CLD 2016 Judgments

2016 C L D 40

[Competition Commission of Pakistan]

Before Mueen Batlay and Dr. Shehzad Ansar, Members

MESSRS WYETH PAKISTAN LIMITED AGAINST RECKITT BENCKISER PAKISTAN LTD. FOR DECEPTIVE MARKETING PRACTICES: In the matter of

Show Cause Notice No. 106/2012, decided on 8th January, 2015.

(a) Competition Act (XIX of 2010)---

----Ss. 10(1), 10(2)(a) & 10(2)(b)---Deceptive marketing practices---Distribution of false and misleading information capable of harming business interests of another undertaking---Distribution of false and misleading information lacking reasonable basis---Determination---Qualifier and disclaimer, requirement of---Respondent-company was alleged to have involved in deceptive marketing practices by marketing one of its depilatory products claiming through advertisement that '9/10 women prefer said product for smooth glowing skin'---Complainant-company contended that disputed claim had attempted to deceive consumers into thinking that product in question, (as a depilatory cream), was preferred choice of ninety per cent of women---Enquiry concluded whereby respondent-company was held to have been engaged in deceptive marketing practices as alleged---During hearing of case, parties reached amicable settlement, whereby respondent-company made commitments to include qualifier 'After using the product' along with disclaimer with disputed claim all in its future advertisements---Validity---Concept 'reasonable basis' provided that advertiser must have some recognizable substantiation for claims made prior to making it in advertisement---Although, respondent-company emphasized that its claim was based on research conducted by "Oasis Insight", but, when disputed claim was seen without disclaimer, ordinary consumer would not think that the claim was based on research conducted on the users---Disclaimer 'after using the product' was small and not legible enough; same was also not used in print media advertisements---Competition Commission observed that fine print disclaimers were inadequate to correct deceptive impressions, and same, in fact, were in themselves a deceptive measure---For purposes of deceptive marketing, actual deception need not to be shown to carry burden of proof; it was sufficient to establish that advertisement had tendency to deceive and capacity to mislead---Such deceptive marketing practice included cases where an undertaking concerned disseminated only half of the truth and omitted the rest, or where seller fails to disclose qualifying information necessary to prevent one of its affirmative statements from creating misleading impression which might lead to making of transactional decision by consumer---Omission of mentioning clear and legible qualifier 'after using product' coupled with disclaimer 'based on survey conducted by 'Oasis Insight' on the product users' was omission of material information from advertisement---Impression conveyed through the advertisement in absence of such disclaimer was deceptive in terms of S. 10 of Competition Act, 2010---Commission further observed that when first contact between seller and buyer occurred through deceptive practice, law might be violated even if truth was subsequently made known to purchaser---Claim that '9/10 women prefer the product for smooth glowing skin' in absence of clear and legible disclaimer was deceptive and misleading in terms of S. 10 of Competition Act, 2010----Respondent-company had made no commitment with reference to print media advertisement---Said disclaimer was missing in print media advertisement, on shelve materials and billboards---Commission directed respondent-company to include disclaimer in all marketing material in clearly legible manner which was visible to ordinary consumers---Respondent-company was reprimanded for its deceptive marketing practices and directed not to indulge in the same in future.

Proctor and Gamble Pakistan (Private) Limited's case 2010 CLD 1696; China Mobile Pak Limited and Messrs Pakistan Telecom Mobile Limited 2010 CLD 1478; International Harvester Co.'s case 104 F.T.C. 949 at pg. 1058 and Cliffdale Associates, Inc.'s case 103 F.T.C. 110 (1984) rel.

(b) Competition Act (XIX of 2010)---

----S. 10---Deceptive marketing practices---For purposes of deceptive marketing, actual deception need not to be shown to carry burden of proof; it was sufficient to establish that advertisement has tendency to deceive and capacity to mislead.

Shehryar Nishat, Legal Director of Messrs Wyeth Pakistan Limited on behalf of Messrs Wyeth Pakistan Limited.

Mehmood Mandviwalla, Ms. Sana Iftikhar and Zafar Khaliq Khan, Advocates of Mandviwalla and Zafar on behalf of Messrs Reckitt Benckiser Pakistan Ltd.

Dates of hearing: 25th November, 5th December of 2012 and 25 April, 2013.

2016 C L D 105

[Competition Commission of Pakistan]

Before Ms. Vadiyya Khalil, Chairperson, Dr. Shahzad Ansar and Ikram Ul Haque Qureshi, Members

Messrs TARA CROP SCIENCES (PRIVATE) LIMITED FOR DECEPTIVE MARKETING PRACTICES: In the matter of

Show Cause Notice No. 11/2014 dated 22nd May, 2014, decided on 19th June, 2015.

(a) Competition Act (XIX of 2010)---

----S. 33---Civil Procedure Code (V of 1908), S. 10---Powers of Commission in relation to proceedings or enquiry---Determination---Principle of 'res sub judice' under S. 10, C.P.C.---Applicability---Interpretation of S. 10, C.P.C.---Respondent-company submitted that as civil suit was pending on same subject matter before District Judge, proceedings under complaint was not maintainable in terms of S. 10, C.P.C.---Validity---Section 10, C.P.C. did not prohibit generation of multiple claims pertaining to same subject matter before different forums---Purpose of S. 10, C.P.C. was to avoid conflicting judgments and wastage of resources---Section 10, C.P.C. was limited by its language to be applicable to 'suits' pending in 'courts'---Section 33 of Competition Act, 2010 prescribed powers of Competition Commission in relation to its proceedings---Judicial nature of proceedings carried out by Commission was limited to situation demarcated in S. 33 of Competition Act, 2010---Commission, in all other situations, performed quasi-judicial functions and not as a 'court' for purposes of S. 10, C.P.C.---Proceedings before Commission were, therefore, not equivalent to suits before civil court---For applicability of S. 10, C.P.C., two suits must be pending before court of competent jurisdiction.

Industrial Development Bank of Pakistan v. Messrs Azeem Food Industries (Pvt.) Ltd. 1999 YLR 1112 rel.

(b) Competition Act (XIX of 2010)---

----Ss. 10(1) & 10(2)(a)---Deceptive marketing practices---Distribution of false and misleading information capable of harming business interests of another undertaking---Determination---Tort of passing off---Applicability---Complainant-company alleged that its brand 'Tara' was being used fraudulently and illegally by respondent-company by marketing its products and business with name 'Tara Zarai Markaz'---Enquiry report found respondent-company having been involved in deceptive marketing practices as alleged---Validity---Complainant had fertilizers available in market by names of 'Tara DAP', Tara Urea' and 'Tara SSP' since the year 2006---Respondent-company was incorporated in year 2012, and advertisements regarding its exclusive franchise network by name of 'Tara Zarai Markaz' appeared in same year---Dates of application filed for registration of trade marks indicated that respondent-company had interest in disputed term prior to year 2012, which interest remained even subsequent to applications filed by complainant in year 2006---Respondent-company's exclusive franchise network by name of 'Tara Zarai Markaz' had been established with aim of providing all types of agriculture-related products under one roof---Complainant's brand was intrinsically related to same industry by virtue of its fertilizer manufacturing business---An affiliation was, therefore, assumed automatically, and amounted to dissemination of misleading information---Had the two undertakings been in unrelated markets such as agriculture and aviation, respectively, said implication might not have been automatically assumed---Respondent-company although had provided that its franchisors, under agreement, might not stock products of complainant, but possibility of confusion as to affiliation of different products remained---As per report of Local Commission appointed in civil suit pending on same subject matter allegations against respondent-company---Respondent-company's use of term 'Tara' in its advertisements was capable of deceiving consumers and other stakeholders into assuming an affiliation between 'Tara Zarai Markaz' and complainant's products---Respondent-company's practice also fell under ambit of 'free-riding', which occurred when an undertaking benefited from actions and efforts of another without paying or sharing costs---Use of same brand as that of complainant was capable of misleading consumers into creating both negative and positive associations between two undertakings, which, in fact, did not exist---Consumers, relying on their experience with complainant's products, might be swayed into purchasing respondent-company's products solely on basis of association created in their minds through use of same brands---Consumers, having negative experience with respondent-company's products, might also be dissuaded from purchasing complainant's products, which might not only result in direct harm to sales and revenue of complainant, but also damage its brand, image, reputation, goodwill and value, which were all elements of business interests---Competition Commission observed that onus was on undertaking to ensure that no deception resulted through their marketing practices---Respondent having not made sufficient efforts to distinguish its franchise network and products from those of complainant's had not discharged onus upon it---Respondent-company's use of term 'Tara' constituted dissemination of misleading information which was doubtlessly capable of harming complainant's business interest in violation of S. 10(1) read with S. 10(2)(a) of Competition Act, 2010---Penalty of rupees five hundred thousand was imposed on respondent company for contravention of said provisions---Respondent was directed to cease solitary use of impugned term 'Tara' as well as to rename it franchise network 'Tara Zarai Markaz' to clarify that its business had no connection with complainant's brand or products.

Industrial Development Bank of Pakistan v. Messrs Azeem Food Industries (Pvt.) Ltd. 1999 YLR 1112; In the matter of Messrs China Mobile Pak Limited and Messrs Pakistan Telecom Mobile Limited; Gaterham Car Sales v. Birkin Cars (Pty) Ltd. 1998 (3) SA 938 (SCA) and Blue Lion Manufacturing (Pty) Ltd. v. National Brands Ltd. [2001] ZASCA 62 [South Africa] rel.

(c) Competition Act (XIX of 2010)---

----Ss. 10(1) & 10(2)(b)---Deceptive marketing practices---Distribution of false and misleading information to consumers lacking reasonable basis--- Determination--- Ordinary consumers being targeted by respondent through its marketing practices were for most part farmers---Overall market of both parties was agriculture---Ordinary farmer already familiar with complainant's products was likely to assume a connection between respondent's products and 'Tara Zarai Markaz'---Name of respondent's franchise, therefore, provided misleading information as to origin and quality of products being sold at its franchises---For purposes of S. 10(2)(b) of Competition Act, 2010, it was sufficient that information was being provided to consumer which was capable of leading customers to believe that goods available at franchises had association, quality or endorsement which belonged or would belong to goods associated with those of complainant, leading to errors of judgment and conduct--­-Respondent's use of term 'Tara' in name of its exclusive franchise network constituted deceptive marketing in terms of S. 10(1) read with S. 10(2)(b) of Competition Act, 2010.

(d) Competition Act (XIX of 2010)---

----Ss. 10(1), 10(2)(d) & 33---Deceptive marketing practices---Fraudulent use of another's trademark, firm name, or product labeling or packaging---Determination---Unregistered trademark---Powers of Competition Commission in relation to proceedings or enquiry---Determination---Disputed trademark 'Tara' had not so far been registered in favour of either party---It was beyond competence of Competition Commission to determine or even advise on allocation of trademarks---Only mandate Commission had with respect to trademarks under S. 10(2)(d) of Competition Act, 2010 was protection of registered trademarks---Since neither party had an established claim to impugned mark, there was, therefore, no matter for Competition Commission to be considered.

(e) Competition Act (XIX of 2010)---

----S. 10(2)(a)---Scope---Provision of S. 10(2)(a) of Competition Act, 2010 constitutes two main elements: Firstly, there must be dissemination of false and misleading information; secondly, it (information) must be capable of harming another's business interest---Violation of said provision occurs when both of the elements are present.

(f) Competition Act (XIX of 2010)---

----S. 10(2)(b)---Scope---Provision of S. 10(2)(b) of Competition Act, 2010 relates to consumer protection, and unlike S. 10(2)(a) of Competition Act, 2010, same does not require potential of harm to be actionable.

(g) Competition Act (XIX of 2010)---

----S. 33---Powers of Competition Commission in relation to proceedings or enquiry---Intellectual property rights, determination of---Principles---Mandate of Commission encompasses protection and promotion of competition, which included protection of competition against fraudulent use of trademarks, which served to indicate proprietary interest of undertakings and did not extend to allocation thereof----Granting of proprietary rights in intellectual property remained sole domain of Intellectual Property Organization (IPO), and Competition Commission could not make any determination in that regard.

(h) Competition Act (XIX of 2010)---

----S. 10----Deceptive marketing practices---'Goodwill' and 'brand'---Meaning and Scope---Modern interpretation of term 'goodwill' included goodwill as well as brand equity---Business has been able to identify acquired goodwill as an intangible asset on balance sheets for some time, and while accounting standards currently do not agree on methods of asset valuation of brands, consensus as their financial value remains in place---In juxtaposition to accounting concept, concept of goodwill in law was broad---Principle of goodwill constitutes totality of attributes that lure or entice clients or potential clients to support a particular business---Brands today are more than simply brand names--- Brands constitute perception of goods and services in consumer's mind and are thus perhaps most sensitive to market factors.

(i) Competition Act (XIX of 2010)---

----Ss. 38, 31(1)(c) & 10---Deceptive marketing practices---Penalty---In case of violation of S. 10 of Competition Act, 2010, Competition Commission is empowered to impose penalty on violating party under S. 38 of Competition Act, 2010---Under S. 31(1)(c) of Competition Act, 2010, Commission may require undertaking concerned, to take such actions as may be necessary to restore previous market conditions and not to repeat prohibitions specified in S. 10 of Competition Act, 2010.

(j) Competition Act (XIX of 2010)---

----S. 10(2)(d)---Scope---Provision of section 10 (2) (d) of Competition Act, 2010 relates to proprietary rights in intellectual property and for its operation the same must be prima facie ascertainable.

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

----S. 10---Interpretation of S. 10, C.P.C.

Wasif Majeed on behalf of Messrs Agritech Limited.

Haseeb Zafar, Muhammad Sohail Akram on behalf of Messrs Tara Crop Sciences Private Limited.

Dates of hearing: 20th June, 2014 and 19th February, 2015.

2016 C L D 289

[Competition Commission of Pakistan]

Before Ms. Vadiyya Khalil, Chairperson, Mueen Batlay, Dr. Shahzad Ansar and Ikram Ul Haque Qureshi, Members

PAKISTAN AUTOMOBILE MANUFACTURERS AUTHORIZED DEALERS ASSOCIATION (PAMADA) AND ITS MEMBER UNDERTAKINGS: In the matter of

Show Cause Notices Nos.26 to 69 of 2014, dated 16th October, 2014, decided on 10th April, 2015.

(a) Competition Act (XIX of 2010)---

----S. 4---Scope---Prohibited agreement---Decision having object or effect of preventing, restricting or reducing competition within relevant market---Doctrine of 'per se', applicability of---Scope---Section 4(1) of Competition Act, 2010 prohibited undertakings from entering into agreements, or in case of association of undertakings, from making decision which had object or effect of preventing, restricting or reducing competition within relevant market---Violation of S. 4 might occur through either of two methods: firstly, through an agreement of undertakings or their associations; or secondly, through a decision of an association of undertakings---Most important consideration in matter brought under S. 4 of Competition Act, 2010 was that of intention and effect---Doctrine of 'per se' stipulated that certain anti-competitive practices were so egregious as to be deemed illegal outright, and same were illegal without elaborate inquiry as to the precise harm they had caused or the business excuse for their use---Price fixing, market allocation and bid rigging were forms of collusion that had commonly been agreed to warrant treatment under the 'per se' doctrine in most jurisdictions---In case of violations which did not fall in the said list, concept of 'appreciable effect' came into play, which required examination of economic conditions prevailing in relevant market and effects of agreement on competition in said market.

(b) Competition Act (XIX of 2010)---

----Ss. 4(1) & 4(2)(a)--- Prohibited agreement--- Decision-making regarding rates of automotive body repairs and paint job services offered to insurance companies---Validity---'Collusive practices' and 'Anti-competitive activities'--- Determination--- Appreciation of evidence--- Doctrine of 'per se', applicability of--- Scope--- Enquiry concluded that discussion between Member Undertakings and multiple decisions for fixing rates of services by Automobile Manufacturers Authorized Dealers Association were, prima facie, in violation of S. 4 of Competition Act, 2010---Association took plea that revision in rates was based on inflationary increase in material costs---Validity---Competition Commission's concern was with horizontal arrangement that was one between actual or potential rivals at the time of the disputed agreement had been made---Elimination of rivalry was a competition concern, and same, being one of the most pernicious forms of collusion, fell in ambit of doctrine of 'per se'---Present case was not fact of price increase that had posed competitive concern, but collective determination and fixation of prices---Inflation might unquestionably be accounted for by individual dealerships, but their Association must not take a decision to do so---Commercial decision making by Association, for or on behalf of its members, for any reason, remained prohibited under Competition Act, 2010---President of Association had addressed letter to insurance company informing about decision of the Association regarding revision in rates and requesting dissemination of said information to its Surveyors and Branch Managers---Minutes of meeting showed Service Managers' meeting regarding implementation of revised rates and also showed actual involvement of participants, as same contained names and details of participating Member Undertakings--¬Circular signed by President of the Association was issued for monitoring and implementation of policies, and same showed how the Association had a mechanism in place to ensure implementation of collusive practices---Another circular was also addressed to all insurance companies notifying them of the collective decision taken by the Association regarding increase in rates---Impugned decision of the Association was also evidenced by chain of e-mails available with Enquiry Report, which contained a draft letter sent by President of the Association in which a decision to boycott an insurance company had been taken for its not accepting the revised rates---Said e-mail exchange also demonstrated as to how the Association served as forum for its members to discuss pricing strategies and enforcement mechanisms for same---Association had not made any submissions regarding said documentary evidence---Collusion and cartelization were one of the most egregious forms of anti-competitive behaviour, which corrupted market as well individual participants themselves---Anti-competitive activities affected not just market players but general public as well---Associations of undertakings had the ability to effect advantageous changes for their members at policy level---Where any commercially sensitive information was being exchanged, undertakings are already in realm of anti-competitive behaviour---Said documents available with Enquiry Report had constituted evidence of decision taken by the Association to fix rates of body repair and painting charges, which Commission considered to be clear violation of S. 4(1) read with S. 4(2)(a) of Competition Act, 2010---Penalty of rupees fifty million was imposed on the Association for each instance---Association was also directed to cease its collusive practices---Member Undertakings, through documentary evidence, had managed to demonstrate their non-compliance with Association's decisions---No individual violations were, therefore, made out at that stage with respect to Member Undertakings in market for automobile body repairs and paint jobs.

Dole Food Company Inc. v. European Commission Case C 286/13 P rel.

(c) Competition Act (XIX of 2010)---

----Ss. 4(1) & 4(2)(a)---Prohibited agreement---Restriction on movement of human resources between Member Undertakings---Determination---Curtailing market for employment of experienced sales and technical staff at authorized dealers was effective restriction on free movement of skilled human resources, which constituted anti-competitive practice falling under S. 4(1) read with S. 4(2)(a) of Competition Act, 2010---Circular available with Enquiry Report was issued by President of the Association stipulated that members of Association should not have hired former employee of other members unless a 'No Objection Certificate' had been given to them by previous employer---E-mails available with Enquiry Report regarding correspondence between President of the Association and Member Undertakings showed implementation of said policy resulting in termination of employees hired in violation of said policy---Said Circular was not reactionary protective mechanism as stated by the Association---Respondents could not provide instances of alleged fraudulent conduct of employees as required by Competition Commission---Said restriction had hampered competition between members, as experienced sales and technical staff could not freely move around, which was critically important for bringing effective competition in relevant market---Commission found said decision violative of S. 4(1) read with S. 4(2)(a) of Competition Act, 2010, as same was imposition of a restrictive trading condition with regards to provision of services---Penalty of rupees fifteen million was imposed on the Association for said violation---Documentary evidence showed isolated instance of compliance of said policy by Member Undertakings---Given the isolated nature of compliance, no violation by Member Undertaking was made out in relevant market in the light of show cause notice---Member Undertakings were, nevertheless, warned that in case of future instances of similar behaviour concerned undertaking would be liable to severe penalty.

(d) Competition Act (XIX of 2010)---

----Ss. 4(1) & 4(2)(b)--- Prohibited agreement--- Decision-making regarding division of market and allocation of quota with respect to new automobile sales---Determination---Agreements or decisions which involved assignment to particular entities of particular customers or markets had the effect of eliminating competition and constituted restraints, either vertical or horizontal---E-mail containing Minutes of meeting of car dealers available with Enquiry Report provided that allocations of new automobiles had been divided amongst dealers on basis of geography---Said Minutes of meetings also discussed rationale and mechanism behind market division in detail---Letter by a Member Undertaking to General Manager of IMC showed protest against another Member Undertaking for poaching a corporate client---From available evidence, no role of Association could be made out---Association was not found in violation of S. 4(1) read with S. 4(2)(b) of Competition Act, 2010---No cogent evidence was available to suggest that Member Undertakings had agreed to divide market amongst themselves---Actions of Member Undertakings, highlighted from documentary evidence, did not pertain to Association's forum and same, therefore, did not fall within context of show cause notice issued to Member Undertakings---Violation alleged in show cause notice was, therefore, not made out against Member Undertakings.

(e) Competition Act (XIX of 2010)---

----Ss. 4(1) & 4(2)(a)----Prohibited agreement---Fixing of prices of genuine spare parts supplied by automobile manufacturers and further prohibiting members (of Association) from offering discounts---Determination---President of the Association addressed a letter to all dealers regarding its decision to implement similar rates of genuine parts at all dealership---Agreement to fix prices was per se violation of competition laws---Authorized dealers were accorded profit margins by manufacturer so as to allow them to set their own rates---Association's decision to prohibit discounts was in direct contradiction with that policy while being anti-competitive practice---Inability of dealers to offer discounts would in effect curtail its capability to set rates of spare parts, and same constituted decision by Association to fix prices in market for genuine spare parts---Penalty of rupees twenty-five million was imposed on the Association for said violation---Member Undertaking had submitted documentary evidence to support absence of implementation of said decision; no violation was, therefore, made out against members.

(f) Competition Act (XIX of 2010)---

----Ss. 4(1), 2(1)(q) & 33---Prohibited agreement---Undertaking---"Association of undertakings"---Meaning and scope---Representation of Association before Competition Commission---Validity---Powers of Commission in relation to proceedings and enquiry---Member Undertakings of Association submitted that Association was not an incorporated entity, with requisite of legal personality to 'sue or be sued' and that there was no formal procedure behind membership and decision making process, and that representation of Association before the Competition Commission was not valid in absence of signatures on power of attorney by individual undertakings--- Validity---"Association", whether constituted either formally or informally, fell under the ambit of the Competition Act, 2010---Proceedings before the Commission, being not equivalent to civil litigation, were not akin to a party 'sued'---Commission was not concerned with legal formalities of an organization or association, except with its de facto nature and the de facto actions being carried out by it---Question of formal 'membership' for purposes of violations under Competition Act, 2010 was irrelevant---Competition Act, 2010 referred to association of those undertakings which were a gathering of undertakings for a common purpose whether same was structured as a society, alliance, forum or similar---As long as undertakings grouped together for common purpose, they were, for all practical purposes, members of association---Member Undertakings, by their own admission, had conceded that Association was a platform which allowed its members to raise collective concerns---Member Undertakings were, therefore, members of Association---Commission was concerned with valid representation only, and not with the technicalities of form---For a representation to be validly made, Commission must reasonably have found same to be so made upon rational inspection of available evidence---Power of attorney submitted by counsel on behalf of Association was both signed by President and embossed with stamp of the association--- Presumption was, in favour of Association's counsel---Member Undertakings had attended meetings called upon by the President of Association regarding Enquiry report of Commission---Company law was not transposable with Competition Act, 2010 on matter of representation, and aims and purposes of Competition Act, 2010 remained entirely different and therefore required different manner of dealing with technicalities---Legal maxim 'no injury is done to the willing' was applicable to the present case---Member Undertakings, having both actively and passively accepted the authority of President to act on behalf of the Association, could not contest it and claim misrepresentation.

In the matter of Complaint filed by Messrs DHL Pakistan (Pvt.) Ltd. rel.

(g) Competition Act (XIX of 2010)---

----Ss. 2(1)(q) & 33---'Undertaking'---Definition and Scope---Term 'association of undertakings'---Determination---Powers of Competition Commission in relation to proceedings and enquiry---Commission observed that in the context of competition law, concept of an undertaking encompassed every entity engaged in an economic activity regardless of its legal status and the way in which it was financed---For entities to fall under ambit of said definition, they must be in performance of an economic activity---Economic activity was an activity consisting of offering goods and services on a given market---All member undertakings were authorized dealers of automobiles and were therefore undertakings for purpose of Competition Act, 2010---Commission further observed that the ordinary meaning of the word 'association' included a gathering of people for a common purpose---Form and purpose of such a gathering was not relevant for purposes of Competition Act, 2010---Regarding existence of de facto organization, the policy of the Commission had been to take both direct and circumstantial evidence into consideration during its evaluative process---Commission, on basis of available evidence, found the Association falling under de jure definition of 'association of undertaking' for purposes of Competition Act, 2010---Association, by its own admissions, had all components of a trade organization.

Hofner and Elser v. Macrotron GmBH and Ambulanzglockner v. LandkreisSudwestpfalz European Court of Justice (1991) Case C-41/90, [1991] ECR I-1979 rel.

(h) Competition Act (XIX of 2010)---

----Ss. 2(1)(k) & 4---Prohibited agreement---Term 'relevant market'---Meaning and relevance---Collusive practices---For purposes of S. 4 of Competition Act, 2010, definition of 'relevant market' was not precondition to establish a violation¬¬---In cases of collusion, agreement to collude, instead of market power, was relevant---Identification of 'relevant market' in cases of collusion was merely for purpose of reference, and same was requirement for establishing an anti-competitive action---Enquiry report had limited its specification to overall market for genuine spare parts, as a market in which Member Undertakings operated and competed---Competition Commission observed that principle that 'with a technically homogenous product, it was not possible to distinguish different markets depending upon the dimensions, size or specific type of products' was applicable to present case---Enquiry report was correct in its demarcations of 'relevant market' for purposes of alleged violation under S. 4 of Competition Act, 2010.

NV Nederlandsche Banden Industrie Michelin v. Commission of the European Communities European Court of Justice (2001) Case C-475/99, [2001] ECR I-8089 rel.

(i) Competition Act (XIX of 2010)---

----Ss. 4, 31 & 38---Prohibited agreement---Orders of Competition Commission---Penalty, imposition of---Powers of Commission---In case of violation of S. 4 of Competition Act, 2010, Commission is empowered to impose fine under S. 38 of Competition Act, 2010 and to issue a "cease and desist order" under S. 31---In case of multiple contraventions, penalty will be reflective of the same.

(j) Competition Act (XIX of 2010)---

----S. 2(1)(b)--- "Agreement"--- Meanings--- Words 'arrangement', 'undertaking' and 'practice' used in definition of 'agreement' under S. 2(1)(b) of Competition Act, 2010 are used in their ordinary dictionary meanings.

Aamir Khalil and Ms. Anam present for Respondents.

Hassan Ali Raza and Umer Shahid for Messrs Honda South.

Mustafa Munir, Ms. Maleeka Ali Bokhari and Shahrukh Iftikhar for Messrs Honda Drive Inn.

Mian Mansoor for Messrs Toyota Walton Motors.

Hassan Mandviwala, Naveed Ul Haq for Messrs Polad Motors and Messrs Mandviwala Motors.

Mansoor Ali Ghanghro for Carachi Motors, Danish Motors, I.G. Motors, Khair Agency, Khalil Motors, Macca Motors, Nadeem International, Naseer Autos, Plaza Motors, Riaz Motors, SNA Motors, Suzuki Defence, Suzuki Margalla Motors, Suzuki Mehran Motors, Suzuki Motorways, Suzuki South, Suzuki Western Motors, Zeeshan Autos and Suzuki Tharparker Motors.

Dates of hearing: 2nd December, 2014, 27th January, 3rd and 12th March, 2015.

2016 C L D 402

[Competition Commission of Pakistan]

Before Ms. Vadiyya Khalil, Chairperson, Dr. Joseph Wilson, Dr. Shahzad Ansar, Ikram Ul Haque Qureshi and Mueen Batlay, Members

SECOND PHASE REVIEW ACQUISITION OF THE GLOBAL VACCINES BUSINESS (EXCLUDING INFLUENZA VACCINES BUSINESS EXCEPT IN CHINA) FROM NOVARTIS A.G. BY GLAXOSMITHKLINE PLC: In the matter of

Show Cause Notice decided on 20th February, 2015.

Competition Act (XIX of 2010)---

----Ss. 11 & 2(e)---Competition (Merger Control) Regulations, 2007, Reglns. 5 & 6---Pre-merger application, acceptance of---Approval of merger---Factors for determination of substantial lessening of competition---Merger which substantially lessens competition by creating or strengthening a dominant position in relevant market---Determination---"Dominant position"---Meaning and determination---Pharmaceutical company, pursuant to share and business sale agreement, submitted application seeking clearance for acquisition of global vaccines business in market of meningococcal (ACWY) vaccines from another pharmaceutical company---Only one product from each of the merging parties was substitutable with each other which they had marketed in Pakistan---Market for medicine of other company was no longer a duopolistic market as there was new entrant in the relevant market---Competition Commission identified competition concerns regarding proposed acquisition---Market concentration data of relevant year proposed that transaction would result in only two players in market for the medicine in question in Pakistan---Applicant company, who was already a dominant player, would further strengthen its dominant position in relevant market and thereby increase its market power---Herfindahl Hirshman Index (HHI) calculation based on sales (value) for the relevant year was above 2000, which meant that relevant market was highly concentrated---As per Merger Guidelines, Competition Commission was likely to find horizontal competition concerns in market with post-merger HHI of above 2000 and delta above 250---After consummation of proposed acquisition, applicant company would own and control the product---Other product which was priced higher was used for long term effects for ages under fifty-five years---Applicant company might be able to escalate price of 'product', which would harm end users that were hospital, clinics and pharmacies---Merger parties were particularly close competitors in relevant market with a third company, which was the only other company supplying those products in Pakistan---Merging company would cease to compete independently of applicant company and thereby remove or lessen competition of applicant company with its two significant competitors---Proposed acquisition would weaken competitive constraints on remaining suppliers or distributors, which might offer them with increased incentive or ability to raise prices and/or offer lower levels of service---New entry or expansion in relation to the product required substantial investment in research and development---For same reason, new entrant took many years in entering relevant market in Pakistan---Given effectiveness of each product program which differs in terms of age usage and duration of protection, it was important to have all the products available in market---Applicant company proposed and committed to implement certain commitments to alleviate said competition concerns undertaking to divest its global business; in addition to those commitments, Competition Commission observed that purchaser with respect to divestment must establish presence in distribution channels used in business in Pakistan--- Pre-merger application for merger was allowed in circumstances.

Asim Nasim, Partner Messrs Orr, Dignam & Co., present on behalf of Messrs GlaxoSmithKline Plc.

Date of hearing: 20th February, 2015.

2016 C L D 444

[Competition Commission of Pakistan]

Before Mueen Batlay, Member

ACQUISITION OF BUSINESS RELATING TO A PORTFOLIO OF ONCOLOGY PRODUCTS (EXCLUDING MANUFACTURING) FROM GLAXOSMITHKLINE BY NOVARTIS A.G.: In the matter of

File No. 667/Merger/CCP/2014, decided on 9th February, 2015.

Competition Act (XIX of 2010)---

----Ss. 11, 3, 31(1)(d)(i) & 2(e)---Competition (Merger Control) Regulations, 2007, Reglns. 5 & 6---Pre-merger application, acceptance of---Approval of merger---Factors for determination of substantial lessening of competition---Merger which substantially lessens competition by creating or strengthening a dominant position in relevant market---Determination---"Dominant position"---Meaning---Abuse of dominant position---Applicant, a pharmaceutical company, pursuant to sale and purchase agreement, submitted pre-merger application seeking clearance for acquisition of business relating to portfolio of oncology products (excluding manufacturing) from another pharmaceutical company---During the first phase review of proposed merger, Commission found other company to be in dominant position in relevant product market and that company would create dominant position as result of proposed merger by acquiring market share of other company---Applicant company had marketed seventeen oncology products in Pakistan and other company, five products; out of which only one oncology product from each merger parties was substitutable with each other, and for which they had competed with each other in Pakistan---Relevant geographic market was national in scope---Applicant company had given its share in market, and was a small player in market for said common oncology product; whereas, other company was dominant---Large number of alternative to said common oncology products were available and were being marketed in Pakistan---Consumers would still have choice after completion of proposed acquisition---Competition Commission observed that proposed merger would reduce from 11 to 10 major companies developing and distributing said common product, which was large number of players---History of collusion (between merger parties) had not been found---Total sales generated from said common products by applicant company was negligible---Low price difference existed between said common products of applicant company and that of other company---If there was ten per cent increase in price of the product, consumers and purchasers might switch to one of many alternative products which were available in the market---Applicant company had not planned to discontinue its product and intended to market the same under brand name of the other company---Consumers and suppliers would, therefore, still have choice of purchasing said product with same name---Proposed acquisition was not likely to have appreciable adverse effect on competition in Pakistan---Competition Commission, allowing application, authorized proposed merger unconditionally in terms of S. 31(1)(d)(i) of Competition Act, 2010---Pre-merger application was allowed in circumstances.

2016 C L D 871

[Competition Commission of Pakistan]

Before Ms. Vadiyya Khalil, Chairperson, Mueen Batlay, Dr. Shahzad Ansar and Ikram Ul Haque Qureshi, Members

PHASE II REVIEW OF INTEGRATION OF KARACHI STOCK EXCHANGE LIMITED, LAHORE STOCK EXCHANGE LIMITED AND ISLAMABAD STOCK EXCHANGE LIMITED: In the matter of

Case No. 757/Merger-CCP/15, decided on 27th November, 2015.

Competition Act (XIX of 2010)---

----Ss. 11, 3 & 2(1)(e)---Competitive (Merger Control) Regulations, 2007, Reglns. 3 & 4---Merger, approval of---Dominant position---Substantial lessening of competition/strengthening of dominant position in relevant market---Vertical/unilateral horizontal effects of merger and countervailing factors---Efficiencies/benefits of merger in post-merger scenario---Karachi Stock Exchange Limited (KSE), Lahore Stock Exchange Limited (LSE) and Islamabad Stock Exchange Limited (ISE) jointly submitted the pre-merger application for their formation as "Pakistan Stock Exchange" (PSE)---Under Phase I Review Order, the proposed merger had met both the thresholds prescribed under Regln. 4 of Competitive (Merger Control) Regulations, 2007 and the presumption of dominance prescribed under S. 2(1)(e) of Competition Act, 2010, and competition concerns raised under the Order included potential impact on listing of companies, on brokers, on future exchanges and on other exchanges---Commission, having analyzed the vertical effects, unilateral horizontal effects of the proposed merger and countervailing factors regarding the same, observed that Karachi Stock Exchange had been the dominant player in the relevant market, both in terms of share of trading volume as well share of turnover, and following the transaction/merger Pakistan Stock Exchange would be the sole dominant undertaking holding 100 % of the market share---Pakistan Stock Exchange, as dominant undertaking in the market, would not be able to create any legal hurdles for new entrants, either in the same segment or even in other specialized areas of financing---Commission, however, finding the undertaking engaged in abuse of its position at any time in the post-merger scenario, had power to penalize the undertaking and rectify such situation under S. 3 of Competition Act, 2010---Commission, also considered the efficiencies, which were expected to be achieved as result of the proposed merger, including benefits to the relevant market, benefits to brokers and benefits to investors---Said efficiencies to be gained by the proposed transaction far outweighed the possible anti-competitive effects which might result from the elimination of competitors in the market---In view of the analysis, therefore, the proposed transaction/merger did not substantially lessen competition in the relevant market---Commission approved the proposed merger but subject to certain conditions imposed on the Pakistan Stock Exchange and recommendations made to the Securities and Exchange Commission of Pakistan for taking measures in the post-merger scenario to safeguard the competition---Pre-merger application was allowed.

Ms. Rahat Kaunain Hassan, Advocate, Syed Ahmed Hassan Shah, Advocate, Nadeem Naqvi, Managing Director, KSE, M. Aftab, Managing Director, LSE and M. Ayyaz Afzal, Managing Director, ISE representing KSE, LSE and ISE.

Ms. Musarat Jabeen, Executive Director for Securities and Exchange Commission of Pakistan.

Date of hearing: 27th October, 2015.

2016 C L D 976

[Competition Commission of Pakistan]

Before Ms. Vadiyya Khalil, Chairperson, Dr. Shahzad Ansar and Ikram Ul Haque Qureshi, Members

PAKISTAN POULTRY ASSOCIATION (PPA): In the matter of

Show Cause Notice No.13/2015, dated 16th November, 2015, decided on 29th February, 2016.

Competition Act (XIX of 2010)---

----Ss. 4(1), 4(2)(a) & 2(1)(q)----Prohibited Agreement---'Preventing, restricting or reducing competition in relevant market', object of---Determination---Advertisements containing different prices of poultry products, validity of---Discussion, approval or advertisement of prices by an association of undertakings would fall within ambit of anti-competitive behaviour---Violations made despite previous warnings by the Commission---Commission issued show cause notice to Poultry Association regarding a series of newspaper advertisements whereby different prices of broiler chicken and chicken eggs had been publicized---Association contended that the rates of poultry products were set by Market Committees of Local Governments; therefore, there was no liability on their part---Validity---Association was an undertaking in terms of S. 2(1)(q) of Competition Act, 2010, as the same was an association of undertakings engaged in the poultry business, comprised of members from across Pakistan---Association had notified the prices of three different products in two relevant markets, that were broiler chicken and chicken eggs, which prima facie constituted a 'decision' for the purpose of Competition Act, 2010---Any form of conduct between the undertakings, which assisted the coordination of commercial behaviour, especially related to pricing, production and sale, was treated as importing the object of 'preventing, restricting or reducing competition'---Actions of trade associations were scrutinized for competition concerns because of the ease with which their legitimate objectives could spill over into illegal coordination---Discussion between the undertakings regarding the role of the Government over a specific industry although would not fall within the ambit of anti-competitive behaviour, but the discussion, approval or advertisement of prices by an association of undertakings would---Association could influence the pricing trend in the overall markets through advertisements in question---Association had to ensure certain authority which had the implicit effect of manipulating the behaviour of players in the relevant markets---Association also constituted the exchange of data which encouraged more uniform prices than might otherwise existed---Association while advertising the prices under its own name, was signaling to both consumers and undertaking in the poultry market that those prices had the approval of the association and the same constituted optimum rates to be followed---Association therefore, violated S. 4(1) read with S. 4(2)(a) of Competition Act, 2010 in each of the two relevant markets---Association had previously been warned by the Commission to desist from such violations---Fine of one hundred million rupees was imposed for said violations in the markets and association was directed to desist from advertising rates of poultry products as an association---Show cause notice was disposed of accordingly.

In the matter of Show Cause Notice issued to Messrs Pakistan Poultry Association and Order in In the matter of Show Cause Notices iussed to Pakistan Automobile Manufacturers Authorized Dealers Assocation (PAMADA) and its Member undertakings rel.

Khalid Saleem Malik, Central Chairman, PPA on behalf of Pakistan Poultry Association.

Date of hearing: 3rd December, 2015.

2016 C L D 1091

[Competition Commission of Pakistan]

Before Mueen Batlay and Dr. Shahzad Ansar, Members

PROCEEDINGS PURSUANT TO HIGH COURT ORDER: In the matter of

Proceedings pursuant to High Court Order decided on 9th October, 2015.

(a) Competition Act (XIX of 2010)---

----Ss.10 & 4---Deceptive marketing practices---Prohibited agreement---Competition concerns, absence of---Powers of Commission---Scope---Petitioner raised number of grievances including disconnection of his telephone numbers, change in the composition of the numbers, change of telephone packages by Telecommunication Company without informing the petitioner, limitation on the permissible number of SIM's, etc.---Validity---Petitioner had not raised any competition concerns---Issues raised by the petitioner either fell within the regulatory jurisdiction of Telecommunication Authority, which might proceed with the case according to its mandate and as per the applicable law and regulations, or the same, being of technical nature, were to be rectified by Telecommunication Company---Commission was bound by its mandate and would not interfere with the situations where no competition concerns were raised---Petition was disposed of accordingly.

Tariq Bilal, Advocate Supreme Court, Raja Ansar Abbas and Shahzadi Samreen Tariq present.

Dates of hearing: 13th November, 2014 and 10th March, 2015.

2016 C L D 1128

[Competition Commission of Pakistan]

Before Ms. Vadiyya Khalil, Chairperson, Dr. Shahzad Ansar and Ikram ul Haque Qureshi, Members

Messrs A. RAHIM FOODS (PRIVATE) LIMITED FOR DECEPTIVE MARKETING PRACTICES: In the matter of

Show Cause Notice No. 1 dated 3rd April, 2014, decided on 8th February, 2016.

(a) Competition Act (XIX of 2010)---

----Ss. 10(1) & 10(2)(d)----Deceptive marketing practices---'Fraudulent use of another's trademark, firm name, or product labelling or packaging'---Parasitic copying/copycat packaging--¬-Determination---Fraud, effect of---Wilful deceitfulness, existence of---Price of product considered as evidence of parasitic copying---Colouring scheme of packaging and labelling, relevance of---Commission's jurisdiction in cases of unregistered trademarks---Question before the Commission was whether the labelling and packaging of the respondent's product was misleadingly similar to that of the complainant's and if so, whether such confusing resemblance was deceptive and amounted to the 'fraudulent use' and that whether the use of the term/mark 'Combo Wings' by the respondent, in absence of authorization from the complainant, amounted to the 'fraudulent use'---Held, only distinguishing factor between packaging of both the products was the existence of the trademark logos, but if such logos were hidden or removed, that would be visually impossible to identify and distinguish the origin of the products---Any ordinary consumer could be deceived as to the origin of the two products at the time of exercising his choice of purchase, as the products, being of the same nature, were displayed for sale side by side, adjacent to each other---Extent of mimicry by respondent in terms of the overall layout, design, size shape and colour scheme of respondent's packaging had made the respondent culpable to parasitic copying---Respondent had made attempt to capitalize on the goodwill and reputation of the complainant---Consumer were susceptible and at serious risk of falling prey to deceptive confusion pertaining to the origin and quality of the commodity in question due to the strikingly similar packaging and labelling of the products---Respondent therefore, had contravened S. 10(1) in terms of S. 10(2)(d) of Competition Act, 2010.

Commission observed that mimicking the packaging designs of familiar established brands was misleading and deceptive ploy with the end purpose of boosting sales. Such purpose or object of parasitic copycat packaging was driven and derived from the viewpoint and perspective of the consumer. Consumer was more likely to purchase such product, rather than if the packaging was clearly distinctive and distinguishable. End result of such practice was that the consumer was misled by the copycat, who was fraudulently attempting to pass off its product as something else's; hence, where product differentiation was insufficient, such practice on part of the copycat had fatal consequences for the business of the market leader. Fraud itself consists of some deceitful practice or wilful device to obtain unjust advantage and which deprives another of a right or causes another an injury.

In cases of both parasitic copying and contravention of S. 10(1) in terms of S. 10(2)(d) of Competition Act, 2010, there existed an element of wilful deceitfulness along with free-riding and passing off. Where there was evidence that an undertaking was culpable of parasitic copycat packaging having the obvious foreseeable effect of misleading and causing deceitful confusion in the mind of the ordinary consumer, a violation in terms of S. 10(2)(d) of Competition Act, 2010 would be made in order to set a benchmark for the Commission's consideration and consequent adjudication of cases.

Commission considered that it was appropriate to examine the packaging and product labelling appearance of finished product as a whole which might collectively include visually confusing resemblances in elements of colour scheme, layout style, design, images, labels, font usage, etc., instead of each individual similarity in isolation, to come to its determination as to contravention under S. 10(2)(d) of Competition Act, 2010. Commission might also take into account the surrounding circumstances which might be different in each particular case, as being peculiar to parties, products, consumers and the relevant market.

When copycat packaging was deployed for a particular commodity, price became the main and sometimes the only criterion which affected a consumer's choice of purchase. Price, being the sole determining factor for the exercise of choice between two products, with no other meaningful distinguishing factor existing between such products, was the evidence of the presence of 'parasitic copying'.

Particular colour scheme played vital part in the identification of a product. In case, however, where the prefixes were similar but the colouring scheme of the packaging boxes was different, an ordinary person could not be deceived. Unless a specific colour was denoted as a standard requirement to be followed by all food processing and packaging companies or even inherently related to the properties or functions of a product, copying the same in presence of market leader already using that, would require more compelling justification.

Other local competitors in the market were all using different colours which were distinct from the K & N packaging. Respondent was marketing the same products abroad with entirely different packaging including its colour scheme, layout and design. K & N Packaging, by virtue of having been introduced prior in time, had acquired reputation and distinctiveness in the relevant market for frozen and/or processed meat products. Timing of the respondent's action suggested that there was no doubt as to the awareness, knowledge and anticipation of the respondent that the red coloured re-designed packaging of its product would cause deceptive confusion in the mind of the consumer. Conduct of the respondent had the purpose and effect of deceiving the consumer. Respondent, therefore, stood to gain undue benefit and unfair advantage at the expense of the complainant, which it would otherwise not have obtained.

Messrs Golden Thread Industries v. J&P Coats Limited Company 2013 CLD 1945 rel.

Per Enquiry Report, the term 'Combo Wings' was part of common usage. Complainant, at the time of lodging present complaint, did not own any trademark rights in the terms 'Combo Wings', and the registration process was already underway. Trademark claimed to have been used without authorization must be registered with the competent authority for the Commission to proceed under Competition Act, 2010. Use of the term 'Combo Wings' by the respondent, however, when seen in conjunction with the overall layout and design of the copied and duplicated complainant's packaging demonstrated the respondent's intention to pass off its products as those of the complainant. Use of said term, therefore, fell within the scope of S. 10(2)(d) of Competition Act, 2010, as fraudulent use of another's product labelling.

Fonts on the packaging of both the parties although were not identical, but the language, used for the product information including the list of ingredients, cooking and storage instructions were identical. Only distinguishing factor between packaging of both the products was the existence of the trademark logos, but if such logos were hidden or removed, that would be visually impossible to identify and distinguish the origin of the products. Any ordinary consumer could be deceived as to the origin of the two products at the time of exercising his choice of purchase, as the products, being of the same nature, were displayed for sale side by side, adjacent to each other in large common freezers. Extent of mimicry by respondent in terms of the overall layout, design, size shape and colour scheme of respondent's packaging had made the respondent culpable to parasitic copying. Respondent had made attempt to capitalize on the goodwill and reputation of the complainant. Consumer were susceptible and at serious risk of falling prey to deceptive confusion pertaining to the origin and quality of the commodity in question due to the strikingly similar packaging and labeling of the products. Respondent, therefore, had contravened S. 10 (1) in terms of S. 10(2)(d) of Competition Act, 2010. Commission imposed fine of rupees ten million for contravention of S. 10(1) read with S. 10(2)(d) of Competition Act, 2010. Commission also directed the respondent to cease from using the copycat packaging for its product within one month.

(b) Competition Act (XIX of 2010)---

----Ss. 10(1), 10(2)(a) & 10(2)(d)---Deceptive marketing practices---'Parasitic Copying'---Scope---Term 'Parasitic Copying' is neither defined in Competition Act, 2010 nor is the same a violation thereof per se---Keeping in view the element of deceit that said term involves as well as its anti-competitive effects in the relevant market, coupled with potential problems the same may pose for consumers with regard to making informed choices, it is necessary to consider as to when and how the term becomes relevant to a contravention under S. 10 of Competition Act, 2010.

(c) Competition Act (XIX of 2010)---

----S. 10(2)(d)---Deceptive marketing practices---'Fraudulent use of another's trademark, firm name, or product labelling or packaging'---Principles---Objective manifestation and not the subject intent, would establish the 'fraudulent use'---Simple approach, that the complainant can demonstrate that the respondent, by use of the trademark, intends to deceive the customer/consumer to gain advantage, is to be adopted.

(d) Competition Act (XIX of 2010)---

----Ss. 10(1), 10(2)(a) & 10(2)(d)---Deceptive marketing practices---'Distribution of false and misleading information that is capable of harming the business interest of another undertaking'---Parasitic copycat packaging---Question before the Commission was whether the respondent's product labelling and packaging and for use of the mark 'Combo Wings' amounted to the 'distribution of false and misleading information that was capable of harming the business interests' of the complainant--- Respondent's parasitic copying of complainant packaging, being misleading and deceptive by its very nature, was capable of harming the business interests of the complainant---Respondent's conduct was likely to cause eventual dilution of the complainant's brand identity and goodwill which the complainant had built over the years in terms of the visual recognition and distinctiveness---Commercial practice was automatically considered as misleading if such marketing practice (including promoting and packaging of a product) caused confusion for the consumer in comparison to another product of a competitor and hence the same influenced their transactional choice---In the event when contravention of S. 10(2)(d) of Competition Act, 2010 existed, then concurrent violation of S. 10(2)(a) of Competition Act, 2010 was also made out---Parasitic copycat packaging, being a practice that fell within the ambit of S. 10(2)(d) of Competition Act, 2010 and which caused deceptive confusion for the consumer in itself also amounted to the dissemination or distribution of misleading information to the public---Commission imposed fine of rupees ten million for contravention of S. 10(1) read with S. 10(2)(a) of Competition Act, 2010.

Messrs China Mobile Pak Limited and Messrs Pakistan Telecom Mobile Limited: In the matter of and Show Cause Notice issued to Messrs Tara Crop. Sciences (Private) Limted for Deceptive Marketing Practices: In the matter of rel.

(e) Competition Act (XIX of 2010)---

----Ss. 10(1) & 10(2)(a)----Deceptive marketing practices---'Distribution of false and misleading information that is capable of harming the business interest of another undertaking'---Proof---No strict proof of actual harm caused to an undertaking is required for determination of contravention of S. 10(2)(a) of Competition Act, 2010, as long as it can be shown that such potential harm is capable or possible of being caused or foreseeable.

(f) Competition Act (XIX of 2010)---

----Ss. 10(2)(a) & 10(2)(d)----Deceptive marketing practices---Scope of S. 10(2)(a) of Competition Act, 2010 is much wider and far reaching than that of S. 10(2)(d) of the Act.

(g) Competition Act (XIX of 2010)---

----Ss. 10(2)(a) & 10(2)(d)---- Deceptive marketing practices---Principles---Contravention of S. 10(2)(d) of Competition Act, 2010 will almost in all circumstances lead to consequent contravention of S. 10(2)(a) of the Act, unless exceptional circumstances exists in a particular case that warrants otherwise.

Adil K. Sattar, Executive Director and Ali Kabir Shah, Messrs Ali and Associates, Advocate and Legal Consultants on behalf of Messrs K&N's Foods (Private) Limited.

Mueen Qamar, S.M. Bilal Ahsan, Messrs Irfan and Irfan Attorneys At Law on behalf of Messrs A. Rahim Foods Limited.

Dates of hearing: 3rd June, 2014 and 25th March, 2015.

2016 C L D 1344

[Competition Commission of Pakistan]

Before Ms. Vadiyya Khalil, Chairperson, Shahzad Ansar and Ikram Ul Haque Qureshi, Members

PHASE II REVIEW OF AMALGAMATION OF PAKISTAN MOBILE COMMUNICATIONS LIMITED AND WARID TELECOM (PRIVATE) LIMITED: In the matter of

Case: 773/MERGER-CCP/15, decided on 18th March, 2016.

(a) Competition Act (XIX of 2010)---

----Ss. 11 & 31(1)(d)(i)----Competition (Merger Control) Regulations, 2007---Merger, approval of---Competition Assessment---Substantive test and nature---Horizontal/vertical effects of the proposed merger assessed---Creation/strengthening of joint control/collective dominance as result of merger, determination of---Substantial lessening of competition/significant Impediment of effective competition---Efficiencies of merger---Conditions and obligations imposed for proposed merger---Notifying parties jointly submitted a pre-merger application for notifying and seeking approval of the Commission to acquire 100% shares of one Telecom Company by another Telecom Company (collectively called "MergeCo") by way of share swap agreement---Competition Commission, after detailed assessment of the proposed merger, subject to the conditions/obligations/directions imposed by the Commission in response to the commitments made by the parties for the proposed merger, as to spectrum concentration, wholesale access to Mobile Virtual Network Operators (MVNOs), interconnection, joint control/cross-holding, infrastructure sharing, non-complete clause, related party transactions, etc., authorized the proposed merger under S. 31(1)(d)(i) of Competition Act, 2010---Competition Commission however, observed that market entry of Mobile Network Operator and Mobile Virtual Network Operator was possible in Pakistan now, however, an MNO or MVNO deciding to enter the market would need suitable spectrum allocation, which would take considerable time and that in absence of proportionate remedies, market entry would be challenging; Pakistan Telecommunication Authority might review its framework to address such barriers and facilitate the entry of new MNOs and MVNOs by appropriating spectrum management held by various MNOs, as had been mandated under the Telecom Policy, 2015; since the year 2010, PTA had not determined any MNO as an SMP; accordingly, none of the MNO was subject to legal obligations to provide a cost-oriented, fresh carrier grade interconnection reference, which was mandatory to address both competitors and subscribers concerns on the mobile telecommunication market; in absence of sufficient countervailing buyer power on the part of end users, a declaration of SMP would act as a countervailing influence on pricing and quality of service and that PTA's new determination ought to have been based on national competition law and international standards.

In terms of the Acquisition Agreement the notifying parties agreed to merge (Mobilink and Warid) into a single entity in two steps; in step one, Mobilink had to acquire 100% shares of Warid, whereupon Warid would become a wholly-owned subsidiary of Mobilink and in consideration, the shareholders of Warid would be entitled up to 15 % of the shares of Mobilink; and in step two, the proposed merger was to be effected through High Court in terms of sections 284 and 287 of Companies Ordinance, 1984. Currently, there were five Mobile Network Operators (MNOs), including Warid and Mobilink, providing services using GSM, UMTS and LTE technologies in Pakistan. ¬Merging parties, Mobilink and Warid, were the first and fifth largest MNOs in Pakistan.

Relevant market in question was although that of the retail mobile telecommunication services in Pakistan, but analysis of competition in different segments was important to assess the competitive dynamics in the relevant market. Competitive dynamics differed between and among retail mobile telecommunication services/products segments. MNOs themselves analysed the relevant market at segment-levels and adopted different marketing strategies for each segment. Commission adopted the same approach while analysing the impact of the proposed merger. Competitive concerns in specific segment were indicative of existence of competitive constraints on the overall market.

Relevant geographic market was national in scope. Commission agreed with the notifying parties' view that Mobile Call Termination (MCT) was a wholesale service market on a single mobile network which constituted a separate relevant product market, with each operator holding 100% market share. From supply-side perspective, Mobile Network Operators faced virtually no competitive constraints in the wholesale MCT market, whether it was fixed-to-mobile or mobile-to-mobile call. From demand-side perspective, the end consumers were impassive as to call termination charges when they choose a network. MCT services on national level were provided on the basis of interconnection agreements both on fixed and mobile networks. Interconnect charges on the national level were regulated by PTA. No significant horizontal overlaps existed between the activities of MNOs on said market. Market definition proposed by the parties was, therefore, appropriate in the present case.

In the light of the proposed transaction, the presence of the Abu Dhabi Group (ADG) shareholding in Mobilink created competition concern with respect to all the markets in which LinkDotNet and Wateen and its associated companies operated concurrently. Shareholding association created from the proposed merger created risks of coordinated behaviour. Markets shares of both parties (to the extent that they were ascertainable and available) in the markets indicated that the two were not strong forces, and the competition risks associated therewith were therefore correspondingly small. Structural link between the companies had been created for as long as the ADG held shares in Mobilink.

Mobilink and Warid were although both present in segment of Long Distance and International (LDI) Fixed Line Telecommunication Market, through their subsidiary and associated companies, but the declared Significant Market Power (SMP) Operators as the PTA Markets and SMP Determination remained to be Pakistan Telecommunication Company Limited (PTCL) in Pakistan and Special Communications Organization (SCO) in Azad Jammu and Kashmir. Sector's promising growth potential, therefore, required that the competition remained vibrant.

According to the PTA's Annual Report, PTCL still held 80% of the market of Retail Broadband, Wateen held 7.2% of the market while LinkDotNet held a negligible share. In spite of the competition facing the segment through emergence of mobile broadband in Pakistan, the international trend towards convergences suggested that the segment might experience rapid growth through synergistic projects with the mobile sector. Telecom policy also envisaged incentives for growth in the broadband segment. Robust competition in said segment, therefore, should have been ensured and dealings between Wateen Group and Mobilink must be fair and non-discriminatory and on arm's length basis.

Licensed commercial banks and microfinance institutions could alone provide 'Branchless Banking' services to customers. Waseela was subsidiary of Global Telecom Holding S.A.E (GTH), which was present company of Mobilink. Mobilink, through Waseela, was active in providing Mobile Financial Services (MFS) specifically through its retail mobile telecommunication services. Notifying parties provided services such as bank deposits, money transfer, etc. MFS created a vertical relationship between the Banks and MNOs; whereas, MergeCo'smobicash and Warid's mobliepaisa services created horizontal and vertical overlap. MFS constituted a separate product market segment as the mobile payments were likely to continue to coexist in the foreseeable future with non-mobile means of payment.

Commission, while conducting its market analysis and competitive assessment, had taken into account the apprehension of MergeCo's competitors in the relevant market, in addition to its own concern identified after independent analysis in terms of horizontal and vertical effects arising out of the proposed merger.

In order to assess MergeCo's incentives and ability to behave independently of its competitors, customers, consumers and suppliers, the Commission found necessary to consider various indicators of market power in the retail mobile telecommunications market, which included MergeCo's pre-merger and post-merger market shares, the size and strength of its infrastructure, economies of scale and scope, barriers to further expansion such as access to financial resources, services/product portfolios, which factors were mutually inclusive.

Combined market share of MergeCo, by revenue, roughly stood at 40% (as compared with other MNOs). Mobilink, on subscriber basis, with over 33 million subscribers had a market share of 29%, while Warid, with over 10 million subscribers had roughly 10% of the total market share. In Post-merger scenario, the combined subscriber-base of MergeCo, would amount up to 39% of the total market share, and as such, MergeCo's share would be 11% more than its closest competitor, which held 28% of the relevant market share.

Post-merger, MergeCo would own and control the Sites, out of which it intended to decommission (certain) Sites. Many of those Sites were shared with other MNOs as guest operators. By sheer number of Sites and subscribers/site and without any assessment as to its quality, MergeCo would have the largest network of Sites in Pakistan. MergeCo, thus, would have increased market power in the infrastructure.

Spectrum was a scarce resource and a key input for operating in the retail mobile telecommunication market. Post-merger spectrum concentration forms one of the most important factors for any competition assessment and determination of dominance in the relevant market. MergeCo would have the largest shares of spectrum in all the three frequency bandwidths. Coupled with flexibility of spectrum management and its vast infrastructure, MergeCo was likely to be able to use its allocation to maximum beneficial effect, including refarming of certain bandwidth to accommodate more profitable segments of the relevant market.

MergeCo would have three strong parents with strong financial portfolio, while other MNOs had one backing conglomerate each. Mobilink's ultimate parent, VimpelCom, was one of the world's largest international communications and technology companies, which offered services to customers in fourteen markets worldwide. Key shareholder in VimpelCom was Telenor Group, which was also an international provider of telecom, data and media communication services present in thirteen markets worldwide. VimpelCom boasted a subscriber base of 200 million customers, while Telenor Group had more than 203 million subscribers across the globe. Similarly, Warid was ultimately backed by the ADG Group, which was a large business conglomerate in the Middle East. MergeCo, in view of said information, was likely to have incentives and ability to exploit the financial and operational expertise of three strong conglomerate.

Phase I Review Order provided that until such time as the Commission was entirely satisfied that Telenor ASA did not exercise joint control over VimpelCom, Telenor Pakistan' market share would be considered alongside that of the merging parties. Collective market share of the parties post-transaction was, thus, held to be up to 65% of the relevant market. Order also specified that the presence of potentially significant structural and economic links of Telenor (through its subsidiary Telenor Pakistan) and VimpelCom raised the possibility of collective dominance by the merging parties and Telenor Pakistan.

Commission, during Phase II Review of the Transaction, found the transaction to raise the possibility of increased concentration and the likelihood of unilateral and coordinated effects on the mobile telecommunication market in Pakistan. Commission also found that structural and economic links between Telenor ASA and VimpelCom raised the potential for coordination between Mobilink and Telenor Pakistan. Commission, therefore, through Order, had prescribed certain behavioural remedies, including creation of a firewall to restrict the sharing of commercially sensitive information between Telenor ASA and VimpelCom, limiting the possibility of collusion between the two competitors.

Telecom industry in particular was characterized by the phenomenon known as 'network effects'. Direct network arose where the value of particular product or service increased with the number of other customers subscribing the products or services, and every new customer subscribing to the network could make contact with every other subscriber and vice-versa without incurring additional cost. In competition economics, the benefit of existing and additional customers was described as 'network externality'.

From competition perspective, the retail mobile telecommunication market in Pakistan was characterized by an oligopolistic structure and a high degree of concentration. In order to measure concentration levels, the Commission applied the Herfindahl-Hirschman Index (HHI) on the basis of both subscriber and revenue shares. Proposed merger increased concentration in the relevant market to an appreciable extent which raised competition concerns. In oligopolistic markets, mergers could lead to substantial lessening of competition whether or not they lead to dominance or coordinated effects.

Warid, with a strong and loyal consumer base in the post-paid segment, and due to its quality, was able to benefit from one of most value-intenstive niches in the market. Warid had been consistently losing its market share in the preceding years and given its current financial position, might not offer as robust competition.

MergeCo would hold increased market power by virtue of a variety of factors, including the share of the subscriber base, its frequency allocations, the size and quality of its infrastructure network, and financial and operational resources available to it from three giant telecom operators and investment companies.

Commission considered the countervailing factors that could be exercised by the buyers, suppliers, existing competitors, potential entrant and commercial viability of the target as well as the regulatory regimes to off-set the adverse effects of proposed merger leading to dominance/concentrations.

Commission concluded that market entry of Mobile Network Operator and Mobile Virtual Network Operator was possible in Pakistan now, however, an MNO or MVNO deciding to enter the market would need suitable spectrum allocation, which would take considerable time and that in absence of proportionate remedies, market entry would be challenging. Pakistan Telecommunication Authority might review its framework to address such barriers and facilitate the entry of new MNOs and MVNO's by appropriating spectrum management held by various MNOs, as had been mandated under the Telecom Policy, 2015. Since the year 2010, PTA had not determined any MNO as an SMP; accordingly, none of the MNO was subject to legal obligations to provide a cost-oriented, fresh carrier grade interconnection reference, which was mandatory to address both competitors and subscribers concerns on the mobile telecommunication market. In absence of sufficient countervailing buyer power on the part of end users, a declaration of SMP would act as a countervailing influence on pricing and quality of service. PTA's new determination ought to have been based on national competition law and international standards.

Certain efficiencies as claimed by the parties might result from the proposed transaction, however, the network efficiencies to begin with could not be achieved otherwise as long as only passive infrastructure sharing was allowed in Pakistan, as no regime was in place for active sharing. Mobilink, with regard to mobile broadband, could hypothetically acquire spectrum in the next auction to provided LTE services to its consumers; whereas, in view of the 2014 spectrum auction, it was unlikely that Warid would be able to provide its consumers with 3G services through any other means. Mobilink's ability to offer services in the MFS or VAS segments was not increased through the merger itself, so far as the product and service innovations were expected. Access of Warid's customers to Mobilink-specific services however, was gained through the transaction.

Merger might provide an opportunity to allow Warid's customers to retain access to services being provided by Warid while additionally availing the services provided by Mobilink, which might not have been possible given the Warid's current financial situation, as Warid had been facing reducing revenues and increasing debt costs.

Increase in the areas covered altogether, including an improved proportion over urban and rural areas, along with franchises, customer care centres and call centres might be expected to improve the quality of service available to the combined subscribers of MergeCo. Larger choice portfolio would necessarily account for benefit to consumers. Merger was likely to generate some efficiency in the market including allowing for increased investment, better network coverage and customer services and reduction in costs.

Commission, subject to the conditions/obligations/directions imposed by the Commission in response to the commitments made by the parties for the proposed merger, as to spectrum concentration, wholesale access to MVNOs, interconnection, joint control/cross-holding, infrastructure sharing, non-complete clause, related party transactions, etc., authorized the proposed merger under S. 31(1)(d)(i) of Competition Act, 2010. Merger was allowed in circumstances.

(b) Competition Act (XIX of 2010)---

----Ss. 2(1)(k) & 11---Merger of companies---'Relevant market'---Meaning and Scope---In terms of S. 2(1)(k) of Competition Act, 2010, 'relevant market' means the market to be determined by the Commission with reference to a product market and a geographic market---In the context of the assessment of a merger, the basic purpose of market definition is to identify in a systematic way the immediate and prospective competitive constraints that would be faced by the merging parties and others in the relevant market.

(c) Competition Act (XIX of 2010)---

----Ss. 4(1), 5 & 9---Prohibited agreements---Cancellation etc. of individual exemptions---Criteria for individual and block exemptions---Section 4(1) read with Ss. 5 & 9 of Competition Act, 2010, allows the Commission to exempt a prohibited agreement if the undertaking seeking exemption can satisfy the Commission that the agreement substantially contributes to improving production or distribution, promoting technical or economic progress, while allowing consumers fair share of the resulting benefit or the benefits of that clearly outweigh the adverse effect of absence or lessening of competition.

(d) Competition Act (XIX of 2010)---

----S. 11---Merger, control of---Scope.

Ms. Rahat Kaunain Hassan, Legal Counsel, Munir Farooqi, CEO and Adeel Bajwa, Chairman Board, Executive Committee on behalf of Warid Telecom (Private) Limited.

Muhammad Irshad, Head of Legal and Company Secretary and Hussain Tahir Zaidi, Legal Counsel on behalf of Warid Telecom Pakistan LLC.

Khalid Ibrahim, Legal Counsel, Jeffery Hedberg, CEO, Aamir Ibrahim, Deputy CEO, A. Hussain Suliman, CSO, Atif Raza, Director Strategy and Niaz Brohi, Chief Legal Officer and Company Secretary on behalf of Pakistan Mobile Communication Limited.

Aslam Hayat, Manager Regulatory Affairs, Yusuf Zaman, Company Secretary, Abdul Mobeen, Director (Regulatory) on behalf of Telenor Pakistan (Private) Limited.

Ali Sibtain Fazli, Legal Counsel on behalf of Telenor ASA.

Hugo Lindsay, Group Director (Policy), Ms. Sheryl Yuan, Deputy General Counsel (M&A), David Dobbie, Deputy General Manager and Sam Szlezinger Partner, DLA PIPER on behalf of VimpelCom Limited.

Dr. Muhammad Saleem, Director General (CA), Rizwan Ahmed, Director General (Licensing), Khurram Siddiqui, Director (Law), Amjad Mustafa Malik, Director (W) and Dr. Shahbaz Nasir, Deputy Director on behalf of Pakistan Telecommunication Authority.

Dates of hearing: 12th February and 9th March, 2016.

2016 C L D 1400

[Sindh Environmental Protection Tribunal]

Before Justice (R) Nisar Muhammad Shaikh, Chairman, Mushtaq Ali Memon, Member Technical and Muhammad Arif Khan, Member Legal

ABDUL GHANI and others---Complainants

Versus

RAIWIND CHEMICAL (PVT.) LTD.---Respondent

Complaint No. 2 of 2012, decided on 25th February, 2016.

(a) Sindh Environmental Protection Act (VIII of 2014)---

----Ss. 21 & 26(3)(b)---Pakistan Environmental Protection Act (XXXIV of 1997), Ss. 6, 11 & 21(3)(b)---Criminal Procedure Code (V of 1898), Ss. 265-K, 200 & 156(3)---Constitution of Pakistan, Art. 176(2)---Environmental Protection Order---Power of court to acquit accused at any stage---Investigation into cognizable offences---Examination of complainant---Jurisdiction and powers of Environmental Tribunal---Respondents contended that the Tribunal had no jurisdiction to take cognizance on direct private complaint, as the complainants had not given a thirty days' notice before filing of the complaint, and that the Tribunal could not be said to have taken cognizance of the case, as only notice, not summons, had been issued to them, and that under S. 200, Cr.P.C., statement of the complainant had to be recorded at once, whereas, the same had been recorded after eight months of the receipt of the complaint---Validity---If the Tribunal ordered for investigation under S. 156(3), Cr.P.C. or issued search warrants for the purpose of the investigation, the Tribunal could not be said to have taken cognizance of the offence---Issuance of search warrants for the purpose of investigation or directing the investigating agency to ascertain the truth of the complaint, could not by itself be regarded as an act of taking cognizance of the offence---Taking cognizance was not the same as issuance of process---Tribunal might be said to have taken cognizance of complaint if, after receiving the complaint from the agency or an aggrieved person, the Tribunal recorded the statement under S. 200, Cr.P.C., applied its mind to the facts in the statement and proceeded to order registration of the case against the accused---Tribunal, after the agency had submitted its report regarding non-compliance of the Environmental Protection Order by the accused persons, proceeded to take cognizance and ordered the registration of cases against them after recording statement of the complainant under S. 200, Cr.P.C.---Tribunal had only directed the complaint to the agency for the purpose of ascertaining the truth, and no summons had been issued on the complaint; thus, the Tribunal had adopted the proper course in the complaint by not taking cognizance at the earliest, before getting the enquiry/investigation conducted---Section 11 of Pakistan Environmental Protection Act, 1997 imposed two obligations on everyone: firstly, the National Quality Standards (NEQS) should not have been violated; and, secondly, the standards established under S. 6(1)(a) of Pakistan Environmental Protection Act, 1997 must have been maintained---Samples of waste water collected by the Agency exceeded the permissible limits of the NEQS in contravention of S. 11 of Pakistan Environmental Protection Act, 1997---Respondents had not complied with the Environmental Protection Order, even after many chances had been given to them for the compliance---Grounds for allowing the application under S. 265-K, Cr.P.C. did not exist, as the violation continued---Present matter required evidence; therefore, the application under S. 265-K, Cr.P.C. and application under S. 21(3)(b) of Pakistan Environmental Protection Act, 1997 and S. 26(3)(b) of Sindh Environmental Protection Act, 2014 read with Art. 175(2) of the Constitution were without merits---Application for withdrawal of the complaint was not maintainable, as the remaining four complainants had not joined in the application for withdrawal and present case was not limited to the complainants as the alleged violation of the NEQS continued to affect the environment and the public at large---Applications were dismissed in circumstances.

Shehla Zia v. WAPDA PLD 1994 SC 693 rel.

(b) Constitution of Pakistan---

----Art. 9--- Right to life--- Scope--- Right to life as enshrined in the Constitution includes the right to an unpolluted environment.

Shehla Zia v. WAPDA PLD 1994 SC 693 rel.

Complainant in person.

Syed Shamim-ul-Hassan for Respondents.

Khalid Muneer Shah, Assistant Director Law, SEPA.

Shoaib Qureshi, Investigating Officer/Field Supervisor, SEPA.

Munir Alam Kolachi, ADPP, present in assistance of SEPA.

Date of hearing: 25th February, 2016.

2016 C L D 544

[Federal Shariat Court]

Before Riaz Ahmad Khan, C.J., Dr. Allama Fida Muhammad Khan, Sheikh Najam ul Hasan and Zahoor Ahmed Shahwani, JJ

Shaikh AFTAB AHMAD---Petitioner

Versus

GOVERNMENT OF PAKISTAN through Secretary, Ministry of Law and Parliamentary Affairs, Islamabad---Respondent

Shariat Petition No.4/L of 2001, decided on 16th April, 2015.

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

----S. 18(3)---Qanun-e-Shahadat (10 of 1984), Arts.17 & 79---Constitution of Pakistan, Art.203-D---Shariat petition---Documents used in banking and financial agreements, attestation of---Section 18(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, making attestation of such documents in terms of Art.17 of Qanun-e-Shahadat, 1984, mandatory---Section 18(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provided protection/validity to all banking documents/finance agreements, executed prior to enforcement of said Ordinance, which were not attested in terms of Art.17 of Qanun-e-Shahadat, 1984---Repugnancy to Injunctions of Islam---Article 17(2) of Qanun-e-Shahadat, 1984 provided exception to some specific laws from the requirement of attestation of financial instruments---Financial Institutions (Recovery of Finances) Ordinance, 2001, was admittedly a special law and as such the exception provided in Art.17(2) of Qanun-e-Shahadat, 1984 was applicable to the documents exempted from attestation as required under S.18(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Giving retrospective effect to requirement of attestation, and thereby removing protection given to financial documents executed prior to enforcement of Financial Institutions (Recovery of Finances) Ordinance, 2001, would open a flood gate of litigation and create legal chaos---Protection given to such documents in terms of S.18(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was in the larger public interest to protect the interest of the banking companies and financial institutions (who were the custodian of the funds belonging to general public) and to avoid the abuse of process of law by the defaulters---Past and closed matters in financial transactions made prior to coming into force of the Financial Institutions (Recovery of Finances) Ordinance, 2001, had been rightly protected by S. 18(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001, which section was not repugnant to Injunctions of Islam---Shariat petition was dismissed accordingly.

Al-Quran Verse 282 of Surah Al-Baqarah ref.

(b) Islamic jurisprudence---

----Legislation---Scheme of legislation in Islam, based on Holy Quran and Sunnah---Prospective effect---Many verses of the Holy Quran prohibited evil and unjust practices/transactions (prevalent before Islam), with immediate effect and stopped them forthwith, however such verses expressly provided that past and closed transactions were left untouched and, rather, waived off, even from the "Akhirath" point of view.

Al-Quran Verses 2.275; 4.22; 4.23; 5.95; Sunan Abu Daud Jild 2nd, Hadith 1147 Marfooa and Sunan Abni Majad, Jild 2nd Hadith 2749 Hadith Marfooa p.38 ref.

(c) Constitution of Pakistan---

----Arts. 203-B(c) & 203-D---Judgment of Shariat Court in respect of any law or provision of law as repugnant to Injunctions of Islam or otherwise---Prospective effect---Such judgment was always prospective i.e. from some date fixed in future, whereafter the law so declared repugnant ceased to have effect on that date onward unless the judgment was challenged in appeal before Shariat Appellate Bench---Principle of effectiveness of a law to be brought in conformity with Injunctions of Islam from a prospective date had been maintained in the Constitution.

Raja Ahsan Mehmood Satti, Standing Counsel for the Federation.

Date of hearing: 9th March, 2015.

2016 C L D 76

[Islamabad]

Before Aamer Farooq, J

PAKISTAN MOBILE COMMUNICATION LTD. and others---Appellants

Versus

APPELLATE BENCH No.III, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and others---Respondents

SECP Appeal No. 1 of 2015, decided on 30th October, 2015.

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

----Ss. 496 & 476---Penalty for carrying on ultra vires business---Punishment and adjudication of fine and penalty---'Prize Reward Scheme' regarded as ultra vires of company's business---Determination---Security Exchange Commission imposed penalty of fine upon the Company and its Directors under S. 476 of Companies Ordinance, 1984 for introducing 'Reward Scheme and Prize Draws' in violation of S. 496 of the Ordinance, being beyond the scope of the objects of the company---Appellate Tribunal of Commission dismissed appeal---Contention raised by company was that the 'Prize Reward Scheme', being part of its advertisement campaign, was within its objects, and that case-law relied upon by the Appellate Tribunal was not attracted to the present case---Validity---High Court observed that objects of Memorandum of Association of a company were not to be interpreted in rigid manner, and rather the same were to be interpreted in flexible fashion, as had been (the practice) in the world today---Company might undertake multiple tasks or business, or while performing a primary function, company could also have ancillary objects---'Prize Reward Scheme', which had been undertaken by the company in pursuance of its advertisement or marketing campaign, was permissible under objects clause of its Memorandum of Association---Steps, declared as illegal by virtue of some rules or regulations, subsequent to incorporation of a company, being part of objects of company, though might be illegal or unlawful, could not be regarded as ultra vires the company's business---Act or transaction of company in question was although unlawful, but the same, being part of its ancillary objects, that were advertisement and marketing for its products, could not be termed as ultra vires---Section 496 of Companies Ordinance, 1984 was not attracted to the facts and circumstances of the present case---Impugned order was set aside---Appeal was allowed in circumstances.

Warid Telecom and others v. Pakistan Telecommunication Authority, Islamabad 2013 CLD 1085; The Directors, &c., of the Ashbury Railway Carriage and Iron Company Ltd. v. Hector Riche (1875); Re Crown Bank v. Chancery Division (1890) and The Attorney General and Ephraim Hutchings (Relator) v. The Directors, &c., of the Great Eastern Railway Company (1880) ref.

Lucky Cement Ltd. v. Commissioner Income Tax, Zone Companies, Circle-5, Peshawar 2015 SCMR 1494; the Shamnugger Jute Factory Co., v. Ram Narain Chatterjee and others 1987 ILR 14 and Framroze Rustomji Paymaster v. British Burmah Petroleum Co. Ltd. 1976 46 CompCas 587 rel.

(b) Words and phrases---

----'Ultra vires'---Meaning.

Black's Law Dictionary ref.

Barrister Ehsaan Ali Qazi for Appellants.

Barrister Ammar Hussain Khushnood and Shahzad Ali Rana for Respondents.

Date of hearing: 14th September, 2015.

2016 C L D 134

[Islamabad]

Before Athar Minallah, J

BABAR SATTAR---Petitioner

Versus

FEDERATION OF PAKISTAN through Secretary Ministry of Water and Power and 4 others---Respondents

Writ Petition No. 4233 of 2014, decided on 9th July, 2015.

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

----S. 183---Public Sector Companies (Corporate Governance) Rules, 2013, R. 25---Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Subsequent events---Press publication---Grievance of petitioner was with regard to appointment of Managing Director---Objection raised by petitioner was that during pendency of constitutional petition, an advertisement was published seeking application for appointment of a Managing Director and notification of expansion of Board of Directors---Validity---Such press publication could be taken into consideration as no prejudice was caused---Such act of authorities had a direct nexus with cause of action disclosed in petition and covered within the ambit of prayer sought---After withdrawal of notification dated 29-9-2014 the proceedings had not become suo motu in nature---Objection was ruled out in circumstances.

(b) Doctrine of pleasure---

----Scope--- Doctrine of pleasure has almost become redundant and the concept of absolute, unfettered or unguided exercise of discretion by public authorities is treated as alien to the essence of rule of law.

Muhammad Yasin v. Federation of Pakistan through Secretary Establishment Division Islamabad and others PLD 2012 SC 132; Aman Ullah Khan and others v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad and others PLD 1990 SC 1093; Chairman Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Company Limited, Rawalpindi PLD 1991 SC 14; Government of N.-W.F.P. through Secretary and 3 others v. Mejee Flour and General Mills (Pvt.) Ltd. Mardan and others 1997 SCMR 1804; Abid Hussain and others v. P.I.A.C. and others 2005 SCMR 25; Messrs Gadoon Textile Mills and 814 others v. WAPDA and others 1997 SCMR 641; Abu Bakar Siddique and others v. Collector of Customs, Lahore and others 2006 SCMR 705; Som Raj and others v. State of Haryana and others AIR 1990 SC 1176; Mahesh Chandra v. Regional Manager, U.P. Financial Corporation and others AIR 1993 SC 935 and Aeltemesh Rein, Advocate Supreme Court of India v. Union of India and others AIR 1988 SC 1768 rel.

(c) Public Sector Companies (Corporate Governance) Rules, 2013---

----R. 25---Companies Ordinance (XLVII of 1984), Ss. 506 & 183---Mandatory nature of rules---Determination---Provisions of Public Sector Companies (Corporate Governance) Rules, 2013 are valid and subsistent and the same had been framed with the approval of Federal Government pursuant to the powers under S. 506 of the Companies Ordinance, 1984---Public Sector Companies (Corporate Governance) Rules, 2013 being valid and subsistent and notified under the empowering provisions of the Companies Ordinance, 1984 are binding on the Federal Government---Provisions of Public Sector Companies (Corporate Governance) Rules, 2013 can neither be ignored nor circumvented while exercising powers under S. 183 of Companies Ordinance, 1984.

Niaz Muhammad Khan v. Mian Fazal Raqib PLD 1974 SC 134; Ghulam Hassan v. Jamshaid Ali and others 2001 SCMR 1001; Syed Zia Haider Rizvi and others v. Deputy Commissioner of Wealth Tax, Lahore and others 2011 SCMR 420; Maulana Nur-ul-Haq v. Ibrahim Khalil 2000 SCMR 1305; Malik Umar Aslam v. Sumera Malik and another PLD 2007 SC 362 and Human Rights Case Nos.4668 of 2006, 1111 of 2007 and 15283-G of 2010 decided on 4th June, 2010 (PLD 2010 SC 759) rel.

(d) Administration of justice---

----Doing of a thing---Principle---When law prescribes doing a certain thing in a particular manner, then it has to be done in that manner alone.

Muhammad Anwar and others v. Mst. Ilyas Begum and others PLD 2013 SC 255 rel.

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

----S. 183---Public Sector Companies (Corporate Governance) Rules, 2013, R. 25---Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Subsequent events---Press publication---Managing Director, appointment of---Petitioner was one of the independent members of Board of Directors of National Transmission and Dispatch Company Limited (NTDCL)---Grievance of petitioner was with regard to interference of Federal Government with regard to appointment of Managing Director---Validity---Administration and management of "NTDCL" was within the exclusive domain of its Board of Directors and the management, as provided under Companies Ordinance, 1984 and the rules made thereunder---Any interference by Federal Government or any other Public Sector Company in administrative matters and management was ultra vires the Companies Ordinance, 1984 and the rules made thereunder---Notification dated 29-9-2014, advertisement dated 3-11-2014 seeking candidates for appointment of Managing Director "NTDCL", notification dated 15-4-2015 purportedly expanding the Board of Directors and appointing one Ex-officio member and four private members, were ultra vires the Companies Ordinance, 1984---Corporate Notifications were issued by Federal Government in violation of mandatory provisions of Public Sector Companies (Corporate Governance) Rules, 2013, instead of placing matters before Board of Directors and thereafter adopting process of scrutiny for determination of 'fit and proper criteria'---Provisions of Public Sector Companies (Corporate Governance) Rules, 2013 were mandatory and strict compliance therewith was an obligation of every stakeholder of NTDCL, particularly the Federal Government---NTDCL was to be governed and managed under Companies Ordinance, 1984 and the rules made thereunder---High Court declared that Federal Government had no discretion, exclusive authority or right to make appointments or remove members of Board of Directors---High Court directed the authorities to strictly comply with the provisions of the Companies Ordinance, 1984 and Public Sector Companies (Corporate Governance) Rules, 2013 and Articles of Association of NTDCL---Petition was allowed accordingly.

OGRA through Secretary v. Midway II, CNG Station and others 2014 SCMR 220; Aman Ullah Khan and others v. The Federal Government of Pakistan through Secretary, Ministry of Finance, Islamabad and others PLD 1990 SC 1092; Ghazanfar Ali v. Federation of Pakistan and others 2014 CLD 664; Khawaja Muhammad Asif v. Federation of Pakistan and others 2013 SCMR 1205; Barrister Sardar Muhammad Ali v. Federation of Pakistan PLD 2013 Lah. 343; Shabana Akhtar v. District Coordination Officer 2012 PLC (C.S.) 366; Muhammad Yasin v. Federation of Pakistan through Secretary Establishment Division PLD 2012 SC 132; Sheikh Zayed Hospital and Post Graduate Medical College v. Dr. Muhammad Saeed 2010 PLC (C.S.) 967; Khawaja Ahmed Hassan v. Government of Punjab 2005 SCMR 186; United Liner Agencies of Pakistan (Pvt.) Ltd., Karachi v. Miss Mahenau Agha 2003 SCMR 132; Dr. Imran Khattak and another v. Ms. Sofia Waqar Khattak, PSO to Chief Justice and others 2014 SCMR 122; Province of East Pakistan and others v. Sirajul Haq Patwari and others PLD 1966 SC 854; All Pakistan Textile Mills Association through Secretary v. Federation of Pakistan through Secretary Commerce, Ministry of Commerce, Islamabad and 2 others PLD 2009 Lah. 494; Mst. Amina Begum and others v. Mehar Ghulam Dastagir PLD 1978 SC 220; Marghub Siddiqi v. Hamid Ahmed Khan and 2 others 1974 SCMR 519; Salahuddin and 2 others v. Frontier Sugar Mills and Distillery Ltd. Tokht Bhai and 10 others PLD 1975 SC 244; Mehrab Khan through Attorney v. Province of Sindh through Secretary Irrigation and Power Department, Government of Sindh and 5 others 2005 CLC 441 and Messrs Facto Belarus Tractors Limited Karachi and another v. Federation of Pakistan through Secretary, Ministry of Industries, Production and Special Initiatives Islamabad and others PLD 2006 Kar. 479 ref.

Petitioner in person.

Ali Shah Gillani for Respondent No.1.

Muhammad Shoaib Shaheen for Applicant (in C.M. No.2595 of 2015).

Afnan Karim Kundi, Additional Attorney General, Omer Rasul, Additional Secretary, M/o Water and Power.

Malik Zahoor Awan, Standing Counsel.

Date of hearing: 2nd July, 2015.

2016 C L D 581

[Islamabad]

Before Athar Minallah, J

EASTERN TESTING SERVICES (PVT.) LTD.---Petitioner

Versus

SECP and others---Respondents

W.P. No. 3689 of 2013, decided on 8th December, 2015.

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

----Ss. 468 & 484---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 2(1)(31), 33 & 34---Constitution of Pakistan, Art. 199---Constitutional petition---Alternate efficacious remedy---Removal from Directorship---Respondent was Chief Executive Officer and Director of petitioner company who was removed from his position through a resolution passed in Extraordinary General Meeting---Decision of the Meeting was set aside by Registrar Securities and Exchange Commission of Pakistan on the ground that the same was in violation of injunctive order passed by Civil Court---Plea raised by respondent was that the petition was not maintainable as the petitioner had adequate alternate remedy available---Validity---Rule that High Court would not entertain a petition under Art. 199 of the Constitution when other appropriate remedy was available was not a rule of law barring jurisdiction of High Court---When law provided an adequate remedy, constitutional jurisdiction under Art. 199 of the Constitution could be exercised in exceptional circumstances---Exceptional circumstances which could justify invoking jurisdiction under Art.199 of the Constitution when adequate remedy was available, were when the order or action assailed was palpably without jurisdiction, mala fide, void or coram non judice---Tendency to bypass remedy provided under relevant statute by resorting to constitutional jurisdiction of High court was to be discouraged so that legislative intent was not defeated---Constitutional jurisdiction under Art. 199 could not be readily resorted to when matters amenable to jurisdiction of exclusive forum was mandated by the Constitution itself or when hierarchy provided under a statute ended up in appeal, revision or reference before High Court or directly before Supreme Court---High Court in exercising its jurisdiction would take into consideration whether the remedy provided under the statute was illusory or not---Adequate remedies having been provided under Companies Ordinance, 1984, in the context of orders in question, petitioner failed to make out a case that order in question suffered from palpable want to jurisdiction, was void, coram non judice or based upon mala fide---Petition was dismissed under circumstances.

Messrs Act International v. Provincial Earthquake Rehabilitation and Reconstruction Authority 2013 YLR 1396; Moula Bux Khatian v. Province of Sindh 2012 MLD 97; N.-W.F.P Public Service Commission v. Muhammad Arif 2011 SCMR 848; Naseemullah v. Executive Director, SECP 2013 CLD 216; Principal Sadiq Public School v. Director EOBI 2012 CLC 880; BP Pakistan Exploration and Production v. Additional Commissioner Inland Revenue 2011 PTD 647; Collector of Customs v. Universal Gateway Trading Corporation 2005 PTD 123; Syed Match Company Ltd. v. Authority under Payment of Wages Act 2003 SCMR 1493; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881; Collector Customs Karachi v. Messrs New Electronics PLD 1994 SC 363; Agha Gas Company v. Central Board of Revenue 1997 PTD 269; Al-Ahram Builders v. Income Tax Appellate Tribunal 1993 SCMR 29; Assistant Collector v. Dunlop India AIR 1985 SC 330; Thansingh Nathmal and others v. The Superintendent of Taxes, Dhubri AIR 1964 SC 1419; Al Raham Travels and Tours v. Ministry of Religious Affairs 2011 SCMR 1621; Federation v. Haji Muhammad Sadiq PLD 2007 SC 133; The Murree Brewery Co. Ltd. v. Pakistan through the Secretary to Government of Pakistan, Works Division and 2 others PLD 1972 SC 279; Muslimabad Cooperative Housing Society Ltd. through Secretary v. Mrs. Siddiqa Faiz and others PLD 2008 SC 135; Hydri Ship Breaking Industries Ltd. v. Sindh Government and others 1988 MLD 1863; Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072; National Development Finance Corporation v. Wafaqi Mohtasib, Islamabad and another 2004 CLD 260; Muhammad Idrish v. East Pakistan Timber Merchants Group and another PLD 1968 SC 412; Salahuddin and 2 others v. Frontier Sugar Mills and Distillery Ltd. and 10 others PLD 1975 SC 244; Abdur Rab Choudhury v. Registrar of Joint Stock Companies and 2 others PLD 1960 DACCA 541; Dr. Sher Afgan Khan Niazi v. Ali S. Habib and others 2011 SCMR 1813; Brig. Muhammad Bashir v. Abdul Karim and others PLD 2004 SC 271; Town Committee, Gakhar Mandi v. Authority under the Payment of Wages Act Gujranwala and 57 others PLD 2002 SC 452; Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672; Government of the Punjab through Collector, Faisalabad and another v. Hudabia Textiles Mills, Faisalabad through Chairman and 4 others 2001 SCMR 209; M.N. Steel Mills v. Wapda PLD 1988 Lah. 243; Ibrahim Textile Mills Ltd. v. Federation of Pakistan and another PLD 1989 Lah. 47; Messrs East and West Steamship Company v. Pakistan, through Secretary Ministry of Commerce, Karachi and others PLD 1958 SC (Pak) 41; Messrs Pioneer Cement Limited through Kanwar Iqbal Talib, duly authorized Director v. Province of the Punjab through Secretary, Local Government Department, Lahore and another 2000 CLC 54; Dr. Sikandar Ali v. Government College University, Lahore 2012 PLC (C.S.) 1119; Zulfiqar Ali v. Munir Ahmed and another 1999 CLC 731; Balochistan Textile Mills Ltd. v. Central Board of Revenue and others 1984 CLC 2192; Messrs EFU General Insurance Ltd. through Joint Managing Director, Karachi v. Federation of Pakistan through Ministry of Law and Parliamentary Affairs, Government of Pakistan, Islamabad and 3 others 2010 PTD 1159; Messrs Pirani Engineering through Chief Financial Officer v. Federal Board of Revenue and 2 others 2009 PTD 809; Dr. Akhtar Hassan Khan and others v. Federation of Pakistan and others 2012 SCMR 455; Tariq Transport Company Lahore v. The Sargodh-Behra Bus Service, Sargodha and others PLD 1958 SC 437; Ltd. Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty and others PLD 1961 SC 119; Abdur Rehman v. Haji Mir Ahmad Khan and another PLD 1983 SC 21; Commissioner of Income Tax, companies-II and another v. Hamdard Dawakhana (Waqf), Karachi PLD 1992 SC 847; Income Tax Officer and another v. Messrs Chappal Builders 1993 SCMR 1108; Ch. Muhammad Ismail v. Fazal Zada, Civil Judge, Lahore and 20 others PLD 1996 SC 246; Collector of Customs, Customs House, Lahore and 3 others v. Messrs S.M. Ahmad and Company (Pvt.) Limited Islamabad 1999 SCMR 138; Commissioner of Income Tax v. Messrs Eli Lilly Pakistan (Pvt.) Ltd. 2009 SCMR 1279; Dr. M.A. Haseeb Khan and others v. Sikandar Shaheen and 9 others PLD 1980 SC 139; Ghulam Muhammad and another v. Mst. Noor Bibi and 5 others 1980 SCMR 933; Khawaja Muhammad Akhtar v. President, Cantonment Board, Sialkot Cantt. Election Authority (Tribunal) and another 1981 SCMR 291; Benedict F.D' Souza v. Karachi Building Control Authority and 3 others 1989 SCMR 918; Federation of Pakistan and 2 others v. Major (Retd) Muhammad Sabir Khan PLD 1991 SC 476 and Muhammad Younis Khan and 12 others v. Government of N.W.F.P. through Secretary, Forest and Agriculture, Peshawar and others 1993 SCMR 618 ref.

(b) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Adequate statutory remedy available---Effect.

Syed Hamid Ali Shah and Syed Ishfaq Hussain Naqvi for Petitioner.

Babar Sattar, Muhammad Afzal Saddiqui, Hamid Ahmed, Nasir Mehmood and Shahzad Ali Rana for Respondents.

Ibrar Saee, Law Officer SECP.

Date of hearing: 17th September, 2015.

2016 C L D 1049

[Islamabad]

Before Athar Minallah, J

DEWAN SALMAN FIBRE LIMITED---Petitioner

Versus

DEWAN PETROLEUM (PVT.) LIMITED---Respondent

C.O. No. 7 of 2015, decided on 15th March, 2016.

Companies Ordinance (XLVII of 1984)---

----S. 160-A--- Annual general meeting--- Invalid proceedings---Principles---Grievance of the petitioner company was that proceedings of the annual general meeting held on 30-4-2015 were invalid---Validity---Every company incorporated under Companies Ordinance, 1984, had a statutory duty to hold annual general meeting at least once in every calendar year---Rights of members included giving of a notice i.e., informing that meeting would be held and containing information or contents as prescribed in such regard, existence of quorum for a meeting, to attend the meeting, to speak and vote on a resolution in person or through a proxy---Materiality of omission or defect in a notice or irregularity in proceedings of meeting was in the context of such rights of members---Petitioner was not able to identify any defect or omission in the notice which could be treated as material and would render the meeting held on 30-4-2015 as invalid---Petitioner was not able to demonstrate that even if there was any omission or defect in the notice then either its rights were prejudiced by such omission or defect or it was prevented from effectively exercising its rights---High Court declined to interfere in the matter---Petition was dismissed in circumstances.

M. Shahid Siagol and 16 others v. Messrs Kohinoor Mills Ltd. and 7 others PLD 1995 Lah. 264; Naveed Textile Mills Ltd. Karachi v. Central Cotton Mills Limited S.I.T.E. Kotri, District Dadu and 2 others PLD 1997 Kar. 432 and Musselwhite v. CH Musselwhite & Sons [1962] 1 All ER 201 ref.

Syed Ahmed Hassan Shah for Petitioner.

Salman Akram Raja for Respondent.

Syed Ishtiaq Hussain Naqvi for Respondent/SECP.

Ibrar Saeed, Representative of SECP.

Date of hearing: 29th December, 2015.

2016 C L D 1077

[Islamabad]

Before Athar Minallah, J

RAZA ABDUL AZIZ AL-RAEE and 6 others---Appellants

Versus

APPELLATE BENCH SECP and another---Respondents

Comm. Appeal No. 2 of 2012, heard on 12th February, 2016.

Companies Ordinance (XLVII of 1984)---

----Ss. 7, 8, 34, 208 & 472---Imposition of penalty---Jurisdiction of Securities and Exchange Commission of Pakistan---Scope---Appellant was penalized by Securities and Exchange Commission of Pakistan for having made unauthorized investment in its associated companies---Validity---Securities and Exchange Commission of Pakistan was a regulatory authority and it was within its powers and jurisdiction to impose such penalties as it could deem appropriate in facts and circumstances of each case---Default was admitted and a lenient view had already been taken by Appellate Bench of Securities and Exchange Commission of Pakistan---High Court declined to waive the penalty and censure or reprimand the appellants---Discretion exercised by Appellate Bench of Securities and Exchange Commission of Pakistan was neither arbitrary nor fanciful and the same was exercised in accordance with law---Penalty imposed was not disproportionate to the violation of mandatory provisions made by appellant---Appellant failed to point out any legal infirmity so as to require any interference and no question of law was raised---High Court declined to interfere in the penalty imposed by Securities and Exchange Commission of Pakistan---Appeal was dismissed in circumstances.

Sardar Anzar Iqbal Khan for Appellants.

M. Bilal, Babar Bilal, Abdullah Qureshi and Shahzad Ali Rana for Respondents.

Date of hearing: 12th February, 2016.

2016 C L D 1260

[Islamabad]

Before Noor-ul-Haq N. Qureshi and Athar Minallah, JJ

Messrs CAPITAL POULTRY FEED AND DALL MILLS and others---Appellants

Versus

PRESIDING OFFICER OF BANKING COURT, ISLAMABAD and others---Respondents

F.A.O. No. 80 of 2015, heard on 9th February, 2016.

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

----S. 19---Civil Procedure Code (V of 1908), O. XXI, Rr. 89 & 92---Limitation Act (IX of 1908), Art. 162---Execution of decree---Auction proceedings---Objection to sale---Remedies---Appellants were aggrieved of order passed by Executing Court dismissing objections filed against auction of mortgaged property---Validity---Time period for making application under either of Rr. 89 & 92, O.XXI, C.P.C. was 30 days from the date of sale and limitation prescribed under Art. 166 of Limitation Act, 1908, was attracted---Provisions of O. XXI, R. 92(2), C.P.C. affirmed that in case of application under O. XXI, R. 89, C.P.C. deposit was to be made within 30 days from the date of sale---Both the methods of challenging sale under O. XXI, Rr. 89 & 92, C.P.C., could not be invoked simultaneously---Provision of O. XXI, R. 89(2), C.P.C. provided that where a person applied under O. XXI, R. 90, C.P.C., to set aside sale of his immovable property then he would lose his entitlement to make application under O. XXI, R. 89, C.P.C., unless the application under O. XXI, R. 90, C.P.C. was withdrawn---Remedy under O.XXI, R. 89, C.P.C. could only be availed within thirty days of the sale---Appellants did not file any application under O. XXI, R. 89, C.P.C. within the prescribed period of limitation---Sale was confirmed in favour of auction purchasers and sale certificate had also been issued; as bona fide purchasers their interests were also intervened and needed to be protected---Sanctity and stability of judicial sale was also required to be upheld---High Court declined to interfere in the order passed by Executing Court---Appeal was dismissed in circumstances.

Muhammad Maherban v. Muhammad Siparas and others 2014 CLC 1329; National Bank of Pakistan and 117 others v. Saf Textile Mills Ltd. and another PLD 2014 SC 283; United Bank Ltd. v. Heryana Asbestos Cement Industries Ltd. and 20 others 2006 CLC 1272; Mian Muhammad Nawaz Sharif v. The State PLD 2009 SC 814; Messrs Lanvin Traders, Karachi v. Presiding Officer, Banking Court No. 2, Karachi and others 2013 SCMR 1419; Muhammad Attique v. Jami Limited and others PLD 2010 SC 993; Mst. Anwar Sultana through L.Rs. v. Bank Al-Falah Ltd. and others 2014 SCMR 1222; Haji Zahid Saeed and another v. Messrs Asif Brothers and 3 others 2015 CLC 183; Ehsan-ul-Haq and 13 others v. Zulfiqar Khan and 7 others 2001 MLD 890; Hakim Ali v. Muhammad Hanif and others 2014 SCMR 866 and Zakaria Ghani and 4 others v. Muhammad Ikhlaq Memon and 8 others Civil Appeal No. 670 of 2002 ref.

Dr. Babar Awan and Dr. M. Salah-ud-Din Mangel for Appellants.

Raja Muqsit Nawaz Khan for Respondent No.2.

Arshad Mahmood for Respondents Nos.3 and 4.

Date of hearing: 9th February, 2016.

2016 C L D 1277

[Islamabad]

Before Athar Minallah, J

MUHAMMAD KAMRAN NADEEM and 11 others---Petitioners

Versus

WEBCOM (PVT.) LIMITED through Chief Executive---Respondent

C.O. No. 4 of 2009, heard on 5th April, 2016.

Companies Ordinance (XLVII of 1984)---

----S. 305---Winding up of company---Eventualities---Onus to prove---Petitioners were minority shareholders and sought winding up of company because of their dissatisfaction to decisions by majority shareholders---Validity---Eventualities for the purposes of winding up a company were described in cls. (a) to (i) of S. 305 of Companies Ordinance, 1984---Petitioners were not able to point out any case in favour of passing an order for winding up of the company---Petitioners held 30% of shares and allegations raised by them were not supported by any material placed on the record of High Court---Petitioners could be disappointed due to the decisions taken by majority share-holders but such disappointment did not tantamount to oppression of minority---Onus to make out a case for passing winding up order was on the petitioners and they had failed to satisfy High Court that a case was made out in the light of eventualities mentioned in S. 305 of Companies Ordinance, 1984---Petition was dismissed in circumstances.

Sardar Anjum Nasim Abbasi for Petitioners.

Babar Bilal, Tariq Bilal and Shazia Bilal for Respondent.

Date of hearing: 5th April, 2016.

2016 C L D 1419

[Islamabad]

Before Aamer Farooq, J

SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY LIMITED---Petitioner

Versus

The FOP through Secretary, Cabinet Division and 3 others---Respondents

Writ Petition No. 97 of 2016, heard on 13th April, 2016.

Constitution of Pakistan---

----Art. 170(2)---Audit by Auditor General for Pakistan---Petitioner company was a joint venture between a foreign country and Pakistan---Grievance of petitioner (company) was that it was not liable to be audited by Auditor General for Pakistan---Validity---Government of Pakistan held 500 shares of petitioner company, therefore, it could not claim complete exemption from conduct of audit by the Auditor General for Pakistan---Nature and extent of shareholding could determine nature and extent of audit to be conducted---High Court declined to interfere in the matter---Constitutional petition was dismissed in circumstances.

Azid Nafees for Petitioner.

Syed Hasnain Ibrahim Kazmi, DAG for Respondents.

Date of hearing: 13th April, 2016.

2016 C L D 1688

[Islamabad]

Before Athar Minallah, J

NATIONAL FEEDS LIMITED---Petitioner

Versus

COMPETITION COMMISSION OF PAKISTAN and others---Respondents

Writ Petition No. 1987 of 2015, decided on 29th April, 2016.

(a) Competition Act (XIX of 2010)---

----S. 37---Enquiry and study---Initiation of inquiry---Competition Commission had issued notices pursuant to consumer's complaint through the National Accountability Bureau, alleging that the Poultry Feed Mill owners had formed cartels and were purchasing ingredients at a low price---Validity---Complaint contained vague and indefinite information---Impugned notices referred to mere concerns raised before the Commission to the effect that despite a decrease in price of poultry feed inputs, the price of feed had consistently been increasing---Said allegations were vague and devoid of sufficient facts, nor any prima facie evidence had been disclosed requiring initiation of an inquiry relating to the prohibitions mentioned in Chapter II of the Act---Impugned notice, at best, could be treated as forming basis for initiating a study, rather than an inquiry under S. 37 of the Act---Nothing had been placed on record to justify initiating an inquiry---Commission had acted in mechanical manner---Impugned notices and complaint were in the nature of roving inquiry---Impugned notices might be treated as forming basis of conducting a study under S. 37 of the Act---If the Commission, after concluding the study, was of the opinion that there were sufficient facts and the complaint was substantiated by prima facie evidence alleging contraventions of the provisions of Chapter II of the Act, then the Commission might issue notices to the petitioners regarding the initiation of inquiry and the sufficient facts or prima facie evidence on the basis of which the opinion was formed would also be disclosed therein---Impugned notices were, therefore, declared as not having been issued under S. 37(1) or S.37(2) of the Act---Notices in question were directed to be treated as forming the basis of conducting a study under S. 37 of the Act---Constitutional petition was allowed accordingly.

Assistant Director, Intelligence and Investigation, Karachi v. Messrs B.R. Herman and others PLD 1992 SC 485; Dr. Akhtar Hassan Khan v. Federation of Pakistan 2012 SCMR 455 and Wazirzada v. Chief of Air Staff, Pakistan Air Force 1998 SCMR 1579 rel.

(b) Competition Act (XIX of 2010)---

----Ss. 28, 29, 32 & Preamble---Competition Commission, powers and purpose of---Scope of order which the Commission was empowered to make in terms of S. 31 read with Chapter II of Competition Act, 2010 showed the legislative intent for establishing the Commission---Commission is vested with the power and jurisdiction to initiate proceedings in case of contraventions and to conduct inquiries---Section 28(1)(a) of Competition Act, 2010 restricts the contraventions in relation to which proceedings may be initiated---While conducting inquiries into the affairs of an undertaking, the Commission cannot go beyond what may be necessary for the purposes of the Act.

(c) Competition Act (XIX of 2010)---

----Preamble---Object of the Act---Purposes of Competition Act, 2010 are enumerated in Chapter II read with Ss. 28, 29 & 31 of Competition Act, 2010.

(d) Competition Act (XIX of 2010)---

----S. 28---Functions and powers of Competition Commission---Scope---Dealing with the abuse of dominant position, prohibited agreements, deceptive marketing practices and mergers or promoting competition through advocacy are the fundamental function and powers of the Commission.

(e) Competition Act (XIX of 2010)---

----Ss. 36 & 37---Enquiry and study---Scope---Scope of Ss. 36 & 37 of Competition Act, 2010 is essentially restricted to the purposes of the Act---Commission would be justified in seeking information from an undertaking under S. 36 of the Act, if the same is in relation to abuse of dominant position, prohibited agreements, approval of mergers or promoting competition through advocacy---Scope of the inquiry contemplated under S. 37 of the Act also cannot go beyond the purposes of the Act.

(f) Competition Act (XIX of 2010)---

----Ss. 36 & 37---Enquiry and study---Modes and preconditions---Distinction existed between 'inquiries' and 'studies' referred to in S. 37 of the Act---Inquiry can be initiated by the Commission, firstly on its own, secondly, upon a reference made to it by the Federal Government, and thirdly, on receiving a complaint in writing from an undertaking or a registered association of consumers---Language of S. 37(2) of the Act is instructive of the legislative intent that are the obligations of the Commission or the preconditions for initiating an inquiry alleging contravention of the provisions of Chapter II of the Act---Section 37 of the Act explicitly provides that the Commission, before initiating an inquiry, is under an obligation to form an opinion that the application/written complaint, is not frivolous or vexatious nor is the same based on insufficient facts or that the same is substantiated by prima facie evidence---Existence of said preconditions, however, are not contemplated for the purposes of carrying out a study.

(g) Competition Act (XIX of 2010)---

----Ss. 37(1) & 37(2)---Enquiry and study---Scope, purpose and effect---Obligation of Competition Commission---Legislative intent was obvious when Ss. 37(1) & 37(2) of Competition Act, 2010 are read together---Initiating an inquiry for an alleged contravention of the provisions of Chapter II is an adverse action for an undertaking---Inquiry proceedings, besides undermining the repute of a commercial entity in the market, entailed inconvenience and intrusive proceedings---Commission, therefore, had a statutory duty to exercise powers vested for the purposes of conducting an inquiry in a just, fair manner, particularly on the basis of sufficient facts and when the complaint or allegations had been substantiated by prima facie evidence---Commission may gather sufficient facts or prima facie evidence on the basis of a study conducted under S. 37 of the Act and then initiate an inquiry on its own.

(h) Competition Act (XIX of 2010)---

----S. 37---Enquiry and study---Notice, issuance of---Requirements---Notice issued under S. 37(1) or S. 37(2) of Competition Act, 2010 ought to disclose the sufficient facts or the prima facie evidence on the basis of which an inquiry is initiated.

(i) Competition Act (XIX of 2010)---

----Preamble---Scope and purpose of Competition Act, 2010.

(j) Administration of justice---

----Authorities vested with powers under a statute cannot use or exercise powers for the purposes of making indiscriminate, roving and fishing inquiries.

Assistant Director, Intelligence and Investigation, Karachi v. Messrs B.R. Herman and others PLD 1992 SC 485 rel.

Ch. Khurshid Ahmed for Petitioner.

Azid Nafees and Aftab Ahmed Butt for Respondents.

Date of hearing: 15th April, 2016.

2016 C L D 1833

[Islamabad]

Before Miangul Hassan Aurangzeb, J

ATLAS CABLES (PVT.) LIMITED----Appellant

Versus

ISLAMABAD ELECTRIC SUPPLY COMPANY LIMITED and another----Respondents

R.S.A. No.2 of 2016, decided on 16th May, 2016.

(a) Contract---

----Force majeure, doctrine of--- Applicability---Force majeure refers to legal or physical prevention and not economic activity which is not profitable---Change in economic or market circumstances, affecting profitability of a contract or the case in which parties' obligation can be performed is not regarded as being a force majeure event.

Advanced Law Lexicon by P. Ramanatha Aiyar, 3rd Edition; Halsbury's Laws of England, 4th Edition, Volume 51; Dhanrajamal Gobindram v. Shamji Kalidas AIR 1961 SC 1285; M/s. Alopi Parshad v. Union of India AIR 1980 SC 588; Brauer & Co. (Great Britain), Ltd. v. James Clark (Brush Materials), Ltd. [1952] 2 All ER 497 and Thames Valley Power Ltd. v. Total Gas and Power Ltd. [2006] 1 Lloyd's Rep. 441 rel.

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

----S. 126---Contract of guarantee or surety---Scope---Guarantee, genesis of---Guarantee envisages two contracts, one between principal debtor and creditor and second between creditor and surety---Guarantee has its genesis in underlying contract between principal debtor and the creditor---Irrevocable and unconditional bank guarantees are normally couched in a language whereby bank undertakes to give money to the beneficiary on demand without demur or protest---If a bank guarantee is unconditional stipulating that the bank should pay, on demand, without demur and that the beneficiary is the sole judge not only on the question of breach of contract but with respect to the amount or loss or damage, the obligation of the bank has to be discharged in the manner provided in the bank guarantee---When such demand is made, the bank is not permitted to probe into the disputes between the parties---Court should not interfere directly or indirectly to withhold payment, otherwise trust in commerce internal and international may be irreparably damaged.

Haral Textiles Milited v. Banque lndosuez Belgium, S.A. 1999 SCMR 591; Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191 and Standard Construction Company (Pvt.) Limited v. Pakistan, through Secretary M/o Communications and others 2010 SCMR 524 rel.

(c) Contract---

----Construction of contract---Principle---First rule of construction of a contract or a document is to ascertain intention of parties to it.

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

----S. 74---Liquidated damages and penalty---Distinction---Liquidated damages are recognized as a genuine pre-estimate of losses suffered due to another party's breach of contract, whereas penalty is a sum of money so stipulated in terrorem so as to drive a party to fulfil a contract.

Muhammad Karimuddin v. Kanza Food Industries Ltd. 1989 MLD 3900 rel.

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

----Ss. 42 & 54---Contract Act (IX of 1872), Ss. 73, 74 & 126---Suit for declaration and injunction---Performance bonds, encashment of---Liquidated damages and penalty---Recovery---Plaintiff company entered into a contract of supply and the Bank issued performance bonds in support of plaintiff---Due to change in market situation, plaintiff failed to supply goods as per contract, therefore, defendant sought encashment of performance bonds and also sought recovery of damages as well as liquidated damages---Suit and appeal filed by plaintiff company were concurrently dismissed by Trial Court and Lower Appellate Court---Validity---Damages had to be first pleaded and thereafter proved by leading trustworthy and cogent evidence---Damages required evidence regarding details of losses actually suffered and liquidated damages, as a rule, required positive evidence to show actual loss suffered by party claiming the damages---Even fixed amount stipulated in contract as liquidated damages could not be recovered if quantum of actual loss suffered was not proved through sufficient evidence---Defendant did not plead or prove any loss caused by breach of contract by plaintiff, therefore, it could not encash performance bond which was furnished to compensate defendant for the losses it was to suffer on account of such breach--- Defendant was not entitled to invoke provisions of performance bond or encash the same unless it was established through adjudicatory process that plaintiff committed default of the provisions of purchase orders and as a result of the default defendant suffered damages---Once such default on the part of plaintiff and loss suffered by defendant as a result of such default was proved, performance bonds could have been encashed to the extent of such loss---High Court set aside judgments and decrees passed by two courts below and suit was partially decreed in favour of plaintiff---Second appeal was allowed accordingly.

Jamia Industries Ltd. v. Pakistan Refinery Ltd. PLD 1976 Kar. 644; Pakistan Engineering Consultants v. PIA Corporation 1993 CLC 1926; Pakistan Engineering Consultants v. P.I.A. Corporation 1989 SCMR 379; Zeenat Brother (Pvt.) Ltd. v. Aiwan-e-Iqbal Authority PLD 1987 Kar. 183; China International Water and Electric Corporation v. WAPDA 2001 YLR 2191; Mehboob Enterprises v. Karachi Development Authority 1997 MLD 3085; Mercury Corporation v. Pakistan Steel Mills Corporation (Private). Ltd. 2000 YLR 734; Messrs A.Z. Company, Karachi v. Government of Pakistan and another PLD 1973 SC 311; Sandoz Limited v. Federation of Pakistan 1995 SCMR 1431; Muhammad Farooq Azam v. Bank Al-Falah Limited 2015 CLD 1439; Bhai Panna Singh and others v. Bhai Arjun Singh and others AIR 1929 Privy Council 179; Saudi-Pakistan Industrial and Agricultural Investment Company (Pvt.) Ltd., Islamabad v. Messrs Allied Bank of Pakistan PLD 2003 SC 215; Messrs Khanzada Muhammad Abdul Haq Khan Khattak and Co. v. WAPDA through Chairman WAPDA, and another 1991 SCMR 1436; Industrial Development Bank of Pakistan v. Messrs Baloch Engineering Industry (Pvt.) Ltd. 2010 CLD 591; Messrs United Bank Limited v. Messrs M. Esmail and Company (Pvt.) Limited 2006 CLD 394; Allied Bank of Pakistan Limited, Faisalabad v. Messrs Asisha Garments 2001 MLD 1955; National Development Finance Corporation v. Moona Liza Fruit Juices Limited 1999 YLR 500 and Messrs HITEC Metal Plast (Pvt.) Ltd. v. Habib Bank Limited PLD 1997 Quetta 87 ref.

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

----Arts. 117 & 120---Damages---Onus to prove---Scope---Burden to prove actual loss is on the party who claims damages or compensation, even in the cases of liquidated damages.

Rashid Hanif for Appellant.

Muhammad Khalid Zaman for Respondent No.1.

Dates of hearing: 1st, 2nd, 18th, 22nd and 24th March, 2016.

2016 C L D 2200

[Islamabad]

Before Miangul Hassan Aurangzeb, J

HASSAN ZIA and another---Appellants

Versus

Mrs. UMERA ARSAM and others---Respondents

F.A.O. No.32 of 2016, decided on 30th August, 2016.

(a) Intellectual Property Organization of Pakistan Act (XXII of 2012)---

----Ss. 19 & 17---Copyright Ordinance (XXXIV of 1962), Ss. 60, 63 & 65---Specific Relief Act (I of 1877), Ss. 55 & 8---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Agreement with regard to proprietary rights over the script of novel---Using the said script with new characters---Suit for permanent injunction, damages and recovery of possession---Ad interim temporary injunction, grant of---Scope---Trial Court while giving findings on application for temporary injunction had not adverted to the terms and conditions of agreement executed between the parties---Defendant had purchased the script of drama from the plaintiff whereafter same had become his property who had right to allow the use of said script, characters or performances to any other person or organization---Defendants could not be restrained from using the script which had been sold to them---Defendants could not tamper with or change around the script---Changed/altered script would give a cause of action to seek a restraint against the use of the same---Adaptation of the original script to modern technology with new characters and in a new setting did not, prima facie, violate plaintiff rights---Plaintiff had sold out all rights with regard to script of novel to the defendants---Plaintiff could not make any grouse against the defendants for using the script which she had sold---Impugned interim order was modified to the extent that defendants in the suit were restrained only from altering, changing or modifying the script for the novel---Appeal was allowed accordingly.

Khadim Hussain v. The Additional District Judge, Faisalabad PLD 1990 SC 632; Muhammad Musa Ansari v. Gul Sahib Jan Khattak 1991 CLC 1483; Rauf B. Qadri v. State Bank of Pakistan PLD 2002 SC 1111; Zahid Zaman Khan v. Khan Afsar PLD 2016 SC 406 and District Council Haripur v. Zaheer Ullah Khan PLD 1994 Pesh. 228 ref.

(b) Intellectual Property Organization of Pakistan Act (XXII of 2012)---

----Ss. 19 & 17---Copyright Ordinance (XXXIV of 1962), Ss. 60, 63 & 65---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1, 2 & O. XLIII, R. 1---Suit for permanent injunction---Ad interim temporary injunction, grant of--- Appeal--- Maintainability--- Words "final judgment and order"---Scope---Right to file an appeal was a substantive right and had to be specifically conferred by the statute---Said right was not a matter of procedure---Intellectual Property Tribunal had all the powers vested in a civil court under Civil Procedure Code, 1908---Said Tribunal had to follow the procedure laid down in Civil Procedure Code, 1908 if no procedure had been provided in Intellectual Property Organization of Pakistan Act, 2012---Intellectual Property Tribunal while exercising powers under Civil Procedure Code, 1908 could pass all orders that a civil court could pass---No bar existed with regard to appeal from an interlocutory order passed by the Intellectual Property Tribunal---Impugned order had finally disposed of the application for temporary injunction---Provision barring a right of appeal had to be strictly construed---Appeal against the order allowing application for temporary injunction was maintainable in circumstances.

Shafique Ahmad Butt v. Punjab Labour Appellate Tribunal 1993 CLC 1352; University of Punjab v. Rehmatullah PLD 1982 Lah. 729 and Amjad Mustafa v. Muhammad Faiz 2005 YLR 419 rel.

Umar Sohaib Pirzada and Faisal Iqbal Khan for Appellants.

Dr. Khalid Ranjha, Advocate Supreme Court for Respondents.

2016 C L D 2293

[Islamabad]

Before Miangul Hassan Aurangzeb, J

MUBARAK TEXTILE MILLS (PVT.) LTD.---Appellant

Versus

DIRECTOR (ENFORCEMENT), HEAD OF DEPARTMENT SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and others---Respondents

S.E.C.P. Appeal No.1 of 2013, decided on 27th July, 2016.

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

----Ss. 33 & 34---Companies Ordinance (XLVII of 1984), S. 231---Appeal---Maintainability---Scrutiny and inspection of record---Suspension of order, denial of---Effect---Appellant company assailed order passed by Securities and Exchange Commission of Pakistan whereby inspectors were appointed to scrutinize and inspect all records and books of accounts of appellant company---Validity---Order in question was an administrative order, appeal against such order could not be filed under S. 33 of Securities and Exchange Commission of Pakistan Act, 1997---Appellate Bench of Securities and Exchange Commission of Pakistan was correct in holding that appeal against order in question was not maintainable---High Court at no stage suspended operation of order in question, therefore, authorities should not have stayed their hands simply because appellant had filed appeal before High Court---Mere filing or pendency of appeal did not operate as a stay of proceedings or as a suspension of order against which appeal was filed unless a specific stay or injunctive order was passed---High Court declined to interfere with order passed by Securities and Exchange Commission of Pakistan---Appeal was dismissed in circumstances.

Ofspace (Pvt.) Limited v. Federation of Islamic Republic of Pakistan 2012 CLD 923; Shah Wali v. Ghulam Din PLD 1966 SC 983; Mst. Irshad Begum v. Mst. Gul Farasha 2003 YLR 724; Agro Dairies (Pvt.) Limited v. Agricultural Development Bank of Pakistan 2004 CLD 232 and Naeem Ullah Khalid v. Dr. Hafiz Mushtaq Ahmed 2007 YLR 1418 rel.

Imran Shafique for Appellant.

Shahzad Ali Rana for Respondents.

2016 C L D 5

[Sindh]

Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ

MUHAMMAD ISMAIL---Appellant

Versus

DUBAI ISLAMIC BANK PAKISTAN LTD.---Respondent

Ist Appeal No.114 of 2011, decided on 30th January, 2015.

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

----S. 15---Execution of decree of Banking Court---Sale of mortgaged property under S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Striking down of S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 by the Supreme Court in National Bank of Pakistan v. Saif Textile Mills [PLD 2014 SC 283]---Effect in cases where auction proceedings were initiated before striking down of said provision, but not finalized---Past and closed transactions---Scope---Appellant impugned the order of Banking Court whereby application of auction purchaser Bank, for issuance of writ of possession for mortgaged property under S. 15(6) of the Financial Institutions (Recovery of Finances) Ordinance, 2001; was allowed---Contention of appellant/judgment debtor was inter alia, that since S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was held to be ultra vires of the Constitution and struck down by the Supreme Court, the entire auction process carried out by the Financial Institution was a nullity in the eye of the law---Validity---Present matter was not a past and closed transaction as neither the possession had been delivered to the auction-purchaser Bank nor any sale deed had been executed, and only proceedings of auction had taken place where in fact the Bank itself purchased the mortgaged property---High Court observed that the criteria for determining past and closed transactions as held in National Bank of Pakistan v. SAF Textile Mills [PLD 2014 SC 283]; was fully attracted to the present case and auction proceedings could not be sustained and were liable to be set aside---Appeal was allowed, accordingly.

Muhammad Umer Rathore v. Federation of Pakistan 2009 CLD 257; National Bank of Pakistan and 117 others v. SAF Textile Mills Ltd. and another PLD 2014 SC 283 and Shaikh Abdul Sattar Lasi v. Federation of Pakistan through Secretary, Ministry of Law, Justice and Parliamentary Affairs, Islamabad and 6 others 2006 CLD 18 rel.

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

----S. 15(2)---Execution of decree of Banking Court---Auction/sale of mortgaged property under S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Mandatory requirement of notice under S. 15(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court before issuing writ of possession, was required to examine and ascertain with a higher degree of caution, that as to whether proper notice(s), as required under S. 15(2) of the Financial Institutions (Recovery of Finances) Ordinance, 2001; had been duly served or not---Law required that the notice had to be "served upon the customer" and merely receipt issued by courier company, in absence of any delivery report; was not sufficient proof to reach a definite conclusion that notice had been served or not---Banking Court therefore, could not issue writ of possession merely on basis of receipt of courier company regarding dispatch of notice instead of a proper acknowledgment of notice or service of the same.

Irfan Nawab v. Soneri Bank Limited 2013 CLD 1922 rel.

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

----S. 15---Execution of decree of Banking Court---Auction/sale of mortgaged property under S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Record/account of sale proceeds of mortgaged property---Transparency in the auction process---Scope---Section 15(10) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 required the Bank to submit account of sale proceeds which included details pertaining to the entire sale/auction of mortgaged property, the names and identification of bidders, their offers along with details of earnest money deposited through bank draft etc; so that it could be ascertained by the Banking Court that the auction had been carried out in a transparent manner and that the same was not dubious---High Court observed that in cases where the Bank had itself participated in auction and had also been declared the highest bidder, the exercise of auction had to be carried out in a more lucid and transparent manner for the reason that otherwise, the customer would be deprived of the full benefit and maximum sale price of its property being sold by the Bank.

Khaleeq Ahmed for Appellant.

Khalid Mehmood Siddiqui for Respondent.

Date of hearing: 15th December, 2014.

2016 C L D 52

[Sindh]

Before Munib Akhtar, J

Messrs NEW LAL ENTERPRISES (PVT.) LTD.---Petitioner

Versus

Messrs SHAHEEN INSURANCE CO. LTD. and another---Respondents

J.M. Nos. 8, 9, 10 and 11 of 2014, decided on 13th July, 2015.

Insurance Ordinance (XXXIX of 2000)---

----S. 143---Companies Ordinance (XLVII of 1984), Ss. 305 & 306---Insurance company, winding up of---Principles---Petitioners were the creditors of respondent company and sought its winding up on the ground that the company was unable to pay its debts---Validity---Claims of petitioners were not denied who were creditors of respondent company which was unable to settle their claims in full---Notices under S. 306 of Companies Ordinance, 1984 were issued and petitioners were able to successfully invoke S. 305(e) of Companies Ordinance, 1984, i.e., the company was unable to pay its debts---Grounds on which petitioners sought winding up of defendant company also fell within S. 143(2)(a) of Insurance Ordinance, 2000---Defendant company failed to make any disclosure regarding its affairs and petitioners were within 'Stand-ins' for company's policy holders as a whole---Interest of policy holders of such an insurer, was that the company which could not settle in full policy claims as and when they fell due, for it to be wound up---Due consideration should also be given to the fact that company had made payment to petitioners and did so even after the petitioners were presented---High Court accepted the figures given by petitioners for the purpose of winding up as the company did not produce any credible figures and statements/accounts of payments and directed that if company had made payment of balance amount, within six months, then the petition would be deemed dismissed otherwise, the winding up order was to become absolute and operative at the conclusion of six months---Conditional winding up order was passed under circumstances.

Controller of Insurance v. Pakistan Insurance Co. (Pvt.) Ltd. PLD 1993 Kar. 720 ref.

Mazhar Imtiaz Lari for Petitioner.

Anwar Kashif along with Ammar Ather Saeed and Usman Alam for Respondents.

Munawar Awan, Law Officer, SECP.

Dates of hearing: 5th September, 26th November and 19th December, 2014.

2016 C L D 82

[Sindh]

Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ

HOMEPACK FREIGHT INTERNATIONAL through Proprietor and another---Appellants

Versus

SAUDI PAK LEASING COMPANY LTD.---Respondent

First Appeal No. 55 of 2013, decided on 15th October, 2015.

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

----Ss. 10 & 22---Civil Procedure Code (V of 1908), O. XXII, R. 4 & O. XXX, R. 10---Suit for recovery of loan amount---Leave to defend, grant of---Suit by or against firm or person carrying on business in name other than their own---Principles---Suit filed against trade name---Suit filed after proprietor of trade name had expired---Trade name, status of---Death of parties---Effect---Decree against legal heirs of defendant---Plaintiff-company filed present suit against proprietary concern, proprietor-guarantor and borrower---Defendant-guarantor had died before filing of present suit, thus, plaintiff-company impleaded legal heirs of deceased defendant---Banking Court, refusing leave to defend and decreed the suit---Validity---Trade name by itself had no legal status, as such same was neither partnership concern nor company incorporated---Proprietorship concern could not sue in trade name; however, in terms of O. XXX, R. 10, C.P.C., same could be sued in trade name---Proprietor of such trade name having expired much before filing of present suit, no further proceedings were valid against such trade name of defendant---Suit could proceed only through legal heirs of deceased defendant---Order XXII, R. 4, C.P.C. provided complete mechanism for bringing legal heirs of defendants on record--In the present case, as deceased was not sole defendant, as such suit could continue against other defendants validly, including legal heirs of deceased defendant if they were brought on record in accordance with law and with permission of court---Present case was not with regard to mortgage of property of deceased, but rather lease finance of assets---In case of mortgage of property, on default, legal heirs, on whom property would have devolved, could have been arrayed as defendants, as financial institution would have lien on mortgaged property---Leased assets did not devolve on legal heirs under law---As per contents of lease agreement, leased assets were to be registered in name of plaintiff-company---No question or issue as to devolving of leased assets to legal heir of borrower existed---Defendant was stated to have no right or interest in leased assets and that plaintiff-company might take possession of same, which were in use and control of defendant-guarantor; in such matters, once legal heirs had been brought on record, it was always appropriate to grant unconditional leave to defend---Legal heirs of deceased defendant having been brought on record, Banking Court was not justified in refusing grant of unconditional leave to defend to the legal heirs---Legal heirs should have been provided opportunity to defend and to bring all facts on record---Banking Court, thereafter, was to examine, as to whether valid decree could be passed and whether legal heirs had inherited any assets from deceased or not---Impugned judgment and decree against deceased defendant could not sustain---High Court, setting aside judgment and decree to the extent of deceased defendant, remanded case to Banking Court with direction to examine as to whether valid decree could be passed against legal heirs of deceased defendant---Appeal was partly allowed in circumstance.

Millwala Sons Limited v. Messrs Jaymissco and another 2009 CLD 1157; Meezan Bank Limited v. Messrs Focus Apparels (Pvt.) Limited and 6 others 2013 CLD 2138 and Mst. Fayyazi Begum and 6 others v. Ali Hassan and another 2009 CLD 1476 ref.

Ch. Muhammad Tufail Khan alias Tufaul Muhammad v. Zarai Taraqiati Bank Ltd. PLD 2007 Lah. 180 and Hafiz Brothers (Pvt.) Ltd. v. Pakistan Industrial Credit and Investment Corporation Ltd. 2001 SCMR 1 rel.

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

----O. XX----Death, marriage and insolvency of parties---Principles---Where a person is sole defendant in a suit, who has expired before filing of such suit, such suit would be non-existent, still born and nullity in eyes of law---Such defect cannot even be cured by bringing on record legal heirs of deceased, notwithstanding that any court has even granted permission for bringing them on record---Only option available for plaintiff is to file fresh suit against legal heirs, if cause of action has survived, in accordance with law.

(c) Inheritance---

----Leased assets do not devolve on legal heirs under law.

Khawaja Shamsul Islam for Appellants.

Mrs. Saima Faiz Durrani for Respondent.

Date of hearing: 22nd September, 2015.

2016 C L D 102

[Sindh]

Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ

MEHFOOZ AKHTER through Legal Heirs---Appellants

Versus

ASKARI LEASING LIMITED and others---Respondents

Spl. High Court Appeal No.226 of 2010, decided on 27th August, 2015.

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

----Ss. 7, 9 & 17---Suit for recovery of loan amount---Mortgage of property on basis of registered general power of attorney---Extent of liability of mortgagor as to loan amount---Bank filed suit against defendants/principal debtor and mortgagor, which was decreed by Trial Court---Legal heirs of mortgagor filed present appeal seeking setting aside of judgment and decree to their extent on ground that their predecessor-in-interest, mortgagor, had deposited titled documents of suit property with principal debtor for obtaining loan from him, and principal debtor, unlawfully and without any authority, had mortgaged same property with plaintiff-Bank---Validity---Defendant-mortgagor had executed general power of attorney in favour of principal debtor empowering him to sell, transfer, gift or mortgage suit property---Power of attorney was duly registered---Principal debtor, on basis of said power of attorney, had mortgaged suit property with plaintiff-Bank for securing repayment of entire outstanding liability---Suit filed by mortgagor seeking permanent and mandatory injunction against principal debtor to restrain him from misusing or destroying title documents of suit property was sham, and same had never been seriously pursued nor redemption regarding suit property had been sought---Defendant-mortgagor, on becoming aware of mortgage of suit property with plaintiff-Bank on basis of said power of attorney, had also initiated contempt proceedings against principal debtor without impleading plaintiff-Bank---Defendant-mortgagor had never sought any declaration as to status of mortgage and title documents nor sought cancellation of said power of attorney---Said suit had been dismissed for non-prosecution during life time of defendant-mortgagor---Legal heirs of mortgagor, filed restoration application, which was also dismissed for non-prosecution---Defendant-mortgagor had filed application under O. VII, R. 11, C.P.C. in present suit, which was also dismissed for non-prosecution---Present suit was decreed after five months of dismissal of defendants' application, but defendants made no attempt either to file application for leave to defend suit or to get application under O. VII, R. 11, C.P.C. restored---No ground for interference with impugned judgment and decree was made out---High Court amended impugned judgment and decree limiting liability of defendant-mortgagor to the extent of maximum liability as fixed in mortgage documents---Appeal was disposed of in circumstances.

Pirzada Niaz Ahmed Farooqi v. Muhammad Bux 2004 SCMR 862 and Muslim Commercial Bank Limited v. Tariq Saeed 2004 CLD 920 ref.

Dr. Raana Khan for Appellants.

Muhammad Ishaq Ali for Respondent No.1.

2016 C L D 158

[Sindh]

Before Munib Akhtar, J

GOLDEN ARROW SELECTED STOCK FUNDS LTD. and another---Plaintiffs

Versus

CLARIANT PAKISTAN LIMITED and 9 others---Defendants.

Suit No.1373 of 2013, decided on 5th June, 2015.

Civil Procedure Code (V of 1908)---

----O. XXXIX, Rr. 1 & 2---Sale of property of company---Temporary injunction, grant of---Invoking exception to the rule in Foss v. Harbottle (1843) 67 ER 189 (in any action in which a wrong is alleged to have been done to a company, the proper claimant is the company itself)---Scope---Consideration received by the company was above the fair market value---No loss, injury or damage would be suffered by the company---No fraud was on record within the meaning of the exception to the rule in Foss v. Harbottle---Said exception could not be invoked in favour of shareholders-plaintiffs in the terms of present proceedings---Application for grant of interim relief was dismissed in circumstances.

Daniels v. Daniels [1978] 2 WLR 73, 75 (et seq.); Konamaneni and others v. Rolls Royce Industrial Power (India) Ltd. and others [2002 1 All ER 979, 987-9; Prakashchandra Rajmal Jain v. Firm Swarupchand Hukumchand and Co. and others 1975 MPLJ 390; Spectrum Technologies USA Inc. v. Spectrum Power Generation Company Ltd. Delhi High Court, dated 21-9-2001; Nirad Amilal Mehta v. Genelec Limited and others [2008] 146 Comp. Cas 481; Prudential Assurance Co. Ltd. v. Newman Industries Ltd and others (No.2) [1980] 2 All ER 841; [1981] 1 Ch. 257; North-West Transportation Company Ltd. and another v. Henry Beatty and others (1887) 12 App. Cas. 589; Muhammad Suleman Kanjiani and others v. Dadex Eternet Ltd. and others 2009 CLD 1687; Pfizer Laboratories Ltd. v. Parke Davis and Co. Ltd. 2007 CLD 1047; In re: Kohinoor Raiwind Mills Ltd. and others 2002 CLD 1747 and Kohinoor Raiwind Mills Ltd. v. Kohinoor Gujar Khan Mills and others 2002 CLD 1314 ref.

In re: Dunlop India Limited and Madura Coats Limited (2012) 2 Comp LJ 199; Anil Modhavdas Ahuja v. Marvel Fragrances Pvt. Ltd. and others (2011) 113 Bom LR 3142 and Nirad Amilal Mehta v. Genelec Limited and others [2008] 146 Comp. Cas 481 distinguished.

Fort Gilkicker Ltd. [2013] 3 All ER 546; Abouraya v. Sigmund and others [2014] EWHC 277 (Ch); Waddington Ltd v. Chan Chun Hoo Thomas [2009] 2B CLC 82; Prudential Assurance Co. Ltd. v. Newman Industries Ltd and others (No. 2) [1982] 1 All ER 354; [1980] 2 All ER 841; [1981] 1 Ch. 257 and [1982] 1 All ER, at p.359 rel.

Murtaza Wahab for Plaintiffs.

Mayhar Mustafa Kazi and Omer Soomro for Defendants Nos.1 and 2

Zohaib Ahmed for Defendant No. 3.

Dates of hearing: 16th January, 3rd, 12th February, 7th March and 2nd December, 2014.

2016 C L D 183

[Sindh]

Before Aqeel Ahmad Abbasi and Muhammad Junaid Ghaffar, JJ

Messrs KALB-E-HAIDER & CO. (PVT.) LTD. through Chief Executive---Appellant

Versus

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

Spl. H.C.A. No.123 of 2008, decided on 10th July, 2015.

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

----Ss. 9 & 22---State Bank of Pakistan F.E. Circular No.83 of 1993 dated 30th December, 1993---Law Reforms Ordinance (XII of 1972), S. 3---Suit for declaration, injunction and recovery of money---Intra-court appeal--- Overdraft/Telegraphic transfer, buying rate---Applicability---Principle of set off---Plaintiff, exported rice by negotiating letters of credits (LC) through defendant Bank---Plaintiff contended that as per exchange control regulations, if payments were made to it from the funds of LC opening Bank abroad, then telegraphic rates as prescribed by State Bank of Pakistan had to be applied because funds of defendant Bank were not involved---Plaintiff further contended that if funds of defendant Bank were involved then overdraft buying rate as prescribed by State Bank of Pakistan had to be applied while disbursing payment to plaintiff---Plea raised by plaintiff was that defendant Bank made payment on the basis of telegraphic transfer buying rate and all payments out of the proceeds and funds being maintained by LC opening fund therefore, recovery notices issued by defendant Bank were illegal---Suit was dismissed by Single Judge of High Court---Validity---Single Judge of High Court was not justified to hold that in view of Foreign Exchange Circular No. 83/1993 dated 30-12-1993 and of the fact that negotiation of the document was on the basis of Letters of Credits, overdraft buying rates were applicable---Funds of defendant Bank were not utilized and State Bank of Pakistan had already dealt with such a situation in the Foreign Exchange Circular No. 83/1993---Plaintiff was entitled for negotiation of documents on the basis of telegraphic transfer buying rate which had been initially applied by defendants---Order for recovery of an amount along with markup from plaintiff was not justified and the same was unlawful---Division Bench of High Court declared plaintiff entitled for reimbursement of the amount with profit/markup as prescribed by State Bank of Pakistan for the relevant period and set aside judgment and decree passed by Single Judge of High Court--- Intra-court appeal was allowed in circumstances.

National Bank of Pakistan and 117 others v. SAF Textile Mills Limited and another PLD 2014 SC 283; London Joint Stock Bank Ltd. v. Macmillan and another 1918 All England Report 30; United Bank Limited v. Messrs Azmat Textile Mills Limited 2002 CLD 495; Abdullah v. Muhammad Siddique 1992 CLC 1561; The Mayor of Manchester v. Williams 1890 I.Q.B. 94 (sic); Rubber Improvement Ltd. v. Daily Telegraph Ltd. H.L. (E.) 1963 page 234; 1963 W.L.R. page 1063; Federation of Pakistan v. Messrs Alfarooq Flour Mills Ltd. 2000 CLC 215 and Mst. Nur Jehan Begum v. Syed Mujtaba Ali Naqvi 1991 SCMR 2300 ref.

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

----Ss. 9 & 19---Civil Procedure Code (V of 1908), O. VIII, R. 6---Suit for declaration, injunction and recovery---Set off against plaintiff---Principle---Defendant Bank cannot take any unilateral action and has to resort to legal process provided under the law---Defendant Bank can exercise right of set off only when the money owed to it is a sum certain, which is due---Defendant Bank cannot be conferred with judicial powers for determination of amount due against its customers---Right of set off is only available when amount due is certain and determined by a competent judicial forum.

National Bank of Pakistan and 117 others v. SAF Textile Mills Limited and another PLD 2014 SC 283 rel.

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

----Ss. 9 & 22---Law Reforms Ordinance (XII of 1972), S. 3---Suit for recovery of damages--- Intra-court appeal---Determination of damages---Principle---Plaintiff company was aggrieved of notices issued by defendant Bank which had put a lien on the foreign currency account of plaintiff---Plaintiff sought recovery of damages against defendant Bank---Validity---To substantiate claim of damages based on losses suffered due to act of defendant Bank as alleged, it was incumbent upon plaintiff to demonstrate that such losses in fact had occurred during such period by quantifying and substantiating them, whereafter damages proportionate to such losses could have been claimed---Damages could not be awarded on such expectation or on hearsay evidence, it had to be specific with transactions and the quantum of losses so as to claim damages in retrospect---Single Judge of High Court rightly declined to allow damages to plaintiff against defendant Bank---Intra-court appeal was dismissed in circumstances.

Shehenshah Hussain for Appellant.

Muhammad Rehan Qureshi holding brief for Muhammad Zubair Qureshi for Respondents.

Dates of hearing: 6th, 20th August, 23rd September, 9th October, 17th November, 8th December of 2014 and 20th May of 2015.

2016 C L D 210

[Sindh]

Before Syed Hassan Azhar Rizvi and Abdul Maalik Gaddi, JJ

ABDUL WAHID PATHAN---Appellant

Versus

HABIB BANK LIMITED through Attorney and Manager and 3 others---Respondents

Ist Appeal No. D-17 of 2011, decided on 18th September, 2015.

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

----Ss. 9 & 19---Civil Procedure Code (V of 1908), S. 12(2)---Limitation Act (IX of 1908), Art. 181---Suit for recovery of loan amount---Application for setting aside of judgment and decree---Limitation, determination of---Mortgage of property with Bank on basis of registered lease deed---Effect---Fraud and misrepresentation, plea of---Proof---Applicant filed application under S. 12(2), C.P.C., which was dismissed by Trial Court---Contention raised by applicant was that suit property could not be mortgaged with Bank as he, being owner of mortgaged property, had leased out the same to defendant-judgment-debtor on certain terms and conditions which he failed to comply with, thus said lease deed stood cancelled, and that plaintiff-Bank had obtained impugned judgment and decree by way of fraud and misrepresentation of facts, as Bank was not authorized to grant loan on basis of lease documents---Validity---Limitation for filing application under S. 12(2), C.P.C. was three years under Art. 181 of Limitation Act, 1908---Applicant had filed application under S. 12(2), C.P.C. after lapse of sixteen years of passing of impugned judgment and decree---Applicant had not brought any plausible explanation or cause on record for remaining silent for such long period---Applicant's case was not that he had come to know about the decree at later stage---No application for condonation of delay had been filed---Lease deed in respect of mortgaged property was registered one, which was still intact and same had not been cancelled by any competent authority---Defendant-judgment-debtor was competent to apply for loan with plaintiff-Bank on basis of said registered lease deed---Proposed auction was in respect of lease hold rights of defendant-judgment-debtor in mortgaged property, thus no right of applicant would be affected---No fraud or misrepresentation in obtaining decree had been established by applicant---No perversity, illegality and incorrectness was found in impugned order---Appeal was dismissed in circumstances.

Mst. Amtul Kabir and others v. Safia Khatoon and others 1991 SCMR 1022 and Messrs United Bank Ltd. v. Muhammad Majeed alias Abdul Majeed 1991 CLC 1102 rel.

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

----S. 12(2)---Limitation Act (IX of 1908), Art. 181---Limitation for filing application under S. 12(2), C.P.C. is three years under Art. 181 of Limitation Act, 1908.

Mst. Amtul Kabir and others v. Safia Khatoon and others 1991 SCMR 1022 rel.

Abdul Qayoom Pirzada for Appellant.

Hakim Ali Siddiqui for Respondent No.1.

Aghis-u-Salam Tahirzada for Respondent No.4.

Date of hearing: 16th September, 2015.

2016 C L D 217

[Sindh]

Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ

Messrs BROADTEX (PVT.) LTD. and 2 others---Appellants

Versus

Messrs NIB BANK LTD.---Respondent

Spl. High Court Appeal No. 165 of 2012, decided on 8th September, 2015.

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

----Ss. 9, 11, 12 & 19---Civil Procedure Code (V of 1908), Ss. 151, 152 & 104---Suit for recovery of loan amount---Execution of decree---Correction of consent order---Permissibility---Inherent jurisdiction of court---Principles---Banking court, while disposing of application filed by defendants with consent of both parties, directed plaintiff-Bank to honour its proposal contained in the consent order---Plaintiff-Bank filed application under S. 151, C.P.C. seeking correction of said consent order to the effect that annexure 'B' of the consent order was to be written instead of annexure 'C' in said consent order, which was allowed by Banking Court---Contention by defendants was that Banking Court was not competent to modify consent order, and that plaintiff-Bank had already accepted their proposal given in annexure 'C' of the order and same, therefore could not be replaced with annexure 'B'---Validity---Court had erroneously mentioned wrong annexure 'C' instead of annexure 'B'---Consent order was always open to correction if any error or omission was proved to have occurred to the satisfaction of the court---Defendants, as per their own request, had assured repayment of their liability in installments, and plaintiff-Bank, as shown from its hand written note on annexure 'B', had accepted such repayment schedule---Neither any acceptance from plaintiff-Bank in respect of annexure 'C' was available nor court could have lawfully directed plaintiff-Bank to act upon proposal as detailed in annexure 'C'---Order directing plaintiff-Bank to honour its proposal contained in annexure 'C', had been passed without proper assistance or even without going through the annexure 'C---Appeal was dismissed in circumstances.

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

----Ss. 151 & 152---Inherent jurisdiction of court---Correction of consent order---Permissibility--- Consent order is always open to correction if any error or omission is proved to have occurred to the satisfaction of the court.

Mushtaq A. Memon for Appellants.

Ms. Sofia Saeed for Respondent.

Date of hearing: 20th August, 2015.

2016 C L D 229

[Sindh]

Before Munib Akhtar, J

ALDO GROUP INTERNATIONAL AG through Authorized Signatory---Plaintiff

Versus

The ALDO SHOES through Proprietor/Manager/Partner---Defendant

Suit No. 886 of 2010, decided on 19th August, 2015.

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

----S. 40(2) & (3)---Term 'Deceptively Similar'---Scope---In a claim of infringement under S. 40(3) of Trade Marks Ordinance, 2001, on the basis that junior mark is deceptively similar, absence of confusion-condition may not matter that much---When claim of infringement is on the basis that junior mark is identical to the senior mark, the complexion changes and an anomaly appears in the law---Such is because if claim was to be made under S. 40(2) of Trade Marks Ordinance, 2001, in respect of 'similar' goods or services (which, by definition, include goods or services of the 'same description') then plaintiff has also to show that the confusion-condition applies---If exactly the same claim has to be made under S. 40(3) of Trade Marks Ordinance, 2001, in respect of goods or services of 'same description' then there would not be any such requirement.

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

----S. 40---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Suit for permanent injunction---Interim injunction, grant of---Infringement of trademark and passing of---"Step-by-step approach"---Applicability---Plaintiff company was not registered in Pakistan nor its trademark "ALDO" was so registered---Defendant was running a shoe store by the name "ALDO shoes" in Pakistan---Plea raised by plaintiff was that defendant was infringing its trademark and passing of business, services and products as those of plaintiff's---Validity---Defendant was running a retail shoe store and plaintiff's specification expressly covered retail store services in the field of footwear etc.---Prima facie, services under defendant's (junior) mark were similar to plaintiff's (senior) mark---Such step answered in favour of plaintiff and it required consideration of next step namely whether there existed a likelihood of confusion on the part of public---High Court considered plaintiff's mark and its alleged infringement in the context of services only and not goods as plaintiff did not use its trademark in Pakistan in respect of class 35--- No services as per specification were provided for the simple reason that plaintiff did not operate any stores in Pakistan---As far as it could be made out that the shoes could not be ordered directly for Pakistan over internet by availing plaintiff's online services, plaintiff might well be unable to make out a case of either balance of convenience being in its favour or that it would suffer an irreparable loss and injury---Two of three ingredients were missing in such context---High Court refrained from recording any finding on such point as there was competition of the parties' respective pending applications in respect of registration under class 25---If defendant was able to obtain registration of its mark it would be able to sell its shoes using that mark and it would be incongruous in such a situation that it would not at the same time be able to use what would then be its registered mark also as part of its trade name---Consideration of claim of alleged infringement on the basis of S. 40(5) of Trade Marks Ordinance, 2001 should in the exercise of High Court's discretion also be deferred till after determination of pending applications in respect of class 25---High Court directed the Registrar of Trademarks to decide the same by hearing and disposing them of together---If plaintiff's application was allowed High Court would grant it permission to file an application for interim relief (without prejudice of course, to the defendant's right of statutory appeal) on the basis of registration of its mark in class 25 and would also grant it permission to renew in such application, its claims of infringement as set out, consideration of which was deferred---High Court declined to grant interim relief to plaintiff---Application was dismissed accordingly.

Soneri Travels and Tours Ltd. v. Soneri Bank Ltd. 2011 CLD 193; Rupali Polyester Ltd. v. Baba China Builders and Developers 2014 CLD 1601; West v. Fuller Smith and Turner [2003] EWCA Civ 48, [2003] FSR 44 (CA); Kerly (13th) (2001); (2013) 25 SAcLJ 339, 340-1; Jellinek's Application (1946) 63 RPC 59; "Daiquiri Rum" case [1969] RPC 600; British Sugar plc v. James Robertson & Sons Ltd. [1996] RPC 281; Sarika Connoisseur Cafe Pte Ltd. v. Ferrero SpA [2012] SGCA 56 [2013] 1 SLR 531 at [40]-[49]; Balkrishna Hatcheries v. Nandos International Ltd. and another 2007 (35) PTC 295; Southern Cross Refrigerating Co v. Toowoomba Foundry Pty Ltd [1954] HCA 82; (1954) 91 CLR 592; McCormick & Company Inc v. McCormick [2000] FCA 1335; Tivo Inc v. Vivo International Corporation Pty Ltd [2012] FCA 252; MID Sydney Pty Ltd v Australian Tourism Co Ltd and others [1998] FCA 1616; Seven-Up Company v. Kohinoor Thread Ball Factory and others PLD 1990 SC 313; Alpha Sewing Machine Company v. Registrar of Trade Marks and another PLD 1990 SC 1074; Kabushiki Kaisha Toshiba (also trading as Toshiba Corporation) v. Ch. Muhammad Altaf and another PLD 1991 SC 27; Sabel v. Puma (C-251/95 dated 11.11.1997) [1998] RPC 199 ("Sabel"); Canon v. MGM (C-39/97 dated 29.09.1998) [1999] RPC 117 ("Canon"); The Polo/Lauren Co, LP v. Shop In Department Store Pte Ltd [2006] SGCA 14, [2006] 2 SLR 690 ("Polo (CA)"); Staywell Hospitality Group Pty Ltd v Starwood Hotels and Resorts Worldwide, Inc and another [2013] SGCA 65, [2014] 1 SLR 911 ("Staywell"); O2 Holdings Ltd. v. Hutchison 3G UK Ltd (Case C-533/06, decided on 12.06.2008); Specsavers International Healthcare Ltd. v. Asda Stores Ltd. [2012] EWCA Civ 24]; Compass Publishing BV v. Compass Logistics Ltd. [2004] EWHC 520 (Ch), [2004] RPC 41 ("Compass Publishing"); Maier and another v. Asos plc and another [2015] EWCA Civ 220; Trade Marks v. Woolworths [1999] FCA 1020, (1999) 45 IPR 411; Caterpillar Loader Hire (Holdings) Pty Ltd. v. Caterpillar Tractor Co [1983] FCA 145, (1983) 48 ALR 511; Australian Trade Marks Office, in Re Aussat Pty Ltd. [1993] ATMO 55; Steven R Smith v Car2go GmbH [2013] ATMO 103 at [47], and FetchTV Ply Ltd. v. LemonStone Group Pty Ltd. [2014] ATMO 2 at [37]; Davidoff & Cie SA and another v. Gofkid Ltd. [2003] 1 WLR 1714; Adidas-Saloman AG and another v. Fitnessworld Trading Ltd. [2004] 2 WLR 1095; Premier Brands (UK) Ltd. v. Typhoon Europe Ltd and another [2000] EWHC 1557 (Ch), [2000] FSR 767 ("Premier Brands"); Tabaq Restraurant v. Tabaq Restraunt 1987 SCMR 1090; J.N. Nichols (Vimto) plc v. Mehran Bottlers (Pvt.) Ltd. PLD 2000 Kar. 192; Unilever plc v. R.B. Oil Industries (Pvt) Ltd. 1999 MLD 1447 and Societe Des Products Nestle SA v. Food International (Pvt) Ltd. 2004 CLD 1383 ref.

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

----Ss. 10(3), 40(4) & 86---Phrase 'Well-known trademark'---Scope---Provisions of S. 40(4) of Trade Marks Ordinance, 2001, apply in either of two situations; firstly, it applies if registered mark has a 'reputation in Pakistan' and this is exactly equivalent to the requirement found in S. 10(3) of Trade Marks Ordinance, 2001; secondly, unlike S. 10(3) of Trade Marks Ordinance, 2001, provisions of S. 40(4) Trade Marks Ordinance, 2001, also apply if the registered mark is also a 'well-known trademark'---Such is independent of the mark having a reputation in Pakistan and is a separate situation in its own right---Phrase 'well-known trademark' as used in S. 40(4) of Trade Marks Ordinance, 2001, must be regarded in the same sense as S. 86 of Trade Marks Ordinance, 2001.

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

----S. 86(3)--- "Well-known trademark"--- Protection--- Protection accorded by S. 86(3) of Trade Marks Ordinance, 2001, is available only when well-known trademark is not registered in Pakistan.

Moeen Qamar for the Plaintiff.

Nadeem Shaikh along with Afaq Yousuf for Defendant.

Dates of hearing: 14th, 31st October, 13th November, 3rd December, 2014 and 13th, 17th August, 2015.

2016 C L D 387

[Sindh]

Before Sajjad Ali Shah and Shahnawaz Tariq, JJ

Dr. JAMIL MASOOD USMANI---Appellant

Versus

Messrs ASKARI BANK LIMITED---Respondents

First Appeal No.85 of 2014, decided on 2nd April, 2015.

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

----S. 7(2)---Provisions of Civil Procedure Code, 1908---Applicability---Scope---Banking Courts adjudicate financial lis strictly in accordance with Financial Institutions (Recovery of Finances) Ordinance, 2001---When procedure for any specific purpose is not provided in Financial Institutions (Recovery of Finances) Ordinance, 2001, Banking Court is fully competent to exercise its jurisdiction under Civil Procedure Code, 1908.

Rafiq Ahmed Sanauri and 3 others v. United Bank Limited and 5 others 2007 CLD 997 and Messrs Agrocare and 3 others' case 2011 CLD 990 rel.

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

----Ss. 9 & 10---Suit for recovery of finance---Application for leave to defend the suit---Dismissing application for non-prosecution---Suit was filed by plaintiff bank for recovery of outstanding dues of credit card---Defendant was holder of credit card, who failed to file application for leave to defend the suit within the scheme of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, nor it contained essential summary of statement of accounts to demonstrate details of amounts paid as well as outstanding against him---Despite last opportunity, defendant remained absent on the date fixed when application for leave to defend the suit was dismissed for non-prosecution and suit was decreed by Banking Court in favour of bank---Validity---Neither defendant filed leave application as required by Financial Institutions (Recovery of Finances) Ordinance, 2001, nor showed any sufficient cause regarding his absence as well as non-appearance of his counsel on the date, when suit was fixed before Banking Court as last chance to proceed leave application---High Court did not find any illegality or material irregularity in verdict of Banking Court and it did not call for interference---Appeal was dismissed in circumstances.

Chairman Broadcasting Corporation v. Nasir Ahmed and others 1995 SCMR 1593; Pakistan v. Public at large PLD 1987 SC 304 and Rafiq Ahmed Sanauri and 3 others v. United Bank Limited and 5 others 2007 CLD 997 distinguished.

Messrs Agrocare and 3 others' case 2011 CLD 990; Nisar Ahmed Afzal v. Muslim Commercial Bank and 14 others 2014 CLD 390; Bank of Punjab v. Genertech Pakistan Ltd. and 2 others 2008 CLD 765 and United Bank Ltd. v. Progas Pakistan Ltd. 2010 CLD 828 rel.

Sami Ahsan for Appellant.

Date of hearing: 2nd April, 2015.

2016 C L D 421

[Sindh]

Before Nazar Akbar, J

GHULAM MUHAMMAD----Appellant

Versus

Messrs ANAND KOHISTAN COTTON GINNING AND PRESSING FACTORY AND OIL MILLS through Proprietor----Respondent

IInd Appeals Nos.7 and 8 of 2009, decided on 30th September, 2015.

(a) Registration Act (XVI of 1908)---

----S. 17---Suit filed by registered firm---Not hit by S. 17, Registration Act, 1908---Appeals were dismissed.

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

----S. 100---Second appeal---Scope---Scope of second appeal was limited to three grounds mentioned in S. 100, C.P.C.---In the present case, none of the ingredients of S. 100, C.P.C. had been found in memo. of appeal or in grounds of appeal---Appellant had failed to point out anything contrary to law or to some usage having force of law in judgments and decrees of lower courts---Appellant had not pointed out any misreading or non-reading of evidence nor he had been able to point out any legal lacuna in findings of lower court---Second appeals were dismissed, in circumstances.

Muhammad Suleman Unar for Appellant.

Respondent absent.

Date of hearing: 7th August, 2015.

2016 C L D 440

[Sindh]

Before Nadeem Akhtar, J

SONERI BANK LTD.---Plaintiff

Versus

Messrs PUNJAB ENGINEERING SERVICES (PVT.) LTD. and 3 others---Defendants

Suit No. B-92 of 2011, decided on 17th September, 2015.

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

----Ss. 16, 23 & 9---Civil Procedure Code (V of 1908), O. XXXVIII, Rr. 5 & 6---Suit for recovery of loan amount---Application for attachment before judgment, injunction and appointment of receiver, acceptance of---Restrictions on transfer of assets and properties---Principles---Arrest and attachment before judgment---Section 16 of Financial Institutions (Recovery of Finances) Ordinance, 2001 could not be looked into or applied in isolation in view of S. 23 of the said Ordinance---Section 23 of Financial Institutions (Recovery of Finances) Ordinance, 2001 provided that pending final decision of suit filed by financial institution in which summons under S. 9(5) of the Ordinance had been published, no customer would, without prior written permission of Banking Court, transfer, alienate, encumber, remove or part with possession of any of his asset or property furnished to financial institution as security by way of mortgage, pledge, hypothecation, charge, lien or otherwise---Any such transfer, alienation, encumbrance or other disposition by customer in violation of S. 23 of Financial Institutions (Recovery of Finances) Ordinance, 2001 would be void and of no legal effect---Banking Court, while deciding application under S. 16 of Financial Institutions (Recovery of Finances) Ordinance, 2001, must also keep in mind mandatory provisions of S. 23 of the Ordinance---Defendants were duty bound under S. 23 of Financial Institutions (Recovery of Finances) Ordinance, 2001 not to transfer, alienate, encumber, remove or part with possession of any of assets or properties furnished to plaintiff-Bank as security by way of hypothecation, without prior written permission of Banking Court---Parties were duty bound to ensure that hypothecated assets were not wasted or destroyed during pendency of suit in which the same were subject matter---Banking Court was supposed to enforce said duty of parties---Defendants had not disputed execution of any of the letters of hypothecation nor had they filed any counter affidavit or objections to oppose present application---Application was allowed in circumstances.

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

----S. 23--- Restrictions on transfer of assets and properties---Principles---Defendants are duty bound under S. 23 of Financial Institutions (Recovery of Finances) Ordinance, 2001 not to transfer, alienate, encumber, remove or part with possession of any of assets or properties furnished to plaintiff-Bank as security by way of hypothecation, without prior written permission of Banking Court---Parties were duty bound to ensure that hypothecated assets are not wasted or destroyed during pendency of suit in which the same are subject matter---Banking Court was supposed to enforce said duty of the parties.

Jamshed Malik for Plaintiff.

Amir Ali holding brief for Khalid Javed for Defendants.

2016 C L D 449

[Sindh]

Before Nadeem Akhtar, J

ASKARI BANK LIMITED---Plaintiff

Versus

DCD SERVICES LIMITED and 3 others---Defendants

Suit No. B-121 of 2011, decided on 15th September, 2015.

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

----S. 27---'Order'---Scope---Word 'order' appearing in S. 27 of Financial Institutions (Recovery of Finances) Ordinance, 2001, implies an order through which a formal determination of rights and liabilities of parties is made by the court.

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

----Ss. 10 & 27---Civil Procedure Code (V of 1908), S. 151 & O. IX, R. 7---Petition dismissed for non-prosecution, restoration of---Bar of S. 27 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Applicability---Defendants sought restoration of their petition for leave to appear and defend the suit which was dismissed for non-prosecution---Validity---Order in question could not be termed as a "decision" as it neither decided rights of parties on merits nor was it a judgment, decision or decree liable to be challenged in appeal---Bar contained in S. 27 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was not attracted as the provisions did not bar Banking Court from exercising its inherent powers of restoring application for leave to defend which was dismissed for non-prosecution without touching merits of the case--- Application was allowed in circumstances.

(c) Interpretation of statutes---

----Procedural provision---Object and scope---Principal object of legal formalities and procedural provisions is to safeguard interest of justice---Procedural provision unless insurmountable not to be allowed to defeat ends of justice---Prescribed procedure is for the purpose of doing justice between parties and should not come in the way of doing substantial justice---Most important duty of courts of law is to do justice between the parties and in absence of any express power, normally relief to a party should not be refused on technical grounds---Civil courts being courts of both law and equity should dispose of cases on merits rather than on technical considerations.

Anwar Khan v. Fazal Khan 2010 SCMR 973 rel.

(d) Administration of justice---

----Procedural provision unless insurmountable not to be allowed to defeat ends of justice---Prescribed procedure is for the purpose of doing justice between parties and should not come in the way of doing substantial justice---Most important duty of courts of law is to do justice between the parties and in absence of any express power, normally relief to a party should not be refused on technical grounds---Civil courts being courts of both law and equity should dispose of cases on merits rather than on technical considerations.

Anwar Khan v. Fazal Khan 2010 SCMR 973 rel.

Muhammad Sohaib Pirzada and Abid Naseem for Plaintiff.

Malik Ahsan Mahmood for Defendants Nos.1 and 2.

2016 C L D 461

[Sindh]

Before Aziz-ur-Rehman, J

GHUFRAN ATTA KHAN---Plaintiff

Versus

Messrs SUMMIT BANK LIMITED through Chief Executive---Defendant

Suit No. 662 of 2010, decided on 24th April, 2015.

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

----Ss. 7(4) & 2(c)---Matter with regard to finance, determination of---Word "otherwise" mentioned in S. 7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Scope---Issue whether plaintiff-borrower had availed any finance from the defendant-Bank or not would fall within the meaning of S. 7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Word 'otherwise' used in the said Section would not only extend to the 'existence' or 'non-existence' of a 'loan' or 'finance' but would also embrace within its ambit a 'decision' vis-à-vis the question whether borrower had availed any finance or not or otherwise he was a customer of defendant-Bank---High Court under its civil jurisdiction could not adjudicate upon whether plaintiff had any relationship of customer or not with the Bank---Banking suit tagged with the civil suit was directed to be de-tagged and same be sent to the Banking Court for decision on merits.

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

----S. 7(4)---Decision as to finance---Banking Court, jurisdiction of---Scope---No court other than Banking Court had jurisdiction to decide as to the existence or non-existence of finance and execute decree passed by the same.

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

----S. 4---Overriding effect of Financial Institutions (Recovery of Finances) Ordinance, 2001---Scope---Financial Institutions (Recovery of Finances) Ordinance, 2001 being a special law had over-riding effect on the other laws.

(d) Words and phrases---

----"Otherwise"---Scope.

Lalchand and 2 others v. Officer on Special Duty, Federal Land Commission and 3 others 1984 CLC 2396 and Sardar Abdul Ghafoor Khan and 3 others v. The Federal Land Commission, Islamabad PLD 1979 Lah. 375 rel.

Faisal Siddiqui for Plaintiff.

Aimal Khan Kansi for Defendant.

2016 C L D 477

[Sindh]

Before Aqeel Ahmed Abbasi and Ghulam Qadir Leghari, JJ

MUHAMMAD JAVED---Appellant

Versus

FEDERATION OF PAKISTAN through Secretary Finance and 3 others---Respondents

First Civil Appeal No. 12 of 2014, decided on 2nd November, 2015.

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

----Ss. 12 & 9---Civil Procedure Code (V of 1908), Ss. 12(2), 151 & O. I, R. 3---Suit for recovery of loan amount---Setting aside of ex parte judgment and decree---Parties to suit---Suit against dead person---Scope---Legal heir of defendant-borrower filed application under S.12(2) read with S. 151, C.P.C. for setting aside ex parte judgment and decree on ground that present suit was not maintainable as defendant had died before filing of the suit---Banking Court dismissed the application---Validity---Banking Court had found that death certificate of the defendant was not genuine and same was an engineered document---Defendant had been served through all legal modes including publication, and no one, including the present applicant (legal heir of borrower) had come forward to defend the suit---Applicant had come forward with plea of non-service of court notices either upon defendant or his legal hers after a period about ten years from date of filing of present suit---No suit lay against dead person in the eyes of law, however, that plea was not applicable to the case, particularly when alleged death certificate did not inspire confidence---Applicant could not explain as to why he had filed application intimating death of borrower to Union Council after lapse of five years of (alleged) death when impugned judgment and decree was passed, and as to why the certificate had been obtained after lapse of about five years during execution proceedings---Applicant had not disputed amount of loan mentioned in the impugned judgment and decree---No useful purpose would be served if the judgment and decree were set aside at stage of execution proceedings, as legal heirs were required to pay outstanding liability of their deceased father---High Court allowed the applicant to file objection before executing court if he could produce conclusive documents to show date of death of defendant before passing of impugned judgment and decree---Appeal was dismissed accordingly.

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

----O. I, R. 3---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9---Suit for recovery of loan amount---Parties to suit--- Suit against dead person---Permissibility---No suit lay against dead person in the eyes of law---Such rule was not applicable to the case when "death certificate" did not inspire confidence.

Zulfiqar Ali Naich for Applicant.

2016 C L D 527

[Sindh]

Before Nadeem Akhtar and Muhammad Iqbal Kalhoro, JJ

HABIB AHMAD----Appellant

Versus

MEEZAN BANK LIMITED and 5 others----Respondents

Spl. High Court Appeal No.22 of 2008, decided on 21st September, 2015.

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

----S. 62---Novation of contract--- Object, import and scope---Novation means and be construed when contract already in existence is extinguished and a new contract is created, whereunder new rights emerge in favour of parties---Unless rights under old contract are explicitly relinquished, no new contract comes into force---Procrastination by a party to abide by terms of contract and to gain benefit out of it does not mean novation of contract---Novation comes about where parties to contract mutually agree to substitute it with new contract---If a party alleges novation of contract, it has to establish such prerequisites.

Mrs. Mussarat Shaukat Ali v. Mrs. Safia Khatoon and others 1994 SCMR 2189 rel.

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

----S. 17--- Fraud--- Proof--- Allegations of fraud require specific evidence establishing unequivocally malfeasance or a misrepresentation made with a design to get benefit for oneself or misleading the other into a course of action, detrimental to its rights.

Black's Law Dictionary (Sixth Edition) rel.

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

----Ss. 9 & 22---Contract Act (IX of 1872), S.176---Recovery of finance---Pledged stock, sale of---Procedure---Notice to pawnor---Requirement---Defendant while seeking finance facility from plaintiff Bank pledged shares owned by him, in a company listed in Stock Exchange---Defendant alleged that Bank and stock broker had illegally and fraudulently sold his shares at lesser price causing loss to his property---Plea raised by defendant was that before selling the shares, bank was to issue notice to him---Validity---Giving notice to pawnor was a mandatory requirement of law that had to be fulfilled before selling his pledged property---Obligation stood complied with if pawnor was served with a letter telling him about sale of his shares by pawnee, in case of non-compliance of terms of pledge-agreement---Regarding contents of such notice no hard and fast rule could be laid down and it was not necessary that such letter would contain actual date and place of intended sale---Only prerequisite was to convey reasonable information to pawnor about ensuing action in case he failed to pay the due amount and to afford him a reasonable time to redeem his pledged property---Mere non-activity of a stock broker at times did not mean that his particular dealing during that era was dubious or against the law---It did not in any manner lead to assume that by conducting transactions in question, the stock broker violated either call of his duty or committed offence of fraud as alleged by defendant---High Court declined interference in order passed by Banking Court--- Appeal was dismissed in circumstances.

PLD 1959 (W.P) Kar.725; AIR 1955 Patna 288; PLD 1962 (W.P) Kar. 565; AIR 1966 All. 134 ;AIR 1932 Cal. 524; PLD 1999 Kar. 468; PLD 1966 W.P. 556; 1989 MLD 3394; PLD 1998 Kar. 671; AIR 1960 Punjab 98 and 1987 CLC 1919 ref.

Rashid Anwer for Appellant.

Sajid Zahid for Respondent No.1.

Nemo for Respondent No.2.

Ejaz Ahmed for Respondents Nos.3, 4 and 5.

Khalid Javed Khan for Respondent No.6.

Dates of hearing: 11th, 18th, 27th November, 9th December, 2014, 12th, 20th January, 27th February and 14th September, 2015.

2016 C L D 555

[Sindh]

Before Nadeem Akhtar, J

ABBAS ALI and another----Plaintiffs

Versus

ASIF ABBAS and 3 others----Defendants

Suit No.1699 of 2010, decided on 17th October, 2015.

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

----Ss. 118, 80 & 79---Civil Procedure Code (V of 1908), O. XXXVII, R.3 & S. 34---Suit for recovery of amount on basis of dishonoured cheques---Summary procedure on negotiable instrument---Presumption as to negotiable instrument---Conditional leave to appear and defend---Failure to fulfil condition, effect of---Interest on decretal amount, award of---Permissibility---Defendants' application for leave to appear and defend was allowed subject to condition of furnishing surety equal to amount of dishonoured cheques, which they failed to fulfil---Defendants assailed leave granting order in appeal, which was dismissed for non-prosecution, and their application for restoration of the appeal was still pending for adjudication---Defendants took plea that suit could not be decreed as their application for restoration of appeal was still pending---Validity---Pendency of application for restoration of appeal could not be deemed to be an appeal---Mere filing or pendency of appeal did not operate as stay of proceedings or orders passed therein (in suit)---When leave to appear and defend suit had been conditionally granted to defendants, same would imply that if such condition was not fulfilled and conditional leave granting order was not complied with by defendant, then such order would cease to have effect to extent of grant of leave to appear and defend the suit---Defendants' application for leave to appear and defend, in such an event, would be deemed to have been dismissed---Court observed that non-appearance of defendants or dismissal of application for leave to appear and defend did not necessarily mean that court was not required to apply its mind to facts and documents before it---Defendants had never denied execution of any of cheques in question---Defendants, in partial satisfaction or adjustment of their liability, had transferred immovable property in favour of plaintiffs---Nothing was available on record to rebut claim of plaintiff---Defendants' objection as to lack of consideration for dishonoured cheques could not be allowed as they had failed to furnish surety as required by court---In view of O.XXXVII, R.2 of C.P.C. and presumption attached to cheque under S.118 of Negotiable Instruments Act, 1881, contents of plaint and allegations made therein were to be deemed to have been admitted---Plaintiffs were, therefore, entitled to decree against defendants jointly and severally with award of profit or markup as prescribed under O.XXXVII, Rr.2(2)(a) & 2(2)(b) of C.P.C., with costs of suit---Suit was decreed in circumstances.

Muhammad Ramzan and others v. Ghulam Qadir 2011 SCMR 659; Col. (Retd.) Ashfaq Ahmed and others v. Sh. Muhammad Wasim 1999 SCMR 2832 and Murtaza Haseeb Textile Mills v. Sitara Chemical Industries 2004 SCMR 882 rel.

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

----O. XXXVII, R. 3(2)--- Summary procedure on negotiable instrument---Conditional leave to appear and defend---Principles---When leave to appear and defend suit is granted to defendant subject to any condition, same will imply that if such condition is not fulfilled and conditional leave granting order is not complied with by defendant, then such order will cease to have effect to extent of grant of leave to appear and defend the suit.

(c) Appeal (Civil)---

----Mere filing or pendency of appeal did not operate as stay of proceedings or orders passed therein---Pendency of application for restoration of appeal could not be deemed to be an appeal.

(d) Administration of justice---

----Every court is required to apply its mind before passing order or judgment, whether any party has appeared before it or not to oppose an order, or the party who wants to oppose is not allowed to oppose because it has failed to fulfill requirements of law.

Mehar Khan for Plaintiffs.

Ghulam Mujtaba Phull for Defendants Nos.1 to 3.

Muneer Ahmed Khan for Defendant No.4.

Date of hearing: 12th October, 2015.

2016 C L D 598

[Sindh]

Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ

Engr. DAROO KHAN ACHAKZAI and others---Petitioners

Versus

REGULATOR OF TRADE ORGANIZATIONS (DIRECTORATE GENERAL OF TRADE ORGANIZATIONS) MINISTRY OF COMMERCE GOVERNMENT OF PAKISTAN and others---Respondents

C.Ps. Nos. D-6686 and D-6687 of 2014, decided on 18th August, 2015.

Trade Organizations Act (II of 2013)---

----Ss. 10(3), 4(3) & 2(f)---Trade Organizations Ordinance (XLV of 1961), S. 3 [Since repealed]---Constitution of Pakistan, Art. 199---Constitutional petition---'Existing trade organization's---Meaning---Membership of trade organization---Licensing and registration of trade organization---Revocation of license of existing trade organization---Right to vote---Principles as to eligibility---Petitioner claimed that respondents were not eligible to contest elections for post of Vice President from Balochistan Province as they were not registered as licensed body under Trade Organizations Act, 2013---Validity---Under S. 2(f) of Trade Organizations Act, 2013, an existing trade organization meant an organization licensed under Trade Organization Ordinance, 1961 [since repealed]---Section 4(3) of Trade Organizations Act, 2013 provided that an 'existing trade organization' which had applied for grant of licence within time notified by Federal Government would continue to function as Trade Organization until Federal Government decided its application for grant of licence and until first elections were held according to rules made under Trade Organizations Act, 2013---Section 10 (3) of Trade Organizations Act, 2013 provided that Chamber which was member of FPCCI would be eligible to vote in election of office-bearers and committees of Federation on completion of two years of grant of licence, provided that existing trade organization, on grant of licence under Trade Organizations Act, 2013, would be deemed to be member of Federation and would be entitled to vote---Case of respondents was not issuance of fresh licence---Respondents had been issued license under Trade Organizations Ordinance, 1961 [since repealed]---Respondents had initially applied for issuance of licence under Trade Organizations Ordinance, 1961 [since repealed] and thereafter under Trade Organizations Act, 2013---Record showed that respondents had already been issued licence for Makran Chamber and Gwadar Chamber under Trade Organizations Ordinance, 1961, which assertion had not been controverted by petitioners---Case of respondents, therefore, did not fall within contemplation of S. 10(3) of Trade Organizations Act, 2013 so as to compel them to complete two years period as standing members after grant of licence---Respondents' case was covered under proviso of S.10(3) of Trade Organizations Act, 2013, which provided that an "Existing Trade Organization" on grant of licence under Trade Organizations Act, 2013 would be deemed to be member of FPCCI and would be entitled to vote---Provisions of S. 4(3) of Trade Organizations Act, 2013 was applicable to case of respondents as admittedly they had applied for grant of licences under Trade Organizations Act, 2013 and their applications were pending---Licenses issued to respondents under Trade Organizations Ordinance, 1961 [since repealed] continued to be valid till fresh licences were issued to them under Trade Organizations Act, 2013---Respondent-Regulator of Trade Organization, for same reason, had directed names of respondents to be included in additional list of voters and they were allowed to compete and participate in elections---Constitutional petitions were misconceived both in facts and in law and were dismissed.

KSB Pumps v. Government of Sindh 2011 MLD 1876; Muhammad Akbar Shah v. Federation of Pakistan 2011 MLD 1484; Mumtaz Steel v. Pakistan Steel Re-rolling Association PLD 1990 Kar. 335; Usman Ashraf v. Director Trade Organizations 2004 CLD 157; Naveed Jan Baloch v. Federation of Pakistan 2012 CLD 1339; Saifuddin v. Chamber of Commerce Balochistan PLD 1982 Quetta 136 and Ali Asghar Malik v. Federation of Pakistan PLD 2000 Lah. 143 ref.

Khalid Javed for Petitioners.

Salahuddin Ahmed for Respondent No.1.

Shaikh Liaquat Hussain, Standing Counsel for Respondent No.2.

Date of hearing: 12th August, 2015.

2016 C L D 609

[Sindh]

Before Aqeel Ahmed Abbasi and Syed Saeeduddin Nasir, JJ

Messrs ASIA MOTOR COMPANY through Proprietor and another---Appellants

Versus

Messrs NIB BANK LIMITED---Respondent

Ist Appeal No. 20 of 2012, decided on 29th June, 2015.

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

----Ss. 9 & 22---Bankers' Books Evidence Act (XVIII of 1891), Ss. 2(8) & 4---Suit for recovery of finance---Unattested statement of accounts---Effect---Banking Court declined to grant leave to appear and defend the suit filed by defendants, resultantly suit was decreed in favour of Bank---Validity---Scheme of Financial Institutions (Recovery of Finances) Ordinance, 2001 was that when a suit was filed by financial institution against borrower the same was fundamentally a suit on accounts---Financial institution was under an obligation to ledger and maintain compulsorily books of accounts in terms of relevant laws, rules and banking practice---Statement of account was the most important and basic document which was mandatorily required to be filed by financial institution along with plaint for recovery of finances against borrower under S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court while dismissing application filed by defendants for grant of leave to appear and defend the suit, totally ignored mandatory provisions contemplated by S.9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and Ss.2(8) & 4 of Bankers' Books Evidence Act, 1891 and erroneously relied upon uncertified statement of accounts which did not mention requisite information and detail as required by law---High Court, in exercise of its appellate jurisdiction, set aside judgment and decree and remanded the matter to Banking Court to decide application for leave to appear and defend the suit afresh---Appeal was allowed accordingly.

Elbow Room and another v. MCB Bank Ltd. 2014 CLD 985; M/s. Liaqat Flour and General Mills v. Messrs Muslim Commercial Bank Ltd. 2007 CLD 188; Messrs C.M. Textile Mills (Pvt.) Ltd. v. Investment Corporation of Pakistan PLJ 2005 Lahore 1147; United Bank Ltd. v. Messrs Ilyas Enterprises 2004 CLD 1338; Bank of Khyber v. Nazamuddin and another 2010 CLD 1792; Ahmed Deen v. Zarai Taraqiati Bank Ltd. 2014 CLD 119; Habib Bank Ltd. v. Karachi Pipe Mills Ltd. 2006 CLD 842; Emirates Global Islamic Bank Ltd. v. Muhammad Abdul Salam Khan 2013 CLD 129; United Bank Ltd. v. Messrs Usman Textiles 2007 CLD 435; Messrs Dhrala Oil Mills v. The Bank of Punjab 2014 CLD 153; Messrs U.I.G. (Pvt.) Ltd. v. Bank Al-Falah Ltd. 2015 CLD 452 and Soneri Bank v. Compass Trading Corporation (Pvt.) Ltd. 2012 CLD 1302 ref.

Munawar Ali for Appellants.

Muhammad Zubair Qureshi and Muhammad Rehan Qureshi for Respondent.

Date of hearing: 15th April, 2015.

2016 C L D 618

[Sindh]

Before Aziz-ur-Rehman, J

BANK ALFALAH LIMITED---Plaintiff

Versus

Syed ZULFIQAR ALI RIZVI and 3 others---Defendants

Suit No. B-130 of 2009, decided on 6th August, 2015.

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

----Ss. 9, 3, 10 & 2(e)---Contract Act (IX of 1872), Ss. 196, 197, 126, 127 & 128---Qanun-e-Shahadat (10 of 1984), Arts. 113 & 114---Negotiable Instruments Act (XXVI of 1881), S. 118---Transfer of Property Act (IV of 1882), S. 58---Foreign Currency Loans (Rate of Exchange) Order (3 of 1982), Art. 3---Constitution of Pakistan, Arts. 4 & 10-A---Suit for recovery of loan amount---Maintainability---Leave to defend, application for---Requirements---Substantial question of facts and law--- Scope--- Damages, claim for---Proof---Guarantor---Liability---Finance agreement---Charge of mark-up---Rescheduling/ restructuring of finance---Scope---Purchase price/marked-up price---Foreign currency finance, conversion of---Effect---Novation/ substitution of contract---Promissory estoppel, doctrine of---Applicability---Mortgage--- Memoranda of deposit of title deeds---Redemption of mortgage---Subordinate legislation---Scope---Fair trial and due process of law in banking matters---Subject to leave to defend the suit---Plaintiff Bank, in the present case, had not 'disowned' the acts performed by Bank's attorneys---If suit was filed by a person having no authority then such defect if any could be ratified later on by the principal---Present suit had been filed competently which was maintainable in law---Claim for losses/damages if any might be established only after framing of issues and recording of evidence in pro and contra thereof by the parties---Defendant had availed finance facility and he was also a guarantor in his personal capacity---Defendant was bound to pay the outstanding amount to the plaintiff Bank---Guarantor could not be allowed to avoid liability under the terms and conditions of guarantee---Liability of guarantor would be co-extensive with that of the principal debtor---Anything 'done' or 'promise' made for the benefit of 'principal debtor' was sufficient consideration for guarantor concerned---Creditor was only required to establish the liability of debtor and occurrence of the event of default---Fair trial and due process in banking matters was subject to leave to defend the suit---Defendant would not be entitled to defend the suit until leave to defend the same was obtained---Plea of fair trial and due process could not make redundant the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001---Rescheduling/ restructuring of finance could only be done at the request of customer---Outstanding amount was not needed to be disbursed again to the customer in rescheduling/restructuring the finance rather same had to be brought forward in the statement of account---Plaintiff Bank could claim purchase price/marked-up price under a new set of documents---Mark-up had been charged on the balance outstanding amount by the plaintiff Bank---Both the Financial Institution and customer were bound to fulfill their obligations---Mark-up mutually agreed between the parties on rescheduled amount was permissible---Entries made in the statement of accounts had presumption of correctness---If foreign currency finance was converted into local currency finance for repayment/payment then same had no consequence---Parties could vary and/or alter the terms of original contract on the basis of mutually agreed fresh terms and conditions---Documents of finance were valid and binding against the parties in the present case---Marked-up price/purchase price could not be enhanced or reduced unilaterally---Signing and execution of memoranda of deposit of title deeds was not a requirement of law---No question of redemption of mortgaged property could arise until entire outstanding amount was paid by the defendant---Defendant had failed to perform and fulfil his obligations towards plaintiff Bank---Plaintiff Bank was entitled to retain all the securities and recover it's up-to-date dues---Defendant could not put forward any sorts of adverse assertions in contravention of admitted fact and documents---Subordinate legislature could not override the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001---Defendant was not only liable to pay the agreed purchase price but also other accrued charges to the plaintiff Bank---Promissory notes had presumption of truth which could be dispelled with solid proof and sufficient evidence---Plaintiff Bank could not charge any mark-up beyond expiry period of finance agreement---If finance agreement did not mention/stipulate any expiry date then same would be treated only for one year/365 days---Mere filing a suit for damages by a customer did not ipso facto entitle him for grant of leave to defend the suit until and unless same was granted---Defendant had failed to fulfil the requirements for grant of leave to defend the suit---No substantial question of facts and law had been raised by the defendant---Application for grant of leave to defend the suit was rejected---Suit was decreed in circumstances with cost of fund w.e.f. April 01, 2009 till realization of the decretal amount---Decree for sale of mortgaged property was also passed.

Faysal Bank Limited v. Genertech Pakistan Ltd. and 6 others 2009 CLD 856; Habib Bank Limited v. Messrs Sabcos (Pvt.) 2006 CLD 244; Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406; KASB Bank Ltd. v. Mirza Ghulam Mujtaba and 2 others 2011 CLD 461 and NIB Bank Ltd. v. Muhammad Yasir and another 2011 CLD 243 ref.

Messrs Petrosin and 2 others v. Messrs Faysal Bank 2009 CLD 361; 2009 CLD 401; 2009 CLD 1177; 2009 CLD 655; 2008 CLD 1252; 2008 CLD 36; 2005 CLD 1442; 2007 CLD 656; 2009 CLD 856; 2007 CLD 492; 2007 CLD 170; 2008 CLD 1611; 2009 CLD 354; PLD 1963 SC 163; PLD 2004 Kar. 309; 2009 CLD 1195; 2005 CLD 1225; 2005 CLD 1437; 2000 CLC 2017; PLD 1999 Kar. 398; 2002 CLC 93; 2001 MLD 1955; 2002 CLD 276; 2003 CLD 1352; 2004 CLC 273; 2005 CLD 444; 1998 CLD 816; PLD 2001 Kar. 264; 2003 CLD 751; 2003 CLD 905; 2003 CLD 1007; PLD 1998 Kar. 302; PLD 1998 Kar. 316; 1999 CLC 1374; 2001 MLD 1137; 2001 MLD 1332; PLD 1999 Kar. 196; PLD 2000 Kar. 246; 2001 CLC 1551; 2007 CLC 634; 2003 CLD 911; 2009 CLD 460; 2004 CLD 913; 2004 SCMR 108; 2002 CLD 1466; 2009 CLD 49; 2010 CLD 585; 2010 CLD 293; 2010 CLD 883; 1998 CLC 1718; 2009 CLD 361 and PLD 1997 SC 315 distinguished.

Muhammad Tariq Mahmood and 2 others v. Anjuman Kashmiri Bradari Khisht Faroshan through President Abdul Ashfaq and 21 others 2003 CLD 335; Syed Adnan Ashraf v. Syed Azhar-ud-Din through Attorney 2014 MLD 342; KASB Bank Limited v. Mirza Ghulam Mujataba and 2 others 2011 CLD 461; Sardar Abdul Ghafoor Khan and 3 others v. The Federal Land Commission, Islamabad PLD 1979 Lah. 375; Khyam Films and another v. Bank of Bahawalpur Ltd. 1982 CLC 1275; Syed Ahmad Saeed Kirmani v. Messrs Muslim Commercial Bank Ltd., Islamabad 1993 SCMR 441; Dr. Aftab Shah v. Pakistan Employees Cooperative Housing Soceity Limited and 5 others 2006 CLC 342; Mian Aftab A. Sheikh and 2 others v. Messrs Trust Leasing Corporation Limited and another 2003 CLD 702; Bank of Baroda AIR 1992 Karnataka 108; Muhammad Arshad and another v. Citibank N.A., Lahore 2006 SCMR 1347; Shabbir Ahmed v. Kiran Khursheed and 8 others 2012 CLC 1236; Babar Hussain Shah and another v. Mujeeb Ahmed Khan and another 2012 SCMR 1235; Ghulam Rasool through Legal Heirs and others v. Muhammad Hussain and others PLD 2011 SC 119; Habib Bank Ltd. v. Taj Textile Mills Ltd. through Chief Executive and 5 others 2009 CLD 1143; Citibank N.A. through Branch Manager v. Ameer Alam 2015 CLD 429; United Bank Ltd. v. Messrs Sartaj Industries, through Qaisar Iqbal, Managing Partner and 6 others PLD 1990 Lah. 99; Terni S.PA v. Peco (Pakistan Engineering Company) Ltd. 1992 SCMR 2238; Arfan Hameed, S.D.O. Mirpur and 42 others v. Secretary, Education, AJ&K Government Civil Secretariat, Muzaffarabad and 3 others 2005 CLC 564; Dr. M. Aslam Khaki v. Syed Muhammad Hashmi PLD 2000 SC 225; Hala Spinning Mills Ltd. v. International finance Corporation 2002 SCMR 450; Zafar Mehmood Shaikh v. Prudential Discount and Guarantee House Limited and 4 others 2003 CLD 1740; National Bank of Pakistan and 117 others v. SAF Textile Mills Ltd. and another PLD 2014 SC 283; Askari Commercial Bank Ltd. v. Hilal Corporation (Pvt.) Ltd. and 6 others 2009 CLD 588; National Bank of Pakistan v. Punjab Building Products Ltd. PLD 1998 Kar. 302; Messrs Muhammad Siddiq Muhammad Umar v. The Australiasia Bank Ltd. PLD 1966 SC 684; Messrs Abdullah Tehseen Trading Company and 15 others v. Platinum Commercial Bank Limited through Chief Manager 2003 CLD 53; Fitzholmes v. The Bank of Upper India Ltd. AIR 1923 Lahore 548 and Apollo Textile Mills Ltd. v. Soneri Bank Ltd. PLD 2012 SC 268 rel.

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

----S. 4---Financial Institutions (Recovery of Finances) Ordinance, 2001 was a special law having overriding effect on all the other laws.

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

----S. 118---Negotiable instrument---Presumption---Promissory notes had presumption of truth.

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

----S. 58 (a)---'Mortgage'---Meaning.

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

----S. 58(f)---'Mortgage by deposit of title deed'---Scope.

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

----O. VIII, R. 4---Evasive denial---Effect---Evasive denial was not denial rather such denial would amount to admission.

(g) Constitution of Pakistan---

----Art. 4---Due process of law---Scope---No action detrimental to life, liberty, body, reputation or property of any person be taken except in accordance with law.

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

----Ss. 196 & 197---Act done by a person on behalf of another person---Ratification---Scope---Act done by a person on behalf of another person but without his knowledge or authority might be 'ratified' or 'disowned' by such another person---If other person had ratified the act already done/performed then said act should be deemed as 'duly performed' by the authority of principal---Act of ratification might be 'expressed' or 'implied' in the conduct of person on whose behalf the act was done earlier.

(i) Notification---

----Circular would be notification having force of law but same could not be termed as "legislative instrument" which could curtail the accrued vested right.

(j) Words and phrases---

----'Cause of action'---Meaning.

Muhammad Tariq Mahmood and 2 others v. Anjuman Kashmiri Bradari Khisht Faroshan through President Abdul Ashfaq and 21 others 2003 CLD 335 rel.

(k) Words and phrases---

----'Power of attorney'---Meaning.

Aijaz Hussain Sheerazi for Plaintiff.

Asim Mansoor Khan for Defendant No.1.

Khalid Lateef for Defendant No.2.

Faiz H. Shah for Defendant No.3.

Arif Khan for Intervener.

Date of hearing: 28th May, 2015.

2016 C L D 739

[Sindh]

Before Muhammad Faisal Kamal Alam, J

TRADING CORPORATION OF PAKISTAN LIMITED---Plaintiff

Versus

Haji KHUDA BUX AMIR UMER LIMITED---Defendant

Suit No. 176 of 1985, decided on 21st January, 2016.

Companies Ordinance (XLVII of 1984)---

----S. 196---Civil Procedure Code (V of 1908), O. XXIX, R. 1---Suit filed by corporation---Resolution of Board of Directors, absence of---Preliminary objection--- Suit for recovery of money was filed by plaintiff corporation and defendant raised preliminary objection to maintainability of suit on the plea that there was no resolution passed by Board of Directors to file the suit---Validity---Act of compromising the suit or releasing or relinquishing company's claim was dealt with by way of mandatory provision viz. S.196 of Companies Ordinance, 1984, which provided a penalty for non-compliance but with regard to filing of legal proceedings the provision was significantly silent---Such silence was due to the fact that filing law suit / legal proceedings was to be regulated by Articles of Association of plaintiff company---Chairman and Directors, besides other senior officials at the helm of affairs, had given their separate approvals for filing the suit, therefore, it could not be said that suit was incompetently filed or instituted---High Court decided preliminary issues and declared principal officer of plaintiff company duly authorized to file the suit, which had been competently filed in the name of plaintiff company---Objection was overruled in circumstances.

China Annang Construction Corporation v. K.A. Construction Company 2001 SCMR 1887; Trading Corporation of Pakistan v. Merchant Agency 2007 CLC 1811; 1988 CLC 1381; Zamendar Co-operative Society v. NBP 1982 CLC 1276; 2004 MLD 1778; PLD 1997 Kar. 62; 2007 YLR 1745; 2008 SCMR 358; 2013 SCMR 1419; 1997 SCMR 66 and Messrs Nishat Mills Limited v. Superintendent of Central Excise Circle-II and others PLD 1989 SC 222 ref.

Mazhar Jafri and Imran Hussain for Plaintiff.

Zia ul Haq Makhdoom and Azhar Mehmood for Defendant.

Date of hearing: 12th January, 2016.

2016 C L D 762

[Sindh]

Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ

Messrs STANDARD CHARTERED LEASING LIMITED through Authorized Attorney---Petitioner

Versus

FEDERATION OF PAKISTAN through Office of the Deputy Attorney General and 4 others---Respondents

Constitutional Petition No. D-722 of 2012, decided on 16th January, 2015.

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

----Ss. 17, 9 & 10 ---Suit for recovery---Final decree of Banking Court---Dismissal of application for leave to defend---Effect---Application for leave to defend was dismissed and suit was decreed in favour of plaintiff Bank; however before passing of final judgment/decree; the Banking Court framed issue with regard to whether the repossessed vehicles which were adjusted against the Bank's claim were done so legally and in accordance with the prevailing market value---Contention of plaintiff Bank was that once application for leave to defend had been dismissed, Banking Court could not frame such an issue---Held, that parameters of the application for leave to defend were well established and it was duty of the defendant to raise all factual and legal objections against claim of plaintiff Bank which were to be taken into consideration and decided by the Banking Court---Dispute relating to any discrepancy in the statement of accounts or adjustment of accounts paid or recovered could be examined and decided after rejection or acceptance of application for leave to defend however, before announcement of final judgment/decree---In the present case, final judgment and decree had not been passed and before the passing of such decree; Banking Court had taken cognizance of the discrepancy in the statement of accounts filed by plaintiff Bank therefore, Banking Court had committed no illegality---Constitutional petition was dismissed, in circumstances.

C.M. Textile Mills (Pvt.) Limited v. Investment Corporation of Pakistan 2004 CLD 587; Bank of Punjab v. Messrs AMZ Ventures Ltd. 2013 CLD 2033; Sajid Borther v. Manager ABL 2012 CLD 1858; Ms. Afshan Ahmed v. HBL 2002 CLC 137; Bashir Sheikh v. State 2007 CLD 1365; Muhammad Farooq Ahmed v. HBL 2004 CLD 7 and 2008 CLD 1252 ref.

Asad Rizvi for Petitioner.

Azizullah, DAG.

Mukhtar Ahmed Kuber for Respondent No.3.

2016 C L D 771

[Sindh]

Before Salahuddin Panhwar, J

MUHAMMAD AMEEN---Appellant

Versus

WALI KHAN---Respondent

Civil Appeal No. 13 of 2010, decided on 12th February, 2015.

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

----Ss. 118 & 13---Civil Procedure Code (V of 1908), O. XXXVII, Rr. 2 & 3---Institution of summary suit on the basis of cheque---Negotiable instrument---Presumption---Scope---Plaintiff filed suit for recovery of money on the basis of cheque which was decreed by the Trial Court---Validity---Negotiable instrument would carry presumption of its being an unconditional promise to pay the amount on demand or at fixed or determinable future time but by no imagination it could be believed that execution of a document (negotiable instrument) could be for any other purpose but to clear (pay-up) certain liability (consideration) though not needed to be referred/mentioned in such a document---Said presumption was rebuttable but once it appeared that a document qualified the definition of 'negotiable instrument' the lis would require to be dealt within the meaning of the provision of O. XXXVII, C.P.C. else the presumption would lose its purpose---If before execution of a 'negotiable instrument' the parties were under certain liabilities through some written agreement then this would not be sufficient to deprive one from resorting to course provided under O. XXXVII of the Code if it was established that earlier liabilities were settled by execution of 'negotiable instrument'---If other side had succeeded in bringing the document out of meaning of 'negotiable instrument' then proper course for the holder would be to file a 'regular suit'---Defendant was bound to prove that document (cheque) to be not a 'negotiable instrument' wherein he had failed---Impugned judgment passed by the Trial Court was not open to any exception---No illegality or irregularity had been pointed out in the impugned judgment---Appeal was dismissed in circumstances.

2007 MLD 1215; 2005 CLC 1751; 2014 CLC 1063; 2012 CLC 1679; 2001 SCMR 772; 2013 CLC 1371; 2005 MLD 1954; PLD 2008 Quetta 1; 2005 MLD 1761; 2011 CLC 430; 2014 CLC 1415; 2011 CLC 191; 2005 MLD 1329 and 2005 SCMR 125 ref.

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

----S. 13---'Negotiable instrument'---Meaning---'Negotiable instrument' was meant to make an unconditional promise to pay a certain sum on demand or at certain future date to the holder which was always against some 'consideration'.

Faraz Ahmed Chandio for Appellant.

Respondent No.1 in person.

Date of hearing: 19th December, 2014.

2016 C L D 804

[Sindh]

Before Faisal Arab, C.J. and Zafar Ahmed Rajput, J

ASIAN CONSUMER CARE PAKISTAN (PVT.) LTD. through Chief Executive Officer---Appellant

Versus

HILAL FOODS (PVT.) LTD. through Company Secretary---Respondent

High Court Appeal No. 55 of 2015, decided on 12th December, 2015.

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

----Ss. 2(iii)(xxxi) & 40---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Law Reforms Ordinance (XII of 1972), S. 3---Suit for infringement of trademarks---Intra-court appeal---Interim injunction was granted by Single Judge of High Court against defendant restraining it from using trademark (Hajmola)---Defendant/appellant claimed to be sub-licensee of manufacturer and produced a letter titled 'Letter of Confirmation/Letter of Authorization' signed by Head Legal as authorized signatory--- Plea raised by defendant/appellant was that it was an authorized user of trademarks through manufacturer---Validity---Head Legal of manufacturer could not delegate authority to defendant/appellant that had not been delegated to him by the manufacturing company---Single Judge of High Court had rightly held that letter in question was merely a descriptive letter which did not even give any date as to when the relevant relationship or arrangement came into existence between defendant/appellant and manufacturing company, such was not enough to consider the former as sub-licensee of the latter---Defendant/appellant could not be termed as 'Authorized User' for the use of trademark as 'Permitted Use' as defined in S. 2(iii) & (xxxi) of Trade Marks Ordinance, 2001---Plaintiff/respondent prima facie succeeded to establish its case for the purpose of interim injunctive relief---Division Bench of High Court declined to interfere in the interim injunction passed by Singh Judge of High Court---Intra-court appeal was dismissed in circumstances.

Muhammad Fazil Bharucha for Appellant.

Muhammad Akram for Respondent.

Date of hearing: 14th April, 2015.

2016 C L D 832

[Sindh]

Before Sajjad Ali Shah and Syed Saeeduddin Nasir, JJ

Mrs. REHANA ANWAR through Attorney---Appellant

Versus

FEDERATION OF PAKISTAN through Secretary, Ministry of Commerce, Islamabad and 2 others---Respondents

High Court Appeal No. 106 of 2015, decided on 13th July, 2015.

(a) Import Policy Order, 2013---

----Cls. 2(1), 5 & 4---Import of vehicle---Contention of respondent (department) was that since year of manufacture as reflected in the number plates was 2012, therefore, such imported vehicle/car did not fit within definition of "new vehicle" as given in clause 2(1) of Import Policy Order, 2013---Importer's (appellant) plea that year of engine manufacturing was 2012 but process of manufacturing was completed in 2014---Validity---High Court observed that it was not possible to find relevancy of definition of "new vehicle" with either importability of vehicle or of imposing ban in case any import did not fit within the definition of "new vehicle" for the reason that clause 5 of Import Policy Order, 2013 which placed prohibition and restriction on import of various items through its sub-clause (A)(vii) of Import Policy Order, 2013 prohibits/bans import of items specified in Appendix "C" of Import Policy Order, 2013 in used/second hand condition---If such items were not in used/second hand condition, then in terms of clause 4 of Import Policy Order, 2013, its importability could not be questioned---In the present case, it was no one's claim that vehicle so imported was in second hand condition and record reflected that use of vehicle as per its meter reading ranges was for test drive and such use would not render vehicle as "used"---Vehicle in question could not by any stretch of imagination be declared banned for import as it was neither "second hand" nor in "used condition"---Intra-court appeal was allowed.

(b) Import Policy Order, 2013---

----Cls. 5A & 2(1)---Import of vehicle---"New vehicle", meaning of---Definition of "new vehicle" given in clause 2(1) of Import Policy Order, 2013 which was being enforced to prohibit/ban import of vehicles/vans appeared to be superfluous as the word "new vehicle" had not been used in clause 5(A) or Appendix C of Import Policy Order, 2013 which banned import so that meaning given to it by definition clause could not be enforced---Definition given to particular word in a statute or instrument could only be resorted to or enforced when such word was used by legislature and/or by authority in case of delegated legislation in any section or clause of such statute/instrument etc. otherwise it remained superfluous---Word "new vehicle" had not been used in any of enforcing clauses which prohibit/ban import of vehicles, therefore, import of vehicles which were "not used" or not in "second hand condition" could not be banned.

(c) Import Policy Order, 2013---

----Cl. 2(1)---Vehicles which were not used or not in second hand condition could be termed as new but entire Import Policy Order, 2013 did not provide consequences of importing new vehicle which did not fit in within definition given in clause 2(1) of Import Policy Order, 2013 specially when intent of Import Policy Order, 2013 was that import of all goods was allowed from worldwide sources unless otherwise elsewhere specified to be banned, prohibited or restricted in the Import Policy Order, 2013---Nothing existed in Import Policy Order, 2013 which restricted import of "new vehicle" which did not fit within definition of clause 2(1) of Import Policy Order, 2013.

(d) Interpretation of statutes---

----Definition given to particular word in a statute or instrument could only be resorted to or enforced when such word was used by legislature and/or by authority in case of delegated legislation in any section or clause of such statute/instrument etc. otherwise it remained superfluous.

Khalid Jawed Khan for Appellant.

Shaikh Liaquat Hussain, Standing Counsel for Respondent No.1.

Ms. Masooda Siraj along with Ilyas Ahsan Khan, Appraising Officer (Legal) for Respondent No.2.

Date of hearing: 25th May, 2015.

2016 C L D 847

[Sindh]

Before Aqeel Ahmed Abbasi and Muhammad Junaid Ghaffar, JJ

ENGLISH BISCUITS MANUFACTURERS (PVT.) LTD.---Appellant

Versus

PAKISTANI DAIRY PRODUCTS (PVT.) LTD.---Respondent

H.C.A. No. 354 of 2008, decided on 9th December, 2015.

Trade Marks Ordinance (XIX of 2001)---

----S. 40---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Infringement of trade mark--- Injunctive relief, grant of---Requirements---Plaintiff was required to prima facie establish that its proprietary right in business or the good-will was likely to be injured by use of the trade mark by the defendant through misrepresentation---Good-will must be so which was likely to be damaged by the alleged misrepresentation---Trade mark and dissimilarity in the product had to be established which could not be done while disposing of application under O. XXXIX, Rr. 1 & 2, C.P.C. as same required evidence---Products in question were different whereas mark in question was also not distinct and or unique to grant any injunctive relief in favour of plaintiff for a passing off action---Plaintiff had failed to make out a case for grant of any injunctive relief either for infringement or for passing off in its favour at this stage of the case---Appeal was dismissed in circumstances.

Seven-Up Company v. Kohinoor Thread Ball Factory and 3 others PLD 1990 SC 313; Mars Incorporated v. Pakistan Mineral Water Bottling Plant (Pvt.) Ltd. 2001 MLD 39; Unilever PLC, A British Company of Port Sunlight Wirral Merseyside, England v. R.B. Oil Industries (Pvt.) Ltd. Karachi 1999 MLD 1447; Messrs Alpha Sewing Machine Company v. Registrar of Trade Marks and another PLD 1990 SC 1074; Kabushiki Kaisha Toshiba v. Ch. Muhammad Latif PLD 1990 SC 27; Pfizer Limited and Pfizer Inc. v. Euro Food Link (UK) Limited 2000 ETMR 896; 2001 FSR 3; Kwvality Food Products 1981 PTC 228; Sabel v. AG, Rudolf Dassler Sport 1997 ECR 1-6191; 1998 PRC 199; Lloyd Schuhtabirik Meyer & Co. GmbH v. Klijsen Handel BV 1999 ETMR 690; Anglo Indian Drug and Chemical Co. v. Swastik Oil Mills Co. Ltd. AIR 1935 Bombay 101; Haji Danu Mian Saudagar v. Shaikh Muhammad Idris and another PLD 1969 Kar. 245; Abdul Wasim v. Messrs Haico through Sole Proprietor/Partner and 2 others 2002 CLD 1623; General Biscuit and another v. English Biscuit Manufacturers (Pvt.) Ltd. 2004 CLD 680; Lyons Maid Limited v. Trcbor Limited 1967 PRC 222; Nugget Polish Company Ltd. v. Harboro Rubber Company 1912 PRC 133; Turner's Motor Manufacturing Company Ltd. v. Messrs Petrol Car Syndicate Ltd. (1907) 24 PRC 531; Lcrimar Productions Inc. and others v. Sterling Clothing Manufacturers (Pvt.) Ltd. 1982 PRC 395; Crystal v. Piano Crystal 2007 CLD 802; Zeera Plus v. Gluco Plus 2004 CLD 680; Tasty Gold v. Piece Gold 2004 CLD 1163; Independent Media v. Ali Saleem and another 2006 CLD 97; Pakistan v. Messrs Mehran Sugar Mills Ltd. Karachi 2001 YLR 1237; Managing Committee, Revenue Employees, Cooperative Housing Society, Rawalpindi v. Secretary, Cooperative Societies, Government of Punjab, Lahore and 3 others 2001 CLC 838; Attock Industrial Products Limited v. Heavy Mechanical Complex (Pvt.) Limited 1999 MLD 1876; Trademark Tibet for Cream v. Trademark Tibet for threads PLD 1969 Kar. 245; Kraft General Foods Inc. v. Abid Anjum Manager/ Partner/Proprietor; Tango Enterprises and 3 others 1994 MLD 607; Imperial Tobacco Co. India Ltd. v. Mullaji Jamaluddin AIR 1937 Nagpur 158; Lyons Maid Ltd. v. Trebor Ltd. PRC 84 1967 222; Sun Line Trade Mark 1970 PRC 207; Helena Rubinstein Ltd. Application (Trade Mark) 1960 PRC 231; British Sugar PLC v. James Robertson & Sons Ltd. 1996 PRC 251; Coombe v. Mendit Ltd. (1913) 30 PRC 709; Lorimar Productions Inc. and others v. Dallas Restaurant 1982 PRC 395; Consort Trade Mark 1980 PRC 160 and Toranto Trade Mark 1979 PRC 155 ref.

Reuter v. Mulhens [1953] 79 [R.P.C.] 253 and Reckitt and Colman Products Ltd. v. Borden Inc. and others [1990] 1 WLR 491 rel.

Zain Shaikh for Appellant.

Mirza Mehmood Baig for Respondent.

Dates of hearing: 18th November, 2014, 27th May and 21st September, 2015.

2016 C L D 892

[Sindh]

Before Sajjad Ali Shah and Syed Saeeduddin Nasir, JJ

Messrs GRACE ACCUMULATORS and 3 others---Appellants

Versus

Messrs SONERI BANK LIMITED and 2 others---Respondents

I.A. No. 33 of 2015, decided on 25th May, 2015.

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

----Ss. 9 & 19---Civil Procedure Code (V of 1908), O. XXI, Rr. 90, 23-A & S. 151---Suit for recovery of loan amount---Execution of decree and auction sale---Objection to execution---Sale of immovable/ mortgaged property, setting aside of---Allegations of material irregularity or fraud not levelled---Effect---Defendants first filed application under O. XXI, R. 90 read with S. 151, C.P.C. for setting aside of sale of the mortgaged property on the ground that the market value of the property was much higher than that on which the same had been sold in auction, which was dismissed by the Executing Court---Defendants, later on, filed another application under O. XXI, R. 90, second proviso, C.P.C. for furnishing security for due performance of the decree, which was also dismissed---Validity---Application under O. XXI, R. 90, C.P.C. was not competent unless material irregularity or fraud in publishing or conducting the sale of immovable property in execution of decree was shown to have taken place, and whereby the interest of decree holder, or any other person entitled to share in a ratable distribution of assets, had been adversely affected by such sale---Defendants had made no such allegation of material irregularity or fraud in publishing or conducting auction of the mortgaged property against the Banking Court, which was a condition precedent to make the application for setting aside the sale of the property---Defendants had also failed to deposit the decretal amount with the Court, or to furnish surety, to secure the repayment of the decretal amount in compliance of order of the Executing Court in terms of O. XXI, R. 23-A, C.P.C., as the property documents furnished as security had not been properly valued---Appeal against impugned orders was, therefore, dismissed in limini in circumstances.

S. Saeed Hasan Zaidi for Appellants.

Date of hearing: 25th May, 2015.

2016 C L D 906

[Sindh]

Before Ahmed Ali M. Shaikh and Muhammad Iqbal Kalhoro, JJ

NASEEM A. SATTAR and 6 others---Petitioners

Versus

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

Constitutional Petition No.D-544 of 2015, decided on 16th April, 2015.

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

----Ss.7, 10, 11 & 20---Offences in Respect of Banks (Special Courts) Ordinance (IX of 1984), Ss.3, 4 & 6---Penal Code (XLV of 1860), Ss. 406, 420, 468, 471 & 109---Suit for recovery of bank loan---Allegation of misappropriation of hypothecated stock by customer---Registration of FIR by the Bank---Petition for quashment---Scope---Customer (petitioners) filed leave to defend suit denying claim of Bank---Pending said suit, Bank had registered FIR under Ss.406, 420, 468, 471 & 109, P.P.C.---Contentions of the petitioners was that offences alleged in the impugned FIR squarely fell under S.20(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, of which only Banking Court could take cognizance and hold trial against the petitioners, after a complaint in writing was made in that regard; that impugned FIR registered under the Penal Code was completely without jurisdiction---Contention of respondent Bank was that petitioners had committed acts punishable under P.P.C., which were Scheduled offences in terms of Offences in Respect of Banks (Special Courts) Ordinance, 1984, and were triable by the Special Court for offences in respect of Banks; that S.20(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001, did not envisage any bar on an action which was taken by the aggrieved party (Bank) against accused under any other penal laws, either in addition to it or independent of it---Validity---Words "without prejudice to any other action which could be taken against him under this Ordinance, or any other law for the time being in force" occurring in S.20 of Financial Institutions (Recovery of Finances) Ordinance, 2001, amply established that registration of FIR in case of commission of cognizable offence by a person, was not barred altogether---Mode of taking cognizance by Banking Court under S.7 of Financial Institutions (Recovery of Finances) Ordinance, 2001, was a separate and independent concept under criminal law, which could not overtake or equate the right of a person to register an FIR in the face of a cognizable offence---Impugned FIR had been lodged for offences which were cognizable in nature and were Scheduled offences according to provisions of Offences in Respect of Banks (Special Courts) Ordinance, 1984; and same were triable exclusively by Special Court, notwithstanding anything contained in the Penal Code---Impugned FIR, did not appear to be illegal or coram non judice---First Information Report in question was not alleged to have been lodged maliciously against the petitioners; or contained allegations which ex facie, were not tenable in the eyes of law; or registration of the same was abuse of process of law---In absence of any cogent and legal grounds; merely on the pleas taken by the petitioners, impugned FIR could not be quashed---Constitutional petition was dismissed accordingly.

2009 PCr.LJ 325; 2010 YLR 547; 2005 PCr.LJ 1228; 2005 CLD 20; 2013 CLD 2133; 2002 YLR 3847; PLD 2002 SC 610; 2006 SCMR 483 and 2005 CLD 436 ref.

Adnan Iqbal Choudhry for Petitioners.

Ashfaq Rafiq Janjua, Standing Counsel for Respondents Nos. 1 and 2.

Jamshed Malik for Respondent No.4.

Date of hearing: 24th March, 2015.

2016 C L D 920

[Sindh]

Before Aziz-ur-Rehman, J

Messrs FIRST DAWOOD INVESTMENT BANK LIMITED through Authorized Officers/Attorneys---Plaintiff

Versus

Mrs. ANJUM SALEEM and 3 others---Defendants

Suit No. B-118 of 2011, decided on 25th November, 2015.

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

----Ss. 9, 4, 7 & 10---Civil Procedure Code (V of 1908), S. 47---Recovery of loan amount---Leave to defend, refusal of---Arbitration clause existed in Musharaka Investment Agreement---Jurisdiction of Banking Court--- Scope---Word 'otherwise' in S. 7(4) of the Ordinance---Scope---Defendants raised the objection that in presence of arbitration clause in Musharaka Agreement, the matter was to be decided by an Arbitrator exclusively and not by the Banking Court---Validity---Financial Institutions (Recovery of Finances) Ordinance, 2001 was special law and the provisions thereof had the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force---Under S. 7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, no court other than Banking Court would have or exercise any jurisdiction whatsoever with respect to any matter to which the jurisdiction of Banking Court had been extended under the Ordinance---Reading S. 7(4) in juxtaposition of S. 4 of the Ordinance, even a decision as to the existence or non-existence of finance also fell exclusively within the jurisdiction of Banking Court---Arbitrator under S. 7(4) of the Ordinance did not exercise colourful jurisdiction regarding existence and/or non-existence of finance---Word 'otherwise' in S. 7(4) of the Ordinance was to be given restricted meanings, the word not only extended to the existence, non-existence of loan or finance, but the same also embraced a decision in relation to the dispute regarding the Musharaka Investment Agreement and/or implementation thereof---Dispute in question, since pertained to the recovery of the outstanding amount on account of finance facility granted to and availed by the defendants, exclusively fell within the jurisdiction of Banking Court---None of the parties to the suit, at any stage, even otherwise, had tried to invoked the arbitration clause---Objection was repelled in the circumstances.

Lalchand and 2 others v. Officer on Special Duty, Federal Land Commission and 3 others 1984 CLC 2396; Sardar Abdul Ghafoor Khan and 3 others v. The Federal Land Commission, Islamabad PLD 1979 Lah. 375 and Messrs Allied Bank Limited v. Messrs Golden Eagle Enterprises and 9 others 1999 MLD 64 rel.

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

----Ss. 9 & 10----Contract Act (IX of 1872), Ss. 196 & 197---Recovery of loan amount---Leave to defend, refusal of---Plaint signed and verified by Special Attorney---Validity---Right of person as to act done for him without his authority---Ratification may be expressed or implied---Defendant raised the objection that person who had signed and verified the plaint was not holding any proper Power of Attorney and/or any resolution of the Board of Directors of the plaintiff-financial institution---Validity---Under Ss. 196 & 197 of Contract Act, 1872, where acts were done by one person on behalf of another, but without his knowledge or authority, he might elect to ratify or to disown such acts; and if he ratified, then the same effect would follow as if all those acts had been performed by his authority---Such ratification might be expressed or implied in the conduct of the person on whose behalf the acts had been done---In case suit was filed by a person having no authority, the principal could later on ratify the defect---Authority of the agent was to be effectively challenged by the principal and not by anybody else---Under S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, the plaint, in case of a Financial Institution, was to be verified on oath by the Branch Manager or such other officer of the Financial Institution as might be duly authorized by Power of Attorney or otherwise---Word 'otherwise' referred to in S. 9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was not to be given restrictive meanings---Word 'otherwise' embraced, apart from the 'Power of Attorney', any other documents that were Special Power of Attorney, and/or Letter of Authority/Board of Directors' Resolution, on the strength whereof, a person became competent to verify the plaint on oath and also to institute the same in Banking Court---Person, who had verified the plaint of the suit was duly constituted attorney of the plaintiff-institution---Objection was repelled in circumstances.

Khyam Films and another v. Bank of Bahawalpur Ltd. 1982 CLC 1275 rel.

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

----Ss. 9 & 10---Constitution of Pakistan, Arts. 4 & 10-A---Recovery of loan amount---Leave to defend, refusal of---Right of an individual to be dealt with in accordance with law---Right to fair trial---'Due process'/'fair trial'---Scope---Defendants raised the objection that after incorporation of Art. 10-A of the Constitution, fair trial and due process had become a fundamental right, which includes right to grant of leave to defend the suit---Validity---Under Art. 4 of the Constitution, no action, detrimental to the life, liberty, body, reputation or property of any person would be taken except in accordance with law---Article 10-A of the Constitution not only ensured fair trial but also due process but in accordance with law, which in the present case was Financial Institutions (Recovery of Finances) Ordinance, 2001---Articles 4 & 10-A of the Constitution were necessarily to be read in juxtaposition of each other---One provision of the Constitution could not be struck down and/or diluted on the basis of another provision of the Constitution---In the present case, not only due process, but also fair trial, had been provided to the defendants under Financial Institutions (Recovery of Finances) Ordinance, 2001---Objection, being misconceived and misleading was repelled, in circumstances.

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

----Ss. 9 & 10---Civil Procedure Code (V of 1908), S. 11---Recovery of loan amount--- Leave to defend, refusal of--- Res judicata---Applicability---Suit previously filed by defendants not of any effect as to grant of leave to defend---Defendants raised the objection that present recovery suit was a counter-blast to the suit already filed by them against the plaintiff-Institution, and that the defendants were, therefore, entitled to the grant of leave to defend present suit---Validity---Plaintiff-Institution had the power to sell the mortgaged property in terms of the Musharaka Investment Agreement---Mere filing of suit against the right of the plaintiff-Institution to sell the mortgaged property, which belonged to the defendants, who had not only executed mortgage deed but also Memorandum of Deposit of Title Documents, could not be alleged to have been a counter blast---Defendant, by merely filing the suit, also did not become automatically entitled to the grant of the Leave to defend the suit---Under S. 9(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, provision of S. 11, C.P.C. did not have application to and regarding the suits filed under Financial Institutions (Recovery of Finances) Ordinance, 2001---Objection was repelled in the circumstances.

Messrs Abdullah Tehseen Trading Company and 15 others v. Platinum Commercial Bank Ltd. through Chief Manager 2003 CLD 53 rel.

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

----Ss. 9 & 10----Recovery of loan amount---Leave to defend, refusal of---Objection as to filing of suit on basis of blank finance documents---Defendants raised the objection that present suit was based on blank documents, which had been later filled-up by the plaintiff-Institution at the time of filing of the suit---Validity---Musharaka Investment Agreement was not only coupled with Promissory Note, but the same was duly filled with dates and figures---Defendants had duly signed all other documents available on record besides duly filled-up dates and figures etc.---Defendants had failed to specifically deny their signatures on the documents annexed with the plaint---Defendants, at no earlier stage or at time of signing of the documents had recorded any protest, which ex-facie meant that all the documents annexed to the plaints had been duly filled-up with date/dates and figures---Defendants, having acted upon the documents and availed the financial facility, could not deny the document at present stage---Objection was repelled in the circumstances.

Muhammad Arshad and another v. Citibank N.A., Lahore 2006 SCMR 1347 rel.

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

----Ss. 9 & 10----Recovery of loan amount---Leave to defend, refusal of---Statement of accounts---Scope---Defendants raised the objection that the suit was not maintainable as the same had not been filed in accordance with S. 9(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001, and that the statement of account had not been prepared in accordance with Bankers' Books Evidence Act, 1891---Validity---Certified Statement of Account annexed with the plaint not only contained the dates but also debit, credit and balance entries therein---Statement of Account also bore the requisite certificate---Statement of Account had been duly signed by the Vice President and Chief Financial Officer of the Plaintiff-Institute, and rubber stamp had also been affixed thereon---Objections was repelled in circumstances.

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

----Ss. 9 & 10---Recovery of loan amount---Leave to defend, refusal of---Cause of action, accrual of---Scope---Defendants raised the objection that no cause of action had been accrued to the plaintiff-Institute to file present suit---Validity---Banking Court had observed that cause of action was bundle or totality of essential facts, which plaintiff prior to succeeding was required to prove---Plaint showed and established that cause of action for filing of present suit had arisen at place "K" on the dates referred in the plaint, when various finance and security documents were signed and executed by the defendants---Defendants' objection, being misconceived and misleading, was repelled in the circumstances.

Zafar Mehmood Shaikh v. Prudential Discount and Guarantee House Limited and 4 others 2003 CLD 1740 and Muhammad Tariq Mahmood and 2 others v. Anjuman Kashmiri Bradari Khisht Faroshan through Abdul Ashfaq and 21 others 2003 CLC 335 rel.

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

----Ss. 9 & 10---Contract Act (IX of 1872), Ss. 126, 127 & 128---Recovery of loan amount---Leave to defend, refusal of---Liability of guarantors---Scope---Contract of guarantee/surety---Consideration for guarantee---Surety's guarantee---Liability of the guarantors was co-extensive with that of the principal debtor, unless otherwise was provided in the letter of guarantee---Anything done or promise made for the benefit of the principal debtor was sufficient consideration---Letter of guarantee, in spirit, was a contract to perform the promise or discharge the liability of a third person, however, as and when default occurred---In an action initiated by a creditor against the principal borrower/customer, and guarantors, the creditor was only required to establish the liability of the principal debtor and occurrence of default as well---Defendants, under Ss. 126, 127 & 128 of Contract Act, 1872 and under the terms and conditions of the letter of guarantee, being guarantors, were liable to liquidate the liability/dues outstanding against the defendant/principal debtor, as their liability was co-extensive.

Bank of Baroda AIR 1992 Karnataka 108; Messrs Huffaz Seamless Pipe Industries Ltd. and 2 others v. Messrs Security Leasing Corporation Ltd. 2002 SCMR 1419 rel.

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

----Ss. 10(7) & 9---Recovery of loan amount---Leave to defend---Replication to leave to defend application---Scope---Defects in plaint not curable/rectifiable through replication---Any lacuna left at time of filing of plaint could not be cured and/or rectified at time of filing of replication in answer to the leave to defend application, as in such situation the defendants would not have the opportunity to rebut the new built-up case and/or challenge other documents suitably if the same were brought on record through replication---Mandatory requirement of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, in no way, could be postponed or otherwise cured subsequently by way of replication---Opportunity provided to a Financial Institution, in terms of S. 10(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was a limited opportunity to the extent of reply only in answer to the leave to defend application.

Habib Metropolitan Bank Limited v. Abid Nisar 2014 CLD 1367 rel.

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

----Ss. 10(7) & 9---Qanun-e-Shahadat (10 of 1984), Art. 144---Recovery of loan amount---Leave to defend, refusal of---Finance facility, rescheduling, restructuring and/or renewal--- Permissibility---Promissory estoppel---Applicability---Contract Act, 1872 and any other law did not provide anything which might prohibit the parties from varying and/or altering the terms of the original contract by executing a new contract on basis of mutually agreed terms and conditions---Novation/substitution of the old contract by new one for rescheduling, restructuring and/or renewal of facilities was permissible upon fresh terms and conditions if the same were mutually and voluntarily agreed upon between the parties---Financial security documents including the Musharaka Investment Agreement in question thus were not only valid but the same were also absolutely binding upon the parties thereto on basis of the promissory estoppel in terms of Art. 144 of Qanun-e-Shahadat, 1984.

Arfan Hameed, S.D.O. Mirpur and 42 others v. Secretary, Education, AJ&K Government Civil Secretariat, Muzaffarabad and 3 others 2005 CLC 564 rel.

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

----S. 58(f)---'Mortgage by deposit of title documents'---Meaning---Under S. 58(f) of Transfer of Property Act, 1882, delivery of title documents pertaining to any immovable property to creditor or his agent with intention to create security thereon is called 'Mortgage by deposit of title deeds/equitable mortgage'.

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

----Ss. 9 & 10---Recovery of loan amount---Leave to defend, refusal of---Suit dismissed against guarantor on basis of compromise---Validity---Defendants, principal debtor and mortgagors, raised the objection that dismissal of the suit against the guarantor on statement of plaintiff-Institute on basis of compromise agreement had caused prejudice to them---Validity---Compromise Agreement in question, on basis of which the suit had been dismissed against the defendant-guarantor, had been executed between the plaintiff-Institute, defendant-mortgagor and said defendant-guarantor---Defendant-mortgagor, being not only the sole proprietor of the defendant-principal debtor/concern but the duly constituted attorney of the other defendant-mortgagor, could not raise any objections in relation to said tripartite compromise agreement---Order of dismissal of the suit in question having not been challenged by the defendants, the same had already attained finality---Objection was repelled in circumstances.

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

----Ss. 9, 10 & 2(e)---Negotiable Instruments Act (XXVI of 1881), S. 188---Recovery of loan amount---Leave to defend---Liability of Bank's customer---Extent---Presumption as to negotiable instrument---Defendants denied their liability to the claim filed by the plaintiff-Institute on ground that the same was false and frivolous, as the registered mortgage created by defendant in his capacity as duly constituted attorney was not enforceable under the law and the letters of guarantees had been signed in blank---Validity---Under S. 2(e) of Financial Institutions (Recovery of Finances) Ordinance, 2001, Bank's customers were not only under legal obligation and duty bound to perform and fulfil their undertakings and promises in relation to repayment of the outstanding amount of the finance facility granted to and availed by the defendant but also in respect of all other amount relating to mark-up charges etc.---Musharaka Finance Agreement in question was also coupled with promissory notes---Under S. 118 of Negotiable Instruments Act, 1881, presumption of truth was attached to the promissory note---Presumption attached to a negotiable instrument is not only statutory but also mandatory in nature---Such presumption ex-facie could not be dispelled in absence of any solid proof---Defendants had not specifically denied their signatures on the financial and security documents including the promissory note, and had only pleaded that the same had been obtained in blank and/or otherwise, the same were without consideration---Defendants were, therefore, liable to pay and liquidate the outstanding amounts as per Musharaka Finance Agreement---High Court, refusing leave to defend application and decreed the suit.

Faysal Bank Ltd. v. Genertech Pakistan Ltd. and 6 others 2009 CLD 858; Habib Bank Ltd. v. Messrs Sabcos (Pvt.) Ltd. 2006 CLD 244 and Bank of Khyber v. Messrs Spencer Distribution Ltd. and 14 others 2003 CLD 1406 ref.

Muhammad Sabir v. Khalil-ur-Rehman 2002 CLD 1545 rel.

Khalil Ahmed Siddiqui for Plaintiff.

Khaleeq Ahmed for Defendants Nos.1 to 3.

Date of hearing: 21st October, 2015.

2016 C L D 984

[Sindh]

Before Muhammad Faisal Kamal Alam, J

Messrs SHAHTAJ TEXTILE LIMITED---Decree Holder

Versus

Messrs J&M CLOTHING CO. and others---Judgment Debtors

Execution Application No.39 of 2015 and Judicial Miscellaneous Application No.62 of 2015 in Suit No. B-38 of 2013, decided on 23rd December, 2015.

Civil Procedure Code (V of 1908)---

----Ss. 12(2), 151 & O. XXI, Rr. 30, 58---Execution of decrees---Rival claims---Bank and private party laid their claim over mortgaged property for execution of decrees passed in their favour respectively---Validity---Burden was upon petitioner to demonstrate that judgment debtors and Bank played any fraud upon the Court and misrepresented facts---Neither judgment debtors nor Bank actively concealed any fact or misrepresented certain facts in such a fraudulent way which, had it not been made or done, would have not resulted in passing of compromise decree in favour of Bank---Element of fraud was not present---High Court declined to entertain application under S.12(2), C.P.C., filed by petitioner---Execution preferred by petitioner/decree holder survived and would be adjudicated on its own merits---High Court refused to entertain objections filed by judgment debtors as order for depositing decretal amount was not complied with and that order was still holding the field---Objection petition was dismissed accordingly.

1995 CLC 99; 1999 PTD 2940; 2006 CLC 415; 1994 SCMR 2248; Messrs Dadabhoy Cement Industries v. National Development Finance Corporation Karachi PLD 2002 SC 500; PLD 1996 Lah. 99; Mobina Begum v. The Joint Secretary, Ministry of Religious and Minority Affairs, Government of Pakistan, Islamabad and 2 others 1994 MLD 1441; 1992 SCMR 2184 and Mohiuddin v. The Province of East Pakistan and others PLD 1962 SC 119 rel.

Syed Ali Ahmed Tariq for Decree Holder.

Irfan Haroon for Judgment Debtors.

Ms. Soofia Saeed Shah for the Applicant.

Syed Aijaz Hussain Shirazi for Objector Chartered Bank (Pakistan) Limited.

Date of hearing: 26th November, 2015.

2016 C L D 1028

[Sindh]

Before Muhammad Faisal Kamal Alam, J

ASKARI BANK LTD.---Decree Holder

Versus

A.H. INTERNATIONAL (PVT.) LTD. and others---Judgment Debtors

Execution Application No. 25 of 2012 in Suit No. B-10 of 2007, decided on 15th January, 2016.

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

----Ss. 19 & 23---Specific Relief Act (I of 1877), S. 39---Civil Procedure Code (V of 1908), O. XXI, R. 11(2)---Execution of decree---Restriction on transfer of property---Cancellation of document---Objector raised the plea that property in question was validly transferred in its name vide registered sale deed---Validity---Summons in the suit were published on 05-03-2007 and eventually decree was passed on 29-06-2009--- Sale transaction in favour of objector by virtue of deed of conveyance was entered into between the objector and judgment-debtor on 30-03-2012, i.e., much after the proceedings of banking suit---Two basic conditions as mentioned in S. 23(1) & (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, were available to decree holder---If a transaction in question was prohibited under an express provision of a statute then such transaction could not be saved on the ground that since it was under a registered instrument, therefore, to give effect to an express provision of law, an independent proceeding under S. 39 of Specific Relief Act, 1877, was to be instituted---Such would destroy the very purpose of S. 23 of Financial Institutions (Recovery of Finances) Ordinance, 2001, and if a transaction did not take place through a registered instrument but in violation of S. 23 of Financial Institutions (Recovery of Finances) Ordinance, 2001, the same could be dealt with without instituting a separate proceeding--- Objection was dismissed in circumstances.

2013 CLC 507; 2011 SCMR 1023; 2013 YLR 727; PLD 1998 Kar. 348; PLD 1969 SC 65; 2000 MLD 421; PLD 2011 SC 241; PLD 2003 Kar. 691; NLR 2004 CLJ 448; 1978 SCMR 264; 2003 CLD 888; 1997 SCMR 237; 2004 MLD 296; AIR 1935 Allahabad 897 and PLD 1997 Kar. 62 ref.

Amanullah Khan and Irfanullah Khan for Decree Holder.

Jaffer Raza for Objector.

Date of hearing: 18th December, 2015.

2016 C L D 1062

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J

ALLE'NORA BEAUTY SALON AND PARLOUR through Partner and others---Appellants

Versus

Mrs. QURAT-UL-AIN MANSOOR and others---Respondents

H.C.As. Nos.151, 152 and 153 of 2015, decided on 10th February, 2016.

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

----Preamble---Scope and object of law relating to trade marks---Reputation and goodwill---Protection---Scope---Key concept behind trade marks jurisdiction revolves around protection against confusion, deception and fraud---Purpose of trader's choosing distinctive or novel trade mark is to keep his goods or service distant from the possibility of being taken as competitor's goods or services---Reason for creation of intellectual property legal system is to provide for mechanism for the protection and offering rewards to creativity and fair trade---Legislation on trade marks aims to protect the goodwill and clientele of person who first creates or adopts trade mark to let the consumers know that another product or service is available to them through this new source---Lesser the confusion as to the source of two different originators of identical goods and service, the lesser the misunderstanding will arise in the mind of common public, and at the same time, the creator's intellectual ingenuity remains protected and the hard work by the first creator/adopter of the trade mark is rewarded through the scheme of trade mark laws---Legal system was built upon protecting the hard work, ingenuity and goodwill of a person who is first one to use a trade mark, trade name or any other similar identifier (including domain name etc.) from the attacks made by competitors---Competitors, who try to disguise themselves by using similar, or confusingly similar, trade mark, have two fold objectives: firstly, they illegally benefit themselves from fruits of goodwill and reputation laboured by the original creator; and, secondly, they deceive public at large as to the true source of the goods or services in question.

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

----Ss. 46, 67 & 3---Suit against infringement of trade mark---Deceitful intent, existence of---Trade mark used with identical type font, colours and calligraphy with inclusion of name in different city---Territorial reputation/goodwill of trade marks---Scope---Goodwill and reputation of unregistered trade mark could be protected by filing passing off action---Defendant had decided to select the trade mark of the plaintiff in identical type-font, colours and calligraphy with the sole objective to get benefit from the existence of the plaintiff's trade mark in the market and to reap the benefits from the well-earned reputation of the trade mark---Deceitful intent also existed on part of the defendant for hatching conspiracy against common people with objective to confuse and defraud them by camouflaging themselves to appear identical to the plaintiff---Traders, while using prominent or substantial part of someone's trade mark with a prefix, suffix or with any other element along with the earlier trade mark, admitted to the existence of the prior trade mark and try to come under umbrella of the earlier trade mark attempting to fool the general public---Use of trade mark in question by the defendant in identical and substantial manner by mere inclusion of her name without any authority or permission of the owner of the trade mark had only strengthened the rights granted to the plaintiff/owner of the earlier trade mark---Trademarks usually carried trans-border reputation that was reputation flowing from one country to another on account of the goodwill and reputation of the trademark in foreign country---Goodwill and reputation in trademark did not extinguish merely because goods and services were not available in some other parts of the country---Reputation and goodwill of a trade spread at the speed of light---Goodwill acquired by the plaintiff at place "L" was not necessarily limited to that city where the services were available---Services were duly advertised in newspapers, periodicals, magazines and internet having circulation to all over the country and even abroad---Goodwill or reputation did not depend upon the availability of goods or services any more---Trade Mark Ordinance, 2001 was based on equitable principles wherein if a person by hard work had established goodwill or reputation in one part of the country, then in terms of S. 1(2) of the Ordinance such reputation and goodwill was protected throughout the country---Relevant territory under Trade Mark Ordinance, 2001 was the whole of Pakistan and relevant public consisted of both general public and interested customers across the country---Reputation and goodwill in a trade mark, even in cases where the trade mark was not registered, could be protected by filing a passing off action under Trade Mark Ordinance, 2001---Appeal was dismissed.

Office Cleaning Services, Ld., v. West Minister Window and General Cleaners, Ltd. 1946 RPC 3; Reckett & Coleman v. Borden Inc. 1990 PRC. 13; Poister Limited v. Marcel Fenez Limited 1964 RPC 6 and Evans v. Eradicure Limited 1972 RPC ref.

Farooq Ghee and Oil Mills v. The Registrar of Trade Marks 2015 CLD 1245 and Tabaq Restaurant (Lahore) v. Tabaq Restaurant (Rawalpindi) 1987 SCMR 1090 rel.

Abdul Rehman for Appellants.

Shaiq Usmani and Suleman Jaffery for Respondents.

Dates of hearing: 9th and 10th February, 2016.

2016 C L D 1084

[Sindh]

Before Sajjad Ali Shah and Syed Saeeduddin Nasir, JJ

Syed WAJAHAT HUSSAIN ZAIDI through Procurator/Authorized Representative---Petitioner

Versus

STATE BANK OF PAKISTAN through Governor and 7 others---Respondents

C.Ps. Nos. D-2113 of 2012, D-3217 of 2013, D-1625 and D-1638 of 2014, decided on 5th May, 2015.

Banking Companies Ordinance (LVII of 1962)---

----Ss. 25-A & 93-C---State Bank BCD Circular No. 6 of 1990---State Bank BCD Circular No. 4 of 2013---State Bank BCD Circular No. 8 of 2013---Constitution of Pakistan, Art. 199----Constitutional petition---Power of State Bank to collect and furnish credit information---Exchange of information---Banking Control Department (BCD) Circulars---Object and scope---Petitioner, under present petition, sought direction to State Bank of Pakistan requiring it to remove name of the petitioner from the Credit Information Bureau (CIB/eCIB) list on the ground that his name had been arbitrarily placed in the list without issuing show cause notice to him and/or affording him any opportunity of hearing on the instigation of the respondent-Bank---Validity---Respondent-Bank had informed the State Bank of Pakistan about the financial status of the petitioner in compliance of Banking Control Department (BCD) Circular No. 6 of 1990---State Bank had issued said Circular in exercise of its powers under S. 25-A of the Banking Companies Ordinance, 1962, read with S. 93-C of said Ordinance, which was followed by Circular No. 4 of 2013 and Circular No. 8 of 2013, on the basis of which the name of the petitioner had been placed on CIB; therefore, no constitutional provision had been violated---Under said Circulars, a mechanism had been devised by the State Bank for collecting information from all Banks/NBFI's about their customers and their business status available with them---Sole purpose of the BCD Circulars was to create one common source of information for all financial institutions from which they could collect the information about the financial status and conduct of transacting business of a particular customer/their customers with other Banks, in order to enable all the financial institutions to adopt their future course of business transaction with regard to advancing finance facilities to such customers, whose names appeared on the CIB list---Only requirement of the BCD Circular No. 6 of 1990 was to intimate the authorities about default and liabilities of borrowers, and that the same, in no way, could encroach upon any of the Fundamental Right of the petitioner---Under S. 25-A of Banking Companies Ordinance, 1962, the State Bank of Pakistan had the power to collect and furnish credit information from any Banking Company---Present petition being misconceived and without any substance, was dismissed in limini with cost.

Messrs Yousuf Sugar Mills v. Trust Leasing Corporation 2006 CLD 1191; Messrs Abdul Aziz Nawab Khan and Co. v. Federation of Pakistan 2006 CLD 55 and Messrs Abdul Aziz Nawab Khan and Co. v. Federation of Pakistan 2006 CLD 1080 distinguished.

Azam Wazir Khan v. IDBP 2013 SCMR 678 rel.

Sami Ahsan for Petitioner.

Muhammad Kazim, Sami Ahsan, Ejaz Ahmed and Shaikh Liaquat, Standing Counsel for Respondents.

Date of hearing: 5th May, 2015.

2016 C L D 1103

[Sindh]

Before Munib Akhtar, J

Messrs BROTHERS INDUSTRIES through Partner---Petitioner

Versus

DOLLARS INDUSTRIES PAKISTAN through Partner and 2 others---Respondents

J. Misc. Application No. 41 of 2008, decided on 13th July, 2015.

Registered Designs Ordinance (XLV of 2000)---

----Ss. 3(2) & 10---Registration of design, cancellation of---Term 'significantly differ'---Dispute was with regard to design for a 'Roller Pen' which was got registered by respondent in year, 2005---Petitioner sought cancellation of registered design in question on the ground that it was merely the copy of 'Hauser 737 Mayor Rollerball' design for a 'Roller Pen' and the same was well known much prior to year, 2005---Validity---Even if S. 3(2) of Registered Designs Ordinance, 2000, was to be given a more nuanced reading, the instant facts and circumstances were well within the meaning of publication anywhere in the world and on a more literal reading, they readily pass muster---Design in question was the same and did not at all 'Significantly differ' from the design of 'Hauser 737 Mayor Rollerball'---Said design as registered by respondent was published much prior to 2005 within the meaning of S. 3(2) of Registered Designs Ordinance, 2000, and therefore, the design was neither new nor original and should not have been registered---High Court cancelled the registration of design registered by respondent--- Petition was allowed in circumstances.

Dollar Industries (Pvt.) Ltd. and another v. Nisar Traders and others 2011 CLD 847; Indo Asahi Glass Co. Ltd. v. Jai Mala Roller Glass Ltd. and another 1995 (33) DRJ 317; Reckit Benkiser India Ltd. v. Wyeth Ltd. AIR 2013 Delhi 113; Bharat Das Tools Ltd. v. Gopal Glass Works Ltd. 2008 (10) SCC 657; Magmatic Ltd v PMS International Ltd [2013] EWHC 1925 (Pat); Intellectual Property Law by Lionel Bently and Brad Sherman (4th ed., 2014) and Industrial Design Law in Singapore by George Wei Sze Shun (2012; pp. 174-176) ref.

Munawar Ghani and Abdul Hameed Iqbal for Petitioner.

Khalid Jawed Khan for Respondents Nos.1 and 2.

Dates of hearing: 27th January, 17th and 27th February, 2015.

2016 C L D 1147

[Sindh]

Before Aziz-ur-Rehman, J

PAK LIBYA HOLDING COMPANY (PRIVATE) LIMITED---Plaintiff

Versus

MAXCO (PVT.) LIMITED and 2 others---Defendants

Suit No. B-45 of 2013, decided on 21st April, 2015.

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

----Ss. 9, 10, 11 & 3---Negotiable Instruments Act (XXVI of 1881), S. 118---Qanun-e-Shahadat (10 of 1984), Art. 114---Suit for recovery of loan amount---Leave to defend, application for---Disputed amount of mark-up---Issue, framing of---Negotiable instrument---Presumption of truth---Promissory estoppel, doctrine of---Applicability---Liquidated damages---Proof of---Contention of defendants was that Banking Court at the time of passing an 'interim decree' was required to grant not only 'leave to defend the suit' but also to frame issues---Validity---Disputed amount of mark-up could conveniently be sorted out without framing of any issue and recording of any evidence---Liquidated damages could not be granted without proving the same through sufficient evidence---Negotiable instrument had presumption of truth and any person who wished to dispel it had to furnish proof/cogent evidence to the contrary---Defendants with their free will and wish had signed and executed documents for repayment of loan amount---Defendants were estopped from challenging the same---Doctrine of promissory estoppel was applicable in the case---No one could approbate and reprobate at the same time---Party claiming liquidated damages had firstly to plead and then to lead positive and sufficient evidence in proof thereof---Issues would arise out of the pleadings of the parties---Issues could only be framed when dispute could not be resolved without putting the parties to lead evidence in 'pro' and 'contra' of the same---Issues were not required to be framed as a routine which would depend upon facts and circumstances of each case---Application for leave to defend the suit was dismissed and suit was decreed against the defendants jointly and severally for outstanding amount plus cost of funds from the date of default till the date of realization---Final decree with regard to sale of mortgaged properties was also passed.

Muhammad Sabir v. Khalil-ur-Rehman 2002 CLD 1543; Mst. Nur Jehan Begum through Legal Representatives v. Syed Mujtaba Ali Naqvi 1991 SCMR 2300; Mirza Nasir and 2 others v. Mirza Hakim-ud-Din, Managing Director, Jahangir Engineering Company, Gujranwala and 2 others 2001 MLD 431; Saudi Pak Industrial and Agricultural Co. (Pvt.) Ltd. Islamabad v. Messrs Allied Bank of Pakistan and another 2003 CLD 596 and Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation, Karachi PLD 2002 SC 500 rel.

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

----S. 118---Negotiable instrument---Presumption of truth---Scope---Negotiable instrument had presumption of truth and any person who wished to dispel the same had to furnish proof/cogent evidence to the contrary.

Muhammad Sabir v. Khalil-ur-Rehman 2002 CLD 1543 rel.

Aijaz Hussain Shirazi for Plaintiff.

Behzad Haider and Jam Asif Mehmood for Defendants.

2016 C L D 1175

[Sindh]

Before Sajjad Ali Shah and Syed Saeeduddin Nasir, JJ

MUHAMMAD ALI RASHID---Appellant

Versus

Messrs UNITED BANK LIMITED and 7 others---Respondents

First Appeal No. 40 of 2014, decided on 5th May, 2015.

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

----Ss. 15 & 19---Civil Procedure Code (V of 1908), S.12(2)---Auction of mortgaged property---Auction-purchaser impugned order of Banking Court whereby application under S.12(2), C.P.C., filed by objector against sale of mortgaged property was allowed---Contention of auction-purchaser was that he had deposited entire amount of auction price of mortgaged property with Nazir of Banking Court, however, sale in his favour had not been confirmed and application under S.12(2), C.P.C., filed by objector was to obstruct auction of mortgaged property in question and to linger on auction proceedings---Validity---Exercise taken by objector by filing an application under S.12(2), C.P.C., was mala fide on the face of it as objector had no right whatsoever to sell property in question by way of auction inasmuch as the same was already mortgaged with the Bank who had obtained decree for sale and foreclosure of mortgage---No reason was available as to why Banking Court considered it a matter which required further evidence, framed four issues and directed parties to adduce their evidence after allowing application under S.12(2), C.P.C., of objector---Application under S.12(2), C.P.C., was dismissed---Appeal was allowed, accordingly.

Obaid-ur-Rahman for Appellant.

Ijaz Ahmed Shirazi, Faiz Ahmed and Shaikh F.M. Javed for Respondents.

Date of hearing: 5th May, 2015.

2016 C L D 1202

[Sindh]

Before Aziz-ur-Rehman, J

BANK ALFALAH LIMITED---Plaintiff

Versus

Messrs CALLMATE TELIPS TELECOM LTD. and 5 others---Defendants

Suit No. B-01 of 2008, decided on 24th August, 2015.

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

----O. XXXVIII, R. 5---Attachment before judgment---Intent to obstruct or delay execution---Proof of---Onus to prove---Onus of proof is on plaintiff's shoulders to establish that defendant is going to dispose of his property with an 'intent' to 'obstruct' or 'delay' execution of any decree that may be passed against him.

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

----S. 19---Civil Procedure Code (V of 1908), O. XXXVIII, R. 5---Suit for recovery of finance---Attachment before judgment---Scope---Plaintiff Bank had already obtained two decrees against mortgagers but in its own wisdom instead of pursuing the sale of properties/fixed assets etc., wanted to recover finance by sale of property subject matter of the suit which belonged to defendant and was not mortgaged or otherwise under any charge of plaintiff Bank---Application was filed by plaintiff Bank seeking attachment of suit property before passing the judgment---Validity---Aim and purpose behind O. XXXVIII, R. 5, C.P.C., was not meant to guarantee a plaintiff vis-a-vis the assets available within the jurisdiction of court or otherwise, to ensure satisfaction of the claim therefrom if it succeeded in his/its action ultimately--- In order to invoke provisions of O. XXXVIII, R. 5, C.P.C., one had to show 'the intent' of defendant about disposal of its property with a view to obstruct/defeat decree that was 'likely' to be passed against a defendant---High Court declined to attach suit property before judgment as plaintiff Bank fell short to fulfil requisite ingredients of O. XXXVIII, R. 5, C.P.C.---Application was dismissed in circumstances.

MCB Bank Limited v. Messrs Atlas Rubber and Plastic Industries Pvt. Ltd. and 6 others 2011 CLD 1550; Muhammad Yousif v. Agha Amir Muhammad PLD 1976 Kar. 926; MCB Bank Limited through Manager v. Messrs Millennium Securities and Investment Private Limited through Chief Executive and 6 others 2011 CLD 1355; Saudi Pak Commercial Bank Ltd. v. A.H. International (Pvt.) Ltd. and others 2007 CLD 175; Muhammad Ather Hafeez Khan v. Messrs Ssangyong and Usmani JV PLD 2011 Kar. 605; Pak American Fertilizers Ltd. Mianwali v. Amir Abdullah Khan and another 1984 CLC 2170 and United Bank Ltd. through Corporate and Industrial Restructuring Corporation (CIRC), Karachi v. Heryana Asbestos Cement Industries (Ltd.) and 20 others 2006 CLC 1272 rel.

Sheikh Muhammad Azim and another v. National Bank of Pakistan and 3 others 2011 CLD 1361; Industrial Development Bank of Pakistan v. Messrs French Food Products (Pvt.) Ltd. and others 2009 CLD 93; Mst. Ishrat Jehan and another v. Muhammad Zakir Hussain 2008 CLC 1637; Messrs Saudi-Pak Commercial Bank Limited v. Messrs Pan Pacific (Private) Ltd. and 9 others 2007 CLD 1348; Messrs State Engineering Corporation Ltd. v. National Development Finance Corporation and others 2006 SCMR 619; Shahid Sayeed Khan and another v. Prinz (Pvt.) Limited 2004 YLR 2062; Messrs Prinze (Pvt.) Limited v. Shahid Saeed Khan and others 2002 CLD 391; National Bank of Pakistan v. A.M. Pirani and 2 others 1988 CLC 935 and Virasat Ullah and another v. Messrs United Bank Ltd., Lahore PLD 1975 Lah. 17 distinguished.

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

----S. 41---State Bank of Pakistan Circular---Violation---Effect---State Bank of Pakistan in its capacity as regulatory body issues circulars, guidelines and prudential regulations which are not only binding on Banks/DFIs but also need to be followed strictly---Any violation or circumvention of the circulars/instructions and prudential regulations render Banks/DFIs and concerned officers liable for penalties under Banking Companies Ordinance, 1962.

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

----S. 41---State Bank of Pakistan Prudential Regulations---"Tangible security"---Connotation---Tangible security as defined in prudential regulations means readily realizable assets i.e., mortgage of land, plant, building, machinery and other fixed assets.

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

----O. XXXVIII, R. 5---Attachment before judgment---Procedure---Jurisdiction of Court---Court may direct defendant to appear and show cause why he should not be asked to furnish security and place the same on the disposal of court as and when required and sufficient to satisfy the decree---Jurisdiction of court in attaching property before judgment is of extraordinary nature and should be exercised strictly in accordance with the time tested procedure.

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

----S. 41---State Bank of Pakistan Regulations Nos. III & XVIII---Negligence---Responsibility---Officer of Bank who is also responsible for disbursement, if acts negligently or omits to take enough care in extending/advancing finance facilities by ignoring State Bank of Pakistan's regulations applicable at the time of advancing finance facility, then such officer is liable to suffer---Bank would be justified in taking appropriate and lawful action against responsible officials pertaining to recovery of losses/or taking action for commission of guilt of a criminal breach of trust.

Abdul Sattar Lakhani for Plaintiff.

Saalim Salam Ansari for Defendants Nos.2, 3, 4 and 5.

Zeeshan Abdullah and Adnan Abdullah for Defendant No.6.

Ms. Alina Qadri holding brief for Ravi Pinjani for Intervener.

Date of hearing: 5th August, 2015.

2016 C L D 1275

[Sindh]

Before Sajjad Ali Shah, C.J. and Anwar Hussain, J

FARHAT FAREED SHAIKH---Petitioner

Versus

Messrs NIB BANK LIMITED and 4 others---Respondents

Constitutional Petition No. 461 of 2016, decided on 28th January, 2016.

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

----Ss. 19(6) & 16(3)(b)---Execution petition---Objections---Contention of applicant was that she had entered into a sale transaction for the purchase of suit property---Validity---Applicant had no locus standi to resist the sale which was being taking place on consequent to a valid judgment and decree---Plea that applicant had purchased suit property from the mortgagor without notice could not defeat the claim of mortgagee as principles of care and caution were flouted---Applicant was not entitled for any concession---Concession to liquidate the liability of Financial Institution could not be obtained from the mortgagee/decree-holder---Constitutional petition was dismissed in limine.

Petitioner in person.

2016 C L D 1281

[Sindh]

Before Sajjad Ali Shah and Syed Saeeduddin Nasir, JJ

ASHFAQ HUSSAIN---Petitioner

Versus

BANKING COURT NO.II and 7 others---Respondents

Constitutional Petition No. D-2273 of 2015, decided on 27th May, 2015.

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

----S. 9---Civil Procedure Code (V of 1908), O. XXI---Suit for recovery of loan amount---Execution of decree against one of the judgment debtors/sureties---Permissibility---Defendant/judgment debtor, under present petition, sought declaration to the effect that the proceedings initiated by the Banking Court in execution of the decree against defendant/surety only, and orders passed thereunder, were illegal and the same were, therefore, liable to be set aside---Validity---Suit had been decreed against all defendants/judgment debtors---Liability of the surety was co-extensive with that of the principal debtor, and the decree holder could proceed to exhaust his remedy for recovery of the loan amount either against the principal borrower or the surety/ guarantor---Decree holder was absolutely justified in deciding to execute the decree against the mortgaged property of the present defendant---Constitutional petition was, therefore, dismissed in circumstances.

Muhammad Rafi Kamboh for Petitioner.

Nemo for Respondents.

Date of hearing: 27th May, 2015.

2016 C L D 1301

[Sindh]

Before Aziz-ur-Rehman, J

The BANK OF PUNJAB---Plaintiff

Versus

ARIF ALI SHAH BUKHARI---Defendant

Suit No. B-112 of 2013, decided on 10th December, 2015.

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

----Ss. 9 & 10---Contract Act (IX of 1872), Ss. 196 & 197---Recovery of Bank loan---Leave to defend, refusal of---Signing and verification of plaint---Defendants raised the objection as to maintainability of the suit on the ground that the same had not been filed by competent/authorized person---Validity---Word 'otherwise' used in S. 9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was not to be given restrictive meanings---Word 'otherwise' not only enlarged the authority of an officer of financial institution but the same also embraced within its ambit, apart from the power of attorney, any other documents that were Special Power of Attorney, Letter of Authority and/or Board's Resolution of company, on strength whereof, a person/officer including Manager of the Financial Institutions became competent not only to verify the plaint on oath, but also to institute a suit in Banking Court for recovery of outstanding amounts---Plaint in the present suit, had been verified by the duly constituted attorney of the plaintiff-Bank---General Attorney of the plaintiff-Bank had duly signed and executed the Special Power of Attorney and thereby had duly authorized the Special Attorney to initiate present recovery proceedings---In terms of Ss. 196 & 197 of Contract Act, 1872, even otherwise, the principal, at later stage could validly ratify the defect, if any---Plaint of the suit, therefore, had been properly and validly verified, and the suit had been competently filed by the Special Attorney.

Khan Iftikhar Hussain Khan of Mamdot (represented by 6 heirs) v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1966 SC 684; Abdul Rahim and 2 others v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar. 62 and Major (Retd.) Ahmed Nadeem Sadal and 3 others v. Federation of Pakistan through Secretary Sports, Islamabad and 3 others 2015 CLC 34 ref.

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

----Ss. 9 & 10---Recovery of bank loan---Leave to defend, refusal of---Restructuring Agreement not mentioned in plaint---Scope---Defendants took the plea that plaintiff-Bank had concealed material fact, as the execution of the Restructuring Agreement had not been pointed out while filing the suit---Validity---Plaintiff-Bank had specifically stated in its reply that the defendant had failed to fulfil the terms and conditions of the Restructuring Agreement satisfactorily---Under the Restructuring Agreement, in case of any contradiction between the terms and conditions of said Agreement, and Offer Letter, the terms and conditions of the Offer Letter were to prevail---Defendants having failed and/or avoided to fulfil the terms and conditions of the Restructuring Agreement, as such, the suit filed by the plaintiff-Bank on basis of documents executed earlier to said Agreement was not only proper but also enforceable.

Saiyed Ali Amir v. Messrs Dalmia Cement Ltd. PLD 1961 (W.P.) Kar. 255; Amin Yousuf Nizami v. Rashid Rayon Mills, Karachi PLD 1971 Kar. 505; Abdul Hafiz and another v. Muzaffar Karim PLD 1973 Kar. 253; Government of West Pakistan (Now Punjab) through Collector, Bahawalpur v. Haji Muhammad PLD 1976 SC 469; Pakistan through Ministry of Finance Economic Affairs and another v. Fecto Belarus Tractors Limited PLD 2002 SC 208 and Muhammad and 2 others v. Mst. Banuk Naz Khatoon 1989 CLC 1819 ref.

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

----Ss. 9 & 10---Recovery of bank loan---Leave to defend, refusal of---Cause of action, existence of---Defendants took the plea that no cause of action had been shown to have accrued in favour of the plaintiff-Bank to file present suit---Validity---Contents of the plaint showed that cause of action had arisen in favour of the plaintiff-Bank and against the defendants on various dates---Objection was, therefore, repelled.

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

----Ss. 9 & 10---Contract Act (IX of 1872), Ss. 126, 127 & 128---Recovery of bank loan---Leave to defend, refusal of---Liability of guarantors---Contract of guarantee/surety---Scope---Principal debtor/ customer not competent to stand as guarantor---Liability of the defendant-guarantor was co-extensive with that of the defendant-principal debtor, unless, the letter of guarantee provided otherwise--- Anything done, or promise made for benefit of the principal debtor was sufficient consideration to constitute so far as the surety was concerned--- Letter of guarantee was a contract to perform a promise or discharge liability of a third person, as and when default occurred---Defendant, however, in the present case, was principal customer; therefore, he himself could not stand as guarantor.

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

----Ss. 10(7) & 9---Recovery of bank loan---Leave to defend---Replication to leave to defend application---Scope---Defects in plaint not curable/rectifiable through replication---Any lacuna left at time of filing of plaint could not be cured and/or rectified at time of filing of replication in answer to the leave to defend application, as in such situation, the defendants would not have the opportunity to rebut the newly built-up case and/or challenge other documents suitably if the same were brought on record through replication---Mandatory requirement of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, in no way, could be postponed or otherwise cured subsequently by way of replication---Opportunity provided to a financial institution, in terms of S. 10(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was a limited opportunity to the extent of reply only in answer to the leave to defend application.

Habib Metropolitan Bank Limited v. Abid Nisar 2014 CLD 1367 rel.

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

----Ss. 9 & 10---Recovery of bank loan---Leave to defend---Documents obtained in blank, objection as to---Validity---Defendants took the plea that the plaintiff-Bank had obtained the finance documents in question in blank and filled-up the same while filing present suit---Validity---All finance agreement were coupled with Promissory Notes, and all the other documents annexed with the plaint had been duly filled-up with dates and figures, which belied the defendants' plea that said documents had been obtained in blank.

Muhammad Arshad and another v. Citibank N.A., Lahore 2006 SCMR 1347 rel.

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

----Ss. 9, 10 & 2(e)(ii)---Recovery of bank loan---Leave to defend, refusal of--- Statement of account--- Validity--- In rescheduling/ restructuring/renewing outstanding amount was not required to be disbursed in statement of account---Defendants raised that objection that plaintiff-Bank, while filing present suit, had not complied with the mandatory requirements of S. 9(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and that mark-up over mark-up had been charged---Validity---Statement of Accounts only contained the dates but also the debit, credit and balance entries---Certified Statement of Accounts also bore the requisite certificates duly signed by Branch Manager of the plaintiff-Bank---Stamp of the plaintiff-Bank was also affixed on the Statements of Accounts---Defendants had not pointed out any specific entry in the Statement of Accounts as being wrong and/or pertained to mark-up over mark-up---Under S. 2(e)(ii) of Financial Institutions (Recovery of Finances) Ordinance, 2001, customer was under obligation to fulfil his commitment made with financial institution regarding repayment of finance and/or any other amounts relating to finance, fulfilment of an undertaking and performance of a promise---Rescheduling, restructuring and renewal of finance facility was facility or accommodation which under the prevailing practice was usually extended to customer on his request---In rescheduling etc., the balance outstanding amounts in the Certified Statements of Accounts was not required to be disbursed; outstanding amount, however, was brought forward in the statement of account---Statement of account, much prior to the last Finance Agreement that was rescheduled/restructured and renewed also was not to be filed, as in restructuring/rescheduling etc., the balance outstanding amount was always acknowledged through execution of a fresh finance agreement---Defendants failed both to fulfill the mandatory requirements of S. 10(3)(4)(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001, and to raise substantial question of law and fact which might require recording of evidence---High Court, dismissing the application for leave to defend, decreed the suit with cost of funds.

Citibank N.A. through Branch Manager v. Ameer Alam 2015 CLD 429 and Habib Bank Ltd. v. Taj Textile Mill through Chief Executive and others 2009 CLD 1143 rel.

M. Jamshed Malik for Plaintiff.

Syed Wasih Hyder for Defendant.

Date of hearing: 3rd November, 2015.

2016 C L D 1453

[Sindh]

Before Faisal Arab, C.J. and Muhammad Iqbal Kalhoro, J

PAKISTAN DEFENCE OFFICERS HOUSING AUTHORITY---Appellant

Versus

CREEK MARINA (PVT.) LIMITED (PAKISTAN)---Respondent

H.C.A. No. 12 of 2013, decided on 4th November, 2015.

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

----Ss. 305, 306, 313 & 314---Companies (Court) Rules, 1997, Rr. 75, 76 & 78---Application for winding-up company---Procedure---Grant of injunction---Scope---Defendant-Pakistan Defence Officers Housing Authority (DHA) entered into an agreement with the plaintiff-company for development of a high-rise project, under which the plaintiff-company was formed for said purpose, and DHA executed a lease deed granting the lease-hold rights of the subject land to the company, but, on the company's failure to complete the project within the prescribed time period, DHA served a notice under S. 306 of Companies Ordinance, 1984 for winding up of the company---Company filed the suit along with injunction application, under which, DHA was restrained from filing a winding up petition against the plaintiff-company---Company took plea that even the presentation of winding up petition could cost heavily on the company, and that the same would make company seem an unviable entity and its standing and status in the public would get eroded beyond repair---Validity---Said plea was without justification in presence of well-defined procedure contained in the Companies (Court) Rules, 1997 and Companies Ordinance, 1984, which, while providing for a comprehensive mechanism to deal with the winding up petition, sought to allay also the fears and apprehensions that the company could face in the event the winding up petition was presented with mala fide and ulterior motive---In terms of R. 75 of Company (Court) Rules, 1997, the petition was required to be presented to the Registrar and not in the open court; therefore, the same foreclosed any chance of its news from being spread and immediately adversely affecting the company---No automatic process existed that took place whereby notices were issued or advertisement in the newspapers was published, but the scheme enunciated in R. 76 of the Rules intervened, according to which, upon presentation of the petition, the same had to be placed before the Judge for its admission and fixing of date for its hearing and for the directions as to its advertisement and the person upon whom copies of the petition were to be served---Advertisement of the petitioner was a subsequent step but the same too was subject to the directions issued by the Judge under R. 78 of the Rules, and those directions came only when the petitioner was able to show a prima facie case in his favour---Rule 76 of the Rules afforded ample opportunity to the company to appear before the Company Judge and satisfy him, by relying on any ground or by producing any material, showing mala fide of the action of DHA---Mala fide action motivated by the ulterior motive could even be checked by the Judge himself---Company judge had all the powers to decline admitting the petition (even when the petition was present on the ground that winding up of the company was just and equitable) when the Judge was of the opinion that some other remedy was available to the petitioner and he was acting unreasonably in seeking to have company wound up instead of pursuing other remedy---In addition to court's inherent power, safety valves provided under S. 313 of Companies Ordinance, 1984, which sufficiently established ample cautions against any mala fide action intended to be taken against the company---Company Judge under S. 313 of the Ordinance, before ordering for winding up, could restrain further proceedings in any suit or proceedings against the company---Winding up petition, thus, could fail at its inception and the Judge might pass appropriate orders directing to seek proper remedy provided under the law than to press the petition---Mere filing of the petition was, therefore, not going to cause encumbrance/embarrassment for the company---High Court observed that plea of the company, by implication, appeared to be harbinger of mistrust on the whole system of judicature and against what the law prescribed to be followed in a given situation and to justify dubbing an action to be false, fabricated and mala fide before the same was taken---Facts and circumstances of the case did not justify the injunction against DHA restraining it from filing a winding up petition, nor the same proposed that the company would be adversely affected by mere presentation of such petition---High Court, setting aside impugned injunctive order, allowed filing of the winding up petition after six weeks' period, during which parties were free to settle down their disputes---Appeal against order was allowed in circumstances.

AIR 1983 SC 1272 and (1983) INSC 125 ref.

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

----O. XXXIX, Rr. 1 & 2----Specific Relief Act (I of 1877), Ss. 56(b), 54, 53 & 42---Companies Ordinance (XLVII of 1984), S. 305---Constitution of Pakistan, Arts. 10-A & 4---Stay of proceedings of winding up of company under original/civil jurisdiction by High Court---Scope---Right to fair trial and due process---Right of individuals to be dealt with in accordance with law etc.---High Court observed that between two situations, where, in the first, a person was stopped from filing proceedings in the court of law on the ground of being mala fide and inspired by ulterior motives, and in the second, the person, even on false ground, was not stopped to present his grievance in the court, the latter would be more close to the scheme of the Constitution---First situation would result into multiplicity of litigation, and a person, who was otherwise lawfully entitled to a right or relief, would not be having an opportunity before the court---However, if the person was allowed to file a lis in the court, the same went through a rigorous procedure of law before even the notice to the other party was ordered to be issued---Court, under several provisions of law, after first examining the lis, would dismiss the same in limine for want of merits, without issuing notice to the other party---Approach that appeared to be nearer to the interest of substantial justice would therefore be not to injunct a person from filing the lis in the court---Administration of justice, which was to protect right to life, liberty and property, would be seriously prejudiced if a person was injuncted to approach the court for redressal of his grievances.

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

----Ss. 56 (b), 54, 53 & 42----Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Companies Ordinance (XLVII of 1984), S. 305---Stay of proceedings of winding up of company under original/civil jurisdiction by High Court---Scope---Defendant contended that Judge High Court while sitting on the original jurisdiction of High Court could not have restrained filing of winding up proceedings in the High Court before the Company Bench having equal jurisdiction---Validity---Section 56(b) of Specific Relief Act, 1877 could be counted as a measure to ensure that at least the proceedings, that were pending in a court that was not subordinate to that from which the injunction was sought, were not stayed by that court---However, the fact that a court could not stay proceedings in a court not subordinate to it fundamentally provided a base to at least cogitate implications of an injunction restraining a person from instituting or prosecuting any proceedings in a court not subordinate to that from which the injunction was sought, which by natural corollary would imply a situation, like in present case, where High Court, while exercising the powers of a civil court, had restrained defendant from filing winding up petition before the Company Judge that happened to be the High Court itself having co-ordinate jurisdiction.

AIR 1983 SC 1272 ref.

(d) Jurisprudence---

----Law----Scope and object.

(e) Constitution of Pakistan---

----Art. 10-A----Right to fair trial and due process---Scope and object.

(f) Words and phrases---

----'Due process'---Meaning and scope.

Black's Law Dictionary ref.

Khalid Mehmood Siddiqui for Appellant.

Arshad Tayyabali for Respondent.

Date of hearing: 8th October, 2015.

2016 C L D 1481

[Sindh]

Before Salahuddin Panhwar, J

MUHAMMAD IRFAN GHAZI---Plaintiff

Versus

IZO SPA and 4 others---Defendants

Suit No. 871 of 2014, decided on 21st September, 2015.

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

----O. XXXIX, Rr. 1 & 2, O. VII, R. 10 & S. 20---Contract Act (IX of 1872), S. 28---Specific Relief Act (I of 1877), S. 42---Suit for declaration---Maintainability---Foreign company---Agreement for distribution of foreign products in Pakistan---Agreement to settle dispute in foreign country---Stay of proceedings---Scope---Plaintiff engaged in business of imports, distribution, marketing and selling of defendant's (foreign company) products in the local markets in Pakistan---Contention of plaintiff was that defendant (foreign company) had terminated agreement to deprive him from the fruits of the same and to cause irreparable loss---Validity---Defendant was a company established and functional in a foreign country and manufacturing it's product there---Parties were in notice and knowledge of their status and place of residence/business---Interpretation of agreement, words used therein or conduct of the parties had to be examined keeping such fact in view---Plaintiff had nowhere challenged the legality of the Court of foreign country nor it was his case that issue involved/raised by him could not be determined by such court or plaintiff's right could not be determined by such court---Status of plaintiff was that of 'distributor' of defendant-foreign company for products supplied through shipment---Such was a series of events---Every breach thereof would give a right to the plaintiff but every such right would be subject to 'arising from or in connection with the agreement'---Plaintiff had right to sue at the place where cause of action had accrued which would be in a foreign country---Civil Procedure Code, 1908 did explain the 'jurisdiction', 'try all suits unless barred', 'rejection of plaint or return thereof for presentation before proper forum' but nowhere permitted the courts to stay proceedings of the suit---Once a lis was brought to a file of courts then law would provide mechanism for disposal of the same but it did not include an order of stay proceedings for an indefinite period---Procedure in courts in a foreign country might be different from one provided in Civil Procedure Code, 1908---Returning of plaint for presentation before proper forum would not meet the requirement of law rather result in causing prejudice to plaintiff---Suit before High Court in Pakistan was not maintainable which was dismissed in circumstances---High Court observed that dismissal of suit would not prejudice the rights of plaintiff to institute proper proceedings for adjudication of its grievances/claims as per applicable limitation of law if any.

PLD 2014 Sindh 175; 2012 SCMR 1027 and State Life Insurance Corporation of Pakistan v. Rana Muhammad Saleem 1987 SCMR 393 rel.

(b) Words and phrases---

----'Ordinary'---Meaning.

Black's Law Dictionary rel.

Muhammad Nouman Jamali for Plaintiff.

Z.U. Mujahid for Defendant No.1.

Date of hearing: 15th April, 2015.

2016 C L D 1493

[Sindh]

Before Aziz-ur-Rehman, J

BANK AL-HABIB LIMITED---Plaintiff

Versus

Messrs KHALID JAVAID AND BROTHERS and 8 others---Defendants

Suit No. B-23 of 2008, decided on 7th May, 2015.

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

----S. 118---Promissory note---Presumption---Negotiable instrument, under S. 118, Negotiable Instruments Act, 1881, attaches itself statutory presumption of truth and it attracts special rules of evidence.

Muhammad Sabir v. Khalil-ur-Rehman 2002 CLD 1545 rel.

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

----Ss. 2(e), 3 & 20---Customer, duties of---Scope---Customers of financial institutions, under Ss. 2(e) & 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001, are under legal obligation and duty bound to fulfil their promises and discharge their duties regarding liquidation of outstanding dues faithfully, otherwise customers commit offence in terms of S. 20 of Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

----S. 2(c)--- Guarantor--- Duties and obligations--- Principle---Guarantors, under law cannot take advantage of any condition incorporated in principal agreement unless the same is also reflected in contract of guarantee---Liabilities of principal and of guarantors are coextensive and in any action initiated by creditor against principal and guarantors, the creditor is only required to establish liability of principal debtor and occurrence of default or breach of terms and conditions, leading to liability---Guarantors cannot resort to technicalities with a view to defeat claim of creditor---Where principal contract becomes unenforceable, then too guarantors are still liable unless there is any covenant in the letters of guarantee to the contrary.

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

----Ss. 9 & 10---State Bank of Pakistan Circular No. BPD 13, dated 30-4-1983---State Bank of Pakistan Circular No. BPD 32, dated 30-11-1984---Suit for recovery of finance---Markup, charging of---Violating Injunctions of Islam---Scope---Suit filed by Bank was resisted by defendants on the plea that charging of markup on rescheduled amount was 'Haram'---Validity---Defendants were fully aware about charging of markup on rescheduled amount and despite such knowledge and awareness they not only executed finance agreement but also got themselves benefited from such rescheduling---Defendants then could not be permitted to say that markup in terms of finance agreement, though voluntarily signed and executed by them was not payable as the same was 'Haram'---Defendants could not avoid payment of agreed markup by saying that it was 'Haram' or otherwise prohibited under State Bank of Pakistan Circulars---If defendant company did not want to pay markup on rescheduled amount then it should not have requested rescheduling of the same---In terms of least finance agreement, defendant company consciously agreed for payment of markup on the scheduled amount---Defendants or anyone of them could not wriggle out from their promises, commitments and obligations much less on the pretexts that markup on rescheduled amount was 'Haram' and/or otherwise prohibited under State Bank of Pakistan Circulars---High Court declined to grant leave to defend the suit, rejected objections of defendants to reports of chartered accountants---Suit was decreed in circumstances.

Habib Bank Limited v. Al-Jalal Textile Mills Ltd. 2003 CLD 1007; Messrs Bolan Bank Limited through Attorney v. Messrs Al-Aslam International through Proprietor and another 2002 CLD 702; Bank of Punjab through Authorised Officer v. Messrs KNK Infrastructure (Pvt.) Ltd. through Chief Executive Officer and 2 others 2012 CLD 961; Muhammad Sabir v. Khalil-ur-Rehman 2002 CLD 1545; Habib Bank Ltd. v. Taj Textile Mills Ltd. through Chief Executive and 5 others 2009 CLD 1143; Muhammad Arshad and another v. Citibank N.A., Lahore 2006 SCMR 1347; Citibank N.A. through Branch Manager v. Ameer Alam 2015 CLD 429; Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi PLD 2002 SC 500; Arfan Hameed, S.D.O. Mirpur and 42 others v. Secretary, Education, AJ&K Government Civil Secretariat, Muzaffarabad and 3 others 2005 CLC 564; United Bank Ltd. v. Messrs Sartaj Industries through Qaisar Iqbal, Managing Partner and 6 others PLD 1990 Lah. 99; Dr. M. Aslam Khaki v. Syed Muhammad Hashmi PLD 2000 SC 225 and Hala Spinning Mills Ltd. v. International Finance Corporation 2002 SCMR 450 ref.

Ghulam Murtaza for Plaintiff.

Abdul Sattar Lakhani for Defendants.

Date of hearing: 6th April, 2015.

2016 C L D 1535

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J

GUJRANWALA ENERGY LIMITED---Appellant

Versus

PRIVATE POWER AND INFRASTRUCTURE BOARD (PPIB) through Managing Director and 3 others---Respondents

H.C.A. No.21 of 2016, decided on 10th May, 2016.

Specific Relief Act (I of 1877)---

----Ss. 42 & 54--- Power Policy, 2002, Art. 5.2, Para. 25---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Suit for declaration and injunction---Intra-court appeal---Interim injunction, grant of---Performance guarantee---Encashment---Plaintiff company was declared as successful bidder for setting up of 200 Megawatt power-plant and for the purpose, a Letter of Support (LOS) was issued in its favour by Private Power and Infrastructure Board (PPIB)---Plaintiff company provided a Performance Guarantee at the rate of US$ 5000 per Megawatt in favour of PPIB for a period of three months in excess of validity of the LOS---Plaintiff company could not perform its part therefore, the Private Power and Infrastructure Board intended to encash Performance guarantee---If there was a possibility that Financial Close was not to be achieved on stipulated date, the contract entered into between parties through LOS specifically provided that a further extension of three months could have been provided to plaintiff upon them having provided additional Performance guarantee---Intent and bona fide of the Board was evident that it seriously wished that Financial Close to be achieved by intending participants either within first period or within extended date because alarming misery of people at large was at stake, who were desperate to have been provided with electricity to improve standard of their lives---Incumbents who merely were visiting process by anchoring into mechanism by making a small investment had been trying to fish third party into the net had no place in the system and could not be allowed trafficking of opportunities provided by the Power Policy---High Court declined to interfere with orders passed by Single Judge of High Court who had rightly dismissed injunction application against encashment of Performance guarantee---Intra-court appeal was dismissed in circumstances.

Khalid Javed Khan for Appellant.

Faisal Siddiqui for Respondents Nos.1 and 2.

Ijaz Ahmed for Respondent No.4.

Date of hearing: 6th May, 2016.

2016 C L D 1551

[Sindh]

Before Muhammad Faisal Kamal Alam, J

RICE EXPORT CORPORATION OF PAKISTAN----Plaintiff

Versus

MUHAMMAD ALAM----Defendant

Suit No.749 of 1989, decided on 1st April, 2016.

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

----Ss. 151 & 161---Civil Procedure Code (V of 1908), O.XXIX, R.1--- Bailee, responsibilities of--- Scope--- Suit by company---Maintainability--- Bailee's responsibility when goods were not returned---Two Directors of company recorded their separate approvals to file the suit---Suit had been filed by a competent person who was the then Director and Principal Officer of the company---Suit was maintainable in circumstances---Bailee had to exercise due care and diligence with regard to goods bailed to him---If bailed goods were not returned, delivered or tendered on the proper time and such default resulted in any loss, bailee would be liable for such loss---Suit was decreed.

Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1966 SC 684; PLD 1959 SC 550 and Abdul Hameed Khan v. Mrs. Saeeda Khalid Kamal Khan PLD 2004 Kar. 17 ref.

Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1966 SC 684; Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd. Lahore PLD 1971 SC 550; Abdul Rahim and others v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar. 62; Trading Corporation of Pakistan v. Merchant Agency, the Trading Corporation Case 2007 CLC 1811; Messrs Mastersons v. Messrs Ebrahim Enterprises and another 1988 CLC 1381 and Sri Narasimhaswami, Namagiri Amman and Sri Ranganathaswami Temples v. Muthukrishna Iyengar AIR 1962 Madras 244 (V 49 C 57) rel.

(b) Maxim---

----"Res ipsa loquitur"---Meaning.

S. Ashfaq Hussain Rizvi for Plaintiff.

Sajid Latif for Defendant.

Date of hearing: 29th March, 2016.

2016 C L D 1604

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J

HUM NETWORK LIMITED---Petitioner

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN through Chairman and 3 others---Respondents

Constitutional Petition No. D-1984 of 2013, decided on 29th March, 2016.

Companies Ordinance (XLVII of 1984)---

----Ss. 230, 231 & 290---Books of accounts of company---Inspection---Notice was issued by Securities and Exchange Commission of Pakistan directing petitioner company to provide certified copies of audit committee, Board meetings, contracts executed by petitioner company and other documents to the respondent who was one of the Directors of the petitioner company---Validity---Path available to an unsatisfied Director was to bring the matter to the knowledge of regulator (Securities and Exchange Commission of Pakistan), which depending on the merits of the case and for reasons to be recorded, could commence preliminary inquiry into affairs of a company by commencing inspection proceedings of books of accounts etc. under S.231 of Companies Ordinance, 1984 and could obtain copies of any required documents---If a Director held not less than 20% of issued share capital of company he could directly approach court under S.290 of Companies Ordinance, 1984, alleging that affairs of company were being conducted in an unlawful, fraudulent or oppressive manner seeking court intervention thereby discharging his fiduciary duties in respect of the company---Law permitted availability of books of accounts etc. under S. 230(4) of Companies Ordinance, 1984 to Directors during business hours and there were no provisions letting a Director making copies of books of accounts etc.---Notice in question was issued by Registrar under S. 230(4) of Companies Ordinance, 1984 which did not grant any power to the Registrar to seek copies of any document---Petitioner company committed no illegality in refusing to provide documents in question to the Registrar---Constitutional petition was allowed in circumstances.

Frank H. Easterbrook & Daniel R. Fischel, Limited Liability and the Corporation, (1985) 52 U.CHI.L.REV.89; Salomon v. Salomon & Co., (House of Lords, (1896), [1897] A.C. 22 HL; Mutter v. Eastern and Midlands Railway Company 1888 M 469 - 92 Chancery Division XXXVIII; 1978 1 All ER 185 and AIR 1938 Cal. 89 ref.

2012 CLD 923 rel.

Ijaz Ahmed Zahid for Petitioner.

Khalid Jawed for Respondents.

Date of hearing: 15th March, 2016.

2016 C L D 1647

[Sindh]

Before Zulfiqar Ahmad Khan, J

SMITHKLINE BEECHAM P.L.C. through Authorized Signatory---Appellant

Versus

The REGISTRAR OF TRADE MARKS and another---Respondents

Miscellaneous Appeals Nos.66 to 73 and 76 to 78 of 2008, decided on 4th May, 2016.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 2(1)(xlvii) & 114--- Trademark--- Distinctive character---Principle---Appellants filed opposition against application for registration of trademark but same was displaced and trademark was registered---Validity---For a mark to have a distinctive character, a customer, when looking at the product on a second time, should be able to connect the product to his past experiences with the present product which meant notwithstanding the eye catching nature of design, product had to be recognized on being seen on the second time---Marks consisting of slug devices (being combinations of stripes, sparkles and colours-while seen as the arrangement of the product itself, or mere decoration, or even as indicating any ingredients in the toothpaste), failed to distinguish respondent's goods and therefore, did not function as a trademark and were debarred from registration---High Court set aside order of registration passed by Registrar Trademarks---Appeal was allowed under circumstances.

1984 R.P.C. 155; 1987 R.P.C. 13 and 2001 RPC 756 ref.

Ms. Amna Salman for Appellant.

Salim Ghulam Hussain for Respondent No.1.

Khwaja Shoaib for Respondent No.2.

Date of hearing: 25th April, 2016.

2016 C L D 1663

[Sindh]

Before Muhammad Shaft Siddiqui, J

JUBILEE LIFE INSURANCE COMPANY LIMITED through Zahid Barki---Plaintiff

Versus

UNITED INSURANCE COMPANY OF PAKISTAN LTD. through Dy. Managing Director and another---Defendants

Suit No. 516 of 2015, heard on 22nd April, 2016.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 40, 39 & 2(xlv)---Specific Relief Act (I of 1877), S. 54---Civil Procedure Code (V of 1908), 0. XXXIX, Kr. 1 & 2---Rights conferred by registration of trade mark---Infringement of registered trade mark---Plaintiff sought 'permanent injunction contending that the defendant's trademark Amaan' was violative of the plaintiff's registered trademarkAmaan Plan'---Defendant took the plea that it was dealing with Takaful services under its trademark, whereas the plaintiff's service under the registered mark was limited to the life insurance policies; hence, their customers were not common and no violation took place--­Validity---In terms of S. 2(xlv) of Trade Marks Ordinance, 2001, similar services' included services which were of the same description-Defendant did not object to the similarity of the marks---Defendant had applied for registration of its markAmaan' under the same Class, which was Class 36 under Trade Marks Ordinance, 2001--­Takaful business might not be of conventional insurance, but the defendant's use of the mark, providing service relating the same Class, might cause confusion in the mind of the customers---No provision existed in Trade Mark Ordinance, 2001 for registration of service mark as Takaful service---Licence obtained from Securities and Exchange Commission of Pakistan for Takaful service meant that the plaintiff's registered mark could be infringed, nor had the same allowed the defendant to act in such manner-Plaintiff's mark `Amaan Plan' had gained so much popularity and goodwill that the customer, who might wish to have other polices of the plaintiff, could be deceived by the mark of the defendant, as the customers would presume that the plaintiff had also started dealing with other kinds of policies---Adoption of the same trademark by the defendant, which was phonetically and visually similar, was likely to create confusion and deception to the customers of the Class 36---Defendant could not show any plausible reason under the law as to why it had chosen the already invented word/mark of the plaintiff-Plaintiff, therefore, had prima facie case, balance of inconvenience was also in its favour and it would suffer irreparable loss, unless the application was allowed as prayed---Application for temporary injunction was allowed in circumstances.

Kazim Raza Abbasi for Plaintiff.

Zeeshan Abdullah for Defendants.

Date of hearing: 22nd April, 2015.

2016 C L D 1673

[Sindh]

Before Sajjad Ali Shah, C.J. and Anwar Hussain, JJ

NATIONAL HIGHWAY AUTHORITY---Appellant

Versus

PAK KUWAIT INVESTMENT CO. (PVT.) LTD. and others---Respondents

Special High Court Appeal No 116 of 2013, decided on 19th January, 2016.

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

----Ss. 19 & 22---Civil Procedure Code (V of 1908), 0. XXI, Rr. 58 & 62---Execution of decree---Attachmen1 of accounts---Grievance of judgment debtor was that in execution of decree, amounts payable by government department were also attached to the extent of decretal amount---Validity---Recovery under Financial Institutions (Recovery of Finances) Ordinance, 2001, provided speedy measures for recovery of outstanding loans---Executing Court under S. 19(2) of Financial Institution's (Recovery of Finances) Ordinance, 2001, had a discretion to execute decree in accordance with the provisions of Civil Procedure Code, 1908, or any other manner it deemed fit---Division Bench of High Court declined to interfere in the order passed by Judge of High Court---Appeal was dismissed in circumstances.

Nawazish Latif Bhatti v. Allied Bank of Pakistan 2004 CLD 92; Agha Attaullah's case 2002 CLD 1550 and Shambhoo Khimiji Khoja v. Baloch Roze Shambe AIR 1947 Sindh 32 rel.

Yasir Ahmed Shah for Appellant.

Khalid Mehmood Siddiqui for Respondent No.l.

Abdul Qayyum Abbasi for Respondent No.2. Asim Mansoor Khan, D.A.G.

2016 C L D 1706

[Sindh]

Before Salahuddin Panhwar, J

JAVED AKHTAR CHAUHAN---Plaintiff

Versus

MUMTAZ ALI and 2 others---Defendants

Suit No.2595 of 2014, decided on 19th November, 2015.

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

----Ss. 73, 85, 86, 92 & 96---Paris Convention of Intellectual Property, 1833---Specific Relief Act (I of 1877), S. 54---Trade name, protection of---Plaintiff claimed to be registered owner of trademark in question and sought injunction against infringement of the same---Defendants claimed to be owner of trademark in question which was well-known in Pakistan and plaintiff had been agent of defendants---Plaintiff claimed that defendants (foreign company) did not seek permission to run their business in Pakistan---Validity---Admission of plaintiff that defendant company had been continuing its business under same mark was sufficient to indicate its intention to enjoy privileges available to such mark under Paris Convention of Intellectual Property, 1833---If such practice was allowed, then in every country any agent or other person would start that practice by getting registration from that area by taking benefits of goodwill attached with such well-known mark---Such practice would mean nothing but negate the Convention which otherwise provided protection to the creator and such scheme was enshrined to save rights of intellectual property---Not only that, but such agent would become entitled to fruits of name and goodwill attached with such mark, and the same could not be allowed to happen because name and goodwill were not earned/established overnights by mere preparing a product alone but the efforts and finance which had made that mark to stand in the market with its own name---No prima facie case or balance of convenience was available to plaintiff and application for injunction so filed by plaintiff was devoid of substance which was dismissed in circumstances.

PLD 2000 Kar. 139; 2007 CLC 1610 and 2003 PLC 26 ref.

Salman Ahmed Shaikh for Plaintiff.

Muhammad Sarfraz Sulehry for Defendants Nos.2 and 3.

2016 C L D 1744

[Sindh]

Before Aziz-ur-Rehman, J

KASB BANK LIMITED---Plaintiff

Versus

MUHAMMAD SALEEM SHAIKH---Defendant

Suit No. B-158 of 2009, decided on 9th June, 2015.

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

----Ss. 9, 3 & 4---Contract Act (IX of 1872), Ss. 196 & 197---Suit for recovery of loan amount---Leave to defend, application for---Word "otherwise" mentioned in S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Defect in filing of suit---Ratification---Guarantor---Liability---Substantial question of law and fact---Word "otherwise" used in S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 would also embrace within its ambit, apart from the power of attorney(s) any other documents including special power of attorney, authority letter etc. whereby a person who had verified the plaint could be authorized---If suit had been filed through a person having no authority then principal could ratify the defect if any later-on---Defendant had executed the documents for repayment of amount to the plaintiff-Bank---Guarantor was also liable to liquidate the outstanding dues owed to the plaintiff-Bank---Guarantor could not be permitted to avoid his liability---Every officer of the Bank who was responsible for recommending, approving and advancing finance facility was required to exercise due care and caution before sanctioning or providing any sort of such facility to the customer---Such officer was required to obtain sufficient security for securing the finance facilities---If an officer of Bank had omitted to take sufficient care in extending/advancing finance facilities then he had to suffer---Defendants/borrowers had failed to raise any substantial question of law and fact which might need recording of evidence---Defendants had availed finance facilities and they were bound to pay the outstanding amount---Suit of plaintiff-Bank was decreed to the extent of outstanding amount plus cost of funds till realization of decretal amount---Guarantor was also found liable in his capacity as a guarantor to the extent of guaranteed amount---Suit was also decreed for the sale of pledged/hypothecated goods if any with cost.

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

----S. 4---Overriding effect of Financial Institutions (Recovery of Finances) Ordinance, 2001---Scope---Financial Institutions (Recovery of Finances) Ordinance, 2001 being a special law, has overriding effect on all the other laws.

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

----Ss. 196 & 197---Ratification---Scope---Where acts were done by one person on behalf of another but without his knowledge or authority, he might elect to ratify or to disown such acts---If such person had ratified such acts then same would follow as if all that acts had been performed by his authority---Such ratification might be expressed or implied in the conduct of the person on whose behalf the acts had been done.

(d) Constitution of Pakistan---

----Art. 4---Due process of law---Scope---No action detrimental to life, liberty, body, reputation or property of any person should be taken except in accordance with law---Person could be dealt with or deprived of rights if it was provided and prescribed otherwise by any law.

(e) Constitution of Pakistan---

----Art. 10-A---Fair trial---Scope---If 'fair trial' and 'due process' was not provided, aggrieved person would be at liberty to seek his remedy before an appropriate forum in accordance with law.

Abid Naseem for Plaintiff.

Ali Raza Habb for Defendant.

Date of hearing: 13th May, 2015.

2016 C L D 1790

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J

HASHWANI HOTELS LIMITED through Senior Manager---Petitioner

Versus

SINDH INSURANCE TRIBUNAL, KARACHI and 3 others---Respondents

Constitutional Petition No. 6388 of 2014, decided on 19th April, 2016.

(a) Insurance Ordinance (XXXIX of 2000)---

----S. 124---Civil Procedure Code (V of 1908), O. I, R. 10 & S. 151---Appeal to the High Court---Scope---Question was as to whether the High Court was barred under S. 124 of Insurance Ordnance, 2000 to consider the Constitutional petition against the order of the Insurance Tribunal on the application under O. I, R. 10, C.P.C.---Section 124(1) of Insurance Ordinance, 2000 provided that 'the decision of the Tribunal on any application shall be final', which meant that once the Tribunal had given any decision in respect of any application presented to it, said decision became final and conclusive immediately upon its delivery and the Tribunal became functus officio---Such decision could not be challenged under the scheme provided by the Insurance Ordinance, 2000---Legislature had intended to confine the decision-making in respect of applications agitated before the Tribunal to the Tribunal itself---Expression and shall not be questioned in any court or before any other authority' used in S. 124(1) of the Ordinance further cemented the finality of the decision made by the Tribunal in respect of any application agitated before it---Section 124(2) of the Ordinance, however, provided an option of appeal before the High Court for a person aggrieved by a decision of the Tribunal, where the amount of claim was in dispute or the prescribed penalty was not less than one hundred rupees---High Court, while exercising its supervisory powers under the Constitution, was fully competent in respect of orders passed by the subordinate courts or tribunals in violation of the principles of natural justice and to correct any error of law where no efficacious remedy was available---Jurisdiction of the High Court was, therefore, not barred under S. 124 of the Ordinance against the impugned order of the Tribunal.

1998 SCMR 1899; 2011 CLD 931; 1995 CLC 239; 1999 SCMR 1881; 2013 SCMR 1707 and PLD 1997 SC 3 rel.

(b) Insurance Ordinance (XXXIX of 2000)---

----S. 41----Civil Procedure Code (V of 1908), O. I, R. 10 & S. 151---Requirement to effect and maintain reinsurer arrangements---Parties to suit---'Proper party'/'necessary party'---Scope---'Dominus litis', rule of---Applicability---Privity of contract---Liability of insurer/reinsurer towards the insured---Determination---Question was as to whether the doctrine of privity of contract barred the plaintiff's action to implead the Reinsurer (Swiss Re) as a necessary or proper party---General rule as to impleadment of parties was that the plaintiff, being 'dominus litis', chose persons against whom he wished to litigate; however, said rule was subject to the provisions of O. I, R. 10, C.P.C., which gave discretion to the court to add any person who was found to be a 'necessary party' or 'proper party'---Plaintiff was not party to the contract with the reinsurer and his claim was not even remotely related with Swiss re----Plaintiff intended to join Swiss Re on the apprehension that in case its claim was decreed against the defendant, and the defendant was not in a position to pay the same, and the defendant succeeded in its reinsurance claim (against Swiss Re), then the money so received by the defendant might be attached by the plaintiff in the garnishee proceedings; said claim could not be held to be remotely connected with the plaintiff's claim against the defendant---Persons indirectly or remotely interested were neither 'necessary' nor 'proper' parties---Indemnity reinsurance agreement conferred no rights on the insured unless the language of the reinsurance contract clearly expressed the intent on part of the reinsurer to be directly liable to the insured---Plaintiff, being an insured, had no direct access to the funds of the reinsurer (Swiss Re), and as no privity of contract between a reinsurer and the insured existed and both operated under different contracts (though with the same insurer) giving rise to situation where, while the insured might succeed against the insurer; however, claim of the insurer against the reinsurer might fail, against which remedial actions would be available to the insurer and not to the insured, as there were inter se veils between these three players---Dispute between the plaintiff/Insured and the defendant/Insurer could effectively be decreed even if the reinsurer (Swiss Re) was not impleaded as a party; therefore, Swiss Re could not be held to be a necessary party---Constitutional petition was dismissed in circumstances.

1996 SCMR 781; 1996 CLC 678; PLD 1972 Lah. 169; 1996 CLC 456; PLD 1996 Kar. 467; PLD 2015 Sindh 134; U.S. Fid & Guar. Co. v. S.B. Phillips Co. Inc., 359 F. Supp. 2d 189 (D. Conn. 2005); Executive Risk Indem., Inc. v. Charleston Area Med. Ctr., Inc., 681 F. Supp. 2d 694 (S.D. W. Va. 2009); General Reins. Corp. v. American Bankers Ins. Co. of Fla., 996 A. 2d 26 (Pa. Commw. Ct. 2009) rel.

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

----O. I, R. 10---Parties to suit---'Proper party'/'necessary party'---Meaning and scope---'Necessary party' is a person who ought to have been joined as a party, and in whose absence no effective decree can be passed at all by the court, and if a necessary party is not impleaded, then the suit itself is liable to be dismissed---'Proper party' is a person, who though not a necessary party, is a person whose presence can enable the court to completely, effectively and adequately adjudicate upon all matters in dispute in the suit, though he does not need to be a person, in favour of or against whom, the decree is to be made.

(d) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Scope---High Court, while exercising its supervisory powers under the Constitution, was fully competent in respect of orders by the subordinate courts or tribunals passed in violation of the principles of natural justice and to correct any error of law where no efficacious remedy was available.

Munir A. Malik for Petitioner.

Barrister Sajid Zahid for Respondents.

Date of hearing: 22nd March, 2016.

2016 C L D 1805

[Sindh (Hyderabad Bench)]

Before Nadeem Akthar and Khadim Hussain M. Shaikh, JJ

Messrs NEW BHATTI OIL MILLS through Proprietor and another---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Principal Officer and Attorney Holder---Respondent

Ist Appeal No.63 of 2010, decided on 21st May, 2016.

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

----Ss. 9 & 10---Suit for recovery of loan amount---Application for leave to defend---Requirements of S. 10 of the Ordinance not fulfilled---Implications/effects---Plaintiff Bank had clearly disclosed the details of the finances, re-payments made by the defendants and the amount outstanding against the defendants and also filed the relevant documents with the plaint; therefore, there was no default on the part of the Bank in complying with the requirement of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Defendant, on the other hand, had not complied with the mandatory requirements of Ss. 10(4) & 10(5) of the Ordinance---Defendants, in terms of S. 10(4) of the Ordinance, were required to disclose in their application for leave to defend, the amount of finance availed by them from the Bank; the amount paid by them to the Bank along with dates of payments; the amount of finance and other amount relating to the finance payable by them to the Bank up to the date of institution of the suit, and the amount, if any, which they had disputed as payable to the Bank, and the facts in support thereof---In terms of S. 10 (5) of the Ordinance, the defendants were required to file all such documents along with their application, which, in their opinion, supported the purported substantial questions of law and fact allegedly raised by them---Under S. 10(6) of the Ordinance, an application for leave to defend which did not comply with the requirements of Ss. 10(3), 10(4) and/or 10(5) of the Ordinance, would be rejected, unless the defendant disclosed therein the sufficient cause for his inability to comply with any such requirement---Defendant had neither complied with the said mandatory requirements nor had they disclosed any sufficient cause for their inability in complying with the same---Defendants had not filed any proof in support of their assertions that some repayments made by them had been suppressed by the Bank or that they were not liable to pay the amount claimed by the Bank---Defendants had categorically admitted to have availed the loan facilities and their liability towards the outstanding amount of the Bank had not been denied---Defendant would be deemed to have failed to make out a case for the grant of leave to defend, if he admitted availing of the finance facility and did not deny his liability to pay the same---Defendants had failed to raise any substantial question of law or fact; therefore, the Banking Court was justified in dismissing the application for leave to defend and decreeing the suit--- Appeal was dismissed in circumstances.

Messrs Shaz Packages and 3 others v. Messrs Bank Alfalah Limited 2011 CLD 790; Tariq Rafique Shaikh v. Citi Bank N.A. 2008 CLD 1252; Al-Hadayat Textile through Proprietor and 2 others v. Soneri Bank Limited 2003 CLD 105; Messrs Ravie Associate (Private) Limited through Director and 10 others v. Industrial Development Bank of Pakistan through Senior Vice-President 2005 CLD 393; Faysal Bank Limited v. Badin Board Mills and 6 others 2010 CLD 442; Sh. Muhammad Naeem and 3 others v. Habib Bank Limited, Karachi and 4 others 2003 CLD 606 and Zarai Taraqiati Bank Limited through Manager v. Syed Furrakh Hussain Shah 2006 CLD 171 distinguished.

National Bank of Pakistan v. Messrs A.I. Brothers (Private) Limited and others 2007 CLD 1356; Industrial Development Bank of Pakistan, Karachi v. Messrs Zamco (Pvt.) Ltd. and 10 others 2007 CLD 217 and Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. PLD 2012 SC 268 ref.

Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. PLD 2012 SC 268 = 2012 CLD 337; Siddique Woolen Mills and others v. Allied Bank of Pakistan 2003 CLD 1033; Messrs Aima Industries (Pvt.) Ltd. and others v. Allied Bank of Pakistan Ltd. 2003 CLD 1770; Travel Kings (Pvt.) Limited through Chief Executive and 4 others v. Union Bank Limited and 2 others 2004 CLD 460; Tariq Javed and another v. National Bank of Pakistan 2004 CLD 838 and National Bank of Pakistan through Zonal Chief and others v. Messrs Power Textile Industries Ltd. through Chief Executive and others 2004 CLD 1239 rel.

Imam Bux Baloch for Appellants.

Zaheeruddin S. Leghari for Respondent.

Date of hearing: 24th February, 2010.

2016 C L D 1821

[Sindh]

Before Nadeem Akhtar and Muhammad Iqbal Kalhoro, JJ

UMER SHARIQ---Appellant

Versus

Messrs SME BANK LIMITED---Respondent

First Appeal No. 2 of 2010, decided on 5th March, 2016.

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

----S. 10---Application for leave to appear---Disposal of application---Scope---Concept of "disposing of"---Application for leave to defend is completely alien and contrary to spirit and provision of Financial Institutions (Recovery of Finances) Ordinance, 2001---Application for leave to defend has to be either "rejected" or "allowed" by Banking Court.

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

----Ss. 9, 10 & 22---Suit for recovery of finance---Application for leave to appear and defend the suit---Disposal of application---Directing parties to file fresh breakup of accounts---Defendants assailed judgment and decree passed by Banking Court on the ground that application for leave to appear was disposed of and parties were directed to settle their claim by submitting relevant documents and fresh breakup---Validity---Held, in order to succeed in application for leave to defend, defendant was to show that his application was competent with all mandatory requirements of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Likewise, plaintiff was to show, even if there was no application for leave to defend the suit or leave was refused to defendant, that his plaint was competent with all mandatory requirements of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 and suit was not barred by any law---No provision existed in Financial Institutions (Recovery of Finances) Ordinance, 2001 to provide further opportunities to parties to file their accounts or fresh breakups thereof after filing suit or application for leave to defend---Banking Court was not justified in granting such opportunity to parties after disposing of application for leave to defend---High Court set aside judgment and decree and remanded matter to Banking Court for decision afresh on application for leave to defend---Appeal was allowed accordingly.

Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. PLD 2012 SC 268 = 2012 CLD 337 rel.

Imran Ahmed for Appellant.

Haris Rashid Khan for Respondent.

Dates of hearing: 19th November and 18th December, 2014.

2016 C L D 1828

[Sindh]

Before Munib Akhtar and Abdul Maalik Gaddi, JJ

Mst. QAIF UL WARA SAJJAD through Attorney---Appellant

Versus

HABIB BANK LIMITED and 2 others---Respondents

First Appeal No. 68 of 2016, decided on 19th May, 2016.

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

----Ss. 19(7) & 9----Civil Procedure Code (V of 1908), O. XXI, R. 58---Suit for recovery of loan amount---Execution of decree and sale---Collusion between judgment debtor and others to defeat execution proceedings---Executing Court not bound to hold regular inquiry and frame issues on all objections---Executing Court vested with powers to reject objection summarily for want of proof or for collusion---Applicant/objector challenged the attachment and auction of the suit property in execution of the decree on the ground that the suit property was the ownership of her late father, and the defendant/judgment debtor, her mother, in connivance with the previous owner of the property, had got transferred the same in her name; therefore, the suit property was not liable to be attached and sold in execution of the decree; the Executing Court dismissed the objection petition---Validity---Suit property had been sold to the defendant/judgment debtor through a registered sale deed, on the basis of which the judgment debtor had obtained loan as guarantor and mortgagor---Registered document had sanctity attached to it, and stronger evidence was required to cast aspersion on its genuineness---Banking Court, after hearing the parties, had decreed the suit for recovery of the loan, against which no appeal had been filed; thus, the judgment and decree had attained finality---Suit property, in execution of the decree, had already been attached and then put into auction---Unregistered sale agreement was the only document on which the applicant/objector was relying---Ownership could not be claimed under said sale agreement, as the same did not confer any right, interest or title in suit property---Prior to the objections filed by the applicant/objector, her brother had also filed objections under O. XXI, R. 58, C.P.C. read with S. 19(7) of the Ordinance, which had also been dismissed by the Executing Court, and the order of dismissal, having not been challenged before any forum, had also attained finality; whereas, the applicant suppressed all said facts in present appeal---Applicant, her said brother and mother, appeared to be in collusion with each other to defeat the execution proceedings---Executing Court was not bound to hold regular inquiry by framing issues and providing opportunities to the parties to produce evidence; rather, the Court was vested with the power to reject objection summarily in absence of prima facie proof and also where the collusion was found between the objector and the judgment debtor---Impugned order was maintained---Appeal was dismissed in limine in circumstances.

Inayat Khan and others v. Allah Ditta and others 2007 SCMR 655; Wajid Ali Khan v. Sheikh Murtaza Ali and 2 others 2003 SCMR 1416 and Mirza Muhammad Sharif and 2 others v. Mst. Nawab Bibi and 4 others 1993 SCMR 462 rel.

Abdul Shakoor for Appellant.

Date of hearing: 19th May, 2016.

2016 C L D 1864

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J

DALDA FOODS (PRIVATE) LIMITED---Appellant

Versus

M/S SHIELD CORPORATION LIMITED---Respondent

High Court Appeal No. 244 of 2014, decided on 18th March, 2016.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 40, 52, 67, 82 & 86---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2--- Temporary injunction---Infringement of trade mark---Remedy for groundless threats of infringement proceedings---'Unfair competition'---Definition---Protection of well-known trade mark---'Identical or confusing similar trade mark'---Determination---'Mark' and 'trade mark', use of---Distinction and Scope---'Classic Trinity'/'Moron in a Hurry' test, applicability of--- Determination--- 'Trade mark registration certificate'--- Scope---'Use it or lose it' principle of---Applicability---'Purity of trade mark register'---Concept---Unfair competition/threat under garb of infringement---Modes against---Claim on ground of 'dilution', infringement---Trial Court had restrained the defendant from using its trade mark 'Health Shield', holding the same identical and deceptively similar with the plaintiff's trade mark 'Shield' products---Plaintiff's mark 'Shield' was functioning as a trade mark; whereas, the defendant's mark 'Health Shield' was not being used as a trade mark---Actual damage or loss to the plaintiff on account of the defendant's use of impugned trade mark could not be imagined, as products of both parties were very much different in nature, sold to different customer needs and usually kept at different locations in shops---Plaintiff, in support of his 'dilution' claim, had to prove the highest degree of fame of his trade mark required under S. 86 of Trade Marks Ordinance, 2001---Once a trade mark had been (honestly) adopted by a trade, the mark would not always remain the property of the said trader, and he would remain the owner of the mark, as long as, he was using the mark in course of trade, and, having abandoned the use of the trade mark, he would eventually lose all rights to the mark---Trade mark registration certificate was, therefore, not a licence to stop other trade indiscriminately---Plaintiff had the reputation and goodwill in its trade mark, however, the same was only limited to the goods falling in Classes 3, 21 and 10, which were toothbrushes, toothpastes, baby feeders, etc. and the plaintiff did not manufacture or sell goods falling in Class 29, which was banaspati ghee, oils, etc. under its trade mark---Defendant had made no attempt to misrepresent or disguise itself as the plaintiff or to sail close to it---Court applying the test 'Moron in a Hurry' found that even a moron in a hurry would not pick a bottle of Dalda Cooking Oil instead of Shield toothpaste---Actual damage or loss to the plaintiff on account of the defendant's use of impugned trade mark could not be imagined, as products of both parties were very much different in nature, sold to different customer needs and usually kept at different locations in shops---Classic Trinity test was, therefore, passed in favour of the defendant---Plaintiff's trade mark could not be construed to have been misused in any way by the non-trademarked type use of the impugned mark by the defendant---High Court, finding all allegations as to infringement of the plaintiff's trade mark as baseless, vacated the injunction---Principles.

'Mark' could be any graphical representation of a visually perceivable item on the packaging of a product, and a consumer connected it with the source of the goods. 'Mark', when used as a trade mark, started connecting products or services to their respective sources and origins, and the customer used the trade mark when choosing particular product or when refusing another product instead.

In the present case, plaintiff's mark 'Shield' was functioning as a trade mark; whereas, the defendant's mark 'Health Shield' was not being used as a trade mark. Customer intending to buy Shield (toothpaste) would go to a shop and ask shopkeeper to give him Shield toothpaste; however, since the impugned trade mark was not used as a trade mark, the customer would go to a shop and would ask for Dalda Cooking Oil. If the defendant decided to remove the impugned mark from its packaging, that would not affect distinctiveness of its trade mark 'Dalda', and the customers would always reach out and choose 'Dalda' as their choice of product. Plaintiff's trade mark, therefore, could not be construed to have been misused in any way by the non-trademarked type use of the impugned mark by the defendant.

Question before the High Court was that in what circumstances a trade mark could be held to be confusingly similar with another trade mark. Plaintiff had the reputation and goodwill in its trade mark, however, the same was only limited to the goods falling in Classes 3, 21 and 10, which were toothbrushes, toothpastes, baby feeders, etc. and the plaintiff did not manufacture or sell goods falling in Class 29, which was banaspati ghee, oils, etc. under its trade mark. Defendant had made no attempt to misrepresent or disguise itself as the plaintiff or to sail close to it. Court applying the test 'Moron in a Hurry' found that even a moron in a hurry would not pick a bottle of Dalda Cooking Oil instead of Shield toothpaste. Actual damage or loss to the plaintiff on account of the defendant's use of impugned trade mark could not be imagined, as products of both parties were very much different in nature, sold to different customer needs and usually kept at different locations in shops. Classic Trinity test was, therefore, passed in favour of the defendant.

Another relevant question before the Court was that whether use of certificate of trade mark registration could block entry of an honest trader commencing use of not really identical or deceptively similar trade mark in relation to a completely different range of products. Trade mark legislation had two arms, one of which protected the customer, and the other, the original creator of the mark (the honest trader). Trade mark was a badge of origin, and the grant of registration certificate was made to the person who used (or honestly proposes to use) a trade mark in the course of trade to the benefit of customers, so that the customers could distinguish the said trader's goods apart from other competitor's products. Trade mark registration certificate was a seal imposed by government certifying that goods manufactured (or sold) under the said trade mark would only and legitimately be sourced by the person in whose name the trade mark was registered. Trade mark registration certificate was, therefore, not a licence to stop other trade indiscriminately.

Philosophy governing the trade mark jurisprudence was the 'use it, or lose it' principle. Once a trade mark had been (honestly) adopted by a trade, the mark would not always remain the property of the said trader, and he would remain the owner of the mark, as long as, he was using the mark in course of trade, and, having abandoned the use of the trade mark, he would eventually lose all rights to the mark.

Concept of 'purity of trade mark register' hinged to the idea that trade marks, which were not used by their respective owners, would be removed from the register of trade marks, as possession of the registration certificate without active commercial use of the trade mark negated the very purpose of trade mark legislation, and at best, the same could be treated as trade mark trafficking which was an undesirable act where a trader used the instrument of registration to gain unfair advantage against an honest trader.

Trade Mark Ordinance, 2001 was aimed to arrest the modes of unfair competition. Section 67 of the Ordinance introduced a new scheme, which restricted the use of such acts of competition, contrary to honest business, industrial or commercial practices. Section 52 of the Ordinance created a firewall by providing a remedy against groundless threat of infringement proceedings, and a person aggrieved by the groundless threat might bring proceedings of relief against the person making the threat---Aggrieved person had to show that the threat was unjustifiable and the person was stretching his right beyond the umbrella provided by section 40 of the Ordinance. Stretching beyond the umbrella provided under section 40 of the Ordinance meant that the person who had registered trade mark was threatening infringement thereof when the other person was either not using the identical trade mark, or using the same not in the course of trade, or not using the trade mark in relation to identical goods or services. Defendant's act/trade mark did not come anywhere inside the triangle of said three pillars; therefore, no infringement of the registered trade mark of the plaintiff had been established.

Plaintiff had contended that the act of the defendant caused 'dilution' of the plaintiff's trade mark. In order to claim 'dilution', the trade mark had to be a well-known mark. Requirements of section 82 of Trade Marks Ordinance, 2001 had to be fulfilled to determine whether a trade mark was well-known. Plaintiff, in support of his 'dilution' claim, had to prove the highest degree of fame required under section 86 of the Ordinance.

Allegations leveled by the plaintiffs were, therefore, completely flawed, and the defendant had the right and reasons to continue using its impugned trade mark. Impugned restraining order was set aside. Application of injunction was dismissed in circumstances.

Khawaja Shoaib Mansoor along with Munawwar Ghani and Ms. Nida Rias for Appellant.

Muhammad Shahid Qadeer for Respondent.

Date of hearing: 24th February, 2016.

2016 C L D 1888

[Sindh]

Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ

LAWRENCEPUR WOOLLEN AND TEXTILE MILLS LTD.----Appellant

Versus

NATIONAL INVESTMENT TRUST LIMITED and another----Respondents

High Court Appeal No.67 of 1999, decided on 3rd May, 2016.

Specific Relief Act (I of 1877)---

----S. 10---Suit for recovery of shares and declaration---Terms of contract, establishment of---Proof--- Suit filed by National Investment Trust was decreed in its favour and against defendant company by Single Judge of High Court---When plaintiff Trust vide its letter dated 27-12-1975, accepted offer made by defendant company, it had to be presumed to be a term of contract between the parties with regard to the offer and acceptance which stood established---When date of consent order on the request of defendant company was extended from time to time by Controller of the Capital Issues (CCI) the delay in making payment, so far as the Trust was concerned, had impliedly been condoned by CCI by granting extension to the consent letter--- Defendant company could not take advantage of the consent order dated 3-1-1975, by stating that by virtue of such consent order since National Investment Trust had failed to subscribe the shares before 2-1-1976, they had rendered themselves ineligible for the issuance of allotment of those shares---Single Judge of High Court had rightly declared that the Trust was entitled for the right shares so also of bonus shares, dividend accrued on those shares in succeeding financial years along with 15% compensation from 15-1-1975 till the date of decree along with costs--- Judgment and decree passed by Single Judge of High Court did not suffer from any illegality or irregularity requiring interference by Division Bench of High Court---Intra-court appeal was dismissed in circumstances.

Zahid F. Ebrahim for Appellant.

Muhammad Masood Khan and Amna Usmani for Respondent No.1.

Respondent No.2 called absent.

Dates of hearing: 11th, 17th, 24th February, 2nd, 9th, 16th, 22nd and 29th March, 2016.

2016 C L D 1903

[Sindh]

Before Aziz-ur-Rehman, J

PAK OMAN INVESTMENT COMPANY LIMITED---Plaintiff

Versus

CHENAB LIMITED and 9 others---Defendants

Suit No.B-08 of 2011, decided on 29th October, 2015.

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

----Ss. 9 & 10----Bankers' Books Evidence Act (XVIII of 1891), S. 2(8)---Constitution of Pakistan, Art. 10-A---Recovery of bank loan, suit for--- Maintainability---Leave to defend, refusal of---Rejection of plaint---Lacuna left in suit not curable through replication---'Certified copy' of statement of account---Ingredients---Statement of account not certified in terms of S. 2(8) of Bankers' Books Evidence Act, 1891---Effect---Territorial jurisdiction of Banking Court---Scope---Friction of cause of action also gave jurisdiction to Banking Court---Right to fair trial---High Court rejected the plaint and dismissed leave application for non-compliance with mandatory requirements:

Plaintiff, in the present case, contended that if any lacuna was left at the time of filing of the suit, the same could be cured at the stage of filing of the replication to the defendants' leave to defend application. High Court held that contention was misconceived and misleading, as the defendants to the knowledge of the plaintiff, had no opportunity to suitably rebut the new built-up case and/or all other documents, which had been brought on record through replication. Mandatory requirements of section 9 of Financial Institutions (Recovery of Finances) Ordinance 2001, in no way, could be postponed, or otherwise, rectified subsequently by way of replication. Opportunity, as given to the plaintiff in terms of section 10(7) of Financial Institutions (Recovery of Finances) Ordinance 2001, was a limited opportunity, that was only to the extent of reply in answer to the leave to defend application. Financial Institutions (Recovery of Finances) Ordinance 2001, being special law, provisions thereof would override all other laws and as such the same need to be strictly complied with. Giving weight to the case built-up and to documents brought on record through replication, would also be against the concept of fair trial and due process as mandated by Article 10-A of the Constitution. Provisions of the Financial Institutions (Recovery of Finances) Ordinance, 2001 needed strict compliance from the very inception and the same could not be left at the whims and sweet will of the Financial Institution to cover up the left over lacuna and shortcomings at the stage of filing of replication. Merely on basis of documents filed along with the replication or replica, the defendant in no event could be deprived to have order for grant of leave to defend the suit for want of proper opportunity of rebuttal, if otherwise the defendants succeeded in raising substantial questions of law or facts.

Apollo Textile Mills Limited and others v. Soneri Bank Limited 2012 CLD 337 and Habib Metropolitan Bank Limited v. Abid Nisar 2014 CLD 1367 rel.

Defendants raised the objection that the certificate on the statement of account was not in accordance with the requirements of section 2(8) of Bankers' Book Evidence, 1891. Under section 2(8) of Banker's Books Evidence Act, 1891, a certificate given at the foot of statement of account, to make the same a certified copy of the statement of account, must state the following requisite ingredients: i) statement of account was true copy of the entry; ii) such entry was contained in one of the ordinary books of bank; iii) the entry was made in the usual and ordinary course of business; iv) such book was still in the custody of the bank; v) certificate must be dated; and vi) the same was subscribed by the principal accountant or manager of the bank with his name and official title. Certificate given at the foot of statement of account in question was not only un-dated, but the same also did not bear the name and official title of the subscriber that was Principal Accountant or Manager of the Bank. For purposes of section 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 the word 'Bank' must/could be read as 'Financial Institution' and the words 'Principal Accountant' as meaning 'Chief Financial Officer' Statement of account and the plaint had been signed by the sub-power of attorney of the plaintiff-company. Said sub-power of attorney although had been signed and executed by the Principal Attorney of the plaintiff-Institution, but the Principal Attorney had not specifically authorized the sub-attorney to certify the statement of account annexed with the plaint and/or the replication. Statement of account in question did not fall fit in the definition of statement of account. Ex-facie, no valid and proper statement of account, which could be said as duly certified in terms of section 2(8) of Bankers' Books Evidence Act, 1891. In case the Financial Institution failed to adhere strictly to the mandatory requirements, then the defendant, besides being entitled for the grant of leave to defend the suit or otherwise, might also be within his right to contest for rejection of the plaint.

Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) Ltd. through Director/Chief Executive and 3 others 2012 CLD 1302 rel.

All requests for availing the finance facilities, their disbursement/drawdown had been sent by the defendants to the plaintiff at its registered office at place. Defendants had committed default at place. Defendants had also made repayments of overdue amounts in its account maintained at place. Fraction of cause of action also gave territorial jurisdiction to the Banking Court to decide the lis in question. Banking Court at place, therefore, had the jurisdiction to entertain the suit.

Regional Development Finance Corporation v. Haji Gul Hassan and another 2009 SCMR 706 rel.

Both parties failed to fulfill the mandatory requirements of sections 9 and 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001. Incompetent suit should not have been allowed to continue further and encumber the legal proceedings in futile manner. Banking Court, therefore, rejected the plaint and dismissed the leave to defend application. Plaint was rejected in circumstances.

Bankers' Equity Ltd. and 5 others v. Messrs Bentonite Pakistan Ltd. through Chief Executive and 7 others 2010 CLD 651; S.M. Shafi Ahmed Zaidi through Legal Heirs v. Malik Hassan Ali Khan (Moin) through Legal heirs 2002 SCMR 338; Elbow Room and another v. MC Bank Limited 2014 CLD 985; Messrs Dhrala Oil Mills through Partners/Guarantors and 4 others v. The Bank of Punjab through Branch Manager 2014 CLD 153; Habib Metropolitan Bank Limited v. Abid Nisar 2014 CLD 1367; Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) Ltd. through Director/Chief Executive and 3 others 2012 CLD 1302; Pakistan Kuwait Investment Company (Pvt.) Ltd through Authorized Representative v. Messrs Active Apparels International and 6 others 2012 CLD 1036 and Messrs Bank Alfalah Ltd. v. The Presiding Officer and another 2014 CLD 160 rel.

Bela Automotives Ltd. v. Habib Bank Ltd. 2005 CLD 893 and Civil Aviation Authority, Karachi v. Messrs Data International (Data Baggage House), Karachi and 2 others PLD 1993 Kar. 700 distinguished.

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

----Ss. 9 & 10----Bankers' Books Evidence Act (XVIII of 1891), S. 2(8)---Recovery of bank loan, suit for---Leave to defend---Requirements---In terms of S. 9 (2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, the plaint would be supported by a statement of account, which in the case of financial institution would be duly certified under Banker's Books Evidence Act, 1891, and accompanied with all other relevant documents relating to the grant of finance---Use of the words, 'duly certified statement of account' actually rendered the compliance of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 as mandatory---In case of non-compliance of said mandatory requirement, the Financial Institution was bound to face adverse consequences---Word 'support' read in the mandatory perspective of the word 'shall' made the plaint filed by the financial institution as totally dependent upon the statement of account duly certified under Banker's Books Evidence Act, 1891---Plaint might be sustained only when the mandatory requirements of S. 9(2) Financial Institutions (Recovery of Finances) Ordinance, 2001 had been fulfilled and not otherwise---Under S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, copies of the plaint, statement of account and other relevant document also needed to be filed with Banking Court in sufficient numbers, so that there was one set of copy for each defendant and on extra copy---Defendant, in suit filed by the financial institution for recovery, must be confronted with the best possible restructured/well framed case that the plaintiff could put forward from the very inception---Foundation of banking suit, which normally was a suit on accounts, must be supported with certified statement of account, which would be duly certified within the meaning of S. 2(8) of Bankers' Books Evidence Act, 1891---Production of certified statement of account in support of the plaint was thus not only mandatory but the same was also very necessary pre-condition for charging the defendants with any liabilities in a suit for recovery filed by financial institution---Defendant was also under legal obligation to definitely plead and specifically state his accounts---Provisions of Ss. 9 & 10 of Financial Institutions (Recovery of Finances) Ordinance 2001 were not only mandatory but also in the event of non-compliance of the same, the parties to the suit would suffer.

Elbow Room and another v. MC Bank Limited 2014 CLD 985; Bankers' Equity Ltd. v. Messrs Bentonite Pakistan Limited and others 2003 CLD 931 and Apollo Textile Mills Limited and others v. Soneri Bank Limited 2012 CLD 337 rel.

(c) Bankers' Books Evidence Act (XVIII of 1891)---

----Ss. 4, 2(8) & Preamble---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 9 & 10----Recovery of bank loan, suit for---Mode of proof of entries in bankers' book---'Certified Copy' of statement of account---Presumption---Under Preamble of Banker's Books Evidence Act, 1891, object of the Act was to render the entries in Bankers Books as admissible in evidence only by producing copies of such entries instead of producing the original entries contained in the ledgers/Books of Accounts---In such situation, as presumption of truth was attached to the entries, thus the statement of account must properly be certified in terms of S. 2(8) of Bankers' Books Evidence Act, 1891---Entries in a statement of account might lose the presumption of truth if all or any of the entries were denied specifically by pinpointing the same.

Muhammad Siddiqui Muhammad and another v. Austrilasia Book Limited PLD 1966 SC 684 rel.

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

----Ss. 9 & 10----Recovery of loan amount, suit for---Leave to defend---Requirements---Both the Financial Institution and customer under Ss. 9(3) & 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001 respectively had identical statutory obligations to plead and state clearly the finances availed by a defendant, repayments made by him, the dates thereof and the amounts of finance repayable by such defendant---Defendant, besides, has also been saddled with further responsibility to also specify the amounts disputed by him and facts in support thereof---Defending customer had been made responsible to also put forward a definite case in terms of Ss. 10(3), (4) & (5) of Financial Institutions (Recovery of Finances) Ordinance 2001.

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

----S. 9----Recovery of bank loan, suit for---Scope---Trial of lis in suit has been restricted to the quantum of amounts claimed and disputed---Such suit in actual facts is a suit on accounts based on credit, debit and balance entries maintained and ledgered in the Books of Accounts.

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

----Ss. 10(8) & 9----Recovery of bank loan, suit for---Leave to defend, grant of---Basis---In terms of S. 10(8) of Financial Institutions (Recovery of Finances) Ordinance 2001, leave to defend the suit to defendant would be granted on consideration of the contents of plaint, leave to defend application and replication, if Banking Court is of the view that substantial questions of law or fact have been raised and in respect thereof evidence needs to be recorded.

(g) Words and phrases---

----'Statement of Account'----Definition.

Encyclopedia of Banking of Finance by Gelmn G. Maunn F.L Garcia and Charles J. ref.

Aijaz Hussain Shirazi and Hashmatullah Aleem for Plaintiff.

Salman J. Mirza and Omer Memon for Defendants.

Date of hearing: 6th October, 2015

2016 C L D 1938

[Sindh]

Before Muhammad Shafi Siddiqui, J

NATIONAL BANK OF PAKISTAN---Plaintiff

Versus

RAJA TRADERS through Sole Proprietor and 8 others---Defendants

Suits Nos. B-63 of 2007 and 1588 of 2006, decided on 16th July, 2015.

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

----Ss. 9 & 10--- Banking Companies Ordinance (LVII of 1962), S. 33-B---State Bank of Pakistan BPD Circular 29, dated 15.10.2002---Contract Act (IX of 1872) Ss. 13, 14 & 16---Civil Procedure Code (V of 1908), Orders XIV & XV---Constitution of Pakistan, Arts. 10-A & 25---Suit for recovery of loan amount---Leave to defend, refusal of---Concessions claimed under State Bank of Pakistan BPD Circular No.29, dated 15-10-2002---Permissibility---Right to fair trial and equality of citizens---Scope---Settlement of issues or determination of suit on issues of law or issues agreed upon---Disposal of suit at first hearing---Plaintiff-Bank filed present suit for recovery of loan amount; whereas, defendant filed connected suit seeking concessions regarding their outstanding liabilities requiring plaintiff-Bank to sign agreement in terms of decision made by Committee of State Bank of Pakistan under BPD Circular No. 29---Validity---Plaintiff-Bank could be coerced to sign any unilateral agreement, terms of which had never been agreed by Bank, as hit by provisions of Ss. 13, 14 & 16 of Contract Act, 1872---No cause of action against law---Plaintiff in connected suit was not only required to show that not only his rights had been infringed but also that right to seek a relief was in existence---BPD Circular No.29 did not provide right to defendants, unless they met precondition as set out in the said Circular, such as where chances of recovery of loan were 'negligible' or unit was considered as sick---Enforcement of BPD Circular No.29 by individual Banks to their respective customers was prerogative of the Banks---Banks were to decide whether debt outstanding against customer was lost debt or recoverable in terms of assets mortgaged with them---Plaintiff-Bank, who was sole decision maker as to recovery of outstanding liability, had never undertook to resolve dispute according to terms of alleged settlement of liabilities under BPD Circular No.29---In the present case, probability of recovery was not negligible, as properties were mortgaged and guarantees were enforceable---Banking Court was required to find out as to whether any question of law and fact was raised which was to be determined and whether allegations made in the plaint would give rise to cause of action or not---Filing of suit by defendant, who otherwise had no cause of action against financial institution, could not be considered to be a guarantee for grant of leave to defend the suit filed by financial institution---Orders XIV & XV, C.P.C., which dealt with issues, also supported that if parties were not at issue, judgment was to be passed straightaway without recording evidence---If no cause of action was made out, plaint was liable to be rejected---No ground, therefore, existed to consider the leave applications which were dismissed and plaint of suit filed by them was rejected---Suit for recovery of loan amount was decreed in circumstances.

1998 CLC 816 and PLD 1995 Lah. 395 ref.

Suo Motu Case No.26 of 2007; Azam Wazir Khan v. IDBP 2013 SCMR 678 and Suit bearing No. B-29 of 2005 rel.

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

----Ss. 9 & 10--- Banking Companies Ordinance (LVII of 1962), S. 33-B---State Bank of Pakistan BPD Circular No.29, dated 15.10.2002---Suit for recovery of loan amount---Leave to defend---BPD Circular No.29, applicability of---BPD Circular No.29 provided that it was issued to Banks concerned in relation to 'non-performing loans'---State Bank of Pakistan, by way of said Circular, had developed new set of guidelines in consultation with Banks and Federation of Pakistan Chamber of Commerce and Industries---Said guidelines did not, in any way, affect legal rights of financial institutions to recover their written off loans if they still wished to pursue them legally---Prima facie, purpose of the guidelines was to provide balance sheet to Banks in order to strengthen their financial matters, which prerogative, under clause 3 of BPD Circular No. 29, had been exclusively given to Banks and financial institutions---Circular was not, in any way, issued to be enforced upon banks to act upon it in any manner whatsoever and under any circumstance---Guidelines had categorized 'non-performing loans' into three categories---Circular had not provided guidelines that Banks and financial institutions, who were in process of setting off all such accounts which might come into such categories, might act accordingly---Guidelines did not demonstrate that those financial institutions were under any compulsion nor they could be---Under the Circular, it was for financial institutions to decide as to how and in what way such accounts were to be dealt with---Once bank had agreed to setting off accounts, then terms and guidelines as provided under BPD Circular No.29, could be made applicable as mandatory which however, did not mean that Banks were under obligation to write-off or set-off individual accounts despite prerogative of Bank which empowered them to undergo legal process for recovery of such loans.

Suo Motu Case No.26 of 2007; Azam Wazir Khan v. IDBP 2013 SCMR 678 and Suit bearing No. B-29 of 2005 rel.

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

----S. 33-B---State Bank of Pakistan BPD Circular No.29, dated 15.10.2002--- Constitution of Pakistan, Art. 25---Fidelity and secrecy---Right as to equality of citizens---Discriminatory treatment---Section 33-B of Banking Companies Ordinance, 1962, under which BPD Circular No.29 had been issued, did not confer authority upon State Bank of Pakistan to allow facility of loan to any borrowers contrary to S. 33-B of Banking Companies Ordinance, 1962---Section 33-B spoke of settling accounts on two important conditions, that were, for want of inadequate security or for rehabilitation of sick unit---Element of discrimination in terms of Art. 25 of Constitution was also identifiable in the Circular.

Suo Motu Case No.26 of 2007; Azam Wazir Khan v. IDBP 2013 SCMR 678 and Suit bearing No. B-29 of 2005 rel.

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

----Ss. 9 & 10----Contract Act (IX of 1872), Ss. 133 & 135---Suit for recovery of loan amount---Leave to defend---Discharge of surety by variance in terms of contract---Discharge of surety when creditor compounds with, gives time to, or agree not to, sue principal---Novation of contract---Determination---Defendant-proprietary concern availed numerous finance facilities from plaintiff Bank---Defendants later formed private limited company for purpose of taking over entire business of defendant-proprietary concern-Finance facilities and outstanding liabilities of defendant-proprietary concern were transferred to defendant-company after rescheduling, enhancement and renewal of same---Contention raised by defendants was that as plaintiff-Bank and defendant-company had entered into finance agreements agreeing to own liabilities of defendant-proprietary concern without knowledge of other defendants, said other defendants had been discharged from liabilities due to novation of contract under Ss. 133 & 135 of Contract Act, 1872---Validity---Last rescheduling had been executed by defendant-proprietary concern---Defendant-company, after said transfer of outstanding liabilities, had entered into finance agreement, thereby agreeing the purchase price to be payable to Bank within seven years---Said rescheduling had been done on condition that defendant-proprietary concern would sell its immovable property and all pledged stock and proceeds thereof were to be adjusted against demand finance---Original security documents were still available with plaintiff-Bank---If it were intention of parties that any charge or guarantee was to get extinguished upon execution of finance or security documents with defendant-company, then all previous security documents would have been returned to guarantors---Guarantors would have demanded return of same if parties had agreed that liability of defendant-proprietary concern would come to an end upon execution of finance or security documents with defendant-company---Personal guarantees had provided that any change in constitution of customer-defendant-proprietary concern would not affect their liability towards plaintiff-Bank---Said guarantees had further provided that unless written notice was given by guarantor to Bank, guarantee would not be discharged, and that even if such notice was given, guarantor would, nevertheless, continue to remain liable---No such notice was available on record---Defendants had also executed identical personal guarantee, which provided that if defendant-company failed to meet its obligation towards plaintiff-Bank, then parties would be jointly and severally liable to meet those obligations---All mortgagors, guarantors and Directors were signatories to the agreement---Since agreements had been executed regarding rescheduled accounts, thus there was no question of such agreement being without consideration or disbursement---On breach of finance agreement, plaintiff-Bank had become entitled to recall or recover entire amount which had been granted to defendant-proprietary concern and which had fallen due.

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

----S. 9----Suit for recovery of loan amount---Claim as to mark up and other charges---Determination---Plaintiff-Bank claimed mark up on fresh disbursement till to date, which was not justified in absence of any agreement---Bank was unable to provide any agreement in order to claim mark up for any period up to filing of suit---Plaintiff-Bank did not produce any document to substantiate claim of Moqadam charges and security guard charges, hence such amounts as claimed were also not justified.

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

----Ss. 9 & 10---Constitution of Pakistan, Art. 10-A---Suit for recovery of loan amount---Leave to defend---Right to fair trial---Contention raised by defendants was that as right to fair trial had been guaranteed as fundamental right under Art. 10-A of the Constitution, thus S. 10 of Financial Institutions (Recovery of Finances) Ordinance 2001 was contrary to that fundamental right, and that hurdle to defend suit by recording evidence was to be treated ultra vies---Validity---Article 10-A of the Constitution provided opportunity of fair trial, but same did not amount to trial of suit where neither any question of law nor fact had been established---Article 10-A of the Constitution also provided for determination of civil rights and obligations---Once due process as required in terms of Financial Institutions (Recovery of Finances) Ordinance, 2001 was adopted, defendant was before court for redressal of his grievance---All the defendant had to do was to establish question of fact and law for determination of civil right and obligation by court---Application for leave to defend was supposed to be in form of written statement, which would be containing summary of substantial question of law and fact in respect of which, in opinion of defendant, evidence needed to be recorded---Under parameters of Financial Institutions (Recovery of Finances) Ordinance, 2001, defendant was entitled for relief if question of law and fact had been established---Questions as raised by defendants had been answered categorically and due process of law had been followed.

Jehnzaib Awan for Plaintiff.

Syed Shabbir Shah for Plaintiff (in Suit No. 1588 of 2006).

Saalim Salam Ansari for Defendants Nos. 2, 5, 7 and 8.

Rizwan Ahmed Siddiqui for Defendant No.9.

Date of hearing: 8th April, 2013.

2016 C L D 1962

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J

DOLLAR INDUSTRIES PAKISTAN through Authorised Attorney and another---Appellants

Versus

Messrs BROTHERS INDUSTRIES through Partner and another---Respondents

H.C.A. No.212 of 2015, decided on 12th April, 2016.

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

----S. 3(2)----Registrable designs---'Ordinary observer'/'point of novelty'---Tests---Historical background.

Sears, Roebuck & Co. v. Talge, 140 F.2d 395 (8th Cir. 1944); Litton Systems, Inc. v. Whirlpool Corp., 728 F.2d 1423 (Fed. Cir. 1984) and Egyptian Goddess v. Swisa (543 F3d 665 (Fed. Cir. 2008)) rel.

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

----S. 3(2)--- Registrable designs--- Visual aspect of designs---Relevance---Visual aspects are of seminal importance, which means that when someone looks at one design and then looks at the second design, and if he gets confused and it becomes hard for him to make a distinction between the two designs, then S. 3(2) of Registered Designs Ordinance, 2000 kicks in---For S. 3(2) of Registered Designs Ordinance, 2000 to be applicable, the complete and overall impression that stays in the intending purchaser's mind when he looks at the two designs is critical.

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

----S. 3(2)--- Registrable designs--- 'Ordinary observer'/'point of novelty'---Tests---Applicability and scope---Court, while deciding the cases about the design similarities routinely applies two tests: firstly, original 'ordinary observer' test and subsequently developed 'point of novelty' test'---In the ordinary observer test, court considers rival designs from the eyes of an ordinary observer, giving such attention as a purchaser usually gives and then determines whether or not through those eyes the two designs are substantially the same.

Gorham Co. v. White, 81 U.S. 511, 528 (1871) rel.

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

----S. 3(2)---Patents and Designs Rules, 1933, R. 35(2)---Registrable designs---Determination---Classification of goods---In case two designs are identical, the law will prohibit the one that is copied or produced later; however, if the same are plainly dissimilar, they can co-exist freely and happily, because designs are personal choices---Diversity is the natural beauty of life and freedom to choose from a range of 'plainly dissimilar' designs is the driving force of today's economy---Designs are considered distinct if they have different appearances, even though they are related articles; for example, two vases having different surface ornamentation creating distinct appearances are required to be claimed in separate applications, because design protects only the appearance of an article of manufacture, and it is possible that minimal differences between similar designs can render each of them resgistrable--- Even change of material to two identical design makes a difference, that's why there is provided a classification of goods under Patents and Designs Rules, 1933, and R. 35 (2) thereof requires an applicant to state the class in which the design is to be registered and the article or articles to which the design is to be applied.

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

----S. 3(2)--- Registrable designs---'Ordinary observer'/'point of novelty'---Tests---Applicability and scope---'Plainly dissimilar/similar', doctrine of---Applicability---Plaintiff filed suit for infringement of the registered design of its pen by the defendant, whereas the defendant filed application before the Registrar of Designs for cancellation of the design of the plaintiff's pen, on the ground that the plaintiff's design was not original in terms of S. 3(2) of Registered Designs Ordinance, 2000, as the same was a copy of a prior published German design of a pen called 'Hauser 737 Mayer Rollerball'---Suit was subsequently transferred to the High Court for decision---Single Judge of the High Court, accepting the claim of the defendant, cancelled the registered design of the plaintiff on the basis of "Hauser Catalog" of the foreign pen and a certificate, holding that identical design of said foreign brand having been active in the international market since 1995, the plaintiff's design could not have been registered in Pakistan in 2005---Validity---Hauser 95 Catalog did not suggest that the same was for the year 1995, as the title page only said 95---Defendant had to prove that the said publication was of the year 1995 (or any date prior to the date of filing of the design by the plaintiff) to defeat the newness claim made by the plaintiff under S. 3 (2) of Registered Designs Ordinance, 2000, which onus of proof, unless discharged, could have been assumed by the Court---Certificate purported to have been issued by "Innowell GmbH" looked fake, and no German company would issue such an untidy document---No citation of the term 'Hauser 737 Mayor Rollerball' was available on the internet, which meant that the term was unknown to the virtual world and one could very safely assume in today's world the such a brand had never existed---Comparing the design of prior art pen appearing in the Catalog 95 alongside the design of the plaintiff's pen, there were apparent dissimilarities in the first look---Looking at the overall visual impressions of both the pens, one would note that the prior art was a roller ball/ball point, and the plaintiff's pen was soft-liner with a fixed line thickness of 0.3mm, which were intended to be used by a different class of purchasers looking for pens for different purposes, which discrepancy set apart the class of divergent users of each pen---Prior art being a roller pen used heavy pressure of hand and thus could create carbon copies; however, the soft-liner could not produce any carbon copies---Court also looked at the specific features of both the pens, such as differences between the nib, the cap, the colours, hardness of the material of the main body and the overall finish of the rival pens---Applying the 'ordinary observer' test through the eyes of an observer familiar with pens, High Court concluded that, based on the differences, the plaintiff's design and the prior art were plainly dissimilar---Differences, existing between the two pens, were enough to render the rival designs plainly dissimilar, and there was no possibility that an ordinary observer would be deceived by similarities of the two designs if the pens were available side-by-side---Alleged "Hauser 737 Mayor Rollerball" pen was sufficiently distinct and plainly dissimilar with the plaintiff's pen on account of the existing differences which were clearly noticeable under the ordinary observer test---Registration acquired in respect of the plaintiff's design under Registered Designs Ordinance, 2000 was therefore not hit by 3 (2) of the Ordinance on account of the prior art's plain dissimilarity---Impugned order for the cancellation of the registered design of the plaintiff was therefore set aside---High Court appeal was allowed.

Gorham Co. v. White, 81 U.S. 511, 528 (1871); Wing Shing Prods (BVI) Co. v. Sunbeam Prods 665 F. Supp. 2d 357 (2009; Minka Lighting Inc., v. Maxim Lighting International, Inc. No. 3:06-CV-995-K, 2009 WL 691594 (N.d. Tex. Mar. 16, 2009) and Ethicon Endo-Surgery, Inc. v. Covidien, Inc. (Fed. Cir. Aug. 7, 2015) rel.

Barrister Khalid Jawed Khan and Ms. Sana Akram Minhas for Appellants.

Monawwer Ghani and Abdul Hameed Iqbal for Respondents.

2016 C L D 1983

[Sindh]

Before Muhammad Faisal Kamal Alam, J

PREMIER INSURANCE COMPANY OF PAKISTAN and another---Plaintiffs

Versus

KARACHI SHIPYARD AND ENGINEERING WORKS LTD. and another---Defendants

Suit No. 13 of 1972, decided on 2nd May, 2016.

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

----Ss. 130-A & 135-A---Transfer of actionable right---Letter of subrogation---Insurance company after being subrogated can sue tortfeasor in its own name.

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

----Ss. 151 & 161---Transfer of Property Act (IV of 1882), Ss. 130-A & 135-A---Qanun-e-Shahadat (10 of 1984), Arts. 114 & 120---Damages---Recovery---Bailee, negligence of---Onus to prove---Vessel in question was duly insured with plaintiff companies who had letter of subrogation in their favour---Plaintiffs filed suit for recovery of damages against defendant companies for causing loss to vessel in question during repairs when it was dry docked with defendants---Validity---Vessel in question was delivered / entrusted to one defendant by its owners and when fire incident occurred on the vessel, it was in the possession of that defendant---Rule applicable in case of bailor and bailee was attracted here, as the defendant acted as bailee and the vessel was dry docked for repairs at its premises---Such defendant had an additional obligation to exercise due care and diligence while undertaking task of repairing the subject vessel---Once contract of bailment was proved and there was entrustment of goods with bailee, then loss of subject matter of bailment was a prima facie evidence of negligence of bailee---Onus was on the defendant to prove that the latter took all appropriate measures while carrying out repair work and employed reasonable standard of care---Defendant could not discharge its burden of proof about not being negligent in performance of its contractual obligation towards shipping company, which was subsequently subrogated plaintiffs---Suit was for recovery of Rs.2.8 million approximately from defendants out of which Rs.2.6 million was paid by plaintiffs to shipping company towards settlement of its insurance claim, while Rs.75000/- was incurred towards cost of survey to assess damages as a pre-requisite for settling any insurance claim---Claim of plaintiffs was neither exaggerated nor was vitiated by lack of uberrima fides (utmost good faith), which was one of the basic principles of insurance contract---Suit was decreed accordingly.

East and West Steamship Company v. Queensland Insurance Company PLD 1963 SC 663; Pakistan through Secretary Communication, Islamabad v. Habib Insurance Company Limited, Karachi 1991 CLC 1270; 2001 SCMR 1700; 1988 CLC 1381; AIR 1962 Madras 244 (V 49 C 57); Halsbury's Law of England Vol. 2, 3rd Edition, Page 117; National Logistic Cell v. Irfan Khan and others 2015 SCMR 1406; Clements v. Clements [2012] 2 R.C.S. and Winfield and Jolowicz on Tort, Sixteenth Edition, 2002 ref.

Mansoor-ul-Arfin for Plaintiffs.

Ikram Ahmed Ansari and Ayaz Ansari for Defendant No.1.

H.A. Rehmani along with Yawar Farooqui and Ms. Naheed Akhtar for Defendant No.2.

2016 C L D 2055

[Sindh (Hyderabad Bench)]

Before Nadeem Akhtar and Khadim Hussain M. Shaikh, JJ

SHAHID ANSARI and another---Appellants

Versus

SONERI BANK LIMITED---Respondent

Ist Appeal No. 22 of 2015, decided on 15th June, 2016.

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

----Ss. 9, 10 & 22---Negotiable Instruments Act (XXVI of 1881), Ss. 20 & 118---Appeal---Leave to defend the suit---Blank documents---Presumption---Non-recording of evidence---Suit for recovery of finance was decreed in favour of Bank---Plea raised by defendants was that they signed blank documents and suit was decided without recording of evidence---Validity---Defendents in their application for leave to defend the suit, did not deny their signatures on financing and security documents and execution thereof---No material was placed on record to establish that they had already repaid amount of finances availed by them and got mortgage of property redeemed or that they were not liable to pay the amount claimed in the suit by bank---No material was available before Banking Court that could create any doubt with regard to the claim of Bank and as such there was no question of recording evidence---Defendants legitimately could not challenge legality, validity and genuineness of documents in view of the provisions of S.20 of Negotiable Instruments Act, 1888---Presumptions were attached to negotiable instruments that the same were made or drawn for consideration etc. in view of the provisions of S.118 of Negotiable Instruments Act, 1881---Defendants failed in raising any substantial question of law or fact, therefore, Banking Court was justified in dismissing their application for leave to defend and suit was rightly decreed in favour of Bank---High Court declined to interfere in judgment and decree passed by Banking Court---Appeal was dismissed in circumstances.

MCB Bank Limited v. Eastern Capital Ltd. and 7 others 2011 CLD 84; Habib Metropolitan Bank Limited through Attorney v. Century 21 Textile and Sportswear (Pvt.) Limited and 3 others 2014 CLD 729 and Elbow Room and another v. MCB Bank Limited 2014 CLD 985 distinguished.

Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. 2012 CLD 337; Muhammad Akhtar Hookmani and others v. Faysal Bank Limited 2015 CLD 227; Muhammad Arshad and another v. Citibank N.A., Lahore 2006 SCMR 1347; Messrs Pacific Plastic Cottage Industry through Proprietor and 2 others v. Askari Bank Ltd. and another 2015 CLD 1964; Equity Participation Fund v. Messrs Abbrasive Products Co. Limited and 4 others 2012 CLD 971; Citi Bank N.A. through Branch Manager v. Ameer Alam 2015 CLD 429; IGI Investment Bank Limited through Attorney v. Messrs Admore Gas (Pvt.) Ltd. and another 2014 CLD 1354; Habib Metropolitian Bank Ltd. v. Mian Abdul Jabbar Gihillin and another 2013 CLD 88; NIB Bank Ltd. v. Highnoon Textile Ltd. and 3 others 2014 CLD 763; Messrs Habib Bank Limited through Senior Manager v. Messrs R.G. Match Industries (Pvt.) Ltd. through Chief Executive and 3 others 2014 CLD 1015; Habib Bank Limited v. Service Fabrics Ltd. and others 2004 CLD 1117; Habib Bank Ltd. v. Taj Textile Mills Ltd. through Chief Executive and 5 others 2009 CLD 1143; Siddique Woolen Mills and others v. Allied Bank of Pakistan 2003 CLD 1033; Messrs Aima Industries (Pvt.) Ltd. and others v. Allied Bank of Pakistan Ltd. 2003 CLD 1770 Travel Kings (Pvt.) Limited through Chief Executive and 4 others v. Union Bank Limited and 2 others 2004 CLD 460; Tariq Javed and another v. National Bank of Pakistan 2004 CLD 838 and National Bank of Pakistan through Zonal Chief and others v. Messrs Power Textile Industries Ltd. through Chief Executive and others 2004 CLD 1239 ref.

Muhammad Yousuf Leghari for Appellants.

Faiz Durani for Respondent.

2016 C L D 2093

[Sindh (Hyderabad Bench)]

Before Nadeem Akhtar and Khadim Hussain M. Shaikh, JJ

MUHAMMAD IMRAN and another---Appellants

Versus

NATIONAL BANK OF PAKISTAN and another---Respondents

Ist Appeal No. 57 of 2011, decided on 15th June, 2016.

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

----Ss. 9, 10, 18 & 22---Negotiable Instruments Act (XXVI of 1881), S.20---Recovery of finance---Blank documents---Application for leave to defend filed by defendants was dismissed and suit was decreed against defendants by Banking Court---Plea raised by defendants was that Bank sought signatures on blank documents---Validity---Even if the defendants put their signatures on blank documents, even then defendants could not legitimately challenge legality and validity of those documents in view of the provisions of S. 20 of Negotiable Instruments Act, 1881, more so when defendants admitted availing of finance facilities, disbursement thereof to them and non-adjustment thereof by them---Defendants failed in raising any substantial question of law or fact, therefore, Banking Court was fully justified in dismissing application for leave to defend and decreeing the suit against them---High Court declined to interfere in judgment and decree passed by Banking Court--- Appeal was dismissed in circumstances.

Muhammad Yousuf Leghari for Appellants.

Zaheeruddin S. Leghari for Respondents.

2016 C L D 2106

[Sindh]

Before Muhammad Faisal Kamal Alam, J

TRADING CORPORATION OF PAKISTAN----Plaintiff

Versus

MUHAMMAD ALAM----Defendant

Suit No.750 of 1989, decided on 1st April, 2016.

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

----O. XXIX, R. 1 & O. VII, R. 2----Suit for accounts and recovery by company--- Authority to file Court proceedings--- Scope--- Any shortcoming in compliance of O.XXIX, R.1, C.P.C. was curable, and if a formal Board Resolution was not there, then, the Articles of Association and/or even internal record (un-rebutted one) like Noting Sheet, could be taken into account to determine about the authority of a person instituting a legal proceeding---If the suit had been unauthorizedly and incompetently filed, that was, where authorization from the Board of Directors did not exist, nor the Articles of Association provided such authority, then such a defect remained incurable, even by subsequent ratification of the Board---Articles of Association of the plaintiff-Company provided that a valid and effectual resolution was to be signed or initialed by at least two Directors, and the minimum quorum for the meeting of the Board of Directors was two; therefore, even if no formal meeting of the Directors had been called for passing the requisite resolution, the approval of three Directors, including the Chairman, could have been treated as 'resolution by circulation' under the Articles of Association, granting authorization for filing the recovery suit---Two Directors of the Plaintiff-Company, besides other senior officer, had recorded their separate approval to file the proceedings after detailed discussion---Veracity and authenticity of the Note Sheets/Noting Portion was not disputed---Present suit, therefore, had been filed by the competent person, who was the then Director and Principal Officer of the Plaintiff-Company, and no violation of O. XXIX, R. 1, C.P.C. had taken place.

Trading Corporation of Pakistan v. Merchant Agency 2007 CLC 1811 rel.

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

----Ss. 151 & 161---Civil Procedure Code (V of 1908), O. VII, R. 2---Suit for accounts and recovery---Bailee of goods---Liabilities/ obligations---Loss of subject matter of bailment considered as proof of negligence of bailee---Plaintiff sought recovery of certain amount of money or rendition of accounts regarding stock of rice etc., entrusted to the defendant, who was the handling agent of the plaintiff under an agreement---Defendant could not shake the testimony of plaintiff witness about non-production of Reserve Stock Accounts (RSA) with regard to Rice Stock as well as gunny bags---Affidavit-in-evidence was the material part of the plaintiff's testimony, whereunder a detailed breakup of the plaintiff's claim was mentioned with regard to the Rice Stock as well as bags, but the plaintiff witness had not been cross-examined on that factual aspect---Defendant, in his cross-examination, had acknowledged the non-submission of the reserve stock account to the plaintiff with regard to rice stock---Defendant had also admitted that submission of periodical accounts of the stock was his responsibility---Defendant had admitted that the guard and ward of the godown was done by his employees, without any interference by the security staff of the plaintiff---Defendant had failed to give any specific figures with regard to the disposal of rice stock by the plaintiff---Defendant, as proved from the evidence available on the record, had neglected to submit periodical accounts of the outstanding rice, and he had not produced any evidence in the form of reserve stock account to discredit the claim of the plaintiff---Onus to proof of submission of periodical reserve stock account to the plaintiff was on the defendant---Defendant had neither pleaded nor stated in the evidence about any default on part of the plaintiff in making timely payments to the defendant for their services as rice handling contractor; therefore, if the plaintiff had fulfilled its part of the contractual obligation, then the defendant was also saddled with the liability to discharge its statutory obligation being bailee of the goods and a contractual obligation as contractor---Under S.151 of Contract Act, 1872, defendant, as the bailee, had to exercise due care and diligence in respect of goods bailed to him, and under S. 161 of the Act, the bailee was responsible if the bailed goods were not returned, delivered or tendered on the proper time and if that default resulted in any loss, then, the bailee was also liable for the same---Status of the defendant in the present case was that of bailee for reward (as distinguished from a gratuituous bailee)---Once a contract of bailment was proved and there was entrustment of the goods with the bailee, then the loss of the subject matter of the bailment was a prima facie evidence of the negligence of the bailee---Defendant had taken the plea that non-submission of the accounts was due to the fact that he was in jail in a criminal case however, the defendant had showed his ignorance about the date of his release from the Jail during his cross-examination---Defendant, therefore, had violated the terms of the contract---High Court decreed the suit with 10% markup per annum--- Suit was decreed in circumstances.

Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1966 SC 684; PLD 1959 SC 550; Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550; Abdul Hameed Khan v. Mrs. Saeeda Khalid Kamal Khan PLD 2004 Kar. 17 and Abdul Rahim and others v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar. 62 ref.

Messrs Mastersons v. Messrs Ebrahim Enterprises and another 1988 CLC 1381 and Sri Narasimhaswami, Namagiri Amman and Sri Temples v. Muthukrishna Iyengar AIR 1962 Madras 244 (V 49 C 57) rel.

S. Ashfaq Hussain Rizvi for Plaintiff.

Sajid Latif for Defendant.

2016 C L D 2125

[Sindh]

Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ

A. HABIB AHMED and another----Appellants

Versus

MEEZAN BANK LIMITED (Former Hongkong and Shanghai Banking Corporation)----Respondent

First Appeal No.51 of 1999, decided on 27th January, 2016.

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

----Ss. 9 & 21---Contract Act (IX of 1872), S. 176---Companies Ordinance (XLVII of 1984), Ss.2(32) & 62---Suit for recovery of bank loan---Pawnee's right---Offer of shares/debentures for sale---Banking Court decreed suit in favour of Bank---Plea raised by borrower was that Bank had not issued notice under S.176 of Contract Act, 1872 and could not sell shares without approval of Securities and Exchange Commission of Pakistan---Validity---If notice by pawnee to pawnor had stated that in case of default of payment of debt within time stipulated, pledged shares would be sold out by pawnee, it was sufficient compliance of requirement of S.176 of Contract Act, 1872---Plaintiff Bank duly made compliance of S.176 of Contract Act, 1872 before exercising its right to sell pledged shares of borrower---Plaintiff was a scheduled Bank in terms of S.2(32) of Companies Ordinance, 1984 and it had obtained shares from borrower as security to finance facility availed by him, in normal course of its banking business---Requirement of seeking approval from Securities and Exchange Commission of Pakistan was not applicable to plaintiff-Bank in view of S. 62(5) of Companies Ordinance, 1984---High Court did not find any infirmity in judgment and decree passed by Banking Court in favour of plaintiff Bank---Appeal was dismissed in circumstances.

Appellants in person.

Ghulam Mustafa for Respondent.

2016 C L D 2144

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, JJ

HAMDARD LABORATORIES (WAQF) PAKISTAN through Director---Appellant

Versus

MUHAMMAD FAHIM---Respondent

H.C.A. No. 269 of 2014, decided on 3rd May, 2016.

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

----S. 40---Trade Marks Act (V of 1940), S. 21---Infringement of registered trademark---Determination---Standard tests of---'Moron in a Hurry'; 'Lapp' tests and 'Classic Trinity' tests, applicability of---Scope---'Get up' of goods/trademark---Scope---Simple 'identical' or 'nearly resembling' requirement from the Trade Marks Act, 1940 calculated to result in 'deception' or 'confusion' had been extensively broadened in Trade Marks Ordinance, 2001 to encompass a number of possibilities non-existent under Trade Marks Act, 1940---Courts, applying the 'Moron in a Hurry' test, would look at the possibility of confusion between two trademarks, from the eyes of a less-than-prudent consumer, and if even such a consumer was cheated by the similarities between the two rival products, the test would pass and the defendant's goods would be held to be infringing---Given the shape and size of both the bottles in question and their respective caps as used by the parties being the same, the colour of syrup therein, the wrappers embodying trademarks and other features placed through a wrist-band in the center portion of the bottle, a 'moron in a hurry' would not be able to distinguish the minute and microscopic difference between the colour of the band and placement of fruits on the wrapper, and being identical looking bottles with similar coloured contents, he was going to pick the confusingly similar bottle of the defendant instead of that of the plaintiff---Said test was, therefore, passed in favour of the plaintiff---Court, while applying the 'Lapp' test, which was a multi-factored test used to establish the existence of likelihood of confusion, considered a number of factors which included similarity of the marks, strength of plaintiff's mark; sophistication of consumers when making a purchase; intent of the defendant in adopting the mark; evidence of actual confusion (or lack thereof); similarity of marketing and advertising channels; extent to which the targets of the parties' sales efforts were the same; product similarity; identity/function/use; and, other factors suggesting that consumers might expect the prior owner to manufacture both products, or expect the prior owner to manufacture a product in defendants market, or expect the prior owner was like to expand into defendant's market---Court, while applying the 'Lapp' test to present case, found all said factors positive---Courts, while applying the 'Classic Trinity' test considered three aspects of the rival parties: goodwill of the trademark of the plaintiff in respect of identical or similar goods; misrepresentation made by the defendant; and, actual damage caused (or to be caused) to the plaintiff from the acts of the defendant---'Classical trinity test', in broader way, considered the same factors which the 'Lapp' test did---Moral of all said three tests was the same: no one was allowed to put off his goods as the goods of a rival trader by using names, marks or other indicia by which he might induce purchasers to believe that the goods which he was selling were the manufacture of another person---Another important aspect, which the courts needed to look at while considering rival trademarks for the possibility of passing test of infringement or passing off, was to consider 'get-up' of the rival goods---'Get-up'/features of appearance included the size, shape and colour schemes of a product as well as distinctive packaging or the arrangement of labels or the fascia, layout and fitting of a shop---'Get-up' was often relied upon by a claimant in addition to the name or the trademark alone---Comparing the rival products in question, clear resemblances were apparent, which included identical caps, ribs at the bottom of the bottle, word 'ROOH' as predominant feature of the defendant's label, devices of fruits and the placement of wrapper at the same place as that on the plaintiff's product---Overall impression left in the mind of an unwary purchaser was nearly the same---High Court observed that a person (urban shopper) saw or heard about more than 1500 trade marks in a day; thus not each and every microscopic element of each brand resided in a person's mind---Very little sketch of a brand's 'get-up' would reside in the mind of a purchaser; therefore, the courts needed to protect that hazy picture developed in the mind of a purchaser by the owner of the original trade mark---Use of the intended trademark, trade dress and 'get-up' by the defendant infringed the common-law right of the plaintiff as well as his statutory rights provided pursuant to its registration and continuous use of its 'RoohAfza' trademark and trade-dress---High Court restrained the defendants and all person claiming under him from infringing the plaintiff's registered trademark in any manner---Appeal was allowed in circumstances.

2012 CLD 226; 2003 CLD 794; 2000 MLD 2057; PLD 2000 Kar. 192; 1987 MLD 2569; PLD 1970 Kar. 537; 1869 PLD Kar. 376; PLD 1958 Kar. 481; Singer Manufacturing Co. v. Loog 18 CD 396; Perry v. Truefitt 6 Beav. 66; Morning Star Cooperative Society v. Express Newspapers Limited 1979 FSR 113; A Practical Guide to Trade Mark Law by Amanda Michaels (Oxford University Press) and Law for Business by M. M. Sulphey and Az-Har Basheer - PHI Learning 2013 rel.

(b) Words and Phrases---

----'Get-up'---Definition.

A Practical Guide to Trade Marks Law by Amanda Michaels (Oxford University Press) rel.

Sultan Ahmed for Appellant.

Shamshad Ali Qureshi for Respondent.

2016 C L D 2160

[Sindh (Hyderabad Bench)]

Before Nadeem Akhtar and Khadim Hussain M. Shaikh, JJ

NIB BANK LTD.---Appellant

Versus

MUHAMMAD ZIA ALI QURESHI---Respondent

Ist Appeal No. 73 of 2011, decided on 13th June, 2016.

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

----S. 22---Limitation Act (IX of 1908), Ss. 5 & 29---Appeal---Delay in filing---Limitation---Application under S. 5, Limitation Act, 1908 for condonation of delay in filing appeal against judgment and decree---Maintainability---Defendant took the plea that he could not file appeal within the prescribed period of limitation, as he was in his village to attend funeral prayer of his deceased uncle---Validity---Defendant had applied for the certified copies after eight days of passing of the impugned judgment and decree---Excluding the period of two days spent in obtaining the certified copies, the defendant still had twenty days for filing the appeal, but the same had been filed after thirty-five days even after receiving the certified copies---Plea taken by the defendant for the delay, being irrelevant and misconceived, could not be a ground for condonation of delay, as the delay of each and every day with justification was to be explained---Section 29(2)(a) of Limitation Act, 1908 provided that for purpose of determining period of limitation prescribed for any suit, appeal or application under any special or local law, the provisions contained in Ss. 4, 9 to 18 and 22 of the Act would apply only in so far as, and to the extent to which, the same were not expressly excluded by such special or local law, and S. 29(2)(b) of the Act provided that the remaining provisions of the Act would not apply---Provisions of S. 5 of Limitation Act, 1908 were not applicable to appeals filed under S. 22 of Financial Institutions (Recovery of Finances) Ordinance, 2001, as the Ordinance, which was a special law, itself had provided the period of thirty days for filing the appeal to the High Court---Application under 5 of Limitation Act, 1908 was, therefore, not maintainable---Appeal was dismissed in circumstances.

Messrs S. Malik Traders and another v. Saudi Pak Leasing Company Ltd. 2009 CLD 171; Allah Dino and another v. Muhammad Shah and others 2001 SCMR 286 and Messrs Khan Tractors, Alipur Road, Khan Garh District Muzaffargarh through Proprietor and 2 others v. Habib Bank Limited, Railway Road Branch, Muzaffargarh through Manager 2013 CLD 177 rel.

Muhammad Yousaf Leghari for Appellant.

2016 C L D 2178

[Sindh]

Before Aqeel Ahmad Abbasi and Zulfiqar Ahmad Khan, JJ

HILAL CONFECTIONERY (PRIVATE) LIMITED through Authorized Representative---Petitioner

Versus

REGISTRAR OF TRADE MARKS and 3 others---Respondents

C.Ps. Nos. D-1906, 1907 and 1908 of 2012, decided on 15th April, 2016.

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

----Ss. 28 & 123---Trade Marks Rules, 2004, Rr. 4 & 80---Publication, opposition proceedings and observations---Extension of time---Fees, payment of---Requirement as to payment of fee---Section 128 of Trade Marks Ordinance, 2001 read with R. 4 of Trade Marks Rules, 2004 made that mandatory to file the application on Form TM-5 in the prescribed manner along with the prescribed fee---Rule 4(1) read with R. 4(5) of Trade Marks Rules, 2004, specifically provided that the fee must have been paid in respect of an application, registration or other matter---Initial two months' period to file opposition (without seeking any extension) had lapsed after the trade mark was advertised---No document had been attached to substantiate that the petitioner had timely sought two extensions to make him eligible to file the opposition up to the maximum extended time limits of four months---Petitioner had filed the appropriate opposition on Form TM-5 on a day before the expiry of the extended period of total four months; however, said application was not accompanied the prescribed fee; the petitioner rectified said error fourteen days after the four months' time limit by paying the prescribed fee--- Notice of opposition on Form TM-5 would be construed as having been filed on the date on which the prescribed fee had been paid and not on the date when the opposition had been filed without prescribed fee---Opposition filed by the petitioner was, therefore, beyond the prescribed time limit of total four months, and the Registrar had rightly rejected the same on ground of limitation---Constitutional petition was dismissed in circumstances.

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

----Ss. 123 & 28--- Publication, opposition proceedings and observations---Extension of time---Parameters---Powers of Registrar of Trade Marks regarding extension of time---Registrar, while acting under S. 123(1) of Trade Marks Ordinance, 2001, can only extend the time for doing any act for which the time limit is not so expressly provided in the Ordinance---Section 28 of Trade Marks Ordinance, 2001 specifically provides that an opposition can be filed within an initial period of two months or after a further extended period of additional two months in aggregate--- Registrar, therefore, is handicapped under S. 123(1) of Trade Marks Ordinance, 2001 from exercising any power to extend the time limit for filing an opposition beyond the time limit of four months.

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

----S. 123---Extension of time---Procedure, validity and object of---Rigidity embodied in S. 123(1) of Trade Marks Ordinance, 2001 regarding adherence to the time frame carries over to S. 123(2) of the Ordinance, which, on the face of it, though appears to be against the principles of natural justice, where the Registrar is not required to hear parties before deciding the matter against them (bounded by the force that said order of Registrar is not even appealable) is very fundamental and principled reasoning---Any extension of the time limit would be at the cost and disadvantage to those persons whose rights accrue from the date of expiry of the said statutory deadline and enabling the Registrar to be in discretionary position to extend such time limit would inversely affect the long awaited rights of a set of persons.

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

----S. 123(1)--- Extension of time---Powers of Registrar of Trade Marks---Limitation---Registrar, while acting under S. 123 (1) of Trade Marks Ordinance, 2001, has no power to extend the time limit to any further period from the total aggregate period of four months from the date of advertisement/re-advertisement of the trade mark in the Trade Mark Journal.

Mirza Mehmood Baig for Petitioner.

Sultan Ahmed Sheikh for Respondents.

Asim Mansoor Khan, D.A.-G. for the Federation of Pakistan.

2016 C L D 2190

[Sindh]

Before Aziz-ur-Rehman, J

NATIONAL BANK OF PAKISTAN---Plaintiff

Versus

RAJBY INTERNATIONAL (PVT.) LIMITED through Liquidator and 3 others---Defendants

Suit No.B-94 of 2013, decided on 20th April, 2016.

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

----Ss. 9 & 19---Civil Procedure Code (V of 1908), O. I, R. 10---Suit for recovery of finance---Necessary/proper party---Determination---Applicant was not "customer" and sought her to be impleaded as party in suit---Validity---Applicant had no concern with the suit filed by Bank against defendants as she was not a customer of plaintiff Bank---Applicant was neither necessary nor proper party to be impleaded in the suit---Objections of applicant, if any could appropriately be seen and considered under S. 19 of Financial Institutions (Recovery of finances) Ordinance, 2001, at execution stage---Application for impleadment was dismissed in circumstances.

Abid Naeem and Behzad Haider for Plaintiff.

Naveed Ahmed Khan for Defendants.

2016 C L D 2229

[Sindh]

Before Zulfiqar Ahmad Khan, J

GETZ PHARMA (PVT.) LIMITED through Authorized Signatory---Plaintiff

Versus

SERVIER LABORATORIES (FRANCE) and another---Defendants

Suit No.786 of 2014, decided on 15th August, 2016.

Patents Ordinance (LXI of 2000)---

----S. 46---Suit for infringement of patent---Maintainability---Formula of a medicine---Subsequent use of patent formula---Plaintiff sought indulgence of Court against defendant regarding a formula of medicine, patent of which was already registered in the name of defendant company---Validity---Plaintiff attempted to eclipse long established rights of patent-holder who neither challenged nor attacked plaintiff (on the date of filing of suit)---Action of plaintiff failed for want of requisites of S. 46 of Patents Ordinance, 2000, as well as making the suit opportunistic, groundless and unwarranted---Alternate remedies were available to plaintiff to file opposition and/or revocation proceedings before Patent Officer at the appropriate times---High Court could not declare already granted patent from a Court as invalid, as an alternate and specialist forum (of the Patent Office) was timely available---Such was a question of forum non-conveniens and was highly technical in nature and the same was left to technical experts at Patent Office to be handled at its best---High Court directed to transfer revocation proceedings to Patent Office as the same were filed pursuant to the suit---Suit was dismissed with cost in circumstances.

The Prague Yearbook of Comparative Law 2009 Mach, T. et al. (Eds), Prague, 2010, pp.55-94 and Mufti Muhammad Taqi Usmani (Al-Rasheed, Published by Jamiatul Ulama - Transvaal) rel.

Mirza Mehmood Baig for Plaintiff.

Ms. Amna Salman for Defendants.

2016 C L D 2240

[Sindh]

Before Nadeem Akhtar and Sadiq Hussain Bhatti, JJ

KARACHI PIPE MILLS LTD. and 4 others---Appellants

Versus

HABIB BANK LIMITED---Respondent

High Court Appeals Nos. 151 and 175 of 2006, decided on 3rd June, 2016.

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

----Ss. 9 & 19---Civil Procedure Code (V of 1908), S. 73, O. XXI, R. 85 & O. XLI, R. 33---Suit for recovery of loan amount---Execution of decree--- Scope--- Ratable distribution---Parameters/conditions---Appellate powers of High Court---Scope---Auction of assets---Impugned decree provided payment of the markup on the decretal amount to the plaintiff-Bank at a specified rate from the date of institution of the suit till realization, which was permissible under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 prevailing at the relevant time---Supreme Court had dismissed the appeals filed by the defendant against the judgment and decree and against the confirmation of the sale of its assets in favour of the auction purchaser; thus, the decree in favour of the plaintiff-Bank and the sale of the assets in the execution proceedings had attained finality---Defendant therefore, was not justified, both in the execution proceedings or before Appellate Court to challenge the grant of mark-up to the plaintiff-Bank from date of filing of the suit till realization or to raise objection regarding the alleged irregularities at the time of auction of its assets---Executing Court was duty bound to execute the decree in letter and spirit and it could not go behind the decree---In terms of S. 73, C.P.C., in order to qualify for ratable distribution of the sale proceeds in execution proceedings amongst decree holders and to succeed in application filed in that behalf, the decree holder must establish that the assets were held by the Court, all the decrees were money decrees, the decrees were against the same judgment debtor, the application for ratable distribution was made to Court holding the assets, and such application was made prior to receipt of the assets by the Court---Assets were deemed to be received by the Court when the entire purchase money was actually deposited in the Court, in case of auction of immovable property, the date of the receipt of the assets was the day on which the entire money was paid under O. XXI, R. 85, C.P.C.---Intervener Bank had filed the application for ratable distribution after the receipt of the assets by the Court, which would disentitle the said Bank to claim ratable distribution---Executing Court had allowed the application of the intervener Bank on the ground that after satisfaction of the plaintiff-Bank's decree, excess amount was available---No reason had been given in the impugned order for deviating from the provisions of S. 73, C.P.C. and for granting the relief to the intervener Bank to which it was not entitled---Impugned order, to the extent of grant of ratable distribution, was therefore, against the express provision of S. 73, C.P.C.---Ratable distribution, ought not have been allowed in favour of the intervener Bank---Executing Court had specifically directed the Official Assignee to examine the plaintiff Bank's objection as to calculation of markup, in compliance of which the Official Assignee had submitted the Reference disclosing the amount of the decree, rate and amounts of markup payable to the plaintiff Bank from date of institution of the suit till certain date and the amount already paid to plaintiff Bank and that after calculating the markup payable to the plaintiff Bank and amounts received by said Bank, the balance amount of certain sum was still payable to the plaintiff---Impugned order was, however, silent about the said reference and the amount stated therein as payable to the plaintiff---Calculation regarding markup sought by the Executing Court on the specific objection raised by plaintiff Bank had not been considered at the time of passing of the impugned order, and no reason had been stated therein for not considering or accepting such calculation---Executing Court was under its statutory duty to execute the decree by ensuring that plaintiff Bank received markup as per the decree from the date of institution of the suit till realization---Executing Court, therefore, had gone behind the decree by modifying the same by holding that plaintiff was not entitled to markup till realization of the decree---Under O. XLI, R. 33, C.P.C., the High Court could exercise the appellate powers in favour of all or any of the parties although such parties might not have filed any appeal or objection---High Court, under O. XXI, R. 33, C.P.C. had the power to make such further or other order as the circumstances of the case might require, and that power could have been exercised in favour of plaintiff Bank even though the said Bank had not filed an appeal or cross-objections and further to provide the remedy against the party that was really liable---High Court, setting aside the impugned order, observed that intervener Bank might seek execution and satisfaction of its decree by filing execution proceedings against the judgment debtors---High Court, revived the execution application, and observed that the plaintiff-Bank would be paid markup from the date of institution of the suit till realization strictly in terms of the decree, all amount received by intervener Bank on account of ratable distribution would be returned/deposited with the Official Assignee, and after payment of all the amounts to plaintiff Bank as per the decree, the remaining/excess amount would be released in favour of the defendant---Appeal was disposed of accordingly.

Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt. and others v. Government of Pakistan 2002 SCMR 496; Messrs S.M. Yusuf and Bros. v. Mirza Muhammad Mehdi Pooya and another PLD 1965 SC 15; Province of Punjab through Collector Bahawalpur and others v. Col. Abdul Majeed and others 1997 SCMR 1692; Ghulam Hussain and another v. Faiz Muhammad and 7 others PLD 1991 SC 218; Central Government of Pakistan and others v. Suleman Khan and others PLD 1992 SC 590; WAPDA and another v. Messrs Khanzada Muhammad Abdul Haque Khan Khattak and Company PLD 1990 SC 359; Province of West Pakistan through the Secretary, Revenue Department, Lahore and 2 others v. Associated Hotels of India Ltd. 1973 SCMR 367; Court of Wards, Hyderabad v. Mir Allahbachayo Khan and another PLD 1964 (W.P.) Kar. 569; Government of Sindh and others v. Mst. Sirtaj Bibi and another PLD 2001 Kar. 442; Hamijan Bibi v. Sheikh Darog Ali and others PLD 1964 Dacca 119; West Pakistan and another v. Sir Nawab Mohammad Farid Khan PLD 1960 (W.P.) Pesh. 111 and Fateh Khan and others v. Rab Nawaz Khan and others 1990 CLC 257 ref.

Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt. and others v. Government of Pakistan 2002 SCMR 496; Messrs S.M. Yusuf & Bros. v. Mirza Muhammad Mehdi Pooya and another PLD 1965 SC 15; Province of Punjab through Collector Bahawalpur and others v. Col. Abdul Majeed and others 1997 SCMR 1692; Central Government of Pakistan and others v. Suleman Khan and others PLD 1992 SC 590; WAPDA and another v. Messrs Khanzada Muhammad Abdul Haque Khan Khattak and Company PLD 1990 SC 359 and Province of West Pakistan through the Secretary, Revenue Department, Lahore and 2 others v. Associated Hotels of India Ltd. 1973 SCMR 367 rel.

Syed Zaki Muhammad and Syed Wajahat Abbas for Appellants (in H.C.A. No. 151 of 2006).

Syed Zaki Muhammad and Syed Wajahat Abbas for Respondent No.1 (H.C.A. No. 175 of 2006).

Nabeel Kolachi for Appellant (United Bank Limited) (in H.C.A. No. 175 of 2006)

Hamza I. Ali for Respondents (Habib Bank Limited) (in H.C.A. No. 151 of 2006).

Hamza I. Ali for Respondent No.2 (in H.C.A. No. 175 of 2006).

2016 C L D 2260

[Sindh]

Before Sajjad Ali Shah, C.J. and Zulfiqar Ahmad Khan, J

JAVED AKHTAR CHAUHAN---Appellant

Versus

JKS (PRIVATE) LIMITED and others---Respondents

H.C.A. No. 357 of 2015, decided on 8th June, 2016.

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

----Ss. 14(3)(4), 83 & 84---Foreign trade mark---Infringement and passing off---Plaintiff got trade mark "Power Sonic" registered in its name whereas the same was already registered in USA and plaintiff was in business relations with it---Single Judge of High Court declined to grant interim relief to plaintiff---Validity---Such was a dishonest adoption of a foreign trade mark by its local importer---Before the plaintiff made application for registration of a deceptively similar trade mark before Pakistan Trade Marks Registry on 22-3-2012, they were already in business relations with US entity which appointed them as their agent effectively from 1-10-2003---Such relation was not denied and there were documents that showed that goods bearing "Power Sonic" trade mark were imported by plaintiff long before he filed application for registration of trade mark in question in their own name in Pakistan--- Goodwill had been established by the US entity in respect of goods for which plaintiff had registered a deceptively similar trade mark---Plaintiff made a misrepresentation by portraying himself as the owner of "Power Sonic" trade mark and actual loss would be caused, if plaintiff was allowed to use deceptively similar trade mark---Plaintiff who had dishonestly adopted US entity's trade mark should not be given any benefit thereof---Single Judge of High Court had rightly refused plaintiff's application seeking injunction and rightly declared registration of trade mark in question as unlawful and liable to be cancelled---Intra court appeal was dismissed accordingly.

Sultan Ahmed Sheikh for Appellant.

M. Sarfaraz Sulehry for Respondents Nos.2 and 3.

2016 C L D 2271

[Sindh]

Before Nadeem Akhtar, J

SCHEME OF ARRANGEMENT BETWEEN JAFFER BROTHERS (PVT.) LIMITED AND JAFFER BUSINESS SYSTEMS (PVT.) LIMITED: In the matter of

J.M. No. 8 of 2015, decided on 23rd December, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 284, 286 & 287--- Scheme of arrangement--- Scope--- In compliance of S. 284(2) of Companies Ordinance, 1984, both the petitioners (companies) disclosed to Court all material facts relating to them including their latest financial position and the latest audited accounts---Scheme of Arrangement was unanimously approved by members of both the petitioners in their respective meetings held with permission of High Court---All legal and formal requirements for sanction of Scheme of Arrangement were duly complied with by petitioners---Object of Scheme of Arrangement was lawful and it was not against public interest/policy or in violation of any law---No investigation or like proceedings were pending in relation to any of the petitioners under S. 263 of Companies Ordinance, 1984, or under any other provision of Companies Ordinance 1984, or any other law for the time being in force---High Court sanctioned Scheme of Arrangement as prepared by both the petitioners---Petition was allowed in circumstances.

Jahanzeb Awan for Petitioners Nos.1 and 2.

Munawwar Ahmed for Securities and Exchange Commission of Pakistan.

2017 C L D 2283

[Sindh]

Before Khadim Hussain M. Shaikh, J

HASSAN ALI & CO. COTTON (PVT.) LTD.----Plaintiff

Versus

TRADING CORPORATION OF PAKISTAN (PVT.) LTD. and another----Defendants

Suit No.837 of 1989, decided on 8th August, 2016.

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

----Art. 129(g)--- Civil Procedure Code (V of 1908), O.XXIX, R.1---Suit for declaration and injunction by company---Valid institution of suit---Absence of authority to file suit---Presumption---Plaintiff company filed suit against defendants, through the person who did not have any authority to file the same---Validity---Where there was any defect in institution of suit, such as it had been instituted un-authorizedly and incompetently, such defect was incurable---Competency and authority to institute legal proceedings were to be determined strictly in accordance with Articles of plaintiff company, as for a suit to be validly instituted, it must have been instituted by a person authorized in such behalf, through a resolution passed in meeting of Board of Directors of the company and/or in accordance with Memorandum of Articles of Association thereof---In order to determine as to whether a suit was instituted by a person competent to do so, reference was to be made to Articles of Association and/or resolution of Board of Directors of the company, on whose behalf the suit had been instituted---Burden to establish that the suit was filed on behalf of plaintiff company by an authorized and competent person was upon plaintiff company---In the present case, more than eleven years had elapsed but no document/authority was produced by plaintiff to establish that the person who filed the suit was Chairman of plaintiff company and he was an authorized person to institute the suit on behalf of plaintiff company, nor Memorandum and Articles of plaintiff company had been produced so as to adduce that suit was instituted on behalf of plaintiff company by a duly authorized and competent person---Presumption about non-existence of alleged authority claimed by person who filed the suit and appeared as plaintiff's witness could legitimately be drawn against the plaintiff company in view of Art.129(g) of Qanun-e-Shahadat, 1984---Suit was dismissed in circumstances.

Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1996 SC 684; Khan Iftikhar Hussain Khan Mamdot v. Messrs Ghulam Nabi Corporation Ltd., Lahore PLD 1971 SC 550 and Abdul Rahim and 2 others v. Messrs United Bank Ltd. of Pakistan PLD 1997 Kar. 62 rel.

S. Irtaza Hussain Zaidi for Plaintiff.

Syed Ashfaq Hussain Rizvi for Defendants.

2016 C L D 2306

[Sindh]

Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ

HABIB BANK LIMITED----Appellant

Versus

LIQUIDATOR NATIONAL CONSTRUCTION COMPANY (PAKISTAN) LTD.----Respondent

First Appeal No.89 of 2002, decided on 19th September, 2016.

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

----Ss. 9 & 22---Contract Act (IX of 1872), S. 171---Suit for recovery of money---Lien without contract---Scope---Suit was filed by borrower assailing lien marked by Bank over amount lying in the account---Banking Court decreed the suit in favour of borrower and against the Bank---Validity---Lien was a right in one man to retain that which was in his possession but belonged to another person, till certain demands of the person in possession were satisfied---Under the provisions of S.171 of Contract Act, 1872, a Banker, amongst others named therein, in absence of a contract to the contrary, had a right to retain as security for a general balance of account goods bailed to him---Bank retained subject margin amount under lien to secure partially outstanding liability till such time either the original guarantees were returned or a no claim/discharge certificate in lieu thereof was provided to Bank for reversal of liability outstanding thereagainst---Banking Court while passing judgment and decree failed to recognize self-same right of Bank under S.171 of Contract Act, 1872, and committed an error of law---High Court set aside judgment and decree passed by Banking Court and dismissed the suit filed by borrower---Appeal was allowed in circumstances.

Shiam Lal J. Dewan v. Official Liquidators of the U.P. Oil Mills Co. Ltd. AIR 1933 Allahabad 789; R.G.N. Price, Official Liquidator, Andhra Paper Mills Company, Limited (in liquidation), v. The Sate of Madras AIR (39) 1952 Madras 58; Discount Bank of India Ltd., Delhi v. Triloki Nath and others AIR 1953 Punjab 145; Ch. Habibullah v. Sheikhupura Central Co-operative Bank Limited PLD 1987 SC 53; Messrs Continental Syndicate of Trade v. Lloyds Bank Ltd. PLD 1966 (W.P.) Kar. 556; Firm Jai Kishan Dass Jinda Ram and others v. Central Bank of India Ltd. AIR 1955 Punjab 250; Muhammad Saleemullah Khan v. National Construction Company (Pak.) Ltd. through Managing Director and another PLD 1999 Lah. 456 and Farooq v. Messrs Eastern Banking Corporation Ltd., Karachi and another PLD 1980 Kar. 115 ref.

Suleman Hudda for Appellant.

Ghulam Murtaza for Respondent.

2016 C L D 2316

[Sindh]

Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ

Messrs APOLLO TEXTILE MILLS LTD. through Chief Executive and 2 others---Appellants

Versus

STANDARD CHARTERED LEASING LTD. through Principal Secretary---Respondent

First Appeal No. 93 of 2010, decided on 9th February, 2015.

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

----Ss. 3, 9 & 22---Suit for recovery of finance---Costs of funds---Defendant assailed judgment and decree passed by Banking Court in favour of financial institution on the ground that "lease rentals" included mark-up, therefore, financial institution was not entitled to cost of funds which Banking Court had allowed from the date of filing of the suit---Validity---Cost of funds was applicable to an instalment from the day it was found overdue---For every instalment cost of funds was to be calculated separately and was to be made applicable from the day it was overdue---High Court declined to interfere in the judgment and decree as the Banking Court had already taken a lenient view by granting cost of funds from the date of filing of the suit---Appeal was dismissed in circumstances.

Mukhtar Ahmed Kuber for Appellant No.1.

2016 C L D 2323

[Sindh]

Before Sajjad Ali Shah and Muhammad Junaid Ghaffar, JJ

AZIZ-UL-HASSAN---Petitioner

Versus

Messrs DUBAI ISLAMIC BANK LTD. and 2 others---Respondents

Constitutional Petition No.D-2130 of 2014, decided on 4th August, 2015.

Civil Procedure Code (V of 1908)---

----O. XXI, Rr. 89, 69 & 90---Constitution of Pakistan, Art. 199---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 19---Constitutional petition---Execution of decrees---Sale of mortgaged property---Setting aside of confirmation of sale of mortgaged property by Executing Court---Scope---Petitioner/judgment-debtor impugned order of Executing Court, whereby sale of petitioner's mortgaged property was confirmed to respondent/auction-purchaser---Contention of petitioner, inter alia, was that after fresh proclamation of sale for the said property was issued by the Executing Court, no advertisement was issued and the same was done without calling for fresh bids in consequence to a new forced sale value---Validity---Specific mechanism was provided for in the C.P.C. for challenging the sale of mortgaged property within a specified time and on specific terms and failure to do so, conferred rights on the auction-purchaser---Record in the present case reflected that the sale was confirmed on 31.03.2014 and the petitioner without resorting to provisions of O.XXI, R. 69 of the C.P.C. or any other provision before the Banking Court, filed (present) constitutional petition and no material irregularity in publishing or conducting of the sale of mortgaged property was pointed out and there existed no indication that the petitioner sustained any injury or loss---Impugned order of Executing Court could not be interfered with--- Constitutional petition was dismissed, in circumstances.

Umar Farooq Khan for Petitioner.

Suleman Huda for Respondent No.1.

2016 C L D 1

[Lahore]

Before Ibad-ur-Rehman Lodhi and Mushtaq Ahmad Tarar, JJ

MERCK SHARP & DOHME CORPORATION through Authorized Signatory---Appellant

Versus

FEROZSONS LABORATORIES LIMITED through Chief Executive/Director/Secretary/Manager/Principal Officer---Respondent

Regular First Appeal No.70 of 2015, heard on 25th August, 2015.

(a) Patents Ordinance (LXI of 2000)---

----Ss. 60 & 61---Civil Procedure Code (V of 1908), S. 96 & O. VII, R. 11---Suit for infringement of patent---Rejection of plaint, remedy against---Appeal from original decree---Maintainability---Plaint of suit filed under S. 60 of Patents Ordinance, 2000 was rejected---Contention of plaintiff was that since no other remedy was available against order passed by Trial Court in suit, so remedy of appeal under general law was available---Validity--­-Under S. 96, C.P.C., appeal was available against decree passed by courts subordinate to such appellate court performing its function under C.P.C.---Under Ss. 60 & 61 of Patents Ordinance, 2000, Trial Court was competent to pass any order, but no decree was required to be passed by Trial Court while trying a suit under special law---Under Patents Ordinance, 2000, no procedure had been made applicable including the C.P.C. to regulate proceedings of trial---Remedy of appeal was provided in Chapter XVIII of Patents Ordinance, 2000, but same was restricted to appeals from decision, order or direction of Controller or Federal Government made under any provision of the Patents Ordinance, 2000---No appeal was provided under said Chapter from any order passed by District Judge in its capacity of Trial Court before any forum---Right of appeal was creation of statute---Person aggrieved of order passed by District Judge in suit under S. 60 of Patents Ordinance, 2000 was not competent to avail remedy of appeal under S. 96, C.P.C.---Appeal was dismissed in circumstances.

Pakistan through Military Estate Officer, Kharian Cantt., and another v. Abdul Hayee Khan through Legal Heirs and 5 others PLD 1995 SC 418; ICI Pakistan Limited v. Salahuddin and others 1991 SCMR 50; Chairman, Central Board of Revenue, Islamabad and 3 others v. Messrs Pak-Saudi Fertilizer Ltd. and another 2001 SCMR 777 and Government of Pakistan through Secretary Ministry of Interior, Islamabad v. Dr. Abdul Qadeer Khan 2010 MLD 533 rel.

(b) Patents Ordinance (LXI of 2000)---

----S. 69--- Appeal, scope of--- Remedy of appeal is provided in Chapter XVIII of Patents Ordinance, 2000, but same is restricted to appeals from decision, order or direction of Controller or Federal Government made under any provision of the Patents Ordinance, 2000.

(c) Patents Ordinance (LXI of 2000)---

----S. 60---Trade Marks Ordinance (XIX of 2001), S. 114(3)---Suit for infringement of patent---Civil Procedure Code, applicability of---Under S. 114(3) of Trade Marks Ordinance, 2001, provisions of C.P.C. are made applicable to appeal before High Court or District Court under the Ordinance---Unlike Trade Marks Ordinance, 20001, no provision was made in Patents Ordinance, 2000, whereby provision of any law including C.P.C. had been made applicable for purpose of regulating proceedings of suit or appeal under Patents Ordinance, 2000.

(d) Administration of justice---

----Courts are not empowered to legislate, and their function is to interpret legislation---Right which has not been provided in statute by legislature cannot be incorporated by courts by adopting role of legislature.

Mueen Qamar for Appellant.

Barrister Haroon Duggal and Malik Omar Saleem for Respondent.

Date of hearing: 25th August, 2015.

2016 C L D 29

[Lahore]

Before Shams Mehmood Mirza, J

The BANK OF PUNJAB through Branch/Chief Manager---Plaintiff

Versus

Messrs KHAN UNIQUE DEVELOPERS PVT. LTD. through Chief Executive Officer and 9 others---Defendants

C.O.S. No. 41 of 2010, decided on 27th October, 2014.

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

----Ss. 9 & 10---Suit for recovery of finances---Leave to appear and defend the suit---Manager of Bank---Locus standi to file suit---Account statement, non-filing of---Defendant company filed application for grant of leave to appear and defend the suit and objected the maintainability of the suit on the plea that no resolution of the bank was filed with the plaint---Validity---Defendant which was a limited liability Company, it was all the more necessary for it to place with its petition for leave to appear and defend the suit, the current account statement or its accounts/audited accounts in order to meet requirements of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 particularly where it had denied availing the finance facility or disbursement of amounts thereunder---Plaintiff stated that plaint was filed through a person who was Branch Manager/Chief Manager which averment was not at all denied by defendants---Requirements of S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 were thus met with by plaintiff Bank and parties were not at issue on such fact---Defendants failed to raise any substantial question of fact requiring evidence, therefore, High Court declined to grant leave to appear and defend the suit---Suit was decreed in circumstances.

Apollo Textile Mills Limited v. Soneri Bank Limited 2012 CLD 337; Pakistan Kuwait Investment Company (Pvt.) Limited v. Messrs Active Apparels International and others 2012 CLD 1036 and United Bank Limited v. Messrs Ilyas Enterprises and others 2004 CLD 1338 ref.

Baba Fareed Ghee Industries (Pvt.) Limited and others v. National Bank of Pakistan 2002 CLD 669 rel.

Messrs Muzamil Brothers and another v. Saudi Pak Commercial Bank Limited 2006 CLD 1546 distinguished.

(b) Bankers' Books Evidence Act (XVIII of 1891)---

----S. 2(8)---Computer generated statement of accounts---Scope---No need to put a certificate on the foot of computer generated accounts/ledgers of Bank, as prescribed by S. 2(8) of Bankers' Books Evidence Act, 1891.

Habib Metropolitan Bank Limited v. Mian Abdul Jabbar Gihllin 2013 CLD 88 rel.

Hafeez Saeed Akhtar for Plaintiff.

Shahid Ikram Siddiqui for Defendants.

Date of hearing: 2nd October, 2014.

2016 C L D 62

[Lahore]

Before Amin-ud-Din Khan and M. Sohail Iqbal Bhatti, JJ

Messrs VISIONTEX, PARTNERSHIP FIRM through Partner and 4 others---Petitioners

Versus

HABIB BANK LIMITED through Branch Manager---Respondent

W. P. No. 25298 of 2012, heard on 16th March, 2015.

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

----Ss. 9 & 10(8)(9)--- Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Suit for recovery of loan amount---Leave to defend, application for---Condition, imposition of---Scope---Expression "substantial question of law or fact" mentioned in S. 10(8) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Connotation---Discretion, exercise of---Trial Court granted leave to defend the suit subject to deposit of cash amount in the court within specified period---Validity---Expression "substantial question of law or fact" did not mean the denial of availing of finance or non-execution of the documents---Defendant should come up with a positive defence of a particular fact which must be supported by certain documentary evidence---Defendant had to raise a serious question to be important, grave and same should entail consequences giving cause of concern and must be worthy of consideration---Imposition of condition was dependent upon the grant of leave to defend the suit---Financial Institutions (Recovery of Finances) Ordinance, 2001 had barred the remedy of appeal, review or revision against such an order---Where statute had excluded a right of appeal from the interim order then same could not be bypassed by bringing it under attack in constitutional jurisdiction---Banking Court, in the present case, had imposed a condition in exercise of its discretionary powers---If court, tribunal or authority had exercised discretion in accordance with law and same was not tainted with malice then constitutional jurisdiction of High Court could not be exercised---Trial Court was empowered to grant leave to defend the suit keeping in view the circumstances of the case---Banking Court could grant leave to defend the suit unconditionally or by imposing condition as to deposit of cash or furnishing of surety---No jurisdictional defect had been pointed out in the impugned order passed by the Banking Court---Constitutional petition was dismissed in circumstances.

Messrs Habib Bank Limited through Authorized Officers/ Attorneys v. Messrs Victor Electronics Appliances Industries (Pvt.) Ltd. and another 2011 CLD 1571 ref.

Messrs S.M. Ayub & Co. v. National Bank of Pakistan and others 1983 CLC 2828; Liaqat Ali Khan and others v. Falak Sher and others PLD 2014 SC 506; Abdul Karim Jaffarani v. United Bank Ltd. and 2 others 1984 SCMR 568 and Manzoor Textile Mills Ltd. v. Special Judge Banking, Lahore and others 1996 CLC 422 distinguished.

M.I. Sanitary Store through Proprietor and another v. Federation of Pakistan through Secretary Commerce and 2 others PLD 2014 Lah. 583; Syed Saghir Ahmad Naqvi v. Province of Sindh through Chief Secretary, S&GAD, Karachi and another 1996 SCMR 1165; Shaikh Gulzar Ali & Co. Ltd., and others v. Special Judge, Special Court of Banking and another 1991 SCMR 590; Muslim Commercial Bank Limited through Chief Manager and Principal Officer v. Judge Banking Court No.2, Faisalabad and 8 others 2002 CLD 991; Pakistan through Secretary Ministry of Food and Agriculture v. Special Court (Banking) Sindh and others 1991 SCMR 2355; Messrs Zulfiqar Associates Ltd. v. Allied Bank of Pakistan Ltd. and 3 others 1985 SCMR 1570; Messrs Bank Alfalah Limited v. The Presiding Officer and another 2014 CLD 160; Garments (Pvt.) Ltd. v. Al-Baraka Islamic Bank and others 2010 CLD 1563; Ahmed Construction Company through Attorney v. Habib Bank Ltd., Karachi and 2 others 2005 CLD 192; Fazal Muhammad Chaudhry v. Chaudhry Khadim and 3 others 1997 SCMR 1368 and Muhammad Riasat SET (Science) and others v. The Secretary of Education, NWFP, Peshawar and 2 others 1997 SCMR 1626 rel.

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

----Preamble---Object of Ordinance---Financial Institutions (Recovery of Finances) Ordinance, 2001 being remedial statute was promulgated to provide speedy measures for recovery of outstanding loans and finances of the banking companies.

(c) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Scope---If court, tribunal or authority had exercised discretion in accordance with law and same was not tainted with malice then constitutional jurisdiction of High Court could not be exercised.

(d) Constitution of Pakistan---

----Art. 189---Judgment of Supreme Court---Binding effect---Scope---Where there was conflict between two decisions of Supreme Court, decision of larger Bench would prevail.

(e) Words and phrases---

----"Substantial"---Meaning---Term "substantial" was meant of real worth and importance as opposed to imaginary or illusory.

(f) Words and phrases---

----Remedial statute---Meaning.

Muhammad Imran Malik for Petitioners.

Iftikhar Ahmad Mian for Respondent.

Date of hearing: 16th March, 2015.

2016 C L D 93

[Lahore]

Before Amin-ud-Din Khan and Muhammad Sajid Mehmood Sethi, JJ

STANDARD COTTON OIL MILLS and 3 others---Appellants

Versus

ALLIED BANK OF PAKISTAN and 2 others---Respondents

R.F.A. No. 96 of 2007, decided on 18th June, 2015.

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

----Ss. 9, 10 & 22---Negotiable Instruments Act (XXVI of 1881), Ss. 20 & 118---Suit for recovery of finance---Negotiable Instrument---Charging of markup, dispute as to---Absence of substantial question of fact warranting inquiry by court---Plaintiff Bank filed suit for recovery of finance against defendants who in return filed petition for grant of leave to appear and defend the suit---Defendants in their petition for leave to appear and defend did not challenge any entry in statement of accounts and disputed markup only---Validity---Contents for application of leave to appear and defend the suit were self-sufficient to establish that defendants admitted fact of availing finance facilities and execution of charge documents---Only dispute raised by defendants related to charging of markup after expiry period---Dispute of markup was not a dispute in respect of which leave to defend could be granted as the same could be easily worked out---Defendants failed to point out any excessive markup charged by Bank---Markup charged by the Bank was as agreed between the parties and no markup after expiry period while statement of accounts was duly verified under the law---Defendants were estopped to challenge validity of finance facilities and charge documents in terms of S. 20 read with S. 118 of Negotiable Instruments Act, 1881---Defendants failed to comply with mandatory provisions of law without furnishing sufficient cause for non-compliance of requirements of S. 10(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Banking Court rightly dismissed application of defendants for grant of leave to appear and defend the suit---Appeal was dismissed in circumstances.

Messrs Dhrala Oil Mills and others v. The Bank of Punjab through Branch Manager 2014 CLD 153; Messrs Muzamil Brothers and another v. Saudi Pak Commercial Bank Ltd. through Manager 2006 CLD 1546 and Soneri Bank Ltd. v. Classic Denim Mills (Pvt.) Ltd. and others 2011 CLD 408 distinguished.

Bank of Khyber v. Messrs Spencer Distribution Ltd. and others 2003 CLD 1406 and Allied Bank of Pakistan Ltd. v. Mohib Fabric Industries Ltd. through Chief Executive 2004 CLD 716 ref.

Muhammad Arshad and another v. Citibank N.A. through Attorney 2005 CLD 1237; Tariq Javed and another v. National Bank of Pakistan 2004 CLD 838; Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd., PLD 2012 SC 268 = 2012 CLD 337; Messrs Sadia Industries and others v. Soneri Bank Ltd. 2014 CLD 1458; Allied Bank of Pakistan Ltd. v. Mohib Fabric Industries Ltd. through Chief Executive 2004 CLD 716; Shahid Farooq Sheikh v. Allied Bank of Pakistan Limited 2005 CLD 1489; Silkbank Limited v. Messrs AZM Chemical Company through Proprietor and others 2014 CLD 1526; KASB Bank Limited v. Muhammad Ahmed Ansari 2014 CLD 1518; Habib Metropolitan Bank Limited v. Century 21 Textile and Sportswear (Pvt.) Limited and others 2014 CLD 729; Habib Metropolitan Bank Ltd. v. Mian Abdul Jabbar Gihllin and another PLD 2013 Sindh 104; Royal Bank of Scotland Ltd. v. Saeed Abbas 2011 CLD 976 and Faysal Bank Limited v. Genertech Pakistan Ltd. and others 2009 CLD 856 rel.

Muhammad Manzoor-ul-Haq for Appellants.

Muhammad Waseem Shahab for Respondents.

Date of hearing: 18th June, 2015.

2016 C L D 124

[Lahore]

Before Shahid Karim, J

MUSLIM COMMERCIAL BANK through Branch Manager/General Attorney---Plaintiff

Versus

FASHION PRIDE (PRIVATE) LTD. through Chief Executive and 5 others---Defendants

C.O.S. No. 62 of 2006, decided on 24th June, 2015.

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

----S. 65---Title of purchaser---Scope---Provisions of S. 65, C.P.C., merely confers a right on the purchaser of property in execution of decree whereby property is deemed to vest in purchaser from the time when property is sold and not from the time when the sale becomes absolute---Such right has an important caveat and it is triggered only when the sale has become absolute.

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

----O, XXI, Rr. 89, 90 & 91---Sale in execution---Objections---Scope---Any sale which has taken place and any immovable property which is sold in execution of decree is subject to rights which accrue under the provisions of O. XXI, Rr. 89, 90 & 91, C.P.C.---Such are immutable rights and until such rights are determined by Executing Court, sale does not become absolute.

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

----S. 19---Civil Procedure Code (V of 1908), S. 65, O, XXI, Rr. 89, 90 & 91---Recovery of finance---Execution of decree---Auction purchaser, right of--- Setting aside of decree---Effect---Applicant was auction purchaser of immovable property sold in execution of decree---Before the sale was confirmed in favour of applicant, decree was set aside by Supreme Court and matter was remanded to High Court for decision on application for leave to defend---Plea raised by applicant was that he was entitled to confirmation of sale and issuance of sale certificate in his favour---Validity---High Court observed that in order to retain faith in court sales, it was imperative that confirmation of sale should not be made contingent upon ultimate fate of decree and until then, sale be kept in nebulous state but path of court auctions be clearly mapped and spelt out---No bar was placed under Civil Procedure Code, 1908, on execution of decree till it was finally decided---Specific provisions existed, especially in many decrees, which eluded to the fact that appeal would not operate as stay of proceedings under decree appealed from (O.XLI, R. 5 C.P.C.)--- Likewise, no provision in C.P.C. empowered Executing Court to set aside sale of property validly sold if decree was reversed--- Matter of sale having passed through conductor of auction proceedings shaped into a right to vest in auction purchaser to have sale confirmed in terms of O. XXI, Rr. 89, 90 & 91, C.P.C.---Right comprised in O. XXI, R. 69, C.P.C., related to stage when immovable property was not sold in execution of decree and it had to be exercised before 'the lot was knocked down', such was the stage where sale could be stopped---Notwithstanding, setting aside of decree by Supreme Court, proceedings for confirmation of sale of immovable property in favour of applicant would continue subject to objection petitions filed in terms of O. XXI, Rr. 89, 90 & 91, C.P.C.---Application was allowed accordingly.

Hudaybia Textile Mills Ltd. and others v. Allied Bank of Pakistan Ltd. and others PLD 1987 SC 512; Mian Muhammad Abdul Khaliq v. M. Abdul Jabbar Khan and others PLD 1953 Lah. 147; Janak Raj v. Gurdial Singh and another AIR 1967 SC 608; Muhammad Attique v. Jami Limited and others PLD 2010 SC 993 and Afzal Maqsood Butt v. Banking Court No. 2, Lahore and 8 others PLD 2005 SC 470 ref.

Ali Sibtain Fazli for Plaintiff.

Asim Hafeez for Defendants.

Muhammad Akram Pasha for Plaintiff-Bank.

Barrister Mehmood A. Sheikh for Objector.

2016 C L D 171

[Lahore]

Before Shams Mehmood Mirza, J

The BANK OF PUNJAB---Plaintiff

Versus

Messrs MAGIC RIVER SERVICES and 4 others---Respondents

C.O.S. No. 6 of 2013, decided on 11th March, 2015.

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

----S. 9(1)---Suit by financial institution---Holder of power-of-attorney of financial institution---Status---Officer of financial institution who holds power-of-attorney need not to append anything else other than the power-of-attorney to demonstrate his authority to institute suit under S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

----S. 2(e)---"Obligation"---Restructured finance---Scope---Restructured finance comes within the definition of finance and customer at whose instance such a restructuring is granted is liable to pay mark-up thereon.

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

----S. 9---Suit for recovery of bank loan---Necessary party---Sister concern---Financial institution filed suit against borrower for its failure to repay demand finance facility and sister-concern of borrower was also impleaded as a defendant---Validity---Nothing was attributed to sister-concern in plaint and there was no document available at plaint to connect it with loan facility---Plaint simply stated that it was a sister-concern of borrower having same directors as borrower---Sister-concern did not come within the definition of 'customer' as defined in Financial Institutions (Recovery of Finances) Ordinance, 2001---Name of sister concern was ordered to be struck off from the array of defendants---Finance facilities and amounts thereof were admitted by defendants---Claim of Bank was substantiated by finance agreements and other documents available on record together with statements of accounts---Defendants failed to raise any dispute on facts requiring recording of evidence---Suit was decreed in circumstances.

Habib Bank Limited v. Service Fabrics Limited and others 2004 CLD 1117 ref.

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

----S. 9---Suit for recovery of finance---Necessary party---Person who was not "customer" of financial institution, could not be impleaded.

Sardar Qasim Farooq Ali for Plaintiff.

Rao Athar Akhlaq for the Defendants.

Date of hearing: 11th March, 2015.

2016 C L D 203

[Lahore]

Before Shahid Karim and Shams Mehmood Mirza, JJ

Messrs ARBAB COTTON INDUSTRIES AND OIL MILLS through Managing Partner---Appellant

Versus

ASKARI BANK LIMITED through Manager---Respondent

E.F.A. No. 42 of 2014, decided on 14th April, 2015.

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

----Ss. 19 & 22---Execution of decree---Sale/auction of mortgaged property---Reserve price---Enhancement of reserve price---Judgment-debtor impugned order of Banking Court whereby its application for enhancement of reserve price of mortgaged property was dismissed---Held, that objection filed by judgment-debtor seeking to enhance the reserve price of mortgaged property was rightly dismissed by Banking Court as the reserve price fixed by the Banking Court were tested in auction and the same could not fetch any buyer and therefore, there existed no force in the argument that the reserve prices were on the lower side---Appeal was dismissed, in circumstances.

Raja Muhammad Majid for Appellant.

Barrister Malik Kashif Rafique Rajwana and Malik Muhammad Tariq Rajwana for Respondent.

2016 C L D 215

[Lahore]

Before Shams Mehmood Mirza, J

The BANK OF PUNJAB through Branch/Chief Manager---Plaintiff

Versus

Messrs GLOBAL INFRASTRUCTURE (PVT.) LIMITED and 3 others---Defendants

Civil Original Suit No. 2 of 2010, decided on 10th March, 2015.

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

----S. 9---Civil Procedure Code (V of 1908), O. XVI, Rr. 1, provisos 2 & 8--- Suit for recovery of finance--- Summoning of witness---Principle---Defendants filed application to summon officials of plaintiff Bank as witnesses---Validity---Proviso to O. XVI, R. 1, C.P.C., (added through amendment by Lahore High Court) showed that party which had initiated its evidence would not be entitled to obtain process from court to enforce attendance of any witness against whom process was not previously been issued---Application for summoning of witnesses was moved after the defendants had examined four witnesses---By virtue of proviso to O. XVI, R. 1, C.P.C., defendants were precluded from summoning witnesses mentioned in the application---Defendants failed to furnish any justification for calling witnesses who were officials of plaintiff Bank and also failed to mention documents the proposed witnesses were required to produce---Application was dismissed in circumstances.

Mir Ghulam Haider Khan v. Abdul Qayyum 1985 CLC 2741 and Syed Shah Muhammad Hussaini and another v. Khutbuddin and another AIR 1997 Karnatka 223 rel.

Hafeez Saeed Akhtar for Plaintiff.

Rao Attar Akhlaq for Defendants.

2016 C L D 224

[Lahore]

Before Shams Mehmood Mirza, J

Ch. SAEED ULLAH and others---Petitioners

Versus

Messrs FAYSAL BANK LTD. and another---Respondents

W. P. No. 13263 of 2013, decided on 4th March, 2015.

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

----Ss. 10 & 22(6)---Constitution of Pakistan, Art. 199---Constitutional petition---Maintainability---Suit for recovery of loan amount---Leave to defend---Imposition of condition while granting leave to defend---Permissibility--- Appeal against order in leave application, maintainability of---Defendant filed application for leave to defend which was conditionally accepted by Trial Court subject to deposit of certain amount within one month---Validity---Banking Court, while granting leave to defend suit in terms of S. 10(8) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was empowered to impose conditions on defendants---Rigors of S. 22(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 were fully applicable and remedy of appeal was not available against such order---Party could not be allowed to challenge orders through constitutional petition which were otherwise non-appealable, as it would amount to negate provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001, which prohibited remedy of appeal against leave granting order---Banking Court, in its discretion, could also impose any condition while granting leave to defend the suit in terms of S. 10(9) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Constitutional petition was dismissed in circumstances.

Syed Sighir Ahmad Naqvi v. Province of Sindh through Chief Secretary and another 1996 SCMR 1165; Crescent Factories Vegetable Ghee Mills and 5 others v. National Bank of Pakistan PLD 1985 Lah. 150; Muslim Commercial Bank Limited v. Judge Banking Court II, Faisalabad and others 2002 CLD 991; Sheikh Gulzar Ali and Co. Limited and others v. Special Judge, Special Court of Banking and another 1991 SCMR 590; Mian Rafique Saigol and another v. Bank of Credit and Commerce International (Overseas) Limited and another PLD 1996 SC 749 and Messrs Shaheen Pumps (Pvt.) Limited v. Messrs Beacon Engineering Industry and another 2006 MLD 1709 rel.

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

----Preamble---Constitution of Pakistan, Art. 199---Constitutional petition--- Maintainability--- Principles--- High Court is slow in encouraging parties to circumvent provision of special statute in respect of orders which they seek to challenge by petition under Art. 199 of the Constitution--- If an error is capable of being corrected by superior court in exercise of its appellate jurisdiction, which is although available at conclusion of proceedings, it would be sound exercise of discretion if High Court refuses to exercise its jurisdiction under Art. 199 of the Constitution during pendency of proceedings---Where a Tribunal is created under law, and which is intra vires the Constitution, it has right to render decision rightly or wrongly---Mere erroneous exercise of jurisdiction by special court does not render its decision to be illegal and without lawful authority so as to be amenable to extraordinary Constitutional jurisdiction of High Court.

Syed Sighir Ahmad Naqvi v. Province of Sindh through Chief Secretary and another 1996 SCMR 1165; Crescent Factories Vegetable Ghee Mills and 5 others v. National Bank of Pakistan PLD 1985 Lah. 150; Muslim Commercial Bank Limited v. Judge Banking Court II, Faisalabad and others 2002 CLD 991 and Sheikh Gulzar Ali and Co. Limited and others v. Special Judge, Special Court of Banking and another 1991 SCMR 590 rel.

(c) Administration of justice---

----Rights and obligations, enforcement of---Principles as to applicable law and procedure---When a statute gives right and provides forum for adjudication of such rights, remedy had to be sought only under provision of that statute---For enforcement of rights or obligations under a statute, only remedy available to person aggrieved is to get adjudication of same under that statute.

Syed Sighir Ahmad Naqvi v. Province of Sindh through Chief Secretary and another 1996 SCMR 1165 and Crescent Factories Vegetable Ghee Mills and 5 others v. National Bank of Pakistan PLD 1985 Lah. 150 rel.

(d) Administration of justice---

----Adjudication and disposal of cases by Tribunals---Principles---Where Tribunal is created under law, which is intra vires the Constitution, the Tribunal has right to render decision rightly or wrongly.

Sheikh Gulzar Ali and Co. Limited and others v. Special Judge, Special Court of Banking and another 1991 SCMR 590 rel.

Barrister Hassan Nawab for Petitioners.

Mian Muhammad Azhar Saleem for Respondents.

2016 C L D 324

[Lahore]

Before Shams Mehmood Mirza, J

ALLIED BANK LIMITED through Maqood Ahmed---Plaintiff

Versus

Messrs NASAR RICE MILLS and 4 others---Defendants

C.O.S. No. 93 of 2012, heard on 15th June, 2015.

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

----S. 10---Leave to defend the suit, grant of---Pledge of goods---Scope--- Where financial institution treats pledge of goods as collateral security, leave to defend the suit cannot be granted on the basis of status, condition and availability or otherwise of the pledged goods---Objection of defendants regarding loss of pledged goods can be adjudicated at the time of execution of decree by Executing Court---Questions relating to accounting for and tracing of security of pledged stock can also be adjudicated by Executing Court.

Messrs Muhammad Siddique Muhammad Umar and others v. The Australasia Bank Limited PLD 1966 SC 684; Siddique Wollen Mills and others v. Allied Bank of Pakistan 2003 CLD 1033 and Apollo Textile Mills Limited and others v. Soneri Bank Limited 2012 CLD 337 rel.

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

----S. 2(e)---Word 'includes'---Scope---Word 'includes' as used in S. 2(e) of Financial Institutions (Recovery of Finances) Ordinance, 2001, implies an extended meaning by including the generic meaning of 'obligation' all those things that the definition declares that it should include.

Dilworth v. Commissioner of Stamps 1899 AC 99 rel.

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

----Ss. 9 & 10--- Suit for recovery of finances---Leave to defend the suit---Pledged goods, loss of---Defendants raised plea of loss of pledged goods by Bank to seek leave to defend the suit---Validity---Defence of loss of pledged goods raised by customer on its own could not form basis for grant of leave to defend---Question of loss of pledged goods was not a dispute requiring recording of evidence if liability was otherwise not disputed or a serious and bona fide dispute in regard thereto was not raised by defending customer---If leave to defend was granted to defending customer on account of substantial dispute regarding liability claim of plaintiff Bank, the trial apart from determining the liability of parties would also be held in respect of loss of pledged goods---Defendants failed to raise any ground in their petition for leave to appear regarding liability claim set up by plaintiff Bank under different finance facilities warranting recording of evidence---Dispute regarding alleged loss of goods did not furnish a ground for grant of leave to defend which could be decided in execution proceedings---High Court declined to grant leave to defend the suit---Suit was dismissed in circumstances.

Ali Traders Rice Dealer v. National Bank of Pakistan 2015 CLD 1; Askari Bank Limited v. Waleed Junaid Industries and 2 others 2012 CLD 1681; A. M. Burq and another v. Central Exchange Bank Limited and others PLD 1996 (WP) Lah. 1; Habib Bank Limited v. Orient Rice Mills Limited and others 2004 CLD 1289; Messrs Crystal Enterprises and others v. Platinum Commercial Bank Limited and others 2002 CLD 868; Messrs Muhammad Siddique Muhammad Umar and others v. The Australasia Bank Limited PLD 1966 SC 684; Siddique Wollen Mils and others v. Allied Bank of Pakistan 2003 CLD 1033 and Apollo Textile Mills Limited and others v. Soneri Bank Limited 2012 CLD 337 ref.

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

----O. VIII, R. 4---Pleadings--- Denial--- Evasive--- Effect--- Every allegation of fact in plaint if not denied specifically or by necessary implication or stated to be not admitted in pleadings of defendant, the same is taken to be admitted against him.

Imran Aziz Khan for Plaintiff.

Assad Javed for Defendants.

Date of hearing: 15th June, 2015.

2016 C L D 383

[Lahore]

Before Atir Mahmood, J

ASKARI BANK LTD. and others---Appellants

Versus

IRFAN AHMED NIAZI and others---Respondents

R.F.A. No.211 of 2008, heard on 8th October, 2015.

(a) Punjab Consumer Protection Act (II of 2005)---

----Ss. 28, 27, 25 & 3----Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S.7(4)---Constitution of Pakistan, Art.143---Banker and customer---Claim by consumer, dismissal of---Jurisdiction of Consumer Court---Settlement of claim, limitation for---Powers of Banking Court---Subsequent notices issued to Bank for settlement of claim not to affect on prescribed limitation---Punjab Consumer Protection Act, 2005 not in derogation of any other law---Inconsistency between Federal and Provincial Law---Effect---Complainant, while getting activation of his new credit card, was informed by the Bank the transactions having been made through his old credit card, which the complainant denied on ground that he had lost the old card and those transactions had not been made by him---Consumer Court allowed the claim by restraining the Bank to recover amount of the disputed transactions---Validity---Complainant had requested the Bank for blockade of his credit card after the card had already been used for alleged unauthorized transactions---Bank could be held responsible for the unauthorized use of the card only after the Bank had been told about misplacing of the same---Bank could neither stop the transactions nor be held responsible for the same, as there was no intimation to the Bank about loss of the card---Matter in question was between the Bank, which was financial institution, and its customer, which could only be taken up and decided by Banking Court, as provided under S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Consumer Court did not have unfettered powers, and certain restrictions existed as embedded in S. 3 of Punjab Consumer Protection Act, 2005---Consumer Court had no jurisdiction to deal with the matter, and had transgressed its powers and erred in law while assuming jurisdiction in the present matter---Financial Institutions (Recovery of Finances) Ordinance, 2001, being Federal statute, had precedence over Punjab Consumer Protection Act, 2005, as provided under Art. 143 of the Constitution---Claim in question had been filed with delay of about one year after cause of action had arisen on pretext that complainant used to issue notices or letter to the Bank in that regard---Mere issuance of subsequent notices after specific denial by the Bank in response to the first notice did not extend period of limitation---Complainant had only thirty days to file his grievance petition in terms of S.28 of Punjab Consumer Protection Act, 2005; whereas, Consumer Court might allow extension of time for filing the same, which had not been done, in the present case---Complaint, being barred by time, should have been dismissed---High Court, setting aside impugned order, dismissed the complaint---Appeal against order was allowed.

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

----S. 7(4)----Punjab Consumer Protection Act (II of 2005), S. 27---Constitution of Pakistan, Art. 143---Powers of Banking Court---Jurisdiction of Consumer Court---Matter in question was between the Bank, which was financial institution, and its customer, which could only be taken up and decided by Banking Court, as provided under S.7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Financial Institutions (Recovery of Finances) Ordinance, 2001, being Federal statute, had precedence over Punjab Consumer Protection Act, 2005, as provided under Art. 143 of the Constitution.

Tariq Kamal Gazi for Appellants.

Asad Ali Bajwa for Respondents.

Date of hearing: 8th October, 2015.

2016 C L D 410

[Lahore]

Before Muhammad Sajid Mehmood Sethi, J

STATE LIFE INSURANCE CORPORATION OF PAKISTAN---Petitioner

Versus

ADDITIONAL DISTRICT JUDGE-1, LAHORE and another---Respondents

Writ Petition No. 4937 of 2014, heard on 12th October, 2015.

(a) Insurance Ordinance (XXXIX of 2000)---

----Ss. 162, 122(3) & 123---Civil Procedure Code (V of 1908), O. VII, R. 11---Constitution of Pakistan, Arts. 199, 23, 18, 9, 5, 4, 3 & 2-A---Constitutional petition---Previous sanction of Securities and Exchange Commission for initiation of proceedings---Rejection of insurance application---Powers and procedure of Insurance Tribunal---Right of individual to be dealt with in accordance with law, etc.---Respondent-Insurance company filed application under S. 162 of Insurance Ordinance, 2000 read with O. VII, R. 11, C.P.C. for rejection of insurance application on ground that applicant had not obtained prior sanction of Securities and Exchange Commission before filing of insurance application as required under S. 162 of Insurance Ordinance, 2000, which was dismissed by Insurance Tribunal---Validity---Insurance Tribunal and its jurisdiction for entertaining insurance claim, as per scheme of Insurance Ordinance, 2000, was dealt with in Part XV of the Ordinance, starting from Ss. 121 to 124---Concept of prior sanction was basically linked with criminal prosecution---Provisions which governed criminal prosecution and penalties were in Part XIX of Insurance Ordinance, 2000, starting from Ss. 156 to 163---Section 162 of Insurance Ordinance, 2000 dealt with prior sanction of Securities and Exchange Commission for institution of proceedings---Reading of S. 162 in juxtaposition with other provisions starting from Ss. 156 to 163 of Insurance Ordinance, 2000, made clear that prior sanction was confined to criminal prosecution against insurance company or its employees, and the same was not for purpose of filing the insurance claim---Provisions of S. 162 of Insurance Ordinance, 2000, which mandated prior sanction, were not to be applied in isolation but in juxtaposition to other sections starting from 156 to 163 of the Ordinance---Court was under duty to interpret various provisions of statute harmoniously in order to advance remedy---Any other interpretation of provision of S. 162 of Insurance Ordinance, 2000 would lead to suppression of remedy, that did not seem to be in conformity with provisions of Arts. 2-A, 3, 4, 5, 9, 18 & 23 of the Constitution, and the same would give undue advantage and edge to the insurance company over bona fide claimant--- Constitutional petition was dismissed in circumstance.

Muhammad Huzafa v. American Life Insurance Company (Pakistan) Ltd. (ALICO) through Chairman/General Manager/Managing Director and another 2013 CLD 1470; Syed Saghir Ahmad Naqvi v. Province of Sindh through Chief Secretary, S&GAD, Karachi and another 1996 SCMR 1165; UBL Insurers Limited v. Ashiq Hussain and another 2014 CLD 1155; Ismail Ebrahim Alloo and others v. The State PLD 1959 (W.P.) Kar. 440; State Life Insurance Corporation of Pakistan and 4 others v. Mst. Sartaj Begum R.F.A. No.43 of 2009; Surendra Nath Sarkar and others v. Kali Pada Das AIR 1940 Calcutta 232; Jaswantray Manilal Akhaney v. State of Bombay AIR 1955 Bombay 259 and National Insurance Company Ltd. v. Narendra Kumar Jhanjhri 1990 Cri.LJ 773 ref.

(b) Interpretation of statutes---

----Rules of construction of statutes---Scope and object---No provision of law, contained in a statute, is to be considered in isolation, until and unless any section or provision is complete code in itself---Any scheme contained in statute is to be considered in totality of the scheme of the statute---Statute is to be interpreted by making it consistent with its scheme---Statute had to be read as a whole and not in bits and pieces---Law is to be interpreted and applied rationally, fairly and not arbitrarily---Literal construction or plain meaning causes hardship, futility, absurdity and uncertainty---Purposeful and contextual construction is preferred to arrive at a more just, reasonable and sensible result---Court is under a duty to mould or creatively interpret legislation by liberally interpreting statute---Statue must be interpreted to advance cause of statute and not to defeat the same.

Ibrar Ahmed for Petitioner.

Liaquat Ali Butt, Akhtar Ali Kureshi, Standing Counsel for Pakistan and Muhammad Ejaz, Assistant Advocate General for Respondents.

Date of hearing: 12th October, 2015.

2016 C L D 437

[Lahore]

Before Muhammad Farrukh Irfan Khan, J

MUHAMMAD ASHRAF alias MAKKHAN---Appellant

Versus

MUHAMMAD AKRAM---Respondent

F.A.O. No. 73 of 2015, decided on 23rd June, 2015.

Trade Marks Ordinance (XIX of 2001)---

----S. 21---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Registration of trade mark subject to disclaimer---Interim relief, grant of---Plea raised by plaintiff was that he had registered trade mark in his favour due to which he had exclusive right over the use of word "Makkhan"---Trial Court declined to grant temporary injunction in favour of plaintiff---Validity---Disclaimer could limit the extent of exclusive rights, which a registration might give to a trade mark owner--- In view of the disclaimer, it was manifest that plaintiff had himself disclaimed any exclusive right to the words "Makkhan Sweets and Bakers"---In absences of having any exclusive right on the use of word "Makkhan", plaintiff was not entitled to be considered to have made out "a prima facie case" on the basis of registration in question---Plaintiff failed to show that he has a prima facie case and balance of convenience was also in his favour and that he would suffer an irreparable loss by continuation of business by defendant by selling his goods under the word "Makkhan"---Order passed by Trial Court was within its legal boundary and High Court declined to interfere therein---Appeal was dismissed in circumstances.

Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090 ref.

Abdul Karim for Appellant.

Muhammad Khalil Haider for Respondent.

2016 C L D 454

[Lahore]

Before Abid Aziz Sheikh, J

BANK AL HABIB LIMITED through Branch Manager---Plaintiff/Decree Holder

Versus

ABU BAKAR TEXTILE MILLS through Managing Partner and 8 others---Defendants/Judgment Debtors

C.O.S. No. 114 of 2009, decided on 30th June, 2015.

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

----Ss. 2(2) & 96(3)---"Consent decree"---Scope---Consent decree has not been separately defined in Civil Procedure Code, 1908---For all intents and purposes consent decree is decree of court and provisions of Civil Procedure Code, 1908, are applicable to such decree also except where specifically excluded such as S. 96(3), C.P.C. which has provided that consent decree is not appealable.

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

----S. 27---Civil Procedure Code (V of 1908), S. 151 & O.XX, R.3---Consent decree---Amendment---Impleading of new party---Suit was decreed in favour of Bank with the consent of parties---Subsequently parties arrived at new settlement and sought amendment of decree as well as impleading a new party---Validity---Consent decree was an agreement, like any other agreement and it was open to parties to enter into compromise with reference to their rights and obligations under a decree---Nothing existed in Civil Procedure Code, 1908, or Financial Institutions (Recovery of Finances) Ordinance, 2001, which could prevent parties to seek amendment of consent decree by circumventing mandatory provisions of Civil Procedure Code, 1908, and Financial Institutions (Recovery of Finances) Ordinance, 2001--- Parties even with consent could not confer jurisdiction on court to amend decree in contravention of provisions of O. XX, R. 2, C.P.C. and S. 27 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Once the Court had passed decree, it became functus officio except for amendment of decree as provided under law---No new person could be impleaded even as a defendant in suit after passing of decree---High Court declined to interfere in consent decree passed by Banking Court--- Application was dismissed in circumstances.

Messrs Muslim Commercial Bank Ltd. v. Messrs World Automobiles through Proprietor and others 2010 CLD 558; Habib and 8 others v. Haji Muhammad and 3 others PLD 1970 Kar. 495; Water and Power Development Authority through Chairman, WAPDA Lahore v. Mian Abdul Rauf PLD 2002 Lah. 268; Haji Ishtiaq Ahmad and 2 others v. Bakhshaya and 7 others 1976 SCMR 420; Nizam ud Din and 13 others v. Ch. Muhammad Saeed and 7 others 1987 CLC 1682; Moti Lal Banker (dead) by his Legal Representative v. Maharaj Kumar Mahmood Hassan Khan AIR 1968 SC 1087 and Muhammad Umar and another v. Gul Muhammad through L.Rs. and 4 others 2010 CLC 397 distinguished.

Industrial Development Bank of Pakistan through Vice-President IDBP v. Messrs Crystal Chemicals Limited through Director/Guarantor Crystal Chemical Ltd. and 9 others PLD 2009 Lah. 176; Fakir Abdullah and others v. Government of Sindh through Secretary to Government of Sindh Revenue Department Sindh Secretariat Karachi and others PLD 2001 SC 131 and Moti Lal Banker (dead) by his legal representative v. Maharaj Kumar Mahmood Hasan Khan 1968 AIR (SC) 1087 rel.

Shezada Mazhar and Salman Faisal for Applicant/Decree Holder Bank.

Raheel Aslam for Respondent/Judgment Debtor.

Anwaar Hussain, Assistant Advocate-General Punjab/ Amicus curiae.

2016 C L D 465

[Lahore]

Before Shams Mehmood Mirza, J

SAUDI PAK INDUSTRIAL AND AGRICULTURAL INVESTMENT COMPANY LIMITED through Duly Authorized---Plaintiff

Versus

B. A. RAJPOOT STEEL AND RE-ROLLING MILLS (PVT.) LIMITED and 6 others---Defendants

C.O.S. No. 58 of 2010, heard on 11th June, 2015.

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

----S. 9---Statement of accounts---Certification---Statement of accounts signed by Vice-President (Finance) of plaintiff Bank are validly "certified" and is in compliance with the provisions of Financial Institutions (Recovery of Finances) Ordinance, 2001.

NIB Bank Limited v. Highnoon Textile Limited 2014 CLD 763 rel.

(b) Pleadings---

----Object, scope and purpose---Object and purpose of pleadings and issues is to ensure that dispute between the parties is clearly defined so as to prevent parties from shifting grounds during the course of trial---In absence of facts stated in pleadings, evidence if any, produced by parties in respect to such fact cannot be considered---No party can be permitted to travel beyond its pleadings.

Thorp v. Holdsworth 1876 3 Ch.D. 637 rel.

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

----Ss. 9 & 10---Qanun-e-Shahadat (10 of 1984), Art. 113---Suit for recovery of finance---Petition for leave to appear and defend---Admitted facts---Rate of markup, dispute as to---Absence of substantial question of fact warranting inquiry by court---Plaintiff Bank filed suit for recovery of finance against defendants who in return filed petition for grant of leave to appear and defend the suit---Defendants in their petition for leave to appear and defend did not challenge any entry in statement of accounts---Defendants only alleged that plaintiff had charged enhanced rate of markup which was never agreed to---No objection was taken by defendants with regard to principal amount under the finance facility---Validity---As no challenge was made to amounts due under finance facilities pleaded in plaint, objection regarding form of statement of account did not constitute a substantial question of fact warranting inquiry by Banking Court---Judgment could be passed on the basis of admission of liability by defendants based on the presumption arising out of absence of specific denial of liability in petition for leave to appear---Admitted facts need not to be proved in terms of Art. 113 of Qanun-e-Shahadat, 1984---High Court declined to grant leave to appear and defend the suit to defendants---Suit was decreed in circumstances.

Prabodh Chandra Mitra v. Road Oils (India) Limited AIR 1930 Cal. 782; Badat & Co. v. East India Trading Co. 1964 AIR 1964 SC 538 and Asha Kapoor v. Hari Om Sharda (2010) 171 DLT 743 ref.

M. Raza Qureshi for Plaintiff.

Syed Waqar Hussain Naqvi for Defendants Nos. 1 to 6.

M. Akram Pasha, Defendant No.7.

Date of hearing: 11th June, 2015.

2016 C L D 521

[Lahore]

Before Shezada Mazhar, J

SAUDI PAK COMMERCIAL BANK LTD. through Chief Manager---Plaintiff

Versus

Messrs SHEIKH AGRO INDUSTRIES through Managing Partner and others---Defendants

C.O.S. No. 19 of 2005, heard on 10th November, 2014.

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

----Ss. 9 & 10---Partnership Act (IX of 1932), S. 19---Suit for recovery of finance---Partnership firm---Implied authority of partner as agent of firm---Defendants were partners of a firm who had admitted finance liability and also admitted that certain amounts were outstanding---Validity---In presence of such admissions, partners of defendant firm had no authority to challenge authority of one of the partners of the firm who had made dealing with plaintiff Bank on behalf of the firm---Partners of the firm could not say that they were absolved from the liability as the partner who had dealt with the plaintiff Bank was not duly authorized by defendant firm---High Court dismissed application filed by defendants for leave to appear and defend the suit---Suit was decreed in circumstances.

Pakistan v. Waliullah Sufyani PLD 1964 Dhaka 1; Messrs M.G. Kadir and Co. v. Abdul Latif PLD 1970 Kar. 708 and Messrs Rising Sun Company through Partner Mr. Farooq Aftab and another v. Bank of Oman Ltd., Lahore through General Manager and 3 others 2005 CLD 1242 ref.

United Bank Ltd. v. Credence Electronics and others PLD 1998 Kar. 325 rel.

Abdul Hameed Chohan assisted by Imran M. Sarwar for Plaintiff.

Sh. Aftab Umar for Defendant No.4.

Asim Hafeez for Defendant No.5.

Defendant No.2 in person.

Date of hearing: 10th November, 2014.

2016 C L D 551

[Lahore]

Before Shahid Karim, J

Messrs LONG GRAIN RICE MILLS (PVT.) LTD. through Chief Executive---Petitioner

Versus

HABIB BANK LIMITED through Senior Manager (CAD) and Senior Manager (Remedial) and another---Respondents

Writ Petition No. 14649 of 2014, decided on 18th September, 2015.

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

----Ss. 9 & 20---Civil Procedure Code (V of 1908), S. 47---Suit for recovery of loan amount---Execution petition---Misappropriation of pledged stock---Criminal proceedings, initiation of---Stay of criminal proceedings---Scope---Decree-holder-Bank filed complaint alleging misappropriation of pledged stocks by the judgment-debtor (customer)---Judgment-debtor (customer) filed application for stay of proceedings in the complaint pending before the Banking Court---Validity---Both the proceedings were intertwined---Criminal proceedings were to be stayed if criminal liability was dependent on the outcome of civil litigation---Question in both the criminal as well as execution proceedings was the same---If complaint was decided ahead of the proceedings in execution then judgment-debtor would be prejudiced in case it was found that liability could not be fixed on him for misappropriation of pledged stocks---Criminal complaint, therefore, could not proceed determination of civil liability---Proceedings in complaint case pending before the Banking Court were stayed till the decision in execution petition with regard to misappropriation of pledged stocks---Constitutional petition was accepted in circumstances.

Abdul Ahad v. Amjad Ali and others PLD 2006 SC 771 and Muhammad Akbar v. The State and Maulvi Muhammad Yasin Khan PLD 1968 SC 281 ref.

Akhlaq Hussain Kayani v. Zafar Iqbal Kiyani and others 2010 SCMR 1835 rel.

Syed Ijaz Qutab for Petitioner.

Mirza Nasar Ahmad, Deputy Attorney-General.

2016 C L D 579

[Lahore]

Before Muhammad Khalid Mahmood Khan, J

LAHORE REGENCY (PRIVATE) LTD. through Managing Director---Appellant

Versus

WYNDHAM HOTEL and others---Respondents

F.A.O. No. 300 of 2013, decided on 11th February, 2015.

Civil Procedure Code (V of 1908)---

----O. XL, R. 1, O. XXXIX, R. 1, 2, O. XXXVII, R. 5 & O. I, R. 10---Suit for recovery of damages---Appointment of receiver---Temporary injunction---Attachment of franchise fee before judgment---Permissibility---Parties to suit---Execution of decree, mode of---Plaintiff filed suit for damages against defendants, foreign companies, and the other defendants, who were franchise holder of said companies, for loss caused due to violation of Letter of Intent---Trial Court, while declining applications of plaintiff for grant of temporary injunction and attachment of franchise fee, deleted names of defendants, franchise holders, from the suit; revisional court maintained the order of Trial Court---Plaintiff contended that defendants, foreign companies, were doing business abroad and were not maintaining assets in Pakistan, except the franchise fee payable by defendants (franchise holders) which, be attached till pendency of the suit to make recovery of damages possible in case decree was passed---Validity---Names of defendants, franchise holder, had already been deleted from array of defendants; thus, case of plaintiff to the extent of attachment of franchise fee before judgment could not proceed---Plaintiff had claimed damages only against defendants, foreign companies---Plaintiff, in case a decree was passed, might file application for execution of decree---Suit having not been decreed restraining order could not be passed on probability---Appeal against order was dismissed in circumstances.

Ch. Bashir Hussain Khalid for Appellant.

Syed Hassan Ali Raza and Asad Javed for Respondents Nos.1 and 2.

Hafeez-ur-Rehman Ch. for Respondent No.3.

Rustam Khan Parhar for Respondent No.4.

2016 C L D 596

[Lahore]

Before Shams Mehmood Mirza and Shahid Karim, JJ

RIAZ AHMAD (RANA RIAZ ANJUM) and another---Appellants

Versus

The BANK OF PUNJAB---Respondent

E.F.A. No. 11 of 2013, decided on 31st March, 2015.

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

----Ss. 9 & 22---Civil Procedure Code (V of 1908), S. 12(2)---Suit for recovery of finance---Decree, setting aside of---Plea of fraud and misrepresentation---Issues, non-framing of---Principle---Defendants assailed judgment and decree passed by Banking Court in favour of Bank on the plea of misrepresentation and fraud which application was dismissed by Banking Court---Validity---Application filed under S. 12(2), C.P.C. did not mention any particulars constituting fraud and misrepresentation on the part of Bank in obtaining judgment and decree from Banking Court---Fact that Bank applied to insurance company for realization of insurance claim had no bearing on recovery suit filed by it against defendants, which was only concerned with determination of liability against defendants---Defendants had full opportunity to defend their case before Banking Court which decided the suit on the basis of available record---Not necessary for a court to always prove issues on application filed under S. 12(2), C.P.C., more so when particulars of fraud and misrepresentation were missing---Appeal was dismissed in circumstances.

Messrs Dadabhoy Cement Industries Limited and 6 others v. National Development Finance Corporation Karachi PLD 2002 SC 500 rel.

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

----S. 9---Suit for recovery of finance---Necessary parties---Realization of the insurance claim by Insurance Company---Insurance company cannot be made party in a recovery suit.

Rana Mehboob Ali for Appellants.

Muhammad Saleem Iqbal for Respondent.

2016 C L D 606

[Lahore]

Before Muhammad Khalid Mahmood Khan, J

LAHORE REGENCY (PRIVATE) LIMITED through Managing Director---Petitioner

Versus

WYNDHAM HOTEL through President and Managing Director and 3 others---Respondents

Civil Revision No. 1183 of 2012, decided on 11th February, 2015.

Civil Procedure Code (V of 1908)---

----O. I, R. 10 & O. VII, R. 11---Suit for damages---Impleadment of parties---Rejection of plaint---Names of defendants were deleted from suit and plaint was rejected to their extent---Validity---Plaintiff, a private limited company filed suit for damages on ground that defendants, foreign companies, had failed to fulfil their part of undertaking as agreed upon through a Letter of Intent, and other defendants were franchise holders, had represented said foreign companies in Pakistan---Defendants, franchise holders, filed application under O. I, R. 10 & O. VII, R. 11, C.P.C. on the ground that they were neither privy to the contract between plaintiff and the foreign companies, nor were they representing them in Pakistan, which was allowed by Trial Court and their names were deleted from array of defendants---Plaintiff contended that defendants, franchise holders, being representative agents were liable to pay decretal amount, in case the suit was decreed---Validity---No agreement existed between plaintiff and defendants, franchise holders, who had stated that they were not agents of defendants, foreign companies, and being franchise holder, they were only their licensee---Plaintiff could not implead the franchise holders, as there was no grievance against them---Present suit was, therefore, not maintainable against the franchise holders---High Court observed that plaintiff might got attached franchise fee payable to defendants, foreign companies by defendants, franchise holders, in case present suit was decreed---Revision petition was dismissed in circumstances.

Tariq Iqbal for Petitioner.

Syed Hassan Ali Raza and Asad Javed for Respondents Nos.1 and 2.

Hafeez-ur-Rehman Ch. for Respondent No.3.

Rustam Khan Parhar for Respondent No.4.

2016 C L D 735

[Lahore]

Before Muhammad Khalid Mehmood Khan, J

LAHORE REGENCY (PRIVATE) LIMITED through Managing Director---Petitioner

Versus

WYNDHAM HOTEL GROUP ASIA PACIFIC through President and Managing Director and 3 others---Respondents

Civil Revision No. 3754 of 2014, decided on 11th February, 2015.

Civil Procedure Code (V of 1908)---

----O. XV, R. 1, O, XII, R. 2 & O. XXI----Suit for recovery of damages---Admission of documents---Disposal of suit at first hearing---Preliminary decree---Deposit of admitted amount in court---Execution of decree---Plaintiff, a private limited company, filed suit for damages on ground that defendants, foreign companies, had failed to fulfill their part of undertaking as agreed upon through a Letter of Intent, which had resulted in huge loss, and other defendants, being franchise holders, represented said foreign companies in Pakistan---Defendants, foreign companies, on application under O. XII, R. 2, C.P.C. filed by plaintiff, had admitted all documents annexed with the plaint, including receipt of amount of money as part of payment of the franchise agreement; on which, plaintiff filed application under O. XV, R. 1 read with S. 151, C.P.C. for preliminary decree on basis of said admission seeking deposit of the admitted amount in court, which was dismissed by Trial Court---Defendants took plea that the amount paid by plaintiff was non-refundable---Validity---Present suit had already been summarily dismissed against defendants, the franchise holders, by Trial Court under O. I, R. 10, C.P.C.---Defendants, in their reply to present application for preliminary decree, had shown their willingness to refund the disputed amount but with condition that plaintiff would withdraw the suit---Defendants, had no assets in Pakistan, and in case, decree was passed, plaintiff would not be able to get the decree executed against the defendants---Franchise fee being received by the defendants from other defendants, franchise holders, were not ascertainable---Defendants, having been incorporated out of Pakistan, should deposited the amount in court, which would be regulated as per terms of decree---High Court, setting aside order of Trial Court, directed defendants to deposit the amount in dispute with Trial Court---Revision petition was allowed in circumstances.

Ch. Bashir Hussain Khalid for Petitioner.

Syed Hassan Ali Raza and Asad Javed for Respondents.

2016 C L D 760

[Lahore]

Before Shams Mehmood Mirza and Shahid Karim, JJ

The BANK OF PUNJAB through Principal Officer/Constituted Attorney---Appellant

Versus

RAB NAWAZ and 2 others---Respondents

R.F.A. No. 152 of 2011, decided on 12th May, 2015.

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

----S. 9---Suit for recovery of loan amount---Second suit on same cause of action---Effect---Trial Court dismissed suit at leave stage on the ground that decree in the first suit had attained finality and second suit on the same cause of action was barred---Validity---Banking Court could not dismiss suit at leave stage---Proper course for Banking Court was to grant leave to defend the suit to the defendants and then to frame issues for its decision thereon---Banking Court in first suit directed the defendants to keep on depositing the instalment amount of loan as per terms of the agreement---Whether said direction had furnished a fresh cause of action was to be thrashed out by the Banking Court---Trial Court had not disclosed under which provision of law second suit was time barred---Impugned order passed by the Trial Court was not sustainable which was set aside---Suit would be deemed to be pending before the Banking Court which should be decided after granting leave to defend the suit to the defendants.

Muhammad Saleem Iqbal for Appellant.

Sardar Riaz Kareem for Respondent No.2.

2016 C L D 766

[Lahore]

Before Amin-ud-Din Khan and M. Sohail Iqbal Bhatti, JJ

Messrs BHANGOO FARMING SERVICES and 2 others---Appellants

Versus

The BANK OF PUNJAB through Manager---Respondent

R.F.A. No. 1159 of 2014, heard on 16th December, 2014.

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

----Ss. 10, 9 & 7---Adjudication by Banking Court---Leave to defend---Duties of Banking Court---Scope---Application for leave to defend suit was dismissed and suit was decreed---Contention of defendant was inter alia that it had raised substantial questions of law and fact in the application for leave to defend, and the objections raised by the defendant were not considered by the Banking Court---Held, that before deciding the suit, it was duty of Banking Court to consider and examine the plaint as well as the documents relied and sued upon by the plaintiff forming basis of the proceedings---Requirement of exact adherence to legal demands was more stringent for plaintiff while invoking jurisdiction of a special court created under a special law when the conditions and prerequisites to resort to such jurisdiction had been specifically and expressly described in the special law---Court in such matters could not presume plaintiff's assertions and pleadings to be correct---Court had to apply terms of a special law and was under an obligation to follow the word of the law than the word of the plaint even in absence of any application for leave to appear and defend suit---At the stage of deciding application for leave to defend; the Banking Court had to be guided by the main rationale behind the law which was not to oust defendant from trial when the defendant had an arguable case---Defendants, in the present case, had raised substantial questions of law which could not have been brushed aside in a causal manner and could only have been decided through a speaking order---Defendants had raised an objection in an unambiguous manner that the suit had not been filed by an authorized person and the statement of accounts had not been duly certified under S. 9(1) of the Financial Institutions (Recovery of Finances) Ordinance, 2001; but the Banking Court did not adjudicate upon the same through a speaking order, which was violative of the law---High Court allowed the application for leave to defend subject to deposit of fifty percent of decretal amount and case was remanded to Banking Court with direction to proceed according to law---Appeal was allowed, accordingly.

Messrs Taxila Cotton Mills Ltd. and 10 others v. Allied Bank of Pakistan Ltd. 2005 CLD 244 and Government of Sindh through Land Acquisition Officer and others v. Muhammad Juman and another 2009 SCMR 1407 rel.

(b) Administration of justice---

----Special law---Adjudication of matters under a special law---Scope---Requirement of exact adherence to legal demands was more stringent for plaintiff while invoking jurisdiction of a special court created under a special law when the conditions and prerequisites to resort to such jurisdiction had been specifically and expressly described in the special law.

(c) Words and phrases---

----"Substantial"---Meaning---Substantial meant of real worth and importance.

Hassan Nawaz Sheikh for Appellants.

Saqib Saleem for Respondent.

Date of hearing: 16th December, 2014.

2016 C L D 784

[Lahore]

Before Shams Mehmood Mirza, J

NATIONAL BANK OF PAKISTAN through Vice President/General Attorney---Decree Holder

Versus

Messrs MURTAZA HASEEB TEXTILE MILLS LTD. through Chief Executive and 13 others---Judgment Debtors

Execution Application No. 12-B of 2007 in C.O.S. No. 16 of 2003, decided on 2nd November, 2015.

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

----Ss. 9, 10 & 19---Civil Procedure Code (V of 1908), S. 47---Recovery of loan amount---Execution of decree and sale of mortgaged property---Questions to be determined by executing court---Scope---Res judicata/constructive res judicata, applicability of---Objections not raised in application for leave to defend could not be raised during execution proceedings---Defendant, judgment debtor, filed application before Executing Court under S. 47, C.P.C. objecting to the auction sale of mortgaged property on the ground that they had been sued only in their capacity as mortgagors of the property in question and no guarantee had been attributed to them in the suit---Validity---Defendant-judgment debtor had contested the suit by filing application for leave to defend along with other judgment debtors, in which properties in question had been shown to be the security for all the finance facilities---Defendant/judgment debtor had not taken said ground in his application for leave to defend with regard to the property in question---Executing court observed that any plea not raised in the application for leave to defend or if raised but rejected, would not form basis for objecting to the executability of the decree under S. 47, C.P.C.---Suit, after dismissal of the application for leave to defend, had been decreed jointly and severally against the defendants---Defendants had not filed any appeal against the judgment and decree, which, therefore, had attained finality; unless the decree was set aside in appellate or revisional proceedings, the same continued to bind the parties even if the same was erroneous---Section 47, C.P.C. did not entitle a party to seek retrial of the issues involved in the suit, particularly, when the party had the opportunity to defend the suit and had contested the suit but had not raised the issues mentioned in the application under S. 47, C.P.C.---Defendants were, therefore, precluded from raising any issue regarding the securities underlying the finance facilities on the principle of res judicata and constructive res judicata----Mortgage deed stipulated that the properties in question would be continuing security for all the amounts due from the defendants--- Defendant, having executed the said instrument, could not turn around to challenge his liability which had since culminated into a lawful and valid decree, which had already attained finality---Expression 'joint and several' meant that each of the judgment debtor was singly and jointly liable for payment of the decretal debt---Application on similar subject matter had already been dismissed for non-prosecution, and the only option available to the defendant was to seek restoration of said application, but instead, he filed present application---Application was dismissed in circumstances.

Habib Bank Limited v. Mst. Parveen Qasim Jan and others 2014 SCMR 322; Modern Knitting and Woollen Spinners (Pvt.) Limited and another v. Manzur Ahmed Sheikh and 3 others 2007 CLD 1071; Messrs Masoom Industries v. Habib Bank Limited 2003 CLD 386 and Messrs New Rahat Engineering Works v. National Bank of Pakistan 2003 CLD 382 rel.

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

----S. 47--- Questions to be determined by executing court---Determination and scope---Executing Court observes that S. 47, C.P.C. empowers the court executing the decree to decide all the questions arising between the parties to the suit in which the decree has been passed, when such questions relate to the execution, discharge or satisfaction of the decree---Provision of S. 47, C.P.C. only deals with the events subsequent to issuance of the decree, and the same does not relate to a cause arising prior to the issuance of the decree---Section 47, C.P.C. did not deal with pre-decretal matters---Question to be dealt with by the Executing Court, therefore, should necessarily be relating to the execution of the decree, regarding a lawful and executable decree and not the one which is nullity.

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

----S. 47---Questions to be determined by executing court---Determination---Executing Court observes that power to decide about the executability of the decree, does not include the power to bring about changes in the rights and obligations of the parties that have already been determined by the decree-Validity of a decree can only be challenged in execution proceedings on the ground that the court which passed the decree lacked the inherent jurisdiction---Court is said to be lacking in jurisdiction when the decree passed by it was without jurisdiction over the subject matter or over the parties or on any other ground which goes to the root of its exercise of jurisdiction or inherent jurisdiction---Defect of jurisdiction strikes at the authority of the court to pass a decree which cannot be cured by consent or waiver of the party---If the court has jurisdiction but there is any defect in its exercise of jurisdiction, then such defect does not go to the root of its authority---Objections to the validity of a decree of court which had not inherent jurisdiction to pass the same can only be raised in execution proceedings when the error of jurisdiction is apparent on the face of the record---However, if the error of jurisdiction requires further examination of the issues raised and determined at the trial or issues which could have been raised but were not raised, then the executing court will have no jurisdiction to entertain such objection as to the validity of the decree even on ground of absence of jurisdiction.

Habib Bank Limited v. Mst. Parveen Qasim Jan and others 2014 SCMR 322 rel.

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

----S. 47---Questions to be determined by executing court---Pre-conditions---Under the scheme of C.P.C., in a suit the court adjudicates upon the rights and liabilities of the parties and incorporates them in the decree, and subsequently, at the instance of the successful party in the suit, the court enforces the liability of the other party through execution of the decree in execution proceedings---Determination of liability of a party in the suit is condition precedent for enforcement of that liability in execution proceedings.

Modern Knitting and Woollen Spinners (Pvt.) Limited and another v. Manzur Ahmed Sheikh and 3 others 2007 CLD 1071 rel.

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

----S. 47---Questions to be determined by executing court---Scope---Executing Court observes that S. 47, C.P.C. was the only provision in the entire C.P.C. that deals with the jurisdiction of the executing court.

Khalid Ishaque for Decree Holder Bank.

Asim Hafeez for Judgment Debtors.

Miss Tabinda Islam, Court Auctioneer.

2016 C L D 812

[Lahore]

Before Shams Mehmood Mirza, J

NATIONAL BANK OF PAKISTAN---Decree Holder

Versus

Messrs SIMNWA POLYPROPYLENE (PVT.) LTD. through Chief Executive and 6 others---Judgment Debtors

Execution Petition No. 15-B/2000 in C.O.S. No. 42 of 1999, decided on 7th October, 2015.

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

----Ss. 9 & 19---Recovery of loan amount---Execution of decree---Objection as to mortgaged property---Defendant, the Judgment debtor, filed two consecutive applications for deletion of the property in question from Fard Taliqa on ground that the same had not been mortgaged with the decree holder bank, which were dismissed by the Executing Court---Validity---Orders passed on the applications had never been challenged and the same had already attained finality---Objection as to the property not having been mortgaged was, therefore, no longer available to the defendant---Application was dismissed in circumstances.

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

----Ss. 9 & 19----Civil Procedure Code (V of 1908), O. XXI, R. 66---Recovery of loan amount---Execution of decree---Objection as to inadequacy of sale price after auction sale---Permissibility---Proclamation of sale/notices, requirement as to---Law did not require that every time, when the property was put to auction, fresh notices under O. XXI, R. 66, C.P.C. were to be issued---Inadequacy of sale price as post auction objection had no substance and the same was therefore not a ground for setting aside the auction sale---Auction schedule had been rightly approved by the Executing Court.

Mukhtar Ahmed v. Messrs United Bank Limited and another 2013 CLD 841; Messrs Capital Poultry Feed and Daal Mills and others v. Atlas Bank Limited 2015 CLD 1149 and Muhammad Rafiq v. Federation of Pakistan through Secretary and others 2013 CLD 1667 rel.

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

----Ss. 9 & 19(7)----Civil Procedure Code (V of 1908), O. XXI, Rr. 90 & 89---Recovery of loan amount---Execution of decree---Objection as to conduct of auction sale---Irregularity, fraud and injury, existence of---Proof---Defendant, the judgment debtor filed application under S. 19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 for setting aside of the auction on ground of conduct of the auction---Validity---Said application in essence was an application under O. XXI, R. 90, C.P.C., thereby, the conduct of the auction had been challenged---Order XXI, Rr. 89 & 90, C.P.C. mandated that the objector should deposit the amounts mentioned in the decree along with the application, and in absence of the deposit, the application could not be entertained by the Banking Court---Defendant was liable to pay 20% of the bid money before their application could be entertained---Defendant had failed to provide any material particular in the application about the irregularity and fraud in publishing and conducting the sale and had instead resorted to making general allegations--- In addition to proving material irregularity or fraud, the defendant had also to prove substantial injury, the onus of which was on the defendant--- Defendant had failed to allege or prove any substantial injury caused to him from the sale of the property---Successful bidder, having deposited the entire bid money within the time stipulated by law, had acquired valuable rights in the property--- Objection application was dismissed in circumstances.

Messrs Nice 'N' Easy (Pvt.) Limited and others v. Allied Bank of Pakistan 2014 SCMR 1662; Mst. Asma Zafarul Hassan v. Messrs United Bank Limited and another 1981 SCMR 108; Ghulam Abbas v. Zohra Bibi and another PLD 1972 SC 337 and Shaukat Ali Mian v. Trust Leasing Corporation Limited and 4 others 2002 CLD 1071 rel.

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

----Ss. 9 & 19---Contract Act (IX of 1872), S. 128---Recovery of loan amount---Execution of decree---Liability of principal debtor and surety/mortgagor/guarantor was co-extensive---Principles---Decree, in the present case, was simultaneous and had been passed jointly and severally against all the defendants, including (present) judgment debtor, who had been sued in his capacity as guarantor/mortgagor---Defendant had not taken any plea in his defence in the suit that his liability was contingent upon and subject to the exhaustion of remedies by the plaintiff-Bank against the principal debtor and his failure to satisfy the dues under the decree---Judgment and decree also did not contain any findings of Banking Court in favour of the defendant to that effect---Decree, which had become final, could not be construed otherwise---Executing Court could not go beyond the decree---Any plea that the liability of the principal debtor had been satisfied ahead of the defendant/guarantor/mortgagor, had to be taken during the suit and not after the decree when the execution was being levied---Unless contrary was contained in the decree, where the creditor had obtained a decree against the surety and the principal debtor, the surety/mortgagor had no right to restrain execution against him until the creditor had exhausted his remedies against the principal debtor---Section 128 of Contract provided that the liability of the surety was co-extensive with that of the principal debtor, unless the contract provided otherwise---Expressions 'guarantor', 'principal debtor' and 'mortgagor' were only used in the suit for purposes of adjudicating upon their rights as such---Once the decree was passed, the same had to be executed by its terms and not in accordance with the relationship inter se the parties prior to passing the decree---After fifteen years of the pending execution proceedings, the court auctioneer had finally been able to successfully conduct the auction could not be set aside merely on general allegations---Banking Court, dismissing objection application, approved the sale and made the same absolute---Applications were dismissed in circumstances.

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

----Ss. 9 & 19----Corporate and Industrial Restructuring Corporation (Dissolution) Order, 2006, S. 5---Non-performing Assets and Rehabilitation of Industrial Undertaking (Legal Proceedings) Ordinance (LVIII of 2000), Preamble---Recovery of loan amount---Execution of decree---Pecuniary jurisdiction of Banking Court---Scope---Defendant claimed absence of pecuniary jurisdiction of the Banking Court on the ground that the decree in question involved an amount of Rs.35 million---Validity---Section 5 of Corporate and Industrial Restructuring Corporation (Dissolution) Order, 2006 provided that all cases pertaining to Corporate and Industrial Restructuring Corporation (CIRC) would continue, prosecuted, defended, enforced and executed by or against the CIRC in the same manner and to the same extent as provided in Non-performing Assets and Rehabilitation of Industrial Undertaking (Legal Proceedings) Ordinance, 2000---Under Non-performing Assets and Rehabilitation of Industrial Undertaking (Legal Proceedings) Ordinance, 2000, the jurisdiction vested in the High Court with regard to the accounts of the Financial Institution taken over by the CIRC---Objection repelled in circumstances.

Khalid Ishaq for Decree Holder Bank.

Mrs. Saba Saeed for Judgment Debtors.

Salman Ahmad for auction purchaser (Husnain Construction Co. (Pvt.) Ltd.).

Zahoor ali Nasir Tagga for Judgment Debtors Nos.1, 2 and 3.

Khawaja Muhammad Saeed, Advocate/Court Auctioneer.

2016 C L D 828

[Lahore]

Before Abid Aziz Sheikh, J

PRD (PVT.) LIMITED through Chief Executive and 2 others: In the matter of

C.O. No. 44 of 2014, decided on 12th May, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 284, 285, 286, 287 & 288---Scheme of merger---Approval---Petitioners sought sanction of scheme of arrangement for amalgamation between petitioner companies---Scheme in question was approved by Board of Directors as well as shareholders of petitioner companies in extraordinary general meetings---After merger, business set up as single unit would be enlarged with a stronger equity and a larger asset base, with more opportunities and option for development of funds---Due to merger, major contribution to profitability would arise from economy of scale and reduction in operating costs was projected immediately upon merger---High Court sanctioned scheme of arrangement for amalgamation between petitioner companies---Petition was allowed in circumstances.

Rasheed A. Shaikh and Azeem Abbas Kazmi for Petitioners.

Umair Mansoor for SECP.

Rai Muhammad Shahbaz and Rehman Aziz Chann, Chairmen appointed to call and hold extraordinary General meetings of the Petitioner Companies.

2016 C L D 845

[Lahore]

Before Shams Mehmood Mirza and Shahid Karim, JJ

ZAFAR HAYAT and another---Appellants

Versus

BANK OF PUNJAB through Manager and others---Respondents

R.F.A. No. 110 of 2013, heard on 21st May, 2015.

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

----Ss. 10 & 22---Suit for recovery of finance---Leave to defend the suit---Triable issue---Wrong entry in statement of accounts---Defendant sought leave to defend the suit on the plea that an entry in his statement of accounts was disputed which required recording of evidence---Validity---Disputed entry was explained by plaintiff Bank that defendant deposited a cheque in current account which was sent for clearance and as per I.T. system, the amount was debited to the current account and credited in running finance account---Cheque in question was dishonored accordingly and disputed entry was reversed from running finance account and current account simultaneously---Explanation given by plaintiff Bank was substantiated by statement of current account and running finance account---High Court declined to interfere in the order passed by Banking Court---Appeal was dismissed in circumstances.

Muhammad Mansoor ul Haq for Appellants.

Muhammad Saleem Iqbal for Respondents.

Date of hearing: 21st May, 2015.

2016 C L D 888

[Lahore]

Before Shezada Mazhar, J

Messrs SILK BANK LIMITED---Plaintiff

Versus

Messrs T&N FIXED STAR (PVT.) LTD. and others---Defendants

C.O.S. No. 129 of 2010, heard on 21st November, 2014.

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

----Ss. 9 & 10---Suit for recovery of finance---Leave to appear and defend the suit, dismissal of---Effect---Defendants raised objections in their application for leave to defend the suit---Validity---In presence of admission of defendants with regard to availing of finance facilities and report of amicus curiae regarding outstanding amount, any objection raised by defendants in their application for leave to defend was of no consideration--- No case for grant of leave to defend the suit was made out, application to leave appeal and defend the suit by defendants was dismissed---Suit was decreed in circumstances.

Abdul Hameed Chohan for Plaintiff.

Haq Nawaz Chatha for Defendants.

Date of hearing: 21st November, 2014.

2016 C L D 902

[Lahore]

Before Ayesha A. Malik and Faisal Zaman Khan, JJ

JOINT REGISTRAR OF COMPANIES, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Appellant

Versus

OMER IQBAL SOLVENT (PVT.) LTD. and another---Respondents

I.C.A. No. 4 of 2010 in C.O. No. 58 of 2009, heard on 24th November, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 92, 284 & 287---Scheme of arrangement/amalgamation---Approval---Judge in Chambers of High Court approved scheme of arrangement for the merger of two companies and declared that authorized capital of transferor, which was transferred to, stood vested in the transferee---Plea raised by Registrar of Companies, Securities and Exchange Commission of Pakistan was that process for increasing authorized capital was provided in S. 94 of Companies Ordinance, 1984, and the same was to be followed---Validity---Company was given power under S. 284 of Companies Ordinance, 1984, to sanction compromise or arrangement between the companies and its members or its creditors---Provisions of Ss.284 & 287 of Companies Ordinance, 1984, were a complete code under which merger/amalgamation was sanctioned therefore there was no reasons for a separate application to be filed for such purpose---No illegality was found in the judgment passed by Judge in Chambers of High Court---Securities and Exchange Commission of Pakistan was unable to show that the issue of authorized capital stood outside the ambit of Ss. 284 & 287 of Companies Ordinance, 1984---Intra Court Appeal was dismissed in circumstances.

Tariq Bashir and Umair Mansoor for Appellant.

Nemo for Respondents.

Date of hearing: 24th November, 2015.

2016 C L D 970

[Lahore]

Before Shahid Karim, J

Malik AZIZ UL HAQ and 14 others---Petitioners

Versus

Messrs CRYSTAL LINE CHEMICAL INDUSTRIES (PVT.) LTD. through Chief Executive and 5 others---Respondents

Civil Original No. 23 of 2014, heard on 23rd November, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 290 & 292---Affairs of the company---Interference---Jurisdiction of High Court---Scope---Petitioner sought appropriate orders from High Court for running the affairs of company---Validity---Affairs of the company were not being conducted in an unlawful or fraudulent manner or in a manner not provided for in its memorandum---Nothing was on record which could bring home the fact that affairs of the company were being conducted in a manner oppressive to the members---Contentions by petitioners merely gave rise to certain irregularities committed by company at worst and fully fell within the domain of Securities and Exchange Commission of Pakistan to exercise powers vested in the Commission by law in such regard---Securities and Exchange Commission of Pakistan could proceed with the matter of any aspect which in the opinion of the Commission fell within its jurisdiction and of which company had fallen in breach---Petition was dismissed in circumstances.

Naseer A. Sheikh and 4 others v. The Commissioner of Income Tax (Investigation), Lahore and others PLD 1992 SC 276; Nanalal Zaver and another v. Bombay Life Assurance Company AIR 1950 SC 172; Needle Industries (India) v. Needle Industries Newey (India) AIR 1981 SC 1298; Milan Sen v. Guardian Plastics Ltd. (1998) 91 Com. Cases 105 and Sri Hari Rao v. Gopal Automotive Ltd. (1999) 96 Com. Cases 493 ref.

Haq Nawaz Chatha for Petitioners.

Nadeem Ahmad Sh. for Respondents Nos.1 to 15.

Umair Mansoor, Legal Advisor for SECP.

Date of hearing: 23rd November, 2015.

2016 C L D 1011

[Lahore]

Before Shahid Bilal Hassan, J

FERYAL ALI GAUHAR and others---Petitioners

Versus

ENVIRONMENTAL PROTECTION AGENCY, PUNJAB and others---Respondents

Writ Petition No. 22520 of 2015, decided on 11th March, 2016.

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

----S. 22 [as amended by Punjab Environmental Protection (Amendment) Act (XXXV of 2012)---Lahore Development Authority Act (XXX of 1975), S. 43---Lahore Development Authority Land Use Rules, 2014, R. 27---Petitioners challenged the order of Environmental Protection Agency, Punjab, whereby environmental clearance/approval for construction of a multi-storey hotel had been granted---Petitioners contended that the impugned order had been passed in violation of substantive and procedural requirements of the relevant environmental laws---Validity---Section 43 of Lahore Development Authority Act, 1975 provided that 'no court or Authority shall have jurisdiction to question the legality of anything done or any action taken under [it], by or at the instance of [LDA]'---Rule 27 of Lahore Development Authority Land Use Rules, 2014 spoke of a remedy of appeal before Government of Punjab in case of any grievance germane to any order passed by an officer under said Act and Rules---Section 22 of Punjab Environmental Protection Act, 1997 provided that any person aggrieved by any order or direction of the Environmental Protection Agency, Punjab under any provision of the Act might file appeal to the Environmental Protection Tribunal, which was functioning at present in full strength under Punjab Environmental Protection Tribunal Rules, 2012---Petitioners, in presence of said alternate remedies, should have approached the said forums instead of invoking the extraordinary constitutional jurisdiction---Petitioners, to satisfy the requirement of being an 'aggrieved person' in public interest litigation needed to disclose personal interest in the performance of legal duty owned to him---Authorities while granting approval for construction of the hotel in question, had followed the rules and regulations---Constitutional petition was dismissed in circumstances.

Lt. Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty PLD 1961 SC 119; Catron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881; Farzand Raza Naqvi and 5 others v. Muhammad Din through Legal Heirs and others 2004 SCMR 400; Moulvi Saif Ullah Memon and another v. Province of Sindh and others 2011 CLC 1004; Muhammad Irshad and another v. Tehsil Municipal Administration through Tehsil Nazim, Lodhran and 3 others 2006 CLC 1902; St. Judge's Secondary School and others v. Employees' Old-age Benefits Institution and another 1988 PLC 746; Gulistan Textile Mills Ltd. v. Pakistan 1983 CLC 1474; Messrs S.A. Haroon and others v. The Collector of Customs, Karachi, and the Federation of Pakistan PLD 1959 SC 177; Mirza Muhammad Iqbal and others v. Government of Punjab PLD 1999 Lah. 109; Pakistan through Secretary Finance, Islamabad and 5 others v. Aryan Petro Chemicals Industries (Pvt.), Ltd., Peshawar and others 2003 SCMR 370; Lahore Development Authority through D.-G. and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739; Qazi Ali Athar, Advocate v. Zawar Ahmed Khan Sherwani and 3 others 2007 MLD 1884; Idress Ahmed Aftab v. Government of Punjab and others 2015 CLC 1295; Ms. Salama Iqbal Chundrigar and others v. Federation of Pakistan through Secretary Ministry of Environmental Protection, Islamabad and others 2009 CLD 682; Bilal Akbar Bhatti v. Election Tribunal, Multan and 15 others PLD 2015 Lah. 272, Suo motu case No.13 of 2010, 2013 SCMR 591; Nayyer Khan v. Government of Pakistan through Secretary Ministry of Defence, Rawalpindi, Cantt. and others 2015 CLC 978; Syeda Abida Hussain Imam and others v. The Province of Punjab through Secretary and others 2015 YLR 1522; Syed Saghir Ahmad Naqvi v. Province of Sindh through Chief Secretary, S&GAD, Karachi and another 1996 SCMR 1165; Rai Ashraf and others v. Muhammad Saleem Bhatti and others PLD 2010 SC 691; Zia ur Rehman v. Syed Ahmed Hussain and others 2014 SCMR 1015 and Ghulam Farid alias Farida v. The State PLD 2006 SC 53 ref.

Lahore Development Authority through D.-G. and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739; Suo Motu Case No. 13 of 2010, 2013 SCMR 591 and Nayyer Khan v. Government of Pakistan through Secretary Ministry of Defence, Rawalpindi, Cantt. and others 2015 CLC 978 rel.

(b) Lahore Development Authority Act (XXX of 1975)---

----Ss. 2, 3(c), 6, 14-A & 46---Lahore Development Authority Land Use Rules 2014, Rr. 37(2) & (3)---Petitioners sought declaration from the High Court to the effect that Ss.2, 3(c), 6, 14-A & 46 of Lahore Development Authority Act, 1975 and Rr. 37(2) & (3) of Lahore Development Authority Rules, 2014 be declared as illegal and unconstitutional---Said question pertaining to the said provisions having already been decided by the Supreme Court, declined to discuss and interfere with the provisions.

Lahore Development Authority through D.-G. and others v. Ms. Imrana Tiwana and others 2015 SCMR 1739 rel.

(c) Administration of justice---

----When law prescribes a certain procedure to do things then its compliance is mandatory.

(d) Administration of justice---

----Court can proceed in a matter when it enjoys jurisdiction of dealing such controversy brought before it, and when petition speaks otherwise, the acts done and proceedings carried on by such Court are nothing but an illegality and nullity in the eye of law.

(e) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Scope---Public interest litigation---Petitioner in presence of alternate remedies should have approached said forums instead of invoking the constitutional jurisdiction---Petitioner to satisfy the requirement of "aggrieved person" in public interest litigation needed to disclose personal interest in the performance of legal duty owed to him.

Waqas Ahmad Mir for Petitioners.

Ch. Tanveer Akhtar for Respondent No.3.

Jawad Hassan and Ahmad Rafay Alam for Respondent No.8.

Mian Ejaz Majeed, Deputy Director (L&E) E.P.A. Punjab.

Shah Faisal Aziz, Assistant Director, E.P.A.

Sittar Sahil, A.A.-G.

Jahanzeb Inam for Respondent No.5.

2016 C L D 1036

[Lahore]

Before Muhammad Farrukh Irfan Khan, J

Messrs SHAUKAT SOAP AND GHEE INDUSTRIES (PVT.) LTD.---Appellant

Versus

Messrs SHAUKAT BROTHERS SOAP MANUFACTURERS (PVT.) LTD.---Respondent

F.A.O. No. 157 of 2015, decided on 27th May, 2015.

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

----O. XXXIX, Rr. 1 & 2---Interim injunction, grant of---Principles---Court dealing with an application under O. XXXIX, Rr. 1 & 2, C.P.C. has to consider as to which of the parties has a prima facie case, balance of convenience or inconvenience and likely to suffer irreparable loss, in case of grant or refusal of interim injunction.

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

----S. 46(2)---Infringement of trademark---Reliefs---In an action for infringement, under S. 46(2) of Trade Marks Ordinance, 2001, all such reliefs by way of damages, injunctions and accounts can be availed by proprietor of a trademark not as alterative to one another.

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

----S.46(2)---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Specific Relief Act (I of 1877), S. 54---Suit for injunction---Interim relief, grant of---Infringement of registered trademark---Plaintiff company was using registered trademark 'Shaukat' for its products (soap) whereas defendant company in the same category of goods started using trademark 'Crystal Shaukat'---Trial Court declined to grant interim injunction in favour of plaintiff---Validity---Defendant had dishonestly adopted trademark 'Shaukat' which was the registered trademark of plaintiff---Defendant's addition of word 'Crystal' before the word 'Shaukat' to make it 'Crystal Shaukat' had no bearing or consequences and did not protect it from being liable for infringement of registered trademark 'Shaukat Soap'---Such was as the public might assume that 'Crystal Shaukat' was yet another product of the same party which was selling products under the trademarks 'Shaukat Soap' or was another quality or range of product and/or manufactured under permission or authorization of the owners of the registered trademark 'Shaukat Soap', which was being sold in Pakistan for decades---High Court set aside the order passed by Trial Court and restrained defendant from using word 'Shaukat' as trademark either alone or along with the word 'Crystal' or in conjunction with any other word or device along with a wrapper of soap which was yellow and black in colour scheme, design and getup and depicted the portrait of their predecessor in the same place and position as that of plaintiff till the decision of main suit--- Appeal was allowed in circumstances.

Messrs Super Asia v. Anwar Industries 2007 CLD 1181; Tabaq v. Tabaq 1987 SCMR 1090; Telephone Soap v. Lever Brothers 1994 CLC 2135; Jamshed Aslam Khan v. Azra Jawed 1995 CLC 436; Azra Jawed v. Jamshed Aslam Khan 1996 MLD 1203; J.N. Nichols (Vimto) Plc A Company Incorporated in the United Kingdom v. Mehran Bottlers (Private) Limited Karachi PLD 2000 Kar. 192; Transpak Corporation Limited v. The Registrar of Trade Marks 1991 MLD 658; National Detergents v. Mod International 1993 MLD 590; Mehran Ghee Mills (Pvt.) Limited v. Chiltan Ghee Mills (Pvt.) Limited 2001 SCMR 967; Messrs Alpha Sewing Machine Co. v. Registrar of Trade Marks and another PLD 1990 SC 1074; Montgomery Flour and General Mills Ltd. v. Registrar of Trademarks PLD 1973 Kar. 567; Seven-up Company v. Kohinoor Thread Ball Factory PLD 1990 SC 313; Cooper's Incorporated v. Pakistan General Stores 1981 SCMR 1039 and PLD 1991 SC 27 rel.

Muzamil Akhtar Shabir for Appellant.

Muhammad Raheel Kamran Sheikh for Respondent.

Date of hearing: 27th May, 2015.

2016 C L D 1059

[Lahore]

Before Shahid Waheed and M. Sohail Iqbal Bhatti, JJ

IMTIAZ RASOOL and another---Appellants

Versus

DEUTSCHE BANK and 7 others---Respondents

R.F.A. No. 243 of 2007, heard on 1st June, 2015.

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

----S. 10---General Clauses Act (X of 1897), S. 24-A---Recovery of finance---Leave to defend the suit, refusal of---Non-speaking order---Effect---Application for leave to appear and defend the suit filed by defendant was dismissed by Banking Court without giving any reasons---Validity--Non-giving of cogent reasons was a material irregularity which vitiated the judgment---Court to accord fair and proper hearing to person sought to be affected by its order and give sufficiently clear and explicit reasons in support of orders made by it---Banking Court dismissed application for leave to defend the suit without giving any reason, therefore, it was not a proper judgment and showed dereliction of duty and complete failure of exercise of jurisdiction---High Court set aside judgment passed by Banking Court and remanded the matter to decide application for leave to defend the suit afresh---Appeal was allowed in circumstances.

Qadir Bakhsh for Appellants.

Pervez Ahmad Barki for Respondents.

Date of hearing: 1st June, 2015.

2016 C L D 1080

[Lahore]

Before Shams Mehmood Mirza, J

NATIONAL BANK OF PAKISTAN---Plaintiff

Versus

Messrs HONDA POINT PVT. LIMITED and others---Defendants

C.O.S. No. 47 of 2011, heard on 3rd December, 2014.

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

----Ss. 9 & 10--- Suit for recovery of finance---Filing of suit, locus standi---Bank filed suit for recovery of finance and one of the objections raised by defendants in their application for leave to defend was that person who filed the suit had no authority in that respect---Validity---Officer of a financial institution who held a power of attorney in his favour need not append anything else other than that power of attorney to demonstrate his authority, to institute suit under S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001--- If it had not been so, S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 would have required production of further documents other than the power of attorney by the attorney holder to demonstrate authorization of person executing the power of attorney---Suit of plaintiff Bank, in circumstances, was competently filed---Defendants failed to raise any dispute regarding their liability that would warrant recording of evidence by granting leave to defend the suit---Claim of plaintiff Bank was duly substantiated by settlement agreement, offer letter and letter for restructuring of dues---High Court declined leave to appear and defend the suit to the defendant---Suit was decreed in circumstances.

Abdul Hameed Chohan and Imran Muhammad Sarwar for Plaintiff.

Haqnawaz Chatta for Defendants Nos.1 and 3.

Date of hearing: 3rd December, 2014.

2016 C L D 1089

[Lahore]

Before Shahid Jamil Khan and Ali Akbar Qureshi, JJ

Mst. FARHAT BEGUM through Legal Heir---Appellant

Versus

JUDGE BANKING COURT NO.1 MULTAN and 2 others---Respondents

F.A.O. No. 41 of 2011, decided on 5th March, 2015.

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

----S. 19(7)---Civil Procedure Code (V of 1908), O. XXI, R. 58---Suit for recovery of finance---Execution of decree---Objections---"Bona fide purchaser"---Scope---Execution of decree was resisted on the plea that objector was bona fide purchaser without notice and his suit for specific performance of agreement was pending---Validity---Objector filed suit for specific performance of agreement after passing of judgment and decree by Banking Court---All proceedings were in the knowledge of objector and he did not fall within the category of a "bona fide purchaser" without notice---Objector could not lay hand on suit land in presence of mortgage deed executed by judgment debtor as "once a mortgage was always a mortgage"---High Court declined to interfere in the order passed by Banking Court---Appeal was dismissed in circumstances.

Muhammad Saleem Iqbal for Appellant.

Rana Muhammad Ashraf Khan for Respondent No.3.

2016 C L D 1097

[Lahore]

Before Atir Mahmood and Shahid Mubeen, JJ

Messrs MEGA STEEL MILLS PRIVATE LIMITED through Chief Executive/Director---Appellant

Versus

GOVERNMENT OF PUNJAB through Secretary, Environmental Protection Department, Punjab and 6 others---Respondents

F.A.O. 145 of 2015, decided on 22nd December, 2015.

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

----Ss. 16 & 23---Pakistan Environmental Protection Agency (Review of IEE and EIA) Regulations, 2000, Regln. 20(3)---Environmental protection---Sealing of property---Audi Alteram Partem, principle of---Applicability---Appellant company was aggrieved of sealing its factory by authorities under Pakistan Environmental Protection Act, 1997---Plea raised by appellant was that no opportunity of hearing was provided to appellant, before sealing its factory---Validity---Authorities were not empowered under S. 16 of Pakistan Environmental Protection Act, 1997, and Regulation 20(3) of Pakistan Environmental Protection Agency (Review of IEE and EIA) Regulations, 2000, to seal property---Sealing of property/premises of appellant by authorities was beyond the scope of Pakistan Environmental Protection Act, 1997, and Pakistan Environmental Protection Agency (Review of IEE and EIA) Regulations, 2000---Action of sealing property of appellant by authorities was violative of principle of audi alteram partem as no notice was given by authorities to appellant---Principles of natural justice had to be observed in all proceedings whether judicial or administrative, if proceedings were to result in consequences affecting person or property or other right of parties concerned---Such rule was applied even though there was no positive words in the statute or legal document whereby power was vested to take such proceedings and in such cases such requirement was to be implied into it as the minimum requirement of fairness---High Court set aside the order of sealing of factory of appellant by authorities---Appeal was allowed in circumstances.

Amanullah Khan v. Chief Secretary, Government of N.-W.F.P. and 2 others 1995 SCMR 1856; The University of Dacca through Vice Chancellor and The Registrar, University of Dacca v. Zakir Ahmad PLD 1965 SC 90; Mrs. Anisa Rehman v. P.I.A.C. and another 1994 SCMR 2232 and Abdul Hafeez Abbasi and others v. Managing Director, Pakistan International Airlines Corporation, Karachi and others 2002 SCMR 1034 rel.

(b) Maxim---

----Audi alteram partem---Applicability---Scope.

Syed Riaz-ul-Hassan Gillani for Appellant.

Mubashar Latif Gill, A.A.-G.

Syed Ahsan Raza Hashmi for Respondent No.7.

Hafiz Muhammad Tahir and Khalid Iqbal Cheema for other Respondents.

2016 C L D 1192

[Lahore]

Before Shams Mehmood Mirza, J

CITIBANK N.A. through duly Authorized Attorney---Plaintiff

Versus

SHOAIB PAPER MILLS and 4 others---Defendants

C.O.S. No.108 of 2013, heard on 5th March, 2015.

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

----Ss. 2(e)(i), 9 & 10---Suit for recovery of finance---Leave to appear and defend the suit---Charging of markup---Extension in time---Bank filed suit against defendants seeking recovery of finance facility which had been defaulted by them---Plea raised by defendants was that Bank could not charge markup for the period extended in payment of finance---Validity---Financial institution, while granting extension in time for payment of finance, could charge markup thereon---Mandatory requirements were imposed under S. 10(4) & (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 to state all particulars mentioned therein and to append all necessary documents---High Court dismissed petition for leave to appear filed by defendants due to its failure to meet requirements of S. 10(4) & (5) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Defendants failed to raise any dispute with regard to their liability---Defendants admitted execution of agreement, therefore, they were estopped from challenging any of the amounts prior to execution of agreement in question---As the defendants failed to raise any dispute on facts, application for leave to defend filed by them was dismissed---Suit was decreed accordingly.

The Bank of Punjab v. Messrs Khan Unique and others 2016 CLD 29; Habib Bank Limited v. Service Fabrics Limited and others 2004 CLD 1117 and Appollo Textile Mills Limited v. Soneri Bank Limited 2012 CLD 337 rel.

Khawar Khaldon Rana for Plaintiff.

M. Manzoor ul Haq Chaudhary for Defendants.

Date of hearing: 5th March, 2015.

2016 C L D 1267

[Lahore]

Before Ayesha A. Malik, J

COLONY SUGAR MILLS LTD.---Petitioner

Versus

D.G. ENVIRONMENTAL PROTECTION AGENCY and others---Respondents

W.P. No. 5168 of 2014, decided on 26th February, 2014.

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

----Ss. 16 & 21(3)(a)---Punjab Local Government Act (XVIII of 2013), Ss. 138 & 143---General powers of Inspector---Power to seal property---Scope---Environmental Protection Order---Jurisdiction and power of Environmental Protection Tribunal---Petitioner had undertaken not to throw the polluted water in the drain and ensured safe disposal thereof---Petitioner, therefore, had fair warning of the situation---Distillery plant of the petitioner had been sealed after notice and opportunity, to rectify the (environmental) issues---Power to seal provided under S. 138 of Punjab Local Government Act, 2013 was to be exercised in cases of threat to public health, safety or welfare of the public, and the same was an independent power---Pendency of (Environmental) appeal or complaint against the petitioner could not prevent the Inspector from taking notice of the serious threat to the public health and safety---Remedy of appeal against the impugned order being available to the petitioner under S. 143 of Punjab Local Government Act, 2013, constitutional petition was dismissed.

Mrs. Jawad Hassan and Ch. Imtiaz Elahi for Petitioner.

Samia Khalid, A.A.-G. with Sharjeel Haider, A.D. Legal, Rizwan Bashir T.O. (R) and Zamir Hussain A.C. Phalia for Respondents.

2016 C L D 1279

[Lahore]

Before Muhammad Farrukh Irfan Khan, J

FC FRI-CHICKS---Petitioner

Versus

AKHTER MEHMOOD---Respondent

Crl. Org. No. 28 of 2016, decided on 19th February, 2016.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 3, 39 & 40---Rights conferred by registered trade mark---Infringement---Scope---Registration of 'trade mark'/'service mark'---Bona fide use of unregistered trade mark---Principles---Petitioner filed present petition for initiation of contempt proceedings on ground that the respondent had given the undertaking before the High Court in the First Appeal against Order to the effect that he would confine his business under his trademark, which had been registered in respect of goods and not in relation to providing services---Petitioner contended that the respondent could not use his trademark for restaurant services etc., as the same was registered for goods only---Validity---Trade Marks Ordinance, 2001 laid down provision for registration of 'trademark' as well as 'service mark'---If an original owner of a trademark failed to register its trademark in relation to its services, he could not be taken to task for that failure---Bona fide use of an unregistered trademark could not be restricted in relation to a lawful business being conducted by a bona fide owner of the business, as long as the trademark was not in conflict with the rights of a third party or against the provision of any law in force---Registered trademark could also be used, even though, the same had not been registered in relation to corresponding or some other services, as long as the use in relation to said services did not infringe the rights of third party or was contrary to any law already in force---Respondent had not given any undertaking in said appeal for not using its registered trademark in relation to services; instead, the respondent had claimed the infringement of his trademark by the petitioner, and the petitioner, having been found at fault, had been directed to make changes in his trademark in order to prevent confusion and deception amongst general public---Criminal original petition was dismissed with cost accordingly.

Faiz Rasool Jalbani for Petitioner.

2016 C L D 1283

[Lahore]

Before Shahid Karim, J

Dr. ZAFAR ULLAH and 5 others---Petitioners

Versus

SPECIALISTS CARE HOSPITAL through Chief Executive and 14 others---Respondents

C.O. No. 61 of 2004, decided on 7th December, 2015.

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

----S. 86---Notice---Mode of service---No requirement of notice by registered post, but the notice can take any form and can be served by any means under the provisions of S. 86 of Companies Ordinance, 1984.

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

----Ss. 86, 152 & 290---Members of company---Change of members---Correction in Register of Members---Statutory notice---Petitioners were shareholders of company who were aggrieved of change in the members of company under a Memorandum of Understanding---Petitioners had sought rectification of Registers of Members of company---Validity---Memorandum of Understanding and meetings of Directors and shareholders with one of the petitioners, regarding transfer of shares to new shareholders was sufficient notice to petitioners within the contemplation of S. 86 of Companies Ordinance, 1984---Petitioners, in circumstances, could not be heard to turn volte face and deny that they had no notice of further issue of capital and such waiver of that notice was unlawful---Where all shareholders were involved in decision making, it would be deemed that they had notice under S. 86 of Companies Ordinance, 1984 and no formal notice was required to be served---No question of waiver, therefore, had arisen---Circular in terms of S. 86(3) of Companies Ordinance, 1984, was issued by respondent company and was also sent to the Registrar of Companies in compliance of the provisions of law---Petitioners had knowledge and notice of further issue of capital---Even if petitioners did not have notice, substantial compliance of the provisions of S. 86 of Companies Ordinance, 1984 was made by issuance of circular in terms of S. 86(3) of Companies Ordinance, 1984---Petitioners were estopped by their conduct and by their acquiescence to challenge further issue of capital on the ground that notices were not issued to them---Validity of petition under S. 290 of Companies Ordinance, 1984 had to be judged on the facts as those were at the time of its presentation and that subsequent facts could not affect maintainability of petition's validity---High Court declined to interfere in the matter and dismissed the petition in circumstances.

Needle Industries, India Ltd. v. Needle Industries Newey (India) Holdings Ltd. AIR 1981 SC 1298; Milan Sen v. Guardian Plastics Ltd. (1998) 91 Com. Cases 105; Gower and Davier Principles of Modern Company Law by Paul L. Davies (Seventh Edition); Naseer A. Sheikh and 4 others v. The Commissioner of Income Tax (Investigation), Lahore and others PLD 1992 SC 276; Tehsil Nazim TMA Okara v. Abbas Ali and 2 others 2010 SCMR 1437; E.A. Evans v. Muhammad Ashraf PLD 1964 SC 536; Maxwell's Interpretation of Statutes, 11th Edition, page 376; Messrs Nishat Mills Limited v. Superintendent of Central Excise Circle II and 3 others PLD 1989 SC 222; Collector of Sales Tax and Central Excise, Lahore v. Zamindara Papers and Board Mills and others 2008 SCMR 615 and Messrs Dadabhoy Cement Industries Limited and others v. Messrs National Development Finance Corporation 2002 CLC 166 ref.

Khawaja Saeed uz Zafar, Asjad Saeed and Ch. M. Naseer for Petitioners (in C.O. No. 61 of 2004).

Dr. Khalid Ranjha for Petitioners (in C.Os. Nos.22 and 23 of 2006).

M. Azam Chughtai for Respondents Nos. 3, 4, 9, 12 and 15.

Dr. Pervaiz Hassan and Asad Ahmad Ghani for Respondents Nos.1, 2, 5, 8, 11 and 14

Date of hearing: 20th November, 2015.

2016 C L D 1409

[Lahore (Multan Bench)]

Before Amin-ud-Din Khan and Mehmood Maqbool Bajwa, JJ

Messrs PARAS OIL INDUSTRIES through Managing Partner and another---Appellants

Versus

MUSLIM COMMERCIAL BANK LIMITED through Manager---Respondent

R.F.A. No. 23 of 2008, heard on 10th September, 2013.

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

----Ss. 12 & 9(5)---Suit for recovery of loan amount---Ex parte decree, setting aside of---contention of the applicants was that they were not residing at the given address and could not be served---Application for setting aside ex parte decree was dismissed by the Banking Court---Validity--Service of the applicants was required to be procured by adopting all modes mentioned in S. 9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Applicants were not residing at the given address and process through summons could not be served upon them---Specific plea was taken by the applicants that they were not residing at the given address---Fate of the application for setting aside ex parte decree could not be decided summarily---Trial Court should have disposed of the application by casting issues and providing an opportunity to the adversaries to substantiate their contention involving factual controversy---Omission on the part of the Trial Court to act in the manner suggested had made all the orders impugned as well as judgment and decree nullity in the eye of law---Impugned orders as well as judgment and decree were set aside and matter was remanded to the Trial Court to decide the application for setting aside ex parte judgment and decree in accordance with law within specified period---Appeal was allowed in circumstances.

Shuja Haider Sayyed for Appellants.

Muhammad Saleem Iqbal for Respondent.

Date of hearing: 10th September, 2013.

2016 C L D 1448

[Lahore]

Before Shams Mehmood Mirza, J

CITIBANK N.A. through Duly Authorized Attorney---Plaintiff

Versus

SANA ULLAH (PVT.) LIMITED and 4 others---Defendants

C.O.S. No. 95 of 2013, heard on 17th March, 2015.

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

----Ss. 9 & 10---Suit for recovery of finance---Leave to appear and defend the suit---Attorney---Authority to file suit---Bank filed suit against defendants seeking recovery of finance facility which had been defaulted by them---Plea raised by defendants was that suit was not filed by a competent person---Validity---Suit was filed by Bank through an official whose power of attorney was available on record---Three categories of persons were empowered under S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, (i) the Branch Manager, (ii) an officer authorized by power of attorney and (iii) an officer who was otherwise authorized by a financial institution---Officer of financial institution, who held power of attorney in his favour, was not required to append anything else other than the power of attorney to demonstrate his authority to institute the suit under S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Defendants failed to raise any dispute with regard to their liability---Defendants admitted execution of agreement which contained their admission of liability, therefore, they were estopped from challenging any of the amounts prior to execution of agreement in question---Defendants having failed to raise any dispute on facts, applications for leave to defend filed by defendants were dismissed---Suit was decreed accordingly.

The Bank of Punjab v. Messrs Khan Unique and others 2016 CLD 29; Habib Bank Limited v. Service Fabrics Limited and others 2004 CLD 1117; Appollo Textile Mills Limited v. Soneri Bank Limited 2012 CLD 337 and Mian Aftab A. Sheikh and others v. Messrs Trust Leasing Corporation Limited and another 2003 CLD 702 rel.

Khawar Khaldoon Rana for Plaintiff.

M. Muneeb for Defendants.

Date of hearing: 17th March, 2015.

2016 C L D 1471

[Lahore (Multan Bench)]

Before Atir Mahmood and Mushtaq Ahmad Tarar, JJ

Sheikh MURSHID ALI and others---Appellants

Versus

UNITED BANK LIMITED---Respondent

R.F.A. No. 202 of 2011, heard on 12th November, 2015.

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

----Ss. 9(2) & 10(3)(4)---Bankers' Books Evidence Act (XVIII of 1891), Ss. 2(8) & 4---Constitution of Pakistan, Art. 10-A---Suit for recovery of loan amount---Procedure---Leave to appear and defend the suit, application for---Statement of account---Certificate of balances---Scope---Banking Court dismissed application for leave to appear and defend the suit and decreed the suit filed by the plaintiff-Bank---Contention of defendants-customers was that no statement of account was filed with the plaint by the plaintiff-Bank---Validity---Plaint should be supported by a statement of account which in case of financial institution should be duly certified under Bankers' Books Evidence Act, 1891 and all other relevant documents with regard to grant of finance---Defendants-customers availed cash finance facility of Rs.5,000,000/- which was outstanding against them---Plaintiff-Bank had annexed one page statement of account of assets and mark up whereas one page statement of other account of customer liabilities mark up with the plaint---Said statements had been certified and signed by an officer and manager but neither the name of manager nor the name of officer was present underneath their signatures---No date had been mentioned as to when such statements were certified by the manager and officer of the Bank---Every amount/sum advanced or paid to a customer or sum expended/incurred for and on behalf of a customer by a banking company should be entered as "debit" in the ledger of Bank---Money received from or on behalf of customer should be entered as a customer's "credit"---Such statement of account was required to be conveyed to the customers informing them of their account position and obligations towards the Bank and vice versa---Statement of account so certified would become admissible in evidence, transactions and accounts therein recorded like original entry unless otherwise disputed---Statement of accounts annexed by the Bank with the plaint did not show all transactional entries, debit and credit entries, rate of mark-up, rate of excise duty and rate of commitment charges---Documents annexed by the Bank, in the present case, could be called only the "certificate of balances"---No presumption of admissibility could be given to the "certificate of balances"---Impugned decree was passed upon an inadmissible document i.e. "certificate of balances"--- Filing of complete and accurate statement of account with the plaint was a mandatory requirement which defect could not be rectified through replication---Only deficiency that affidavit attached with the application for leave to appear and defend the suit was not in an elaborate form did not render the said application ineffective---Impugned judgment and decree passed by the Banking Court was not sustainable which was set aside---Application for leave to appear and defend the suit was accepted subject to submission of surety bond equal to the decretal amount before the Trial Court within fifteen days of appearance of defendants-customers---Case was remanded to the Banking Court for decision afresh on merits in accordance with law.

Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others 2011 CLD 408; Messrs Soneri Bank Limited v. Messrs Compass Trading Corporation (Pvt.) Limited through Director/Chief Executive and 3 others 2012 CLD 1302; Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931; National Bank of Pakistan through Manager v. Messrs Mujahid Nawaz Cotton Ginners through Partners and 6 others 2007 CLD 678; Messrs Muhammad Siddiq Muhammad Umar and another v. The Australasia Bank Ltd. PLD 1966 SC 684; Habib Bank Ltd. v. Messrs Doaba Corporation through Proprietor and another 2009 CLD 845; Habib Bank Ltd. v. Service Tabrics Ltd. and others 2004 CLD 1117; Apollo Textile Mills Ltd. through Chief Executive and Director and 3 others v. Soneri Bank Limited through Manager/Principal Officer 2011 CLD 1655 and NIB Bank Ltd. v. Dewan Textile Mills Ltd. 2012 CLD 141 ref.

Messrs C.M. Textiles (Pvt.) Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587; Elbow Room and another v. MCB Bank Limited 2014 CLD 985; Zohair Akhtar v. Jawad Adil 2006 YLR 1510 and United Bank Ltd. v. Ilyas Enterprises through Proprietor Mr. Ilyas Malik and 2 others 2004 CLD 1338 rel.

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

----Preamble---Scope---Financial Institutions (Recovery of Finances) Ordinance, 2001 is a special law which regulates the relationship between financial institutions and customers.

M. Suleman Bhatti for Appellants.

Muhammad Salim Iqbal for Respondent-Bank.

Date of hearing: 12th November, 2015.

2016 C L D 1546

[Lahore]

Before Atir Mahmood, J

STANDARD CHARTERED BANK (PAKISTAN) LIMITED through Manager---Appellant

Versus

SHAFQAT ULLAH TAHIR---Respondent

F.A.Os. Nos. 158, 223 and 255 of 2008, heard on 14th October, 2015.

Punjab Consumer Protection Act (II of 2005)---

----Ss. 33, 27, 25, 13 & 3---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 7 (4) & 2(a)---Constitution of Pakistan, Art. 143---Consumer complaint---Liability for defective services---Jurisdiction of Consumer Court regarding matter between financial institutions and their customers---Scope---Respondents filed application for rejection of the complaint on the ground that the Consumer Court had no jurisdiction to try the complaint as the matter was between the financial institution and its customer, which was dismissed by the Consumer Court---Respondent, later on, filed application for revisiting said order of dismissal, which was also dismissed---Petitioner contended that impugned order being interlocutory order present appeal was not competent---Validity---Impugned orders to the extent of the applications were final and not interlocutory orders---Matters in hand were between Bank and customers---Bank fell within the definition of 'financial institutions'---Matters pertaining to the financial institutions with their customers could only be taken up and decided by the Banking Court as provided under S. 7(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Consumer Court had no unfettered powers and certain restrictions existed in S. 3 of the Punjab Consumer Protection Act, 2005, which provided that the Act would be in addition to, and not in derogation of, the provisions of any other law---Consumer Court, therefore, had transgressed its powers and erred in law while assuming jurisdiction in the matter in hand and entertaining the complaint---Financial Institutions (Recovery of Finances) Ordinances, 2001, in terms of Art. 143 of the Constitution, being a Federal statute, had precedence over the Consumer Protection Act, 2005---High Court, setting aside the impugned orders, dismissed the complaint---Appeal was allowed in circumstances.

Messrs Askari Leasing Ltd. through Chief Manager v. Presiding Officer and another 2015 CLD 196 = PLD 2015 Lah. 140 and Allied Bank Ltd. Faisalabad through Attorneys of the Bank v. Khalid Mehmood PLD 2013 Lah. 454 ref.

Messrs Askari Leasing Ltd. through Chief Manager v. Presiding Officer and another 2015 CLD 196 = PLD 2015 Lah. 140 rel.

Ashiq Hussain Hanjra for Appellant.

Usman Malik for Respondent.

Date of hearing: 14th October, 2015.

2016 C L D 1566

[Lahore]

Before Shams Mehmood Mirza, J

BANK OF PUNJAB through Chief Manager---Plaintiff

Versus

Messrs ANMOL TEXTILE MILLS LIMITED through Chief Executive and 3 others---Defendants

C.O.S. No. 44 of 2008, decided on 10th November, 2015.

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

----S. 9---Civil Procedure Code (V of 1908), O. XVI, Rr. 1, 2 & 8---Summoning and attendance of witnesses--- Principles--- Proposed witnesses were being summoned for production of the record (of finance facilities)---None of the witnesses, who were sought to have been summoned, had been required to adduce oral evidence, and rather, record of the finance facilities was being summoned through them---Plaintiff-Bank had examined witnesses in its evidence and produced documentary evidence, the onus of which was on the plaintiff---Defendants were, therefore, under a duty to allege the type of record the witnesses were required to produce--- Precise details of the record had not been mentioned in the application---In terms of O. XVI, R. 1(3), C.P.C., the party, who had begun to call his witnesses, was not entitled to obtain the process to enforce the attendance of any witness against whom process had not previously been issued without an order passed by the court stating reasons thereof---Application in question was not maintainable for want of particulars of the relevant documents sought to be produced and as the same had been filed at belated stage after recording of evidence of the defendants--- Application was dismissed in circumstances.

Ch. Abdul Hameed Chohan for Plaintiff.

Rao Athar Ikhlaq for Defendants/Applicants (in C.M. No.126-B of 2015).

2016 C L D 1586

[Lahore]

Before Shahid Karim, J

BANK ALFALAH LIMITED---Plaintiff

Versus

MUKHTAR HUSSAIN CHISHTI---Defendant

C.O.S. No. 19 of 2010, heard on 27th November, 2015.

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

----Ss. 9 & 10---Contract Act (IX of 1872), S. 176---Recovery of loan amount---Leave to defend, refusal of---Pawnee's right where pawnor makes default---Set off not claimable in application for leave to defend---Jurisdiction of Banking Court---Scope---Plaintiff-Bank filed the suit for sale of pledged shares to recover the loan amount---Defendant contended that failure to sell the shares resulted in the cumulative loss which needed to be set off against present claim of the Bank---Validity---Set off could not be claimed in the application for leave to defend, and the same could only be claimed in written statement filed under regular suit under S. 9, C.P.C.---Banking Court exercised its jurisdiction under the special law and special procedure had been prescribed regulating the suit filed under the law; normal and recognized mode of trial was not applicable to the suit filed under the special jurisdiction of Banking Court---Application for leave to defend had to be seen on its own merits and the substantial questions of law raised therein had to be weighed without recourse to any claim of set off set up by the defendant---However, whether the plaintiff-Bank had acted prudently and with commercial sense could legitimately be put forth as ground for the grant of leave to defend--¬-Defendant's plea, that under the Contract Act, 1872, he was entitled to the set off as the Bank had failed to fulfil its obligation to sell the shares, was misplaced and erroneous---Bank had been authorized to sell the pledged shares in terms of the agreement, but the same did not mean that there was corresponding duty of the Bank, either under the terms of the agreement or under the general law of contract to sell the pledged shares under certain conditions---Section 176 of Contract Act, 1872 conferred right on the Pawnee to bring suit against the pawnor upon the debt or price if the pawnor made default in payment of the debt or performance of the promise at the stipulated time; at the same time, the Pawnee might retain the goods pledged as collateral security---Section 176 of Contract Act, 1872 also gave right to the Bank to sell the goods pledged on giving the pawnor reasonable notice for the sale---Said rights gave alternate remedies which the Bank might exercise at its discretion---Goods which had been pledged with the Bank were shares and stocks, which were traded in the stock market---Shares had a value attached to them, and the value was not constant and the same fluctuated with the currents of the market---Shares, as a commodity, were susceptible to ebbs and flows in value and could not be equated with perishable goods---Value of the shares might be much higher at that point of time, as the shares might have recovered the value that had lost during the crash of year 2008; for the same reason, the Bank did not make the commercial decision of selling the shares at the time when the capital markets were at their lowest ebb---Defendant had not produced any correspondence with the Bank at the relevant time calling upon the Bank to off load the shares and sell the same in order to recover the debt owed to the Bank---No duty was cast upon the Bank to sell the shares at any cost under given circumstances, and the Bank had the option to bring the suit and to retain the pledged shares as security---Defendant failed to raise any substantial questions of law and fact--- Application for leave to defend was dismissed and the suit decreed in circumstances.

A.M. Burg v. Central Exchange Bank Ltd. PLD 1966 (W.P.) Lah. 1; Ellis and Company's Trustees v. Dixon Johason (1925) AC 489, p.493; Faysal Bank Ltd. v. Messrs Zamindar Rice Mills 2007 CLD 1164; Bank of Punjab v. First National Equities Limited 2010 CLD 903 and Siddique Woolen Mills and others v. Allied Bank of Pakistan 2003 SCMR 1156 rel.

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

----S. 176---Pawnee's right where pawnor makes default---Scope---Section 176 of Contract Act, 1872 is, in essence, a right which comes to vest in the pawnee, and the right cannot be controverted into corresponding obligation at the whim of the pawnor---Said right in the pawnee and discretion to exercise that right at the most opportune moment cannot be asserted as an obligation from the standpoint of the pawnor, which would tantamount to taking away that right---Key words in S. 176 of Contract Act, 1872 are 'makes default in payment of the debt, or performance, at the stipulated time, of the promise'; thus, the right under S. 176 is triggered on the default at the stipulated time---Said right is not engaged when the price of the goods fall below certain threshold; otherwise, that would amount to reading into the law what is not provided---In absence of default and the stipulated time having not arrived, the mandate of S. 176 of Contract Act, 1872 is not engaged.

A.M. Burg v. Central Exchange Bank Ltd. PLD 1966 (W.P.) Lah. 1 and Faysal Bank Ltd. v. Messrs Zamindar Rice Mills 2007 CLD 1164 rel.

Shazib Masood for Plaintiff.

Tariq Kamal Qazi for Defendant.

Date of hearing: 27th November, 2015.

2016 C L D 1621

[Lahore]

Before Ijaz ul Ahsan, J

ROYAL BANK OF SCOTLAND LIMITED---Plaintiff

Versus

Syed ATTAULAH SHAH and another---Defendants

Civil Original Suit No. 88 of 2010, decided on 13th February, 2012.

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

----Ss. 9 & 10----Recovery of loan amount---Leave to defend, refusal of--- Fraud, misrepresentation or deceit---Statement of account---Scope---Running finance facility---Essence---Bank's right of lien on amount kept in lien account---Scope---Amount repaid could be utilized/adjusted either towards principal sum or markup---Board of Directors of the plaintiff-Bank had passed resolution authorizing two of its officials to execute power of attorney in favour of different officers of the Bank---Said Bank officials had executed the power of attorney in favour of the Bank officials, who had signed plaint in the suit---Suit had, therefore, been competently filed by said authorized representatives of the Bank---Documents available on record contained all necessary details along with the amounts disbursed, amounts repaid and the balance amount recoverable from the defendants---Defendants had admitted to have availed the facility as alleged by the Bank and had not denied signing/execution of any of the documents---Only defence taken in the application for leave to defend was that the finance and security documents had been obtained by fraud, misrepresentation or deception---Defendants, however, continued to operate their accounts and utilized the facilities granted to them by the Bank during years from 2005 till 2010, but they had neither challenged any of the documents nor approached any court of law with the allegation that they had been adverted into signing or executing any of the documents in favour of the Bank---Defendants had mortgaged their property not only by way of deposit of original title documents of the property but also by executing registered mortgage for token amount in favour of the Bank, but the defendants had not agitated the matter before any court that the mortgage had been fraudulently created and the original title documents had fraudulently been obtained---Sum of Rs.195 Million allowed to the defendants by the Bank represented the principal limit of the facility which the defendants had been allowed to avail; however, the Bank had never promised, nor had the defendants attempted to withdraw the entire amount in one go---Essence of 'running finance facility' was that while remaining within principal limit of the facility, the customer was allowed to withdraw the amount according to his business requirements and repay the amount from time to time, of which the Bank maintained the record---Amount repaid could be utilized towards payment of the principal as well as mark up; for the same reason, the Bank maintained two different accounts, one for disbursement and recovery of the principal and the other for accrual and repayment of markup---Statement of account in question contained date-wise debit and credit entries, which had been maintained in the regular course of business---Statement of account had been duly verified in accordance with the provisions of Bankers' Books Evidence Act, 1891, and the same therefore, carried the presumption of truth---Amount of Rs.75 Million was agreed to be kept in the lien account, and the defendants were entitled to receive return on said amount at the agreed rates---However, the essence of the Bank's right on the lien account was that in case the customer defaulted, the Bank had the right to exercise its right of lien and adjust the amounts kept under its lien to recover its dues; the Bank had adjusted said amount in exercise of its right of lien---Petition for leave to defend raised no substantial question of law or fact, which could require recording of evidence---Averments made in the plaint were deemed to have been admitted---Suit was decreed in circumstances.

Muhammad Ali Lashari for Plaintiff.

Omar Farooq Khan for Defendants.

Date of hearing: 9th February, 2012.

2016 C L D 1654

[Lahore]

Before Masud Abid Naqvi and Shams Mehmood Mirza, JJ

Messrs ASIM TRADERS through Sole Proprietor and others---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Manager---Respondent

R.F.A. No. 719 of 2010, decided on 1st February, 2016.

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

----S. 9----Contract Act (IX of 1872), S. 141---Recovery of loan amount---Discharge of guarantee/surety on release of pledged stock---Permissibility---Question before the High Court was as to whether release of pledged stocks by the plaintiff-Bank to the defendants/ principal debtor had discharged the defendants/guarantors from their liability as guarantors---Guarantees executed by the defendants showed that permission had been granted to the Bank by the terms of the guarantees to deal with the securities of the principal debtor without reference to the guarantors---Deed of guarantee showed that the scope of liability of the guarantors had been defined in extremely broad and wide terms, the effect of which was not to discharge the guarantor of his obligations or liability, particularly, if there had been some material variation in the principal debtor's obligation or where the creditor had dealt with the securities offered by the principal debtor---Defendant/ principal debtor had approached the Bank with the request to release the pledged stocks as according to him the stock was losing its value and sought permission to sell the same for repayment to the Bank of the amount under the Case Finance (pledge) Facility, and the Bank had released the pledged stocks after the defendant had executed the trust receipt, after which the defendant had been paying amounts to the Bank for certain period---By releasing the pledged stocks and getting payments in return, the Bank could not be said to have lost or parted with the security, which could, in turn, affect discharge of the surety under S. 141 of Contract Act, 1872---Actions of the Bank in releasing the pledged stocks to the defendant and getting money in return was not inconsistent with or rendered nugatory to the rights of the surety in any manner whatsoever---By releasing the pledged stocks, the Bank had not impaired any of the rights or remedies of the defendants/guarantors against the principal debtor---Defendants/principal debtors had not pleaded in their applications for leave to defend that the transaction, through which the pledged stock had been released, was in any way mala fide or the stocks had been sold for a lesser value or the same was the result of fraud---In view of the express stipulations in the deeds of guarantee executed by the defendants/guarantors, any reliance on S. 141 of Contract Act, 1872 was entirely futile and of no avail to them---Defendants had not met the requirements of S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001, as they had not furnished the details of the availing and repayments of the amounts as alleged in their applications for leave to defend---Appeal was dismissed in circumstances.

Citibank N.A. v. Juggilal Kamlapat Jute Mills Co. AIR 1982 Delhi 487; Corporation Bank v. Mohandas Baliga ILR 1993 Kar 201; Mian Aftab A. Sheikh and others v. Messrs Trust Leasing Corporation Limited and another 2003 CLD 702 and Amir Javed and another v. Al-Baraka Islamic Investment Bank and others 2005 CLC 178 rel.

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

----Ss. 23, 133, 135 & 141---Guarantee/surety, rights of---Scope---Rights conferred on the surety under Ss. 133, 135 & 141 of Contract Act, 1872 can be waived by specific agreement in the deed of guarantee and such agreement amounts to consent within the meaning of said provisions of Contract Act, 1872---Legal rights available to the guarantor under the provisions of Chapter VIII [Ss. 124 - 147] of Contract Act, 1872, can be given up at the time of execution of the contract of guarantee, provided such giving up of legal rights under any contract was not hit by S. 23 of Contract Act, 1872.

Citibank N.A. v. Juggilal Kamlapat Jute Mills Co. AIR 1982 Delhi 487 rel.

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

---Ch. VIII [Ss. 124 - 147]---Interpretation, rules of---Provisions contained in Chapter VIII of Contract Act, 1872 are closely interlinked, and, therefore, the same must be read together and not in isolation.

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

----Ch. VIII [Ss. 124 - 147]---Guarantee/surety, rights of---Scope---Rights of surety under Chapter VIII of Contract Act, 1872 are related to the agreement entered into by individuals, and as such the same had nothing to do with the public policy.

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

----S. 145---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9---Surety's/guarantor's right to be indemnified---In case of payment by the surety of the amount of the finance facilities under the contract of guarantee in terms of S. 145 of Contract Act, 1872, the surety has the right to be indemnified and to recover from the principal debtor whatever sum he has originally paid under the guarantee.

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

----Ss. 128, 137 & 138---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9---Liability of co-guarantors/co-sureties---Scope and relationship---Release of one co-surety by creditor does not discharge other sureties---Section 128 of Contract Act, 1872 provides that the liability of guarantor/surety is co-extensive with that of the principal debtor, unless otherwise is provided by the contract, that is the parties to the contract may contract out of said provision---Guarantor's liability stands on equal footing with that of the principal debtor and the creditor can sue them jointly and singly---Section 137 of Contract Act, 1872 provides that the creditor's forbearance to sue the principal debtor or to enforce any other remedy against him does not, in absence of any provision in the guarantee to the contrary, discharge the surety---Similarly, under S. 138 of Contract Act, 1872, in case there were co-sureties, release by the creditor of one of them does not discharge the others, nor does the same freed the surety so released from his responsibility to the other sureties.

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

----Ch. VIII [Ss. 124 - 147]---Guarantee, consideration and object of---Scope---Consideration, in case of contract of guarantee, was the advancing of loan to the principal debtor with the object to secure the debt of the creditor-Neither said consideration nor the object of the agreement were unlawful as the same were not forbidden by law.

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

----Ch. VIII [Ss. 124 - 147]--- Guarantee/surety, waiver of---Parameters---Rights of surety under Chapter VIII of Contract Act, 1872 could be waived, and the waiver did not defeat any provision of law; therefore, recitals in the agreement of guarantee waiving rights under Chapter VIII of Contract Act, 1872 were not opposed to public policy.

Itikhar Ullah Malik for Appellants.

Fakhar uz Zaman for Respondent/Bank.

Date of hearing: 2nd December, 2015.

2016 C L D 1678

[Lahore]

Before Muhammad Khalid Mehmood Khan and Shahid Bilal Hassan, JJ

BEGUM RASHIDA JAMIL---Appellant

Versus

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Chairman and 2 others---Respondents

E.F.A. No.862 of 2015, heard on 5th April, 2016.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 118(2), 122 & 123---Execution of decree---Payment under decree---Decree would be satisfied on payment of entire decretal amount as ordered by the Trial Court-Payment of liquidation damages on late settlement of claim-Realization' (of decretal amount)--­Scope---Executing Court had found that the judgment debtor, having deposited the amount of decree in the Court as security for suspension of executing of the decree, as directed by the appellate court, which the decree holder had also received, was said to have satisfied the decretal amount-Validity-Insurance Tribunal, while passing the decree, had specifically provided that the judgment debtors were liable to pay Group Claim along with liquidated damages under S. 118(2) of Insurance Ordinance, 2000 from the date of death of the deceased till realization of the same at monthly rests at the rate of 5% higher than the prevailing base rate---Insurance Tribunal had fixed the date from which the decree would be payable and liquidated damages would •continue till realization (of decretal amount)---Word 'realization' denoted that the amount of decree, stood paid or realized---Judgment debtor had although deposited certain sum with the appellate court, but said amount was not payable to the decree holder, as such the decree could. not be said to have stood realized on deposit of the amount with the Court---Executing Court had, therefore, erred in law while holding that the decree stood satisfied on deposit of amount of the decree M the Court---Decree in question would be satisfied on payment of entire decretal amount as ordered by the Trial Court---High Court, accepting appeal, remanded the case to the Executing Court with the direction that the Court would calculate the decretal amount as per terms of the decree after entertaining objections as to . calculation of the decretal amount and make adjustment of the amount already paid to the decree holder before directing the judgment debtor to pay the amount of decree---Execution appeal was allowed in circumstances.

Liaqat Ali Butt for Appellant.

Ibrar Ahmad for Respondents.

Date of hearing: 5th April, 2016.

2016 C L D 1726

[Lahore]

Before Muhammad Khalid Mehmood Khan and Abdus Sattar Asghar, JJ

Messrs RAVI MEDICAL SUPPLIES (PVT.) LIMITED through Chief Executive and 4 others---Appellants

Versus

Messrs FIRST WOMEN BANK LIMITED through Branch Manager---Respondent

R.F.A. No. 905 of 2012, heard on 12th March, 2014.

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

----Ss. 10 & 9---Recovery of loan amount---Leave to defend, refusal of---Letter of Credits/Running Finance/Forced Finance/Export Re-finance facility---Trial Court, disallowing the claim of mark-up, decreed the suit for the amounts of Running Finance Account and amount due on Letters of Credit---Validity---All Letters of Credit had been opened on the request of the company---Application for opening an irrevocable letter of credit had been duly signed by the Managing Director of the company---Defendants had also signed trust receipts, which had established beyond any shadow of doubt that the Letters of Credit had been opened for importing the goods---Defendants had requested the delivery of goods without making payment against the trust receipts when the goods had reached, and the Bank had delivered the goods imported under the Letter of Credit---Company had accepted the Bill of Exchange drawn under different Letters of Credit----Bank, after handing over the documents of title of the imported goods to the defendants against the trust receipts, had created Forced Finances (PAD)---Bank had allowed Export Re-finance to the defendants on their request, and the statement of account also showed disbursement of the amount of Export Re-finance to them---Defendants could not raise any legal or factual question, which could require recording of evidence---Appeal was dismissed in circumstances.

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

----Ss. 10 & 9--- Recovery of loan amount--- 'Branch Manager'/'Assistant Vice President', of the Bank---"Authorised person"---Scope---Word 'Branch Manager' had been used in S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001, and if the plaint had been signed or instituted by the Branch Manager, no power of attorney was required---Plaintiff had mentioned in the suit that same was being filed through Branch Manager and in the verification of the plaint, the Assistant Vice President/Manager of the Bank had affixed her signatures---Assistant Vice President was a designation in Banks, and Assistance Vice President might be the Manager of any branch of the Bank---Said signatory of the plaint disclosed that she was Manager of the Main Branch of the Bank and her designation was Assistant Vice President---Plaint was held to have been filed signed/filed by authorized person.

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

Ss. 10 & 9----Bankers' Books Evidence Act (XVIII of 1891), S. 4---Recovery of loan amount---Statements of account---Validity and admissibility---All statements of accounts had been certified under S. 4 of Bankers' Books Evidence Act, 1891---Defendants had not pointed out single entry in said statements of account, which was not according to law---Statements of account along with certificate under S. 4 of Bankers' Books Evidence Act, 1891 was admissible per se, unless the same was objected or the account holder pointed out any discrepancy and rebutted the same---Statements of account in question were held to have been issued/certified validly.

Ali Rana for Appellants.

Abdul Hameed Chohan and Imran Muhammad Sarwar for Respondent.

Date of hearing: 12th March, 2014.

2016 C L D 1741

[Lahore]

Before Muhammad Ameer Bhatti and Ch. Muhammad Iqbal, JJ

IYAZ-UL-HAQ CHAUDHRY---Appellant

Versus

NIB BANK LIMITED through Authorized Attorney and 4 others---Respondents

Regular First Appeal No. 642 of 2015, heard on 8th July, 2015.

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

----Ss. 9 & 24---Limitation Act (IX of 1908), S. 5---Suit for recovery of loan amount---Application for leave to appear and defend the suit---Disposal of suit without passing order on application for leave to defend the suit---Effect---Defendant moved application for leave to appear and defend the suit and case was fixed for replication---Banking Court passed ex-parte proceedings and suit was decreed without passing order on application for leave to defend---Validity---Application for leave to appear and defend the suit had not been decided while passing the impugned judgment and decree by the Banking Court---Impugned judgment and decree was void in circumstances---Plaintiff had neither filed any reply to the application for leave to appear and defend the suit nor counter affidavit---Plaintiff, therefore, had admitted the facts and ground narrated in the application for leave to appear and defend the suit---Impugned judgment and decree were set aside---Held, application for leave to appear and defend the suit would be deemed to be pending before the Banking Court who should decide the same on merits---Appeal was allowed in circumstances.

Mst. Khalida Khatoon and another v. Askari Bank Limited and 2 others 2012 CLD 194 and Gul Muhammad v. MCB Bank Limited through President and others 2012 SCMR 136 ref.

Islamic Republic of Pakistan through the Secretary, Ministry of Defence, Government of Pakistan, Rawalpindi and another v. Amjad Ali Mirza PLD 1977 SC 182 rel.

(b) Limitation---

----Void order---Principle---No limitation would run against a void order.

Province of Sindh and others v. Ghulam Fareed and others 2015 PLC (C.S.) 151 and Fazli Hakeem and another v. Secretary State and Frontier Regions Division Islamabad and others 2015 SCMR 795 rel.

Taffazul H. Rizvi for Appellant.

Rana Haseeb Ahmad Khan for Respondent No.1.

Date of hearing: 8th July, 2015.

2016 C L D 1782

[Lahore]

Before Shahid Karim, J

HABIB BANK LIMITED---Plaintiff

Versus

T & N PAKISTAN (PVT.) LIMITED through Chief Executive and 7 others---Defendants

C.O.S. No.82 of 2011, decided on 19th February, 2016.

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

----Ss. 9 & 10---Recovery of loan amount---Application for leave to defend---Dismissal---Defendant-company contended that Demand Finance facility had been created for the purpose of adjusting the Finance against Packing Credit FAPC (Finance against packing credit) facility and FAFB (finance against foreign bill) facility; and that the only amount due and payable was the amount against the Demand Finance facility, as according to the last entry in the statement of account, the liability with regard to the FAPC facility had been shown as Nil balance and in the statement of account, the Demand Finance facility had been shown as adjusted and no withdrawal had been shown; that the claim regarding FAPC facility and FAFB facility was therefore unlawful, and that no actual disbursement had taken place---Plaintiff-Bank contended that the FAPC facility and a portion of FAFB facility had been converted into the Demand Finance facility, and that said restructuring substantiated the Bank's claim with regard to the Demand Finance facility and FAFB facility separately, and that the last entry in the statement of accounts was marked as Nil for the reason that the amounts had been transferred to a new account, which was described as non-performing loan account---Validity---Facility offer letter with regard to the renewal and restructuring of certain finance facilities was already being availed by the defendant-company; some of those facilities were fresh facilities, whereas, the others were merely renewed or restructured so as to enable the defendant to repay the amounts already due from them, and which had not been paid in terms of the obligations cast upon them by way of the earlier finance agreements---Bank's claim with regard to its claim in respect of FAFB facility and FAPC facility was supported by the concise statement of account attached with the plaint, which had been validly and properly been explained by the plaintiff-Bank---Claim with regard to the Demand Finance facility was separate claim, which had been admitted by the defendant-company---Facility offer letter, the finance facilities had been renewed and restructured as a result of the arrangement reflected in said facility offer letter, which merely meant that in respect of existing entries certain adjustments had been made and for the purpose book entries had been made which were in contemplation of the contracting parties, and disbursement of facility was not necessary in said cases---Defendant, at the time of grant of renewal and restructuring of the facilities under the facility offer letter, were aware of the nature of the facilities being granted and also that for the purposes of the restructuring of those facilities, certain book entries would have to be made and adjustments of the earlier outstanding dues would also be part of the restructuring agreement---Chief Executive of the defendant-company had written a letter to the Bank, whereby, the defendant had admitted the finance facilities having been availed by them form the Bank and certain amount outstanding and due to the bank, and they also made a request to reschedule the credit line---Admission made by the defendant in the said letter was sufficient to hold them liable for the repayment of the amount mentioned in the letter--- Defendant had failed to raise any substantial question of fact or law in their application for leave to defend---Suit for recovery was decreed in circumstances.

Habib Bank Ltd. v. Taj Textile Mills Ltd. through Chief Executive and 5 others 2009 CLD 1143; NIB Bank Ltd. v. Dewan Textile Mills Ltd. 2012 CLD 141; Messrs Ibrahim Oil Mills through Proprietor and 2 others v. MCB Bank Limited 2015 CLD 802 and Syed Abbas Ali v. Bank of Punjab through Manager and others 2015 CLD 1409 ref.

A. W. Butt for Plaintiff.

Muhammad Imran Malik for Defendants Nos.1 to 6.

Date of hearing: 4th February, 2016.

2016 C L D 1874

[Lahore]

Before Atir Mahmood and Shams Mehmood Mirza, JJ

EHSAN-UL-HAQ---Appellant

Versus

MCB BANK LIMITED through Manager---Respondent

Regular First Appeal No. 655 of 2011, heard on 31st March, 2016.

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

----Ss. 9, 10 & Preamble---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), S. 9 & Preamble---Suit for recovery of loan amount---Leave to defend---Requirements---Officers authorized to file suit---Scope---Statement of accounts, validity of---Interpretation of S. 9, Financial Institutions (Recovery of Finances) Ordinance, 2001---Section 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001 empowered three categories of persons to file suits on behalf of the financial institutions; the branch manager; an officer authorized by a power of attorney; and, an officer who was otherwise authorized by financial institutions---Section 9 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 and Financial Institutions (Recovery of Finances) Ordinance, 2001 differed only by inclusion in the latter law the category of officers who were authorized through a power of attorney to institute the suit and by omission of officers who were authorized by the Board of Directors of a financial institution---Section 9 of the Ordinance was indicative of the intent of the Legislature and conveyed a definite meaning that those officers were competent to institute suits on behalf of the financial institutions on the strength of the power of attorney, which necessarily followed that those officers did not need to append anything else other than the power of attorney to demonstrate their authority to institute the suit under S. 9 of the Ordinance---Due authorization of the officer to file the suit flowed from the power of attorney in terms of S. 9 of the Ordinance and not from any other document---Any interpretation that required such category of officers to substantiate the authority of the executant of the power of attorney would nullify the effect that the Legislature intended by modifying S. 9 of the Ordinance---Officer of the financial institution holding power of attorney was designated person to file suits on its behalf apart from the Manager by the force of S. 9 of the Ordinance---Any other officer other than the Manager and the officer holding the power of attorney would be required to show due authority from the financial institution for filing of the suit---Word 'or' appearing between the three categories of persons in S. 9 of the Ordinance had to be read as 'and' and the three categories were to be read disjunctively entitling each of them to validly institute suit on behalf of a financial institution---Manager of a financial institution had recognized to be the authority to validly institute the suit in terms of S. 9 of the Ordinance---Words 'as Board of Directors of a banking company might authorize in that behalf' had been excluded on purpose from S. 9 of the Ordinance for simplifying the institution of suits and to obviate the task of the officers filing suits to show authorization from the Board of Directors of the financial institution; as such, those words could not be included in S. 9 of the Ordinance through the back door by judicial interpretation---By promulgating the Ordinance and bringing changes and modification in S. 9 of the Ordinance the purpose was to render validity to the practice of filing of suits by the financial institutions through officers holding general power of attorney---Power of attorney is a legal term of act that has a widely accepted common law meaning and was governed by Power of Attorney Act, 1882---All kinds of powers could be exercised by the donee of the power of attorney, including filing suits if such a power is reserved in the instrument creating the power of attorney---General power of attorney in favour of the officer, who had instituted the present suit, was available on the record, which contained the power to commence and institute a suit for and on behalf of the Bank; thus, the suit had validly been instituted in terms of S. 9 of the Ordinance---Statement of accounts had been duly certified by the Bankers' Books Evidence Act, 1891---Defendant had not met the mandatory requirements of S. 10 of the Ordinance, which had resulted in dismissal of the suit---Dismissal of the application of leave to defend meant that all the allegations made in the plaint would be deemed to have been accepted and the Banking Court was obliged to pass a decree thereon---Defendant had not disputed the principal liability and only called into question the claim of mark up on the ground that payment of mark up had not been included in the terms of the finance agreement---Sanction letter and finance agreement appended with the plaint stipulated for the payment of the mark-up by the defendant---Defendant had failed to raise any bona fide defence---Appeal was dismissed in circumstances.

Keene Corp. v. United States, 508 U.S. 200, 208; Pakistan Tobacco Co. Limited v. Karachi Municipal Corporation PLD 1967 SC 241; S. Zafar Ijaz v. Chairman Steel Mills Corporation 1988 PLC (C.S.) 777; National Bank of Pakistan and others v. Karachi Development Authority and others PLD 1999 Kar. 262; Abdul Rahim and others v. Messrs United Bank Limited of Pakistan PLD 1997 Kar. 62; Karachi Development Authority's case PLD 1990 Kar. 260; Holman Transfer Co. v. Portland, 250 P. 2d 929 (Or. 1952); State ex rel. Everding v. Simon, 20 Or. 365, 26 P. 170 (1891); Dilger v. School District 24 CJ, 222 Or. 108, 112, 352 P. 2d 564 (1960); Local No. 290 v. Dept. of Environ, Quality, 323 Or. 559, 919 P.2d 1168 (1996) and Appollo Textile Mills Limited v. Soneri Bank Limited 2012 CLD 337 rel.

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

----S. 9 & Preamble---Persons authorized to file banking suit---Legislative background.

(c) Interpretation of statutes---

----Court is under duty to show restraint in inserting in a statute what has been omitted---Job of the Court, while interpreting statutes, is to discover the meaning of enacted language and in doing so it cannot normally insert what was omitted or to omit what was inserted.

State ex rel. Everding v. Simon, 20 Or. 365, 26 P. 170 (1891); Dilger v. School District 24 CJ, 222 Or. 108, 112, 352 P. 2d 564 (1960) and Local No. 290 v. Dept. of Environ, Quality, 323 Or. 559, 919 P.2d 1168 (1996) rel.

(d) Interpretation of statutes---

----When a new law is passed on a subject where there was earlier a vacuum, the intention is to redress and rectify a shortcoming---Where, however, an existing law is altered or modified or even supplemented through an amendment, the purpose is none other than to ameliorate the situation, flaw or deficiency for which such amendment is brought about---Enactment of the law fills a need and thereby improves a given condition.

(e) Interpretation of statutes---

----For determination of the purpose or object of the Legislature, it is permissible to look into the circumstances which prevailed at the time when the law passed and which necessitated the passing of that law.

Corpus Juris Secundum rel.

Abdul Rahim and others v. Messrs United Bank Limited of Pakistan PLD 1997 Karachi 62 rel.

(f) Interpretation of statutes---

----Remedial statutes---Construction, rules of---Remedial statutes are to be given liberal interpretation and construction to remedy the defects in the law for which purpose the statute was enacted---Where a statute has been amended, the original statute may be used to explain any ambiguity that might exist in the language of the amended statute.

Holman Transfer Co. v. Portland, 250 P.2d 929 (Or.1952) rel.

(g) Interpretation of statutes---

----Word used in a statute must be understood in their natural and ordinary sense and construed accordingly unless there is something in the object of the statute suggesting a contrary intention.

(h) Interpretation of statute---

----Clear and plain words of the statute must be given effect to regardless of the consequences.

(i) Interpretation of statutes---

----Unambiguous and popular expression used in statute cannot be brushed aside a surpluses more so when they have a proper application in circumstances conceivable within the contemplation of the statute.

(j) Interpretation of statutes---

----When the Legislature, in promulgating a statute, had used plain, unambiguous and popularly understood language, it is presumed to have intended precisely what the words of the statute imply.

(k) Interpretation of statutes---

----When the Legislature employs certain language in a particular provision of a statute but omit it in the re-enacted statute then it is presumed that the Legislature acted intentionally and purposely in the disparate inclusion or exclusion.

Pakistan Tobacco Co. Limited v. Karachi Municipal Corporation PLD 1967 SC 241 and S. Zafar Ijaz v. Chairman Steel Mills Corporation 1988 PLC (C.S.) 777 rel.

(l) Interpretation of statutes---

----'Remedial statute'---Definition.

Holman Transfer Co. v. Portland, 250 P.2d 929 (Or.1952) rel.

Iftikhar Ullah Malik for Appellant.

Ch. Imran Ali for Respondent.

Date of hearing: 31st March, 2016.

2016 C L D 1897

[Lahore (Multan Bench)]

Before Muhammad Ameer Bhatti and Khalid Mahmood Malik, JJ

Messrs HASSAN COTTON GINNERS through Managing Partner and 4 others---Appellants

Versus

BANK AL-HABIB LIMITED through Branch Manager---Respondent

R.F.A. No. 154 of 2013, heard on 29th June, 2015.

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

----S. 9---Suit for recovery of loan amount---Filing of---Application for leave to defend the suit---Substantial question of law and fact---Scope---Finance facility---Banking Court dismissed the application for leave to defend the suit and decreed suit filed by the plaintiff---Validity---Financial Institution could file a suit against the consumer through branch manager or such other officer as might be duly authorized in that behalf by power of attorney or otherwise---Present suit had been filed by the bank manager who was competent to file the plaint---Bank manager had filed plaint after fulfilment of mandatory requirement of S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Consumers-defendants had not challenged the legality or genuineness of finance agreement and charged documents before any court of law---Defendants had accepted the terms and conditions settled between the parties---Consumer had right to utilize the finance facility subject to terms and conditions of agreement and charged documents---Plaintiff-bank was entitled to principal amount (due) including mark-up, cost of finances till the date of expiry---Defendants-consumers had failed to raise any substantial question of law and facts---Banking Court had rightly dismissed the application for leave to defend the suit---Controversy with regard to principal amount, mark-up and cost of finances could be resolved keeping in view the documents available on record---Principal amount was outstanding against the consumers and Bank was entitled for the same including mark-up, cost of finances till the date of expiry---No illegality, material irregularity or non-appreciation of documentary evidence had been pointed out in the findings recorded by the Banking Court---Appeal was dismissed in circumstances.

Bankers Equity Limited through Principal Law Officer and 5 others v. Messrs Bentonite Pakistan Limited and 7 others 2003 CLD 931; National Bank of Pakistan through Manager v. Messrs Mujahid Nawaz Cotton Ginners through Partners and 6 others 2007 CLD 678; Habib Metropolitan Bank Limited v. Abid Nisar 2014 CLD 1367; Appollo Textile Mills Ltd. and others v. Soneri Bank Ltd. 2012 CLD 337 and Bankers Equity Limited and 5 others v. Messrs Bentonite Pakistan Limited through Chief Executive and 7 others 2010 CLD 651 distinguished.

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

----S. 9---Suit for recovery of loan amount---Scope---Financial Institution could file a suit against the consumer through branch manager or such other officer as might be duly authorized in this behalf by power of attorney or otherwise.

Malik Muhammad Riaz Khokhar for Appellants.

Mian Muhammad Shakeel Akhtar Hashmi for Respondent.

Date of hearing: 29th June, 2015.

2016 C L D 1935

[Lahore]

Before Muhammad Khalid Mahmood Khan and Shahid Bilal Hassan, JJ

EFU LIFE INSURANCE---Appellant

Versus

Mst. SOBIA BANO---Respondent

Insurance Appeal No.942 of 2015, heard on 17th March, 2016.

Insurance Ordinance (XXXIX of 2000)---

----S. 118----Civil Procedure Code (V 1908), O. XVI---Life insurance claim---Summoning and attendance of witnesses---Insurance Tribunal, while deciding the insurance claim, found that medical documentary evidence available on record had no evidentiary value, as the Insurance Company had not summoned any Medical Officer of the hospital to prove the document---Respondent contended that said document was not required to be proved after the same had been admitted by the policy-holder---Validity---Policy holder had not admitted the veracity and legality of the document---High Court, setting aside the judgment, remanded the case to the Insurance Tribunal with the direction that the Tribunal would allow the respondent to summon the doctor or any concerned official of the Medical Institution for proving the document--- Appeal was disposed of in circumstances.

Rana Rizwan Hussain for Appellant.

Liaqat Ali Butt for Respondent.

Date of hearing: 17th March, 2016.

2016 C L D 1955

[Lahore]

Before Shezada Mazhar, J

The BANK OF PUNJAB---Plaintiff

Versus

Sardar DILDAR AHMAD CHEEMA---Defendant

C.O.S. 145 and P.L.A. No. 219 of 2011, heard on 3rd February, 2015.

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

----Ss. 9 & 10---Recovery of loan amount---Leave to defend, refusal of---Statement of account, validity of---Defendant to give specific reply to claim of Bank with supportive evidence---Settlement agreement regarded as re-scheduling agreement---Bank not required to show disbursement under re-scheduled agreement and not entitled to claim mark-up in absence of specific agreement---Defendant not entitled to raise objection to the power of attorney of Bank after admitting Bank's claim---High Court decreed the suit only to the extent of principal outstanding amount.

Defendant, while mentioning the requirement of section 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, had mentioned only the total debit transaction on the basis of the statement of account attached with the plaint. Under Financial Institutions (Recovery of Finances) Ordinance, 2001, the defendant was required to give specific reply to the claim of the plaintiff-Bank, along with the supporting account; if such reply was not mentioned in the application for leave to defend the suit, the same was liable to be dismissed. Neither any accounts nor any document had been attached with the application, which could support the claim of the defendant. Letter attached with the leave application, whereby the defendant had acknowledged the payment of the mark-up, showed that the defendant had availed the finance facilities from the Bank, which were outstanding as on the date of the letter.

Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. 2012 CLD 337 rel.

Defendants raised the objection that no finance facility had been disbursed under the settlement agreement, and that the date of purchase of stamp papers was later in time to the date of execution of the settlement agreement. Settlement agreement in question revealed that the same was a re-scheduling agreement, which was allowed under the law. Plaintiff-Bank was not required to show any fresh disbursement of finance under the re-scheduled agreement. Date of purchase of the stamp papers would have no effect when the defendant had admitted its execution by saying that no amount under said agreement had been disbursed.

Habib Bank Ltd. v. Taj Textile Mills Ltd. through Chief Executive and 5 others 2009 CLD 1143 and NIB Bank Ltd. v. Devan Textile Mills Ltd. 2012 CLD 141 rel.

Amount rescheduled and mentioned in the settlement agreement was the total outstanding liability, including mark-up, and no bifurcation of the principal and mark-up had been mentioned in the agreement. Re-scheduling offer letter, although, showed that the mark-up was to be charged on the facilities, however, for both the facilities, the charging of the mark-up was after the grace period. Recovery suit in question had been filed on defendant's failure to abide by the terms of the settlement agreement on expiry of the grace period. Bank, therefore, could not claim mark-up over the outstanding amounts.

Suit had been filed by the authorized officers of the Bank, as power of attorney of the authorized officer was attached with the plaint, which fulfilled the requirements of section 9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001. Customer, who had admittedly availed the finance facility, could not raise such objection on the power of attorney of the officer only to avoid/delay the repayment of the finance facilities.

KASB Bank Limited v. Mirza Ghulam Mujtaba and 2 others 2011 CLD 461 rel.

Statement of account was duly verified in accordance with Bankers' Books Evidence Act, 1891, and the same did not contain any ambiguous entries.

Requirements of section 9(3) of Financial Institutions (Recovery of Finances) Ordinance, 2001 had been duly complied with when the plaint was read in conjunction with the admission of the defendant regarding availing of the earlier finance facility as well as execution of re-scheduling agreement. Plaintiff-Bank had proved its claim only to the extent of the principal amount, as there was no agreement with regard to the payment of mark-up after re-scheduling---Suit was decreed in circumstances.

Abdul Hameed Chohan for Plaintiff.

Shahid Ikram Siddiqui assisted by Rao Athar Ikhlaq for Defendant.

Date of hearing: 3rd February, 2015.

2016 C L D 1978

[Lahore]

Before Shahid Karim, J

MECHANIZED CONSTRUCTION OF PAKISTAN (PVT.) LIMITED---Petitioner

Versus

GOVERNMENT OF BALOCHISTAN and others---Respondents

C.O. No. 29 of 2010, decided on 15th February, 2016.

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

----Ss. 391, 316, 333 & 317---Companies (Court) Rules, 1997, R. 127---Liquidation---Liquidator, powers of---Competence of liquidator to apply to court for implementation of his findings---Scope---Term "determine any question arising in the winding up of a company" used in S. 391 of Companies Ordinance, 1984---Connotation---Interpretation of S. 391 of the Companies Ordinance, 1984---Official liquidator under S. 391 of the Companies Ordinance sought implementation of his findings with regard to the company's dispute with a third party---Validity---Liquidator did not have power to determine disputes involving a company under liquidation with third parties, and any such determination would be ultra vires and without lawful authority and could not be sought to be implemented by the High Court under jurisdiction conferred by S. 391 of the Companies Ordinance, 1984---High Court observed that in the present case, the official liquidator had misconstrued power of the court and that where a dispute arose of the nature which required evidence to be recorded and proof to be adduced, the same could only be determined through a proper trial and there was no bar on the liquidator from filing a claim by way of proper proceedings and then applying to the court for its expeditious disposal---High Court under the Companies Ordinance, 1984 was adequately equipped to order that matters brought by the official liquidator be decided with all deliberate speed or for expeditious disposal of the same, however, the route adopted by the official liquidator in the present case was not countenanced under the law---Term "determine any question arising in the winding up of a company" used in S. 391 of the Companies Ordinance, 1984 did not include the questions related to disputed claims which the company had against third parties and such an interpretation would have the effect of making redundant the other provisions of the Companies Ordinance, 1984 relating to expeditious and summary disposal of suits and claims and the intention of the Legislature not to stultify the normal proceedings for determination of claims---Application was dismissed, in circumstances.

(b) Administration of justice---

----What could not be done directly could not also be achieved indirectly.

Aurangzeb Mirza for Petitioner.

2016 C L D 2007

[Lahore]

Before Shahid Karim, J

AMTEX LIMITED through Director---Plaintiff

Versus

BANKISLAMI PAKISTAN LTD. and 8 others---Defendants

C.O.S. No. 25 of 2011, decided on 25th April, 2016.

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

----S. 9---Banking Court---Jurisdiction---Pre-condition---Default in fulfilment of any obligation with regard to any finance is a sine qua non and confers a right on customer or financial institution to bring a suit under S. 9 of Financial Institutions (Recovery of Finances) Ordinance, 2001.

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

----S. 2(e)(ii)---Word 'includes'---Scope---Word 'includes' in S. 2(e)(ii) of Financial Institutions (Recovery of Finances) Ordinance, 2001, is not used as a whole to expand meaning of term 'obligation' so as to defeat the intent of Legislature---Term 'obligation' is merely confined to two different concepts of obligations given in S. 2(e)(ii) of Financial Institutions (Recovery of Finances) Ordinance, 2001, and the term 'includes' has been used to connect the two concepts.

The Construction of Statutes by Crawford; The Interpretation of Legal Taxes by Antonin Scalia and Bryan A. Garner and Craies on Statute Law rel.

(c) Special Court---

----Jurisdiction---Law may establish special Court to deal with special matters and give jurisdiction to decide such matters---Such a special jurisdiction may be carved out from the general jurisdiction of the Courts.

Brother Steel Mills Ltd. and others v. Mian Ilyas Miraj and 14 others PLD 1996 SC 543 and Akhtar Ali v. Altaf-ur-Rehman PLD 1963 Lah. 390 rel.

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

----Ss. 2(e) & 9---Civil Procedure Code (V of 1908), O. VII, R. 10---Specific Relief Act (I of 1877), Ss. 42, 54 & 39---Suit for declaration, injunction and cancellation of document filed before High Court under special jurisdiction under Financial Institutions (Recovery of Finances) Ordinance, 2001---Maintainability---Intent of the legislature under S. 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 was to file a suit on the ground of default in fulfilment of obligation regarding any representation, warranties and covenants by financial institution---Such construction lent credence to the scheme and policy of Financial Institutions (Recovery of Finances) Ordinance, 2001, which had been enacted primarily to act as an engine of recovery of defaulted finance by financial institution and not vice versa---Customer might have a cause of action but that was enforceable in the Court of general jurisdiction only---Definition of term 'obligation' had restricted meaning of the term within a certain periphery---High Court directed the plaintiff to present the suit for declaration, injunction and cancellation of document in proper Court as the Banking Court lacked jurisdiction---Plaint was returned in circumstances.

Reg v. Commissioner for Special Purposes of the Income Tax (1888) and Sabir Shah v. Shah Muhammad Khan PLD 1995 SC 66, 141 ref.

State v. Zia-ur-Rehman PLD 1973 SC 49 rel.

(e) Interpretation of statutes---

----Rules and principles---Scope---Rules of interpretation were merely tools employed by Court to ascertain true meaning of a provision in a statute in case of ambiguity---Such rules are not immutable and are subject to exception---Every rule in a given situation is capable of being administered differently and according to context, with necessary variations.

Munawar ul Islam for Plaintiff.

Salman Akram Raja for Defendants Nos.1 to 8.

Talib Hussain for Defendant No. 9.

2016 C L D 2066

[Lahore]

Before Shahid Karim, J

STANDARD CHARTERED BANK (PAKISTAN) LTD. through Authorized Attorney---Plaintiff

Versus

NEEDLE POINT (PVT.) LTD. through Chief Executive and others---Defendants

C.O.S. No. 30 of 2006, heard on 4th May, 2016.

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

----Ss. 9 & 10---Civil Procedure Code (V of 1908), O. VI, Rr. 14, 15 & O.XXIX, R. 1--- Suit for recovery of finance---Leave to defend the suit---Signing and verification of plaint by a single officer of the plaintiff Bank instead of two officers jointly---Effect---Plaint was signed and verified by a single officer, whereas, the power of attorney on the basis of which the suit was filed mentioned that the said act could only be performed jointly with another attorney of the Bank---Defendants raised a preliminary objection that since the plaint was not jointly signed by the officer along with another officer who was required to be jointly authorized on behalf of the Bank, there was "no suit" before the Court to be adjudicated upon---Validity---Suit was filed jointly, as the power of attorney of another officer of the Bank was filed with the plaint and which fact was not denied by the defendants---Objection in specific detail was not taken in the application for leave to defend wherein the defendants had merely raised a general objection to the competency to file the suit---Plaint was signed and verified by one of the officers in whose favour the power of attorney was given and this was permissible by O. VI, R. 15 of C.P.C., with regard to verification of the plaint which may be performed by one of the attorneys on behalf of other attorneys---Such defects with regard to the signing of the plaint, if at all they were considered as defects, were mere irregularities and could not entail the dismissal of the suit or the rejection of the plaint---Objection raised by the defendants had no substance.

Habib Bank Limited v. Messrs Ess Emm Ess Corporation Pakistan Limited through Chairman and 5 others 2005 CLD 854; Azizullah Shaikh, Bar at Law and another v. Union Bank Limited 2007 CLD 1022 and Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others 2011 CLD 408 rel.

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

----S. 10---Civil Procedure Code (V of 1908), O. XXIX, R. 1---Suit for recovery of finance---Application for leave to defend the suit---Maintainability---Preliminary objection by plaintiff Bank was that there was no resolution of the Board of Directors of defendant-company authorizing any officer to file application for leave to defend on its behalf---Defendants did not deny that Board resolution was not filed with the application for leave to defend---Defendants contended that as rest of the defendants who were the directors had signed the application for leave to defend, therefore, it should be taken to have been signed on behalf of the defendant-company as well---Validity---Although the application for leave to defend was purportedly filed on behalf of all the defendants, however, the Board resolution on behalf of the defendant-company was not filed nor was it annexed with the application---Company being a juristic person, acts through its Board of Directors, which authorized its officers or any of them to act on its behalf by any authority conferred in the resolution of the Board of Directors---Company was a separate legal entity and must be represented by a duly authorized officer to do all acts on its behalf---Signatures which were affixed on the application for leave to defend did not at all bring forth any evidence that the application was filed on behalf of defendant-company as well---If proposition put forth by the defendants was accepted then any officer or Director of a company could bind the company of its acts and which could cause irreparable damage to the company in various ways---An application for leave to defend on behalf of the company had to be authorized by a resolution of the Board of Directors and an officer duly authorized by such resolution could file an application on behalf of the company and none else---It could neither be presumed nor be inferred that an application had been duly filed by merely the fact that it had been signed by any of the Directors of the company---Held, that there shall be deemed to be no application for leave to defend on behalf of the defendant-company in circumstances.

Habib Bank Limited v. Crescent Software Products (Pvt.) Ltd. 2009 CLD 412; Telecard Limited through Authorized Representative v. Pakistan Telecommunication Authority through Chairman 2014 CLD 415 and Bankers Equity Ltd. through Attorney and 5 others v. Sunflo Cit-Russ Ltd. (formerly known as Sunflo Juices Ltd.) through Managing Director PLD 1999 Lah. 450 rel.

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

----Ss. 9 & 10---Contract Act (IX of 1872), S. 10---Suit for recovery of finance---Application for leave to defend the suit---Substantial questions of law and fact---Non-signing of finance agreements by the plaintiff Bank---Effect---Defendants raised objection that the finance agreements filed by the plaintiff Bank in support of the finance facilities were not signed by the plaintiff Bank or by any one on its behalf, and therefore, the agreements were not valid in the eyes of law and must be taken out of consideration as void documents---Plaintiff Bank argued that although the agreements were not signed on behalf of the Bank, however, the defendants did not deny the signatures of these agreements by and on behalf of the defendants and that the defendants had admitted the repayments, and, therefore, it did not lie in the mouth of the defendants to deny the execution of the agreements---Validity--- Proposition put forth by the Defendants would only hold good in case the agreements or their execution was denied by either of the parties when the onus would fall upon the other party to prove its execution---Plaintiff Bank clearly did not deny that the agreements were executed and the defendants also had not denied the execution by the defendants in the application for leave to defend---Objection raised by the defendants was turned down by the High Court.

Farzand Ali and another v. Khuda Bakhsh and others PLD 2015 SC 187 and Messrs Jamal Jute Baling and Co., Dacca v. Messrs M. Sarkies and Sorts, Dacca PLD 1971 SC 784 rel.

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

----Ss. 9 & 10---Suit for recovery of finances---Application for leave to defend on behalf of the borrower defendant-company was found to be incompetent---Scope of the application for leave to defend on behalf of the remaining defendants, who were guarantors---Validity---Nothing was sought in the application for leave to defend by the defendants as to their personal guarantees---Execution of the personal guarantees was not denied, hence, the said documents stood admitted---Surety/guarantee could not be permitted to deny the original finance facility---Application for leave to defend by the guarantor defendants was also dismissed in the circumstances.

Messrs Huffaz Seamless Pipe Industries Ltd. and 2 others v. Messrs Security Leasing Corporation Ltd. 2002 CLD 550 and Sahara Trading International (Pvt.) Ltd. and others v. Bank Alfalah Ltd. 2004 CLD 1522 rel.

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

----O. VI, Rr. 14, 15 & O. XXIX, R. 1---Verification of pleadings---Where the plaint was signed and verified by one of the officers in whose favour the power of attorney was given, it was permissible in terms of the provisions of O. VI, R. 15, C.P.C., with regard to verification of the plaint which could be performed by one of the attorneys on behalf of other attorneys.

Habib Bank Limited v. Messrs Ess Emm Ess Corporation Pakistan Limited through Chairman and 5 others 2005 CLD 854; Azizullah Shaikh, Bar at Law and another v. Union Bank Limited 2007 CLD 1022 and Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others 2011 CLD 408 rel.

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

----Ss. 9 & 10---Suit for recovery of finance---Application for leave to defend---No substantial questions of law and fact raised in the application---Validity---Defence set up by the defendants during the course of arguments was not taken by them in their application for leave to defend---Defendants admitted in the application for leave to defend that certain facilities were sanctioned by the plaintiff Bank to the defendants against collaterals and that the defendant-company accepted the sanctioned facilities---Plaintiff Bank in the plaint had brought forth the repayments which were made over the years by the defendants, and which were not denied in the application for leave to defend---While the finance facilities were admitted in the application for leave to defend, however, during the arguments the defendants continued to deny the execution of the agreements---Defendants had also made a case of counterclaim in their application for leave to defend, with a prayer that if any amount was found to be due from the defendants, it may be adjusted against the counter claim of the defendants---Counterclaim could not be sought in an application for leave to defend and in case the defendants had a claim against the plaintiff Bank, a separate suit could have been filed which had not been done---Statement of accounts was attacked by the defendants in the arguments, however, no specific objection was taken to the entries in the statement of accounts---Statement of accounts filed by the plaintiff Bank was verified in accordance with law and complied with the requirements of a valid statement of account---No substantial question of law or fact was raised in the application for leave to defend by the defendants---Application for leave to defend was dismissed and the suit was decree in circumstances.

Majid Ali Wajid for Plaintiff.

Munawar ul Islam for Defendants.

2016 C L D 2084

[Lahore (Multan Bench)]

Before Amin-ud-Din Khan and Mahmood Ahmad Bhatti, JJ

Messrs SARWAR BROTHERS COTTON GINNING AND PRESSING FACTORY AND HUSSAIN OIL MILLS through Managing Partner and 4 others---Appellants

Versus

HABIB BANK LIMITED and another---Respondents

R.F.A. No. 20 of 2010, heard on 4th May, 2015.

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

----Ss. 9 & 10---Civil Procedure Code (V of 1908), O. XX, R. 5---Suit for recovery of loan amount by Bank and Suit for rendition of accounts by customer---Issues, determination of---Requirement---Banking Court had not given any finding on the issues framed in the suit filed by the defendants---Banking Court was under an obligation to record issue-wise findings and the appellate court was not required to do so---Order XX, R. 5, C.P.C. was mandatory---Unsound and flawed approach of the Trial Court necessitated the remand of the case---High Court, allowing the appeal, remanded the case to the Trial Court for decision afresh---Appeal was allowed in circumstances.

Hafiz Muhammad Hussain and another v. Abbas Khan and another 1981 SCMR 1233; Ch. Noor Ahmad through Legal Heirs v. Abdul Majid through Legal Representatives 2005 MLD 620; Messrs M. A. Chaudhry and 3 others v. National Bank of Pakistan, Faisalabad through General Attorney 2005 CLD 875; Malik Sher Muhammad through Legal Heirs v. Karachi Development Authority and another 2006 YLR 2889; Gul Muhammad through Legal Heirs v. Karachi Development Authority and another 1998 MLD 150; Pak Carpet Industries Limited v. Government of Sindh and 2 others 1993 CLC 334; Muhammad Yaqoob v. Baqir and 2 others 1993 CLC 1319 and Khair Deen v. Rehm Deen and 4 others 1996 CLC 1731 ref.

Qadir Bakhsh (deceased) through L.Rs v. Allah Dewaya and another 2011 SCMR 1162; Muhammad Amir through L.Rs v. Muhammad Sher and others 2006 SCMR 185; Mst. Husna Bano alias Mst. Bibi Hussain Bano and others v. Faiz Muhammad through Legal Heirs and others 2002 SCMR 667; Raja Ali Shan v. Messrs Essem Hotel Limited and others 2007 SCMR 741; Muhammad Azam Khan v. Askari Leasing Limited through Branch Manager 2014 CLD 462; Gulistan Textile Mills Ltd. v. Askari Bank Ltd. and others PLD 2013 Lah. 716; Muhammad Shafi and 5 others v. Amanat Ali and 5 others 2005 MLD 559 and Riasat Ali v. Muhammad Yaseen through Legal Heirs and another 2006 CLC 1390 distinguished.

Ali Muhammad v. Muhammad Hayat and others 1982 SCMR 816; Rehmatullah Khan and another v. Ghulam Farid and others 2009 SCMR 371; Syed Iftikhar-ud-Din Haider Gardezi and 9 others v. Central Bank of India Ltd., Lahore and 2 others 1996 SCMR 669; Mohammad Mustafa v. Sri Abu Bakar and others AIR 1971 SC 361; Abdul Sattar v. Bashir Ahmed and others 2004 CLC 370; Mst. Feroza v. Anjuman-e-Ittehad-e-Baluchan and others 2004 YLR 1535; Darayus Crus Minwala v. National Accountability Bureau through Its Chairman and 2 others 2010 MLD 1931; Farid Ullah Khan Kundi v. Rustam Khan PLD 2012 Pesh. 121; Haji Abdul Jalil v. Anjuman Jame Masjid Haquani 1996 MLD 818; Sakhi Muhammad v. Mst. Taj Begum and 4 others 1985 CLC 734; Abdul Karim v. Hoshiar Khan and 2 others 1983 CLC 1450; Mahomed Sulaiman v. Kumar Birendra Chandra Singh AIR 1922 PC 405; Kutoor Vengayil Rayarappan Nayanar v. Kutoor Vengiyil Valia Madhavi Amma and others AIR (37) 1950 FC 140; Nasir Abbas v. Manzoor Haider Shah PLD 1989 SC 568; Shoukat Ali v. Mst. Razia Bibi and others 1999 CLC 62; Abdul Qayyum v. The State 1999 MLD 2026; Nadar Ali v. Mst. Hussain Bibi and 5 others 1998 MLD 250; Muhammad Tufail v. Mst. Sardar Bibi and 2 others 1998 CLC 1969; Asadullah Khan v. Abdul Karim 1997 CLC 1334; Alaf Din v. Mst. Soni Bibi 1999 CLC 1808; Mst. Husna Band v. Faiz Muhammad Magsi and another 2000 CLC 709; Syed Khurshid Ahmed alias Wahid Hussain through General Attorney v. Rao Muhammad Akram Khan 2000 CLC 825; Kistan Tobacco Company Ltd. v. Pakistan Chest Foundation' (PLD 1998 Lah. 100(106), 'Mst. Fatima Bibi v. Mst. Raheem Bibi 1999 MLD 1026; Suleman and others v. Dadoo and others 2001 YLR 764; Syed Rehmat Ali through Legal heirs and 2 others v. Syed Sadique Ali through Legal Heirs 1999 YLR 1656 and Muhammad Nawaz Shah v. Imam Bakhsh and 4 others 2000 YLR 1456 rel.

Syed Kabir Mahmood for Appellants.

Muhammad Waseem Shahab for Respondents.

2016 C L D 2134

[Lahore]

Before Shahid Jamil Khan and Muhammad Sajid Mehmood Sethi, JJ

JAGUAR PRIVATE LIMITED and another---Appellants

Versus

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

E.F.A. No. 76 of 2016, decided on 5th May, 2016.

(a) Constitution of Pakistan---

----Art. 189---Decision by Supreme Court---Binding effect---Scope---Decision of Supreme Court amounts to law declared and it has binding effect on all fora within the country---Law declared by Supreme Court, unless reviewed by itself remains binding on High Court.

Muhammad Ramzan and others v. Rahim Shah 2009 CLC 866; Mst. Hira Rehman v. Chancellor Government College University Lahore and 2 others 2011 CLC 377 and Zainab Garments (Pvt.) Ltd. through Chief Executive and others v. Federation of Pakistan through Secretary Ministry of Housing and Works, Islamabad and another PLD 2010 Kar. 374 rel.

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

----Ss. 9 & 19---Civil Procedure Code (V of 1908), O.XXI, R.90---Recovery of finance---Execution of decree---Auction purchaser---Failure to deposit 20% bid money---Banking Court dismissed objections filed by judgment debtor as 20% of bid money was not deposited after auction---Validity---Bid offered by third person before High Court in response to offer made by judgment debtor on first date of hearing when they were confronted with provisions of O. XXI, R. 90, C.P.C. regarding 20% mandatory deposit had no legal effect as third person had no locus standi to participate in matching bid---Even judgment debtors had no right to maintain appeal before High Court on such score alone---Mandatory deposit of 20% could not be dispensed with on the plea of arrangement of a matching bid by a third person---High Court declined to interfere in the order passed by Banking Court dismissing objections filed by judgment debtor---Appeal was dismissed in circumstances.

Messrs Nice 'N' Easy Fashion (Pvt.) Ltd. and others v. Allied Bank of Pakistan and another 2014 SCMR 1662; Mst. Manzoor Jahan Begum and others v. Haji Hussain Bakhsh PLD 1966 SC 375; Mohib Textile Mills Limited through Director/Shareholder/Representative, Former Management of the Company v. National Bank of Pakistan Karachi and others 2005 SCMR 1237; Muhammad Attique v. Jami Limited and others PLD 2010 SC 993; Messrs Lanvin Traders, Karachi v. Presiding Officer, Banking Court No.2, Karachi and others 2013 SCMR 1419; National Bank of Pakistan and 117 others v. Saf Textile Mills Ltd. and another PLD 2014 SC 283; Nadeem Akhtar Tabasum v. Muslim Commercial Bank Limited and others 2014 SCMR 1371; Muhammad Attique v. Jami Limited and others 2015 SCMR 148; Mst. Alhamdi Begum v. National Bank of Pakistan, Karachi and 2 others PLD 1976 Kar. 723; Brig. (Retd.) Mazhar-ul-Haq and another v. Messrs Muslim Commercial Bank Limited, Islamabad and another PLD 1993 Lah. 706; Khursheed Begum and others v. Inam-ur-Rehman Khan and others PLD 2009 Lah. 552; Pakistan Industrial Credit and Investment Corporation Limited, Peshawar Cantt. and others v. Government of Pakistan through Collector Customs, Customs House, Jamrod Road, Peshawar and others 2002 CLD 1; Al-Haj Chaudhry Muhammad Bashir v. Citibank N.A. and 2 others 2002 CLD 962; Messrs Majid and Sons and another v. National Bank of Pakistan 2002 CLD 1742; Messrs Ripple Jewellers (Pvt.) Ltd. through Chief Executive and another v. First Woman Bank through Officers/General Attorneys/Principal Officers and 6 others 2003 CLD 1318; Muhammad Hassan v. Messrs Muslim Commercial Bank Ltd., through Branch Manager and 3 others 2003 CLD 1693; Syed Muhammad Ehsan Ali v. Zarai Taraqiati Bank Limited 2006 CLD 622; Rana Muhammad Naseeb Khan v. Zarai Tarukiyati Bank of Pakistan and 2 others 2007 CLD 466; Messrs Shah's Impex Industries [Pvt.) Ltd. through Sikander Ali and 2 others v. IDBP through Authorized Officer and 3 others 2009 CLD 1203; Mst. Nadia Malik v. Messrs Makki Chemical Industries Pvt. Ltd. through Chief Executive and others 2011 CLD 1517; Messrs NIB Bank Limited v. Messrs Apollo Textile Mills Limited and 2 others 2013 CLD 1398; Muhammad Afzal Khan and another v. National Bank of Pakistan through Branch Manager and another 2015 CLD 464; Messrs Capital Poultry Feed and Daal Mills through Managing Partner and 5 others v. Atlas Bank Limited through Branch Manager and 3 others 2015 CLD 1149; Asif Ali Khan and another v. Standard Chartered Bank Limited and another 2015 CLD 1813; Messrs S.M. Nisar and Company through Partner and 4 others v. Banking Court-III, Multan Camp at Sahiwal and 5 others 2015 CLD 1843; M. Shafique Shah and another v. Mst. Irshad Begum and 8 others 1981 CLC 369; Mst. Rukhsana and others v. Muhammad Ilyas and others 1993 CLC 1949; M/s. National Electric Company of Pakistan v. Allied Bank of Pakistan Ltd. and 2 others 1996 CLC 192; Mrs. Shahida Saleem and another v. Habib Credit and Exchange Bank Limited and 4 others 2001 CLC 126; Haji Zahid Saeed and another v. Messrs Asif Brothers and 3 others 2015 CLC 183; Messrs Saudi Arabian Airlines v. Messrs International Marketing Corporation and others 2015 CLC 916; Messrs Ali Match Industries Ltd through Managing Director and 3 others v. Industrial Development Bank of Pakistan through Manager and another 1999 MLD 2127 and Muhammad Hussain v. Industrial Development Bank of Pakistan, Hyderabad and another 2014 MLD 192 distinguished.

Messrs Irisma International, Karachi and 3 others v. United Bank Limited, Karachi and another 2007 SCMR 1271; Muhammad Attique v. Jami Limited and others PLD 2010 SC 993; Messrs Lanvin Traders, Karachi v. Presiding Officer, Banking Court No.2. Karachi and others 2013 CLD 1581; Mst. Anwar Sultana through L.Rs. v. Bank Al-Falah Ltd. and others 2014 SCMR 1222; Nadeem Akhtar Tabasum v. Muslim Commercial Bank Limited and others 2014 SCMR 1371; Muhammad Attique v. Jami Limited and others 2015 SCMR 148; Punjab National Bank Ltd., Rawalpindi v. Sundar Singh and others AIR 1929 Lahore 673; Krishna Mohan Kundu v. Nripendra Nath Nandi and others AIR 1933 Calcutta 662; Bhola Nath and another v. Maharani Kunwar AIR 1936 Oudh 280; Khawaja Muhammad Daud Sulaimani v. Election Tribunal and others PLD 2003 Lah. 106; Messrs Madina Rice Mills through Managing Partner and 6 others v. National Bank of Pakistan and 6 others 2004 CLD 1371; Messrs Ashraf Agro and others v. HBL 2008 CLD 449; Saudi Pak Industrial and Agricultural Investment Co. (Pvt.) Ltd. v. A.H. International (Pvt.) Ltd. and 11 others 2008 CLD 1294; Messrs Saudi Arabian Airlines v. Messrs International Marketing Corporation and others 2015 CLC 916; Messrs Zamindar Rice Mills through Partners and others v. Faisal Bank Limited through Attorneys and others 2015 CLD 219; Azhar Rashid Khan and mother v. Mujeed Salman Khan and 10 others 2015 CLD 963; Messrs Capital Poultry Feed and Daal Mills through Managing Partner and 5 others v. Atlas Bank Limited through Branch Manager and 3 others 2015 CLD 1149; Zakaria Ghani and 4 others v. Muhammad Ikhlaq Memon and 8 others PLD 2016 SC 229; Mst. Nadia Malik v. Messrs Makki Chemical Industries (Pvt.) Ltd. through Chief Executive and others 2011 SCMR 1675 and Justice Khurshid Anwar Bhinder and others v. Federation of Pakistan and another PLD 2010 SC 483 ref.

Messrs Irisma International, Karachi and 3 others v. United Bank Limited, Karachi and another 2007 SCMR 1271 rel.

(c) Precedent---

----View expressed in case law latest in time has to be preferred over the views earlier in time.

Asim Hafeez for Appellants.

Hassan Iqbal Warraich, Nadeem Ahmad Sheikh, Zain Sikander and Wasif Majeed for Respondents.

Zaheer-ud-Din Babar, Rana Intizar and Ali Sufyan Faiz for Applicants.

2016 C L D 2167

[Lahore]

Before Muhammad Farrukh Irfan Khan, J

Messrs ASLI MAND BARFI SHOP and others---Appellants

Versus

Messrs MAND BARFI SHOP---Respondent

F.A.O. No. 418 of 2014, decided on 22nd February, 2016.

Trade Marks Ordinance (XIX of 2001)---

----S. 28---Revised Trade Marks Rules, 1963, R. 30---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Infringement of trade mark---Interim injunction, grant of---Hereditary use of trade mark---Plaintiff was son of original owner of trade mark in question and he was aggrieved of use of the trade mark by one of the maternal grandsons of the deceased owner---Trial Court issued interim injunction in favour of plaintiff---Validity---In presence of daughter of deceased, the defendant being maternal grandson did not fall within the list of legal heirs, therefore, he had no right to use trade mark as hereditary right---Plaintiff was son of founder of trade mark in question who adopted same in the year 1947---Defendant, in opposition, did not dispute right of plaintiff to use the trade mark but with some distinction---Defendant failed to establish his right to use trade mark in question as a hereditary right---Registrar of Trade Marks rightly dismissed opposition of defendant and order passed by Trial Court did not suffer from any legal infirmity or procedural irregularity calling for interference by High Court in its appellate jurisdiction---Record had established that three grounds necessary to be considered for grant of temporary injunctions i.e. (i) prima facie strong case, (ii) balance of convenience and (iii) irreparable loss leaned in favour of plaintiff existed in the present case---Trial Court rightly granted temporary injunction in favour of plaintiff and against defendant---High Court declined to interfere in the order passed by Trial Court as there was no illegality in the same---Appeal was dismissed in circumstances.

Nemo for Appellant.

Azhar Aqeel Arain for Respondent No.1.

Muzamil Akhtar Shabir, Deputy Attorney General for Pakistan along with Dr. Abdul Qadir Orakzai, Registrar of Trade Marks and Muhammad Rafiq, Deputy Registrar of Trade Marks for Respondent No.2.

2016 C L D 2185

[Lahore (Multan Bench)]

Before Muhammad Ameer Bhatti, J

MASOOD SPINNING MILLS through Representative and another---Petitioners

Versus

PUBLIC AT LARGE and others---Respondents

C.O. No. 6 of 2015, decided on 31st May, 2016.

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

----Ss. 284 to 288---Companies (Court) Rules, 1997, R. 60---Amalgamation of companies--- Scheme of arrangement for amalgamation--- Sanction of--- Respondents/shareholders of the petitioners' companies had unanimously endorsed the resolution in their general meeting held in supervision of the chairperson appointed by the High Court, whereby the shareholders had approved the "Scheme of Arrangement" for the amalgamation by way of merger---No one appeared to object to the proposed amalgamation in response to publications in the daily newspapers---Revenue Authority had no objection for grant of sanction in favour of the petitioners regarding their amalgamation subject to their undertaking that they would deposit the requisite stamp duty in accordance with the law---High Court sanctioned the proposed scheme of amalgamation---Application was allowed.

PLD 2015 Lah. 632 rel.

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

----Ss. 284 to 288---Amalgamation of companies---Inclusion of the schedule of properties of the transferor Company in the "Scheme of Arrangement" is sine qua non to evaluate the assets of that Company.

PLD 2015 Lah. 632 rel.

Malik Muhammad Tariq Rajwana and Barrister Malik Kashif Rajwana for Petitioners.

2016 C L D 2219

[Lahore]

Before Shahid Karim, J

STATE LIFE INSURANCE CORPORATION through Attorney---Petitioner

Versus

PROVINCE OF PUNJAB through Secretary Local Government and Community Development Department and 3 others---Respondents

Writ Petition No. 35029 of 2015, decided on 4th October, 2016.

Punjab Office of the Ombudsman Act (X of 1997)---

----S. 9---Life Insurance (Nationalization) Order (10 of 1972), Art.11---State Life Insurance Corporation---Provincial Ombudsman, jurisdiction of---Scope---Jurisdiction of the Provincial Ombudsman, Punjab was confined to an instrumentality of the Provincial Government and not to any department of the Federal Government or the corporations set up under a federal law---State Life Insurance Corporation, having been incorporated under a federal law and managed and controlled by the Federal Government, was not amenable to the jurisdiction of the Provincial Ombudsman, Punjab---Constitutional petition was allowed accordingly.

Ibrar Ahmad for Petitioner.

Mian Muhammad Ashraf Asmi for Respondent No.4 (in W.P. No. 2323 of 2015).

2016 C L D 2325

[Lahore]

Before Shahid Karim, J

Messrs UNITED FOAM INDUSTRIES (PVT.) LTD. through Chairman and another---Petitioners

Versus

Messrs JOY FOAM (PVT.) LTD. through Chief Executive and 6 others---Respondents

C.O. No. 52 of 2010, decided on 26th May, 2016.

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

----Art. 181---Applications---Limitation---Provision of Art. 181 of Limitation Act, 1908, applies to all applications either in First Schedule to Limitation Act, 1908, or in any other statute.

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

----S. 152---Limitation Act (IX of 1908), Art. 181---Rectification of Register of Members---Limitation---Petitioners initially filed a suit in year, 2004 before Civil Court but on 28-9-2010, the plaint was returned for filing the same before competent forum---Petition under S. 152 of Companies Ordinance, 1984, was filed on 8-12-2010, by petitioners before High Court for rectification of Register of Members of Company---Plea raised by respondents was that the application was barred by limitation---Validity---Suit was filed in year, 2004, on the cause of action that petitioners had made substantial investment in the company in question and respondents fraudulently omitted names of petitioners as shareholders from the Register of Members of company in question---Same cause of action was also basis for filing of application under S.152 of Companies Ordinance, 1984---Primary cause of action had not transmitted or undergone a change through the course of period since filing of the suit by the petitioners---Petitioners could not create a new cause of action in year, 2005, when Form 'A' with regard to company in question was filed---No amendment was made in the plaint filed by petitioners before civil court seeking any amendment with regard to the fact regarding new cause of action---Even if year, 2005, were taken as forming the basis for a fresh cause of action for the purposes of petition under S.152 of Companies Ordinance, 1984, it was under Art. 181 of Limitation Act, 1908, and petition was filed beyond the period of three years and was barred by time in any case--- Petitioners claimed that it was a new petition and had no relation with the suit filed in year, 2004, but the petition was filed beyond the period of limitation under Art. 181 of First Schedule of Limitation Act, 1908, therefore, the same was not competent and maintainable---Petition was rejected in circumstances.

Lahore Race Club v. Raja Khushbakht ur Rehman PLD 2008 SC 707; Mst. Hawabai and 6 others v. Abdus Shakoor and 8 others PLD 1970 Kar. 367; Kashif Rasheed and another v. Haji Muhammad Adrees through LRs. and 13 others 2007 CLC 1848; Sardaraz Khan and 36 others v. Amirullah Khan and 34 others PLD 1995 Pesh. 86; Abdul Shakoor and others v. Mst. Hawabai and others 1982 SCMR 867; Mian Waheed ud Din and others v. Messrs Royal Rice Millers (Pvt.) Ltd. 2015 CLD 1978; Talib Hussain v. Babu Muhammad Shafi and 12 others PLD 1987 Lah. 1; Syed Akbar Ali v. Mamun Ali Bumasuk (Pvt.) Ltd. and others 2006 CLD 960; Mrs. Saeeda Mahmood and another v. Anas Munir (Pvt.) Ltd. through Chief Executive and 6 others 2007 CLD 637 and M. Imam-ud-Din Janjua v. The Thal Development Authority through the Chairman, T.D.A. Jauharabad PLD 1972 SC 123 ref.

Omar Alvi and Usman Raza Jamil for Petitioners.

Uzair Karamat Bhandari for Respondents Nos. 1 to 5.

Umair Mansoor for Securities and Exchange Commission of Pakistan.

2016 C L D 26

[Peshawar]

Before Lal Jan Khattak and Qalandar Ali Khan, JJ

Messrs ALI MATCH INDUSTRIES LIMITED---Appellant

Versus

EQUITY PARTICIPATION FUND---Respondent

FAB No. 30 of 2004, decided on 10th June, 2015.

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

----Ss. 9 & 10---Suit for recovery of finance---Leave to appear and defend the suit---Auction of defendant company---Triable issues---Scope---Equity Participation Fund (EPF) had been declared as "Banking Company" by Federal Government vide notification dated 4-2-1987---Defendant Company secured Equity support of Rs. 700,000 disbursed in year 1975 but could not repurchase the shares as per the agreement---Equity Participation Fund filed suit for recovery of 650,000 before Banking Court---Validity---Several triable issues like equal responsibility of EPF in the management of defendant company and bringing the functioning of defendant company to a standstill in year 1996 due to auction and removal of machinery and equipment etc. by auction purchaser were raised in the application for leave to defend---Such objections to the suit went to the roots of the case and required adjudication on merits---High Court set aside the order passed by Banking Court and remanded the case to Banking Court for decision afresh on application for leave to defend the suit---Appeal was allowed accordingly.

2004 CLD 587; 2008 CLD 427; 2005 CLD 588 and 2003 CLD 1527 rel.

Abdur Rehman Qadri for Appellant.

Abdul Rauf Rokiala for Respondent.

Date of hearing: 10th June, 2015.

2016 C L D 569

[Peshawar]

Before Nisar Hussain Khan and Muhammad Daud Khan, JJ

ALI STEEL INDUSTRY through Proprietor---Petitioner

Versus

GOVERNMENT OF KHYBER PAKHTUNKHWA through Chief Secretary and another---Respondents

Writ Petition No. 2744-P of 2015 along with C.M. No. 1149-P of 2015, decided on 10th September, 2015.

(a) Khyber Pakhtunkhwa Environmental Protection Act (XXXVIII of 2014)---

----Ss. 17, 18(1) & Preamble----Constitution of Pakistan, Arts. 2-A, 9, 14, 199(1)(c) & 247---Environmental Protection Order---Penalties---Administration of Tribal Areas---Security of person---Inviolability of dignity of man etc.---Environmental Protection Agency served notice under S. 17 of Khyber Pakhtunkhwa Environmental Protection Act, 2014 upon the petitioner and directed him to stop all activities of his Mill immediately---Petitioner challenged the vires of the impugned order on ground that Khyber Pakhtunkhwa Environmental Protection Act, 2014 had not been extended to Provincially Administered Tribal Areas (PATA)---Validity---Petitioner's mill was situated in PATA, and, under Art. 247 of the Constitution, Environmental Protection Act, 2014 had not been extended to PATA, however the break or further non-extension of the environmental laws did not grant licence to any person to threaten the health or life of the locales by his actions/activities---Present case was not only in between the petitioner and the Agency, but the locales of the vicinity had also filed several complaints in that regard---Petitioner's mill was situated in a thickly populated area---Location of the mill showed that public's basic rights were also involved, which was a feature of the environmental assessment---High Court, in exercise of its jurisdiction under Art. 199(1)(c) of Constitution, might grant relief to the extent of stopping the functioning of factories, which created pollution and environmental degradation---Article 9 of the Constitution ensured safety against any attack or danger or apprehension on life of a person---Likelihood of any hazard to life by air pollution that was dangerous to human health and surrounding environment could not be ignored---Constitutional petition was dismissed in circumstances.

Mst. Shehla Zia v. WAPDA PLD 1994 SC 693; M.C. Mehta v. Union of India AIR 1988 SC 1115 and M.C. Mehta v. Union of India AIR 1988 SC 1037 ref.

(b) Constitution of Pakistan---

----Arts. 2-A, 9 & 14---Khyber Pakhtunkhwa Environmental Protection Act (XXXVIII of 2014), Preamble---Security of person---Inviolability of dignity of man etc.---'Right to life', meaning of---Environment right/environmental justice---Scope---Protection of environment is an inalienable right and perhaps more fundamental than the other rights, and the same emerges from the right to life, liberty and dignity under Arts. 9 & 14 of the Constitution---Right to life as enshrined under Art. 9 of the Constitution means a right to a healthier and cleaner environment---Environmental justice is an amalgam of the constitutional principles of democracy, equality, social, economic and political justice guaranteed under the Objectives Resolution, the fundamental right to life, liberty and human dignity given under Art. 14 of the Constitution includes the international environmental principles of sustainable development, precautionary principle, environmental impact assessment, inter and intra-generational equity and public trust doctrine.

Mst. Shehla Zia v. WAPDA PLD 1994 SC 693 ref.

(c) Words and phrases---

----'Life'----Meaning and scope---Word 'life' under the American Constitution mentioned.

Oxford Dictionary and Black's Law Dictionary ref.

Shumail Ahmad Butt and Abdul Rahim Khan Jadoon for Petitioner.

Rab Nawaz Khan, A.A.-G. for Respondents.

Date of hearing: 10th September, 2015.

2016 C L D 1164

[Peshawar]

Before Rooh-ul-Amin Khan and Syed Afsar Shah, JJ

Messrs SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN through Chairman---Appellant

Versus

OFFICIAL LIQUIDATOR, ISLAMIC INVESTMENT BANK LIMITED and 10 others---Respondents

I.C.A. No. 6-P of 2012, decided on 4th February, 2016.

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

----Ss. 412, 413, 305, 309, 59(6-A) & Preamble---Securities and Exchange Commission Act (XLII of 1997), S. 20(4)(f)---Winding up of company---Power of court to assess damages against delinquent directors etc.---Liability for fraudulent conduct of business---'Promotion'/'Promoter'---Meaning and scope---Powers and functions of the Securities and Exchange Commission---Depositor/affectees and official liquidators, on winding up of the company, a Bank on ground of bankruptcy, filed applications for determination of the loss and for recovery of the same from the responsible persons, including Securities and Exchange Commission of Pakistan and State Bank of Pakistan---Securities and Exchange Commission of Pakistan and State Bank of Pakistan took plea that they had not taken part in promotion and formation of the company, nor were they regulators of the insolvent company; therefore, they could not be proceeded against under Ss. 412 & 413 of Companies Ordinance, 1984---Company Judge, of High Court overruling said plea, held the applications maintainable---Validity---Word 'Promotion' being used in S. 412 of Companies Ordinance, 1984 was of significant nature and was also placed in the Preamble of Companies Ordinance, 1984---Companies Ordinance, 1984, however, did not provide specific definition of the word 'promotion' in terms of S. 412 of the Ordinance; therefore, simple and ordinary meaning of the word 'promotion' would be seen for ascertaining the fact as to whether Securities and Exchange Commission of Pakistan fell within the terms of promoter or otherwise---Securities and Exchange Commission of Pakistan had pivotal role in promotion of the companies and arranged/provided information to promote investor education---Under S. 20(4)(f) of Securities and Exchange Commission Act 1997, the Commission would be responsible for performance and function with regard to the promotion and regulation of the organizations, including security industries and related organization such as stock exchange and association of mutual fund, leasing company and other non-banking financial institution (NBFI)---Company under liquidation was non-banking financial institution for regulation of which Securities and Exchange Commission of Pakistan was responsible---Legislature, by inserting S. 20(4)(f) of Securities and Exchange Commission Act 1997, had expressly held Securities and Exchange Commission of Pakistan responsible for promoting and regulating non-banking financial institutions---Promotion and regulation of the such institution was the mission and vision of Securities and Exchange Commission of Pakistan, as declared by Securities and Exchange Commission Act, 1997---Legislature, therefore, while expressly assigning the function of promoting and regulating such institutions, was fully aware of the intent to make S. 412 of Companies Ordinance 1984 fully applicable to regulators, including Securities and Exchange Commission of Pakistan---Securities and Exchange Commission of Pakistan dealt with all the companies registered under Companies Ordinance, 1984, except Banking Companies---Section 59(6-A) of Companies Ordinance, 1984 began with phrase 'for the purpose of this section', which had its limited applicability to S. 59 only and excluded its relevancy to S. 412 of the Ordinance--- Definition of 'promotion' contemplated in S. 59(6-A) of the Ordinance, therefore, had no relevance to S. 412 of the Ordinance---Declining status of the company had come into the notice of the regulating wing of State Bank of Pakistan and Securities and Exchange Commission of Pakistan at the initial stage, and they were in a position to save the company from insolvency, but they remained negligent from performing their statutory duty, which resulted into fall of the company followed by liquidation---Company under liquidation was registered and licensed organization being regulated, supervised and controlled by the Government of Pakistan through State Bank of Pakistan and Securities and Exchange Commission of Pakistan---State Bank of Pakistan and Securities and Exchange Commission of Pakistan were taking deposits from the public on the strength that the company was being organized and regulated by the Government of Pakistan, which assurance was the best source of promotion for the company---Court, therefore, might examine into the conduct of any person, who had taken part in promotion and formation of the company, and compel him to repay or restore the money or property etc. of the company---Appeal against order were dismissed in circumstances.

(b) Interpretation of statutes---

----In absence of any specific definition, plain meaning of the word is to be taken into consideration---Statute is to be interpreted by using the original and natural meaning under the statute---Word provided in the statute is to be read word for word and interpreted according to the ordinary meaning of the language.

(c) Words and phrases---

----'Promotion'/'Promoter'---Definition and scope.

The Webster Dictionary; Black's Law Dictionary, Sixth Edition, 1990; Legal Dictionary and Free Dictionary by Farlex ref.

Anwar Mansoor Khan for Appellant.

Barrister Syed Mudassir Ameer for Respondent No.1.

Hidayatullah Khan and Qazi Jawad Ehsanullah Qureshi for other Respondents.

Date of hearing: 4th February, 2016.

2016 C L D 1572

[Peshawar]

Before Yahya Afridi, J

HABIB BANK LIMITED---Petitioner

Versus

Messrs SUMIFFO MEDICAL INDUSTRIES (PVT.) LTD. and others---Respondents

C.Ms. Nos. 6 and 8-P of 2015 in Company Case No. 8 of 1999, decided on 22nd February, 2016.

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

----Ss. 284, 285 & 305---Application for winding up of company---Liquidation proceedings--- Revival of proceedings--- Scope---Arrangement, during winding up proceedings, was sanctioned between impleaded company and creditor but such arrangement was not complied with---Effect---Company Judge had jurisdiction under Ss. 284 & 285 of Companies Ordinance, 1984 not only to sanction an arrangement but also to ensure its compliance and award consequences in case of its violation---Order passed by Company Judge under deeming provision on failure of sanction arrangement was an order of winding up of the company---Jurisdiction of Company Judge to pass an order reviving winding up proceedings was provided under S.285(2) of Companies Ordinance, 1984--- No cogent reasons were provided by impleaded company for non-payment of terms of settlement and for High Court to provide any further indulgence to impleaded company to continue in retaining possession of the companies--- High Court revived liquidation proceedings of companies and liquidators were allowed to proceed with winding up proceedings of companies---Application was allowed accordingly.

Capital Assets Leasing Corporation's case 2003 CLD 1713; D.S. Venkatraman's case 1977 47 Comp. Case. 352 (Bom.); Company Law; Re Wreck Recovery and Salvage Co., (1880), 15 Ch. D. 353; Re-Great Eastern Electric Co., Ltd's case (1941) 1 All E.R. 409 and Anjuman Bhahbood-e-Mutassrin Taj Company's case 2005 CLD 1818 ref.

(b) Interpretation of document---

----Provision contrary to an enactment---Scope---Any provision of written instrument which is contrary to an enactment is void to that extent.

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

----S. 284---Arrangement/compromise, sanction of---Powers of company Judge---Scope---Role of company Judge to sanction an arrangement or a compromise as provided under S. 284 of Companies Ordinance, 1984, is not that of a silent spectator but of a vigilant supervisor---Company Judge has to ensure that scheme seeking sanction of Court is valid, reasonable, bona fide and protects interest of creditors and contributories.

Abdul Rauf Rohaila for Petitioner.

Barrister Waqar Ali Khan for Respondent No.5.

Qaiser Ali for Respondent No.6.

Shumail Ahmad Butt for Respondent No.8.

Date of hearing: 1st February, 2016.

2016 C L D 778

[Punjab Environmental Tribunal]

Before Justice (Retd.) Ch. Muhammad Younis, Chairperson, Prof. Dr. A.R. Saleemi, Member Technical and Muzaffar Mahmood, Member General

DISTRICT OFFICER (ENVIRONMENT) BAHAWALNAGAR---Appellant

Versus

Messrs GHULAM FARID ATTA CHAKKI UNIT through Ghulam Farid---Respondent

Complaint No. 255 of 2014, decided on 14th December, 2015.

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

----Ss. 16, 17, 19 & 21---Environmental protection order---Complaint---Maintainability---District Officer (Environment) issued Environment Protection Order which was allegedly violated therefore complaint was filed---Validity---Neither District Officer (Environment) was competent to issue Environment Protection Order nor such power could be delegated to him by Director-General Environment Protection Authority---Environmental Tribunal could not take cognizance of any complaint which was not filed by provincial agency, government agency or local council---Legislature, wherever necessary, empowered authorized officer to deal with a specific matter---Provisions of S.17(6) of Pakistan Environmental Protection Act, 1997, provided that Director-General of provincial agency or an officer generally or specially authorized by him in such behalf could, on the application of accused, compound an offence under Pakistan Environmental Protection Act, 1997, with the permission of Environment Tribunal or Environmental Magistrate---If powers of S. 16 of Pakistan Environmental Protection Act, 1997, to issue environmental protection order or to file complaint were intended to be conferred on any other officer the same could have been mentioned in Ss. 16 & 21 of Pakistan Environmental Protection Act, 1997---Complaint was not maintainable as the same was filed without jurisdiction---Tribunal declared notification issued by Director-General to be illegal and without jurisdiction to the extent of delegating powers under Ss. 16 & 21 of the Pakistan Environmental Protection Act, 1997---Complaint was dismissed accordingly.

2016 C L D 913

[Punjab Environmental Tribunal]

Before Justice (R) Ch. Muhammad Younis, Chairperson, Prof. Dr. A.R. Saleemi, Member Technical and Muzaffar Mahmood, Member General

LALA PAK BRICKS KILN---Appellant

Versus

DIRECTOR GENERAL, EPA and others---Respondents

Appeal No. 20 of 2015, decided on 16th December, 2015.

(a) Punjab Environmental Protection Act (XXXIV of 1997) [as amended by Punjab Environmental Protection (Amendment) Act (XXXV of 2012)]---

----Ss. 16, 12, 6 & 5---Pakistan Environmental Protection Act (XXXIV of 1997), S. 8---Environmental Samples Rules, 2001, R. 6---Initial Environmental Examination and Environmental Impact Assessment---Establishment, powers and functions of Provincial Environmental Protection Agencies---District Officer (Environment) issued EPO to the appellant directing him to make arrangements to regularize his unit under S. 12 and to stop activities of the brick kiln---Validity---Before promulgation of amended Act as per 18th Amendment of the Constitution, the Provincial Agencies had been established under S. 8 of Pakistan Environmental Protection Act, 1997, but after the amendment and the promulgation of Punjab Environmental Protection (Amendment) Act, 2012, the Provincial Agency was required to be re-constituted under the Act, because S. 8 of Punjab Environmental Protection Act, 1997 had been omitted by the Legislature---No such Provincial Agency as required under S. 5 of the amended Act had been constituted and notified in the official Gazette---Section 5(4) of Punjab Environmental Protection Act, 1997 provided that the powers and functions of the Provincial Agency would be exercised and performed by Director General---Section 5(5) of Punjab Environmental Protection Act, 1997, however empowered Director General to delegate any of those powers and functions by general or special order to staff appointed under S. 5(3) of Punjab Environmental Protection Act, 1997---Notification available on the record did not find mention that Director General had delegated the functions of the Provincial Agency under S. 6(1)(a) of Punjab Environmental Protection Act, 1997 to the District Officer (Environment)---Any functions and powers of the Provincial Agency enumerated in Ss. 6 & 7 of Punjab Environmental Protection Act, 1997 could be delegated by Director General to any officer appointed under S. 5(3) of Punjab Environmental Protection Act, 1997 to pass the EPO could not be delegated to any District Officer (Environment) by Director General---Delegation of powers to District Officer (Environment) by Director General would give rise to exploitation of the business community and monopoly of power at district level---Section 16 of Punjab Environmental Protection Act, 1997 was a specific provision which related to the issuing of EPO---Status of the District Officer (Environment) was that of investigation officer and after thorough enquiry and collecting evidence he had to send the material collected during the investigation along with his report etc. to the Agency, which had to issue the notice under S.16 of Punjab Environmental Protection Act, 1997 and after hearing the person responsible could pass the EPO containing certain specific directions to control the pollution---Giving powers of adjudication to the Investigation Officer was against the scheme of law---Rule 6 of Environmental Samples Rules, 2001 provided that where on entry, inspection or search of any place, the authorized person was satisfied that the circumstances in such place required issuance of EPO in respect thereof, he would immediately inform Director General in writing for initiation of necessary action in accordance with S. 16 of Punjab Environmental Protection Act, 1997---If District Officer (Environment) was given the powers to pass EPO, then said Rule would become redundant, thus, power to issue EPO could not be delegated by the Director General to District Officer (Environment)---No occasion existed for the District Officer (Environment) for issuing impugned EPO, especially when the appellant had already moved for Environmental Approval in order to resolve the controversy---Environmental Protection Order (EPO) in question passed by the District Officer (Environment) was illegal and without jurisdiction and the same was therefore not sustainable in the eye of law---Impugned EPO was, therefore, set aside---Appeal was allowed in circumstances.

(b) Punjab Environmental Protection Act (XXXIV of 1997) [as amended by Punjab Environmental Protection (Amendment) Act (XXXV of 2012)]---

----Ss. 16 & 6--- Environmental Protection Order (EPO)---Function of Provincial Agency--- Issuing of EPO is a quasi-judicial power.

Sardar Aasif Ali Sial, counsel for Appellant.

Rafay Alam, counsel for Respondent No.2.

Nawaz Manik, Director Legal for the EPA.

2016 C L D 1186

[Punjab Environmental Tribunal]

Before Justice (R) Ch. Muhammad Younis, Chairperson, Prof. Dr. A.R. Saleemi, Member (Technical) and Muzaffar Mahmood, Member (General)

DIRECTOR GENERAL ENVIRONMENTAL PROTECTION AGENCY---Appellant

Versus

FATIMA SUGAR MILLS LIMITED---Respondent

Complaint No.517 of 2012, decided on 15th January, 2016.

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

----Ss. 18, 16 & 6(2)(a) & (b)---Criminal Procedure Code (V of 1898), S. 265-K---Environmental Protection Order---Offence by bodies corporate---Functions of Provincial Agency---Complaint against person, other than the Chief Executive of company, not maintainable---Court may acquit accused at any stage of trial---Accused person, in the present case, was Admin Manager, and not the Chief Executive, of the company---Under S. 18, proviso, of Punjab Environmental Protection Act, 1997, only the Chief Executive was liable to be proceeded against, besides the company itself---Entire proceedings in question were, therefore, based on misconception and in derogation to S. 18, proviso, of Punjab Environmental Protection Act, 1997---Agency had to carry out thorough investigation by exercising the powers under S. 6(2)(a) of Punjab Environmental Protection Act, 1997 and determine the person responsible and then to issue notice of hearing under S. 16 of the Act and thereafter issuing the Environmental Protection Order the complaint could be filed against a specific person/company---No Environmental Protection Order could be passed unless the person responsible for discharge, emission etc. was determined and given the opportunity of being heard---Chief Executive of the Company or the person responsible had to be associated with the proceedings from the very beginning and not after the trial---Name of the Chief Executive of the company could not be allowed in the complaint after lapse of eight years---Present complaint had been filed four years after the Environmental Protection Order without any explanation for the inordinate delay, which amounted to misuse of powers by the Agency and gave rise to doubts about the genuineness of the proceedings---Definition of "complaint", as given in Cr.P.C. was not applicable in such cases being inconsistent with the provisions of Punjab Environmental Protection Act, 1997---Application for acquittal was allowed accordingly.

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

----S. 30---Punjab Environmental Protection Act, 1997 to override other laws---Provisions of Punjab Environmental Protection Act, 1997 override provisions of any other law, if the former are inconsistent with the latter.

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

----S. 21---Functions and powers of Environmental Tribunal---Scope---Environmental Protection Tribunal has to perform its functions independently in accordance with law without any influence of the Government or the Agency.

Jawad Hassan, Senior Advocate assisted by Ali Usman Advocate for Respondent.

Ijaz Majeed, Deputy Director (Legal) EPA assisted by Mohsin Sarfraz Cheema (Law Officer) and Miss Amina (ADPP).

2016 C L D 1271

[Punjab Environmental Tribunal]

Before Justice (R) Ch. Muhammad Younis, Chairperson, Prof. Dr. A.R. Saleemi, Member Technical and Ubaid Rubbani, Member General

Messrs COLONY SUGAR MILLS---Respondent

Versus

ENVIRONMENTAL PROTECTION AGENCY through D.G.---Complainant

Complaint No. 343 of 2013, decided on 14th April, 2015.

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

----Ss. 18, 16 & 11---Environmental Protection Order---Offences by bodies corporate---Prohibition of certain discharges and emissions---Proof---Absence of Analysis Report---Effect---Complaint not filed against Chief Executive of company, maintainability of---In terms of S. 18, proviso of Punjab Environmental Protection Act, 1997, only the Chief Executive of the company could be held liable for violation of the environmental laws and none else---No analysis report had been procured after passing of the Environmental Protection Order and filing of the complaint to prove the allegations under S. 11 of Punjab Environmental Protection Act, 1997---Analysis report attached with the complaint had absolutely no legal value because, the lab had observed that the samples seemed not to be the representative (of the sugar industry)---Accused, on basis of said analysis report, could not be convicted---Compliance status report had been prepared when the unit was not operational due to off season; therefore, without procuring fresh analysis report while the unit was operational, the complaint could not be filed---Agency might initiate fresh proceedings against the Chief Executive of the company after procuring fresh analysis report---Complaint was dismissed accordingly.

AIR 1665 SC 1595 and AIR 1950 SC 188 ref.

Ejaz Majeed, D.D. (L&E) for the Complainant/EPA.

Miss Amina, ADPP for the State.

Ali Usman for Respondent.

2016 C L D 1416

[Punjab Environmental Tribunal]

Before Justice (R) Ch. Muhammad Younis, Chairperson, Prof. Dr. A.R. Saleemi, Member Technical and Muzaffar Mahmood, Member General

JALAL PROTIEN FARM---Appellant

Versus

DIRECTOR GENERAL, EPA and others---Respondents

Appeal No. 68 of 2014, decided on 24th March, 2016.

Punjab Environmental Protection Act (XXXVI of 1997)---

----Ss. 12, 16 & 22---Environmental approval---Operational activities, stopping of---Appellant was running a poultry farm and was aggrieved of Environmental Protection Order directing him to stop all operational activities---Validity---Environmental Protection Order was to be passed by Director-General but it was signed by Director on behalf of Director-General which was not permissible in law---When an act was required to be done in a particular manner it must be done in that way alone or not at all---No forum for granting Environmental Approval existed so direction contained in order in question to stop operational activities unless approval was obtained could not be given---No other specific and practicable direction was given to appellant before stopping operational activities of unit---Environmental Protection agency had no jurisdiction to close, stop or seal any unit---Environmental Tribunal set aside order passed by Agency and remanded the matter for decision afresh---Appeal was allowed in circumstances.

Appeal No.43 of 2015, Shalimar Pyrolysis v. Director General EPA and others rel.

Muhammad Yasin Hatif, Senior Advocate for Appellant.

Mohsin Sarfraz Cheema, Law Officer for the EPA.

2016 C L D 1429

[Punjab Environmental Tribunal]

Before Justice (R) Ch. Muhammad Younis, Chairperson, Prof. Dr. A.R. Saleemi, Member Technical and Ubaid Rubbani, Member General

Messrs COLONY SUGAR MILLS AND DISTILLERY, KARMANWALA, PHALIA, DISTRICT MANDI BAHADUDIN---Respondent

Versus

ENVIRONMENTAL PROTECTION AGENCY through D.G.---Complainant

Complaint No. 932 of 2012, decided on 14th April, 2015.

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

----Ss. 18, 17(5), 16, 11 & 6(2)(a)----Environmental Protection Order---Offences by bodies corporate---Prohibition of certain discharges and emissions---Functions of Provincial Agency---Complaint against person, other than the Chief Executive of company, not maintainable---Under S. 6(2)(a) of Punjab Environmental Protection Act, 1997, the Agency was empowered to conduct inquiry or investigation and might request any person to furnish any information or data relevant to its functions---Investigation Officer/Inspector was under legal obligation to thoroughly investigate the matter and determine the liability before proceeding further, and in case of a company, he might determine as to who was the Chief Executive of the company---Said information could be obtained from the Securities and Exchange Commission of Pakistan, where Form 29 submitted by the company was available---No occasion, therefore, existed to initiate proceedings against accused, who had never been the Chief Executive of the company and all the proceedings initiated against present accused were based on misconception---In terms of S. 18, proviso, of Punjab Environmental Protection Act, 1997, only the Chief Executive could be held liable for violation of Environmental laws and none else--- No analysis report had been procured after passing of the Environmental Protection Order and before filing the complaint to prove the allegations under S. 11 of Punjab Environmental Protection Act, 1997---Complaint was dismissed accordingly.

AIR 1665 (sic.) SC 1595 and AIR 1950 SC 188 ref.

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

----S. 18--- Offences by bodies corporate--- Person liable to prosecution---Wisdom behind S. 18, proviso of Punjab Environmental Protection Act, 1997 is that the legal entity/corporate body or company has to be prosecuted through some natural person, and, in case of a company, the Chief Executive is said person as per S. 18, proviso, of Punjab Environmental Protection Act, 1997---If like other corporate bodies, anyone can be prosecuted, then there would be no need for the Legislature to add the proviso to S. 18 of Punjab Environmental Protection Act, 1997 against a company---Proviso to S. 18 Punjab Environmental Protection Act, 1997 has purposely been added, as according to S. 17(5) of Punjab Environmental Protection Act, 1997, if a person is convicted and he repeats the offence, then, he could be sentenced to imprisonment for term which may extend to two years.

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

----S. 18--- Offences by bodies corporate--- Invoking the relevant provisions of Cr.P.C.---Scope---Attendance of the Chief Executive of companies, who might be out of Pakistan, could be dispensed with.

(d) Criminal trial---

----No one could be allowed to defeat the ends of justice by impleading an unconcerned person as accused.

(e) Criminal Procedure Code (V of 1898)---

----Preamble---No provision existed in Cr.P.C. to conduct double trial or substitute the accused after full trial.

(f) Criminal trial---

----Prosecution cannot be allowed to fill up the lacuna in their complaint after procrastinated trial, as in criminal justice system, the benefit of doubt is given to the accused and not the prosecuting agency.

Ejaz Majeed, D.D. (L&E) for the Complainant/EPA.

Miss Amina, ADPP for the State.

Ali Usman, Counsel for Respondent.

2016 C L D 1439

[Punjab Environmental Tribunal]

Before Justice (R) Ch. Muhammad Younis, Chairperson, Prof. Dr. A.R. Saleemi, Member Technical and Muzaffar Mahmood, Member General

Messrs SHAKARGANJ LIMITED, UNIT-1 TOBA ROAD, TEHSIL AND DISTRICT JHANG through Chief Executive---Appellant

Versus

ENVIRONMENTAL PROTECTION AGENCY, PUNJAB---Respondent

Appeal No. 25 of 2015, decided on 17th March, 2016.

Punjab Environmental Protection Act (XXXVI of 1997)---

----Ss. 6(1)(g)(i), 11, 20 & 22---Prohibition of discharges and emissions---Punjab Environmental Quality Standards (PEQS)---Violation---Appellant was aggrieved of directions passed under Environmental Protection Order against it for non-compliance of PEQS---Validity---In order to attract provisions of S. 11 of Punjab Environmental Protection Act, 1997 it had to be proved that level of discharge and emission of any effluent or waste or air pollutant or noise exceeded the PEQS or where applicable, standards established under S. 6(1)(g)(i) of Punjab Environmental Protection Act, 1997---Neither any such standards nor PEQS were prepared and notified in official gazette nor Punjab Environmental Protection Council had so far approved the PEQS---Legislature never provided any mechanism in Punjab Environmental Protection (Amendment) Act, 2012 to save applicability of National Environmental Quality Standards (NEQS) till the preparation of PEQS---Environmental Tribunal declined to convict any person under S. 11 of Punjab Environmental Protection Act, 1997 for violation of NEQS in the proceedings initiated after promulgation of Punjab Environmental Protection (Amendment) Act, 2012---Environmental Protection Order passed against petitioner was unlawful, without authority and not sustainable in the eyes of law---Environmental Tribunal set aside the order in question and remanded the matter to the authority for decision afresh---Appeal was allowed accordingly.

2015 CLC 1053; PLD 2015 Lah. 345; 2015 SCMR 795 and PLD 2013 SC 255 ref.

Irshad Chaudhary for Appellant.

Nawaz Manik, Director Legal assisted by Mohsin Sarfraz Cheema, Law Officer for Respondent/EPA.

2016 C L D 1628

[Punjab Environmental Tribunal]

Before Justice (R) Ch. Muhammad Younis, Chairperson and Muzaffar Mahmood, Member (General)

DIRECTOR GENERAL, EPA---Appellant

Versus

Messrs ASHRAF SUGAR MILLS LIMITED---Respondent

Complaint No.709 of 2013, decided on 29th April, 2016.

Punjab Environmental Protection Act (XXXIV of 1997) [As amended by Punjab Environmental Protection (Amendment) Act (XXXV of 2012)]----

----Ss. 11, 12, 16, 18, 31, 33 & 34----Environmental Sample Rules, 2001, Rr. 6 & 10(5)--- Criminal Procedure Code (V of 1898), S. 265-K---Environmental Protection Order (EPO)---Application under S. 265-K, Cr.P.C.---Scope---Court may acquit accused at any stage of trial---Cases of offences by body corporate---Only Chief Executive was liable---Company/unit established prior to Punjab Environmental Protection Act, 1997, was not subject to the Act, as the enactment was not retrospective---Contradiction existed as to date and authority of sampling of waste water in SIR, complaint and analysis report---Waste water not discharged into any drain had no adverse environmental effect---National Environmental Quality Standards (NEQS's), being inconsistent with Punjab Environmental Protection Act, 1997, were not applicable, and proof of violation of Punjab Environmental Quality Standards (PEQS's) was necessary for application of S. 11 of Punjab Environmental Protection Act, 1997---Tribunal observed that Provincial Agency was required to frame its own Rules or Environmental Sample Rules, 2001 could have been adopted with modification so as to substitute PEQ's for NEQS's---Certificate in Form D in original was to be provided to the accused, and providing attested copy thereof was violation of Environmental Samples Rules, 2001---No forum at the Provincial level was available for review of Initial Environmental Examination (IEE) and Environmental Impact Assessment (EIA)/ extension in the unit of the Company---EPO, being a quasi-judicial forum, order thereof, had to be a speaking order---Each and every defence plea was to be discussed in the EPO before discarding the plea---Accused claiming to have taken certain remedial measures---Agency was required to procure fresh report regarding remedial measures allegedly taken by the accused---Practice of passing the EPO by Director General and signing of the same by Deputy Director was disapproved by the Tribunal---Findings in EPO being arbitrary and contrary to the law and rules were set aside by the Tribunal---Principles and procedure.

Accused, at the time of initiating the proceedings in the year 2012, was neither a Director nor the Chief Executive of the Company, and he although had been appointed as Director of the Company in the year 2014, but he had never been the Chief Executive. In terms of section 18, proviso of Punjab Environmental Protection Act, 1997. In case of a company, only the Chief Executive thereof was liable to be proceeded against and not anyone else.

Sampling dates, as mentioned in the SIR forwarded by the District office (Environment) and in the analysis report, were contradictory, which meant that either the samples had not been sent within 48 hours as per the Rules, or the same had been taken later on. Analysis report and the complaint were also contradictory as to the official who had taken and sent the sample to the lab.

Analysis report itself mentioned that the waste water was being used for irrigation of the agricultural farm of the accused. According to the analysis report got prepared by the accused from an independent lab, discharge of waste water exceeding the prescribed standards had not been found. Waste water, being not discharged into any drain, therefore, had no adverse environmental effect.

Environmental Sample Rules, 2001 had been framed under Pakistan Environmental Protection Act, 1997, and the National Environmental Quality Standards (NEQS's), were to be observed; however, the Rules being inconsistent with Punjab Environmental Protection Act, 1997, in order to attract the provisions of S. 11 of the Act, the accused was to be proved to have violated the Provincial Environmental Quality Standards (PEQS's).NEQS's had never been saved till the formulation of PEQS's. Provincial Agency was required to frame its own sample rules, or Environmental Sample Rules, 2001 could have been adopted with necessary modification so as to substitute PEQS's for NEQS's. No offence under S. 11 of Punjab Environmental Protection Act, 1997 [As amended by Punjab Environmental Protection (Amendment) Act (XXXV of 2012)], was, therefore, made out from the material placed on the record.

No report to the Director General, as required by R. 6 of Environmental Sample Rules, 2001, for issuance of EPO by the authorized officer, was available on the record. Nothing was on the record to show that one of the samples had been given to the accused. Rule 10(5) of the Environmental Sample Rules, 2001 required that one certificate in Form D in original would be sent to the person, from whom the sample was taken, the second original was to be filed with the complaint, if the same had been filed before the Environmental Tribunal, and the third original was to retained by the authorized person. Only attested copy of the certificate in Form D had been placed on the record, and the same in original had not been provided to the accused to enable the Company to challenge the same within the stipulated time period, which was violation of R. 10(5) of the Rules.

No details of any extension in the unit of the Company had been given in the SIR, and only the capacity of the unit was alleged to have been enhanced, which might have been the result of some repair or replacement of old machinery or the use of the latest technology or other modern devices. No new construction was mentioned in the SIR. Provincial Agency had not framed and notified its own regulations for review of IEE and EIA under Punjab Environmental Protection Act, 1997 to provide a forum for environmental approval to any extension. Provisions of S. 12 of Punjab Environmental Protection Act, 1997, therefore, could not be invoked for want of forum.

Accused had submitted his written reply to answer the allegations contained in the notice, but not a single word in that respect had been mentioned in the EPO, and the defence plea had been discarded by incorporating a stereo type sentence that ' competent authority is not satisfied with the reply' without giving any reasons. EPO, being a quasi-judicial forum, appealable order, had to be speaking order. Each and every defence plea was required to be discussed and reasons given for discarding the same.

Accused claiming to have taken certain remedial measures by installing some equipment to control the pollution, the Agency was under an obligation to procure a fresh report to verify said stance of the accused before discarding the same.

Environmental Protection Order in question had been passed by the Director General, but the same had been signed by the Deputy Director (R & I); said practice could not be approved.

Accused's unit, as per the SIR, had been established in the year 1982, thus, present case did not fall within the purview of S. 12 of Punjab Environmental Protection Act, 1997 [as amended by Punjab Environmental Protection (Amendment) Act (XXXV of 2012)] as the Act had no retrospective effect.

EPO in question, therefore, had been issued arbitrarily, as the same contained no reasons for discarding the defence plea, and the subsequent complaint was not maintainable for lack of sufficient incriminating evidence and the legal infirmities; therefore, there was no likelihood of conviction of the accused, and to proceed further with the complaint would be a futile exercise. Application under section 265-K, Cr.P.C. was allowed accordingly.

2005 CLD 1267 and Allah Ditta v. DCO 2009 CLD 825 rel.

Miss Amina ADPP assisted by Mohsin Sarfraz Cheema Law Officer on behalf of EPA.

Brigadier Anjum Saeed, representative of the Respondent along with Jawad Hassan, Senior Advocate assisted by Ali Usman, Counsel for Respondent.

2016 C L D 17

[Securities and Exchange Commission of Pakistan]

Before Tariq Hussain, Director

CHAIRMAN BOARD OF DIRECTORS, JUBILEE LIFE INSURANCE COMPANY LIMITED: In the matter of

Show Cause Notice, dated 22nd January, 2014, decided on 2nd July, 2014.

Companies Ordinance (XLVII of 1984)---

----Ss. 214 & 196---Failure of Director to disclose nature of his interest in respect of any contract/arrangement entered into by the company at the meeting of the Directors---Effect---Under provisions of S.214 of Companies Ordinance, 1984 where any director was directly or indirectly interested in any contract or arrangement entered into by the company, he would be required to disclose the same at a meeting of Directors---Said section also required annual renewal of the notice of interest from any such Director---Chairman Board of the company, in the present case had failed to comply with provisions of S.214 of the Companies Ordinance, 1984, as he did not give notice of his interest at a meeting of Board of Directors; and subsequent annual renewals of the notice had not been made; which attracted penal provisions as provided under S.214(6) of the Companies Ordinance, 1984---Directors of the company, in addition to the day-to-day running of the company and the arrangement of its business, also had some 'fiduciary' duties i.e. duties held in trust and some wider duties imposed by statute and breach of those statutory duties would usually be a criminal offence, punishable by fine or imprisonment---Directors were gauged against a higher standard of accountability which required them to be vigilant and perform their duties with due care---In the present case, Directors had also failed to perform their duties with due care and prudence in respect of holding timely elections of Directors---Since the Directors were supposed to be well aware of their legal obligations in connection with the statutory requirement of S.214 of the Companies Ordinance, 1984, it could be legitimately inferred that the default was committed to the extent of explicit disclosure and annual renewal only---Default having been established penalty as provided under S.214(6) of Companies Ordinance, 1984 could be imposed on the Chairman of the Board of Directors of the company but, the Commission, instead of imposing the penalty, took a lenient view, and issued a stern warnings that in case of similar non-compliance in future a stronger action against him would be taken.

Naveed ul Haq, Advocate Supreme Court, Ms. Sidrah Jameel, Advocate Lower Court and Ms. Zara Bokhari, Associate attended.

Date of hearing: 20th May, 2014.

2016 C L D 72

[Securities and Exchange Commission of Pakistan]

Before Mohammed Asif Arif, Commissioner (Insurance) and Imtiaz Haider, Commissioner (SCD)

Syed MUHAMMAD REHAN---Appellant

Versus

HEAD OF DEPARTMENT (ENFORCEMENT)---Respondent

Appeal No. 20 of 2013, decided on 14th July, 2014.

Companies Ordinance (XLVII of 1984)---

----S. 255---Issuance of unqualified report by the Auditor in contravention to the adopted accounting policy of the company and the requirements of Accounting and Financial Reporting Standard---Auditor had failed to report misstatement to the members and instead stated in the report that accounts gave a true and fair view of the affairs of the company and conformed with the approved accounting standard as applicable in Pakistan---Company had wrongly recognized sales in the accounts and the Auditor had failed to report the same to the members---Such a situation the same override all the contentions of the Auditor with regard to the recognition of revenue on the "Bill and Hold" sales---Auditor had failed to perform his statutory obligations in violation of S.255 of the Companies Ordinance, 1984 by failing to report a material deviation from the company's accounts---Penalty in circumstances, was rightly imposed on the Auditor, which could not be interfered with.

Syed Muhammad Rehan, (S. M. Rehan and Co., Chartered Accountants) for Appellant.

Bilal Rasul, Director (Enforcement) and Moeed Hassan, Assistant Director (Enforcement), Department Representatives.

Date of hearing: 20th February, 2014.

2016 C L D 89

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director/HOD (MSRD)

RUHAIL ASHRAF KHAN, CHIEF EXECUTIVE OFFICER OF MESSRS AURUM COMMODITIES (PVT.) LIMITED: In the matter of

Show Cause Notice No.4/BRC-288/PMEX/SMD/2014 dated 19th May, 2014, decided on 10th July, 2014.

Commodities Exchange and Future Contracts Rules, 2005---

----Rr. 12(4) & 26---Application of Company for grant of certificate of registration as broker---Chief Executive Officer of the company, who was also a major shareholder of the company, submitted his work experience---Commission had come to know that Chief Executive of the company had also worked as the Deputy Chief Executive Officer of another company---Said other company was suspended by the Commission, due to non-settlement of investor's complaints, and subsequently was expelled by the Stock Exchange---Consequent to that misrepresentation, the Commission issued show-cause notice to Chief Executive Officer for providing false and misleading information to the Commission, which prima facie led to the violation of R.26 of Commodities Exchange and Future Contracts Rules, 2005---Working tenure of the Chief Executive Officer with the other company was approximately eight months, which was contrary to the verbal comments made by Chief Executive Officer---Non-disclosure of such material fact, had raised serious concern, while examining application of the company for grant of certificate of registration as 'broker'---Granting certificate of registration to the company, would not be in the interest of the commodities market since Chief Executive Officer of the company, who was major shareholder had worked as Deputy Chief Executive Officer of other company, which defaulted in payment to its clients and as a result of said default, large number of investors' claims amounting to millions of rupees were outstanding---Application for "registration certificate as broker" was rejected in circumstances.

Ruhail Ashraf Khan Present at Hearing.

Hasnat Ahmad, Director MSRD and Murtaza Abbas, Deputy Director - MSRD representing MSRD.

Date of hearing: 26th May, 2014.

2016 C L D 176

[Securities and Exchange Commission of Pakistan]

Before Tariq Hussain, Director (Insurance)

CONTINENTAL INSURANCE COMPANY LIMITED: In the matter of

Show Cause Notice dated 26th March, 2014, decided on 30th June, 2014.

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

----Ss. 218 & 236---Appointment of company secretary---Failure to disclose to members of Directors' interest in the contract of appointment---Under provisions of S. 218(1) of the Companies Ordinance, 1984, company while making appointments, would make out and attach in the report referred in S.236 of the Ordinance, an abstract of the terms of the appointment or contract or variation, together with a memorandum clearly specifying the nature of the concern or interest of the Directors in such appointment or contract or variation---Company, while appointing company secretary, had not complied with the provisions of S.218 of the Companies Ordinance, 1984---Default of S.218 of the Companies Ordinance, 1984 having been established and the company had accepted the default, penalty as provided under S.218(6) of the Ordinance, could be imposed on the company---Commission, instead of imposing the penalty, took a lenient view and condoned the company; due to the fact that the company had no intent to hide the information to be written in the Directors' report of the company; and ensured that such mistake would not be repeated in future.

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

----Ss. 174 & 196---Duties of the Directors---Directors, in addition to the day-to-day running of the company and management of its business, also had some 'fiduciary' duties i.e., duties held in trust and some wider duties imposed by statute; and breach of those statutory duties would usually be a criminal offence, punishable with fine or imprisonment---Directors were gauged against a higher standard of accountability which required them to be vigilant, and perform their duties with due care.

Sohail Saleem and Zubair Ali Khan, Authorized Representative attended.

Date of hearing: 21st May, 2014.

2016 C L D 204

[Securities and Exchange Commission of Pakistan]

Before Tariq Hussain, Director (Insurance)

PAK KUWAIT TAKAFUL COMPANY LIMITED: In the matter of

Show Cause Notice dated 26th February, 2014, decided on 21st July, 2014.

Companies Ordinance (XLVII of 1984)---

----Ss. 180 & 186--- Election, term of office and duties of the Directors---Under provisions of S.180 of the Companies Ordinance, 1984 term of office of Directors of the company, was three years---In the present case, election of Directors was held prior to the expiry of the term of existing Directors, in violation of provisions of S.180 of the Companies Ordinance, 1984---Company had accepted the default---Directors of the company, in addition to the day-to-day running of the company and management of its business, also had some 'fiduciary' duties i.e. duties held in trust and some wider duties imposed by statute---Breach of those statutory duties, would usually be a criminal offence, punishable with fine or imprisonment---Directors, were gauged against a higher standard of accountability, which required them to be vigilant and perform their duties with due care---Directors, in the present case, had overlooked and failed to perform their duties with due care and prudence---Directors were supposed to be well aware of their legal obligations in connection with statutory requirement of S.180 of the Companies Ordinance, 1984---Directors of the company were required to follow the laws in letter and spirit at any cost---Default of S.180 of the Companies Ordinance, 1984, having been established, penalty as provided under S.186 of the Companies Ordinance, 1984 could be imposed on the company---Commission, in exercise of the power conferred under S.186 of the Insurance Ordinance, 1984, instead of imposing the penalty, taking a lenient view condoned the company due to the fact that act of conducting the elections of the Directors was just before its expiry of three days of their terms---Company was issued a stern warning by the Commission that in case of similar non-compliance in future, a stronger action against the company and its Directors would be taken.

Syed Wajahatullah Quadri, Chief Financial Officer and Aziz Kapadia, Company Secretary attended.

Date of hearing: 28th May, 2014.

2016 C L D 353

[Securities and Exchange Commission of Pakistan]

Before Tariq Hussain, Director (Insurance)

ALPHA INSURANCE COMPANY LIMITED: In the matter of

Show Cause Notice dated 18th December, 2013, decided on 18th July, 2014.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 59-A, 156 & 166---Insurance of public property---Default in complying with or acting in contravention of Insurance Ordinance, 2000--- Company had underwritten risks related to assets owned/managed by Public Sector entities---Said risks fell under the definition of "public property" as envisaged under S.166 of Insurance Ordinance, 2000---Company had also obtained insurance policy for its vehicles from the company itself---Said insurance coverage, did not fall within the definition of "Insurance Contract" given in International Financial Reporting Standard---Company had repeatedly contravened the provisions of S.166 of Insurance Ordinance, 2000, for which the penal action as provided under S.156 of the Ordinance, could be taken---Established default under the relevant provisions of Insurance Ordinance, 2000 had taken place---Representative of the company, who had admitted said default, had shown the intention and commitment of the company to fulfil the statutory requirements as laid down under S.166 of the Insurance Ordinance, 2000---Directors of the company had overlooked and failed to perform their duties with due care and prudence---Directors were supposed to be well aware of their legal obligations in connection with requirement of S.166 of Insurance Ordinance, 2000 and to follow the laws in letter and spirit at any cost---Default of S.166 of Insurance Ordinance, 2000, having been established, penalty as provided under S.156 of Insurance Ordinance, 2000, could be imposed on the company---Commission, instead of imposing the penalty, took a lenient view and condoned the default---Company, its Directors and Chief Executive, were issued stern warning that in case of similar non-compliance in future, a stronger action would be taken.

Umair Khan, Managing Director/Chief Executive and Latif A. Choudhri, General Manager (Operations) attended.

Date of hearing: 26th February, 2014.

2016 C L D 426

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director/HOD (MSRD)

H. P. BYRAMJI AND CO. (PVT.) LIMITED: In the matter of

Show Cause Notice No.1(31) SMD/MSRD/C&IW/2014, dated 21st May, 2014, decided on 4th August, 2014.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 6(1) & 22---Brokers and Agents Registration Rules, 2001, R.8---Stock Exchange Members (Inspection of Books and Record) Rules, 2001, Rr.3, 4 & 7---Failure of the company (broker) to maintain segregation of clients assets---Inspection Report, submitted by Inspection Team had highlighted that broker/company, had failed to maintain segregation of clients' assets---Company, in circumstances, had failed to perform its responsibilities by not maintaining segregation of its clients' assets---Violation of Rules and Regulations, was a serious matter---Company had communicated that it was now maintaining segregation of clients' assets in letter and spirit---Company, had rectified the identified irregularities, highlighted in the inspection report; and intimated that it was now complying with the applicable regulatory framework---Commission, in exercise of the powers under S.22 of Securities and Exchange Ordinance, 1969, imposed on the broker a penalty of Rs.25,000, with directions, that the company would comply with Securities and Exchange Rules, 1971; and the guidelines issued in letter and spirit; and ensure segregation of clients' assets in letter and spirit.

Shahveer JHP Byramji, Director and Muhammad Shoaib Bashir, Manager Operations representing H.P. Byramji & Co. (Private) Limited.

Muhammad Tanveer Alam, Joint Director and Ms. Najia Ubaid, Deputy Director assisting Director/HOD (MSRD).

Date of hearing: 10th July, 2014.

2016 C L D 748

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director/HOD (MSRD)

ELIXIR SECURITIES PAKISTAN (PRIVATE) LIMITED: In the matter of

Show Cause Notice No.1(32) SMD/MSRD/C&IW/2013 dated 24th July, 2014, decided on 30th September, 2014.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 6 & 22---Brokers and Agents Registration Rules, 2001, R.8---Stock Exchange Members (Inspection of Books and Record) Rules, 2001, Rr.3, 4 & 7---Failure of company/broker to maintain segregation of clients' assets---Involvement of company in imposition of late payment charges to its clients and other irregularities---Inspection report, submitted by duly constituted Inspection Team, had revealed that the company had failed to maintain segregation of client's assets; that company was involved in imposition of late payment charges to its clients; that broker company did not have improve "Know Your Customers (KYC)"; and that failed to maintain pre-trade and post-trade margins---Broker company was expected to maintain a single bank account for maintaining segregation of clients' assets; and clients' funds should be deposited on the same bank account---Broker by not maintaining proper segregation of clients' assets, was prima facie in violation of the requirements as laid down in the Stock Exchange Rule Book---Violation of the Rules and Regulations being a serious matter, Commission, in exercise of power under S.22 of Securities and Exchange Ordinance, 1969, imposed on the company a penalty of Rs.50,000, with directions to comply with Securities and Exchange Rules, 1971; ensure proper segregation of clients' assets and maintain a separate bank account for the clients' funds; provide Bank statement of the bank account; and immediately stop imposing late payment charges.

Junaid Iqbal, Chief Executive Officer and Fahad Muslim, Company Secretary representing Elixir Securities Pakistan (Private) Limited.

Muhammad Tanveer Alam, Joint Director and Ms. Najia Ubaid, Deputy Director assisting Director/HOD (MSRD).

Date of hearing: 29th August, 2014.

2016 C L D 792

[Securities and Exchange Commission of Pakistan]

Before Mohammed Asif Arif, Commissioner (Insurance)

CRESCENT STAR INSURANCE COMPANY LIMITED: In the matter of

Show Cause Notice dated 1st February, 2012, decided on 4th September, 2014.

(a) Insurance Ordinance (XXXIX of 2000)---

----Ss. 11, 28, 63 & 156---Requirements as to minimum paid up share capital---Failure to comply with such requirements by insurance company---Every insurer, registered under Insurance Ordinance, 2000, under notification S.R.O. 291(1)/2007 dated March 26, 2007, was required to raise its paid up share capital in the manner given hereunder, which was stated against the status of the company's paid up share capital on the given dead line---Insurance company, which had failed to do so had contravened the provisions of Ss.28, 11(1) of Insurance Ordinance, 2000 and notification, for which company could be punished under S.63(1) or S.156 of Ordinance---Company, was also required to provide the bank statement of account in which the proceeds of the right issuance, were received but same was not provided by the company---Regardless of whether the proceeds of the said right issue, were actually received by the company in a special account for that purpose, non-compliance of the conditions imposed vide approval of the Commission, seemed to be quite obvious---Default of Ss.28 & 11(1) of Insurance Ordinance, 2000, appertaining to the minimum paid up capital requirement till the issuance of right shares had been established---Company and its Directors had failed to perform their legal obligations in connection with the statutory requirements of Ss.28 & 11(1) of Insurance Ordinance, 2000---Legitimate inference would be inferred that the default was committed knowingly---Penalty as provided under S.156 of Insurance Ordinance, 2000, could be imposed on the company, its Directors and/or its Management---Commission, taking lenient view, imposed fine of Rupees Five Hundred Thousands (Rs.500,000) only on the company for the reasons that the basic default was laid down by the previous Board of Directors of the company and that the current Directors had complied with the minimum paid up capital requirements---Company was issued a strong warning that in case of similar non-compliance in future, a strong action would be taken against the company.

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

----Ss. 194 & 196---Duties of the Directors---Directors, in addition to the day-to-day running of the company, and the management of its business, also had some fiduciary duties, i.e. duties held in trust and some wider duties imposed by statute; and breach of those statutory duties would usually be a criminal offence, punishable by fine or imprisonment---Directors were gauged against a higher standard of accountability, which required them to be vigilant and performing their duties with due care.

2016 C L D 822

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director/HOD (MSRD)

ASLAM MALIK AND COMPANY, CHARTERED ACCOUNTANTS: In the matter of

Show Cause Notice No. 1(17) SMD/MSRD/C&IW/2013 dated 2nd July, 2014, decided on 3rd September, 2014.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 6 & 22---Stock Exchange Members (Inspection of Books and Record) Rules, 2001, Rr.3, 4 & 7---Securities and Exchange Rules, 1971, Third Schedule---Irregularities in calculation of Net Capital Balance (N.C.B.)---Report of Inspection Team, revealed irregularities in calculation of Net Capital Balance of company---Net Capital Balance of the company, was not calculated and prepared by Chartered Accountants in accordance with Third Schedule of Securities and Exchange Rules, 1971---Company failed to apply necessary prudence in certifying its Net Capital Balance, despite having been penalized earlier for the same non-compliances---Company was responsible to ensure that figures used to calculate the Net Capital Balance, depicted completeness and accuracy, and was also expected to give a statement to the same effect in Net Capital Balance Certificate---Auditor should perceive as professional that was beyond reproach; and it should perform its functions in a fair, proficient and impartial manner---Auditing company, by not ensuring the completeness and accuracy of items, had failed to perform its responsibilities diligently---Auditing company, however, had, assured that it would comply with the applicable regulatory framework in future---Violation of the Rules and Regulations was a serious matter, Securities and Exchange Commission, taking a lenient view, imposed on the auditor company a penalty of Rs.10,000, in circumstances.

Shoaib, Director representing Aslam Malik and Company, Chartered Accountants.

Muhammad Tanveer Alam, Joint Director and Ms. Najma Ubaid, Deputy Director assisting the Director/HOD (MSRD).

Date of hearing: 6th August, 2014.

2016 C L D 840

[Securities and Exchange Commission of Pakistan]

Before Mohammed Asif Arif, Commissioner (Insurance)

TAKAFUL PAKISTAN LIMITED: In the matter of

Show Cause Notice dated 11th March, 2013, decided on 4th September, 2014.

(a) Takaful Rules, 2012---

----Rr. 10(1)(k) & 12(1)(d)---Failure of company to maintain excess admissible assets over liabilities---Statement of Assets and Liabilities provided by broker/company, had shown that company had not maintained excess admissible assets over liabilities of the Company's Participants Takaful Fund (PTF)---Company's Total Liabilities, were in excess to its Total Assets---Company, in circumstances, had violated provisions of R.10(1)(k) of Takaful Rules, 2012 to the greater extent, which attracted penal action against the company as provided under R.12(1)(d) of said Rules---Commission, instead of imposing the penalty on the company under R.12(1)(d) of Takaful Rules, 2012, took a lenient view, and condoned the company due to the fact that the company had agreed to ensure compliance with the requirements of the Rules; and that the requirements of the Rules, were quite stringent compared to those of the repealed Takaful Rules, 2005, for which more time would be required to deploy additional resources for ensuring compliance with those requirements---Act of the company had not harmed the interests of the Policy holders/ participants of the company---Company, was advised to ensure compliance with the provisions of R.10(1)(k) of Takaful Rules, 2012.

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

----Ss. 194 & 196---Duties of Directors of the company---Directors, in addition to the day-to-day running of the company, and the management of its business, also had some 'fiduciary' duties i.e. duties held in trust, and some wider duties imposed by statute---Breach of those statutory duties would usually be a criminal offence, punishable by fine or imprisonment---Directions were gauged against a higher standard of accountability, which required them to be vigilant, and perform their duties with due care.

Taimur Mirza for Messrs Mohsin Tayebaly & Co.

Date of hearing: 29th April, 2013.

2016 C L D 863

[Securities and Exchange Commission of Pakistan]

Before Tariq Hussain, Director (Insurance)

SECURITY GENERAL INSURANCE COMPANY LIMITED: In the matter of

Show Cause Notice dated 28th March, 2014, decided on 28th July, 2014.

Insurance Companies (Sound and Prudent Management) Regulations, 2012---

----Regln. 2(2)---Insurance Ordinance (XXXIX of 2000), Ss.11(1)(f), 12(1)(b), 63 & 156---Election of Directors of company---Duty of directors---Company, held the election of Directors in the Annual General Meeting, without obtaining the approval from the Commission---Validity---Company and its Directors were required to seek approval of the Commission before election of the company as required under Regln.2(2) of Insurance Companies (Sound and Prudent Management) Regulations, 2012 and Ss.11(1)(f) and 12(1)(b) of Insurance Ordinance, 2000---Directors, in addition to the day-to-day running of the company and the management of its business, also had some fiduciary duties i.e., duties held in trust and some wider duties imposed by statute and breach of those statutory duties would usually be a criminal offence, punishable by fine or imprisonment---Directors were gauged against a higher standard of accountability which required them to be vigilant and perform their duties with due care---In the present case, the persons elected and acting as "Directors" of the company had failed to perform their duties with due care and prudence---Default committed was prolonged/continued---Company and the persons appointed as the Directors and the Chief Executive of the company, however, unintentionally contravened the provisions of Regulations and Ordinance--- Such was merely an oversight on the part of the company, and the Directors---Commission vide its letter, had granted the approval of five persons to act as Directors of the company---Default of the company, having been established, penalty could be imposed on the company and/or the Director---Commission, in exercise of the powers conferred on it under Ss. 63(1) & 156 of the Insurance Ordinance, 2000, instead of directing the company to cease entering into new contracts of insurance, or even imposing the penalty to the company, and/or its Directors (including the Chief Executive) took a lenient view, and condoned the company and its Directors (including the Chief Executive), in circumstances.

Rashid Sadiq, Chief Executive for Messrs RS Corporate Advisory (Private) Limited.

Date of hearing: 7th May, 2014.

2016 C L D 998

[Securities and Exchange Commission of Pakistan]

Before Imran Inayat Butt, Director/HOD (MSRD)

AMIR FINE (EXPORTS) LIMITED AND FAZAL CLOTH MILLS LIMITED: In the matter of

Show Cause Notices Nos. S.M. (B.O.)222/4(593)2001-228 and S.M. (B.O.)222/4(593)2001-229, dated 16th April, 2013, decided on 4th September, 2014.

Companies Ordinance (XLVII of 1984)---

----S. 224---Making gain by beneficial owner of listed equity securities by purchase and sale transaction---Failure to make report and tender amount of such gain to company and send intimation to that effect to Registrar of Companies and the Commission---Section 224 of the Companies Ordinance, provided that where more than ten per cent beneficial owner of listed equity would make any gain by purchase and sale transaction, of any such securities, within a period of less than six months; such person was required to make a report and tender the amount of such gain to the company; and simultaneously send intimation to that effect to the Registrar of the Companies and the Commission---Section 224 of Companies Ordinance, 1984, had further provided that where such person would fail or neglect to tender, or the company would fail to recover any such gain within a period of six months after its accrual, such gain would vest to the Commission, unless such gain was deposited in the prescribed account---In the present case, neither the accrual of said gain was reported in Part-D of the prescribed returns of beneficial ownership, nor same was tendered to issuer company by beneficial owner---Issuer company, did not raise demand for recovery of said gain within the stipulated time limit---Beneficial owner, in circumstances, had contravened the provisions of S.224(1) of Companies Ordinance, 1984 and committed violation---Commission in exercise of powers conferred under S.224(4) of Companies Ordinance, 1984 imposed a fine of Rs.30,000 on beneficial owner---Issuer company, had also contravened the provisions of S.224(2) of Companies Ordinance, 1984 and had committed violation---Commission taking a lenient view also imposed a fine of Rs.30,000 on the company, in circumstances.

M.D. Kanwar, Company Secretary representing the Fazal Cloth Mills Limited.

M.D. Kanwar, Company Secretary representing the Amir Fine Exports (Pvt.) Limited.

Muhammad Farooq, Joint Director, assisting the Director/ HOD (MSRD).

Date of hearing: 13th June, 2013.

2016 C L D 1021

[Securities and Exchange Commission of Pakistan]

Before Tariq Hussain, Director (Insurance)

PAKISTAN GENERAL INSURANCE COMPANY LIMITED: In the matter of

Show Cause Notice dated 31st March, 2014, decided on 20th August, 2014.

(a) Insurance Companies (Sound and Prudent Management) Regulations, 2012---

----Regln. 2(2)---Insurance Ordinance (XXXIX of 2000), Ss.11(i)(f), 12(1)(b), 63(1) & 156---Failure of insurer to meet criteria for sound and prudent management---Regulation 2(2) of Insurance Companies (Sound and Prudent Management) Regulations, 2012, provided that Director or Chief Executive, or Principal Officer of the insurer, would not assume the charge of office, until their appointment had been approved by the Securities and Exchange Commission of Pakistan---Under provisions of S.11(1)(b) Insurance Ordinance, 2000, insurer was to meet criteria for sound and prudent management, set out in S.12 of Insurance Ordinance, 2000---Company had elected nine Directors for a period of three years---Said nine Directors had not assumed the charge of office of the Directors and the Chief Executive Officer of the company, with the approval of the Commission---Company, in circumstances, had contravened the provisions of Regln.2(2) of the Insurance Companies (Sound and Prudent Management) Regulations, 2012 and Ss.12(1)(b) & 11(1)(b) of Insurance Ordinance, 2000; for which punitive actions as provided under S.63(1) and S.156 of the Ordinance, could be invoked---Representative of the company, had stated that Chief Executive and Directors and the company had obtained approval of the Commission; and that non-compliance was merely a result of misunderstanding of the applicability of the Regulations, as to whether those would be applicable to the elected Directors or not---Company's representative, further assured that company and all its 'Directors' would ensure compliance with Regulations, in future--- Default of Regulations and relevant Ss.11(1)(f) & 12(1)(b) of Insurance Ordinance, 2000 having been established, Directors under S.63(1) and S.156 of Insurance Ordinance, 2000 penalty could be imposed---Commission, instead of directing the company to cease entering into new contracts of insurance, or imposing the penalty on the company and its Directors, took lenient view, condoned the default and issued stern warning to its Directors including Chief Executive that in case of similar non-compliance in future, a strong action would be taken.

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

----Ss. 194 & 196---Duties of Directors---Directors, in addition to the day-to-day running of the company, and the management of its business, also had some "fiduciary" duties i.e., duties held in trust and some wider duties imposed by statute; and breach of those statutory duties, would usually be a criminal offence, punishable by fine or imprisonment---Directors were gauged against a higher standard of accountability, which required them to be vigilant, and perform their duties with due care.

Rahat Aziz and M. Barkatullah, Company's Representative.

Date of hearing: 1st July, 2014.

2016 C L D 1073

[Securities and Exchange Commission of Pakistan]

Before Tariq Hussain, Director (Insurance)

PAKISTAN GENERAL INSURANCE COMPANY LIMITED: In the matter of

Show Cause Notice dated 31st March, 2014, decided on 20th August, 2014.

(a) Companies (Issue of Capital) Rules, 1996---

----Rr. 6 & 11---Issuance of bonus shares in violation of Rules---Company communicated to the Commission, the decision of its Directors to issue 25 per cent bonus shares, but intimation letter was not accompanied by Auditors' certificate as required by R.6(i)(iii) of Companies (Issue of Capital) Rules, 1996---Under provisions of R.6 of said Rules, the communication of the decision of the Board of Directors of the company, should have been sent to the Commission along with the certificate of free reserves from the Auditors on the day on which such decision was taken by the Board---Company, in circumstances, had contravened the provisions of R.6(i)(iii) of the Companies (Issue of Capital) Rules, 1996, for which the Commission could take action as provided under R.11 of said Rules, 1996---Default of R.6 of Companies (Issue of Capital) Rules, 1996, punishable under R.11 of said Rules, had been established---Commission, instead of imposing the penalty on the company, took lenient view, and condoned the company and its Directors, issuing stern warning to Directors, Chief Executive and Secretary that in case of similar non-compliance in future a stronger action would be taken against them.

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

----Ss. 194 & 196---Duties of Directors---Directors, in addition to the day-to-day running of the company, and the management of its business, also had some 'fiduciary' duties i.e., duties held in trust; and some wider duties imposed by statute and breach of those statutory duties, would usually be a criminal offence, punishable by fine or imprisonment---Directors were gauged against a higher standard of accountability which required them to be vigilant and perform their duties with due care.

Rahat Aziz and M. Barkatullah, Company's Representative.

Date of hearing: 31st March, 2014.

2016 C L D 1114

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Zafar Abdullah, Commissioner (SMD)

DAWOOD CAPITAL MANAGEMENT LIMITED and 2 others---Appellants

Versus

EXECUTIVE DIRECTOR (SPECIALIZED COMPANIES DIVISION)---Respondent

Appeals Nos.18, 19 and 21 of 2013, decided on 22nd January, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 282-D, 282-J(1)(2) & 282-M---Non-Banking Finance Companies and Notified Entities Regulations, 2008, Reglns. 38(a) & 38(n)---Notification No.862(1)/2000 dated 6-12-2001---Notification No.1061(1)/ 2005 dated 18-10-2005---SRO No.49(I)/2009 dated 23-1-2009---Violation of Regulations---Company, was licensed by the Commission to undertake the business of assets management services; and investment advisory services; and was managing three Collective Investment Schemes (C.I.S.)---Show-cause notice was issued to company for violations of Reglns.38(a) & 38(n) of Non-Banking Finance Companies Regulations, 2008---Executive Director (Specialised Companies Division) of the Commission, held that management of the company, had failed to safeguard the interest of the unit holders; and had not discharged its fiduciary responsibility of managing assets of the "Collective Investment Schemes (CIS)", under its management, in good faith and wilfully gained undue advantage for itself and related parties---Licences of the company were cancelled on the basis of allegations and penalty of Rs.20,000,000 was imposed on the Chief Executive Officer of the company; and also a penalty of Rs.1,000,000 on the Chief Financial Officer and Company, Secretary for the wilful contraventions of Reglns. 38(a) & 38(n) of the Non-Banking Finance Companies and Notified Entities Regulations, 2008---Validity---Notification No.862(1)/2000 dated 6-12-2001 and Notification No.1061(1)/2005 dated 18-10-2005, were not applicable in respect of delegation of powers under Reglns.38(a) & 38(n)---Power to issue order under Ss.282-J(1)(2), 282-M of the Companies Ordinance, 1984 had not been delegated---Company, did not gain as a result of redemption of investments---Violation of Reglns.38(a) & 38(n) of the Non-Banking Finance Companies and Notified Entities Regulations, 2008, was not such that lead to cancellation of licence--- Said Regulations, would apply to a company, and could not apply to the individuals, such as Chief Executive Officer and Chief Financial Officer---No substantial evidence was available to prove that Chief Executive Officer and, Chief Financial Officer, and related parties, actually gained from the redemption of their investments, as they could have redeemed their entire investments, had they known about provisioning prior to the BoD---Executive Director (Specialised Companies) did not have the power to issue order under Ss.282-J(1)(2) & 282-M of the Companies Ordinance, 1984 for alleged violation of Reglns.38(a) & 38(n) of Non-Banking Finance Corporation and Notified Entities Regulations, 2008; and said Regulations could not apply to individuals such as the Chief Executive Officer and Chief Financial Officer---Impugned order was set aside, in circumstances.

Mir Muhammad Idris and others v. Federation of Pakistan PLD 2011 SC 213 ref.

Sikandar Bashir, Advocate Supreme Court and Mustafa Sherpao, Advocate High Court for Appellants.

Tariq Soomro, Director (SCD), Javed Akhtar Malik, Deputy Director (SCD), Asif Paryani, Deputy Director (SCD) and Kashif Ghani, Deputy Director (SCD) Departmental representatives.

Date of hearing: 10th March, 2014.

2016 C L D 1158

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

LAHORE STOCK EXCHANGE (GUARANTEE) LIMITED through Managing Director---Appellant

Versus

DIRECTOR (ICW), SECURITIES MARKET DIVISION---Respondent

Appeal No. 13 of 2010, decided on 6th February, 2015.

Securities Exchange Ordinance (XVII of 1969)---

----Ss. 5-A & 22---Brokers and Agents Registration Rules, 2001, Rr.3, 5, 6 & 7---Unified Trade System Regulation ("UTS Regulations"), Reglns.6.1.1 & 6.1.2---Registration as broker---Continuing trading without renewal of registration---Stock Exchange, forwarded and recommended registration of its client as broker under the Brokers and Agents Registration Rules, 2001 to the Commission---Certificate of registration as a broker was granted; which was valid for one year---Broker failed to apply for renewal of certificate on its expiry---Broker continued trading without renewal of its registration in violation of Reglns.6.1.1 & 6.1.2 of Unified Trading System Regulations ("UTS Regulations") and S.5A of the Securities and Exchange Ordinance, 1969---Director Securities (Market Division) of the Commission dissatisfied with the response of Stock Exchange held that broker could not do trading after expiry of date of certificate of registration---Penalty of Rs.1,000,000 was imposed on the Stock Exchange under S.22 of Securities Exchange Ordinance, 1969---Stock Exchange continued to allow the broker to trade even after receiving the letter from Director, Securities (Market Division) of the Commission which was only a reminder sent to Stock Exchange---Held, Stock Exchange was primarily responsible to monitor the activities of its broker; and should not have allowed trading without renewal of its registration---No reason existed to interfere with the impugned order---Appeal was dismissed, in circumstances.

M. Asim Aziz for Appellant.

Tahir Mahmood Kiani, Deputy Director (SMD) for Respondent.

Date of hearing: 16th January, 2015.

2016 C L D 1179

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner CLD and Fida Hussain Samoo, Commissioner Insurance

AXIS GLOBAL LIMITED---Appellant

Versus

DIRECTOR/HOD (MSCI) SECURITIES MARKET DIVISION, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 6 of 2013, decided on 22nd January, 2015.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Brokers and Agents Registration Rules, 2001, Rr.8 & 12, Third Sched., Code of Conduct, Cls. A(1), A(2), A(5) & B(6)---Buying and selling the shares of companies and earning quick profit, by contravening Code of Conduct---Broker/company's client, bought off 50,000 shares of two companies at the rate of Rs.285; subsequently, within a minute, said client sold said shares at Rs.300 through the company, and earned a quick profit of Rs.750,000---Such transaction, having raised ambiguity regarding the fairness on the part of the company, show-cause notice was issued to the company---Director of the Commission, after hearing arguments of the Managing Director of the company, held that, the company violated Cls. A(1), A(2), A(5) & B(6) of the Code of Conduct set forth under the Third Schedule of Brokers and Agents Registration Rules, 2001, which in term was a violation of Rr.8 & 12 of Rules of 2001---Director, exercising powers under S.22 of the Securities and Exchange Ordinance, 1969, imposed a penalty of Rs.1,000,000 on the company; and company was directed to ensure that full compliance by made of all Rules, Regulations and Directives of the Commission in future for avoiding any punitive action under the law---Validity---Penalty under Securities and Exchange Ordinance, 1969, could only be imposed, if the person, upon whom penalty was being imposed, had intended to breach any provision of law---In the present case, one had to determine, whether or not the act had been intentionally and deliberately done and not by accident or inadvertence---One must also determine; whether the company had essentially violated any provision of the Securities and Exchange Ordinance, 1969 or not before imposing a penalty under S.22 of the Securities and Exchange Ordinance, 1969---Impugned order was set aside, in circumstances.

Hamad Kehar, Managing Director Axis Global Limited for Appellant.

Amir Saleem, Deputy Director (SMD) and Ms. Tayyaba Nisar, Assistant Director (SMD) for Respondent.

Date of hearing: 8th January, 2015.

2016 C L D 1196

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain, Commissioner (Insurance)

Messrs H.H. MISBAH SECURITIES---Appellant

Versus

DIRECTOR, MARKET SUPERVISION AND CAPITAL ISSUE DEPARTMENT---Respondent

Appeal No. 46 of 2012, decided on 20th January, 2015.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Brokers and Agents Registration Rules, 2001, Rr.8(iv)(b) & 12, Third Sched., Code of Conduct, Cls.A(2) & A(5)---"Blank sale"---Broker company's inter exchange client, had engaged in setting and squaring up his position in different scrips---Commission, sought clarification regarding short sales in different scrips, executed by said client through the broker---Response of the broker, was not satisfactory as it did not contain any evidence and justification regarding execution of said sales by its client---Commission, in exercise of its power under S.22 of the Securities and Exchange Ordinance, 1969, imposed a penalty of Rs.100,000 on the broker, with strong advice to take immediate measures; and put in place proper system; and check to eliminate the occurrence of such instances in future---'Blank sale' would mean "a sale by a party that did not own shares, or the sale did not constitute a sale with pre-existing interest; or was sale by a party that had not entered into a contractual borrowing arrangement to meet delivery requirements"---Sale by the broker, without pre-existing interest in the client's account, would fall within the ambit of "blank sale" which was prohibited---Broker was responsible to monitor all trading activities, being carried out through its brokerage house---'Code of Conduct', prescribed in the Third Schedule of the Brokers and Agents Registration Rules, 2001, with its R.12, had prohibited interference with the fair and smooth functioning of market---Contention that said violations were a result of ignorance and not fraud, could not suffice---Broker had not been alleged to have benefited by indulging in said transactions, but had failed to act with due skill, care and diligence in the conduct of its business and acted in violation of Rr.8(iv) and 12 of the Brokers and Agents Registration Rules, 2001---Unfair trade practices like 'wash trades", were harmful for the development of market---Commission was bound to protect the interest of investors; and in doing so it had been empowered to deal with elements, which would affect smooth and fair functioning of the stock exchanges---Commission, could have suspended the licence of the broker, but by taking a lenient view, had rightly imposed a penalty of Rs.100,000 under R.8(b) of Brokers and Agents Registration Rules, 2001---Broker was directed to ensure compliance of all the rules, regulations and directives of the Commission in future for avoiding any serious punitive action under the law.

Abdul Wahab, CEO H.H. Misbah Securities (Pvt.) Ltd. for Appellant.

Adnan Ahmed, Deputy Director, SMD, Amir Saleem, Deputy Director, SMD (through video conferencing) and Ms. Tayyaba Nisar, Assistant Director, SMD (through video conferencing) for Respondent.

Date of hearing: 8th January, 2015.

2016 C L D 1399

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SMD) and Fida Hussain Samoo, Commissioner (Insurance)

RASHID ABDULLAH, CHAIRMAN, SEARLE PAKISTAN LIMITED and 8 others---Appellants

Versus

EXECUTIVE DIRECTOR (ENFORCEMENT), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 40 of 2007, decided on 15th January, 2015.

Companies Ordinance (XLVII of 1984)---

----S. 477---Revision before Appellate Bench of Commission was withdrawn to allow the parties to enter into settlement---Revision application was dismissed as withdrawn.

Nemo for Appellants.

Nemo for Respondent.

Date of hearing: 2nd January, 2015.

2016 C L D 1412

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

KHURRAM INAYAT---Appellant

Versus

DIRECTOR (BR&ICW), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and another---Respondents

Appeal No. 63 of 2012, decided on 19th January, 2015.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Brokers and Agents Registration Rules, 2001, R.8---Securities and Exchange Rules, 1971, R.4(4)---Commission, had received a number of complaints against the company from its clients---One of the complaints was that company was not transferring his shares of other company in its investor account, despite repeated requests---Commission asked the company to provide required information coupled with trade confirmation, which was issued to the complainants in accordance to R.4(4) of the Securities and Exchange Rules, 1971, but the company failed to provide the same---Authorized representative of the company, had failed to provide the information in respect of each complaint, respectively---Director (BR&ICW) of the Commission held that failure of the company to provide information, implied, that company had failed to maintain required record---Alleged Regulatory violations stood established, in circumstances---Violation of the Rules and Regulations, was a serious matter---In exercise of the powers, under S.22 of the Securities and Exchange Ordinance, 1969, penalty of Rs.500,000 was imposed on the company, with direction to ensure full compliance with the Ordinance, Rules and Regulations and Directives of the Commission in future---When appeal was fixed for hearing, counsel for the company, and representative of the Commission, were called for hearing at 4.30 p.m., counsel for the company and department representative were present, but no one appeared on behalf of the appellant---Impugned order, was upheld, in circumstances.

Sheikh Azfar Amin for Appellant.

Hasnat Ahmed, Director Departmental representative.

Nemo for Respondent No.2.

Date of hearing: 1st January, 2015.

2016 C L D 1423

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Chairman and Zafar Abdullah, Commissioner (SMD)

Messrs ENGRO CORPORATION (FORMERLY ENGRO CHEMICAL LIMITED)---Appellant

Versus

EXECUTIVE DIRECTOR (SMD)---Respondent

Appeal No. 46 of 2011, decided on 3rd October, 2014.

Companies Ordinance (XLVII of 1984)---

----Ss. 222 & 224---Companies (General Provisions and Forms) Rules, 1985, R.16---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Accrual of gain by appellant company from purchase and sale transactions of shares---Failure to make report of said transactions to the Commission---Appellant made gain, but neither the matter of accrual of said gain was reported by the appellant/accruer in Part-D of the prescribed returns of beneficial ownership filed by him with the Commission; nor its tendering or recovery was reported to the Commission as provided in S.224 of Companies Ordinance, 1984---Plea of appellant was that Ss.222 & 224 of the Companies Ordinance, 1984, as well as R.16 of the Companies (General Provisions of Forms) Rules, 1985, were designed to penalize trading gain (made within 6 months), but no such gain had been made by him---Said plea of the appellant, having been considered to be unsatisfactory, show-cause notice was issued to him; and appellant had filed appeal against impugned order, contending that objective of S.224 of Companies Ordinance, 1984 was to prevent the insiders from benefiting from the gains---Validity---Transactions in the present case were done in the ordinary course of business; and nothing in said transactions suggested that appellant had entered into an unjust or inequitable transaction; or had acted in a manner, which was in violation of appellant's duties and obligations to the issuer; as stated in S.224(1) of the Companies Ordinance, 1984---No monetary gain was made by the appellant in the case---Impugned order was set aside, in circumstances.

The Securities and Exchange Commission of Pakistan through Commissioner v. First Capital Securities Corporation Limited and another 2005 PLD 2011 SC 778 ref.

Ruhail Muhammad, Chief Accountant for Appellant.

Muhammad Farooq (Joint Director, SMD) for Respondent.

Date of hearing: 27th December, 2013.

2016 C L D 1434

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commission (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

IRFAN ISMAIL---Appellant

Versus

DIRECTOR/HEAD OF DEPARTMENT (MSRD)---Respondent

Appeal No. 47 of 2013, decided on 22nd January, 2015.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 15-E(2)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Inside trading---Appellant was employed at broker company, and responsible for execution of orders of the foreign clients of the company---Trading data of "Karachi Automated Trading System (KATS)", had shown that brother of the appellant traded extensively in the shares of various companies---Information related to the trading and order placement of the foreign clients was sought from the company---Appellant, being insider, by virtue of his position as "Karachi Automated Trading System" operator of the broker company, had passed on/disclosed the inside information relating to trading orders received from foreign clients to his brother, based on which brother of the appellant indulged in insider trading---Hearing in the matter was held, and on the date fixed, Chief Executive Officer and Chief Operating Officer of the company appeared but appellant appeared and left without attending the hearing---Appellant was given a final opportunity to attend the hearing but instead, his brother appeared and made verbal submissions---Director/Head of Department (MSRD) of the Commission, dissatisfied with the submissions made by the brother of the appellant, held that appellant was an insider, by virtue of his position, he used to receive material, non-public information relating to trading orders of foreign clients and it was established that appellant provided information relating to trading orders of foreign clients to his brother---Fine of Rs.100,000 was imposed on the appellant for passing on/disclosing inside information relating to trading orders of foreign clients to his brother, who was not required to possess such inside information---Appellant, admitted his default, but stated that he was unable to pay the fine imposed on him---Appellant, having admitted his default, there was no reason to interfere with the impugned order.

Irfan Ismail for Appellant.

Muhammad Arslan Zafar, Deputy Director (SMD) and Ms. Tayyaba Nisar, Assistant Director (SMD) for Respondent (through video conferencing).

Date of hearing: 8th January, 2015.

2016 C L D 1468

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

RIAZ AHMED, SAQIB, GOHAR AND CO. CHARTERED ACCOUNTANTS---Appellant

Versus

DIRECTOR (MARKETING SUPERVISION AND REGISTRATION DEPARTMENT) SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 29 of 2013, decided on 22nd January, 2015.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 6 & 22---Stock Exchange Members (Inspection of Books and Record) Rules, 2001, Rr.3 & 4---Securities and Exchange Rules, 1971, Third Schedule---Irregularities in calculation of "Net Capital Balance" ('N.C.B.')---Report submitted by the inspection team, highlighted major irregularities in calculation of the 'Net Capital Balance' ('N.C.B.') of the company---Said calculation was duly verified and certified by the Auditor which showed that 'N.C.B.' was not calculated in accordance with Third Schedule of the Securities and Exchange Rules, 1971 and had been overstated---Director of the Commission taking a lenient view issued warning to the Auditors to be vigilant in the future---Validity---Auditors, had overstated the "N.C.B." and Director of the Commission had rightly taken a lenient view, and did not impose any penalty under S.22 of the Securities and Exchange Ordinance, 1969, but given a warning to strictly comply with applicable Rules and Regulations in future---Impugned order, could not be interfered with, in circumstances.

Shahid Kamran (Partner Riaz Ahmad, Saqib, Gohar & Co.) for Appellant.

Adnan Ahmad, Deputy Director (SMD) and Ms. Najia Ubaid, Assistant Director (SMD) through video conferencing for Respondent.

Date of hearing: 8th January, 2015.

2016 C L D 1489

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Akif Saeed, Commissioner (SCD)

EFU GENERAL INSURANCE LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 52 of 2012, decided on 10th February, 2015.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 32(2)(k), 156 & 163---Deposits received by the insurer (Insurance Company) as security against guarantees---Admissibility---Company in its statement of assets for solvency purpose at relevant date, had included the deposits received as security against guarantees, as admissible assets, in violation of S.32(2)(k) of Insurance Ordinance, 2000---Auditor had also qualified the Regulatory Returns on that inclusion of deposit---Executive Director (Insurance) dissatisfied with the response of the company, imposed a penalty of Rs.100,000 on the company---Company had contended that the purpose of the statement of assets, was that the company would meet the solvency requirement; that amount deposited as security against guarantee, as admissible assets, had a zero effect on the companies' solvency status; and that it was purely a technical error---Executive Director (Insurance) contended that there was no room for interpretations, when S.32(2)(k) of the Insurance Ordinance, 2000, was very clear and explicit---Executive Director (Insurance), rightly stated that though the violation of the section could not have a net effect on the solvency status of the company, but it was still a violation of the said section---Section 163 of the Insurance Ordinance, 2000, had empowered the court to grant relief, if it appeared to the court that the person had "acted honestly and reasonably" and "having regard to all the circumstances of the case, he ought fairly to be excused for the negligence, default, breach of duty or breach of trust"---Commission had already taken a lenient view under S.156 of the Insurance Ordinance, 2000---Company's plea that it was not an intentional mistake on part of the company was accepted and the penalty imposed on the company was condoned---Impugned order was set aside to the extent of penalty, in circumstances.

UBL Insurers Limited v. Executive Director, SECP 23-12-2009 and Re Excel Insurance Company Limited before Executive Director SECP, 16-6-2011 ref.

Rashid Sadiq, CEO RS Corporate Advisory for Appellant.

Tariq Hussain, Director (Insurance) and Arif Nizami, Deputy Director (Insurance) for Respondent (through video conferencing).

Date of hearing: 21st May, 2015.

2016 C L D 1531

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Chairman and Zafar Abdullah, Commissioner (SMD)

BESTWAY (HOLDINGS) LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR, SECURITIES MARKET DIVISION, SECP, ISLAMABAD---Respondent

Appeal No. 37 of 2006, decided on 1st December, 2014.

Companies Ordinance (XLVII of 1984)---

----Ss. 222 & 224---Companies (General Provisions and Forms) Rules, 1985, R.16---Trading by beneficial owner of more than ten per cent of its listed equity securities---Company, filed returns of beneficial ownership as a more than ten per cent shareholder of the issuer company as required under S.222 of the Companies Ordinance, 1984---Company made purchase and sale transactions resulting in gain of Rs.347,531,00; computed in the manner prescribed in R.16 of the Companies (General Provisions and Forms) Rules, 1985---Section 224 of the Companies Ordinance, 1984, had provided that where, more than ten per cent shareholder of a listed equity security, would make an-y gain by purchase and sale or the sale and purchase of any such security within a period of less than six months, such shareholder was required to make a report, and tender amount of such gain to the company, and simultaneously send intimation to that effect to the Registrar of Companies and the Commission; and in case of failure to do so, such gain would vest in the Commission---Executive Director of the Commission in view of such provision of law, directed the company to tender amount of gain to the Commission within thirty days of the issue of the order---Validity---In the present case, the transactions having been done in the ordinary course of business, any gains made by the company would vest in the issuer company---Impugned order was set aside---Gain would be transferred to the issuer company, in circumstances.

PLD 2011 SC 778 rel.

Irfan A. Sheikh, (Bestway Cement Ltd.) and Haleem Ashraf (Bestway (Holding) Limited) for Appellant.

Muhammad Farooq, Joint Director (SMD) and Nazim Ali, Assistant Director (SMD) for Respondent.

Date of hearing: 4th February, 2014.

2016 C L D 1544

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SCD) and Fida Hussain Samoo, Commissioner (Insurance)

ASHRAF SUGAR MILLS---Appellant

Versus

EXECUTIVE DIRECTOR (REGISTRATION) and another---Respondents

Appeal No. 12 of 2007, decided on 7th April, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 261, 263 & 265---Power of Registrar of Companies to call for information or explanation---Investigation of affairs and other issues of the company---Registrar, sought information from the management of the brokerage company under S. 261 of the Companies Ordinance, 1984, but management did not provide requisite information to the Registrar---Registrar reported the matter to the Securities and Exchange Commission, and recommended appointment of Inspector to investigate the affairs of the company under S. 263(c) of the Companies Ordinance, 1984--- Commission dissatisfied with the response of the company to show-cause notice issued to it under Ss.263 & 265 of the Companies Ordinance, 1984, appointed Inspector to investigate the affairs of the company under Ss. 263 & 265 of the Companies Ordinance, 1984---Appeal was initiated in 2007, and after lapse of almost eight years, the matter was still pending---Parties were directed to finalize the terms of reference of the investigation within seven days of the order---Department was also directed to finalize the investigation by April 30, 2015.

Imtiaz Rashid Siddiqui, Advocate Supreme Court, Aftab Malik Saleem, Company Representative and Shehryar Kasuri for Appellant (through video conference).

Muhammad Siddiqui, Executive Director (C&C) and Irfan Afzal, Deputy Registrar for Respondent No.1.

Adil Bandial for Respondent No.2.

Date of hearing: 6th April, 2015.

2016 C L D 1549

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

NADEEM ELAHI, CEO ALI ASGHAR TEXTILE MILLS LTD.---Appellant

Versus

DIRECTOR (MSRD), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No.16 of 2014, decided on 22nd January, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 222 & 224---Failure to file return of beneficial ownership within prescribed period---Company, was required to file return of beneficial ownership on Form 32, within the period prescribed under S. 222 of the Companies Ordinance, 1984, but it failed to discharge the said obligation, which attracted penal provision contained in S.224(4) of the Ordinance---Director of the Commission, took a lenient view and imposed penalty of Rs.15,000 on the company---Validity---Section 222 of the Companies Ordinance, 1984, clearly stated that the returns of beneficial ownership, were required to be filed with the Registrar of Companies and the Commission---In view of the fact that company had promptly, upon reminder from the department, provided the requisite form, penalty imposed was set aside on the assurance that no such delay would be made in future.

Nadeem Elahi, CEO and Salman Khimani, CFO/Company Secretary for Appellant.

Muhammad Farooq, Joint Director and Nazim Ali, Assistant Director, Departmental representatives.

Date of hearing: 9th January, 2015.

2016 C L D 1562

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

AAMIR---Appellant

Versus

DIRECTOR/HEAD OF DEPARTMENT (MSRD)---Respondent

Appeal No.48 of 2013, decided on 22nd January, 2015.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 15-A & 15-E(1)(3)--- Inside trading--- Prohibition on Stock Exchange deals by insiders--- Trading data of Stock Exchange (Guarantee), had revealed that the broker traded extensively in shares of a number of companies---Trading by the broker was conducted through another broker/Trading Right Certificate Holder of Stock Exchange---Broker traded in his brokerage account with "IIS" for about one year---Broker's trading was carried out significantly in correlation with the trading of the foreign clients of broker/Trading Right Entitlement Certificate Holder of the Stock Exchange, later termed as "the foreign clients"---Prima facie, it was established that the broker being an insider, by virtue of his position as 'KATS' operator had passed on/disclosed the insider information relating to trading orders received from foreign clients to the broker, based on which the broker indulged in insider trading---Director/Head of Department (MSRD) of the Commission dissatisfied with the response of the broker to the show-cause notice, issued to him, held that the broker was an insider by virtue of his position and employment, where he used to receive material non-public information relating to trading orders of foreign clients---Subsequently, the broker indulged in insider trading in his account on the basis of inside information; and earned significant amount of profit of approximately Rs.1.073 million---In exercise of powers under S.15-E(1) of the Securities and Exchange Ordinance, 1969, Director/Head of Department (MSRD), imposed a fine of Rs.1,00,000 on the broker for contravention of S.15-A(1) of the Securities and Exchange Ordinance, 1969---Broker had admitted his default, but had stated that he was unable to pay the fine imposed by the Director/Head of Department (MSRD)---Broker, having admitted his default, no reason existed to interfere with impugned order.

Aamir, Appellant present.

Mohammad Arslan Zafar, Deputy Director (SMD) and Ms. Tayyaba Nisar, Assistant Director (SMD) for Respondent (through video conferencing).

Date of hearing: 8th January, 2015.

2016 C L D 1569

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Chairman and Zafar Abdullah, Commissioner (SMD)

M. NADIM ANWAR KHAN---Appellant

Versus

DEPUTY DIRECTOR (SCD), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 56 of 2013, decided on 4th December, 2014.

Non-Banking Finance Companies and Notified Entities Regulations, 2008---

----Regln. 2(xvii), Sched. IX, Cl. (c)(iii)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Appointment of Chief Executive Officer of company---Company submitted application for appointment of appellant as its Chief Executive Officer---Commission not finding the appellant fit and proper person for the post of Chief Executive Officer of the company, rejected the application---Aggrieved by the decision of the Deputy Director of the Commission, appellant filed constitutional petition in the High Court; and High Court disposed of the constitutional petition with the observation that "department would consider the appellant for the position; and if it would disapprove the appellant again, then reasons for the disapproval would be written"---Commission as per order of the High Court reconsidered the application for appointment of the appellant as Chief Executive Officer of the company, and passed impugned order, wherein the department disapproved the appellant for the said position on the ground that he did not possess minimum 7 to 10 years work experience in a senior management position---Validity---Impugned order, was not a speaking order as no reasons were made out for the decision by the Deputy Director of the Commission as required by the High Court---Impugned order was set aside; and matter was remanded to the Commission---Head of the department in the Commission would decide the application for appointment of the appellant on merits afresh, without being prejudiced by the impugned order within 30 days---In case of rejection of application, a speaking order should be passed.

Appellant Nadim Anwar Khan present.

Farrukh Niaz for Appellant.

Nasir Askar, Director (SCD) and Ms. Tanzila Mirza, Joint Director (SCD), Departmental representatives.

Date of hearing: 2nd December, 2014.

2016 C L D 1597

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

NEXT CAPITAL LIMITED---Appellant

Versus

DIRECTOR/HEAD OF DEPARTMENT MARKET SURVEILLANCE AND SPECIAL INITIATIVE DEPARTMENT SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 26 of 2015, decided on 24th July, 2015.

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

----S. 33---Brokers and Agents Registration Rules, 2001, Rr.8, 12 & Third Schedule, Cl.A(2)---Securities and Exchange Ordinance (XVII of 1969), S. 22---Discrepancies in "Standard Account Opening Form (SAOF)"---Code of conduct---"Standard Account Opening Form (SAOF)", provided by the appellant, contained various discrepancies---Show-cause notice was issued to the appellant as to why action could not be taken against the appellant in pursuance of R. 8 of the Brokers and Agents Registration Rules, 2001 and S. 22 of the Securities and Exchange Ordinance, 1969---In response to said show-cause notice, Authorized Representative of the appellant informed the Commission, that he had started reviewing all the "SAOF", to ensure compliance of the law in letter and spirit---Representative further admitted that the observations made with regard to "SAOF" in question were valid---Commission, dissatisfied with the response of the appellant held that appellant failed to exercise due care, skill and diligence in conduct of its business---Appellant allowed a client to open account and trade in the market whose complete particulars were not obtained---Appellant, had failed to follow the applicable rules and regulations by violating Cl. A(2) of Code of Conduct, set forth under Third Schedule of Brokers and Agents Registration Rules, 2001 which in turn was a violation of R.12, read with R.8 of said Rules---Commission in exercise of the powers under S.22 of Securities and Exchange Ordinance, 1969 imposed a penalty of Rs.100,000, on appellant company with direction to appellant to ensure compliance of all rules, regulations and directives of the Commission---Facts and circumstances had established that "SAOF" had errors, which fact was admitted by the appellant---No mala fide was noticed and the errors in "SAOF" were inadvertent---Appellant provided the "SAOF", when required by the Commission---Appellant, could have rectified the error before providing the same to the Commission, but that was not done; which had again indicated that there was no wilful error---Errors in the "SAOF" were immediately rectified, once it was brought to the notice of the appellant by the Commission---Appellant's previous track record, was unblemished---Order to the extent of penalty, was set aside, with direction to appellant to complete "SAOFs" of all existing account holders within three months and assure compliance of all rules, regulations and directives of the Commission in future.

(b) Words and phrases---

----"Wilful"---Connotation.

Pakistan Industrial Promotors Limited v. Monopoly Control Authority 1990 CLC 1008 rel.

Muhammad Najam Ali, Chief Executive Officer, Next Capital Limited and Khurram Ali, Head of Compliance, Next Capital Limited for Appellant (through video conferencing).

Abid Hussain, Director (SMD) and Mirza Shoaib Baig, Deputy Director (SMD) Departmental representatives.

Date of hearing: 6th July, 2015.

2016 C L D 1611

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

Messrs FIRST NATIONAL EQUITIES LIMITED---Appellant

Versus

DIRECTOR/HOD (MSRD), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 46 of 2013, decided on 24th July, 2015.

Brokers and Agents Registration Rules, 2001---

----Rr. 5, 7(2) & 8---Securities and Exchange Rules, 1971, R. 3(b) & Third Schedule---Securities and Exchange Ordinance (XVII of 1969), Ss.18 & 22---Renewal of certificate of registration as Broker, application for---Scrutiny of application for renewal of certificate of registration as broker, had revealed that 'Net Capital Balance (NCB)', had major irregularities as said 'NCB' was not calculated in accordance with Third Schedule of the Securities and Exchange Rules, 1971; and prima facie was overstated---Show-cause notice under S.22 of the Securities and Exchange Ordinance, 1969, read with Rr.7(2) & 5 of the Brokers and Agents Registration Rules, 2001; was issued stating that appellant had misstated the "NCB" in violation of R.3(b) of the Securities and Exchange Rules, 1971; and had given false/misleading information in contravention of S. 18 of Securities and Exchange Ordinance, 1969 and R.8 of the Brokers and Agents Registration Rules, 2001---Commission, dissatisfied with the response of the appellant, held that violation of Rules and Regulations, was a serious matter, which entitled the Commission to suspend the registration of appellant---Commission, however, taking lenient view, renewed certificate of registration, with the condition that appellant would be required to submit a revised 'NCB' duly audited within three months, which would be in strict compliance with the Third Schedule of Securities and Exchange Rules, 1971, and would meet the minimum specified requirement---In view of the regulatory violations, and in exercise of the powers under S.22 of the Securities and Exchange Ordinance, 1969, a penalty of Rs.500,000 was imposed on the appellant with direction to ensure full compliance of all Regulations and Directives of the Commission in future---Validity---Appellant had been unable to demonstrate, as to why 'NCB' was significantly overstated by recording Securities for its clients on the basis of its Share Balance Report---Net Capital Balance; having not been calculated in accordance with Third Schedule of Securities and Exchange Rules, 1971, penalty was rightly imposed upon the appellant under S.22 of Securities and Exchange Ordinance, 1969---No reason existed to interfere with the impugned order, appeal was dismissed, in circumstances.

Jabran Tariq Butt for Appellant.

Imran Inayat Butt, Director (SMD) and Ms. Najia Ubaid, Deputy Director (SMD), Departmental representatives.

Date of hearing: 2nd April, 2015.

2016 C L D 1638

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SCD) and Fida Hussain Samoo, Commissioner (Insurance)

MUHAMMAD AYUB---Appellant

Versus

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

Appeal No. 34 of 2014, decided on 29th June, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 358, 372 & 468---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---SRO No.659(I)/2009, dated 14-7-2009---Voluntary winding up of company---Submission of necessary documents for approval---Refusal to accept the documents---Additional Registrar of companies filed petition for winding up of the company on the ground that company had ceased its operation for the last several years, and had not filed any statutory return with the Commission---Management, who were the major shareholders and major creditors, presented a revival plan before the court that they would revive the operation of the company within one year---Based on the said revival plan and the assurance made therein, court decided that company should not be wound up---Chairman of the company in compliance with said order of the court, made quarterly review report---Meanwhile, the company initiated the proceedings of creditors voluntarily wound up, within less than 4 months of the court order---Liquidator, who was appointed for that purpose, completed the whole process within the period of three months and submitted necessary documents with Companies Registrar Office for approval---Deputy Registrar refused to accept the documents filed by Liquidator---Company, being aggrieved by the original order, filed appeal under S.468(4) of the Companies Ordinance, 1984 before the Registrar of Companies, who remanded the case to the Deputy Registrar vide impugned order to re-examine and dispose of the matter in accordance with the relevant provisions of law, and to call comments from the Liquidator---Registrar of Companies, raised preliminary objection regarding the maintainability of the appeal before the Appellate Bench of the Commission under S. 33 of Securities and Exchange Commission of Pakistan Act, 1997, and stated that appeal should be filed before Commissioner Company Law Division by virtue of SRO 659(I)/2009, dated 14-7-2009---Validity---Registrar of companies had neither set aside, nor upheld the original order, appeal could not be heard by Commissioner Company Law Division---Company had rightly invoked the jurisdiction of Appellate Bench under S.33 of the Securities and Exchange Commission of Pakistan Act, 1997---Registrar of companies, had rightly remanded the case to the Deputy Registrar to consider all unresolved facts by calling record from all the concerned---Representative of company, should appear before the Deputy Registrar with all required record---Deputy Registrar was directed to entertain the grievances and issues of the company with utmost care and in accordance with law---No reason existed to interfere with the impugned order passed by the Registrar of Companies, wherein case was remanded to the Deputy Registrar, with appropriate directives to ensure the ends of justice.

Shehryar Kasuri and Muhammad Hamza for Appellant (through Video conferencing).

Muhammad Siddique, Registrar of Company, Mubasher Saeed Saddozai, Director C&CD and Anwaar Ahmed, Deputy Director C&CD for Respondents Nos.1 and 2.

Date of hearing: 6th April, 2015

2016 C L D 1668

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

IBL MODARABA MANAGEMENT (PVT.) LIMITED and 4 others---Appellants

Versus

REGISTRAR MODARABA COMPANIES AND MODARABAS, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 23 of 2014, decided on 16th July, 2015.

Modaraba Companies and Modaraba (Floatation and Control) Ordinance (XXXI of 1980)---

----S. 10---Companies Ordinanc47,CLVII of 1984), Ss. 496 & 503--- .Issuance of guarantees by Modaraba company to its clients conducting ultra vires business---Imposition of penalty---Appellant/Modaraba company had issued guarantees to, its clients, without any enabling provision of the prospectus---Stance of the appellant having been found to be unsatisfactory, penalty of fine Rs.25,000 on each of the Directors of the appellant company was imposed--- Validity---Section 10 of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, had provided that no Modaraba would be a business against Islamic Injunctions; and the Religious Board had to certify in

writing that the Modaraba was not a business opposed to Injunctions of 'Islam before Registrar could permit the floatation of such Modaraba--- Issuance of guarantees, was also a business, which had not been allowed by the Religious Board---Appellants, in the present case, had undertaken ultra vires business by allowing said guarantees in violation of S.496 of the Companies Ordinance, 1984---Since the issuance of guarantees, was not specifically allowed through the prospectus, it could not be deemed to have been allowed; and express approval from the Registrar in terms of'S.10 of Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, was required---Penalty was rightly imposed on the appellants; and no reason existed to interfere with the impugned order.

Dr. Hasan Shoaib Murad, Chief Executive Officer, First IBL Modaraba and Shiraz Butt, Chief Operating Officer, First IBL Modraba, Appellants present.

Syed Adeel Qaiser, Legal Advisor for Appellants.

Shahid Mahmood, Joint Director (SCD), Departmental representative.

Date of hearing: 2nd April, 2015.

2016 C L D 1683

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Zafar Abdullah, Commissioner (SCD)

Messrs CAPITAL INSURANCE COMPANY LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR, (INSURANCE DIVISION) KARACHI, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 39 of 2012, decided on 16th July, 2015.

Insurance Ordinance (XXXIX of 2000)-

----Ss. 11(1)(a), 28 & 156---Failure to comply with requirements of minimum paid up share capital---Paid up capital of the appellant company was Rs,262,705,750 which was below the requirement of minimum capital as contained in Ss.11(1)(a) & 28 of the Insurance Ordinance, 2000---Commission, vide its letter advised the appellant to provide its future plan as to how compliance would be made---Appellant requested the Commission to grant an extension of one year for the increase in its paid up capital, but the Commission refused to grant such extension---Commission being dissatisfied with the response of the appellant to show-cause notice found that the appellant had not yet complied with the statutory requirements pertaining to the minimum paid up share capital---Penalty of Rs.100,000 was imposed on the appellant in exercise of powers conferred on the Commission under S.156 of the Insurance Ordinance, 2000---Validity---Appellant, who had admitted its default and failure to comply with the requirement of minimum paid up capital, could not be exempted from the liability at all---Appellant had failed to establish that the Commission had acted beyond the jurisdiction and authority by passing the impugned order and to point out any irregularity or illegality therein---No reason existed to interfere with the order passed by the Commission for violation of Ss.28 & 11(1)(a) of Insurance Ordinance, 2000.

Ch. Sheraz Suhail for Appellant.

Shahid Nasim, Executive Director and Tariq Hussain, Director Insurance for Respondent.

Date of hearing: 30th April, 2015:

2016 C L D 1697

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SCD) and Fida Husain Samoo, Commissioner (Insurance)

MUHAMMAD SOHAIL TABBA---Appellant

Versus

DIRECTOR ENFORCEMENT, SECP---Respondent

Appeal No.18 of 2014, decided on 24th April, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 160, 233, 208 & 476---Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012, Regln.4(2)---SRO No.865(I)/2000 dated 6-12-2000---Investments in associated companies and undertakings in violation of resolution---Company was granted approval by the shareholders under S.208 of the Companies Ordinance, 1984 in Extra Ordinary General Meeting ('EOGM') for equity investment of Rs.500 million in the associated company---Company had not acted in accordance with the shareholders' approval and had not made equity investment accordingly---Company had not fulfilled requirement of disclosures as outlined in SRO No. 865(I)/2000 dated 6-12-2000; and Regln.4(2) of the Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012 in subsequent general meetings---Show-cause notice was issued to the Directors of the company, pointing out the non-compliance of requirements contained in Ss.160 & 208, read with S.476 of the Companies Ordinance, 1984---Commission being dissatisfied with the reply of the Company, imposed penalty of Rs.100,000 under Ss.160 & 208 of the Companies Ordinance, 1984 on the Chief Executive Officer of the company, and Directors were warned to ensure strict compliance with relevant provisions of Companies Ordinance, 1984 in future---Validity---Shareholders of the company accorded approval for investment in terms of S.208 of the Companies Ordinance, 1984, and S.R.O., which required listed company to give an update on the status of implementation of the project approved by the shareholders through resolution in subsequent general meeting, including reasons for not investing in the project so far and major change in the financial position of the investment, but the company had failed to do so---Company committed wilful default, as company published notice of Annual General Meeting in the newspapers, seeking shareholders approval for modification to the earlier Resolution, after receipt of notice of the Commission---Penalty was rightly imposed on the company---No reason existed to interfere with impugned order for non-compliance of the provisions of Ss. 160 & 208 of the Companies Ordinance, 1984.

Muhammad Waseem, Partner, Rahman Sarfaraz Rahim Iqbal Rafiq, Chartered Accountants and Muhammad Toufique Yusuf, Director Finance and Company Secretary, Fazal Textile Mills Limited for Appellant.

Ali Azeem Akram, Director Enforcement and Ms. Ayesha Riaz, Joint Director Enforcement for Respondent.

Date of hearing: 6th April, 2015.

2016 C L D 1713

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SCD) and Fida Hussain Samoo, Commissioner (Insurance)

MOHAMMAD ABDULLAH, CHAIRMAN and 6 others---Appellants

Versus

HEAD OF DEPARTMENT (ENFORCEMENT), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 40 of 2013, decided on 6th July, 2015.

Companies Ordinance (XLVII of 1984)---

----S. 208---Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012 (SRO No.27(I)/2012, dated 16-1-2012)---Investment in associated companies and undertakings---Company had made investment in its associated company having common directorship in both the companies---Company passed various resolutions for making investments in associated company---Enhancement of limit was made in general meeting of shareholders, but no approval was sought for getting the issuance of letter of credit for the associated company which was in the nature of investment in associated company---Director Enforcement of the Commission sought clarification from the company on compliance of S.208 of the Companies Ordinance, 1984---Company submitted that all required approvals regarding the investment were placed before the shareholders---Show-cause notice was issued to all the seven Directors of the company---Commission being dissatisfied with the response of Directors, held that standby letters of credit issued on behalf of associated company fell under the ambit of investments in terms of S.208 of the Companies Ordinance, 1984---Issuance of standby letters of credit aggregating Rs.1,000 million, without obtaining sanction of members was a violation of S.208 of Companies Ordinance, 1984---Taking lenient view, a penalty of Rs.50,000 was imposed on each of the Directors---Company tried to escape the liability by taking refuge behind Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012, but as per legal and interpretational norms, secondary legislation could not go behind the ambit of primary legislation---Section 208 of the Companies Ordinance, 1984 was a primary provision, whereas Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012 was a piece of secondary legislature---Company having violated S.208 of the Companies Ordinance, 1984---Penalty imposed through the impugned order, was not based on any loss caused; rather it was invoked for violation of the requirements contained in S. 208, Companies Ordinance, 1984---Conduct of the Directors had established that company, violation of S.208 of the Companies Ordinance, 1984 had been committed, however, in view of the fact that said violation was ratified by the shareholders of the company in their general meeting, taking a lenient view, impugned order to the extent of penalty, was set aside.

Imtiaz Majeed, CEO Hameed Majeed Associates and Adnan Akhtar, Senior Consultant for Appellants.

Ali Azeem Ikram, Director Enforcement and Ms. Ayesha Riaz, Joint Director Enforcement for Respondent.

Date of hearing: 14th May, 2015.

2016 C L D 1719

[Securities and Exchange Commission of Pakistan]

Before Tahir Mehmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

SIDDIQ MOTI---Appellant

Versus

DIRECTOR (SMD), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and another---Respondents

Appeal No. 59 of 2009, decided on 22nd May, 2015.

(a) Central Depositories Act (XIX of 1997)---

----S. 24(2)---Handling book-entry securities without authority---Whenever a broker would move/handle the securities of client, he would move them with the consent of client and not otherwise.

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

----Ss. 20, 29 & 33---Qanun-e-Shahadat (10 of 1984), Arts.117, 118 & 119---Claim of debit---Burden to prove---Broker who claimed debit against respondent failed to produce any documentary evidence in proof of his claim---Burden being on the broker under Arts. 117, 118 & 119 of the Qanun-e-Shahadat, 1984 to prove the fact of debit, he was under obligation to prove the same---Broker having failed to prove the fact of alleged debit, it would be assumed that no such debit was in existence.

Ali Rana for Appellant.

Murtaza Abbas, Deputy Director for Respondent No.1.

Naeem Hussain for Respondent No.2.

Date of hearing: 9th March, 2015.

2016 C L D 1734

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SM) and Fida Hussain Samoo, Commissioner (Insurance)

ASLAM MALIK & CO. CHARTERED ACCOUNTANTS---Appellant

Versus

HEAD OF DEPARTMENT (ENFORCEMENT), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 33 of 2012, decided on 6th July, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 255, 260 & 476---Issuance of unqualified audit report by Auditor---Imposition of penalty---Appellant/Chartered Accountant, allegedly issued unqualified audit report to the members of the company, although, the company had failed to comply with certain disclosure requirements of Accounting and Financial Reporting Standards for small and medium sized entities issued by "ICAP"---Auditor submitted cash flow statement of changes in equity, and revised notes to the accounts---Commission issued show-cause notice to the Auditor under Ss.255, 260 & 476 of the Companies Ordinance, 1984 and being dissatisfied with his response to show-cause notice, found that the provisions of S.255 of the Companies Ordinance, 1984 had been violated---Commission taking lenient view, imposed maximum fine; a penalty of Rs.40,000 under S.260 of the Companies Ordinance, 1984---Auditor had failed to discharge its duty in accordance with S.255 of the Companies Ordinance, 1984 by issuing unqualified opinion on accounts, which did not include cash flow statement and statement of changes in equity as required by "MSE's" reporting standards---Company had admitted the fact that cash flow statement and statement of changes in equity as required by 'MSE's' reporting standards had not been included in the accounts and the same would be complied in future---Auditor had violated S. 255 of the Companies Ordinance, 1984; and the Commission had rightly imposed penalty---No case of appeal having had been made out interference was declined in appeal.

Muhammad Khalid Aslam, Manager for Appellant.

Ali Azeem Akram, Director Enforcement and Mrs. Mahaeen Fatima, Director Enforcement for Respondent.

Dates of hearing: 24th May, 2013 and 13th May, 2015.

2016 C L D 1801

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

Messrs FIRST NATIONAL EQUITIES LIMITED---Appellant

Versus

IMRAN INAYAT BUTT, DIRECTOR/HOD (MSCI) SECP---Respondent

Appeal No. 62 of 2012, decided on 7th July, 2015.

Brokers and Agents Registration Rules, 2001---

----R. 8---Securities and Exchange Ordinance (XVII of 1969), S.22---Trading by associates---Increase in share price and price hike---Suspension of registration and imposition of penalty---Trading data of Stock Exchange revealed that out of the total trading volume of 15.85 million shares in the scrip of the appellant company, approximately 82% was traded by the associates of the appellant, which resulted in increase in share price and traded value of the scrip of the appellant, was the highest---Trading record of the Stock Exchange, also depicted that clients of the appellant, traded in a manner that resulted in price hike the scrip of appellant to almost 212.5%---Show-cause notice was issued to the appellant under S.22 of the Securities and Exchange Ordinance, 1969 read with R.8 of Brokers and Agents Registration Rules, 2001---Commission dissatisfied with the response of appellant of show-cause notice, found that the violation of Rules and Regulations was committed which was a serious matter---Commission in exercise of the powers under S. 22 of Securities Exchange Ordinance, 1969 imposed a penalty of Rs.500,000 on the appellant---Validity---In the best interests of justice appellant was given a fair opportunity of being heard and impugned order was set aside, and matter was remanded to the Commission with the direction to decide the matter within one month of the date of order.

Ijaz Chaudhary for Appellant.

Abid Hussain, Director (SMD), Amir Saleem, Joint Director (SMD) and Hafiz M. Wajid Wahidi, Deputy Director (SMD) departmental representatives.

Date of hearing: 2nd April, 2015.

2016 C L D 1814

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SCD) and Fida Hussain Samoo, Commissioner (Insurance)

IMRAN GAFOOR, CHIEF EXECUTIVE SITARA SPINNING MILLS LIMITED and 3 others---Appellants

Versus

BILAL RASUL, DIRECTOR (ENFORCEMENT) ADDITIONAL REGISTRAR OF COMPANIES, SECP---Respondent

Appeal No.19 of 2014, decided on 29th June, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 242, 244 & 476---Non-forwarding of copy of balance-sheet to the Registrar of Companies---Improper issue, circulation or publishing of balance-sheet or profit and loss account---Director Enforcement of the Commission, while examining the annual audited accounts of the company, observed that Director's report was not annexed with the account under S. 242 of the Companies Ordinance, 1984---Show-cause notice was issued to the Chief Executive Officer, Directors and Company Secretary under Ss. 242 & 244, read with S. 476 of the Companies Ordinance, 1984---Director Enforcement being dissatisfied with the response of the company, imposed a penalty of Rs.16,000 for violation of Ss.242 & 244 of the Companies Ordinance, 1984---Validity---Section 242 of the Companies Ordinance, 1984 mandated the filing of the accounts along with required documents and reports with the Registrar within thirty days from the date of the general meeting; and if the said provision was violated by any company, then it should be dealt through the penal provision in subsection (4) of the S. 242 of the Companies Ordinance, 1984---Section 244 of the Companies Ordinance, 1984, laid down the obligation of "issuing", 'circulating' and 'publishing' of the accounts along with different documents and reports---Section 244 of the Companies Ordinance, 1984, also imposed certain penalty for violation of improper issue, circulation publishing---Provisions of S.242 and S.244 of the Companies Ordinance, 1984, were inter alia independent with respect to the filing, issue, circulation and publishing perspective---Non-filing of the document under S.242, could not be considered a violation of S.244 of the Companies Ordinance, 1984 on the basis that the said documents had not been filed with the Registrar, same could not be treated as "issued, circulated or published" to or for the Registrar---Conclusion that "Accounts of the company filed under S.242 of the Companies Ordinance, 1984, were deemed to have been issued, circulated and published", could not be accepted as intended statutory interpretation of law---While deciding the issue related to S.242 of the Companies Ordinance, 1984, Director Enforcement had wrongly applied and interpreted S.244 as related provision of S.242 of the Companies Ordinance, 1984---Act of Director Enforcement, to issue show-cause notice under Ss.242 & 244 read with S.476 of the Companies Ordinance, 1984, was against the fundamental principles of justice and equity---Exercise of issuance of show-cause notice, was void ab initio; both could not be sustained---Impugned order was set aside being illegal and result of mis-interpretation of law---Case was remanded to the Director Enforcement, with direction to initiate fresh proceedings; and adjudicating the matter independently under S. 242 of the Companies Ordinance, 1984, if any default had been committed by the company in compliance of S.242 of the Companies Ordinance, 1984.

Rashid Sadiq, RS Corporate Advisory (Pvt.) Limited for Appellants.

Maheen Fatima, Director (CSD) and Shafiq-ur-Rehman, Deputy Director (CSD) for Respondent.

Date of hearing: 6th April, 2015.

2016 C L D 1827

[Securities and Exchange Commission of Pakistan]

Before Tahir Mehmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

HIGHLINK CAPITAL (PRIVATE) LIMITED---Appellant

Versus

DIRECTOR, MARKET SUPERVISION AND REGISTRATION DEPARTMENT SECP---Respondent

Appeal No. 8 of 2014, decided on 21st May, 2015.

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

----S. 33---Dismissal of appeal for non-appearance and non-prosecution---Final opportunity of hearing was also provided to the appellant in the interest of justice---Appeal was called for hearing at 12-10 Pm., but no one appeared on behalf of the appellant---Matter was kept pending till the close of official timings, but appellant failed to enter appearance; despite repeated calls, and no request for adjournment was received---Representative of the Commission was present---Such fact depicted the conduct of the appellant; and it appeared that he was not interested in pressing the appeal---Appeal was dismissed for non-appearance and non-prosecution, in circumstances.

Nemo for Appellant.

Tahir Mehmood, Deputy Director (MS&RD) for Respondent.

Dates of hearing: 9th March and 6th May, 2015.

2016 C L D 2045

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Zafar Abdullah, Commissioner (SMD)

KAMRAN WAHAB KHAN---Appellant

Versus

DIRECTOR/HOD (MSCID, SECP)---Respondent

Appeal No. 1 of 2013, decided on 19th December, 2014.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 15-A, 15-B, 15-C, 15-D & 15-E---Disclosing the inside information relating to financial result of the company---Imposition of penalty---Appellant was member of the Investment Committee of the company by virtue of being Head of the Finance Department and was an insider, who disclosed the inside information relating to the financial result of the company to the Funds---Appellant, in circumstances, was liable for penalty as defined under S.15-E(3) of Securities and Exchange Ordinance, 1969---Penalty of Rs.500,000 was imposed--- Validity--- Investment proposal was sent to the Board of Trustees of the appellant for approval by the Chief Accountant of the company; and not the Secretary of the Fund---No action was taken against the appellant, which raised further questions about allegations of insider trading and transparency within the Fund---Case was remanded to the Commission for review, and to further investigate allegations of insider trading by the appellant.

Barrister Yousuf Khosa, Partner RIAA Law, Islamabad.

Abdul Manan and Ms. Umaira Iqbal Raza, RIAA Law Islamabad and Kamran Wahab Khan, Appellant, CFO, Pakistan Petroleum Limited (PPL) (in person) for Appellant.

Awais Ali, Assistant Director (SCD) and Amir Saleem, Assistant Director (SCD) for Respondent.

2016 C L D 2077

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SMD) and Fida Hussain Samoo, Commissioner (Insurance)

FAISAL MALIK IMRAN HUSSAIN, CHIEF EXECUTIVE/ DIRECTOR and 5 others---Appellants

Versus

DIRECTOR (ENFORCEMENT), SECP---Respondent

Appeal No. 25 of 2014, decided on 17th February, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 227, 229 & 476---Maintenance of employees' provident fund---Utilizing provident fund amount by the company for its operational purposes---Paid up capital of the company at 30-6-2012, stood at Rs.278.615 million rupees, divided into 27.816 million ordinary shares of Rs.10 each---Commission, while examining the annual audited accounts for year ended 30-6-2012 of the company, observed that, total employees' provident fund contribution booked during the year under review, was Rs.18.178 million, whereas, the total liability shown in that regard under the head of "Trade and Payable", was Rs.51.376 million---Commission dissatisfied with the response of the company found that provisions of S. 227 of the Companies Ordinance, 1984 had been violated in respect of utilization of provident fund amount of the company for its operational purposes---Maximum aggregate penalty of Rs.50,000 was imposed on all Directors of the company---Validity---Directors contended that they had no role in the default in contribution towards Employees' Provident Fund; and penalizing them was not within the spirit of S.227 of the Companies Ordinance, 1984---Contributions to Employees' Provident Fund had been made with profit accrued---Company had complied with the provisions of S.227 of the Companies Ordinance, 1984; and any delay in provident fund, could be condoned---Impugned order was set aside to the extent of penalty, with strict warning to the Directors to fully comply with the requirements of S.227 of the Company Ordinance, 1984 in future.

Messrs Metropolitan Steel Corporation Limited's case 2006 CLD 454; United Brands Ltd.'s case 2008 CLD 731; Arif Habib Limited's case 2007 CLD 1667 and Pak Kuwait Takaful Company Ltd.'s case 2013 CLD 1710 rel.

Ms. Shehzeen Abdullah for Appellants.

Amjad Iqbal Rao, Deputy Director (Enforcement) and Shahid Javed, Deputy Director (Enforcement) for Respondent.

2016 C L D 2118

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SMD) and Fida Hussain Samoo, Commissioner (Insurance)

Mrs. SHAMA BASHIR KHAN and 4 others---Appellants

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 7 of 2014, decided on 19th February, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 263, 264 & 265---Investigation of affairs of the company on application of shareholders of the company---Shareholders of the company, filed application under S.263 of the Companies Ordinance, 1984 with the Commission for an investigation into the affairs of the company---Application was made on the basis of alleged mismanagement of the affairs of the company, and alleged illegal transfer of shares of the company---Commission refused to proceed with the matter, on the ground that so far as the matter relating to transfer of shares and the register of members, the courts were vested with "Exclusive jurisdiction"---Commission agreed to proceed against the company in relation to "other corporate non-compliances"---Commission declined to pass an order for appointment of Inspectors for the investigation into the affairs of the company---Allegations made by the shareholders of the company in their application were of a very grave nature, but response of the Commission related to only one aspect i.e. transfer of shares and charges made in the register of members---Rest of the allegations made in the application were not addressed; such as failure of service of notice, general meetings and mismanagement on the part of the company---Shareholders, had a genuine case, which should have been thoroughly investigated---Issue of transfer of shares, could be one aspect for which the courts had exclusive jurisdiction; that would not bar the Commission from investigation into other grave allegations made by the shareholder---Filing of application by the company under S.170 of the Companies Ordinance, 1984, and the matter pending before CRO, would not prevent the Commission from conducting an investigation into the affairs of the company in terms of S.263 of the Companies Ordinance, 1984--- Impugned order of the Commission, was set aside with direction to investigate the affairs of the company in terms of S.263 of the Companies Ordinance, 1984 within 30 days, in circumstances.

Syed Hassan Ali Raza, Senior Associate, Orr Dignam and Co. and Anjum Tanweer, Senior Associate, Orr Dignam for Appellants.

Irfan Afzal, Deputy Registrar (C&CD) for Respondent.

2016 C L D 2155

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Chairman and Zafar Abdullah, Commissioner (SMD)

Dr. ALLAH DAD LUNI and 6 others---Appellants

Versus

EXECUTIVE DIRECTOR (CLD)---Respondent

Appeal No. 35 of 2014, decided on 12th December, 2014.

Companies Ordinance (XLVII of 1984)---

----Ss. 4, 42, 242, 498 & 506---Companies (General Provisions and Forms) Rules, 1985, Rr. 6 & 35---Prohibition for payment of remuneration to member of the company---Company's member, who was acting as Chief Executive Officer of the company, had been drawing remuneration---Provisions of R.6(4)(ii) of the Companies (General Provisions and Forms) Rules, 1985, had prohibited the payment of remuneration of services, or otherwise to its members, whether holding an office in the company or not---Commission imposed penalty of Rs.125,000 on Chief Executive Officer and Rs.62,500 each on the rest of Directors of the company---Validity---Company was responsible to ensure that full compliance was made of all the rules and regulations and to recover the amount of remuneration paid to said member---Company had not violated rules wilfully---Impugned order was set aside, with direction to the appellants to be careful in future, and ensure strict compliance with the applicable rules and regulations.

Farooq Akhtar for Appellant.

Muhammad Akram, Assistant Director (CCD) and Mubasher Saddozai, Director (CCD) for Respondent.

2016 C L D 2174

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Chairman and Zafar Abdullah, Commissioner (SMD)

ECOPACK LIMITED---Appellant

Versus

DIRECTOR/HOD (MSRD), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 34 of 2013, decided on 15th December, 2014.

Securities and Exchange Ordinance (XVII of 1969)---

----S. 22---Listing Regulations of Karachi Stock Exchange, Regln.17---Delay in communicating the financial result for the half year---Effect---Financial results of the company for the half year, were communicated to the Stock Exchange, a day after the meeting of the Board of Directors---Commission required the company to communicate reasons for delay in communicating the results---No response was received from the company---Commission dissatisfied with response of the appellant company regarding show-cause notice, taking a lenient view, imposed a penalty of Rs.25,000 on the company and directed, the company to exercise care and caution, while announcing price sensitive information, and to ensure full compliance with law---Under the Listing Regulations of Stock Exchange, which was binding for every listed company to advise and keep advised Stock Exchange all decisions of the Board of Directors, relating to cash dividend, bonus issue, right issue, or any other entitlement or corporate action, and any other price sensitive information in the manner notified by Stock Exchange from time to time---Every company was required to follow the laid down procedure---Company being listed on Stock Exchange, was expected to be conversant with the regulatory requirements---Listed companies were required to ensure that any disclosure of price sensitive information, should be equitable, and not in a manner that compromise the investors' confidence, or the fairness and transparency of the market---Commission had already taken a lenient view in the impugned order by imposing a penalty of Rs.25,000 on the appellant company---Impugned order could not be interfered with, in circumstances.

Javed Panni for Appellant.

Amir Saleem, Deputy Director (MSRD) and Awais Ali, Assistant Director (MSRD) for Respondent.

2016 C L D 2188

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CL) and Zafar Abdullah, Commissioner (SMD)

FARAZ FAZAL SHEIKH---Appellant

Versus

ADDITIONAL REGISTRAR OF COMPANIES, ISLAMABAD, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 41 of 2013, decided on 19th December, 2014.

Companies Ordinance (XLVII of 1984)---

----S. 254(6)--- Appointment of unqualified person as Auditor---Imposition of penalty---Appeal to Appellate Bench of the Commission---Company had notified the appointment of Auditor, who was not qualified person as per information available in Form 'A' and Form 29--- Show-cause notice was issued to the Auditor for violation of S. 254(6) of Companies Ordinance, 1984, as he had been notified as Auditor of the company since its incorporation---No reply having been received from the appellant, Commission imposed a penalty of Rs.10,000 on the appellant---Form A and Form 29 of the company, were filed and signed by appellant himself---Appellant, in circumstances, had clearly violated S.254(6) of the Companies Ordinance, 1984, wilfully and deliberately---Commission had already taken a lenient view---In absence of any ground to interfere with impugned order, appeal was dismissed, in circumstances.

Faraz Fazal Sheikh, Appellant in person.

Abid Ali Abid, Deputy Registrar Departmental Representatives.

2016 C L D 2193

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Commissioner (SCD) and Tahir Mahmood, Commissioner (CLD)

EFU GENERAL INSURANCE LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE) SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 53 of 2012, decided on 17th February, 2015.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 45(5)(b), (6), 59-A & 156---Failure to maintain proper books and records---Inspection of record of company---Failure to give access to Inspection team to various claim files---During onsite inspection, Inspection team was not given access to various claim files relating to motor claims, which were misplaced allegedly during the shifting of company's corporate branch---Said files pertained to the workshops, aggregated to more than Rs.1,869,384---Survey reports of said claims were not available on the Company's Internet Portal---Fifty four claim files, were missing from the record of the company which raised serious doubts on the authenticity of all those claims/payments---Said missing of files, signaled inappropriate maintenance of records of the company---Executive Director (Insurance) of the Commission, dissatisfied with the response of the company, vide impugned order imposed a penalty of Rs.500,000 on the company; with direction to the company to probe into the issue of missing files; and genuineness of claims paid; and to immediately recover the missing files; and report to the Commission within 90 days---Validity---Company should have taken care of the files, while shifting premises; and that could not be deemed to be inadvertent on their part---Fact that, the company, was unable to provide 87% of the requested files, depicted that there had been some level of negligence on part of the company---All missing files, were related to the workshop owned by close relatives---Company, could have computerized information of those claims, but it did not contain basis of payment of claims i.e. survey report---Company, in circumstances, had not complied in terms of S.45(1) of the Insurance Ordinance, 2000---Default, was committed knowingly in terms of S.156 of the Insurance Ordinance, 2000, as company's stance had been the same throughout---Was not necessary to provide the original files, as computer records would suffice---Appellate Bench declined to interfere with impugned order.

Rashid Sadiq, CEO RS Corporate Advisory for Appellant.

Tariq Hussain, Director (Insurance) and Arif Nizami, Deputy Director (Insurance) for Respondent (through video conferencing).

2016 C L D 2212

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Commissioner (SCD) and Tahir Mahmood, Commissioner (CLD)

NATIONAL INSURANCE COMPANY LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR (INSURANCE) SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 12 of 2010, decided on 17th February, 2015.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 11, 29, 36, 63 & 157---Securities and Exchange Commission (Insurance) Rules, 2002, Rr.9(2) & 13---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---SRO No.682(I)/2008 dated 25-6-2008---Failure to maintain statutory deposit---Exemption---Imposition of penalty---Record available with State Bank of Pakistan, having shown, that appellant/Insurance company had Nil balance against the statutory deposit, show-cause notice was issued to the appellant under Ss.11(1)(b), 29, 63 & 157 of Insurance Ordinance, 2000, calling upon the appellant to show-cause as to why action should not be initiated against appellant for violation of said sections---Contention of appellant was that Executive Director (Insurance) of the Commission, had failed to take into account that upon fulfilment of all statutory requirements the appellant accrued a vested right to be granted exemption from the requirement of maintaining minimum statutory deposit under S.29 of Insurance Ordinance, 2000; as it was incumbent upon Executive Director (Insurance) of Commission, to set the minimum requirement as zero--- When application for granting exemption was made, Executive Director (Insurance) of the Commission, should have responded the request of appellant and if such request was to be refused, reasons should have been communicated to the appellant---Contention of the appellant that, their application requesting exemption from minimum statutory deposit under S.29 of the Insurance Ordinance, 2000, should have been properly dealt with by the authorities, was accepted---Executive Director (Insurance) of the Commission must exercise his discretion to grant exemption to the appellant, when criterion for minimum solvency as well as maintenance of a statutory deposit had been fulfilled---Impugned order, was set aside---Authorities were directed to review the matter and appropriate amendments in law were desired to be made, so that in future same issue was not faced by other Insurance Companies.

Abdul Karim v. The Returning Officer/AC Hub at Hub and another PLD 1999 Quetta 78 ref.

Ms. Mishal Nasir for Appellant.

Tariq Hussain, Director (Insurance Division) and Arif Nizami, Deputy Director (Insurance Division) for Respondent (through video conferencing).

2016 C L D 2221

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

AMIR RASHEED and another---Appellants

Versus

LAHORE STOCK EXCHANGE (GUARANTEE) LIMITED through Managing Director and 3 others---Respondents

Appeal No. 27 of 2006, decided on 17th March, 2015.

Brokers and Agents Registration Rules, 2001---

----R. 17---Security and Exchange Rules, 1971, R. 3---Securities and Exchange Ordinance (XVII of 1969), Ss. 17, 18 & 21---Protection of interest of investors---Fraudulent and false statements---Dealing of agent with the client in his own name---Grievance of the appellants was, that Stock Exchange (Guarantee) had failed to act as a frontline regulator and taking any immediate action against the ex-Member of the Stock Exchange to protect the interest of numerous investors; that Stock Exchange kept on allowing said ex-Member to work as a broker till 2001, though he had ceased to be member of Stock Exchange---Director, Securities Market Division, found that said ex-Member was not liable for acts done by another ex-Member in his personal capacity, and outside the authority of ex-Member; that other ex-Member having made himself liable for giving shares/money, liability vested upon him individually and personally---Director Securities Market Division further found that Stock Exchange had handled claim of complainant in accordance with its powers, enumerated in its Articles, Rules and Regulations to entertain such complaints of investors against members/Brokers and adjudicate upon such disputes and rejected the prayer of appellants that there were legal discrepancies, as well as violation of law and directions of the Commission, were committed by the Stock Exchange---Grievance of the appellants, had not been redressed, even after lapse of a decade---Appellants had been denied remedy on the basis of mere technicalities---Growth of stock market hinged on the confidence of investors in the system and process related to redress of grievance and dispute settlement---System, where the investors, had to run from pillar to post to seek justice, was a system which was bound to collapse and detrimental to the economy---Appellants, had prayed for return of their investment which seemed to be denied to them on the basis of technicalities---Quasi judicial forum, should seek to dispense justice, and not hide behind technicalities---While administering financial laws and adjudicating upon disputes, which affected the integrity of financial markets, not only justice must be done; it must also be seen to have been done---Considerable time had lapsed and the appellants, were not even close to getting remedy and redress of grievance---Director Securities Market Division had not gone through the material on record or details; it appeared that impugned order of the Director was based on non-reading of relevant record and case-law---Since it was not within the mandate and authority of Appellate Bench to go into factual controversy by sifting through the record, it was in the fitness of things that the matter be remanded to the department to decide the matter afresh after appreciating all the record---Matter was remanded to the department to decide the same within the 30 days accordingly.

PLD 1963 SC 244; 1997 PLC 446 and PLD 1978 Quetta 45 ref.

Appellant No. 1 in person.

Inamullah for Respondent No.1.

Abid Hussain for Respondent No.2.

Ms. Asima Wajid, Deputy Director, Departmental Representative.

2016 C L D 2233

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SMD) and Fida Hussain Samoo, Commissioner (Insurance)

K. ALI KAZILBASH and another---Appellants

Versus

EXECUTIVE DIRECTOR (REGISTRATION) SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeals Nos. 10 and 11 of 2011, decided on 24th April, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 173, 476 & 492---Passing resolution by Association without convening meeting and without recording minutes of the meeting---Supreme Court had directed the Commission to conduct an inquiry, and submit a report along with note of action on the matter with regard to the passing of resolution approved by the Central Executive Committee of the Association in its meeting allegedly held---Supreme Court had observed that no meeting for passing of said resolution was convened; neither any minutes of said meeting were recorded under S.173 of the Companies Ordinance, 1984, nor any notice for attending the meeting was issued as required by law---Supreme Court had further observed that an attempt to misguide the Supreme Court was made by producing false and forged documents; and prima facie a criminal offence was committed---Commission dissatisfied with the response to show-cause notice held that neither formal notice was issued to the members for a meeting of Central Executive Committee of the Association in its meeting, allegedly held, nor proper minutes recorded and circulated to the members within the time period stipulated under S.173 of Companies Ordinance, 1984---Commission in exercise of the powers conferred under S.492 of the Companies Ordinance, 1984, imposed a penalty of Rs.100,000 on the brokers, with total amount aggregating to Rs.600,000---Validity---Nothing was provided in the Companies Ordinance, 1984; the Articles of Association of the Association or rules, regulation that meeting could not be held without a notice---Notice of meeting, was an entitlement, and it could be waived and attendance at meetings and concurrence of the members/Directors was treated as waiver of notice---Issue of procedural formalities, and lapses in passing a resolution, or holding a meeting of Central Executive Committee of the Association, was something which did not invalidate a resolution---If the Directors were informed over phone about the meeting within shorter notice, same was acceptable---Declaration in the impugned order that the resolution of Central Executive Committee of the Association was false resolution on the basis of a procedural lapse, was highly unjustified---Fact that majority of Directors stated that meeting was held, and the decision was later ratified by a duly convened and held meeting of Central Executive Committee, held the ground---Impugned order was set aside, in circumstances.

Lackawanna Pants Manufacturing Co. v. Wiseman 133 F.2d 482 (6th Cir. 1943) ref.

Javed A. Kiyani for Appellant No.2.

Rashid Sadiq for Appellants.

Mubbashar Saeed Saddozai, Director (C&CD) and Muhammad Akram, Assistant Director (C&CD), Departmental Representatives (through video conference).

2016 C L D 2252

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SCD) and Fida Hussain Samoo, Commissioner (Insurance)

ZAHUR AHMED, APOLLO TEXTILE MILLS LIMITED and 2 others---Appellants

Versus

The COMMISSIONER (COMPANY LAW DIVISION) SECP, ISLAMABAD---Respondent

Appeal No. 12 of 2014, decided on 15th May, 2016.

Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance (CIII of 2002)---

----Ss. 6, 25 & 26---Increase of shareholding---Inspection of books of account by Registrar---Appellant/Brokerage Company, had four major shareholders, who collectively held 90.60% of share capital of the company---Second, shareholder (Consolidated overseas Investment and Finance (COIF)) subsequently increased its shareholding, but mandatory compliance with the relevant requirements of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 was not made by (COIF)---Company failed to provide the relevant information required by Inspection Team, divulging the identity of "COIF" being the major shareholder of 79.12%---Commissioner (Company Law Division) of the Commission dissatisfied with the response of company, held that default under S.6 of Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002 was established, necessitating action under Ss.25 & 26 of Takeovers Ordinance, 2002, and a fine of Rs.500,000 was imposed on each Director---Directors while alleging the non-compliance of S. 231 of the Companies Ordinance, 1984, by the Inspection Team of the Commission had neither produced any proof, nor had been able to point out an instance, where such non-compliance could be established---Inspection proceeded under S.231 of the Companies Ordinance, 1984, transpired into a report, which was considered a statutory report and was authenticated by the Inspectors so appointed---Any adjudicatory action taken pursuant to an inspection report by issuing a show-cause notice to a company, could not be deemed recognition---Fair opportunity of hearing was given to the Directors but they had not participated in the proceedings held before the Commissioner---Directors had not been able to clarify their positions with respect to the acquisition of additional shareholding in the company, while acting in concert with (COIF), which made them liable to the violation of mandatory provisions of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Ordinance, 2002---In absence of any reason to interfere with the impugned order appeal was dismissed.

Khurram Chughtai for Appellants.

Imran Iqbal Panjwani, Executive Director (CSD), Ms. Amina Aziz, Director (CSD) and Ms. Khalida Perveen, Joint Director (CSD) for Respondent.

2016 C L D 2265

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SCD) and Fida Hussain Samoo, Commissioner (Insurance)

JAVED IQBAL, CHIEF EXECUTIVE, SITARA FABRICS LIMITED and 2 others---Appellants

Versus

BILAL RASUL, DIRECTOR (ENFORCEMENT)/ADDITIONAL REGISTRAR OF COMPANIES, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 20 of 2014, decided on 29th June, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 242, 244 & 476---Failure to annex Director's Report with accounts filed with Registrar of companies---While examining the annual audited accounts of the company for relevant financial year, it was observed that the Director's report was not annexed therewith in the accounts filed with the Registrar under S.242 of the Companies Ordinance, 1984---Director (Enforcement) of the Commission being dissatisfied with the response of company to show-cause notice, imposed a penalty of Rs.4,000 on each Director and Chief Executive Officer of the company for violation of S.244 of the Companies Ordinance, 1984---Section 242 of the Companies Ordinance, 1984, mandated the filing of the accounts along with required documents and reports with the Registrar---If the provision for filing audited accounts was violated by company, it should be dealt, through the penal provision contained in subsection (4) of S. 242 of the Companies Ordinance, 1984 laid down the obligation of "issuing, circulating and publishing" of the accounts along with different documents and reports---Provisions of Ss. 244 & 242 of the Companies Ordinance, 1984, in circumstances, were independent with respect to filing, issue, circulation and publication perspective under the Ordinance---Non-filing of the documents under S.242 of the Companies Ordinance, 1984, could not be presumably considered a violation of S.244 of the Ordinance, on the basis that since documents had not been filed with the Registrar, same could not be treated as "issued, circulated or published" to or for the Registrar---Conclusion drawn by the Director (Enforcement) of the Commission could not be accepted being not as intended statutory interpretation of the law---Show-cause notice, and impugned order, were set aside being illegal and result of mis-interpretation of law---Case was remanded to Director (Enforcement) with direction to initiate fresh proceedings and adjudge the matter accordingly.

Rashid Sadiq, RS Corporate Advisory (Pvt.) Limited for Appellants.

Maheen Fatima, Director (CSD) and Shafiq-ur-Rehman, Deputy Director (CSD) for Respondent.

2016 C L D 2276

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Chairman and Zafar Abdullah, Commissioner (SMD)

MUHAMMAD ASIF RAZA, FCA, ASIF ASSOCIATES, CHARTERED ACCOUNTANTS---Appellant

Versus

HEAD OF DEPARTMENT (ENFORCEMENT), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 32 of 2014, decided on 8th December, 2014.

Companies Ordinance (XLVII of 1984)---

----Ss. 255, 260 & 476---Audit of Annual Financial Statement of the company---Issuing unqualified audited report contrary to the provisions of "Accounting and Financial Reporting Standard ("AFRS")---Auditor, audited the Annual Financial Statements of the company and issued an unqualified audit report, by not complying with the provisions of "Accounting and Financial Reporting Standards" ("AFRS")---Auditor also failed to perform the audit as per the standard and guidelines provided in International Standards on Auditing (ISAs)---Commission dissatisfied with the submission of the Auditor held that auditor had failed to comply with the provisions of S. 255(3) of the Companies Ordinance, 1984 which attracted penal provisions of S.260 of the Ordinance---Keeping in view the assurance given by the Auditor that the default would not recur in future, a token penalty of Rs.7,000 was imposed on the Auditor---Validity---Auditors, being the ultimate watchdog of the shareholders' interest, were required to give a report on the financial statements and books of account after conducting the audit in accordance with the prescribed procedure and requirements of Companies Ordinance, 1984 and International Accounting and Auditing Standards---If any misstatement/omission was found, which had a material impact on the financial statements, the Auditor was required to issue a modified report---In the present case, Auditor had admitted his mistake that he had not identified the title of "Statement of charges in funds" due to a clerical mistake on part of their staff, and consequently submitted a revised report to the company---Revised report was required to be submitted as per the guidelines outlined in International Standards on Auditing, which had not been complied with by the Auditor---Fact that the company had acknowledged the revised report, had no bearing on the Auditor, and would not relieve the Auditor of his statutory responsibility to follow the guidelines and requirements of International Standards on Accounting---Auditor having failed to give an audit report in accordance with the provisions of S. 255(3) of the Companies Ordinance, 1984, penalty, was rightly imposed on the Auditor---Impugned order was upheld, in circumstances.

Appellant in person.

Ms. Maheen Fatima, Director (Enforcement) and Alishah Ali Raza, Deputy Director (Enforcement) for Respondent.

2016 C L D 2298

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Fida Hussain Samoo, Commissioner (Insurance)

LAHORE STOCK EXCHANGE (GUARANTEE) LIMITED---Appellant

Versus

DIRECTOR, SMD and 2 others---Respondents

Appeal No. 74 of 2006, decided on 6th February, 2015.

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

----Ss. 20(6)(b)(g) & 33---Securities and Exchange Ordinance (XVII of 1969), S.7---Deposit of amount for purchase of shares---Complaint against---Failure to deliver shares---Jurisdiction of Securities and Exchange Commission---Complaint was lodged against Ex member of Stock Exchange, to the effect that, said member of Stock Exchange, despite repeated reminders, could not deliver shares, despite complainant had deposited amount of said shares---Stock Exchange confirmed that there were seventy-five claims against said member, out of which twenty-two were settled; that amount received from the sale of membership seat of said member was distributed on pro rata basis among the claimants---Director (SMD) of the Commission, held that Stock Exchange did not take all necessary steps to protect the small investor and failed to declare its member as a defaulter for failing to pay to the complainant---Director (S.M.D.) of the Commission, directed the Stock Exchange, to either return shares as claimed by the complainant, or give the amount deposited by the complainant to said member---Stock Exchange, filed appeal against impugned order contending that, Commission had failed to establish that under which provision of law it had assumed jurisdiction in the matter between two private parties---Validity---Stock Exchange, was a front line regulator for capital market, and one of its main functions, was to provide adequate protection to investors---Commission, being the apex regulator, would provide framework within which the Stock Exchange, the capital market intermediaries and investors, could operate; and had to keep check on the omissions and commissions of the Stock Exchange---Section 20(6)(b)(g) of the Securities and Exchange Commission of Pakistan Act, 1997, had given power to the Commission to look into the matter where there was regulatory non-compliances on part of the Stock Exchange, and to take necessary action in order to maintain confidence of investors in the securities market---Contention of Stock Exchange, held, was baseless and without merit---Stock Exchange had exhibited negligence in performance of its duties towards investors; and in supervision of settlement of claims---Stock Exchange, had deviated from the laid down procedure in handling the matter---Impugned order, could not be interfered with, in circumstances.

Abu Bakar Siddique v. Collector of Customs 2004 PTD 2187; Manager, Jammu and Kashmir, State Property in Pakistan v. Khuda Yar and another PLD 1975 SC 678; District Board, Khunia v. Jogesh Chandra AIR 1943 Cal. 447; State of U.P. v. Manbodhan Lal AIR 1957 SC 912; Kajir v. Baran Shah PLD 1970 Quetta 19 and Government of Burma v. Municipal Corporation of Rangoon AIR 1930 Rang 297 ref.

Dr. Parvez Hassan and Ms. Maham Naqshband for Appellant.

Anwar Toor for Respondent No.2.

Tahir Mahmood Kiani, Deputy Director Departmental Representative.

2016 C L D 2312

[Securities and Exchange Commission of Pakistan]

Before Tahir Mahmood, Commissioner (CLD) and Akif Saeed, Commissioner (SCD)

TAKAFUL PAKISTAN LIMITED---Appellant

Versus

COMMISSIONER (INSURANCE), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 37 of 2013, decided on 17th February, 2015.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 11(1)(f) & 12(1)(b)---Insurance Companies (Sound and Prudent Management) Regulations, 2012, Regln.2(2)---Holding the Office of Chief Executive Officer by Director---Company's letter showed that Director, was holding the office of Chief Executive Officer; and the position had been termed "Chief Executive Officer (Acting)"---Director took role of that position without the approval and notification of the Commission, which was in violation of Regln.2(2) of the Insurance Companies (Sound and Prudent Management) Regulations, 2012---Commissioner (Insurance) of the Commission, dissatisfied with the response of the company, imposed penalty of Rs.1,000,000 (ten lac) on the Director under S.156 of the Insurance Ordinance, 2000 for violation of Regln.2(2) of the Regulations, 2012, and Rs.200,000 on the remaining directors under Ss.12(1)(b) & 11(1)(f) of Insurance Ordinance, 2000---Validity---Company had accepted the default, and convinced the Appellate Bench that they would fully comply with the said provisions of law and Regulations in future---Taking a lenient view, impugned order to the extent of imposition of penalty, was set aside by the Appellate Bench and company was strictly warned to be careful in future.

Shahid Nizam, Mohsin Tayabaly & Co. and Dr. Syed Arif Hussain, Chief Executive Officer, Takaful Pakistan Ltd. for Appellant.

Tariq Hussain, Director (Insurance) and Arif Nizami, Deputy Director (Insurance) for Respondent (through video conferencing).

2016 C L D 2318

[Securities and Exchange Commission of Pakistan]

Before Zafar Abdullah, Commissioner (SMD) and Fida Hussain Samoo, Commissioner (Insurance)

MAQSOOD ELAHI, CEO/DIRECTOR/COMPANY SECRETARY and 4 others---Appellants

Versus

HEAD OF DEPARTMENT (ENFORCEMENT), SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No. 38 of 2014, decided on 19th February, 2015.

Companies Ordinance (XLVII of 1984)---

----Ss. 242, 476 & 492---Contravention of "Accounting Financing Reporting Standard" (A.F.R.S)---Commission, while examining the annual audited accounts for the relevant year of the company, filed under S.242 of the Companies Ordinance, 1984, observed; that the company being a medium-sized entity had contravened the requirements of Para 1.1 of 'Accounting and Financing Reporting Standards' (AFRS) for small and medium-sized entities, by not preparing/attaching the "Cash Flow Statements" and "Statement of charges in equity", and partial notes along with the accounts; and the requirement of Para 1.3 of the 'AFRS' for entities by not giving disclosure of the statement of compliance with the accounts---Company, also failed to prepare and report notes to the accounts to (a) accounting policies, (b) share capital, (c) fixed assets, and (d) total net sales as per the requirements set out in Fifth Schedule of the Companies Ordinance, 1984 and "AFRS"---Show-cause notice was issued to Directors of the company under Ss.492 & 476 of the Companies Ordinance, 1984---Commission dissatisfied with the response of the Directors of the company found that provisions of S.492 of the Companies Ordinance, 1984 were violated in six counts---Directors of the company had failed to comply with the provisions of the Companies Ordinance, 1984 by submitting the missing/required information; and not explaining/commenting the reason for non-compliance---Token penalty of Rs.25,000 was imposed on each of the Directors---Directors had accepted the default; and had asked for a warning to be issued instead of penalty, contending that it was the responsibility of the Chartered Accountant, which the company had hired to meet the required Accounting Standards---Contention of the department was that there were significant violations; and a Statutory Auditor could not provide consultancy to the company---Validity---Company being a public listed company, had a responsibility to ensure full compliance of "AFRS", and provisions of the Companies Ordinance, 1984---Said violations, could not be excused; and penalty was rightly imposed on the Directors of the company---No reason existed to interfere with the impugned order in circumstances.

Maqsood Elahi, CEO Pak Chromical Ltd. for Appellant No.1 (through video conferencing).

Ms. Amina Aziz, Director (Enforcement) and Shafiq-ur-Rehman, Deputy Director (Enforcement) for Respondent.

2016 C L D 338

[Supreme Court of Pakistan]

Present: Mian Saqib Nisar, Sh. Azmat Saeed and Manzoor Ahmad Malik, JJ

Ch. NAZIR AHMED---Appellant

Versus

ALI AHMED and another---Respondents

Civil Appeal No. 363-L of 2015, decided on 23rd December, 2015.

(Against the judgment dated 13-9-2011 of the Lahore High Court, Lahore passed in R.F.A. No. 279 of 2009)

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

----S. 69---Unregistered partnership firm---Bar on filing of suit by an existing unregistered partnership firm or its partners for enforcement of rights---Principles and exceptions.

Following are the principles provided under section 69 of Partnership Act, 1932 regarding bar on filing of suit by unregistered partnership firm or its partners for enforcement of rights;

(i) Partner of an unregistered firm cannot sue the firm or any of its partners, past or present, for enforcing a right conferred by the Partnership Act, 1932 or arising out of the contract of partnership;

(ii) Unregistered firm cannot file a suit against any third person for enforcing a right arising out of a contract;

(iii) Above two disabilities also apply to a claim of set off or any other proceeding to enforce a right arising out of contract. But they did not apply to -

• the right to sue for dissolution or for accounts of a dissolved firm, or to realize the property of a dissolved firm; or

• the power to realize the property of an insolvent partner;

(iv) Section 69 of Partnership Act, 1932 did not affect,-

• firms located in areas to which the Act does not extend or which are exempt from the operation of the Act;

• proceeding, etc. not exceeding Rs.100 in value.

Sections 69(1) & (2) of Partnership Act, 1932 place a complete bar on every proceeding initiated vide a suit by an unregistered firm and its partners. However, as expressly provided by section 69(3)(a) of Partnership Act, 1932 the above rules causing disabilities are not applicable to, and registration of a firm is not necessary in, the following cases:-

• where the suit is for the dissolution of a firm;

• where the suit is for rendition of accounts of a dissolved firm;

• where the suit is for realization of the property of a dissolved firm.

Said three exceptions should be strictly contrived and applied.

Partnership Act, 1932 placed no prohibition upon an unregistered partnership making contracts either inter se the partners or with some third party, nor forbids an unregistered partnership acquiring property or assets, all section 69 does is to make a suit instituted by an unregistered partnership to recover property or enforce rights, unenforceable and precluded.

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

----S. 69(1) & (2)--- Civil Procedure Code (V of 1908), O.VII, R. 11(c)---Unregistered partnership firm---Suit for declaration (simpliciter) filed by partner of an existing unregistered partnership firm against the other partner---Such suit would be barred in terms of bar contained under S. 69 of Partnership Act, 1932, and plaint should be rejected on such account under O. VII, R. 11, C.P.C.

Registration of a firm was a condition precedent and sine qua non to the right to institute a suit by or on behalf of the firm or its partner(s) as the case may be and any suit instituted against the mandate of law shall be barred, with the obvious consequences of rejection of the plaint by the Court as per Order VII, Rule 11(c), C.P.C. which provided that "where the suit appears from the statement in the plaint to be barred by any law". Section 69 of Partnership Act, 1932, was mandatory and penal in nature, thus, the bar to the suit(s) falling within the ambit of said section was absolute and unequivocal.

Usman v. Haji Omer PLD 1966 SC 328; The Australasia Bank Ltd. v. Messrs A. Ismail Ji and Sons and others PLD 1952 Lah. 314 and Prem Lata v. Ishar Das Chaman Lal AIR 1995 SC 714 ref.

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

----S. 69---Unregistered partnership firm---Bar on filing of suit by one partner of an existing unregistered partnership firm against the other partner for enforcement of rights--- Suit for specific performance of partnership deed, rendition of accounts, cancellation of documents and permanent injunction (simpliciter) filed by partner of an existing unregistered partnership firm against the other partner---Such suit (simpliciter) would be barred in terms of bar contained under Ss. 69(1) & (2) of Partnership Act, 1932---Such suit would only be competent if the unregistered partnership firm had already been dissolved or was first sought to be dissolved, as in such eventuality it would fall within the (three) exceptions provided under S. 69(3)(a) of the said Act.

Relationship between partners of a firm was fiduciary in nature making them liable to provide accounts to each other. Suit for accounts shall thus be competent by the partner(s) against the other, however with the clear limitation and qualifier that the firm should have already been dissolved and if not so, be first sought to be dissolved, because an exclusive and simple suit for the rendition of accounts while the (unregistered) partnership/firm was in existence shall not be competent in view of the absolute bar contained in section 69 of Partnership Act, 1932. Suit for rendition of accounts (simpliciter) shall not fall within any one of the three exceptions provided under sections 69(3) and (4) of the Partnership Act, 1932.

In the present case, the plaintiff-partner was seeking a declaration to the effect about the existence of the firm which meant the firm was existent; for the specific enforcement of his rights under the partnership deed and performance of other partner's/defendant's duties on that basis, as also in relation to the business of the firm, again with the clear assertion that the firm was intact, and then for the rendition of accounts and the cancellation of a certain document which the plaintiff-partner claimed to be violative of his rights under the deed and for permanent injunction. All such relief(s) sought by the plaintiff-partner were not in consonance with and did not fall strictly within the exceptions created by section 69(3)(a) of Partnership Act, 1932.

Present suit fell within the purview of the clear bar contemplated by sections 69(1) and (2) of the Partnership Act, 1932, and should have been accordingly dismissed.

Usman v. Haji Omer PLD 1966 SC 328 ref.

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

----S. 69---Unregistered partnership firm---Bar on filing of suit by one partner of an existing unregistered partnership firm against the other partner for enforcement of rights--- Exceptions--- Scope and interpretation of three exceptions to the bar on filing of suit provided under S. 69(3)(a) of Partnership Act, 1932 detailed.

Section 69(3)(a) of Partnership Act, 1932 provided three exceptions to the bar on filing of suit by unregistered partnership firm or its partners for enforcement of rights. First and second exceptions, i.e., "the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm", seemed quite simple in that where the firm had not been dissolved prior to the institution of the suit, the partner(s) may sue for the dissolution of the firm simpliciter and may not ask for any other relief such as the rendition of accounts, but it did not mean that the relief of rendition etc. as ancillary, incidental or consequential relief flowing on account of dissolution could not be sought for. Therefore a composite suit in such behalf could always be filed. But where the accounts were being sought for an existing (unregistered) firm which was not yet dissolved the suit shall be barred. Firm for which the accounts were being sought must be one which was "dissolved". Thus, the condition precedent for seeking the accounts of the (unregistered) firm was the dissolution of the firm itself prior to the institution of the suit. If however the firm was not dissolved, in such an eventuality a composite suit could be filed by any of the partner(s) to seek the dissolution of the firm and at the same time ask for the rendition of accounts.

As regards the third exception seeking enforcement of "any right or power to release the property of a dissolved firm", again the condition was the same i.e. the "dissolved firm", postulating that the firm should have been dissolved as a prerequisite for the enforcement of the right of realizing the property etc. or a composite suit should be filed.

In case of a dispute between the parties as to whether a firm had been dissolved or not, where the dissolution was not being sought by the plaintiff rather the other reliefs falling within the exceptions [under sections 69(3)(a) of Partnership Act, 1932] were sought, the court shall primarily consider and determine this aspect of the matter (i.e. the dissolution of the firm) and depending upon the positive outcome in favour of the plaintiff shall consider and grant the second (or ancillary) relief(s) of rendition of accounts, or realization of property etc. as the case may be. In order to cross the bar of section 69 of Partnership Act, 1932 when it was set out as a defence by the other side the plaintiff could always seek amendment of the plaint and ask for dissolution at the appropriate stage of the proceeding. Second/ancillary relief(s) in all the cases falling within the exceptions was subservient and was circumscribed by the dissolution of the firm in the first instance and was not an independent and separate relief(s) by itself. In case the firm was not dissolved, such ancillary relief(s) being hermetically insulated thereto could not be granted and the plaint was liable to be rejected as the suit shall be barred by law (section 69 of Partnership Act, 1932).

Muhammad Farooq Qureshi Chishti, Advocate Supreme Court for Appellant.

Alamgir, Advocate Supreme Court and Mehmood-ul-Islam, Advocate-on-Record for Respondents.

Ms. Ayesha Hamid, Advocate Amicus Curiae (with the permission of the Court) on Court's call.

Date of hearing: 4th December, 2015.

2016 C L D 362

[Supreme Court of Pakistan]

Present: Mian Saqib Nisar, Sh. Azmat Saeed and Maqbool Baqar, JJ

PAKISTAN TELECOMMUNICATION AUTHORITY (PTA), ISLAMABAD through Chairman---Petitioner

Versus

PAKISTAN TELECOMMUNICATION COMPANY LIMITED, ISLAMABAD---Respondent

Civil Petition No. 2093 of 2015, decided on 26th October, 2015.

(On appeal from judgment dated 5-5-2015, passed by the Islamabad High Court, Islamabad, in FAO No.25/2012)

(a) Number Allocation and Administration Regulations, 2005 (since substituted by the Number Allocation and Administration Regulations, 2011)---

----Regln. 18(1) & (2)--- Pakistan Telecommunication (Re-Organization) Act (XVII of 1996), S. 23(3)(c)(i)---Pakistan Telecommunication Rules, 2000, R. 9---Late payment of annual Number Allocation Fee---Imposition of penalty equivalent to 10% of the amount due [Regulation 18(2) of the Number Allocation and Administration Regulations, 2005]---Vires of---'Penalty' in fact a 'fine'---Pakistan Telecommunication Authority raised a claim of 10% penalty on the late payment of annual Number Allocation Fee by the respondent-licensee in terms of Regln. 18(2) of Number Allocation and Administration Regulations, 2005---Licensee contended that under the Pakistan Telecommunication (Re-Organization) Act, 1996, the Authority was only entitled to impose a fine for late payment, and it could not impose any penalty---High Court had held that Regln. 18(2) of Number Allocation and Administration Regulations, 2005, which provided for imposition of a penalty was ultra vires the Pakistan Telecommunication (Re-Organization) Act, 1996---Validity---Licensee, in the present case, failed to deposit the annual Number Allocation Fee for the years 2005 to 2011 and such payment was, in fact, belatedly made in the year 2011---Prima facie, the licensee had failed to comply with the terms of its licence---In terms of Regln. 18(2) of the Number Allocation and Administration Regulations, 2005, a licensee, who failed to make payment of the dues under Regln. 18(1) of the said Regulations was liable to suffer a penalty equivalent to 10% of the amount due, i.e. a peculiarity disadvantage resulting from a violation of the said Regulations, which a licensee was required to comply with in view of his Licence Agreement, and it also constituted a breach of S. 23 of the Pakistan Telecommunication (Re-Organization) Act, 1996---Penalty under Regln. 18(2) of the Number Allocation and Administration Regulations, 2005, when examined with reference to the subject and object of the Pakistan Telecommunication (Re-Organization) Act, 1996, the Pakistan Telecommunication Rules, 2000 and Number Allocation and Administration Regulations, 2005, and in the context in which the term "penalty" had been used, there was no manner of doubt that for all intents and purposes, it was a "fine"---Supreme Court observed that Regln. 18(2) of the Number Allocation and Administration Regulations, 2005 may not be happily worded and could have been constructed with a greater care and accuracy, but it was not ultra vires the Pakistan Telecommunication (Re-Organization) Act, 1996---Appeal was allowed accordingly and judgment of High Court was set aside.

(b) Words and phrases---

----"Penalty"--- Meaning and scope--- Penalty implied a loss, disability or disadvantage of some kind visiting a person or his property on account of his own actions or omissions---Penalty had both criminal and civil dimensions; in the former, it denoted a punishment imposed on a wrongdoer in the form of term of imprisonment or a sum of money exacted from him for violation of the law, while in civil law, it may arise from a breach of statutory duty or a contractual obligation with its inherent limitations and peculiar remedies.

Wharton's Law Lexicon, Fourteenth Edition by A.S. OPPE; Stroud's Judicial Dictionary of Words and Phrases, Fifth Edition Volume 4 by Johns S. James; Oxford Companion to Law by David M. Walker; Black's Law Dictionary, Tenth Edition by Bryan A. Garner; Law Dictionary with Pronunciations by James A. Ballentine 1948 Edition; N.K. Jain and others v. C. K. Shah and others AIR 1991 SC 1289 and R.S. Joshi and others v. Taluka Sahakari and others AIR 1977 SC 2279 ref.

(c) Words and phrases---

----"Fine"---Definition and meaning.

Stroud's Judicial Dictionary of Words and Phrases, Fifth Edition Volume 4 by Johns S. James; Oxford Companion to Law by David M. Walker; Black's Law Dictionary, Tenth Edition by Bryan A. Garner; Abdul Hameed Talib v. Additional District Judge PLD 2013 SC 775 and R.S. Joshi and others v. Taluka Sahakari and others AIR 1977 SC 2279 ref.

(d) Words and phrases---

----"Penalty" and "fine"---Synonymity and scope---Fine was a form of "penalty" which implied the payment of money by way of punishment usually imposed for breach of law---Fine was a pecuniary penalty---All fines were penalties but all penalties were not necessarily fines---Both the terms "penalty" and "fine" in a statutory construction may sometimes be used loosely but a true import of the term would obviously depend upon the subject matter and the object of the statutory instrument wherein such term had been employed that too with reference to the context in which it was used.

(e) Interpretation of statutes---

----Where the object and intention of a statute was clear it must not be reduced to a nullity by the draftsman's unskillfulness or ignorance.

The Interpretation of Statutes 7th Edition by Sir Peter Mexwer ref.

(f) Interpretation of statutes---

----Courts should always lean in favour of validity of a statutory instrument and should be slow to strike it down, and an interpretation, which saved the law, should be adopted rather than holding a law to be invalid, unconstitutional or ultra vires.

Mehreen Zaibun Nisa and others v. Land Commissioner, Multan and others PLD 1975 SC 397; Multiline Associates v. Ardeshir Cowasjee and 2 others PLD 1995 SC 423; Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary, M/o Finance, Islamabad and 6 others PLD 1997 SC 582; Federation of Pakistan through Secretary, Ministry of Finance and others v. Haji Muhammad Sadiq and others PLD 2007 SC 133; Syed Aizad Hussain and others v. Motor Registration Authority and others PLD 2010 SC 983 and Dr. Tariq Nawaz and another v. Government of Pakistan through the Secretary, Ministry of Health, Government of Pakistan, Islamabad and another 2000 SCMR 1956 ref.

(g) Number Allocation and Administration Regulations, 2005 [since substituted by the Number Allocation and Administration Regulations, 2011]---

----Reglns. 18(1) & (2)--- Pakistan Telecommunication (Re-Organization) Act (XVII of 1996), S. 23(3)(c)(i)---Late payment of annual Number Allocation Fee--- Imposition of penalty equivalent to 10% of the amount due--- Quantum of such penalty/fine was subject to maximum limit of Rs. 350 million mentioned in S. 23(3)(c)(i) of Pakistan Telecommunication (Re-Organization) Act, 1996.

Afnan Karim Kundi, Advocate Supreme Court along with Syed Rifaqat Hussain Shah, Advocate-on-Record, M. Khurram Siddiqui, Director (Law), PTA and Gul Hassan, Assistant Director (Law), PTA for Petitioner.

Azid Nafees, Advocate Supreme Court for Respondent.

Date of hearing: 26th October, 2015.

2016 C L D 393

[Supreme Court of Pakistan]

Present: Nasir-ul-Mulk, C.J., Amir Hani Muslim and Ejaz Afzal Khan, JJ

Mian JAVED AMIR and others---Appellants

Versus

UNITED FOAM INDUSTRIES (PVT.) LTD., LAHORE and others---Respondents

Civil Appeals Nos.616 and 617 of 2006, decided on 18th June, 2015.

(On appeal against the judgment dated 16-2-2006 passed by the Lahore High Court, Lahore in ICA No.12 of 2005 and the Order dated 27-2-2006 passed in C.M. No.69 of 2006 in ICA No.12 of 2005)

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

----Ss. 9 & 152---Application before Company Court under S. 152 of the Companies Ordinance, 1984---Company Court, jurisdiction of---Factual controversy--- Framing of issues and recording of oral/documentary evidence---Section 9(3) of the Companies Ordinance, 1984 did not abridge or curtail the power of the (Company) Court to enter into a factual inquiry, frame issues for determination, and record oral evidence as well as documentary evidence in the proceedings before it to determine the issues relating to a "company" or its members covered under the Companies Ordinance, 1984---Company Court having jurisdiction under the Companies Ordinance, 1984, could receive evidence in cases it thought appropriate in circumstances of the case---All matters relating to companies irrespective of the fact whether factual controversy was involved or not were required to be tried by a court having jurisdiction under the Companies Ordinance, 1984---Civil court would not be the appropriate forum for resolving such matters.

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

----Ss. 9, 263, 265 & 305---Company Court/Judge, jurisdiction of---Scope---Application before Company Court under S. 152 of the Companies Ordinance, 1984--- Dispute arose between major shareholders of a company due to alleged manipulation in the company record and bogus entries in the register---One of the major shareholders filed an application before Company Court under S. 152 of the Companies Ordinance, 1984---Company Court referred the matter to the Securities and Exchange Commission for appointing an Inspector to investigate into the affairs of the company and submit a report as to whether a case under S. 305 of Companies Ordinance, 1984 was made out or not---Validity---Power to appoint an Inspector under Ss. 263 & 265 of the Companies Ordinance, 1984, vested with the Commission on an application by a member of the company or the Registrar of the Commission--- Issue in the present case that the Inspector was directed to investigate fell within the jurisdiction of the Company Court and could be investigated and looked into by a Company Judge itself--- Appeal was partly allowed accordingly.

Aitzaz Ahsan, Senior Advocate Supreme Court, Uzair Karamat Bhandari, Advocate Supreme Court and M.S. Khattak, Advocate-on-Record for Appellants (in both cases).

Raza Karim, Senior Advocate Supreme Court and Omar Alvi, Advocate Supreme Court for Respondents Nos.1 - 10 (in C.A. 616 of 2006).

Raza Karim, Senior Advocate Supreme Court and Omar Alvi, Advocate Supreme Court for Respondents Nos.2 - 11 (in C.A. 617 of 2006).

Hamid Khan, Senior Advocate Supreme Court for Respondent No. 12 (C.A. 616 of 2006).

Hamid Khan, Senior Advocate Supreme Court for Respondent No.1 (in C.A. 617 of 2006).

Dates of hearing: 10th, 15th, 16th and 18th June, 2015.

2016 C L D 418

[Supreme Court of Pakistan]

Present: Ijaz Ahmed Chaudhry and Gulzar Ahmed, JJ

MUJAHID KAREEM and others---Petitioners

Versus

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

Civil Petition No.1374 of 2015, decided on 14th September, 2015.

(On appeal against order dated 9-3-2015, passed by the Lahore High Court, Multan Bench, Multan, in FAO No.174 of 2010)

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

----S. 19(7)---Civil Procedure Code (V of 1908), O.XXI, Rr. 58 & 59---Auction of mortgaged property---Inordinate delay in challenging execution and auction proceedings despite having knowledge of the same---Effect---Dismissal of application for cancellation of auction proceedings---Petitioner stood as guarantor for a loan advanced by the Bank to the loanee---Bank filed a recovery suit against the loanee, which was decreed---During execution proceedings loanee expired and his legal heirs were joined as judgment debtors---On orders of the court mortgaged property of loanee was sold in auction proceedings--- Petitioner/guarantor filed an application before Banking Court under S. 19(7) of Financial Institutions (Recovery of Finances) Ordinance, 2001 read with O. XXI, Rr. 58 & 89, C.P.C. for cancellation of sale of mortgaged property by contending that he was living abroad and had no knowledge of the recovery suit and the execution proceedings---Validity---Recovery suit filed by Bank against the loanee was not defended and ultimately ex parte decree was passed, which was never challenged by anyone in any proceedings---Petitioner/guarantor took no steps for liquidating the decretal amount to the Bank nor did he deposit the same in the Banking Court within the time provided by the law---Bank, in such circumstances, had to auction the mortgaged property for recovery of its dues under the decree---Petitioner/guarantor had knowledge of filing of the suit, execution proceedings and sale of mortgaged property but took no steps for stopping the auction of the mortgaged property---Decree was passed in the year 2001 but the guarantor deposited decretal amount in the year 2009, after the mortgaged property had been auctioned and such auction had been confirmed, registered and possession delivered to the auction purchaser---No reason had been assigned as to why petitioner/ guarantor initiated proceedings belatedly---Purpose of filing application for cancellation of auction proceedings seemed to be to linger on the matter and delay the recovery of the Bank dues for culmination of the proceedings---Contentions raised by petitioner/guarantor were not supported by the record---Petition was dismissed accordingly and leave was refused.

Hamid Ali Shah, Advocate Supreme Court and Arshad Ali Ch. Advocate-on-Record for Petitioners.

Sardar Riaz Karim, Advocate Supreme Court and Ch. Akhtar Ali, Advocate-on-Record for Respondent No.1.

Muhammad Hassan Bilal Buzdar, Advocate Supreme Court and Syed Rafaqat Hussain Shah, Advocate-on-Record for Respondent No.3.

Nemo for other Respondents.

Date of hearing: 14th September, 2015.

2016 C L D 480

[Supreme Court of Pakistan]

Present: Mian Saqib Nisar, Sh. Azmat Saeed and Maqbool Baqar, JJ

ZAKARIA GHANI and 4 others---Petitioners

Versus

MUHAMMAD IKHLAQ MEMON and 8 others---Respondents

Civil Review Petition No. 383 of 2005 in Civil Appeal No. 670 of 2002, decided on 5th January, 2016.

(Against the judgment dated 27-6-2005 of this Court passed in Civil Appeal No. 670 of 2002)

Per Mian Saqib Nisar, J; Maqbool Baqar, J agreeing; Sh. Azmat Saeed, J, dissenting.

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

----O. XXI, Rr. 89 & 90---Sale of immoveable property in execution of a decree---Application to set aside such sale either under O. XXI, R.89 or under O. XXI, R. 90, C.P.C.---Distinction between O. XXI, R.89, C.P.C. and O. XXI, R. 90, C.P.C stated.

Great deal of difference existed between O. XXI, R. 89, C.P.C and O. XXI, R. 90, C.P.C. Under Order XXI, Rule 89 a judgment debtor was not obligated to show any legal infirmity in the order of sale. He had an unqualified right to have the sale set aside provided he complied with the conditions laid down therein, namely, that he should deposit the full decretal amount in court plus 5% to be paid to the auction purchaser. The time period for making such an application was 30 days.

Order XXI, Rule 90, C.P.C. proceeded on a different basis. In order to succeed it was mandatory for the judgment-debtor to satisfy the court, on the merits, that the sale should be set aside on the ground of a material irregularity, or fraud, in publishing or conducting it. Another condition was prescribed by means of the proviso thereto which stipulated that no sale shall be set aside on the ground of irregularity or fraud unless, upon the facts proved before the Court, it was established that the judgment-debtor had sustained substantial injury by reason of such irregularity or fraud. A mere allegation was not sufficient. It has to be established that not merely an irregularity but a material irregularity had taken place, or, in the alternative, that fraud had been perpetrated in the process of carrying out the sale. Even if these conditions were complied with the judgment-debtor must satisfy the court that he had sustained a substantial injury by reason thereof. Yet another condition was prescribed by the second proviso which stated that no application shall be entertained in terms of this provision of law unless and until the judgment debtor deposited an amount equal to 20% of the sum realized at the sale or furnish such security as the court may direct.

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

----S. 18 [since repealed]--- Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 19(2)---Civil Procedure Code (V of 1908), O. XXI, R. 66---Sale of immoveable property in execution of a decree, procedure for---Power of Banking Court to adopt any procedure for sale of immoveable property--Banking Court in the present case ordered sale of immoveable property by directing Nazir of the Court to invite sealed bids through advertisement in the daily newspapers instead of effecting sale through public auction, in terms of O. XXI, R. 66, C.P.C.---Propriety---Banking Court was entitled [in terms of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 (since repealed), and also in terms of the present banking laws, i.e. Financial Institutions (Recovery of Finances) Ordinance, 2001] to follow any procedure deemed appropriate by it to effect sale of immoveable property in execution of a decree---Once an order had been passed by the Banking Court stipulating that the sale was to be made under the Civil Procedure Code, 1908 it was open to the court to switch over to any alternative procedure.

Mumtaz-ud-Din Feroze v. Sheikh Iftikhar Adil and others PLD 2009 SC 207 ref.

(c) Constitution of Pakistan---

----Art. 188---Supreme Court Rules, 1980, O. XXVI---Review of Supreme Court judgment---Plea taken by petitioner during hearing of review petition not raised either in the review petition nor in the certificate in support thereof---Such plea, being an afterthought could not be entertained.

(d) Constitution of Pakistan---

----Art. 188--- Supreme Court Rules, 1980 O. XXVI--- Review of Supreme Court judgment---Scope---Scope of a review petition was very narrow and limited and it hardly seemed appropriate to consider a legal objection which had not been taken at any stage of the proceedings on an initiative of the Supreme Court on its own.

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

----O. XXI, Rr. 66, 89 & 90---Sale of immoveable property through court auction---Sanctity of---Supreme Court observed that sanctity of court auction could only be reaffirmed if judicial sales were only set aside if it was clearly established that there had been fraud---Mere irregularity, even if material, should not suffice unless it could be shown that material loss had been caused---Where the irregularity consisted of errors by the court, or by court officials such as the Nazir, no party should be made to suffer by reason thereof.

General impression in the market was that to purchase a property in a court auction was to purchase not property but litigation. In the normal course purchasers were interested in concluding a transaction as soon as possible and thereafter to take over possession of the property and use it for whatever purposes they had in mind. Wide spread belief was that prudent buyers should refrain from participating in court auctions of property. This lead to two deeply unfortunate consequences. On the one hand the decree holders suffered since the collateral which was being attempted to be sold was eventually sold at a price which may well be far below the market value in a private sale and thus the full decretal amount could not be recovered. Even the judgment debtors suffered. Obviously it was in judgment debtors' interest to obtain the highest possible price for their property. If, however, the negative market perception continued to prevail they also would be deprived of a fair value since very few people would be interested in purchasing their property. This therefore, was a case not merely of one party's legal rights suffering but of both parties suffering. The sanctity of judicial sales needed to be reaffirmed authoritatively and definitively in the public interest as well as in the interest of decree holders and judgment debtors. This could only be done if judicial sales were only set aside if it was clearly established that there had been fraud. A mere irregularity, even if material, should not suffice unless it could be shown that material loss had been caused. Where the irregularity consisted of errors by the court, or by court officials such as the Nazir, no party should be made to suffer by reason thereof.

Hudaybia Textile Mills Limited v. Allied Bank of Pakistan Ltd. PLD 1987 SC 512; Nanhelal and another v. Umrao Singh AIR 1931 PC 33 and American Jurisprudence (2nd Edn. Vol 47, Art.178, p.440 ref.

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

----O. XXI, Rr. 89 & 90---Sale of immoveable property in execution of a decree---Objections by judgment-debtor to set aside sale---Such objections should be raised at initial stage before executing court---Legal right which inhered in a party should be asserted and ex post facto objections should not be entertained thereafter, especially when the law provided a machinery for raising objections as set out in O. XXI, Rr. 89 & 90, C.P.C.--- Where the judgment-debtor felt that he was being harmed by some ministerial order with respect to sale of his immoveable property, which was not in accordance with law, it was his clear duty to assert the same before the court rather than waiting to raise it at the stage of appeal, or further appeal, or in review, or not at all and expect the court to do it for him---Judgment-debtor could not be allowed to do nothing and then after the passage of many years in which third party interests had been created to rely on a technical objection to delay the course of justice.

(g) Words and phrases---

----"Reserve price"---Definition.

(h) Auction--

----'Government owned property'---Sale or privatization through auction---"Reserve price"---Relevance of 'reserve price' in respect of sale/privatization of Government owned property and importance of not disclosing such reserve price to public stated.

In cases of Government owned property which was being privatized a reserve price was often fixed but was deliberately not disclosed to the public at all. The fixation of the reserve price was intended to be an internal guide to the Government in taking a decision as to whether or not to carry out a sale of the property at the highest price bid. The reason it was not disclosed to the bidders was that this may actually cause a loss to the Government. This would be because bidders would assume that if the Government, on the basis of its internal evaluation of the property, had come to a conclusion as to the actual value of the property, they would be reluctant to offer amounts substantially higher. This then was the reason why fixation of a disclosed reserve price could cause a loss to the owner of the property.

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

----O. XXI, R. 66---Sale of immoveable property in execution of decree---Court auction---'Reserve price'---Scope and significance---Court had the discretion to decide whether or not to sell judgment-debtor's property and at what price keeping in mind that it had to act fairly to both the decree holder and the judgment-debtor---Reserve price in the normal course had no special significance unless judgment-debtor had an apprehension of fraud or collusion, in which case he could ask the court to have a reserve price fixed.

In auction sales it was the Court which had to decide whether it wished to sell or not to sell judgment-debtor's property and at what price. The court in taking such decision essentially struck a balance in terms of which it was fair to both the decree holder and the judgment-debtor. It however always bore in mind the fact that, after a decree had been passed, the decree holder had a crystallized legal right to get the property sold if the judgment debtor persisted in not paying the decretal amount. A judgment-debtor could not plead that prices were abnormally low at present and if the sale was delayed for some months or years a higher price could be obtained. The court would simply ensure a fair and even playing field and then proceed to sell or dispose of property at the highest price someone was prepared to pay at the prevalent time and in those circumstances. A judgment-debtor could not object to the same because when he failed to discharge his obligation to pay the decretal amount he must suffer the consequences. Insofar as potential bidders were concerned it was obvious that the Nazir's valuation of the property was not likely to be decisive one way or the other. All bidders would unquestionably carry out their independent valuation of the property before making an investment. Thus the reserve price in the normal course had no special significance. However the position would be different in cases of manifest fraud. If, for example, an auctioneer was acting in collusion with someone and proceeded to dispose of the property at a nominal price without making the requisite publicity then most certainly the court would intervene to prevent such a fraud taking place. It was for this very reason that if a judgment debtor was apprehensive of foul play he should make a specific request in advance, or as soon as practicable thereafter, to have a reserve price fixed.

Lanvin Traders, Karachi v. Presiding Officer, Banking Court No.2 Karachi 2013 SCMR 1419 ref.

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

----O. XXI, R. 66---Sale of immoveable property in execution of decree---Proclamation of sales by public auction---Error of court in not mentioning reserve price at time of issuance of sale proclamations---Objection regarding non-mentioning of reserve price not raised by judgment-debtor before High Court or Supreme Court---Effect---Auction purchaser could not be blamed and consequently non-suited for error of court especially when judgment-debtor had not raised any objection regarding reserve price before any forum---Supreme Court noted that although the auction purchaser was not at fault in the present case, however judgment-debtor had perhaps been severely treated by the Bank (decree holder), thus taking into account the broader equities of the present case from a humanitarian perspective, the ends of justice would be met if instead of the original price, in addition to the amount already deposited in court by the auction purchaser an additional amount of Rs.1,25,00,000 (one crore and twenty five lacs) was also deposited by him--- Review petition was disposed of accordingly.

Per Sh. Azmat Saeed, J; dissenting with Mian Saqib Nisar, J.

(k) Constitution of Pakistan--

----Art. 188---Review of Supreme Court judgment---Scope---Power of review stemmed from the possibility of judicial fallibility and was exercised in exceptional circumstances in the aid of justice to avoid gross injustice and in view of the necessity to avoid perpetuating such illegality, which could not be allowed to remain on the record---Review was not synonymous with an appeal and did not include rehearing of the matter in issue nor would be warranted merely because the conclusion drawn was wrong or erroneous but was limited to eventualities where something obvious had been overlooked or where there was a glaring omission or patent mistake of fact or law, which was self-evident, manifest and floating on the surface, materially affecting the outcome of the adjudicatory process---Where such material mistake or error had resulted in injustice or an illegality, the Court should not hesitate or be reluctant to make necessary corrections to undo the injury caused thereby.

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

----O. XXI, R. 85---Sale of immoveable property in execution of a decree---Terms and conditions of sale---Payment of balance consideration---Court fixing a period of one month for deposit of balance consideration---Subsequent order of court directing auction purchaser that he may take steps in terms of O. XXI, R. 85, C.P.C.---Meaning---Such order did not mean that time period of one month for depositing balance consideration had been extended by the court in any way in terms of O. XXI, R. 85, C.P.C.---Auction purchaser in the present case failed to deposit balance consideration within the stipulated period of one month---Failure to deposit the balance consideration by an auction purchaser may result in setting aside the sale. [Minority view]

Terms and conditions for sale were advertised with the approval of the Executing Court and in accordance therewith, the balance consideration was required to be paid immediately upon confirmation of the sale by the Executing Court. The sale was confirmed vide order dated 26.02.2001. However, by the same order, auction purchaser was allowed one month's time to deposit the balance consideration. A perusal of the order dated 26.02.2001 did not disclose any conscious adjudication by the Court, for granting such indulgence of extension of time beyond the period as contemplated by the terms and conditions of the sale. Be that as it may, the time allowed to auction purchaser to deposit the balance consideration was "within one month from today". Admittedly, the said balance consideration was not deposited within one month but in fact was deposited on 30.3.2001.

Time for deposit of balance consideration was not extended by the Executing Court. Executing Court had merely stated in its order that auction purchaser may take steps in terms of Order XXI, Rule 85, C.P.C. Perusal of the Order XXI, Rule 85, C.P.C. revealed that the steps to be taken in terms thereof were to deposit the balance sale price within 15 days from the date of the sale of the property. In the present case, sale was confirmed by the Court on or before 26.02.2001. The only other steps to be taken or privilege advanced to the auction purchaser would be to take advantage of any set-off, if permitted. In such circumstances, it was very difficult to accept that in fact the period of one month to deposit the balance consideration set forth by the court in its order had been extended. Auction purchaser never argued that a prayer for extension of time had been made. There was no clear and unequivocal order passed to the effect that such time was extended for deposit of the balance consideration.

Failure to deposit the balance consideration by an auction purchaser may result in setting aside the sale.

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

----O. XXI, R. 66---Sale of immoveable property in execution of decree---'Reserve price'---Scope and significance---In sale of immovable properties under O. XXI, C.P.C., the reserve price must be fixed and the absence thereof may vitiate the entire process.

Lt. Col. Nawabzada Muhammad Amir Khan and others v. The Controller of Estate Duty, Government of Pakistan, Karachi and others PLD 1962 SC 335 and Abdul Ghaffar-Abdul Rehman v. Asghar Ali PLD 1998 SC 363 ref.

Muhammad Akram Sheikh, Senior Advocate Supreme Court for Petitioners.

Khalid Anwar, Senior Advocate Supreme Court for Respondent No.1.

Date of hearing: 3rd November, 2015.

2016 C L D 560

[Supreme Court of Pakistan]

Present Sarmad Jalal Osmany, Muhammad Athar Saeed and Mushir Alam, JJ

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN---Appellant

Versus

HYDERABAD BEVERAGE COMPANY PRIVATE LIMITED and others---Respondents

Civil Appeal No. 42-K of 2010, decided on 26th September, 2014.

(Against judgment dated 20-2-2009 of High Court of Sindh at Karachi, passed in High Court Appeal No.287 of 2007)

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

----S. 133---Discharge of surety/guarantor by variance in terms of contract---Continuous guarantee---Scope---Finance agreement between bank and borrower with respondent standing as guarantor/surety---Default by borrower---Concession/settlement agreement between bank, borrower and guarantor for rescheduling the loan arising out of the original finance agreement---Liability of guarantor/surety would continue in such circumstances as liability of guarantor/surety was co-extensive with the principal borrower, and more so since guarantor had waived his right and or defence in the present case against any variation of loan agreement.

Guarantor in widest terms agreed and consented that the bank could settle the debt by extending any concession "you think fit with or without reference or notice to me at all times without prejudice to this Guarantee and without discharging or in any way affecting my liability hereunder, grant time or other indulgence to or accept or make any composition or arrangement with the customer or any person or persons liable in respect of the indebtedness and liability hereby guaranteed and also vary, abstain from perfecting, exchange, renew, discharges, release, realize, enforce and deal with any securities, guarantees, obligations or decrees now or hereafter held by you in respect thereof". In the face of such pledge, the guarantor had bartered away his rights and or defence against any variation of contract, if any, under section 133 of the Contract Act, 1872 and "waived all surety-ship or other rights at any time inconsistent with the term hereof".

Aftab A. Sheikh v. Trust Leasing Corporation Limited 2003 CLD 702 and Lloyds Steel Industries Ltd. v. Indian Oil Corporation Ltd. AIR 1999 Delhi 248 ref.

Guarantee in the present case, was a continuing guarantee, consideration of which was the original finance agreement. Borrower defaulted in repayment where after, original finance agreement, was negotiated for a settlement as offered by the bank to which the guarantor was also a party thus, guarantor was liable under his guarantee being continuing guarantee. Such word of honour of guarantor under the original guarantee and subsequent supplemental agreement/guarantee was for the benefit of principal borrower arising out of original finance agreement. Bank rescheduled the loan amount that had swollen to Rs.33.50 million and had agreed to accept Rs.9.00 million in satisfaction of entire outstanding liability in installments. Guarantor had given his approval and consent to such rescheduling, in most unequivocal terms in the letter of guarantee. Any rescheduling, composition or manner of repayment in installment or any grace shown by the bank was with the concurrence and within the sight and contemplation of the borrowers as well as of guarantor, at the time of supplemental agreement and guarantee. Liability of surety was co-extensive with the principal borrower. Therefore, the guarantor continued to be bound by the terms of the guarantee. Record further showed that the incentive package offered to the borrower was not availed and same was withdrawn by the bank. Even otherwise, any abortive or attempted variation in terms of contract, which did not become effective, would not absolve the guarantor/surety of original contracted liability. Once the incentive package was withdrawn parties including the surety/guarantor were relegated to their respective original position as before the incentive offer was made and or acted upon. Respondent, in the present case, could not be absolved from his liability as guarantor/surety in respect of the loan advanced to the borrower.

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

----S. 133---Discharge of surety/guarantor by variance in terms of contract---Loan agreement between bank and borrower---Person standing as guarantor/surety for loan---Variation of loan agreement---Scope---Variation of contract (loan agreement), within the contemplation of S. 133 of the Contract Act, 1872, meant material variation or alteration in the original contract, that may prejudicially or adversely affect the surety---Any composition or concession offered by the creditor, whereby, rescheduling the liability with substantial markup waived or written-off leading to reduction in liability of borrower was normal banking practice, and the same did not amount to variation of finance agreement.

A.I. Chundrigar, Advocate Supreme Court for Appellant.

Abrar Hassan, Advocate Supreme Court for Respondent No.6.

Sanaullah Noor Ghouri, Advocate Supreme Court for Respondent No.7.

Date of hearing: 25th February, 2014.

2016 C L D 895

[Supreme Court of Pakistan]

Present: Ejaz Afzal Khan, Sardar Tariq Masood and Faisal Arab, JJ

Messrs WORLD TRANS LOGISTICS and others---Petitioners

Versus

SILK BANK LIMITED and others---Respondents

Civil Petition No. 3729 of 2015, decided on 29th January, 2016.

(On appeal against the judgment dated 27-10-2015 passed by the High Court of Sindh, Karachi in Ist Appeal No.79 of 2015)

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

----Ss. 172, 151 & 152---"Pledge of goods" in mercantile practice for obtaining finance facility---Pledge of raw materials or stock-in-trade by industrial or commercial enterprise---Pledge of goods created by giving pledgee-bank only constructive possession of goods and not actual possession--- Pledgor retaining possession of pledged goods with the freedom to deal with them in the ordinary course of business---Pledgor holding the pledged goods on trust for the pledgee-bank---Principles.

Under the Contract Act, 1872 a pledge was ordinarily construed to mean delivery of an article to the pledgee by the pledgor as security for a debt or for carrying out some engagement that had been committed by the pledgor with the pledgee. An article owned by the pledgor was physically delivered to be kept by the pledgee as security until the commitment of the pledgor with the pledgee was honoured. However, in mercantile practice another form of pledge had also developed. Under this form, the actual delivery of goods was not entrusted to the pledgee as only constructive possession of the pledged goods was handed over. In this manner, the pledgor was allowed to utilize the pledged goods in his ordinary course of business. Examples of such form of pledge were pledge of raw materials and stocks-in-trade of an industrial or commercial enterprise which needed to be consumed on regular basis in the ordinary course of business. On account of such use continuous change took place in the inventory. The inventory was to be replenished by the pledgor. Hence entire current inventory stood covered under the contract of pledge on which the pledgee could exercise his right to take over in the event of breach of the contract by the pledgee. Such form of pledge attached certain conditions on the pledgor, for instance maintaining a register to record the particulars of the pledged goods and their time to time utilization and communicate to the pledgee changes in the level of inventory on weekly or fortnightly or monthly basis; or the value of the inventory of the pledged goods was to be maintained to a level which met the value of the security provided under the contract of pledge; or to hold the pledgee harmless against any loss, damage or deterioration caused to the pledged goods for any conceivable reason; or obtain insurance cover against any loss, damage or deterioration that may be caused to the pledged goods.

In the said form of pledge, the pledgor wore two hats, one that of a pledgor and the other that of a person authorized by the pledgee to hold the pledged goods on trust for the pledgee with the freedom to deal with them in the ordinary course of business. On account of enjoying such freedom, the pledgor was obligated to ensure that while dealing with the pledged goods, the security provided for the debt was not diluted or destroyed to the disadvantage of the pledgee. Furthermore, as the actual possession of the goods under pledge was entrusted to the pledgor, the standard of care in relation to pledged goods, as envisaged under sections 151 and 152 of the Contract Act, 1972 purely fell on the pledgor. If freedom to utilize the pledged goods was not made available to the pledgor engaged in some industrial or commercial enterprise and physical possession was retained by the pledgee then this would immobilize the pledgor from utilizing such goods in ordinary course of his business. The whole purpose of obtaining the finance under such type of pledge against raw materials or stocks-in-trade would thus stand frustrated.

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

----S. 172--- "Pledge of goods" for obtaining finance facility from bank---Pledgee-bank only having constructive possession of goods---Actual possession of goods with pledgor (loan defaulter) with permission to deal with them in ordinary course of business---Misappropriation of the pledged goods---Pledgee-bank not liable for such misappropriation as it only had constructive possession of goods---Pledgor (loan defaulter) was responsible for taking care of the pledged goods in such circumstances.

Valid pledge could be created not only by actual delivery of articles but also by handing over constructive possession only. Pledgee retained a mere right to take possession of the pledged goods in case the pledgor committed default in discharge of his obligation. The character of pledge was not lost merely because actual physical possession of the pledged goods was not delivered to the pledgee.

Pledgee-bank, in the present case, only had constructive possession over the pledged goods. Letter of pledge showed that pledgor (loan defaulter) was permitted by pledgee-bank to deal with the pledged goods. As pledgor (loan defaulter) was at liberty to deal with the pledged goods in his ordinary course of business, it was required under the letter of pledge that pledgor shall maintain a register for recording changes in the inventory of pledged goods that occurred on account of its consumption of the goods from time to time. Furthermore, the letter of pledge also provided that in case any loss or damage or deterioration in the value of goods was caused that shall be borne by the pledgor (loan defaulter) without any responsibility whatsoever on the pledgee-bank. So it was apparent that only constructive possession was delivered to the pledgee-bank and actual possession of the pledged goods was with pledgor (loan defaulter). Hence it was for the pledgor (loan defaulter) to take care of the goods as a man of ordinary prudence would take of his own goods and in case any loss, damage or deterioration was caused to the pledged goods, the pledgee-bank could not be held accountable. In the present case, as the pledgee-bank was only having constructive possession of the pledged goods, therefore, it was not liable to account for the alleged theft or misappropriation of the pledged goods.

Lallan Prasad v. Rahmat Ali and another AIR 1967 SC 1322; Messrs Ali Traders Rice Dealer Gujranwala through Sole Proprietor and another v. National Bank of Pakistan 2015 CLD 1; Askari Bank Limited v. Waleed Junaid Industries and others 2012 CLD 1681; Sardar Muhammad v. Muhammad Israr and others 1995 SCMR 1356; A. M. Burq and another v. Central Exchange Bank Ltd. and others PLD 1966 (W.P) Lah. 1 and Apollo Textile Mills Ltd. and others v. Soneri Bank Ltd. 2012 CLD 337 distinguished.

Syed Waqar Hussain Naqvi, Advocate Supreme Court for Petitioners.

Nemo for Respondents.

Date of hearing: 29th January, 2016.

2016 C L D 2003

[Supreme Court of Pakistan]

Present: Iqbal Hameedur Rahman, Umar Ata Bandial and Ijaz-ul-Ahsan, JJ

JUBILEE GENERAL INSURANCE CO. LTD.---Petitioner

Versus

RAVI STEEL COMPANY---Respondent

Civil Petition No. 1287-L of 2016, decided on 29th June, 2016.

(On appeal from the judgment/order dated 06.04.2016 passed by Lahore High Court, Lahore in R.F.A. No. 992 of 2012)

Insurance Ordinance (XXXIX of 2000)---

----Ss. 124(2) & 123(5)---Limitation Act (IX of 1908), Ss. 12 & 29---Appeal against decision of Tribunal---Limitation period of 30 days for filing appeal, commencement of---Uncertified copy of Tribunal's decision---Perusal of provisions of S. 124(2) of the Insurance Ordinance, 2000 read with S. 123(5) thereof, revealed that there was no requirement for filing 'certified copy' of the Tribunal's decision along with the appeal thereagainst---In the present case when the appellant selected the course of filing his appeal with the aid of an uncertified copy of the Tribunal's decision, which was already available with him on 3-10-2012, it was clear that starting point of limitation was the date on which the appellant had knowledge of and was handed over a copy of the decision by the Tribunal---Appellant was aware of the Tribunal's decision and had received copy thereof on 3-10-2012---Accordingly, the appeal filed by the petitioner on 3-11-2012 was time barred---Petition for leave to appeal was dismissed accordingly.

Mian Allah Nawaz, Senior Advocate Supreme Court and A.H. Masood, Advocate-on-Record for Petitioner.

Zaheer-ud-Din Babar, Advocate Supreme Court and Ibrar Ahmed, Advocate Supreme Court for Respondent.

2016 C L D 2025

[Supreme Court of Pakistan]

Present: Anwar Zaheer Jamali, C.J., Mian Saqib Nisar, Amir Hani Muslim, Iqbal Hameedur Rahman and Khilji Arif Hussain, JJ

SHAHIDA BIBI and others---Appellants

Versus

HABIB BANK LIMITED and others---Respondents

Civil Appeal No. 280-L of 2009, decided on 29th September, 2016.

(Against the judgment dated 16-4-2009 of the Lahore High Court, Lahore passed in E.F.A. No. 489 of 1999)

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

----S. 6---Repeal of an Act---Effect---Any act done or any action taken or purported to have been done or taken under or in pursuance of the repealed Act, shall in so far as it was not inconsistent with the provisions of new Act, be deemed to have been done or taken under the corresponding provisions of the new Act---Litigant was provided protection with respect to any right, privilege, obligation or liability acquired or accrued under any enactment repealed.

(b) Interpretation of statutes---

----Retrospective effect---Scope---Unless the Legislature enacted a new law to be specifically retrospective, and that too with great particularity of language, the courts were not to assume retrospectivity.

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

----Ss. 7(7), 18 & 28---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance (XXV of 1997), S. 12 [since repealed]---Banking Tribunals Ordinance (LVIII of 1984), S. 11 [since repealed]---Execution proceedings instituted under the Banking Tribunals Ordinance, 1984, transferred to the Banking Court established under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997, and then the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Retrospective effect---Scope---Section 28 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, which was a repealing section, did not indicate that the Legislature meant for said Act to be applied with retrospective effect---Question of retrospective application of the provisions of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997 and Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, to the execution proceedings, in the present case, did not therefore arise---In the absence of any saving clause, the relevant provisions of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997 [and then the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997] were to apply on the date of transfer of such execution proceedings and thereafter---Banking Court was not required to proceed de novo, rather from the stage which the proceedings had reached immediately prior to the transfer as envisaged by S. 7(7) of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Appeal was dismissed accordingly.

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

----S. 18---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance (XXV of 1997), S. 12 [since repealed]---Property mortgaged with Bank---Execution proceedings---Sale of property by Bank without intervention of the court---Procedure---Sale by private treaty---Sale by sealed tenders---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997 clearly permitted for sale by way of private treaty, subject to the written notice of option to purchase being provided to the judgment debtor, however such provision only came into effect from the date of promulgation of the 1997 Ordinance till its repeal, i.e. from 4.2.1997 to 31.5.1997---On the other hand the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 allowed a banking company to sell the mortgaged property by sealed tenders, thereby implying that sale by private treaty was no longer permissible under the said Act (such situation prevailing from 31.5.1997 onwards till the said Act was repealed).

Section 12 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Ordinance, 1997 dealt with execution of decrees and provided that where a banking company was a mortgagee of any property belonging to the judgment-debtor, the banking company may sell such property without the intervention of the Banking Court either by public auction or by private treaty to any person or purchase such property on its own account. Further, where the banking company wished to sell the property by private treaty or to purchase it on its own account it was to, before concluding the sale, give to the judgment debtor an option by a notice in writing for purchasing or redeeming such property at the price at which the banking company proposed to sell or purchase within such period as the banking company may specify in such notice which was not, in any case, to be less than seven days. Therefore the 1997 Ordinance clearly permitted for sale by way of private treaty, subject to the written notice of option to purchase being provided to the judgment debtor. However these provisions only came into effect from the date of promulgation of the 1997 Ordinance till its repeal, i.e. from 4.2.1997 to 31.5.1997, after which the relevant provisions of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 came into force.

Provisions governing execution of decree under the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 were contained in section 18 of the said Act, which provided that in cases of mortgaged property a banking company could sell the same with or without the intervention of the Banking Court by inviting sealed tenders in which case the banking company was to invite offers through advertisements in one English and one Urdu newspaper having a wide circulation in the city in which the sale was to take place giving not less than thirty days' time for submission of offers, provided that before conclusion of the sale the judgment-debtor was to be given an opportunity to purchase the property at a matching price to be paid in cash within a period of thirty days. There was a clear departure in the wording of section 18 of the 1997 Act from that of section 12 of the 1997 Ordinance, the former allowing a banking company to sell the mortgaged property by sealed tenders, and the latter by private treaty, thereby implying that sale by private treaty was no longer permissible under the 1997 Act. This remained the situation prevailing from 31.5.1997 onwards (till the said Act was repealed.

(e) Banking Tribunals Ordinance (LVIII of 1984) [since repealed]---

----S. 11(3)---Property mortgaged with bank---Execution proceedings---Sale of property by Bank through private treaty/negotiation with auction bidder without intervention of the court---Judgment-debtor not given option to purchase through a notice---Effect---Section 11(3) of the Banking Tribunals Ordinance, 1984 required the Bank (decree holder) in case of sale through private negotiation to give to the judgment-debtor, by a notice, the option to purchase or redeem the property, as the case may be, at the same price within such time as the banking company may supply in such notice---Such option, which was a right conferred upon the judgment-debtor, was never afforded to him in the present case, therefore, the sale was not made as per the law and could not be sustained---Appeal was dismissed accordingly.

(f) Administration of justice---

----Where law required an act to be done in a particular manner it had to be done in that manner alone and such dictate of law could not be termed a mere technicality.

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

----S. 19---Civil Procedure Code (V of 1908), O. XXI, R. 66---Sale of judgment debtor's property by court---Public auction---Alternate modes of sale---Duty of court---Scope---In execution proceedings the court of law must always proceed to employ the principles of 'balancing' and 'proportionality' in order to accomplish a state of affairs where the rights of both the decree-holder and those of the judgment-debtor were secured---Similarly court must be conscious of protecting a third party such as the auction purchaser---Court held the rights of every litigant equally dear---Ideal manner of sale of the judgment-debtor's property was indeed through public auction, but sale(s) of property in execution proceedings were essentially distress sales and the circumstances were far from ideal, therefore the legislature in its wisdom had allowed alternative means of sale---Court may depart from a preferred mode of sale if the circumstances warranted such departure, but when it did depart therefrom it must be through a conscious application of mind because it must itself be convinced that a less "ideal" mode of sale was necessitated by the circumstances prevailing and these must be set out in order to reassure all the parties that the sale proceedings were open and transparent and the court was conscious of its solemn duty---Executing Court should not give its "tacit consent" to a new/different mode of sale as it would not meet the standard of openness required of the executing court.

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

----S. 19---Civil Procedure Code (V of 1908), O. XXI, R. 66---Sale of judgment-debtor's property by Executing court---Public auction---Alternate modes of sale---Executing Court adopted public auction as the mode of selling judgment-debtor's property---Whether having once adopted a mode of execution as set out in the Civil Procedure Code, 1908, an Executing court could deviate therefrom and adopt an alternative means of sale---Executing court may indeed adopt a different method of sale if required, the only proviso being that such change in course must be after due application of mind by assigning justifiable reasons---To hold otherwise was to shackle the court in an undesirable manner and hold it hostage to its own earlier orders. [Muhammad Attique v. Jami Limited and others PLD 2010 SC 993 held to be "correct law"---Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108 and National Bank of Pakistan v. Paradise Trading Company 2015 CLD 366 held to be "per incuriam and not correct law"].

Muhammad Attique v. Jami Limited and others PLD 2010 SC 993 held to be correct law.

Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108 and National Bank of Pakistan v. Paradise Trading Company 2015 CLD 366 held to be per incuriam and not correct law.

Mian Muhammad Nawaz, Advocate Supreme Court and Raja Muhammad Sabir, Advocate Supreme Court for Appellants.

Muhammad Shuja Baba, Advocate Supreme Court for Respondent No.1.

Shahid Ikram Siddiqui, Advocate Supreme Court for Respondents Nos. 2 - 3.

2016 C L D 2102

[Supreme Court of Pakistan]

Present: Anwar Zaheer Jamali, C.J., Amir Hani Muslim and Faisal Arab, JJ

AKBAR ALI and others---Appellants

Versus

STATE BANK OF PAKISTAN and others---Respondents

Civil Appeals Nos. 1359, 1360, 1446, 1447, 1448 and 1511 of 2013, decided on 2nd June, 2016.

(On appeal against the judgment dated 4.7.2013 passed by the Peshawar High Court, Mingora Bench (Dar-ul-Qaza) Swat, in Writ Petitions Nos. 41, 166, 841, 1203, 1230, 1469, 1470, 1705, 1779, 1781, 2082 of 2011 and 25, 91, 116, 132, 156, 200, 358, 529 of 2012)

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

----Ss. 25 & 41---State Bank of Pakistan SMEFD Circular No. 1/2011 dated 02.02.2011---Write off of loans in certain areas affected by terrorism---Beneficiaries of such scheme---Scope---In order to rehabilitate business and industrial activities severely affected by the acts of terrorism in certain parts of the country, the Federal Government announced a relief package for such areas---Pursuant to such announcement, the State Bank of Pakistan issued SMEFD Circular No. 1/2011 dated 02.02.2011 ("the Circular")---In terms of said Circular, loans that were extended by financial institutions for their utilization in certain areas and had remained outstanding as of 31.12.2009 were to be written-off on certain conditions---Impact of such write-off on the financial institutions was to be borne by the Federal Government in the shape of providing subsidy to the affected financial institutions---Employees of the financial institutions located in the areas covered by the Circular claimed that they be also extended the benefit of the write-off scheme as they were also working in the areas to which benefit of the scheme had been extended---Validity---Circular of State Bank was followed by a clarificatory letter describing the scope of its application---Said letter provided that the loans extended by the financial institutions to their employees were not eligible for write-off under the Circular---Any category of persons who were excluded from the grant of benefit could not seek a write-off of its financial liability even if it related to the period or the areas covered under the scheme---Write-off package was intended to rehabilitate the business and industrial community of certain specified areas that were badly affected by terrorism, possibly for the reason that they may not close their businesses and shift to other areas, as such shifting might result in a decrease in commercial and industrial activities and an increase in unemployment ratio in the affected areas---Thus the whole purpose of the write-off scheme was to encourage business and industrial activities in such affected areas---Employee of a financial institution located in the affected areas, who had obtained loan from his financial institution, he being already gainfully employed could not be said to have been adversely affected by the hostile business or industrial environment---Claim of employees of financial institutions as borrowers, by no stretch of imagination fell within the object and scope of the write-off scheme---Appeal was dismissed accordingly.

(b) Administration of justice---

----Courts give effect to law or to any instrument having the force of law---Court of law cannot grant a concession under any legally enforceable instrument to a person who is not entitled thereunder.

Kh. Azhar Rasheed, Advocate Supreme Court and Ahmed Nawaz Ch., Advocate-on-Record (Absent) for Appellants (in C.As. 1359-1360 and 1447-1448 of 2013).

Z.K. Malooka, Advocate Supreme Court for Appellants (in C.A. 1511 of 2013).

Haji M. Zahir Shah, Advocate Supreme Court/Advocate-on-Record for Appellants (in C.A. 1448, 1511 of 2013, C.M.As. 7981 of 2013 and 4609 of 2014).

Raja Abdul Ghafoor, Advocate-on-Record/Advocate Supreme Court for State Bank of Pakistan (in all cases).

M. Saeed Khan Shangala, Advocate Supreme Court and M. Ajmal Khan, Advocate-on-Record (Absent) for Respondent No.4 (in C.As. 892, 895 of 2012).

M. Saeed Khan Shangala, Advocate Supreme Court and M. Ajmal Khan, Advocate-on-Record (Absent) for Respondents Nos.21, 23 and 48 (in C.A. 898 of 2012).

M. Saeed Khan Shangala, Advocate Supreme Court and M. Ajmal Khan, Advocate-on-Record (Absent) for Applicants (in C.M.A. 5415 of 2015).

Farooq Zaman Qureshi, Advocate Supreme Court for Respondents Nos. 5 and 8 (in C.A. 1359 of 2013).

Khawaja M. Farooq, Senior Advocate Supreme Court for N.B.P. (in C.As. 1359 and 1360 of 2013).

Ghulam Shoaib Jally, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for HBL (in C.As. 1359, 1447, 1448 of 2013).

Ghulam Shoaib Jally, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for Respondents Nos. 5, 68 (in C.A. 1446 of 2013).

Ghulam Shoaib Jally, Advocate Supreme Court and Syed Rifaqat Hussain Shah, Advocate-on-Record for HBL (in all cases).

Syed Zalfiqar Abbas Naqvi, Advocate Supreme Court (Nemo) for Bank of Khyber (in C.As. 1359, 1360, 1447 of 2013 and C.M.A. 7965 of 2013).

Mian Muhammad Hanif, Advocate Supreme Court and M. S. Khattak, Advocate-on-Record for Respondents Nos. 4-12 (in C.A. 1447 of 2013).

Mian Muhammad Hanif, Advocate Supreme Court and M. S. Khattak, Advocate-on-Record for Respondents Nos. 4 and 5 (in C.A. 1511 of 2013).

M. Ajmal Khan, Advocate-on-Record/Advocate Supreme Court (Absent) for Respondent No.1

Qari Abdul Rasheed, Advocate-on-Record for Respondent No.2.