sales contract containing an agreement to arbitration---Counsel for plaintiff had argued that there was no document to show that there was arbitration agreement between the parties---Validity---Defendant's counsel had rightly contended that to wriggle out of arbitration agreement, plaintiff had attached documents prior to the sates contract and not the sates contract itself which contained arbitration agreement, terms of which were accepted by plaintiff by opening a letter of credit favouring defendant in terms thereof---Plaintiff could not accept some of the terms of said contract and denied others, such as arbitration clause; plaintiff could not be allowed to blow hot and cold in the same breath---Agreement to arbitration, could also be inferred from the conduct of the parties based on exchange of correspondence---From the exchange of correspondence between parties, art agreement to refer dispute to arbitration could easily be inferred, from which plaintiff could not extricate itself---Suit was stayed and plaintiff was directed to resort to terms of sales contract for settlement of its dispute with defendant by arbitration as agreed between the parties.

2002 SCMR 1903; 1977 SCMR 409; 1986 CLC 312; Zambia Steel's case [1986] 2 Lloyds Law Report 225 and Hitachi Limited v. Rupali Polyester 1998 SCMR 1618 ref.

(b) Administration of justice---

----Omission to mention a provision or mentioning of a wrong provision of law, would not render an application invalid or make it fatal to the grant of relief, if it was available under the law to an aggrieved party.

1982 SCMR 673 and 1994 SCMR 1555 ref.

Noorullah Manji and Nasir Mehmood for Plaintiff.

Jawad Sarwana for Defendant.

2006 C L D 1506

[Karachi]

Before Anwar Zaheer Jamali and Syed Zawwar Hussain Jaffery, JJ

NAJMUL HASSAN ATA and 4 others---Appellants

Versus

HABIB BANK LIMITED through President and 5 others ---Respondents

First Appeal No.67 and C.M.A. No.1161 of 2005, decided on 31st August, 2006.

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

---S. 2---Appeal---Counsel for appellant conceded that appellants had no case to pursue the appeal, however with reference to position of one appellant, who since had died, it was contended that impugned judgment against deceased appellant was unjustified as she was not original borrower, but had executed some documents in favour of the Bank to secure payment from other appellants--Submission of counsel for appellants was that liability of deceased appellant would be confined only to the extent of liability created against her through execution of documents---Validity--Impugned judgment and decree, in circumstances could be executed against deceased appellant only to the extent of her liability in view of documents executed by her.

Mukhtiar Ahmed for Appellants.

Badar Alam for Respondent No.1.

Nemo for other Respondents.

2006 C L D 1511

[Karachi]

Before Faisal Arab, J

ADAM HOLDING LIMITED and another---Plaintiffs

Versus

GLOBAL CONTAINER LINES (BAHAMAS) LTD. through Local Agents---Defendant

Suit No.752 of 1987, decided on 21st August, 2006.

Contract Act (IX of 1872)----

----Ss. 151 & 152---Civil Procedure Code (V of 1908), S.34 & O.XV, R.4---Bill of lading---Carrier's duty---Right of endorsee---Scope---Defendant's failure to produce evidence---Effect--Plaintiff/exporter based in Pakistan sold goods (cloth) to a foreign company---Importer/other plaintiff was placed abroad---Plaintiff/exporter entrusted goods to defendant (shipping company) for their shipment abroad---Upon lading the goods on defendant's ship, the defendant's agent at Karachi issued bill of lading ' in favour of plaintiff/importer---Plaintiff/importer approached ship owner's local agent abroad for receiving delivery of consignment but the former was informed that consignment was not traceable---Plaintiffs-both exporter and importer jointly filed suit against defendant for recovery of amount i.e. value of consignment along with interest thereon---Validity---Defendant (shipping company) after filing written statement as well as counter claim failed to adduce evidence though several opportunities were given to it--Defendant when failed to adduce evidence in its defence, then its pleas taken in written statement were not to be considered except those which were purely legal or which were admitted by plaintiff in his evidence---In absence of any evidence of defendant, all factual pleas taken in written statement were to be ignored while deciding the controversy between the parties---When any consignment was entrusted to a carrier for delivery to a port of destination, then it was carrier's bounden duty to ensure that---Consignment reached designated port---If shipment did not reach its destination or even if it reached the destination but on account of negligence by carrier or its agent: the same was lost or mis-­delivered and the real consignee or the endorsee of the bill of lading did not get the delivery of consignment, then the carrier was to be answerable to the shipper or consignee or endorsee of bill of lading for the lost shipment---Carrier in such situation could not absolve itself of the obligation by shifting its responsibility on port authorities--Shipper or consignee or the endorsee of the bill of lading had every right to claim from carrier compensation as well as damages for the lost consignment and carrier was to compensate them for value of goods as well as for a claim of damages which. they had sustained on account of non-delivery of consignment---Carrier was to establish that consignment shipped through his vessel had been discharged at the port of destination and that delivery order for such consignment had also been issued by carrier's agent to the consignee or the endorsee of bill of lading---Shipper was to prove through cogent evidence that consignment was discharged at the port of destination and given into the custody of port authorities---Plaintiff/importer tried his utmost to get delivery of goods but the defendant did not even discharge its burden by establishing that consignment in question was unloaded at port of destination---Defendant, who did not lead any evidence to establish his assertions, could not shift its burden by taking plea that it was for the plaintiffs to file complaint with authorities at the port of discharge for the lost consignment---Plaintiff established their claim for compensation for the lost consignment---Defendant was liable to pay amount/value of consignment along with interest on decretal amount in terms of S.34 of C.P.C.---Suit was decreed accordingly.

Muhammad Noor Alam v. Zair Hussain 1988 MLD 1122; Pakistan v. American President Lines and others PLD 1962 Kar. 87 and East and West Steamship Company v. Hossain Brothers and others PLD 1968 SC 15 rel.

Rashid Anwar for Plaintiffs.

I.H. Zaidi for Defendant.

Date of hearing: 9th March, 2006.

2006 C L D 1523

[Karachi]

Before Sabihuddin Ahmed, C.J. and Rahmat Hussain Jafferi, J

Messrs SAPPHIRE TEXTILE MILLS LIMITED---Petitioner

Versus

PAKISTAN through the Secretary, Ministry of Finance and 2 others---Respondents

Constitutional Petitions Nos.2659 of 1994 and 34 of 1995, decided on 10th August, 2006.

(a) Constitution of Pakistan (1973)----

----Art.199---Civil Procedure Code (V of 1908), O.XXIX, R.1---Constitutional petition---Maintainability--Filing of petition by a company through its secretary---Authorities raised objection to maintainability of petition on the ground that it was not filed by competent person---Plea raised by petitioner was that its secretary was authorized under Articles of Associations and its Memorandum to file suit---Furthermore according to resolution of Board of Directors, secretary of petitioner-company was authorized to prepare, sign, execute and submit all necessary documents on behalf of the company to Court, from time to time, either personally or through some other officer of the company; who might be authorized by him for such purpose---Validity---Secretary was competent to file petition, which was maintainable in circumstances.

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

----Art.18---Freedom of trade, business or profession---Imposing of restrictions---Principles---Right of freedom of trade, business or profession guaranteed by Art.18 of the Constitution, is not absolute---Such right is not unfettered and is subject to reasonable restrictions and regulations as may be prescribed by law---Regulations of any business, profession or trade through licensing system in the interest of free competition, empowers legislature as well as authorities concerned to impose restrictions on the exercise of such rights---Restrictions imposed must be reasonable, relating to trade, business or profession for the purpose of promoting general welfare of citizens.

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

----S.3---Import policy---Scope---Imposition of restrictions on imports and exports---Principles---Federal Government has been given powers to prohibit, restrict or otherwise to control import and export of goods or allow the same subject to regulations relating to trade practices or grant of licence--Federal Government through Ministry of Commerce, in order to implement such restrictions, issued various orders, notifications etc. including Import Policy Order to regulate import and export--Import policy may change from time to time keeping in view the circumstances and conditions for promoting general welfare of citizens.

(d) Words and phrases---

----Fee---Meaning---Fee is charged for services rendered by statutory functionaries and for conferment of a benefit or a privilege as well.

Rasheed Mehmood v. Muhammad Riaz Akhtar 1997 SCMR 1406; Ayaz Textile Mills Ltd. v. Federation of Pakistan PLD 1993 Lah. 194 and Commissioner, Hindu Religious Endowments Madrass v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt AIR 1954 SC 282 rel.

(e) Import and Export (Control) Act (XXXIX of 1950)---

----S.3---Import Policy Order, 1993---Constitution of Pakistan (1973), Arts.18 & 199--Constitutional petition---Vires of Import Policy, 1993---Petitioner-company assailed imposition of fee at the time of opening of letters of credit---Plea raised by petitioner was that imposition of such fee was ultra vires the Constitution, as Government was not providing any service against such fee---Validity---Government had provided special benefit and privilege to importers under Import Policy Order, 1993, because previously they were not allowed to import items for which import licence, import permit or clearance permit was required but under Import Policy Order, 1993, importers were allowed to do so without such restrictions---If such licensing system would have been applicable and importers had imported such articles without such licence, then they would have contravened the customs laws---In order to save importers from violation of such laws, special benefit and privilege were given to them to import such items---Such policy was in the interest of welfare of citizens because free competition between importers and exporters would ultimately benefit the citizens and that was permissible under Art.18 (b) of the Constitution---When Government chose to offer a benefit or privilege on import on such items or goods through merely registration of importers and directly opening the letter of credit, then Government could charge a reasonable fee for the benefit or privilege offered to them as well as for the services rendered in the field of import and export---Import Policy Order, 1993 was thus not ultra vires the Constitution---Petition was dismissed in circumstances.

Iftikhar Hussian Khan of Mamdot v. Ghulam Nabi Corporation Limited PLD 1971 SC 550; Muhammad Siddiq Muhammad Umer v. Australasia Bank Limited PLD 1996 SC 684; Collector of Customs v. Sheikh Spinning Mills 1999 SCMR 1402; Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 58.2; Star Textile Mills Ltd. v. Pakistan 1999 MLD 3001 and All Pakistan Textile Mills Association v. Province of Sindh SBLR 2003 Sindh 1345 ref.

Dewan Salman Fibres Ltd. v. Federal Government PTCL 2003 CL 456 distinguished.

Anjum Ghani and Tariq Jawaid for Petitioners.

Fareed-du-Din and Sajjad Ali Shah, D.A.-G. for Respondents.

Dates of hearing: 22nd March and 4th May, 2005.

2006 C L D 1537

[Karachi]

Before Khilji Arif Hussain, J

Rana MUNEER AHMED---Plaintiff

Versus

KASB BANK LIMITED and another---Defendants

Banking Suit No.15, C.M.As. Nos.2170 and 3060 of 2006, decided on 13th September, 2006.

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

----Ss. 2(b)(ii), 9 & 23---Suit for recovery of loan---Interim order---Application for---Plaintiff filed application to restrain defendants from halting, snatching, taking possession and/or causing hindrance of whatsoever nature in the operation of the buses plying on route---With consent of parties, to safeguard the interest of all interested parties in the matter, High Court appointed. Official Assignee as Receiver of 25 buses and directed that plaintiff would continue to operate buses under the supervision of Official Assignee or his nominee; that plaintiff would submit fortnightly account with Official Assignee and would deposit 50% of receipts with Official Assignee that Official Assignee would make necessary arrangement for inspection of said buses and that Official Assignee would take assistance of defendants, if any, required in discharge of his duties as Receiver.

Saalim Salam Ansari with Mukhtar Ahmed Kober for Plaintiff.

Nadeem Ahmed for Defendants with Anwar Saeed, Vice-President, KASB Bank Ltd.

2006 C L D 1540

[Karachi]

Before Mushir Alam and Muneeb Ahmed Khan, JJ

MUSLIM COMMERCIAL BANK LIMITED-Appellant

Versus

MOHSIN BAIG---Respondent

First Appeal No.31 of 2006, decided on 9th August, 2006.

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

----Ss. 9, 10 & 22---Limitation Act (IX of 1908), S.19---Suit for recovery of loan---Limitation for---Effect of acknowledgment in writing---Appeal to High Court---Banking Court having dismissed suit filed by plaintiff-Bank, on ground of limitation plaintiff had filed appeal against judgment of Banking Court---Contention of plaintiff-Bank was that suit was very much in time in terms of S.19 of Limitation Act, 1908 as acknowledgment of liability was made by the counsel of defendant borrower through reply within period of limitation---Effect of acknowledgment in writing was clearly spelled out in S.19 of Limitation Act, 1908---Present suit was filed on 28-10-2003 on the basis of acknowledgment dated 17-11-2001-Earlier acknowledgment was made on 14-12-1998 and before limitation expired, another acknowledgment dated 17-11-2001 was made by the counsel of defendant---Suit filed by plaintiff on 28-10-2003, in circumstances was well within limitation---Conclusion drawn by the Trial Court/Banking Court on the face of record could not be sustained---Order of Banking Court was set aside in. circumstances.

Muhammad Zubair Qureshi for Appellant.

Nemo for Respondent.

2006 C L D 1548

[Karachi]

Before Azizullah M. Memon and Syed Sajjad Ali Shah, JJ

Messrs SINDH SMALL INDUSTRIES CORPORATION-Appellant

Versus

SHAHZADO KHAN and another---Respondents

1st Civil Appeal No. D-03 of 2006, decided on 20th September, 2006.

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

----Ss.2(a)(iii), 7(2) & 22---Sindh Small Industries and Handicraft Development Corporation Act, (XXVI of 1972)---Banking Companies Ordinance, (LVII of 1962), Ss.5(b)(c) & 27(1)---Civil Procedure Code (V of 1908),O.VII, R.10---Court Fees Act (VII of 1870), S.13---Suit for recovery of loan---"Banking Company" and "Banking"---Meaning---Recovery of loan by financial corporation not doing business of banking---Scope---Dismissal of suit by Banking Court for want of jurisdiction---Plaintiff/ Corporation (Sindh Small Industries and Handicraft Development Corporation) filed suit for recovery of loan before Banking Court/Trial Court which was dismissed by the latter for want of jurisdiction as plaintiff/appellant was not found to be a Banking Company'---Plaintiff argued that it advanced loans and finances to various persons and companies, therefore, it was a banking company---Validity---Under S.5(b)(c) of Banking Companies Ordinance, 1962 'Banking Company' meant any company which transacted business of banking in Pakistan and 'banking' meant the accepting, for the purpose of lending or investment, of deposits of money from public, repayable on demand or otherwise and withdrawable by cheque, draft order or otherwise---No company could carry the business of banking unless it held a licence from State Bank of Pakistan as provided in S.27(1) of Banking Companies Ordinance, 1962---'Financial Institution' was defined in S.2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Plaintiff/appellant was not to be termed as banking company for the reasons; that it did not accept deposits of money from public for the purpose of lending or investment as envisaged in S.5(b) of Banking Companies Ordinance, 1962; that it could not be termed as financial institution as defined by S.2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001, for it did not carry banking business and that it had not been notified by Federal Government to carry on a business as envisaged in clause (iii) of S.2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001 in order to attract jurisdiction of Banking Court---Trial Court though did not have jurisdiction to deal with the matter but instead of dismissing the suit it was required to return the plaint under O.VII, R.10, C.P.C.---Section 7(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided that if procedure had not been provided in the Ordinance, then Banking Court was to follow procedure laid down in C.P.C.---Judgment and decree passed by Banking Court was set aside and plaint was returned to plaintiff along with court fee as envisaged under S.13 of Court Fees Act, 1870---Appeal was decided accordingly.

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

----S. 7(2)---Civil Procedure Code (V of 1908), O. VII, R.10---Dismissal of suit by Banking Court for want of jurisdiction---Procedure to be followed by Banking Court---Scope---Banking Court when did not have jurisdiction to try the suit then instead of dismissing the suit it was to return the same to plaintiff--Section 7(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided that if procedure had not been provided in the said Ordinance, then Banking Court was to follow procedure laid down in C.P.C.

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

----S.5(c)---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.2(a)---"Banking Company", banking and 'financial institution"---Meaning---Under S.5(c) of Banking Companies Ordinance, 1962, "Banking Company" meant any company which transacted business of banking in Pakistan and section 5(b) of Banking Companies Ordinance, 1962, provided that "Banking" meant the accepting, for the purpose of lending or investment, of deposits of money from public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise--- Section 2(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided that a company whether incorporated, within or outside of Pakistan which transacted business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan including Government Saving Bank or a Moclaraba or its management company, loaning company, investment bank, Venture Capital Company, Financing Company, Unit Trust or mutual fund of any kind and credit or investment institution, Corporation or Company authorized by law to carry on any similar business through a notification in official gazette, fell within the ambit of Financial Institution.

Abdul Hamid Bhurgri for Appellant.

2006 C L D 1559

[Karachi]

Before Zia Perwaz and Ghulam Rabbani, JJ

Dr. Mirza IKHTIAR BAIG---Petitioner

Versus

FEDERATION OF PAKISTAN and another---Respondents

Constitutional Petition No.D-1246 of 2003, decided on 14th September, 2006.

(a) Special US Dollar Bearer Bonds Rules, 1998---

----Rr.2, 3 & 10(3)---State Bank of Pakistan EDMD Circular No.9, dated 15-6-2002---Constitution of Pakistan' (1973), Art.199---Constitutional petition---Purchase of Special US Dollar Bearer Bonds---Re-investment in bonds on maturity thereof on expiry of fixed term---Purchaser's claim for redemption bonus of 5% on maturity of reinvested bonds---Refusal of authority to accept such claim---Validity---Bonds on maturity were encashable at purchaser's discretion either in Pak Rupee or US Dollars---Denominations of bonds was in US Dollars and interest payable was based on London Inter-Bank Offer Rate (LIBOR), which applied to US Dollars and not to Pak Rupee---Reinvestment was neither a continuation of original contract nor the same transaction, but would amount to encashment of bonds on maturity in Dollars followed by a fresh contract for reinvestment in US Dollars under fresh conditions not providing for payment of bonus on encashment of bonds in Pak rupee---Purchaser on reinvestment was entitled to LIBOR plus 2% and enjoy tax exemption, which was a higher rate of profit as compared to prevailing rate of profit on sale of Special US Dollar Bonds---Purchaser had chosen second incentive on maturity of bonds i.e. to obtain amount in US Dollars---Impugned action was neither discriminatory nor hit by promissory estoppel---High Court dismissed constitutional petition.

Chambers 20th Century Dictionary; The New Shorter Oxford English Dictionary; Oxford English Dictionary (1982); I.A. Sherwani and others v. Government of Pakistan 1991 SCMR 1041 rel.

Tradex (Pvt.) Limited v. Governor, State Bank of Pakistan 2003 CLD 756; Messrs Dadabhoy Cement Industries Limited v. Messrs National Development Finance Corporation 2002 CLC 166; Habib-ur-Rehman alias Rehman alias Raja Bottal v. The State 1992 SCMR 1625 and Messrs United Kashmir Flour Mills (Pvt.) Ltd. Company v. Government of Azad Jammu and Kashmir 2003 YLR 2835 distinguished.

(b) Words and phrases---

----"Reinvest" and "reinvestment"----Meaning.

Chambers 20th Century Dictionary; The New Shorter Oxford English Dictionary and Oxford English Dictionary (1982) ref.

Nafees Siddiqui for Petitioner.

Ziauddin Nasir Standing Counsel for Respondents Nos.1 and 2.

Abdul Aziz an and Abdul Qadir Khan for Respondent No.3.

Date of hearing: 21st February, 2006.

2006 C L D 1

[Lahore]

Before Umar Ata Bandial, J

Mian FAROOQ AHMAD SH. and others---Plaintiffs

Versus

PRIVATIZATION COMMISSION and others---Defendants

C.O.S. No.2 of 2005, decided on 28th October, 2005.

(a) Privatization Commission Ordinance (LII of 2000)---

---- Ss. 28 & 29---Transfer of Managed Establishments Order [P.O. 12 of 1978], Sched---General Rules for Estimating Break-up Value of Industrial Projects, para.A---Suit under Ss.28 & 29, Privatization Commission Ordinance, 2000---Maintainability---Privatization of managed Company's shares---Diligent and faithful performance of payment obligations by the highest bidder is an overriding concern in privatization matters---Prolonged negotiations, undue objections or procrastination by the successful bidder have to be looked with disdain.

Javedan Cement Mehnat Kash Union and another v. The Federation of Pakistan and others 1998 SCMR 2182 and Calicon (Pvt.) Ltd. through Chief Executive v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad 1994 SCMR 1758 ref.

(b) Privatization Commission Ordinance (LII of 2000)----

---Ss. 28 & 29---Transfer of Managed Establishments Order [P.O. 12 of 1978], Sched.---General Rules for Estimating Break-up Value of Industrial Projects, para.A---Civil Procedure Code (V of 1908), O. VII, R.11---Rejection of plaint---Suit under Ss.28 & 29 Privatization Commission Ordinance, 2000 before High Court by previous owners of the, privatized Company---Maintainability---Privatization of managed Company's shares---Number of developments that took place in sequel to the preliminary order by the High Court were that bidding for the shares of the company was held by the Commission in which the highest bid per share was offered by another party---Said bid was conveyed to the plaintiffs (previous owners of the Company) for exercising their option under Transfer of Managed Establishments Order, 1978 to pre-empt the sale---Plaintiffs failed to accept, and therefore refused the offer whilst irrelevantly asserting a right to match the received bid rather than the highest bid arrived in the fresh auction; that the highest bidder in the sales of the Company's shares applied for and was allowed to become a party in the suit as defendant; that the plaintiffs (previous owners of the Company) made a deposit in Court to satisfy a condition laid down in the preliminary order of the High Court for showing the seriousness of their claim and their capacity and willingness to perform their projected financial obligations and that following a preliminary look at the foregoing aspects of maintainability and receipt of the market valuation of the shares under sale by the highest bidder, High Court framed queries that were answered through better statements filed by the parties---Following eighteen months of abortive negotiations before the preliminary order of the High Court, the Commission had issued a final notice to the plaints (previous owners) giving them thirty days to pay the total price of the shares under sale ---Plaintiffs failed to assert any right and to allege any wrong doing by the Commission until the present suit was filed---Irrespective of the merit of the plaintiffs' claim before the Court or during negotiations with the Commission, there was no explanation by the plaintiffs for their inaction during the extended delay of more than thirteen months after -issuance of the said final notice by the Commission ---Plaintiffs, in the absence of having made any deposit or investment at all, had no stake to expedite the matter and no real interest to purchase the shares of the company on other than their own terms---Impugned fresh notice of the expression of interest by the Commission had somehow revived the plaintiffs' interest in the matter but in the light of the facts and the view expressed by the Supreme Court in its judgment, it axis too late to revive their case---Supreme Court judgment also provided no room for the relief prayed in the suit as particularized in the plaints' better statement---Complete writing-off in the price payable by the plaintiffs was neither expressly allowed in the Supreme Court judgment nor stated to be contemplated by or to, be consistent with its terms---Acknowledgment made in the plaintiffs' letter addressed to the Commission showed that the claimed right for the adjustment of price of the shares of the establishment under sale was fully known to the plaintiffs during the proceedings before the Supreme Court---To avoid potential objections under constructive res judicata, the reason for not asserting such a right before the Supreme Court was explained to be the legitimate expectation of the plaintiffs that adjustment under the General Rules shall be readily granted by the Commission in post judgment negotiations between the parties---Such was a simplistic and facile justification for the plaintiffs' forbearance---Doctrine of legitimate expectation did exist in public law to safeguard vested rights conferred by law, but in the present case, the plaintiffs had been unable to show any statutory or legal instrument conferring the claimed legal right---Present suit, therefore, was not a case where the said doctrine could be said to apply ---Plaintiffs' claim for adjustment was so, huge that it wiped out the total price payable by the plaints under the Supreme Court judgment, leaving nothing for its enforcement---Claim that totally eclipsed the direction in the Supreme Court judgment and rendered it nugatory, could not be consistent 'therewith ---Plaintiffs on such realization offered to accept any level of price adjustment that was ordered by the Court---Such plea was, however, futile---If the right of adjustment claimed by the plaints had derogated from the judgment of the Supreme Court then it axis void and the suit was baseless---Surrendering the right of adjustment now meant that the stand taken by the plaints after the Supreme Court judgment in its negotiations and in the present suit had been abandoned, which change destroyed the claim of the plaintiffs rather than attracted any relief---Tentative and conjectural right asserted by the plaintiffs, in the context of the privatization law, showing defiance of the direction given in the Supreme Court judgment, the extraordinary length of time consumed in negotiation that helped to circumvent payment of the price to the Commission and a suit seeking to exclude the real value of the shares under sale in preference to their notional value were all grounds that condemned the suit as a speculative venture aimed to prevent market based privatization of the shares under sale and thereby to extract favourable terms from the Commission---Concession made by the plaintiffs during the hearing for the Court to grant such adjustment as it pleased, including no adjustment whatsoever, in the light in a comparison with the offer by the highest bidder, admitted the futility of the suit as framed and also demonstrated its utterly speculative object---Sanctity of a right recognized, affirmed and conferred by the Supreme Court had led the High Court to take pains to search and discover the legal requisites for sustaining the competence, validity and merits of the plaintiffs' claim---Analysis of pleadings of the plaintiffs including their better statement and admitted documents however, disclosed that the plaintiffs were aware of the legal defects in the suit before filing the same and by these defects and given also object of the suit, the claim for the relief prayed was rendered futile and false---Such infirmities reflected upon the seriousness of the present proceedings---Privatization Commission Ordinance, 2000 provided for the sale of public property in the hands of the Government in order to generate public revenue for economic and social goals of the State namely debt retirement and poverty alleviation---To ensure the transparency, fairness and propriety of the privatization process the Ordinance, however, conferred a right upon an aggrieved person to challenge the proceedings of privatization---Salutary object of the Commission's work, however, made it imperative that the privatization process was not interrupted by speculative, futile or false litigation---High Court, in the administration of the remedy provided, in its original statutory jurisdiction therefore ensured that competent, substantive and well-founded claims were entertained for adjudication---Present suit lacked one or more of the said attributes---No interim injunction though was granted to the plaintiffs, however, the effect of the doctrine of lis pendens on the scale of the highest bid in the auction of shares under sale could. not be estimated---Process of privatization of the shares of the company was nevertheless delayed and hindered by the proceedings in the suit---Impossibility to grant relief in a suit would lead a Court towards either the rejection of the plaint or the dismissal of the suit--- Whilst scrutinizing the plaint in a suit, the Court might also consider the admitted documents on record and even the pleadings of the other side---Power of rejection of plaint might be exercised at any stage of the proceedings on grounds for which O. VII, R. 11, C.P.C. was not exhaustive---Powers under O.VII, R.11, C.P.C. were to be exercised to put an incompetent suit or a merit less claim at rest at the earliest possible opportunity---High Court, in circumstances, rejected the plaint in the suit---Consequent to the rejection of the plaint the total amount deposited by the plaintiffs along with profit thereon shall be refunded to the plaintiffs ---High Court further decided to award costs to the defendant Commission---High Court having discretion in the matter of choosing its procedure under S.29 of the Ordinance and not being bound by the provisions of C.P.C., in order to assess costs, adopted a procedure that would meet the ends of justice and would also promote the object of the law --- High Court observed that before fixing the amount of costs, the Court would hear the parties to ascertain the relevant events and consequences of the suit bearing upon the amount of costs to be awarded and outcome of such bearing shall reflect on the amount awarded in the case---Office of High Court shall fix hearing on the matter of costs in the case on the specified date---Office shall keep in investment deposit the withheld amount of profit until decision of the Court in the costs matter.

Javedan Cement Mehnat Kash Union and another v. The Federation of Pakistan and others 1998 SCMR 2182; Calicon (Pvt.) Ltd. through Chief Executive v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad 1994 SCMR 1758; Nazeer Ahmed and others v. Ghulam Mehdi and others 1988 SCMR 824; Muhammad Zaman v. Tariq Mahmood and 28 others 1994 MLD 207; Rashid Ahmad v. Federation of Pakistan and others 1997 CLC 578; S.M. Shaft Ahmad Zaidi through Legal Heirs v. Malik Hassan Ali Khan (MOIN) through Legal Heirs 2002 SCMR 338; Muhammad Akhtar and others v. Abdul Hadi and others 1981 SCMR 878; Asghar Ali v. P.K. Shahni and 2 others 1992 CLC 2282; Mst. Mazhar Khanum v. Sheikh Saleem Ali 2004 CLC 799; Burmah Eastern Ltd. v. Burmah Eastern Employees Union and others PLD 1967 Dacca 190; Diamond Rubber Mills v. Pakistan Television Corporation Ltd. and 2 others 1989 CLC 1989 and Bore Muhammad v. Mst. Aziza Begum and others PLD 2003 Kar. 466 ref.

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

----O. VII, R.11---Rejection of plaint---Principles---Impossibility to grant relief in a suit would lead a Court towards either the rejection of the plaint or the dismissal of the suit---Whilst scrutinizing the plaint in a suit, the Court might also consider the admitted documents on record and even the pleadings of the other side---Power of rejection of plaint might be exercised at any stage of the proceedings on grounds for which O.VII, R.11, C.P.C. was not exhaustive---Powers under O.VII, R.11, C.P.C. were to be exercised to put an incompetent suit or a merit less claim at rest at the earliest possible opportunity.

?

(d) Legitimate expectation, doctrine of---

----Applicability---Said doctrine did exist in public law to safeguard vested rights conferred by law.

Imtiaz Siddiqui and Qasim Ali Chohan for Plaintiff.

Raja Muhammad Akram for Defendant No. 1.

Abid Aziz for Defendants Nos.2 and 3.

Raja Muhammad Bashir for Defendant No.5 Bestway Cement Limited.

2006 C L D 59

[Lahore]

Before Syed Zahid Hussain and Mian Saqib Nisar, JJ

SHAUKAT ALI---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN LIMITED through Chairman and 2 others---Respondents

R.F.A. No.495 of 2003, heard on 8th November, 2005.

Agricultural Development Bank Ordinance (IV of 1961)---

----Ss.24 & 25---Civil Procedure Code (V of 1908), O. VII, R.11---Suit for recovery of loan---Application of defendants for grant of leave to defend suit---Reply by plaintiff to the said application was also filed---Banking Court, while treating the application for grant of leave to defend as a written statement, upheld the objection of the defendants that the plaint did not disclose any cause of action and thus the plaint uxis rejected under O.VII, R.11, C.P.C.---Validity---Plaint could not be ordered to be rejected for the reason which prevailed with the Banking Court and the manner the provisions of O.VII, R.11, C.P.C. were involved---Averments at the stage made in the plaint as to the disclosure of cause of action were to be taken into consideration ---Obtention of loan had indeed not been denied by the defendant, his case was that he had made certain payments to clear the liability towards loan amount and that the demand raised through notices was exaggerated and factually incorrect---Prima facie the averments of the plaint did disclose the accrual of cause of action for the suit---Case being still at the preliminary stage, no extraneous material could be taken into consideration for non-suiting the plaintiff --Banking Court could grant leave to defend the suit as was prayed for by the defendants for determining the real controversy and the quantum of liability but it erred in law while rejecting the plaint---High Court, in circumstances, set aside the judgment of the Banking Court with the result that the application for leave to defend the suit by the defendants and suit by the plaintiff would be deemed to be pending before the Banking Court to be heard in accordance with law.

Muhammad Javed Kasuri for Appellant.

Syed Mohsin Abbas for Respondents.

Date of hearing: 8th November, 2005.

2006 C L D 61

[Lahore]

Before Sh. Hakim Ali and Muhammad Jehangir Arshad, JJ

Syed SABIR HUSSAIN---Appellant

Versus

HOUSE BUILDING FINANCE CORPORAITON, BAHAWALPUR through District Manager---Respondent

R.F.A. No.59 of 2002-BWP, decided on 27th April, 2005.

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

----Ss. 9 & 16---Suit for recovery of loan---Defendant had raised material point of fact that great flood had devastated house in dispute and due to that damage, house had become unsuitable for residence---Banking Court on said material fact had not framed any issue and decided the suit without framing that important issue---Such factual controversy was to be shaped into an issue as it was to affect materially the fate and decision of the case and parties were to be granted opportunity to produce their evidence thereon---That having not been done, Banking Court had not passed judgment in accordance with law--Impugned judgment and decree was set aside and matter was referred back to Banking Court for further proceeding after framing issue on the said material point of fact---Parties would be granted fresh opportunity also to bring their evidence and after that case would be decided on merits.

Muhammad Abdullah Qureshi for Appellant.

Shamshir Iqbal Chughtai for Respondent.

Date of hearing: 27th April, 2005.

2006 C L D 67

[Lahore]

Before Syed Zahid Hussain and Muhammad Akhtar Shabbir, JJ

ZAIB COLD STORAGE AND ICE FACTORY through Sole Proprietor and another---Appellants

Versus

Messrs PAKISTAN INDUSTRIAL LEASING CORPORATION

LIMITED (PILCORP) --- Respondent

Regular First Appeal No. 137 of 1998, heard on 20th October, 2003.

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

----Ss. 9 & 22---Suit for recovery of loan---Territorial jurisdiction of Banking Court---Contention of defendant that Court at Lahore had no jurisdiction in, the matter as defendant/Factory was situated at Sialkot and documents were executed there, had no merits in view of lease agreement which had provided: "Lease Agreement has been entered into at Lahore and parties are agreed that Courts at Lahore shall have exclusive jurisdiction in any and all litigations arising from or in connection with this Lease Agreement"---Having admitted the execution of agreement at Lahore and having agreed that the Court at Lahore would have jurisdiction in the matter, it could not be successfully pleaded on behalf of defendant that Court at Lahore had no jurisdiction to entertain, try or adjudicate the matter---Decree granted by Banking Court for a sum of Rs.8,00,700, however was not consistent with previous findings of the Court as Court had specifically noted that claim of plaintiff- Corporation was accepted and was to be decreed to the extent of lease rentals on the machinery and not finance facility relating to the car---As per operative part of order of Banking Court, decree granted for Rs. 8,00,700 covered also an amount of Rs.1,51,750 as rentals of the car---Such was result of an error having crept in the order which needed to be corrected---To make the decretal amount consistent with the findings and judgment, it was directed that decree granted by Banking Court would be for Rs. 6, 48, 950 (8, 00, 700 minus 1, 51,750).

Tahir Tariq Textile Mills (Pvt.) Ltd. through Chief Executive and 2 others v. N.D.F.C. through Chairman 2001 YLR 846 and Bankers Equity Ltd. v. Iqas Weaving Mills (Pvt.) Ltd. 2001 CLC 169 ref.

Rana Nasar Ullah Khan for Appellants.

Sh. Naveed Masood for Respondent.

Date of hearing: 20th October, 2003.

2006 C L D 69

[Lahore]

Before Umar Ata Bandial and Muhammad Sayeed Akhtar, JJ

Messrs M.O.A. TEXTILES (PVT.) LIMITED and 3 others---Appellants

Versus

HABIB BANK LIMITED---Respondent

Regular First Appeal No.366 of 2002, heard on 6th October, 2005.

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

Ss. 10, 13 & 21---Leave to defend suit, grant of---Unconditional grant of leave to defend suggested a bona fide triable issue to have been disclosed by the defendant before the Banking Court and in such circumstances, it was pre-emptory and onerous for the Banking Court to have applied a condition of bank guarantee of the entire principal amount without giving prior notice to the defendant or granting of hearing on the question to the parties---By connecting the liability for default in progress of the suit with the quantum of liability in fact operated as a review of the order granting unconditional leave to defend when no such relief was either prayed or otherwise urged in the arguments by the plaintiff --Judgment and decree which was entirely based upon the failure of the defendants to satisfy the subsequent condition of furnishing bank guarantee and not on the merits of the dispute on which leave to defend had been granted, was set aside by the High Court--High Court allowed the appeal of the defendant and directed the parties to appear before the Banking Court for hearing and disposal of the case within a period of six months.

Ashtar Ausaf Ali for Appellants.

Shamas Mehmood Mirza for Respondent.

Date of hearing: 6th October, 2005.

2006 C L D 72

[Lahore]

Before Syed Zahid Hussain and M. Akhtar Shabbir, JJ

HOUSE BUILDING FINANCE CORPORATION through District/Branch Manager---Appellant

Versus

Mst. KHAIRAN Bibi --- Respondent

Regular First Appeal No.226 of 2003, heard on 21st October, 2003.

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

----S.9---Suit for declaration by borrower- window---Incentive Policy of House Building Finance Corporation to remit loan of widows---Borrower's claim for remission in pursuance of such policy---Non-consideration of borrower's application by Corporation, rather initiation of recovery process against ,her---Borrower's suit decreed by Banking Court finding that she had applied in pursuance of such scheme and being a window was entitled to benefit thereof---Plea of Corporation that no such application was made by borrower--Validity---Mere such assertion of Corporation could not be given credence in presence of specific assertion made in the plaint, evidence led by borrower and finding of Banking Court believing her version---High Court dismissed appeal in circumstances.

Dil Afroz Subhani for Appellant.

Sheikh Munir Ahmad for Respondent.

Date of hearing: 21st October, 2003.

2006 C L D 73

[Lahore]

Before Umar Ata Bandial, J

ASLAM TEXTILE MILLS LIMITED through General Manager---Petitioner

Versus

STATE BANK OF PAKISTAN through Governor and 2 others---Respondents

Writ Petition No. 19454 of 2004, decided on 29th September, 2005.

State Bank of Pakistan BPD Circular No. 29 dated 15-9-2002---

----State Bank of Pakistan BPD Circular No.7 dated 4-3-2003---Constitution of Pakistan (1973), Art.199---Constitutional petition---Default---Due to the Bank's apportionment of the payments made by the petitioner, default was shown in the petitioner's statement of accounts, in fact the overall obligations of the petitioner under the repayment schedule had been fully met and there was no default by the petitioner that would qualify it for classification in the loss category under BPD Circular No.29 of 2002---Dispute involved a question of fact and it was inappropriate for enquiry in Constitutional jurisdiction---Constitutional petition was dismissed.

Shamas Mehmood Mirza for Petitioner.

Rehan Nawaz Bhatti for SBP/Respondents Nos. 1 and 2.

M. Afzal Sandhu for Respondent No.3.

2006 C L D 76

[Lahore]

Before Muhammad Sair Ali and Sh. Azmat Saeed, JJ

COMMISSIONER OF INCOME-TAX/WEALTH TAX, COMPANIES ZONE-I, LAHORE

Versus

MUHAMMAD MUGHFOOR

Wealth Tax Appeal No.284 of 2002, decided on 17th February, 2005.

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

----S.235---Wealth Tax Rules, 1963, R. 8(2)(c)(i)(ii) --- Valuation of shares of a company---Methodology.

Rule 8(2)(c)(i) of Wealth Tax Rules, 1963 provides that for shares of an incorporated company not quoted at the Stock Exchange, out of the "face value" or the "break-up value" of the shares, whichever is higher is to be adopted as the share value. Under rule 8(2)(c)(ii), the total wealth of the company is to be computed by adding to paid-up capital, debentures, reserves and the balance as per the Profit and Loss Account and liabilities are to be accounted for by excluding items forming part of the reserves. And from that the total so arrived at, the paid-up value of the preference shares and debentures is deductible, and the resulting balance is to be divided by the amount of paid-up ordinary shares capital value of the shares held by an assessee. The break-up value of the shares of company will be negative irrespective of its "face value".

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

----S.235---Wealth Tax Rules, 1963, R. 8(2)(c)(i)(ii) --- Share of a dissolved company, valuation of---Mode---Such share would not be taken as an "asset" owned by its former shareholders---Such share would carry no value with reference to paid-up capital or subscribed capital of such company---Reasons stated.

In the case of winding-up of a company, liquidation of its assets and ultimate dissolution of company, its share would carry no value with reference to paid-up capital or subscribed capital. The reason is that on dissolution of the company, its assets and capital are also liquidated either by adjustment or distribution or in the final accounts. A share being a unit of the capital also erodes with reference to the capital of company. On dissolution, the company is taken off the register of incorporated companies. The company, thus, ceases to exist and so do its share units. The shares of a dissolved company as such cannot be held to be an "asset" owned by its former shareholders.

Sirdar Ahmed Jamal Sukhera for Appellant.

Date of hearing: 17th February, 2005.

2006 C L D 79

[Lahore]

Before Mian Saqib Nisar and Sh. Azmat Saeed, JJ

Syed ASAD ABBAS---Appellant

Versus

ALLIED BANK OF PAKISTAN through Branch Manager and others---Respondents

Regular First Appeal No.372 of 2004, decided on 23rd December, 2004.

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

----Ss.9 & 10---Recovery of bank loan---Non-filing of counter affidavit ---Application for leave to appear and defend the suit was dismissed for non-prosecution, after the same had been argued thus the suit was decreed ex parte in favour of bank---Plea raised by defendant was that his application was supported by affidavit which had not been controverted---Validity---Even if leave application was to be dismissed for non-prosecution, yet while decreeing the suit of bank, Banking Court ought to have applied its mind to the facts of the case and adjudged, if the plaint was supported by statement of accounts and such documents on the basis of which suit of bank was justified---Claim of defendant in leave application and affidavit in that behalf had not been controverted---Banking Court, in a mechanical and sketchy manner had passed the decree, which did not reflect application of a judicial mind ---Ex ­parte decree passed by Banking Court was set aside and the case was remanded to Banking Court for deciding the leave application afresh---Appeal was allowed in circumstances.

Syed Waqar Naqvi for Appellant.

Sh. Naveed Anwaar for Respondents.

2006 C L D 81

[Lahore]

Before Sh. Azmat Saeed and Muhammad Muzammal Khan, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Appellant

Versus

REHMANIA TEXTILE MILLS (PVT.) LIMITED through Chief Executive and 3 others---Respondents

Regular First Appeal No.457 of 2003, heard on 22nd September, 2005.

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, 1908---Maintainability---Limitation in such case was prescribed by Financial Institutions (Recovery of Finances) Ordinance, 2001 and not by Limitation Act, 1908, thus, provisions of S.5 thereof would not attract to such case---High Court dismissed appeal being time-barred.

Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 and Abdul Rasheed and another v. Bank of Punjab through Branch Manager 2004 CLD 800 rel.

Rashdeen Nawaz for Appellant.

Sardar Sami Hayat for Respondents.

Date of hearing: 22nd September, 2005.

2006 C L D 82

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

ADIL MAHMOOD---Appellant

Versus

ATLAS LEASING LIMITED and 3 others---Respondents

F.A.O. No.213 of 2003, decided on 9th December, 2003.

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

----Ss. 9, 10, 12 & 22---Suit for recovery of loan---Leave to appear and defend suit---Ex parte decree, setting aside of---Defendant appeared before Trial Court, filed application for leave to appear and defend suit, but thereafter he became absent, and was proceeded against ex parte---Application for leave to appear and defend suit was dismissed for non-prosecution and suit was accordingly decreed---Defendant filed application under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 for setting aside ex parte order stating that no notice/summons were received by him---Defendant had alleged that plaintiff despite having knowledge of his correct address, had given wrong address in the plaint due to which summons were never issued and served on him on his correct address---Plaints resisted claim of defendant and submitted that defendant resided at address as given in plaint and he further contended that even in the present appeal and affidavit submitted by defendant, he had given same address--Claim of defendant, in circumstances was baseless and he had taken false plea---Defendant had filed present appeal only to delay execution proceedings and to pressurize the plaint---Appeal filed by defendant being without any justification was dismissed with costs.

Imtiaz Rashid Siddiqui for Appellant.

Azmat Saeed for Respondent No.1.

2006 C L D 91

[Lahore]

Before Maulvi Anwarul Haq and Muhammad Jehangir Arshad, JJ

AAMAR TUFAIL--- Appellant

Versus

MUHAMMAD SADIQ and others---Respondents

Regular First Appeal No. 57 of 1992, heard on 11th October, 2005.

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

----O. XXXVII, Rr.1 & 2---Negotiable Instruments Act (XXVI of 1881), S.4---Qanun-e-Shahadat (10 of 1984), Arts.17 & 79---Recovery of money---Promissory note---Non-attestation of two witnesses---Suit for recovery of money on the basis of promissory note was dismissed by Trial Court for the reason that two witnesses were not produced to prove the note---Validity--Promissory note being a promise by its maker for payment of amount received under Negotiable Instruments Act, 1881, if same required certain attestation, the instrument i.e. promissory note would become a bond---Promissory note required no attestation of witnesses and was neither covered by Art.17 of Qanun-e-Shahadat, 1984, which was a general law, nor non-production of at least two witnesses to prove the execution of pro note was fatal for making the same admissible in evidence---Trial Court was not right in excluding disputed pro note from consideration either for want of attesting witnesses in terms of Art.17 of Qanun-e-Shahadat, 1984, or for non-production of two witnesses for its proof as required by Art-79 of Qanun-e-Shahadat, 1984-- Judgment and decree passed by Trial Court was set aside and case was remanded to Trial Court for decision afresh---Appeal was allowed in circumstances.

Zaheer-ud-Din Sheikh v. Shatab Khan Nasim NLR 1994 AC 661 rel.

Muhammad Nawaz v. Abdul Sattar PLD 2000 Lah. 1619; Maqsood Ahmad and others v. Salman Ali PLD 2003 SC 31 and Abdul Khaliq v. Muhammad Asghar Khan and 2 others PLD 1996 Lah. 367 distinguished.

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

----S.4---Stamp Act (II of 1899), S.2(5)---'Promissory note" and "bond"---Distinction---Bond is a promise made by its maker but to be attested by witnesses, whereas, according to Negotiable Instruments Act, 1881, promissory note is also a promise by its maker, yet does not require to be attested by witnesses.

Mst. Sughran Begum and 11 others v. Haji Mir Qadir Bakhsh and 2 others PLD 1986 Quetta 232 rel.

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

---O.XX, R.5---Judgment---Evidence, non-discussing of---Trial Court, while recording its findings on merits of the case, did not fully discuss the evidence---Validity---Such judgment could neither be considered as reasoned judgment, nor the same fulfilled the requirements of O.XX, R.5, C.P.C.---Such judgment was set aside in circumstances.

Ch. Muhammad Iqbal Abid for Appellant.

Ch. Ghulam Muhammad for Respondents.

Date of hearing: 11th October, 2005.

2006 C L D 107

[Lahore]

Before Abdul Shakoor Paracha and Farrukh Latif, JJ

Sheikh MUHAMMAD JAVED ANWAR--- Appellant

Versus

MUHAMMAD ASHRAF---Respondent

Regular First Appeals Nos.244 and 360 of 1999, heard on 22nd July, 2004.

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

----O. XXXVII, Rr.1 & 2---Negotiable Instruments Act (XXVI of 1881), S.118---Suit for recovery of money on basis of pro note---Suit was decreed by Trial Court---Decree was challenged---Plaintiff had stated that defendant was closely known to plaintiff and used to borrow money from him for use in his business, when plaintiff demanded back his money defendant refused---Matter was referred to Punchayat which decided that defendant was liable to pay amount in dispute at the rate of 2 per cent per month---Defendant, in pursuance of the settlement had executed pro note in question but later on he declined to make any payment---Stance of defendant, in the written statement was that he had never borrowed any money from plaintiff and that his signatures on the pro note and receipt were obtained by the head of Punchayat by misrepresentation and fraud---Contention was that execution of pro note was not formally proved in accordance with law as its scribe was not produced---Validity---When the execution of pro note was admitted, it was not required to be formally proved---Promissory note, execution of which had fully been proved, carried presumption under S.118 of Negotiable Instruments Act, 1881 that it was with consideration---Plaintiff had proved that defendant had received disputed amount from him and was liable to pay that amount---Head of Punchayat had no motive to have got the pro note executed from defendant by misrepresentation and fraud and that too for the benefit of another person---Defence version of defendant neither appealed to common sense nor was proved by him at trial---No misreading or non-reading of evidence had been pointed out---Appeal was dismissed by High Court.

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

----O. XXXVII, Rr. 1 & 2---Suit for recovery of money on basis of pro note---Trial Court decreed, the suit---Contention was that in view of the affidavit in which plaintiffs own witness had admitted the version of defendant, suit could not have been decreed ---Validity ---Plaintiffs witness had fully supported the plaints case during his examination-in-chief and he vehemently denied the suggestion that defendant had never borrowed any money from plaintiff --Witness also denied the suggestion that defendant had not acknowledged the amount due against him in his presence and finally it was denied by him that he had made a false statement before the Court---Plaintiffs witness having not been confronted with the statement made in the affidavit and having not been asked as to which of the two statements was correct, contents of the affidavit were of no legal significance---Contention had no force in circumstances.

?

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

----S. 118---Civil Procedure Code (V of 1908), O.XXXVII, Rr.1 & 2---Recovery of loan on basis of pro note---Suit was decreed---Contention was that according to promissory note and receipt, amount in question was paid at time of execution of pro note whereas plaint and evidence showed that said amount had been paid earlier---Validity---Not necessary that consideration for pro note should be paid on the same date on which pro note was executed---Consideration paid earlier in time was good consideration---Section 118, Negotiable Instruments Act, 1881, provided that when execution of pro note was admitted presumption would be that consideration of the document was paid.

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

-----O. XX, R. 5 & O.XXXVII, Rr. 1 & 2---Suit for recovery of money on basis of pro note---Issues decided together---Separate finding on each issue whether necessary---Prejudice caused to defendant by clubbing two issues and deciding the same together was not proved---Judgment dealing with issues raised, might discuss and decide them together if they were inter?related---No illegality was committed by Trial Court in discussing and deciding said issues together.

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

----Ss. 79 & 80---Civil Procedure Code (V of 1908), S.34---Suit for recovery on basis of pro note was decreed to the extent of principal amount only and interest was refused on ground that it was against the Injunctions of Islam---Cross-objection---Question as to whether interest was repugnant to Injunctions of Islam could only be examined by Federal Shariat Court and not by Civil Court---Civil Court could not strike down the legislative provisions relating to interest and so long as the law remained, Court had to award interest under S.79 or section 80 of Negotiable Instruments Act, 1881 and section 34, C.P.C.---Defendant having himself contracted to pay the interest would not have been allowed to violate his contractual obligation---Plaintiff was entitled to the decree for principal amount along with agreed rate of interest.

Shabbir Ahmad Khan for Appellant.

Ch. Muhammad Ikram Zahid for Respondent.

Date of hearing: 22nd July, 2004.

2006 C L D 115

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

RAFAQAT ALI and 2 others---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager---Respondent

Regular First Appeal No. 145 of 2005, heard on 3rd October, 2005.

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

----S.11---Recovery of bank loran---Undisputed amount---Defendants admitted that they were ready to pay principal amount but not the disputed amount of mark-up claimed by bank---Effect---If dispute between the parties did not extend to whole of the claim and part of the claim was undisputed, under the provisions of S. 11 of Financial Institutions (Recovery of Finances) Ordinance, 2001, Banking Court should pass interim decree in respect of undisputed amount and should decide with respect to the disputed amount after granting leave to the defendants and framing of issues---Defendants having admitted claim of bank to the extent of principal amount, the case fell under S.11 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Interim decree was passed in circumstances.

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

----S.10---Recovery of bank loan---Leave to defend the suit, grant of---Dispute with regard to mark-up---Defendants admitted claim of bank to the extent of principal amount but disputed the charging of mark-up on the ground that in sanction advice bank was to recover ruling rate of commission and not mark-up---Defendants in their leave application, specifically raised the plea that the bank was not entitled to charge mark-up, as there was no agreement between the parties---Banking Court, without giving any finding on such primary controversy, dismissed the application and decreed the suit in favour of bank---Validity---Judgment passed by Banking Court was silent about such crucial aspect of the case---Banking Court did not touch such matter and failed to render any findings on the questions of mark-up and its rate---Banking Court was under obligation to, at least, give some findings on such controversy but it had skipped over the real controversy---Banking Court failed to advert and decide the material controversy between the parties and decided the suit in complete oblivion of the record of the case---Judgment passed by Banking Court was set aside and defendants were granted unconditional leave to defend the suit---Case axis remanded to Banking Court in circumstances.

?

Ch. Tariq Mehmood Gill for Appellants.

Mushtaq Ahmad Khan for Respondent.

Date of hearing: 3rd October, 2005.

2006 C L D 119

[Lahore]

Before Syed Zahid Hussain and Mian Saqib Nisar, JJ

MUHAMMAD SALEEM and another---Appellants

Versus

SAJIDA PARVEEN and 5 others---Respondents

E.F.A. No.585 of 2002, decided on 22nd November, 2005.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.84---Execution of decree---Re-auction of property---Obtaining illegal order from Court---Auction purchaser failed to pay the auction money and appellants being the second highest bidders applied Banking Court for deposit of auction money---Banking Court passed an order for deposit of auction money but objection was raised to such deposit of money and Banking Court allowed objection petition and ordered for resale of the property---Contention of appellants was that they, in compliance of Court's order, had made a deposit of the amount and should not be made to suffer---Validity---Executing Court had to follow the procedure provided in O.XXI, Rr.82 to 94 C.P.C.---Auction ­purchaser having failed to deposit auction money, Banking Court would hold fresh auction of the property for satisfaction of the decrees, in accordance with law---Contention of the appellants had no substance as they themselves applied to the Court for making deposit ---If an illegal order was obtained from the Court on the application per invitum, no indefeasible right could be claimed by appellants on such basis---Sale in favour of appellants had thus rightly been cancelled---Appellants might also take part in re-auction and the amount already deposited by them (if they succeed in fresh auction) could be adjusted-or they might apply for the return of the same---Appeal was dismissed in circumstances.

Multan Khan v. Cantonment Board, Nowshera through Cantonment Executive Officer, Nowshera and 4 others 1995 CLC 1297 and Messrs United Bank Ltd., Karachi v. Mst. Asma Zafarul Hassan 1980 CLC 565 distinguished.

Feroze Din Faiz v. Chaman Lal and others PLD 1953 Lah. 83 and Manilal Mohanlal Shah and others v. Sayed Ahmed Sayed Mahmad and another AIR. 1954 SC 349 ref.

Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 and Afzal Maqsood Butt v. Banking Court No.2, Lahore and 8 others PLD 2005 SC 470 rel.

Muhammad Sharif Chohan for Appellant.

Mian Yousaf Umar for Respondents.

2006 C L D 123

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SHARAFAT HAFEEZ GOREJA and 5 others---Appellants

Versus

HABIB BANK LIMITED through President---Respondent

Regular First Appeal No.887 of 2001, heard on 22nd March, 2005.

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

----S.6(2)---Civil Procedure Code (V of 1908), O.IX, R.6(a)(b)---Suit for recovery of loan---Service of show cause notice under S.6(2), Banking Tribunals Ordinance, 1984---Two defendants were residing abroad---Process server reported that said defendants had left the address at which some other person was residing---Report by the postal authorities on registered A/D was, that the addressee had left the premises---Trial Court, after perusing the said report should have proceeded against the said defendants ex parte under O.IX, R.6(a), C.P.C. or had issued second summons to the defendants under O.IX, R.6(b), C.P.C.---In case of the former action, the Court was to decree the suit against the said defendants on their failure to file reply to show-cause notice under S.6(2) of the Ordinance---Trial Court had not passed any specific order with regard to the non-appearance of defendants and non-submission of the reply to the show-cause notice---Trial Court was under an obligation to record due service before proceeding ex parte against defendants---Decree passed by Court was not sustainable as it was obligatory on the Court, to apply the proper provisions of law even if a party had not brought such requirement to the attention of the Court---High Court in appeal, set aside the impugned order decree of the Banking Court and remanded the case to the said Court for passing an appropriate order qua non-appearance of the tug defendants in response to the notice issued to them.

Akbar and 2 others v. Abdul Ghafoor and 3 others 2000 SCMR 1000 ref.

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

---S.6---Civil Procedure Code (V of 1908), O. VII, R.11 & S.151---Contract Act (IX of 1872), S.176---Suit for recovery of loan---Contesting defendants had moved tux) applications one under O. VII, R. 11, C.P.C. and the other under S.176, Contract Act, 1872 read with S.151, C.P.C. for furnishing the accounts of the pledged stock---Banking Court decreed the suit without deciding the pending applications---Disposal of the suit without disposal of the said applications was violative of law---Impugned judgment and decree by the Banking Court was set aside by the High Court in appeal and case was remanded to the Banking Court for decision of the matter, after disposing the pending applications.

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.

M. Shahid Ikram Siddiqui for Appellants.

Shamas Mahmood Mirza for Respondent.

Dates of hearing: 21st and 22nd March, 2005.

2006 C L D 127

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs FYBRON (PVT.) LIMITED through Managing Director and 2 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Zonal Chief---Respondent

Regular First Appeal No.801 of 2002, decided on 24th October, 2005.

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

----S.10---Recovery of bank loan---Leave to defend the suit---Serious and bona fide dispute---Defendants in their leave application specifically pleaded that bank was in possession of pledged goods and despite repeated requests, bank failed to sell the pledged goods with the result that on one hand outstanding liabilities against them accumulated and on the other hand their business suffered serious set back---Banking Court appointed Local Commission who prepared inventory of pledged goods but without deciding the fate of the goods, leave application was dismissed and the suit was decreed in favour of bank---Plea raised by defendants was that before passing the decree, some order regarding pledged goods should have been passed by Banking Court---Validity---Banking Court was obliged to pass an effective order regarding the fate of pledged goods but while bypassing such crucial issue, Banking Court proceeded to dismiss the application, which disclosed serious and bona fide disputes between the parties---More than 3 ½ years had elapsed---Defendants had no objection to sale of the pledged goods---During all such long period the condition of the goods must have deteriorated resulting in depreciation of its value---High Court observed that if Banking Court had applied its judicial mind and at least attended to its oun order sheet, both the parties would have been saved from suffering losses as in case of sale of pledged goods, the liabilities of defendants would have reduced and on the other hand bank would have got at least some portion of the suit amount---Banking Court while rendering judgment, had misdirected itself and failed to decide the crucial questions between the parties and decided the case only for the purpose of disposal---High Court depreciated such action on the part of judicial officer and set aside the same---Case was remanded to Banking Court for decision afresh---Appeal was allowed accordingly.

(b) Judicial order---

----Composition---Judicial order must be a speaking order manifesting by itself that the Court has applied its judicial mind to the issues and points of controversy involved in the case---Any judicial order which is not a speaking order and devoid of reasons is not sustainable in law.

Ch. Ishtiaq Ahmad for Appellants.

Sardar Mashkoor Ahmad for Respondent.

Date of hearing: 7th September, 2005.

2006 C L D 132

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs BASHIR LEATHER INT. (PVT.) LIMITED and 2 others---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager---Respondent

F.A.O. No.33 of 2003, decided on 25th October, 2005.

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

----S.12---Ex parte decree, setting aside of---Change of address---Documents produced by defendants in support of setting aside of decree---Scope---Defendants, in response to the process issued by Banking Court, did not appear and the suit was decreed ex parte against the defendants---Defendants filed application for setting aside ex parte decree, on the ground that the process was issued on wrong address---Plea raised by the defendants was that new address of defendants axis in the knowledge of the bank but the same was concealed---Banking Court dismissed the application and ex parte decree was maintained--Validity---Letters between the parties produced by' defendants, contained the new address thus defendants were prejudiced by ignoring to consider the documents produced by them---Bank did not categorically deny those letters in any way---Documents which had substantial bearing on the fate of the case were neither discussed nor considered by Banking Court and were completely brushed aside while deciding application of defendants---Banking Court omitted to read/consider the documents produced by defendants in support of their claim, while giving its findings on the controversies involved between the parties---If material document or material evidence was not considered by lower Courts, then High Court could interfere in the matter---Order dismissing application under S.12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, suffered from misreading and non-reading of documentary evidence and the same was set aside---High Court remanded the case to Banking Court for deciding application afresh---Appeal was allowed accordingly.

Brig (Retd.) Mazhar-ul-Haq and another v. M/s. Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lah.706; Abdul Kadir and others v. Abdul Karim and another 1986 CLC 1895; Abdul Majeed and others v. Senior Member, Federal Land Commission, Rawalpindi and others 1991 CLC 1243; Messrs Wahid Ice and Cold Storage Plant through Proprietor v. National Bank of Pakistan, I.I. Chundrigar Road, Karachi PLD 1996 Kar. 529 and Muhammad Iftikhar and another v. District and Sessions Judge, Faisalabad and 7 others 2003 CLC 254 rel.

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

---S.12---Limitation Act (IX of 1908), S.5---Ex parte decree, setting aside of---Miscellaneous applications, non-deciding of---Defendants filed application for setting aside ex parte decree along with application for condonation of delay---Banking Court dismissed the application for setting aside ex parte decree but did not pass any order on the application for condonation of delay---Effect---Application for condonation of delay was not disposed of and thus the same would be deemed to be Pending---Bank raised objection that the application under S.12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, was barred by time, though there were no findings to such effect in the order---If any miscellaneous application was filed by parties, it was incumbent upon the Court to decide such application either wiry through a specific order and then to decide main case and failure to decide such application would vitiate the main judgment---Order passed by Banking Court was set aside in circumstances.

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.

Mian Muhammad Rafi-ud-Din for Appellants.

Hassan Makhdoom for Respondent.

Date of hearing: 4th October, 2005.

2006 C L D 139

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Syed ZULFIQAR ALI SHAH---Applicant

Versus

HABIB BANK LIMITED through Attorney and 7 others---Respondents

C.M. No.792 of 2004 in Regular First Appeal No.419 of 2001, decided on 27th October, 2005.

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

--S.21---Civil Procedure Code (V of 1908), O.XLI, R.19---Appeal, restoration of---Sufficient cause---Pre-occupation of counsel before other Court-Non-filing of affidavit of counsel---Effect---Appeal against judgment and decree passed by Banking Court, was dismissed on account of non-prosecution---Application for restoration of appeal was filed---Applicant did not specifically plead as to before which Court, his counsel was busy and at what point of time---Even counsel for applicant did not furnish his affidavit and appellant felt contended only by filing his affidavit in routine---Effect---Affidavit of applicant was of no avail to him, as he could not depose about alleged engagements of his counsel before other Benches of High Court and before Supreme Court, especially when applicant had stated in the application that he could not be informed by his counsel belonging to outside city and for such reason case remained unattended by him---If such statement of applicant be taken as true, then his affidavit appeared to be false, as he could not depose about alleged pre-occupation of his counsel before any of the Courts as he was not in knowledge of fixation of the appeal---Applicant along with the application, had filed a photocopy of single page of a diary statedly belonging to his counsel; it was not discernible from that Page whether the diary, in fact, belonged to his counsel---Even otherwise in absence of daily cause list and affidavit of counsel, such photocopy of diary could not be relied upon, more importantly, when valuable right had accrued favouring the other Ply---Applicant failed to even prima facie prove as to whether his counsel was busy before other Benches of High Court and at what point of time---All such details were lacking in the application and affidavit filed by applicant---No case was made out by applicant warranting re-admission of appeal--- High Court thus declined to exercise discretion in his favour--Application was dismissed in circumstances.

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

----O.XLI, R.17---Prosecution of appeal---Duty of appellant---Mere fact that a litigant having engaged a counsel to appear on his behalf does not absolve him of all the responsibilities---Litigant is also under duty to see that his appeal is properly and diligently prosecuted.

Rafiq Ahmad Khawaja v. Abdul Haleem 1982 SCMR 1229 ref.

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

----Ss.21 & 22---Limitation Act (IX of 1908), Ss.5 & 29---Appeal---Limitation---Condonation of delay--Appeal filed against judgment and decree passed by Banking Court, was barred by limitation---Appellant filed application under S.5 of Limitation Act, 1908, for condonation of delay---Validity---Under. ordinary law, a period of 90 days had been prescribed for filing of first appeal before High Court, while the present case was governed by the provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, which was a special law and its S.21(1) had prescribed a period of 30 days for filing the first appeal before High Court, against the judgment and decree passed by Banking Court-As the special law had provided different period of limitation for filing the first appeal in High Court, than the ordinary law, therefore, S.5 of Limitation Act, 1908, was neither applicable nor attracted---Delay was not condoned in circumstances.

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.

Ch. Muhammad Amin Javed for Applicant.

Muhammad Afzal Sindhu for Respondents.

2006 C L D 144

[Lahore]

Before Muhammad Jehangir Arshad, J

BANK OF PUNJAB, LAHORE through Manager---Appellant

Versus

Raja AMEER KHAN and others---Respondents

First Appeal from Order No.14 of 2004, decided on 28th September, 2005.

(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.58, 60 & 62---Transfer of Property Act (IV of 1882), Ss.41 & 52---Execution of decree---Sale of property---Objector claimed to be bona fide purchaser of property on basis of registered sale-deed---Decree was passed on 9-6-1998---Execution proceedings were started on 19-10-1998---Agreement to sell in, favour of objector was executed on 23-12-1998 and sale-deed was registered on 29-8-2000---Banking Court accepted objection petition and set aside sale by treating sale-deed to be effective from 23-12-1998---Validity---Sale-deed registered on 29-8-2000 could not be considered as operative from 23-12-1998---Without recording evidence and proving ingredients of S.41 of Transfer of Property Act, 1882, objector could not be held as bona fide purchaser on mere oral assertions---Banking Court had neither determined locus standi of objector nor took into consideration the provisions of S.52 of Act, 1882 barring transfer of property during pendency of lis--High Court accepted appeal, set aside impugned order and remanded case to Banking Court for its decision afresh after framing of issues arising out of objection petition' and recording of evidence.

Kanwal Nain and 3 others v. Fateh Khan and others PLD 1983 SC 53 fol.

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

----S.41---Bona fide purchaser, claim of--Proof-Such claim could not be determined on mere oral assertions---Recording of evidence would be essential for determination of such claim.

Kanwal Nain and 3 others v. Fateh Khan and others PLD 1983 SC 53 fol.

G. Haider Al-Ghazali for Appellant.

Nauman Qureshi for Respondents.

Date of hearing: 22nd September, 2005.

2006 C L D 167

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Mehr ASHIQ HUSSAIN---Appellant

Versus

CITIBANK, N.A. through Chief Manager and another---Respondents

First Appeal from Order No.245 of 2001, heard on 1st December, 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.10---Recovery of damages for torts--- Return of plaint-Plaintiff was aggrieved of non-encashment of his cheque by bank, despite availability of funds in his account---Suit for recovery of damages for torts was filed before Banking Court, which suit was returned to plaintiff---Validity---Plaintiff neither fell within the definition of 'borrower' and 'customer' nor he obtained any finance' or 'loan' as defined under the provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Suit filed by plaintiff was simple suit for recovery of damages on the basis of torts, which was excluded from the jurisdiction of Banking Court---Plaint was rightly returned to plaintiff for filing before appropriate forum---Appeal was dismissed in circumstances.

Nasimuddin Siddiqui and another v. United Bank Limited and others 1998 CLC 1718 fol.

Iftikhar Ullah Malik for Appellant. Shahid Ikram Siddiqui for Respondents.

Date of hearing: 1st December, 2005.

2006 C L D 171

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ZARAI TARAQIATI BANK LIMITED through Manager---Appellant

Versus

Syed FURRAKH HUSSAIN SHAH---Respondent

R.F.As. Nos.234 and 235 of 2005; heard on 8th September, 2005.

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

----Ss.9 & 10---Specific Relief Act (I of 1877), Ss.42 & 54---Recovery of bank loan---Declaratory suit---Procedure---Bank filed suit for recovery of bank loan in which leave was granted to the borrower and the suit was dismissed---Banking Court, in suit for declaration, filed by borrower declined to grant leave to defend the suit to bank and suit filed by borrower was decreed---Plea raised by bank was that after acceptance of leave application of borrower, suit of bank could not have been dismissed straightaway---Validity---Dismissal of suit filed by Bank, after acceptance of borrower's leave application was in derogation of the provisions of S.10 (10) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court was obliged to decide borrower's leave application on its own merits before embarking upon the issues involved in the suit---If Banking Court was of the view that substantial questions of law and facts were raised by borrower, leave to defend the suit could have been granted to him but in no way, at that point of time, suit filed by bank could have been dismissed---Banking Court did not adopt the procedure as prescribed in the statute and had gone outside the scope of S.10 (10) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Even if Banking Court was persuaded to accept borrower's leave application, the Court, instead of straightaway dismissing bank's suit, in obedience to the provisions of S.10 (10) of Financial Institutions (Recovery of Finances) Ordinance, 2001, should have treated his leave application as written statement, framed the issues, recorded the evidence and thereafter decided the suit, in accordance with law---Judgment and decree passed by Banking Court was set aside and the case was remanded to Banking Court for decision afresh in accordance with law--Appeal was allowed in circumstances.

Agricultural Development Bank of Pakistan through Manager v. Malik Iftikhar Ahmed 2002 CLD 1280 and National Bank of Pakistan v. Messrs PAKSACO Limited 2005 CLC 422 ref.

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

---S.5-Banking Court---Scope---Banking Court being creature of statute, is bound by the provisions and procedure provided under that particular statute.

Lt.-Col. (Retd.) Mahmood Akhtar v. Bank of Punjab through Manager 2004 CLD 821 rel.

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

----Ss.42 & 54---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.9 & 10---Declaratory suit---Procedure---Dismissal of leave application---Plaintiff (borrower) filed suit for declaration against defendant (bank) wherein Banking Court declined to grant leave to defend the suit to defendant and suit filed by plaintiff was decreed---Plea raised by defendant was that after rejection of leave application of defendant, declaratory suit could not have been decreed---Validity---After rejecting defendant's leave application in the suit for declaration and permanent injunction, decree could not have been passed straightaway, as the claim of declaration could not be equated with the suit founded on negotiable instruments---When defendant failed to obtain leave to defend in plaintiff s suit for declaration and permanent injunction, Banking Court was legally obliged to decide the suit after calling upon the plaintiff to produce evidence in support of his claim---Banking Court thus deviated from the procedure provided under the special statute---In such types of suits, even if a defendant failed to file application for leave to defend the suit or its application was dismissed and leave was refused, Banking Court was legally obliged to decide the suit after recording of plaintiff s evidence in support of his claim, thereby providing adequate opportunity to defendant to cross-examine the witnesses---Even if defendant in such a case, did not appear before Banking Court or he was not granted leave, the Banking Court was not absolved of its duty to apply its mind to the facts and circumstances of each case---Judgment and decree passed by Banking Court was set aside and the case was remanded to Banking Court for decision afresh---Appeal was allowed in circumstances.

Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 rel.

Chaudhry Tariq Mehmood Gill for Appellant.

Syed Muhammad Hanif Bokhari for Respondent.

Date of hearing: 8th September, 2005.

2006 C L D 178

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

AMIR JAVED and another-Appellants

Versus

AL-BARAKA ISLAMIC INVESTMENT BANK and others---Respondents

Regular First Appeal No.692 of 2002, heard on 13th April, 2005.

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

----Ss.7, 17 & 3---Contract Act (IX of 1872), Ss.132 & 135---Suit for recovery of loan---Contract of guarantee---Responsibility of guarantor---Scope---Contract of guarantee, in the present case, showed that defendants had signed and guaranteed the loan agreement not being the guarantors only but as a principal debtor---Liability to pay said defendants shall not stand discharged merely by resorting to S.133, Contract Act, 1872---Liability of defendants, besides being guarantor, was also in their capacity as principal debtor---Subsequent agreements would not absolve the defendants of their liability because defendants had bound themselves by virtue of the contract of guarantee that their liability shall remain unaffacted even in the event of modification, variation of the terms of facility, compositions or other arrangements' with the customer of the Bank---Contract of guarantee was itself an independent agreement, the terms whereof had bound the parties in isolation with main agreement---Provisions of Ss.133 & 135 Contract Act, 1872, visualized consent -or assent of the guarantors at the time of variance only and the same could not be waived by the guarantors in advance.

Mian Aftab A Sheikh v. Trust Leasing Corporation Ltd. 2003 CLD 702 fol.

Javed Iqbal for Appellant.

Khalid Saleem for Respondent No. 1.

Respondents Nos.2 to 10 proceeded ex parte-vide order dated 24-3-2005.

Date of hearing: 13th April, 2005.

2006 C L D 183

[Lahore]

Before Mian Hamid Farooq and Hamid Ali Shah, JJ

Messrs FAISAL M. B. CORPORATION (PVT.) LTD. through Chief Executive---Appellant

Versus

EQUITY PARTICIPATION FUND through Vice-President, E.P.F.---Respondent

E.F.A. No.841 of 2002, heard on 7th November, 2005.

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

--S.19---General Clauses Act (X of 1897), S.24-A---Execution proceedings---Incentive scheme, benefit of---Non-speaking order---Judgment debtor filed application for allowing benefit of incentive scheme during execution proceedings---Banking Court dismissed the application without giving its own finding---Judgment debtor, to prove his entitlement to benefit of incentive scheme, produced a letter issued by the bank-Validity-Banking Court although had narrated contents of application filed by judgment debtor and stance of bank, yet the Court failed to give its own findings except to state that offer made by judgment-debtor was not acceptable to the bank---Such order of Banking Court was perfunctory, devoid of reasons and showed complete non-application of judicial mind---Letter produced by judgment debtor had a substantial bearing on the fate of the case---Order passed by Banking Court was set aside and case was remanded to Banking Court for deciding judgment-debtor's application afresh, in accordance with record of the case and after taking into consideration contents of the letter produced by judgment-debtor---Appeal was allowed accordingly.

Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others PLD 1959 SC (Pak.) 272; Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan and others PLD 1970 SC 173 and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others 1984 SCMR 1014 rel.

Asghar Hamid Bhutta for Appellant.

Iftikhar Hussain Shah for Respondent.

Date of hearing: 7th November, 2005.

2006 C L D 186

[Lahore]

Before Fazal-e-Miran Chauhan and Sh. Javaid Sarfraz, JJ

MUHAMMAD MAJID through Legal Heirs---Petitioner

Versus

UNITED BANK LIMTED---Respondent

Writ Petition No.1941 of 2003 decided on 3rd March, 2005.

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

----Ss.9, 17 & 19---Suit for recovery of loan amount---Prayer of legal heirs of deceased loanee to decree suit allowing them to pay suit amount in three instalments---Banking Court passed decree prescribing schedule of instalments subject to the condition that in case of default to pay any instalment, entire remaining amount would become recoverable along with mark up till realization---Non-payment of second instalment in time---Issuance of statement of accounts by Bank showing balance as nil after receipt of entire amount from judgment debtors---Execution petition by Bank claiming mark up on entire decretal amount from date of decree till its realization for judgment-debtor's failure to pay second instalment in time---Validity---Banking Court in its decree had clarified that in case of default, Bank would be entitled to recover entire remaining balance with mark up and not entire decretal amount---Mark up would be calculated from the date when remaining balance became due and not from date of passing of decree---Bank had wrongly calculated mark up on entire decree amount---Bank, after issuance of statement of accounts showing balance as nil, would not be estopped to claim mark up on judgment debtor's failure to pay second instalment in time---Bank, in circumstance, was entitled to claim mark up on remaining balance from date when second instalment became due till its realization.

Mian Irshad Ali Qureshi for Petitioner.

Abdul Majid Malik for Respondent.

Date of hearing: 3rd March, 2005.

2006 C L D 202

[Lahore]

Before Maulvi Anwarul Haq and Sh. Hakim Ali, JJ

UNITED BANK LIMITED through Manager---Appellant

Versus

KHAN DUR MUHAMMAD KHAN TAREEN through Legal Heirs and others---Respondents

R.F.A. No.75 of 2004, heard on 21st November, 2005.

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

----Ss. 9 & 22---Suit by customer against Bank---Customer, who was holding a Fixed Deposit and Savings Bank Account with the Bank, was informed by Bank that disputed amount was being appropriated towards alleged dues of two firms---Customer initially filed suit for declaration to the effect that he was not liable for any claim against said firms and that he was not connected with the firms in any manner and was not liable for any dues/outstanding against same---Said suit subsequently was transferred to Banking Court which decreed the same---Validity---Bank had referred to some undertaking given by customer binding himself for repayment of dues of said firms---Plea of Bank was that customer had given an authority to the Bank to appropriate amount in question against dues of said firms by executing a letter of lien---Statement of customer was recorded in the Court, but he was not at all confronted with said letter of lien---Signatures of customer were compared on request of the Bank--Account opening form was dated 4-11-1970 while alleged letter of lien bore the date as 29-10-1971---Signatures on said two documents were examined with the assistance of counsel for parties and dissimilarity was found in the same---Evidence of customer had been recorded, while evidence of the Bank had been closed after giving about eight years period to do the needful and case remained pending for 13 years---In view of such conduct of the Bank, no prejudice was caused to the merits of case---Appeal by Bank, against judgment of Banking Court, was dismissed, in circumstances.

Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and another PLD 1996 Lah. 672 ref.

Muhammad Suleman Bhatti for Appellant.

Umar Kamal Khan for Respondents.

Date of hearing: 21st November, 2005.

2006 C L D 206

[Lahore]

Before Syed Hamid Ali Shah, J

HABIB BANK LIMITED---Applicant

Versus

DAIZY KNITWEAR (PVT.) LIMITED through Chief Executive and 3 others-Respondents

Suit No.47 of 2002, C.M. No.4-B of 2005 in Ex. A-20-B of 2004, decided on 18th February, 2005.

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

----S. 23---Contract Act (IX of 1872), S.23---Civil Procedure Code (V of 1908), O. XXI, Rr.96 & 103---Restoration of possession---Void agreement---Sale after passing of decree---Principle of waiver---Applicability---Suit for recovery of bank loan was decreed in favour of Bank---Possession of disputed house was delivered to bank in execution proceedings, as it was mortgaged with it---Earlier the applicant appeared before High Court and admitted to be a tenant and undertook to vacate the house on a specified date---After change of possession in execution proceedings, applicant sought restoration of possession on the plea of bona fide purchaser of disputed house, for valuable consideration---Validity---Sale deed had been executed subsequent to the decree which was passed against judgment-debtor--Any sale subsequent to the decree by a mortgagor was void---Disputed property was sold during the period when Financial Institutions (Recovery of Finances) Ordinance, 2001, was enforced and it was a void sale by virtue of the provisions of S.23 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Object of agreement of sale in favour of applicant was void under S.23 of Contract Act, 1872, as it had defeated the provisions of law---Applicant gave undertaking to vacate the premises, thus if at all the applicant had any rights with regard to the property in question, the same stood waived---Application was without any merit and was aimed to delay the execution proceedings---Application was dismissed in circumstances.

Waris Ali Khan Khattak v. The University of Karachi PLD 1956 Kar. 155; Ch. Rehmat Ali v. Custodian Evacuee Property PLD 1966 Kar.31; Khan Azizul Hassan Khan v. Haji Muhammad Ismail PLD 1972 Lah. 142; The District Magistrate Lahore v. Faqir Sayyed Fayyazuddin PLD 1965 SC 371; Abdul Rehman Bepary v. Gulapuddin Bepary PLD 1970 Dacca 876; Ikram Bus Service and others v. Board of Revenue PLD 1963 SC 564; Gulam Sarwar v. Manager Muslim Commercial Bank Ltd. PLD 1984 Pesh.22 and Aziz Ahmad v. Secretary Regional Transport Authority PLD 1984 Quetta 106 ref.

Muhammad Irshad for Applicant.

Shamas Mehmood Mirza for Respondents.

2006 C L D 210

[Lahore]

Before Syed Hamid Ali Shah, J

PAK CHINA CHEMICALS through Chief Executive/Director---Appellant

Versus

DEPARTMENT OF PLANT PROTECTION and another---Respondents

F.A.Os. Nos. 169 and 184 of 2005, decided on 2nd August, 2005.

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

----Ss.27 & 182---Franchise Agreement---Sole distribution agreement---Such agreement imposing condition on principal not to sell goods through other agents and also on agent not to deal with competing goods---Validity---Such condition not wholly one sided, if operated during currency of contract, could not be regarded as one in restraint of trade---Global trade was mostly based on such agreements---Restraint clause in such agreement would not be void, if same was reasonable, on equal bargaining strength, not unilateral and operated during currency of agreement.

Sultan Textile Mills Ltd. v. Muhammad Yousaf Shami PLD 1972 Kar. 226; Messrs Gujrat Bottling Company Limited v. Coca Cola Ltd. AIR 1995 SC 2375; Mung Sein Htin v. Cher Pan Ngaw AIR 1925 Rangoon 275; Muhammad Aref Efendi v. Egypt Air PLD 1980 SC 588: Messrs Universal Trading Corpn. (Pvt.) Ltd. v. Messrs Beechan Group PLC and another 1994 CLC 726; Pak Shaheen Containers Service v. Trustees of Post of Karachi PLD 2001 Kar. 30 and Liaqat National Hospital Association v. Province of Sindh PLD 2002 Kar. 359 ref.

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

----S.201---Termination of agency---Appointment of sole agent for sale of principal's goods for a fixed term---Agent's right to claim privilege of sole agent after expiry of fixed term---Scope---Person once appointed as sole agent would have right to act in such capacity to exclusion of others but such agency, after lapse of prescribed period would stand terminated and agent would cease to have any right---Principles.

Zamir Ahmad Khan v. Government of Pakistan 1978 SCMR 327; Shahzada Muhammad Umar Baig v. Sultan Mehmood Khan PLD 1970 SC 139; PLD 1981 SC 137; Sheikh Irshad Ahmad v. English Leasing Ltd. 2004 YLR 2700 and United Bank Ltd. v. Ahmad Akhtar 1998 SCMR 68 ref.

(c) Arbitration Act (X of 1940)---

----S.34---Stay of proceedings in suit---Arbitration agreement between parties---Written statement, filing of-Such proceedings not liable to be stayed---Principles.

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

----S.201---Specific Relief Act (I of 1877), Ss.12 & 54---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for specific performance and permanent injunction---Fixed term agency contract for sale of goods---Term of agency, expiry of---Agent seeking temporary injunction for continuance of business under such contract---Validity---Expiration of term had put an end to such agency-Business of agency had been accomplished terminating such agency---No prima facie case existed in favour of plaintiff---Temporary injunction was declined to plaintiff in circumstances.

(e) Jurisdiction---

----Parties by mutual consent could neither confer jurisdiction upon a Court nor could take away same, if so vested.

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

----S.20---Contract Act (IX of 1872), S.201---Specific Relief Act (I of 1877), S.12---Suit for specific performance of contract of agency---Agreement between parties in Pakistan to refer dispute to arbitration outside Pakistan---Import of goods under Pakistan laws---Establishment of Letter of Credit in Pakistan---Cause of action arising in Pakistan---Court in Pakistan in whose jurisdiction cause of action had arisen, would have jurisdiction to entertain suit irrespective of residence of defendant.

PLD 2003 Kar. 382; Muhammad Ashiq v. Government of Sindh 2002 SCMR 307; Mahtab Ahmed v. Meer Shakeel-ur-Rehman 2004 MLD 662 and Messrs EFU General Insurance v. Faheem-ul-Haq 1997 CLC 1441 ref.

T. Zubair Ltd. v. Judge Banking Court Lahore 2000 CLC 1405 rel.

Mian Sultan Tanvir Ahmad for Appellant.

Sardar Ali, Entomologist Department of Plant Protection, Lahore, Representative of Respondent No.1.

Mian Irfan Akram for Respondent No.2.

2006 C L D 217

[Lahore]

Before Muhammad Sayeed Akhtar and Sheikh Azmat Saeed, JJ

HABIB-UR-REHMAN and another---Appellants

Versus

JUDGE BANKING COURT No.4, LAHORE and another---Respondents

R.F.A. No.38 of 2002, heard on 20th December, 2005.

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

--S.10-Recovery of bank loan---Leave to defend the suit, grant of---Substantial question of law and facts---Statement of account deficient in material particulars---Banking Court dismissed leave application filed by defendants and decreed the suit in favour of bank---Plea raised by defendants was that the statement of account filed by bank with plaint was deficient in material particulars and claim of bank consisted of illegal mark-up charged under various finance agreements---Validity---Statement of account was replete with various debit entries of substantial amounts which were merely identified as 'to transfer'---No explanation as to where and on what authority such amounts were transferred could be gleaned from the record nor the same had been supplied by the bank on being confronted with the same---Statement of accounts showed that defendants had admittedly deposited Rs. 13,68,406.67---Debit entries of mark-up had also not been explained by bank with reference to the documents sued and relied upon---Contention of defendants that claim of bank consisted of illegal mark-up charged under various finance agreements rather than the amount actually disbursed to them or mark-up due thereupon in accordance with the terms of finance agreements must necessarily be examined in the context of the statement of accounts---Infirmities were floating in the present case on the surface---Serious disputed questions of facts and law had arisen in the case which could only be adjudicated after recording of evidence as the claim of bank needed to be proved---Application for leave to defend the suit could not have been dismissed outrightly and defendants were entitled to unconditional leave to defend the suit---High Court granted unconditional leave to defend the suit to the defendants, set aside the judgment passed by Banking Court and remanded the case to Banking Court for decision afresh after framing of issues and recording of evidence--Appeal was allowed accordingly.

Shahid Iqbal Mian for Appellants.

Abdur Rehman Tariq Alvi for Respondents.

Date of hearing: 20th December, 2005.

2006 C L D 220

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD ANWAR---Appellant

Versus

CITIBANK N.A. through Branch Manager (Litigation) ---Respondent

Regular First Appeal No.317 of 2005, decided on 14th November, 2005.

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

----S.9---Recovery of bank loan---Application for leave to defend suit---Limitation---Press publication--Application for leave to defend the suit was dismissed by Banking Court being time-barred and the suit was decreed in favour of bank---Plea raised by defendant was that as soon as he came to know about the publication of summons in the press, he immediately filed the application---Contention of the bank was that such application was filed after 21 days, hence the application was time-barred---Validity---Defendant was served, as required under law, on 8-6-2001, or at the maximum on 18-6-2001, when summons were published in newspapers and thus he was required to file the application for leave to defend the suit within 21 days from 8-6-2001, while he filed leave application on 20-9-2001, therefore, the same was barred by time---Banking Court committed no illegality while holding that the application for leave to ,defend the suit was barred by time and no application for condonation of delay had been filed, therefore, the same deserved dismissal---Judgment passed by Banking Court did not suffer from any illegality and no interference was called for by High Court--Appeal was dismissed in circumstances.

Tahir v. Union Bank Limited through Branch Manager and another 2005 CLD 930 distinguished.

M. Afzal v. Allied Bank of Pakistan Ltd. and another 2003 CLD 765; Khawaja Muhammad Bilal v. Union Bank Limited through Branch Manager 2004 CLD 1555; Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170 and Messrs Ahmad Autos and another v. Allied Bank of Pakistan PLD 1990 SC 497 rel.

Ch. Imtiaz Ahmad Kamboh for Appellant.

Shahid Ikram Siddiqui for Respondent.

2006 C L D 227

[Lahore]

Before Syed Hamid Ali Shah, J

FAYSAL BANK LIMITED through Attorney---Petitioner

Versus

IRAM GHEE MILLS (PVT.) LTD. Through Chief Executive -Respondent

C.O. No.2 of 2001, decided on 15th December, 2005.

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

----Ss.127, 305 & 306---Winding up of company---Inability of company to pay its debts---Loan obtained by company was secured by mortgage of property and registration of charge in favour of petitioner under S.127 of Companies Ordinance, 1984---Acknowledgment of outstanding liabilities by company in its letters addressed to petitioner---Non-payment of debt by company within thirty days in spite of having received petitioner's notice---Non-production for Court's inspection by company its balance sheets for last three years and proof of submission of statutory returns to Security Exchange Commission of Pakistan---Effect---Simple denial of liability by company in an evasive manner would not make debt disputed---Mere disputing debt in words would not be sufficient ground to resist winding up order---Commercial solvency of company had not been proved by submission of duly audited annual balance sheets---Company was commercially insolvent and was unable to pay its debts---High Court ordered winding up of company in circumstances.

Trade and Industry Publication Limited v. Industrial Development Bank of Pakistan PLD 1990 SC 768; Habib Bank Limited v. Messrs Golden Plastic (Pvt.) Limited 1991 MLD 124; PICIC v. Indus Steel Pipe Limited 1993 MLD 94; Sindh Glass Industries Limited v. National Development Finance Corporation and others PLD 1996 SC 601; Habib Bank Ltd. v. Hamza Board Mills and others PLD 1996 Lah. 633; Banker's Equity Limited v. Balochistan Coaters Limited PLD 1997 Kar. 416; ICP v. Sindh Tech. Industries Limited 1997 MLD 2609; International Finance Corporation v. Hala Spinning Ltd. PLD 2000 Lah. 323; Deutsche Bank A.G., Lahore v. Messrs Farm Aids (Pvt.) Ltd. and 3 others 2004 CLD 449; Ghulam Hussain Ahmedalli and Co. v. Canhag Private Ltd. (1972) 42 Company Cases 136; G. Calridge and Company Ltd. v. Nav Bharat Investments Ltd. (1977) 47 Company Cases 428, (1962) 1 All ER 121 (Re. Tweeds Garages Ltd.); All Woolen Mills Limited v. Industrial Development Bank of Pakistan and others PLD 1990 SC 763 and Messrs Platinum Insurance Company Ltd. v. Daewoo Corporation PLD 1999 SC 1 ref.

Union Bank Ltd. v. Pak Wheat Products PLD 1970 Lah. 235 and United Western Bank Ltd. and Paramount Enterprise v. Re Champse (1985) 57 Companies Cases rel.

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

---Ss. 305 & 306---Winding up of company---Inability of company to pay its debts---Simple denial of liability by company in an evasive manner---Effect---Such denial would not be sufficient to make debt disputed---Mere disputing debt in words would not be sufficient ground to resist winding up order.

Union Bank Ltd. v. Pak Wheat Products PLD 1970 Lah. 235 and United Western Bank Ltd. and Paramount Enterprise v. Re Champse (1985) 57 Companies Cases rel.

Naeem Sehgal for Petitioner.

Kh. Asif Mahmood for Respondent.

Date of hearing: 8th March, 2005.

2006 C L D 234

[Lahore]

Before Ali Nawaz Chowhan, J

NADEEM IJAZ and others---Appellants

Versus

Malik EHSAN ULLAH and others---Respondents

F.A.O. No.205 of 2003, decided on 23rd December, 2005.

Trade Marks Act (V of 1940)-

----Ss. 15 & 76---Opposition to registration of trade mark---Question of a trade mark becoming publici juris (common to the trade)---Determination---Principles---Publici juris---Meaning-Publici juris means when something is declared common to the trade or commerce and in the context of law, it is the Registrar of Trade Marks' who has to decide whether a word (trade mark) was publici juris or not---One of the users of trade mark, in the present case, had applied way back in July, 1998 while claiming the use of the trade mark since 1997, and the application for the other user was dated 17-3-2001 i.e. 2-1/2 years later and who had produced no evidence in support of his being prior user and did not file income-tax, documents---Other user who had applied in 1998 had filed documents such as Balance Sheet, Sales Invoices, Bills of advertisement, Income-tax assessment order all reflecting the use of the trade mark since, 1997---Effect---On the question of prior user dates of the applications made by both the sides, were available on "record---High Court in appeal, declined to interfere with the decision of the Registrar, Trade Marks holding that it was established that trade mark which was claimed to be publici juris by the party who applied in 2001 had become distinctive of the goods of the user who had gained recognition for the name of the trade mark by virtue of long, extensive and continuous use since 1997---Principles.

Multani Sohan Halva v. Registrar of Trade Marks, Karachi 1987 CLC 1448; Muhammad Ismail through Mst. Shamim Akhtar and 8 others v. Messrs Soofi Soap Factory PLJ 1973 Lah. 208; Zakauddin v. Muhammad Zahid and 2 others PLD 1993 Kar. 766; W. Woodward Ltd. and another v. Hakimullah Siddiqui NLR 1981 UC 377 and Cecil Dr. Cordova and others v. Vick Chemical Company PLD 1951 PC 108 ref.

Sultan Ahmed Sheikh and Kh. Aamir Farooq for Appellants.

Hassan Irfan for Respondents.

2006 C L D 242

[Lahore]

Before Nazir Ahmad Siddiqui and Muhammad Nawaz Bhatti, JJ

Messrs NOOR HAYAT INDUSTRIES (PVT) LTD. through Chief Executive---Appellant

Versus

BANK OF PUNJAB through Manager and 4 others---Respondents

F.A.O. No.167 of 2005, heard on 24th November, 2005.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.66, 67, 90, 92 & 93---Execution of decree---Sale by auction, setting aside of---Return of money deposited by auction-purchaser---Despite being unsuccessful on two dates, bank was successful in auctioning the mortgaged property on the third date---Before putting mortgaged property to auction neither publicity was made nor the reasons were brought on the Court file as to why auction proceedings on two dates could not be held---Executing Court confirmed the sale through auction but judgment-debtor filed objection application which was dismissed by Executing Court---Validity---Such auction was not conducted by bank in accordance with the settled principles of law, justice and equity, hence confirmation of sale by Executing Court could not be blessed with sanctity and the same was set aside---Bank was directed to return the auction price already deposited by him along with 20% of the same or the due mark-up (whichever was higher)---High Court directed the judgment-debtor to deposit decretal amount within one month, failing which bank would be at liberty to sell mortgaged property with or without intervention of Court with reference to S.19 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Appeal was allowed accordingly.

Sardar Riaz Karim for Appellant.

Shahid Mumtaz Piracha for Respondent No.1.

Ch. Ehsan Ahmad Sindhu for Respondents Nos.2 and 4.

Maulvi Sultan Alam Ansari for Respondent No.5.

Date of hearing: 24th November, 2005.

2006 C L D 255

[Lahore]

Before Maulvi Anwarul Haq and jaz Ahmad Chaudhry, JJ

UNITED BANK LIMITED and another---Appellants

Versus

Mian AHMAD HASSAN---Respondent

R.F.A. No.114 of 1997, heard on 28th September, 2005.

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

---S.9---Recovery of damages---Malicious prosecution---Banking Court---Jurisdiction---Grievance of plaintiff was that he did not stand guarantee for the loan advanced to a third party and he was maliciously impleaded in the suit for recovery of bank loan---None of the documents were signed by plaintiff and witnesses admitted in their cross-examination that plaintiff did not sign any document in their presence---Banking Court decreed the suit for damages in favour of plaintiff---Plea raised by bank was that plaintiff being not a borrower or customer and matter having not arisen out of a finance agreement, Banking Court had no jurisdiction in the matter---Validity---Primary question to be determined in the present case, was as to whether or not plaintiff stood guarantee and consequently was a borrower as defined in the banking laws---Such question was to be decided by Banking Court and no other Court---Plaintiff categorically denied having stood guarantee or having signed any of the documents---High Court did not find any error in the findings of Banking Court that plaintiff had never stood guarantee in the matter---Borrower had also repaid its loan---Suit was maliciously filed against plaintiff and the damages granted by Banking Court were reasonable---Appeal was dismissed in circumstances.

Sardar Riaz Karim and Abdul Majid Malik for Appellants.

Nemo for the Respondents.

Date of hearing: 28th September, 2005.

2006 C L D 261

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Mst. HAJRA BIBI---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED (ADBP) through Manager---Respondent

R.F.A. No.198 of 2005, decided on 26th May; 2005.

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

----Ss.9(5) & 10(2)-Application for leave to defend suit---Limitation---Service of defendant through proclamation in newspapers was effected on 30-1-2004 and through bailiff on 6-2-2004---Filing of leave application on 10-3-2004---Validity---Defendant was required Jo file such application within thirty days of the date of first service of summons by anyone of the modes laid down in S.9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001---No good ground for condonation of delay was shown---Leave application was dismissed for having been filed out of time.

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

--Ss.9 & 10---Suit for recovery of loan amount--Application for leave to defend suit---Availing of loan facility and outstanding amount not denied by defendant---Willingness of defendant to pay outstanding amount---Validity---Defendant had failed to raise substantial questions of law and facts requiring recording of evidence---Leave application was dismissed in circumstances.

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

--Ss.9 & 10---Suit for recovery of loan amount---Application for leave to defend suit---Dismissal of such application--Plea of defendant was that statement of accounts was not in consonance with averments contained in plaint---Validity---Defendant had not raised such plea in leave application---High Court dismissed appeal in circumstances.

Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 and Amir Shah v. Ziarat Gul 1998 SCMR 593 rel.

(d) Pleadings-

----Litigant could not be allowed to raise altogether a new and different plea before Appellate and Revisional Court, which had not been raised before lower forums.

Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 and Amir Shah v. Ziarat Gul 1998 SCMR 593 rel.

Shahid Ikram Siddiqui for Appellant.

Date of hearing: 26th May, 2005.

2006 C L D 377

[Lahore]

Before Muhammad Sayeed Akhtar and Sheikh Azmat Saeed, JJ

HABIB BANK LIMITED through Branch Manager---Appellant

Versus

MUHAMMAD AKRAM and 3 others---Respondents

Execution First Appeal No.305-B of 2005, decided on 20th January, 2006

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

----S.19---Execution of decree---Auction of mortgaged property--Objection petition stating that mortgaged property had been exchanged through a decree of civil court, and that objector had deposited with decree-holder/Bank more than Rs.16,00,000---Bank claimed outstanding amount to be Rs.40,00,000---Decision of executing court that Bank was estopped to claim Rs.40,00,000 for having itself fixed Rs.16,00,000 as reserve price of mortgaged property for its auction---Validity---High Court, with consent of parties, accepted appeal, set aside impugned order and remanded case to executing court for its decision in accordance with law.

Muhammad Afzal Sindhu for Appellant.

Kazim Khan for Respondents.

2006 C L D 405

[Lahore]

Before Mian Saqib Nisar and Syed Zahid Hussain, JJ

NUSRAT MEHDI CHAUDHRI---Appellant

Versus

HABIB BANK LIMITED and another---Respondents

R.F.A. No.303 of 2003 and R.F.A. No.436 of 2001, heard on 13th December, 2005.

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

----Ss.9 & 10---Civil Procedure Code (V of 1908), S.20(a)---Suit for recovery of loan amount---Leave to defend suit, application for---Loan obtained by Pakistani company from foreign Branch of Pakistani Bank---Loan secured by guarantor residing abroad---Ex parte decree by Banking Judge against company while leave application of guarantor w s pending---Change in jurisdiction after promulgation of Financial Institutions (Recovery of Finances) Ordinance, 2001---Flesh leave application by guarantor alleging lack of jurisdiction of Banking Court---Dismissal of leave application---Validity---Objection of jurisdiction was not illusionary, frivolous or bald, rather same by all means was/is a substantial question of law, determination of which would depend upon ascertaining of certain jurisdictional facts---IZecording of requisite evidence could not be ruled out for such ascertainment---Three aspects of jurisdiction i.e. jurisdiction over subject-matter, jurisdiction over parties and territorial jurisdiction, should have been considered, dilated upon and decided by Banking Court---Guarantor's case warranted grant of leave---High Court accepted appeal, set aside impugned judgment/decree and remanded case to Banking Court for its decision afresh in accordance with law.

Hamid Khan for Appellant.

Iqbal Hameed-ur-Rehman for Respondents.

Date of hearing: 13th December, 2005.

2006 C L D 421

[Lahore]

Before Ali Nawaz Chowhan, J

Messrs GADOON SYNTHETIC MILLS LIMITED---Petitioner

Versus

CORPORATE AND INDUSTRIAL RESTRUCTURING CORPORATION---Respondent

Writ Petition No.683 of 2005 and C.O. No.9 of 1999, decided on 30th January, 2006.

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)°-Scheme for amicable settlement of non-performing assets in line with State Bank of Pakistan BPD Circular No.29 of 2002 dated 15-10-2002 by the Corporate and Industrial Restructuring Corporation---Scope---Borrower in the present case, was ready to pay the amount in accordance with the letter of State Bank of Pakistan but lending Bank refused to accept the amount on the ground of interference by the Corporate and Industrial Restructuring Corporation--Effect-Held, when the lending Bank was refusing to accept the money, borrower was to send the payment to the Corporate and Industrial Restructuring Corporation with a note that the amount was meant to discharge the liability of the lending Bank-Such path which the borrower had to adopt was' for discharging its liability and because of the fact that the Corporate and Industrial Restructuring Corporation was there as entity for purposes of receiving the money under the law for non-performing assets and that there were certain documents to be completed by the Corporation after receiving the payment---Procedure so adopted by the borrower would not reopen the quantum of liability of the borrower which was already determined in the letter of State Bank of Pakistan and such liability would be respected by the Corporation to the extent of fore-sale value---Liability of the borrower having already been determined, matter would end and borrower would follow the method accordingly.

Tanya Knitwear (Pvt.) Ltd. v. United Bank Ltd. and others 2005 CLD 114; Industrial Development Bank of Pakistan v. Friends Spinning Mills (Pvt.) Ltd. through Chief Executive and 10 others 2005 CLD 833 and National Bank of Pakistan v. Messrs Paksaco Limited 2005 CLD 422 ref.

Raja Muhammad Akram for Petitioner.

Muhammad Muzammil for CIRC.

2006 C L D 486

[Lahore]

Before Syed Zahid Hussain, J

MUHAMMAD SULEMAN ZAHID JAMIL---Petitioner

Versus

INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN through Secretary and another ---Respondents

Writ Petition No.17765 of 2005, decided on 22nd February, 2006.

(a) Chartered Accountants Ordinance (X of 1961)---

----Ss.20-D. 20-A(2), 20-K & 9---Constitution of Pakistan (1973). Art.199---Constitutional petition---Maintainability---Initiation of proceedings by Institute of Chartered Accountants of Pakistan against the petitioner (Chartered Accountant) and issuance of show-cause notice for hearing by the Council---Validity---Petitioner had been taking part in the proceedings, filing reply to the notices and even disputing the allegations and objecting to the jurisdiction of the institute---Petitioner thus, could not, at such an intermediary stage, seek annulment of the proceedings, and should wait for the decision by the Council---Matter being still pending before the Institute and the Council. a statutory body, as per S.9. Chartered Accountants Ordinance, 1961, was seized of lire same, which had issued notice to tine petitioner for affording him an opportunity of hearing as contemplated by S.20-I) of the Ordinance. all such issues could be raised by the petitioner before the Council on the basis of which the legality and validity of the proceedings initiated against hint was sought to be assailed---All such questions. undoubtedly would be adverted and attended to by the Council---High Court observed that it was rather appropriate that in the first instance the Council recorded its opinion, after affording due opportunity of hearing to the petitioner and Council would consider the matter objectively as any adverse action/order against the petitioner would have far-reaching effects---High Court declined interference in the mutter at such a stage and dismissed the petition.

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

---Art.199---Judicial review---Scope- Domestic bodies/tribunals who derive their powers from statute, their actions/orders are untenable to judicial review in appropriate cases---For assumption and exercise of jurisdiction the Court. Tribunal or the authority must possess the power to decide the mutter before it and for that matter the existence of basic facts qua which the jurisdiction can be exercised, assume relevance and importance---Principles---No hard and fast rule exists as to interference by the Court in writ jurisdiction where defects of jurisdiction are apparent on the face of the record.

?

Black's Law Dictionary, Fifth Edition, Page 258; Strouds Judicial Dictionary, Fourth Edition, Volume-1, pages 5 to 7; Institute of Chartered Accountants of Pakistan v. Messrs Hyder Ali Bhimji & Co. and another 2002 CLD 1207; Virasat Ullah v. Bashir Ahmad, Settlement Commissioner (Industries) and another 1969 SCMR 154: Nawab Syed Raunaq Ali and others v. Chief Settlement Commissioner and others PLD 1973 SC 236; Mir Nabi Bakhsh Khan Khoso v. Branch Manager, National Bank of Pakistan. Jhatpat (Dera Allah Yar) Branch and 3 others 2000 SCMR 1017; Secretary to the Government of the Punjab, Forest Department, Punjab, Lahore through Divisional Forest Officer v. Ghulam Nabi and 3 others PLD 2001 SC 415; Muhammad Sharif through Legal Heirs and 4 others v. Sultan Hamayun and others 2003 SCMR 1221; Muhammad Shoaib and 2 others v. Government of N.-W.F.P. through the Collector, D.I. Khan and others 2005 SCMR 85; Kabir Khan v. Government of Punjab through Secretary Local Government and Rural Development Department and another 2002 MLD 672; Sir William Wade at pages 623 to 626 of Administrative Law Eighth Edition; Sir William on Wade Administrative Law Eighth Edition at . page 260; Mehr Dad v. Settlement and Rehabilitation Commissioner, Lahore Division, Lahore and another PLD 1974 SC 193 and Sindh Employees Social Security Institute v. Dr. Mumtaz Ali Taj and another PLD 1975 SC 450 ref.

Shahid Karim for Petitioner.

Syed Mansoor Ali Shah and M. Naeem Sehgal for Respondents.

Date of hearing: 22nd February. 2006.

2006 C L D 539

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

BANK OF PUNJAB---Appellant

Versus

MUHAMMAD RAMZAN 2 others ---Respondents

Regular First Appeal No.744 of 2002, heard on 31st January, 2006.

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

----Ss.9, 10, 22 & 24---Suit for recovery of Bank loan---Date of default by the borrower---Determination---Bank had served legal notice upon the borrower on 13-10-2000 which led to the conclusion that borrower had already committed default, which necessitated the Bank to serve legal notice---Contents of the legal notice in the present case, did not show any date of default and it had casually been stated therein that borrower failed to pay the agreed instalment as per terms of the finance---Statement of accounts showed that borrower paid the first instalment on 12-1-2000 and thereafter he did not pay any amount, and thus committed default---No other document was available on the record, which would go to show that the date of default was 9-5-2002 and not 12-1-2000 as alleged by the Bank---Plaintiff had to succeed on the strength of his own case and not on the weakness of the other party---Bank having failed to substantiate its sole contention that date of default was 9-5-2002 and not 12-1-2000, its appeal against the order of the Banking Court was dismissed by High Court.

Tariq Saleem Sheikh for Appellant.

Nemo for Respondents.

Date of hearing: 31st January, 2006.

2006 C L D 554

[Lahore]

Before Sheikh Azmat Saeed and Muhammad Sayeed Akhtar, JJ

Messrs CHENAB FLOUR MILLS (PVT.) LTD. Through Director/Chief Executive and others---Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN and 2 others---Respondents

E.F.A. No.781 of 2001, decided on 23rd February, 2006.

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

----Ss.22 & 18---Banking Tribunals Ordinance (LVIII of 1984), Ss.12 & 11---Limitation Act (IX of 1908), Art.181---Execution of decree passed under Banking Tribunals Ordinance, 1984---Limitation---Banking Tribunals Ordinance, 1984 having been repealed on promulgation of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, a fresh cause of action and limitation of three years had accrued to the decree holder for execution in terms of S.22(2) of the new Act.

Muhammad Akhtar v. Agricultural Development Bank of Pakistan 2005 CLD 1173 fol.

Syed Khalid Saleem for Appellants.

M. Shuja Baba for Respondents.

2006 C L D 568

[Lahore]

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

AAMIR KHURSHID MIRZA---Petitioner

Versus

THE STATE and another---Respondents

Writ Petitions Nos.3021, 3635, 3636 and 3835 of 2005, decided on 7th June, 2005.

(a) Stay order---

----Operation of stay granted by superior Court---Just as law would operate from the moment it was enacted and ignorance was no defence, a stay granted by a superior Court would operate from the time, the order was made and ignorance of the order, would not permit a lower Court to render the order of a superior Court ineffective or a nullity---Any or all proceedings taken by the Trial Court after order of High Court staying proceedings before it, were a nullity and totally without jurisdiction.

Din Muhammad Khan v. Abdul Rehman Khan 1992 SCMR 127 and Akhtar Hussain and 4 others v. The State 1993 SCMR 1523 ref.

(b) Jurisdiction---

---Jurisdiction of a Court was always the core question, which had to be dealt with immediately to the exclusion of all other business, because that was what would decide the competence or otherwise of a Court or Tribunal to proceed further in the matter.

Town Committee, Gakhar Mandi v. Authority Under the Payment of Wages Act, Gujranwala and 57 others PLD 2002 SC 452 and Muslim Commercial Bank Limited v. Tahir Edible Oil (Pvt.) Ltd. and others 2003 CLC 416 ref.

(c) Words and phrases---

----Term `Per incuriam', defined and explained.

(d) Interpretation of statutes---

----Legislature was presumed to be cognizant of existing law---Presumption being that Legislature would not make any mistake, and expression of Legislative will, could not lightly and easily be ignored.

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

--Ss. 5 & 7---Recovery of money---Machinery for dealing with the matter of recovery of money---Banking Tribunals Ordinance, 1984 was a special law relating to the recovery of money from delinquent/defaulting borrowers---Banking Tribunals Ordinance, 1984 a complete Code unto itself and had 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 recovery---Provisions of Banking Tribunals Ordinance, 1984 would prevail over any other law and any criminal Act falling within the definition of offence contained in S.7 of the Ordinance, would fall within the exclusive domain of Banking Tribunal and that too in the manner that offence would not be cognizable and that cognizance thereof would be taken by the Tribunal on a written complaint by the Bank which would be bailable and also compoundable.

Aamer Khurshid Mirza v. The State 2005 CLD 20; Messrs Chenab Cement Products (Pvt.) Ltd. and others v. Banking, Tribunal Lahore and others PLD 1996 Lahore 672 and Nayyar Islam's case PLD 2001 Lah. 533 ref.

Navid Rasul Mirza for Petitioner.

Waqar Hassan Mir, Deputy Prosecutor General for NAB for the State.

Date of hearing: 7th June, 2005.

2006 C L D 612

[Lahore]

Before Ali Nawaz Chowhan and M. A. Shahid Siddiqui, JJ

EQUITY PARTICIPATION FUND---Appellant

Versus

Messrs PAKIZAN OIL MILLS (PVT.) LTD. and 4 others---Respondents

Regular First Appeal No.449 of 2001, heard on 16th February, 2006.

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

----Ss.9 & 10---Finance Agreement---Financial facility provided by way of participation in equity of company against assurance of payment of minimum dividend @ 13% per annum for a period of four years---Guarantors had agreed to buy back the shares acquired by appellant and had also guaranteed the payment of said minimum rate of dividend at 13% per annum after grace period of one year---Leave to defend was refused but later on Court allowed counsel for respondents to record statement/ acquiescence and suit was decreed---Decretal amount had been paid and dispute with regard to residual amount was challenged by appellant---Question was as to whether after having refused to grant leave to defend, recording such statement, was permissible under the law and if that was so whether liability under said statement was liable to be altered---Validity---Case was remanded to trial Court for verifying the liability after statement of respondent's side---If no concession was offered by appellant through any statement the trial Court would allow appellant to rebut the statement made by counsel of respondent.

Sadiq Hussain Lodhi for Appellant.

Ch. Anwar-ul-Haq for Respondents.

Date of hearing: 16th February, 2006.

2006 C L D 615

[Lahore]

Before Maulvi Anwarul Haq, J

Hafiz MUHAMMAD RAMZAN through Legal Heirs---Appellants

Versus

Hafiz HABIB-UR-REHMAN---Respondent

Regular First Appeal No.169 of 2005, heard on 14th February, 2006.

Trade Marks Act (V of 1940)---

----Ss. 16, 21, 26, 57, 73 & 76---Registration of Trade Mark--Infringement of registered Trade Mark---Suit against---Plaintiff, was engaged in manufacture of sweetmeat commonly known as 'Multani Sohan Halva' since before independence of the country and Trade Mark was also registered in his favour---Defendant, a former employee of plaintiff, after leaving service of plaintiff, started manufacturing and selling said product under words 'Hafiz Ka Multani Sohan Halva'---Goods were being sold by defendant in packets which bore same inscription, colour and design as registered design of plaintiff, which act of defendant constituted infringement of plaintiffs registered Trade Mark/name---Plaintiff in his suit filed against infringement of his registered Trade Mark, also sought restraining defendant from selling disputed goods in packets and other identical packets inscribed with name 'Hafi.z' design, colour and general get-up resembling in material particulars with said registered Trade Mark---Trial Court after Comparing name of goods concerned, packet in which same were being sold, inscription, colour and design had arrived at the conclusion that public at large would be confused and misled---Wrapper used by defendant was absolutely similar to wrapper used by plaintiff----Appellate Court agreed with the opinion formed by Trial Court upon a comparison of said two sets of wrappers and tins in which goods were being sold---Word 'Hafiz' was adopted by plaintiff as registered proprietor in the year 1963 and worked thereon since then continuously and without any interruption---Defendant could not come out with the plea that word 'Hafiz' had become 'public juris'---Appeal filed by defendant against judgment of the Trial Court, was dismissed, in circumstances.

The National Electric Fans Manufacturers (Regd.), Gujrat v. S. Muhammad Din and Sons Ltd., Lahore 1980 SCMR 97; Multani Sohan Halva, Hussain Aghahi Multan v. Registrar of Trade Marks, Karachi and another 1987 CLC 1448; Bashir Ahmad v. Registered Firm Hafiz Habib-ur-Rehman and another 1980 CLC 1268 and National Starch Manufacturing Co. v. Munn's Patent Maizena and Starch Co. 1984 A. 275/63 LJPC 112 ref.

Ijaz Rahim for Appellants.

Haassan Bakhsh Khan for Respondent.

Date of hearing: 14th February, 2006.

2006 C L D 622

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Syed MUHAMMAD EHSAN ALI---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED ---Respondent

Execution First Appeals Nos.403 and 386 of 2003, decided on 23rd February, 2006.

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

----S. 19(7)---Execution of decree---Banking Court, acting as an executing Court, while hearing objection petition, has no jurisdiction to direct the objection petitioner to make a deposit of 20% of the sale price as a condition precedent for hearing the objection petition---Imposition of such condition by the Banking Court was illegal.

Messrs Majid and Sons and another v. National Bank of Pakistan 2002 CLD 1742 and Messrs Noor Hayat Industries (Pvt.) Ltd. through Chief Executive v. Judge Banking Court No.1, Multan and 5 others 2004 CLD 1281 fol.

Shahid Ikram Siddiqui for Appellant.

Muhammad Mohsin Chohan for Respondent.

2006 C L D 679

[Lahore]

Before Umar Ata Bandial, J

Sh. ANAYAT ALI ---Petitioner

Versus

NATIONAL BANK OF PAKISTAN---Respondent

Writ Petition No.14700 of 2004, heard on 20th December, 2005.

State Bank of Pakistan BCD Circular No.34 dated 26-11-1984---

----Constitution of Pakistan (1973), Art.199---Constitutional jurisdiction---Scope---Contentions of the petitioner, an account holder of "Profit/loss Sharing System" were that he had made an investment with the Bank in its monthly Scheme and at that time he earned a rate of profit of 9.0% on the said Scheme without deduction of Zakat; that thereafter, from time to time, the Bank reduced the profit rate resulting, at the time of filing of the present constitutional petition to a diminished profit per month and that the present constitutional petition was filed by the petitioner for advancing personal right and for protecting public interest to enforce the promise of profit/loss sharing by the Bank---Validity---Financial statements of the Bank did not provide information that was specific and relevant for purposes of State Bank of Pakistan BCD Circular No.34 dated 26-11-1984 criteria and calculations---Ambiguity of representation in the financial statements, for example clubbing of mark-up and interest income, non-disclosure of administrative costs as a specific head and so forth was, therefore, misleading and invited careful scrutiny---Report by the financial Controller of the Bank which had declared that lowering of the profit rates distributed to the depositors of the Bank was, inter alia, on account of lowering of treasury bill rates, inter-bank rates and monetary policy enforced by the State Bank of Pakistan, which undermined the Bank's Stand that State Bank of Pakistan BCD Circular No.34 was the sole criterion for profit rate determination on its deposit accounts which also invited scrutiny--Analysis requisite for examining such pleas as well as the Bank statements was, however, an enterprise that required detailed information and expertise, neither of which was possessed by the High Court; but more importantly, under the law such an exercise was both the function and duty of the State Bank of Pakistan---High Court, in circumstances declined to explore the matters that fell within the domain of an expert statutory institution---Duty of Court was to ensure that the legal criteria and procedure for the declaration of rates of profit by the Bank on its PLS deposit were fully met---High Court, for the purpose of safeguarding investor's rights, referred the matter to the State Bank of Pakistan to ensure that the provisions and objectives of its BCD Circular No.34 were duly met which included the maximization of the non-interest income from the deposits made by the Banks/D.F.Is. as well as strict check on the costs allocated to the non-interest income calculation---Principles.?

Iftikharullah Malik for Petitioner.

Iftikhar Hussain Shah for Respondent.

Date of hearing: 20th December, 2005.

2006 C L D 706

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Mst. SHAHEEN NOON and another---Appellants

Versus

ALLIED BANK OF PAKISTAN through Manager and others---Respondents

Regular First Appeal No.66 of 2002, heard on 6th July, 2005.

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

--S.9---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S. 22---Recovery of bank loan---Time-barred suit---Interest bearing loan---Provisions of S.22 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Applicability---Interest bearing loan was granted to defendants in years, 1977-1980 and the suit was filed on 31-5-2000---Banking Court declined to grant leave to defend the suit and decreed the suit in favour of bank---Plea raised by defendants was that suit was barred by limitation---Validity---Loans became time-barred as per provisions of Limitation Act, 1908, prior to enactment of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Right of bank to recover amount of finance stood extinguished due to bar of limitation as provisions of Limitation Act, 1908, were applicable to interest bearing loans---Bank failed to file suit against defendants within the period of limitation---Rights, which were past and closed transaction, could not be revived---Fresh cause of action under the provisions of S.22 of repealed Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, arose only in cases where loans were granted on mark-up basis according to Islamic Banking to overcome hardship and inconvenience in cases where no limitation was provided by Banking Companies (Recovery of Loans) Ordinance, 1979 and Banking Tribunals Ordinance, 1984---After coming into force of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, provisions of its S.22 were not made applicable to all cases instituted or filed in Banking Court---Loans disbursed under non-Islamic Banking System, wherein period of limitation was provided, fell outside the purview of S.22 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Rights extinguished could not be revived resorting to S.22 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Judgment and decree passed by Banking Court was set aside and the suit was dismissed---Appeal was allowed accordingly.

Khalid Qureshi and 5 others v. United Bank Limited 2001 SCMR 103 and N.D.F.C. v. Anwar Zaib White Cement and others 1999 MLD 1888 ref.

(b) Banker and customer---

----When guarantee is for a limited amount, guarantor cannot be held liable for anything more than what he has guaranteed.

Salman Aslam Butt for Appellants.

Sh. Zahoor Kausar for Respondents.

Date of hearing: 6th July, 2005.

2006 C L D 726

[Lahore]

Before Sheikh Azmat Saeed, J

NATIONAL DEVELOPMENT LEASING CORPORATION LTD.---Petitioner

Versus

Messrs SUNSHINE CLOTH LIMITED and others---Respondents

Execution Petition No.36-B of 2003 in C.O.S. No.147 of 1997, decided on 25th November, 2005.

(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.10 & 11---Execution of decree---Principles---Overt act of decree-holder is required for execution.

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

--S.19---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S.18---Limitation Act (IX of 1908), Art.181---Civil Procedure Code (V of 1908), S.48 & O.XXI, Rr.10 & 11---Execution of decree---Limitation---Decree was passed by Banking Court on 3-2-1998 and first application for execution of the decree was filed in the year, 2003---Validity---Decree-holder was required to make application (written or oral) for execution of decree in question and provisions of Limitation Act, 1908, would apply thereto and there was no escape from the fact that such application would be governed by Art.181 of Limitation Act, 1908 i.e. three years---First application for execution could have been filed by decree-holder by or before 2-2-2001, i.e. within three years of the decree and thus the right of decree-holder to file execution petition had lapsed during the currency of Banking Companies (Recovery of Loans) Ordinance, 1979, prior to its repeal vide Financial Institutions (Recovery of Finances) Ordinance, 2001, on 30-8-2001---Vested right was created in favour of judgment-debtor and there was nothing in Financial Institutions (Recovery of Finances) Ordinance, 2001, which could be pressed into service so as to extend period of limitation---Execution petition filed by bank was barred by limitation---Petition was dismissed in circumstances.

Muhammad Sher v. Muhammad Khan PLD 1975 Lah. 1016 and Muhammad Jalat Khan and another v. Ghulam Sarwar 1986 CLC 552 ref.

United Bank Ltd. Bank Square Branch Lahore v. Fateh Hayat Khan Tiwana and 7 others 2004 CLD 223 rel.

Tariq Kamal Qazi for Petitioner.

Dr. Danishwar Malik for Respondents.

2006 C L D 737

[Lahore]

Before Ch. Ijaz Ahmad and Mian Saqib Nisar, JJ

MUHAMMAD AKHTAR---Appellant

Versus

ZAHAR KHAN---Respondent

R.F.A. No.56 of 2004, decided on 18th May, 2005.

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

----S. 96, O.XXXVII, Rr.2 & 3---Suit for recovery of amount on basis of promissory note---Application for leave to defend suit---Defendant, who executed promissory note and receipt in respect of amount received by him from plaintiff, having failed to return amount to plaintiff according to terms of promissory note, plaintiff filed suit against defendant who filed application for leave to defend suit which was allowed---Defendant admitted execution of pro note/receipt with the objection that said pro note/receipt was executed as surety---Defendant, in circumstances had admitted execution of pro note---Burden to prove that document in question/pro note, was executed by him as surety, was on defendant, but he could not prove that fact by producing evidence---Trial Court, in circumstances was justified to decree suit against defendant---In absence of any infirmity or illegality in impugned judgment and decree of Trial Court, same could not be interfered with in appeal.

Farid Akhtar Hadi's case 1993 CLC 2015 ref.

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

----S. 118---Presumption as to negotiable instrument---Under provisions of S.118 of Negotiable Instruments Act, 1881 there was an initial presumption that negotiable instrument was made, drawn, accepted and endorsed for consideration---Such presumption though was rebutable, but onus was on person denying consideration to allege and prove same.

Haji Karim's case 1973 SCMR 100; Khalid Mukhtar's case 1996 CLC 741; Muhammad Boota's case 1979 SCMR 465; Muhammad Rafiq's case 2001 CLC 318; Muhammad Yousafs case PLD 1993 Lah. 244 and Muhammad Ashiq v. Niaz Ahmad PLD 2004 Lah. 95 ref.

Waheed Babar Butt for Appellant.

Ch. Javed Rasool for Respondent.

Date of hearing: 18th May, 2005.

2006 C L D 743

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs S.A CORPORATION through Partners and 2 others---Appellants

Versus

BANK OF PUNJAB through Manager---Respondent

Regular First Appeal No.161 of 2002, heard on 28th February, 2006.

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

----Ss.9 & 10---Recovery of bank loan---Ex parte decree---Duty of Banking Court---Nor-speaking order---After dismissal of application for leave to defend the suit, Banking Court, without looking into the genuineness of claim of bank, decreed the suit in favour of bank---Validity---Banking Court, after dismissing application for leave to defend the suit, was not absolved from its primary duty of seeing and judging the genuineness of the claim of bank---Banking Court was required to apply its mind to the facts of the case and documents before it---Courts were expected to be more vigilant, cautious and considerate while deciding the valuable rights of the parties---Judgment passed by Banking Court was in complete oblivion of the dictum of law laid down by Supreme Court in its judgments---Banking Court did not care even to examine the documents available on record, nor it had seen that the plaint was supported by statement of accounts to meet the mandatory requirement of S.9 (1) and (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Judgment and decree under appeal was non-speaking and lacked the element of reasoning---Banking Court did not discuss in the judgment the grounds urged before it by the defendant---Judgment and decree passed by Banking Court were set aside and the case was remanded to Banking Court for re-writing the judgment through a speaking order---Appeal was allowed accordingly.

Habib Bank Ltd. v. Al Jalal Textile Mills Ltd. 2003 CLD 1007; Haji Ali Khan and Company v. Allied Bank of Pakistan Ltd. PLD 1995 SC 362 and Messrs Qureshi Salt and Spices Industries v. Muslim Commercial Bank Ltd. 1999 SCMR 2353 ref.

Irfan Masood Sheikh for Appellants.

Respondent ex Parte.

Date of hearing: 28th February, 2006.

2006 C L D 760

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

MUHAMMAD DIN alias Mamma---Appellant

Versus

ZARAI TARAQIATI BANK LTD. through Manager and 2 others---Respondents

R.F.A. No.291 of 2005, heard on 22nd February, 2006.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.89 & 90---Execution of decree -Auction proceedings, publicizing of--Procedure-Sale through auction, setting aside of-Decree was passed for a sum of Rs.7,44,243 and to realize decretal amount, agriculture land measuring 16 acres and 18 Marlas Owned by judgment-debtor was auctioned for a sum of Rs.8,00,000 only---Plea raised by judgment-debtor was that the auction was dubious and his valuable land was let off on a throwaway price---Validity--Court Auctioneer did not mention in his report that any respectable of area including any Nazim, Naib Nazim, Councillor, Lumbardar or Chowkidar was called upon to join him in order to show transparency in the auction, which was being conducted by him---Reported exercise was done by the Court Auctioneer before 4/5 persons and nobody else participated or witnessed the same---Besides extensive participation of the residents of locality, efforts should have been made to publicize auction through beat of drum in adjoining villages, announcements in mosques and other important places around---Dubious nature and fakery of auction proceedings were apparent on the face of auction report---Banking Court failed to discharge its legal/statutory obligations to undo auction for the defects therein, whereas such exercise should have been undertaken even in absence of any objection by judgment-debtor or any body else---Highest bidder could not earn any edge over on the basis of such fake auction---High Court, in order to meet the ends of justice, directed refund of amount deposited by auction-purchaser along with mark-up at prevalent bank rate---High Court directed judgment-debtor to pay the amount in terms of O.XXI, R.89 C.P.C.---In case of failure of judgment-debtor to deposit the amount, mark-up amount would be adjusted out of sale proceeds on fresh auction---Appeal was allowed accordingly.

Mian Subah Sadiq for Appellant.

Syed Haider Ali Shah for Respondent No.1.

Muhammad Nawaz Shah for Respondent No.2.

Respondent No.3 (in person).

Date of hearing: 22nd February, 2006.

2006 C L D 764

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Agha ABBAS HAIDER KHAN---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Branch Manager---Respondent

E.F.A. No.471 of 2005, decided on 28th February, 2006.

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

----S.18---Limitation Act (IX of 1908), Art.166---Civil Procedure Code (V of 1908), O.XXI, R.90---Execution of decree---Setting aside of sale---Limitation---In satisfaction of decree, mortgaged property was auctioned and sale was confirmed on 12-3-1999---Judgment-debtor on 5-9-2005, filed objection petition under O.XXI, R.90, C.P.C. for setting aside the sale, which was dismissed by Banking Court being barred by limitation---Validity---Limitation period prescribed for filing application to set aside a sale in execution of decree was thirty days and limitation period was to start from the date of sale---Objection petition filed by judgment-debtor on 5-9-2005 was grossly barred by time and the same was rightly dismissed by Banking Court---Judgment-­debtor failed to point out any illegality or legal infirmity in the process of auctioning the property and in ensuing proceedings---Sale was held competently made in accordance with law and no exception could be taken to the same---Order passed by Banking Court not suffering from any legal infirmity, High Court declined to interfere in the matter Appeal was dismissed in circumstances.

Mian Nisar Ahmad for Appellant.

2006 C L D 769

[Lahore]

Before Nasim Sikandar, J

RELIANCE EXPORT (PVT.) LTD. and others: In the matter of

C.O. No.3 of 2006, heard on 16th March, 2006.

Companies Ordinance (XLVII of I984) -

----Ss. 284, 285, 286, 287 & 288---Companies (Court) Rules, 1977, R.61--Application for merger of two companies---Merger was sought on the ground that the creation of a single unit of the two companies after merger would save administrative/ overheads; would enhance the profitability of the unit; improve the operations, manufacturing and production and even make the credit arrangements smoother---General meetings were convened under the supervision of a local commission appointed by the High Court; Scheme of proposed merger and various arrangements for its execution were put before the meetings, both creditors as well shareholders unanimously approved the amalgamation Scheme---Notice of hearing was issued thereafter, through newspapers in terms of R.61, Companies (Court) Rules, 1977 and no one had come forward to object to the proposed Scheme and amalgamation---Merger proposed through the Scheme for amalgamation of the companies was sanctioned by the High Court and resultantly the proposed company shall be dissolved and would cease to exist from the specified date.

Malik Muhammad Rafique Rajwana for Petitioner.

Date of hearing: 16th March, 2006.

2006 C L D 773

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

BANK OF PUNJAB through Manager---Appellant

Versus

Mrs. MAH TALLAT SULTAN and another---Respondents

Regular First Appeal No.337 of 2003, heard on 8th March, 2006.

Bankers' Books Evidence Act (XVIII of 1891)-

----S.4---Statement of accounts not only containing unauthorized entries, but also not verified as required by law---Validity---Such statement of accounts was defective and not a prima facie proof of entries in the books of account, thus, could not be relied upon.

Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Betonite 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.

Muhammad Aqeel Malik for Appellant.

Nemo for Respondent.

Date of hearing: 8th March, 2006.

2006 C L D 780

[Lahore]

Before Mian Hamid Farooq and Syed Humid Ali Shah, JJ

CITIBANK N.A.---Appellant

Versus

IFTIKHAR ALI---Respondent

E.F.A. No.123 of 2002, heard on 28th February, 2006.

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

----S.19---Civil Procedure Code (V of 1908), S.I05---Execution of decree---Principle of estoppel---Applicability---Ground of objection not raised in Memorandum of appeal---Effect---After passing of decree in favour of bank, judgment-debtor during execution proceedings had been depositing different amounts in liquidation of decree---Finally, Banking Court, after finding that the decree had been satisfied, filed execution petition as having been completed---Bank assailed such order of Banking Court on the ground that the decree was not completely satisfied and certain amount was outstanding against the judgment-debtor---Validity---Bank through its counsel participated in the proceedings and was aware of different orders passed by Banking Court wherein amounts deposited by judgment-debtor were mentioned---Previous orders of Banking Court were indicative of the fact that judgment-debtor deposited different amounts in satisfaction of decree, which were accepted and acknowledged by the bank---In view of the conduct of bank, it could not be legitimately argued that some amount was outstanding against judgment-debtor---Bank did not challenge the previous orders passed by Banking Court, in the present appeal---High Court examined memorandum of appeal and did not find that bank had assailed the previous orders as a ground of objection in the memorandum of appeal, as required under S.105, C.P.C.---Bank acknowledged the previous orders as correct and acquiesced in the matter and that was why those orders were neither challenged before higher forum at relevant time nor in the present appeal---Principle of estoppel operated against the bank---Order passed by Banking Court not suffering from any legal infirmity did not call for interference by High Court--Appeal was dismissed in circumstances.

Shahid Ikram Siddiqui for Appellant.

Nemo for Respondent.

Date of hearing: 28th February, 2006.

2006 C L D 787

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD ZAHID MAHMOOD---Appellant

Versus

UNITED BANK LIMITED through Manager---Respondent

First Appeal from Order No. 231 of 2005, heard on 16th March, 2006.

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

----S.22(1)---Limitation Act (IX of 1908), S.12(2)---Appeal---Limitation---Impugned order was passed on 5-7-2005---Application for obtaining certified copy of impugned order was made on 9-7-2005---Certified copy was prepared on 13-7-2005 and delivered to appellant on 21-7-2005---Appeal was filed on 17-8-2005---Computing period of limitation from date of delivery of certified copy to appellant, appeal was within time.

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

----Ss.9 & 10---Civil Procedure Code (V of 1908), O.IX, R.13---Suit for recovery of f loan amount---Filing of written statement and framing of issues after granting to defendant leave to defend suit---Absence of defendant on a date fixed for evidence of Bank---Order of ex parte proceedings against defendant and passing of ex parte decree on such date without recording Bank's evidence---Application by defendant under O.IX, R.13, C.P.C., for setting aside ex parte decree---Dismissal of such application by Banking Court for being incompetent---Validity---Banking Court, after proceeding ex parte against defendant, should have called upon. Bank to produce evidence in support of its claim and then to decide suit after giving findings on all issues on the basis of evidence on record---Such application being maintainable could not be dismissed on such ground---High Court accepted appeal, set aside impugned order and accepted such application, resultantly suit would be deemed to be pending before Banking Court to be decided after recording evidence of parties.

Sh. Inayatullah v. Mian Abbas Ahmad Khan and another 1970 SCMR 130 and Kamran Co. and others v. Messrs Modern Motors and another PLD 1990 SC 713 rel.

National Development Finance Corporation v. Sheikh000 Cooking Oil Mills Limited and 7 others 2002 CLD 341; Sultan Mahmood and another v. Habib Bank Limited through Manager 2001 MLD 1987 and Messrs Ammar Rice Dealers and 2 others v. National Bank of Pakistan and others 2004 CLD 857 distinguished.

Mushtaq Ahmad Kashmiri for Appellant.

Muhammad Arshad Qureshi for Respondent.

Date of hearing: 16th March, 2006.

2006 C L D 797

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SARFRAZ AHMAD---Appellant

Versus

ALLIED BANK OF PAKISTAN and 2 others---Respondents

First Appeal from Order No. 301 of 2005, decided on 15th March, 2006.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.89---Execution of decree---Auction of mortgaged property---Petition by second bidder objecting to confirmation of sale in favour of highest bidder---Direction of Executing Court to second bidder to deposit 20% of auction price before hearing his objection petition---Rejection of objection petition for non-deposit of 20% of auction price---Validity---Impugned order was illegal and without jurisdiction.

Messrs Majid & Sons and another v. National Bank of Pakistan 2002 CLD 1742 and Messrs Noor Hayat Industries (Pvt.) Ltd. through Chief Executive v. Judge Banking Court No.1, Multan and 5 others 2004 CLD 1281 fol.

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

• Art.201---Decision of High Court---Binding on subordinate courts.

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

---O.XXI, R.92---Sale, setting aside of-Scope-Normally, sale after its confirmation would not be set aside---Where sale itself became invalid, then its confirmation would also be invalid.

Afzal Maqsood Butt v. Banking Court No.2, Lahore and 8 others 2005 CLD 967 rel.

Malik Shakeel Ahmad Awan for Appellant.

Mian Nasir Mehmood for Respondent No. 1.

Nemo for Rrespondent No.2.

2006 C L D 800

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

HAROON RASHID---Appellant

Versus

HABIB BANK LIMITED through Manager---Respondent

Regular First Appeal No. 89 of 2006, heard on 7th March, 2006.

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

----S.9---Suit for recovery of finance provided for purchase of vehicle---Default in payment of instalments by customer---Suit by Bank for recovery of balance amount after taking possession of vehicle---Maintainability---Agreement between parties provided that on_ failure of customer to pay any instalment on its due date, Bank would become entitled to demand immediate payment of entire balance amount and take possession of vehicle and sell the same---Bank, after taking possession of vehicle sold same and credited its sale proceedings to customer's account---Bank, after taking possession of vehicle, was not left without any remedy regarding recovery of balance amount---Customer in leave application had not denied execution of documents, availing of finance facility and delivery of possession of vehicle to him---Suit was decreed in circumstances.

Shahzad Saleem Bhatti for Appellant.

Nemo for Respondent.

Date of hearing: 7th March, 2006.

2006 C L D 804

[Lahore]

Before Muhammad Sayeed Akhtar and Syed Sakhi Hussain Bokhari, JJ

HABIB BANK LIMITD---Appellant

Versus

NATIONAL ENGINEERING COMPANY (PVT.) LTD. through Chief Executive and 2 others---Respondents

Execution First Appeal No. 5 of 2006, heard on 4th April, 2006.

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

----Ss. 3, 9 & 22---Suit ,for recovery of loan---Guarantors of loan whether liable to pay cost of funds.

Rashdeen Nawaz Kasuri for Appellant.

Zafar Ullah Khan for Respondents.

Date of hearing: 4th April, 2006.

2006 C L D 806

[Lahore]

Before Sheikh Azmat Saeed and Umar Ata Bandial, JJ

Mst. SURIYA KHANUM and 2 others---Appellants

Versus

HABIB BANK LIMITED through Branch Manager---Respondent

Execution First Appeal No. 118 of 2006, decided on 29th March, 2006.

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

----Ss. 15, 19 & 22---Recovery suit was decreed against the judgment-debtor and during execution proceedings property admittedly belonging to the judgment-debtor was directed by the Banking Court to be auctioned---While terms and conditions of the auction were in the process of being settled judgment-debtor filed objection petition challenging terms and conditions which was rejected by the Banking Court not only that application seeking postponement of the sale so as to enable judgment-debtor to deposit the decretal amount was also turned down---Contention of the judgment-debtor was that reserve price was not fixed by the Court nor the time and venue of the auction was determined by the Court and all these matters had been delegated to and left at the discretion of the Court auctioneer---Record, however, showed that in fact reserve price had been fixed and approved by the Court by an earlier order factum whereof was reflected from the order impugned and there was evidence on the record that venue of the auction was also fixed by the Court being at site---Only the date and time had not been fixed with exactitude---Validity---High Court, in appeal directed the Banking Court to fix the date and time of the auction and thereafter to proceed with auction proceedings in accordance with law and declined to pass any further order in this regard---Held, no provision existed in law which enabled the judgment debtor to seek postponement of the auction of the property in order to satisfy the decree and there was nothing in law that impeded satisfaction of the decree by the judgment-debtor in accordance with and subject to limitation provided by law.

Shahid Ikram Siddiqui for Appellants.

Nisar Ahmad Nisar for Respondent.

2006 C L D 808

[Lahore]

Before Muhammad Sayeed Akhtar and Muhammad Arshad Jehangir, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Appellant

Versus

PAKISTAN BELTING (PVT.) LIMITED through Chief Executive and 5 others---Respondents

Regular First Appeal No. 270 of 2005, decided on 29th March, 2006.

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

---Ss. 9, 3 & 22---Finance agreement---Cost of fund, award of---Suit for recovery of amount was decreed with costs and costs of fund from the date of institution of the suit till realization---Bank filed appeal against the decree claiming the funds from the date of the default which according to it was 9-9-1992---Validity---Finance Agreement was dated 16-9-1991, which according to the Bank expired on 9-9-1992 and which allegedly was the date of default---Bank remained indolent for 10 years and filed suit for recovery on 20-1-2003---No legal justification was available for awarding the costs of funds from the alleged date of default i.e.9-9-1992---Judgment-debtor could not be penalized for the inaction of the Bank---Trial Court had already granted the costs of fund from the date of institution of the suit---Bank admitted that decree already stood satisfied-Appeal of the Bank having no merit was dismissed by the High Court with direction to the Bank to release the security documents of the judgment-debtor within ten days from the date of present order.

Rashdeen Nawaz Kasuri for Appellant.

Aftab Arshad Sheikh, Director, Pakistan Belting (Pvt.) Ltd. Lahore for Respondents.

2006 C L D 812

[Lahore]

Before Mian Hamid Farooq and Syed Humid Ali Shah, JJ

QAISER MAJEED---Appellant

Versus

NATIONAL BANK OF PAKISTAN, RAIWIND BRANCH, DISTRICT LAHORE through Manager and 3 others---Respondents

Regular First Appeal No. 9 of 2006, decided on 6th March, 2006.

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

----Ss.15(6) & 19(3)(5)---Execution of decree---Sale of mortgaged property---Application of decree-holder seeking possession of mortgaged property---Plea of judgment-debtor that before auction of mortgaged property, Banking Court could not order for delivery of its possession to decree-holder---Validity---Section 19(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 by reference incorporated certain provisions of S.15 including its subsection (6) which made them applicable to sale of mortgaged, pledged or hypothecated property by financial institution in exercise of powers conferred by S.19(3) of the Ordinance---Cumulative effect of Ss.15(6) & 19(5) of the Ordinance would be that financial institution in order to succeed in such application, would have to show that property was mortgaged; that mortgagor or his agent/servant or any person put in possession by mortgagor did not voluntarily give possession thereof; that financial institution had sought sale or purchase or . had purchased mortgaged property; and that financial institution had filed application for obtaining possession of such property---Only upon fulfilment of all such conditions, Banking Court would be competent to order for delivery of possession of mortgaged property to financial institution or purchaser---Where any or more of such conditions were lacking, then Banking Court would have no such power---Not necessary before passing order for delivery of possession that mortgaged property must have already been sold, but same would include mortgaged property yet to be sold and its sale was sought by financial institution---All such conditions being sine qua non for passing an order for delivery of possession, were available in the present case---Application of decree-holder was accepted I n circumstances---Principles.

Mian Nisar Ahmed for the Appellant.

Ch. Muhammad Zafar Iqbal for Respondent No.1.

Shahid Ikram Siddiqui for Respondents Nos.2 to 4.

2006 C L D 816

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs SUI NORTHERN GAS PIPELINES LTD. Through Deputy Chief (Legal)---Appellant

Versus

MUSLIM COMMERCIAL BANK LTD., AVARI HOTEL BRANCH, LAHORE through Manager and another---Respondents

Regular First Appeal No. 19 of 2006, heard on 9th March, 2006.

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

----Ss.2(c), 9 & I0---Civil Procedure Code (V of 1908), O.VII, R.10---Suit for recovery of amount of bank guarantee---Applications for leave to defend suit by private defendant and Bank followed by amended applications under S.10(12) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court without first deciding such applications ordered for return of plaint for its presentation to proper Court as plaintiff being beneficiary of bank guarantee did not fall in definition of "customer" as defined in S.2(c) of the Ordinance---Validity---Nowhere was provided under S.10 of the Ordinance that while hearing leave application, Banking Court could either reject or return plaint---If Banking Court was of the view that defendants had raised substantial questions of law and facts, then leave could have been granted, but plaint could not be rejected or returned at such point of time---Banking Court being a creature of statute would be bound by the provisions and procedure provided thereunder---High Court accepted appeal and set aside impugned order, resultantly leave applications and suit would be deemed to be pending before Banking Court for their decisions in accordance with law.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245; Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645; Falcon Ventures Pvt. Ltd. through Chief Executive Iftikhar Ahmad v. Punjab Banking Court No.II, Lahore and another 2004 CLD 726 and Manzoor Ahmad and another v. Agricultural Development Bank of Pakistan through Manager Nankana Sahib Branch and 3 others 2005 CLD 653 rel.

Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 and Haji Ali Khan and Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362 distinguished.

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

----S.5---Banking Court---Creature of statute---Bound by the provisions and procedure provided under such statute.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245: Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer 2004 CLD 1645; Falcon Ventures Pvt. Ltd. through Chief Executive Iftikhar Ahmad v. Punjab Banking Court No.11, Lahore and another 2004 CLD 726 and Manzoor Ahmad and another v. Agricultural Development Bank of Pakistan through Manager, Nankana Sahib Branch and 3 others 2005 CLD 653 fol.

Azhar Maqbool Shah for Appellant.

All Zafar for Respondent No.1.

Khawaja Saeed-uz-Zafar for Respondent No.2.

Date of hearing: 9th March, 2006.

2006 C L D 822

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

TAHIR MUBEEN---Appellant

Versus

PUNJAB SMALL INDUSTRIES CORPORATION

and others---Respondents

First Appeal from Order No. 274 of 2005, decided on 16th March, 2006.

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

• • • -Ss . 9(5), 10 & 12---Ex parte decree, setting aside of---Non­appearance of defendant and non filing of leave application despite issuance of summons to him through all prescribed modes of service---Return of registered envelope by postal authorities with refusal report---Application by defendant for setting aside ex parte decree filed after one year and eight months of its passing on the ground that he had left earlier house and shifted to a new house, where no notice was sent---Validity---Service duly effected in any of the modes provided in S.9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 would be deemed to be a valid service---Defendant had not conveyed his new address to plaintiff-Bank, which was in the knowledge of his earlier address also given in his Identity Card---Defendant in application stated that he came to know of suit, when his father went to old house along with two named persons, but no affidavit to such effect of such persons had been filed to support such assertion---Such application was barred by time---Defendant failed to explain as to why, despite service through newspapers, he did not file leave application---Such application was dismissed with costs.

Ch. Abdul Ghafar for the Appellant.

Jari Ullah Ghafar Khan for the Respondents

2006 C L D 826

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

AMERICAN EXPRESS BANK LIMITED through Chief Manager and another---Appellants

Versus

TAHIR AMIN---Respondent

Regular First Appeal No. 491 of 2004, heard on 7th March, 2006.

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

----Ss.2(c)(d), 9 & 10-Suit against Bank for recovery of amount of traveller cheques---Application for leave to defend suit by Bank that plaintiff had not purchased traveller cheques from Bank, which were lost/stolen, thus, no privity of contract existed between parties; and that Bank was neither a "customer" nor had granted "finance facility" to plaintiff---Banking Court decreed suit after finding that relationship of "customer" and "financial institution" did exist between the parties---Validity---Leave application gave rise to questions of law and facts to the effect as to whether plaintiff was "customer" within meaning of S.2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001; whether any 'finance" within scope of S.2(d) of the Ordinance was granted to plaintiff, whether Banking Court had jurisdiction to try suit; whether traveller cheques would fall within term of finance" as defined in S.2(d) of the Ordinance; whether Bank was liable to make good the loss of travellers cheques purchased by plaintiff from its original holder---Banking Court had not dealt with such questions in its true perspective---Bank had made out a case for grant of leave to defend suit, which should have been granted on furnishing bank guarantee---High Court accepted appeal, set aside impugned decree and accepted leave application subject to furnishing of bank guarantee equal to suit amount with direction to Banking Court to decide suit after framing issues and recording evidence of parties within specified time.

Muhammad Khalid Mehmood Khan for Appellants.

Asim Hafeez for Respondent.

Date of hearing: 7th March, 2006.

2006 C L D 836

[Lahore]

Before Muhammad Muzammal Khan and Syed Sajjad Hussain Shah, JJ

MONAZAM BIBI and 2 others---Appellants

Versus

ZARI TARAQIATI BANK LTD. Through Branch Manager---Respondent

First Appeal from Order No. 241 of 2005, decided on 6th April, 2006.

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

----S.9(5)---Substituted service---Press publication---Selection of newspapers---Failure to dispatch newspapers under postal cover---Banking Court after publication of citation in two newspapers, one English and the other Urdu proceeded ex parte against defendants and decreed the suit in favour of bank---Plea raised by defendants was that the newspapers in which publications were printed, did not have circulation in their area and no copy of newspapers was dispatched to them under postal cover---Validity---Defendants were not educated as one of them had thumb-marked his power of attorney in favour of their counsel and others had signed it in broken Urdu---High Court, in circumstances, assumed that the English newspaper was not being read and had no circulation in the area where they resided---Urdu newspaper was a local newspaper and had no circulation in any other district, especially in the rural area of the district of residence of defendants---High Court declined to accept that the service of defendants was effected in accordance with law, especially when newspapers in which citations against defendants were published were not dispatched through post at their addresses---Defendants were thus not served with the process properly in circumstances.

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

----S.12---Ex parte decree, setting aside of---Improper service of summons---Banking Court, after publication in press proceeded ex parte against defendants and decreed the suit in favour of bank---Defendants filed application for setting aside ex parte decree but the same was dismissed by Banking Court---Plea raised by defendants was that they were not properly served with the process of Court---Validity---Defendants were not real loanees, guarantors or mortgagors but were heirs/legal representatives of the loanee, thus they were to be substituted/ impleaded in the suit with all clarity and their service should have been effected lawfully through any of the modes known to law---Defendants were not personally served and their service through substituted means was defective---Ex parte decree was incorrectly passed without proper service of defendants/heirs of deceased loanee and they were illegally non-suited by dismissal of their application for setting aside ex parte decree---Banking Court had passed ex parte decree incorrectly without proper service of defendants/heirs of deceased loanee and they were non-suited by dismissal of their application---Ex parte decree passed by Banking Court was set aside and the case was remanded to Banking Court for decision of suit in accordance with law---Appeal was allowed in circumstances.

Ch. Muhammad Amin Javaid for the Appellants.

Mumtaz Bharwana for the Respondent.

2006 C L D 839

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs S.B. ENGINEERING (PVT.) LIMITED through Chief Executive and 4 others---Appellants

Versus

PRUDENTIAL COMMERCIAL BANK LTD. Through Branch Manager---Respondent

Execution First Appeal No. 214 of 2005, heard on 13th March, 2006.

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

----Ss.10, 15(11) & 19(7)---State Bank of Pakistan B.C.D. Circular No.29---Execution---Objection---Conditional leave granting order--Non-fulfilment of the condition imposed by High Court---Banking Court dismissed the leave application and decreed the suit in favour of bank but the decree was set aside by High Court and leave to defend the suit was granted subject to deposit of certain amount---Condition imposed by High Court having not been complied with, therefore, application to defend the suit was dismissed and the suit was decreed in favour of bank and execution proceedings were initiated---Judgment-debtors filed objection application and sought settlement of their matter as per terms of State Bank of Pakistan BCD Circular No.29---Banking Court dismissed the objection application on the ground that judgment-debtors had already failed to comply with the direction of High Court---Validity---Ground on which Banking Court dismissed the objection application of judgment-debtors was not sufficient to knock them out and to dismiss their application, as the same had to be decided on its own merits---If judgment-debtors did not comply with the terms of the order of High Court and failed to deposit the requisite amount, they had faced the consequences, as their leave application was disallowed---On the basis of such non-deposit, judgment-debtors objection application could not be dismissed---Banking Court was obliged under law to at least give some findings on the controversies raised in the objection petition---Banking Court did not advert to any of the controversies raised by the parties and issues involved in the case and proceeded to dismiss the objection petition with additional ground that judgment-debtors were prolonging the matter in execution of decree---Order passed by Banking Court, dismissing objection application was devoid of reasons and was set aside---Objection application filed by judgment-debtors filed under Ss.15(11) & 19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was remanded to Banking Court for decision afresh---Appeal was allowed accordingly.

Mahmood A. Sheikh for Appellants.

Muhammad Ashraf Khan for Respondent.

Date of hearing: 13th March, 2006.

2006 C L D 852

[Lahore]

Before Sheikh Azmat Saeed, J

ABDUL RASHEED MUGHAL through Board Resolution---Petitioner

Versus

Messrs ECSA (PK) (PVT.) LTD.---Respondent

C.M. 379-L of 2006 in C.O. No. 53 of 2004, decided on 7th April, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 319, 305 & 309---Application seeking stay of winding up proceedings, etc.---Powers of High Court under S.319, Companies Ordinance, 1984---Nature, extent, mode and principles for exercise of such powers elucidated.

A perusal of S.319 of the Companies Ordinance, 1984 reveals that the nature, extent and the mode of exercise of powers conferred thereby have not been spelt out in any great detail. An overview of the judicial precedents in this behalf reveals that the established principles of the English jurisdiction have, by and large, been followed.

In the exercise of its jurisdiction to stay the winding up proceedings the Court will refuse to act upon the mere assent of the creditors in the matter, and will consider whether what is proposed is for their benefit, and also whether the stay will be conducive or detrimental to commercial morality and to the interests of the public at large. In particular, the Court will have regard to the following facts:-

(1) that directors have not complied with their statutory duties as to giving information to the official receiver or furnishing a statement of affairs;

(2) that there has been an undisclosed agreement between the promoter and the vendor to the company as to the participation by the promoter in fully-paid shares forming the consideration for the purchase of property by the company on its formation:

(3) that the promoter has made gifts of fully-paid shares to the directors;

(4) that there are any other matters connected with the promotion, formation or failure of the company or the conduct of its business or affairs, which appear to the Court to require investigation.

?

Following are the principles for exercise of powers under S.319 of the Companies Ordinance, 1984:-

(1) if the Court is satisfied on the materials before it that the application is bona fide;

(2) the Court would be guided by the principles and definitely come to the finding that the principles are applicable to the facts of a particular case;

(3) mere consent of all the creditors for stay of winding up is not enough;

(4) the offer to pay in full or make satisfactory provisions for the payment to the creditors is not enough;

(5) Court will consider the interest of commercial morality and not merely the wishes of the creditors and contributories;

(6) Court will refuse an order if there is evidence of misfeasance or of irregularity demanding investigation;

(7) a firm and accepted proposal for satisfying all the creditors must be before the Court with material particulars;

(8) the jurisdiction for stay can be used only to allow in proper circumstances of resumption of the business of the company;

(9) the Court is to consider not only the question whether the proposal for revival of the company is for benefit of the creditors but also whether the stay will be conducive or detrimental to commercial morality and to the interest of the public at large;

(10) before making any order Court must see whether the ex-directors have complied with their statutory duties as to giving information to the Official Liquidator by furnishing the statement of affairs;

(11) and any other relevant fact which the Court thinks fit to be considered for granting or not granting the stay having regard to the particular facts of a particular case.

A winding up order is passed for reason or cause contemplated by law e.g. inability of the company to pay its debts, failure to commence business within one year from its incorporation, carrying on business not authorized by its memorandum, a special resolution has been passed by its members for its winding up etc. And a close and careful analysis of the statutory provision (section 319) and the judicial precedents reveal that in essence a power has been conferred upon the Court to stay winding up proceedings on an application of a person or party mentioned in the said provision and within the period specified therein where it is proved to the satisfaction of the Court that the cause for the winding up order has disappeared or is likely to disappear. In other words, the mischief prompting the winding up order has been set at naught or the company or its shareholders are able and willing to set it right either by arrangement, compromise or settlement and a proposal in this behalf for the revival of the company is submitted to the Court. Usually, such proposal would include an arrangement or settlement with the creditors especially if the winding up order has been passed on account of the inability of the company and its debts. The power conferred is primarily to consider a proposal for revival of the company and an eventual revocation or withdrawal of the winding up order. This is also evident from the wording of the statutory provision (section 319) whereby the word stay has been used along with withdrawn, cancelled or revoked, with reference to the winding up order. Such power and jurisdiction can be exercised by High Court and by the Supreme Court to consider and approve arrangements for payment of debts and revocation of winding up order.

Powers conferred are discretionary in nature and can only be exercised in furtherance of commercial morality and after bona fides of the parties have been established on the record. Such powers will not be exercised to permit the cover up of any malfeasances illegality or irregularity in the conduct of the affairs of the company.

In the present application it is not the case of the petitioner that the cause resulting in the winding up order has disappeared or is likely to disappear. The petitioner is not seeking an order for revocation of winding up order but merely prays that the winding up proceedings be stayed and investigation be carried out to adjudicate upon the allegations made by the applicant as to the title of the property purportedly owned by the Company sought to be sold in auction and to determine the illegality or otherwise of allocation of share amongst the shareholders. Such contentions raised are beyond the scope and ambit of the powers conferred under section 319 of the Companies Ordinance, 1984, upon High Court, which cannot be interpreted to provide an opportunity to a contributory or shareholder etc. to seek investigation and determination of collateral issues.

No doubt during the course of proceedings following the winding up orders issues and disputes may arise requiring the Court to pause and determine the same before proceeding further. Such ancillary issues are to be dealt with in accordance with the Companies Ordinance, 1984 and the Companies (Court) Rules, 1997 that too at the proper stage and upon an application of a person clothed with the locus standi to raise such issues.

The applicant in the present case, claims to own one share out of a total of 105,900 shares. She has raised the only issue as to the title of the company to the property proposed to be sold but admittedly does not claim any right therein. Her husband apparently had control over the said property of the company and had derived financial benefits therefrom to the exclusion of the company and the other shareholders. This application is obviously mala fide and has been filed to subvert the process of the law, more particularly, the sale of the property of the company. When and if any bona fide claimant to the said property objects to the sale such objection can and will be dealt with in accordance with law. Similarly, the question of the respective shares of the shareholders is also premature and would only arise when the property of the company has been sold and when and if the funds realized therefrom are to be distributed to the persons entitled thereto.

Present application is not only misconceived but also not bona fide, contention raised therein cannot form the basis for stay of winding up proceedings or for postponing the sale of the property, as is the intention of the applicant. Outstanding matters, if any, can and will be dealt with, determined and adjudicated upon in due course in accordance with law as and when the occasion arises.

Halsbury's Laws of England Fourth Edn. 1996 Reissue Vol.7(3) and Mahabir Prasad Agarwalla v. Ashkaran Chattar Singh (1980-81) 85 CWN 557 at 581, 582 (as reproduced in AIR 1996 Cal. 171) quoted.

Messrs Consolidated Exports Ltd. v. Messrs Dyer Textile and Printing Mills Ltd. PLD 1984 Kar. 541; East India Cotton Mills Ltd. AIR (36) Culcutta 1949 and Nikanta Kolay v. The Official Liquidator AIR 1996 Cal. 171 ref.

Kh. Aamer Farooq, Malik M. Rashid Awan, Azhar Maqbool Ahmed Khan and Tanvir Ahmed Shami, Joint Official Liquidators.

2006 C L D 863

[Lahore]

Before Sheikh Azmat Saeed and Umar Ata Bandial, JJ

MUHAMMAD SABIR---Appellant

Versus

MUHAMMAD AKRAM---Respondent

Regular First Appeal No. 18 of 2005, decided on 29th March, 2006.

Civil Procedure Code (V of I908)---

----O.XXXVII, Rr.2 & 3---Negotiable Instruments Act (XXVI of 1881), S.118---Suit for recovery of amount on basis of pro note---Leave to appear and defend suit---Case of plaintiff was that he had business dealings with the brother-in-law of defendant and suit amount was due from the brother-in-law and that defendant in consideration of amount due from his brother-in-law, had executed pro note in question---Suit having been decreed, defendant had filed appeal against judgment and decree of the Trial Court---Execution of pro note had fully been proved on the record by the witnesses and the report of Handwriting Expert---No doubt presumption was that pro note was executed for consideration as was the import of law embodied in S.118 of Negotiable Instruments Act. 1881 but such presumption was rebuttable---Admittedly no consideration was paid to the defendant in the facts and circumstances of the case---Allegation was that there was some liability owed to plaintiff by brother-in-law of the defendant, but there was no specific finding to the effect that such liability stood established on record---Details and nature of such liability were conspicuous by their absence in evidence produced on record on behalf of plaintiff in rebuttal of a denial of consideration by defendant on oath when he appeared as a witness---No specific issue in that regard had been framed which had resulted in the prejudice to both the parties who did not produce evidence to prove/disprove consideration for the pro note in question---Judgment of the Trial Court, in circumstances could not sustain and the matter needed to be decided afresh, particularly with reference to the payment of consideration, if any, of the pro note in question---Accepting appeal impugned order of the Trial Court was set aside by the High Court and case was remanded to the Trial Court to decide question of consideration, if any, of the pro note.

Muhammad Sabir Shad and Mirza Muhammad Aziz ur Rehman for Appellant.

2006 C L D 865

[Lahore]

Before Syed Sakhi Hussain Bokhari and Syed Hamid Ali Shah, JJ

MUHAMMAD ASHIQ---Appellant

Versus

Rana TARIQ MAHMOOD---Respondent

Regular First Appeal No. 123 of 2005, decided on 23rd February, 2006.

(a) Stamp Act (I of 1899)---

----Ss.35, 36 & 61---Negotiable Instruments Act (XXVI of 1881), S.4---Promissory note not duly stamped---Admission in evidence without objection---Effect---Such document could not be called in question subsequently, but could legally be read and considered in evidence---Such document would be subject to challenge only under S.61 of Stamp Act, 1899, but not otherwise.

Ramdeo v. Gulabchand AIR 1958 Rajasthan 183; Sohanlal Nihal Chan v. Ranghu Nath Singh AIR 1934 Lah. 606; Firm Sri Chan Sheo Parshad v. Lajja Ram AIR 1939 Lah. 31; K.M. Munner v. Mirza Rasheed Ahmad PLD 1963 Kar. 905; Munir Ahmad Kahloon v. Rana Muhammad Yousuf PLD 2003 Lah. 173 and Farid Akhtar Hadi v. Muhammad Latif Ghazi 1993 CLC 2105 ref.

Muhammad Ashiq and another v. Niaz Ahmad and another PLD 2004 Lah. 95; Muhammad Luqman's case PLD 1994 Kar. 492 and M/s Rasheed Ullah v. Punjab Province and others 1995 CLC 1914 rel.

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

----S.4---Qanun-e-Shahadat (10 of 1984), Art.17(2)(a) --Promissory Note---Attestation by witnesses---Effect---Article 17(2)(a) of Qanun-e-Shahadat, 1984 provided for attestation of a document by two witnesses---Conditions enumerated in S.4 of Negotiable Instruments Act, 1881, if present in a document, then same would become a 'Promissory Note'---Mere signing of Promissory Note by witnesses would not change its nature nor same would become void nor lose its significance as negotiable instrument.

Malik Muhammad Akram v. Khuda Bakhsh 2000 CLC 759 ref.

Keshari Chand Susana and others v. Asharam Mahato AIR 1916 Cal. 88 distinguished.

S.M. Masud for Appellant.

Muhammad Shahid Rana for Respondent.

2006 C L D 869

[Lahore]

Before Syed Asghar Haider, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through duly Authorized

Attorney---Appellant

Versus

Messrs KAUSAR ICE FACTORY and 3 others---Respondents

First Appeal from Order No.112 of 2003, heard on 3rd April, 2006.

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

--S.39-Civil Procedure Code (V of 1908), S.47---Execution of decree---Executing Court---Powers---Incentive scheme, benefit of--- During execution proceedings, judgment-debtors filed constitutional petition for seeking benefit of incentive scheme---High Court directed judgment-debtors to pursue their remedy before Executing Court---Application of judgment-debtors was accepted by Executing Court and they were allowed benefit of incentive scheme---Plea raised by decree-holder was that Executing Court could not go beyond the decree---Validity---High Court in no way directed Executing Court to accept contention of judgment-debtors that they were entitled to the benefit of incentive scheme---Observation indicated that Executing Court was required to proceed in accordance with law---Executing Court had to restrict itself to execution of decree and could not go beyond the terms of decree---Executing Court exceeded its jurisdiction and took cognizance of the matter which was not within its purview-Executing Court adverted to serious procedural lapses and deviations effecting rights of parties---. Order passed by Executing Court was set aside and matter was remanded to Executing Court to determine rights, obligations and liabilities of parties---Appeal was allowed accordingly.

Mst. Naseem Akhtar and 4 others v. Shalimar General Insurance Company Ltd. 1994 SCMR 22 and Nawazish Latif Bhatti v. A.B.L. 2004 CLD 92 fol.

Sheikh Muhammad Ikram and another v. Government of Pakistan 2001 MLD 1996; Dr. Idrees v. National Logistic Cell. 2002 CLC 1609; Muhammad Younas v. National Insurance Corporation 2002 CLC 757; Brig. (R.) Muhammad Aslam Khan v. The Government of AJ&K 1983 CLC 1204; Mst. Yasmeen v. National Insurance Corporation 2004 CLC 979; Messrs Intercity Transport Service v. Judge Banking Court 2004 CLD 466; Silver Oil Mills v. Union Bank Ltd. 2003 CLD 1658; Ghulam Muhammad v. ADBP 2003 CLD 267; Messrs PILC v. Nooriani Industries 2003 CLD 259; Kiran Sugar Mills v. BEL 2003 CLD 1159; Allied Bank of Pakistan v. Messrs Aiysah Garments 2001 MLD 1955 and 2004 CLD 1155 and 827 ref.

Shoiab Zafar for Appellant.

Ch. Irshad Ullah Chattha for Respondents Nos. 1 to 3.

Mian Maqsood Ahmed for Respondent No.4.

Date of hearing: 3rd April, 2006.

2006 C L D 874

[Lahore]

Before Muhammad Muzammal Khan, J

Mst. NUSRAT MALIK SALEEM---Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Law, Justice and Human Rights Division, Islamabad and 3 others---Respondents

Writ. Petition No. 1374 of 2006, decided on 18th April, 2006.

(a) Insurance Ordinance (XXXIX of 2000)-

----S.118--Liquidated damages---Entitlement---Pre-condition---Claimant under insurance policy is entitled to liquidated damages in case of delay in payment of insurance claim, from the date of completion of case, which could only be avoided by promptly paying the claim or it is proved that delay occurred due to circumstances beyond the control of insurer.

(b) Insurance Ordinance (XXXIX of 2000)---

----S. 118---Constitution of Pakistan (1973), Art. 199---Constitu­tional petition---Liquidated damages---Entitlement---Petitioners were forced to file complaint with Wafaqi Mohtasib against delay being caused by insurers in payment of insurance claim---Wafaqi Mohtasib directed the insurers to make payment but instead insurers preferred representation before the President of Pakistan which too was dismissed---Petitioners sought recovery of liquidated damages on the ground that they received their claims after litigation---Validity---Insurers could not show that failure/ delay to make death claims was beyond their control whereas, delay was deliberate and claims were paid after thrusting petitioners into litigation---Insurers failed to demonstrate that their conduct in payment of petitioner's death claims was covered by the only exception created by law i.e. the delay was beyond their control, hence they were obliged to pay the claimed liquidated damages as per 5.118 (2) of Insurance Ordinance. 2000---High Court directed the insurers to pay liquidated damages to petitioners according to law within three months---Petition was allowed accordingly.

Liaqat Ali Butt for the Petitioner.

Mian Naseer Ahmad for Respondents.

2006 C L D 879

[Lahore]

Before Nasim Sikandar and Muhammad Jehangir Arshad, JJ

SAUDI-PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY (PVT.) LIMITED (SAUDI - PAK) - - -Appellant

Versus

SAUDI-PAK KALABAGH LIVESTOCK COMPANY LTD. and 2 others---Respondents

Regular First Appeal No. 20 of 1997, heard on 13th April, 2006.

Banking Tribunals Ordinance (LVIII of 1984)-

----S.5---Decree, setting aside of---Review of judgment---Jurisdiction of Banking Tribunal---Judgment and decree passed by Banking Tribunal was set aside on review application---Validity---Power of review was not available to Banking Tribunal under Banking Tribunals Ordinance, 1984---Even if Banking Tribunal was of the view that the judgment and decree sought to be reviewed suffered from any mistake apparent on the face of record, the Tribunal should have tried the suit on. merits instead of dismissing the same after recalling of decree---In absence of specific power available to Banking Tribunal under Banking Tribunals Ordinance, 1984, order passed in review application was set aside---Appeal was allowed in circumstances.

Muzaffar Ali v. Muhammad Shafi PLD 1981 SC 94; Messrs Baghpotee Services (Private) Ltd. and others v. Messrs Allied Bank of Pakistan Ltd. 2001 CLC 1363; Messrs Shah Jewana Textile Mills Ltd. Lahore v. United Bank Ltd. PLD 2000 Lah. 162 and Allied Bank of Pakistan Limited v. Digital Radio Paging (Pvt.) Ltd. and 4 others 2000 CLC 1153 ref.

Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Limited v. Allied Bank of Pakistan Limited and Saudi Pak Kalabagh Livestock Company Limited and in R.F.A. No.19 of 1997, decided on 19-12-2001 fol.

Babar Bilal for Appellant.

Nemo for Respondents.

Date of hearing: 13th April, 2006.

2006 C L D 882

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Agha ABBAS HAIDER KHAN---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Branch Manager---Respondent

Regular First Appeal No. 470 of 2005, heard on 10th April, 2006.

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

----S.12---Civil Procedure Code (V of 1908), S.12 (2)---Limitation Act (IX of 1908), S.5--:Ex parte decree---Miscellaneous application, non-deciding of---Defendant filed application under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and S.12 (2) C.P.C., for setting aside ex parte decree--Along with such application an application under S.5 of Limitation Act, 1908, was also filed for condonation of delay---Main application was dismissed primarily on the ground that defendant's application for setting aside ex parte decree was hopelessly barred by time---Banking Court while deciding defendant's application under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and S.12 (2) C.P.C. completely ignored the pendency of defendant's another application under S.5 of Limitation Act, 1908---Effect---Order passed by Banking Court suffered from misreading of record of the case and the Court did not notice pendency of defendant's application under S.5 of Limitation Act, 1908---If any miscellaneous application was filed by parties then it was the duty of the Court to fast decide that application either way, through a specific order and then to decide the main case---Banking Court committed clear illegality, when it failed to decide defendant's application for condonation of delay---Banking Court without deciding defendant's application under S.5 of Limitation Act, 1908, had dismissed the principal application, therefore, the order could not be allowed to remain in field---Application of defendant for setting aside the ex parte decree was deemed to be pending and the order passed by Banking Court was set aside---Appeal was allowed accordingly.

Messrs Mahmood Brothers through Mahmood Ahmed and another v. National Bank of Pakistan through Manager and another 2004 CLD 771 ref.

Messrs M.A. Chaudhary and 3 others v. National Bank of Pakistan, Faisalabad through General Attorney 2005 CLD 875 fol.

Mian Nisar Ahmad for Appellant.

Iftikhar Ahmad Chaudhary for Respondent.

Date of hearing: 10th April, 2006.

2006 C L D 885

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

KHALID LATIF---Appellant

Versus

UNITED BANK LTD. SHAH ALAM MARKET, LAHORE and 4 others---Respondents

Regular First Appeal No.146 of 2000, heard on 13th April, 2006.

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

----S.21---Civil Procedure Code (V of 1908), S.48---Limitation Act (IX of 1908), Art.181---Execution of decree---Limitation---Decree dated 22-6-1981---First execution petition filed on 11-6-1983 was dismissed on 2-9-1989 for non-filing of "Fard Taliqa"---Second execution petition was filed on 17-4-1990---Maintainability---First execution petition would be governed by Art.181 of Limitation Act, 1908 providing three years, while subsequent applications would be governed by S.48, C.P.C, providing six (6) years---Where no execution petition was filed within three years from date of decree, then first petition filed after three years would be barred by time and decree-holder could not avail benefit of extended period provided under S.48, C.P.C.---Where first execution petition was filed within three years and dismissed due to any reason, then decree-holder could file any number of petitions within six years, but any petition filed beyond six years would be barred by time---First execution petition having been filed within three years, any number of subsequent petitions could have been filed uptil 21-6-1987---Second petition filed on 17-4-1990 was beyond time.

K.M. Munir and 2 others v. National Bank of Pakistan and others 1999 CLC 555 ref.

Mahboob Khan v. Hassan Khan Durrani PLD 1990 SC 778 and National Bank of Pakistan v. Mian Aziz ud Din and 7 others 1996 SCMR 759 rel.

Ashar Ellahi for Appellant.

Respondent No.1 proceeded ex parte.

Date of hearing: 13th April, 2006.

2006 C L D 892

[Lahore]

Before Ali Nawaz Chowhan, J

MEHRAN ENGINEERING WORKS through Proprietor---Appellant

Versus

REGISTRAR OF TRADE MARKS and another---Respondents

First Appeal from Orders Nos. 71, 72 and 241 of 2004, heard on 24th April, 2006.

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

----Ss.14(3) & 46---Registration of trade mark---Opposition application, refusal of---Effect---Registrar could not proceed with application for registration of same trade mark in which he had earlier refused opposition petition.

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

----S.37---Prior user of trade mark, proof of---Certificate issued by Chamber of Commerce and Industry---Validity---Such Chamber had no locus standi to speak on subject of prior user.

M. Shakeel Abid for Appellant.

Hussan Irfan Khan with Sajjad Ahmad Khokhar and Gulshir representative of the Department for Respondents.

Date of hearing: 24th April, 2006.

2006 C L D 946

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD AZWAR SIDDIQUI---Appellant

Versus

CHIEF EXECUTIVE UNION LEASING LTD. and 21 others---Respondents

Regular First Appeal No. 271 of 2005, heard on 2nd March, 2006.

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

---S. 9(5)---Summons served upon defendant through registered post only---Effect---Section 9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 provides that process to defendant be issued through bailiff as well as through registered post acknowledgment due and by publication---Process sent to the Financial Institution only through registered post had bypassed the procedure prescribed by the Ordinance.

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

----S. 10---Civil Procedure Code (V of 1908), O.VII, R.II---Rejection of plaint before granting leave to defend the suit---Validity---Banking Court was obliged under the law to firstly decide defendants' application for leave to defend the suit---Court, by rejecting the plaint before deciding leave application, had violated the provisions of section 10(8) of the Ordinance---If Banking Court was of the view that substantial questions of law and facts had been raised by defendants then leave to defend the suit could have been granted to the defendants but plaint could not have been rejected---Defendants, after granting of leave, were within their right to file application under O.VII, R.II, C.P.C. and if the case fell under the provisions of O.VII, R.II, C.P.C. then Banking Court had jurisdiction to reject the plaint---Rejection of plaint prior to grant of leave was in conflict with express provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court set aside the judgment/decree, with the result that leave application of Bank would be deemed to be pending before the Banking Court.

(c) Constitution of Pakistan (1973)---

----Art.201---Decision of High Court is binding on all the Courts subordinate .to it, to the extent it decides a question of 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 Office 2004 CLD 1645 ref.

Nisar Ahmad Nisar for Appellant.

Muhammad Azeem Malik for Respondents.

Date of hearing: 2nd March, 2006.

2006 C L D 950

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ZARAI TARAQIATI BANK LIMITED through Branch Manager---Appellant

Versus

Messrs A-ONE CHICKS AND FEEDS (PVT.) LIMITED through Chief Executive

and 6 others---Respondents

Regular First Appeal No. 347 of 2003, heard on 12th April, 2006.

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

----Ss.9 & 22---Civil Procedure Code (V of 1908), 0.1, Rr.3 & 10(2)---Suit by Bank against its customers, one of them was already dead---Deletion of name of dead customer from array of defendants by Banking Court---Dismissal of suit---Appeal by Bank impleading therein dead customer---Maintainability---Appeal to the extent of such customer was incompetent.

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

----Ss.9 & 10---Suit for recovery of loan amount---Framing of issues after acceptance of application for leave to defend suit---Dismissal of suit without recording evidence of parties---Validity---Banking Court had not adopted procedure prescribed by S.10(10) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Plaintiff had been condemned unheard---High Court set aside impugned judgment, resultantly suit would be deemed to be pending before Banking Court for its decision after recording evidence of parties.

Lt.-Col. (Retd.) Mahmood Akhtar v. Bank of Punjab through Manager 2004 CLD 821 rel.

Iftikhar Ullah Malik for Appellant.

Mian Israr ul Haq and Qazi Awais Ahmad for Respondents Nos.4 and 5.

Alamgir for Respondent No.6.

Nemo for Respondents No. 1 to 3.

Date of hearing: 12th April, 2006.

2006 C L D 954

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs KARISHMA FASHION BOUTIQUE, through Sole Proprietor and another Appellants

Versus

HABIB BANK LIMITED through Authorized Attorneys/Manager and another-Respondents

Execution First Appeal No. 484 of 2005, decided on 16th April, 2006.

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

----Ss.22 & 9---Civil Procedure Code (V of 1908), O.XXI, Rr.84, 85 & 86---Court auction---Deposit of 1 /4th of auction amount on date of sale---Deposit of remaining 3/4th auction amount after more than two years from date of sale---Validity---Court would not be competent to extend time fixed by a statute---Provision of O.XXI, R.58, C.P.C. relating to deposit of sale price was mandatory as non-compliance thereof entailed penal consequences as provided under O.XXI, R.86, C.P.C.---No abnormal or extraordinary circumstances had been shown by purchaser---Executing Court before allowing such deposit had not issued notice to other party in whose favour valuable rights had accrued by that date---Order allowing such deposit of 3/4th of auction money was illegal, thus, was set aside.

Afzal Maqsood Butt v. Banking Court No.2, Lahore and 8 others 2005 CLD 967; Aiksun International Manufacturers and Exporters, Allama Iqbal Market, Paris Road, Sialkot City through its Partners and 2 others v. Habib Bank Limited through Vice-President and 2 others 2005 CLD 1 and Al-Hassan Feeds and another v. Untied Bank Ltd. Jinnah Road, Abbottabd and 6 others 2004 CLD 275 ref.

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.

Muhammad Qamar uz Zaman for Appellants.

Tehseen Ullah But for Respondent

No. 1. Ch. Shafqat Qadeer for Respondent No.2.

Date of hearing: 6th April, 2005.

2006 C L D 970

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

FARRUKH ABBAS---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN, MANDI BAHAUDDIN BRANCH---Respondent

Execution First Appeal No. 467 of 2002, heard on 9th March, 2006.

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

----Ss.15 (5) & 19 (5)---Civil Procedure Code (V of 1908), O.XXI, R.72 (1)---Execution of decree---Purchase of property by decree holder---Permission of Executing Court---Scope---Provisions of special law and general laws---Distinction and applicability---Decree holder participated in auction and was the highest bidder---Judgment debtor filed application for setting aside of auction on the ground that decree holder did not seek permission of Court under O.XXI, R.72, C.P.C. in participating auction proceedings---Application was dismissed by Executing Court on the ground that decree holder was not required under Ss.15 (5) & 19(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, to seek any such permission---Validity---When a mortgaged property was proposed to be sold either with intervention of Court or without intervention of Court, under the provisions of 5.15 (5) or 19 (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, in that case legislature had conferred discretion upon decree holder to participate in public auction without obtaining permission of Executing Court and to purchase mortgaged property at the highest bid---In respect of purchase of property by decree holder under O.XXI, R.72 (1) C.P.C., no holder of decree could, without express permission of Executing Court, bid for or purchase property, which was sold in execution of a decree---Provisions of Ss.15 (5) & 19 (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, with regard to purchase of property by decree holder without permission of Executing Court, were contrary to the provisions of O.XXI, R.72 C.P.C., therefore, the provisions of special enactment would override the provisions of C.P.C., which would give way to the contrary provisions of special statute---Decree holder was not under any legal obligation to obtain permission of Executing Court for purchase of mortgaged property, rather it could in its discretion, participate in public auction and purchase mortgaged property at highest bid, which discretion was exercised by decree holder---Order passed by Executing Court was legal and did not call for any interference by High Court---Appeal was dismissed in circumstances.

Rana Muhammad Shafi and another v. M. Javed Iqbal Siddiqui, Judge Banking Court No.1, Gujranwala and 2 others 2002 CLD 1269; Agha Attaullah v. Presiding Officer, Banking Court and others 2002 CLD 1550; Nawazish Latif Bhatti v. Allied Bank of Pakistan, Ltd. 2004 CLD 92; Messrs Nizamuddin and Company and 4 others v. The Bank of Khyber 2003 CLD 914 and Muhammad Hassan v. Messrs Muslim Commercial Bank Ltd. through Branch Manager and 3 others 2003 CLD 1693 distinguished.

Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 rel.

Muhammad Khalid Sajjad for Appellant.

Nemo for Respondent.

Date of hearing: 9th March, 2006.

2006 C L D 977

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs IQBAL TRADERS through Partners and 12 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Attorney---Respondent

Regular First Appeal No. 57 of 2006, heard on 12th April. 2006.

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

----Ss.9, 10 & 11---Suit for recovery of loan amount---Application for leave to defend suit---Defendant admitting plaintiff's claim to some extent, but disputing remaining amount consisting of cushion period mark-up, mark-up over mark-up beyond contractual period, godown staff salaries and insurance charges for being excessive and illegally charged---Validity---Bank was granted interim decree to the extent of its claim admitted by defendant---Regarding rest of the claim of Bank, defendant had some case to be further investigated---Defendant was granted unconditional leave to defend suit, which would be decided after framing of issues and recording evidence of parties.

Ch. Rizwan Ahmad Batth for Appellant.

Mian Qamar uz Zaman for Respondent.

Date of hearing:12th April, 2006.

2006 C L D 984

[Lahore]

Before Sheikh Azmat Saeed and Umar Ata Bandial, JJ

AHMAD ILYAS and others---Appellants

Versus

CITIBANK N.A. through Manager---Respondent

First Appeal from Order No. 108 of 2006, decided on 19th April, 2006.

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

----Ss.9 & 12---Suit by Bank---Ex parte decree, passing of---Setting aside of ex parte decree on application of legal heirs of defendant for being dead before filing of suit---Amended plaint by Bank impleading therein widow and children of deceased--Issuance of summons to widow and children, but their non-appearance in Court resulted in passing of second ex parte decree---Application by widow and children for setting aside second ex parte decree for having no knowledge thereof---Dismissal of application by Banking Court while considering issuance of summons to widow and children at their given address as sufficient service under law---Validity---Impugned judgment did not state that service in any of the prescribed modes had been effected on widow and her children---Impugned judgment had been passed on assumption that widow had been allegedly served through affixation-Two children contended to be major, thus, had to be served personally or through a male relative. and their service through mother was insufficient---Widow and children further contended that time , for such application was to be computed from date of knowledge of ex parte decree and alleged knowledge of pendency of suit was irrelevant. wherein they had not been impleaded as party---Such contentions of widow and children required adjudication, which had escaped notice of Banking Court---High Court set aside impugned judgment and remanded case to Banking Court for its decision fresh.

Waqar Mushtaq Ahmed for Appellants.

Shahid Karim for Respondent.

2006 C L D 988

[Lahore]

Before Ali Nawaz Chowhan, J

LAHORE STOCK EXCHANGE---Appellant

Versus

LAHORE APPELLATE BENCH S&EC---Respondent

Commercial Appeal No. 9 of 2004, heard on 18th May, 2006.

Securities and Exchange Ordinance (XVII of 1969)---

---S. 9(6)---Securities and Exchange Commission of Pakistan, Act (XLII of 1997), S.34---Regulation for voluntary De-listing, paras.32-A & 5--- Listing of securities--- Refusal of voluntary---de­listing by Stock Exchange---When a Stock Exchange refuses to de-list a security the same powers can be exercised by the Securities and Exchange Commission and de-listing order should not be handed down by the Commission without providing safeguards for protection of the rights of the investors---Protection of investors appears to be the main aim of the Securities and Exchange Ordinance. 1969 and rationale and the purpose for creation of the Securities and Exchange Commission---Regulation setting conditions for a Stock Exchange for de-listing is to be observed by the Commission and Commission cannot bypass the requirement merely because it has a higher concurrent jurisdiction regarding de-listing---Once a company is listed with the Stock Exchange and asks for voluntary de-listing, the Securities and Exchange Commission, in view of para.32-A of the Regulation for Voluntary De-listing, cannot allow de-listing without meeting the requirement with respect to protection of the interest of the investors or without notice to them---Order of de-listing by the Commission which failed to protect the interest of the Security holders and was without advertence to the said requirement, would not be deemed correct in law and the Commission shall be bound to follow the requirement while directly dealing with the question of de-listing of a Company---Such order of de-listing which failed to follow the requirement, therefore, was not only improper but was bad in law which was set aside by the High Court in appeal.

Prof Louis Loss's Treatise on Security Regulation quoted.

Jawad Hassan and Arif Saeed for Appellants

Khawaja Saeed-ud-Zafar for Respondent.

Sohail Ahmad and Javed Iqbal for Respondent No.2.

Dates of hearing: 17th and 18th May, 2006,.

2006 C L D 1038

[Lahore]

Before Umar Ata Bandial, J

SHIRE BIOCHEM INC. and others---Appellants

Versus

ENGLISH PHARMACEUTICAL INDUSTRIES---Respondent

F.A.O. No.147 of 2006, decided on 18th May, 2006.

(a) Patents Ordinance (LXI of 2000)---

----Ss. 61(1)(b), 39, 58 & 69---Relief in suit for infringement of patent---Scope---Manufacturer of pharmaceutical product--Identical manufacturing process of the product---Original patent of appellants had expired---Application for interim injunction by the appellants---Notwithstanding the admissions made by the appellants, it was an established fact that they had a process registered under Patent Laws and that the respondent admitted its product to be identical to the appellants' product---Statutory presumption under S.61(1)(b) of the Patents Ordinance, 2000, was attracted to the facts of the case---Statutory presumption under S.61(1)(b) of the Ordinance was available to the appellants' patent, and therefore, it was necessary that the interests of the appellants be duly secured during the period that prima facie evidence on its patentability was brought before the Trial Court to explain and displace' the admissions of the appellants brought on record---Such reasoning would not support the grant of interim injunction to the appellants at the present stage (first appeal from order), however, that could not authorize the respondent to manufacture and sell its product without establishing the originality of its manufacturing process and, ' thus, its bona fides---Respondent, to exonerate itself from the burden of the statutory presumption, must disclose and establish its process for developing its allegedly infringing product, which could be established by the process of reverse chemical analysis of the respondent's allegedly infringing product, wherefrom a fairly accurate picture about the process employed by the respondent could be obtained---Two facts namely, expiry of original patent of the appellants and the statement that the product of the expired patent was the active ingredients of the appellants' product had diminished the appellants' prima facie case for an immediate injunctive order---Refusal to issue injunctive order was also justified for a very weighty reason that was the plea of public interest adopted by the respondent which tilted the balance of convenience in favour of respondent, as respondent had stated that a public tender calling for medicine treating Hepatitis-B was floated by Prime Minister Programme, respondent being the lowest bidder of an approved drug was declared the successful bidder and a contract of 365000 tablets of the medicine within 35 days was awarded to the respondent---High Court, in the interest of justice and in furtherance of the object of Patents Ordinance, 2000, directed that the product of the respondent shall be tested and analysed by a competent international laboratory with prior notice to and upon the criteria notified by the appellants; test and analysis shall be conducted forthwith and their result shall be provided to the parties within one month of the date of present judgment---If the result showed manufacturing process identical to that of the appellants', the latter shall have the right to move a fresh application for interim injunction before the Trial Court which shall be decided on merits and material on record at that time---Counsel for the parties objected on nationalistic considerations to the tests being conducted by laboratories in the jurisdiction of domicile of either of the parties or in Pakistan-High Court, to promote credibility of the test reports, ordered that a laboratory in Malaysia or Singapore, neither country having any connection with the parties to the suit, shall conduct and report on the relevant tests of the respondent's product---National Public Health Laboratory of Malaysia at Selangor was designated in the first instance, to conduct the necessary tests---If the said laboratory declined or was otherwise unable to conduct the said tests and analysis, the Trial Court shall, with the consultation of the counsel for the parties order for another laboratory to conduct the requisite tests and analysis, and shall treat the time to be of the essence.

Beecham Group Limited v. Bristol Laboratories Limited and another 1967 R.P.C. 406; Smith Kline French Laboratories Ltd. and another v. Ferozsons Laboratories Ltd. and another 1992 MLD 2226, Glaxo Group Limited and 2 others v. Evron (Private) Limited and another 1992 CLC 2382; Mere & Co. Ing. and others v. Hilton Pharma (Pvt.) Ltd. 2003 CLD 407; Khawaja Tahir Jamal v. Messrs A.R. Rehman Glass 2005 CLD 1768; Acto Lab (Pvt.) Ltd. v. Pfizer Ltd. and others 2002 CLD 120; Biogen Inc. v. Medeva Plc 1997 RPC 1; Bristol Myers Squibb Co. v. Baker Norton Pharmaceuticals Inc. 2001 RPC 1 and Ebayinc etal v. Mercexchange. L. L. C. (http://laws.findlaw.com/us/000/05-03.html) the U.S. Supreme Court on 15-5-2006 ref.

(b) Patents Ordinance (LXI of 2000)--

----Ss. 61(1)(b) & 58(2)---Suit for infringement of a patent---Application for interim injunction by appellant---Original registration of the patent of appellants had expired---Exploitation of a patent by a government agency---Public interest---Provision of S.58 of the Patents Ordinance, 2000 recognizes public interest as a dominant factor for determining the outcome, inter alia, of infringement actions under the Ordinance including application for provisional measures---Where the National Programme of Prime Minister of the country declared an urgent need for supply of medicine for Hapatitis-B treatment, in such situation S.58 itself allowed relief against infringement actions but subject to a right of hearing and compensation to the patentee---Appellants, in the present case, having chosen not to avail their right of hearing under S.58(2) of the Ordinance, they might however be justified to pursue remedies after establishing infringement of their patent---Court's jurisdiction was conferred by law and was exercised in accordance therewith; in the exercise of its jurisdiction the Court watches public interest as a predominant consideration---Theory underlying injunctive relief in patent cases was recognized internationally to be subject to the consideration of public interest---On the touchstone of public interest arising on account of the medical emergency in the country as well as the expiry of the appellants' original patent, balance of convenience was found by the High Court to be in favour of the respondent---High Court, therefore, ordered that the respondent shall supply the contract quality of its product to the Prima Minister Programme and in doing so, however, the respondent shall not supply its product either in the market or to any other person---On account of the fact that the respondent shall be deriving advantage from a commercial bargain that derogated alleged patent rights of the appellants, it was further directed by the High Court that prior to making supply of medicine to the Prime. Minister Programme the respondent shall submit in the Trial Court a Bank guarantee of a Scheduled Commercial Bank in the amount of the respondent's contract value supplied to the Programme, issued in favour of the appellants for its encashment by appellants if they succeed in establishing before the competent Court their case of infringement of their patent by the respondent.?

Beecham Group Limited v. Bristol Laboratories Limited and another 1967 R.P.C. 406; Smith Kline French Laboratories L and another v. Ferozsons Laboratories Ltd. and another 1g92 MLD 2226. Glaxo Group Limited and 2 others v. Evron (Private) Limited and another 1992 CLC 2382; Mere & Co. Ing. and others v. Hilton Pharma (Pvt.) Ltd. 2003 CLD 407; Khawaja Tahir Jamal v. Messrs A.R. Rehman Glass 2005 CLD 1768; Acto Lab Pvt. Ltd. v. Pfizer Ltd. and others 2001 CLR 1852; Biogen Inc.- v. Medeva Plc 1997 RPC 1; Bristol Myers Squibb Co. v. Baker Norton Pharmaceuticals Inc. 2001 RPC 1 and Ebayinc etal v. Mercexchange, L.L.C. (http://laws.findlaw.com/us/000/05-03.html) the U.S. Supreme Court on 15-5-2006 ref.

Hasan Irfan Khan and Mueen Qamar for Appellants.

Dr. A. Basit and Ijaz Rahim for Respondent.

2006 C L D 1107

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

Sh. ARSLAN AZMAT and 2 others---Appellants

Versus

HABIB BANK LIMITED through General Attorneys and others---Respondents

R.F.A. No.499 of 1999, heard on 22nd May, 2006.

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

----Ss. 17 & 22---Qanun-e-Shahadat (10 of 1984), Art.61---Appeal---Decree for recovery of Bank loan---Denial of defendant to have signed personal guarantee---Defendant's application seeking comparison of his admitted signatures with disputed signatures through Finger Print Expert---Omission of Banking Court to get such comparison---Offer of Bank not to enforce personal guarantee of defendant---Liability of Bank had been settled by principal borrower in terms of Circular of State Bank---Held, defendant was, not personally liable for satisfaction of decree in circumstances.

Pir S.A. Rasheed for Appellants.

Muhammad Afzal Sandhu and Iftikhar Ullah Malik for Respondents Nos.3 and 4.

Ch. Fazal Hussain for Respondent No.6.

Date of hearing: 22nd May, 2006.

2006 C L D 1127

[Lahore]

Before Mian Saqib Nisar and Umar Ata Bandial, JJ

GENERALE BISCUIT through

Authorized Signatory and another---Appellants

Versus

MEHRAN BAKERS (PRIVATE) LIMITED through Chief Executive---Respondent

Regular First Appeal No.392 of 1999, heard on 16th May, 2006.

Trade Marks Act (V of 1940)--

----S. 73---Suit for infringement of trade mark and for passing off action---Valid authority to institute such suit---Question about the valid authority qua the institution of such suit is that of fact, having legal implication, but such fact could only be determined by the Trial Court after framing of the issues and recording of the evidence, in the absence of which, the judgment is illegal and cannot sustain.

Hassan Irfan Khan for Appellants.

Nemo for Respondent.

Date of hearing: 16th May, 2006.

2006 C L D 1 129

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

ASIM HUSSAIN QADRI and others---Appellants

Versus

DEUTECHE BANK and another---Respondents

R.F.A. No.46 of 2006, heard on 10th May, 2006.

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

---Ss. 10 & 22---Application for leave to defend the suit was dismissed for non-prosecution---Counsel, in order to explain his absence on the relevant date had brought on record the copy of the order sheet and endeavoured to show that the application for leave could not have been dismissed for non-prosecution nor the resultant decree (ex parte) could be passed---Validity---Held, in view of proceedings reflected from the interim orders as also the contents of affidavit of the Advocate, the Banking Court should have granted at least one adjournment instead of dismissing the application for leave for non-prosecution---High Court observed that it could not be overlooked and ignored that the suit had remained pending since long and thus imposed costs of Rs.50,000 subject to the payment of which the order dismissing the application and consequential decree was set aside.

Muhammad Qamar-uz- Zaman for Appellants.

Parvez Ahmed Barki for Respondents.

Date of hearing: 10th May, 2006.

2006 C L D 1130

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

Mian FAROOQ AHMED SHEIKH and 8 others---Appellants

Versus

PRIVATIZATION COMMMISSION through Chairman and 4 others---Respondents

R.F.A. No.518 of 2005, decided on 26th May, 2006.

(a) Privatization Commission Ordinance (LII of 2000)---

----S.29---Civil Procedure Code (V of 1908), O.VII, R.11---Rejection of plaint---Scopq---In cases under Privatization Commission Ordinance, 2000, provisions of O.VII, R.11 C.P.C. may not be applicable strictly.

(b) Privatization Commission Ordinance (LII of 2000)---

----S.33---Transfer of Managed Establishments Order (XII of 1978), Art.4---Appeal---Privatization of industrial unit--Proprietary interests, transfer of---Principles---Plaintiffs were the original owners of the shares of the unit put to sale---During privatization proceedings, the plaints were the lowest bidders but asserted their right to match the highest bid under Art.4 of Transfer of Managed Establishments Order, 1978---Dispute between the plaintiffs and Privatization Commission was finally decided by Supreme Court and opportunity was provided to plaintiffs to match the highest bid---Suit filed by plaintiffs was dismissed by Judge in Chambers of High Court, on the ground that the plaintiffs failed to match the highest bid---Validity---Privatization Commission having fulfilled its obligation under Supreme Court judgment by asking plaintiffs to match the highest bid, the question was whether the plaintiffs accepted such offer and were ready and willing to match the highest bid---As the plaintiffs neither matched the highest bid nor they intended to do so, therefore, the suit filed by them was rightly dismissed by High Court---Appeal was dismissed in circumstances.

(c) Privatization Commission Ordinance (LII of 2000)---

---S.29---Civil Procedure Code (V of 1908). Preamble---Phrase, "follow the procedure as nearly as possible as provided in the Code of Civil Procedure"---Applicability---To suits under Privatization Commission Ordinance, 2000, Civil Procedure Code, 1908, itself was not made applicable---Where relevant facts are not in dispute, the Court merely has to apply the law to such facts and render its decision---No need, in such case is to call for evidence and to embark on a regular trial-Even Civil Procedure Code, 1908, envisages decision of cases on preliminary issues without a full trial.

Muhammad Akram Sheikh and Tariq Kamal Qazi for Appellants.

Raja Muhammad Akram for Respondent No. 1.

Abid Aziz Sheikh for Respondent No.2.

Raja M. Bashir for Respondents Nos.3 and 5.

Date of hearing: 23rd, 25th and 26th May, 2006.

2006 C L D 1140

[Lahore]

Before Sheikh Azmat Saeed, J

HAROON RASHID CHAUDRI---Plaintiff

Versus

MUSLIM COMMERICAL BANK through Manager---Defendant

C.O.S. No.12 of 1994, decided on 21st January, 2006.

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

----O.XIII, R.4---Photocopies of documents---Endorsement of exhibit marks on such documents---Contents of such documents not disputed by parties---Relevant portion of such document requiring examination by Court finding mention in plaint and not denied by defendant---References were freely made to such documents by parties during course of arguments---Record showing such documents exhibited by plaintiff-Such documents, held were part of evidence on record.

(b) Tort---

----Banker and customer---Damages, claim for---Supply of goods other than those contracted for---Issuance of Letter of Intent by plaintiff for purchase of goods---Opening of Letter of Credit by Bank at plaintiffs request in favour of supplier---Receipt of shipping documents by Bank including Bill of Lading, Commercial Invoice and Packing List--Plea of plaintiff was that Bank having negotiated Letter of Credit despite the term "Synthetic Resin" added to Bill of Lading showing discrepancy in description of contracted goods, had violated provisions of Uniform Customs and Practice of Documentary Credits (UCP-400)---Validity---Under UCP, description of goods in commercial invoice alone must correspond with description in Letter of Credit, while in all other documents, goods might be described in general terms not inconsistent with such description---Duty of negotiating Bank was to examine all documents by exercising reasonable care---Description of goods in Letter of Credit and commercial invoice was identical---Letter of Credit finding mention of identical description, but prefaced by term "Synthetic Resin"---Bank could not refuse to negotiate Letter of Credit, if description of goods in Bill of Lading was inconsistent with description mentioned in Letter of Credit---Report of Surveyors dealt with goods and not such documents-Plaintiff had not objected to shipping documents initially, but had raised such objection after having examined goods---Grievance of plaints was with regard to breach of contract by supplier for not supplying goods as agreed and described in Bill of Lading, Letter of Credit and Commercial Invoice---Bank in view of autonomy principle was neither concerned with underling contract between buyer and seller nor responsible for breach of any term thereof or quality of goods---Held: bank had neither acted negligently nor had failed to perform its duty or obligation enjoined by law or the UCP---Plaintiffs suit was dismissed in circumstances.

(c) Pleadings---

----Discrepancies in documents, plea of---Such plea neither pleaded in plaint nor mentioned by plaintiff in his statement made before Court---Held, such plea could not be considered or adjudicated upon.

Syed Mansoor Ali Shah and Syed Zafar Ali for Plaintiff.

Imtiaz Rasheed Siddiqui and Ahmad Hassan Anwari for Defendant.

Date of hearing: 21st October, 2005.

2006 C L D 1 147

[Lahore]

Before Umar aTa Bandial, J

Messrs M.M.K. RICE MILLS---Appellants

Versus

GRAYS LEASING and others---Respondents

C.O.S. No.12 of 2004, heard on 16th March, 2006.

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

----Ss.7 & 9---Recovery of tortuous damages, suit for---Not entertainable by Banking Court.

Mehr Ashiq Hussain v. Citibank N.A. through Chief Manager and another 2006 CLD 167 and Messrs PEL Appliances Limited v. United Bank Limited 2005 CLD 1352 fol.

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

----Ss.7 & 9---Civil Procedure Code (V of 1908), O.VIl, R.10---Suit filed in High Court involving several reliefs including recovery of tortuous damages---Striking out from plaint relief of tortuous damages for not forming a claim in suit to be filed under Financial Institutions (Recovery of Finances) Ordinance, 2001---Pecuniary benchmark for suits triable before High Court being Rs.50 million or excess thereof---After deletion of relief of damages, remaining relief prayed in suit being less than Rs.50 million would be urged before Banking Court---High Court returned suit to Banking Court concerned for its hearing.

Mehr Ashiq Hussain v. Citibank N.A. through Chief Manager and another 2006 CLD 167 and Messrs PEL Appliances Limited v. United Bank Limited 2005 CLD 1352 fol.

Abdul Rehman Allana v. Citibank 2003 CLD 1843 ref.

Haq Nawaz Chatha for Plaintiff.

Ch. Shaheed Aslam Jaura for Defendants Nos. 1 and 2.

Khurram Saeed for Respondent No.3.

Date of hearing: 16th March. 2006.

2006 C L D 1155

[Lahore]

Before Muhammad Muzammal Khan and Syed Sajjad Hussain Shah, JJ

RAHEEL 1KHLAS---Appellant

Versus

Messrs CITIBANK, N.A.---Respondent

F.A.O. No. 59 of 2003, heard on 16th May, 2006.

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

---S.3---Amount due in Credit Card cases---Mark-up, charging of---Scope---No mark-up is charged on such amount, rather service fee 3% per month is charged on each retail transaction from its date till statement is made---Service fee is chargeable only after lapse of timefrarne for repayment of facility availed---Rate of service fee is less than costs of funds as per S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001.

(b) Execution

----Executing Court cannot go behind the decree passed.

S. Abid Mumtaz Tirmazi for Appellant.

Ashar Elahi for Respondent.

Date of hearing: 16th May, 2006.

2006 C L D 1161

[Lahore]

Before Maulvi Anwarul Haq and Muhammad Jehangir Arshad, JJ

INVESTMENT CORPORATION OF PAKISTAN and 5 others---Petitioners

Versus

JUDGE, BANKING COURT NO.1, MULTAN and 9 others---Respondents

Writ Petition No.2241 of 2003 converted into F.A.O. 84 of 2006, heard on 3rd May, 2006.

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

1997)---

----Ss. 7 & 21---Financial Instihutions (Recovery of Finances) Ordinance, (XLVI of 2001), Ss.7 & 22---Civil Procedure Code (V of 1908), S.73(1), Proviso (c)---Constitution of Pakistan (1973), Art.199---Constitutional petition--Maintainability---Execution proceedings---Ratable distribution of sale proceeds amongst decree-holders---Scope---Petitioner ' and respondent both advanced loan facility to company and on its default suits for recovery of loan were filed against the company by petitioner and respondent---Respondent filed an application for execution in the executing Court praying that entire sale proceeds be paid to it---Petitioner filed application for ratable distribution of proceeds between both decree-holders---Banking/Executing Court allowed respondents application and dismissed that of the petitioners---Validity---Assets were received as result of sale of property of the company on joint application of both decree-holders and when assets were received in Court both execution applications were pending---Under provisions of S.73, C.P.C. assets were liable to be ratably distributed between both the decree-holders---Respondent's assertion that application for ratable distribution was to be filed before receipt of assets in Court was repelled---Constitutional petition was not maintainable as remedy of appeal was available under S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Constitutional petition which was filed within 30 days, was converted into appeal/F.A.O. and was allowed.

Gobinda Sankar Dikshit Firm v. Mst. Shah Mahmud Palwan and another PLD 1959 Dacca 939; Vishnubhotla Ramayya v. Sajja Namayya and others AIR 1943 Madras 165 Messrs Unicorn Enterprises v. Banking Court No.5, City Court Building, Karachi and 2 others 2004 CLD 1452; M.A. Kareem Iqbal v. Presiding Officer, Banking Court No.III and 4 others 2003 CLD 1447 and Chief Executive and 3 others v. Muslim Commercial Bank Ltd. through Chief Manager/Manager, Shadman Colony Branch, Lahore and another 2002 CLD 1407 ref.

Abdul Majid Malik and Sardar Riaz Karim for Petitioners.

Neel Keshav for Respondent No.2.

Nemo for others.

Date of hearing: 3rd May, 2006.

2006 C L D 1181

[Lahore]

Before Muhammad Muzammal Khan and Syed Sajjad Hussain Shah, JJ

Messrs A-UMAR FABRICS through Proprietor and 2 others----Appellants

Versus

HABIB BANK LIMITED through General Attorney/Manager---Respondent

Regular First Appeals Nos.128 and 129 of 2005, heard on 24th May, 2006.

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

----S.7(4)---Specific Relief Act (I of 1877), Ss.42 & 56---Dispute between bank and borrower---Declaratory suit, dismissal of--Two suits were filed before Banking Court, one by borrower seeking declaration against hank and the other by bank for recovery of loam--Suit filed by borrower was dismissed while that of bank was decreed---Validity---Controversy canvassed in the suit filed by borrower was to be settled on the petition for leave to appear/defend the suit filed by bank, thus cognizance of such suit being prohibited by S.56 of Specific Relief Act, 1877, was rightly refused to be independently adjudicated upon.

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

--S.7(4) & 9---Recovery of bank loan---Claim of set off ---Disputed encashment of cheques---Grievance of borrower was that his two cheques, reported last were encashed by bank, despite his stoppage of payment---Borrower had not only admitted sanctioning of finance facility in his favour in the plaint filed by him but was also accepted in his petition for leave to appear/defend the suit and also had admitted in memorandum of appeal before High Court---Banking Court in view of such admission of borrower, decreed the suit in favour of bank---Validity---Banking Court entertained, adjudicated and decided disputes by deriving their jurisdiction from S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, regarding matters arising out of disputes covered by the Ordinance---Encashment of two disputed cheques front the account of borrower, in spite of stoppage of payment, was not a dispute arising out of finance facility, thus was not covered by S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 Suit filed by borrower was not triable by Banking Court and was aptly dismissed---Plea of unauthorized encashment of disputed cheques was in form of set off which could not be raised in recovery suit under Financial Institutions (Recovery of Finances) Ordinance, 2001, especially earlier to filing of written statement---High Court in exercise of appellate jurisdiction, declined to interfere in the judgment and decree passed by Banking Court---Appeal was dismissed in circumstances.

Shahid Ikram Siddiqui for Appellants.

Nisar Ahmed Nisar for Respondent.

Date of hearing: 24th May, 2006.

2006 C L D 1191

[Lahore]

Before Syed Hamid Ali Shah, J

Messrs YOUSAF SUGAR MILLS---Petitioner

Versus

TRUST LEASING CORPORATION and others---Respondents

Writ Petitions Nos. 2916 to 2919 and 7916 of 2005, decided on 15th May, 2006.

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

----S.25-A---Credit Information Bureau---Import, object and scope---Credit Information Bureau is a project of State Bank of Pakistan for collecting data---Primary purpose of collecting information is to equip all banks and NBFIs, with their customers and their financial status, available with them---Object is to enable banks/DFIs to decide course of their business transaction with their customers in the light of such informations so that they may not be deceived by defaulters---Placement of name of a company/customer is to caution lending institutions about default---Despite placement of name of a customer on Credit Information Bureau list, lending institution is at liberty to extend financial assistance to a borrower---Power to call for information and collect data vests with State Bank of Pakistan under S.25-A of Banking Companies Ordinance, 1962.

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

--Ss.3-A & 25-A---Credit Information Bureau---Defaulter of leasing company---Placing name of defaulter of leasing company on Credit Information Bureau List---Validity---State Bank of Pakistan can collect information under S.25-A of Banking Companies Ordinance, 1962, only from banking companies---Leasing company does not fall within the definition of 'banking company'---Banking Company is under the control of State Bank of Pakistan, while leasing company, as against banking company, is under the control of Securities and Exchange Commission of Pakistan, which is empowered to direct for submission of information through prescribed returns and statements to State Bank of Pakistan, so as to introduce a uniform set of regulations to improve effective management capabilities---Information called by Security and Exchange Commission of Pakistan and submitted to State Bank of Pakistan at the instance of the Commission cannot be avoided---State Bank of Pakistan collects credit information from all banks under S.25 of Banking Companies Ordinance, 1962, while from NBFIs on the direction of the Commission and by virtue of provisions of S.3-A of Banking Companies Ordinance, 1962---Directions of Security and Exchange Commission of Pakistan are binding in nature and there is no illegality in furnishing information by a leasing company to State Bank of Pakistan.

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

----S.25-A---Constitution of Pakistan (1973), Art.18---Credit Information Bureau list---Blacklisting a person---Effect and procedure---Act of blacklisting or depriving a company from privilege and advantages of entering into a lawful relationship with bank for the purpose of gain, is violative of Art.18 of the Constitution---Consequences of blacklisting a person, are of great magnitude and warrant that before taking such action there should be a fair and proper trial through impartial Court or Tribunal by providing such person reasonable opportunity to defend the allegations made against him---Effect of placement of a person's name on the list that facility of finance is extended to such person, only after recording reasons, according to para.2(a)(ii) : of Prudential Regulations, is negating the facility to borrower in the ordinary course---If name of a person is brought on the list without any verification, it adversely affects reputation as well as business of such person ---Placement of a person on Credit Information Bureau List of defaulters, places a restraint on his business to enter freely into a contract with banks etc., therefore, before such placement, concerned individual is entitled to a notice---State Bank of Pakistan which regulates the affairs of banks etc. has the responsibility at least to see genuineness and truthfulness of claim of a Banking company or NBFI regarding default of a borrower.

(d) Banking Companies Ordinance (LXII of 1962)---

----S.25-A---Constitution of Pakistan (1973), Arts.4, 18, 25 &199---Constitutional petition---Freedom of trade, business or profession---Placing name on Credit Information Bureau List---Grievance of petitioners was that despite settlement of dues, their names were not removed from Credit Information Bureau List---Validity---Action of State Bank of Pakistan regarding placement of petitioners on Credit Information Bureau List without notice and without ascertaining genuineness of the information was violative of Arts. 4, 18 and 25 of the Constitution---Such placement of petitioners' names on Credit Information Bureau List was without lawful authority and with no legal effect, thus the order was set aside---High Court allowed the authorities to verify genuineness and correctness of information---High Court further allowed the authorities that if they were satisfied that information received was correct, after due notice to petitioners, could place the names of petitioners on Credit Information Bureau List---Petition was allowed accordingly.

Sayed Paper Mills (Pvt.) Ltd. and 2 others v. Trust Investment Bank Ltd. 2005 CLD 1830; Badshah Begum and others v. the Additional Commissioner (R), Lahore Division and others 2003 SCMR 629: New Jubilee Insurance Company, Karachi v. National Bank of Pakistan Karachi PLD 1999 SC 1126; Agricultural Development Bank of Pakistan and others v. Abid Akhtar and others 2003 SCMR 1547 and Abdul Aziz Nawab Khan and Company v. Federation of Pakistan, Minister of Finance and others 2006 CLD 55 ref.

Shahid Karirn for Petitioner.

Rissal Hassan Syed for Respondent No.1.

Rehan Nawaz for Respondents Nos.2 and 3.

2006 C L D 1213

[Lahore]

Before Mian Hamid Farooq and Sheikh Azmat Saeed, JJ

NASIM NIZAMI---Appellant

Versus

HABIB BANK LIMITED ---Respondent

R.F.A. No. 63 of 2006, heard on 21st June, 2006.

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

----O.IX, R.13---Limitation Act (IX of 1908), Art.181---Ex parte decree, setting aside of---Parent application for setting aside of ex parte decree, dismissal of ---Second application seeking restoration of parent application---Limitation---Second application would be governed by Art.181 of Limitation Act, 1908 providing a period of three years---Second application filed after 35 days of dismissal of parent application was, held, to be within time.

Ahmad Ali v. Registrar, Co-operative Societies PLD 1971 Kar. 182 and Muhammad Khan v. Additional District Judge and 2 others PLD 1985 Pesh. 8 rel.

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

----S.12---Civil Procedure Code (V of 1908), O.IX, R.13---Ex parte decree, setting aside of---Parent application for setting aside of ex parte decree, dismissal oil-Second application seeking restoration of parent application supported by affidavit-Non-­filing of counter affidavit by plaintiff---Absence of rebuttal to applicant's such affidavit-Second application was accepted in circumstances, resultantly parent application was restored to its original number.

Tariq Kamal Qazi for Appellant.

Tahir Maqsood for Respondent.

Date of hearing: 21st June, 2006.

2006 C L D 1220

[Lahore]

Before Maulvi Anwarul Haq and Muhammad Jehangir Arshad. JJ

Messrs ANSARI COTTON, GINNING AND PRESSING FACTORY (PVT.) LTD.

through Directors and 5 others---Appellants

Versus

HABIB BANK LIMITED ---Respondent

R.F.A. No. 33-A of 2006, decided on 27th June, 2006.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 200I)---

----Ss.9 & 10---Recovery of loan amount, suit for-Leave to appear and defend suit, application for---Suit for damages by defendant pending against plaintiff-Bank---Validity---Pendency of such suit would not be a valid ground for allowing leave application.

2003 CLD 1406 ref.

Muhammad Iqbal Khan for Appellants.

2006 C L D 1223

[Lahore)

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

SHARAFAT ALI---Appellant

Versus

HOUSE BUILDING FINANCE CORPORATION through District Manager, Sargodha---Respondent

E.F.A. No. 144 of 2006, decided on 29th June, 2006.

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

----S.18---Decree for recovery of loan amount, execution of---Two loans under two distinct accounts against separate deeds sanctioned in judgment-debtor's .Warne---Amount of sanctioned loan under each account was less than Rs.1,00,000---Settlement/Incentive Scheme issued during pendency of execution prescribing three different categories with regard to investment slabs---Issuance of two notices to judgment-debtor about two accounts for availing incentive under scheme---Judgment-debtor cleared both accounts under category "A" of scheme---Refusal of Bank to return charge documents to judgment-debtor treating his case under category "B" making him liable to pay Rs.51,000 more on the ground that he was given total loan amount beyond Rs.1,00,001 against both accounts---Validity---Words used in incentive scheme were "loan amount" being relatable to each account and not to each individual---Judgment-debtor's case was covered by category "A" and he was not liable to pay anything more to Bank---High Court directed Bank to return charge documents to judgment-debtor relieving him of liabilities of both loan accounts.

S.M. Masood assisted by Moiz Tariq for Appellant.

Shafiqu-ur-Rehman for Respondent.

2006 C L D 1226

[Lahore]

Before Syed Humid Ali Shah, J

UNITED BANK LIMITED through Manager---Petitioner

Versus

BANKING MOHTASIB PAKISTAN and another---Respondents

Writ Petition No. 293 of 2006, decided on 16th June, 2006.

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

----S.82-A(3)---Jurisdiction of Banking Mohtasib---Scope---Receipt of cash amount by Manager during banking hours within Bank premises against issuance of deposit slips without opening account of customer---Complaint before Mohtasib against such act of Manager---Maintainability---Only transaction and not persons would determine jurisdiction of Mohtasib---Impugned act was an act of maladministration and banking malpractice---Banking Mohtasib had jurisdiction to entertain such complaint.

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

----Ss.82-D(3) & 82-F---Complaint, investigation of-Bunking Mohtasib, powers of ---Scope---No bar on Mohtasib to adopt any procedure for disposal of complaint---Mohtasib for such purpose could call for information relevant documents and record evidence of parties.

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

----Ss.82-D & 82-F---Banking Mohtasib---Complaint by customer---Receipt of amount by Manager within Bank premises during banking hours against issuance of deposit slips without opening account of customer---Liability of Bank to compensate customer for amount misappropriated in such manner by its Manager---Validity---Such transaction was a normal banking transaction as deposit slips were signed by Cashier and another Officer of Bank and duly stamped---Bank had admitted five out of six such deposit slips---Payment of compensation by Bank to 140 customers out of 145 customers further proved involvement of its staff in malpractices and fraudulent acts---Such deposits made by customer had not been accounted for in record of Bank---Bank was, held, to be vicariously liable for fraudulent acts of its Branch Manager.

Kooragang Investment (Pvt.) Ltd. v. Richardson and Wrench Ltd. (1981) 3 W.L.R. 493; Armagas Ltd. v. Mundogas S.A. (H.L.(E)) (1986) 2 WLR 1063; The King v. City of Westminister Assessment Committee (1941) 1 KB 53 and State Bank of India v. Smt. Shyama Devi 1990-1991 Banking Laws Cases (Volume 1) page 349 ref.

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

----Ss.82-D & 82-F---Complaint by customer---Investigation proceedings, conclusion of---Banking Mohtasib obtaining information from an Officer of Bank and giving due weight to his statement---Validity---Mohtasib was obliged to irform and provide Bank an opportunity to cross-examine such Officer before drawing inference against Bank on basis of his statement---Bank had right to controvert statement of such Officer through evidence---Such act of Mohtasib was, held, to be violative of principles of natural justice.

Muhammad Jamil Asghar v. The Improvement Trust Rawalpindi PLD 1965 SC 698; Abdus Saboor Khan v. Karachi University and another PLD 1966 SC 536; Mehr Dad v. Settlement and Rehabilitation Commissioner and another PLD 1974 SC 193 and Chief Commissioner Karachi and another v. Dina Sohrab Katrak PLD 1959 SC 45 ref.

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

----S.82-E(1)(c) ---Complaint---Amount received by Manager from customer not shown in record of Bank---Customer's claim for compensation/damages against Bank---Validity---Banking Mohtasib without legal proof could not award such amount to customer---Mohtasib could award compensation for loss actually sustained by customer, but not in the form of damages---Damages could not be awarded without proper proof and determination---Damages could be granted by Civil Court.

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

----Ss.82-D & 82-F---Constitution of Pakistan (1973), Art.199---Banking Mohtasib, order of---Validity---Such order, if suffered from jurisdictional defect and was violative of principle of natural justice, could be challenged before High Court.

Muhammad Abdullah v. The Road Transport Corporation and others PLD 1964 Lah. 743; Allah Bakhsh and another v. Muhammad Ismail and others 1987 SCMR 810; Collector of Customs, Lahore and others v. Universal Gateway Trading Corporation and another 2005 SCMR 37; Farzan Raza Naqvi and others v. Muhammad Din and others 2004 SCMR 400; Naeem Jafar v. Senior Superintendent of Police and 2 others 1997 MLD 1198; Aslam Hassan Qureshi.v. Government, State Bank of Pakistan and 4 others 2004 CLD 1407; Sui Southern Gas Company Ltd. and another v. Khawaja Muhammad Munir and another 2000 SCMR 702; Abdur Rehman v. Haji Mir Ahmad Khan and another PLD 1983 SC 21; Anjuman Arhtian (Regd.) Khanpur v. Province of Punjab PLD 1990 Lah. 32; General Manager PC Hotel v. Farhat Iqbal PLD 2003 SC 952; Muhammad Samiullah Khan v. Addl. District Judge. Sargodha PLD 2002 Lah. 56; Federal Land Commission v. Mst. Gul Bibi and others 1983 SCMR 818: Syed Akhtar Hussain Zaidi v. Muhammad Yaqinuddin 1988 SCMR 753; Khairuddin and others v. Settlement Commissioner and others 1988 SCMR 988; Allied Bank of Pakistan Ltd. v. Ejaz Ahmad Abbasi and another 1990 SCMR 1713 and Banking Law Theory and Practice by Gupta at pp.1320, 1321, 1329 to 1333 ref.

Town Committee Gakhar Mandi v. Authority under the Payment of Wages Act, Gujranwala and 57 others PLD 2002 SC 452 and Government of Pakistan and another v. Hudabia Textiles Mills, Faisalabad 2001 SCMR 209 rel.

Imran Aziz Khan for Petitioner.

Ata-ur-Rehman Sheikh for Respondent No.2.

2006 C L D 1237

[Lahore]

Before Mian Saqib Nisar, J

D.G. KHAN CEMENT COMPANIES LIMITED through Company Secretary/through Chairperson---Appellant

Versus

MONOPOLY CONTROL AUTHORITY---Respondent

Monopoly Appeal No.2 of 2005, decided on 26th July, 2006.

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

----S.20---Civil Procedure Code (V of 1908), S.100---Appeal to High Court---Scope.

An examination of section 20 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, indicates that it is based on, and indeed is identical to section 100 C.P.C., which provides for second appeals, against decrees of Civil Courts. As is well known, the second appeal under section 100, C.P.C. lies only on questions of law. The scope and extent of scope of section 100, C.P.C. and the sort of questions and issues which are regarded as questions of law for purposes of that section are well settled by numerous decisions of the Supreme Court and the High Courts. It is clear from the close identity between section 20 of the Ordinance and section 100. C.P.C. that an appeal against an order of the Authority also lies only on questions of law. Furthermore, the sort of questions and issues which should be regarded as questions of law under section 20 of the Ordinance are essentially the same on which a second appeal can be taken under section 100 C.P.C. The principles established for the proper application and interpretation of section 100, C.P.C. can, therefore, be adopted and applied for purposes of section 20 of the Ordinance as well.

(b) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----S.3---Prohibition on undue concentration of economic power---Scope.

Section 3 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 is one of the most important provisions of the Ordinance. It prohibits and renders unlawful, any undue concentration of economic power, or unreasonable monopoly power, or unreasonably restrictive trade practices. Each of these is a distinct category of undesirable situation and proscribed circumstances and each is separately defined and dealt with in the Ordinance.

(c) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----S.10---Function of the Authority---Scope.

Section 10 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, lays down the functions of the Authority, and clause (f) of this section empowers the Authority "to make such orders and to do all such things as are necessary for carrying out the purposes of this Ordinance". Thus the Authority has a general statutory duty to ensure that there is no violation of section 3 of the Ordinance by any person or persons, and it has been empowered accordingly.

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

----Ss.2, 3 & 6---Trade" and "trade practice"---Concepts---Power of Authority---Scope.

An unreasonably restrictive trade practice is defined in section 2(m), of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 but in. order to properly appreciate this definition, it is necessary also to examine the concepts of trade and trade practice, both of which are also defined terms. Trade is defined in broad terms, and it is not in dispute that the cement industry is a trade within the meaning of section 2(k). Section 2 (1) defines a trade practice. Though exhaustive, the definition brings within its ambit both an act (i.e. a single or isolated instance or event), and also a practice (i.e. a trade custom or usage or acts or events or series of acts or events undertaken with some degree of regularity, continuity or repetition) in relation to the carrying on of a trade or business. If the definition (section 2(n) of an unreasonably restrictive trade practice is now examined, it will be. found to comprise of two main components: (a) there must be a trade practice, and (b) such trade practice must or must have the effect of unreasonably preventing, restraining or otherwise lessening competition in any manner. Obviously, both components must exist for a finding of an unreasonably restrictive trade practice to be recorded. Looking at the second component of the definition, it is clear that this itself has two requirements: (i) the trade practice must prevent, restrain or lessen competition, and (ii) it must have this effect in any unreasonable manner or to an unreasonable degree. The term competition is not as such defined in the Ordinance and it is not necessary to exhaustively examine this concept in the context of monopoly law (or anti-trust law as it is known in American jurisprudence). It is sufficient to note that competition means and requires the free interplay between the suppliers and consumers of goods in a market environment. The actions and decisions of the buyers and sellers (such as the price demanded for the commodity by the suppliers or accepted by the consumers, the quantity to be supplied or consumed, etc.) must be set purely by market forces and conditions. The market itself may, of course, be subject to regulation by the State. For example, a retail market where foodstuff and other perishable items are sold may be subject to local regulations as to timings, hygiene requirements, specifications as to weights and. measures to be used, etc. The requirement of competition under the Ordinance focuses on the actions and decisions of those who act in, or in relation to, the market as the suppliers and consumers of goods. These actions and decisions must be solely controlled by the market forces and conditions as prevailing from time to time. It is also important to keep in mind in this context that the requirement as to competition is not limited to the immediate or actual market participants. To revert to the example just given, the suppliers would include not just the shopkeepers in the retail trade, but also their wholesale suppliers and the persons from whom the wholesellers acquire the goods, etc.

Ordinarily, if the Authority is of the view that there has been or is likely to be a breach of section 3, it must establish that there exists, or will exist, an unreasonably restrictive trade practice. Put differently, the Authority must establish that all of the various ingredients of an unreasonably restrictive trade practice as discussed above have been made out. Section 6 (1) however, contains a deeming provision with regard to unreasonably restrictive trade practice. Once it is shown that a situation as contemplated by that subsection has arisen, the law deems that an unreasonably restrictive trade practice exists, i.e. has been resorted to or is being continued. The existence of a subsection (1) situation is in and of itself a contravention and violation of section 3 by virtue of the deeming provision.

(e) Interpretation of statutes---

----Deeming provision in a statute---Principles of interpretation.

Once a deeming provision is attracted, the court must not let its mind boggle at the consequences that may flow from or be ancillary to such deeming and is required to recognize and give effect to the same. However, the court is entitled to ascertain the purpose and scope of the deeming provision, Le as to how and between whom is the deeming provisions attractive or made applicable. Finally for the deeming provisions to be applicable, all the conditions laid down in the relevant provisions must be fulfilled before it can be regarded as having taken effect.

Mehreen Zaib-un-Nisa v. Land Commissioner, Multan and others PLD 1975 SC 397 ref.

(f) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.6 & 2(a)---Unreasonably restrictive trade practices---Interpretation, application and scope of S.6, Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Agreement or cartel--- Agreement of the nature covered by S.6(1), Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Existence---Onus of proof---Section 6, Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 contains a two stages process; in the first instance, art agreement must establish in terms of S.6(1); such an agreement may be admitted or found (objectively) to exist in the facts and circumstances of the particular situation being examined, if an agreement is so found to exist, the deeming provision of S.6(1) becomes applicable, if however, this stage is crossed, only then would the matter move to the second stage, namely that of determining whether the conditions of S.6(2) are found to be attractive (i.e. all of its clauses held to apply) then the deeming provisions of S.6(1) would be negated---Principles elaborated---Making of gateway---Ingredients.

Subsection (1) of section 6, Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 contains three clauses, the first two of which also contain certain sub-clauses. The first requirement for the deeming provision to become applicable is that there must be an agreement. This is the most basic requirement, and without there being an agreement, section 6(1) can have no application at all. In the first instance, therefore, the agreement must be established. Indeed, if it is asserted that subsection (I) applies to any situation, what is being asserted is nothing more than that there exists an agreement of the sort referred to in that subsection. The requirement as to the existence of any agreement, is therefore, central to a proper appreciation and correct application of section 6.

Three primary questions arise in relation to an agreement under section 6(I): (a) what is the nature of the agreement; (b) among whom must the agreement subsist or exist and (c) how is the agreement to be established?. As to the first question, the answer is contained in the definition given in section 2(a) of the Ordinance. As is immediately apparent, the law has defined the expression in very broad terms. The definition is inclusive and not exhaustive. It includes any arrangement or understanding. It does not need to be in writing and it does not even have to be or intended to be legally enforceable. Thus the meaning of agreement in the Ordinance goes far beyond (although it certainly includes) that which is contained in the Contract Act, 1872. While there must necessarily be a meeting of minds for there to be an agreement at all, it can be of the most informal or casual nature for purposes of section 2(a).

As to the second question i.e. among whom must the agreement subsist or exist, the answer is contained in subsection (1) itself. Clause (a) relates to a certain group of persons, namely "actual or potential competitors". Clauses (b) and (c) apply to certain types of groups or persons in specified situations or relationship. Clause (b) applies to "a supplier and a dealer of goods" where the agreement is being entered into for purposes of fixing minimum resale prices. Clause (c) applies to agreements between "suppliers or buyers" where the agreement is being subjected to the additional conditions of the sort specified in that clause.

The third question is as to how is the agreement to be established. Obviously, such an agreement can be established by direct evidence. However, it is in the very nature of things that agreements of the sort covered by section 6 (1) are born in darkness and remain shrouded in secrecy. Direct evidence of such agreements would invariably be rare. Given the definition of agreement in section 2(a) and the purpose and scope of the Ordinance, especially the prohibition of unreasonable restrictive trade practice, an agreement in terms of section 6(1) can be established indirectly, i.e. through circumstantial evidence. More particularly, it can be inferred from the facts and circumstances of the particular situation that it is being examined. In the present case this point was not seriously disputed by the counsel for the appellants. There is, needless to say, no direct evidence of any agreement in the present case, and it was common ground between the parties that if at all any such agreement existed (which was of course, asserted by the Authority and denied by the appellants), it could only be inferred from circumstantial evidence. The crucial question therefore, is as to what were, in the facts and circumstances of the present case, the permissible inferences that could be drawn from the record, and did those inferences 'establish, in law and in fact an agreement of the nature covered by subsection (1). This is the exercise that would invariably have to be carried out, whenever there is an assertion that there exists an agreement of the nature covered by section 6(1).

The policy reasons behind deeming agreements of the nature covered by subsection (1) of section 6 to be unreasonably restrictive trade practices are clear. These agreements invariably have such a deleterious and harmful effect on competition that the mere existence of such an agreement is sufficient to condemn it. The most obvious example, which in fact is the very situation with which the present appeals are concerned, is a price fixing agreement between actual or potential competitors. Such an agreement, if found to exist, is the very anti-thesis of competition, and indeed its very purpose is to negate competition. By deeming such agreements to be unreasonably restrictive trade practices, the law obviates the need for an enquiry or finding into whether the particular agreement in question "has or may have the effect of unreasonably preventing, restraining or otherwise lessening competition in any manner." Those who enter into such agreements do so at their own peril: the law will deem that they have acted in an unlawful manner. The law, however, also recognizes that while this broad approach of condemning such agreements out of hand is generally desirable, there may yet exist some agreements, which require a different response. It is in this connection that, according to the appellants, the provisions of subsection (2) of section 6 have been enacted, and it is this point, which now needs consideration.

On a bare reading, subsection (2) appears to be essentially in the nature of an exception to subsection (1). It provides that if the clauses specified therein are fulfilled in relation to an agreement to which subsection (1) applies, then that agreement. shall not be deemed to be an unreasonably restrictive trade practice. It is important to note that the three clauses of subsection (2) are cumulative, i.e. all must be shown to exist before this subsection can take effect. Contention on behalf of the Authority was that the proper interpretation of the two subsections was that all that was required was for the Authority to be satisfied that there was a prima facie case made out in terms of subsection (1). Such satisfaction raised a rebuttable presumption that the deeming provisions of subsection (1) had become applicable. It was then for the other side to rebut the presumption by establishing that the provisions of subsection (2) were applicable. This is not a correct interpretation of the two subsections. It is clear from the opening words of subsection (2) that it applies only to an "agreement as is referred to in subsection (1)". If no such agreement exists, then subsection (2) can obviously have no application at all. Subsection (1) itself does not state that an agreement must exist to the Authority's satisfaction or use some such subjective language. It simply deems an unreasonably restrictive trade practice to have been resorted to or continued, if an agreement of the nature covered by the subsection (1) is found to exist. The test must, therefore, be objective, i.e. the agreement must be found to exist on an objective assessment of all the facts and circumstances. If no agreement can be found, either as a matter of law or on the facts on the basis of such an objective assessment, the matter ends and there is no need to take recourse to subsection (2).

The proper interpretation of section 6, therefore, is that it contains a two stages process. In the first instance, an agreement must be established in terms of subsection (1). Such an agreement may be admitted or found (objectively) to exist in the facts and circumstances of the particular situation being examined. If an agreement is so found to exist, the deeming provisions of subsection (1) become applicable. If this stage is crossed, only then would the matter move to the second stage, namely that of determining whether the conditions of subsection (2) are made out. If the conditions of the latter subsection (2) are found to be attractive (i.e. all of its clauses held to apply,) then the deeming provisions of subsection (1) would be negated.

It appears that the provisions similar to subsection (2) of section 6 are well established in this branch of the law, and are known as 'gateways'. These provisions reflect the policy of the law noted above, namely that while agreements of the sort hit by the deeming provisions of subsection (1) were generally to be condemned as being unreasonably restrictive trade practices, in certain situations, such agreements had to be allowed to stand. In effect, the disadvantages or harmful effects of such an agreement are outweighed by the benefits obtained by letting it stand. One example will suffice to illustrate the point. Suppose the Pakistani exporters of a particular commodity enter into a price fixing agreement e.g. agree not to sell their product abroad at less than the price agreed upon. Obviously, such an agreement is precisely that sort of arrangement to which subsection (1)(a)(i) applies, namely an agreement between actual or potential competitors to fix the selling price of goods. Such an agreement would, therefore, ordinarily be deemed to be an unreasonably restrictive trade practice and would stand condemned accordingly. However, recourse may be possible in such a situation to subsection (2). In the example, being considered, the clauses would apply if following conditions are found to exist: (a) the agreement promotes the export of goods from Pakistan; (b) such promotion could not have been achieved by means less restrictive of competition i.e. without the agreement; and (c) the benefits of such an agreement (i.e. the promotion of exports) clearly outweigh the adverse impact on competition (i.e. that the selling prices being charged by the exporters are not being set by market conditions). If these conditions are fulfilled, then the agreement will not be deemed to be an unreasonably restrictive trade practice i.e. will be allowed to stand and continue.

The onus lies on the Authority to establish that an agreement of the nature specified in section 6(1) exists in order to attract the deeming provisions thereof. This assessment must be made on an objective basis since the Ordinance, does not use subjective language that the Authority must be so satisfied (or any such similar words). This position is also clear from general principles, since it is the Authority that is asserting the positive (i.e. that an agreement exists), whereas the persons alleged to have entered into such an agreement are asserting the negative (that such an agreement does not exist). Clearly the burden of establishing that an agreement exists, must lie on the party making the positive assertion. Furthermore, the agreement, if it exists, would be an unlawful act, being violative of section 3, and the offending persons would be liable to penalties under section 19 of the Ordinance. The burden of discharging the onus of subsection (1) of section 6 must therefore lie squarely on the Authority. Once this burden is discharged, and an agreement is found to exist, then if at all a subsection (2) defence or justification is pleaded, the onus lies on those who entered into the agreement to establish that the ingredients of the 'gateway' have been made out. The onus shifts from one side to the other, starting in the first instance (i.e. subsection (1) by being on the Authority and then moving on to the opposite parties, if a 'gateway' (i.e. subsection (2)) defence is pleaded.

In the present case, the appellants have not pleaded any subsection (2) defence. It is therefore, not their case that the provisions of the "gateway" are attracted. Rather, the appellants contend, as noted above, that no agreement at all, as specified in subsection (1), is made out and hence there is nothing that can N; deemed to be an unreasonably restrictive trade practice. The matter must therefore, be examined and determined with reference to section 6(1) and the onus of establishing an agreement in terms thereof lies on the Authority.

(g) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.6, 3, 11, 12, 2 & 20---Appeal to High Court---Allegation of unreasonably restrictive trade practices---Powers, jurisdiction and functions of the Authority---Scope---Monopoly Control Authority's contention which the appellants denied, was that a parallel increase in prices over a given period was in itself sufficient material from which an agreement or cartel could legitimately by indirectly inferred---Impugned order of the Authority showed that the Authority did not find that the prices rose by the same amount. or to the same level---Prices of the various cement manufacturers were at different levels and remained so, rising by different amounts and on different dates---Parallel increase in price was noticed i.e. there was a general upward movement over the same period of time---Question therefore, was as to whether it was permissible, both as a matter of law as well as in fact for the Authority to infer from the parallel price increase that there existed an agreement or cartel to which S.6(1), Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 applied---Held, any price f fixing was unlawful under the Ordinance, it was entirely irrelevant whether the prices were rising, falling, remaining steady, high or low or at any level in between, if they were being fixed (and the amount by which the fixation took place was likewise irrelevant) in any manner by agreement between actual or potential competitors, they were unlawful---Agreement under the Ordinance and for the purposes of S.6(1) of the Ordinance could be indirectly inferred from the situation---Parallel business behaviour or conscious parallelism was not in itself' sufficient to lead to or permit an inference that a price fixing agreement or cartel existed---Factors in addition to, and over and above the conscious parallelism for the existence of a cartel in violation of S.3 read with S.6 must be established---Authority must identify and particularize the "plus" factors on which it sought to rely in addition to the parallel business behaviour---If such "plus" factors did exist in addition to parallel business behaviour, it would be open to the alleged conspirators to present material to show that it could not be reasonably inferred by the Authority that they had entered into a price fixing conspiracy and they would be entitled to rebut the inferences being drawn from the parallel business behaviour and the plus factors" as the matter was being determined not on the basis of direct evidence, but on deductions being indirectly made and inferred from the facts and circumstances of the case and it was possible in such a situation that Authority might misread or draw the wrong conclusions from the circumstantial material and it was only right for the alleged conspirators to be entitled to present material to rebut the inferences---If the alleged conspirators jail to present any such material or the material presented was found to be deficient or unconvincing, then it could legitimately be inferred from the parallel business behaviour and the "plus" factors being relied upon that an agreement existed which was violative of S.6(1) of the Ordinance, and that there had been a violation of S.3 thereof---Entire such exercise, however, was to be carried out exclusively with reference to and within the ambit of S.6(1) of the Ordinance---Once such agreement had been legitimately inferred, arid was therefore, deemed to exist, it might still be open to the conspirators to rely on the "gateway" contained in S.6(2) of the Ordinance---Onus, however would lie on the alleged conspirators to establish that their situation came within all three clauses of the latter provision and it was only then that they' would be entitled to rely on the gateway'---Price fixing agreement which could be condemned under the deeming provision of S.6(1) of the Ordinance was not limited to price increase only---Section 6(1) of the Ordinance applies to any price fixation, regardless of whether the prices were being increased, reduced or had remained steady, and whether the level was high or low--Authority was the regulator and restorer of competition and not of prices and prices level as such---By fundamentally confusing two entirely separate and distinct functions and powers, the Authority would assert a power that did not vest in it under law---At any time that the prices moved in parallel, the Authority would be able to claim that a cartel existed and that the Authority was entitled to take action in the matter---Regulation of prices by the Authority was clearly beyond the limits of its powers and jurisdiction under the Ordinance---Authority was not concerned with the level of prices as such nor did it have any statutory power to determine whether prices were reasonable or too high or low, its jurisdiction was confined only to ensuring that there was proper competition, i.e. that prices were being determined by market conditions and not fixed collusively and unless there was additional material or evidence, the parallel change in prices could not by itself establish that there had been collusion or cartelization---Mere fact that the prices during one specific month rose parallel would not establish that there existed cartel among the manufacturer in violation of S.6(1) of the Ordinance, there was no basis whatsoever on which the Authority could contend that there had been a planned or systematic" increase in the prices and it was insufficient to simply rely upon the price increase itself as establishing the existence of a cartel---Authority had also failed to specify or identify the alleged conspirators which was an infirmity and fatal to the case of the Authority---While referring to the price increases, the impugned order merely stated that "a good number" of the cement manufacturers were involved in the cartel, but the actual conspirators were never identified---No agreement, in circumstances could be spelt out---Authority was bound to particularize the parties to the agreement and identify the participants in the conspiracy and to show when or how they functioned and if the Authority failed to do so, then no agreement could be found to exist---Factors relied upon by the Authority to justify the impugned order included great public outcry at the increase in prices of cement during the particular month---Such was a fundamental misconception of the powers and jurisdiction of the Authority and resulted in a complete transformation of its role from a regulator of competition to a regulator of prices without any warrant in law--Principles on the subject recorded exhaustively---High Court accepted the appeals, set aside the impugned orders of the Authority, declaring the orders as not sustainable either in law or on the basis of the record and material as available before the Authority.

In essence, the point in issue between the parties, in the present case, can be stated as follows: the Authority contends, and the appellants deny, that a parallel increase in prices over a given period is in itself sufficient material from which an agreement or cartel can legitimately be indirectly inferred. It is pertinent to note that, as is clear from the passage from the impugned order, the Authority does not contend that the prices rose by the same amount or to the same level. The prices of the various cement manufacturers were at different levels and remained so, rising by different amounts and on different dates.

Thus, there was a parallel increase in prices, i.e. there was a general upward movement over the same period of time. The question is whether it was permissible, both as a matter of law as well as in fact for the Authority to infer from the parallel price increase that there existed an agreement or cartel to which section 6(1) applied.

The deeming provisions of section 6(1) of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 provides that there are certain categories of agreements the very existence of which is violative of law, being section 3 of the Ordinance. The price fixing agreements condemned out of hand under section 6(1)(a)(i) under the deeming provisions of the Ordinance. It is important to keep in mind that any price fixing is unlawful under the Ordinance. It is entirely irrelevant whether the prices are rising, falling, remaining steady, high, low or at any level in between. If they are being fixed (and the amount by which the fixation takes place is likewise irrelevant) in any manner by agreement between actual or potential competitors, they are unlawful in American jurisprudence, price fixing agreements are divided into different types, such as horizontal price fixing, vertical price fixing, predatory pricing etc. Horizontal price fixing is a price fixing agreement or cartel between actual or potential competitors. Vertical price fixing is a price fixing agreement between producers and wholesalers or distributors, or between producers and retailers, or between wholesalers or distributors and retailers. Predatory pricing is a price fixing agreement between competitors designed to eliminate other competitors from the market. The sort of agreement or cartel with which the present appeals are concerned would be regarded as horizontal price fixing.

The following principles are deducible from the decisions of the US Supreme Court and various Courts of Appeals.

(1) An agreement violative of the Ordinance can be established either by direct evidence or can be inferred indirectly from the facts and circumstances of the case before the Court. Business behaviour is admissible circumstantial evidence from which a cartel can be inferred.

(2) While an agreement can be indirectly inferred, the alleged conspirators must at least be properly identified and there must be some indication of when or how they functioned.

(3) Parallel business behaviour, or conscious parallelism is not in itself sufficient to indirectly establish an agreement in violation of' the Ordinance. Parallel business behaviour can be of various sorts, and a parallel movement in prices is one example of conscious parallelism. Parallel business behaviour is all the more possible in the case of standardized products where it is expected that prices will ordinarily tend to move in parallel. Furthermore, in a concentrated market, where there are relatively few sellers, conscious parallelism is also to be expected.

(4) If there are certain factors, referred to as "plus" factors, in addition to, and over and above, parallel business behaviour, then a presumption arises that there has been unlawful price fixing and in such a situation, a violation of the Ordinance can be indirectly inferred. The "plus" factors may include evidence demonstrating that the conspirators acted contrary to their economic interests and were motivated to enter into a price fixing conspiracy. The nature of a "plus" factor must be such as it tends to exclude the possibility that the alleged conspirators acted independently.

(5) If parallel business behaviour and "plus" factors are found to exist, the alleged conspirators can nonetheless rebut the inference of collusion by presenting evidence establishing that it could not reasonably be concluded that they entered into a price fixing conspiracy.

An agreement under the Ordinance and for the purposes of section 6(1) can be indirectly inferred from the facts and circumstances of the situation. Parallel business behaviour or conscious parallelism is not in itself sufficient to lead to or permit an inference that a price fixing agreement or cartel exists. There must be shown to exist factors in addition to, and over and above the conscious parallelism for the existence of a cartel in violation of section 3 read with section 6 to be established. The Authority must identify and particularize the "plus" factors on which it seeks to rely in addition to the parallel business behaviour. If such "plus" factors do exist in addition to parallel business behaviour, it would be open to the alleged conspirators to present material to show that it cannot be reasonably inferred by the Authority that they have entered into a price fixing conspiracy. They would be entitled to rebut the inferences being drawn from the parallel business behaviour and the "plus" factors. The reason is that the matter is being determined riot on the basis of direct evidence, but on deductions being indirectly made and inferred from the facts and circumstances of the case. It is possible in such a situation

that Authority may misread or draw the wrong conclusions from the circumstantial material and it is only right for the alleged conspirators to be entitled to present material to rebut the inferences. If the alleged conspirators fail to present any such material or the material presented is found to be deficient or unconvincing, then it can legitimately be inferred from the parallel business behaviour and the "plus" factors being relied upon that an agreement exists which is violative of section 6(1) of the Ordinance, and that there has thus been a violation of section 3 thereof. Entire exercise as aforesaid is to be carried out exclusively with reference to, and within the ambit of section 6(1). Once such an agreement has been legitimately inferred, and is therefore, deemed to exist, it may still be open to the conspirators to rely on the gateway' contained in section 6(2). However, as explained above, the onus (and it is a heavy burden to discharge) would lie on them to establish that their situation comes within all three of the clauses of the latter provision and it is only then that they would be entitled to rely on thegateway'.

It is important to keep in mind that the price fixing agreement which can be condemned under the deeming provision of section 6(1) is not limited to price increases only. Section 6(1) applies to any price fixation, regardless of whether the prices are being increased, reduced or have remained steady, and whether the level is high or low. At any time that the prices moved in parallel, the Authority would be able to claim that a cartel existed and that the Authority was entitled to take action in the matter. It is a matter of common experience that the prices of most commodities tend to fluctuate and such changes usually occur in parallel, and this is certainly true for standardized products, which are (if at all) differentiated only by the public perception of their brand names or trademarks. Prices, especially of essential items (e.g. food supplies such as tomatoes and onions during the season), can change suddenly and for no apparent reason, rising and falling frequently and sometimes on a daily basis. If it is held that price change is itself sufficient to establish a cartel, then the Authority would virtually at any time be able to declare a violation of section 3 read with section 6. All it would need to do is to point to the parallel price movement (regardless of whether the prices were rising or falling) and claim that a cartel existed. This would confer an unfettered discretion and power on the Authority to take action at its own sweet-will and at a time of its own choosing. Such a view cannot be countenanced by the law and is, flatly contrary to the provision of the Ordinance. This would convert the Authority into a price regulator, which is clearly beyond the limits of its powers and jurisdiction under the Ordinance. The Authority is not concerned with the level of prices as such nor does it have any statutory power to determine whether prices are reasonable or too high or too low. Its jurisdiction is confined only to ensuring that there is proper competition, i.e. that prices are being determined by market conditions and not fixed collusively. Unless, therefore, there is additional material or evidence, the parallel change in prices cannot by itself establish that there has been collusion or cartelization.

The principles established by the American courts, and followed and adopted by the Indian Commission, establish the necessary framework and lay down the correct approach to be taken for a proper interpretation and application of the deeming provisions of section 6(1) of the Ordinance. The Authority in the present case, has acted on the basis of a complete misunderstanding of the Ordinance and has misapplied the relevant provisions.

The mere fact that the prices in May, 2003 rose in parallel does not therefore, establish that there existed a cartel among the appellants in violation of section 6(1). There was no basis whatsoever on which the Authority could contend that there had been a "planned" or "systematic" increase in the prices, and it was insufficient to simply rely upon the price increase itself as establishing the existence of a cartel. In this context, there is an additional infirmity, which is fatal to the case put forward by the Authority. The Authority has not specified or identified the alleged conspirators. When referring to the price increases, the Impugned Order merely states that "a good number" of the cement manufacturers were involved in the cartel, but the actual conspirators are never identified. No agreement can legitimately be spelt out in such circumstances. While an agreement can certainly be inferred circumstantially as held above, it is at the very least necessary for the Authority to particularize the parties thereto and identify the participants in the conspiracy and to show when or how they functioned. If the Authority fails to do so, then no agreement can be found to exist. In the present case, there is no specific allegation at all against any particular cement manufacturer that it was a participant in the alleged cartel. Furthermore, the Authority fatally undermines its own case by subsequently referring in the Impugned Order to "some" cement manufacturers having acted together with respect to capacity underutilization. Thus, although orders were passed against nearly all the cement manufacturers, the finding actually recorded by the Authority is only that °a good number" of (unspecified) cement manufacturers increased prices in parallel and that only "some" (again unidentified) cement manufacturers underutilized their plant capacities. There is, to say the least, a great difference between "all", "a good number" and "some" and the failure on the part of the Authority to keep this basic distinction in mind clearly indicates that in fact the Authority did not have any knowledge of the identity of' the alleged conspirators, nor did it even bother to carry out such an exercise, which was required under the Ordinance. The Impugned Order, is self-contradictory on the face of it, since the cartel is at one and the same time supposed to be between "a good number" of cement manufacturers and/or "some" of the manufactures. No agreement within the meaning of section 2(a) can be spelt out in such circumstances.

The conclusion purported to be drawn by the Authority in the impugned orders are also not supported by the record of the case. In the impugned order the Authority has purported to "adjust" the central excise duty relief given in the 2003 Budget because, it is stated, the relief "was not passed on to consumers". Yet, this assertion is contradicted by the table of prices given by the Authority itself in its parawise comments. There, the price of cement charged by the appellant is shown as Rs.215 per bag for the first 6 days of June, and then with effect from June 7th, the price is shown as dropping to Rs.205 per bag, a level which is maintained up to June 22nd, whereafter the price is shown as dropping further to Rs. 199 per bag. The situation is similar in the case of other cement manufacturers. Thus, it is clear from the Authority's own statements that the budgetary relief in central excise duty was in fact passed on to the consumers. The conclusions drawn in this regard in the impugned Orders are thus directly contradicted by the record. In any case, even if the relief in central excise duty had not been passed on to the consumers by some or all of the cement manufacturers, it is not clear why that would show the existence of a cartel in violation of section 6(1). It is surely a business decision to be taken by the cement manufacturers in the light of market conditions whether, and if so, to what extent, the relief is to be passed on to the consumers. It would normally be expected that there would be some fall in prices in such a situation and that is in fact what the record establishes. The conclusions to the contrary drawn by the Authority are clearly unsustainable.

The table of prices set out in the Authority's parawise comments clearly shows that there was a lot of price variation and fluctuation in the months leading up to May, 2003. In March, prices did rise and there was a general upward movement. There was thus, throughout the period, prior to the Authority's impugned action, a parallel price movement of the same nature as took place in May, 2003. Furthermore, in June, the prices began to fall, a fact which appears to have been ignored or misunderstood by the Authority. Yet, it is only the May, 2003 price increase that is condemned by the Authority as cartelization. Those that occurred prior thereto are accepted, and attributed to market conditions. It is also pertinent to note that even as per the impugned orders, the price levels in October, 2002 were at about same level as the prices after the May, 2003, increase (and in some cases, were even higher). Yet, no action was earlier taken by the Authority. This contradiction clearly establishes the point that if a mere change in prices is sufficient to spell out a cartel, then the matter is at the unfettered discretion and sweet-will of the Authority. It can at any time condemn a price movement as violative of the Ordinance, or leave it undisturbed as a mere market fluctuation, and justify its action or inaction accordingly. In the present case, price movements, including increases, prior to May, 2003, were accepted by the Authority as responses to market conditions and "independent strategies" of the cement manufacturers, and yet, the price increase of May, 2003, was held to establish a cartel. Price changes of the same nature and magnitude as took place in May, 2003, were earlier accepted and passed unnoticed and without action, whereas the situation that prevailed in that month was condemned as proof of cartelization. It seems that in fact, the Authority was only reacting to the public outcry in May, 2003. The Authority simply acted as a price regulator to bring down the prices to what it regarded as a "reasonable" level acceptable to the public. This was clearly beyond its jurisdiction and powers and outside the scope and ambit of' the Ordinance. The Authority is the regulator and restorer of competition and not of prices and price levels as such. By fundamentally confusing two entirely separate and distinct functions and powers, the Authority has asserted a power that does not vest in it under law.

The Authority also appears to have ignored altogether, the various factors stated in detail by the cement manufacturers as explaining the price increases and capacity utilization. These factors included the concept of price leadership, seasonal factors and changes in the demand and supply conditions. The Authority was bound to consider the same and if it was not convinced by the submissions that had been made before it in this regard, to give its reasons for rejecting the case put forward by the cement manufacturers. It is also to be noted that while the Authority concluded that the cost of production had been falling over the relevant period, it did not take into consideration the contrary submissions made by the appellants in this regard. In any case the fact that there is no ready explanation forthcoming for the increase in prices is not in itself sufficient: to conclude that a cartel or conspiracy existed in violation of the law.

The factors relied upon by the Authority to justify the Impugned Order included the great public outcry, especially in the national press, at the increase in prices in May, 2003, and complaints received by the Authority with regard thereto from various persons and concerned quarters such as builders, etc. These factors appear to have impelled the Authority to take action to bring down cement prices from what was obviously regarded by it as too high a level to a range believed to be more "reasonable" and acceptable. This was a fundamental misconception of the powers and jurisdiction of the Authority and. resulted in a complete transformation of its role from a regulator of competition to a regulator of prices without any warrant in law.

Section 3(1) of Price Control and Prevention of Profiteering and Hoarding Act, 1977 empowers the Federal Government, for purposes of ensuring equitable distribution of an essential commodity and its availability at fair prices, to issue an order (to be published in the official Gazette) regulating the price, production, movement, supply, distribution, sale, etc. of the essential commodity. Cement is, or at any rate was, one of the commodities specified in the schedule to the 1977 Act, as an essential commodity. The important point is that if the Authority was allowed to take action at any time there is a price change unacceptable to it (on the basis that such a price change can in and of itself establish a cartel), then there would essentially be no difference between the power exercised by the Authority under the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 and the power exercisable by the Federal Government under the Price Control and Prevention of Profiteering and Hoarding Act, 1977 to regulate prices. Indeed, in the operative part of each impugned order, the Authority has purported to fix the price of cement for each manufacturer by requiring it to reduce its price, as prevailing on the date of the order by the amount specified in the order which amount, according to the Authority, represents the "unjustified increase" in the cement price in May, 2003. This is nothing other than price fixation or regulation which is beyond the scope and limits of the Ordinance and indeed, is the very anti-thesis of that law, since the price is being fixed by the administrative fiat and not market conditions. Section 12(1)(c) in terms of which the Authority has purported to take this action, does not and cannot confer any such power on the Authority. The purported action taken by the Authority is therefore, unlawful and contrary to the provisions of the Ordinance. The Authority has also held with reference to the "unjustified increase" that "it remains incorporated in undertaking's selling price till now notwithstanding some fluctuations during the intervening period." To take the example of appellant, the Rs.60 per bag "unjustified increase" is regarded by the Authority as somehow remaining part of the manufacturer's cement price from May, 2003, till October, 2005 (i.e. up to the issuance of the Impugned Order), although the Authority concedes that the cement price did undergo "some fluctuations" during this period. One can find no warrant for this extraordinary conclusion either in law or the record. There is no conceivable basis on which the Authority's conclusion can be supported. Furthermore, the order to reduce the price by the amount specified by the Authority is itself unenforceable. Suppose that a manufacturer does comply with the Authority's order. For how long is a manufacturer required to keep its price artificially depressed by the amount directed by the Authority? There is nothing in the impugned order that would prevent a manufacturer from reducing its price in purported compliance .of the order and then raising it the next day. There is an even more fundamental defect in the order in this regard. A direction to reduce the price by an amount fixed by the Authority is itself a negation of competition since the prices would not then be set by market conditions, but would be at a level mandated by the Authority. The Authority's direction is therefore, on the face of it inconsistent with the concept of market competition and with the Authority's fundamental statutory duty to protect the same. The Impugned Order is therefore, unsustainable in law on this point as well.

The capacity underutilization was also referred to as a factor which justified the Authority in concluding that a cartel existed to increase the prices in May, 2003. One aspect of this part of the Impugned Order, namely the Authority's failure to identify and particularize who, among the cement manufacturers, were "soiree" of the alleged conspirators in this regard has already been dealt with. It was submitted by the companies in this regard that the Authority had characterized the capacity utilization of each cement manufacturer as "low" or "very low" in a random and haphazard manner and without any basis or proper application of mind. For example, the capacity utilization of one Company Cement was stated to be 68%, which was regarded as "low". The capacity utilization of another company on the other hand, was 71% and this was regarded as "very low". There is force in this submission on behalf of the appellants. There does not appear to have been any proper application of' mind in the present case by the Authority. No basis is shown as to how or why some capacity utilization is characterized as low and other as very low. In addition, it is also the case that the record relied upon by the Authority in this regard itself shows great variations in capacity utilization. Annexure to the report to the special enquiry is a table showing the industry wise capacity utilization from July, 2002 to June, 2003. An examination of this Annexure indicates that the capacity utilization changed considerably from month to month and rose and fell regularly, sometimes by substantial amounts. Therefore, it cannot be concluded from the fact that capacity utilization fell in May, 2003, as compared to the previous month that there was a cartel to increase the prices as held by the Authority.

The impugned orders are not sustainable either in law or on the basis of the record and material as available before the Authority. The appeals were therefore, allowed and the impugned orders were set aside and quashed.

Mehram Ali and others v. Federation of Pakistan PLD 1998 SC 1445; Islamization of Laws PLD 1985 FSC 193; Mehreen Zaib-un-Nisa v. Land Commissioner, Multan and others PLD 1975 SC 397; Mahindra and Mahindra Ltd. v. Union of India AIR 1979 SC 798; Kiefer-Stewart Co. v. Joseph E. Seagram & Sons Inc. and others (1951) 340 US 211; United States v. New York Coffee and Sugar Exchange and others (1924) 263 US 611; Theatre Enterprises, Inc. v. Paramount Film Distributing Corporation and others (1954) 346 US 537; Matsushita Electric Industrial Co. Ltd. and others v. Zenith Radio Corporation and others 475 US 574; Brooke Group Ltd. v. Brown and Williamson Tobacco Corporation (1993) 509 US 209; Bendix Corporation and another v. Balax, Inc. and another (1972) 471 F.2d 149; Cayman Exploration Corporation v. Untied Gas Pipe Line Company (1989) 873 F.2d 1357 and Alkali and Chemical Corporation of India Ltd. v. Bayar (India) Ltd. (1984) 3 Comp. LJ 268 ref.

Munib Akhtar and Salman Akram Raja for Appellant.

Dr. Danishwar Malik, D.A.-G. and Ms. Seema Munawar, A.A.-G. for Respondent.

Date of hearing: 3rd July, 2006.

2006 C L D 1299

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

Malik KHALIL AHMED---Appellant

Versus

HABIB BANK LIMITED through Branch Manager and 2 others---Respondents

Execution First Appeals Nos. 278 and 341 of 2006, decided on 27th June, 2006.

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

----S. 19---Execution of decree---Sale of mortgaged property sought by judgment-debtor through private negotiations---Validity---Prerogative of decree-holder to seek execution and satisfaction of decree through the mode he chooses---Judgment-debtor could not be permitted to sell mortgaged property through private negotiations---High Court rejected such prayer of judgment-debtor.

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

----S. 19---Decree for recovery of loan amount, execution of---Mortgaged property---Prayer of guarantor that first property of principal borrower be put to auction for satisfaction of decree---Validity---Status of guarantor was independent---Such prayer was not allowed in circumstances.

Shahid Ikram Siddiqui for Appellant (in E.F.A. No.278 of 2006).

Asim Hafeez for Appellant (in E.F.A. No.341 of 2006).

Ch. Muhammad Afzal Sandhu for Respondent-Bank.

2006 C L D 1301

[Lahore]

Before Mian Hamid Farooq and Sheikh Azmat Saeed, JJ

Chaudhry MUHAMMAD ASLAM---Appellant

Versus

SME BANK LIMITED through Chairman/President and 2 others---Respondents

Regular First Appeal No. 473 of 2005, heard on 19th June, 2006.

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

----S.22(1)---Limitation Act (IX of 1908), Ss.5 & 29(2)---Appeal---Delay, condonation of---Application under S.5 of Limitation Act, 1908---Not maintainable---Principles.

Section 29 of Limitation Act, 1908 provides that where in a special or local law different periods of limitation have been prescribed, then provisions of' section 5 thereof are not applicable. Under the ordinary law, a period of 90 days has been prescribed under Article 156 of Limitation Act, 1908 for filing of first appeal before High Court, while the present suit is governed by the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, which is a special law and S.22(1) thereof prescribes a period of 30 days for filing the first appeal before High Court against judgment and decree passed by Banking Court. The special law has provided different period of limitation for filing the first appeal in High Court than the ordinary law. Therefore, section 5 of Limitation Act, 1908 was neither applicable nor attracted in present case; thus, the application filed thereunder was misconceived, incompetent and not maintainable. High Court dismissed such application and dismissed present appeal as 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; 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.

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

---- Ss.9 & 22(1)---Civil Procedure Code (V of 1908), O.IX, R.9---Non-appearance of plaintiff---Dismissal of suit---Application for restoration of suit was dismissed---Appeal against order of dismissal of such application was maintainable---Principles.

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

----S.9---Civil Procedure Code (V of 1908), O.X, R.4(2)---Suit by borrower for declaration and cancellation of documents---Order of Court for personal appearance of plaintiff---Non-appearance of plaintiff in spite of availing four adjournments, out of which three adjournments were granted subject to payment of costs---Court on relevant date kept case in waiting thrice for plaintiff and his counsel, but none of them attended the Court----Dismissal of suit for non-appearance and non-compliance with Court's such order and non-prosecution by plaintiff was legal and justified.

Nazir Ahmad v. District Judge Leiah and 9 others PLD 1986 Lah. 137 and Mst. Sardar Begum v. Darwesh Muhammad PLD 1997 Lah. 730 rel.

M. Shahid Saigol v. Al-Towfeek Investment Bank Ltd. through Branch Manager 2005 CLD 920 distinguished.

Mirza Nasar Hussain Baig for Appellant.

Syed Zaheer Saghir for Respondents.

Date of hearing: 19th June, 2006.

2006 C L D 1312

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

KALEEM ULLAH --- Appellant

Versus

ZARAI TRAQIATI BANK LIMITED through Manager---Respondent

F.A. O. No. 188 of 2004, decided on 5th July, 2006.

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

----Ss.17 & 22---Recovery of loan amount, decree for---Suit decreed by Banking Court in terms of earlier orders of High Court ---Validity---Banking Court neither misapplied nor disregarded such orders---High Court dismissed appeal against said order of Banking Court.

Messrs Dadabhoy Cement Industries Limited and others v. Messrs National Development Finance Corporation 2002 CLC 166 and Syed Manzoor Hussain v. ADBP and another 2005 CLD 183 ref.

Ch. Muhammad Ayub for Appellant.

Mian Nasir Mahmood for Respondent.

2006 C L D 1314

[Lahore]

Before Syed Shabbar Raza Rizvi, J

Manor (Retd.) JAVED INAYAT KHAN KIYANI---Petitioner

Versus

THE STATE---Respondent

Criminal Miscellaneous No. 3399-B of 2006, decided on 29th June, 2006.

(a) Penal Code (XLV of 1860)---

---S. 489-F [as added vide S.2 of Criminal Law (Amendment) Ordinance (LXXXV of 2002)]---Object of S. 489-F, P.P.C. was to curb the fraudulent or dishonest issuance of cheques to cause dishonest gain or to cause dishonest loss---Before approaching investigation agency or launching a criminal prosecution, it was necessary to establish, prima facie, that cheque was issued dishonestly and with the intention to defraud---To know the intention of a drawer a payee could give a notice to the drawer after dishonour of cheque by the drewee and before approaching the police or the Court---Word "dishonestly" employed in S.489-F, P.P.C. required conscious and serious examination.

2005 PCr.LJ 1462 and Mian Hussain Ahmad Hyder v. S.H.O. and others 2005 YLR 1565 ref.

(b) Penal Code (XLV of 1860)---

----S. 24---Word "dishonestly", defined and explained---Language of S.24, P.P.C. was explicit and conveyed that to constitute an act "dishonestly", it was important that something should be done with the intention of causing wrongful gain or wrongful loss---Wrongful gain could not be attained by wrong doer for himself only, but wrong doer could cause gain or loss to any other person also---Person could be said to have dishonest intention if in taking property it was his intention to cause gain by unlawful means of the property to which the person was so gaining, was not legally entitled or to cause loss .by wrongful means of property to which the person so losing was legally entitled and it was further clear from definition of "dishonestly" that the gain or loss contemplated need not be a total acquisition or a total deprivation, but was enough, if it was temporary retention of property by the person wrongfully gaining or temporary "keeping out" the property from the person, legally entitled.

PLD 1957 SC (India) 317 at 324 ref.

(c) Words and phrases---

----Dishonestly' defined and explained.

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

----Ss. 2(d)(iv), 7, 20 & 22---Penal Code (XLV of 1860), S.489-F [as added vide S.2 of Criminal Law (Amendment) Ordinance (LXXXV Of 2002)]--Recovery of loan---Procedure ---Object and reason for enacting Financial Institutions (Recovery of Finances) Ordinance, 2001 and S.489-F, P.P.C., was to provide single forum to the Banks for the recovery of their loans from their customers and like-wise to the customers to approach the same Court if they had any grievance against the Banks---Word "loan" was substituted in P.P.C. with word "finance", similarly, punishment of one year was substituted with three years in P.P.C.---Objective to legislate S.20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was different than objective to legislate S.489-F, P.P.C., but S.489-F, P.P.C. had not been legislated/drafted differently--Purpose of enacting said laws was to provide speedy measures for the recovers/of outstanding loans and finances---Under S.7 of Financial Institutions (Recovery of Finances) Ordinance, 2001, a Banking Court was conferred criminal jurisdiction to try offences punishable under said Ordinance and for the purpose, same powers were vested as were vested in the Court of Session in Code of Criminal Procedure, 1898---Banking Court could take cognizance of any offence under Financial Institutions (Recovery of Finances) Ordinance, 2001 upon a complaint in writing made by a person authorized in that behalf by concerned Financial Institutions in respect of which offence was committed---Whenever an offence was committed under S.20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, Banking Court would take cognizance on a complaint filed by authorized person and the complaint would be tried by concerned Banking Court --- Appeal was provided before two Judges of the High Court under S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Under S.489-F, P.P.C., an F.I.R. was lodged with a concerned police station and after submission of final report, jurisdiction of trial was conferred upon Magistrate of the First Class and appeal could be filed before concerned Sessions Judge---Section 489-F, P.P.C. would be attracted where an individual would issue a cheque dishonestly in favour of another individual and the same was dishonoured on presentation---Purpose of both enactments was different and the procedure for prosecution was also different---Banking Laws relating to recovery, expressly or impliedly, envisaged effect of issuance of cheque "dishonestly" or "inadvertently".

MZ Corporation v. MS Sky Lines Printing Press 1993 MLD 1764; 1993 MLD 1766; 1995 MLD 12; PLD 1993 SC 341; PLD 1986 SC 240; PLD 2002 SC 460; Ocean Industries Limited and another v. Industrial Development Bank PLD 1966 SC 738 and M. A. Hameed Puri v. Federation of Pakistan PLD 1979 Lah. 252, ref.

(e) Criminal Procedure Code (V of 1898)---

----S. 498---Penal Code (XLV of 1860), S. 489-F---Pre-arrest bail, grant of --- F.I.R. had shown that cheque in question was issued from joint account of accused and co-accused to be encashed on specified date---Said cheque was signed by both of them, which had indicated that they were partners and possibility of possession of cheques jointly signed by them with co-accused could not be ruled out---Payment was made to complainant despite letter of accused to the Bank that joint account be closed---Co-accused gave cheque to complainant who got it encashed before accused could inform Batik not to encash any cheque from the joint account---On the basis of said payment in favour of complainant, Investigating Officer, found that actual payment was made to complainant from the joint account and no wrongful loss was caused to him---Police record also indicated that accused had informed the Bank that partnership between accused and his co-accused ended and jointly signed cheques be not honoured---Opinion of the police though was not binding, but it had a persuasive value in all criminal matters including bail before arrest---Cheque in question either was not issued by accused at all or it was issued jointly by accused and co-­accused---No harm came to co-accused from complainant side---If said cheque was issued dishonestly, then it was issued by both of them---Agreement to buy machinery mentioned in F.I.R., might have existed between co-accused and complainant, accused had no obligation or liability towards complainant which he failed to fulfil---Accused also did not owe any loan to complainant---Element of mala fides on part of complainant, could not be ruled out in circumstances-- Accused, who was a retired army officer and a businessman, had been declared innocent by Investigating Officer---Interim bail granted to accused was confirmed, in circumstances.

Sardar Khurram Latif Khan Khosa for Petitioner.

Imtiaz Ahmad Kaifi for the Complainant.

Ijaz Ahmad Bajwa for the State and S. Raza Hussain, S. -I.

2006CLD 1338

[Lahore]

Before Syed Zahid Hussain and Muhammad Sayeed Akhtar, JJ

MUHAMMAD SHAFIQUE and another---Appellants

Versus

SMALL BUSINESS FINANCE CORPORATION OF PAKISTAN through Manager and

another ---Respondents

R.F. A. No.468 of 2002, heard on 19th July, 2006.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 200I)---

----Ss. 9, 10 & 22---Specific Relief Act (I of 1877), Ss.54 & 55---Suit for permanent and mandatory injunction in Banking Court---Leave to defend suit---Rejection of plaint---Appeal against---On filing suit for permanent and mandatory injunction, respondent-Corporatim filed application for grant of leave to defend suit---Banking Court while hearing and deciding said application rejected the plaint-Contention of counsel of respondent-Corporation was that since appellants had obtained loan of Rs.3,00,000 out of which only some amount had been returned, appellants had no cause of action---Validity---Though loan worth Rs.3,00,000 was obtained by appellants from the Corporation, some of which was also returned, but coercive process for much higher amount was initiated against appellants and the guarantor, which pushed them to institute suit---Held, appellants would pay balance principal amount of loan within specified period and if so done, order passed by Banking Court rejecting plaint, would stand set aside; in that case, application filed by respondent-Corporation for leave to defend would stand accepted unconditionally, whereafter Banking Court would proceed to decide the suit in accordance with law.

Saqib Saleem for Appellants.

Sardar Muhammad Tariq Khan for Respondents.

Date of hearing: 19th July, 2006

2006 C L D 1340

[Lahore]

Before Mian Humid Farooq and

Umar Ata Bandial, JJ

Syed SHAHZAD HUSSAIN---Appellant

Versus

CITIBANK N.A. through Regional Collection Manager

and 2 others---Respondents

E.F.A. No. 141-C of 2000, heard on 10th July, 2006.

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

----Ss. 19 & 22---Execution of decree---Objection to---Appeal to High Court---Sale of mortgaged property was confirmed in favour of auction purchaser and sate certificate was also issued in his favour despite the fact that said auction purchaser had not deposited purchase money within stipulated period---Objection petition filed by petitioner/judgment-debtor for investigation of claims was dismissed by Banking Court ---Validity---Executing Court had no power to extend the time for doing an act which had not been determined and fixed by law---Even otherwise auction purchaser did not adhere to the terms and conditions, upon which auction was held---Sale in favour of auction purchaser, in circumstances, could not be upheld---Same stood vitiated and was set aside---Counsel for decree-holder had stated that in case judgment-debtor would pay a sum of R4.12,00,000 out of decretal amount of Rs.31,69,807.13, decree would be satisfied---Counsel for appellant/judgment-debtor had no objection to that course of action and submitted that appellant was ready to pay a sum of Rs.12,00,000 within a period of one month---Appeal was allowed accordingly and impugned order was set aside.

Messrs Maqi Chemicals Industries (Pvt.) Limited through Chief Executive and 3 others v. Habib Bank Ltd. through Manager and 2 others 2003 CLD 571 ref.

Syed Haider Ali Shah for Appellant.

Shahid Ikram Siddiqui for Respondent No.1.

Noman gureshi for Respondent No.3.

Date of hearing: 10th July, 2006.

2006 C L D 1347

[Lahore]

Before Syed Hamid Ali Shah, J

Messrs PAKISTAN INDUSTRIAL LEASING

CCRPORATION LTD.---Petitioner

Versus

Messrs SUNRISE TEXTILES LTD. through

Chief Executive---Respondent

C.O. No. 10 of 1995 and C.M. No.519 of 2004, decided on 28th April, 2006.

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

--Ss. 297, 309, 311 & 321---Companies (Court) Rules, 1947, Rr.236 & 237---Civil Procedure Code (V of 1908), O.XXT, Rr.64-73 & 89-92---Winding up of company---Liquidation proceedings---Company was ordered to be wound up and official liquidators were appointed to carry winding up proceedings under Companies Ordinance, 1984---Assets of company in Liquidation were being sold in liquidation proceedings, provisions of Companies Ordinance, 1984, would govern such sale---Companies Ordinance, I984 being a special statute, its provisions would supersede the general law---Relevant provisions of Civil Procedure Code, 1908 pertaining to Court's sales contained in Rules 64 to 73 and 89 to 92 of O.XXI, C.P.C. would have no application to the sales conducted under the provision of Companies Ordinance, 1984---Such sales were to be governed under the terms and conditions as settled and approved by Company Court---Auction conducted in the present case being on the terms and conditions as approved by the Court, sale was not liable to be set aside, merely on the pretext that the provisions of relevant rules of O.XXI, C.P.C. governing sale through Court auction, were not adhered to---Provisions of O.XXJ, Rr.64 to 73 & 89 to 92, C.P.C., had no application in the case.

Mrs. Aziz Fatima and 3 others v. Mrs. Rehana Chughtai and 3 others 2000 CLC 863; Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lah. 706; Mohib Textile Mills Ltd. v. National Bank of Pakistan, Karachi and others 2005 SCMR 1237; Specialty Traders v. Ferdous Textile Mills Limited 1987 CLC 2109; Syed Matloob Hassan v. Brook Bond Pakistan Limited Lahore 1992 SCMR 227 and Golden Oraphies (Pvt.) Ltd. and 12 others v. Director of Vigilance, Central Excise, 'Customs and Sales Tax and others 1993 SCMR 1635 ref.

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

----Ss. 297, 309, 311 & 321---Companies (Court) Rules, 1947, Rr.236 & 237---Winding up of company---Liquidation proceedings---Sale of assets of company---Decree-holder in the case, with the permission of the Court participated in bid and was declared successful bidder---Court was to ensure that highest bid would be obtained and decree holder's participation would not work to the disadvantage to the judgment-debtor---Rights of the judgment-debtors or of the company in liquidation could be protected in such circumstances by fixing a reserve price---Valuation of assets, subject matter of sale, was appraised as far back as in 1994---Such appraisal, would not depict current position of those assets---Flesh appraisal/evaluation was necessary, specially in the circumstances when decree-holder opted to participate in the bid---Sale though could not be set aside on the basis of objection of the applicant that provisions of C.P. C. as contained in Rules 64 to 73 of O.XXI, C.P.C. were not adhered to in the conduct of impugned sale, and thus same could not be confirmed/approved in terms of R.236 Companies (Court) Rules, 1947---Reserve price was necessary in circumstances to persuade the creditor to buy property at a market competitive price---Participation of the decree-holder in the auction was disadvantageous to the rights of judgment-debtor---Fresh sale was ordered to be conducted with a reserve price on the basis of fresh appraisal/evaluation of the assets by the High Court.

Mian Saadat Nisar for Petitioner.

Hamid Khan, Advocate.

Shakeel-ur-Rehman Khan Advocate/Official Liquidator.

Mian Sultan Tanvir Ahmad for PILC Ltd.

2006 CLD 1352

[Lahore]

Before Mian Hamid Farooq and

Syed Hamid Ali Shah, JJ

MUHAMMAD KHALID and 2

others---Appellants

Versus

HABIB BANK LIMITED BRANCH MURIDKEY through Manager and 3 others---Respondents

E.F. A. No. 89 of 2005, heard on 3rd April, 2006.

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

----S.19---Civil Procedure Code (V of 1908), S.64, O.XXI, RE 58 & 66---Transfer of Property Act (IV of 1882); S.41---Money decree, execution of---Attachment of property---Private sale of attached property by judgment-debtor---Objection petition by purchaser claiming protection under S.41 of Transfer of Property Act, 1882---Validity---Such private sale was void---Judgment-debtor­was not ostensible owner, but he, in capacity of real owner, had sold property contrary to express provisions of law---Provision of S.41 of Transfer of Property Act, 1882 would not attract to such case---Dismissal of objection petition by Banking Court without recording evidence was, proper and legal.

Messrs Ashrafi (Private) Ltd. through Managing Director Sharafat All Abbasi v. Abdul Majeed Bawany through L.Rs. 1991 MLD 1101 and Frasat Jabeen v. United Bank Ltd. through Manager and 2 others 2004 CLD 1586 rel.

1987 SCMR 208; Ch. Muhammad Saleem v. Fazal' Ahmad and 2 others 1997 SCMR 315; Khair Din and another v. Mst.Lenab Bibi and 2 others PLD 1973 Lah. 586 and Messrs State Associates v. Messrs Farben Industrial Development 1991 CLC 424 distinguished.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R. 13(2)(j)---Money decree; execution of---Sale of other properly of judgment-debtor instead of mortgaged property---Scope---Decree-holder not bound under law to first sell mortgaged properly and then recover decretal amount from other properties of judgment­debtor---Decree could be executed through any of the modes laid down in C.P.C.

Iftikhar Ullah Malik for Appellants.

Sheikh Aftab Omar for Respondent No. 1.

Respondents Nos.2 to 4 were proceeded ex parte vide order dated 27-7-2005.

Date of hearing: 3rd April, 2006.

2006 C L D 1364

[Lahore]

Before Nazir Ahmed Siddiqui, J

MAHMOOD POWER GENERATION

LIMITED AND MAHMOOD TEXTILE

MILLS LIMITED---Petitioners

Versus

JOINT REGISTRAR OF COMPANIES

and others---Respondents

C.O. No.2 of 2006, decided on 19th May, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss.287, 288, 92 & 93---Amalgamation of companies, scheme for---Application for sanction---Grounds were that creation of a single unit after merger would save administrative/overheads expenses, enhance profit of unit, improve its operations, . manufacturing and production and make credit arrangements smoother---Unanimous approval of merger in meetings held by members of each of the two companies---Except Joint Registrar of Companies,' no one appeared to object proposed merger---Objection of Registrar was that authorized capital of a company could be increased in terms of Ss.92 & 93 of Companies Ordinance, 1984, whereas in the present case, merger of authorized capital of one company into another authorized capital of other company would be beyond the scope of S.287 of Companies Ordinance, 1984 and same would cause loss of revenue to Securities and Exchange Commission of Pakistan---Validity---Requisite fee qua authorized capital of each company had already been paid---Admission of Registrar was that such merger was not tainted with any malice, but was being done in good faith---High Court repelled such objection and approved the proposed merger.

Malik Muhammad Rafiq Rajwana for Petitioner.

Javed Hussain Qureshi, Joint Registrar of Companies, Multan.

2006 C L D 1370

[Lahore]

Before Mian Hamid Farooq and

Sheikh Azmat Saeed, JJ

ERUM JAFARI---Appellant

Versus

KASB BANK through Manager and

10 others---Respondents

E.F.A. No. 345 of 2006, decided on 28th June, 2006.

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

----S.19(7)---Money decree, execution of---Mortgaged property, sale of-Petitioner on basis of gift deed registered in year 1994 claimed to be owner of property as judgment-debtor could not mortgage the same in year 1997---Denial of objector's claim by decree-holder-Proof-Objector claiming to be beneficiary of gift deed was under legal obligation to establish through evidence its valid execution by judgment-debtor---Objector did not produce any independent witness, but appeared as his own witness and produced gift deed---Objector did not summon stamp vendor and scribe of gift deed---Objector to prove execution of the deed neither summoned nor produced record of Sub-Registrar---Gift deed was presented and attested before Local Commissioner, but he being an important witness was not produced---Marginal witnesses of gift deed were neither summoned nor produced in evidence---Neither- judgment-debtor/donor appeared in witness box in support of gift nor his signatures were got compared by 1-land Writing Expert---Objector did not summon any one from Development Authority to prove documents relied upon by him---Objector had failed to prove execution and existence of valid and legal gift deed qua mortgaged property, thus, same was a void document---Objection petition was dismissed in circumstances.

Wajid Ali Khan v. Sheikh Murtaza Ali and 2 others 2003 SCMR 1416 rel.

(b) Islamic Law---

----Oral gift---Proof---Essential to establish offer of gift, its acceptance and delivery of possession.

(c) Gift---

----Party based its case upon gift deed, but failed to prove its execution---Effect---Such party later on could not fall back upon oral gift---Principles.

Arnir Shah v. Ziarat Gul 1998 SCMR 593; Mst. Jannat Bibi v. Sher Muhammad and others 1988 SCMR 1696; Binyameen and 3 others v. Chaudhry Hakim and another 1996 SCMR 336 and Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 rel.

(d) Registration Act (XVI of 1908)---

----Ss.17 & 28---Gift deed, registration of---Property purported to be transferred by such document not jailing within territorial jurisdiction of Sub-Registrar, who registered the sarne---Such registration would be without jurisdiction and void.

Wajid Ali Khan v. Sheikh Murtaza All and 2 others 2003 SCMR 1416 rel.

Aish Bahadur Rana for Appellant.

2006 C L D 1384

[Lahore]

Before Mian Saqib Nisar and

Muhammad Sair All, JJ

MUHAMMAD MUMTAZ and 2 others---Appellants

Versus

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION

LIMITED and another---Respondents

R.F.A. No. 603 of 2002, heard on 24th May, 2006.

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

----S. 10---Suit for recovery of loans against guarantors-Non­filing of complete statement of accounts-Effect-Plaintiff's application for submission of detailed statement of accounts was allowed with an opportunity given to guarantors to file further leave application---Leave application so moved after statement of accounts was brought on record, was declined and suit was decreed---Validity---Grievance of guarantors was that certain amounts were paid by principal debtor to plaintiff but these amounts had not been adjusted in statement of accounts hence the suit amount was not due to plaintiff whereas plaintiff asserted that he had subsequently filed another detailed statement of accounts before the Banking Court with its permission but perusal of record did not disclose any such permission---In view of the inaccuracies, inadequacies, unauthorized entries as pointed out in statement of accounts and in order to ascertain as to what was the amount due to the plaintiff from principal debtor regarding which defendants were guarantors, the leave should have been allowed and the evidence should have been recorded.

Mr. Asim Hafeez for Appellants.

Syed Salman Haider Jafari for Respondents.

Date of hearing: 24th May, 2006.

2006 C L D 1393

[Lahore]

Before Mian Hamid Farooq and Umar Ata Bandial, JJ

NATIONAL BANK OF PAKISTAN ---Appellant

Versus

Messrs OVERSEAS TRADING SERVICES

(PVT.) LTD. through Managing

Director and 5 others---Respondents

E.F.A. No. 359 of 2006, decided on 5th July, 2006.

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

----Ss.17 & 27---Execution application after satisfaction of decree---Maintainability---Costs of funds, recovery of---First execution application was dismissed for non-prosecution---Second execution petition was dismissed for the reason that bank had issued a certificate regarding recovery of decretal amount---Subsequently decree-holder filed third execution petition seeking recovery of' costs of funds, which petition was also dismissed by Executing Court---Validity---Conduct of decree-holder bank showed that it felt satisfied from the order passed in second execution petition and did not challenge the same at any point of time---Executing Court did not go beyond the decree---If any loss was caused to decree-holder, it was because of negligence, carelessness and conduct of its own functionaries, who could not point out, at the time of dismissal of second execution petition, that costs of funds were still to be recovered or/and also failed to file appeal against such order---Decree­holder did not even choose to assail such order in the instant appeal---Order passed by Executing Court was legal and did not require interference by High Court, thus the same was maintained---Appeal was dismissed in circumstances.

Muhammad Qamar-uz-Zaman for Appellant.

2006 C L D 1396

[Lahore]

Before Mian Harnid Farooq and Syed Hamid Ali Shah, JJ

HABIB BANK LIMITED ---Appellant

Versus

Messrs FIVE STAR TRAVELS and 2 others ---Respondents

E.F.A. No. 499 of 2005, decided on 13th February, 2006.

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

----Ss.22 & 24 (2)---Limitation Act (IX of 1908), Arts.181 & 183---Civil Procedure Code (V of 1908), S.48---Execution of decree---Limitation---Condonation of delay---Sufficient cause---Suit for recovery of bank loan was decreed on 27-11-1997 and execution petition was filed on 18-10-2003---Reason for filing the application with delay was non-availability of information as to the assets and properties of judgment-debtors---Executing Court dismissed the petition being barred by limitation---Plea raised by decree-holder was that time-barred execution petition could be entertained on showing sufficient cause---Validity---Banking Court passed the decree wherein decretal amount was ordered to be recovered from the assets, properties and persons of judgment-debtors---Justification for filing execution petition at a belated stage was attributed to the non-availability of information, as to the assets and properties of judgment ­debtors---Such justification was of no avail to decree-holder as Trial Court had ordered execution of decree from the persons of judgment-debtors, besides their properties and assets---Decree­-holder could have resorted to execution of decree through arrest and detention of judgment-debtors---If no application for execution of decree was made within the period of three years prescribed by Art.I81 of Limitation Act, 1908, any application made thereafter, would be barred and no benefit under S.48 C.P. C. could be availed in. such cases---High Court did not see any infirmity or illegality in the order passed by Executing Court and the same was in accordance with law, following the dictum of judgments passed by superior Courts---Appeal was dismissed in circumstances.

National Bank of Pakistan v. Mian Aziz-ud-Din and 7 others 1996 SCMR 759 rel.

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

----S.22(2)---Terns "all cases"---Applicability---Execution proceed­ings---Scope---Tenn "all cases" referred in S.22 (2) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, relates to any suit, application or other proceedings filed or transferred to Banking Court, under the Act (repealed)---Term "all cases" is not restricted to suits only and includes execution application as well.

Mehboob Khan v. Hassan Durrani PLD 1990 SC 778 rel.

Shamas Mehmood Mirza for Appellant.

2006 C L D 1400

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Mrs. SHAMIM AKHTAR and 2 others---Appellants

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and 3 others---Respondents

R.F.A. No. 477 of 2005, decided on 25th July, 2006.

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

----S.10---Civil Procedure Code (V of 1908), 0. XLI, R.22---Leave to defend suit---Three applications by three different defendants, filing of =--Passing of decree against all defendants after dismissal of application filed by first defendant---Validity---Suit could not be decreed during pendency of leave application---Before proceeding with suit, Banking Court was under legal obligation to decide pending leave applications---Second and third defendants had been condemned unheard---Decree passed during pendency of leave applications of said two defendants was nullity under law---Decree had become final against first defendant for non-filing appeal or cross-objection thereagainst-:-High Court set aside decree against second and third defendants and directed Banking Court to decide first their leave applications and then the suit.

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

----S.2(2) & O.XLI, R.22---Decree, variation in---Scope---Decree could not be varied in absence of appeal or cross-objection---Decree passed against a party would become final for non filing of appeal or cross-objection against the same.

Waqar Mushtaq Ahmad for Appellants.

Ashar Elahi for Respondent No.1.

Malik Zahid Hussain for Respondents Nos.2 to 4.

2006 C L D 1403

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ZAHID MAHMOOD through Attorney---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Manager---Respondent

F.A.O. No. 21 of 2004, heard on 26th July, 2006.

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

----S.12---Ex parte decree, setting aside of---Application for---Applicant's plea was that no notice was served upon him as he was not residing at the address given in plaint---Dismissal of application by Banking Court while relying upon summons reportedly received by applicant's nephew and proclamation made in two newspapers---Validity---Registered envelope had not returned to Banking Court either served or unserved---Nephew of applicant was not produced by arty party as no opportunity was granted for production of evidence---Such application could not be decided simply after hearing parties---Banking Court by declining to afford opportunity to parties for recording evidence had exercised its discretion in arbitrary and fanciful manner---High Court set aside impugned order and directed Banking Court to decide such application after framing issues and recording evidence of parties.

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

----S.12---Ex parte decree, setting aside of---Application for---Banking Court not obliged under law to record evidence of parties in each and every application---Discretion of Banking Court to record evidence or not, as circumstances of case required.

Ch. Muhammad Amin Javed for Appellant.

Rana Muhammad Zahid for Respondent.

Date of hearing: 26th July, 2006.

2006 C L D 1406

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs PAK RAVI DAIRY and 2 others---Appellants

Versus

TRUST LEASING CORPORATION LIMITED through Chief Executive---Respondent

R.F.A. No. 201 of 2005, heard on 27th July, 2006.

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

----Ss.9 & 10---Suit for recovery of loan amount---Application for leave to defend suit---Absence of defendant's admission regarding liability to pay amount---Effect---Banking Court while hearing leave application would be bound under law to deal with grounds raised therein by defendant---Principles.'

G. Haider Al-Ghazali for Appellants.

Naseem Mehmood for Respondent.

Date of hearing: 27th July, 2006.

2006 C L D 1409

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs LIKE SPORTS through Managing Partner and 5 others---Appellants

Versus

Messrs ALLIED BANK OF PAKISTAN LIMITED through Attorneys---Respondent

R.F.A. No. 19 of 1999, heard on 26th July, 2006.

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

1997)--

----Ss. 21, 10 & 9---Suit for recovery of bank loan---Application for leave to defend-Plaintiff-Bank filed suit for recovery of loan against defendants---Defendants filed application seeking leave to defend the suit mainly on ground that statement of accounts was not in accordance with law and the same did not reflect actual "amount due" recoverable---Trial Court while dismissing application for leave to defend, decreed the suit---Validity---Statement of accounts furnished by plaintiff-Bank in support of its claim bore unauthorized entries, inasmuch as mark-up had incorrectly been charged---Entries in computerized statement of accounts not only did not show details of amount transferred but they did not even reveal as to which account and for what purpose the amounts from account of defendant. were transferred---Defendants could not be saddled with such colossal liability on basis of sketchy, incomplete and untrustworthy statement of accounts---Statement of accounts , furnished by plaintiff was not a prima facie proof of defendant's liabilities by any stretch of imagination---Plaintiff-Bank was entitled to claim lawful outstanding amount from defendants but it could not be allowed to recover amounts from a customer at its own whims, on the basis of conjectures and which is not at all "due"---Trial Court while rejecting leave application had mainly relied upon the admission trade by defendants in application for leave to defend, that they would pay outstanding amount in instalments within two years; but Court skipped over crucial aspect that defendants had showed their willingness to pay "amount due" and "lawful amount"---Defendants were granted leave to defend suit to determine "amount due" and "lawful amount" recoverable from them---Defendants however, were to deposit half of the decretal amount in order to defend suit---Judgment and decree passed by Trial Court were set aside---Appeal was partly allowed.

Messrs C.M. Textile Mills (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587 rel.

Shahid Ikram Siddiqui for Appellants.

Mirza Muzafar Ahmad for Respondent.

Date of hearing: 26th July, 2006.

2006 C L D 1424

[Lahore]

Before ore Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs OVERSEAS BLUE STAR GHEE MILLS LIMITED through Chief Executive/Managing Director and 2 others---Appellants

Versus

UNITED BANK LIMITED through Principal Officers/Managers/General Attorneys

and 8 others---Respondents

C.M.A. No.420-C of 2006 in R.F.A. No. 639 of 2002, decided on 6th July, 2006.

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

----S.9---Civil Procedure Code (V of 1908), Ss.12 (2) & 73 (3)-Recovery of loan-Consent decree, setting aside of---Rateable distribution of assets---Government dues---Suit filed by bank was decreed in favour of bank on the basis of compromise arrived at between the parties---Customs authorities filed application under S.12 (2) C.P.C. for setting aside of the decree on the ground that earlier application under S.73 (3) C.P.C. was filed for sale of assets for recovery of state dues, which application remained undecided and the suit was decreed---Plea raised by Customs authorities was that compromise between the parties ousted the authorities, resultantly their dues remained unpaid---Validity--Grant of loan, execution of documents and existence of valid mortgage in favour of bank was neither disputed nor denied---Bank approached High Court in its original banking jurisdiction. for recovery of its dues and the Court decreed the suit according to the provisions of law---Bank neither misstated any fact nor concealed anything from the Court to obtain the decree---Parties had settled their dispute amicably, whereby the bank, instead of pursuing recovery of total decretal amount, accepted the agreed amount as full and final settlement of its claim---Decree could not be said to have been obtained through fraud and misrepresentation, merely on the ground that a third party had also a valid claim against judgment-debtors---Decree could be set aside under S.12 (2.1, C.P.C., where it was proved that decree-holder had misstated facts or concealed facts or element of fraud and misrepresentation was involved---Judgment-debtor was a company, which was not in the process of winding up but a going concern---No sale proceeds were deposited with Court to qualify the applicant to claim priority in rateable distribution of decree---Application was dismissed in circumstances.

Saiyed Abu-Miyan v. Haji Abdul Ghani and others PLD 1974 Karachi 39; Mst. Hasina Khatoon and 2 others v. United Bank Limited and 6 others" 1993 MLD 1088 and Central Cotton Mills and another v. Atlas Bot Lease Co. Limited and 2 others 1998 SCMR 2352 ref.

Izhar-ul-Haq Sheikh for Appellant.

Nemo for Respondents.

Date of hearing: 8th March, 2006.

2006 C L D 1427

[Lahore]

Before Mian Hamid Farooq and Umar Ata Bandial, JJ

SHAHID MAHMOOD---Appellant

Versus

BANK AL-FALAH LIMITED through Manager, Sargodha Road Branch, Sheikhupura---Respondent

R.F.A. No. 213 of 2006, heard on 6th July, 2006.

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

----Ss.9 & 10---Specific Relief Act (I of 1877), Ss.42 (Si 54---Declaration and injunction---Dismissal of suit as well as application for leave to defend the suit-Effect-Declaratory suit was filed by borrower and hank filed application under S. I0 of Financial Institutions (Recovery of Finances) Ordinance, 2001, seeking leave to defend the suit---Banking Court dismissed application of bank and also disposed of suit of borrower on the ground that same could not be proceeded---Validity---Approach of Banking Court in simultaneously dismissing application for leave to defend and suit was not recognized under the law and was in complete departure from the procedure prescribed under law---After dismissal of bank's leave application, suit could not have straightaway been decreed or dismissed without affording opportunity to borrower to produce evidence in support of his claim---Even after rejecting of bank's leave application in suit for declaration and permanent injunction, decree could not have been passed straightaway as the claim of declaration could not be equated with the suit founded on negotiable instruments---When bank failed to obtain leave to defend the suit, Banking Court was legally obliged to decide the suit after calling upon the borrower to produce evidence in respect of his claim---In such like cases, even if a defendant had not appeared before Banking Court or was not granted leave, the Court was not absolved of its duty to apply its judicial mind to the facts and circumstances of each case---Bank had neither filed appeal nor cross-objections against order of dismissal of leave application and seemed to be satisfied, therefore, order rejecting its leave application had attained finality---High Court declined to interfere in the order of Banking Court to the extent of dismissal of leave application but set aside the order dismissing the suit of borrower---Case was . remanded to Banking Court by the High Court for decision afresh after recording of evidence-Appeal was allowed accordingly.

Messrs Qureshi Salt and Spices Industries Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353; Gouranga Mohan Sindar v. The Controller Import and Export and 2 others PLD 1970 SC 158 and Mollah Ejahar All v. Government of East Pakistan and others PLD 1970 SC 173 ref.

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

----S.10 (11)---Recovery of loan---Decree, passing of---Principle---Banking Court in exercise of powers under S.10 (11) of Financial Institutions (Recovery of Finances) Ordinance, 2001, may pass a decree in favour of bank, where the suit is based on negotiable instruments.

Mian Sohail Ahmad for Appellant.

Ch. Abdul Rauf for Respondent.

Date of hearing: 6th July, 2006.

2006 C L D 1432

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

PUNJAB SMALL INDUSTRIES CORPORATION through Regional Director, Gujranwala---Appellant

Versus

MUSLIM COMMERCIAL BANK LTD. through

Manager and Attorney and 3 others---Respondents

E.F.A. No.338 of 2005, decided on 20th July, 2006.

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

----S.19(7)---Transfer of Property Act (IV of 1882), S.108(j)---Decree, execution of---Mortgaged property, attachment and sale of---Property under lease for 99 years---Objection by lessor that without his permission, lessee (judgment-debtor) could not mortgage leased property---'No Objection Certificate' issued by lessor in favour of lessee for mortgage---Plea of decree-­holder/Bank that on basis of such certificate, property had been validly and legally mortgaged in its favour by Lessee---Validity---Lessee was entitled and competent to mortgage its rights in property, which confined to lease-hold rights according to such certificate---Lessee could mortgage only lease hold-rights, but not the property---Lessee on basis of lease deed could not claim ownership of property, which vested with lessor---Bank, while granting finance to lessee had not minutely examined contents of such certificate, for which Bank should suffer---Such mortgage in favour of Bank was by an unauthorized person---Such property could not be sold in execution of decree against lessee---Bank in execution of its decree, could sell only lease-hold rights of lessee---Property was released from attachment in circumstances.

Ghulam Rasul and others v. Muhammad Anwar and others 1969 SCMR 254 and Mst. Nawab Bibi v. Mst. Rafiq Bano PLD 1971 SC 481 ref.

Sheharyar Sheikh for Appellant.

Sheikh Shahid Waheed for Respondent No.1.

Respondents Nos.2 to 4 were proceeded ex parte vide order dated 26-1-2006.

2006 C L D 1437

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

MUHAMMAD IMRAN SHEIKH---Appellant

Versus

HABIB BANK LTD. through Authorized Attorneys 'and another---Respondents

F.A.O. No.237 of 2006, decided on 3rd August, 2006.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 200I)--

----S.19--Transfer of Property Act (IV of 1882), S.53---Decree, execution of---Attachment of property---Objection petition by nephew of judgment-debtor claiming to be owner of attached property---Production of PT-I Form and allotment letter by objector in support of claim---Dismissal of objection petition by Banking Court on the ground that allotment letter for not being a title deed would not confer upon objector any right in property---Subsequent registration of sale-deed in favour of objector by owner of property---Validity---Impugned order had rightly been passed as sale-deed was not in existence at the time of its passing---Had sale-deed been produced before Banking Court. result would have been dferent---Objector was neither mortgagor nor guarantor nor judgment-debtor ---Attached property was not furnished as security for repayment of finance---Judgment-debtor was neither owner nor had any nexus with attached property---Parties to such sale-deed were not judgment-debtors---Objectors case would not fall within scope of 'fraudulent transfer" as envisaged under S.53 of Transfer of Property Act. 1882---Such property which was attached under misconception and dis­information, was not liable to be attached---High Court accepted objection petition and released property from attachment.

Asghar Hameed Bhutta for Appellant.

Muhammad Shujah Baba for Respondents.

Date of hearing: 20th July, 2006.

2006 C L D 1451

[Lahore]

Before Mian Hamid Farooq and Umar Ata Bandial, JJ

NOOR BADSHAH---Appellant

Versus

HOUSE BUILDING FINANCE CORPORATION through District Manager and another---Respondents

E.F.A. No.97 of 2003, heard on 4th July, 2006.

Civil Procedure Code (V of 1908)-

----O. XXI, Rr. 66 & 90---Auction of immovable property---Reserve price---Court auctioneer---Powers---Sale of property by auction was confirmed on the price less than the reserve price---Judgment-debtor filed objection and sought setting aside of sale on the ground that the price of property was more than what was reserved by the Executing Court but Court auctioneer sold the same against the price less than the reserve price---Objection petition was dismissed by Executing Court and sale was confirmed in favour of auction purchaser---Validity---Bid had to start from the reserve price and Court auctioneer had no authority either to reduce the reserve price or to accept any bid below the reserve price, which had the sanctity of the Court, who fixed the reserve price---Purpose of fixing reserve price in proclamation was that the Court had to safeguard the rights of judgment-debtor and the bid was to start from that figure---Court auctioneer committed material irregularity while conducting the sale and accepting bid below the reserve price, inasmuch as the order of the Court fixing the reserve price was completely ignored---Sale was declared illegal by the High Court on account of such material irregularity, and was set aside---Such a sale, in normal circumstances, after its confirmation was not set aside but if sale itself became invalid, its confirmation would also be invalid---Objection petition of judgment-debtor was remanded to Executing Court for decision afresh---Appeal was allowed accordingly.

Brig. (Recd.) Mazhar-ul-Haq and another v. M/s. Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lah. 706; Mrs. Aziz Fatima and 3 others v. Mrs. Rehana Chughtai and 3 others 2000 CLC 863; Mrs. Shahida Saleem and another v. Habib Credit and Exchange Bank Limited and 4 others 2001 CLC 126 and Afzal Maqsood Butt v. Banking Court No. 2, Lahore and 8 others 2005 CLD 967 ref.

Javaid Jalal for Appellant.

Ch. Shafique ur Rehman for Respondent No.1.

Tariq Mehmood Mann for Respondent No.2.

Date of hearing: 4th July, 2006.

2006 C L D 1467

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ARSHAD CHAUDHRY---Appellant

Versus

JUDGE BANKING COURT NO.I, LAHORE and 5 others---Respondents

F.A.O. No.290 of 2005, decided on 20th July, 2006.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.84 & 85---Execution of decree---Setting aside of sale by auction---Non ­deposit of 25% auction price on the same day---Effect---Extending time to deposit auction price---Executing Court, jurisdiction of---Appellant being the highest bidder deposited 25% of auction price six days after auction and remaining 3/4th was deposited within nine days from the auction---Executing Court declined to confirm the auction in favour of appellant, as he did not deposit 25% of auction price on the same day---Plea raised by appellant was that the full amount was deposited within fifteen days as per the requirement of O.XXI, R.85, C.P.C.---Validity---Payment made after six days could not be considered and taken to be immediate payment, as envisaged under O.XXI, R.84, C.P.C.---Such provisions of law was mandatory, as penal consequence of its non-compliance had itself been provided under that provision of law, which stated that if purchaser had committed default in immediate payment of 25% of the sale price, the property would forthwith be resold---Initial payment of 25% having not been made within the period prescribed under O.XXI, R.84, C.P.C., even Executing Court had no power to extend the time for doing an act, which was determined and fixed by law---Order passed by Executing Court was in accordance with law and no interference was called for by High Court---Appellant could not point out arty grave legal infirmity in the order passed by Executing Court, so as to warrant dislodging the same---High Court maintaining the impugned order, dismissed the appeal.

Messrs S.P.R. L. Rehman Brothers and another v. Judge Banking Court No.II, Lahore and another 2000 MLD 1957 and Messrs Maqi Chemicals Industries (Pvt.) Ltd. through Chief Executive and 3 others v. Habib Bank Ltd. through Manager and 2 others 2003 CLD 571 rel.

M. Habib Ullah for Appellant.

Sh. Shahid Waheed for Respondents.

2006 C L D 1486

[Lahore]

Before Minn Hamid Farooq and Umar Ata Bandial, JJ

MUHAMMAD NAVEED HUSSAIN---Appellant

Versus

SMALL BUSINESS FINANCE CORPORATION/SME BANK LTD. and 2 others---Respondents

F.A.O. No.229 of 2006, decided on 7th August, 2006.

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

----S.9---Civil Procedure Code (V of 1908). O.IX. Rr.3, 4 & 7---Pendency of defendant's application for setting aside order of ex parte proceedings---Proceedings fixed for filing reply to such application by plaintiff----Dismissal of suit on such date for non-appearance of arty party---Dismissal of plaintiffs application for restoration of suit---Validity--Suit was not fixed for "hearing" on such date, thus, same could not be dismissed for non- prosecution---Banking Court on such date could dismiss defendant's application for non prosecution, but could not dismiss suit' which was not fixed for "hearing"---High Court set aside order of dismissal of suit and accepted application for restoration of suit, resultantly defendant's application would be deemed to be pending before Banking Court.

Qaim Ali Khan v. Muhammad Siddique 1987 SCMR 733 fol.

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

----O.IX, R.9---Dismissal of suit for non-prosecution for second time---Application for an order to set dismissal aside---Essential considerations---Previous dismissal and restoration of suit would be no ground for rejecting subsequent application for restoration of suit, if case for restoration of suit was made out under law.

Seth Shivrattan G. Mohatta and another v. Messrs Muhammadi Steamship Co. Ltd. PLD 1965 SC 669; Babu Jan Muhammad and others v. Dr. Abdul Ghafoor and others PLD 1966 SC 461 and National Bank of Pakistan v. Champhar (Pakistan) Ltd. and 2 others 1988 MLD 984 fol.

Tafazal H. Rizvi for Appellant.

Rana Mehmood Ahmed Khan for Respondents Nos.1 and 2.

Syed Samar Abbas, Chief Manager, Allied Bank, Respondent No.3.

2006 CLD 1502

[Lahore]

Before Maulvi Anwarul Haq and Muhammad Jehangir Arshad, JJ

HUSSAN ARA and 8 others---Appellants

Versus

BANK OF PUNJAB through Manager---Respondent

F.A.O. No. 155 of 2005, heard on 28th June, 2006.

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

----S.9 (5)---Civil Procedure Code (V of 1908), O.IX, R.13. Form-4 of Appendix-B---Suit for recovery of bank loan---Setting aside of ex parte decree---Service on defendant. mode of--Non-compliance of mandatory provisions of S.9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001-Plaintiff-Bank filed suit for recovery of loan on 17-6-2004 which was registered on same day and issuance of summons in Form-4 of Appendix-B, C.P.C. along with proclamations in newspapers were ordered for service of defendants by Banking Court, for 27-7-2004---Defendants having failed to turn up on date fixed for hearing. Banking Court decreed the suit on 23-8-2004---Defendants moved application before Trial Court on 26-10-2004 for setting aside ex parte decree but the same was dismissed on ground of limitation---Defendant contended that ex parte decree was passed against them without fulfilling the requirements of S.9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, hence the same was liable to be set aside---Validity---Held ex parte decree was passed by Trial Court without resorting to all modes of service prescribed under S.9(5) of the Ordinance---No genuine effort was made by the Court for effecting service on defendants as prescribed by relevant law---Ex parte decree which was passed in violation of principles of natural justice as well as mandatory provisions of S.9(5) of the Ordinance was a void document liable to be set aside even without recording evidence---Application filed by defendants for setting aside of ex parte decree was not to be dismissed on ground of being barred by limitation as no limitation was prescribed for void decree, document or order--Allowing appeal ex parte decree was set aside by the High Court.

PLD 2002 SC 101 and PLJ 2005 SC 709 rel.

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

----S. 9(5)---Practice and procedure---High Court while deprecating procedure adopted by Banking Court, observed that instead of passing order in their own handwriting, Banking Courts used stereotype pro forma for summoning defendants which did not contain all modes for effecting service of defendants as prescribed under S.9(5) of Financial Institutions (Recovery of Finances) Ordinance 2001---Banking Courts were directed by High Court to record orders regarding summoning of defendants in their own handwriting and ensure that all modes as prescribed in S.9(5) of the Ordinance were adopted---Unless all modes of service as prescribed under S.9(5) of the Ordinance were adopted, no valid service was to be deemed to have been effected on defendants---High Court further directed that it was mandatory requirement of S.9(5) of the Ordinance that publication of proclamation was to be made in newspapers with wide circulation within its territorial limits instead of publishing same in unknown newspapers or those with limited publication (Circulation)---Publication of proclamation in unknown newspapers or in those with limited circulation amounted to keep defendants in ignorance about institution of suit---Ex parte decree passed on basis of such type of proclamation was not to be graced with legal sanctity.

Ch. Manzoor-ul--Haq for Appellants.

Muhammad Shakil Chaudhry for Respondent.

Date of hearing: 28th June, 2006.

2006 C L D 1508

[Lahore]

Before Mian Hamid Farooq and Sh. Azmat Saeed, JJ

Mst. MUNAWAR KHANUM ---Appellant

Versus

Messrs HABIB BANK LIMITED and 3 others---Respondents

E.F.A. No. 346 of 2006, decided on 28th June, 2006.

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

---Ss.17 & 19 (2)---Civil Procedure Code (V of 1908). O.XXI. R.66---Execution of decree---Sale of mortgaged property or hypothecated goods---Executing Court, discretion of---Appellant was impleaded in the suit being guarantor and decree was also passed against her---Grievance of appellant was that for execution of decree hypothecated goods should be sold at the first instance---Validity---Held, it was left to the discretion of Executing Court to execute a decree through any manner or mode prescribed under Civil Procedure Code, 1908, or any provision of law or any manner deemed fit by it---Judgment-debtor was in no way, in a position to suggest a decree-holder to execute the decree in a particular manner and according to her wishes, rather it was the discretion of the decree-holder bank to get the decree executed through any of the modes of execution provided under the law---Appellant who was one of the judgment-debtors, could not be allowed to plead that firstly hypothecated goods he sold instead of the mortgaged property moreso when the stance of the bank was that no list of hypothecated goods was provided to the decree-holder--Order passed by Executing Court did not suffer from illegality and High Court declined to interfere in the same, which order was maintained-Appeal was dismissed in circumstances.

Sheikh Aftab Umar for Appellant.

2006 C L D 1521

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

Mirza MUNAWAR BAIG---Appellant

Versus

HABIB CREDIT AND EXCHANGE BANK and 6 others---Respondents

E.F.A. No. 145 of 2003, heard on 6th September, 2006.

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

-----S.47---Decree not challenged in appeal---Objection regarding validity of decree raised before Executing Court---Not open to Executing Court to go behind decree.

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

----Ss.19 & 22--Appeal against order of Executing Court---Plea raised before High Court not raised by appellant before Executing Court---High Court dismissed appeal in circumstances.

Muhammad Yaqoob Khan and Faisal Yaqoob Khan for Appellant.

Muhammad Saeed Ansari for Respondents Nos.3 and 7.

Ch. Abdul Rauf for Respondent/Bank.

Ghulam Sabir Khan Kaifi for auction-purchaser.

Date of hearing: 6th September, 2006.

2006 C L D 1534

[Lahore]

Before Syed Hamid Ali Shah, J

MUHAMMAD RAFIQUE and others---Petitioners

Versus

MANAGING DIRECTOR, BANK OF PUNJAB and others---Respondents

Writ Petition No. 18112 of 2005, decided on 6th June, 2006.

Banking Companies Ordinance (LVII of 1962)--

----Part-IV-A---Penal Code (XLV of 1860), Ss.409, 420, 463, 468 & 471---Prevention of Corruption Act (II of 1947), S.5(2)---Constitution of Pakistan (1973), Art. 199---Constitutional jurisdiction---Scope---Petitioner had called in question act of omission on the part of respondent by not performing his obligation in refunding 'Term Deposit Receipt' for a sum of Rs.20,00,000-Question of genuineness of said 'Term Deposit Receipt' was a question of fact, which could not be ascertained unless an inquiry in that respect was conducted---Petitioner had remedy of either filing a suit under the relevant law or a complaint before the Banking Mohtasib---Alternate remedy was available to petitioner to approach either the Court of competent jurisdiction or Banking Mohtasib under the provisions of Part IV-A of the Banking Companies Ordinance, 1962---Constitutional jurisdiction being an extraordinary jurisdiction, could be invoked only to meet extraordinary situation---Such jurisdiction was never meant to be treated as adequate or alternate remedy provided by law---Constitutional petition was not competent in view of availability of alternate remedy.

Ch. Muhammad Ismail v. Fazal Zada, Civil Judge, Lahore PLD 1996 SC 246; Mst. Kaniz Fatima through L.Rs. v. Muhammad Salim and 27 others 2001 SCMR 1493; Umar Hayat Khan v. Inayatullah Butt and others 1994 SCMR 572; Col. Shah Sadiq v. Muhammad Ashiq and others 2006 SCMR 276 and Mahmud Khan and another v. Government of the Punjab through District Collector, Lahore 2005 YLR 1 133 ref.

Babar A Khilji for Petitioners.

Abdul Hameed Chauhan for Respondents.

2006 C L D 1539

[Lahore]

Before Mian Saqib Nisar and Syed Asghar Haider, JJ

COMMISISONER OF INCOME TAX/WEALTH TAX COMPANIES ZONE, FAISALABAD---Appellant

Versus

Messrs RAFHAN MAIZ PRODUCT COMPANY LTD., FAISALABAD---Respondent

I.T.A. No.479 of 2000, decided on 4th September, 2006.

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

---S.2(ab) & (c)---Transfer of Property Act (IV of 1882), S.54---Income Tax Ordinance (XXXI of 1979), S.50(4)---Supply of goods through lease and buy-back arrangement---Taxability---Such transaction would not amount to sale, thus, not taxable---Section 54 of Transfer of Property Act, 1882 not applicable to lease agreement of goods made by Modaraba Companies to its client:

(b) Income Tax Ordinance (XXXI of 1979)---

----S.80(c)---Transaction on account of buy-back and lease arrangement would not attract provisions of S.80(c) of Income Tax Ordinance, 1979.

Mian Yusuf Umar for Appellant.

2006 C L D 1543

[Lahore]

Before Umar Ata Bandial, J

CITIBANK N.A. through Manager and duly authorized Attorney of the Bank---Petitioner

Versus

JUDGE BANKING COURT-III, LAHORE and another---Respondents

Writ Petition No. 1457 of 2000, heard on 18th July, 2006.

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

----S.5---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of' 1997), S.7--Civil Procedure Code (V of 1908), O.IX, R.8---Constitution of Pakistan (1973), Art.199---Constitutional petition---Maintainability---Non-avail­ability of alternate remedy---Dismissal of suit for non­-prosecution-Restoration-Date of hearing---Suit filed by bank was dismissed for non-prosecution by Banking Court and application for restoration of the suit was also dismissed---Contention of the bank was that the date on which the suit was dismissed was not the date fixed for hearing for any specific purpose---Validity---Proceedings before Banking Court were not fixed for hearing for any specific purpose as borrower had been seeking adjournments---Date on which suit was dismissed was not a date of hearing within the contemplation of law---Except on a date of hearing, action to dismiss a suit in default could not be taken against plaintiff---Order passed by Banking Court was misdirected as it failed to apply the relevant law and proceeded on point that was extraneous to the question determined by it---Judicial duty to exercise' discretion reasonably. fairly and relevantly was breached---Prima facie, appeal against the order of dismissal of application for restoration for suit dismissed for non-prosecution was not competent under Banking Tribunals Ordinance, 1984 and Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---As no other remedy was available, therefore, constitutional petition filed by bank was maintainable---Delay and avoidance tactics by borrower could not operate to deprive bank of a determination of present petition including question of relief by adjudication on merits---Order passed by Banking Court was set aside and case was remanded to Banking Court for decision on merits after hearing the parties in accordance with statute and rules of natural justice---Petition was allowed accordingly.

Abdul Ghani v. Muhammad Shaft 1990 CLC 1473 and Abdul Karim and 2 others v. Rehm Ali 1991 MLD 63 rel.

(b) Laches---

----Question of laches is to be dealt with on, the touchstone of natural justice.

Pakistan Post Office v. Settlement Commissioner 1987 SCMR 1119 rel.

Ashar Elahi for Petitioner.

Nemo for Respondents.

Date of hearing: 18th July, 2006.

2006 C L D 1546

[Lahore]

Before Mian Saqib Nisar and Syed Asghar Haider, JJ

Messrs MUZAMIL BROTHERS and another---Appellants

Versus

SAUDI-PAK COMMERCIAL BANK LIMITED through Manager---Respondent

R.F.A. No.431 of 2003, heard on 14th September, 2006.

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

----Ss. 9 & 10--Suit for recovery of loan by Bank---Leave to defend suit, application for-Non-filing of documents and statement of account along with plaint in its support, but filing them along with reply to leave application---Absence of proof in support of authority of person, who filed suit on behalf of plaintiff-Bank--Neither plaint nor was there any proof on record that such person was either Branch Manager or Principal Officer of the Bank---Defendant was entitled to leave to defend suit on such grounds.

A.M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1966 (W.P.) Lah. 1 ref.

Iftikhar Ullah Malik for Appellants.

Sheikh Zahoor Kausar for Respondent.

Date of hearing: 14th September, 2006.

2006 C L D 1553

[Lahore]

Before Umar Ala Bandial and Sh. Azmat Saeed, JJ

ZAEEM A. MALIK through Attorney---Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager and 2 others---Respondents

F.A. O. No. 285 of 2003, decided on 12th September, 2006.

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

----Ss.2(c) & 9---Civil Procedure Code (V of 1908), S.9 & O.VII, R.10---Suit for declaration---Return of plaint- -Plaintiff sought declaration to the effect that his shares lying with Stock Exchange and handed over by Stock Exchange to Bank without his permission and knowledge as security in respect of alleged finance advanced to him, were liable to be returned to him as free from encumbrance---Validity---Plaintiff had denied to have been extended any finance by Bank nor did he stand as a surety or indemnifier for such finance---Contents of plaint showing denial of plaintiff to be a customer---Plaint was returned to plaintiff for its presentation before Court of competent jurisdiction.

Iftikhar Ullah Malik for Appellant.

Sabahat Rizvi for Respondent No. 1.

Abid Aziz Sheikh for Respondent No.3.

2006 C L D 1568

[Lahore]

Before Muhammad Sayeed Akhtar and Muhammad Jehangir Arshad, JJ

Mian AMIR SALEEM---Appellant

Versus

STANDARD CHARTERED GRINDLAYS BANK (FORMER ANZ GRINDLAYS BANK) through Manager and another---Respondents

R.F.A. No. 439 of 2005, decided on 27th March, 2006.

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

----S. 10---Suit for rendition of accounts and recovery of damages---Dismissal of suit without deciding application for leave to defend the suit---Plaintiff/appellant filed suit for rendition of accounts and for recovery of damages against defendant-Bank/respondent---Defendant-Bank filed application for leave to appear and defend the suit and plaintiff filed his reply to the same---Banking Court without deciding application for leave to defend the suit, dismissed the suit---Validity---Without first deciding application for leave to defend the suit on its own merits, Banking Court was not to embark upon deciding the suit and dismiss the same---Dismissal of suit by Banking Court was violative of provision of S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Judgment passed by Banking Court was set aside---Appeal was allowed.

Mian Muhammad Rafi-ud-Din for Appellant.

Malik M. Rashid Awan for Respondents.

2006 C L D 1571

[Lahore]

Before Mian Saqib Nisar and Syed Asghar Haider, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Chief Manager, I.D.B.P.---Appellant

Versus

Messrs MADNI RICE MILLS through Proprietor and 4 others---Respondents

R.F.A. No. 449 of 2003, heard on 18th September, 2006.

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

S. 2(c)---Specific Relief Act (I of 1877), S.12---Suit for recovery of Bank loan---"Indemnifier" and "customer"---Liability of---Scope---Plaintiff/respondent filed suit for specific performance against the defendant (one of the five defendants) regarding property mortgaged with another Bank---On consenting statement of the defendant suit was decreed in favour of plaintiff subject to payment by the latter of loan amount due to Bank---Bank which was defendant in earlier suit, subsequently filed suit for recovery of loan against the said defendant and plaintiff (in earlier suit) who was "indemnifier" of loan amount---Banking Court decreed the suit to the extent of the defendant but as to plaintiff (in earlier suit), the Court deleted his name from array of defendants as not being 'customer' of the plaintiff-Bank-Plaintiff-Bank contended that as per definition of 'customer' given in Financial Institutions (Recovery of Finances) Ordinance, 2001, an 'indemnifier' was also a customer and, therefore, deletion of name of plaintiff (in earlier suit) was illegally ordered by Banking Court---Validity---Deletion of name of plaintiff (in earlier suit) by Banking Court was not legally tenable in view of definition of word 'customer' given in Financial Institutions (Recovery of Finances) Ordinance, 2001---Appeal filed by plaintiff-Bank was allowed and case was remanded to Banking Court.

Sardar Mashkoor Ahmed for Appellant.

Nemo for Respondents.

Date of hearing: 18th September, 2006.

2006 C L D 1574

[Lahore]

Before Mian Hamid Farooq and Syed Sakhi Hussain Bokhari, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through duly authorized person Mr. Zahid Waheed Khan---Appellant

Versus

Messrs LUCK FRUIT PRODUCTS and 6 others---Respondents

F.A. O. No. 319 of 2005, decided on 6th September, 2006.

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

----S. 15(6)---Suit for recovery of Bank loan---Execution proceedings---Judgment-debtor's failure to pay decretal amount---Attachment of properties other than those mortgaged by judgment-debtors---Scope---Suit filed by plaintiff-Bank/appellant's (decree-holder) was decreed against defendants/respondents and during execution proceedings, executing Court attached properties mortgaged by defendants/judgment-debtors--Plaintiff/decree-holder, later on, filed application for attachment of property of judgment-debtors which was not mortgaged with plaintiff-Bank---Executing Court attached the property and its possession was delivered to plaintiff/decree-holder---Defendants/judgment-debtors filed application for restoration of possession of property on ground that property in question had never been mortgaged; that decree could be satisfied after sale of property mortgaged and attached by judgment-debtors; that judgment-debtors gave undertaking not to sell property in question and to settle accounts---Executing Court accepted application filed by judgment-debtors---Validity---Under S.15(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001, decree-holder could only get possession of property which was mortgaged in his favour by judgment­debtor---Property in question was not mortgaged with plaintiff therefore, there was no legal justification for delivering possession of property to decree-holder/plaintiff---Judgment-­debtors/defendants had already mortgaged their property and the same had been attached during execution proceedings, therefore, it was proper to sell mortgaged property and recover decretal amount---Appeal calling into question the order passed by executing Court was dismissed.

Ashar Elahi for Appellant.

Shahid Ikram Siddiqui for Respondents.

2006 C L D 1587

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

HEALTHCO SURGICAL SUPPLIES and 4 others---Appellants

Versus

STANDARD CHARTERED BANK (FORMERLY CHARTERED GRINDLAYS BANK, ANZ GRINDLAYS BANK)---Respondent

R.F.A. No. 447 and C.M. No.2 of 2005, decided on 11th September, 2006.

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

----S. 9(3)---Suit for recovery of bank loan---Leave to defend suit--Non-compliance of mandatory requirements of S.9(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Effect---Plaintiff-Bank/respondent filed suit for recovery of loan amount against defendants/appellants who filed application for leave to defend the suit which was dismissed by Banking Court---Defendants contended that plaint did not fulfil the mandatory requirements of S.9(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001, hence the same was liable to be dismissed and that plaintiff-Bank illegally clubbed two finances and charged exorbitant and illegal mark-up thereupon---Validity---Plaintiff did not comply with mandatory provisions of S.9(3) of the Ordinance, but this fact was not adjudicated upon by Banking Court---Objections regarding amount due and amount paid by defendants were also not adverted to---Contention of defendants that letters written by way of settlement were neither admissions nor admissible in evidence hence the same could not be relied upon, had not been considered by Banking Court---Plausible defence had been set up by defendants with respect of part of claim which was disputed, consequently defendants were entitled to grant of leave to defend the suit in respect thereof---Defendants were granted leave to defend suit subject to deposit of admitted liability of a certain amount with Trial Court---Case was remanded.

Mian Muhammad Rafi-ud-Din for Appellants.

Malik Rashid Ahmad Awan for Respondent-Bank.

2006 C L D 1590

[Lahore]

Before Syed Zahid Hussain and Syed Asghar Haider, JJ

Messrs WORLD CLOTHING COMPANY through Managing Partner and 2 others---Appellants

Versus

HABIB BANK LIMITED through General- Attorneys/Manager-Respondent

R.F.A. No.268 and C.M. No.1-C of 2006, decided on 25th September, 2006.

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

----S. 22---Limitation Act (IX of 1908), Art.5---Suit for recovery of Bank loans---Limitation---Application for condonation of delay---Doubtful date of delivery of copy---Effect---Plaintiffs/appellants filed appeal against judgment and decree passed by Banking Court, along with application under S.5 of Limitation Act, 1908, for condonation of delay---Defendant/respondent urged for dismissal of appeal as being barred by time---Validity---Copy was applied for on 11-3-2006 which was prepared on 21-3-2006--Against Column of date of delivery, date 21-3-2006 was mentioned which was then scored out and overwritten as 9-5-2006 and such fact made date of delivery doubtful---Plaintiffs failed to produce slip/chit issued by copying agency which ordinarily bore the expected date of delivery of copy applied for---Bare assertion made in application which was not even supported by affidavit of counsel who applied or received copy, was not to be considered sufficient---Appeal was prima facie barred by time and delay in filing of appeal was not satisfactorily explained---Application for condonation of delay and appeal were dismissed.

Shabbir Ahmed Khan for Appellant.

Mian Nasir Mahmood for Respondent.

2006 C L D 1592

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

NAEEMULLAH MALIK---Appellant

Versus

UNITED BANK LIMITED and 2 others ---Respondents

R.F.A. No. 170 of 2003, heard on 3rd April, 2006.

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

---S.3(2)---Civil S.3(2)---Civil Procedure Code (V of 1908), Ss. 13, 20 & 44-A---Limitation Act (IX of 1908), Art.117---Suit for recovery of Bank loan---Judgment passed by foreign Courts---Execution in Pakistan---Scope---Suit based on foreign judgment as a cause of action and suit' based on original cause of action---Maintainability---Res judicata, principles of-:-Applicability-Plaintiff-Bank's Dubai Branch extended financial facility to defendant's company and following default in payment, the Bank filed recovery proceedings against defendants vide -a suit---Courts at Dubai decreed suit against defendants in absentia---On defendant's failure to satisfy judgments issued by foreign Court, the plaintiff-Bank filed recovery suit against defendants before the Banking Court in Pakistan---Banking Court decreed the suit against defendants---Defendants contended that foreign judgments constituted res judicata and excluded determination of original cause of action by Banking Court in Pakistan; that claim on foreign judgments was to be unsuccessful because statutory tests of recognition and enforceability of foreign judgment were not applied by judgment passed by Court in Pakistan; that claim based on original cause of action was not available because it went beyond the scope of suit which was squarely based on foreign judgments and that suit based on foreign cause of action three aspects namely jurisdiction over subject-matter and over the parties and territorial jurisdiction were to be taken into consideration---Plaintiff-Bank argued that a suit based on a foreign cause of action was maintainable before Courts in Pakistan under provisions of S.20, C.P.C.---Validity---On obtaining a foreign judgment three courses were open to decree-holder, that is, he could execute decree through proceedings under S.44-A of C.P.C. without filing a suit, or, if judgment was after fulfilling conditions of S.13, C.P.C., he could file suit on the basis of foreign judgment keeping in view the provisions of Art.117 of Limitation Act, 1908; or he could file a suit on original cause of action as it did not come to an end after passing of foreign judgment if same was recorded in accordance with provisions of S.13, C.P.C.---In suit based on foreign cause of action Trial Court was not to deal with question of jurisdiction in summary manner rather three aspects of jurisdiction, that is, territorial jurisdiction, jurisdiction over subject-matter and over the parties were to be taken into Consideration, and record requisite evidence---Objection of jurisdiction was a substantial question of law, determination of which depended upon ascertainment of certain jurisdictional facts---For ascertainment of such facts, recording of requisite evidence was not to be ruled out---Suit filed by Plaintiff-Bank in Pakistan revolved around two types of actions; firstly, the foreign judgment as a cause of action and secondly, the original cause of action---Scope and frame of suit, precluded Bank from advancing second type of action---Quantum and calculation of relief prayed and plea on point of limitation showed that suit as a whole had substance and effect only with reference to foreign judgments---Bank was to first show whether it could maintain its claim on original cause of action---For action on the basis of foreign judgment, the test of recognition and enforceability of foreign judgment mentioned in S.13 of C.P.C. needed to be applied and satisfied before a decree on foreign judgment was to be passed---Foreign judgment when given in absentia then it was to require its scrutiny on the touchstone of rules of natural justice as applied in Pakistan---Case was to be decided afresh after taking into consideration different facts of jurisdictional objections raised by appellant. ?

Emirates Bank International Ltd. v. Messrs Usman Brothers and 9 others 1990 MLD 1779; Nusrat Mehdi Chaudhri Y. Habib Bank Limited and another R.F.A. No.303 of 2003 and National Bank of Pakistan and 4 others v. Gammon Pakistan Limited PLD 1990 Kar. 209 rel.

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

----Ss. 13 & 44-A---Limitation Act (IX of 1908), Art.117---Suit for recovery of Bank loan---Judgment passed by foreign Courts---Execution in Pakistan---Scope---Res judicata, principles of---Applicability---Limitation---Upon obtaining a foreign judgment three courses were open to decree-holder, that is, that he could obtain execution of foreign judgment by proceeding under S.44-A of C.P.C., if the country from where decree had been obtained was United Kingdom or any reciprocating territory and in that case decree-holder could obtain execution of that decree from District Court of concerned District in Pakistan and he need not file a suit; that decree-holder could file a suit in Pakistan on the basis of foreign judgment treating it as cause of action; and in that case if conditions prescribed in S.13, C.P.C. were fulfilled, the judgment would be conclusive between the parties, otherwise it was 'res judicata' between them and as such Courts, in Pakistan were bound by its findings, such suit, however, was to be filed within a period of six years from the date of judgment as provided under Art.117 of Limitation Act, 1908 and that third course open to decree-holder was that he could file a suit on original cause of action as it did not come to an end after passing of foreign judgment but remained intact until and unless that foreign judgment was satisfied---Conditions mentioned in S.13, C.P.C. if were not satisfied, .then foreign decree would be open to collateral attack in Pakistan.?

Emirates Bank International Ltd. v. Messrs Usman Brothers and 9 others 1990 MLD 1779 rel.

Abid Aziz Sh. for Appellant.

Ali Zafar Syed for Respondents.

Date of hearing: 3rd April, 2006.

2006 C L D 877

[Peshawar]

Before Talaat Qayum Qureshi and Muhammad Qaim Jan Khan, JJ

SHAHAB SAQIB---Appellant

Versus

UNITED BANK LIMITED---Respondent

F.A.B. No.38 of 2005 with C.M. No.120 of 2005, decided on 7th April, 2005.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 200I)-

----Ss. 9, 10 & 22---Suit for recovery of loan---Leave to defend suit---Appeal---Plaintiff/Bank through convincing and reliable evidence proved that finance facility was availed by defendant under the Prime Minister Transport Scheme and he failed to repay the amount of finance facility---Vehicle in question was admittedly impounded by plaintiff and was sold/auctioned by it and amount thereof was adjusted towards outstanding amount of finance facility---Appeal was accepted to the extent that plaintiff-Bank was not entitled to mark-up till passing of the decree---After deducting mark-up of said period, remaining amount would stand decreed against defendant in favour of plaintiff.

Muhammad Qasim Khan Khattak for Appellant.

Aamir Javed for Respondent.

2006 C L D 1201

[Peshawar]

Before Salim Khan and Hamid Farooq Durrani, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Appellant

Versus

S.I.E. and another---Respondents

F.A.B. No. 12 of 2005, decided on 23rd June, 2006.

Banking Companies (Recovery of Loans, Advances, Credits and Finances)

Ordinance (XXV of 1992)---

----Ss.9 & 16---Civil Procedure Code (V of 1908), O.XXI, R.66---Demand of claims of arrears from decree-holder---Appeal to High Court---Instant appeal had been filed against order of Banking Court whereby observations regarding recovery of charges/claims of arrears had been given to the effect that respondent/industrial estate could demand claims of arrears from appellant/bank decree-holder---Respondent Industrial Estate, could have a right to claim arrears against judgment-debtor and could have a right to recover same either from the person or property of judgment-debtor in accordance with terms and conditions of lease deed/agreement deed between respective parties, but respondent in the case had not specifically mentioned amount of arrears and had not shown chargeability of said amount against property in question---Without mentioning any encumbrance to which property was liable and without mentioning the amount of such encumbrance and without adding it to the amount already outstanding and making a total amount for which sale was ordered, in the proclamation and consequent warrant of auction, neither the decree-holder nor the auction purchaser, were to be taxed for the purpose of such encumbrance and its amount---Encumbrance was not brought to the notice of decree-holder or to the notice of auction purchaser before or at the time of auction---Observation of execution Court regarding claim of respondent from the appellant, was not based on solid ground---Omissions by the Court, could not prejudice the parties and, appellant could not be declared liable to pay charges/ arrears out of amount of auction money, specially in the circumstances that further huge amount of decree-holder, was still outstanding against judgment-debtor---Observations regarding the rights of respondent to demand claims of arrears were set aside, in circumstances.

Fazal-e-Gul Khan for Appellant.

Iftikhar Khan Tanoli for Respondents.

Date of hearing: 23rd June, 2006.

2006 C L D 18

[Quetta]

Before Raja Fayyaz Ahmed, C.J. and Akhtar Zaman Malghani, J

Sh. ABDUL SATTAR LASI --- Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Law, Justice and Parliamentary Affairs, Islamabad and 6 others---Respondents

Constitutional Petition No.321 of 2003, decided on 27th July, 2005.

(a) Constitution of Pakistan (1973)---

----Art. 199---Civil Procedure Code (V of 1908), S.20---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 10 & 15---Constitutional petition ---Vires of a Federal Law applicable to whole Pakistan---Territorial jurisdiction of High Court, where neither aggrieved person or respondent resided nor property situated---Extent---Provision of S.20, C.P.C. could not be pressed into service or read in Art. 199 of the Constitution---Constitutional jurisdiction of a High Court not contingent upon residence of an aggrieved person---Writ could be issued against any person/authority/functionary of the State performing function irrespective of its nature relating to the affairs of Federation, Province or Local Authority within territorial jurisdiction of such High Court---Principles.

Under Article 199 of the Constitution, writ can be issued against any person, who is performing in the Province any function irrespective of its nature relating to the affairs of the Federation, Province or a Local Authority within the territorial jurisdiction of a High Court. In the present case, petitioner had challenged the vires of section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 i.e. the law equally applicable to the Province of Balochistan, which is the main relief claimed' in the constitutional petition, whereas the other relief for declaring public auction notices as illegal, void or setting aside auction proceedings carried out in the exercise of the powers conferred under section 15(4), are ancillary to the main relief, as such, Balochistan High Court has the jurisdiction in the matter, which cannot be ousted only on the ground that the properties auctioned and purchased happened to be situated outside its jurisdiction or that respondents were residing outside its jurisdiction, because the jurisdiction conferred on a High Court is not contingent upon residence of an aggrieved person, but it requires that a person/ authority/ functionary of State against whom order was sought to be issued should be operating or be amenable to the jurisdiction of High Court, therefore, the provision of section 20, C.P.C. cannot be pressed into service or read in Article 199; as vires of the Federal Law has been challenged, which is applicable to whole of the Pakistan.

The dominant object for filing of present petition was to challenge the validity and vires of section 15 of Financial Institution (Recovery of Finances) Ordinance, 2001, thus, Balochistan High Court had the jurisdiction in the matter.

1996 CLC 539; 1995 CLC 1027; PLD 1988 SC 387 and PLD 1987 SC 334 rel.

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

----S. 15---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), 5.18---Non-payment of Bank loan---Sale of mortgaged property without intervention of Court---Plea of borrower was that provision of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 would not apply to loan obtained by him in year 1997, when no such provision was available in Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Validity---Non-payment of loan. would be a continuing breach of duty/obligation and a continuing default---Contractual obligation of borrower to repay loan would not expire, but would continue till its payment as per terms of agreement---No question of retrospectivity would arise as long as such liability remained undischarged.

PLD 2001 SC 607 rel.

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

----Ss. 9 & 15---7Mnsfer of Property Act (IV of 1882), S.69---Industrial Development Bank of Pakistan Ordinance (XXXI of 1961), S.40---Constitution of Pakistan (1973), Arts.4, 25 & 175---Bankers' Books Evidence Act (XVIII of 1891), S.4---Non?payment of Bank loan---Sale of mortgaged property with or without intervention of Court---Option of Bank---Scope---Provision of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Statute providing more than one remedies against a defaulter or different statutes providing various modes for recovery could not be termed as an arbitrary and unreasonable provision of laver--Provisions of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 were neither innovation nor novel nor alien to statute book, but similar provisions were also available in other statutes prevalent in Pakistan and India---Question of creating a parallel judicial system would not arise as provision of S.15 of the Ordinance, did not completely oust jurisdiction of Banking Court, but gave choice to Bank either to press into service such provision or to bring suit under S.9 thereof---Provisions of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 were neither unreasonable and arbitrary nor violative of principles of natural justice or Arts. 4, 25 and 175 of 11he Constitution--- Reasons.

It has not been provided by the law that there can be only one remedy available for recovery of loans, advances etc. from defaulters namely recourse through Courts. Any statute may in appropriate cases provide for more than one remedy against a defaulter for recovery of the dues or it may be that various modes for recovery have been or can be provided in different enactments. Special remedies may be available in favour or against a particular class of person. Where in a statute or special enactment two or more remedies have been provided against the same defaulter, the powers so conferred and exercisable ipso facto cannot be termed as an arbitrary and unreasonable provision of law and more particularly when guidelines to control the discretionary powers to be exercised have been given, which need not necessarily be specifically enumerated in the very section or provision conferring such powers. The guidelines can be gathered from the other provisions of the statute, the preamble and the surrounding circumstances.

The provisions contained in section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 are neither innovation nor novel as similar provisions already exist in a number of statutes, such as section 69 of Transfer of Property Act, 1882, wherein a mortgagee can sell mortgaged property without intervention of the Court and he may not file a suit for that purpose in a Court of law, but this does not mean that it cannot be done at all. If the mortgagee finds any difficulty in proceeding without assistance of the Court, he may take a decision to go to a Court of law, but it is a decision of the mortgagee and at this stage no quasi-judicial function is involved. Similar provisions are also available in section 40 of the Industrial Development Bank of Pakistan, 1961, empowering Bank to take over the management of hypothecated goods etc., in case the industrial concern makes any default in payment or fails to comply with the terms of its agreement with the Bank.

In India, section 20 of State Financial Corporation Act (LXIII of 1951) also contains similar provisions giving right to Financial Corporation to take over the management or possession or both of the industrial concern as well as the right to transfer by way of lease or sale and realize the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation where an industrial concern, which is under a liability to Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof or meeting with its obligation in relation to any guarantee given to the Corporation or otherwise fails to comply with the terms of agreement with Financial Corporation. Subsection (5) of section 29 provides that where Financial Corporation has taken any action against an industrial concern under the provisions of subsection (1), the Financial Corporation shall be deemed to be the owner of such concern for the purpose of suits by or against the concern and shall be sued and be sued in the name of the concern.

?

Sufficient safeguards and guidelines have been provided in section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001. Proviso to subsection (4) of section 15 of the Ordinance provides that before taking action under said subsection, the financial institution shall cause to be published a notice in one of the reputable English Daily Newspaper widely circulated and one in Urdu Newspaper in the Province in which the mortgaged property is situated specifying particulars of the mortgaged property including name and address of the mortgagor, details of the mortgaged property, amount of outstanding mortgaged money and indicating intention of the financial institution to sell the mortgaged property. Besides sending such notices to all persons, who have an interest in the mortgaged property as mortgagees has been made mandatory. Likewise subsection (9) thereof provides that any surplus left after paying in full all the dues of the mortgagees shall be paid to the mortgagor. Further safeguard has been provided under subsection (10) thereof, whereby it has been made mandatory for a financial institution, which has sold mortgaged property to file proper accounts of the sale proceeds in a Banking Court within 30 days of the Sale.

Under section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, a customer can file a suit against the financial institution in the Banking Court, and by virtue of subsection (12) of section 15 thereof, neither Banking Court nor High Court shall grant an injunction restraining the sale or proposed sale of mortgaged property, unless it is satisfied that no mortgage in respect of immovable property has been created or all moneys secured by mortgage of property have been paid or mortgagor or objector has deposited in Banking Court in cash outstanding mortgaged money. The words "proposed sale" suggest that these provisions are also applicable to a pre-sale dispute and not confined to post-sale dispute. Similarly subsection (11) of section 15 of the Ordinance stipulates that all disputes relating to the sale of mortgaged property under this section including dispute amongst mortgagees in respect of the distribution of sale proceeds shall be decided by Banking Court, thus, the jurisdiction of Banking Court has not been completely ousted and the customer can even after issuance of notices provided under subsection (2) thereof approach to Banking Court in case he disputes his liabilities, therefore, the question of creating a parallel judicial system does not arise. However, it has been left to the choice of Bank either to press into service the provision of section 15 or to bring a suit as provided under section 9 of the Ordinance. Similar provisions in the shape of section 69 of Transfer of Property Act, 1882 are prevalent in the country for the last more than hundred years, as such it cannot be said that the provisions providing sale of mortgaged property without intervention of the Court incorporated in Ordinance, 2001 are unreasonable and arbitrary, particularly keeping in view the circumstances as highlighted in a judgment of Supreme Court reported in PLD 2001 SC 607, which necessitated for the enactment of such provisions.

?

Similarly, while couching language of section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001, Legislature has kept in mind the principles of natural justice as before taking action under section 15(4) thereof, the Bank is required to issue three notices; first notice demanding payment of mortgaged money outstanding within 14 days from service of notice and failing payment of amount within due date to send a second notice of demand for payment of amount within 14 days. In case, the customer continues to default in payment 'despite second notice, the financial institution has to serve a final notice on the mortgagor demanding payment of mortgaged money outstanding within 30 days from service of the final notice on the customer.

According to Bankers' Books Evidence Act, 1891, a statement of accounts carries presumption of truth, therefore, if any liabilities have been shown in said statement, the same would be presumed to be true, unless contrary is proved. Therefore, on the basis of statement of account, the Bank can issue demand notice as envisaged in subsection (2) of section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001, if it decides to proceed under section 15(4) thereof to sell the mortgaged property without intervention of the Court.

Thus, the provisions of section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 are neither innovation nor alien to the statute book nor aimed to militate Articles 4 and 175 of the Constitution nor the same can be termed to be arbitrary, discriminatory and despotic provisions.

?

PLD 1998 SC 1445; PLD 1999 SC 1126; PLD 1996 Lah. 672; PLD 1957 SC 157; PLD 1988 SC 416; 1992 SCMR 563; PLD 20()3 Kar. 127; 2002 CLD 962; 2004 CLD 1600; AIR 1942 All. 50; AIR 1973 Dehli 28; AIR 1976 Andh. Para. 93; AIR 1982 Gujarat 198; AIR 1993 SC 935; AIR 1988 SC 686 and PLD 2000 Lah. 508 ref.

AIR 1990 Gujarat 105; AIR 1955 Mad. 455; PLD. 2001 SC 607; PLD 1997 SC 582 and PLD 1989 Quetta 8 rel.

(d) Administration of justice---

----Every procedure would be understood as permissible unless prohibited by law--Every Court must, in absence of an express provision to the contrary, be deemed to possess itself inherent powers to do right and undo wrongs---Principles.

Courts are not to act upon the principle that every procedure has to be taken as prohibited, unless it is expressly provided for, but are to act on the converse principle that every procedure is to be understood as permissible, till it is shown to be prohibited by the law. As a matter of general principle, prohibition cannot be presumed. Every Court must, in the absence of an express provision to the contrary, be deemed to possess inherent in itself such powers as are necessary to do right and to undo wrong in the course of administration of justice.

AIR 1955 Mad. 455 fol.

(e) Interpretation of statute---

----Validity of a statute---Presumption---Courts would presume validity of a statue---Burden would lie on a person questioning validity of a statute to show transgression of constitutional principle--- Principles.

There is a presumption in favour of the validity of a statute, and Courts of law have to presume that the particular law is intra vires and not ultra vires. It is also to be presumed that the power conferred shall be exercised for the purpose for which it has been conferred and shall be exercised reasonably. Presumption is in favour of the constitutionality of an enactment and the burden is upon him, who questions its validity to show that there has been a transgression of constitutional principles.

(f) Interpretation of statute---

----Reasonableness of a law, determination of---No absolute standard existed for such determination, but would be judged with reference to prevailing circumstances, when particular evil was sought to be remedied.

(g) Natural justice, principles of-

----Principles of natural justice in administrative decision are the principles to act fairly---Authority could proceed in accordance with provisions of law--Action in breach of principles of natural justice could be challenged, but would not vitiate legal provision under which authority took such action.

AIR 1990 Gujarat 105 fol.

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

----Ss. 3(3) & 15(2)--- Default" as used in S.3(3) and S.15(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Distinction---Definition of the word as given in S.3(3) not applicable to the word used in 5.15(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Reasons.

The word "default" used .in section 15(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 does not have the same meaning as defined in section 3(3) thereof in view of the language used therein, which provides "for purpose of this section, a judgment against a customer under this Ordinance shall mean that he is in default of his due duty under subsection (1)". The words "for the purpose of this section" make it manifest that the definition of "default" given in subsection (3) of section 3 only relates to section 3 and is not applicable to the word "default" used in subsection (2) of section 15, which provides that in case of default in payment by customer, the financial institutions may serve a notice on the mortgagor demanding payment of mortgaged money outstanding. The words "default in payment" used in subsection (2) is in respect of mortgaged money outstanding against a customer, which has been defined 'in subsections (1)(b) of section 15, according to which "mortgaged money" means any finance or other amounts relating to a finance, penalties, damages, charges or pecuniary liabilities, payment of which is secured for the time being by the document by which mortgage is effected or evidenced including any mortgage deed or memorandum of deposit of title deeds. Thus, the words "default in payment of mortgaged money." used in section 15 of Ordinance, 2001 cannot be given the same meaning as defined in section 3(3) thereof.

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

----Ss. 9 & 15---Constitution of Pakistan (1973), Art.25---Classification of customer under Ss.9 & 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Reasonable -- - Principles.

Provisions of section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 are applicable only to the class of those individuals, who have mortgaged their properties in order to obtain finance facilities/ loans, but failed to repay the amount as agreed and are defaulters, whereas for other classes of customers, whose loans are not based on mortgage, the Bank has to file suit under S.9 thereof, which is a reasonable classification.

(j) Constitution of Pakistan (1973)---

----Art. 25---Reasonable classification---Purpose---Maintenance of equilibrium between two contending interests at stake---Principles.

Absolute and un-restricted individual rights do not exist in a modern State and there is no such thing as absolute and un-controlled liberty. The collective interest of the society, peace and security of State and the maintenance of public order are of paramount importance in an organized society, if the State is in danger, the liberties of the people are themselves in danger. It is for these reasons that an equilibrium has to be maintained between the contending interests at stake, (1) the individual liberties and the fundamental rights of citizens and the other need to impose social control and reasonable limitation on the enjoyment of those rights in the interest of collective good of the society.

(k) Constitution of Pakistan (1973)----

---Art. 25---Equality of citizens before law --Connotation.

Article 25 of the Constitution guarantees equality of all citizens before law and their entitlement to get equal protection, but equality of citizen does not mean that all law must apply to all the subjects or that all the subjects must have the same rights and liabilities. Therefore, treating of a class of citizens differently from another class, which was not similarly situated, would not offend against the fundamental rights of equal protection of law. However, such classification should be reasonable.

PLD 1989 Quetta 8 rel.

Waseem Sajjad, M. Aslam Chishti and Talat Waheed for Petitioner.

Nafees Siddiqui, H. Shakil Ahmed and Ch. Mumtaz Yousaf Standing Counsel for Respondents.

Uzair Karamat Bhandari for Attorney-General.

Date of hearing: 16th June, 2005.

2006 C L D 275

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizui and Shahid Ghaffar, Commissioners

HYDER ALI BHIMJI, F.C.A. and 3 others---Appellants

Versus

DIRECTOR (ENFORCEMENT-II)---Respondent

Appeal No.4 of 2005, decided on 27th July, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss. 255 & 260---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of penalty on Auditing Company---Auditing Company had conducted the audit of the accounts of a limited company and signed audit report---Examination of audited account of the company by Enforcement Department had revealed deficiencies and irregularities therein---Fine was imposed on all partners of the Auditing Company after issuing show-cause notices and providing opportunity of hearing---Evidence on record had proved that Audit report was not made by the company in conformity with requirements of S.255 of Companies Ordinance, 1984---Major weaknesses in audit coupled with lapses on account of disclosure requirements of International Accounting Standards, had cast doubts about the quality of audit, which amounted to failure in performance of statutory duty---Provisions of S.260 of Companies Ordinance, 1984 were attracted in the case in circumstances---Facts which were material about the affairs of company of which accounts were audited by Auditors having not been disclosed wilfully, Auditing Company had not made a report in conformity with requirements of S.255 of Companies Ordinance, 1984---Impugned order, whereby penalty was imposed on appellant Auditing Company, was upheld in circumstances.

London and General Bank Ltd.' case (1895) 2 Ch. 166 ref.

Munawar Salam and S.M. Tanveer and Syed Aftab Hameed for Appellants.

Uzma Hayat, Joint Director and Ayesha Riaz, Assistant Director for Respondent.

Date of hearing: 17th May, 2005.

2006 C L D 283

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Shahid Ghaffar, Commissioners

DAWOOD FIBRE MILLS LIMITED---Appellant

Versus

COMMISSIONER (COMPANY LAW DIVISION), SEC---Respondent

Appeal No.2 of 2005, decided on 30th May, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 160(1)(b) & 265---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Investigation of company's affairs--Appointment of Inspector---Appeal had been filed against order of Commissioner, whereby Inspectors were appointed to investigate affairs of appellant-Company which was facing financial problems, including liquidity crunch etc.---Commissioner had appointed Inspectors under S.265(b) of Companies Ordinance, 1984 after issuing show-cause notice under the circumstances that affairs of appellant-Company were not being conducted in accordance with sound business and prudent commercial practices; that affairs were being conducted in a manner oppressive to its members; that affairs were being conducted with an intent to deprive members of reasonable return on their investment and-that said defect could lead to ultimate closure of the project--Appellant-Company had not paid any return to its share holders by way of dividend for the last 12 years and its accumulated losses had increased and its negative equity had also increased---Said reduction was due to the sale of assets of the company and not because of any business returns---Company was no longer in business and had closed down its production and no immediate prospect was in sight for reversing that situation---If said situation was allowed to continue, there was every likelihood of closure or insolvency of the company---Company was a listed company and the Commission in that regard had a dual role of beneficial regulation and control of corporate sector as well as protection of investors and the Commission could not be expected to sit idle while listed company slided into liquidation---Authority to carry out inspections had been provided to Commission by law for entirely that reason---Argument of appellant that present management was not responsible for the quagmire faced by the company, could not be made reason not to inquire into affairs of the company as intention behind the inspection, was not witch hunting, but was to find reasons for bad state of affairs of the company---Impugned order passed by Commissioner, could not be interfered with in appeal.

PLD 1995 Kar.132 ref.

Khalid Ahmed Tanwari for Appellant.

Mubasher Saeed, Joint Director (EMD) for Respondent.

Date of hearing: 9th March, 2005.

2006 C L D 289

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik and Shahid Ghaffar, Commissioners

MUHAMMAD AHMED ISMAIL and others---Applicants

Versus

COMMISSIONER (SCD), SECT---Respondent

Application for restoration of Appeal No.2 of 2003, heard on 27th April, 2005.

Securities and Exchange Commission of Pakistan (Appellate Bench Procedure) Rules, 2003-----

----R. 13(1)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Limitation Act (IX of 1908), Art.168---Dismissal of appeal in default---Restoration, application for---Appeal filed by appellants under S.33 of Securities and Exchange Commission of Pakistan Act, 1997 having been dismissed for non-prosecution, appellant had filed application for its restoration after more than one year and four months from its dismissal, with application for condonation of delay in filing said application---No clear and sufficient reason for delay in filing application for restoration of appeal dad been given---Effect---Proceedings before Commission and Appellate Bench were in the form of summary proceedings and Appellate Bench was required under Securities and Exchange Commission of Pakistan (Appellate Bench Procedure) Rules, 2003, to decide appeal as far as possible, within 45 days of its filing---Contention that appellants would have 3 years to file an application for restoration of an appeal which was dismissed for non-prosecution, would defeat the intent and purpose of law---If Appellate Bench was to take guidance from law of limitation, it would be from Art.168 of Limitation Act, 1908, which had specifically dealt with the present matter---Law would not help a person who was not vigilant of his own right---Conduct of appellants had throughout been non-serious, as they had taken more than 20 months to apply for restoration of appeal---Contention. of appellants that order passed by Appellate Bench was a void order as appeal was not 'called on' for hearing, was repelled being absurd because Appellate Bench did not function like ordinary Courts where calls were made for the parties and appeals before it were specifically fixed ed on dates and exact time---On the date when appeal was dismissed by Appellate Bench, date and exact time had been fixed on the request of appellants---Appellants having not come to Appellate Bench with clean hands, application for restoration of appeal, was dismissed.

Umer Lakhan for Applicants.

Ikram-ul-Haq, Joint Director and Muhammad Afzal, Joint Director for Respondent.

Date of hearing: 27th April, 2005.

2006 C L D 295

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Shahid Ghaffar, Commissioners

Syed MOONIS ABDULLAH ALVI and 7 others---Applicants

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT AND MONITORING), SEC---Respondent

Revision No.3 of 2004, decided on 30th November, 2004.

Companies Ordinance (XLVII of 1984)---

----Ss. 74, 472(1), 484 & 495---Securities and Exchange Ordinance (XVII of 1969), S.31---Revision against order of Executive Director whereby direction was issued to the company to transfer the shares lodged with it by different members of Stock Exchange within specified period---Company had been evading the registration of transfers on the ground that persons, who had lodged the shares for transfer, were not bona fide purchasers---Validity---Persons who had bought the shares on the floor of a Stock Exchange, should be deemed to be bona fide purchasers---Concerned companies though could have acted against the terms of the Scheme of arrangement by setting those shares instead of depositing them with the trustees as ordered by High Court, but bona fide third parties could not be punished for the acts of those companies---General direction requiring registration of all transfers lodged with the company, even if f not consistent with S.74 of Companies Ordinance, 1984 read with S.31 of Securities and Exchange Ordinance, 1969, but the company had no valid reasons to refuse registration of transfer to bona fide purchasers---Company was ordered to register all such transfers of shares, which were bought by bona fide persons on the floor of the Stock Market.

Barrister Muhammad Ahmed Saeed for Petitioners.

Mubasher Saeed, Joint Director (EMD) SEC for Respondent.

2006 C L D 298

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Shahid Ghaffar, Commissioners

WASEEM AHMED SIDDIQI---Petitioner

Versus

ZAFAR-UL-HAQ HIJAZI (EX-COMMISSIONER), SEC and 3 others---Respondents

Revision/Appeal No.3 of 2005, decided on 2nd June, 2005.

(a) Companies Ordinance (XLVII of 1984)-

----Ss. 476, 477 & 484--- Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33--Revision---Scope---Conversion of revision into an appeal---Petitioner had filed revision petition under S.484 of Companies Ordinance, 1984 against impugned order which was also passed in revision, albeit under S.477 of the Ordinance---Revision under S.484 of Companies Ordinance, 1984 lay against those orders which had not been passed under provisions of S.476 of the Ordinance---Order imposing the penalties passed by Registrar of Companies, which was upheld in revision by Commissioner, was passed under S.476 of Companies Ordinance, 1984---Such order, in circumstances could not be challenged in revision under S.484 of Companies Ordinance, 1984---Besides, a revision did not lie against an order which was passed in revision---Revision petition filed by petitioner, however, was converted into appeal under S.33 of Securities and Exchange Commission of Pakistan Act, 1997 in order to meet the ends of justice and to decide the issue on its merits.

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

----S. 254(6)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Disqualification of an auditor---Imposition of penalty---Scope---Registrar of Companies, after issuing show-cause notices to petitioner, had imposed a fine/penalty on petitioner for being appointed and having acted as the auditor of the Company under S.254(6) of Companies Ordinance, 1984---No evidence was available on record which could suggest that show-cause notices issued to the petitioner were based on mala fide intention---Commission which had upheld order of Registrar of Companies was, legally duty bound to take cognizance of any contravention of the laws being administered by it---Issuing of show-cause notices, passing of orders and imposition of fines, were parts of said legal duty which was performed by the Commissioners and Officers of the Commission---Unless the parties could produce some real evidence that any of those acts had been done in bad faith there was no reason to come to such a conclusion---Penalty under S.254(6) of Companies Ordinance, 1984 could only be imposed if the auditor so appointed, had acted as the auditor of the Company---Department had not produced any evidence that the petitioner had acted as the auditor of the Company---Petitioner's contentions that the Company was dormant and that no audit had been conducted, had not been repelled by Department either---Penalty imposed on the, auditor under S.254(6) of Companies Ordinance, 1984, was set aside, in circumstances.

?

(c) Companies Ordinance (XLVII of 1984)-

---Ss. 254 & 259---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Disqualification of auditor---Imposition of penalty---Annual return (Form-A) filed by the Company had proved that petitioner being a Director of Company was appointed as the auditor of the Company, whereas subsection (3) of S.254 of Companies Ordinance, 1984 had disqualified a Director of a Company to be appointed as the auditor---Plea of petitioner that it was a computer or typing mistake, could not be accepted as subsequent returns filed by Company, had shown the same appointment---Contravention could not be accepted to be not wilful---Penalty imposed on Director of the Company under S.254(3) of Companies Ordinance, 1984 read with S.259 of the Ordinance, for appointing an unqualified person as auditor was made out---Director having not acted as the auditor of the Company, taking lenient view fine/penalty imposed on the Director under S.259 of Companies Ordinance, 1984, was reduced accordingly.

?

Petitioner in person.

Muhammad Siddique for Respondents.

Date of hearing: 10th May, 2005.

2006 C L D 304

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh and Etrat H. Rizvi, Commissioners

Honorary Capt. (Retd.) NOOR AHMED---Appellant

Versus

ALY OSMAN, JOINT DIRECTOR (SECURITIES MARKET DIVISION) SEC

and another---Respondents

Appeal No.5 of 2005, decided on 6th July, 2005.

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

--Ss. 20 & 33-Rejection of complaint---Appeal---Appellant in his complaint had alleged that his shares had been sold by respondent (broker) without his authority; that his shares were sold too early in the morning within 5 minutes of opening of market due to which he had suffered a loss and that all his shares were not kept in 'Badla' as instructed by him---Validity---Appellant had not denied that there was debit balance in his account and appellant could not point out any legal bar on the respondent for selling shares of appellant to clear his dues---Account Opening Form had clearly authorized the broker to sell shares to clear his dues---Respondent (broker) had stated that he waited all day before selling some of the shares to settle the position---Appellant had himself admitted that he did not visit the brokerage house of respondent that very day---Contention of appellant that his shares were sold too early in the morning thus could not be accepted---Stock trading was a risky business where price of shares keeps changing all the day long and it was quite possible that price of shares belonging to appellant could have fallen during the day---No merit was found in the plea that shares were sold at the wrong time---Respondent (broker) had given a valid reason for not having kept all shares of appellant in 'Badla'---If there was not enough security to secure 'Badla' position of appellant, respondent could not have been expected to follow instructions given by appellant in that respect.

Appellant in person.

Murtaza Abbas Deputy Director for Respondent No.1.

Respondent No.2 in person.

Date of hearing: 29th June, 2005.

2006 C L D 308

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik and Shahid Ghaffar, Commissioners

INTER ASIA LEASING COMPANY LIMITED and 6 others---Appellants

Versus

COMMISSIONER (SPECIALISED COMPANIES DIVISION), SEC---Respondent

Appeal No.6 of 2005, decided on 1st July, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 282 & 282-M---Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003, Rr.5(2)&(6) & 7---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Refusal to grant licence and imposition of fine---Appeal---Equity of appellant-Company being deficient in terms of R.5(2) of Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003, licence to commerce leasing business was not granted to appellant-Company by Commissioner---Audited accounts of appellant-Company for relevant year had revealed that auditors had placed certain qualification in their report---Show-cause notice was issued to appellant and after providing opportunity of hearing, fine was imposed on the Chairman, Chief Executive Officer and Directors of appellant-Company on allegation that annual accounts of appellant-Company did not depict true and fair picture of Company's affairs---Validity---Impugned order was not a speaking order---Detailed response was filed by appellants to show-cause notice issued to appellants, but impugned order did not even mention that said response was filed by appellants---Commissioner had also not provided any reason for his findings---Case was remanded to Commissioner to decide afresh after taking into consideration the contentions of appellants.

Omar Sial and M. Younas Khan for Appellants.

Shoaib Qureshi, Director. (SCD) and Rubab Mehdi AD (SCD) for Respondent.

Date of hearing: 17th May, 2005.

2006 C L D 311

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik and Shahid Ghaffar, Commissioners

ENGLISH LEASING (COMPANY) LIMITED and 6 others---Appellants

Versus

COMMISSIONER (SPECIALISED COMPANIES DIVISION), SEC---Respondent

Appeal No.7 of 2005, heard on 24th May; 2005.

Companies Ordinance (XLVII of 1984)--

----Ss. 282, 282-A & 282-M---Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003, R.7---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of fine---Appeal---Fine of Rs.400,000 on each Director of Company was imposed on allegation that annual accounts of appellant-Company for relevant year did not depict true and fair picture of Company's affairs---Plea of Company was that leasing licence of the Company having been cancelled by Commission much before notification of Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003. appellant-Company could no longer be said to be a Non-Banking Finance Company and could not be penalized for violation of said Rules---Company had further alleged that impugned order was not a speaking order and no reason or justification had been provided for the finding by Commissioner---Validity---Plea of non-applicability of said Rules on appellant-Company and its directions needed consideration in the light of fact that Company's leasing licence was cancelled by Commission, but that issue having not been raised before the Commissioner no finding had been given on it---Bare reading of impugned order, however, revealed that it was not a speaking order as the Commissioner had not provided any reason for his finding---Case, in circumstances was remanded to the Commissioner, who would pass speaking order after taking into consideration arguments presented by appellant in defence to the show-cause notice.

Arshad Tayebaly and M. Younas Khan for Appellants Nos.1 and 3 to 6.

Firasat Ali for Appellants Nos.2 and 7.

Shoaib Qureshi, Director (SCD) for Respondent.

Date of hearing: 24th May, 2005.

2006 C L D 314

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Abdul Rehman Qureshi, Commissioners

FRIEND STOCK LINKER (REGD.) through Muhammad Tahir Ismail and another---Appellants

Versus

NIAZ MUHAMMAD BHATTI and another---Respondents

Appeal No.8 of 2004, decided on 24th August, 2004.

Securities and Exchange Ordinance (XVII of 1969)-

----Ss. 5-A & 20---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Unauthorized brokerage business---Prohibiting transfer of shares---Complaint was that appellant was carrying on brokerage business without authorization---Inquiry conducted against the appellant having confirmed the allegation, a show-cause notice was issued to him and Commissioner vide his order prohibited transfer of shares from account of the appellant---Validity---Appellant though had admitted that he was carrying on unauthorized brokerage business, but not all claims filed against him were genuine---Prayer of appellant that impugned order prohibiting transfer of shares, though could not be accepted in given circumstances, but appellant having more than once expressed his sincere intention of settling claims against him, interest of all parties could only be served by early settlement of the claims against appellant in a fair and transparent manner---Appellant; in circumstances, was directed to settle claims of the claimants.

Muhammad Tahir Ismail and Afnan Karim Kundi for Appellants.

Niaz Muhammad Bhatti and Hafiz Abdul Sattar for Respondent No.1.

Imtiaz Haider, Director (SM) for Respondent No.2.

Date of hearing: 24th August, 2004.

2006 C L D 317

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Shahid Ghaffar, Commissioners

CLIMAX ENGINEERING COMPANY LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (COMPANY LAW), SEC---Respondents

Appeal No.11 of 2005, decided on 6th July, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss. 160(1)(b) & 265---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Sale of land by the company---Appointment of Inspector to enquire into affairs of company---Management of company intended to obtain permission of its share-holders through a special resolution for disposal of company's surplus land, and building etc., but Enforcement and Monitoring Department directed the company not to proceed with the sale of land etc. and advised company to provide certain information, whereas statement of facts required under 5.160(1)(b) of Companies Ordinance, 1984 did not provide require information---Executive Director, after issuing show-cause notice and providing company opportunity of hearing, appointed Inspector to conduct investigation on all aspects of operation of the company which order had been challenged in appeal-Validity-Appointment of Inspector had been made solely for the reasons that Enforcement and Monitoring Department had viewed sale of land by the company with suspicion and no other grounds had been made out against the company for reaching the conclusion that there were circumstances which suggested that any of the grounds mentioned in S.265(b) of Companies Ordinance, 1984 existed---Transaction involving sale of land by the company did not lead to such a suggestion that those grounds existed---Department insisted that land should not have been sold without carrying out the revaluation---Department, however, had failed to point out any requirement of law in that respect---Land in question had been sold by the company after completing legal requirements and for the purpose of paying off a liability which had been reduced through regulation---Sole reason for appointment of Inspector was the doubt with regard to sale of land, but terms of reference, set for the Inspector were very wide as Inspector had been directed to investigate all aspects of operations of the company---Reasons for investigation and scope of investigation did not correspond with each other---Since no other valid reason for appointment of inspector had been given impugned order passed by Executive Director, was set aside.

Hammad Raza, F.C.M.A. for Appellant.

Mubasher Saeed, Joint Director for Respondent.

Date of hearing: 8th June, 2005.

2006 C L D 323

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh and Shahid Ghaffar, Commissioners

Mian FAROOQ AHMED SHEIKH---Appellant

Versus

DIRECTOR (ENFORCEMENT), SECP---Respondent

Appeal No.17 of 2005, heard on 25th August, 2005.

Companies Ordinance (XLVII of 1984)---

----S. 245---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of penalty---Appeal---Appellant Company which was required under S.245 of Companies Ordinance, 1984 to prepare and transmit its quarterly accounts for 3rd quarter to its members and Commission, prepared quarterly accounts and also transmitted them to the members, but failed to simultaneously file them with the Commission---Penalty was imposed on appellant for said omission after issuing show-cause notice and providing appellant opportunity of hearing---Validity---Law though required that accounts should be separately provided to the Registrar and Commission, but it seemed that no mala fide was intended by the appellant-Company or its management in not providing the accounts to the Commission---Office of Registrar of Companies was part of Commission and if accounts had been provided to the Registrar, there was no reason why those' could not have been provided to the Commission---Said default could have happened due to some oversight and same was not committed knowingly---Enforcement and Monitoring Department, in circumstances should have taken a lenient view, at best it should have warned the Company and its management to be careful in future---Impugned order was set aside with direction that amount deposited by appellant should be refunded by the Commission.

Mian Farooq Ahmed Sheikh in person.

Mubasher Saeed, Joint Director and Abdul Ghafoor Khan Deputy Director for Respondent.

Date of hearing: 25th August, 2005.

2006 C L D 326

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar and Etrat H. Rizvi, Commissioners

Lt.-General (Retd.) ALI KULI KHAN KHATTAK and 3 others---Appellants

Versus

COMMISSIONER (CLD) SEC and another---Respondents

Appeal No.18 of 2004, decided on 1st February, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 178, 179, 184, 186, 472, 476 & 495---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Securities and Exchange Commission of Pakistan (Appellate Bench Procedure) Rules, 2003, R.3---Complaint against irregularities committed in election of Board of Directors of Company---Appellants who claimed to be shareholders of the Company had filed complaint before Securities and Exchange Commission alleging that appellants were denied the opportunity to exercise their legitimate voting rights in election; that despite holding 14 per cent shares in the company, none of their representatives was elected in the Board and that management of the Company with a view to deny the right of complainants/appellants to participate in the election of Directors of company, was holding election six months prior to the expiry of the terms of existing Directors---Prior to election, complainants/ appellants delivered to the Company notices of their intention to contest election, but said notices were rejected by the company as invalid on the ground that the notices were issued by appellants under wrong provision of Companies Ordinance, 1984---Complainant whose notices were rejected and were not allowed to contest election filed appeal before Securities and Exchange Commission---Commissioner found that mention of wrong provision of Ordinance did not vitiate notices to the Company and same could not have been rejected on such technical ground by the Company, but despite that Commissioner did not interfere in the matter holding that considerable period had passed since election of Directors and that power to declare election of Directors invalid, rested with the High Court---Appellants aggrieved by impugned order passed by Commissioner had filed present appeal before the Appellate Bench of the Commission which was in time---Regarding issue of legality of holding election six months prior to expiry of tenure of Directors, appellants could not point towards any provision of law which barred the same---Commissioner had rightly found that management should not have rejected notices of intention of appellants to contest election merely for mentioning wrong provision of the Ordinance---Officers of the Company who were responsible for rejection of notices of appellants, had been penalized for violating provisions of S.178 of Companies Ordinance, 1984---Commissioner, however, had rightly observed that power to declare election of Directors in question lay with the High Court under S.179 of Companies Ordinance, 1984---Even if Commission had come to the conclusion that there was a material irregularity in holding disputed election, Commission would have no authority to declare election invalid---Appellants should have sought their relief from the High Court.

Abid S. Zuberi, Muhammad Umer Lakhani and Khurram M. Hashmi for Appellants.

Mubasher Saeed, Joint Director and Wajiha Farooqi, Assistant Director SEC for Respondent No. 1.

Dr. Khalid Ranjha and Fakhar Mehmood Chanda for Respondent No.2.

Dates of hearing: 15th October, 2004, 25th January and 1st February, 2005.

2006 C L D 334

[Securities and Exchange Commission of Pakistan]

Before Dr. Tariq Hassan, Chairman/Commissioner and Shahid Ghaffar, Commissioner

HALA ENTERPRISES LTD. and another---Appellants

Versus

DIRECTOR (ENFORCEMENT) SECP---Respondent

Revision No.18 of 2005, decided on 17th October, 2005.

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

----Ss. 158, 476 & 477---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---S.R.O.161(I)/2004, dated 17-3-2004---Imposition of fine on failure of company to hold its Annual General Meeting---Company having failed to hold its Annual General Meeting for relevant year as required under subsection (1) of 5.158 of Companies Ordinance, 1984, penalty was imposed on the same and its Chief Executive Officer under Ss.158 & 476 of Companies Ordinance, 1984 after issuing show-cause notice and providing opportunity of hearing---Company had challenged order imposing fine in revision---Company had a right of appeal against impugned order under S.33 of Securities and Exchange Commission of Pakistan Act, 1997, but they had chosen to file a revision under S.477 of Companies Ordinance, 1984---Only logical reason for said choice seemed to be the difference in limitation period as appeal was required to be filed within 30 days of impugned order while revision could be filed within 60 days---Commissioner could have converted revision into an appeal, but record had shown that revision petition was not filed within limitation of 30 days specified for appeal in S.33 of Securities and Exchange Commission of Pakistan Act, 1997---Revision could be converted into an appeal and vice versa, provided same was within the period of limitation---Jurisdiction to take cognizance of contravention under S.158 of Companies Ordinance, 1984 and impose penalty thereon having been duly delegated to Director under S.R.O. 161(I)/2004 dated 17-3-2004, Director had competently passed impugned order.

1995 CLC 1578 ref.

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

----S. 477---Civil Procedure Code (V of 1908), Preamble---Revision---Scope--Applicability of C.P.C. to proceedings before the Commission---Civil Procedure Code, 1908, though did not apply to the proceedings before the Commission, but the broad principles of C.P.C. specified therein, could be referred to for guidance, especially where identical terms had been used by the Legislature---Revision generally had a limited scope compared to appeal and it would apply only in cases involving illegal assumption of jurisdiction or non-exercise or irregular exercise of jurisdiction by the Authority passing the order---Erroneous conclusions of law or fact, could not be corrected in revision if there was no jurisdictional error and revisional Court was not bound to interfere with the merits of the case.

PLD 2000 Quetta 66 ref.

Mushtaq Ahmad for Petitioners.

Mubasher Saeed, Joint Director and Abdul Ghafoor Khan, Deputy Director for Respondent.

Date of hearing: 27th September, 2005.

2006 C L D 339

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Shahid Ghaffar, Commissioners

KARIM COTTON MILLS LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT AND MONITORING) SEC and another---Respondents

Appeal No.20 of 2004, heard on 27th August, 2005.

Companies Ordinance (XLVII of 1984)-

----S. 309--- Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Suspension of business of company---Grant of sanction to file winding up petition---Executive Director vide impugned order had granted sanction sought by Joint Registrar to file winding up petition against appellant-Company and said order had been challenged in appeal by the company---Appellant-Company was an old institution and carried goodwill in the market---Sponsor Directors of appellant-Company had shown their honesty and professionalism by protecting the interests of minority share-holders and had fulfilled the requirements of law by filing necessary returns and holding its annual general meetings within time---Efforts, in circumstances should be made to revive appellant-Company before it was finally put to rest---Sponsor Directors were given time to finally revive company as prayed by the company, either by injecting funds themselves or selling the company to some other sound business party who should revive company up to specified time---If the sponsor Directors would fail to do so, they would initiate voluntary winding up of company within 15 days of extended time, failing which Enforcement, and Monitoring Department of the Commission could provide a fresh sanction to Registrar concerned to file a winding up petition against the appellant-Company in the Court of law.

Muhammad Idrees Haji Ebrahim, CEO for Appellant.

Date of hearing: 27th August, 2004.

2006 C L D 342

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh and Etrat H. Rizvi, Commissioners

HASHIMI CAN COMPANY LTD.---Appellant

Versus

COMMISSIONER (SECURITIES MARKET) SEC ISLAMABAD and another---Respondents

Appeal No.23 of 2004, decided on 14th March, 2005.

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

----S. 33---Securities and Exchange Ordinance (XVII of 1969), S.9(4)---Failure of appellant Company to join Central Depository Company on direction of Commissioner---Appeal before Appellate Bench---Commissioner vide impugned order gave directions to all Companies including appellant Company under S.9(4) of Securities and Exchange Ordinance, 1969 to join Central Depository Company---Appellant not being satisfied with impugned order had preferred appeal against impugned order---Appellant Company had no plausible reason to refuse joining Central Depository Company as it being a listed Company could not argue that cost of such joining would drain its resources---Central 'Depository Company had reduced the annual costs to a bare minimum and the benefits of joining Central Depository Company to the investors, shareholders and even to the Companies could not be under-estimated---Appellant was the only Company out of 40 Companies, which had refused to join Central Depository Company and had filed appeal in that regard---Validity---Once the Company decided to list its securities on Stock Exchange, it must comply with the listing Regulations in letter and spirit---Appellant, in circumstances, could not refuse to join Central Depository Company without facing consequences of such refusal specified in cl.32(1)(FF) of Listing Regulations-Directions given by Commission to appellant vide impugned order, were upheld.

Asif A. Mufti and Shafqat Raza for Appellant.

S.M. Aly Osman, Joint Director for Respondent No.1.

Rasool Hooda for Respondent No.2.

Date of hearing: 8th March, 2005.

2006 C L D 344

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Abdul Rehman Qureshi, Commissioners

KHALID AHMED KHAN and others---Appellants

Versus

Malik RAFI PRIVATE LTD. and others---Respondents

Appeals Nos.25, 26, 27 and 30 of 2004, heard on 14th October, 2004.

Brokers and Agents Registration Rules, 2001---

----Rr. 8(IV) and A(1) & A(2)--- Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of fine for lack of prudence and neglect in business---Complainants had alleged that they had been dealing with the company through a person who was an agent of the company: and that their accounts had been misappropriated and they had suffered huge losses consequently---Contention of the company was that said person was not an agent of the company, but only was its customer and that Company was not responsible for any loss allegedly caused to the complainants by the said person--Director of the Commission, despite finding that said person was an agent of the company, had also found that actions done by the said person were outside the scope of his work and that company was not liable, for his actions---Director of the Commission had imposed fine of Rs.50,000 for each complaint on company under R.8(IV) read with Rules A(1) & A(2) of Brokers and Agents Registration Rules, 2001 for lack of prudence and neglect in the business---All parties had filed respective appeals against decision of Director---Argument of complainants was that impugned order was bad in law as it was self-contradictory as on the one hand Director of the Commission had found that said person was the agent of company, while on the other hand he had found the company innocent and then directed complainants to seek redress with the Civil Court---Validity---Impugned order did appear to contradict itself, besides, it was an intricate issue which had not been properly investigated---Case, in circumstances, was remanded to Securities Market Division with direction that said issue could be re-investigated through appointment of an independent outside investigator---Securities Market Division was further directed to identify issues involved therein and formulate detailed Terms of Reference for investigator, who would present his report within 60 days of his appointment.

Asim M. Khan for Appellants (in Appeals Nos.25. 26, 27 of 2004).

Naeem Raft for Rani Securities Pvt. Ltd.

Rashid Safdar Paracha, Director for Director (SMD).

Date of hearing: 14th October, 2004.

2006 C L D 347

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar and Abdul Rehman Qureshi, Commissioners

MUHAMMAD YOUNUS and 5 others---Appellants

Versus

COMMISSIONER (SPECIALIZED COMPANIES DIVISION) SEC---Respondent

Appeal No.29 of 2004, heard on 5th October, 2004.

Companies Ordinance (XLVII of 1984)---

----Ss. 177, 180, 186, 472 & 476--- Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to hold election for new Directors of Company---Imposition of penalty--Term of Directors of company having ended, they were required to take immediate steps to hold election for new Directors of company, but such election was not held even after lapse of two months period given by the Directors themselves---Commission after issuing show-cause notice to the Directors and giving them opportunity of being heard, imposed fine on each Director against which appeal had been filed---Director of the company had been rightly penalized for delaying the election for nine months as they should have been retired on the expiry of terms of their office and taken immediate steps to hold election, which they failed to do--Wilful absence of Directors from the country at the time of said election would not constitute a valid impediment under S. 177 of Companies Ordinance, 1984 as it was the duty of Directors to retake themselves available so that election for new Directors could have been held without delay--Impediments created by Directors one after the other, were clearly excuses for holding on to the office of Directorship---Commissioner had already taken a lenient view by imposing a penalty of Rs.5000 on the Directors---Order of Commissioner could not be interfered with in appeal.

M. Farooq Akhtar for Appellant.

Umar Hayat Khan, Director and Ms. Farah Qamar, Joint Director for Respondent.

Date of hearing: 5th October, 2004.

2006 C L D 350

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Shahid Ghaffar, Commissioners

PUNJAB OIL MILLS LIMITED and 3 others---Appellants

Versus

DIRECTOR (ENFORCEMENT), SECP and another---Respondents

Appeal No.35 of 2004, decided on 12th May, 2004.

Companies Ordinance (XLVII of 1984)-

----Ss. 74, 473 & 476---Securities and Exchange Ordinance (XVII of 1969), S.31---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Complaint against Company for not transferring certain shares in the name of complainant---Imposition of penalty---Respondent had filed a complaint with Commission against appellant-Company for not transferring certain shares in his name---Plea of appellant-Company was that said shares were disputed shares and that matter was sub judice before a Court of law---Director Enforcement vide his order rejected arguments presented by appellant-Company and imposed penalty on the company, its Chairman, Vice-Chairman, Chief Executive and Director and he further directed the company to transfer shares in the name of complainant---Company had filed appeal against order of Director---Validity---When impugned order was passed by the Director, a stay order passed by Modarba Tribunal was in effect---Impugned order, in circumstances, had been passed in violation of stay granted by Modarba Tribunal---Two important issues would decide outcome of case; first, whether shares in question were brought by complainant through the System of Stock Exchange and according to its rules and regulations; and second whether a stay order was in effect when impugned order was passed---Second issue seemed to be quite clear and undisputed as a stay order passed by Modarba Tribunal was in effect when impugned order was passed by the Director---Directions given by the Director to appellant-Company to transfer shares in question in the name of complainant, in circumstances, were against the stay order grunted by Modarba Tribunal---Regarding first issue, complainant was unaware of exact nature of transaction, whether said shares were bought by complainant through System of Stock Exchange and according to its rules and regulations and whether a person had acquired shares without fraud and notice of defect---Such questions of facts could only he answered after taking evidence---Complainant could very well be a bona fide purchaser and if so, should be given the benefit provided by law, but in peculiar circumstances of the case, that issue needed to be decided by the Court which had already taken cognizance of the dispute---Since dispute regarding said issues was already sub judice before Modarba Tribunal, complainant was advised to become a party in said suit---Impugned order passed by the Director, was set aside in circumstances.

Imran Anjum All for Appellant.

Mubasher Saeed, Joint Director and Saleem Daredia, Joint Director for Respondent No.1.

Khurram Raza for Respondent No.2.

Date of hearing: 17th February, 2005.

2006 C L D 356

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Abdul Rehman Qureshi, Commissioners

NAUREEN AHSAN---Appellant

Versus

DIRECTOR (SECURITIES MARKET DIVISION) SEC and 2 others---Respondents

Appeal No. 19 of 2004, heard on 7th September, 2004.

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

----S. 33---Misappropriation of account and transfer of shares unauthorisedly---Rejection of complaint---Appellant/complainant had claimed that she opened an account with the Bank \and authorized her father to operate the said account on her behalf, that said account was operated on interactive basis by her father through an employee of the Bank---Complainant had alleged that her father who fell sick proceeded abroad for medical treatment and he returned from abroad after six months and during that period said employee operated her account despite she had not authorized him to do that and her account suffered loss---Complainant had further alleged that some shares owned by her father, were transferred from his account held with a broker to her account in the Bank and them were sold without any authority front her or her father-Complainant had also alleged that her account held by the Bunk, was illegally and without her authorization was transferred to another institution---Complainant had complained that the Bank and its employee had misappropriated her account and prayed that balance amount in her account along with shares be reimbursed to her, but Director of the Commission dismissed complaint---Validity---Grounds on which account of complainant was transferred from the Bank to another institution, were not valid grounds, because both the Bank and the institution being separate legal entities, an account along with its balance, could not have been transferred without the authority of account holder---Right thing to do for both the Bank and the institution when complainant had not provided necessary documents, was to suspend said account till the time she completed legal requirement---Transfer of complainant's account from the Bank to the other institution, which was based on presumption, proved to be unauthorized---Complainant had produced statement of account held by her father, to rebut the finding of the Director of the Commission that her father did not have an account---Only issue which needed adjudication, was that of remaining shares claimed by complainant---Director, in circumstances, was directed to hold an inquiry and give his finding on said remaining shares within specified period and the Bank and the institution were also directed to reimburse shares to complainant within specified Period.

Shezada Mazhar for Appellant.

Imtiaz Haider for Respondent No. 1.

Jawad Akhtar for Respondents Nos.2 and 3.

Date of hearing: 7th September, 2004.

2006 C L D 364

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar and Abdul Rehman Qureshi, Commissioners

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION

LIMITED---Appellant

Versus

ASSISTANT DIRECTOR (SPECIALIZED COMPANIES DIVISION) SEC and

another---Respondents

Appeal No.22 of 2004, decided on 22nd September. 2004.

Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003-

----R. 5(5)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---S.R.O.161(1)/2004, dated' 17-3-2004---Rejection of application for renewal of Investment Advisory Licence---Scope---Appellant corporation had alleged that it was not granted art opportunity of being heard before rejection of application--Power to renew or refuse renewal of Investment Advisory Licence under R.5(5) of Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 had been delegated by the Commission to Executive Director (Specialized Companies Division) under S.R.O. 161(1)/2004 dated 17-3-2004---No decision or order of competent Authority was available on record which was conveyed to the appellant---Assistant Director did not have the power or authority to refuse renewal of licence---Decision conveyed by Assistant Director being not a lawful order, Specialized Companies Division was advised to place the matter before Executive Director concerned who was competent and had been duly allowed by the Commission to decide such matters---Application pending before the Commission since long, should have been disposed of within specified period after providing proper opportunity of hearing to the appellant.

Kazim Hassan for Appellant.

Ms. Farah Qamar, Joint Director for Respondents.

Date of hearing: 21st September, 2004.

2006 C L D 366

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Abdul Rehman Qureshi, Commissioners

Mian KHALID BASHIR---Appellant

Versus

IMTIAZ HAIDER, DIRECTOR (SECURITIES MARKET DIVISON) SEC and 2

others---Respondents

Appeal No.17 of 2004, heard on 10th September, 2004.

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

----Ss. 20(6)(b) & (g) & 33---Securities and Exchange Ordinance (XVII of 1969), Preamble---S. R. 0.205(1)/2004, dated 19-4-2004---Complainant had alleged that various shares held by her were handed over to appellant for sale and appellant sold the same, but he did not give complainant the sale proceeds thereof--Appellant took the stance that his agents who used to run his brokerage house, had absconded with all relevant record---Said assertions of appellant were rejected by the Joint Director who ordered appellant to return either the shares claimed by the complainant or an amount equivalent to the value of shares in question on specified date---Appellant being aggrieved with the findings of Joint Director, had challenged them in appeal---Prime argument of appellant for rejecting claim filed by complainant was that as his agents who used to run his brokerage house had absconded with all relevant record, no other means were available for verifying the claim of complainant-Validity-Said reasoning of appellant was untenable and unacceptable as claim of complainant could not he rejected on the ground that appellant's agents had run away with the record---Appellant as a principal was fully responsible for the actions of his agents and he could not plead innocence on the basis of his differences with his agents---Contention of appellant that complaint was a civil matter and should be referred to the Civil Court, was only an attempt on his part to avoid his obligation---Case was a straight-forward one, where appellant's brokerage firm sold shares belonging to complainant and then failed to hand over sale proceeds to her---Commission was fully competent to regulate business of Stock Exchanges and its members and brokers under the law and to protect the interest of investors---S.R.0.205(I)/2004 dated 19-4-2004 having given powers of adjudication to Director, he was competent to pass impugned order.

2003 CI,D 293 ref.

Asad Ullah Javed for Appellant.

Imtiaz Haider, Director (SEC) for himself.

Aamir Zareef Khan for Respondent No.2.

Imtiaz Ahmed for Respondent No.3.

Dates of hearing: 7th and 10th September, 2004.

2006 C L D 371

[Securities and Exchange Commission of Pakistan]

Before Etrat H. Rizvi and Abdul Rehman Qureshi, Commissioners

FIRST CAPITAL SECURITIES CORPORATION LTD.---Appellant

Versus

COMMISSIONER (SECURITIES MARKET) SEC, ISLAMABAD---Respondent

Appeal No.21 of 2004, heard on 19th October, 2004.

Companies Ordinance (XLVII of I984)---

-----S. 224(2)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.23(2)(d)---Gain made in sale and purchase transaction of shares---Failure to tender gain---Order to tender gain to the Commission---Corporation which gained by sale and purchase transaction of shares, having failed to tender said gain to issuer within period specified in S.224(2) of Companies Ordinance, 1984 the Commission after issuing show-cause notice to the corporation and granting opportunity of hearing, ordered to tender the gain to the Commission-Validity-Demand by issuer must be raised within six months of the date of accrual of gain---Once the demand was raised, issuer then had the remaining portion of the six months period or sixty days whichever was later, to recover the gain---Gain accrued in the case must become part of the Commission's fund being property of the Commission---Contention that the Commission should recover the gain for the benefit of issuer, was flawed and self-serving because the Commission, conceivably could not be saddled with the duty to act as a recovery mechanism for the benefit of private parties---Gain which had become the property of the Commission after the lapse of six months period front elate of accrual, could not be given to any party, including the issuer---Gain tendered to issuer after the Commission had raised the issue with the corporation, had indicated mala fides and in such circumstances, corporations contention that recovery should be made from the issuer, was quite devious and condemnable as no one could take advantage of his own wrong---Commission being duly authorized under law to initiate proceedings and issue show-cause notice, appeal against impugned order was dismissed.

Imtiaz Rashid Siddiqui for Appellant.

Imran Inayat Butt, Director and Muhammad Farooq, Deputy Director for Respondent.

Date of hearing: 19th October, 2004.

2006 C L D 378

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmed Khan, Director (Enforcement)

In the matter of: Messrs AYAZ TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/Enf-II/215/2004, dated February 21, 2005, decided on 26th April, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss. 158(1)(4) & 476---Failure of company to hold Annual General Meeting---Imposition of penalty---Company in terms of provisions of subsection (1) of S.158 of Companies Ordinance, 1984 was required to hold its Annual General Meeting for the year ended September 30, 2004 on or before January 31. 2004, but it failed to do so---Failure of company to comply with said mandatory requirement, had necessitated action against the company and its Directors in terms of subsection (4) of S.158 of Companies Ordinance, 1984---Plea of representative of company that Annual General Meeting could not be held due to the closure of company's operations, was not cogent reason for default in holding Annual General Meeting---Company had also defaulted in holding said meeting in the past---Directors of the company who had also committed serious defaults by non-submission of quarterly accounts, were responsible for non-holding of Annual General Meeting---Even if the company intended to get liquidated, it remained Director's responsibility to prepare annual accounts and hold Annual General Meeting within prescribed time limit---Default, which had attracted provisions of subsection (4) of S.158 of Companies Ordinance, 1984, in circumstances, had been established-However, in view of financial crises faced by the company mid intention of Directors to liquidate the company, lenient view was taken and instead of imposing the maximum fine of Rs.50,000 on every Director and further fine of Rs.2.000 per day for continuous default, a fine of Rs.20,000 teas imposed on Chief Executive of the company and other Directors were reprimanded to be careful in future in observance of mandatory requirements of law.

Mazhar Hussain, Accounts Officer in person.

Date of hearing: 18th April, 2005.

2006 C L D 381

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmed Khan, Director (Enforcement)

In the matter of: SAUD ANSARI, F.C.A.

Show-Cause Notice No. EMD/233/499/2002, dated January 18, 2005, decided on 18th March, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 234, 252, 255, 260 & 476---Companies (General Provisions and Forms) Rules, 1985, Rr.17-A & 35---Duties and responsibilities of an auditor appointed by shareholders---Show­cause proceedings initiated against and imposition of fine on the auditor---Auditor was a Fellow Member of the Institute of Chartered Accountants of Pakistan and was conducting business of a Chartered Accountants' firm of which he was a sole partner and himself had been the auditor of the company since the year 2000---Enforcement Department of the Commission, while examining accounts and auditors' report of company observed that company had not annexed statement of changes in equity in the accounts, and that auditors' report was also not according to Form 35-A prescribed under R.17-A of Companies (General Provisions and Forms) Rules, 1985 as he had failed to give an opinion on the statement of changes in equity---Certain other lapses were also found in the account of company---Written submission of the auditor admitted said faults and also admitted carelessness on his part while making report in terms of S.255 of Companies Ordinance, 1984 and he assured that said defaults would not be repeated in future-Company being a listed-company was required to comply with provisions of law and auditor was required to report thereon and issue art audit report as perform given in Form 35-A which required an opinion on the statement of changes in equity---Auditors being the ultimate watchman of shareholders interest, was required to give a report on the accounts and books of accounts after conducting the audit in accordance with prescribed procedure and requirements of Companies Ordinance, 1984, International Accounting and Auditing Standards---Shareholders of the Company were the ultimate entity to whom the auditors were responsible and they must keep that fact in mind while auditing the books of accounts and reporting thereon---Law having made auditors responsible, it was therefore extremely important for them to be vigilant and perform their duties and obligations with due care while auditing the accounts and books of accounts---Lapses and non-compliances of, on the part of the auditors, could not be taken lightly---Auditor in the present case having signed the audit report otherwise than in conformity with the requirements of S.255 of Companies Ordinance, 1984 and R.17-A of Companies (General Provisions and Forms) Rules, 1985 and having made himself liable for punishment under subsection (1) of S.260 of the Ordinance and R.35 of the Rules, was imposed fine of Rs.20,000.

Saud Ansari, F.C.A. in person.

Date of hearing: 22nd February, 2005.

2006 C L D 399

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmed Khan, Director (Enforcement)

In the matter of: MANSHA MOHSIN DOSSANI KHAN & COMPANY, CHARTERED ACCOUNTANTS

Show-Cause Notice No. EMD/233/214 of 2002, decided on 18th February, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 252, 255, 260 & 476---Powers and duties of auditors---Preparing and submitting defective audit report---Non-compliance of mandatory provisions of law---Imposition of penalty---Auditors appointed to conduct account of the company, submitted audit report otherwise than in conformity with the requirements of S.255 of Companies Ordinance, 1984---Enforcement Department of the Commission while examining the audited accounts of the company for the relevant year and auditors' report thereon observed that the company had not complied with provisions of Ss.234 & 235 of Companies Ordinance, 1984 and that audit report submitted by auditors was full of defaults-Auditors being the ultimate watchdog of the shareholders interest, were required to give a report on the accounts and books of accounts after conducting audit in accordance with prescribed procedure and requirements of Companies Ordinance, 1984 and International Accounting and Auditing Standards---Shareholders were the ultimate entity to whom the auditors were responsible and they must keep that fact in mind while auditing the books of accounts and reporting thereon---Was extremely important for the auditors to be vigilant and perform their duties and obligations with due care while auditing the accounts and books of accounts---Lapses and non-compliance of mandatory provisions of law on the part of auditors could not be taken lightly---Audit report having been made otherwise than in conformity with requirements of S.255 of Companies Ordinance, 1984, representation of auditors who had signed that report had made him liable for punishment under subsection (1) of S.260. of the Ordinance---Accounts of the company in subsequent years having been rectified, instead of imposing maximum fine of Rs.100,000, a fine of Rs.20,000 was imposed on engagement partner of auditing company who had also assumed the sole responsibility of the audit of the company and no fine was imposed on other Auditors.

Khan Muhammad, F.C.A. in person.

Date of hearing: 16th February, 2005.

2006 C L D 408

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar, Commissioner (Securities Market Division)

In the matter of: ARIF HABIB SECURITIES LTD. through Chief Executive

Show-Cause Notice No.SMD/TO/02/2005 dated February 11, 2005, decided on 23rd February, 2005.

Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----Ss. 4, 5, 13, 15, 20, 25, 26 & Preamble---Purpose of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002---Imposition of penalty---Acquirers in the case had acquired 20 million shares of an Industry ('Target Company) representing a percentage interest of 52.5% through a share purchase agreement at a price of Rs.30 per share for a total consideration of Rs.600 million---Acquirers intended to make a public announcement for shares held by minority share-holders at a price of Rs.30 per share---Acquirers failed to comply with the requirements of S.5 of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 which failure had provided for action against acquirers in terms of Ss.25 & 26 of the Ordinance---In addition, public announcement submitted to the Commission, lacked a number of statutory disclosures or contained such material which was contradictory to various provisions of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance 2002---Several other deficiencies having also been observed in Public announcement, a show-case notice was issued to acquirers---Purpose of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 was to provide a fair and equal treatment to all the investors as well as a transparent and efficient system for substantial acquisition of voting shares and takeovers of listed companies---Understanding of acquirers that S.5 of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, was not applicable on (hem as it applied to one person only, whereas in the subject case, there were more than one person, was totally incorrect: because the Ordinance clearly provided for the acquirer acting either by himself and/or through other person in concert, which admittedly was the case in the present matter---Default on the part of the acquirers was wilful and they had violated various provisions of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 for that they could be punished under S.25(c) of the Ordinance---Taking a lenient view, acquirers were directed under S.25(b) of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, not to dispose of any of 20 million shares of target company acquired by them for a period of three years from the date of acquisition without the prior approval of the Commission---Violation on part of the acquirers being wilful, a collective penalty of one million rupees under S.26(3) of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, was imposed on acquirers in proportion to the voting shares acquired by them---Acquirers were also directed to make public announcement for offer of respective shares after making necessary correction as intimated by the Commission.

Representing the acquirers:

Mr. Arif Habib, Chief Executive, Arif Habib Securities Ltd.

Mr. Akmal Jameel, SVP, Arif Habib Securities Ltd.

Mr. Abdul Ghani Usman.

Representing the Manager to the Offer:

Mr. Shahid Ali Habib, Chief Executive, Motiwala Securities (Pvt.) Ltd.

Date of hearing: 17th February, 2005.

2006 C L D 418

[Securities and Exchange Commission of Pakistan]

Before Tariq Bakhtawar, Director Enforcement

In the matter of: M/s. HUFFAZ SEAMLESS PIPE INDUSTRIES LIMITED

Show-Cause Notice No.EMD/233/422/2002-3573, dated December 14, 2004, decided on 26th January, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 178. 184, 186 & 476---Appointment of Directors without getting their consent in writing---Imposition of penalty---Commission while examining the record of the company, had observed that the company, which was a public limited company, had appointed four U.A.E based Directors without getting their written consent as required by S.184 of Companies Ordinance, 1984 and that Directors, at the time of election, did not disclose in the notice of the meeting the number of Directors fixed as required under subsection (2) of S.178 of Companies Ordinance, 1984---Company admitted statutory default, but had contended that said mistakes were due to misunderstanding in interpretation of relevant provisions of law and that. four Directors, who were appointed without getting their written consent, were foreign based and despite continuous persuasion of the Company, their consent was not received, but they were retained in good faith and in the larger interest of the company---Chief Executive of company, however, had assured that company would comply with the requirements of law in future-Default of the company though was established and admitted but in view of assurance of the company that requirements of law would be complied with in future, lenient view was taken and instead of imposing a maximum penalty of Rs. 10,000 on all Directors of the company, fine of Rs.5,000 was imposed on the Chief Executive and company secretary only as provided under S.186 read with S.476 of Companies Ordinance, 1984---Other Directors of the company were also advised to he careful in compliance of law in future.

Hafiz Abdul Majid Chief Executive, Huffaz Seamless Pipe Industries Ltd.

Abdul Hafeez Khan, Company Secretary.

Fazal Mahmood, Auditor.

Date of hearing: 12th January, 2005.

2006 C L D 427

[Securities and Exchange Commission of Pakistan]

Before Javed K. Siddiqui Executive Director (CL)

In the matter of: Messrs PAKISTAN PVC LIMITED

Show-Cause Notice No.EMD/Enf-II/506/2003, dated 9th April and 6th July, 2004, decided on 16th June, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 245 & 476---Failure of Company to file its quarterly accounts within prescribed time period---Imposition of penalty---Company having failed to file its quarterly accounts within prescribed period, such failure of the company had necessitated action against responsible Directors of the company in terms of subsection (3) of S.245 of Companies Ordinance, 1984---Preparation and circulation of quarterly accounts was one of the statutory obligations of the Directors of the company and they were supposed to make serious efforts to ensure the compliance of relevant provisions of law, but Directors had not made serious attempt to prepare and transmit said quarterly accounts within prescribed time---Disregard of law by the' company and its Directors was also evident from unsatisfactory track record of the company regarding compliance of statutory provisions---Chief Executive and Directors of the company had been penalized a number of times in the past also for defaults in compliance with the mandatory provisions of Companies Ordinance, 1984---Fine was imposed on the company after issuing show-cause notice and providing it opportunity of hearing---Taking lenient view amount of penalty imposed on company and its Directors, was reduced accordingly.

Arif Shaffi, Director present.

Date of hearing: 9th May, 2005.

2006 C L D 431

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmed Khan, Director (Enforcement)

In the matter of: Messrs SARWAR AWAN & CO.

CHARTERED ACCOUNTANTS

Show-Cause Notice No.EMD/233/571/2002, dated 6th January, 2005, decided on 3rd March, 2005.

Companies Ordinance (XLVII of 1984)-

----Ss. 252, 255, 260 & 476---Powers and duties of auditors---Non-compliance of provisions of' law by auditors in preparing and submission of audit report---Imposition of penalty---Auditors duly appointed to audit accounts of the company for relevant year, ;nude and signed audit report after auditing its accounts---Enforcement Department, after examining financial statements of the company for relevant year, observed that auditors had drawn a qualified report on said accounts and felt concerned about the quality of the audit conducted by auditors and audit report made by then---Materiality' of the qualifications required an adverse opinion by the auditors, who prima facie, failed to address whose issues as required, by auditing standards applicable in Pakistan---Auditors being the ultimate watchdog of the shareholders' interest, were required to give a report on the accounts and books of accounts after conducting the audit in accordance with prescribed procedure and requirements of Companies Ordinance, 1984 and International Accounting and Auditing Standards, but in several cases auditors were not performing their statutory duties with due care and in accordance with legal requirements---Law had made the auditors responsible for preparing a report in accordance with legal requirements and it was extremely important for auditors to be vigilant and perform their duties and obligation with due care while auditing accounts and books of accounts---Lapses, errors and non-compliance of requirements on the part of auditors, could not be taken lightly---Audit report having not been signed by auditors in conformity with the requirements of S.255 of Companies Ordinance, 1984, they had made themselves liable for punishment under subsection (1) of 5.260 of the Ordinance---Fine of Rs.20,000 was imposed on person of auditing company who was responsible for alleged default.

Aslam Awan. A.C.A. present.

Date of hearing: 15th February, 2005.

2006 C L D 454

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmed Khan, Director (Enforcement)

In the matter of: Messrs METROPOLITAN STEEL CORPORATION LIMITED

Show-Cause Notice No.EMD/233/20/2002, dated 11th February, 2005, decided on 10th March, 2005.

Companies Ordinance (XLVII of 1984)---

----Ss. 227 & 472---Failure of company to make timely payment towards Employees' Provident Fund Trust---Accounts of the company for relevant year had revealed that a considerable amount was still payable towards Employees' Provident Rind, but the company had not made payment thereof towards accumulated outstanding balance of said Fund and company by said failure had violated provisions of S.227 of Companies Ordinance, 1984---Company, in response to the notice had stated that new management which had taken over the charge from consortium of Banks, was busy with the revival of the company which had to close its operations due to disconnection of electricity, gas and water and undertook to pay accumulated contribution of Provident Fund and regularize payment of same--Notice in terms of provisions of S.472 of Companies Ordinance. 1984 was issued to the company and its Chief Executive to make good the default in payment of Provident Fund by making payment of entire outstanding amount within specified period-On date fixed for hearing the matter, representative of the company, had reiterated that company was ready to repay outstanding amount to Fund in seven monthly instalments in view of liquidity position of the company---Such undertaking on part of the company had indicated its willingness to undo the irregularities and intent to abide by the law, it was before, ordered in circumstances that company would repay the entire outstanding amount to the Fund in seven equal monthly instalments---Report would be submitted, by the company to the Commission on the 20th day of each month along with the proof of payment of instalment.

Shariful Muzaffer, C.F.O. and Company Secretary.

Date of hearing: 7th March, 2005.

2006 C L D 458

[Securities and Exchange Commission of Pakistan]

Before Javed K. Siddiqui, Executive Director (CL)

In the matter of: DIAMOND INDUSTRIES LTD.

Show-Cause Notice No.EMD/233/595/2002-6612-6618, dated 4th March, 2005, decided on 25th May, 2005.

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

----S. 208---S.R.O.865(I)/2000, dated 6-12-2000--Business transaction of company with associated companies and undertaking without authority of special resolution---Imposition of penalty on company---During examination of annual accounts of the company for the relevant year it was observed that the company had business transaction by making investment in associated companies or associated undertakings without authority of special resolution in violation of provisions of S.208 of Companies Ordinance, 1984---Company had contended that it had passed a resolution for making investment in associated company and that there was no contravention of S.208 of Companies Ordinance, 1984---Alleged resolution was passed about nine years ago and investments made by the company in associated companies on the basis of a nine years old resolution could not be treated as a valid investment---Investment made by the company for the last number of years was not bringing duty return to its shareholders: in view of amendments made in the provisions of S.208 of Companies Ordinance, 1984, company had to disclose the additional information to its shareholders as required under S.R.O. 865(1)/2000 dated 6-12-2000---No such disclosures were matte indicating that company had always been viewing such investment as a trade transaction---Company and its management, in circumstances had contravened provisions of S.208 of Companies Ordinance, 1984---Default under S.208 of Companies Ordinance, 1984, being willful and deliberate, penalty was imposed on the company, as the company had recovered outstanding amount in subsequent period, taking lenient view, instead of imposing a maximum penalty of Rs.10, 00,000 on each Director fine of Rs.2.50,000 was imposed on Chief Executive' of the Company only and other Directors were reprimanded to be careful in future.

Nazir Ahmed, Company Secretary, R.R. Alvi, Advocate and Hameed Khan, F.C.A. on behalf of the Company Present.

Date of hearing: 6th May, 2005.

2006 C L D 476

[Securities and Exchange Commission of Pakistan]

Before Shahid Ghaffar, Securities Market and Etrat H. Rizvi, Specialized Companies, Commissioners

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Chief Manager---Appellant

Versus

SHAF INDUSTRIES (PVT.) LIMITED and another---Respondents

Appeal No. 11 of 2004, decided on 20th July, 2004.

Companies Ordinance (XLVII of 1984)-

----Ss. 131 & 132---Securities and Exchange Commission of Pakistan, Act (XLII of 1997), S.33---Rejection of application Or rectification of register of mortgage---Original facility provided by Bank to the company, having been settled, company requested the Bank to issue a final clearance of liability certificate with regard to its liabilities owed to the Bank---Required clearance certificate was issued by the Bank on the same day, which was delivered to the Joint Registrar concerned by the company along with Form-17 (memorandum of complete satisfaction of charge) which was duly registered by the Registrar---'Thereafter, application filed by the Bank under S.131 of Companies Ordinance, 1984 seeking rectification of register of mortgage/ charge of the company, was rejected by Commissioner after hearing the Bank on the ground that Registrar was justified in recording Form-17 on production of clearance certificate issued by Bank---Bank had filed appeal against impugned order by the Commissioner---Validity---Requirement of notice to holder of charge under subsection (2) of S.132 of Companies Ordinance, 1984 was fulfilled by clearance certificate issued by the Bank confirming that shares were issued by the company accordingly---Law did not provide for creation of charge in favour of share-holder in respect of equity investment---Initial charge documents as well as subsequent enhancement of charge was registered in favour of Bank only---Onus of due diligence while issuing clearance certificate was on the Bank---Company had made its intention vent clear that in order to avail a financial facility from other Bank, it would be creating a charge on same property and for that purpose it needed a final clearance certificate front the Bank-Rectification of register sought for by the 13ank, could not be ordered, when a charge had been created and registered, in favour of another Bank on same assets which being an innocent party heal relied on clearance certificate issued by the Bank arid memorandum of complete satisfaction of charge (Form-17) issued by Joint Registrar---Commissioner, in circumstances, had rightly rejected application of Bank or rectification of register of charges/ mortgages.

Qazi Jawad Ehsanullah and Tahir Latif for Appellant.

Nemo for Respondent No. 1.

Munawar Ali Bhatti, Joint Registrar, SEC for Respondent No.2.

Date of hearing: 6th June, 2004.

2006 C L D 480

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (Company Law)

In the matter of: Messrs AYAZ TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/Enf-II/215/2004, dated November 18, 2005, decided on 6th January, 2006.

Companies Ordinance (XLVII of I984)-

----Ss. 245 & 476---Failure of company to prepare and transmit quarterly accounts---Imposition of penalty on company---Company in terms of provisions of S.245 of Companies Ordinance, 1984 was required to prepare and transmit to the members of the company and simultaneously file with the Registrar and the Commission its quarterly accounts, but company failed to do so---Protection of investors/shareholders of the company, was one of the primary objectives of Companies Ordinance, 1984---If interest of investors/shareholders who provided seed for capital formation, was protected they would save and invest more---Interest of shareholders/investors was protected by transmission of timely, adequate and meaningful information to them---Annual and interim accounts would provide information to the investors about the affairs of company---Default in preparing and submitting required quarterly report on part of the company proved to be wilful and deliberate---Legitimate inference could be formed that Chief Executive and Directors of the company had failed to protect the interest of the shareholders---Track record of the company with regard to filing of annual and quarterly accounts was not satisfactory---Directors had also failed to deposit the amount of penalties imposed on them for previous defaults---Conduct of Directors had established that they had no respect for the law and they had again deprived shareholders of their statutory rights to receive quarterly accounts of the company within prescribed time limit---Penalty was imposed on company after issuing show-cause notice and providing opportunity of hearing---Instead of imposing maximum fine of Rs.100,000 on every Director and a further fine of Rs.1,000 per day for continuous default, fine of Rs.20,000 was imposed on each Director accordingly.

None appeared.

Date of hearing: 5th January, 2006.

2006 C L D 533

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Quershi, Executive Director (CL)

In the matter of: Messrs MUBARAK DAIRIES LIMITED

Showe-Cause Notice No. EMD/233/571/2002- 5015, dated November 30, 2005, decided on 24th February, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 158, 233, 234, 245, 472 & 495---Default in the accounts of Company and other irregularities---Directions to Company to undo said defaults and irregularities---Enforcement Department of the Securities and Exchange Commission, after examining financial statement of the Company pertaining to relevant year as provided by Auditors of the Company, found certain defaults and irregularities but such audited accounts had not been made in conformity with the requirements of S.234 of Companies Ordinance, 1984---Matter was taken up with the Auditors of the Company, who admitted that accounts of the Company for relevant year did not depict the true and fair view of the state of affairs of the company---Auditors of the Company were penalized for their incorrect opinion---Company also failed to hold its annual general meeting to lay therein annual audited accounts and to file quarterly accounts for the first, second and third quarters---Commission, in circumstances, considered necessary to direct the Company to undo said defaults---Notice under S.472 of Companies Ordinance, 1984 was issued requiring the Company to make good continuing defaults relating to annual and interim accounts within specified days, but Company did not respond to said notice---Protection of the investors/share-holders was one of the key objectives of Companies Ordinance, 1984 as investors/share-holders provided seed for capital formation---Such persons did not have any direct control over the Company, apart from that they elect Directors for a period of three years and hand over the affairs of the Company to them in the expectation that they would manage the Company in a prudent manner---In order to protect interests of shareholders Ss.233, 234 & 245 of Companies Ordinance, 1984 required that timely, adequate, meaningful and true and fair information was transmitted to them in formal annual and interim account reports---Violation of said mandatory provisions of Companies Ordinance, 1984 could not be ignored---Commission, in circumstances initiated proceedings against the Company under Ss.158 & 245 of Companies Ordinance, 1984---Company was also directed through a notice under S.472 of Companies Ordinance, 1984 to undo defaults---Directors of the Company, in case of non-compliance of said directives, would be liable to action under 5.495 of Companies Ordinance.

Mr. Khalid Suraj Bajwa, Chief Executive Officer.

Date of hearing: 22nd February, 2006.

2006 C L D 542

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CL)

In the matter of: M/s. QUICE FOOD INDUSTRIES LIMITED

Show-Cause Notice No. EMD/233/578/2002-7191-7197, dated January 3, 2006, decided on 1st March, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 158, 170, 233, 234, 472 & 495---Failure to hold Annual General Meetings and failure to file quarterly accounts---Directions to company to undo other defaults and irregularities---Company had failed to hold its Annual General Meetings for the relevant year to lay therein Annual Audited accounts as required under Ss.158(1) & 233 of Companies Ordinance, 1984---Track record of the Company with regard to filing of accounts and holding of Annual General Meetings, was also not satisfactory---Audited accounts pertaining to relevant financial years, had not been made in conformity with requirements of S.234 of Companies Ordinance, 1984 and it did not present a true and fair picture of the state of affairs of the Company---Notice was issued under S.472 of Companies Ordinance, 1984 requiring Company to make good continuing defaults by removing Auditors' qualifications and submitting audited annual accounts for relevant years---Company was also advised that accounts should be prepared in such a way that they should depict true and fair view of the state of affairs of the Company; in addition, separate proceedings under Ss.158, 170 & 245 of Companies Ordinance, 1984 were also initiated against the Company---Protection of investors/shareholders was one of the key objectives of Companies Ordinance, 1984, because investors/share-holders provided seed for capital formation---Said persons do not have any direct control over the Company apart from that they elect Directors for a period of three years and hand over affairs of the Company to them in the expectation that they would manage the Company in a prudent manner---In order to protect their interests Ss.233, 234 & 245 of Companies Ordinance, 1984 required that timely, adequate, meaningful and true and fair information be transmitted to them in the form of annual and interim accounts---Directors of the Company were to submit to the Commission the audited financial statements of the company for relevant years prepared in accordance with S.234 of Companies Ordinance, 1984 depicting the true and fair view of the state of its affairs along with auditors report thereon, duly approved by share-holders within specified period---Directors of the Company, in case of non-compliance of said directives, were to be liable to action under S.495 of Companies Ordinance, 1984.

Mr. Muhammad Afaq Shamsi, Chief Executive Officer.

Date of hearing: 22nd February, 2006.

2006 C L D 556

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CL)

In the matter of: M/s. HAJARA TEXTILE MILLS LIMITED

Show-Cause Notice No. EMD/CO.233/73/2002 dated January 3, 2006, decided on 3rd March, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 83(3), 476 & 492---Companies (Issue of Capital) Rules, 1996, R.5---Balloters, Transfer Agents and Underwriters Rules, 2001---Offer of new shares---Imposition of penalty for false statement--Annual accounts of the Company for the year ending June 30,2005 stated that subsequent to the balance-sheet date, company offered 100% right shares, all of which were taken up by the Directors and as a result Directors' loan amounting Rs.68.75 million was converted into equity and that purchasing of right shares by the Directors was on account of underwriting of right shares as they were underwriters to the right issue---Appointment of Directors as underwriter. was in violation of Balloters, Transfer Agents and Underwriters Rules, 2001---Financial statements for the quarter ending September 30, 2005, however, did not show any material additions in the fixed assets ensuring the right issue---Said observations having raised concern about the state of affairs of the Company, a show-cause notice was issued to the Chief Executive and Directors of the Company asking them to explain why penalty as provided under Companies (Issue of Capital) Rules, I996 and S.492 of Companies Ordinance, should not be imposed on Chief Executive and the Directors of the Company---After considering facts of the case, it was observed that Directors, while agreeing in capacity of underwriters, were expected to have full knowledge of all relevant statutes---Directors were reprimanded to remain careful in future while complying with Statute---Company had given incorrect information in circular letter and projections related to the right issue, however in view of Director's commitment for revival of Company taking lenient view, fine of Rs.20,000 was imposed on each Director and Chief Executive, instead of imposing maximum penalty as prescribed by S.492 of Companies Ordinance, 1984.

A. Hameed Chaudhry, Consultant and Sa'adat A. Chaudhry, Director.

Date of hearing: 1st March, 2006.

2006 C L D 588

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (Company Law Division)

In the matter of: M/s. HAFIZULLAH & CO. CHARTERED ACCOUNTANTS

Show-Cause Notice No.EMD/233/249/2002-11411-13 dated June 16, 2005, decided 2nd March, 2006.

Companies Ordinance (XLVII of 1984)---

--Ss. 252, 255 & 260---Powers and duties of auditors---Failure of auditors to perform their statutory obligations---Imposition of penalty--Auditors had failed to perform their statutory obligations by not giving fullest information to the members of company concerned and made report otherwise than in conformity with the requirements of S.255 of Companies Ordinance, 1984---Auditors being the ultimate watchdog of share-holders, were required to give a report on the accounts and books of accounts after conducting the audit, in accordance with the prescribed procedures and requirements of Companies Ordinance, 1984, International Accounting and Auditing Standards---If Auditors had found any irregularity, which was material with regard to the accounts, they were required to issue a qualified report---Share-holders were the ultimate entity to whom the Auditors were responsible and they must keep that fact in mind while auditing the books of accounts and reporting thereon---Auditors must realize their true role and restrain themselves from performing their duties indulgently---Capital required for the business of a company, was contributed by its share-holders, who could not necessarily be the persons managing the company---General public, in the case of a listed-company, also contributed towards the equity of the company and such persons did not have any direct control over the company---Practically, share-holders had no control over the way their company was managed by the Directors appointed by them, it was, in circumstances necessary that there must be some arrangement whereby the share-holders, who were the real beneficiaries must get some independent view as to how the Directors had managed the affairs of the company---Law, in circumstances had provided that share-holders should appoint an auditor who would be responsible to audit the accounts and books of accounts and make out a report to them at the end of each year---Such was the only safeguard provided by law to the share-holders---Law, in circumstances had made the Auditors responsible, to make out a report in accordance with legal requirements---Was extremely important for the auditors to be vigilant and perform their duties and obligations with due care while auditing the accounts and books of accounts---Auditors having failed to perform their professional duties with reasonable degree of care and skill, penalty was imposed on all partners of Auditing Company accordingly.

Tanwir Arif F.C.A., Partner.

Date of hearing: 21st February, 2006.

2006 C L D 627

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Commissioner (CLD)

In the matter of: Messrs MUKHTAR TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/CO.233/123/2002, October 21, 2005, decided on 17th January, 2006.

Securities and Exchange Ordinance (XVII of 1969).-

----S. 22(1)(b)---Balloters, Transfer Agents and Underwriters Rules, 2001, R.(3)---Companies Ordinance (XVVII of 1984), Ss.86(3), 231(1), 472 & 492---Refusal or failure to comply with any order or direction of Central Government---Imposition of penalty for false statement---During examination of annual accounts of the company for relevant year, it was observed that capital of company was increased considerably---On inquiry it was discovered that share-holding of five Directors who were joint underwriters to the issue, had increased, which, however resulted in dilution of share-holding of minority share-holders---Later on, from perusal of detailed financial projections it transpired that project implementation was not completely in accordance with financial projections---Company had also failed to materialize anticipated benefits and lacked appropriately structured management set-up proficient with business planning and decision making process---In view of such state of affairs of the company show-cause notice was issued to Chief Executive and Directors of the Company asking them to explain violation of Balloters, Transfer Agents and Underwriters Rules, 2001---Management, in order to conduct the business of the company in a prudent manner, should have complete knowledge of the business environment and factors which could affect it in any manner whatsoever---Code of Corporate governance aimed at promoting such a management attitude and management while making statement of company with Code's requirements was expected to be fully cognizant of that---Management of listed-company should also be conscious of the fact that investment decisions of ordinary investors were effected by the information disseminated by them in the statutory document' circulated to share-holders---Management was responsible to ensure that undertakings were implemented in letter and spirit within the timeframe specified therein---In case of deviation of any sort, management was duty bound to disclose same to share-holders along with the effects thereof and measures taken to minimize the adverse effects---Deviation of the financial position of the company from that presented in the projections, appeared to be more attributable to lack of professionalism and ill-planning of the management, rather than any mala fide on their part to defraud general public---Securities and Exchange Commission, instead of imposing maximum penalty of Rs.100, 000 on Chief Executive and each Director as prescribed by 5.492 of Companies Ordinance, 1984 and ordering for inspection in terms of S.231 of the Ordinance, provided opportunity to the management to honour its commitments and deferred any action till such time the concerns of Commission were satisfactorily answered.

Rana Muhammad Saleem, Chief Executive Present.

Date of hearing: 3rd January, 2006.

2006 C L D 635

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik, Commissioner (CLD)

In the matter of: SHAHPUR TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/CO.233/ 194/2002 dated July 11, 2005, decided on 18th January, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 86(3), 472 & 492---Securities and Exchange Ordinance (XVII of 1969), S.22---Companies (Issue of Capital) Rules, 1996, R.5---Imposition of penalty on certain irregularities and refusal or failure to comply with any direction---Annual accounts of company for relevant year had shown that share capital of the company was considerably increased, but from perusal of financial projections prepared pursuant to R.5 of Companies (Issue of Capital) Rules, 1996 it was noticed that the project implementation was not completely in accordance with financial projections---Proceeds of the right issue were not utilized for the' purposes disclosed in the financial projections submitted to the share-holders at the time of approval of right issue; instead those appeared to have been utilized for repayment of Directors' loan---Such situation having raised concerns about the state of affairs of the company, a show-cause notice was issued to the Chief Executive and Directors of the Company asking them to explain violation of Balloters, Transfer Agents and Underwriters, Rules, 2001 and that why penalty under S.492 of Companies Ordinance, 1984, may not be imposed on the Chief Executive and the Directors for said violation---Company replied to the notice .wherein it was accepted that company was unaware of said Balloters, Transfer Agents and Underwriters Rules, 2001---Chief Executive while agreeing to act in the capacity of an underwriter, was expected to have full knowledge of all relevant statutes---Chief Executive, in circumstances was reprimanded to remain careful while complying with statute---Securities and Exchange Commission, instead of imposing maximum penally of Rs.1,00,000 on Chief Executive and each Director as prescribed by S.492 of Companies Ordinance, 1984, imposed a fine of. Rs.50,000 on Chief Executive and each of six Directors---Since the concerns of the Commission regarding company's profitability had remained unsolved, Chief Executive and Directors were directed under provisions of 5.472 of Companies Ordinance, 1984 to provide financial plan after carrying out due diligence within the specified period.

Imtiaz Majeed, Consultant and Nasir Ali Khan, C.F.O.

Date of hearing: 15th November, 2005.

2006 C L D 660

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

In the matter of: M/s. QUICE FOOD INDUSTRIES LIMITED

Show-Cause Notice No.EMD/Enf-II/578/2004, dated December 26, 2005, decided on 14th February, 2006.

Companies Ordinance (XLVII of 1980-

----Ss. 158 & 476---Failure to hold Annual General Meeting---Imposition of penalty---Company, which in terms of provisions of subsection (1) of 5.158 of Companies Ordinance, 1984 was required to hold its Annual General Meeting within prescribed time, had failed to do so---Failure of the company to comply with said mandatory requirement had necessitated action against the company and its Directors in terms of subsection (4) of 5.158 of Companies Ordinance, 1984---Show-cause notice was served on the company and its Directors including its Chief Executive---In response to said show-cause notice, company had furnished certain explanations but same were not found satisfactory---Directors and Chief Executive having intentionally avoided to appear before Director (Enforcement) of the Securities and Exchange of Commission, default on part of the company was considered wilful and deliberate and it could legitimately be inferred that Chief Executive and Directors of the company had failed to protect interest of share-holders, which state of affairs was a cause of great concern for Commission---Directors of the company were responsible to timely hold Annual General Meeting as that was the only forum to the share-holders where they could discuss, speak and vote on the significant matters---Management of the company in the past also, had committed such default for which penalties were imposed on Chief Executive and Directors of the Company and Directors had failed to deposit amount of most of the penalties imposed for the previous defaults---Directors of the company, in circumstances, had shown no respect for the law and they had again deprived share-holders of their statutory right to receive annual accounts of the company within prescribed time limit---Securities and Exchange Commission, instead of imposing maximum fine of Rs.50,000 on the company and every Director and further fine of Rs.2,000 per day for continuous default, imposed reduced penalties on Chief Executive and Directors of the company accordingly under S.158(4) of Companies Ordinance.

No one appeared.

Date of hearing: 14th February, 2006.

2006 C L D 663

[Securities and Exchange Commission of Pakistan]

Before Arif Mian, Executive Director (Securities Market Division)

In the matter of: AAMIR SHEZAD AWAN

Show-Cause Notice No.SMD/Co.62/2/2004-S, 6th December, 2005, decided on 30th January, 2006.

Securities and Exchange Ordinance (XVII of 1969)-

----S. 18-A---Making a fictitious application or submitting more than one application for shares of companies offered to the public---Effect---Bank on behalf of sponsoring share-holders of Bank (the offerer) vide a letter, furnished to Securities and Exchange Commission, a list of cases of all those applicants which were detected by the Corporation (the balloters of the offer) as being filed in violation of S.18-A of Securities and Exchange Ordinance, 1969---One application was submitted by applicant through one Commercial Bank and other allegedly was submitted by him through a different Bank---Both said applications were submitted under same name with same N.LC. number and father's name, but with different signatures and addresses---Show-cause notices were issued by Securities and Exchange Commission to one and same person, but on different addresses---Applicant in his reply to written explanation had stated that he had submitted only one application through one Commercial Bank and that he had no knowledge of person who had filed other application---Perusal of said applications and correspondence exchanged in the matter, had revealed that said application had been submitted by two different persons using same N.LC. number and father's name, but with different addresses and signatures---Facts made it evident that application submitted by applicant through Commercial Bank was genuine---Offerer was advised to accept application submitted by applicant through Commercial Bank and refund subscription money deposited against same and money deposited against fictitious application be confiscated accordingly.

Petitioners in person.

Respondents in person.

Date of hearing: 13th December, 2005.

2006 C L D 667

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: M/s. MACDONALD LAYTON COMPANY LIMITED

Show-Cause Notice No. EMD/233/571/2002-5457-5464, dated 12th December, 2005, decided on 17th February, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 233, 237, 472 & 495---Enforcing compliance with mandatory provisions of Companies Ordinance, 1984---Company and its Directors had been proceeded against under provisions of S.472 of Companies Ordinance, 1984 for non-compliance of mandatory provisions of Ss.233 & 237 of the Ordinance---Directors of the Company in terms of provisions of S.233 of Companies Ordinance, 1984 were required to lay before its share-holders in the annual general meeting, audited balance sheet and profit and loss account and in terms of S.237 of the Ordinance, the Directors were required to attach to said audited accounts consolidated financial statements of the group presented as those of a single enterprise and such consolidated financial statements had to be reviewed by the auditors---Company having failed to comply with said mandatory provisions of law, notice under S.472 of Companies Ordinance, 1984 was issued, requiring Directors of company to arrange for audit of books of account of the company and submit audited/consolidated accounts within specified period---Explanation given by company for non-compliance of said mandatory provisions of law in response to said notice, did not justify contravention of the mandatory provisions of law---Business of the company though had been suspended since 1998 and it was in dire straits as regard its financial position, but it was even more important that share-holders of the company were provided authentic information regarding the state of affairs of the company---Audited annual financial statements were one such source of verified information provided by law---Directors of the company were ordered to comply with said mandatory provisions of law and in case of non-compliance of said directive, company and its Directors were liable to action under S.495 of Companies Ordinance, 1984.

No one appeared on behalf of the Company and Directors present.

Date of hearing: 13th February, 2006.

2006 C L D 684

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: Messrs NETSOL TECHNOLOGIES LIMITED

Show-Cause Notice No.EMD/233/669/2005-7868 dated February 3, 2006, decided on 9th March, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 195, 473 & 476---Loans to Directors---Examination of annual accounts of the Company for relevant year showed that Company had provided loans to its Directors, without taking approval of Commission for making said loans to Directors; and that no particulars had been filed with Registrar of Companies in that respect---Enforcement Department, in circumstances apprehended violations of statutory provisions of S.195 of Companies Ordinance, 1984---Show-cause notice was issued under Ss.195 & 476 of Companies Ordinance, 1984 to Chief Executive and Directors of the Company---Legal Advisor of the Company admitted that the Company had failed to file particulars of loans of said Directors with the Registrar and he requested to take a lenient view of the matter and to allow some time to the Company for doing the needful---Validity---Company had breached the mandatory requirements of S.195 of Companies Ordinance, 1984, however due to minor nature of default and keeping in view the fact that Company was a newly­listed-Company, lenient view of the matter was taken and instead of imposing any fine, invoking powers contained in S.473 of Companies Ordinance, 1984, Company was directed to file particulars of loans provided to Directors with the Registrar and send a copy of the same with the directions that Company would, in future comply with provisions of Companies Ordinance, 1984.

Boo Ali, Chief Financial Officer and Asif Anwar, Legal Advisor for Respondent..

Date of hearing: 9th March, 2006.

2006 C L D 694

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: Messrs ZAHUR TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/Enf-II/291/2004 dated February, 28, 2006, decided on 10th March, 2006.

Companies Ordinance (XLVII of 1984)----

----Ss. 245 & 476---Failure of Company to prepare and submit its quarterly accounts---Imposition of penalty---Company which under S.245 of Companies Ordinance, 1984 was required to prepare and transmit to the members and simultaneously file with Commission its quarterly accounts, having failed to do within prescribed time, a show-cause notice was served on Chief Executive and other Directors of the Company---Protection of investors/share-holders of the Company was one of the primary objectives of Companies Ordinance, 1984---If the interest of the investors was protected they would save and invest more and their interest could be protected by transmission of timely, adequate and meaningful information to them and it was the annual and interim accounts which could provide information to investors about the affairs of the Company---Default in preparing and transmitting quarterly account was considered wilful and deliberate---Chief Executive and Directors had failed to protect the interest of shareholders and the track record of the Company with regard to filing quarterly and annual account was also not satisfactory---Default under subsection (1) of S.245 of Companies Ordinance, 1984 regarding non-submission of quarterly accounts, stood established, in circumstances---However, instead of imposing maximum fine of Rs.100,000 on every Director, Rs.30,000 were imposed on Chief Executive and Rs.20,000 on each Director accordingly.

No one appeared.

Date of hearing: 7th March, 2006.

2006 C L D 711

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (SM)

In the matter of: ISMAIL ABDUL SHAKOOR, MEMBER KARACHI STOCK EXCHANGE

Show-Cause Notice No.1(8) OCT 18/MSW/SMD/2005/38 dated December 26, 2005, decided on 16th March, 2006.

Brokers and Agents Registration Rules, 2001---

----Rr.8(iii) & 8(b)---Regulations for Short Selling Under Ready Market, 2002, Cls.2(a)(g) & 4---Violation of Rules and Regulations---Imposition of penalty---Stock market having experienced abnormal volatility on 18-10-2005, the Commission, in order to investigate the reasons thereof, obtained trading data from Automated Trading System---Data so obtained and subsequent information had shown that on said date client of Member, Stock Exchange sold shares of Bank of Punjab, while said client of the Member did not have pre-existing interest in the shares of Bank of Punjab---Sale transaction of shares was said to be regular when a client had pre-existing interest in the shares before the sale---Record produced by the Member did not substantiate that the client had any pre-existing interest in the shares of Bank of Punjab on said date and merely provided a purchase bill of an unknown person from pre-existing interest of Member's client as required in Regulations for Short Selling Under Ready Market, 2002---Sale by Member's client without pre-existing interest and any contractual borrowing arrangement, in circumstances, fell within the ambit of blank sale which was prohibited in terms of Regulations for Short Selling under Ready Market, 2002---Member Stock Exchange, in circumstances had acted in violation of Cl.4 of Regulations for Short Selling Under Ready Market 2002 and R.8(iii) of Bankers and Agents Registration Rules, 2001---Violation of said Rules and Regulations was a serious matter which had entitled the Commission to suspend Member's membership, but Commission in exercise of powers under Cl.8(b) of Brokers and Agents Registration Rules, 2001, had imposed on the Member penalty of Rs. 50,000.

Shakeel Hussain, Manager for Respondent.

Shaukat Hameed, Joint Director assisting the Director (SMD).

Date of hearing: 20th January, 2006.

2006 C L D 729

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

In the matter of: Messrs SERVICE FABRICS LIMITED

Show-Cause Notice No.EMD/Enf-II/231/2003 dated December 13, 2005, decided on 24th March, 2006.

Companies Ordinance (XLVII of 1984)--

--Ss. 158 & 476---Failure to hold annual general meeting---Imposition of penalty---Company in terms of provisions of subsection (1) of S.158 of Companies Ordinance, 1984 was required to hold its Annual General Meeting within prescribed time, but it failed to do so---Validity and effect---Notice was served on the Company---Protection of investors/share-holders of Company was one of primary objectives of Companies Ordinance, 1984 and their interest was protected by transmission of timely, adequate and meaningful information to them---Annual and interim accounts only could provide information to said investors/share-holders about the affairs of the Company---Annual General Meeting was a forum where investors could freely discuss, speak and vote on important matters concerning approval of accounts, appointment of auditors, election of Directors etc.---Chief Executive and Directors of Company had failed to protect the interest of share-holders by not holding Annual General Meeting---Track record of the Company with regard to holding of Annual General Meetings, was also not satisfactory for which Directors were penalized earlier also---Repetition of default had clearly shown that Company was not making any serious efforts to comply with provisions of law---Default regarding non-holding of Annual General Meeting for relevant year was considered wilful---Keeping in view the financial position of Company, a lenient view was taken in imposing penalty on Company---Instead of imposing maximum fine of Rs.50,000 on Company and every Director Rs.20,000 were imposed on the Company, its Chief Executive and other Directors under subsection (4) of S.158 of Companies Ordinance, 1984 for non-holding of Annual General Meeting.

Ralph Nazirullah, Company Secretary for Respondent.

Date of hearing: 27th February, 2006.

2006 C L D 741

[Securities and Exchange Commission of Pakistan]

Before Salman Ali Shaikh and Rashid I. Malik, Commissioners

Mian MUHAMMAD ILYAS MEHRAJ and 16 others---Appellants

Versus

COMMISSIONER (SECURITIES MARKET DIVISION) and 35 others---Respondents

Appeal No.64 of 2005, decided on 21st March, 2006.

Listed-Companies (Substantial Acquisition of Voting Shares and Takeover) Ordinance (CIII of 2002)---

----S. 21---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Complaint seeking inquiry into acquisition of shares---Appeal before Appellate Bench--Appellant had stated that no inquiry was held by the Commission and their complaints seeking an inquiry into acquisition of shares were rejected by an officer of Securities Market Division who was not competent to decide the controversy---Appellants had also filed a constitutional petition before High Court praying therein, that their complaint be decided by competent Authority after giving them full opportunity of hearing---Said constitutional petition had been disposed of by High Court with directions that appellants be heard by competent Officer of the Commission---In line with orders of High Court, necessary action in that regard had already been initiated by the Commission and a hearing had been fixed---Appellants having already been granted relief prayed for in the appeal by High Court, nothing was left in appeal to be decided---Securities Market Division, was directed to dispose of the matter in accordance with directions of the High Court after providing all relevant parties a proper opportunity of hearing.

Zahir Shah for Appellants.

Arif Mian, Executive Director (SM) and Ms. Jahanara Sajjad, Joint Director (SM) for Respondents Nos. 1 and 2.

Muhammad Waseem F.C.A. for Respondents Nos.26 to 29

Iqbal Bawany for Respondents Nos.5, 7, 21, 23 and 25.

S.M. Nasim for Respondents Nos.33 and 34.

Date of hearing: 16th March, 2006.

2006 C L D 756

[Securities and Exchange Commission of Pakistan]

Before Riaz-ur-Rahman Khan, Chairman/Commissioner and Salman A. Shaikh, Commissioner

MUHAMMAD ARIF and 5 others---Appellants

Versus

EXECUTIVE DIRECTOR (COMPANY LAW DIVISION) SEC---Respondent

Appeals Nos.40 and 43 to 47 of 2005, decided on 4th April, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 245 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Failure to prepare and furnish quarterly accounts---Imposition of penalty-Appeal-Appellant-Company having failed to prepare and furnish quarterly accounts for the second quarter ending 31-12-2004 and third quarter ending 31-3-2005, Commission imposed penalty of Rs.100, 000 on each of its six Directors and on its Chief Executive---Past record of the appellant-Company had shown that its management was not in the habit of complying with statutory requirements---Such behaviour was unacceptable from the management of a listed-company---Overall management of the company and responsibility for its affairs rested with the Board of Directors---Commission, in circumstances, had rightly penalized Chief Executive and Directors of the Company---In light of repeated violation of law, it could not be argued that the directors were not knowingly responsible for the defaults as they were fully aware. of the facts and obligations placed on them by the law---Plea that the Company should be given more time to comply with the requirements also would carry no force in the light of the past record of the Company---Chief Executive was not barred to fulfil the requirements of law after his return from abroad--Absence of necessary staff for preparing the accounts, could not be made a ground for not complying with requirements of law.

Mansoor A. Sheikh for Appellants.

Tariq Bakhtawar, Mubashir Saeed, Abdul Ghafoor Khan and Shahzad Afzal Khan for Respondent.

Date of hearing: 7th February, 2006.

2006 C L D 784

[Securities and Exchange Commission of Pakistan]

Before Jahanara Sajjad Ahmad, Joint Director (Securities Market Division)

In the matter of: ABDUL KAHLIQ

Show-Cause Notices No.SMD/Co.62/3/2004-S, dated January 23, 2006 and dated January 26, 2006, decided on 28th March, 2006.

Securities and Exchange Ordinance (XVII of 1969)-

----S. 18-A---Making fictitious application or submitting more than one application ,for shares of companies offered to the public---Applications in question had been submitted by two different persons using same National Identity Card number and father's name, but with different addresses and signatures---One of applications was submitted by applicant through one Bank, while other was submitted through another Bank---Application submitted in one Bank was genuine, whereas submitted in the other was fictitious one---Privatization Commission, was advised to accept application submitted through one Bank which was genuine and to allot shares against same---Subscription money deposited against said fictitious application, was directed to be confiscated under subsection (2) of S.18-A of Securities and Exchange Ordinance, 1969.

Abdul Khaliq Applicant in person.

Ms. Asma Tayyiba, Deputy Director, C.I.

Date of hearing: 31st January, 2006.

2006 C L D 810

[Securities and Exchange Commission of Pakistan]

Before Nazir Ahmed Shaheen, Registrar of Companies

In the matter of: Messrs SASTA PHONE (PRIVATE) LTD.

Show-Cause Notice under section 142 read with section 476 of the Companies Ordinance, 1984, decided on 18th April, 2006.

Companies Ordinance (XLVII of 1980-

----Ss.142 & 476---Change of registered office---Information to Registrar---Delay in sending information---Company which had changed its registered office, was required to inform the Registrar on prescribed Form 21 within specified period, had informed Registrar with a delay of 17 days from period as provided under S.142 of Companies Ordinance, 1984---Default having not been committed wilfully, taking lenient view of the matter, penalty was condoned for said default with a warning to all concerned officers of the company to be careful in future in compliance of mandatory provisions of Companies Ordinance, 1984.

Shehzad Ahmed Malik (Company Representative).

Date of hearing: 13th April, 2006.

2006 C L D 997

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (Company Law Division)

In the matter of: Messrs S.G. POWER LIMITED

Show-Cause Notice No. EMD/233/410/2002-6525-31 dated March 1, 2005, decided on 6th April, 2006.

Companies Ordinance (XLVII of 1984--

----Ss. 208 & 476---Making unauthorized investments by Company in its associated Companies---Imposition of fine---Chief Executive and Directors of the Company had breached their fiduciary duty by failing to exercise due diligence while providing open ended trade credits to its associated company and not recovering long outstanding interest receivable from said associated company, without authority of share-holders which was in violation of provisions of S.208 of Companies Ordinance, 1984---Credit facilities extended to associated company, could not be termed as a normal trade credit, but would fall under ambit of S.208 of Companies Ordinance, 1984, especially when same were extended without seeking prior approval of share-holders through a special resolution in violation of requirements of S.208 of Companies Ordinance, 1984 and without charging any return on each credit given---Chief Executive and Directors were established to have violated provisions of S.208 of Companies Ordinance, 1984 and had not exercised due care while extending said credit to associated concern---Directors of Company, however had admitted default and were in a process of rectifying the default by recovering the balance of trade debts due from its associated company along with outstanding interest and reduce the credit extension period to 120 days in order to bring it close to three years' sectoral average being practised as normal trade credit period---Representatives of the company had also assured that company would ensure strict compliance of provisions of Companies Ordinance, 1984 in future---Commission, in circumstances, instead of imposing maximum penalty as prescribed by subsection (3) of S.208 of Companies Ordinance, 1984, taking lenient view of the default, imposed a fine Rs.100,000 on each of the Directors of the company---Directors were issued directions by the Commission, by invoking powers under S.473, Companies Ordinance, 1984, accordingly.

M. Javed Panni, Chief Executive of M.J. Panni and Associates on behalf of all the Directors and Chief Executive of M/s. S.G. Power Limited.

2006 C L D 1016

[Securities and Exchange Commission of Pakistan]

Before M. Arif Mian, Executive Director

(Securities Market Division)

In the matter of: SHARES OF PAK ELECTRON LIMITED AND MASOOD TEXTILE MILLS LIMITED LISTED ON LAHORE STOCK EXCHANGE (GUARANTEE) LIMITED

Decided on 26th April, 2006.

Securities and Exchange Ordinance (XVII of 1969)--

----Ss. 9(4) & 22(c)---Companies Ordinance (XLVII of 1984), S.86(1)---Listing Regulations, V, Regln.8(3)(4)---Listing Regula­tions, II, Regln:3---Companies Share Capital (Variation in Rights and Privileges) Rules, 2000, R.5(i)---Listing preference share by Stock Exchange---Violation of Listing Regulations---Imposition of penalty---Matter before Executive Director (Securities Market) of the Commission had arisen from the fact that Stock Exchange, had listed preference shares of two Companies in violation of its Listing Regulations---Listing of preference shares on Stock Exchange of the two Companies, issued to Financial Institutions and Banks, was in violation of Listing Regulation II(3)---Listing Regulations II, 3(2), required that Stock Exchange in granting permission of listing at the Exchange, would consider sufficiency of public interest in the company on the securities---Preference shares of the two Companies had not been privately placed with institutional investors without any offer to general public---No sufficient public interest, in circumstances existed in listing of preference shares of said two companies---Listing of said shares, was contrary to requirements of Listing Regulations II, 3(2)---Board of the Stock Exchange had been empowered under Listing Regulations II, 3(4) to release any of Listing Regulation subject to two third majority of Directors present at the meeting of the Board of the Exchange and so resolving---Managing Director of the Stock Exchange had confirmed that no such relaxation was granted by the Board of Directors in the case of two Companies---No verbal approval was granted by Commission to the Stock Exchange for listing of such shares in violation of Stock Exchange's own Listing Regulations---Insufficiency of public interest in the listing of preference shares of the Companies, was a material deficiency since it was a violation of requirements of Listing Regulations II---Executive Director of the Commission, in exercise of powers conferred by subsection (4) of S.9 of Securities and Exchange Ordinance, 1969, ordered the Stock Exchange to de-list preference shares issued to the two Companies with immediate effect as the Stock Exchange Management had acted in irresponsible manner in complete violation of Listed Regulations, II---Penalty of Rs.100,000 was imposed on the Managing Director of the Stock Exchange in exercise of powers conferred by subsection (c) of S.22 of Securities and Exchange Ordinance 1969.

Hamid M. Imtiazi, Managing Director (LSE) and Malik Zafar Javaid for Lahore Stock Exchange.

Syed Manzar Hasan, M. Umar Farooq and Aziz-ur-Rahman for Pak Electron Limited.

Abdul Bari Haggani and Waseem Bari for Masood Textile Mills Limited.

2006 C L D 1023

[Securities and Exchange Commission of Pakistan]

Before Tariq Bakhtawar, Director Enforcement

In the matter of: KAMRAN & CO. CHARTERED ACCOUNTANTS

Show-Cause Notice No.EMD/233/541/2003-6575 dated December 21, 2005, decided on 2nd May, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 255, 260(1) & 476---Powers and duties of auditors---Non­compliance with legal provisions by the auditors---Effect---Auditors had failed to perform their statutory obligations by giving contradictory and misleading information to members and in that way, had failed to perform their professional duties with reasonable degree of care and skill---Auditors knowingly and recklessly ignored their observations and gave a clean bill of health to company's accounts---Auditors. in circumstances had committed a breach of fiduciary duty cast upon them by shareholders of company concerned---Proprietor of Auditors' Company, had signed audit report otherwise than in conformity with requirements of S.255 of Companies Ordinance, 1984 and by so doing had made himself liable for punishment under subsection (1) of S.260 of the Ordinance---Auditors being ultimate watch-dog of share-holder's interest, were required to give a report on the accounts and books of accounts, after conducting the audit in accordance with prescribed procedure and requirements of Companies Ordinance, 1984, international accounting and auditing standards---If Auditors found any irregularity, which was material with regard to those accounts, they were required to issue qualified report---Share-holders were ultimate entity to whom the Auditors were responsible and they must keep that fact in mind while auditing the books of accounts and reporting thereon---Auditors must realize their true role and restrain themselves from performing their duties indulgently---Share-holders, who were stake-holders and ultimate beneficiaries, had no control over the way the Company was managed by the Directors appointed by them and it was necessary that there must be some arrangement in place where shareholders who were the real beneficiaries, must get some independent views as to how the Directors had managed the affairs of the company---Law having recognized that situation, had provided that shareholders should appoint an Auditor who would be responsible to audit accounts and books of accounts and make out a report to them at the end of each year which was the only safeguard provided by law to share-holders---Extremely important for the Auditors to be vigilant and perform their duties and obligations with due care while auditing accounts and books of accounts---Fyne of Rs.25,000 under S.260(1) of Companies Ordinance, 1984, was imposed on the proprietor of Auditing Company for making report otherwise than in conformity with requirement under S.255 of the Companies Ordinance, 1984.

Wasim Barkat, Assistant Manager, Kamran & Co., Chartered Accountants Present.

2006 C L D 1034

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (Company Law)

In the matter of: TRANSMISSION ENGINEERING INDUSTRIES LIMITED

Show-Cause Notice No.EMD/Enf-II/432/2005, dated February 24, 2006, decided on 12th May, 2006.

Companies Ordinance (XLVII of 19841---

----Ss. 245 & 476---Default in transmitting quarterly accounts--Imposition of penalty---Company, which, in terms of provisions of S.245, Companies Ordinance, 1984, was required to prepare and transmit to the members and simultaneously file with Registrar and the Commission its quarterly account within prescribed time period, had submitted same to Commission with a delay of 3 months and 10 days---Explanation furnished by Chief Executive of the Company as well as by the representative of Directors, was not found cogent---Effect---Protection of investors/share­holders, was one of the primary objectives of Companies Ordinance, 1984 and it was investors/shareholders who provide seed for capital formation; if the interest of investors was protected, they would save and invest more---Interest of investors was protected by transmission of timely, adequately and meaningful information to them---Annual and interim accounts would provide information to the investors about the affairs of the company, but Directors of company had not observed the compulsory requirements of law and had failed to protect interest of the shareholders---Track record of company with regard to filing of quarterly accounts was also not satisfactory as it had also defaulted in filing of quarterly accounts in the past, but the commission always took a lenient view and condoned defaults, which had shown that Directors had no respect for the law--Instead of imposing maximum fine of Rs.100,000 on every Director and a further fine of Rs.1,000 per day for continuous default, Rs.5,000 was imposed on each Director of the company.

Anwar Kashif Mumtaz, the Authorized Representative Present.

2006 C L D 1055

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: Messrs NOON TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/233/ 164/2002-7073-7079, dated December 30, 2005, decided on 15th May, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 208 & 472---Making unauthorized investment in associated undertakings by the company without obtaining approval of its shareholders---Imposition of fine by the Commission---Examination of audited accounts of company had revealed that Rs.13.757 millions were shown as due from associated undertakings and said amount had been outstanding since long---Said investment was made by the company without obtaining approval of its shareholders---No resolution was ever passed by the company under provisions of S.208 of Companies Ordinance, 1984---Company could not provide loans to its associated company without any return thereon---Provisions of Clause (b) of proviso to subsection (1) of S.208 of Companies Ordinance, 1984, were mandatory which required that return on loans would not be less than the borrowing cost of the company---As the company had no loans, it was wrongly presumed that company could provide loans without any return thereon to its associated company---Provision of loans without any return thereon, had indicated that Directors of company had acted in the interest of associated companies---Case was one where Directors holding interest in more than one company had tried to pass on the benefits to one company at the cost of shareholders . of other company---Chief Executive and the Directors, therefore, had violated provisions of 5.208 of Companies Ordinance, 1984 and had not exercised due care while providing advances to associated concerns---Directors of the company, however had admitted default and were in a process of rectifying said default by recovering the balance due from its associated companies---Commission, in circumstances, instead of imposing maximum penalty as prescribed by subsection (3) of S.208 of Companies Ordinance, 1984, imposed a fine of Rs.100,000 on the Chief Executive, accordingly.

M. Azam Khan, Company Secretary and Fahim Ahmed, Consultant present.

2006 C L D 1060

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmad Khan, Director Enforcement

In the matter of: Messrs GENERAL TYRE AND RUBBER COMPANY OF PAKISTAN LIMITED

Show-Cause Notice No. EMD/233/430/2001-9906-07, dated April 17, 2006. decided on 19th May, 2006.

Companies Ordinance (XLVII of 1984)---

----S. 218---Failure to circulate to shareholders, abstract relating to increase in Chief Executive's remuneration---Imposition of penalty---Enforcement Department, while examining financial statements of the Company for relevant year, noticed that remuneration of Chief Executive of the Company, had been increased from Rs.4.059 million to Rs.6.330 million without intimation to shareholders as per requirements of subsections (1) & (2) of S.218 of Companies Ordinance, 1984---Representatives of company In response to show-cause notice, contended that there was no major variation in the existing terms of appointment of Chief Executive and it was a normal annual increase---More than 50% increase having been made in the remuneration of the Chief Executive, representatives were asked to provide documentary proof i.e. contract evidencing such a huge increase as annual increment, but they failed to do so and finally admitted that company had made default of provisions of S.218 of Companies Ordinance, 1984---Default was established, however, keeping in view company's past track record, lenient view was taken in the matter, instead of imposing fine of Rs.5,000 each on company and its Secretary, fine of Rs.5,000 was imposed on the Company only.

S. Ehtesham Taqi, Company Secretary and Sarfraz A. Zahid, Group Resident Manager Present.

Date of hearing: 19th May, 2006.

2006 C L D 1063

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: Messrs USMAN TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/Enf-II/289/2003, dated July 25, 2005 and January 27, 2006, decided on 18th May, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 245 & 476---Failure to file quarterly account---Imposition of penalty---Company having failed to file quarterly accounts in terms of provisions of S.245 of Companies Ordinance, 1984, show-cause notices were issued to Directors of company---Default in filing the quarterly account was admitted by the Company, but it was contended that during default period operation of the Company remained suspended and there was no staff to prepare quarterly account-Validity-Non-functioning of company, was not a cogent excuse for non-submission of quarterly accounts to the shareholders as when company was not functioning, it was all the more easy for the Directors to have prepared and transmitted said report---Representative of Directors having failed to furnish any cogent reason to justify said defaults, same were considered wilful and deliberate---Track record of the company with regard to filing of quarterly accounts, was also not satisfactory as Directors of said company were also imposed penalty in the past, which had shown that Directors had no respect for law and they had intentionally deprived shareholders of their statutory right to receive quarterly accounts---Defaults in filing of quarterly accounts had been established---Executive Director of the Commission, took lenient view in the matter and instead of imposing maximum fine of Rs.100,000 on every Director of company and a further fine of Rs.1,000 per day for continuous default, imposed on Chief Executive and Directors of Company a penalty of Rs.30,000 each, accordingly.

Shahab Sarki and Nuruddin Sarki & Co. present.

2006 C L D 1068

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Mlaik and Salman Ali Shaikh, Commissioners

ALFALAH SECURITIES (PVT.) LTD.---Appellant

Versus

COMMISSIONER (SECURITIES MARKET DIVISION) SEC---Respondent

Appeal No.38 of 2005, decided on 9th August, 2005.

Securities and Exchange Ordinance (XVII of 19691--

----Ss. 7(1)(d), 15-A, B & 22(1)(c)---Brokers and Agents Registration Rules, 2001, Rr.8(ii), (iv) & 8(a)(b)---Securities and Exchange Commission of Pakistan, Act (XLII of 1997), S.33---Imposition of penalty---Scope---Commissioner (Securities Market Division), had imposed under S.15-B of Securities and Exchange Ordinance, 1969, a fine of Rs.72,150 on appellant, being equivalent to the gain accrued to its parent company---Impugned order had not specified whether fine had been imposed under subsection (3) or (4) of S.15-B of the Ordinance---Commission did not have the power to impose any sort of 'Fine' under S.15-B, be it subsection (3) or (4) of Securities and Exchange Ordinance, 1969---Commissioner, however had the power under subsection (3) of S.15-B of Securities and Exchange Ordinance, 1969 to direct payment of compensation to any person who had suffered loss as a result of dealing of insider information by accused---Where a person who had suffered loss had not determined the amount of compensation payable to the commission, it was possible that Commissioner could have mistakenly used the term 'Fine' for the term 'compensation'---Contention of appellant that it had been punished twice for the same offence, was untenable as appellant was punished for two different offences and not one offence; firstly for insider trading under S.15-A of Securities and Exchange Ordinance, 1969; and secondly for violation of R.8(iv) of Brokers and Agents Registration Rules, 2001 and the Code of Conduct for Using Terminology in the Morning Note, which was inconsistent with the requirements laid down therein---Appellant had not violated provisions of S.15-A of Securities and Exchange Ordinance. 1969---Fine of Rr.72, 150 imposed on appellant in the impugned order, o- was set aside, in circumstances---Appellant, however, had acted in violation of Code of Conduct contained in Brokers and Agents Registration Rules, 2001 by stating in their Morning Note that relevant information had been acquired from their sources---Penalty of Rs.100, 000 imposed under R.8(b) of Brokers and Agents Registration Rules, 2001, however, was upheld, with direction that appellant should be careful and avoid making statements which were contrary to the required standards of integrity, due skill and care laid down in the Code of Conduct.

Ijaz Ahmed and Muhammad Shoaib for Appellant.

Imran Inayat Butt, Babar Sattar and Muhammad Hasan Zaidi for Respondent.

Date of hearing: 14th February, 2006.

2006 C L D 1075

[Securities and Exchange Commission of Pakistan]

Before Jahanara Sajjad Ahmad, Joint Director (Securities Market Division)

In the matter of: MUHAMMAD BILAL KHAN and another

Show-cause Notice No.SMD/Co.62/3/2004-S dated January 23, 2006 and January 26, 2006, decided on 26th April, 2006.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 18-A---Submission of more than one applications for subscription of shares---List of cases of all applicants, who were detected to have filed applications in violation of S.18-A of Securities and Exchange Ordinance, 1969, was furnished to the Commission and applicant's name appeared in said list of multiple applicants---One application was submitted through one Bank and other application was submitted through the same bank at different city---Both applications were submitted using same N.I.C. number, but under different names, father's name and signatures---Applicant, in reply to written explanation, had stated that he had submitted only one application and had no knowledge of any other application submitted in his name---Commission called for a written explanation from other person whose name was mentioned in other application---Said other person appeared and admitted that he had tampered with the Photocopy of N.I.C. of original applicant and used same to file second application in his own name; he further stated that original applicant was innocent and was completely unaware about that act of his and that shares be allotted to said original applicant---Applications were established to have been submitted by two different persons using same N.I.C. number, but with different names, father's name, addresses and signatures---Original application submitted by applicant was genuine---Authority was advised that application submitted by applicant be accepted and shares be allotted against his name---Other person having admitted to have submitted a fictitious application using a tampered copy of N.I.C. of applicant, subscription money deposited against said fictitious application, was ordered to be confiscated under subsection (2) of S.18-A of Securities and Exchange Ordinance, 1969.

Nasim Khan and Muhammad Bilal Khan in person.

Ms. Asma Tayyiba, Deputy Director, C.I. for Joint Director (SM).

2006 C L D 1092

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: HASEEB WAQAS SUGAR MILLS LIMITED

Show-cause Notice No.EMD/233/345/2002, dated January 27, 2006, decided on 5th April, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 170, 171, 305 & 476---Default in holding meetings--Imposition of penalty---Proceedings were initiated against company and its Directors for default made in complying with provisions of S.171, Companies Ordinance, 1984---Company, in terms of provisions of subsection (1) of S.158 of Companies Ordinance. 1984, was required to hold its Annual General Meeting but it failed to hold such meeting---Enforcement Department of the Commission passed order against the company for non-holding of Annual General Meeting on the ground that any violation of Take-over Ordinance, would not allow the company and its Directors to postpone Annual General Meeting---Non-holding of Annual General Meeting had deprived share-holders to exercise their powers envisaged in the Statute---Distress of share-holders required redressal and company was directed by the Commission under 5.170 of Companies Ordinance, 1984 to hold Annual General Meeting within thirty days of the issuance of direction---Annual General Meeting of an organization was a forum where the Board, Executives and share-holders were all in attendance for deliberating the important affairs of the company---Such meeting is a forum at which management of the Company lays annual accounts and appraise share-holders and if required, various powers are also exercised---Such were fundamental requisites which necessitated holding of Annual General Meeting in the given time-frame-Directions of the Commission issued under S.170 of Companies Ordinance, 1984 to hold Annual General Meeting were not complied with by the Company---Commission vide a letter asked the company to explain its position with regard to said directions but company neither responded back nor complied with the directions---Effect---Chief Executive of the Company was responsible for not complying with direction of Commission to hold Annual General Meeting in the prescribed time---Default in holding Annual General Meeting having established, Commission in exercise of powers conferred upon it, under Ss.171 & 476 of Companies Ordinance, 1984 imposed fine of Rs.33,200 on Chief Executive---Since company had not held two consecutive Annual General Meetings penal action as provided under S.305 of Companies Ordinance, 1984 was attracted whereby company could be wound up---Directors and Chief Executive of Company were directed to hold Annual General Meeting without fail and in case of default, Commission had the right to invoke Ss.305 & 495 or any other provisions of Companies Ordinance, 1984.

Muhammad Imran, Company Secretary Present.

2006 C L D 1150

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director

In the matter of: LIBAAS TEXTILE LIMITED

Show-Cause Notice No. EMD/233/265/2002-8959-65 dated March 10, 2006, decided on 7th June, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 492 & 476---Making a false statement regarding audit of accounts of the company---Imposition of penalty---Examination of annual accounts of the company for relevant period had revealed that auditors' report annexed with said accounts was not signed by the auditors of the company; it was discovered after further investigation that auditors had not issued an audit report due to non-availability of approved accounts and information/ documents regarding certain significant matters---Directors of company were duty bound, under provisions of Companies Ordinance, 1984 to provide required information/documents to the auditors so that they could furnish their report, but that was not done, until it was directed by the Commission, which had shown careless behaviour of the Directors of the company---Directors were aware of factual position, at the time of issuance of accounts and notice of meeting, however they, despite having knowledge of the fact that auditors had only issued an initiated report, same was presented to the Commission and the shareholders as the auditors' report and the account as audited account---Conduct of the Directors, in circumstances, had substantiated deliberate misstatement---Directors, in addition of day to day running of the company and the management of its business, also had some fiduciary' duties and breach of said statutory duties would be a criminal offence, punishable by fine or imprisonment---Directors, in the present case had failed to perform their duties with care and skill---Default of Directors was established, but considering Directors' assurance for strict observance of law in future and fact that company had promptly acted on receipt of notice and had already submitted audited accounts along with auditors' report to the Commission, Ienient view was taken and instead of imposing maximum fine of Rs.100,000 on each Director, a token fine of Rs.15,000 each was imposed on Chief Executive and one Director only---Other Directors were reprimanded to be careful in future.

Salman Mahmood, Director and Company Secretary present.

2006 C L D 1157

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director

(Company into Division)

In the matter of: Messrs SUNSHINE COTTON MILLS LIMITED

Show-Cause Notice No.EMD/Enf-II/201/2003-8402-8408, dated February 23, 2006, decided on 14th June, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss.245 & 476---Failure to prepare and transmit quarterly accounts---Imposition of penalty---Company in terms of provisions of S.245 of Companies Ordinance, 1984 was required to prepare and transmit to the members and simultaneously file with the Registrar and the Commission its quarterly accounts, but company had failed to comply with said mandatory requirements within prescribed time---In response to show-cause notice, representative of Directors of Company could not justify said default---If Company was lying vacant as claimed by Directors of Company, same was not a cogent reason to justify default---Directors of the Company could have refrained from committing said default as it was all the more easy for them when Company was not functioning, to have prepared and transmitted quarterly account to the shareholders---It was duty of Directors to ensure compliance with all the statutory requirements, but they failed to do that wilfully and intentionally---Track record of the Company with regard to filing of quarterly/half yearly accounts, was also unsatisfactory as it failed to file accounts within prescribed time since 2001 for which Directors were penalized earlier also---Protection of investors/share-holders was one of the primary objectives of Companies Ordinance, 1984 and their interest was protected by transmission of timely, adequate and meaningful information to them; it was annual and interim accounts which could provide it formation to (hem about affairs of the Company, but Chief Executive and Directors of the Company had failed to protect said interest of investors/share-holders---Such state of affairs was a cause of great concern for the Commission---Repetition of default had clearly shown that Company was not making any serious efforts to comply with provisions of law---Default of company having stood established it was liable to be imposed fine2--However, instead of imposing maximum fine of Rs.100,000 on every Director and fine of Rs.1000 per day for continuous default, penalty of Rs.10,000, was imposed on Chief Executive and each Director of Company.

Ghulam Murtaza, Authorized Representative Present.

2006 C L D 1167

[Securities and Exchange Commission of Pakistan]

Before M. Arif Mian, Executive Director (Securities Market)

In the matter of: MAHMOOD AHMED and another

Show-Cause Notice No.SMD/TO/04/2006, dated April 5, 2006, decided on 22nd June, 2006.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 15-A & B---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.10---Mismanagement of books and accounts and unauthorized transaction---Associated companies---One Company sold twenty million shares of the other Company to a listed Public Company at Rs.12.00 per share, four and a half million shares at Rs.11.98 per share---Securities and Exchange Commission of Pakistan, after commencing inspection of books and accounts of the Company whose shares were sold, communicated to the Board of Directors of said Company critical information regarding mismanagement of books and accounts and unauthorized transaction undertaken, as well as its poor financial condition asking it to explain and clarify the same---Company gave unsatisfactory clarification---On basis of unpublished price-sensitive information, seller Company dealt in Company's Securities and mcuraged to cause buyer Company to purchase Securities thereby itself avoiding loss and causing same to buyer Company, which acts of seller Company fell within the ambit of insider trading defined and prescribed by Chap.Ill-A of Securities and Exchange Ordinance, 1969---Show-cause notices were issued to the Board of Directors of seller Company comprising of only two Directors to the effect that seller Company by acting on material non-public information, illegally caused buyer Company to deal in Securities in violation of S.15-A of Securities .and Exchange Ordinance, 1969 and in circumstances avoided loss to itself and inflicted loss on buyer Company and its shareholders---Members of Board of Directors of seller Company who were issued show-cause notice, had contravened the provisions of S.15-A of Securities and Exchange Ordinance, 1969---Executive Director of the Commission, in exercise of its powers under subsection (3) of S.15-B of Securities and Exchange Ordinance, 1969 delegated under S.10 of Securities and Exchange Commission of Pakistan Act, 1997, directed the seller Company through its Director and Chief Executive, to forthwith, but in any case not later than 30 days of issue of order, compensate a sum of Rs.182.435 million in aggregate to buyer Company, which was an amount equivalent to cumulative sum of difference between price of Rs.12 for 20 million shares and Rs.11.98 for 4.5 million shares of all twenty four and a half million Securities paid by buyer Company as part of transactions in question---Such order was issued without prejudice to any other action or prosecution that Commission could initiate against seller Company, its Directors or any other person in the matter.

Hassan and Hassan, Legal Counsel.

Ms. Saima Ghazal, Deputy Director (SM), Ms. Amber Dar, Executive Director (Law) and Babar Sattar, Joint Director (Law) assisting the Executive Director (SM).

2006 C L D 1188

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

In the matter of: Messrs CRESCENT KNITWEAR LIMITED

Show-Cause Notice No.EMD/Enf-II/246/2005, dated January 26, 2006, decided on 5th June, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 158 & 476---Failure to hold annual general meeting--Imposition of fine---Company which was required to hold its annual general meeting for relevant 'year within prescribed time, having failed to comply with said mandatory requirements, a show-cause notice was served on the company and its Directors including Chief Executive, calling upon them to show-cause as to why penalties as provided under Ss.158(4) & 476 of Companies Ordinance, 1984 may not be imposed on them, but no response was received to the said notice---Directors and Chief Executive had intentionally avoided appearance before Commission despite the fact that they were provided two opportunities of hearing by the Commission which they failed to avail---Effect---Company had failed to hold annual general meeting even after issuance of show-cause notice---Default, in circumstances was wilful and deliberate---Protection of investors/share-holders was one of the primary objectives of Companies Ordinance, 1984 as investors/share-holders provide seed for capital formation---If the interest of investors was protected they would save and invest more; their interest was protected by transmission of timely, adequate and meaningful information to them and it was annual and interim accounts which provide information to investors about the affairs of the Company---Annual general meeting was a forum where investors could freely speak, discuss and vote on important matters concerning approval of accounts, appointment of auditors, election of Directors etc.---Directors of the company had not observed said compulsory requirement of law---Default under subsection (1) of S.158 of Companies Ordinance, 1984 regarding non-holding of Annual General Meeting for the relevant year, stood established; however, instead of imposing maximum fine of Rs.50,000 on the company and every Director" and a further fine of Rs.2,000 per day for the continuous default; fine of Rs.20,000 was imposed on Chief Executive and on each Director under S.158(4) of Companies Ordinance, 1984.

No one appeared.

2006 C L D 1204

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rahman Khan, Chairman/Commissioner and Salmon Ali Shaikh, Commissioner

NORTHERN TOURISM DEVELOPMENT (PVT.) LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (COMPANY LAW), SEC and 2 others---Respondents

Appeal No.43 of 2006, decided on 28th June, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 263, 264, 279 & 290---Securities and Exchange Ordinance (XVII of 1969), S.33---Appointment of Inspector to investigate affairs of Company---Appeal against such appointment---Respondents Nos.2 and 3 who were share-holders of Company holding 35% shares in it, alleged administrative, corporate as well as financial mismanagement on part of management of Company and filed petition under S.290 of Companies Ordinance, 1984 for appointment of Inspector to investigate affairs of the company---Local Commission duly appointed on direction of High Court, also recommended that a detailed inquiry needed to be conducted through an investigation agency---Record produced, facts, history of the case and allegations exchanged between parties, had confirmed High Court's decision that matters of Company required detailed examination Examination of record, witnesses and evidence, could not be done by a Court or an officer sitting in adjudication---It required time, effort, knowledge of corporate laws and internal workings of a company, investigative expertise and skills and most of all a fair and independent assessment of disputes---Allegations levelled by parties included financial and administrative irregularities as well as contravention of Rules and Regulations which would come within the jurisdiction of commission---Contention of appellant that Executive Director (CLD) had not been delegated powers to appoint Inspector under S.263 of Companies Ordinance, 1984, was repelled as said power had clearly been delegated by Commission through S.R.O. 1061(1)/2005 dated 18-10-2005---Contention of appellant that respondents Nos.2 and 3 did not hold 10% voting power in the company and could not apply for appointment of Inspector, was also untenable---Commission on facts on record was satisfied that case was fit for appointment of Inspector---Remanding case on a mere procedural issue, would waste further time which could affect the right of innocent parties and would amount to impeding implementation of orders of High Court---Impugned orders appointing Inspector, was upheld---Department, however was directed to involve Fraud Investigation Unit of the Commission to investigate and also to initiate necessary proceedings under S.279 of Companies Ordinance with regard to disputed shares issued by the Company.

PLD 1990 Kar. 198; 2006 CLD 283; 2006 CLD 308; 2006 CLD 311; 2000 MLD 1880 and 2006 CLD 85 ref.

Malik Qamar Afzal for Appellant.

Munawar Ali Bhatti, Joint Registrar for Respondent No.1.

Fakhar Mahmud Chanda for Respondents Nos.2 and 3.

2006 C L D 1216

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik and Salman Ali Shaikh, Commissioners

DJM SECURITIES (PVT.) LIMITED---Appellant

Versus

JOINT DIRECTOR (SECURITIES MARKET DIVISION) SEC---Respondent

Appeal No.42 of 2005, decided on 30th June, 2006.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 17---Brokers and Agents Registration Rules, 2001, R.8(iv)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of penalty for failure to maintain high standard of integrity, due skill and care in conduct of business---Appeal against---Respondent Department had contended that appellant had been penalized for failure to maintain high standard of integrity, due skill and care in conduct of its business---Validity---No reason was to believe that there was a lack of integrity on part of appellant while executing the trade or that it had acted in bad faith---Besides, volume of trade in question was so insignificant that any intended manipulation could not have materialized---Appellant, in any case, could not be penalized for market manipulation---Finding given by respondent/Joint Director that appellant had indulged in manipulative, fraudulent and deceptive practices, was contrary to conclusion arrived at in impugned order---If appellant had indeed indulged in manipulative, fraudulent and deceptive practices then it should have been proceeded against under S.17 of Securities and Exchange Ordinance, 1969, rather than for violation of Code of conduct---Appellant, however, had not acted skilfully while trading on behalf of its client---Surrounding circumstances, had shown that no lack of integrity was on part of appellant---Since volume of trades was not significant, taking lenient view, fine of Rs.25,000 imposed on appellant was set aside directing appellant to be cautious in future and take necessary measures to abide by the standards set forth for responsible trading.

Dawood Jan Muhammad for Appellant.

My Osman, Joint Director (SM) for Respondent.

2006 C L D 1295

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

In the matter of: Messrs HAKKIM TEXTILE MILLS LIMITED

Show-Cause Notice No.EMD/Enf-II/217/2005-6576-6582, dated December 21, 2005, decided can 21st July, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 158 & 476---Failure to hold Annual General Meetings---Company, which under provisions of S.158(1) of Companies Ordinance, 1984 was required to hold its Annual General Meetings, having failed to hold said meetings within prescribed tune period, show-cause notice was served on all the Directors including Chief Executive of the company; calling upon them to show cause as to why penalties as provided under S.158(4) of-Companies Ordinance, 1984, should not be imposed on then---Company explained that it remained closed due to conflicts with previous owners and financial institutions and at that stage company had no employee to maintain accounts---Validity---Reason that company was lying closed, was not a cogent reason to justify default; it was easier for the Directors, when company was not functioning to have prepared Annual Accounts and hold Annual General Meetings within prescribed time---Protection of investors/share-holders, was one of the primary objectives of Companies Ordinance, 1984---If the interest of investors was protected, they would save and invest more; their interest was protected by transmission of timely, adequate and meaningful information to them---Annual and interim accounts, could provide information to investors about the affairs of the company---Annual General Meeting, was a forum where investors could freely speak, discuss and vote on important matters concerning approval of accounts, appointment of auditors, election of-Directors etc.---Directors of the Company were not observing those compulsory requirements of law---Default of company having been established, company was liable to be imposed penalty---Instead of imposing maximum fine of Rs.50,000 on every Director and a further fine of Rs.2000 per day for continuous default, lesser penalties were imposed on Chief Executives and each Director of Company under subsection (4) of S. 158 of Companies Ordinance, 1984.

Muhammad Tahir Raza, Manager Present.

2006 C L D 1307

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman/Commissioner and Rashid I. Malik, Commissioner

SHADAB HASSAN and another---Appellants

Versus

COMMISSIONER (SPECIALISED COMPANIES DIVISION), SEC---Respondent

Appeals Nos. 23 and 24 of'2005, decided on 22nd June, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss.282-J(1), 282-K & 282-M(1)---Non-Banking Finance Companies (Establishment and Regulations) Rules, 2003, Rr.5(6) & 7(1)(a)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Qualifications indicated by the Auditors in the accounts of Company---Imposition of fine---Audited accounts of appellant-Company for relevant year had revealed that auditors had indicated various qualifications---Commissioner, after providing an opportunity of hearing to appellants, held that annual accounts of the Company for relevant year did not depict true and fair view of Company's affairs and imposed a fine of Rs. 1,000,000 (Rupees one million) on each of the Directors of the Company under subsection (1) of S.282-J of Companies Ordinance, 1984---Two Directors of Company had filed appeal against order of Commissioner---Appellants had raised preliminary objection that Commissioner had not passed order as to imposition of penalty as nowhere in impugned order words "impose a penalty" had been used and Commissioner had straightaway directed appellants to deposit the fine---Objection was overruled because lack of one word "impose" could not be made a ground for setting aside judgment when entire judgment had made it amply clear that appellant had been found in violation of law and penalized under S.282-J of Companies Ordinance, 1984---Appellant-Company being a listed entity had blatantly mismanaged even over an extended period of time; it was the duty of event' member of the Board of Company, whether he or she was a non-Executive Director, nominee Director or a minority Director, to raise concern and have his view recorded in the meetings---Extent of their responsibility, though could van, according to their position, but members of the Board were overall responsible for the affairs of company and violation, if any, occurring during their tenure---Appellant who was co-opted as a Director on 5-1-2004, should not be held liable for qualifications given by auditors in the accounts for the year June, 2004; his appeal was accepted and penalty imposed on him was set aside---Other appellant, however could not plead same defence as he had been a Director of the Company since year 2002---Considering position of said appellant as a non-executive Director representing minority share-holders, taking lenient view, penalty imposed on him was reduced to Rs.50,000, accordingly.

M. Farooq Akhtar for Appellants.

Imran Hussain Minhas, Joint Director (SCD) and Ms. Saima Ahrar, Assistant Director (SCD) for Respondent.

2006 C L D 1334

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: Messrs TRI-STAR POLYESTER LIMITED

Show-Cause Notice No.EMD/Enf-II/321/2004, dated May, 3 and 16, 2006, decided on 20th July, 2006.

Companies Ordinance (XLVII of 19841--

----Ss. 245 & 476---Failure to prepare and transmit quarterly accounts---Imposition of fine---Company which, in terms of provisions of S.245 of Companies Ordinance, 1984, was required to prepare and transmit to the members and simultaneously file with Registrar and the Commission its quarterly accounts for 2nd and 3rd quarters of the relevant year, had failed to do that---Failure of the Company to comply with mandatory requirements within prescribed time, necessitated action against responsible Directors of the Company in terms of subsection (3) of S.245 of Companies Ordinance, 1984---Chief Executive and other Directors of Company, neither responded to show-cause notices issued to them nor appeared on the date fixed for hearing the matter nor gave their written explanation---From such indifferent behaviour of Directors etc. it could be assumed that Chief Executive and Directors of the Company had nothing to say in their defence and had deliberately avoided appearance in the hearing---Protection of investors/share-holders was one of the primary objectives of Companies Ordinance, 1984---If shareholders interest was protected, they would save and invest more and their interest was protected by transmission of timely, adequate and meaningful information to them---Annual and interim accounts, would provide information to investors about the affairs of the Companies---Defaults in filing quarterly accounts being wilful and deliberate, it could legitimately be inferred that Chief Executive and Directors had failed to protect interest of shareholders---Track record of Company with regard to filing of quarterly/half yearly accounts, was also not satisfactory as it had also previously defaulted and Directors were penalized---Instead of imposing maximum fine of Rs.100,000 on every Director and further fine of Rs.1,000 per day for the continuous default, penalty of Rs.50,000 for one quarter, was imposed on Chief Executive and six Directors of the Company under S.245(3) of Companies Ordinance, 1984, accordingly.

No one appeared.

2006 C L D 1343

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: Messrs REDCO TEXTILES LIMITED

Show-Cause Notice No.EMD/Enf-II/278/2006, dated May 4 and 23, 2006, decided on 12th July, 2006.

Companies Ordinance (XLVII of 1984)---

--S. 245---Failure to file quarterly accounts---Imposition of penalty---Company filed its second quarter accounts for relevant period with delay of one month and 18 days, whereas it failed to file its third quarter accounts according to terms of S.245 of Companies Ordinance, I984---Contention of Directors and Chief Executive of Company, in response to show-cause notice was that delay in submission of said account was not deliberate, but was the result of a mistake on part of accounts staff member and that Board of Directors of the Company had taken very serious note of such a mistake and assured that in future no delay would occur in filing of financial statements---Explanation furnished to show cause notices was not -found satisfactory because such assurance was also given by the Company in the past, but it always failed to make compliance of statutory provisions of law within prescribed tune---Protection of investors/shareholders was one of the primary objectives of Companies Ordinance, 1984---If the interest of the investors was protected they would ,save and invest more---Annual and interim accounts provided information to the investors about the affairs of the Company---Track record ' of the Company with regard to filing of quarterly/half yearly accounts was also not satisfactory---Company was committing defaults in filing of hay' yearly accounts since 2000 and in filing of quarterly accounts since 2001 for which Directors were penalized earlier also---Defaults, in circumstances. held, were wilful and deliberate---Instead of imposing maximum fine of Rs.100, 000 on every Director and further fine of Rs.1000 per day for continuous default, penalty of Rs.20,000 on each Director and Chief Executive of Company,was imposed.

No one appeared.

2006 C L D 1357

[Securities and Exchange Commission of Pakistan]

Before Tariq Bakhtawar, Director Enforcement

In the matter of: Messrs FRONTIER CERAMICS LIMITED

Show-Cause Notice No.EMD/Enf-II/584/2006-7645-52, dated January 25, 2006 decided on 30th June, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 158 & 476---Failure to hold Annual General Meeting by Company---Imposition of fine-Company which was required to hold its Annual General Meeting, had, jailed to hold same within prescribed time period---Show-cause notice was served on the Company and its Directors including the Chief Executive---Contention of Company was that non-holding of Annual General Meeting for relevant year, was neither wilful nor intentional, but due to closure of factory---Explanation furnished by the Company was not found satisfactory---Protection of investors/share­holders was one of the primary objectives of Companies Ordinance, 1984---bwestors/share-holders who provided seed for capital formation, their interest was protected by transmission of timely, adequate and meaningful it formation to them and it was annual and interim accounts, winch could provide information to the investors about the affairs of the Company---Annual General Meeting was a forum where investors could freely speak, discuss and vote on important matters concerning approval of accounts, appointment of auditors, election of directors, etc.---Directors of Company had not observed said compulsory requirements of law; it could be legitimately inferred from such state of affairs that Chief Executive and Directors had failed to protect the interest of share-holders---Company had also committed default in filing of lral/ yearly and quarterly accounts in the past---Instead of imposing maximum fine of Rs.50,000 on the Company and every Director and a further fine of Rs.2,000 per day for continuous default, fine of Rs.10,000 was imposed on Chief Executive and on each Director, accordingly.

Muhammad Noor Khan, Officer Corporate Affairs present.

2006 C L D 1366

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of : Messrs TRI-STAR POWER LIMITED

Show-Cause Notice No.EMD/Enf-II/416/2004, dated May 3, 2006 and May 16, 2006, decided on 20th July, 2006.

Companies Ordinance (XLVII of I984)---

----S. 245---Failure to prepare and transmit quarterly accounts---Imposition of penalty---Company which under provisions of S.245 of Companies Ordinance, 1984 was required to prepare and transmit to members and simultaneously file with the Registrar and Commission its quarterly accounts for relevant year, failed to comply with said mandatory requirements within prescribed time---Show-cause notices were served on all Directors including Chief Executive of the company, but they did not respond to said show-cause notice and also no body appeared on date of hearing nor any explanation was received on their belraf --Protection of investors/share-holders was one of the primary objectives of Companies Ordinance, 1984---If the interest of investors was protected, they would save and invest more and their interest was protected by transmission of timely, adequate and meaningful information to them---Annual and interim accounts were to provide information to the investors about the affairs of the Company, but Directors of Company were not observing said compulsory requirements of law---Defaults of Company were wilful and deliberate and it could be legitimately inferred that Chief Executive and Directors had failed to protect the interests of share-holders---Track record of the Company with regard to filing of quarterly/half yearly accounts was also not satisfactory---Company was liable to be imposed fine, however, instead of imposing maximum fine of Rs.100,000 on every Director and further fine of Rs.1,000 per day for continuous default, lesser penalties were imposed accordingly under subsection (3) of S.245 of Companies Ordinance on Chief Executive and Directors of the Company.

No one appeared.

2006 C L D 1376

[Securities and Exchange Commission of Pakistan]

Before Tariq Bakhtawar, Director Enforcement

In the matter of: Messrs MEHRAN SUGAR MILLS LIMITED

Show-Cause Notice No.EMD/233/351 /2002-10672-10679, dated May 17, 2006, decided on 30th June, 2006.

Companies Ordinance (XLVII of I984)---

----Ss. 227, 229 & 476---Failure to make payments to Provident Fund Trust---Imposition of penalty---Company had not made payments to Provident Fund Trust as required under provisions of S.227 of Companies Ordinance, 1984---Objective of provisions of S.227 of Companies Ordinance, 1984 was to secure the amounts collected from the employees of the Company as contribution to Provident Fund for the benefits of employees of the company---Law required that all moneys contributed by employees as well as Company if any, including the profit thereon, must be deposited within fifteen days of contribution to be invested in securities referred to in cls.(a) to (c) of subsection (2) of S.227 of Companies Ordinance, 1984---When a Trust had been created by a company with respect to any Provident Fund, Company had an obligation to pay contributions including its own contribution to the trustee within fifteen days from date of collection---Amounts collected from the employees as contributions to a Provident Fund were in the nature of Trust moneys in the hand of the company and same must be paid to the trustees within stipulated time---Company on the pretext of higher returns, could not withhold such moneys---Law did not permit any company to utilize the funds of Provident Fund for its commercial purposes---Company, by not making payment within stipulated time, h d breached mandatory requirements of S.227 of Companies Ordinance, 1984--Fine of Rs.5,000 on Company and each of its Directors was imposed under S.229 of Companies Ordinance, 1984---Company, its Chief Executive and Directors, were directed to make good the loss suffered by Provident Fund due to lack of payment, accordingly.

M. Hanif, General Manager Finance present.

2006 C L D 1386

[Securities and Exchange Commission of Pakistan]

Before Tariq Bakhtawar, Director Enforcement

In the matter of: Messrs DIN TEXTILE MILLS LIMITED

Show-Cause Notice No.C-2103/EMD/166/2005, dated August 11, 2005 decided on 30th June, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 74, 77 & 476---Complaint regarding non-receipt of shares after being successful in share balloting---Imposition of fine---Complainant lodged a complaint with the Commission regarding non-receipt of shares after being held successful in the share balloting---Complainant had alleged that she was allotted shares, but as she was out of country, she could not contact the Company and after her return, on taking up the matter with the Company, she was informed that her shares had been transferred to another share-holder---Complainant pleaded that she had been denied her right of allotment of shares and resultantly was deprived from any dividend/bonus shares issued by the Company from time to time without any lapse on her part---Validity---Company, prima ,facie, had contravened provisions of S.74 of Companies Ordinance, 1984 by not allotting/dispatching the shares within ninety days as stipulated under proviso to subsection (I) of S.74 of Companies Ordinance, 1984---Company had not been able to present any cogent argument in support of its failure to transfer shares in the name of complainant who was lawful owner of those shares---Company also failed to point out any defect or invalidity in the instrument of transfer lodged by complainant---Prima facie provisions of subsection (1) of S.74 of Companies Ordinance, 1984 had been contravened---Delay in transfer of shares attracted penal provisions contained in subsection (2) of S.74 of the Companies Ordinance, 1984 which provided fine of Rs.100 for each day during which default continued---Directors,, including Chief Executive of the Company were held liable under said penal provisions for which instead of per day fine, token fine of Rs.5,000 on each of the Directors and Chief Executive, was imposed.

Ansar-ul-Hassan Feroz, Manager . Corporate Affairs present.

2006 C L D 1440

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmad Khan, Director (Enforcement)

In the matter of: Messrs TARIQ AYUB ANWAR & CO.

CHARTERED ACCOUNTANTS

Show-Cause Notice No.EMD/233/571/2002 dated March 22, 2006, decided on 10th August, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 255, 260 & 476---Powers and duties of auditors--Imposition of penalty on auditors for non-compliance of provisions of law---Auditors, who audited the accounts of the company made report to the members of the company on the accounts, books of accounts, balance-sheet and profit and loss account otherwise than in conformity with the requirements of S.255 of Companies Ordinance, 1984--Examination of gudited accounts of the company for relevant years had revealed that certain requirements of International Accounting Standards and Companies Ordinance, 1984, were not followed by the auditors and that accounting policy for recording and disclosure of "revenue" was not consistently applied--Auditors being the ultimate watchdogs of the share-holders' interest, were required to give a report on the accounts and books of accounts after conducting the audit in accordance with the prescribed (Ashfaq Ahmad. Ktian, Director (KnJorcement))procedures and requirements of Companies Ordinance, 1984 and International Accounting Standards---If Auditors found irregularity, which was material with regard to those accounts, they were required. to issue a qualified report---Share-holders were ultimate entity to whom Auditors were responsible and they must keep that fact in mind while auditing the books of accounts and reporting thereon--Auditors must realize their true rote and restrain themselves from performing their duties indulgently; it was extremely important for the auditors to be vigilant and perform their duties and obligations with due care while auditing the accounts and books of accounts---Auditors, in the present case had failed to perform their statutory obligations by giving misleading information to the members and in that way had failed to perform their professional duties with reasonable degree of care and skill---Auditors/Chartered Accountants, had signed audit reports otherwise than in conformity with the requirements of S.255 of Companies Ordinance, 1984 and had made themselves liable for punitive action under subsection (1) of S.260 of Companies Ordinance, 1984---Fine of Rs.50,000 each on Chartered Accountants, was imposed, in circumstances.

Tariq Ayub Qureshi, F.C.A., Partner, Messrs Tariq Ayub Anwar & Co. Chartered Accountants Present.

Faisal Latif, A.C.A., Partner, Messrs Tariq Ayub Anwar & Co. Chartered Accountants Present.

2006 C L D 1455

[Securities and Exchange Commission of Pakistan]

Before Tariq Bakhtawar, Director (Enforcement)

In the matter of: Messrs HASEEB WAQAS SUGAR MILLS LIMITED

Show-Cause Notice No.EMD/233/345/2002-152-159 dated' July 6, 2006, decided on 16th August, 2006.

Companies Ordinance (XLVII of 1984)-

----Ss. 158 & 476---Failure to hold Annual General Meeting--Imposition of fine---Company in terms of provisions of S.158(1) of Companies Ordinance, 1984 was required to hold its Annual General Meeting for relevant year on or before specified date, but the company, the Chief Executive and Directors, had failed to hold said meeting---Non-holding of Annual General Meeting, had deprived shareholders of exercising their powers envisaged In the statute---Organization's Annual General Meeting was the forum where the Board, Executives and Share-holders were all in attendance for deliberating the important affairs of the company---Company lays Annual Accounts and appraise the share-holders about its performance---Auditors of the Company were appointed by the share-holders and if required, various statutory powers were also exercised, these were fundamental requisite which necessitated holding of Annual General Meeting in the given timeframe---Company in the present case had failed to comply with mandatory provision of law---Plea of representative of company that Annual. General Meeting, could not be held due to request of majority share-holders and the disputed takeover, could not be made a reason for not holding Annual General Meeting---Default in holding Annual General Meeting having proved to be wilful, penalty was imposed on the Company---Fine of Rs.50, 000 on even/ Director and a further fine of Rs.2,000 per day for the continuous default, was imposed accordingly on Company its Chief Executive and each Director.

Awais Yasin, Company Secretary Present.

2006 C L D 1470

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: ALTERN ENERGY LIMITED

Show-Cause Notice No.EMD/233/390/02-11676-82 dated June 20, 2006, decided on 16th August, 2006.

Companies (Issue of Capital) Rules, 1996---

----Rr. 5(ii), (iii) & 11---Companies Ordinance (XLVII of 1984), Ss.86 & 492--Increasing capital of the company by issue of further shares---Failure to provide necessary information--Imposition of penalty--While announcement made by the company for the right issue, it was observed by Enforcement Department that company had not provided to the Commission and Stock Exchange, as required under sub-rule (ii) of R.5 of Companies (Issue of Capital) Rules. 1996, the purpose of right issue, benefits to the company, use of funds and financial projections for three years---Company had also not provided financial plan and projections signed by all the Directors who were present in the meeting in which the right issue was approved---Chief Executive and Directors had violated provisions of R.5 of Companies (Issue of Capital) Rules, 1996 and S.492 of Companies Ordinance, 1984, and had not exercised due care while making announcement of issue of right shares---Full information as required under S.492 of Companies Ordinance, 1984 was not provided and crucial explanations were also not given-Company had admitted that it was a mistake and it was simply overlooked---Acquisition was of a large magnitude, to make careless mistake at that level was unbelievable and was mismanagement by Directors and the Company---Announcement of right issues made by the company, did not meet the requirement of Sub-rule (ii) of R.5 of Companies (Issue of Capital) Rules, 1996 and was made without stating the purpose of right issue, benefits to the company, use of funds and providing financial plan and projection in violation of the Rule-Information that was subsequently provided, had omitted the name of Power Plant and its capacity---Company had become liable to be imposed penalty, however, instead of imposing maximum penalty of Rs. 1,00,000 as prescribed by S.492 of Companies Ordinance, 1984 taking lenient view fine of Rs.50,000 was imposed on each Director, accordingly.

Sheikh Muhammad Iqbal, Chief Executive and Khawaja Ahmad Hosain present.

2006 C L D 1482

[Securities and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

In the matter of: Messrs SERVICE FABRICS LIMITED

Show-Cause Notice No.EMD/Enf-II/231/2003 dated June 16, 2006, decided on 16th August, 2006.

Companies Ordinance (XLVII of 1984)---

---S. 245---Failure of company to prepare and submit quarterly accounts---Imposition of fine---Company which wider provisions of S.245 of Companies Ordinance, 1984 was required to prepare and transmit to members and simultaneously file with Registrar and the Commission its quarterly accounts for second quarter of relevant year within specified period, had failed to comply with said mandatory requirement of law---Circumstances and facts stated by company for its failure to comply with said mandatory provisions of law did not prove that default was beyond the control of management---Responsibility for preparation/ circulation of quarterly accounts rested with the Directors of the Company and they had to take appropriate action at appropriate time---Protection of the interest of investors/shareholders, was one of the primary objectives of Companies Ordinance, 1984---If the interest of the investors was protected, they would save and invest more-Interest of shareholders was protected by transmission of timely, adequate and meaningful information to them---Annual and interim accounts could provide information to investors 'about the affairs of the Company---Directors of the Company, in the present case, having not observed said compulsory requirements of law, default under subsection (1) of S.245 of Companies Ordinance, 1984, was established, in circumstances---In view of undertaking given by the Directors of the company that profit and Loss account and balance sheet of company for the second quarter of relevant year, would be filed soon and their assurance for taking necessary measures to make strict compliance of law and timely submission of accounts in future, instead of imposing maximum fine of Rs. 100,000 on every Director and a fine of Rs.1, 000 per day for continuous default, fine of Rs.5,000 was imposed on Chief Executive and each Director.

Muhammad Pervaiz Tahir, G.M. Finance and Ahmir Siddique. Company Secretary Present.

2006 C L D 1577

[Security and Exchange Commission of Pakistan]

Before Dr. Sajid Qureshi, Executive Director (CLD)

Messrs WALI OIL MILLS LIMITED: In the matter of

Show-Cause Notice No.CO.233/123/2002, dated October 28, 2005, decided on 24th August, 2006.

Companies Ordinance (XLVII of 1984)--

----Ss. 86(3) & 492---Companies (Issue of Capital) Rules, 1996, R.5---Offer of new shares for increasing capital of company--Incorrect statements in the relevant circular filed with Registrar and misstatement in financial projections---Imposition of penalty---Circular communicating right offer to the share-holders filed with the Registrar and share-holders pursuant to S.86(3) of Companies Ordinance, 1984, did not disclose the actual intention of the Directors that the right issue would be utilized towards conversion of Director's loan into equity---Material variances between the financial projection and actual results, reflected that necessary due diligence was not shown while making investment decisions which resulted in the company's failure to translate the projected results into reality and raised concerns about the management's representations made before the share-holders and the Commission from time to time---Fundamental information regarding capital flow, Director's loan and operating results provided in the projections for the offer of the right issue, was rendered inaccurate and material facts were omitted---Preparation Of financial projections and their submission to the regulator was not given due attention by the Company, as a result of which the financial impact of the right issue was miscalculated and misrepresented---Such situation had reflected lapse in the financial controls of the company---Financial projections prepared pursuant to R.5 of Companies (Issue of Capital) Rules, 1996, had revealed that the project implementation was altogether in contrast with the financial projection; it was also observed that proceeds of the right issue, were not utilized for the purposes disclosed in the financial projections submitted to the share-holders at the time of approval of right issue, but instead appeared to have been utilized for payment of Director's loan---Directors of the company, which was a listed company, should fulfil their responsibilities laid down in the Code of Corporate Governance and follow good financial practices, which in the present case were very much lacking---Company was liable to be imposed penalty, however, instead of imposing maximum penalty of Rs. 1,00,000 on the Chief Executive and each Director as prescribed by S.492 of Companies Ordinance, 1984, Rs.50,000 was imposed on each of the Directors and Chief Executive.

Irfan Malik, Consultant and M. Farooq Akhtar, Attorney present.

2006 C L D 625

[Supreme Court of Pakistan]

Present: Khalil-ur-Rehman Ramday and Ch. Ijaz Ahmad, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and others----Petitioners

Versus

Mian ASIM FAREED and others ----Respondents

Civil Petition No.356-L of 2005, decided on 15th December, 2005.

(On appeal from the order, dated 23-12-2004 of the Lahore High Court, Lahore, passed in Writ Petition No.1181 of 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---Quashing of F.I.R.---Registration of F.I.R. and taking of cognizance---Distinction---High Court, in exercise of constitutional jurisdiction, quashed F.I.R. on the ground that it was registered in violation of the provisions of S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---No order for quashing of F.I.R. could be passed nor the same could be approved in absence of any finding that the offences mentioned in F.I.R. were false and malicious and in absence of a finding that if a particular forum or mode had been prescribed with respect to taking of cognizance of an offence then the same also implied prohibition regarding the registration of F.I.R.---Registration of F.I.R. and taking of cognizance of cases were two distinct and independent concepts under the criminal law---If the intention of law-maker was to put any clog on the registration of F.I.R. then the Legislature would have said so specifically and that if the law put a condition only on the taking of cognizance then it could never be read to imply prohibition on registration of FIRs.---High Court did not pass legal and valid order---Supreme Court converted petition for leave to appeal into appeal and set aside the order passed by High Court---Appeal was allowed.

M.A. Zafar, Advocate Supreme Court for Petitioners.

Abid Aziz Sheikh, Advocate Supreme Court for Respondents Nos. 1 to 3.

Akhtar Ali Qureshi, A.A.-G. with Mian Abdul Qayyum Anjum, Advocate Supreme Court and M. Ikram Khan, D.S.P. Investigation, Kasur for the State.

Date of hearing: 15th December, 2005.

2006 C L D 646

[Supreme Court of Pakistan]

Present: Rana Bhagwandas, Saiyed Saeed Ashhad and Hamid Ali Mirza, JJ

ENGLISH BISCUIT MANUFACTURES (PVT.) LIMITED and another---Petitioners

Versus

MONOPOLY CONTROL AUTHORITY and others---Respondents

C.P.L.A. No.1191 of 2004, decided on 16th December, 2005.

(On appeal from judgment of Sindh High Court, Karachi dated 30-3-2004 passed in M.A.No.7 of 2003).

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

----Ss. 3, 11 & 14---Special inquiry, non-holding of---Condition precedent---Withdrawal of show-cause notices---Grievance of complainant was that Monopoly Control Authority had withdrawn the show-cause notices and dropped the proceedings against accused---Validity---Monopoly Control Authority had been given discretion under S.14 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, not to hold special inquiry, if application/complaint was found to be frivolous or vexatious or based on insufficient facts---Wrong issuance of notices to accused party would not bring the proceedings conducted by Monopoly Control Authority within the ambit of S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---From the facts contained in complaint, the Authority found that there was no contravention of S.3 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, and complaint was frivolous and vexatious---Monopoly Control Authority acted within the authority conferred upon it by S.14 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, in withdrawing the show-cause notices issued to the parties and dropping the proceedings---Order of the Authority could not be considered to be an order under S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, so as to be appealable under S.20 of the Ordinance.

(b) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss. 3, 11, 12 & 14---Passing of order by Monopoly Control Authority---Principles---Provisions of S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, would not have come into play or could not be resorted to until the Authority, in pursuance of special inquiry, had come to the conclusion that there was prima facie contravention of S.3 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 and it was necessary to initiate proceedings in public interest---Initiation of proceedings by Monopoly Control Authority has been made dependent upon the finding of special inquiry conducted under S.14 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, rendering or establishing contravention of S.3 of the Ordinance, whereupon it would order initiation of statutory proceedings under S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Once statutory proceedings under S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, are commenced, Monopoly Control Authority would have the power or authority to make an order under S.11 (2) of the Ordinance, recommending/ordering one or more remedial/corrective measures enumerated and specified in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, to be adopted for arresting the contravention of S.3 of the Ordinance.

(c) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.3, 11 & 12-Cognizance by Monopoly Control Authority---Principles---Provision of S.3 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, is a remedial section to be read and acted upon in conjunction with S.11 of the Ordinance enabling the Authority to adopt or order anyone or more of the remedies enumerated in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, for redress of the grievance on account of violation of S.3 of the Ordinance.

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

----Ss. 11 & 12---Orders of Monopoly Control Authority---Scope---While making one or more orders specified in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, the order is to be deemed to be an order under S.11 of the Ordinance and not under S.12 of Monopolies and Restrictive Trade. Practices (Control and Prevention) Ordinance, 1970.

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

---Ss. 3, 11, 12, 14, 19 & 20---Constitution of Pakistan (1973), Art.185(3)-Appeal to High Court---Maintainability---Special inquiry, non-holding of---Withdrawal of show-cause notices---Filing of complaint by less than 25 persons---Complaint of petitioner was dismissed by Monopoly Control Authority on the ground that the petitioner was not an aggrieved person---Show ?cause notices issued to respondents were withdrawn by Monopoly Control Authority and proceedings were dropped---Appeal filed by the petitioner was also dismissed by High Court, being not maintainable---Validity---Person aggrieved by an order under Ss. 11 or 19 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, had a right to file appeal under S.20 of the Ordinance---Order passed by Monopoly Control Authority was not an order under S.11 or 19 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 but was an order under S.14 of the Ordinance, against which no appeal could be entertained in view of the provisions of S.20 of the Ordinance---Neither the order of the Authority, nor judgment of High Court suffered from any illegality, impropriety or grave irregularity nor it suffered from misconstruction or misinterpretation of any provisions/ sections of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---High Court was justified in holding that complaint filed by petitioner was not maintainable as it was not filed or presented by the requisite number of 25 persons as required by S.14(2) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 and that the order of the Authority was not an order under S.11 of the Ordinance---High Court was also right in holding that Monopoly Control Authority was not legally bound to adopt or pass an order recommending anyone or more of the directives, prohibitions or limitations enumerated in S.12 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Supreme Court declined to interfere with the order passed by High Court---Leave to appeal was refused.

Shaiq Usmani, Senior Advocate Supreme Court, Syed Sharifuddin Pirzada, Senior Advocate Supreme Court, Aziz A. Munshi, Senior Advocate Supreme Court, Salman Aslam Butt, Advocate Supreme Court and Mehr Khan Malik, Advocate-on-Record for Petitioners.

M. Bilal, Senior Advocate Supreme Court and Ejaz Muhammad Khan, Advocate-on-Record for Respondent No.1.

Fakhruddin G. Ehrahim, Senior Advocate Supreme Court and M.A. Khattak, Advocate-on-Record for Respondents Nos. 2 and 3.

Munir A. Malik, Advocate Supreme Court and M.A. Zaidi, Advocate-on-Record for Respondent No.4.

Date of hearing: 16th December, 2005.

2006 C L D 687

[Supreme Court of Pakistan]

Present: Javed Iqbal and Ch. Ijaz Ahmad, JJ

Messrs STATE ENGINEERING CORPORATION LTD. ----Petitioner

Versus

NATIONAL DEVELOPMENT FINANCE CORPORATION and others----Respondents

C.P. No. 1441-L of 2004, decided on 7th February, 2006.

(On appeal from the order, dated 25-2-2004 passed by the Lahore High Court, Lahore in R.F.A. No.62 of 1998).

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

----S. 126-'Guarantee'-Connotation-'Guarantee' is an under-taking by a third party for one of the parties to the contract whereby the third party binds itself to see that the promise or condition would be fulfilled according to covenant.

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

----S. 9---Contract Act (IX of 1872), S.128---Constitution of Pakistan (1973), Art.185 (3)---Recovery of bank loan---Liability of guarantor/ surety---Suit was decreed in favour of bank against the borrower and guarantor---Petitioner being guarantor was aggrieved of the judgment and decree passed by High Court in exercise of banking jurisdiction---Validity---Liability of guarantor/surety was co-extensive with that of the principal debtor, unless it was otherwise provided by the contract as envisaged in S.128 of Contract Act, 1872---Guarantor and principal debtor were jointly and severally liable to pay the outstanding amount to the creditor---Guarantor could not shirk from the liabilities incurred by him through the execution of documents---Creditor's in an action against guarantor was merely required to show existence of liability of the principal debtor and occurrence of default or breach of terms leading to the liability---Defence based on technicalities, loss of procedure or covenants to which guarantor was not a party, could not be pressed into service by guarantee---No infirmity or illegality in the judgment passed by High Court having been found by the Supreme Court and no question of law of public importance having been raised by the petitioner, leave to appeal was refused.

Rafique Hazquel Masih v. Bank Alfalah Ltd. and others 2005 SCMR 72 = 2005 CLD 95; M/s. Platinum Insurance Company Ltd. v. Daewoo Corporation PLD 1991 SC 1; Ram Sagar Singh v. Yogendra Narain Prasad Singh AIR 1975 Pat. 239; Ashrafi Rai v. Parsbadilal AIR 1959 M.P. 26; Dalchand v. State of Rajasthan AIR 1976 Raj. 112; Madho Sah v. Sitaram Sah AIR 1962 Pat. 405; Arumugham Chettiar v. Sadasiram AIR 1971 Mad. 321; Nagpur Nagrik Sahakari Bank Ltd. v. Union of India AIR 1981 A.B. 153; Budh Singh v. Mukhund Murailal AIR 1975 A.B. 201; Kali Cheran v. Abdul Rehman AIR 1918 PC 226; Central Exchange Bank Ltd. v. Mst. Zaitoon Begum and 2 others PLD 1968 SC 83 and Sree Meenakshi Mills Ltd. v. Ratilal Tribhovandas Thakar AIR 1941 Bom. 108 rel.

(c) Pleadings---

----Parties are bound by their pleadings.

Mst. Murad Begum's case PLD 1974 SC 322 rel.

(d) Constitution of Pakistan (1973)---

----Art. 185---New plea---Fresh plea cannot be raised before Supreme Court.

John E. Brown Lee. v. Vivan Mac Milian AIR 1940 PC 219; Ashfaque-ur-Rehman v. Ch. Muhammad Afzal PLD 1971 SC 766 and Ganga Nath Sen v. Ram Jit Ray ILR (1942) 1 Cal. 11 rel.

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

----S. 141---Surety's right---Scope---So long as principal debtor is liable, the guarantor also agrees to be liable---Right has been conferred on surety by S.141 of Contract Act, 1872, to the benefit of every security which creditor has against principal debtor at the time when the contract of surety is entered into.

Citibank N.A. Newdehly v. Juggilal Kamlapat Jute Mills Co. Ltd. Kanpur AIR 1982 Dehly 487 rel.

(f) Constitution of Pakistan (1973)---

--Art. 185(3)---Petition for leave to appeal---Concurrent findings of fact by the Courts below---Scope---Supreme Court cannot interfere with the concurrent findings of the Courts below while exercising power under Art.185(3) of the Constitution.

Humayun and others v. The State 1986 SCMR 1987 and Evacuee Trust Property Board v. Muhammad Sharif 1984 Pakistan Supreme Court Cases 1501 rel.

Sh. Shahid Waheed, Advocate Supreme Court for Petitioner.

Nemo for Respondents.

Date of hearing: 7th February, 2006.

2006 C L D 776

[Supreme Court of Pakistan]

Present: Abdul Hameed Dogar, Muhammad Nawaz Abbasi and Mian Shakirullah Jan, JJ

IBRAHIM SHAMSI and another---Appellants

Versus

BASHIR AHMED MEMON and others---Respondents

Civil Appeal No.1071 of 2005 along with Civil Appeal No.1325 of 2005, decided on 15th February, 2006.

(On appeal from the judgment of High Court of Sindh at Karachi passed in J. Miscellaneous No. 37 of 2003, dated 3-8-2005 in both cases)

Companies Ordinance (XLVII of 1984)-

----Ss.305, 309 & 311---Civil Procedure Code (V of 1908), O.XXI, R.92---Winding up of company---Liquidation proceedings---Acceptance of highest bid---Company under liquidation was put to sale through sealed bids received in High Court---Matter went up to Supreme Court and in post remand proceedings, High Court directed to hold fresh bid---Appellant was the highest bidder in post remand bidding but after receipt of his bid, High Court received bid of respondent which was higher than that of the appellant---High Court called the appellant to match the bid and on his failure to do so, bid offered by respondent was accepted---Validity---High Court instead of deciding the dispute in terms of the judgment of Supreme Court confirmed the auction in favour of respondent, who entered in the competition at a later stage and offered matching bid with a nominal margin---With the consent of parties, order passed by High Court accepting the bid of respondent was set aside---Matter was remanded to High Court for decision of references, along with the objections and miscellaneous applications afresh in the light of observation contained in the earlier judgment of Supreme Court in the present case---Appeal was allowed accordingly.

Raja Muhammad Ibrahim Satti, Advocate Supreme Court for Appellant (in C.A. No.1071 of 2005).

Nemo for Respondent No.1 (in C.A. No.1071 of 2005).

M. Ikram Siddiqui, Advocate Supreme Court for Respondent No.2 (in C.A. No.1071 of 2005).

Fakhruddin G. Ebrahim, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Appellant (in C.A. No.1325 of 2005).

M. Jaffar Hashmi, Advocate Supreme Court for Respondent No.39 (in C.A. No.1325 of 2005).

M. Ikram Siddiqui, Advocate Supreme Court for Respondent No.40 (in C.A. No.1325 of 2005).

Nemo for Respondents (in C.A. No.1325 of 2005).

Date of hearing: 15th February, 2006.

2006 C L D 793

[Supreme Court of Pakistan]

Present: Saiyed Saeed Ashhad and Nasir-ul-Mulk, JJ

CHIEF MANAGER, STATE BANK OF PAKISTAN and another----Appellants

Versus

Messrs FATIMA ENTERPRISES LTD. and others----Respondents

Civil Appeal No.380 of 2002, decided on 23rd February, 2006.

(On appeal from the judgment of the Lahore High Court, Multan Bench, Multan, dated 3-12-1999 passed in Writ Petition No.9251 of 1999).

Guarantee---

----Bank guarantee---Interest, payment of-Company, in the present case, had applied to the State Bank of Pakistan for cover of foreign exchange risk on the amount payable to a foreign company in foreign currency which was granted---Dispute arose between the Company and the State Bank regarding the rate of foreign exchange for covering the risk---Dispute eventually landed in Supreme Court in which leave was granted and appeal was decided wherein State Bank was directed to calculate the amount payable by the Company and to recover the same from the bank guarantee furnished by the Company---Bank guarantee showed that interest mentioned therein related to the interest that was payable by the Company to the credit supplier on the principal amount and not on the facility provided by the State Bank of Pakistan---Second guarantee, which had revalidated the earlier one on the orders of the Supreme Court, did not mention the payment of any interest/mark-up---Order of the Supreme Court in compliance with which Bank guarantee was furnished, was silent regarding payment of interest/mark-up---State Bank of Pakistan, in circumstances, was not entitled to debit to the Bank amount of interest in respect of a guarantee furnished by the Bank on behalf of the Company to cover the differential amount regarding which the dispute had arisen between the State Bank and the Company.

State Bank of Pakistan v. Messrs Faisal Spinning Mills Limited 1997 SCMR 1244 distinguished.

State Bank of Pakistan v. Messrs Faisal Spinning Mills Limited 1997 SCMR 1244 ref.

M. Bilal, Senior Advocate Supreme Court with Ejaz M. Khan, Advocate-on-Record for Petitioners.

M. Rafiq Rajwana, Advocate Supreme Court with M. S. Khattak, Advocate-on-Record for Respondent No.1.

Raja M. Akram, Senior Advocate Supreme Court with Ch. Akhtar Ali, Advocate-on-Record for Respondents Nos.2 and 3.

Date of hearing: 23rd February, 2006.

2006 C L D 1011

[Supreme Court of Pakistan]

Present: Javed Iqbal and Ch. Ijaz Ahmed, JJ

MUHAMMAD ARSHAD and another----Petitioners

Versus

CITIBANK N.A., AL-FALAH BUILDING, LAHORE----Respondent

Civil Petition No.1207-L of 2005, decided on 16th February, 2006.

(On appeal from the judgment, dated 30-3-2005 of the Lahore High Court, Lahore, passed in R.F.A. No.923 of 2001).

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

----S.9---Negotiable Instruments Act (XXVI of 1881), Ss.20 & 118---Constitution of Pakistan (1973), Art.185(3)---Recovery of bank loan---Financing agreement---Authenticity---Blank columns---Re-scheduling of loan---Banking Court as well as Appellate Court decreed the suit in favour of bank and dismissed the appeal respectively---Plea raised by defendants was that at the time of signing of financing agreement many columns were left blank and bank created a fictitious rescheduling agreement just to enhance its claim---Validity---Re-scheduling agreement was not only signed but defendants also affixed their thumb-impressions on it which were never denied---Contention of defendants that the genuineness and authenticity of re-scheduling agreement was not above board as relevant columns were left blank and filled in subsequently by the bank was repelled with observation by the Supreme Court even if it was admitted, then why the re-scheduling agreement was acted upon and pursuant thereof ten instalments had been paid and outstanding liability was reduced---In fact, instalments were made as per re-payment schedule which was inseparable part of re-scheduling agreement---Main object to get the renewed agreement was restructuring of finance facility and not liquidation of the liability---Re-scheduling agreement was authentic, genuine and executed between the parties and acted upon---No benefit could be given to defendants in view of the provisions of Ss.20 & 118 of Negotiable Instruments Act, 1881, on the ground that the agreement was not completely filled in when executed as it would have no substantial bearing on the validity of the agreement---Signatures on various documents annexed with the plaint were not disputed by defendants which led the Supreme Court to draw the only unescapable conclusion that claim of bank was genuine and based on authentic documents---No illegality or infirmity could be pointed out by defendants in the judgment and decree passed by High Court, which being well based did not warrant interference---Leave to appeal was refused.

Muhammad Sarfraz Khan Rana v. Government of the Punjab PLD 1990 Lah. 88; M.P. R.M. Irulandi Mudaliar v. Syed Ibrahim AIR 1962 Mad. 326; National Bank of Pakistan v. Azizullah Hassan 1984 MLD 1035; Messrs Mach Knitters (Pvt.) Ltd. v. A.B.P. 2004 CLD 535; Iftikhar Hussain Khan of Mamdot v. Ghulam Nabi Corporation PLD 1971 SC 550; United Bank v. Business Investment Ltd. 1982 CLC 1101; Karim v. Zikar Abdullah 1973 SCMR 100; National Commercial Bank Ltd. v. Muhammad Younus Butt 1980 CLC 90; Chandan Lal v. Messrs Amin Chand Mohal Lal AIR 1960 Punjab 500 and Sundar Singh v. Khushi Ram AIR 1927 Lah. 864 ref.

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

----S.20---Inchoate stamp instruments---Where one person signs and delivers to another, paper stamped in accordance with law, either wholly blank or having written thereon, incomplete negotiable instrument, in order that it may be made, or completed into negotiable instrument, he thereby gives prima facie authority to person who received that paper to make or complete it, as case may be, into negotiable instrument for any amount.

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

----5.118---Presumptions as to negotiable instruments---Section 118 of the Negotiable Instruments Act, 1881 provides that presumptions are attached to negotiable instruments, which, inter alia included that negotiable instrument was made or drawn on such date.

Mahmood A. Sheikh, Advocate Supreme Court for Petitioners.

Nemo for Respondent.

Date of hearing: 16th February, 2006.

2006 C L D 1477

[Supreme Court of Pakistan]

Present Hamid Ali Mirza and Muhammad Nawaz Abbasi, JJ

GAP INC. A DAWARE CORPORATION USA through Authorized Signatory---Petitioner

Versus

GAP DEPARTMENTAL STORE, KARACHI and another---Respondents

Civil Petition No.1044 of 2003, decided on 28th February, 2005.

(On appeal from the judgment dated 3-3-2003 in Miscellaneous Appeal No.12 of 2000 passed by the High Court of Sindh, Karachi).

Trade Marks Act (V of 1940)-

----S.15 (2)---Trade Marks Rules. 1963, Rr.30 & 76---Constitution

of Pakistan (1973), Art. 185 (3)---Registration of trade mark--

Notice of opposition---Extension of time---Filing of opposition

notice without power of attorney---Petitioner's trade mark

application was advertised on 7-8-1996 but no opposition

against such registration was filed till 27-2-1997---Notice dated

22-4-1997 was issued to respondent by the authorities for

inviting opposition to the petitioner's trade mark, which was

directed to be filed by 22-5-1997---After expiry of the said time limit respondent filed opposition notice dated 22-11-1997, which was dismissed by the authorities being barred by time---High Court, in exercise of appellate jurisdiction allowed the appeal and remanded the matter to the authorities for decision afresh on the opposition notice of respondent---Plea raised by the petitioner was that the notice of opposition was time barred and was filed by the counsel without power of attorney---Validity--- High Court had observed that according to R. 76 of Trade Marks Rules, 1963, respondent was entitled to extension of one month each but not exceeding six months---Respondent had maximum six months for filing opposition notice which was timely filed on 22-11-1997, therefore, such opposition notice was within time---Filing of opposition notice by counsel without power of attorney was hypertechnical objection and procedural matter not affecting the merits of case---Such objection could not be sustained being of insignificant nature considering that justice was not only to be done but should seem to have been done--- High Court had only remanded the case to the Registrar to decide opposition in accordance with law on merits as such no prejudice would be caused to the petitioner if matter was decided on merits after hearing the parties---Supreme Court declined to interfere in the judgment passed by High Court as there was no legal or factual infirmity therein---Leave to appeal was refused.

Rehmat Elahi v. Messrs Hoyo Kabushiki Kaisha PLD 1992 SC 417 fol.

Muhammad Shahzad Shaukat, Advocate Supreme Court for petitioner.

Sultan Ahmad Sh., Advocate Supreme Court for Respondent No.1.

Date of hearing: 28th February, 2005.

2006 C L D 1569

[Supreme Court of Pakistan]

Present: Jawed Iqbal and Karamat Nazir Bhandari, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN LTD.----Petitioner

Versus

BLUE STAR HOTEL (PVT.) LTD. and others----Respondents

Civil Petition No.142 of 2006, decided on 7th August, 2006.

(On appeal from the judgment, dated 5-12-2005 of the Lahore High Court, Rawalpindi Bench, Rawalpindi passed in E.F.A. No.3 of 2002).

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

----S. 18---State Bank of Pakistan Circular No.19---Constitution of Pakistan (1973), Art.185(3)---Execution of decree---Change of decretal amount---During execution proceedings, Executing Court in view of the Circular No.19 issued by State Bank of Pakistan, changed the decretal amount---Validity---Leave to appeal was granted by Supreme Court to consider, whether terms and conditions as enumerated in Circular No.19 issued by State Bank of Pakistan had been misinterpreted and misconstrued by the High Court; whether any amendment, deletion, insertion, addition or extension in stipulated period mentioned in Circular No.19 issued by State Bank of Pakistan could have been made by High Court; whether package, dated 15-2-1999, was given to respondent pursuant to Circular No.19 issued by State Bank of Pakistan and any further relief under the Circular could have been given by High Court after expiry of the Circular when it was no more in existence; and whether Circular No.19 issued by State Bank of Pakistan could have changed or modified the decree passed on 12-4-2001, by Banking Court, which had attained finality.

Khawaja Muhammad Farooq, Senior Advocate Supreme Court and Ejaz Muhammad Khan, Advocate-on-Record for Petitioner.

Malik Shahzad Ahmed, Advocate Supreme Court and Ch Akhtar Ali, Advocate-on-Record for Respondents.