CLD 2008 Judgments

2008 C L D 1133

[Competition Commission of Pakistan]

Before Khalid A. Mirza, Chairman, Abdul Ghaffar, Rahat Kaunain Hassan and Maleeha Mimi Bangash, Members

POLYESTER STAPLE FIBRE COMPANIES: In the matter of

File No.1(1)/Miscellaneous/Dir (Inv)/MCA/2006), decided on 10th June, 2008.

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

----Ss. 6, 11, 14 & 21---Competition Ordinance (LII of 2007), S.59---Trade practices---Monopolistic or restrictive trading behaviour of manufactures---Manipulation of price---Authority during examination of price pattern of Polyester Staple Fibre in the market, noticed that almost same price was being offered in the market by undertakings engaged in production and sale of said fibre---Authority in view of said unity among the undertakings in quoting/charging one price all over Pakistan, observed that possibility was that undertakings had an understanding not to compete with each other in price and also were sharing commercial information---Authority initiating suo motu enquiry under S.14 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970, asked the undertakings to supply certain informations under S.21 of said Ordinance, which, except one undertaking, supplied requisite information, which were examined by the Authority---Comparison of the prices quoted by the undertakings and the prices reported in a Business daily, indicated a wide difference, whereas per Kilogram profit and loss analysis, provided by the undertakings, showed a considerable difference in their cost and expenses structure---Authority, in circumstances, issued a show-cause notice for concerted price fixing behaviour in the Polyester Staple Fibre market being a restrictive trade practice in terms of S.6(1)(a)(i) of Monopolies and Restrictive Trade practices (Control and Prevention) Ordinance, 1970---In response to the show-cause notice, undertakings made certain submissions---Authority was satisfied that prima facie collusive arrangement existed among Polyester Staple Fibre manufactures/ undertakings; that a negation existed of free play of market forces of supply and demand by undertakings; (iii) that undertakings with their monopolistic or restrictive trade behaviour had manipulated the price of Polyester Staple Fibre manufacturers/undertakings---After promulgation of Competition Ordinance, 2007, the Competition Commission of Pakistan successor of the Authority, decided to fix the matter for hearing---In the case, along with the parallel price fixing, there certainly were some "plus factors'---Price pattern followed was similar, which, in itself, also had an indicative value---Slight variation in price, if any, could be attributed to the variance in the terms and conditions applicable to each party---Such type of price parallelism was normally not possible in a fairly competitive market, where the competitors had quite different installed capacities and 'levels of capacity utilization as well as divergent cost structures---Such facts were indicative of a tied arrangement and it would, be incorrect to state that it was merely a case of price parallelism or that every thing could be justified under one umbrella ground that prices were determined by the "market forces"-Nothing cogent had been provided as to how those market forces worked, whereas there was some reason to believe that market forces could have been impeded by collusive behaviour---In view of submissions made by the undertakings, the Commission was not fully satisfied with the grounds and explanations offered on the part of the concerned undertakings---Commission, in circumstances, inquired whether the parties would be willing to come forward with any assurances in that regard and parties were informed that such assurance, had to be in the form of an undertaking, for and on behalf of the Board of Directors and affidavits of their Chief Executive Officers to the satisfaction of the Commission, inter alia, affirming; that they had not organized themselves in any formal or informal association; in no manner would meet or coordinate to adopt or fix parallel pricing or levels of output---Undertakings also had to categorically state and confirm that they had neither quoted any price in the media nor provided any information in that regard---Since all the parties in the subject proceedings readily consented to comply with the requirement of filing an undertaking and submitting the affidavit of Chief Executive Officer, they were directed to file same within specified period---Commission, after considering the facts of the case, the submissions of the authorized representatives and the fact that the parties voluntarily furnished undertakings, benefit of doubt was given to the undertakings---Said undertakings, however, were cautioned that the Commission would maintain a vigilant eye on their conduct of business and in the event of any violation of law was apprehended or detected, the Commission would proceed against them in accordance with law.?

D.G. Khan Cement Co. Ltd. v. MCA 2006 CLD 1237 ref.

Mazhar Javed Khan, CFO, Dewan M. Yousuf Farooqui, Group M.D., Ahmad Nadeem, Director Marketing, Mansoor-ul-Haq, G.M. Treasury and Company Secretary, Rashid Anwar and Syed Nasik Ali Gillani Counsel of Messrs Dewan Salaman Fibre Ltd. Present.

Abdul Hayee, Director Finance of Messrs Rupali Polyester Ltd. Present.

Shahid Amin, Director of Messrs Ibrahim Fibres Ltd. Present.

Ahmad Ibrahim, Director and Salina Aziz of Pakistan Synthetics Ltd. Present.

Pervaiz A. Khan, Vice-President Polyester Business, Ali Zaman, Business Manager, Feroz Rizvi, Finance Director and Barrister Baddruddin F. Vellani Counsel of Messrs ICI Pakistan Ltd. Present.

2008 C L D 1178

[ENVIRONMENTAL TRIBUNAL PUNJAB]

Before Syed Zamir Hussain, Chairperson, Mussarat Baig, Member Technical and Mansoor Akbar Kokab, Member Legal

PACKAGES LIMITED---Appellant

Versus

ENVIRONMENTAL PROTECTION AGENCY, GOVERNMENT OF THE PUNJAB---Respondent

Appeal under section 22 of the Pakistan Environmental Protection Act, 1997, decided on 5th March, 2008.

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

----Ss.16(1) 17 & 22---Appeal---Environmental hazards---Environmental Protection Agency gave three months time to appellant for taking appropriate measures to treat waste water of its unit keeping it within National Environmental Quality Standards---Failing to comply with directions given by the Agency, appellant was proceeded against under S.17 of Pakistan Environmental Protection Act, 1997, and Environmental Protection Order was passed against appellant---Plea raised by appellant was that proceedings by Pakistan Environmental Protection Agency were not within its knowledge---Validity---Right from year, 1999, appellant's unit was time and again directed by Environmental Protection Agency to control its pollution---Throughout the entire proceedings, appellant fully participated and remained associated with entire process of personal hearing as well as taking of samples etc., therefore, it was incorrect to allege that findings of Environmental Protection Agency were not notified or within the knowledge of appellant---Appellant had not come forward with the contention that its effluents were free from any pollution---Despite lapse of about 9 years, appellant's unit failed to control its effluents as mentioned in Environmental Protection Order---No ground was available to appellant to question validity of Environmental Protection Order---Appeal was dismissed in circumstances.

Jawad Hassan for Appellant.

Muqadus Malik and M. Nawaz Malik for Respondent.

2008 C L D 1185

[ENVIRONMENTAL TRIBUNAL PUNJAB]

Before Syed Zamir Hussain, Chairperson and Mansoor Akbar Kokab, Member Legal

SUMAIRA AWAN, SECRETARY GENERAL---Appellant

Versus

GOVERNMENT OF PAKISTAN and 10 others---Respondents

Complaint No. 76 of 2003, decided on 20th February, 2006.

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

----S.17---Word "contravention"---Connotation---Cognizance by Court or Tribunal---Scope---Word "contravention" connotes act or omission done or committed in past, therefore, no one cart plead that since past is over hence the Courts or Tribunals are functus officio to take cognizance of offence; it is always cognizable when act or omission has actually been done or committed by an offender and so is reported---Cognizance of offence is not warranted for acts or omission or offences likely to be done or committed or merely apprehended to be committed.

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

----S.12---Pakistan Environmental Protection Agency (Review of IEE & EM) Regulations, 2000, Art.5, Schedule, II, Sr.D---Words "Reconstruction", "maintenance", "rebuilding" and "improvements"---Distinction---Word "reconstruction" means to restore existing road in its original shape, type and in dimensions without touching any addition or subtraction---Even otherwise, adding capacity to roads system is always a new construction, what bears, by its nature, impacts to natural and social environment---Reconstruction is differentiable from "maintenance" or "rebuilding" or even "improvements", what generally refer to superficial changes such as upgrades and resurfacing.

Black's Law Dictionary Seventh Edition ref.

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

----Ss.12 & 17---Criminal Procedure Code (V of 1898), S.265-K---Environmental hazards---Environmental Protection Agency, approval of-Project of government---Liability of contractor---Plea raised by authorities was that environmental effect of project during construction was evaluated by a consultant company of government and Secretary of Environment was specialty invited in the meetings of Executive Committee of National Economic Council (ECNIC) of Government of Pakistan, therefore, requirement of Pakistan Environmental Protection Act, 1997, was not obligatory---Contention of contractor was that since it was a government project, therefore, it was not his liability to obtain 'No Objection Certificate' under S.12 of Pakistan Environmental Protection Act, 1997---Validity---Tribunal did not agree with the plea raised by authorities, as specific provisions of enacted law could not be by-passed or deferred by adopting some other unwarranted methods or procedures, no matter such procedures might be more comprehensive and complete than the one required by some enacted provisions of law---Particular act to be done under law must be done in particular and specified manner as provision of law prescribed or required action of that act---Contractor could not absolve himself from liability of executing an unlawful work/project on the plea that contract awarding agency was primarily obliged to comply with the provisions of law---Every executant of an unlawful work was considered equally responsible for penalty as a co-offender as original proponent of unlawful work was considered as an offender---Unlawful work to be accomplished by third party could not be considered lawful for him either on the basis of absence of knowledge about law or any legal flaw in assigned work to him by his master/contract assignee authority---Application was dismissed in circumstances.

Akhtar A Awan for Appellant.

Jawad Hassan for Respondent.

2008 C L D 487

[Islamabad]

Before Dr. Sajid Qureshi, J

INVEST CAPITAL INVESTMENT BANK LTD.---Petitioner

Versus

SECP---Respondent

C.O. of 2 of 2008, decided on 7th March, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss.96, 97 & 98---Constitution of Pakistan (1973), Art.199---Constitutional petition---Reduction of share capital---Share capital was sought to be reduced under S.96(1)(ii) of the Companies Ordinance, 1984, being capital not represented by available assets of the company---Such reduction was permissible by Articles of Association of the company---Reduction of capital did not involve the diminution of any liability in respect of unpaid share capital over payment to any shareholder of any paid-up share capital---Representative of Security Exchange Commission of Pakistan stated that they had no objection to the petition and for the reduction of share capital under S.97 of the Companies Ordinance, 1984--All steps and procedures having been complied with under Ss.96, 97 & 98 of Companies Ordinance, 1984, petition for reduction of share capital was accepted and High Court allowed the reduction of the share capital as prayed for by the petitioner.

Anwar Mansoor Khan, Muhammad Bilal, Babar Bilal and Shaziya Bilal for Petitioner.

Mian Ahmad Ibrahim Assistant Director (Law) SECP.

2008 C L D 830

[Islamabad]

Before Dr. Sajid Qureshi, J

POEPA---Petitioner

Versus

GOVERNMENT OF PAKISTAN and others---Respondents

Writ Petition No. 175 of 2008, heard on 9th May, 2008.

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

---Art 199---Constitutional petition---Maintainability---Person being not an aggrieved party, cannot invoke constitutional jurisdiction of High Court under Art.199 of the Constitution.

(b) Trade Organizations Ordinance (XXXI of 2007)---

----Ss. 5 & 21---Penal Code (KLV of 1860), S.419---Constitution of Pakistan (1973), Art.199-Constitutional petition---Maintainability--Alternate remedy---Factual controversy---Concealing of facts---Petitioner was denied issuance of trade certificate who without availing remedy of appeal, invoked constitutional jurisdiction of High Court---Validity--Petitioner did not avail remedy of appeal against disputed license under Trade Organizations Ordinance, 2007---Petitioner had no locus standi nor legal status to file constitutional petition, which had not been properly constituted and it had not been filed by a duly authorized person---Factual controversy was involved and petitioner had concealed material facts especially in Form A and had further impersonated as a Chairman or office bearer of defunct organization, whose license had been revoked-Such conduct of petitioner was an offence under S.419, P.P.C.---Constitutional petition was dismissed in circumstances.

Friendship Textile Mills v. Government of Pakistan 1998 CLC 1767; Qamber Ali Baloch v. Principal Daud College 1987 CLC 371 and Sabzi and Fruits v. Commissioner, Larkana 2001 YLR 916 ref.

Malik Qamar Afzal for Petitioner.

Khalid Abbas, Deputy Attorney General with Khalid Deputy Director for Respondent No.1.

Muhammad Ilyas Sheikh for Respondents Nos.4 and 5.

Date of hearing: 9th May, 2008.

2008 C L D 1206

[Islamabad]

Before Muhammad Munir Paracha, J

HUNZA SUGAR MILLS (PVT.) LIMITED through General Manager Finance, Lahore---Appellant

Versus

MONOPOLY CONTROL AUTHORITY---Respondent

F.A.Os. Nos. 166 to 175 of 2005, decided on 30th July, 2008.

(a) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordnance (V of 1970)---

----Ss. 7, 3, 2 & 6---Concentration of economic power---Unreasonably restrictive trade practices---Powers of the Authority---cope--Provision of S.7(1), Monopolies and Restrictive Trade Practices (Control and Prevention) Ordnance, 1970 empowers the Authority to prescribe by general order, the practice which shall be deemed to be unreasonably restrictive trade practice---Before making any general order, the Authority has to comply with the provisions of S.7(2)(3) of the Ordinance---Before recording a finding that there has been or is likely to be contravention of the provisions of S.3 of the Ordinance, the Authority must establish that there .exists-c' or will exist an unreasonably restrictive trade practice---To establish the existence of an unreasonably restrictive trade practice, either the Authority has to establish all the ingredients of an unreasonably restrictive trade practice mentioned in S.2(n) or has to resort to the deeming clause of Ss.6 & 7 of the Ordinance---Where admittedly there was no general order prescribing the practice, which shall be deemed to be unreasonably restrictive trade practice, either the Authority was to establish all the ingredients of unreasonably restrictive trade practice, or to prove an agreement mentioned in S.6 of the Ordinance justifying to presume that unreasonably restrictive trade practice has been resorted to or is continuing.

PLD 2007 Lah. 1 ref.

(b) Monopolies and Restrictive Trade Practices (Control and Prevention) Ordnance (V of 1970)---

----Ss. 3, 6, 12 & 14---Undue concentration of economic power---Unreasonably restrictive trade practices---Powers of the Authority---Scope---Authority, while taking suo motu action under S.14, Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 issued show cause notices and directions to Sugar Mills to discontinue and not to repeat the practice of withholding of stock to create artificial shortage of the commodity in the market---Only reason recorded by the Authority was that a very small percentage of total stock was sold in the market---Validity---Held, such reason would not provide a sufficient criteria to hold that unreasonably restrictive trade practice had been resorted to---Authority had not mentioned in the order as to how, much quantity of Sugar was sold in the market in the specified months as compared to earlier months---Collusive arrangement between the undertakings dealing with manufacturers of Sugar had not been satisfactorily proved---Manufacturers, in their reply to show cause notices issued to them by the Authority, had pleaded that a number of the Mills had sold more quantity of Sugar in the market in the later months as compared to the average monthly sale which according to the manufacturers negated the alleged collusive arrangement---Authority had failed to consider such aspect of the matter and there was no evidence that the sale of Sugar was refused by the undertakings despite demand by the dealers---Orders of' the Authority, in circumstances, were liable to be set aside.

PLD 2007 Lah. 1 ref.

Jawad Hassan for Appellant.

Bilal and Baber Bilal with Muhammad Ajaib Khan, Joint Registrar for Respondent.

Date of hearing: 30th July, 2008.

2008 C L D 1349

[Islamabad]

Before Syed Qalb-i-Hassan, J

HAMDARD NATIONAL FOUNDATION PAKISTAN---Appellant

Versus

ROZNAMA HAMDARD through Chief Editor---Respondent

Regular First Appeal No.8 of 2008, decided on 30th July, 2008.

Trade Marks Ordinance (XIX of 2001)---

----S.40(4)---Infringement of trade mark---Distinct business---Plaintiff was owner of registered trade mark known as "Hamdard" renowned in the field of Unani medicines, syrups and other goods---Plaintiff also claimed that it was publishing magazines and journals under the name and title of "Hamdard-e-Sehat" and "Hamdard Naunehal"---Plaintiff assailed registration of "The Daily Hamdard" a newspaper, in the name of defendant---Plea raised by defendant was that publishing of newspaper was distinct business and law had not restricted from using such name irrespective of registration of trade mark "Hamdard" of plaintiff---Validity---Registered trade mark was infringed under S.40(4) of Trade Marks Act, 2002, if any person had used in the course of trade mark in relation to goods or services which were not similar to those for which the trade mark was registered when deceptively similar to trade mark used which lead to confusion or deception---Defendant was although publishing daily newspaper with the name "The Daily Hamdard" and plaintiff was publishing monthly magazines under their trade mark of "Hamdard-e-Sehat" and "Hamdard-e-Naunehal" and although both the publications were differently classified but had often same sale points and outlet points and readers are largely of the same category, therefore, element of deception and confusion could not be ignored---Judgment and decree passed by trial Court was set aside and the suit was decreed in favour of plaintiff to the extent that defendant was restrained from infringing plaintiffs registered trade mark "Hamdard" by using the trade mark word "Hamdard" in his publication--Appeal was allowed in circumstances.

Messrs Dewan Sugar Mills (Pvt.) Ltd. v. M.B. Abbasi and others 2007 CLD 1610; Seven-up Company v. Kohinoor Thread Ball Factory and 3 others PLD 1990 SC 313 and Alpha Sewing Machine v. Registrar of Trade Marks PLD 1990 SC 1074 rel.

Sunkit Growers Inc. v. Messrs Karachi Aerosol Co. Ltd. and another PLD 1987 Kar. 119 and Montres Rolex S.A. Geneva, Switzerland v. Assistant Registrar of Trade marks PLD 1987 Kar. 199 ref.

Sultan Ahmad Sheikh for Appellant.

Hafeez Ullah Yaqoob and Inaam Amin Minhas for Respondent.

Date of hearing: 15th July, 2008.

2008 C L D 48

[Karachi]

Before Nadeem Azhar Siddiqi, J

Messrs NAJMA SUGAR MILLS (PVT.) LTD.-Appellant

Versus

SALEEM KHAN and others---Respondents

J. M. No.20 of 2004, decided on 18th October, 2007.

Companies Ordinance (XLVII of 1984)---

----S.40(3)---Civil Procedure Code (V of 1908), S.12(2) & O.V, Rr.10, 12 & 13---Decree, setting aside of---Misrepresentation---Service of process---Proof---Change of name of company---Effect---Decree passed against applicant company was sought to be set aside -on the ground that process was not served on it as it had changed its address and name---Validity---Summons sent to applicant company was received by its officials putting seal of the company-Applicant did not specifically deny that officials of the company, who received summons, were not in its employment---In absence of such specific denial it could not be presumed that no summons was served upon applicant---Protection under S.40(3) of Companies Ordinance, 1984, to such legal proceedings were provided which had been continued or commenced against the company by its former name---Applicant company failed to demonstrate any fraud or misrepresentation in service of summons upon applicant and thus decree was not set aside---Application was dismissed in circumstances.

Ch. A. Rasheed for Applicant.

Amjad Ali Sahito for Respondent No. 1.

Nemo for Respondents Nos.2 and 3.

Date of hearing: 24th September; 2007.

2008 C L D 51

[Karachi]

Before Nadeem Azhar Siddiqi, J

Syed AIJAZ HUSSAIN----Plaintiff

Versus

Syed ABDUL AZEEM----Defendant

Suit No.942 of 2005, decided on 24th October, 2007.

Negotiable Instruments Act (XXVI of 1881)---

----Ss. 79 & 80---Civil Procedure Code (V of 1908), O. XXXVII, Rr.2, 3 & S.34---Suit for recovery of loan amount on basis of dishonoured cheque---Non-appearance of defendant in court despite service of summons of suit upon him---Failure of defendant to obtain leave to defend suit---Placing on record original cheque by plaintiff along with memorandum issued by Bank for return of cheque issued by defendant---Factum of dishonouring of cheque going unchallenged and unrebutted---Effect-- Allegation in plaint would be deemed to be admitted by defendant and plaintiff would be entitled to decree---Suit was based on 'negotiable instrument, which would be presumed to have been issued against consideration---Defendant had not come forward to rebut such presumption---High Court decreed-the suit with interest @ 6% per annum in accordance with Ss.79 & 80 of Negotiable Instruments Act, 1881 from date of dishonouring of cheque till date of suit and at the same rate from date of suit till date of decree, and interest @ 10% per annum from date of decree till date of payment of decretal amount in accordance with S.34, C.P.C. along with costs of suit.

Wajahat Abbas for Plaintiff.

Nemo for Defendant.

Date of hearing: 11th October, 2007.

2008 C L D 56

[Karachi]

Before Khilji Arif Hussain and Salman Ansari, JJ

Messrs UNITED BANK LIMITED---Appellant

Versus

Messrs MUHAMMADI TEXTILE MILLS LTD. and 5 others---Respondents

I. Appeal No.75 of 1994, decided on 31st October, 2007.

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

----Ss.9 & 22---Appeal-Suit for recovery of loan---Entitlement to grant of mark-up---Judgment of Banking Tribunal though had found that plaintiff was entitled to mark-up for 210 days "cushion period", but such mark-up was not granted---Mark-up of 210 days had not been granted on account of some typographical error, judgment and decree passed by the Banking Tribunal was modified by the High Court, only to the extent that in addition to amount decreed, plaintiff was also entitled to mark-up of 210 days along with mark-up from the date of judgment and decree.

Naveedul Haq for Appellant.

Nemo for Respondents.

2008 C L D 57

[Karachi]

Before Sabihuddin Ahmed, and Faisal Arab, J

Sheikh ABDUL WAHID and 7 others---Appellants

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and 2 others---Respondents

Miscellaneous Appeal No.4 of 2007, decided on 12th October, 2007.

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

----S.34---Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002), Ss.4, 25 & 26--Acquisition of shares---Inquiry---Protection to investors---Unfair trade practice---Security and Exchange. Commission of Pakistan---Duties---Appellants were proceeded against by Security and Exchange Commission of Pakistan on the ground that they had fraudulently sold shares of their company on a very low price of Rs.16 per share and the buyer company further sold the shares to another buyer at a price of Rs.333.33 per share within a period of less than one year---Plea raised by appellants was that transaction was a genuine transaction---Validity---Held, it was one of the duties of Security and Exchange Commission of Pakistan to ensure adequate protection. to investors by detecting unfair trade practices in case any unfair practice was detected, it should take all necessary measures to undo the wrong---Such was necessary to maintain confidence of ordinary share-holders of a company who were sitting at a distance waiting to reap fruits of their investments---Investors not being part of every decision making process of the company reposed faith in the management which was expected to make sound commercial decisions for collective benefit of all share-holders---Such faith and trust could not be allowed to be breached with impunity--High Court commended detection of scam by officers of the Commission---Shares of the company were sold below their value that deprived ordinary share-holders of true worth of their shares---Right to claim price differential between two sale transactions belonged to such share-holders who in proportion to their respective shareholdings held in the company as on the date when shares were initially sold and not to those who purchased the shares in the company after the initial sale---High Court in exercise of appellate jurisdiction declined to interfere with the order passed by Security and Exchange Commission of Pakistan---Appeal was dismissed in circumstances.

Collector Central Excuse and Land Customs v. Rahim Din 1987 SCMR 1840; Exide Pakistan v. Deputy Collector Adjudication 2004 PTD 1449; Muhammad Zaman v. Collector of Customs 1981 CLC 991; Muhammad Amin v. The Province of Sindh 1992 MLD 671 and Islamabad Club v. Punjab Labour Court PLD 1980 SC 307 ref.

Arshad Tayyabali for Appellants.

Ijaz Ahmad for Respondents.

Date of hearing: 13th September, 2007.

2008 C L D 70

[Karachi]

Before Nadeem Azhar Siddiqi, J

WRANGLER APPAREL CORPORATION through Authorized Signatory---Plaintiff

Versus

AXFOR GARMENTS through Proprietor/Manager/Partners-Defendant

Suit No.772 of 2004, decided on 1st October, 2007.

Trade Marks Ordinance (XIX of 2001)---

----Ss.39 & 40---Registered trade Mark---Infringement---Plaintiff claimed to be the owner of trade mark which was registered with the authorities and defendant was infringing that mark---Despite issuance of process, defendant remained un-represented and ex parte proceedings were initiated---Defendant neither filed written statement nor in any manner denied contentions of plaintiff---Effect---Trade mark in question and logo was registered in favour of plaintiff and only plaintiff had exclusive right to use the same---Defendant could not use the same for marketing and selling its product---Using of registered trade marks of plaintiff by defendants on its products amounted to infringement of registered trade r narks of plaintiff-Suit was decreed in circumstances.

Ms. Amna Salman for Plaintiff.

Nemo for Defendant.

Date of hearing: 18th September, 2007.

2008 C L D 75

[Karachi]

Before Zia Perwez, J

TANYA KNITWEAR (PVT.) LTD. and others---Appellants

Versus

FIRST WOMEN BANK LTD---Respondent

First Appeal No.24 of 2003, decided on 23rd October, 2007.

(a) Review---

---Special statute---Power to review---Scope---Exercise of powers under special enactment does not imply a power to review earlier orders in exercise of inherent powers unless power of review' is specifically conferred by such statute.

Messrs Baghpatee Service (Pvt.) Ltd. and 6 others v. Messrs Allied Bank of Pakistan Ltd. 2001 CLC 1363 rel.

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

----S. 17---Civil Procedure Code (V of 1908), O.XXIII, R.3 & S.151---Consent decree, setting aside of---Decision on merits---Scope---Suit filed by bank was decreed in favour of bank on the basis of joint statement submitted by counsel' of both the parties---After over two years of passing of consent decree, bank, filed application for either changing material dates in 'the compromise or for setting aside of decree and decision of case on merits on the ground that statement filed by their counsel was without authority---Bank did not institute any action against counsel who had allegedly filed compromise---Effect---Such consent order which was based on record, where change of dates might seriously prejudice the right of opposite party could not be reviewed or interfered with by High Court, after a long delay of more than two years---No violation of any State Bank Circular was pointed out by the bank---Such was beyond the scope of S.151, C.P.C. to review such case on merits---High Court did not find any ground or error in the consent order passed earlier which could call for correction as compromise was based on the statement of both the parties---Neither any ground for recall or order of compromise decree was made out nor powers of review were available---Application was dismissed in circumstances.

Metal Containers Employees Union v. Ali Anwar Changhro 2001 YLR 1818; Messrs Baghpatee Service (Pvt.) Ltd. and 6 others :v. Messrs Allied Bank of Pakistan Ltd. 2001 CLC 1363; Hashwani Hotels Limited v. Federation of Pakistan and others PLD 1997 SC 315; Messrs Habib Bank Limited v. Messrs Schon Textiles Ltd. 2001 YLR 1244: Agricultural Development Bank of Pakistan v. Jasarat Hussain 2002 CLD 93; Allied Bank of Pakistan Ltd. Faisalabad v. Messrs Aisha Garments, etc. 2002 AC 104; Textile Management (Pvt.) Ltd. v. N.I.T. 2002 CLD 276; Allied Bank of Pakistan Ltd. v. Messrs Modern Metallic Services 2003 CLD 1352; Allied Bank of Pakistan Ltd. v. Mrs. Fahmida and others 2004 CLD 110; Nasir Mushtaq Vohra v. Crescent Investment Bank Ltd. 2005 SLJ 35; United Bank Ltd. v. Ch. Ghulam Hussain 1998 CLC 816; Habib Bank Ltd. v. A.B.M. Graner (Pvt.) Ltd. PLD 2001 Kar`. 264; 2001 MLD 1351; 2001 YLR 1549; Addul Basit v. Bank of Punjab 2003 CLD 751; Yussra Textile Corporation v. PICIC Commercial Bank Ltd. 2003 CLD 905; Habib Bank Ltd. V. Al-Jalal Textile Mills Ltd. 2003 CLD 1007; National Bank of Pakistan v. Punjab Building Products Ltd. PLD 1998 Kar. 302; I.C.P. v. Messrs Chiniot Textile Mills Ltd': PLD 1998 Kar. 316; United Bank Ltd. v Central Cotton. Mills Ltd. 1999 CLC 1374; Habib Bank Ltd. v. Pakistan National Textile Mills 2001 MLD 1137; United Bank Ltd. v. Mian Aftab Ahmed 2001 MLD 1332; Habib Bank Ltd. v. Balochistan Gum Industries (Pvt.) Ltd. 2001 YLR 81; Muslim Commercial Bank Ltd. v. Razwan Textile Mills Ltd. 1998 MLD 529; Muhammad Yusaf v. A.D.B.P. 2002 CLD 1270; Gul Habib v. Habib Bank Ltd. PLD 1983 Pesh. 31; Muhammad Sulleman v. Habib Bank Ltd. 1988 CLC 969; Industrial Development Bank of Pakistan v. Al-Mansoor Ltd. PLD 1989 Pesh. 191; Bakers Equity Ltd. v. Bentonite Pakistan Ltd, 2003 CLD 931; International Traders v. Union Bank Ltd. 2003 CLD 1464; Bank of Khyber v. Spencer Distribution Ltd. 2003 CLD 1406; Central Bank of India v. S. Muhammad Abdul Jalil Shah 1999 CLC 971; Muhammad Siddiq Muhammad Umar v. Australasia Bank Ltd. PLD 1966 SC 684; Citibank N.A., A Banking Company v. Riaz Ahmed 2000 CLC 847; First Grindlays Modaraba v. Pakland Cement Ltd. 2000 CLC 2017; Sh. Muhammad Naeem v. Habib Bank Ltd. 2003 CLD 606: Citybank v. Tariq Mohsin Siddiqui PLD 1999 Kar. 196; Askari Commercial Bank Ltd. v. Pakland Cement PLD 2000 Kar: 246; Pakistan Industrial Credit and Investment Corporation Ltd. 2001 CLC 1551 and Muzaffar Ali v. Muhammad Shafi PLD 1981 SC 94 ref.

Raja Qasit Nawaz Khan for Appellants.

Khawaja Naveed Ahmed for Respondent.

2008 C L D 85

[Karachi]

Before Mrs. Qaisar Iqbal, J

ECHO WEST INTERNATIONAL (PVT.) LTD.-Plaintiffs

Versus

PAKLAND CEMENT LTD.---Defendants

Suit No.510 of 1999, decided on 17th April, 2007.

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

----O.III, R.1 &, O.XXIX, R.1---Suit by company registered under Companies Ordinance, 1984---Signing, verification and filing of plaint by Chairman of the company---Non-mentioning in plaint as to how and in what manner Chairman was legally authorized to file suit on behalf of company---Vakalatnama lying on record being a Letter Head of company finding mention of Board Resolution authorizing Chairman to file suit --Non filing along with affidavit-in-evidence Articles of Association of company or Resolution of its Board of Directors to show delegation of power on its behalf in favour of its Chairman--Validity--No cross-examination could be conducted on such Letter Head being so-called resolution, which was not exhibited in evidence---Once Court had consciously framed issue regarding authority to file suit, then plaintiff was bound to have produced/exhibited such letter, failing which same could not be relied upon---Suit instituted by Chairman was dismissed for being incompetent and non-maintainable.

Khan Iftikhar Hussain Khan v. Ghulam Nabi Corporation Limited PLD 1971 S.C. 550 and Dr. S.M. Rub v. National Refinery PLD 2005 Kar. 478 rel.

(b) Pleadings---

----Written statement per se cannot be used as evidence.

Abdul Karim v. Mst. Kohi Noor Begum 1981 CLC 1055; Kabir Ahmed v. Saudabad Trust through Administrator Deputy Commissioner Officer, Karachi 2007 CLC 288; Messrs Ainy Builders and Company Hyderabad Hyderabad Municipal Corporation, Huderabad 1997 MLD 732 and Abdul Majid v. Syed Muhammad Ali Shamim 2000 SCMR 1391 ref.

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

----Arts. 117 & 118---Failure of plaintiff to prove his claim---Effect---Plaintiff could not take assistance from weaknesses apparent in defendant's case.

Ahmed Khan v. Rasul Shah and others PLD 1975 SC 311; Abdul Karim v. Mst. Kohi Noor Begum 1981 CLC 1055; Kabir Ahmed v. Saudabad Trust through Administrator Deputy Commissioner Officer, Karachi 2007 CLC 288; Messrs Ainy Builders and Company Hyderabad v. Hyderabad Municipal Corporation, Huderabad 1997 MLD 732 and Abdul Majid v. Syed Muhammad Ali Shamim 2000 SCMR 1391 rel.

(d) Interpretation of document---

----Document would be read as a whole and not piecemeal.

Asad Waheed v. Khalid Perviz 2005 MLD 986 and Pakistan Agricultural Storage and Services Corporation Limited (Passco) v. Qamar-ul-Islam 2005 YLR Lah. 879 rel.

(e) Damages---

----Suit for---Party would be bound to prove factum and quantum of damages sustained by it by producing cogent evidence---Principles.

Suit for damages cannot be decreed without proof and every averment in- the plaint has to be separately proved by evidence on each point. General, vague and scanty evidence cannot be relied upon. The damages suffered and the quantity of the amount claimed item wise has to be proved by cogent evidence. Mere assertion in the plaint and repletion in evidence is of no avail to the plaintiff. Party has to prove the factum as well as quantum of damages sustained by it.

Nazir Ahmed v. Hap Nasir Ali 2006 MLD 907; Messrs Taj Oil Industries- Limited v. Messrs Bengal Oil Mills Ltd. 1990 MLD 877; Messrs Muhammad Amin Muhammad Bashir Ltd. v. Messrs Muhammad Amin Brothers Ltd. PLD 1969 Kar. 233 and Moin's (Private) Limited v. Pakistan Television Corporation Ltd. Karachi 2001 MLD 1065. rel.

Bilal A. Khawaja for Plaintiff.

Dr. Farogh Naseem along with Sardar M Ajaz Khan for Defendants.

2008 C L D 94

[Karachi]

Before Nadeem Azhar Siddiqi, J

Messrs TEAM NAYYER (PVT.) LTD. and another---Plaintiffs

Versus

TARIQ AHMED SULTANI---Defendant

Suit No.983 and C.M.A. No.6910 of 2007, decided on 2nd November, 2007.

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

----Ss.7 & 8---Suit for declaration, injunction and recovery of damages---Plaintiff as proprietor of registered design and trademark "Bodycap" alleged its infringement by defendant--Grant of interim injunction---Resemblance in two designs would be sufficient to establish infringement, but similarity thereof to each other in all respects would not be necessary---Photocopies of certificates for registration of such design and trademark produced by plaintiff had established his right to exclusive use thereof---Photographs of canopies manufactured by plaintiff and defendant had established that both were similar to each other' and capable of creating confusion and deception in the mind of public---Defendant by non filing his reply had failed to rebut such factual controversy---Registered designs of plaintiff were still valid---Defendant, without plaintiffs consent, had no right to copy such design and trademark---Plaintiff had established, prima facie, case in his favour---Balance of convenience was also in favour of plaintiff-In case of refusal of injunction, plaintiff would suffer irreparable loss and would be deprived of benefits of his registered design---Application for interim injunction was granted in circumstances.

Messrs Select Sports A.S. Co. v. Messrs Tempo Enterprises PLD 1998 Lah. 69; Silver Cotton Textile Mills Ltd. and another v. Bawany Violin Textile Mills Ltd. PLD 1963 (W.P.) Kar. 79; Muhammad Jahangir and another v. Hassan Qaiser and another 2004 CLD 516; Messrs Team Nayyer (Pvt.) Ltd. v. Kamran Jamal Khan Suit No.495 of 2007 and Jamshed Aslam Khan v. Mrs. Azra Jawed and others 1995 CLC 436 ref.

Messrs Team Nayyer (Pvt.) Ltd. v. Kamran Jamal Khan Suit No.495 of 2007; Valor Heating Company Limited v. Main Gas Appliances Limited (1973) RPC 871 and (1972) FSR 497 rel.

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

----S. 8---Infringement of design, claim for---Proof---Resemblance in two designs would be sufficient to establish infringement, but similarity thereof to each other in all respects would not be necessary.

Haider Waheed for Plaintiffs.

Nemo for Defendant.

2008 C L D 101

[Karachi]

Before Nadeem Azhar Siddiqi, J

KASB BANK LIMITED---Plaintiff

Versus

Messrs TRANS LIVIA PRIVATE LIMITED and 5 others---Defendants

Suit No.B-33 of 2005, decided on 24th October, 2007.

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

----S.10---Leave to defend suit, refusal of---Effect---Leave to defend having not been granted court could not consider plea raised by defendant in their objection.

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

----S.10---Leave to defend suit, refusal of---Power of court to pass decree against defendant in such case---Scope---Court might require any other material to satisfy itself of plaintiffs claim and would not be absolved from its primary duty of seeing and finding genuineness of plaintiff's claim.

Jan Asif Mehmood for Plaintiff.

Muhammad Saleem Thepdawala for Defendants Nos.1, 2 and 4.

Mirza Adil Baig for Defendant No.3.

Defendant No.5 called absent.

.Date of hearing: 24th October, 2007.

2008 C L D 107

[Karachi]

Before Nadeem Azhar Siddiqi, J

THAL JUTE MILLS LTD.---Applicant

Versus

NAJEEB NAWER and others---Respondents

J.M. No.36 of 2003, decided on 10th August, 2006.

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

----Ss.2, 10 & 25-Application for cancellation of registered design---Applicant had filed application for cancellation of design acquired by respondent in respect of design of three wheeled vehicle---Claim of applicant was that he, by compensating respondent, had acquired the exclusive right in design in question and the respondent had no more right in that respect---Respondent had claimed proprietorship and exclusive right in said design on the ground that he had worked for said design---Parties had not correctly set forth the true facts and both parties were trying to take advantage of verbal understanding between them and were not fair to each other---Registered Designs Ordinance, 2000 did not provide any procedure for the High Court to follow in hearing application under S.10 of the Ordinance though its S.25 provided for evidence before Registrar---In absence of any prescribed procedure, the High Court could adopt any procedure---Unless specifically prohibited, the court was empowered to frame issues and could take evidence to resolve the dispute once for all---In the present case, due to absence of any agreement in writing between the parties, it was difficult to give any findings on the basis of affidavit and counter-affidavit of the parties---Best course available was to frame the issues and to direct the parties to prove their respective contentions by way of evidence-Parties were directed by High Court to file their respective claims and after framing of issues, the parties would be at liberty to produce evidence in support of their claims.

Ward Lock and Company Limited v. Long (1906) 2 Ch. D. 550; Lawarence and Buller Limited v. Aflalo and Cook 1904 Appeal Cases 17; Lamb v. Evans (1993) 1 Ch 218; Muhammad Mohsin Butt v. Muhammad Inayat Butt 2005 CLD 747; Province of West Pakistan v. Mahboob Ali PLD 1976 SC 483; The Attorney General and Ephraim Hutchings (Relator) v. The Directors and The Co. of The Great Eastern Railway (1880) 5 HL 473; Ashbay Railway Company v. Riche (1860) 8 HLC 721; Fida Ali Yousuf Ali v. Graxalt PLD 1967 Kar. 637; Commissioner for Income _Tax (Central) Karachi v. Messrs Habib Insurance Company Limited Karachi PLD 1969 Kar. 278; The United Bank Limited v. Messrs Pak Wheat Products Limited PLD 1970 Lahore 235; Bell Honges v. City Wall Properties (1966) 2 All ER 674 and (1993) 76 Company Cases 1. rel

Rashid Anwar for Applicant.

Abdul Rehman for Respondents.

Date of hearing: 5th August, 2006.

2008 C L D 141

[Karachi]

Before Khilji Arif Hussain, J

STAR TEXTILE MILLS LTD.---Plaintiffs

Versus

Messrs LONGCLOSE and 2 others---Defendants

Suit No.672 of 1991, decided on 27th April, 2007.

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

----Ss.125 & 128---Contract for supply of machine---Letter by first defendant addressed to plaintiff giving him assurance that machine to be supplied would be free from manufacturing defect---Letter by second defendant addressed to plaintiff confirming contents of such letter of first defendant---Validity---Letter by second defendant could" not be termed in any manner as guarantee given by first defendant holding himself personally liable for any defect in machine supplied to plaintiff.

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

----S.73-Contract for supply of machine-Non-functioning of machine for being not in accordance with agreed specifications---Plaintiff claimed Rs.14,600 for loss suffered in one shift due to non-working of machine---Running of plaintiff s factory in three shifts per day and 300 days in a . year---Non-production of evidence by plaintiff in support of alleged loss of non-functioning of machine---Non-mentioning of alleged loss of production in income tax returns by plaintiff----Report of Official Assignee :showing machine not to be in accordance with agreed specifications-Validity-Amount claimed by plaintiff could not be granted in absence of evidence that due to defect in machine, he had suffered loss and damages---Official Assignee had agreed with claim of Rs.2,00,000 to Rs.10,00,000 being amount to be incurred for making machine workable according to specifications---Defendant had committed breach in delivering machine not in accordance with specifications---Defendant in contract had given warranty of proper functioning of machine for six months---Plaintiffs suit was decreed in sum of Rs.5,00,000 for being reasonable amount of damages.

S.I. H. Zaidi for Plaintiff.

Usman Sheikh for Defendant No.3.

Dates of hearing: 21st November, 2006 and 10th April, 2007.

2008 C L D 158

[Karachi]

Before Nadeem Azhar Siddiqi, J

I. D. B. P. ---Petitioner

Versus

AOKI (PVT.) LTD, and others---Respondents

J.M. No. 193 of 1996 and C.M.A. No.252 of 2007, decided on 30th November, 2007.

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

----S.39---Transfer of Property Act (IV of 1882), S.100---Execution of decree for recovery of loan amount---Mortgaged property, attachment of---Objector's application for release of attached property claiming to be owner thereof on basis of gift made in year 1990 by her husband/judgment-debtor---Validity---Loan documents executed in year 1988 by judgment-debtor in favour of Bank were in respect of other properties---Attached property was mentioned in guarantee as property of judgment-debtor---Judgment-debtor had not executed deed for deposit of title document or mortgaged deed in respect of attached property---Judgment-debtor had not deposited title document of attached property with Bank to create equitable mortgage---Deposit of title document and execution of memo. of deposit of title deed was necessary for creating equitable mortgage---Attached property had not been offered as security in terms of S.100 of Transfer of Property Act, 1882---Bank could not produce any document to show that at any point of time charge had been created against attached property---Objector's application was accepted in circumstances.

Mian M. Rafiq Saigol v. Trust Modaraba 2003 CLD 646 ref.

Allied Bank of Pakistan Ltd. v. Sainjees Restaurant and Motel 1985 CLC 391 rel.

Salman Hamid for Petitioner.

Abid Akram for Objector.

2008 C L D 177

[Karachi]

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

INDUS BATTERY INDUSTRIES (PVT.) LTD.---Petitioner

Versus

FEDERATION OF PAKISTAN and others---Respondents

Constitutional Petition No.D-2326 of 2006, heard on 11th October, 2007.

(a) Customs Act (IV of 1969)---

---Ss. 25-C & 155-H---Freedom of Information Ordinance (XCVI of 2002), Ss.3, 8 & 15---Under-invoicing of imported goods, detection of---Information regarding description quantity, quality, port of export, country of origin and value of imported goods declared by importer---Right to such information of a person interested in making-an offer under S.25-C of Customs Act, 1969---Non-disclosure of such information to such interested person by Customs Authorities claiming immunity under S.155-H of the Customs Act, 1969---Validity---Object of S.25-C of Customs Act, 1969 was to facilitate detection of .under-invoicing in order to prevent evasion of customs duties and charges---Immunity from making such disclosure claimed by Customs Authorities, if permitted, would defeat such object of S.25-C of the Act---Such information to be gathered by such interested person would not fall within any of immunities provided under Ss.8 & 15 of Freedom of Information Ordinance, 2002---Duty of Customs Authorities to disclose such information to such interested person as same would help in preventing under-invoicing---Principles.

Section 155-H of the Customs Act, 1969 bars the Customs Authorities from divulging information about the imported goods to a third person. The object of section 25-C of the Customs Act, 1969 is to facilitate detection of under-invoicing so as to prevent evasion of customs duties and charges. This object cannot be achieved if the Customs Authorities claim immunity under section 155-H of the Customs Act, 1969, which if permitted would defeat the very purpose of section 25-C of the Customs Act, 1969. The information as to description of the imported consignment, the quantity, the quality, the country of origin, the port of export and the value declared for such goods is necessary' to make offer under section 25-C. If these material particulars are not disclosed to a local buyer, he would not be able to make his offer under section 25-C which would have facilitated detection of under-invoicing, if any committed. Divulging requisite information to a person interested in making an offer under section 25-C is therefore necessary to achieve the objects of section 25-C of the Customs Act, 1969. On the contrary withholding such information by claiming immunity from disclosure under section 155-H of the Customs Act, 1969 would thwart the detection of under-invoicing thereby causing loss to the exchequer.

Access to information is sine qua non of constitutional democracy. The public has a right to know everything that is done by the public functionaries. The responsibility of public functionaries to disclose their acts works both .against corruption and oppression. Though this right has its limitations but every routine business of the public functionary cannot be covered with the veil of secrecy or privilege. Only where disclosures would cause greater harm than good that the disclosures are to be disallowed. Therefore, as a rule, information should be disclosed and only as an exception privilege should be claimed on justifiable grounds permissible under the law. Freedom of Information Ordinance, 2002, regulates this right to information, which emanates from the freedom of expression. The object of this Ordinance as evinced from its preamble, is to provide for transparency and freedom of information in order to ensure that citizens have access to public records and the Government is more accountable to its citizens. Under section 3 of the Freedom of Information Ordinance, 2002, the provisions of the said Ordinance are to be so interpreted as to facilitate prompt disclosure of information at minimal cost. Furthermore section 3 also contains a non obstante clause which provides that notwithstanding anything contained in any other law, no person is to be denied information from any official record. The only limitations to this right are the immunities described in sections 8 and 15 of the said Ordinance.

When an immunity is claimed from making disclosures, the courts have to tilt towards permitting disclosures in order to balance the public right to know against the interest of an individual, unless of course the disclosures are likely to expose personal privacy of an individual. No doubt, where there are two competing interests involved, the court would perform balancing act by weighing both the interests and decide where the balance tilts. In a democratic and free societies even the consumers of a product are given the right to be informed about its quality, quantity, purity, potency, standards and constituents, so that consumers could make informed choices.

The documents from which necessary details of imported' consignment are to be gathered by a person interested in making an offer under section 25-C of the Customs Act, 1969 do not fall within any of the immunities provided under sections 8 and 15 of the Freedom of Information Ordinance, 2002. Furthermore, as section 3 of the Freedom of Information Ordinance, 2002 contains non obstante clause "notwithstanding anything contained in any other law", no immunity can be claimed on the basis of section 155-H of the Customs Act, 1969 as the provisions of the Freedom of Information Ordinance, 2002 have overriding effect over the provisions of section 155-H of the Customs Act, 1969.

The Customs Authorities are bound to disclose information regarding description, quantity, quality, the port of export, the country of origin and the value of the imported consignment declared by' the importer to any person, who is, interested in making an offer under section 25-C of the Customs Act, 1969. The disclosure of such information would certainly help in preventing under-invoicing, which is the very object of section 25-C of the Customs Act, 1969. In fact, all such information should be made available on the web site of the Customs Authorities.

Kashif Naseem v. Federation of Pakistan and others 2007 PTD 2250 ref.

(b) Freedom of Information Ordinance (XCVI of 2002)---

----Ss. 3, 8, 14, 15, 16 & 17---Application for obtaining information regarding public record---Immunity from making such disclosure claimed by authority---Duty of court---Right of citizen to have access to such information had its limitations, but every routine business of public functionary could not be covered with veil' of secrecy of privilege---Where disclosure would cause greater harm than good, then disclosure could be disallowed---Where two competing interests were involved, then court would perform balancing act by weighing both interests and decide where balance tilted---Principles.

Access to information is sine qua non of constitutional democracy. The public has a right to know everything that is clone by the pubic functionaries. The responsibility of public functionaries to disclose their acts works both against corruption and oppression. Though this right has its limitations but every routine business of the public functionary cannot be covered with the veil of secrecy or privilege. Only where disclosures would cause greater harm than good that the disclosures are to be disallowed. Therefore, as a rule, information should be disclosed and only as an exception privilege should be claimed on justifiable grounds permissible under the law. Freedom of Information Ordinance, 2002, regulates this right to information, which emanates from the freedom of expression. The object of this Ordinance as evinced from its preamble, is to provide for transparency and freedom of information in order to ensure that citizens have access to public records and the Government is more accountable to its citizens. Under section 3 of the Freedom of Information Ordinance, 2002, the provisions of the said Ordinance are to be so interpreted as to facilitate prompt disclosure of information at minimal cost. Furthermore section 3 also contains a noel obstante clause which provides that notwithstanding anything contained in any other law, no person is to be denied information from any official record. The only limitations to this right are the immunities described in sections 8 and 15 of the said Ordinance.

When an immunity is claimed from making disclosures, the courts have to tilt towards permitting disclosures in order to balance the public right to know, against the interest of an individual unless of course the disclosures are likely to expose personal privacy of an individual. No doubt where there are two competing interests involved, the court would perform balancing act by weighing both the interests and decide where the balance tilts. In a democratic and free societies even the consumers of a product are given the right to be informed about its quality, quantity, purity, potency, standards and constituents, so that consumers could make informed choices.

Haseeb Jamali for Petitioner.

Rizwan Ahmed Siddiqi, D.A.-G., Aqeel Ahmad Abbasi and Ghulam Ahmed Khan for Respondents.

Date of hearing: 11th October, 2007.

2008 C L D 190

[Karachi]

Before Khalid Ali Z. Qazi, J

Messrs HUB PAK SALT REFINERY through Duly Authorized Partner---Plaintiff

Versus

NATIONAL FOODS (PVT.) LIMITED---Defendant

C.M.As. Nos.9084, 8633, 9946, 10085, 10086, 10087, 10088, 10089, 10090, 10091 and 10157 of 2007 in Suit No.1339 of 2007, decided on 3rd January, 2008.

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

----Ss.52(2)(b), 2(6) & 68---Copyright Ordinance (XXXIV Of 1962), S.56-Defamation Ordinance (LVI of 2002), Ss.8 & 4---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for declaration---Application for grant of permanent injunction against a legal notice to plaintiff by the defendant threatening it taking a coercive action and restraining it from interfering in any manner whatsoever with the dealings, affairs and contractual relations of the plaintiff with the television channels airing the advertisement for the plaintiffs product, other than through a court in due process of law---Defendant, who was copyright owner and had registered trade mark for its product in question, which was shown in the advertisement on electronic media by the plaintiffs advertisement to the effect that `a lady picked up the defendant's product and put off treating the same as

dangerous to health and human consumption'---Defendant, in view of such advertisement served legal notice on the plaintiff, its advertisers and concerned channels of the TV pointing out the violation by them of relevant law on the subject and taking action therefor---Validity.---Offensive advertisement seemed to have been prepared in such a manner as to amount defaming the defendant and its product which was not permissible under the law and was not a `comparative advertisement' and was disparagement--Advertisement admittedly was disparaging, in fact, it would cause great damage to the marketability of the' defendant's product---Advertisement campaign on the electronic media had an immediate impact on the viewers and possible purchaser's mind and effect of the aired advertisement could not be repaired readily and easily---Legal notice issued by defendant could be inferred to be in compliance of law and under the circumstances, the defendant was justified to take necessary action according to law---Plaintiff, in circumstances, was not entitled for the relief, and issuance of the notice by the defendant might be treated as notice required under S.8 of Defamation Ordinance, 2002, and the notice could not be said to be a groundless threat---Plaintiff, in circumstances, had no prima facei case at the present stage balance of convenience was also not in favour of plaintiff as great inconvenience would be caused to the owner of registered intellectual property in exercising its legal rights to deal with the property as per law and no irreparable loss would be caused to the plaintiff, if the injunction was refused because the loss, if any, could be compensated in the shape of damages---Application for grant of injunction by the plaintiff was dismissed by the High Court.

Prince PLCV Prince Sports Group Inc. (1998) FSR Volume 25, decided 30-7-1997 by Mr. Justice Neuberger', High Court of Justice Chancery Division, U.K.; Halsbury's Laws of England, Forth Edition 2000 Rassue Volume 48 Page Para 118. 119 and 120; CM Row's Law of Injunctions 8th Edition by K. Swami Paragraph 17.5; Muhammad v. Bism Nath AIR 1928 All. 316; 1976 RPC 308 (313); .1998 FCR 21; Country Link Development Corporation v. Habib Bank Limited and others PLD 2000 Kar. 269 (277); Mst. Bushra Sadiq v. KDA and others 2001 MLD 1257 (DB); 94(2001) DLT 30 case of Pepsi Cola (Dehli High Court); Pakistan Drug House (Pvt.) Ltd. v. Rio Chemical Company and another 2003 CLD 1531; AIR 1978 SC 1613 (1627); AIR 1965 SC 980; AIR 1995 SC 1795 (1806); PLD 1984 SC 44 (46); AIR 1939 Lah. 529; PLD 1960 Dacca 19; 1991 MLD 1243; 1986 CLC 1908; Jaybeam Limited v. Abru Aluminum Limited (1976) R.P.C. 308 decided on 15-5-1975; (1929) 2 K.B. 331 case of Cassidy v. Daily Mirror Newspapers Ltd. decided by Court of Appeal on 13-5-1929; (1905) 1 Chancery Division 519 in case of Hanfstaengl v. W.H. Smith & Sons; Black Law Dictionary page 448 definition of Defamation; All ER (1941) 2 Page 403 in case of King Features Syndicate Inc. v. O. and M. Kleemann, Ltd.; Syed Muhammad Ali v. Network Television Marketing (Pvt.) Ltd. and another PLD 2005 Kar. 399; Adeeb Javedani v. Yahya Bakhtiar 1995 CLC 1246; Abdul Ghafoor v. Syed Jawed Hussain Jaffrey and another PLD 2006 Kar. 691; Eureka 'Forbes Limited, Kalkata v. Pentair Water India Private Limited 2006 Ind Law Kar. 505, decided on 20-12-2006; Dabur India' Limited v. Emami Limited 2004 Ind Law Del 162, decided on 28-5-2004 by Delhi High Court; Altaf Goher v. Wajid Shamsul Hussain PLD 1981 Kar. 515 and Unreported Judgment of Delhi High Court in I.A. No.5445 of 2004 titled as Dabur India Limited v. Colgate Palmolive India Ltd. decided on 9-9-2004 ref.

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

---Rr.1 & 2---Grant of injunction---Entitlement of a party to get relief---Satisfaction of Court---Conditions.

A party would be entitled to relief under Order XXXIX Rules 1 and 2, C.P.C. provided that it satisfies the court that it has a prima facie case; that balance of convenience is in his favour and the irreparable loss and injury could be caused to him if interim relief is not granted. The aforesaid three phrases are not Rhetoric phrases but elastic words to meet a wide range of situation in given set of facts and circumstances. The burden is always on the plaintiff/applicant' to satisfy the court that a prima facie case exists in his favour. The court must further satisfy itself that non-interference by court 'would result in irreparable injury to a party seeking relief. Irreparable injury means that the injury must be a material one, one that court cannot adequately compensate by way of damages. The court is expected to exercise sound judicial discretion to find out the amount of substantial mischief or injury which is likely to be caused to the other party if the injunction is granted.?

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

---S.52---Defamation Ordinance (LVI of 2002), S.8---Remedy for groundless threats of infringement proceedings---Expression "the plaintiff shall be entitled to any relief specified in S.52(2) of Trade Marks Ordinance, 2001"---Scope---If defendant shows a valid cause of initiating the proceedings, which were threatened, then the plaintiff in such situation shall not be entitled to any relief---Principles.

The expression "the plaintiff shall be entitled to any relief specified in subsection (2) unless the defendant shows that the acts in respect of which proceedings were threatened constitute, or if done would constitute, an infringement of the registered trade mark concerned" in section 52(3) makes it clear that if defendant shows a valid cause of initiating the proceedings, which were threatened, then the plaintiff in such situation shall not be entitled to any relief. In the present case, the plaintiff admitted in its plaint and supporting affidavit of application under Order XXXIX Rules 1 and 2, C.P.C. that in its advertisement packet of product of the defendant was shown and can be seen that the lady picked up the defendant's packet and put off treating the same as dangerous to health and human consumption. It is to be inferred that legal notice issued by defendant was in compliance of law and under the circumstances, the defendant was justified to take necessary action according to law. In the circumstances the plaintiff is not entitled for the relief. Therefore, the issuance of legal notice may be treated as notice required under section 8 of Defamation Ordinance 2002 therefore, it cannot be said to be a groundless threat.?

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

----Ss. 67, 68 & 2(6)---Disparagement---Definition.

Webster's Dictionary; Black's Law Dictionary and Chambers Dictionary ref.

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

----Ss.67, 68 & 2(6)---Disparagement---Principles to decide whether a party was entitled to an injunction, enumerated.

The main principles for deciding as to whether the party was entitled to grant of injunction are:--

(i) A tradesman is entitled to declare his goods to be the best in the world, even though the declaration is untrue.

(ii) He can also claim that his goods are better than his competitor, even though, such statement is untrue.

(iii) For the purpose of saying that his goods are the best in the world or his goods are better than his competitor he can even compare the advantages of his goods over the goods of the other.

(iv) He, however cannot, while saying his goods are better than competitor, say that his competitors goods are bad. If he says so, he really slanders the goods of his competitors. In other words he defames his competitors and their goods, which is not permissible.

(v) If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation then action lies and if an action lies for recovery of damages for defamation, then the court is always competent to grant an injunction restraining repetition of such defamation.?

Rockitt and Colman India Ltd. v. M.S. Ramachandran and another 1999 PTC 741 quoted.

(f) ?Trade Marks Ordinance (XIX of 2001)---

----Ss.67, 68 & 2(6)---Disparagement---`Comparative advertisement'---Such advertisement is admissible, however, the advertisement should not be in such a manner as to disparage the goods of the competitor---Mere puffing up the goods without disparagement is not actionable---Advertisement must be issued in the light of, such test.

94 (2001) D.L.T. 30 Pepsi Cola Inc. and another v. Hindustan Coca Cola and others in I.A. No.3097 of 2001 in Suit No.635 of 2001 decided in September, 2001 rel.

Yousaf Saeed for Plaintiff.

Zahid Jamil for Defendant.???????

2008 C L D 214

[Karachi]

Before Nadeem Azhar Siddiqi, J

HUMERA ABDUL AZIZ ESSA---.Petitioner

Versus

AL-ABBAS CEMENT INDUSTRIES LIMITED---Respondent

J. Miscellaneous No.15 of 2007, decided on 24th October, 2007.

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

----Ss.305 & 314(2)---Petition for winding up of company---Share purchase agreement, whereby purchaser agreed . to require company to re-pay sponsors loan to petitioner-seller within six months, and in case of its non-payment, petitioner would be entitled to mark-up---Non-payment of outstanding amount and agreed mark-up to petitioner despite issuance of statutory notice to company---Denial of company to be insolvent or party to share purchase agreement and bound thereby---Validity---Non-­mentioning of clear amount in such agreement, which was to be paid by company, created bona fide dispute between parties---No basis was given in such petition to calculate amount claimed therein--Company had denied its liability to pay amount to petitioner---Evidence would be required to determine liability of company, which exercise could not be undertaken under S.305 of Companies Ordinance, 1984---Company was not signatory to such agreement, thus, was not liable to pay/adjust sponsors loan---Company was financially and commercially sound and capable of doing business for having issued rights shares subscribed by petitioner also---Petition had been filed to pressurize company to pay claimed amount to petitioner---Purchaser had filed application for appointment of" arbitrator---Alternate remedy by way of arbitration was, thus, available to petitioner, who through arbitration proceedings could recover amount after its determination---Petition for winding up of company was dismissed in circumstances.

Messrs Glorex Textile Ltd., Karachi v. Messrs Investment Corporation of Pakistan and others 1999 SCMR 1850; Industrial Development Bank of Pakistan v. Modern Poultry Farm Limited 1990 CLC 1030 and Messrs Habib Bank Ltd. v. Messrs Golden Plastic (Pvt.) Ltd. 1991 MLD 124 ref.

Messrs Ali Woollen Mills Ltd. v. Industrial Development Bank of Pakistan and others PLD 1990 SC 763; London and Paris Banking Corporation (1874) 19 E.Q. 444 and The Company v. Rameshwar Singh AIR 1920 Cal. 1004 rel.

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

----S. 305---Petition for winding up of company---Ground of non-payment of debt by company-Validity-Amount of such debt must be determined and undisputed.

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

----S.305(e)---Petition, for winding up of company would not be maintainable, if made to pressurize company to pay its debts.

Sohail Muzaffar for Petitioner.

Shaiq Usmani for Respondent.

Date of hearing: 3rd October, 2007.

2008 C L D 227

[Karachi]

Before Munib Ahmad Khan, J

Messrs TEAM NAWER (PVT.) LTD.---Plaintiff

Versus

KAMRAN JAMAL KHAN-Defendant

Suit No.495 and C.M.A. No.4185 of 2007, decided on 2nd October, 2007.

Patents Ordinance (LXI of 2000)---

----Ss.62, 61 & 60---Suit for permanent injunction and damages--Application for interim relief---Plaintiff had submitted that since defendant was still manufacturing and copying design of canopy registered in the name of plaintiff, great urgency was that defendant should be stopped from copying the same---Counter­-affidavit of defendant did not deny manufacturing of the canopy in dispute, but he had stated that design of both canopies of plaintiff and defendant were different---Defendant had pointed out some differences, but apparently strong resemblance existed in both the canopies of the plaintiff and defendant and minor differences pointed out by the defendant, could not make much difference to remove the deception in respect of recognition as to whether both canopies were from one design or not---Registrar of design was also of the view that canopy of the plaintiff was a registered design, while the design applied for by the defendant was refused---When apparently resemblance existed in both the designs, application filed by the plaintiff was granted and defendants were restrained in terms of the prayer of application of plaintiff during pendency of suit.

Haider Waheed for Plaintiff.

Nemo for Defendant.

2008 C L D 239

[Karachi]

Before Nadeem Azhar Siddiqi, J

QAMRAN CONSTRUCTION (PVT.) LTD.---Plaintiff

Versus

SALEEMULLAH and 2 others ---Defendants

Suit No.353 of 2003 and C.M.A. No.2881 of 2007, decided 10th January, 2008.

Civil Procedure code (V of 1908)---

----O.VII, R.11 & XXIX, R.1---Rejection of plaint---Suit by corporation---Valid authority to file suit---Onus to prove---Non-­filing of resolution of company---Effect---Suit on behalf of private limited company was filed without resolution of Board of Directors and Memorandum and Articles of Association---Plea raised by defendant was that suit was not filed by authorized person and was liable to be rejected---Validity---Suit on behalf of private limited company was to be filed by an authorized person who was duly authorized in accordance with Memorandum and Articles of Association of the company---In order to determine whether suit was instituted by a person duly authorized to do so, reference would have to be made to Articles of the Company---Burden to show that suit had been filed by authorized person was upon plaintiff who failed to discharge the burden by not producing Boards' Resolution and Memorandum and Articles of Association of Company---If there was a defect in institution of proceedings, such defect was incurable---Suit was instituted by unauthorized persons and plaint was rejected by the court---Application was allowed accordingly.

Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Abdul Rahim v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar. 62 and PICIC Commercial Bank Limited v. Spectrum Fisheries Limited 2006 CLD 440 rel.

S. Ali Abbas Zaidi for Plaintiff.

Abdul Karim Siddiqui for Defendants.

2008 C L D 277

[Karachi]

Before Qammer-ud-Din Bhora, J

ADDITIONAL REGISTRAR OF COMPANIES---Petitioner

Versus

Messrs NOORIE TEXTILE MILLS LIMITED---Respondent

J.M. Application No.16 and C.M. A. No.1027 of 2006, decided 22nd January, 2008.

Companies Ordinance (XLVII of I984)---

----Ss.10, 305 & 309---Companies (Court) Rules, 1997, R.75---Winding up of company, application for---Ex parte order, setting aside of---Order of winding up of company was passed ex parte---Counsel for company had stated that on relevant date when ex parte order was passed against his client, he reached the court late due to heavy rush of traffic, which was beyond his control---Application for suspension of ex parte order was filed by the company on the very date the ex parte order. was passed---Validity---Section 10 of the Companies Ordinance, 1984 did not debar to move application before the Company Judge to set aside an ex paste order for winding up of the company---No prejudice would be caused to petitioner if ex parte order was set aside---Ex parte order was set aside with direction to proceed with the petition on merits accordingly.

PLD 1984 Kar. 541; 2005 SCMR 450; 1980 (50) Com cases 122 (Delhi) and 2000 CLC 1843 rel.

S.M. Naqvi for Petitioner.

Raghib Baqi for Respondent.

2008 C L D 315

[Karachi]

Before Nadeem Azhar Siddiqi, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Petitioner

Versus

Messrs HUB STEEL MILLS (PRIVATE) LIMITED and 3 others---Respondents

Judicial Miscellaneous Application No.18 of 1989, decided on 17th January, 2008.

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

----S.39---Transfer of Property. Act (IV of 1882), S.100---Interim attachment---Creation of charge---Proof---Applicant filed objection to attachment of property on the ground that prior to release of funds by bank, borrower had already transferred the property to applicant---Effect---On the day when credit agreement between bank and borrower was executed, the owner was no more owner of the property and the same could not be made subject-matter of any credit agreement---Property in question was never offered as security in terms of S.100 of Industrial Development Bank of Pakistan, 1961---Bank did not produce any document to show that at any point of time charge was created against the property or the same was simply mortgaged with bank---Even no document had been filed to show that while obtaining loan, borrower claimed, property in question and on such basis loan was granted---Property in question was attached without any cause and jurisdiction, thus High Court released the same from interim attachment---Application was allowed in circumstances.

Salman Hamid for Petitioner.

Khawaja Shams-ul-Islam for Applicant.

Nemo for Respondent.

2008 C L D 326

[Karachi]

Before Mushir Alam and Muhammad Afzal Soomro, JJ

SIKANDER TRADING COMPANY PRIVATE LIMITED and 6 others---Appellants

Versus

HABIB BANK LIMITED---Respondent

H.C.A. No.228 of 2007, decided 26th October, 2007.

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

----S.22(2)---Civil Procedure Code (V of 1908), O.XLIII, R.3(1)---Appeal against interim order passed by Banking Court---Service of notice of appeal upon respondent without memo. of appeal and impugned order---Effect---Parties were aware of impugned order, which was seriously contested by them before Banking Court---Service of notice had not been disputed---Neither appeal had been admitted nor any order had been passed without hearing respondent, who had already received notice of appeal---High Court fixed appeal for Katcha Peshi while directing appellant to provide memo. of appeal along with all annexures within three days to respondent---Objection as to non-service of memo. of appeal raised by respondent was overruled in circumstances.

Sindh Industrial Trading Estate Limited and 3 others v. Noorani Enterprises, 1996 CLC 570; National Investment Trust Limited v. Waqar Saigal and 6 others PLD 2001 Lah. 516; Messrs Haji Suleman Gowawala & Sons Ltd. v. Usman and 13 others 1985 CLC 168; Nazir Ahmed Jagirani Balouch v. Province of Sindh and another 1987 CLC 1750; Ali Asbestos Ltd. and 4 others v. Bank of Credit and Commerce 1997 MLD 2003; Messrs Cooperative House Building Society Limited, Lahore through Secretary v. Messrs Trust Leasing Corporation Ltd. through Chief Executive and 4 others PLD 2000 Lah. 232 and Raja Hamayun Sarfraz Khan and others v. Noor Muhammad 2007 SCMR 307 ref.

Mrs. Dino Manekji Chinoy and 8 others v. Muhammad Matin PLD 1983 SC 693 rel.

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

----S.22(2)---Civil Procedure Code (V of 1908), O.XLIII, R.3(1)---Appeal against interim order of Banking Court---Non-compliance of provisions of O.XLIII, R.3, C.P.C. before filing of appeal by appellant---Effect---Purpose of such provisions was to provide an ample reasonable opportunity to respondent to contest appeal on merit---Such purpose could be served even by issuing pre-admission notice to respondent.

(c) Administration of justice---

----Party could not be non-suited on account of non-observance of any procedural requirement---Principles.

It is always desirable that the procedural requirement as laid down in any procedural law is complied with, unless it is shown that non-observance of any procedural requirement run prejudicial to the right and interest of the other side, a party cannot be non-suited.

(d) Administration of justice---

----Technicality of taw is to be avoided---Procedural law is to be construed to foster the cause of justice and not to strangulate same.

Soofia Saeed Shah for Appellants.

Nadeem Akhter for Respondent.

2008 C L D 338

[Karachi]

Before Azizullah M. Memon and Khawaja Naveed Ahmed, JJ

Ms. RAHIMA IQBAL---Petitioner

Versus

BANKING COURT No.II and 2 others---Respondents

Constitutional Petition No. D-401 of 2007, decided 10th January, 2008.

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

----Ss.17 & 22---Constitution of Pakistan (1973), Art.199---Constitutional Petition---Maintainability---Order of Banking Court passed in execution proceedings---Validity---Petitioner being a lady had appeared in person---High Court converted such petition into appeal to avoid giving trouble to petitioner to first withdraw such petition and then enter into another set of litigation for a cause which was very simple.

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

----Ss.17 & '22---Civil Procedure Code (V of 1908), O.XXI, R.86---Execution proceedings---Mortgaged property, auction of---Notice of auction advertised offering property for absolute sale-Non-­mentioning in such notice that property offered for sale was in fact a leased land given for 30 years by government for poultry farming---Deposit of earnest money by auction-purchaser without knowing status of property being saleable or transferable---Application by auction-purchaser for refund of earnest money---Rejection of application and forfeiture of earnest money by Banking Court---Validity---Advertisement published by Banking Court was itself defective-Auction­-purchaser had participated in auction and deposited earnest money under a wrong impression---High Court directed Banking Court to refund earnest money deposited by auction-purchaser.

Petitioner in Person.

Sanaullah Noor Ghori for Respondent No.2.

2008 C L D 369

[Karachi]

Before Khalid Ali Z. Qazi, J

Messrs TRADING CORPORATION OF PAKISTAN (PVT.) LTD.---Plaintiff

Versus

Messrs AL-NOOR (PVT.) LTD.---Defendant

Suit No.564 of 1997, decided on 7th February, 2008.

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

----Ss. 151, 152 & 176---Contract far storage of rice---Shortage of rice and bags---Burden of proof---Duty of bailee would be to take all reasonable precautions to obviate risks, which either actually accrued or might reasonably be apprehended or foreseeable---Onus to prove proper discharge of such duty would initially lie on bailee and not on bailor-In case of bailee's failure to discharge such onus, he would be liable to pay bailor's claim---Principles.

Messrs Master Sons v. Messrs Ebrahim Enterprises and another 1988 CLC 1381 and Q.B.E. Insurance Ltd. v. The Trustees of the Port of Karachi through Chairman and others 1992 CLC 904 ref.

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

---Arts.113 & 133---Shortage in bailed stock of rice and bags---Proof---Shortage of rice claimed by plaintiff admitted by defendant during his cross-examination and in his letter addressed to plaintiff---Shortage of rice, quantity of bags and value thereof mentioned in plaint and affidavit-in-evidence of plaintiff was not shaken during his cross-examination by defendant---Effect---Such shortage would be deemed to be admitted by defendant, thus, same stood proved and would not require any further proof---Principles.

Mst. Farooq Bibi v. Abdul Khaliq and others 1999 CLC 1358; Central Bank of India v. Syed Muhammad Abdul Jalil Shah and others 1999 CLC 671 and Muhammad Akhtar v. Mst. Manna and 3 others 2001 SCMR 1700 rel.

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

----O.VIII, R. 6 & O. XX, R. 16---Suit for accounts on basis of contract---Security amount plus retention money held by plaintiff as per terms of contract---Defendant's counter-claim for refund of such money and interest/profit thereon---Maintainability--Plaintiff as per terms of contract was entitled to retain such money until finalization of accounts after performance of contract by defendant---Retention of such money by plaintiff could not be described as illegal, thus, question of payment of any interest/profit thereon would not arise---Counter-claim of defendant was dismissed with costs.

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

----S.148---Contract for bailment of rice---Enquiry report regarding shortage of rice---Validity'---Such report could not legally be described .as illegal and ineffective in absence of proof to the contrary.

Syed Mamnoon Hussain for Plaintiff.

Agha Faquir Muhammad and Agha Zafar for Defendant.

Date of hearing: 27th November, 2007.

2008 C L D 395

[Karachi]

Before Khalid Ali Z. Qazi, J

TRADING CORPORATION OF PAKISTAN (PVT.) LTD.---Plaintiff

Versus

Messrs ALI NOOR (PVT.) LTD.---Defendant

Suit No.572 of 1997, decided on 7th February, 2008.

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

----Arts.132 & 133---Shortage in bailed stock of rice and bags---Proof---Shortage of rice claimed by plaintiff admitted by defendant during his cross-examination and in his letter addressed to plaintiff---Quantity of short bags and value thereof mentioned in plaint and affidavit-in-evidence of plaintiff not challenged during his cross-examination by defendant---Effect ---Plaintiff s case stood proved and would not 'require any further proof---Principles.

Mst. Farooq Bibi v. Abdul Khaliq and others 1999 CLC 1358; Central Bank of India v. Syed Muhammad Abdul Jalil Shah and others 1999 CLC 671 and Muhammad Akhtar v. Mst. Manna and 3 others 2001 SCMR 1700 rel.

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

----Ss.151, 152 & 176---Contract for storage of rice---Shortage of rice in bags---Burden of proof---Duty of bailee was to take all reasonable precautions to obviate risk, which actually accrued or might reasonably be apprehended or foreseeable---Onus to prove proper discharge of such duty would initially lie on bailee and not on bailor---In case of bailee's failure to discharge such onus, he would become liable to make good loss of bailor---Principles.

Messrs Master Sons v. Messrs Ebrahim Enterprises and another 1988 CLC 1381 and Q.B.E. Insurance Ltd. v. The Trustees of the Port of Karachi through Chairman and others 1992 CLC 904 ref.

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

----O. VIII, R.6 & O.XX, R.16---Suit for accounts on basis of contract---Security amount plus retention money lying' with plaintiff as per terms of contract---Defendant's counter-claim for interest/profit on such money-Maintainability-Plaintiff as per terms of contract was entitled to retain such money until finalization of accounts after performance of contract by defendant---Retention of such money by plaintiff could not be described as illegal, thus, question of payment of any interest/profit thereon would not arise---Counter-claim of defendant was dismissed with costs.

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

----S.148-Contract for bailment of rice---Enquiry report regarding shortage of rice---Validity---Such report could not legally be described as illegal and ineffective in absence to the contrary.

Syed Mamnoon Hassan for Plaintiff.

Agha Faquir Muhammad and Agha Zafar for Defendant.

Date of hearing: 27th November, 2007.

JUDGEMENT

KHALID ALI Z. QAZI, J.---Plaintiff has filed this suit against the defendant for accounts and recovery of Rs.101,225,535 with mark-up at the rate of 14% per year from the date of suit till recovery plus cost of the. Bardana found short at the time of final account.

1. Brief facts of the plaintiffs case are that initially the plaintiff in the suit was Rice Export Corporation of Pakistan which was merged with Trading Corporation of Pakistan (Private) Limited whose name was substituted by filing amended title of the plaintiff. On 15-1-1997 the suit was filed against defendant, a Sole Proprietorship Firm carrying on business. Subsequently the plaint was amended pursuant to the Court order dated 10-12-2003 in H. C.A No.152 of 2003 whereby claim of Rs.5,404,344 was added being the value of 11,980 - B Twill / Pt. Will bags 45,281 Hessain Bags, 243,828 and 57,223 Heavy Cess Bags and Polypropylene bags (Total 358,312 Bags) found short, making the total plaintiffs claim in the suit to Rs.101,225,535 and the amended plaint was accordingly filed on 22-10-2003.

2. It was further contended that plaintiff invited tender for handling rice crop 1991-92 at their godown at Bin Qasirn Landhi and TPX Godown.

3. The plaintiff urged that defendant, Firm submitted tender for handling of rice at Qasim Rice Godown and plaintiff accepted the tender of the defendant.

4. It was further contended that the plaintiffs entered into a written contract with the defendant on 21st November, 1991 bearing No.RECP-5/MXM/91-92/3 (Exh.P/2) and appointed the defendant Contractors/Handling Agents for handling the rice crop 1991-92 at Qasim Rice Godown of the plaintiff as well as for the handling of any other rice stock which the plaintiff may entrust the defendant during the currency of the said contract. The terms and conditions of the rates for rendering service to the plaintiffs were duly provided for in the contract. That the terms and conditions contained in the said Agreement/Contract and tender document may be read as part of the plaint.

5. It was contended in the plaint that as per terms of the contract defendant have to exercise all care in respect of stocks including its bye-products etc., entrusted to them and are liable for and make good any loss or damage therein howsoever caused or arising.

6. It is inter alia, contended by the plaintiff that in pursuance of the said contract the defendants were entrusted with large quantities of rice of various qualities, gunny bags and dunnages in connection with the performance of the contract for handling rice as per terms of the aforesaid contract.

7. The plaintiff has urged that as per Clause 4(a) of the tender document the period of contract, was for two years from the date of acceptance of tenders, and time of contract period was extended from time to time till 30-9-1995.

8. It was stated in plaint that the services rendered and work performed by the defendant throughout the handling of rice crop 1991-92 was found unsatisfactory which .fact is evident from the letters addressed by the plaintiff to the defendant from time to time. Copies of three letters were filed as annexures B, C and D along with the plaint (Exhs.P/3, P/4 and P/9).

9. It was further stated that the plaintiff appointed an independent Surveyor in whose presence plaintiff and defendant carried out physical verification of the stocks and submitted the report. Copy of the report dated 27-8-1992 was filed along with plaint as annexure-E (Exh.P/ 11).

10. It was contended that Vide letter dated 31-10.-1996 Exh.P/5) the plaintiff called upon the defendant to deposit Rs.95,821,191 being the cost of shortage of 11543 M. Ton of rice.

11. It was stated by the plaintiff that defendant vide his letter dated 16-11-1996 (Exh.P/6) admitted the shortage of 11,543 M.Ton of rice. Photocopy of defendant's letter dated 16-11-1996 was filed along with plaint as annexure-G.

12. It is urged by the plaintiff that the defendant as handling agents under the terms and conditions of contract are liable to render account for the stocks entrusted to them under the terms and conditions of the contract in question and are liable to pay to the plaintiff a sum of Rs.95,821,191 being the value of the shortage and cost of the rice, which was entrusted to the defendant and remained unaccounted for. The plaintiff held security of the defendant in contract against the claim in suit. It was further contended that the defendants are also liable to pay Rs.5,404,344 being the value of 358,312 Gunny Bags / Bardana found short. Therefore, the total claim comes to Rs. 101 ,225,535 only.

13. The defendant filed written statement and counter-claim against the plaintiff for recovery of Rs.106,42,443 on 5-10-2001. The contents of paras. 1 to 5 of plaint were admitted and further stated that Rs.35,00,000.00 (Rupees thirty five lacs only) as cash security were given to the plaintiff as per their requirement.

14. The defendant contended that under the agreement the defendants were required to submit their running bill for the job completed and 2.5% of the amount on each running bill was to be deducted by the plaintiff and retained by them as ..Retention Money.., which was payable by the plaintiffs to the defendants along with security amount after completion of the contract. The copies of the concise statement, statement of each year and vouchers issued by the plaintiffs were filed along with written-statement as annexures D/ 1 to D/6 respectively. It was contended that the total amount of retention money, which is still lying with the plaintiff is Rs. 16, 91,436.00.

15. The defendant urged that the defendants exercised and taken all the due care in respect of the stock including its bye-product etc. It is further submitted that the cargo which was entrusted to the defendants for handling purposes had to pass through numerous handling and processing stages i.e. loading, un-loading, screening, polishing, transportation, filling in gunny bags, securing services and prolong storage which are likely to cause shortages in weight, over which the defendants and his servants had no control.

16. It was contended by the defendant that the matter was brought into the notice of plaintiffs, which was considered by the Board of Directors of the plaintiffs in their meeting held on 19-4-1995. The Board of Directors of the plaintiffs through the working papers and detail deliberations agreed in principle to allow rebate 3% on loss, in handling and its storage etc. The Board of Directors of the plaintiffs also directed the plaintiffs to seek their opinion of the well known international reputed firm SGS Pakistan (Private) Limited surveyor. Photocopy of the extract from the meeting of the Board of Directors held on 19-4-1995 was filed along with the written-statement as annexure D-7.

17. It is urged by the learned counsel for the defendant that the plaintiffs thereafter as per direction of the Board of Directors approached the said firm Messrs SGS Pakistan (Private) Ltd., an international surveyor, and obtained their opinion on the subject of loss in weight of rice' in R.E.C.P. godown. The said surveyor gave their report discussing the various stages of multiple handling process and transportation before shipment and during long storage and recommended loss of 3.5% to 6%. Copy of the said report of Messrs SGS Pakistan (Private) Ltd. dated 30-5-1995 filed as annexure D/8 along with the written-statement.

18. The defendant stated that during the period of contract the answering defendants received 2,38,447 metric tons of rice in R.E.C.P. godown and successfully handled the same according to the terms of the contract along with the Rice Crop for the year 199u-91 which was already stored there :in the R.E.C.P. godown. Out of the total huge quantity of 5, 24, 547 metric tons for the Crop 90-91 plus 2,38,447 metric tons for the Crop 91-92 which equals 7,62,994 metric tons, a handling loss alleged to have been found to be 22,354 metric tons which comes within expected limits as approved by the international surveyors and Board of Directors of R.E.C.P.

19. The defendant further urged that the contract was performed according to the entire satisfaction of the plaintiffs, it was further contended that the directions as contained in annexures B, C and D of the plaint, are not correct and the letters have been issued just to make baseless ground for withholding the defendants security as well as retention amount.

20. It was further stated that the defendants have no notice of the appointment of the surveyor and the survey was conducted by them and the findings of the surveyor are not binding upon the defendants. It was further urged that it was verification report, which was prepared by the plaintiffs own surveyor.

21. The contents of para. 11 were denied. It was denied that the defendants are liable do deposit. Rs.9,58,21,191.00 being cost of the shortage of 11,543 metric tons of rice or any part thereof. The said letter dated 31-10-1996 has been appropriately replied, by letter dated 16-11-1996 and it was pointed out that the alleged said shortage comes within the expected range of 3.5% to 6%, which has been approved by the plaintiffs Board of Directors and defendants are not liable.

22. It was pleaded that the defendants are not liable to any amount or the plaintiffs are entitled to retain or adjust the security amount against the alleged losses. It is further contended that the defendants by their letter dated 2-7-1994, stated that they have successfully completed 2 contracts of the plaintiffs for the Crop 1991-92 which were handled simultaneously and also demanded their security amount of two contracts together with the Retention Amount.

23. The defendant contended that the defendants also by their another letter dated 12-9-1995 demanded their deposit total amounting to Rs.1,84,27,861.00 so as to close the matter.

24. It was submitted that the plaintiffs also by their letter dated 15-10-1995 admitted the security amount and the Retention Money of the defendants and informed that the amount is adjusted/recovered against the losses. It was further urged that in view of the survey report of Messrs SGS Pakistan (Private) Ltd. and the resolution passed by the Board of Directors of the plaintiffs, no amount is payable by the defendants to the plaintiffs. The defendant claims that the plaintiffs are liable to pay the following amount to the defendants:-

| | | | --- | --- | | Security amount | Rs.35, 00,000.00 | | Retention Money | Rs. 16, 91,436.00 | | Profits at the rate of 15% w. e.f. 1-1-1995 till 30-9-2001 | Rs.54, 51, 007.00 | | Total | Rs. 1,06,42,443.00 |

1. The defendant urged that the plaintiffs have no right to add any shortage and claim the same. The defendant further, denied that any amount is payable by the defendants to the plaintiffs. It was further submitted that the plaintiffs have taken over the control in the year 1996 and since then they have been handling themselves, hence no liability can be put upon the defendants thereafter.

2. The defendant urged that in view of the repeated demand of security amount and the Retention Money which is illegally withheld by the plaintiffs, the plaintiffs are using the said amount of the defendants and making profit thereof, therefore, the plaintiffs are liable to pay the profit of the said amount to the answering defendants at the rate of 15% per annum since the date of completion of the contract till the amount is paid.

3. Out of the pleading of the parties following issues were framed by this Court on 19-4-2004:--

(i) What quantity of rice and bags entrusted to the defendant by the plaintiff for handling purpose at the time of contract?

(ii) Whether there was any shortage of rice and bags, if so, to what percentage of quantity as to rice and numbers as to bags?

(iii) Whether shortage in rice, if any, comes within the expected range of 3.5% to 6% if so, its effect?

(iv) Whether the defendants are entitled to claim relaxation benefit under the contract between the parties as to rice bags?

(v) Whether the Plaintiff had any control, over the management or over the stock of the goods in the godown, if so, to its effect?

(vi) Whether the defendant is liable to pay plaintiffs claim of shortage of rice and bags? If so, what amount?

(vii) Whether the plaintiff have illegally retained the security amount and retention money, if so, its effect?

(viii) Whether the plaintiffs are liable to pay any profit to the defendant on retention money, if so, to what amount?

(ix) Whether the defendant has cause of action and counter-claim is maintainable?

(x) Whether the survey report dated 14-1-1999 is illegal, if so, its effect?

(xi) To what relief, if any, the parties are entitled to?

1. It appears that vide order dated 16-12-2004 this Court appointed Mr. Abdul Ghafoor Qureshi, Advocate as Commissioner to record evidence of the parties.

2. Plaintiff examined one witness Muhammad Atiq Khan, who produced his affidavit-in-evidence as Exh.P/1 along with documents and in cross-examination produced documents thereafter, closed its side.

3. On the other hand defendant filed affidavit-in-evidence of Mr. Kamaran Farid same was exhibited as Exh.D/1 along with documents. After cross-examination the said witness, closed its side:

4. The learned counsel for the parties have submitted written arguments.

5. I have heard the learned counsel for the parties at some length, perused the record and written arguments and the relevant case law. I will deal the issue one by one. My findings are as under:--

Issue No.1

Learned counsel for the defendant submitted that the quantity of rice entrusted to the defendant after the handing over to the warehouse / godown is not denied. However, important point for consideration of this Court is that at the time of handing over to godown, the account of the defendant was credited with the balance rice as per balance or reserved stock account maintained with the plaintiff in other words physically handing over of the rice was not done by the plaintiff at the time of handing over/at the time of contract therefore in other words they are not responsible for the loss of the shortage of the stock. It may be observed that contention of the learned counsel has no force because the plaintiff had given him rice and Bardana on book balance without physical weighment, because physical weighment of huge rice and Bardana was not possible at that time by the plaintiff consequently after completion of his work, balance rice should be taken from him as per agreement it may be observed that it was agreed in the terms and conditions by both the parties that subject condition In the contract was that the defendant would take over the rice crop on the basis of book balance, therefore, at this stage he is not entitled for raising the objection about physical handing over, the stocks the other condition of the contract was that final account will be rendered by the defendant since there was a clog of the contract that he would render accounts on the basis of physical payment. He had to abide by it, whether it was right or wrong. It may be further observed that according to the terms and conditions of the contract the defendant was under obligation to comply with the provisions of contract as mentioned in Exh.P/2 Annexure III specially Article-13 which reads under:--

1. Accounts

(i) The contractors shall maintain separately a complete and faithful record of each variety of rice, its bye-products, refractions, stores and gunny bags (new, serviceable and unserviceable) received, stored and delivered by them. The record shall include all transactions arising out of or relating to the execution of the contract.

(ii) The contractor shall render to the Corporation separately a Monthly Account of each variety of rice, its bye-products and refractions (arising out of milling process or manual preparation) stores and gunny bags (new, serviceable and unserviceable) receive, stored and delivered by them including sweeping, empty gunnies (new, serviceable and unserviceable) tarpaulins, dunnage, etc. utilized.

(iii) The contractors shall also maintain separately a complete and faithful record of rice received, shifted, transported and cleaned by the Mills including its bye-products, and refractions and shall submit monthly Milling Account on the forms prescribed by the Corporation to Manager/DM (Mills) and a copy thereof Accounts Division, R.S. Accounts Section by the 15th of the following month along with the necessary documents Manager/DM (Mills) shall verify and forward the Milling Accounts to Accounts Division, R.S. Account Section promptly.

(iv) The Monthly Accounts shall be prepared on forms prescribed by the Corporation under the Stock Account Rules (copies of which will be made available to the Contractor by the Corporation) and submitted to the Account Division through the Area Officer concerned by 15th of the following month along with necessary documents including Check Weighment Certificate etc. A copy of the Account shall simultaneously be submitted to the Accounts Division (R.S. Accounts Section) of the Corporation. The Area Officer shall verify and forward .the R.S. Accounts promptly to the Accounts Division R.S. Accounts Section.

(v) In addition to the Monthly Accounts, the contractors shall furnish to the Corporation (R.S. Account Section of the Accounts Division) half yearly accounts of stocks and stores referred to in sub-clauses (i), (ii) and (iii) above of this clause by 30th April and 31st of October respectively in each year showing particulars of all transactions upto and balance on 31st March and 30th September for all such stocks and stores received from the up-country or by transfer from other agents, area, crops and mills. The accounts will" also show issue of rice for export, local sale transfer to other agents, area, crops and mill, balance in godowns and at mills separately in the pro forma prescribed by the Corporation.

(vi) The Contractors shall keep a complete record/account of expenditure incurred by them in the execution of the Contract and shall produce such record before or furnish information therefrom to the Corporation as and when required.

(vii) The Contractors shall maintain separately a running account of bags of every type, quality and size (new, serviceable and unserviceable) early exhibiting the availability of empty as well as bags filled with rice showing quantity received, dispatched or delivered by them for empty bags separately. All for transfers from new to serviceable, one handling agent to another within or outside the area shall be supported by CWCs.

(viii) The Contractors shall also maintain and submit to the Corporation separately a running account of quantities/ weight of damaged rice / bags and exhibit the same at each godown, plinth or shed where the damaged rice, bags are stored.

(ix) The Contractors shall furnish such daily or weekly returns as may be required by the Corporation from time to time in addition to the monthly or half yearly returns prescribed under the Stock Account Rules.

(x) All accounts maintained by the Contractors under the terms and conditions of the Contract shall be made available, as and when required for check and audit by a representative of the Corporation and / or by the Audit Officer of the Government of Pakistan. For this purpose the Contractors shall provide all facilities and assistance to the representative of the Corporation and / or the Audit Officer of the 'Government of Pakistan. The contractors shall keep all records intact in case local audit is not conducted during the currency of the contract. The contractors shall preserve the records for a minimum period of four years from the date of expiry of the contract.

(xi) The Contractors shall immediately but not later than 90 days after the completion of the contract (i.e. on the disposal of entire or almost entire stocks of rice and stores in accordance with the provisions of the contract) furnish complete and final accounts of stocks and stores to the Corporation and surrender the balance, if any, without any delay. Failure to do so will entitle the Corporation to transfer the stocks and stores in the custody of the contractors to some other agent or contractor and to appoint a stock verifier for the purpose of verification of the ending stocks and stores. In such an event, the Contractors shall be liable for all costs and consequences including shortages, if any, found by the stocks verifier, and the Corporation will have the right to withhold all payments which may be due to the Contractors (including the payment Security Deposit and Retention Money) until and Accounts are furnished and settled by the Contractors.

(xii) If the Contractors fail to render accounts within ninety days from the expiry of the contract, their Security Deposit shall be forfeited and if any further dues are outstanding against them, action would be taken to recover such dues from Retention Money or through Court of Law or through an Arbitrator so appointed by the R.E.C.P.

(xiii) The contractors shall ensure proper up-keep and use of the Corporation stores and be responsible for any loss/damage which might accrue to such stores due to carelessness or negligence on the part of the Contractors, their employees, agents, servants or the labour engaged by them. (underlining to give emphasis);

(xiv) The contractors shall maintain:---

(i) Godown-wise stock Register indicating variety-wise stock position in each godowns

(ii) Stack cards to be provided on each and every stack of rice Lot/gunjy of rice and bags indicating its quantity/ weight.

(iii) Consolidates stock Register.

(iv) Arrival Register showing full details of stocks received i.e. date of receipt, wagon number, R.R. number weight, station of dispatch and godown number where stored etc.

(v) Disposal Register showing full details of stocks

(vi) Register of Bye-product and Refractions of each variety of rice.

(vii) Register showing the name,' address, relevant details etc., of permanent employees of the Contractors employed in connection with the execution of the contract.

(xv) The contractors shall maintain accounts in accordance with any new system of accounting that may be introduced by the Corporation during the currency of the contract.

(xvi) The contractors shall furnish a statement to the Corporation (R.S. Account Section of the Account Division) by 15th of each Month showing details of arrival of wagons/NLC/Private trucks from the up-country, station-wise and wagon/NLC/Private truck-wise in respect of each variety of rice received during the preceding month, quoting CWC No. and date under which the stocks have been accounted for in R.S Accounts.

(xvii) In case the Contractors fail to comply with any of the provisions of Clause 13 for any reason whatsoever, the Corporation shall withhold payment of their running bills until the compliance has been made. This will be without prejudice to any other punitive of the contract or any law for the time being in force.

It appears that total quantity of rice entrusted to the defendant for handling purposes under the contract in question was admittedly 238,447 M/tons, rice as accepted by the defendant vides its letter dated 16-11-1996 (Exh.P/6) while the total quantity of gunny Bags / Bardana were 358,312.

Issue No.2.

As regard the issue No.2 from the record it appears that shortage of rice was 11,543 M/tons which was specifically mentioned by the plaintiff in its letter dated 11-10-1996 (Ex.P/5), which shortage was accepted by the defendant vide its letter 16-11-1996 Exh.P/6. The D.W. in his cross-examination admitted which read as under:--

It is correct that according to the plaintiff the shortage of rice as mentioned in Exh.P/5 was 11543 M/tons. It is correct that our letter dated 16-11-1996 (Exh.P/6), we have not denied the figure of shortage, but we claimed the exemption of the same...

As such the same stand proved and as per Article 113 of the Qanun-e-Shahadat, 1984 no further proof is required, while the shortage of Bags was total 358,312 bags. As is evident from Enquiry Report dated 24-5-1999 (Exh.P/13). The quantity of bags and their value has been specifically mentioned in para. 14-A in the amended plaint filed in the above suit and in affidavit-in-evidence of P.W. The defendant could not shake / advert to the evidence of PW with regards to shortage of quantity and value of bags / Bardana. Thus the shortage and value of Bags in question is legally deemed to be admitted by the defendant. Learned counsel for the plaintiff has placed reliance on the following case laws:-

(i) Mst. Farooq Bibi v. Abdul Khaliq and others reported in 1999 CLC 1358 (a) relevant page [1361]. A Supreme Court (AJ & K) wherein it has been held that:

"It is a settled principle of law that a piece of evidence or statement of witness which goes against the interest of particular party and that party does not question the correctness of that assertion or the deposition of the witness it shall be deemed to have been admitted".

(ii) Central Bank of India v. Syed Muhammad Abdul Jalil Shah and others reported in 1999 CLC 671 (t) relevant page 1691) E wherein it was held that:

"If a fact is asserted in Examination in Chief and is not impeached by way of cross-examination, that assertion is deemed to have been admitted by defaulting party".

(iii) Muhammad Akhtar v. Mst. Manna and 3 others 2001 SCMR 1700 (c) wherein it was held that:

"Where a fact asserted by one party remains unchallenged, the same amount to admission on the part of the other party".

Issues Nos.3 and 4

I will deal these issues together as both are interconnected. On the basis of shortage of 11,543 M/tons rice as compared to admitted total quantity of 238,447 M/tons Rice entrusted to the defendant for handling purposes for the crop 1991-92 under the Contract in question comes to 4.84%. It is stated that even this percentage of loss / shortage is not permissible / allowable as there it is no provisions in the Contract (Exh.P/2) and/or its supplements annexures I to V between the parties. Resolution of Board of Directors of the plaintiff of no consequences as it was subject to approval of Govt. of Pakistan, Ministry of Commerce, which approval was not accorded. In the result, the defendant is liable for the admitted shortage of rice to the plaintiff. The defendant could avoid this admitted loss / shortage of rice by taking care as mentioned / quoted / pointed out in para. 5 herein above but he failed to do so though it was responsibility of the defendant to protect and take care of the stock of rice and bags entrusted to it by the plaintiff, which the defendant has been neglected as Bailee as such the defendant is liable for the shortage in. question in terms of clause 13 (xiii) of annexure III supplemented to the Contract Exh.P/2. The defendant as bailee was liable to discharge of his duty imposed upon him under section 151 of Contract Act, 1872. Nothing has been stated / deposed by the D.W. in this regard in evidence. The defendant as bailee was bound to take as much care of the stocks of rice in question as a man of ordinary prudence would, under similar circumstances, take of his own goods. It was duty of the defendant to take all reasonable precaution to obviate risks, which may be reasonable apprehended or foreseeable, his duty would be to take proper measures for the protection of goods B when such risks were imminent or had actually occurred. The defendant has failed to discharge his onus as cast upon him as bailee under section 151 read with section 152 C.P.C. of the Contract Act, 1872; as such as per section 176 ibid is responsible to the plaintiff for the shortage of rice and bags in question and he cannot legally avoid his liability thereto on any cause. Learned counsel has placed reliance on the following case laws.

(i) Messrs Master Sons v. Messrs Ebrahim Enterprises and another 1988 CLC 1381 (a) relevant page 1386-A;

(ii) Q.B.E. Insurance Ltd. v The Trustees of the Port of Karachi through Chairman and others reported in 1992 CLC Page 904(f).

Issue No.5

It appears that burden of this issue was on the defendant to prove that the plaintiff had any Contract over the management or over the stock of the goods in the godown, which the defendant has failed to discharge. The defendant under Clauses 7(a), (c) (k) and (m) of the said annexure supplemented to the Contract in question was required to take proper care and precaution to protect the stocks of rice and to prevent from deterioration and not to allow any unauthorized person to enter into godown at any time as stated above which the defendant failed / neglected to do so, as such, the answer to this issue is to be against the defendant.

Issue No.6

As regard this issue plaintiff stated that the defendant in the above facts and circumstances and the submissions made relating to the issues Nos.2, 3 and 4 above is liable to pay plaintiffs claim as claimed.

Issues Nos.7 and 8

As regard these issues interconnected I will deal together. It appears that security amount and retention money in question has been retained by the plaintiff in accordance with terms and conditions of clause 15 of the said annexure III supplemented to the Contract in question between the parties, as such, cannot be held illegal. Clause 15 (iii) thereof, inter alia provided that amount of security deposit plus retention money shall remain with the corporation until the finalization of accounts after performance of the contract by the Contractor and clause 15(iv) provided that the corporation shall have lien or charge upon the security deposit/retention money and may forfeit the same if the contractor commit a breach of contract or fail to perform any of the terms, conditions and covenants contained in the contract or understanding given by them to the contractor and that out of the security deposit/retention money, the corporation may appropriate and reimburse to itself sums due by the contractor to the corporation. If the sum due to the corporation exceeds the amount of the security deposit/retention money, the corporation shall have the right to demand the excess amount from the contractor and/or recover the same from the Contractor out of any other amount that may be payable by the corporation to the contractor. Thus the plaintiff was/is legally entitled to retain the security deposit/retention money and since the security amount and retention money have been retained as per agreement between the parties, it cannot be described as illegal, as such, the question of payment of any interest/profit thereon cannot legally arise. Further,: clause 15(iii) provides that no interest shall be payable to the contractor on the security deposit and the amount retained by the corporation under clause 15(ii), the plaintiff is in any event is not liable to pay any interest / profit thereon to the defendant.

Issue No.9

As regard this issue, it appears that defendant has no cause of action for counter claim, which is for refund of security money and retention money held / retained by the plaintiff as provided under clause 15 of the agreement annexure III supplemented to the Contract in question. In my opinion the counterclaim of the defendant is liable to be dismissed with costs.

Issue No.10

As regards this issue it appears there is no survey report dated 24-1-1999, there is an enquiry report dated 24-5-1999 which cannot legally be described as illegal and ineffective in absence to the contrary. It appears that enquiry report relates, to Gunny Bags / Bardana.

2008 C L D 412

[Karachi]

Before Khalid Ali Z. Qazi, J

TRADING CORPORATION OF PAKISTAN (PVT.) LTD.---Plaintiff

Versus

Messrs S.R. INTERNATIONAL---Defendant

Suit No.563 of 1997, decided on 7th February, 2008.

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

----Ss.2 & 148--Contract for bailment of rice---Report regarding loss in stock of rice prepared by outsider agencies---Validity---Such report neither would be binding nor could condone agreed terms and conditions in contract regarding such loss.

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

----Ss.151, 152 & 176---Contract for bailment of rice---Loss in stock of rice---Burden of proof---Duty of bailee was to take all reasonable precautions to obviate risk, which actually accrued or might reasonably be apprehended or foreseeable---Onus to prove proper discharge of such duty would initially lie on bailee and not on bailor---In case of bailee's failure to discharge such onus, he would become liable to make good loss of bailor---Principles.

Messrs Master Sons v. Messrs Ebrahim Enterprises and other 1988 CLC 1381 and Q.B.E. Insurance Ltd. v. The Trustees of Port of Karachi 1992 CLC 904 ref.

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

----Arts.113 & 133---Affidavit-in-evidence and documentary evidence produced by plaintiff not contradicted in his cross-examination by defendant---Effect---Plaintiffs case would stand proved and would not require any further proof.

Mst. Farooq Bibi v. Abdul Khaliq and others 1999 CLC 1358; Central Bank of India v. Syed Muhammad Abdul Jalil Shah and others 1999 CLC 671 and Muhammad Akhtar v. Mst. Manna and 3 others 2001 SCMR 1700 rel.

Syed Mamnoon Hassan for Plaintiff.

Agha Faquir Muhammad and Agha Zafar for Defendant.

Date of hearing: 27th November, 2007.

2008 C L D 429

[Karachi]

Before Zia Perwez, J

INTERGRA TRADE AND MARKETING---Appellant

Versus

INTERNATIONAL TRADE AND MARKETING---Respondent

Civil Miscellaneous Appeal No.34 of 1997, decided on 23rd August, 2007.

Copyright Ordinance (XXXIV of 1962)---

----S.41---Civil Procedure Code (V of 1908), S.104-Appeal against order passed by Copyright Board---Miscellaneous appeal was directed against the order passed by the Copyright Board on application under S.41 of Copyright Ordinance, 1962---Counsel for appellant had not been able to make out any case calling for interference with the order of the Copyright Board---On the point of subsequent developments that, had taken place during the pendency of the appeals as a result of which pending proceedings before the court, required consideration first before the competent forum for proper adjudication after appreciation of facts---Grievance of the appellant deserved no merit---No cause having been shown for interference with the impugned order, appellant could move afresh before the competent forum for re-consideration of the case on the ground of subsequent developments as contended by counsel for the appellant---Appeal was dismissed-Appellant, however, was at liberty to approach the competent forum, which could dispose of the case on its own merits after hearing respective parties.

Abdul Hameed Iqbal for Appellant.

Date of hearing: 23rd August, 2007.

2008 C L D 444

[Karachi]

Before Faisal Arab, J

RICE EXPORT CORPORATION OF PAKISTAN---Plaintiff

Versus

NAVEED HUSSAIN SHAH---Defendant

Suit No.495 of 2007, decided on 24th October, 2007.

Civil Procedure Code (V of 1908)---

----O.VII, R.2---Suit for recovery of amount---Plaintiff-Corporation had sought recovery of the value of the stocks of rice which were misappropriated by the defendant from the its godown---Plaintiff-Corporation had awarded a contract to the defendant for handling its stock of rice stored at its godown which pertained to the crop of 1991-1992 season-Plaintiff-Corporation came to know that defendant had not handled his assignment professionally---Firm of Chartered Accountants verified the stocks and submitted its summary to the plaintiff indicating shortage of about 11766 metric tons of rice---Defendant continued to enjoy the fruits of his wrong doings committed since 1992 worth more than seventy five million rupees without any fear of criminal prosecution---Defendant chose not to contest the suit proceedings though was served even through publication---On account of the failure of the defendant to come forward and contest the proceedings, High Court ordered ex parte proceedings against defendant and directed plaintiff-Corporation to file affidavit in ex parte proof- Claim of the plaintiff-Corporation had gone unchallenged--No other alternative was left, but to accept plaintiff's version by the Court---Suit was decreed in sum of Rs.7,52,57,276.51 as claimed by the plaintiff along with mark-up at the rate of 14% per annum recoverable from the defendant from the date of contract till the recovery of the entire decretal amount.

(b) Decree--

----Remotest chance of effecting recovery of decretal amount---Such decree could be a source of sigh of relief to the decree-holder as the burden to effect recovery had shifted to the Court.

(c) Public functionaries---

----Duty of public functionaries entrusted with the assignment of dealing with public assets

Ashfaq Hussain for Plaintiff.

Date of hearing: 24th October, 2007.

2008 C L D 469

[Karachi]

Before Nadeem Azhar Siddiqi, J

GENERAL TRADERS AND AMMUNITION MANUFACTURERS LTD. through Chief Executive---Applicant

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Commerce, Government of Pakistan, Islamabad and another---Respondents

C.M.A. No.8947 of 2008 in Suit No.1386 of 2007, decided on 20th February, 2008.

Import Policy Order, 2005---

----Item.19----Specific Relief Act (I of 1877), Ss.42 & 54---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Interim injunction, grant of---Import of banned items---Plaintiff was. manufacturer of non-prohibited bore of shotgun cartridges---Grievance of plaintiff was that in year 2005, authorities allowed him to import empty cases of shotgun cartridges but in subsequent year, such import was denied---Plea raised by authorities was that one time permission was granted to plaintiff and no further permission could be granted---Validity---Powers were given to Federal Government to allow import in relaxation of any prohibition or restriction under Import Policy Order---Federal Government had to assign reasons for allowing relaxation---If Federal Government refused to allow import in relaxation of any prohibition or restriction reasons had to be given which were just and reasonable and not arbitrary---Reasons for not allowing import in relaxation must be cogent and for advancement of Import Policy Order---Under exception only ammunition could be imported and not spare-parts but at the same time it had to be seen that when cartridges could be imported under exception, the empty shells being part of cartridges could also be imported under exceptions and above all the powers were given to Federal Government to relax any prohibition and restriction---When no restriction was imposed by Import Policy Order, the Officers exercising powers under Import Policy Order could not impose such restrictions and each request for relaxation had to be examined independently on its own merits---Plaintiff had made out a prima facie case and balance of convenience was also in favour of plaintiff---If, no Objection Certificate/relaxation was not granted, plaintiff would suffer irreparable losses and injuries which could not be calculated in terms of money---High Court directed the authorities to issue required No Objection Certificate/relaxation to plaintiff for import of empty cases of shotgun cartridges---Application was allowed accordingly.

Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi and others 1998 SCMR 2268; Abid Hassan and another v. P.I.A.C. and another 2005 SCMR 25; Chairman Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi PLD 1991 SC 14; Shaukat Ali v. Secretary, Industries and Mineral Development, Government of Punjab, Lahore and others 1995 MLD 123; Shaheen Construction Co. through Managing Partner/Attorney v. Province of Sindh through Chief Secretary and others 2000 MLD 1660; Messrs Mirpurkhas Sugar Mills Ltd. v. Consolidated Sugar Mills Ltd. and others PLD 1987 Kar. 225 and Messrs Arif Builders and Developers v. Government of Pakistan and others PLD 1997 Kar. 627 ref.

Khalid Jawed Khan for Applicant.

Mrs. Sofia Saeed Shah, Standing Counsel for Defendant No.1, along with Umardad Afridi, Section Officer (Import) of Respondent No. 1.

2008 C L D 475

[Karachi]

Before Nadeem Azhar Siddiqi, J

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

Versus

Messrs SCHON TEXTILE LIMITED---Respondent

J. Miscellaneous Application No.54 of 2003 and C.M.A. No.209 of 2007, decided on 20th February, 2008.

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

----S.319---Winding up order, suspending of--Scope-Power contained in S.319 of Companies Ordinance, 1984, are independent and not subject to any order in appeal and the same can be exercised irrespective of filing of appeal---Only condition imposed is that application has to be made within three years of winding up order---Court, while revoking winding up order, may put conditions to safeguard interest of creditors/contributors.

Ibrahim Shamsi v. Bashir Ahmed Memon 2005 SCMR 1450 rel.

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

----S.319---Winding up of company---Suspending winding up order-Requisites-Applicants were shareholders/Contributors of respondent company which was ordered to be wound up---Applicants sought suspension of winding up order on the ground that company had improved its commercial viability---Validity---Company had sufficiently fixed assets and interest of share-holders could be safeguarded by imposing restriction upon company not to dispose of fixed assets without permission of court---If winding up order was maintained, the share-holders would get a meagre amount against their investment---If the company was allowed to function under the supervision and control of Security and Exchange Commission of Pakistan and official liquidator, the same would be beneficial to the share­holders---By revival of the company, there was a chance that value of shares would be increased and share-holders would be benefited---Bona fides of the company could also be judged by suspending winding up order and to allow the company to implement scheme of revival under supervision of official liquidator and Security and Exchange Commission of Pakistan--Before suspending winding up order, High Court directed the company to call Special General Meeting of creditors and contributors in accordance with provisions of Companies Ordinance, 1984, for its approval.

National Bank of Pakistan v. The Punjab National Silk Mills Ltd. 1989 MLD 2963; Messrs Aeroflot Russian International Airlines v. Messrs Gerry's International (Private) Ltd. 2003 CLD 1075; Messrs Consolidated Exports Ltd. v. Messrs Dyer Textile and Printing Mills Ltd. PLD 1984 Karachi 541; Rauf B. Kadri v. State Bank of Pakistan PLD 2002 Supreme Court 1111 and Ibrahim Shamsi v. Bashir Ahmed Memon 2005 SCMR 1450 ref.

S.M. Aamir Naqvi for Petitioner and Applicant.

Mushtaq A. Memon along with Shahid Ali Ansari for Respondent.

2008 C L D 483

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mahmood Alam Rizvi, JJ

Messrs HABIB BANK LTD.---Appellant

Versus

Capt. (Retd.) MANSOOR YOUSUF and 7 others---Respondents

First Appeal No.66-D of 2005, decided on 26th February, 2008.

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

----S.9---Companies Ordinance (XLVII of 1984), S.318---Contract Act (IX of 1872), S.130---Recovery of money---Guarantors, liability of---Suit filed by bank was dismissed by Banking Court on the ground that borrower company was wound up and official liquidator had paid partial amount available with him---Plea raised by bank was that guarantors were liable to pay outstanding amount---Validity---Time for enforcement of liability under guarantee started from date of revocation of guarantee under S.130 of Contract Act, 1872, or upon failure by guarantor to make payment in pursuance of notice of demand---Guarantors remained liable for finance facilities advanced to company---Guarantees having not been revoked at any point of time, the suit could not be proceeded against company being ordered to be wound up---Guarantors became liable to liquidate liabilities by virtue of guarantee and were entitled under S.318 of Companies Ordinance, 1984; to claim payment from liquidator of company---High Court set aside judgment passed by Banking Court and remanded the case for adjudication on merits---Appeal was allowed accordingly.

United Bank Ltd v. Haji Bawa Company Ltd. and 3 others 1981 CLC 89; National Bank of Pakistan v. General Tractor and Machinery Co. Ltd. 1996 CLD 79; United Bank Limited v. Aftab Ahmad 1998 MLD 1744; Mirza Anwar Ahmad v. Habib Bank Ltd. Faisalabad 1989 CLC 2441 and Ghulam Mustafa Jatoi v. Additional District and Sessions Judge/Returning Officer, N.A. 158, Naushero Feroz 1994 SCMR 1299 ref.

Hassan Akbar for Appellant.

2008 C L D 492

[Karachi]

Before Mrs. Yasmin Abbasey and Syed Mahmood Alam Rizvi, JJ

NIPPON YUSEN KAISHA (NYK) LINES---Appellants

Versus

Messrs MSC TEXTILES (PRIVATE) LIMITED and 6 others---Respondents

Admiralty Appeal No. 4 of 2007, decided on 7th March, 2008.

(a) Carriage of Goods by Sea Act (XXVI of 1925)---

----S. 6 & Sched. Art 3---Discharge of goods---Acts necessary to be done by carrier of goods stated.

Discharge of goods does not mean to discharge at the port of destination, but to the person, who is entitled to take the delivery. So if, consignee, because of his own reason failed to get release of the consignment, the responsibility of carrier does not end here. It was responsibility of the carrier, if consignee does not come forward to receive delivery of goods to give a proper notice to him and a reasonable time to pick-up the goods. If, no diligent response came to him from the consignee, even then he should have followed the local port law, custom and regulation for its careful delivery to the customs authorities.

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

----Ss. 3 & 4---Carriage of Goods by Sea Act WWI of 1925), S.6---Admiralty suit---Breach of contract of carriage of goods on ship---Claim in rem and personam against offending ship being slot charter of defendant---Liability of slot charter stated.

Slot charter is relatively a recent device of sharing the carrying capacity of ship. In such arrangement, two or more operators usually of similar size vessel in a particular geographic trade will agree to share space on another vessel. The attraction of such arrangement is evident, space is utilized more efficiently and operating cost is reduced while service is expanded. Thus when a party agrees to provide a space at the board of his vessel for transportation from the place of discharge to the place of destination, then he cannot escape, from the liability on breach of contract from a claim in rem and personam against the offending vessel and its beneficiary owner who operates it.

Atlantic Steamer's Supply Company v. M.V. Titisee and others PLD 1993 SC 88; Yukong Ltd. South Korea Co. v. M.T. Eastern Navigation PLD 2000 SC 57 and Weekly Law Reporters 818 (827) ref.

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

----Ss. 3, 4 & 5-Admiralty suit-Arrest of three vessels for an action in rem, out of which two being slot charter of defendant---Liability of slot charter for damages caused to plaintiff (consignor of goods)---Scope---Bill of Lading was executed between plaintiff and defendant---Defendant being owner and having major shares in chartered vessel had control over there, thus as per contract had transported goods thereby to port of destination---Arrest of sister ship of vessel, which was beneficially owned by defendant was just and proper---Defendant, who beneficially owned and operated such three vessels as per contract was responsible to carry goods and discharge same at port of destination---Defendant, thus, at later stage, could not escape itself from liability that vessels were not owned by it.

Ahmed Investment Ltd. v. Sunrise PLD 1980 Kar. 229; Bangladesh Shipping Corporation v. Nedon PLD 1981 Kar. 246 and Yukong Ltd., South Korea C. v. M.T. Eastern Navigation PLD 2001 SC 57 ref.

C.V. 'Lamon Bay' and others v. Sadruddin and others 2005 CLD 133 rel.

(d) Words and phrases---

---"Slot charter"---Meaning.

13th Edn. Judicial Dictionary of K.J. Aiyar and Admiralty and Maritime Law Practitioner's Edn. ref.

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

----Ss. 3, 4 & 5---Carriage of Goods by Sea Act (XXVI of 1925), S.6 & Sched. III, Art. 1(e)---Admiralty suit---Limitation---Non-delivery of goods to consignee at port of destination was communicated to plaintiff on 8-5-2003---Failure of carrier to re-export goods to Pakistan as advised on 16-6-2004 by plaintiff-Auction of goods by customs authorities on Port of destination on 30-6-2004---Filing of suit by plaintiff on 9-10-2004---Validity---Notice of auction was served on 18-3-2004, but same was not communicated to plaintiff---Limitation in such case would run with effect from 29-6-2004, when plaintiff was informed that customs authorities had taken decision to auction suit consignment---Suit filed on 9-10-2004 was well in time.

Newzealand Insurance Co. Ltd. Chittagong v. M.A. Rouf and others 1962 Dacca 31 rel.

Muhammad Naeem for Appellant.

Nisar A. Mujahid for Respondents.

Date of hearing: 5th December, 2007.

2008 C L D 504

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mehmood Alam Rizvi, JJ

Shaikh KAMRAN SALIM and another---Appellants

Versus

PRIME COMMERCIAL BANK LTD. and 8 others---Respondents

First Appeal No.34 of 2007, decided on 20th February, 2008.

(a) Karachi Development Authority Order (V of 1957)---

---Art.40---Karachi Building and Town Planning Regulations, 1979, preamble---Land sanctioned by authority for amenity of general public---Effect---Such land could not be utilized for any other purpose nor same could be auctioned to any one---Principles.

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

----S.19--Execution of decree---Auction of property---Property mortgaged with Bank not owned by borrower, could not be sold.

Khawaja Shamsul Islam for Appellants.

Abbas Ali Addl. A.-G. Sindh.

Muhammad Mujahid for Respondent No. 1.

Sofia Saeed Shah for Respondent No.7.

Date of hearing: 29th January, 2008.

2008 C L D 522

[Karachi]

Before Khalid Ali Z. Qazi, J

INTERASIA LEASING COMPANY LIMITED---Petitioner

Versus

BANKERS EQUITY LIMITED---Respondent

J.M. No.3 of 2006, decided on 15th January, 2008.

Companies Ordinance (XLVII of 1984)---

----S.205---Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, R.5---Winding up of Leasing Company, petition for---Long term association of Leasing Company with Bankers Equity Limited (BEL)---Taking over control of BEL by State Bank after discovering fraud in BEL'S management and accounts and its subsequent winding up by order of High Court---Negative equity of Leasing Company for its inability to attract fresh funds from financial institutions due to its past association with Bankers Equity Ltd.---Failure of Leasing Company to raise its equity and rejection of its application by State Bank for grant of licence under R.5 of Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003---Failure of merger of Leasing Company with another leasing company due to its negative equity condition---Leasing income of company being minimal due to acute liquidity problems and suspension of its business since long---Losses' incurred by Leasing Company exceeded its paid-up capital and reserves-Passing of resolution in Annual General Meeting of shareholders of Leasing Company authorizing its Board of Directors to initiate High Court for its winding-up---Inability of Directors to execute a certificate of solvency for purpose of voluntary winding up of Leasing Company---Non-willingness of creditors to initiate a creditors' winding up---High Court accepted such winding up petition in circumstances.

Mrs. Afsheen Aman for Petitioner.

Khalid Mehmood Siddiqui for Respondent.

2008 C L D 549

[Karachi]

Before Muhammad Afzal Soomro, C.J

NAZIMUDDIN and another---Applicants

Versus

SAUDI PAK COMMERCIAL BANK LIMITED---Respondent

Civil Transfer Application No.48 of 2007, decided on 30th January, 2008.

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

----Ss.5(3) & 9---Civil Procedure Code (V of 1908), S.24---Transfer application---Prayer for transfer of suit from Banking Court to High Court, where another suit between both parties involving same issues was pending---Validity---Held, trial of both suits would not only be expedient in interest of justice, but would also be in interest of both parties as joint trial of both suits would certainly obviate possibility of a conflict of judgment---High Court accepted transfer application in circumstances.

Malik Jehangir Khan v. Banking Tribunal No.1 Karachi 2002 CLD 1466; Messrs Shazim International (Pvt.) Ltd. v. Messrs First Women Bank Ltd. T.A. No. 10 of 2006; Mybank Ltd. v. Speedway Fondmetall Pakistan Ltd. and others 2007 CLD 1547; Messrs Sialkot Dairies Ltd. v. Agricultural Development Bank of Pakistan 2003 CLD 67 and Masjid Bilal v. Wali Muhammad and others 2006 CLC 1757 ref.

Messrs First Women Bank Ltd. v. Registrar High Court of Sindh 2004 SCMR 108 fol.

Saalim Salam Ansari for Applicants.

Azizuddin for Respondent.

2008 C L D 552

[Karachi]

Before Anwar Zaheer Jamali and Arshad Siraj, JJ

FIRST WOMEN BANK LTD.-appellant

Versus

Mrs. AFIFA IFTIKHAR and 2 others---Respondents

First Appeal No.53 and C.M.A. No.1980 of 2007, decided on 4th October, 2007.

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

----S.9-Contract Act (IX of 1872), Ss.126 & 128---Recovery of Bank loan---Liability of guarantor---Scope---Held, even where contract had become unenforceable against the principal borrower yet the guarantor would be liable for surety executed by him.

Messrs Huffaz Seamless Pipe Industries Ltd. and 2 others v. Messrs Security Leasing Corporation Ltd. 2002 CLD 550 fol.

Jam Asif Mehmood Lar for Appellant.

2008 C L D 563

[Karachi]

Before Khawaja Naveed Ahmed, J

ADDITIONAL REGISTRAR OF COMPANIES---Petitioner

Versus

WHITE HOUSE SECURITY (PVT.) LTD.---Respondent

J.M. No.41 of 2003, decided on 21st January, 2008. Companies

Ordinance (XLVII of 1984)---

----Ss.88, 305 & 309---Companies (Court) Rules, 1997, R.75---Banking Companies Ordinance (LVII of 1962), S.27-A--Winding-up of company---Violation of S.88 of Companies Ordinance, 1984---petitioner alleged that company was collecting deposit from general public in violation of S.88 of Companies Ordinance, 1984 and was engaged in Banking business---Effect---Company had not undertaken the business for which it was formed and amounts of investors were at stake---No one appeared to defend the company, therefore, Court was left with no option except to wind-up the company---Petition was allowed in circumstances.

Khurram Rasheed for Petitioner.

2008 C L D 566

[Karachi]

Before Mrs. Qaisar Iqbal and Syed Mehmood Alam Rizvi, JJ

SAUDI PAK COMMERCIAL BANK LTD. Through duly Constituted Attorneys---Appellant

Versus

Qazi EHTISHAMUL HAQ and another---Respondents First Appeal

No.D-39 of 2007, decided on 20th February, 2008.

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

----Ss.9 & 22---Negotiable Instruments Act (XXVI of 1881), Ss.20 & 118---Suit for recovery of loan---Appeal---Liability having not been fully adjusted by respondent; appellant Bank proceeded to file suit for recovery of amount of loan with cost of funds which was decreed by the Banking Court, but without cost of fund and appellant Bank had filed appeal---Examination of contents of the plaint stowed that respondent had availed the facility, part payments were made, finance advance was rescheduled---Rescheduling agreement was signed by the respondent and subsequently respondent agreed to make payment according to schedule---No benefit could be extended in favour of respondent in view of provisions of Ss.20 & 118 of the Negotiable Instruments Act, 1881---Negotiable Instruments Act, 1881 provided that where one person would sign and deliver to another, paper stamp in accordance with law, either wholly blank or having writing thereon, incomplete negotiable instrument could be presumed to be made or completed under the said Act---Trial Court had committed grave illegality in passing the judgment on whimsical grounds without adhering to law---Impugned judgment and decree was set aside---Appellant's claim along with cost of funds by way of sale under mortgage decree of the immovable properties, was allowed.

Bela Automotives Limited v. Habib Bank Limited 2005 CLD 893 and Muhammad Arshad and another v. Citi Bank N.A., Lahore 2006 SCMR 1347 rel.

Syed Muhammad Kazmi and Azizuddin for Appellant.

Nemo for Respondents.

2008 C L D 569

[Karachi]

Before Khalid Ali Z. Qazi, J

NATIONAL LOGISTIC CELL, MINISTRY OF DEFENCE GOVERNMENT OF PAKISTAN through Commander---Plaintiff

Versus

NATIONAL INSURANCE CORP. through Managing Directors---Defendant

Suit No.694 of 2001, heard on 11th January, 2008.

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

----Ss.9 & 15---Suit for recovery - of amount---Execution proceedings---Present case was an office reference submitted by Assistant Registrar Soliciting Answers to Questions as to whether decree could be prepared in terms of the judgment to the extent of the maximum liability of the defendant/Insurance Company as disclosed in the judgment; since the amounts pertaining to the liability of the defendant under the policy had already been deposited or paid---Held, that the judgment passed by the High Court, could be treated as maximum liability to the extent of the amount so deposited and decree was ordered to be prepared accordingly.

AIR 1981 Madras 299; AIR 1986 Rajasthan 2; PLD 1993 SC 158; PLD 1984 Kar. 38; AIR 1977 SC 1158; 2002 MLD 861; 2001 CLC 1808 and 2003 CLC 719 ref.

Abdur Rauf, Nasir Maqsood and Mukhtair Ahmed Kober for Plaintiff.

Nemo for Defendant.

2008 C L D 572

[Karachi]

Before Maqbool Baqar, J

NAZMEEN SHAFI---Petitioner

Versus

SINDH TRAVEL SERVICES (PVT.) LTD. through Managing Director and 5 others---Respondents

J.M.No.27 of 2004, decided on 6th March, 2007.

Companies Ordinance (XLVII of 1984)---

----S.309---Petition for winding up of company---Compromise between the parties---Parties in their application filed under O.XXIII, R.3 C.P.C. had submitted that parties had resolved their dispute amicably by arriving at a compromise, in terms :.whereof respondent had paid to petitioner amount towards the value of her holding in the company; and upon the said payment, the respondent had become the sole and absolute owner of the shares held by the petitioner in the company-Petitioner having been paid the amount of her claim, had absolutely ceased to have any claim over/or in respect of the shares and assets of the company or against respondent or any of the Directors of the company---Application for compromise was granted in circumstances.

Munawar Hussain for Petitioner.

Ziaul Haq Makhdoom for Respondent No.2.

2008 C L D 576

[Karachi]

Before Dr. Qammaruddin Bohra, J

Messrs KLB-E-HYDER AND COMPANY (PVT.) LTD. through Chief Executive---Plaintiff

Versus

NATIONAL BANK OF PAKISTAN through President and 3 others---Respondents

Suit No.B-50 of 2001, decided on 27th March, 2008.

(a) State Bank of Pakistan Circular No.F.E.5 of 1997---

----Circulars of State Bank of Pakistan have to Bank applied as a law and as these have binding effect like other provisions of law, since circulars are issued under the authority and the same must be treated as having the force of law.

2002 CLD 542 rel.

(b) Damages---

----Types of damages---Scope---Damages are usually considered under two heads viz. general or non-pecuniary' loss or damages that is physical injury, pain and suffering, impaired capacity for enjoyment of life or lessened capacity and special or pecuniary damages that are actual, incidental and direct expense, capable of calculation in terms of monetary value, may it be on account of medical treatment, loss in business profit earning or otherwise---In an action for damages either general or special, burden to prove is always on plaintiff---In absence of authentic, oral and documentary supporting evidence, mere statement of party is not sufficient: to establish amount of damages allegedly suffered by him---Person claiming special damages must prove each item of his loss on the basis of evidence---Where a person claims special damages then it is incumbent upon him to show as to under which head of account and how such damages have been sustained---In absence of such proof, special damages cannot be allowed.

1992 CLC 1561 rel.

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

----O.XXIX, R.1---Tort---Mental torture---Corporation---Scope---Private limited company cannot sue for damages of its feelings like mental torture.

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

----Arts. 132 & 133---Failure to cross-examine---Effect---Mere not cross-examining on material facts does not ipso facto constitute establishment of the fact---Party proving a fact has to stand on its own legs and not on the weakness of other side---Without discharging burden of proof of any specified fact, the other side cannot be presumed to have admitted the fact.

2000 CLC 215 and 1991 SCMR 2300 rel.

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

---S.9(1) & (2)---Civil Procedure Code (V of 1908), O.XXIX, R.1---Banking suit---Maintainability---Statement of accounts---Customer company filed suit against banking company without appending statement of accounts and without any resolution of board of directors---Effect---Suit was filed before High Court in its original Banking jurisdiction wherein Bank filed leave to defend application which was granted and the suit proceeded as Banking suit---Plaintiff, in such suit was required under S.9(1) and (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, to append with plaint a statement of account---Only concession available to customer was that such statement of account was not required to be certified in the manner prescribed under Bankers Books Evidence Act, 1891---Plaintiff having failed to file statement of accounts as required, the suit was liable to be dismissed---Plaintiff being a private limited company filed the suit without any Company's Board Resolution---Suit was dismissed in circumstances.

(f) Tort---

----Damage---Corporation---Mental torture---Private limited company cannot sue for damages of its feelings like mental torture.

Saalim Salam Ansari for Plaintiff.

Zubair Qureshi and Muhammad Rehan Qureshi for Respondents.

Date of hearing: 15th January, 2008.

JUDMGENT

DR. QAMMARUDDIN BOHRA, J.---The plaintiff an exporter of rice has filed present suit against the defendants for declaration for permanent injunction, damages and recovery of Rs.601.00 million.

1. Initially, suit was filed against the National Bank of Pakistan through its President and Manager and State Bank of Pakistan through its Governor and Federation of Pakistan through its Secretary Finance. Subsequently, suit against defendants Nos.3 and 4 dropped as per Court order dated 29-4-2007.

2. Brief facts forming background of this litigation are that the plaintiff is a registered company under Company Law and its registered office at Suit No.11-14.A.K. Chamber West Wharf Road Karachi. The plaintiffs company is dealing in export of rice and remained a leading Exporter of rice in Pakistan from the year 1995 to 1996. The plaintiff exported about 70,000 million tons of Basmati Rice to Islamic Republic of Iran. It is the case of plaintiff that he maintained the accounts with defendant No.2 and negotiated all letters of credit through the said Branch. It is further case of the plaintiff that he made thirteen (13) shipments to Islamic Republic of Iran and one shipment to Uganda all against advance payments and was given T.T. rate. As per Exchange Control Regulations if payments are made to Exporter from the funds of opening Bank. T.T. rate should be given being no involvement of negotiating banks funds. The details are given in the plaint. The Letters of Credit were negotiated under ACU(ECU) arrangement between the two countries Pakistan and Islamic Republic of Iran till December 1995. The rate made under this agreement was in local currencies in Pak Rupees and Iranian Tomans. From January, 1996 the arrangement was changed to US $. The exports were made only against Letters of Credit of Bank Millat Iran under ACU A/C maintained by National Bank of Pakistan, Karachi. As per ACU mechanism T.T. buying rate is applicable, , if negotiating Bank is maintaining account of opening Bank: The negotiating Bank shall pay the exporters with T.T. buying rate, by debiting the opening Bank A/C with them and if they do not maintain the account of opening Bank they should claim the re­imbursement from opening bank and on receipt of reimbursement shall pay the T.T. buying rate as per FE Circular 5, resultantly Bank is bound to pay T.T. buying rate when re-imbursement is received under ACU arrangements as no funds of negotiating Bank are involved. According to the plaintiff his case was covered in paragraph one FE Circular No.5, likewise according to F.E. Circular No.83, which covers general exports, if no funds of negotiating banks are involved T.T. buying rate be given to exporter. In O.D. buying rate the negotiating Bank charge the interest for 14 days for the funds provided to exporters and claim funds (re-imbursement) from opening Bank after making the payment from their own funds hence interest. In T.T. buying rate no such deduction can be made being no involvement of negotiating Bank's fund. It is further case of the plaintiff that suddenly on 17th September, 1996 the exchange wing of defendant No.1 vide letter No.FEW/BTR/ACU/3988 advised their branch the defendant No.2 maintaining the account of plaintiff to recover from him the paid excess amount being the difference of T.T. buying rate and O.D. buying rate w.e.f. 1st January 1996 as prior to this arrangement were in local currency. On 22-2-1997 vide letter No.CST/FBP/ACU/97 the defendant No.2 served a notice on plaintiff for recovery of Rs.701,778 (Rupees seven lacs one thousand and seven hundred and seventy eight only). To the surprising of the plaintiff, he was served with another letter No.CST/EXP97/433 dated: 26-7-1997 from defendant No.2 directing him to deposit Rs.27,25,125 (Rupees twenty seven lack twenty five thousand, one hundred twenty five only) which was inclusive of the period when transactions were made in local currencies. According to the plaintiff, this was the serious conspiracy against plaintiff who were exporting rice to I.R. Iran worth US $20/25 million per annum till 1996 with full satisfaction of importers and always got appreciation certificates against their supplies. They (defendant No.2) also marked lien on plaintiff FC a/c, whereas out of 13 said shipments, 4 shipments were made by the sister concern Messrs Ali Associates of plaintiff as the L/C was in their name. For this injustice on the part of National Bank (defendant No.2) the plaintiff appealed to State Bank of Pakistan vide plaintiff s letter dated 13-8-1997 and 19th September, 1997 to stop National Bank of Pakistan for this illegal and unjust action. The State Bank of Pakistan immediately took action vide their letter dated 27-2-1997 and asked for detailed report from National Bank of Pakistan. The State Bank of Pakistan again sent two letters to National Bank of Pakistan on 30-9-1997 and 25-11-1997 to expedite the report without further loss of time. Since then till December 1998 neither National Bank of Pakistan submitted report to State Bank of Pakistan nor requested to plaintiff to make the said payment. The plaintiff was satisfied that the matter is resolved for ever and issue is settled on intervention of State Bank of Pakistan. On 19th December 1998 after lapse of one year the plaintiff wrote the letter to National Bank of Pakistan to confirm the closure of issue so that the lien on plaintiffs foreign currency is removed which they did in very beginning but no reply was received till 27th February 1999. Again on 27-2-.1999 the plaintiff reminded them for the same action but they did not reply till June, 1999. On 7th and 10th June 1999 the plaintiff received a short recovery notice from Campbell Street Branch of National Bank of Pakistan (defendant No.2) requesting the plaintiff to deposit Rs.27,25,125 only plus Rs.19,05,476 being mark-up for the period. The plaintiff immediately replied them explaining the whole position vide plaintiffs letter dated 11-6-1999, with copy to the State Bank of Pakistan, that it is quite unjustified and National Bank of Pakistan must remove the lien and withdraw the so-called recovery notice of demand. The defendant No.3 State Bank of Pakistan took immediate action and advised National Bank of Pakistan (defendant No.2) to confirm' the removal of lien on foreign currency and also stop the recovery of differential amount. T.T. buying rate and O.D. buying rate. Surprisingly again the same authority of defendant No.3 issue a letter on 25-8-1999 which they had referred to National Bank of Pakistan and advised the plaintiff that the plaintiff's request cannot be acceded to. In fact the plaintiffs were shocked on receipt of the said letter and the Chief Executive of plaintiff approached personally the Executive Director of State Bank of Pakistan (defendant No.3) and delivered letter dated 20-8-1999 to reconsider the case in light of fact and figure but all in vain. Lastly it came to the notice of plaintiff that Branch Manager of defendant No.2 had criminally fabricated the documents by changing the dates of receipts of export proceeds to misguide the State Bank of Pakistan, that is why State Bank of Pakistan issued the letter contrary to their earlier letter. It is further stated that the claim of exchange rate difference between O.D. buying and T.T. buying rates by, defendant No.2 is illegal unlawful and mala fide as exports were made to Iran under ACU account and funds of bank were not involved and plaintiff was correctly credited with T.T. buying rate which was in accordance to F.E. Circular of State Bank of Pakistan. Furthermore the National Bank of Pakistan had given in writing to the plaintiff to give T.T. buying rate against, all A.C.U. L/Cs.

3. According to the plaintiff, regarding one shipment to Uganda, the plaintiff received Fax No.002256-41-241969 dated 16-7-1997 from Messrs MNT Importers and Distributors of General Merchandise Compala; Uganda for supply of rice (15% broken) for equivalent to US$ 90,000 and the plaintiff vide fax message dated 21-7-1997 regretted the supply required (15% broken) rice as it was not available and informed them to wait till next crop which will start after three months. Plaintiff received fax dated; 22-7-1997 from their sister concern Messrs AMC General Traders informing the plaintiff that they have already dispatched the cheque of US $80,000 and requested him to clear the cheque and after receiving the money help them and make shipment of items including wheat, floor, bread sugar or any kind of rice so that he may make some profit in the months. The plaintiff after receiving cheque No.014028 deposited the said cheque/demand draft of US $80,000 with defendant No.2 and defendant No.2 sent the cheque fir collection. On 1st August, 1997 defendant No.2 confirmed the realization of the cheque but credited the said amount on 13-8-1997 in Local currency in A/C No.860-1. The plaintiff has a sister concern namely Messrs Five Star International dealing the exports of commodities including rice. The plaintiff vide letter No.KH/786-110/143/114/97 dated 6-8-1997 asked the defendant No.2 to credit the net proceeds of realized amount of US $80,000 equivalent in Pak. Rupees in A/C No.860-1 maintained in the name of five Star International as the exports were to be made by that sister concern. The plaintiff after receiving the amount in Pak. Rupees as advance amount for exporting rice or any other commodities and after confirmation of realization of net proceeds of the Cheque in favour of plaintiff by defendant No.2 on 1-8-1997 and after issuance of the proceeds realization Certificate dated 13-8-1997 the plaintiff exported superior long grain Basmati rice 2% broken to importer Messrs MNT importer and distributor the shipment was made on 15-8-1997 and was received by importer on 23-9-1997. After receiving the goods the importer vanished and dis-appeared. The defendant No.2 had dispatched documents directly to the importer instead of through banking channel as per banking practice. The defendant No.2 vide letter dated 18-4-1998 informed the plaintiff that cheque was forged/counterfeit instrument and further they have made lien on US$ Account of the plaintiff which was deposited under NDR PIII Scheme, on appeal of Prime Minister Islamic Republic of Pakistan. The plaintiff faxed importer to immediately resolve the problem but no reply was received from them through the fax was received by them. The plaintiff sent copy of Fax through courier service to locate their office but Courier also failed to locate their office. The plaintiff at its request was granted Running Finance facility of Rs. 10 million against deposit of foreign currency in A/C No.007117-6 which had expired in 1999 when there was debit balance of Rs.30399, and the plaintiff vide letter dated 10-9-1999 and 27-9-1999 had informed the defendant No.2 that the company would not avail the facility till finalization of export contracts with the foreign buyers and therefore, no debit should be raised against the account without prior permission of company/plaintiff. The defendant No.2 had debited, plaintiffs account No.007117-6 with Rs.27,255,125 being difference of TT rate and O.D. rate on 29-12-1999 of subsequently debited Markup of either amounts on that amounts and also debited amount equivalent to US$ 80,000 being Rs.4,11,2000 on 29-12-1999 of subsequent debit of Mark and other amount on that amount. The defendant No.2 also encashed US$ Account N.D.R. PIII Scheme of US$ 315000 at premature stage without permission of plaintiff, though no further debit entry was to be made in a closed account as period of finance facility had expired in account No.007117-6. The said deduction/debit in plaintiffs account is illegal against the provisions of law and rules and has been effected only to suppress the negligence and faults of defendant No.2. The advance payment was received on 13-8- 1997, as permit realization Certificate issued by defendant No.2 and according to Exchange control regulations the export proceeds should be realized within 120 days of shipment whereas in this case the proceeds were realized before shipment and after 270 days of shipment false issue has been raised because of fault, of defendants Nos. 1 and 2, they did not obtain the credit report of importer being unknown African importer as required under regulation of State Bank of Pakistan. They misdeclared on export form having obtained and satisfied. They dispatched the shipping documents directly to importer instead of through Banking Channel as per practice. The plaintiff wrote various letter's to defendants Nos.1, 2 and 3 regarding the said illegality and illegal demand and lot of correspondence took place but they turned deaf ears. The plaintiff made complaint before Wafaqi Mohtasib (Ombudsman) for the maladministration of the Agencies i.e. defendants Nos.1 to 3 and the acting Ombudsman vide order dated 5-4-2000 declared the same as white collar fraud and held that the appropriate forum for handling such cases is Banking Court and advised the Complainant/plaintiff to approach the Court of competent authority for redressal of his grievance. The defendants Nos.1, 2 and 3 admitted that on 18-9-1997 after expiring of 42 days National Bank of Pakistan received telex from American Express Bank New York through their OBD/Head Office that the said draft was returned with remarks "altered amount" and National Bank of Pakistan Head Office had immediately replied on 19-9-1997 to them that payment had already been effected on the basis of their Karachi office advice dated 8-8-1997, therefore, National Bank of Pakistan A/c should not be debited accordingly. On 9-4-1998 after lapse of 9 months the American Express Bank, New York debited National Bank of Pakistan A/c with them and returned the cheque with the remarks that the cheque is forged/ counterfeit instrument. The respondent No.3 filed a complaint under sections 12(1) and 23B(4) of Foreign Exchange Act 1947 being FER case No.45/99 before Court of Muhammad Bari Director of adjudication Foreign Exchange Adjudication Court State Bank of Pakistan Karachi. The evidence was led and the Court vide order dated 31-7-2000 vacated the show cause issued to plaintiff for failure to repatriate sale proceeds of shipment to Uganda within stipulated period of four months from date of shipment. The Court also declared it to be international white collar fraud. The plaintiff approached defendant No.4 but he was neither heard nor any action was taken by defendant No.4. Due to all extreme and coercive actions and illegal and unlawful acts of defendants the export business of plaintiff was ruined and came to stand still as plaintiff had to refuse and return L.Cs. valuing millions of foreign Exchange during the above mentioned period due to lack of Banking Service and facilities on the ground of dispute raised by the defendants. The defendant No.1 not only created illegal and unlawful hurdles in the smooth export business of plaintiff but also started cheap publicity through their . henchmen and favourite exporters that the plaintiff is not able to export rice as he has been penalized and huge amount is outstanding against him, which caused alarm in the minds of rice suppliers to the plaintiff and they stopped credit business with the plaintiff, which resulted huge losses to the plaintiff. The entire business of rice exports of plaintiff has been destroyed and all contracts and orders have been cancelled by the foreign buyers, and plaintiff suffered huge financial losses. According to the plaintiff he had to undergo mental torture and harassment due to illegal acts of defendants and litigation. The plaintiff has suffered huge financial losses and therefore, claimed the following amount by way of damages:

(a) Loss of exports of US $ 25 Millions per annum. The plaintiff suffered loss of Rs.300 Millions estimated upon shipment and calculated @ 7%.

(b) Loss of goods in the local as well as foreign market and prompt service record being Rs. 10 Million.

(c) Mental Torture Rs.300 Millions

(d) Litigation Cost Rs.01 Million.

Total damages claimed Rs,611 Millions.

1. The plaintiff served the defendants with legal notice dated 6-6-2000 and 28-11-2000 but the defendants neglected the same. The plaintiff accordingly filed the present suit with following prayer:

(a) To declare that the amount of Rs.27,25,125 charged as difference of TT buying rate and O.D. buying rate debited on 29-12-1999 and amounts subsequent Markup and others in the account No.007117-6 of the plaintiff is illegal, unlawful and without any lawful authority.

(b) To declare that , the amount of Rs.41,12,000 charged as equivalent value to US$ 80,000 and debited on 29-12-1999 and subsequent Mark-up and other amount in the account No.007117-6 of the plaintiff is illegal unlawful and without lawful authority.

(c) To declare that premature encashment on 15-5-2000 of foreign currency deposit NDRP III of US$ 31,5000 deposited vide receipt No.754265 dated 15 4-1997 by the plaintiff Is illegal unlawful and without any lawful authority said deposit continues up to 14-4-2002.

(d) To declare that Running Finance facility in A/c No.007117-6 was never got renewed by plaintiff and entries after the expiry of finance period are illegal and against Banking laws.

(e) To direct the defendants to reverse the debit entries and restore the foreign currency under deposit NDPP III at its original position and return from 29-12-1999 till date and continue paying return.

(f) To pass a decree of Rs.611 Million as damages against the defendants in favour of plaintiff, for the loss suffered in business and agencies of mental torture and harassment suffered by the plaintiff, who had to incur for litigation he had to face on account of illegal actions of defendants.

(g) Any other relief this Hon'ble Courts deems fit and proper.

1. The defendants contested the above suit by filing their leave to defend applications which were allowed by consent vide order dated 25-8-2003 and the defendants filed the written statement. The defendant raised preliminary objections as regards maintainability of the suit. The case of the defendants as contained in the said written statement is as follows:--

.sic…….

1. It is averred in the written statement that all 13 shipments were made against the letters of credit issued by the Bank Millat-e-Iran and shipments were effected by the exporters. The defendant bank never received any advance payment. It is further averred in the written statement that plaintiff has filed a false and frivolous letter before the State Bank of Pakistan in order to obtain a letter for charging TT buying rate instead of O.D. buying rate. It was averred that plaintiff has not produced any document in support of their contention of any advance payment to the defendant bank. The export under advance payments and against letters of credits are quite different mode of shipments, in case of export against advance payment proceeds are received before the shipments and credited to the account of the Exporter whereas exports against letters of credit, proceeds are received after shipment moreso after negotiation of export documents, as such, two different rates are applicable to the exports against advance payments which is TT rate and on the other hand exports against letter of credits, in which documents are drawn and the exporter asked for negotiations to the negotiating bank, then the O.D. buying rate is applicable to the exporters. It is further averred that the thirteen shipments the documents were drawn under letters of credit, and on the instructions of the exporters, the documents negotiated and proceeds were credited in the respective accounts maintained by the plaintiff with the defendant bank and the plaintiff was entitled for O.D. buying rate as per State Bank of Pakistan Foreign Exchange Circular No.83 of 1993. It is further asserted by the defendant in the written statement that the defendant bank has to pay to the plaintiff O.D. buying rate applicable to the letter of credits in any circumstances except the payments which are received in advance. The O.D. buying rate is applicable in all the letters of credits whatsoever, whereas TT buying rate is applicable only against advance payments received by the Exporter through the bank. According to the defendant, the Circular No.5 of 1997, dated 18-3-1997 was not applicable in the instant case as the plaintiffs case pertains to the years 1994 to 1996. It was pointed out by the Senior Auditor during the course of audit in the year 1996 that wrong TT buying rate had been allowed to the plaintiff after negotiations of export documents instead of O.D. buying rate applicable as per Circular No.83 of 1993 of State Bank of Pakistan. After the discovery of this mistake, the Senior Auditor had instructed defendant No.2 to mark lien against foreign currency deposit account and the 'plaintiff may not be allowed to withdraw the same unless and until the amounts are recovered from the plaintiff, whereafter the plaintiff were repeatedly requested orally as well as through letters for the adjustment of the excess amount paid to them towards the T.T. rate instead of O.D. buying rate but they did not pay any attention to this and avoided/neglected the adjustment of the excess amount paid by the defendant No.2 bank inadvertently. It is not. disputed that four shipments were made by the sister concern as the letters of credit were in the name of sister concern as such, the proceeds were credited to its sister concern account. When the correct position was explained to the State Bank of Pakistan they declined to accept their complaint in respect of T.T. buying rate and asked the defendant No.2 to charge the same at the O.D. buying rate which were accordingly charged and the plaintiff was repeatedly asked to adjust the excess amount received by them towards TT buying rate as well as through its sister concern. The defendant-Bank has rightly issued letters to the plaintiff whereby the amounts were demanded. The plaintiffs letter in reply thereto was quite unjustified, as 'such; the defendant-Bank did not remove the lien marked according to instructions of the senior Auditor of the defendant-Bank. After receipt of correct explanation of the defendant-Bank in respect of the exports made by the plaintiff under the letters of Credit, State Bank of Pakistan had rightly refused vide its letter dated 25-8-1999 in terms of foreign exchange circular of SBP, as the payments were received by the defendant bank after negotiation of documents. The defendant denied that the Branch Manager/defendant No.2 had criminally fabricated the documents by changing the dates of the receipts of shipment documents and export proceeds to misguide the State Bank of Pakistan. The State Bank of Pakistan has rightly declined its request in respect of T.T. buying rates. The defendant bank has rightly claimed the difference of O.D. buying and T.T. buying rates. The plaintiff had deposited cheque in its FC deposited account No.72 for US $ 80, with the defendant bank without assigning and showing the purpose of its receipt from abroad. The plaintiff was also maintaining current account in Pak rupees with the defendant-Bank. The cheque of US $ 80,000 was received in the name of the plaintiff i.e. Kalb-e-Hyder & Company (Pvt.) Limited and on presentation in clearing through American Express Bank, the proceeds were credited to the foreign currency account No.72 accordingly and thereafter at the request of the plaintiff vide its letter dated 6-8-1997 transfer the entire amount of US $ 80,000 equivalent to Pak rupees to the account of sister concern bearing No.860-1 of Messrs Five Star International in order to export the cargo by them to Mambasa through the sister concern- and accordingly Pak rupees were transferred as advance in its sister concern account 860-1 on 13-8-1997. However, the plaintiff did not ship the goods, whereas the shipment was made by its sister concern Messrs Five Star International, Karachi under the proprietorship of Mr. Mazhar Hussain, who is also Chief Executive of Kalb-e-Hyder & Co. (Pvt.) Ltd., against the cheque of US$ 80,000 which was later on dishonoured and the same was returned by the collecting bank to the defendant bank being forged/counterfeit instrument. The American Express Bank, debited the account of the defendant-Bank for US$ 80,000 of forged/counterfeit cheque deposited by the plaintiff with the defendant-Bank. According to the defendant the plaintiff was in connivance with the importer and it was in the knowledge that the said cheque of US$ 80,000 is a forged/counterfeit instrument, as such, after the presentation and credit of the proceeds to the foreign currency account No.72, the plaintiff exported fief: according to his own choice without. any consent and involvement of the defendant/bank which has completed in a very short span of time i.e. one and a half day and completed the shipment on 15-8-1997 which was not possible in normal dealing of exports and instructed the defendant to dispatch the shipment documents to the consignee through courier service vide its letter dated 13-8-1997. According to the defendant, the plaintiff itself due to connivance with the importer has been trying to stimulate the defendant bank from each and every corner for achieving its evil designs. It is further averred in the written statement that the defendant bank informed the plaintiff that the draft was forged/counterfeit instrument, as such, a lien was made on US$ account of the plaintiff, The plaintiff also obtained running finance facility of Rs.10.0 million against the deposit under NDRP-III Scheme. It is alleged by defendant that plaintiff deliberately and knowingly has tried to indulge the defendant bank under heavy losses on one pretext or the other. According to the defendant the plaintiff was also aware that the importer after issuance of the draft of US$ 80,000 had disappeared and was not available even otherwise the plaintiff asked the defendant-Bank to dispatch the shipment documents directly to the Importer at Uganda. It is further stated that plaintiff was granted a running finance facility of Rs.10.0 million against NDRP-III Scheme and according to the sanction' amount which the plaintiff was utilizing time to time. The amount of forged/counterfeit cheque as well as the amount of difference of TT buying rate and O.D. buying rate was payable by the plaintiff, as such, in order to save its skin, instructed the bank not to debit the running finance account. According to the defendant, the defendant-Bank repeatedly requested the plaintiff to adjust. the above amounts, when the plaintiff failed to adjust the same, the defendant bank had no alternate except to debit the said amounts which the defendant bank adjusted according to law and banking practice, as such, the allegations of the plaintiff are baseless and without any footings. The defendant had also denied that defendant bank encashed US $ NDRP III Scheme of US$ 315,000 at premature stage without permission of the plaintiff as alleged or at all. According to them, repeatedly letters and notices were sent to the plaintiff in respect of encashment of US$ account for adjustment of the outstanding liabilities of the plaintiff but the plaintiff failed to fulfil the demand of the defendant-Bank, as such, the same was encashed and amounts were credited to its account and remaining amount was sent to the plaintiff through Draft No.110006 dated 11-9-2000 US$ 106,176.73 of defendant bank, but the same was refused by the plaintiff. After refusal by the plaintiff the said draft was cancelled and the amount was kept in the sundry account of the defendant No.2/bank which is still lying with the defendant-Bank and the same can be withdrawn by the plaintiff any time without any hitch and hurdle. It is further case of defendant that except forged/counterfeit US$ 80,000 draft, no any advance payment was received towards the 13 shipments made to Islamic Republic of Iran. The said US$ draft, according to defendant, was returned being forged/counterfeit instrument, which was against the shipment documents sent to the Importer at the request of the plaintiff. According to the defendant, the draft was firstly returned with the remarks "altered amount", thereafter they declared the same cheque being forged/ counterfeit and debited the defendant-Bank account at New York. According to them, the American Express Bank, New York, debited NBP Account and the same was returned with the remarks mentioned above. According to the defendant, the Adjudication Court also declared it to be international white collar fraud, as well as the same was also declared by the Ombudsman as white collar fraud. It is averred by the defendants that due to return of cheque of US$ 80,000 and non-cooperation of the plaintiff on flimsy grounds, the plaintiff itself stopped the business. According to the defendants, the defendant No.2/Bank always tried to explain the plaintiff the difficulties of the bank and after the return of US$ 80,000.00 cheque but, the plaintiff never cooperated and did not solve the problem of the bank, as such, the bank was compelled to adjust the outstanding liabilities according to rule from its account. According to the defendants, the plaintiff had not sustained any loss in export business as they had already admitted vide its letter No.KH/786-110/137/95/99 dated 10-9-1999 that no export contracts/orders were finalized with the foreign buyers, hence could not avail finance facility which was granted by the defendant No.2/Bank. According to the defendants, it was a case of arranged shipment against a bogus contract, moreover, against a forged/counterfeit instrument, therefore, the export proceeds could not be repatriated. According to the defendants, the outstanding amounts were correctly debited to plaintiffs account from the proceeds of NDRP-III, which was under lien for the purposes and, when the plaintiff despite all efforts, letters/reminders and due notices, by the defendant No.2/Bank failed, then the defendants had no alternate except to adjust the outstanding liabilities from its accounts as per authorization under the law. Prayer for the dismissal of suit with special costs.

2. On 25-8-2003 following consent issues were framed in view of the above pleadings of the parties:--

(1) Whether the defendant is entitled to charge from the plaintiff T.T. rates or O.D. rates on the transaction does by the plaintiff with the Iranian counterparts?

(2) Whether the cheque of US$ 80,000 was cleared by the National Bank whereafter shipment was effected by the plaintiff to Uganda?

(3) Whether the plaintiff has clouded with the foreign importers (Uganda) at the cost of the defendant?

(4) Whether National Bank could encash the plaintiffs NDRP Certificates to recover amount in connection with another transaction.

(5) Damages.

(6) Relief.

1. After framing of the issues the evidence of both the parties were recorded.

2. I have gone through the written arguments of Mr. Saalim Salam Ansari Advocate for the plaintiff and Mr. Zubair Qureshi Advocate for defendants Nos.1 and 2 National Bank of Pakistan and also perused the record of the case.

3. Before we discuss the issues framed above, it is pertinent to mention that the defendants Nos.1 and 2 have taken a specific plea in their written statement that the suit as framed is not maintainable under the law but at the time of framing the issues the said plea is not pleaded and by consent this issue was framed.

ISSUE NO.1

1. On this issue the learned counsel for the plaintiff contended that the plaintiff has succeeded to establish his claim through recording his evidence as well as documents produced by the plaintiff, which are exhibited and mostly of them issued by the defendant and State Bank of Pakistan. He further drawn the attention of this Court on the evidence of Bank Manager and another witness of the defendant who came from American Express Bank. By referring the evidence and documents learned counsel contended in cases where documents presented are not negotiated for any valid reasons but payment is made to the exporter after receipt of funds from the opening/reimbursing bank then conversion will invariably made at the T.T. clean buying rate instead of O.D. buying rate his contention in this regard is that the instant case no funds of bank are involved therefore, the exporter/plaintiff should have been given T.T. rate (i.e. no markup should be charge) and if funds of negotiating bank are involved by paying first exporter from own funds at the time- of negotiating and then claim reimbursement from abroad then O.D. rate paid to the exporter (which is less because mark-up for 15 days) to come from abroad.

2. According to him in this case no funds of negotiating banks (the defendants) were involved. The plaintiffs were paid the proceeds already available with defendant by debiting the account of importer bank Messrs Millat Bank, Tehran. Accordingly, T.T. rate given to the plaintiff as per L.Cs. reimbursement clause of Exhs.5/12, 5/14, 5/18 and 5/21.

3. He further contended that after about one year when shipments were completed and cases were closed mark up for 15 days was claimed on all thirteen (13) shipments by giving O.D. rate and also mark up over mark was charged which is violation of the State Bank of Pakistan's Circulars 13 and 32 of 1984, the circular of the State Bank of Pakistan are binding on the banks operating in Pakistan in view of sections 25 and 33-P of Banking Companies Ordinance, 1962.

He referred as under:--

(a) Letter of National Bank of Pakistan Branch dated 18-6-1996 to their Head Office (N.B.P.) confirming that there is no involvement of National Bank of Pakistan funds in the plaintiffs case Exh.5/69-B.

(b) L.Cs. were opened under U.C.P.-500 which says that negotiations means (providing funds) which were not provided on presentation of documents as per L.0 terms, but were provided on receipt from abroad.

(c) The plaintiff were issued Annexure "A" (format annexed to the circular) will also be used for claiming refunds of the import fee) against all the 13 shipments which is only issued when proceeds are realized into Pakistan. In case where proceeds are to be realized later after negotiation then "annexure-B" (Format where export has been made) is supposed to be issued which is quite different from "annexure-A" as per State Bank F.E. Circular 64 dated 25th August 1993.

(d) Further contended that the dates of realization of proceeds into Pakistan and the dates of its reporting to State Bank of Pakistan are specifically mentioned in the Anexure "A" issued by the defendant. "Negotiation date" and "proceed realization date" both are same (Column No.5 and column-9), hence no Capitals of National Bank of Pakistan were involved.

(e) L/Cs reimbursement clause is also self-explanatory, which allow reimbursement by debiting bank Millat Tehran account only, with the defendant.

(f) The Export Promotion Bureau of Pakistan (EPB) in its letter to defendant (Exh.5/69) had explained the position of the plaintiff, which was not rebutted.

1. According to the learned counsel the bank (defendant) did not provide any funds to the plaintiff, hence no negotiations took place under the terms of UCP-500. The credit was given to the plaintiff after getting instructions/funds from Bank Millat, Tehran, using "delay tactics", so much so that in one shipment defendant although issued the credit advice to the plaintiff in time on 29-2-1996 (Exh.5/51) but criminally, credit of PKR 120 Million was not provided into plaintiff's accounts resulting cheques issued to local Rice suppliers worth Rs.120 Millions were "dishonoured".

2. Further the learned counsel in light of the above contended that the defendant (bank) is entitled to charge from the plaintiff T.T. rates and not O.D. rates on the transaction done by the plaintiff with the Iranian Counterpart.

3. On the other hand the learned counsel for the defendant contended that initial burden to prove this issue lies on the plaintiff and he referred the evidence of the plaintiff as under:--

As per understanding between the members of ACU exporters' banks as well as importers' bank has to establish account in each country from where remittance can be transferred by debiting their accounts. The defendant's-Bank have an account with

2008 C L D 688

[Karachi]

Before Dr. Qammaruddin Bohra, J

UNITED BANK LIMITED---Plaintiff

Versus

NORTHERN POLYETHELENE LIMITED and 3 others---Defendants

Suit No. B-17 of 2007, decided on 3rd April, 2008.

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

----S.9---Recovery of bank loan---Ex paste decree-Notices were issued to defendants by all four modes as provided under S.9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 but defendants did not appear nor they filed any leave to defend the suit application---Effect---Nothing was available on record from the side of defendants to dislodge the claim of plaintiff contained in plaint---High Court under Banking Jurisdiction decreed the suit only against the borrower to the extent of amount claimed in plaint, cost of funds at the prevailing rate from the date of filing of suit till realization of decretal amount and sale of mortgaged and hypothecated property---Suit was decreed accordingly.

Naveedul Haq for Plaintiff.

Nemo for Defendants.

Date of hearing: 26th March, 2008.

2008 C L D 701

[Karachi]

Before Abdur Rahman Faruq Pirzada, J

ABDUL RAHIM PATEL---Applicant

Versus

HABIB BANK LIMITED through Branch Manager and another---Respondents

Revision Application No.13 and C.M.A. No.57 of 2008, decided on 7th April, 2008.

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

---S.9(5)---Valid service---Scope---Even if service is duly effected in any one of the modes (viz. through bailiff or process server of Banking Court, by registered post acknowledgment due, by courier or by publication) the same is deemed to be valid service for the purposes of Financial Institutions (Recovery of Finances) Ordinance, 2001.

Messrs Simnwa Polypropylene (Pvt.) Ltd. and others v. Messrs National Bank of Pakistan 2002 SCMR 476 rel.

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

----Ss. 9 & 10---Civil Procedure Code (V of 1908), S.115---Revision---Maintainability---Order passed by Banking Court dismissing application for leave to defend, was assailed before High Court in exercise of revisional jurisdiction---Validity---No provision of any revision application existed against any interlocutory order passed by Banking Court---Revision was not maintainable in circumstances.

Bolan Bank Ltd. V. Capricorn Enterprises (Pvt.) Ltd. 1998 SCMR 1961; United Bank Limited v. Abdul Hamid and others 2001 CLC 460 and Messrs Unicorn Enterprises v. Banking Court No.5, City Court Building, Karachi and 2 others 2004 CLD 1452 (Karachi) rel.

(c) Financial Institutions (Recovery of Finances) Ordinance (XLVI of 200I)---

----Ss. 9 & 10---Limitation Act (IX of 1908), S.5---Recovery of bank loan---Leave to appear and defend the suit---Condonation of delay---On the day when Banking Court held service good on defendants, one of the defendants suddenly appeared as he was statedly standing outside the court with some work---Even after appearance of that defendant before Banking Court, he chose to wait for another 27 days before filing application for leave to defend along with application under S.5 of Limitation Act, 1908---Banking Court refused to condone the delay and dismissed application for leave to defend the suit---Validity---Delay on the part of defendant was without any plausible cause---Defendant was required to explain delay of each and every day and he had also to show that delay had been caused by reason beyond his control---In application under S.5 of Limitation Act, 1908, defendant did not mention any reason for delay of 27 days in filing of that application, after he had appeared before Banking Court---No illegality having been found in the order passed by Banking Court---Revision was dismissed in limine by High Court.

Messrs Emirates Airlines v. Dr. Prof. Haroon Ahmed and 3 others PLD 2006 Kar. 126 rel.

Tahir Nisar Rajput for Applicant.

Hakim Ali Siddiqui for Respondent.

2008 C L D 712

[Karachi]

Before Khalid Ali Z. Qazi, J

PAKISTAN TELEVISION CORPORATION-.-Plaintiff

Versus

Messrs BOND ADVERTISING (PVT.) LTD.---Defendant

Suit No.102 of 2000, decided on 10th April, 2008.

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

----O.XXIX, R.1---Suit filed by corporation---Maintainability---Plaint was signed and verified by manager who was attorney and had been authorized through power of attorney executed by Managing Director for the purpose as required under O.XXIX, R.1 C.P.C---Power of attorney was produced in court and the fact was confirmed by plaintiffs representative in his evidence which had not been denied or rebutted by defendant in cross-­examination---Suit, held, was filed by authorized person in circumstances.

1988 CLC 1381 rel.

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

----S.12---Specific performance of contract---Recovery of money--Plaintiff claimed that in compliance of contracts between the parties, plaintiff telecast advertisement spots for defendant's clients but defendant did not make full contractual payments---Validity---Plaintiff's version was supported through evidence while defendant failed to appear to defend the suit filed by plaintiff and to support his counter-claim made by him in his written statement---Effect---When signatory to written statement failed to appear, then even written statement could not be exhibited and there was no rebuttal to plaintiffs version---Written statement/counter-claim filed by defendant could not be considered in his favour and no reliance could be placed on such written statement and presumption would be that the defendant had not pressed the issues---High Court decreed the suit in favour of plaintiff to the extent of the amount claimed along with markup till realization of decretal amount---Suit was decreed accordingly.

1988 CLC 1381; 2008 YLR 464; PLD 2004 SC 633; PLD 2004 SC 415; 2000 SCMR 1391; PLD 1972 SC 25 and PLD 2003 SC 594 ref.

Manawer Ghani for Plaintiff.

Nemo for Defendant.

Date of hearing: 12th February. 2008.

2008 C L D 727

[Karachi]

Before Khalid Ali Z. Qazi, J

JAVEDAN CEMENT LIMITED through Chief Operating Officer----Plaintiff

Versus

PROVINCE OF SINDH through Member, Fund Utilization Department, Board of Revenue and others----Respondents

Suit No. Nil of 2007, C.M. As. Nos. 7753 of 2007 and 391 of 2008, decided on 5th May, 2008.

Civil Procedure Code (V of 1908)---

----O. XXIX, R.1---Signing and verification of pleadings---Suit by or against corporation/company---Non-signing of plaint by person authorized is only an irregularity and not an illegality so as to non-suit the plaintiff---Such omission can be rectified at any time---Rule 1 of O.XXDC, C.P.C. provides that in suits by or against company/corporation pleadings may be signed and verified on behalf of corporation/company by the Secretary or by any Director or other principal officer of the corporation, who is able to depose to the facts of the case---Suit in the name of company may be signed and verified by its Manager.

1982 CLC 1276 and 1988 CLC 1381 fol.

PLD 1960 Lah. 1179; 1992 CLC 1480; 2001 YLR 1834; 1994 SCMR 826 and 2003 SCMR 83 ref.

Nisar A. Mujahid for Plaintiff.

Ahmed Pirzada, A.A.-G. Sindh for Defendants Nos. 1 to 7.

Khalil-ur-Rehman for Defendants Nos. 11 and 12.

Nemo for other Defendants.

2008 C L D 742

[Karachi]

Before Nadeem Azhar Siddiqi, J

IBRAHEEM KHAN and 2 others----Plaintiffs

Versus

ABUL MOHSIN and 4 others----Defendants

Suit No. Nil of 2006, decided on 10th March, 2008.

Specific Relief Act (I of 1877)---

---Ss. 42 & 54---Civil Procedure Code (V of 1908), S.12(2)-Suit for declaration, permanent injunction and damages---Plea of fraud and misrepresentation---Main prayer of the plaintiffs was for declaration to the effect that mortgage deed executed by defendant in favour of the Bank on basis of unregistered power of attorney was illegal and void---Plaintiffs had claimed that the power of attorney executed by plaintiffs, in favour of defendant was cancelled and the mortgage deed was executed after cancellation of said power of attorney---Plaintiffs had also filed application under S.12(2), C.P.C. before Banking Court for setting aside judgment in earlier suit filed by Bank and plaintiffs and other defendants on the plea that property was mortgaged in collusion with the staff of the Bank---Plaintiffs by the present suit had indirectly challenged the mortgage deed as well as the judgment passed by Banking Court in suit filed by Bank---Plaintiffs in their suit could not challenge the mortgage deed as well the decree passed by the Banking Court as no court other than a Banking Court could exercise any jurisdiction with respect to any matter to which jurisdiction of a Banking Court extended under Financial Institutions (Recovery of Finances) Ordinance, 2001---Loan was obtained in the name of the plaintiffs by using the power of attorney executed by them, execution of which had not been disputed by the plaintiffs---Application already filed by plaintiffs under S.12(2), C.P.C. was pending before the Banking Court and in that proceedings question that whether the power of attorney was cancelled and thereafter loan was obtained, could be thrashed out---Judgment and decree could not be challenged by way of separate suit and could only be challenged by filing application under S.12(2), C.P.C.---Plaint was returned to the plaintiffs and in case the Banking Court found that said court had no jurisdiction to entertain application under S.12(2), C.P.C., plaintiffs could file a suit in the High Court.

Muhammad Nawaid Qureshi for Plaintiffs.

2008 C L D 756

[Karachi]

Before Azizullah M. Memon and Arshad Noor Khan, JJ

Syed WASEEM HUSSAIN----Petitioner

Versus

PAKISTAN EXPORT FINANCE GUARANTEE LIMITED and 2 others----Respondents

Constitutional Petition No.D-1195 and C.M.A. No.4156 of 2007, decided on 18th April, 2008.

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

----S. 15(10)---Constitution of Pakistan (1973), Art.199---Constitutional petition---Sale of mortgaged property---Provisions of S.15 of Financial Institutions (Recovery of Finances) Ordinance, 2001 being directory in nature no penal consequence had been provided under S.15 and cases were to be decided on merits and not merely on the basis of technicalities.

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

----S.15(10)---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Sale of mortgaged property---Sale proceeds of mortgaged property in question had already been deposited by the respondent before the Banking Court; sale deed of the said property also stood executed and at present only the part remaining to be performed towards completion of sale of said mortgaged property, under execution of suit, decree was to deliver the possession of the property to the petitioner---High Court, in circumstances, allowed the constitutional petition, set aside the impugned order and remanded the matter to Trial Court, with directions to re-hear the parties on the point involved in the case and to decide the same afresh in accordance with the relevant law.

Bank of Khyber v. Messrs Spencer Distribution Limited and others 2003 CLD 1406 ref.

Saalim Salam Ansari and Mukhtar Ahmed for Petitioner.

Naveed-ul-Haq for Respondent No.1.

Iirran Ahmed, Deputy Attorney General.

2008 C L D 761

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mahmood Alam Rizvi, JJ

Messrs CLIMAX PRINTERS through Proprietor and another----Appellants

Versus

Messrs HABIB BANK LTD. and 5 others----Respondents

Ist Appeals Nos.68 to 73 and 79 of 2006 and C.M.A. No.484 of 2007, heard on 15th February, 2008.

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

----Ss. 15(6) & 19---Sindh Rented Premises Ordinance (XVII of 1979), S.15---Money decree, execution of -Auction of mortgaged property in possession of tenant---Conformation of auction in favour of auction-purchaser-Order of Banking Court directing tenant to deliver possession of such property to auction­-purchaser---Validity---Statutory tenant had a right to remain on premises and no one could eject/dispossess him without due course of law---Banking Court, in absence of explicit provision could not put auction purchaser into possession of such property---Legislative intent could not be construed to deprive tenant of his right to occupy property guaranteed under law in presence of documentary evidence confirming his status---High Court set aside impugned order in circumstances.

Mst. Zarina Khawaja and others v. Agha Mehboob Shah PLD 1988 SC 190; Mst. Mubarak Shah v. Banking Court No.III 2005 CLD 515 and M. Ghana v. M. A. Mullick and 3 others 1973 SCMR 90 rel.

(b) Sindh Rented Premises Ordinance (XVII of 1979)---

---S.15---Statutory tenant, right of---Scope---Such tenant had a right to remain on premises and no one could dispossess/eject him without due course of law.

Mst. Mubarak Shah v. Banking Court No. III 2005 CLD 515 and M. Ghani v. M. A. Mullick and 3 others 1973 SCMR 90 rel.

Raja Qasit Nawaz for Appellant.

Sadaruddin Huda for Respondent No.1.

Muhammad Yaseen Azad for Respondent No.5.

Date of hearing: 15th February, 2008.

2008 C L D 775

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mahmood Alam Rizvi, JJ

Messrs UNITED BANK LIMITED---Appellant

Versus

MUHAMMAD IRFAN---Respondent

Ist Appeal No.73 of 2001, decided on 21st April, 2008.

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

----S.9---Suit for recovery of amount withdrawn by defendant-customer against false entries of fake deposits made in his Bank Account in connivance with Bank Officer---Proof---Defendant claimed to be in possession of photo copies of counterfoil and receipts regarding his deposits with Bank, but did not produce same in Court---Defendant did not produce any document or examine witness to prove that disputed deposit entries were genuine---Defendant during cross-examination admitted withdrawal of suit amount---Defendant in connivance with Bank Officer had withdrawn suit amount from his Bank account without having any credit balance---Suit was decreed in circumstances with cost of funds as envisaged under law.

Muhammad Zubair Qureshi for Appellant.

Nemo for Respondent.

Date of hearing: 19th March, 2008.

2008 C L D 778

[Karachi]

Before Khalid Ali Z. Qazi, J

BELA AUTOMOTIVES LTD.---Plaintiff

Versus

HABIB BANK LTD.---Defendant

Banking Suit No.90 of 2001 and C.M.A. No.6573 of 2004, decided on 25th April, 2008.

(a) Words and phrases---

---- "Shall "---Meaning.

Oxford Dictionary, Thesaurus and Wordpower Guide, at page 1185 ref.

(b) Interpretation of statutes---

---Word "shall" used in a statute---Effect stated.

Use of word "shall" does not always mean that the enactment is obligatory or mandatory. It depends upon the context in which the word "shall" occurs and the other circumstances.

It depends on the language employed in a particular statute as to whether the word "shall" is to be treated as mandatory or directory.

Government of Pakistan v. Ghulam Moinul Ahmed DLR 1965 Dac. 377; State of M.P. v. Azad Bharat Finance Co. (1996) 2 SCA 336; Abdul Rahim and 2 others v. United Bank Ltd. PLD 1997 Kar. 62; Muhammad Saleh v. The Chief Settlement Commissioner, Lahore and 2 others PLD 1972 SC 326; S. Hukam Singh Sham Singh and another v. S. Sardul Singh Kirpal Singh and others AIR 1953 Pepsu 133; State of Haryana v. Raghobir Dayal (1955) ISCJ 332 at 336 and Crawford's Statutory Construction, 1940 Edition, Paragraph 262 at page 519, 1989 ref.

(c) Interpretation of statutes---

----Intention of statute would be gathered from whole statute.

Rani Drigraj Kuer v. Raja Sri Amar Krishna Narain Singh AIR 1960 SC 444 rel.

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

----Ss. 9(2) &10---Civil Procedure Code (V of 1908), O. VII, R. 11---Suit for recovery of loan amount--- Non filing of statement of account along with plaint---Rejection of plaint, application for---Validity---Mode or manner of filing of statement of account not provided in Ss. 9(2) and 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Filing of statement of account was a matter of procedural formality as no consequences were provided for failure of strict compliance of S.9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001--Application was dismissed---Principles---[Muhammad Yousuf v. A.D.B.P. 2002 CLD 1270 dissented from].

Muhammad Yousuf v. A.D.B.P. 2002 CLD 1270 dissented from.

Bela Automotives Limited v. Habib Bank Limited 2005 CLD 893; Messer C.M Textile Mills (Pvt.) Limited and 5 others v. Investment Corporation of Pakistan 2004 CLD 587; Baba Farid Ghee Industries .v. National Bank of Pakistan 2002 CLD 669; Bankers Equity Ltd. and 5 others v. Messer Bentonite Pakistan Ltd. and 7 others 2003 CLD 9341; Muhammad Mushtaq and others v. Bashir Ahmed Chudhary and other PLD 1991 Lah. 400; Atta Muhammad Qureshi v. The Settlement Commissioner Lahore and 2 others PLD 1971 SC 61; Niaz Muhammad Khan v. Mian Fazal Raqib PLD 1974 SC 134 and Bela Automatives Limited v. Habib Bank Limited 2005 CLD 893 ref.

(e) Practice and procedure---

----Law always favours adjudication on merits---Technicalities should not be allowed to prevail to defeat ends of justice.

Mansoorul Arfin for Plaintiff.

Badar Alam for Defendant.

2008 C L D 800

[Karachi]

Before Nadeem Asghar Siddiqui, J

ASKARI COMMERCIAL BANK LIMITED---Plaintiff

Versus

ZAFAR AHMED and 2 others---Defendants

Suit No.B-43 of 2007 and C.M. No.4395 of 2005, decided on 15th May, 2008.

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

---Ss.9 & 19---Suit for recovery of loan---Execution of decree---Sale of mortgaged goods through auction---Auction-purchaser was declared higher bidder, sale of mortgaged goods was confirmed in his favour and he deposited the balance sale consideration with the Nazir of the Court---Applicant, who had not participated in the auction and had not assigned any reason for not doing so, filed application for acceptance of his bid after sale of goods was confirmed in favour of auction-purchaser---Applicant had not assigned any reason for not submitting the bid before the Nazir of the Court within time prescribed in the public notice---Validity---Bid which was presented by the applicant to the Nazir of the Court, after the close of the auction, had no legal value and could not be considered as same was violative of the right acquired by auction-­purchaser---Entertaining such requests after closing of sale, was seriously affecting the working as well as sanctity of the auction by Court and it would not be possible to conclude sale through Court auction and the order of the Court would lose its sanctity-No allegation of any mal practices, irregularities and fraud in the process of auction concluded by the Nazir of the Court was found and no one had questioned the legality of auction---Application was dismissed.

Hudaybia Textile Mills and others v. ABL and others PLD 1987 SC 512 and UBL v. A.Z. Hashmi and others 2000 CLC 1483 rel.

Amanullah Khan for Plaintiff.

Shahab Sarki for Defendants.

Suhail Abbass for Auctioneer-purchaser.

Muhammad Amin, Auction-purchaser Present in Person.

2008 C L D 837

[Karachi]

Before Nadeem Azhar Siddiqi, J

SHAUKAT ALI---Petitioner

Versus

AMIN FABRICS LTD. and 3 others---Respondents

J. Miscellaneous No. 22 of 2006, decided on 6th May, 2008.

Companies Ordinance (XLVII of 1984)---

----S.290---Petition for winding up of company---Plea of petitioner was that company was showing loss for the last ten years; and that affairs of company were oppressive to members and were not being managed in accordance with sound business principles/prudent commercial practices---Petitioner was holding shares less than 20% of issued share capital of company---Effect---Purpose of S.290 of Companies Ordinance, 1984 was to keep company going as well as to secure interest of minor shareholders from acts of oppression and mismanagement---Petitioner, not holding qualified shares could not maintain such petition, thus, same was dismissed.

Petitioner in Person.

Atif Awan for Respondent No.1.

Muhammad Aslam Butt for Respondent No.2.

2008 C L D 844

[Karachi]

Before Zia Perwez and Nadeem Azhar Siddiqi, JJ

Messrs MEHRAN SOLVENT EXTRACTION (PVT.) LTD. through Directors/Partners

and 5 others---Plaintiffs

Versus

I.D.B.P. through Manager---Respondent

Civil Petition No.D-100 of 2005, decided on 14th November, 2006.

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

---Ss. 9 & 10---Civil Procedure Code (V of 1908), O.VII, R.10---Suit for recovery of loan--Application for leave to defend suit---Application for return of plaint---Application filed by defendant for return of plaint having been dismissed by the Banking Court, defendant had filed revision against said order of the Banking Court, while application for leave to defend suit filed by defendant under S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 in which same plea had already been raised, was pending---No application for seeking relief or interlocutory relief was maintainable on the same ground which had already been taken in the application filed wider S.10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 seeking leave to defend as it would amount to splitting up of the application to seek relief in parts.

Ms. Afshan Ahmed v. Messrs Habib Bank Limited and another 2002 CLD 137; Central Cotton Mills Limited and another v. Atlas Bot Lease Co. Limited and 2 others 1998 SCMR 2352; Pir Sabir Shah v. Shad Muhammad Khan, Member Provincial Assembly N.-W.F.P. and another PLD 1995 SC 66; Munawar Hussain and 2 others v. Sultan Ahmed 2005 SCMR 1388; Major (Retd.) Barkat Ali and others v. Qaim Din and others 2006 SCMR 562; Messrs Rady & Co. (Pakistan) Limited v. Messrs Sayed Saigol Industries Ltd. 1981 SCMR 494; National Bank of Pakistan and 4 others v. Gamman Pakistan Limited PLD 1990 Kar. 209 and Muhammad Yasin and 2 others v. Ch. Muhammad Abdul Aziz PLD 1993 SC 395 rel.

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

----S. 22(6)---Appeal, competency of---Powers available to the court for entertaining an appeal, revision and review, were to be exercised only to the extent conferred by statutory provisions--Inherent powers of the superior courts for examining the jurisdiction on the touchstone of circumstantial limitations were available, but no such ground had been agitated---Under­ provisions of S.22(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001, while providing for the remedy by way of appeal had laid down scope of such appeal---Appeal could only be filed against judgment, decree, sentence or final order.

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

----Ss.4, 5 & 7---Civil Procedure Code (V of 1908), S. 20---Jurisdiction of the court---Provisions of S.20, C.P.C. conferred jurisdiction on the courts under three different conditions, namely territorial, accrual of cause of action and residence of parties---Provisions of S.5 of Financial Institutions (Recovery of Finances) Ordinance, 2001 only pertained to the territorial jurisdiction of the Banking Court, while question of accrual of cause of action and residence of parties had not been touched or dealt with by said section---While giving effect of S.4 of Financial Institutions (Recovery of Finances) Ordinance, 2001, question of territorial jurisdiction as conferred under S.5 of the Ordinance was attracted, however as S.5 of said Ordinance, was silent on the question of accrual of cause of action, the provisions of S.20, C.P.C. were attracted to the Banking Court---In case where more than one Banking Court had jurisdiction to try the matter, suit could not be rejected on mere ground that any other Banking Court was also competent to try the case.

A.M. Mubeen Khan for Petitioner.

David Lawrence for Respondent No 1.

2008 C L D 856

[Karachi]

Before Mushir Alam, J

Messrs AL-REHMAN CHEMICALS through Proprietor and 2 others---Plaintiffs

Versus

AKHTAR ALEEM SYED and 6 others--Defendants

Suit No.B-55 of 2007, decided on 8th October, 2007.

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

----Ss.7 & 15---Specific Relief Act (I of 1877), Ss. 39, 42 & 54 Suit for declaration, injunction and cancellation---Powers and jurisdiction of Banking Court---Plaintiffs in their suit had impugned the action of selling the property of the plaintiff by the Banking Court in exercise of powers under S.15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and all incidental and consequential relief including damages---Office had raised objections that the relationship between the plaintiffs and defendants being that of customer and borrower, suit was barred under Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Section 7(a) of Financial Institutions (Recovery of Finances) Ordinance, 2001 had given ample powers to the Banking Court and said court possessed all the jurisdiction as vested in civil court under Civil Procedure Code, 1908 and in terms of subsection (4) of S.7 of said Ordinance, no court other than the Banking Court had jurisdiction in respect of the matter covered under the said Ordinance---Relief sought and the claim contained in the suit emanated from the relationship between the borrower and customers and clearly fell within the jurisdiction of the Banking Court---Office objection regarding jurisdiction was sustained in circumstances-Since law favoured adjudication on merits rather than striking off the parties on technicalities, suit was ordered to be transferred to court of Banking jurisdiction.

Siddique Woollen Mills and others v. Allied Bank of Pakistan 2003 SCMR 1156 = 2003 CLD 1033 rel.

Sami Ahsan for Plaintiffs.

Sultan A. Allana for Defendants.

2008 C L D 879

[Karachi]

Before Khalid Ali Z. Qazi, J

Shaikh MUHAMMAD FAZAI, RAHIM and another---Petitioners

Versus

ANDREW STAERMOSE and 3 others---Respondents

Judicial Miscellaneous No.26 of 2007, decided on 25th April, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss.494, 68, 69, 70, 86 & 146---Companies (Registration Offices) Regulations, 2003, R.11---Petition by local shareholders for substitution of revised Form-3 to rectify company's record after cancelling earlier Form-3 submitted by foreign shareholders company without deposit of increased capital amount into company's bank account and issuance of direction to Security and Exchange' Commission of Pakistan for issuing commencement of business certificate---Validity---Ministry of Finance had obtained financial due diligence report of foreign shareholders of company; according to which its financial and corporate structure was not sound---Foreign shareholders company had not deposited the required amount of increased capital amount, minimum subscription amount and subscribed amount of 100 shares as stipulated in Memorandum and Articles of Association of company against their names into company's bank account---Foreign shareholders of company had not qualified themselves to be shareholders of company---High Court accepted petition as prayed for.

Mukhtair Ahmed Mughal for Petitioner.

Nemo for Respondents Nos.1 to 3.

Nitasha Jhangir, Assistant Director Law for Respondent No.4.

2008 C L D 891

[Karachi]

Before Azizullah M. Memon and Arshad Noor Khan, JJ

PINE COMMERCIAL CORPORATION---Appellant

Versus

RANA BROTHERS and 3 others---Respondents

High Court Appeal No.60 and C.M.A. No.386 of 2008, decided on 16th May, 2008.

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

----S.5---Admiralty suit--Application for setting aside of Court auction of shipped goods-Non-participation of applicant in auction due to death of his close relative Applicant neither produced documentary proof of death of his relative nor disclosed name and date of death of relative---Validity---In absence of any evidence proving death of his relative, bald statement of applicant could not be treated as gospel truth regarding such death--Applicant for his absence had not shown any reasonable and plausible explanation-Filing of such application seemed to be an attempt of applicant to protract auction proceedings, cause harm, damage and loss to highest bidder---High Court dismissed application in circumstances.

(b) Administrative decision---

----State departments and public functionaries must act in accordance with law, rules and regulations applicable to them in fair and transparent discharge of their duties.

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

----S.5-Admiralty suit---Shipped goods, auction of---Forfeiture of security amount deposited by successful bidder in first auction for his failure to lift auctioned goods completely---Re-auction of remaining goods and acceptance of bid offered by second bidder at the rate lower than that offered by successful bidder in first auction---Application by successful bidder in first auction offering higher rate than that offered by second bidder in re-auction---Validity---Re-auction had been held under orders of the Court and under supervision of Official Assignee and after completion of highest bid---Valuable right had been created in favour of second bidder after acceptance of his bid in re-auction, which could not be snatched leniently---Successful bidder in first auction had not lifted whole quantity of goods on pretext of decrease in its prices in open market and had chosen to get his security forfeited instead of lifting auctioned goods---Such attitude and behaviour of successful bidder had disentitled him to make subsequent higher offer and its acceptance---High Court refused to accept subsequent high offer of successful bidder in first auction and dismissed his application in circumstances.

Shaukat Ali v. Government of Pakistan and others PLD 1997 SC 432; Messrs Pacific Multinational (Pvt.) Ltd. v. Inspector-General of Police, Sindh and others PLD 1992 Kar. 283; Messrs Arif. Builders and Developers v. Government of Pakistan and others PLD 1997 Kar. 627; Pak Shaheen Containers Services v. Trustees of Port of Karachi and others PLD 2001 Kar. 30; Hudaybia Textile Mills v. Allied Bank of Pakistan PLD. 1987 SC 512; United Bank Ltd. v. A.Z. Hashmi (Pvt.) Ltd. 2000 CLC 1483; Muhammad Akhlaq Memon v. Zakaria Ghani PLD 2005 SC 819; Abdul Hamid v. Riaz Brothers Commission Agent, Hafizabad 1986 CLC 242; Habib Bank Ltd. v. Iqbal I. Chundrigar and another 1983 CLC 1464; Messrs Ahan Saz Contractors v. Pak Chromical Ltd. 1999 MLD 1781; Overseas Containers Ltd. v. Muhammad Iqbal 1988 CLC 461 and Abdul Razak v. Karachi Building Control Authority PLD 1994 SC 512 ref.

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

----Ss.5 & 7---Law Reforms Ordinance (XII of 1972), S.2---Admiralty suit---Shipped goods, auction of---Intra-Court appeal against such auction by Single Judge of High Court---Maintainability---Request of appellant to treat Infra-Court appeal filed mistakenly as appeal under S.7 of Admiralty Jurisdiction of High Courts Ordinance, 1980---Validity---Intra-Court appeal had been filed in time---Such request of appellant would not prejudice case of remaining parties---Division Bench of High Court converted Intra-Court appeal into appeal under S.7 of the Ordinance, 1980.

Salman Hamid for Appellant.

Abul Inam for Respondent No.1.

Samiuddin Sami for Respondent No.2.

M. Naeem and Siddique Shahzad for Respondent No.3.

Shaiq Usmani for Respondent No.4.

2008 C L D 901

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mehmood Alam Rizvi, JJ

SUI SOUTHERN GAS COMPANY LTD.---Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Petroleum and Natural Resources, Govt. of Pakistan and 2 others---Respondents

Constitutional Petition No.D-91 of 2006 and C.M.As. Nos.321 of 2006 and 6017 of 2007, decided on 21st April, 2008.

Oil and Gas Regulatory Authority Ordinance (XVII of 2002)---

---Ss. 2(xxxii), 3 & 12---Constitution of Pakistan (1973), Art.199---Constitutional petition---Demand of gas supply for Captive Power Plant of hotel---Refusal of Suit Southern Gas Company (SSGC) to accept such demand of applicant-hotel--Dismissal of appeal and review filed by SSGC against acceptance of such demand of hotel by Oil and Gas Regulatory Authority---Plea of SSGC was that applicant-hotel was not export oriented industry; and that acceptance of its demand was voilative of decision of Economic Coordination Committee of Federal Cabinet and Power Policies prohibiting supply of gas for power generation to Hotels lacking foreign investment of 500 million rupees or above---Validity---Applicant-hotel did not fulfil requirements for grant of gas connection for power generation---Power Policies announced by Government subsequent to rejection of applicant-hotel's demand by SSGC would not govern such matter-As no dispute existed regarding "regulated activity" as defined in S.2(xxxii) of Oil and Gas Regulatory Authority Ordinance, 2002, all proceedings before authority were irregular and without jurisdiction---High Court accepted constitutional petition with observations that applicant-hotel would be at liberty to make fresh application to Federal Government, which would decide same according to law and its policies.

District Magistrate, Lahore and Commissioner, Lahore Division v. Syed Raza Kazim PLD 1961 SC 178 ref.

Asim Iqbal for Petitioner.

Khalid Mahmood Siddiqui for Respondent No.2.

Rasheed A. Razvi for Respondent No.3.

2008 C L D 909

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mahmood Alam Rizvi, JJ

Messrs HAJI ABDUL BAQI AND BROTHERS---Petitioner

Versus

MANAGING DIRECTOR, KARACHI WATER AND SEWERAGE BOARD and 6 others---Respondents

C.P. No.D-535 of 2008, decided on 21st April, 2008.

Constitution of Pakistan (1973)---

----Art.199---Constitutional petition---Tender, bidding in---Qualification---Joint venture---Grievance of petitioner was that authorities did not issue him tender document as he was not found qualified to participate in tender---Plea raised by petitioner was that it was a joint venture and any disqualification in him could be met by his venture partner---Validity---Petitioner and his joint venture partner were both individually disqualified under Pakistan Engineering Council Regulations---Petitioner was disqualified on the ground of lacking financial limit, while his partner was lacking field specialization---Two disqualified persons even in cases of joint venture tender would not be qualified by joining hands---Each contractor must be qualified in his own right before forming a partnership to tender for a joint venture project---Petitioner being disqualified was not entitled to be issued tender documents--- Petitioner himself was at fault and by filing constitutional petition, he had delayed execution of project in question---Petition was dismissed in circumstances.

Rukhsana Ahmed for Petitioner.

Qazi Majid Ali for Respondents Nos.1, 2, 4, 5, 6 and 7.

Khalid Javed Khan for Respondent No.3.

2008 C L D 917

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mahmood Alam, JJ

MCB LIMITED---Appellant

Versus

Messrs ATIF CORPORATION through Proprietor and another---Respondents

Ist Appeal No.17 and C.M.A. No.422 of 2006, decided on 13th May, 2008.

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

----Ss. 10 & 22---Suit for recovery of loan---Petition for leave to defend suit was dismissed by Banking Court and suit was decreed--Appeal by Bank---Question raised by the appellant-Bank was regarding the mark-up payable by the borrower, which had already been manifestly adjudicated upon by the Banking Judge---No interference, in circumstances, was warranted in the judgment of Banking Judge---Appeal was dismissed.

Zubair Qureshi for Appellant.

Mirza Sarfraz Ahmed for Respondents.

2008 C L D 974

[Karachi]

Before Mrs. Yasmin Abbasey, J

COLGATE-PALMOLIVE (PAKISTAN) LTD.---Appellant

Versus

REGISTRAR OF TRADE MARKS and another---Respondents

M.A. No.328 of 2003, decided on 12th November, 2007.

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

---Ss.8 & 10---Prohibition of registration of certain matters and identical and similar trade marks---Trade name applied by both the parties was the same but the goods manufactured by them were absolutely different to each other; one party had applied for bleaching preparations and other substances; while the other had applied for food products etc. ---Principles.

Section 8 of Trade Marks Act, 1940, specifies the reason when registration of certain matters is prohibited.

Section 8 has been enacted with the purpose that if goods manufactured by both parties are examined apparently they are different to each other. Goods manufactured by one party are used for laundry purpose, whereas the goods supplied by the other mostly are edible items. There is no apprehension that it will create any confusion or deception in the mind of general public or purchasers.

Section 8(a) of the Act is designed for the protection of the public against deception or confusion and must, therefore, be given a wide scope and should not be limited to any kind of confusion such as arising by reason of any trade connection between the competing goods. Once it is established on the evidence that deception or confusion is probable, the Registrar is bound to prohibit registration of the proposed trade mark in the public interest.

In the present case the goods were absolutely of different description and classes and it was hard to believe that it would create an impression in the mind of general public that the goods produced by each of the parties had some connection with each other.

To protect the public from any confusion or deception due to name of similar nature of product manufactured and supplied in the matter a wide scope has been given under section 8.

Section 10 of Trade Marks Act, 1940 in addition to section 8 of Trade Marks Act lays down 'a rule for prohibiting the registration of identical and similar trade marks. Much emphasis has been laid on non-similarity of goods in different classes, as the very purpose of registration of trade mark is to protect public at large from any confusion to enjoy the product of their own choice and for this very purpose the term "same goods" or "description of goods" have been repeated in section 10 of Trade Marks Act for such products, or goods.

A trade mark at common law is acquired not solely through origination of the mark but through its use in trade.

The object of giving a particular name to goods is to make known to general public through picture, label, words that the said goods are being manufactured by that particular company. Thus a symbol is given to a product with its description manufactured by a particular company. The term "trade mark" as used in the Act means a trade mark used or proposed to be used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some persons having the right, either as proprietor or as registered user, to use the mark whether with or without any indication of the identity of that person. Thus if a particular name is symbolized for a particular goods to promote the interest with the benefits of its use by their consumers, can create a confusion and affect their business in a market with the similar trade mark given to another company for the similar trade mark given to another company for the similar goods, but in case of different nature of goods in different classes no such possibility can occur, as it is expected from the general purchasers to differentiate between the nature of goods placed under the 'mark' for different use.

Where the parties had identical and similar trade mark but were manufacturing goods absolutely different to each other and by refusing the registration of one party the Registrar of Trade Marks had not applied his judicial mind. High Court remanded the case to the Registrar for re-examination of the case in the light of the goods manufactured by both the parties in different classes and its future effect as to the confusion and deception in the mind of any consumer in case of identical trade marks given to different commodities under different class.

Sunkist Growers Inc. v. Messrs Karachi Aerosol Co. Ltd. and another PLD 1987 Kar. 119; Montres Rolex v. Assistant Registrar Trade Marks and another PLD 1993 Kar. 442 and Seven-up Company v. Kohinoor Thread Ball Factory and 3 others PLD 1990 SC 313 ref.

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

----Ss.8 & 10---General Clauses Act (X of 1897), S.24 A---Rejection of application for registration of trade mark or allowing the opposition without applying judicial mind by the Registrar of Trade Marks was against the principles of natural justice---Principles.

Without reasoning rejection of application of applicant for registration of the trade mark or allowing the Opposition is against the principles of natural justice. Section 24-A of General Clause Act is very much clear on the point that every order passed must be based on reasoning. It is incumbent upon Judicial Officer that he should look into the evidence and material available with him and give its reasoning to allow or discard the evidence available on the record, with his final conclusion. If the order is lacking with these requirements it cannot be termed to be a judicial verdict and will be deemed to be an administrative order incapable to settle controversy judicially between the parties.

Salim Ghulam Hussain for Appellant.

Nemo for the Respondents.

Date of hearing: 23rd October, 2007.

2008 C L D 983

[Karachi]

Before Munib Ahmad Khan, J

Messrs HERO MOTORS LTD. and another---Plaintiffs

Versus

BABAR AUTO TRADING AND MANUFACTURING COMPANY through Partners, Proprietors, Manager and another---Defendants

Suit No.952 and C.M.A. No.6118 of 2005, decided on 4th October, 2007.

Trade Marks Ordinance (XIX of 2001)--

----S.92---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Application for injunction against different pending suits, for mandatory injunction, damages and rendition of accounts under Trade Marks Ordinance, 2001---On comparison of both the. trade marks in question those were found quite disjunctive to each other, they were also distinctive in their appearance as they had been used in different styles, both the parties had no exclusive rights to the word in dispute which was an adjective and was frequently used in so many varieties and respects and there was difference of price of both the items therefore, deception was not conceivable---Only the plaintiff was not using the word in dispute but others were also using the same---Prima facie, case and balance of convenience, in circumstances, would be in favour of the defendant and not the plaintiff as by granting injunction, defendant would suffer irreparable loss while the plaintiff had already been in the field with other competitors---Injunction as prayed for by the plaintiff, could not be granted in circumstances---Principle.

PLD 1970 SC 460; 1992 CLC 1728; 1993 CLC 2201; 1994 MLD 607; 1987 MLD 2864; Coca Cola v. Pepsi Cola and 1960 RPC 229; 30 RPC 709; Suit No.1427 of 2005 and Suit No.1161 of 2004 ref.

Hakim Ali Chohan for Plaintiff.

Munawar Ghani for Defendant.

2008 C L D 987

[Karachi]

Before Azizullah M. Memon and Arshad Noor Khan, JJ

NATIONAL BANK OF PAKISTAN---Appellant

Versus

Messrs FARRUKH CORPORATION through Sole Proprietory Concern's Legal Heirs and another---Respondents

H.C.A. No.220 of 1989, decided on 30th May, 2008.

Civil Procedure Code (V of 1908)---

----O.VII, R.2---Law Reforms Ordinance (XII of 1972), S.3---Money suit---Recovery---Joint liability---Proof---Suit was filed by plaintiff-Bank against his borrower and godown owner with whom stocks of the borrower were pledged---Borrower committed default of the loan and bank auctioned stocks of the borrower---Grievance of bank was that owner of godown failed to deliver full quantity of stocks pledged with him, therefore, bank suffered loss which was sought to be recovered from the borrower as well as from the owner of the godown jointly---Trial Court decreed the suit in favour of bank only against the borrower only---Plea raised by bank was that both the defendants were jointly responsible for the loss caused to the bank, therefore, suit should have been decreed against both the defendants jointly---Validity---Trial Court did not appraise the evidence in its true perspective and wrongly found that there was no privity of contract between plaintiff-Bank and owner of the godown---If there was no privity of contract between plaintiff-Bank and owner of godown, the owner could not be absolved from the responsibility of keeping of particular quantity of the stock at his godown and its return in the manner in which it was kept in his godown to the bank or its nominee---If any shortfall had occurred the owner of godown was responsible for such shortfall and was liable to pay the loss and damages caused to the stock kept by him in his godown-Owner of godown could not be let free in case of any loss or shortfall of the stock kept in his godown---Owner of godown was liable to pay the losses incurred because of his negligence to the stock kept by him at his godown---Trial Court was not justified in absolving owner of godown from such responsibility---High Court modified the judgment and decree passed by trial Court and suit was also decreed against owner of godown---Intra-court appeal was allowed accordingly.

Mansoor-ul-Arfin for Appellant.

Farrukh Corporation for Respondent No.1.

Atiqur Rehman Sole Proprietor of Messrs United Clearing and Forwarding Corp. for Respondent No.2.

Nemo for the Remaining Respondents.

Date of hearing: 13th May, 2008.

2008 C L D 996

[Karachi]

Before Nadeem Azhar Siddiqi, J

SHELL PAKISTAN LTD. through Attorney---Plaintiff

Versus

AERO ASIA INTERNATIONAL (PVT.) LTD. through Chief Executive and another---Defendants

Suit No.1338 of 2007, decided on 13th June, 2008.

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

----S.34---Civil Procedure Code (V of 1908), O.XXXVII, R.1---Stay of proceedings---Recovery of money---Dishonoured cheque---Defendant sought stay of proceedings on the basis of arbitration agreement between both the parties---Validity---For deciding application under S.34 of Arbitration Act, 1940, the pleadings in the suit were to be considered---Cause of action pleaded in the plaint was based on dishonoured cheques which was an independent cause of action not related to dispute under arbitration clause in the agreement---Proceedings were not stayed in circumstances.

Messrs Shell Pakistan Ltd. v. Messrs Bhoja Air (Pvt.) Ltd., 2007 MLD 1424; Mst. Suriya Waseem Usmani v. L and M Int. (Pvt.) Ltd. 2002 CLD 624 and Cotton Export Corporation of Pakistan v. Asif Cotton Ginners, 1995 CLC 1024 ref.

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

----Ss. 118(a), 79 & 80---Civil Procedure Code (V of 1908), O.XXXVII, Rr.1 & 2---Recovery of money---Negotiable instrument---Presumption---Scope---Suit was based on negotiable instruments/dishonoured cheques and presumption would be that the same were issued against consideration unless rebutted by defendant.

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

----S.34, O.XX XVII, Rr.1 & 2---Negotiable Instruments Act (XXVI of 1881), Ss.118(a), 79 & 80---Recovery of money---Dishonoured cheques--Amount of decree---Determination---Inclusion of interest in decree---Plaintiff sought recovery of his money on the basis of dishonoured cheques issued by defendants in favour of plaintiff---Despite service of process in the name of defendants, no body appeared on their behalf-Plaintiff sought decree for Rs.3,47,19,000 against defendant company and Rs.20,00,0000 against private defendant---Validity---From pleadings it appeared that amount of Rs.20,000,00 was included in the sum of Rs.3,47,19,000 as private defendant had issued cheque on behalf of defendant-Company as personal guarantee---High Court decreed the suit of plaintiff only in the sum of Rs.34,719,000 against both the defendants jointly and severally but liability of private defendant would not exceed Rs.20 million in any case, with interest at the rate of 6% per annum in accordance with Ss.79 and 80 of Negotiable Instruments Act, 1881, from the date of filing of suit till the date of decree---High Court also included interest in the decree at the rate of 10% per annum from the date of decree to the date of payment in accordance with S.34, C.P.C.-Suit was decreed accordingly.

Naeem Iqbal v. Mst. Zarina 1996 SCMR 1530; Ahmed Autos v. Allied Bank of Pakistan PLD 1990 SC 497 and Mian Muhammad Amjad Amin v. Rana Bashir Ahmed 2004 MLD 988 ref.

Khalid Jawaid Khan and Noman Jamali for Plaintiff.

Nemo for Defendant.

Date of hearing: 15th May, 2008

2008 C L D 1003

[Karachi]

Before Mrs. Yasmeen Abbasey, J

ERWIN MULLAR GMBH & CO.---Appellant

Versus

ASSISTANT REGISTRAR OF TRADE MARKS----Respondent

Miscellaneous Appeals Nos.43 and 44 of 2002, decided on 21st August, 2006.

Trade Marks Act (V of 1940)---

----S. 10---Prohibition of registration of identical or similar trade mark---Powers of Registrar of Trade Marks---Scope---Applicant claiming registration of identical or deceptively and confusingly similar trade mark has to show either "concurrent user" or "other special circumstances"---Initial burden is on the applicant for registration to prove to the satisfaction of the Registrar that it is in his honest and concurrent use or other special circumstances---Phrase "other special circumstances"---Scope---Socio-economic conditions of the use of trade mark is not a relevant consideration---Consent of one party to allow registration of the other---Effect.

The Registrar on receipt of the application for registration either refuses the application or' accepts it subject to such amendment, modification, conditions or limitations if any, as he may think fit. Section 10(1) Trade Marks Act, 1940 prohibits registration of identical or deceptively similar trade mark, which belongs to a different proprietor in respect of same goods or description of goods. The prohibition to register identical and deceptively similar trade marks in subsection (1) is controlled by subsection (2) of section 10 ibid. Discretion of Registrar to Register more than one identical or similar mark, within the contemplation of section 10(2) of the Trade Marks Act of 1940 is not arbitrary. The applicant claiming registration of identical or deceptively and confusingly similar mark has t' show either "concurrent user" or "other special circumstances". Initial burden is on the applicant to prove to the satisfaction of the Registrar that it is in his "honest and concurrent use" or "other special circumstances". The appellants in the present case, did not claim honest and concurrent user, at the best they could press "other special circumstances". Phrase "other special circumstances" as used in subsection (2) of section 10 of the Act has not been defined under the Trade Marks Act of 1940. "Other special circumstances" must be connected with the use of the mark. These include any circumstances peculiar to the application in relations to the subject-matter of the application and this includes use by an applicant of his mark before the conflicting mark was registered or used. Socio-economic consideration of the use of the article is not a relevant consideration.

Contention that "Letter of Consent" from the holder of Trade Mark was placed on record does not appeal. As such letter of consent is' subsequent in date. "Letter of Consent" which is dated June 11, 2001 obviously could not be available when the application was dismissed on 3-3-2002 by short order followed by details reasons dated 23-3-2002.

Appellant may apply afresh claiming registration of mark applied for on the basis of letter of consent and the application shall be decided in accordance with law.

London Rubber Co. v. Durex Product Inc. AIR 1963 1882 ref.

Amna Salman for Appellant.

Saleem Ghulam Hussain for Respondent.

2008 C L D 1009

[Karachi]

Before Khalid Ali Z. Qazi, J

ABDUL GHANI and others---Plaintiffs

Versus

ABDUL RASHID and others---Defendants

Suit No.1273 of 2002, decided on 23rd June, 2008.

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

----Ss. 43, 44 & 46---Civil Procedure Code (V of 1908), O.XL, R.I---Suit for dissolution of partnership and rendition of accounts---Partnership firm was engaged in developing of Housing Scheme---Nazir of the Court appointed to prepare report about the accounts and assets of the partnership concern, submitted that in spite of repeatedly asking the defendants to produce the accounts of the firm, no such accounts and layout Plan of the Scheme were produced, as such, it was not possible for the Nazir to prepare the accounts of partnership---Record showed that the defendants admitted in their written statement and affidavit-in-evidence and cross-examination that they were conducting the affairs of partnership business as managing Partners but in spite of that admission and the direction of the Court they failed to tender accounts to the plaintiffs and in spite of directions of the Court, they as managing partners, failed to provide and submit accounts of the partnership firm, bank statements, approved plan, allotment orders of the plots in the Housing Scheme and monies received from the allottees of the plots and all the accounts in respect of partnership firm but the managing partner fraudulently, mala fide and dishonestly failed to produce all such accounts and documents---High Court, in circumstances, ordered the office to prepare final decree in terms of O.XX, R.13, C.P.C. and appointed the Nazir as Receiver as well as Commissioner to take over the business and all the assets of the partnership firm moveable or immovable and recover from the defendants including unutilized land of the Housing Scheme (Partnership business) and after taking over all the assets and properties of the partnership firm, he was further directed to sell the same through public auction on 'as is where is' basis and to distribute the sale proceeds amongst the partners in accordance with their respective shares.

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

----S.30---Admission of minor in partnership---Scope---Minor may be a partner in a firm with the consent of all the partners for the time being and he may be admitted to the benefits of the partnership.

PLD 1955 Lah. 350 ref.

(c) Administration of justice---

----Technicalities not to create hurdles in way of substantial justice-Principles.

Cases of parties should be decided en merits. If a party upon evidence brought on record, has established his case on merits, then such party should not be knocked out on technical grounds. The technicalities should not create hurdles in the way of substantial justice. Mere technicalities, unless offering insurmountable hurdles, should not be allowed to defeat the ends of justice.

Nasir Hamid Qureshi v. Abbasi Begum 2003 SCMR 1553 rel.

Mubarak Ahmed for Plaintiffs.

Syed Asfaq Hussain Rizvi for Defendants.

Dates of hearing: 20th November, 2007, 5th December, 2007 and 15th January, 2008.

2008 C L D 1026

[Karachi]

Before Mrs. Yasmin Abbasey, J

CANON KABUSHIKI KAISHA through Authorized Signatory---Appellant

Versus

REGISTRAR OF TRADE MARKS and another---Respondents

Miscellaneous Appeal No.42 of 2004, decided on 5th May, 2008.

Trade Marks Ordinance (XIX of 2001)--

----Ss. 33, 22 & 46---Procedure when application for trade mark was allowed---Aggrieved party had to make an application before the High Court or Registrar of Trade Marks for correcting any entry made or error or defect appearing in the impugned order of the Registrar---Where the proper procedure had not been followed by the appellant, High Court remanded the matter to the Registrar of Trade Marks with specific direction.

Once an application for registration of trade mark is allowed proper procedure has been prescribed for getting it set aside or rectified. Aggrieved party has to make an application before the High Court or Registrar for correcting any entry made or error or defect appearing in the impugned order. In the present case admittedly proper procedure had not been followed by the appellant. Counsel for the respondent conceded that he had no objection if the matter was remanded to the Registrar for rectification of his order if any application for the same was moved by the appellant before the Registrar Trade Marks.

In view of the legal position matter was remanded by the High Court to the Registrar for, considering application for rectification along with oppositions on record, if any, moved by the appellant, with notice to both the parties and giving them an opportunity of hearing. In case, no application was moved the impugned order would hold the field.

Amina Salman for Appellant.

Saleem Ghulam Hussain for Respondents.

2008 C L D 1040

[Karachi]

Before Munib Ahmad Khan, J

Messrs FINE COTTON TEXTILES ---Plaintiff

Versus

KHALED IBN AL WALEED through Master/Chief Officer and 3 others---Defendants

Admiralty Suit No.9 of 2000, decided on 13th March. 2008.

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

----S.3(2)(b)---Admiralty suit, maintainability of---Matter in dispute pertained to agreement relating to carriage of goods in a ship and by virtue of S.3(2)(b), Admiralty Jurisdiction of High Courts Ordinance, 1980, the matter fell within the Admiralty jurisdiction---Clause (b) of subsection (2) of section 3 of the Admiralty Jurisdiction of High Courts Ordinance, 1980 was very wide bringing all the matters related to Shipment, Carriage by Sea within the Admiralty jurisdiction--Admiralty suit, in circumstances was maintainable.

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

----S. 3(2)(b)---Admiralty suit---Matter in dispute pertained to agreement relating to carriage of goods in a ship---Plaintiff itself had shown, through its correspondence that it was fully aware about the fate of the consignment lying unattended, in the absence of receiver so it tried to shift the same to some other Port of another country but failed, nor it could prove any alleged buyer at the port where the consignment was lying unattended---Defendants had stated that the consignment was in good condition under original seal as was loaded from the Port of Shipment and nothing in rebuttal had been brought by the plaintiff---Ship/owners of Ship were not liable for anything in circumstances.

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

----S. 3(2)(b)---Admiralty suit---Record showed that consignee of the goods, had backed out from the contract, as firstly, there were discrepancies in the documents of Shipment which was evident from the letter of the plaintiffs Bank to the plaintiff itself and secondly there was nobody at the port of destination to receive the consignment, when the same landed nor there was any communication from the consignee that it was effected by non-availability of the consignment of the Port---Consignment, in such circumstances, remained unattended and almost abandoned---Consignee having backed out there was liability on the part of defendants.

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

----S. 3(2)(b)---Admiralty suit---Consignment, at the port of destination having been refused by the consignee and lying unattended, defendants on justified reasons, had shifted the consignment to another Port but there was no data to disclose, the date on which shifting was effected---Such factual position did not affect the plaintiff as at his request the defendants were even ready to transship the consignment from the Port of destination to another Port of different country but the plaintiff failed to agree to the terms and conditions on the ground that charges were exorbitant-Plaintiff however, could arrange other ship for transshipment of the consignment, which he failed---Excuse that defendants were charging demurrage/storage charges were also not of any help as at one time, the defendants agreed to charge lesser amount, but since there was no settlement on the controversies, therefore, the defendants started asking for total charge---Such factual position did not affect the merits of the case and defendants were not liable for any loss.

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

----S. 3(2)(b)---Admiralty suit---Consignment, at the Port of destination having been refused by the consignee was lying unattended---Ship owners/charters had claimed demurrage/ storage charges but the plaintiff had not been able to establish that they were on higher side---Shifting of the consignment from Port of destination to another Port by the defendants was basically due to fault of the plaintiff as its buyer backed out, otherwise all the incidents would not have happened and since the root cause lay with the plaintiff, therefore the claim of demurrage/storage charges did not give cause of action to the plaintiff----Defendants, though at one stage, for the purpose of settlement of issue waived demurrage/storage charges, but in the absence of any receiver for the consignment at the Port of destination they again started asking the same---From dual stana of the defendants regarding their defence that there was no buyer and secondly the consignment was shifted to other Port erroneously it was obvious that they had failed to give relevant dates---Defendants, in circumstances, were not entitled to claim demurrage/storage charges.

Mazher Imtiaz Lari for Plaintiff.

Mansoor A. Shaikh for Defendants.

Date of hearing: 2nd March, 2006.

2008 C L D 1056

[Karachi]

Before Khalil Ali Z. Qazi, J

RAEES GHULAM SARWAR through Attorney---Plaintiff

Versus

MANSOOR SADIQ ZAIDI and 4 others---Defendants

Suit No.164 of 2007 and C.M.As. Nos.4708, 8186, 1216 of 2007, decided on 29th May, 2008.

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

----O. VII, R.11---Rejection of plaint in piecemeal---Scope---Plaint could not be rejected in piecemeal---Where even one prayer was maintainable, plaint could not be rejected under O.VII, R.11, C.P.C.

Younus Textile Mills v. Muhammad Fazal Tayyab 2004 MLD 1081 rel.

(b) Defamation Ordinance (LVI of 2002)---

----Ss. 3, 4, 9 & 13---Civil Procedure Code (V of 1908), S.9---Libel, suit for damages---Jurisdiction of civil court---Scope---Jurisdiction of civil court to entertain such suit under general law (i.e. S.9, C.P.C.) not specifically ousted by Defamation Ordinance, 2002---Jurisdiction of civil court under S.9, C.P.C. and that of District Judge under Defamation Ordinance, 2002 to entertain such suit was concurrent---Open to plaintiff to choose either to pursue statutory remedy under Defamation Ordinance, 2002 or general law remedy under S.9, C.P.C.---When plaintiff once opted to pursue general law remedy under S.9, C.P.C. then his statutory remedy under Defamation Ordinance, 2002 would be completely barred and vice versa---Principles.

M. Moosa v. Mahomed and others PLD 1959 liar. 378; M. Moosa v. Mahomed and others PLD 1968 SC 25; Government of Punjab v. Mst. Kamina 1990 CLC 404; Ghulam All v. Abdul Hafiz PLD 1962 Lah. 765; Adeeb Javedani v. Yahya Bakhtiar 1995 CLC 1246; Capt. Benaras Khan v. Commodore Akhtar Hanif and another 1988 CLC 1093; Syed Mehmood Ali v. Network Television Marketing (Pvt.) Ltd. and another PLD 2005 Kar. 399; Major (Retd.) Tanvir Hussin Shah v. Government of the Punjab and others 1989 MLD 1086 and Mohiuddin Ansari and another v. Muhammad Arif Siddiqui 1989 MLD 3875; Wolverhampton New Water Works Company v. Hawkesford (1859) 37 LJ 248; Mian Sultan Ali Nanghiana v. Mian Nur Hussain PLD 1949 Lah. 301; Tanveer Jamshed v.Raja Ghulam Haider 1992 SCMR 917 and Mst. Fehmida Begum v. Muhammad Khalid 1992 SCMR 1908 rel.

Shafqat-ur-Rehman v. Daud-ur-Rehman PLD 2006 Pesh. 206 not fol.

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

----S. 9---Enforcement of legal right recognized in general law or created by special law---Remedy under special or general law, availability of---Principles.

In the first category are the cases, where a legal right is already recognized in common or general law, which is later codified through statute and such statute also provides a remedy. In such cases, unless there is an ouster clause barring jurisdiction of civil courts, both the remedies under the general and special laws would be available, subject to the doctrine of election i.e. the plaintiff/applicant will have to choose as to whether he would pursue the remedy under special or general law; in the second category of cases, the legal right itself is created by the statute, but no remedy is provided under the codified law. In such cases, the statutory right will be enforceable by the procedure given under the general law.

Wolverhampton New Water Works Company v. Hawkesford (1859) 37 LJ 248; Mian Sultan Ali Nanghiana v. Mian Nur Hussain PLD 1949 Lah. 301; H.H. Ahmed v. Pakistan PLD 1972 Kar. 366; Pakistan v. H.H. Ahmed 1971 SCMR 626; United Bank Ltd. v. Messrs Akbar Agencies Ltd. PLD 1987 Kar. 81 and West Punjab Government v. Pindi Jhelum Valley Transport Ltd. PLD 1953 Lah. 339 rel.

(d) Constitution of Pakistan (1973)---

--Arts. 19, 15, 16 & 17---Defamation Ordinance (LVI of 2002), Ss.5 & 2---Defamatory publication---Freedoms envisaged in Arts 15, 16, 17 and 19 of the Constitution are not absolute, but subject to reasonable restrictions---Fundamental duty of every propagator, printer and publisher would be to establish that whatever they published was based upon truth---Principles.

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

----Ss. 5 & 2---Civil Procedure Code (V of 1908), O. XXXIX, Rr.1 & 2---Defamatory publication---Grant of temporary injunction against such publication---Scope---Courts though not debarred from granting such injunction, but would be reluctant to grant the same---Where publication was apparently untrue or caused with an attempt to blackmail the plaintiff then such injunction would be granted---Principles.

Puri Terminal Ltd. v. Government of Pakistan 2004 SCMR 1092 ref.

Majid Nizami v. Sheikh Muhammad Rashid PLD 1996 Lah. 410; Sultan Ali Lakhani v. Mir Shakeelur Rehman PLD 1997 Kar. 41; Quarz Hill v. Beall (1882) 20 Ch. D 501; Bonnard v. Perryman (1891) 2 Ch. 269; Harishankar v.Kailash Narain 1981 MPLJ 589; Ratanlal and Dhirajlal on the Law of Torts by Justice G.P. Singh, 24th Edn., P.307 & 308 and Mehrotra's Commentary on the Law of Defamation, Damages and Malicius Prosecution by G.S. Kalra, 5th Edn., p.89 rel.

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

----O. XXXIX, Rr. 1 & 2---Defamation Ordinance (LVI of 2002), Ss.5 & 2---Defamatory publication---Temporary injunction, grant of ---Denial of plaintiff's plea by defendant---Pleadings of parties and documents on record not making out a case against defendant---Effect---Such being a case of "word against word" was wanting in evidence---Where prima facie case could not be established without recording evidence, court would refrain from granting such injunction---Where court could not draw any inference from pleadings of parties, then no injunction could be issued---Temporary injunction was refused in circumstances.

Mashkoor Khan v. Province of Sindh 1971 SCMR 572; Fazal Din v. Rubina Aurangzaib 1983 CLC 1280 and Balagamwala Oil Mills v. Shakarchi Trading 1991 CLD 2071 rel.

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

----O. XXXIX, Rr. 1 & 2---Defamation Ordinance (LVI of 2002), Ss. 5 & 2---Defamatory publication---Temporary injunction, grant of---Establishment of prima facie case required recording of evidence---Effect---Court would not grant injunction in such case.

Fazal Din v. Rubina Aurangzaib 1983 CLC 1280 rel.

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

----O. XXXIX, Rr. 1 & 2---Defamation Ordinance (LVI of 2002); Ss.5 & 2---Defamatory publication---Temporary injunction, grant of---quantification of damages by plaintiff---Effect---Such quantification would disentitle plaintiff to seek injunction---Where prayer for damages was made in alternative, then plaintiff, despite quantification of damages, could obtain injunction--Illustration.

Tahir Zaman v. Jin WEI SBLR 2004 Sindh 222 rel.

(i) Constitution of Pakistan 1973)---

----Art. 204---Contempt of Court Ordinance (IV of 2003), S.3---Defamation Ordinance (LVI of 2002), Ss.5 & 2---Defamatory publication---Contempt of court application for---Order of court restraining defendant from publishing any adverse report against plaintiff-Plaintiff alleged distribution of defamatory pamphlets against him, which fact was denied by defendant in counter-affidavit---Validity---Such being a case of "word against word"-Plaintiff had failed to establish. a prima case as there was nothing on record to show that defendant had violated such order of court---Such application was dismissed in circumstances.

Syed Saeeduddin Nasir for Plaintiff.

Muhammad Khalid for Defendants.

2008 C L D 1079

[Karachi]

Before Khawaja Naveed Ahmad, J

Messrs ISHTIAQ TEXTILE MILLS LTD.---Plaintiff

Versus

FEDERATION OF PAKISTAN through Secretary Finance Division and others---Defendants

Suit No.1628 of 1999, decided on 14th May, 2008.

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

-- Arts.132 & 133---If on a particular point there is no cross-examination, such point stands proved.

(b) Pay-As-You-Earn Scheme Act (XXXI of 1973)---

----S.4---Pay-As-You-Earn Scheme Rules, 1973; R.4---Levy and recovery of penalty and interest thereon on account of shortfall in export earnings of the Industrial Unit without prior notice to the Unit to explain the shortfall and/or to meet the short-fall--Validity-Prior service of notice being a requirement of every statute and principles of natural justice where rights of party were affected, the imposition of penalty and interest thereon was unlawful without service of such notice.

(c) Pay-As-You-Earn Scheme Act (XXXI of 1973)---

----S. 4---Pay-As-You-Earn Scheme Rules, 1973, R.4---Civil Procedure Code (V of 1908), S.34---Specific Relief Act (I of 1877), Ss.42 & 55---Suit for declaration, injunction and damages---Levy and recovery of penalty and interest thereon on account of shortfall in export earnings by the plaintiff, an industrial unit---Nothing was available on record from the Authorities that such was a wilful default by the plaintiff---Contention of the plaintiff/ industrial unit was that in any event, no penalty could be imposed after taking into consideration all facts and circumstances of the case which was explained by it---Reasons for shortfall had not been denied by the authorities/defendant and same had not been subjected to any cross-examination from the' Authorities' side-Record showed that Authorities/ defendants had charged interest on the penalty amount, which, by itself, was illegal in as much as interest in the nature of damages could not have been charged on the penalty amount---Provision of S.34, C.P.C. provided awarding of interest pendente lite and from date of decree---Plaintiff thus had been deprived of his lawful money for very long time and discretion had to be exercised by the court in its favour---When the Court was of the opinion that the recovery of any public dues from a party was unjustified, it may, while disposing of the suit, make an order for payment of interest on the amount recovered at the rate of two per cent above the prevailing bank rate---Suit of the plaintiff was decreed by High Court against the Authorities/defendants with interest at 9 per cent. per annum from the date of the suit till payment with costs---High Court also declared Pay-As-You-Earn Scheme Rules, 1973 as ultra vires and in excess of delegated powers---Authorities were restrained from declaring and treating the plaintiff as defaulter on account of amount mentioned in the suit and if the name of the unit (plaintiff) reported in C/B, same should be removed immediately therefrom.

Neelam Textile Mills v. State Bank of Pakistan PLD 1999 Kar. 433; Suleman Spinning Mills Ltd. v. Federation of Pakistan PLD 2001 Lah. 324; Colony Thal Textile Mills Ltd. v. Federation of Pakistan PLD 2001 Lah. 518 and Pakistan Railways v. Javed Iqbal 1995 SCMR 446 ref.

Mansoorul Arfin for Respondent.

Ainuddin Khan for Defendant No.2.

Date of hearing: 5th March, 2008.

2008 C L D 1127

[Karachi]

Before Mrs. Qaisar Iqbal, J

Messrs CARGO AIDS and 4 others---Plaintiffs

Versus

SONERI BANK LIMITED---Defendant

Suit No.B-49 of 2008, decided on 4th July, 2008.

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

----S.15(2) & (4)---Civil Procedure Code (V of 1908), O.XXXJX Rr.1 & 2---Application for grant of injunction---Sale of mortgaged property---Contention of the plaintiff was that publication of defendant (Bank) in the daily newspaper about the sale of the subject property was not in consonance with law and was in contravention of provisions of S.15(2) & (4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 therefore the defendant (Bank) be restrained from auctioning the property in question---Validity---Held, since similar issues had been raised in two cases pending before the High Court (Sindh), the defendant was restrained from auctioning the mortgaged property till the next date of hearing.

Salim Salam Ansari for Plaintiffs.

2008 C L D 1162

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mahmood Alam Rizvi, JJ

MAJEED A. TAHIR---Appellant

Versus

UNITED BANK LIMITED through President and 3 others---Respondents

High Court Appeal No.227 of 2002, heard on 11th January, 2008.

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

----Ss.2(c)(d)(I)(ii), 7(4) proviso & 9---Civil Procedure Code (V of 1908), O.VII, R.10---Law Reforms Ordinance (XII of 1972), S.3---High Court appeal---Return of plaint---Banking Court, jurisdiction of---Determination---Pre-conditions---Dispute was with regard to recovery of amount of demand draft prepared by plaintiff from defendant-Bank, which was encashed by other defendants---High Court in exercise of original civil jurisdiction returned the plaint to plaintiff for filing the same before Banking Court---Validity---Banking Court, under S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, could assume jurisdiction where a customer of financial institution committed a default in fulfilment of any obligation with regard to finance---Demand draft prepared by defendant-Bank on the request of plaintiff, was the basis of cause of action which touched the business of the Bank used for the purpose of facilitating a party to procure a contract---After failing to procure the contract, demand draft was encashed in favour of other defendant, which fact had determined the status of that other defendant as customer---Jurisdiction of any Court with regard to any matter to which jurisdiction of Banking Court extended including a position as to existence or otherwise of a matter of finance, was excluded under proviso to S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Presence of three preconditions for the exercise of jurisdiction of Banking Court, were under S.9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, which contemplated that plaintiff being either financial institution or the customer, (2) the cause of action of default in fulfilment of any obligation (3) with regard to finance i.e. subject-matter---Order passed by High Court did not call for interference---High Court appeal was dismissed in circumstances.?

A.R.Y. (Pvt.) Limited v. Muslim Commercial Bank 2003 CLD 1601; Lal Chand and 2 others v. Officer on Special Duty, Federal Land Commission and 3 others 1984 CLC 2396; PLD 1979 Lah. 375; Naseemuddin Siddiqui v. United Bank Ltd. 1998 CLC 1718; A. Habib Ahmed v. The Hong Kong and Shangahi 1999 CLC 1953 and Qayyom and another v. The Regional Manager Agricultural Development of Pakistan and others PLD 1977 Pesh. 72 ref.

Moin Azhar for Appellant.

Aziz-ur-Rehman for Respondent.

Nemo for Respondents Nos.2 to 4.

2008 C L D 1170

[Karachi]

Before Mrs. Qaiser Iqbal, J

Messrs GOLD STAR PAPER MILLS (PVT.) LTD. and 3 others---Plaintiffs

Versus

NATIONAL BANK OF PAKISTAN ---Defendant

Suit No.B-48 and C.M.As. No.7011, 7012 of 2008, decided on 9th July, 2008.

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

----S.15(2)---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Contention of the plaintiff/borrower was that publication effected by the Bank for auction of the mortgaged property in the newspaper was in violation of relevant law and was liable to be suspended---High Court having found the contention worth-consideration, ordered the Bank to be kept pending---In the meanwhile operation of the notice published in the newspaper was suspended and Bank was restrained from creating third party interest in the property till the next date of hearing.

Salim Salam Ansari for Plaintiff.

2008 C L D 1183

[Karachi]

Before Mushir Alam, J

AL-HAMD EDIBLE OIL INDUSTRIES (PVT.) LTD. through Chief Executive---Plaintiffs

Versus

Syed WASEEM HYDER---Defendant

Suit No.1347 of 2004, decided on 20th February, 2006.

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

----O. XXXVII, Rr.2 & 3---Suit for recovery of amount on basis of promissory note and dishonored cheques---Plaintiffs claimed that they extended loan to defendant and on presentation, all the cheques were dishonoured---Suit was not contested by- the defendant on merits---Plaintiffs, in circumstances were entitled to recover the amount covered by the promissory note and the cheques---Suit was decreed accordingly.

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

----S. 84---Non-presentation of cheque---Effect---Unless a cheque was presented for payment within a reasonable time of its issue, no right to recover the amount would accrue.

Muhammad Tasnim for Plaintiffs.

Nemo for Defendant.

Date of hearing: 24th September, 2007.

2008 C L D 1197

[Karachi]

Before Mrs. Qaiser Iqbal, J

Messrs SINDH EXPORT ENTERPRISES through Proprietor, and 2 others---Plaintiffs

Versus

Messrs BANK OF KHYBER through PECHS Branch and another---Defendants

Suit No.B-60 of 2007 and C.M.A. No.6338 of 2008, decided on 9th July, 2008.

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

----Ss. 15 & 9--Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for recovery of loan by Bank---Sale of mortgaged properties by Bank---Status quo order obtained by the borrowers after the sale of mortgaged property was carried out by the Bank after serving three notices to the borrowers which were admittedly received by them---Application for vacation of status quo order by the auction purchaser---Validity---Representative of the borrowers remained in touch with the Bank during the whole transaction of sale of the mortgaged properties and co-operated with the Bank in that behalf---Substantial amount was outstanding against the borrowers which they had failed to liquidate till present date, which was secured from the sale of the mortgaged properties---Requirements of S.15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 were complied with by the Bank before the auction sale of the mortgaged properties---Borrowers, in circumstances, were not entitled to the relief by way .of status quo which was vacated by the High Court---Principles---Auction purchaser was at liberty to approach Banking Court for redressal of his grievance.

Muhammad Khalid and 2 others v. KASB Bank Limited through Managing Director 2007 CLD 232 ref.

Aqeel-ur-Rehman for Plaintiffs.

Naveedul Haq for Defendant No.1.

Sohail H.K. Rana for Defendant No.2.

Muhammad Siddique, Law Officer, the Bank of Khyber.

2008 C L D 1217

[Karachi]

Before Munib Ahmed Khan, J

TRADESMEN INTERNATIONAL (PVT.) LTD. ---Plaintiff

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Food, Agriculture and Livestock and another---Defendants

Suit No.469 of 2004, decided on 4th August, 2008.

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

----S.28-Restraint of legal proceedings---Scope---Either of the parties to agreement, is prohibited under S.28 of Contract Act, 1872, from restricting other from taking matter to the ordinary tribunals but it does not provide any restriction in respect of consensus between the parties to refer the matter to arbitration or to take up their dispute in a particular Court or tribunal exclusive to other Courts even if they have jurisdiction.

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

----S.28---Civil Procedure Code (V of 1908), O.VII, R.10, Ss.19 & 20---Return of plaint---Territorial jurisdiction---Determination---Contention of defendant was that according to a specific clause in agreement between the parties, dispute between the parties could only be entertained by Courts at place "L" having the exclusive jurisdiction, therefore, suit filed at place "K" should have been returned to plaintiff---Validity---Such clause in the agreement did not restrict either of the parties to take up the matter to the Court or ordinary tribunals while according to Ss.19 and 20, C.P.C. the suit could be filed at place where the cause of action had arisen or the defendant voluntarily resided or carried on business---By virtue of this clause in agreement, only venue of jurisdiction had been chosen but no restriction in respect of legal remedy was imposed nor there was any limitation in such respect from S.28 of Contract Act, 1872---Jurisdiction could be stretched to either place at "K" or "L" keeping in view the contention of plaintiff but sanctity of agreement had restricted both the parties to avail remedy at place "L" by virtue of its clause---High Court directed the office to return the plaint to plaintiff---Application was allowed accordingly.

State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem 1987 SCMR 393; ; Messrs Kadir Motors (Regd.) Rawalpindi v. Messrs National Motors Ltd. Karachi and 3 others 1992 SCMR 1174; Tahir Tariq Textile Mills (Pvt.) Ltd. and others v. National Development Finance Corporation through its Chairman, 2003 CLD 1546; Maqsood Ali Khan v. National Bank of Pakistan 2003 PLC (CS) 226; Messrs Muslim Commercial Bank Limited v. Tahir Edible Oil (Pvt.) Ltd. and others 2003 CLC 416 and 2003 CLD 1546 rel.

Chokkahnga Pillay v. Velayudha Mudaliar and others 1925 Mad. 117 distinguished.

(c) Interpretation of document---

----Reservations and restrictions imposed in agreement---Scope---When parties enter into an agreement with certain reservations and restrictions, keeping in view for and against prospects and that is not restricted by law, then policy of law requires that spirit of the intention of parties is to be considered as sacrosanct until there is specific legal restriction---Intention of parties should not be killed through technicalities.

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

---Preamble---Object and scope---Law of contract has been promulgated with the spirit that there should be some statutory legal lines between which contracting parties should act and their obligation to each other should not be violated.

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

---S.37---Parties to contract---Obligations---Parties of contract as well as their representatives are bound under S.37 of Contract Act, 1872, to complete the contract in agreed terms.

Commissioner of Income-Tax v. Messrs Siemen A.G. 1991 PTD 488 and Hafeezullah Khan v. Al-Haj Chaudhri Barkat Ali PLD 1998 Kar. 274 rel.

Shaiq Usmani for Plaintiff.

Nemo for Defendant No.1.

Muhammad Akram Khawaja and Qazi Abdul Hameed for Defendant No.2.

2008 C L D 1230

[Karachi]

Before Nadeem Azhar Siddiqi, J

ABDUL WAHAB ABBASI---Plaintiff

Versus

GUL MUHAMMAD HAJANO---Defendant

Suit No.644 of 2006, decided 7th August, 2008.

(a) Defamation---

----Meaning and compensation---Defamation is communication to third party of false statement about a person to injure his reputation and to cause personal harm to him---Filing of suit for compensation on account of civil action is permissible, if in the case of special nature in which suit for damages, independent of cost awarded in the suit, can be maintained.

Ali Asghar v. Fazal Akbar 1988 CLC 147 rel.

(b) Defamation---

---Onus to prove---If matter is defamatory, the falsity of it is presumed until it is proved to be true---Matter is deemed to be defamatory if it exposes plaintiff to hatred, ridicule or tends to injure him in his profession or trade.

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

---O.IX, R.13---Defamation--Ex pane decree--Malicious prosecution---Recovery of damages---Quantum---Statement of plaintiff on oath---Plaintiff was a Government official and made party in constitutional petition filed by defendant before High Court, wherein certain allegations were levelled against him, which petition was dismissed by High Court---Plaintiff filed suit against defendant for recovery of Rs.60,60,000 as damages for malicious prosecution---Validity---To prove allegation or defamatory statements as true, the burden was on defendant, who neither filed any written statement nor rebutted affidavit in ex parte proof filed by plaintiff---Statement on oath of plaintiff had gone unchallenged and remained un-rebutted---Allegations in constitutional petition filed by defendant were defamatory in nature and had been levelled to lower reputation of plaintiff in estimation of others and could be treated as malicious---Defendant failed to prove that allegations made against plaintiff in the petition were true---Plaintiff was a respectable officer and was enjoying good reputation and false and malicious prosecution had affected his reputation in his profession and trade---False and malicious allegations had caused loss of reputation, mental torture and financial losses to plaintiff---Court was itself competent to ascertain question of damages keeping in view the circumstances of the case---High Court awarded a sum of Rs.15,00,000 as compensation to plaintiff for malicious prosecution---Suit was decreed accordingly.

Muhammad Akram v. Mst. Farman Bi PLD 1990 SC 28; Ameeruddin v. Fazalur Rahim Khan 2003 YLR 136 and Pakistan Industrial Development Corporation v. Aziz Qureshi PLD 1965 (W.P) Karachi 202 ref.

(d) Defamation---

----Quantum of damages---Scope---No hard and fast rule to grant general damages and there is also no yardstick to measure the same---Rule for award of general damage is that in the case of defamation the conscience of court should be satisfied that damages awarded would if not completely satisfactorily compensate aggrieved party and that the amount so assessed must be compensatory in nature and not to appear punitive or exemplary.

Muhammad Sharif v. Nawab Din PLD 1957 W.P. Lah. 283 and Sufi Muhammad Ishaque v. The Metropolitan -Corporation, Lahore PLD 1996 SC 737 rel.

Manzoor Ali Khan for Plaintiff.

Nemo for Defendant.

Date of hearing: 24th December, 2007 and 17th January, 2008.

2008 C L D 1239

[Karachi]

Before Arshad Noor Khan, J

HABIB BANK LIMITED---Plaintiff'

Versus

SUHAIL YOUSUF and 3 others---Defendants

Suit No.B-22 of 2005 and C.M.A. No.4607 of 2007, decided 15th August, 2008.

Financial Institutions (Recovery of Finances) Ordinance (XLVI of 200I)---

----S.19(1) & (7)---Civil Procedure code (V of 1908), O.XXI---Objection application---Maintainability---Separate execution proceedings-Applicant sought exclusion of property in question from schedule of decree on the ground that the property was owned by him and defendant was only tenant in the property against whom eviction order had already been passed by Rent Controller---Validity---By application of O.XXI, C.P.C. in Financial Institutions (Recovery of Finances) Ordinance, 2001, for the purpose of execution of decree, Executing Court was empowered to determine all claims of respective parties, in case, if the party filing objection was not party to original proceedings of suit or the decree was obtained by committing misrepresentation and fraud----Powers of Executing Court, therefore, remained unfettered and vast to determine respective claims of aggrieved party at the time of execution of decree---In the event of passing decree by Banking Court, no separate execution application was required to be filed under S.19(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, and suit itself might be treated as execution application---Decree-holder had filed separate execution application which was pending adjudication, therefore, if objection application would be dealt with in absence of original parties to suit, the same would prejudice the case of either of the parties---As separate execution proceedings were pending adjudication, therefore, applicant had all the rights and opportunities to avail before Executing Court---High Court declined to pass any order in objection application filed by applicant---Application was dismissed in circumstances.

Shahnzawaz Sahto for Applicant.

Abdul Sattar Lakhani for Plaintiff.

2008 C L D 1243

[Karachi]

Before Mrs. Qaiser Iqbal, J

SAMREEN LIAQUAT MALIK---Plaintiff

Versus

Messrs AQMAR HEALTH FOODS through its Proprietors, Partners, Director, etc.

and 8 others---Defendants

Suit No.932 and C.M.A. No.6872 of 2008, decided on 19th August, 2008.

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

---Ss. 46 & 67---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Injunction---Action for infringement--Application for grant of injunction---Principles set out for decision for application for grant of injunction are to the effect that the plaintiff must establish its business consisting of a class of goods; that the goods so sold have created a goodwill in the mind of wary person and that the goodwill owned by the plaintiff on account of the use of similar trademark by the defendant has caused a substantial damage to the plaintiff's business and goodwill.

Abdul Jabbar and another v. Ahmad Jan PLD 1973 Kar. 289; Zafar Farooq v. Raja Dil Nawaz Khan 2000 YLR 2351; Messrs Mehran Ghee Mills (Pvt.) Limited and others v. Messrs Chiltan Ghee Mill (Pvt.) Limited and others 2001 SCMR 967; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; Bayer A.G. and another v. Macter International (Pvt.) Ltd. 2003 CLD 794; Pakistan Soap Factory v. Chittangong Soap Factory and another PLD 1970 SC 460; Oil and Gas Development Corporation v. Ltd. Col. Shujauddin Ahmed PLD 1970 Kar. 332; RPC 1957 P.181; Seven Up Company v. Assistant Registrar of Trademarks II and another 1992 CLC 694; Messrs Ghulam Muhammad Dossul & Co. v. Messrs Vulcan Co. Ltd. and another 1984 SCMR 1024; Abdul Wasim v. Messrs Haico through Sole Proprietor Partner and 2 others 2002 CLD 1623; Formica Corporation v. Pakistan Formica Ltd. 1989 SCMR 361; Ghulam Muhammad Dossal and Co. v. Vulcan Company Ltd. and another 1986 MLD 886; Messrs Team Nayyer (Pvt.) Ltd. and another v. Tariq Ahmed Sultani 2008 CLD 94; Messrs Select Sports A.S. Company v. Messrs Tempo Enterprises PLD 1998 Lahore 69; Messrs Hotel Galaxy (Private) Limited through Chief Executive and 2 others v. Messrs Days Inn Worldwide Inc. through Signatory/Chief Executive 2004 CLD 1590; Messrs ADT Services AG through Attorney and another v. Messrs ADT Pakistan (Pvt.) Ltd. through Promoter and Director and 4 others 2005 CLD 1546 and S. Muhammad Din and Sons v. Sh. Nabi Bakhsh and Sons 1987 CLD 759 ref.

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

----Ss. 46 & 67---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2-Action for infringement---Injunction, grant of---pharmaceutical product---Deception of similarity of trade name---Test to determine---Principles.

Generic name of a pharmaceutical product could not function as a trade name to indicate its origin. Points to be considered by Court in arriving at the conclusion of fact as to whether deception or confusion was likely to be caused, enumerated. Whether the defendant is selling the goods so marked by design calculated to lead the public to believe that they are the plaintiffs goods. Ultimate test in this behalf is whether the mark used by the defendant as a whole is deceptively similar to that of the registered mark of the plaintiff. Court has to compare the two marks with the degree of resemblance which is necessary to exist to cause deception not being capable of definition by laying down objective standard. The 'persons, who would be deceived, are, of course, the purchasers of the goods and it is the likelihood of their being deceived that is the subject for consideration. The purpose of comparison is for determining whether the essential features of the plaintiffs trademark are to be found used by the defendant. When two marks are not identical, the plaintiff would have to establish that the mark used by the defendant so nearly resembles with the plaintiffs registered trademark that it is likely to deceive and to cause confusion in relation to the goods in respect of which it is registered.

Above rule would be applicable in judging the case of infringement but while dealing with the cases of drugs sold on prescription by the doctors, chemists and druggists, these factors assume much significance.

So far as the question of the deception and confusion created in the minds of the general public was concerned besides the packing logo and label, prima facie, it was required to be judged with similarity that had affected the business of the parties marketing' the drugs. In the present case, not a single instance had been produced to substantiate that with the use of product any loss has been caused to the plaintiffs business. It is not the plaintiffs case that they had sustained any loss due to the use of the similar product in the market with colour and scheme design and calligraphy marked by the defendant.

The label and the bottle used by the defendant was strikingly different with dominating features and brightly coloured therefore it would not affect the mind of the public and would not cause loss to the business or goodwill of the plaintiff.

Where there was no possibility for an average wary customer to be deceived or confused from a product as the same was imported from the foreign country and both the labels were' distinct on account of colour scheme and the variation in the labels of both the parties, grant of injunctive relief as claimed by the plaintiff was declined.

Messrs Hero Motor Ltd by a Single Bench of this Court in Suit No.952 of 2005; Bayer A.G. and another v. Macter International (Pvt.) Ltd. 2003 CLC 794; Abdul Wasim v. Messrs Haico through Sole Proprietor/Partner and 2 others 2002 CLD 1623; 1987 CLC 1448; Mulfani Sohan Halva, Hussain Aghahi Multan v. Registrar of Trademarks, Karachi and another 2001 SCMR 967 and United Kingdom v. Mehran Bottlers (Private) Limited Karachi PLD 2000 Kar. 192 ref.

Miss Iqra Saleem for Plaintiff.

Raja Qasit Nawaz for Defendants.

2008 C L D 1258

[Karachi]

Before Khalid Ali Z. Qazi, J

EXIDE PAKISTAN LIMITED through Finance Director and Company Secretary---Plaintiff

Versus

Malik ABDUL WADOOD---Defendant

Suit No.797 and C.M.As Nos.5097, 7214 of 2008, decided on 19th August, 2008.

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

----S. 27---Specific Relief Act (I of 1877), S.57---Restrictive covenant---Scope--Any agreement by which any lawful profession, trade or business is restrained is void under S.27 of Contract Act, 1872, as such the same is subject to an exception contained in S.57 of Specific Relief Act, 1877, according to which agreement restraining carrying on a business after sale of goodwill is exempt from operation of S.27 of Contract Act, 1872---Basic principle was that any restraint on trade clause would be, prima facie, void unless the same was justified to be reasonable between the parties and not inimical to public interest.

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

----S. 27---Specific Relief Act (I of 1877), S.57-Restrictive covenant--Applicability---Principles.

Following are the principles for application of restrictive covenant:--

(a) a restraint of trade clause is void if unreasonable, however, if the same is reasonable the said clause is valid;

(b) a reasonable restraint of trade clause whereby an employee is prevented from entering into competition with his former employer or entering into an employment in same/ similar business with a competitor of former employer, can be enforced by Court. The said enforcement can include a declaration or injunction or both, as the case may be;

(c) reasonableness of the clause .will vary from case to case and will inter alia, depends upon the following:--

(i) the extent of duration;

(ii) the extent of the geographical territory.

(d) the employer will only be able to obtain an injunction for information, know-how and details of customers/orders acquired by employee the through some classified or secret information. However, no injunction would be obtained if the know-how is not acquired by employee through access of classified or secret information but rather during the normal course of employment;

(e) the restraint of trade clause should only be aimed at protecting interest of the employer and not aimed at penalizing the employee or causing him inconvenience;

(f) the restraint of trade clause should not be vague and generalized but should be rather specific. In case general a vague part of the restrictive covenant is separable from the substantive part, the Court while exercising doctrine of severance and by supplying construction will be empowered to uphold the substantive part of the restrictive covenant. However, where the restraint of trade is not separable in the manner stated above, the Court will reject the entire clause without applying the doctrine of severance;

(g) the restraint of trade clause can only be applicable to the particular type of business in which the employer is actually engaged in and not to any business activity in which the employer would possibly engage in the future.

BNS Air Services (Pvt.) Ltd. v. Anwar Ali and others 1987 MLD 3009; Al-Abid Silk Mills Ltd. v. Syed Muhammad Mudassar Rizvi 2003 MLD 1947; Zafar Iqbal Papu v. District Magistrate Karachi East PLD 1988 Kar. 275; Syed Shabih Haider Zaidi v. Shaikh Muhammad Zahoor-ud-Din 2001 CLC 69; Government of Pakistan v. M.I. Cheema Dy. Registrar, Federal Shariat Court 1992 SCMR 1852; Shahab Din v. The State 2004 MLD 1411; Al-Jamiaul Arabia Ahasanul Uloom and Jamia Masjid v. Syed Sibte Hasan 1999 YLR 1634; Section 57 of the Specific Relief Act; Shree Gopal Paper Mills Ltd. v. Surendra K. Ganeshdas Malhotra MR 1962 Cal. 61; Superintendence Company of India (P.) Ltd. v. Krishan Murgal AIR 1980 SC 1717; Sandhya Organic Chemicals P. Ltd. and others v. United Phosphorous Ltd. and another AIR 1997 Gujrat 177; Indo-Burma Oil fields Ltd. v. Burma Oil Company Ltd. AIR 1921 Lower Burma 19; V.N. Desh Pande v. Arvind Mills Company Ltd. AIR 1946 Bombay 423; Niranjan Shanker Goli Kari v. Century Spinning and Manufacture Company Ltd. AIR 1967 SC 1098;. AIR 1979 Delhi 232; Nooruddin Hussain v. Diamond Vacuum Bottle Manufacturing Co. Ltd. PLD 1981 Kar. 720; Pak China Chemicals v. Department of Plant Protection 2006 CLD 210; Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd. (1894) AC 535; British reinforced Concrete engineering Co. Ltd. v. Schelff (1921) 2 Ch. 563; Goldsoll v. Goldman (1915) 1 Ch. 292; Herbert Morris Ltd. v. Saxelby (1916) 1 AC 688; Forster and sons Ltd. v. Suggett (1918) 35 TLR 87; Commercial Plastics Ltd. v. Vincent (1965) 1 QB 623; Little Woods Organization Ltd. v. Harris (1978) 1 All. ER 1026; Fitch v. Dewes (1921) 2 AC 158; M&S Drapers v. Reynolds (1957) 1 WLR 9; Marion White Ltd. v. Francis (1972) 1 WLR 1423; Mason v. Provident Clothing and Supply Co. Ltd. (1913) AG 724; Attwood v. Lamont (1920) 3 KB 571 and Alec Lobb Grages Ltd. v. Total Oil (GB) Ltd. (1985) 1 WLR 173 rel.

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

----Ss. 54 & 57---Contract Act (IX of 1872), S.27---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Interim injunction, grant of---Restrictive covenant---Applicability---Plaintiff was a manufacturing company and defendant was its ex-employee--Plaintiff sought injunction against defendant on the ground that defendant had executed an agreement undertaking not to work for a period of two years with any competitor of plaintiff, once he would leave the job---Plea raised by plaintiff was that during employment with plaintiff, defendant had acquired confidential information---Validity---Restrictive covenant between the parties was too vague, generalized and hence void---Agreement did not specify as to what particular specialized information had been divulged to defendant, which he would be prevented to use directly or indirectly in employment with another employer---Plaintiff could not particularize as to what particular confidential information was acquired by defendant---As the plaintiff failed to disclose as to what particular trade secret or secret formula or information was specially acquired by defendant other, than in his normal course of employment, therefore, he had failed to make out a prima facie case---Interim injunction was refused in circumstances.

BNS Air Services (Pvt.) Ltd. v. Anwar Ali and others 1987 MLD 3009; Al-Abid Silk Mills Ltd. v. Syed Muhammad Mudassar Rizvi 2003 MLD 1947; Zafar Iqbal Papu v. District Magistrate Karachi East PLD 1988 Kar. 275; Syed Shabih Haider Zaidi v. Shaikh Muhammad Zahoor-ud-Din 2001 CLC 69; Government of Pakistan v. M.I. Cheema Dy. Registrar, Federal Shariat Court 1992 SCMR 1852; Shahab Din v. The State 2004 MLD 1411; Al-Jamiaul Arabia Ahasanul Uloom and Jamia Masjid v. Syed Sibte Hasan 1999 YLR 1634; Section 57 of the Specific Relief . Act; Shree Gopal Paper Mills Ltd. v. Surendra K. Ganeshdas Malhotra AIR 1962 Cal. 61; Superintendence Company of India (P.) Ltd. v. Krishan Murgal AIR 1980 SC 1717; and Sandhya Organic Chemicals P. Ltd. and others v. United Phosphorous Ltd. and another AIR 1997 Gujrat 177 ref.

Ms. Sana Minhas for Plaintiff.

Abdul Qayyum Abbasi for Defendant.

Date of hearing: 29th July, 2008.

2008 C L D 1285

[Karachi]

Before Munib Ahmad Khan and Ghulam Dastagir Shahani, JJ

AWAMI HIMAYAT TEHREEK PAKISTAN through its Chairman and another-Petitioners

Versus

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

Constitutional Petition No.D-2238 of 2006, decided on 14th March, 2008.

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

---Preamble---State Bank of Pakistan BPD Circular No.29, dated 15-10-2002---Constitution of Pakistan (1973), Art.199---Constitutional petition---State Bank BPD Circular No.29, dated 15-10-2002 was challenged with further prayer that it could not prevail upon the Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Held, State Bank BPD Circular No.29, dated 15-10-2002 was a legal document as treated by Superior Courts.

None present for Petitioners.

Ain-ud-Din and Sanaullah Noor Ghouri for Respondents.

Imran Ahmad, D.A.G. for the State.

2008 C L D 1286

[Karachi]

Before Faisal Arab, J

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Petitioner

Versus

MUHAMMAD AYUB STONE CRUSHER and others---Respondents

J. Miscellaneous No.76 of 1988, decided on 25th October, 2007.

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

---Ss. 9 & 19---Suit for recovery of loan---Execution proceedings---Sale of mortgaged property---Application of intervener---Case of intervener was that property sold through auction in execution proceedings was already mortgaged with it since 1983 under a registered mortgage-deed---Effect---As valuable right had been created in favour of auction purchaser, who had .become bona fide owner for value, sale in his favour could not be set aside, however, intervener being prior mortgagee was entitled to receive the amount of sale consideration pursuant to such sale after deducting expenses incurred in the process of sale---Petitioner was directed to return the amount which it had received from the Official Assignee within specified period, to the intervener.

Ain-ud-Din Ahmed for Petitioner.

Khaleeq Ahmed for Intervenor.

2008 C L D 1288

[Karachi]

Before Nadeem Azhar Siddiqi, J

ABRAR AHMED---Plaintiff

Versus

Shaikh ZAHOOR AHMED---Defendant

Suit No.1642 of 2001, decided on 26th August, 2008.

Civil Procedure Code (V of 1908)---

----S.20 & O.XXXVII, R.1---Recovery of money---Dishonoured cheque---Territorial jurisdiction---Place of cause of action---After filing written statement, defendant neither appeared before the court nor produced any evidence in support of his averments made in written statement---One of the objections raised by defendant in his written statement was with regard to territorial jurisdiction of the Trial Court---Contention of defendant was that as transaction took place at place "M", therefore, suit at place "K" was not maintainable---Plaintiff produced original cheque and its memorandum in support of his claim---Validity---Suit was based on negotiable instrument and, presumption was that the same was against consideration and defendant did not come forward to rebut the presumption---Plaint as well as contents of affidavit-in-evidence had gone unrebutted and unchallenged---Though defendant had filed written statement but the same could not be considered as defendant did not lead any evidence---In absence of any evidence pleas raised by defendant in his written statement could not be considered---As the cheque was dishonoured at place "K" and the cause of action had accrued at place "K" therefore, according to S.20, Cr.P.C. suit could be filed where defendant resided or cause of action had arisen---Suit was decreed accordingly.

Aminuddin Ansari for Plaintiff.

Nemo for Defendant.

Date of hearing: 8th August, 2008.

2008 C L D 1291

[Karachi]

Before Ali Sain Dino Metlo and Dr. Rana Muhammad Shamim, JJ

NATIONAL ENVIRONMENTAL CONSULTING, (PVT.) LTD. through Authorized Officer---Applicant

Versus

Mirza KAMRAN BAIG and 2 others---Respondents

Criminal Revision No.127 of 2005, decided on 11th August, 2008.

Offences in Respect of Banks (Special Courts) Ordinance (IX of 1984)---

----Ss. 4 & 5---Banking Companies Ordinance (LVII of 1962), S.5(b)---Complaint, dismissal of---Deposits of money in bank---Purpose---Deposits of money accepted by a bank from members of public were for the purpose of bank's use in lending or investment and not for the purpose of keeping them apart as trust money--Adjustment of money from the account of petitioner against the credit card liability of the Chief Executive of its associated company did not amount to criminal breach of trust---No exception could be taken to the Order of the Trial Court dismissing the complaint.

S. Pakrashi and another v. Emperor AIR 1941 Cal. 713; Attorney-General of Canada and another v. Attorney-General of the Province of Quebec and another AIR 1947 P.C. 44; Gopesh Chandra Pal and another v. Nirmal Kumar Das Gupta AIR 1950 Calcutta 57 and Santosh Kumar and another v. The King AIR 1952 Cal. 193 ref.

Muhammad Abdullah for Applicant.

Saalim Salam Ansari for Respondent No.1.

Jam Asif Mehmood for Respondent No.2.

Rizwan Ahmed Siddiqui, D.A.-G. for Respondent No.3.

Date of hearing: 11th August, 2008.

2008 C L D 1294

[Karachi]

Before Nadeem Azhar Siddiqi, J

SAUDI PAK INDUSTRIAL & AGRICULTURAL INVESTMENT CO. (PVT.) LTD. Applicant

Versus

A.H. INTERNATIONAL (PVT.) LTD. and 11 others---Respondents

Execution Application No.38 of 2008 and Suit No.B-38 of 2006, decided on 1st September, 2008.

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

----Ss.11 & 19---Interim decree---Execution petition---Interim decree was passed against judgment-debtors---No appeal had been filed against the said interim decree and thus the same had attained finality and was executable as a final decree in terms of S.11(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court allowed the execution petition in circumstances.

Khawaja Muhammad Dawood Sulaimani v. Election Tribunal and others PLD 2003 Lah. 106 and Messrs Madina Rice Mills v. National Bank of Pakistan and others 2004 CLD 1371 ref.

Bashir Ahmed Khan for Decree-Holder.

Nemo for the JDs.

Date of hearing: 1st September, 2008.

2008 C L D 1297

[Karachi]

Before Anwar Zaheer Jamali and Muhammad Athar Saeed, JJ

Ch. BARKAT ALI through Attorney---Appellant

Versus

Messrs AL-ZAMIN LEASING MODARABA and 2 others---Respondents

I.A. No.8 and C.M.A. No.6243 of 2006, decided on 16th November, 2006.

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

----Ss.9, 10 & 22---High Court appeal---Leave to defend the suit---Guarantor---Signatures admitted---Plea of fraud---Appellant stood guarantor at the time of signing of loan documents---Bank filed suit for recovery of loan amount and after dismissal of applications for leave to defend the suit, Banking Court decreed the suit in favour of bank---Plea raised by appellant was that his signatures on loan documents were obtained by borrowers by fraud---Validity---Person knowing well about contents of such documents could not put his signatures over them at six places and subsequently taking U turn that his signatures over such documents were obtained by his employees through fraud and cheating--Appellant did not even bother to submit application for leave to defend the suit under his own signatures or even to file his personal affidavit in denial of allegations of bank that letter of guarantee was genuinely and knowingly executed by him---Banking Court, while passing its judgment and decree, had judiciously examined the defence of appellant and rightly concluded that no plausible defence entitling appellant for grant of leave to defend the suit was made out---In view of clear admission about signatures of appellant on letter of guarantee as well as other documents available on record, suit was also rightly decreed---Division Bench of High Court declined to interfere with the judgment and decree passed by Banking Court in favour of bank---Appeal was dismissed in circumstances.

Messrs National Security Insurance Company Limited and others v. Messrs Hoechst Pakistan Limited and others 1992 SCMR 718; American Express Bank Ltd. v. Adamjee Industries Limited 1995 CLC 880 and Messrs Habib Bank Limited v. Messrs Pan Islamic Steamship Co. Limited and 6 others 2005 CLD 626 ref.

Muhammad Iqbal for Appellant.

Samia Durrani for Respondent No.1.

Nemo for Respondents Nos.2 and 3.

2008 C L D 1309

[Karachi]

Before Nadeem Azhar Siddiqi, J

MY BANK LTD. through President/Chief Executive---Applicant

Versus

Messrs RIZWAN & SONS and 12 others---Respondent

Execution Application No.1 of 2007 and in Suit No.B-30 of 2006, decided on 26th September, 2007.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.11---Execution petition---One of the judgment-debtors had filed objections to the execution stating that he was not a party to the suit and no decree was passed against him or against his property---Plea raised was that decree-holder had malafidely and intentionally impleaded the judgment-debtor as party in the execution proceedings---Validity---Judgment-debtor being not a party to the suit and being not before the Court, no order affecting his rights to property could be passed without affording him the right of hearing---Undertaking for payment was given by other judgment-debtors and the same could only be binding upon them and against their property---High Court upheld the objections raised by the judgment-debtors and it was ordered that the property of the judgment-debtors could not be sold in satisfaction of the decree.

Aziz-ur-Rehman for Decree-Holder.

Muhammad Sharif for Judgment-debtor No.5.

2008 C L D 1312

[Karachi]

Before Nadeem Azhar Siddiqi, J

Messrs ZAHOORIA BUILDERS (PVT.) LTD. through Managing Director---Petitioner

Versus

THE REGISTRAR OF COMPANIES, SECP and 2 others---Respondents

J.M. No.20 of 2007, decided on 2nd October, 2007.

Companies Ordinance (XLVII of 1984)---

----S.439(6)---Restoration of company---Petition for restoration of company which was struck off by the Registrar of Companies---Plea raised was that name of company was struck off from the register without service of statutory notices and without hearing the petitioner---Validity---Section 439, Companies Ordinance 1984, provides that the Registrar will serve statutory notices upon the company through post---Officer appearing on behalf of the Registrar failed to produce the postal receipts and in absence of postal receipts it could not be said that statutory notices had been served upon the petitioner---Order for striking off the name of the company, without service of statutory notices, was bad in law and could not be sustained---High Court allowed the petition in circumstances.

K.B. Bhutto for Petitioner.

Shoukat Ali Zai, Assistant Registrar of Respondent No.1.

Date of hearing: 2nd October, 2007.

2008 C L D 1315

[Karachi]

Before Anwar Zaheer Jamali, CJ

WASEEM FATIMA and another---Applicants

Versus

NETWORK LEASING CORPORATION LIMITED through Chief Executive and another---Respondents

Transfer Application No.15 of 2008, decided on 1st September, 2008.

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

----S. 5(3)---Transfer application--Applicants had sought transfer of suit pending before Banking Court No.II at 'K' to Banking Court No.V at 'K' where earlier suit relating to same dispute was pending---Respondents contended that in subsequent suit filed by one of the respondents, at this juncture, an application for leave to defend, moved by some of the defendants in the suit, was pending for disposal, therefore, it would not be appropriate that at this stage the said suit be transferred to any other court and that in case leave to defend application, pending in the suit was dismissed then the entire procedure would be in accordance with S.10(10)(11) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and therefore transfer bf either suit to one court at this stage would not serve any purpose---Validity---High Court dismissed the transfer application moved by the defendants with the observation that in case leave to defend application moved by the defendants in the suit was granted by the Banking Court then it would be open for applicants to file fresh transfer application.

Khaleeq Ahmed for Applicants.

Behzad Haider for Respondents.

2008 C L D 1317

[Karachi]

Before Farrukh Zia G. Shaikh, J

SONERI BANK LTD.---Plaintiff

Versus

ABDUL QADIR JANGDA---Defendant

Suit No.B-11 of 2008, decided on 30th July, 2008.

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

----S.9---Suit for recovery of loan by Bank---Defendant had defaulted and failed to pay amount due---Bank had also alleged that defendant had deposited fake documents of mortgaged property---Defendant was duly served by all modes but no one appeared on his behalf to defend the suit---Statutory period for filing leave to defend the suit had expired---High Court decreed the suit in favour of the Bank in circumstances and observed that plaintiff was at liberty to initiate criminal proceedings against the defendant, if provided by law, for depositing the fake documents.

2002 CLD 1510; PLD 1990 SC 497; 1987 CLC 2164; 2006 CLD 261; 2005 CLD 1705 and 2002 CLD 242 fol.

Jam Asif Mehmood Lar for Plaintiff.

Nemo for Defendants.

2008 C L D 1324

[Karachi]

Before Khilji Arif Hussain and Bin Yamin, JJ

MUHAMMAD AAMIR SAEED---Petitioner

Versus

Messrs UNITED BANK LTD. through President and 2 others---Respondents

Constitutional Petition No.D-931 of 2008, decided on 12th September, 2008.

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

----S. 82---Constitution of Pakistan (1973), Art.199---Constitutional petition---Maintainability---Suspension of operation of credit card---Petitioner, who used credit card issued to him by the Bank, having defaulted; Bank suspended operation of said credit card---Petitioner, who had failed to pay the dues, was attempting to avoid his liability---If any dispute was in respect of charging of mark-up or interest over and above the agreement entered between the parties, petitioner's remedy lay before Banking Court and/or if there was any malpractice or any violation of Banking laws, rules, regulations or guidelines or perverse, arbitrary or discriminatory actions by the Bank, the efficacious remedy was available to petitioner before Banking Mohtasib appointed under S.82 of the Banking Companies Ordinance, 1962 who had jurisdiction to look into the complaint of aggrieved person and constitutional petition was not an efficacious remedy---Petitioner being defaulter, was not entitled to equitable relief---Constitutional petition was dismissed.

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

---Art. 199---Constitutional jurisdiction---Scope---Equitable relief, in exercise of power under Art.199 of the Constitution, could not be granted in aid of injustice.

Sardar Sher Afzal for Petitioner.

2008 C L D 1329

[Karachi]

Before Arshad Noor Khan, J

Messrs INTERNATIONAL CHROME TANNERY and 3 others---Plaintiffs

Versus

UNITED BANK LIMITED---Defendant

Suit No.B-26, C.M.As. Nos.4267, 6165 and 6166 of 2006, decided on 10th September, 2008.

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

----S. 10(2)---Limitation Act (IX of 1908), S.5--Application for leave to defend suit barred by time--Application for condonation of delay---Scope---Held, if specific time was provided in the statute to do or not to do a certain act, the said acts were required to be done within the period so provided under the statute and after expiry of the limitation period the valuable right accrued in favour of the opposite party which could not be snatched leniently or lightly--After expiry of limitation period, each day's delay is to be explained so as to be assessed by the court that delay in filing the suit or application was beyond the control of defaulting Party---When the reasons for delay were vague, there would be no justification to condone the inordinate delay of 35 days in filing the application---Principles.

Messrs Friends International (Pvt.) Ltd. through Director and others v. ABL Ltd. through Manager and 5 others 2004 CLD 817 and Yasir Chaudhary v. Zarai Taraqiati Bank Ltd. 2005 CLD 1701 ref.

Amanullah Khan for Plaintiffs.

Nemo for Defendant.

2008 C L D 1336

[Karachi]

Before Nadeem Azhar Siddiqi, J

FAYSAL BANK LTD. through Attorneys-Petitioner

Versus

SOUTHERN NETWORKS LTD.---Respondent

J.M. No.13 of 2007, decided on 16th September, 2008.

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

----S.305---Winding up of company---Object---Conditional order---Duty of Court---Scope---Before passing winding up order, court has to satisfy itself and to form an opinion in terms of S.305(h) of Companies Ordinance, 1984, that it is just and equitable that the company should be wound up---Object of proceedings is to find out solvency or insolvency of the company and not to settle claims of creditors---Object of winding up is also not to coerce the company to make payment to unpaid creditor but to secure discontinuation of functions of such company, which has ceased to be commercially solvent and viable.

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

----Ss.305, 306(a) & 314(1)---Winding up of company---Failure to repay debts---Petitioner sought winding up of respondent company on the ground that it had failed to repay its debts---Respondent did not come forward with any defence and amount claimed by petitioner became undisputed---Effect---High Court keeping in view the provisions of S.314(1) of Companies Ordinance, 1984, instead of directly ordering for winding up of the company, directed the company to pay undisputed amount to petitioner within eight weeks, and on failure to pay the amount, the company would' be wound up---Petition was allowed accordingly.

Arshad Tayebally for Petitioner.

Nemo for Respondent.

Date of hearing: 16th September, 2008.

2008 C L D 1340

[Karachi]

Before Ali Sain Dino Metlo and Bin Yamin, JJ

SAKINA---Appellant

Versus

ALLIED BANK OF PAKISTAN and 2 others---Respondents

Ist Appeal No.68 of 2007, decided on 29th August, 2008.

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

----Ss. 9, 15 & 19---Suit for recovery of loan against principal debtor and guarantor---Suit was decreed against which no appeal was filed by the Banking Court, however, guarantor moved two belated applications one for setting aside the decree and the other for releasing her property attached in the execution of decree---Guarantor's contention was that she had not deposited the title documents with the Bank and simply handed over the title documents to the principal debtor in good faith---Banking Court dismissed guarantor's applications holding the same time barred and that her plea that she had, simply handed over the title documents of her property to the principal debtor and had not mortgaged the house was not true and had been taken only to delay the execution proceedings---Validity---Held, Guarantor had not only mortgaged her house as guarantee for the repayment of loan, which admittedly had not been repaid, but was in the knowledge of the proceedings from the beginning---Banking Court, in circumstances, had rightly refused to set aside the decree and release her property at such belated stage---No exception thus could be taken to the impugned order---Appeal was dismissed by High Court.

Khaleeq Ahmed for Appellant.

Akhlaq Ahmed Khan for Respondent No.1.

Nemo for Respondents Nos.2 and 3.

Date of hearing: 29th August, 2008.

2008 C L D 1343

[Karachi]

Before Nadeem Azhar Siddiqi, J

ERIDANIA (SUISSE) SA---Petitioner

Versus

RAJBY INTERNATIONAL (PVT.) LTD.---Respondent

J.M. No.24 of 2007, decided on 15th September, 2008.

(a) Damages---

----Claim for damages---Scope---Claim for damages is not a vested right and grant of damages is subject to proof---Mere filing of a suit for damages cannot be termed as a bona fide dispute.

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

----Ss.305, 306(a) & 314(1)---Winding up of company---Failure to pay debt---Conditional order---Petitioner sought winding up of company on the ground that the company had failed to pay its claim---Validity---Company was not withholding the amount due to any bona fide dispute but with mala fide intention not to pay the admitted amount---Petition was filed for admitted amount and it was not filed just to pressurize the company---Company admitted the claim of petitioner and S.305 (e) of Companies Ordinance, 1984, had given a right to a creditor to seek an order of winding up provided conditions set in Ss.306 and 314 of Companies Ordinance, 1984, were met---Neglect on the part of company to pay the stun due after thirty days of the service of notice deemed that company was unable to pay its debts---Such neglect to pay had furnished a ground for winding up of the company, irrespective of the fact that the company was commercially solvent---High Court exercising discretion under S.314 (1) of Companies Ordinance, 1984, directed the company to pay undisputed amount to petitioner within four weeks and on failure to pay the amount, respondent company was directed to be wound-up---Petition was allowed accordingly.

Humera Abdul Aziz Essa v. Al-Abbas Cement Industries Ltd. 2008 CLD 214 ref.

Salman Talibuddin for Petitioner.

Shaiq Usmani for Respondent.

Date of hearing: 15th September, 2008.

2008 C L D 1347

[Karachi]

Before Azizullah M. Memon, A.C.J.

Rana MUNEER AHMED and another---Applicants

Versus

AL-ZAMIN LEASING MODARABA ---Respondent

Civil Transfer Application No.16 of 2008, decided on 25th August, 2008.

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

----S.7(4)---Jurisdiction--Admitted documents were to be given preference over and above the evidence which was yet to be produced by other party---If, after the evidence is recorded by competent Court of law it arrived at the conclusion that it had no jurisdiction to entertain such dispute in between the parties, the plaint or suit in question may be returned to concerned party with direction to present the same before the competent Court having jurisdiction---High Court dismissed the transfer application, leaving the applicant at liberty to file fresh one as and when fresh cause of action arose in his favour.

Salim Salam Ansari for Applicants.

Mrs. Samia Alam Khan Durrani for Respondent.

2008 C L D 1353

[Karachi]

Before Mrs. Qaiser Iqbal and Syed Mahmood Alam Rizvi, JJ

A.M. SIDDIQI and others---Petitioners

Versus

THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN and another---Respondents

C.P. No.1687 of 2005, decided on 26th February, 2008.

(a) Securities and Exchange Commission of Pakistan Act (XLII of 1997)---

----Ss. 3 & 20(2)---Securities and Exchange Ordinance (XVII of 1969), S.34---Nature and responsibilities of Security and Exchange Commission of Pakistan---Scope.

Khawaja Imran Ahmed v. Noor and another 1992 SCMR 1152 and Shaukat Ali and others v. Government of Pakistan through Chairman Ministry of Railways and others PLD 1997 SC 342 ref.

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

----Ss. 4, 5 & 6---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss.3 & 10---Companies Ordinance, 1984 and Securities and Exchange Commission of Pakistan Act, 1997 focus on distinct legislative concerns to be regulated in separate areas on which scope of the law was limited and which squarely fell within the ambit of listing the companies for such exchange.

Abrar Hassan for Petitioners.

Asim Mansoor Khan for Respondent No.1.

Muhammad Aslam Butt for Respondent No.2.

Date of hearing: 22nd January, 2008.

2008 C L D 1

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

ZARAI TARIQIATI BANK LIMITED---Appellant

Versus

BASIT ALI and another---Respondents

Regular First Appeal No.237 of 2007, heard on 24th September, 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---Financial facility availed by defendants, was not in dispute and terms and conditions in agreement of loan also stood admitted---Payments made by defendants were also not disputed---Impugned judgment reflected that the total amount due to plaintiff Bank was Rs.4,73,760 out of which, defendants made payment of Rs.4,44,150---Defendants were obliged to pay a further sum of Rs.29,610 to the plaintiff Bank---Appeal was partially allowed and decree was enhanced from Rs.4,44,150 to Rs.4,73,760---Decree sheet was amended accordingly.

Muhammad Mohsin Chohan for Appellant.

Nadeem Saeed for Respondents.

Date of hearing: 24th September, 2007.

2008 C L D 36

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

HABIB BANK LTD. through duly constituted Attorney-Appellant

Versus

Messrs KAMOKE RICE MILLS through Sole Proprietor and others---Respondents

Regular First Appeal No.69 of 2007, heard on 4th October, 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---On filing suit for recovery of loan by appellant Bank, respondents filed application for leave to defend suit, which was dismissed by Banking Court holding that no substantial question of law and fact had been raised in said application---Banking. Court decreed suit, but without granting mark-up---Appellant Bank was aggrieved by said decree---Respondents had raised material question of law and fact as alleged material discrepancies existed in the plaint and documents referred to---Unconditional leave to defend was granted to respondents qua the question of determination of mark-up payable to the Bank or otherwise.

Mushtaq Mehdi Akhtar for Appellant.

Syed Najaf Hussain Shah for Respondents.

Date of hearing: 4th October, 2007.

2008 C L D 38

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

Mir MUHAMMAD ASLAM through Legal Heirs and 2 others---Appellants

Versus

BILQEES BEGUM through General Attorney and another---Respondents

Regular First Appeal No.167 of 2007, decided on 12th October, 2007.

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

----S.55---Time as essence of contract---Contracts of immovable properties---Principles---Generally time is not of the essence of contracts concerning immovable properties but in case parties thereto settle between them that time would be of the essence of the contract and they subsequently stuck to it, then it becomes operative even in the contracts of immovable properties---Simple fixation of time in agreement for execution of sale-deed of immovable property, could not make the time as of the essence of contract---If parties with a clear understanding make time as of the essence of contract and subsequently demonstrate same by their conduct, it could become essence of transaction.

Sandoz Limited and another v. Federation of Pakistan and others 1995 SCMR 1431; Ghulam Nabi and others v. Seth Muhammad Yaqub and others 'PLD 1983 SC 344; Mst. Anima Bibi v. Mudassar Aziz PLD 2003 SC 430; Muhammad Yaqoob and others v. Hakim Ali and others 2004 SCMR 584; Fazal-ur-Rehman v. Ahmed Saeed Mughal and others 2004 SCMR 436 and Mst. Batul and others v. Mst. Razia Fazal and others 2005 SCMR 544 rel.

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

----S.15---Indivisible joint property---Co-sharers not signatories to agreement---Two co-owners of suit property did not associate with the bargain and did not sign agreement to sell---Entire suit property was joint and share of both non-signatories was not identified and could not be separated without resort to partition proceedings by metes and bounds---Effect---Performance of such agreement to sell could not be enforced against non-signatory owners.

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

----Ss.15 & 22---Contract Act (DC of 1872), Ss.55 & 65-Agreement to sell---Specific performance---Indivisible joint property---Time as of the essence of contract, principle of---Applicability---Suit land was owned by three persons and out of them only defendant entered into agreement to sell with plaintiff for the whole land---Earnest money was received by defendant and agreement was to be completed within a specified time---Plaintiff filed suit on the ground that defendant failed to perform his part of agreement and refused to transfer suit-land---Plea raised by defendant was that time was the essence of the agreement and plaintiff, had failed to complete the same within the fixed time---Trial Court decreed the suit in favour of plaintiff only to the extent of land owned by defendant---Validity---Plaintiff remained unsuccessful in proving her entitlement to decree granted by Trial Court as she had not expressed her willingness to relinquish her claim to further performance or to compensation etc. of the part of suit-land not given to her---Parties contemplated only a single and indivisible transaction of sale with immediate delivery of possession and for effecting a conveyance time stipulated was expressly mentioned to be of the essence of contract---Part to be specifically enforced stood on a separate and independent footing from remaining part of the contract---Parties entered into agreement with clear intendment that agreement would be performed within six months and they had given a specific date for that purpose---Defendants had successfully proved that they were not obliged to perform their part of contract on account of lapse on the part of plaintiff to pay the balance sale price within the stipulated time---Plaintiff was not entitled to specific performance of agreement in terms of S.65 of Contract Act, 1872 but she was entitled to get back her money paid in advance with profit/interest at the bank rate---Judgment and decree passed by Trial Court for specific performance of agreement to sell was not maintainable and was reversed and decree was modified by High Court for recovery of earnest money.

Inam Naqshband v. Haji Shaikh Ijaz Ahmad PLD 1995 SC 314 distinguished.

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

----Art.113--Specific performance of contract---Limitation---Computation--For determination of starting point: of limitation, Art.113 of Limitation Act, 1908 has two parts, under first part, starting point of three years limitation for filing of suit, is the date given in agreement itself for its performance, whereas under its second part, suit for specific performance can be filed within a period of three years from the date when plaintiff gains notice that performance has been refused used.

Mian Sarfraz-ul-Hassan for Appellants.

Shahid Karim for Respondents.

Date of hearing: 24th September, 2007.

2008 C L D 53

[Lahore]

Before Syed Sakhi Hussain Bokhari and Syed Hamid Ali Shah, JJ

MUHAMMAD NAVEED IQBAL---Appellant

Versus

MUSLIM COMMERCIAL BANK through Manager and 2 others---Respondents

F.A.O. No.41 of 2006, decided on 23rd October, 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---Objection petition---Non framing of issues and recording of evidence---In execution of decree passed by Banking Court, a house was auctioned against which appellant filed objection petition but Banking Court summarily dismissed the petition---Plea raised by appellant was that his objection petition could not be dismissed summarily and court should have framed issues on the same---Validity---Appellant was directed to deposit decretal amount which order was not challenged before any forum---Objection petition filed, by appellant was dismissed for non-prosecution and thereafter sale was confirmed and sale certificate was issued in favour of auction purchaser---Non­compliance of order was fatal and application was rightly dismissed---Order passed by Banking Court was devoid of any illegality or infirmity---Appellant was bound to deposit the amount according to the direction of court---Order passed by Banking Court did not call for any interference---Appeal was dismissed in circumstances.

Ch. Muhammad Masood Jahangir and Mir Khalid Aseer Chaudhry for Appellant.

Muhammad Qamar-uz-Zaman for Respondent No. 1.

Date of hearing: 18th-September, 2007.

2008 C L D 73

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Syed TATHEER HUSSAIN---Appellant

Versus

AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN through Manager---Respondent

E.F.A. No.553 of 2006, heard on 25th October, 2007.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, Rr.92 & 95---Limitation Act (IX of 1908), Arts.138 & 180---Decree, execution of---Mortgaged property, sale of---Sale certificate in favour of purchaser, confirmation of---Purchasers' application under O.XXI, R.95, C.P.C. seeking possession of property after 10 years of sale certificate---Maintainability---Article 180 of Limitation Act, 1908 would govern such application, which prescribed for its filing a period of three years to commence from date when sale became absolute---Date on which ; sale would become absolute was provided in O.XXI, R.92, C.P.C.---Article 138 of Limitation Act, 1908 would not apply to execution proceedings---Purchaser might file suit for possession as contemplated by Art.138 of Limitation Act, 1908, if limitation prescribed thereby were available---Such application filed after 10 years of issuance of sale certificate being barred by time, was dismissed.

Ch. Irshad Ullah Chatha for Appellant.

Tariq Mahmood Gill for Respondent.

Date of hearing: 25th October, 2007.

2008 C L D 98

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

ZAHID AFZAL DAHA---Appellant

Versus

HABIB BANK LIMITED and 3 others---Respondents

R.F.A. No.716 of 2001, heard on 31st October, 2007.

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

----Ss.9 & 10---Civil Procedure Code (V of 1908), S.13---Qanun-e-Shahadat (10 of 1984), Art.89(5)---Suit for recovery of loan amount by Bank on basis of foreign judgment---Leave to defend suit, application for---Denial of defendant to have executed guarantee in foreign country for not being present there at relevant time---Foreign judgment bearing legend both in Arabic and English versions to the effect "Photo Copy Attested", "Syed Afzal Hussain Shah Consular Officer"---Validity---Such attestation or certificate did not meet requirements of Art.89(5) of Qanun-e-Shahadat, 1984---Question requiring determination as to whether person issuing such certificate was legal keeper of such document or having legal custody of its original and if not, what was its effect---After determination of such primary fact, court would have to determine as to whether such foreign judgment was conclusive within meaning of S.13, C.P.C.---Foreign judgment was silent regarding denial of execution of guarantee by defendant and his absence from foreign country when guarantee was stated to be executed by him---Defendant made out a plausible defence entitling him to grant of leave to defend suit---Leave application was accepted in circumstances.

Nusrat Mehdi Chaudhri v. Habib Bank Ltd. and another 2006 CLD 405 and Naeemullah Malik v. United Bank Ltd and two others 2006 CLD 1592 rel.

Syed Najam-ul-Hassan Kazmi for Appellant.

Wahid Mazhar for Respondent No. 1.

Nemo for Respondents Nos.2 and 4.

Date of hearing: 31st October, 2007.

2008 C L D 105

[Lahore]

Before Fazal-e-Miran Chauhan, J

GHULAM MUSTAFA---Petitioner

Versus

THE STATE---Respondent

Crl. Miscellaneous No.8511-B of 2007, decided on 26th November, 2007.

Criminal Procedure Code (V of 1898)---

---S.498---Copy Right Ordinance (XXXIV of 1962), Ss.66 & 67---Pre-arrest bail, refusal of---Accused was specifically nominated in the FIR. with specific role of manufacturing the ink with the name and style "Best Dollar Ink", having no permission to use that trade mark, which was similar with the trademark used by the complainant-Prima facie, sufficient material was available on record to connect accused with the alleged offence---Accused had failed to show any mala fide on the part of the complainant or the police for his false implication in the case---Such similarity was found in the name and style that any one could easily be deceived while purchasing said item, because no major change existed in the size of the packet, colour and pieces therein---Prerequisites for grant of bail before arrest were missing in the case---Ad interim pre-arrest bail already granted to accused, was recalled.

Mian Saeed-ud-Din Ahmad for Petitioner.

Muhammad Shakil Abid for the Complainant.

Shahid Mehmood Khan. Deputy Prosecutor-General for the State.

Muhammad Sharif, S.-I., with Record.

2008 C L D 186

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

Mst. SHAMIM AKHTAR---Appellant

Versus

MUHAMMAD RIAZ and another---Respondents

FAO No.214 of 2007, decided on 29th November, 2007.

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

---Preamble-Financial Institutions (Recovery of Finances) Ordinance, 2001 being a special law, every provision contained therein has to be strictly construed and meticulously adhered to.

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

----S.15---Sale of mortgaged property without intervention of the Court---Manner and mode---Non-compliance of statutory requirements---Effect---Parameters prescribed by statute being mandatory are required to be followed as directed---Even a minor lapse or departure therefrom shall make the whole transaction questionable and vitiate entire proceedings of sale---Principles.

The manner and mode of auction without intervention of Court has been clearly spelt out in section 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001. It is initiated by resorting to the provisions as contained in section 15(2) by serving notice upon the mortgagor, calling for payment. It clearly envisages service upon "customer" as defined in the Ordinance. Thereafter another notice demanding payment has to be issued within 14 days of service and lastly, in case, of contumacious default in payment, the Financial Institution is required to serve a final notice within 30 days. The proviso to section 15(4) of the Ordinance makes it imperative that before venturing upon the exercise of sale by auction of mortgaged property, a notice' is required to be published in. an English and Urdu daily "Newspaper", in the Province where the mortgaged property is located. The proclamation is required to contain the name, and address of the mortgagor, the details of the mortgaged property, the amount of outstanding mortgage money and intention of sale of mortgaged property. This exercise also entails a requirement of sending notice to all persons, who, to the knowledge of Financial Institution, have an interest in the mortgaged property as mortgagees. After fulfilling these requirements the Financial Institution, has power to sell the mortgaged property and thereafter, file proper accounts of sale proceeds, with the Banking Court, within 30 days of sale.

Record in the present, case showed that the property mortgaged by the customer measured 184 Kanals and 6 Marlas, agricultural land. Whereas in the proclamation of sale, property was shown to be 114 Kanals 3 Marlas. Therefore, there was clear misdescription, resulting in non-compliance of statutory requirements as contained in section 15(4). There was not only non-adherence to description of property, but this lapse had also impacted the other ingredients of sale, as contained in proclamation of sale. Because the reserve price fixed was Rs.5,20,000 for 114 Kanals and 3 Marlas of land. Obviously, if the area of land was more than 114 Kanals 3 Marlas, the reserve price would correspondingly increase. Thus, the entire proceedings of sale were not in accordance with the requirements of law. The "Financial Institution" itself exercises. powers of sale, therefore, it is required to adopt a procedure, which is transparent, above-board, and also, strictly in consonance with the provisions of section 15. Even a minor lapse or departure shall make the whole transaction questionable and vitiate entire proceedings of sale. Therefore, to safeguard the interest of "customer", the parameters prescribed by statute are mandatory and thus required to be followed as directed.

The objection petition indicated that the respondent faltered in these requirements by misdescribing the area of land. This lapse alone is enough to vitiate the entire process of auction and sale.

Therefore, the objection petition was rightly allowed and auction proceedings set aside. The impugned order therefore, was un-exceptionable.

Khizar Abbas Khan for Appellant.

2008 C L D 313

[Lahore]

Before Sh. Javaid Sarfraz and Umar Ata Bandial, JJ

INVESTMENT CORPORATION OF PAKISTAN---Appellant

Versus

MUHAMMAD BILAL AHMAD and others---Respondents

E.F.A. No.1 of 2003, decided 27th June, 2007.

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

----Ss.9, 19 & 22---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 90---Appeal to High Court---Execution of decree---Objection petition-Appeal was filed against the order passed by executing court rejecting. the objections by the decree-holder as well as by two other objectors who offered to pay higher price, on the ground that decree-holder's objection was time-barred and other bidders' objections did not disclose substantial injury as required by O.XXI, R.90 C.P.C.---Decree-holder had objected that the terms of auction were to be finalized and approved by the executing court under O.XXI, R.66 C.P.C. and said terms must necessarily contain the reserve price of property under auction---Validity---Only question was whether the sale of the auction property below the reserve price fixed by the executing court was valid or not---Reserve price of a property under auction must be fixed with the approval of the court---Neither the Court Auctioneers nor the parties to the decree had authority to modify a duly fixed reserve price without such approval---In the present case impugned sale was finalized at a price below the reserve price fixed by the executing court without obtaining approval for the reduction of the reserve price of the property under auction---Such auction was illegal and consequently the sale concluded thereby was void---Failure by the Banking Court to consider and deal with the said illegality upon the pretext of technical objections was deprecated---Executing Court, however would sell the property under auction through a fresh auction to be conducted strictly in accordance with law.

Amir Sona and M. Shamsher Iqbal Chughtai for Appellant.

Ch. Muhammad Shafi Maye for Respondents.

Date of hearing: 27th June, 2007.

2008 C L D 341

[Lahore]

Before Nasim Sikandar and Kh. Farooq Saeed, JJ

MCB BANK LIMITED---Appellant

Versus

Messrs BAIGA PAINTS through Proprietor and 3 others---Respondents

F.A.O. No.213 of 2006, heard 21st January, 2008.

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

----Ss.9, 10 & 22---Suit for recovery of loan---Petition for leave to appeal---Ex parte judgment---Setting aside of---Defendant filed amended petition for leave to defend and matter was accordingly adjourned for filing reply by the Bank---Since no one appeared on behalf of plaintiff-Bank on the date when case was called out twice, suit filed by plaintiff Bank was dismissed for non-prosecution and plaintiff-Bank filed application for setting aside dismissal-in-default order, which application was dismissed by the Banking Court with observation that under S.22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, order of dismissal was final and that court was not permitted to revise or review or recall the same---Validity--Banking Court was possessed with the competence to recall or set aside an order passed on account of non-appearance of a party---Trial Court ought to have recalled the ex parte order instead of non-suiting the Bank on technicalities---Dismissal of application for recalling of order was totally uncalled for when the proceedings to take place were limited only to filing of reply to the amended petition for leave to defend, all the moreso when said application was filed on the same day.

Messrs Baghpotee Services (Private) Ltd. and others v. Messrs Allied Bank of Pakistan Ltd. 2001 CLC 1363; Muhammad Iftikhar through Special Attorney v. Zarai Taraqiati Bank Limited through Chairman and another 2005 CLD 1454; Muslim Commercial Bank Limited v. Tariq Saeed and another 2004 CLD 920 and Muhammad Naveed Hussain v. Small Business Finance Corporation/SME Bank Ltd. and 2 others 2006 CLD 1486 rel.

Muhammad Qamar-uz-Zaman for Appellant.

Ch. Shahid Javaid Waraich for Respondent.

Date of hearing: 21st January, 2008.

2008 C L D 351

[Lahore]

Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ

Messrs JAMI (PVT.) LIMITED---Appellant

Versus

UNION BANK LIMITED and others---Respondents

E.F.A. No.110 of 2003, decided on 21st April, 2005.

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

---Ss.9, 19 & 22---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 90---Suit for recovery of loan---Execution of decree---Objection petition---Appeal to High Court---Suit for recovery of loan by Bank was decreed and decree-holder/Bank went in execution and successfully obtained sale order of mortgaged property---Court Auctioneers appointed by the executing court conducted auction of mortgaged property and respondent being highest bidder succeeded in purchasing the same---Court Auctioneers submitted their report before the executing court and judgment-debtor filed objection petition to said execution and auction proceedings---Validity---Undisputedly, publicity of the auction allegedly held, was not properly done as its notice was not publicized in any of the newspaper---Court Auctioneers felt satisfied with circulation of few pamphlets which according to their report were only pasted outside the Court Room and at the place of auction---Display of those pamphlets, if were really published, was not shown to have been done at public places of the adjoining villages/towns---Court Auctioneers had referred to publicity by the beat of drums, but nothing was in the report to show as to what places and by whom it was undertaken---Pamphlets published by the Court Auctioneers were also vague---Copy of the pamphlets placed on record had shown that neither the proper specification of land subject of auction nor the place of auction had been mentioned with clarity---All said points were specifically pointed out in the objection petition filed by the appellant, but executing court through sketchy/unreasoned impugned order, dismissed same with a solitary unbased finding that publicity was properly done for the auction conducted for decreed amount---Such determination through the order impugned was not justifiable on the touchstone of any canon known for administration of justice---Judgment of the Banking Court could, in no manner, come within the arena of judicial decisions as no kind of reason had been mentioned therein for throwing the objections of the appellant out of the file---Impugned order being illegal, was set aside with the result that objection petition filed by the appellant would be deemed to be pending before Executing Court which would be decided afresh in accordance with law.

Waqar Mushtaq Ahmed for Appellant.

Syed Muhammad Shah for Respondent No.2.

Date of hearing: 21st April, 2005.

2008 C L D 356

[Lahore]

Before M. Bilal Khan and Tariq Shamim, JJ

PUNJAB PRIVATIZATION BOARD, GOVERNMENT OF PUNJAB through Secretary

and 3 others---Appellants

Versus

MUHAMMAD YOUNAS MALIK and another---Respondents

I.C. A. No.131 of 2004, heard on 1st November, 2007.

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

----S.3---Proposal---Acceptance or rejection---Principles---Communi­cation of proposals and acceptance of proposals are to be deemed by an act or omission of party proposing or accepting by which he intends to communicate such proposal or acceptance---Mere acceptance without communicating the same cannot be binding.

Dr. Azeem Shad v. Municipal Committee, Multan PLD 1968 Lah. 1419 and Powell v. Lee [(1908)] 99 L T 284 rel.

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

----S.3---Constitution of Pakistan (1973), Art.199---Intra-court appeal---Public contract---Judicial review---Powers. of High Court---Scope---Property in question was put to auction by Privatization Board and respondent was the highest bidder but the Board being not satisfied with the price offered re-auctioned the property---Validity---Privatization Board, in its meeting, had decided to re-auction the property in question which meant that its earlier decision of accepting bid of respondent had been rescinded---Decision of re-auction was taken in the large interest of Government and could not be termed as mala fide or unreasonable---Confirmation of bid depended on discretion of Government as was spelt out from advertisements---No objection could be raised if bid was found to be below the price which Government expected the property would fetch High Court, under its constitutional jurisdiction, could only review a public contract only on the touchstone of reasonableness, relevance, fairplay, natural justice, equality and non-discrimination---Respondent did not challenge re-auction before the High Court on any of the such grounds-No writ could have been issued on the touchstone of reasonableness and fairplay as issuance of the same would tend to confer undue advantage on the respondent--High Court, in intra-court appeal, set aside . the judgment passed by single Judge.

Prof. Muhammad Usman and others v. Punjab University Academic Staff Association and another 1991 SCMR 320; The Central Bank, Heotmal Ltd. v. Vyankatesh Bapuji AIR (36) 1949 Nagpur 286; Haridwar Sindh v. Begum Sumbrui and others AIR 1972 SC 1242; Javaid Iqbal Abbasi & Company v. Province of Punjab and 6 others 1996 SCMR 1433; Messrs Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasanagar Municipal Corporation and others AIR 2000 SC 2272; Mst. Surraya Begum and others v. Mst. Suban. Begum and others 1992 SCMR 652; Pakistan v. Messrs H. Pir Muhammad Shamsuddin PLD 1962 M.P.) Kar. 810; Chairman and others v. Mst. Qaisra Elahi and others 2005 SCMR 678; Messrs Ittehad Cargo Service and 2 others v. Messrs Syed Tasneem Hussain Naqvi and others PLD 2001 SC 116; Ch. Muhammad Yunus v. The Islamic Republic of Pakistan through the Secretary, Ministry of Communication, Government of Pakistan, Islamabad and 3 others PLD 1972 Lah. 847; Pakistan v. Golam Moinuddin Ahmed PLD 1966 Dacca 570; Federal Government of Pakistan through Secretary, Ministry of Interior, Islamabad v. Government of Punjab through Chief Secretary, Lahore and another PLD 1991 SC 505 and City Schools (Pvt.) Ltd., Lahore Cantt. v. Privatization Commission, Government of Pakistan and others 2002 SCMR 1150 ref.

Khawaja Haris Ahmad for Appellants.

Mian Nisar Ahmad and Ch. M. Ashraf Wahlah for Respondents.

Ch. Muhammad Sadiq Addl. A.-G.

Date of hearing: 1st November, 2007.

2008 C L D 411

[Lahore]

Before Syed Asghar Haider, J

Messrs IHSAN PROCESSING MILLS (PVT.) LTD.: In the matter of

C.O. No.55 of 2006, decided on 29th January, 2008.

Companies Ordinance (XLVII of 1984)---

----S.305---Petition for winding up of company---Winding up of company was sought on basis that it was incapable to liquidating its liabilities---Notices were issued through modes prescribed and also through publication in the newspaper, but none entered appearance and consequently company was proceeded against ex parte---Fact that company was not in a position to liquidate its liabilities was established on record---No attempt was made from any quarter to contest such assertions---Petition was allowed as prayed for

Muqtedir Akhtar Shabbir for Petitioner.

2008 C L D 427

[Lahore]

Before Maulvi Anwarul Haq and Syed Asghar Haider, JJ

RUSTAM KHAN---Appellant

Versus

ZARI TARIQIATI BANK LIMITED through Manager---Respondent

Regular First Appeal No.81 of 2007, heard on 5th September, 2007.

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

----Ss.9, 10 & 22---Suit for rendition of accounts---Leave to defend suit---Plaintiff had assailed order/decree passed by the Banking Court, whereby his suit for rendition of accounts was dismissed---Contents of the order reflected that defendant filed an. application for leave to defend the suit, but thereafter failed to appear---Contents of the order were not clear as to whether leave was granted or not, or even if the leave application was considered---Validity---Section 10(8) of Financial Institutions (Recovery of Finances) Ordinance, 2001, mandated the Banking Court to consider the contents of the plaint, application for leave to defend and reply thereto---Such having not been done, mandatory requirements of law were not fulfilled-Allowing appeal, impugned order and decree were set aside by the High Court---Banking Court would decide leave application as required by law and thereafter, if leave was granted, it would proceed to follow the procedure as contained in S.10(10) of Financial Institutions (Recovery of Finances) Ordinance, 2001.

Rao Abdul Jabbar Khan for Appellant.

ZTBL proceeded ex parte vide order dated 17-4-2007.

Date of hearing: 5th September, 2007.

2008 C L D 431

[Lahore]

Before Kh. Farooq Saeed, J

SAUDI PAK KALABAGH and others---Appellants

Versus

JUDGE BANKING COURT and others---Petitioners

Writ Petition No.12454 of 2004, decided on 20th February, 2008.

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

----Ss.5, 7 & 12---Constitution of Pakistan (1973), Art.199---Constitutional petition---Application for setting aside ex parte decree passed in year 1993---Filing of such application in year 2004 in Banking Court at place 7---Transfer of such application by Banking Court at place "I" to Banking Court at place "R" due to lack of territorial jurisdiction---Validity---Provisions of Ss.5 & 7 of Financial Institutions (Recovery of Finances) Ordinance, 2001 would be read together and none of them would be read and interpreted in isolation---Federal Government had power to establish Banking Courts and define their territorial jurisdiction---By virtue of provision of S.7(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001, all proceedings pending in any Banking Court constituted under relevant laws would stand transferred to or be deemed to be transferred to Banking Courts having jurisdiction under the Ordinance, 2001---Banking Court at place "I" had exercised its jurisdiction rightly by conveying to applicant that he had approached wrong forum and that he should have approached Banking Court at place "R"---High Court dismissed constitutional petition---Principles.

Muhammad Rezzanullah Khan v. Abdul Khayer and others PLD 1956 Dacca 285 and Messrs Sialkot Dairies Ltd. and 8 others v. Agricultural Development Bank of Pakistan through Manager, A.D.B.P. and 3 others 2003 CLD 67 ref.

(b) Interpretation of documents---

----Grammatical and ordinary sense of words would be adhered to, unless same would lead to some absurdity, repugnancy or inconsistency with the rest of written instrument, in which case grammatical and ordinary sense of words may be modified, so as to avoid absurdity and inconsistency, but not further.

Grevy v. Pearson (1987) 6 H.Z Cas 61 fol.

Shahid Ikram Siddiqui for Petitioners.

Mian Nasir Mehmood for Respondents.

2008 C L D 449

[Lahore]

Before Syed Hamid Ali Shah and Zafar Iqbal Chaudhry, JJ

Messrs ASHRAF AGRO and others---Appellants

Versus

H.B.L.-Respondent

E.F.A. No.3 of 2005, decided on 4th February, 2008.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI, R.66---Execution of decree---Sale through auction---Inadequate price---Effect---After successive efforts by court auctioneer, property in question was sold through auction-Judgment-debtor sought setting aside of such auction sale on the ground that reserve price of the property was fixed at too low a rate and auction-purchaser did not deposit 1/4th of the purchase price on the fall of hammer---Validity---Mere inadequacy of sale price in court sale was no valid ground for setting aside the sale, moreso when every effort was made to fetch maximum price---Buyer was always reluctant to purchase a property in court sale as it involved litigation, it was time consuming exercise and had the element of uncertainty---Court sales could not fetch market price for such reasons and sale through auction could not be set aside on such score alone-Non-payment of 1/4th amount on the fall of hammer did not vitiate the sale conducted under the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, as the law had permitted execution of decree according to the manner and desire of decree-holder---Judgment-debtors raised frivolous objections which Executing Court had answered in a lawful manner---Order of Executing Court was devoid of any illegality or legal infirmity---Judgment-debtors had filed objections as and when auction was conducted---Matter regarding sale through auction of property remained pending for about 8 years but judgment-debtors did not come forward even on a single occasion to satisfy decretal amount---Incentive packages which State Bank of Pakistan had announced for payment of long outstanding defaults in bank loans were there, but the judgment. debtors did not even avail such incentives---Objections were filed to delay execution which Was nothing but mala fide on the part of judgment-debtors---High Court declined to interfere with the order passed by executing court---Appeal was dismissed in circumstances.

Muhammad Hassan v. Muslim Commercial Bank Ltd. and 3 others 2003 CLD 1693; Mst. Zarina Bibi v. Allied Bank Ltd" 2003 YLR 3274; Messrs Dawood Flour Mills and others v. National Bank of Pakistan 1999 MLD 3205; Afzal Maqsood Butt v. Banking Court No.2 Lahore and 8 others PLD 2005 SC 470 = 2005 CLD 967; Mir Wall Khan and another v. Manager A.D.B.P. Muzaffar Garh and another PLD 2003 SC 500 and Habib Bank Limited v. Messrs Dost Muhammad Cotton Mills and 3 others PLD 2000 Kar. 186 ref.

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

--S.19---Execution of decree---Sale through auction---Procedure---Auction in the course of execution by Banking Court in appropriate cases can be made through deviation from Civil Procedure Code, 1908.

Muhammad Ikhlaq Memon v. Zakaria Ghani and others PLD 2005 SC 819 and Shaukat Ali Mian v. Trust Leasing Corporation Ltd. through Chief Executive and 4 others 2002 CLD 1071 rel.

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

----S.22---Appeal---Maintainability---Non-issuance of notice to decree-holder---Effect---Notice to decree-holder-Bank, under S.22 of Financial Institutions (Recovery of Finances) Ordinance, 2001, is an essential requirement---Non-compliance of such mandatory requirement renders appeal incompetent.

Sardar Riaz Karim for Appellant.

Muhammad Masood Sabir for Respondent No. 1.

Date of hearing: 4th February, 2008.

2008 C L D 465

[Lahore]

Before Syed Hamid Ali Shah, J

JOINT REGISTRAR OF COMPANIES---Appellant

Versus

Sh. FAZAL REHMAN & SONS LTD.---Respondents

C.O. No.3/L of 2006, decided on 26th February, 2008.

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

----S.305(c)---Word "suspend" as used in S.305(c) of Companies Ordinance, 1984---Connotation---Business of company would be deemed to be suspended, when there was no business activity at all or when there was complete cessation of business for a certain period---Where company was making investments, improving its management installing new unit, paying its liability, seeking credit lines from Banks and raising construction, then its business could not be said to be suspended.

(b) Words and phrases---

----"Suspend"---Meaning.

Black's Law Dictionary (Sixth Edition) and The Encyclopaedic Law Dictionary ref.

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

---S.305(c)---Winding up of company---Scope---Mere running of company into losses would not justify a winding up order.

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

---S.305(c)---Winding up of company---Scope---Substratum of company, would be said to have gone, where there was no hope of business of company to be run on profits---Court would lean in favour of a company to be a going concern---Winding up order would be justifiable only when there was no hope that company would recommence its business.

Liaqat Ali Dholla, Joint Registrar of Companies/petitioner (in person).

Syed Safdar Imam Bokhri and Riaz Hussain Sial for Respondents.

2008 C L D 489

[Lahore]

Before Kh. Farooq Saeed, J

Raja MUHAMMAD SHIRAZ---Petitioner

Versus

BANK MANAGER, SME BANK LTD., RECOVERY OFFICER---Respondent

Writ Petition No.2190 of 2007, decided on 12th March, 2008.

Constitution of Pakistan (1973)---

----Art.199---Constitutional petition---Recovery of borrowed amount---Son of petitioner borrowed amount from bank in which petitioner was only a witness to the documents of loan---Borrower son having failed to fulfil the terms of loan facility had become defaulter, Bank started harassing petitioner being father of the borrower---Petitioner was sent to jail in civil prison where he remained for about 40 days, which was maximum punishment for such default as per law---Petitioner being not borrower, could not have been sent to jail; it was a case of highhandedness on the part of Bank---Petitioner having already shouldered his responsibility being father of the borrower in terms of jail of 40 days, he could not be further punished or harassed---Even if petitioner was a guarantor, in the presence of original borrower the entire responsibility should not have been thrown on his shoulder for being father of borrower-High Court directed that petitioner should not be further harassed by the Bank, which however, would not mean that Bank could not recover the amount from the main borrower---Petitioner would co-operate by informing the address and whereabouts of the main borrower.

Muhammad Riaz v. District Collector, Okara and 3 others PLD 1997 Lah. 980 and Abdul Latif v. Manager Small Business Finance Corporation and others 2003 YLR 1052 rel.

Petitioner in Person.

Syed Hasnain Kazmi, Asst. A.-G.

2008 C L D 573

[Lahore]

Before Syed Asghar Haider, J

MAHMOOD ALI MALIK---Petitioner

Versus

DEPUTY CONTROLLER, DEPARTMENT OF TOURIST SERVICES and 2 others---Respondents

Writ Petition No.9107 of 2007, decided on 7th March, 2008.

(a) Travel Agencies Act (XXX of 1976) ---

----S.4---Licence, issuance of---Refusal---Similarity of name---Nowhere in the terms mentioned in S.4 of Travel Agencies Act, 1976, it has been mentioned that a person can be refused licence on the ground of similarity of name.

(b) Travel Agencies Act (XXX of 1976) ---

----Ss. 2(b), 4 & 13---Constitution of Pakistan (1973), Arts. 25 & 199---Constitutional petition---Licence, refusal of-Discrimination-Alternate remedy---Grievance of petitioner was that authorities refused him licence for travel agency on the ground of similarity of name-Authorities contended that constitutional petition was not maintainable because petitioner had right of appeal under S.13 of Travel Agencies Act, 1976---Plea raised by petitioner was that authorities had issued licences to many other agencies having similar names and refusal to him was an act of discrimination---Validity---If authorities were prohibited in law to refuse licence on the ground of similarity of first name, they would not have granted licences to other entities-Act of authorities was violative of Art.25 of the Constitution and petitioner was discriminated---Right of appeal was restricted only to a travel agency which had been granted licence under S.4 of Travel Agencies Act, 1976---Petitioner so far was not a "licensee" in terms of S.2 (b) of Travel Agencies Act, 1976 and held no licence, therefore, he could not invoke the right of appeal---Order passed by authorities was set aside and High Court directed the authorities to issue licence to the petitioner---Constitutional petition was allowed accordingly.

Mian Nisar Ahmad for Petitioner.

Syed Iftikhar Hussain Shah, Deputy Attorney General for Respondents.

2008 C L D 697

[Lahore]

Before Syed Hamid Ali Shah, J

AURANGZEB KHAN---Petitioner

Versus

DABAGH (PVT.) LTD.---Respondent

C.O. No.34 of 2007, decided on 7th March, 2008.

Companies Ordinance (XLVII of 1984)--

----S.152---Arbitration Act (IX of 1940), S.32---Summary proceedings---Factual controversy---Rectification of register of shareholders---Specific performance of agreement---Arbitration clause in agreement---Effect---Petitioner asserted that consideration according to terms of agreement had not been paid, while respondent claimed that entire consideration had been paid---Petitioner was also aggrieved of the removal of his name from the register of shareholders---Validity---Agreement contained arbitration clause for settlement of dispute in connection with the agreement in question---Dispute arising under the agreement and non-performance of any of its agreed terms required determination through arbitration which had not been adopted by petitioner---Petitioner sought rectification of register of shareholders on the ground that his name was fraudulently removed from the register but respondent had denied such fact and stated that shares were validly transferred and petitioner had received consideration of shares---Strong unimpeachable evidence was needed to rebut such fact which could be undertaken by recording of evidence after framing of issues---Proceedings before High Court under S.152 of Companies Ordinance, 1984, were summary in nature---Complicated and intricate factual controversy fell outside the ambit of summary proceedings, therefore, High Court had no jurisdiction to entertain and adjudicate upon the claim of petitioner---Petition did not fall within the purview of S.152 of Companies Ordinance, 1984 and it involved a factual controversy---Petition was dismissed in circumstances.

Smt. Mohadevi v. Motiram Roshan Lal Coal Co. AIR 1939 Patna 603 ref.

Kh. Muhammad Saeed for Petitioner.

Ahmad Shehzad Farooq for Respondent.

2008 C L D 708

[Lahore]

Before Muhammad Khalid Alvi and Saif-ur-Rehman, JJ

AKARI LEASING LIMITED through Manager---Petitioner

Versus

JUDGE, BANKING COURT NO.1, MULTAN and another---Respondents

Writ Petition No.271 of 2008, decided on 2nd April, 2008.

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

----S.9---Civil Procedure Code (V of 1908), S.20---Constitution of Pakistan (1973), Art.199---Constitutional petition---Territorial jurisdiction---Determination---Choice of parties---Condition precedent---Borrowers filed suit for rendition of accounts in Banking Court against leasing company---Plea raised by leasing company was that according to lease agreement between the parties Banking Court at place "R" had jurisdiction, therefore, suit filed at place "M" was not maintainable---Validity---Lease agreement did not show its execution at place "R" rather it was executed and signed at place "M"---All necessary ingredients of S.20, C.P.C. had also taken place within the territorial jurisdiction of Court at place "M"---Leasing company failed to point out anything which could even remotely suggest that any partial cause of action had arisen at place 'R"---None of the ingredients of S.20, C.P.C. was available by way of which it could be said that courts at place "R" had jurisdiction to entertain the lis between parties to agreement---Clause of agreement containing jurisdiction of Courts at place "R" could not be enforced under the law---Condition precedent to make a choice from among two or more courts of one court by parties through an agreement was that all the courts including the one chosen by the parties had the jurisdiction under the law---If the chosen court did not qualify the test of jurisdiction, then such agreement could not confer jurisdiction on such Court---Petition was dismissed in circumstances.

State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem 1987 SCMR 393; Zaib Cold Storage and Ice Factory through Sole Proprietor and another v. Messrs Pakistan Industrial Leasing Corporation Limited (PILCORP) 2006 CLD 67 and Banking Equity Ltd. v. Iqas Weaving Mills (Pvt.) Ltd. 2001 CLC 169 ref.

M. Sohail Iqbal Bhatti for Petitioner.

Ch. Shahzad Aslam for Respondent No.2.

2008 C L D 723

[Lahore]

Before Syed Asghar Haider and Hafiz Tariq Nasim, JJ

MUHAMMAD YAHYA AKBAR---Appellant

Versus

MUSLIM COMMERCIAL BANK through Manager and 6 others-Respondents

E.F.A. No.85 of 2007, decided on 1st April, 2008.

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

---Ss. 9, 19 & 22---Appeal to High Court---Suit for recovery of loan---Execution of decree---Plaintiff-Bank filed suit for recovery of loan against borrowers and appellant was a guarantor of one of the borrowers---Suit having been decreed, plaintiff-Bank initiated execution proceedings against appellant/guarantor and the borrowers---Properties belonging to appellant/guarantor and borrowers, which were mortgaged, were put to auction---Court Auctioneers filled schedule of auction to which appellant/ guarantor filed objections before Banking Court for exclusion of his property from auction schedule, which objection was dismissed---Validity---Properties belonging to borrowers, could not be auctioned due to non participation of bidders in respect of their properties but property of appellant/guarantor was auctioned and was confirmed in the name of successful bidder---Appellant levelled certain allegations against Court Auctioneers---Record had shown that at the time of auction, Court Auctioneers, Bank Officials and appellant were present at the spot---Satisfaction of decree against customer/borrower should be through sale/auction of properties of borrowers/principal debtors, however if thereafter decree was not satisfied., the properties of the guarantor could be sold---Properties belonging to borrowers which were put to auction could not be auctioned due to non-availability of the bidders, thus property belonging to appellant/guarantor was put to auction, which was legal as liability was co-extensive qua principal debtor/borrowers and the guarantor---Properties belonging to principal debtors having remained un-auctioned, Court Auctioneers were left with no choice but to sell the property of appellant/guarantor---No illegality having been committed by the Court Auctioneers, impugned order of Executing Court, held, was unexceptionable.

Sh. Azhar Salam for Appellant.

Shahzib Masud for Respondent No. 1.

Syed Haider Ali Shah for Respondent No.6.

Tasawar Hussain Shah for Respondent No.7.

Date of hearing: 1st April, 2008.

2008 C L D 758

[Lahore]

Before Muhammad Muzammal Khan and Syed Humid Ali Shah, JJ

AHMED REHAN ASIF---Appellant

Versus

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

I.C.A. No.181 arising from W.P. No.3344 of 2006, decided on 3rd May, 2007.

Pakistan Environmental Protection Act (XXXIV of 1997)--

----S. 12---Constitution of Pakistan (1973), Art.199---Constitutional petition---Maintainability---Intra-Court appeal---Sole object of filing constitutional petition, in the present case, was to seek protection of individual benefit, at the altar of public interest at large---Petitioner had failed to satisfy the court that impugned action of the authorities was not beneficial to larger interest of community as a whole---Bald allegations were made in the petition and relevant material was suppressed---Such conduct of petitioner disentitled him to a relief, in the extraordinary constitutional jurisdiction---High Court, under its constitutional jurisdiction, could not pass such direction which suited to the business of an individual or a few individuals; larger interest of the society had precedence over individual gains and benefits---Constitutional petition was rightly dismissed in circumstances---Intra-court appeal was dismissed.

Agha Abul Hassan Arif for Petitioner.

2008 C L D 765

[Lahore]

Before Syed Hamid Ali Shah, J

BANK OF PUNJAB through EVP/General Manager---Plaintiff

Versus

GENERTECH PAKISTAN LTD. Through Chief Executive and 2 others----Defendants

C.O.S. No.34 and PLA No.73-B of 2006, decided on 7th March, 2008.

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

----S. 10(3)(4) & (5)---Application for leave to defend suit---Non­compliance with mandatory provisions of S.10(3)(4)(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 would provide for penalty and leave application would merit be rejected---Where the applicants had neither sought amendment of petition for leave to appeal nor had shown any sufficient cause for inability to comply with the mandatory requirements of law, application merited dismissal.

National Bank of Pakistan through Vice-President, Zonal Chief, Multan v. Effef Industries Limited and 11 others 2002 CLD 1431; Bolan Bank Limited through Attorneys v. Baig Textile Mills (Pvt.) Limited through Chief Executive and 6 others 2002 CLD 557; Siddique Woollen Mills and others v. Allied Bank of Pakistan 2003 CLD 1033; Bank of Khyber v. Messrs Spencer Distribution and 14 others 2003 CLD 1406; Zeeshan Energy Ltd. and 2 others v. Faisal Bank Ltd. 2004 CLD 1741; Allied Bank of Pakistan Ltd. through Iftikhar-ul-Haq and Khalid Ishaq v. Mohib Fabric Industries Ltd. through Chief Executive 2004 CLD 716 and Habib Bank Limited v. Messrs SABCOS (Pvt.) Ltd. 2006 CLD 244 fol.

Messrs Ittefaq Industries (Regd.) through Managing Partner and 2 others v. Bank of Punjab through Duly Constituted Attorney 2004 CLD 1356; National Bank of Pakistan v. Al-Asif Sugar Mills Limited and others 2001 MLD 1317; Habib Bank Ltd. v. A.M.B. Graner (Pvt.) Ltd. and others PLD 2001 Kar. 264; City Bank N.A., A Banking Company through Attorney v. Riaz Ahmed 2000 CLC 847; Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931; Messrs C.M. Textile Mills (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587; Habib-ur-Rehman and another v. Judge Banking Court No.4 Lahore and another 2006 CLD 217 and Muhammad Arshad and another v. City Bank N.A. Al-Falah Building, Lahore 2006 CLD 1011 ref.

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

----S. 10--Application for leave to defend suit---Leave petition having been filed on behalf of a company without a valid resolution or authority of the company same cannot proceed.

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

---S. 10---Application for leave to defend suit---Leave application jointly filed by the defendants, not meeting the requirements of law, was dismissed.

(d) Financial Institutional (Recovery of Finances) Ordinance, (XLVI of 2001)---

----S. 10---Dismissal of leave application does not absolve the plaintiff of its primary responsibility to prove its case.

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

----S. 9---Plaintiff, to establish its claim, has to show within contemplation of S.9, Financial Institutions (Recovery of Finances) Ordinance, 2001 that the averments of the plaint are duly supported by statement of account.

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

----Ss. 9, 14 & 15---Creation of equitable mortgage---Requirements---Valid mortgage in. the eyes of law is one which is, in present i.e. disbursement of loan, signing of memorandum and delivery of the deposit of title deed, has taken place at one and the same time---Where, however, the agreement of finance was' signed and executed on 19-7-2003, while memorandum was signed on 28-6-2002, the mortgage did not cover agreement dated 19-7-2003 and the same was not a valid mortgage---Property was under charge, as a charge had been created and registered with Security Exchange Commission of Pakistan, therefore, the property would remain encumbered.

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

----S. 9---Recovery of loan-Plaintiff had established its claim, suit amount was reflected in the statement of account and outstanding amounts were mentioned in the repayment schedule and various documents and letters had proved the existence of loan facility and the disbursement of loan---Suit was decreed for the suit amount along with costs and costs funds with directions to the defendants to make payment accordingly.

M. Salman Masood for Plaintiff.

Munawar-ul-Islam for Defendants.

2008 C L D 823

[Lahore]

Before Syed Asghar Haider and Hafiz Tariq Nasim, JJ

Syed AMJAD HUSSAIN JAFRI---Appellant

Versus

KASB BANK LTD through Manager and 8 others---Respondents

E.F.A. No. 28 of 2008, heard on 24th March, 2008.

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

----Ss. 9, 19 & 22---Civil Procedure Code (V of 1908), O.XXI, Rr.89 & 93---Suit for recovery of loan---Execution of decree--Auction of mortgaged property---Return of purchase money---Suit for recovery of loan filed by plaintiff-Bank having been decreed, Bank had filed execution petition and pursuant to that mortgaged property was directed to be sold---Said property was put to auction, but same was challenged---Banking Court found that property being commercial in nature and its sale price being well below the normal sale price in the market, same could not be confirmed and it was directed that auction purchaser would be returned the bid money and that judgment-debtor would pay 5% of purchase price to auction purchaser in terms of O.XXI, R.89, C.P.C. as well as mark-up at the rate of 5% as purchase money of auction purchaser remained blocked for more than one year---Validity---Judgment-debtor had absolutely no role in the entire, exercise---Property which was sold at a lesser price, its auction was not confirmed---Imposition of any penalty in the shape of interest upon judgment-debtor, in circumstances, was not only unreasonable, but was also unwarranted---Award of purchase money equivalent to 5% and mark-up to the extent of 5% was set aside and appeal was allowed to that extent.

Sajid Mehmood Sheikh for Appellant.

Muhammad Akram Pasha for Respondent No.1.

Faisal Malik Buttar for Respondent.

Nemo for other Respondents.

Date of hearing: 24th March, 2008.

2008 C L D 840

[Lahore]

Before Syed Hamid Ali Shah and Zafar Iqbal Chaudhry, JJ

Messrs PACIFIC LEASING COMPANY LTD. through Executive Vice-President---Appellant

Versus

Messrs BRITISH BISCUITS COMPANY (PVT.) Ltd. through Chief Executive and 2 others---Respondents

R.F.A. No.168 of 2002, decided on 19th May, 2008.

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

----Ss.9 & 10---Contract Act (IX of 1872), S.25---Civil Procedure Code (V of 1908), S. 11 & O.XXI, R.2---Recovery of loan---Principle of res judicata---Applicability---Deciding main suit without deciding pending applications---Decree passed against borrower company was satisfied out of court by new management-At the time of withdrawal of execution proceedings, fresh lease agreement was signed by new management---On failure of new management to satisfy fresh lease agreement, Financial Institution filed suit before Banking Court which was dismissed on the ground of res judicator---Validity---Promise to pay decretal amount in 48 rentals was a valid consideration within the contemplation of S.25 of Contract Act, 1872---Present suit was not based on agreement, which was subject-matter of earlier suit and . default was committed under fresh lease agreement---Banking Court had erroneously found that suit was hit by principle of res judicata and there was bar of O.XXI, R.2, C.P.C.---Judgment passed by Banking Court was not sustainable in the eye of law as the court had proceeded to decide main suit without deciding pending applications---Disposal of suit without disposing of pending applications was violative of law-Judgment and decree passed by Banking court was Set aside and case was remanded to Trial Court for deciding the suit and application for leave to defend the suit on merits within the parameters of law---Appeal was allowed accordingly.

United Bank Limited through Attorneys v. Messrs Home Aids Corporation through Managing Director and 6 others" 2002 CLD 875 and "Sh. Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer" 2004 CLD 1645 rel.

Ashar Elahi for Appellant.

Jawahar A. Naqvi for Respondents.

Date of hearing: 21st April, 2008.

2008 C L D 850

[Lahore]

Before Syed Zahid Hussain, CJ

SULEMAN DAUD---Petitioner

Versus

LAHORE DEVELOPMENT AUTHORITY through Director General ---Respondent

Writ Petition No.7160 of 2007, decided on 21st May. 2008.

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

----Art.25---'Equality' and 'arbitrariness'---Distinction---Similar treatment--Principle---Concept of equality is negation of arbitrariness---Every power has its extent and legal limits---Exercise of such power should be based on fairness and reasonableness---Persons in similar circumstances should have similar treatment, unless differentiation is based upon valid classification, which should not have taint of arbitrariness and that is the hallmark of ideal dispensation of justice.

Justice (R) Fazal Karim at page-871 of Judicial Review of Public Actions rel.

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

----Ss.4 & 8---Constitution of Pakistan (1973), Arts.23, 24, 25 & 199---Constitutional petition---Investment by foreign national Pakistani---Protection of Economic Reforms Act, 1992---Scope---Right to acquire property-Discrimination-Legitimate expectancy, principle of---Applicability---Petitioner being Pakistani was settled abroad and had acquired foreign nationality also---Petitioner invested in Pakistan through foreign exchange remitted from abroad and purchased lands, which lands were acquired by authorities to be included in a housing scheme---Grievance of petitioner was that his land could not be acquired due to protection available to him under Protection of Economic Reforms Act, 1992---Petitioner also contended that authorities had exempted many lands owned by other persons but did not exempt his lands---Validity---Even if it be assumed that all owners of lands could not be treated similarly for any reason, petitioner would still be on better footing having brought in foreign exchange, in claiming exclusion of his land, which was purchased by him, from his foreign remittances---Petitioner was clamouring and craving for exclusion of his piece of property, which was not so large as may be likely to in any way disturb the plan, effectiveness and utility of the housing scheme---Previously as well when the property of petitioner was acquired for some other housing scheme, it was excluded; it could not be again acquired for a similar purpose as on such exclusion petitioner had earned a right to hold the same, which also gave rise to a legitimate expectancy that in future his property would not be subjected to similar acquisition---High Court found petitioner entitled to exclusion of his property from the operation of scheme---Petition was allowed in circumstances.

Mian Zafar Iqbal Kalanauri, for Petitioner.

Muhammad Ghani, Advocate/Legal Advisor L.D.A. for Respondent.

Dates of hearing: 23rd, 28th, 30th April, 2008, 2nd and 12th May, 2008.

2008 C L D 858

[Lahore]

Before Muhammad Ashraf Bhatti and Saghir Ahmad, JJ

MUHAMMAD JAVED AKHTAR---Appellant

Versus

UNITED BANK LTD. and others---Respondents

Execution Appeal No.2 of 2000, decided on 12th March, 2008.

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

----Ss. 9, 19 & 22---Suit for recovery of loan---Execution of decree---Objection petition--Appeal---Appellant, who was son of deceased judgment-debtor, filed two applications before Banking Court to stop execution proceedings and also to restrain auction of the property mortgaged with the Bank, for recovery of loan granted to respondent---Appellant had alleged that loan was granted to respondent on false documents to which the judgment-­debtor/father of appellant was not a party and that his father died prior to the institution of the recovery suit--:Appellant had submitted that no judgment and decree could be passed against a dead person---Respondents admitted position as to factum of death of appellant's father prior to the institution of the suit for recovery of the loan---Ex parte proceedings were ordered in slipshod manner and that too against a dead person on the one hand and the applications disclosing the factum of death of father of appellant were not given any weight on the other, whereas it was the bounden duty of the Banking Court to take care of mandatory provisions of Order XXII, C.P.C.---Judgment and decree passed in the case were nullity in the eyes of law and ineffective and inoperative as against the legal heirs of deceased/judgment-debtor in the case, as same had been passed in relation to property of a dead person which was of no consequence---Since no proceedings could be initiated against a dead person, impugned judgment and decree were set aside by High Court---Suit would be deemed to be pending before the Banking Court---Case was remanded to the Banking Court for its decision afresh accordingly.

Muhammad Naseer v. Mir Azhar Ali Talpur 2001 SCMR 4; Mst. Afshan and another v. IIIrd Additional District and Sessions Judge Karachi (South) City Courts, Karachi and others 2006 CLC 71 and Mian Muhammad Akram and others v. Muhammad Chiragh and others PLD 2003 Lah. 804 rel.

Nadeem Iqbal Chaudhry for Appellant.

Basit Babar Chughtai for Respondents.

Date of hearing: 12th March, 2008.

2008 C L D 889

[Lahore]

Before Syed Asghar Haider, J

Rana MUHAMMAD TARIQ ANJUM---Petitioner

Versus

Messrs IHSAN PROCESSING MILLS (PVT.) LTD. and others---Respondents

C.O. No.55 of 2006, decided on 29th January, 2008.

Companies Ordinance (XLVII of 1984)---

----S. 305---Winding up of Company---Petitioner had sought winding of the company on basis that it was incapable of liquidating its liabilities---Petitioner had contended that the company owed petitioner a sum of Rs.14,25,100 on account of civil works done by the petitioner---Company had accepted its liability---Petitioner had contended that non-payment of amount by the company had entailed winding up of the company under S.305 of the Companies Ordinance, 1984---Facts on record had established that company was not in a position to liquidate its liabilities---No opposition came from any quarter to contest the assertions made by the petitioner---Petition was allowed as prayed for---Official liquidator duly appointed was directed to take over the control of assets of the company and proceed according to law thereafter.

Muqtedir Akhtar Shabbir for Petitioner.

2008 C L D 915

[Lahore]

Before Hafiz Tariq Nasim, J

Messrs STAR AGRO ALLIED MACHINERY INDUSTRIES (PVT.) LTD. through Chief Executive ---Appellants

Versus

CHAIRMAN, COMMERCIAL COURT, PUNJAB AND N.-W.F.P and 2 others---Respondents

Appeal No. 1/C of 2007, decided on 20th May, 2008.

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

----Ss.5A(7), (8) & 5(B)---Criminal Procedure Code (V of 1898), S.249-A---Commercial Court proceedings---Procedure---Order of acquittal in the absence of Prosecutor-Legality---On the information by the appellant that the respondent had illegally retained export proceeds amounting to US$ 7,783,150, the Trade Development Authority of Pakistan filed a complaint against the respondent before the Commercial Court, for violation of the Import and Export Control Act, 1950---Respondent was acquitted by the Commercial Court under S.249-A, Cr.P.C.---Appeal against acquittal---Pleas of the appellant were that as the Prosecutor was yet to be appointed for prosecuting the case before the Commercial Court, and secondly, as there was no application filed by the respondent for acquittal under S.249-A, Cr.P.C., therefore, the order of acquittal could not have been passed---Validity---Where S.5A(7) of the Import and Export (Control) Act, 1950, and S.249-A, Cr.P.C. being the laws relevant to the proceedings before the Commercial Court, provided that without the presence/appointment of the Prosecutor, case could not be proceeded by the Commercial Court, and where there was also an allegation that an application under S.249-A, Cr.P.C. was not filed, the matter could only be resolved by recording evidence of the parties and that too after granting an opportunity to advance the case of the appellant---Commercial Court had passed the order of acquittal under S.249-A, Cr.P.C., in haste without adverting to the provisions of the law---Appeal was allowed and the case was remanded to the Commercial Court for decision on merits after recording evidence.

Majid Ali Wajid and Hammad Khalid Butt for Appellant.

Muhammad Irfan Malik and Tahir Farooq for Respondent No.2.

Arshad Mehmood for Respondent No.3 with Muhammad Usman Ashraf, Assistant Director Legal.

Syed Iftikhar Hussain Shah, Deputy Attorney-General.

2008 C L D 935

[Lahore]

Before Maulvi Anwarul Haq, J

MUHAMMAD YAQOOB and others---Appellants

Versus

Messrs UNITED BANK LTD. and others---Respondents

C.M. 47-B of 1999 in COS No.2 of 1998, decided on 29th January, 2008.

Banking Tribunals Ordinance (LVIII of 1984)---

----Ss. 2(c) & 11--'Customer'---Definition---Suit for recovery of loan---Employee---Directors of the company, who had defaulted, as per plaint, could not at all be termed as customers within the meaning of S.2(c), Banking Tribunals Ordinance, 1984---Judgment and decree to their extent was wholly without jurisdiction.

Mian Nusrat Ullah for Applicants.

Tariq Saleem Sheikh for Decree-holder/Respondent-Bank.

2008 C L D 981

[Lahore]

Before Syed Asghar Haider, J

KHAN AMIR---Appellant

Versus

SARDAR KHAN---Respondent

Civil Revision No.753 of 2003, decided on 7th February, 2006.

Tort---

----Malicious prosecution---Suit for recovery of damages for malicious prosecution---Defendant whose son was murdered, had right to seek justice---Defendant nominated plaintiff in the F.I.R.; it was up to the plaintiff to prove that said act of defendant had an element of malice---Evidence on record clearly reflected that plaintiff had not been able to prove malice against defendant---Other necessary ingredients which lead to a successful action for grant of damages for malicious prosecution were not fulfilled by the plaintiff as he could not substantiate his assertions with quality evidence---Appellate Court below, in circumstances, had rightly concurred with the findings of the Trial Court, which had dismissed suit filed by the plaintiff--Concurrent findings of the Courts below, could not be interfered with in revisional jurisdiction of High Court, when no jurisdictional error, material illegality or irregularity, misreading and non-reading of evidence had been pointed out.

Nayab Ali Dafadar v. Abdul Gani alias Gulu Mia PLD 1969 Dacca 985; Abdul Wahab Khan v. Messrs Pakistan Aviation Ltd., Karachi PLD 1970 Karachi 757 and Muhammad Akram v. Mst. Farman Bi PLD 1990 SC 28 ref.

Naseem Ullah Khan Niazi for Appellant.

2008 C L D 1007

[Lahore]

Before Syed Asghar Haider and Khalil Ahmad, JJ

KHUSHI MUHAMMAD and another---Appellants

Versus

SAJIDA PARVEEN and 4 others---Respondents

E.F.A. No.152 of 2008, decided on 16th June, 2008.

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

----S.19---Civil Procedure Code (V of 1908), S.47 & O.XXI, R.87---Money decree, execution of--Auction of property---Failure of auction-purchaser to pay purchase money---Issuance of sale certificate in favour of second highest bidder after deposit of purchase money at directive of executing court---High Court set aside such order of executing court and ordered for re-auction of property---Satisfaction of decree by judgment-debtor after entering into compromise with decree-holder---Validity---When sale failed, then executing court had to order resale of property by publishing a proclamation, but could not permit second highest bidder to take benefit of auction and be substituted for auction-purchaser-When judgment-debtor opted to pay off decretal amount, then executing court had no option but to go along with such arrangement---Executing court had power under S.47, C.P.C., to decide all questions relating to discharge and satisfaction of decree---Second highest bidder had no locus standi to challenge satisfaction of decree by judgment-debtor---High Court dismissed appeal in circumstances.

Muhammad Sharif Chohan for Appellants.

Tahir Attique Peracha for Respondents.

2008 C L D 1069

[Lahore]

Before Khawaja Farooq Saeed and Syed Hamid Ali Shah, JJ

STATE LIFE INSURANCE CORPN.---Appellant

Versus

Mst. SADAQAT BANO---Respondent

R.F.A. No.5 of 2008, decided on 8th July, 2008.

Insurance Ordinance (XXXIX of 2000)---

----S. 80---Limitation Act (IX of 1908), Art.181---Scope of application of S.80, Insurance Ordinance, 2000---Repudiation of claim by Insurance Company on account of concealment of his ailment by policy-holder---Limitation---Policy cannot be called in question on the grounds of misrepresentation, false statement or suppression of material facts, after two years from the date when the policy was originally effected---Period of two years, even in cases where the policy was revived and renewed, would be counted from original date of the policy in question---Principles.

In the present case deceased was policy-holder, who insured himself under Policy against a yearly premium commencing from 15-10-1992. The premium was paid till October, 1994, whereafter, it was discontinued. The policy-holder revived the policy on 31-12-1998, after complying with requisite formalities, including a declaration of good health on a printed form. Insured breathed his last on 28-4-2000 and his widow being nominee, lodged the insurance claim of her husband before the appellant, which was repudiated by the Insurance company on account of concealment of his ailment at the time of revival of Policy.

A Policy cannot be called in question on the ground of misstatement, after two years of it's effectiveness, within the contemplation of section 80 of Insurance Ordinance, 2000.

According to section 80, Insurance Ordinance, 2000 an Insurance Policy, cannot be called in question on the grounds of misrepresentation, false statement or suppression of material facts, after two years from the date when the Policy was originally effected. The period of two years, even in cases where the Policy was revived and renewed, would be counted from original date of the Policy in question. The application of provisions of section 80 is contingent upon fulfilment of following conditions:--

(i) The inaccurate statement pertains to a matter which is material, or the facts which are suppressed, the disclosure thereof was material.

(ii) The suppression must be fraudulent and made by Policy-holder.

(iii) The Policy-holder, at the time of making the statement had known that statement was false and it was material to disclose the facts suppressed. [p. 1076] C

Disclosure of material facts as to ones health, is ticklish issue. What is material again depends upon the circumstances of each case. Good health means reasonably good health. A warranty of good health can never mean that a person has not in him the seeds of disorder. One is born with seeds of mortality in it. A person can be ignorant about his health or about the deadly disease, which has its roots in him. A person has normally a general idea of his health. Then question arises as to when the contract of insurance becomes voidable at the option of insurer. Non-disclosure relates to the facts which are in the knowledge of the person making the statement. A person who is himself unaware of his ill health, can make an innocent statement that he is not suffering from disease/illness. This statement cannot be used against such a person. A statement is fatal only when person making the statement deliberately and wilfully suppresses the material facts, knowing that disclosure of such facts was material and facts were fraudulently suppressed. Three conditions, are essential and necessary for repudiation of insurance contract or to invoke provisions of section 80 of the Insurance Ordinance (XXXIX of 2000).

Deceased had not made false statement at the time of revival of the policy and failed to disclose the factum of his heart ailment. The Policy-holder performed laborious duty on a heavy duty vehicle, in extreme weather conditions, in Bahrain. He, in the form pertaining to the history of patient had supplied information, which shows that deceased was confident of his good health. Insurance company on the other hand had failed to adduce any cogent evidence to the effect that Policy-holder was aware of his ailment and had deliberately concealed and made fraudulent misrepresentation. An entry in "Pre Angro Information Form" which had not been entered/incorporated by the deceased himself, does not establish or prove the factum of non-disclosure.

Admittedly the Article 181 of the Limitation Act, 1908 applies to the present case. The claimant/respondent approached Wafaqi Mohtasib and then contested the order of President before High Court in it's writ jurisdiction. The matter thereafter remained pending before apex Court and on remand during the pendency of writ petition, the Insurance Tribunal was constituted. The writ petition was withdrawn and matter was agitated before Insurance Tribunal. The application was moved before Insurance Tribunal, on its constitution. Held, the application was within limitation as rightly held so by the Tribunal.

Norwich Union Life Insurance Society v. Mst. Zainab Bibi 1981 CLC 1722; State Life Insurance Corporation v. Mst. Sarwat Kazmi 1979 SCMR 295; State Life Insurance Corporation v. Mamoor Khan 1993 CLC 790; Messrs Burjor Ardeshir Industries Ltd. Karachi v. The Employers Liability Assurance Corporation Ltd., Karachi and another PLD 1970 Kar. 462; Mohsin A. Rehman v. Messrs Premier Insurance Company of Pakistan Ltd. PLD 1967 Kar. 204; Mithoolal Nayak v. Life Insurance Corporation of India AIR 1962 SC 814; Santosh Kumar Gupta v. Indian Life Insurance Corporation AIR 2000 Rajisthan 327; Life Insurance Corporation of India v. Suit Sosamma Punnah AIR 1945 Ker. 230; Mst. Irshad Begum v. State Life Insurance Co. 2006 YLR 1186 and York v. Yorkshire Insurance 1918 1 KB 662 ref.

Ibrar Ahmad for Appellant.

Liaqat Ali Butt for Respondent.

Date of hearing: 21st May, 2008.

2008 C L D 1114

[Lahore]

Before Maulvi Anwarul Haq, J

ALTAF HUSSAIN SAJID---Appellant

Versus

MUHAMMAD ARIF---Respondent

F.A. No.41 of 2008, heard on 2nd July, 2008.

Civil Procedure Code (V of 1908)---

----O. XXXVII, R.2---Negotiable Instruments Act (XXVI of 1881), S.4---Stamp Act (II of 1899), S.2(5)(b) & (20)---Suit for recovery4of amount on basis of Promissory Note (pro note) signed by witnesses---Maintainability---Such document signed by defendant (its maker) contained unconditional undertaking to pay certain amount to plaintiff or to his order---Such document fulfilled all conditions prescribed by S.2(20) of Stamp Act, 1899 read with S.4 of Negotiable Instruments Act, 1881---Such document was not a "bond" within meaning of S.2(5)(b) of Stamp Act, 1899---Mere signing of such document by witnesses would not change its nature or lose its significance as negotiable instrument within meaning of O.XXXVII, C.P.C.---Suit was maintainable on basis of such document---Principles.

Abdul Rauf v. Farooq Ahmed and another PLD 2007 Lah. 114 not fol.

Muhammad Ashiq v. Rana Tariq Mahmood 2006 CLD 865 ref.

Muhammad Zafar v. Dr. Jehan Ara Ahmad 2002 CLD 257 fol.

Qazi Zia Zahid for Appellant.

Respondent ex parte.

Date of hearing: 2nd July, 2008.

2008 C L D 1128

[Lahore]

Before Syed Qalb-i-Hassan, J

MUHAMMAD AZAD----Petitioner

Versus

Malik ZAHOOR----Respondent

Civil Revision No.605 of 2006, decided on 5th May, 2008.

Civil Procedure Code (V of 1908)---

----O. XXXVII, Rr.1, 2 & 3---Suit for recovery of amount on basis of cheque---Application for leave to appear and defend suit---Granting leave subject to furnishing a Bank guarantee---Trial Court accepted application and defendant was allowed to appear and defend suit subject to furnishing of Bank guarantee equivalent to the claim of plaintiff---Defendant had challenged condition imposed in impugned order---Grant of conditional or non-conditional leave having direct nexus with plausibility of defence, ultimate success or failure in the suit, was no consideration for refusal or grant of leave, rather, consideration was that the grounds taken in the application for grant of permission to defend the suit, were plausible and defendant had arguable case---On the face of unrebutted assertion of the plaintiff and supported by the documents executed by the defendant from time to time acknowledging his liability to amount claimed against him---Defendant had already received a considerable amount through an agreement to sell---When possession of the land was still with him along with the possession of house handed over to him through Jirga (agreement), which was also leased out by him on account of demarcation of land, which had not been done by any default of either party, it could not be said that the conditions of Jirga (agreement) had not been fulfilled---Exercise of discretion by the Thal Court in granting leave to appear and defend the suit on condition of furnishing Bank guarantee, did not suffer from any infirmity, in the circumstances of the case.

Mian Rafique Segal and others v. Bank of Credit and Commerce International (Overseas) Limited and others PLD 1996 SC 749 rel.

Qausain Faisal Mufti for Petitioner.

Miss Robina Shaheen for Respondent.

Date of hearing: 18th April, 2008.

2008 C L D 1160

[Lahore]

Before Maulvi Anwarul Haq and Hafiz Tariq Naseem, JJ

PACKAGES LIMITED through Director and Finance Manager---Appellant

Versus

DIRECTOR GENERAL, ENVIRONMENTAL PROTECTION AGENCY, LAHORE and another---Respondents

Environmental Appeal No.161 of 2008, decided on 19th May, 2008.

Pakistan Environmental Protection Act (XXXIV Of 1997)---

---Ss. 17, 22 & 23-Appeal---Environmental hazards---Protection--Complaints had started coming in about environmental hazards being caused by the unit of appellant as far back as in year, 1999 and proceedings were conducted by the concerned agency---Environmental Protection Agency, after notifying the appellant of the reports regarding pollution, suggested remedial measures---Order passed by the Agency was maintained by Environmental Protection Tribunal---Validity---Appellants had never seriously questioned the fact that effluents were being polluted; 'it had been intended to take measures for reduction of pollution and even it was suggested that the unit was being wound up but the needful had not been done---High Court did not find any ground to interfere either with the judgment passed by the Tribunal or Environmental Protection Order---Appeal was dismissed in circumstances.

Altaf-ur-Rehman Khan and Jawad Hassan for Appellant.

2008 C L D 1214

[Lahore]

Before Maulvi Anwarul Haq, J

SAUDI PAK COMMERCIAL BANK LIMITED through Authorized Officers---Plaintiff

Versus

PAK INTERNATIONL EXPORTS through Sole Proprietor and 10 others---Defendants

Suit No.47 of 2006, decided on 28th May, 2008.

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

----S. 10---Petition for leave to defend the suit---Availing or disbursement of the facility of finances had not been denied---Execution of any of the documents relied upon by the Bank was also not denied---Suit was filed by the duly authorized persons of the Bank---Applications for leave to defend suit contained vague and nebulous allegations---Defendants had denied the execution of any guarantee and stated that mortgage documents had been prepared fraudulently through Halqa Patwari---Such denials being without any substance, no plausible defence in law was made out in the petition for leave to defend the suit.

Sulman Masood for Plaintiff.

Nemo for Defendants.

2008 C L D 1226

[Lahore]

Before Syed Asghar Haider, J

WASEEM IQBAL---Petitioner

Versus

TANVEER AHMAD---Respondent

Civil Revision No.831 of 2008, decided 31st July, 2008.

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

----O. VII, Rr.1 & 2---Recovery of money---Negotiable instrument---Summary procedure---Object and scope---Summary procedure for trial of suits have been contemplated by provisions of O.XXXVII, C.P.C.---Such procedure normally applies to commercial transactions and can be filed on the basis of bill of exchange, hundi, promissory note and cheque etc.---Purpose of O.XXXVII, C.P.C. is to ensure decision of dispute on one. hand and to limit right of defence of delinquent defendant to defend suit unless he obtains leave of the court by showing good cause---Such being a special procedure, therefore, every provision enacted is required to be adhered to and strictly followed.

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

----O.XXXVII, Rr.1 & 2, Form 4, Appendix B to Schedule & S.115---Recovery of money---Ordinary notice, issuance of--Application for leave to defend the suit---Limitation---Application filed by defendant was dismissed by trial Court being barred by limitation---Plea raised by defendant was that summonses in Form 4 to Appendix B of C.P.C. were not issued and he was summoned through ordinary notice, therefore, application for leave to defend could not be dismissed---Validity---To ensure effective service of defendant, law had made it incumbent and mandatory that summons be issued in Form IV of Appendix B, of C.P.C.---Though the suit was filed under the provisions of O.XXXVII, C.P.C. but summons/notice issued was not in Form IV of Appendix B, therefore, the suit lost its nature and character and was thus required to be tried as a normal suit---Bar of filing of application to obtain leave to defend the suit was wrongly applied---Filing of application being not a requirement, therefore, dismissing the same on the ground of limitation was improper---High Court in exercise of revisional jurisdiction set aside the order passed by Trial Court and directed the trial Court to proceed in accordance with the procedure devised for ordinary civil suits, itself or by a Court of competent jurisdiction---Revision was allowed accordingly.

Sh. Abdul Majid v. Syed Akhtar Hussain Zaidi PLD 1988 SC 124 and Zubair Muhammad v. United Bank Limited 2004 CLD 112 rel.

Atta-ul-Mohsin Lak for Appellant.

Ms. Gulzar Butt for Respondent.

Date of hearing: 14th July, 2008.

2008 C L D 1252

[Lahore]

Before Syed Hamid Ali Shah and Khawaja Farooq Saeed, JJ

TARIQ RAFIQUE SHEIKH---Appellant

Versus

CITI BANK N.A. through Authorized Attorney---Respondent

R.F.A. No.167 of 2004, heard 27th June, 2008.

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

----S. 10 (8)---Leave to defend the suit---Preconditions---Essentials for grant of leave are questions of law and fact which require determination through recording of evidence.

(b) Banker and customer---

----Lease finance---Liability of hirer---Scope---Under Lease finance the liability of hirer arises only when leased assets are delivered by hire grantor.

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

----S.2 (d)(i)---Word "lease"---Connotation---Essential of valid lease is delivery of leased assets---There is no lease when there is no "lease property"----Lease commences when lease assets are delivered and the date on which parties signed lease agreement is not material in such regard---Legal and valid lease is one where hire grantor has delivered possession of leased assets to hirer---In absence of possession, the rights and obligations of hire grantor and hirer are not created in the eyes of law.

The Concise Oxford Dictionary; Black's Law Dictionary 6th Edition; Lease Finance and Hire Purchase" by Vinod Kothari P.7; Karsales (Harrow) Ltd. v. Wallias" (1956) All ER 866; Associated Japanese Bank (International) v. Credit Du Nord SA and another (1988) 3 All ER 902 and Domestic Electric Rentals Ltd. V. Dowson" (1943) LJ CCR 31 rel.

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

----Ss. 9 & 10---Recovery of finance---Lease agreement---Non-­delivery of possession of hired asset---Bank filed the suit on the basis of lease agreement, whereby a car was leased to defendant---Banking Court did not allow application for leave to defend and decreed the suit in favour of bank---Plea raised by defendant was that though he signed lease document but possession of car was delivered to his employer, registration was also in the name of 'his employer who was in fact using the same---Validity---Bank did not prove or establish that leased car was delivered to defendant and remained in his use---Registration book of leased car showed that its possession- was with another person---Banking Court without determining factum of delivery of possession proceeded to pass decree which was not legally sustainable---High Court in exercise of appellate jurisdiction, set aside judgment and decree passed by Banking Court, granted leave to defend the suit to defendant and remanded the case for decision afresh on merits--Appeal was allowed accordingly.

Raja Zaheer-ud-Din Babar for Appellant.

Muhammad Rasheed Qamar for Respondent.

Date of hearing: 27th June, 2008.

2008 C L D 1281

[Lahore]

Before Syed Shaheen Masud Rizvi and M.A. Zafar, JJ

Rana MUHAMMAD IRFAN AKRAM and others---Appellants

Versus

ALLIED BANK LTD. and others---Respondents

F.A.O. No.22 of 2008, decided on 19th May, 2008.

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

----Ss. 19 & 22---Civil Procedure Code (V of 1908), O.XXI, Rr.66 & 90---Execution of decree---Sale of mortgaged property---Objection against such sale---Appeal to High Court---After conduct of auction of mortgaged properties, the decree-holder/Bank and one of judgment-debtors filed objection petitions against sale of said properties alleging that same had been sold away at a throwaway price, whereas the value of the properties was much higher---Banking Court holding that the properties had not been sold properly and lawfully and auction proceedings lacked transparency, set aside the auction conducted by the Court Auctioneer in favour of auction purchasers, with further direction to refund the auction price received from the successful bidders/appellants---Said auction purchasers had filed appeal against judgment of the Banking Court---Both judgment-debtors and decree-holder/Bank had concurrently alleged that properties in question had been sold on a throwaway price and requested not to confirm sale in favour of the appellants/successful bidders---Validity---Held, it was the duty of Executing Court to protect the rights of the parties, which were not to be jeopardized and sacrificed at the altar of execution of decree---In execution of decree, proper price should be fetched through the sale of property and were not to be sold at throwaway and paltry price---Highest bidder, would not earn any edge over on the basis of fake auction or collusive sale and auction was always subject to confirmation of Executing Court---Appeal was dismissed and Bank was directed to refund the amount of sale to auction purchasers accordingly.

Jamshed Iqbal Khakwani for Appellants.

2008 C L D 1155

[Peshawar]

Before Muhammad Alam Khan, J

ABDUR REHMAN KHAN---Appellant

Versus

YAQOOB ---Respondent

Regular First Appeal No.15 of 2005, decided on 3rd June, 2008.

Civil Procedure Code (V of 1908)---

----O. XXXVII, Rr.2, 3 & S.96---Suit for recovery of amount on basis of pro note---Leave to defend suit---Trial Court after hearing the parties and evaluating the material on record, dismissed the suit through impugned judgment which was challenged in appeal---Validity---Record had indicated that the Trial Court had not properly appreciated the evidence on record and impugned judgment and decree needed to be set aside---Plaintiff had successfully proved his claim. through cogent and reliable evidence by producing scribe of the pro note who had verified the contents of the pro note duly entered in the relevant register---Trial Court had not adverted to that important fact of proving the execution of pro note and had non-suited the plaintiff on the sole ground that payment before the marginal witnesses at the time of execution of pro note, was not proved---Once the execution of the pro note was proved, then the burden would shift to the defendant to prove that the pro note was without consideration--If, on the record, it was proved that the consideration was admitted to have been passed on to the debtor before the marginal witnesses and scribe of the documents, that would be .sufficient proof of payment of consideration---When the claim of the plaintiff was duly proved by the evidence of prosecution witnesses in support of the pro note with regard to the suit money, the Trial Court was required to have taken into consideration the same and should not have drawn the impugned conclusion---Adverse findings recorded by the Trial Court on various issues in the judgment impugned in the appeal were set aside---Impugned judgment and decree of the Trial Court was set aside and decree for recovery of amount in question, was passed in favour of the plaintiff against the defendant with simple interest at the rate of four per cent per annum.

Salar Abdur Rauf v. Mst. Barkht Bibi 1973 SCMR 332; Muhammad Boota v. Faiz Ahmad 1979 SCMR 465; Mst. Sajida Abbas Zaidi v. Syed Arshad Ali Jaffri 1990 CLC 1018 and Muhammad Ashiq and others v. Niaz Muhammad and others PLD 2004 Lah. 95 ref.

S. Abid Hussain Bukhara for Appellant.

Muhammad Waheed Anjum for Respondent.

Date of hearing: 20th May, 2008.

2008 C L D 1167

[Peshawar]

Before Muhammad Alam Khan, J

DERA CABLE NETWORK LTD. through, Chief Executive and 3 others---Appellants

Versus

PAKISTAN ELECTRONIC MEDIA REGULATORY AUTHORITY (PEMRA) through Chairman and 5 others---Respondents

R.F.A. No.48 of 2007, decided on 19th May, 2008.

Pakistan Electronic Media Regulatory Ordinance (XIII of 2002)---

----S. 30-A [As amended by Pakistan Electronic Media Regulatory Authority (Amendment) Act (II of 2007)]-Application for permission to install cable network---Dismissal of application---Appeal---Principles of natural justice, violation of---Appellants submitted application to the Authority supported by two demand drafts for the issuance of licence---Authority, by a short order through a letter communicated to appellants, informing them that there being already functioning four cable networks, no scope existed for the issuance of further licence---Impugned order had been passed at the back of appellants and no notice of hearing had been given to them---Effect---Appellants, who had a right of hearing had been deprived of their right which could not be denied to them, especially in the circumstances when no notice of hearing had been issued to them---Not only in judicial proceedings, but also in administrative actions, petitioner or appellant, as the case may be, was always entitled to a notice or a chance of hearing---Even, in a lis pending in Administrative Tribunals or Quasi-Judicial Tribunals, the right of hearing of a party was a must which was derived from natural justice as no body could be condemned unheard---Impugned order had revealed that same was 'cursory, non-speaking and violative of law and was liable to be struck down---Impugned order was set aside and matter was remitted to the Tribunal constituted under Pakistan Electronic Media Regulatory Authority Ordinance, 2002 to re-decide the same afresh strictly in accordance with law after giving an opportunity of hearing to the appellants.

Baldvin and Francis Ltd. v. Patents Appeals Tribunal 1959 AC 663 and Utility Stores Corporation of Pakistan Ltd. v. Punjab Labour Appellate Tribunal and others PLD 1987 SC 447 ref.

Abdul Qayyum Qureshi for Appellants.

Irfan Khan Taja Khel for Respondents.

Date of hearing: 19th May, 2008.

2008 C L D 1171

[Peshawar]

Before Muhammad Raza Khan, CJ

Haji MUHAMMAD HUSSAIN and another---Petitioners

Versus

D.C.O. DIR UPPER and another---Respondents

Civil Revision No.1075 of 2007, decided on 5th May, 2008.

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

----S.21(9)---Specific Relief Act (I of 1877), Ss. 54 & 55--Air and noise pollution---Suit for perpetual and mandatory injunction---Jurisdiction of civil court---Plaintiff sought a perpetual injunction against defendant with a purpose to restrain defendant from operating the stone crushing plant near the residential area of plaintiff---Plaintiff also prayed for mandatory injunction to direct the defendant to remove the plant and for cancellation of licence of defendant---Court below concurrently returned plaint to the plaintiff for submission to the appropriate forum as civil court had no jurisdiction in the matter---Both courts below found that in view of the provisions of the Pakistan Environmental Protection Act, 1997, civil court did not have the jurisdiction to hear and decide the suit relating to pollution---Validity---Refusal to exercise jurisdiction by the courts below, indicated lack of appreciation of the nuisance created by a Stone Crushing Plant---Location of the disputed plant near the residential area at the road side was confirmed and it was explained that under the instruction of the concerned Authorities, defendant had taken various steps to comply with the legal provisions for minimizing the pollution, by developing water sprinkling filter system etc., whereby environment had been protected from the air pollution-Effect--Entire effort of local Authorities for the prevention of pollution, had focused on the dust, however, the fact of noise pollution had not been properly evaluated---Noise created by unloading the stone at crushing site and process of crushing as well as granting thereof, would certainly create noise, in addition to dust which could be unbearable for the nearby residents---Deeper appreciation would lead to the conclusion that the Pakistan Environmental Protection Act, 1997 would not satisfy the protection of all the civil rights of the citizens, which could be adversely affected by an irresponsible entrepreneur---Plaintiff had asked for the prohibitory and mandatory injunction, which was the exclusive jurisdiction of the civil court-Plaintiff had also prayed for cancellation of licence for the installation of Stone Crushing Plant issued by the District Co-ordination Officer---Such part of the prayer of the plaintiff did not fall within the competence of any of the Authorities, Magistrate or Tribunal under Environmental Protection Act, 1997---Additional prayer included in the plaint related to the recovery of damages, which certainly was the exclusive jurisdiction of the civil court---Even otherwise, determination of question, whether an act or omission by the defendant, whereby civil right of a, person or the environment of an area was being adversely affected was a pure question of fact, which could be determined after recording evidence---Return of plaint through the impugned order, was not in conformity with the established practice---Impugned judgments of both the courts were set aside and matter was remanded to the Trial Court for adjudication of the suit on merit after recording evidence.?

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

----Ss. 2(xxxiii) & 21-Purpose of Pakistan Environmental Protection Act, 1997---Purpose of Pakistan Environmental Protection Act, 1997 was to protect, conserve, rehabilitate and improve the environment for the prevention and control of pollution and promotion of sustainable development-Not only noise, but air pollution and other factors disturbing the ecology bio diversity or the health of the citizen, was the major aim of said lain---Scheme of the statute, gave a look of an impressive and protective instrument which eliminated the possibility of exercise of jurisdiction by any other forum including the civil Court; however, the deeper appreciation could lead to the conclusion that the law, did not satisfy the protection of all the civil rights of the citizen which could be adversely affected by an irresponsible entrepreneur whereby nuisance could be caused to the citizens and in addition to the potential damage to health, inconvenience faced by such citizen would go unchecked.?

Abdul Latif Afridi for Petitioners.

Asghar Khan for Respondents.

Date of hearing. 5th May, 2008.

2008 C L D 385

[Quetta]

Before Mehta Kailash Nath Kohli and Muhammad Nadir Khan, JJ

SALEH MUHAMMAD and 2 others---Appellants

Versus

Messrs UNITED BANK LIMITED---Respondent

R.F.A. No.14 of 2004, decided on 15th November, 2007.

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

----Ss.2(c)(d) & 9---Civil Procedure Code (V of 1908), Ss.9, 96 & O.VII, R.2---Suit for recovery of amount---Jurisdiction of civil court-Suit for recovery of amount with damages/compensation filed by appellants against Bank was dismissed by the Trial Court---Claims relating to advancement of loan, furnishing of Bank guarantee, mark-up extending in favour of the Bank, were triable by Banking Court constituted under, Financial Institutions (Recovery of Finances) Ordinance, 2001; however, any liability claimed by any person, who was not figured or contemplated by word 'customer' and finance as defined in S.2(c)(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001, could not institute a suit---Bank though. had admitted in the written statement that account was opened by the appellants, however the amount claimed by appellants was not accepted to be due---Claim and the subject-matter of the suit filed by the appellants was triable by the civil court and same did not fall within the ambit of S.9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Trial Court had properly appreciated the evidence on record and had concluded that the claim put forth was not based on genuine. assertions and the receipts had been made afterwards---Record also showed that the then Manager of the Bank, who had committed fraud, was neighbour of the appellants---Enquiry committee had come to the finding that said record did not tally with their available record --Witnesses produced by the plaintiff had not corroborated the figures of amount claimed---Issues on merits had been rightly decided in favour of the Bank---In absence of any misappreration or misreading of record, appeal against judgment of the Trial Court having no merits, was dismissed with costs.

Muhammad Qahir Shah for Appellants.

Muhammad Ayaz Sawati for Respondent.

Date of hearing: 24th October, 2007.

2008 C L D 3

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

In the matter of: MUNAF SATTAR, SECURITIES (PRIVATE) LIMITED

Show-Cause Notice No.SMD-SOUTH/SCN/100/07, dated 1st August, 2007, decided on 12th October, 2007.

Securities and Exchange Ordinance (XVII of 1969)---

----S.21---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.29(2)---Brokers and Agents Registration Rules, 2001, Rr.8 & 12, Third Schedule---Non-compliance with applicable laws and regulations---Proceedings were initiated through show-cause notice issued to company by the Securities and Exchange Commission under R.8 of the Brokers and Agents Registration Rules, 2001 for violation of R.12 and clause A-5 of Code of Conduct in Third Schedule to the Rules---Inquiry Officer's report mentioned 553 instances of Potential Blank sales pursuant to the Commission's letter---Most of the errors were accepted by the company, which demonstrated its willingness to co-operate with the Commission and abide by the laws and regulations-Alleged blank sales had been established which were result of error and did not represent any intention of distorting the market or damaging public interest---Taking lenient view in the matter, punitive action under R.8 of Brokers and Agents Registration, Rules, 2001 was not taken by the Commission.

Munaf Sattar CEO and Saleem Chamdia Present.

2008 C L D 6

[Securities and. Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

In the matter of: ZAFAR MOTI CAPITAL SECURITIES (PVT.) LTD. ("ZMCS") and another

Show-Cause Notice No.SMD-SOUTH/IU-KHI(619)/2007 dated 20th August, 2007, decided on 5th October, 2007.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss.5-A, 18 & 22---Brokers and Agents Registration Rules, 2001, Rr.8 & 12-7-Contravention of requirement of the Code of Conduct---Imposition of penalty---Proceedings were initiated through show-cause notice to the company for contravention of the requirements of the Code of Conduct laid down in the Third Schedule to Brokers and Agents Registration Rules, 2001 and for giving false and incorrect statements/information to the Securities and Exchange Commission---Commission had received various complaints from investors alleging that a person who was not registered and/was not authorized person, his activities in dealing in Securities and effecting transactions in relation thereto on behalf of clients/investors, were illegal and in complete disregard of the relevant securities laws and rules---Company and its Chief Executive Officer, were in full knowledge of the facts surrounding the illegal activities being conducted by said alleged unauthorized person---False and incorrect statements made by the company and its Chief Executive Officer to the Commission, was a clear violation of S.18 of Securities and Exchange Ordinance, 1969---Said unauthorized person while running his business was using stationery including Account Opening Forms and other things depicting that his organization was a branch of the company---Company having wilfully contravened provisions of S.18 of Securities and Exchange Ordinance, 1969, was liable to be penalized under S.22 of the Ordinance---Company was directed to pay Rs.5,000,000 (Five Million) with direction to pay/settle all claims of the complainants within specified period`, failing which its registration as a broker would be suspended by the Commission for a period of one year.

Zafar Siddiq Moti and Javed Ibrahim present.

2008 C L D 17

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

In the matter of: SEARLE PAKISTAN LIMITED

Show-Cause 'Notice No.EMD/233/596/2002/7456-7463, dated 15th July, 2007, decided on 24th September, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss.208, 254, 473 & 476---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.20(6)---Investment in associated companies and undertakings---Imposition of penalty---Annual audited accounts for the relevant year showed that company had receivable balance as "Trade Debts" and "Other Receivables" from its associated concern-Company, in circumstances had violated provisions of S.208 of Companies Ordinance, 1984 and Directors of the company were liable for the penalties---Chief Executive and Director of the company had breached their fiduciary duty by providing unnecessary 'benefits to its associated undertakings where they. were major share-holders and thereby had acted against the interest of its share­holders---Chief Executive and Directors did not exercise due care while entering into transaction with associated undertakings, which had established that the Chief Executive and all the Directors of the company had intentionally and deliberately avoided complying with the mandatory provisions of Companies Ordinance 1984---Default, in circumstances was deliberate and wilful and the Chief Executive and the Directors had made themselves liable for, fine as provided under subsection (3) of S.208 of Companies Ordinance, 1984---Directors of the company, in circumstances, deserved no sympathy on that account, but in view of the fact that default was admitted, instead of imposing . maximum fine, an aggregate penalty of one million and four hundred thousand rupees only was imposed on all the Directors accordingly---Company was directed to immediately appoint statutory auditor or a firm of Chartered Accountants meeting the criteria given in the provisions of S.254 of Companies Ordinance, 1984 which would examine the transaction with associated undertakings.

S.M. Nasir Raza (Director, Mehmood Idrees Qamar & Co.; Chartered Accountants) Present.

2008 C L D 120

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director, (Securities Market Division)

AZIZ FIDA HUSSAIN & COMPANY (PVT.) LTD.: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/95/07, dated 31st July; 2007, decided on 29th October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Making blank sales--- Regln.4 of Central Depository Company of Pakistan Regulations, 2002, provided that blank sales were not admissible---Findings of the Enquiry Officer had revealed 7 instances of blank sales during the review period---Contention of the company was that the instances identified by the Enquiry Officer were in fact not blank sales and it submitted evidence in support of its claim---Company further submitted that respective client had pre-existing interest at the time of sale---Company was strongly advised by the Commission that the evidence provided pursuant to the show-cause notice should have been produced before the Enquiry Officer and submitted to the Commission in response to the Commission's letter, wherein the company was provided with an opportunity to respond on the issues raised by the Enquiry Officer.

(b) Brokers and Agents Registration Rules, 2001---

----R.8---General Rules and Regulations of Karachi Stock Exchange (Guarantee) Limned, Regln.74---Missing account opening forms---Regulation 74 of General Rules and Regulations of Karachi Stock Exchange (Guarantee) Limited, provided that the member of the Exchange would adopt the standardized account opening form attached as Form 1, to said regulations for their new account holders with immediate effect---Findings of the Enquiry Officer had revealed that the account opening forms of 9 customers were not available with the company---Company submitted pout of 9 account opening forms and for the remaining forms had contended that one of those pertained to an inactive house account, while the other pertained to an institutional client, which refused to fill the forms over certain disagreement over standard terms and conditions---Considering the fact that, non-submission of account opening forms by institutional client was an industry-wise problem which was faced by all the brokers and the tow number and frequency of the cases of forms was not obtained from customers-Lenient view was taken of the matter by the Commission---No punitive action was taken against the company under Rule 8 of Brokers and Agent Registration Rules, 2001 as a caution would be suffice---Company was directed to ensure that no individual or institution would be admitted as a client, unless it submitted a duly filled account opening form and that the company should clearly direct all its existing clients to immediately submit duly filled account opening forms.

(c) Central Depository Company of Pakistan Regulations, 2002---

----Regln. 6.2A-1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statements---Regulation 6.2A-1 of Central Depository Company of Pakistan Regulations, 2002, provided that every participant would send by the 10th day of every month to all sub-account holders maintaining sub-account under the control of such participant holding balance statements showing the number of every book-entry security entered in every said sub-account as at the end of the preceding month-Findings of the Enquiry Officer had revealed that company did not have a practice to send the C.D.C. balance statements to all of its customers by the 10th of each month---Company had admitted that C.D.C. balance statements were provided only to the active clients and whenever requested by any client as sending the same to all of its clients raised its operating costs and placed unnecessary burden on the company---Commission was cognizant of the practical difficulties associated with sending the C.D.C. balance statements to all customers specially in case of brokerage houses with a large clientele comprising significant number of dormant accounts and acknowledging the fact that company was following the requirements of the C.D.C. Registration---Taking a lenient view of the matter,, no punitive action was taken against the company under S.28 of Central Depositories Act, 1097, caution would suffice---Company was directed to ensure that full compliance would be made of the Regulations in future.

Aziz Fida Hussain, CEO and Irfan Aziz, Director Present.

2008 C L D 126

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

FARAN SUGAR MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/340/2006, dated 13th September, 2007, decided on 24th October, 2007.

Companies Ordinance (XLVII of 1984)----

----Ss. 246 & 476---Failure to transmit the notices of Extraordinary General Meetings---Imposition of penalty---Company had been established to have failed to transmit notices of Extraordinary General Meetings on two dates to Securities and Exchange Commission in the manner prescribed in Circular No.5 of 2002---Effect---Failure to transmit notice Of said meetings, could be regarded as equivalent to making an attempt to hide the correct and timely information about an important transaction from the Commission---Chief Executive and the Company Secretary, by their repetitive faults, had made themselves liable for penal action under the provisions of subsection (2) of S.346 of Companies Ordinance, 1984---Keeping in view the fact that notices of Extraordinary General Meetings were sent to the share-holders within the stipulated time and also the same was published in the newspapers in compliance with sub-section (7) of S.159 of the Companies Ordinance, 1984; taking lenient view an aggregate fine of Rs.5,000, was imposed on the Chief Executive and the Secretary of the Company.

Abdul Aziz, Assistant Corporate Manager Present.

2008 C L D 130

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director, (Securities Market Division)

ORIENTAL SECURITIES (PVT.) LTD.: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/1019/07, dated 3rd August, 2007, decided on 29th October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8--Making blank sales---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002, provided that blank sates were not permissible, whereas findings of the Enquiry Officer had revealed 11 instances of blank sales during the review period---Company admitted that 2 out of 11 instances were the result of error and in respect of the remaining 9 instances, the company had submitted evidence to demonstrate that same were not blank sales and that the clients. had pre-existing interest at the time of sale---On 2 occasions blank sales had been proved to have been made at 2 occasions in violation of regulation 4 of Central Depository Company of Pakistan of Regulations, 2002---Considering the low number and frequency of the blank sales, lenient viewwas taken in the matter, instead of taking any punitive action under R.8 of the Brokers and Agents Registration Rules, 2002, caution would suffice and the company was directed to ensure that full compliance would be made of all the laws and regulations in future for avoiding any punitive action under the law.

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

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8 & Schedule---Failure to maintain order register---Rule 4(1) of the Securities and Exchange Rules, 1971 provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order in a register to be maintained by him in a form showing the name and address of the person who placed the order; name and number of the securities to be bought or sold; the nature of transaction and the limitation---Findings of the Enquiry Officer had revealed that said register was not maintained by the company accordingly---Daily Activity Log as mentioned by the company, was not a substitute for the Order Register, as Daily Activity Log only recorded those orders . that were placed by the brokerage house and not the orders received from the clients---Securities and Exchange Commission, however was cognizant of the practical difficulties associated with the maintenance of such an Order Register manually---Taking lenient view of the facts, instead of taking punitive action against the company under R.8 of Brokers and Agents Registration Rules, 2001, it was considered that caution would suffice---Company was directed to ensure that full compliance would be made of all the rules and regulations in future.

(c) Securities and Exchange. Rules, 1971---

----R.4(4)---Brokers and Agents Registration- Rules, 2001, R.8---Failure to submit confirmation order---Rule 4(4) of Securities and Exchange Rules, 1971, provided that a member executing an order of a customer would, within twenty four hours of the execution of the order, transmit to the customer a confirmation which would include certain information---Findings of the Enquiry Officer had revealed that confirmation of orders executed, were not provided to the clients on a regular basis---Contention on the part of the company' was that company had a practice of entailing the trade confirmation to its client on a daily basis; it had in place an online system which enabled its clients to access and view their accounts balances and details of transactions executed---Considering said facts no punitive action was required against the company under R.8 of Brokers and Agents Registration Rules, 2001 and instead a caution Would suffice.

Baharutullah Khan M.D. and Asadullah Khan, Director.

2008 C L D 161

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah Executive Director

(Securities Market Division)

GHORY'S SECURITIES (PRIVATE) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/ 103/07, dated 3rd August, 2007, decided on 29th October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Schedule---Making blank sales in violation of Regulations---Imposition of penalty---Regln.4 of Central Depository Company of Pakistan Regulations 2002 prohibited blank sales, whereas findings of the Enquiry Officer had revealed 182 instances of blank sales by the company during the review period---Brokerage house was required to abide by all the provisions of Securities and Exchange Commission of Pakistan Act, 1997 or Securities and Exchange Ordinance, 1969 or relevant 'rules and directions---Said brokerage house having been established to have made 182 blank sales, in violation of Regln.4 of Central Depository Company of Pakistan Regulations, 2002 attracting sub-rule (iii) of R.8 of the Brokers and Agents Registration Rules, 2001, penalty of Rs.50,000 was imposed on the company.

(b) Central Depositories Act (XIX of 1997)---

----Ss.2(27), 3, 28---Holding Book entry securities of different customers in a single C.D.C. sub-account---Imposition of penalty---Findings of the Enquiry Officer had revealed that book entry securities beneficially owned by different customers were kept in a single C.D.C. sub-account opened in the name of a certain customer in violation of S.2(27) of Central Depositories Act, 1997---C.D.C. accounts were opened to establish the title and beneficial ownership of the shares and keeping the shares of clients in a C.D.C. sub-account opened in the name of another customer was a serious violation Of Central Depositories Act, 1997---Penalty of Rs.25,000 was imposed on the company, in circumstances.

(c) Securities and Exchange Rules, 1971---

----R.4(1)-Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Rule 4(1) of Securities and Exchange Rules, 1971, had provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order, in a register to be maintained by him in a form which would show the name and address of the person who placed the order, name and number of the securities to be bought or sold, the nature of transaction and the limitation, if any---Findings of the Enquiry Officer had revealed that said register was not maintained by the company during the Review period---Company had contended that it was not possible to maintain the said order register due to practical difficulties and a computerized order book was maintained as a solution---Order book as mentioned by the company, was not a substitute for the order register as required under R.4(1) of Securities and Exchange Rules, 1971---Securities and Exchange Commission, however was cognizant of the practical difficulties associated with the maintenance of said register manually---Taking. lenient view of matter, instead of taking punitive action against the company, a caution to the company would suffice---Company was directed to ensure that full compliance was made of all regulations and rules in future for avoiding any punitive action under the law.

Naveed Yaqoob Present.

2008 C L D 168

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

FIRST PAKISTAN SECURITIES LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/116/07, dated 16th August, 2007, decided on 30th October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Schedule---Making blank sales in violation of Regulations---Imposition of penalty---Regln.4 of Central Depository Company of Pakistan Regulations, 2002, prohibited blank sales, whereas findings of the Enquiry Officer had revealed 750 instances of blank sales during the review period---Brokerage house was obliged to ensure compliance with all applicable rules and regulations and appropriate internal control should prevent a customer from making a sale without holding pre-existing interest---Contention raised on part of the company that blank sales were made due to the negligence of the employees or that a customer undertook to deliver securities at the time of sale and later squared up his position, could not be accepted---Brokerage House had been established to have made blank sales on 750 occasions in violation of Regln.4 of Central . Depository Company of Pakistan Regulations, 2002---Rule 8 of Brokers and Agents Registration Rules, 2001 mandated that where Securities and Exchange Commission was of the opinion that a broker had failed to comply with any requirements of the Securities and Exchange Commission of Pakistan Act, 1997 or Securities and Exchange Ordinance, 1969 or any rules and directions or had failed to follow any requirements of the Code of Conduct laid down in the Third Schedule of Brokers and Agents Registration Rules, 2001, it could, in the public interest take action under Rule 8(a) or (b) of Brokers and Agents Registration Rules, 2001---Company having violated Rules and Regulations--by making blank sales, penalty of Rs.75,000 was imposed on the company, in circumstances.

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

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Rule 4(1) of Securities and Exchange Rules, 1971, provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order, in a register to be maintained by him in a form showing the name and address of the person who placed the order---Findings of the Enquiry Officer had revealed that said register was not maintained by the company during the review period-Order book as mentioned by the company was not a substitute for the order register as required under R.4(1) of Securities and Exchange Rules, 1971---Commission, however was cognizant of the practical difficulties associated with the maintenance of said order register manually----Taking lenient view of the matter, no punitive action was taken against the company under R.8 of Brokers and Agents Registration Rules, 2001 and a caution was considered sufficient---Company was directed to ensure that full compliance was made of all the regulations in future for avoiding any punitive action under the law.

(c) Securities and Exchange Rules, 1971---

---R.8(1)(g)---Brokers and Agents Registration Rules, 2001, R.8--- Failure to maintain books of account etc.---Imposition of penalty---Rule 8(1)(g) of Securities and Exchange Rules, 1971, provided that every member would prepare and maintain books of account and other documents in a manner that would disclose a true, accurate and up-to-date position of the business, namely duplicate or counterfoils of memos of confirmation issued to customers---Findings of the Enquiry Officer had revealed that duplicates or counterfoils of memos of confirmation issued to customers were not maintained by the broker---Company having violated the requirements of R.8(1)(g) of Securities and Exchange Rules, 1971 attracting R.8(1) of Brokers and Agents Registration Rules, 2001, penalty of Rs.1000 was imposed on the company.

(d) Central Depository Company of Pakistan Regulations, 2002---

----Regnl.6.2A-1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statements---Regulation 6.2.A-1 of Central Depository Company of Pakistan Regulations, 2002, provided that every participant would send by the 10th day of event' month to all sub-account holders balance statements showing the number of every book entry, securities entered in every such sub-account as of the end of the preceding month---Findings of the Enquiry Officer had revealed that the company did not have a practice to send said C.D.C. balance statements to all of its customers by the 10th of each month---C.D.C. 'position as offering in the back office record of the company, could not be a substitute of C.D.C. balance statement---Considering the practical difficulties in sending the C.D.C. balance statements to all the clients of the company, lenient view of the matter was taken---Instead of taking any punitive action under S.28 of Central Depositories Act, 1997, a direction was issued to the company to ensure that full compliance would be made of all the rules and regulations in future for avoiding punitive action under the law.

Mirza Mahmood Ahmad Present.

2008 C L D 221

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

STANDARD CAPITAL SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/101/07, dated 1st August, 2007, decided on 26th October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln. 4---Brokers and Agents Registration Rules 2001, Rr. 8, 12 & Third Sched.---Making blank sales---Imposition of .penalty---Regln.4 of Central Depository Company of Pakistan Regulations, 2Q02, provided that blank sales were not permissible, but findings of the Enquiry Officer had revealed 86 instances of blank sales during, the review period---Information submitted by the company, transpired that 70 out of 86 instances were not blank sales and pre-existing interest existed at the time of the sale---Sixteen occasions had been established to have blank sales in violation of Regln. 4 of the Central Depository Company of Pakistan, 2002---Company, in circumstances had violated Central Depository Company of Pakistan Regulations, 2002 attracting sub-rule (iii) of R.8 of Brokers and Agents Registration Rules, 2001 and also failed to comply with clause A.5 of the Code of Conduct contained in third Schedule of said Rules---Penalty of Rs.10, 000 was imposed on the company under R. 8(b) of Brokers and Agents Registration Rules, 2001.

(b) Central Depositories Act (XIX of 1997)---

----S.2(27)-Brokers and Agents Registration Rules, 2001, R.8---Opening sub-account in violation of rules---Imposition of penalty---Findings of the Enquiry Officer had revealed that in certain client to client transactions, delivery was moved from/to the Director's account instead of opening a sub-account of a client---It was established that the company had, violated S.2(27) of Central Depositories Act, 1997---However, considering the magnitude. and frequency of the instances in question, lenient view in the matter was taken arid punitive action under R.8 of Brokers and Agents Registration Rules, 2001 would not be taken---A "caution" to the company would suffice with direction to the company to ensure that full compliance would be made of all the regulations in future for avoiding any punitive action under the law.

(c) Central Depository Company of Pakistan Regulations, 2002---

---Rgln.6.2-A.1---Brokers and Agents Registration Rules, 2001, R.8---Failure to send C.D.C. Balance Statements---Imposition of penalty---In terms of Regln. 6.2 A.1 of Central Depository Company of Pakistan Regulations, 2002, it was provided that every participant would send by the 10th of every month to all sub-account holders maintaining sub-accounts under the control of such participant holding, balance statements showing the number of every book entry security entered in every such sub-account as of the end of the preceding month---Findings of the Enquiry Officer had revealed that the broker did not have a practice to send the C.D.C. balance statements to all of its customers accordingly---Respondent Broker had admitted that C.D.C. balance statements were provided to its clients according to their preference i.e.. daily, weekly or monthly basis, but it did not have a practice of strictly complying with regulation---Broker had further stated that it had made arrangements to comply with the requirements of regulation in future-Considering said facts and acknowledging the practical difficulties in sending said C.D.C. balance statements, instead of taking any punitive action against the broker under R.8 of Brokers and Agents Registration Rules, 2001, a lenient view was taken in the matter---A "caution" to the broker was considered sufficient, with direction to ensure that full compliance would be made of all the regulations in future for avoiding any punitive action under the law.

Naveed Thaplawala, Finance Manager.

2008 C L D 229

[Securities and Exchange Commission of Pakistan]

Before Razi-ur-Rehman Khan, Chairman/Commissioner and Salman Ali Shaikh, Commissioner

Shaikh ABDUL WAHID, CHAIRMAN, AHMED SPINNING MILLS LTD. and 7 others---Appellants

Versus

COMMISSIONER (SMD AND CLD)---Respondent

Appeal No.85 of 2006, decided on 31st May, 2007.

Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, (CIII of 2002)---

----Ss.3, 4, 5, 6 & 25---Securities and Exchange Commission of Pakistan Act, (XLII of 1997), Ss.20(4)(g), (6), (b), (g) & 33---Appeal---Acquiring shares in violation of provisions of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002---Imposition of penalty---Appellant-Company and its Directors in their individual capacity having acquired shares of another company in violation of provisions of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, show-cause-notice was issued to appellant-Company and its directors---Takeovers law not only required the acquirers to make public offer when acquiring voting shares or control of a company, but it also required that proper disclosures should be made---Directors of the appellant-Company acquired the, shares and control of the company without complying with the disclosure requirements---Directors were thus liable to be penalized---Directors had admitted not to have made proper disclosures under Takeovers law for acquiring more than 25% shares in their individual names--- Penalty imposed on them under S.5 of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002, was upheld--On the issue of penalty imposed on appellants under S.6 of the Ordinance, counsel for appellant had rightly contended that penalties under both Ss.5 & 6 of the Ordinance, should not be imposed on the appellants---Penalty under S.6 of the Ordinance, was set aside, in circumstances-Amount withheld by the Commission could not be handed over to the appellants for the time being as same belonged to the shareholders of the appellant company.

Arshad Tayebaly for Appellants.

Syed Ahmad Hassan Shah, Advocate, Mr. Tariq Bakhtawar, Director SECP and Tariq Ahmed, Deputy Director SECP for Respondent.

2008 C L D 242

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

FDM CAPITAL SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/110/07, dated 3rd August, 2007, decided on 30th October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Reglns.4 & 5---Brokers and Agents Registration Rules, 2001, R.8 & Third Sched.---Making blank sales in violation of regulations---Imposition of penalty---Regln.4 of Central Depository Company of Pakistan Regulations, 2002, provided that blank sales were not permissible---Findings of the Enquiry Officer had revealed 18 instances of blank sales during the review period---Clients making the -sales having entered into contractual borrowing arrangements to meet delivery requirements, the instances identified by the Enquiry Officer were not blank sales, but short sales as detailed under Central Depository Company of Pakistan, 2002---Said short sales were made without identifying the trade as a short sale at the time of placement of order, which was a violation of Regln.5 of Central Depository Company of Pakistan Regulations, 2002---Rule 8 of Brokers rand Agents Registration Rules, 2001, provided that where the Securities and Exchange Commission of Pakistan was of the opinion that a broker had inter alia failed to comply with any requirements of the Securities and Exchange Commission of Pakistan Act, 1997 and Securities and Exchange Ordinance, 1969, or of any rules or direction made or given thereunder and had contravened the rules and regulations of the Exchange and had failed to follow any requirement of the Code of Conduct laid down in the Third Schedule, Commission could in the public interest take action under R.8(a) or (b) of the Brokers and Agents Registration Rules, 2001---By making short sales without identifying the trade as a short sale at the time of placement of orders, the company had violated Central Depository Company of Pakistan Regulations, 2002, penalty of Rs.10,000 was imposed on the company under R. 8(b) of the Brokers and Agents Registration Rules, 2001.

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

----R.4(1)--Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Effect---Rule 4(1) of the Securities and Exchange Rules, 1971 provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order, in a register to be maintained by him in a form showing the name and address of the person who placed the order, name and number of the securities to be bought or sold; the nature of transaction and the limitation--Findings of the Enquiry Officer revealed that said register was not maintained by the company during the review period---Computerized Log as mentioned by the company was not a substitute, for said Order Register as required under R.4(1) of Securities and Exchange Rules, 1971---Securities and Exchange Commission, however was cognizant of the practical difficulties associated with the maintenance of said order register manually---Taking lenient view of the matter, no punitive action was taken against company by the Commission under R.8 of Brokers and Agents Registration Rules, 2001 and instead a caution would suffice---Company was directed to ensure that full compliance would be made of all the regulations in future for avoiding punitive action under the law.

Tufail Ahmad, Chief Operating Officer and M. Ayub, Head of Equity Sales Present.

2008 C L D 248

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

MARS SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/96/07, dated 31st July, 2007, decided on 30th October, 2007.

Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8 & Third Sched.---Making blank sales---Imposition of penalty---Regan; 4 of the Central Depository Company of Pakistan Regulations, 2002 provided that blank sales were not permissible, but findings of the Enquiry Officer had revealed 164 instances of blank sales during the review period---In Rule 8 of the Brokers and Agents Registration Rules, 2001 provided that where the Securities and Exchange Commission was of the opinion that a broker had failed to comply with any requirement of the Securities and Exchange Commission of Pakistan Act, 1997 or Securities and Exchange Ordinance, 1969; or any rule or direction made thereunder; or had contravened rules and regulations of the Exchange and had failed to follow any requirement of the Code of Conduct laid down in the Third Schedule of Brokers and Agents Registration Rules, 2001, it could in the public interest, take action under R.8(a)(b) of said rules---Broker by making blank sales having violated rules and regulations, penalty of Rs.50,000 was imposed on the company in circumstances.

Sajjad Ahmed Present.

2008 C L D 252

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

FARAN SUGAR MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/36/02, dated 10th October, 2007, decided on 17th December, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss.208 & 476---Making investments in associated companies and ' undertakings in excess of its entitlement---Imposition of penalty---Company was authorized by the shareholders to make a total equity investment up to Rs.88.67 million while it had invested in an associate undertaking---Company, however, in addition to that, had given guarantee to a commercial Bank on behalf of said associate company amounting to Rs.138.00 million during the year 2006 without taking approval from the shareholders---Company, prima facie, had contravened the provisions of S.208 of the Companies Ordinance, 1984---Representatives of the company, while admitting the default, had - prayed that a lenient view be taken and proceedings could be withdrawn and assured that the company would ensure strict compliance of the statutory provisions in future---Under 5.208 of the Companies Ordinance, 1984 it was mandatory that a `special resolution' be passed for making investment in associated undertakings, but the company had not complied with the requirement of said mandatory provisions of law---For said violation of S. 208 of the Companies Ordinance, 1984 Directors of the Company were liable for penalties as defined in subsection (3) of S.208---Keeping in view the track record of the company, lenient view was taken of the matter and instead of imposing a maximum penalty of one million rupees on each Director, a token fine aggregating to Rs.4,50,000 was imposed which would be paid by six Directors accordingly---Directors of the company were directed to deposit said fine in the designated bank account in the name of Commission within specified period.

Muhammad Ayub, CFO and Company Secretary Jehangir Adam Abdul Aziz, Advisor for Present.

2008 C L D 259

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

MUHAMMAD MUNIR MUHAMMAD AHMAD KHANANI SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/118/07, dated 24th August, 2007, decided on 30th October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8 & Third, Sched.---Making blank sales in violation of Regulations---Imposition of penalty---Reg1n.4 of Central Depository Company of Pakistan Regulations, 2002 provided that blank sales were not permissible, whereas it was established that on 616 occasions blank sales had been made by the company in violation of said Regulations---Rule 8 of the Brokers and Agents Registration Rules, 2001 provided 'that where Securities and Exchange Commission was of the opinion that a Broker had failed to comply with any requirement of the Securities and Exchange Commission of Pakistan Act, 1997 or Securities and Exchange Ordinance, 1969; or of any rules or direction made or given thereunder; and had contravened the rules and regulations of the exchange; or had failed to follow any requirement of the Code of Conduct laid down in the Third Schedule, Commission in the interest of public could take action under R.8(a)(b) of Brokers and Agents Registration Rules, 2001---Company, by making blank sales having violated Central Depository Company of Pakistan Regulations, 2002, and also having failed to comply with clause A-5 of the Code of Conduct contained in the Third Schedule of the Brokers and Agents Registration Rules, 2001, a penalty of Rs.75,000 was imposed on the company under Rule 8 of Central Depository Company of Pakistan Regulations, 2002.

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

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---In terms of Rule 4(1) of the Securities and Exchange Rules, 1971, it was provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order in a register to be maintained by him in a form which would show the name and address of the person who placed the order; name and number of the securities to be bought or sold etc.---Findings of the Enquiry Officer had revealed that said register was not maintained by the company during the review period---Managing system as described by the company was not a substitute for the order register as required order Rule 4(1) of Securities and Exchange Rules, 1971---Commission, however was cognizant of the practical difficulties associated with the maintenance of such an order register manually; and in order to facilitate the brokerage houses in meeting the requirements of the said rule, the company was developing a system which would be provided in due course---In view of said fact, taking lenient view of the matter no punitive action was taken against the company under Rule 8 of Brokers and Agents Registration Rules, 2001---Caution would suffice---Company was directed to ensure the full compliance of the rules/regulations for avoiding any punitive action in future.

(c) Central Depositories Act (XIX of 1997)---

----Ss.2(27), 3 & 28---Holding book entries of different customers in a single sub-account---Imposition of penalty---Findings of the Enquiry Officer had revealed that book entries beneficially owned by different customers were kept in a single sub-account opened in the name of a certain customer in violation of S.2(27) of Central Depositories Act, 1997---C.D.C. accounts were opened to establish the title and beneficial ownership of the shares and keeping the shares of clients in C.D.C. sub-account opened in the name of an other customer was a serious violation of Central Depositories Act, 1997 as it would result in the change in the beneficial ownership of the shares---It had established that the company had violated S.2(27) of Central Depositions Act, 1997 in terms of Ss.3 & 28 of said Act---Penalty of Rs.75,000 was imposed on the company, in circumstances.

M. Munir M. Khanani, CEO.

2008 C L D 266

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

BAWANYAIR PRODUCTS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/480/2003-1194-1201, dated 12th September, 2007, decided on 8th November, 2007.

Companies Ordinance (XLVII of 1984) --

----Ss.227, 229 & 476---Failure to pay amount to Provident Fund Trust within stipulated time---Imposition of penalty---Company having failed to pay or disburse amount to Provident Fund 'trust within stipulated period of 15 days, show-cause notice was issued to the Directors of the company who, prima facie, authorized and permitted the contravention of the provisions of S.227 of the Companies Ordinance, 1981---Directors of the company had stated that the delay in payment of outstanding amount was due to the fact that company was facing liquidity crunch as expansion project was in progress---Object of provisions of S.227 of the Companies Ordinance, 1984 was to keep the, management away from utilizing any portion of the fund collected as contribution to a provident fund and to secure the amount collected from the employees of the company for the benefits of the employees of the company---Law required that when a trust had been created by a company with respect to any Provident Fund, the company had an obligation. to pay the contribution including its own contribution to the trust within fifteen days from the date of collection---Amounts collected from the employees as contribution to a Provident Fund, were in nature of trust money in the hands of the company and the same must be paid to the trustees within stipulated time---Arguments advanced by the Directors that the moneys were not paid to the trust due to liquidity crunch, was not tenable---Directors of the company, in circumstances, had failed to comply with the mandatory requirements of S.227 of the Companies Ordinance, 1984---Default had been admitted by the Directors, but it had been assured by them that balance amount would be paid by them soon---Taking a lenient view of the default, instead of imposing a maximum fine on Chief Executive and Directors of the Company, a fine of Rs.15,000 in aggregate on all Directors of the company, was imposed.

Faisal Habib, Chief Financial Officer Authorized Representative of Board of Directors.

2008 C L D 280

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities. Market Division)

A.H.K.D. SECURITIES (PVT.) LTD.: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/97/07, dated 1st August, 2007, decided on 7th November, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln. 4---Brokers and Agents Registration Rules, 2001, R.8 & Third Sched.---Making blank sales in violation of rules and regulations---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002 provided that blank sales were not permissible, but it was established that on 663 occasions blank sales had been made by the company in violation of said regulation---Rule 8 of Brokers and Agents Registration Rules, 2001, provided that where the Commission was of the opinion that a broker had failed to comply with any requirements of the Act and Rules or of any rule, or direction made or given under rules and Regulations of the Exchange or any requirement of the Code of Conduct laid down in the Third Schedule of Brokers and Agents Registration Rules, 2001, the Commission could, in the public interest, take action under R.8(a) or (b) of Brokers and Agents Registration Rules, 2001---Violation of Regulations 2002 having been established, penalty of Rs. 75,000 was imposed on, the broker under Rule 8(b) of Brokers and Agents Registration Rules, 2001.

(b) Brokers and Agents Registration Rules, 2001---

----Rr.8, 12 & Third Sched.---Change in trades---Imposition of penalty---Clauses A-1 and A-2 of the Code of Conduct contained in the Third Schedule read with R.12 of the Brokers and Agents Registration Rules, 2001 provided; that broker would maintain high standard of integrity, promptitude and fairness in the conduct of all his business acid that broker would act with due skill, care and diligence in the conduct of all his business---Findings of the Enquiry Officer had revealed, various instances where trades entered into KATS on account of a client, were subsequently assigned to another client in the back office record---Said subsequent modification of trades and their allocation to another customer had created opportunities to disguise any violation of laws and regulations that might have occurred---Broker having failed to comply with clauses A-1 and A-2 of the Code of Conduct contained in the Third Schedule to the Brokers and Agents Registration Rules, 2001, a penalty of Rs.1000 was imposed on the broker under R.8(b) of Brokers Rules, 2001.

(c) Central Depository Company of Pakistan Regulations, 2000---

----Regln. 6.2A-1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statement to customers---Regulation 6.2A-1 of Central Depository Company of Pakistan, Regulations, 2002 provided that every participant would send by the 10th day of every month to all Sub Account Holders maintaining Sub-Account under the control of such participant, balance statement showing the number of every book-entry security entered in every such Sub-Account as at the end of the preceding month---Findings of the Enquiry Officer had revealed that the company did not have a practice to send said C.D.C. balance statements to all of its customers by the 10th of each month as required under Central Depository Company of Pakistan Regulations, 2002---Contention raised on part of the company was that its clientage was mainly comprised retail clients who obtained said statements and other details by hand on a daily basis, instead of taking punitive action against broker under S.28 of Central Depositories Act, 1997, a caution would suffice---Broker was directed to take measures to obtain acknowledgment of its clients to demonstrate the compliance with the Regulations, 2002.

M. Raheel, Settlement Incharge Present.

2008 C L D 286

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

SALEEM SUGAR MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/359/2002/1297, dated 8th August, 2003, decided on 15th November, 2007.

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

----Ss.305 & 309---Winding up of company---Additional Registrar of Companies vide his letter had approached the Commission for grant of sanction in terms of Proviso (b) of S.309 of the Companies Ordinance. 1984 in order to enable him to present: a petition before High Court for winding up of the company which had been based on the ground that the company had suspended its business since the year 1995 in contravention of clause (c) of S.305 of the Companies Ordinance, 1984, which provided that a company could be wound up by the Court, if it suspended its business for a whole year---Under- the provisions of S.309 of the Companies Ordinance, 1984 the Registrar would not be entitled to present a petition for the winding up of a company, unless the previous sanction of the Commission had been obtained for presentation of the petition, provided that no such sanction would be given unless the company had first been afforded an opportunity of making a representation and of being heard.

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

----Ss.305 & 309---Winding up of the company---Provisions of S.305 of the Companies Ordinance, 1984 had provided that a company could be wound up, by the Court, if the company 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 manage¢ by persons who failed to maintain proper and true account, or committed fraud, misfeasance or malfeasance in relation to the company---In the present case. company's business had been suspended since 1995 and auditors of the company had given a qualified opinion on the annual accounts for the years ending September 30, 2004, 2005 & 2006---Failure of the company's management to start its business or to make efforts to revive the company, indicated that the management had no intention of carrying on its business/operations---Winding up of such company had become necessary so that available assets of the company could be distributed among the shareholders before such company becomes empty shells in hands of inefficient and imprudent management---Under the facts and circumstances, it would be appropriate to initiate winding up proceedings against the company---Additional Registrar was authorized under S.309 of the Companies Ordinance, 1984 to file a winding up petition in the High Court for winding up the company.

Muhammad Azeem, Director and Fazal Muhammad, Company Secretary Present.

2008 C L D 293

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

FAIRTRADE CAPITAL SECURITIES (PVT.) LTD. (FORMERLY MUHAMMAD HUSSAIN ADM): In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/113/07, dated 27th September, 2007, decided on 2nd November, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8, 12 & Third Sched.---Making blank sales to violation of regulations---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002 provided that blank sales were not permissible---Findings of Enquiry Officer had revealed 194 instances of blank sales during the review period---Rule 8 of Brokers and Agents Registration Rules, 2001 provided that where the Commission was of the opinion that a broker had failed to comply with any requirement of the Securities and Exchange Commission of Pakistan Act, 1997 or Securities and Exchange Ordinance, 1969, or of any rules or direction made or given thereunder, Commission in the public interest, could take action under R.8(a) or (b) of Brokers and Agents Registration Rules, 2001---Broker having violated Central Depository Company of Pakistan Regulations, 2002 and also having failed to comply with clause A-5 of the Code of Conduct contained in the Third Schedule to the Brokers and Agents Registration Rules, 2001, a penalty of Rs. 75, 000 was imposed on the Broker under R.8(b) of Brokers and Agents Registration Rules, 2001.

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

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain register of transactions---Rule 4(1) of Securities and Exchange Rules, 1971 provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order in a register to be maintained by him---Findings of the Enquiry Officer had revealed that said register was not maintained by the Broker during the review period---Commission, however, was cognizant of the practical difficulties associated with the maintenance of such an Order Register manually---Taking lenient view in the matter, no punitive action under R.8 of Brokers and Agents Registration, Rules, 2001 was taken, but it was considered appropriate that a caution to the broker be issued which would suffice---Broker was directed to ensure that full compliance would be made of all laws and regulations in future for avoiding any punitive action under the law.

(c) Central Depository Company of Pakistan Regulations, 2002---

----Regln. 6.2A-1---Central Depositories Act (XIX of 1997), Ss.3 & 28---Failure to send balance sheet to customers---Imposition of penalty---Findings of the Enquiry officer had revealed that the broker did not have a practice to send the C.D.C. balance statements to all of its customers by the 10th of each month as required by Central Depository Company of Pakistan Regulations, 2002---Sections 3 & 28 of Central Depositories Act, 1997, Commission could impose a penalty for contravention of Regulations---Since by not sending the said balance statements to its clients by the 10th of each month, the Broker had violated Regulation 6.2A-1 of Central Depository Company of Pakistan Regulations, 2002, penalty of Rs.25,000 was imposed on the Broker.

None on behalf of the Respondent.

2008 C L D 298

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

SHERMAN SECURITIES (PVT.) LTD.: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/98/07, dated 1st August, 2007, decided on 2nd November, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Sched.---Making blank sales in violation of rules and regulations---Imposition of penalty---In terms of Regulation 4 of Central Depository Company of Pakistan Regulations, 2002, blank sales were not permissible---Findings of the Enquiry Officer had revealed 12 instances of blank sales by the Broker during review period---Rule 8 of the Brokers and Agents Registration Rules, 2001, more particularly sub-rules (ii) (iii) & (iv), thereof, provided: that where the Commission was of the opinion that a broker had failed to comply with any of the requirements of the Securities and Exchange Commission of Pakistan Act, 1997 or Securities and Exchange Ordinance, 1969 or any rules or directions made or given thereunder, Commission in the interest of public interest, could take action under Rule 8(a)(b) of Brokers and Agents Registration Rules, 2001---Broker having violated Regulations and also having failed to comply with clause A-5 of the Code of Conduct contained in the Third Schedule of the Brokers and Agents Registration Rules, 2001, a penalty of Rs.10,000 was imposed on the Broker under R.8(b) of Brokers and Agents Registration Rules, 2001.

(b) Brokers and Agents Registration Rules, 2001---

----Rr.8, 12 & Third Sched.---General Rules and Regulations of the Karachi Stock Exchange (Guarantee) Regulations, Regln. 74---Non-­availability of Account Opening Forms---Imposition of penalty---Findings of the Enquiry Officer had revealed that Account Opening Forms of 62 customers were not available with the company---Company had been established to have failed to comply with the requirements of Regln. 74 of General Rules and Regulations of Karachi Stock Exchange thereby attracting sub-rule (iii) of R.8 of Brokers and Agents Registration Rules, 2001 and had also failed to comply with clause A-5 of the Code of Conduct contained in the Third Schedule to said Rules, 2001---Penalty of Rs.5,000 was imposed on the company under R.8(b) of the Brokers and Agents Registration Rules, 2001.

(c) Central Depository Company of Pakistan Regulations, 2002---

----Regln.6.2A-1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statements to customers---Findings of the Enquiry Officer had revealed that the company did not have a practice to send the C.D.C. balance statements to all of its customers by the 10th of each month as required by the Regulations---Regulation 6.2A-1 of Central Depository Company of Pakistan Regulations, 2002, provided that every participant would send by the 10th day of every month to all Sub-Account Holders maintaining Sub Accounts under the control of such participant holding balance statements showing the number of every book-entry---Security entered in every such Sub Account, as at the end of the preceding month; such holding balance statements would be generated from the C.D.S. and would be sent to the Sub Account Holders---Default of the company was established, however, considering the practical difficulties . in sending said balance statements to all of the clients of the company, taking lenient view in the matter, no punitive action under S.28 Central Depositories Act, 1997 was taken and it was considered sufficient to direct the company to ensure that full compliance would be made of all the rules and regulations in future for avoiding any punitive action under the law.

Mirza Mehmood Ahmad Present.

2008 C L D 305

[Securities and Exchange Commission of Pakistan]

Before Ali Azeem Ikram, Director (Enforcement)

MAHBOOB SHEIKH & CO. CHARTERED ACCOUNTANTS: In the matter of

Show-Cause Notice No.EMD/233/217/2002, dated 5th July, 2007, decided on 15th November, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss. 255, 260, 476 & 492---Powers and duties of auditors--Penalty for non-compliance with-provisions of law by auditors---Auditor had audited accounts of the company for the year ending June 30, 2006---Examination of the accounts of company had revealed that the auditor had qualified his report---Detailed scrutiny of the accounts in the light of the provisions of Companies Ordinance, 1984, International Accounting Standards (IASs) and International Standards on Auditing (ISAs) had revealed certain irregularities---Enforcement Department felt concern about the quality of the audit conducted by the auditor and audit report made on the accounts of the company---Section 255 of the Companies Ordinance, 1984 mandated that auditor was required to report, among other things, whether or not the accounts of the company, conformed to the approved accounting standards, gave the information as required by the Companies Ordinance, 1984 and gave a true and fair view of the company's state of affairs---Auditor was also required to follow the applicable auditing standards---Auditor, in the present case, however, not only failed to report' the non-compliances with International Accounting Standards, but had also failed to make his report in accordance with International Standards on Auditing---Auditor's statement that default was not wilful, could not be accepted---Auditor had signed the audit report otherwise than in conformity with the requirements of S.255 of the Companies Ordinance 1984 and had made himself liable for punishment under S.260(1) of said Ordinance---Penalty of fine Rs.25,000 was imposed on auditing company under S.260(1) of the Companies Ordinance, 1984 instead of imposing a maximum penalty of Rs.100,000.

London and General Bank Ltd. (1895) 2 Ch. 166 and City Equitable Fire Insurance Co. Ltd. Re, 1925 Ch. 407 ref.

Mahboob Ahmed Sheikh, FCA, Present.

2008 C L D 318

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

AL ASAR SECURITIES (PVT.) LTD.: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/108/07, dated August 3, 2007, decided on 2nd November, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Sched.---Making blank sales in violation of Regulations---Imposition of penalty---Regulation .4 of Central Depository Company of Pakistan Regulations, 2002, provided that blank sales were not permissible---Findings of the Enquiry Officer had revealed 446 instances of blank sates by the Broker during review period---Rule 8 of the Brokers and Agents Registration' Rules, 2001, provided that where the Commission was of the opinion that a broker had failed to comply with any requirements of the Securities and Exchange Commission of Pakistan Act, 1997 and Securities and Exchange Ordinance, 1969 or any rules or direction made or given thereunder and/or; had controverted the rules and regulation of the Exchange; or had failed to follow any requirement of the Code of Conduct laid down in the Third Schedule, of Brokers and Agents Registration Rules, 2001, Commission in the public interest could take action under R.8(a)(b) of Brokers and Agents Registration Rules, 2001---Broker by making blank sales in violation of Regulations, penalty of Rs.75,000 was imposed on the Broker.

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

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register of transactions---Rule 4(1) of Securities and Exchange Rules, 1971, provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order in a register to be maintained by him---Findings of the Enquiry Officer had revealed that said register was not maintained by the broker during the review period---Commission, however was cognizant of the practical difficulties associated with the maintenance of such register manually---Taking lenient view in the matter, no punitive action was taken under R.8 of Brokers and Agents Registration Rules, 2001, but it was considered that a caution to the broker would suffice---Broker was directed to ensure that full compliance would be made of the laws and regulations in future for avoiding any punitive action under the law.

(c) Central Depository Company of Pakistan, Regulations, 2002---

----Regln. 6.2A-1---Central Depositories Act (XIX of 1997), Ss.3 & 28---Failure to send balance statement to customers---Imposition of penalty---Findings of the Enquiry Officer had revealed that company did not have a practice to send the balance statement to all of its customers by the 10th of each month according to Regulations---Sections 3 & 28 of Central Depositories Act, 1997, provided that Commission could impose a penalty for contravention of Regulations---Since by not sending the balance statement to its clients by the 10th of each month, company had violated Regln.6.2A-1 of Central Depository Company of Pakistan Regulations, 2002, penalty of Rs.25,000 was imposed on the company.

(d) Central Depositories Act (XIX of 1997)---

----Ss.2(27), 3 & 28---Book entry securities of different customers, keeping in a single sub-account---Findings of the Enquiry Officer had revealed that book-entry securities beneficially owned by different customers were kept in a single C.D.C. sub-account opened in the name of a certain customer in violation of S.2(2) of Central Depositories Act, 1997---Section 28 read with S.3 of Central Depositories Act, 1997, provided that Commission could impose a penalty for contravention or an attempt to contravene any provision of Central Depositories Act, 1997 or Central Depositories Company of Pakistan Regulations, 2002---Since by not sending balance statements to its clients by the 10th of each month, the company had violated regulations, penalty of Rs.25,000 was imposed on the company.

(e) Brokers and Agents Registration Rules, 2001---

----Rule 8 & Sched.---General Rules and Regulations of the Karachi Stock Exchange (Guarantee) Regulations, Regln. 74---Non-availability of Account Opening Forms with the company---Imposition of penalty---Findings of the Enquiry Officer had revealed that the Account Opening Forms of 38 customers were not available with the company---Company, in circumstances had violated Regln. 74 of General Rules and Regulations of the Karachi Stocks Exchange (Guarantee) Regulations, "thereby attracting R.8(iii) of the Brokers and Agents Registration Rules, 2001---Company also had failed to comply with clause A-5 of the Code of Conduct contained in the Third Schedule of the Brokers and Agents Registration Rules, 2001---Penalty of Rs.25,000 was imposed on the company under R.8(b) of the Brokers and Agent Registration Rules, 2001.

Nemo for Respondent.

2008 C L D 331

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

ZEAL PAK CEMENT FACTORY LIMITED: In the matter of

Show-Cause Notice No.EMD/Co.233/388/2002, dated March 1, 2007, decided on 20th November, 2007.

Companies Ordinance (XLVII of 1984)---

----Ss.26, 473, 476 & 495---Failure to comply with mandatory directions---Imposition of penalty---Securities and Exchange Commission of Pakistan passed an order against the company for non-compliance of mandatory provisions of S.226 of the Companies Ordinance, 1984---During the examination of annual accounts for the year ending June 30, 2005, company had been given certain directions under S.473 of Companies Ordinance, 1984 with regard to amend the agreement with the cement stockist for utilization of the security deposits or otherwise keep the same in separate account with a scheduled bank; to submit statutory auditors' certificate etc.---Record of the company had revealed that said directions were not followed by the company---Company, in circumstances was liable to be punished under the provisions of S.495 of the Companies Ordinance, 1984---Counsel of the company, during the course of hearing, having assured to comply with the directions of the Commission by keeping the security deposits of, cement stockists in a separate bank account in a scheduled bank, taking lenient view, instead of imposing a maximum penalty of rupees fifty thousand only token penalty of Rs.10,000 was imposed on the Chief Executive of the company.

Shaffiiq Ahmad, Legal Counsel for Present.

2008 C L D 344

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

AMZ SECURITIES (PVT.) LTD.: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/93/07; dated 30th July, 2007, decided on 7th November, 2007.

(a) Brokers and Agents Regulation Rules, 2001---

----Rr.8, 12 & Third Sched.---Securities and Exchange Ordinance (XVII of 1969), S.21---Central Depositories Act (XIX of 1997), S.28---Central Depositories Company Regulations, 2002, Regln.4---Making blank sales---Non-compliance with applicable laws and regulations---Imposition of penalty-Findings of the Enquiry Officer had revealed several instances of potential non-compliance with applicable talus and regulations by the company---Blank sales had been made on 64 occasions by the company, in violation of rules and regulations---Company had made blank sales violating Central Depositories Company Regulations, 2002 attracting sub-rule" (iii) of R.8 Brokers and Agents Regulation Rules. 2001 and also had failed to comply with clause A-5 of the Code of Conduct contained in the Third Schedule to the Brokers Rules---Penalty of Rs.25,000 was imposed on the company under R.8(b) of Broker and Agent Regulation Rules, 2001.

(b) Brokers and Agents Regulation Rules, 2001---

----Rr.8, 12 & Third Sched.---Change in trade in violation of rules and regulations---Imposition of penalty---Findings of Enquiry Officer had revealed various instances where traders entered into KATS on account of a client which were subsequently assigned to another client in the back office record---Clauses A-1 and A-2 of Code of Conduct contained in the Third Schedule read with R.12 of the Brokers and Agents Regulation Rules, 2001, provided that under clause A-1 a broker would maintain high standard of integrity, promptitude and fairness in the conduct of all business and under clause A-2 a broker would act with due skill, care and diligence in the conduct of all his business---Subsequent modification of trades and their allocation to another customer, would create opportunities to disguise any violation of laws and regulations that might have occurred--Company, in circumstances had failed to comply with douses A-1 and A-2 of the Code of Conduct contained in the Third Schedule to the Brokers and Agents Regulation Rules, 2001, thereby attracting sub-rule (iv) of R.8 of said Rules---Effect---Penalty of Rs.1,000 was imposed on the company under R.8(b) of Brokers and Agents Regulation Rules, 2001.

(c) Central Depositories Company of Pakistan Regulations, 2002---

---Regln. 6.2A.1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statements on the 10th of each month---Effect---Findings of the Enquiry Officer had revealed that company did not have a practice to send C.D.C. balance statements to all its customers by the 10th of each month as required under Central Depositories Company Regulations, 2002 and where said statements were sent, same were not generated from C.D.S. and instead were sent on the company's own format---Validity---Regln. 6.2A.1 of Central Depositories Company Regulations, 2002, provided that every participant was obliged to send by the 10th of every month to all sub-accounts Holders maintaining sub-accounts under the control' of such participant holding balance statements showing the number of every book-entry security entered in every such sub-account at the end of preceding month---Commission, however, was cognizant of the practical difficulties associated with sending C.D.C. balance houses with a large clientage comprising a significant number of dormant accounts; and acknowledging the fact that the company was following the requirement of the Regulations in spirit by providing said statements to its active clients---Lenient view was taken in the matter and no punitive action was taken under S.25 of Central Depositories Act, 1997---Caution would suffice---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.

Shahid Munir, Chief Financial Officer present.

2008 C L D 436

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

Messrs BOSICOR PAKISTAN LIMITED: In the matter of

Show-Cause Notice No.EMD/233/638/2002-2342-2349, dated 12th December, 2007, decided on 3rd March, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss.208, 476 & 492---Making investments in associated companies/undertakings, not in accordance with the resolutions approved by the share-holders---Imposition of penalty---Investments in question though were made on the basis of special resolutions resolved in Extraordinary General Meeting of the company, but said resolutions were not approved by the share-holders of the company---To ascertain the extent of violation committed by the company and loss sustained by it in consequence of such investments, necessary proceedings were initiated under S.208 of the Companies Ordinance, 1984---Show­cause notice was issued to the company and its Directors---Directors of the Company had violated the provisions of 5.208 of the Companies Ordinance, 1984 and had advanced funds in total disregard of the approval of the shareholders---Nature and terms of the investments had been changed to serve the interest of the Directors, rather than the shareholders, which did not carry rationalization and were not acceptable---Violation of S.208 of the Companies Ordinance, 1984, was established and all Directors were found responsible for said violation; however, instead of imposing maximum penalty of Rs.10,000,000 (Ten Million Rupees) on each pf the Directors as prescribed by subsection (3) of S.208 of the Companies Ordinance, 1984, a lenient view was taken of the default by imposing a fine of Rs.500,000 on each Director, Chairman and Vice-Chairman.

Hamid Imtiaz Hanfi, Vice-Chairnian and Amir Waheed Ahmed, Company Secretary.

2008 C L D 456

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

ISMAIL ABDUL SHAKOOR SECURITIES (PVT.) LIMITED.: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/106/07, dated 3rd August, 2007, decided on 31st October, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8 & Third Sched.---Making blank sales in violation of regulations and rules---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002 provided that blank sales were not permissible---Findings of the Enquiry Officer had revealed 234 instances of blank sales during the review period---Company had submitted; firstly that said instances of blank sales were either the result of mistake by the clients; or secondly, same represented trading by a group of individuals who had mutual understanding to perform trading and meet delivery of shares---As far as matter of blank sales made due to mistake was concerned, it was the responsibility of the brokerage house to ensure compliance with all applicable rules, regulations and appropriate internal control---So far as meeting the delivery requirements through mutual understanding was concerned, the regulatory framework provided an appropriate mechanism for such form of trading through the options of opening joint accounts and performing short sales by fulfilling the conditions prescribed in the Central Depository Company of Pakistan Regulations, 2002---Company had been established to have made blank sales in violation of Central Depository Company of Pakistan Regulations, 2002---Penalty of Rs.50,000 had been imposed on the company for said violation under R.8(b) of Brokers and Agents Registration Rules, 2001.

(b) Central Depository Company of Pakistan Regulations, 2002---

----Regln.2.11-1---Central Depositories Act (XIX of 1997), Ss.3 & 28---Customers Securities held in house account for pledge purpose---Imposition of penalty---Findings of the Enquiry Officer had revealed that the book entry securities of certain customers were kept in the C.D.C. house account of the company--Submission of the company was that it had a practice of holding customers' shares in the C.D.C. house account of the company so as to pledge the shares and obtain financing for customers from financial institutions and that said practice had now been stopped---Placing of customers shares in the C.D.C. house account of the company for pledge with financial institutions was not an acceptable practice in order to provide financing to the customers---Company had been established to have violated Regln.2.11 of Central Depository Company of Pakistan Regulations, 2002---Sections 3 & 28 Central Depositories Act, 1997, provided that Securities and Exchange Commission could impose a penalty for contravention or an attempt to contravene the provisions of Central Depositories Act, 1997 or Regulations, 2002---Penalty of Rs.25, 000 was imposed on the company, in circumstances.

(c) Securities and Exchange Rules, 1971---

---R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Effect---Rule 4(1) of Securities and Exchange Rules, 1971, provided that all orders to buy or sell Securities which a member could receive, would be entered in the chronological order in a register to be maintained by him' in a form showing the name and address of the person who placed the order, name and number of the Securities to be bought or sold, the nature of transaction and the limitation, if any, as to the price of the Securities or the period for which the order was to be valid---Findings of the Enquiry Officer revealed that said register was not maintained by the company during the review period---Validity---Order book as mentioned by the company was not substitute for said required order register, since order book only had recorded those orders which were placed by the brokerage house into KATS and not the orders received from the clients---Securities and Exchange Commission, however was cognizant of the practical difficulties associated with the maintenance of such an order register manually---Taking a lenient view of the matter, no punitive action was taken under R.8 of Brokers and Agents Registration Rules, 2001 and instead it was considered appropriate that a caution would suffice---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.

(d) Central Depository Company of Pakistan Regulations, 2002---

----R.6.2-A-1---Brokers and Agents Registration Rules, 2001, R.8-Failure to send C.D.C. balance statement-Effect--Regulation 6.2A-1 of Central Depository Company of Pakistan, Regulations, 2002, provided that every participant would send C.D.C. Balance-statement by the 10th day of every month to all sub-account holders maintaining sub-accounts under the control of such participant---Findings of the Enquiry Officer revealed that the company did not have a practice to send the C.D.C. balance statements to all of its customers by the 10th of each month---Submission of the company was that majority of the clients constituted retail clients ,who collect the C.D.C. balance statements by hand and the company also disseminated the C.D.C. balance statements to other customers through courier---Taking lenient view of the matter no punitive action was taken against the company under R.8 of Brokers and Agents Registration Rules, 2001 and it was considered that caution to the company would suffice---Company was directed to take measures to obtain acknowledgement of its clients and maintain evidence of dispatch of C.D.C. balance-statements to demonstrate compliance with the regulations.

Furqan Hanif, Director and Shoaib Chamdia, Internal Auditor.

2008 C L D 509

[Securities and Exchange Commission of Pakistan]

Before Zaffar Abdullah, Executive Director (Securities Market Division)

Y.H. SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/104/07, dated 3rd August, 2007, decided on 2nd November, 2007.

(a) Central Depository Company of Pakistan, Regulations, 2002---

----Reglns.2, 4 & 5---Brokers and Agents Registration Rules, 2001, R.8---Making blank sales---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan, Regulations, 2002, provided that blank sales were not permissible, whereas findings of the Enquiry Officer, had revealed 21 instances of blank sales during the review period---Company which allegedly had made blank sales, had submitted contractual borrowing arrangements to meet delivery of shares in the case of reported 21 instances of blank sales---Existence of contractual borrowing arrangements demonstrated that said instances were not blank sales, but were short sales as provided in Regulation 2(1) of the Central Depository Company of Pakistan Regulations, 2002---Regulation 5 of Central Depository Company of Pakistan Regulations 2002, provided that one of the pre-requisite of a short sale was that "the trade was identified as a short sale at the time of placement of order", which was not met by the company-Company was established to have made short sales on 21 occasions without meeting the prerequisite criteria as provided in Regulation 5 of Central Depository Company of Pakistan Regulations, 2002---Company had violated the Regulations, thereby attracting sub-rule (iii) of R.8 of Brokers and Agents Registration Rules; 2001 and had also failed to comply with Clause A.5 of the Code of Conduct contained in the Third Schedule to said Brokers Rules, thereby attracting sub-rule (iv) of R.8 of the Rules---Penalty of Rs.10,000 was imposed on the company, in circumstances.

(b) Central Depository Company of Pakistan Regulations, 2002---

----Regln.5---Brokers and Agents Registration Rules, 2001, R.8---Making short sales---Imposition of penalty---Regulation 5 of Central Depository Company of Pakistan Regulations, 2002 provided that "No member could make a short sale, unless a prior contractual borrowing arrangement had been made'---Findings of the Enquiry Officer's report had revealed 148 instances of short sales during review period, which were made without identifying the trade as a short sale at the time of placement of order---No evidence had been submitted by the company in support of its claim so as to establish that said 148 instances were not short sales---Company did not provide any justification for not meeting the prerequisite for making short sales---Company which had made short sales without meeting the prescribed prerequisite, had violated Central Depository Company of Pakistan Regulations, 2002, attracting R.8 of Brokers and Agents Registration Rules, 2001---Penalty of Rs.10,000 was imposed on the company wider R.8(b) of Brokers and Agents Registration Rules, 2001.

(c) Central Depositories Act (XIX of 1997----

---Ss.2(27), 3 & 28---Holding book entry securities of different customers in a single C.D.C. sub-account---Imposition of penalty---Findings of the Enquiry Officer had revealed that in case of certain customers sub-accounts were not opened and in the absence of said sub-accounts, the related movements of book. entry securities against the transactions undertaken by such customers were affected through a separate C.D.C. account opened in the name of another customer---Section 28 and S.3 of Central Depositories Act, 1997, provided that . Securities and Exchange Commission could impose a penalty for contravention of Central Depositories Act, 1997---Since by keeping the book entry securities of different clients of a single C.D.C. sub-account opened in. the name of another client the company had violated S:2(27) of Central Depositories Act, 1997, penalty of Rs.25,000 was imposed on the company.

(d) Brokers and Agents Registration Rules, 2001--

----Rr.8, 12 & Third Sched.---Change in trades---Imposition of penalty---Clauses A-1 & A-2 of the Code of Conduct contained in the Third .Schedule read with R.12 of Brokers and Agents Registration Rules, 2001, provided that a broker would maintain high standards of integrity, promptitude and fairness in the conduct of all his business, whereas under Clause A.2 broker would act with due skill and diligence in the conduct of all his business---Findings of the Enquiry Officer revealed various instances where trades entered into KATS on account of a client which were subsequently assigned to another client in the back office record---Findings of the Enquiry Officer had also revealed that in various instances KATS assigned to customers by the company for trading, did not exist in the back office record or KATS were not entered by the company while executing the transactions---Notwithstanding claim of the company that said instances were reported to the exchange, the fact remained that in order to ensure the practice of fair trade and due skill, care and diligence in conduct of business, it was imperative that correct KATS were used for the clients while executing trades---Subsequent modification of trades and their allocation to another customer, would create opportunity to disguise any violation of laws and regulations that might have occurred---Company having failed to comply with Clauses A-1 & A-2 of the Code of Conduct of the R.8 of the Brokers and Agents Registration Rules, 2001, penalty of Rs.1, 000 was imposed on the company under R.8(b) of said Rules, 2001.

(e) Securities and Exchange Rules, 1971---

----R.4---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Rule 4(1) of Securities and Exchange Rules, 1971, provided that all orders to buy or sell securities which a member could receive, would be entered in the chronological order in a register to be maintained by him in a form showing the name and address of the person who placed the order, name and number of the securities to be bought or sold; the nature of transaction and the limitation, if any---Findings of the Enquiry Officer revealed that said register was not maintained by the company during the review period---Securities and Exchange Commission, however was cognizant of the practical difficulties associated with maintenance of such an order register manually---Taking a lenient view of the matter, no punitive action was taken against the company under R.8 of Brokers and Agents Registration Rules, 2001 and a caution to the company was considered to suffice---Company was directed to ensure that full compliance would be made by the company of all the regulations in future for avoiding any punitive action under the law.

(f) Securities and Exchange Ordinance (XVII of 1969)---

----S.21(2)---Brokers and Agents Registration Rules, 2001, R.8--Non-providing of information to the Enquiry Officer-Section 21(2) of Securities and Exchange Ordinance, 1969, provided that when any enquiry had been undertaken, every past or present Member, Director, manager or other officer of the stock exchange, would furnish information and documents in his custody or power to the person conducing the enquiry---Findings of the Enquiry Officer had revealed that he was not provided all said information---Fact was that individual ledger statements provided transactions and there was no intention to conceal information from the Enquiry Officer---No punitive action was considered necessary in the matter, under R.8 of the Brokers and Agents Registration Rules, 2001, in circumstances.

Mirza Mehmood Ahmad, Present.

2008 C L D 526

[Securities and Exchange Commission of Pakistan]

Before Zaffar Abdullah, Executive Director (Securities Market Division)

ISMAIL IQBAL SECURITIES (PRIVATE) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/120/07, dated 31st August, 2007, decided on 16th December, 2007.

(a) Brokers and Agents Registration Rules, 2001---

---Rr.8, 12 & Sched. Third---Central Depository Company of Pakistan Regulations, 2002, Regln.4---Making blank sales---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan. Regulations provided that 2002, blank sales were not permissible and findings of the Enquiry Officer had revealed 2,387 instances of blank sales during the review period---Documents submitted by the., company had revealed that 1,027 out of 2,387 instances were not blank sales and the respective clients had pre-existing interest at the time of trade while in respect of remaining 1,360 instances the evidence submitted by the company was not found satisfactory and contention that said instances were not material, was repelled as such number of instances identified as blank sales could not be considered immaterial---1,360 occasions of blank sales had been established to have been made in violation of Regln.4 of Central Depository Company of Pakistan Regulations, 2002, thereby attracting sub-rule (iii) of R.8 of Brokers and Agents Registration Rules, 2001; and also failed to comply with Clause A5 of the Code of Conduct contained in Third Schedule to the said Rules---Penalty of Rs. 100,000 was imposed on the company under R.8(b) of Brokers and Agents Registration Rules, 2001.

(b) General Rules and Regulations of Karachi Stock Exchange (Guarantee) Limited---

----Regln.74---Brokers and Agents Registration' Rules, 2001, R.8---Non-availability of missing account opening forms---Findings of the Inquiry Officer had revealed that Memorandum and Articles of Association of Corporate clients were not obtained by the company and the account opening Forms of 12 customers were not available with the company---Company had contended that the account opening forms were misplaced due to shifting of record to its new office and that remaining forms were being traced---Considering the low number of missing account opening forms and the fact that non-submission of completed account opening forms by institutional clients was an industry-wise problem which was faced by all the brokers and the steps taken by the company to compel its institutional clients to submit account opening forms, thereby demonstrating their willingness to comply with the requirements of General Rules and Regulations of Karachi Stock Exchange---Instead of taking any punitive action under R.8' of Brokers and Agents Registration Rules, 2001, taking lenient view of the matter, "caution" to the company would suffice---Company was directed to ensure that no individual or institution was as a client, unless it would submit a duly filled account opening forms with supporting documents and that the company should clearly direct all of its existing clients to submit duly filled opening forms.

(c) Central Depository Company of Pakistan Regulations, 2002---

----Regln.2.11.1---Central Depositories Act. (MX of 1997), Ss.3 & 287-Holding customers' securities in house account for pledge purpose in violation of Rules---Findings of the Enquiry Officer had revealed that in case of certain customers no C.D.C. sub-accounts were opened and in the absence of those accounts, the related movements of securities against the transactions undertaken by such customers were effected through the house account---C.D.C. accounts were opened to establish the title and beneficial ownership of the shares and keeping the shares of clients in the house account was a serious violation of Central Depository Company of Pakistan Regulations, 2002 as it resulted in a change in the beneficial ownership of the shares---Placing of customers' shares in the C.D.C. house account of the company, was not an acceptable practice---Company was established to have violated Regln.2.11.1 of Central Depository Company of Pakistan Regulations, 2002 in terms of S.28 read with 3 of the Central Depositories Act, 1997---Penalty of Rs.25,000 was imposed on the company.

(d) Securities and Exchange Rules, 1971---

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register according to rules---Rule 4(1) of Securities and Exchange Rules, 1971 provided that all orders to buy or sell securities which a member could receive, was to be entered in the chronological order in a register to be maintained by him in a form which would show the name and address of the person who placed the. order; name arid number of securities to be bought or sold; the nature of transaction and the limitation, if any as to the price of the securities or the period for which the order was to be valid---Findings of the Enquiry Officer had revealed that said register was not maintained by the company. during the review period---Contention of the company was that it was maintaining an order log which fulfilled the requirements of the said rules---Company also informed that a phone recording system was also in place---Validity---Order log as mentioned by the company was not a substitute for the order register in question---Security and Exchange Commission, however, was cognizant of the practical difficulties associated with the maintenance of such order register manually---Considering said facts, instead of taking punitive action against the company under Rule 8 of Brokers and Agents Registration Rules, 2001, a lenient view of the matter was taken---Caution to the company would suffice and it was directed that the company should ensure that full compliance would be made of all the Regulations in future for avoiding any punitive action under the law.

(e) Central Depository Company of Pakistan Regulations, 2002---

----R.6.2-A.1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statements in accordance with Regulations---Findings of the Enquiry Officer had revealed that the company did not have a practice to send the C.D.C. balance statements to all of its customers by the 10th of each month as required under Central Depository Company of Pakistan. Regulations, 2002---Contention of the company was that it had a practice of balance reports to its clients on daily basis through e-mail and had also started the practice of sending said statements through courier---Considering said fact, the corrective measures taken by the company and also the practical difficulties in sending said balance statements to all the clients of the company, including the dormant accounts, instead of taking punitive action against the company under S.28 of the Central Depositories Act, 1997, a lenient view was taken of the matter---Company was directed to ensure that full compliance would be made of all the rules and regulations in future for avoiding any punitive action under the law.

(f) Securities and Exchange Rules, 1971---

----R.8(1)(a) & (c)---Brokers and Agents Registration Rules, 2001, R.8---Failure to prepare and maintain "difference in the back office record and C.D.C. statements"---Findings of the Enquiry Officer had revealed difference between the holdings of book entry securities by client as per the back office record and as per the C.D.C. 'balance statements---Contentions of the company were that its back office records clearly reflected the movement of all securities in the account; that the differences were temporary in nature and occurred only due to constraints of time and that company had taken measures to ensure that same would not occur in future---Considering said facts and the corrective measures taken by the company, lenient view was taken in the matter and instead of taking punitive action against the company under R.8 of the Brokers and Agents Registration Rules, 2001---Company was directed to design and implement a sound system of internal controls in order to ensure that full compliance would be made of all the rules and regulations in future for avoiding any punitive action under the law.

Asad Iqbal and Junaid Haroon Present.

2008 C L D 539

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

INTERMARKET SECURITIES (PRIVATE) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/124/07, dated 22nd, October 2007, decided on 14th December, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8 & Third Sched.---Making blank sales in violation of Regulations--Imposition of penalty---Blank sales were not permissible in terms of Regulation 4 of Central Depository Company of Pakistan Regulations, 2002, whereas findings of the Enquiry Officer revealed 387 instances of blank sales---Contention of the company was that instances reported by the Enquiry Officer were not blank sales as the selling quantity of shares was equal to the quantity of shares purchased---Company had further contended that due to heavy trading and large volume of transactions, it became difficult for it to prevent occurrence of such instances---Company had admitted that some errors were made and were immediately sought to be rectified by purchasing back the shares---Merely the fact that the respective customers had purchased the shares sold, squaring the position, will not establish that said sales were not blank sales, if at the time of making the sale, the pre-requisites were not met---387 occasions of blank sales had been established to have been made in violation of Regulation 4 of Central Depository Company of Pakistan Regulations, 2002---Penalty of Rs.75,000 was imposed on the company under R.8(b) of Brokers and Agents Registration Rules, 2001.

(b) Brokers and Agents Registration Rules, 2001---

----Rr.8, 12 & Third Sched.---Change in trades in violation of rules---Imposition of penalty---Findings of the Enquiry Officer had revealed various instances where trades entered into KATS on account of a client were subsequently assigned to another client in back office record---Findings of the Enquiry Officer had also revealed that two accounts were opened in the name of a minor---Company had contended the said instances were result of errors and were corrected on the same day in the back office record---In order to ensure the practice of fair trade and due skill as well as care diligence in conduct of business, it was imperative that correct KATS were used for the clients while exercising trades---Subsequent modification of trades and their allocation to another customer would create opportunities to disguise any violation of law and regulations that might have occurred---Company had failed to comply with clauses A-1 and A-2 of the Code of Conduct contained in the Third Schedule to the Brokers and Agents Registration Rules, 2001 attracting sub-rule (iv) of R.8 of the Rules---Penalty of Rs.1,000 was imposed on the company under R.8 of Brokers and Agents Registration Rules, 2001, regarding findings of the Enquiry Officer that two accounts were opened in the name of minors, contention of company was that said accounts were opened by the guardians of said minors on their behalf as that practice was legally allowed---Company submitted that said accounts were operated in the names of their guardians---Considering the corrective measures taken by the company, no punitive action was taken against the 'company under R.8 of brokers and Agents Registration Rules, 2001---Company was directed to ensure full compliance with best practices and applicable laws and regulations

?

(c) Securities and Exchange Rules, 1971---

----R.4(1)---Brokers and Agents Registration Rules, 2001 R.8---Failure to maintain order register---Findings of the Enquiry Officer had revealed that the order register under Rule 4(1) of Securities and Exchange Rules, 1971 was not maintained by the company during the review period---Contention of the company was that maintenance of register in question was not possible due to practical difficulties and that a computerized order book was maintained as a solution---Validity---Order book as mentioned by the company was not a substitute for the order register in question as said order book only recorded those orders which were placed by the brokerage house into KATS and not orders received from the clients---Securities and Exchange Commission was cognizant of the practical difficulties associated with the maintenance of such an order register manually and in order to facilitate the brokerage houses in meeting the requirements of the Rule 4(1) of Securities and Exchange Rules, 1971 exchange was developing a system which would be provided in due course---Lenient view was taken in the matter in circumstances and instead of taking punitive action against the company under R.8 of Brokers and Agents Registration Rules, 2001 only caution to the company was considered to suffice---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.?

(d) Central Depository Company of Pakistan Regulations, 2002---

----Regln.2.11.1---Central Depositories Act (XIX of 1997), Ss.3 & 28---Customers' securities held in house account for pledge purpose---Imposition of penalty---Findings of Enquiry Officer revealed that the book entry securities of certain customers were kept in the C.D.C. House Account of the company---Contention of the company was that it had a practice of holding customers' shares in the C.D.C. House Account of the company so as to pledge the shares and obtain financing for customers from financial institutions---Company had further contended that the practice had been adopted in order to safeguard itself in case of default of a client---Placing of customers' shares in the C.D.C. House Account of the company for pledge with financial institutions was not an acceptable practice---Interest of the company in the case of default could be safeguarded by developing appropriate risk management system which was in no way in contravention of the applicable legal framework---Company having violated Regulation 2.11.1 of Central Depository Company of Pakistan Regulations, 2002, penalty of Rs.25,000 was imposed on the company.

(e) Central Depository Company of Pakistan Regulations, 2002---

----Regin.6.2-A.1---Central Depositories Act (XIX of 1997), Ss.3 & 28---Failure to send C.D.C. balance statements---Findings of the Enquiry Officer revealed that the company did not have a practice to send C.D.C. balance statements to all of its customers by the 10th of each month as required under Central Depository Company of Pakistan Regulations, 2002---Contention of the company was that it was regularly sending C.D.C. holding statements to its clients through courier service---No punitive action, in circumstances, was necessary against the company and a simple caution would suffice.?

M. Yasin Chaudhry and Shoaib Chamdia Present.

2008 C L D 553

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

EASTERN CAPITAL LIMITED: In the matter of Show-Cause Notice

No.SMD-SOUTH/SCN/122/07, dated 31st August 2007, decided on 14th December, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8---Making blank sales in violation of regulations---Regulation 4 of Central. Depository Company of Pakistan Regulations, 2002 prohibited blank sales, whereas findings of the Enquiry Officer revealed 41 instances of blank sales in the company during the review period---Submission of the company was that majority of said 41 instances in fact was not blank sales---Company submitted proper evidence to the Enquiry Officer to verify same---Evidence produced by the company in support of its claim had revealed that 41 instances were not blank sales---No punitive action in circumstances was required against the company under R.8 of Brokers and Agents' Registration Rules, 2001.

(b) Brokers and Agents Registration Rules, 2001---

----R.8---General Rules and Regulations of Karachi Stock Exchange (Guarantee) Ltd., Regln.74---Non-availability of account opening Forms---Findings of the Enquiry Officer revealed that the account opening Forms of certain customers were not available with the company---Contention of the company was that all the Forms in its possession were provided to the Enquiry Officer and remaining Forms pertained to old and inactive clients--Taking lenient view in the matter, no punitive action was taken against the company under R.8 of Brokers and Agents Registration Rules, 2001 and a caution to the company was considered to suffice---Company was directed to ensure that full compliance would be made of all rules and regulations in future for avoiding any punitive action under the law.

(c) Central Depository Company of Pakistan, Regulations, 2002---

----Regtn.2.11.1---Central Depositories Act (XIX of 1997), Ss.2(27), 3 & 28---Failure to open sub-accounts---Imposition of penalty---Finding of the Enquiry Officer revealed certain cases of customers of the company where no sub-accounts were opened and in the absence of said accounts, the related movements of securities against the transactions undertaken by such customers were effected through either the house accounts or a C.D.C. sub-account opened in the. name of another customer---Company contended that under Central Depositories Act, 1997, it was not mandatory to open the C.D.C. account of customer and that it had corrected its practice and had opened C.D.C. account of all of its customers---C.D.C. accounts were opened to establish the title and beneficial ownership of the shares and a brokerage house either should open the C.D.C. sub-account of its customers or the customers should have their own C.D.C. investor account or C.D.C. participant account---In absence of relevant C.D.C. sub-accounts, keeping the shares of clients in C.D.C. sub-account opened in the name of another customer or in the C.D.C. House account was a serious violation of Central Depositories Act, 1997 as it would result in the change in the beneficial ownership of the shares---By keeping the book entry securities of different clients in a single C.D.C: sub-account opened in the name of another client, the company had violated S.2(27) Central Depositories Act.1997 and Regln. 2.11.1 of Central Depository Company of Pakistan Regulations. 2002, a penalty of Rs.25,000 was imposed on the company.

(d) Brokers and Agents Registration Rules, 2001---

----Rr.8, 12 & Third Sched.---Change in trades in violation of rules---Imposition of penalty---Findings of the Enquiry Officer had revealed various instances where trades entered into KATS on account of a client were subsequently assigned to another client in the back office record..-Company had contended that alleged instances were result of error by the KATS operator and occurred due to constraints of time---Company had further submitted that it had taken measures to ensure that same did not occur in future---In order to ensure the practice of fair trade and due skill as well as care and diligence in conduct of business, company should have entered connect KATS for its clients---Subsequent modification of trade and their allocation to another customer would create opportunities to disguise any violation of laws and regulations that might have occurred---Company having failed to comply with clauses A.1 and A.2 of the Code of Conduct contained in the Third Schedule to the Brokers and Agents Registration Rules, 2001, thereby attracting sub-rule (iv) of the R.8 of Brokers and Agents Registration Rules, 2001, a penalty of Rs.1,000 was imposed on the company under R.8 of said rules, 2001.

(e) Securities and Exchange Rules, 1971---

----R.8(1)(a) & (c)---Brokers and Agents Registration Rules, 2001, R.8---Difference in the back office record and C.D.C. statements---Findings of the Enquiry Officer revealed differences between the holdings of book entry securities by clients as per the back office record and as per C.D.C. balance statements---Contention of the company was that differences were temporary in nature and occurred only due to constraints of time---Company had further submitted that it had taken measures to ensure that same would not occur in future---Lenient view of the matter, in circumstances, was taken and instead of taking punitive action against the company under R.8 of Brokers and Agents Registration Rules, 2001, a caution to the company was considered to suffice---Company was directed to design and implement a sound system of internal controls in order to ensure that full compliance would be made of all the rules and regulations in future for avoiding any punitive action under the law.

(f) Central Depository Company of Pakistan Regulations, 2002---

--Regin.6.2.A-1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statement---Findings of the Enquiry Officer had revealed that company diet not have a practice to send C.D.C. balance statement to all its customers by the 10th of each month as required under Central Depository Company of Pakistan Regulations, 2002; curd where same were not, generated from C.D.S., instead statement was sent on the company's own format---Contention of the company was that C.D.C. balance statements were provided to its clients on regular basis and any failure in that regard would be of isolated nature and due to bona fide error---Evidence of C.D.C. balance statements, however, were impractical to maintain--'No punitive action, in circumstances was required under S.28 of Central Depositories Act, 1997---Company, however, was directed to take measures to obtain acknowledgments of its clients to demonstrate compliance with Central Depository Company of Pakistan Regulations.

Rasheed Ahmad, Chief Operating Officer Present.

2008 C L D 614

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director Securities Market Division)

FIRST NATIONAL EQUITIES LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/115/07 dated August 16th, 2007, decided on 17th December, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002--

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8---Making blank sales in violation of regulations---Imposition of penalty---Regln.4 of Central Depository Company of Pakistan Regulations, 2002, had prohibited blank sales, whereas findings of the Enquiry Officer revealed 4,847 instances of blank sales in the company during the review period---Company claimed that majority of said instances were in fact not blank sales and the respective clients had pre-existing interest at the time of sale; that upon the direction of the Securities and Exchange Commission the company undertook to provide valid evidence in support of its claim---Company also contended that Enquiry Officer had selected the transaction on a pick and choose basis and did not take into account earlier purchases made by the respective clients---Further contention was that in certain cases a customer instructed execution of a sale order and undertook to deliver securities to the broker---Company had further contended that the reported blank sales could be a result of infra-day trading whereby a customer purchased shares in the early hours of trades and could sell in the later hours, but no evidence was provided by the company in support of that assertion---Evidence on record revealed that 2,787 out of 4,847 instances were not blank sales and respective customers had pre-existing interest at the time of trade---Satisfactory evidence, however was not provided by the company in respect of remaining 2,060 instances of blank 'sales---Brokerage House was obliged to ensure compliance with all applicable rules and regulations; and appropriate internal control procedures needed to be in place to prevent a customer from making a sale without holding pre-existing interest---Contention of the company that blank sales were made due to fact that a customer undertook to deliver securities at the time of sale and later squared up its position, could not be accepted---On 2060 occasions it having been established that blank sales had been made in violation of Regulation 4 of Central Depository Company of Pakistan Regulations, 2002 attracting sub-rule (iii) of R.8 of Brokers and Agents Registration Rules, 2001 and also that the company had failed to comply with Clause A.5 of the Code of Conduct contained in the Third Schedule to said Brokers Rules, 2001, penalty of Rs.100, 000 was imposed on the company under R.8(b) of said Rules.

(b) Brokers and Agents Registration Rules, 2001---

----R.8---General Rules and Regulations of Karachi Stock Exchange (Guarantee) Ltd., Regln.74---Failure to maintain account opening Forms of institutional clients---Findings of the Enquiry Officer revealed that' the account opening Forms of institutional clients were either not maintained by the company or the account opening Forms of said clients were not complete in all respect and did not contain all the relevant information required to be filled in---Contention of the company was that discrepancies pointed out by the Enquiry Officer were removed and the corrected forms were presented before him---Further contention was that it had created two separate departments to immediately take action on any discrepancies in the Forms---Considering the fact that non-submission of account opening Forms by institutional clients was an industry-wide problem which was faced by all the brokers and the corrective measures having been taken by the company in that regard, lenient view was taken of the matter and instead of taking punitive action under R.8 of Brokers and Agents Registration Rules, 2001, caution to the company was considered to suffice---Company was directed to ensure that no individual or institution was admitted as a client unless it submitted a duly filled opening Forms with supporting documents; and that company should clearly direct all of its existing clients to submit duly filled account opening Forms.

(c) Securities and Exchange Rules, 1971--

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Findings of the Enquiry Officer revealed that order register was not maintained by the company during the review period in terms of R.4(1) of the Securities and Exchange Rules, 1971---Contention of the company was that the purpose of maintaining said register was easily served by retrieving the date of Karachi Stock Exchange Stock System and information was also available from its "Ultra Trade System"---Company also emphasized the practical difficulties with the maintenance of such a register---Order book as maintained by the company was not a substitute for the order register as required under the R.4(1) of Securities and Exchange Rules, 1971---Securities and Exchange Commission being cognizant of practical difficulties associated with the maintenance of such an order register manually and in order to facilitate the brokerage house, lenient view of the matter was taken instead of taking punitive action under R.8 of Brokers and Agents Registration Rules, 2001---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.

(d) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4(ii)---Non-compliances with regulation 4(ii)---Effect---Findings of the Enquiry Officer revealed that the Chief Executive Officer of the company took decisions regarding investments, whereas, the head of the Sales Department obtained the orders of customers during the review period---Both personnel directly conveyed orders to equity dealers without any co-ordination with each other; as a result Central Depository Company of Pakistan Regulations, 2002, could not be complied with---Contention of the company was that it kept its proprietary trading separate from customers' trading and for that purpose had created a Chinese wall between the two functions so as to follow regulations in spirit---Company had further claimed that no proprietary trading was carried out in its branches---Company though was following the law in its spirit, the objective of the law required it to be followed in letter as well as the spirit---Company, in circumstances was advised to adopt the practice so that the requirements of the Regulation 4(ii) of the Central Depository Company of Pakistan Regulations, 2002 were adequately followed in light of the same---No punitive action was taken against the company.

(e) Central Depository Company of Pakistan Regulations, 2002---

---Regln.6---Non-compliance with Regulation 6 of Central Depository Company of Pakistan Regulations, 2002---Findings of the Enquiry Officer revealed that Regln.6 of Central Depository Company of Pakistan Regulations, 2002, was not complied with by the company---Regulation 6 had provided that the broker would disclose to his customer placing an order in a particular security, while accepting such order, whether he intended to or was carrying out proprietary trading in that security on that particular day; that the broker, if doing proprietary trading through agents/traders, would disclose the names of such persons to his customers---Company was following the law in its spirit, the objective of the law required it to be followed in letter as well as in sprit---Company, in circumstances was advised to adopt the practice so that the requirements of Regulation 6, were adequately followed---No punitive action 'was taken against the company.

(f) Securities and Exchange Rules, 1971---

----R.8(1)(a) & (c)---Brokers and Agents Registration Rules, 2001, R.8---Difference in the back office record and C.D.C. statements---Findings of the Enquiry Officer revealed difference between the holdings of book entry securities by clients as per the back office record and as per C.D.C. balance statements---Contention of the company was that differences were attributed to various factors such as slow speed of internet service, repeated disconnections with the C.D.C. and time lag in communication---Company had further contended that those differences were temporary in nature and were corrected immediately---Instead of taking punitive action against the company under R.8 of Brokers and Agents Registration Rules, 2001, a lenient view of the matter was taken in circumstances---Company was directed to design and implement a sound system of internal controls in order to ensure that full compliance would be made of all the rules and regulations in future for avoiding any punitive action under the law.

Mirza Mehmood Ahmad and Muhammad Rafique Present.

2008 C L D 627

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

MUSTEHKAM CEMENT LIMITED: In the matter of

Show-Cause Notice No. EMD/233/384/2002-2586, dated January 18, 2008, decided on 25th March, 2008.

Companies Ordinance (XLVII of 1984)--

----Ss.233, 244, 245 & 476---Issuance of balance-sheet improperly without annexing relevant documents---Imposition of penalty--Annual accounts submitted by the company for the year ending June 30, 2007 with the Commission had revealed that company had failed to annex with the said report documents as enumerated in S.244 of the Companies Ordinance, 1984---Company had also failed to annex Directors' Report with said quarterly accounts---Counsel for the company admitted the default of the company and requested for lenient view in the light of his commitment that the company would be careful in complying with the requirements of law in future---Default was not inadvertent, as the management of the company did not pay serious attention towards complying with the mandatory provisions of Companies Ordinance, 1984---Considering the. fact that counsel for the company had provided Directors' report for the annual accounts and had given assurance for future compliance, lenient view was taken of said default and instead of imposing penalty of Rs.5,000 on each Director of the company, penalty of Rs.5,000 was imposed on Chief Executive of the company, which he would deposit within thirty days from the receipt of order.

M. Javed Panni, Authorized Representative.

2008 C L D 631

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

BAWA SECURITIES (PRIVATE) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/119/07/dated August 24th, 2007, decided on 26th December, 2007.

(a) Central Depository Company of Pakistan Regulations, 2002--

----Regln.4---Brokers and Agents Registration Rules, 2001, R.8 & Third Schedule---Making blank sales---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002 prohibited blank sales, but findings of the Enquiry Officer had revealed 6,829 instances of blank sales by the company during the review period---Contention of company was that instances identified by the Enquiry Officer were not blank sales and the respective clients had pre-existing interest at the time of the trades---Further contention of the company was that in certain cases customers instructed execution of a sale order and undertook to deliver securities to the broker-6,013 instances of blank sales had been established to have been made by the company in violation of Regulation 4 of Central Depository Company of Pakistan Regulations, 2002 attracting sub-rule (iii) of R.8 of Brokers and Agents Registration Rules, 2001 and company also failed to comply with clause A5 of the Code of Conduct contained in the Third Schedule of Brokers Rules, 2001, thereby attracting sub-rule (iv) of R.8 of said rules---Penalty of Rs.100,000 was imposed on the company under R.8(b) of Brokers and Agents Registration Rules, 2001.

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

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Findings of the Enquiry Officer had revealed that order register as mentioned in R.4(1) of Securities and Exchange Rules, 1971 was not maintained by the company during the review period---Contention of the company was that said register was not possible to maintain due to practical difficulties and computer generated reports were maintained as a solution---Said computer generated reports as described by the company were not a substitute for the order register as required under R.4(1) of Securities and Exchange Rules, 1971---Securities and Exchange Commission, however, was cognizant of the practical difficulties associated with the maintenance of such an order register manually---Lenient view of the matter was taken and instead of taking any punitive action under R.8 of Brokers and Agents Registration Rules, 2001, a caution was considered sufficient---Company was directed to ensure that full compliance was made of all regulations in future for avoiding any punitive action under the law.

(c) Securities and Exchange Rules, 1971---

----R.4(4)---Brokers and Agents Registration Rules, 2004, R.8---Failure to provide confirmation of orders---Findings of the Enquiry Officer revealed that confirmation of orders executed were not provided to the clients on a regular basis---Contention of the company was that it had now placed a system of sending the order confirmations to its clients through e-mail on a daily basis---Company had further contended that majority of its clients comprised retail clients who collect their trade confirmation personally on daily basis--Considering said facts, no punitive action was necessary under R.8 of the Brokers and Agents Registration Rules, 2001.

(d) Central Depository Company of Pakistan Regulations, 2002---

----Regin.6.2-A.1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. balance statements---Findings of the Enquiry Officer revealed that company did not have a practice to send C.D.C. balance statements to all of its customers by the 10th of each month as required under. Central Depository Company of Pakistan Regulations, 2002---Contention of the company was that said balance statements were regularly sent to its clients through courier, however, evidence of dispatch of statements was impractical to maintain---Considering said fact, no punitive action was necessary under S.28 of the Central Depositories Act, 1997---Company was directed to take measures to maintain evidence of dispatch of said balance statements to its clients in order to demonstrate compliances with the Central Depository Company of Pakistan Regulations, 2002.

Shoaib Chamdia Present.

2008 C L D 639

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

MOTIWALA SECURITIES (PRIVATE) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/123/07, dated 10th, October 2007, decided on 22nd January, 2008.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Reglns.4 & 5---Brokers and. Agents Registration Rules, 2001, Rr.8, 12 & Sched.---Making blank sales in violation of rules and regulations---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002, prohibited blank sales, whereas findings of the Enquiry Officer had revealed 2444 instances of blank sales during the review period---Perusal of the information submitted by the company, transpired that 434 out of 2444 instances were not blank sales as the respective customers had purchased the shares before making the sale---No valid justification or supporting documents were provided for remaining 2010 instances of blank sales and it was established that on 2010 occasions short sales had been made without meeting the requisite criteria as provided in Regln.5 of Central Depository Company of Pakistan Regulations, 2002 in terms of Rule 8 of Brokers and Agents Registration Rules, 2001---Company having violated Central Depository Company of Pakistan Regulations, 2002 attracting Rule 8 of Brokers and Agents Registration Rules, 2001, penalty of Rs.100,000 was imposed on the company.

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

----R.4---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order Register---Under Rule 4(1) of Securities and Exchange Rules, 1971, all orders to buy or sell securities which a member could receive, would be entered in a chronological order in a register to be maintained in a form which would show the name and address of the persons who placed the order, name and number of the securities to be bought or sold, the nature of transaction and the limitation, if any---Findings of the Enquiry Officer had revealed that said Register was not maintained by the company during the review period---Security and Exchange Commission, however was cognizant of the practical difficulties associated with the maintenance of said order Register manually---Taking a lenient view of the matter, no punitive action was taken against the company under R.8 of Brokers and Agents Registration Rules, 2001---Caution, was considered to suffice, with direction to the company to ensure 'that full compliance was made of the Regulations in future for avoiding any punitive action under the law.

(c) Brokers and Agents Registration Rules, 2001---

----Ss.8, 12 & Sched.---Change of trade---Clauses A1 and A2 of the Code of Conduct contained in the Third Schedule read with R.12 of the Brokers and Agents Registration Rules, 2001, provided that a Broker would maintain high standard of integrity, promptitude and fairness in the conduct of his business and that a Broker would act with due skill, care and diligence in the conduct of all his business---Findings of the Enquiry Officer had revealed various instances where trades entered on account of a client were subsequently assigned to another client in the Back ,Office record---Broker had failed to comply with clauses Al and A2 of the Code of Conduct contained in the Third Schedule to the Brokers and Agents Registration Rules,'2001 attracting sub-rule (iv) of the R.8 of said. Rules, a penalty of Rs.1000 was imposed on the company under R.8(b) of the Rules.

(d) Brokers and Agents Registration Rules, 2001---

----R.8---Securities and Exchange Rules, 1971, R.8---Difference between the number of shares entered in C.F.S. and the number of shares released---Rule 8(a)(b) of Securities and Exchange Rules, 1971, provided that every member would prepare and maintain books of accounts and other documents in a manner that would disclose a true, accurate and up to date position of his business---Company made submission that a reconciliation of the number of shares were entered and released---No punitive action, in circumstances was required under R.8 of Brokers and Agents Registration Rules, 2001.

(e) Central Depository Company of Pakistan Regulations, 2002---

----Regln.6.2A.1---Central Depositories Act (XIX of 1997), S.28---Failure to send C.D.C. Balance Statements---Imposition of penalty---Regulation 6.2A.1 of Central Depository Company of Pakistan Regulations 2002, provided that every participant would send by the 10th day of every month to all the sub-Account Holders maintaining Sub-Accounts under the control of such participants Holding Balance Statements showing the number of every Book-entry Security entered in every such Sub-Account---Findings of the Enquiry Officer had revealed that company did not have a practice to send the C.D.C. Balance Statements to all of its customers by the 10th of each month as required under the Regulations---Company had submitted that it regularly sent C.D.C. Holding Statements to its clients through courier service---Company, to prove its claim, had submitted supporting documents---No punitive action, in circumstances was required against the company under S.28 of Central Depositories Act, 1997.

Shahid Ali-CEO Present.

2008 C L D 648

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

H.M. IDREES H. ADAM: In the matter of

Show-Cause Notice No.SMD-SOUTH/,SCN/102/07, dated 1st August, 2007, decided on 11th February, 2008.

Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Sched.---Making blank sales in violation of rules and regulations---Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002 prohibited blank sales, whereas the findings of the Enquiry Officer had revealed 126 instances of blank sales during the review period---Company had contended that said 126 instances were in fact not blank sales and those represented arbitrage with another Stock Exchange---Some transactions were claimed by the company as customer to customer transactions---Company, however, could not produce any evidence in proof of its contentions---Validity---Held, it had fully been established that on 126 occasions blank sales had been made in violation of Regln.4 of Central Depository Company of Pakistan Regulations, 2002 attracting sub-rule (iii) of Rule 8 of Brokers and Agents Registration Rules, 2001; company also failed to comply with clause A5 of the Code of Conduct in the Third Schedule to Brokers and Agents Registration Rules, 2001---Penalty of Rs.50,000 was imposed on the company under R. 8 (b) of Brokers and Agents Registration Rules, 2001.

H.M. Idress H. Adam Present.

2008 C L D 651

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah (Executive Director Securities Market Division)

MUHAMMAD AYUB YOUNUS SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/112/07/dated August 3rd, 2007, decided on 8th February, 2008.

Brokers and Agents Registration Rules, 2001---

----Rr.8, 12 & Sched.---Non-compliance with applicable laws and regulations---Findings of the Enquiry Officer had revealed several instances of potential non-compliances with laws---Notice was issued to the company stating that company had, prima facie, contravened Rule 12 of Brokers and Agents Registration Rules, 2001, read with clause AS of the Code of Conduct contained in the Third Schedule to the Rules---Company submitted a written reply and informed Securities and Exchange Commission that Enquiry Officer's report pertained to a different Brokerage House, which company was a separate legal entity---Record had shown that contention of the company was correct---No punitive action, in circumstances, was required to be taken in consequence of show-cause notice, which was withdrawn.

M. Aamir Fattani Present.

2008 C L D 654

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director (Securities Market Division)

M.R. SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.MSW/SMD/LSE/1(5)2006, dated October 31st, 2007, decided on 27th December, 2007.

(a) Brokers and Agents Registration Rules, 2001---

----Rr.8, 12 & Sched.---Short Selling Regulations, 2002, Regln.4---Making blank sales---Under Regln.4 of the Short Selling Regulations, 2002, blank sales were not permissible, whereas findings of the Enquiry Officer had revealed three instances of blank sales during the review period-Claim of the company was that said three blank sales were result of an error and were not deliberate attempts to execute same-Two of said blank sales had been made in violation of Regln.4 of the Short Selling Regulations---Security Exchange Commission was of the opinion that broker had failed to comply with requirement of Security and Exchange Commission of Pakistan Act, 1997 or Security and Exchange Ordinance, 1969 or of any rule or direction made or given thereunder---Company had failed to comply with. Commission's directive thereby attracting sub-rule (v) of R.8 of the Brokers and Agents Registration Rules, 2001, however keeping in view small number of sales and shares involved and statement of the company that it had already taken corrective actions and assured that such violations would not occur in future, a lenient view was taken of the matter instead of taking punitive action against the company under R.8 of the Brokers and Agents Registration Rules, 2001---Caution to company would suffice with direction to the company to ensure compliance of all Rules and regulations in. future to avoid any punitive action under the law.

(b) Brokers and Agents Registration Rules, 2001---

----R.8---Failure to maintain account opening forms---Effect---In terms of Security and Exchange Commissions' directive, Brokers were required to maintain 'Account Opening Forms' in conformity with the Standardized Account Opening Forms prescribed by the Commission---Findings of the Enquiry Officer had revealed non-compliance of said directive of the Commission by the company attracting provisions of R.8 of Brokers and Agents Registration Rules, 2001, however as the company had already taken corrective actions and assured that such violations would not occur in future a lenient view was taken of the matter and instead of taking punitive action against the company, a caution was considered to suffice with direction to the company to ensure that full compliance would be made of all Rules and Regulations and the directives of the Commission in future for avoiding any punitive action under the law.

(c) Brokers and Agents Registration Rules, 2001---

----R.8---Execution of orders of other members of the same Exchange in violation of Rules---Imposition of penalty---In terms of directive of the Securities and Exchange Commission, members were not allowed to trade through other brokerage houses within the same Exchange---Findings of the Enquiry Officer had revealed that company had executed orders on behalf of the other members---Company had failed to comply with directive of Commission thereby attracting sub-rule (v) of R.8 of Brokers and Agents Registration Rules, 2001---Penalty of Rs.5000 was imposed on the company under R.8(b) of Brokers and Agents Registration Rules, 2001.

Engr. Mazhar Rafiq, Chief Executive, Present.

2008 C L D 665

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Executive Director (Securities Market Division)

SIDDIQ MOTI: In the matter of

Show-Cause Notice No.SMD-SOUTH/SCN/122/07, dated 10th, October 2007, decided on 22nd January, 2008.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Sched.---Making blank sales---Imposition of penalty---In terms of Regln.4 of Central Depository Company of Pakistan Regulations, 2002, blank sales were not permissible, whereas findings of the Enquiry Officer revealed 4,584 instances of blank sales during the review period---Blank sale was a sale which was made without owning shares, without pre-existing interest or without entering into a contractual borrowing arrangement to meet delivery of shares---Merely the fact that the respective customers had purchased the shares sold on the same day, securing their position, would not establish that those sales were not blank sales, if at the time of making the sale, the pre-requisites were not met---On 4,584 occasions blank sales had been made in violation of Regln.4 of Central Depository Company of Pakistan Regulations, 2002 attracting sub-rule (iii) of R.8 of Brokers and Agents Registration Rules, 2001---Company had also failed to comply with clause A5 of the Code of Conduct in the Third Schedule to the Brokers and Agents Registration Rules, 2001---Penalty of Rs.100,000 was imposed on the company under R.8(b) of Brokers and Agents Registration Rules, 2001.

(b) Central Depositories Act (XIX of 1997)---

----Ss.2(27), 3 & 28---Failure to open sub-account---Imposition of penalty---Findings of the Enquiry Officer had revealed that in case of certain customers, sub-accounts were not opened and in the absence of those sub-accounts, the shares beneficially owned by those customers were affected---Submission of the company was that all the customers whose shares were held in the sub-account, had given authority letters for that practice and those customers were not interested in opening individual C.D.C. Sub-­accounts---C.D.C. sub-accounts were to be opened to establish the title and beneficial ownership of the shares and keeping the shares of clients in a C.D.C. sub-account opened in the name of other customer, was a serious violation of the Central Depositories Act, 1997; as it would result in the change in the beneficial ownership of the shares---Authority from a customer could not be circumvented being a mandatory provision of the law---Penalty of Rs.25,000 was imposed on the company in terms of Section 28 read with Section 3 of Central Depositories Act, 1997.

(c) Securities and Exchange Rules, 1971---

----R.8(1)(a) & (c)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain separate records of shares of customers---Findings of the Enquiry Officer had revealed that the company did not maintain separate records of the shares of customers---Contention of the company was that it maintained proper records of shares pledged in. electronic form---Further contention was that shares were pledged with the authority of the customers---Pledging of customers' shares with Financial Institutions for obtaining finance, was not an acceptable practice and in order to provide financing to the customers, C.F.S. and margin financing could be utilized---Authority from a customer could not circumvent a mandatory provision of law---Considering the facts of the case, lenient view of the matter was taken--Instead of taking punitive action under Rule 8 of Brokers and Agents Registration Rules, 2001, a 'caution' would suffice and it was further directed that the company should ensure that full compliance would be made of all the regulations in future for avoiding any punitive action under the law.

(d) Brokers and Agents Registration Rules, 2001---

----Rr.8, 12 & Sched.---Lack of fairness, due care and diligence in conduct of business---In terms of clauses A1 and A2 of the Code of Conduct contained in the Third Schedule read with Rule 12 of Brokers and Agents Registration Rules, 2001, a broker would maintain high standard of integrity, promptitude and fairness in the conduct of his business---Broker would also act with due skill and diligence in the conduct of all his business---Findings of the Enquiry Officer revealed an account which was opened in the name of a minor---Findings of the Enquiry Officer also revealed an account which was opened in the name of an employee of the company, but the trading was carried out by another person and profits made during the review period on that account were transferred to other accounts---Company had contended that the title of the account was changed to the name of the mother of the minor---Company agreed that opening the account in the name of minor was an irregularity which had been corrected---Regarding findings of the Enquiry Officer that the company had opened account in the name of different employees, company had contended that it did not open any account in the name of an employee and that account referred to in the report of Enquiry Officer pertained to a c4ent of the company and balances were transferred out of his account upon his written instruction--Considering said facts, a lenient view was taken of the matter and instead of taking punitive action under R.8 of Brokers and Agents Registration Rules, 2001, a 'caution' to the company was considered to suffice---Company was directed to ensure that full compliance would be mode of all the Rules and Regulations in future for avoiding any punitive action under the law.

Usman Shaikh and Javed Ibrahim Present.

2008 C L D 676

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director, (Securities Market Division)

MAXIMUS SECURITIES (PVT.) LIMITED: In the matter of

Show-Cause Notice No.MSW/SMD/LSE/1(5)2006/3, dated October 8th, 2007, decided on 17th January, 2008.

(a) Central Depository Company of Pakistan Regulations, 2002---

----Regln.4---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Sched.---Making blank sales in violation of Regulations--Imposition of penalty---Regulation 4 of Central Depository Company of Pakistan Regulations, 2002, prohibited blank sales, whereas findings of the Enquiry Officer had revealed 41 instances of blank sales during the review period---Securities and Exchange Commission, was of the opinion that company had failed to comply with the requirements of the Act, Ordinance or of Rules and directions made or given thereunder---Company had contravened the Rules and Regulations of the Exchange in terms of R.8 of Brokers and Agents Registration Rules, 2001 and company had failed to follow any requirement of the Code of Conduct laid down in the Third Schedule of the Rules---Penalty of Rs.25,000 was imposed on the company under R.8(b) of the Brokers and Agents Registration Rules, 2001.

(b) Brokers and Agents Registration Rules, 2001---

----R.8---Failure to attach list of transaction fee etc. with AOF---Effect---Findings of the Enquiry Officer had revealed that list of transaction fee, commission to be charged by the company and other C.D.C. charges to be levied was not attached with AOF---Unattested copies of CNICs of the clients were attached with said AOFs---Company had acknowledged said violations, however, it had assured that it had taken corrective steps and was currently complying with the direction of the Security and Exchange Commission and requirements of SAOF --Company though had failed to comply with directions of the Commission thereby attracting R.8 of Brokers and Agents Registration Rules, 2001, but as company had taken corrective actions and had assured the Commission that such violations would not occur in future, a 'lenient view was taken of the matter---Instead of taking any punitive action against the company a 'caution' to company was considered to suffice-Company was directed to ensure that full compliance be made of all rules, regulations and directions of the Commission in the future for avoiding any punitive action under the law.

(c) Securities and Exchange Rules, 1971--

----R.4(1)---Brokers and Agents Registration Rules, 2001, R.8---Failure to maintain order register---Rule 4(1) of Securities and Exchange Rules, 1971, provided that all orders to buy or sell securities which a member could receive would be entered in the chronological order in a register to be maintained by him in that respect---Findings of the Enquiry Officer revealed that said order register was not maintained by the company during the review period---Company had acknowledged that it had not maintained separate order register---Effect---Company had violated Rules and Regulations, but in view of facts of the case, instead of taking punitive action against the company under R.8 of Brokers and Agents Registration Rules 2001, a 'caution' would suffice---Company was directed to ensure that full compliance be made of the law, regulations and directions of the Commission in future for avoiding any punitive action under the law.

(d) Securities and Exchange Rules, 1971---

---R.4---Brokers and Agents Registration Rules, 2001, R.8---Execution of order---Failure to transmit confirmation of said order---Effect---Under R. 4(4) of Securities and Exchange Rules, 1971, a member executing an order of a customer, would, within twenty four hours of the execution of said order transmit to the customer a confirmation which would include certain information---Findings of the Enquiry Officer had revealed that said confirmations were not sent to the clients on regular basis---Company had asserted that most of its clients were residing outside Pakistan to whom it sent E-Mail within 24 hours of execution of their trades, whereas some of the clients themselves collected trade confirmations---Validity---Company was not fully complying with the requirements of R.4(4) of Securities and Exchange Rules, 1971; however, in view of facts of the case, instead of taking punitive action against the company, a lenient view was taken and 'caution' was considered to suffice---Company was directed to ensure that full compliance would be made of all the laws, regulations and directions of the Commission in future for avoiding any punitive action under the law.

(e) Brokers and Agents Registration Rules, 2001---

----R.8---Failure to maintain separate blank account for Clients Funds---In terms of directive of Commission, Exchanges were to ensure that Brokers would follow the practice of segregating assets of clients from the Brokers' assets in order to ensure that clients' assets were not misused---For such purposes Brokers should have a separate blank account---Findings of the Enquiry Officer revealed that the company was not maintaining a separate blank account---Company had failed to comply with directive of the Commission---Plea that company was not aware of the directive of the Commission, would not absolve it from its obligation to comply with Commission's directive; however, in view of facts and circumstances of the case, instead of taking punitive action against the company under R.8 of Brokers and Agents Registration Rules, 2001, a caution to the company was considered to suffice---Company was directed to ensure that full compliance would be made of the Rules and Regulations and direction of the Commission in future for avoiding any punitive action under the law.

Adeel Arif Khan, Chief Executive Officer Present.

2008 C L D 693

[Securities and Exchange Commission of Pakistan]

Before Akif Sewed, Executive Director, (Specialized Companies Division)

Amalgamation of Messrs UNIVERSAL LEASING CORPORATION LIMITED: In the matter of

Companies Ordinance (XLVII of 1984)---

----S.282-L---Amalgamation of non-banking finance companies---Both non-banking finance companies, which were incorporated under the Companies Ordinance, 1984 submitted joint application to. Securities and Exchange Commission of Pakistan for sanction of scheme of amalgamation pursuant to the provisions of S.282-L of the Companies Ordinance, 1984---Securities and Exchange Commission considered and examined the joint application for amalgamation along with the required information/documents-Amalgamation scheme submitted by the two companies was sanctioned by the Commission in terms of S.282-L of the Companies Ordinance, 1984 subject to imposition of certain conditions---If subsequent to sanctioning of the scheme of amalgamation by the Commission, any fact was found to have been misrepresented to the Commission by the amalgamating entities, the Commission would have the right to take any appropriate measure as it deemed fit, and would not confine itself to the cancellation of licence of merged companies.

2008 C L D 731

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

UNITED BRANDS LIMITED: In the matter of

Show-Cause Notice No. EMD/233/616/2002/2822-2828, dated February 13th, 2008, decided on 28th March, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss. 227, 229 & 476--Amount payable on account of staff provident fund---Failure to make payment to the fund---While examining the annual accounts of the company for relevant year, it transpired that company had not made payment to the staff provident fund in compliance with the provisions of S.227 of the Companies Ordinance, 1984---Object of provisions of S.227 of Companies Ordinance, 1984 which were clear and explicit, was to secure the amount of provident fund of the employees by the company and that fund was for the use and benefit of the employees only---Law required that all moneys contributed by the employees as well as the company's own contribution including the profit/interest thereon must be deposited in a separate bank account or invested in accordance with the provisions of S.227(1)(2) of Companies Ordinance, 1984---Where a trust had been constituted for that specific purpose, the company had an obligation to pay the employees provident contribution including its own contributions to the trustees within fifteen days from the date of collection---Law did not permit any company to utilize the funds of provident fund for its commercial purposes---Action was necessary under S.229 of the Companies Ordinance, 1984 which had provided punishment with a fine which could extend to five thousand rupees; however, taking into consideration the company's commitment for constituting the fund through a trust deed and assurance by the authorized representatives that all the moneys of the fund including mark-up accrued on the outstanding amounts of the fund would be transferred to the fund in accordance with the law, instead of imposing penalty on the Directors of the Company, warned them to observe in future the compliance of law in letter and spirit; and if any default of the provisions of Companies Ordinance; was observed in future, a stem action would be taken against them.

Muhammad Suhail and Zubair Palwala Present.

2008 C L D 746

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

GENERAL TYRE AND RUBBER COMPANY OF PAKISTAN LIMITED: In the matter of

Show-Cause Notice No. EMD/233/430/2001-2963-68, dated February 26th, 2008, decided on 23rd April, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss. 196, 208 & 476---Making investments in associated company and undertaking in violation of law---Imposition of penalty---While examining the annual accounts of the company concerned, it was observed that management of the company had subscribed 302,100 right shares of associated company and paid Rs.3.021 million as consideration thereof---No special resolution was passed by the company in that respect as required under provisions of S.208 of the Companies Ordinance, 1984---After subscribing the rights, company disposed of the same to another associated company for consideration of Rs.3.074 million; however, at the date of sale of such shares market price was much higher than the price on which said shares were sold---Board of Directors through such arrangement, had caused a loss to the company and its members and thus such an arrangement fell within the ambit of subsection (1) of S.196 of the Companies Ordinance, 1984---Directors of the Company, in circumstances had violated the provisions of subsection (1) of S.196 and S.208 of Companies Ordinance, 1984---Company, in circumstances had violated provisions of S.208 of Companies Ordinance, 1984 and had failed to exercise due care while subscribing right shares of its associated company and by giving preferential treatment to associated companies by allowing abnormal credit period of three times of its credit policy---Default having been admitted, fine of one million rupees was imposed on the company in aggregate on the Directors including the Chief Executive of the company for contravention of subsection (1) of S.208 of the Companies Ordinance, 1984.

Ashfaq Ahmed Khan, Corporate Consultant Ashfaq Ahmed Khan and Associates Present.

2008 C L D 786

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

Messrs HASEEB WAQAS SUGAR MILLS LIMITED: In the matter of

Show-Cause Notice No. EMD/233/638/2002-2342-2349, dated 12th December, 2007, decided on 5th May, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss. 208 & 476---Making investments in associated companies and undertaking without authorization of shareholders---Imposition of penalty---Director of the company had invested funds in associated companies without authorization of the shareholders---Violation of S.208 of the Companies Ordinance, 1984 was established and all Directors were responsible for the said violation---Directors owe fiduciary duties to the company they serve 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 the shareholders---Directors, in circumstances had breached their fiduciary duties which they owed to the company and its shareholders---Company, in fact had been acting as a financier by providing funds to associated concerns to fulfil their financial needs at the cost of the company---Violation of S.208 of the Companies Ordinance, 1984 was established and all Directors were held responsible for the said violation; however, instead of imposing maximum penalty of ten million rupees on each of the Directors as prescribed by subsection (3) of S.208 of Companies Ordinance, 1984 fine of rupees five lac was imposed on one Director who had been acting in deviation of the policies and procedure of the company.

Mansoor Ali Shah Present.

2008 C L D 796

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

JAHANGIR SIDDIQUI & COMPANY LIMITED: In the matter of

Show-Cause Notice No.EMD/233/644/2002-3104-05, dated 4th March, 2008, decided on 25th April, 2008.

Companies Ordinance (XLVII of 1984)---

---Ss. 246 &, 476--S. R. O. 865(I)/2000, dated 6-12-2000---Failure to submit periodical statements of the accounts, information or other reports---Half yearly account for the relevant year had. shown that the company during that period made equal investments in its associated companies---Company had made said investments in the associated companies based on resolution passed by the shareholders of the company in the Extraordinary General Meeting---Company had failed to comply with the requirement of S.R.O.865(I)/2000 dated 6-12-2000 by non-providing the required information to its share-holders in the subsequent general meetings of the company---Effect--Management of the company was duty bound by the law to keep the share-holders informed and provide them complete details of the decisions approved by them in order to safeguard their interest---In the present case share-holders should have been informed in the meetings of said detail of decision---Concerned officers of the company had failed to clarify their position with respect to non-compliance with the requirement of notification---Considering track record of the company and taking into consideration that the company had complied with the requirements of the notification for the forthcoming General. Meetings of the share-holders, instead' of imposing penalty, officers of the company were warned to observe the compliance of law in letter and spirit in future.

Yousaf Ali Sayeed of Sayeed and Sayeed Advocates and Legal Consultant (Present).

2008 C L D 803

[Securities and Exchange Commission of Pakistan]

Before Abid Hussain, Director (Enforcement)

PAKISTAN PVC LIMITED: In the matter of

Show-Cause Notice No. EMD/233/506/2002-2870-2879, dated 15th February, 2008, decided on 28th April, 2008.

Companies Ordinance (XLVII of 1984)---

---Ss. 227, 229 & 476---Failure of Company to deposit amount of contribution payable to Provident Fund Trust in accordance with law---Imposition of penalty---Examination of annual audit account of the company had revealed that amount payable to Provident Fund Trust by the company was not deposited according to S.227 of Companies Ordinance, 1984---Company admitted default, but had expressed that company, ever since its privatization in 1992, was facing severe financial crises and it was further expressed that company being in litigation with its ex-employees in matter of the payment of their final dues including payment of provident fund, matter had become sub judice for the Commission---Validity---Object of provisions of S.227 of the Companies Ordinance, 1984 was to restrain the management of the company from utilizing any portion of the fund collected as contributions to a provident fund and to secure the amounts collected from the employees of the company only for the benefit of the employees of the company---Law required that when a trust had been created by a company with respect to any Provident Fund, the company had an obligation to pay the contributions including its own contribution to the trustee within fifteen days from the date of collection of said amount--Amounts collected from the employees as contributions to a provident fund were in the nature of trust money in the hands of the company and the same must be paid to the trustees within stipulated time, whereas the trustees were responsible to invest the money of the fund in accordance with the provisions of law---Contention of the Directors of the company that moneys were not paid to the trust due to liquidity crunch, was not tenable---Payment towards the provident fund was not given any priority by the company and instead was utilized as working capital in violation of the provisions of S.227 of the Companies Ordinance, 1984---Directors had failed to comply with the mandatory requirement of S.227 of the Companies Ordinance, 1984 by not making timely payment to the provident Fund Trust---Considering that the default was admitted by the Directors and that Chief Executive of the Company was already penalized for violating the provisions of S.227 of the Companies Ordinance, 1984, lenient view of the default was taken and instead of imposing a fine on the Chief Executive and Directors .of the Company under S.229 of the Companies Ordinance, 1984, Chief Executive of the Company was directed in terms of S.473 of the Companies Ordinance, 1984 to appoint statutory auditor to evaluate and verify the amount due to the Provident Fund Trust and verify the amount of Provident Fund which was sub judice due to pendency of the matter in the court of law and amount so assessed along with interest thereon, would be deposited in the Bank account as provided in S.227 of the Companies Ordinance, 1984.

Reyaz Shaffi, Chairman and Chief Executive attended.

Asif Shaffi, Director Pakistan PVC Limited as Authorized Representative of Board of Directors.

2008 C L D 809

[Securities & Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

Messrs JDW SUGAR MILLS LIMITED: In the matter of

Show-Cause Notice No. EMD/233/34812002-3394-3401, dated 3rd March, 2008, decided on 6th May, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss. 208, 476 & 492--Advancing amount to subsidiary company without obtaining approval of share-holders--Imposition of penalty--Company advanced amount to its subsidiary company without obtaining approval of its share­holders---Board of Directors of the company was fully aware of the requirements regarding approval of share-holders for making investment. in associated companies in respect of renewal/ sanction of short-term working capital advance to subsidiary company, however that was not complied with by the Directors of the company---Such was mandatory requirement of S.208 of the Companies Ordinance, 1984 that funds could only be invested in the associated/subsidiary company under the authorization of the share-holders, but company had violated said mandatory requirements---Management of the company had deprived the share-holders to exercise their legitimate right to make a decision to invest in its subsidiary company---Directors of the company owed fiduciary duties to the company they served and to its share-holders; they must discharge their statutory obligations in good faith, fairness and honesty---Violation of provisions of S.208 of the Companies Ordinance, 1984 had been established, as funds of the company had been advanced in total disregard of the share-holders approval---Considering the representation of the counsel for the company that sufficient mark up was charged on the loan advanced by the company and subsequent transactions with the associated undertaking were made in compliance with S.208 of the Companies Ordinance, 1984, instead of imposing maximum penalty of one million rupees on each of the Directors of the company as prescribed by subsection (3) of S.208 of the Companies Ordinance, 1984, a fine of Rupees seven hundred thousand only was imposed on Chief Executive of the company who was mainly responsible for extending said advances and Directors were' reprimanded to remain careful in future.

Burton v. Bevan (1908) 2 Ch. 240 and City Equitable Fire Insurance Co. Ltd.'s case 1925 Ch 407 ref.

Shehzad A. Ellahi, Legal Counsel and Muhammad Rafique, CFO, JDW Sugar Mills Limited Present.

2008 C L D 825

[Securities & Exchange Commission of Pakistan]

Before Tahir Mahmoad, Executive Director (Enforcement)

SAPPHIRE TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/261/2002-3008-14, dated 26th February, 2008, decided on 19th May, 2008, Companies Ordinance (XLVII of 1984)---

----Ss. 208 & 476---Making investment in associated companies and undertakings without taking necessary approval---Imposition of penalty---During examination of annual audited accounts of the company for relevant year it was revealed that company made investment in the shares of another company-Company had also advanced a loan to another company for the purpose of leasing project land---Company stated that amount was invested in wholly owned subsidiary company without taking necessary approval as required under S.208 of the Companies Ordinance, 1984 and that said transaction took place due to understanding that there was S.R.O. whereby the holding company did not require any special resolution for the purpose of investment made in wholly owned subsidiary company---Validity---Default having been admitted, the provisions of S.208 of the Companies Ordinance, 1984 had been violated and the Directors of the Company were liable for the penalties; however, keeping in view the fact that said amount was advanced to a wholly owned subsidiary company; and that the Commission vide notification had exempted such investments from the scope of S.208 of the Companies Ordinance, 1984, a lenient view was taken by imposing a token penalty of rupees three hundred and fifty thousands only on the Directors of the company.

Imtiaz Majeed of IIameed Majeed Associates (Pvt.) Limited, Present.

2008 C L D 861

[Securities & Exchange Commission of Pakistan]

Before Tahir Mahmood, Executive Director (Enforcement)

Messrs GARDEZI & CO. CHARTERED ACCOUNTANTS: In the matter of

Show-Cause Notice No.CLD/EMD/FIU/32/2006, dated 3rd March, 2008, decided on 3rd April, 2008.

Companies Ordinance (XLVII of 1984)---

----Ss. 255, 260 & 476---Powers and duties of the auditors---Failure of auditors to perform their professional duties With reasonable degree of care and skill---Imposition of penalty---Auditors were alleged to have been making audit reports to the members of the company otherwise than in conformity with the requirement of S.255 of the Companies Ordinance, 1984---Review of the accounts and underlying records of the company had shown that audited reports were materially misstated--Auditors appeared to have failed to discharge their duties and responsibility laid down in the Companies Ordinance, 1984---Apprehension was that auditors had failed to design audit procedure in a manner so as to have enabled the discovery of violation and had failed to appropriately modify all the relevant reports---Capital requirement for the business of a company was contributed by its shareholders who might not necessarily be the persons managing the company---In the case of a listed company, the general public also contributed towards the equity of the company---Such persons did not have any direct control over the company except that they elected Directors for a period of three years and entrusted the officers of the company to them in the hope that they would manage the company to their benefits---Shareholders, in circumstances were the stake-holders and the ultimate beneficiaries-Practically however, shareholders had no control over the way their company was managed by the Directors appointed by them, it was, in circumstances necessary that there must be some arrangement in place whereby the share holders must get some independent view as to how the Directors have managed the affairs of the company---Law, in circumstances, had provided that shareholders should appoint an auditor, who would be responsible to audit the books of accounts and make out a report to them at the end of each year---Such was the only safeguard provided by the law to the shareholders to ensure that the business was carried on by the Directors in accordance with sound business principles and prudent commercial practices and no money of the company was wasted or misappropriated---Law, in circumstances, had made auditors responsible in case to make out report in accordance with the legal requirement and it was, extremely important for the auditors to be vigilant and perform their duties and obligations with due care while auditing the accounts and books of account---Auditors in the present case had committed a breach of fiduciary duty cast upon them by the shareholders and had signed the audit reports otherwise than in conformity with the requirement of S.255 of the Companies Ordinance, 1984 and had committed a default in terms of S.260 of the said Ordinance---Auditors having offered to co-operate with the Security and Exchange Commission in the legal course against delinquent management, they were only reprimanded.

Khawaja Abrar Majal, Barrister-at-Law Partners Messrs Gardezi & Co. Chartered Accountants, Shaikh Muhammad Tanvir, FCA, Syed Aftab Hameed, FCA and Shabir Ahmad, ACA Present.

2008 C L D 825

[Securities & Exchange Commission of Pakistan]

Before Tahir Mahmoad, Executive Director (Enforcement)

SAPPHIRE TEXTILE MILLS LIMITED: In the matter of

Show-Cause Notice No.EMD/233/261/2002-3008-14, dated 26th February, 2008, decided on 19th May, 2008, Companies Ordinance (XLVII of 1984)---

----Ss. 208 & 476---Making investment in associated companies and undertakings without taking necessary approval---Imposition of penalty---During examination of annual audited accounts of the company for relevant year it was revealed that company made investment in the shares of another company-Company had also advanced a loan to another company for the purpose of leasing project land---Company stated that amount was invested in wholly owned subsidiary company without taking necessary approval as required under S.208 of the Companies Ordinance, 1984 and that said transaction took place due to understanding that there was S.R.O. whereby the holding company did not require any special resolution for the purpose of investment made in wholly owned subsidiary company---Validity---Default having been admitted, the provisions of S.208 of the Companies Ordinance, 1984 had been violated and the Directors of the Company were liable for the penalties; however, keeping in view the fact that said amount was advanced to a wholly owned subsidiary company; and that the Commission vide notification had exempted such investments from the scope of S.208 of the Companies Ordinance, 1984, a lenient view was taken by imposing a token penalty of rupees three hundred and fifty thousands only on the Directors of the company.

Imtiaz Majeed of IIameed Majeed Associates (Pvt.) Limited, Present.

2008 C L D 116

[Supreme Court of Pakistan]

Present: Rana Bhagwandas, Hamid Ali Mirza and Ghulam Rabbani, JJ

MUHAMMAD AZHAR and others---Petitioners

Versus

Messrs UNITED TEXTILE MILLS through Manager---Respondent

Constitutional Petitions Nos. 236-K to 289-K of 2007, decided on 4th September, 2007.

Industrial Relations Ordinance (XXIII of 1969)---

----Ss. 2(viii)(a) & 25-A---West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance (VI of 1968), S. 11-A---Payment of Wages Act (IV of 1936), S.15---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.19---Closure of Mills by owners without permission of Authority---Workers' claim for dues, pendency of---Purchase of such Mills by respondent-Company in open auction in execution of decree passed by Banking Court in recovery suit against such Mills---Non-acceptance of claim of workers of such Mills by respondent­ company---Grievance petition by workers of such Mills against respondent-company---Validity---Managements of such Mills and that of respondent-company were entirely different---Respondent-company had purchased such Mills in open auction free from all liabilities,' claims, encumbrances and charges---Respondent-company, by purchasing such Mills had in actual effect taken a new birth---Respondent-company, after purchase, had not taken upon itself obligation to pay dues to workers of such Mills---Respondent-company could not be assumed to be successor of such Mills, and thus, it was not legally obliged to pay dues to workers of such Mills---Grievance petition .was dismissed in circumstances.

Rafique Ahmed. Advocate Supreme Court and Muhammad Mazher Ali B. Chohan, Advocate-on-Record for Petitioners.

Nemo for Respondent.

Date of hearing: 4th September, 2007.

2008 C L D 149

[Supreme Court of Pakistan]

Present: Rana Bhagwandas and Muhammad Nawaz Abbasi, JJ

IZHAR ALAM FAROOQI, ADVOCATE and another---Petitioners

Versus

Sheikh ABDUL SATTAR LASI and others -Respondents

C.P.L.As. Nos.488-K and 489-K of 2006, decided on 17th November, 2006.

[On appeal from the judgment of High Court of Sindh dated 12-9-2006 passed in C.Ps. Nos. D-217 and D-219 of 2005].

(a) Jurisdiction---

----Scope-Court having jurisdiction to adjudicate dispute and pass an order would also have implicit power to have its order implemented.

(b) Jurisdiction---

----Erroneous order passed by court of competent jurisdiction would not render same without jurisdiction.

(c) Jurisdiction---

----Jurisdiction could not be assumed with consent of parties---Mandatory for Court to decide at first instance question of its jurisdiction, even though such question not raised by a party---Jurisdictional defect would not be removed by mere conclusion of trial or inquiry---Objection to jurisdiction could be raised at any subsequent stage---Principles.

Jurisdiction cannot be assumed with the consent of the parties, and notwithstanding the non-raising of such an objection by the parties, the forum taking cognizance of the matter must, at the first instance, decide the question of its jurisdiction. There can be no exception to the principle that an order passed or an act done by a court or a Tribunal not competent to entertain the proceedings, is without jurisdiction; that it is mandatory for the court or Tribunal, as the case may be, to attend the question of jurisdiction at the commencement of trial or inquiry; and that objection to the jurisdiction can be raised at any subsequent stage.

(d) Jurisdiction---

----Non, fulfilment of mandatory condition for exercise of jurisdiction before court would render illegal its entire proceedings---Principles.

If a mandatory condition for the exercise of a jurisdiction before court, Tribunal or Authority is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revision equally suffer from illegality and are without jurisdiction.

Rashid Ahmed v. State PLD 1972 SC 271 fol.

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

----Ss.2(b) & 15(4)(6)---Auction of mortgaged property by hank without intervention of court---Claim of Bank/liability of borrower exceeding Rs. Fifty million---application by Bank to Banking Court for delivering possession of auctioned property to auction­purchaser---Pecuniary jurisdiction of Banking Court to decide such application---Scope---Banking Court could not take cognizance of a matter under S.15(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 beyond its pecuniary jurisdiction prescribed under S.2(b) thereof---Principles.

The plain reading of section 15(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 would unambiguously show that the jurisdiction of Banking Court either for the purpose of satisfaction of claim of the financial institution or disposal of allied matters must be determined in the light of provision of section 2(b) of the Ordinance, which is not confined only to the suits involving financial dispute, rather all matters directly or indirectly connected with the satisfaction of the claim of financial institution or the financial liability of a person are covered, and Banking Court is not supposed to entertain the proceedings under section 15(6) in a case involving' claim beyond its pecuniary jurisdiction.

Provision of section 2(b) of the Ordinance clearly shows that Banking Court established under the Ordinance cannot assume jurisdiction in a case in which claim of financial institution or the financial liability of a person is more than fifty million rupees, and all matters directly or indirectly connected with the claim of financial institution exceeding fifty million rupees arc exclusively adjudicatable by the High Court.

The Banking Court established under the Ordinance is not authorized to take cognizance of a matter under section 15(6) beyond its pecuniary jurisdiction prescribed under section 2(b) of the Ordinance.

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

----S.15(4)---Sale of mortgaged property by Bank without intervention of Court---Scope---Such sale without compliance of mandatory requirements of law in letter and spirit would invalidate sale as a whole---Principles.

The financial institution subject to the compliance of mandatory requirements of law is empowered to sell the mortgaged property under section 15(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 without the intervention of court, and in addition to the furnishing of necessary particulars of the mortgaged properties and detail of the outstanding liability of the mortgagor is also required to send notices to all concerned and file proper accounts .of sale proceedings in terms of section 15(10) of the Ordinance.

The sale of mortgaged property through auction without the compliance of the requirement of law in letter and spirit certainly invalidates the transaction as a whole.

The financial institution does not enjoy the unbridled and unlimited power to dispose of the mortgaged property in its sole discretion.

'Petitioner in Person (in C.P. No.488 of 2006).

Izhar Alam Farooqi, Advocate Supreme Court for Petitioner (in C.P. No.489 of 2006).

Wasim Sajjad, Sr. Advocate Supreme Court and A.A. Siddiqui, Advocate-on-Record for Respondent No. 1.

Date of hearing: 17th November, 2006.

2008 C L D 662

[Supreme Court of Pakistan]

Present: Abdul Hameed Dogar, C.J., Ijaz-ul-Hassan Khan and Ch. Ejaz Yousaf, JJ

Sqn. Ldr. (R.) KHURRAM ZAMAN---Appellant

Versus

Mrs. AFIA ZAFAR and others---Respondents

Civil Appeal No.264 of 2008, decided on 10th March, 2008.

[On appeal from the judgment dated 24-9-2007 of the Lahore High Court, Rawalpindi Bench, Rawalpindi passed in C.R. No.378 of 2007].

Civil Procedure Code (V of 1908)---

----O.XX, R.15---Arbitration Act (X of 1940), S.34----Partnership Act (IX of 1932), S.69---Suit for dissolution of un-registered partnership and rendition of accounts---Partnership deed providing mechanism to resolve dispute between partners through arbitration---Defendant's application for stay of suit before filing his written statement--Validity---Where party to an arbitration agreement started legal proceedings with respect to subject matter of such agreement, then other party would have a right to get such proceedings stayed so as to enable arbitration to proceed in terms thereof---Application for stay of suit was accepted in circumstances.

Pakistan International Airlines Corporation v. Messrs Pak Saaf Dry Cleaners PLD 1981 SC 553 ref.

Syed Wahid Hussain v. Maharajkumar Mahmud Masan Khan and others AIR 1961 Allahabad 409; Messrs Para Ram Darshan Lal v. Union of India and another AIR 1979 Delhi 135; Ali Muhammad v. Mirza Muhammad Hussain Beg PLD 1968 Lah. 712; Syed Naushab Ali v. Lt. Col. Mehmood Khan Durrani PLD 1972 Lah. 766; Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd. AIR 1964 SC 1882 and Usman v. Haji Omer and others PLD 1966 SC 328 distinguished.

Khawaja Muhammad Farooq, Advocate Supreme Court for Appellant.

.Respondents in person.

Date of hearing: 10th March, 2008.

2008 C L D 738

[Supreme Court of Pakistan]

Present: Muhammad Qaim Jan Khan, Muhammad Moosa K. Leghari, Syed Sakhi Hussain Bokhari and Sheikh Hakim Ali, JJ

AGRICULTURE DEVELOPMENT BANK OF PAKISTAN---Appellant

Versus

MUBARAK DAIRIES LIMITED and others---Respondents

Civil Appeal No.1214 of 2001, decided on 12th March, 2008.

(On appeal from the judgment dated 22-2-2001, passed by the Lahore High Court, Lahore in EFA No.316 of 2000).

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

----S. 171--Applicability of S.171, Contract Act, 1872---Pre­conditions.

The pre-condition for the applicability of section 171 of the Contract Act, 1872 is that there must not be an explicit or implied contract indicative of the intention of the depositors. If the customer has deposited the amount with specific instruction to adjust the amount in such and such account, in that event, when the bank accepts it as such, it cannot vary it or change and adjust it to any other account. Section 171 of the Contract Act would apply when no such specific, express or implied instructions at the time of deposit were conveyed or imparted to the Bank. Moreover, the provision of section 171 of the Contract Act is not applicable to the case on other counts also.

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

----S. 59---Phrase "whether a debtor in several distinct debts to one person makes a payment to him, either with express intimation or under circumstances implying that' the payment is to be applied to the discharge of some particular debt, the payment, if accepted must be applied accordingly"---Connotation---Bank, in the present case, was made to know through letter, the specific instructions by the customer to adjust the specified amount---Bank having accepted that amount with specific directions to adjust the same into the indicated loan account, was bound to adjust the same in that account---Bank, in pursuance of the indicated instructions, afterwards had no discretion/power/authority to vary that agreed adjustment for any other account on its own whim and will, without express consent of the customer---Where the Bank had adjusted such amount in another account of the customer on-its own discretion, S.59 of the Contract Act, 1872 would apply to the case---Principles.

Munshi Emamuddin Ahmed through Muhammad Abdur Rehman and others v. Province of East Bengal and others PLD 1952 Dacca 279 ref.

Iftikhar Malik, Advocate Supreme Court for Appellant.

Ray Muhammad Nawaz Kharal, Advocate Supreme Court for Respondents Nos. 1-5.

Date of hearing: 12th March, 2008.

2008 C L D 1103

[Supreme Court of Pakistan]

Present: Muhammad Nawaz Abbasi, Ijaz-ul-Hassan Khan and Mian Hamid Farooq, JJ

MUHAMMAD SHAFIQ and others---Petitioners

Versus

ARIF HAMEED MEHAR and others---Respondents

Civil Petition No.40 and 246 of 2008, decided on 14th April, 2008.

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

----Preamble---Constitution of Pakistan (1973), Art.184(3)---Environmental pollution--Arrangement of supply of clean water to the residents of Islamabad and disposal of waste and rubbish---General complaint that drinking water in Islamabad was polluted which was not upto the required standard and similarly due to other civic problems and cleanliness of the Capital City, there was also complaint of environmental pollution---Held, Supreme Court, in exercise of powers under Art.184(3) of the Constitution, could not make arrangement for removal of filth from public places but could certainly issue directions to the Municipal Committees, Corporations and other concerned agencies in the federal and provincial governments to take necessary steps and adopt measures to stop environmental pollution---Concerned Secretaries in the Federal as well as Provincial Governments shall issue necessary directions to all concerned including public representatives in the local bodies in urban and rural areas to keep proper check and control on the environment problem by deputing special teams to inspect the local areas and take remedial steps and in case of any breach also initiate appropriate action in accordance with law---Compliance reports regarding steps taken and measures adopted by the Secretaries in the Federal and Provincial Governments shall be submitted to the Registrar of Supreme Court within a month for the perusal of the Supreme Court.

Amir Alam Khan, Advocate Supreme Court for Petitioner (in Civil Petition No.40 of 2008).

Shahram Sarwar Ch., Advocate- Supreme Court for Respondent No.1 (in Civil Petition No.40 of 2008).

Kh. Muhammad Afzal, Advocate Supreme Court for Respondents Nos. 3 and 7.

Mrs. Afshan Ghazanfar, A.A.-G., Punjab, Arif Hameed, G.M. SNGPL, Abdul Rashid Lone, MD, SNGPL, M. Younas, D.O. (Environment) and Khalid Kiani, Supdtt. Estab. Div. For Respondents Nos. 15 and 16 (in Civil Petition No.40 of 2008).

Humayun Gohar and Khawar Shahzad, Owners of Factories (in Civil Petition No.40 of 2008).

Raja Abdul Ghafoor, Advocate Supreme Court and M. Maqsood Ahmed, Dir. (W and S) for C.D.A.

Shahram Sarwar Ch. Advocate Supreme Court for Petitioner (in Civil Petition No.246 of 2008).

Khawaja Muhammad Afzal, Advocate Supreme Court along with Respondent No.1 in Person (in Civil Petition No.246 of 2008).

Date of hearing: 14th April, 2008.

JUDMGENT

MUHAMMAD NAWAZ ABBASI, J.---In the proceedings in C.P. No.40 of 2008 (Muhammad Shafique v. Muhammad Arif) in which environmental issue was involved, notice was also issued to C.D.A., Islamabad, to explain the arrangement of supply of clean water to the residents of Islamabad and disposal of waste and rubbish.

1. Dr. Babar Awan, learned Advocate Supreme Court, while assisting the Court as amicus curiae, has submitted a report on the issue wherein he has pointed out that as a result of supply of unclean water throughout the country, the citizens are facing serious diseases including hepatitis and in Islamabad, the drinking water, being supplied by the C.D.A., is also not free from pollution. The report reads as under:--

"Environmental issues in Pakistan threaten the economy and the population's health, and there is little indication of their abatement.

Economic effects

A 1997 World Bank study estimated the annual cost of Pakistan's environmental problems at US $ 1.8 billion in health expenditures, reduced labour productivity, and other costs. The availability of natural resources is limited by the dry climate and mountainous terrain, substantial population growth is increasing pressure on the resource base, and resource management has suffered from the emphasis on rapid economic growth and often-unregulated forms of economic growth and often-unregulated forms of economic productivity. As a result, human transformation of the environment is manifest in several problems. Population growth and poor water infrastructure have reduced per capita water availability from 53,000 cubic meters to 1,200 cubic meters, and heavy reliance on firewood has contributed to the world's second highest rate of deforestation. Poor agricultural practices have led to soil erosion, groundwater degradation, and other problems that have hindered crop output and contributed to health problems for rural communities.

Solid waste burning, low-quality fuels, and the growing use of fuel-inefficient motor vehicles have contributed to air pollution that in some cities---such as Karachi, Islamabad, Lahore, Peshawar, Quetta, Faisalabad and Rawalpindi---has exceeded levels deemed safe by the World Health Organization.

Industrial Pollution

The major industrial sectors in Pakistan are textile, metal, dying chemicals, pesticides, cement, petrochemical, energy and power, leather, sugar processing, construction, steel, engineering, pulp, paper, tanning, food processing, beverages, electronic consumer goods and mining. The typical hazards related to industry are noise, vibrations, green house effect, radiation, chemicals, electromagnetic radiation and microbiological and social problems like stress and fatigue. Chromium compounds are a typical cause of concern from dyes and tanneries and may lead to lung cancer and ulcers. Toxic and hazardous wastes in Pakistan are mainly the by-product of the chemical and petrochemical dying industries. Industrial pollution is thought to be responsible for the health problems people are experiencing at Manga Mandi.

Water Pollution Fact-sheet

Growing population, increased economic activity and industrialization has resulted in an increased demand for fresh water. In addition, rapid urbanization is changing patterns of consumption. This has caused a severe misuse of water resources. Discharging untreated sewage and chemical wastes directly into rivers, lakes and drains has become a traditional habit. Water bodies can no longer cope with the increasing pollution load. In Pakistan, water is mainly used for industrial, agricultural and domestic purposes.

The following table shows its percentage consumption for every use.

| | | | --- | --- | | Purpose | Percentage | | Agriculture | 69% | | Industry | 23 % | | Domestic uses | 8 % |

Since most water is being used by the agricultural sector, irrigation can cause water-logging and salinity. This happens when the water table rises close to the surface of the soil. If plants do not use this water, it evaporates, leaving salts behind. Even in uncultivated, barren lands, a water table within 2 meters of the surface can cause salinity in the soil. If irrigation water containing high levels of contaminants evaporates, it can result in damage to the soil. The Punjab Province draws its major share of drinking water from the natural ground water aquifer. Groundwater becomes contaminated when chemicals from surface water sep into soil and come in contact with the flowing groundwater. The movement of groundwater is through open spaces in soil and rock layers, which is usually very slow, indicating a very low dilution of contaminants. According to WHO, groundwater of Lahore up to 700-ft deep has been seriously contaminated and should not be used for human consumption. In 1989, pollution was found to a depth of 300-ft, and to 500-ft in 1992.

Industries

Industrial wastewater contains toxic chemicals. It is alarming that most industries have been started without proper planning and waste treatment plaints. They just dispose of untreated toxic waste into nearby drains, canals or rivers. Lahore, Faisalabad, Karachi, Sialkot contribute major pollution loads into their water bodies.

According to an EPD source, 9000 million gallons of wastewater having 20,000 tons of BOD5 loading are daily discharged into water bodies from the industrial sector. [Proceedings of International Symposium by CEWR in 1993, Paper By M. A. Saleemi]. Automobile service stations are another major contributor to surface water pollution. Untreated oil, grease and dirt find its way into nearby canals and rivers where it damages the ecosystem.

Water pollution and humans

Karachi's untreated wastewater from domestic sewage and industrial estates is discharged into the Layari and Malir rivers, which fall into the Arabian Sea. This waste has begun to pose a serious threat to the marine environment, as the channel water is contaminated not only with bacteria but also with toxic chemicals. Water pollution also extends a savage threat to wildlife of Pakistan. Animals drink water out of polluted water bodies, ailing ponds, rivers and streams. This sickens the animals and some may even die. Oil spills kill thousands of fish in oceans. Extreme pollution of River Ravi has destroyed the once existing 42 species of fish and the bird life around the river has migrated to other areas. Survival of small invertebrates, micro fauna and flora is also threatened.

Persistent Organic Pollutants Fact-sheet

Persistent Organic Pollutants (POPs) are carbon-based chemical compounds and mixtures, that include industrial chemicals. Most POPs are products and by-products of human industry and are of relatively recent origin.

The story so far: Concern is growing about POPs because they accumulate in body fat and in the environment. The problem is worse in colder climates as they breakdown more slowly at lower temperatures. As they can be transported through both air and sea, the problem of POPs crosses national boundaries. Traces of these chemicals can be found in most human beings and all kinds of wildlife, even in isolated parts of the globe. POPs are banned in most countries because of their harmful effects. Despite this they are still being used as pesticides in many countries including Pakistan.

POPs.--The dirty dozen of the many existing POPs, the following twelve are currently being studied:--

Aldrin.--applied to soil

Chlordane

DDT

Dieldrin

Dioxins.--produced by combustion

Endrin

Furan

Heptachlor

Hexachlorobenzene (HCB)

Mirex

Polychlorinated Biphenyls (PCBs) are used in industry as heat exchange fluids, in electric transformers and capacitors, and as additives in paint, carbon-less copy paper, and plastics. They are toxic to fish, suppress the human immune system and are listed as probable human carcinogens. Countries which ban PCBs include Austria, Germany, Switzerland, and the US.

Toxaphene

Environmental Legislation

At independence, Pakistan inherited a number of laws from the colonial period that were converted to environmental provisions. The Constitution of 1973 mentions environmental objectives in the preamble, but no specific law was drafted to that time. In 1983, the Pakistan Environmental Protection Ordinance (P. E.P.O.) was passed. This highlighted the need to have a framework of environmental law in Pakistan to address emerging national issues. P.E.P.O. established the Pakistan Environmental Protection Council (PEPC) and the Pakistan Environmental Protection Agency, as well as introducing the concept of Environmental Impact Assessments. It is unfortunate that P.E.P.O. has remained largely unimplemented. P.E.P.C. met in 1993 for the first time and approved National Environmental Quality. Standards (N.E.Q.S.), which later formulated the limits on major pollutants in municipal and industrial liquid effluents, industrial gaseous emissions, motor vehicle exhaust and noise.

The draft Environmental Protection Act, which lapsed in 1996 after failing to be approved in the National Assembly has recently been redrafted and unanimously passed by the Assembly."

1. The report was circulated to the concerned departments in the Federal and Provincial Governments but none has submitted satisfactory answer to resolve the issue and solve the environment problem. The representatives of Federal Government and Provincial Governments have not been able to justify inaction in case of breach of environment laws. The representatives of C.D.A. have stated that drinking water is being supplied in the city of Islamabad free of any pollution and all precautionary measures are taken to keep the water reservoirs neat and clean. They have also pointed out that treatment plant is being installed outside the city for disposal of waste and rubbish etc. and that maximum efforts are being made to keep the city neat and clean. Sh. Zamir Hussain, learned Advocates Supreme Court was deputed to verify the contents of the statement made by the representatives of C.D.A. and perusal of the report submitted by him would show that the position explained by the representative of C.D.A. was correct as the reservoirs of drinking waster of C.D.A. are properly managed and all precautionary measures are being taken to keep the water clean. The report is read as under:--

"Respectfully sheweth:--

1. In compliance with the order of this Honourable Court dated 20-3-2008 I visited the various sites. I was accompanied by Mr. Maqsood, Director Supply, Mr. Shah Murtaza Deputy Director General Law, Abdul Baqi Deputy Director Litigation, Mr. Suleman Sheikh Deputy Director Environment, Mr. Sajjad Deputy Director Environment Protection, Mr. Ayub Tariq Director Regional Planning, Mr. Shahid, Director Bulk Water Management, Mr. Sherazi Sami Assistant Director, Sanitation and also Raja Abdul Ghafoor, Advocate.

The expert officials imparted relevant information on the subject.

(1) The first site was the Nallah Noorpur. It allegedly originates in Margallah Hills and falls in Rawal Darn. Quaid-e-Azam University, Village Nurpur, area and of Bari Imam situate at its banks or in the vicinity. The sewerage water of the said localities falls in the said Nullah and ultimately in the Rawal Dam.

(2) The second site was Korung River. It originates in the Murree Hills and while lastly running through populated area of Bhara Kahu falls in Rawal Lake. The sewerage water of upstream populated area and also Bhara Kahu falls in Korung River and ultimately in the Rawal Lake. Thus polluting the whole Rawal Dam. I wonder if such a polluted water could be made potable.

It may be pointed out that the area from Bhara Kahu to Chhatar falls within the territory of Islamabad Capital Territory. The rest falls within the Province of Punjab and is managed by Small Dam Organization. However, the area wherein Nallah Noorpur runs through fall within the area governed by C.D.A.

It appears appropriate that the authorities concerned be directed to construct large septic tanks at appropriate places and also the sewerage treatment plants whereafter the water is used for green area in the University Campus and agriculture purposes in the villages. As a matter of fact the civil society is also responsible for such pollution either due to lack of awareness or other constraints. The issue cannot be possibly settled without the cooperation of the population.

I may point out that I have not been able to visit water treatment plant allegedly functioning at the Rawal Dam which provides drinking water to population of Rawalpindi.

(3) The third site we visited was the water treatment plant near the Helipad Islamabad. The said plant is situated in the forest near Shakar Parrian. A six feet high wall stand constructed around the plant. Besides 2 to 3 feet high fence of barbard wire is also constructed. Thus the entry of any wild life like cats and dogs is too remote possibility. Moreso when there is no attraction for the wild animals within the four walls of the plant. Naturally there has to be something to eat within that may attract the animals.

The said plant consists of six water tanks which are allegedly 10 to 12 feet deep. Filtration bed are laid which consists of sand and gravel to filter down the water which is sucked to main plant where Chlorine is mixed and then pumped to main reservoir at Shakarparian.

(i) I observed Algae/Kai in three water tanks. A positive indication that water tanks were not kept clean. Initially the Algae/Kai may not be injurious to health but if it is not periodically removed then colonization of other injurious vegetation cannot be ruled out. Upon inquiry, I found that there was no register to show that water tanks were visited and checked by the experts periodically.

It would be useful to direct that the water tanks and the plant itself be periodically checked and such visits be registered.

(ii) A periodically change of bed would be more beneficial. It would cost, as informed, about 4 'to 5 lacs of rupees. The cost is not much for such a benefit.

(iii) Secondly, I observed that the water tanks are so constructed that their walls are hardly 1-1/2 feet high from the ground. The officer concerned agreed that it needs to be fenced with a net (Jali) about three feet high and in order to protect the tanks from leafs etc. a net cover could also be used so that the water is protected and at the same time it receives the sunlight which is useful for oxygenation.

1. The fourth site was sewerage treatment plants. The sewerage is received from almost whole of Islamabad and is scientifically treated. It almost treats, as informed 17-18 millions gallon of water a day and is 'thrown in Nallah Lai and the solid waste is dewatered and used as fertilizer. The solid waste is spread upon various beds for dewatering. A sufficient piece of land are thus wasted.

The dewatering is scientifically possible at a small place like a small hall. It is hoped that the C.D.A. would take care of it. I wish that such treatment plants are established in Rawalpindi as well as other large cities in whole of Pakistan.

1. The last site we visited was the water treatment plant at Sangjani. It receives water from Khanpur Dam and the drinking water is supplied to Rawalpindi Cantonment and Islamabad. The visit was a treat. It is managed and run in a best possible manner. The authorities have done a commendable job.

Importantly it has own laboratory also. The treated water is scientifically checked by the experts.

I was informed that there are more water treatment plants at Shahidra, Noorpur, Saidpur and Samli Dam but without laboratory. It would be appropriate that either a mobile laboratory or centralized laboratory is established to check the quality of the drinking water supplied to citizens.

Before parting I would observe that in the totality of things the authorities concerned are functioning reasonably well. An idealistic approach is good but the constraints are also be taken into account specially the financial constrains and importantly the lack of cooperation by the citizens, without their cooperation ideal conditions cannot be obtained. The C.D.A. has made an effort to launch awareness program but I think much more is required in this behalf not only by the C.D.A. alone but Government and Non-Government Organization as well. I hope that the above report by a non-expert would lay requisite information to the august Court."

1. However, there is general complaint that drinking water in Islamabad is polluted which is not up to the required standard and similarly, due to other civic problems and cleanliness of the capital city, there is also complaint of environmental pollution. It is to be pointed out that people in the public and private sector as well as official agencies and the government departments are carefree about the pollution in the environment as dirt and filth can be seen every where throughout the country on road, parks and streets. There is no proper arrangement for removal of waste from the industrial area and similarly heaps of filth and dirt can be seen lying on the open places in populated areas as well as near the water reservoirs and such other places which is rich source of pollution in the water, fresh air and also dangerous disease at the cost of health of common man. This Court in exercise of powers under Article 184(3) of the Constitution cannot make arrangement for removal of filth from public places but can certainly issue directions to the Municipal Committees, Corporation and other concerned Agencies in the Federal and Provincial Governments to take necessary steps and adopt measures to stop environmental pollution.

2008 C L D 1117

[Supreme Court of Pakistan]

Present: Muhammad Akhtar Shabbir and Syed Sakhi Hussain Bukhari, JJ

LAHORE RACE CLUB, through Secretary and others---Appellants

Versus

Raja KHUSHBAKHT-UR-REHMAN---Respondent

Civil Appeal No.820 of 2004, decided on 30th May, 2008.

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

----Ss. 152 & 9(3)---Rectification of Register of members, application for---Civil suit---Maintainability---High Court being the Court of "original jurisdiction" under the Companies Ordinance, 1984, is empowered under S.152 of the Ordinance to entertain the application for "correction/rectification of the register of members" in the first instance, and thereafter if reached to the conclusion by taking into consideration the application, reply thereto and the documents produced before it, that the matter is out of the purview of the summary procedure as provided under S.9(3) of the Ordinance, it may refer/advise the party to approach the Civil Court for resolution of the controversy in issue---Principles.

Messrs Ammonia Supplies Corporation Private Ltd. v. Messrs Modern Plastic Containers (Pvt.) Ltd and others AIR 1994 Delhi 51; Hamid Husain v. Government of West Pakistan and others 1974 SCMR 356; Sh. Mushtaq Ahmad v. Shaukat Soap Factory and others 1987 CLC 2079; Khurshid Ahmad Khan and another v. Pak Cycle Manufacturing Company Ltd., Shandara and 4 others PLD 1987 Lair. 1; Zakir Latif Ansar and another v. Pakistan Industrial Promoters Ltd. and 2 others 1988 CLC 1541; Syed Shafqat Hussain v. Registrar, Joint Stock Companies Lahore and others PLD 2001 Lah. 523; Messrs Sunrise Textile Limited and others v. Mashreq Bank PSC and other PLD 1996 Lah. 1; Brother Steel Mills Ltd and others v. Mian Ilyas Miraj and 14 others PLD 1996 SC 543; Black's Law Dictionary; Manzoor Ahmad Bhatti and 4 others v. Haji Noval Khan and 5 others 1986 CLC 2560; Syed Shafqat Hussain v. Registrar, Joint Stock Companies Lahore and others PLD 2001 Lah. 523; Zakir Latif Ansari and others v. Pakistan Industrial Promoters Ltd and others 1988 CLC 154; Muhammad Hussain v. Dawood Flour Mills and others 2003 CLD 1429 and Messrs Ammonia Supplies Corporation (P) Ltd v. Messrs Modern Plastic containers Pvt. Ltd and other AIR 1998 SC 3153 ref.

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

----Art. 175(2)---"Original civil jurisdiction of High Court"---Concept and connotation.

The term "original jurisdiction" means "jurisdiction in the first instance", jurisdiction to take cognizance of a cause at its inception, try it, and pass judgment upon the law and facts. "Original Jurisdiction" is the authority of a court to hear a case in the first instance, i.e., to function as a Trial Court and the "Appellate Jurisdiction" is the authority of a court to hear a case that has first been decided by a lower Court. Jurisdiction of a court is never established by the court itself but by some authority external to it either in a Statute or the Constitution. "Original Civil Jurisdiction" of a court is such jurisdiction where it is empowered to entertain suits and such proceedings of civil nature which are initiated before the said court and entertained by it as a court of first instance and are decided by it. Sub-Article 2 of Article 175 of the Constitution enshrines the principle that, "No court shall have any jurisdiction save as is or may be conferred on it by the Constitution or under any law". The jurisdiction can be conferred on any court including a High court by a statute which may be provided for initiating she proceedings in that court as a court of first instance having power to entertain and decide it. Such Court will thus be vested with original jurisdiction. If it relates to civil disputes, it will be termed as "Original Civil Jurisdiction." It is also a common proposition that Statutes are promulgated conferring jurisdiction on the High Court to initiate proceedings as a court of first instance for purposes of exercise of jurisdiction.

Black's Law Dictionary ref.

Dr. Khalid Ranjha, Advocate Supreme Court for Appellants.

Sh. Salahuddin, Advocate Supreme Court, for Respondent.

Date of hearing: 30th May, 2008.

2008 C L D 1202

[Supreme Court of Pakistan]

Present: Mian Hamid Farooq and Sheikh Hakim Ali, JJ

WAQAR JALAL ANSARI----Petitioner

Versus

NATIONAL BANK OF PAKISTAN and another---- Respondents

Civil Petition No.549-L of 2008, decided on 16th July, 2008.

(On appeal from the order, dated 31-3-2008 of the Lahore High Court, Lahore passed in R.F.A. No.214 of 2007 in C.M. No.3 of 2007).

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

----Ss. 10 & 22---Constitution of Pakistan (1973), Art.185(3)---Application for leave to defend suit---Scope---When no such application was filed by the "principal debtor", a guarantor was not automatically entitled for leave to defend the suit---Banking Court shall grant the defendant leave to defend the suit if it is of the view that defendant had raised substantial questions of law or fact in respect of which the evidence needed to be recorded-In the present case, in the estimation of the Banking Court, guarantor in his application for leave to defend the suit, could not raise substantial question of law and fact requiring evidence to be recorded and thus it dismissed his application, against which no exception could be taken, more so when his appeal against the judgment and decree of the Banking Court was dismissed being barred by time---Petition for leave to appeal was dismissed in circumstances.

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

----Ss. 22 & 10---Limitation Act (IX of 1908), S.5---Constitution of Pakistan (1973), Art.185(3)---Appeal---Limitation---Time barred appeal--Application for condonation of delay---Ground for condonation as urged by the petitioner was that judgment was not announced on the date incorporated in the judgment itself, but it was subsequently rendered, therefore, he could not file the appeal within time and thus it was sufficient cause to condone the delay---Petitioner had not placed on record any material to substantiate his plea---Presumption of correctness in favour of judicial proceedings and credibility was attached to the proceedings before judicial forum---Impugned judgment did not suffer from any legal infirmity and High Court, after adverting to every aspect of the case and considering all the relevant dates, had rightly found that appeal was time barred and dismissed the application for condonation of delay---Petition for leave to appeal was dismissed.

Fayyaz Hussain v. Akbar Hussain and others 2004 SCMR 964 and Abdullah v. Shaukat 2001 SCMR 60 ref.

Khan Muhammad Vehniwal, Advocate Supreme Court for Petitioner.

Nemo for Respondents.

Date of hearing: 16th July, 2008.

2008 C L D 1311

[Supreme Court of Pakistan]

Present: Muhammad Nawaz Abbasi and Ghulam Rabbani, JJ

ZARAI TARAQIATI BANK---Petitioner

Versus

LAEEQ AHMED---Respondent

Civil Petition No.343-K of 2006, decided on 17th April, 2007.

(On appeal from the judgment, dated 19-4-2006 passed by High Court of Sindh at Karachi in I.A. No.9 of 2005).

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

----S. 9---Constitution of Pakistan (1973), Art.185(3)---Petitioner had stated that the proceedings in the suit filed by the petitioner involving the same dispute in the Banking Court, had matured for conclusion; and if the execution of the decree passed by the High Court in the suit filed by the respondent against the petitioner under challenge before the Supreme Court in the present petition, was stayed till the decision of the suit of petitioner Bank, he would not press the petition---Counsel for respondent, had stated that respondent would not agitate for the execution of decree pending disposal of the suit filed by the petitioner Bank---Petition was disposed of by the Supreme Court with direction that pending final decision of the suit filed by the petitioner Bank against the respondent in the Banking Court, decree would not be executed.

Muhammad Siddiq Mirza, Advocate Supreme Court for Petitioner.

A.A. Siddiqui, Advocate-on-Record for Respondent.

Date of hearing: 17th April, 2007.