CLD 2007 Judgments

2007 C L D 1311

[High Court (AJ & K)]

Before Ghulam Mustafa Mughal, J

NATLONAL BANK OF PAKISTAN, BRANCH MIRPUR---Applicant

Versus

MIAN MUHAMMAD SUGAR MILLS, BHIMBER, AZAD KASHMIR---Respondent

Civil Miscellaneous No.20 of 2005, decided on 8th June, 2007.

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

----Ss.9 & 12---Civil Procedure Code (V of 1908), O.III, R.4---Suit for recovery of loan amount---Withdrawal of power of attorney by defendant's counsel without prior notice to defendant---Ex parte decree against defendant for his non-appearance after issuance of summons and proclamation for his service---Validity---Withdrawal from prosecution as contemplated by O.III, R.4, C.P.C. was not a unilateral act of a party to suit---Counsel before withdrawing from prosecution was bound to intimate defendant through a notice---Non-appearance of defendant after such intimation. could be considered as wilful default on next date---non-compliance with provision of O.III, R.4, C.P.C. had rendered whole proceedings coram non judice---Defendant had been penalized for such act of his counsel and the court---Issuance of substituted service and ex parte decree on basis of such service was a nullity in the eye of law---Ex parte decree was set aside in circumstances.

Hudaybia Textile Mills's case PLD 1987 SC 512; Bank of Credit and Commerce International (Overseas) Ltd. v. Banking Tribunal for Sindh, Balochistan and 2 others 1990 MLD 309 and U.B.L's case 1998 CLC 179 rel.

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

----S.9(3)---Summons and proclamation for service of defendant could be issued simultaneously---Principles.

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

----Ss.5 & 9---Suit for recovery of loan amount--Institution of suit in High Court in its original jurisdiction---Effect---Provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 would not apply to High Court for not being a court created thereunder.

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

----S.7(2)---Civil Procedure Code (V of 1908), Preamble---Proceedings before Banking Court---Civil Procedure Code, 1908, applicability of---Scope---Court would be bound to apply provisions of C.P.C. in a situation for handling of which no corresponding provision existed in Banking Companies (Recovery of Loans, Advanced, Credits and Finances) Act, 1997.

Hudaybia Textile Mills's case PLD 1987 SC 512 and Bank of Credit and Commerce International (Overseas) Ltd. v. Banking Tribunal for Sindh, Balochistan and 2 others 1990 MLD 309 ref.

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

----O.V, R.20---Substituted service, ordering for---Essentials---Provision of O.V, R.20, C.P.C., was mandatory, thus, its non-compliance would render whole proceedings as coram non judice---Court for ordering such service must record definite finding that defendant was avoiding service---Such findings ordinarily were recorded on basis of report of Process-Server, who had taken pains in searching defendant.

Major Syed Walayat Shah's case PLD 1971 SC 184 ref.

Sikandar Mehmood's case PLD 1998 Lah.118 and Mst. Sardaran Begum's case 1993 CLC 2303 rel.

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

----S.12---Ex parte decree, setting aside of application for---Delay, condonation of---Defendant's plea was that he came to know about decree, when he received notice in execution application---Such plea was supported by defendant's affidavit and was not denied by plaintiff---Delay was condoned in .circumstances.

(g) Power of Attorney---

----Power of attorney showing executee to have powers to file appeal, review, revision and perform all other necessary acts for prosecution of suit---Effect-- Authority of executee to file application for setting aside ex parte decree would be deemed to have been delegated impliedly.

Javed Najum Saqib for Applicant.

Raja Muhammad Yaqoob, Advocate for Respondent.

2007 C L D 69

[Karachi]

Before Mushir Alam and Munib Ahmed Khan, JJ

Sheikh ABDUL SATTAR LASI and another---Appellants

Versus

JUDGE BANKING COURT and 3 others---Respondents

C.Ps. Nos. D-217 to D-219 of 2005, decided on 12th September, 2006.

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

----Ss.15(4)(6)(10), 2(b), 7(2), 22 & 16(10)---Civil Procedure Code (V of 1908), O.I, R.10, O.XXI, Rr.58, 59, 60 & 66---Constitution of Pakistan (1973), Art.199---Constitutional petition---Auction of mortgaged property---Notices---Challenge to---Non-observance of mandatory provisions of S.16(10) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Wrongful assumption of jurisdiction by High Court---Effect---Banking Court initiated action against petitioners on application filed under S.15(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001, by Bank with prayer that direction be issued to occupant of property to hand over vacant possession to the Bank---Bank claimed that it was entitled under S.15(6) of the Ordinance to sell mortgaged property without intervention of Court by public auction and Bank had served notice on mortgagors in this regard---Petitioners, however, were not impleaded as party but occupant of property was arrayed as party---One of the petitioners after knowing pendency of matter, filed application under O.I, R.10, C.P.C. for becoming party to proceedings---Contending that word 'suit' was covered by definition provided in S.2(b) of the Ordinance, 2001, while other proceedings including those under S.15(6) of the Ordinance were covered by word 'case' which could be filed in the Banking Court irrespective of amount of money involved, since petitioners had not challenged the jurisdiction of 'Banking Court', they could not challenge the same before High Court---Validity---In notices issued under S.15(4) of the Ordinance, 2001, besides detail of mortgaged property, name of mortgagor and outstanding amount against each property was to be given but contrarily, in notices, separate amount had not been given against each property, therefore, notice in newspaper was to be taken as a whole and amount involved was to be considered as Rs.1046 Million, which identified jurisdiction of the Court---Civil jurisdiction of Banking Court in respect of finance was only up to Rs.50 Million while for trial of offences under the Ordinance, 2001, it was unlimited---In the present case, Banking Court had assumed jurisdiction without looking into mandatory provisions of law regarding publication of notices under S.15(4), its effect including determination of financial liability of customer and financial statement under S.15(10) of the Ordinance---Such consideration was necessary to confer jurisdiction upon a particular Court---Banking Court had failed to file proper accounts of sale proceeds within 30 days of sale as required by S.16(10) of the Ordinance, 2001---Petitioners while calling in question the order passed by Banking Court contended; that Banking Court was not the "Court" as envisaged under S.15(6) of the Ordinance, 2001, as word "Court" mentioned in the Ordinance, had been defined under S.2(b) which meant "High Court" as through notices of Bank as well as advertisement, amount due from petitioners was more than Rs.50 million; that C.P.C. was applicable by virtue of S.7(2) of the Ordinance, 2001 but Bank failed to comply with Order XXI, Rule 66, C.P,C.; that alleged auction of property in question was not public auction as property had been thrown away much below market value and that Bank had failed to file statement of accounts as required under S.15(10) of the Ordinance, 2001---Respondents, including auction-purchaser contended that instead of filing constitutional petition, petitioners were to avail remedy of appeal under S.22 of the Ordinance, 2001, against auction order passed by the Banking Court; that definition of word 'Court' as given in S.2(b) of the Ordinance, 2001, was applicable only when a suit was filed before Banking Court but in proceedings under S.15, 'Court' meant 'Banking Court' only and not 'High Court'; that Bank had issued combined notices to petitioners as required under S.15 of the Ordinance, 2001 and against each property separate application under S.15(6) of the Ordinance, 2001, had been filed; petitioner though did not challenge jurisdiction of Banking Court at earliest opportunity, but he could challenge the same before High Court as he was not impleaded as a party when auction under S.15(6) of the Ordinance was initiated rather he appeared on his own accord before Court with application under O.I, R.10, C.P.C.---Grave illegality had been committed by Bank against its customer---Banking Court had no jurisdiction to entertain the matter and order passed by it suffered from principle of corum non judice, hence, was liable to be set aside---Petition was allowed.?

2002 CLD 441; 2003 CLD 699; 2002 YLR 969; 2002 CLD 264; PLD 2002 SC 452; 2006 CLD 812; 2004 CLD 215; 1987 PLC 605; PLD 1986 Lah.184; PLD 1983 Kar. 112; AIR 1965 Kar.99: AIR 1965 SC 834; PLD 1972 SC 337; 1983 CLC 3075; PLD 1987 SC 512; 1987 CLC 1338; 1994 SCMR 1555; PLD 1985 SC 104; PLD 1982 SCMR 633; SLJ 1997 550; SBLR 2004 Sindh 623; 2003 CLD 689; 2002 CLD 441; 2002 YLR 696; 1999 SCMR 900; 2002 CLC 147; 2006 AC 44; 2004 UC 310; 2002 CLC 1438; 2001 CLC 1267; PLD 1987 SC 512; 2004 SCMR 1965: PLD 1983 Kar.122 and 2006 SCJ 509 ref.

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

--S. 15(6)---"Banking Court"---"Connotation"---Word 'Banking Court' used in S.15(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, could be 'High Court' only due to involvement of more than Rs.50 Million and not the "Banking Court".?

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

----S. 2(b)---Words 'suit' and 'case'---Distinction---Words 'suit' and 'case' had no difference within the meaning of Financial Institutions (Recovery of Finances) Ordinance, 2001.?

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

----Ss. 2(b), 15(6) & 22(6)---Constitution of Pakistan (1973). Art.199---Constitutional petition---Maintainability---Jurisdiction of Banking Court---Challenge to---Jurisdiction of High Court---Held, in case of grave violation in observance of substantive provisions of law, even consent could not confer jurisdiction upon a forum which was never vested in it---Constitutional petition was maintainable where Banking Court had wrongly assumed jurisdiction ---Bank, in the present case had gravely violated law to its own benefit and order passed by Banking Court fell within S.22(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 as not being appealable.

Ali Sajjad for Petitioners.

Altaf Hussain, Ms. Wajiha Mehdi and Izhar Alam Farooqi for Respondents.

Date of hearing: 17th August, 2006.

2007 C L D 125

[Karachi]

Before Anwar Zaheer Jamali and Syed Zawwar Hussain Jaffery, JJ

Messrs SHAMS AND BROTHERS---Petitioners

Versus

GOVERNMENT OF PAKISTAN and others---Respondents

Civil Petition No.D-1437 of 2005 and C.M. As. Nos.6030, 5807, 5366 of 2005, and C.M.A. No.2005 of 2006, decided on 27th October, 2006.

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

----Ss. 10 & 37---Constitution of Pakistan (1973), Art.199---Constitutional jurisdiction of High Court---Scope---Invitation of bids/offers---Highest offer not accepted---New conditions having no nexus with purpose and nature of contract---Ulterior motive and mala fide of tendering authority---Petitioner, a registered partnership firm, filed constitutional petition against respondents to the effect that one respondent being a corporate body under administrative control of Government of Pakistan, invited bids/offers to run and maintain Marriage Lawns on built, operate and transfer basis at a certain plot---Petitioner's offer being the highest was accepted by respondent who verbally asked petitioner to start development work at the site---Respondent then cancelled petitioner's offer on ground that on assessment and verification of business profile and experience of petitioner, it was found unsatisfactory---Fresh offers, thereafter, were invited by the corporate body with addition of new set of conditions and qualifications---Petitioner again stood as the highest bidder but respondent with ulterior motive did not accept petitioner's bid, but contemplated to award contract to another party with meagre offer---Petitioner contended; that due to nepotism, favouritism and underhand dealing between respondents and the party and in order to harm interest of petitioner and also to cause huge loss to public exchequer, his highest offer was rejected by respondent; that first highest bid of petitioner had been accepted by respondent who even encashed pay order deposited by petitioner; that in second invitation of tenders certain uncalled for and unreasonable conditions were incorporated to ensure that petitioner was kept out of process due to non fulfilment of flimsy conditions and qualifications---Respondents argued that petitioner had no resources available with it, therefore due to non-meeting of minimum requirement of bid, respondent was fully justified in rejecting its highest bid; that mere highest bid of a party was not to give it locus standi to challenge rejection of its bid and that petitioner firm was not member of Chamber of Commerce and Industry---Validity---Transparency in process where doubted and mala fides or ulterior motive to oblige any particular party to cause financial loss to public exchequer was alleged, the powers of High Court under Art.199 of the Constitution could be invoked and exercised to examine such aspects and to undo such wrongs to avoid financial loss to exchequer due to acts of misdeed, collusion or favouritism by individuals involved in such process--Court was not to sit as silent spectator to approve underhand devices, aimed to eliminate one party and to accommodate another, causing heavy financial loss to the exchequer---Terms and conditions imposed by respondent for awarding contract were to have nexus with nature of contract and its objectives---Security deposit paid by petitioner and encashed by respondent gave strong presumption in favour of petitioner that his highest bid was accepted, being in accordance with specified terms and conditions and to the satisfaction of respondents---Petitioner was vigorously pursuing its case for execution of final agreement in its favour but respondent was putting up new conditions beyond scope of terms and conditions provided in advertisement just to frustrate claim of petitioner---Substantial difference existed between petitioner's offer and second highest offer of other party which aspect put heavy burden on respondent to justify his action of non-acceptance of petitioner's highest offer---Ulterior motive and mala fide of respondents was clear from comparison of contents of their two advertisements for invitation of offers as a number of additional conditions and qualifications were incorporated in second advertisement which had no nexus with purpose and objective of respondent which were solely to get maximum financial benefits for public exchequer---For establishing and managing a marriage hall on built, operate and transfer basis, an experience of minimum five years in relevant field was not much relevant from point of view of respondent who after award of contract were to be concerned only with receipt of maximum monthly income---Petitioner though was member of Chamber of Commerce and Industry but such registration was not that much material as the same could have been obtained by petitioner later on---Respondents could not give a satisfactory reply to query that why several additional technical terms and conditions were incorporated in second tender notice which did not find place in the first advertisement--Acceptance by respondent of offer of other party and awarding contract to the latter was illegal, without lawful authority and of no legal effect---Respondent was directed by High Court to invite fresh bids/offers for granting lease of plot for purpose of marriage lawn by incorporation of only such conditions which were available in first advertisement and were necessary to safeguard their interest properly---Constitutional petition was accepted.

Rehmat Ali and 2 others v. The Revenue Board, West Pakistan, Lahore and others 1973 SCMR 342; Calicon (Pvt.) Ltd. v. The Federal Government of Pakistan and 5 others 1994 SCMR 1758; Munshi Muhammad and another v. Faizanulhaq and others 1971 SCMR 533 and City Schools (Pvt.) Ltd., Lahore Cantt. v. Privatization Commission, Government of Pakistan and another 2002 SCMR 1150 distinguished.

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

---Ss. 10 & 37---Constitution of Pakistan (1973), Art.199---Constitutional jurisdiction of High Court---Scope---Award of contract by State functionaries---Judicial review of administrative action---Scope---State functionary in awarding contracts was to act fairly, reasonably, honestly and justly---Court though was not to substitute its opinion with that of State functionary, yet it certainly had powers to judicially review administrative actions to check their fairness, reasonableness and transparency---In the context of tenders and award of contracts the prescribed conditions were not to be unreasonable, irrational and were to have direct nexus with performance of work sought to be performed by contractors in totality of circumstances---Condition whether had or did not have nexus with the object was to depend upon facts and circumstances of each case.

Balochistan Construction Company v. Port Qasim Authority SBLR 2001 Karachi 661 and Ramana Dayram Shetty v. International Airport Authority of India AIR 1977 SC 1628 rel.

(c) Constitution of Pakistan (1973)---

--Art. 199---Award of contract by State functionaries---Judicial review---Scope.

Rehmat Ali and 2 others v. The Revenue Board, West Pakistan, Lahore and others 1973 SCMR 342; Calicon (Pvt.) Ltd. v. The Federal Government of Pakistan and 5 others 1994 SCMR 1758; Munshi Muhammad and another v. Faizanulhaq and others 1971 SCMR 533 and City Schools (Pvt.) Ltd., Lahore Cantt. v. Privatization Commission, Government of Pakistan and another 2002 SCMR 1150 distinguished.

Balochistan Construction Company v. Port Qasim Authority SBLR 2001 Karachi 661 and Ramana Dayram Shetty v. International Airport Authority of India AIR 1977 SC 1628 rel.

Sardar Muhammad Yousuf for Petitioner.

Muhammad Aslam for Respondents Nos. 1 and 2.

Rehman Aziz holding brief for Muhammad Aziz Malik for Respondent No.3.

Muhammad Sher Awan holding brief for Mr. A. Rauf Kasuri for Respondent No.4.

2007 C L D 143

[Karachi]

Before Faisal Arab, J

PORT QASIM AUTHORITY, A STATUTORY BODY HAVING ITS HEAD OFFICE AT BIN QASIM, KARACHI and others---Plaintiffs

Versus

OFFICIAL ASSIGNEE OF KARACHI and others---Defendants

Admiralty Suits Nos. 7 of 2000, 1254, 1292, 1293 of 1997, 14 of 1998 and 35 of 1999, decided on 16th October, 2006.

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

----Ss.3(2) & 4(4)---Port Qasim Authority Act (XLIII of 1973), S.23---Scale-B of S.R.O. No.04(KE)/2005 dated 12-5-2005 and S.R.O. No.72(KE)/96 dated 2-5-1996---Sindh Chief Court Rules, (O.S.) R.731---Suits under Admiralty Jurisdiction of High Court---Port Authority's preferential claim against rival claimants---Scope---Failure of Authority to seek relief of arrest of ship in suit---Effect---Six suits including that of Port Authority were filed under Admiralty jurisdiction of High Court in which plaintiffs raised their respective claims against ship arrested and then sold through official assignee---Buyer paid entire sale price to official assignee and took delivery of ship on 1-2-2000---Port Authority in its suit averred that claim for Authority's dues and charges was to be given preference over all other claims and since claim of Authority was more than amount realized from sale of ship, therefore, nothing was to be left for distribution to other five claimants even if they established their respective claims against ship---Remaining five plaintiffs contended that suit filed by Authority was not for arrest of-ship, hence its suit was not to be treated as a suit under Admiralty jurisdiction of High Court, and therefore Authority's claim did not enjoy any priority over claim of rival claimants; that Authority's claim was not covered by any clause of S.3(2) of Admiralty Jurisdiction of High Court Ordinance, 1980; that Authority being a statutory body under Port Qasim Authority Act, 1973, was provided alternate remedy of filing suit under S.23 of Port Qasim Authority Act, 1973 and having left with such remedy, any decree to be passed in present suit was to be treated as an ordinary decree enjoying no priority over other claims; that Authority did not charge mooring charges under Scale B' of S.R.O. No.04(KE)/2005 dated 12-5-2005 and that Authority did not provide details of expenses as to extra charges or contingencies and such amount was to be deleted from its claim---Validity---Arrest of ship was only an interim measure which might or might not be sought in suits filed under Admiralty jurisdiction of High Court, depending upon circumstances---Absence of plea for arrest of ship did not take out a suit from ambit of Admiralty jurisdiction of High Court, if claim otherwise fell under any of clauses mentioned in S.3(2) of Admiralty Jurisdiction of High Court Ordinance, 1980---Under R.731 of Sindh Chief Court Rules, arrest of a ship was not a condition precedent for bringing a suit within scope of Admiralty jurisdiction of High Court---Relief of seeking arrest of a ship was optional--In the present case, by the- time Authority filed suit, ship was already arrested and ordered to be sold. therefore question of again seeking its arrest to secure the claim did not arise--Arrest of ship was not necessary to found jurisdiction in an action in rem as service of writ on res was sufficient---Authority's claim fell under Cl. (m) of subsection (2) of S.3 read with subsection (4) of S.4 of Admiralty Jurisdiction of High Court Ordinance, 1980---Authority's claim being a claim towards Port dues and charges, the same was to be given preferential treatment over and above the rest of claims made in remaining suits also filed under Admiralty jurisdiction---Section 32 of Port Qasim Authority Act, 1973, empowered Board of Authority to recover its dues and charges by filing a suit---Suit under Admiralty Jurisdiction of High Court was in fact invocation of S.23 of the Port Qasim Authority Act, 1973, as for some reasons Authority in ordinary course had failed to recover its dues directly from ship or its owners and suit was only alternate remedy left with Authority---Authority was entitled to claim mooring charges uptill the date when delivery of ship was handed over to new purchaser as liability of buyer to pay mooring charges commenced only after he was handed over delivery of ship---Authority's claim which was bereft of any detail or any lawful basis was liable to be outrightly rejected---Three other suits along with one filed by Authority were decreed as the same had established their respective claims against ship; however claim established by Authority was more than the amount recovered from sale of ship and said claim was to be preferred over claims of rest of claimants and no amount was to be left to satisfy their decrees---Official Assignee was to release entire amount recovered from sale of ship in favour of Port Authority---Suit was decreed.

Yukong Ltd. v. M.T. Eastern Navigator PLD 2001 SC 57; (1988) Lloyds Law Reports Volume 2, 454 (455) by Deichland; (1989) Volume I by Lloyds Law Report 388 (392) Frecia Del Nord; 1967 Vol. 2 Lloyds Law Reports 113 by Monica S; (1980) in re: ARO Co. Ltd., (1980) Ch. 196; Muhammad Bashir Butt v. M.V. Taheri PLD 1980 Kar. 458 and Tawaha v. The Master M.V. Asian Queen PLD 1982 Kar.749 rel.

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

----Ss. 3(2) & 4(4)---Sindh Chief Court Rules (O.S.) R.731---Arrest of ship---Action in rem-Scope and object--Action in rem when resorted to under Admiralty jurisdiction of High Court meant an action against property or ship and in case plaintiff succeeded in its action, then property or ship was to be sold towards satisfaction of claim---Action in rem under Admiralty jurisdiction of High Court was legal proceedings against corpus of offending ship---Person could get decree in a proceeding in rem against a ship without suing its owner or any person---Object of such an action was to acquire jurisdiction over ship as owner of vessel might be located overseas over which Court might not have jurisdiction--Actual arrest of a res had ceased to be in majority of instances, the distinctive feature of an action in rem--Arrest, therefore, was not necessary in all cases, in majority of actions in rem no arrest was made.?

Para.66 volume 14 of British Shipping Laws (1980) and Para. 232, Vol.1, of British Shipping Laws (1964) rel.

(c) Sindh Chief Court Rules (O.S.)---

----R.731---Expression "any party may"---Connotation---Use of expression "any party may" in R.731 of Sindh Chief Court Rules (O.S.) made it clear that in proceedings initiated in rem, relief of arrest of property (ship) might or might not be sought---Relief of seeking arrest of a ship was optional.?

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

----Ss. 3(2)(a) to (r) & 4(2)--Admiralty jurisdiction of High Court---Scope---Under Admiralty jurisdiction, High Court was to hear and determine the causes, questions or claims enumerated in Cls. (a) to (r) of subsection (2) of S.3 of the Admiralty Jurisdiction of High Court Ordinance, 1980 which included any claim regarding mortgage or charge on ship or any share therein.?

Khalid Rehman for Plaintiff (in Suit No.1254 of 1997).

Mansoor A. Shaikh for Plaintiffs (in Suits Nos.1292 and 1293 of 1997).

Agha Faquir Muhammad for Plaintiffs (in Suit No.14 of 1998).

Arif Khan for Plaintiff (in Suit No.7 of 2000).

Munir-ur-Rehman for Defendant.

Muhammad Naeem for Defendant.

Dates of hearing; 24th, 30th November, 2005 7th, 13th and 14th December, 2005, 19th January, 2006, 21st February, 2006 and 16th March, 2006.

2007 C L D 157

[Karachi]

Before Rahmat Hussain Jafferi and Muhammad Afzal Soomro, JJ

ABDUL QADIR TAWAKAL---Appellant

Versus

THE STATE---Respondent

Criminal Accountability Appeal No.39 of 2001, decided on 7th November, 2005.

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

----S. 19(1)(a)---Appreciation. of evidence---Misappropriation of hypothecated stock by the debtor---Prosecution had established that without clearing the amount due against the company, the hypothecated stock, which was kept as security for the loan, had been removed and sold without authority, consent and knowledge of the Bank---Such stock was in the possession and control of the company as such the company had misappropriated the stock---Prosecution had proved the case against accused beyond any reasonable doubt---No illegality or irregularity was found in the impugned judgment and also no misreading or non-reading of evidence was there---Impugned order, in circumstances did not require interference.

Muhammad Ashraf Baig for Appellant.

Shafat Nabi Khan Sherwani, DPGA for the State.

Date of hearing: 1st November, 2005.

2007 C L D 165

[Karachi]

Before Faisal Arab, J

MUSLIM COMMERCIAL BANK LTD. through Secretary and 2 others---Plaintiffs

Versus

ABDUL HAMID ADAMJEE and 6 others---Defendants

Suit No. 522 and C.M.A. No.2503 of 2005, decided on 20th November, 2006.

Insurance Ordinance (XXXIX of 2000)---

----S. 12---Companies Ordinance (XLVII of 1984), S. 187---Disqualification to become Director of company---Plaintiffs in their suit had sought disqualification of defendants on the ground that they were not fit and proper persons to act as Directors within the meaning of S.12 of Insurance Ordinance, 2000---Security and Exchange Commission of Pakistan, in its report had not found anything which suggested that said defendants did not qualify the test of sound and prudent management as stated in S.12 of Insurance Ordinance, 2000---Integrity or professional skills of defendants had not even been doubted---Only ground on which disqualification of defendants was sought, was that two other companies in 'which they held the position of Directorship, had become Bank defaulters--Nothing had been brought on record to establish that any court of law had declared the defendants as defaulters in payment of loan to a financial institution in order to attract the provisions of S.187(1) of Companies Ordinance, 1984---Main objective to disqualify a person. from acting as a Director of a company was to save the community from the consequences of his mismanagement or fraudulent acts or incompetence---Report of Security and Exchange Commission of Pakistan, however, did not point any such deficiency; in absence of any material to justify disqualifying defendants from acting as Directors under S.12 of Insurance Ordinance, 2000 or S.187 of Companies Ordinance, 1984, suit was dismissed.

Re: Pamstock Ltd., Ch. D.Re (1994) 1 BCLC 716; Swift 736 Ltd., Ch. D. (1993) BCLC 1 and Secretary of State for Trade and Industry v, Gray and another Ch. D. (1995) BCLC 276 rel.

Bilal Shaukat for Plaintiffs.

Qutubuddin Sain for Defendants Nos. 1 to 3.

Muhammad Shahid for Defendants Nos. 4 and 5.

2007 C L D 170

[Karachi]

Before Khilji Arif Hussain, J

KASB BANK LTD.---Plaintiff

Versus

Rana MUNIR AHMED KHAN---Defendant

Suit No. B-19 and C.M.A. No.5819 of 2006, decided on 31st October, 2006.

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

----S.10---Lease financing facility---Suit for recovery---Application for grant of leave to defend the suit---Defendant had also filed suit for declaration, specific performance and rendition of accounts against the plaintiff-Bank which was pending---Bank, instead of granting finance to the defendant, in fact, had delivered assets (in the present case vehicles) to the customers---Out of 25 vehicles, agreed to be leased out to the defendant, delivery of nine, vehicles had not been effected by the Bank and Receiver had been appointed in the suit filed by the defendant, 'in respect of 16 buses which were delivered to the defendant---Specified directions had been issued to the Official Assignee---Defendant, in lease financing facility, was required to disclose amount of finance granted to him and amount of finance paid by him---High Court, in circumstances, without going into the question whether the defendant was entitled for leave, granted leave to defend the suit as substantial questions of law had been raised viz., whether the time was essence of lease financing agreement executed between the plaintiff-Bank and the defendant; whether the plaintiff-Bank delivered lease assets/buses well in time to the defendant; whether delay committed by the plaintiff-Bank in payment of amount caused financial loss and damaged business credibility of the defendant; whether without delivery of 25 vehicles, the plaintiff could claim rental of the said 25 buses and whether the plaintiff under Islamic Financing System was entitled for proportionate rental.

Nadeem Ahmed for Plaintiff.

Saalim Salam Ansari for Defendant.

2007 C L D 175

[Karachi]

Before Khilji Arif Hussain, J

SAUDI PAK COMMERCIAL BANK LTD.---Plaintiff

Versus

A.H. INTERNATIONAL (PVT.) LTD. and others---Defendants

Suit No. B-37 of 2005, C.M.As. Nos. 262, 1117, 1118, 1119, 1120 and 1121 of 2006, decided on 31st August, 2006.

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

----Ss. 16(1), 23(1)(2) & 9(5)---Civil Procedure Code (V of 1908), O.XXXVIII, R.5 & S.151---Transfer of Property Act (IV of 1882), S.52---Suit for recovery of bank loan---Application for attachment of property before pronouncing judgment---Scope---Transaction of sale not made to defeat or delay prospective decree or to defeat right of creditors---Effect---Plaintiff Bank filed suit for recovery of loan amount against defendants and also joined different banking-companies as defendants having Pari Pasu charge on assets of the defendants---During pendency of suit plaintiff filed application under S.16 of Financial Institutions (Recovery of Finances) Ordinance, 2001, read with O. XVIII, R.5 & S.151, C.P.C. to attach property of defendants---Plaintiff contended that on having information that defendants intended to sell property in question, notice was served on them to the effect that sale was in violation of S.53 of Transfer of Property Act, 1882, as defendants were heavily indebted to plaintiff and that in case property was not attached it was to become difficult for plaintiff to adjust liability---Defendant Banking Company argued that with its permission defendants agreed to sell property in question on which four defendant-Banking Companies had their Pari Pasu mortgage charge; that by sale of said property, defendants were to be in a position to adjust part of their liabilities; that property in question was not mortgaged with plaintiff-Bank and that plaintiff-Bank had only 7% share in total liability against defendants, hence plaintiff was not entitled for attachment of property in question---Validity---Under S.16(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, financial institution could after filing of suit, file an application to restrain customer from transferring, alienating, parting with possession of property which was mortgaged, pledged, hypothecated or assigned or which was subject to any obligation---Since property in question was neither under mortgage of plaintiff, nor plaintiff had any charge over it nor same was subject to any obligation in favour of plaintiff, therefore, application under S.16(1) of the Ordinance was not maintainable---Under Ss.16, 23(1) & 23(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, before pronouncement of judgment and interim decree or otherwise, Plaintiff-Bank could ask for attachment of property of customer over which it had charge and customer could not transfer it but after passing of decree---Customer could not deal with any of his property except with prior written permission of Banking Court---Bank, however, could apply for attachment of property other than one over which Bank had charge under. O.XXXVIII, R.5, C.P.C.---Under S.53 of Transfer of Property Act, 1882, transaction for sale of immovable property by debtors could not be held void or voidable transaction at the option of creditors, if the same was carried out in normal course of business bona fide and not with intent to defeat or delay creditors-Plaintiff in order to bring his case within ambit of S.53 of Transfer of Property Act, 1882, was to establish that transfer of property was made with intent to defeat right of creditors-Plaintiff in order to attract provisions of S.53 of Transfer of Property Act, 1882, should have filed suit seeking declaration that transaction was void but no such relief had been asked for by plaintiff in his suit---Notice for sale of property in question was. published much prior to filing of suit and as such it did not lie in mouth of plaintiff to say that defendants were disposing of property with intent to obstruct or delay execution of any decree that might be passed against them---Object of O.XXXVIII, R.5, C.P.C. was not to paralyse the normal and bona fide transaction and unless it was established that defendants were about to dispose of property with intent to defeat or delay decree that might be passed, normally ,Court was not to pass order for attachment of property before judgment---Defendant Banking Company's charge on property was prior in time to that of plaintiff's and on principle of qui prior est tempore portior estjure (he has a better title who was first in time), plaintiff had no prima facie case---Balance of convenience also was in favour of defendants as by disposal of mortgaged property, outstanding dues of defendant Banking Companies who had charge on property could be adjusted, whereas to restrain sale of property was to result in increasing liabilities of defendants---Application for attachment of property was dismissed.

?

Messrs Virasat Ullah and another v. Messrs United Bank Ltd. Lahore PLD 1975 Lah. 17 rel.

(b) Maxim---

---Qui prior est tempore portior estjure: "He has a better title who was first in time".---Applicability.?

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

---O.XXXVIII, R. 5---Scope, object and application of O.XXXVIII, R.5, C.P.C.?

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

----S.53---Scope of application of S.53, Transfer of Property Act, 1882.?

Abdul Sattar Lakhani for Defendants Nos. 1 to 3. M.

Zubair Quraishy for Defendants No.5(ii).

Miss Farhat Ansari for Defendant No.5(iv).

Amanullah Khan for Defendant No.5 (v).

2007 C L D 198

[Karachi]

Before Mushir Alam, J

DAYS INN WORLDWIDE INC. through Authorized Signatory---Plaintiff

Versus

HOTEL GALAXY (PVT.) LIMITED through Chief Executive/Director/Secretary and 2 others---Defendants

Suit No. 88 and C.M.A. No.496 of 2005, decided on 8th March, 2005.

Trade marks Act (V of 1940)---

----Ss.73 & 74 A---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Plaintiffs had filed application under O.XXXIX, Rr.1 & 2, C.P.C. seeking restraining order against defendants from using plaintiff s Trade and Service Marks "Days Inn" and "Sun Burst" logo---Contention of plaintiffs was that they were owners of said mark and carrying on similar business worldwide under same mark and logo---Plaintiff admittedly were owners and proprietors of subject trade mark and service mark and no concluded contract existed between the parties---Application of plaintiffs for restraining defendants from using trade mark and service mark, was allowed, subject to deposit of amount with the Nazir of the Court within specified period---When said order was dictated by the Court, counsel for defendant had stated that since defendant had invested huge amount, he would avail remedy of appeal---High Court observed that operation of the order would remain suspended for 30 days to enable defendant to seek remedy by way of appeal, if so permissible under the law.

Muhammad Siddiq Muhammad Umer v. Australaisa Bank Ltd. PLD 1966 SC 684; Taurus Securities Limited v. Arif Sagiol and others 2002 CLD 1665 and Muhammad Hanif v. Kissan Dost (Pvt.) Ltd. 2003 CLD 224 rel.

Hasan Irfan Khan and Moin Qamar for Plaintiff.

Agha Faqir Muhammad for Defendants.

2007 C L D 208

[Karachi]

Before Amir Hani Muslim, J

Messrs ALLIED BANK OF PAKISTAN LTD.---Plaintiff

Versus

Messrs GHARO TEXTILE MILLS (PVT.) LTD. and 6 others---Defendants

Suit No. 1719 of 1997, Execution No.92 of 1998, References Nos.1, 2 of 2005, 3 of 2006, C.M.A. Nos.1269 and 1270 of 2005, decided on 6th September, 2006.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.58---Execution of decree for recovery of loan amount---Intervenor claimed to be owner of machinery installed in judgment-debtor's factory---Bank claimed such machinery to be owned by judgment debtor, over which Bank had floating charge---Order of Court directing Official Assignee to examine intervenor's claim--Intervenor examined himself in support of his claim---Bank neither examined any witness nor produced any material before Official Assignee to rebutt intervenor's claim---Validity---Official Assignee was not required to examine proprieties of documents, unless a specific plea of forgery was raised by contesting party---Objection as to inadmissibility of documents was not raised before Official Assignee-Judgment-debtor under Deed of Floating Charge was not required to obtain NOC from Bank for installing machinery in his factory---Deed of Floating Charge could bind judgment debtor, but not intervenor, who was a stranger to such contract- -Report of Official Assignee showed that machinery of intervenor was not claimed by judgment-debtor; and that auction-purchaser had stated before him that any decision in regard to machinery of intervenor would be binding on him---Bank's objections against such claim of intervenor were overruled in circumstances.

Nizam Ali Khan for Plaintiff.

Syed Sammadul Haq, holding brief for S. Mazharul Haq for Habib Bank Ltd.

Naveedul Haq for CIRC.

Saalim Salam Ansari for Intervenor

Ms. Sofia Saeed Shah for Auction Purchaser.

Qadir Bux Umrani, Official Assignee.

2007 C L D 210

[Karachi]

Before Mrs. Yasmin Abbasey, J

TRITEX COTTON MILLS LIMITED---Appellant

Versus

CRESCENT JUTE PRODUCTS LIMITED and another---Respondents

M.A. No. 23 of 2004 decided on 2nd January, 2006.

Trade Marks Act (V of 1940)---

----Ss. 10 & 76---Trade Marks Rules, 2004, Fourth Sched.., Classes 23 & 24---Application for registration of trade mark---Appellant Company which was manufacturing and marketing cotton yam, applied for registration of trade mark named as "Lotus" for its goods under Class 24 of Fourth Sched. of Trade Marks Rules, 2004---Respondent filed objection stating that it was doing business since 1990 under the name of mark "Lotus" and had also applied for its registration under Class 23 of said Set-Leda-Application of applicant had been rejected---Validity---Rejection order did not contain reason for rejection of application of applicant as the Authority had failed to point out any distinction between the goods of both applicant and respondent---Use of products defined in both Classes 23 & 24 of Sched. were absolutely different to each other having different categories of consumers---Contention that if application of applicant was allowed it would create confusion and deception among the traders and consumers, was repelled because class of consumers of the two products detailed in Classes 23 & 24 of Schedule, were quite different---Impugned order was set aside with direction to Registrar of Trade Marks to consider application of applicant for registration of Trade Mark "Lotus" in accordance with law.

1998 SCMR 2268; 1998 SCMR 2419 and PLD 2002 Kar. 524 ref.

Salim Ghulam Hussain for Appellant.

2007 C L D 217

[Karachi]

Before Gulzar Ahmed, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN, KARACHI ---Plaintiff

Versus

Messrs ZAMCO (PVT.) LTD. and 10 others---Defendants

Suit No.B-101 of 2000, decided on 6th October, 2006.

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

----S. 10---Suit for recovery of loan amount---Leave to defend suit, application for---Granting of facilities and execution of security documents, and amount of facilities disbursed to defendants not denied by them---No question of law or fact was raised by defendants for grant of such application, which was dismissed in circumstances.

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

----S. 10---Civil Procedure Code (V of 1908 ), O. VIII, R.5---Qanun-e-Shahadat (10 of 1984), Art.113---Leave to defend suit, application for---Defendants in original leave application admitted signing and, delivery to plaintiff memorandum of deposit of title deed and letter of continuity of mortgage of property, but in subsequent amended leave application, such documents were alleged to be forged---Effect---Both such pleas were mutually destructive as if one was believed to be true, then other would obviously be false---Both such pleas being so diagonally opposed to each other they could not co-exist at one and same tune---Such pleading was not permissible in law--Party to proceedings once having made art admission in pleadings would not be allowed to wriggle out of same as other party acquired valuable right in terms of O.VIII, R.5, C.P.C., and Art.113 of Qanun-e-Shahadat, 1984--Plea of defendants that such documents were forged could not be accepted, and admission in original leave application would be binding on them---Leave application was dismissed in circumstances.

Allied Bank of Pakistan Limited v. Mrs. Fahmida 2004 CLD 110; Imtiaz Ahmed v. Platinum Commercial Bank Limited 2004 CLD 481; Messrs Habib Bank Limited v. Messrs Pan Islamic Steamship Company Limited 2005 CLD 626: Mushtaq Ahmed Bohra v. Crescent Investment Bank Ltd. 2005 CLD 444; Kamran Zali v. Union Bank Limited 2002 CLD 876; Muhammad Yaqoob v. Feroze Khan and others 2003 SCMR 41; Mst. Baswar Sultan v. Mst. Adeeba Alvi 2002 SCMR 326; Haji Suleman Ali Muhammad v. Ahmed Ali and another PLD 1982 Kar. 111; Ghulam Abbas v. Manzoor Ahmed and another PLD 2004 Lah. 125; Kamran Zali v. Messrs Bhitai Rubber Industries Ltd. 2001 CLC 492: Khuda Buksh v. Banking Court No.11, Multan 2000 CLC 1013; Messrs Allied Bank of Pakistan Ltd. v. Messrs Tahir Traders PLD 1986 Kar. 369; Messrs Quetta Silk Centre v. Muslim Commercial Bank 2003 CLD 254 and Emirates Bank international Ltd. v. Messrs United Export Limited PLJ 1994 Kar. 222 ref.

Secretary Government (West Pakistan) N.W.F.-P. Department of Agriculture and Forest v. Kazi Abdul Kalil PLJ 1978 SC 314; Mst. Baswar Sultan v. Mst. Adeeba Alvi 2002 SCMR 326; Messrs Haji Suleman Gowawala and Sons Ltd. v. Usman and 13 others 1985 CLC 132; Qaid Jauhar v. Mst. Hajiani Hajra Bai 2002 CLC 551 and Suleman Ali Muhammad v. Ahmed Ali PLD 1982 Kar. 111 rel.

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

----S. 2---Contract Act (IX of 1872), S.126---Surety for principal borrower company---Person becoming surety for such principal need to be either its shareholder or Director or to have requested for facility or beneficiary of same.

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

---S. 10---Leave to defend suit, application for---Charging of illegal mark-up, question of---Validity---Such question was not a substantial question of fact or law, and alone on its basis, leave to defend would not be granted.

(e) Death Certificate---

---Variation in death certificate would not make same a reliable document.

Azizur Rahman for Plaintiff.

Rizwan Ahmed Siddiqui for Defendants Nos. 1 to 4.

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

Muhammad Zia Kiyani for Defendant No.7.

Qazi Faez Isa for Defendant No.11.

Dates of hearing: 27th September, 2005, 18th January, 7th February, 17th, 24th April and 22nd May, 2006.

2007 CLD 232

[Karachi]

Before Khilji Arif Hussain, J

MUHAMMAD KHALID and 2 others---Plaintiffs

Versus

K.A.S.B. BANK LTD. through Managing Director---Defendant

Suit No.B-25 and C.M.A. No.4138 of 2006, decided on 31st August, 2006.

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

----Ss. 9 & 15---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2, Ss.151 & 10---Arbitration Act (X of 1940), S.34---Suit for declaration and injunction against bank--Application for injunction to restrain bank from selling mortgaged property---Decision of interlocutory application filed by defendant before deciding the application for leave to defend---Scope---Service of notices under S.15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Procedure--Plaintiffs filed suit seeking declaration that notices issued by defendant-bank under S.15(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, for sate of their mortgaged properties were illegal, void and of no legal effect---Plaintiffs also filed application under O.XXXIX, Rr.1 & 2 read with S.151, C.P.C. to restrain defendant (Bank) from selling properties mortgaged with it---Plaintiffs contended that before deciding any application filed by them, Court teas first to decide application for grant of leave to defend the suit that defendant charged mark-up in excess of what was agreed upon between parties; that defendant bank's facility was fully secured and notices in question had been issued mala fide and without lawful authority-Validity--Application on behalf of defendant was normally not entertained without first deciding whether defendant was entitled to grant of leave or not, but if plaintiff had filed application and delay in deciding application might cause prejudice to defendant while hearing such application on its merits, defendant's contention could be looked into---Even application under S.10, C.P. C. and application under S.34 of Arbitration Act, 1940, filed by defendant without deciding the application for leave could be heard and decided on its merits---Subsection (12) of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided that neither Banking Court nor High Court was to grant an injunction restraining the sale or proposed sale of mortgaged property unless Court was satisfied that no mortgage in respect of immovable property had been created; or all money secured by mortgage of mortgaged property had been paid; or mortgagor or objector deposited in Banking Court in cash, the outstanding mortgage money--Section 15 of the Ordinance, required that in case of default in payment by customer, financial institution might send a notice to mortgagor demanding payment of mortgaged money outstanding within 14 days from service of notice and second notice in this regard was to be served within next 14 days---Mortgagor if jailed to pay amount after service of second notice, Uteri financial institution had to serve a final notice demanding payment within 30 days from service of notice on customer---Upon service of final notice, financial institution acquired right to recover rent and profit from mortgaged property till the time notice was withdrawn and to sell mortgaged property without intervention by public auction--Three notices served upon plaintiffs would satisfy requirements' of S.15(2) of the. Ordinance---Plaintiffs were not entitled to grunt of relief prayed in application for grant of u junction order against defendant--Interest of justice. however,, was to be served if defendant-Bank first sold one property of plaintiffs in the first instance and if from proceeds of sale, outstanding due could not be satisfied, then to put second mortgaged property for sale---Application was dismissed.?

Muhammad Azwar Siddiqui v. Chief Executive Union Leasing Ltd. 2006 CLD 946; Sh. Abdul Sattar Lasi v. Federation of Pakistan and another 2004 CLD 252: Sheikh Abdul Sattar v. Federation of Pakistan 2006 CLD 18 and Muhammad Hussain v. SME Bank Ltd. and another 2005 CLD 323 ref.

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

---S. 15---Scope and object of S.15, Financial Institutions (Recovery of Finances) Ordinance, 2001, was a special law framed for expeditious recovery of dues of financial institutions--Legislature, in S.15 had used negative language--Negative, prohibitory and exclusive words or terms were indicative of Legislative intent that statute was to be mandatory-Court, while interpreting a taw, had to find out intention of law-makers from words used in statute and as such while interpreting S.15(12) of the Ordinance it had to be interpreted in a way which advanced intention of law-makers and not in a way to defeat the very object of special law---Subsection (12) of S.15 of the Ordinance, was a mandatory provision restraining Courts from granting injunction to restrain proposed sale of mortgaged property except when condition of clauses (a), (b) & (c) of subsection (12) of S.15 of the Ordinance were attracted.?

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

----S. 9---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2, Ss.151 & 10---Arbitration Act (X of 1940), S.34---Suit for declaration, and injunction-Interlocutory application on behalf of defendant was normally not to be entertained without first deciding whether defendant was entitled to grant of leave or not, but if plaintiff had filed an application and delay in deciding application might cause prejudice to defendant while hearing such application on its merits, defendant's contention could be looked into---Even application under S.10, C.P.C. and application under S.34 of Arbitration Act, 1940, filed by defendant could be heard and decided without deciding application for grant of leave to defend the suit.?

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

----S. 15(12)---Sale of mortgaged property---Grant of injunction---Scope.

Subsection (12) of section 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided that neither Banking Court nor High Court was to grant an injunction restraining the sale or proposed sale of mortgaged property unless Court was satisfied that no mortgage in respect of immovable property had been created; or all money secured by mortgage of mortgaged property had been paid; or mortgagor or objector deposited in Banking Court in cash, the outstanding mortgage money---Section 15 of the Ordinance, required that in case of default in payment by customer, financial institution might send a notice to mortgagor demanding payment of mortgaged money outstanding within 14 days from service of notice and second notice in this regard was to be served within next 14 days--Mortgagor if failed to pay amount after service of second notice, then financial institution had to serve a final notice demanding payment within 30 days from service of notice on customer---Upon service of final notice, financial institution acquired right to recover rent and profit from mortgaged property till the time notice was withdrawn and to sell mortgaged property without intervention by public auction---Three notices served upon plaintiffs would satisfy requirements of section 15(2) of the Ordinance.?

(e) Interpretation of statutes---

----Court while interpreting a law has to find intention of law-makers from words used in the statue.?

(f) Interpretation of statutes---

----Special law---Provision of law has to be interpreted in a way which advanced intention of the law makers and not in a way to defeat the very object of a special law.?

Abdul Latif A. Shakoor for Plaintiffs.

Nadeem Ahmed for Defendant.

2007 C L D 248

[Karachi]

Before Khilji Arif Hussain, J

M/s. AIRSYS ATM LIMITED LONDON and another---Plaintiffs

Versus

CIVIL AVIATION AUTHORITY OF PAKISTAN and another-Defendants

Suit No. 119 of 2004, decided on 12th October, 2006.

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

----Ss.456, 451 & 452---Civil Procedure Code (V of 1908), O. VII, R.11---Specific Relief Act (I of 1877), S.42---Partnership Act (IX of I932), S.69---Suit filed by consortium of two companies without passing of resolution of Board of Directors of two companies---Maintainability---Change in constitution of company to be notified to Registrar of Companies-Association of companies as consortium whether a partnership---Scope---Plaintiff consortium of two companies filed suit for declaration. damages and cost against defendants, and. plaint was verified by Country Manager of one company who also acted ad Project Manager of plaintiff consortium---Defendants filed application under Order VII, R. 11, C.P.C. with prayer that plaint be rejected as suit had not been instituted by competent person having power and authority to do so. hence barred under Ss.456, 451 & 452 of Companies Ordinance, 1984---Defendant contended that suit was instituted by a consortium of two companies and plaint was verified by Manager of one company arid without passing of resolution by Board of Directors of said two Companies, deciding to file suit and authorizing someone to file the same, suit was not properly instituted by a competent person, hence, it was liable to dismissal; that under Ss.451 & 452 of Companies Ordinance, 1984, any change in constitution of company was to be notified to Registrar of Companies which requirement of law was not complied with by plaintiff. therefore suit was barred under S.459 of Companies Ordinance, 1984: that death of one of Directors of a company was not conveyed to Registrar of Companies as required under S.452 of Companies Ordinance, 1984---Plaintiff argued that both companies being members of consortium conferred their powers to Management Committee constituted in terms of Articles of consortium agreement for overall management and control of affairs of consortium and Management Committee decided by resolution to institute suit and authorized one of its members to sign all documents, plaint, written statement etc., in proceedings to be filed against defendants and that there was no need of passing of resolution by Board of Directors of each company for purpose of instituting the suit---Validity---For purpose of deciding application under O.VII, R.11, C.P.C., Court had to confine itself to contents of memo. of plaint to see whether plaint was to be rejected or not; however, in appropriate cases defence taken by defendant could also be looked into--Word "Consortium" when used in business and commercial dealings meant that two or more companies decided to do particular venture together---Such an association of companies whether could be termed as a partnership business between two companies and required registration with Registrar of Firms under Partnership Act, 1932, and that non-registration might bar suit to enforce an agreement by such an association under S.69 of Partnership Act. 1932, was a question which could be answered after recording evidence---One of the objects of registration of firm was to put on notice all persons dealing with partnership firm to know who were partners of firm answerable to its liability, whereas company by itself was a legal person and was under discipline so far as its acts and deeds were concerned under Companies Ordinance. 1984, and rules framed under it---Court had reservation that a 'Consortium' constituted by two or more companies could sue in its own name as legal entity, but as in title of plaint, name of all members of consortium had been given, suit could not be dismissed due to any ambiguity in description of parties, and if arty, and in the interest of justice, parties could be called to remove ambiguity to decide case on merit---Members of consortium conferred overall management control of consortium in favour of four persons two nominees by each being members of Management Committee which controlled affairs of consortium---Question whether two members of consortium nominated their two respective representatives on members of Management Committee while nominating them conferred all powers or authority to deal with management and affairs of consortium including authority to institute suit could be answered after recording of evidence---Tentatively. filing of suit by management of consortium could not be termed other than an act dealing with affairs of consortium and in this view of the matter, plaint could riot be rejected summarily---Person duly authorized by company, either by Articles of company or by a resolution of Board of Directors, could institute suit---Plaintiff denied that there was undisclosed change in directorship of any members of consortium and that all information required under S.451, sub-rules (1) & (2) of Companies Ordinance, 1984 had

been duly provided to Registrar of Companies---Plaint could not be rejected at initial stage and the same could be decided only after recording of evidence---Application under O. VII, R. 11, C.P.C. was dismissed.

Abdul Rahim and 2 others v. Messrs United Bank Limited of Pakistan PLD 1997 Kar. 62 and China Annang Construction Corporation v. K.A. Construction Co. 2001 SCMR 1877 ref.

(b) Words and phrases--

----"Consortium"--- "Meaning" and "connotation"---Ordinary dictionary meaning of consortium was companionship, love, affection and a benefit that spouse was entitled to receive from the other but phrase "Consortium" when used in business and commercial dealings meant decision of two or more companies to do particular venture together.

(c) Words and phrases---

----"Affairs"---Meaning---Term "affairs" has been defined as 'inclusive term bringing in its scope and meaning anything that person may do.

Black's Law Dictionary 16th Edition ref.

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

----O.VII, R.11---Rejection of plaint---Scope---For purpose of deciding application under O.VII, R.11, C.P.C., Court had to confine itself to contents of memo. of plaint to see whether plaint was to be rejected or not---In appropriate case, however, defence taken by defendant could be looked into while deciding application under O. VII, R. 11, C.P.C.

(e) Partnership Act (IX of 1932)---

----S.69---Registration of firm---Object.

Bilal A. Khawaja for Plaintiffs.

Salman Talibuddin for Defendant No.2.

2007 C L D 262

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

MUHAMMAD UMER---Petitioner

Versus

COLLECTOR OF COUSTOMS, KARACHI and another---Respondents

C.P. No.D-1909 of 2006, decided on 7th November, 2006.

Constitution of Pakistan (1973)---

---Art. 199---Constitutional petition---Auction of public goods---Acceptance of respondent bid of Rs.15,150 by members of Auction Committee as against petitioner's offer of Rs.18,000---Validity---Such bid could not be accepted as transparent and honest process of auction resulting in loss of public revenue--Intervention of High Court would be required in such case to save loss to public exchequer---High Court accepted constitutional petition and allowed petitioner to take delivery of goods at such offered price.

Muhammad Amin Lakhani for Petitioner.

Raja Muhammad Iqbal for Respondent No.1 along with Ali Zaman Gardezi, A.C.C. and Irfan Jawaid, D.C.C.

Muhammad Sarfaraz Sulehri for Respondent No.2.

Abid Feroze for Intervenor/Auction-Purchaser Abdul Latif.

2007 C L D 349

[Karachi]

Before Zia Perwaz, J

ABDUL KADIR JANGDA and 7 others-Plaintiffs

Versus

MY BANK LTD.---Defendant

Suit No. B-37 and C.M. As. Nos.3878, 3879 and 4504 of 2006, decided on 15th September, 2006.

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

----Ss.5, 9 & 13---International Chamber of Commerce Uniform Customs and Practice for Documentary Credits, 1993 Revision, ICC Publication No.500---Bill. of Exchange, return off--Necessity---Where payment was backed by a credit established by importer's Bank under Uniform Customs and Practice for Documentary Credits, 1993 Revision, ICC Publication No.500, then bill of Exchange would be required to be returned prior to any action for recovery of amount.

National Bank of Pakistan v. Shahyar Textile Mills Ltd. 2003 CLD 1370 rel.

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

---Ss.5, 9 & 13---Holder of hilt of Exchange in due course executed in respect of Letter of Credit---Validity---Transactions against Irrevocable Letter of Credit---Nature and effect--Such transactions enjoy sanctity of transactions between Bank to Bank in the course of international trade pertaining to terms covering Irrevocable Letter of Credit-Holder of Bill of Exchange in due course executed in respect of Letter of Credit would stand on higher pedestal than a simpliciter beneficiary under a Letter of Credit---Importance and significance of such transactions stated.

Transactions against Irrevocable Letters of Credit are Bank-to-Bank transactions so far as the question of rights, obligations and payment is made by one Bank to another. They enjoy the sanctity of the transactions between the Bank and Bank in the course of international trade pertaining to terms covering the Irrevocable Letter of Credit.

The effect of Irrevocable Letter of Credit is to substitute the issuing Bank in place of a buyer. The issuing Bank, thus, undertakes to buy the shipping documents. This undertaking is absolute and so as the documents of title to the goods conform to the terms and conditions of the contract as specified in the Letter of Credit, it is an obligation of the Bank to accept the documents regardless of any dispute between the seller and the buyer as to the quality of goods shipped under the Letter of Credit. This transaction between two Banks is independent of any dispute between the seller and the buyer. International Commerce involving transactions based on Letter of Credit are Carried on the footings that conform credits by Bankers of that charter. They do not call for any interference by the Court of law and derive their strength based on recognized banking practices, such charter does not involve interference by the Court of law except only in exceptional circumstances where a clear case of fraud is involved challenging the validity of Letter of Credit on a ground akin to fraud or concealment of material facts. Holder of Bill of Exchange in due course executed in respect of Letter of Credit stands on higher pedestal than a simpliciter beneficiary under a Letter of Credit, so that the interest of innocent parties, who may hold drafts drawn upon the Letter of Credit is protected. It would be a bad day in the business world, if for every breach of contract between the buyer and the seller, a party may come to a Court of equity and enjoin payment on drafts drawn upon a Letter of Credit issued by a Bank which owes no duty to the buyer in respect of the breach.

Haral Textiles Limited v. Banque Indosuez Belgium 1999 SCMR 591 fol.

(c) Letter of credit---

----Irrevocable Letter of Credit---Export of goods on collection basis, but not under Irrevocable Letter of Credit---Effect---Such transaction would attract Articles of International Chamber of Commerce Uniform Rules for Union Rules for Collections, 1995. Revision, ICC Publication No.522---Obligations of Bank in transaction under Irrevocable Letter of Credit stated.

Where goods are exported on collection basis and not under an Irrevocable Letter of Credit, then such transaction would attract Article of ICC Uniform Rules for URC 522 as set forth under ICC Publication No.522. This publication provides a separate set of rules entirely different from the set of rules contained in ICC Publication No.500. While tinder an Irrevocable Letter of Credit, the Bank is obliged to make payment at site within the stipulated period for negotiation and reimbursing the Bank with the amount in pursuance of Articles.8 and 9 of UCP 500, and Article 1(b) thereof specifically provides that Bank has no obligation to handle either a collection or any collection instruction or subsequent related instructions. In such transactions, the collecting Bank does not extend any guarantee or assurance to make any payment and the possibility of dishonour of the negotiable Bill of Exchange on presentation exists. Even provision has been made for such a situation as to protest. Article 24 shows that in the absence of specific instructions regarding protest in the event of non-payment or non-acceptance, the Bank concerned with the collection has no obligation to have the documents protested for non-acceptance. The collecting Bank under the circumstances, is under no obligation either to follow up the recovery or take any step, until clearly so instructed and that only to the extent of protest. The Bank in absence of instructions is not expected to act in any manner, as the same would amount to acting without instructions. Collection for amount and remittance of payment attracts the provisions of section 12(1) of the Foreign Exchange Regulation Act, 1947, which makes it obligatory upon exporter to repatriate the Foreign Exchange within the stipulated period and failure to do so entail penal action. The repatriation of foreign exchange also have the consequence of settlement of the outstanding liability of exporter with the Bank. Under the circumstances, the conditions laid down in UCP 522 and the provisions of Foreign Exchange Regulation Act, 1947 being the special law pertaining to export made on collection/ consignment basis are attracted. These applicable provisions of the law are totally 'different from transaction covered by (CC Publication 500.

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

----Ss.9 & 15---Negotiable Instruments Act (XXVI of 1881), Ss.5, 9 & 13---International Chamber of Commerce Uniform Customs and Practice for Documentary Credits, 1995 Revision, ICC Publication No.522, Arts. 1(b), 8, 9 & 24---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit by borrower against Bank---Sale of mortgaged property by Bank to recover amount advanced to borrower for export of goods on collection basis---Borrower seeking temporary Injunction against such sale---Validity---Foreign Bank as collecting agent was holding Bill of Exchange for collection and after collection for subsequent disbursement in pursuance of instructions as collecting agent of borrower---Borrower had not taken any step to seek recovery or any instruction for return of documents or repatriate amount in foreign exchange---In case of failure in receipt of remittance in foreign exchange, amount advanced by defendant Bank was duly secured by way of mortgage of property---Such amount was already settled and disclosed in documents covering export and mentioned in documents forwarded for collection---Such action of defendant-Bank was not violative of any provisions of law---Question of granting restraining order would not arise in such circumstances--Application of borrower for grant of temporary injunction was dismissed in circumstances.

Abdul Sattar Shah Zaidi v. University of Karachi 1993 CLC 2026; Khawaja Muhammad Akbar v. Khawaja Fateh Muhammad 1993 MLD 76; Nazimuddin Siddiqui v. United Bank Limited 1998 CLC 1718; National Bank of Pakistan v. Khalid Mehmood 2002 CLD 658; Mian Munir Ahmed v. The State 2004 PCr.LJ 2012; Abdul Shakoor Kaloodi v. The State SBLR 2002 Sindh 1263; Asim Textile Mills Ltd. v. National Accountability Bureau PLD 2004 Karachi 638; Agricultural Development Bank of Pakistan v. Sanaullah Khan PLD 1988 SC 67; Abdul Latif v. The Government of West Pakistan PLD 1962 SC 384; Mrs. Mussarat Shaukat Ali v. Mrs. Safia Khatoon 1994 SCMR 2189; United Bank Limited v. Messrs Azmat Trading Co. 2001 CLC 1172; Nazimuddin v. The Bank of Khyber 2005 CLD 647; Habib Bank Limited v. Ahmed food Industries 2002 CLD 668; Aslam Industries Ltd. v. Pakistan Edible Corporation 1993 SCMR 683; Mrs. Aziz Fatima v. Mrs. Rehana Chughtai 2000 CLC 863; National Bank of Pakistan v. Shahyar Textile Mills Ltd. 2003 CLD 1370; National Bank of Pakistan v. Messrs Fateh Apparel and others in Execution No.32 of 2001; Muhammad Irshad v. Deputy Director Adjudication 2003 CLD 917; East West Trading Company v. State Bank of Pakistan 2000 MLD 15; Sh. Abdul Sattar Lasi v. Federation of Pakistan 2006 CLD 18; Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582; Dr. Tariq Nawaz v. Government of Pakistan 2000 SCMR 1956; Messrs Chawla International v. Habib Bank Limited 2003 CLD 956; Lips Records (P.) Ltd. v. Hadiqa Mahmood Kiani PLD 2002 Karachi 141; Muhammad Abid v. Nisar Ahmed 2000 SCMR '780: Ghulam Hassan v. Jaunshaid Ali 2001 SCMR 1001; market Committee v. Cantonment Board 2000 MLD 396; Managing Director Ravi Rayon Limited v. Province of Punjab 2001 MLD 577; Shakil Waaqas v. General Manager/Marketing P.R. PLD 2001 Kar.185; Hala spinning Mills Ltd. v. International Finance Corporation 2002 SCMR 450; Valuegold Limited v. United Bank Limited PLD 1999 Karl; Bolan Beverages (Pvt.) Limited v. Pepsico Inc. PLD 2004 SC 860; Nizamuddin v. Central Government of Pakistan 1983 CLC 924; The Agricultural Development Bank of Pakistan v. Messrs Chaudhry Harvesting Company Lahore PLD 1993 Lab. 328; Javed Iqbal Khan v. Federal Employees B. & G.I. Funds 2002 SCMR 557; Industrial Development Bank of Pakistan v. Saadi Asmatullah 1999 SCMR 2874; Chairman, Minimum Wage Board v. Fayyaz Khan Khattak 1999 SCMR 1004; Chief Land Commissioner v. Maula Dad 1978 SCMR 264: Habib Bank Limited v. Messrs Pazhong Traders 1986 CLC 1086; Zubair Muhammad v. United Bank Limited 2004 CLD 112; Bank Alfalah Limited v. Iftikhar A. Malik 2003 CLD 363; Messrs M.A. Majeed Khan v. Karachi Water and Sewerage Board PLD 2002 Kar. 315; Messrs Al-Madan Coal Company (Pvt.) Ltd. v. Regional Development Finance Corporation 2005 CLD 287; Muhammad Sharif v. Muhammad Hashim Paracha PLD 1987 Kar. 76; United Bank Limited v. Messrs Blessed International (Pvt.) Limited 2003 CLD 39; United Bank Limited v. Central Cotton Mills Ltd. 2001 MLD 78; Pakistan Industrial' Credit and Investment Corporation Limited v. Government of Pakistan 2002 SCMR 496; MCB v. Syed Ahmad Saeed Kinnani 1991 CLC 140; United Bank Limited v. Azmat Trading Co. 2001 CLC 1172; Rashid Ahmed v. The State 2003 YLR 2432; Polymer International v. Bolan Bank Ltd. 2005 CLD 1129; Islamic Republic of Pakistan v. Muhammad Zaman Khan 1997 SCMR 1508 and Abdul Saleem v. Federation of Pakistan and others CP No.D-195 of 2006 ref.

Saalim Salam Ansari for Plaintiffs.

Aziz-ur-Rehman for Defendant.

2007 C L D 428

[Karachi]

Before Gulzar Ahmed, J

RAJBY INTERNATIONAL (PVT.) LIMITED---Plaintiffs

Versus

M.V. ANNIE SIERRS through Master or any Person Incharge of Vessel

and 2 others---Defendants

Adm. Suit No.26, C.M. As. Nos.995 and 1010 of 2006, decided on 22nd December, 2006.

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

----S.3(2)---Sindh Chief Court Rules (O.S.). R.731---Admiral4i suit---Violation by defendant-vessel of terms of carriage contract contained in Charter-party agreement---Arrest of defendant vessel, application for---Rice loading on defendant-vessel was completed 13 days before, which was stilt unable to commence voyage provided in such agreement due to its arrest in another case and inability to obtain release by providing security---Validity---Defendant-vessel had history of getting arrested---Long detention of rice loaded on vessel would putrefy as there was no chance of its obtaining release within a reasonable time---Charterer being an exporter of rice could not justifiably be allowed to jeopardize its commercial. venture just because vessel in which cargo was to be carried decides to undertake voyage at its own leisure and thus abandon its implied 'undertaking of completing voyage with all reasonable dispatch---Object of charterer in chartering vessel was entirely frustrated-Defendant vessel for not having earned freight was not entitled to payment of freight as voyage never started---Defendant-vessel might be entitled to payment of compensation for which no lien on cargo could be claimed--Plaintiff claimed cost of loading and unloading of cargo---High Court directed defendant-vessel to discharge plaintiffs cargo, ordered arrest of vessel for payment of compensation claimed by plaintiff with direction that vessel would be free to sail from port subject to deposit of claimed compensation with or furnish equivalent security to the satisfaction of Nazir of the High Court.

Scrutton on Charterparties and Bill of Lading 20th Edn., in Article 52 and Ex party Nvhom Re Child (1873) 29 Law Times 634.rel.

Shaiq Usmani for Plaintiff.

Akbar H. Mirza for Defendants Nos. 1 and 2.

Mustafa Lakhani for Defendant No.3.

2007 C L D 439

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

COMMISSIONER OF INCOME TAX---Appellant

Versus

PAKISTAN STATE OIL LTD.---Respondent

Income Tax Appeals Nos.60 and 61 of 1999, decided on 17th November, 2006.

Income Tax Ordinance (XXXI of 1979)--

----Ss.50(5) & 80-C---Import of petroleum liquid products by public limited company (Pakistan State Oil Ltd.) on behalf of Federal Government---Contract of such imports was signed with foreign supplier by Federal Government---Company denying to be liable to pay tax on such imports under S.80-C of Income Tax Ordinance, 1979---Company claimed not to be importer of such products. but to have imported same as handling agent of Federal Government--Validity---Company in its name opened Letter of Credit and prepared bill of entry---Duties were paid and documents were retired by company---Provisions of S.80-C of Income Tax Ordinance, 1979 would apply to person, who imported goods, filed Bill of Entry and paid customs duties assessed on such Bill of Entry---Section 80-C of Income Tax Ordinance, 1979 Would apply to person on whose' account amount was computed for collection of tax under S.50(5) thereof, which would be deductible in case of importer of goods and not in case of a person on whose behalf imports were allegedly made---Held: such company and not Federal Government was importer of such products, thus, was liable to pay income tax thereon---Principles.

Ellahi Cotton Mills v. Federation of Pakistan PLD 1997 SC 582; Caltex Oil (Pakistan) Ltd. v. Collector, Central Excise and' Sales Tax and others 2005 PTD 480; Commissioner of Income Tax Zone-C, Lahore v. Messrs Jinnah Cadet School, Lahore 2002 PTD 462; Dr. S.M. Rab v. National Refinery Limited and another PLD 2005 Kar.478: Messrs Sutlej Cotton Mills Ltd., Okara v. The Commissioner of Income Tax, North Zone (West Pakistan), Lahore PLD 1965 SC 443: The Scindia Steam Navigation. Co. Ltd. v. The Commissioner of Income Tax PLD 1959 Kar. 527; Messrs Haroon Textile Mills, Ltd. v. Commissioner of Income Tax, South Zone, Karachi PLD 1967 Kar.532; Messrs Ahmad Karachi Halva Merchants and Ahmad Food Products v. The Commissioner of Income Tax, South Zone, Karachi 1982 SCMR 489 and Messrs Pakistan Refinery Ltd. v. Commissioner of Income Tax, Companies-V, Karachi 2005 PTD 2216 distinguished.

Aqeel Ahmad Abbasi for Appellant.

Khalid Anwar along with Irfan Saadat Khan for Respondent.

2007 C L D 463

[Karachi]

Before Mrs. Yasmin Abbasey, J

UNION MATCH (PVT,) LTD.---Appellant

Versus

REGISTRAR OF TRADE MARKS and another---Respondents

M.A. No.227 of 2003, decided on 14th February, 2006.

Trade Marks Act (V of 1940)---

----Ss. 10 & 76---Registration of trade mark 'Union'---Application for---Appeal to High Court---Appellant filed application for registration of trade mark 'Union' for its product 'Match box;---Respondent, a Tobacco Company filed objection before Registrar Trade Marks on the ground that very trade mark 'Union' was registered in favour of their company and that they were doing their business under the same mark since, 1980---Appellant who filed application for registration of trade mark 'Union' for its product match box on 1-1-1995, claimed that appellant was using said trade mark since, 1995, but appellant could not prove that---Since Tobacco Company was already using trade mark 'Union' for their product since 1980, application of appellant for registration of said marls for its product, was rightly dismissed by Registrar Trade Marks---Impugned order being very elaborate, required no interference---Appeal was dismissed.

1989 MLD 1598; KLR 1987 Civil Cases 322; PLD 1987 Kar.119; PLD 1986 Kar. 482 and PLD 1978 Kar. 161 rel.

Ms. Ch. Tanveer Amjad for Appellant.

Salim Ghulam Hussain for Respondents.

Date of hearing: 3rd February, 2006.

2007 C L D 473

[Karachi]

Before Anwar Zaheer Jamali and Syed Zawwar Hussain Jaffery, JJ

HABIB BANK LTD. and another-Appellants

Versus

WASIM ENTERPRISES and others---Respondents

1st Appeal No.85 of 2004, decided on 26th September, 2006.

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

----Ss.9, 19 & 22---Suit for recovery of loan----Execution of decree---Jurisdiction of executing court---Appeal---No Court under the garb of substantive justice, could be allowed to exceed its jurisdiction or violate the settled legal principles as regards jurisdiction of the executing court; that it could not go behind the judgment and decree wider execution.

Sardar Ahmed Yar Khan Jogezai and 2 others v. Province of Baluchistan 2002 SCMR 122; Messrs Haji Ahmed & Co. v. Muhammad Siddiqui and others PLD 1965 Kar. 293; Ghanaya Lal and others v. Punjab National Bank Ltd., Lahore AIR 1932 Lah. 534; Abdul Khaliq v. Haji PLD 1983 Lah. 445; Taponmal v. Kundomal Gangaram AIR 1960 SC 388; Reference No.1 of 1988 made by the President of Pakistan under Article 1986 of the Constitution of Islamic Republic of Pakistan PLD 1989 SC 75; Province of Punjab v. Burewala Textile Mills Ltd. 2001 SCMR 396; 2003 SCMR 318 ; 2001 SCMR 1001 and 1997 SCMR 209 rel.

Rizwan Ahmed Siddiqui for Appellants.

Saleem Thapdawala for Respondent No.2.

2007 C L D 508

[Karachi]

Before Faisal Arab, J

Messrs NATIONAL BANK OF PAKISTAN---Appellant

Versus

Messrs MARHABA TEXTILE LTD. and 6 others---Respondents

Execution Application No. 46 of 2003 and C.M.As. Nos.648 and 114 of 2006, decided on 15th January, 2007.

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

---S. 19---State Bank of Pakistan BCD Circular No.13 of 1984---State Bank of Pakistan BCD Circular No.32 of 1984--Execution of decree--Award of mark-up on decretal amount--Mark-up awarded by Banking Court on decretal amount under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, should not be confused with the mark-up chargeable under buyback agreement---Award of mark-up by Banking Court in cases filed' under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 on the decretal amount was a legal obligation independent of contractual mark-up which a financial institution was entitled to charge its customer under a buyback agreement---Award of mark-up by Banking Court on decretal amount, in circumstances, could not be avoided on the ground that decretal amount already contained the element of mark-up charged under a buyback agreement---State Bank of Pakistan B.C.D. Circulars Nos.13 and 32 of I984, prohibited Financial Institutions from charging mark-up upon mark-up, but such restrictions related to the contractual obligations created under an agreement of finance---Where recovery suit was filed under Banking Companies (Recovery of Loans Advances, Credits and Finances) Act, 1997, S.15 thereof, would empower Banking Court to award mark-up to financial institution on the decretal amount from the date of filing of the suit till the recovery of entire decretal amount, in that manner in. addition to the contractual obligation to pay mark-up which was determined when decree was passed, a legal obligation was created upon a customer of financial institution to pay mark-up on the decretal amount from the date of filing of the suit till its recovery---Under repealed laws two stages existed to which mark-up was lawfully charged; first, the contractual mark-up termed as contractual obligation charged for the contractual period, and the other termed as legal obligation chargeable on the decretal amount---Both were not to be confused with each other as the right to claim each of those, would arise independently under separate provisions of laws.

(b) Interpretation of statutes---

---Prospective and retrospective nature of statute---New laws were generally prospective, not retrospective in their operation and would not affect pending cases so as to impose new duties or attach new disabilities---Matters of procedure were different, as laws affecting procedure, were always retrospective, however, where new law intended to take away vested rights or intended to create new disabilities or obligations, it had to be in language which expressly or through clear intendment take away or affect such rights, obligations and liabilities.

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

---Ss. 3(2) & 19---Execution of decree---Right to claim mark-up---Section 3(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, clearly made a customer of a financial institution liable for any civil or criminal liability that he might have incurred under the contract or rules or any other law for the time being in force---Section 3(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 clearly preserved the, right of litigant that already existed at the time of promulgation of said Ordinance---In the present case the recovery suit from which execution application had arisen, was filed in 1999 when Banking Companies (Recovery of oans. Advances, Credits and Finances) Act, 1997 was in force, section 15 of which provided for grant of mark-up on the decretal amount from the date of filing of the suit till its recovery---Right to claim mark-up, in circumstances remained enforceable in the present case---Award of mark-up in the present case on the decretal amount within the scope of S.15 of repealed Act, 1997, could not be termed as a nullity in the eyes of law and in the cases like present one prime consideration was to see, what was the law that was in force at the time of filing of the suit and notwithstanding its repeal during pendency of the suit, such provisions of the repealed enactment which created rights, obligations and disabilities, had to be given effect to.

PLD 1961 SC 523 and AIR 1957 SC 540 ref.

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

----S.74---Civil Procedure Code (V of 1908). S.47---Execution of decree---Points to be considered---Compensation for breach of contract---Section 74 of Contract Act, 1872 would apply, even to compromise decrees as the court while decreeing a suit on the basis of a compromise, would record only the compromise if its terms were lawful---Sum could have been named in a compromise agreement, which a party was required to pay in case it committed its breach---Such stipulation was not lawful, however, the right to claim such named amount on account of breach of a contract was circumscribed by S.74 of Contract Act, 1872---Section 74 of Contract Act, 1872 provided that it was for the Court to determine what would be the reasonable compensation not exceeding the amount named in the contract to be awarded for breach of a contract---Judgment-debtor could raise an objection in execution proceedings as to the extent any sum named in a compromise decree was to be paid on account of his committing breach of a term of the compromise---Such objection was well within the purview of S.47 of C.P.C.---Rate of mark-up settled under compromise agreement being not more than what was provided originally under the agreement of finance, could not be termed as unreasonable so as to reduce it to any extent within the meaning and scope of S.74 of Contract Act, 1872.

Habib Bank Limited v. Karachi Pipe Mills Limited 2006 CLD 842: AIR 1927, Lah. 659; AIR 1933 Allah. 252; AIR 1938, Sind 185; AIR 1943 Sind 247; AIR 1943 Pesh. 33; AIR 1946 Sind 150; AIR 1977 MP 112; AIR 1985 Pun. and Har. 143 and PLD 1961 SC 523 rel.

Adnan Chaudhry for Decree-holder.

Kh. Shams-ul-Islam, for Judgment-debtors.

2007 C L D 523

[Karachi]

Before Syed Zawwar Hussain Jaffery and Maqbool Baqar, JJ

ABDUL SULTAN K. MERCHANT---Appellant

Versus

Messrs FIRST GENERAL LEASING MODARAABA and others---Respondents

First Appeal No. 37 of. 2001, decided on 8th March, 2006.

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

----Ss. 9 & 22---Suit for recovery of loan---Appeal---Limitation---Appeal though was filed within time, but copy of impugned judgment of Banking Court was not attached by appellant with memo. of appeal, and was filed after about 3 years from passing of impugned judgment and decree by the Banking Court---Appeal in circumstances, would be deemed to be barred by limitation which was accordingly dismissed along with pending application.

Hussain Ali Merchant for Appellant.

Irfan Haroon, for Respondent No.1.

2007 C L D 527

[Karachi]

Before Maqbool Baqar, J

SHAHI ENTERPRISES (PVT.) LIMITED---Plaintiff

Versus

D.F.I. (PVT.) LIMITED-Defendant

Suit No. 1488 of 2006, decided on 29th December, 2006.

Trade Marks Ordinance (XIX of 2001)---

----S. 22-Application for registration of Trade Mark---Applicants claimed that sweet balls under the Trade Mark " CHOKLIK" were being produced and sold by them since the year 2005 throughout Pakistan---Applicants through their application dated 22-8-2006 applied to the Trade Marks Office for registration of "CHOKLIK"---Applicants had alleged that in order to confuse (he purchasers and general public respondents commenced manufacturing, marketing and selling sweet balls and candy under the name "CHOCOLIQ" which was confusingly and deceptively similar to applicant's mark "CHOKLIK"-Validity--Two names "CHOKLIK" and "CHOCOLIQ", no doubt were phonetically similar, but in order to establish passing off by respondent, it was imperative upon applicants to establish that they were the prior user of the name "CHOKLIK", but plaintiff had not been able to establish their presence in the market with the name of "CHOKLIK"--Applicants though had claimed having used name "CHOKLIK" since 2005, but they could not produce any material in support of their claim, whereas respondents through various Sales Tax Invoices, prima facie had established that they were producing their products under trade mark "CHOCOLIQ" since 3-6-2005---Applicants, at the best could claim (heir user from the date of their application which was 28-8-2006 for registration of trade mark "CHOKLIK"---Application was dismissed in circumstances,

Munawwar Ghani for Plaintiff.

Sultan Ahmed Shaikh for Defendant.

2007 C L D 661

[Karachi]

Before Gulzar Ahmed, J

Messrs PACIFIC LLOYDS LTD. through duly Constituted Attorney---Plaintiff

Versus

Messrs BLESSED ENTERPRISES through Proprietor---Defendant.

Suit No.139 and C.M.As. Nos.292, 871 of 2005, decided on 14th February, 2007.

(a) Arbitration (Protocol and Convention) Act (VI of I937)---

----Ss. 4, 5, 6 & 7--Application for enforcement of foreign award---Clause of Charter Parties-Interpretation-Clause which is written, stamped on or typed in the Form will prevail as expressing the intention the parties.

Author by Scrutton on Charter Parties and Bills of Lading 9th Edn., p.20 quoted.

Gesellschaft Burgerlichen Pechts and others v. Stockholms Rederiaktiebolag Svea (1966) 2 WLR 909; Conticotton S.A. Co. v. Farooq Corporation 1999 CLC 1018; A. Merdith Janes Co. Ltd. v. Crescent Board Ltd. 1999 CLC 437; Nan Fling Textiles Ltd. v. Saddiq Traders Ltd. PLD 1982 Kar. 619 and Quinn .Corporation and others v. Cotton Export Corporation of Pakistan (Pvt.) Ltd. and others 2004 CLD 1040 ref.

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

----Ss. 4, 5, 6 & 7--Application for enforcement of foreign award---When reasons of award are not part of the award but have been separately given for the award, that will not mean that such reasons are not for the final arbitration award.

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

---Ss. 4, 5, 6 & 7--Application for enforcement of foreign award--If Charter Party-has been signed by the agent and agent appears to have lodged the claim but the award shows the name of the claimant to be the owner, the award is in favour of the owner itself and not in favour of the agent.

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

----Ss. 4, 5, 6 & 7---Application far enforcement of foreign award--Allegation of bias by the arbitrator--Bias by the arbitrator is not the ground provided for the non-enforcement of the award--If the arbitrator has used the word "leeway" for providing some time to the claimant and no prejudice has been caused to the defendant, the arbitrator was not biased.

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

----S. 7(1)(d)---Conditions for enforcement of foreign award---Merely because 'certificate from the foreign Court (where the award was made) has not been obtained, will not rob the award of its finality---Provision of S.7(1)(d) Arbitration (Protocol and Convention) Act, 1937 only requires that the award must have become final in the country in which it was made.

Yousuf Moulvi for Plaintiff.

Shaiq Usmani for Defendants.

Date of hearing: 23rd November, 2006.

2007 C L D 694

[Karachi]

Before Khilji Arif Hussain, J

NATIONAL BANK OF PAKISTAN---Plaintiff

Versus

ABSON INDUSTRIES and others---Defendants

Suit No.1797 of 1999, decided on 3rd November, 2006.

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

---Ss. 9 & 10---Civil Procedure Code (V of 1908), O.IX, R.9-Suit for recovery of loan---Dismissal of suit for non-appearance of plaintiff---Application for setting aside dismissal order---Suit filed by plaintiff having been dismissed for non-prosecution, plaintiff filed application under O.IX, R.9, C.P.C. for setting aside order dismissing suit---Validity---On the date when suit was dismissed same was not fixed for hearing, but in fact same was listed for further order on application of plaintiff that it did not want to press the suit against defendant ---Suit could not be dismissed on date fixed for hearing interlocutory application---Application filed by plaintiff was granted and suit was restored to its original number.

Muhammad Afzal v. Small Business Finance Corporation and 4 others 1997 CLC 1080; Mst. Ghulam Sakina and 6 others v. Karim Bakhsh and 7 others PLD 1970 Lah. 412: 2002 CLC 875; 2001 MLD 890 and 1991 KLR 606 rel.

Muslim Shahmim for Plaintiff.

Nisar A. Mujahid for Defendants Nos. 1 and 8.

2007 C L D 726

[Karachi]

Before Maqbool Baqar, J

HABIB BANK LIMITED---Plaintiff

Versus

Messrs KIRAN SUGAR MILLS (PUBLIC) through Managing Director----Respondent

Executions Applications Nos.88 of 1999 and 42 of 2002, decided on 17th December, 2005.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.65, 66 & 67---Sindh Chief Court Rules (OS), R.351--Auction sale of mortgaged property in execution of decree in a suit for recovery of loan by Bank---Contentions of judgment-debtor and one of the bidders in auction were that publication and conduct of the sale was violative of the mandate of O.XXI, Rr.65, 66 & 67, C.P.C., as reserved price was not mentioned in the sale proclamation and the Banking Court having rejected the earlier bids as being inadequate, ought to have ordered re-auction, and by not doing so, and instead, allowing the Official Assignee to negotiate enhancement of the bid amount not only with the original bidders but also with any party who may be interested in purchasing the property, had not only violated the mandate of law but had committed a jurisdictional error by abdicating its authority to the Official Assignee---Validity---Judgment-debtors, in the present case, were duly served before the appointment of Official Assignee as Commissioner to sell the property, and appearance had been entered on behalf of the judgment-debtor company, before passing of such order; neither the company submitted valuation of its assets nor it objected to non-disclosure of reserved price of its property in the sale proclamation; it was at least on two occasions that the Court rejected the offers made by various bidders and directed the Official Assignee to seek improvement in the bid amounts, but no objection was then raised by the judgment-debtors, or by the bidder; they also did not object to the order whereby the Official Assignee was directed to negotiate the sale of the property with bidders or any other party interested in buying the property, although the order was passed in presence of their counsel; bidder had not only submitted its bid in response to the sale proclamation in question without any reservation and/or raising any objection with regard to the sale proclamation or otherwise but also participated in the meetings held by the Official Assignee and had enhanced its bid/offer; bidder however, failed to enhance its offer in yet another meeting of bidders for enhancement of bids, and in the said meeting counsel of the bidder, for the first time objected to offer made by the highest bidder being considered and thus the judgment-debtor and bidder having acquiesced in the proceedings conducted and exercise undertaken in relation to the sale of the property, were estopped from raising any objection to that extent---No prejudice had been caused to the judgment-debtor company as the sale proclamation under objection, contained adequate description and particulars regarding the property and as a result of the various orders passed by the Banking Court and efforts made ,by the Official Assignee by holding negotiation with the original bidders and the subsequent entrants including the successful bidder---Offer for the purchase of the property had been enhanced from Rs.17.50 crores of the objecting bidder to Rs.46 crores, ultimately offered by the successful bidder and accepted by the Court---Objecting bidder failed to match the offer made by the successful bidder---Held, in circumstances, it did not lie in the mouth of objecting bidder that the property had been sold at an inadequate price, even otherwise inadequacy of price per se was no ground for setting aside a sale---By floating of bid no legal right whatsoever had accrued in favour of the objecting bidder---Provisions of O.XXI, R.65, C.P.C. and Rule 351, Sindh Chief Court Rules (O.S) did prescribe the mode of disposal by public auction but neither of said provisions expressly or by necessary implication had prohibited any other mode of disposal---If the Court had deviated from the prescribed mode of disposal to serve the ends of justice, no exception could be taken to it---Court was competent, under its inherent powers, to accept, after due notice to party, when satisfied as to offer being reasonable and that the Court was competent to take all steps to execute its own mandate and orders---Court, in such-like eventualities was required to safeguard primarily the interest of judgment-debtor and further to see that auction proceedings had been conducted in fair and transparent manner and no bar whatsoever had been imposed on the Court if some beneficial devices were evolved to get maximum price and to achieve the said purpose---Court may make any amendment, deletion, insertion or change in the advertisement qua auction---Requirements which were not complied with in the case when settling the sale proclamation were intended for the benefit of judgment-debtor and could be waived by him, as those were not matters which went to the root of the Court's jurisdiction or constituted the foundation or authority for the proceedings nor involved public interest; clearly those were irregularities and could not be described as errors which rendered the sale void---Objections, both by judgment-debtor and the bidder having no force were repelled.?

Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108; Captain-PQ Chemical Industries (Pvt.)' Ltd. v. Messrs A.W. Brothers and others 2004 SCMR 1956 and S.A. Sundararajan v. A.P.V. Rajendran 1982 PSC 1293 rel.

Messrs. SPRL Rehman Brothers v. Banking Court No.II Lahore 2000 MLD 1957; Messrs Naqi Chemical Industries (Pvt.) Ltd. v. Habib Bank Limited 2003 CLD 571; Muhammad Hassan v. Messrs Muslim Commercial Bank Ltd. 2003 CLD 1693; Hydaybia Textile Mills Ltd. v. Allied Bank of Pakistan Ltd. PLD 1987 SC 512; Ch. Abdul Majeed v. Sadaqat Seed Malik 2002 CLD 463; Messrs Shandia Saleem and another v. Habib Credit and Exchange Limited and 4 others 2001 CLC 126; Brig. (Retd.) Maqbool Haq v. Messrs Muslim Commercial Bank Ltd. PLD 1993 Lah. 706; Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108; Ghulam Abbas v. Zuhra Bibi and another PLD 1972 SC 337; Captain-PQ Chemical Industries (Pvt.) Ltd. v. Messrs A.W. Brothers and others 2004 SCMR 1956; S.A. Sundararajan v. A.P.V. Rajendran 1982 PSC 1293; Messrs United Bank Ltd. Karachi v. Mst. Asma Zafarul Hassan 1980 CLC 565; Rasheed Ehsan and others v. Bashir Ahmed and another PLD 1989 SC 146 and UBL v. Zahid Hamid Chaudhry in Execution No.7-B of 2003 distinguished.

Ghulam Abbas v. Zuhra Bibi and another PLD 1972 SC 337; Brig. (Retd.) Maqbool Haq v. M/s Muslim Commercial Bank Ltd. PLD 1993 Lah.706; AIR 1973 SC 2593; 2000 CLC 63; Manilal Mohanlal Sha and others v. Sardar Sayed Ahmed Sayed Mahmad and another AIR 1954 SC 349; Sayed Brothers, Lahore v. District Council, Layallpur and another PLD 1953 Lah.83; PLD 1977 Lah. 542 and National Bank of Pakistan v. Messrs Nasir Industries, Karachi and others 1982 CLC 388 ref.

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

----S. 19---Civil Procedure Code (V of 1908), O.XXI, R.84---Auction sale of mortgaged property in execution of decree in a suit for recovery of loan by the Bank---Objection was that successful bidders had failed to deposit 10% of their bid of Rs.30 crores, along with their bid, as required in terms of the sale proclamation, and they had further failed to deposit 25% of the sale price immediately upon acceptance of their offer and the remaining 75% within 15 days, thereafter---Bidders' offer thus had been rendered nullity---Validity---Court had accepted two deposits made by the bidders and approved a further deposit to be made within time prescribed by the Court---Bidders having faithfully complied with Court's order, they could not be penalised for the violation of R.84, O.XXI, C.P.C., maxim Actus Curiae neminem gravabit' will come to their rescue.?

Rasheed Ehsan and others v. Bashir Ahmed and another PLD 1989 SC 146 rel.

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

----S. 19--Civil Procedure Code (V of 1908), O.XXI, Rr.85 & 86--Auction sale of mortgaged property in execution of a decree in suit for recovery of loan by the Bank---Provisions with regard to the payment of 75% of balance purchase money contained in O.XXI, R.85, C.P.C. are mandatory and not merely directory---Non-compliance of said provisions renders the sale void and in such circumstances the Court is under obligation to resale the property in terms of R.86, 4.XXI, C.P.C.---Principles.

?

Feroze Din Faiz v. Chaman Lal and others PLD 1953 Lah. 83; National Bank of Pakistan v. Messrs Nasir Industries, Karachi and others 1982 CLC 388; Sayed Brothers, Lahore v. District Council, Lyallpur and another PLD 1977 Lah. 542; Balram v. 11am Singh AIR 1996 SC 2781 and Manilal Mohanlal Sha and others v. Sardar Sayed Ahmed Sayed Mahmad and another AIR 1954 SC 349 rel.

Al-Hassan Feeds v. United Bank Ltd. and 6 others 2004 CLD 275 distinguished.

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

----S. 19---State Bank of Pakistan BPD Circular No.29---Auction sale of mortgaged property in execution of a decree in suit for recovery of loan by the Bank was set aside by the High Court---Judgment-debtor could approach the decree-holder Bank and CIRC for settlement of their respective dues in terms as envisaged in State Bank of Pakistan BPD Circular No.29 and CIRC Scheme and in case such settlement was reached, binding and collusive agreements shall be executed between the judgment-debtor company and the decree-holder, within fifteen days---In case either no settlement was reached, or agreements were not executed, the Official Assignee shall issue fresh proclamation for the sale of the property, after seeking approval of the proposed proclamation from the Court-Official Assignee was directed to refund the amount deposited by bidder in the execution of decree.?

Tasawar Ali Hashimi for Decree-holder, Habib Bank Ltd.

Abu Baker Ismail Chundngar for Decree-holder, CIRC.

Messrs Aitzaz Ahsan and Abid S. Zuberi for Judgment-debtor Company.

Abdul Hafeez Pirzada and Afzal Siddiqui for Messrs Chawala International.

Ali Bin Adam Jafri for Auction-Purchaser.

Official Assignee in Person.

2007 C L D 762

[Karachi]

Before Maqbool Baqar, J

Messrs TIME N VISIONS INTERNATIONAL (PVT.) LTD.-Plaintiff

Versus

DUBAI ISLAMIC BANK PAKISTAN LIMITED---Defendant

Suit No.862 of 2006, decided on 30th August, 2006.

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

----S. 202---Agency coupled with interest---Concept---Scope and applicability.

The concept of an agency coupled with interest' is a special concept. It envisages a pre-existing interest of the agent in the subject-matter of the agency which is sought to be protected through creation of the agency and notan interest arising therefrom. The concept can be clearly comprehended through the illustration given in section 202 of the Contract Act.

Where the agency is created by deed, or for valuable consideration, and the authority is given to effectuate a security to secure the interest of the agent, the authority cannot be revoked. Thus, if an agreement is entered into on a sufficient consideration whereby an authority is given for the purpose of securing some benefit to the donee of the authority, the authority is irrevocable on the ground that it is coupled with an interest. So, an authority to sell in consideration of forbearance to sue for previous advances, an authority to apply for share to be allotted on an underwriting agreement a commission being paid for the underwriting, and an authority to receive rents until the principal and interest of a loan have been paid off or to receive money from a third party in payment of a debt, have been held to be irrevocable. On the other hand, an authority is not irrevocable merely because the agent has a special property in or a lien upon goods to which the authority relates, the authority not being given for the purpose of securing the claims of the agent.

Section 202, Contract Act, 1872 lays down an exception to the general rule. A contract of agency by its very nature is personal to the parties and revocable at their volition subject to agreed terms. It does not create eternal legal relations. Under this section in certain exceptional circumstances, such contracts can be considered irrevocable, the most common examples of such contracts are when the owner of certain goods appoints his creditor as agent to sell the goods and recover the amount advanced or where the owner of immovable property, having agreed to transfer such property appoints, before formal title is passed, the vendee as his agent to manage the property or effect the final transfer of title. In such cases interest in the property has already been created in favour of another who is appointed agent primarily to secure such interest. The principal is precluded from revoking the authority of such agent unless otherwise agreed, because the main interest in the property is not retained by him but is passed on to the agent. The interest of the agent, forming subject-matter of the agency, is to be some sort of an adverse nature qua the principal. So, according to the true construction and scope of section 202 the agency can be said to be coupled with interest where the authority of an agent is given for the purpose of effectuating a security or of securing an interest of the agent. This can be inferred from documents forming the basis of agency or from the course of dealings between the parties and from the other surrounding circumstances.

Section 202 does not get attracted merely because the agent has acquired substantial interest in the returns arising from the agency. A comparison between sections 202 and 206 may clarify the legal position. Under section 206 when the contract of agency does not contain a specific stipulation as to termination, it may be terminated upon reasonable notice. In the absence of such notice the damage resulting to one party must be made good by the other. If the principal terminates the agency without notice, he must compensate the agent. It follows that the agent must be having an interest which must be compensated for. Therefore it is not possible to say that whenever an agent has an interest in the continuance of an agency section 202 gets attracted. Section 202 applies only where an agent has a special kind of interest i.e. pre-existing interest in the subject-matter of the agency which is sought to be protected through creation of the agency and not an interest arising therefrom.

Substantial investment in the business of agency would not make the agency irrevocable.

As regards the contention .that the agent had invested colossal amount of funds in setting up of office and necessary infrastructure and so the agency was irrevocable, suffice it to say that setting up of office and employment of necessary, staff was essential for carrying on the business of the agency. These acts were not anterior to the contract. These were not consideration to any right of agent. Under no circumstances they can be considered as security for any interest of the agent under the agreement of agency.

Halsbury's Laws of England IVth Edn. Vol. I; p.2036; Messrs Business Computing International (Pvt.) Ltd. v. IBM World Trade Corporation 1997 CLC 1903; World Wide Trading Company v. Sanyo-Electric Trading Company Ltd. and another PLD 1986 Kar. 234; Messrs Farooq & Co. v. Federation of Pakistan and 3 others 1996 CLC 2030 and Palani Vannan v. Krishnaswami Konar AIR 1946 Mad. 2036 fol.

Ghulam Ishaq Khan Institute of Engineering, Science and Technology and another v. Messrs Hassan Construction Co. (Pvt.) Ltd. Engineer and Consultants 1998 CLC 485; Manzoor Construction Co. Ltd. v. University of Engineering and Technology, Taxila 1984 CLC 3342; Muhammad Younus and 2 others v. Abdul Ghaffar and others 1998 MLD 1622; M/s. Jamia industries Ltd. v. Messrs Pakistan Refinary Ltd., Karachi PLD 1976 Kar. 644; Mst. Neelam Nosheen and others v. Raja Muhammad Khaqaan and others 2002 MLD 784; Unreported judgment passed in Suit. No. 388 of 2002 between ACB (Pvt.) Ltd. UPS Worldwide; Pak National Construction Co. v. State Bank of Pakistan PLD 1977 Kar. 838; Progressive Engineering Associates v. Pakistan Steel Mills Corporation Limited 1997 CLC 236; Roomi Ent. (Pvt.) Ltd. v. Stafford Miller Ltd. 2005 CLD 1805; Huma Enterprises v: S. Pir Ali Shah and others 1985 CLC 1522; World Wide Trading v. Sanyo Electric Trading Co. Ltd. and another PLD 1986 Kar. 234; Farooq & Co. v. Federation of Pakistan and others 1996 CLC 2030; Business Computing International v. IBM World Trade Corporation 1997 CLC 1903; Philippine Airlines v. Paramount Aviation (Pvt.) Ltd. and others PLD 1999 Kar. 227 and Muhammad Yousuf v. M/s. Urooj (Pvt.) Limited and another PLD 2003 Kar. 16 ref.

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

----S. 20---Contract Act (IX of 1872), S.202---Agency agreement--Application to file in court arbitration agreement---Powers conferred on the court under S.20, Arbitration Act, 1940---Scope.

Question as to whether, in the present case, in terms of the agency agreement, the agency could be terminated by serving two months' advance notice, only after the initial two years of the creation of the agency, would certainly require interpretation of the agreement itself, and which question, in view of the clause of agreement, which provides for a dispute resolution mechanism through arbitration in respect of every dispute, difference or question which may at any time arise between the parties, touching or arising out of or in respect of the agreement, can only be decided by the arbitrators. The scope of the powers conferred on the Court under section 20 of the Arbitration Act, 1940 is merely limited to determination of the factum of real dispute and no more. It is not for the Court to go into the question pertaining to the dispute raised or suggested, the manner of decision thereof for that would amount to usurping the jurisdiction of the domestic tribunal constituted under the arbitration agreement. Court, therefore would refrain from delving into the controversy as to at what point of time the parties can exercise their option to terminate the agency, which forms, a real dispute amenable to arbitration only.

Jamia Industries Limited v. Pakistan Refinery Ltd. PLD 1976 Kar. 644 and Manzoor Construction Co. Ltd. v. University of Engineering and Technology Taxila 1984 CLC 3347 ref.

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

----S. 20---Contract Act (IX of 1872), Ss.201 & 202---Specific: Relief Act (I of 1877), Ss.12, 42 & 55--Agency agreement---Termination of agency--Arbitration clause in agency agreement---Application to file in court agreement and for grant of injunction---Agency in question was not an agency coupled with interest--Such agency did not attract exceptional status of irrevocability as provided by S.202, Contract Act, 1872--Provision of S.201, Contract Act, 1872 provided for termination of an agency by the Principal revoking his authority, an order restraining the principal from revoking the agency and forcing the principal to continue with relationship would not be justified, as even if the arbitrators come to the conclusion that the termination of the agency would, in terms of the agreement, be premature for want of the requisite notice, the agent may be duly compensated by awarding damages---Application for grant of injunction was dismissed and defendant was directed to file the original arbitration agreement in court within specified time---Principles.

Huma Enterprises and 3 others v. S. Pir Ali Shah and others 1985 CLC 1522; West Pakistan Industrial Development Corporation, Karachi v. Aziz Qureshi 1973 SCMR 555 and Messrs Business Computing International (Pvt.) Ltd. v. IBM World Trade Corporation 1997 CLC 1903 ref.

Abdul Hafeez Pirzada, Hasaamuddin and Abdul Sattar Pirzada for Plaintiff.

Rasheed A. Razvi and Mahmood Mandviwala for Defendant.

Dates of hearing: 24th and 30th August, 2006.

2007 C L D 783

[Karachi]

Before Mushir Alam and Maqbool Baqar, JJ

SHEHRI C.B.E.---Petitioner

Versus

GOVERNMENT OF PAKISTAN and others---Respondents

Constitutional Petition No.D-455 of 2005, decided on 25th October, 2006.

(a) Pakistan Environmental Protection Act (XXXIV of 1997)---

---S. 12---Pakistan Environmental Protection Agency (Revenue of IEE and EIA) Regulations, 2000, Regln.10---Establishment of project not only for power generation but also for desalination of a massive quantity of seawater every day---Essential pre­requisite-Such plant cannot be classified as a power generation plant only, ignoring its attributes of a desalination plant--Desalination plant can be classified as a treatment plant--Treatment' means and includes a desalination plant, not only in the common usage of the term, but ,a desalination plant would clearly fall within the classification 'treatment plant---Principles---Term Treatment'---Connotation---Desalination process--Description.

Sindh Institute of Urology and Transplantation and others v. Nestle Milkpak Ltd. and others 2005 CLC 424; Illinois Central R. Co. v. Illinois 146 U.S. 387 (1892); Appleby v. City New York 271 US 364 (1926); Reynolds v. Ingalls Shipbuilding Div. v. Litton Systems Incorporation C.A. Miss. 788 F 2nd 264, 268; New Encyclopaedia Britannica 15th Edn.; WiseGEEK by S.Mithra; The ABCs of Desalting by O.K. Burros; California Coastal Commission Report on Seawater. Desalination in California in Chap. 3 and Einav R. Harussi K. and Perry D., in Article The Footprint of the Desalination Process on the Environment Desalination 152 (2002) pp.141--154 ref.

(b) Interpretation of statutes--

----Words of a statute are to be understood in their natural sense, and phrases and sentences are construed according grammatical meaning, unless that leads to some absurdity or unless there is something in the context, or in the object of the statute to suggest the contrary--Expressions used in the statute should ordinarily be understood in a sense in which they best harmonize with the object of the statute and which effectuate the object of the Legislature.

(c) Pakistan Environmental Protection Act (XXXIV of 1997)----

----S. 12 & Preamble---Pakistan Environmental Agency (Revenue of IEE and EIA), Regulations, 2000, Regln. 10---Term `treatment plant' cannot be given a restrictive meaning so as to artificially exclude desalination plant from its meaning and scope---Pakistan Environmental Protection Act, 1997, as declared in its preamble has been promulgated to provide for the protection, conservation, rehabilitation and improvement of the environment and for the prevention and control of pollution and promotion of sustainable development and for matters connected therewith and incidental thereto.

(d) Pakistan Environmental Protection Act (XXXIV of 1997)---

---Ss. 5, 6, 8, 11, 12, 13, 16 & 17---Environmental protection---Object, purpose and applicability of Ss.5, 6, 8, 11, 12, 13, 16 & 17, Pakistan Environmental Protection Act, 1997.

(e) Pakistan Environmental Protection Act (XXXIV of 1997)---

----S. 12-- Pakistan Environmental Agency (Revenue of IEE and EIA), Regulations, 2000, Reglns. 11, 10, 3 & 9---Establishment of a desalination plant-Implications-Desalination plant' falls in the category of a 'treatment plant'---Desalination plant, unless appropriate mitigating measures are employed and adequate monitoring is implemented, and effective corrective measures are suggested and implemented after thorough assessment and evaluation of the project as required under S.12, Pakistan Environmental Protection Act, 1997, may impair or damage the environment and therefore, in the context of Pakistan Environmental Protection Act, 1997 also a desalination plant cannot be deemed to be a plant not falling into the category of a treatment plant.

(f) Pakistan Environmental Protection Act (XXXIV of 1997)---

----S. 12---Held, it is essential to maintain balance between industrialization and ecology and that development and environmental protection must progress, it is in consonance with such principle that Pakistan Environmental Protection Act, 1997 has been enacted and enforced and thus its mandate should be honoured in its true letter and spirit.

(g) Pakistan Environmental Protection Act (XXXIV of 1997)---

----S. 12--Establishment of Environmental Tribunals---High Court directed the Government of Pakistan to establish Environmental Tribunals as required in terms of S.12, Pakistan Environmental Protection Act, 1997 at the earliest and preferably within two months from the date of the present judgment, so that, the issues such as raised in the present case may be decided expeditiously.

Abdur Rehman and Rizwana Ismail for Petitioner.

Makhdoom Ali Khan, Attorney-General and Dr. M. Usman for Respondents Nos. 1 and 5.

Abbas Ali, A.A.-G. for Respondents Nos. 3 and 4.

Sohail H.K. Rana for Respondent No.6.

Mahmood Mandviwala for Respondent No.7.

Date of hearing: 25th October, 2006.

2007 C L D 802

[Karachi]

Before Syed Zawwar Husain Jaffery and Maqbool Baqar, JJ

TRI-STAR INDUSTRIES (PVT.) LTD. through Director---Appellant

Versus

SAYYED ENGINEERS (PVT.) LTD. through Chief Executive Director/Manager---Respondent

High Court Appeal No.1190 of 2001, decided on 28th-February, 2006.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 46 & 15----Trade mark---Action for passing off---Requirements--In an action for passing off the central question had always been as to whether the name or description given by the defendant to his goods is such as to create a likelihood that a substantial section of the purchasing public will be misled into believing that his goods are the goods of the plaintiff and that defendant is selling his goods wider the pretence that they are those of the plaintiff---Representation must be such as to cause confusion in the public mind between the defendant's goods and the plaintiff s goods---Impugned mark should be identical with plaintiff s mark or so nearly resembling same as to be likely to deceive or cause confusion in the course of trade in relation to the goods in respect of which it is used and the impugned mark is being used in such a manner as to render the use of that mark likely to be taken to import a reference to the proprietor of the trade mark or import or reference to the goods to which the proprietor is connected in the course of a trade---In the present case though there was some similarity in the design of the two ball pens, inasmuch as both were barrel shaped, with round topped caps and both had transparent bodies and caps, however, the ball pen 'PIANO CRYSTAL' of the plaintiff was clearly distinguishable from the ball pen 'IMAGE' of the defendant as the former contained a coloured ball inserted inside the top of its cap, indicating the colour of its ink; other 'distinguishing' feature was that top of the ball pen 'PIANO CRYSTAL' was of yellow/golden colour, whereas, that of 'IMAGE' was of the colour of its ink i.e. blue or black---Pen 'IMAGE' did not carry the word 'CRYSTAL' and only its name 'IMAGE' was printed thereon, whereas the other pen prominently bore its name 'PIANO CRYSTAL' on its body and there was no novelty in the shape or design of 'PIANO CRYSTAL', as the barrel shaped pens were the commonest of all the pens---Word 'CRYSTAL' was admittedly not being impressed upon the defendant's pen, the same being a descriptive word could not be allowed to be monopolised by the plaintiff rnore so for the reason that the plaintiff also was using the word to characterize the transparent bodied version of their yellow ball pen 'PIANO'---Boxes containing both the pens were clearly distinguishable being in different colours and there was absolutely no element of any confusion or probability of the buyers being deceived into buying the ball pen 'IMAGE' for the ball pen 'PIANO CRYSTAL' or as product of plaintiff-Dissimilarities were. so glaring that there seemed to be no probability of deception by the defendants using the word CRYSTAL, in the way they were doing---Appeal was allowed and impugned order against the defendant was set aside in circumstances.

Zakauddin v. Muhammad Zahid and 2 others PLD 1993 Kar.766; The Sanitas Company Ltd. v. Condy RPC 4 1987 530; Messrs K.S. Sulemanji Esmailji and Sons v. Messrs M. Sulemanji and Company Ltd. 1986 CLC 775; Muhammad Fazil v. Messrs Ashfaq Brothers, Karachi 1981 CLC 1519; Insaf Soap Factory v. Lever Brothers Port Sunlight Ltd. PLD 1959 (W.P:) Lah. 381; Jamia Industries Ltd. v. Caltex Oil (Pak.) Ltd. and another PLD 1984 SC 8; Cecil De Cordova and others v. Vick Chemical Company PLD 1951 PC 108; Messrs Kala Niketan v. Koran Bagh New Delhi and another AIR 1983 Delhi 161 and T.J. Balaji Chettiar v. Hindustan Lever Ltd. Bombay AIR 1967 Mad. 148 distinguished.

Burberrys v. J.C. Cording and Co. Ltd. RPC 1909 p.693 and Tepal Tea (Pvt.) Ltd. v. Lever Brothers (Pakistan) Ltd. 1997 MLD 1277 ref.

Abid S. Zuberi for Appellant

Khawaja Mansoor Ahmed for Respondent.

2007 C L D 830

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

AMZ SECURITIES (PVT.) LTD---Appellant

Versus

TAHIR ABBAS and another---Respondents

Miscellaneous Appeal No.8 of 2006, decided on 20th March, 2007.

Securities And Exchange Commission of Pakistan Act (XLII of 1997)---

----Ss. 32 & 34--Appeal to High Court-Appellant/Broker was a member of the Stock Exchange and maintained investment portfolios on behalf of various clients in which they traded in securities and shares quoted on Stock Exchange under instructions from and on behalf of various clients-Allegation of the customer supported by number of .documents, was that Broker had carefully manipulated his shares and instead of crediting into his account he had credited to the account of some other person so as to ensure that they do not have to account for the same to the customer---Validity---Stock Exchange Broker had not maintained proper documentation and had not issued the prescribed receipts for shares nor had they maintained registers prescribed for entry and movements of convenience being not in favour of Broker, benefit of doubt, if any, should go to the customer---Principles.

Nasir J.R. Shaikh for Appellant.

Muhammad Aqil and Abdul Majeed Shaghil for Respondent No.1.

Umar Sial for Respondent No.2.

2007 C L D 841

[Karachi]

Before Syed Zawwar Hussain Jafri and Maqbool Baqar, JJ

ASKARI & CO. and 2 others---Appellants

Versus

MUSLIM COMMERCIAL BANK LTD. and another---Respondents

Ist A. No.17 of 2004, decided on 2nd February, 2006.

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

----Ss. 19 & 22---Civil Procedure Code (V of 1908), O.XXI, R.90---Execution proceedings--Application for setting aside of sale of property---Maintainability---Judgment-debtor in his appeal had assailed order whereby Banking Court confirmed sale of his property ---Property in question, initially was put to auction, but on account of postponement of confirmation of the bid at the request of judgment-debtor, highest bidder withdrew his offer--Fresh auction of property was held and bidder, who offered to purchase property at Rs.1,64,00,000 was declared the highest ---Another person though offered to purchase property for a sum of Rs.1,95,00,000, but he having failed to deposit 25% of price offered by him, was not considered and Banking Court confirmed the sale in favour of the bidder, who in the mean time had enhanced his offer from Rs.1,64,00,000 to Rs. 1,73,25,000---Neither did said bidder defaulted in making payment of the purchase price at any stage nor had judgment-debtor at any point in time earlier or through appeal even alleged any fraud and/or irregularity either in the publication of sale proclamation or in the conduct of sale proceedings---Application under O.XXI, R.90, C.P.C. filed by judgment-debtor before High Court in appeal, besides being barred by limitation was, not maintainable and was liable to be dismissed--Appeal along with application, was dismissed.

Hudabla Textile Mills and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 ref.

Sohail Muzaffar for Appellants.

Rasheed A. Razvi for Respondents.

2007 C L D 847

[Karachi]

Before Zia Parwaz, J

Mst. FARHA ZIA and another---Plaintiffs

Versus

Messrs MYBANK LIMITED---Defendant

Suit No.B/1197 of 2006, decided on 10th October, 2006.

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

---Ss. 9, 10, 15(11)(12), 21, 23 & 28---Suit for recovery of loan---Maintainability---Trial Court, in a suit earlier filed by the plaintiff ordered the plaintiff to deposit amount in question within fifteen days with the Nazir of that Court and in case of default the defendant could auction the property---Instead of depositing the amount, plaintiff withdrew said suit---Court did not allow the plaintiff with regard to permission to file fresh suit---Subsequently, Judicial Miscellaneous application was filed by the plaintiff under S.15(11) of Financial Institutions (Recovery of Finances) Ordinance, 2001 with the same prayer, which was dismissed as withdrawn---Fresh suit by the plaintiff was based on the same cause of action which was included in earlier suit---Fresh suit which was not maintainable, was dismissed along with listed application.

Gul Sahib Din and others v. Malik Sultan Jan and others PLD 1982 SC 254; Hashim Khan v. National Bank of Pakistan PLD 2001 Supreme Court 325; Ghulam Rasool v. Shana 2001 MLD 661; Messrs Artisans Craftsman Rehabilitation Society v. Mst. Asif Jahan Begum 1990 MLD 1702; Abdul Malik v. Muhammad Urfan 1989 CLC 2363; Ch. Muhammad Ali v. Sardar Muhammad Kazim Ziauddin Durrani 1999 CLC 1437 and Hussain Bakhsh's case PLD 1970 SC 1 ref.

Nemo for Plaintiffs.

Ms. Fouzia Rashid for Defendant.

2007 C L D 879

[Karachi]

Before Munib Ahmad Khan, J

PRUDENTIAL COMMERCIAL BANK LTD. through Attorneys---Decree-holder

Versus

WEST PAKISTAN TANKS TERMINAL (PVT.) LTD. and 5 others---Judgment-debtors

Execution Application No.29 of 1998 in C.M.As. Nos.664, 684, 685, 709, 712 and 714 of 2006, decided on 10th November, 2006.

Civil Procedure Code (V of 1908)---

----O. XXI, R.29---Banker and customer--Applications for stay of execution pending suit between decree holder and judgment-debtors---Certain relaxations during the course of execution had been granted and no sound efforts had been made to pay off the debts---Court, though could stay the proceedings under O.XXI, R.29, C.P.C. but that could be subject to sufficient security to satisfy the existing decretal amount with future claim in respect of mark-up, which aspect was missing in the present case---Record showed that execution was filed in 1998 while the applications under O.XXI, R.29, C.P.C. had been filed after about seven years, which apparently was late in time---Judgment­-debtors could make certain efforts if they were inclined to satisfy the decree but the same was not done--Adjustment which had been claimed in respect to sale proceed of pledged shares did not belong to either of the judgment-debtors---Applications for stay of execution proceedings had no force in circumstances---Official Assignee was allowed to proceed further in terms of the order already passed by the Court.

AIR 1928 Cal. 222; AIR 1936 Mad. 102; PLD 1957 Dhaka Page 603: AIR 1931 Bom.247; AIR 1935 Rangoon 151 and 1972 SCMR Page 236 ref.

Shahab Sarki for Decree-holder.

Ali Sibtain Fazli for Judgment-debtors Nos.1, 2 and 4.

2007 C L D 900

[Karachi]

Before Nadeem Azhar Siddiqi, J

W & P CO. (PVT.) LTD.: In the matter of

J. Miscellaneous No.01 of 2005, decided on 15th June, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 287, 284, 285, 286, 287 & 288---Companies (Court) Rules, 1997, Rr.55 to 60---Merger of Companies---Petition under S.284 read with Ss.285, to 287 of the Companies Ordinance, 1984 praying that an order under S.287(1)(a) of the Ordinance be passed transferring to and vesting in the company 'M' the whole undertaking, assets, properties, liabilities, rights, benefits, powers, privileges, licences, contracts of Company 'W' and more particularly described in the scheme as set forth in the Annexure to the petition---Scheme of Arrangements for merger of the companies was also filed with the petition---Object of Scheme was to merge Company 'W' into Company 'M'---Validity---Both the Companies had agreed and entered into Scheme for the proposed merger of the Companies, Scheme of Arrangements had been filed giving details of the merger; minutes of the meeting held pursuant to court order were also filed; notice of the merger was published in the newspapers and Gazette of Pakistan; notice was sewed upon the Joint Registrar of Companies and Securities and Exchange Commission explaining therein to the Commission and Joint Registrar the details of capital and arrangements of merger; dues of both Joint Registrar and Securities and Exchange Commission, in accordance with law, were promised to be paid by both the Companies which was sufficient to safeguard the interest of the Commission and the Joint Registrar---Formalities having been completed and no objection whatsoever having been received from any quarter there remained no impediment for allowing the petition---High Court approved the Scheme of Arrangements for proposed merger accordingly.

Shahab Sarki for Petitioners.

2007 C L D 916

[Karachi]

Before Muhammad Afzal Soomro and Rahmat Hussain Jafferi, JJ

M. YOUSUF ADIL SALEEM & CO. and 7 others-Appellants

Versus

HAMID MASOOD---Respondent

High Court Appeal No.30 of 2007, decided on 25th April, 2007.

(a) Partnership Act (IX of 1932)---

----Ss. 32, 33, 39, 40, 41, 42, 43 & 44----Retirement of a partner---Modes, conditions and effect---Where the partnership provides the mode of retirement, such mode has to be adopted for retirement alone which would fall within the ambit of S.32(1)(b), Partnership Act, 1932---Principles.

A perusal of Partnership Act reveals that there are three ways of retirement of partner: (1) dissolution of partnership as provided under sections 39 to 44; (2) one or more partners' retirement as provided under section 32; and (3) expulsion of partner as provided under section 33. It will be noticed that the word "dissolution" is defined whereas "retirement" is not defined in the Partnership Act. The retirement of a partner from the firm is somewhat different from the dissolution of the firm. According to section 39 which defines the dissolution, "dissolution" means dissolution of the partnership as between all the partners. What happens on the retirement, on the other hand, is that the partnership is not dissolved. It remains what it has been, but only a member or two leave it. This can happen clearly because the very scheme of the Partnership Act is such that ingress and egress of members can be regulated without affecting the continuity of the firm.

The retirement of a partner has the effect of dissolving the jural relations of partnership inter se amongst all the partners. A partner can retire in the cases set out in section 32 and when he does so, he is said to have retired from the firm.

From the bare reading of S.32, Partnership Act, 1932 it is clear that a partner may retire;

(a) with the consent of all other partners. This will result in amicable retirement of a partner.

(b) in accordance with an express agreement by the partners. This will result in a case where the partnership agreement itself provides for the retirement of a partner or partners under certain conditions.

(c) in case a partnership is at will a partner may retire by giving notice in writing to all other partners of his intention to retire.

It appears that all the three clauses of S.32, Partnership Act, 1932 cover different situations as clause (a) deals with the situation where there is no express agreement in the partnership deed with regard to the retirement of partners or the partnership is at will.

Clause (a) is a general provision about retirement of partner. The clauses (b) and (c) deal with specific situations mentioned thereunder, as such, those are special provisions in respect of retirement of partner. When a statute has general and special provisions then special provision will prevail over general provision. Applying the above principle when conditions mentioned in clauses (b) & (c) are fulfilled then retirement should be made in that manner alone as the partners have unanimously agreed to such procedure. If no such agreement appears in the partnership deed then the partner can retire in the manner as provided under clause (a) only. Nevertheless, if all the partners agree upon retirement of partner in the manner as provided under clause (a), then such mode can also be adopted in retirement of partner, subject to proof of such fact showing 'modification in the partnership agreement within the meaning of Articles 102 & 103 of Qanun-e-Shahadat, 1984. Thus the clauses (a), (b) & (c) are mutually exclusive.

Where the partnership deed provides the mode of retirement, such mode should be adopted for the retirement alone. If a thing is required to be done in a particular manner then it shall be done in that manner alone. When the mode of retirement is provided in the partnership deed, the case would fall within the ambit of section 32(1)(b) of Partnership Act.

S.W.F. Product (Pvt.) Limited v. Sohanlal Bagla AIR 1964 Cal.209; IT v. A.W. Figgis AIR 1953 SC 455 and Moss v. Elphick 102 LT 639 ref.

(b) Partnership Act (IX of 1932)---

---Ss. 7 & 68---Partnership at will---Rules of evidence---Principles---Entries of the Registrar of Firms appearing in his Register made on the information furnished by firm would be conclusive proof against the firm by virtue of S.68, Partnership Act, 1932---Estoppel, principle of---Applicability---Scope---'Conclusive proof' and 'conclusive evidence'---Definition.

Somawanti v. State of Punjab AIR 1963 SC 151 ref.

(c) Partnership Act (IX of 1932)---

-----S. 7-Partnership at will---Implications---Where no provision is made by contract between the partners for the duration of the partnership, or for the determination of the partnership, the partnership is 'partnership at will'---Exceptions.

Section 7, Partnership Act, 1932 provides that where no provision is made by contract between the partners for the duration of the partnership, or for the determination of the partnership, the partnership is partnership at will. Thus, section 7 of the Act contemplates two exceptions to a partnership at will. The first exception is where there is a provision in the contract for the duration of the partnership, the second exception is where there is a provision for the determination of partnership. In either of these cases the partnership is not at will. The duration of a partnership may be expressly provided in the contract. Nevertheless, where there is no express agreement to continue a partnership for a definite period there may be an implied agreement to do so. The general rules of partnership are well settled. Where no term is expressly limited for its duration, and there is nothing in the contract to fix it, the partnership may be terminated at a moment's notice by either party-without doubt, in the absence of express term, there may be an implied contract as to the duration of a partnership.

The same principle applies to a case of determination. The contract may expressly provide that the partnership will determine in certain circumstances; but even if there is no such express term an implied term as to when the partnership will determine may be found in the contract.

It has been observed in Moss's case (102 L.T. 639) that in order to negative the implication of a partnership at will, there must be some express or implied agreement that is inconsistent with the right which a partner would otherwise have to determine the partnership by notice. Thus, an express term that "This agreement shall be terminated by mutual arrangement only" will clearly amount to such an agreement.

Whether the partnership is a partnership at will or not is a question of interpretation of the partnership deed and the conduct of the partners.

Crawshay v. Maula (1818) 36 ER 479 ref.

(d) Partnership Act (IX of 1932)---

----Ss. 7 & 32(1)(c)---Partnership at will---Retirement of a partner--Procedure provided under S.32(1)(c), Partnership Act, 1932 is required to be followed.

(e) Words and phrases---

----'Tantamount'---Meaning.

Chamer's 21st Century Dictionary ref.

(f) Partnership Act (IX of 1932)---

----S. 32(1)(a)---Retirement of a partner---Conditions---Mere non-signing of agreement of alteration of partnership deed cannot be a ground by itself to retire a partner.

Under section 32(1)(a) of the Partnership Act, 1932 a partner has to make, suggest or intend to retire voluntarily with his freewill, without any pressure, inducement, threat, promise and such proposal or intention of retirement can be expressed at any time subject to the condition that all the partners are agreeable to retirement, voluntarily with their own freewill without any pressure, inducement or coercion. Partnership is a voluntary association of consenting members, therefore, with equal ease the membership of anyone of them can be de-linked with the consent of all of them. "Consent" may take the form of an express agreement, but it may equally be inferred from conduct. The very fact that nobody objects to the retirement is sufficient evidence of consent by acquiescence. Nevertheless, the first and foremost condition is the intention or proposal of retirement of the partner, which should be voluntarily made clear, unambiguous, without pressure, promise and coercion. If the above elements are missing in the proposal then the same cannot be termed as a valid and legal proposal hence the consent, if any, given on such type of proposal would not affect the relationship between the partners.

The non-signing of the agreement of alteration of partnership deed was not the ground by itself to retire a partner.

(g) Partnership Act (IX of 1932)----

----Ss. 7, 32 & 68---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Partnership at will---Suit for permanent injunction with a prayer for restraining the defendant (one of the partners) from acting as partner of the firm and for mandatory injunction---Plaintiff had failed to show the prima facie case in his favour---Balance of convenience was also not in favour of the plaintiff as great inconvenience was likely be caused to the defendant if he was debarred from participating in. the partnership firm--Defendant was associated with the firm from the year 1986 and had raised serious objections before the Registrar of the Firms when he came to know that his name was excluded from the partnership firm and conditions mentioned in S.32(1)(b) of the Partnership Act, 1932 had not' been fulfilled---If the defendant was debarred from acting as partner in the firm, irreparable loss would be caused to him which could not be compensated in terms of money because he would suffer not only financially but mentally and physically---High Court declined to interfere in the order refusing the grant of injunction by the Single Judge in original jurisdiction.

(h) Estopple, principle of---

---Applicability---Scope.

Somawanti v. State of Punjab AIR 1963 SC 151 ref.

Kamal Azfar for Appellants.

Salahuddin Ahmed for Respondent.

Date of hearing: 28th March, 2006.

2007 C L D 940

[Karachi]

Before Syed Zawwar Hussain Jaffery and Maqbool Baqar, JJ

PAKISTAN WATER AND POWER DEVELOPMENT AUTHORITY----Appellant

Versus

Messrs SHAUKAT & RAZA (PVT.) LIMITED and 2 others----Respondents

H.C.A. No.269 of 2002, decided on 14th November, 2006.

Contract Act (IX of 1872)-

----S. 73---Construction contract---Completion of work by contractor through sub-contractor beyond stipulated date---Withholding of certain amount by principal out of running bills payable to contractor and its adjustment towards risk and cost---Validity---Amount of mobilization of advance stood adjusted towards work done and was not re-payable by contractor to the principal---Impugned adjustment of amount was not authorized by contract, thus, it was wholly 'unjustified---Principal was not justified to invoke mobilization advance payment bond, thus, was not entitled to seek refund of amount of mobilization advance in circumstances.

Talmiz S. Burney for Appellant.

Samiuddin Sami for Respondent No.1.

Ejaz Ahmed for Respondent No.2.

Muhammad Shahid for Respondent No.3.

Date of hearing: 1st February, 2006.

2007 C L D 957

[Karachi]

Before S. Ali Aslam Jafri, J

GETZ PHARMA (PVT.) LTD. through Authorized Officer---Plaintiff

Versus

FAROOQ & SONS through Proprietor and another---Defendants

Suit No. 916 of 2005, decided on 13th September, 2005.

Trade Marks Ordinance (XIX of 2001)---

---S.46-Drugs Act (XXXI of 1976), Ss.7 & 23---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for infringement of trade mark-Interim injunction, grant of----Plaintiff claimed to be manufacturing and selling drug under trade name "MIBS"---Permission to manufacture and sell medicine under such trade name granted to plaintiff was withdrawn by Controller of Drugs, which order was challenged in appeal, but no interim or final relief had been granted---Such trade name was not registered in plaintiffs name---Controller of Drugs had permitted defendant to manufacture and sell medicine under such trade name, which registration was still intact--Defendant had applied for registration of such trade name and copyrights---Controller of Drugs had advised plaintiff to change trade name of its drug, which was similar to trade name being used by defendant-Under S.23 of Drugs Act, 1976, no drug could be imported, manufactured or sold by any person in absence of a valid registration/permission, granted under S.7 thereof---No prima facie case and balance of convenience existed in favour of plaintiff---Balance of convenience would lie in favour of defendant for being manufacturer of drug under such trade name under a valid permission/registration---Application for interim injunction was dismissed in circumstances.

Law of Trade Marks and Passing off by P. Naryanan Forth Edn., p.42 ref.

Abdul Hameed Iqbal for Plaintiff.

Defendant No.1 in Person.

B. Amjad Hussain for Defendant No.2.

2007 C L D 966

[Karachi]

Before Khilji Arif Hussain, J

AL-KARAM TEXTILE MILLS (PVT.) LIMITED through duly Authorized Officer---Plaintiff

Versus

MEHTAB CHAWALA and 3 others---Defendants

Suit No. 35 and C.M.As. Nos.4821, 1920 and 2142 of 2003, decided on 11th May, 2006.

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

----Ss.21 & 46---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for infringement of trade mark filed in year 2003---Interim injunction, grant of---Plaintiff having proof regarding use of trade mark since year 1999, but not prior thereto--Documents produced by defendant showed that he was carrying on business under such trade mark since 1985---Plaintiff in year 2000 while dealing with defendant never objected to use of such trade mark by defendant---Registered proprietor could not restrain bona fide user of trade mark in respect of identical or confusingly similar trade mark---Defendant was using such trade mark prior in time to plaintiff who on basis of registered trade mark could not restrain defendant from using same-Plaintiff's suit was suffering from laches, which disentitled him to grant of injunction---Plaintiff had failed to make out a prima facie case---Balance of convenience, would lie in favour of defendant--Restraining defendant from using such trade mark, which was in his use for last 20 years, would cause more inconvenience to defendant than plaintiff---Interim injunction was declined to plaintiff in circumstances.

Messrs Chas A. Mendoza v. Syed Tausif Ahmed and 2 others PLD 1993 Kar. 790; Messrs Tabak Restaurant v. Messrs Tabak Restaurant 1987 SCMR 1090; Cluett,, Peabody and Company Inc. v. Assistant Registrar of Trade Marks and another 1991 SCMR 921; National Detergents Limited v. Mod International (Pvt.) Ltd. 1993 MLD 590; The Welcome Foundation Limited v. Messrs Karachi Chemical Industries (Private) Limited 2000 YLR 1376; J.N Nichols (Vimto) PLCA Company Incorporated in the United Kingdom v. Mehran Bottlers (Private) Limited, Karachi PLD 2000 Kar. 192; Messrs Mehran Ghee Mills (Pvt.) Limited and others v. Messrs Chiltan Ghee Mill (Pvt.) Limited and others 2001 SCMR 967; Messrs Western Brand Tea, Karachi v. Messrs. Tapal Tea (Pvt.) Limited PLD 2001 SC 14; Tekronix Incorporated v. M. Abdul Mannan PLD 1973 Kar. 14; ACER. Inc. v. ACER Computers 2004 CLD 1131; Messrs ADT SERVICES AG through Attorney and another v. Messrs ADT Pakistan (Pvt.) Ltd. through Promoter and Director and 4 others 2005 CLD 1546; William Dimech v. Gofferodo Allesandro Chriten and another AIR 1931 PC 15; Messrs Kala Niketan Karol Bagh, New pehli v. Messrs Kala Niketan, G-10 (Basement) South Extension Market 1, New Dehli AIR 1983 Delhi 161; Lloyd's Bank Ltd. v. Lloyd's Investment Trust Company Ltd. 1912 RPC 545 and 557; Unilever PLC A British Company of Port Sunlight Wirral Merseyside, England v. R.B. Oil Industries (Pvt.) Ltd. Karach 1999 MLD 1447; Zafar Farooq v. Raja Dil Nawaz Khan 2000 YLR 2351; Kabushiki Kaisha Toshiba (also Trading as Toshiba Corporation) v. Ch. Muhammad Altaf (trading as Murad Industries (Regd.) and another PLD 1991 SC 27; Indus Pencil Industries (Pvt.) Ltd. v. Indus Copy House 1987 MLD 2073; AFG Telefunken Pakistan Ltd. v. Electric Concern Corporation 1985 CLC 155 and General Biscuit and another v. English Biscuit Manufacturers (Pvt.) Ltd. 2004 CLD 680 ref.

Abdul Wasim v. Messrs Haico through Sole Proprietor/Partner and 2 others 2002 CLD 1623; Indus Pencil Industries (Pvt.) Ltd. v. Indus Copy House 1987 MLD 2073 and AEG Telefunken Pakistan Ltd. v. Electric Concern Corporation 1985 CLC 155 rel.

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

---Ss.21, 22, 25 & 26---Registered proprietor could not restrain prior bona fide user of trade mark in respect of identical or confusingly similar trade mark---Principles.

Abdul Wasim v. Messrs Haico through Sole Proprietor/ Partner and 2 others 2002 CLD 1623 rel.

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

---S.46---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Infringement of trade mark, suit for---Interim injunction, grant of---Plaintiff filed suit after 20 years from date of use of trade mark by defendant and about 3 years after having notice of such use by defendant---Held, plaintiff on account of- lathes was not entitled to grant of interim injunction.

Indus Pencil Industries (Pvt.) Ltd. v. Indus Copy House 1987 MLD 2073 and AEG Telefunken Pakistan Ltd. v. Electric Concern Corporation 1985 CLC 155 rel.

Khurram Gul Ghoury for Plaintiff.

Mrs. Navin Merchant for Defendants.

2007 C L D 978

[Karachi]

Before Mrs. Qaiser Iqbal, J

Messrs MACTER INTERNATIONAL (PVT.) LTD. through Duly Authorized Officer---Plaintiff

Versus

Messrs SANTE (PVT.) LIMITED through Chief Executive, Directors, Secretary Manufacturers and Merchants-Defendant

Suit No.460 and C.M.A. No.2848 of 2004, decided on 3rd April, 2006.

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

----Ss.10(2) & 46---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Infringement of trade mark, suit for---Parallel use of trade mark by both parties---Interim injunction, grant of---Scope--Delay in bringing action per se would be fatal to grant of injunction in such cases---Interim injunction was declined in circumstances.

Shahid Mirza v. Merloniziara S.P.A. PLD 1991 Kar. 425; Multani Sohan Halva, Hussain Agahi Multan v. Registrar of Trade Mark 1987 CLC 1448; Messrs Burneys Industrial and Commercial v. Messrs Rehman Match Works PLD 1983 Kar.357; Mama International Company L.L.C. v. Popular Foods Industrial Ltd. 2004 CLD 171; Pakistan Drugs House (Pvt,) v. Rio Chemical Company and others 2003 CLD 1131; Tapal Tea (private) Limited v. Shahs Tea Company 2002 CLD 1113; A. Meredith Jones & Co. v. Usman Textile Mills. Ltd. 2002 CLD 1121; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Cluett, Peabody and Company Inc. v. Assistant Registrar of Trade Marks 1991 SCMR 921; National Detergents Limited v. Mod International (Pvt.) Ltd. 1993 MLD 590; Abdul Hadi and 4 others v. Government of Sindh through Secretary Industries Department, Karachi and 3 others 1993 MLD 590; The Welcome Foundation Limited v. Messrs Karachi Chemical Industries (Private) Limited 2000 YLR 1376; J.N. Nichols (Vimto) PLC A Company Incorporated in the Kingdom v. Mehran Bottlers (Private) Limited, Karachi PLD 2000 Kar. 192; The National Electric Fans Manufacture v. S. Muhammad Din & Sons Ltd. 1980 SCMR 97 and Indus Pencil Industries (Pvt.) Ltd. v. Indus Copy House 1987 MLD 2073 ref.

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

----Ss.10(2)---Trade Mark "SANTE" being a descriptive word purely, thus every one would have right to use same.

Mrs. Shazia Tasleem for Plaintiff.

Mrs. Naveen Merchant for Defendant.

2007 C L D 991

[Karachi]

Before Mrs. Qaiser Iqbal, J

Messrs MASTER TEXTILE MILLS LTD. Through Duly Authorized Signatory---Plaintiff

Versus

MASTER FABRICS through Managing Partner and 5 others---Defendants

Suit No.1161 and C.M.A. No.7175 of 2004, decided on 16th February, 2006.

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

----S.17---Trade mark, registration---Scope---Particular trade mark, if common to trade used by more than one person, would become publici juris and all traders in field could claim their right therein---Principles.

The registrations of trade mark, which are identical or nearly resemble each other in respect of the same kind of goods or description of goods, are permissible to be registered favouring different proprietors. When a particular trade mark is common to the trade used by more than one person, it becomes publici juris and all traders in the field can claim their right in the said trade mark. The deception and confusion should be such, which affects a wary person.

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

----Ss.10(2), 22, 25, 26 & 46---Infringement of trade mark, suit for---Plaintiffs trade mark was not registered---Defendant had commenced business earlier than plaintiff, but its trade mark was registered later on---Held, plaintiff could claim a right of passing off action.

PLD 1987 SC 1090; PLD 1991 SC 921; 2000 YLR 1376; PLD 2000 Kar. 192; 2001 SCMR 967; PLD 2001 SC 14; 2004 CLD 171; Formica Corporation v. Pakistan Formica Ltd. 1989 SCMR 361; Abdul Wasim v. Messrs Haiko through Sole Proprietor 2002 CLD 1623; Oil and Gas Development Corporation v. Lt.-Colonel Shujjauddin Ahmed PLD 1970 Kar, 332 and Bayer A.G. and another v. Master International (Pvt.) 2003 CLD 794 ref.

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

----S.10(2)---Trade Mark "Master"---Word "Master" has become common to trade, thus a public property in local and universal use.

Ms. Shazia Taslim for Plaintiff.

Muhammad Iqbal Chaudhry for Defendants.

2007 C L D 1017

[Karachi

Before Amir Hani Muslim, J

Messrs KARACHI UNIQUE EXPRESS through Managing Partner---Appellant

Versus

Messrs KASB BANK LIMITED and 2 others---Respondents

Banking Suit No.B-49 and C.M.As. Nos.582, 864, 929, 930, 931 and 932 of 2007, decided on 23rd April, 2007.

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

----S.9---Partnership Act (IX of 1932), S.69(2)---Civil Procedure Code (V of 1908), O. VII, R.11---Suit filed by unregistered firm---Maintainability---Rejection of plaint, application for---Maintainability of suit was objected to on the grounds that suit filed by unregistered firm was barred under S.69(2) of Partnership Act, 1932---Defendants moved application under O. VII, R.11, C.P.C. for rejection of plaint---Plaintiff during pendency of said application filed application seeking amendment of plaint by substituting name of plaintiff for that of its partners---Application filed by plaintiff for amendment of plaint by substituting name of plaintiff for that of its partners was allowed--Application filed by defendants for rejection of plaint was disposed of observing that at the time of framing of issues, a preliminary issue would be framed as to whether partners of unregistered firm could file a suit against the third party; and arguments on that legal issue would be heard after settlement of issues---Plaintiff would amend the title of the plaint accordingly---Ad interim order issued, would continue with restriction contained therein.

Ardeshir Cowasjee v. KBACA PLD 2003 Kar.314; Abdul Hamid v. Riaz Brothers Commission Agents 1986 CLC 242 and Aslam Awan v. Ras Tariq Chaudhary 1985 CLC 2514 rel.

Saalim Salam Ansari for Plaintiff.

Ms. Samia Durrani for Defendants Nos.1 and 2.

Tahawar Ali Khan for Defendant No.3.

2007 C L D 1022

[Karachi]

Before Mushir Alam and Muhammad Afzal Soomro, JJ

AZIZULLAH SHAIKH, BAR AT LAW and another---Appellants

Versus

UNION BANK LIMITED---Respondent

Spl. H.C.A. No.92 of 2006, decided on 22nd March, 2007.

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

----O.VII, R.11---Contract Act (IX of 1872), S.73---Suit for damages and compensation by customer on the allegation of breach of contract by the Bank---Contention, of the customer was that defendant (Bank) having not got the written statement signed through its second attorney, plaint was liable to be rejected---Validity---Held, even where the pleadings were not signed, same could not be rejected on such hyper-technical ground---Such lapse could be remedied by permitting the party to sign it---In the present case, the moment such lapse or objection was raised, same was instantly remedied by the Bank and the Court rightly exercised its discretion and allowed the other attorney of the Bank to sign the written statement in red ink---No prejudice having been shown to have been caused to the customer, no exception therefore, on such hyper-technical ground could be entertained.

Ismail and others v. Mst. Razia Begum and others 1981 SCMR 687 and Ghulam Mohi-ud-Din v. Noor Dad 1988 PLD 42 SC (AJ&K) ref.

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

---S.73---Negotiable Instruments Act (XXVI of 1881), S.117---State Bank of Pakistan Prudential Regulations for Consumer Financing, 2003, 0-1 to 0-5 and Reglns. 7 & 8---Banker and customer---Suit for damages and compensation by customer against Bank---Issuance of credit card by Bank to customer---Contention of the customer was that while travelling, throughout the journey abroad his credit cards were not accepted for payment each time the same was presented, he not only felt greatly insulted, disgraced, defamed and humiliated, as if he was using stolen cards---Customer claimed to have suffered mental torture and agony and claimed damages---Bank, in its written statement denied the allegation and blamed the customer or their agent Bank, who did not pay the renewal charges in time despite having been raised through invoices---Breach of any of the contracts, either between the card holder and or retailer, cardholder and issuer and/or between the issuer and the retailer and/or all of three, in absence of any special enactment, would be governed by S.72 of the Contract Act, 1872---Generally, failure to pay money may not entail anything more than interest, however, litmus test prescribed per S.73 of the Contract Act, 1872 was whether the loss was within the contemplation of the parties or not---If a valid card was dishonoured, the card holder may claim expenses incurred to bail him out of the situation, including the cost of borrowing if any---Cost of protesting, consequential fall out, expenses in communication, because the financial consequences, which may occur, in the particular circumstances, would be within the contemplation of parties, at the time when the contract was made between the issuer and the card holder---Credit card or similar card being not negotiable instruments, measure of damages as prescribed under S.117, Negotiable Instruments Act, 1881 could not be called in aid---Customer in the present case, admittedly was holding charge cards, which required the balance to be paid in full each month unlike credit card, which allowed the consumers to revolve their balance at the cost---Statement of accounts on record showed renewal fee claimed in April and then in May was not paid in time, therefore, customer could not claim performance of agreement to provide financial cover or services without performing reciprocal obligation on his part to pay the renewal fee in time---When a person himself failed to perform his part of the obligation, he could not compel reciprocating party to discharge its part of duty---Principles.

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. Cambell (1877)7 Ch. D.494 and Urquhart Lindsay & Co. v. Eastern Bank Ltd., (1922) 1 K.B. 318 ref.

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

----S.117---Rules as to compensation---Credit or other similar cards could not be equated with negotiable instruments, therefore measure of damages as prescribed under S.117, Negotiable Instruments Act, 1881 could not be called in aid in matters relating to such cards.

(d) Credit Card---

----Nature and implication of transaction arising out of issue and use of credit cards detailed.

Credit, charge and debit card in present day is a common and convenient device to acquire goods, services and withdrawal of cash on credit locally and internationally. It has become synonymous to cash and international currency.

Credit card is defined in the Blacks Laws Dictionary (sixth edition) as "Any card, plate, or other like credit device existing for the purposes of obtaining money, property, labour or service on card. The term does not include a note, cheque, draft, money order or other like negotiable instrument. Federal and often State statutes regulate the issuance and use of credit cards". On the web also numerous definitions are available some of which are as follows;

A plastic credit card bearing an account number assigned to a card holder with a credit limit that can be used for purchase of goods and service and to obtain cash disbursement on credit, for which a card holder is subsequently billed by an issuer for repayment of the credit extended at once or on an instalment basis. (www. Istumertccuicarclserutce.com/glossury and www. merchantseek.com/gossury).

A credit card system is a type of retail transaction settlement and credit system named after the small plastic and issued to user of the system. A credit card is different from a debit card in that the credit card issuer lends the customer money rather than having the money removed from an account.

Debit card is defined as "A plastic card used to initiate a debit transaction. In general these transactions are used primarily to purchase goods and services and to obtain cash for which the card holder assets account is debited by the issuer" en.wikipedia.org/wiki/credit-card. A credit card is a system of payment named after the small plastic card issued to user of the system. A credit card is different from a debit card in that it does not remove money from the users account after every transaction. In the case of credit card, the issuer lends money to the consumer (or the user). It is also different from a charge card (though this name is used by the public to describe credit card), which requires the balance to be paid in full each month. In contrast, credit card allows the consumer to revolve their balance, at the cost. (htp//en.wikipedia/wiki/crdit-card).

A credit card is a device usually rectangular plastic card with magnetic strip or Chip or other security feature generally issued by a banker to its customer for repetitive use to procure merchandise, service or withdraw money on credit to the extent of authorized limit. Card is issued to the customer against reciprocal arrangement to reimburse the issuer either in lump sum on each use, periodically or in instalments as and against such charges, renewal fee, interest rate or line of credit as may be agreed between them. It is convenient method of payment as an alternative to conventional mode like cash, cheque, pay order, demand draft etc.

Once a card is issued may it be credit, charge or debit card, three separate contracts come into being. Firstly between the issuer and the cardholder under which the issuer agrees to make payment to the retailer of goods, service or cash dispensers (Automated Teller Machine abbreviated as ATM), which a card holder acquires, avails or .withdraws because of use of the card. Reciprocally the cardholder agrees to reimburse the issuer for payment or liability incurred by the issuer to the merchant of goods, service or cash dispenser because of use of the card. Secondly, by accepting card the retailer of goods, service or cash dispenser enters into agreement with the card holder to provide service, goods or cash against the card. Thirdly, between the retailer of goods, service or cash teller, and the card issuer under which, the retailer of goods, service or cash teller agrees to honour the card.

Once card is issued and as long as it is valid the issuer enters into a contract to provide financial cover and service against the use of the card of the services or goods availed by the card holder. In the event, a valid card is denied, the card issuer becomes liable for breach of contract to provide cover for availing goods or service. In case the retailer of goods or service declines to honour the valid card, he may not only be exposed to damages but also he would be liable to reimburse loss as may be claimed and recovered by the card holder from the issuer.

Although, dishonour of card has close semblance to dishonour of a negotiable instrument, parameters to claim compensation in respect of negotiable instruments are circumscribed in section 117 of the Negotiable Instruments Act. Credit or other similar card could not be equated with negotiable instruments, therefore, measure of damages as prescribed under section 117 of the Negotiable Instruments Act cannot be called in aid. In absence of any special enactment defining rights and obligations of issuer and card holder breach of obligations arising out of use of card would be regulated by general law of damages contained in section 73 of the Contract Act.

Use of credit and other like cards has become widespread and common. It has virtually substituted cash and other conventional modes of payment, increasing dependence on such type of card caries with it concomitant conveniences and inconveniences. Controversies arising out of blockage, freezing, misuse, excessive billing, over charging, dishonouring of cards are but few instances that are subject matter of litigation worldwide and Pakistan is no exception. There is no reason why damages or injury that may arise out of breach of agreement to honour the card may not be considered as naturally arising according to the usual course of things form the breach of contract and thus could be recoverable in the ordinary circumstances. Likewise, a party to contact of credit card may also recover special damages provided a case is made out. Special damages are awarded in cases, as may reasonably be supposed to have been in contemplation of both parties at the time of contract. Burden is on the person alleging loss, damages or injury.

Unlike other countries (Consumer Credit Act, 1974. in United Kingdom) relationship, between the card holder, card issuer and the retailer of service or goods is not yet formally regulated in Pakistan under any statute. However, the State Bank of Pakistan has issued Prudential Regulations for Consumer Financing (2003). Regulations 0-1 to 0-5 and Regulations R-7 to R-8, deal with credit card. The embryonic Prudential Regulations hardly provide sufficient matrix to deal with complex situation that may arise out of issuance and use and dishonour of such cards, it is high time to legislate on the subject. Until legislation is made, State Bank may at least consider framing more comprehensive regulations regulating rights and obligations inter se the card holders, issuers and goods or service providers.

(e) State Bank of Pakistan Prudential Regulations for Consumer Financing, 2003---

----Regulations 0-1 to 0-5 and Regulations R-7 to R-8---Credit card---High Court deserved that unlike other countries relationship, between the card holder, card issuer and the retailer of service or goods is not yet formally regulated in Pakistan under any statute---State Bank of Pakistan Prudential Regulations for Consumer Financing which deal with credit card hardly provide sufficient matrix to deal with complex situation that may arise out of issuance and use and dishonour of such cards---It is high time to legislate on the subject---Until legislation is made, State Bank may at least consider framing more comprehensive regulations regulating rights and obligations inter se the card holders, issuers and goods and service providers.

Iqbal Kazi for Appellants.

Syed Saeeduddin Nasir for Respondent.

Date of hearing: 8th February, 2007.

2007 C L D 1044

[Karachi]

Present: Mushir Alam and Muhammad Afzal Soomro, JJ

AL-KARAM TEXTILE MILLS LTD. through Duly Authorized officer----Appellant

Versus

MEHTAB CHAWALA and others----Respondents

H.C.A. No.236 of 2006, decided on 5th September, 2006.

Trade Marks Act (V of 1940)---

----Ss.21, 22, 25 & 26---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Dispute as to trade mark--Application for seeking restraining orders against defendants---Applicant had contended that it had adopted and was using the trade mark on its goods, which mark had acquired substantial good-will within and outside Pakistan---Case of applicant was that defendants had adopted identical and confusingly similar mark which was causing confusion and deception amongst customers of applicant particularly and in public generally---Claim of defendants was that they had adopted the Trade Mark and were operating the same before applicant entered the field---Defendants had claimed that even applicant had been dealing with them since 2002, but no objection had been ever raised by applicant in that respect---Defendants had alleged that applicant had copied trade mark in question and managed to obtain its registration by misrepresentation---Applicant did not dispute that defendants had adopted the trade mark in question prior to applicant---Applicant acquired whatever right in the trade mark in question, was subject to limitation contained in S.21 Trade Marks Act, 1940 and it could not be argued that since applicant had filed suit when Trade Marks Ordinance, 2001 was in the field, it was entitled to adopt the trade mark in question---Fact remained that rights acquired by the parties were under the predecessor Trade Marks Act, 1940 and such rights would continue to be governed under successor Trade Mark Ordinance, 2001---In absence of any error impugned order could not be interfered with.

1987 9MCR 1090; AIR 1980 Dehli 254; National Electric Fans Manufacturers v. S. Muhammad Din and Son's Ltd. 1980 SCMR 97; General Biscuit v. English Biscuit Manufacturer (Pvt.) Ltd. 2004 CLD 680 and Abdul Wasim v. Haico and others 2002 CLD 623 rel.

Khuram Gul Ghory for Appellant.

Saleem Ghulam Hussain for Respondents.

2007 C L D 1047

[Karachi]

Before Gulzar Ahmed, J

PFIZER LABORATORIES LIMITED----Petitioner

Versus

PARKE DAVIS & COMPANY LIMITED---Respondent

J. Miscellaneous Petition No.29 of 2001 and C.M.A. No.1725 of 2003, decided on 21st May, 2007.

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

----Ss.284, 285, 286, 287 & 288---Petition seeking sanction of the scheme of arrangement providing for amalgamation of two Companies with usual transfer of whole of the undertaking, business, assets, properties, rights, liabilities and obligations and consequential prayers was contested by minority shareholders of both the companies and arrangement was declined by the Court with directions that exercise of valuation be conducted afresh through an independent auditor, who should evaluate the companies as ongoing concern and for the purpose of valuation the factors such as tangible and intangible assets and every factor that concerns the valuation be taken into consideration---Objectors had attacked the valuation report of the auditors and contended that the report did not comply with the Court order as the ' auditors had not valued the company as an ongoing concern, and not taken factors into consideration provided in the order of the Court---Companies objected to the maintainability of the application of the objectors on the grounds, that order directing fresh valuation did not provide for filing objection to the valuation report of the auditors and on pronouncement of judgment the Court had become functus officio and that application of objectors was based upon mala fide---Validity---Held, when the Court in its order required anything to be done providing parameters, a party to the proceedings was always entitled to agitate that the thing done was not consistent with the Court order and may seek its compliance in its true terms and spirit---This was so because the thing done under the Court order remained justiciable until the same reached its logical conclusion of either being accepted by the parties or operated as an acceptance by law---Auditors had followed the formula of dividend growth model whereby per share value had been advised to be reasonable price of the company at which the majority might require from the minority share-holders--Grievance of the objectors was that the value of their shares may be derived on dividend growth model by excluding the right shares issued to the parent company which exercise, probably, was not possible for the reason that, there was no proceedings before the Court for the ratification of the register and it was not made clear as to on what principle of law the same could be done in the present proceedings---Facts and circumstances; however, showed oppressive treatment to minority share-holders of the company inasmuch as they had not been paid return on their investment and the value of their shares had receded over the period and they seemed to be entitled to some measure of compensation on acquiring from them their shareholding---Oppressive conduct of the subsidiary and its minority shareholders by the parent company was established---High Court in circumstances directed that price of the objectors' shares be worked out by the auditors minusing the element of oppression on the dividend growth model which model was accepted by the objectors---Auditors were directed to hear the objector and the company and accordingly give their report at the earliest---Principles.

(b) Administration of justice----

---When the Court in its order required anything to be done providing parameters, a party to the proceeding was always entitled to agitate that the thing done was not consistent with the Court order and may seek compliance of it in its true terms and spirit---Such was so because the thing done under the Court order remained justiciable until the same reached its logical conclusion of either being accepted by the parties or operated as an acceptance by law.

Scottish Co-operative Wholesale Society Ltd. v. Meyer and another (1959) AC 324 rel.

Qazi Faez Issa for Petitioner.

Muhammad Ali Sayeed and Shehnshah Hussain for Objectors.

2007 C L D 1092

[Karachi]

Before Mushir Alam, J

UNITED MARINE AGENCIES (PVT.) LTD. and others---Plaintiffs

Versus

TRUSTEES OF THE PORT OF KARACHI and others---Defendants

Suits Nos.693 to 695 of 1997, decided on 7th March, 2005.

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

----Ss.87 & 43---Bar on suit---Scope---Limitation---Bar under S.87 of the Karachi Port Trust Act, 1886 would be attracted in case firstly, where the act done or purported to have been done, meaning thereby that where past act of the Karachi Port Trust had been impugned; secondly where the impugned action was done or purported to have been done under the Act itself or the rule and regulations framed thereunder---Limitation to challenge the act done or purported to have been done under the Act was six months from the date of accrual of cause of action---Challenge to notification, charging and collecting outer anchorage charges at the Karachi Port and recoveries thereunder, was not only a past act but also taken under the Act and thus was hit by S.87 of the Act on both counts namely, for want of statutory notice, as well as limitation.

(b) Karachi Port Trust Act (VI of 1886)---

----S.87---Agents being not liable for port dues, therefore, cause of action had accrued to the plaintiff against the intended act of Port Trust seeking recovery against agents.

(c) Karachi Port Trust Act (VI of 1886)---

----Ss.43 & 43-A---Constitution of Pakistan (1973), Art.7---Imposition of levy etc.---No authority could impose, levy or collect tax or cess unless empowered by to law to do so---No tax, levy, charges, fees or cess could be imposed or recovered without there being any statutory sanction---Imposition of tax, levy, charges, fees or cess is a sovereign function and could only be exercised under the mandate and subject to limitation provided under the law.

(d) Karachi Port Trust Act (VI of 1886)---

----Ss.43A & 43-B---Scope of S.43-A, Karachi Port Trust Act, 1886---Section 43-A provides for the scale of charges for the use of dock and other related services as detailed therein---Scale of tax, fee, cess, charges, tolls, dues or rates as may be framed or altered by the Board of the Trust, under S.43-A become enforceable under law only subject to the sanction by the government and on its publication in the official gazette.

Zafar Enterprises v. KPT 2003 YLR 205 ref.

(e) Karachi Port Trust Act (VI of 1886)---

----Ss. 43 & 43 -A-Notification S.R.O. No.148 (KE/93) dated 2-8-1993---Charging and collecting outer anchorage charges at Karachi Port---Validity---Provisions of Ss.43 & 43-A, Karachi Port Trust Act, 1886 at the relevant time, only provided for power to frame or sanction scales for tolls or charges as wharves, Quays, moorings, stages, jetties, piers and docks---Said charging provisions at the relevant time did not cater for the imposition and/or collection of charges and fees for the vessel using anchoring area at outer anchorage within port limits, therefore, on the face of it, item No.(d) of Table X of the Notification 148 (KE)/93 dated 2-8-1993 prescribing charges for the "vessel using anchoring area at outer anchorage, within port limits" was not authorized under the Karachi Port Trusts Act, 1886---Notification 148(KE)/93 dated 2-8-1993 imposing fee or charges on vessel entering outer anchorage within port of Karachi, had no sanction of law, thus was without lawful authority, therefore, could not be sustained on this ground atone.

(f) Karachi Port Trust Act (VI of 1886)---

---S. 43-B---S.R. O. 148(KE)/93/27 dated 2-8-1993---S.R.O. 129(KE)/94 dated 12-7-1994---S.R.O. 12 9(KE)/93/27 dated 28-7-1994, S.R.O. 131 (KE)/95 dated 15-11-1995---Imposition of charges etc.--Section 43-B, Karachi Port Trust Act, 1886 provided that, scale of fee or any alteration thereof, was enforceable under the law provided it qualified two conditions viz. sanction of the government was obtained and the scale of fee, charges levies etc. or any alteration thereof was published in the official Gazette---Proposed corrigendum notification superseding S.R.Os. did not receive the sanction of the Government, therefore, question of its publication never arose and in terms of S.43-B of the Act, unless a notification after receiving sanction of the government, was published in the official Gazette, it had no sanction of law---Karachi Port Trust, on the strength of its Board Resolution at the relevant time was bereft of legal sanction to derive any benefit---Where the very imposition or charge, fee or tax etc. was beyond the scope of statutory authority or in colourable exercise of authority, irrespective of its publication in the official gazette, would neither sanctify nor legitimize the same.

(g) Karachi Port Trust Act (VI of 1886)---

----Ss.43(d) [as added by Karachi Port Trust (Amendment) Ordinance (XLIV of 1994), dated 13-7-1994]---S.R.O. No.129(KE) / 94 dated 12-7-1994---Scale of charges and fees for vessels entering port limit or approaches for the purposes of anchoring and victuals---S.R.O. No.129(KE)/94 dated 12-7-1994 imposing the charge, having been published in the official Gazette after the insertion of clause (d) to S.43, Karachi Port Trust Act, 1886, there was no doubt that such notification was validly issued and had statutory backing.

(h) Karachi Port Trust Act (VI of 1886)---

----S.43--Scale of charges and fees for vessel entering port limits or approaches for the purposes of anchoring and victuals---Contention of the plaintiff was that no services had been provided by the Port Trust---Held, mere fact that the plaintiff had not availed of any service, it could not be said that no services were provided.

(i) Karachi Port Trust Act (VI of 1886)---

----S.43---S.R.O. No.131(KE)/95, dated 15-11-1995---Scales of charges and fees for vessel entering port limits or approaches for the purposes of anchoring and victuals---Question was as to whether corrigendum notification dated 15-11-1995 was effective from the date it was issued or from 28-7-1994---Held, any imposition of levy, tax, fee or charge may be illegal or void for more than one reasons, may it be on account of lack of statutory sanction, want of jurisdiction, excess or colourable exercise of jurisdiction, it may be validated and legalized either prospectively or even retrospectively by according statutory sanction or by conferring appropriate jurisdiction on the authority competent to impose a levy, tax, fee or charge under the law---Principles.

Quetta Textile Mills Ltd. v. Province of Sindh PLD 2005 Kar. 55; GOP v. Sikandar Khan PLD 1987 Pesh. 68: Al-Haj Muhammad Yasmeen Qureshi v. Province of East Pakistan and others PLD 1963 Dacca 1014 and Idrees Ahmad v. Fida Ahmed Khan PLD 1985 SC 376 ref.

(j) Interpretation of statutes---

---Notification---Determination of real nature of statute/ notification---Principles detailed.

It is not the name, title or the nomenclature assigned to a Notification or Statute that determines its real nature or characteristic. It is the tenor, intent and purpose, for which a statute or notification is issued that classify it to be correcting, annulling, amending, repealing, consolidating or harmonizing statute or notification.

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

----S.21---Jurisdiction of statutory functionary to frame law and issue notification and corrigendum---Scope and extent---Corrigendum---Effect---Principles.

When laws enjoins jurisdiction on a statutory functionary to frame law and issue a notification then such jurisdiction also includes power to add, amend, vary or rescind the law or notification so framed or issued, of necessary implication, such jurisdiction also includes power to issue corrigendum as well. Authority to issue corrigendum is but incidental to authority to make, add, amend or rescind a statue or notification.

By corrigendum Notification, it implies, some misprint, erratum, typo or slip has occurred in earlier notification, that is intended to be rectified, corrected or omission is remedied.

Corrigendum, Notification or statute in effect merely corrects the mistake or remedies the omission occurring in the preceding Notification. It does not add or supplement any new state of affairs, as its very object is to correct the error and not to cancel or rescind it. The validity of the notification originally issued will, therefore, stand in letter and spirit. If it is a corrigendum, it will not change the complexion of the original notification. However, if any exemption is added either extending or taking away some privilege or concession, then it may be any thing other than mere corrigendum.

GOP v. Sikandar Khan PLD 1987 Pesh. 68 ref.

(l) Interpretation of statutes---

---Giving retrospective or prospective effect to statute---Competence---Held, it was a sovereign prerogative to enact a statute or issue a notification either with retrospective or prospective effect.

(m) Notification---

----Corrigendum notification---Nature---Predecessor, notification was re-enacted verbatim, simply by adding " except those vessels using outer anchorage for the duration of their waiting for berthing turn" and it did not seem that, any correction or rectification of any error, mistake, typo or slip had been effected---What was achieved by such corrigendum was that, it in fact added the exemption clause---Name corrigendum applied to the notification providing exemption, held, was a misnomer and not appropriate, it was by nature and tenor more an amending and revising notification.

(n) General clauses Act (X of 1897)---

---S.6---Repeal, effect of---Principles.

Generally the Courts do not lean in favour of the repeal readily. Repeal of law is not to be inferred by implication unless it is clearly manifest by the intention of legislation. Applying general principles of interpretation of statutes, a repeal of an enactment does-not affect the operation of anything duly done or suffered thereunder or affects any right, privilege according or incurred under any enactment so repealed unless of course, a contrary intention appears in the repealing statute or notification itself.

Repeal unless the contrary intention appears does not affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder. Nor does it affect any right privilege, obligation or liability acquired, accrued or incurred under any enactment or notification so repealed, as if the repealing Act, notification or regulation had not been passed.

(o) Karachi Port Trust Act (VI of 1886)---

---S.89-Agent's responsibility to discharge the liability incurred by the vessels on account of fee/charges for using anchoring at the outer anchorage within port limits---Extent.

On bare reading of S.89 Karachi Port Trust Act, 1886, it appears that persons holding jointly and severally responsibility are "The Master, Agent and owner of a vessel" only for the acts enumerated in the provision itself namely (a) for the damage caused by the vessel to the property or servant of 'the Port, (b) mis-declaration of particulars of vessel and for disobeying the particulars specified for handling of vessel in Karachi Harbour and lastly (c) for sinking or grounding of any vessel or causing damage to any other vessel in the Port limit or approaches and for removal of the vessel. Liability for the port dues does not extend to Agent under the referred provision.

The liability of the Shipping Agent may be extended to the imposed extent it is spelled out from the agency agreement or by any statutory provision

From the scheme of the Statute it can safely be deduced that each vessel, through master or owner is liable to discharge and pay Port dues and charges. Liability of one vessel or principal, cannot be enforced against the Shipping Agent unless of recourse such agent undertook or is bound by some declaration.

Global Tradeways Ltd. v. Tsavliris Russ (World Salvage & Towage) Ltd. 2004 YLR 2581 ref.

(p) Karachi Port Trust Act (VI of 1886)---

---S.43 [as amended by Karachi Port Trust (Amendment) Ordinance (XLIV of 1994)]---Vires of amendment-Amended provisions of S.43, Karachi Port Trust Act, 1886 in any manner was not beyond the legislative competence or in conflict with any provision of the Constitution or any other superior statute---Principles.

Ms. Sana Minhas for Plaintiffs.

Salman Hamid for Defendants.

Name of Defendant No.2 called absent.

Date of hearing: 26th October, 2004.

2007 C L D 1120

[Karachi]

Before Muhammad Akhtar Shabbir and Syed Sakhi Hussain Bokhari, JJ

SHAHID HAMID HUSSAIN---Appellant

Versus

TRUST LEASING CORPORATION LIMITED through Chief Executive and 5 others---Respondents

E.F.A. No.368, 594 of 2005, decided on 8th March, 2007.

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

----S.19---Civil Procedure Code (V of 1908), S.47 & O.XXI, Rr.97, 103---Execution of decree---Objection---Title of suit property---Determination---Suit property was claimed to be owned by objector/petitioner, instead of judgment-debtor---Executing Court, after framing of issues and recording of evidence, dismissed objection petition on the ground that name of objector/petitioner was entered in the sale-deed through forgery and interpolation---Validity---Objector/petitioner failed to produce any worthwhile evidence in support of his case---Executing Court also found that name of objector/petitioner had been inserted in the sale deed later on---Relevant record showed that property in question was purchased by judgment-debtor and entries of record had been changed after rubbing the original writing---Judgment passed by Executing Court was well reasoned and there was no illegality or infirmity in it---Executing Court had rightly decided the issues and findings of the court on all issues were affirmed---Judgment-­debtor was aunt of objector /petitioner and she had not paid decretal amount and it seemed that appeal had been filed only to avoid payment of decretal amount---Appeal was dismissed in circumstances.

Ms. Ambreen Moin for Appellant.

Muhammad Atif Amin for Respondents.

2007 C L D 1129

[Karachi]

Before Zia Perwaz, J

NAUSHAD SHAMSUDDIN FANCY and another---Plaintiffs

Versus

NEW JUBILEE INSURANCE COMPANY LIMITED and others---Defendants

Suit No.572 of 1978 and Suit No.472 of 1993, decided on 7th August, 2003.

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

----Ss. 11, 42 & 55---Limitation Act (IX of 1908), S.10---Suit for declaration and mandatory injunction with all accruing benefits with respect to shares of a company---Limitation---Entrustment of disputed shares to the business concern of the person who was to undertake arbitration proceedings to decide the ownership of shares amounted to creation of trust---Clause (a) of S.11, Specific Relief Act, 1877 & S.10, Limitation Act. 1908 envisaged that where a trust is created, no period of limitation would apply.

Deputy Custodian of Enemy Property v. Karachi Electric Supply Corporation PLD 1975 Kar.21 ref.

(b) Limitation Act (IX of 1908)---

----S.10 & Art 145---Specific Relief Act (I of 1877). Ss. 11, illus (a), 42 & 55---Suit for declaration and mandatory injunction with all accruing benefits with respect to shares of company---Limitation---Effect of provisions of S.10 and Art.145, Limitation Act, 1908---Where there was entrustment of disputed shares, S.10 and Art.145 of Limitation Act, 1908 would be attracted to the case---Under S.10, Limitation Act, 1908, no suit against a person, in whom the property had become vested in trust, shall be barred by any length of time---Question arose as to whether, in circumstances, a trust was created within meaning of S.10, Limitation Act, 1908 or such a trust could be termed as a "depository" as described in Art.145, Limitation Act, 1908---Significance of the word "trustee" as described in S.10, Limitation Act, 1908 and word "depository" as described in Art.145 of the said Act required consideration---Entrustment of disputed shares could be either termed as "entrustment" within the meaning of S.10, Limitation Act, 1908 read with S.11, Specific Relief Act, 1877 or it could also be termed as "depository" within the meaning of Art.145, Limitation Act, 1908; in case of former no period of limitation applied whereas in case of latter Art.145 attracted a period of 30 years.

Bibhutibhushan Datta v. Anadinath Datta ILR 61 Cal; Promotho Nath Mullick v. Prodymno Kumar Mullich 1921 CWN 772; Lala Gobind Prasad v. Chairman of Patna Municipality 6 CLJ 535; Kishtappa Chetty v. Lakshmi Ammal 1923 Mad. 578; Deputy Custodian of Enemy Property v. Karachi Electric Supply Corporation PLD 1975 Kar.21 and ILR 62 Cal. 393 ref.

(c) Limitation Act (IX of 1908)---

----S.10 & Art.145---Specific Relief Act (I of 1877), Ss.11, 42 & 55---Suit for declaration and mandatory injunction with all accruing benefits with respect to shares of a company---"Deposit" and "depository"---Meaning---Rights and duties of "depository" stated.

The term "deposit" is borrowed from the civil law, and is a word of large and varied signification. In the technical legal sense a deposit is a naked bailment of goods, to be kept for the depositor without reward, and to be returned when he shall require it; and the term "depositum" a term used in the civil and common law, is given the same meaning. The term "deposit" is also used to denote the thing deposited.

A depository is the person receiving a deposit; and the term "special depository" has been held to mean merely a bailee whose possession is the possession of his principal.

A depository is bound to deliver the res to the depositor or his representative, or to his order, except where, as stated infra, delivery to a third person is authorised. Any delivery made pursuant to the terms of the deposit relieves the depository from further liability; but a misdelivery of the res or its decrease renders the depository liable therefore, unless he has a sufficient excuse for his failure to deliver properly.

Corpus Juris Secundum, Vol.26A, at p.198 ref.

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

----O. II, R.2 & O. VI---Specific Relief Act (I of 1877), Ss.11, 42 & 55---Suit for declaration and mandatory injunction with all accruing benefits with respect to shares of a company--Pleadings-One cannot be permitted to take one plea in the pleadings and then lead evidence to prove an assertion which is diametrically opposed to one's own pleading as this amounts to destroying the very cause of action on which the suit was based---Plaintiff having failed to lead evidence in support of his plea made in the plaint is not entitled to any relief---Principles.

Habib Khan v. Mst. Taj Bibi and others 1973 SCMR 228; Ala-ud-Din v. Mst. Farkhanda Akhtar PLD 1953 Lah.131; Binyameen and others v. Chaudhry Hakim and another 1996 SCMR 336: Ghulam Mohayyuddin and others v. Sher Khan and others 1970 SCMR 2000 and Sughran Bibi v. Mst. Aziz Begum and others 1996 SCMR 137 ref.

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

----Ss. 11, 42 & 55---Suit for declaration and mandatory injunction with all accruing benefits with respect to shares of a company---Transfer of shares on the basis of prior possession in one's name irrespective of his proving his title to the disputed shares---Validity, held, to seek transfer of the said shares, the person has to prove the legal source by which he acquired possession thereof which is required to be examined in context with evidence of the prior transaction of sale of disputed shares---Any subsequent transaction even though entered into for valid consideration after a prior similar transaction in favour of any person for lawful consideration, cannot be ignored---Mere fact that someone came into possession of the disputed shares would not confer title in his favour unless he established his own title to the disputed shares for lawful consideration.

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

----Ss. 11, 42 & 55---Suit for declaration and mandatory injunction with all accruing benefits with respect to shares of a company---Dispute as to ownership/title of share by three claimants---Mere lodging of the disputed shares by one of such persons would not stop the Court to go into the question of title of disputed shares---Title to shares in the presence of cogent documentary evidence cannot pass to a person who merely holds its possession in respect of which there is a dispute---Any view to the contrary would render the law of ownership a nullity as any person who comes in custody of shares with blank transfer deeds and lodges them with the company for transfer would become owner of the shares irrespective of the fact whether he came in custody of the shares lawfully or not---In case of a controversy as to the lawful ownership, of the disputed shares, unless a claimant proves his right to the shares, he, by merely having possession of the disputed shares would not be declared transferee of such shares---Three persons admittedly in the present case, had claimed title to the disputed shares, therefore, unless the rival claims are properly adjudicated, no right to the disputed shares could be claimed by anyone---Disputed shares, admittedly were specifically sent to someone to be kept in trust untill the dispute of ownership was resolved, therefore, one out of the three claimants could not claim any right in the disputed shares only because at some earlier stage he came in custody of the disputed shares.

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

---Arts. 132 & 133---By not submitting himself for cross-examination the affidavit-in-evidence given loses its evidentiary value---If a party did not produce any evidence in support of the contents of its written statement then the averments contained in the written statement could not be treated as evidence.

Muhammad Noor Alam v. Zair Hussain and others 1988 MLD 1122 ref.

(h) Administration of justice---

----In the absence of any rule or law on the subject, Court has to follow rules of justice.

(i) Electronic Transactions Ordinance (LI of 2002)---

---Ss. 12, 13, 14, 15 & 16---Scope and application of Ss.12, 13, 14, 15 & 16 of Electronic Transactions Ordinance, 2002.

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

---S.11--Civil Procedure Code (V of 1908), O.11, R.2 & O.VI---Suit for declaration and mandatory injunction with all accruing benefits with respect to shares of a company--Inconsistent pleadings---Principles---Rival claims of the parties are examined and weighed and the claim of that party is accepted whose claim seems more probable than the other---Evidence of the defendant, in the present case, was more convincing and supported by admitted documents while plaintiff s evidence was not only full of contradictions but was based on inconsistent pleadings which were not permissible in law---Defendant thus, had established that he was lawful purchaser of disputed shares and was entitled to their transfer in his name.

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

----O. II, R.2 & O. VI---Pleadings---Principles of debarring a party from deviating from its pleadings has not to be flouted, the object of which is firstly, that all claims should be disclosed in the pleadings to enable the opposing party to rebut such claim through evidence, secondly, if a person makes one claim in his pleadings i.e. plaint or written statement and then attempts to establish a claim contrary to his own pleadings then it may be inferred that in case of shifting stand the plea is not based on truth---Wisdom leading the Legislature to enact the provisions of O.11, R.2, C.P.C. and O. VI, C.P.C. was to prevent a party from adding to or deviating from the pleadings.

(l) Liability---

----Acknowledgment of liability is to be made by the person who has incurred such liability.

I.H. Zaidi for Plaintiff.

Anjum Ghani for Defendant No.1.

Arshad Tayebaly for Defendant No.6.

Liaquat Merchant for Defendant No.7.

Faisal Arab for Defendant No.10.

Qadir H. Saeed for Defendant No.14.

Date of hearing: 28th January, 2002.

2007 C L D 1210

[Karachi]

Before Anwar Zaheer Jamali and Maqbool Baqar, JJ

ANJUM RASHID and others---Appellants

Versus

SHEHZAD and others---Respondents

H.C.As. Nos.67, 68, 69, 70, 71 and 670 of 2002, decided on 28th June, 2006.

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

----O.XXI, Rr.84, 85, 90 & S.12(2)---Ex parte money decree and sale---Such sale was set aside on an application under S.12(2), C.P.C.---Setting aside of sale, in circumstances, would not result in nullifying the impugned sale.

Al-Hassan Feeds and another v. United Bank Ltd. and 6 others 2004 CLD 275; Messrs Chawla International v. Habib Bank Limited 2003 CLD 956; Mian Abdul Khalid v. M. Abdul Jabbar Khan and others PLD 1953 Lai. 147; Janak Raj v. Gurdial Singh and another AIR 1967 SC 608 and Chota Nagpur Banking Association v. C.T. M. Smith and another AIR (30) 1943 Pat. 325 ref.

(b) Company---

----Legal entity---Company is a separate entity distinct from its Directors and no shareholders/or Director of a company can be said to be the owner of any particular piece of a properly in which the company has an interest---Such distinction has to be clearly observed between the company as a legal entity and its rights on the one hand and individual shareholders and their rights on the other---Such, it cannot be said that the property in question is owned by its shareholders or Directors.

Mohan Singh Oberon v. Rai Bahadur Jodha Omal Kuthalla PLD 1961 SC 6; The Eastern Federal Union Insurance Company v. State Life Insurance Corporation of Pakistan 1987 CLC 1408 and EBM Company Ltd. V. Domanion Bank AIR 1937 PC 279 ref.

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

----S.50---Property owned by a wife and sons of a judgment debtor, or for that matter by any other person cannot be said to be a properly of such person.

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

----O.XXXI, Rr.85 & 866--Money decree---Execution proceedings---Attachment and sale of property--Appellants in the present case, were tenants in respect of the property and the machinery installed therein, were evidently owned by them and there was absolutely no question of such machinery being attached or sold and of the appellants being dispossessed through execution proceedings and as such, the orders of attachment and sale of the machinery in question and consequential dispossession of the appellants were absolutely illegal, without jurisdiction and void and was not even required to be set aside--Auction purchaser could not therefore seek to enforce any right in respect of either of the factory premises or the machinery in question on the basis of the impugned sale.

S. M. Jakati and another v. S.M. Borkar and others AIR 1959 SC 282 and Chengalraya Reddy and others v. Kollapuri Reddi AIR 1930 Mad. 12 ref.

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

----O.XXI, Rr.85 & 86---Default by auction purchaser---Effect---Offer of purchase of property was accepted by the executing court---Auction purchaser having defaulted in complying with the provision of O.XXI, R.85, C.P.C., could not escape the consequence as envisaged by O.XXI, R.86, C.P.C. which required that in the event of default in depositing the full amount of purchase price within 15 days from the sale of the property, the Court may, after defraying the expenses of the sale, forfeit to the Government, the initial deposit and shall release the property and further that defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may subsequently be sold---When the auction purchaser defaulted in depositing the balance purchase price, as required by O.XXI, R.85, C.P.C. the sale stood completely wiped out and became a nullity and was not even required to be set aside---Fact that amount was deposited, within fifteen days of the letter from the Nazir/official Assignee would not wipe out the default, as it was the bounded duty of the auction purchaser to make the deposit within fifteen days of the acceptance of his offer and no demand was required to be made in this regard---Court was not possessed of any power to enlarge the time fixed under the rules.

Al-Hassan Feeds and another v. United Bank Ltd. and 6 others 2004 CLD 275 and Messrs Chawla International v. Habib Bank Limited 2003 CLD 956 distinguished.

Kedar Nath Goenka v. Munshi Ram Narain Lal and others AIR 1935 Privy Council 139; Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim- Commercial Bank Limited, Islamabad and another PLD 1993 Lah. 706; Messrs Dawood Flour Mills and others v. National Bank of Pakistan 1999 MLD 3205; National, Bank of Pakistan v. Messrs Nasir Industries and others 1982 CLC 388 and Manilal Mohanlal Shah and others v. Sardar Sayed Ahmed Sayed Ahmad and another AIR 1954 SC 349 ref.

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

----O. XXI, Rr.90, 85 & 86---Money decree---Execution proceedings---Attachment and sale of property---Default by auction purchaser---Limitation---Attachment and sale of the properties was without, jurisdiction and void ab initio and in consequence of the default committed by the auction purchaser in depositing the balance price, the purported sale was rendered a nullity--Such attachment and/or sale was not even required to be set aside and thus no application in that regard was required to be moved---Appellants in the present case, were not parties to the proceedings between judgment debtors and the decree holder nor were they aware of the judgment/and decree, for enforcement whereof the execution proceedings were initiated by the decree holder, or of any orders passed by the executing court till the date they were dispossessed by the official Assignee, therefore, there was no question of their approaching the Executing Court, any time earlier than the date of their knowledge---Attachment and sale of the property and order for taking over possession of the property of appellants being void, the period of limitation available to the appellants was three years from the date of their dispossession.

Haji Hussain Haji Dawood and others v. M.Y. Kherati 2002 SCMR 343; National Electric Company of Pakistan v. Allied Bank of Pakistan Ltd. 1991 CLC 192; National Bank of Pakistan v. Nasir Industries 1982 CLC 388 and Chengalraya Reddy and others v. Kollapuri Reddi AIR 1930 Mad. 12 ref.

(g) Contempt of Court---

----Jurisdiction of courts to take action for contempt of their own authority---Scope---Execution proceedings of money decree---Attachment and sale of property---In the present case possession of their respective tenements was reverted back to the appellants on the condition that they shall not remove the machinery therefrom, and such restoration was subject to their furnishing security of Rs.50,000 each along with undertaking to the effect that they shall not remove any machinery from the tenements---Attachment of sale in question being wholly without jurisdiction and even otherwise rendered void the appellants removed the machinery under a bona fide impression that the setting aside of judgment and decree had resulted in termination of the proceedings before the Executing Court and that all orders stood vacated including the one of restricting the appellants not to remove the machinery etc.---Held, forfeiture of entire security of appellants, in that behalf in circumstances, was too harsh--Jurisdiction of Superior Courts to take action for contempt of their own authority was to be jealously guarded but sparingly` exercised and that where the conduct of a person, apparently defying orders of the court, left room for doubt with regard to his intention and belief and it was possible that he acted either mistakenly or on wrong but honest notions about his right, the benefit of doubt should ungrudgingly ,be given to him---High court modified the order of forfeiture of security to the extension of .Rs.5, 000 each with the direction that forfeiture shalt be in favour of the Government and auction purchaser was not entitled to the same in circumstances.

S.M. Yousaf v. S.K. Rahim and others PLD 1969 SC 77 ref.

Mansoorul Arfin for Appellants.

Mushtaq A. Memon for Respondents.

Dates of hearing: 12th, 19th, 25th, 27th, August, 2004, 22nd, 30th September, 2004, 1st, 4th, 18th, October, 2004, 6th, 13th, 20th, 28th, December, 2004 and 7th March, 2005.

2007 C L D 1239

[Supreme Court of Pakistan]

Present: Sardar Muhammad Raza Khan, Ch. Ijaz Ahmed and Hamid Ali Mirza, JJ

WAJID SAEED KHAN---Petitioner.

Versus

ABDUL QADOOS KHAN SWATI and others---Respondents

Civil Petition No.272 of 2007, decided on 10th May, 2007.

(On appeal from the judgment dated 25-1-2007 of the Peshawar High Court, Abbottabad Bench, passed in F.A.B. No.6 of 2006).

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

---Art. 185(3)---Remand order passed by High Court---Validity---Supreme Court would not interfere with such order.

Rehmatullah's case 1968 SCMR 337 rel.

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

---S.25---State Bank of Pakistan having powers to control advances made by Banking Companies.

(c) Administration of justice---

---Judicial Officers are duty bound to decide cases/applications/objections after judicial application of mind.'

Gouranga Mohan Sikdar's case PLD 1970 SC 158 and Mollah Ejahar Ali's case PLD 1970 SC 173 rel.

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

---S.24-A---Public functionaries are duty bound to decide applications of citizens after judicial application of mind.

Airport Support Services v. The Airport Manager 1998 SCMR 2268 rel.

Abdul Shakoor Khan, Advocate Supreme Court for Petitioner.

Nemo for Respondents.

Date of hearing: 10th May, 2007.

2007 C L D 1247

[Karachi]

Before Amir Hani Muslim and Munib Ahmad Khan, JJ

NOOR ELLAHI---Appellant

Versus

Messrs TRADING CORPORATION OF PAKISTAN (PVT.) LTD. and 4 others---Respondents

Admiralty Appeal No. 5 of 2007, decided on 9th June 2007.

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

---O.XXI, Rr.77 & 92--Admiralty jurisdiction of High Courts Ordinance (XLII of 1980), Ss.3 & 7---Sale of notice/tender---Authority of Court in providing an opportunity to the contesting bidders towards improvement of the auction price on the ground that Court had to follow O.XXI, Rr.77 & 92, C.P.C.---Validity---Sale directed by Court through tender/sale notice was different in' kind, as sale was never completed before official assignee/ commissioner nor he had power to confirm as that only rested with the Court and that the balance of the purchase price was to be paid within 15 days from the date of confirmation by the Court and not before auction after completion of bids---Factual position, that balance was not paid before the Official Assignee/Commissioner or that the bidder did not participate on the terms and conditions of tender/sale notice was not being dented.---Sale of notice, in circumstances had no match with O.XXI, R.77, C.P.C. hence no reference could be made to R.77 of O.XI, C.P.C.---Principles.

PLD 1987 SC 512; AIR 1940 Madras 42; AIR 1960 Andra Pardesh 429; AIR 1930 Lah. 236 and 2005 CLD 1737 distinguished.

1981 SCMR 108 rel.

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

---O.XXI, Rr.92 & 77---Sale of notice/tender--Authority of Court in providing an opportunity to the contesting bidders towards improvement of the auction price was challenged on the ground that Court had to follow O.XXI, Rr.77 & 92, C.P.C.---When in Court proceedings, through Court any sale is conducted then the Court, acting as custodian of the goods/property, has to see and watch carefully the interest of the person whose goods/property has been sold in any manner and it becomes a duty of the Court than maximum price of the goods/property be obtained, so the losses of the affected party, who normally is judgment-debtor, are to be minimized---Court, has to adjust its proceedings in such a way as to get maximum price for the goods/property---No restriction exists in such type of cases under the law upon the Court to restrain it from doing such exercise which can be peculiar in nature keeping in view the factual position in each and every case.

PLD 1987 SC 512; AIR 1940 Madras 42; AIR 1960 Andra Pardesh 429: AIR 1930 Lah. 236 and 2005 CLD 1737 distinguished.

1981 SCMR 108 rel.

Abul Inam for Appellant.

Samiuddin Sami for Respondent No.1.

Khurram Rasheed and Siddique Shehzad for Respondent No.2.

2007 C L D 1324

[Karachi]

Before Khilji Arif Hussain, J

LIGHT INDUSTRIES (PVT.) LTD through Director---Plaintiff

Versus

Messrs ZSK STICKMASCHINEN GmbH and another---Defendants

Suit No.146, C. M.As. Nos.5848 and 2448 of 2006, decided on 23rd January, 2007.

(a) Contract---

----Exclusive jurisdiction clause in an agreement---Such clause in a contract is part of consideration of the agreement between the parties on the basis of which parties enter into a contract and such consideration should not be ignored lightly particularly merely at the whims of one of the parties to the contract.

(b) Contract---

----Intention of parties---Determination of---Held, to discover the intention of parties to a contract documents/agreement as a whole has to be read.

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

----O. VII, Rr.10 & 11---Specific Relief Act (I of 1877), S.42---Agency contract between a foreign principal and agent in Pakistan---Termination of such contract---Suit for declaration and recovery---Application by defendant (foreign company) under O. VII, Rr.10 & 11, C.P.C. for stay of the suit and to direct the plaintiff to file his claim for adjudication before a foreign court on the basis of foreign jurisdiction clause in their Agency. contract---Contentions of the defendant were that clause of the Agency contract, conferring exclusive jurisdiction to a foreign Court (Germany) by treating like a foreign arbitration clause, the suit was liable to be stayed; that claim of the plaintiff as per laws of Pakistan was barred by time, however, in terms of the German laws was not hit by the provisions of the Limitation Act, 1908 and that the plaintiff, if had any claim could get the relief claimed from the court at Germany; that there was no reciprocal agreement between Government of Pakistan and Germany and accordingly, if any decree was passed by the Pakistan court, same could not be executed in Court of Germany and for the recovery of the amount in decree, if any, the plaintiff would have to approach the court of Germany---Plaintiff, on the other hand, contended that clause of exclusive jurisdiction was uncertain and vague and accordingly the jurisdiction of the court on such vague clause could not be ousted; that said clause of the Agency Contract was a void clause and proceedings could not be stayed on the basis of such void clause under S.28, Contract Act, ,1872; that High Court (Pakistan) .not only had jurisdiction, but in fact the appropriate court to adjudicate the matter as regard the termination letter of the Agency and other correspondence were in English and Courts in Pakistani were better experienced in dealing English language and its interpretation than the German Courts. where German language was court language; that Courts in Pakistan were more economical and cost effective than the Courts in Germany and all evidence was available in Pakistan; that sales of defendant's goods were procured in Pakistan and all expenses were incurred by plaintiff in Pakistan and that Courts rarely disturb the plaintiffs choice of forum and would not do so unless the balance of factors was strongly in favour of the defendant---Validity---Held, with the advancement of science and technology the question of convenience and inconvenience of parties was not so material to wriggle out from. the validly constituted agreement between them---No reciprocal agreement between Germany and Pakistan being in existence, as such even if any decree was passed by High Court of Pakistan same could not be executed in the Court of .Germany as foreign judgment---Application guider O.VII, Rr.10 & 11, C.P.C. by the defendant in circumstances, was granted and the proceedings in the suit were stayed by the High Court with the observations that plaintiff, if so advised, could approach for adjudication of his claim before the Court at Germany.

M.A. Chowdhury v. Messrs. Mitsui O.S.K. Lines Ltd. and 3 others PLD 1970 SC 373; CGM (Companies General Maritime; v. Hussain Akbar 2002 CLD 1528; M/s Travel Automation (Pvt.) Ltd. v. Abacus International (Pvt.) Ltd. and 2 others, 2006 CLD 497; Spiliada Maritime Corporation v. Cansules Ltd. (The "Spiliada") (1987) 1 Lloyd's p.1; Evans Marshall and Co, Ltd v. Bertola S.A. and another (1973) 1 WLR 349; Standard Insurance Co. v. Pak Garments Ltd. .1998 SCMR 1239; State Life Insurance Corporation v. Rana Muhammad Saleem 1987 SCMR 393 and New India Assurance Co. Ltd. and others v. T. K. Nanjunda Setty and Sons and others AIR 1964 Mysore 147 ref.

Agha Zafar Ahmed for Plaintiff.

Jawwad Sarwana for Defendant No. 1.

Farhatullah for Defendant No.2.

2007 C L D 1336

[Karachi]

Before Mushir Alam and Maqbool Bagar, JJ

Dr. TARIQ MEHMOOD MEMON---Petitioner

Versus

PROVINCE OF SINDH through Chief Secretary and another---Respondents

C.Ps. Nos. D-609 and D-902 of 2006, decided on 13th October, 2006.

(a) Sindh Privatization Commission Ordinance (XXV of 200l)---

----S.2(a)---Contract Act (IX of 1872), Ss.2(h), 10 & 31---Constitution of Pakistan (1973), Art.199---Constitutional petition---Rejection of bid---Validly enforceable contract---Bids were incited through newspapers for sale of properties---Petitioners submitted their bids in response to said advertisement---Petitioners were incited ,for further negotiation with the Committee constituted by Privatization Commission and .after negotiation, petitioners improved their bids, on which said bids were recommended by the Committee to Sindh Cabinet Committee on Privatization, which rejected bid of petitioners---Petitioners, in their constitutional petitions had challenged said rejection contending the same to be illegal, arbitrary and violative of rules of natural justice---Petitioners had also claimed that a 'concluded contract' had come into being and that they had acquired some nested rights in the subject properties---Petitioners had contended that High Court in exercise of its constitutional jurisdiction, was competent to review administrative action of authorities being violative of principles of natural justice and liable to be struck down---Validity---Inciting bid was in fact an invitation to offer, which, unless accepted and confirmed by competent authority, would create no enforceable contract nor would it create any right in favour of highest bidder---Unless an offer was accepted unconditionally no enforceable contract would come into being---Where acceptance was contingent or conditional, then it would amount to a counter proposal---Unless the contingency was met or condition was complied with or the counter proposal was unconditionally accepted, it could not be said that a valid contract was born---Competent authority in the present case was Sindh Cabinet Committee on Privatization and Sindh Privatization Commission had acted merely as an agent to said competent authority---Mere making highest bid by itself would not constitute any valid and enforceable contract unless there was unqualified acceptance by competent Authority which, in the present case, was missing---High Court could not exercise extraordinary constitutional jurisdiction in favour of petitioners in the facts and circumstances of the case.

Balochistan Construction Company v. Port Qasim Authority 2001 YLR 2716; Pacific Multinational Ltd. v. LG. of Police PLD 1992 Kar. 283; Abdulah and Co. v. Province of Sindh 1992 MLD 293; Dada Bhoy Investment (Pvt.) Ltd. v. Federation of Pakistan PLD 1995 Kar. 33; Muhammad Ashraf v. Privatization Board 2002 MLD 550; Pakistan Steel Products v. Indus Steel Pipes Limited 1996 CLC 118; Munshi Muhammad v. Faizanul Haq 1971 SCMR 533; Pervez Qureshi v. Settlement Commissioner, Multan and Bhawalpur and others 1974 SCMR 337; Afzal Maqsood Butt v. Banking Court No.1 PLD 2005 SC 470; Petrosin Products (Pvt.) Ltd. v. Federation of Pakistan 2001 CLC 1412; Bagh Constriction Company v. Federation of Pakistan 2001 YLR 2791 and City School (Pvt.) Ltd. v. Privatization Commission of Pakistan 2002 CLC 1158 ref.

(b) Constitution of Pakistan (1973)--

----Art.199---Constitutional jurisdiction of High Court---Scope---Executive and administrative action and decision tainted with mala fide, arbitrariness, and lacking transparency and fair play, in appropriate cases could be subjected to judicial review.

Ittehad Cargo Services v. Syed Tasneem Hussain Naqvi PLD 2001 SC 121 and Messrs Airport Support Service v. Airport Manager 1998 SCMR 2268 ref.

Abrar Hassan for Petitioner (in C.P. No.D-609 of 2006).

Abid S. Zuberi for Petitioner (in C.P. No.D-902 of 2006).

Sarwar Khan, A.A.-G. for Respondent (in C.Ps. Nos.D-609 and 902 of 2006).

Zafar Ahmed Khan for the Commission (in C.Ps. Nos.D-609 and 902 of 2006).

Date of hearing: 13th October, 2006.

2007 C L D 1348

[Karachi]

Before Faisal Arab, J

Messrs SAUDI-PAK COMMERCIAL BANK LIMITED---Plaintiffs

Versus

Messrs PAN PACIFIC (PRIVATE) LTD. and 9 others---Defendants

Suit No.B-27 of 2005, C.M.As. Nos. 11151 and 11152 of 2006, decided on 22nd January, 2007.

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

----Ss. 7, 10 & 14---Suit far recovery of loan amount with mark­up---Defendant company had not disputed any entry which showed disbursement of the amount and had also not claimed that any amount which defendants repaid was not reflected in the statements but had disputed all entries with. regard to marls-up appearing in the statements of account---Determination of incidence of mark-up---Procedure---Outstanding balances of each of the four accounts held by the defendants without the incidence of mark-up could be arrived at by first deducting repayments from the disbursed amounts and then deduction of .all entries of mark up; thereafter mark-up permissible under the law could be added to the aggregate of outstanding balances of the four accounts in order to arrive at the final liability of defendant.

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

----Ss. 7, 10 & 14---Suit for recovery of loan by Bank---Defendant had not disputed any entry which showed disbursement of the amount and had also not claimed that any amount which it repaid was not reflected in the statements of account---Application for leave to defend the suit was dismissed and suit: was decreed with cost of funds at the rate notified by the State Bank of Pakistan:--Recoveries were ordered to be effected first through sale of mortgaged properties belonging to the defendant-company, in case the value of mortgaged properties was not sufficient to cover the decretal amount, then recoveries were to be made from the assets of the rest of the defendants except one who stood guarantor to company's liability and a consent order was passed in the connected suit whereby it was agreed by the parties that recovery of the decretal sum shall not be made from the guarantor but shall first be made from the rest of the defendants and only if any sum still remained to be recovered out of the decretal amount only then recovery shall be made from the guarantor---Executing Court; in view of such consent order, shall glue effect to it while executing the present decree.

Iqbal Haider for Plaintiff.

Faisal Kamal for Defendant No.5.

Shahab Sarki for other Defendants.

2007 C L D 1356

[Karachi]

Before Khilji Arif Hussain, J

NATIONAL BANK OF PAKISTAN---Plaintiff

Versus

Messrs A.I. BROTHERS (PRIVATE) LIMITED and others---Defendants

Suits Nos.1445 of 1999, C.M.As. Nos. 7805, 7806 of 2002, 4494 of 2003, 147, 148 of 2004, 7956 of 2006 and B-2 of 2004, decided on 27th March, 2007.

(a) State Bank of Pakistan B.P.D. Circular No. 29, dated 15-10-2002---

-----Cl.12---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.13---Suit for recovery of loan by Bank---Settlement of dispute under incentive scheme--Defendant had not paid 10% of the amount, as required under B.P.D. Circular

No.29, had not accepted the forced sale value determined by the valuer and no agreement in terms of Cl. 12 of B.P.D. Circular No.29 was entered into between the parties---Bank had rightly refused to accept the request made by the defendant for settlement of claim under the incentive scheme.

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

----S.10---Suit for recovery of loan by Bank---Leave to defend suit---Defendants had not denied the financial facilities granted to them by the Bank and/or received by them, the execution of documents had also not been denied by the defendants---Defendants, in circumstances, were not entitled to leave to defend the suit.

Tanya Knitwear (Pvt.) Ltd. v. United Bank Limited and others 2005 CLD 114; National Bank of Pakistan v. Messrs Pakasaco Limited 2005 CLD 422; P.Q. Chemicals v. A.W. Brothers and others 2005 CLD 169; Captain P.Q. Chemical Industries (Pvt.) Ltd. v. Messrs. A. W. Brothers and others 2004 SCMR 1956; Muhammad Ayub Khan and others v. Muhammad Farooq Textile Mills Ltd. and others 2004 PLC 250; United Bank Limited v. Messrs Azmat Textile Mills Limited 2002 CLD 542; Hashwani Hotels Limited v. Federation of Pakistan and others PLD 1997 SC 315; Perma Constrict (Pvt.) Limited v. Habib Jute Mills Ltd. 2002 CLD 166 and Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation, Karachi PLD 2002 SC 500 ref.

Naveedul Haq for Plaintiff (In Shit No.1445 of 1999 and for Defendant in Suit No.B-02 of 2004).

Saalim Salam Ansari for Plaintiff (In Suit No.B-02 of 2004 and for Defendant in Suit No.1445 of 1999).

Date of hearing: 1st March, 2007.

2007 C L D 1365

[Karachi]

Before Munib Ahmad Khan, J

BABER SHEIKH---Applicant

Versus

THE STATE---Respondent

Criminal Miscellaneous Application No.118 of 2006, decided on 22nd June, 2007.

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

----S.16(3)---Criminal Procedure Code (V of 1898), S. 561 A---Car financing---Default in lease---Recovery/re-possession of car from lessee by Agent of Leasing Company---Validity---Head, before taking any action for recovery/re-possession of the car from the lessee no notice or intimation was given by the Leasing Company or by its Agents nor any reasonable opportunity at any time was given to the alleged defaulter in lease, therefore the action by both the Leasing Company and its Agents was totally unjustified and they had wrongly exercised direct power to recover the lease article in terms of S.16(3)(a), Financial Institutions (Recovery of Finances) Ordinance, 2001---Lessee may seek its remedy as provided by proviso to subsection (3) of S.16 of the Ordinance---Petition for quashing of proceedings under S.561-A, Cr.P.C. was disposed of by the High Court by setting aside the order of the Magistrate to that extent---High Court, however, observed that situation coming out in the petition was alarming one as a company or body could not be authorized to take law in its own hands on its own justification without any notice etc: as, sometimes, it could create serious problem if any resistance was offered by the borrower/customer---High Court directed that matter be referred to the Provincial Home Secretary to realize the situation and see as to what extent recovery force could be applied in such-like cases and who would be responsible if any untoward incident was caused to either party and iii such a situation what would be the role and excuse of police---Security Exchange Commission of Pakistan was also directed to check Memorandum and Articles of the Association of both the companies to have a check on misuse of their Memorandum and Articles of Association as simple mentioning of any name or object in their memorandum would not empower the concerned company to take refuge from any illegality under its memorandum.

M. M. Tariq for Applicant.

Manzoor Arain for Crescent Leasing Co.

M. Ahmed Pirzada, Addl. A.-G.

Syed Shah Nawaz Rizvi, Director/Chief Executive of Crescent Leasing Company present in Person.

Babar Mufti, Managing Director of ICIL along with its Officer Syed Sultan Haider, present in Person.

2007 C L D 1374

[Karachi]

Before Faisal Arab, J

Messrs SAUDI PAK COMMERCIAL BANK LIMITED---Plaintiff

Versus

Messrs MARVI AGROCHEM (PRIVATE) LTD. and 9 others---Defendants

Suit No.B-31 of 2005 and C.M.A. No.296 of 2006, decided on 22nd January, 2007.

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

----Ss. 9, 10 &. 14---Suit for recovery of loan by the bank---Application for leave to defend suit---Defendant seeking deduction of amounts which it claimed were based on, wrong debit entries---Neither such objection was raised in the leave to defend application nor even at argument stage---Detailed statement of account was filed by Bank along with its affidavit; statement of account showed debit entries of finances which were availed by the defendant company from time to time and credit entries of repayment made to the Bank; after adjusting the repayments a specified sum was left as outstanding amount and-this amount was without the incidence of mark-up and claim of mark-up had been filed which showed carious debit entries for charging mark-up from time to time---High Court, after determination of outstanding amount on the basis of the amount actually availed and the repayments made by the defendant company as reflected in the debit and credit entries wherein none of the debit entries had been identified by the defendant company to be erroneous, application for leave to defend the suit was dismissed and suit was decreed against the defendants in a specified amount along with cost of funds, chargeable at the State Bank's approved rates uptill such time the entire decretal amount was recovered---Recoveries were ordered to be effected first through sale of mortgaged properties to the defendant company and in case the value of mortgaged properties was not sufficient to cover the decretal amount, then recoveries were to be made from the assets of the other defendants.

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

----S. 9---Suit for recovery of loan by the Bank---Claim of mark-up---Scope and extent---Plaintiff--Bank can claim mark-up on a facility only to the extent agreed upon under the contract of finance and that too which is arrived at after deducting the rebate on mark-up.

NDFC v. Anwarzaib 1999 MLD 1888 fol.

Iqbal Haider for Plaintiff.

Shahab Sarki for Defendants.

2007 C L D 1392

[Karachi]

Before Zia Perwez, J

BULK INTERNATIONAL TRADERS INC, EGYPT---Plaintiff

Versus

MV. "AFAMIIA" through Master and another---Defendants

A.D.M. Suit No.13, C.M.As. Nos. 739, 740, 718 and 729 of 2007, deckled on 27th July, 2007.

(a) Admiralty Jurisdiction of High Courts Ordinance (XLII of I980)--

----S. 4---Sindh Chief Court Rules (O.S.), R.731---Civil Procedure Code (V of 1908), S.151---Admiralty suit---Claim of damages pertaining to cargo shipped from a port or not designated under Fixing Note or a Charter Party based on cost of shipment of cargo from one port to another would have no relevance to the freight for transport of cargo under the contract for shipment from a different port which cargo was even otherwise, not available at the port for shipment.

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

----S. 4---Sindh Chief Court Rules (O.S.); R.77---Admiralty suit---Claim for misappropriation of cargo---Omission of specific particulars at the time of institution bringing an action in Admiralty jurisdiction of High Court---Effect---Mere fact that in their counter affidavit the owner of the vessel, who, in the absence of knowledge of specific facts, denied the fact of issue of Mate Receipts or bill of lading for want of knowledge, could not be saddled with liability for misappropriation of any cargo particularly when plaintiffs themselves had specifically admitted the fact that the cargo had been shipped after issuance of bill of lading by the local agents, who under the terms of Fixing Note were appointed by the plaintiffs themselves to discharge the formalities requisite for obtaining port clearance and leaving of the vessel from the port---Such action on the part of local agents of the vessel appointed by the plaintiffs themselves reflected an implied agreement on their part---With the vessel sailing with cargo ort board against which a freight prepared bill of lading had already been issued, the question of misappropriation of cargo was not made out---Principles.

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

----S. 4---Sindh Chief Court Rules (O.S.), R.77---Admiralty suit---Claim of conversion of cargo/loading of additional cargo---Mere statement to the fact that the additional cargo was being loaded at the Port over Cargo on board would not constitute any act of conversion of Cargo as two shipments were under separate shipping marks; the goods already shipped were contained in yellow bags duly marked with specific marking as distinct from the additional Cargo being shipped with its own brand making---Vessel remained at the last port for about 24 days where, instead of loading about 1500 M/tons of Cargo per day, the Cargo loaded was only 3960 M/Tons in 24 days or thereabout resulting in an average load of less than 200 M/Tons per day; that the cargo was not available for loading at the Port; that by calling upon the defendants to load the cargo at the Port which was at a distance of about 400 miles from the designated port the breach or act of repudiation of contract in circumstances, could only be attributed to the plaintiffs and defendants could claim then right to take appropriate action against the plaintiffs, as may he available to them, according to law---Principles.

Sui Gas Transmission Co. v. M.V. Good Herald 1983 CLC 886; Schwarz and Co. (Grain), Ltd. v. St. Elefterio (Owners) 1957 (1) Llyods. Report 283; The Ethel Radclifee Steamship Company Ltd. v. W.R. Barnett. Ltd I925 (23) Llyods Report 279; Ethel Redcliffe Steamship Company Ltd: v. W.& R. Barnett Ltd: 1926(8) Lloyds Reports 277 and Strathlorne Steamship Company Ltd. v. Andrew Weir 1935 Lloyds Reports 184 distinguished.

Jaffer Brothers (Pvt.) Ltd. v. N1.V: Eurobulker II 2002 CLD 926; VN. Lakhani and Co. v. M.V. Lakatoi Express PLD 1994 SC 894; D.H.L. International v. N.T.C. Ltd. 1982 CLC 1360; MEC Shipbreakers Ltd. v. Peason Investment PLD 1982 Kar. 701 and Abdullah v Muhammad Moizuddin PLD 1955 Sindh 330 ref:

Shaiq Usmani for Plaintiff, Mazhar Lari for Defendants.

2007 C L D 1407

[Karachi]

Before Zia Perwez, J

KASB BANK LIMITED---Plaintiff

Versus

Messrs TRANS LIMA PRIVATE LIMITED and 4others---Defendants

C.M.As. Nos. 476 and 477 of 2006 in Suit No.B-33 of 2005, decided on 27th July, 2007.

(a) Lease---

---- "Financial lease" and "operating lease"---Distinction illustrated.

Distinction between 'Financial Lease' as opposed to 'Operating Lease' can be summarized as follows:--

| | | | --- | --- | | Financial Lease | Operating Lease | | Financial lease is a long term ­lease on fixed assets, the same may not be cancelled by either party. | Operating Lease is a non-pay out lease which may be cancelled by the lessee prior to its expiration. | | In financial lease the leasing company buys the equipment and leases it to the lessee. | The sum of all the lease payments by the lessee does not necessarily fully provide for the recovery of the assets cost. | | It is a full payout lease involving obligatory payment by the lessee to the lessor that exceeds the purchase price of the leased property and financial cost. | In operating lease sphere of operation is limited which generally cover those goods which could be, needed by different users. | | Financial Lease is a lease that transfers substantially all the risks and rewards incident to ownership of an asset. Lessor is only a financier and is not interested in the assets. | In Operating Lease, the lessor will have the continuing interest in the leased equipment and thereby undertakes to bear the maintenance etc. Lessor retains the usual risks and rewards that come from the ownership of the assets. | | The Financial.Lease is not cancellable by the lessee prior to its expiration date: | The Operating Lease is cancellable by the lessee prior to its expiration. | | The Financial Lease provides for maintenance services at the cost of lessee. | The lessor provides service, maintenance and insurance. | | The asset is fully amortized over the life of the lease. | Under such lease the equipment cost is not fully amortized over the leased tenure. | | The lessee has the use of the asset for 75% or more of the estimated economic life of the leased property. | Such lease is usually for a short period i.e. less than 75% of the estimated life of the assets, which period may not be adequate to recover to the full extent the investment in the asset. | | The present value al the beginning of the, lease term of the minimum amounts payable under the lease (exclusive of amounts payable for insurance, maintenance and similar normal outgoings) is at least equal to 90% of the cost of the leased assets net of investment grants. | | | The lessor makes payment for the cost of the asset and remains the owner of such equipment and. permits the use of equipment to the lessee for a specified period of tune against the rentals. | | | During the period of lease, the lessee must fulfil the obligations irrespective of the fact. whether the asset remains in use or becomes obsolete. | | | In case of default committed by the lessee in payment of lease money the lessor has recourse to the leased asset as the owner. | |

The operating lease is anon-pay-out lease in which the lessor's obligations may include services attached to the leased property such as maintenance, repair and technical advice. A good example of an operating lease is a lease for telephone service wherein the Telephone Department renders all such services for the leased telephone equipment against fixed uniform rentals from the users. Furthermore, the Operating. Lease generally cover those goods which could be needed by different users which includes goods that are not peculiar to one kind of industry i.e. the things that many different kinds of lessees can use, like air conditioners, which could be used in offices, hospitals, laboratories and cars etc. Thus the equipments/machineries, like the buses cannot be included in the category far Operating Lease.

Normally the rentals or charges for any machinery is maximum for a new machine and may decrease over the period of its use.

Lease Financing and Hire Purchase 4th Edn. by Dr. J.C. Verma ref.

(b) Lease---

----Financial Lease---Rentals or charges' for any machinery is maximum for a new machine and may decrease over the period of its use.

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

----Ss. 9, 10 & 15---Suit for recovery of financial lease money of buses leased to defendants---Default by lessee---Remedies available to the lessor---Record showed, that defendants defaulted to pay several instalments as per lease agreement and failed to get the insurance polices of the leased vehicles renewed on expiry of the insurance policies---Such being obligations on the part of defendants and by their acts and omissions, plaintiff/Bank became entitled to act in pursuance of the terms agreed to between the parties and effect recovery of the amount in pursuance of the provisions of Financial institutions (Recovery of Finances) Ordinance, 2001---Principles.

Hadley v. Baxendale (1854), 9 Ex. 341; 156 E.R. 145; Victoria Laundry (Windsor) Ltd. v. Newman-Industry Ltd. (1949) 2 KB 528; (1949) 1 All.ER 997; Humphrey Motors Ltd. v. Ells, (1935) SCR 249; Financings Ltd. v. Baldock, (1963) 1 All.ER 443; Buchanan v. Byrnes (1906), 3 CLR 704; Hughes v. N.Ls. (Pvt.) Ltd. (1966) WAR 100; Pigott Construction Co. v. W.J. Crowe Ltd. (1961), 27 DLR (2d) 258; Alkok v. Grymek, (1968) SCR 452; Hongkong Fir Shipping Co. v. Kawasaki Kisen Kaisha Ltd., (1962) 2 Q.B. 26; Cehave N.V. v. Bremer Handelsgesellschaft m.b.H., the `Hansa Nord'; (1976) Q.B.44; Johnson v. Agnew, (1980) AC 367; (1979) 1 All. ER 883; Moschi v. Lep Air Services Ltd., (1973) AC 331; (1972) 2 All.ER 393; Red Deer College v. Michaels, (1976) 2 SCR 324 and Keneric Tractor Sales Ltd. v. Langille, (1987) 2 SCR 440 ref.

(d) Lease---

----Financial lease---Default by lessee---Damages---Remedies available to the lessor.

The modern view is that when one party repudiates the contract and the other party accepts the repudiation, the contract is at this point terminated or brought to an end. The contract is not, however, rescinded in the true legal sense, i. e. in the sense of being void ab initio by some vitiating element. The parties are discharged of their prospective obligations under the contract as from the date of termination but the prospective obligations embodied in the contract are relevant to the assessment of damages. Such is the law for contracts generally and it is this law which should apply equally to breaches of chattel lease.

Hadley v. Baxendale (1854), 9 Ex. 341, 156 E.R. 145; Victoria Laundry (Windsor) Ltd. v. Newman Industry Ltd. (1949) 2 KB 528; (1949) 1 All. ER 997; Humphrey Motors Ltd. v. Ells, (1935) SCR 249; Financings Ltd. v. Baldock, (1963) 1 All. ER 443; Buchanan v. Byrnes (1906), 3 CLR 704; Hughes v. N.Ls. (Pvt.) Ltd. (1966) WAR 100; Pigott Construction Co. v. W.J. Crowe Ltd. (1961), 27 DLR (2d) 258; Alkok v. Grymek, (1968) SCR 452; Hongkong Fir Shipping Co. v. Kawasaki Kisen Kaisha Ltd., (1962) 2 Q.B. 26; Cehave N.V. v. Brerner Handelsgesellschaft m.b.H., the 'Hansa Nord'; (1976) Q.B.44; Johnson v. Agnew, (1980) AC 367; (1979) 1 All. ER 884; Moschi v. Lep Air Services Ltd., (1973) AC 331; (1972) 2 All. ER 393; Red Deer College v. Michaels, (1976) 2 SCR 324 and Keneric Tractor Sales Ltd. v. Langille (1987) 2 SCR 440 ref.

(e) Lease--

----Operating lease---Default in payment or discontinuation of lease by lessee---Remedies available to the lessor.

Where an operating lease is extended under a written contract extending over a fixed tenure the .remedy available to the lessor in case of default in payment or discontinuation of the lease by the lessee would be to lease out the property elsewhere and to recover the amount of difference, if any, from the lessee for the .un-expired period of lease under written contract in addition to the higher lease charges for the period that the property remained with the lessee.

(f) Lease---

----Financial lease---Main business of lessor not hiring of machinery but that of providing finance for purchase of chattels or machinery to be Leased---Default by lessee-~-Remedies available to the lessor.

Cases involving financial lease, where the main business of the lessor is not that of hiring of machinery but it is that of providing finance for purchase of chattels or machinery to be leased out on lease suitable to the particular needs and requirements of the specific lessee. Default in such cases of financial lease can be distinguished from that in case of an operating lease. However as in such cases the lessor indulges only to the extent of financing which is his main vocation, the ordinary course to be followed to minimize the losses would be to dispose of the chattel or machinery. The amount of sale proceeds be adjusted towards the unpaid instalments due for the entire tenure of the lease under contract. The' balance outstanding, if any, may be recovered from the lessee to secure the agreed amount of return and the finance, as already stipulated under the terms of the agreement between the parties.

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

----S. 10---Suit for recovery of advanced amount by Bank---Application for leave to defend suit by defendants---Validity---All he figures had been settled and worked out by the parties in their agreement in specific detail at the time of agreement which also provided for agreed loss in case of default and from such amount of agreed losses the defendants were entitled to adjustments out of auction proceeds of items, hence no ground for grant of leave to defend the suit was made out.

Qutubuddin Saim with Jam Asif Mehmood for of Ahmed and Qazi for Plaintiff.

M. Salim Thepdawala for Defendant Nos. 1, 2 and 4.

Mirza Adil Baig and M. Beg for Defendant No.3.

2007 C L D 1456

[Karachi]

Before Sabihuddin Ahmed C.J. and Muhammad Afzal Soomro, J

Messrs A.I. BROTHERS (PVT.) LTD. And another---Appellants

Versus

NATIONAL BANK OF PAKISTAN and 4 others---Respondents

Special high Court Appeal No.D-181 of 2007 decided on 30th July, 2007.

State Bank of Pakistan BPD Circular No.29 dated 15-10-2002---

----Contention was that having held that BPD Circular No.29 of 2002 was applicable to the appellant, the Trial Court came to the wrong conclusion that appellants were not entitled to its benefit on account of failure to make payment of the requisite 10% amount---Counsel for appellant had argued that the failure to make payment was not attributable to appellants but to respondents, who took the erroneous plea that appellants were not entitled to the benefits of the circular in question---Contention required consideration and being the first appeal against the judgment and decree, was admitted to hearing.

Saalim Salam Ansari, Farooq H. Naek and Adnan Karim for Appellants.

2007 C L D 1459

[Karachi]

Before Mushir Alam and Muhammad Afzal Soomro, JJ

SOALEH MUHAMMAD and Brothers---Appellants

Versus

CANTONMENT BOARD---Respondent

H.C.A. No.164 of 2006, decided on 16th February, 2007.

Contract Act (IX of 1872)---

----S.25(3)---Limitation Act (IX of 1908), S.19---Civil Procedure Code (V of 1908), O.XII, R.6---Commitment to make payment---Enforceability of---Limitation---Function of public functionaries-Scope----To bring the case within the purview of S.25(3), Contract Act, 1872, it must be shown that writing signed by a debtor or his agent to pay liability, whole or in part thereof, which creditor could have enforced, but for the law of limitation in the suit---Commitment to make payment; if extended after the expiry of limitation, it would become independently enforceable---Plea of limitation in terms of S.19 of Limitation Act, 1908, in circumstances could not, be invoked to deny such right--When 'liability was not disputed then in all fairness admitted amount should have been paid, instead of engaging the claimant in undesired and lengthy litigation---By denying legitimate claim, it was not realized that execution had caused double loss; firstly to the rightful claimant; and secondly in incurring expense that was paid out of the public fund--Public functionary was always expected to resolve petty dispute, controversy and technicalities in favour of citizenry---Application under O.XII, R.6, C.P.C. stood granted with cost.

Riasatullah v. The Tripura Modern Bank Ltd. PLD 1968 Dacca 260; Habib Bank Ltd. v. Shamim Qureshi PLD 1988 Kar. 481; Pervaiz Akhtar v. The Additional District Judge Rawalpindi PLD 1990 SC 681 and Minaram v. Seth Rupchand LR 33 LA. 165 ref.

Rao M. Shakir Naqshbandi for Appellants.

Ashraf Ali Butt for Respondent.

Date of hearing: 15th February, 2007.

2007 C L D 1465

[Karachi]

Before Mushir Alam, J

Messrs MSC TEXTILES (PRNATE) LIMITED through Executive Director---Plaintiff

Versus

ASIAN POLLUX and 5others---Defendants

Admiralty Suit No.29 of 2004 decided on 23rd December, 2006.

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

----S. 3(2)---Carriage of Goods by Sea Act (XXVI of 1925), Art. III, Cl. (6), para.3---Contract Act (IX of 1872), S.63---Limitation Act (IX of 1908), Art.31---Admiralty suit---Breach of contract for affreightment---Limitation---Computation---Bills of lading in original were with the plaintiff as the contract with the named consignee was rescinded; cargo was never delivered, it was in the defendant's warehouse; correspondence on record. showed that the delivery was 'not made and amidst reshipment negotiations the notice of auction was issued yet the defendants did not inform the plaintiff about the auction proceedings and goods were eventually auctioned which fact the plaintiff learnt later---Defendants until last minute continued to represent that they were making arrangements and efforts to re-export the goods to Pakistan---Allegation of fraud, committed by one of the employees of the consignee, who allegedly was mixed up with the auction-purchaser of the subject goods was, on record---Held, prima facie, at the best, date of auction could be taken as reckoning date to compute limitation of one year on which date the defendant could be said to have failed to deliver the goods---Principles.

Abdul Jalil Chowdhury v. Muhammadi Steamship Company PLD 1961 SC 340 quoted.

British India Steam Navigation Co. v. Abdul Razzak Abdul Kadir PLD -1967 SC 68; Dutsche Dampschiffaharts-Gesellschaft PLD 1975 Kar. 819 and Central Insurance Co. Ltd. V. Chitagong Steamship Corporation Ltd. PLD 1963 SC 633 ref.

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

----S. 4---Charterer---Definition and scope---"Slot Charter" is included in the definition of "charterer"---Expression the charterer of the ship can include a slot charterer and a slot charterer can properly be described as the charterer of the Ship---Principles.

Slot charter is included in the definition of charter. There is no reason to construe the word "Charterer" as if it meant demise charterer. If the draftsman had meant to confine the expression "charterer" to one type of charterer namely the demise charterer, there is no reason why he should not have done so. Charterers have for many years ordinarily included demise charterers, time charterers and voyage charterers, among others. Whether or not the expression "charterer" includes slot charterer, it naturally includes a time charterer or voyage charterer. The expression the charterer of the ship can include a slot charterer and that a slot charterer can properly be described as the charterer of the ship.

Term "Charterer" has varied shades of meaning, term charterer includes voyage charterer, time charterer, sub-charter, demise charterer, there is no reason why the slot charterer be excluded. In subsection (4) referred to above, words used are `when a person who would be liable on the claim in action in personam was when the cause of action arose the owner or charterer of or in possession and control of the ship.' The word charterer is not qualified, unlike English .pct therefore, no restricted meaning could be assigned to it. The term charterer clearly includes slot charterer. A slot charterer is liable for all the consequences for the contract of carriage of goods as any charterer could be. Slot charter is in fact lease or hire of a space or cell on board of a vessel, for storage of goods and cargo. Through slot charter, the owner or the charterer lets out or sublets and allocates space/cell or more popularly known as a slot on board a vessel to more than one sub-charterer.

Thus, no doubt is left in mind that slot charterer cannot escape the liability to answer the claim in rem against the very offending vessel or against any other ship which at the time when the action is brought is either under charterer's ownership or is a sister ship.

Mediterranean Shipping Company SA v. Owners of Ship "TYCHI" [1999] EWCA CIV 1150 = (1999] 2, Lloyd's Report 11 quoted.

A-Z Dictionary of Export, Trade and Shipping Terms, (http:/www.exportbureau.com) and Maritime and Shipping Dictionary, 2006 Edition, by AGA Faquir Muhammad at page 547 ref.

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

----S. 4---Scope and applicability of S.4, Admiralty Jurisdiction of High Courts Ordinance, 1980---Jurisdiction in rem and claim in personam---Scope---Slot Charterer--- Liability---Admiralty jurisdiction under S.4 of the Ordinance could be invoked by action in rem, against the offending ship or against the sister ship---Claim in personam lies where the person who would be liable on the claim was the owner or charterer of, or in possession or in control of the ship when the cause of action arose---Slot charterer could not escape the liability to answer the claim in rem against the very offending vessel or against any other ship which at the time when the action was brought was either under charterer's ownership or was sister ship---Jurisdiction in rem could be invoked, against offending vessel, when one proceeds in rem, the purpose is to draw out the owner or charterer, or any person who claimed to be interested or in possession or in control of the offending vessel---In such event, the person having any interest in the offending vessel had two options either to come out and defend the entire claim or abstain---However, if such person chose to abstain, then the liability was limited to the extent to the vessel otherwise not.

Ahmed Investment Ltd. v. Sunrise IV PLD 1980 Kar. 229; Bangladesh Shipping Corporation v. Nedon PLD Kar. 246 and Yukong Ltd. South Korea Co. v. M.T. Eastern Navigation PLD 2001 SC 57 ref.

Nisar A. Mujahid for Plaintiff.

M. Naeem for Defendants.

2007 C L D 1511

[Karachi]

Before Sabihuddin Ahmed, C.J. and Faisal Arab, J

Mrs. YASMEEN YAQOOB---Appellant

Versus

Messrs ALLIED BANK OF PAKISTAN LTD. and 3others---Respondents

I.A. No.108 of 2006, decided on 21st August, 2007.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.89 & 90---Recovery of Bank loan---Execution of decree---Out of court settlement---Setting aside of sale---Suit flied by bank was decreed and mortgaged property was sold through auction---Auction-purchaser deposited full consideration amount and was waiting for sale confirmation by Executing Court, when bank filed application for withdrawal of execution application, as bank and judgment debtor had reached some settlement---Application filed by bank was dismissed by Executing Court---Plea raised by judgment-debtor was that Executing Court ought to have allowed withdrawal of execution proceedings instead of confirming sale of her property in favour of auction-purchaser---Validity---Once property was sold by court in execution proceedings, the same could be nullified only on the basis of circumstances envisaged by O.XXI, Rr.89 and 90, C.P.C.---Mere arrangement reached between decree holder and judgment-debtor, after such sale could not be considered as sufficient enough to set aside the sale as by then third party rights had intervened---Irrespective of the fact that sale had been confirmed by the court or not tinder . O.XXI, R.92, C.P.C., nullifying court sales whenever judgment-debtor had come to some arrangement with decree-holder would shatter confidence of people in stability of sates made through courts---Court sale should only be set aside when equitable grounds for nullifying it existed in favour of the person who owned or held any interest in the property sold---Such equitable grounds lead already been provided by late under the provisions of O.XXI, Rr.89 and 90, C.P.C.---Judgment-debtor herself did not take any legal step for seeking setting aside of sale for more than 15 months---Auction-purchaser who had paid entire sale consideration could not be deprived. Of the property sold to him through court sale---High Court declined to interfere with the order passed by Executing Court---Appeal was dismissed in circumstances.

Hudaybia Textile Mills Limited v. Allied Bank of Pakistan Limited PLD 1987 SC 512 and Muhammad Ikhlaq Memon v. Zakaria Ghani PLD 2005 SC 819 = 2005 CLD 1589 rel.

Farida v. Sanjida 2000 SCMR 1264; Navalkha & Sons v. Ramaya Das AIR 1970 SC 2037; Captain PQ Chemical Industries (Pvt.) Limited v. A.W. Brothers 2004 SCMR 1956; Magi Chemicals Industries v. Habib Sank Limited 2003 CLD 571 and Shahida Saleem v. Habib Credit and Exchange Bank Limited 2001 CLC 126 distinguished.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.89 & 90---Setting aside of sale---Principles---Person who. owns or has acquired any proprietary interest in property, which is being sold by court in execution proceedings, to seek recall of order of sale within 30 days of such sale upon deposit of 5% of the purchase money for payment to the auction-purchaser---Such provision if invoked will tin stipulated time is sufficient enough to avoid court sale as it gives successful bidder 5% of purchase money as compensation for denying him right to buy the property---Order XXI, R.90, C.P.C. also entitles a person whose interests in property sold by court in execution have been affected on account of any material irregularity or fraud in the conduct of sale proceedings or price that was procured was inadequate and did not commensurate with value of the property---Such rule covers situation where owner of property under sale was either not aware of sale of his property or his property ought not to have been put to sale in the first place.

Muhammad Saleem Thepdawala for Appellant.

Muhammad Asif Malik for Respondent No.4.

Date of hearing: 15th March, 2007.

2007 C L D 1532

[Karachi]

Before Faisal Arab, J

PROCTER & GAMBLE PAKISTAN (PVT.) LTD., KARACHI---Plaintiff

Versus

BANK AL-FALAH LIMITED, KARACHI and 2 others---Defendants

Suit No. B-35, C.M.As. Nos.1591, 7388, 7389, 7690 and 7691 of 2006, decided on 13th August, 2007.

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

----S.9---Civil Procedure Code (V of 1908), O. VI, R.17 &, VII, R.1(i)---Plaint not containing clause regarding valuation of suit---Application for amendment of plaint for inserting therein valuation clause made by plaintiff rafter raising of objection by defendant---Validity---Such omission could be provided through amendment in plaint---Plaintiff was fully justified in seeking such amendment---Application was allowed in circumstances.

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

----S.9---Civil Procedure Code (V of 1908), O. VI, R.17---Suit for declaration that Bank had. no right to withhold payment due under Letters of Credit---Application for amendment of plaint to insert in its prayer clause direction to Bank to pay a sum of Rs.150 million---Plea of Bank that no relief had been sought against Bank in plaint, wherein no amount had been quantified against Bank---Validity---Such plea of defendant-Bank was misconceived in view of such declaration sought in the plaint---Plaintiff s application for amendment of plaint was accepted in circumstances.

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

----Ss.2(c), 2(d)(iii) & 9---Suit against Bank by beneficiary of guarantee or Letter of Credit---Maintainability--No one could invoke jurisdiction of Banking Court except financial institution and its customers, but only regarding dispute relating to financial facility defined as finance" under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Customer'---Categories of----Person not being a customer of financial institution, if connected in some way to a Transaction defined as finance" under S.2(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001, could neither sue nor be sued under S.9 thereof---Beneficiary of letter of Credit and guarantee would not fall within definition of "customer" as given in S.2(c) of the Ordinance---Legal remedy for and against person not being a customer would lie before ordinary civil court, but not before Banking Court---Principles.

No doubt, letter of Credit is included in the definition of "finance" under the Financial Institutions (Recovery of Finances) Ordinance, 2001, but this does not mean that all parties that may be connected in any way to "any financing defined under section 2(d) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, could invoke the jurisdiction of Banking Court. In this regard, section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 is very clear, wherein parties to a banking suit are specifically mentioned. Section 9 of the Ordinance states that "where a customer or a financial institution commits a default in the fulfillment of any obligation with regard to any finance, the financial institution or, as the Case may be, the customer may' institute a suit in the Banking Court Financial Institutions (Recovery of Finances)' Ordinance, 2001, being a special law, its scope is to be confined to the parties, which are entitled to invoke its jurisdiction and section 9 clearly mentions that they are only two i.e. a financial institution, and its customer. Other than these two if a person is connected in some way to a transaction falling under the definition of "finance", that person not being a customer of the financial institution could not invoke the jurisdiction provided under section 9 of the Ordinance as section 9 of the Ordinance does not authorize such person to invoke banking jurisdiction. The real test is not that a dispute has arisen in relation to a transaction defined as "finance" under section 2(d) of the Ordinance, but the real test is that dispute should have arisen between a "financial institution" and its "customer". There is no denying the fact that such dispute must relate to a financial facility defined under the term "finance" but it is also necessary that dispute must relate to a financial facility defined under the term "finance", but it is also necessary that dispute should have arisen between a financial institution and its customer and no one else. A dispute relating to any of the transactions covered by the definition of "finance", if' not between a financial institution and its customer, then this is not sufficient the give jurisdiction to the Banking Court to try such dispute. A party other than a financial institution or a customer can neither sue nor be sued under section 9 of the Ordinance, as there is no such room for them in section 9 of the Ordinance. Hence a person not being a customer, if has to sue a financial institution, he is to do so under the provisions of general law and not under section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

Definition of "customer" as provided in S. 2(d) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 includes three categories of persons. First category is of the. person to whom finance is extended by a financial institution. This category means persons who avail fund based financial facility from a financial institution.

The second category of persons who come within the definition of "customer' are the persons, who avail non-fund based financial facility such as Guarantee or Letter of Credit i.e. the persons on whose behalf a Guarantee or a Letter of Credit had been issued by a financial institution. The persons for whose benefit such instruments are opened i.e. the beneficiary of such instruments are not included within the definition of section 2(c) of the Ordinance, as it includes within its ambit as "customer" only such person on whose, behalf a Guarantee or a Letter of Credit has been issued. The persons who are entitled to receive finance from a financial' institution without any obligation to repay, such as a beneficiary of Guarantee or Letter of Credit or a person who is entitled to receive payment from a financial institution in order to make supplies to a customer of a financial institution cannot be treated as a `customer' of the financial institution. There is no room for including the beneficiary of the non-fund based facility to be included in the definition of "customer". A beneficiary cannot be treated a customer of a financial institution as financial institution is not concerned as to who is the beneficiary of its Guarantee or Letter of Credit. It may not even come in contact with the beneficiary of a Guarantee: or a Letter of Credit. The beneficiary has merely figured in at the instance of the person on whose behalf the financial institution has issued a Guarantee or a Letter of Credit. Extending the meaning of the word "customer" to the beneficiary of an instrument would amount to doing violence to the provisions of section 2(c) and section 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.

The third and the last category of persons who fall under the definition of "customer" are those who stand surety or indemnifier before a financial institution on behalf of direct customers of financial institutions. This last category of persons though not, the direct customers of a financial institution, as is the case with the first two categories of persons, but through a deeming provision of section 2(c) of the Ordinance, they too have been made customers of the financial institutions as they have taken upon themselves the obligation to discharge the liability of a customer, who availed the financial facility from a financial institution.

The above analysis of the meaning of the word "customer" as defined in section 2(c) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 clearly leads to the conclusion that the word "customer" means and includes (a) a person to whom finance has been extended directly by a financial institution; (b) a person on whose behalf a financial institution undertakes to make payment to a third party e.g. under a Guarantee or a Letter of Credit; and (c) a person who has taken upon himself the obligation to repay to the financial institution the defaulted sum in his capacity as surety or indemnifier. Therefore, only these three categories of persons come within the definition of "customer" and only they can sue or be sued under section 9 of the Ordinance. No person, no matter in what capacity he is connected with a financial facility, if he does not fall within the definition of a "customer" as defined under section 2(c) of the Ordinance, he can neither sue nor be sued under section 9 of the Ordinance, 2001 and the legal remedy for and against him lies before ordinary Civil Court.

The definition of "customer" as provided under section 2(c) of Financial Institutions (Recovery of Finances) Ordinance, 2001 includes within its ambit only such persons against whom a financial institution has recourse in the event of .default in repayment of finance provided by it i.e. the persons upon whom obligation is created to repay in case of default in repayment and no one else and it is for this reason that section 9 of the Ordinance envisages only a financial institution and its customer as party to a banking suit. Thus, the persons who ultimately become liable to make payment to a financial institution in case of a default in the repayment of finance are the persons who fall under the definition of "customer" and none else.

Qatar Airways PLC v. ANZ Grindlays Bank 2000 CLC 1455 not fol.

Aziz A. Shaikh for Plaintiff.

Abdul Sattar Lakhani for Defendant No.1.

2007 C L D 1547

[Karachi]

Before Mrs. Qaisar Iqbal, J

MY BANK LTD.---Plaintiff

Versus

SPEEDWAY FONDMETALL PAKISTAN LTD. and another---Defendants

Suit No.B-5 of 2007, decided on 10th April, 2007.

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

---S.9(4)---Suit for recovery of loan by plaintiff-Bank---Suit for damages filed by defendant/customer against plaintiff-Bank---Effect---Mere fact that defendant had filed suit for damages against plaintiff, would not disentitle plaintiff from obtaining decree in the suit and would not affect proceedings in terms of S.9(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Both rival suits were to be disposed of on their own merits.

1992 CLC 3; 2003 MLD 816; 1999 SCMR 1004 and 1987 CLC 2541 rel.

Ajaz Sheerazi for Plaintiff.

Ali Hyder Qureshi for Defendants.

2007 C L D 1550

[Karachi]

Before Azizullah M. Memon and Sajjad Ali Shah, JJ

FIRST WOMEN BANK LTD.---Appellant

Versus

Mst. KARIMA BANO and others---Respondents

C.A. No.7 of 2006, decided on 15th September, 2006.

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

----Ss.9 & 22---Qanun-e-Shahadat (10 of 1984), Art.129---Suit for recovery of security amount---"Demand Finance Facility" under self-employment scheme which was sanctioned and was availed by borrowers, whereas respondents stood their guarantors and had secured repayment of said finance facility---Borrowers having failed to repay their entire outstanding liability, Bank initiated recovery proceedings by filing suit before Banking Court---Suit was dismissed on -the basis of report procured from A.I.G. Police Criminalistic Division, without discussing the effect of deposit of original title documents by the mortgagors, creation of charge on the mortgaged property, appearing on record for the last 10 years, valuation certificates, site plan etc., and effect of registered mortgage deed having a legal presumption attached thereto that all judicial and official acts were performed regularly as provided in illustration "e" to Article 129 of Qanun-e-Shahadat, 1984--Impugned judgment and decree were set aside and case was remanded to the Banking Court for decision afresh after providing an opportunity to both parties for adducing evidence.

Abdul Hussain A. Junejo for Appellant.

Gulab Rai Jessrani for Respondents I.TOS.1 to 4.

Respondents Nos.2, 3 and 4 Present in Person.

2007 C L D 1555

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Ather Saeed, JJ

Messrs EAST YARN TRADING COMPANY and 2 others---Appellants

Versus

UNITED BANK LIMITED and 2 others---Respondents

Special H.C.A. No.303 of 2006; decided ors 31st August, 2007.

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

----Ss. 19 & 22---Corporate and Industrial Restructuring Corporation Ordinance (L of 2000), S.10---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 89---Execution of decree---Confirmed sale of mortgaged property through public auction under order of the court---Objection of judgment-debtors was about nominal sale, consideration as against the two offers made by them before the Court in terms of applications but no allegation was made about collusive, mala fide or illegal acts having been committed during the process of such sale---Judgment and decree under execution passed in suit followed by preparation of final decree-was not challenged in appeal by the judgment-debtors---Such conduct of judgment-debtors showed that not only the said decree had attained finality and was to be satisfied by the judgment-debtors but they had also, at the earlier stage of the proceedings, accepted such liability to be paid to the Bank---Record showed that prior to the sale of the properties, another property was sold in the execution proceedings of the same decree, but the judgment-debtors did not object to such sale though the Court which had also attained finality---Possession. of the two properties in question was admittedly obtained by the Nazir of the High Court much prior to the sale of these properties in favour of the auction-purchasers which was more .than sufficient notice of the execution proceedings to the judgment-debtors, but even then they did not opt to attend/pursue or contest execution proceedings---During the period when the properties in question were competently sold through CIRC and soon thereafter the .market value of the immovable properties in the urban areas of the city, particularly in the areas where the properties in question were situated, had multiplied in no time; and it was in, such circumstances that the judgment-debtor had given a second thought and opted to challenge confirmed transaction of sale of properties in favour of auction purchaser on the pretext of two applications---Grievance about low price raised by the judgment-debtors, seemed to be unjustified and an afterthought in circumstances and their case was clearly hit by the ratio of Supreme Court judgment in the case of Hudaibia Textile Mills Ltd v. Allied Bank of Pakistan Ltd. PLD 1987 SC 512.

Messrs Ripple Jewellers (Pvt.) Ltd. v. First Women Bank 2003 CLD 1318; Mrs. Shahida Saleem and another v. Habib. Credit and Exchange Bank and 4 others 2001 CLC 126; Mazarul Haq and another v. Messrs Muslim; Commercial Bank Ltd. and another PLD 1993 Lah. 706; Messrs National Electric Co. of Pakistan v. Allied Bank of Pakistan Ltd. and 2 others 1996 CLC 192; Nani Gopal Paul v. Prasad Singh and others AIR 1995 SC 1971; Messrs Nizamudin & Co. and 4 others v. Messrs Bank of Khyber 2003 CLD 914; Talib Hussain and others v. Board of Revenue 2003 SCMR 549; Messrs Majid & Sons and another v. National Bank of Pakistan 2002 CLD 1742; Habib Bank Ltd. v. Messrs Ajma Corporation and others 2000 CLC 1425; Messrs Jaipur Mineral Development Syndicate, Jaipur v. The Commer. Of L-T; New Delhi AIR 1977 SC 1348; Mst. Amina Begum and others v. Mehar Ghulam Dastgir PLD 1978 SC 220; Muhammad Sadiq and others v. Ali Asghar Khan and others 1995 CLC 522; United India Insurance Company Ltd. v. Rajendra Singh and others AIR. 2000 SC 1165; Mst. Manzoor Jahan Begum and others v. Haji Hussain Baksh PLD 1966 SC 375; United Bank Limited v. Messrs A.Z. Hashmi (Pvt.) Ltd. and 8 others 2000 CLC 1438; Messrs United Bank Ltd Karachi v. Mst. Asma Zafarul Hassan 1980 CLC 565; Trust leaving v. Messrs Regent Dying 2005 CLC .1368; Messrs Chawla International v. Habib Bank Limited and others 2003 CLD 956; Azhar Haider Shah v. The State 1988 SCMR 108; Muhammad Ikhlaq Memon v, Zakarin Ghani and others PLD 2005 SC 819; Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108; P.Q. Chemicals v. A.W. Brothers and others 2005 CLD 169 and Hudaibia textile Mills Ltd. v. ABL PLD 1987 SC 512 ref.

Badar Alam for Appellants.

Sadruddin Huda for Respondent No. 1.

Masood Anwar Ausaf for Respondent No.2.

Mushtaq A. Memon for Respondent No.3.

2007 C L D 1568

[Karachi]

Before Nadeem Azhar Siddiqi, J

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

Versus

Messrs BAHAWALPUR TEXTILE MILLS LIMITED---Respondent

J-Miscellaneous No.63 of 2003, decided on 21st December; 2005.

Companies Ordinance (XLVII of 2984)---

----Ss.305, 309 & 318---Civil Procedure Code (V of 1908), O.I, R.10---Winding up of company---Claim of creditors---Application for becoming party---Maintainability---Petitioner stepped into the shoes of creditor and intended to join proceedings---Objection was .raised that as petitioner was not party to proceedings, therefore, it could not intervene court proceedings---Validity---Since company was wound up and application for setting aside of winding up order was pending, therefore, creditors and contributors had right to intervene and to assist the court---As order was operating in favour of creditors by operation of law, no formal application under O.I, R.10, C.P.C. was required---Creditors with leave of the court could place their point of view before the court as in case of setting aside of winding up order creditors and contributors would suffer, thus their presence before the court was necessary---Even otherwise, court could call anyone to assist it and no restriction could be placed on the court in this behalf---High Court allowed petitioner to appear before court and place its point of view at the time of hearing---Objection raised against petitioner was overruled in circumstances.

Investment Corporation of Pakistan v. Messrs Noor Silk Mills Ltd. 1998 CLC 543 rel.

S. M. Aamir Naqvi for Petitioner.

Abul Inam for Defendants.

Sofia Screed Shah for Auction-Purchaser.

Aziz-ur-Rehman for CIRC.

Kadir Bux Umarani, Official Assignee.

2007 C L D 1590

[Karachi]

Before Sarmad Jalal Osmany and Sajjad Ali Shah, JJ

Messrs HOTEL GALAXY (PRIVATE) LIMITED through Chief Executive and 2others---Appellants

Versus

Messrs DAYS INN WORLDWIDE INC. through Signatory/Chief Executive---Respondent

H.C.A. No.83 of 2005 and C.M.As. Nos.557, 558 of 2005 and 1264 of 2006, decided on 2nd November, 2006.

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

----O.III, R.1, O.XXIX, R.1, XXXIX, Rr:1, 2 & O.XLIII, R.1(r)---Qanun-e-Shahadat (10 of 1984), Art.95---Suit by corporation---Dismissal of application for interim injunction---Objection as to non-signing of plaint by authorized person raised by defendant before Appellate Court---Validity---Defendant had not raised such objection in counter-affidavit filed before Trial Court, consequently plaintiff had no opportunity to meet such objection---Power of Attorney filed by plaintiff before appellate Court was duly notarized by Consulate General of Pakistan before filing of suit and Notorial Certificate supported competency of its executants---,Question as to whether person, who signed plaint was competent or not, was a question of fact and not purely a question of law, which could not be raised in appeal or during course of arguments before Appellate Court---Failure of plaintiff to establish during trial valid authorization of Attorney, would call for dismissal of suit and not before---Such objection being a question of fact could be decided appropriately at the stage of trial---High Court dismissed appeal in circumstances.

Muhammad Siddique Umer v. Australasia Bank Limited PLD 1966 SC 684; Aki Habara Electric Corporation (PTE.) Limited v. Hyder Magnetic Industries (Private) Limited PLD 2003 Kar. 420 and N.V. Nutricia v. Messrs Nutricia Foods International (Private) Limited 2000 CLC 866 ref.

ANZ Grindlays Bank Limited v. Saadi Cement Company Limited and others PLD 2001 Kar. 143 and United Bank Limited v. Shahyar Textile Mills Limited 1996 CLC 106 rel.

(b) Civil Procedure (V of 1908)-

----O.III, R.1 & O.XXIX, R.1---Person signing plaint, competency of---Question as to whether person, who signed plaint was competent or not, is a question of fact and not purely a question of law.

ANZ Grindlays Bank Limited v. Saadi Cement Company Limited and others PLD 2001 Kar. 143 and United Bank Limited v. Shahyar Textile Mills Limited 1996 CLC 106 rel.

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

----S.46---Civil Procedure Code (V of 1908), O.XXXIX Rr.1 & 2---Suit for declaration and injunction for infrignment of trade and service. mark---Interim injunction, application for---Order of trial Court restraining defendant from using plaintiffs trade and service mark, till final decision of suit---Validity---Plaintiff was owner of such mark acid had every right to sue anyone found to be using same without its authority---Defendant for grant of franchise could negotiate with parent organization/authorized agent of plaintiff---Nothing on record .was available to show that such parent organization had authorized defendant to use such mark or conferred authority upon any one to grant franchise on its behalf to defendant---High Court dismissed appeal in circumstances.

Agha Faquir Muhammad for Appellants.

Moin Qamar for Respondents.

2007 C L D 1600

[Karachi]

Before Muhammad Mujeebullah Siddiqui and Syed Zawwar Hussain Jaffery, JJ

HASSAMUDDIN---Appellant

Versus

AL-ZAMIN LEASING MODARBA and 5 others---Respondents

H.C.A. No.333 of 2005 and C.M.A. No.382 of 2006, decided on 27th April, 2006.

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

----S.12(2) & O.I, R.10---Application for joining as party' in suit after its decision---Scope---Once court decided suit, then Court would become functus officio and such application could not be made---Remedy under S.12(2), C.P.C. would be available to a person feeling aggrieved of final judgment to be obtained against him by misrepresentation, fraud or without showing him as a party---Where suit was pending, then any person feeling himself to be a necessary party, could make application for being joined as a party thereto.

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

----Ss.12(2), 96, O.I, R.10 & O.XXXIX, Rr. 1, 2, 4---Interlocutory order, recalling of---Application by stranger to suit/proceedings---Maintainability---Stranger without being joined as party to suit/proceedings could not make such application---Principles.

If a suit is still pending and any person feels that he is a necessary party to the suit, he may submit an application far being joined as party to the suit. If it is not done, a person feeling aggrieved would be stranger to the proceedings and a stranger cannot be allowed to make a request for recalling of the order, which has been passed with reference to the parties to the proceedings.

The interlocutory orders are normally in respect of the parties to the suit and- are not applicable to the entire world.

Once the legal character of a person is declared, then it has the effect of being applicable to the entire world, and any body feeling aggrieved by such declaration can file appeal or if it is a fraudulent order obtained by misdeclaration or misstatement or concealment of fact, an application under section 12(2), C.P.C., can be submitted.

(c) Interlocutory order---

----Nature and Scope---Such order would normally be in respect of parties to suit---Such order not being in nature of judgment in rem would not apply to entire world---Legal character of a person, once declared by Court would have effect of being applicable to entire world.

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

----Ss. 96, O.I, R.10, O.VII, R.2 & O.XXXIX, Rr.1, 2 & 4--Suit for recovery of amount---Interim order of Court directing Bank concerned not to disburse defendant's amount to any one---Application under O: XXXIX, R.4, C.P.C. by non-party to suit for recalling of such order---Maintainability---Applicant without being joined as party to suit could not make such application---Applicant had an opportunity to submit application .under 0.1, R:10,. C.P.C. and satisfy Court that he was a proper or necessary party as his interest was involved in issues before Court---Applicant, after acceptance of application under O.I, R.10, C.P.C., could file application for recalling of interim order---Applicant in case of rejection of application under O.I, R.10, C.P.C., could file appeal there against---Suit was still pending, thus, applicant could avail opportunity of being joined as party to suit and then could seek relief of recalling of interim order---Application for recalling of interim order for being made by a stranger was dismissed as non-maintainable in law.

H.M. Saya & Co. v. Wazir Ali Industries Ltd. PLD 1969 S. C. 65 distinguished.

(e) Administration of justice---

----Things not done in the manner as required by law would lead to legal anarchy---Principles.

Things should be done, as they are required to be done or not at all. The system of administration of justice envisages discipline and if every body is allowed to file any application he likes, then it will lead to legal anarchy. Every body seeking relief from the Court should bring himself within the system of law and cannot be allowed to destroy the system for seeking the relief.

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

---S.151---Applicability of S.151, C.P.C.---Scope---Resort to S.151, C.P.C. could be-made in a case not covered by any provision in C.P. C. ---Principles.

The legislature while enacting C.P.C., has taken care to cover all the situations and has thereafter enacted section 151, C.P.C. , with the purpose that in case a situation arises which is not covered by the provisions in C.P.C., then Courts may exercise inherent jurisdiction. However, if there are .specific provisions in C.P.C., then no resort has to be made to section 151, C.P.C.

Fiaz H. Shah for Appellant.

Kazim Hasan for Respondent No. 1.

G.M. Bhutto for Respondent No.5.

2007 C L D 1610

[Karachi]

Before Amir Hani Muslim, J

Messrs DEWAN SUGAR MILLS (PVT.) LTD.---Plaintiff

Versus

M. B. ABBASI and others---Defendants

Suit No.640 of 2006, decided on 9th August, 2006.

Trade Marks Ordinance (XIX of 2001)-

----Ss.40(4) & 17---Application seeing restraining order against the defendants from infringing and/or passing off their right in ;; respect of the trade mark, house mark, service mark, trade name 'Dewan' by using. the trade marls `Daily Dewan' for their newspaper, service and or any other product---Validity---Once a trademark/trade name is registered under the provisions of the Trade Marks Ordinance, 2001, then it restricts the other party from using such trade mark, moreso when it is distinct and its use would lead to confusion or deception---Grant of declaration to

u newspaper under Press Council of Pakistan Ordinance, 2002 sloes not give right to a party under the garb of distinct nature of business---Plaintiff, in circumstances, having made out a case for grant of injunction, application was allowed---Principles.

If trademark is registered the same cannot be used by any other person in the face of the provision of section 40(4) read with section 17 of the Trade Marks Ordinance, 2001. Mere granting of declaration under the Press Council of Pakistan Ordinance, 2002 does not authorize the defendants to infringe the right of the plaintiff guaranteed under the provision of the registered Trade Marks Ordinance, 2001. The scope of granting of declaration is independent of the provision of Trade Marks Ordinance, 2001. Grant of declaration does not give rise to a party a right to use the registered trade mark of another party under the garb of distinct nature of business. Publication of the Newspaper under the provision of Press Council of Pakistan Ordinance, 2002 on the basis of a declaration does not exclude the right of infringement of the plaintiff under the Trade Marks circumstance, 2001.

Once a trade mark/trade name is registered under the provision of Trade Marks Ordinance, 2001 then it restricts the other party from using such trade marls, moreso when it is distinct and its use would lead to confusion or deception.

The plaintiff prima facie had made out a case for grant of injunction and allowing to use the trade mark "DEWAN" by the defendants would cause inconvenience and would lead to deception and confusion in terms of the .provision of Section 17 of the Trade Marks Ordinance, 2001. The balance of convenience, also rested with the plaintiff for the purpose of granting of injunction. Injunction application, restraining the defendants from using the trade name/trade mark word in question in their publication was allowed.

Alpha Sewing Machine v. Registrar of Trade Makrs PLD 1990 SC 1074 fol.

Miss Shazia Tasleem for Plaintiff.

Rizwan H. Nadeem for Defendants.

2007 C L D 1620

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

Mian ABSAR AKHTAR and others---Appellants

Versus

ZARAI TARAQIATI BANK LTD. and others---Respondents

Special High Court Appeal No.238 of 2005, .decided on 9th September, 2007.

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

----S.9---Contract Act (IX of 1872), S.128---Suit for recovery of loan amount by Bank---Guarantor's denial of his liability for non-fulfillment of conditions precedent by Bank for furnishing of Bank guarantee---Validity---Bank Guarantee was executed a week prior to letter written by Secretary of Borrower Company to Bank containing conditions---Such unilateral conditions proposed by Borrower Company were not. accepted by Bank---Bank Guarantee was self contained document in all respects---If at the time of execution of Bank Guarantee, there was any understanding between guarantor or Borrower Company and Bank for implementation of conditions contained in such letter, then nobody had restrained guarantor from incorporating such terms in Bank guarantee---Borrower Company was an independent legal entity, thus, conditions contained in such letter of its Secretary could not form part of guarantee, separately executed by guarantor---Suit was decreed against guarantor in circumstances.

Custodian of Enemy Property, Islamabad v. Hoshang M. Dastur and 6 others PLD 1977 Kar. 377; Saudi-Pak Industrial and Agricultural Investment Company (Pvt:) Ltd. v: Messrs Allied Bank of Pakistan and another PLD 2003 SC 215 and Sadar Din v. Mst. Khatoon and others 2004 SCMR 1102 distinguished.

(b) Interpretation of documents---

----Written contract containing clear and unambiguous terms---Validity---Court would be reluctant to add/edit, modify or vary its terms on basis of any other evidence, oral or documentary, unless such intention of both parties was obvious.

(c) Contract Act (IX of 1872)-

----S.127---Plea of absence of consideration of guarantee---Purchase of project of Borrower Company by guarantor with all its assets and liabilities---Execution of guarantee by guarantor in favour of Bank in capacity as new Director of Borrower Company---Held; execution of such guarantee was not without consideration.

A.H. Lakho for appellants.

Muhammad Riaz Malik holding brief for Altaf Hussain for Respondent.

2007 C L D 1639

[Karachi]

Before Nadeem Azhar Siddiqi, J

KASB BANK LIMITED---Plaintiff

Versus

ABDIJL QADIR JANGDA---Defendant

Suit No.B-30 of 2005, decided on 14th September, 2007.

Financial Institutions" (Recovery of Finances) Ordinance (LXVI of 2001)-

----Ss.3(3) & 9---Recovery of Bank loan---Cost of funds---Proof---Interim decree was passed against defendant on the basis of his admission made in application for leave to defend---Bank sought final decree and claimed inclusion of cost of funds in the decree passed against defendant---Plea raised by defendant was that without. determination of date of default, cost of funds could not be included in the decree---Validity---When date of default was not disputed formal determination was not necessary and admitted date of default could be taken as date of default---Interim decree though was passed but it was not complied with thus the same could be taken as admitted date of default---State Bank of Pakistan had fixed cost of funds at 6.44%---High Court decreed the suit against defendant including the cost of funds at the rate of 6.44% from the date of interim decree---Suit was decreed accordingly.

Prince Glass Works Limited v. Commissioner Sindh Employees Social Securities Institution 1987 PLC 541 ref.

Jam Asif Mahmood for Plaintiff.

Abdul Ghaffar for Defendant.

Date of hearing: 29th August, 2007.

2007 C L D 1642

[Karachi]

Before. Sarmad Ja1a1 Osmany and Ali Sain Dino Metlo, JJ

NAZIR COTTON MILLS LTD.---Petitioner

Versus

STATE BANK OF PAKISTAN and others---Respondents

Constitutional Petition No. D-641 of 2005, decided on 25th May, 2007.

(a) State, Bank of Pakistan BPD Circular No.29 of 2002---

----Forced Sale Value (FSV) of borrowers' assets over which. The Bank had a charge and manner in which the same was to be decided by the Committee---Guidelines as per State Bank of Pakistan BPD Circular No.29 of 2002 detailed.

(b) Constitution of Pakistan (1973}-

----Art. 199---Constitutional jurisdiction of High Court---Scope---Duties and functions, of official functionaries---All official functionaries were to perform their duties within the ambit of law, efficaciously and judiciously---Where functionaries acted without jurisdiction, with mala fides or in violation of any law, their actions would certainly be amenable to the constitutional jurisdiction of High Court---Executive Authorities, before passing any orders, should give a right of hearing to the parties which , right was to be .read in all statutory provisions as well as rules/Notifications issued thereunder regardless of the fact that it may not be mentioned therein.

(c) State Bank of Pakistan BPD Circular No.29 of 2002---

----Banking Companies Ordinance (LVII of 1962), S. 33-B---Deliberations of the Committee---Nature.

Messrs Cons. (Pvt.) Limited v. Industrial Development Bank of Pakistan 2007 CLD 295; Messrs Ghazi Papers Limited v. IDBP and others W:P. No.17804 of 2003; United Bank Limited v. Messrs Azmat Textile Mills Ltd. 2002 CLD 542 and Tanya Knitwear (Pvt.) Limited v. United Bank Limited 2005 CLD 11.4 rel.

(d) Interpretation of statutes---

----Retrospective operation, of statute---Vested rights could not be taken away save by express words or necessary intendment in the statute---Where that was not done; statute must -not be presumed to operate retrospectively.

?

Al-Samrez v. Federation of Pakistan 1986 SCMR 1917; Molasses Trading and Export- (Pvt.) Limited v. Federation of Pakistan 1993 SCMR 1905; Crescent Pak Industries (Pvt.) Limited v. Government of Pakistan 1990 PTD 29 and Ahmed Investment (Pvt.) Limited v. Federation of Pakistan 1994 PTD 575 ref.

Ahmed Malik for the Petitioner.

Ainuddin Khan for the Respondent No. 1.

Iqbal Haider for Respondent No.3.

Date of hearing: 7th March, 2007.

2007 C L D 80

[Lahore]

Before Muhammad Khalid Alvi, J

THAL INDUSTRIES CORPORATION LIMITED through Legal Manager---Petitioner

Versus

GOVERNMENT OF PUNJAB through Chief Secretary Punjab and 11 others---Respondents

Writ Petition No. 3415 and C.M. No.1709 of 2006, decided on 10th October, 2006.

(a) Punjab Industries (Control on Establishment and Enlargement) Ordinance (IV of 1963)---

----S.3---Sugar Industry, establishment of---Letter granting permission to establish Sugar Industry signed and issued by Economic Adviser under directions of competent authority---Validity---Such letter would be deemed to be an order issued by the Government.

(b) Punjab Industries (Control on Establishment and Enlargement) Ordinance (IV of 1963)---

----S.3---Pakistan Environmental Protection Act (XXXIV of 1997), Ss.12 & 16---Constitution of Pakistan (1973), Art.199---Constitutional petition---Sugar industry, establishment of---Prayer in constitutional petition to restrain respondent from establishing industry without permission of Provincial Government and Environment Protection Authority---Obtaining of such permission by respondent during pendency of constitutional petition---Effect---Constitutional petition for all practical purposes had become infructuous.

(c) Punjab Industries (Control on Establishment and Enlargement) Ordinance (IV of 1963)---

----Ss.3 & 11---Sugar Industry, establishment of----Issuance of Notification dated 15-7-2005 by the Governor allowing setting up of sugar industry in the Province up to specified capacity--Issuance of letter dated 23-11-2005 by Chief Minister addressed to all DCOs imposing ban on setting up of sugar industry---Validity---Chief Minister being head of the executive could frame policies to be adopted by the Government--Any change in such policy, after its adaption by the Government, could be made through a notification to be issued by the Governor---Chief Minister by issuing such letter could not supersede notification issued by the Governor reflecting the will of Government.

Jawad Hassan and M.A. Hayat Haraj for Petitioner.

Zafarullah Khakwani, A.A.-G. for Respondents Nos.1 to 9.

Malik Muhammad Tariq Rajwana for Respondent No.11.

Sh. Sajjad Ahmad for Respondent No.12.

Muhammad Nawaz Manik, Deputy Director Legal on behalf of Respondent No.5.

Muhammad Arshad Hussain D.O. (E & IP).

Tasleem Haider Officer Grade-I, State Bank of Pakistan.

2007 C L D 86

[Lahore]

Before Muhammad Muzammal Khan and Syed Hamid Ali Shah, JJ

Mian MUHAMMAD YOUSAF and 5 others---Appellants

Versus

ORIX LEASING PAKISTAN LIMITED through Chief Executive---Respondent

First Appeal against Order No. 233 of 2005, decided on 13th September, 2006.

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

----S.12---Civil Procedure Code (V of 1908), O.IX, R.13 & O. VII, Rr. 1, 2---Recovery suit decreed ex parte--Application for setting aside same moved after limitation period and also not accompanied by an application for condonation of delay, was refused---Validity---Nothing was urged in application as to when the defendant had come to know of the decree in question---Mere mentioning of a date of knowledge not supported by an affidavit of other defendants was vague---Since two of the defendants had appeared before Court there was no force in the argument that defendants were not served by trial Court before passing ex parte decree---Trial Court treating the application under O.IX, R.13, C.P.C. as under S.12 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 had rightly dismissed the application being barred by limitation.

Saudi-Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Messrs Allied Bank of Pakistan and another 2003 CLD 596 and Messrs C.M. Textile Mills (Pvt.) Ltd. through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587 ref.

Shahid Ikram Siddiqui for Appellants.

Akhtar Javaid for Respondent.

2007 C L D 99

[Lahore]

Before Umar Ata Bandial, J

Sheikh INAYAT ALI---Appellant

Versus

NATIONAL BANK OF PAKISTAN through Manager and another---Respondents

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

State Bank of Pakistan B.C.D. Circular No.34 dated 26-11-1984---

----Constitution of Pakistan (1973), Art. 199---Constitutional petition---Reduction in profit rate by the Bank---Petitioner/ investor, in the year 2000 made investment of Rs.2.00 million with the Bank in its monthly income scheme under "Profit/Loss Sharing System"---At time of making investment, petitioner earned a rate of profit of 9.0% on the Scheme earning Rs.16, 000 per month income without deduction of Zakat; thereafter from time to time Bank reduced profit rate, resulting in the year 2004 profit payment was diminished to Rs.4,463 per month---Plea of Bank was that it had informed the petitioner that `Profit/Loss Sharing System' under which petitioner had made investment, did not contain any contractual commitment for a fixed or other rate of profit to be paid by the Bank on its monthly income Scheme and that profit rate on Profit/Loss Scheme' deposit accounts were declared by the Bank with the prior approval of State Bank of Pakistan in terms of its BCD Circular 34 date 26-11-1984---Petitioner had reiterated his basic point that it was contrary to reason that rising profits of the Bank should be reflected in declining profits rates on its Profit/Loss Scheme Accounts'---Petitioner had sought careful scrutiny of the record submitted, but had not raised any specific objection to the Bank's financial statements and P.L.C. profit rate calculated under BCD Circular No.34---Financial statement of Bank had shown that its profit after tax had risen considerably in the year 2004 and net mark up/interest income of Bank had also increased during the same period---Financial statements of the Bank did not provide specific and relevant information for the purpose of BCD Circular No.34 criteria and calculation---State Bank of Pakistan being author of BCD Circular No. 34 and its governing statutory authority, same played a regulatory role to ensure compliance of

the circular, for the purpose of safeguarding investors' rights---High Court referred the matter to the State Bank of Pakistan to ensure that provisions and objectives of said Circular were duly met.

Iftikhar Ullah Malik for Petitioner.

Iftikhar Hussain Shah for Respondents.

Date of hearing: 20th December, 2005.

2007 C L D 114

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

ABDUL RAUF---Appellant

Versus

FAROOQ AHMED and another---Respondents

R.F.A. No.209 of 2006, decided on 2nd October, 2006.

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

----Ss.6, 29-C & 35---Civil Procedure Code (V of 1908), O.XXXVII---Qanun-e-Shahadat (10 of 1984), Art.17(2)(a)---Evidence Act (I of 1872)---Stamp Act (II of 1899), S.2(5)(b)---Suit for recovery of money on basis of pro note---Promissory note not attested by marginal witnesses--Article 17(2)(a) of Qanun-e-Shahadat, 1984, applicability to promissory note---Expression "any special law" mentioned in Art.17(2)(a) of Qanun-e-Shahadat, 1984---Scope---Plaintiffs filed suit for recovery of money on the basis of pro note against defendant, asserting therein that defendant had executed pro note along with receipt and an agreement in favour of plaintiffs---Defendant though denied his liability to pay amount but admitted his signature/thumb-impression on pro note and receipt which according to him were obtained by plaintiffs on blank papers---Defendant contended that pro note had not been witnessed by two marginal witnesses as required under Art.17 of Qanun-e-Shahadat, 1984 and, therefore, no right to recover "any amount was to be based on the same---Trial Court decreed the suit and appeal filed thereagainst by defendant was dismissed by Appellate Court---Validity---Receipt and agreement had been proved by marginal witnesses---Defendant having admitted his signature and thumb-impression on pro note, burden of proof had shifted upon him to prove that he had signed and thumb-marked on blank papers---Statements of marginal witnesses had not been shattered in cross-examination, nor any motive was attributed to them that they were making false statements---Qanun-e-Shahadat, 1984, was a general law and expression "any special law" appearing in Art.17(2)(a) of Qanun-e-Shahadat, 1984, meant special law dealing with special subjects which were existing at the time of enforcement of the Qanun-e-Shahadat, 1984---Negotiable Instruments Act, 1881, was also a special law within meanings of Art.17(2)(a) of Qanun-e-Shahadat, 1984-Under Ss.6 & 29-C of Negotiable Instruments Act, 1881, promissory note and cheque were negotiable instruments which could not be attested by witnesses and in case any signature by stranger were appended thereupon, the signing was to be presumed to have been made as indorser---Under S.35 of Negotiable Instruments Act, 1881, attestation of pro note by witnesses was impermissible and could only be made by a stranger in capacity and status of an indorser---Under S.2(5)(b) of Stamp Act, 1899, if an instrument, which otherwise might be a promissory note, but if attested by witnesses, it attained legal status of a bond and no more remained a negotiable instrument---One of the important tests to determine whether an instrument was bond or promissory note, was attestation of witnesses---Promissory note in question was not required to be attested by any witness and, moreover, when the same was tendered in evidence by plaintiffs, no objection was raised by defendant---Promissory note had been proved by two marginal witnesses of receipt---Appeal was- dismissed. ?

Ram Narayan Bhagat and another v. Ram Chandra Singh and others AIR 1962 Patna 325; Haji Hamzo Panhwar. v. Muhammad Ibrahim, and another PLD 1963 (W.P.) Kar. 962 and Dayal and another v. Bhimma 1925 Oudh 188 rel.

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

----S. 4---Promissory note---Four conditions to qualify as a promissory note enumerated.

Following are the conditions to qualify as a promissory note:--

(i) an unconditional undertaking to pay;

(ii) sum should be a sum of money and should be certain;

(iii) payment should be to or to the order of a person who is certain or to bearer of instrument and

(iv) maker should sign it.?

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

---Art. 17(2)(a)---Expression "any special law" appearing in Art.17(2)(a) of Qanun-e-Shahadat, 1984 means special law dealing with special subjects which existed at the time of enforcement of the Qanun-e-Shahadat, 1984.?

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

----Ss.6 & 29-C---Promissory note and cheque were negotiable instruments which could not be attested by witnesses and in case any signature by stranger were appended thereupon the signing was to be presumed to have been made as indorser. ?

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

----S. 35--Attestation of pro note by witnesses was impermissible and could only be made by a stranger in capacity and status of an indorser.?

(f) Stamp Act (II of 1899)---

----S. 2(5)(b)---If an instrument, which otherwise might be a promissory note, but if attested by witnesses, the same attained legal status of a bond and no more remained a negotiable instrument---One of the important tests to determine whether an instrument was bond or promissory note, was attestation of witnesses.?

?

S. M. Masud for Appellant.

Mian Muhammad Aslam Arain for Respondents.

Date of hearing: 2nd October, 2006.

2007 C L D 163

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

Sheikh RIAZ ALI---Appellant

Versus

Messrs NIB (NDLC-IFIC) through Branch Office and 5 others---Respondents

R.F.A. No.366 of 2004, decided on 6h November, 2006.

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

---Ss. 9 & 22---Civil Procedure Code (V of 1908), O.I, R.10---Suit for recovery of finance---Impleading of party--Appellant moved application under O.I, R.10, C.P.C. to be impleaded as a party to the suit and had alleged that he was the real owner in possession of land in respect of which respondent had created a mortgage; and that respondent by fraud and forgery had fabricated and manufactured sale-deed of land alleged to have been executed in his favour by appellant--Application of appellant for impleading him as party, was dismissed by Banking Court and constitutional petition filed by appellant against dismissal order was pending adjudication---Banking Court having passed decree in favour of Bank and against respondents, appellant in said changed circumstances filed appeal against judgment and decree of Banking Court and also challenged order of Banking Court, whereby his application for impleading him as party was dismissed---Bank had raised a preliminary objection about the maintainability of said appeal contending that appellant as an aggrieved party had also availed appropriate remedy of filing objections under S.47, C.P.C. before Banking Court/Executing Court and said objections had been entertained by the Court, which were pending in which stay order had also been granted in favour of appellant, restraining sale of property in auction in execution of decree in favour of Bank---Contention of respondent was that both remedies could not be availed by appellant--Appellant, in circumstances did not press his appeal, however, he had stated that during pendency of his suit, auction of disputed property be stayed---On objections of appellant, Banking/Executing Court had taken cognizance of the matter and had granted stay order to appellant---If any order adverse to interest of appellant was passed, such order could be challenged by him before appropriate forum in proper proceedings---Stay order, however could not be granted to appellant in the present appeal which was dismissed as withdrawn by the appellant.

Syed Waqar Hussain Naqvi for Appellant.

Muhammad Azeem Malik for Respondent No.1.

2007 C L D 172

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

Mst. NOOR BEGUM through Legal Representatives---Appellants

Versus

Messrs ZARAI TARAQIATI BANK LTD. and 2 others---Respondents

E.F.A. No, 486 of 2005, heard on 16th October, 2006.

Financial Institutions (Recover} of Finances) Ordinance (LXVI of 2001)---

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.89---Execution of decree---Objection petition---Summary disposal---Auction proceedings---Property in question was sold to the highest bidder and on 12-7-2005, sale certificate was issued---On 20-8-2005, appellants filed objection petition under O.XXI, R.89 C.P.C. claiming themselves to be the actual owners and offered to deposit 5% along with decretal amount---Executing Court summarily dismissed the objection petition on the ground that sale certificate had already been issued in favour of auction­-purchaser-Plea raised by appellants was that they attained knowledge of sale only two weeks prior to filing of objection petition, thus their petition was within time-Validity-As the question whether appellants had the knowledge of auction of property in question or not and whether the application should have been filed within thirty clays, even if they had no knowledge, was a question of fact which needed determination and for that an inquiry should have been conducted by the Court---High Court in exercise of appellate jurisdiction, set aside the order passed by Executing Court and objection petition was remanded to be decided afresh--Appeal was allowed.

Syed Suleman Haider Jafri for Appellants.

Shahid Ikram Siddiqui for Respondent No.1.

S. Tariq Nawaz Bhatti for Respondent No.2.

Nemo for other Respondents.

Date of hearing: 16th October, 2006.

2007 C L D 183

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

UMER HAYAT through Legal Heirs---Appellants

Versus

ZARAI TARAQIATI BANK LTD. through Manager---Respondent

F.A.O. No.236 of 2005, heard on 31st October, 2006.

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

----Ss.9 & 12---Qanun-e-Shahadat (10 of 1984), Art.129 (e)---Ex parte decree, setting aside of---Remanded case---Service of notice---Postal receipt---Presumption---Non-compliance of order passed by High Court---Case was earlier remanded by High Court in presence of both the parties and it was directed that the suit should be decided in two months time---In post remand proceedings, defendants did not attend the Court and were proceeded ex parte and decree was passed---Plea raised by defendants was that they were not served in accordance with law---Validity---Defendants, in view of the direction of High Court, did not make any inquiry from Banking Court as to whom the case was remanded with a direction to decide it within two months---Notices were issued to defendants as well as their counsel, under registered cover/Acknowledgement Due, as also through courier service and through process server---Certified copies of the receipts were available on record which showed that counsel of defendants had received the notice sent to him through courier service---Statutory presumption was attached to postal receipts that a notice under registered cover had reached its destination---Process server reported that house of defendants was locked and notice was affixed on outer door of the house---Defendants claimed to have been informed by Lambardar of their village about factum of passing of ex parte decree---Fact that Lambardar came to know about the decree and not the defendants being strange, High Court declined to interfere with judgment and decree of Banking Court--Appeal was dismissed in circumstances.

Ch. Shahid Saeed for Appellants.

Mian Nisar Mahmood for Respondent.

Date of hearing: 31st October, 2006.

2007 C L D 185

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

Messrs A.B. FABRICS and 3 others---Appellants

Versus

NDLC-IFIC BANK LTD. (NIB) through Branch Manager---Respondent

R.F.As. Nos.308 to 310 of 2006, decided on 4th October, 2006.

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

----Ss.17 & 22--Appeal---Consolidated judgment---Scope---Borrowers against financial institution filed two suits, whereas suit for recovery was filed against them---Banking Court, in recovery suit, on 1-3-2006, passed a consolidated judgment and decreed the suit in favour of financial institution, while the two suits filed by borrowers that were dismissed being infructuous--Plea raised by borrowers was that as their suits were fixed on 8--3-2006, therefore, no judgment regarding both the suits could have been passed on 1-3-2006---Validity---Banking Court while deciding three suits on 1-3-2006, and disposing of borrowers two suits, on 8-3-2006, had committed grave legal error, which vitiated the judgments and decrees---High Court remanded the cases to Banking Court for decision afresh---Appeal was allowed.

Haji Ali Khan and Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Ltd., Abbottabad PLD 1995 SC 362 rel.

Zafar Iqbal Chohan for Appellants.

Ahmad Shahzad Farooq Rana for Respondent.

2007 C L D 188

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

Messrs LIAQAT FLOUR AND GENERAL MILLS through Partners and 3 others---Appellants

Versus

Messrs MUSLIM COMMERCIAL BANK LTD. - --Respondent

R.F.A. No.545 of 2003, heard on 30th October, 2006.

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

----Ss.9. 10, 12 & 18---Ex parte decree---Duty of Court---Blank banking documents---On enforcement of Financial Institutions (Recovery of Finances) Ordinance, 2001, out of four defendants only one filed fresh application for leave to defend the suit, which was dismissed by Banking Court and the suit was decreed against all defendants---Plea raised by defendants was that no decree could have been passed by Banking Court on the basis of blank documents submitted by the bank---Validity---Demand Promissory Notes and the agreements of finance were blank: most of them were even without date; in plaint the bank had not set out a case regarding running finance on the basis of such agreements---From the statement of accounts, it seemed to be a case of running finance; plaint was not initially supported by complete statement of accounts---Such were some of the anomalies and deficiencies, which floated on the face of bank's case and should have been considered by Banking Court, while passing the decree---Irrespective of the fact that there was no leave application on behalf of defendants and if filed the same had been dismissed, decree should not have been passed by the Court in a mechanical manner, specially for the omission of plaintiff to support its claim by filing complete statements of account, along with the suit---Such was very material and crucial aspect of the case but Banking Court had not even adverted to the same---Defendants after filing of complete statement of account by bank, under the new law, were entitled to an opportunity given to them expressly by the Court to file an amended leave application but from the record it transpired that it was not so done---High Court in exercise of appellate jurisdiction, set aside the judgment and decree passed by Banking Court and remanded the case for decision afresh with a permission to defendants to file fresh application for leave to defend the suit---Appeal was allowed accordingly.

Muhammad Asghar Khan for Appellants.

Shahzeb Masud for Respondent.

Date of hearing: 30th October, 2006.

2007 C L D 192

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

HABIB BANK LTD.---Appellant

Versus

Messrs SHARIA HABIB CORPORATION through Proprietor and 8 others---Respondents

F.A.O. No.271 of 2006, heard on 14th November, 2006.

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

----Ss.9, 19 & 22---Suit for recovery of loan---Execution of decree---Property owned by respondent (3) having been attached, respondents (5 to 9) filed objections against said attachment, contending that respondent (3) had surrendered his share in the suit property in favour of their predecessor-in-interest---Validity---Question of title in respect of attached property could not have been summarily decided by Executing Court---Document had to be produced and proved in accordance with law, to be considered for decision of the matter--High Court, allowing appeal, set aside the impugned order with the result that objection petition filed by respondents (5 to 9) would be deemed to be pending before the Banking Court---Executing Court would frame appropriate issue arising out of said pleadings and after recording evidence of parties, would decide the matter within prescribed period of time.

Waheed Mazhar for Appellant.

Tahir Atiq Paracha for Respondent No.3.

Shahid Ikram Siddiqui for Respondents Nos.5 to 9.

Date of hearing: 14th November, 2006.

2007 C L D 193

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

NAJMA KAUSAR---Appellant

Versus

CITIBANK N.A. through Branch Manager/Principal Officer and 4 others---Respondents

E.F.A. No.329 of 2005, heard on 13th November, 2006.

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

----Ss. 9 & 22-Suit for recovery of loan---Execution of decree---Objection to sale of mortgaged property---Suit filed by respondent-Bank having been decreed, mortgaged property was ordered to be sold in execution of said decree---Appellant filed objections to the proposed sale which were dismissed by Executing Court---Respondent-Bank was called upon to produce original documents relating to the mortgage of the suit property, but it failed to comply---No one having turned up for respondent-Bank on the date fixed for hearing despite repeated calls, Bank was proceeded against ex parte---Plea of appellant was that she was bona fide purchaser of mortgaged property and said property had been mortgaged with another Bank; that after entering into a registered agreement with owner of said property, she cleared said loan and the Bank informed the Authority of said payment and as such charge was lifted---Appellant had further contended that thereafter a private person obtained a stay order against said sale which ultimately was vacated by the Court and Authority effected mutation of said property in her favour in its record---Appeal filed by appellant was allowed and impugned order was set aside with the result that objection petition filed by appellant would be deemed to be pending before the Judge Banking Court which would seek reply from the decree-holder Bank, on appropriate issues and decide the matter after recording evidence of the parties within prescribed time.

Iqbal Mahmood Awan for Appellant.

Ex parte for Respondents.

Date of hearing: 13th November, 2006.

2007 C L D 196

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

SAJID HUSSAIN GILLANI---Appellant

Versus

SAUDI PAK LEASING COMPANY LTD. and 2 others-Respondents

R.F.A. No. 376 of 2006, decided on 17th October, 2006.

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

----Ss. 9, 10 & 22---Contract Act (IX of 1872), S.128---Suit for recovery of amount of loan for lease of certain equipment---Application for leave to defend suit---Respondent (2) took on lease certain equipment from respondent (1) to which appellant and respondent (3) stood guarantors and executed documents---Subsequently respondent (2) having committed default and failed to liquidate outstanding amount, suit was filed by respondent (1)---Both respondent, borrower and guarantors filed separate applications seeking leave to defend suit---Banking Court after finding that appellant failed to raise arty plausible cause, proceeded to dismiss his said application on merits, while application of respondents (2 and 3) was dismissed for non-prosecution and suit was decreed against appellant and respondents (2 and 3) jointly and severally vide impugned judgment---Contention of counsel for appellant/guarantor was that though appellant had executed personal guarantee in favour of respondent (1) but decretal amount be firstly recovered from respondent (2)/principal debtor who was in possession of the leased machinery---Execution of guarantee by appellant favouring respondent (1) was admitted---Under provisions of S.128 of Contract Act, 1872. liability of the surety was co-extensive with that of principal debtor---Appellant had not been able to demonstrate from the available record that it was otherwise provided in the letter of guarantee---Impugned judgment was not only in accordance with record of the case, but same was also in consonance with the law on the subject.

Muhammad Naeem Ahmad for Appellant.

2007 C L D 202

[Lahore]

Before Syed Asghar Haider, J

Haji MUHAMMAD AFZAL & MUHAMMAD YOUSAF, TRADING AS ZAFAR AUTO & FILTER HOUSE---Appellant

Versus

Messrs HITACHI LIMITED---Respondent

F.A.O. No. 39 of 1996, heard on 2nd October, 2006.

Copyright Ordinance (XXXIV of 1962)---

----Ss. 2, 3, 10, 39 & 41---Rectification application--Application of appellant for registration of "Hitachi Filter" for his product, having initially been allowed by Registrar: a representation was filed against same by respondent before the Copyright Board, which was allowed and word "Hitachi" was ordered to be expunged from the Registration---Appellant had contended that application for rectification filed by respondent was malicious and mala fide as initial application made by appellant was granted after examining all aspects and law, but decision of Registrar was illegally reversed without appraising relevant material or law---Validity ---"Hitachi" was a household name which was used by respondent in Japan since, 1910: was registered as a trade mark in Japan and was also in its use in Pakistan since, 1964---Registrar Copyright, in circumstances exceeded jurisdiction by granting application of appellant, which was rightly corrected/ rectified by the Copyright Board by reversing decision of Registrar---No element of mala fide had been proved and impugned order being in consonance with law, warranted no interference in appeal.

Pakistan Drug House (Pvt.) Limited v. Rio Chemical Company and another 2003 CLD 1531; Abbas Hussain Farooqui v. Messrs Royal Printing Press and Ali Printing Service, Karachi and 10 others PLD 1970 Kar. 551 rel.

Hafiz Abdul Rehman Ansari for Appellant.

Hassan Irfan Khan for Respondent.

Date of hearing: 2nd October, 2006.

2007 C L D 214

[Lahore]

Before Sh. Azmat Saeed, J

MUSLIM COMMERCIAL BANK LIMITED through General Attorney---Decree-holder

Versus

Messrs CHAUDHRY APPARELS LIMITED through Chief Executive and 11 others--Judgment-debtors

Execution Petition No.26-B of 1998, C.O.S. No.92 of 1997 and C.M. No.133-B of 2004, decided on 20th November, 2006.

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

----Ss.9. 15 & 19---Suit for recovery of loan---Execution of decree--Sale of mortgaged property without intervention of the Court---Issuance of sale certificate---Application for--Applicant/auction purchaser had sought issuance of sale certificate in respect of mortgaged property purchased by her through auction---Property in question which was mortgaged with decree-holder Bank, was sold by Bank without intervention of the Court in favour of applicant/auction purchaser---Since sale without intervention of the Court was effected after passing of decree, matter fell squarely within the purview of S.9 Financial Institutions (Recovery of Finances) Ordinance, 2001---In case of a sale of mortgaged property by a financial institution without intervention of the Court, mode of transfer of title would be through the execution of a deed of conveyance by the said financial institution and not by the Court through a sale certificate.

United Bank Limited v. Defence Housing Authority 2004 CLD 215 ref.

Amir Zahoor Chohan for Applicant.

2007 C L D 229

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

CRYSTAL SEEDS (PVT.) LTD. LAHROE through Chief Executive and 2 others---Appellants

Versus

CRESCENT COMMERCIAL BANK LIMITED LAHORE through Branch Manager---Respondent

Regular First Appeal No.202 and C.M. No.2 of 2006, decided on 4th September, 2006.

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

----S. 10(3)(4)---Suit for recovery of bank loans---Application for leave to defend the suit---Defence established its case to the extent of part of claim---Effect---Bank filed suit for recovery of amount along with compensation and cost of funds against defendants---Defendants filed application for leave to defend the suit which was dismissed by Trial Court and suit filed by plaintiff was decreed--Defendants contended that Trial Court had incorrectly invoked subsections (3)(4) of S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 as the same had been complied with and there were triable issues requiring the recording of evidence, therefore, leave ought to have been granted in the case-Validity-Record revealed that defendants had failed to make out a plausible defence with regard to certain unpaid overdue rental amount---Balance claim of plaint g pertained to late payment charges and cheque return charges---Unpaid overdue rental amount was prima facie a penalty---Balance claim of plaintiff pertaining to late payment charges and cheque return charges needed to be proved in evidence by plaintiff---Plaintiff, in the facts and circumstances of the case, was entitled to an interim decree as to unpaid overdue rental amount along with cost of funds and defendants were entitled to unconditional leave to defend the suit as, to balance claim of plaintiff---Appeal was accepted accordingly.

Muhammad Arshad-V for Appellants.

Mian Sultan Tanveer Ahmad for Respondent.

2007 C L D 244

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

HABIB BANK LIMITED, LAHORE---Appellant

Versus

Messrs CREATIVE ENTERPRISES (PVT.) LTD. and others---Respondents

R.F.A. No.42 of 2003, heard on 16th October, 2006.

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

----Ss. 9, 19 & 22---Suit for recovery of loan---Appellant Bank filed suit for recovery of loan pleading that three financial facilities were provided to respondent (1) who executed charge documents, while respondents (2) who were guarantors of respondent (1), executed personal guarantees---Banking Court passed interim decree for recovery of loan against respondent (1), but decreed appellant's suit against respondents (2 and 3) for recovery of amount to the extent of their guarantee---Validity---Impugned order was devoid of reasons and lacked alt characteristics of valid a; ~d legal judgment and of judicial order---Impugned judgment was sketchy, slipshod and devoid of reasons and was not at all a "speaking order" and could not be called a judicial order" within the parameters set up by law---Tenor of impugned judgment amply manifested. non-application of judicial mind and casual and cursory approach of Banking Court---Judicial order" must be speaking order manifesting by itself that the Court had applied its judicial mind to the issues and points of controversy involved in the cases---Impugned judgment which was not a speaking order and was devoid of reasons, was not maintainable in law which was set aside.

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

Shams Mehmood Mirza for Appellant.

Kh. Saeed uz Zafar for Respondent No.2.

Nemo for Respondent No.1.

Respondent No.3 proceeded ex parte vide order dated 11-9-2006.

Date of hearing: 16th October, 2006.

2007 C L D 257

[Lahore]

Before Syed Zahid Hussain, J

ISLAMIC REPUBLIC OF PAKISTAN through Directorate General (Procurement) Army, Ministry of Defence and another---Appellants

Versus

Messrs Sheikh MUHAMMAD SADIQ MUHAMMAD AFZAL through Proprietor

and Legal Heirs and others---Respondents

R.S.A. No.30 of 1996, heard on 13th September, 2006.

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

----Ss. 41, 42, 24 & 63---Supply of goods---Acceptance of goods by buyer on due inspection---Rejection of some of goods after a lapse of one year of its delivery on basis bf inspection carried out by buyer at the back of seller---Validity---Cumulative reading of Ss.41 & 42 of Sale of Goods Act, 1930 showed that place of examination/inspection of goods were to be taken as place of delivery and that if any defect in the goods was found the same was to be conveyed within a reasonable time---Reasonable opportunity for inspection of goods did not mean unlimited period--After the goods had been accepted on inspection, the same could not be rejected afterwards---Stance of seller that since goods were accepted on the inspection the damage if any found after delivery of the same almost one year thereafter could have been due to arty act, omission, improper storage or careless handlings by buyer, was not without substance, setter's suit for recovery was therefore, rightly decreed by appellate Court in its appellate jurisdiction.

Rahim Bakhsh Piracha v. Muhammad Ibrahim 1978 SCMR 220 and Messrs Mahmood Industries v. West Pakistan, Water and Power Development authority and another 1987 CLC 1 196 ref.

Zafar Iqbal Chaudhry, D.A.-G. for Appellants.

Nemo for Respondents proceeded Ex parte.

Date of hearing: 13th September, 2006.

2007 C L D 267

[Lahore]

Before Mian Saqib Nisar, J

MUHAMMAD ASHRAF---Petitioner

Versus

AKHLAQ SHEEDA-Respondent

Civil Revision No.763 of 2006, decided on 6th November, 2006.

Negotiable Instruments Act (XXXVI of 1881)---

----S. 118-Civil Procedure Code (V of 1908) O.XXXVII, R.3---Suit for recovery of money on the basis of pro note---Negotiable instrument---Onus to prove---Presumption---Conditional leave to defend the suit---.Principles---Defendant denied having executed pro note in question but Trial Court, while granting leave to defend the suit, imposed condition of furnishing bank guarantee---Plea raised by defendant was that imposing of such condition tantamount to refusal of leave---Validity---If defendant, to whom alleged execution of pro note had been imputed, had outrightly denied execution of the document, without enabling the parties to prove/disprove the execution. Trial Court could not form a prima facie opinion that the pro note and receipt bore signatures and thumb impression of defendant---Holding defence of defendant as contumacious, tantamounts to prejudging the issue at the stage of leave---Presumption attached to negotiable instrument, until contrary was proved, was inter alia about the "consideration", however, under S.118 of Negotiable Instruments Act, 1881, there was no presumption that negotiable instrument, if denied, still should be presumed to have been executed by defendant as alleged by plaintiff---Trial Court had fallen into error in retying upon .5.118 of Negotiable Instruments Act. 1881---Observation of Trial Court that it was for defendant to specify reason as to why pro note was forged and fictitious, was fallacious and perfunctory---Trial Court. in fact at leave stage wanted defendant to prove a negative fact, onus of which should, in view of pleadings of the case, be upon plaintiff-Defendant could not state about the state of mind of plaintiff, as to why he prepared a forged document---Condition of deposit, as imposed by Trial Court was harsh and tantamount to negate the principles of law---High Court directed defendant to furnish solvent security regarding suit amount to the satisfaction of Court, as order imposing condition of deposit of bank guarantee was untenable-High Court modified the order of Trial Court to the extent of condition imposed.

Mian Rafique Saigol and another v. Bank of Credit and Commerce International (Overseas) Ltd. and another PLD 1996 SC 749; Abdul Rauf Ghauri v. Mrs. Kishwar Sultana and 4 others 1995 SCMR 925 and Fine Textile Mills Ltd. v. Haji Umar PLD 1963 SC 163 rel.

Prof. (R) Dr. Muhammad Jamil Bhutta v. Abdullah Farooq 2006 CLC 982 ref.

Syed Haider Ali Shah for Petitioner.

Ch. Muhammad Amin for Respondent.

Date of hearing: 6th November, 2006.

2007 C L D 272

[Lahore]

Before Mian Hamid Farooq and Syed Sakhi Hussain Bokhari, JJ

NAGHMA ARSHAD TOOR and 2 others---Appellants

Versus

HABIB BANK LIMITED and another through Sole Proprietor---Respondents

Regular First Appeal No.691 of 2002, heard on 19th September, 2006.

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

----S. 22---Contract Act (IX of 1872), S.133---Suit for recovery of bank loan---Mortgage not to be taken as security for repayment of second financial facility granted to principal debtor after death of mortgagee---Fresh documents executed at the back of surety without his consent---Effect---Plaintiff-Bank filed suit for recovery of certain sum against defendants including principal debtor and legal heirs of deceased mortgagor and guarantor--Defendants/legal heirs of deceased mortgagor and guarantor filed application for leave to defend but principal debtor did not file any such application---Banking Court decreed the suit--Defendants contended that memorandum of deposit of title deed was allegedly executed on 22-11-2000 for facility which was discharged on 30-11-2000 and their predecessor-in-interest died on 29-1-2001, therefore, said memorandum of deposit of title deed stood terminated and no fresh loan could be allowed on strength of alleged document: that subsequent to adjustment of first loan facility neither predecessor-in-interest of defendants nor they themselves executed any document to secure second finance facility which was allegedly availed by principal debtor on 3-3-2001 and that under S.133 of Contract Act, 1872, predecessor of defendants stood discharged from guarantee--Plaintiff-Bank submitted that continuing guarantee had been executed by predecessor of defendants and it was binding on legal heirs and that defendants informed the Bank about death of their predecessor when second facility had already been sanctioned---Validity---Mortgage allegedly created on 22-11-2000 could not be taken as security for repayment of second financial facility granted to principal debtor, after death of mortgagor-Plaintiff-Bank could not invoke bank guarantee dated 22-11-2000 as the same lost its efficacy after adjustment of first financial facility---Plaintiff-Bank had provided second financial facility to principal debtor, fresh documents and fresh agreement for financing were executed after death of guarantor/surety---Admittedly at the time of granting of second facility predecessor of defendants had already died and no liabilities could be created against a dead person---Original. agreement dated 22-11-2000 for which predecessor of defendants executed guarantee and created mortgage stood varied without consent of surety, therefore, surety stood discharged under S.133 of Contract Act, 1872---Principal debtor when executed fresh documents at the back of surety and without his consent, latest agreement was not to bind surety or his legal heirs as they were not signatory to those documents---Judgment passed by Banking Court suffered from Legal errors hence the same was set aside by High Court in appeal.

Dr. M.A. Qadir Khan v. The Bank of Bahawalpur Ltd. and another PLD 1984 Kar.211; National Development Leasing Corporation Limited v. Messrs National Fibres Limited and others 2003 CLC 637 and N.D. Leasing Corporation v. National Fibres Ltd. 2002 CLD 643 rel.

Ali Akbar Qureshi for Appellants.

Tahseen Ullah Butt for Respondent No. 1.

Date of hearing: 19th September, 2006.

2007 C L D 295

[Lahore]

Before Umar Ata Bandial, J

Messrs CONS (PRIVATE) LIMITED through Chief Executive and 2 others---Petitioners

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Regional Manager and another---Respondents

Writ Petition No.1085 of 2006, decided on 14th April, 2006.

State Bank of Pakistan B.P.D. Circular No.29 of 2002, dated 15-10-2002--

----Constitution of Pakistan (1973), Art. 199---Constitutional petition---Representation by the borrower to the effect that Forced Sale Value (FSV) of the assets charged to the Bank was Rs.1.0 million rather than Rs.10.0 million, Dispute Resolution Committee of State Bank of Pakistan, by its letter modified its decision and reduced settlement amount from Rs.9.154 million to Rs.5.533 million---Question before the High Court was whether Dispute Resolution Committee, in exercise of its authority under B.P.D. Circulars No.29, had jurisdiction to review its decision---Bank had defended the refusal by the Bank to comply the revised decision of said Committee on the grounds firstly, that it had no jurisdiction to review its earlier decision and that revision was based on a mistaken view of Forced Sale Value of the charged property---Contention of borrower was that as petitioner was under a duty to provide security for Rs.1.0 million, value of his charged property should be treated at that level---Provisions of B.P.D. Circular No.29 were concerned with Forced Sale Value of the charged security given by a borrower, rather than the value of such security that was necessary to avail the facility---Contention of petitioner was based on the latter premise---Such rationale, however, was not relevant for purpose of settlement amount worked out by Dispute Resolution Committee---Constitutional petition being meritless, was dismissed.???????????

?

Raja Jehanzab Akhtar for Petitioners.

Faisal Yaqoob Khan for Respondent No.1.

2007 C L D 304

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

MEER JAVED ASGHAR and 2 others---Appellants

Versus

CITIBANK N.A. through Attorney---Respondent

Regular First Appeal No.433 of 2006, heard on 28th November, 2006.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Leave to defend suit---Appellants were served. only one day prior to date fixed for hearing of the case---Appellants did not file application for leave to defend suit, suit was decreed as prayed for---Appellants were to make an application for leave to defend suit within 30 days and from the date of service of notice, appellants had 28 days to do the needful when Banking Court proceeded to decree the suit---Validity---Impugned order could not be maintained---Appeal was allowed, judgment and decree passed by Banking Court was set aside---Suit filed by appellants, in circumstances, would be deemed to be pending before Banking Court and appellants would file application for leave to defend suit within specified period.

Ahmad Rauf for Appellants.

Malik Muhammad Amjad Khan for Respondent.

Date of hearing: 28th November, 2006.

2007 C L D 312

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

HABIB BANK LIMITED---Appellant

Versus

MUHAMMAD ASIF and others---Respondents

F.A.O. No.256 of 2005, heard on 27th November, 2006.

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

----Ss.9, 19 & 22---Suit, for recovery of loan---Execution of decree---Suit filed by Bank having been partially decreed by Banking Tribunal regular first appeal was filed by Bank against that order contending that an amount of Rs.2,11, 000, had wrongly and illegally been denied in the decree---Decreed sum. in (he meantime, was paid by judgment-debtors and execution petition was disposed of accordingly by the Banking Court---When. however appeal came up for hearing before High Court. case was remanded to the Banking Court concerned. and after remand, the Banking Court took up the matter and disposed of the case having become infructuous---Validity---Reason that prevailed with Banking Court was the 'disposal of execution petition, which had been consigned to record due to satisfaction of the decree---Fact which had been overlooked by the Banking Court was concerned with grievance of Bank qua that part of the claim which had not been decreed---Said appeal having been remanded to Banking Court. matter required to be heard and determined by the Banking Court on its merits in accordance with law---Banking Court had clearly erred in law in disposing of the suit as having become infructuous---Impugned order, was not maintainable and remand order passed in regular first appeal, stood revived---Parties were directed to cause their presence/representation before Banking Court, for proceedings in the suit in accordance with law. ?

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

Shamas Mahmood Mirza for Appellant.

Syed Ghayas Anwar for Respondents.

Date of hearing: 27th November, 2006.

JDUGMENT

SYED ZAHID HUSSAIN, J.---On 1-11-1995 Chairman Banking Tribunal, Faisalabad partially decreed the suit filed by the appellant-Bank. R.F.A. No.40 of 1997 was filed by the appellant qua the same that an amount of Rs.2,11,000 had wrongly and illegally been denied in the decree. In the meantime the decreed sum was paid by the judgment-debtors and execution petition was disposed of accordingly by the Banking Court. When however the appeal came up for hearing before a Division Bench of this Court the case was remanded to the Banking Court, Faisalabad on 21-7-2003 in view of the judgment in Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others (PLD 1996 Lahore 672) and in R.F.A. No.23 of 1996 and R.F.A. No.98 of 1997. After remand the Banking Court No.II, Faisalabad took up the matter and "disposed of having become infructuous" on 14-7-2005. This order is subject-matter of this appeal.

2007 C L D 320

[Lahore]

Before Syed Hamid Ali Shah, J

MASHREQ BANK PSC through Constituted Attorney---Plaintiff

Versus

FAROOQ HABIB TEXTILE MILLS LTD. Through Director/Chief Executive and 8 others---Defendants

Civil Original Suit No. 93 of 1998, decided on 27th July, 2006.

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

---S. 9---Uniform Customs and Practice (for Documentary Credit Letters), (UCP 500), Art.2---Suit for recovery of bank loan---Agreements mentioned in letters of pledge not filed with plaint nor produced in evidence---Statement of account on letter head of plaintiff bank---Suit filed without statement of accounts---Effect---Documentary credit letter---Requirements of establishing existence of valid loan facility---Scope---Plaintiff-bank filed suit asserting therein that defendant company requested plaintiff for financial assistance and in response thereto two letters of credit were established whereby defendant No.1 was beneficiary that consolidated letter of pledge regarding stock was executed in favour of plaintiff that defendants Nos.2 & 3 were authorised vide resolutions of company to negotiate financial arrangements and sign documents; that as defendants Nos.2 to 8 signed letters of personal guarantee, therefore, executants were liable, severally and jointly, for liabilities of defendant No.1; that subsequently it was found that no stocks existed; that defendant No.1 being borrower was liable to pay liability as per terms of letter of credit---Defendants contended that amounts disbursed to defendant No.1 were on the request of opener of letter of credit: that defendant No.9 in order to ensure dispatch of goods, made letter of credit conditional; that correspondence as well as agreement between defendant No.1 and defendant No.9 revealed that pledge was created at desire of defendant No.9; that amounts disbursed were subject matter of Red Clause letter of credit, therefore, a beneficiary in such transaction was not personally liable;, that balance sheets of defendant No.1 did not reflect existence of any loan and that suit was not properly instituted---Validity---Assertions of plaintiff (bank) were not supported by any documentary evidence---Plaintiff witness in cross-examination had admitted that there was no sanction letter on record about disbursement of loan against pledge stocks and letters of personal guarantee of Directors and also that there was neither finance agreement between plaintiff and defendant No.1 nor a promisory note executed--Admittedly agreements mentioned in letters of pledge were not filed with plaint nor the same were subsequently produced in evidence---Contractual obligations of defendants in respect of pledge of stock, arid personal guarantees could be fixed only on basis of agreements which were mentioned in letters of pledge/guarantee but the same were not available and were not produced by plaintiff-In absence of such crucial documents defendants could not be burdened with any responsibility---Plaintiff-bank could establish existence of valid loan facility by bringing on record the application for loan facility, sanction letter, agreement of finance and statement of account showing entries of debit and credit and disbursement of amount of finance which elements were missing in the case---Letters of pledge were not' independent agreement but had been executed on basis of certain agreements which were specially mentioned in letters of pledge---Plaintiff witnesses had deposed nothing about these agreements and plaint was silent in this respect-Statements of account which were produced in evidence showed NIL balance---Statement of account on letter head of plaintiff bank filed with suit had no evidentiary value for reasons that the same had not been produced in evidence and secondly it could not be termed as statement of account as it lacked in element of debit and credit entries, account profile, levy of mark-up periodically and balance in relevant column---Such certificate could not be termed as statement. of account---In order to charge a person with liability, the entries in statement of account were to have corroboration---Statement of account by all means was to possess clarity, details and completeness---Under S.9 of Financial Institutions (Recovery of Finances) Ordinance 2001, a suit without statement of account was not competent and plaint which was not supported by a statement of account merited rejection---Letter addressed by defendant No.1 to plaintiff (bank) did not show arty admission on the part of defendant No.1 about its liability towards plains ff rather it was stated in the letter that amounts received were against red clause, thus, such letter had no value---Under Art.2 of Uniform Customs and Practice for Documentary Credits Letter was an offer whereby issuing bank on request of applicant authorised another bank to effect payment, accept and pay bills of exchange or negotiate document, provided the terms and conditions of credit were complied with which meant that buyer (the applicant of credit) applied to a bank in his country (the issuing bank) to open and issue in favour of setter (the beneficiary) a letter of credit to pay the beneficiary such amount on his fulfilment of terms and conditions specified in the letter of credit---Banks involved in documentary letters of credit transaction were agents of the parties and charged their commission for services they rendered---In documentary letter of credit, the banks dealt in documents and parties dealt in goods---Opening Bank in letter of credit, containing red clause, advises the advising bank to grant advance payment to the exporter to enable him to produce goods or raw material for preparation of exportable items for shipment---Advising bank then reimburses itself by negotiating the documents by exporter and if beneficiary fails to ship goods or fails to present documents or otherwise fails to repay the funds advance. the advising/confirming bank will write to issuing bank for reimbursement of amounts advanced---Goods, subject matter of Letter of Credit, were exported to foreign buyer which fact stood proved through export proceeds/realisation vouchers---Plaintiff on the contrary failed to produce agreement of finance and other agreements which were made basis of letters of pledge and letters of personal guarantee--Plaintiff had not extended any loan facility to defendant No.1 on the basis of pledge of stock---Real transaction was payment under letters of credit of which plaintiff was corresponding bank and defendant No.1 was beneficiary; in such transaction, if arty amount remained to be recovered, it was recoverable from advising bank---Plaint had been signed by two officers of plaintiff bank and power of attorney on behalf of these officers of the bank were already on file---Suit was properly instituted---Plaintiff had failed to prove that amounts subject matter of agreements mentioned in letters of guarantee were still outstanding as neither agreements nor the statement of account had been filed in this regard---Suit was dismissed.?

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

---S. 9---Suit without statement of account was not competent and plaint which was not supported by a statement of account merited rejection under S.9 of the Ordinance.?

(c) Banker and customer---

----Expression---'Documentary credit"---Meaning---Normal transac?tion of documentary credit was fundamentally a contract by which a payment teas to be made in exchange for documents---Transaction of documentary credit embodied three agreements to which parties were (a) buyer and issuing bank; (b) issuing bank and intermediary bank; (c) intermediary bank and beneficiary. ?

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

----S. 134---Liability of guarantor and principal borrower---Scope---Section 134 of Contract Act, 1872 envisaged that liability of guarantor was co-extensive with that of the liability of principal borrower---Guarantor was liable as long as claim against principal debtor survived.?

Muhammad Nawaz Kasuri for Plaintiff.

Tariq Kamal Qazi for Defendants Nos. 1 to 8.

Mian Qamar-uz-Zaman, Pervez Akhtar Malik and Ch. Imtiaz Elahi for Defendant No.9.

Date of hearing: 14th April, 2006.

2007 C L D 332

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

MUHAMMAD YASIN---Appellant

Versus

NATIONAL BANK OF PAKISTAN through Manager and another-Respondents

F.A.O. No. 292 of 2006, heard on 13th December, 2006.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Application for grant of leave to defend---Service of defendant---Appellant and his mother were proceeded against ex parte and ex parte decree was passed against appellant and application filed by appellant for setting aside ex parte decree was dismissed by Banking Court---Appellant, had contended that, though address of appellant was given correctly in the plaint, but it came to be recorded wrongly in the process issued by Banking Court and that, in circumstances there was no due service in law and in fact---Validity---Name of Block of residential area was stated as "USMA", in the plaint whereas in the process, it was mentioned as "UZMA"; it could not be said, in circumstances that appellant was duly served---Allowing appeal, impugned order and ex parte decree were set aside by High Court---Appellant could file application for grant of leave to defend in terms of S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, within specified period.

Tariq Waheed Khan for Appellant.

Abid Nazir Sial for Respondents.

Date of hearing: 13th December, 2006.

2007 C L D 334

[Lahore]

Before Nasim Sikandar, J

INAYATULLAH KHAN NIAZI---Petitioner

Versus

ADDITIONAL REGISTRAR OF COMPANIES and 2 others---Respondents

C.O. No. 1 of 2002, decided on 31st August, 2004.

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

----Ss. 9(3), 152, 73 & 263---Application for rectification of register of members of Company---Summary jurisdiction of High Court---Scope---Contentious issues involved between parties---Resolution---Petitioner filed application under S.152 of Companies Ordinance, 1984, seeking rectification of register of members of company which was a public company limited by shares and was incorporated on 18-2-1990---Petitioner alleged that respondent arid members of his family had been allotted shares without any contribution in cash or kind to the assets of company; that after transfer of originally allotted 14000 shares earlier held by previous management of another person and his family, said respondent got himself issued 250,000 shares of Rs.100 each without any subscription to company in cash or kind; that respondent committed a fraud on company by severing its assets in the form of declaration of a daily newspaper by delivering it to his son without having transferred arty benefit to the company; that all transactions were against mandatory provisions of S.73 of Companies Ordinance, 1984; that Registrar of Companies, Securities and Exchange Commission of Pakistan unlawfully accommodated returns of allotment of shares of value of Rs.2, 50.00, 000; that two returns of allotment filed with Registrar were liable to be rejected and quashed being not reflective of actual receipts of assets by company either in form of cash or in form of any property; that respondent in utter disregard of relevant provisions of Companies Ordinance, 1984, further raised the issued capital of company and had rather received additional amount from different persons without permission and consent of existing Directors; that respondent was continuously further reducing the ratio of shares holding of those who were not members of his family and in order to materialize his designs had arranged to further increase the authorized capital from Rs.40 million to Rs.50 million; that respondent was guilty of breach of trust in transferring the assets of company in the form of declaration of daily "Newspaper" to his son without any consideration and without any authorization from company and that issue of rectification of Register of members in the given situation was capable of disposal in a summary manner---Petitioner sought direction to Registrar of Companies to rectify/delete the name of respondent and his family members which he had got entered in the record of company without any receipt of cash or other consideration---Registrar of Companies stated that since transferor never complained to him regarding non-payment of consideration against transfer of shares therefore no action was taken in that regard---Respondent had objected to maintainability of present petition 'under S.152 of Companies Ordinance, 1984 on ground that in view of facts given and allegations made in petition, it could not be disposed of in a summary manner--Respondent claimed that he and his family members were genuine investors and share-holders of company who purchased shares from old management for a valuable consideration in pursuance of an agreement dated 3-9-1998; that none of these shares was issued by company without consideration, that petitioner could not challenge issuance of shares to previous management nor their transfer of shares in favour of respondent inasmuch as if at all any consideration was to be paid by respondent, it was payable to previous management/share-holders as neither company nor petitioner was in any manner a party to agreement dated 3-9-1998; that respondent, who was a genuine investor in view of agreement dated 3-9-1998 purchased entire holding of company and declaration of daily "Newspaper" and that petitioner became share-holder of company to the extent of shares worth Rs.1000 only on 25-12-1999---Respondent submitted that complicated issues of fact involved in the case could be resolved only in a regular trial and that jurisdiction of High Court under S.152 of Companies Ordinance, 1984 though very wide, could not be resorted to in such situation---Validity---Power vested in High Court under S.152 of Companies Ordinance, 1984 was to be exercised where legal title of applicant was clear---Summary jurisdiction of High Court in complicated or doubtful case, as contemplated in S.9(3) of Companies Ordinance, 1984, could not be resorted to---Petitioner was not correct in claiming that his only objection of lack of receipt of consideration for issuance of shares both in cash or otherwise could be resolved in summary jurisdiction-Part of shares were purchased from previous management for which there was no question of any payment to company while rest of them were issued by company for which adequate payment was actually made to company---Defence taken by respondent with regard to transaction involving transfer of declaration of daily "newspaper" was a factual controversy which could not be resolved in summary jurisdiction---Case of respondent that company even wider previous management had nothing to do with declaration of daily "Newspaper" and its transfer in favour of his son was not related to dispute between present parties again needed to be resolved after recording of evidence and appreciation of documents executed in that behalf---Validity---Irrespective of correctness or otherwise of allegation that present petitioner was re-agitating all issues, which were earlier resolved by Inspector under S.263 of Companies Ordinance, 1984, the fact remained that on a detailed inquiry said Inspector by way of his report did not agree to any of allegations set out for investigation by Securities and Exchange Commission of Pakistan---Dispute between parties, even if looked at from simplest possible angle as petitioner desired, could not be resolved in summary jurisdiction inasmuch as receipt of consideration by Company whose entitlement to such receipt was disputed by defence, still needed recording and appreciation of documentary evidence before coming to a conclusion---Petition wider S.152 of Companies Ordinance. 1984 could not be entertained till the time the contentious issues between parties were resolved by a competent forum---Contentious issues once settled by a competent forum, the petitioner could always approach High Court for exercise of jurisdiction under S.152 of Companies Ordinance, 1984---Proceedings intended by way of present application could riot culminate into a direction for rectification as prayed for without holding of a long drawn trial which obviously was not possible in summary jurisdiction of High Court---Petition was decided accordingly.?

Khurshid Ahmad Khan and another v. Pak Cycle Manufacturing Company Limited PLD 1987 Lah.1 rel.

Sh. Mushtaq Ahmad v. Shaukat Soap Factory and others 1987 CLC 2079; Zakir Latif Ansari and another v. Pakistan Industrial Promoters Ltd. and 2 others 1988 CLC 1541 and Rohail Hashmi and others v. Nabeel Hashmi and others 2003 CLD 201 ref.

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

---Ss. 152 & 9(3)---Summary jurisdiction of High Court---Scope---Power vested in High Court under S.152 of Companies Ordinance, 1984 was to be exercised where legal title of applicant was clear; in a complicated or doubtful case, summary jurisdiction of High Court as contemplated in S.9(3) of the Companies Ordinance. 1984 could not be resorted to.?

Khurshid Ahmad Khan and another v. Pak Cycle Manufacturing Company Limited PLD 1987 Lah. 1 rel.

Irfan Ahmad Sheikh for Petitioner.

Tariq Kamal Qazi and Muhammad Kamran Sheikh for Respondent No.2.

2007 C L D 344

[Lahore]

Before Mian Hamid Farooq and Syed Sakhi Hussain Bokhari, JJ

Messrs MULTIMED MARKETERS through Managing Partner and 7 others---Appellants

Versus

UNITED BANK LIMITED through Manager---Respondent

R.F.As. Nos.237 and 238 of 2005, heard on 13th September, 2006.

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

---Ss. 9, 10 & 22---Borrowers filed suit seeking declaration that mark-up being charged by the Bank was illegal---Bank on the other hand filed suit for recovery of loan against the borrowers---Bank when served, filed application seeking leave to defend the suit by the borrowers---Banking Court rejected plaint in borrower's suit holding that plaint in their suit did not disclose any cause of action, whereas Banking Court decreed suit filed by Bank against borrowers vide consolidated judgment and separate decrees---Validity---Banking Court instead of deciding first application of Bank filed by it to defend suit against it, rejected plaint of borrowers through impugned judgment, which was not justifiable---Banking Court was obliged under the law to first decide Bank's application for leave to defend the suit on its own merits before embarking upon the suit---If Banking Court was of the view that substantial question of law and facts were raised by the Bank, then at best leave to defend, could have been granted to Bank, but at that stage neither plaint could be rejected nor the suit could he dismissed---Banking Court, in circumstances had violated provisions of S.10(8) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court without rendering any reasons or/and adverting to grounds raised in borrower's plaint, had abruptly held that their plaint did not raise plausible or substantial questions of law and facts---Tenor of impugned judgment showed that Bank's suit was decreed in view of dismissal of borrowers suit---Leave application filed by borrowers in Bank's suit did disclose substantial questions of law and facts, in which evidence needed to be recorded---Interest of justice would have been adequately met if Banking Court granted leave to borrowers subject to imposition of some conditions---Allowing appeals impugned consolidated judgment and both decrees were set aside by the High Court---Both suits and leave applications filed by respective parties would be deemed to be pending before Banking Court which would decide same afresh after hearing parties 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.11, Lahore and another 2004 CLD 726 and Manzoor Ahmad and another v. Agricultural Development Bank of Pakistan through Manager, Nankana Sahib Branch and three others 2005 CLD 653 ref.

Khawaja Aamir Farooq for Appellants.

Muhammad Akram Pasha for Respondent.

Date of hearing: 13th September, 2006.

2007 C L D 365

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

VITA PAKISTAN PVT. LTD. through Director---Appellant

Versus

TRUST INVESTMENT BANK LTD. Through Branch Manager and 6 others---Respondents

Execution First Appeal No. 60 of 2006, heard on 20th November, 2006.

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

----S.19---Specific Relief Act (I of 1877), S.27 (b)---Civil Procedure Code (V of 1908), O.XXI, Rr.83 & 90---Execution of decree-Sale of property other than by auction---Objection to sale---Mortgaged property was put to auction for ten times but could not he sold out---Judgment debtor filed application in Executing' Court, seeking sale of property without auction, as he had a potential buyer---Executing Court with' the consent of decree holder and judgment debtor, sold the property in Court---After sale of property, appellant filed objection petition before Executing Court on tine ground that the judgment debtor had already executed agreement to sell in his favour thus the property could not be sold out---Validity---Banking Court had been given the discretion under S.19 (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, to execute decree in a manner it considered appropriate at the request of decree holder---Property, in the present case, could not be sold. despite several attempts by Court Auctioneer---Efforts made by Executing Court, whereby a price was obtained which apart from satisfying decretal amount was also acceptable to judgment debtors, could not be said to be unreasonable-Sale dial not at all cause any prejudice to the appellant as a suit for specific performance was pending---Sale would not at all derogate from the terms of agreement subject to its proof in civil Court and the agreement would be enforceable subject to terms of S.27 (b) of Specific Relief Act, 1877, against the subsequent purchaser as well---Appeal was dismissed in circumstances.

Navalkha and Sons v. Sri Ramanva Das and others AIR 1976 SC 2037 and Mohiuddin Molla v. The Province of East Pakistan and 2 others PLD 1962 SC 119 ref.

Shahid Ikram Siddiqui for Appellant.

Sultan Tanvir Ahmad for Respondent No. 1.

Sajjad Mehmood Butt for Respondents Nos.2, 3, 5 and 6.

Zafar Iqbal Chaudhry for Respondent No.7.

Date of hearing: 20th November, 2006.

2007 C L D 376

[Lahore]

Before Jawwad S. Khawaja, J

Mian NISAR ELAHI-Plaintiff

Versus

LAHORE STOCK EXCHANGE(G) LIMITED and 4 other---Respondents

Civil Original Suit No.1 of 2004, decided on 18th December, 2006.

(a) Central Depositories Act (XIX of 1997)---

---Ss.11 & 12---Limitation Act (IX of 1908), Art.120---Suit under S.11 of Central Depositories Act, 1997---Limitation---No period of limitation having been specified in the Limitation Act, 1908 for the filing of suits under Central. Depositories Act, 1997, Art. 120 of the Limitation Act, 1908 would apply which provides six years' period of limitation starting from the date on which the right to sue accrued---Cause of action, according to the plaintiff, having accrued to him on 9th and 10th April, 2001 when the Central Depository Company wrongly allowed transfer of the pledged shares and the Stock Exchange illegally sold the said shares and the suit which was filed on 2-4-2004, was within three years from the said acts of Stock Exchange and Central Depository Company, the same was thus well within time.

(b) Central Depositories Act (XIX of 1997)---

----Ss.11, 12, 5, 4 & 8(5)---Suit under S.11, Central Depositories Act, 1997---Maintainability--Aggrieved party---Title to book-entry securities entered in a sub-account shall vest in the sub-account holder and the owner of the pledged shares who claimed that his shares were unlawfully sold, would be an aggrieved party---Such sub-account holder had direct contractual relationship with the Stock Exchange created through the agency of the Member of the Stock Exchange--Right of sub-account holder to sue the Central Depository for compensation was vested in himself and he was not dependent on the participant (member) for enforcing his such right---Plaintiff a sub-account holder who claimed that his shares were illegally sold, was an aggrieved party and was, therefore, entitled to maintain suit---Principles.

(c) Stock Exchange---

----Functions and obligations.

A Stock Exchange, which, among other things, provides a market for trading of shares, is obliged by the very nature of its franchise, to afford protection to investors who buy and sell shares through its members. It would be quite extraordinary if a Stock Exchange could tell an investor that regardless of any wrongdoing on the part of the Exchange and irrespective of the harm that may have been caused to him, he has no claim against the exchange because the Exchange only recognizes and deals with its own members.

(d) Central Depositories Act (XIX of 1997)---

----Ss.11, 12 & 8(5)---Suit wider S.11, Central Depositories Act, 1997--Case of the plaintiff was that Central Depository Company had allowed the Stock Exchange to exercise its call option and had permitted withdrawal of the pledged shares front the sub-account, in violation of orders which had been passed by Security Exchange Commission of Pakistan and by the High Court---Validity---Notwithstanding the freezing order and the order granting relief to the plaintiff Central Depository Company, in the present case, permitted the Stock Exchange to exercise its pledge call option, which constituted deliberate illegality on the Central Depository Company---Not only the Central. Depository Company acted unlawfully in transferring the pledged shares from the plaintiffs sub-account it also acted with gross negligence---Jurisdiction under S.11, Central Depositories Act, 1997 was attracted and the holder to book-entry securities in a sub-account could invoke the same if he did not consent to a transfer of any book-entry securities from his sub-account---Mere fact that Central Depository Company had recorded a pledge position in the plaintiffs sub-account had no bearing on the right of the plaintiff to approach the High Court under S.11, Central Depositories Act, 1997 and to claim damages.

(e) Central Depositories Act (XIX of 1997)---

----Preamble---Contract Act (IX of 1872), Preamble---Fundamental change brought about with the enactment of the Central Depositories Act, 1997 and the licensing on Central Depository Company as a Central Depository in the Scheme which prevailed previously under the Contract Act, 1872, stated.

With the enactment of the Central Depositories Act, 1997 and the licensing of Central Depository Company as a central depository, a fundamental change has been brought about in the scheme which prevailed previously under the Contract Act. The said statute only catered for physical delivery of goods including shares, which under the Sale of Goods Act, are treated as goods. If the shares are in the form of paper scrips, there can be a physical delivery of the same from the pledgor to the pledgee. However, shares, which are transferred or deposited into a central depository system, do not have material existence. Transactions relating to such shares are made through electronic book-entries in the central depository system. There is, as such, a loss of physical control over the shares on the part of both, the pledgor and the pledgee. By operation of the Central Depositories Act, 1997 and the central depository system created thereunder; control of shares to the limited extent being examined at this stage, is ceded to the Central Depository Company. There is no physical delivery of shares when a pledge is created in a central depository system and likewise, there is no physical transfer from pledgor to pledgee when a pledge call option is exercised by a pledgee. These transactions occur simply through electronic book-entry in the central depository system.

(f) Central Depositories Act (XIX of 1997)---

----S.12-Pledge of book-entry securities---Transfer of shares--Scope-Transfer of shares can only be effected at a point in time alter a default has been committed by the pledgor and not at the time the pledge was created---Principles.

Subsection (2) of S.12, Central Depositories Act, 1997 talks of the blocking of book-entry securities by way of pledge. Subsection (3)(a) of section 12 empowers a pledgee to transfer the pledged shares upon the default of the pledgor. This also necessarily implies a linear sequence of events spread over time. The transfer of shares can, thus, only be effected at a point in time after a default has been committed by the pledgor and not at the time the pledge was created.

(g) Central Depositories Act (XIX of 1997)---

----Ss.11 & 12---Jurisdiction to award damages---Expression "may award damages" in S.11, Central Depositories Act, 1997---Meaning---Word "may" is only used in the sense that the Court will not, in all cases, be obliged to award damages---If damages are to be awarded same can only be done by the High Court which necessarily excludes tine jurisdiction of any other forum---Principles.

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

----O.II, R.2-Central Depositories Act (XIX of 1997), S.11---Provisions of O.II, R.2, C.P.C. may apply if the plaintiff files a suit in future seeking relief which he could have claimed in the present suit but has omitted to do so.

(i) Central Depositories Act (XIX of 1997)---

----S.11---Suit under S.11, Central Depositories Act, 1997 can be proved notwithstanding the pendency of commercial appeals between the parties.

(j) Central Depositories Act (XIX of 1997)---

----S.12(8)---Contract Act (IX of 1872), S.176---Pledge of book-entry securities--Applicability of S.176, Contract Act, 1872---Scope---Provisions of S.176, Contract Act, 1872 have been made applicable to the pledge of book-entry securities by virtue of S.12(8) of the Central Depositories Act. 1997.

(k) Central Depositories Act (XIX of 1997)----

----Ss. 12 & 11---Central Depository Company of Pakistan Limited

Regulations, Cl. 11---Contract Act (IX of 1872), 5.176---Pledge of book-entry securities-Sale of pledged security cannot be effected without a reasonable notice being given by the pledgee to the pledgor---Principles.

Usman Malik v. The Bank of Bahawalpur Ltd. PLD 1959 (W.P.) Kar. 725 and Alliance Bank of Simla Ltd. v. Ghamandi Lal-Jaini Lal AIR 1927 Lah.408 ref.

(l) Central Depositories Act (XIX of 1997)---

----Ss.12 & 11---Central Depository Company of Pakistan Limited Regulations, Cl. 11-Contract Act (IX of 1872), S.174---Pledge of book-entry securities---Sale of pledged shares---Scope---Pledge security cart only be realized and sold to enforce an obligation for which the pledge was made and not for arty other purpose---Pledged shares could not have been sold when the pledgor was not in default-Principles.

Cowasji Muncherji v. Official Assignee of Bombay AIR 1928 Bom. 507 ref.

(m) Central Depositories Act (XIX of 1997)---

----Ss.12 & 11---Central Depository Company of Pakistan Limited Regulations, Cl.11---Contract Act (IX of 1872), Ss.176 & 174---Suit under S.11, Central Depositories Act, 1997---Pledge of book-entry securities---Tort---Conversion---Damages---Unlawful sale of pledged shares by Stock Exchange where Central Depository Company had also acted unlawfully and negligently by disobeying binding orders passed by Security Exchange Commission of Pakistan and the High Court and but for the wrongful acts of Central Depository Company the sale would not have been made-Central Depository Company and Stock Exchange, in the present case, had acted collusively in a manner which had deprived the plaintiff of his shares---Such acts of Central Depository Company and Stock Exchange constituted conversion, under every definition of the tort and both Central Depository Company and the Stock Exchange had thus rendered themselves liable to pay damages to the plaintiff---Principles.

(n) Tort---

---Unlawful conversion---Suit for damages---Measure of damages---Pledge of book-entry securities---Unlawful sate of pledged shares from the plaintiff s account by Stock Exchange and Central Depository Company acting against the law and in breach of the duty of care owed by it to the plaintiff-Such circumstances could legitimately be factored into the measure of damages---Principles.

Michael v. Hart & Co. (1901) 2 KB 867 and Louis Dreyfus & Co. v. Ghandarnal & Co. AIR 1919 Sind 67 fol.

I.B.L. v. Coussens (1991) 2 All ER 133; Alliance Bank of Simla Ltd. v. Ghamandi Lal-Jaini Lal AIR 1927 Lah.408; Motilal v. Lakhmichand AIR (30) 1943 Nag. 162 and General and Finance Facilities Ltd. v. Cooks Cars (Romford) Ltd. (1963) 2 All ER 314 ref.

(o) Central Depositories Act (XIX of 1997)---

---Ss. 11 & 12---Suit for damages under S.11, Central Depositories Act, 1997 against unlawful sale of pledged shares by Central Depository Company and Stock Exchange--Quantification of loss in monetary terms of pledged shares---Principles---High Court, calculated the loss and passed decree in favour of the plaintiff and against Stock Exchange and Central Depository Company jointly and severally.

Faisal Hussain Naqvi and Mian Muhammad Kashif for Plaintiff.

Syed Ali Zafar, Tariq Bashir, Abid Aziz Sh. for Defendants Nos.1 and 3.

Raza Qureshi for Defendant No.4.

M. Saqlain Arshad and Salman Akron Raja for Defendant No.2 (SECP).

Abid Khan Minhas for Defendant No.5.

Dates of hearing; 20th to 28th November, 2006, 1st, 4th to 8th, 11th and 12th December, 2006.

2007 C L D 423

[Lahore]

Before Mian Hamid Farooq and Sh. Azmat Saeed, JJ

Mst. IRAM JAFFARY and others---Appellants

Versus

K.A.S.B. BANK and 10 others---Respondents

E.F.A. No. 345 of 2006, decided on 28th June, 2006.

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

---Ss. 9, 19 & 22--Civil Procedure Code (V of 1908), O.XXI, R.26---Suit for recovery of loan---Execution proceedings for realization of decretal amount---Sale of mortgaged property---Suit for recovery of loan filed by Bank on basis of mortgage of property was decreed---Decree-holder Bank initiated execution proceedings for realization of decretal amount through sale of mortgaged property---Objector assailed the sale of mortgaged property through auction and filed application seeking stay of auction proceedings under O.XXI, R26, C.P.C. contending that property in question was gifted away by objector 2 to her arid five others through gift-deed duly executed and registered with the Sub-Registrar---Onus to prove execution of alleged gift-deed was on the objector as execution of the gift-deed was denied by Bank, but objector failed to discharge the onus---Objector simply appeared as her own witness and no independent witness was produced by her to prove execution of said gift-deed and produced certain documents in evidence, including alleged gift-deed but she did not summon the stamp vendor and scribe of the gift-deed---Even the record of Sub-Registrar was neither summoned nor produced in evidence in order to prove execution and registration of deed---Local Commissioner before whom gift-deed was allegedly presented and attested, was also not produced in evidence---Marginal witnesses of the gift-deed were neither summoned nor produced in evidence in order to prove execution and genuineness of gift-deed---Objector in circumstances, had failed to prove execution of valid gift-deed and same was not proved---Subsequent letters, even if admitted, would not advance case of the objector as those were based on gift-deed, execution of which had not been proved---Case of objector being not based upon oral gift, but from the very inception she was only relying upon the gift-deed, it could neither be argued nor held that even if gift-deed was not proved, oral gift could be accepted----Objector having failed to prove execution and existence of valid and legal gift-deed qua the mortgaged property, impugned order was legal which did not call for any interference by the High Court in appeal---Impugned order was maintained.

Wajid Ali Khan v. Sheikh Murtaza Ali and 2 others 2003 SCMR 1416; Abdul Majeed and 6 others v. Muhammad Subhan and 2 others 1999 SCMR 1245; Amir 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; Anwar Ali and others v. Manzoor Hussain and another 1996 SCMR 1770 and Muhammad Mushtaq and another v. Bashir Ahmad Chaudhry and another PLD 1991 Lah.400 rel.

Aish Bahadur Rana.

2007 C L D 435

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

UNITED BANK LIMITED---Appellant

Versus

Messrs USMAN TEXTILES and 6 others---Respondents

R.F.A. No. 186 of 2003, heard on 20th November, 2006.

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

---S.9---Suit for recovery of loan amount---Charging of mark­up/interest on principal amount beyond contract-agreement period---Entitlement---Mark-up/interest could only be charged under agreement between parties or if permissible under law, but not otherwise--Mark-up could not be charged beyond contract period.

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

----S.9---Suit by Bank for recovery of amount paid as penalty imposed upon borrower by State Bank for not exporting goods for which finance was awarded---Validity---State Bank under the rule and Scheme had authority to impose such penalty---Borrower had to incur burden of such penalty---Bank was well within right to claim and recover such amount.

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

----Ss.9 & 10---Contract Act (IX of 1872), Ss.133 & 135---Suit for recovery of loan amount---Application by guarantor for leave to defend suit--Questions requiring consideration were: whether documents on basis of which guarantor was sued were executed by him with regard to loan facility for recovery of which suit was filed: whether in finance for which defendant stood surety had been adjusted, and thus he was discharged as guarantor---Leave to defend suit was granted to guarantor in circumstances.

Mian Aftab A. Sheikh and 2 others v. Messrs Trust Leasing Corporation Limited and others 2003 CLD 702 rel.

Syed Ali Zafar for Appellant.

Muhammad Khalid Sajjad Khan for Respondent.

Date of hearing: 20th November, 2006.

2007 C L D 457

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Messrs ASMAR TEXTILE MILLS (PVT.) LTD. through Chief Executive ---Appellant

Versus

ASKARI COMMERCIAL BANK LTD. Through Manager and another----Respondents

R.F.A. No. 368 of 2006, heard on 7th December, 2006.

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

----S. 9---Civil Procedure Code (V of 1908), O.VII, R.10---Procedure of Banking Court--Scope---Suit for recovery of damages on account of defamation---Maintainability---Claim in tort would not be within jurisdiction of Banking Court---Plaint in such case would be returned to plaintiff for its presentation before a Court of competent jurisdiction.

Kh. Muhammad Saeed for Appellant.

Tariq Saleem Sheikh for Respondents.

Date of hearing: 7th December, 2006.

2007 C L D 459

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

Messrs MAKMA STEEL CRAFTS (PVT.) LIMITED through Chief Executive and 13 others---Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED---Respondent

E.F.As. Nos. 130, 522, 523 and 524 of 2006, heard on 6th December, 2006.

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

---S.19(7)---Civil Procedure Code (V of 1908), O.XXI, R.29---Suit for damages and redemption of pledged stocks---Decree on basis of compromise--Non-return of other pledged goods by Bank despite part payment of decretal amount-Execution of decree for recovery of remaining amount-Dismissal of objection petition by Executing Bank---Validity---Bank on basis of decree was not under any liability to return any other pledged goods to judgment-debtor, which were duly paid and were in custody of Bank---Compromise agreement and. decree were silent regarding such other pledged goods---Executing Court could not go behind decree and grant relief of return of such other goods---Bank under compromise agreement was not responsible for any shortfall or damage due to storage and deterioration of pledged goods and on account of which, Bank was not liable to compensate judgment-debtor-High Court dismissed appeal in circumstances.

Muhammad Khalid Mehmood Khan for Appellants.

Shams Mehmood Mirza for Respondent.

Date of hearing: 6th December, 2006.

2007 C L D 466

[Lahore]

Before Sh. Azmat Saeed and Syed Hamid Ali Shah, JJ

Rana MUHAMMAD NASEEB KHAN---Appellant

Versus

ZARAI TARUKIYATI BANK OF PAKISTAN and 2 others---Respondents

E.F.A. No. 249 of 2004, decided on 23rd November, 2006.

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

----S. 19 ---Civil Procedure Code (V of 1908). O.XXI, R90---Execution of decree---Auction of property-Non-filing of objection petition against auction---Duty of Court---Scope---Court had inherent jurisdiction to suo motu examine whether a serious attempt had been made to sell property at a reasonable price and that auction had been conducted in accordance with law---Purchase of property in auction by decree-holder and its immediate sale in favour of third party at a price several times higher than court-auction price--High Court set aside such sale in circumstances---Principles.

Qamar Zaman Qureshi for Appellant.

Mian Subha Sadiq Kalasson for Respondents Nos.1 and 2.

2007 C L D 469

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Messrs JAVED NAZIR BROTHERS (PVT.) LIMITED and 3 others---Appellants

Versus

Messrs ALBARAKA ISLAMIC BANK, LAHORE---Respondent

R.F.A. No. 597 and C.M. No.100-C of 2006 in C.O.S. 'No.6 of 2005, decided on 11th December, 2006.

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

---Ss. 9 & 10(1)---Civil Procedure Code (V of 1908), O. VIII. R.6---Suit for recovery---Application for leave to defend suit---Reply was filed on basis of which defendant claimed set off through civil miscellaneous application-Validity-Set off in terms of O.VIII, R.6, C.P.C. could. not be competently claimed by defendant without grant of leave to defend the suit---Plea of set off whether legal or equitable, whether it is in respect of ascertained amount or an unascertained sum of money primarily constitutes a defence in the suit itself---Section 10(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001 provided' that where summons have been served as prescribed in S.9(5) of ,the Ordinance defendant shall not be entitled to defend the suit unless he obtained leave from Banking Court---What was being claimed by defendant as legal set off or an equitable set off, etc. was a defence and for purposes of raising any defence in a suit filed in terms of S.9 of the Ordinance, obtaining of leave to defend was a condition precedent for setting up the same.

Syed Niamat Ali and 4 others v. Dewan Jairam Dass and another PLD 1983 SC 5 ref.

Rana Muhammad Sarwar for Appellants.

2007 C L D 471

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Messrs ISHFAQ & COMPANY through Proprietor and 3 others---Appellants

Versus

ALLIED BANK OF PAKISTAN LIMITED through Authorized Attorney/Manager ---Respondent

R.F.A. No. 109 of 2003, heard on 6th December, 2006.

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

---Ss. 9 & 10---Recovery of loan amount, suit for---Leave to defend suit, application for--Defendant's plea was that in compliance of Court's order, he had deposited balance amount outstanding against him, thus, no amount was outstanding against him---Validity---Defendant had raised a bona fide defence, for which recording of evidence was essential to determine outstanding liability, if any---Such application was accepted in circumstances.

Shahid Ikram Siddique for Appellants.

Sh. Zaheer Kausar for Respondent.

Date of hearing: 6th December, 2006.

2007 C L D 477

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Mst. NAJMA MANSOOR---Appellant

Versus

Messrs NATIONAL DEVELOPMENT FINANCE CORPORATION through Authorised Officer and 7 others--Respondents

F.A.Os. Nos. 325, 326 and 327 of 2006, decided on 1st November, 2006.

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

---Ss. 19(7). 15(11), 21 & 22(1)(6)---Limitation Act (IX of 1908), S.14-Appeal-Limitation-Principles-Suit for recovery was decreed---Objection petitions against sale of mortgaged properties were not allowed---Appeals dismissed on points of limitation---Appellant's contention that since subsection (6) of S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001 takes an order under its S.19(7) out of the pale of interlocutory order the period of limitation had to be prescribed separately for it, had no force---Section 22 is to he read together with its subsection (6) which gives interpretation that right of appeal has been conferred upon an aggrieved person in matter of a judgment, decree, sentence or final order passed by Banking Court, an ex parte decree and an order passed under S.15(11) or S.19(7)---Controlling provision would, of course, be subsection (1) of S.22 of the Ordinance which provides that appeal has to be filed in the High Court within 30 days of the passing of orders or judgments or decrees or sentences---Appeals having not been filed within stipulated period were hopelessly time bar-red-Time spent on prosecuting constitutional petitions against order in question could have been excluded on the analogy of section I4 of Limitation Act, 1908 but delay in filing of appeals after withdrawal of constitutional petitions had not been satisfactorily explained.

Allah Bakhsh Gondal for Appellant.

2007 C L D 480

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

Messrs NENSER DRUGS (PVT.) LIMITED and 3 others---Appellants

Versus

THE BANK OF PUNJAB---Respondent

R.F.A. No. 683 of 2001, heard on 4th December, 2006.

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

----Ss. 7, 9 & 21---Suit for recovery of loan---Leave to appear defend suit---Defendants filed application for leave to appear and defend suit within prescribed period, but said and dismissed by Banking Court, despite serious factual and legal objections were raised by defendants in their application---Provisions of S.10 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, provided that leave to appear and defend suit should have been granted to defendant, if serious and bona fide dispute had been raised which included both legal and factual points of controversy--Objections about valid institution of suit and also the absence of the statement of account, raised in the case were vital, on the bases of which, the Court should have granted leave to the defendants---If the Court was not inclined to take action against plaintiff Bank for non f fling of statement of account, then at least, defendants should have been asked to file the amended leave application, so as to raise necessary plea about the account statement after it was submitted incomplete---Court while refusing leave, had not considered the contents of the plaint about the disbursement and the repayment chart given therein---Impugned judgment and decree were set aside defendants were permitted to file amended leave application, only to the extent of challenging figures therein and not permitting them in any manner to raise any new plea, within a period of two months---Banking Court would decide leave application within two months.

Messrs Ittefaq Industries (Regd.) through Managing Partner and 2 others v. Bank of Punjab through duly constituted Attorney 2004 CLD 1356 and Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931 ref.

Salman Aslam Butt and Munawar Salim for Appellants.

Muhammad Aqeel Malik for Respondent.

Date of hearing: 4th December, 2006.

2007 C L D 483

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

MUHAMMAD SHARIF and another---Appellants

Versus

Hafiz MUHAMMAD ISMAIL and 10 others---Respondents

R.F.A. No. 545 of 2006, heard on 13th December, 2006.

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

----Ss. 9, 15 & 19---Civic Procedure Code (V of 1908), O. VII, R.11---Suit by objector against sale of property by Bank for recovering amount decreed against judgment-debtor---Maintainability---Objector's plea was that during pendency of his suit for specific performance, vendor in violation of stay order sold property to judgment-debtor, who later on mortgaged same with Bank and that Bank after obtaining decree against judgment-debtor issued proclamation of sale of property-Banking Court rejected plaint in the suit---Validity---Objector was not customer of Bank, thus, his suit was not maintainable--- Objector had right to file objections before Banking Court in terms of S.15 read with S.19 of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court accepted appeal with direction to objector to file objections before Banking Court against proposed sale, and if filed, same would he decided by Banking Court in accordance with law.

Mian Ghulam Rasool for Appellants.

Syed Abbas Niazi for Respondent No.11 in Person.

Date of hearing: 13th December, 2006.

2007 C L D 486

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

GHULAM RASUL and 2 others---Appellants

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Respondent

R.F.A. No. 311 of 2003, heard on 9th January, 2007.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Application for leave to defend suit---One of the material grounds urged by borrowers in defence was that they had been defrauded by the Mobile Credit Officer of the Bank---Borrowers had brought on record the report of ,an inquiry conducted against said Mobile Credit Officer-Inquiry showed that the record of Bank relating to the last loan allegedly advanced to the borrowers had reflected foulplay on the part of sub-Manager, Accounts Officer and Cashier of the Bank---Contention of borrowers was that finding recorded by the functionary of the Bank was by itself sufficient for granting unconditional leave to them to defend the suit---Banking Court, however brushed aside said inquiry report---Bank was not in a position to argue that in the given circumstances borrowers had not made out a case for grant of leave to defend the suit--- Borrowers, in circumstances had made out a good case for grant of leave to defend suit in respect of the loan about which fraud was alleged to have been committed---No defence had been made or urged on behalf of borrowers with regard to other loans--Impugned judgment and decree, were set aside and application of borrowers were allowed and leave was granted to them to defend the suit as regarded the loan about which fraud was alleged to have been committed.

Malik Sajid Naveed for Appellants.

Malik Karamat Ali Awan for Respondent.

Date of hearing: 9th January, 2007.

2007 C L D 488

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

ZARAI TRAQIATI BANK LIMITED through Branch Manager-Appellant

Versus

MUHAMMAD MEHMOODUL HASSAN KHAN and another---Respondents

Regular First Appeal No. 485 of 2005, heard on 5th December, 2006.

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

----Ss. 9, 10 & 22---Suit for recovery of loan---Leave to defend suit---Appeal---Facility for purchase of tractor granted to respondent was liable to be liquidated in agreed instalments, which were duly paid by respondents---Claim of appellant-Bank was restricted to imposition of penalty on account of delayed, payment of instalments---Validity--- Bank could only initiate steps for recovery of outstanding instalments---Respondents had diligently discharged their liability by depositing the instalments and liquidating the liability---Leave to defend suit, had been correctly refused to the Bank by Banking Court---In absence of any illegality in the impugned order and decree, appeal was dismissed.

Askari Commercial Bank Limited and others v. Pakland Cement and others PLD 2000Kar, 246 rel.

Agha Syed Najam-ul-Hassan Zaidi for Appellant.

Nemo for Respondents.

Date of hearing: 5th December, 2006.

2007 C L D 490

[Lahore]

Before Maulvi Anwarul Haq, J

Haji MUHAMMAD HANIF---Appellant

Versus

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Chairman---Respondent

F.A.O. No, 382 of 2006, decided on 20th December, 2006.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 121, 122, 123 & 124---Civil Procedure Code (V of 1908), S.9 & O. VII. R.11---Suit for recovery of death claim on basis of Insurance Policy---Jurisdiction of civil court---Suit under S.9, C.P.C. challenging decisions of the Zonal, Regional and Central Claim Committee for recovery of death claim--Objection was taken by Insurance Corporation to the jurisdiction of the civil court with reference to S.122 of Insurance Ordinance, 2000---Validity---Section 122(3) of Insurance Ordinance, 2000 had provided that no court other than a Tribunal duly constituted, would have or exercise any jurisdiction with respect to any matter to which jurisdiction of a Tribunal extended under Insurance Ordinance, 2000--District Judge had been constituted as an Insurance Tribunal by Federal Government vide notification---Bar was already operative when suit was filed---Tribunal having been constituted, jurisdiction in the matter vested in it under provisions of Insurance Ordinance, 2000--While presenting plaint a request could be made to Tribunal to requisition the record of suit.

Mian Israr-ul-Haq for Appellant.

2007 C L D 492

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

PASSCO---Appellant

Versus

OMER BILAL TRADERS (PVT.) LIMITED---Respondent

F.A.O. No. 104 of 2006, decided on 6th November, 2006.

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

---Ss.9, 10 & 22---Civil Procedure Code (V of 1908), O.VII, R.10---Suit for declaration and permanent injunction---Application for leave to defend suit raising objection as to jurisdiction of Banking Court to entertain such suit---Plaintiff conceding to the objection--Return of plaint to plaintiff without decision of leave application--Appeal against such order by defendant---Validity---Defendant was neither asked nor did he specifically consent to return of plaint nor was heard---No reason was recorded by Court on absence of its jurisdiction and consequent return of plaint---Acceptance of such concession or objection without scrutinizing legality thereof was a course contrary to law---Such objection of defendant and confessional statement of plaintiff thereto could not absolve court of its duty to decide question of 'existence or non-existence of its jurisdiction with reasons and reference to law---Defendant's objection on Court's jurisdiction would not be relevant, if under law court had jurisdiction as law on the subject had to be given effect to-Objection or concession contrary to law would not bind any party nor would principles of estoppel apply thereto---Plea on jurisdiction raised by defendant was a plea of defence of suit---Defendant without first obtaining leave from court could not defend suit--High Court set aside impugned order, resultantly suit would be deemed pending before Banking Court, which would first consider and decide leave application and then proceed to decide question of jurisdiction or/and suit in accordance with law.

Messrs Sui Northern Gas Pipelines Ltd. through Deputy Chief (Legal) v. Muslim Commercial Bank Ltd. Awari Hotel Branch, Lahore, through Manager and another 2006 CLD 816: Muhammad Afzal v. Board of Revenue, West Pakistan and another 1967 SC 314; Multan Electric Power Company Ltd. v. Muhammad Ashiq and others PLD 2006 SC 328; Chief Administrator of Auqaf, Punjab v. Allah Ditta and another 1990 CLC 821; S.M. Akil Fakree v. Muhammad Qamar-uz-Zaman PLD 1982 Karachi 745; Habib Bank Limited v. Olympia Hosiery Works 1988 CLC 1340; Messrs United Distributors Pakistan Limited v. Ahmed Zarie Services and another 1997 MLD 1835; Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394; Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Falcon Ventures (Pvt.) Ltd. through Chief Executive, Iftikhar Ahmed v. Punjab Banking Court No.11, Lahore and another 2004 CLD 726 rel.

(b) Jurisdiction---

----Estoppel, principle of---Applicability---Objection or concession as to jurisdiction of Court would not bind any party---Principle of estoppel would not apply thereto---If under Law Court had jurisdiction then objection on its jurisdiction would not be relevant, as law on the subject would be given effect to.

Muhammad Afzal v. Board of Revenue, West Pakistan and another 1967 SC 314; Multan Electric Power Company Ltd. v. Muhammad Ashiq and others PLD 2006 SC 328 and Chief Administrator of Auqaf, Punjab v, Allah Ditta and another 1990 CLC 821 rel.

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

----Ss.9 & 10---Summonses. issued to defendant---Scope---Such summonses would allow defendant a limited right to enter Court for seeking its leave to defend suit--- Defendant only on getting such leave would get right to enter suit for its defence---Principles.

S.M. Akil Fakree v. Muhammad Qamar-uz-Zaman PLD 1982 Kar. 745; Habib Bank Limited v. Olympia Hosiery Works 1988 CLC 1340; Messrs United Distributors Pakistan Limited v. Ahmed Zarie Services and another 1997 MLD 1835; Messrs Platinum Insurance Company through Chief Executive v. Messrs Highways Bridge, Contractor International (Pvt.) Ltd. and another 1997 MLD 2394: Messrs Waheed Corporation through Proprietor 'and another v. Allied Bank of Pakistan through Manager 2003 CLD 245; Falcon Ventures (Pvt.) Ltd. through Chief Executive, Iftikhar Ahmed v. Punjab Banking Court No.11, Lahore and another 2004 CLD 726 and Messrs Sui Northern Gas Pipelines Ltd. through Deputy Chief (Legal) v. Muslim Commercial Bank Ltd. Awari Hotel Branch, Lahore, through Manager and another 2006 CLD 816 rel.

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

---S.10---Leave to defend suit---Jurisdiction of Banking Court---Scope---While exercising leave jurisdiction, Court can only decide whether substantial questions of Law and facts have been raised in leave application or not, and whether leave is to be granted or not---Leave application would be rejected, if same did not show existence of triable defence questions---Court at leave stage would not decide such question, but on granting of leave, such application would be deemed to be a written statement and questions raised therein would be transposed into issues and decided as such---Principles.

Sultan Tanvir Ahmed for Appellant.

Respondent No.1 Ex parte.

Omer Aziz and M. Salman Masood for Respondent No.2.

2007 C L D 501

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman JJ

Chaudhry MUKHTAR AHMAD---Appellant

Versus

NATIONAL BANK OF PAKISTAN and others---Respondents

R.F.A. No. 47 of.2004, decided on 27th November, 2006.

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

----Ss. 7, 9, 10 & 22---Suit for damages against bank---Plaintiff have to produce the evidence even if the defendant-Bank failed to file any application for leave to defend the suit --Banking Court was legally obliged to decide the suit for damages after recording the evidence of plaintiffs in support of their claim, thereby providing adequate opportunity to the Bank to cross-examine witnesses---Even if the defendant did not appear before the Bunking Court or it was not granted leave to appear and defend the suit, Banking Court was not absolved of its duty to apply its mind to facts and circumstances of the case and could not pass a decree straightaway as claim for damages could not be equated with a suit founded on a negotiable instruments.

Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD. 1170; Usman v. Haji Omer Haji Ayub and Haji Razzaq PLD 1966 SC 328 and Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353 ref.

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

----S. 7---Civil Procedure Code (V of 1908), O.VII, R.11, Ss.4(1) & 141---Partnership Act (IX of 1932), S.69(2)---Suit for damages against Bank by customer---Rejection of plaint---Procedure to be followed---Defendant filed written statement and moved application for leave to defend the suit and rejection of plaint taking the ground that plaintiffs being an unregistered firm, was debarred from filing the suit in view of S.69, Partnership Act, 1932---Banking Court allowed the application for leave to defend the suit, and after that defendants filed application for rejection of plaint and written statement---Validity--Held, if the Court reached the conclusion that the cases fall under any of the clauses of O.VII, R.11, C.P.C., plaint could be rejected, but in no way before the grunt of leave to defend the suit---Banking Court, while exercising its civil jurisdiction had to follow the procedure laid down in regard to the suits in the C.P.C., except to the extent of any contrary provision appearing in the Ordinance as the general provisions of C.P.C. would give way to the contrary provisions of the Ordinance which would override to the extent of repugnancy---Provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 read in juxtaposition with S.69(2), Partnership Act, 1932 would show that provisions of the Act were not repugnant to the provisions of the Ordinance and did not provide for the exclusion of the provisions of Partnership Act, 1932---Provisions of Partnership Act, 1932, therefore, could be made applicable to the cases tried and adjudicated under Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court, in circumstances, had rightly rejected the plaint in view of S.69(2), Partnership Act, 1932 and committed no legal error in exercising the powers under O. VII, R.11, C.P.C.

Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Limited, Islamabad v. Mohib Textile Mills Limited Lahore and 3 others 2002 CLD 1170; Usman v. Haji Order Haji Ayub and Haji Razzaq PLD 1966 SC 328; Messrs Qureshi Salt and Spices Industries, Khushab and another v. Muslim Commercial Bank Limited, Karachi through President and 3 others 1999 SCMR 2353; Haji Ali Khan and Company, Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited, Abbottabad PLD 1995 SC 362; Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 and Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512 ref.

Ch. Muhammad Hussain Jahania for Appellant.

Ch. Ehsan Ahmad Sindhu for Respondents.

Date of hearing: 27th November, 2006.

2007 C L D 521

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

HAMAYUN---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Manager---Respondent

R.F.A. No.441 of 2006, decided on 11th January, 2007.

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

---Ss.9 & 10-Recovery of bank loan---Leave to defend the suit---Denial of loan---Grievance of defendant was that bank had used documents of loan which had already been paid off---Validity---Certificate of mortgage pertained to year, 1992, and pertained to different loan which was not the subject matter of the suit filed by bank--Bank's case was not that the mortgage was created in year, 1992 and was to continue for future loans including loans in issue---Defendant had denied execution of loan agreement and other charge documents---Defence of defendant had not been considered in its true perspective so as to conclude whether defendant was entitled to leave to defend the suit whether conditional or otherwise---Judgment and decree passed by Banking Court could not be sustained and was set aside---Case was remanded to Banking Court, where application for leave to defend filed by defendant would be deemed pending and would be adjudicated upon afresh after hearing both the parties ---Appeal was allowed accordingly.

Mushtaq Ahmad Khan for Appellant.

Syed Murad Ali Shah Bukhari for Respondent-Bank.

2007 C L D 524

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

SAEED AKHTAR---Appellant

Versus

PERVAIZ HANIF--Respondent

E.F.A. No.4 of 2005, heard .on 14th December, 2006.

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

----Ss.9, 19 & 22---Suit for recovery of loan---Execution of decree---Entitlement to upto date mark-up---Compromise decree, inclusive of mark-up having been passed against judgment-debtors, decree holder Bank filed execution petition against judgment-debtors---Judgment-debtors filed application stating therein that Bank was entitled only to recover decretal amount, which having been paid by judgment-debtors, execution petition be disposed of and consigned to record after making observation that decree had been fully satisfied--Banking Court having dismissed said application appeal was filed by the judgment-debtors---Propriety---Suit was decreed under repeated Banking Tribunals Ordinance, 1984 whereunder future mark-up or upto date mark-up was neither allowed nor was recoverable from judgment­-debtor---Compromise decree had shown that no such mark-up was allowed to the decree-holder---Execution petition on the basis of upto date mark-up could not be allowed in view of settled principle that an executing court could not go behind the decree and it was obliged to execute the decree as it was.

Abdul Majeed Malik and Sardar Riaz Karim for Appellant.

Muhammad Ramzan Khalid Joyia for Respondent.

Date of hearing: 14th December, 2006.

2007 C L D 533

[Lahore]

Before Syed Hamid Ali Shah, J

Syed MANSOOR ALI SHAH and 4 others---Petitioners

Versus

GOVERNMENT OF PUNJAB, through Housing, Physical and Environmental Planning Department, and 3 others---Respondents

Writ Petitions Nos. 6927 of 1997 and 8491 of 2001, heard on 21st September, 2006.

(a) Pakistan Environmental Protection Act (XXXIV of 1979)---

----Arts.9 & 14--Provincial Motor Vehicles Ordinance (XIX of 1965), Preamble---Provincial Motor Vehicles Rules; 1,969, R.163---Penal Code (XLV of 1860), Ss.268 & 278---Constitution of Pakistan (1973) Arts. 9, 14 & 199---Constitutional petition---Air pollution caused by vehicular emission---Nuisance caused by air pollution--State functionaries were bound by contractual obligations under international treaties to take effective measures for elimination of vehicular pollution---Measures to be adapted for curbing vehicular pollution---Scope---Petitioners asserted that air pollution caused by vehicular emissions had severely affected human life, causing various diseases to citizens; that under Rule 163 of Provincial Motor Vehicles Rules, 1969, the owner of vehicle was required by law to properly maintain vehicle so that it did not cause damage or annoyance to any other person or property or endanger safety of any other user of road and was to be fitted with efficient appliance for the purpose of preventing emission of sparks or grit etc. that Regional Transport Authority was issuing Fitness Certificates to transport vehicles which did not meet required standards and that respondents were to be directed to act to accordance with law so as to arrest growing problem of air pollution---Validity---Court had constituted a Commission to study and analyse the increasing problem of vehicular air pollution and formulate a solution---Commission accomplished task assigned to it and its recommendations had thoroughly been examined by Federal as well as Provincial Government besides other stake­holders---Pakistan had signed certain international treaties for protection of ozone layer and environment---Besides international treaties perseverance and protection of dignity of man was fundamental right of citizens which was guaranteed under Art.14 of the Constitution---Article 9 of the Constitution protected life of citizens and where life of a citizen was degraded, quality of life was adversely affected and health hazards were created affecting large number of people the same amounted to deprivation of life which was prohibited by Arts.9 & 14 of the Constitution---Nuisance caused through air pollution was punishable under Ss.268 & 278 of Penal Code---Pakistan Environmental Protection Act, 1979 had been enforced for protection, conservation, inhabitation and improvement of environment---Redressal of grievance, voiced through present petitions was covered under Arts.9 & 14 of the Constitution and provisions of Pakistan Environmental Protection Act, 1979---State functionaries were bound by contractual obligations under International Treaties to take effective measures for elimination of vehicular pollution---Appropriate writ for implementation of recommendations of commission was issued---Measures and recommendations for control and maintenance of vehicles, air quality and fuel standards, capacity building and monitoring/inspection stations were enumerated.

1996 SCMR 543 rel.

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

---Arts. 9 & 199---Right to life---Scope--Petition under Art.199 of the Constitution-Maintainability-Article 9 of the Constitution, provided that no person was to be deprived of life or liberty save in accordance with law---Word 'life' had not been defined in Constitution but it did not mean nor could be restricted only to vegetative or animal life or mere existence from conception to death---Life included all such amenities and facilities which a person born in free country was entitled to enjoy with dignity, legally and constitutionally---Person whose right of easement, property or health was adversely affected by any act of omission or commission of a third person in neighbourhood or at a far-off place, was entitled under Common law to seek injunction and also claim damages but constitutional rights were higher than legal rights conferred by law, be it municipal law or common law---Such a danger was depicted to affect a large number of people who might suffer from it unknowingly because such sufferance was silent and fatal and most of the people who would be residing under or at a dangerous distance of grid station or such installation and who did not know that they were facing any risk or were likely to suffer by such risk---Word 'life' in terms of Art.9 of the Constitution was so wide that danger and encroachment complained of would impinge fundamental right of a citizen---Petition under Art.199 of the Constitution was maintainable---Word 'Life' in the Constitution had not been used in a Limited manner---Wide meaning was to be given to enable a man not only to sustain We but to enjoy it.

Ms. Shehla Zia and others v. WAPDA PLD 1994 SC 693 rel.

Syed Mansoor Ali Shah and Ms. Saima Amin Khawaja for Petitioners.

Malik Pervaiz Akhtar, D.A.-G. for Federal Government.

Shujaat Ali Khan, A.A.-G. for Respondents Nos. 1 to 3.

Kamran Shuja for Transport Department, Government of the Punjab.

Malik Muhammad Naeem for Applicant (in C.M. 1949 of 2006).

Ijaz-ul-Hassan for Respondents Nos.5 to 7.

Javad Hassan on Court Call.

Date of hearing: 21st September, 2006.

2007 C L D 555

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

IMRAN ENTERPRISES through Proprietor and another---Appellants

Versus

MUSLIM COMMERCIAL BANK through Manager and another---Respondents

Regular First Appeals Nos.197 and 450 of 2004, heard on 21st December, 2006.

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

----Ss. 9, 10 & 22---Suit for recovery of loan by Bank---Leave to ,appear and defend suit---Appeal---Application for leave to defend suit filed by appellant was dismissed and suit filed by Bank was decreed---Appellants had alleged that accounts had not been verified as mandated by law; that statement of accounts was also not in consonance with the disbursements made to the appellants and that defence set up by appellants in application for the grant of leave, had not been dealt with properly, especially qua the effect that a fire broke out in the factory of the appellants which destroyed the hypothecated stocks for which Insurance Company was bound to make payment---Insurance Policy had reflected that the right of the Bank to recover claim was unimpaired---Stance for appellants that recovery had to be made from the Insurance Company, was without substance, in circumstances---Statement of account was in consonance with the claim made by Bank---Preponderance of documents attached with the plaint had clearly reflected that appellants had availed the facility in question---Trial Court appraised the documents appended with the plaint and impugned judgment of Banking Court had dealt with all objections raised by appellants in their appeal--Assertion of appellant that judgment impugned in appeal was not in consonance with requirement of law, was untenable and without substance---Appeal against impugned order was dismissed.

Mirza Aamir Baig for Appellants.

Raza Farooq for Respondents.

Dale of hearing: 21st December, 2006.

2007 C L D 562

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

ELGIN LEATHER INDUSTRIES (PVT.) LIMITED and others---Appellants

Versus

HABIB BANK LIMITED through Manager, Officer of Branch and Joint Attorney and others---Respondents

R.F.A. No.541 of 1999, decided on 17th January, 2007.

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

----Ss. 9, 10 & 22---Suit for recovery of Bank loan---Leave to appear and defend suit---Appeal---Plaint filed by Bank showed that two separate finance facilities namely; Export Re-finance Part.2 (E.R.F.) and Finance Against Foreign Bills (F.A.F.B.) were granted to appellants and upon failure of appellants to adjust the liability, suit for recovery of amount under said facilities was filed--Applications filed by appellants seeking leave to defend suit were dismissed and suit filed by Bank was decreed as prayed for---Impugned judgment and decree passed by Banking Court had been challenged by appellants on three grounds; firstly that Bank could not recover the mark-up of cushioned period; secondly, that future mark-up had been awarded without taking into consideration that there were two facilities' with separate rates of mark-up; and thirdly that the payments made by appellants were not being taken into consideration---Validity---Contention of Bank was that no mark-up for cushioned period was included in the claim in that behalf---Bank referred to the statements of accounts appended with the plaint in order to ; establish that there was no debit entry of mark-up for said cushioned period therein-Appellant was unable to point out any specific debit entry for mark-up which pertained to cushioned period---Contention of appellants in that behalf was not found on the record, however there being insertion in the plaint with reference to the inclusion of mark-up of' cushioned period, some sort of defence in that behalf appeared to have been made out insisting grant of leave to defend to the extent of the claim of mark-up of cushioned period, however not unconditional---Appellants were entitled to leave to appear and defend suit with respect to alleged mark-up for cushioned period subject to condition of furnishing the Bank guarantee of said amount---Future mark-up. as per second ground of appellants, only had been awarded on the contracted rate and since there were two separate facilities with separate rates of mark-up, future mark-up must necessarily be awarded in terms thereof as had rightly been contended by appellants---Third ground had revealed that matter of adjustment of payments, if any, made by appellants, was within the jurisdiction of the Executing Court and same could not form a subject-matter of present appeal---Appeal was partially accepted and decree of Banking Court was modified accordingly.?

Mian Muhammad Rafi-ud-Din for Appellants.

Shamas Mehmood Mirza for Respondents.

2007 C L D 571

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

M. MANZOOR AHMAD PARACHA and 5 others---Appellants

Versus

HABIB BANK LTD, through President and 2 others----Respondents

F.A.O. No.143 of 2004, heard on 29th November, 2006.

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

----Ss.2(d) & 9--- Civil Procedure Code (V of 1908), O.VII & R.10, O.XLIII, R.1(a)---Tort---Banker and customer---Suit for recovery of damages for malicious prosecution by successors of customer---Jurisdiction of Banking Court---Return of plaint by the Banking Court---Appellants filed suit for recovery of amount as damages for malicious prosecution against Bank on the ground that the suit for recovery filed by Bank against, their predecessor, was frivolous and they in the capacity of legal heirs suffered losses---Validity---Appellants in their personal capacity had not entered into a banking transaction with the Bank, nor they had availed any finance from it---Appellant's case was not that they were the "customer" as finance was never extended to them by the Bank and they were neither "surety" nor 'indemnifier"---No finance" as defined in S.2(d) Financial institutions (Recovery of Finances) Ordinance, 2001, was provided to appellants---Banking Court had rightly returned the plaint in appellants' suit in exercise of its powers under O. VII, R.10, C.P.C. to be presented before appropriate forum--Impugned judgment and decree, not suffering from any illegality same could not be unsettled.

Syed Muhammad Hussain Shah Qadri for Appellants.

Makhdooni Syed Muhammad Mumtaz Hussain for Respondents.

Date of hearing: 29th November, 2006.

2007 C L D 578

[Lahore]

Before Abdul Shakoor Paracha, J

PETROSIN CORPORATION PVT. LTD. and 2 others---Petitioners

Versus

OIL AND GAS DEVELOPMENT COMPANY LTD. through Managing Director---Respondent

Writ Petitions Nos.2055 and 2056 of 2006, decided on 27th September, 2006.

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

---Art.199(a)(i)(ii)---Constitutional jurisdiction of High Court--Scope---Such jurisdiction could be exercised only in respect of a person performing functions within territorial. jurisdiction of High Court in connection with affairs of Federation, Province or Local Authority---If person, whose acts, actions or proceedings were challenged before High Court, did not fall within any of specified categories, then he would not be amenable to such jurisdiction.

Deputy Managing Director, National Bank of Pakistan v. Ataul Haq PLD 1965 SC 201 and Salahuddin and 2 others v. Frontier Sugar Mills and Distillery Ltd. Tokht Bhai and 10 others PLD 1975 SC 244 rel.

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

--Art 199(a)(i)(ii)---Oil and Gas Development Company incorporated under Companies Ordinance, 1984--Action of the company or its order awarding contract---Constitutional petition challenging such action or order of company---Maintainability---Such company could undertake any business in pursuance of directives given by Federal Government still holding shares thereof --Company financed and controlled by Government would be regarded as investing joint stock companies with character of a person performing functions in connection with affairs of Federation---Constitutional petition was. maintainable--Principles.

Federal Government Employees Housing Foundation through its Director General Islamabad v. Muhammad Akram Alizai, Dy. Controller, PBC, Islamabad PLD 2002 SC 1079 rel.

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

S.2(a)(b)(e)---Invitation to bid and tender documents, issuance of---Validity---Such invitation and tender documents would be considered only to make proposal---Submission of bid, its acceptance and submission of performance guarantee bond by bidder would not constitute an acceptance as defined in S.2(b) of Contract Act, 1872 and would not result in agreement as defined in S.2(e) or contract as defined in. S.2(h) thereof---Bid submitted and tender documents wound itself constitute a proposal, which might be accepted or rejected by the person inviting bid---Submission of performance guarantee bond would not in any way add to the status of a bid---Principles.

Messrs O.K. Agencies v. Chief Controller etc. 2000 YLR 1867; Writ Petition No.1339 of 1995 decided on 21-11-1995; Munshi Muhammad's case 1971 SCMR 533 and Imperial Construction Company, Sahiwal and 30 others v. Chief Engineer (South) Public Health Engineering Department, Punjab and 2 others 1999 YLR 1153 ref.

Kundan Lal v. Secretary of State AIR 1939 Oudh 249 and Bagh Construction Company v. Federation of Pakistan and others 2001 YLR 2791 rel.

(d) Words and phrases---

----"Letter of Intent"---Definition.

Blacks Law Dictionary, 5th Edition; Province of West Pakistan through the Secretary, Public Works Department, Lahore v. Gammon's Pakistan Ltd. Karachi PLD 1976 Kar. 458; Javed Hotel Pvt. Limited v. Capital Development Authority, Islamabad through Chairman and another PLD 1994 Lah. 315; Messrs Bagh Construction Company v. Federation of Pakistan and others 2001 YLR 2791; Bhool Chand v. Port Qasim Authority 2005 CLC 476; Union of India v. Bhimsen Walaiti Ram AIR 1971 SC 2295 and Orisa Harinarayan Jaiswal AIR 1972 SC 1816 ref.

(e) Constitution of Pakistan (1973)---

----Art. 199---Constitutional petition for enforcement of contract---Not maintainable---Reasons stated.

The writ for enforcement of the contract is not maintainable for the reason that the enforcement of the contract requires factual inquiry into the disputed questions, which is the function of the Court having primary jurisdiction.

In the present case, whether petitioner had complied with all the necessary conditions of the contract was a question of fact, which could not be determined by High Court in exercise of constitutional jurisdiction.

Messrs Ittehad Cargo Service and 2 others .v. Messrs Syed Tasneem Hussain Nagvi and others PLD 2001 SC 116 and Messrs Airport Support Services v. The Airport Manager, Quaid­-e-Azam International Airport, Karachi and others 1998 SCMR 2268 rel.

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

---Ss.3(17) & 24-A---Contract Act (IX of 1872), S.2--Tender Notice floated by Oil and Gas Development Company---Letter of Intent issued by company after submission of performance guarantee bond by lowest bidder-Readiness of bidder to sign contract---Return of performance guarantee bond to bidder and re-advertising of tender by company without any reason and without giving opportunity of hearing to bidder---Validity---Neither statute conferred any power upon company to enter into a contract with bidder nor concluded contract between functionary of State/OGDC had been reached---Section 24-A of General Clauses Act. 1897, thus, would not attract to such case---Principles.

It is obligatory for an authority deriving power to make an order or give direction under any enactment to pass such an order or give direction reasonably, fairly, justly and for the advancement of the purpose of enactment and the authority, officer or person making any order or issuing any direction under the powers conferred by or under any enactment shall, so far as the necessary or appropriate, give reason for making the order as the case may be for issuing the direction and shall provide a copy of the order as the case may be per section 24-A of the General Clauses Act, 1897. The term "enactment" is defined in section 3(17) of the General Clauses Act, 1897 as including a Regulation and any Regulation or the Code, and shall also include any provision contained in any Act or in any such Regulation as aforesaid.

It is correct proposition of law that a contract carrying element: of public interest concluded by functionaries of State has to be just, fair, transparent, reasonable and free of any taint of mala fides. This doctrine has further been recognized by insertion of section 24-A in General Clauses Act, 1897, which declares that where a statute confers a power to make any order or give any direction to any Authority, office or person, such would be exercised reasonably, fairly, justly and for the advancement of the purpose of the enactment. Reasons should also be reflected in the order.

In the present case, neither Statute conferred any power upon the Oil and Gas Development Company Limited to enter into a contract with the petitioner (bidder) after issuance of the Letter of Intent nor concluded contract by functionary of State/OGDCL with petitioner had been reached. Therefore, section 24-A of General Clauses Act, 1897 was not applicable to the case. Petitioner's plea that impugned letter was completely devoid of any reason for it was the company's statutory obligation under section 24-A of General Clauses Act, 1897 and that it was against the requirement of procedural propriety and against the principles of natural justice was not sustainable.

Mst. Hamida Begum v. Mst. Murad Begum and others PLD 1975 SC 624 rel.

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

----S.24-A---Contract Act (IX of 1872), S.2---Public interest contract made by State functionaries---Essential requirements stated.

It is correct proposition of law that a contract carrying element of public interest concluded by functionaries of State has to be just, fair, transparent, reasonable and free of any taint of mala fides. This doctrine has further been cognized by insertion of section 24-A in General Clauses Act, 1897, which declares that where a statute confers a power to make any order or give any direction to any Authority, office or person, such would be exercised reasonably, fairly, justly and for the advancement of the purpose of the enactment. Reasons should also be reflected in the order.

Abdul Hafeez Pirzada with Mian Gul Hassan Aurangzeb for Petitioners.

Khaliq-uz-Zaman and Shah Khawar for Respondent.

2007 C L D 604

[Lahore]

Before Muhammad Muzammal Khan and Syed Sajjad Hussain Shah, JJ

ROBINA QADEER---Appellant

Versus

PLATINUM COMMERCIAL BANK LTD. through Vice-President/Manager Credit---Respondent

R.F.A. No.205 of 2006, decided on 10th January, 2007.

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

----S. 10---Suit for recovery of finances-Suit was decreed by Banking Court with assumption that appellant as guarantor of loanees did not file any petition for leave to appear---Appellant contended that she had filed petition for leave to appear which was incorrectly not attended to by the Banking Court while decreeing the suit against her---Decree to the extent of appellant was set aside by High Court with the consent of parties--Appellant's petition for leave to appear would be deemed to be pending before Banking Court for decision afresh in accordance with law within specified time.

Shahid Ikram Siddiqui for Appellant.

Rashdeen Nawaz Kasuri for Respondent.

2007 C L D 609

[Lahore]

Before Umar Ata Bandial, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Plaintiff

Versus

GHAZI PAPER MILLS---Respondent

C.O.S. No.S-40 of 2002, decided on 15th July, 2005.

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

----Ss. 9 & 10---Suit for recovery of loans-Application for leave to defend suit---Defendant-Company which had availed different finance facilities from plaintiff-Bank, having failed to adjust or settle its liabilities, the Bank filed suit for recovery of amounts of loan along with mark-up and costs of funds etc.---Defendant filed application for leave to defend suit---Main ground of defence of defendant in said application was the alleged concealment by plaintiff-Bank of liability of the amount owed by the defendant-Company to third party to whom plaintiff-Bank had given NOC for creating a second charge on mortgage assets of defendant-Company---Validity---While observing due diligence at the time of taking over management of company, defendant management ought to have inspected register of mortgage and charges wherein obligation owed by the company to Bank/third party, was duly recorded---Defence plea of defendants admits their own fault due to their omission to inspect said register---Neither plaintiff-Bank nor defendant to be held responsible for said failure---Without existence of contract or legal duty of disclosure, non-mention of liabilities owed by the company to third party, could not be deemed to be obligation of plaintiff as a creditor of the defendant-Company---What aggrieved the defendants was the consequence of their own fault and not a breach of any duty owed by the plaintiff---No ground having been made out for grant of leave to defend, application for leave to defend suit was dismissed.

Haji Ali Khan & Company v. Messrs Allied Bank of Pakistan Ltd. PLD 1995 SC 362 ref.

Rasheen Nawaz Kasuri for Plaintiff.

Rana Muhammad Arshad for Defendants Nos.1 to 9.

Hamid Shabbir Azhar for Defendant No.10.

2007 C L D 618

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

Messrs 'ZAHID INDUSTRIES through Managing Partner and 10 others--Appellants

Versus

HABIB BANK LTD: through Manager---Respondent

Execution First Appeal No.4 of 2005 heard on 14th December, 2006.

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

---Ss.6 & 11---Execution petition by Bank claiming future mark­up-Validity-Future mark-up or up to date mark-up was neither allowed nor recoverable from judgment-debtor---No such mark-up was allowed to Bank under compromise decree---Execution petition on basis of such mark-up could not be allowed---Execution petition was dismissed in circumstances.

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

----S. 11---Executing Court--Powers of ---Scope---Executing Court cannot go behind the decree, but is obliged to execute decree as it is.

Abdul Majeed Malik and Sardar Riaz Karim for Appellants.

Muhammad Ramzan Khalid Joyia for Respondent.

Date of hearing: 14th December, 2006.

2007 C L D 625

[Lahore]

Before Nasim Sikandar and Jawwad S. Khawaja, JJ

Malik GHULAM SHABBIR---Petitioner

Versus

UNITED BANK LIMITED through Manager and 5 others---Respondents

Writ Petition No.10789 and E.F.A. No.129 of 2006, heard on 5th October, 2006.

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

----S.19(7)---Civil Procedure Code (V of 1908), O.VI, R.17---Constitution of Pakistan (1973), Art.199---Constitutional petition--Amendment of pleadings---Purchase of encumbered property---Summary dismissal of objection petition---Petitioner being purchaser of mortgaged property, before putting the same in auction, filed objection petition before Executing Court--Auction took place and petitioner sought amendment of his objection petition, which petition was summarily dismissed by the Court---Validity---Serious allegations were levelled in respect of Court auction which if found true, would merit serious consideration and might justify -acceptance of petitioner's objection petition---Allegations made by petitioner needed to be probed in order to ensure that petitioner would not be deprived of his rights on the basis of auction report which" might be untrue---Factual controversy, which necessarily arose from allegations made in amendment application, could not be determined without allowing amendment in objection petition---Petitioner had a valid and subsisting interest in the property, which he was entitled to assert and protect even if the property was encumbered and was liable to be brought to sale in execution of decree---Reasons given by Executing Court for dismissing petitioner's application were not sustainable thus order dismissing the application was set aside and application under O.VI, R.17, C.P.C. was allowed--Petition was allowed accordingly.

(b) Administration of justice---

----Court, duty of---Scope---Principal obligation of Court is to ensure that matters pertaining to valuable property rights of parties are properly adjudicated.

Shahid Ikram Siddiqui for Petitioner.

Bashir Ahmad for Respondent No.1.

Kh. Saeed-uz-Zafar for Respondent No.6.

Date of hearing: 5th October, 2006.

2007 C L D 634

[Lahore]

Before Muhammad Muzammal Khan, J

M.L. TRADERS through Proprietor and others---Petitioners

Versus

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

Writ Petition No.1286 of 2006, decided on f9th January, 2007.

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

----S.9---Civil Procedure Code (V of 1908), S.151---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Consolidation of suits---Two suits were pending before Banking Court, one filed by bank and the other filed by borrower---Defendants in both the suits had been granted unconditional leave to defend---Borrower filed application for consolidation of both the suits on the ground that their subject-matter was same, similar evidence was required for their decision and there was likelihood of conflict of judgments if separately tried but Banking Court dismissed the application---Validity---Trial of both the suits between the parties through consolidated trial was not only expedient in the interest of justice but was in the interest of parties and was necessary to avoid, possibility of conflict of judgments---Order passed by Bunking Court was declared void and non-existent in the eyes of law-High Court directed Banking Court to hold trial of both the suits after consolidation and framing of consolidated issues in accordance with law---Petition was allowed in circumstances.

Messrs First Woman Bank Limited v. Registrar High Court of Sindh, Karachi and 4 others 2004 SCMR 108 fol.

Shahid Ikram Siddiqui for Petitioners.

Shamas Mehmood Mirza for Respondents.

2007 C L D 637

[Lahore]

Before Sh. Azmat Saeed, J

Mrs. SAEEDA MAHMOOD and another---Petitioners

Versus

ANAS MUNIR (PVT.) LTD. through Chief Executive, and 6 others ---Respondents

C.O. No.43 of 2005 decided on 12th January, 2007.

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

----S.152--Limitation Act (IX of 1908) Arts. 120 & 181---Petition for rectification of register of share holders of company---Limitation---No definitive precedent exists to the effect that provision of Limitation Act, 1908 applies to such application or whether same is covered wider Art.120 or 181 thereof---Time available for filing such application is not open ended, where a suit based on same cause of action seeking substantially same relief as prayed for under S.152 of Companies Ordinance, 1984 has become barred by limitation, such application would ordinarily be liable to be dismissed.

Talib Hussain v. Babu Muhammad Shafi and 12 others PLD 1987 Lah.1; Syed Akbar Ali v. Mamun Ali Bumasuk (Pvt.) Ltd. and others 2006 CLD 960; PLD 2002 Lah. 443: Sha Mulchand and Co., Ltd. v. Jawahar Mills Ltd. Salem AIR 1953 SC 98 and Anil Gupta v. Delhi Cloth and General Mills Co. Ltd, 1983 (54) Companies Ordinance Cases 301 ref.

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

----S.152---Civil Procedure Code (V of 1908), O. VIII, R.3---Limitation Act (V of 1908), Arts. 120 & 181---Rectification of register of share holders of company, petition for---Limitation---Petition by legal heirs of deceased share holders after knowing of removal of their names in Form-A---Respondents while denying such knowledge of petitioner pleaded in their favour transfer of shares by the deceased much earlier than such knowledge of the petitioner---Validity---Respondents' dental simpliciter without alleging knowledge of petitioner of disputed transaction would neither be sufficient nor inspire confidence---Respondents in reply had not specified date of transfer of shares in their favour by deceased---Part of petitioner's claim pertained to inheritance of shares owned by deceased---No limitation would apply in respect of claims of inheritance---Such petition was not barred by limitation.

Juma Khan v. Mst. Bibi Zenaba PLD 2003 SC 823; Muhammad Zubair and others v. Muhammad Sharif 2005 SCMR 1217; Muhammad Iqbal and 5 others v. Allah Bachaya and 18 others 2005 SCMR 1447; Mst. Kaneezan Bibi and others v. Muhammad Ramzan 2005 SCMR 1534; S. Bikram Singh v. Patiala Banaspati and Allied Products Co. Ltd. and others 1956 PEPSU 98 AIR V. 43 C.32 Dee; Sha Mulchand and Co., Ltd. v. Jawahar Mills Ltd., Salem AIR 1953 SUP. Court 1998 (Vol. 40, C.N. 27); Talib Hussain v. Babu Muhammad Shafi and 12 others PLD 1987 Lah. 1; Syed Akbar Ali v. Mamun Ali Bumasuk (Pvt.) Ltd. and others 2006 CLD 960; PLD 2002 Lah. 443; Sha Mulchand and Co., Ltd. v. Jawahar Mills Ltd. Salem AIR 1953 SC 98 and Anil Gupta v. Delhi Cloth and General Mills Co. Ltd. 1983 (54) Companies Ordinance Cases 301 ref.

(c) Inheritance---

----Claim of-No Limitation would apply in respect of such claim.

Muhammad Iqbal and 5 others v. Allah Bachaya and 18 others 2005 SCMR 1447 and Mst. Kaneezan Bibi and others v. Muhammad Ramzan and others 2005 SCMR 1534 fol.

(d) Estoppel---

---"Estoppel" and :"laches"---Distinction stated.

Ladles is a sub-specie of estoppel and there can be no question of estoppel in the absence' of knowledge of relevant facts.

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

----Ss.76 & 152---Petition for rectification of register of share 'holders of company---Petition by legal heirs of deceased share­holder---Respondents pleaded to have purchased shares from deceased---- Validity---Respondents did not claim that any transfer deed regarding such shares was ever executed in their favour by deceased--Requirements of S.76 of Companies Ordinance, 1984 being mandatory in nature had not been complied with---In absence of such compliance, no transfer of shares in law would stand effect---Petition was accepted accordingly.

Juma Khan v. Mst. Bibi Zenaba PLD 2003 SC 823; Muhammad Zubair and others v. Muhammad Sharif 2005 SCMR 1217; Muhammad Iqbal and 5 others v. Allah Bachaya and 18 others 2005 SCMR 1447; Mst. Kaneezan Bibi and others v. Muhammad Ramzan 2005 SCMR 1534; S. Bikram Singh v. Patiala Banaspati and Allied Products Co. Ltd. and others 1956 PEPSU 98 AIR V. 43 C.32 Dee; Sha Mulchand and Co.,, Ltd. v. Jawahar Mills Ltd., Salem AIR 1953 Sup. Court 1998 (Vol. 40, C.N. 27); Khurshid Ahmad Khan and another v. Pak Cycle. Manufacturing Company Ltd., Shandara and 4 others PLD 1978 Lah.1, Syed Shafqat Hussain v. Registrar, Joint, Stock Companies, Lahore and others PLD 2001 Lah.523, Syed' Akbar Ali v. Mamun Ali Bumasuk (Pvt.) Ltd. and others 2006 CLD 960, Haji Gulshan v. Abdul Qayoom and 4 others PLD 1991 Pesh, 85, Sher Muhammad Jan and another v. Mst. Shahzadi Asafia Sultan and another PLD 1955 Lah.593 and Bostan and 5 others v. Mst. Sattar Bibi and 11 others PLD 1993 SC (AJ&K) 24 and Talib Hussain v. Babu Muhammad Shafi and 12 others PLD 1987 Lah. 1 ref.

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

----S.76---Transfer of shares---Requirements of S.76 of Companies Ordinance, 1984---Mandatory in nature---In case of non-compliance of such requirements, no transfer of shares in law would stand effected.

Mubashar Latif for Petitioners.

Kashif Nawaz Bajwa for Respondents.

2007 C L D 648

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

ELAHI BANISH---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Branch Manager and another---Respondents

F.A.O. No.195 of 2005, heard on 11th December, 2006.

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

---Ss. 9, 10 & 22---Suit against Bank--Application for redemption of mortgaged property---Appeal against judgment of Banking Court---Appellant filed suit for declaration against Bank---Bank filed application for leave to defend suit which was granted and Bank filed written statement---Bank contended in the written statement that appellant was defaulter of Rs.2,61,447 up to 30-6-2000 and appellant who conceded liability to pay said amount, prayed to Banking Court that appellant be allowed two years period for repayment of said amount in the form of quarterly instalments---Banking Court allowed appellant to make payment of amount in question in quarterly instalments and appellant deposited said amount in instalments accordingly and moved application for redemption, of mortgaged property---Bank contested said application through written reply and contended that appellant was required to pay further amount of Rs.1,29,307 as outstanding plus Rs.15,198 against tubewell amount---Banking Court dismissed application of appellant for redemption of mortgaged property---Validity---Bank had categorically stated in its application for leave to defend suit that appellant was a defaulter to the tune of Rs.2,61,447 and said amount was paid by appellant in accordance with order of the Banking Court in instalments---Counsel for Bank had failed to show as to how appellant was liable to pay further amount as claimed by the Bank---Appellant who had complied with judgment and decree of Banking Court and paid agreed amount in instalments, could not be held defaulter for amount as claimed by the Bank---Order of Banking Court dismissing application of appellant for redemption of mortgaged property, was set aside and case was remanded to Banking Court for passing order of redemption of mortgaged property, accordingly.

Malik Javed Akhtar Wains for Appellant.

Sahibzada Muhammad Saleem for Respondents.

Date of hearing: 11th December, 2006.

2007 C L D 652

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Messrs SHAHEEN FOODS LIMITED through Chief Executive and 8 others---Appellants

Versus

REGIONAL DEVELOPMENT FINANCE CORPORATION LIMITED through Managing Director and another---Respondents

R.F.A. No.106 of 1997, decided on 5th December, 2006.

Banking Tribunals Ordinance (LVIII of 1984)---

----S.6---Financial Institutions (Recovery of Finances) Ordinance (XLI of 2001) S.13---Civil. Procedure Code (V of 1908), O.IX, R.13---Suit for recovery of finances--Service of notices to defendants in prescribed manner--Reply to show-cause notice was received only from four defendants out of nine, while remaining defendants were proceeded against ex parte---None having turned up from said defendants, reply to show-cause notice was rejected and suit was decreed ex parte---Application seeking setting aside of ex pane decree, moved by legal representatives of one such defendant. was allowed and impugned decree was set aside---Reply to show-cause notice had been filed by the legal representatives of one defendant---Remaining three defendants were proceeded against ex parte and suit was decreed as prayed for---Validity---Record revealed that application to set aside ex parte decree was filed only by the legal representatives of one defendant but Chairman Banking Tribunal set aside the entire decree---Chairman Banking Tribunal had no jurisdiction to pass the impugned judgment and decree hence .set aside by High Court---Suit would be deemed to be pending before Banking Tribunal-Petitioners were directed to file leave application in terms of section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 within 10 days.

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

Kh. Ahmad Tariq Rahim for Appellant.

Abid Aziz Sheikh for Respondent No.1.

Ghulam Farid-ud-Din for Respondent No.2.

Dates of hearing: 29th November and 5th December, 2006.

2007 C L D 656

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

ALLIED BANK OF PAKISTAN LIMITED through Manager---Appellant

Versus

Messrs SAWAN IMPEX through Sole Proprietor---Respondent

Regular First Appeal No.234-A of 2003, heard on 18th December, 2006.

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

----Ss.9, 10, 15 & 22---Specific Relief Act (I of 1877), Ss.42 & 54--Suit for declaration and permanent injunction---Application for leave to defend suit---Rejection of application---Appeal---Application filed by defendant Bank for leave to defend suit was dismissed and suit filed by plaintiff was decreed against defendant Bank by the Banking Court taking the view that plaintiff was liable to pay amount of Rs.75,26,635 as full and final liquidation of the liabilities and defendant Bank was entitled to draw the same amount---Defendant Bank had filed appeal against judgment of Banking Court contending that Banking Court had proceeded arbitrarily in rejecting application for leave to defend the suit as per record, liability of plaintiff was Rs.1,17,41,508.95 till 16-1-2003 and that any dispute about. correctness thereof could be determined only by granting leave to defend suit and after due trial of the suit ---Validity--Availing of financial liability had not 'been denied by the plaintiff---Whole issue was about the correct determination of quantity of liability and amount due---Defendant Bank had come up with the plea through his application for leave to defend the suit that liability of plaintiff was to the extent of Rs.1,17,41,508.95, but as per version of plaintiff said amount was Rs. 75,26,634.48 and said amount was in fact outstanding against plaintiff---Approach adopted by Banking Court was untenable, factually and legally as assertion made by defendant Bank and grounds for leave to defend urged in the application, warranted due consideration and such a summary disposal of the suit was not called for when there was a serious dispute and controversy involved was about the amount due from plaintiff---Judgment of Banking Court was not maintainable to the extent of dismissal of application for leave to defend the suit---Said application would be deemed to be pending, which would be heard and decided by Banking Court in accordance with law. ?

Syed Fazal Mahmood for Appellant.

Respondent Ex parte.

Date of hearing: 18th December, 2006.

2007 C L D 659

[Lahore]

Before Sh. Azmat Saeed, J

PATTOKI SUGAR MILLS LIMITED through Chief Executive---Appellant

Versus

WATER AND POWER DEVELOPMENT AUTHORITY (WAPDA) through Chairman and 4 others---Respondents

Writ Petition No.16143 of 2005, decided on 21st February, 2006.

Company---

--Limited company is a juristic person with a legal Identity separate from its shore-holders--Any change in shareholding of a company does not mean change in the title of the assets of company or premises occupied by it--Principles.

Commissioner of Income Tax v. Mass Products (Ind) Ltd. 199& PTD 1096; Shaikh Muhammad Anwar v. Sh. Muhammad Iqbal and another 1984 CLC 103; Haji Khuda Bakhsh Nizamani v. Election Tribunal and others 2003 MLD 607; Muhammad Irfan Azad v. Mst. Sultan Begum and 8 others PLD 1971 Kar. 91 and Haider International Finance Ltd. v. The State Bank 1986 CLC 2197 ref.

Muzammal Akhtar Shabbir and Mugtadir Akhtar Shabbir for Appellant.

Mumtaz Khan, XEN Chunian

Ashfaq Ahmed Khan, RO Chunian.

Maqsood ul Hasan Director Legal.

2007 C L D 667

[Lahore]

Before Muhammad Sayeed Akhtar and Muhammad Jehangir Arshad, JJ

GHULAM NAZAK---Appellant

Versus

ZARAI TARAQIATI BANK OF PAKISTAN through Manager and another---Respondents

R.F.A. No.189 of 2004, heard on 16th January, 2007.

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

---S.9-Bankers' Books Evidence Act (XVIII of 1891), S.4---Suit for declaration by plaintiff disclaiming to have obtained loan from Bank-Proof-Onus was on Bank to prove that disputed loan was advanced to plaintiff----Bank did not produce original application of plaintiff for obtaining of finance, sanction letter, finance agreement, cheque showing withdrawal of loan or any document securing finance-Even photocopies of such documents were not placed on record---Un-attested documents produced by Bank relating to another loan account would have no evidentiary value---Mutation allegedly securing finance by mortgaging land was not produced in evidence---Bank had not pleaded that cheque through which disputed amount was allegedly withdrawn by plaintiff had been lost---Plaintiff could not be burdened with disputed loan in absence of its record-- Bank had failed to prove that original record was lost---Mere oral assertion of Bank's witnesses would not be enough to prove loss of record---Bank regarding loss of record had neither made report to its Regional Manager nor lodged F.I.R.--"Bank had not obtained permission from Court to produce secondary evidence---Loss of record had not been proved, thus, secondary evidence, if led any, would become valueless---Bank did not prove that plaintiff had obtained alleged loan from Bank---Suit was decreed against Bank in circumstances.

Mst. Khurshid Begum and 6 others v. Chiragh Muhammad 1995 SCMR 1237 and Mukhtar Ahinad through Legal Heirs v. Muhammad Yunus and 4 others 2001 CLC 1796 rel.

(b) Bankers' Books Evidence Act (XVIII of 1891)---

---S.4-Civil Procedure Code (V of 1908), O.XIII, R.4---Documents relating to entries in Bankers' Books not attested by Bank, but exhibited in evidence---Validity---Such documents would have no evidentiary value.

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

----Arts.76 & 77---Leading "secondary evidence relating to original documents, which were lost or destroyed---Scope---Such evidence could be given after seeking permission of Court and fulfilling conditions laid down in Art.77 of Qanun-e-Shahadat, 1984.

Mst. Amir v. Soini 1997 MLD 2376 rel.

(d) Qanun-e-Shahadat (I0 of 1984)---

----Arts.76 & 77---Transaction drawn in the form of a document---Oral evidence to prove such transaction---Scope---Such oral evidence could not be led, unless original document was shown to have been lost or could not be procured/produced and that too after obtaining permission of Court for production of secondary evidence.

Mst. Amir v. Soini 1997 MLD 2376 rel.

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

----Arts.76 & 77---Loss of document not proved---Secondary evidence, if led any, would become valueless.

Mst. Khurshid Begum and 6 others v. Chiragh Muhammad 1995 SCMR 1237 and Mukhtar Ahmad through Legal Heirs v. Muhammad Yunus and 4 others 2001 CLC 1796 rel.

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

----O.XIII, R.4---Document not duly proved, though exhibited without objection---Evidentiary value---Such document could not be read in evidence.

Water and Power Development Authority v. Ghulani Shabbir 1998 MILD 1592 rel.

Akhtar Mehmood Khan for Appellant.

Abdul Razaq Raja for Respondents.

Date of hearing: 16th January, 2007.

2007 C L D 673

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

Messrs S.S. GINNERS through Ch. Muhammad Younus and 6 others---Appellants

Versus

MULSIM COMMERCIAL BANK LTD. through Manager---Respondent

R.F.A. No.94 of 2003, heard on 23rd November, 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-Pleas raised by defendant, inter alia, were regarding illegal charging of mark-up and excessive charging of mark-up---Banking Court without giving findings on such pleas dismissed leave application and decreed suit---Validity---Bank in statement of accounts had charged mark-up after 30-4-1997, whereas plaintiff claimed that period of finance expired on 30-4-1997---Statement of accounts suffered from other discrepancies and glaring legal infirmities---Plaintiff had made out a case for grant of leave to defend suit--Plaintiff had disputed amount of mark-up and admitted remaining decretal amount---High Court accepted leave application only to consider question of mark-up, subject to deposit of remaining decretal amount by plaintiff within specified time, failing which leave application would be deemed to be dismissed---High Court remanded case to Banking Court for its decision after framing issue on question of mark-up and recording evidence.

Ch. M. Manzoor ul Haq for Appellants.

Muhammad Irfan Wain for Respondent.

Date of hearing: 23rd November, 2006.

2007 C L D 678

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

NATIONAL BANK OF PAKISTAN through Manager---Appellant

Versus

Messrs MUJAHID NAWAZ COTTON GINNERS through Partners and 6 others---Respondents

R.F.A. No.128 of 2004, heard on 30th November, 2006.

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

----Ss. 9 & 18---Suit for recovery of loan---Mortgage of property---Insurance charges---Mortgage deed clearly stated that in case of failure of mortgagor to pay any premium of the insurance, the Bank may pay the same on behalf of mortgagor and recover the same from defendants---Execution of mortgaged deed having not been denied, Bank, on the strength of said clause of deed, could recover the insurance charges from the defendants---Requirement-Bank, however, in addition to the amount of insurance charges, had also debited the, salary of the staff, inspection charges and other miscellaneous expenses in the account of the borrower---Record showed that although the amount of all those charges was debited in the account of borrowers, yet the Bank did not file any supporting documents in order to show that such and such amount was paid by the Bank, to the insurance company as premium, on behalf of the mortgagors and, that such and such amount was paid as salary---No document on record even prima facie showed that the said amount was, in fact, paid to the insurance company/concerned persons---Held, Bank should have filed the vouchers, receipts or some other documents manifesting that the said amount was, in fact, paid to the insurance company---In the absence of any supporting documents, the Bank was not entitled to recover the said amount merely on the ground that the same found mention in the statement of accounts, which was not authenticated by documents/receipts---Banking Court, therefore, had rightly declined to allow the amount to the Bank.

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

----Ss. 9 & 18---Bankers' Books Evidence Act (XVIII of 1891), Ss.2(8) & 4---Suit for recovery of loan by Bank---Statement of account submitted by Bank --"Certification" of such statement---Requirements---If the 'certificate' on the 'statement of accounts' by Bank was not in accordance with the provision of S.2(8), Bankers' Books Evidence Act, 1891 the same was not 'certified copy' as contemplated by law and such copy of, statement could not be considered as prima facie evidence of the existence of entries in the statement of account by the Bank---Such copies of the 'statement' of the Bank could not be received as evidence of matters, transaction and accounts as required under S.4, Bankers' Books Evidence Act. 1891 and on the basis of such statement of accounts, which was not the 'certified copy', the defendants could not be held liable to pay the amounts claimed by the Bank.

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

---Ss. 89 & 18---Bankers' Books Evidence Act (XVIII of 1891), Ss.2(8) & 4---Suit for recovery of loan by Bank---Submission of Bank statements, by Bank---Certificate to be given at the foot of such' statements so as to make it a 'certified copy'---Requirements enumerated.

It flows from the bare perusal of the provision of section 2(8); Bankers' Books Evidence Act, 1891 that a certificate, which is to be given at the foot of copy of statement of account, so as to make it certified copy of the statement of Accounts, must state the following facts:-

(i) it is true copy of the such entry;

(ii) such entry is contained in one of the ordinary's books of bank;

(iii) it was made in the usual and ordinary course of business:

(iv) such book is still in the custody of the bank;

(v) it must be dated; and

(vi) subscribed by the principal accountant or manager of the bank with his name and official title.

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

----Ss. 9 & 18---Suit for recovery of loan---Finance agreement---Dispute as to date of expiry of Finance agreement---Finance agreement which bears cuttings, overwriting, manipulations and interpolation in that behalf, can be struck down.

Sardar Riaz Kareem for Appellant.

Abdul Majeed Malik for Respondents.

Date of hearing: 30th November, 2006.

2007 C L D 687

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rehman, JJ

NAZIR HUSSAIN and another---Appellants

Versus

BANK OF PUNJAB through Manager---Respondent

F.A.O. No.162 of 2006, heard on 18th January, 2007.

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

----Ss. 9 & 12---Service on defendant---Modes---Procedure---Deviation of Banking Court from procedure laid down in S.9(5), Financial Institutions (Recovery of Finances) Ordinance, 2001 and passing ex parte decree against the defendants---Effect---High Court observed that it was expected from a judicial officer, especially of the rank of a District Judge, to be extremely careful, conscious and abreast of the provisions of law, while deciding valuable rights of the parties, which, in the present case, to say the least, the Judge Banking Court failed to abide by---High Court set aside the impugned order of the Banking Court, accepted the defendant's application and remanded the case---Defendant's having already filed the application for leave to appear and defend the suit, which shall. be deemed to be pending before the Banking Court, who, at the first instance, shall decide the same then the suit, if need arose, after hearing the parties in. accordance with law.

Section 9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 envisages that when a plaint is presented to the Banking Court, it shall issue summons, which shall be served on the defendant through the bailiff or process server of the Banking Court, by registered post acknowledgement due, by courier and by publication in one English language and one Urdu language daily newspaper, and service duly effected in anyone of the aforesaid modes shall be deemed to be valid service for purposes of the Ordinance. In the present case, the Banking Court, on 27-10-2003, issued summons to the defendants only through registered envelopes and by proclamation in two newspapers. Placing the provision of section 9(5) of the Ordinance in juxtaposition with order dated 27-10-2003, it leads to the irresistible conclusion that the Judge Banking Court issued summons to the appellants contrary to the said provision of law. Section 9(5) of the Ordinance provides that the summons shall be issued to a defendant through four modes of service, viz. bailiff or process server, by registered post acknowledgement due, by courier service and by publication in two newspapers, while the Judge Banking Court thought it fit in his own wisdom to issue summons only through two modes. Banking Judge has no jurisdiction to deviate from the procedure laid down in section 9(5), and adopt his own procedure. The Court, thus, failed to resort to the procedure prescribed in the special statute (Financial Institutions (Recovery of Finances) Ordinance, 2001) and has unnecessarily bypassed the procedure of service prescribed therein, while the Judge Banking Court, who is the creature of the said statute, is bound to adopt and obey the said procedure. In view whereof, the procedure adopted for service of the defendants was defective, violative of law and had definitely caused prejudice to the defendants. Although postal receipts, which were on record, showed that the summons were sent by registered post, yet no acknowledgment is on record showing that the defendants were served through postal service. Judge Banking Court; failed to issue summons as prescribed under the law and the defendants were not served in accordance with law, therefore, it would have been in the fitness of things and interest of justice if the Judge Banking Court would have set aside the ex parte decree.

As the basic order dated 27-10-2003 for issuance of summons was contrary to the mandatory provision of law, therefore, all subsequent orders passed and the superstructure made thereon would automatically fall to the ground.?

Judge Banking Court without adverting to the material aspect of the case, qua the service of the defendants, has erroneously held that the defendants were served. While rendering the said findings, the Judge was completely oblivious of the fact that he himself failed to summon the defendants through the process prescribed by the special statute. The Judge Banking Court, at the first instance, should have adopted the procedure as prescribed under section 9(5) of the Ordinance. Secondly, in the present scenario, he should not have passed the ex parte decree only on the basis of publication in the newspapers and if he erroneously passed the decree, then he ought to have set aside the same when such an application was brought before him. This sort of hasty and illegal decisions cannot be countenanced under any stretch of imagination. It is expected from a judicial officer, especially of the rank of a District Judge, to be extremely careful, conscious and abreast of the provision of law, while deciding valuable rights of the parties, which in the present case, to say the least, the Judge Banking Court failed to abide by.?

A Judge must wear all the laws of the country on the sleeve of his robe and failure of the counsel to properly advise him is not a complete excuse in the matter.?

High Court set aside the impugned order and accepted the defendants' application for setting aside of the ex parte judgment and decree and remanded the case, and allowed the appeal with specified terms.?

Muhammad Azwar Siddiqui v. Chief Executive Union Leasing Limited and 2 others 2006 CLD 946; Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104 and Board of Intermediate and Secondary Education Lahore through Chairman and another v. Mst. Salma Afroze and 2 others PLD 1992 SC 263 fol.

Mian Muhammad Jamal for Appellants.

Muhammad Siddique for Respondent.

Date of hearing: 18th January, 2007.

2007 C L D 698

[Lahore]

Before Nasim Sikandar and Muhammad Sair Ali, JJ

Mian MUHAMMAD AKHTAR---Appellant

Versus

MUSLIM COMMERCIAL BANK LIMITED through Duly Authorized Attorney/

Representative and others---Respondents

E.F.A. No.420 of 2004, heard on 15th February, 2007.

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

----Ss. 19 & 9---Auction sale of mortgaged property---Court auctioneer himself admitted in his report that at the time of auction, neither any of the representatives of the, decree-holder nor of judgment-debtors were present, but two officers of the decree holder arrived at 10.35 am along with six prospective bidders. seeking to participate in the auction proceedings but were denied the participation in the auction---Order of the executing Court to the effect that the refusal of the Court auctioneer to allow the prospective bidders arranged by the decree holder to participate in the auction was improper and in the prevailing circumstances and the facts surrounding the auction, completion of the auction proceedings in thirty minutes (between 10 a.m. to 10.30 a.m.) was neither possible nor probable and thus the possibility that no auction was held and the report was collusively completed was justified---No exception could be taken to the order of the executing Court to accept the objection petition against the auction proceedings.

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

---Ss. 19 & 9---Court auction of mortgaged property---Bid in 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.

Nasir Mushtaq Sheikh v. Platinum Commercial Bank Limited E.F.A. No.33 of 2004; Afzal Maqsood Butt v. Banking Court No.2 Lahore 2005 CLD 967 and Messrs Rasu Food Industries and another v. Messrs Pakistan Industrial Leasing Cooperation Limited and others 2005 SCMR 1643 ref.

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

---Ss. 19 & 9---Order of Court auction of mortgaged property---Such sale not confirmed by the executing Court---Decretal debt amount having been settled by the judgment-debtors in the meanwhile and property redeemed, the execution proceedings completed on satisfaction of the decree---Bidder, in such auction, could not be held entitled to any legitimate relief under law.

Muhammad Sharif Chauhan for Appellant.

Hassan Nawaz Makhdoom for Respondent No.1.

Respondents Nos.2 to 9 Ex parte.

Date of hearing: 15th February, 2007.

2007 C L D 702

[Lahore]

Before Muhammad Muzammal Khan, J

HABIB BANK LIMITED---Petitioner

Versus

KALCO PHARMA LIMITED through Chief Executive and 14 others---Respondents

Writ Petition No.16432 of 1996, heard on 20th February, 2007.

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

---Ss. 9 & 15---Transfer of Property Act (IV of 1882), Ss.79 & 58---Constitution of Pakistan (1973), Art.199---.Constitutional petition---Suit for recovery of loan---Sale of mortgage property---Mortgage---Waiver/renouncement of---Principles---Property in question was initially mortgaged through registered deed dated 16-3-1986 in favour of petitioner/Bank and said property underwent further mortgage on 16-5-1986, besides four equitable mortgages by deposit of title deeds---Mortgage so created was never terminated by operation of law or through deliberate act of the parties---Termination, if any, had to be proved/established but in the present case there was no evidence with the Banking Court to return any such finding---When a person is possessed of any right, question of its waiver/renouncement had to be proved by evidence and while electing from any of the two interpretations one involving loss of the right and the other preserving of that right, his conduct was to be construed on the basis of preserving his rights---Relinquishment/desertion of mortgagee rights inspite of holding the documents of the property under mortgage and institution of suit for recovery of the advanced finance facility, even though in 1995, would not lead to loss of mortgagee rights---Petitioner-Bank had not issued any N.O.C. in favour of respondents for creation of second mortgage and the petitioner-Bank being not party to said transaction, would not be bound by it---Second mortgage could have been created by the owners, till the time their title in the property become extinct---Provision of S.79, Transfer of Property Act, 1882 had enacted an exception to the rule of priority, making the subsequent/intermediate mortgage as part of the first mortgage, if the advanced amount was within the fixed minimum limit, provided the subsequent/ intermediate mortgagee had the notice of first mortgage---Subsequent mortgage had no notice of mortgage of the petitioner-Bank and as such it could hardly be held that later mortgage was void or had become part of first mortgage under the ordinary law of the land, as mortgagor/owner could further mortgage/sell out his property but subject to earlier mortgage/charge/ encumbrance.

Nazeef v. Abdul Ghaffar and others PLD 1966 SC 267 ref.

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

----Art. 199-Constitutional petition---Order impugned was patently illegal as the entire controversy was not compre­hended---Such an order could not be allowed to continue.

Syed Ali Abbas and others v. Vishan Singh and others PLD 1967 SC 294; Nawab Syed Raunaq Ali and others v. Chief Settlement Commissioner PLD 1973 SC 236; Khuda Bakhsh v. Khushi Muhammad and 3 others PLD 1976 SC 208 and Ch. Muhammad Amin v. Mushtaq Ahmad and others PLD 1980 Lah. 784 ref.

Shamas Mehmood Mirza for Petitioner.

Jahangir Akhtar Jhojha for Respondent No.16.

Date of hearing: 20th February, 2007

2007 C L D 710

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

MAZHAR HUSSAIN and another-Appellants

Versus

ZARAI TARIQATI BANK LIMITED (ADBP) through Manager and 16 others---Respondents

E.F.A. No.564 of 2006, decided on 25th January, 2007.

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

---Ss. 9, 14 & 19---Civil Procedure Code (V of 1908), O.X XIV, R.5---Suit for recovery of loan---Impleading of guarantors and mortgagors as defendants---Mortgage deed was appended with the plaint---Said defendants never entered appearance and suit was decreed---Execution of decree--Application under O.XXXIV. R.5, C.P.C. by defendants was refused---Validity---Decree revealed that it was for recovery of money only, inter cilia, against the said defendants---Executing Court, no doubt, had the jurisdiction to examine all the documents on record to ascertain true import of the decree but it could not travel beyond the decree---Contentions raised by the defendants (guarantors and mortgagors) pertained to interpretation of a document filed before the Banking Court where the defendants never entered appearance or replied to the show-cause notice and decree was eventually passed---To permit the defendants to raise said issue at the appeal stage before the High Court would amount to a retrial of the suit which was not possible in execution proceedings and the Court executing the decree could not sit in appeal against the decree sought to be executed before it---Application of the defendants under O.XXXIV R.5, C.P.C. in circumstances, was rightly dismissed by the impugned order.

Fazal-ur-Rehman Jillani for Appellants.

Shaukat Umar Pirzada for Respondent No.1.

Arshad Ali Mohar for other Respondents.

2007 C L D 712

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Messrs ALI. ABBAS (PVT.) LTD. and 2 others---Appellants

Versus

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

E.F.A. No.53 of 2006, heard on 6th March, 2007.

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

----Ss. 9, 15 & 19---Civil Procedure Code (V of 1908), O.XXI, Rr.84, 85, 89, 90, 91 & 92---Confirmation of sale---Procedure---O.XXI, Rr.85, 89, 90, 91 & 92, C.P.C.---Applicability---Auction sale of mortgaged property---Sate was conducted in execution of the decree with the intervention of the Banking Court and Banking Court opted to follow the procedure laid down in C.P.C. for such purpose and preliminary process was followed and consequently the sale was conducted---Objections to sale were filed and auction purchaser also filed application for confirmation of sale and delivery of possession---Sale having been completed, subject to the deposits to be made in terms of Rr.84 and 85 of O.XXI, C.P.C., Provision of R.92 of O.XXI, C.P.C. would come into play which laid down that where no, application was made under Rr.89, 90 & 91 of O.XXI, C.P.C. or where such application was made and disallowed, the Court shall make an order confirming the sale and thereupon the sale would become absolute---Once a sale had been completed then, unless and until same was set aside in terms of Rr.89, 90 or 91 read with R.92(2) of O.XXI, C.P.C., the executing Court was bound to pass an order for confirmation of the sale whereupon it was to become absolute---Executing Court, in the present case, while dismissing the execution application and other application for non-prosecution, was oblivious of the said mandatory provision of law, and instead of passing proper orders under O.XXI, R.92, C.P.C., proceeded to dismiss all the applications for non-prosecution---Apart from such glaring illegality, the auction purchaser filed an application for confirmation of sale and delivery of possession and Banking Court, on the date fixed for reply and arguments proceeded to dismiss the execution application as well as the objections for non-prosecution---Such order of the Banking Court, from whatever angle seen, was wholly without jurisdiction---Second application was to be treated to be in continuation of the process already commenced in the matter of execution of the decree passed in favour of the decree-holder Bank.

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

----Ss. 9, 15 & 19--Auction sale of mortgaged property in execution of decrees---Executing Court proceeded, in the first instance, to hold the objection petition to be time barred with reference to sale that took place and thereafter in somewhat mechanical manner proceeded to dispose of the other objections---Order passed gave the impression that the Executing Court having already held the objections to be barred by time proceeded with the same mind set while rejecting the other objections---Banking Court, after correctly holding that the second execution application could be entertained, the logical conclusion was that it was in continuation of the first application---Objections had been filed in time and withdrawn Contention was that since a fresh execution application had been filed, a fresh objection petition would also be, filed being under the impression that a fresh process for execution in the matter would be started and objections would be filed accordingly---Such was not to be so, notwithstanding the fact that the application for restoration was withdrawn, order dismissing the execution application as also the objections for non-prosecution were without lawful authority---Objections filed were deemed to be pending, the replies had already been filed and these objections needed to be decided afresh---Appeal was allowed, impugned order passed by Banking Court was set aside---Execution petition already filed by the decree-holder as also the objections filed by the appellants shall be deemed to be pending---Executing Court shall take up the said objections and decide the same after hearing all concerned--Parties for such purpose shall appear before the Banking Court accordingly.

Shazib Masud for Appellants.

Shoaib Zafar for Respondent No.1.

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

Date of hearing: 6th March, 2007.

2007 C L D 718

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

MUHAMMAD HAYAT---Appellant

Versus

ZARAI TARQIATI BANK LTD. Through Chairman and another---Respondents

R.F. A. No. 544 of 2006, heard on 28th February, 2007.

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

---S. 10---Suit by borrower/customer against Financial Institution---Precondition Defendant was required to obtain leave to defend the suit for which purpose the application was filed-Banking Court, instead of considering the said application and deciding the question of grant or refusal of leave, dismissed the suit itself---Validity--Order of dismissal of the suit by the Banking Court, held, was not sustainable---High Court, while granting leave to defend the suit, for which the plaintiff had no objection, remanded the case to Banking Court accordingly.

Malik Sarfraz Nawaz for Appellant.

Ch. M. Zafar Iqbal for Respondents.

Date of hearing: 28th February, 2007.

2007 C L D 778

[Lahore]

Before Mian Hamid Farooq and Iqbal Hameed-ur-Rahman, JJ

Mst. SHAMIM TAHIRA and others---Appellants

Versus

ZARAI TARAQIYATI BANK OF PAKISTAN LTD. through Manager and another---Respondents

R.F.A. No.16 of 2005, decided on 11th December, 2006.

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

----S. 22(1)---Limitation Act (IX of 1908), Ss.5, 29(2) & Art.156---Time-barred appeal--Provisions of S.5 Limitation Act, 1908 cannot be invoked for condonation of delay---Held, time allowed for filing first appeal under S.22(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, a special statute, was 30 days---Same being different from that given in Art. 156 Limitation Act, 1908, S.5 of the Act stands excluded by virtue of S.29(2) Limitation Act, 1908s.

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 Kahsif 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; Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 ref.

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

---Ss. 9 & 10---Civil Procedure Code (V of 1908), O. VII, R.11---Rejection of plaint for disclosing no cause of action---Powers of court to reject plaint of its own accord---Plaintiffs filed suit against Bank pleading that they had not obtained any loan against the specified account---Leave to defend suit was granted--Averments made in the plaint showed that plaintiffs had' received from bank an amount of Rs.1,30,000 as loan under the Specified Account number---Banking Court rightly held that plaint did not disclose any cause of action as plaintiffs had admitted availing of loan facility to the tune of Rs.1,30,000 against the same loan account-Contention that bank did not file any application under O.VII, R.11, C.P.C. had no force because provisions of said Order nowhere ordained that a defendant must file an application for rejection of plaint and the court, before whom the lis was pending, was divested of powers from rejecting plaint of its own accord---Order VII, R.11 C.P.C, amply manifests that plaint could be rejected in certain eventualities, rather it was the duty of court to examine the plaint to determine as to whether plaint should be rejected or not---Order of Banking Court whereby plaint was rejected after granting leave to defend suit did not call for interference in circumstances.

Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager 2003 CLD 245 ref.

Rana Abdul Majeed for Appellants.

2007 C L D 826

[Lahore]

Before Muhammad Sayeed Akhtar and Muhammad Jehangir Arshad, JJ

MUHAMMAD NAEEM FAROOQ---Appellant

Versus

MUHAMMAD ASLAM---Respondent

R.F.A. No.215 of 2004, heard on 1st February, 2007.

Negotiable Instruments Act (XXXVI of 1881)---

----S.87---Civil Procedure Code (V of 1908), O.XXXVII, R.2---Recovery of money---Interpolated pro note---Material alteration, effect of---In pro note relied upon by plaintiff, figures and words 'two' were changed into 'twelve' and a note was given on the margin of the pro note regarding alteration--Defendant denied having executed any pro note and also alleged the same as forged-Trial Court dismissed the suit---Validity--Although plaintiff tried to justify such tampering by referring to the note on the margin of pro note, yet such note could not rectify alteration especially when the note neither contained signatures or thumb impression of defendant nor gave any explanation for changing "2" into "12", both in words and figures-Such alteration without consent of defendant was sufficient' to discharge him from his liability in respect of consideration under pro note in absence of way evidence that the alteration was made in order to carry out common intention of parties as required by S.87 of Negotiable Instruments Act, 1881---Trial Court did not commit any illegality or irregularity by arriving at the conclusion that defendant had successfully proved material issue relating to genuineness of pro note---High Court in exercise of appellate jurisdiction maintained the findings of trial Court on material issues-Appeal was dismissed in circumstances.

Khadim Nadim Malik for Appellant.

Muhammad Shahid Tassar for Respondent.

Date of hearing: 1st February, 2007.

2007 C L D 835

[Lahore]

Before Syed Zahid Hussain and Jawwad S. Khawaja, JJ

SHOAIB AHMED FARIDI---Appellant

Versus

UNITED BANK LIMITED---Respondent

Regular First Appeal No.244 of 2006, heard on 11th January, 2007.

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

---S.22---Civil Procedure Code (V of 1908), O.XLI, R.20---Contract Act (IX of 1872), S.146---Partnership Act (IX of 1932), S.25---Appeal---Decree for recovery of loan amount passed jointly and severally against borrower firm, its two partners and mortgagor of mortgaged property---Appeal against decree by one partner without impleading borrower-firm, its second partner and mortgagor---Plea of appellant before Banking Court and Appellate Court was that he had ceased to be partner of borrower firm, thus, was not liable to discharge its financial obligations---Application by appellant to implead omitted defendants as pro forma respondents---Validity---Impugned decree was not divisible---Partner of a partnership firm would be liable for re-paying its debts---If appellant's claim was accepted, then mortgagor not being partner of firm would certainly be affected by such judgment---If impugned decree was affirmed, then mortgagor might have right before Executing Court to apply for attachment and sale of appellant's property before mortgaged property was put to auction---In alternative, mortgagor would have right to recover from appellant (in full) and from second partner (ratably) amount realized from sale of mortgaged property and applied towards satisfaction of decree---Second partner would be also affected, if impugned decree was affirmed as his liabilities as partner of firm would be increased without a chance to claim ratable contribution from appellant under 5.146 of Contract Act, 1872---Second partner and mortgagor had a valid interest in contesting appeal, thus, they were necessary parties---Failure of appellant to implead second partner and mortgagor within period of limitation rendered appeal as incompetent---High Court dismissed appeal along with such application.

Mst. Murad Begum and others v. Muhammad Rafiq and others PLD 1974 SC 322; Mst. Magbool Begum and others v. Gullan and others PLD 1982 SC 46; Abdul Qadir and 5 others v. Muhammad Umar and others PLD 1987 Lah. 232; Muhammad Suleman v. Abdul Rashid and 13 others PLD 1987 Lah. 387; Sher Muhammad and 27 others v. Muhammad Mumtaz-ul-Islam through Legal Heirs and 6 others 2001 MLD 1964; Mst. Jannat Bibi and others v. Barkat Ali and others 1987 MLD 15; Muhammad Ibrahim and another v. Jalal Din 2000 CLC 165; Said Muhammad and others v. M. Sardar and others PLD 1089 SC 532; Mst. Sardar Begum v. Muhammad Anwar Shah and others 1993 SCMR 363 and Punjab Road Transport Board through its Chairman, Lahore v. Abdul Ghafoor and 6 others PLD 1989 SC 541 ref.

(b) Partnership Act (IX of 1932)---

---S.25---Partner of partnership firm would be liable for re-paying its debts.

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

----O.XLI. R.20---Decree passed jointly and severally against several defendants--Appeal against decree by one defendant without impleading others-Application by appellant after period of limitation for impelading omitted necessary defendants---Validity Such decree was not divisible and failure of appellant had rendered appeal as incompetent--Appeal was dismissed along with such application.

Mst. Murad Begum and others v. Muhammad Rafiq and others PLD 1974 SC 322; Mst. Magbool Begum and others v. Gullan and others PLD 1982 SC 46; Abdul Qadir and 5 others v. Muhammad Umar and others PLD 1987 Lah. 232; Muhammad Suleman v. Abdul Rashid and 13 others PLD 1987 Lah. 387; Sher Muhammad and 27 others v. Muhammad Mumtaz-ul-Islam through Legal Heirs and 6 others 2001 MLD 1964; Mst. Jannat Bibi and others' v. Barkat Ali and others 1987 MLD 15; Muhammad Ibrahim and another v. Jalal Din 2000 CLC 165; Said Muhammad and others v. M. Sardar and others PLD 1989 SC 532; Mst. Sardar Begum v. Muhammad Anwar Shah and others 1993 SCMR 363 and Punjab Road Transport Board through its Chairman, Lahore v. Abdul Ghafoor and 6 others PLD 1989 SC 541 ref.

Rashdeen Nawaz Kasur for Appellant.

Amir Iqbal Basharat for Respondent.

Date of hearing: 11th January, 2007.

2007 C L D 845

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Mst. FAIZ ASGHAR through Legal Heirs---Appellant

Versus

HABIB BANK LIMITED through Manager and 2 others---Respondents

F.A.O. No.278 of 2004, heard on 27th March, 2007.

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

----Ss.9, 19 & 22---Suit for recovery of loan---Execution of decree---Suit filed by Bank was decreed with mark-up and it was specifically directed that decretal amount would be recovered by sale of house/bungalow and other properties mentioned in the plaint---Decree was put into execution and property was attached---Defendant filed objection petition against attachment of her property which was attached by the Banking Court--Defendant claimed that she was not liable to pay decretal amount and was not party to the suit or to the loan agreements; and that her property could not have been attached in execution of said decree---Validity---Decree had to be executed as directed in the decree itself i.e. the properties mentioned in the judgment to be read with the plaint, were to be sold and if thereafter some deficiency was found, then other assets of the judgment-debtors, were to be attached and sold---Said process having started, impugned order whereby other property of defendant was directed to be sold, was set aside---Executing Court would carry on the process as directed in the decree and if some deficiency was found, would take up objections filed by appellant lady and decide same in accordance with law.

Tafazul H. Rizvi for Appellant.

Abdul Hameed Butt for other Respondents.

Shahid Ikram Siddiqi for Respondent No.3.

Date of hearing: 27th March, 2007.

2007 C L D 852

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

MUHAMMAD NAEEM and another---Appellants

Versus

BANK OF KHYBER through Branch Manager and 2 others---Respondents

F.A.O. No.171 of 2005, decided on 5th October, 2006.

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

----Ss. 9, 12(2), 19 & 22---Suit for recovery of loan---Execution of decree;--First appeal---Counsel for decree-holders had no objection, if impugned order was set aside and matter was sent back to the Trial Court which would decide the case after framing of issues and recording evidence of the parties on the point; whether service of defendants was effected upon a correct address or otherwise-Parties had agreed that till the disposal of application of defendants under S.12(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 by the Banking Court, they would not alienate or encumber the property, which the Bank/decree-holder claimed to have been mortgaged with it; whereas decree-holders would not get the ' decree executed against defendants till such decision.

Shahid Akram Siddique for Appellants.

Ali Zafar for Respondents.

2007 C L D 857

[Lahore]

Before Jawwad S. Khawaja, J

BARI RICE MILLS LTD.---Appellant

Versus

PASSCO---Respondent

R.S.A No.94 of 2006, decided on 26th February, 2007.

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

----Ss.15, 16 & 36---Term "as is where is"-Applicability-Scope-Wording employed in the contract, in the present case, clearly evidenced that the seller by adopting the term 'as is where is' only excluded from its obligations, the duty to put the agreed quantity of goods in a deliverable state---Term "as is where is" was applicable only to the stipulation in the contract as to delivery of the goods and it did not, in any manner, absolve the seller from its obligation to supply the agreed quality of goods---Only effect of the term "as is where is" used in the contract was to shift the burden of S.36(5), Sale of Goods, Act, 1930 onto the purchaser---Meaning given to the term "as is where is" will have to be determined on the basis of the context in which the term is used; "as is where is" was not capable of one inflexible meaning---When the quality of goods to be supplied by the seller did not meet the description given in the contract, the purchaser could not be faulted for not lifting the goods which did not meet the description given in the contract and S.16(2) of the Sale of Goods Act, 1930 could not benefit the seller---Principles.

Thornett and Fehr v. Beers and Son [1919] 1 KB 486 distinguished.

Paramount Corporation, Karachi v. Haji Moosa Haji Oomar, Karachi PLD 1954 Sind 32; Messrs Fairland Export Syndicate v. Messrs Bengal Oil Mills Ltd., Karachi PLD 1970 Kar. 125 and United Bank Ltd. v. Messrs Al-Noor Enterprises and another 2006 CLC 822 ref.

(b) Contra Proferentum, Principle of---

----Applicability---Scope---Principle of contra proferentum can be resorted to if there is an ambiguity which makes the contract difficult to ascertain the intention of the contracting parties.

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

----S. 55---Sale of Goods Act (III of 1930), Ss.15, 16 & 36(2)---Contract of sale of goods by description was based on reciprocal promises---Time not essence of the contract---No evidence was available to show that time was of the essence of the contract---Admitted position was that the seller itself twice extended the time for lifting of the goods sold---Such circumstance, itself was sufficient to show that time was not of the essence of the contract---Buyer, under the contract, was only obliged to lift the goods if the goods met the description given in the contract and buyer had no responsibility for lifting the goods which did not meet the agreed description---Seller having failed to make the described goods available to the buyer for lifting, which was a condition of the contract and had to be performed by the seller before it could ask. the buyer to fulfil its promise to lift the goods---Buyer's duty to take delivery of the goods, in circumstances, would not arise and it could not be held to be in breach of its obligation to lift, the goods within the period specified in the contract.

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

----Ss. 21 & 56-Suit seeking specific performance of the contract with prayer for damages---Defendant failing to supply the goods as per description in the contract---Plaintiff had proved that it had to purchase the goods from the market in order to meet its commitments in relation to the export contracts with foreign importers which was done through oral testimony as well as documents which showed the purchases made by plaintiff from the open market---Document showed that plaintiff had to pay price for the goods so purchased which were higher than the prices agreed upon by the defendant---Plaintiff, as a result of such purchases, had to incur an additional expense of Rs.5,57,355---Evidence produced by the plaintiff was not controverted by the defendant through any evidence to the contrary---Defendant having committed breach of contract plaintiff was entitled to a sum of Rs.5,57,355 by way of damages.

Uzair Karamat Bhindhri and Mian Muhammad Kashif for Appellant.

Muhammad Akram Khawaja for Respondent.

Date of hearing: 14th/15th February, 2007.

2007 C L D 868

[Lahore]

Before Muhammad Muzammal Khan, J

IRZA PHARMA (PVT.) LTD. Through Managing Director---Appellant

Versus

MONOPLY CONTROL AUTHORITY---Respondent

Monopoly Appeal No.2 of 2004, heard on 22nd February, 2007.

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

----Ss.2 (l)(m), 7, 11, 12, 19 & 21--Appeal---Imposing of penalty---Non-issuance of general or special order--Appellant was an undertaking within the provision of S.2 (l)(m) of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Monopoly Control Authority sought certain information from the appellant but on failure to get the required information, imposed penalty under S. 19 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---Validity---Authority could call upon an undertaking to furnish information concerning its activities, relating to its organization, business; trade practice and management through general order passed under S.7 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, or special order in terms of Ss.11 & 12 thereof---No order either special or general was ever passed or conveyed to appellant---In absence of any order, appellant could not have been proceeded against in terms of S.19 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, whereunder penalty could be imposed by the Authority--Appellant was proceeded against under the punitive provisions of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, which had to be strictly construed and in absence of lapse those should not have been utilized to un-necessarily punish the "undertakings"---Controversy between the parties was not correctly put to rest and entire lis was not comprehended as canvassed by appellant before High Court---Order passed by Monopoly Control Authority being tainted with patent illegalities was not sustainable at law---High Court in exercise of appellate jurisdiction set aside the order passed by the Authority and remanded the case for decision afresh---Appeal was allowed accordingly.

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

---Art.4-Protection of law---Principles---Every citizen of Pakistan, under Art.4 of the Constitution, has an inalienable right to protection of law, which cannot be snatched in derogation of law applicable.

Sh. Muhammad Nawaz for Appellant.

Muhammad Aslam Zar for Respondent.

Date of hearing: 22nd February, 2007.

2007 C L D 872

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

SALEEM AHMED---Appellant

Versus

ZARAI TARAQIATI BANK LIMITED through Manager---Respondent

F.A.O. No.250 of 2006, heard on 7th March, 2007.

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

---Ss.10 & 12---Ex parte decree---Service of process---Passing of decree before 'termination of limitation for filing of application for leave to defend the suit---Bank filed suit against two persons, one had died much before filing of the suit while the other was not served in accordance with the provisions of S.10 (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Report of process server was dated 17-10-2005, while case was taken up on 20-10-2005 and on the same day, the suit was decreed ex parte---Application filed by defendant for setting aside ex parte decree was dismissed by Banking Court---Validity---Application for leave to defend was to be filed, under S.10 (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, within thirty days of the date of first service by any one of the modes---Banking Court failed to mention any such date of service---Even if it was deemed that deceased defendant was alive and' there' was due service of the process, the defendants in the suit had thirty days to file application for leave to defend---When Banking Court passed the decree, still 27 days were available to defendants to file application for leave to defend, thus ex parte decree was without jurisdiction---High Court set aside ex parte decree passed by Banking Court and remanded the case for decision afresh-High Court directed the defendant to file application for leave to defend the suit within ten days---Appeal was allowed accordingly.

Zafar Iqbal Chuhan for Appellant.

Tariq Mahmood Gill for Respondent.

Date of hearing: 7th March, 2007.

2007 C L D 875

[Lahore]

Before Syed Zahid Hussain and Abdul Shakoor Paracha, JJ

Mian HABIB ULLAH---Appellant

Versus

BANK OF KHYBER---Respondent

F.A.O. No.33 of 2002, heard on 21st February, 2007.

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

---S.19---Civil Procedure Code (V of 1908), O.XXI, R.58---Execution proceedings---Objection petition---Summery disposal---Property in question was mortgaged with another bank and was got redeemed after payment of outstanding liability of the other bank by some arrangement between another person and appellant---During execution proceedings, the Court Auctioneer failed to auction the properties mortgaged with decree holder bank and the property in question was got attached by the orders of Banking Court--Appellant filed objection petition with regard to the status of property in question but Banking Court summarily dismissed the objection petition---Validity---All transactions between appellant and other bank regarding redemption of property in question took place prior to the purported attachment of disputed property by Banking Court---Other person who had entered into the arrangement for redemption of the property sought decree in a suit for specific performance of agreement to sell, which decree had attained finality-Such was a controversy of the nature which required proper investigation as to claim of appellant and property determination could be made only by framing proper issues, enabling the parties to lead evidence in support of their respective stances---Summary dismissal of objection petition in the peculiar facts and circumstances was not warranted---Such dismissal of objection petition was unsustainable in law and the order passed by Banking Court was set aside---Case was remanded to Banking Court for deciding objection petition afresh after recording of evidence-Appeal was allowed accordingly.

Shaukat Ali Mian v. Trust Leasing Corporation Ltd. through Chief Executive and 4 others 2002 CLD 1071; Mirza Naseem Ahmad and 4 others v. Dr. Sadiqa Sharif and 12 others 2003 CLD 88; Muhammad Saleem v. Allied Bank of Pakistan and 12 others 2003 CLD 280 and Fazla v. Mehr' Din and 2 others 1997 SCMR 837 ref.

Malik Qamar Afzal for Appellant.

Ch. Muhammad Khan for Respondent.

Date of hearing: 21st February, 2007.

2007 C L D 888

[Lahore]

Before Mian Hamid Farooq and Syed Hamid Ali Shah, JJ

ASGHAR ALI---Petitioner

Versus

OFFICIAL LIQUIDATOR and others---Respondents

I.C.A. No.5-L of 2003, decided on 20th March, 2007.

Companies Ordinance (XLVII of 1984)---

----S. 10(1)---Law Reforms Ordinance (XII of 1972), S.3---Appeal against orders of company Judge---Forum---Expression "appeal against any order, decision or judgment of the Court"-Connotation-Word "any"---Significance---'Appeal against art!: order, decision or judgment of the Court" passed under the Companies Ordinance, 1984 shall lie to the Supreme Court--Where the company ordered to be wound up had a paid up share capital of not less than one million rupees; and, where the company ordered to be wound up had a paid up capital of less than one million rupees, or had no share capital, such appeal shall lie only if the Supreme Court granted leave to appeal---Intra­-court appeal in such cases before the High Court was not competent---Word 'any' enlarged the scope and brought within its purview any order of Company Judge after the winding up---Use of multiples like 'order', 'decision' or judgment' against singular i.e. 'order' connoted that appeal provided in section 10(1) of Companies Ordinance, 1984 was not restricted to only to an order passed for winding up---Intent of Legislature became apparent when a specific phrase 'ordering the winding up of company' as against 'company sought to be wound up' had been used, to enlarge the scope of appeal to every decision, after the winding up of a company was ordered---Use of said word and phrase was meaningful to bring into the purview of appeal, all orders/decisions/judgments passed by the Company Judge subsequent to winding up orders including the order for winding up---Impugned order in the present, was made in the course of winding up and appeal against such order did not lie before a Division Bench of High Court.

Ibrahim Shamsi and 21 others v. Bashir Ahmad Memon/Official Liquidator and another PLD 2006 SC 584 = 2005 SCMR 1450; S. Muhammad Din & Sons and another v. Allied Bank of Pakistan and 5 others 1992 SCMR 1795; Mahboob Industries Ltd. v. PICIC 1998 CLC 806; Messrs Aeroflot Russian Industrial Airline v. Garry's International (Pvt.) Ltd. 2003 CLC 211; Brother Steels Mills Ltd. and others v. Mian Ilyas Miraj and 14 others PLD 1996 SC 543; Muhammad Farooq v. Messrs T.J. Ibrahim & Com. And alliance Motors (Pvt.) Ltd. PLD 1999 Kar. 246; Ch. Jamil Ahmad v. Nippon Bobbin. Company (Pakistan) Ltd. PLD 1991 Lah. 467 and Messrs Sunrise Textile Ltd. v. Mashreq Bank PLD 1976 Lah.1 ref.

Talat Farooq Sheikh for Appellant.

Sardar Roshan Ali Sindhu, Advocate/Official Liquidator.

2007 C L D 932

[Lahore]

Before Umar Ata Bandial, J

YOUSAF TRADERS---Petitioner.

Versus

UNITED BANK LIMITED---Respondent

Writ Petition No.17694 of 2005, decided on 26th January, 2007.

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

----Ss.9 & 19---Constitution of Pakistan (1973), Art.199---Constitutional petition---Maintainability---Rule of exhaustion of available remedies---Applicability---Scope--- Execution proceedings---Order of arrest of judgment-debtor by Banking Court---Judgment-debtor assailing the execution proceedings on the ground that decree had been satisfied---Jurisdiction and process of Banking Court was extended to the decree-holder as a matter of course without application of mind to the causes and grounds for the past abortive execution proceedings by the Bank---Constitutional petition contained facts that prima facie suggested an abuse of process of Court by a decree-holder and correspondingly attracted the supervisory constitutional jurisdiction of the High Court---Facts of the case also involved the enforcement of constitutional safeguards of the personal liberty of a citizen/judgment-debtor---Case of the petitioner contained elements that made the writ jurisdiction to be appropriate, efficacious and speedy namely against the impugned action---Record. showed that the coercive process of the Banking Court had been exercised as a threat rather than for enforcement as a judicial order---High Court, therefore, showed inclination to grant hearing in. the matter to save time, focus the proceedings of Banking Court on lawful exercise of its jurisdiction and for the fair enforcement of the parties rights and obligations under law---Counsel of the Bank/decree-holder had assured that his client shall not press for the petitioner to be arrested until the latter's objection to the maintainability of the execution petition were decided by the Banking Court---High Court, in view of the assurance of the counsel directed that the assurance should be duly honoured in proceedings before the Banking Court where objections of the petitioner to maintainability of the execution proceedings shall be heard and decided in accordance with law before any coercive action was taken against the petitioner and disposed the constitutional petition accordingly.

Muslim Commercial Bank Ltd. and others v. Ahmed Ali and another 2007 SCMRE 38 distinguished.

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

-- Art.199---Constitutional jurisdiction of High Court---Rule of exhaustion of available remedies---Applicability---Scope---Rule of exhaustion of available remedies, though was not prescribed by Art.199 of the Constitution, however, it was salutary criterion by which High Court regulated its proceedings.

Muslim Commercial Bank Ltd. and other v. Ahmed All and another 2007 SCMR 38 ref.

(c) Constitution of Pakistan (1973)---

----Art.199---Constitutional jurisdiction of High Court---Scope---Abuse of process of Court by a decree-holder affecting liberty of judgment-debtor/citizen attracts the constitutional jurisdiction of High Court and matter contains elements that make the constitutional jurisdiction to be the appropriate, efficacious and speedy remedy against the impugned action.

Aziz Ahmed Malik for Petitioner.

Fazal Mehmood Malik for Respondent.

2007 C L D 936

[Lahore]

Before Umar Ata Bandial, J

KAMRAN ELAHI---Petitioner.

Versus

JUDGE BANKING COURT and others---Respondents

Writ Petition No.12753 of 2006, decided on 22nd February, 2007.

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

----Ss. 9, 19 & 22---Civil Procedure Code (V of 1908), S.51 & O.XXI, R.37---Constitution of Pakistan (1973), Art.199---Constitutional petition---Issuance of warrants of arrest of judgment-debtor by the Banking Court at the very outset in execution proceedings of an ex parte decree without prescribed notice and without conducting inquiry contemplated under S.51 and O.XXI, R.40, C.P.C.---Ground given in the order of arrest so early in the execution process was that judgment-debtor was likely to leave the country at any time---Validity---Held, an order for issuance of warrants of arrest was illegal unless preceded by an enquiry expressing satisfaction of executing Court that conditions for arrest as specified in S.51, C.P.C. were duly met---Failure by the Banking Court to have conducted the requisite enquiry and to have omitted to apply its judicial mind to the criteria and the factual material for ordering arrest of a judgment-debtor constituted a fatal error that vitiated the order of arrest---High Court declared the order of arrest to be illegal, without lawful authority and of no legal effect---Petitioner was directed to face the execution proceedings before the Banking Court which shall proceed strictly in accordance with law in the matter of realization of the decretal amount from the judgment-debtors---Principles.

An order for issuance of warrants of arrest would be illegal unless preceded by an enquiry expressing satisfaction of executing Court that conditions for arrest as specified in section 51, C.P.C. are duly met.

In the first instance, notice has to be given to the judgment-debtor to explain as to why he should not be detained in prison. On his appearance the Court has to make an inquiry, record evidence, give opportunity of evidence in rebuttal and thereafter to pass an order on the request for detention in prison, in accordance with law. During these proceedings the judgment-debtor can be asked, to furnish security for appearance, which does not mean security for the payment of decretal amount. Without making any inquiry the Court cannot straightaway order detention in civil prison. Likewise, unless the prerequisites of section 51 of C.P.C. are proved to exist, detention in prison cannot' be ordered. The preconditions, as highlighted hereinabove, are that judgment-debtor should be proved to have made attempt to leave the limits of Court, to obstruct the decree or execution thereof or to have dishonestly transferred the property after the institution of the suit to avoid the decree or had the means to pay the decree and neglected to do the same. Without satisfaction of these preconditions no mechanical order for detention in prison can be passed.

Precision Engineering Ltd. v. The Grays Leasing Limited PLD 200 Lah. 290; Aftab Saleem Chaudhry and another v. Soneri Bank Limited 2003 CLC 401; Bahsir Ahmed v. Judge Banking Court No.1 2005 CLC 1728; Abdul Qayyum Arif v. Agha Gul 2002 YLR 2541 and Qamar Zaman v. Judge Family Court 2003 YLR 2415 ref.

Ahtisham ul Haq Dar for Petitioner.

Shahid Ikram Siddiqui for Respondents.

2007 C L D 943

[Lahore]

Before Syed Zahid Hussain and Syed Sajjad Hussain, JJ

Malik MUHAMMAD FAISAL and another---Appellants

Versus

STATE LIFE INSURANCE CORPORATION through Chairman and 2 others---Respondents

R.F.A. No.56 of 2001, decided on 28th February, 2007.

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

----O. XXXVII, Rr. 2 & 3---Contract Act (IX of 1872), S.19---Suit for recovery on basis of cheque issued by Insurance Company to legal heirs of deceased under his insurance policy---Stoppage of payment of cheque by bank at instruction of company---Plea of company that cheque ' was obtained by fraud as date of birth disclosed by deceased while obtaining insurance policy was found as incorrect---Proof and validity---Deceased while obtaining insurance policy had represented to have no other proof of his date of birth as 8-3-1945 except National Identity Card---Record of school-Board of Secondary Education showed the date of birth of deceased as 8-3-1940---Deceased had stated his date of birth as 8-3-1940 while filling up Secondary School Examination form in year 1957---National Identity Card containing a different dote of birth had been issued long thereafter---Correct and true date of birth of deceased would be the one as recorded in School/Board record being earliest in time---Ordinarily, once insurance policy was issued, claim was processed and cheque was issued, then matter would become a fait accompli---Fraud had been committed by deceased at the time of getting insurance policy---Cheque had been issued on the basis of insurance policy obtained through fraud and misrepresentation---Suit was dismissed in circumstances.

State Life Insurance Corporation v. Mst. Begum Jan PLD 1983 SC 421; State Life Insurance Corporation v. Mamoor Khan 1993 C1C 790; Mithoolal Nayat v. Life Insurance Corporation of India AIR 1962 SC 814; Smt. Rami Bai v. Life Insurance Corporation of India, Bhopal AIR 1981 Mad. Pra. 69 and Smt. Saroj Agrawal v. Life Insurance Corporation. of India and Others AIR 2004 Jhar. 134 rel.

(b) Insurance---

----Ordinarily once insurance policy was issued, claim was processed and cheque was issued, then matter would become a fait accompli.

(c) Age---

---Date of birth, proof of---National Identity Card and School/Board Record both containing different dates of birth of same person---Validity---Date of birth mentioned in National Identity Card would ordinarily be taken to correct unless proved to the contrary by cogent and convincing evidence---Date of birth recorded in School/Board record, though different, but earliest in time than National Identity Card. would be taken to be true---Principles.

Raja Muhammad Azam for Appellants.

Tahir Malik for Respondents.

Date of hearing: 15th February, 2007.

2007 C L D 952

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

Messrs NAWAZ ENTERPRISES through Sole Proprietor and another---Appellants

Versus

HABIB BANK LIMITED and 5 others---Respondents

Regular First Appeal No.448 of 2004, decided on 8th March, 2007.

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

---Ss. 9 & 22---Suit for recovery of loan against debtor and guarantors was decreed---Appeal--Appellants had admitted the sanction of the loan in question and the agreement of finance the execution whereof was also admitted---None of the documents sued or relied upon by the Bank had been denied---Appellants had admitted that finance facility in question was availed and funds thereof paid to the suppliers of the machinery---Machinery was in fact delivered to the appellants---Appellants stated that machinery which was insured as per finance agreement, had been stolen---Finance agreement, however, revealed that after delivery of the machinery, entire risk of any loss or damage thereto shall be on the account of the appellants---Held, theft of the machinery after delivery as alleged, was not only on account of the appellants but also the same, in no manner, mitigated the liability of the appellants towards the Bank in respect of the finance in question---Finance agreement though mentioned that machinery shall be insured but nothing in the said agreement envisaged the extinguishment of the liability of the appellants on account of any loss of the machinery whether the same was insured or not and also that insurance company was neither a borrower nor a customer as defined by law.

Ch. Fazal Ahmad for Appellants.

Sh. Abid Aziz for Respondents.

Date of hearing: 8th March, 2007.

2007 C L D 964

[Lahore]

Before Sh. Azmat Saeed, J

Dr. RAUF AHMAD AZHAR---Petitioner

Versus

BANKING COURT NO. II, LAHORE and 6 others---Respondents

Writ Petition No.11421 of 2005, decided on 15th July, 2005.

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

----S. 9---Civil Procedure Code (V of 1908), S.51---Constitution of Pakistan (1973), Art.199---Constitutional petition---Detention of judgment-debtor in pursuance of execution of decree---Record did not show any allegation that the petitioner/judgment-debtor was guilty of any act or omission specified in S.51, C.P.C. which would make him liable for detention in pursuance of execution of decree---No preliminary inquiry appeared to have been conducted and it was not even prima facie established that the petitioner/judgment-debtor was liable to be arrested and detained---No citizen could be deprived of his liberty without due process of law---Order of detention was set aside by the High Court in circumstances.

Waheed Mazhar for Petitioner.

Kh. Haras Ahmed for Respondents.

2007 C L D 975

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Messrs HAQ FEED INDUSTRIES (PVT.) LIMITED through Chief Executive and 7 others---Appellants

Versus

NATIONAL DEVELOPMENT FINANCE CORPORATION-Respondent

R.F.A. No.238 of 2003, heard on 9th April, 2007.

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

----Ss. 9, 10 & 22---Suit for recovery of loan--Application for leave to defend suit-Appeal---Suit was decreed in the sum of Rs.38,50,348 and said amount was worked out after deducting the claim for liquidated damages, which formed part of the said amount---Contention of counsel for defendants was that statement of accounts, referred to in the plaint by plaintiff Bank, did riot: at all support the impugned decree keeping in view the admitted amount paid back by defendants to plaintiff---Counsel for defendant stated that the detailed statement of amount was also not consistent with the plaint and claim as mentioned in the plaint, could not have been decreed, despite the fact that leave to defend suit was refused---Not a word was mentioned in the impugned judgment as to how Banking Court had proceeded to decree the suit in the said amount---Banking Court had done nothing to reconcile plaint with different statements of accounts produced by plaintiff Bank---Impugned judgment and decree, in circumstances was not at all sustainable---Permission was granted to plaintiff to amend plaint suitably and consequently to grant leave to defend suit to defendants---Impugned judgment and decree passed by Banking Court was set aside---Suit would be deemed to be pending in the said Court, which would summon the parties---Amended plaint would be taken on record and thereafter a chance would be given to defendants to amend written statement and suit would be decided in accordance with law.

Asad Javed for Appellants.

Umar Farooq for Respondent.

Date of hearing: 9th April, 2007.

2007 C L D 983

[Lahore]

Before Mian Saqib Nisar, J

CRESCENT JUTE PRODUCTS LTD. Through Secretary duly Authorized---Appellant

Versus

MONOPOLY CONTROL AUTHORITY through Chairman---Respondent

F.A.O. No.358 of 2000, decided on 2nd March, 2007.

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

----Ss.3, 4(b), 11 & 12---Companies Ordinance (XLVII of 1984), S.208---Undue concentration of economic power---Provision of S.208, Companies Ordinance, 1984 is not applicable and in no way either expressly or by necessary implication, bars the jurisdiction of Monopoly Control Authority to take action against the companies under the provisions of Monopoly and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, when a case of undue concentration of economic power has been made out---Principles.

Rafhan Maize Products Company Ltd. v. Monopoly Control Authority and 9 others PLD 1986 Lah. 346 and Habib Bank Ltd. v. Monopoly Control Authority 1986 CLC 2489 ref.

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

----S.208---Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, (V of 1970), Ss.3, 4(b), 11 & 12---Investments in associated companies and undertakings---Undue concentration of economic power---Application and effect of S.208, Companies Ordinance, 1984 elaborated.

Section 208, Companies Ordinance, 1984 from its clear wording is a prohibitory provision, which prevents a company from making any investment in its associated company or associated undertaking except under the special resolution of the investor company, which shall indicate the nature and the amount of the investment and the terms and conditions thereof. Section 208 pertains to a separate regime altogether, and is meant to cater for, a different situation, but it is not well founded to argue that the section is remedial or corrective in its nature, rather according to the plaint and simple language of subsection (5), it is a penal provision whereby in case of the violation of the conditions of section 208(1), the directors of the investor company shall be penalized, and shall be saddled with the penalty of fine, besides they shall also make good the loss suffered by the company for the breach of the conditions. This law by no means provides any remedy to the company making the investment for the recovery of the amount of investment, which has been made in violation of the section. Besides, the section has nothing to do with the purpose and the object of the Ordinance which has been promulgated with the primary intent to curb and remove the vice of "undue concentration of economic power" by such associations which have the common management but have the semblance of separate management. Such a vice, which if admittedly found in a case, could only be dealt with under the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

Section 208 of the Companies Ordinance, 1984 is not applicable and in no way either expressly or by necessary implication, bars the jurisdiction of the Monopoly Control Authority to take action against the Companies under the provisions of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 when a case of "undue concentration of economic power" has been made out.

Rafhan Maize Products Company Ltd. v. Monopoly Control Authority and 9 others PLD 1986 Lah. 346 and Habib Bank Ltd. v. Monopoly Control Authority 1986 CLC 2489 ref.

(c) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance (V of 1970)---

----Ss.4(b) & 2---Scope and interpretation of S.4, Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970---'Dealings' as used in S.4 of the Ordinance---Connotation---Expression "associated undertakings"---Definition---Section 4 envisages two broad conditions for its application i.e. dealings, between two associated undertakings and affecting or unfairly benefiting owners or shareholders of its other associated undertaking---Word 'Dealings' has been used in its ordinary meaning, which contemplates any transaction between the two parties---Grant of loan by one to another is a 'dealing'---Where J' is a public limited company having nine directors, whereas 's' has three Directors and all the three Directors are related to the Directors of J' falling within the purview of S.2(2) of the Ordinance, both the companies are undertakings under a common management and thus are 'associated undertakings'.

The plain and simple language of the Section 4 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 envisages two broad conditions for its application; (1) dealings between two associated undertakings (2) affecting or unfairly benefiting owners or shareholders of one such undertaking to the prejudice of the owner or shareholder of its other associated undertaking. The word "dealings" has been used in the provision in its ordinary meaning, which contemplates any transaction between the two parties. Obviously, the grant of loan by one to another person is a dealing. As regards, whether the Companies are associated undertakings, the expression has been defined in section 2(b) of the Ordinance and when read along with section 2(2) thereof, it is clear that an individual shall be deemed to own, hold or control a thing if it is owned, held or controlled by the individual or his spouse, or by a brother or sister of the individual or by any of the lineal ascendants or descendants of the individual. In the present case, the 'J' is a public limited company having nine Directors, whereas 'S' has three Directors and all the three Directors are related to the Directors of 'J' falling within the purview of subsection 2 of section 2 of the Ordinance, therefore, both the companies are undertakings under a common management and thus, are associated undertakings.

Messrs (Colony) Sarhad Textile Mills Ltd. (File No.6/R/IND/MCA of 1972 1986 CLC 2764 and Habib Bank (Overseas) 1986 CLC 2867 ref.

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

----Ss.3, 4(b), 11 & 12---Undue concentration of economic power---Unfair benefit---Instance---If the recovery of loan amount is deferred for an indefinite period and the markup is frozen and not recovered, it undoubtedly shall give unfair advantage and benefit to the owners and shareholders of the debtor company and would be disadvantageous to and shall prejudice the shareholders of the loaning Company, who shall be deprived of the benefits of the Capital and the markup payable to the said company which ultimately shall be for their benefit.

PLD 1986 Lah. 346 held not applicable.

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

----Ss.12 & 11---Associated undertakings---Undue concentration of economic power---No prohibition under the law exists that direction for the purposes of passing an appropriate order should be confined to the contents of the show-cause notice---Provisions of S.12 (1)(a)(iii) read with S.11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 has given ample power to the Monopoly Control Authority to pass an order prescribing the circumstances in which and the conditions on which the associated undertakings concerned may deal with each other---Return of the loan amount along with markup is strictly covered by such power/authority.

Ahmer Bilal Soofi for Appellant.

Asad Munir, D.A.-G for Respondent.

2007 C L D 997

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

ABID AZIZ KHAN and 2 others---Appellants

Versus

BANK OF PUNJAB through Branch Manager---Respondent

First Appeal against Order No.363 of 2006, heard on 17th April, 2007.

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

----S. 10---Leave to defend---Dismissal of application for leave to appeal for non-prosecution---Without jurisdiction and illegal---Procedure---Interpretation, scope and application of S.10, Financial Institutions (Recovery of Finances) Ordinance, 2001---Defendant is required to file petition for leave to appeal in accordance with the conditions enumerated in S.10, Financial Institutions (Recovery of Finances) Ordinance, 2001, the Banking Court is required to examine the same and if the application fulfils the requirements set there, to place it on record---Once petition for leave to appeal is part of record, it is the cardinal duty of the Banking Court, to consider the plaint, the petition for leave to appeal and the replication filed and thereafter proceed to grant leave conditional or unconditional or reject the application under S.10(11) of the Ordinance---Banking Court, therefore, is required to consider and decide the application on merits, since it has been left with no other choice in this context---Financial Institutions (Recovery of Finances) Ordinance, 2001 does not visualize the dismissal of application for non-prosecution, as no such powers have been conferred upon the Banking Court---Such action otherwise would amount to defeating the legislative intent---Dismissal of petition for leave to appeal for non-prosecution therefore, was without jurisdiction and patently illegal and entire structure built upon it was bound to fall---Even otherwise High Court on appeal has ample powers under O.XLI, R.33, C.P.C. to pass appropriate orders if the matter so requires.

Muneer Floor Mills (Private) Limited and 4 others v, National Bank of Pakistan through Chief Manager and 2 others 2005 CLD 1019; Ka Iran Co. and others v. Messrs Modern Motors and another PLD 1990 SC 713; Nowsheri Khan v. Said Ahmad Shah 1983 SCMR 1092; Delta Weavers (Pvt.) Limited through Director and 3 others v. Allied Bank of Pakistan Limited 2003 CLD 1751; Haji Khudai Nazar and another v. Haji Abdul Bari 1997 SCMR 1986; Messrs Baghpotee Services (Private) Ltd. and others v. Messrs Allied Bank of Pakistan Ltd. 2001 CLC 1363; Messrs Rose Incorporate, Bajwa Manzil and 4 others v. Messrs Bolan Bank Limited 2002 CLD 598; Shafis Pak Associates (Pvt.) Limited through Chief Executive and another v. Habib Bank Limited and 3 others 2002 CLD 379; Muhammad Iftikhar through Special Attorney v. Zarai Taraqiati Bank Limited through Chairman and another 2005 CLD 1454; 2004 CLD 854; National Development Finance Corporation v. Sheikhoo Cooking Oil Mills Limited and 7 others 2002 CLD 341 and United Bank Ltd. v. Messrs Zafar Textile Mills Ltd. 2000 CLC 1330 ref.

Shahid Ikram Siddiqui for Appellants.

Ghulpam Haider Al-Ghazali for Respondent.

Date of hearing: 17th April, 2007.

2007 C L D 1002

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

RAFIQ AHMED SANAURI through Attorney and 3 others---Appellants

Versus

UNION BANK LIMITED through Branch Manager and 5 others---Respondents

E.F.A. No.12 of 2006, decided on 6th April, 2007. .

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

----S.19(7)---Execution of decree-As soon as the claim of the decree-holder Bank stands satisfied by sale of the mortgaged property in execution proceedings, then such Bank has no legal obligation to chase the undoing of any irregular private sale of property made by the judgment-debtor.

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

----S.23(2)---Provisions of S.23(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 treat post decretal transactions of properties by judgment-debtors to be void.

Haq Nawaz Chattha for Appellants.

Mian Mushtaq Ahmad Mehdi Akhtar and Sajid Mhamood Sheikh for Respondents.

2007 C L D 1005

[Lahore]

Before Umar Ata Bandial, J

Messrs SAUDI PAK COMMERCIAL BANK---Appellant

Versus

Messrs LUCKY TEXTILE (PVT.) LTD. and others---Respondents

C.O.S. No.13 and. P.L.A. No.39-B of 2006, decided on 16th February, 2007.

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

----Ss. 7, 9 & 10---Suit for recovery of loan by Bank---Petition for leave to defend suit---Defendants who admitted the sanction and availing of the facility claimed in the suit was objected to contending that securities outside the scope of the Bank commitment letter had been wrongly alleged in the suit---Validity---Objection of the defendants however, failed to account for that the security creating instruments were executed by the defendants and no substantial ground to dislodge the said documents had been given in the petition for leave to appeal and that the commitment letter relied upon could not operate to prevent a creditor bank from improving its security position.

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

----Ss.7, 9 & 10---Suit for recovery of loan by Bank---Mark-up accruing under the fresh finance agreement was claimed, which had accrued during the default period of the defendant company during which the Bank exercised forbearance to sue---Such accrual of mark-up was therefore for a period past and beyond the bona fide facility period and constituted mark-up on mark-up, which was contrary to law and must be struck down.

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

----Ss.7, 9 & 10---Suit for recovery of loan by Bank---Principal amount remained outstanding against the defendant company and its sureties and encumbrances, for payment---Judgment and decree in the sum against the defendants along with cost of funds and costs were passed against the defendants jointly and severally.

Umar Aziz Khan for Plaintiff.

Mian Abdul Ghaffar for Defendants.

2007 C L D 1071

[Lahore]

Present: Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

MODERN KNITTING AND WOOLLEN SPINNERS (PVT.) LTD and another----Appellants

Versus

MANZUR AHMED SHEIKH and 3 others----Respondents

E.F.A. No.125 of 2007, decided on 17th April, 2007.

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

----Ss. 9, 10, 18 & 21---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.19---Civil Procedure Code (V of 1908), S.11 & O.XOXVII---Procedure of Banking Court---Scope---Grant of leave to defend suit---Principles---Execution of decree--:Appeal---Principles of res judicata--Applicability---Plea about the pledge of goods by the appellants with respondent-Bank and misappropriation of such goods by the Bank had not been raised at all---If any plea was not raised .or raised but rejected, it would not be permissible for the Banking Court to grant the leave---If the requisite pleas were not raised, the stage for the determination of the controversy between the parties was passed---When a leave application was refused on the pleas raised therein, to all intents and purposes, such pleas were the issues directly and substantially in issue in the suit, which, when rejected, were the one heard and finally decided by the Court within the meaning of S.11, C.P.C., so as to attract res judicata in the subsequent suit---Such principle shall also be true for the pleas which might and ought to have been made grounds of defence or attack in leave application, but were not so made, shall be deemed to have been a matter directly and substantially in issue, for attracting the rule of constructive res judicata---Decrees passed in the suit of such a nature, to all intents and purposes, thus shall operate as res judicata in the suits to follow---In the present case, parties were heard in the regular first appeal which was dismissed as a notice case---Rule of res judicata was not involved in appeal against execution of decree as the question involved was that of jurisdiction of Executing Court-Pledge or otherwise of the goods was a disputed question of fact between the parties, having legal consequences, which should have been raised by the appellants in the leave application, but it was not done, however, when it was propounded for the first time in appeal, which was a continuation of the suit, said plea was rejected on the factual premises and the legal proposition which the appellants raised was not accepted, therefore, said question stood conclusively determined by the Court and it was not within the jurisdiction and the competence of the Executing Court to re-adjudicate, whether the goods were pledged by the appellants with the respondent-Bank or not, and about their misappropriation---Such question however, could not be dealt with and adjudicated under S.19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Stages of such litigation highlighted by High Court.

The procedure for the adjudication of the cases pertaining to the "finances" between the Banking Company and the customer before the Banking Court is of a special and specific nature, which is quite akin to the summary procedure provided for the adjudication of the suits filed under Order XXXVII,-C.P.C. The object of summary procedure of both the laws is to provide efficacious remedy to the plaintiff and avoid prolongation of commercial litigation. In such cases, the defendant is not as a matter of right entitled to appear and defend the cause against him, but if he desires to be heard, he must apply to the Court for the permission to appear and defend. In his leave application, the defendant must disclose all the grounds, which entitles him to such leave, specially in the cases pertaining to the recovery under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), the law applicable at the relevant time, the leave could only be granted to the defendant if "a serious and bona fide dispute" was raised, which should, essentially be spelt out from the specific and clear pleas/grounds taken in the leave application. If any plea was not raised or raised but rejected, it would be impermissible for the Banking Court to grant the leave. In the present case, the plea about the pledge of goods by the appellants with the respondent-Bank and the misappropriation of such goods by the Bank had not been raised at all. Obviously such plea which had to be founded on the factual premise at the first stage, could not be allowed to have been raised in appeal, yet when this plea for the first time was taken before High Court, High Court while taking a liberal view in the matter, considered the above and in unambiguous, unequivocal and categorical terms, rejected the plea.?

When, a leave application is refused on the pleas raised therein, to all intents and purposes, such pleas are the issues directly and substantially in issue in the suit, which when rejected are the one heard and finally decided by the Court within the meaning of section 11 of the C.P.C.; so as to attract res judicata in the subsequent suit. This shall also be true for the pleas which might and ought to have been made grounds of' defence or attack in the leave application, but were not so made, shall be deemed to have been a matter directly and substantially in issue, for attracting the rule of constructive "res judicata". Therefore, the decrees passed in the suits of the nature mentioned above, to all intents and. purposes, shall operate as res judicata in the suits to follow. Besides, it was not well conceived to argue that the dismissal of regular first appeal was in limine, rather from the record of that case it transpires that the parties were heard and the appeal was dismissed as a notice case. Be that as it may, the rule of res judicata was not involved in the present case, rather the question was about the jurisdiction of the Executing Court.?

The proposition of the pledge or otherwise of the goods was a disputed question of fact between the parties, having legal consequences, which should have been raised by the appellants in the leave application, but it was not done; however, when it was propounded for the first time in appeal, which is a continuation of the suit, this plea was rejected on the factual premises and the legal proposition which the appellants raised was not accepted, therefore, this question stood conclusively determined by the Court and it was not within the jurisdiction and the competence of the Executing Court to re-adjudicate, whether the goods were pledged by the appellants with the respondent-Bank or not; and about their misappropriation. There are two stages in a litigation. The first, where all the points of controversy, may be legal or factual, inter se the parties passes through the process and phase of judicial determination. It is this stage where the plaintiff of the case mandatorily has to raise all the necessary pleas in order to succeed in the matter. And the defendant is obliged to do the same in defence for defeating the cause of the plaintiff. In the cases pertaining to Order XXXVII, C.P.C. and those under the Special Banking Laws, this stage includes the adjudication of the pleas raised in the leave application of the defence. This can be defined as the "determination stage for resolving the dispute between the parties", which goes up to the forum of appeal etc. Therefore, if the requisite pleas are not raised here, the stage for the determination of the controversy between the parties is passed. The second stage is confined only to the execution of the decree, which means the enforcement of the decree by the process of the Court, so as to enable the decree-holder or the judgment-creditor to recover the fruits of the judgments. At this stage, not only the powers of the Executing Court are subservient to the judgment of the Court, which has determined the dispute between the parties and pronounced its verdict, but the parties are also precluded to raise any controversy, which they failed to propound at the determination stage, or if raised, had failed to succeed in this behalf. Besides, it is settled law that the Executing Court cannot go behind the decree; and undoubtedly, it cannot question the legality or the correctness of the decree; grant the relief to a party, which is not granted in the judgment and decree and above all to adjudicate upon a controversy, which has already been settled by the Court at the determination stage or in the hierarchy thereto. Despite the fact that the plea of pledge of goods was not raised in the leave application, which is the fundamental lapse and default on part of the appellants, but when set out in the appeal, such plea was rejected which has attained finality and thereafter, the Executing Court was left with no power at all to enter into the area, whether the goods were pledged or not etc.?

Under the provisions of section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the aforementioned question cannot be dealt with and adjudicated by the Executing Court.?

A.M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1966 (W.P) Lah. 1 ref.

Habib Bank Limited v. Orient Rice Mills Ltd. and others 2004 CLD 1289; Messrs Crystal Enterprises and 6 others v. Platinum Commercial Bank. Ltd. and 2 others through General Attorney 2002 CLD 868; Messrs Polymer International through Sole Proprietor and another v. Messrs Bolan Bank Ltd. through General Manager 2004 CLD 1637 and A.M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1966 (W.P) Lah.1 distinguished.

Saeed-uz-Zafar for Appellants.

Faisal Zaman Khan for Respondent No.4.

2007 C L D 1084

[Lahore]

Present: Syed Hamid Ali Shah, J

ALI MUHAMMAD SHAH---Appellant

Versus

IJAZ HUSSAIN----Respondent

R.F.A. No.436 of 2005, heard on 8th November, 2006.

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

---O.XXXVII, R.3---Suit for recovery of money on the basis of negotiable instruments--Leave to defend the suit---Concessionary statement of counsel for plaintiff---Effect---Practice and procedure---Plaintiff asserted that no leave to defend the suit was granted by Trial Court---Validity---Court granted leave to defend the suit on the concessionary statement of counsel of plaintiff, though no statement of the counsel for plaintiff was recorded---Order passed by Court had precedence over the assertions of parties or their counsel to the contrary.

Fayyaz Hussain v. Akbar Hussain and others 2004 SCMR 964 rel.

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

----O. XXXVII, Rr. 1, 3---Negotiable Instruments Act (XXXVI of 1881), S.120---Qanun-e-Shahadat (10 of 1984), Arts.17(2) & 59---Recovery of money---Promissory note---Proof---Non-production of two marginal witnesses---Handwriting Expert, opinion of---Failure to decide miscellaneous application---Suit filed by plaintiff was dismissed by trial Court on the ground that two attesting witnesses of promissory note did not enter into witness-box---Plea raised by plaintiff was that without deciding his application for referring disputed signatures to Handwriting Expert, Trial Court could not have decided the suit---Validity---Non-appearance of marginal witness was fatal to the case where ordinary document was to be proved like agreement to sell etc.---Since presumption of truth was attached to promissory note, in terms of S.120 of Negotiable Instruments Act, 1881, mere non-production of one of its marginal witnesses was not fatal, specially when scribe, promisee and one marginal witness entered into witness-box to prove its veracity--Trial Court had drawn erroneous conclusion that failure to examine one marginal witness defeated the provisions of Art.17(2) of Qanun-e-Shahadat, 1984---Promissory note was signed by two marginal witnesses, which had met the requirement of S.17(2) of Qanun-e-Shahadat 1984---Without first deciding pending application of plaintiff Trial Court could not have proceeded to pass final judgment---High Court directed the Trial Court to decide pending application of plaintiff for referring disputed signatures for examination of Handwriting Expert and then to decide the matter on the basis of available evidence and also on the basis of opinion of Handwriting Expert, if needed be---Judgment and decree passed by Trial Court were set aside and the case was remanded for decision afresh---Appeal was allowed accordingly.

"M/s Waheed Corporation and another v. Allied Bank of Pakistan 2003 CLD 245; Sheikh Muhammad Kashif v. Askari Leasing Limited 2004 CLD 1645 and M/s. M.A. Chaudhry and others v. National Bank of Pakistan 2005 CLD 875 rel.

Ras Tariq Chaudhry for Appellant.

Baleegh-uz-Zaman Chaudhry for Respondent.

Date of hearing: 8th November, 2006.

2007 C L D 1164

[Lahore]

Before Sh. Azmat Saeed, J

FAISAL BANK through duly appointed Attorneys---Plaintiff

Versus

Messrs ZIMINDARA RICE MILLS and 21 others---Defendants

C.O.S. No.29 of 2006 and C.M. No.920-B of 2007, decided on 25th April, 2007.

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

---Ss. 10 & 15---Contract Act (IX of 1872), Ss.151 & 152---Suit for recovery of loan by the Bank---Petition for leave to appeal---Grant and availing of the facilities in question had not been disputed; there was also no dispute inter se the plaintiff and defendants with regard to payments made by the defendants nor was it alleged that such payments were not reflected in the statement of accounts and to all intents and purposes, liability to the extent of loan amount had been admitted in the petition for leave to appeal---Defendants had merely claimed that value of the pledged goods alleged to have been lost and no longer available were also liable to be adjusted against the claim of the plaintiff-Bank---Bank's case was that it was entitled to recover its debts in their entirety---Validity---If the pledgee sued for recovery of the original debt, he was required to keep the pledged goods intact to be returned to the pledger, who always had the right to redeem the same and in the eventuality of sate after reasonable notice, the amount realized therefrom was to be adjusted against the debt due---Question of such adjustment would only arise when and if the goods were actually sold---Where, however, the pledged goods were lost, damaged or otherwise not available for delivery to the pledger, in equity, the pledgee could not seek recovery of the debt secured thereby and pledger was entitled to an equitable set off by way of adjustment of the value of the lost pledged goods and could always sue the pledgee for damages for the loss suffered on account of the damaged or lost pledged goods---To deprive the pledger of such right of equitable set off and adjustment could result in grave hardship and inequity as the pledgee might obtain a decree for the debt due for an amount which might be equal to or less than the value of goods pledged and in execution seek recovery thereof against the person and other properties of the pledger leaving him to seek his remedy at a later date---Inequity, thus was more likely to occur in suits instituted under the Financial Institutions (Recovery of Finances) Ordinance, 2001 where the pledgee financial institution might obtain a decree for recovery through dismissal of a leave application filed by the pledger customer who was then left to seek his remedy through a long cause suit in the same court as he would be required to prove his claim through evidence---Where pledged goods were lost or damaged, the value thereof must be set off and adjusted against the claim of plaintiff financial institutions---Merely because the pledged goods were lost or the pledgee was unable to return the same, however, did not in every eventuality confer upon the pledger a right to an equitable set off nor same was always a complete defence to a suit for recovery of debt secured by the pledge---Liability of pledgee in such eventuality was circumscribed by Ss.151 & 152, Contract Act, 1872---Where equities of the case did not appear to be in favour of the defendants, they were therefore, disentitled to seek the relief of equitable set off, particularly in view of their own acts and omissions---Principles.

A.M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1966 (W.P.) Lah.1; Messrs Muhammad Siddique Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1996 SC 684; Central Bank of India v. Syed Muhammad Abdul Jalil Shah and others 1999 CLC 671; Mst. Talat Nasreen v. United Bank Ltd. and others 2003 CLD 94; National Bank of Pakistan v. Messrs Bright Leather Works and 3 others 1980 CLC 1170; Messrs Taj Sea Food Industries and 2 others v. Messrs United Bank Ltd. and 2 others PLD 1982 Kar. 902; Messrs Crystal Enterprises and 6 others v. Platinum Commercial Bank Ltd. and 2 others 2002 CLD 868: Habib Bank Ltd. v. Kashif Steel Industry and others PLD 2001 Lah. 224; Messrs Fybron Pvt. Ltd. through MD and 2 others v. National Bank of Pakistan through Zonal Chief 2006 CLD 127; Prudential Commercial Bank Ltd. v. Hydaw, Ghee Industries Ltd. and 9 others 1999 MLD 1694 and Messrs United Bank Ltd. v. Messrs Amin Corporation Ltd. and others PLD 1983 CLC 1559 ref.

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

---Ss. 172. 148, 160 & 176---Pledge---Bailment---Default---Rights inter se the parties---Pledge, in terms of 5.172, Contract Act, 1872 is defined as the bailment of goods as security for payment of debt or the performance of a promise---Section 148, Contract Act, 1872 defines bailment as the delivery of goods by one person to another for some purpose upon the contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them---Pledge is a sub-specie of bailment and the purposes for the delivery of goods by way of bailment is the security for payment as mentioned in S.172, Contract Act, 1872 and rights inter se the parties are primarily governed by Chapter IX of the Contract Act, 1872 i.e. from S.148 to S.181---Section 160, Contract Act, 1872 cast a duty for the return of the goods to the pledger when the purpose for which the goods were delivered is accomplished (in case of pledge, repayment of the debt)---In case of default by pledger in making payment of the debt secured by pledge, rights of the pledgee are enumerated in S.176 of the Contract Act, 1872, which include the right to sue for recovery of the debt due retaining the pledged goods as collateral security or he may sell the goods pledged after giving pledger reasonable notice of such sale.?

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

----Ss. 152 & 151---Loss of goods pledged---Section 152, Contract Act, 1872 requires the pledgee to take care of the goods pledged as a man of ordinary prudence would under similar circumstances take care of his own goods of the same bulk, quality and value as the goods pledged---No other duty in this behalf is cast upon the pledgee except as may be agreed upon between the parties by such contract---Where a loss has been occasioned to the goods and the pledgee has taken care of the same as a man of ordinary prudence would look after his own property and no obligation under a contract, if any, has been violated, then perhaps the liability for such loss may not visit the pledgee nor would the pledger be entitled to any claim of set off against recovery of the debt secured: there must be dereliction of duty either statutory or contractual by the pledgee before he could be held liable under the law---In case of loss or damage of pledged goods, it is always for the pledgee to show that it has fulfilled his obligations both statutory and contractual which is an onerous burden and may require the recording of evidence.

Prudential Commercial Bank Ltd. v. Hydari Ghee Industries Ltd. and 9 others 1999 MLD 1694 and Messrs United Bank Ltd. v. Messrs Amin Corporation Ltd. and others PLD 1983 CLC 1559 ref.

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

----Ss. 10 & 15---Suit for recovery of loan by Bank---Petition for leave to defend suit by defendants-Mortgage-Financial facilities were granted and availed by the defendants---Record showed that facilities were to be secured by mortgage of the properties---Original title deeds of the said properties were admittedly with the plaintiff-Bank---Factum of the mortgage was duly borne out from the revenue record---Properties in dispute, therefore, had been duly mortgaged with plaintiff-Bank in circumstances---No defence whatsoever had been set up with respect to the amount for which the plaintiff was entitled to an immediate interim decree---Claim of defendants with reference to the equitable set off the pledged goods did not appear to be well founded in fact, in law or in equity and the defence taken was at best illusory---Held consequently, it would be appropriate for the defendants to furnish bank guarantee for the amount claimed as set off if they seek leave to defend the suit---Leave to defend the suit was granted with reference to the amount of the claim subject to defendants' furnishing the bank guarantee for specified amount within 30 days from the day of present order. ?

Mst. Talat Nasreen v. UBL and others. 2003 CLD 94; Habib Bank Ltd. v. Kashif Steel Industry and others PLD 2001 Lah.224; Messrs Crystal Enterprises and 6 others v. Platinum Commercial Bank Ltd. and 2 others 2002 CLD 868: Mian Aftab A. Sheikh and 2 others v. Messrs Trust Leasing Corporation Ltd. and another 2003 CLD 702; Bashir Ahmed Mughal v. S.M.E. Bank Ltd. through General Manager and 2 others 2005 CLD 1689.; Messrs Fybron Pvt. Ltd. through Managing Director and others v. National Bank of Pakistan through Zonal Chief 2006 CLD 127; A.M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1996 (W.P.) Lah.1; Messrs Muhammad Siddique Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1996 SC 684; Central Bank of India v. Syed Muhammad Abdul Jalil Shah and others 1999 CLC 671; National Bank of Pakistan v. Messrs Bright Leather Works and 3 others 1980 CLC 1170; Messrs Taj Sea Food Industries and 2 others v. Messrs United Bank Ltd. and 2 others PLD 1982 Kar. 902; Prudential Commercial Bank Ltd. v. Hydari Ghee Industries Ltd. and 9 others 1999 MLD 1694 and Messrs United Bank Ltd. v. Messrs Amin Corporation Ltd. and others PLD 1983 CLC 1559 ref.

Kh. Aamir Farooq for Plaintiff.

Mushtaq Akhtar Mehdi for Defendants.

Mian Qamar Uz Zaman (in CM No.920-B of 2007) for Applicant.

2007 C L D 1179

[Lahore]

Before Mian Saqib Nisar and Muhammad Sair Ali, JJ

PIONEER STEEL MILLS (PVT.) LIMITED---Appellant

Versus

UNION BANK LIMITED---Respondent

R.F.A. No.466 of 2003, heard on 29th May, 2007.

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

----Ss.9. 10 & 22---Civil Procedure Code (V of 1908), O.VII, R.11---Suit for rendition of accounts---Leave to appear and defend suit---Rejection of plaint---Application for leave to appear and defend suit was allowed, issues were framed---Trial. Court, without recording evidence, vide impugned order, rejected plaint under O.VII, R.11, C.P.C. holding that cause of action, did not subsist against the Bank---Plaint had been rejected on account of lack of cause of action, which, on the basis of contents of the plaint and settled principles regarding the rejection of plaint was not a valid order---Question of maintainability of suit for rendition of accounts filed by appellant, was neither raised by Bank before Banking/Trial Court nor same was ground for the rejection of the plaint----Issue about maintainability of the suit had already been framed---Contents of plaint had disclosed a cause of action---Impugned order was set aside and case was remanded to Banking Court for fresh decision---Banking Court, while deciding question of maintainability of suit would take into account the respective pleas of the parties and dispose of the matter in accordance with law.

M/s Friend Engineering, Corporation v. Government of Punjab and 4 others 1991 SCMR 2324 rel.

Nasar Ahmad for Appellant.

Khawaja Amar Farooq for Respondent.

Date of hearing: 29th June, 2007.

2007 C L D 1181

[Lahore]

Before Syed Hamid Ali Shah, J

Messrs SUPER ASIA M.D. (PVT.) LTD. Through Chief Executive---Appellant

Versus

Messrs ANWAR INDUSTRIES (PVT.) LTD. Through Chief Executive and another---Respondents

F.A.O. No. 158 of 2005, decided on 28th February, 2007.

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

----Ss.6, 13 & 73---Constitution of Pakistan (1973), Art.201---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Interim injunction, grant of--Registration subject to disclaimer---Effect--Geographical name---Judgment passed by High Court---Registered trade mark of plaintiff was "Asia" while that of defendant was "Super Asia"--In earlier round of litigation between the same parties, High Court held that the two names were altogether different, not confusing and were distinguishable---Judgment passed by High Court had attained finality as no appeal was filed against it--Subsequently plaintiff was granted interim injunction by Trial Court, restraining defendant from using its trade mark "Super Asia"---Validity---Mere non-mention . of earlier litigation, in written statement created no bar---Judgment of High Court was authority, in subsequent suit, which had to be considered and was not liable to be ignored under Art.201 of the Constitution---Order passed by Trial Court whereby earlier order had not been taken into consideration, was not legally sustainable---In view of definite finding of High Court that respective trade marks of the parties were altogether different, and distinguishable, left no room to conclude that pre-requisite of injunction order i.e. prima facie .case was lacking---Unexplained delay of 11 years in instituting proceedings for infringement and / or passing off against defendant-Such unexplained delay clearly tilted balance of convenience and likelihood of irreparable loss existed in favour of defendant disentitling plaintiff for grant of discretionary relief of interlocutory injunction---Such important aspects had been overlooked by the court below---Order passed by Trial Court was set aside and application for grant of temporary injunction filed by plaintiff was dismissed---Appeal was allowed in circumstances.

Anwar Industries Limited v. Muhammad Ishaque Gondal and others 1988 CLC 489; Ehtesham ud Din Qureshi v. Pakistan Steel Mills Corporation Ltd. and others 2004 MLD 361; Messrs Mehran Ghee Mills (Pvt.) Limited and others v. Messrs Chiltan Ghee Mills (Pvt.) Limited and others 2001 SCMR 967; Messrs Tabaq Resturant v. -Messrs Tabaq Resturant 1987 SCMR 1090; Unilever PLC v. Al-Alameen Industries 2003 CLD 623; M. Sikandar Sultan v. Masih Ahmad Sheikh 2003 CLD 26; Telebrands Corporation through Attorney v. Telebrands Pakistan (Pvt.) Ltd. through Chief Executive and another 2006 CLD 580; Khawaja Tahir Jamal v. Messrs A.R. Fehman Glass 2005 CLD 1768 and Pakistan Energy House (Pvt.) Ltd. v. Rio Chemical Company and another 2003 CLD 1531 ref.

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

----S.13---Registration subject to disclaimer---Object---Registrar, powers of---Scope---Registrar, under S.13 of Trade Marks Act, 1940, is empowered to place limitations by way of disclaimers on the rights which are granted to a party applying for registration of a trademark---Disclaimers are necessary to define rights that a proprietor acquires by virtue of registration---Disclaimer does not affect the proprietary rights acquired in disclaimed features by virtue of use---Proprietor can prevent unauthorized use of disclaimed feature by proving prior use and acquisition of reputation and goodwill---One who opposes the exclusive rights of a proprietor in disclaimed features of trademark, either arising out of a registration or through use, must establish a higher degree of honesty in adoption of that mark by him, absence of bad faith and that the mark is not a mark itself but only a description of goods or services which is common to trade and should be for free of use by all traders.

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

----S.6(1)(d)---Distinctiveness requisite for registration--Geographical name---Principles---Registration of trademark comprising of geographical name is prohibited under S.6 (1)(d) of Trade Marks Act, 1940. there is a distinctiveness requisite for registration laid down in S. 6 of Trade Marks Act, 1940---Any trade mark, which does not fulfil the requirements laid down in S.6 of Trade Marks Act, 1940, is not considered to be inherently distinctive and therefore, not registerable.

Waqar Azeem for Appellant.

Mushtaq Mehdi Akhtar for Respondent No.1.

2007 C L D 1189

[Lahore]

Before Syed Hamid Ali Shah, J

NAWAZ HUSSAIN---Appellant

Versus

MUHAMMAD JAMIL CHAUDHARY and 2 others---Respondents

F.A.O. No.84 of 2007, heard on 25th April, 2007.

Trade Marks Act (V of 1940)---

----Ss.20& 73---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Trade mark, registration of-Interim injunction, grant of---Application of defendant for registration of trade mark was, accepted by Registrar, before whom opposition by plaintiff was pending---Trial Court through injunctive order restrained Registrar from passing any order---Validity-Defendant had filed written statement and reply to injunction-application-Application filed by defendant under O.VII, R.11, C.P.C., was also pending before trial Court---Defendant could raise all such questions before trial Court, which would be decided through a speaking order---Whole. business of defendant was blocked in view of injunctive order, while delay was causing further loss to his business---High Court disposed of appeal with directions to trial Court to decide grant or otherwise of temporary relief as early as possible while attending to all objections raised by defendant including objections as to maintainability of suit and effect of pendency of earlier suit coupled with opposition of trade mark.

M. Shakil Abid for Appellant.

M. Traiq Malik for Respondent No.1.

M. Shakil Ahmad Mian for Respondent No.2.

Gulsher Khan, Examiner for Respondent No.3.

Date of hearing: 25th April, 2007.

2007 C L D 1194

[Lahore]

Before Syed Zahid Hussain and Iqbal Hameed-ur-Rahman JJ

Messrs NAQVI DEVELOPERS and others---Appellants

Versus

HABIB BANK LIMITED---Respondent

F.A.O. No.127 of 2007, decided on 5th June, 2007.

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

---S.12---Application for setting aside of ex parte decree---Delay of 11 years in making application---Plea in application that address of defendant given in plaint was wrong as he had changed his residence prior to filing of suit by Bank---Proof---Nothing was available on record to show that defendant had informed Bank regarding change of his residence---Address provided by borrower to Bank would be considered address of borrower---Report of Bailiff showed that he had affixed notice outside defendant's office for being closed---Personal notice issued to defendant showed that same was affixed outside his office due to his non-presence there---Execution proceedings were being conducted for a long duration, wherein notices had been issued to defendant and schedule of auction had been published---Liquidation proceedings between defendant and Bank were pending before Company Judge---During pendency of liquidation proceedings, suit or execution of decree could not proceed without permission of Company Judge---Defendant had made such application after issuance of warrants of his arrest without explaining such delay---Application for setting aside ex parte decree was dismissed in circumstances.

Messrs Bashir Leather Int. (Pvt.) Limited and 2 others v. Muslim Commercial Bank Limited through Manager 2006 CLD 132 distinguished.

Sh. Aftab Umar for Appellants.

2007 C L D 1198

[Lahore]

Before Umar Ata Bandial, J

SARAH JEWELLERY (PVT.) LTD through Chief Executive---Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Commerce, Islamabad and another---Respondents

Writ Petition No.16354 of 2005, decided on 8th March, 2007.

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

----S. 70---Quasi contractual relations---Gratuitous benefit---Scope---Held, it was a legal presumption in jurisprudence that unless stated so expressly, no benefit and, therefore, privilege could be deemed to be conferred gratuitously on a party---Law presumes against free rides---Such is the rationale of S.70 of Contract Act, 1872, which sets out the legal principle of non-gratuitous benefits in quasi contractual relations.

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

----S.3---Fees, charging of---Jurisdiction---Government is vested with authority to charge "a fee for conferring a benefit or privilege on a person.

Collector of Custom v. Sheikh Spinning Mills and others 1999 SCMR 1402 ref.

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

----S.3---Import Policy Order, 1999, Sched.---Notification S.R.O. 496(I)/2002, dated 6-8-2002---Constitution of Pakistan (1973), Art.199---Constitutional petition--Bullion import--Call deposit, concept and meaning---Refund of---Call deposit---Change in policy --Effect---Validity---Importer was authorized to import gold and silver in bulk against a call deposit for a sum of US$ 50,000-Importer sought refund of call deposit but authorities declined to refund the same on the ground that it was the fee charged as recompense for the import of bullion--Plea raised by importer was that call deposit amount possessed the character of a security amount, which became refundable after the change in law---Validity---Expression "call deposit" was not a term of art either under the law developed in relation to Imports and Exports (Control) Act, 1950, nor under taxation law--Conduct of parties clearly showed that they understood the meaning and effect of the expression "call deposit" for grant of registration to import bullion to be a payment and not merely the provision of security amount---Nothing was indicated in public notice, the Import Policy Order, 1999 or notification S.R.O. 496(I)/2002, dated 6-8-2002, to suggest that call deposit amount was refundable after acceptance of application---None of the instruments contained any provision for refund of call deposit--Importer's claim that call deposit represented a security amount, lacked legal or factual foundation---Payment of call deposit amount by the importer constituted a payment of fees as recompense by him for the privilege and benefit of being granted registration and authorization to import bullion---Such was a

lawful charge collected by Federal Government from the importer---Petition was dismissed in circumstances.

Collector of Custom v. Sheikh Spinning Mills and others 1999 SCMR 1402 and Saghir Ahmed through legal heirs v. Province of Punjab through Secretary, Housing and Physical Planning Lahore and others PLD 2004 SC 261 ref.

Shehzad Rabbani for Petitioner.

Asad Munir, Deputy Attorney General.

2007 C L D 1205

[Lahore]

Before Syed Hamid Ali Shah, J

MUSLIM COMMERCIAL BANK---Plaintiff

Versus

EAST AND EXPORTS (PVT.) LTD. and others-Defendants

C.O.S. No.28 of 2004, decided on 2nd April, 2007.

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

----Ss.10 & 9---Petition for leave to defend suit---Mere dismissal of petition for leave to defend the suit, does not entitle plaintiff to a decree as prayed in the plaint---Plaintiff on dismissal of petition for leave to defend the suit, is not absolved of its responsibility to prove its case.

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

---Ss.18 & 9---Mark-up, claim of-Held, in a banking transaction, based on Islamic modes of financing only those claims of creditor are permissible which are expressly stipulated in the agreement--Claim of mark-up, based on agreement, can be levied and charged only for the period of agreement/contract---Any mark-up' beyond the period of transaction is not legal---Principles.

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

----S.126---Surety ship/guarantee, contract of---Construction---Principles---Contract of surety ship/guarantee is to be construed according to the terms mentioned therein and must be construed strictly so that no liability is imposed on the surety, which is not clearly and distinctively covered by the terms of agreement.

Blest v. Brown 1862 4De GF&J 367 ref.

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

----S.126----Contract of guarantee---Nature---Contract of guarantee, is required under law to be specific, identifiable, devoid of uncertainty and must refer to a particular transaction or transactions---Illustration.

Further the contract of guarantee, is required under law to be specific, identifiable devoid of uncertainty and must refer to a particular transaction or transactions.

It is possible for the guarantee to be limited as to the type of principal transaction guaranteed. If the principal transaction intended to be the subject of the guarantee is not clearly identified, the guarantee may be void for uncertainty, such as where a guarantee for the performance of the lessee's obligations under a lease could reasonably refer to two leases. Where the guarantee refers to a particular transaction, the surety will not be liable for a 'different transaction or one outside the scope of that guaranteed, such .as where the guarantee relates to a transaction or a given amount but the transaction proceeds for a larger amount, or where the creditor advances monies to the principal under a different facility to the one identified in the guarantee, or where the guarantee is limited to banking transactions and facilities and the creditor owed money in respect of debt discounting goods.

Law of Guarantees (Second Edition), pp.164 and 165 by Geraldine Mary Andrews and Richard Millett quoted.

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

----Ss.18 & 9---Suit for recovery of loan-Letters of guarantee placed on record, did not cover the loans subject-matter of the suit, for various reasons: firstly the agreements referred in the letters of guarantee were neither the subject-matter of the suit nor the same were placed on record; secondly the execution of. letters of personal guarantee and establishment of letters of credit was at different period of times; thirdly the amounts mentioned in the guarantee were altogether different from the one subject-matter of the letters of credit and lastly the guarantee agreement found no support from the plaint---No liability, therefore, could be imposed upon defendants' on the basis of these letters of guarantee.

Salman Akram Raja and Mirza Muzaffar Ahmad for Plaintiff.

Ali Akbar Qureshi for Defendants.

2007 C L D 1232

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

MUSLIM COMMERCIAL BANK LIMITED---Appellant

Versus

AHMED ZIA and 10 others---Respondents

R.F.A. No.349 of 2006, heard on 20th March, 2007.

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

----S.10--Limitation Act (IX of 1908), S.5---Leave to defend suit---Condonation of delay---Plaintiffs counsel after submitting replies and partly arguing matter recorded to Court a statement requesting for acceptance of leave application---Banking Court decreed suit after dismissing leave application to be time­-barred---Validity---Counsel had made such statement with prior consent of plaintiff---Plaintiff had made such concession with awareness of attending circumstances of case---Such concession by itself would constitute a sufficient cause within meaning of S.5 of Limitation Act, 1908---Banking Court had not exercised its jurisdiction properly---High Court set aside impugned judgment/decree and granted to defendant leave to defend suit before Banking Court.

Mian Abdul Sattar for Appellant.

Iftikhar Ullah Malik for Respondents.

Date of 20th March, 2007.

2007 C L D 1234

[Lahore]

Before Nasim Sikandar, J

COMBINED GINNERS (PVT.) LIMITED---Appellant

Versus

REGISTRAR, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN, LAHORE---Respondent

C.O. No.66 of 2006, decided on 11th April, 2007.

Companies Ordinance (XLVII of 1984)---

----S. 439---Removal of a company from Register of Companies on the ground of its failure to submit statutory returns as required under the Companies Ordinance, 1984---Scope---Company being in possession of known assets in the form of immovable property, provisions of S.439 Companies Ordinance, 1984 enabling the Registrar to strike off the name of the Company from Register of companies were not applicable---In the presence and availability of substantial immovable assets of the company it was otherwise lust and proper that the name of the company be restored to the Register---Principles.

Irfan Khaleel Qureshi for Petitioner.

2007 C L D 1236

[Lahore]

Before Mian Saqib Nisar and Syed Sakhi Hussain Bokhari, JJ

RAB NAWAZ SHAHID and 3 others---Appellants

Versus

BANK OF KHYBER and 2 others---Respondents

F.A.O. No.274 of 2004, decided on 15th May, 2007.

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

---Ss.9 & 10---Suit for recovery of loan---Petition for leave to appear---Inherent powers of Banking Court---Scope---Application for leave to appear was dismissed on the date when application was fitted for hearing for non-appearance of defendants and decree in favour of plaintiff was passed---Validity---When suit was not fixed for hearing, decree could not be passed in favour of plaintiff---High Court, in circumstances, accepted appeal of defendants and impugned order passing decree was set aside with the result that application of defendants for leave to appear shall be deemed to be pending before the Banking Court and if some reply to the leave to appear had been filed by the Bank, the Court shall decide the matter, after providing an opportunity to the defendants to lead evidence and if defendants were able to show sufficient cause for non-appearance on the date, when the application for leave to appear was dismissed, the same shall be followed.

Shafis Pak Associates (Pvt.) Limited through Chief Executive and another v. Habib Bank Limited and 3 others 2002 CLD 379 and Syed Rashid Hussain v. Bank of Punjab through Managing Director and another 2005 CLD 1823 ref.

Shahid Ikram Siddiqui for Appellants.

Abdul Hamid Chauhan for Respondent No. 1.

2007 C L D 1243

[Lahore]

Before Syed Hamid Ali Shah, J

MUHAMMAD MUNIR UD DIN---Appellant

Versus

REGISTRAR, TRADE MARK---Respondent

F.A.O. No.178 and C.M. No.2-C of 2004, decided on 28th February, 2007.

Trade Marks Act (V of 1940)---

----S. 76---Limitation Act (IX of 1908), Ss. 5 & 14--Appeal---Limitation---Time consumed in approaching the wrong forum---Condonation of delay---Trade Marks Act, 1940, a special statute, having provided different period of limitation for filing the first appeal than the ordinary law, therefore S.5 of Limitation Act, 1908 was neither applicable nor attracted--Application under Ss.5 & 14, Limitation Act, 1908 for condonation of delay was neither competent nor had any merits.

Arshad Nasim v. Registrar of Trade Marks and another 1986 CLC 2622 fol.

A.D. Naseem for Appellant.

Syed Moazzam Ali Shah for Respondent No.2.

2007 C L D 1301

[Lahore]

Before Sh. Hakim Ali, J

MUHAMMAD SALEEM and others---Petitioners

Versus

MARRYAM BIBI and others---Respondents

Civil Revisions Nos.2528, 2565 and Writ Petition No.18370 of 2005, decided on 28th June, 2007.

(a) Interpretation of document---

----Sale deed---Document itself has to be accepted true and correct by its express and clear words which are to be given their apparent meaning---Addition, substraction, modification are not to be supplied to any document when the words used in the .document are clear in their meanings and .terms and no ambiguity is found in them---Meanings. of plain words are riot to be stretched in such a way so as to bring into them the properties which are not included therein by its plain wordings---Words in the document (sale-deed) actually displaying rights of easement attached to the property having been sold cannot be interpreted in such a manner so as to include another different and separate property in it---Illustration.

(b) Contract---

----Principle of mutuality---Applicability---Scope.

So far as the principle of mutuality of contract is concerned, it would suffice to say that it is not necessary that in all cases, a document must contain the signature of the other party. If any party has accepted the contract by getting a document executed in his favour, paying the full' or part amount under it, obtaining the possession of the property concerned and receiving the document of title or creating a right to or in the property settled, then the contract cannot be deemed to suffer with the rule/principle of lack of mutuality. If any party to the contract does any act with regard to any part of the contract which is visible and material by performing it and that act leads to irresistible conclusion that the party has accepted it, the contract would be considered complete and there will be no question of .lack of mutuality of contract.

It is not necessary for the validity of an agreement, that it must contain the signature of the other party, if the other party is shown to have performed the desired, express or implied condition, act or has done any other thing which can display that the other party has accepted the agreement by his act, or conduct or through the fulfillment of condition like payment of consideration, acceptance of delivery of possession etc. in the performance of agreement, then that agreement would be considered to be a contract having been entered into by the other party with his consent. Mere .failure to put signatures of the other party, upon that agreement would not .invalidate the agreement or make it ineffective.

When the vendor and vendee state in agreement that such a contract (agreement to sell) was entered into between them, then no objection of lack of mutuality can be raised by a third party, particularly, when the possession of the property sold was obtained by the vendee under the agreement. The admission of vendor having executed the agreement, received the amount and delivered the possession of property in dispute, were sufficient to prove the execution of the contract.

Mst. Barkat Bibi and others v. Muhammad Rafique and ethers 1990 SCMR 281; Rehmat .Ali and others v. Faqir Muhammad (deceased) through legal representatives and others 2005 YLR 301 and Malik Hashim Din and .others v. Bashir Ahmad 1992 CLC 754 distinguished.

Messrs Jamal Jute Baling and Co. Daccaa v. Messrs M. Sarkiess and Sons Dacca PLD 1971 SC 784; Vouwang Raja Challaphroo Chwdhury v. Banga Behary Sen AIR 1916 Calcutta 771 and The State of Bihar v. Bengal Chemical and Pharmaceutical Works Ltd. AIR 1954 Patna 14 ref..

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

----S.115---Revision---Objection on a question of fact not earlier raised in the suit and no issue having been framed on that point---Validity---Question of fact was necessarily to be raised in the pleadings as it had required evidence on the point in the shape of proving or disproving same---Such question could not be considered in decision to have not been correctly and competently raised by the petitioner.

Malik Noor Muhammad Awan for Petitioners.

Ch. Irshad Ullah Chatta for Respondents.

2007 C L D 1346

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

MUHAMMAD WASEEM IFTIKHAR AHMAD and another---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Corporate and Industrial Restructuring Corporation and 6others---Respondents

E.F.A. No.330 of 2006, heard on 20th June, 2007.

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

----Ss. 19, 15, 9 & 22---Sale of mortgaged property in execution proceedings---Confirmation of said sale by the High Court---Sale was set aside by Supreme Court on appeal---Contention of the judgment debtor (who had paid to the Bank Rs.26.4 million out of Rs.32.418 million) was that sale having been set aside, auction purchaser had no right to retain the possession of the property---Validity---Held, order under which the property was sold and delivered to the said auction-purchaser having been set aside by the Supreme Court, by all means, the judgment debtors were entitled to be restituted.

Salman Mansoor for Appellants.

Muhammad Afzal Sindhu for Respondents.

Date of hearing: 20th June, 2007.

2007 C L D 1352

[Lahore]

Before Khawaja Muhammad Sharif, J

SHAUKAT ALI---Petitioner

Versus

STATE BANK OF PAKISTAN and 2others---Respondents

Writ Petition No.5693 of 2007, decided on 29th June, 2007.

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

----Ss. 9 & 2(d)(e)---Constitution of Pakistan (1973), Art, 199---Constitutional petition--Alternate remedy, availability of---Car financing---Default in payment of instalments---Confiscation of car by Bank---Contentions of respondent Bank were that petitioner had alternate remedy available by way of filing a civil suit before the Banking Court; that High Court had no jurisdiction to deal with the matter and petition was liable to be dismissed anal that there was factual controversy in the case, as matter was not only qua the payment of some instalments---Petitioner's contention was that there was no factual controversy and case was a simple matter of payment of four instalments, which were dire against the petitioner, which he was ready to pay instantly---Validity---Held, as far as filing of suit before the Banking Court was concerned, it would take years and years and the car, which had been taken into custody by the Bank, would be damaged---Petitioner being ready to pay outstanding instalments to the Bank, no factual controversy was involved in the case, there/ore, petitioner was directed by the High Court to pay four outstanding instalments to the Bank within two days and the Bank thereafter would release the car forthwith to the petitioner and in future if any default was made in payment of instalments by the petitioner, the Bank would have a right to confiscate the car.

2004 CLD 257; 2005 CLD 1662 and. Muhammad Aslam v. Senior Member (Colonies) Board of Revenue, Punjab and others 2004 SCMR 1587 ref.

Kh. Waseem Abbas for Petitioner.

Muhammad Hanif Khatana, Addl. A.-G.

Mian Asghar Ali for Respondents.

2007 C L D 1354

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

MUHAMNIAD IRFAN QAMAR and another---Appellants

Versus

S.M.E. BANK LIMITED through Branch Manager---Respondent

R.F.A. No.506 of 2006, heard on 6th February, 2007.

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

----Ss.10 & 7---Respondent-Bank filed a suit against appellants for recovery of loan---Application for leave to defend -suit was dismissed and claim of Bank was decreed---Contention raised by appellants was that the Loan in question had been secured through hypothecation of stock which was lost---Said stock had been insured and Bank was also a beneficiary of such insurance, therefore, Bank was only entitled to receive claim from Insurance Company and that future mark up could not have been granted---Contentions were repelled as appellants were unable to show from the documents admittedly executed between the parties that liability of appellants would cease in case of loss of hypothecated goads---Defence taken by appellants, at the best was illusionary as receipt of loan amount was not disputed nor it had been disputed at the bar that a certain sum was otherwise due from the appellants---High Court, however, deemed it appropriate that appellants be granted leave to defend .suit subject to deposit of liability of Rs.2,40,000.

Mian Shah Abbas for Appellants.

Naeem Sultan for Respondent.

Date of hearing: 6th February, 2007.

2007 C L D 1362

[Lahore]

Before Mian Saqib Nisar and Fazal-e-Miran Chauhan, JJ

SHAFAT ARMED---Appellant

Versus

MUHAMMAD IRSHAD and 3others---Respondents

E.F.A. No. 111 of 2006, decided on 22nd February, 2007.

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

---S.19---Civil Procedure Code (V of 1908), O.XXI, R.90---Execution of decree-- Auction of judgment-debtor's property---Applicant claiming to have purchased property from judgment debtor objected to its auction on ground of certain irregularities and fraud--Confirmation of sale of property and dismissal of objection petition by Executing Court---Validity---Parties settled their dispute before Appellate Court in the terms that auction purchaser would be compensated by paying .him specified amount over and above auction price, resultantly court sale would stand cancelled; that in suit for specific performance pending between applicant and judgment debtor, names of auction purchaser and decree holder-Bank joined as party would stand deleted; and that applicant and judgment debtor would have no objection, if auction purchaser applied for refund of stamp duty paid by him---High Court on such terms disposed of appeal while cancelling court sale in favour of auction purchaser.

Mian Yousaf Umar and Mian Harneed-ud-Din Kasuri for Appellants.

Noor Muhammad Khan Chandia for Respondent No.2.

Shahid Ikram Siddiqui for Respondent No.4.

2007 C L D 1369

[Lahore]

Before Mian Saqib Nisar, J

DOST MUHAMMAD ---Appellant

Versus

HOUSE BUILDING FINANCE CORPORATION---Respondent

R.F.A. No.460 of 2000, heard on 14th April, 2005.

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

----S.9---Transfer of Property Act (IV of 1882), Ss.41 & 59 A---Suit for recovery of -loan amount by Bank---Mortgaged property---Applicant as purchaser of property through a court decree claimed to be bona fide purchaser having no knowledge- about mortgage'--Validity---Property being mortgaged, when not redeemed, would always be subject to recovery of loan by enforcing mortgage-- Applicant could not take up plea of bona fide purchaser, even if he had bought property through a court decree-- Amount paid by applicant to transferor was neither towards return of loan amount of Bank nor was paid to Bank---Applicant for commission of any fraud or misrepresentation by transferor might take legal proceedings against him---Property mortgaged for discharge of loan could not be absolved of charge/encumbrance on account of such plea of applicant---Suit was decreed in circumstances.

Zahid Hussain Khan for Appellant.

Syed Muhammad Hanif Bokhari for Respondent.

Date of hearing: 14th April, 2005.

2007 C L D 1371

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

Mst. ZARINA SHAMIM---Appellant

Versus

ZARAI TARQIATI BANK LIMITED through Manager ---Respondent

F.A.O. No.7 of 2003, heard on 22nd January, 2007.

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

----Ss. 9(5), 12 & 22---Suit for recovery of loan---Ex parte decree, setting aside of---Appellant against whom ex parte decree was passed, had pleaded non-service of summons in the suit filed by respondent-Bank against him---Banking Court had referred to service of nonce of proceedings on the appellant by publication in two Dailies---Reference had also been made to the report of Postal Authority on registered A.D. notice which had noted that appellant/addressee, had refused to accept service---A.D. Form contained another note by the Postman recording that appellant had moved and was available at a different address---Process server's report had created doubt as to service being effected on appellant in compliance with provisions of S.9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Case was one wherein appellant could at best be deemed to have been served through notice by publication alone---Bailiff did not serve summons and conflicting reports of the Postman, had rendered service of appellant by registered A.D. to be doubtful---Rejection in limine of appellant's application for setting aside ex parte decree passed against him, filed tinder S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001 by impugned order, was inappropriate---Impugned order was set aside and matter was remanded to the Banking Court for consideration afresh after granting hearing to the parties and providing opportunity to lead evidence.

Miss Khalida Abid for Appellant.

Malik Muhammad Zahoor Anwar for Respondent.

Date of hearing. 22nd January, 2007.

2007 C L D 1424

[Lahore]

Before Umar Ata Bandial, J

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN---Plaintiff

Versus

Messrs MODERN LEATHERS and others---Respondents

COS No.56 of 2002 and P.L.As. Nos.48-B, 42-B of 2003, 60-B of 2006, decided on 23rd July, 2007.

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

----Ss.9 & 17---Suit for recovery of Loan by Bank---Production of incomplete accounts of the subject-matter loan fails to meet the object of Financial 6tsfitutions (Recovery of Finances) Ordinance, 2001---Principles.

Messrs United Dairies Farms (Pvt.) Ltd. and 4 others v. United Bank Ltd. 2005 CLD 569 fol.

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

----Ss.9 & 17---State Bank of Pakistan BPD Circular No.29, dated 15-10-2002---Plea of relief under BPD Circular No.29---Validity---Suit for recovery of local by Bank---Original statement of accounts filed with the suit was incomplete in material particulars both with regard to the amount and the date of disbursement of loan to the defendant company---Correct version of the account filed later by the Bank conflicted with the contents of the plaint---Date of disbursement of finance,. in an ordinary case, may be significant, inter alia, for ascertaining the effective date for applying or calculating the quantum of mark-up, however, in the facts of the present case, the date of disbursement of loan assumed greater importance because under the agreed terms contained in the sanction advice that date determined the date of repayment of the loan and consequently .the date of commission of default, if any, by the defendant-Company---Supplemental statement of account had furnished the basis for the defendant-Company to advance its plea under BPD Circular No.29---Rights of a customer of a financial institution, in the present case, the defendant-Company, to be considered for settlement under BPD Circular No.29 was backed by law---Prima facie, such a right of the defendant-Company overrides its contractual obligation and hence the claim of Bank as framed in the present suit is admissible---Continuing default committed prior to 15-10-1999 qualified the case of a defaulting customer for classification and relief under State Bank of Pakistan BPD Circular No.29---Principles.

United Bank Ltd. v. Messrs Azmat Textile Mills Ltd. 2002 CLD 542 and Hashwani Hotels Limited v. Federation of Pakistan and others PLD 1997 SC 315 fol.

(c) State Bank of Pakistan BPD Circular No. 29, dated 15-10-2002---

----Legal effect of circular guidelines by the State Bank of Pakistan.

United Bank Ltd. v. Messrs Amat Textile Mills Ltd. 2002 CLD 542 and Hashwani Hotels Limited v. Federation of Pakistan and others PLD 1997 SC 315 ref.

(d) State Bank of Pakistan BPD Circular No. 29, dated 15-10-2002---

----Whether an unperformed re-schedulement can oust a defaulting customer from qualifying for relief under Circular No.29 is a question which, if raised., would also require consideration.

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

----Ss.9 & 17---State Bank of. Pakistan BPD Circular No.29, dated 15-10-2002---Suit for recovery of Loan by Bank---Defendant-Company seeking leave to defend the suit and relief under BPD Circular No.29---Record showed that the original statement of account submitted by the Bank was wrong in material particulars---Such a statement of account formed a foundational document to sustain a claim for recovery made by a financial institution---Bank, in the present case, was allowed to cure the defect contained in the original statements of account filed with the suit---Had the cured defect been superficial or of a technical nature, the objection to leave to defend the suit might have deserved indulgence--Plaintiff-Bank sought to recover public money advanced to its customers, therefore, technical and superficial objections could not be allowed to arrest the progress of the suit as contemplated by law--Defect in the plaint did affect the progress of the suit and the petition for leave to appeal on its merits---Suit as a banking claim, in circumstances, was not enough to sanctify the basis given or the quantum claimed in such a suit---Suit should not progress on account of a defective document attached to it, but prima facie, such a defective document could not bar a suit that had. otherwise been filed within time---Classification rendered with regard to defective documents by the Bank had confirmed inconsistency between the plaint, the charge documents and the supplemental statement of account with regard to the amount of Loan disbursed and .the date of its disbursement---Such information had material bearing on the right of defendant-Company to oppose the claim filed in the suit---Such right was derived from BPD Circular No.29 which had both substantive content ,and also effect---Defence was eclipsed by the irregularity m a suit document for failing to meet the statutory mandate under S.9(1)(2)(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001--Removal of defects v2 documents by the Bank had exposed the incorrectness of the plaint anal new situation clearly presented a different claim of the plaintiff-Bank apart from fortifying a new defence plea under BPD Circular No.29---Change in the claim justified the grant of a right to the defendants to present their defence afresh and thus their new plea was admissible---High Court granted leave to appear and defend the suit inter alia to show that the defendant-Company qualified for relief under BPD Circular No.29 and therefore, the suit could not proceed unless the case of defended company was first considered and disposed of on merits wider the said circular by the plaintiff-Bank---Grant of leave to the defendant was on the condition that the defendant-Company shall furnish security in the amount of the mark-up price under the finance agreement through a surety bond to the satisfaction of the Registrar of the High Court.

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

----Ss. 9 & 10---Suit for recovery of loan by Bank---Duty. of Court---Duly is cast on the Court to decide all claims filed before it strictly in accordance with law, even though these n ray be undefended---Court, in discharge of said duty, has to direct the Bank to also justify its position for claiming interest as part of marked-up price under its Islamic Finance agreement, and in any event for claiming a decree for an amount exceeding the marked-up price agreed in that financial agreement.

Messrs Qureshi Salt and Spices Laboratories v. MCB 1999 SCMR 2353 fol.

(g) State Bank of Pakistan BPD Circular No. 29, dated 15-10-2002---

----BPD Circular No. 29 has substantive content and effect.

Jehanzeb Bharwana for Plaintiff.

Shehzada Mazhar for Defendants Nos.1 to 3, 5 and 9.

Mian Ghulam Rasool for Defendant No.1.

Khan A. Hameed for Defendants Nos.4, 6, 7, 8 and 10.

2007 C L D 1439

[Lahore]

Before Sh. Azmat Saeed and Umar Ata Bandial, JJ

KHAN MUHAMMAD, F.C.A.---Appellant

Versus

SECURITY EXCHANGE COMMISSION OF PAKISTAN ---Respondent

Commercial Appeal No.3 of 2005 decided on 12th April, 2007.

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

----Ss. 260(1), 255 & 476---S. R. O. No. 45(I)/2003 dated 13-1-2003--Notice under S.260(1) read with Ss.255 & 476 of Companies Ordinance, 1984 by the Security Exchange Commission of Pakistan alleging non-compliance by auditor (appellant) with the provisions of S.235, Companies Ordinance, 1984 read with S.R.O. No.45(I)/2003, dated 13-1-2003 to the preparation of audited account statement of the Company (his client) wherein he failed to "transfer the amount of incremental depreciation from surplus on revaluation of fixed assets account to un-appropriated profit/accumulated loss account through statement of changes in equity"---Auditor contested the notice and was heard by the Commission who passed .the order of adverse action against the auditor---Validity---Impugned order of the Commission contained a discussion on the general obligations of auditors but no discussion whatsoever of the constitutive facts of the case was found meriting adverse action against the auditor---Impugned order neither specified the default of the auditor that was found to be established on record nor same pointed out the relevant legal provisions that consequently stood infringed by the auditor's conduct---Sifting of the facts by the impugned order was necessary to sustain a finding of liability against the auditor---Commission, as a statutory body was also under an obligation to pass speaking orders specifying grounds upon which parties before it, were found to be delinquent---Without providing the relevant factual context the general description of the duties and obligations of an auditor given in the impugned order were a theoretical rendition that had no nexus with establishing liability of the auditor---Impugned order was defective for failing to specify the precise factual defaults of the auditor which were determined to be duly established on record and which were found to constitute violations of specified Legal obligations for which sanctions contemplated by law may be imposed---Said ingredients were necessary to lawfully impose liability on the auditor---Such particulars were essential for facilitating the appellate forum to apply its mind in assessing the validity of an order passed by the Commission; and for serving the rules of natural justice by confronting the affected party with the grounds of his liability---High Court, in circumstances, remanded the matter to the Security Exchange Commission of Pakistan for passing a fresh order based on record after grant of hearing to the parties---Commission shall pass a final order in the matter within two months from the date of receipt of a certified copy of High Court order.

(b) Admission---

----Scope---Reply, in the present case, circumvented the allegations made in the show-cause notice against the party but at the same time it may be considered to impliediy acknowledge the same---For serving as proof, such a non-contentious explanation did not amount to an unequivocal admission of liability for the purpose of proving the allegations made---Plea that the party had admitted the allegations levelled was not tenable in circumstances.

Shahzad Rabbani for Appellant.

Ahmed Bashir for Respondents.

2007 C L D 1445

[Lahore]

Before Jawwad S. Khawaja, J

MUHAMMAD AMIN BROTHERS (PVT.) LIMITED through Director---Appellant

Versus

PAKISTAN AGRICULTURAL STORAGE AND SERVICES CORPORATION LIMITED---Respondent

Regular Second Appeal No.95 of 2006, heard on 1st March, 2007.

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

----S.15---Sale by description---Use of term "as is where is" in relation to delivery of goods---Inspection of goods when not relevant---Principle of contra proferentum---Contract for sale of Basmati Special Rice was awarded to appellant by respondent---Appellant lifted some of the agreed quantity but refused to lift remaining stock as rice did not meet the description set out in the contract between the parties---Appellant filed a suit seeking specific performance of contract, claimed damages and refund of security amount along with the sum deposited by it with respondent in excess of the security amount---Defence set up by respondent was that sale had been made on "as is where is" basis therefore, respondent was not obliged to meet the description of rice given in the contract---Suit was partly decreed by trial Court, however, plea of specific performance and claim of damages was disallowed---Suit of appellant was dismissed in its entirety by the appellate Court---Validity---Appellant proved his case by producing oral as well as documentary evidence on record---Onus to prone the issue that suit was not instituted by duly authorized person has placed on respondent but it did not produce any evidence td discharge this onus-- Appellant made repeated offers to .respondent for joint inspection and survey of contracted rice with the object of substantiating its contention that rice made available by the latter was not Basmati Special Rice but such offers were not: accepted by respondent---Words `Basmati Special Rice' had been used as many as six times in the contract document leaning no room for doubt that contracted rice was being sold by description---Term "as is where is" had been used only in relation to delivery of the rice and it did not in any manner absolve the respondent from its obligation to supply the agreed quality of rice---Principle of contra proferentum was not applicable in the case as there was no ambiguity which made it difficult to ascertain the intention" of contracting parties---Meaning of term "as is where is" would have been determined on the basis of the context in which the term was used---Section 16(2) of Sale of Goods Act could not benefit respondent in circumstances---Contract was for sale by description and there was no occasion for appellant to inspect the rice prior to the date of contract---Inspection of rice, post contract, would be relevant, but only for the purpose of enabling the appellant to determine "if it met the contracted description and, if necessary, to refuse taking delivery---Time was not of the essence of contract and contract was based on reciprocal promises---Appellant was only obliged to lift the rice if it met the description given in the contract and he has not bound to lift the rice which did not meet such description---Record revealed that respondent committed breach of contract however, no direct nexus between lost profits and breach of contract "had been proved on record nor there was any evidence to prove the quantum of damages claimed by appellant---Damages were, therefore, not allowed---Appellant, however, was held entitled to refund of entire security amount and said excess amount with mark-up-- Appellate decree was modified accordingly.

Paramount Corporation, Karachi v. Haji Moosa Haji Omar, Karachi PLD 1954 Sindh 32 and Messrs Fairland Export Syndicate v. Messrs Bengal Oil Mills Ltd., Karachi PLD 1970 Kar. 125 ref.

United Bank Ltd. v. Messrs Al-Noor Enterprises and another 2006 CLD 822 'and Thornett and Fehr v. Beers and Son (1919) 1 KB 486 distinguished.

(b) Words and phrases---

----Expression " as is where is "---Connotation.

Mian Muhammad Kashif for Appellant.

Kh. Muhammad Akram for Respondent.

Date of hearing: 1st March, 2007.

2007 C L D 1457

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

MUSLIM COMMERCIAL BANK LTD---Appellant

Versus

Messrs SHAIKH ORENTAL RUGS through Proprietor and 2others---Respondents

R.F.A. No.265 of 2005, heard on 12th April, 2007.

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

----Ss.9, 10 & 22---Suit for recovery of loan---Application for leave to defend suit---Appeal to High Court---Defendants were served in the manner prescribed by the law, who put in appearance and filed application for leave to defend suit, which application was dismissed by the Banking. Court observing that it did not raise any substantial question of fact and law---Banking Court however, proceeded to dismiss 90% of the claim of Bank---Validity---All the points raised in the application for leave to defend suit were discussed point by point by the Trial Court, but still it proceeded to dismiss suit by the Bank almost in its entirety for which there was no justification---Allowing appeal of Bank impugned judgment and decree passed by the Banking Court, were set aside, with the result that suit filed by Bank would be deemed to be pending before the Banking Court---Defendants were granted leave to defend the suit by consent of counsel for the Bank ---Leave application would be deemed to be written statement; issues arising out of the pleadings, would be framed and after giving an opportunity to the parties to lead evidence, suit would be decided on its merits.

Muhammad Qamar uz Zaman for Appellants.

Sh. Izharul Islam for Respondents.

Date of hearing: 12th April, 2007.

2007 C L D 1478

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

ZAHID HAMEED and another---Appellants

Versus

PAHISTAN INDUSTRIAL AND COMMERCIAL LEASING LIMITED through Chief

Executive ---Respondent

R.F.A. No.836 of 2002 decided on 9th August, 2007.

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

----Ss.9 & 10---Recovery of bank loan---Leave to defend the suit---Limitation---Bank stated in plaint that default accrued fast time in March, 1996, then in August, 1997, while the suit was filed in November, 2000---Defendant, in petition for leave to defend the suit, also raised the objection of suit being barred by limitation---Banking Court without adverting to the objection of limitation dismissed the application for leave to defend the .suit and decreed the suit in favour of bank---Validity---Judgment passed by Banking Court noted that question of limitation was duly urged but it was not adequately answered---Banking Court did 'not address the contentions of parties and there was also no basis for holding as to how the suit was within limitation---Question of limitation was a mixed question of law and fact and, therefore, had to be decided after perusing material evidence in such context---Judgment and decree passed by Banking Court was set aside, defendant was allowed conditional leave to defend the suit and case was remanded to Banking Court for decision afresh on merits---Appeal was allowed accordingly.

Mahmood A. Sheikh for Appellant.

Shahzada Mazhar for Respondent.

Date of hearing: 27th June, 2007.

2007 C L D 1484

[Lahore]

Before Syed Hamid Ali Shah, J

MUHAMMAD SOHAIL BUTT---Petitioner

Versus

CAPITAL INSURANCE COMPANY LIMITED and another---Respondents

C.O. No.57 of 2006, decided on 29th June, 2007.

(a) Trust---

----Connotation---Term trust' is commonly used for a "trust" registered and created under Trust Act, 1882; or for the right to beneficial enjoyment of property to which another person holds legal title---"Trust" in former case is an obligation annexed to ownership of property and arising out of confidence reposed in and accepted by owner, or declared and accepted by him for benefit of another or the owner---Person who reposes or declares confidence is called "author of trust", person who accepts confidence is calledtrustee'; person for whose benefit confidence is accepted is called beneficiary' orbeneficiaries'; subject matter of trust is called trust property' or 'trust money' and instrument, if any, by which trust is declared is calledinstrument of trust', it be private or public i.e. charitable---Trust in latter case, signifies relation whereby one or more persons hold something material or accept some obligation in trust for another or for the benefit of other persons; relation when it finds manifestation in its practical form is named as trust'; person in such relation, who holds something or accept some obligation for benefit of other is calledtrustee' and for whose benefit something is held is called 'beneficiary' or 'cestui que trust'---In farmer case, it is an 'institution' while in latter it is relation of confidence.

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

----Ss.2 (21), 148 & 152---Word, 'trust' as used in S.148 of Companies Ordinance, 1984--Connotation---Dry Port Trust, a person---Entering notice of trust on register of members---Rectification of Register of members of respondent-Company was sought by petitioner by seeking removal of name of Dry Port Trust' as shareholder/member of respondent-Company---Plea raised by petitioner was that Dry Port Trust was not a legal entity, hence could not be a shareholder in respondent-Company---Contention of Dry Port Trust was that it being a legal entity, having registered instrument of trust, was authorized to invest in stocks and was eligible to become member of respondent-Company---Validity---Wordtrust' used in S.148 of Companies Ordinance, 1984, related to a trust, where relationship of trustee and cestui que trust was created---Provisions of S.148 of Companies Ordinance, 1984, did not extend to a trust as an institution, registered and created under Trust Act, 1882---Dry Port Trust fell within the definition of person and was capable of becoming a member in a company---Only restriction in such respect was when instrument of trust failed to prone or prohibit the Trust to become member/shareholder in a company---Instrument of trust, if had imposed conditions then Trust could become member, subject to such conditions---Petitioner failed to make out a case for rectification of the Register of Members of respondent-Company---Petition was dismissed in circumstances.

E.D. Sasson and Company Limited v. Kapatch XLV Bombay Law Reporter 46; Palmer's Company Law (13th Edition) and Perkins and others v. Mexican Santa Barbra Mining Co." (1890) 24 QBD 613 ref.

Irfan Mahmood Sheikh for Petitioner.

Sh. Muhammad Ismaili for Respondent No. 1.

Shahid Karim for Respondent No.2.

Javaid Iqbal Bhinder on Court's Call.

2007 C L D 1552

[Lahore]

Before Syed Sakhi Hussain Bokhari and Syed Hamid Ali Shah, JJ

NASEEM ULLAH KHAN---Appellant

Versus

UNITED BANK LIMNED---Respondent

F.A.O. No.282 of 2003, decided on 1st November, 2006.

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

----S.9(5) & 12---Ex parte decree, setting aside of---Service of process---Defendant/borrower in his application for setting aside decree averred that when suit for recovery of amount was filed, he was not residing at the address on which process was issued---Defendant alleged that creditor Bank was well aware of his new address and suing at former address was a deliberate attempt to procure ex parte decree---Defendant's application for setting aside decree was dismissed for limitation---Validity---Record proved that all modes of service given in section 9(3) of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (then applicable) were resorted to and service upon defendant was effected on the address which he had himself provided to creditor Bank and was found mentioned in loan documents---Defendant was served on his last known address and nothing was on record to show that creditor Bank was ever informed about change in his address---In view of rule that "debtor must seek the creditor" defendant was under obligation to intimate the Bank about change in his address but such obligation was not discharged---Omission on the part of defendant was fatal and hp was to suffer for such omission---Application for condonation of delay was lacking necessary information about the-date of knowledge of decree, hence rightly dismissed.

Sardar Anwar Ahmad Khan for Appellant.

2007 C L D 1578

[Lahore]

Before Syed Hamid Ali Shah, J

GHULAM RASOOL BHATTI---Petitioner

Versus

JUDGE BANKING COURT-II, LAHORE and 4others---Respondents

Writ Petition No.15966 of 2005, decided on 31st August, 2007.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.90---Decree, execution of---Auction of property---Application under O.XXI, R.90, C.P.C., filed after 2-1 /2 years of auction without application for condonation of delay and without deposit of 20% of the sum realized at sale---Maintainability---Such application could not proceed for want of compliance of mandatory provisions of law.

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

----Ss.19 & 22---Civil Procedure Code N of 1908), O.XXI, R.90---Constitution of Pakistan (1973), Art.199---Constitutional petition---Decree of Banking Court, execution- of---Appeal. against decree, dismissal of---Sale of property in auction---Application under O.XXI, R.90, C.P.C. filed after 2-1/2 years of auction---Dismissal of such application by Banking Court---Constitutional petition challenging order of Banking Court---Plea of judgment-debtor was that decree of Banking Court, after its affirmation in appeal, merged into decree of Appellate Court, which could be executed---Validity---Decree under execution was passed under provisions of special statute--Suit, after passing of decree by Banking. Court would stand automatically converted into execution proceedings---Summoning of record by High Court for hearing appeal would not result into discontinuation of execution proceedings, rather execution would continue on basis of photocopies of relevant record required under law to be .retained by Banking Court---No fresh execution application would be needed even after merging of decree of Banking Court into appellate decree, which would stand automatically converted into execution proceedings---Provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 would override general provisions of C.P.C., conflicting .with Financial Institutions (Recovery of Finances) Ordinance, 2001---Impugned execution proceedings regarding sale of property .through auction were not suffering from any illegality or jurisdictional error---High Court dismissed constitutional petition in circumstances.

Hudabia Textile Mills Ltd. And another. v. Allied Bank of Pakistan Ltd. and another PLD 1987 SC 512 rel.

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

---S.19---Decree of Banking Court, execution of----Essentials---Filing of separate application and issuance of fresh notice would riot be needed for execution of decree.

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

----S.7(2)---Provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001 would override general provisions of C.P.C., which were contrary to the Ordinance.

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

----Ss.15, 19 & 22---Civil Procedure Code (V of 1908), O.XXI, R.90---Constitution of Pakistan (1973), Art.199---Constitutional petition---Decree, execution of---Appeal against decree, dismissal of---Sale of property---Registration of sale-deed after confirmation of sale in favour of auction-purchaser---Application under O.XXI, R.90, C.P.C. by judgment-debtor after 2-1 /2 years. of auction---Dismissal of such application by Banking Court---Constitutional petition challenging order of Banking Court---Maintainability---Mortgagor upon registration of sale-deed in favour of auction-purchaser would divest himself of any right, title and interest in mortgaged property by .virtue of S.15(8) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Right which judgment-debtor had with regard to mortgaged property stood "extinguished long before filing of constitutional petition---Judgment-debtor had contested suit and filed appeal against decree---Judgment-debtor had falsely stated in constitutional petition that he was in judicial , lock-up during pendency, of execution proceedings--- Judgment-debtor had neither paid decrefal amount nor had made any effort to file objection on auction report before its confirmation---Without availing remedy of appeal provided against impugned order under S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001, constitutional petition. would not be maintainable---Appealable order passed by competent court would not be open to exception in constitutional jurisdiction after expiry of period of limitation prescribed for filing appeal there against---High Court dismissed constitutional petition for being riot competent.

F.A. Khan v. The Government of Pakistan PLD 1964 SC 520;. The Commissioner and another v Mian Sher Muhammad 1972 SCMR 395; Barkat Ram v. Bhagwan Singh and others AIR. 1940 Lah. 394; Gajadhar Prasad-and others v. Babu Bhakta Ratan and others AIR" 1973 SC 2593; Nagina Silk Nlill, Lyallpur v. The Income Tax Officer,. A-Ward Layallpur and Income Tax Appellate Tribunal, Pakistan PLD 1993 Lah. 706; Islamic Republic of Pakistan v. Muhammad Saeed PLD 1961 SC 192; Fakir Abdullah and others v. Government of Sindh through Secretary to Government of Sindh, Revenue Department, Sindh . Secretariat, Karachi ,and others PLD 2001 SC 131; Ch. Altaf Hussain and others v. The Chief Settlement Commissioner, Pakistan, Lahore and others PLD 1965 SC 68; .Ali Muhammad v. Hussain Bakhsh and others PLD 1976 SC 37; Yousofalli Mulla Noorbhoy v. The King PLD 1949 P.0 108; Khuda Bakhsh v. Khushi Muhammad and 3 others PLD 1976 SC 208; Al-Ahram Builders (Private) Limited v. Income Tax Appellate Tribunal 1993 SCMR 29; Sadaqat Enterprises v. Islamic Republic of Pakistan and others -1994 CLC 1802; Khalid Mehmood v. "Collector of Custom, Customs House, Lahore 1999 SCMR 1881; Allan Khan v: S.H.O Police Station Mouladad 1999 PCr.LJ 781; Lt. Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty and others PLD 1961 SC 119; Salahuddin and 2 others v. Frontier Sugar Mills and Distillery Ltd. Tokht Bhai and 10 others PLD 1975 , SC 244; .Sind Employees' Social, Security Institution v. Dr. Mumtaz Ali Taj and another PLD 1975 SC 450; Asdullah Mangi and others v. Pakistan International Airlines Corporation and others 2005 SCMR 445: Fiaz Bakhsh and others v. Deputy Commissioner/Land Acquisition Officer, Bahawalpur and others 2006 SCMR 219; Rehmat Elahi v. Messrs Hoyo Kabushiki Kaisha PLD 1992 SC 417; Agha Abbas Haider Khan v. Zarai Taragiati Bank Limited through Branch Manager 2006 CLD 764 and Ghulam Mustafa Bughiio and another 2006 CLD 528 ref.

Messrs United Bank Limited. v Banking Court Na-IV, Lahore and others 2004 CLD 1114 and Messrs Unicom Enterprises v. Banking Court. No-5, City Court Building Karachi and 2 others 2004 CLD 1452 rel.

(f) Constitution of Pakistan (1973) ---

---Art 199---Appealable order passed. by court of competent jurisdiction---Validity---Such order would not be open to exception in constitutional jurisdiction after expiry of period of limitation prescribed for filing appeal thereagainst.

Messrs United Bank Limited v Banking Court No-IV, Lahore and others 2004 CLD 1114 and Messrs Unicom Enterprises v. Banking Court No-5, City Court Building Karachi -and 2 others 2004 CLD 1452 rel

A.K. Dogar for Petitioner.

Hassan Nawaz Makhdoom for Respondents Nos.4 and 5.

2007 C L D 1598

[Lahore]

Before Nasim Sikandar, J

KHALID AZIZ KHAN----Petitioner

Versus

THE STATE----Respondent

Criminal Miscellaneous No.4743/B of 2007, decided on 20th September, 2007.

Criminal Procedure Code (V of 1898)-

----S. 498---Penal Code (XLV of 1860), S.489-F--- Ad interim pre-arrest bail, confirmation of---Accused, Managing Director/Chief Executive Officer of a limited company which had gone into liquidation and where a liquidator also had been appointed, was alleged to have issued cheques of the value of Rs.2,84,096 in consideration of supply of cotton to the Spinning Mill owned by said limited company---I3ank had declined to honour said cheques---Accused was one of the 57 share-holders of the said limited company and had not issued cheques from his personal account nor had incurred any personal liability on supply of cotton nor he was the sole beneficiary of the supply made to the limited company---Factum of the company having gone into liquidation. and a liquidator having been appointed, the nature ,of claim. of the complainant as supplier as also the status of the accused as Chief Executive Officer had undergone a change, legal implications of such change also needed to be considered and ruled upon, which would be possible only after production of evidence of the parties in trial---Issue of liability cf Chief Executive of the company extended and over-laped his liability as ashare-holder also needed further consideration---Accused was stated to be more. than 70 years of age and a number of documents, medical prescriptions, laboratories results had been placed on record to show that he was a heart patient besides suffering from other serious ailments---All documents relevant to the ease being not in possession of the accused, he was not required for their recovery and such documents could eery wets be collected by the Investigating Officer without arresting the accused---Ad interim bail already allowed to accused was confirmed by the High Court.

Salman Safdar for Petitioner.

Ms. Azra Parveen, Deputy Prosecutor-General, Punjab, with Khalid Javed S.-I.

2007 C L D 1614

[Lahore]

Before Sh. Azmat Saeed and Umar Atta Bandial, JJ

Sardar MUHAMMAD IQBAL---Appellant

Versus

ITTEFAQ GENERAL INSURANCE COMPANY through Chief Executive/Managing Director and others---Respondent

Regular First Appeal No.191 of 2006, decided on 4th April, 2007.

Specific Relief Act (I of 1877)-

----Ss.39 & 42---Civil Procedure Code (V of 1908), O.VII, R.11---Companies Ordinance (XLVII of 1984), S. 290---Suit for declaration and cancellation of documents---Rejection of plaint---Suit for declaration, cancellation of resolution of defendant Insurance Company as well as the power of attorney and sale-deed executed in pursuance thereof---Plaint in the suit was rejected under O.VII, R.11, Cr.P.C. on the ground that suit was barred by S.290 of Companies Ordinance, 1984---Defendants had conceded that the basis for rejection of plaint as disclosed in the impugned order, were not tenable in law, but plaint was liable to be rejected on other grounds and impugned order and decree were not sustainable---Validity---Held, it ,would be appropriate that defendants in the suit, were to take ail objections to the maintainability of the suit: together which could always be adjudicated upon by the Trial Court after hearing the parties and thereby ensuring that none of the parties was taken by surprise---Appeal was accepted, impugned ,order and the decree were set aside and case was remanded to the Trial Court for decision afresh.

Malik Abdul Wahid for Appellant.

Muhammad Saleem Chaudhry and Malik Abdul Sattar Awan for the Respondents.

2007 C L D 1616

[Lahore]

Before Maulvi Anwarul Haq and Nasim Sikandar, JJ

NAJMA SUGAR MILLS LIMITED---Appellant

Versus

Messrs MEGA TRADING COMPANY through Chief Executive---Respondent

R.F.A. No.173 of 2003; heard on 30th May, 2007.

Civil Procedure Code (V of 1908)---

---O.XXXVII, Rr.2 & 3---Limitation Act (IX of 1908), Arts.64-A & 73---Suit for recovery of amount on basis of cheques---Leave to defend suit---Issuance of post-dated cheques as a condition of agreement between parties for- supply of material-- -Suit .was filed on T7-4-2003, while first cheque was dated 15-1-2000, second cheque was' dated 1-3-2000 and third cheque was dated 15-4-2000'--Application for leave to defend suit raising plea that Art. 73 of Limitation. Act, 1908 would govern such matter providing three years' period commencing from date of bill of exchange---Validity---Suit under O.XXXVII, C.P.C., would be governed by Art.64-A of Limitation Act, 1908 and starting point would be when debt became payable---Suit cheques according to agreement were to be presented on the dates mentioned thereon---Question of limitation with reference to Art.64-A of Limitation Act, 1908 could not be determined without determining question of performance of such agreement after framing of issues and recording evidence thereon---Leave to defend suit was granted subject to deposit of Rs.50,00,000 in cash by defendant grid furnishing of company-guarantee by plaintiff like amount to the satisfaction of court.

Raja Muhammad Akram for Appellant.

Mujeeb-ur-Rehman Kiani for Respondent.

Date of hearing: 30th May. 2007.

2007 C L D 1633

[Lahore]

Before Mian Hamid Farooq, J

GHULAM MUHAMMAD---Appellant

Versus

ABDUL GHAFFAR---Respondent

F.A.O. No.39 of 2005, decided an 13th September, 2007.

Civil Procedure Code (V of 1908)---

----O. XXXVII, Rr.2, 3, 4, O.IX, R.13 & O.V, R.20---Suit for recovery of money on basis of promissory note---Leave to appeal and defend suit---Ex parte decree, setting aside of---Passing of ex pane .decree on basis of publication of notice in newspaper---Plea of non-service of notices/summons upon defendant through ordinary manner---Validity---Summons issued to .defendant were not in Form No.4 in Appendix-B to C.P.C.---Summons issued to defendant neither. indicated filing of summary suit against him nor was he called upon to file within 10 days application for leave to appear and defend suit---Such publication was made under provisions of O.V, R.12, C.P.C. and, not under O.XXXVII, R,2(1) thereof---Can basis of such publication it could not be said that summons had been validly published or defendant had been legally served---Neither defendant could be proceeded ex parte nor ex parte decree could be passed against him on basis of such proclamation in .newspaper---Superstructure built upon a void order would fall to the ground---High Court set aside impugned order/decree and allowed defendant to file application for leave to appeal and defend suit.

Yousaf Ali v. Muhammad Aslam Zia and 2 others PLD 1958 SC 104 rel.

Hafiz Khalil Ahmed for Appellant.

Ch. Ijaz Akbar for Respondent.

2007 C L D 1637

[Lahore]

Before Mian Saqib Nisar and Sh. Hakim Ali , JJ

Haji SHAH NAWAZ RANJHA and another---Appellants

Versus

PUNJAB SMALL INDUSTRIES CORPORATION, through Regional Director Sargodha and 4others---Respondents

F.A.O. No.171 of 2006, heard on 5th September, 2007.

Civil Procedure Code (V of 1908)-

----S.12(2)---Dismissal of application under section 12(2), C.P.C. without framing issues and recording evidence---Effect---Plaintiff filed suit for recovery which was decreed ex parte---Defendants moved an application under section. 12(2), C.P.C. contending that they were not properly served as they were not the residents of the address given in the plaint---Such fact was controverted by plaintiff but Banking Court, without framing any issue or recording evidence, dismissed the application---Validity---Matter in controversy could only be resolved if parties were afforded an opportunity of producing the evidence---Banking Court, without there being any material on record, simply on the basis of pleadings of parties which were not the substitute of evidence, had decided the matter---Such decision was not tenable in the eyes of law hence was set aside---Case was remanded to Banking Court with direction to frame issues involved in the matter and to decide it in accordance with the law.

Ahmad Waheed Khan for Appellants.

Jari Ullah Khan for Respondent No. 1.

Date of hearing: 5th September, 2007.

2007 C L D 1191

[Peshawar]

Before Muhammad Qaim Jan Khan, J

NATIONAL DEVELOPMENT FINANCE CORPORATION and others---Petitioners

Versus

Mian ABDULLAH INDUSTRIES (PVT.) LIMITED and 5 others---Respondents

C.M. No.9 of 2004 in B.O.S. No.26 of 1997, decided on 26th March, 2007.

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

----Ss. 9, 10 & 19---Civil Procedure Code (V of 1908), S.12(2)---Suit for recovery of loan---Petition for leave to appear and defend suit---Execution proceedings---Challenging decree on plea of fraud and misrepresentation---Petition under S.12(2), C.P.C.--- Plaintiff/ National Development Finance Corporation extended finance facilities to defendant company and repayment of amount of the facilities was secured through personal guarantee of Directors of the company---Defendant-company having failed to repay amount, plaintiff-Corporation brought suit against defendants/ Directors of the company for recovery of amount---One of the Directors of the company filed petition for leave to defend suit, which application .was rejected and suit filed by plaintiff-Corporation was decreed---When execution proceedings of the decree started, legal heirs of. one of the Directors of the company filed petition under S.12(2), C.P.C. which petition having been dismissed, petitioners/legal heirs filed appeal against such dismissal---Said appeal was accepted, order dismissing their petition under S.12(2) C.P.C. was set aside and case was remanded for decision afresh to the extent of liability of predecessor-in-interest of petitioners/legal heirs---One of the sons of deceased appeared as witness and closed their case and no evidence was produced on behalf of decree-holder Corporation---Evidence of son of deceased had revealed that predecessor-in-­interest of petitioners who was one of the Directors of defendant-company had died about two years before passing of decree and that fact was very much in the knowledge of Director of the company who earlier had filed petition for leave to defend the suit of plaintiff-Corporation--Neither in application for leave to defend suit nor in any other document, Directors/defendants had disclosed the fact of death of father of petitioners/ legal heirs of deceased---No decree could be obtained against a dead person--Petit-toners/legal legal heirs of deceased, were not in the know of the proceedings---Petition filed by petitioners/legal heirs of deceased, was accepted and judgment and decree passed by Banking Court was set aside to the extent of deceased Director of the defendant-company.

Arshad Zaman Kiyani for Petitioners.

Alamzeb Khan for National Bank of Pakistan.

2007 C L D 1520

[Peshawar]

Before Ijaz-ul-Hassan Khan and Muhammad Raza Khan, JJ

Messrs SALEEM CIGARETTE INDUSTRIES (PVT.) LIMITED through Chief Executive---Petitioner

Versus

ASSISTANT COLLECTOR (CUSTOMS) and 4others---Respondents

Writ Petition No.883 of 2007, decided on 24th July, 2007.

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

----S.3---Customs Act (IV of 1969), S.202--- Recovery of government dues---Liability of subsidiary company' and indirect responsibility onassociated company' or associated undertaking---Scope.

The term "sister concern" finds no mention either in the Company Law or in the Customs Act. There is a concept of "subsidiary company" and the "holding company" and there can also be a connection of an "associated company" or "associated undertakings" between two corporate bodies or firms. In the former case, the "holding company", as per section 3 of the Companies Ordinance, 1984, directly or indirectly controls more than 50% of the voting power of a "subsidiary company", may be held liable for the liabilities against the "subsidiary company". Such an indirect responsibility cannot be fixed on an "associated company" or "associated undertakings" for the outstanding liability of one of them.

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

----S.3---Customs Act (IV of 1969), Ss.202 & 193---Constitution of Pakistan (1973), Arts.23 & 199---Constitutional petition---Recovery of government dues---Petitioner-Company was directed by Customs Authorities, not to remove any goods from his business premises till such time the amount of taxes recoverable from another company was paid in full and simultaneously a direction was issued to the petitioner-Company "not to sell, mortgage, lease or otherwise deal with all movable and immovable property belonging to it directly or indirectly except with the prior permission of the Assistant Collector (Customs)"---Contentions of the petitioner-company were that it was a corporate body and had got no concern. with the defaulter company; that there was no outstanding liability of the Customs Department against it and petitioner-Company being neither a 'holding company' of the defaulter-company nor the petitioner being a Director or guarantor of the defaulter-Company, neither the notice could be served nor an embargo could be unposed on the business transactions of the petitioner-company---Validity---Both the Corporate bodies did not fit in even as "associate companies" or "associate undertakings.", merely to justify the term `sister concerns' as alleged .by the department---Demand of the liability of another corporate body from the petitioner-company, in circumstances was prima facie illegal and without jurisdiction---Issuance of impugned demand notice in the name of the petitioner-company was gross misuse of authority and a demonstration of an authority not vested in the department which was strongly deprecated by the High Court---Impugned notice could not he held to have been issued under the Customs Act, 1969, and therefore, same could not have been challenged in appeal under S.193 Customs Act, 1969 and the only remedy available to the aggrieved person was to challenge the said notice. in a constitutional petition---Constitutional petition was allowed, the impugned notice was set aside and any action taken thereunder stood reversed---High Court directed that the copy of the present judgment be forwarded to the Central Board of Revenue for taking appropriate action against the person responsible for such illegal, unjust, arbitrary and illogical demand notice along with a restraint order---Principles.

1997 SCMR 169; 2001 YLR 2696 and 1999 SCMR 1881 ref.

Under the Constitution, every person, or for that matter every juristic person, was entitled to own the property and business (subject to the legal restrictions) and such an owner can use, sell, transfer or otherwise transact in such property and business. Before placing a particular person under restraint, the functionaries of the State are required to establish not only the scope of responsibility of such person vis-a-vis the defaulter but they are also duty bound to ensure that such a person or juristic person cannot be put under an unconditional complete restraint. Issuing a notice on the personal beliefs, without such verification, shall amount to the misuse of authority which shall be amenable to the constitutional jurisdiction of this Court.

A bare perusal of section 202, Customs Act, 1969 would show that the demand notice has to be served on the person who was liable to pay such amount either as a principal or as an agent or who may be liable under a guarantee or any other instrument. By thorough scanning of the entire record, one could not trace the responsibility of the petitioner with regard to the outstanding amount payable by defaulter-Company Admittedly, there was no amount directly outstanding against the petitioner in this regard. Defaulter-company was exclusively liable for the said amount, subject to the adjudication by the appropriate forum. The petitioner-company was neither an agent of the defaulter-company nor a guarantor for the payment of such liability. There was no instrument whatsoever to hold the petitioner-company liable in this behalf. Therefore, the demand of the liability of another corporate body from the petitioner-company was prima facie illegal and without jurisdiction

The petitioner-company being a corporate body, could be directly a shareholder of defaulter-Company or it could regulate the affairs of said company through a nominated/representative Director but there was no proof that any shares of the defaulter-Company were .ever purchased by the petitioner-Company or that. petitioner-Company lead ever been on the panel of Directors of said company. Had it been so, the department could be, remotely justified in issuing the impugned demand notice. However, the department had not been able to prove that it had made any effort to verify the said status of the petitioner-company with regard to defaulter-company.

The extract from Form No.29 and the other documents of both the petitioner and the defaulter-company show that the petitioner-company, was being managed by the Directors and the Chief Executive who had a nexus with the Directors of the defaulter-company. At the most, two of the share-holders of the petitioner-company were the share-holders in the company of defaulter-company. Even these facts were provided by the petitioner, which could not be rebutted by the department the voting power of each of such share-holders is less than 10% of the defaulter-company. Therefore, both the corporate bodies do not fit in even as "Associate Companies" or "Associate Under-takings" merely to justify the term "sister concern".

The responsibility of a shareholder, in a company limited by shares, is restricted to the extent of the unpaid amount of the share capital purchased by him. He can be called upon to pay the unpaid amount of the share capital. However, if the entire share capital is paid up by a shareholder, he is entitled to the benefits attached with the number of shares purchased by him and his liability stall be limited to the extent of his investment in the share capital.

If the company i.e. defaulter-company suffered a loss, it would be proportionately shared by each of the shareholders, including the said two shareholders. Thus, the maximum loss of the said individual shareholder shall be to the extent of the amount invested by him in the share capital by purchasing a particular number of shares. But he could not be held liable for a single penny beyond the amount of the said shares. Although the point of responsibility of such shareholder was not a point in issue in the present case but the position was being high-lighted to stress that the maximum liability which could be imposed on the said two persons, being individual shareholders of the defaulting company, could not exceed the value of their shares. In such a situation, the demand of the entire outstanding liability from the petitioner-company vas net only illegal but issuance of the impugned demand notice in the name of the petitioner-company was the gross misuse of authority and a demonstration of an authority not vested in the department.

There is no doubt that the officials of the Customs department were the earning hands of the Government and, therefore, extraordinary latitude was extended to them by the Government to facilitate the revenue generation but in pursuit of such an endeavour, the exercise of authority to the extent of illegality shall be counter-productive to the very concept of civilized society. The placement of embargo and restraint, as depicted through the impugned order, unfortunately displayed the unbridled exercise of authority over the citizens by those who were on the other side of the table. Such a barbarious action could not be conceived even in the most uncivilized societies. Corporate bodies are regulated by well recognized principles throughout the world. The Corporate bodies have independent juristic personalities governed by their Directors, who are trustees of the capital of the share-holders. They cannot be held liable for the liabilities of the share-holders and vice versa. In such a situation, it will be illogical to presume that the corporate body, being the independent juristic person, may be held responsible for the liabilities of another corporate body without establishing a connection between the two. The petitioner did not control the defaulter-company nor was guarantor thereof. There was no undertaking or instrument to make the petitioner responsible for liabilities of the defaulter-Company.

Under section 193 of the Customs Act, an aggrieved person could file an appeal to the Collector (Appeals) within thirty days of such decision or order. This section has been referred to in the written statement of the Customs department without realizing that such remedy has been expressly barred with regard to the notice under section 202. Since the impugned notice purported to have been issued under the said section, therefore, such a notice could not be challenged under the' said provision in appeal. However the stress of section 193 of the Customs Act .relates to "any decision or order passed under this Act". The impugned notice could not be issued either under the Customs Act or under any other legal instrument of a civilized society, therefore, the impugned notice could not be held to be an order under "the Act". Since the impugned notice was entirely illogical and unreasonable, therefore, it could not be challenged in appeal under the said section and the only remedy available to the aggrieved person was to challenge the absurd notice in a constitutional petition. Similarly, the concept of appeals and internal redressal mechanism through an Appellate Tribunal or through the Board etc. shall only relate to the grievances of an action legally taken by an authority of the Federal Government under the statutory provisions. The objections with regard to the assessment, legality of the demand, propriety of an assessment etc. could be challenged by a person through the fora created within the Department itself but if a third person having no relationship or responsibility with the defaulter was required to pay the liability of the defaulter, such an action could not: be challenged in the internal redressal system. Such an illegal and arbitrary order had to be taken to the Court where the fundamental rights of a citizen were watched and the citizens were protected from the atrocities of irresponsible administrative agency.

Constitutional petition was allowed, the impugned notice was set aside and any action taken thereunder stood reversed. Copy of this judgment was directed to be forwarded to the Federal/Central Board of Revenue nor taking appropriate action against the person responsible for such illegal, unjust, arbitrary and illogical demand notice coupled with a restraint order.

Yahya Khan Afridi for Petitioner.

Hashim Raza for Respondents.

Date of hearing: 26th June, 2007.

2007 C L D 1377

[Quetta]

Before Amanullah Khan, C J

TRANSWAYS ENTERPRISES S.A.---Plaintiff

Versus

M.V. ALDONA through Master/Chief Officer and others---Defendants

Admiralty Suit No.01 of 2006, decided on 5th January, 2007.

Admiralty jurisdiction of High Courts Ordinance (XLII of 1980)--

----Ss.3, 4(4) & 6---Admiralty suit---Crew and the master of the vessel had a maritime lien over the vessel which right could be enforced against the res, the vessel, in admiralty jurisdiction---Such was a right in rem and could be enforced by action in the rem against the res---In the present case plaintiff being neither a. member of the crew nor Master of the ship, said principle would not apply to the case---If a suit under S.4(4) of Admiralty Jurisdiction of High Courts Ordinance, 1980, was brought for an action in personam, plaintiff had to show that when cause of 'action in personam accrued the person liable, at the time was the owner of the res i.e., the vessel---Suit having been found not entertainable in the hierarchy of admiralty jurisdiction, for the enforcement of foreign .judgments passed by the ordinary courts and further the ship being no more a "vessel" it was not necessary to go into the question of limitation.

Hong Leong Finance Limited v. MV Asian Queen through Nazir High Court PLD 1991 SC 120; Himayat Ahmad v. Khalid Khan 1991 MLD 148; Atlantic Steamer's Supply Co. v. M.S. Titisee PLD 1993 SC 88; Oriental Shipping Company Ltd. v. M.V. Monto-Crisdo 1984 CLC 2265 and AIR 1999 Bombay 193 ref.

Agha Faqir Muhammad for Plaintiff.

Muhammad Naeem Ishrat Alvi and H. Shakil Ahmed for Defendants.

Dare of hearing: 28th November, 2006.

JUDMENT

AMANULLAH KHAN, C.J.--- By invoking the admiralty jurisdiction the Court, instant suit has been filed by plaintiff, for recovery of USS: 9,759,415,54 and enforcement of foreign judgment 2 to 5 in personam.

Succinctly the fact as disclosed in the plaint are that, plaintiff is a Liberian engaged in various activities in different fields of international trade and commerce, including shipping and maritime industry in general. For carrying out the obligations of transportation, the defendant No.1. Vessel was being used for carrying the goods from one port to anther on the basis of which, she was earning the freight. According to the plaintiff the defendant No.2 is the current owner of the Vessel whereas defendant No.3 is the former owner at the relevant time when cause of action accrued in the year, 2003. The defendant No.4 is the current Manager of the Vessel while the defendant No.5 was the former Manger. It was averred that, in the year, 1993, the plaintiff was approached that, in company i.e. Navigational Satellites Chartering Limited (in short "NSC") fir representing the plaintiff in the maritime activities. In lieu of request the NSC was appointed Agent for carrying out maritime operations. During association with NSC the two long term partners of plaintiffs namely Empressa ?Cubana Importadfora? de products Quimices ("Quininport") and Empressa Cubana de Alinentos ('Alimimport') to cooperate with defendant No.5 a Cuban state company in? the name and style of? 'Naviera Poseidntos'. It the case of plaintiff that since 1993 and until termination of relationship between the plaintiff and NSC in 2003, the plaintiff undertook various project of maritime when NSC requested him to co-operate with defendant No.5 which resulted in giving various project to defendant No.5 but during course of transportation it transpired that due to various acts of omission of defendant No.5 the plaintiff encountered significant problems and losses secondly its reputation as a charterer was seriously damaged ensuing to extensive legal costs, incurred by plaintiff, which have not been recovered till to date and due to negligent act of defendant No.5 the excellent relation of the plaintiff with the Cuban State Companies was destroyed, leading to serious financial losses and also forced it to incur huge expenses. It has been further averred in the plaint, that in the year, 2000, NSC proposed to the plaintiff regarding transportation of two cargoes from Tunisia to Cuba i.e. the first involved the charter being Quimmport for 6000 tons of cargo and second involved the charterer being Alimimport for 4000 tons of cargo and for the said voyages, the defendant No.5, was meant to provide a vessel i.e. "M.V. Shannon" to carry the said two cargoes. However, the plaintiff performed his part of obligation despite encountering the threats of defendant No.5, for reducing the rates, and at the end of voyage. The defendant No.5, owed an amount of US$ 114,835.70 and despite several promises for settlement, the defendant No.5 never paid the same. Thereafter the defendant No.5, after the initiation of NSC entered into an agreement with the plaintiff, which was finally. concluded, wherein it was agreed that the defendant No.5, would provide the Vessel controlled by it to NSG on a voyage basis according to fixtures set by the plaintiff, and the outstanding amount would be paid in instalments of US$ 50,000 per voyage until the debt is fully paid. In lieu of this Agreement, the Vessel M.V. Lilac Island (now renamed as M.V. Aldona) was chartered pursuant to charterparty dated. 7-2-2002. It is the case of plaintiff that, right from the beginning of this charterparty, the defendant No. 1 was not in a position to pay disbursements (port dues, agency fees etc.) in Tunisia being the last port of discharge, nor was it in a position to pay for spare parts, bunkers and supplies needed to enable the Vessel's performance and seaworthiness. These problems continued when charterparty dated 10-5-2002, was arrived, on the basis of which second Vessel M.V. Lotus was chartered. The Vessel M.V. Lilac Island proceeded for the agreed voyages and arrived at the post of Conakry, however, the said vessel was arrested with cargo on board by Adecon Shipping Inc. (is short "Adecon.") of Ontario Canada, on the basis of judgment dated 10-12-2003, as the vessel has to deliver one more cargo, pursuant to new agreement, which commenced while the Vessel was discharging at the port of Conakry. The plaintiff in the meanwhile approached the Cuban Ministry of Transport, but no reply was received from Cuba and during this time, the plaintiff learnt that the Court of Conakry had ordered auction of Vessel M.V. Lilac Island in relating to the claim of Adecon. Thus realizing that the Res i.e. Vessel was incapable of performing its contractual obligation and having no option but to secure its claim, the plaintiff initiated legal action in Guinea originally against Panamaianian companies being owners of two Vessel i.e. Battersea Maritime Company (defendant No.3) and Wadena Shipping Co. as well as defendant No.5).

Thus the Court of Conakry after carefully examining the case, issued Orders Nos. 15 of 26-3-2003 and 17 of 2-4-2003, in favour of plaintiff, awarding total sum of US$:2,446,976.56 which were served upon all concerned parties. Thereafter realizing that the defendant No.5 was not serious in paying the amount, the plaintiff by abundant caution presented a further petition in the First Court of Conakry, with a claim against the other relevant companies. In the first instance the Court of Conakry confirmed the award of US$ 2,446,976.56 against the relevant Companies jointly and severally. The appeals were filed in the matter against the order dated 14-4-2003, which were dismissed in term of Judgment No.56 of 26-6-2003. In the meanwhile the defendant No.3, fraudulently succeeded in releasing the Vessel by taking the document of M.V. Lilac Island and allowed the vessel to sail from Conakry. In such circumstances, the plaintiff filed another petition before the First Court of Conakry, which resulted in issuance of Orders Nos.80 of 4-6-2003 and 123 of 5-6-2003, thereby ordering the defendant No.5 and Adecon to bring back the Vessel failing which they would be liable to a penalty of 5,000,000 Guinea Frances per day until the Vessel returned. Due to pressure of the Court orders, the Vessel returned to Conakry port.

It is the case of plaintiff that despite various orders passed by the Court of Conakry, the claim of plaintiff was not satisfied .and fictitiously the name of M.V. Lilac Island was altered to M.V. Aldona and was somehow brought and beached at Gadarri Port. With these averments and for the satisfaction of total claim of US$: 9,759,415.54 instant suit has been brought under the Admiralty Jurisdiction of this Court, bestowed by Admiralty Jurisdiction of High Courts Ordinance 1980 (hereinafter referred as "the Ordinance of 1980"). The prayer clause of the suit reads as under:--

"The plaintiff therefore, prays that this Honourable Court may be pleased:---

(1) to pass judgment and decree against the defendants Nos. 1, 3 and 3 jointly and severally for US$ 9,759,425.54;

(2) to grant mark-up/interest at the rate of 30 per cent per annum from the date of the Suit till realization;

(3) to issue a Warrant of Arrest and/or orders for attachment of the defendant No.1 which is presently berthed at Gadani for the purpose of scrapping/ breaking, which exercise may be restrained till such time as the defendants furnish security either through cash payment or through a bank draft or guarantee in US Dollars of an International Bank doing the business of banking in Pakistan to the extent of the amount claimed in the suit along with amount of costs/mark-up and if the security is not furnished, the defendant No.1, may be ordered to be sold and the claimed amount paid out of the sale proceeds and the balance if any, to be paid by the defendants Nos.3 and 5 jointly and severally;

(4) to grant costs of the suit; and

(5) to grant such further and other reliefs or any other relief which this Honourable Court may deem fit, necessary and proper in the circumstances of the case."

On 1-11-2006, the suit came-up for hearing when on an application (being C.M.A. No.945 of 2006), filed by plaintiff showing apprehension that the Vessel might be scrapped and the judgments of the Conakry Court will be frustrated; status quo order was passed directing the defendants not to scrap the Vessel.

After passing of the order; Mideast Shipping and Trading Ltd. who is the Vendor of the ship, requested for impleading them as party and filed reply to C.M.A. No.945 of 2006. They were allowed to plead their case vide order dated 14-11-2006. In response to the notices, the defendant No.1, also filed counter affidavit/reply to application for arrest of Vessel.

Both defendant No. 1, and the Vendor contested the suit on legal and- factual plane.

I have heard Mr. Agha Faqir Muhammad, learned counsel for the plaintiff, Mr. Muhammad Naeem, learned counsel for Intervenor/Vendor and Mr. Ishrat Alvi, learned counsel for defendant No. 1.

Learned counsel Mr. Muhammad Naeem, argued that plaintiff in the aid of admiralty jurisdiction of this Court, is seeking implementation of Foreign. Judgments, passed by the Courts, acting in the hierarchy of civil and commercial jurisdiction, against the defendant No.1, in rem and against defendants Nos.2 to 5 in personam. Learned counsel while elaborating his contention argued that, suit in itself does not disclose that it is for enforcement of Foreign Judgments and the prayer clause indicates that claim of plaintiff is solely for the recovery of US$:9,759,425.54, which proves that the suit is simpliciter for recovery of money and if the plaintiff is seeking relief against the Vessel in rem, then he has no right to seek any relief against defendants 2 to 5 in personam. Learned counsel strenuously reiterated that enforcement of judgments which is being sought, in fact had not been passed by the Admiralty Court of Conakry and on the basis of judgments passed by a Court of Conakry functioning in the hierarchy of Civil and Commercial jurisdiction, the plaintiff is trying to bring his case within the admiralty jurisdiction of this Court, thus this Court had no jurisdiction to entertain thee suit. Learned counsel empathically argued that, this Court .under the Admiralty jurisdiction cannot enforce the judgments in personam as the Judgments in rem purported to be enforced is against the Res. i.e. Vessel and above all the ship is no more 'navigable', as it has not been 'berthed' but it has been 'beached' at Gaddani and- process of scrap has already started and now it cannot be said to be a `Vessel' in terms of the Ordinance of 1980.

Agha Faqir Muhammad, learned counsel in reply stated that, he only seeks relief against the Vessel in rem and does not press the relief against the defendants Nos.2 to 5 in personam.

Adverting to the argument of learned counsel that; prayer clause of suit does not disclose that, suit is for enforcement of Foreign Judgments; in this behalf, reference may be made to the prayer clause, reproduced hereinabove. It may be seen that plaintiff is not pressing relief claimed. in prayer clauses (1) and (2), and is only pressing prayer clause (3), wherein relief has been sought for issuance of Warrant of Arrest and attachment of the Vessel (defendant No. 1), but there is nothing to suggest that said relief is being sought, pursuant to enforcement of judgments passed by the Admiralty, Court of Conakry. In this behalf, reference may be made to para.32 of the plaint, which reads as follows:--

"That the suit is maintainable in rem against defendant No.1 and the plaintiff is entitled in law to arrest/attach the defendant No.1, under the Admiralty Jurisdiction of High Courts Ordinance, 1980 (" 1980 Ordinance") since; inter alia, the plaintiff has a 'charge' over the Vessel. That if the amount due is not paid then the defendant No.1, is to be sold and the outstanding amount is to be paid out of the same proceeds of defendant No.1 and this Honourable Court has jurisdiction in the matter as the Vessel is presently berthed within the jurisdiction of this Honourable Court."

The contention of Mr. Muhammad Naeem, learned counsel has substance that; plaintiff only wants to bring his case under the Admiralty jurisdiction of this Court, on the basis of judgments passed by the First Instance Court of Conakry and the Appeal Court of Conakry, under the hierarchy of civil and commercial jurisdiction. I have minutely gone through the judgments passed by the first Instance Court of Conakry and the appeal Court of Conakry. A bare perusal of the same transpires that, said Courts have not passed judgment as Admiralty Courts, but it appears that the judgments were passed by ordinary civil Courts, against the Companies and not the Vessel by taking into account the provisions of United Act of 10th April, 1998 and various articles of Financial and Administrative Civil Procedure Code. In such circumstances, the case of plaintiff thus, would not fall within the admiralty jurisdiction of this Court, as laid down in section 3 of the Ordinance of 1980, which reads as under:--

1. (1) The Sindh High Court and the High Court of Balochistan shall nave and exercise, within their respective territorial jurisdiction, Admiralty jurisdiction as is in this Ordinance provided and the Lahore High Court and the Peshawar High Court shall, within their respective territorial jurisdiction, have and exercise the said jurisdiction in cases in which any question or claim relating to aircraft is to be determined.

(2) The Admiralty jurisdiction of the High Court shall be as follows, that is to say, jurisdiction to hear and determine any of the following causes; questions or claims:--

(a) any claim to the possession or ownership of a ship or to the ownership of any share therein or for recovery of documents of title and ownership of a ship, including Registration certificate, log book and such certificates as may be necessary for the operation or navigation of the ship;

(b) any question arising between the co-owners of a ship as to possession, employment or earnings of that ship;

(c) any claim in respect of a mortgage of or charge on a ship on any share therein;

(d) any claim for damage done by a ship;

(e) any claim for damage receive by a ship;

(f) any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or of the wrongful act, neglect or default of the owners; charters or persons in possession or control of a ship or of the master or crew thereof or of any other person for whose wrongful acts, neglects or defaults, the owners, charterers or persons in possession or control of a ship are responsible being an act, neglect or default in the navigation or management of the ship, in the loading, carriage or discharge or goods on, in or from the ship or in the embarkation, carriage or disembarkation of persons on, in or from the ship;

(g) any claim for loss of or damage to goods carried in a ship.

(h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or shire of a ship;

(i) any action or claim in the nature of salvage of life from a ship or cargo or any property on board a ship or the ship itself or its apparel, whether services rendered on the high sea or within territorial waters or internal waters or in a port, including airy claim arising by virtue of the application by or under section 12 of the Civil Aviation Ordinance, 1960, of the law relating to salvage to air?craft and their apparel and cargo;

(j) any claim in the nature of towage in respect of a ship or an aircraft whether. services were rendered on the high sea or within territorial waters or internal waters or in port;

(k) any claim in the nature of pilotage in respect of a ship or an aircraft;

(l) any claim in respect of necessaries supplied to a ship;

(m) any claim in respect of the construction, repair or equipment of a ship or dock charges or dues;

(n) any claim by a master or members of the crew of a ship for wages and any claim by or in respect of a master or members of the crew of a ship for any money or property which, under any of the provisions of Merchant Shipping Acts or the Merchant Shipping Act, 1923, is recoverable as wages or in the Court and in the manner in which wages may be recovered;

(o) any claim by a master, shipper, charterer or agent in respect of disbursement made on account of a ship;

(p) any claim arising out of an act which is or is claimed to be a general average act;

?

(q) any claim arising out of bottomry or respondentia;

(r) any claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried, in a ship as a Naval Prize or in violation of customary law of the sea or otherwise or for the restoration of a ship or any such goods after seizure or for droits of Admiralty, together with any other jurisdiction for the grant of such reliefs as are provided, under the Merchant Shipping Acts or the Merchant Shipping Act, 1923, any other jurisdiction which was vested in the High Court as a Court of Admiralty immediately before the commencement of this Ordinance or is conferred by or under any other law and any other jurisdiction connected with ships or aircraft in respect of things done at sea which has by tradition or custom of the .sea been exercised by a Court of Admiralty apart from this section.

(3) The jurisdiction of the High Courts under clause (b) of subsection (2) includes power to settle any account outstanding and unsettled between the parties in relation to the ship, and to direct that the ship, or any share thereof, shall be sold,' and to make such other order as the Court thinks fit.

(4) The reference in clause (i) of subsection (2) to claims in the nature of salvage includes a reference to such claims for services rendered in saving life from a ship or an aircraft or in preserving cargo apparel or wreck as, under any law for the time being in force, are authorized to be made in connection with a ship or an aircraft.

(5) The preceding provisions of this section apply:--

(a) in relation to all ships or aircraft, whether Pakistani or not and whether registered or not and wherever the residence or domicile of their owners may be;

(b) in relation to all claims, wheresoever arising including in the case of cargo or wreck salvage, claims in respect of cargo or wreck found on land; and

(c) so far as they relate to mortgages and charges, to all mortgages or charges, whether registered or not -and whether legal or equitable, including mortgages and charge created under foreign law:

Provided that nothing in this subsection shall be construed as extending the cases in which money or property is recoverable under any provisions of the Merchant Shipping Act or the Merchant Shipping Act, 1923."

The plaintiff has utterly failed to show that the judgments were passed by Admiralty Courts, Reference may be made to the judgment of Probate Division "The City of Mecca (1879 C.275), wherein while setting aside the judgment/decree of Sir Phillimore of the Admiralty Court, Jessel, M.R. of Appellate Court held as under:--

"It appears to us clear that this judgment is a personal judgment in a personal action. Then it may be said what is .there to argue? The argument presented to us by the respondents is this-First of all it is alleged that the action in Portugal was an action. for enforcing a maritime lien; secondly, that whatever the terms of the judgment might be, it was a judgment for enforcing a maritime lien and a judgment in rem, and that being so, it was a judgment binding the vessel in the courts of every civilized country under the international law. But if find the simple answer is that it is not an action or proceeding to enforce a maritime lien---nothing of the kind appears on the proceedings. There is no suggestion from beginning to end that the ship is liable; there is no declaration that the ship is liable, and it does not appear on the proceedings that the ship was even within the jurisdiction at the time the action was commenced against the owners. An action for enforcing a maritime lien may no doubt be commenced without an actual arrest of ship, but there is no suggestion that they intended anything of the kind, and in fact, the law does not allow it. An action against a ship, as it is called, is not allowed by the law of Portugal. You may in England and in most countries proceed against the ship. The writ may be issued against the owner of such a ship, and the owner may never appear, and you your judgment against the ship without a single person being named from beginning to end. That is an action in rem, and it is perfectly well understood that the judgment is against the ship. In the present case the judgment does not affect the ship at all, unless the ship should afterwards come within the jurisdiction of the Portuguese Court, and then it can be made a proceeding by which you can after-wards arrest the ship and get it condemned.

In the same judgment, while concurring with the view, Mr. Baggallay, L.J., held as under:--

"For reasons that have been assigned by the Master of the Rolls, which it is unnecessary for me to repeat, it appears to me that there is no question but that the proceedings in the Tribunal of Commerce in Portugal were entirely personal proceedings-proceedings in personam. No doubt proceedings of a different character were commenced in the Civil Tribunal of Portugal--those proceedings preceded the judgment of the Tribunal of Commerce. In this first instance in the Civil Tribunal an embargo was obtained by the plaintiffs in the present action to arrest the ship, and the ship was only released by giving security. But those proceedings were made the subject of an appeal in the Supreme Court of Lisbon, and ultimately the decision of the Court of first instance was reversed, and on the two grounds to which reference has already been made, the one that it was not within the ordinary jurisdiction of the Tribunal of Commerce to grant an embargo, unless it were established that the ship was to blame, so far differing from proceedings in the English Court of Admiralty, in which, where the matter is in doubt, the ship may be arrested and security given if it is allowed to go, but in Portugal it is not the law while there is a doubt. That was one ground. The second ground for discharging the embargo, I must confess, appears to be one more difficult to understand. Whatever might be the effect of that particular reason which can be only well understood by an examination of the particular article of the Code to which reference has been made; one thing is clear, that there was proceedings that could have been taken in the Civil Tribunal in Lisbon, by which the arrest of the ship could be obtained, and this would be a proceeding in rem according to my view."

Thus on this plane the suit merits dismissal.

Agha Faqir Muhammad, learned Advocate, argued that Maritime lien being a right in rem would be enforceable in rem against the rem, the said lien being a charge on the res and travels with it even in the hands of a bona fide purchaser with notice.

Conversely Mr. Muhammad Naeem, Advocate strenuously argued that, aforesaid principle is not applicable to the instant case. The learned counsel contended that, under the Admiralty law the Crew Members and Master of the ship have a maritime lien over the res i.e. the vessel but in this case, undisputedly the, plaintiff is neither the owner of the vessel nor a Crew member. Besides at time, when the orders were passed, the owner did not own the vessel and the same was purchased later on free from any encumbrance.

It may be observed here that the Crew and the Master of the, Vessel have a maritime lien over the vessel which right can be enforced against the res the Vessel in admiralty jurisdiction. It is a right in rem and can be enforced by action in rem against the res. In this regard reference may be made to A PLD 1991 SC 120. "Hong Leong Fiunance Limited v. MV Asian Queen through Nazir High Court". In the case in hand admittedly the plaintiff is neither a Member of the Crew nor the Master of the ship, thus the aforestated principle does not apply to his case.

Coming to the argument of Mr. Muhammad Naeem learned counsel for the vendor that when the initial cause of action accrued to the plaintiff the defendant No.1 was owned by the present Vendor.

It may be mentioned here that if a suit under section 4(4) of the Ordinance is brought for an action in personam, the plaintiff has to show that; when cause of action in personam accrued, person liable, at the time was the owner of the res i.e. the vessel. In the case in hand, admittedly when initially the cause of action accrued to the plaintiff, the Vessel was not owned by the present owner i.e. Commercial Metals. The ship was purchased from its previous owner i.e. the Vendor Messrs Mid East and Trading Limited of Navis. It may be mentioned here that the ship admittedly was registered in Panama and though the judgment of first Court Conakry was passed in the year, 2003, but there is nothing on record to suggest that the Registration Office at Panama was informed about the Attachment and judgment against the Vessel. Moreover, the Vessel was purchased through a valid agreement and a non-encumbrance certificate was also issued. Thus it can be safely concluded that, Purchaser had no knowledge about the proceedings against the res. As such, the judgment could not be enforced against the purchaser. Reference may be made to Himayat Ahmad v. Khalid Khan. 1991 MLD 148 and (Atlantic Steamer's Supply Co. v. m.s. Titisee) PLD 1993 SC 88. In the former, it has been observed as under.--

"In admiralty, suit in rem is competent for recovery of claim for necessities and other disbursement made by 'the agents only so long as ownership of the vessel has not been changed. Since the ownership of this vessel had changed before the filing of the suit, it became property of new purchaser i.e. defendant No.3, free from all encumbrances and proceedings in rem for recovery of the dues, if any, against the previous owners were no longer competent, except where there was a maritime lien available which was not the case in this suit. Plaintiff's counsel has himself admitted that no claim for supply of necessaries which is not a Maritime lien can be enforced against a vessel if its ownership changes before the filing of the suit. Reliance was placed by the defendant's counsel on the case of Oriental Shipping Company Ltd. v. M.V. Monto-Crisdo 1984 CLC 2265."

Whereas in the later case-law it has been held as under: --

"It may observed that section 4 deals with the mode of exercise of Admiralty jurisdiction. Sub-section (1) thereof provides that subject to the provisions of section 5, the Admiralty jurisdiction of the High Court may in all cases be invoked by an action in personam, whereas subsection (2) of it lays down that the Admiralty jurisdiction of the High Court may in the cases mentioned in clauses (a) to (d) (i) and (R) of subsection (2) of section 3 be invoked in rem against the ship or property in question. It may further be stated that subsection (3) of above section 4 provides that, in any case, in which there is maritime lien or other charge on any ship, aircraft or other property of the amount claimed, the Admiralty jurisdiction of the High. Court can be pressed into service by action in rem against the ship, aircraft or property.

"It may also be noted that subsection (4) of section 4 lays down that in case of the claim covered by clauses (e) to (h) and (j) to (q) of subsection (2) of section 3 being a claim arising in connection with a ship where the person who would be liable on the claim in action in personam was, when the cause of action arose, the owner of charterer of, or in possession or control of the Admiralty jurisdiction of the High Court, may, where the claim gives rise to a maritime lien on the ship or not, be involved by an action in rem against:--

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

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

Coming to the next contention of learned counsel that the ship has not been berthed, as such, being not 'navigable' cannot be termed a Vessel'. To determine, the said point, it would be advantageous to refer to the definition of 'berth', which means, the place allocated to the Trading Vessel which comes and leaves for loading and unloading goods. In the case in hand, the Vessel has been beached at Gaddani and it was argued at length that Admiralty Court can only issue arrest warrants of Vessel, if it is navigable. For reference, the meaning of wordsnavigable' `ship' and 'Vessel' as defined in Blacks Law Dictionary, are reproduced herein-below:-

"Navigable Capable of being navigated.---That may be navigated or passed over in ships or vessels. Natchez v. City of Bowling Green 264 Ky 584, 95 S.W. 2d 355, 259. But the term is often particularly at common law, understood in a more restricted sense viz., subject to the ebb and flow of the tide. Lusher v. Reynolds, 153 Or. 625, 56, P.2d 1158, 1162.

Ship. A vessel of any kind employed in navigation. In a more restrained and more technical sense, a three-masted vessel navigated with sails. U.S. v. Kelly, 4 Wash. C.C. 528, F. Cas No.15,516."

Vessel. A ship, brig, sloop, or others craft .used in navigation. The word in its broadest sense is more comprehensive than `ship'.

Any structure which is made to float upon the water, for purpose of commerce or war, whether impelled by wind, steam, or oards, Chaffe v. Ludeling 27 La. Ann. 607. Any structure, especially a hollow one, made to float upon the water for purpose of navigation; a craft or navigation of the water, often, specifically, one larger than a common raw boat; as, a war vessel; a passenger vessel. City of Tampa v. Tampa Shipbuilding and Engineering Co. 136 Fla. 216, 186 So. 411, 412; Massman Const. Co. V. Bassett, D.C. Mo., 30 F. Supp. 813, 815."

Learned counsel argued that the ship is no more `Vessel' as it has been beached at Gaddani for scrap. Reference was made to the report of Bailiff, who served the notices of the Court, wherein it was stated on solemn affirmation that, pursuant to the order dated 4-11-2006, notices were taken in order to get them served upon the representative of defendant No.1, Mr. Saeed Mian and ship on Plot No.45 Gaddani was beached and there ship M.V. Aldona was shown to him and it was found that already 25% of the ship was dismantled and scrapped. Thus taking into consideration the above definitions, in the light of this report, the ship could not be said to be a 'Vessel', as it is no more navigable. In this regard reference may be made to AIR 1999 Bombay 193, wherein following observations have been made:--???????

"11. From all these discussions regarding res and action in rem it is clear that when the plaintiff files for an action in rem and arrest of vessel, he most prima facie prove that res was in existence on the date of its arrest. If the defence denies the existence of res and contends that res was demolished, the burden is still on the plaintiff to prove that on the date of arrest the res was in fact in existence and not demolished to such an extend so as to get converted into goods.

Mr. Muhammad Naeem learned counsel also raised the question of limitation, by contending that, since the judgments "were passed in the year, 2003 therefore, in view of section 6 of the Ordinance of 1980, the- plaintiff was to file suit within a period of two years, whereas admittedly the same has beery filed after a period of two years.

Since the suit has been found not entertainable in the hierarchy of admiralty jurisdiction, for the enforcement of foreign judgments passed by the ordinary Courts and further the ship is no more 'vessel' therefore, it is not necessary to go into the question of limitation.

2007 C L D 57

[Security and Exchange Commission of Pakistan]

Before Ashfaq Ahmed Khan, Director (Enforcement)

GARDEZI AND COMPANY, CHARTERED ACCOUNTANTS: In the matter of

Show-Cause Notice No. EMD/233/75/2004-179-180, July 7, 2005, decided on 22nd September, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 255, 260 & 476---Powers and duties of auditors--Imposition of penalty for non-compliance with provisions of law by auditors---Auditors, audited annual accounts of the company for relevant years and made their report on accounts of the company---Enforcement Department of the Securities and Exchange Commission conducted examination of the company's accounts for relevant years and found certain discrepancies---Auditors, prima facie, did not comply with the requirements of law while issuing audit report for relevant years---Auditors had not signed the audit report in conformity with the requirements of S.255 of Companies Ordinance, 1984 and had committed a wilful default in terms of S.260 of Companies Ordinance, 1984 and had made themselves liable to punishment under subsection (1) of S.260 of Companies Ordinance, 1984--Auditors had failed to perform their professional duties with reasonable degree of care and skill and had committed a breach of fiduciary duty cast upon them by share-holders---Such failure in exercising due professional skill with diligence also amounted to a breach of trust which the society in general and statute in particular had reposed in .them---Careless and casual attitude and not exercising due diligence by the auditors while discharging their responsibilities and issuing their reports, could spell disaster for such trust and confidence---Auditors being the ultimate watchdog of share-holders' interest they were required to give a report on the accounts and books of accounts after conducting the audit in accordance with procedures and requirements of Companies Ordinance, 1984 and International Accounting and Auditing Standards---Share-holders were the ultimate entity to whom the auditors were responsible and they must keep that fact in mind while auditing books of accounts and reporting thereon---Auditors, in the present case having not performed their statutory duties with due care and in accordance with legal requirements, were liable to be imposed fine---Fine of Rs.100, 000 was imposed on auditors under subsection (1) of S.260 of Companies Ordinance, 1984.

Sheikh M. Tanvir and Syed Aftab Hameed Partners Gardezi and Company.

Hanif Razzaq Authorized Representative of Hyder Ali Bhimji, Partner Gardezi and Company.

Walid Khalid, Advocate Cornelius, Lane and Mufti, Legal Advisor.

2007 C L D 93

[Security and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

Messrs PHARMAGEN LIMITED: In the matter of

Show-Cause Notice No.EMD/233/656/2004-11348-11354, dated June 7, 2006, decided on 29th September, 2006.

Companies Ordinance (XLVII of 1984)---

----Ss. 227, 229 & 476---Failure to make payment to Provident Fund Trust-Imposition of penalty---Amount payable to Provident Fund Trust by the Company, was withheld and Company had not made payment to said Fund as required under S.227 of Companies Ordinance, 1984---Company admitted default and submitted that the default was due to financial and liquidity problems in the relevant year---Representative of the Company had requested to condone unwilful and unintentional contravention of related provisions of Companies Ordinance, 1984 and had sought the approval of the Commission for a repayment schedule---Argument 'advanced on behalf of Directors of the Company that moneys in question were not paid to the Fund due to liquidity constraints, was not tenable because it was obligatory for the company to pay the employees contribution as well its own contribution within fifteen days from the date of collection thereof---Underlying purpose of S.227(2) & (3) of Companies Ordinance, 1984 was to protect the funds of the employees by obligating the company/trustees to deposit contributions in the safe/secured modes of investment/ deposits permitted under S.227(2) of Companies Ordinance, 1984---Directors having breached the mandatory requirements of S.227 of Companies Ordinance, 1984 as they had failed to ensure timely payment to the Provident Fund, action against them was necessary under S.229 of Companies Ordinance, 1984, whereunder punishment with a fine of Rs. Five thousand Rupees could be imposed and they would also be liable to pay loss suffered by the employees on account of such contravention--Considering that default was admitted by the Company which had also assured that the balance amount would be paid, taking a lenient view, instead of imposing fine on Chief Executive and Directors of the Company, only fine of Rs.5,000 was imposed on Chief Executive of the Company and all Directors were reprimanded to remain careful in future in compliance with mandatory statutory provisions.

Parvez Sufi, Chief Executive on behalf of all the Directors of Messrs Pharmagen Limited present.

2007 C L D 103

[Security and Exchange Commission of Pakistan]

Before Ms. Jaweria Ather, Director (NBFCD)

SAFEWAY MUTUAL FUND LIMITED (SMFL): In the matter of

Show-Cause Notice No.NBFC/MF-D/248/2006, dated April 25, 2006, decided on 29th September, 2006.

Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003---

----Rr. 5(2)(e), 7(2)(g), 38, 49(3)(4) & 63-Companies Ordinance (XLVII of 1984), S.282-B---Making excessive investment--Imposition of fine---Investment Company which was registered under Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 was obliged to adhere to the investment limits specified in the Rules, but company had invested in various companies more than twenty five per cent of its net assets in contravention of R.49(4) of Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003---Directors of company, who had admitted making excessive investment, had failed to provide any justifiable explanation for the same---Company, in circumstances had contravened R.49(3)(4) of Non-Banking Finance (Establishment and Regulation) Rules, 2003---Said Rules being not applicable at the time of investment by a closed end fund, Directors, who were members of the Board at the time the violation was committed, were answerable for any such default and remained responsible for their acts during the period of their appointment as Directors and show-cause notice issued to them was valid and appropriate---All those companies in which company had been holding investments were one Group of Companies, which had shown that company had been holding strategic investments in said Group of Companies as a major share-holders in the interest of the Group and not in the interest of general public whose funds had been pooled into the Company---All the Directors were employees/ Directors of different Group of said Companies---Directors of Company in circumstances had committed wilful default under R.49(3) & (4) of Non-Banking Finance (Establishment and Regulation) Rules, 2003---Fine of Rs.200,000 on each Director was imposed, in circumstances.

Faisal Islam, Legal Counsel representing Directors and CEO of Safeway Mutual Fund Limited present.

2007 C L D 121

[Security and Exchange Commission of Pakistan]

Before Rashid I. Malik and Salman Ali Shaikh, Commissioners

MUHAMMAD ZUBAIR---Appellant

Versus

KARACHI STOCK EXCHANGE(G) LIMITED and 3 others---Respondents

Appeal No.41 of 2006, decided on 2nd November, 2006.

Security and Exchange Commission of Pakistan Act (XLII of 1997)---

----S. 33--Appeal to Appellate Bench of the Commission---Appellant in his complaint, filed with Securities and Exchange Commission, had alleged that account statement received by him from Stock Exchange had been forged, as many shares belonging to him were missing from his C.D.C. account--Appellant had alleged during hearing before the. Director (LC.W.), that certain shares were sold by Stock Exchange without his consent for which he did not get any sale proceeds or benefit at all---Director (LC.W.) came to the conclusion that all transactions were duly executed by Stock Exchange and movement of the disputed shares, was duly reflected in the statements provided by the broker---Complaint of appellant, having been rejected, he had preferred appeal against impugned order passed by the Director (LC.W.)---Stock Exchange as well as appellant during hearing of appeal, stated that they were willing to have the dispute properly re-investigated---Commission held that matter could be re-investigated to remove any doubt and directed that investigator should complete investigation and submit report to the Securities Market Division of the Commission within specified period and the Security Market Division would take appropriate and necessary action on the report within 30 days from submission of the report.

Appellant for himself.

Abdul Jabbar Lodhi for Respondents Nos.1 and 2.

Munir Ahmed Khanani for himself.

Murtaza Abbas, Deputy Director SECP for Respondent No.4.

2007 C L D 277

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik, Commissioner Company Law (SMD)

In the matter of: ACQUISITIONS OF SHARES OF UNITED SUGAR MILLS LIMITED and 12 others

Show-Cause Notice No.CLD/EMD/FIU/17/2006/89-96, dated July 14, 2006, decided on 13th November, 2006.

(a) Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----Preamble, Ss.2(1)(a), 4, 25 & 26--Acquiring of shares in contravention of mandatory provisions of law---Imposition of fine---Under provisions of S.4 of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 any person who acquired more than 10 per cent of shares in a listed-company must make adequate disclosure not only to the company whose shares such person had acquired, but also to the stock exchange on which securities were traded---Facts available on record had confirmed said disclosures as required under law, were not made---Acquirers in the present case had contravened said mandatory provisions of law which had made them liable to be penalized for such breach---Target company and/or its Directors in concert with acquirers in the matter of acquisition of shares, had violated mandatory provisions of law as Directors and company in fact co-operated with acquirer for the purpose of acquiring 22.44% voting shares and with said cooperation parties sought to make colossal gains---Said cooperation was for illegal purposes---Instead of ensuring due transparency and making due disclosures, which was a cornerstone for today's capital gain, Directors of a listed-company had deliberately attempted to misguide the office--Purpose of Listed-Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, was to provide for fair and equal treatment to all investors and provide a transparent and efficient system for substantial acquisition of voting shares in listed-companies---Accordingly, it would be defeating the intent of Legislature if an acquirer, was allowed to avoid compliance with the mandatory provisions of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, behind the cover of a person acting in concert with them---Each of the Directors had acted in concert in matter of acquisition of shares in violation of said Ordinance---In order to safeguard and protect the interest of target company's shareholders arid to ensure clue compliance with the mandatory provisions of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, penalty was imposed upon Directors of target company.

(b) Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----S. 2(1)(h)---Acting in concert for contravention of provisions of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002---Conditions---Conditions which must be met before any person could be regarded as having acted in concert for contravention of provisions of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 were that the person cooperated with acquirer; that such cooperation .was for the acquisition of voting shares i.e. shares in the capital of a listed-company: and that such voting shares were of target company i.e. the listed-company whose shares were directly or indirectly acquired or intended to be acquired as defined in S.2(1)(o) of the Ordinance.

Securities and Exchange Board of India v. Alka Synthetics Ltd. AIR 1999 Gujarat 221 ref.

(c) Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----S. 3---Islamic law---Concept of 'Constructive' delivery---Hiba---Essentials of Hiba--Under Islamic Law, three essentials of Hiba were offer, acceptance and actual physical delivery---Concept. of 'Constructive' delivery was a concept not compatible with Islamic Jurisprudence on the point---Under Islamic Law, actual delivery had to be made in cases where the gifted property was a movable asset---Since possession of pledged shares was with Financial Institutions, their delivery could not have been possible---Even otherwise, Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, did not exempt acquisition of beneficial shares---No exemption was available to such acquisition under S.3 of Listed Companies (Substantial Acquisition, of Voting Shares and Takeovers) Ordinance, 2002 as those shares were neither held by them in their name prior to coming in force of said Ordinance, nor did they devolve in inheritance or succession or were transferred by a Financial Institution within the meaning and scope of cl. (6), S.3 of the Ordinance.

2007 C L D 297

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rahman Khan, Chairman/Commissioner and Salman Ali Shaikh, Commissioner

Mian MUHAMMAD ILYAS MEHRAJ and others---Petitioners

Versus

EXECUTIVE DIRECTOR, (COMPANY LAW DIVISION) and another---Respondents

Revisions Nos.6, 47 and 81 of 2006, decided on 30th November, 2006.

Companies Ordinance (XLVII of I984)---

----Ss. 158, 170, 171 & 477---Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002), S.21---Failure of company to hold Annual General Meeting---Imposition of penalty---Company which was required to hold its Annual General Meeting for the year ending 30-9-2004 on or before 31-1-2005, having failed to hold said meeting Enforcement Department of the Security Exchange Commission issued show-cause notice to the Company and its Directors including the Chief Executive for not holding meeting within the time prescribed under S.158 of Companies Ordinance, 1984---Management of the company in response to show-cause notice, took up the plea that since certain individuals had acquired substantial number of shares of the Company in violation of Listed Companies (Substantial Acquisition of Voting Shares of Takeovers) Ordinance, 2002, and were intending to contest the election of Directors, to be held in 2004 Annual General Meeting: it was incumbent upon the Management to postpone said Annual General Meeting--Validity--Election of Directors being just one of the agenda in the Annual General Meeting, same should not have been made ground for not holding Annual General Meeting for two consecutive years--Election of Directors could have been held subsequently in an extraordinary General Meeting called specifically for that purpose---By that way neither the rights of the share-holders would have been violated nor the Management would have contravened the statutory requirement of holding Annual General Meeting---Annual. General Meeting should not have been postponed by the company just because one of the agenda items of the meeting could not have been carried out---By not holding Annual General Meeting, management of company had infringed share-holders' right to be informed of the company's affairs and the struggle raging between two groups of share-holders for the management of the company---Violation of law by the management in not holding the Annual General Meeting within the prescribed time was established---Penalties had rightly been imposed on petitioners, in circumstances.

Syed Mansoor Ali Shah for Petitioners.

Tariq Bakhtawar, (Director Enforcement) for Respondents.

2007 C L D 306

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik, Commissioner (Securities Market Division)

ACQUISITION OF SHARES OF MUBARAK TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No.SMD/TO/22/2005 dated August 16, 2006, decided 10th November, 2006.

(a) Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----Ss.3(e), 4, 5, 25 & 26---Increase in Acquirer's shareholding--Imposition of penalty---Acquirer whose shareholding had been increased, having ,tailed to comply with relevant provisions of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, a show-cause notice was issued to him---Representatives of Acquirer had stated that shareholding of Acquirer was increased due to transfer of' shares as gift from his parents pursuant to a gift-deed-Said representatives claimed that the transaction fell under S.3(e) of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 which exempted acquisition . of voting shares by succession or inheritance-Validity-Contention of Representatives of Acquirer that transaction fell under S.3(e) of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, was applicable only where acquisition of voting shares were made by succession or inheritance---Since shares in question were transferred as gift during the life time of the parents of the Acquirer, said S.3(e) of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance. 2002 was inapplicable to case of Acquirer---Interfamily transaction, did riot fall under exempted transaction---Default on the part of the Acquirer, was wilful, in circumstances---However taking a lenient view, penalty of Rs.100, 000 was imposed on Acquirer under S.26(3) of Listed Companies (Substantial Acquisition of Voting Shares . and Takeovers) Ordinance. 2002 for the default.

(b) Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----Preamble---Purpose of the Ordinance---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.?

Faisal Latif, A,C.A., Tariq Ayub, Anwar & Co., Chartered Accountants, Ms. Sofia Akhtar, Advocate, Tariq Ayub, Anwar & Co. Chartered Accountants and Shahid Iqbal, C.F.O., Mubarak Textile Mills Ltd. for .Representing the Acquirer.

Imran Inayat Butt, Director (MSW) and Sajid Imran, Deputy Director (CI) for Assisting the Commissioner (SMD).

2007 C L D 314

[Securities and Exchange Commission of Pakistan]

Before Rashid I. Malik and Salman Ali Shaikh, Commissioners

TAHIR ABBAS---Appellant

Versus

AMZ SECURITIES (PVT.) LIMITED and another---Respondents

Appeal No.44 of 2006, decided on 8th December, 2006.

Securities and Exchange Commission of Pakistan (XLII of 1997)---

---S. 33---General Rules and Regulations of Karachi Stock Exchange 2004, Regln.74---Appeal---Maintainability---Principle of res sub judice---Applicability---Appellant filed complaint with the Commission against respondent alleging that he had sent 4,000 physical shares of a Company through an employee for conversion from Physical Shares to Central Depository System and subsequent Crediting to C.D.C. sub-account; that said shares were not credited to his account, but were sent erroneously to sub-account of another person who had no claim against the appellant---Said complaint having been dismissed by Director (Securities Market Division) of the Commission, appellant filed appeal before Appellate Bench, which was accepted---While said appeal filed by appellant was pending before Appellate Bench, appellant sent another complaint alleging that respondent had frozen his account and had refused to provide money from the balance maintained therein or issue the Account Balance Statement to him-Said second complaint was also rejected by Director of the Commission on the ground that subject-matter of complaint was sub judice before High Court in appeal filed by respondent against earlier order of Appellate Bench passed in favour of appellant---First complaint of appellant which was decided in his favour by Appellate Bench in his earlier appeal was only restricted to issue of deposit of 4,000 Physical Shares belonging to appellant in another account---Appellate Bench had decided that said deposit by respondent was wrongful and shares should be returned to appellant---Such decision of Appellate Bench was subject-matter of appeal filed by respondent wherein respondent had prayed for setting aside said order of Appellate Bench---Principle of res sub judice, would apply to those parallel proceedings where the subject-matter; the cause of action; and the relief sought, were the same---Except for the parties, none of the issues were the same in those two proceedings---Suspension of Appellate Bench's order by High Court, neither had any effect on the issue raised by appellant in his second appeal nor barred the Commission from proceeding against respondent in other matters---Accepting the appeal by the Commission, case was remanded to Director Securities Market Division for a decision on issues raised in the complaint filed by appellant: accordingly.

A. M. Shaghil and Tahir Abbas for Appellant.

Nasir J. R. Sheikh for Respondent No.1.

Murtaza Abbas, Deputy Director (SMD) for Respondent No.2.

2007 C L D 370

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikrarn, Director (Enforcement)

BESTWAY CEMENT LIMITED: In the matter of

Show-Cause Notice No.EMD/233/368/2002-2989-95, dated November 3, 2006, decided on 28th December, 2006.

Companies Ordinance (XLVII of 1984)---

----S.208---Investments in associated companies and undertakings without complying with mandatory provisions of law---Imposition of penalty---Company concerned, in addition to approval of loans/advances to be given to its subsidiary, also sought approval and ratification from share-holders in respect of loans/advances already given to subsidiary---Provisions of S.208(1) of Companies Ordinance, 1984, required passing a special resolution before making arty investment by a company in its associated companies or undertakings and did not envisage subsequent ratification of such investment---Explanation provided by company was not found convincing and it was observed that company had not complied with mandatory provisions of S.208 of Companies Ordinance, 1984 while providing advances to the subsidiary---Provisions of S.208 of Companies Ordinance, 1984 having been violated, Directors of the company were liable for penalties as provided under S.208(3) of Companies Ordinance, 1984---Giving benefit of fact that company had recovered major amount taking lenient view, instead of imposing maximum penalty of Rs. 10,00,000 on each Director, fine of Rs. 1,00,000 was imposed only on Chief Executive of the company---Other Directors were reprimanded to be careful in future and ensure compliance with requirements of law in letter and spirit.

Gharibwall Cement's case 2003 CLD 131 ref.

M. Javed Panni, Counsel for the Directors.

2007 C L D 557

[Securities and Exchange Commission of Pakistan]

Before Ashfaq Ahmad Khan, Director Enforcement

HONDA ATLAS CARS (PAKISTAN) LIMITED: In the matter of

Show-Cause Notice No.EMD/233/448/2002, dated July 25, 2006, decided on 22nd January, 2007.

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

----S. 208---Unauthorised investments by the Company in its associated undertakings---Imposition of penalty---Proceedings were initiated against the Chairman, Chief Executive Officer and Directors of the Company for making unauthorized investments in its associated undertakings in violation of provisions of S.208 of Companies Ordinance, 1984---Show-cause notice was issued to the company and in reply, company took plea that investments had been made on basis of advice from it's counsel as to the applicability of S.208 of Companies Ordinance, 1984---Representatives of the company on query as to whether advice of the counsel was obtained prior to making of investments, had admitted that such advice was obtained after making investments in question---Representatives, however claimed that said investments had not caused any revenue loss to the company---Plea that investments had not caused any revenue loss, was not a valid reason for violating the mandatory provisions of law by making unauthorized investments in associated undertakings---Act of making unauthorized investments having been done prior to obtaining of legal opinion, was construed as wilful-Chairman, the Chief Executive and Directors of the Company, in circumstances, had violated provisions of S.208 of Companies Ordinance, 1984 and had not exercised due care while malting investments in the associated concerns---Default had been established, however as no financial loss seemed to have been caused, instead. of imposing maximum penalty of Rs.1,000,000 as prescribed by subsection (3) of S.208 of Companies Ordinance, 1984, taking a lenient view, fine of Rs.100, 000, was imposed on each of the Directors, accordingly.

(b) Words and phrases---

----"Undertaking"---Connotation---Term "undertaking" had been interpreted as any business work or project, which one engaged in or attempted as an enterprise analogous to business or trade.

AIR 1968 SC 554 ref.

Sardar Abid Ali Khan, Company Secretary.

Asad Murad, Chief Financial Officer.

Munawar-us-Salam, Legal Counsel, Cornelius Lane and Mufti.

2007 C L D 566

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman/Commissioner and Rashid I. Malik, Commissioner

ARSHAD WADUD KHAN and 5 others-Appellants

Versus

EXECUTIVE DIRECTOR (NBFC DEPARTMENT) SEC and another---Respondents

Appeals Nos.29, 30, 31, 32, 33, 34 of 2005 and 48, 49, 68, 72, 79 and 80 of 2006, decided on.2nd February, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 158, 245 & 476---Security and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Imposition of penalty for failure to prepare and furnish quarterly accounts and for non-holding company's Annual General Meetings---Penalty was imposed on Directors of company for violation of Ss.158 & 245 of Companies Ordinance, 1984--Appeal of Directors though was barred by time, but said delay was condoned so that matter could be heard and disposed of on merits, rather than on technical grounds--Appellants had contended that Annual General Meeting was scheduled to be held on time, but few days before holding that meeting, Management on its own and without consulting the Board decided to postpone same and that in the year 2004 Commission had started a separate action against the Management as well as the company---Management and Board were therefore too occupied, with those issues and could not prepare the accounts and hold Annual General Meeting---Directors also contended that in 2005 the entire Board was taken into custody by National Accountability Bureau---Appellants had contended that they were not responsible for the Management of the company, it was overall responsibility of the Board of Directors/appellants to see that accounts were prepared and Annual General Meeting was held in time---Argument of Directors that since NAB had not set them free, they should be pardoned of all the contraventions committed during their tenure was meritless---Requirements of law under the Companies Ordinance, 1984, were separate and distinct from any other contravention Directors could or could not have committed---Argument that since the Commission had initiated numerous actions against the Company and its Board, they were pre-occupied with those issues, was also not tenable--Holding of Annual General Meeting and finalizing the accounts of the Company were among the primary responsibilities of the Board---Appellants/Directors having failed to comply with mandatory provisions of law in respect of holding Annual General Meeting and preparing and furnishing quarterly accounts, they were rightly penalized.

Appellants in person.

Shoaib A. Qureshi, Director NBFC and Imran Hussein Minhas for Respondents.

2007 C L D 574

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

USMAN TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/289/2002-445-451, dated July 19, 2006, decided on 20th February, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 177, 186 & 476---Non-holding of election of Directors of the company---Imposition of penalty---Last election of Directors of the company was held on March 26, 2002 to elect Directors for a period of 3 years which expired on March. 26, 2005---Directors of the company were required to hold fresh election of Directors on or before March 26, 2005, but continuing Directors, not only failed to hold election on or before said prescribed period but also failed to report the impediments to the Registrar of Companies within fifteen days as required under S.177 of Companies Ordinance, 1984--Show-cause notice was served upon the Directors of the company, but they failed to respond to said show-cause notice despite they were duly served and no one appeared on date of hearing despite being adjourned date of hearing--Counsel for Directors admitted the fact that election of Directors were not held within the prescribed time and also that Directors jailed to report to the Registrar of the Companies in that regard---Counsel. however averred that election of Directors could not be held due to circumstances which were beyond the control of the company and submitted that the company had finalized its annual audit accounts for the last three years and had planned to hold its overdue annual general meeting in January, 2007---Default of company to hold election of Directors thus was established and admitted---Directors were supposed to take immediate steps to hold election of Directors, of the company and in case of impediments they should have reported the circumstances to the Registrar of the Companies, but they failed to do so---Considering the fact that Directors had now held elections in Annual General Meeting, taking lenient view of the default, instead of imposing maximum penalty of Rs.10,000 on each Director and debarring them from continuing or becoming the Director of. the company for a period of 3 years. a token penalty of Rs.10, 000 only was imposed on Director, who was also Company Secretary of the company---All other Directors were advised to remain careful in future in ensuring compliance with mandatory requirements of the statute.

Shafiq Ahmed, Counsel Present.

2007 C L D 599

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

UMSAN TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/289/2003, dated June 21, 2006 and August 11, 2006, decided on 19th February, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 245 & 476---Failure to file quarterly accounts---Imposition of penalty---Company which was required under provisions of S.245 of Companies Ordinance, 1984 to prepare quarterly accounts for the relevant periods and transmit same to the members and simultaneously file same with' the Registrar and the Commission within prescribed period, show-cause notices were served on all Directors of the company including Chief Executive of the Company on their failure in performing such obligation---Counsel for the company, in response to said show-cause notice, appeared and stated that Chief Executive of the Company remained under arrest with the National Accountability Bureau for about three years as a result of which entire corporate activities of the company came to stand stilt; that after his release management was taking all the steps to meet the requirements of law and annual accounts were prepared, but could not be audited as the auditors -had resigned---Validity---Plea that Chief Executive of the company remained under arrest with the NAB, was not a cogent excuse for non filing and non-circulation of quarterly accounts, because the other Directors were equally responsible to ensure compliance of statutory provisions of law which were mandatory in nature---Even otherwise, it was easier for the Directors to finalize and circulate accounts when the company was not In operations as less effort

was required for data compilation---Directors of the company, who had f ailed to file quarterly accounts with the Commission in time, had deprived the share-holders of their statutory right to receive the quarterly accounts in time---Even after release of Chief Executive, there was sufficient time with the company for preparation and circulation of quarterly accounts, but still they could not comply with the mandatory provisions of law--Company and its Directors including Chief Executive, in circumstances had wilfully and deliberately committed the defaults in preparation, circulation and filing of quarterly accounts---Fact that company had made efforts in preparation of its annual accounts and had held Annual General Meetings having been established, taking lenient view, of the matter instead of imposing maximum fine of Rs.100,000 on every Director, penalty of Rs.5,000 was imposed on each Director.?

Shafiq Ahmed and Nurruddin Sarki & Co. Present.

2007 C L D 605

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

NOOR SILK MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/312/2006, dated December 6, 2006, decided on 12th February, 2007.

Companies Ordinance (XLVII of'1984)---

----Ss. 158 & 476---Failure to hold Annual General Meeting---Imposition of penalty---Company which under S.158(1) of Companies Ordinance, I984 was required to hold its Annual General Meeting for relevant year having failed to comply with said mandatory provision of law, a show-cause notice was served on the company---None of the Directors of the company could justify said default---Directors had simply stated that their Accountant had left the job and new Accountant was not fully aware of the facts and thus finalization of accounts was delayed---Validity---Resignation of Accountant was not a cogent reason to justify default---Directors of the company were responsible for timely holding of Annual General Meetings and they should have made necessary arrangements to prepare accounts and complete rest of the formalities accordingly---Protection of investors/share-holders, was one of the primary objectives of Companies Ordinance, 1984 as it was investors/share-holders who provided seed for capital formation---If their interest was protected they would invest more to save the company---Company, in circumstances must ensure transmission of timely, adequate and meaningful information to them--Annual and interim accounts were to provide information to the share-holders about the affairs of the company and Annual General Meeting was a forum where they could freely speak, discuss and vote on important matters---Directors of the company had failed to observe mandatory. requirements of law with regard to timely holding of Annual General Meeting---Default under S.158 of Companies Ordinance, 1984 was wilful and deliberate which had attracted the penal provisions of subsection (4) of S.158 of Companies Ordinance, 1984---However in. view of the fact that company had held its Annual General Meeting and management of company had assured future prompt compliance, taking a lenient view, instead of imposing maximum fine of Rs.50,000 on the company and every Director, token penalty of Rs.5,000 was imposed on each Director of the company.

Muhammad Amin Noor Muhammad, Chief Executive.

2007 C L D 613

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman/Commissioner and Salman Ali Shaikh, Commissioner

Mian MUHAMMAD ILYAS MEHRAJ and 16 others---Appellants

Versus

COMMISSIONER (SECURITIES MARKET DIVISION) and 35 others---Respondents

Appeal No.87 of 2006, decided on 22nd February, 2007.

Listed-Companies (Substantial Acquisition Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----Ss. 4, 21 & 24---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33--Acquiring shares of company in violation of Listed-Companies (Substantial Acquisition Voting Shares and Takeovers) Ordinance, 2002---Complaint---Report of Inquiry Committee-Appeal--Date was fixed for holding Annual General Meeting, agenda of which included election of Directors of the company, but one day before said meeting, Board of Directors of the company postponed Annual General Meeting---Company stated that majority shareholders had requested for postponement of Annual General Meeting as five nominees who had informed their intention to contest the election of Directors had acquired 39% shares of Company in violation of Listed-Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002---Management lodged two complaints with Securities Market Division of the Commission against alleged acquisition of 39% shares of the company---Commission, in response to said complaints, appointed an Inquiry Committee to inquire whether or not there had been a violation of law---Inquiry Committee after holding inquiry submitted report rejecting allegation made by complainant/appellants found that respondents had not acquired more than 10% shares of the company and there was no violation of Takeovers Law---Commissioner (Securities Market Division), exercising powers of Commission under Takeovers Law, rejected objections raised by appellants .and request of appellants for a personal hearing was also rejected--Appellants had alleged that by not providing them enquiry report and denying them opportunity of hearing, they had been-deprived of their right to represent against findings of enquiry---Validity--Appellants should have been given an opportunity by the Commission to present their grievance against the findings of Inquiry Committee---Inquiry order had revealed that even written objections filed by appellants/complainant were not considered and discussed in impugned order---Unless there were good reasons for such omission, Inquiry Report should have been provided to concerned parties-Though no mala fide was found on part of Securities Market Division in not providing Inquiry Report, case was remanded to Commissioner for fresh proceedings--Parties were to be given an opportunity to personally present their case against findings of Inquiry Committee.

Syed Mansoor Ali Shah for Appellants.

Imran Inayat Butt, Director (SMD) for Respondent No.1.

Afzal Siddiqui and Iqbal Bawani for Respondents Nos.5, 7, 21, 22, 23 and 25.

Naveed Alam for Respondent No.3.

M. Waseem for Respondent No. 26.

Adnan Alam for Respondent No.35.

2007 C L D 621

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

FRONTIER CERAMICS LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-III/584/2006, dated May 3, and May 16, 2006, decided on 6th February, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 245 & 476---Failure to prepare and transmit quarterly accounts-Imposition of penalty---Company which, in terms of provisions of S.245 of Companies Ordinance 1984. was required to prepare and submit to members and simultaneously file with the Registrar and Commission its quarterly accounts for relevant period, having failed to comply with the said provision, show-cause notice was issued to same---Company, in response to show-cause notices, furnished written explanation stating that company was lying closed and all staff including accounts staff were laid off, resultantly company could not finalize accounts---Closure of mill of the company, was not a cogent reason for non-submission of quarterly accounts to the share-holders-'--Directors could easily finalize and circulate accounts when the company was not in operation as less effort was required for data compilation---Directors were obliged to ensure compliance with all statutory requirements, but they failed to do so---Directors due to said omission had deprived the share-holders of their statutory rights to receive quarterly accounts in time---Company and its Directors including Chief Executive had wilfully and deliberately committed the default in preparation, circulation and filing of quarterly accounts, which was established from the record---Company having finally provided quarterly accounts and had also assured future compliance, taking lenient view, instead of imposing the maximum fine of Rs.100, 000 on every Director, penalty of Rs.2,000 on Chief Executive and each Director of the Company who were responsible for the default, was imposed.

Waqar Ali, C.F.O. and Muhammad Noor Khan, Officer.

2007 C L D 630

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

HAKKIM TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-H/217/2005, dated June 21, 2006, decided on 28th February, 2007.

Companies Ordinance (XLVII of 1984)--

---Ss. 245 & 476---Failure of company to prepare and transmit quarterly accounts---Imposition of penalty---Company which under S.245 of Companies Ordinance, 1984 was required to prepare and transmit to its members and simultaneously file with the Registrar and Commission its quarterly accounts, having failed to do so, show-cause notice was issued to the Company--Company in reply to show-cause notice had contended that company could not comply with provisions of S.245 of Companies Ordinance. 1984 as it was Lying closed since the year 1999 having no staff and funds---Validity---Company had made default in compliance of provisions of S.245 of Companies Ordinance, 1984 number of times in the past and similar reasons were given for late filing of quarterly accounts for the previous ` quarters---Closure of mill of the Company was not .a cogent reason for non-circulation of quarterly accounts to the share-holders---Directors could easily finalize and circulate accounts when company was not in operation as less efforts was required for data compilation---Protection of investors, share-holders, was one of the primary objectives of Companies Ordinance, 1984---Share-holders provide seed for capital formation of the company---If interest of investors was protected, they would save and invest more---Investors must be provided timely, adequate and meaningful information--Annual and interim accounts would provide information to the investors about the affairs of the Company---Past track record of the company showed wilful and deliberate default under subsection (3) of S.245 of Companies Ordinance, 1984---Company however having provided the quarterly accounts to the Commission and had also assured future compliance, taking lenient view, instead of imposing maximum fine of Rs.100,000 on every Director, nominal penalty of Rs.5,000 was imposed on Chief Executive and each of the Directors of the Company who were responsible for the default.

Hussain Sajid, Company Secretary present.

2007 C L D 882

[Security Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman/Commissioner and Salman Ali Shaikh, Commissioner

LATIF JUTE MILLS LTD.---Appellant

Versus

EXECUTIVE DIRECTOR (COMPANY LAW), SEC and another-Respondents

Appeal No.9 of 2005, decided on 21st March, 2007.

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

----S.265(a)(b)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.20(4)---Investigation into affairs of company--Appointment of Inspector by Commission---Scope---Commission under S.265(a) of Companies Ordinance, 1984 could appoint Inspector subject to fulfilment of pre-conditions mentioned therein---Such pre-conditions not applicable to its suo motu powers under S.265(b) of Companies Ordinance, 1984 to appoint Inspector.

2002 CLD 1714 rel.

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

----S.265(b)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.20(4)---Sale of company's assets by management for settlement of debts--Appointment of Inspector to investigate into affairs of company---Validity---Company had not completely met requirements under S.160(1)(b) of Companies Ordinance, 1984---Appropriate way to settle liabilities of company, which was not a going concern, would be its winding up---Where a company had closed its business and there was no foreseeable plan for its revival, then sale of company's assets by management for selective settlement of debts would not be desirable for being an attempt to circumvent priority of payment among creditors prescribed by law---Commission to address such apprehensions appointed Inspector to investigate and report on identified issues, whereafter decision regarding winding up of company would be made.

A.S. Pinger and M. Tariq Bawany for Appellant.

Uzma Hayat, Joint Director and Shoaib Dar, Assistant Director SECP.

2007 C L D 893

[Security Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director

ASIAN SECURITIES (PVT.) LIMITED: In the matter of

Show Cause No.SMD-SOUTH/SCN/22/07, dated March 16th, 2007 decided on 3rd April, 2007.

Brokers and Agents Regulation Rules, 2001---

----Rr. 8 & 12---Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited, Regln.3(b)---Violation of Regulations---Imposition of penalty---Examination of the information provided by the company had revealed that 21 times, during the period from March 10, 2005 to March 25, 2005, company had net sale position in future contracts, which were in excess of the prescribed limit of Rs.50 million---In contravention of the requirement of Regln.3(b) of Regulations Governing Future Contract of Karachi Exchange (Guarantee) Limited, Company had failed to either deposit with the Exchange the actual shares sold over the prescribed limit or submit to the Exchange the documentary evidence that such shares, were lying in the Central Depository Company of Pakistan or a Bank or Finance Institution on the given dates---Based on such findings a show cause notice was issued under R.8 of the Brokers and Agents Regulation Rules, 2001 stating that company had prima facie contravened. R.12 of the said Rules---Chief Executive of the company in response to said show-cause notice, appeared and submitted written submissions---Company had been established to have not fulfilled the requirements of reporting/taking action as envisaged, under Regln.3(b) Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited---Certain extenuating circumstances, however, had emerged from company's practice of supplying the requisite evidence under Regln.3(b) of Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited, only when required by the Exchange, which could have persuaded the company to believe that it had discharged its obligation under said Regln.3(b), which clearly it did not for reasons stated---No evidence of "short selling" had been revealed from the examination of the record provided by the company---Taking a lenient view in the matter, in circumstances, punitive action under R.8 of Brokers and Agents Regulation Rules, 2001 would not be taken against the company and 'caution' in that instance to the company would suffice---Company was directed to ensure that full compliance be made of all the Regulations in future for avoiding any punitive action under the law.

Anwar Lakhani, CEO and Muhammad Raza, Asian Securities (Pvt.) Limited Present.

2007 C L D 903

[Security Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director

TAURUS SECURITIES LIMITED: In the matter of

Show Cause No.SMD-SOUTH/SCN/04/07, dated January 26, 2007 and SMD-SOUHT/SCN/09/07, dated March 15, 2007, decided on 3rd April 2007.

Securities and Exchange Ordinance (XVII of 1969)--

----S. 22(1)---Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited, Regln.3(b)---Brokers and Agents Regulation Rules, 2001, R.8---Violation of Regulations---Effect---Examination of information provided by the company had revealed that 23 times during the period from February 21, 2005 to March 18, 2005, company had net sale position in Future Contracts, which were in excess of the prescribed limit of Rs.50 Million---Company, in contravention of the requirement of Regln.3(b) of Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited, had failed to either deposit with the Exchange the actual shares sold over the prescribed limit or submit to the Exchange the documentary evidence that such shares were lying in the Central Depository Company of Pakistan or with some Bank or Development Finance Institution on the given dates---Based on said findings, a show-cause notice tinder S.22(1) of Securities and Exchange Ordinance, 1969 for violation of Regln.3(b) of Regulations Governing Future Contracts of Karachi Exchange (Guarantee) Limited, was issued to the company to explain in writing or in person, before Executive Director as to why a penalty should not be imposed by the Commission in the matter---Written reply was submitted by the company in response to said show-cause notice--Considering said written reply and documents and informations placed on record it was established that company had not fulfilled the requirement of reporting/taking action as envisaged under said Regl.3(b) of Regulations Governing Futures Contracts of Karachi Exchange (Guarantee) Limited---Certain extenuating circumstances, however, had emerged from the company's practice of supplying the requisite evidence under said Regln.3(b), when required by the Exchange, which could have persuaded the Company to believe that it had discharged its obligation under said Regln.3(b) of Regulations---No evidence of short selling had been revealed from the examination of the records provided by the company and in that background a lenient view in the matter was taken and punitive action under R.8 of Brokers and Agents Regulation Rules, 2001, was not taken--'Caution' to the company would suffice in circumstances--Company was directed to ensure that full compliance would be made of all the Regulations in future for avoiding any punitive action under the law.

Arshad M. Tayebaly, Legal Counsel, Present.

Syed Zain Hussain, Chief Executive Present.

Ali Abbas Bhojani, Head of Settlement Present.

2007 C L D 1038

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

DADABHOY CONSTRUCTION TECHNOLOGY LIMITED: In the matter of

Companies Ordinance (XLVII of 1980-

----Ss.196 & 476---Object and purpose of Ss.196 and 476, Companies Ordinance, 1984---Non-compliance of said provisions---Effect---Selling plant and machinery without obtaining prior approval of share-holders of the company---Imposition of penalty---Examination of annual accounts of the company for relevant year had revealed that Company had sold its entire plant and machinery without obtaining prior approval of the share-holders as required under provisions of clause (a) of subsection (3) of S.196 of Companies Ordinance, 1984---Show­-cause notice under subsection (4) of S.196 of Companies Ordinance, 1984 was served on all Directors including Chief Executive of the company, requiring them to explain their position---Authorized representative on behalf of the Chairman and all the Directors of the company, accepted the default and stated that company was ready to ratify the default by taking approval of share-holders in the next General Meeting---Object of provisions of S.196(3)(a) of Companies Ordinance, 1984 was that the Directors must consult the shareholders when an undertaking or a sizeable part of the company was intended to be sold---Company and its Directors had not submitted any evidence that they had complied with the requirements of law---Default having been established, Directors of the Company were liable for punishment under provisions of S.196(4) of Companies Ordinance, 1984---However, considering the fact that proceeds from the sale of assets were utilized to repay the liabilities of the company and the fact that management was making efforts for revival of the company, instead of imposing maximum amount of fine of Rs. 1,00,000 on each Director, penalty of Rs.50,000 was imposed on Chief Executive of the company under provisions of S.196(4) of Companies Ordinance, 1984 and' Directors were warned to be careful and vigilant in future and comply with the requirements of law in letter and spirit.

2007 C L D 1060

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

Messrs CRESCENT STEEL AND ALLIED PRODUCT LIMITED: In the matter of

Show-Cause Notice No.233/420/2002-930-939, dated August 7th 2006, decided on 23rd May, 2007.

Companies Ordinance (XLVII of 1984)---

---Ss.208 & 476---Investments made by the company in its associated company and undertaking without approval of its shareholders---Imposition of penalty---Investments of the company made in its associated undertakings being not in accordance with the resolutions approved by shareholders of the company; it was considered necessary to ascertain the extent of violation committee by the company and loss sustained in consequence of those investments for which necessary proceedings were initiated under S.208 of Companies Ordinance, 1984---Show cause notice was issued to the company and its Directors highlighting the prima facie violation of S.208 of the Companies Ordinance, 1984---Corporate advisor of the company admitted the default in respect of investment, but submitted that interest of. the shareholders of the company had not been damaged and that default was not wilful or intentional---Validity---Amount advanced by the company was loan and that fact was confirmed by the Auditor of the undertaking to which loan was advanced---Advance given by the company to the associated company or undertaking was not in accordance with the approval given by the shareholders---Directors owed fiduciary duties to the company they served and its shareholders---Directors must discharge their statutory obligations in good faith with fairness and honesty---Directors had failed to exercise reasonable care to see that mandatory provisions of law were being violated and had not respected the mandate of shareholders---Directors, in circumstances had breached their fiduciary duties which they owed to the company and its shareholders by making unauthorized transactions out of the funds of the company---Company, in fact had been acting as financier by providing to the associated concerns to fulfil their financial requirements at the cost of the company---Chief Executive and the Directors had been established to have violated provisions of S.208 of the Companies Ordinance, 1984 and had note exercised due care while providing advances to associated concerns---Chief Executive and Directors were liable to be penalized; however, instead of imposing maximum penalty of Rs.1,000,000 by taking lenient view, fine of Rs.1,00,000 was imposed on Chief Executive and each Director.

Javed Parini, Corporate Advisor present.

2007 C L D 1080

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

KASHMIR POLYTEX LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/307/2005, dated March 30, 2007, decided on 16th May, 2007.

Companies Ordinance (XLVII of 1984)--

----S. 245---Failure of company to file 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 Commission its quarterly accounts for relevant year, had failed to do so within prescribed time limit---In response to show cause notice served on Chief Executive and Directors of the company, Authorized representative of the company appeared and staged that company being registered in Azad Jammu and Kashmir, Commission did not have jurisdiction over the company and that during relevant period, company faced financial constraints--Company could not justify default in filing quarterly accounts---Plea of the company that it being registered in Azad Jammu and Kashmir, was not required to file accounts with the Commission, was not correct, because as per requirement of S.245 of Companies Ordinance, 1984, every company listed on Stock Exchange, was required to transmit quarterly accounts to its members and Stock Exchanges at which shares of the company were listed and simultaneously filed same with Registrar and the Commission---Since Company was listed on Karachi and Lahore Stock Exchanges; S.245 of Companies Ordinance, 1984 was applicable to company and its Directors---Directors, accordingly were responsible for submission of quarterly accounts to the Commission, but company had failed to file requisite accounts with the Commission within prescribed time---Track record of the company with regard to filing of annual, half yearly and quarterly accounts was also not satisfactory---Repetition of default had shown that management of the company did not take the provisions of law seriously---Default was established which attracted penal provisions of subsection (3) of S.245 of Companies Ordinance, 1984, however, instead of imposing maximum fine of Rs. 100, 00,000 on every Director, fine of Rs.30,000 was imposed on Chief Executive and each of the Directors of the company responsible for the default.

Tanveer Ahmed, Authorized Representative Present.

2007 C L D 1088

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

QUALITY STEEL WORKS LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/492/2005, dated May 3 and May 18, 2006, decided on 18th May, 2007.

Companies Ordinance (XLVII of 1984)---

----S. 245---Failure to prepare and file quarterly accounts by company---Imposition of penalty--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 for relevant year, but the company failed to comply with said mandatory requirements within prescribed time---In response to show-cause notice, authorized representatives of the company appeared---Said representatives while admitting default, contended that quarterly accounts could not be prepared/filed because during relevant period, operation of the company remained suspended and no staff was available to prepare said accounts and that said accounts could not be finalized due to non finalization of annual accounts as during that period management of company remained involved in litigation with the Bank for the settlement of the loans---None of the grounds mentioned by the representatives justified the default--Non­functioning of the company was not a cogent excuse for non-circulation of quarterly accounts to the shareholders as it was easier for the Directors to prepare quarterly accounts because less efforts were required to gather the financial data during period when Company was not functioning---Ground of litigation with the Bank was also not a compelling plea to justify the default because Directors of the company were responsible for timely preparation and circulation of quarterly accounts---Protection of the investors/shareholders, was one of the primary objectives of Companies Ordinance, 1984 as they provided 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, adequate and meaningful information to them--Annual and interim accounts could provide information to the investors about the affairs of the company---Default regarding non filing of quarterly accounts having stood established, Directors were liable to be penalized---Instead of imposing maximum fine of Rs.100, 000 on each Director, fine of Rs.30,000 was imposed on Chief Executive and each of the Directors of the company under subsection (3) of S.245 of Companies Ordinance, 1984.

Muhammad Irshad and Mahmood Ahmad, Authorized Representatives Present.

2007 C L D 1116

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement))

QUALITY STEEL WORKS LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/492/2005, dated December 15, 2006, decided on 18th May, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 158 & 476---Failure to hold Annual General Meeting by company---Imposition of penalty---Company having failed to hold Annual General Meeting within the prescribed period, a notice was issued on the Directors including Chief Executive of company calling upon them to show cause as to why penalties as provided under subsection (4) of S.158 of the Companies Ordinance, 1984 may not be imposed on them--Directors, who admitted said default, had contended that Annual General Meeting could not be held during relevant period because operation of the company remained suspended and no staff was available to prepare the accounts and that management of the company remained involved in litigation with the Banks for settlement of loans---Counsel for the company could not justify said default---Suspension of operation of company or its non-functioning was not a .cogent excuse for non-holding of Annual General Meeting and non-circulation of accounts to the share holders---Protection of the investors/shareholders, was one of the primary objectives of Companies Ordinance, 1984 as they provide seed for capital formation---If the interest of said investors/shareholders was protected, they would save and invest more---Interest of investors/shareholders was protected by transmission of timely, adequate and meaningful information to them and it was the annual and interim accounts which could provide information to the investors/shareholders about the affairs of the company---Annual General Meeting was a forum where investors/shareholders could freely discuss, speak and vote on important matters concerning approval of accounts, appointment of auditors, election of Directors etc.--Default regarding holding of Annual General Meeting for relevant year stood established, however, instead of imposing maximum fine of Rs.50,000 on the company and every Director, penalty of Rs.30, 000 was imposed on the Chief Executive and each of the Directors of the company.

Muhammad Irshad and Mahmood Ahmad, Authorized Representatives Present.

2007 C L D 1125

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

KASHMIR POLYTEX LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/307/2005, dated March 30, 2007, decided on 22nd May, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 158 & 476---Failure of company to hold Annual General Meeting---Imposition of .penalty---Company in terms of the provisions of subsection (1) of S.158 of the Companies Ordinance, 1984 was required to hold its Annual General Meeting for the end of relevant year, but company had failed to hold the meeting within prescribed time period---Notice was issued to the company and its Directors including Chief Executive, calling upon them to show cause as to why penalties as provided under subsection (4) of S.158 of Companies Ordinance, 1984 read with S.476 of the Ordinance should not be imposed on them---Counsel for the company during course of hearing had contended that company being registered in Azad Jammu and Kashmir, Commission, did not have jurisdiction over the company---Counsel had further submitted that during relevant period, company faced financial constraints---Directors of the company could not justify default in holding of Annual General Meeting---Plea of company that it being registered in Azad Jammu and Kashmir, company did not fall within the jurisdiction of the Commission was not a cogent excuse for non-holding Annual General Meeting---Every listed company as per requirement of S.158 of Companies Ordinance, 1984 was required to hold Annual General Meeting once at least in every calendar year, but in the present case company had failed to comply with said mandatory provisions of law---Protection of investors/shareholders, was one of primary objectives of Companies Ordinance, 1984 as they provided seed for capital formation---Interest of investors/shareholders would be protected by transmission of timely, adequate and meaningful information to them and Annual General Meeting was a forum where investors/shareholders could freely discuss, speak and vote on important matters concerning approval of accounts, appointment of auditors, election of Directors etc.---Default/delay regarding holding of Annual General Meeting for relevant year stood established, however, instead of imposing the maximum fine of Rs.50,000 on the company and every Director, penalty of Rs.30,000 was imposed on Chief Executive and each of the Directors of the company under subsection (4) of S.158 of Companies Ordinance, 1984.

Tanveer Ahmed, Authorized Representative Present.

2007 C L D 1251

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

Messrs HAMID TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/255/2002-8014-20, dated 10-2-2006, decided on 21st June, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 196 & 476---Sale of sizeable part of assets of the company without consent of general meeting---Imposition of penalty---Proceedings were initiated against Chief Executive and Directors' of the company for selling a sizeable part of assets of the company comprising plant and machinery/ in contravention of the provisions of S.196(3)(a) of the Companies Ordinance, 1984, whereunder Directors of the company could not sell or lease out assets of the company without consent of general meeting-Validity---Sale of machinery was never included in the agenda item in any general meeting of the company held during last seven .years---Directors' report attached to the accounts, did not show sale of said plant and machinery; as it was a sizeable part of overall undertaking of the company, its sale required consent of general meeting of the company---Stance taken by the company in response to Commission's proceedings, violated the principles of good corporate culture and depicted carelessness on the part of Directors of the company---Mandatory requirements were meant to ensure that shareholders were consulted prior to sale of the undertaking or a sizeable part thereof---Such breach could not be ignored---Default was established and directors were liable for punishment under provisions of S.196(4) of the Companies Ordinance, 1984---Considering the fact that the proceeds from the sale of assets were utilised to repay the liabilities of the company and the fact that the management was making efforts for revival of the company, instead of imposing maximum fine of Rs.100, 000 on each director, penalty of Rs.20, 000 was imposed on Chief Executive and three directors of the company---Taking lenient view, three female directors had been condoned---All Directors, however, were warned to be careful and vigilant in future and comply with the requirements of the law in letter and spirit.

Sardar Ahmad Ayaz Nakai, Managing Director and Zahid Lateef, General Manager on behalf of all the Chief Executive and Directors of Messrs Hamid Textile Mills Limited, present.

2007 C L D 1256

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement Department)

GANGAT & CO., CHARTERED ACCOUNTANTS: In the matter of

Show-Cause Notice No.EMD/233/253/2002-9484-85, dated March 30, 2006, decided on 25th May, 2007.

Companies Ordinance (XLVI of 1984)---

----Ss.255, 260 & 476---Statement and report of Auditors---Making Audit report otherwise than in conformity with requirements of S.255 of Companies Ordinance, 1984---Imposition of penalty---Enforcement Department of the Commission while examining account of company concerned, found the Auditors' report pertaining; to accounts had not been made in conformity with the requirements of S.255 of Companies Ordinance, 1984---Matters pertaining to previous years' accounts of the company were also not considered by the Auditors while issuing audit report---Show-cause notice was issued to the Auditors pertaining to their responsibilities under the Companies Ordinance, 1984: International Accounting and Auditing standards and non-compliance observed in the accounts---Auditors being the ultimate watchdog of the share-holders interest, were required to give a report on the accounts and books of account after conducting the audit in accordance with a prescribed procedure and requirements of Companies Ordinance, 1984, and International Accounting and Auditing standards---If Auditors found any irregularity, which was material and pervasive with regard to the, accounts, they were required to issue an adverse opinion in their report---Share-holders were the 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 is contributed by its shareholders who could not necessarily be the persons managing the company---1n the present case of a listed company, general public also contributed towards the equity of the company---Share-holders were stakeholders and ultimate beneficiaries, but they had no control over the way their company was managed by the directors appointed by . them---Law; in circumstances had provided that shareholders should appoint 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; it was extremely important for the Auditors to be vigilant and to perform their duties and obligation with due care while auditing the accounts and books of account---Auditors in the present case had failed to perform their statutory obligations by not giving fullest information to the members and knowingly and recklessly ignored their observations and gave an inappropriate bill of health to the company's account---Taking lenient view, instead of imposing maximum penalty of Rs.100,000 on each partner of the firm, fine of Rs.25,000 each under subsection (1) of S.260 of Companies Ordinance, 1984, was imposed on all partners of the Auditing Company for making report otherwise than in conformity with the requirements of S.255 of Companies Ordinance, 1984.

Husaini Fakhruddin, Partner, Present.

2007 C L D 1271

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

Messrs ZAHUR COTTON MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/290/02, dated January 19, 2007, decided on 6th June, 2007.

Companies Ordinance (XLVII of 1984)---

---Ss. 160. 246 & 476---Holding of Annual General Meeting---Non-submission of notice of meeting to Commission and members of the company--Imposition of penalty---Company held Annual General Meeting, but neither submitted to the Commission notice of meeting nor submitted copies of the Newspapers in which notice was published---Company, in circumstances had failed to comply with the requirements of Commission's Circular issued in exercise of powers under S.246 of Companies Ordinance, 1984---Company was also transacting 'Special Business' in terms of S.160(1)(a) of Companies Ordinance, 1984---Show-cause notice was issued to the company---Relevant provisions of law contained in S.160(1)(a) of Companies Ordinance, 1984 had stated that where any special business was to be transacted at a general meeting, there would be annexed to the notice of meeting a statement setting out all material facts concerning such business---Objective of annexation of statement of material facts was that all members of the company must know as to what was the exact nature of the business to be transacted at the meeting so that they could make up their mind to attend the meeting considering the nature of business from their point of view and to make conscious decision by using their rights effectively---In the present case there was a proposal to authorized CEO to negotiate and sell assets to pay off liabilities or to lease whole assets to the company--No details for said transaction were provided to the share-holders for their consideration and proposal---Notice of meeting, in circumstances did not comply with the provision of S.160 of the Companies Ordinance, 1984---Default was established, but keeping in view the assurance of Authorized Representative that requirements of law would be complied with in future, lenient view was taken and instead of imposing a maximum penalty of Rs.50,000, penalty of Rs.15,000 was imposed in- total on Chief Executive of the company---Other Directors of the company were reprimanded to be careful in future.

Javed Zahur, Chief Executive Officer, Present.

2007 C L D 1277

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

MUBARIK DAIRIES LIMITED: In the matter of

Show-Cause Notice No.EMD/Enf-II/571/2003, dated May 5, 2006 and May 16, 2006, decided on 13th May, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 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 the members of the company and simultaneously file with the Registrar and the Commission its quarterly accounts for relevant quarter, having failed to file said accounts within prescribed time, show-cause notice was issued to the company---Contention of Secretary of Company was that external audit of the company was in progress; that accounts for relevant quarter could not be finalized prior to completion of annual accounts and requested to keep the matter pending till finalization of annual accounts---Validity---Plea of the company Secretary that quarterly accounts could not be finalized prior to completion of annual accounts, was not a cogent reason to justify the default, as preparation and circulation of annual and quarterly accounts were two distinct and separate requirements of law---Management of the company should have made necessary arrangements to provide financial information in time to the shareholders and file same with the Registrar and the Commission within prescribed time---Plea of the company that accounts could not be prepared/filed due to financial crises, was also not a compelling argument to justify the non-compliance with legal requirements---Non-compliance with the mandatory requirements would be considered wilful and deliberate default in the eyes of taw---Preparation and circulation of quarterly accounts was one of the mandatory requirements of law and Directors were supposed to make serious efforts to ensure the compliance of relevant provisions of law-Default under subsection (3) of S.245 of Companies Ordinance, 1984, in circumstances, was considered wilful and deliberate---Company had filed quarterly accounts instead of imposing the maximum fine of Rs.100,000 on every Director, token penalty of Rs.5,000, was imposed for each default on the Chief Executive and each Director of the company. ?

No one appeared.

2007 C L D 1281

[Securities and Exchange Commission of Pakistan]

Before Razi-ul-Rahman Khan, Chairman/Commissioner and Salman Ali Shaikh, Commissioner

Shaikh ABDUL WAHID and 7 others---Appellants

Versus

COMMISSIONER (SMD & CLD)---Respondent

Appeal No.85 of 2006, decided on 31st May, 2007.

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

----Ss. 20(4)(g), 20(6)(b)(g) & 33---Listed Companies (Substantial Acquisition Voting Shares' and Takeovers) Ordinance (CM of 2002), Ss.3, 4, 5, 6 & 25--Violation of Takeover law---Imposition of penalty---Appeal against---Appellant company held ordinary shares constituting 22.44% shares. a Sugar Mill(U), said shares amounted to 61% of the total assets of the appellant-Company---Pursuant to an agreement said 22.44% shares were sold by appellant-Company to a U.K. registered company--Directors of appellant-Company when said shares were sold to U.K. Company and had also been Directors of Sugar Mills(U), entered into a share sale agreement with ;another Sugar Mills(J) to sell 75%. shares of Sugar Mills(U), which included said 22.44% acquired by U.K. Company--Commissioner (Securities Market Division) pursuant to the powers conferred under S.25 of Listed Companies (Substantial Acquisition Voting Shares and Takeover) Ordinance, 2002 read with Ss.20(4)(g) & 20(6)(b)&(g)' of Securities and Exchange Commission of Pakistan Act, 1997, directed Sugar Mill(J) not to make all or any part of outstanding payment under its share purchase agreement---Later through the impugned order, Commissioner restrained appellant-Company from receiving amount from Sugar Mill(J)---Appellant-Company and its Directors being not satisfied with the findings of Commissioner, had filed present appeal, while U.K. Company and its Directors had not challenged impugned order---Facts had clearly demonstrated that case squarely fell within the ambit of Takeover Laws and direction to withhold payment was an ancillary, but a necessary direction---Appellant-Company at one hand denied acting in concert with U.K. Company in acquiring 22.44% shares on the other they had not only entered into an agreement to sell those shares to Sugar Mill(J) but were also claiming that money deposited with Commission which, in their own view, was payable to U.K. Company---Rule of logic was that a person could not be allowed to blow hot and cold with reference to same transaction---Legal Maxim "Allegans Contraria Non Est Audiendus" provided that he was not to be heard who alleged things contradictory to each other---Relations between the appellant and the sponsors/Directors of U.K. Company stated in the impugned order, clearly pointed to the fact that said parties were acting in concert to' acquire 22.44% of Sugar Mill(U)---Appellants, in circumstances could very well have been penalized along with U.K. Company for violation, however, since Commissioner had not imposed any penalty, Appellate Authority declined to impose the penalty--,-Directors of appellant-Company having acquired shares in their individual names however were imposed penalty under S.5 of Listed Companies (Substantial Acquisition Voting Shares and Takeovers) Ordinance, 2002.?

Arshad Tayebaly for Appellants.

Syed Ahmad Hassan Shah, Tariq Bakhtawar, Director SECP and Tariq Ahmed, Deputy Director SECP for Respondent.

2007 C L D 1291

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

SHAKARGANJ MILLS LIMITED: In the matter of

Show-Cause Notice No. EMD/233/363/2002, dated September 15, 2006, decided on 14th June, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 208 & 476---Making investment in associated company without prior approval of shareholders---Imposition of penalty---Company granted advance to its associate company without approval of its shareholders in the general meeting as required under provisions of S.208 of Companies Ordinance, 1984---Approval of share-holders of the company being necessary before grant of such advance/investment and that approval having not been obtained, provisions of S.208 of Companies Ordinance, 1984 had been violated and Directors of the Company . were liable for the penalties as defined in subsection (3) of S.208 of the Ordinance---Share-holders and regulatory bodies should be provided correct and timely information with all fairness, but the Directors of the Company had tried to conceal the correct information front the share-holders and the Commission with regard to said advance/investment given to associate company---Directors of the Company, in circumstances deserved no sympathy on that account, however, keeping in view the track record of the company, instead of imposing maximum fine, an aggregate penalty of Rs.600,000, Le. Rs.100, 00,000 each to six Directors was imposed who involved themselves in such an illegitimate transaction---Said penalties were imposed on the Directors in their personal capacity and they were required to pay said amount from their personal resources.

M. Javed Panni (MJ Panni & Associates), Asif Ali (General Manager, Finance) and Shahid Aziz, representing, Muhammad Asif and Gulnawaz, Nominee Directors NIT, Present.

2007 C L D 1491

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

In he matter of: Messrs KOHINOOR POWER COMPANY LIMITED

Show Cause Notice No. EMD/233/404/2002-755-61 dated 28th July, 2006, decided on 17th July, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss.208, 476 & 495---Making unauthorized investment in associated company---Non-complying with the direction of Commission---Imposition of penalty---Chief Executive and Directors of the company, made unauthorized investments in then associated company---Authority in respect of investment under S.208 of the Companies Ordinance, 1984 vested in the share-holders and that authority axis abused by the Directors as they invested funds of the company without taking approval of the share-holders into the said associated company and moreover, the directions of the Commission remained unattended---Show­-cause notice under S.495(1) of Companies Ordinance, 1984 was served on the Chief Executive and Directors of the Company, but after allowing carious extensions in submission of reply, company failed to respond---Opportunity of hearing was given to the Chief Executive and the, Directors of the Company---Manager Corporate Affairs appeared on behalf of Chief Executive and all Directors of the Company---Main contentions made in their submission; had been analysed, but were not found satisfactory---Default of non-compliance of directions of the Commission were also evident from the subsequent annual audit account---Default having been established, Directors were liable for penalty under provisions of S.495(1) of the Companies Ordinance, 1984, however, considering the fact that management was making efforts for revival of the company, instead of imposing maximum fine not exceeding fifty thousand rupees and in the case of a continuing non-compliance to a further fine not exceeding two thousand rupees for every day during which such non-compliance would continue on the Chief Executive and each Director as prescribed by S.495(1) of Companies Ordinance, 1984, fine of Rs.50,000 was imposed on each Director---Further, all the Directors were warned to be careful and vigilant in future and comply with the requirement of law in letter and spirit.

Liaqat Ali, Sr. Manager +Taxation and Khawaja Safee Sultan, Manager Corporate Affairs on behalf of Chief Executive and all the Directors of Messrs Kohinoor Power Company Limited.

2007 C L D 1498

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director Enforcement, In the matter of: Messrs NAMDAR & CO., CHARTERED ACCOUNTANTS

Number and date of Notice EMD/233/578/2002 dated 15th September, 2006, decided on 1st August, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss.253(3), 255(3)(6), 476 & 498---Failure to submit signed audit report---Imposition of penalty---Record of the Commission had revealed that company had submitted annual accounts in compliance with S.233 of Companies Ordinance, 1984---Said; accounts had revealed that accounts were signed by the Chief Executive and the Director of the Company but audit report attached with the accounts was not signed by the Auditor, but was initialed by him---Auditor was aware of the fact that company was presenting the accounts in the annual general meeting which were -not authorized by hire---Despite the said knowledge Auditor had failed to make representation in said annual general meeting and bring the fact to the knowledge off share-holders and regulatory authorities---Show-cause notice was issued to the Auditor in which 14 days time was. given to respond to said show-cause notice, but same was replied with a. delay of two months---Arguments put forward by the Auditor in response to show-cause notice were not tenable---Auditors being the ultimate watchdog of the share-holders' interest, were required to give a report on the accounts and books of account after conducting the audit in accordance with the prescribed procedure and requirements of Companies Ordinance, 1984 and standards---If auditors found any irregularity, they were required to issue a modified report, if said irregularity was material to the accounts, otherwise they would issue a clear report to the share-holders, who were the ultimate entity to whom the Auditors were responsible-- Auditors were also responsible to report to the members and the regulatory authorities of any irregularity noticed during the audit---Auditors .should be vigilant in performing their duties with. due care---Chartered Accountants/Auditors had not signed the annual accounts of the company for the relevant year, which the company had presented in annual general meeting and got approved from the shareholders-- Auditors however, having reported said fact to the Commission subsequently, taking lenient view, instead of imposing a maximum penalty of Rs.50,000 under S.498 of the Companies Ordinance, 1984, nominal fine of Rs.5, 000 was imposed for not submitting the signed audit report-- Auditor, however, was directed to furnish to the Commission and the company within 14 days of the order, signed audit reports.

Ali Raza Namdar, Partner.

2007 C L D 1504

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

In the matter of: Messrs SOUTHERN NETWORKS LIMITED

Show-Cause Notice No.EMD/233/652/2004-8828, dated 7th March, 2006, decided on 1st August, 2007.

Companies Ordinance (XLVII of 1984)--

----Ss.226 & 229---Mismanagement and misuse of securities and deposits---Imposition of penalty---Objective of provisions of S.226 of Companies Ordinance, 1984 was to secure the amounts collected from the dealers of the company from being misutilized--Company was required to act like a trustee of the dealers---Deposits received by the company were, in fact, security deposits, but company had failed to fulfil the requirement of S.226 of Companies Ordinance, 1984 to keep the deposits of the dealers in separate bank accounts and wrongly assumed that company was exempt from the requirements as laid down in S.226 of Companies Ordinance, 1984---Chief Executive had breached the mandatory requirement of S.226 of Companies Ordinance, 1984---Action, in circumstances was necessary under S.229 of Companies Ordinance, 1984, which had provided fine of Rs. five thousand, however, considering the fact that the company had made effort to rectify the default in response to issuance of show-cause notice by the Commission, which was evident from the reduction in the amount of security deposit, lenient view was taken and instead for imposing maximum penalty of fine of Rs.2,000 was imposed on Chief Executive of the Company under S.229 of Companies Ordinance, 1984.

Nisar Ahmed, Director on behalf of Chief Executive of Messrs Southern Networks Limited.

2007 C L D 1

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhry, C.J., Faqir Muhammad Khokhar and Mian Shakirullah Jan, JJ

Civil Appeals Nos. 2296 to 2412 of 2001

FEDERATION OF PAKISTAN through Secretary, Ministry of Finance and others---Appellants

Versus

Haji MUHAMMAD SADIQ and others---Respondents

(On appeal from the judgment and order of High Court of Sindh, Karachi dated 22-12-2000 passed in C.Ps. Nos. 1216, 1452, 2287, 1454, 1471, 1969, 1795, 774, 1064, 693, 1517, 463, 1521/1993, 1545/92, 1092, 1514, 1841, 204, 3430, 932, 762, 3163, 1038, 3146, 775, 1541, 1290, 3186, 1160, 1735, 1468, 140, 2616, 1470, 805, 2818, 1456, 2136, 3514, 3147, 1063, 748, 1036, 506, 3167, 1518/93, 3164/92, 1513, 694, 2872, 224, 691/93, 225/94, 1379, 2471, 704, 1031/93, 186, 1342, 1371, 2873, 692, 1736, 3389, 1453, 1472, 2874, 1159/93, 3185/92, 804-D/93, 3165/92, 275-D/93, 2617/93, 3166-D/92, 1457/93, 1794-D/93, 690/93, 1116-D/93, 1281/93, 1694, 1333/93, D-226/93, D-1098/94, D-1405/98, D-1372/94, D-1449/93, D-1494/93, D-1519/93, D-1532/94, D-1951/93, D-1971/93, D-1796/93, D-3137/92, D-151/93, D-255/93, D-734/93, D-735/93, D-769/93, 934/93, 1099/94, 1143/93, 1189/95, 1217/93, 1372/94, 1386/93, 1794/93, 1970/93, 2193/93, 2194/93, 3098/93 and 3146/92).

Civil Appeals Nos.2707-2717 of 2001

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Appellants

Versus

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

(On appeal from the judgment and order of High Court of Sindh, Karachi dated 22-12-2000 passed in C.Ps. Nos.D-148, 152, 727, 729, 736, 775, 1064, 1099, 1468, 1521 and 1541/1993).

Civil Appeal No.516 of 2002

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Appellants

Versus

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

(On appeal from the judgment and order of High Court of Sindh at Karachi dated 30-10-2001 in C.P. No.D-2342/93).

Civil Appeal No.934 of 2002

ICC TEXTILE MILLS, LTD.---Appellants

Versus

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

(On appeal from the judgment and order of Lahore High Court Lahore dated 4-4-2002 passed in W.P. No. 9705).

Civil Appeals Nos. 1087-1091 of 2004

Messrs PAK ELECTRON LTD. and others---Appellants

Versus

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

(On appeal from the judgment and order of the Lahore High Court, Lahore dated 4-4-2002 passed in W.Ps. Nos. 23072/96, 316-317/97 and dated 27-5-2004 in W.Ps. Nos. 21760 and 20642/1996).

Civil Appeals Nos.2254-2403 of 2005

Messrs FAISAL ASAD TEXTILE MILLS LTD. and others---Appellants

Versus

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

(On appeal from the judgment and order of Lahore High Court, Lahore dated 4-4-2002 in W.Ps. Nos. 151/94, 1082/93, 3895/92, 12059/97, 743/93, 744/93, 795/93, 742/93, 918/96, 2512/97, 10691/95, 5686/96, 4915/95, 4919/95, 4917/95, 4918/95, 776/93, 4916/95, 121010/92, 12011/92, 685/93, 22007/92, 12139/92; 101/93, 11060/92, 102/93, 12091/92, 12014/92, 12092/92, 11059/92, 12013/92, 11061/92, 12008/92, 12012-92, 3730/96, 2063/96, 12143/92, 12141/02, 12142/02, 4599/94, 16565/96, 2293/97, 16567/96, 7601/97, 704/97, 703/97, 1851/93, 12445/92, 12450/92, 1770/98, 1357/93, 1580/93, 16520/95, 216522/95, 2918/93, 1046/93, 12665/96, 12768/96, 11238/97, 1267/96, 1263/96, 12674/96, 12676/96, 12695/96, 12696/96, 19120/01, 20059/96, 20060/96, 2901/93, 3309/93, 3513/97, 4073/97, 7039 to 7041/93, 2454/93, 2523/93, 2526-2530/93, 3995/93, 14284/93, 14285/93, 243/93, 436/93, 492/93, 2525/93, 2531/93, 5317/93, 11294/95, 1407/92, 13775/96, 3543/93, 509/93, 1083/93, 2524/93, 322/94, 989/93, 3000/94, 3001/94, 3004-3005/94, 13894/94, 8113/95, 8115/95, 8116/95, 8117/95, 987/93, 17214/96, 17215/96, 17218/96, 10057/97, 10045/97, 10061/97, 10063/97, 13179/96, 613/96, 12333/92, 10054/97, 2593/96, 611/96, 2594/96, 2592/96, 609/96, 2595/96, 606/96, 610/96, 605/96, 607/96, 4099/93, 10055/97, 12334/92, 10056/97, 612/97, 608/96, dated 20-8-2002 in W.P. No.3896/1992, dated 4-4-2002 in W. P. No. 2596/96, 1408/93, 5412/93, dated 24-9-2002 in W.P. No. 18702/2001, dated 4-4-2002 in W.Ps. Nos.1884/96, 20753/96, dated 18-6-2002 in W.P. No. 319/93 and dated 4-4-2002 in W.P.No.7078/ 1993).

Civil Appeals Nos.2410-2423 of 2005

FEDERATION OF PAKISTAN and others---Appellants

Versus

GUL AHMAD TEXTILE MILLS LTD. and others---Respondents

(On appeal from the judgment and order of High Court of Sindh, Karachi passed in C.Ps. Nos. 462, 780, 2289/93, 2136/94, 841/93, 3139/92, 147/03, D-54/94, D-2190/93, D-254/93, D-2202/93, D-933/93, D-1-331/93 and 1606-D/1993).

Civil Appeals Nos.2433-2436 of 2005

THE PAK PUNJAB MANUFACTURING COMPANY (PVT.) LTD. and others---Appellants

Versus

FEDERATION OF PAKISTAN and others---Respondents

(On appeal from the judgment and order of Lahore High Court, Lahore dated 4-4-2002 in W.Ps. Nos.17307, 17309, 17310 and 17314 of 1993).

Civil Appeals Nos. 2296 to 2412, 2707-2717 of 2001, 516, 934 of 2002, 1087-1091 of 2004, 2254-2403, 2410-2423, 2433--2436 of 2005, decided on 22nd February, 2006.

(a) Islamic Banking---

----Islamic modes of financing, adoption of---Expressions "loan", "interest" etc., would be alien to Islamic Banking system.

(b) Central Excise Act (I of 1944)---

---Ss. 2(20), 3 & First Sched. Part-II, Item 14.14---Excisable Services---History stated.

(c) Central Excise Act (I of 1944)---

----Ss. 2(20), 3, 3-C(1)(b), 4(3), 7(1) & First Sched. Part-II, Item 14.14 [as inserted by S.5 of Finance Act (XII of 1991) and then replaced with Item No.9813.0000 by Finance Act (XII of 1994)]---Constitution of Pakistan (1973), Arts, 144, 163 & Fourth Sched.---Levy of excise duty on services provided or rendered to its customers by Institutions named in Item 14.14 of Part-II of First Sched. of Central Excise Act, 1944---Validity---Legislature was competent to levy excise duty on excisable services by inserting Item 14.14 in First Sched. of Central Excise Act, 1944---Such Item was part of the Central Excise Act, 1944 for purposes of charging duty on services in respect of advances made to any person---First Sched. was appended with Central Excise Act, 1944 to cater requirement of S.3 thereof being a charging section---Constitutionality of such Item, thus, could not be testified on touchstone of S.3 of Central Excise Act, 1944 for being constitutional---In case of irreconcilable inconsistency between such Item and S.3 of Central Excise Act, 1944, such Item would yield to section 3 thereof---Legal nexus between such Item and S.3 of the Act, existed for both being part of a statute---Word "services" used in plural sense in Column II of such Item would cover all services provided to its customers by Institutions named therein---Criteria or measure to calculate duty provided in Column II of such Item was neither vague nor ambiguous---Excise duty would be calculated on the volume of loan/advance at the rate specified in Column III of such Item---Such Institutions would have a recurring cause of action for purpose of effecting recovery of excise duty on services being provided on monthly basis on volume of advance/loan, which would be calculated on last working day of each calendar month---Expressions/ words used in S. 2(20) of Central Excise Act, 1944 and such item would be interpreted keeping in view their popular meanings---Words facilities", "loans", "utilities" and "advances" would be considered in popular sense---Such Item did not speak in respect of Modaraba or Musharka etc., but after its replacement with Item No.9813.0000 by Finance Act, 1994, excise duty became chargeable on services provided or rendered by Banking Companies, Insurance Companies, Cooperative Financing Society, Modaraba, Musharka, Licensing Companies, Non-Banking Companies and other person dealing in such services---Levy of excise duty would depend upon services being provided in respect of advances to a person, but no sooner when there was no advance outstanding, Bank would not be deemed to be providing or rendering any service as transaction between Bank and customer came to an end--Financing Company would enjoy recurring cause of action till adjustment of loan---Day on which excisable service was rendered/provided would be the date for determination of excise duty---Rate of excise duty mentioned in Item 14.4 of First Schedule, Part II of the Central Excise Act, 1944 was just, proper and not arbitrary---Levy of excise duty at such rate being an indirect tax would not 1-'urden such Institutions, but would be passed on to its customs---Principles.

South Behar Sugar Mills Ltd. v. Union of India AIR 1968 SC 922; Hirjina & Co. v. Islamic Republic of Pakistan 1993 SCMR 1342; Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582; Pakistan Industrial Development Corporation v. Pakistan 1992 SCMR 891; United Provinces v. Atiqa Begum AIR 1941 FC 16; Navinchaandra Mafatlal v. Commissioner of Income Tax [1954] (XVI) I'I'R 758; Bisvil Spinners v. Superintendent Central Excise PLD 1988 SC 370; Ghulam Hyder Shah v. Chief Land Commissioner 1983 CLC 1585; Sabir Shah v. Shad Muhammad Khan PLD 1995 SC 66; A&B Food Industries Ltd. v. Commissioner of Income/Sales Tax Karachi 1992 SCMR 663; Commissioner of Agricultural Income Tax East Bengal v. B.W.M. Abdul Rehman PLD 1973 SC 445; Excise and Taxation Officer Karachi v. Burma Shell Storage and Distribution Company of Pakistan 1993 SCMR 338; Mondi's Refreshment Room & Bar, Karachi v. Islamic Republic of Pakistan PLD 1983 Kar. 214; Sohail Jute Mills Ltd. and others v. Federation of Pakistan PLD 1991 SC 329; ICC Textiles Ltd. v. Federation of Pakistan 2003 PTD 1017; P. Kunhammad Kutty Haji v. Union of India [1989] 176 ITR 481; Ocean Industries Ltd. v. Industrial Development Bank PLD 1966 SC 738; Jamat-i-Islami Pakistan v. Federation of Pakistan PLD 2000 SC 111; Buxa Dooars Tea Company Ltd. v. State of West Bengal AIR 1989 SC 2015; Govind Saran Ganga Saran v. Commissioner of the Sales Tax (1985) 155 ITR 144; Commissioner of Sales Tax v. Hunza Central Asian Textile and Woolen Mills Ltd. 1999 PTD 1135; Reference No.2 of 2005 PLD 2005 SC 873; 2002 CLC 1714; Messrs Central Insurance Co. v. The Central Board of Revenue 1993 SCMR 1232; Al-Jehad Trust v. Federation of Pakistan PLD 1996 SC 324; Pakistan v. Public at large PLD 1987 SC 304 and Mrs. Zehra Begum v. Pakistan Burmah-shell Ltd. PLD 1984 SC 38 ref.

Abdul Rahim v. UBL PLD 1997 Kar. 62; Excise and Taxation Officer Karachi v. Burma Shell Storage and Distribution Company of Pakistan 1993 SCMR 338; Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan 1992 SCMR 1652: Chambers Concise Dictionary (pg. 53); Habib Bank Limited v. Messrs Farooq Compost Fertilizer Corporation Ltd. 1993 MLD 1571; Habib Bank Limited v. Messrs Qayyum Spinning Ltd. 2001 MLD 1351; Muhammad Shafi v. Wealth Tax Officer 1992 PTD 726 and Messrs ICC Textile Ltd. and others v. Federation of Pakistan and others 2001 SCMR 1208 rel.

(d) Words and phrases----

--"Service" -Meaning.

Advanced Law Lexicon 3rd Edition Volume 4 (2005) ref.

(e) Interpretation of statutes---

----Fiscal statute---Language used in fiscal statute would be interpreted in its literal and ordinary meanings in favour of taxpayer.

Government of Pakistan v. Messrs Haswani Hotel Ltd. PLD 1990 SC 68; Messrs Army Welfare Sugar Mills Ltd. v. Federation of Pakistan 1992 SCMR 1652; Messrs Bisvil Spinners Ltd. v. Superintendent Central Excise and Land Customs PLD 1988 SC 370 and Abdul Rahim v. United Bank Ltd. PLD 1997 Kar. 62 fol.

(f) Interpretation of statutes---

----Not safe to compare language in one statute with that employed in another, even though subject covered by the two may involve similarities.

Abdul Rahim v. UBL PLD 1997 Kar. 62 ref.

(g) Words and phrases----

---"Advances"-Meaning.

Words and Phrases Vo. 2-A (pg. 117) and Corpus Juris Secundum Vol. 2 page 496-97 ref.

(h) Interpretation of statutes---

--Law should be interpreted in such a manner, that same should be saved rather than destroyed.

Elahi Cotton Mills PLD 1997 SC 582 and Corpus Juris Secundum Vol. 2 pg. 496-97 rel.

(i) Interpretation of statutes---

----Schedule appended with statute---Legal status---Schedule placed/appended with an enactment is an extension of the section for the purpose of which same has been inserted.

(j) Interpretation of statutes---

--Act and Schedule, conflict between---Schedule being an enjoinder equal status of an enacment; in case of such conflict, Act would prevail and Schedule would yield to the Act---Principles.

Excise and Taxation Officer Karachi v. Burma Shell Storage and Distribution Company of Pakistan 1993 SCMR 338; Craies on Statute Law Seventh Edition 1971 p. 225; N.S. Bindra's The Interpretation of Statutes Seventh Edition at pg. 92 and Understanding Statutes S.M. Zafar rel.

(k) Interpretation of statutes---

----Fiscal statute constitutional validity of---Determination---Principles stated.

The Court is bound while examining whether particular matter falls within a fiscal statute is required to examine the letter of the law, and if it comes to the conclusion that all the expressions used by the legislature are to be taken into consideration its popular meaning, then there should not be hesitation in maintaining the constitutionality of particular law.

Corpus Juris Secundum Vol. 84 page 246; Commissioner of Agricultural Income Tax East Bengal v. B.W.M. Abdul Rehman 1973 SCMR 445; Tenant v. Smith 1892 AC 150; Interpretation of Statutes Fourth Edition at page 977; Sohail Jute Mills Ltd. v. Federation of Pakistan PLD 1991 SC 329 and Mian Ejaz Shafi v. Federation of Pakistan and others PLD 1997 Kar. 604 ref.

(l) Interpretation of statutes---

----Laws relating to economical activities, interpretation of---Principles stated

The Court while interpreting laws relating to economical activities view the same with greater latitude than the law relating to civil rights such as freedom of speech, religion etc., keeping in view the complexity of economic problems, which do not admit of solution through any doctrinaire or strait jacket formula.

Elahi Cotton Mills PLD 1997 SC 582 fol.

(m) Interpretation of statutes---

----Fiscal statute---Taxing measure---Ultra vires to the Constitution---Determination---Reasonableness or otherwise of such measure would be a matter of legislative policy and not for the Courts for adjudication.

Anoud Power Generation Ltd. v. Federation of Pakistan PLD 2001 SC 340 rel.

(n) Constitution of Pakistan (1973)----

--Arts. 25, 184, 185(3) & 199---Pakistan Citizenship Act (II of 1951), S.2---Constitutional petition by a Company challenging constitutionality of a statute on touchstone of Art. 25 of the Constitution---Not maintainable without joining its shareholder/director-Principles.

Undoubtedly, the companies have got fundamental rights to carry on business through its representatives, who are the citizens of Pakistan, but for the purpose of challenging the constitutionality. of a statute, it would be a condition precedent to satisfy that challenge is by a citizen at the touchstone of Article 25 of the Constitution, which provides that all citizens are equal before the law and are entitled to protection of law. Expression "citizen" means a citizen of Pakistan as defined by law under Article 260 of the Constitution.

A company incorporated under the Companies Act, 1913 or the Companies Ordinance, 1984, does not fall within the definition of a citizen. However, the constitutionality of a legislation, which has impaired the rights of a company, can be challenged through a shareholder.

An incorporated company does not fall within the definition of citizen. However, constitutionality of a statute can be examined for violation of Article 25 of the Constitution, if the vires of the statute have been questioned by a shareholder, director along with the company itself and the company independently cannot question the constitutionality of legislation at the touchstone of Article 25 of the Constitution. The Courts are not debarred to examine the case of the company on the point other than the alleged violation of Article 25 of the Constitution.

The incorporated bodies/companies do not fall within the definition of a citizen for the purpose of Article 25 of the Constitution; therefore, without joining the share/account holders, the impugned legislation cannot be examined within the parameters of Article 25 of the Constitution.

It would be incorrect to contend that while examining the availability of the question of discrimination under Article 25 to an incorporated body, but so far as the petition under Article 199 of the Constitution is concerned, it would be maintainable on behalf of the companies/banking institutions, if they fall within the definition of a person as it has been used in Article 199 of the Constitution. It would not be out of context to lay down a distinction between the expression of a person and a citizen. As far as the expression "person" is concerned, it also includes a juristic person i.e. incorporated bodies, and so far as expression "citizen" is concerned as it has been employed in Article 25 of the Constitution, which means as defined under the law. Essentially the law on the subject is Pakistan Citizenship Act, 1951, which by its implication excludes a juristic person from the definition of citizen.

Divisional Forest Officer v. Bishwanath Tea Co. Ltd. AIR 1981 SC 1368; Excell Wear v. Union of India AIR 1979 SC 25; U.P.S.E. Board v. Han Shanker AIR 1979 SC 65; I.A. Sherwani v. Government of Pakistan 1991 SCMR 1041 and Inaam ur Rehman v. Federation of Pakistan 1992 SCMR 563 ref.

The Progress of Pakistan Co. Ltd. v. Registrar Joint Stock Companies Karachi PLD 1958 Lah. 887; Shelat v. Bhargava, G.K. Mitter AIR 1970 SC 564; Godhra Electric Company v. State of Gujarat AIR 1975 SC 32 and DC & GM Company v. Union of India AIR 1983 SC 937 rel.

(o) Administration of justice---

----Power of Court to maintain judgment other than on the grounds on which same was founded---Scope stated.

Courts can maintain the judgments other than on the grounds on which the same were founded. But if the plea is not available under the law to defend the judgment, then argument raised by him would not help him at all.

(p) Central Excise Act (1 of 1944)---

----S. 2(20), 3 & First Sched. Part-II, Item, 14.14 [as inserted by S.5 of Finance Act (XII of 1991) and then replaced with Item No.9813.0000 by Finance Act (XII of 1994)]---Excise duty on excisable services---Status---Such tax being an indirect tax recoverable from a person to whom excisable services were provided or rendered---Duty of Financial Institution, Insurance Company, Cooperative Financial Society, other Lending Bank or Institution and. other person dealing in advancing of loans to realize excise duty at prescribed rate from amount of advances outstanding against each borrower.

Messrs Central Insurance Co. v. The Central Board of Revenue 1993 SCMR 1232 ref.

(q) Interpretation of statutes---

----Retrospective effect---Scope---In absence of clear intention of legislature to apply provision of a statute with retrospective effect, same would be deemed applicable prospectively.

(r) Taxation---

----Rate of tax, fixation of---Acceptable consensus of taxpayers ordinarily preferred by Lawmakers---Principles.

The Lawgivers before imposing the tax ordinarily undertake an exercise during the process whereof the taxpayers are also examined and keeping in view their acceptable consensus the rate of tax is fixed. Besides at the same time, it becomes very difficult to quantify the excise tax, therefore, a reasonable/moderate rate of tax is fixed keeping in view the suggestion of the taxpayers and other persons who matter in this behalf.

Elahi Cotton Mills PLD 1997 SC 582 rel.

(s) Central Excise Act (I of 1944)---

---Ss. 2(20), 3, 3-C(1)(b), 4(3), 7(1) & First Sched. Part-II Item 14.14 [as inserted by S. 5 of Finance Act (XII of 1991)]---Excise duty on excisable services, imposition of-Estoppel against legislature---Scope---Legislature could not be estopped from promulgating a law to impose tax with a view to generate revenue---Principles.

Neither Banking Companies nor C.B.R. has imposed excise levy on excisable services, as it is evident from the contents of Finance Act, 1991. Similarly the Federation of Pakistan, who had legislated item 14.14 of First Schedule Part-II is not a party to the agreement between the persons dealing in advances of loans and the Bank. Therefore, the legislature cannot be estopped from promulgating a law for the purpose of imposing of the tax with a view to generate revenue keeping in view its growing requirement to generate funds to address burning problems of the day and the complex issues facing the people, which the legislature in its wisdom through legislation seeks to solve, therefore, there is no estoppel against the Federation to levy excise on the excisable services notwithstanding the contents of the agreement. The powers of the legislature to promulgate the law imposing excise duty or other duties cannot be curtailed.

Molasses Trading and Export (Pvt.) Ltd. v. Federation of Pakistan 1993 SCMR 1905 and Government of Pakistan v. Muhammad Ashraf PLD 1993 SC 176 rel.

Waseem Sajjad, Senior Advocate Supreme Court, and Mumtaz Sheikh, Member (Legal) C.B.R. for Appellants (in Civil Appeals Nos.2296 to 2412 of 2001).

Khalid Anwar, Senior Advocate Supreme Court with M.A. Zaidi and M.S. Khattak,. Advocates-on-Record for Respondents (in C. As. Nos.2312, 2317, 2321, 2355, 2356, 2359, 2373, 2375, 2376, 2383, 2402 and 2406 of 2001).

Syed Ali Zafar, Advocate Supreme Court for Respondents (in C.A. No.2318 of 2001).

Fazal-e-Ghani, Advocate Supreme Court and Ejaz Muhammad Khan, Advocate-on-Record for Respondents (in C.As. Nos. 2325, 2331, 2376, 2402 and 2410 of 2001).

Muhammad Afzal Sandhu, Advocate Supreme Court for Respondents (in C.As. Nos. 2330 and 2366 of 2001).

Raja Haq Nawaz, Advocate Supreme Court with Ch. Akhtar Ali, Advocate-on-Record for Respondents (in C.As. Nos. 2345, 2357, 2363, 2386 and 2405 of 2001).

Muhammad Farid, Advocate Supreme Court for Respondents (in C.A. No.2401 of 2001).

A.I. Chundrigarh, Advocate Supreme Court with A.S.K. Ghori, Advocate Supreme Court for Appellant (in C.As. Nos. 2707-2717 of 2001).

Waseem Sajjad, Senior Advocate Supreme Court with Raja Abdul Ghafoor, Advocate-on-Record (in Civil Appeals Nos. 2707 to 2717 of 2001) and Farogh Naseem, Advocate Supreme Court with M.A. Zaidi, Advocate-on-Record for Respondents (in C.A.2717 of 2001).

A.I. Chundrigarh, Advocate Supreme Court with A.S.K. Ghori, Advocate-on-Record for Appellant (in C.A. No. 516 of 2002).

Nemo for Respondents (in C.As. Nos. 516 of 2002).

Imtiaz Rasheed Siddiqui, Advocate Supreme Court with Sh. Salahuddin, Advocate-on-Record for Appellant (in C.A. No.934 of 2002).

A. Karim Malik, Senior Advocate Supreme Court and Ahmer Bilal Sufi, Advocate Supreme Court for Respondents (in C.A. No.934 of 2002).

Nemo for Appellant (in C.As. Nos. 1087-1091 of 2004).

Raja Muhammad Irshad, D.A.-G. with Raja Abdul Ghafoor, Advocate-on-Record for Respondents (in C.As. Nos.1087 to 1091 of 2004).

Izhar-ul-Haq Advocate-Supreme-Court (in C. A No.1091 of 2004).

Imtiaz Rasheed Siddiqui, Advocate Supreme Court with Sh. Salahuddin, Advocate-on-Record for Appellants (in C.As. Nos.2254-2256, 2260-2261, 2262, 227, 2287, 2290-2292, 2297-2300, 2301, 2303, 2318-2322, 2327-2329, 2349, 2350 and 2395 of 2005).

Syed Ali Zafar, Advocate Supreme Court with Ch. Arshad Ali, Advocate-on-Record for Appellants (in C.As. Nos.2257, 2288, 2289 and 2304-2308 of 2005).

Syed Najmul Hassan Kazmi, Advocate Supreme Court for Appellants (in C.As. Nos. 2258 and 2259 of 2005).

Ashtar Ausaf Ali, Advocate Supreme Court with Sh. Salahuddin, Advocate-on-Record for Appellants (in C.As. Nos.2262, 2290-2292 and 2327-2329 of 2005).

Shahid Hamid, Senior Advocate Supreme Court for Appellants (in C.As. Nos. 2263-2265 of 2005).

Khawaja Muhammad Akram, Advocate Supreme Court for Appellants (in C.As. Nos. 2293-2296 and 2323 of 2005).

Muhammad Akram Sheikh, Senior Advocate Supreme Court for Appellants (in C.As. Nos.2310-2317 and 2325-2326 of 2005).

Raja Muhammad Akram, Senior Advocate Supreme Court for Appellants (in C.As.Nos.2259, 2311., 2330-2338, 2340-2347, 2349, 2352, 2353, 2365, 2367-2369, 2375, 2376 and 2385-2388 of 2005).

Sh. Shahid Waheed, .Advocate Supreme Court for Appellants (in C.As. Nos.2337-2339 of 2005).

Mian Abdul Rauf, Advocate Supreme Court for Appellants (in C.As. Nos. 2344 and 2352 of 2005).

Ch. Muhammad Anwar, Advocate Supreme Court for Appellants (in C.As. Nos. 2348, 2354 and 2364 of 2005).

Tariq Mehmood Khokhar, Advocate Supreme Court with Ejaz Muhammad Khan, Advocate-on-Record for Respondents (in C.A. No.2332 of 2005).

Waseem Sajjad, Senior Advocate Supreme Court and Mumtaz Sheikh, Member (Legal) C.B.R. for Appellants (C.As. Nos.2410-2423 of 2005).

Khalid Anwar, Senior Advocate Supreme Court with M.S. Khattak, Advocate-on-Record for Respondents (in C.As. Nos.2410 and 2412 of 2005).

Muhammad Azeem Malik, Advocate Supreme Court for Appellants (in C.As. Nos.2433 and 2434 of 2005).

Ch. Muhammad Anwar Khan, Advocate-on-Record for Appellants (in C.As. Nos. 2435-2436 of 2005).

M.S. Khattak, Advocate-on-Record for Respondents (in C.A. No.2433 of 2005).

Dates of hearing: 20th, 21st and 22nd February, 2006.

2007 C L D 90

[Supreme Court of Pakistan]

Present: Rana Bhagwandas, Sardar Muhammad Raza Khan and Saiyed Saeed Ashhad, JJ

MUSLIM COMMERCIAL BANK LTD. and others----Petitioners

Versus

AHMED ALI and another----Respondents

Civil Petition No.808-K of 2002, decided on 17th July, 2006.

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

----Ss.7 & 21---Constitution of Pakistan (1973), Arts.185(3) & 199---Suit for recovery of loan--Appeal to High Court---Constitutional petition to High Court---Scope---Consent of parties, would not confer jurisdiction upon the High Court which it did not inherently possess---Judgment and decree passed by Banking Court being appealable under the relevant laws, only remedy available to respondent was to assail such judgment and decree before a Division Bench of High Court---Invocation of constitutional jurisdiction against execution proceedings before a single Judge of High Court was neither warranted by law nor permissible---Contention that order impugned in constitutional petition being void and without lawful authority, non-availing of alternate remedy of appeal was of no consequence, was repelled because judgment and decree passed by Banking Court with exclusive jurisdiction was neither void nor without jurisdiction---Petition for leave to appeal was converted into appeal and was accepted.

Farzand Raza Naqvi v. Muhammad Din 2004 SCMR 400 and Mst. Kaniz Fatima v. Muhammad Salim 2001 SCMR 1493 rel.

Rizwan Ahmed Siddiqui, Advocate Supreme Court, Miss Wajahat Niaz, Advocate-on-Record (absent) for Petitioners.

Ghulam Qadir Jatoi, Advocate Supreme Court for Respondents.

2007 C L D 530

[Supreme Court of Pakistan]

Present: Rana Bhagwandas Sardar Muhammad Raza Khan and Saiyed Saeed Ashhad, JJ

GHULAM SARWAR---Petitioner

Versus

NATIONAL BANK OF PAKISTAN and others---Respondents

Civil Petition No. 329-K of 2005, decided on 17th July, 2006.

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

----Ss. 9, 12 & 22--- Constitution of Pakistan (1973), Art. 199 & 185(3)---Ex parte judgment and decree---Setting aside of---Jurisdiction of High Court---Scope---Petitioner against whom suit for recovery of loan was filed by Bank, despite service of notice through bailiff, by registered post and publication of summonses in two newspapers; neither appeared before the Banking Court nor filed any application for leave to defend the suit---Suit was decreed against petitioner and petitioner, instead of challenging ex pane judgment and decree by way of appeal, preferred miscellaneous application under S.12 of Financial Institutions (Recovery of Finances) Ordinance, 2001, for setting aside judgment and decree, which was declined by Banking Court---Said order being in the nature of final determination of the liability of petitioner and upholding the ex pane decree passed against him, remedy of statutory appeal was available before the High Court, but petitioner chose to file a constitutional petition before High Court. which was dismissed' being without any merits and substance---Validity---Statutory remedy provided by law having not been availed by petitioner, he could not be allowed to bypass such course and invoke the extraordinary jurisdiction of the High Court which could only be availed after exhausting all available remedies provided under law--Since order passed by the Banking Court was neither void nor without jurisdiction, recourse to the constitutional jurisdiction of the High Court was totally unwarranted and uncalled for which was rightly not exercised. in favour of petitioner---Where in peculiar facts and circumstances of the case, petitioner himself chose a wrong ' forum knowing fully well, the remedy available to him under the law, there was no fault with the judgment of the High Court and no ground existed for grant of leave to appeal.

Ghulam Qadir Jatoi, Advocate-on-Record for Petitioner.

2007 C L D 683

[Supreme Court of Pakistan]

Present: Javed Iqbal and Hamid Ali Mirza, JJ

MUHAMMAD YAQOOB and others---Appellants

Versus

Messrs UNITED BANK LIMITED and others---Respondents

Civil Appeal No.592 of 2003, decided on 19th September, 2006.

(On appeal from the judgment dated 6-4 2000 of the Lahore High Court, Lahore passed in C.M. No.47/B of 1999).

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

----S.3---Civil Procedure Code (V of 1908), S.12 (2)---Constitution of Pakistan (1973), Art. 185 (3)---Leave to appeal Supreme Court to resolve the contradictory views expressed by Lahore High Court and Sindh High Court as reflected in judgments in cases titled Gold Star v. Muslim Commercial Bank, reported as 2000 MLD 421, Mian Munir Ahmed v. United Bank Limited and 3 others reported as PLD 1998 Kar. 278 and Messrs Tawakal Export Corporation and 5 others v. Muslim Commercial Bank Ltd. reported as 1997 CLC 1342.

Gold Star v. Muslim Commercial Bank 2000 MLD 421; Mian Munir Ahmed v. United Bank Limited and 3 others PLD 1998 Kar. 278 and Messrs Tawakal Export Corporation and 5 others v. Muslim Commercial Bank Ltd. CLC 1997 Page 1342 ref.

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

---S.3---Civil Procedure Code (V of 1968), S.12 (2)---Decree setting aside of---Provisions of S.12 (2) C.P.C.---Applicability---Application filed by appellant, under S.12 (2) C.P.C. decree was dismissed by Banking Court being not maintainable under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Order passed by Banking Court was maintained by High Court-Validity-Provisions of Procedure Code, 1908 continued to be applicable being Civil ousted by the provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Order passed by High Court was set aside and application preferred on behalf of appellant under S.12 (2) C.P.C. would be treated as pending before High Court and to be disposed of in accordance with law on the merits by Banking Court-Appeal was allowed.

Gold Star v. Muslim Commercial Bank 2000 MLD 421; Mian Munir Ahmed v. United Bank Limited and 3 others PLD 1998 Kar. 278; Messrs Tawakal Export Corporation and 5 others v. Muslim Commercial Bank Ltd. CLC 1997 1342 and Muhammad Ayub Batt v. Allied Bank Ltd. PLD 1981 SC 359 ref.

Mian Nusrat Ullah, Senior Advocate Supreme Court for Appellants.

Muhammad Afzal Sindhu, Advocate Supreme Court for Respondent No.1.

Nemo for Respondents Nos.2 to 7.

Date of hearing: 19th September, 2006.

2007 C L D 720

[Supreme Court of Pakistan]

Present: Tassaduq Hussain Jillani, Nasir-ul-Mulk and Syed Jamshed Ali, JJ

RAB NAWAZ CHAUDHRY---Appellant

Versus

Begum NUSRAT MAQBOOL and another---Respondents

Civil Appeal No.35 of 2003, decided on 15th December, 2006.

(On appeal from the judgment of the Lahore High Court, Rawalpindi Bench, Rawalpindi, dated 11-11-2002 passed in R.F.A. No.14 of 1996).

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

----S.12(5)-Appeal---Admission of appeal to full hearing by Appellate Court without requiring appellant to deposit decretal amount or furnish security---Legality and effect---Duty of Appellate Court was to take note of provision of S.12(5) of Banking Companies (Recovery of Loans) Ordinance, 1979---Admission of appeal to hearing in such manner was an act of the Court---Appellant could not be made to suffer for such omission of Appellate Court.

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

----Ss.7 & 12---Civil Procedure Code (V of 1908), O.XXI, R.89---Execution of decree for recovery of loan amount with interest---Appeal against decree, pendency of---Appellate Court allowed execution to continue, but refused to confirm sale till decision of stay application---Sale of mortgaged property by executing Court-Auction purchaser got himself impleaded as respondent in appeal--High Court disposed of stay application with direction to appellant to deposit decretal amount---High. Court on deposit of decretal amount accepted appeal and set aside auction with direction to appellant to pay amount of interest---Validity---Judgment-debtor had not applied for setting aside of sale under O.XXI, R.89, C.P.C.---Auction proceedings had been allowed to be carried out subject to direction of High Court, which obviously included purchase of property by auction-purchaser---High Court in view of its such order could pass any order regarding auction proceedings---High Court was well within its authority to accept payment already made by judgment-debtor and remaining amount to be paid within prescribed period in total satisfaction of decree---Decretal amount had been paid to Bank, while remaining amount of interest ordered to be paid by High Court, had been paid---Impugned judgment of High Court did not suffer from any legal infirmity---Supreme Court dismissed appeal in circumstances.

Tribhobandas v. Ratilal AIR 1968 SC 372 and Janak Raj v. Gurdial Singh AIR 1967 SC 608 ref.

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

Gul Zarin Kiani, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Appellant.

Ehsan-ul-Haq Chaudhry, Advocate Supreme Court and Ejaz Muhammad Khan, Advocate-on-Record for Respondent No.1.

Rasheed Qamar, Advocate Supreme Court and Raja Abdul Ghaioor, Advocate-on-Record for Respondent No.2.

Date of hearing: 15th December, 2006.

2007 C L D 853

[Supreme Court of Pakistan]

Present: Rana Bhagwandas and Muhammad Nawaz Abbasi, JJ

PAKISTAN STEEL MILLS CORPORATION (PVT.) LTD.---Petitioner

Versus

PAKISTAN INDUSTRIAL CREDIT AND INVESTMENT CORPORATION LIMITED

and another---Respondents

C.P.L.A. No.677-K of 2004, decided on 16th November, 2006.

(On appeal from judgment of High Court of Sindh, Karachi dated 28-6-2004 passed in High Court Appeal No.54 of 2004).

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

---Ss.9, 17 & 19---Civil Procedure Code (V of 1908), S.12(2)---Suit for recovery of loan amount---Plot leased out by lessor in favour of borrower-company for setting up joint venture---Company obtained loan from Bank by mortgaging leased plot---Execution of consent decree obtained by Bank against company in suit---Application under S.12(2), C.P.C., by lessor that leased plot could not be sold out in execution of decree as company had no saleable and marketable interest therein---Plea that company before mortgaging plot had obtained 'No Objection Certificate' from lessor---Validity---Lessor being a shareholder and Director in company would be legally bound by contracts, acts and deeds executed and performed by and on behalf of company---Lessor could not be heard to say that he was not impleaded in suit---Lessor could not make out a case of commission of fraud, misrepresentation or want of jurisdiction on the part of company, when suit was decreed in favour of Bank---Application under S.12(2), C.P.C. was dismissed in circumstances.

M. G. Dastagir, Advocate Supreme Court and Akhlaq Ahmad Siddiqui, Advocate-On-Record for Petitioner.

Habibur Rehman, Advocate Supreme Court for Respondent No.1.

Nemo for Respondent No.2.

Date of hearing: 16th November, 2006.

2007 C L D 949

[Supreme Court of Pakistan]

Present: Javed Iqbal and Abdul Hameed Dogar, JJ

INTERNATIONAL MULTI LEASING CORPORATION and others----Petitioners

Versus

CAPITAL ASSETS LEASING CORPORATION LTD. and others----Respondents

Civil Petition No.3181 of 2003, decided on 11th January, 2007.

(On appeal from the judgment, dated 25-11-2003 of the Lahore High Court, Lahore passed in I.C.A No.14-L of 2003).

Companies Ordinance (XLVII of 1984)---

----S. 282-L & Part VIII-A---Companies Court Rules, 1997, Rr.60 & 61---Armed Forces Civil General Transport Companies and Requisition of Civil Transport Ordinance (CXXII of 2002), Part IX---Constitution of Pakistan (1973), Art. 185 (3)---Merger of Non-Banking Finance Companies---Powers of High Court and Security and Exchange Commission of Pakistan---Statutory majority of shareholders---Effect---Scrap ratio---Determination---Caveat emptor, principle of---Scope---Leave to appeal was granted by Supreme Court to consider; what was import and significance of provisions as enumerated in S.282-L of Companies Ordinance, 1984 and what effect it would have on the scheme-of arrangement/merger of a Non-Banking Finance Company; whether such a scheme of arrangement/merger could have been sanctioned by High Court, pursuant to the provisions contained in S.282-L of Companies Ordinance, 1984, read with Part VIII-A and Part IX of the Armed Forces Civil General Transport Companies and Requisition of Civil Transport Ordinance (CXXII of 2002) or by Security and Exchange Commission of Pakistan in view of the provisions as enumerated in said Ordinance; whether provisions as contemplated in S.282-L of Companies Ordinance, 1984, had been misconstrued and misinterpreted; whether question of limitation had been dilated upon and decided correctly by High Court and time for the purposes of limitation would commence from the date of merger order or when the merger order attained finality; whether "market value of shares" was the only criterion to determine "the scrap ratio" and other relevant factors such as "net assets value" and "profit earning capacity value" could be ignored; whether requisite statutory majority of share-holders of amalgamating

companies had unfettered and unbridled powers and grievance of aggrieved party could not be redressed where the scheme of arrangement/merger was not fair and transparent; whether provisions as envisaged in Rr.60 and 61 of Companies Court Rules, 1997 had been adhered to strictly; whether the principle of caveat emptor could be pressed into service; whether conclusion of High Court qua increase in paid up capital to the required minimum of Rs.200 million was based on conjectural presumption; whether scheme of amalgamation duly approved by statutory majority and sanctioned by court had attained finality and being a statutory instrument was immune from challenge in any manner whatsoever and whether order of merger could be termed as "consent order" having not been secured by two companies.

Syed Sharifuddin Pirzada, Senior Advocate Supreme Court and Mehr Khan Malik, Advocate-on-Record for Petitioners.

Khawaja Ahmad Tariq Rahim, Advocate Supreme Court for Respondent No.1.

Ashtar Ausaf Ali, Advocate Supreme Court for Respondent No.2.

Date of hearing: 11th January, 2007.

2007 C L D 1009

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director Enforcement

Messrs KARIM SILK MILLS LIMITED; in the matter of

Show-Cause Notice No.EMD/233/306/2002-5890-91, dated March 29th, 2007 decided on 7th May, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 305 & 309---Winding up of company---Additional Registrar of Companies had approached Security and Exchange Commission for grant of sanction in terms of proviso (b) of S.309 of Companies Ordinance, 1984 in order to enable him to present petition before High Court for winding up of company---Business of company sought to be wound up had been suspended since 1993 and auditors of the company had given an adverse opinion on the annual accounts for the year ending June 30, 2006 wherein it had been stated that financial statements of the company together with notes forming part thereof, did not conform to approved accounting standards as applicable in Pakistan and respectively did not give a true and fair view---Failure of the company's management to start its business or to make efforts to revive the company, had indicated that the management had no intention of carrying on its business/operations---Under provisions of S.305 of Companies Ordinance, 1984, a Company could be wound up by the court, if it did not commence its business within a year from its incorporation, or suspended its business for a whole year and if the company was 'run and managed by persons who failed to maintain proper and true accounts, or committed fraud, misfeasance or malfeasance in relation to the company; under such facts and circumstances, it would be appropriate to initiate winding up proceedings against the company---In exercise of powers conferred under S.309 of Companies Ordinance, 1984, Additional Registrar, was authorized to file winding up petition in the High Court for winding up the company in question.

Muhammad Siddique, Company Secretary, Present.

2007 C L D 1013

[Supreme Court of Pakistan]

Present: Rana Bhagwandas and Muhammad Nawaz Abbasi, JJ

Messrs IRISMA INTERNATIONAL, KARACHI and 3 others---Petitioners.

Versus

UNITED BANK LIMITED, KARACHI and another---Respondents

Civil Petition No.64-K of 2006, decided on 17th November, 2006.

(On appeal from the judgment of High Court of Sindh, dated 13-12-2005, passed in Appeal No.6 of 2005).

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

----S.18---Civil Procedure Code (V of 1908), O.XXI, R.65---Constitution of Pakistan (1973), Art. 185 (3)---Execution of decree---Sale of property---Matching bid---Entitlement of judgment debtors---After getting the property auctioned, Banking Court gave three days time to judgment debtors to match the highest bid---Instead of judgment debtors, a third party on their behalf offered price higher than that of the highest bidder---Banking Court confirmed the sale in favour of auction purchaser---Plea rained by judgment debtors was that confirmation of sale in favour of auction purchaser was in violation of O.XXI, R.65, C.P.C.--Validity---Procedure provided under O.XXI, R.65, C.P.C. might not be strictly applicable in respect of execution of a decree passed by Banking Court in preference to the procedure provided under S.18 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, which was a special law---Provisions of S.18 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, having overriding effect, had to be essentially followed by Banking Court for the purpose of execution of decree, except in the matter which was not covered by the special provision---Bid offered by a third person would have no legal effect as he had no locus standi to participate in the matching bid---Judgment-debtors, on the basis of matching bid offered by a stranger to the proceedings, could not claim first right of purchase and maintain appeal before High Court or Supreme Court---Leave to appeal was refused.

Mohib Textile Mills Ltd. v. National Bank of Pakistan 2005 SCMR 1237 and Muhammad Ikhlaq Memon v. Zakaria Ghani PLD 2005 SC 819 ref.

Muhammad Sharif, Advocate Supreme Court and Suleman Habibullah, Advocate-on-Record for Petitioners.

Aziz-ur-Rehman, Advocate Supreme Court_ and A.A. Siddiqui, Advocate-on-Record for Respondent No.1.

Rahid A. Rizvi, Advocate Supreme Court and A. Aziz Khan, Advocate-on-Record for Respondent No.2.

Date of hearing: 17th November, 2006.

2007 C L D 1019

[Securities and Exchange Commission of Pakistan]

Before Nazir Ahmad Shaheen, Registrar of Companies

Messrs ALI TAMIM AGRO DEVELOPMENT INDUSTRIES (PRIVATE) LIMITED: in the matter of

Appeal under section 477 of the Companies Ordinance, 1984, decided on 18th May, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss.156, 205 & 477---Failure of company to fife Form-A and Form 29---Imposition of penalty--Appeal---Company and its management having failed to file Form A and Form-29 for the years 1988 to 2006 within the statutory period as provided under Ss.156 & 205 of Companies Ordinance, 1984, penalty was imposed on company---Company had informed that Director of company had passed away; that due to non-payment of instalments of loan obtained by the company, Bank got a decree against company from the Banking Court which was under execution and that after the death of Director of company, decree holders tried to take over properties of the company through deceitful means for which matter was challenged in civil court for its adjudication--Appellant had prayed that impugned order be set aside---Registrar concerned had confirmed that Form-A and Form-29 for the. years 1988 to 2006 of the company had not yet been accepted/recorded as the matter of ownership of company's shares/assets was sub judice before the court of law and impugned order was passed only for late filing of said documents---Company was legal entity and must act through human agency---Company and its Directors in accordance with Ss.156 and 205 of Companies Ordinance, 1984 were required to file statutory returns within prescribed time, but same were filed with a considerable delay---Dispute of ownership would not preclude its management from filing of mandatory statutory returns---Statutory returns (Form-A and Form-29) having not been accepted/recorded by the Registrar concerned and penalty had only been imposed on the company for late filing of returns, no ownership of the company's assets could be claimed on the basis of deposit of penalty by its Director.

Tamim Tufail Aulia, Appellant.

Pir Syed Shahid Ali Shah, Advocate High Court.

2007 C L D 1399

[Supreme Court of Pakistan]

Present: Muhammad Nawaz Abbasi and Ch. Ijaz Ahmed, JJ

THAL INDUSTRIES CORPORATION LIMITED (LAYYAH SUGAR MILLS) through Legal Manager---Petitioner

Versus

GOVERNMENT OF THE PUNJAB through Chief Secretary, Punjab and 11 others---Respondents

Civil Petition No.1085 of 2006, decided on 9th February, 2007.

(On appeal from. the judgment dated 10-10-2006 passed by Lahore High Court, Multan Bench in W.P. 3415 of 2006).

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

---Art. 18---Right of lawful business and trade---Shortage of raw material---Effect---Shortage of raw material in a particular area is not a valid ground to restrain a person from his constitutional right of ding business in a particular area.

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

----Arts. 18, 184 (3) & 199--Constitutional jurisdiction of Supreme

Court and High Court---Scope---Lawful business---Restraining order---Person aggrieved of action of public functionaries can invoke extraordinary constitutional jurisdiction of High Court for interference and simultaneously jurisdiction of Supreme Court under Art. 184 (3) of the Constitution can be invoked in a matter of public importance involving enforcement of fundamental rights---Constitutional jurisdiction of superior courts cannot be invoked and exercised in aid of injustice or to restrain a person from doing lawful business of his choice in accordance with law and Constitution.

(c) Punjab Industrial (Control on Establishment and Enlargement) Ordinance (IV of 1963)--

----S.3---Notification No. AEA-III-3-5/2003, dated 15-7-2005---Constitution of Pakistan (1973), Arts.18 & 185 (3)---Right of lawful trade and business---Shortage of raw material---Installation of sugar mill---Petitioner was running a sugar mill and sought interference of High Court for restraining respondent from raising a new sugar mill on the plea of shortage of raw material in the area---High Court dismissed the petition---Validity---Petitioner was not competent to maintain constitutional petition to challenge setting up a new sugar mill in the area on the ground that- establishment of industry was against public interest and policy of law---Constitutional mandate was that neither any restriction could be placed on setting up of a lawful business or trade nor any person in private sector could be allowed to create monopoly in such trade or business---Provincial Government having conceded the right of private respondent for setting up of sugar .mill, raised a serious objection to the locus standi of the petitioner to challenge establishment of sugar mill in the district---Supreme Court declined to interfere with the judgment passed by High Court---Leave to appeal was, refused.

M. Akram Sheikh Senior Advocate Supreme Court for Petitioner.

Nasir Saeed Shaikh (Court call) for Respondents.

Khadim Hussain Qaiser Addl.A.-G., Ahmed Ali, DOE and IP, Irfan on behalf of Secretary Agriculture and Mehmood Ajmal, A.D. (Industries) for Respondents Nos. 1 to 9.

Raja Abdul Ghafoor, Advocate Supreme Court for Respondent No.10.

Wasim Sajjad, Senior Advocate Supreme Court, Idrees Ashraf, Advocate Supreme Court and Malik M. Rafiq Rajwana, Advocate Supreme Court for Respondent No. 11.

Date of hearing: 9th February, 2007.

2007 C L D 1442

[Supreme Court of Pakistan]

Present: Sardar Muhammad Raza Khan and Tassaduq Hussain Jillani, JJ

Messrs TAJ COMPANY LIMITED through General Manager---Petitioner

Versus

Haji AHMAD JAN and others---Respondents

C.Ps. Nos. 1392-L, 1393-L, 1394-L and 1395-L of 2003 decided on 2nd August, 2007.

(On appeal from the judgment dated 7-4-2003 of the Lahore High Court, Lahore sassed in I.C.As. Nos.2-L, of 2001 and 16-L to 18-L of 2002).

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

----Ss. 10, 9 & 39---Claim of exclusive copyright---Requirements---Held, in order to avail such monopoly in the manuscript and to claim exclusive copyright thereof, it must have somewhere been got registered under the provisions of copyright law---Where there was no document on record indicative of the fact that manuscript used by the publisher had ever been registered in accordance with law and if any such document ever existed in favour of the publisher and not placed on record, the claim of publisher was liable to be rejected on this score alone.

Noor Khan's case 1984 SCMR 681 and Ch. Abdul Ghani's case 1988 SCMR 390 fol.

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

----S. 28---Protection of typography and term of protection---Scope---Held, even if the publisher had any right in the typographic arrangement of the editions of publication, it was to subsist for a period of twenty fine years from the beginning of the calendar year next following the year in which the edition was first published---Where there was no evidence on record, which palpably seemed to have been suppressed, as to when the script was first published because such printing had remained in vogue for many decades even beyond twenty fine years, no case of copyright involvement had been made out in circumstances.

Abdur Rauf Rohaila, Advocate Supreme Court, Muhammad Naazar Khan, Advocate Supreme Court and M.A. Qureshi, Advocate-on-Record for Petitioners (In all cases).

Muhammad Yousaf Kazmi, Advocate Supreme Court for Respondent (In C.P. No.1394-L of 2003).

Nemo for Respondent (in C.Ps. Nos.1392-L, 1393-L and 1395-L of 2003).

2007 C L D 1481

[Supreme Court of Pakistan]

Present: Tassaduq Hussain Jillani, Nasir-ul-Mulk and Syed Jamshed Ali, JJ

SAMAD DEVELOPMENT CORPORATION---Appellant

Versus

MUHAMMAD SHAFI PETAL---Respondent

Civil Appeal No.1027 of 2007 decided on 29th November, 2006.

(On appeal from the judgment dated 17-9-1998 of the High Court of Sindh, passed in H.C.A. No.209 of 1996).

Banking Companies Ordinance (LVII of 1962)---

----S. 43(F)---Civil Procedure Code (V of 1908), O.XXI, R. 58---Constitution of Pakistan (1973), Art. 185--- Appeal to Supreme Court---Appellant had challenged the judgment passed by the High Court, aide which appeal filed by the respondent was allowed and order passed by the Single Judge of High Court, was set aside---No adverse finding with regard to the claim of the appellant had been given by the Division Bench in the impugned judgment and the. matter was left to be decided by the Court of Special Jurisdiction i.e., the Company Judge---Primary concern of appellant, appeared to be the delay in deciding the application, which could not be taken exception to because the winding up matter was pending for the last 15 years and before Supreme Court for the last 6/7 dears---Even otherwise, impugned judgment was a remand order and in absence of any observation, which could have prejudiced appellant, no interference was warranted---While dismissing appeal, Company Judge was directed by the Supreme Court to decide the matter expeditiously---Respondent in the meanwhile, would not alienate or encumber the property and would not remove any material/articles/machinery lying there.

Rizwan Ahmed Siddiqui, Advocate Supreme Court for Appellant.

Shehanshah Hussian, Advocate Supreme Court for Respondent.

Date of hearing: 29th November, 2006.

2007 C L D 1509

[Supreme Court of Pakistan]

Present: Faqir Muhammad Khokhar and Karamat Nazir Bhandari, JJ

Messrs TERMIZI OIL INDUSTRIES (PVT.) LTD. through Director and 3others---Petitioners

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN through Senior Vice President---Respondent

Civil Petition No.2021-L of 2005, decided on 20th October, 2005.

(On appeal from the order dated 18-4-2005 passed by the Lahore High Court Lahore in R.F.A. No.572 of 2001).

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

----S.9---Constitution of Pakistan (1973), Art.185(3)---Suit for recovery of loan---Money decree passed by Banking Court, having been confirmed by the High Court in appeal, petitioner had sought leave to appeal against said judgment and decree---Ground urged by petitioner was that Senior Vice-President, Regional Office, through whom suit was filed, was not authorized to file the suit in the name and on behalf of the Bank---High Court relied on a Notification No.EST/110/1292/72 dated 13-9-1974, wherein the Board of Directors of the Bank, had authorized the officer of the rank of Senior Vice-President to institute the suit---No argument, whatsoever having been addressed by counsel for petitioner against said Notification, impugned -judgment and decree were held perfectly valid.

Khawar Ikram Bhatti for Petitioners.

Nemo for Respondents.

2007 C L D 1542

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhry, C.J., Abdul Hameed Dogar, Khalil-ur-Rehman Ramday, Muhammad Nawaz Abbasi and Mian Shakirullah Jan, JJ

MUHAMMAD AZIZUR REHMAN---Appellant

Versus

LIAQUAT ALI---Respondent

Civil Appeal No.2101of 2006, decided on 5th March, 2007.

(On appeal from the judgment dated 13-9-2006 of the Lahore High Court, Lahore passed in R.F.A. No.124 of 2004).

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

----S.118---Civil Procedure Code (V of 1908), O.XXXVII, Rr.1 & 2---Suit for recovery of loan amount on basis of pro note and its receipt---Execution of such documents denied by defendant in written statement, but his admission in cross-examination to have executed same as guarantee for business with plaintiff---Effect---Where execution of negotiable instrument was admitted, then burden of proof of non-payment of consideration would lie on its executant---Section 118 of Negotiable Instruments Act, 1881, provided that until contrary was proved presumption would be that negotiable instrument was made/drawn for consideration---Defendant had failed to prove non-payment of consideration through independent and cogent evidence---Suit was dismissed in circumstances.

Muhammad Boota v. Fiaz Ahmed 1979 SCMR 465 and Haji Karim and another v. Zakir Abdullah 1973 SCMR 100 rel.

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

----S.118---Negotiable instrument---Denial of consideration---Burden of proof---Where execution of negotiable instrument was admitted, Cheri burden of proof of non-payment of consideration would lie on its executant.

Muhammad Boota v. Fiaz Ahmed 1979 SCMR 465 and Haji Karim and another v. Zakir Abdullah 1973 SCMR 100 rel.

Salim Khan Chechi, Advocate Supreme Court for Appellant.

Irfan Ahmed Wain, Advocate Supreme Court for Respondent.

Date of hearing: 5th March, 2007.

2007 C L D 1570

[Supreme Court of Pakistan]

Present: Faqir Muhammad Khokhar, M. Javed Butter and Ch. Ijaz Ahmed, JJ

ENGLISH PHARMACEUTICAL INDUSTRIES through Partner/Proprietor/

Manager and another---Petitioners

Versus

SHIRE BIOCHEM INC. through Authorized Signatory and others---Respondents

Civil Petitions Nos. 388 and 389 of 2006, decided on 20th June, 2006.

(On appeal from the Judgment dated 18-5-2006 of the Lahore High Court, Lahore passed in F.A.Os. Nos.147 and 148 of 2006)

Patents Ordinance (LXI of 2000)---

---Ss.60 & 61---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for injunction to restrain defendant from infringing,: counterfeiting and. imitating plaintiff s registered patent and for damages etc.---Interim injunction, application for---Infringing drug was manufactured by defendant in October, ..2006 i.e. during the period of validity of plaintiffs original patent, which allegedly expired on 7-2-2006---question as to whether plaintiff s subsequent patent ,constituted an independent patent being an inventive step rather an improvement or madification of original expired patent, was a master of evidence, which could not be presumed -prematurely---Statutory ,presumption under S.61(1)(b) of Patents Ordinance, 2000 was available to plaintiff s original patent---Securing the interest of plaintiff would be necessary during the period prima facie, evidence of patent-ability of subsequent patent was brought before court---defendant tied to establish the origin of its manufacturing process for. developing its allegedly infringing product---Plaintiff had failed to make out a prima faacie case for interim injunction---Balance of inconvenience was in favour of defendant---Court stopped defendant from supplying infringing drug in market, but allowed him in public interest to supply contract quantity of drug to Government only, but subject to prior furnishing of Bank guarantee in the amount of contract value in favour of plaintiff for its encashment, if tie succeeded in establishing infringement of his patent by defendant---Application for interim injunction was disposed of in such terms.

Acto Lab. (Pvt.) Ltd. v. Pfizer Ltd. and others 2002 CLD 120; Biogen Inc. v. Medeva PLC 1997 RPC 1 and Bristol Myers Squibb Co. v. Baker Norton Pharmaceuticals Inc. 2001 RPC 1 ref.

Dr. A. Basit, Advocate Supreme Court Ejaz Muhammad Khan, Advocate-on-Record (In both cases).

Moeen Qamar, Advocate. Supreme Court and Syed Zafar Abbas Naqvi, Advocate-on-Record for Respondents Nos.1 to 4. (In both cases).

2007 C L D 1605

[Supreme Court of Pakistan]

Present: Iftikhar Muhammad Chaudhary, C.J., Abdul Hameed Dogar, Khalil-ur-Rehman Ramday, Muhammad Nawaz Abbasi and Mian Shakirullah Jan, JJ

MUHAMMAD AZIZUR REHMAN---Appellant

Versus

LIAQUAT ALI---Respondent

Civil Appeal No.2101 of 2006; decided on 5th March, 2007.

(On appeal from the judgment dated 13-9-2006 of the Lahore High Court, Lahore passed in R.P.A. No.124 of 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 loan amount an basis of pro note and its receipt---Execution such documents denied by defendant in written statement, but his admission in cross­ examination to have executed same as guarantee for business with plaintiff---Effect---Where execution of negotiable instrument was admitted, then burden of proof of non-payment of consideration would lie on its executant--Section. 118 of Negotiable Instruments Act, 1881, provided that until contrary was proved, presumption mould be that negotiable instrument was made/ drawn for consideration---Defendant had failed to prove non -payment of consideration through independent cold cogent evidence---Shit was dismissed in circumstances.

Muhammad Boota v. Fiaz Ahmed 1979 SCMR 465 and Haji Karim and another v. Zakir Abdullah 1973 SCMR 100 rel.

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

---S. 118---Negotiable instrument---Denial of consideration---Burden of proof---Where execution of negotiable instrument was admitted, then burden of proof of non-payment of consideration would lie on its executant.

Muhammad Boota v. Fiaz Ahmed 1979 SCMR 465 and Haji Karim and another. v. Zakir Abdullah 1973 SCMR 100 rel.

Salim Khan Chechi, Advocate Supreme Court for Appellant.

Irfan Ahmed Wain, Advocate, Supreme Court for Respondent.

Date of hearing: 5th March, 2007.