CLD 2024 Judgments

2024 C L D 1069

[Competition Commission of Pakistan]

Before Abdul Rashid Sheikh and Saeed Ahmad Nawaz, Members

IN THE MATTER OF: SHOW CAUSE NOTICE ISSUED TO: UNILEVER PAKISTAN LIMITED

On Complaint Filed By

RECKITT BENCKISER PAKISTAN LTD. FOR DECEPTIVE MARKETING PRACTICES

File No.376/OFT/Unilever/CCP of 2020, decided on 31st July, 2024.

(a) Words and phrases---

----Germ---Meaning.

Matter of Protector and Gamble 2017 CLD 1609 rel.

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

----S.10(2)---Deceptive marketing practice---Advertisement content---Impact---Guidelines---Ordinary consumers are unlikely to investigate types of laboratory tests conducted to substantiate claims made about a product---Such consumers are primarily attracted to bold advertising claims displayed on packaging and in TV Commercials and readily rely upon highly appealing descriptions---It is essential that claims made are clearly and conspicuously qualified to justify their reliability and validity in wide spectrum of real life social conditions.

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

----S.10(2)---Deceptive marketing practice---Advertisement content---Scientific evidence---Advertisement must provide minimum level of substantiation required in terms of competent and reliable scientific evidence---In absence of such evidence claims are called misleading and deceptive regarding products characteristics constituting violation of S. 10(2)(b) of Competition Act, 2010.

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

----Ss. 10 & 30---Deceptive marketing practice---False and misleading claims---Infringement---Advertisement content---Disclaimer on packaging---Respondent company was issued show cause notice for using false and misleading claims about product in question---Validity---There was no report to sufficiently establish measurable superiority of the product over the products of competitors---Disclaimer on packaging of product in question was equally incomprehensible for consumers---Respondent failed to present empirical evidence or reliable data, such as comprehensive market research, sales figures, scientific studies or validation by a relevant third-party to substantiate their claim---Advertising such claim by respondent company tentamount to distribution of false and misleading information to consumers in violation of S. 10(2)(b) of Competition Act, 2010---Respondent company committed violations of S.10 of Competition Act, 2010, which continued even after issuance of show cause notice and persisted---Respondent company demonstrated clear intent of deliberate claims for same product in different countries, with worst deception occurring in Pakistan---Competition Commission imposed fine upon respondent company---Show cause notice succeeded, in circumstances.

In the matter of Proctor and Gamble 2017 CLD 1609; In the matter of M/s. China Mobile Pak Limited and M/s Pakistan Telecome Mobile Limited 2010 CLD 1478; Pfizer Inc., 81 F.T.C. 23 (1972) and Oxford English Dictionary ref.

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

----S.10(2)---Deceptive marketing practice---Infringement---Advertisement content---Disseminating false or misleading information to consumers in violation of Ss. 10(2)(b) & 10(2)(c) or 10(2)(d) of Competition Act, 2010 constitutes an inherent infringement of S.10(2)(a) of Competition Act, 2010 by detrimentally impacting competitors' business interests---Deceptive marketing distorts fair competition, giving undue advantage to an undertaking in breach of law, to detriment of returns (quantitative interests), brand image and product reputation (qualitative standing) of competitors---Correlation between deceptive marketing of one undertaking and potential harm to the business interests of the competitors, is logical and verifiable---Such principle is applicable unless exceptional circumstances warrant a divergent interpretation in a specific case, potentially absolving the undertaking from liability under S. 10(2)(a) of Competition Act, 2010.

Barrister Haroon Dugal, Advocate Supreme Court, Waqar Waraich and Ms. Subhe Naseeb for Reckitt Benckiser Pakistan Limited.

Khawaja Aizaz Ahsan, Hamza Malik, Shaheer Roshan and Ms. Abiyya Kasmani for Unilever Pakistan Limited.

2024 C L D 1230

[Competition Commission of Pakistan]

Before Saeed Ahmad Nawaz and Salman Amin, Members

IN COMPLIANCE THE ORDER OF THE HONORABLE LAHORE HIGH COURT (MULTAN BENCH) LAHORE DATED 02-10-2023, IN INTRA COURT APPEALS NOS.185, 186, 187 of 2023, ALL TITLED S.M. FOOD MAKERS LIMITED V. FEDERATION OF PAKISTAN ETC.

(File No: 338/ISMAIL INDUSTRIES/OFT/CCP/2019) (File No: 354 / ENGLISH BISCUITS/OFTCCP/2019) (File No: 325/HILAL-FOODS/OFT/CCP/2018), decided on 26th August, 2024.

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

----S.59---Expression "notwithstanding anything to the contrary contained in any other law for the time being in force"---Effect---Expression "notwithstanding anything to the contrary contained in any other law for the time being in force" is meant to give precedence to the provisions of Competition Act, 2010 over any other Act or Rules which were in force at the time of the enactment---Provisions of Competition Act, 2010 have overriding effect over conflicting or comparative provisions of laws of any other administrative or regulatory bodies specifically with respect to matters covered under the Competition Act, 2010.

(b) Maxim---

----Lex specialis derogat legi generali---Connotation---In legal history and practice lex specialis derogat legi generali means where two laws govern same factual situation, a law governing specific subject matter (lex specialis) overrides the law which governs general matters on the same subject (lex generalis).

Syed Mushahid Shah v. Federation of Pakistan 2017 SCMR 1218 rel.

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

----Ss.10, 30 & Schedule---Intellectual Property Organization of Pakistan Act (XXII of 2012), Ss. 2(g) & 13(xx)---Deceptive market practice---Deceptive passing off---Anti-competitive practice---Competition Commission, jurisdiction of---Overlapping of two laws---Scope---Maxim "lex specialis derogat legi generali"---Applicability---Show cause notice was issued to respondent company for employing deceptive marketing practices---Plea raised by respondent company was that the Competition Commission did not have jurisdiction in the matter---Validity---There was no overlapping jurisdiction in the matters related to deceptive marketing especially concerning the issue of trade dress (passing off) between Intellectual Property Organization and Competition Commission and there was no question of para materia or parallel jurisdiction---Commercial and economic activities of businesses and commercial entities involved in production or distribution of goods or services with a view to increase economic efficiency, ensure fair competition and protect consumers from anti-competitive practice were dealt under the provisions of Competition Act, 2010, which was a special law---Scheme of anticompetitive prohibitions with a mechanism for enforcement was provided in Competition Act, 2010---In the matters of deceptive passing off, Competition Act, 2010 was a specific law (lex specialis) while Intellectual Property Organization of Pakistan Act, 2012 was general law (legi generali)---Special law was to prevail over general law (Lex specialis derogat legi generali)---Competition Commission had exclusive jurisdiction to prevent and prohibit anticompetitive practices and restore market competition whenever any distortion was introduced in violation of prohibitions prescribed in S.10 of Competition Act, 2010---Proceedings were lawfully initiated against respondent company---Objection was dismissed in circumstances.

Syed Mushahid Shah v. Federation of Pakistan 2017 SCMR 1218; A. Rahim Foods (Pvt.) Limited v. K&N'S Foods (Pvt.) Limited 2023 CLD 1001 W.P. No.26929 of 2015; Black's Law Dictionary 6th Edition; C.P.L.A. No.102-L of 2013 and Society of Accounting Education (SOAE) v. CFA Institute, Lahore and another, Civil Appeal No. 2117 of 2017 rel.

Hassan Zafar, Advocate High Court for the M/s. English Biscuits Manufacturer.

Ms. Hania Haroon, Advocate High Court for the M/s. Ismail Industries Limited.

Khurram Shehzad Chughtai, Advocate High Court for the M/s. Hilal Foods (Pvt.) Limited.

Wasim Khokhar, Advocate High Court for the M/s. Volka Foods International Limited.

Shafqat Chohan, Advocate Supreme Court for the M/s. SM Foods Private Limited.

2024 C L D 1292

[Competition Commission of Pakistan]

Before Dr. Salman Ahmed Sidhu, Chairman and Salman Amin, Member

IN THE MATTER OF: SHOW CAUSE NOTICE ISSUED TO M/S DIAMOND PAINT INDUSTRIES (PRIVATE) LIMITED

On Complaint Filed By

M/S NIPPON PAINT PAKISTAN (PRIVATE) LIMITED FOR DECEPTIVE MARKETING PRACTICES

File No.415/OFT/Diamond Paints/CCP/2021/1355, decided on 16th August, 2024.

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

----S.10---Deceptive marketing practice---Misleading information---Scope---Misleading information encompasses omission of material information which is pivotal to a consumer's transactional decision.

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

----S.10---Deceptive marketing practice---Misleading information---Omission of material information---Redeemable tokens, non-disclosure of---Show cause notice was issued to respondent company for not disclosing in TV Commercial (TVC), presence of redeemable tokens in paint buckets---Validity---Most consumers do not buy paint themselves, instead painters / contractors actually make the purchase on behalf of consumers---Beneficiaries of tokens are mostly painters / contractors and not the consumers---Omission of required disclosures in TVC makes consumers unaware of presence of redeemable coupons in buckets which are an inducement for painters / contractors on whom consumers are relying for selecting paint---Practice of respondent company inserting tokens without required disclosure in alleged TVC amounted to misleading information lacking reasonable basis with respect to price of its product---This was a deceptive practice under S.10(2)(b) of Competition Act, 2010---Competition Commission held respondent company as non-compliant and penalty of fine was imposed---Show-cause notice succeeded in circumstances.

In the matter of; Show-Cause Notice Issued to Paint Manufacturers 2012 CLD 808; In the Matter of; Show-Cause Notices issued to the Paint Manufacturers for non-compliance of CCP's Order dated 13.01.2012; In the Matter of; China Mobile Pakistan Ltd. (Zone) and Pakistan Telecom Mobile Ltd. (Ufone) 2010 CLD 1478; In The Matter of; Show-Cause Notice Issued to M/s Proctor and Gamble Pakistan (Pvt.) Limited for Deceptive Marketing Practices 2017 CLD 1609; Reckitt Benckiser 2015; Dry and Acid-Lead Battery Manufacturers 2018; In the Matter of; Show-Cause Notice Issued to Tara Crop Sciences (Pvt.) Limited 2016 CLD 105 and In the Matter of; M/s Al-Hilaal Industries (Pvt.) Limited, 2012 CLD 1861 ref.

Hammad Saeed for Messrs Nippon Paint Pakistan (Private) Limited (Complainant).

Waqas Ahmed Mir, Advocate Supreme Court and Anas Irtiza Awan for Messrs Diamond Paint Industries (Private) Limited (Respondent).

2024 C L D 874

[Competition Appellate Tribunal]

Before Mazhar Alam Khan Miankhel, Chairperson, Muhammad Asghar Ch., Member Technical-I and Raja Saad Sultan, Member Technical-II

Messrs OPTIONS INTERNATIONAL (SMC PVT.) LIMITED---Appellant

Versus

COMPETITION COMMISSION OF PAKISTAN and another---Respondents

Appeal No.45 of 2023, decided on 29th May, 2024.

Competition Act (XIX of 2010)---

----Ss.10 & 41---Trade Marks Ordinance (XIX of 2001), S.86---Competition Appellate Tribunal Rules 2015, R. 25---Competition (General Enforcement) Regulations, 2007, Reglns. 16 & 17---Dominant position, abuse of---Deceptive Marketing Practice---Mis-using brand name---Enhancement of penalty---Appellant company was aggrieved of penalty imposed on it for using logo/trademark of "Starbucks"---Plea raised by appellant was that trademark in question had no commercial existence in Pakistan---Validity---All undertakings are prohibited under S.10(1) of Competition Act, 2010, from entering into deceptive marketing practices without making any distinction between a foreign company not registered or operating in Pakistan---Any undertaking whether based in Pakistan or not for the purpose of S.10 of Competition Act, 2010 and Reglns. 16 & 17 of the Competition (General Enforcement) Regulations, 2007, can file a complaint to protect its legal rights beside an action under Trade Marks Ordinance, 2001, or any other law---Appellant failed to establish its case and directions issued by the Commission for compliance were also not fulfilled--- Commission by taking a lenient view had imposed penalty of Rs.5,000,000/- (Rupees Five Million) but the same was not paid---Competition Appellate Tribunal enhanced the penalty to Rs.6,000,000/- under R.25 of Competition Appellate Tribunal Rules, 2015, as the Competition Commission had noted that appellant was still using some of the images on social media---Appeal was dismissed, in circumstances.

Abdul Ghafoor Sheikh for Appellant.

Hassan Ahsan Mian, Law Officer for CCP for Respondent No.1.

Sana Sheikh Fikree for Respondent No.2.

2024 C L D 39

[Environmental Tribunal (AJ&K)]

Before Raja Rashad Nasim Khan, Chairman and Muhammad Bashir Khan, Member (Technical)

PAKISTAN MOBILE COMMUNICATION LIMITED (MOBILINK) through Authorized Attorney and others---Appellants

Versus

AZAD JAMMU AND KASHMIR ENVIRONMENTAL PROTECTION AGENCY through Director General and others---Respondents

Appeals Nos. 2 and 3 of 2014, decided on 4th October, 2023.

(a) Azad Jammu and Kashmir Environmental Protection Act (IV of 2000)---

----Ss. 5, 15, 11 & 21---Environmental Protection Order, issuance of---Powers--- Scope--- Appellants were companies providing telecommunication services to the people of Azad Jammu and Kashmir ('Companies') who assailed order of the Environmental Protection Agency ('Agency') whereby it decided to issue Environmental Protection Order ('EPO') to them---Contention of the appellants/ companies was that the powers to issue an EPO under S. 15 of the Azad Jammu and Kashmir Environmental Protection Act, 2000 ('the Act 2000') could only be exercised by the Director General of the Agency, whereas the impugned EPO being issued by the Assistant Director without delegation of any power under S. 5(5) of the Act 2000 was coram-non-judice---Held that , the contention of the appellants was based upon misconception as appellants/companies had mistakenly considered the minutes of meetings to be an EPO under S. 15 of the Act 2000---Said document (minutes), in fact, showed the intent of the agency to issue EPO to stop all the functions of the appellants/ companies in Azad Jammu and Kashmir, thus, the contention of the appellants/companies was without substance---One of the appellant/companies had complied with the EPO and resultantly had obtained NOC, while another (appellant) applied for issuance of NOC, so it was necessary for other appellants to obtain their respective NOCs---Environmental Tribunal dismissed the appeals filed by the companies providing telecommunication services, in circumstances.

(b) Azad Jammu and Kashmir Environmental Protection Act (IV of 2000)---

----Ss. 5, 15, 11 & 21---Azad Jammu and Kashmir Environmental Protection Agency Review of IEE and EIA Regulations, 2009---Requirement/submission of Environmental Examination and Environmental Impact Assessment---Powers of the Environmental Protection Agency---Scope---Appellants were companies providing telecommunication services to the people of Azad Jammu and Kashmir ('Companies') who assailed order of the Environmental Protection Agency ('Agency') whereby the Agency issued Environmental Protection Order ('EPO') to them for submitting of Initial Environmental Examination ("IEE") and Environmental Impact Assessment ("EIA")---Contention of the appellants/companies was that under S. 11 of Azad Jammu and Kashmir Environmental Protection Act, 2000 ('the Act 2000'), the filing of IEE and EIA was only required before commencement of the project as the projects-in-question commenced prior to promulgation of Azad Jammu and Kashmir Environmental Protection Agency Review of IEE and EIA Regulations, 2009 ('the Regulations 2009')---Validity---Objects mentioned in the Preamble of the Act 2000 could only be achieved when all projects, whether commenced prior to promulgation of Regulations 2009 or thereafter, were brought within the spheres of the environmental laws, which did not restrict the Agency to regulate the previous projects---Even otherwise, the Act 2000 was promulgated in the year 2000 and the projects were commenced by the appellants after the year 2000---Under S. 11(1) of the Act 2000, the requirement of furnishing an IEE and EIA was incorporated since its inception, whereas Regulations 2009 were framed to regulate the mechanism of filing of IEE and EIA---Thus, the projects of the appellants, having commenced prior to promulgation of Regulations 2009, required filing of IEE and EIA---One of the appellants/companies had complied with the EPO and resultantly had obtained NOC, while another (appellant) applied for issuance of NOC, so it was necessary for other appellants to obtain their respective NOCs---Environmental Tribunal dismissed the appeals filed by the companies providing telecommunication services, in circumstances.

(c) Azad Jammu and Kashmir Environmental Protection Act (IV of 2000)---

----Ss. 5, 15, 11, & 21---BTS (Cell phone) towers, installation/ functioning of---Adverse environmental effects---Appellants were companies providing telecommunication services to the people of Azad Jammu and Kashmir ('Companies') who assailed order of the Environmental Protection Agency ('Agency') whereby the Agency issued Environmental Protection Order ('EPO') to them regarding BTS Towers---Contention of the appellants/companies was that no adverse environmental effects of their BTS Towers had been pointed out---Validity---Adverse environmental effect means impairment of, or damage to, human health and safety or biodiversity or property; pollution and any adverse environmental effect as may be specified in the Azad Jammu and Kashmir Protection Agency Review of IEE and EIA Regulations, 2009---BTS towers were causing adverse environmental effect because they release Radio Frequency radiations (RF radiations); animal or human exposure to RF energy has certain biological effects---RF radiation from Cellular Towers is a class 2B carcinogen, meaning that it is possibly carcinogenic to humans with increased risk of certain types of brain cancer---Health hazards resulting from exposure from towers are such that the threat from cell phone tower is more than that of cell phones due to the constant nature of activity of towers---Tower radiation affects brain in a distressing manner causing irritability, lack of concentration, lack of appetite and sleeping difficulties---Said radiation is a lethal poison that is slowly impairing people and its severity varies depending upon the proximity, age and sex---Effects are more acute among women than men and its severity increases as the proximity to the tower decreases---Mobile tower/phone is deadlier as one can not see it or smell it and its effect creeps up on people after a long period of exposure---Blissful ignorance and indifference only adds to this misery and people around the world, both users and non-users alike are absorbing this slow poison without knowing its fatal effect---Sufficient measures must be taken to abolish self-certification by the operators---Measures should be executed by a trust-worthy third party and continuous monitoring must be done---It is clear from various researches and articles that exposure to radiations emitting from the cell phone towers causes impairment of, damage to human health, which falls within the definition of " adverse environmental effect"---Environmental Tribunal dismissed the appeals filed by the companies providing telecommunication services, in circumstances.

Messrs Rabbiya Associates v. Messrs Zong (China Mobile)" PLD 2011 Kar. 132 ref.

(d) Azad Jammu and Kashmir Interim Constitution Act, (VIII of 1974)---

----Art. 4---Constitution of Pakistan, Arts. 9 & 14---Azad Jammu and Kashmir Environmental Protection Act (IV of 2000), Ss. 5, 15, 11, & 21--- Adverse environmental effects---Right to life and liberty of person---Though the word "life" has been used in the Art. 9 of the Constitution of Pakistan, however, the same has not been defined therein nor in the Azad Jammu and Kashmir Interim Constitution Act, 1974, or in Azad Jammu and Kashmir Environmental Protection Act, 2000, but its value is admitted being very exceptional as it covers all facts of human existence---Right of life and liberty of person as well as right to preserve and protect the dignity of man are guaranteed under Arts. 9 & 14 of the Constitution of Pakistan, with regard to pollution and other adverse environmental effects---Environmental Tribunal dismissed the appeals filed by the companies providing tele-communication services, in circumstances.

Mst. Shehla Zia's case PLD 1994 SC 693 ref.

(e) Azad Jammu and Kashmir Environmental Protection Act (IV of 2000)---

----Ss. 5, 6, 7 & 32---Environmental Protection Agency, powers of---Appellants were companies providing telecommunication services to the people of Azad Jammu and Kashmir ('Companies') who assailed order of the Environmental Protection Agency ('Agency') whereby the Agency issued Environmental Protection Order ('EPO') to them regarding installation of BTS towers ---Whether Environmental Protection Agency was competent to issue guidelines regarding installation of BTS towers or not---Held, that Ss. 5, 6 & 7 of the Azad Jammu and Kashmir Environmental Protection Act 2000 ('the Act 2000) deal with the establishment, function, powers of the Agency whereas S. 32 of the Act 2000 envisages the Agency has the powers to make Regulations---Provisions as stipulated in said sections of the Act 2000 stipulate that the Environmental Protection Agency is competent to make guidelines to streamline the installation and operation of BTS towers within territory of Azad Jammu and Kashmir---Environmental Tribunal dismissed the appeals filed by the companies providing tele-communication services, in circumstances.

Sardar Jam Sadiq for Appellants.

2024 C L D 350

[Sindh Environmental Protection Tribunal]

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

CITIZENS FOR ENVIRONMENT through General Secretary---Appellant

Versus

DIRECTOR GENERAL, SINDH ENVIRONMENTAL PROTECTION AGENCY and 2 others---Respondents

Appeal No. 2 of 2021, decided on 14th November, 2023.

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

----S. 27---Sindh Environmental Protection Agency (Review of Initial Environmental Examination and Environmental Impact Assessment) Regulations, 2014, Regln. 9(2)(c)---Sindh Cultural Heritage (Preservation) Act (XII of 1994), S. 10(1)---Environment Impact Assessment (EIA) Report---Cultural heritage buildings---Protection---Appellant organization assailed Environment Impact Assessment Report issued in favour respondent with regard to construction of multistoried building consisting of six basements---Validity---Culture, Tourism and Antiquities Department was one of the relevant departments whose no objection certificate/clearance or otherwise was required in terms of Regln. 9(2)(c) of Sindh Environmental Protection Agency (Review of Initial Environmental Examination and Environmental Impact Assessment) Regulations 2014, so as to be made part of EIA report, falling within the scope of Sindh Environmental Protection Act, 2014 and Regulations framed thereunder---Certain constructions of buildings etc. were allowed under Sindh Environmental Protection Act, 2014, and some constructions were prohibited under certain terms and conditions, which could not be gone through, when such objections raised by appellant in its comments filed on EIA report were not considered by Sindh Environmental Protection Agency while passing/issuing order in question---Construction of project building had not yet commenced and applicability of various provisions of law and validity of relevant notifications could be considered together with environmental issues, if any, after due compliance of relevant provisions of law by authorities---Sindh Environment Tribunal remanded the matter to Sindh Environmental Protection Agency for issuance of EIA Report afresh, after getting no objection certificate/approval/clearance from Culture, Tourism and Antiquities Department--- Appeal was allowed accordingly.

2009 SCMR 1435; 1975 SCMR 157; 2011 SCMR 8; 2018 SCMR 1885; 2019 SCMR 859; 2017 SCMR 831; 2008 SCMR 1148; PLD 2004 SC 261; PLD 2016 Sindh 31 and PLD 2020 Sindh 85 rel.

Zubair Ahmed for Appellant.

Hamza Hussain Hidayatullah for Respondent No. 2.

2024 C L D 975

[Insurance Appellate Tribunal Punjab]

Before Justice (Retd.) Ali Akbar Qureshi, Chairman and Zafar Iqbal Tarar, Member Legal WIRE MANUFACTURING INDUSTRY LTD.through Authorized Officer---Petitioner

Versus

HABIB INSURANCE COMPANY LTD.---Respondent

Insurance Petition No.273 of 2022, decided on 22nd March, 2024.

(a) Marine Insurance Act (V of 2018)---

----S. 2(D)---Federal Ombudsmen Institutional Reforms Act (XIV of 2013), S.18---Insurance Ordinance (XXXIX of 2000), Ss. 130, 122 & 118---Marine Insurance contract---Insurance matters---Principle of indemnity and doctrine of "subrogation"---Insurance claim after availing loss---Maintainability---Question was whether or not , the petitioner /insured after receiving the compensation of the loss occurred from the shipping company, was entitled to insurance claim---Held, that Marine Insurance has been defined in S. 2(D) of the Marine Insurance Act, 2018, as "Marine Insurance means a contract whereby the insurer undertakes to indemnify the insured in manner and to the extent thereby agreed against marine loses that is to say, the loses incidental to marine adventure"---In insurance matters, the principle of indemnity is the cardinal principle and the doctrine of the "subrogation " is relevant---For "subrogation" it is said that the insurer is entitled to be subrogated to the rights of the insured and not to a contribution from other insurers where he has paid the whole of the loss or more than his proportionate share of it---Insured is entitled to a sum that would practically restore it to the same financial condition as before the damage---Insurance company can recover the amount paid to the insured as it has already compensated the insured---Insurance contract, particularly Marine Insurance Contract, is always a contract of indemnity and indemnity alone and the only purpose is to return the insured to the same position as he was prior to the loss---Principle of indemnity in insurance contract does not permit double compensation and particularly a marine insurance is a contract of personal indemnity and not a contract from which profit can be realized---Even otherwise the insurance loss is the financial damage one suffers due to insurable event and if the same is compensated, the insured is not entitled to ask for the double benefit---In the present case, admittedly, the insured (petitioner) had already been compensated by the shipping company (respondent), and had received $35,000 way back i.e. after about two and half months of filing of complaint before the Insurance Ombudsman---Said compensation of the loss to the petitioner was paid on the written request of the petitioner, which was made about four months before filing said complaint---Therefore, the petitioner who had already been compensated is not entitled to ask for insurance claim, keeping in view the principle of indemnity and doctrine of "subrogation"---Even, the complaint/grievance petition before the Federal Insurance Ombudsman filed by the petitioner was dismissed on account of payment/compensation already having been made to the complainant---Insurance petition was dismissed on ground of principle of indemnity.

Castellain v. Preston and others (1881-85) All Er Rep 493; AIR 1997 SC 2871; Mission National Insurance Company, Plaintiff v. Lowell M. Schulman, Schulman Investment Company, and United Organics Corporation, Defendants 659 F. Supp 270 (1986) and Burnand v. Rodocanachi (2) (7App Cas at p 330) ref.

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

----Ss. 130 & 122---Federal Ombudsmen Institutional Reforms Act (XIV of 2013), S. 18---Complaint before the Insurance Ombudsman, dismissal / rejection of---Insurance petition before the Insurance Tribunal---Maintainability---Doctrine of election of remedy---Scope---Although in order to curb the multiplicity of the litigation/proceedings, the "doctrine of election of remedy" is applied but S. 130(4) of the Insurance Ordinance, 2000, provides that a complainant is not prevented from filing of suit against an insurance company even if his complaint has been rejected by the Federal Insurance Ombudsman---Thus, in the present case, insurance petition was maintainable.

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

----Art. 86(b)---Insurance Ordinance (XXXIX of 2000), S.122---Insurance petition, filing of---Limitation---Petitioner (insured) had itself admitted in relevant para of the insurance petition that the cause of action occurred on 30.04.2017, whereas, the present petition was filed on 19.12.2020 i.e. after more than three and half years of accrual of cause of action---Article 86(b) of the Limitation Act, 1908, was applicable in the present case which provides limitation of three years from the date of occurrence of cause of action---Petitioner, in the insurance petition, had not given any explanation for the said delay nor any record was presented to meet with the objection raised by the respondent/insurance company---Insurance petition was dismissed being time-barred.

Robina Bibi v. State Life Insurance 2013 CLD 477; 2006 MLD 619; 2006 MLD 622 and PLD 2018 SC 828 ref.

Ali Rana for Petitioner.

2024 C L D 1543

[Insurance Tribunal Lahore]

Before Justice (R) Ali Akbar Qureshi, Chairman and Zafar Iqbal Tarar, Member

MUHAMMAD MANSHA---Petitioner

Versus

JUBILEE LIFE INSURANCE---Respondent

Petition No.76 of 2024, decided on 7th October, 2024.

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

----Ss.97, 118 & 122(3)---Insurance Rules, 2017, Rr.41, 54, 56 & 57---Corporate Insurance Agents Regulations, 2020, Regln. 18(f)---Insurance policy---Claim of policy holder---Communication with policy holder---Call Back Confirmation (CBC)---Proof---Duty of insurer---Phrase "thought out the policy cycle"---Scope---Insurance agent, qualifications of---Petitioner / policy holder was aggrieved of failure of respondent / insurer to return, at the time of maturity of policy, the full amount of premium deposited by him along with profits---Plea raised by respondent / insurer was that petitioner / policy holder had been communicated regularly through Call Back Confirmation (CBC)---Validity---Respondent / insurer was bound by law and had no option but to communicate policy holder the status of policy, unit linked policy, statutory funds, creation of statutory fund and units, allocation of units to policy holder and details of investment of amount of premium including name of the company or government security as required by law---Phrase "throughout the policy cycle" and any "ancillary matters" were very significant and were purposely inserted by law maker to safeguard and protect rights and particularly pecuniary rights of policy holder who was the only stake holder in insurance business---Steps or proceedings required to be communicated to policy holder were to be proved and established by insurer, through strong, reliable and cogent evidence---Respondent / insurer failed to prove CBC in accordance with terms of law---Conversation (CBC) recorded by respondent / insurer could not be termed as communication to petitioner / policy holder as CBC was totally silent about creation of funds, units and investment etc. and such type of evidence was not admissible in evidence---Insurance Tribunal decided relevant issues against respondent/insurer and in favour of petitioner / policy holder---Insurance Tribunal directed respondent / insurer to pay premium excluding the paid amount along with liquidated damages as laid down in S. 118 of Insurance Ordinance, 2000---Insurance Tribunal directed Insurance Companies to appoint qualified insurance agents who had qualified the courses; agent must explain each and every aspect of insurance policy, including special terminology in simple words and in the language of prospective policyholder; video should also be made wherein advice of insurer agent and queries raised by intended policyholder should be recorded; such record should be submitted along with all written replies of insurance companies; in the case of filing of insurance petition, the same video should be given on demand to policyholder---Insurance Tribunal further directed Insurance Companies to communicate to policyholder full information regarding policy and any ancillary matters relating thereto, nature of different funds, creation of statutory funds, location of units and investment of premium amount fund in sound equity, including its name, so that policyholder could know value of his / her / its units timely in an effective manner throughout the policy cycle, as provided in Insurance Rules, 2017 and Corporate Insurance Agents Regulations, 2020---Insurer and corporate insurance agent should provide detail of illustrations to prospective policyholder as per the formant provided by the Commission from time to time with profit on maturity or surrender and insurance agents should ensure that illustration plan given in the prospective policy order as to stand alone document and should also provide a reasonable time to understand the illustration before purchasing life insurance policy---Insurers should also ensure that a specified person must carry out insurance need analysis of the prospective policy holder strictly to accommodate with the terms given in Regln. 18(f) of Corporate Insurance Agents Regulations, 2020---Insurance Tribunal also directed that in case prospective policy holder was an illiterate or individual person or was a lady, whether educated or uneducated, the insurer or its agent should ensure presence of an independent educated advice, preferably of male member of her family, who should also be a witness of policy documents---Insurance Tribunal directed bilingual policy documents in Urdu and English in plain and simple language so that the policy holders, if not much qualified, could understand the nature of the plan sold---Insurer should strictly abide by the directions given in R. 56 of Insurance Rules, 2017---Insurance Tribunal also directed that in future all insurance companies dealing in business of life insurance should preferably invest amount of premium after creating the fund chosen by policy holder in a company having at least rating of AA+ issued by Pakistan Credit Rating Agency to protect interest of policy holders and to save the insurer from unnecessary litigation---Pakistan Credit Rating Agency issues rating of different companies from time to time and AA+ company has the capacity of low expectation of credit risk and indicates strong capacity for timely payment of financial commitment and such capacity is not significantly vulnerable to foreseeable events---Insurance companies in any circumstance should comply with such important direction and violation of the same would entail serious consequences---Insurance Tribunal also directed that SECP and all insurance companies must have universal phone numbers and websites which should answer FAQ's and all other questions arising in the minds of policyholders---Insurance Tribunal further directed that insurers should also submit a complete record of compliance of mandatory provisions of law at time of filing of insurance petition before Insurance Tribunal---Insurance Tribunal further directed that the SECP as regulator of all insurance companies, should ensure that insurance companies are complying with such directions---Petition was allowed accordingly.

PLD 2019 SC 675; 2021 SCMR 522; 2016 PLC (C.S.) 1219 and 2023 PCr.LJ 1394 rel.

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

----S. 75---Act of "utmost good faith"---Scope---Act of utmost good faith of any party is to be assessed and gauged from the first day till maturity or termination of policy.

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

----S. 77---Language of policy documents---Principle---It is mandatory requirement of law to use plain language while drafting policy documentation, so that prospective policy holder can easily understand terms of policy, benefits and responsibilities of insurer during the currency of the policy---Failure to comply with mandatory requirement given in S. 77 of Insurance Ordinance, 2000 precludes insurer from refusing payment of claim on the ground of non-compliance or non-disclosure by policy holder of any fact mentioned in policy documents.

Petitioner in person.

2024 C L D 431

[Insurance Tribunal Multan]

Before Justice (Retd.) Muhammad Khalid Alvi, Chairperson and Syed Ali Abbas District and Sessions Judge, Member

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Authorized Officer/Attorney---Petitioner

Versus

Mst. RIFFAT ASGHAR---Respondent

Application No. 7 of 2023, decided on 25th October, 2023.

Insurance Ordinance (XXXIX of 2000)---

----S. 122---Civil Procedure Code (V of 1908), S. 144---Insurance claim---Claim amount already received by the widow/nominee, recovery of---Judgment being per incuriam---Effect---Insurer availed policy in the year 1995 but died in the year 1998---Insurance Tribunal dismissed application of the widow/nominee of the insurer, however, her claim amount was decreed by the High Court, and in execution she received part amount in the year 2010---After lapse of more than three years, State Life Insurance Corporation ('the Corporation') filed, in the execution before the Insurance Tribunal, an application under S. 144 of the Civil Procedure Code, 1908 for the restitution of the claim amount already paid to the widow/respondent---With reference to the case titled Mst. Robina Bibi v. State Life Insurance reported as 2013 CLD 477 ('judgment-in-question'), the petitioner (Corporation) contended that all the judgments passed by the Division Benches of the High Court were declared to be per incuriam in which the insurance policies were issued prior to the promulgation of the Insurance Ordinance, 2000, thus the same was applicable in case of the respondent (widow/nominee)---Plea of the widow/respondent was that when the High Court accepted appeal in her favour allowing her claim, the judgment-in-question was not in field, and that she being a lady of advanced age had already consumed the(received) claim amount for her day to day life---Validity---In the present case though the judgment passed by the High Court in favour of respondent(widow/nominee) was ,no doubt, declared to be per incuriam but the respondent/widow had already received the claim amount much before the judgment-in-question was passed---It was only a technical question which resulted in the judgment-in-question to be per incuriam---Respondent' husband was insured by the petitioner/Corporation and respondent as nominee was entitled to his death claim for which she suffered rigors of litigation over decades---Merits of respondent's case were also held in her favour by the High Court in appeal preferred by her---No mala fide or fraud could be attributed to the respondent (widow/nominee)---Application filed by the State Life Insurance Corporation under S. 144 of the Civil Procedure Code, 1908, for restitution/refund of the claim amount having been received by the respondent (widow/nominee) of the insurer, being meritless, was dismissed.

PLD 2008 SC 2013; PLD 2008 SC 522 and 2021 CLD 686 ref.

Mst. Robina Bibi v. State Life Insurance 2013 CLD 477 distinguished.

Qazi Mansoor Ahmed for Petitioner.

2024 C L D 18

[Islamabad]

Before Sardar Ejaz Ishaq Khan, J

SIDDIQSONS ENERGY LIMITED---Appellant

Versus

PRIVATE POWER AND INFRASTRUCTURE BOARD (PPIB) and another---Respondents

F.A.O. No. 58 of 2022, decided on 11th September, 2023.

Civil Procedure Code (V of 1908)---

----O. XXXVIII, R. 5 & O. XXXIX, Rr. 1, 2---Specific Relief Act (I of 1877), Ss. 42 & 54---Suit for declaration, injunction and recovery of damages---Encashment of performance guarantee---Attachment before judgment---Proceeds of performance guarantee---Plaintiff company resisted encashing of performance guarantee by defendant Board on the ground that notice of demand was defective---Trial Court declined to issue interim injunction against encashing of performance guarantee---Validity---Proceeds of performance guarantee drawn and resting with defendant Board were not property of plaintiff company, for that would essentially tantamount to rendering judgment for plaintiff company---Essential conditions under O. XXXVIII, R. 5, C.P.C., for attachment before judgment did not demonstrate circumstances to identify that defendant authorities intended to dispose of its assets to defeat any decree that might be passed in favour of plaintiff company---High Court declined to order deposit of the proceeds of performance guarantee with Court, as such order would be practically equivalent to an attachment before judgment and the relief was molded accordingly---High Court in exercise of jurisdiction under S. 94(e), C.P.C., directed defendant authorities to report to Trial Court immediately if and when total net realizable value of its liquid plus near-cash equivalent assets would decline to an amount which was equal (i) the total sum of the provisioning for sums in litigation in its accounts, (ii) plus the sum of plaintiff company's performance guarantee encashed by defendant authorities [if not included in (i)], and (iii) plus 10 percent of the sum of (i) and (ii) above---High Court further allowed that plaintiff company may file an application for appropriate orders, including attachment before judgment, and Trial Court would then pass an order on such application---Application was disposed of accordingly.

Muhammadi v. Ghulam Nabi 2007 SCMR 761; Ibrahim v. Rahmatullah 1985 SCMR 241; Balgamwala Oil Mills (Pvt.) Ltd. v. Shakarchi Trading AG and 2 others PLD 1990 Kar. 1; Nazar Mohammad v. Ali Akbar PLD 1989 Kar. 635; Synthetic Foams Limited v. Simplex Concrete Piles (India) AIR 1988 Delhi 207; Isgec Heavy Engineering Ltd v. Indian Oil Corporation Ltd. (2021) SCC Online Delhi 4748 and Muhammad Athar Hafeez Khan v. Ssangyong and Usmani JV PLD 2011 Kar. 605 ref.

Nadir Altaf, Abdullah Alim Qureshi and Malik Omair Saleem for Appellant.

Skandar Bashir Mohmand, Hashim Ali Khan and Barrister Khush Bakht for Respondent No. 1.

Hisham Ali Khan for Respondent No. 2.

2024 C L D 220

[Islamabad]

Before Sardar Ejaz Ishaq Khan, J

NATIONAL HIGHWAY AUTHORITY (NHA) through Chairman---Appellant

Versus

Messrs SARDAR MUHAMMAD ASHRAF D. BALOCH (PRIVATE) LIMITED and another---Respondents

F.A.O. No. 70 of 2022, decided on 3rd October, 2023.

Arbitration Act (X of 1940)---

----Ss. 30, 33 & 39---Arbitration---Objections against award---Legal advice, non-compliance of---Appellant/National Highway Authority was aggrieved of dismissal of its objections by Trial Court against award which was made rule of the Court---Validity---Appellant/Authority had legal experts rendering opinions and memoranda on probability of success of a challenge to a claim or to an award---Members of appellant/Authority should have recorded in their minutes of meetings as to why they chose to differ from legal advice if it recommended accepting the award without further contest---Such accountability would become all the more important where award had stipulated ongoing late payment charges that kept on accumulating until those were paid---Appellant/Authority had made matters worse for itself by frivolous contests to the awards for years to come---If appellant/ Authority had paid the award on time, it would not have incurred 3% above the discount rate of State Bank of Pakistan accumulating to a substantial sum---There was no accountability of appellant/Authority on such score, which had caused needless misery for the contractors, apart from being a drain on appellant's/Authority's finances---In any private organization, Board of Directors could have been fired for ignoring legal advice against contest to an award if such advice was given, and not obtaining such advice was itself a negligent act, for the directors were meant to act on expert legal advice and not pretend to be legal experts themselves where their ignorance could translate into tens of millions of rupees of public money being paid out as late payment charges---Such act of appellant/Authority had burdened Courts with disputes that should never have reached the Courts in the first place---High Court declined to interfere in order of Trial Court making award rule of the Court and imposed costs upon appellant/Authority---Appeal was dismissed, in circumstances.

Messrs Joint Venture KG/Rist v. Federation of Pakistan PLD 1996 SC 108; Oil and Gas Development Company Limited v. Messrs Marathon Construction Company and another 2013 CLD 1483; Mian Corporation v. Messrs Lever Brothers of Pakistan Limited PLD 2006 SC 169; Lahore Development Authority v. Khalid Javed Co. 1983 SCMR 718 and Defence Housing Authority, Islamabad v. Multi-National Venture Development Private Limited 2019 CLD 566 ref.

Muhammad Hassan Alam for Appellant.

Babbar Ali Khan and Jawad ur Rahim Malik for Respondents.

2024 C L D 230

[Islamabad]

Before Miangul Hassan Aurangzeb, J

Dr. AZIZ UR REHMAN and others---Petitioners

Versus

FEDERATION OF PAKISTAN through Secretary Cabinet and others---Respondents

Writ Petitions Nos. 3916, 4077, 4371 and 4543 of 2022, decided on 9th December, 2022.

(a) Interpretation of statutes---

----Mandatory provision---Scope---Whenever intent of a statute is mandatory, it is clothed with a negative command.

Atta Muhammad Qureshi v. Settlement Commissioner PLD 1971 SC 61; Chaudhry Shujat Hussain v. The State 1995 SCMR 1249; Saadat Khiyali v. City Coordination Officer PLD 2005 Lah. 190 and National Institutional Facilitation Technologies (Pvt.) Limited v. Federal Board of Revenue and others PLD 2020 Isl. 378 rel.

(b) Public functionary---

----Public functionary, obligations of---Compliance of directions---Principle---Politicians are not expected to be well-versed with niceties of law---Corresponding obligation is placed on civil servants/public functionaries to make requirements of law well known to politicians, more so when compliance with a direction issued by a Prime Minister would entail violation of the law.

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

----Ss. 12 & 17(6)---Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order (1 of 1983), Arts. 2(2) & 9---Constitution of Pakistan, Art. 199---Constitutional jurisdiction of High Court---Abdication of powers---Maladministration---Inquiry, initiation of---Proceedings against delinquent officials---No penalty was imposed by authorities under Pakistan Environmental Protection Act, 1997, against officials of Capital Development Authority who commenced the project prior to approval of Environment Impact Assessment---Effect---Abdication of powers by Pakistan Environmental Protection Agency by not submitting any complaint against delinquent officials of CDA and/or the contractor to Environment Tribunal could not operate as a fetter on the Constitutional jurisdiction of High Court in taking notice of such contravention--- Maladministration, under Art. 2(2) of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, included a decision, process, recommendation, act of omission or commission which was contrary to law, rules or regulations or was a departure from established practice or procedure, unless it was bona fide---Continuation of construction activity by CDA and/or the contractor without having obtained an approval of the EIA was a clear violation of S. 12 of Pakistan Environmental Protection Act, 1997---Construction activity continued despite issuance of show cause notice by Pakistan Environmental Protection Agency (PEPA); the continuation of such activity could not be termed as bona fide---PEPA had adequately put CDA to notice that the continuation of construction activity was a contravention of S. 12 of Pakistan Environmental Protection Act, 1997---Wafaqi Mohtasib was empowered under Art. 9 of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, to undertake any investigation into any allegation of maladministration on the part of any Agency or any of its officers or employees on a motion of High Court made during the course of any proceedings before it---"Agency" was defined in Art. 2(1) of Establishment of the Office of Wafaqi Mohtasib (Ombudsman) Order, 1983, which included a statutory body like CDA---High Court instead of shutting it's eyes to such brazen violation by CDA of the mandatory requirements of S. 12 of Pakistan Environmental Protection Act, 1997, referred such maladministration committed by the officials of CDA to Wafaqi Mohtasib for investigation and proceeding in accordance with the law.

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

----S. 17(6)--- Compounding of offence--- Procedure---Authority may compound an offence under Pakistan Environmental Protection Act, 1997 with the permission of Environmental Tribunal or Environmental Magistrate---Such power can only be exercised on application of accused for compounding the offence.

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

----Ss. 12 & 22(1)---Pakistan Environmental Protection Agency Review of Initial Environmental Examination and Environmental Impact Assessment Regulations, 2000, Regln. 10---Constitution of Pakistan, Art. 199---Constitutional petition--- Maintainability--- Alternate and efficacious remedy---Relief, grant of---Principle---Petitioners were members of teaching faculty of Quaid-e-Azam University and were aggrieved of construction of road---Contention of petitioners was that such construction was an environmental hazard for the University and its students studying there---Validity---Exercise of jurisdiction under Art. 199 of the Constitution is purely discretionary---Seldom can a petitioner ask for it as of right---Writs are not issued as a matter of course---While deciding Constitutional petition, High Court can see which way justice lies---High Court is not obliged or bound to interfere in constitutional jurisdiction in every case where order of authorities may be unlawful---In equitable jurisdiction, it is the duty of High Court to preserve public good---High Court, in its discretionary jurisdiction, only exercises judicial discretion in favour of or against authorities according to facts and circumstances of each case---Right to education of students at the University was not restricted or curtailed by construction of road in question---High Court declined to exercise its discretionary jurisdiction in stopping the construction activity---Public hearing pursuant to Regulation 10 of Pakistan Environmental Protection Agency Review of Initial Environmental Examination and Environmental Impact Assessment Regulations, 2000, was conducted by PEPA, and such hearing was also attended by petitioners, who were members of the teaching faculty in Quaid-e-Azam University---After public hearing, PEPA issued approval of EIA report submitted by CDA on road in question---Against such approval, petitioners could prefer an appeal under S. 22(1) of Pakistan Environmental Protection Act, 1997, to Environmental Tribunal---Due to availability of alternative remedy provided by law Constitutional petition was not maintainable---Constitutional petition was dismissed, in circumstances.

Prof. Zahid Baig Mirza v. The C.D.A. PLD 2022 Isl. 398; Raja Zahoor Ahmed v. C.D.A. 2022 SCMR 1411; Murree Brewery Co. Ltd. v. Pakistan PLD 1971 SC 279; Federal Government Employees Housing Foundation v. Ednan Syed PLD 2022 Isl. 273; Shahzada Sikandar ul Mulk v. C.D.A. PLD 2019 Isl. 365; Park View Enclave (Pvt.) Ltd. v. C.D.A. 2018 CLC 947; Imrana Tiwana v. Lahore Development Authority PLD 2015 Lah. 522; Muhammad Shahid v. Punjab Environmental Tribunal PLD 2018 Lah. 356; Sumaira Awan v. Government of Pakistan 2008 CLD 1185; Zahid Akhtar v. Government of Punjab PLD 1995 SC 530; Province of Punjab v. Muhammad Afzal 2004 SCMR 49; Muhammad Akhtar Shirani v. Punjab Text Book Board 2004 SCMR 1077; PLD 2005 SC 873 (Reference No.2 of 2005 by the President of Pakistan); Secretary, Education, N.-W.F.P v. Mustamir Khan 2005 SCMR 17; Muhammad Akram v. Member, Board of Revenue 2007 SCMR 289; Human Rights Cases Nos. 4668 of 2006, 1111 of 2017 and 15283-G of 2010 PLD 2010 SC 759; Government of Pakistan v. Farheen Rashid 2011 SCMR 1; Watan Party v. Federation of Pakistan PLD 2011 SC 997; Yaqoob Shah v. XEN PESCO PLD 2002 SC 667; Ramesh M. Udeshi v. The State 2005 SCMR 648; Ghulam Sakina v. Member Board of Revenue PLD 2004 Kar. 391; Lahore Development Authority v. Imrana Tiwana 2015 SCMR 1739; Zeenat Salim v. Pakistan Naval Farms PLD 2022 Isl. 138; Suo Motu case No.25/2009 (In the matter of cutting of trees for canal widening project, Lahore) 2011 SCMR 1743; Lahore Conservation Society v. Chief Minister of Punjab PLD 2011 Lah. 344; Muhammad Khan v. Federation of Pakistan 2012 CLC 101 and Muhammad Jahangir v. Government of Punjab 2000 MLD 1196 ref.

Petitioners by:

Kashif Ali Malik, Qaiser Abbas Gondal, Umair Khan and Hisaan Khalil Noon in the instant petition.

Aziz ul Haq Nishtar (in W.P. No. 4077 of 2022).

Barrister Atif Rahim Barki and Abdul Manan (in W.P. No.4371 of 2022).

Muhammad Munir Paracha and Noman Munir Paracha for Q.A.U. (in W.P. No. 4543 of 2022).

Respondents by:

Munawar Iqbal Duggal, Additional Attorney-General, Syed Ahsan Raza Kazmi, Mian Faisal Irfan, Deputy Attorneys-General, and Azmat Bashir Tarar, Assistant Attorney-General.

Muhammad Munir Paracha and Noman Munir Paracha for Q.A.U., Dr. Raja Qaiser Ahmed, Registrar and Engr. Bakht Rehman, Dir. (Works) and Sami Ullah Khan, Assistant Registrar Q.A.U.

Hafiz Arfat Ahmed Ch., Muhammad Nazir Jawad, Kashifa Niaz Awan, Muhammad Asim Bhatti, Tariq Zaman Ch., Muhammad Farooq, Miuh Aftab Shah and Auf Rehman Khan for the C.D.A.

Jalil Akhtar Abbasi, Waseem Uddin, Muhammad Furqan Shabbir, Shabbir Mehmood Abbasi and Asad Iqbal for Respondents Nos.10 to 17 (in W.P. No. 3916 of 2022).

Muhammad Ramzan, A.D. Pak. E.P.A.

Dr. Agha Ghulam Haider, Deputy Director Ministry of F.E.& P.T.

2024 C L D 301

[Islamabad]

Before Arbab Muhammad Tahir, J

Messrs SGEC-AMC JV through Authorized Officer---Appellant

Versus

NATIONAL HIGHWAY AUTHORITY through Chairman---Respondent

F.A.O. No. 119 of 2020, decided on 26th July, 2022.

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

----Ss. 20, 34 & 39---Specific Relief Act (I of 1877), Ss. 12, 42 & 54---Suit for specific performance of agreement, declaration and injunction---Arbitration clause---Stay of proceedings---Dispute, non-mentioning of---Appellant/plaintiff company was awarded contract for construction of carriageway but certain differences led to filing of suit---Ad-interim injunction issued by Trial Court in favour of appellant/plaintiff was set aside under S. 34 of Arbitration Act, 1940---Validity---Appellant/ plaintiff did not apply to respondent/defendant (National Highway Authority) for extension of time for completion of the project---If NHA and/or Engineer, as the case was, had declined to accede to genuine request of appellant/plaintiff for the grant of extension in time, then appellant/plaintiff could have been in a good possible position to have blamed NHA for causing undue delay and creating hurdles in the way of appellant/plaintiff towards completion of project---In absence of such resort regarding seeking extension in completion period, appellant/plaintiff exposed itself to unsavory consequences, for which NHA could not be held responsible---It was neither a statutory nor a mandatory requirement of law that application under S. 34 of Arbitration Act, 1940, must specify disputes arising between the parties---Mere non-mentioning of disputes in application under Arbitration Act, 1940 would not render the application bad ipso facto---Court, by itself perusing arbitration clause in the contract and claim raised in the suit, would determine whether claim brought in suit, sought to be stayed or otherwise, was within the submission to arbitration---Trial Court did not just stay proceedings in the civil suit, but had also put aggrieved party at liberty to approach concerned forum by referring the matter to arbitration if so needed---High Court declined to interfere in order passed by Trial Court as the same was not suffering from any legal infirmity---Appeal was dismissed, in circumstances.

2019 YLR 427; PLD 2015 Sindh 319; 2013 MLD 1083; 2009 CLC 676; 2002 CLD 706; 1994 CLC 2000; PLD 1976 Kar. 644; 2011 CLC 157; 1990 CLC 609; 2003 CLD 407; 2016 CLC 1677; 2013 MLD 1499; 2020 CLC 1300 and 2020 CLC 1349 distinguished.

Messrs S.M. Qasim & Co. v. Messrs Ch. Azimuddin PLD 1962 Lah. 95; Farid Virani v. Feroz Virani PLD 2013 Sindh 386; Pakistan International Airlines Corporation v. Messrs Pak Saaf Dry Cleaners PLD 1981 SC 553; Province of Punjab v. Ehsan Fazal and Company, Lahore 1986 CLC 2800; Messrs Associates Construction Limited v. WAPDA 1989 MLD 206; Haji Soomar Haji Hajjan v. Muhammad Amin Muhammad Bashir Limited 1981 SCMR 129 and Rachappa Guruadappa Bijapur v. Gurusiddappa Nuraniappa and others AIR 1989 SC 635 rel.

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

----S. 34---Stay of proceedings---Object, purpose and scope---Provision of S. 34 of Arbitration Act, 1940, has been enacted to make arbitration agreements effective and prevent a party from going to Court contrary to his/its own agreement---Where parties have agreed to refer disputes to arbitration, Court should as far as possible give an opportunity for resolution of disputes through arbitration rather than by judicial adjudication---Powers vested in Court to grant stay under S. 34 of Arbitration Act, 1940, are entirely a matter of discretion of Court---Courts must not ignore to see that parties are held to their bargain and promote sanctity of contracts/agreements---Stay of proceedings in a suit is a more expedient and proper course to follow where there is arbitration clause in agreement/contract---When application under S. 34 of Arbitration Act, 1940, is filed in pending suit, further progress/proceedings in such suit automatically comes to an end and Trial Court's power to act under Civil Procedure Code, 1908, is suspended till a decision is rendered on such application---Court has jurisdiction to entertain suit, however, Court in its discretion may stay the suit but Court has to consider whether discretion should be exercised in a particular case or not---Provision of S. 34 of Arbitration Act, 1940 does not make it obligatory on Court to necessarily refer dispute to arbitration and may exercise discretion to stay proceedings if it is satisfied that there is no sufficient reason why matter should not be referred to in accordance with the arbitration agreement---Arbitration agreement is a contractual undertaking by which parties agree to settle their dispute by way of arbitration rather than to proceed in Court---Whenever, any dispute or difference arises relating to and arising out of arbitration agreement, any party to the agreement may apply for staying of Court's proceedings by filing application under S. 34 of Arbitration Act, 1940---Party who wishes to refer disputes to arbitration has to apply without delay to Court for stay of proceedings particularly in breach of agreement to arbitrate dispute which arises between parties and falls within the scope of arbitration---Word "dispute" has got wide meaning and scope and includes any claim which other party admits under S. 34 of Arbitration Act, 1940---Court has ample powers to exercise its discretion to stay legal proceedings provided that there has been a valid arbitration agreement, proceedings in Court have been commenced, application is made by a party to the proceedings before filing written statement and or taking any other step in pending proceedings and such party is ready and willing to do all the acts necessary for the proper conduct of arbitration.

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

----Ss. 20 & 34---Stay of proceedings---Effect---When Court stays proceedings in suit instituted by either party to agreement containing arbitration clause, parties are left whether to institute arbitration proceedings with the intervention of Court (as provided under S. 20 of Arbitration Act, 1940), or without intervention of the Court (as provided under Chapter-II of Arbitration Act, 1940)---Where parties to suit, who are also parties to arbitration agreement executed prior to institution of suit, jointly apply for matters in dispute between such parties to be referred to arbitration, Court may treat such application as application under S. 20 of Arbitration Act, 1940 and refers disputes to arbitration.

Barrister M. Saad Bhuttar and Tahir Hussain Anchanan for Appellant.

Barrister Asghar Khan for Respondent.

2024 C L D 397

[Islamabad]

Before Miangul Hassan Aurangzeb and Saman Rafat Imtiaz, JJ

ALI WAQAR AZEEM---Appellant

Versus

STANDARD CHARTERED BANK PAKISTAN LIMITED---Respondent

R.F.A. No. 224 of 2023, decided on 13th December, 2023.

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

----Ss. 9, 10 & 22---Suit for recovery of finance---Leave to defend the suit---Limitation, non-consideration of---Effect---Application for leave to defend the suit filed by appellant/defendant was dismissed due to non-prosecution resultantly Banking Court decreed the suit in favour of respondent/plaintiff---Validity---It was not mandatory for Banking Court to decree the suit in favour of respondent/plaintiff upon default of appellant/defendant due to his absence---Even if appellant/defendant failed to file application for leave to defend or had failed to file it in a timely manner leading to its dismissal unless delay was condoned, it was bounden duty of Banking Court to apply its mind to see if respondent/plaintiff had made out a case for decree of the matter---Appellant/defendant's leave application was dismissed by Banking Court simply on account of non-prosecution without considering whether any substantial question of law or fact had arisen therefrom---Banking Court failed to discharge its duty under the law and had adopted procedure alien to the one envisaged in S. 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001---It was the Banking Court which while considering petition for leave to appear and defend the suit should have considered and rendered its findings as to whether it was timely filed---High Court in appellate jurisdiction declined to determine whether petition for leave to appear and defend the suit was time barred or not, as Banking Court failed to consider petition filed by appellant/defendant---High Court set aside judgment and decree passed by Banking Court as it suffered from legal infirmity and the matter was remanded to Banking Court to decide petition for leave to appear and defend the suit afresh---Appeal was allowed accordingly.

Messrs Bahawalpur Cotton Company v. United Bank Limited 2023 CLD 1116; Oil and Gas Development Company Limited v. Muhammad Ilyas Mian 2018 CLC 1666; Pakistan Telecommunication Company Limited (PTCL) v. Mst. Naima Ayub 2013 CLC 1191; Abid Aziz Khan v. Bank of Punjab 2007 CLD 997; Syed Asad Abbas v. Allied Bank of Pakistan 2006 CLD 79; Syed Rashid Hussain v. Bank of Punjab 2005 CLD 1823; National Bank of Pakistan v. Messrs ARK Messrs Ark Garments Industry (Pvt.) Ltd. through Managing Director 2015 CLD 179; Ghulistan Textile Limited v. Askari Bank Ltd. 2013 CLD 2005; Messrs United Bank Limited v. Banking Court No. II 2012 CLD 1556; National Bank of Pakistan v. Pakistan Textile City Limited 2021 CLD 194; Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited 2011 CLD 408; United Bank Limited v. Mehmood Ilyas Khan 2012 CLD 1372; Admore Gas (Pvt.) Limited v. Standard Chartered Bank (Pakistan) Limited 2013 CLD 423; Dr. Jamil Masood Usmani v. Messrs Askari Bank Limited 2016 CLD 387; Askari Leasing Limited v. Sher Bahadur 2011 CLD 1186; Ghulam Rasool v. Zarai Taraqiati Bank Limited (ZTBL) through Bank Manager 2005 CLD 1740; Syed Rashid Hussain v. Bank of Punjab through Managing Director 2005 CLD 1823; Asim Hussain Qadri v. Deuteche Bank 2006 CLD 1129 and Messrs Mumtaz Traders v. Messrs Habib Bank Limited 2009 CLD 169 ref.

Ghulam Qasim Bhatti for Appellant.

Ms. Aaliya Zareen Abbasi for Respondent.

2024 C L D 611

[Islamabad]

Before Saman Rafat Imtiaz, J

ABDUL SAEED---Appellant

Versus

Mrs. NASEEM KHATTAK HUMAYUN and 3 others---Respondents

F.A.O. No.32 of 2023, decided on 14th February, 2024.

(a) Companies Act (XIX of 2017)---

----Ss. 74, 75, 76, 77, 78, 79 & 80---Transfer of shares---Procedure---Provisions of Ss. 74 to 80 of Companies Act, 2017, deal with relationship between transferor/transferee vis-a-vis the company and not between the transferor and the transferee inter se---Such provisions deal with the steps to be taken by transferor or transferee vis-a-vis the company in order to give effect to their agreement for transfer of shares.

(b) Companies Act (XIX of 2017)---

----Ss. 5, 80 & 126---Specific Relief Act (I of 1877), S. 12---Civil Procedure Code (V of 1908), O.VII, R.10---Suit for specific performance of agreement to sell---Return of plaint---Suit filed by appellant / plaintiff was with regard to agreement for sale of shares---Trial Court returned the suit on the ground of lack of jurisdiction under S. 5 of Companies Act, 2017---Validity---Provision of S. 126 of Companies Act, 2017, only pertains to rectification for any fraudulent entry or omission of name of any person in the register of members or if default or unnecessary delay is made in entering the fact of a person having become or ceasing to be a member thereof---No allegation was made in the suit to be covered under S.126 of Companies Act, 2017---Civil Court's jurisdiction is ousted only in respect of suits or proceedings which involved a matter which the Court under S.5 of Companies Act, 2017, is empowered to determine---Controversy between the parties involved dispute regarding agreement for sale of shares by respondents / defendants appellant / plaintiff due to which appellant / plaintiff was seeking specific performance of subject agreement---There is no provision in Companies Act, 2017, which can empower Company Court to exercise jurisdiction in respect of disputes between parties to a share purchase agreement---Jurisdiction of Civil Courts under S. 5 of Companies Act, 2017, is not barred in respect of such disputes---Enforcement of a contract for sale/purchase of shares is covered under Specific Relief Act, 1877---High Court set aside order passed by Trial Court and application filed by respondents / defendant were dismissed---High Court directed Trial Court to proceed with the suit in accordance with law---Appeal was allowed, in circumstances.

Province of Punjab v. Messrs Muhammad Tufail and Company PLD 2017 SC 53; National Highway Authority v. Messrs Put Sarajevo General Engineering Company 2012 CLC 463; Ravi Glass Mills Limited v. I.C.I. Pakistan Powergen Limited 2004 YLR 2503; Messrs Businet International (Pvt.) Ltd. v. Messrs Aramex International (Pvt.) Ltd. 2001 CLC 104; WAPDA v. Mian Ghulam Bari PLD 1991 SC 780; Messrs Brady & Co. (Pakistan) Ltd. v. Messrs Sayed Saigol Industries Ltd. 1981 SCMR 494; Sh. Imam Ali v. Ch. Muhammad Shafi PLD 1956 Lah. 341; Dr. Omar Masood and another v. Syed Amir Hussain Naqvi and another 2019 CLD 931; MCB Bank Limited v. Adeel Shahbaz Steel Mills and others 2023 CLD 655; Zaib Cold Storage and Ice Factory through Sole Proprietor and another v. Messrs Pakistan Industrial Leasing Corporation Limited 2006 CLD 67; Bankers Equity Ltd. v. Iqas Weaving Mills (Pvt.) Ltd. 2001 CLC 169; Tahir Tariq Textile Mills (Pvt.) Ltd. v. N.D.F.C. through Chairman 2001 YLR 846 and Faqir Muhammad v. Federation of Pakistan 2000 SCMR 1312 ref.

National Investment Trust Ltd. v. Lawrencepur Woolen and Textile Mills Ltd. 2002 CLD 527 rel.

Muhammad Ramzan Chaudhry for Appellant.

Sajjad Muhammad Durrani for Respondents Nos.1 to 3.

Syed Muneeza Fatima for Respondent No.4.

2024 C L D 829

[Islamabad]

Before Mohsin Akhtar Kayani and Sardar Ijaz Ishaq Khan, JJ

CIRCLENET COMMUNICATION PAKISTAN (PRIVATE) LIMITED and others---Appellants

Versus

PAKISTAN TELECOMMUNICATION COMPANY LIMITED through General Manager---Respondents

Regular First Appeals Nos.66 of 2013 and 55 and 56 of 2015, decided on 20th February, 2024.

Contract Act (IX of 1872)---

----S. 62---Suit for recovery of damages---Novation of contract---Effect---Respondent / plaintiff company filed suit for recovery of damages against appellant / defendant company---Trial Court decreed the suit in favour of respondent / plaintiff company---Validity---Discharge of original contract under S. 62 of Contract Act, 1872, was only to the extent it was novated, rescinded or altered---Such novated contract did not override intention of parties to novate original contract only partially---Original contract to the extent it was not novated or altered remained binding and operative---For novation excusing performance of previous agreements, it first needed to be established that parties agreed to substitute new contract wholly for the earlier one but it could not be so if accrued obligations under previous contract were kept alive in express terms despite new contract, all the more so where new contract was occasioned due to breach of first contract and injured party included a term in new contract that its claims under the old contract would remain alive---High Court declined to interfere in judgment and decree passed by Trial Court as novation did not excuse performance of accrued obligations under previous settlement agreements---Appeal was dismissed, in circumstances.

Mst. Akhtar Sultana v. Major Retd. Muzaffar Khan Malik through his legal heirs and others PLD 2021 SC 715; Muhammad Farooq and others v. Javed Khan and others PLD 2022 SC 73; BP Refinery (Westernport) Pty Ltd. v. Shire of Hastings (1977) 16 ALR 363 at 376; The Moorcock (1889) 14 PD 64; West Pakistan Industrial Development Corporation, Karachi v. Aziz Qureshi PLD 1973 SC 222; House Building Finance Corporation v. Shahinshah Humayun Cooperative House Building Society 1992 SCMR 19; Philips Electronique v. British Sky Broadcasting [1995] EMLR 472 at 482 and Karachi Municipal Corporation v. Nawabuddin PLD 1961 (W.P.) Kar. 599 ref.

Malik Qamar Afzal for Appellants.

Tariq Aziz for Respondent.

2024 C L D 858

[Islamabad]

Before Miangul Hassan Aurangzeb, J

NATIONAL HIGHWAY AUTHORITY---Appellant

Versus

Messrs KAC-UCC JV and others---Respondents

F.A.O. No.141 of 2023, decided on 2nd May, 2024.

Specific Relief Act (I of 1877)---

----Ss.42 & 54---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for declaration and injunction---Interim injunction, refusal of---Performance guarantee---Encashment---Principle---Respondent / plaintiff was aggrieved of encashing of Performance Guarantee issued on its behalf in favour of appellant / defendant---Trial Court allowed interim injunction restraining encashment of Performance Guarantee furnished on behalf of respondent / plaintiff by insurance company---Validity---Rights and liabilities of parties in a contract of guarantee have to be determined strictly in accordance with terms and conditions of guarantee without recourse to underlined contract---Guarantee, whether captioned as a "bank guarantee" or "performance bond" or "performance security" issued by a bank or an insurance company, is an autonomous contract and imposes an absolute obligation on guarantor to fulfill its terms---It is the language of contract of guarantee that reveals intention of parties---Where a bank / insurance company gives a guarantee in absolute and unconditional terms and where payment is to be made on demand irrespective of the dispute and differences between parties to underlying contract, bank / insurance company is duty bound to honour its obligation and it cannot be prevented by an injunction from honouring such obligation---Irrevocable commitment in the form of irrevocable bank guarantee cannot be interfered with by Courts, except where a case of fraud or irretrievable injustice has been made out---Terms of Performance Security do not defer a claim for its encashment until the resolution of disputes between the parties to underlined contract---Courts do their utmost to enforce a guarantee according to its terms and do not interfere by way of an injunction to prevent its enforcement---High Court set aside interim injunction issued by Trial Courts in favour of respondent / plaintiff restraining encashment of Performance Security in question---Appeal was allowed, in circumstances.

Sambo Construction Co. Ltd. v. Laraib Energy Limited 2021 CLC 1914; Montage Design Build v. Republic of Tajikistan 2015 CLD 8; Standard Construction Company (Pvt.) Limited v. Pakistan through Secretary Ministry of Communications 2010 SCMR 524; Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191; Pak Consulting and Engineering (Pvt.) Ltd. v. Pakistan Steel Mills 2002 SCMR 1781; National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311; Pakistan Real Estate Investment and Management Company Private Limited v. M/s Sky Blue Builders 2021 CLD 518; Husein Industries Ltd. v. Sui Southern Gas Company Ltd. PLD 2020 Sindh 551; Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Limited 2003 CLD 1 and Sirafi Trading Establishment v. Trading Corporation of Pakistan Ltd. 1984 CLC 381 rel.

Malik Muhammad Tariq Rajwana for Appellant.

Sahibzada Uzair Hashim, Ali Ahmad Shah and Raja Hamza Tahir for Respondent No.1.

Malik Zaheer Abbas Tipu, representative for Respondent No.3.

2024 C L D 909

[Islamabad]

Before Miangul Hassan Aurangzeb, J

BLUE ZONE INTERNATIONAL (PVT.) LIMITEDthrough Chief Executive

and 27 others---Appellants

Versus

PAKISTAN STATE OIL COMPANY LIMITED (PSO) through Managing Director---Respondent

Writ Petition No.4100 of 2022 in Regular Second Appeal No.04 of 2018 decided on 29th April, 2024.

Arbitration Act (X of 1940)---

----Ss. 30, 33 & 39---Arbitration proceedings---Locus standi---Concurrent findings of facts by two Courts below---Petitioners were All Pakistan Compressed Natural Gas Association (APCNGA) and CNG marketing companies---Petitioner companies were aggrieved of order passed by Lower Appellate Court maintaining judgment and decree by Trial Court allowing objections of respondent / Pakistan State Oil Company against arbitration award---Validity---Notice for arbitration, statement of claim, application to make award rule of Court and appeal under S. 39 of Arbitration Act, 1940, against judgment and decree passed by Trial Court were all filed by petitioner / APCNGA in its own name---Petitioner / APCNGA was not a party to licenses / agreements, therefore, it could neither have invoked arbitration clause embedded therein, nor have filed application or appeal---High Court declined to interfere with concurrent findings of two Courts below as petitioner / APCNGA was a stranger to licenses / agreements and arbitration proceedings---Concurrent judgments and decrees passed by two Courts below did not suffer from any jurisdictional infirmity or irregularity---Constitutional petition was dismissed, in circumstances.

PLD 2013 SC 224 and K&N International v. Motorway Operations and Rehabilitation Engineering (Private) Limited 2019 CLC 1613 ref.

Asad Ladha and Malik Ghulam Sabir for Petitioners.

Sheikh Naveed Anwaar and Rai Azhar Iqbal Kharal for Respondent.

2024 C L D 931

[Islamabad]

Before Aamer Farooq, CJ

The MD /CEO UNITED INSURANCE COMPANY OF PAKISTAN LIMITED, LAHORE---Petitioner

Versus

The PRESIDENT OF THE ISLAMIC REPUBLIC OF PAKISTAN through Director (Legal), President's Secretariat (Public), Islamabad and 2 others---Respondents

Writ Petition No.2553 of 2020, decided on 31st May, 2024.

Insurance Ordinance (XXXIX of 2000)---

----Ss.122, 125 & 127---Insurance claim---Determination---Ombudsman, jurisdiction of---Petitioner / Insurance company was aggrieved of order passed by Insurance Ombudsman on complaint filed by respondent / insurer---Validity---Controversy between petitioner / company and respondent / insurer involved disputed questions of fact, which required recording of evidence---Delay in providing report of Surveyor was made good and the same was provided but it was about payment of insurance amount that was in dispute---Petitioner / company refused claim of respondent / insurer and such matter could only be resolved by way of recording evidence---High Court set aside order passed by Insurance Ombudsman who had no jurisdiction in the matter and appropriate forum was Insurance Tribunal constituted under S. 125 of Insurance Ordinance, 2000---Constitutional petition was allowed, in circumstances.

Messrs Capital Insurance Co. Ltd. v. Securities and Exchange Commission of Pakistan and 4 others 2013 CLD 1075; Atlas Insurance Limited v. Federal Insurance and others (W.P. No.23312 of 2014); Shafaatullah Qureshi v. Federation of Pakistan PLD 2001 SC 142; Regional Manager, Adamjee Insurance Company Ltd. v. Presiding Officer, District Consumer Court, Lahore and 3 others 2012 CLD 846; Judicial Review of Public Actions by Justice Fazal Karim P.128 PLD 1975 SC 49; Mehram Ali and others v. Federation of Pakistan and others PLD 1998 SC 1445; Dr. Zahid Javed v. Dr. Tahir Riaz Chaudhry and others PLD 2016 SC 637; Habib Bank Limited v. Federation of Pakistan and others 2022 CLD 769; Mst. Parveen Akhtar v. Subash Chandar and others 2016 MLD 1596 and United Bank Limited through Manager v. Banking Mohtasib Pakistan and another 2006 CLD 1226 ref.

Ali Ibrahim for Petitioner.

M. Irfan Zafar Hashmi for Respondent No.3.

Azmat Bashir Tarar, Assistant Attorney General.

2024 C L D 1004

[Islamabad]

Before Miangul Hassan Aurangzeb, J

HYDERABAD CHAMBER OF COMMERCE AND INDUSTRY (HCCI) through duly authorized person---Petitioner

Versus

MINISTRY OF COMMERCE GOVERNMENT OF PAKISTAN through Directorate General of Trade Organization and 4 others---Respondents

Writ Petition No.158 of 2023, decided on 22nd May, 2024.

(a) Trade Organizations Act (II of 2013)---

----Ss. 3, 6(2), 7(2), 9(1) & 21(4)---Trade Organizations Rules, 2013, Sched. B---Constitution of Pakistan, Art.199---Constitutional petition---Trade organization license---Renewal---Principle---Appellant/ petitioner was old Hyderabad Chamber of Commerce and Industry (Old-HCCI) and aggrieved of order passed by Committee of the Federal Cabinet dismissing its appeal against order passed by Directorate General of Trade Organizations (DGTO), cancelling the license issued to it---Appellant/petitioner also assailed grant of license to New-HCCI---Validity---Application of appellant/petitioner for renewal of its license was not filed within the period prescribed by S. 6(2) of Trade Organizations Act, 2013---Appellant/petitioner was entitled to extension of thirty days for filing of such application, which period was to be reckoned from the date "ninety days prior to the expiry of the license"---Law entitled appellant/petitioner to an extension in time for filing an application for renewal of its license up to 06-03-2013 only--- Respondent/DGTO was not vested with the power to entertain application for renewal of license or an application for extension in time for filing such application beyond time limits prescribed in S. 6(2) of Trade Organizations Act, 2013 and its proviso---Respondent/DGTO acted in transgression of S. 6(2) of Trade Organizations Act, 2013 by not just entertaining appellant's/petitioner's application filed on 02.07.2013 for renewal of its license but also by keeping it pending for years and requiring the appellant/petitioner through letters to clear deficiencies in its application---This had the consequence of appellant/ petitioner functioning without valid license since 06-05-2011 when its license had expired---New-HCCI submitted application for grant of license as trade organization to respondent/DGTO on 26-04-2019---By that time, license granted to appellant/petitioner had not been cancelled by Federal Government---During subsistence of appellant/petitioner's license, New-HCCI could not have applied to respondent/DGTO for issuance of license in its favour---More than one trade organization with same name and object could not be granted licenses under the provisions of Trade Organizations Act, 2013 and Trade Organizations Rules, 2013---Respondent/DGTO granted license to New-HCCI after cancelling appellant's/petitioner's license and dismissal of appeal by Federal Government---High Court set aside orders against appellant/ petitioner passed by respondent/DGTO and Federal Government---High Court also set-aside license granted by authorities to New-HCCI as the same had been granted in violation of requirements of S. 9(1) of Trade Organizations Act, 2013---High Court remanded the matter to respondent/DGTO to amend show cause notice and thereafter decide whether or not to cancel appellant's/petitioner's license after affording opportunity of hearing as required by S. 7(2) of Trade Organizations Act, 2013---Constitutional petition was allowed accordingly.

Mirza Abdul Rehman and others v. Director General Trade Organization and others Writ Petition No.4239 of 2023; Karachi Women Chamber of Commerce and Industry v. The Director General/Regulator of Trade Organizations Writ Petition No.2274 of 2023; Mian Naseer Hayat Maggo v. Federation of Pakistan through the Ministry of Commerce 2019 CLD 267; MFMY Industries Ltd. v. Federation of Pakistan 2015 SCMR 1550; Pawan Goel v. KMG Milk Food Ltd. (2008 (142) Comp. Cas 441; Abid Hussain v. Additional District Judge, Alipur 2006 SCMR 100 and Messrs Tariq Brothers v. Controller of Customs 2005 PTD 186 ref.

(b) Trade Organizations Act (II of 2013)---

----S. 7(1)(a)--- License, cancellation of--- Jurisdiction--- Federal Government under S. 7(1)(a) of Trade Organizations Act, 2013 is empowered to cancel license of a trade organization which fails to apply for its renewal within prescribed period or extended period allowed by Director General Trade Organization.

(c) Administration of justice---

----Show cause notice---Penal action---Principle---Order which is penal in nature cannot be passed on a ground which is not mentioned in the show cause notice.

Smt. Hetal Alpesh Muchhala v. Adityesh Educational Institute and others 2009 Supreme Court OnLine 1454; Collector Central Excise and Land Customs v. Rahm Din 1987 SCMR 1840; Commissioner Inland Revenue v. RYK Mills 2023 SCMR 1856; Poja Jaiswal v. Food Corporation of India AIR 1923 Allahabad 86; Commissioner Inland Revenue v. Rose Food Industries 2023 SCMR 2070; Ramlala v. State of U.P. 2023 SCC OnLine (All) 2479 and Associated Switch Gears and Projects v. State of U.P. (MANU/UP/0953/2024) rel.

(d) Trade Organizations Act (II of 2013)---

----S.6(1)---Trade Organizations Rules, 2013, R. 10(2) & Schedule-B---Renewal of license---Principle---Litigation of members---Scope---Licensed trade organization is obligated under S. 6(1) of Trade Organizations Act, 2013 to renew its license every five years---Trade organization's application for renewal of its license is to be made to Director General Trade Organization (DGTO) on the format set out in Schedule-B to Trade Organizations Rules, 2013---Conditions which a trade organization has to fulfill for renewal of its license have been set out in R. 10 of Trade Organizations Rules, 2013---Trade organization whose license is not renewed due to non-fulfillment of conditions set out in R. 10(2) of Trade Organizations Rules, 2013, cannot be said to be discharging statutory obligations in accordance with the requirements of Trade Organizations Act, 2013 and Trade Organizations Rules, 2013---Internal bickering or litigation between members of trade organization does not absolve a trade organization from fulfilling its obligations imposed under Trade Organizations Act, 2013 and Trade Organizations Rules, 2013.

(e) Administration of justice---

----Principles of natural justice---Audi alteram partem---Applicability---Principle of natural justice, unless prohibited by wording of a statute, must be read into each and every statute---Right of personal hearing to a person against whom an adverse order is to be made is to be equated with a fundamental right and an adverse order made without affording opportunity of personal hearing is to be treated as a void order---If principles of natural justice are violated in respect of any decision, it is immaterial whether the same decision would have been arrived at in absence of departure from these essential principles of natural justice---Decision taken in violation of principles of natural justice must be declared to be no decision---Violation of principle of audi alteram partem (no one should be condemned unheard) would be enough to vitiate even the most solemn proceedings---This principle has originated from the Islamic principles of justice.

Abdul Majeed Zafar v. Governor of the Punjab 2007 SCMR 330; Nazir Ahmad Panhwar v. Government of Sindh 2005 SCMR 1814; Collector of Customs, Model Customs Collectorate v. Muhammad Ismail 2023 SCMR 1319; Ashiq Muhammad Khan Mazari v. Chairman Federal Land Commission PLD 1977 SC 461 and Hazara (Hill Tract) Improvement Trust v. Mst. Qaisra Ellahi 2005 SCMR 678 rel.

Ali Nawaz Kharal, Hassan Muneeb Zia, Ayesha Tauqeer Aslam, Narmeen Jamal and Malik Qamar Abbas for Petitioner/Appellant.

Arshid Mehmood Kiani, Deputy Attorney-General.

Ms. Asia Batool, Assistant Attorney General.

Malik Ghulam Sabir for Respondent No.5 (in Writ Petition No.158 of 2023 and for Applicant in C.M. No. 969 of 2022 in C.M.A. No.56 of 2022).

Muzaffar A. Mirza, Chief Prosecutor and Hasnain Raza, SPP, SECP.

Pir Shah Gul Ahmad, Deputy Director, D.G.T.O.

2024 C L D 1055

[Islamabad]

Before Miangul Hassan Aurangzeb, J

CIVIL AVIATION AUTHORITY OF PAKISTAN---Petitioner

Versus

LTH JV and others---Respondents

Civil Revision No.168 of 2024, decided on 22nd July, 2024.

Arbitration Act (X of 1940)---

----S.8---Arbitration---Arbitrators with divided opinion---Umpire, appointment of---Procedure---Statutory notice, non-issuance of---Effect---During arbitration proceedings between the parties, the umpire appointed recused from acting as umpire---Petitioner /Civil Aviation Authority was aggrieved of order passed by Trial Court for appointment of an umpire for arbitration proceedings between the parties---Held, that requirement for appointment of umpire is intended to meet contingency of arbitrators with divided opinion---Where arbitrators are not at variance there is no occasion to refer matter to umpire, who can only be appointed if there are even number of arbitrators---Contract between parties required the arbitrators and not the parties to appoint the umpire---Respondents / contractors did not address notice in question for appointment of substitute umpire to the arbitrators but to petitioner / Authority---Such notice did not conform to requirements of S. 8(1)(b) of Arbitration Act, 1940---Respondents / contractors could not solicit concurrence in appointment of umpire from petitioner / Authority but from arbitrators as that was what the relevant clause of the Contract had provided for---Without a notice by respondents / contractors to the arbitrators to appoint the umpire in place of umpire nominated in contract, the application under S. 8 of Arbitration Act, 1940 could not be entertained by Trial Court, which ought to have pointed out respondents / contractors to the arbitrators who were to concur in the appointment of substitute umpire---As arbitrators had not been required by respondents / contractors to supply vacancy created by recusal of umpire nominated in contract to sit as the umpire, the requirements of S. 8(1)(b) of Arbitration Act, 1940, were not fulfilled, therefore Trial Court did not have jurisdiction to appoint an umpire under S.8(2) of Arbitration Act, 1940---High Court set aside the order passed by Trial Court and respondents / contractors were at liberty to request arbitrators to supply vacancy created due to recusal of umpire nominated in contract---Respondents / contractors could send a notice in writing under S. 8(1) Arbitration Act, 1940, to arbitrators requiring them to supply the vacancy within fifteen days of such notice, in case they did not appoint an umpire---In case arbitrators did not appoint umpire even after notice, then respondents / contractors could apply under S.8(2) of Arbitration Act, 1940, to Trial Court to supply the vacancy---Revision was allowed accordingly.

Excel Techno Solutions FZE, UAE v. Messrs Oil and Gas Development Company Limited 2019 CLC 416; Better Engineered Solutions (Pvt.) Ltd. v. Balochistan Development Authority, Quetta PLD 2023 Isl. 105; Messrs Alpha Insurance Co. Limited v. Messrs Ch. Nizam Din & Sons 2001 CLC 289; Project Director University of Loralai v. Zarif Khan Hussainzai and Brothers 2023 YLR 527; Karachi Dock Labour Board v. Messrs Quality Builders Ltd. PLD 2016 SC 121; Mengal Brothers Transporters (Pvt.) Ltd. v. Federation of Pakistan 2023 MLD 195; Syed Munir Syed v. Sardar Muhammad Kamal Khan 2019 YLR 209; Gul Rehman v. Gul Nawaz Khan 2009 SCMR 589; Muhammad Kamal-ud-Din v. Munir Syed 2022 SCMR 806; Province of Punjab v. Rana & Sons 1996 CLC 69; Keshavsinh Dwarkadas Kapadia v. Indian Engineering Company AIR 1972 SC 1538; Union of India v. Prafulla Kumar AIR 1979 SC 1457; D. Gobindram v. Messrs Shamji K. & Co. AIR 1961 SC 1285; Vedprakash v. Union of India AIR 1984 Delhi 325; Food Corpn. of India v. A. Muhammad Yunus AIR 1987 Kerala 231; Union of India v. Raghunath Singh & Co. AIR 1980 SC 103; Parbhat General Agencies v. Union of India AIR 1971 SC 2298; Misti Enterprises v. Britannia Engineering Products and Services Ltd. AIR 1993 Cal. 272; Union of India v. D.P. Singh AIR 1961 Patna 228; Union of India v. Dev & Co. AIR 1978 Gauhati 91 and Bharat Construction Co. Ltd. v. Union of India AIR 1954 Calcutta 606 rel.

Barrister Yousaf Khosa, Barrister M. Zubair Khan Nasar, Barrister Khushbakht and Malik Omair Saleem along with Sagheer Ahmad Bhatti, Legal Officer, CAA for Petitioners.

Muhammad Masood Khan and Syed Faisal Hussain Shah for Respondent.

2024 C L D 1099

[Islamabad]

Before Arbab Muhammad Tahir, J

Saad Muhammad Abbasi---Appellant

Versus

Syed Ejaz Ali---Respondent

R.F.A. No. 286 of 2022, decided on 5th July, 2024.

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

----O. XXXVII, Rr.1 & 2---Qanun-e-Shahadat (10 of 1984), Arts. 76 & 77---Suit for recovery on the basis of cheque---Secondary evidence, adducing of---Conditions---Trial Court decreed the suit against the defendant / appellant---Record revealed that the plaintiff / respondent, as documentary evidence, exhibited photocopies of the documents (the agreement, bank deposit slip, Bank Statements, the cheque and dishonor slip)---Documents must be proved by primary evidence---In certain cases, the documents can be proved through the secondary evidence in terms of Art. 76 of the Qanun-e-Shahadat, 1984 ('the Order 1984')---Secondary evidence is an exception to general rule and only meant for the purpose to cater to a genuine need and hardship---It is not to be allowed in routine or without complying with the requirements mentioned under Arts. 76 & 77 of the Order, 1984---Contents of the documents can only be proved through secondary evidence if the conditions mentioned under Art. 76 of the Order 1984 are available which should be satisfied first---Said Article provides an alternate mode and method of proving the documents which for various reasons could not be produced---When primary evidence is not available or produced, Law permits secondary evidence which remedy is designed for the protection of person, who despite best efforts is unable, from the circumstances beyond his control, to produce the primary evidence---Where a person is unable to bring the original documents despite reasonable efforts, the Court is competent to admit secondary evidence but at the same time, it should be kept in mind that the said benefit is not intended fora person who intentionally or with some ulterior motive or sinister objects, refuses to produce the documents in court which is in his possession, power or control--- Court is competent to determine whether sufficient ground has been made out or not for the admission of secondary evidence which discretion is to be exercised keeping in the parameters contained in Art. 76 of the Order 1984 and facts and circumstances of each case as secondary evidence is given to prove the existence, contents of documents and nothing more---Impugned judgment on the face of it was short of pre-requisites on the subject---High Court set-aside the impugned ex-parte judgment and decree, and remanded the case to the Trial Court for decision on merits with the direction that the application for leave to appear and defend the suit filed by the appellant/defendant would be deemed to have been allowed on the basis of surety bond having been tendered before the High Court/Appellate Court---Appeal, filed by the defendant, was allowed accordingly.

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

----O. XXXVII , Rr. 1 & 2---Suit for recovery on the basis of cheque---Ex-parte proceedings---Judgment, passing of---Court, powers of---"Court having no option but to decree the suit"---Scope---Trial Court, after conducting ex-parte proceedings against the defendant / appellant , decreed the suit in favour of plaintiff /respondent---Validity---Trial Court while decreeing the suit , in concluding paragraph, observed that Court was left with no option but to decree the suit---Said observation, on the face of it, was contrary to law as not only in an ex-parte case/instance , but even in case of a conceding statement, it is obligatory for the court to appreciate the veracity of the claim of the respondent/ plaintiff---Court is under obligation to see the legality and genuineness of the issue brought before it---Observation that Court was left with no option reflected dealing with the cause in a mechanical manner without application of judicial mind---High Court set-aside the impugned ex-parte judgment and decree and remanded the case to the Trial Court for decision on merits and directed that the application for leave to appear and defend the suit filed by the appellant/defendant would be deemed to have been allowed on the basis of surety bond having been tendered before the High/Appellate Court---Appeal , filed by the defendant, was allowed accordingly.

Misbah Khanum v. Kamran Yaseen and another 2022 SCMR 1629 and Hamid Nasrullah Ranjha v. Civil Judge West Islamabad 2024 MLD 10 ref.

(c) Administration of justice---

----Act of Court shall prejudice no one---Scope---Where any Court did not comply with a mandatory provision of law or omitted to pass an order in the manner prescribed by law, the litigant could not be taxed much less penalized for the act or omission of the Court---Fault in such cases does lie with the court and not with the litigant and no litigant should suffer on such account---In such like situation, where injustice is caused due to an act or omission on the part of court, the courts are required to remedy the defect that occurred as a consequence thereof.

Muhammad Ijaz and another v. Muhammad Shafi through LRs 2016 SCMR 834; Shirin and 4 others v. Fazal Muhammad and 4 others 1995 SCMR 585 and Jai Berham v. Kedar Nath AIR 1922 PC 269 ref.

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

----O. XXXVII, Rr. 1 & 2---Constitution of Pakistan, Art. 10-A---Suit for recovery on the basis of cheque---Ex-parte judgment---Fair trial---Scope---After inability of the defendant to submit surety-bond, Trial Court passed ex-parte decree against the defendant / appellant---Validity---In the FIR registered by the respondent/plaintiff against the appellant/defendant on account of dishononing of the subject-cheque, the appellant/defendant was acquitted after a full length trial---There was nothing on record to show that the respondent/ plaintiff assailed the said judgment of acquittal---Such facts warranted due appreciation and judicial scrutiny for just decision of the case under the principle of fair trial envisaged in Art. 10-A of the Constitution---Said aspects had to be seen in conjunction with the mischief attributed to the appellant/defendant whereby he was held guilty of non-submission of surety bond, and was permanently precluded to contest the suit---Appellant /defendant should be afforded an opportunity to contest the suit---High Court set-aside the impugned ex-parte judgment and decree, and remanded the case to the Trial Court for decision on merits and directed that the application for leave to appear and defend the suit filed by the appellant/defendant would be deemed to have been allowed on the basis of surety bond tendered before the High/Appellate Court---Appeal, filed by the defendant, was allowed accordingly .

Muhammad Faisal Malik for Appellant.

Habib-ur-Rehman for Respondent.

Date of hearing: 31st May, 2024.

Order

Arbab Muhammad Tahir, J.---Through the listed appeal in terms of Section 96, C.P.C., appellant namely Saad Muhammad Abbasi (hereinafter to be referred as 'the defendant' in the suit) assails ex-parte judgment and decree dated 20.04.2022 passed by the learned Additional District Judge, Islamabad West, whereby suit under Order XXXVII, C.P.C., filed by respondent namely Syed Ijaz Ali (hereinafter to be referred as 'the plaintiff' in the suit) on the basis of cheque No. 10398556, worth Rs.10-million dated 23.11.2016 was decreed by observing as under:-

"There is nothing on record to rebut the claim of plaintiff with respect of documentary evidence produced by him. Therefore, in absence of any evidence in rebuttal, the plaintiff's evidence stands against the defendant un-rebutted, un-denied and unchallenged regarding recovery of amount against the negotiable instrument. Therefore, this court has no other option but to decree the 1,00,00,000/- (ten million) and plaintiff is entitled for recovery of above said amount from the defendant. No order as to cost. Decree sheet be prepared." {Emphasis supplied}

1. Precisely, facts relevant and essential for adjudication of the listed appeal are to the effect that on 26.10.2017, the respondent/plaintiff filed the subject suit on the basis of cheque worth Rs.10 million, pursuant to investment agreement dated 03.01.2016, ('the agreement') that stood terminated in the midst on account of stated mischief attributed to the appellant/ defendant due to non-payment of profits due. In response to notice, the appellant/defendant entered appearance and filed application for leave to appear and defend the suit. The Trial Court allowed the said application vide order dated 15.05.2018 subject to furnishing of bank guarantee to the tune of Rs.10-million. The appellant/defendant being dissatisfied with the condition, filed Civil Revision Petition No. 191 of 2018 before this Court which was disposed of vide order dated 04.11.2021, whereby order-in-original dated 15.05.2018 was modified in terms that the appellant/defendant was allowed to submit any security of the like amount to the satisfaction of Trial Court within two weeks.

2. During pendency of C.R. No. 191/2018, the learned Trial Court continued with the proceedings on directions of this Court, framed issues and recorded examination-in-chief of respondent/plaintiff as PW-1, who on 14.12.2020 tendered copy of sale deed Exh-P1, agreement Exh-P2, deposit receipt Exh-P3, bank statements Exh-P4 to P7, termination notice Exh-P8, the cheque Exh-P9, dishonor slips Ex-P10 and P-11, copy of FIR No. 68/2017 under section 489-F, P.P.C. PS Ramna Islamabad as Exh-P12. After recording examine in-chief of the respondent/plaintiff, the case was adjourned for cross-examination. The suit remained pending for the purpose when it was dismissed for non-prosecution vide order dated 06.11.2021.

3. The suit was subsequently restored on the application of the respondent/plaintiff and the appellant/defendant was directed to furnish surety bond of Rs.10-million vide order dated 10.02.2022. For the purpose, case was adjourned to 03.03.2022, 18.03.2022 and lastly for 01.04.2022 when right of the appellant/defendant to appear and defend the suit was closed and the case was set for recording of ex-parte evidence of the respondent/plaintiff. On 15.04.2022 the respondent/ plaintiff got recorded statement wherein he relied upon his statement recorded on 14.12.2020. The learned Trial Court after hearing arguments decreed the suit ex-parte in terms noted in paragraph-1 above, hence instant appeal.

4. Learned counsel for the appellant/defendant argued that even in case where the appellant/defendant is proceeded ex-parte, it is mandatory for the Court to give due consideration to the claim on the touchstone of the principles on the subject. According to the learned counsel, claim of the respondent/plaintiff is, primarily, rested upon distorted facts, based upon inadmissible evidence and concealment of facts including former suits and that in terms of section 96, C.P.C., appellant/defendant retains statutory remedy of appeal to question ex-parte judgment and decree, which in the backdrop of the evidence deserves outright dismissal of suit. The learned counsel also highlighted the previous litigation between the parties on the subject.

5. On the other hand, learned counsel for the respondent/ plaintiff repelled the above submissions by contending that the mischief attributed to the respondent/plaintiff is floating on the record as he not only failed to furnish surety bond within two weeks as directed by this Court but also failed to avail ample opportunities afforded to him before closing his right to defend the suit. The learned counsel argued that there is no contest on the point that there was business relation between the parties, reduced into writing through an agreement, followed by issuance of cheque, not denied by the appellant/defendant therefore in such eventuality, the course adopted by the Trial Court is in accordance with evidence on record therefore, impugned judgment and decree do not call for any interference.

6. Heard, record perused.

7. Before dilating upon the mischief attributed to the appellant/defendant and its consequence, made basis to close his right to contest the suit, it is necessary to ascertain as to whether the course adopted by the trial court for decreeing the suit of the plaintiff had been in accordance with the law and principles on the subject and for the purpose, evidence on record has carefully been gone through in the light of submissions advanced by learned counsel for the parties.

8. It is significant to note that the agreement Ex-P2, bank deposit slip Ex-P3, Bank Statements, the cheque Ex-P9 and dishonor slip P10 are photocopies of the documents. It is well settled that the documents must be proved by primary evidence. In certain cases same can be proved through the secondary evidence in terms of Article 76 of the Qanun-e-Shahadat Order, 1984. The secondary evidence is an exception to general rule and only meant for the purpose to cater a genuine need and hardship. It is not to be allowed in routine or without complying with the requirements mentioned under Articles 76 and 77 of the Order 1984. The contents of the documents can only be proved through secondary evidence if the conditions mentioned under Article 76 are available which should be satisfied first. This Article provides an alternate mode and method of proving the documents which for various reasons could not be produced. When primary evidence is not available or produced, law permits secondary evidence which remedy is designed for the protection of person who despite best efforts is unable, from the circumstances beyond his control, to produce the primary evidence. Where a person is unable to bring the original documents despite a reasonable efforts, the Court is competent to admit secondary evidence but at the same time, this should also to be kept in mind that this benefit is not intended for a person who intentionally or with some ulterior motives or sinister objects refused to produce the documents in court which is in his possession, power or control. The Court is competent to determine whether sufficient ground has been made out or not for the admission of secondary evidence which discretion is to be exercised keeping in view the parameter contained in Article 76 and facts and circumstances of each case as secondary evidence is given to prove the existence, condition or contents of documents and nothing more beyond that. The impugned judgment, on the face of it, is short of pre-requisites on the subject.

9. Bare perusal of crucial document i.e. the agreement Exh-P2 reveals that same is a photocopy of front page with blank reverse side. There is no explanation as to on what grounds, covenants contained therein were admitted as correct. It is for the respondent/plaintiff to establish his case by producing evidence of unimpeachable character as any defect in defense cannot be made basis to accept the claim of the respondent/ plaintiff. The impugned judgment is short of reasoning as to how photocopies were allowed to be exhibited and whether the claim set in plaint had been in accordance with the terms of the agreement Exh-P2 and that the same lend support to the claim of the respondent/plaintiff. It is mandatory for the Trial Court to decide the case strictly in accordance with parameters on the subject. The law, in no way, recognizes acceptance of claim in ex-parte case as it is, without subjecting the same to judicial scrutiny on the touchstone of the principles on the subject.

10. Furthermore, in concluding paragraph, Trial Court observed that "court had left no option but to decree the suit". This observation, on the face of it, is contrary to law as not only in an ex-parte case, but even in case of a conceding statement, it is obligatory for the court to appreciate the veracity of the claim of the respondent/ plaintiff. The court is under obligation to see the legality and genuineness of the issue brought before it. The observation "court left with no option" reflects dealing with a cause in a mechanical manner without application of judicial mind. Reliance is placed upon case of "Misbah Khanum v. Kamran Yaseen and another (2022 SCMR 1629)" and judgment of this Court in the case of "Hamid Nasrullah Ranjha v. Civil Judge West Islamabad" (2024 MLD 10)".

11. It is well settled that the act of Court shall prejudice no one and where any Court did not comply with a mandatory provision of law or omitted to pass an order in a manner prescribed by law, the litigant could not be taxed much less penalize for the act or omission of the Court. Fault in such cases did lie with the court and not with the litigant and no litigant should suffer on such account. Reliance is placed upon case of "Muhammad Ijaz and another v. Muhammad Shafi through LRs (2016 SCMR 834). In such like situation, where injustice caused due to act or omission on the part of court, the courts are required to remedy the defect that occurred as a consequence thereof. Reliance is placed upon Shirin and 4 others v. Fazal Muhammad and 4 others (1995 SCMR 585) and Jai Berham v. Kedar Nath (AIR 1922 PC 269).

2024 C L D 1266

[Islamabad]

Before Miangul Hassan Aurangzeb, J

PAKISTAN POULTRY ASSOCIATION through Secretary General---Petitioner

Versus

REGULATOR OF TRADE ORGANIZATIONS and another---Respondents

Writ Petition No.445 of 2024, decided on 19th April, 2024.

(a) Companies Act (XIX of 2017)---

----S.135(1)---Trade Organizations Act (II of 2013), Ss.14(1) & 14(3)(g)---Trade Organizations Rules, 2013, R.6(1)(h)---Pakistan Poultry Association---Annual General Meeting---Holding of adjourned Annual General Meeting (AGM) of Pakistan Poultry Association (PPA) on the same day without following the law and required quorum---Jurisdiction of Directorate General Trade Organization (DGTO) to issue direction to call AGM of PPA and to take cognizance of complaint filed by respondent---Scope---High Court ruled that DGTO had jurisdiction to take cognizance of respondent's complaint regarding non-compliance of the requirements of proviso to S.135(1) of the Companies Act by PPA---Provisions of Trade Organization Act, 2013 (2013 Act), give far-reaching powers to DGTO to oversee the activities and functions of a trade organization to ensure that they remain compliant with provisions of 2013 Act and 2013 Rules as well as the terms and conditions of their licences---Section 14(1) of 2013 Act provides inter alia that the affairs of a registered trade organization shall be managed and conducted in such manner as the Regulator may direct from time to time---Section 14(3)(g) of the 2013 Act empowers the Regulator to give directions to trade organizations in matters concerning 2013-Act or any rules or directives, made thereunder---Registered Trade Organization is required to conduct its affairs in accordance with and remain compliant with the requirements of the Companies Act, 2017---Directorate General Trade Organizations (DGTO) did not commit any illegality by requiring PPA to call an AGM in accordance with the law---Constitutional petition was dismissed accordingly.

(b) Trade Organizations Act (II of 2013)---

----Ss.7(1)(c), 7(1)(g) & 8---Trade Organizations Rules, 2013, R.6(1)(h)---Failure of a company to get itself registered under the Companies Act, 2017---Effect---Trade organization renders its licence liable to cancellation where it fails to get registration as a company under the provisions of the Companies Act, 2017, or where it does not discharge statutory obligations as a limited company under the said Act---Licence granted to any trade organization is subject to the condition that trade organization complies with the provisions of inter alia the Companies Act, 2017---Section 8 of Trade Organizations Act, 2013 which contains a non-obstante clause giving an overriding effect to the provisions of the said Act over the Companies Act, 2017, provides for the cancellation of a trade organization's registration where the licence granted to it is cancelled by the Federal Government or where it fails to apply for the grant of a fresh licence.

Tariq Bilal along with Muzamil Aftab, Secretary General PPA for Petitioner.

Ms. Asia Batool, Assistant Attorney General for Respondent.

Misbah-ul-Mustafa Safir for Respondent No.2.

Malik Ghulam Sabir and Ali Nawaz Kharral, Amici curiae.

2024 C L D 1346

[Islamabad]

Before Sardar Ejaz Ishaq Khan, J

CRTG-MATRACON JV through Manager Legal---Petitioner

Versus

FEDERAL EMPLOYEES BENEVOLENT FUND AND GROUP INSURANCE FUND (FEBFGIF)---Respondent

Civil Revision No.200 of 2023, decided on 19th March, 2024.

Arbitration Act (X of 1940)---

----Ss.8(2) & 20---Appointment of Arbitrator---Jurisdiction of Civil Court---Scope---Contract price variation on account of legislative changes and market-based currency fluctuation---Distinction---Issues regarding contract interpretation including whether a party is entitled to compensation for escalation based on legislative changes or currency fluctuation---Issue reserved for arbitrator---Civil Court in an application under Ss.8 & 20 of the Arbitration Act, 1940 (Act), only has to see whether a dispute exists and whether it is covered by the arbitration agreement, and it is not meant to delve into the merits of the dispute itself, and threshold of the examination has to be extremely low to see only whether the dispute raised is one which, under the terms of the dispute resolution clause, could be considered a dispute under or in relation to that contract and can by no means extend to interpretation of the contract clauses to examine whether that interpretation justifies or precludes the claim in dispute, which is the arbitrator's job---Assertion of a claim by one party and the repudiation thereof by the other party constitutes a dispute warranting the arbitration clause to become operative---While proceeding the matter to arbitration, one has to be careful with any observations on the merits of the case, but it needs to be said that there can be a distinction between a variation to the contract price occurring due to a change in legislation and variation on market-based currency fluctuation in the ordinary course---Consequences of changes in legislation on the foreign cost component and the consequences of exchange rate fluctuations due to ordinary market movements are not necessarily the same thing---Question as to whether this distinction held in the case in hand and whether the petitioner was entitled to any escalation on that basis on the proper construction of the Contract was a job reserved for the arbitrator and not for the Civil Court---Civil revision was allowed, in circumstances.

The Union of Indian v. Mangaldas N. Varma (1958) 2 MLJ 16; Ghulam Ishaq Khan Institute of Engineering, Science and Technology v. Messrs Hassan Construction Co. (Pvt.) Ltd. 1998 CLC 485 and AJ Corporation v. Fauji Fertilizer Bin Qasim Limited 2013 CLD 636 rel.

Hamza Siddiqui for Petitioner.

2024 C L D 1426

[Islamabad]

Before Aamer Farooq, CJ

Messrs PAKISTAN TELECOMMUNICATION COMPANY LIMITED and others---Appellants

Versus

UNIVERSAL SERVICE FUND, ISLAMABAD through Chief Executive Officer and others---Respondents

F.A.Os. Nos. 139, 140 and 141 of 2021, decided on 16th May, 2024.

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

----S. 124---Performance guarantee---Scope---Bank guarantee / performance guarantee operates independently of agreement between parties---Guarantor / promisor is bound to honour the same as and when the beneficiary wishes to encash the same---Guarantor is not to go into the agreement between parties.

(b) Constitution of Pakistan---

----Art. 199---Constitutional jurisdiction of High Court---Interpretation of document---Judicial review---Scope Courts generally do not rewrite agreement by taking over the role of one party but examine whether decision made is reasonable, rationale and proper in the facts and circumstances which are broadly the parameters, in which judicial review is made.

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

----S. 124---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Specific Relief Act (I of 1877), Ss. 42 & 54---Suit for declaration and injunction---Interim injunction, refusal of---Performance guarantee---Encashment---Force majeure clause---Scope---Appellant / plaintiff company sought restraining order against encashing of performance guarantee executed in favour of respondent / defendant---Validity---Respondent / defendant was the sole judge of whether there was delay in implementation of agreement and that penalty clause could be invoked---Such clause could only be excluded if there was force majeure clause---There was no force majeure and on the basis thereof, respondent / defendant sought encashing of bank guarantees issued in its favour due to delay as penalty---Whether there was delay or not, was a question of fact which could only be decided on the basis of evidence led and on the basis of documents---There was no prima facie case in favour of appellant / plaintiff and as it was a money matter there was no question of irreparable loss and balance of convenience was also in favour of respondent / defendant---In case, if eventually the suit filed by appellant / plaintiff was decided in its favour, return of money could always be ordered by Court---High Court declined to interfere in the order passed by Trial Court refusing to issue interim injunction against encashing of performance guarantee---Appeal was dismissed in circumstances.

Messrs Mehboob Enterprises v. Karachi Development Authority and another 1997 MLD 3085; Messrs Mercury Corporation v. Messrs Pakistan Steel Mills Corporation (Pvt.) Ltd. 2000 YLR 734; Atlas Cables (Pvt.) Ltd. v. Islamabad Electric Supply Company Limited and another 2016 CLD 1833; Pakistan Real Estate Investment and Management Company (Pvt.) Ltd. v. Messrs Sky Blue Builders and another 2021 CLC 488; Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191; Braganza v. BP Shipping Limited and another 2015 SCMR 742; Atif Mehmood Kayani and another v. Messrs Sukh Chayn Private Limited, Royal Plaza, Blue Area, Islamabad and another 2021 SCMR 1446 and Oasis Travels (Pvt.) Limited v. Donvand Limited and others 2020 CLC 1128 rel.

Saudi Pak Industrial and Agricultural Investment Company (Pvt.) Ltd. Islamabad v. Messrs Allied Bank of Pakistan and another PLD 2003 SC 215; Messrs Jamia Industries Limited v. Messrs Pakistan Refinery Ltd. Karachi PLD 1976 Kar. 644; Pakistan Engineering Consultants v. Pakistan International Airlines Corporation and another 1989 SCMR 379; Messrs National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311 and Hyundai Corporation v. Sui Northern Gas Pipelines Limited and 3 others 2015 CLC 1216 ref.

Abdullah Alim Qureshi, Malik Omair Saleem and Barrister Khush Bakht with Irtazaa Ifzaal Group Director (Legal), PTCL and Obaid Lodhi, Manager (Legal), PTCL for Appellants.

Faisal Fareed for Respondent.

2024 C L D 1451

[Islamabad]

Before Mohsin Akhtar Kayani and Sardar Ejaz Ishaq Khan, JJ

PAK GULF CONSTRUCTION (PRIVATE) LIMITED---Appellant

Versus

GODWIN AUSTEN JOHNSON----Respondent

F.A.O. No.121 of 2021, decided on 10th October, 2024.

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

----S. 18---Arbitration proceedings---Question of law---Scope---Expression "question of law" includes conclusion of fact drawn from facts proven in arbitration---Legal effect of conclusion of fact is a question of law.

Hodgkinson v. Fernie (1857) 3 C.B. (N.S.) 189 fol.

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

----Ss. 17, 18 & 39 (vi)---Arbitration award---Rule of Court---Appellant / employer hired services of respondent / consultant and entered into contract titled 'Design Consultancy Service-Architecture, Interior and Specialty Design for 5 Star Movenpic Hotel, Centaurus Islamabad'---Dispute had arisen between the parties regarding right of respondent / consultant to invoice reimbursable expenses---Objections to award filed by appellant / employer were rejected by Trial Court and award was made rule of Court---Validity---It was not explained in award that, in absence of express words, how was it a valid construction of Schedule 4 to the Contract, read as a whole that appellant / employer agreed to pay for detailed drawings regardless of whether they were indeed final (i.e., useable for the project) or were mere garbage---In absence of express words to the contrary in Sched. 4 to the Contract, reasons for depriving appellant / employer of its final say in acceptability of work-products were absent in award---Out of two alternatives of respondent / consultant giving customary warranty of fitness for purpose versus appellant's / employer's right to reject deliverables and not pay final one-third of the Contract price for relevant phase, parties agreed on the latter in Sched. 4 to the Contract, but award did not expound such bargain of parties---Award did not give sufficient reasons for not reading Sched. 4 of the Contract as a whole nor how the applicable stage for payment under relevant phase had been accomplished without appellant's / employer's approval of final drawings---Appeal was precluded under S. 17 of Arbitration Act, 1940 from a decree but when the very award on which that decree rested was revisited (by setting aside, modifying or remitting the award) by Appellate Court under S.39(vi) of Arbitration Act, 1940 then the foundation for that decree, to the extent the award was set aside, modified or remitted, had gone and lost all legal value---High Court set aside rule of Court and remitted the award under S. 26A of Arbitration Act, 1940 to arbitrator only to the extent of respondent's / consultant's right to invoice, and appellant / employer's obligation to pay, for the relevant phase of Schedule 4 to the Contract, in absence of appellant's / employer's approval of final detailed drawings---Appeal was allowed accordingly.

Gerry's International (Private) Limited v. Aeroflot Russian International Airlines 2018 SCMR 662; Bhagawati Oxygen Ld. v. Hindustan Copper Ltd. 2005 (6) SCC 462; Abdul Ghani and Inayat Karim PLD 1960 Supreme Court (Pak) 98; A. Qutubuddin Khan v. CHEC Mill Wala Dredging Co. (Pvt.) Ltd. 2014 SCMR 1268; National Highway Authority v. Sambu Construction Co. Ltd. 2023 SCMR 1103; Injum Aqeel v. Latif Muhammad Chaudhry 2023 SCMR 1361; Pakistan State Oil Company Limited v. Muhammad Tahir Khan and others PLD 2001 SC 980; Shahin Shah v. Government of Khyber Pakhtunkhwa 2022 SCMR 1810 and Rashida Begum v. Ch. Muhammad Anwar PLD 2003 Lah. 522 ref.

Hodgkinson v. Fernie (1857) 3 C.B. (N.S.) 189 fol.

Barrister Talha Ilyas Sheikh for Appellant.

Malik Omair Saleem for Respondent No.1.

2024 C L D 1481

[Islamabad]

Before Miangul Hassan Aurangzeb and Saman Rafat Imtiaz, JJ

Syed WAQAR-UL-HASSAN SHAH BUKHARI and others---Appellants

Versus

SMALL BUSINESS FINANCE CORPORATION (NOW SME BANK LTD.) and 3 others---Respondents

E.F.A. No.02 of 2013, C.R. No.06 of 2005 and R.F.A. No.204 of 2004, decided on 26th September, 2024.

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

----S.115---Limitation Act (IX of 1908), Ss. 5 & 29 (2)(b)---Revision application---Limitation---Condonation of delay---Principle---Provision of S. 115 C.P.C. is a special law and application of S. 5 of Limitation Act, 1908 has been excluded by S. 29(2)(b) of Limitation Act, 1908---Revision application filed beyond period of limitation is liable to be dismissed as time-barred.

Government of Balochistan v. Abdul Rashid Langove 2007 SCMR 518; Allah Dino v. Muhammad Shah 2001 SCMR 286; Muhammad Zafar v. Nazir Ahmed 2005 MLD 1034; Muhammad Amir v. Muhammad Sarfraz 2019 CLD 523; Muhammad Khalid Naeem v. Habib Bank Limited 2018 CLD 1027; Raja Karamat Ullah v. Sardar Muhammad Aslam Sukhera 1999 SCMR 1892; Noor Muhammad v. Assistant Commissioner, Vehari 1986 SCMR 292 and Abdul Aziz v. Additional Settlement Commissioner 1984 SCMR 1562 rel.

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

----S. 22---Civil Procedure Code (V of 1908), Ss. 11, 12 (2) & 35 (1)(iii) [as inserted by Costs of Litigation Act, 2017]---Consent decree, appeal against---Maintainability---Principle of res judicata---Applicability---Cost, imposing of---Appellant / defendant did not appeal against consent decree and his application under S. 12(2), C.P.C. to challenge consent order and decree was dismissed by Trial Court whereas appeal before Lower Appellate Court was dismissed as withdrawn---Appellant's / defendant's revision application was dismissed by High Court as time barred---Validity---Consent decree had attained finality for all intents and purposes---High Court declined to interfere in order dismissing application under S. 12 (2) C.P.C.---Decree was in the nature of a compromise decree and was not only binding upon parties as a contract between them but also operated as res judicata between parties thereto with regard to matters which constituted main foundation of agreement of compromise---Principle of res judicata was rightly applied by Trial Court in subsequent proceedings---High Court imposed cost of Rs.1 million upon appellant / defendant under S. 35 (1) (iii), C.P.C. which was to be deposited in government treasury---Appeal was dismissed in circumstances.

Meghraj v. Bayabai AIR 1970 SC 161; Meka Venkatadri v. Raja Parthasarathy AIR 1922 PC 233; Najam Koreshi v. Chase Manhattan Bank 2015 SCMR 1461 and Mahmud Alam v. Mehdi Hussain PLD 1970 Lah. 6 ref.

Hafiz Muhammad Kashif Zaman for Appellants along with Appellant No.1. in person (in E.F.A. No.02 of 2013).

Qausain Faisal Mufti for Appellant (in R.A. No.204 of 2004).

Wasim Abid for Respondent No.1 (in E.F.A. No.02 of 2013).

Muhammad Mehboob Alam for Respondents Nos.2 to 4 (in E.F.A. No.02 of 2013) and for Petitioner (in C.R. No.06 of 2005).

Raja Abdul Qayyum for Respondent No.1. (in R.F.A. No.204 of 2004 and C.R. No.06 of 2005).

Amir Latif Gill for CDA (in C.R. No.06 of 2005).

Umar Farooq, Deputy Registrar and Barrister Khadija Naeem, Law Clerk.

2024 C L D 1507

[Islamabad]

Before Miangul Hassan Aurangzeb and Arbab Muhammad Tahir, JJ

HAJVAIRY ASSOCIATES (PVT.) LTD. through Chief Executive Officer---Appellant

Versus

Messrs POWER CONSTRUCTION CORPORATION OF CHINA LIMITED---Respondent

F.A.O. No.138 of 2021, decided on 26th September, 2024.

Arbitration Act (X of 1940)---

----S. 34---Specific Relief Act (I of 1877), S. 54---Suit for recovery of contractual amount and injunction---Arbitration clause---Stay of proceedings---Words "taking any other steps in the proceedings"---Scope---Appellant / defendant was aggrieved of refusal of Trial Court to stay proceedings of trial---Validity---Appellant / defendant invoked discretion of Trial Court under S. 34 of Arbitration Act, 1940---It was necessary that appellant / defendant should not have disentitled itself from doing so either by filing written statement or by taking any other step in the proceedings---Application of appellant / defendant to Trial Court under S. 34 of Arbitration Act, 1940, was filed "before filing a written statement or taking any other step in the proceedings"---Words "taking any other steps in the proceedings" did not include each and every step, it must be such a step which clearly and unambiguously manifested intention to waive benefit of arbitration agreement and to proceed with the suit---Taking other steps in suit proceedings connoted the idea of doing something in aid of the progress of suit or submitting to jurisdiction of Trial Court for the purpose of adjudication of merits of the controversy in suit---Once a party exercised option to invoke arbitration clause in terms of S. 34 of Arbitration Act, 1940, that was a manifestation of its readiness and willingness to do all things necessary for the proper conduct of arbitration---If Trial Court was satisfied that dispute pending before it in a suit (legal proceedings) should be decided by arbitration in accordance with arbitration agreement and parties were ready and willing to do all things necessary for proper conduct of arbitration, it could make an order staying the proceedings before it---Effect of an order under S. 34 of Arbitration Act, 1940, was of a stay of the suit---High Court set aside order passed by Trial Court whereby appellant's / defendant's application under S. 34 of Arbitration Act, 1940, was dismissed and proceedings in the suit instituted by respondent/plaintiff were stayed---Appeal was allowed, in circumstances.

General Electric Company v. Renusagar Power Company 1987 (4) SCC 137 ref.

Barrister Muhammad Usama Rauf for Appellant.

Barrister Yousaf Khosa, Abdullah Alim Qureshi and Malik Omair Salim for Respondent.

2024 C L D 25

[Sindh]

Before Irfan Saadat Khan, ACJ and Ms. Sana Akram Minhas, J

ZAFAR HASSAN KHAN---Appellant

Versus

HABIB BANK LIMITED---Respondent

First Appeal No. 68 of 2021, decided on 30th October, 2023.

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

----Ss. 2(b), 5, 9, 22 & 27---Recovery suit---Admitting of appeal---Pre-conditions---Stay, grant of---Provisions of S. 22(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Scope---Appellate Court/High Court on request of the respondent/Bank while the counsel of appellant/customer was occupied before another bench, directed him (appellant/customer) to deposit decretal amount (without even granting stay or admitting the appeal)---Appellant/customer moved application to recall/review the said order contending that impugned order had been passed in violation of provisions of the S. 22(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('the Ordinance 2001')---Plea of the respondent/Bank was that the order was rightly passed in view of bar contained in S. 27 of the Ordinance 2001---Validity---Under S. 22(3) of the Ordinance 2001, the Court could consider an order for submitting security at the stage of admitting appeal and a direction for deposit of decretal amount to be issued in the event of grant of stay order, however reasonable order was required to be passed---In the present case, none of said circumstances/pre-conditions existed on the date when the impugned order was passed, or even later than such day/date---Plea of the respondent/Bank was misconceived as the bar contained in S. 27 of the Ordinance 2001 (which was subject to the provision of S. 22 of the Ordinance 2001) would be applicable to Courts and Authorities other than the Banking Courts---"Banking Court" was defined in S. 2(b) of the Ordinance 2001 in which (i) the claim does not exceed Rs. 100 million (as was in the present case); and for the trial of offences under the Ordinance 2001 the Court established under S. 5 of the Ordinance 2001 and (ii) in respect of any other case, the High Court---Whereas, in the present case, High Court as an Appellate Court was exercising jurisdiction when seized of appeal under S. 22 of the Ordinance 2001, and not of a suit under S. 9 of the Ordinance 2001---High Court on the original side also exercises jurisdiction of a Banking Court; which does not mean that the Appellate Court when seized of an appeal becomes a Banking Court ---In the present case, neither the present appeal had been admitted nor any stay order had been sought nor passed---Passing of the impugned order due to an incorrect exposition of law regarding S. 22 of the Ordinance 2001 was untenable and unsustainable---High Court recalled the impugned order---Application to review/recall was allowed, in circumstances.

M. A. Kareem Iqbal v. Presiding Officer, Banking Court 2003 CLD 1447 and Askari Bank Limited v. DCD Services Limited 2016 CLD 449 ref.

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

----Ss. 2(b), 5, 9, 22 & 27---Civil Procedure Code (V of 1908), S. 114 & O. XLVII---Review, exercise of---Powers of the Court---Scope---Appellate Court/High Court on request of the respondent/bank while the counsel of appellant/customer was occupied before another bench, directed him (appellant/customer) to deposit decretal amount (without even granting stay or admitting the appeal)---Appellant/customer moved application to recall/review the said order contending that impugned order had been passed in violation of provisions of the S. 22(3) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('the Ordinance 2001')---Validity---Power of review can be exercised for any sufficient reason which is wide enough to include a misconception of fact or law---Court is in fact obliged to correct itself and undo the wrong done to a party by the act of Court through a review/recall of its own order which suffers from an obvious error and is also causing miscarriage of justice---Record revealed the fact that neither the present appeal had been admitted nor any stay order had been sought nor passed---Passing of the impugned order due to an incorrect exposition of law regarding S. 22 of the Ordinance 2001 was untenable and unsustainable---High Court recalled the impugned order---Application to review/recall was allowed, in circumstances.

Khaleeq Ahmed for Appellant.

2024 C L D 106

[Sindh (Hyderabad Bench)]

Before Muhammad Shafi Siddiqui and Arshad Hussain Khan, JJ

Messrs QALANDRI FILLING AND CNG STATION SEHWAN through Proprietor and 3 others---Appellants

Versus

SME LEASING LIMITED---Respondent

First Appeals Nos. 78 and 79 of 2021, decided on 28th September, 2023.

(a) Administration of justice---

----Prevailing law---Applicability---Any action on the basis of existing law, cannot be said to be unlawful if performed under four corners of law.

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

----Ss. 9, 15 & 22---Suit for recovery of finance---Execution proceedings---Appellant/borrower defaulted in payment of outstanding installments---For recovery, process was initiated under existing laws---Recovery procedure was adopted in terms of S. 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001, as available at the relevant time which was only later declared ultra vires---Suit filed by respondent/financial institution was initiated once the matter was set at rest by Supreme Court for recovery under S. 15 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Validity---Suit filed by respondent/financial institution was in time and there was no ambiguity or error in findings of Banking Court's judgment---Two receipts could not form part of account of lease rentals---Definition of S. 2 of Financial Institutions (Recovery of Finances) Ordinance, 2001 included Leasing Companies for the purposes of defining Financial Institution to invoke jurisdiction of Banking Court---High Court declined to interfere in judgment and decree passed by Banking Court in favour of respondent/financial institution and against appellant/ borrowers---Appeal was dismissed accordingly.

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

Parkash Kumar for Appellants.

Faiz Durrani, Siraj Ali and Salahuddin for Respondent.

2024 C L D 126

[Sindh]

Before Irfan Saadat Khan and Arshad Hussain Khan, JJ

ASIF MUNAWAR---Appellant

Versus

BANK ISLAMI PAKISTAN formerly CITI BANK and 3 others---Respondents

Ist Civil Appeal No. 63 of 2018, decided on 19th April, 2023.

(a) Administration of justice---

----Heading/caption of an application filed before the Court---Scope---Heading/caption does not matter and it is only the content of the application, which has to be considered by Court.

Asif Raza Mir v. Muhammad Khurshid Khan 2011 SCMR 1917 rel.

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

----Ss. 9, 19 & 22--- Civil Procedure Code (V of 1908), S. 12 (2)---Execution of decree--- Sale through Court--- Fraud and mis- representation, plea of--- Appellant/intervener to execution proceedings sought setting aside of judgment and decree by filing application under S. 12(2), C.P.C., but Trial Court dismissed the application---Validity---If fraud was alleged in application filed under S. 12(2), C.P.C., its necessary ingredients must be pleaded, so as to subsequently prove the same---General and bald allegations of fraud and misrepresentation could not form basis to upset a decree, validly passed by a court of competent jurisdiction---Appellant was required to prove that fraud and misrepresentation was done during proceedings in Court; that alleged fraud was due to false statement and concealment of facts and that judgment and decree was collusively obtained on the basis of forged documents, which in the present case were missing---Active concealment and suppression of facts in words and deeds was essential ingredient of fraud, which could not be inferred by mere assertion, rather it was to be proved through strong, independent, clear and convincing evidence and burden was heavier in the cases in which a decree or judgment had been passed by Court of competent jurisdiction under which valuable rights were accrued in favour of opposite-party---Without bringing essential facts on record and evidence in proof of fraud, plea of ignorance and lack of knowledge simpliciter was not sufficient to constitute fraud and dislodge sanctity attached with official acts and judicial proceedings---It was not incumbent on Court to frame issues on every application filed under S. 12(2), C.P.C., especially when particulars of fraud and misrepresentation were missing but it depended upon facts and circumstances of each case---During execution proceedings subject property was auctioned and auction purchaser, pursuant to the directions of Court, deposited entire sale consideration---Right and interest of auction purchaser was created irrespective of the fact that order of confirmation for sale had been passed or not, such right of auction purchaser could not be taken away, as sanctity was attached to judicial sale---High Court declined to interfere in order passed by Banking Court as there was no illegality and/or infirmity in the order---Appeal was dismissed, in circumstances.

2012 CLC 1891; 2010 YLR 50; PLD 1958 SC 104; PLD 2007 Lah. 341; 2007 MLD 3551; 2007 YLR 2311; PLD 2015 SC 212; PLD 2008 SC 663; 1994 CLC 1044; NLR 1993 SCJ 290; 1993 SCMR 662; 1994 SCMR 782; 1987 SCMR 171; 2007 SCMR 922; 2015 CLD 249; 2014 CLD 390; 2011 CLC 848; 2016 YLR 2246; 2009 CLD 507; 2011 CLC 553; 2017 YLR 138; 2006 YLR 2038; 2015 MLD 57; 1991 SCMR 2063; 2007 SCMR 480; 2015 SCMR 1708; 2006 SCMR 12; PLD 2011 SC 905; PLD 2006 Kar. 278 and 2020 CLC 1835 distinguished.

2022 CLC 1523; PLD 1976 Kar. 414; 1988 MLD 596; 2003 CLD 552; 2007 CLD 1511; PLD 2005 SC 819; 2019 SCMR 1453; 2019 CLC 389; 2007 SCMR 922; 2014 CLD 390; 2000 MLD 421-424; 2022 CLD 1523; 2017 YLR 1422 and 2003 CLD 1788 ref.

Mst. Nasira Khatoon and another v. Mst. Aisha Bai and 12 others 2003 SCMR 1050; Messrs Dadabhoy Cement Industries Limited and 6 others v. National Development Finance Corporation Karachi PLD 2002 SC 500; Misbah Khanum v. Kamran Yasin Khan 2022 SCMR 1629 and Mrs. Yasmeen Yaqoob v. Messrs Allied Bank of Pakistan Ltd. and 3 others 2007 CLD 1511 rel.

Abbad-ul-Hasnain for Appellant.

Syed Aijaz Hussain Shirazi for Respondent No. 1.

Badar Alam and Khashif Badar for Respondent No. 4.

2024 C L D 141

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

MUHAMMAD SHEHZAD---Appellant

Versus

FAISAL BANK LIMITED and another---Respondents

First Appeal No. 80 of 2023, decided on 25th October, 2023.

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

----Ss. 9, 22 & 27---Civil Procedure Code (V of 1908), S. 12(2)---Recovery suit---Fraud or misrepresentation asserted before the Banking Court---Appellant-customer filed an application under S. 12(2), C.P.C. to set aside the judgment and decree--- Contention of the appellant/customer was that a fraud had been played on the Banking Court by not mentioning his correct up-to-date address in the title of the plaint, consequently, no valid service was effected on him---Validity---Service might be effected under S. 9 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('FIO 2001'), by any one of the modes mentioned therein---Record revealed that in the present case service was effected through all modes on the appellant/customer, and he was bound to file his leave to defend application within 30 days from service of summons---Section 9 of the FIO, 2001 stipulated that any one of the modes was a valid service provided such service was effected in the manner prescribed by the Appendix to the Civil Procedure Code, 1908---Appellant/customer did not argue/challenge that service was not affected as provided for in S. 9(5) of the FIO, 2001, in the manner prescribed by the Appendix to the C.P.C., but merely claimed that he did not receive a copy of the summons as the address mentioned in the title of the plaint was incorrect---Appellant/customer did not file leave to defend application and consequently, the Banking Court passed the judgment and decree---Appellant/customer did not prefer any appeal against the said judgment and decree under S. 22 of the FIO, 2001---Appeal filed by the customer was dismissed, in circumstances.

Muhammad Amir Safdar v. The Bank Al-Falah Limited through Manager and 2 others 2021 CLC 428 ref.

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

----Ss. 9, 22 & 27---Civil Procedure Code (V of 1908), S. 12(2)---Recovery suit---Execution proceedings---Fraud or misrepresentation alleged by the customer/judgment-debtor---Scope---Appellant/customer (defendant/judgment-debtor), during execution proceedings, filed an application under S. 12(2) of the Civil Procedure Code, 1908 ('C.P.C.') in the Banking Court alleging that fraud had been played on the Court---Validity---Record revealed that after about four (4) years of the passing of the judgment and decree by the Banking Court, the appellant (customer/judgment-debtor) filed an Application under S. 12(2) of the Civil Procedure Code, 1908---Under S. 12(2), C.P.C. fraud must be shown by the applicant to have been played upon the Court during the proceedings of the lis---Respondent/Bank sending notices to the last known address of the appellant-customer did not constitute fraud under S. 12(2), C.P.C.---Appeal filed by the customer was dismissed, in circumstances.

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

----Ss. 9, 22 & 27---Civil Procedure Code (V of 1908), S. 12(2)---Recovery suit---Misrepresentation or fraud asserted before the Banking Court by customer (defendant)---Scope---Validity---Application under S. 12(2), C.P.C. did not mention any particulars arguably constituting fraud or misrepresentation which may have been played upon the Banking Court in obtaining judgment and decree from the Banking Court---In absence of any convincing evidence, no misrepresentation or fraud could be alleged to have been contrived by Respondent/Bank to obtain a decision in its favour, which came into being mainly due to the failure of the appellant/customer to put up an appearance before the Banking Court in pursuance of the notices and summons issued to him---Appeal filed by the customer was dismissed, in circumstances.

Mohammad Iftikhar v. Messrs First Dawood Investment Bank Ltd. through Authorized Officer/Attorney and 2 others 2023 CLD 1124 ref.

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

----Ss. 9, 22 & 27---Recovery suit---Conduct of the appellant---Scope---Conduct of the appellant-customer also did not inspire confidence as no valid grounds had been made out to disturb the orders of the Banking Court---No valid grounds had been made out to hear a time-barred appeal---In the present case, the grounds of appeal remained unsubstantiated, general, vague and bald accusations not supported with any cogent prima facie evidence or material, which might require the issuance of notice to the decree-holder/respondent/ Bank or summoning entire record or admit present appeal in whole or in part---Retaining the present appeal on the docket of the Court would only burden the Court, postpone the inevitable writing on the wall and bring misery for the contesting parties, at least for the decree-holder who was prosecuting execution proceedings against the appellant/customer---No illegality or material irregularity was noticed in the impugned judgments, orders and decrees passed by the Banking Court---Appeal filed by the customer was dismissed in limine, in circumstances.

Colony Textile Mills Ltd. and another v. First Punjab Modarba, 2021 CLD 1212 ref.

Zulfiqar Ali Khan for Appellant.

Nemo for Respondent/Faisal Bank Ltd.

2024 C L D 202

[Sindh]

Before Muhammad Shafi Siddiqui, J

Messrs BISMILLAH METAL IMPEX (PVT.) LTD. through Authorized Officer---Plaintiff

Versus

PORT QASIM AUTHORITY through Chairman and 3 others---Defendants

Suit No. 174 and C.M.A. 1692 of 2022, decided on 4th October, 2023.

Public Procurement Rules, 2004---

----R. 19---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Specific Relief Act (I of 1877), Ss. 42 & 54---Suit for declaration and injunction---Interim injunction, refusal of---Weight of steel---Term "as is and where is basis"---Applicablity---Plaintiff/bidder failed to deposit bid amount in favour of defendant/Port Qasim Authority, in relation to auctioned crafts---Plaintiff in anticipation of action under the provision of R. 19 of Public Procurement Rules, 2004 and forfeiture of security bond sought stay of proceedings---Validity---Bidding document was not a complicated document or a document which required interpretation---Tug/craft was to be weighed on "as is where is basis" and there was no way that the crafts/tugs could be weighed in a way that steel and other part/components of ship should be segregated first---Plaintiff/bidder was not able to make out a prima facie case in its favour and balance of inconvenience was also not in its favour whereas irreparable loss would be suffered by defendant/Authority in case injunction as prayed was granted, as entire process in respect of subject vessels would become standstill--- Application was dismissed, in circumstances.

Muhammad Saeed v. State Life Insurance Corporation 2023 PLC (C.S.) 849 and Universal Insurance Company v. Karim Gul 2021 CLD 1189 ref.

Ali Abid Zuberi for Plaintiff.

2024 C L D 264

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

NATIONAL TILES AND CERAMICS LTD. and another---Appellants

Versus

SINDH BANK LIMITED and 9 others---Respondents

Special High Court Appeal No. 137 of 2023, decided on 14th December, 2023.

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

----Ss. 29 & 22---Execution of decree---Auction purchaser, rights of---Appellants/Judgment Debtors were aggrieved of sale of suit property during auction proceedings---Validity---Appellants/Judgment Debtors failed to identify any illegalities in proclamation of sale, its publication and the conduct of sale in execution---Appellants/Judgment Debtors, including other members of their family, did not bring anything on record to assail auction proceedings---No cogent reason was advanced by appellants/judgment debtors or their family to set aside sale on the grounds of irregularity or fraud---High Court declined to set aside the sale on the plea that suit property was a residential bungalow occupied by members of the family and it should not be sold---Appellants/Judgment Debtors did not justify setting aside the sale to the detriment of auction-purchaser---Auction-Purchaser consistently obeyed the orders of Executing Court and had successfully achieved all the milestones during auction proceedings, including, depositing of entire enhanced/increased purchase-price pursuant to O. XXI, R. 85, C.P.C.---Court could not be prejudiced against a party that had obeyed them---Auction-Purchaser acquired legal rights and interest in the purchased Banking Suit Property---High Court declined to interfere in the order passed by Executing Court as no legal grounds were urged to set aside sale of suit property and the order was passed on proper appreciation of facts and law---Appeal was dismissed, in circumstances.

Messrs Habib and Company and others v. Muslim Commercial Bank Limited and others 2019 SCMR 1453; Hudaybia Textile Mills Ltd. v. Allied Bank of Pakistan PLD 1987 SC 512; Mohammad Attique v. Jami Limited and others PLD 2010 SC 993; Lanvin Traders, Karachi v. Presiding Officer, Banking Court No.2, Karachi and others 2013 SCMR 1419; Mst. Anwar Sultana through L.Rs. v. Bank AL-Falah Ltd. and others 2014 SCMR 1222; Messrs Abdur Razzaq and Company, through Mian Abrar Ahmed v. Bank of Punjab and others 2005 CLC 1170 and Mst. Asma Zafarul Hassan v. Messrs United Bank Ltd. and another 1981 SCMR 108 ref.

Ghulam Abbas v. Zohra Bibi and another PLD 1972 SC 337; Zakarai Ghani and 4 others v. Muhammad Ikhlaq Memon and 8 others PLD 2016 SC 229; Muhammad Ikhlaq Memon v. Zakaria Ghani and others PLD 2005 SC 819 and Mrs. Yasmeen Yaqoob v. Messrs Allied Bank of Pakistan Ltd. 2007 CLC 1511 rel.

Abdul Wahab Baloch for Appellant No. 1.

Abdul Wahab Baloch for Appellant No. 2.

Mehmood Ali for Respondent No. 1.

Moulvi Iqbal Haider for Respondents Nos. 2 to 5, 7 and 9.

Nemo for Respondent No. 6.

Nemo for Respondent No. 8.

Abdul Hameed Chohan for Respondent No. 10.

2024 C L D 290

[Sindh]

Before Muhammad Shafi Siddiqui, J

MUHAMMAD AYUB TAREEN and others---Plaintiffs

Versus

JS BANK LIMITED through Chief Executive and others---Defendants

Suits Nos. 318 and 674 of 2023, decided on 5th July, 2023.

Companies Act (XIX of 2017)---

----S. 2(68)---Banking Companies Ordinance (LVII of 1962), S.23(1)---Listed Companies (Substantial Acquisition of Voting Shares and Take-Overs) Regulation, 2017---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Suit for declaration and injunction---Interim injunction, refusal of---Subsidiary company---Word "form" used in S. 23 of Banking Companies Ordinance, 1962--- Scope--- Plaintiff companies challenged acquisition of decisive percentage of shareholding in Bank Islami Pakistan Limited by defendant Bank---Plaintiffs sought injunctive order to restrain defendant-bank and/or purported JS Group, from acquiring majority shareholding in Bank Islami Pakistan Limited---Validity---Subsidiary as defined in S. 2(68) of Companies Act, 2017, could only exist in relation to a holding company in which holding company either (i) controlled composition of the Board of the subsidiary or (ii) exercised or controlled more than one half of its voting securities---Word "form" used in S. 23 of Banking Companies Ordinance, 1962 envisaged forming of a subsidiary by acquisition either by control of composition of its Board or control of more than half of its shareholding by way of acquisition under Listed Companies (Substantial Acquisition of Voting Shares and Take-over) Regulation, 2017---This was further strengthened by the fact that S. 23(1) of Banking Companies Ordinance, 1962, used term "formed" in past tense in respect of the subsidiary taken over by Banking Company, so envisaged a subsidiary which was to be formed or was already formed---Generally word "form" is a flexible word and takes its meaning from the context in which it is used---Word "form" has to be given a broader rather than a restrictive meaning as has been done by State Bank of Pakistan---Objective behind and mischief sought to be avoided by S. 23(1) of Banking Companies Ordinance, 1962 is to bar more than one commercial banking license within a group save where a subsidiary is engaged in Islamic banking---Whether the subsidiary is a newly formed company or formed by way of acquisition of its majority shareholding, is immaterial to that objective---Provision of S. 23(1) of Banking Companies Ordinance, 1962, places a general restriction on a banking company from forming any subsidiary company except if the essence/subject matter/character of the business of subsidiary company falls within the exceptions provided for in S. 23(1)(a) to (e) of Banking Companies Ordinance, 1962, which exceptions include business of Islamic banking---Regardless and irrespective of whether the word "form" means "to incorporate" and / or "to acquire," if the nature of business of the subsidiary company in question is neither of the kind provided for in S. 23(1)(a) to (e) of Banking Companies Ordinance, 1962, then a banking company is simply prohibited from its incorporation and/or acquisition and that actually is the spirit of the law and not the method of forming one---High Court declined to grant interim injunction as plaintiff companies were not able to make out prima facie case; balance of inconvenience was not in their favour nor would they suffer irreparable loss in case injunction was refused---Application was dismissed, in circumstances.

Pakistan Tobacco Co. Ltd. v. Pakistan and 4 others 1991 PTD 359; Multan Educational Trust v. Commissioner Inland Revenue PLD 2014 Lah. 57; Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. 468 US 837 (1984)(SC) at 842-844; President National Bank of Pakistan v. Waqas Ahmed Khan 2023 SCMR 766; Kohinoor Raiwind Mills Limited v. Kohinoor Gujar Khan Mills 2002 CLD 1314; Kohinoor Raiwind Mills Limited v. Kohinoor Gujar Khan Mills 2002 CLD 1747; Muhammad Yasin Fecto v. Muhammad Raza Fecto 1998 CLC 237; United Bank Limited v. Azmat Textile Mills Limited 2002 CLD 542; Anya Knitwear (Pvt.) Ltd. v. United Bank Limited and others 2005 CLD 114; Bank Alfalah Limited v. Callmate Telips Telecom Ltd. 2016 CLD 1202; Farrukh Raza Sheikh v. Appellate Tribunal Inland Revenue 2022 SCMR 1787 and Muhammad Uneeb Ahmed v. Federation of Pakistan PLD 2022 SC 345 ref.

Salman Akram Raja assisted by Basil Nabi Mallik along with Bilal Ahmed Khan and Kehar Khan Hyder for Plaintiffs.

Khalid Jawed Khan along with Umer Akhund for Defendants Nos.1 and 2.

Shahan Karimi for Defendant No.3.

S. Mustafa Ali along with Dr. Atifuddin for Defendant No.5/State Bank of Pakistan along with Shahbaz Shahid, Joint Director State Bank of Pakistan.

2024 C L D 338

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

ABDUL KHALID---Appellant

Versus

HABIB BANK LIMITED and 11 others---Respondents

First Appeal No. 92 of 2021, decided on 28th December, 2023.

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

----Ss.19 & 22---Civil Procedure Code (V of 1908), O. XXI, R. 64---Execution proceedings---Notices, non-issuance of---Death of judgment debtor---Appellants were legal heirs of deceased judgment debtor who claimed to have not received any notice issued by Court during execution proceedings---Validity---Notices had to be sent to each of the legal heirs of deceased judgment-debtor even if address was the same---Court notices and sale proclamation were issued in year 2021 to a dead person who had passed away in year 2017---In spite of decree holder bank amending title of execution proceedings, mandatory requirement of notices to all legal heirs of deceased judgment-debtor, went unnoticed and slipped under the radar---No one should suffer on account of a procedural lacuna on the part of the Court, but then neither should any party benefit or suffer on such account---Decree holder bank should have also remained more vigilant and pointed out such critical missing information and mandatory requirement in Banking Court notices and sale proclamation to the concerned officer of the Court---High Court set aside order in question and remanded the matter to Banking Court to implead all legal heirs of deceased Judgment-Debtor as per her family tree set out in Family Registration Certificate (FRC) issued by NADRA--- Appeal was allowed accordingly.

Nihal Khan Lashari for Appellant.

Masood Anwar Ausaf for Respondent No. 1.

Nemo for Respondent No. 2.

Abdul Shakoor and Muhammad Mobeen Khan for Respondent No. 3.

Nemo for Respondent No. 4.

Nemo for Respondent No. 9.

Syed Farhan A Jaffery for Respondents Nos. 5, 8, 10, 11 and 12.

2024 C L D 360

[Sindh]

Before Muhammad Faisal Kamal Alam, J

ASKARI BANK LIMITED---Plaintiff

Versus

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

Execution Application No. 25 of 2012 along with Suit No. B-10 of 2007, J.M. No. 33 of 2016 and Suit No. 531 of 2016, decided on 13th November, 2023.

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

----Ss.19, 22 & 23---Execution proceedings---Property not mortgaged---Scope---Applicant claimed that property in question was not part of mortgaged properties and if liabilities of judgment debtors were not satisfied, then the same could have been recovered by liquidating other mortgaged properties with decree holder bank and not property in question---Validity---At all material times, decree holder bank was aware of such factual and legal position, that suit property was actually mortgaged with another bank---Property in question was sold in proceeding instituted by other bank, which was disclosed by judgment debtors in their leave to defend application---Decree holder bank opted to include property in question in Compromise Application which was illegal and void ab initio in view of the earlier judicial Order dated 4.10.2008 passed by Banking Court and the same could not be interfered with in a collateral proceeding but only through statutory hierarchy provided in Financial Institutions (Recovery of Finances) Ordinance, 2001---Order passed by Banking Court was without jurisdiction and property in question could not have been part of compromise decree between decree holder bank and judgment debtors---Compromise order and decree to the extent of property in question was not obtained with bona fide intention, but through misrepresentation and subsequent order passed was also not correct---Application was allowed accordingly.

Abdul Majeed and another v. Shaukat Ali and others 2012 SCMR 1172; Farhat Fareed Shaikh v. Messrs NIB Bank Limited and 4 others 2016 C L D 1275; Punjab and Sindh Bank Ltd., Gujranwala v. Amir Chand and others AIR 1930 Lahore 731; National Bank of Pakistan through Attorney and another v. Paradise Trading Company and others 2015 SCMR 319; Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi PLD 2002 SC 500; Messrs Shahtaj Textile Limited v. Messrs J&M Clothing Co. and others 2016 CLD 984 and Misbah Khanum v. Kamran Yasin Khan and another 2022 SCMR 1629 ref.

Lubna Aman and Irfanullah Khan for Decree Holder (in Execution No.25 of 2012, Defendant No.1 in Suit No. 531 of 2016 and Respondent No.1 in J.M. No.33 of 2016).

Jahanzeb Awan, Shahan Karimi, Rashid Mahar, Sarosh Arif and Sauban Tasleem for Applicant (in J.M. No.33 of 2016, for Plaintiff in Suit No. 531 of 2016 and for Objector in Ex. No.25 of 2016).

Rasshid Anwer and S. Mustafa Ali for Respondent No. 11 [in J. M. No.33 of 2016 and for Defendant No.10 in Suit No.B-10 of 2007).

Dates of hearing: 23rd January, 16th February and 26th September, 2023.

DECEISION

MUHAMMAD FAISAL KAMAL ALAM, J.---The subject matter of this proceeding is a House No. G-31, 5th Gizri Street, Karachi ["Suit Property"].

1. Necessary background facts are that a Suit No.B-10 of 2007 was filed by Askari Bank Ltd. concerning the financial facility, extended to private Defendants, in which they defaulted. Matter was settled between Askari Bank Ltd., to be referred as the "Decree Holder - D.H., and the private Defendants - the "Judgment Debtors - J.Ds.", vide Judgment of 29-6-2009 and Decree dated 06.08.2009 [collectively referred as the "Impugned Decision"], challenged in J.M. No.33 of 2016, filed by Mst. Samar Raees, claiming to be the subsequent Purchaser/Owner of the above Suit Property - the Claimant. The above Judgment Debtors are impleaded in this J.M. as Respondents Nos.2 to 7. It is pertinent to mention that Ms. Seema Shirazee [present Respondent No.4] was the sole owner of the Suit Property.

2. The gist of the arguments of Mr. Jahanzeb Awan, Advocate for the Claimant, is, that the Suit Property was never part of the mortgage properties regarding which the above Impugned Decision was obtained by the Decree Holder and the Judgment Debtors. It is pointed out that the Suit Property was never part of the Compromise Application filed under Order XXIII, Rule 3 of C.P.C. [C.M.A. No.4577 of 2008] in Suit No.B-10 of 2007; that if the liabilities of the Decree Holder were not satisfied, then the same could have been recovered by liquidating other mortgaged properties with Decree Holder Bank, and not the Subject Property, which was actually mortgaged with Pakistan Industrial Credit and Investment Corporation [PICIC]. He has referred to Agreement for Settlement of Outstanding Liability dated 30.03.2012, between present Respondent No.4 [Ms. Seema Shirazee] and MCB (Muslim Commercial Bank), Memorandum of Deposit of Title Deed (13.10.2008) in respect of Subject Property with MCB; subsequent Deed of Conveyance between MCB and the Claimant, Mutation in favour of Claimant by DHA (Defence Housing Authority), Extract of General Land Registrar and CBC (Cantonment Board Clifton). These documents are available in J.M. No.33 of 2016 from pages-85 to 163. Contended that both the Decree Holder Bank and the Judgment Debtors through misrepresentation and fraud had obtained the Decree [the impugned Decision].

3. Mr. S. Mustafa Ali, Advocate for Respondent No.11 - MCB, has in fact supported the arguments of the Counsel for the above Applicant Lady - the Claimant. Contended that Judgment Debtor No.3-Ms. Seema Shirazee, in the Execution Application No.25 of 2012, preferred by the Decree Holder Bank, had also obtained loan from the erstwhile PICIC and got the Suit Property mortgaged. Subsequently under a debt swap arrangement, the loan was paid off by Muslim Commercial Bank and all this is recorded in a judicial proceeding in Banking Suit No.133 of 2016, before the learned Banking Court No.1 at Karachi, which was filed by PICIC, for recovery of its finance facility.

4. The above stance is rebutted by Ms. Lubna Aman, Advocate, representing the Decree Holder Bank - Askari Bank Limited ["ABL"]. She has supported the Impugned Decision, and stated that the Suit Property was illegally transferred during pendency of the proceeding and is adversely affected by the principle of Lis pendens, as envisaged in section 53 of the Transfer of Property Act, besides, sections 19 and 23 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 - FIO 2001. Contended that on the basis of photocopies, the Suit Property was mortgaged with ABL, which is a valid transaction, in view of the case law relied upon by her; that fraud is in fact played by MCB, as the Suit Property could not be passed on (transferred) to the above Claimant, as no loan/finance facility was extended by MCB to present Respondents Nos.2 to 7 [Judgment Debtors in the Execution No.25 of 2012, ibid], inter alia, as no Statement of Accounts is ever filed by MCB. Since Claimant has purchased the Subject Property after passing of Compromise Decree in Suit No. B-10 of 2007 (that is, filed by Askari Bank-the afore referred D.H), therefore, entire transaction is void ab initio, in view of the above provisions so also reported judgments [supra]; requested that both Suit No.531 of 2016 and J.M. No.33 of 2016, preferred by Claimants, be dismissed. She has referred to the Correspondence dated 05.07.2005 of J.D.No.1 [A. H. International (Private) Limited] addressed to D.H. Bank / ABL, that the above J.D. No.1 had conveyed its consent about creation of second charge over the Subject Property; this document is available at page-2619 of Part-4 of the Banking Suit No.B-10 of 2007.

5. Précis of the case law cited by Ms. Lubna Aman, Advocate, is that above Claimant is not a bona fide purchaser, because the purported sale transaction in her favour for the Suit Property took place when the Banking Suit No.10 of 2007 was pending, thus, it is held by the Honourable Supreme Court that when admittedly the transaction in question was done when the suit was pending, it is hit by the principle of lis pendens and the petitioner [of the reported case] cannot be held as a bona fide purchaser; petitioner has no locus standi to resist the sale in favour of a Bank pursuant to a valid judgment and decree and the transaction between petitioner/purchaser and the respondents/mortgager is not legal. Burden is on an applicant to demonstrate and prove about the alleged fraud committed by a Bank and the borrowers [that is, judgment debtors of the reported case] in entering into a compromise decree - in this case of Shahtaj Textile, ibid, claim of decree holder was in respect of an immoveable property, which was already mortgaged with a Bank, with which the judgment debtor entered into a settlement followed by a compromise decree. It is not necessary that every proceeding under section 12(2) of C.P.C. warrants a detailed investigation or inquiry for which triable issues are framed and evidence is led, if the controversy can be decided through undisputed record; since no Appeal was filed against a consent decree, therefore, it has attained finality and does not suffer from fraud, misrepresentation or want of jurisdiction. Copy of the Relinquishment Deed was deposited with the Bank to create an equitable mortgage, which was termed as a title deed in the case of Punjab and Sindh Bank Limited [ibid] and it was held that it was sufficient to create an equitable mortgage. The Honourable Supreme Court in the case of NBP [supra], which is also relied upon by the Claimant's side, it is held that in a situation, where original Title Deeds were lost and the borrower deposited with the Bank an Evaluation Certificate, Approved Building Plan, Non-Encumbrance Certificate, issued by Sub-Registrar Lahore, Permission to Mortgage issued by Military Estate Officer, copy of the FIR that the complaint was lodged, then through these documents, equitable mortgage can be created.

6. Gist of the case law cited by counsel for the Applicant Lady, who is claiming to be a bona fide purchaser of the Suit Property, is, that there is no legal bar for a party to avail two or more available remedies under the law simultaneously and a decision in any one of such proceeding, would render the other as infructuous - this case law is cited to justify filing of J.M. No.33 of 2016, in addition to Suit No. 531 of 2016 by the same Applicant Lady-Mst. Sammar Raees. Even where a matter is compromised, Court has to decide its legality and genuineness and should not act in a mechanical manner. In a Banking Suit, where the sale has taken place in view of the valid Judgment and Decree, the same cannot be opposed by the petitioner (of the reported judgment).

7. Arguments heard and record perused.

8. Undisputedly, the original title documents of the Suit Property were with PICIC, which has separately extended a finance facility to the present Respondents Nos. 3 to 5, which are Judgment Debtors Nos.1 to 4 in the Execution No.25 of 2012 filed by D.H. Bank; whereas, the Plaint of Banking Suit No.133 of 2006 instituted by PICIC against the above private Respondents/J.Ds. is available in the record, according to which they have defaulted in re-payment of loan/finance facility availed by them and eventually the proceeding was filed under section 15 of the FIO 2001, for recovery of Rs.44,327,306.88. This Suit filed by PICIC was prior in time. Memorandum of Deposit of Title Deed available in record shows that the Subject Property was mortgaged by Ms. Seema Shirazee-J.D. No.3 (present Respondent No.4 in J.M 3 of 2016) with the PICIC.

9. C.M.A. No.4577 of 2008, upon which the Impugned Decision is given, is also perused. The Application is at page-859/913 in the File of Suit No. B-10 of 2007, preferred by D.H. Bank, along with the Schedule, in which different assets including immoveable properties are mentioned, which were kept as security by the J.Ds. with D.H. Bank. At page-873, Serial No.I, Suit Property is mentioned and under the Column 'Nature of Security', it is mentioned, Second Mortgage of Rupees One Hundred and Fifty Million, whereas, under the Remarks column, the exact wordings are reproduced herein under_

"Our bank's charge has not been notified due to the absence of NOC from NIB (Formerly PICIC) and non co-operation of the client."

The above remark means that no charge of Askari Bank Limited was created regarding the Suit Property.

1. The other undisputed material fact is that the Banking Suit No.133 of 2006 was settled between the PICIC and present Judgment Debtors through the Order dated 5-7-2006; this Order along with the Settlement Application is part of the Record of the Suit No. B-10 of 2007 [of D. H. Bank] and appended with the Leave to Defend Application [C.M.A. No. 4231 of 2007] filed by PICIC [at Page 405 of the 2nd Part of Court File]. It means that the above Banking Suit was settled even before the present Lis [Banking Suit No. B-10 of 2007] was instituted by D. H. Bank. It is clearly mentioned in the above Leave to Defend Application that the Suit Property was exclusively mortgaged with the PICIC and there was no pari passu charge or ranking charge as averred by the D. H. Bank. Similarly, and undisputedly, in Execution No.24 of 2007 vis-a-vis Suit No.133 of 2006 [mentioned in the foregoing paragraphs] earlier filed by PICIC against the present J.Ds., a Joint Application was filed by the PICIC [which subsequently became NIB Bank Limited] and J.D. No.3 - Seema Shirazee, who is also the same J.D. of present Execution No.25 of 2012 [preferred by D.H. Bank]. In this Application under section 47, Order XXIII, Rule 3 of C.P.C., it is stated [disclosed] that the Suit Property had been sold out by above Ms. Seema Sheerazi to one Mrs. Fatima Sarah Dawood for Rs.54,260,000/- covering the "principal decretal amount and mark-up", paid to PICIC [the decree holder in its above Banking Suit] through a Pay Order drawn on MCB Bank Limited. It is further mentioned in Paragraph 2 of this Application that Ms. Sarah Dawood had obtained financing from MCB and thus the original documents were to be delivered to MCB. This Application is available at page-143 of the Execution No.25 of 2012, on which, Order dated 14.10.2008 was passed by the learned Banking Court No.1 at Karachi, accepting the Settlement and Sale of the Suit Property. This sale has attained finality. The impugned Decision has the effect of over turning this Sale of the Suit Property, which is endorsed by the earlier Judicial Order [14-10-2008, ibid], prior in time to the impugned Decision; thus, the impugned Decision to this extent is contrary to law and cannot be sustained.

During the course of hearing of present Cases, on a specific query, it was not disputed by the learned Advocate representing D.H. Bank that the Title document-'B' Lease of the Suit Property was never handed over to the D. H. Bank.

1. The above record relating to the Banking Suit between PICIC and J.D. No.3, is available in the Execution No.25 of 2012, filed under Statement/Affidavit of the Officers of D.H. Bank. The other pertinent question, which came up during hearing, was, that if the entire decretal amount of this D.H. Bank has not been satisfied, then why D.H. Bank has not encashed the personal guarantees of the J.Ds. [above Judgment Debtors] towards satisfaction of the entire decretal amount, instead laying claim of the purported second charge on the Suit Property. This relevant question could not be satisfactorily replied on behalf of D.H. Bank, except what is submitted in the preceding paragraphs.

2. Order dated 01.07.2008 is referred, passed in Suit No.B-10 of 2007, is also relevant. In the said Order, the contention of erstwhile learned counsel for the D.H. Bank was recorded that in case the Suit Property is auctioned and after satisfaction of the loan of PICIC, the remaining balance be given to D.H. Bank; while this Court observed that if any amount remains, for which present D.H. Bank was lawfully entitled, the Banking Court may consider the request of present D.H. Bank, in accordance with law; this Order was passed on C.M.A. No.6668 of 2008, (preferred by D.H. Bank in its Suit No.B-10 of 2007). This Application is available at page-957. Thereafter nothing has been agitated by the D.H. Bank in respect of the Suit Property, except the impugned Decision.

3. In the main Counter Affidavit to this J.M., similar stance is mentioned on behalf of D.H. Bank, but after the above Order of 01.07.2008, the stance of present D.H. Bank concerning the Suit Property, was narrowed down to the extent mentioned in the above Order, that present D.H. Bank can approach the learned Banking Court for payment of any amount left after satisfaction of decretal amount in favour of PICIC (subsequently NIB Bank), regarding which the record is silent.

4. Case law relied upon by the learned counsel for D.H. Bank, is distinguishable, inter alia, as in the present case, neither the title documents of the Suit Property were lost, nor any No-Encumbrance letter was obtained by D.H. Bank or the Mortgager - J.D. No.3, from MEO or Defence Housing Authority. Conversely, the Letter dated 21.04.2008 has been issued by Defence Housing Authority, conveying its no-objection that the Suit Property is mortgaged by Seema Shirazee-J.D. No.3 with PICIC against the loan facility; the above Correspondence is at page-423 of the Banking Suit No.B-10 of 2007 [of the D.H. Bank]. The above endorsement mentioned in the Schedule of Compromise Application between D.H. Bank and J.Ds., belies the entire claim of the former [Askari Bank Limited] about the purported creation of second charge, as it was never created as required. Conversely, the Suit Property was purchased by the present Claimant from MCB vide Deed of Conveyance dated 16.08.2013 [at page-85 of J.M. No.33 of 2016 preferred by the Claimant]. Earlier, the said Suit Property was released by a Judicial Order passed in the above Banking Suit (of PICIC), which order and proceeding has attained finality. Consequently, argument of learned Advocate for Askari Bank Limited [ABL] about the fraudulent transaction in respect of the Suit Property between MCB and the Claimant, and that no finance facility was extended to J.Ds., is misconceived in nature and untenable.

5. At all material times, D.H. Bank was aware of this factual and legal position, that the Suit Property is actually mortgaged with PICIC and not with Askari Bank Limited, and subsequently it has been sold in the above Banking Suit proceeding instituted by PICIC and disclosed in their Leave to Defend Application, yet D. H. Bank opted to include the Suit Property in the Compromise Application which was/is illegal and void ab initio, because, inter alia, in view of the earlier judicial Order dated 04.10.2008 passed by the learned Banking Court, which cannot be interfered with in a collateral Proceeding of Banking Suit B-10 of 2007, but, only through the statutory hierarchy provided in FIO, 2001. Thus, to this extent, with utmost respect, the impugned Decision is without jurisdiction. Therefore, the Subject Property could not have been part of the Compromise Decree/the impugned Decision, between D.H. Bank and J.Ds., in the Suit No.B-10 of 2007, in which neither MCB nor present Claimant were Parties. The said Compromise Order and Decree to the extent of Suit Property is not obtained with bona fide intention, but, through misrepresentation. Similarly, the subsequent Order of 15.01.2016 passed in Execution No.25 of 2012, is also not correct, inter alia, in view of the above discussion; the same is recalled and the Objections of MCB will be re-heard.

6. J. M. No.33 of 2016 is allowed only to the extent that the impugned Decision is set-aside in respect of the Suit Property. Whereas, Suit No.531 of 2016, was already dismissed as not pressed vide Order dated 16.02.2023.

APPENDIX

Case Law relied upon by Decree Holder's Counsel

1. 2012 SCMR 1172 [Abdul Majeed and another v. Shaukat Ali and others];

2. 2016 CLD 1275 [Farhat Fareed Shaikh v. Messrs NIB Bank Limited and 4 others];

3. AIR 1930 Lahore 731[Punjab and Sindh Bank Ltd., Gujranwala v. Amir Chand and others] - Punjab and Sindh Bank Limited Case;

4. 2015 SCMR 319 [National Bank of Pakistan through Attorney and another v. Paradise Trading Company and others] - NBP Case;

[It is also relied upon by the counsel for Applicant in J. M. No.33 of 2016]

1. PLD 2002 Supreme Court 500 [Messrs Dadabhoy Cement Industries Ltd. and 6 others v. National Development Finance Corporation Karachi];

2. 2016 CLD 984 [Messrs Shahtaj Textile Limited v. Messrs J&M Clothing Co. and others]

3. Shahtaj Textile Case;

Reference

Corpus Juris Secundum [Volume LIX]

2024 C L D 380

[Sindh]

Before Irfan Saadat Khan and Arshad Hussain Khan, JJ

Syed WAJAHAT HUSSAIN ZAIDI and another---Appellants

Versus

UNITED BANK LIMITED---Respondent

Special H.C.A. No. 210 of 2019, decided on 6th March, 2023.

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

----Ss. 9 & 22---Evaluator, appointment of---Consent of the parties---Scope---Evaluator was appointed in the proceedings to sell out pledged stock (chemicals) lying in the custody of the Muccaddum of plaintiff/ Bank through public auction---Application of the defendant (customer/ chemical company) for change/replacement of the Evaluator was dismissed---Stance of the appellant (defendant) was that appointment of evaluator was non-proficient as the chemicals, which were to be evaluated, were highly inflammable and in the event if sampling would be done without specialized care, the whole stock would be destroyed---Validity---Evaluator, in the present case, was, admittedly, appointed by consent of the counsel/parties---Further, neither the Bank nor Muccadum of the Bank had raised any objection with regard to expertise/capability of the said evaluator for conducting evaluation of such type of chemical---Appellant had failed to corroborate his stance (appointed evaluator being non-proficient) through any proof of document or evidence---Thus, in absence of any proof substantiating the stance of the appellant with regard to non-proficiency of the evaluator, for conducting evaluation of such type of chemical, Single Judge of the High Court was justified in dismissing the application of the appellant for change of evaluator---Appellants had failed to give any plausible justification for interference in the impugned order of dismissal of their application for removal/change of evaluator---Special High Court appeal filed by the customer was dismissed, in circumstances.

Sami Ahsan for Appellants.

Aijaz Hussain Shirazi for Respondent.

2024 C L D 435

[Sindh (Sukkur Bench)]

Before Arbab Ali Hakro, J

GHULAM MUSTAFA---Appellant

Versus

RASHID ALI---Respondent

Ist Civil Appeal No. S-30 of 2021, decided on 6th November, 2023.

(a) Words and phrases---

----Security and surety---Distinction---Security refers to freedom from harm or measures taken to prevent harm, while surety refers to a promise to one party to assume responsibility for the debt obligation of another party, if that party defaults.

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

----O. XXXVII, Rr. 2 & 3---Leave to defend the suit---Conditional order, non-compliance of---Effect---In summary suit, when defendant does not obtain leave or leave is refused to him, or where defendant fails to comply with conditional order such defendant is precluded from further contesting plaintiff's claim---There is further disability for defendant under O. XXXVII, C.P.C. that allegations in plaint must be deemed to be admitted and plaintiff would be entitled to a decree---Provisions of O. XXXVII, C.P.C. not only provide for abridgement of procedure of suits so covered but restricts and curtails right of defendants in such suits to contest plaintiff's claim---When matter is carried in appeal, the defendant who did not obtain leave or had failed to comply with conditional order continues to suffer under the same disability.

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

----S. 118---Civil Procedure Code (V of 1908), O. XXXVII, Rr. 2 & 3---Suit for recovery of money on the basis of negotiable instruments---Presumption---Leave to defend the suit---Conditional order, non-compliance of---Appellant/defendant was granted leave to defend the suit subject to deposit of security in shape of Defence Saving Certificates---Appellant/defendant failed to comply the condition resultantly suit was decreed against him---Validity---Cheques in question had presumption under S. 118 of Negotiable Instruments Act, 1881, and contents of plaint and allegations made therein were deemed to be admitted---Appellant/defendant did not comply with conditional order, therefore, he was not entitled to challenge the decree before High Court on such grounds that he had taken in application for leave to defend the suit---High Court declined to interfere with judgment and decree passed by Trial Court as the Court did not err in law by passing a decree---Appeal was dismissed, in circumstances.

Col. (Retd.) Ashfaq Ahmed and others v. Sh. Muhammad Wasim 1999 SCMR 2832; Murtaza Haseeb Textile Mills v. Sitara Chemical Industries 2004 SCMR 882 and Haji Ali Khan and Company Abbottabad and 8 others v. Messrs Allied Bank of Pakistan Limited Abbottabad PLD 1995 SC 362 ref.

Muhammad Ramzan and others v. Ghulam Qadir 2011 SCMR 659 rel.

Niazuddin N. Memon for Appellant.

Asif Hyder Phulpoto for Respondent.

2024 C L D 474

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

MUHAMMAD MUZZAMMIL through Attorney---Appellant

Versus

KHURRAM SAEED---Respondent

First Appeal No. 61 of 2023, decided on 14th November, 2023.

Negotiable Instruments Act (XXVI of 1881)---

----S. 118---Civil Procedure Code (V of 1908), O. XXXVII, Rr. 1 & 2---Suit for recovery of money on the basis of negotiable instrument---Leave to defend the suit---Conditional order---Non-compliance---Tempering of cheques---Proof---Appellant/defendant was granted leave to defend the suit subject to furnishing solvent surety---Appellant/defendant failed to furnish the surety, resultantly the suit was decreed against him---Contention of appellant/defendant was that the cheques were tempered---Validity---There was no documentary evidence to corroborate such position---Appellant/defendant sought cancellation of underlying agreement which was the basis of his suit for cancellation but such plea did not lie in summary suit---High Court declined to interfere in judgment and decree passed by Trial Court as the same was well-reasoned and proof of dishonored cheques was annexed with plaint---Trial Court rightly observed that presumption regarding cheques in question under S. 118 of Negotiable Instruments Act, 1881, was to be admitted---Appeal was dismissed, in circumstances.

Sardar Sher Afzal for Appellant.

Sardar Abdul Hameed for Respondent.

2024 C L D 488

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

PSRM STEELS PRIVATE LIMITED---Appellant

Versus

ASKARI BANK LIMITED and 5 others---Respondents

Special High Court Appeal No. 288 of 2018, decided on 29th December, 2023.

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

----Ss. 19 & 22---Civil Procedure Code (V of 1908), O.XXI, Rr. 89 & 90---Execution of decree---Highest bidder---Vested right---Re-auction---Appellant was the highest bidder who had only deposited 25% of bid money and did not deposit remaining amount---Appellant was aggrieved of order passed by Executing Court to re-auction mortgaged properties---Validity---Appellant as the highest bidder did not assume vested right at such stage---Even acceptance of offer was not a vested right which had to pass through the rigorous of O. XXI, Rr. 89/90, C.P.C. etc.---Merely on the strength of a highest bid, appellant cannot insist for acceptance of its offer and/or confirmation when material available before the court was sufficient to justify order of re-auction of properties both moveable and immoveable which had been ordered to fetch the maximum amount---Unless and until bid was confirmed and sale certificates were issued the absolute rights of highest bidder could not surface---High Court declined to interfere in the matter---Appeal was dismissed, in circumstances.

Ghulam Rasool Korai for Appellant.

Bahzad Haider for Respondents Nos. 1 to 5.

2024 C L D 496

[Sindh]

Before Muhammad Shafi Siddiqui, J

GULISTAN SPINNING MILLS LIMITED and 9 others: In the matter of

Judicial Company Misc. No. 15 of 2019, decided on 30th October, 2023.

Companies Act (XIX of 2017)---

----Ss. 280, 281, 282, 283 & 285(8)---Scheme of Arrangement---Rights of parties---Petitioners sought approval of understandings and arrangements reached at between borrower and financers/creditors---Validity---High Court could not sit as Court of appeal over and above wisdom disclosed by borrower and creditors while agreeing to certain terms of repayment, provided it was within the frame of company law and within the contours of Financial Institutions (Recovery of Finances) Ordinance, 2001---To such extent High Court was bound to watch and commercial wisdom of participant of the Scheme could not be pierced by a Bench who might have its own opinion---Company jurisdiction of High Court in such matters was peripheral and supervisory and not of an appellate authority---By taking into confidence all stakeholders, a policy was devised to settle and pay liabilities of all secured creditors in a befitting manner---To achieve such goal, charged assets of petitioner company were put to sale through Assets Sale Committee consisting of representatives of banks---High Court set aside all objections and approved the Scheme of Arrangement---Petition was allowed, in circumstances.

Gulistan Weaving Mills Ltd. v. Al Baraka Bank (Pakistan) Limited 2018 CLD 737 rel.

M. Shoaib Rashid and Shahid Iqbal Rana for Petitioner No. 1.

Ms. Heer Memon for Petitioners Nos. 2 to 10.

Waqar Ahmed for Objector PAIR Investment Company Limited.

2024 C L D 513

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

HOUSE BUILDING FINANCE COMPANY LTD. through Manager Law---Appellant

Versus

Major MUHAMMAD ABDUL AZIZ and another---Respondents

First Appeal No. 88 of 2016, decided on 8th November, 2023.

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

----Ss. 3(2), 9 & 22---Recovery of finance---Cost of funds---Determination---Appellant/borrower was aggrieved of cost of funds determined by Banking Court and included in decree passed in favour of respondent/financial institution---Validity---Cost of funds of financial institution payable under S. 3(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 were as certified by State Bank of Pakistan from time to time---There was no need for Banking Court to exercise its discretion and apply its own formula of cost of funds and not those certified by State Bank of Pakistan---Division Bench of High Court declined to determine rate of cost of funds of commercial banks and there was no basis provided for bifurcating period for which cost of funds was due and payable---High Court set aside the criterion adopted by Banking Court for calculating cost of funds---High Court set aside cost of funds imposed against appellant/borrower and remanded the matter to Banking Court for calculation afresh---Appeal was allowed accordingly.

Muhammad Aslam for Appellant.

Respondent No. 1 in person.

Nemo for Respondent No. 2.

2024 C L D 525

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

NEW DADU SUGAR MILLS (PVT.) LTD. through Authorized Person and another---Appellants

Versus

SINDH SUGAR CORPORATION LTD. and another---Respondents

High Court Appeals Nos. 171 and 172 of 2021, decided on 15th November, 2023.

Companies Ordinance (XLVII of 1984) [since reapealed]---

----Ss. 305 & 309---Law Reforms Ordinance (XII of 1972), S. 3---Intra Court Appeal---Winding up proceedings---Auction purchaser, rights of---Ad-interim order---Appellant was auction purchaser and aggrieved of proceedings with regard to recovery of government dues during winding up proceedings---Validity---Judge in Chambers of High Court was likely hear the matter and would examine conclusions/issues assailed in ad-interim order, after giving opportunity of hearing to all parties including appellants who would file written reply, counter-affidavit and rejoinder, as the case would be---It was best that the appellant defends the proceedings and once for all puts to rest the challenges raised against auction-purchasers---Remarks made by Judge in Chambers of High Court were tentative subject to re-hearing of all parties and stakeholder---Division Bench of High Court declined to interfere in interim order passed by Judge in Chambers of High Court as interim measures were to be decided by the Single Judge at the time of passing of final order--- Appeal was allowed accordingly.

Chaudhry Atif Rafiq for Appellant (in H.C.As. Nos.171 and 172 of 2021).

Assistant A.G. Abdul Jalil Zubedi for Respondent No. 1 (in H.C.As. Nos.171 and 172 of 2021).

Nemo for Respondent No. 2 (in H.C.As. Nos.171 and 172 of 2021).

Dr. Waseem Iqbal, Official Assignee.

2024 C L D 563

[Sindh]

Before Sana Akram Minhas, J

HABIB BANK LIMITED---Petitioner

Versus

AMIN SOAP AND OIL INDUSTRIES (PVT.) LTD.---Respondent

Execution Application No.08 of 2019, decided on 14th December, 2023.

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

----S.19---Execution proceedings--- Office objection--- Compromise decree---Office of High Court declined to convert compromise decree into execution proceedings in view of dictum laid down by Supreme Court in case titled Peer Dad v. Dad Muhammad, reported as 2009 SCMR 1268---Validity---Imposing a blanket prohibition against institution of execution proceedings for enforcement of compromise decrees without factoring individual situations or contexts would foster misconception of its efficaciousness, diminish its value, which would in turn persuade parties to shun compromises and discourage them from seeking settlements, and instead they might be inclined to lock horns in prolonged, obstinate legal battles, leading to increased strain on resources and an overburdened judiciary---Overboard generalization and an inflexible approach (by not considering individual circumstances or exceptions) which required parties to initiate new legal proceedings for every violation of a compromise decree, would deprive the decree holder of the fruits of its labour and would reduce earlier rounds of agonizing, draining and long-winded litigation (which resulted into compromise decree) into mere dress rehearsals for future litigation---This was not the intent of law nor could it be in line with the purpose of compromise decrees, it which was to settle disputes and avoid prolonged legal battles and it would also undermine the purpose of tailoring a special statute viz Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court directed its office to issue notices to judgment debtors as the terms of compromise decree were executable---Office objection was overruled.

Peer Dil v. Dad Muhammad 2009 SCMR 1268 distinguished.

Muslim Commercial Bank Ltd. v. Hirra Farooq Ltd. 2009 CLD 922; Samba Bank Ltd v. Syed Bhais 2013 CLC 2080; National Bank of Pakistan v. Sultan Ali Lakhani 2015 CLC 1278; Montgomery Flour and General Mills v. MCB Bank Ltd. 2015 CLD 1590; Ejaz Ahmed v. Meezan Bank Limited 2021 CLD 113; Peer Dil v. Dad Muhammad 2009 SCMR 1268; Muhammad Iqbal v. Khair Din 2014 SCMR 33; Abdul Hafeez v. Pakistan Defence Officers Housing Authority PLD 2015 Sindh 336; Port Qasim Authority v. Industrial Management and Investment Co. 2020 CLC 721; Muhammad Jamil v. Waheeda Aslam 2020 CLC 1173; Black's Law Dictionary [10th Edition]. Concise Oxford English Dictionary [12th Edition]; Muhammad Siddique v. Noor Hussain 1990 MLD 379; Jaffar Abbas v. Ahmad PLD 1991 SC 1131; Fazal Mehdi v. Allah Ditta PLD 2007 SC 343; Messrs Country Products Export Ltd. v. Messrs Bawany Sugar Mills Ltd. PLD 1968 Kar. 115; Nooruddin Hussain v. Diamond Vacuum Bottle PLD 1981 Kar. 720 (725, A); Ghulam Muhammad v. Zubaida Begum 1984 CLC 874; Muhammad Idris Mia v. Abdul Matleb Mia PLD 1966 Dacca 234; Sindh Road Transport Corporation v. S.M. Ali Zaheer Khan 1991 SCMR 425; Port Qasim Authority v. Industrial Management and Investment Co 2020 CLC 721; Muhammad Nawaz v. Rehmat Ali 1994 SCMR 349; Dr. Pehlaj Mal v. Seetal Das (JM No.33/2018); Mena Energy DMCC v. Hascol Petroleum Ltd. PLD 2022 Sindh 388; Khaliluddin v. Rafiq Ahmed Qandhari 2021 CLC 877; World Automobiles v. Muslim Commercial Bank Ltd. 2009 CLD 1276; Packages Limited v. Muhammad Maqbool PLD 1991 SC 258; Habib Bank Ltd. v. Faiqa Trading Company 2011 CLD 92; NIB Bank Limited v. Apollo Textile Mills PLD 2013 Kar. 430; Saeed Ullah Paracha v. Habib Bank Limited 2014 CLD 582; Ghulam Fareed v. Muslim Commercial Bank 2019 CLD 437; Nazli Hilal Rizvi v. Bank Al-Falah 2019 SCMR 1679; Summit Bank Limited v. M.M. Brothers 2023 SCMR 374; Pearl Fabrics Corporation v. KASB Bank Limited 2014 CLD 243; Standard Chartered Bank v. Johar Associates 2018 MLD 1293; Montgomery Flour and General Mills v. MCB Bank Ltd. 2015 CLD 1590; Pak Land Corporation v. Khadim Ali Shah Bukhari (KASB) Bank Ltd. 2020 CLD 310; Ejaz Ahmed v. Meezan Bank Limited 2021 CLD 113 and Fakir Abdullah v. Government of Sindh PLD 2001 SC 131 rel.

Rahman Aziz Malik for Decree-Holder.

2024 C L D 580

[Sindh]

Before Muhammad Shafi Siddiqui and Mahmood A. Khan, JJ PAKISTAN STOCK EXCHANGE LIMITED through Duly Authorized Officer---Petitioner

Versus

PROVINCE OF SINDH through Secretary, Ministry of Finance and 3 others---Respondents

Constitutional Petitions Nos.3601, 3602 of 2018 and 3302, 3422 of 2019, decided on 27th January, 2022.

(a) Stock Exchanges (Corporatisation, Demutualization and Integration) Act (XV of 2012)---

----Preamble---Object, purpose and scope---Provision of Stock Exchanges (Corporatisation, Demutualization and Integration) Act, 2012, is not a law for establishment or creation of authority as it merely provides enabling provision for conversion of a company limited by guarantee to a company limited by shares---Provision of Stock Exchanges (Corporatisation, Demutualization and Integration) Act, 2012, provides an easy way for amalgamation and integration without undergoing hassle of recourse available under Company law available at the relevant time.

(b) Constitution of Pakistan---

----Fourth Schedule---Federal Legislative List---Scope---Federal Legislative List as appearing in Fourth Schedule to the Constitution clearly demarcates and distributes the legislative powers between Provincial and Federal Legislatures---Entries in Federal Legislative List indicate subjects as long as it does not transgress or encroach upon power of other legislature---Entries in Federal Legislative List catalogue legislative powers and domain which has been given in these Articles---All entries are to be read by articulating them with the words "subject to the Constitution"---To understand width and amplitude of subject matter mentioned against each entry and to see whether it covers subject matter of taxation or not, the entry in question cannot be read as standalone---One has to see extent or limitation imposed by some other provisions of the Constitution or other entries in Federal Legislative List as they are also part of the Constitution.

Pakistan Medical and Dental Council v. Muhammad Fahad Malik 2018 SCMR 1956; Elahi Cotton Mills Ltd. v. Federation of Pakistan PLD 1997 SC 582 and LDA v. Imrana Tiwana 2015 SCMR 1739 rel.

(c) Sindh Sales Tax on Services Act (XII of 2011)---

----S. 23---Constitution of Pakistan, Fourth Schedule---Federal entity---Show-cause notice---Pakistan Stock Exchange Limited---Income from listing fee and exchange operations---Petitioner / Pakistan Stock Exchange Limited assailed show-cause notice issued under S. 23 of Sindh Sales Tax on Services Act, 2011, by respondent / Sindh Revenue Board for recovery of defaulted tax amount on petitioner's income arising from listing fee and exchange operation earned by it---Plea raised by petitioner was that respondent / Sindh Revenue Board could not influence or exert their provincial executive authority over petitioner since it was a body created in pursuance of subjects enumerated in Fourth Schedule to the Constitution having Federal Legislative domain---Validity---Scheme of legislative entries in Fourth Schedule to the Constitution regarding taxation is such that taxes on income, sales tax on purchase and sales of goods, duties of customs and excise etc. fall in the domain of Federation---Federal Legislature has no power to legislate in respect of sales tax on services even regarding those subject matters which are enumerated in Federal Legislative List to the Constitution, subject to strict trans-provincial application(Entry 3 and 13 of Federal Legislative List not pressed by petitioner)---Entry 49 enjoys a unique position as it shifts taxing power (for services) from the Federation to the Provinces and it recognizes scope and extent of the powers and creates a reconciled balance, which allows Federation and Provinces to operate in their own fields in harmony---High Court declined to interfere in show-cause notices in question as the same were issued having authority and legislative competence in such regard---Petitioner had already registered itself voluntarily with respondent / Sindh Revenue Board earlier and if any issues of "adjudication" and not competence, were raised or agitated by the petitioner, the same could be addressed by the authority concerned by issuing show-cause notices---Constitutional petition was dismissed, in circumstances.

Sindh Revenue Board v. Civil Aviation Authority 2017 SCMR 1344 and Karachi Golf Club (Pvt.) Ltd. v. Province of Sindh 2021 PTD 558 distinguished.

Province of Punjab v. Muhammad Tufail & Co. PLD 2017 SC 53; Kh. Ahmed Tariq Rahim v. Federation of Pakistan PLD 1992 SC 646; Pakistan Mobil Communication Ltd. v. Federation of Pakistan (C.P. No.D-4778/2021) and Sui Southern Gas Co. Ltd. v. Federation of Pakistan 2018 SCMR 802 ref.

Hyder Ali Khan along with Shaheer Roshan Shaikh, Sami-ur-Rehman and Hamza Waheed for Petitioner (in all petitions).

Saifullah, Assistant Advocate General for Respondent No.1.

Muhammad Tariq Masood, Shamshad Ahmed Narejo and Muhammad Idrees Jakhrani along with Khalid Zamir, Commissioner SRB and Syed Zain-ul-Abdin Shah, Deputy Commissioner SRB for Respondents Nos.2 and 3.

Kafeel Ahmed Abbasi, Deputy Attorney General for Respondent No.4.

Dates of hearing: 18th November, 26th October, 7th and 14th December, 2021.

LAW/STATUTES DISCUSSED

i) Securities Act, 2015 ("Act of 2015")

ii) Stock Exchanges (Corporatization, Demutualization and Integration) Act, 2012 ("Act 2012")

iii) Rule Book Pakistan Stock Exchange Ltd. (PSX)

iv) Sindh Sales Tax on Services Act, 2011 (SSTA 2011)

2024 C L D 604

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

FATEH TEXTILE MILLS LTD and others---Petitioners

Versus

ALLIED BANK OF PAKISTAN and another---Respondents

Special High Court Appeals Nos.153 of 2022 and 158 of 2023, decided on 31st January, 2024.

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

----Ss. 19 & 22---Civil Procedure Code (V of 1908), O.XXI, Rr. 66, 89 & 90---Suit for recovery of finance---Execution proceedings---Objections, delay in decision---Effect---Appellant / Judgment Debtors were aggrieved of orders passed by Executing Court regarding issuance of Sale Certificates to auction purchasers---Validity---Proceedings taken by Executing Court while accepting bid on 28-02-2022 based on evaluation report of properties of year 2015 / 2016 was unlawful and inequitable as value of properties for the auction held in year 2022---Claim of bank was multiplied regularly---Order of acceptance dated 28-02-2022 was in fact a short order and did not provide time for raising objections in terms of O. XXI, Rr.89 & 90, C.P.C. and Rr.347 to 351 of Sindh Chief Court Rules---Before such reasons could have been provided, the Executing Court ordered issuance of sale certificate and permission was granted to conclude sale by issuing sale certificate---Division Bench of High Court directed to put mortgaged / attached property / properties to fresh auction and set aside order passed by Executing Court---Division Bench of High Court gave directions to comply with the provisions of O.XXI, R.66, C.P.C.---Appeal was allowed accordingly.

MFMY Industries v. Federation of Pakistan 2015 SCMR 1550; Commissioner Inland Revenue v. Sui Northern Gas Pipeline Ltd. PLD 2023 SC 241 and 2022 CLD 413 rel.

S. Ahsan Imran Rizvi along with Bahadur Khosa and Assadullah Shar, Shahabuddin Kalwar holding brief for M. Saleem Mangrio for Appellants.

Raashid Anwar with Syed Mustafa Ali along with Syed Ahsan Rahman, Law Officer Allied Bank Limited for Respondents.

2024 C L D 623

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

MUHAMMAD BILAL through Legal Heirs---Petitioner

Versus

DUBAI ISLAMIC BANK LIMITED---Respondent

First Appeal No.44 of 2019, decided on 6th February, 2024.

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

----Ss. 9 & 22---Suit for recovery of finance---Finance agreement---Terms and conditions, challenge to---Appellant / defendant was aggrieved of judgment and decree passed by Trial Court in favour of respondent / bank---Validity---After consuming amount, appellant / defendant came forward challenging KIBOR on the terms of which the finance facility was consciously availed, utilized and then defaults were made and recovery suit was filed---Appellant / defendant failed to point out that KIBOR was not applicable in terms of some circular of State Bank of Pakistan---Neither, when leave application was filed and granted nor at any stage of suit proceeding, nor when present appeal was filed, such circular of State Bank of Pakistan was presented to the Court---KIBOR was part of the agreed terms when loan was structured and financed and hence appellant / defendant could not blow hot and cold after utilization of amount---Cheques which bounced could not be adjusted in the execution proceedings and only the amount that was paid after decree was duly adjusted---High Court declined to interfere in judgment and decree passed by Trial Court---Appeal was dismissed, in circumstances.

Sohail Hameed for Appellants.

2024 C L D 631

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

ABDUL BASIT KHAN and others---Appellant

Versus

BANK ISLAMI PAKISTAN LIMITED through attorneys and 3 others---Respondents

First Appeals Nos.60 of 2020 and 42 of 2021, decided on 4th December, 2023.

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

----Ss.19 & 22---Civil Procedure Code (V of 1908), S. 47 & O.XXI, R. 60---Execution proceedings---Agreement to sell---Right of purchaser---Scope---Appellant was aggrieved of execution proceedings on the plea that he was owner of mortgaged property on basis of agreement to sell in his favour---Validity---Executing Court had power under S. 47, C.P.C., to determine questions arising out between the parties to the suit---Appellant had come in picture after passing of judgment and decree hence was a stranger in the findings---In terms of O. XXI, R.60, C.P.C., release of property from attachment could be allowed only in case the objector/claimant had a title or right over it---Appellant had no valid title in his favour and there was a registered document whereby judgment debtor was the sole owner of the subject property---High Court declined to interfere in execution proceedings---Appeal was dismissed, in circumstances.

Muhammad Ali Waris Lari for Appellant.

Faiz Durrani for Respondent No.1.

Sohail Abbas for Respondent No.4.

2024 C L D 640

[Sindh]

Before Muhammad Shafi Siddiqui and Jawad Akbar Sarwana, JJ

ABDUL KARIM MOMNANI and another---Appellants

Versus

Messrs HABIB BANK LIMITED---Respondent

First Appeal No.76 of 2021, decided on 15th December, 2023.

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 bank finance---Plea of fraud and misrepresentation---Private dispute---Entries in statement of accounts---Appellants / defendants assailed judgment and decree passed against them on the plea of fraud committed by branch manager who was their relative---Validity---Fraud must be shown under S. 12(2), C.P.C. by appellants / defendants to have been played upon the Court during the proceedings of the lis---Appellants / defendants relied on bank entries in account statements in their application under S. 12(2), C.P.C., which called for examination on merits, not fraud and misrepresentation---Private dispute between appellants / defendants and their relative, who happened to be the Branch Manager did not constitute fraud under S.12(2), C.P.C.---Judgment passed by Banking Court had already discussed the points raised by appellants / defendants against the Bank Manager and decided the suit against appellants / defendants; the same issues could not be agitated in application under S. 12(2), C.P.C. as grounds of fraud and misrepresentation---Grounds of appeal remained unsubstantiated, general, vague, and were not supported with any cogent prima facie evidence or material---Order passed by Banking Court on application under S. 12(2), C.P.C., was based on reasonable grounds available to Banking Court for such dismissal---High Court declined to interfere in order in question, as Banking Court did not err while passing judgment/decree/order against appellants / defendants and it was well-grounded, and no interference was required---Judgment, decree and orders passed by Banking Court did not suffer from any illegality or material irregularity---Appeal was dismissed, in circumstance.

Abdul Shakoor for Appellants.

Aijaz Hussain Shirazi for Respondent.

2024 C L D 648

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

MUHAMMAD NAVEED and others---Petitioners

Versus

HABIB BANK LIMITED---Respondent

First Appeals Nos.105 and 106 of 2016, decided on 17th January, 2024.

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

----Ss.9, 10 & 22---Bankers' Books Evidence Act (XVIII of 1891), S.2(8)---Recovery of finance---Leave to defend suit, grant of---Statement of accounts---Admissibility---Appellant / defendant was aggrieved of judgment and decree passed by Banking Court on the plea that statement of accounts produced by respondent / bank was not in compliance of S. 2(8) of Bankers' Books Evidence Act, 1891---Validity---Statement of accounts on the basis of which suit was decreed was disputed and could not be relied upon as it had become a case of evidence---Where defects in statement of accounts were pointed out, even on such score alone leave should have been granted by virtue of requirement of S.9 of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court set aside judgment and decree passed by Banking Court as the same was passed without looking at applicability of statement of accounts in that form---High Court granted leave to defend the suit and remanded the matter to Banking Court for trial in accordance with law---Appeal was allowed accordingly.

Appolo Textile Mills Ltd. and others v. Soneri Bank Limited PLD 2012 SC 268; Kareem Nawas Khan v. The State through PGP and another 2016 SCMR 291 and The Commissioner Inland Revenue v. The Secretary Revenue Division and others 2020 SCMR 2055 ref.

Khaleeq Ahmed for Appellants.

2024 C L D 655

[Sindh (Larkana Bench)]

Before Muhammad Saleem Jessar and Jawad Akbar Sarwana, JJ

GHULAM MUHAMMAD through his Legal Heirs---Appellants

Versus

ZARAI TARAQIATI BANK LTD. through Manager and authorized person and others---Respondents

First Civil Appeal No.D-03 of 2023, decided on 21st February, 2024.

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

----Ss.9, 10 & 22---Suit for recovery of finance facility---Legal heirs of deceased borrower---All legal heirs not impleaded---Effect---Respondent / bank did not implead all appellants / legal representatives of deceased borrower and Banking Court decreed the suit only to the extent of appellants / legal representatives---Validity---Suit was filed by respondent / bank against some and not all legal heirs of deceased borrower as per names of legal representatives disclosed by appellant / legal representative in power of attorney attached to appeal---Judgment and decree could not be enforced against those legal representative of deceased borrower who were not impleaded in suit before Banking Court and were not given opportunity of hearing notwithstanding that any claim of legal representatives on land of deceased borrower would be subject to the first lien (mortgage) of respondent / bank---High Court declined to interfere in judgment and decree passed by Banking Court in favour of respondent / bank, as the same was proper and based on facts and law which did not suffer from any illegality---Appeal was dismissed, in circumstances.

Jai Kumar for Appellants.

Nemo for Respondent No.1.

Nemo for Respondent No.2.

2024 C L D 665

[Sindh]

Before Jawad Akbar Sarwana, J

MCB BANK LIMITED---Plaintiff

Versus

EMAD-UL-HASSAN---Defendant

Suit No.563 of 2007, decided on 1st February, 2024.

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

----Ss. 7(4) & 9---Civil Procedure Code (V of 1908), O. VII, R.10---Recovery of finance---Employee loan---Return of plaint---Dispute was with regard to Staff Loan extended to defendant / employee of bank---Validity---Loan advanced by bank to its employee was finance falling within statutory definition of "finance" under Financial Institutions (Recovery of Finances) Ordinance, 2001---It was prerogative of Banking Court to determine whether or not heads of claims which defendant / employee alleged to fall outside the scope of finance, actually did---Such judicial determination of what heads of claim constituted "finance" had been mandated by the Legislature to be determined by Banking Court alone and not High Court exercising its original civil jurisdiction (under general civil law)---Division Bench of High Court retuned plaint to plaintiff / bank to enable it to avail jurisdiction of Banking Court under Financial Institutions (Recovery of Finances) Ordinance, 2001---Appeal was disposed of accordingly.

2012 CLD 483; 2008 CLC 759; 2016 CLD 461; PLD 2010 SC 878; 1995 CLC 1982; 2014 CLD 729; 2019 CLD 1350; PLD 2022 SC 716; 2001 YLR 2259; 2015 CLD 600; 2019 CLD 1350; 2002 CLD 1466; PLD 2007 Kar. 362; PLD 2009 Lah. 494 and Nooruddin and others v. Messrs Sindh Industrial Trading Estate and others (High Court Appeal No. 129 of 2017) rel.

Syed Danish Ghazi and Rameez Adnan Ansari for Plaintiff.

Defendant present in Person.

2024 C L D 676

[Sindh]

Before Ahmed Ali M. Shaikh, CJ and Yousuf Ali Sayeed, J

MUHAMMAD TARIQ---Petitioner

Versus

FEDERATION OF PAKISTAN and others---Respondents

C.P. No.D-6004 of 2020, decided on 21st August, 2023.

Trade Marks Ordinance (XIX of 2001)---

----Ss. 28, 114 & 123---Constitution of Pakistan, Art. 199---Order passed by the Registrar of Trademarks, assailing of---Constitutional petition---Maintainability---Appeal, right of---Petitioner filed constitutional petition impugning an order passed by the respondent (the Registrar of Trade Marks), who dismissed twenty (20) Notices of Opposition (TM-05) and like number of Extension Applications (TM-56) presented by him (petitioner) on the ground that the same were time barred---Contention of the petitioner was that as the right of appeal was specifically barred in the present case by virtue of S. 123 of the Trade Marks Ordinance, 2001, hence the petitioner had no alternate remedy there-under, thus the constitutional petition was maintainable---Validity---Combined reading of the provisions of Ss. 28, 114 & 123 of the Trade Marks Ordinance, 2001 manifest that S.28(2) of Trade Marks Ordinance, 2001 expressly sets out a timeframe within which the notice of opposition is to be given, whereas S.123(1) of Trade Marks Ordinance, 2001, applies only in respect of those matters where time has not been expressly provided for under the Ordinance---Furthermore, S.123(2) of the Trade Marks Ordinance, 2001, operates so as to bar an appeal only where the Registrar has allowed an application under S.123(1) and extended time in such un-provided cases---High Court viewed that the contention of the petitioner as to the unavailability of an appeal on the touchstone of S.123(2) of Trade Marks Ordinance, 2001, was misconceived---Moreover, the aspect of opposition was rendered as a moot by the registrations made in favour of the Respondent under the Trade Marks Ordinance, 2001, following the impugned Order, thus he was at liberty to pursue such remedies as might be available to him under the given circumstances in terms of the Ordinance, 2001---Constitutional petition was dismissed, in circumstances.

Ms. Saira Shaikh for Petitioner.

Qazi Ayazuddin, Assistant Attorney General for Respondent No.1.

Saleem Ghulam Hussain for Respondent No.2.

Mirza Mehmood Baig for Respondent No.3.

2024 C L D 713

[Sindh]

Before Zafar Ahmed Rajput, J

HILAL FOODS (PVT.) LIMITED (FORMERLY HILAL CONFECTIONERY (PVT.) LIMITED) through Company Secretary, Karachi---Plaintiff

Versus

DABUR INDIA LIMITED and 8 others---Defendants

Suit No. 1763 of 2019, decided on 4th December, 2023.

Trade Marks Ordinance (XIX of 2001)---

----Ss.39 and 40---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 and 2---Passing off---Infringement of trade mark and copy right---Interim injunction, refusal of---Concealing of facts---Plaintiff company assailed use of trade mark "HAJMOLA" by defendant company---Validity---Intellectual Property Tribunal passed an order restraining defendant company from passing off goods by using the offending trade mark---Subsequently the Tribunal passed another order observing that the injunctive order passed earlier would have no effect because of an order passed by High Court---Intellectual Property Tribunal adjourned that suit sine die till adjudication of matter by High Court---Plaintiff company failed to disclose filing and pending of adjudication of cases in its pleadings especially order passed by High Court, whereby the defendant company was permitted to use trade mark "HAJMOLA" on its products---Concealment of fact as to the earlier litigation between same parties, in subsequent suit, is a conduct which disentitles a party to grant of discretionary relief of an injunction---Complete disclosure about previous connected, related or relevant proceedings and orders is essential when a litigant approaches a Court and unless such non-disclosure can be satisfactorily explained, the claimant should not, as a matter of general principle, be granted interim relief---He who comes to equity must come with clean hands---Plaintiff failed to make out prima facie good arguable case for the grant of interim injunctive relief---Application was dismissed, in circumstances.

Farooq Ghee and Oils Mills (Pvt.) Ltd. v. Registrar of Trade Marks, Trade Mark Registry and others 2015 SCMR 1230; Messrs Bengal Waterproof Limited v. Messrs Bombay Waterproof Manufacturing Company and another AIR 1997 SC 1398; Muhammad Ashraf and 3 others v. Muhammad Latif 2005 YLR 756; Muhammad Qasim v. Razia Begum and 5 others 2012 CLC 1118; Bayer AG. through Authorized Signatory v. Bayhealth Care (Private) Limited through Chief Executive Director, Company Secretary and another 2013 CLD 2087; Messrs Snowhite Dry Cleaners v. Sufiyan Ahmed 2013 CLD 57; Roznama Hamdard through Chief Editor v. Hamdard National Foundation Pakistan 2010 SCMR 95; Wrangler Apparel Corporation v. Axfor Garments through Proprietor/Manager/Partners 2008 CLD 70; Vifor (International) Inc. through Authorized Signatory v. MeMon Pharmaceutical through Sole Proprietor 2013 CLD 1531; Pioneer Cement Limited through Company Secretary v. Fecto Cement Limited through Chief Executive Officer and 3 others PLD 2013 Lah. 110; Seven Up Company v. Kohinoor Thread Ball Factory and 3 others PLD 1990 SC 313; ARC International through Authorized Signatory v. Ahmer Mansoor and 2 others 2012 CLD 226; Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090; J.N. Nichols (Vimto) PlC A Company incorporated in the United Kingdom v. Mehran Bottlers (Private) Limited, Karachi PLD 2000 SC 192; M. Sikandar Sultan v. Masih Ahmed Shaikh 2003 CLD 26; Maaza International Company L.L.C. v. Popular Food Industries Ltd. and another 2004 CLD 171; Tapal Tea (Private) Limited v. Shahi Tea Company 2002 CLD 1113; Pakistan Drug House (Pvt.) Limited v. Rio Chemical Company and another 2003 CLD 1531; Ch. Zafarullah Khan and 6 others v. Pakistan through Secretary, Ministry of Defence, Government of Pakistan, Islamabad and 5 others PLD 1975 SC 15 and Sahib Khan v. Muhammad Ramzan and another 2000 MLD 729 distinguished.

The Stillman's Company (Pvt.) Ltd. through Chief Executive Officer v. S.M. Anees and another 2019 YLR 815; University of Health Sciences and others v. Mumtaz Ahmad 2010 SCMR 767; Clifton Block-7 Residents' Association through V.P. Amir and 6 others v. Zubair Ahmed and 5 others 2015 CLC 1090; Zulfiqar Ahmed Bhutta and 15 others v. Federation of Pakistan through Secretary Ministry of Law, Justice and Parliamentary Affairs and others PLD 2018 SC 370; Mumtaz Baig and others v. Jamal Din through legal heirs 2009 SCMR 1364; Muhammad Ibrahim through Attorney v. Province of Sindh through Chief Secretary, Government of Sindh, Sindh Secretariat, Karachi and 6 others 2018 MLD 1099; Messrs H and B General Trading Company through Director v. Messrs International Marketing Company through Proprietor and 2 others 2009 CLD 318; Italfarmaco S.P.A. v. Himont Pharmaceuticals (Pvt.) Ltd. and another 2017 CLD 1382; Gulistan Textile Mills Ltd. and another v. Soneri Bank Ltd. and another 2018 CLC 203; Messrs Beecham Group Ltd. v. Registrar of Trade Marks and another 1968 SCMR 626; Khushi Muhammad and 2 others v. The Province of Punjab through Secretary Government of Punjab and 2 others 1999 SCMR 1633; State Bank of Pakistan through Governor and another v. Imtiaz Ali Khan 2012 SCMR 280; Abdul Hakim and 2 others v. Saadullah Khan and 2 others PLD 1970 SC 63; Aziz Ahmed and others v. Mst. Hajran Bibi and another 1987 SCMR 527 and Messrs Coca Cola Beverages Pakistan Ltd through Company Secretary v. Messrs Echo West International (Pvt.) Ltd: through Chief Executive Officer and another 2016 MLD 1077 rel.

Ms. Saira Sheikh for Plaintiff.

Mohsin Tayebaly and Co. for Defendants Nos. 1 and 2.

Nemo for Defendants Nos.3 to 9.

2024 C L D 744

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

FAYSAL BANK LIMITED through Authorized Attorneys---Appellant

Versus

MASOOD ASGHAR and another---Respondents

Ist Appeal No.120 of 2016, decided on 30th January, 2024.

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

----Ss. 19 & 24---Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997), Preamble & S. 18---Suit for recovery filed by the bank---Decree---Execution---Limitation---Execution petition, filing of---Scope---Banking Court by applying the provisions of S. 24 of the Financial Institution (Recovery of Finances) Ordinance, 2001, dismissed the execution petition filed by the bank /appellant on the ground that the same was filed after lapse of more than 09 years while appeal was pending---Validity---Financial Institutions (Recovery of Finances) Ordinance, 2001, is a special law which covers all proceedings upon execution---Previous law i.e. Banking Companies (Recovery of Loans , Advances, Credits and Finances) Act, 1997, enabled the Banking Court to convert the proceedings into execution application on preferring an application---Whereas the frame of the Financial Institutions (Recovery of Finances) Ordinance, 2001, is different as its S.19 provides that upon announcement of judgment and decree, the suit shall automatically convert into execution application---Thus, no sooner the judgment and decree is passed in proceedings under the Financial Institutions (Recovery of Finances) Ordinance, 2001, the proceedings stand converted into execution application---Financial Institutions (Recovery of Finances) Ordinance, 2001, does not provide a way to file a fresh execution application, as was inadvertently done in the present case by the appellant/Bank---At the most, since an appeal was pending before the High Court and the machinery of the execution was not triggered, the application that was inadvertently moved as an execution application by the bank/appellant could be considered for triggering machinery of the Banking Court, where the suit was decreed and converted into execution application---Surprisingly, the Banking Court did not discuss S.19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Thus, S. 24 of the Financial Institution (Recovery of Finances) Ordinance, 2001 can not be conceived to have its application on the execution proceedings as the suit proceedings automatically stand converted into execution, leaving no room for limitation---Since the Financial Institutions (Recovery of Finances) Ordinance, 2001 does not recognize the scheme of filing fresh execution application, High Court referred the matter to the Banking Court in order to club the execution application with suit which will be deemed to be converted into execution---Appeal filed by the Bank/decree-holder was allowed accordingly.

Shahan Karimi for Appellant.

2024 C L D 765

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

Mst. KHURSHEED BEGUM and others---Appellants

Versus

NIB BANK LIMITED and others---Respondents

High Court Appeal No.127 of 2011, decided on 14th February, 2024.

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

----S.19---Contract Act (IX of 1872), S. 58 (f)---Equitable mortgage, creation of---Deposit of title---Scope---Case of the appellants was that their liability was limited only to the extent of a cap provided by the registered mortgage deed and nothing more could be recovered under the registered instrument; that there was no document attached with the plaint to show that the deposit of title in fact was for creating equitable mortgage under S.58 of the Contract Act---Validity---Language of S.58(f) of the Contract Act, 1872, was not understood properly by the appellants as there was no requirement of any attached document apart from the fact that title was deposited for securing the loan extended to borrower---Deposit of title itself was sufficient to reveal the intent of an applicant depositing title document with the mortgagee---There was just one intention, that it is to secure the outstanding loan of the borrower---Mortgage by deposit of title deed gave his/ her intent that where a title document in relation to an immoveable property was deposited, the intent was to provide a security in relation to a transaction between main borrower and Bank/mortgagee--- Contentions of the appellants were misconceived that the amount to the extent of cap provided under registered deed could only be recovered and nothing more, as this deposit of title document was enough to create equitable mortgage to cover entire outstanding amount---Registered mortgage is only a token mortgage to overcome any impediment that may come in the way---Requirement, for equitable mortgage is the existence of debt, delivery of title document and the intention that the document of title shall be the security for the debt and the same are sufficient to establish the intent---Additional mortgage deed cannot eclipse the fact of equitable mortgage under S.58(f) of Contract Act---High Court maintained judgment passed by the Banking Court---Appeal, being merit-less was dismissed, in circumstances.

Mst. Zubeda Khanum v. Presiding Officer, Special Court (Banking), Karachi and others 1994 CLC 2150 and National Bank of Pakistan through attorney and another v. Paradise Trading Company and others 2015 SCMR 319 ref.

Khaleeq Ahmed for Appellants.

Syed Daanish Ghazi for Respondent No.1.

2024 C L D 770

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

ZAFAR HASAN KHAN and 2 others---Appellants

Versus

Messrs HABIB BANK LIMITED---Respondent

First Appeal No.25 of 2016, decided on 15th March, 2024.

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

----Ss. 19 & 22---Civil Procedure Code (V of 1908), S. 51, proviso & O.XXI, R. 40---Issuance of arrest-warrant---Scope---Decree-holder/bank filed application before the Banking Court seeking issuance of arrest warrant of the customer/judgment-debtor on the ground that as the decree was not materialized yet, hence the warrants were inevitable---Customer/judgment-debtor preferred appeal against acceptance of said application contenting that ground taken by the decree-holder was not enough for issuance of such warrants---Validity---Issuance of warrant in respect of decrees, which were unaccomplished, is not a routine matter---Section 51 of the Civil Procedure Code, 1908, provides for execution of a decree though arrest and detention of the judgment-debtor and the proviso thereof furnishes certain safeguards against the deprivation of liberty and contemplates that such power can only be exercised under certain given situations---In the present case, such situations were not considered prior to the issuance of warrants---High Court set aside impugned judgment and remanded the matter to the Banking Court, observing that unless the requirement of S. 51 & O. XXI, R. 40 of the Civil Procedure Code, 1908, are fulfilled, the ultimate recourse of arrest of the judgment-debtor may not be made---Appeal filed by the judgment-debtor was disposed of accordingly.

Khaleeq Ahmed for Appellants.

Zamir Ahmed Kalhoro for Respondent.

2024 C L D 781

[Sindh]

Before Jawad Akbar Sarwana, J

Mst. BANO HASHAM ALLIBHAI---Plaintiff

Versus

NEW JUBILEE INSURANCE COMPANY LIMITED---Defendant

Suit No.997 of 2007, decided on 13th October, 2023.

(a) Companies Act (XIX of 2017)---

----S.17---Companies Ordinance (XLVII of 1984) [Since repealed], S.31---Companies Act (VII of 1913) [Since repealed], S. 21---Memorandum and Articles---Object, purpose and scope---Articles of Association always regulate relationship between a Company and its member as its shareholder---Such relationship between shareholder and Company is governed by the Articles of Association.

(b) Trusts Act (II of 1882)---

----Ss. 3, 5, 6 & 8---Companies Act (XIX of 2017), S.17---Companies Ordinance (XLVII of 1984) [Since repealed], S. 31---Companies Act (VII of 1913) [Since repealed], S. 21---Suit for recovery of money---Unpaid dividends---Memorandum and Articles---Trust---Creation and subject---Unjust enrichment, principle of---Applicability---Plaintiff sought recovery of markup and profit on unpaid dividends retained by defendant company---Validity---Where author of trust makes a clear written declaration of trust, no actual transfer of movable trust property or trust money is necessary, and where author of trust is himself the trustee such declaration need not be registered---There was no declaration of trust by defendant Company in favor of plaintiff---Three certainties to form a trust based on judgments and provisions of law were also missing---Three missing requirements, include, (1) Defendant company intended to constitute a trust for unpaid dividends; (2) Defendant company intended to bind definite property (profit on unclaimed shares) by the trust; and (3) defendant company intended to benefit a definite person (plaintiff) in a definite way---Defendant Company was not acting as a trustee---Plaintiff voluntarily and willingly remitted funds to purchase shares that defendant company never registered, and used dividends from disputed shares for almost 37.5 years---Defendant company was bound to compensate plaintiff for unjust enrichment it had enjoyed for 37.5 years based on the orders of High Court passed in appellate jurisdiction read in the light of relevant articles of the Articles of Association of 1953, 1986 and 2007---Plaintiff was entitled to profit/interest on unpaid dividends on the basis of equity and/or unjust enrichment---Plaintiff established his claim against defendant company who was liable to compensate plaintiff in the sum of Rs.154,110,753 (net of taxes) as the equalizer profit on the dividend income retained and utilized by defendant company based on principles of equity and in the alternative, unjust enrichment---Defendant company retained plaintiff's funds arising out of the shares eventually registered in the name of plaintiff by way of Court's Order under relevant articles of the Articles of Association of 1953, 1986 and 2007 which provided an exception under the Articles of Association of defendant company that members could claim no interest---Such equalizer profit of Rs.154,110,753 was calculated based on simple interest of 5% p.a. of aggregate of unpaid dividend income of Rs.82,192,402 (net of taxes) spread over 37.5 years from 01-01-1970 to 30-06-2007 and such equalizer assumed that defendant company made annual profit of Rs.4,109,620 per year on unpaid dividends---Suit was decreed accordingly.

Muhammad Rashid Ahmed v. Muhammad Siddique 2002 SCMR 300; Muhammad Tahir v. Abdul Latif and 5 others 1990 SCMR 751; Malik Din and another v. Muhammad Aslam PLD 1969 SC 136; Haseeb Express (Pvt.) Ltd. v. Azerbaijan Hava Yollari State concern Azerbaijan Airlines 1998 CLC 1390; Lucky Cement v. Commissioner of Income Tax 2015 PTD 2210; Wood v. Odessa Water Company (1889) 42 Ch. D.636; Tulsidas Kilachand v. Commissioner of Income Tax AIR 1961 SC 1023; Bai Mahakore v. Bai Mangla (1911) ILR 35 Bombay 403 and Manchershaw S. Narielwalla v. Ardeshir S. Narielwalla (1908) 10 Bom LR 1209 rel.

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

----S. 34---Interest on investment---Principle---Plaintiff sought imposing of interest at the rate of 14% per annum on the amount to be recovered from defendant company---Validity---Plaintiff had produced no evidence in support of and/or to justify a rate of interest/markup of 14% p.a. and failed to prove his claim for award of mark-up at the rate of 14% per annum---High Court declined plaintiff's claim for mark-up at 14% p.a. but in exercising its discretion under S. 34, C.P.C., read with the judgment of Supreme Court reported as Raja Muhammad Sadiq and 9 others v. WAPDA through Chairman, WAPDA House, Lahore and 3 others (PLD 2003 SC 290), awarded the plaintiff simple markup of 5% on Rs. 82,192,402/ from the date of filing of the suit, i.e. 03-07-2007, till the date of the decree----Mark up was allowed accordingly.

Habib Bank Ltd. v. Bashir Ahmad 2019 SCMR 362 fol.

Usman Tufail Shaikh for Plaintiff.

Khawaja Aizar Ahsan, Shaheer Roshan Shaikh and Sami ur Rehman for Defendant.

2024 C L D 845

[Sindh (Larkana Bench)]

Before Muhammad Saleem Jessar and Jawad Akbar Sarwana, JJ

SAFDAR ALI JALBANI---Appellant

Versus

ZTBL through Authorized Person---Respondent

1st Civil Appeal No.D-02 of 2022, decided on 26th March, 2024.

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

----Ss. 9 & 10(4)---Suit for recovery filed by the bank---Application for leave to appear and defend the suit---Substantial question(s) of law or fact, non-raising of---Effect---Banking Court dismissed application for leave to defend filed by the customer/ defendant, and decreed the suit filed by the bank---Validity---After the plaintiff / bank filed its banking suit, the appellant (customer /defendant) was required to raise substantial questions of law or fact in its application for leave to defend, failing which the Banking Court would pass judgment and decree against him /defendant---Contents of the application for leave to defend submitted by appellant /defendant showed that he failed to raise his defence in terms of S.10(4) of the Financial Institutions (Recovery of Finances) Ordinance, 2001, which (application) required him to expressly set out the amount of finance availed by him, the amounts paid by him to the Bank (plaintiff/respondent) , identify the amount actually payable, identify the disputed amount, etc.---However, application filed by the appellant /defendant was silent on all said points---Impugned judgment and decree had been passed on proper appreciation of facts and law and the Single Judge of the High Court did not make any error while passing the same---First appeal, filed by the defendant/customer, was dismissed accordingly.

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

----Ss. 9 & 10(4)---Bankers' Books Evidence Act (XVIII of 1891), Preamble---Suit for recovery filed by the bank---Application for leave to appear and defend the suit, dismissal of---Scope---Banking Court dismissed application for leave to defend filed by the customer/ defendant, and decreed the suit filed by the bank---Plea of the appellant/defendant was that the banking suit pertained to the finance of previous years---Validity---Plaint and the supporting documents filed by the bank, included, inter alia, the Statement of Account duly verified under the Bankers' Books Evidence Act, 1891, clearly mentioning relevant record/evidence like the finance having been disbursed and the opening entry reflected in the statement as the first credit entry---There was no carry forward entry in the account, negating appellant's submission that Bank was claiming finance advanced in prior years, therefore, appellant's plea that the banking suit pertained to the finance of previous years carried no weight---Impugned judgment and decree had been passed on proper appreciation of facts and law and the Single Judge of the High Court did not make any error while passing the same---First appeal, filed by the defendant/customer, was dismissed accordingly.

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

----S. 10(12)---Suit for recovery filed by the bank---Application for leave to appear and defend the suit, dismissal of---Decreeing the suit forthwith---Scope---Banking Court dismissed application for leave to defend filed by the customer/ defendant, and on the same date decreed the suit filed by the bank---Plea of the appellant (customer / defendant) was that the dismissal of the leave to defend application and the passing of the judgment and decree on the same date constituted an irregularity---Held, that argument of the appellant had no legs to stand as S.10(12) of Financial Institutions (Recovery of Finances) Ordinance, 2001, clearly stated, in no uncertain terms, that where the application for Leave to Defend was rejected or where a defendant failed to fulfil the conditions attached to the grant of leave to defend, the Banking Court shall forthwith proceed to pass judgment and decree in favor of the plaintiff and against the defendant---Accordingly, in the present (banking) suit, when the Banking Court rejected appellant's leave to defend application, it was well within its powers to pass judgment and decree in banking suit---Impugned judgment and decree had been passed on proper appreciation of facts and law and the Single Judge of the High Court did not make any error while passing the same---First appeal, filed by the defendant/customer, was dismissed accordingly.

Abdul Rehman A. Bhutto for Appellant.

Niaz Ali Ansari for Respondent.

Oshaque Ali Sangi, Asstt. Attorney General.

2024 C L D 864

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

UNITED BANK LIMITED---Appellant

Versus

GHULAM NABI SHEIKH---Respondent

First Appeal No.61 of 2016, decided on 3rd April, 2024.

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

----Ss.20 (4) & 22---Default in repayment of finance---Dishonoring of cheque---Pre-condition---Private complaint, dismissal of---Appellant / bank was aggrieved of dismissal of private complaint by Banking Court filed against respondent / accused for dishonoring of cheque presented for repayment of finance---Validity---Requirement of S.20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, was different than gist of complaint filed by appellant / bank---Section 20(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001, only enabled the Banking Court to frame punishment if customer / whosever, breached the terms by "dishonestly issuing cheques" towards repayment of finances or fulfilment of such obligation which was / were dishonored---Prime consideration for Court was to see whether element of dishonesty was involved or not and the later part was only consequential---Burden to prove such element of dishonesty was upon complainant which was lacking in the present complaint---There was no evidence to demonstrate such "dishonest intention" of alleged accused, even if charge was to be altered---It was not a civil case of recovery under banking jurisdiction that preponderance or cumulative effect was to be given for recovery proceedings; the process in the present case was criminal intent which led to punishment where intent of dishonesty was inevitable---High Court declined to interfere in order passed by Banking Court---Appeal was dismissed, in circumstances.

Zain Shahid v. The State and another 2024 SCMR 843 rel.

Ghulam Rasool Korai for Appellant.

None present for Respondent.

2024 C L D 888

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

Mst. KHURSHEED BEGUM and others---Petitioners

Versus

NIB BANK LIMITED and 2 others----Respondents

First Appeal No. 127 of 2011, decided on 14th February, 2024.

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

----S. 19---Contract Act (IX of 1872), S. 58(f)---Equitable mortgage, creation of---Deposit of title---Scope---Case of the appellants was that their liability was limited only to the extent of a cap provided by the registered mortgage deed and nothing more could be recovered under the registered instrument; that there was no document attached with the plaint to show that the deposit of title in fact was for creating equitable mortgage under S. 58 of the Contract Act---Validity---Language of S.58(f) of the Contract Act, 1872, was not understood properly by the appellants as there was no requirement of any attached document apart from the fact that title was deposited for securing the loan extended to borrower---Deposit of title itself was sufficient to reveal the intent of an applicant depositing title document with the mortgagee---There was just one intention, that it, to secure the outstanding loan of the borrower---Mortgage by deposit of title deed gave his/ her intent that where a title document in relation to an immoveable property was deposited, the intent was to provide a security in relation to a transaction between main borrower and Bank/mortgagee---Contentions of the appellants were misconceived that the amount to the extent of cap provided under registered deed could only be recovered and nothing more, as this deposit of title document was enough to create equitable mortgage to cover entire outstanding amount---Registered mortgage is only a token mortgage to overcome any impediment that may come in the way---Requirement for equitable mortgage is the existence of debt, delivery of title document and the intention that the document of title shall be the security for the debt, and the same are sufficient to establish the intent---Additional mortgage deed cannot eclipse the fact of equitable mortgage under S. 58(f) of Contract Act---High Court maintained judgment passed by the Banking Court---Appeal, being meritless was dismissed, in circumstances.

Mst. Zubeda Khanum v. Presiding Officer, Special Court (Banking), Karachi and others 1994 CLC 2150 and National Bank of Pakistan through attorney and another v. Paradise Trading Company and others 2015 SCMR 319 ref.

Khaleeq Ahmed for Appellants.

2024 C L D 1121

[Sindh]

Before Yousuf Ali Sayeed, J

SHEHZAD ARSHAD---Plaintiff

Versus

PERVEZ ARSHAD and others---Defendants

Suit No. 1721 of 2022, decided on 16th April, 2024.

Alternative Dispute Resolution Act (XX of 2017)---

----Ss. 6 & 8---Reference to Alternative Dispute Resolution (ADR)---Valuation Report---Objections---Parties referred to mediation---Dispute between parties was with regard to affairs and assets of a textile mill and it was agreed to refer the matter for ADR---Plaintiff had objected to utilization of assets of the mill---Held, that plaintiff did not demonstrate any material discrepancy and even if Valuation Report cited by him was considered, the only material diminution was on account of plant and machinery but that too was subject to counter allegation of improprieties imputed by defendant to plaintiff predating the Agreement---Question of diminution could not be answered without a deeper assessment based on evidence, following which any shortfall could be determined and made good---High Court directed the office to send copies of plaint, written statement and other documents to the mediation centre---High Court referred the parties to mediation accordingly.

Prudential Assurance v. Newman Industries Ltd (No 2) [1982] Ch 204; Foss v. Harbottle (1843) 2 Hare 461; Johnson v. Gore Wood & Co. (No. 1) [2002] 2 AC 1; Marex Financial Limited v. Sevilleja 2020 SCMR 1867; Peak Hotel and Resorts Ltd v. Tarek Investments Ltd. [2015] EWHC 3048; Latin American Shipping Co. v. Maroil Trading Inc. [2017] EWHC 1254; Faisal Zafar and another v. Siraj-Ud-Din and 4 others 2024 CLD 1 and Ghulam Asghar Pathan and others v. Federation of Pakistan and others PLD 2023 Sindh 187 ref.

Abdullah Azzam Naqvi for Plaintiff.

Khalid Mehmood Siddiqui for Defendant No.1.

Nemo for Defendant No.2.

Muhammad Hanif Faisal Alam for alleged Contemnors Nos. 2 and 3.

2024 C L D 1145

[Sindh]

Before Muhammad Faisal Kamal Alam, J

TCB AVIATION (PVT.) LIMITED---Plaintiff

Versus

SRI LANKAN AIRLINES LIMITED through Country Manager---Defendant

Suit No. 1657 of 2020, decided on 17th May, 2021.

Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011)---

----Ss. 3, 4 & Sched., Art. II---Arbitration Act (X of 1940), Ss. 20 & 41---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Arbitration proceedings---Interim injunction, refusal of---Foreign jurisdiction---Scope---Plaintiff was acting as General Sales Agent (GSA) in Pakistan on behalf of defendant airline of foreign country---Plaintiff was aggrieved of intention of defendant airline to terminate the agreement---Plaintiff invoked arbitration clause in the agreement and sought referring the matter to arbitration after issuance of interim injunction in its favour---Validity---GSA Agreements fulfilled the term "agreement in writing" containing an "arbitral clause" as mentioned in Art. II of Schedule of Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011---Proceedings were governed by the provisions of Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 and not Arbitration Act, 1940---High Court declined to confirm restraining order granted earlier, as no case was made out by plaintiff for such kind of interim injunctive relief---Subject GSA Agreements not only contained foreign arbitration clause but also the governing law was that of foreign country---Plaintiff could avail remedy of interim relief/ protection, under the relevant provisions of laws of foreign country---High Court stayed proceedings of suit filed by plaintiff, under Ss. 3 & 4 of Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011, and ad-interim order passed earlier was vacated/recalled---Application was dismissed in circumstances.

Tallahasee Resources Incorporated through Mrs. Maleeha Waheed Malik v. Director General Petroleum Concessions, Ministry of Energy (Petroleum Division) and another 2021 CLC 423; The Hub Power Company Limited (HUBCO) through Chief Executive and another v. Pakistan WAPDA through Chairman and others PLD 2000 SC 841; Messrs Uzin Export and Import Enterprises for Foreign Trade v. Messrs M. Iftikhar & Company Limited 1993 SCMR 866; Pak Turk Enterprises (Pvt.) Ltd. v. Turk Hava Yollari (Turkish Airlines Inc.) 2015 CLC 1; Messrs Serulean (Pvt.) Ltd. Karachi v. Messrs Bhoja Airlines (Pvt.) Ltd. through Chairman and another 2001 YLR 3150; Gul son Air Cargo Services (Pvt.) Ltd. v. Compagnie Internationale Air France 1997 CLC 1250; In re: Messrs Allied Commercial Finance Limited 1986 CLC 2408; Muhammad Farooq M. Memon v. Government of Sindh through its Chief Secretary, Karachi 1986 CLC 1408; Muhammad Jamil v. Iqbal Ahmed PLD 1977 Kar. 351; Global Quality Foods Pvt. Limited v. Hardee's Food Systems, Inc. PLD 2016 Sindh 169; 1979 CLC 307; 1997 CLC 1230; PLD 1972 AJK 80; 1994 CLC 2000; PLD 1974 Lah. 231; 1979 CLC 565; 1983 CLC 1695; 2013 MLD 1083; 1995 CLC 1877; 1987 CLC 2063; 2010 YLR 3331; PLD 2014 Kar. 427; 2011 CLC 323; 1984 CLC 546; PLD 1976 Kar. 644; 2000 MLD 785; 2001 CLC 664; 2003 CLD 209; 2004 CLC 544; 2008 CLD 1312; 2003 YLR 461; PLD 1983 Kar. 613; PLD 1978 Kar. 273; 1996 SCMR 690 ; PLD 1993 SC 42; 2010 YLR 1560; PLD 1989 Kar. 645; 2005 MLD 641; PLD 1986 Kar. 38; PLD 2008 Isl. 48 ; PLD 1970 SC 373; 1989 CLC 1143; PLD 1995 Kar. 286; 1998 CLC 485; 2014 CLD 337; PLD 1966 AJK 19; 1994 SCMR 1555; 2006 CLD 1491; PLD 1978 SC 220; PLD 1989 Kar. 404; Digital World Pakistan (Pvt.) Ltd. through Chief Executive v. Samsung Gulf Electronics FZE through Managing Director/Chief Executive Officer and another PLD 2010 Kar. 274; Hitachi Limited and another v. Rupali Polyester and others 1998 SCMR 1618; Aroma Travel Services (Pvt.) Ltd. through Director and 4 others v. Faisal Al Abdullah Al Faisal Al-Saud and 20 others PLD 2018 Sindh 414; Ovex Technologies (Private) Limited v. PCM PK (Private) Limited and others PLD 2020 Isl. 52; Standard Construction Company (Pvt.) Limited v. Pakistan through Secretary Ministry of Communications and others 2010 SCMR 524; Societe Generale De Surveillance S.A. v. Pakistan through Secretary, Ministry of Finance, Revenue Division, Islamabad 2002 SCMR 1694; Lahore Cantt. Cooperative Housing Society Limited v. Messrs Builders and Developers (Pvt.) Ltd and others PLD 2002 SC 660; Abdul Salam Ansari and 6 others v. Province of Sindh through Secretary and 2 others 2012 CLC 350; Messrs Jame's Construction Company (Pvt.) Ltd., through Executive Director v. Province of Punjab through Secretary to the Government of Punjab (Communication and Works) Department, Lahore and 3 others PLD 2002 SC 310; Mst. Baigan v. Abdul Hakeem and another 1982 SCMR 673;Taisei Corporation v. A.M. Corporation Company (Pvt.) Ltd. 2018 MLD 2058; Cummins Sales and Service (Pakistan) Limited through Authorized Signatory v. Cummins Middle East FZE through Chief Executive and 4 others 2015 CLD 1655; Abid Associated Agencies International (Pvt.) Ltd. and others v. Areva and others 2015 MLD 1646; Cummins Sales and Service (Pakistan) Limited through Authorized Signatory v. Cummins Middle East FZE through Chief Executive and 3 others 2013 CLC 291; Sahabzadi Maharunisa and another v. Mst. Ghulam Sughran and another v. Mst. Ghulam Sughran and another PLD 2016 SC 358; FAR Eastern Impex (Pvt.) Ltd. v. Guest International Nederland by and 6 others 2009 CLD 153; Messrs Travel Automation (Pvt.) Ltd. through Managing Director v. Abacus International (Pvt.) Ltd. through President and Chief Executive and 2 others 2006 CLD 497 and Bolan Beverages (Pvt.) Limited v. Pepsico. Inc. and 4 others 2004 CLD 1530 ref.

S. Haider Imam Rizvi, Jamal Bukhari, S. Ahsan Imam Rizvi and Asadullah Shar for Plaintiff.

Jahanzeb Awan and Rashid Mahar for Defendant.

Irfan Ahmed Memon, D.A.G.

2024 C L D 1170

[Sindh]

Before Adnan Iqbal Chaudhry, J

ZIAUDDIN AHMED & CO. (PVT.) LIMITED---Plaintiff

Versus

KARACHI SHIPYARD AND ENGINEERING WORKS LTD. and others---Defendants

Suit No. 1192 of 2022, decided on 31st August, 2023.

Contract Act (IX of 1872)---

----S. 126---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Specific Relief Act (I of 1877), Ss. 42 & 54---Suit for declaration and injunction---Interim injunction, refusal of---Bank guarantees, types of---Object, purpose and scope---Principle of strict liability---Applicability---Plaintiff/company sought stay against encashing of bank guarantees issued to defendant for Performance of Contract and to secure Mobilization Advance---Validity---Bank guarantee is an autonomous contract, and as such it has to be construed on its own terms, independent of underlying contract between principal and beneficiary, irrespective of claims pending between them---Accordingly nature and text of bank guarantee assumes great importance---Of the two well-known types of bank guarantees, Mobilization Guarantee is given to secure advance payment received by principal from beneficiary for contracted works---Usually beneficiary deducts that advance payment from bills raised by principal from time to time and Mobilization Guarantee is then renewed for unadjusted amount---Performance Guarantee, generally speaking, is to guarantee fulfilling of obligations by principal under underlying contract---Mobilization Guarantee is essentially beneficiary's money with principal---Courts ordinarily invoke 'the rule of non-interference' with a banker's obligation to construe such guarantee as not being subject to a restraining order even if there is a dispute between the parties to the underlying contract---In cases involving guarantees such as Performance Guarantees, Courts grant or refuse injunction depending upon the text of the guarantee construing it on 'the rule of strict compliance'---Plaintiff did not bring forth any exception to unsettle general rule of non-interference with bank guarantees, and the demand raised on bank guarantees too met the test of strict compliance---Plaintiff did not have a prima facie case for the grant of temporary injunction to stay payment under the bank guarantees, nor was it a case of irreparable harm---High Court declined to grant interim injunction restraining encashing of bank guarantees as balance of convenience was also in favour of defendant---Application was dismissed, in circumstances.

Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Ltd. PLD 2003 SC 191; EFU General Insurance Ltd. v. Zhongxing Telecom Pakistan (Pvt.) Ltd. PLD 2022 SC 809; Guangdong Overseas Construction Group Company v. Creek Marina PLD 2011 Kar. 304; Shan Associates v. Getz Pharma 2020 CLD 808; Husein Industries v. Sui Southern Gas Company PLD 2020 Sindh 551; Pakistan Real Estate Investment and Management Company v. Sky Blue Builders 2021 CLD 518; Sazco (Pvt.) Ltd. v. Askari Commercial Bank Ltd. 2021 SCMR 558; National Construction Ltd. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311; National Grid Company v. Government of Pakistan 1999 SCMR 2367 and Equitable Trust of New York v. Dawson Partners Ltd. [1926] 27 Lloyd's Rep 49, 52 rel.

Khawaja Shams-ul-Islam, Obaid-ur-Rehman, Sabih Ahmed Zuberi and Khalid Iqbal for Plaintiff.

Arshad M. Tayebaly and Talha Javed for Defendants Nos. 1 and 2.

Nemo for Defendant No. 3.

Faheem Raza for Defendant No. 4.

Mubashir Mirza, Assistant Attorney General for Pakistan.

2024 C L D 1199

[Sindh]

Before Muhammad Shafi Siddiqui and Ms. Sana Akram Minhas, JJ

Messrs FAROOQUI FISHERIES through Partner and others---Appellants

Versus

FAYSAL BANK LIMITED and another---Respondents

First Appeal No.89 of 2023, decided on 26th June, 2024.

(a) Precedent---

----Judgment per incuriam---Principle---Doctrine of per incuriam refers to a judgment of Court which has been decided without reference to, or in ignorance of a statute or an earlier judgment/precedent and/or overall dress up of the scheme of law, which could have been relevant and therefore such ignorance has affected the result of the case---Some of the factors to be considered while contending that a decision is not a binding precedent and should not be followed or be ignored on such principles are summarized hereunder but are not limited:

i. Decision where point in issue is not argued or considered by Court or decision rendered without answer to argument, without reference to crucial words of the rules and without any citation of authority;

ii. Decision where mere direction is issued without laying down any principle of law; and

iii. If a judgment is delivered in ignorance of the "scheme of law" to demonstrate real intent of legislature will also be recited per incuriam.

Legislature's real intent should never be left behind or overshadowed by judgment rendered per incuriam---Jurisprudence evolves and unveils through a constant process.

Chaudhary Pervez Elahi v. Deputy Speaker, Provincial Assembly of Punjab, Lahore and others PLD 2023 SC 539 rel.

(b) Interpretation of statutes---

----Provision or word used in any statute cannot be rendered redundant.

Pakistan Television Corporation Limited v. Commissioner Inland Revenue (Legal), LTU Islamabad and others 2017 PTD 1372; Micro Innovations and Technologies (Pvt.) Ltd. v. Federation of Pakistan and 4 others 2023 PTD 742 and Messrs Master Foam (Pvt.) Ltd. and 7 others v. Government of Pakistan through Ministry of Finance and others PLD 2005 SC 373 rel.

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

----S. 22---Civil Procedure Code (V of 1908), S. 2---Appeal---Term "Judgement"---Scope---Term "judgment" only refers to judgment of Banking Court in exercise of criminal jurisdiction---In case of civil jurisdiction appeal is actually against a decree---Court cannot render any word of S. 22(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001 as redundant nor can it read any word or procedure into it---Such reading also aligns with the definition of "judgment" or "decree" as given in Civil Procedure Code, 1908.

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

----S.22---Appeal---Limitation---Delay caused in drawing decree sheet---Effect---Appellants / borrowers filed appeal after receiving copy of decree which was prepared with delay---Plea raised by respondent / bank was that appeal was not maintainable as the same was beyond period of limitation---Validity---In civil jurisdiction appeal could be filed after passing of judgment but the process was completed only after filing of decree within limitation---Only on the basis of judgment, civil appeal was not maintainable under Financial Institutions (Recovery of Finances) Ordinance, 2001---If appeal was preferred against judgment only for any urgent cause, it was to be followed by a decree to be placed and time consumed to obtain decree was to be excluded as limitation would run from the date of drawing decree---Appeal was maintainable in circumstances.

First Pakistan Security Limited and others v. Bank Alfalah Limited 2020 CLD 269 dissent.

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

----Ss. 9 & 22---Suit for recovery of finance---Availing of finance facility---Statement of account, no objection to---Suit filed by respondent / bank for recovery of outstanding finance facility was decreed against appellants / borrowers by Judge in Chambers of High Court in exercise of Banking jurisdiction---Validity---Appellants / borrowers failed to prove that they did not utilize Term Finance Facility---Partial denial of availing Term Finance Facility in terms of leave application/affidavit-in-evidence was immaterial when in cross-examination witness admitted to have availed two finance facilities i.e. Running Finance Facilities and Term Finance Facilities which were sanctioned in their favour---Out of Term Finance Facility sanctioned for Rs. 18 million, a sum of Rs.4 million was paid to another bank for release of property documents---Property documents, after its release, were then mortgaged with respondent / bank for outstanding amounts, which amounts were disclosed in statement of account and were not subjected to any challenge---Surrender of respondent / bank to settle outstanding amount of Rs.30 million by way of 24 monthly installments also superseded unreliable statement made in leave to defend application as well as in affidavit-in-evidence---Division Bench of High Court declined to interfere in judgment and decree passed by Banking Court---Appeal was dismissed in circumstances.

Multiline Associates v. Ardeshir Cowasjee and others 1995 SCMR 362; Yousaf Garments and 3 others v. Grindlays Bank and another 1988 CLC 1214; Bank of America v. Alam & Bros and 6 others 1984 CLC 3393; Sevak Jeranchod Bhogilal and others v. The Dakore Temple Committee and others AIR 1925 Privy Council 155; H.H.S Feldman v. the Province of East Bengal PLD 1970 Kar. 295; The Asiatic Industries Ltd., Karachi v. Zahid Ali PLD 1972 Kar. 84; Appollo Textile Mills Limited v. Soneri Bank Limited PLD 2012 SC 268; Imtiaz Ali v. Atta Muhammad and another PLD 2008 SC 462 and Cooperative Insurance Society of Pakistan Limited, Karachi and others v. State Life Insurance Corporation of Pakistan, Karachi and 12 others 1999 SCMR 2799 rel.

Shahab Sarki for Appellant along with Wahaj Ali Khan.

Adil Khan Abbasi for Respondent No.1.

Ijaz Ahmed Zahid, Amicus Curiae.

2024 C L D 1314

[Sindh]

Before Muhammad Shafi Siddiqui and Ms. Sana Akram Minhas, JJ

SEARLE PAKISTAN LTD. and another---Appellants

Versus

The COMPETITION COMMISSION OF PAKISTAN through Chairman---Respondent

Miscellaneous Appeal No.7 of 2007, decided on 7th June, 2024.

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

----Ss. 3, 4, 11 & 20---Undue concentration of economic power---Past and future conduct---Pubic interest---Appellant was aggrieved of order passed by Monopoly Control Authority---Held, that power of the Authority, under S. 11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 was in no manner restricted to future transactions only---Power to pass an order could be exercised if "there has been" a contravention i.e. if past conduct of parties constituted contravention of law and also if there "is likely to be a contravention" i.e. future conduct of parties---Monopoly Control Authority could not only pass an order directing future course of action but could also correct past unlawful conducts and could direct the person, found to be in breach of the law, to return the benefit that had been siphoned wrongfully---If this was not done, then the person violating law would be unjustly enriched and his act would defeat the very purpose of law---High Court declined to interfere in conclusion drawn by Monopoly Control Authority in its order as there was a limited scope of appeal under S. 20 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 and there was no transgression of authority---Appeal was dismissed in circumstances.

Pakistan Mobile Communication (Pvt.) Limited v. The Commissioner of Income Tax (C.As Nos. 1081-1092 of 2009) and 2008 CLD 17 rel.

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

----S.11---Proceedings against contravention---Limitation---There is no time limitation given in S. 11 of Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970.

(c) Administration of justice---

----Action taken in public interest---Scope---Where action is to be taken in public interest, it does not mean that such action must be in advancement of public interest, what is required is that it should not harm or prejudice the public interest.

Ashiq Ali Bhutto v. President Summary Military Court and others PLD 1979 Kar. 814 rel.

Jawad A. Qureshi for Appellants.

Ijaz Ahmed along with Hashmatullah Aleem for Respondent.

2024 C L D 1344

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

ZAHOOR AHMED and others---Petitioners

Versus

Messrs AL-ZAMIN LEASING MODARABA and another---Respondents

First Appeal No.23 of 2019, decided on 16th April, 2024.

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

----S. 19---Civil Procedure Code (V of 1908), S. 12(2), O.XXI, Rr. 58 & 60---Execution of decree---Setting aside of judgment---Forged document---Proof---Non-recording of evidence---Effect---Appellants claimed to be owners of mortgaged property on the basis of registered sub-leases of plot in question---Banking Court dismissed application under S. 12(2), C.P.C. and maintained judgment in question---Validity---There were only words against words; it was only in response to S.12(2), C.P.C. application that Banking Court found that the instruments were not genuine and fake---Thus required trial, more particularly when registered instruments were obtained and/or executed much before equitable and registered mortgage of year 2003---Sub-leases of appellants were registered in the year 1998 and application under S. 12(2), C.P.C., could not have been dismissed summarily via order under appeal---Division Bench of High Court set aside order in question and remanded the case to Banking Court to allow parties who might record their respective evidence, if they so desired---Appeal was allowed accordingly.

Ch. Atif Rafique for Appellants.

Faiz H. Durrani for Respondent No.1.

No one appeared for Respondents Nos.2 to 8.

2024 C L D 1373

[Sindh]

Before Yousuf Ali Sayeed and Arbab Ali Hakro, JJ

Syed Ayaz haider---Appellant

Versus

National Bank of Pakistan and 2 others---Respondents

First Appeal No. 26 of 2024, decided on 8th August, 2024.

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

----S.19---Civil Procedure Code (V of 1908), O.XXI Rr.89 & 90---Execution of decree passed by Banking Court---Auction proceedings---Sale---Setting aside sale on deposit of certain amount--Scope---Order XXI, R. 89 of the Civil Procedure Code, 1908, stipulates and allows any person who either owns the property or holds an interest in it by virtue of a title acquired before the sale to apply to have the sale set aside; this is contingent on such person depositing a certain amount in the Court---First condition for setting aside the sale is that the person must deposit a sum equal to five per cent of the purchase money for payment to the purchaser/successful bidder---Second condition is that the person must deposit an amount for payment to the decree-holder---Such amount is specified in the proclamation of sale for the recovery of which the sale is ordered---However, any amount received by the decree -holder since the date of the proclamation of sale is deducted from such/said amount---There is also a restriction that if a person has applied under O. XXI, R. 90 of the Civil Procedure Code, 1908, to set aside the sale of his immovable property, he cannot make or prosecute an application under this rule unless he withdraws his application under Rule 90; this R. also does not relieve the judgment-debtor from any liability he may have in respect of costs and interest not covered by the proclamation of sale.

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

----S.19---Civil Procedure Code (V of 1908), O. XXI Rr. 89 & 90---Execution of decree passed by Banking Court---Auction proceedings---Sale Setting aside of sale on deposit of certain amount---Appellant / Judgment-debtor assailed orders passed by the Banking /Executing Court, whereby application under O. XXI, R. 89 of the Civil Procedure Code, 1908, filed by the appellant was dismissed and on the same day the sale of mortgaged property was confirmed---Contention of the appellant was that the auction proceedings were orchestrated without consideration of the actual market value or price of the property---Validity---Order XXI, R. 90, C.P.C, provides a legal avenue for the annulment of an auction / sale on the grounds of fraud or material irregularity---Conversely, O. XXI, R. 89, C.P.C, offers the judgment-debtor an alternative recourse to circumvent a sale post its valid execution ;this rule endows the judgment debtor with a final opportunity post-auction to have the sale rescinded upon payment of the decretal amount and an additional sum as compensation for the auction purchaser---In light of these provisions, these remedies are mutually exclusive---Once the appellant had embarked on a course of action in accordance with O.XXI R.89, C.P.C, it was not permissible for the appellant to assert that the auction proceedings were conducted without soliciting the actual market of the mortgaged property---Thus, the contention of the appellant was incongruous with the chosen course of action and was, therefore, untenable under the stipulations of O.XXI, R.89 of the Civil Procedure Code, 1908---No case of interference by the appellate /High court was made out---Appeal, filed by the judgment-debtor, was dismissed, in circumstances.

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

----S.19---Civil Procedure Code (V of 1908), O. XXI Rr. 89 & 90---Execution of decree passed by Banking Court---Auction proceedings---Application to set-aside sale---Non-depositing of decretal amount---Effect---Appellant / Judgment-debtor assailed orders passed by the Banking/Executing Court, whereby application under O.XXI, R. 89 of the Civil Procedure Code, 1908, filed by the appellant was dismissed and on the same day the sale of mortgaged property was confirmed---Ground taken by the appellant was that he had deposited (5% of the purchased) amount deposited by the purchaser---Validity---Though record (photostat copy of the Pay Order annexed by the appellant) reflected that he had deposited 5% amount, however, there was no explanation regarding the non-deposit of the decretal amount( specified in the proclamation of sale) by the appellant, which, as per the second condition of R.89 (b) of O.XXI, C.P.C., he /appellant( being person applying to set-aside sale) should have deposited for payment to the decree-holder---No case of interference by the appellate /High court was made out---Appeal, filed by the judgment-debtor, was dismissed, in circumstances.

Anwar Sultan through L.Rs v. Bank Al-Falah Ltd. and others 2014 SCMR 1222 ref.

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

----S.19---Civil Procedure Code (V of 1908), O. XXI Rr. 89 & 90---Execution of decree passed by Banking Court---Sale---Setting aside of sale on deposit of certain amount---Purchase-amount deposited by the bidder with the stipulated time---Appellant / Judgment-debtor assailed orders passed by the Banking/Executing Court, whereby application under O.XXI, R.89 of the Civil Procedure Code, 1908, filed by the appellant was dismissed and on the same day the sale of mortgaged property was confirmed---Objection raised by the appellant was that the purchaser /bidder, despite being explicitly directed by the Executing/Banking Court to deposit the residual 75% of the bid amount within 15 days, had failed to comply with said directive---Validity---Record (diary sheets etc.) showed that the purchaser-bidder was indeed directed to deposit the residual 75% of the bid amount within 15 days ; the purchaser-bidder, in response, deposited the said amount through a Pay Order---By the date mentioned on said Pay Order, if one were to calculate the duration, it unequivocally amounted to 15 days---Thus, it was incontrovertible that the purchaser-bidder had deposited the remaining 75% of the bid amount well within the stipulated time frame---Therefore, the contentions advanced by the appellant were fundamentally flawed and devoid of merit---No case of interference by the Appellate /High court was made out---Appeal, filed by the judgment-debtor, was dismissed, in circumstances .

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

----S.19---Civil Procedure Code (V of 1908), O.XXI Rr. 89 & 90---Execution of decree passed by Banking Court---Auction proceedings---Purchaser-bidder---Vested right---Scope---Appellant / Judgment-debtor assailed orders passed by the Banking/ Executing Court, whereby application under O.XXI, R.89 of the Civil Procedure Code, 1908, filed by the appellant was dismissed and on the same day the sale of mortgaged property was confirmed---Validity---Records revealed that the Executing Court had scheduled the sale of the mortgaged property on seven separate occasions, yet no one stepped forward to participate in the auction---It was only on the eighth attempt that the auction proceedings were successfully conducted---On said occasion, only respondent made an appearance and offered the highest bid---Said bid was accepted by the Court and respondent was consequently declared the successful bidder---Subsequent to said declaration, respondent fulfilled his obligation by depositing the remaining 75% of the bid amount, leading to the confirmation of the sale---As a result of said proceedings, a vested right had been conferred upon the auction-purchaser / respondent---Said right, once established, could not be disturbed or invalidated, thereby solidifying respondent's position as the lawful owner of the property-in-question---No case of interference by the appellate / High Court was made out---Appeal, filed by the judgment-debtor, was dismissed, in circumstances.

Muhammad Saleem Thepdawala for Appellant.

Suleman Huda for Respondent No. 1.

Taimur Ahmed Qureshi for Respondent No. 2.

Ali Raza Litigation Officer NBP.

Date of hearing: 8th August, 2024.

Judgment

Arbab Ali Hakro, J.---Through this 1st Appeal under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (FIO, 2001), the Judgment Debtor (appellant herein) has impugned Orders dated 16.02.2024, passed by learned Banking Court-II, Karachi (Executing Court) in Suit No.89 of 2024 (Execution Appl. No.24. of 2017), whereby application under Order XXI Rule 89 read with Section 151 C.P.C, filed by the appellant was dismissed and on the same day vide separate Order dated 12.02.2024, confirm the sale of mortgaged property.

1. Briefly, the fact is that the respondent-Bank instituted Suit No.89 of 2014 against the appellant under Section 9 of the FIO, 2001, for the recovery of Rs. 14,537,837./-. This was decreed vide an ex-parte judgment dated 08.8.2016 by the Banking Court-II, Karachi, for the recovery of Rs.14,240,404/- in favour of the respondent Bank against the appellant jointly and severally with the cost of funds from the date of default until the realization of the entire decretal amount. The said ex-parte Judgment and Decree were then challenged by the appellant by filling an application under Section 12(2) read with Section 151 of C.P.C which was dismissed by the Banking Court.

2. During the execution proceedings, the mortgaged property bearing Plot No.B-105, measuring 240 Sq. Yds, Block-3 Gulshan-e-Iqbal KDA Scheme No.24, Karachi, was auctioned. The auction took place on 08.01.2024, and respondent No.2 emerged as the highest bidder with an offer of Rs.30,500,000/-, who deposited 25% of the bid amount with the Nazir of the Court. Subsequently, on 19.01.2024, the appellant filed an application under Order XXI Rule 89, read with Section 151 of the C.P.C, to set aside the auction proceedings on the grounds that the auction proceedings were held without calling/ascertaining the actual market value of the mortgaged property. The appellant conveyed his readiness to deposit the balance decretal amount and annexed a copy of the Pay Order dated 18.01.2024 for an amount of Rs.381,250/-, the 5% of the bid amount (i.e., purchase money) for payment to the respondent No.2. The said application of the appellant was dismissed vide the impugned Order dated 16.02.2024. Consequently, on the same day vide separate Order 16.02.2024, the Executing Court confirmed the sale of the mortgaged property. Therefore, the appellant preferred the instant appeal impugning both the above Orders.

3. Mr. Muhammad Saleem Thepdawala, appearing on behalf of the appellant, at the very outset, argued that the learned Executing Court had not considered the fact that the auction purchaser had failed to deposit the remaining 75% amount within 15 days and illegally confirmed the auction. He has argued that the appellant deposited 5% of the purchase amount through a Pay order and annexed the same with the application, but the learned Executing Court has not considered the same and illegally dismissed his application and confirmed the auction. He has also contended that the learned Executing Court has deprived the appellant of his valuable rights in the mortgaged property, so he also deprived more than 200 students of their educational careers. Therefore, application under Order XXI Rule 21 C.P.C. filed by the appellant should be allowed. Lastly, he prayed for setting aside the impugned Order.

4. Conversely, Mr. Suleman Huda and Mr. Taimur Ahmed Qureshi, learned Advocates for respondents Nos.1 and 2, respectively, contended that impugned Orders passed by the learned Executing Court are in accordance with law and require no interference by this Court in the instant appeal. They further contended that respondent No.2 had already deposited the entire amount before the Executing Court, and the sale was confirmed; thus, a vested right was created in favour of respondent No.2.

5. We have heard the learned counsel for the respective parties and have also perused the record and the case law cited at the bar with their assistance. The question is whether the appellant has complied with the conditions envisaged under Order XXI, Rule 89, C.P.C. In such circumstances, it would be imperative to replicate the above provision as follows: -

"89. Application to set aside sale on deposit. (1) Where immovable property has been sold in execution of a decree, any person, either owning such property or holding an interest therein by virtue of a title acquired before such sale, may apply to have the sale set aside on his depositing in the Court-

(a) for payment to the purchaser, a sum equal to five per cent of the purchase-money; and

(b) For payment to the decree-holder, the amount specified in the proclamation of sale is for the recovery of which the sale was ordered, less any amount which may, since the date of such proclamation of sale, have been received by the decree holder.

(2) Where a person applied under rule 90 to set aside the sale of his immovable property, he shall not, unless he withdraws his application, be entitled to make or prosecute an application under this rule.

(3) Nothing in this rule shall relieve the Judgment-debtor from any liability he may be under in respect of costs and interest not covered by the proclamation of sale."

1. The above provision stipulates and allows any person who either owns the property or holds an interest in it by virtue of a title acquired before the sale to apply to have the sale set aside. This is contingent on them depositing a certain amount in the Court. The first condition for setting aside the sale is that the person must deposit a sum equal to five per cent of the purchase money for payment to the purchaser/successful bidder. The second condition is that the person must deposit an amount for payment to the decree-holder. This amount is specified in the proclamation of sale for the recovery of which the sale was ordered. However, any amount received by the decree holder since the date of the proclamation of sale is deducted from this amount. There is also a restriction that if a person has applied under Rule 90 to set aside the sale of his immoveable property, he cannot make or prosecute an application under this rule unless he withdraws his application under Rule 90. This Rule also does not relieve the Judgment-debtor (the person against whom the decree has been passed) from any liability he may have in respect of costs and interest not covered by the proclamation of sale.

2. Upon meticulous examination of the application under Order XXI, Rule 89 of the Code of Civil Procedure (C.P.C), submitted by the appellant to the Banking Court, it is discernible that the appellant's primary contention is that the auction proceedings were orchestrated without consideration of the actual market value or price of the property. However, such a contention is circumscribed under Order XXI, Rule 89, C.P.C. Order XXI, Rule 90, C.P.C provides a legal avenue for the annulment of an auction sale on the grounds of fraud or material irregularity. Conversely, Order XXI, Rule 89, C.P.C offers the judgment-debtor an alternative recourse to circumvent a sale post its valid execution. This rule endows the judgment debtor with a final opportunity post-auction to have the sale rescinded upon payment of the decretal amount and an additional sum as compensation for the auction purchaser. In light of these provisions, these remedies are mutually exclusive. Once the appellant has embarked on a course of action in accordance with Order XXI, Rule 89, C.P.C, it is not permissible for the appellant to assert that the auction proceedings were conducted without soliciting the actual market value of the mortgaged property. This assertion is incongruous with the chosen course of action and is therefore untenable under the stipulations of Order XXI, Rule 89, C.P.C.

2024 C L D 1391

[Sindh]

Before Sana Akram Minhas, J

FIRST WOMEN BANK LIMITED through duly Constituted Attorneys---Plaintiff

Versus

Messrs HASCOL PETROLEUM LIMITED through CEO/MD---Defendant

Banking Suit No.B-28 of 2023, decided on 15th August, 2024.

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

----S.10---Limitation Act (IX of 1908), S. 5---Suit for recovery of finance---Leave to defend the suit, filing of---Limitation---Issuance of process on wrong address---Effect---Invalid Service---Appellant / Defendant sought condonation of delay in filing of application for leave to Defend on the plea of issue of process on wrong address---Validity---Service via registered post and courier directed to old, incorrect registered address instead of current registered office, constituted invalid service---Limitation period for filing application for leave to defend the suit had not commenced and application was filed within the prescribed timeframe---Calculating 30-day period for filing of leave to defend application from date of receiving notice through Court Bailiff on 24-7-2023, the application was well within the prescribed timeframe---Computing 30-day period for filing leave to defend application from date of newspaper publications i.e. 12-7-2023, there was delay of two days in filing the application on 15-8-2023---High Court condoned delay in terms of proviso to S. 10(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court treated application filed under S. 5 of Limitation Act, 1908 as application under S. 10(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001 and allowed the same---As long as a court has jurisdiction to hear and decide an application or a case citing an incorrect legal provision does not impede its ability to exercise that authority---High Court allowed respondent/bank to file its replication if so required---Application was allowed accordingly.

Ayub Raza v. Bank Al Falah 2019 CLD 602; The Bank of Punjab v. Hascol Petroleum Limited Banking Suit No.B-45/2022; Deutsche Bank v. Fateh Textile Mills 2019 CLD 285; J.S. Bank v. Landhi Steel Mill 2018 CLD 1016; Nazir Hussain v. Bank of Punjab 2007 CLD 687; Mubarak Ali v. First Prudential Modaraba 2011 SCMR 1496; Muhammad Amin v. National Bank of Pakistan 2021 CLD 553; Muhammad Yaqoob Akhtar v. Habib Bank Ltd. 2009 CLD 1699; Aamer Enterprises v. United Bank Limited 2009 CLD 342; Zarai Taraqiyati Bank v. Muzaffar Khan 2023 CLD 1339; Axle Products v. Allied Bank 2011 SCMR 1469; Muslim Commercial Bank v. Aslam Khan 1987 CLC 2043; Asif Kudia v. KASB Bank Limited 2014 CLD 1548 = 2015 CLC 1734; Allied Bank v. Sultan Ali 2015 CLD 759; Muhammad Bilal v. Union Bank 2004 CLD 1555; Safia Bibi v. Aisha Bibi 1982 SCMR 494; Pakistan Fisheries Ltd. v. United Bank Ltd. PLD 1993 SC 109; Jane Margrete William v. Abdul Hamid Mian 1994 SCMR 1555; Asif Kudia v. KASB Bank Limited 2014 CLD 1548 = 2015 CLC 1734 and Al-Khair Gadoon Ltd. v. The Appellate Tribunal 2019 SCMR 2018 ref.

Gohar Mahmood along with Ms. Sobia Mehak, Law Officer, FWBL for Plaintiff.

Ms. Maria Ahmed for Defendant.

2024 C L D 1407

[Sindh]

Before Muhammad Shafi Siddiqui and Omar Sial, JJ

Messrs S.M. CORPORATION (PVT.) LTD. Managing Director and 2 others---Appellant

Versus

MUHAMMAD MOHSIN BUTT (deceased) through legal heirs and others---Respondents

High Court Appeal No.220 of 2004, decided on 8th April, 2024.

Companies Ordinance (XLVII of 1984) [Since repealed]---

----Ss. 290, 291 & 292---Limitation Act (IX of 1908), First Sched., Art.181---Rendition of accounts, division of assets / properties and recovery of future dividends---Limitation---Intricate questions---Conducting of inquiry---Applicant sought rendition of accounts, division of assets / properties and recovery of future dividends---Held, that these were intricate questions and required evidence---Judge in Chambers of High Court did not apply his mind as to maintainability of company petition on the touchstone of Art. 181 of Limitation Act, 1908---Division Bench of High Court declined to decide such question as deciding the same without giving an opportunity to parties to address such question before Judge in Chambers of High Court and recording of evidence would be unfair---Parties intended to agitate maintainability of company petition on the touchstone of Art. 181 of Limitation Act, 1908, before Judge in Chambers of High Court and if required evidence would be recorded---Division Bench of High Court expected that finding would be recorded on point of limitation in addition to other intricate questions as were investigated in terms of judgment under appeal---Appeal was disposed of accordingly.

None Present for Appellant No.1.

Muhammad Najeeb Jamali for Respondents Nos.2 and 3.

Amir Saleem for Respondents Nos.1(ii) and (iii).

Noor Muhammad for Respondents Nos.3 and 4.

2024 C L D 1419

[Sindh]

Before Yousuf Ali Sayeed, J

Messrs POPULAR INTERNATIONAL (PVT.) LTD., through CEO---Plaintiff

Versus

Messrs ETISALAT GROUP through Chief Executive Officer---Defendant

Civil Suit No.110 of 2022, decided on 23rd April, 2024.

Civil Procedure Code (V of 1908)---

----O. VII, R. 10---Suit filed in Pakistan---Territorial jurisdiction---Scope---Return of plaint---Plaintiff (private limited company incorporated in Pakistan) filed suit for damages against the defendant which was a telecommunications company based in the United Arab Emirates---Claim of the plaintiff's Chief Executive Officer was that he was arrested when he landed at Dubai Airport due to a criminal case registered for fraudulent misuse of a SIM card issued by the defendant---Defendant filed an application under O. VII, R. 10 of the Civil Procedure Code, 1908---Validity---Suit was misconceived, for having been brought in the name of the wrong plaintiff as the cause of action, if any, accrued in favour of the Chief Executive Officer in his individual capacity rather than the company, and that too beyond the territorial jurisdiction of the Court---Application under O.VII, R. 10 of the Civil Procedure Code, 1908, filed by the defendant, was allowed, in circumstances, and the original plaint was returned.

Aamir Raza for Plaintiff.

Mansoor Hassan Khan for Defendant.

2024 C L D 1474

[Sindh]

Before Zulfiqar Ahmad Khan, J

Messrs GETZ PHARMA INTERNATIONAL FZ LLC through Authorized Attorney---Appellant

Versus

The REGISTRAR OF TRADE MARKS and another---Respondents

Miscellaneous Appeal No.63 of 2022, decided on 10th July, 2024.

Trade Marks Ordinance (XIX of 2001)---

----Ss.17, 39 & 114---Registered trade mark---Rights and privileges---Deceptive similarity and confusion---Effect---Appellant / objector was aggrieved of order passed by Registrar of Trade Marks dismissing its objection against disputed trade mark of respondent / company---Validity---Concept of totality of impression, test of average consumer etc. recorded by Registrar in his order was misconceived and erroneous---There were strong reasons disclosed by Appellant / objector in its opposition (application) which justified grant of such opposition and consequent rejection of application of registration of disputed trade mark in favour of respondent / company---High Court directed respondent / company to change disputed trade mark to any other trade name, which was not deceptively similar to appellant's / trade mark or any third party's trademark and to make appropriate applications before Security and Exchange Commission of Pakistan and Drug Regulatory Authority etc. to do the needful---High Court set aside order passed by Registrar Trade Marks---Appeal was allowed in circumstances.

Messrs Burney's Industrial and Commercial Co. Ltd. v. Messrs Rehman Match Works" PLD 1983 Kar. 357; Messrs Mehran Ghee Mills (Pvt.) Limited and others v. Messrs Chiltan Ghee Mill (Pvt.) Limited and others 2001 SCMR 967; Jamia Industries Ltd. v. Caltex Oil (Pak) Ltd. and another PLD 1984 SC 8; Seven-Up Company v. Kohinoor Thread Ball Factory and 3 others PLD 1990 SC 313; Shan Food Industries v. Eastern Products (Pvt.) Ltd. and others 2012 SCMR 1504 and Messrs Farooq Ghee and Oils Mills (Pvt.) Ltd. v. Registrar of Trade Marks, Trade Mark Registry and others 2015 CLD 1245 rel.

Zain Shaikh for Appellant.

Salim Ghulam Hussain for Respondent No.1.

Zulfiqar Ali for Respondent.

Sarmad Khan Azad for Respondent No.2 along with Qasim Iqbal for Respondent.

Alqamah Bin Mehmood for Respondents.

2024 C L D 1518

[Sindh]

Before Muhammad Junaid Ghaffar and Jawad Akbar Sarwana, JJ

CIVIL AVIATION AUTHORITY OF PAKISTAN---Petitioner

Versus

FEDERATION OF PAKISTAN and others---Respondents

C.P. No.1513 of 2024, decided on 30th May, 2024.

State-Owned Enterprises (Governance and Operations) Act (VII of 2023)---

----Ss. 2 (e)(ii) & 3---Rules of Business, 1973, R. 8(2)---Income Tax Ordinance (XLIX of 2001), Ss.54 & 134A [as amended by the Finance (Amendment) Act, 2024]---Inter Division Procedure---Alternate Dispute Resolution---State-owned enterprise---Tax exemption, dispute of---Petitioner / Civil Aviation Authority claimed that it was exempted from levy of income tax and that it was not obliged to follow Alternate Dispute Resolution---Validity ---Petitioner was an authority generating its revenue from selling services on a commercial basis, therefore, provision of S. 2(e)(ii) of State-Owned Enterprises (Governance and Operations) Act, 2023 was fully attracted---Petitioner / Authority was being run on a commercial basis and was controlled or managed by Federal Government---Petitioner / Authority was covered by State- Owned enterprises (Governance and Operations) Act, 2023---Internal mechanism under S.134A of Income Tax Ordinance, 2001, was evolved for quick disposal of tax disputes between State-Owned Enterprises and Federal Board of Revenue, as in any such disputes, it was, in fact, the Federal Government who was the ultimate loser, by way of litigation costs besides delay in settlement of such disputes from Courts of law---High Court declined to exercise its discretion under Art. 199 of the Constitution so as to adjudicate the matter on merits---High Court directed petitioner / Authority to either avail Alternate Dispute Resolution mechanism under S. 134A of Income Tax Ordinance, 2001 or under R. 8(2) of Rules of Business, 1973 and if at all the issue was not resolved by way of such two alternate mechanisms and petitioner / Authority remained aggrieved, then the petitioner / Authority was at liberty to seek remedy as could be available under the law---High Court directed Federal Board of Revenue to form Committee in terms of S.134A(3) of Income Tax Ordinance, 2001, in case petitioner / Authority would opt for Alternate Dispute Resolution in terms of S.134A of Income Tax Ordinance, 2001---High Court directed Inland Revenue authorities to halt recovery proceedings under S.134A(7) of Income Tax Ordinance, 2001, as soon as a Committee was notified---Constitutional petition was disposed of accordingly.

1995 SCMR 1647; PLD 2013 Lahore. 343; Province of Punjab v. Haroon Construction Company 2024 SCMR 947; Faisal Zafar v. Siraj-ud-Din 2024 CLD 1; Netherlands Financierings Maatschappij Voor Ontwikkelingslanden N.V. (F.M.O.) v. Morgah Valley Limited and SECP PLD 2024 Lah. 315 = 2024 CLD 685 and Shehzad Arshad v. Pervez Arshad 2024 CLD 1121 ref.

Ammar Athar Saeed and Usman Alam for Petitioner.

Dr. Shahnawaz Memon for Respondents.

Kashif Nazeer, Assistant Attorney General.

2024 C L D 1536

[Sindh]

Before Yousuf Ali Sayeed and Arbab Ali Hakro, JJ

CITIBANK N.A.---Appellant

Versus

MUHAMMAD TASLEEM and others---Respondents

I.A. No.33 of 2018, decided on 18th September, 2024.

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

----Ss. 2(d), 9 & 16(3)---Suit for recovery of damages filed before the Banking Court---Maintainability---Claim for damages grounded in tort---Effect---Agreement between the parties in relation to the finance facility---Customer filed a suit against the Bank for declaration / possession, etc., including prayer for recovery of damages---Prayer(s) sought by the plaintiff /customer stemmed from Bank's act of repossession of motor vehicle obtained by the plaintiff / customer through car finance facility---Appellant/Bank preferred appeal against the judgment passed by Banking Court in favour of customer accepting his claim of damages---Argument of the appellant /Bank was that as the claim of the respondent (plaintiff /customer) was for damages based on an allegation of a tortuous act, the matter did not fall within the ambit of the Financial Institutions (Recovery of Finances) Ordinance, 2001 (' the Ordinance 2001'), and hence not within the jurisdiction of the Banking Court; that, as the respondent / customer had defaulted in its repayment obligations, repossession of the vehicle had ensued validly for cause within the scope of S.16 (3) of the Ordinance, 2001 as underlying agreements entered into between the parties in relation to the finance facility---Validity---Plaint along with prayer(s), revealed that the claim of the plaintiff (respondent / customer) for damages predicated on the assertion that the act of repossession undertaken at the behest of the appellant had been wrongful and had caused him mental suffering and loss of reputation in the sum claimed ; thus ,the said claim was grounded in tort---Whilst a suit for damages arising out of a breach of contract executed in respect of a loan or finance between the Banking Company on the one hand and the borrower or customer on the other could be entertained by the Banking Court, however, a suit based on tort did not full within the competence of such forum and claim for damages in tort was struck out---A claim for pecuniary compensation could either arise from a tortious act i.e. not based on any contract or a breach of a contractual obligation not pertaining to an accommodation of facility of finance as defined under S. 2(d) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and for these two categories of claims obviously the Banking Court is not the appropriate forum---However, a claim for pecuniary compensation could also arise on account of the failure of a financial institution to fulfill its obligation in relation to any financial accommodation or facility---It is this category of claim which certainly comes within the scope of S.9 of financial institutions (Recovery of Finances) Ordinance, 2001 and a suit relating thereto is always maintainable before a Banking court---However, a perusal of even the affidavit-in-evidence filed by the respondent /customer reflected the same to be bereft of any assertion whatsoever regarding the mental suffering or loss of reputation alleged in the plaint, failing even to incorporate the averments set out in the relevant paragraphs, as such, the burden of proof as to damage remained completely undischarged---Where the damages claimed are not alleged to represent economic loss associated with a breach of contract but are based purely in tort, and also remain unproven to any degree, the determination of the Banking Court cannot stand on either the jurisdictional or evidentiary plane---High Court set-aside the impugned judgment passed by the Banking Court---Appeal, filed by the Bank, was allowed, in circumstances.

Nasimuddin Siddiqui v. United Bank Limited 1998 CLC 1718; Abdul Rehman Allana v. Citibank 2003 CLD 1843; M. Nujeebullah Qureshi v. Messrs Citibank N.A. 2009 CLD 49; Messrs M.M.K Rice Mills v. Grays Leasing and others 2006 CLD 1147; Citibank N.A v. Syed Shahanshah Hussain SBLR 2009 Sindh 1290 and Messrs Klb-e-Hyder and Company (Pvt.) Ltd. v. National Bank of Pakistan and 3 others 2008 CLD 576 ref.

Nabeel Ahmed Kolachi for Appellant.

Noor Muhammad Dayo for Respondents.

2024 C L D 1563

[Sindh]

Before Muhammad Shafi Siddiqui, CJ and Jawad Akbar Sarwana, J

Messrs ADAMJEE INSURANCE COMPANY LIMITED---Petitioner

Versus

The PRESIDENT, ISLAMIC REPUBLIC OF PAKISTAN and 3 others---Respondents

C.P. No.D-1379 of 2023, decided on 5th September, 2024.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 122 & 127---Constitution of Pakistan, Art. 199---Constitutional petition---Insurance dispute---Fire policy---Mal-administration---Ombudsman and Insurance Tribunal, jurisdiction of---Scope---Petitioner / Insurance Company was aggrieved of directions issued by Ombudsman to pay compensation to respondent / policy holder---Validity---Ombudsman travelled away from his contours defined under law---It was a case to be tried before Insurance Tribunal and not by the Ombudsman---Respondent / policy holder opted for wrong forum for a claim under fire policy---If such adjudication of policy claim was entrusted to Ombudsman, adjudication via Insurance Tribunal would become redundant---Adjudication of fire policy was not required under S. 127 of Insurance Ordinance, 2000---High Court did not find any mal-administration whereas merit of claim was not adjudicated before proper forum---High Court set aside concurrent findings by two fora below as lack of jurisdiction exercised had reduced the findings to a cipher---Constitutional petition was allowed in circumstances.

Muhammad Ghazali Shaikh for Petitioner.

Shahab Imam for Respondent No.4.

2024 C L D 1

[Lahore (Rawalpindi Bench)]

Before Jawad Hassan, J

FAISAL ZAFAR and another---Petitioners

Versus

SIRAJ-UD-DIN and 4 others---Respondents

Civil Original No. 6 of 2022, decided on 10th October, 2023.

(a) Companies Act (XIX of 2017)---

----Ss. 276 & 277--- Company/commercial matters---Resolution of dispute through mediation--- Mediation--- Scope and benefits---Mediation offers a voluntary and confidential alternative to traditional court proceedings for resolving disputes---In this process, disputing parties willingly engage in discussions facilitated by a neutral third party known as the mediator---Unlike court proceedings, mediation is a more informal and flexible approach, fostering open communication and creative problem solving---Mediator's role is not to make decisions but to guide the parties in finding common ground and exploring potential solutions---One of the key advantages of mediation is its cost-effectiveness compared to court proceedings---It also tends to be a faster method of resolution, putting more control in the hands of the parties involved---Informality of mediation contributes to a quicker resolution compared to the often time-consuming nature of court proceedings---Additionally, the process preserves relationships, as parties actively engage in finding mutually agreeable solutions---Flexibility of mediation allows for a more personalized and tailored resolution to the specific needs and concerns of the parties involved.

(b) Companies Act (XIX of 2017)---

----Ss. 6, 276, 277, 280, 282, 286 & 287 & Preamble---Prevention of oppression and mis-management---Resolution of dispute through mediation---Mediation and Conciliation Panel---Early Neutral-Party Evaluation ("ENE"), process of---Doctrine of expeditious resolution of corporate disputes through mediation---Scope---Corporate dispute or petition under Ss. 286 & 287 of the Companies Act, 2017 ("Act") alleging the mismanagement of members of a company may be resolved through mediation and compromise before passing any determination by the Court with the consent of the parties involved in such dispute---Sections 276 and 277 of the "Act" can be invoked in order to protect the interest of the "Company" and the Court can initiate process of Early Neutral-Party Evaluation ("ENE") and then mediation---In the present case mediation was set forth amongst parties supervised by the regulatory authority i.e. the Securities and Exchange Commission of Pakistan ("SECP"), which mediation worked and was met with desired fruits as well with mutual coordination and cooperation of counsel for the parties---High Court directed that the parties shall adhere to the compromise deed and the "SECP", being regulator, shall facilitate them with regard to division of the Company and decide their matter arising out of mediation---Petition was disposed of accordingly.

Messrs U.I.G. (Pvt.) Limited through Director and 3 others v. Muhammad Imran Qureshi 2011 CLC 758; Messrs ALSTOM Power Generation through Ashfaq Ahmad v. Pakistan Water and Power Development Authority through Chairman and another PLD 2007 Lah. 581 and Mall Road Traders Association v. The Deputy Commissioner, Lahore 2019 CLC 744 ref.

Ahmer Bilal Soofi, Senior Advocate Supreme Court, Samar Masood, Usman Jilani, Barrister Zainab Nasir Khan, Fatima Midrar and Barrister Aiema Asrar for Petitioners.

Nadeem Ahmad Sheikh, Advocate Supreme Court for the Respondents Nos.1 to 3.

Barrister Osama Amin Qazi for Respondent No.4.

Muzaffar Ahmad Mirza, Chief Prosecutor/Executive Director, Legal Affairs, SECP along with Fatima Shabbir and Barrister Zunaira Fayyaz for SECP.

Malik Saqib Mehmood Khalid, Qurraish Mughal and Malik Shaukat Mahmood for Respondents.

2024 C L D 30

[Lahore]

Before Tariq Saleem Sheikh, J

AHMAD FARAN SABIR---Petitioner

Versus

The STATE and another---Respondents

Criminal Miscellaneous No. 8564/M of 2022, heard on 26th May, 2022.

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

----Ss. 5 & 118---Criminal Procedure Code (V of 1898), Ss. 249-A & 561-A---Penal Code (XLV of 1860), S. 489-F---Presumptions as to negotiable instrument--- Petitioner moved an application under S. 249-A, Cr.P.C., before the Trial Court for his acquittal claiming that the charge against him was groundless and there was no probability of him being convicted of any offence---Said application was dismissed---Decision of the Trial Court was upheld in revision by the Revisional Court---Validity---Petitioner had neither denied his signature on Cheque in question nor the fact that it was drawn on his account---Petitioner had challenged its validity on the premise that it did not conform to the requirements of S. 5 of the Negotiable Instruments Act, 1881---Cheque in question contained the expression "Pay cash or bearer"---In view of the said discourse, the contention was repelled---Allegedly, police had found defence plea of petitioner correct during investigation, which might help him during the trial but not at present stage---Investigating Officer had the mandate only to collect the evidence pertaining to the case he was investigating and to dig out the truth and then submit report in terms of S. 173, Cr.P.C.---Said report, however, was not a piece of evidence itself---If the cheque said "pay cash" and the words "or bearer" were not scored off, the person in possession of the instrument would be presumed to be a holder in due course---In the instant case, respondent No. 2 (complainant) enjoyed the same presumption in respect of Cheque in question which could be rebutted at a regular trial where the parties have equal opportunity to adduce evidence to prove their respective claims and test the credibility of the witnesses of the other side through cross-examination---Sole opinion of the Investigating Officer could not negate that presumption---Section 249-A, Cr.P.C., reflected a compromise between the collective good of the society and the rights of an individual offender---Idea was to spare the offender the rigors of full trial if the Court at any stage found that the charge was groundless and the prosecution was not likely to succeed, however, present case was not a case in which the provisions of S. 249-A, Cr.P.C., could be invoked---Petition had no merit and was therefore dismissed.

Muhammad Sultan v. The State 2010 SCMR 806; North and South Insurance Corporation Limited v. National Provincial Bank Limited, [1936] 1 K.B. 328; Cole v. Milsome, [1951] All ER 311; Orbit Mining and Trading Co. Ltd. v. Westminster Bank Ltd., [1963] 1 QB 794; Col. Shah Sadiq v. Muhammad Ashiq and others 2006 SCMR 276 and Muhammad Bashir v. Station House Officer Okara Cantt. and others PLD 2007 SC 539 rel.

(b) Criminal Procedure Code (V of 1898)---

----Ss. 249-A & 561-A--- Quashing of proceedings--- Inherent jurisdiction of High Court---Scope---In law, S. 561-A, Cr.P.C., did not confer an alternative or additional jurisdiction on the High Court---Said provisions of law merely preserve it's inherent jurisdiction to enable it to make such orders as might be necessary to give effect to an order under the Criminal Procedure Code, 1898 or to prevent the abuse of the process of any Court or otherwise to secure the ends of justice---Said section could not be used to stifle prosecution---High Court should invoke S. 561-A, Cr.P.C., for quashing the proceedings pending before the Trial Court in exceptional circumstances.

Ijaz Feroze and Zia Ullah Khan for Petitioner.

Rana Tasawar Ali Khan, Deputy Prosecutor General for the State.

Abdul Khaliq Safrani and Muhammad Awaiz Riaz for Respondent No. 2.

2024 C L D 100

[Lahore]

Before Shujaat Ali Khan, J

RABEAH HUSSAIN and 3 others---Appellants

Versus

NUSRAT AFTAB and 6 others---Respondents

F.A.O. No. 73598 of 2021, decided on 15th February, 2022.

Partnership Act (IX of 1932)---

----S. 42---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Specific Relief Act (I of 1877), Ss. 39, 42 & 54---Suit for declaration, rendition of account, permanent injunction and recovery---Dissolution of partnership---Death of a partner---Interim injunction, refusal of---Scope---Plaintiff claimed that cl. 12 of the Partnership Deed was against the injunction of Islam as a partnership could not continue in the event of death of a partner---Validity---Plaintiffs on the ground that cl. 12 of the Partnership Deed was against injunctions of Islam were not entitled for interim relief on the said ground alone as it was to be decided by Trial Court after thrashing evidence of the parties, as to whether cl. 12 was valid or not, thus, no opinion could be rendered by the Court in that regard---Allegedly, in case the appeal was not accepted the plaintiffs would suffer irreparable loss, however monetary loss did not constitute irreparable loss rather in case a party was found entitled to any fiscal benefit, at the time of final adjudication of the matter, the Court would be empowered to order in that regard but no relief could be granted under O. XXXIX, Rr. 1 & 2, C.P.C.---Three ingredients i.e. prima-facie case, balance of inconvenience in favour of the plaintiff and irreparable loss must exist for grant of temporary injunction, which were missing in the case of the plaintiffs---Trial Court had committed no illegality while declining application of grant of temporary injunction--- Appeal was dismissed, in circumstances.

Islamic Republic of Pakistan through Secretary, Establishment Division, Islamabad and others v. Muhammad Zaman Khan and others 1997 SCMR 1508; Khan Muhammad Niazi v. Messrs Habib Bank Ltd. Assistant Vice-President and Incharge Vigillance Team, President's Secretariat, Habib Bank Annex, Head Office, Karachi and 3 others 1997 MLD 1304; Messrs United Bank Ltd. v. Messrs Iftikhar and Company and 6 others PLD 1990 Lah. 111; Iftikhar Siddiqui v. Clifton Cantonment Board and others PLD 1998 Kar. 373; Atif Mehmood Kiyani and another v. Messrs Sukh Chayn Private Limited, Royal Plaza, Blue Area, Islamabad and another 2021 SCMR 1446 and M.S.V. Narayanan Chettiar v. M.S.M. Umayal Achi AIR 1959 Madras 283 ref.

Muhammad Ashraf Khan v. Abdul Qadar and 3 others 1995 SCMR 296; Commissioner of Income-Tax v. Ganeshi Lal and Sons 2000 PTD 677; Messrs Eastern Medical Technology Services v. Province of Punjab and others PLD 2019 Lah. 395; Bolan Beverages (Pvt.) Ltd. v. PEPSICO Inc. and 4 others 2004 CLD 1530; Irshad Hussain v. Province of Punjab and others PLD 2003 SC 344 and Mrs. Khalida Azhar v. Rustam Ali Bakhshi and others 2007 CLC 339 rel.

Hafeez ur Rehman Ch. assisted by Noor Dad Chaudhry for Appellants.

Rana Shamshad Khan, Additional Advocate General with Ms. Rashida Batool, Registrar of Firm, Sialkot for Respondens.

Malik Shahbaz Ahmad for Respondent No.1.

Barrister Osama Ahmad for Respondent No.6.

2024 C L D 113

[Lahore (Rawalpindi Bench)]

Before Jawad Hassan, J

Ch. SHAUKAT ALI NOON and another---Petitioners

Versus

TEHZEB BAKERS (PVT.) LIMITED and others---Respondents

Civil Original No. 4 of 2023, decided on 19th December, 2023.

(a) Jurisdiction---

----Every Court prior to taking cognizance and adjudicating upon an issue should first resort to the question of assumption of its jurisdiction and if it comes to the conclusion that jurisdiction can be assumed only then the issue can be adjudicated upon.

Government of Sindh through Secretary Education And Literacy Department and others v. Nizakat Ali and others 2011 SCMR 592 and Fauji Foundation and another v. Shamimur Rehman PLD 1983 SC 457 ref.

(b) Companies Act (XIX of 2017)---

----Ss. 118 & 119---'Shareholders' and 'members'---Meaning and scope---Company consists of members, though it has its own separate legal entity and its members are the persons who constitute the company as a corporate body---In the case of a company limited by shares, the shareholders are the members---Terms "members" and "shareholders" are usually used interchangeably, being synonymous, as there can be no membership except through the medium of shareholding---Thus, in general, every shareholder is a member and every member is a shareholder---However, there may be exceptions to this statement; a person may be a holder of shares by transfer but will not become its member until the transfer is registered in the books of the company in his favour and his name is entered in the register of members---Similarly, a member who has transferred his shares, though he does not hold any shares yet he continues to be a member of the company until the transfer is registered and his name is removed from the register of members maintained by the company---In a company limited by guarantee, the persons who are liable under the guarantee clause in its Memorandum of Association are members of the company---Likewise, in an unlimited company, the members are the persons who are liable to the company, each in proportion to the extent of their interests in the company, to contribute the sums necessary to discharge in full, the debts and liabilities of the company, in the event of its being wound up.

(c) Companies Act (XIX of 2017)---

----Ss. 118, 119 & 286--- Prevention of oppression and mis-management---Application to Court under S. 286 of the Companies Act, 2017---Maintainability---Purported partners and shareholders in a company---Allegations of company's affairs being run in an unlawful and fraudulent manner---Sections 118 & 119 of the Companies Act, 2017 ("Act") define the modes of becoming a member of a company; firstly by subscribing to memorandum; secondly by allotment of shares; and, thirdly by entering their name in the register of members of a company in terms of S. 119 of the "Act"---Though the petitioners in the present case claim themselves as members and shareholders of the subject company but none of the modes, mentioned above, which create obligation upon them, have been fulfilled for invoking S. 286 of the Act---Requirements setting out the essential attributes of a member, cannot therefore, be disregarded---Petitioners never remained the members or shareholders of the company, hence, the prayers made by them cannot be acceded to---Petition under S. 286 of the Act was dismissed.

(d) Companies Act (XIX of 2017)---

----S. 286--- Prevention of oppression and mis-management---Application to Court under S. 286 of the Companies Act, 2017---Scope---Issues with respect to trademark or intellectual property rights cannot be settled through a petition under S. 286 of the Companies Act, 2017.

Nadeem Kiani v. Messrs Americal Lycetuff Pvt. Limited and others 2021 CLD 7 ref.

(e) Companies Act (XIX of 2017)---

----S. 286---Companies Ordinance (XLVII of 1984), Ss. 39 & 40 [since repealed]---Prevention of oppression and mis-management---Proof---Application to Court under S. 286 of the Companies Act, 2017---Maintainability---In the case in hand, the record submitted by the Securities and Exchange Commission of Pakistan (SECP) verifies the stance of the respondents by reporting that a company was registered vide Certificate of Incorporation dated 20.01.2012 and as per Memorandum of Association and Articles of Association, the respondents were reported as subscriber/members/directors having 5100, 4950 and 4950 shares respectively---Further, as per Form 26 dated 28.01.2013, a request was made after passing a special resolution under S. 39 of the Companies Ordinance, 1984 ("Ordinance") for change of name of the company to its current name, which request was acceded to under S. 40 of the "Ordinance" vide certificate dated 18.02.2013---SECP has also reported that vide Form 29 dated 25.10.2021, received in its office on 31.03.2022, the three respondents were appointed as Directors, with one of them also appointed as the Chief Executive Officer---Notably, the company prior to its name change was registered with the "SECP" on 20.01.2012 by one of the respondents as sole proprietor but interestingly, the petitioners did not agitate the matter before the concerned forums at the relevant time regardless of the fact that a remedy of rectification of register does lie with the High Court under S. 126 of the Companies Act, 2017 ("Act")---Furthermore, the petitioners could have approached the "SECP" regarding alleged fraud of the respondents in the affairs of the company and could have gotten information through online service/SDMS portal provided by the SECP or alternatively by lodging complaint or writing an email or even through the phone provided for resolving complaints or even could have contacted through fax; but none of these methods were ever used by the petitioners to strengthen their version and they remained mum for almost ten years and now the present petition has been filed on 21.03.2023 which is also hit by period of laches---Documents annexed with present petition do not show that the affairs of the Company are being conducted in an unlawful and fraudulent manner because the annexed documents includes the deeds of partnership, letter of trademark registry and agreement between the parties; hence the petitioners have not brought on record anything which would constitute and lead to the conclusion that they are the members or shareholders of the company or that its affairs are being conducted in violation of S. 286 of the Act---Petition under S. 286 of the Act was dismissed.

Abdullah Khan Usmani v. Securities and Exchange Commission of Pakistan and others 2022 CLD 821 ref.

Saqib Shafique for Petitioners.

Kashif Ali Malik, Advocate Supreme Court with Malik Ghulam Mustafa, Barrister Gulsher Ali and Qaisar Abbas Gondal for Respondents Nos. 1 to 4.

Mirza Muzaffar Ahmed, Chief Prosecutor along with Fatima Shabbir and Shahzad Ali Rana for Respondents-SECP.

2024 C L D 137

[Lahore (Multan Bench)]

Before Muhammad Sajid Mehmood Sethi and Muhammad Raza Qureshi, JJ

Messrs Haji MEHDI HASSAN AND SONS through Partners and 2 others---Appellants

Versus

ALLIED BANK LIMITED through Duly Authorized Attorney/Branch Manager---Respondent

R.F.A. No. 13 of 2017, heard on 28th November, 2022.

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

----S. 4---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss. 9 & 10---Suit for recovery---Grant of leave, refusal of---Documents relied by the Bank---General allegations asserted by the customer---Application for grant of leave filed by the customer/ appellants was rejected by the Banking Court---Validity---Record revealed that claim of the respondent/Bank was supported by as many as six documents having been annexed with the plaint, among which the statement of accounts was certified the within the meaning of S. 4 of the Bankers' Books Evidence Act, 1891, therefore, there was no doubt in its authenticity and validity---Appellant/customer disputed the veracity of annexed documents through leave application without any documentary proof, thus, it did not constitute a plausible defense---Appellants failed to present any substantial question of fact or law, which needed to be tried or investigated into---Appellants did not append any proof regarding alleged repayment which were suppressed by the respondent/Bank---In banking suits, the parties had no option to make general allegation/assertions, especially in respect of amounts but must be absolute and specific in said regard---Appellants were rightly held disentitled for grant of leave---No illegality or infirmity was noticed in the impugned judgment and decree passed by the Banking Court---Appeal filed by the customer was dismissed, in circumstances.

Messrs New Bhatti Oil Mills through Proprietor and another v. National Bank of Pakistan through Principal Officer and Attorney Holder 2016 CLD 1805; PAK OMAN Investment Company Limited v. CRESOX (Pvt.) Limited 2017 CLD 1659 and National Bank of Pakistan v. Messrs Kohinoor Spinning Mills and others 2021 CLD 1112 ref.

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

----Art. 84---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9---Suit for recovery---Grant of leave, refusal of---Filing of application for renewal of finance facility, denial of---Appellant/customer denied signatures upon sanction letter regarding renewal of finance facility---Validity---Under Art. 84 of the Qanun-e-Shahadat, 1984, the Court enjoined plenary powers to itself compare the signature along with other relevant material to effectively resolve the main controversy---High Court compared the signatures of appellants on relevant sanction letter with admitted signatures on sanction advice and found them similar---Appellants could not deny said similarity on both documents---Thus, the questions regarding non-filing of application for renewal of finance facility and non-execution of other documents did not arise---Appellants were rightly held disentitled for grant of leave---No illegality or infirmity was noticed in the impugned judgment and decree passed by the Banking Court---Appeal filed by the customer was dismissed, in circumstances.

Messrs Waqas Enterprises and others v. Allied Bank of Pakistan and 2 others 1999 SCMR 85 and Dr. Ijaz Ahmad v. Mst. Nasreen Akhtar and others 2005 SCMR 1295 ref.

Muhammad Suleman Bhatti for Appellants.

Muhammad Riaz Kamlana for Respondent.

2024 C L D 148

[Lahore]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

NATIONAL BANK OF PAKISTAN through Authorized Attorney---Appellant

Versus

Messrs BRITE CHEMICALS through Managing Partners and others---Respondents

R.F.A. No. 1538 of 2015, decided on 21st September, 2023.

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

----Ss. 3, 9, 22 & 29(2)---Suit for recovery of finance---Cost of funds, non-awarding of---Effect---Suit filed under previous law i.e. Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 was decreed in favour of appellant bank without awarding cost of funds---Validity---In terms of S. 29(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, no decree could lawfully be passed under Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997 with respect to markup-based finance and only interest-bearing loans could be decreed under S. 15 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---If at all decree had to be passed regarding markup-based finance, in all possibility, it had to be under Financial Institutions (Recovery of Finances) Ordinance, 2001---Provision of S. 29 was the bridge for dealing with adjudication of claims of markup-based finances under the provisions of Financial Institutions (Recovery of Finances) Ordinance 2001, notwithstanding institution of suits under provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997---Banking Court committed error of law while declining cost of funds on erroneous assumption that S. 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001 had no application---High Court set aside judgment passed by Banking Court to the extent of denying of cost of funds as it was legally defective and result of misconstruction of law---High Court remanded the matter to Banking Court to determine cost of funds in accordance with the mandate of S. 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Appeal was allowed accordingly.

National Bank of Pakistan through Manager v. Messrs Footcare (Pvt.) Limited through Chief Executive and others 2005 CLD 1114 and Messrs A.M. Rice Corporation through Sole Proprietor and another v. Bank of Punjab through Manager as Attorney 2005 CLD 1569 ref.

Lancaster Motor Company (London) Ltd. v. Bremith Ltd. [1941] 1KB 675; Multiline Associates v. Ardeshir Covasjee and 2 others PLD 1995 SC 423; Gulshan Ara v. The State 2010 SCMR 1162 and State of U.P and another v. Messrs Synthetics and Chemicals Ltd. and another 1991 SCC (4)139 rel.

Irfan Ali Sheikh for Appellant.

2024 C L D 153

[Lahore]

Before Shams Mehmood Mirza, J

Messrs PARAGON TECHNOLOGIES---Petitioner

Versus

SUI NORTHERN GAS PIPELINES LIMITED and others---Respondents

Writ Petition No. 4534 of 2023, decided on 26th May, 2023.

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

----Ss. 13 & 5---Unconditional bank guarantee or a letter of credit---Autonomy principle---Scope---Fate of an unconditional bank guarantee or a letter of credit being independent contracts is not dependent upon any dispute between the contracting parties and payment thereunder has to be made if an unconditional undertaking has been made by the issuer---Payment obligation under both the instruments is dependent on documentary demands and the issuer is barred from making any determination of objective facts---This is called the autonomy principle--- Premise on which this principle rests is that as between parties to documentary credit transactions a dispute related to the underlying transaction has to be pursued through a separate action for breach of the underlying contract and not by withholding payment under the letter of credit---"Pay first, sue later" is the core objective underlying the autonomy principle.

Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Limited PLD 2003 SC 191 ref.

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

----Ss. 13 & 5---Bank guarantee, encashment of---Principles and exception---Fundamental rule of payment under the bank guarantee independent of any dispute between the contracting parties is excepted only where fraud is alleged as against the beneficiary of the bond/guarantee and the bank has notice of such fraud.

Bolivinter Oil SA v. Chase Manhattan [1984] 1 All ER 351 ref.

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

----S. 41 & Second Sched., Clause 4---Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Arbitration proceedings before the Court---Power of the Court to grant interim injunction---Principles and prerequisites stated.

Clause 4 of the Second Schedule of the Arbitration Act, 1940 ('the Act') grants the power to the Court to issue interim injunctions. It is evident from the reading of the text of section 41 of the Act that the grant of injunction by the court in proceedings pending before it shall be governed by the provisions of the Code of Civil Procedure, 1908 (the Code) whereas the court retains the power to issue interim injunction on basis of the power contained in the Second Schedule even when the matter has been referred to arbitration and proceedings are pending in that forum.

The grant of interim injunction for the period the proceedings remain pending before the court or the arbitrators is regulated by the provisions of the Code. The three tests applied for grant of interlocutory injunctions are well established in almost all the jurisdictions. These tests require an applicant to demonstrate that (i) there is a prima facie case by which it is meant that the applicant must be able to demonstrate to the satisfaction of the Court that there is a serious question to be tried in the sense that the claim is not frivolous; (ii) it will suffer irreparable loss and injury in case the relief is denied to it or in other words granting an injunction could cause less harm to the defendant compared to the likely harm the applicant would suffer from the refusal of such injunction, and (iii) the balance of inconvenience favours it. Where the right asserted by the applicant is disputed or is in doubt, the balance of convenience becomes an important factor in grant or refusal of interlocutory injunction. Where the decision depends upon the consideration of the preponderance of inconvenience, the onus is upon the applicant to demonstrate that his inconvenience would exceed that of the respondent.

The central question facing the court is the extent to which it can go into the merits of the case involving complex factual issues in dispute at the interlocutory stage to identify which party has the better case particularly where the parties by agreement have agreed to refer the matter to arbitration. If the Court examines only the substance of the dispute for decision on the application, the other two tests become redundant. The classical model thus postulates that the Court as a matter of principle ought not to delve deep into controversy between the parties to make a forecast about the outcome of the case and that it would be sufficient for the Court to decide that the applicant has put forward a case that is arguable or at least not a frivolous one and after making this determination to move to discover whether the balance of convenience favours the grant of the injunction by striking a balance between the interests of the applicant and that of the beneficiary. In doing so, the Court should bear in mind the extent to which damages are likely to be an adequate remedy and the ability of the other party to pay the same. Similarly, where the legal right claimed is not sufficiently clear to enable the Court to form an opinion thereon, the relevant convenience or inconvenience in granting injunction (or refusal thereof) to the parties should be considered. The Court, while exercising jurisdiction under section 20 of the Arbitration Act, can only go so far in determination of the so-called prima facie case test as the decision on the dispute falls within the jurisdiction of the arbitrators. It is thus imperative that the Courts must not make findings of fact or construe the provisions of contract between the parties particularly when they have expressly agreed to refer such dispute to arbitration.

Lansing Linde Ltd. v. Kerr [1991] 1 WLR 251 (CA) ref.

The jurisdiction to grant interim injunction is designed to preserve the rights of the parties or to minimize irreparable loss of legal rights pending the trial. The adjudication on an application for grant of interlocutory injunction takes place at a time and on material not tested by cross-examination. Any interference with the position of parties prior to merit adjudication runs the risk of infringement with the due process standards and additionally the Courts are concerned with the likelihood of error that is significantly greater in interlocutory proceeding than on a merit investigation. In order to prevent the probability of mistake and its magnitude and to reconcile the above-mentioned competing considerations, the Courts have devised the three tests to regulate their discretion.

While making the determination at the interlocutory stage, the legal nature of the right involved must be central to any consideration of grant of injunction, which is another way of saying that the Courts must take into account the juridical nature of the dispute before entering upon any inquiry into the three tests. Although the guidelines are anchored in tradition and policy, it would be a fallacy to think that their application to cases is anything but uniform. A case involving immovable property or public interest/public safety or freedom of expression/speech would not give rise to the same concerns regarding the jural nature of irreparability as a commercial dispute arising out of a contract between the private parties. Moreover, considerable difficulties may arise in assessment of damages even in commercial disputes particularly in cases where patents or trademarks are involved in which case damages shall never be the fully adequate remedy. These are all variables that a Court would contemplate and examine in granting (or refusing) interim injunctions. It must, however, be stated that it is not possible to pinpoint all the matters required to be considered by the Court in determining where the balance lies let alone the relative weight to be attached to each of them as it will vary from case to case.

American Cyanamid Co. v. Ethicon Ltd. [1975] 2 WLR 316; Hoffman LaRoche & Co. Ltd. v. Secretary of State for Trade and Industry [1975] AC 295; State Transport Authority v. Apex Quarries Ltd., [1988] V.R. 187, 193; City of Melbourne v. Hamas Pty Ltd. (1987) 62 L.G.R.A. 250, 261-262; Lewis v. Heffer [1978] 1 W.L.R. 1061; Series 5 Software Ltd. v. Clark [1996] 1 All ER 853; NWL Ltd v. Woods [1979] 1 WLR 1294; Merck Sharp and Dohme Corporation v. Clonmel Healthcare Limited [2019] IESC 65 and Uber Builders and Developers Pty Ltd. v. MIFA Pty Ltd. [2020] VSC 596 ref.

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

----Ss. 13 & 5----Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Performance bond, encashment of---Power of the Court to grant interim injunction---'Unconscionability'---Jurisprudence on grant of interim injunction on the ground of 'unconscionability' as developed by the Courts of Singapore and its criticism stated.

AES Façade Pte Ltd. v. Wyse Private Limited [2018] SGHC 163; Bocotra Construction Pte Ltd. v. Attorney-General [1995] 2 SLR(R) 262; CKR Contract Services Pte Ltd. v. Asplenium Land Pte Ltd. and another [2015] SGCA 24; JBE Properties Pte Ltd. v. Gammon Pte Ltd. [2010] SGCA 46; The Problems of Abusive Calls on Demand Guarantees [2007] MLCLQ 83; Dauphin Offshore Engineering and Trading v. Private Office of HRH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan [2000] 1 SLR 657; Kitchen v. Royal Air Force Association [1958] 2 All ER 241; Injuncting Calls on Performance Bonds: Reconstructing Unconscionability SAcLJ 30 (2003); Eltraco International Pte Ltd. v. CGH Development Pte Ltd [2000] 4 SLR 290; Restraining a Call on a Performance Bond: Should 'Fraud or Unconscionability' be the New Orthodoxy?" (2000) 12 SAcLJ 132; Standard Construction Company (Pvt.) Limited v. Pakistan through Secretary Ministry of Communications and others 2010 SCMR 524; Shapoorji Pallonji & Co. Pvt. Ltd. v. Yumn Ltd. and Standard Charter Bank [2021] EWHC 862 and Permasteelisa Japan KK v. Bouyguesstroi and Bank Intesa SpA [2007] EWHC 3508 (QB) ref.

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

----Ss. 13 & 5----Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Unconditional bank guarantee, realization of---Power of the Court to grant interim injunction---Jurisprudence relating to grant of an injunction to restrain the realization of an unconditional bank guarantee as developed by the Courts of India stated.

U.P. Cooperative (U.P. Coop. Federation Ltd. v. Singh Consultants and Engineers (P) Ltd. (1988) 1 SCC 174; U.P. State Sugar Corporation v. Sumac International Ltd 6 [1997] 1 SCC 568; Himadri Chemicals Industries Ltd. v. Coal Tar Refining Company 7 [2007] 8 SCC 110; Mahatma Gandhi Sahakra Sakkare Karkhane v. National Heavy Engg. Coop. Ltd. (2007) 6 SCC 470; Vinitec Electronics (P) Ltd. v. HCL Infosystems Ltd. (2008) 1 SCC 544; Standard Chartered Bank v. Heavy Engg. Corpn. Ltd. (2020) 13 SCC 574; CRSC Research and Design Institute Group Co. v. Dedicated Freight Corridor Corpn. of India Ltd. 274 (2020) DLT 89 and FAO (OS) (Comm) 123 of 2020 CRSC Research and Design Institute Group Co. v. Dedicated Freight Corridor Corpn. of India Ltd. 2020 SCC OnLine Del 1526 ref.

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

----Ss. 13 & 5----Civil Procedure Code (V of 1908), O.XXXIX, Rr.1 & 2---Autonomous demand bond---On-demand guarantees---Power of the Court to grant interim injunction---Jurisprudence relating to grant of an injunction to restrain the call upon an autonomous demand bond or on-demand guarantee as developed by the Courts in England stated.

Tetronics (International) Limited v. HSBC Bank PLC [2018] EWHC 201 (TCC); Alternative Power Solution's case [2015] 1 WLR 697; Simon Carves Ltd. v. Ensus UK Ltd. [2011] EWHC 657 (TCC); Doosnan Babcock v. Commercializadora de Equipos ("MABE") [2013] EWHC 3201 (TCC); MW High Tech Projects UK Ltd v. Biffa Waste Services Ltd. [2015] EWHC 949; Shapoorji Pallonji and Company Private Ltd v. Yumn Ltd. and Standard Chartered Bank [2021 ] EWHC 862 (Comm); Ouais Group Engineering and Contracting v Saipem SpA [2013] EWHC 990 (Comm); Salam Air SAOC v. Latam Airlines Group SA [2020] EWHC 2414 (Comm); United City Merchants (Investments) Ltd. v. Royal Bank of Canada (1982) 2 W.L.R. 1039; Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827; Bolivinter Oil SA v. Chase Manhattan [1984] 1 All ER 351; Wuhan Guoyu Logistics

Group Company Limited v. Emporiki Bank of Greece Sa (No 2) [2013] EWCA (Civ) 1679, [2014] 1 All ER (Comm) 817); MW High Tech Projects UK Ltd v. Biffa Waste Services Ltd. [2015] EWHC 949 (TCC) and Bridge v. Campbell Discount Co Ltd. [1961] 2 WLR 596 (at 605) ref.

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

----Ss. 13 & 5---Arbitration Act (X of 1940), S. 41 & Second Sched. Clause 4---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---On-demand performance guarantee---Bank guarantee, encashment of---Arbitration proceedings before the Court---Principles relating to grant of an injunction to restrain the encashment of a bank guarantee stated.

(i) Mere allegations regarding breaches of contractual obligations in the plaint regarding fraud/unfair conduct shall be insufficient for an applicant to succeed in obtaining an interim injunction;

(ii) In commercial cases where breach of contract is claimed, courts should be robustly sceptical of a claim that damages are not an adequate remedy; the determination that damages are a sufficient remedy means that the balance of convenience favours a refusal to grant an injunction;

(iii) The facts before the court must reflect the conduct of the respondent to be of such magnitude and consequence and the harm to the applicant to be of such irretrievable nature so as to override the twin considerations of the autonomy principle. This rule cannot be accorded an elastic construction such that it would snap the principle of autonomy;

(iv) It must be demonstrated before the court that the applicant on being successful at the trial shall not be restituted/compensated by the respondent; and

(v) The applicant must be able to clearly establish fraud and also that the bank has notice of such fraud.

The rules above are the insurmountable barriers for the applicant to cross before a case can be made out before the Court for grant of injunction. Mere breaches of contract for which there are counter allegations shall not bring the case in any of the exceptions to the non-interference rule and in commercial cases the allegation of breach of contract shall not suffice to claim that damages are not an adequate remedy. In addition to that the applicant must also plead that if it succeeds at the conclusion of the trial, it shall not be able to recover the amount from the beneficiary.

Courts do intervene in cases where the applicant is successful in demonstrating incontrovertibly that the demand made on the guarantee is wholly without any valid basis or that the beneficiary is acting fraudulently or that the call on the bond amounts to fraud and that the damages shall not be an adequate remedy.

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

----Ss. 13 & 5---Arbitration Act (X of 1940), S. 41 & Second Sched. Clause 4---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Contract for supply of goods---Supplies made beyond the period stipulated in the contract---Late payment charges---Unconditional bank guarantee, encashment of---Payment under the bank guarantee regardless of the dispute between the contracting parties---Scope---Bank guarantee is an independent contract and if it is unconditional the payment thereunder has to be made regardless of dispute between the contracting parties---Guarantee in the present case was unconditional and thus the demand made by respondent on the bank guarantee was required to be met by the Bank---Petitioner (supplier) had not made out the case required for the purposes of considering whether interlocutory relief should be granted to restrain payment under the guarantee---In relation to the order refusing to grant injunction by the courts below preventing respondent from making a call on the guarantee, no case for fraud had been made out---Case put forward by the petitioner that it was not in breach of its obligations, which assertion the respondent disputed, required proof for its validity and adjudication in this regard shall be done before the arbitrator(s)---Petitioner furthermore had not made any allegation about its prospective financial bankruptcy in case an injunction was refused---In any event, there did not appear to be any serious doubt about the financial position of respondent to pay the amount back to the petitioner together with compensatory costs should it succeed before the arbitrators in demonstrating that respondent could not have imposed late payment charges on it---In such circumstances, the petitioner had on facts and material before the Court failed to dislodge the burden of getting around the twin considerations underpinning the non-interference rule---Both the courts below had rightly dismissed the application of the petitioner for interim injunction to restrain the respondent from making any demand on the bank guarantee---Writ petition was dismissed.

EFU General Insurance Limited v. Zhongxing Telecom Pakistan (Pvt.) Limited and others PLD 2022 SC 809; Shipyard K. Damen International v. Karachi Shipyard and Engineering Works Limited PLD 2003 SC 191; Messrs National Construction Limited. v. Aiwan-e-Iqbal Authority PLD 1994 SC 311 and Atif Mehmood Kiyani and another v. Messrs Sukh Chain Private Limited, Royal Plaza, Blue Area, Islamabad and another 2021 SCMR 1446 ref.

Sh. Usman Karim ud Din for Petitioner.

2024 C L D 212

[Lahore]

Before Abid Hussain Chattha, J

Messrs COMPUTER TIPS through Managing Partner and others---Petitioners

Versus

PROVINCE OF PUNJAB through School Education Department and others-- Respondents

Writ Petitions Nos. 28679 and 33077 of 2023, decided on 3rd October, 2023.

Contract Act (IX of 1872)---

----Ss. 16 & 23---Punjab Procurement Rules, 2014, Rr. 4 & 62---Constitution of Pakistan, Arts. 4, 18, 24 & 25---Public procurement---Transparency---Final payment---Non-clearance---Coercive measures to seek unlawful demand of rebates---Petitioner supplied computers to respondent/ authorities after competing in open bidding tenders---Grievance of petitioners was that despite supply of goods, their final payments were not released by respondent/authorities who were forcing them to give rebates in prices---Validity---There was no legal justification to force petitioners to give rebates to the tune of 15% to 20% with respect to fully executed and duly performed contracts at the time of making payments to them---This was an arbitrary, unreasonable and capricious act in colorable exercise of authority and offended R. 62 of Punjab Procurement Rules, 2014 and express contractual stipulations and this was also against principle of transparency enshrined in R. 4 of Punjab Procurement Rules, 2014---Transparency in procurement process not only envisages that procurement should be made through transparent, open and competitive processes at the lowest price but also equally safeguards and protects right of technically qualified lowest bidder to receive timely payment against successfully performed contract---Mere fact that payments were not made to petitioners within thirty days with respect to Second Contract, Third Contract and Fourth Contract was sufficient to establish that petitioners were being pressurized, coerced and blackmailed to satisfy unlawful demand of rebates of respondents/ authorities---Rights of petitioners after successful performance of their respective contracts awarded after due process of law were fully protected in terms of Arts. 4, 18, 24 & 25 of the Constitution and Ss. 16 & 23 of Contract Act, 1872---High Court directed the respondents to forthwith release complete contract prices to petitioners---High Court further directed Competent Authority to take appropriate steps to ensure transparency in public procurements--- Constitutional petition was allowed, in circumstances.

Messrs Ramna Pipe and General Mills (Pvt.) Limited v. Messrs Sui Northern Gas Pipe Lines (Pvt.) and others 2004 SCMR 1274 rel.

Hussain Tahir Zaidi, Umer Abdullah, Zarak Zaman Khan and Ahmed Abdullah for Petitioners.

Sikandar Nisar Soroya, Assistant Advocate General, Muhammad Imran, Law Officer for School Education Department, Muneer Ahmad, Administration and Accounts Officer, PMIU, PESRP for Respondents.

2024 C L D 278

[Lahore]

Before Abid Hussain Chattha, J

SILK BANK LIMITED through Constituted Attorney---Plaintiff

Versus

Messrs HASEEB WAQAS SUGAR MILLS LIMITED through Chief Executive and 14 others---Defendants

C.O.S. No. 16637 of 2020, decided on 29th November, 2023.

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

----S. 9--- Suit, filing of--- Pre-conditions--- Suit by a 'financial institution' or a 'customer' can be instituted by one against the other only in case of 'default' in fulfillment of any 'obligation' with respect to any 'finance'.

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

----S. 9---Pre-mature suit--- Effect--- In case Banking Court concludes that 'default' alleged in plaint was non-existent at the time of institution of suit but it matured due to afflux of time during pendency of the suit, Banking Court in exercise of judicial discretion can grant relief by decreeing the suit.

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

----Ss. 3, 9, 10 & 17---Suit for recovery of finance with cost of funds---Pre-mature cause of action---Effect---Defendant company availed facility from plaintiff-bank which was restructured on a number of occasions on account of default by defendant company---Defendant company defaulted the facility under Finance Rescheduling Agreement which matured during pendency of the suit---Plaint was supported by all necessary finance and security documents and was also accompanied with certified statement of accounts---Not a single instalment either with respect to principal or mark-up component was paid under Finance Rescheduling Agreement---Effect---Question to determine amount due in terms of any payment made by defendant company did not arise---Principal and mark-up components under the last Finance Restructuring Agreement were Rs. 390,000,000/- and Rs. 35,792,917.81/-, respectively, the sum total of which amounted to Rs. 425,792,917.81/- as on 21-02-2019---Nothing was paid thereafter against the amount due---High Court deducted amount of fine imposed on the plaintiff-bank, whereafter the amount had come to Rs. 420,792,917.81---High Court denied additional amount of claimed mark-up and allowed cost of funds from the date of default under S. 3 read with S. 17 of Financial Institutions (Recovery of Finances) Ordinance, 2001---Suit was decreed accordingly.

Pakistan Mobile Communication Ltd. and others v. Appellate Bench No. III, Securities and Exchange Commission of Pakistan and others 2016 CLD 76; Lucky Cement Ltd. v. Commissioner Income Tax, Zone Companies, Circle-5, Peshawar 2015 SCMR 1494; Abdur Razaq v. Abdul Hamid 1979 SCMR 534; Precision Engineering Ltd. and others v. The Grays Leasing Limited PLD 2000 Lah. 290; Managing Director, Oil and Gas Development Company Ltd. v. Syed Najmul Hassan Naqvi 2005 SCMR 890 and Vithalbhai (P) Ltd. v. Union Bank of India (2005) 4 Supreme Court Cases 315 rel.

Abdul Hameed Chohan and Ch. Sohail Khurshid for Plaintiff.

Hasham Ahmad Khan for Defendants Nos. 1 to 10.

Nemo for Defendants Nos. 11 to 15.

2024 C L D 326

[Lahore]

Before Tariq Saleem Sheikh, J

HAYAT KIMYA PAKISTAN (PRIVATE) LIMITED---Petitioner

Versus

HUMAIR YUSUF and others---Respondents

Writ Petition No. 3103 of 2023, decided on 27th March, 2023.

Criminal Procedure Code (V of 1898)---

----Ss. 22-A & 22-B---Penal Code (XLV of 1860), S. 489-F---Cheques issued as security---Ex-officio Justice of Peace, powers of---Scope---Petitioner-Company assailed the order passed by Justice of Peace whereby he had declined the request for issuance of direction for registration of FIR---Contention of petitioner was that the accused persons had provided three cheques for payment of outstanding amount which were dishonoured when presented---Ex-officio Justice of Peace dismissed the petitioner's application under S. 22-A, Cr.P.C. holding that respondent gave the cheque by way of security, thus S. 489-F, P.P.C., did not apply to such cheques---Validity---In its application under S. 22-A, Cr.P.C., before the Ex-officio Justice of Peace, the petitioner stated that it did business with a company and Rs.15.00 million became outstanding against it over time---Said company's directors, i.e. respondents Nos.1 and 2, issued three cheques for Rs.5.00 million each to settle the liability, but these were dishonoured on presentation---However the petitioner's pleadings before the High Court, indicated that it received the said cheques as security under a distribution agreement---Respondents Nos.1 and 2 had submitted documents proving that reality---Most importantly, the petitioner admitted them---Since the petitioner's plea, which it took in the application under S. 22-A, Cr.P.C., was negated, present petition was liable to be dismissed on that short ground---Admittedly, the petitioner and the company of which the respondents were directors, never settled their accounts---However, there was a dispute between the two and the latter had a claim against it for Rs.100,439,515/-, which was currently under litigation---As per record, respondent No.1 issued one of the cheques on 13.5.2019, while respondent No.2 issued the other two cheques on 25.1.2020 and 2.7.2020, respectively, and there was no final liability of the respondents' company on those dates or when the petitioner presented them---Said cheques were also not the outcome of any specific transaction---True, that one of the clauses of the distribution agreement allowed the petitioner to pursue both criminal and civil proceedings for the dishonour of cheques, but that was subject to the law---Requirements of S. 489-F, P.P.C., had to be met before petitioner could begin proceedings thereunder and prosecute respondents Nos.1 and 2, which were conspicuously missing in the present case---Petition had no merit and was dismissed, in circumstances.

Malik Safdar Ali v. Syed Khalid Ali and others PLD 2012 Sindh 464; Mian Allah Ditta v. The State and others 2013 SCMR 51; Indus Airways Private Limited v Magnum Aviation Private Limited (2014) 12 SCC 539; Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited (2016) 10 SCC 458 : AIR 2016 SC 4363; Sripati Singh (since deceased) v. State of Jharkhand and another AIR 2021 SC 5732; Sunil Todi v. The State of Gujarat AIR 2022 SC 147; Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel and others AIR 2022 SC 4961; Ivey v. Genting Casinos (UK) Ltd. t/a Crockfords [2017] UKSC 67 and Ahmed Shakeel Bhatti and others v. The State and others 2023 SCMR 1 rel.

Barrister Sharjeel Adnan Sheikh assisted by Mian Hassan Raza and Khayyam-ul-Hassan Lodhi for Petitioner.

Kh. Haris Ahmad assisted by Muhammad Zubair Khalid for Respondents Nos. 1 and 2.

Sittar Sahil, Assistant Advocate General for Respondents Nos. 3 and 4.

2024 C L D 343

[Lahore]

Before Shahid Karim and Asim Hafeez, JJ

GUJRANWALA STEEL INDUSTRIES through Partner---Appellant

Versus

INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN and 7 others---Respondents

E.F.A. No. 8251 of 2023, decided on 14th November, 2023.

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

----Ss.22 & 23---Execution of decree---Redemption of mortgage---Lease hold rights---Banking Court during execution proceedings declared that allotment of suit property in favour of appellant was void---Validity---Question of determination of voidness of allotment, upon satisfaction of decree, fell outside the jurisdiction of Banking Court and S. 23(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001, had no application---Once decree stood satisfied, effect of attachment order disappeared---Lessor, lessee and allottee each were at liberty to plead, raise or agitate their respective claims before Courts having general jurisdiction---Possession of suit property was taken from lessee and delivered to decree holder bank in terms of order of 08-01-2004, and lessee was entitled to have possession upon redemption of lease hold rights---Such arrangement was subject to terms of lease deed and determination of legality of order of cancellation of lease---Rights claimed by appellant was subject to determination of issue of legality of order of cancellation of lease---High Court set aside declaration of voidness of allotment in favour of appellant and lessor, with the lessee and allottee at liberty to seek remedies available in law for enforcement of respective claims---High Court directed that process of redemption of property would be completed and possession of property be delivered to lessee---Appeal was allowed accordingly.

Mst. Farhat Fareed Sheikh v. NIB Bank Limited and 5 others 2019 CLD 632; Siraj Din and 2 others v. Khushi Muhammad through legal heirs 2002 YLR 1643; Muslim Commercial Bank Limited v. Syed Ataullah Shah and 2 others 2003 CLD 888; A. Gnanam v. Messrs Palaniappa & Co. and others AIR 2001 MADRAS 14; Hafizur Rehman and 2 others v. Messrs Fresh Farms (Pvt.) Ltd 2010 CLD 999; Manzoor Ellahi through legal heirs v. Ch. Muhammad Akbar and 2 others 1999 MLD 901; Mst. Irshad Yamin v. Citibank N.A. and others 2005 CLD 1477; Allied Bank Limited v. Messrs Fazal Vegetable Ghee Mills and others 2019 CLD 441; Anees-ur-Rehman v. Faysal Bank Limited through Manager 2019 CLD 1031; Messrs PEL Appliances Limited v. United Bank Limited 2005 CLD 1352; Rai Muhammad Riaz v. Ejaz Ahmad and others 2013 YLR 1890; Sardar Ali v. Abdul Ghafoor and others 2022 CLC 1925; SME Bank Ltd, (Former Regional Development Finance Corporation) through Branch Manager v. Messrs Continent Leather (Pvt.) Ltd. through Director and 3 others 2005 CLD 1508; Mirza Naseem Ahmad and 4 others v. Dr. Sadiqa Sharif and 12 others 2003 CLD 88; Government of Pakistan through Director General Ministry of Interior, Islamabad and others v. Farheen Rashid 2011 SCMR 1; Fasih-ud-Din Khan and others v. Government of Punjab and others 2010 SCMR 1778; The Bank of Punjab v. Messrs Magic River Services and 4 others 2016 CLD 171; Haji Dad Muhammad v. Muslim Commercial Bank Limited 2011 CLD 785; Mazco Industries Ltd. v. Habib Bank Ltd and others 2011 CLD 186 and Messrs Data Laboratories (Pvt.) Ltd. through Chief Executive and 3 others v. Judge Banking Court No.III, Lahore and 4 others 2008 CLD 1326 rel.

Asad Ahmad Ghani for Appellant.

Imran Malik, C.M. Sarwar and Sikandar Javed for Respondents Nos. 2 and 3.

Fiaz Ahmad Ranjha for Respondent No. 8.

2024 C L D 376

[Lahore]

Before Shams Mehmood Mirza, J

ZAFAR IQBAL---Petitioner

Versus

G.T. PHARMA (PVT.) LIMITED through Chief Executive and 5 others---Respondents

C.O. No. 37 of 2015, decided on 13th October, 2023.

Companies Act (XIX of 2017)---

----Ss. 17(2) proviso & 152---Companies Ordinance (XLVII of 1984), S. 76 [since repealed]---Declaration---Transfer of shares---Petitioners claimed that transfer of their shares to respondents were illegal---Validity---Respondents failed to prove either that petitioners did not make payment of shares or that valid transfer of shares as reflected in Form A dated 8.5.2008 took place in the mode and manner prescribed by S. 76 of Companies Ordinance, 1984---Alleged transfer of shares of petitioners as reflected in Form A submitted by respondents with Security and Exchange Commission of Pakistan on 8.5.2008 and 19.11.2011 had no legal sanctity as no document was brought to substantiate allegation that process formalities prescribed by S. 76 of Companies Ordinance, 1984, which were mandatory in nature, were duly complied with---High Court declared transaction for transfer of shares of petitioners as reflected in Form A submitted on 8.5.2008 and 19.7.2011 with the Commission, to be null and void---High Court directed respondents to forthwith enter names of petitioners in Register of Members and to transmit relevant information to the Commission through Form A---Petition was allowed, in circumstances.

Orix Leasing Pakistan Limited v. Colony Thal Textile Mills Limited PLD 1997 Lah. 443 ref.

Muqtedir Akhtar Shabbir, Mirza Shahryar Baig and Syed Arbab Shah for Petitioner.

2024 C L D 387

[Lahore]

Before Abid Aziz Sheikh, J

MCB BANK LIMITED through Authorized Officer---Plaintiff

Versus

Messrs CITY STEEL UAE MILLS (PVT.) LIMITED through Chief Executive and others---Defendants

C.O.S. No. 33 of 2015, decided on 22nd March, 2023.

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

----Ss. 9 & 10---Bankers' Books Evidence Act (XVIII of 1891), S. 2(8)---Suit for recovery of finance---Leave to appear, refusal of---Penal interest---Scope---Plaintiff bank produced statements of accounts which were duly verified as required under S. 2(8) of Bankers' Books Evidence Act, 1891 and S. 9(2) of Financial Institutions (Recovery of Finances) Ordinance, 2001---No counterstatement was filed by defendant company to controvert the statement of accounts---Validity---Mere bald allegations against statement of accounts without backing of law and documented proof had no basis---Statement of accounts of defendant company showed that penal interest was charged from time to time---Such penal interest had no backing of law---Plaintiff bank excluded amount of penal interest from the liability against defendant company---High Court excluded penal interest and markup was charged on the basis of finance agreement only till its expiry---Plaintiff bank was entitled for cost of funds after the date of markup---Claim of plaintiff bank was substantiated by agreement/statement of accounts as well as finance documents---Defendant company was unable to raise any substantial question of law or fact regarding requiring recording of evidence for its resolution---High Court declined to grant leave to appear to defendant company---Suit was decreased accordingly.

Hassan Ali & Co. Cotton (Pvt.) Ltd. v. Trading Corporation of Pakistan (Pvt.) Ltd and another 2017 CLD 2283; PICIC Commercial Bank Limited v. Spectrum Fisheries Limited 2006 CLD 440; National Bank of Pakistan v. Ali Akbar Spinning Mills Limited and others C.O.S. No.126 of 2011; Muhammad Saleem Khan v. MCB Bank Limited 2020 CLD 737; Trust Investment Bank Limited v. The Bank of Punjab 2021 CLD 1430; IGI Investment Bank Limited through Attorney v. Messrs Admore Gas (Pvt.) Ltd. and another 2014 CLD 1354; NIB Bank Limited v. Highnoon Textile Ltd. and 3 others 2014 CLD 763; Messrs Soneri Bank Limited through Attorneys v. Messrs Elite Publishers Limited and 3 others 2011 CLD 755; Baba Fareed Ghee Industries (Pvt.) Limited through Chief Executive and 3 others v. National Bank of Pakistan 2002 CLD 669 and Messrs Mach Knitters (Pvt.) Limited and 3 others v. Allied Bank of Pakistan Limited through Manager 2004 CLD 535 rel.

Abdul Hameed Chohan and Ms. Iqra Riaz for Plaintiff.

Aakif Majeed Butt, Asim Tufail Farooqi and Ms. Shamim Akhtar for Defendants.

2024 C L D 418

[Lahore]

Before Shams Mehmood Mirza, J

MCB BANK LIMITED and others---Petitioners

Versus

PROVINCE OF PUNJAB and others---Respondents

Writ Petition No. 366 of 2022, (and other connected Writ Petitions) heard on 20th October, 2023.

(a) Interpretation of statutes---

----Federal and Provincial statutes---Conflict between---In case of conflict between federal and provincial law on same subject, the federal law overrides the provincial law or the part of provincial law that is inconsistent with it.

(b) Companies Act (XIX of 2017)---

----S. 22(a)---Parks and Horticulture Authority Act (XLVII of 2012), S.12(8)---Financial institutions and other companies Bill boards and sign boards---Charging of fee---Petitioner companies were aggrieved of notice of demand issued by respondent Authority to recover fee for installing their bill boards, sky boards and advertisements---Validity---Notices in question delivered to petitioners by Parks and Horticulture Authority did not contain specific particulars regarding nature of product which was advertised and the date, time and place it was installed/erected---Such generic notices were vague and simply mentioned various categories of outdoor advertisements directing petitioners to pay fee---Due process requirements would be fulfilled after it had afforded opportunity to petitioners to respond to such notices by taking any and all objections available to them for assailed levy of advertisement fee---High Court set aside notices issued to petitioner companies and High Court directed Parks and Horticulture Authority that if fresh notices were to be issued, directions given by High Court in W.P. No. 208309 of 2018 titled Meezan Bank Limited and others v. The Province of Punjab should be followed---Constitutional petition was allowed accordingly.

The Bank of Khyber v. Municipal Corporation Gujrat PLD 2021 Lah. 108 distinguished.

Meezan Bank Limited and others v. The Province of Punjab and others Writ Petition No.208309 of 2018 fol.

Soneri Bank Limited v. Province of Punjab and others PLJ 2020 Lahore 239; Government of Pakistan and others v. Messrs Hashwani Hotel Limited PLD 1990 SC 68; Ameer Nawaz Khan Niazi and another v. Member Board of Revenue Punjab, Lahore and others 2015 CLC 439 and Commissioner Inland Revenue v. MCB Bank Limited 2021 SCMR 1325 rel.

Abdul Muqtadir Khan for Petitioners (in the present Writ Petition and in Criminal Org. No.53313 of 2023).

Abad ur Rehman for Petitioners (in W.Ps. Nos. 40071 of 2022 and 40569 of 2023).

Muhammad Yousaf Chudhary-I and Samra Malik for Petitioners (in W.Ps. Nos.41185 of 2021, 34969 of 2022, 35919 of 2021, 48563 of 2022, 48455 of 2022, 24634 of 2021, 22719 of 2021, 58394 of 2021, 8995 of 2022, Criminal Org. Nos.52719, 8972 of 2022, Criminal Org. Nos.18140 and 18124 of 2023).

Shezada Mazhar and Rizwan Rasool for Petitioners (in W.Ps. Nos.48733, 19400 of 2021, 31310, 22755 and 21886 of 2022).

Mian Asghar Ali for Petitioner (in W.P. No.47699 of 2021).

Zeeshan Hussain Adil and Haider Ali Khan for Petitioners (in W.Ps. Nos.47243 and 64348 of 2021, Criminal Org. No.76877 of 2021 and Criminal Org. No.46878 of 2020).

Kashif Ali Chaudhary and Usman Haider Toor for Petitioners (in W.Ps. Nos. 33403 of 2022, 65585 of 2020, 25050, 28552 and 26425 of 2022).

Muhammad Asif Ismail for Petitioners (in W.Ps. Nos.67304, 1881 of 2021, 34303 of 2019, 36182 of 2019, 32901 of 2020, 17224 of 2020, 34304 of 2019 and Criminal Org. No. 7049 of 2021).

Usman Ejaz Malik for Petitioners (in W.Ps. Nos.28864 of 2021 and 34979 of 2022).

Sajjad Haider Rizvi for Petitioner (in W.P. No.48798 of 2021 and Criminal Org. No.74982 of 2021).

Ehsan Ahmad Munir for Petitioner (in W.Ps. Nos.45285 of 2021, 20222 and 34204 of 2023).

Muhammad Mustafa Khalid and Muhammad Gul Nawaz for Petitioners (in W.P. No.67386 of 2021).

Syed Hoor Ali Shah for Petitioner (in W.P. No.76002 of 2021).

Abdur Rehman Bajwa for Petitioners (in W.Ps. Nos.40569, 27784, 27533, 12304, 75280 of 2022, 40530, 62923 of 2021, 56061 of 2022 and Crl. Org. No.30097 of 2023).

Syed Sajid Ali Shah Bokhari for Petitioners (in W.Ps. Nos.65261 of 2023, 4675, 60784 of 2021, 16705 and 24515 of 2022).

Rai Ali Shan Marth for Petitioner (in W.P. No. 51800 of 2023).

Muhammad Yousaf Sabir Chohan for Petitioner (in W.P. No.48715 of 2022).

Ahmad Khamal Khan for Petitioner (in W.P. No.1599 of 2016).

Ashar Elahi and Usman Nawaz Butt for Petitioner (in W.P. No.5536 of 2021).

Akhtar Hussain Bhatti for Petitioner (in W.P. No.33456 of 2020).

Raza ur Rehman Asad for Petitioner (in W.P. No.65261 of 2023).

Haris Azmat, Waqar A. Sheikh and Barrister Hamza Amjad for Respondent/PHA.

Ali Imran Bhutta for Advertisement Contractor PHA Faisalabad, Gujranwala and Multan.

Ms. Shazia Khakil for Respondent No.5.

Ms. Sana Iqbal for PHA Gujranwala (in W.Ps. Nos.18881, 62987 of 2021 and 13310 of 2022).

2024 C L D 445

[Lahore]

Before Anwaar Hussain, J

STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Zonal Head/Attorney and another---Appellants

Versus

Mst. UNDLUS BEGUM---Respondent

R.F.A. No. 16370 of 2019, decided on 22nd December, 2023.

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

----S. 5---Condonation of delay---Object, purpose and scope---Condonation of delay is a matter of concession and cannot be claimed as a matter of absolute right---It is existence of sufficient cause for not filing proceeding in time before proper forum that must be justified to the satisfaction of Court to exercise its power of granting or refusing to grant condonation of delay/extension of time---If such condition is not satisfied, there is no room for applicability of power to condone delay---Where no cause has, at all, been shown that is, where no explanation has been given for filing proceeding out of time, there arises no opportunity of considering sufficiency or otherwise of the reasons for that fact, and there cannot be any room for the exercise of discretion given under the law---If the condition is satisfied, then Court gets a discretionary power to grant or refuse prayer for extension of time---What is sufficient cause is question of discretion, which depends upon facts and circumstances of a particular case.

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

----O. VII, R. 10---Return of plaint---Effect---Once a plaint is returned under O. VII, R. 10, C.P.C., a litigant has option to either file the same before proper forum or institute new suit.

Abdul Shakoor and others v. Mst. Hawabai and others 1982 SCMR 867 and Messrs Pakistan Agro Forestry Corporation Ltd. v. T.C. PAF Pakistan (Pvt.) Ltd. and others PLD 2003 Kar. 284 rel.

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

----S. 47-B---Insurance claim---Compound interest---Scope---Self-subscribed Group Insurance Scheme---Appellant/Insurance company was aggrieved of judgment passed by Trial Court in favour of respondent/widow by applying compound interest, who was widow of a Sales Manager---Validity---Scheme was under Memorandum of Understanding (MOU) and was a voluntary self-subscribed additional group insurance---Scheme was introduced for the benefit of Sales Managers, Sales Officers and Sales Representatives---As per terms of MOU, Sales Managers and Sales Officers were to be automatically included in the Scheme whereas only Sales Representatives were made eligible provided they had completed at least Rs.15,000 (Rs.10,000 after amendment) First Year Premium (FYP) during the previous calendar year---Requirement to complete FYP was not applicable to Sales Managers (like the husband of respondent) or Sales Officers---Rejection of claim by appellant/company was misconceived and flawed---Wrongful repudiation of claim of respondent/widow by appellant/company, after considerable and unexplained delay could not be countenanced---Insurance contract was aimed to help the insured or his legal heirs to bounce back from certain unforeseen disasters such as death---When an insurance company attempted to renege on its obligations, such act was in bad faith, which included unreasonable delay in processing a claim---Delay in intimating rejection/repudiation of claim of respondent/widow resulted into limitation issue for the insured (including his heirs)---Legal as well as equitable obligations to act in good faith towards each other was squarely applicable to the insurer who was required to act in an honest and upright manner to fulfil its promise---Rejection/repudiation of insurance claims on flimsy and baseless grounds offended principles of equity and justice---Appellant/company was estopped from taking undue advantage by retaining the sums that were due and payable to claimant like respondent/widow---Claim of respondent/widow was genuine and should have been allowed well in time---Denying and repudiating the claim with an inordinate delay in itself exhibited lack of bona fide on part of appellant/company---High Court maintained judgment and decree passed by Trial Court to the extent of claim of respondent/widow amounting to Rs.600,000/- along with compensatory costs of Rs.1,000,000 but findings to the extent of award of compound interest on the claim were set aside---Appeal was dismissed accordingly.

Mst. Robina Bibi v. State Life Insurance and others 2013 CLD 477; Mst. Naseem Begum and others v. State Life Insurance Corporation of Pakistan and others 2014 SCMR 655; Messrs Pak Suzuki Motors Company Limited through Manager v. Faisal Jameel Butt and another PLD 2023 SC 482; Water and Power Development Authority v. Aurangzeb 1998 SCMR 1354; Abdul Majeed and another v. Ghulam Haider and others 2001 SCMR 1254; Furqan Habib and others v. Government of Pakistan and others 2006 SCMR 460; Syed Athar Hussain Shah v. Haji Muhammad Riaz and another 2022 SCMR 778; Askari General Insurance Company Limited through President/Chief Executive Officer v. Islam Lubricants (Pvt.) Limited through Director and 2 others 2022 CLD 425; State Life Insurance Corporation of Pakistan through Chairman/Zonal Head/Attorney and others v. Mst. Razia Begum through Legal Heirs/Representative 2022 CLD 1026; Muhammad Asif and others v. State Life Insurance Corporation of Pakistan through Chairman and another 2018 CLD 239; Jubilee General Insurance Co. Ltd., Karachi v. Ravi Steel Company, Lahore PLD 2020 SC 324; State Life Insurance Corporation and others v. Mst. Syeda Muzhara Fatima 2021 CLD 479; State Life Insurance Corporation of Pakistan v. Atta Ur Rehman 2021 SCMR 1347; Sahabzadi Maharunisa and another v. Mst. Ghulam Sughran and another PLD 2016 SC 358; Kiramat Khan v. IG, Frontier Corps and others 2023 SCMR 866 and Khushi Muhammad through L.Rs. and others v. Mst. Fazal Bibi and others PLD 2016 SC 872 ref.

Dr. Mahmood-ur-Rahman Faisal and others v. Secretary, Ministry of Law, Justice and Parliamentary Affairs, Government of Pakistan, Islamabad and others PLD 1992 FSC 1 and Dr. M. Aslam Khaki v. Syed Muhammad Hashim and 2 others PLD 2000 SC 225 rel.

Ibrar Ahmed along with Barrister Hassan Attique, Manager/Legal Officer and Tariq Altaf Tipu, Deputy Manager Legal, State Life Insurance Corporation of Pakistan for Appellants.

Liaqat Ali Butt for Respondent.

Hussain Tahir Zaidi, Amicus Curiae.

2024 C L D 484

[Lahore]

Before Sultan Tanvir Ahmad, J

Messrs SAMSARA COUTURE HOUSE (PVT.) LTD. through Chief Executive and another---Appellants

Versus

Syeda KHADIJA BATOOOL and 2 others---Respondents

F.A.O. No. 7892 of 2020, decided on 13th December, 2023.

Trade Marks Ordinance (XIX of 2001)---

----S. 114---Civil Procedure Code (V of 1908), O. XXXIX, Rr. 1 & 2---Suit for trade mark infringement---Interim injunction---Bona fide owner and prior use---Proof---Trade mark in question was owned by partnership concern and prior or bona fide usage of the trade mark by respondent/plaintiff was denied by appellant/defendant in written statement---Intellectual Property Tribunal restrained appellant / defendant from using trade mark in question---Validity---Interim injunction, by its nature, is a preventive relief preserving status quo of subject matter till final conclusion of the suit---After ascertaining prima facie case, by assessing relevant documents if available, Courts must see existence of remaining two factors of balance of convenience and irreparable loss or injury---Preventive relief, in such circumstances and in the cases of unregistered marks, should not be granted as a matter of course and it is suitable when existence of right by prior use or its creation as well as its infringement are demonstrated with some clarity---High Court set aside order passed by the Tribunal as three ingredients required for grant of interim injunction were not co-existing---Appeal was allowed, in circumstances.

Messrs Unique School v. Messrs Unique Group of Institutions 2015 CLD 1297; Pioneer Cement Limited through Company Secretary v. Fecto Cement Limited through Chief Executive Officer and 3 others 2013 CLD 201; Qadeer Ahmed v. The Assistant Registrar of Trade Marks, The Trade Marks Registry and another 1999 YLR 96; Muhammad Kashan v. Coca Cola Export Corporation through Chief Executive Officer and 3 others 2015 CLD 1513; Yaqoob v. Additional Settlement Commissioner, Karachi and 2 others 1973 SCMR 116 and Kohinoor Soap and Detergents (Private) Ltd through Chief Executive of the Company v. Basra Soap Factory and 4 others 2002 CLD 1223 rel.

Hasan Irfan Khan, Saqib Asghar, Mudassar Hassan and Ms. Mahnoor for Appellants.

Syed Salman Ali Mohsin for Respondent No. 1.

2024 C L D 502

[Lahore]

Before Muhammad Sajid Mehmood Sethi, J

NESTLE PAK LIMITED, LAHORE through Authorized Signatory and another---Petitioners

Versus

SHEHRYAR KURESHI and 3 others---Respondents

C.R. No. 43193 of 2022, heard on 18th October, 2023.

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

----S. 39---Registration of copyrights---Word "may"---Scope---Words "may" and "shall" in legal parlance are interchangeable, depending upon the context in which they are used but legislative intent is to be seen and given effect to---Registration of copyrights in terms of S. 39 of Copyright Ordinance, 1962, is not mandatory but optional with the author, publisher, owner or other person interested in the copyright.

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

----S. 39---Registration of copyrights---Object, purpose and scope---Purpose of registration of copyright is to protect interest of a person who has invented or prepared a particular work as against a person who wants to take undue advantage of the same in order to deceive the unwary public---Mere failure to get copyright registered does not invalidate or impair copyright nor destroys the right to sue for copyright infringement.

Messrs Ferozesons (Pvt.) Ltd. v. Dr. Col. Retd. K.U. Kureshi and others 2003 CLD 1052; Rabia Bai v. Zeeshan Farooqi 2004 CLD 1163; Digital Medial Solutions Private Limited through Company Secretary v. Warid Telecom Private Limited through Faisal Saeed 2012 CLD 858 and Glaxosmithkilne Services Limited v. Anfords Pakistan (Pvt.) Limited SBLR 2017 Sindh 1537 rel.

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

----S. 2(h) & Schedule Entry 2---Copyright Ordinance (XXXIV of 1962), S. 39---Civil Procedure Code (V of 1908), S. 9 [as amended by the Code of Civil Procedure (Punjab) (Amendment) Act (XIV of 2018)], O. VII, R. 10---Suit for recovery of damages---Intellectual property---Copyrights---Jurisdiction of Courts---Principle---Special and general laws---Suit filed by respondents/plaintiffs for recovery of damages was returned by Trial Court to be filed before competent forum---Lower Appellate Court on appeal filed by respondents/plaintiffs remanded the matter to Trial Court for decision afresh---Validity---Court which is specialized and exclusive on a particular subject would be more equipped and focused to deal with special subject which may involve interpretation of specialized legal terms and concepts, as compared to an ordinary Court of civil jurisdiction---Such stance also finds its support from the latest amendment regarding jurisdiction of Civil Courts in Civil Procedure Code, 1908 and as per Province of Punjab Amendment brought in S. 9, C.P.C. [as inserted by the Code of Civil Procedure (Punjab) (Amendment) Act (XIV of 2018), dated 20.3.2018]---jurisdiction of Courts provided in the C.P.C. is barred where a general or special law is in force---Respondents/plaintiffs could not insist to pursue their claim before Civil Court---Term "Intellectual Property Laws" was defined in S. 2(h) of Intellectual Property Organization of Pakistan Act, 2012, to mean laws specified in its Schedule--- Provision of Entry 2 of Schedule to Intellectual Property Organization of Pakistan Act, 2012, duly mentioned "Copyright Ordinance, 1962"--- Where Legislature created a Special Court that would deal with all matters relating to Intellectual Property Laws including matters relating to intellectual property rights along with matters concerned therewith or incidental thereto notwithstanding that suit involved other non-IP related matters---High Court set aside order passed by Lower Appellate Court and plaint of respondents/plaintiff would stand returned for its presentation before concerned Intellectual Property Tribunal---Revision was allowed accordingly.

Muhammad Multazam Raza v. Muhammad Ayub Khan and others 2022 SCMR 979 and Messrs Shaheen Chemist through Proprietors and 3 others v. Zahid Mehmood Chaudhry and another 2023 CLD 1 rel.

Messrs Tabaq Restaurant v. Messrs Tabaq Restaurant 1987 SCMR 1090 ref.

Islamic Republic of Pakistan through Secretary, Ministry of Railways and others 2011 SCMR 1836; Mst. Zeeshan Nadeem v. Omer Aziz 2002 CLD 706; Messrs Fact Finders (Pvt.) Ltd. and others v. CNBC Pakistan and others 2022 CLC 1397; Reckitt and Colman Products Ltd. v. Borden Inc and others (1990) 1 All ER 873 and Krishika Lulla and others v. Shyam Vithalrao Devkatta and another Supreme Court of India in Criminal Appeals Nos.258 and 259 of 2013 distinguished.

Farooq Amjad Meer and Ahmad Farooq Meer for Petitioners.

Mudassar Raza Butt, Sajawal Javaid Butt and Muhammad Muazzam Akram for Respondents.

2024 C L D 518

[Lahore]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

MUHAMMAD JAVED SHAFI and others---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Branch Manager---Respondent

R.F.A. No. 30994 of 2022, decided on 11th November, 2023.

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

----Ss. 9, 10 & 22---Suit for recovery of finance---Finance facility, non-availing of---Proof---Suit filed by respondent/financial institution was decreed against appellants/customers---Validity---Bald denial of execution of finance and security documents was not convincing when numerous documents were otherwise available on record to substantiate the claim---Board Resolution for seeking renewal of CF-Facility, loan application, acceptance of terms of facility offer letter, execution of documents, finance and security, registration of charge with SECP were sufficient to dismiss applications for grant of leave to defend---Mere institution of suit by appellants/customer, seeking various declarations and grant of unconditional leave to defend to respondent/financial institution did not entitle appellants/customers for grant of leave to defend in suit by respondent/financial institution, as rule of the thumb---High Court maintained judgment and decree passed against appellants/customers, as no illegality was found to justify interference in exercise of appellate jurisdiction---Appeal was dismissed in circumstances.

PICIC Commercial Bank Limited v. Spectrum Fisheries Limited 2006 CLD 440; Messrs Muzamil Brothers and another v. Saudi Pak Commercial Bank Limited through Manager 2006 CLD 1546; Jamal Tube (Pvt.) Ltd, Lahore through Chief Executive Officer and others v. First Punjab Modarba, Lahore 2021 CLD 1372; Decent Builders and Developers v. Standard Chartered Bank (Pakistan) Limited 2021 CLD 130; Obaid Associates through Proprietor and another v. United Bank Limited 2021 CLD 1019; Messrs First Dawood Investment Bank Limited through Authorized Officers/Attorneys v. Mrs. Anjum Saleem and 3 others 2016 CLD 920; Pak Oman Investment Company Limited v. Chenab Limited and 9 others 2016 CLD 1903; The Bank of Punjab v. Arif Ali Shah Bukhari 2016 CLD 1301; Bank of Punjab v. International Ceramics Ltd. and others 2013 CLD 1472; Soneri Bank Limited v. Classic Denim Mills (Pvt.) Limited and 3 others 2011 CLD 408; Nusrat Textile Mills Ltd and 8 others v. United Bank Ltd. through Attorney 2005 CLD 1421; Messrs C.M. Textile Mills Pvt. Limited through Chairman and 5 others v. Investment Corporation of Pakistan 2004 CLD 587; The Bank of Punjab v. Fazal Abbas and another 2020 CLD 977; NIB Bank Limited through Authorized Officer and Special Attorney v. Messrs Venus Chemicals Private Limited and others 2020 CLD 1227; Zeeshan Energy Ltd. and others v. Faysal Bank Ltd. 2014 SCMR 1048; Muhammad Nawaz v. Zarai Taraqiati Bank Limited through Manager and 2 others 2013 CLD 1390; Messrs Dhrala Oil Mills through Partners/Guarantors and 4 others 2014 CLD 153; Elblow Room and another v. MCB Bank Limited 2014 CLD 985; National Bank of Pakistan v. Messrs Amna Export (Private) Limited and 2 others 2020 CLD 1243; Habib-ur-Rehman and another v. Judge Banking Court No.4, Lahore and another 2006 CLD 217; Messrs United Dairies Farms (Pvt.) Limited and 4 others v. United Bank Limited 2005 CLD 569; Nand Lal v. Askari Bank Ltd and others 2018 CLD 1176; Messrs M.A. Chaudhry and 3 others v. National Bank of Pakistan, Faisalabad through General Attorney 2005 CLD 875; National Bank of Pakistan and 117 others v. SAF Textile Mills Ltd and another PLD 2014 SC 283 and Apollo Textile Mills and others v. Soneri Bank Ltd. 2012 CLD 337 distinguished.

Shahid Ikram Siddiqui, Barrister Sajid Ikram Siddiqui, Aakif Majeed, Asim Tufail Farooqi and Sajid Hussain Qureshi for Appellants.

Ambreen Moin and Zain-ul-Abideen for Respondent.

2024 C L D 575

[Lahore]

Before Shahid Karim, J

JAN MUHAMMAD TAYAB through Authorized Attorney---Petitioner

Versus

FEDERATION OF PAKISTAN through Ministry of Law and Justice, Islamabad

and 7 others---Respondents

Writ Petition No. 36748 of 2022, decided on 1st February, 2023.

Foreign Exchange Regulation Act (VII of 1947)---

----S. 23C(4)---Adjudication Proceedings and Appeal Rules, 1998, R. 8---Constitution of Pakistan, Arts. 4, 10-A & 199---Order of penalty imposed by the Adjudicating Officer of State Bank of Pakistan, assailing of---Appeal before the Foreign Exchange Regulation Appellate Board, admitting of---Deposit of surety of the equivalent amount of the penalty by the appellant---Pre-condition, vires of---Right to fair trial---Due process---Scope---Appellant invoked constitutional jurisdiction of the High Court as the Presiding Officer of the Appellate Board, while relying upon S. 23C (4) of the Foreign Exchange Regulation Act, 1947 ("the Act, 1947"), had required the petitioner/ appellant to deposit before the Appellate Board a surety equivalent to the amount of penalty imposed upon him holding the same as a sine qua non for the appeal to be entertained and decided---Petitioner prayed for holding the provisions of S. 23C(4) to be unconstitutional on the ground that the same offended the rights of the petitioner/accused to be treated in accordance with law fairly and justly and his right to access of justice was also infringed---Validity---Provisions set out in S.23C(4) of the Act, 1947 provides that no appeal shall be admitted for hearing unless the appellant before the Appellate Board deposits in cash amount of penalty or at the discretion of the Appellate Board furnishes security equal in value to such amount of penalty, therefore, there is a complete prohibition enacted by subsection (4) of S. 23C of the Act 1947 to the hearing of the appeal unless the pre-condition is satisfied by an appellant, which is an infringement of the right which inheres in the petitioner to access to justice---One of the most important planks of the right of access to justice is the right to file at least one appeal against the order which affects the rights of a person---Right to file an appeal must be unimpeded and should not be circumscribed by a condition which surely takes away that right---Subsection (4) of S. 23C of the Act 1947 is one such provision which in fact is tantamount to taking away the right of the petitioner in not only filing of the appeal but also the hearing to be granted on that appeal irrespective of whether it fulfills the condition or not---It is one thing to say that petitioner may be burdened with a condition in case he seeks the suspension of the determination of a liability against him pending the appeal but another aspect entirely to provide in the law that the hearing of the appeal will be contingent upon the fulfillment of a condition precedent which if unfulfilled takes away the right of appeal---Distinction will have to be drawn between the two circumstances---Surely, under civil law a money decree can only be suspended if adequate security is provided by the judgment debtor and as determined by Appellate Court, but that mere fact does not mean that in case of failure to do so the appeal shall not be heard on its merits and that the appellant will be deprived of grant of hearing in the appeal itself unless he deposits the security equivalent to the amount of penalty---Subsection (4) of S. 23C of the Act 1947is a clog on the right of the petitioner to be dealt with in accordance with law---Petitioner has the right of filing at least one appeal and for that appeal to be heard without any pre-conditions attached to it, which is a fundamental right under the Constitution and springs from Art. 10A of the Constitution which provides, inter alia, that for the determination of civil rights and obligations, a person shall be entitled to due process, which also emanates from Art. 4 of the Constitution---Said right is absolute and cannot be taken away by laying down a condition which undermines that right---Rule 8 of the Adjudication Proceedings and Appeal Rules, 1998, makes the receipt of an appeal by the Appellate Board subject to compliance with subsection (4) of S. 23C of the Act, 1947, thus, said Rule too prohibits the Appellate Board from hearing the appeal unless the condition is satisfied---High Court set-aside the impugned orders, and struck down subsection (4) of S. 23C of the Foreign Exchange Regulation Act, 1947, as well as R. 8 of the Rules 1998 (to the extent said Rule makes the receipt of an appeal subject to the compliance with subsection (4) of S. 23C of the Act 1947) holding the same as unconstitutional and violative of the fundamental rights of the petitioner/appellant---Constitutional petition was allowed, in circumstances.

Asfandyar Wali v. Federation of Pakistan PLD 2001 SC 607; Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal Lahore and others PLD 1996 Lah. 672 and Messrs Eastern Rice Syncicate v. Central Board of Revenue, Government of Pakistan and others PLD 1959 SC (Pak.) 364 ref.

Waqas Ahmad Mir, Mian Tariq Hassan, Hassan Ali and Jahangir Dogar for Petitioner.

Rehan Nawaz and Dr. Shahid Raza for Respondent-SBP.

2024 C L D 626

[Lahore]

Before Shahid Karim and Raheel Kamran, JJ

NAVEED KHALID BUTT and another---Appellants

Versus

The BANK OF PUNJAB and others---Respondents

Execution First Appeal No.45601 of 2022, heard on 28th September, 2022.

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

----Ss. 15(8), proviso and 15(13), 15(14) & 15(5) [as amended by Financial Institutions (Recovery of Finances) Amendment Act (XXXVIII of 2016)]---Sale of mortgaged property without intervention of the Court---Objection petition ­­­seeking injunction for restraining the sale before filing of proper accounts for the sale proceeds---Maintainability---Appellants (who intented to participate in the bidding process) objected, through two Civil Miscellaneous Applications, to the sale of mortgaged property through auction without intervention of the Court, seeking a restraining order against the decree-holder/Bank from transferring the mortgaged property in favour of the auction purchaser through the sale deed---Executing Court (Single Judge of the High Court ) dismissed both Civil Miscellaneous Applications moved by the appellants holding the same as not-maintainable as the decree-holder/Bank had not yet filed the requisite accounts of the sale---Validity---There is nothing in the provisions of subsections (13) and (15) of S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('the Ordinance 2001') to suggest that application qua objection to the sale of mortgaged property without intervention of the Court and seeking injunction for restraining of sale of mortgaged property are not maintainable before proper accounts for the sale are filed in the Court---After the sale takes place (real or fictitious), a sale deed in respect of the property is to be executed by the financial institution which is authorized in said behalf by virtue of subsection (8) of S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001---Said subsection (8) contains a proviso that no such sale deed shall be executed or registered until expiry of seven days after the completion---Prior to enactment of the Financial Institutions (Recovery of Finances) Amendment Act, 2016, there was no provision in the Ordinance, 2001 which permitted objecting to the conduct of sale after the fall of hammer, which was declared repugnant to due process and fair trial, as guaranteed under Art. 10-A of the Constitution by the Supreme Court of Pakistan in the case of National Bank of Pakistan and 117 others v. SAF Textile Mills Limited reported as PLD 2014 SC 243, whereafter provisions of S.15 of the Ordinance, 2001 were amended to provide for the remedies under subsections (13) and (14) of S. 15 of the Ordinance, 2001---Subsequently, a Full Bench of High Court in the case of Muhammad Shoaib Arshad and another v. Federation of Pakistan through Secretary, Ministry of Law, Justice Human Rights and Parliamentary Affairs and 4 others reported as 2020 CLD 638, declared the provisions of aforementioned amended S. 15 intra vires the Constitution---No doubt the financial institution which has sold the mortgaged property is required to submit proper accounts of the sale proceeds in the Banking Court within thirty days of the sale, as manifest from subsection (11) of S. 15 of the Financial Institutions ( Recovery of Finances) Ordinance, 2001, however, in the scheme of said section such occasion arises after the sale has become absolute either because no remedy was availed under subsections (13) and (14) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 or the remedy availed does not yield fruitful results for the objector---Thus, the impugned orders had been passed apparently without having regard to the provisions of subsections (13) to (15) and proviso to subsection (8) of S. 15 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, therefore, the impugned orders were not sustainable in law and the same were set aside---Civil Miscellaneous Applications of the appellants would be deemed to be pending before the Executing Court (Single Judge of the High Court) to be decided in accordance with law---Execution first appeal was allowed, in circumstances.

National Bank of Pakistan and 117 others v. SAF Textile Mills Limited PLD 2014 SC 243 and Muhammad Shoaib Arshad and another v. Federation of Pakistan through Secretary, Ministry of Law, Justice Human Rights and Parliamentary Affairs and 4 others 2020 CLD 638 ref.

Ch. Sohail Khurshid for Appellant.

Jahanzaib Inam for Respondent No.1.

Majid Ali Wajid for Respondent No.3.

2024 C L D 685

[Lahore (Rawalpindi Bench)]

Before Jawad Hassan, J

NETHERLANDS FINANCIERINGS MAATSCHAPPIJ VOOR ONTWIKKELINGSLANDEN

N.V. (F.M.O.)---Petitioner

Versus

MORGAH VALLEY LIMITED and SECP---Respondents

Civil Original No. 08 of 1989, decided on 20th December, 2022.\

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

----S. 89-A, O. IX-A and IX-B---Alternative Dispute Resolution Act

(XX of 2017), S. 2(i)---Mediation---Object, purpose and scope---Mediation is used to settle contract, interpersonal and human resource conflicts---Mediation involves intervention of a third person, or mediator, into a dispute to assist parties in negotiating jointly acceptable resolution of issues in conflict---Mediator meets with the parties at a neutral location where parties can discuss the dispute and explore a variety of solutions---Each party is encouraged to be open and candid about its own point of view---Mediator, as a neutral third party, can view a dispute objectively and assist the parties in considering alternatives and options that they might not have considered---Mediator is neutral and does not stand for personal benefit from the terms of settlement, and is impartial in that he or she does not have a preconceived bias about how the conflict should be resolved---Mediation is a process where parties meet with mutually selected impartial and neutral person who assists them in negotiation of their differences---Such process brings in hope of getting parties to discuss settlement through a trustworthy and skilled mediator who encourages settlement freeing up valuable court time and resources.

(b) Companies Act (XIX of 2017)---

----Ss. 6, 276 and 277---Companies (Mediation and Conciliation) Regulations, 2018, Reglns. 3, 4, 9, 10 and 11---Company dispute---Mediation---Company Judge, duty of---Dispute between the parties was non-payment of loan amount extended by petitioner company to respondent company---High Court persuaded the parties to settle their dispute through mediation---Validity---Due to ever growing economic activism, stimulation and expansion of international investment, trade entities are eagerly and consistently falling in interactions, deals and transactions, not only with local citizens but with foreign business communities as well---In course thereof, parties aspire certain securities safeguarding and protecting their investments, interests and rights as well as guaranteeing resolution of trade/commercial/corporate disputes at the earliest and at the lowest costs of time and money, that too, under the umbrella of law---Using mediation as a technique to resolve trade/commercial/corporate disputes has now been transformed in a global movement---It is duty of Company Judge to protect interest of company and minimize adverse effect to it---Based on the strong principles to safeguard the interest of company and to resolve corporate dispute developed by Supreme Court in various judgments, provisions of Ss. 276 and 277 of Companies Act, 2017, can be invoked in order to protect interest of company and the Court can initiate process of Early Neutral-Party Evaluation ("ENE") and then mediation---Parties are encouraged throughout the litigation process to attempt to settle disputes, for good reason, and such decision may encourage more litigants to explore settlement possibilities before being ordered to do so by the court---Mediation outcomes not only save time and money of parties, but it also reduces load of work in Courts as well as it is the most updated way on resolutions based on the "divine culture of peace"---Issue between the parties pertained only claim of debt amount, which issue stood settled in the way that receipt of amount was admitted by petitioner---Disputed debt claim stood thoroughly satisfied and there was no justification for winding up the "company" in such a scenario---Petition was disposed of accordingly.

Daniels v The Commissioner of Police for the Metropolis [2005] EWCA Civ 1312; Faisal Zafar and another v. Siraj-ud-Din and 4 others, GENOME Pharmaceuticals and SECP 2024 CLD 1; M.C.R. (Pvt.) Ltd., Franchisee of Pizza Hut v. Multan Development Authority and others 2021 CLD 639; Federation of Pakistan and others v. Attock Petroleum Ltd. Islamabad 2007 SCMR 1095; The Additional Registrar Company v. Al-Qaim Sugar Mills Ltd. 2021 CLD 931; Saudi Pak Industrial and Agricultural Investment Company Ltd. v. Chenab Limited 2020 CLD 339; Messrs U.I.G. (Pvt.) Limited through Director and 3 others v. Muhammad Imran Qureshi 2011 CLC 758; Messrs Alstom Power Generation through Ashfaq Ahmad v. Pakistan Water and Power Development Authority through Chairman and another PLD 2007 Lah. 581; Atlantic Pipe Corp. (304 F.3d 135 (1st Cir. 2002); African-American Slave Descendants' Litigation MLD No.1491, Lead Case No.02 C 7764 (307 F. Supp. 2d 977 (N.D. Ill. 2004); Messrs Afcons Infra Ltd. and another v. Messrs Cherian Varkey Constn (2010 (8) SCC 24); Pitamber B Ruchandani v. Arti Bharatbhai Ruchandani and 5 (O.J.Appeal No. 7 of 2014); James Churchill v. Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416; Halsey v. Milton Keynes General NHS Trust [2004] 1 WLR 3002; Kelly v. Miller and others [2014] EWCA Civ 1151; Wright v. Michael Wright Supplies Ltd [2013] EWCA Civ 234; Ghaith v Indesit Company UK Ltd. [2012] EWCA Civ 642; DK (Iraq) v. Secretary of State for the Home Department [2008] EWCA Civ 1169; Ezsias v. Welsh Ministers [2008] EWCA Civ 874; R (on the application of) v. Birmingham East and North Primary Care Trust [2008] EWCA Civ 465; Burchell v. Bullard and others [2005] EWCA Civ 358; Day v. Day [2002] EWCA Civ 1842; Circuits Ltd. v. Coates Brothers Plc [2002] EWCA Civ 333; Lt. General (Retd.) Mahmud Ahmad Akhtar and another v. Messrs Allied Developers (Private) Limited and others 2022 CLD 718; Shaheen Merchant v. Federation of Pakistan and others 2021 PTD 2126; Ms. Shehla Zia and others v. WAPDA PLD 1994 SC 693; D. G. Khan Cement Company Ltd. v. Government of Punjab through Chief Secretary, Lahore and others 2021 SCMR 834; Messrs Bahria Town (Pvt.) Ltd. through Manager (Operations) v. District Consumer Court, Rawalpindi and 2 others PLD 2022 Lah. 488; Ch. Fayyaz Hussain v. Province of Punjab and others PLD 2022 Lah. 1; The Additional Registrar Company v. Al-Qaim Textile Mills Limited 2021 CLD 931; Messrs Jet Green (Pvt.) Limited v. Federation of Pakistan and others PLD 2021 Lah. 770; Saif Ur Rehman Khan v. Securities and Exchange Commission of Pakistan (SECP) through Chairman and 2 others 2022 CLD 1460 and Tariq Iqbal Malik v. Messrs Multiplierz Group Pvt. Ltd. and 4 others 2022 CLD 468 rel.

Anwar Kamal, Senior Advocate Supreme Court with Muhammad Umar Khan Vardaq, Advocate Supreme Court for Petitioner.

Malik Qamar Afzal, Advocate Supreme Court with Malik Shahriyar Qamar Afzal, Raja Asad Iqbal Sati and Usman Jillani and Barrister Zainab Nasir along with Nasir Jabbar Khan for Respondent.

Muzaffar Ahmad Mirza, Executive Director, Legal Affairs with Adeel Peter and Hassnain Raza, SPP for SECP.

Malik Amjad Ali, Additional Advocate General.

M. Kamal Hassan, ENE Mediator with M. Bilal Riaz and Barrister Mian Sheraz Javaid.

Ch. Ali Abbas, Advocate for IDBL Bank with Officials of Bank namely Faizan Khan, Officer Grade-II, IDBL and Zargham Shah.

Sadique Akbar Abbasi, Advocate Supreme Court for NBP.

Attiq-ur-Rehman Kiani, Advocate Supreme Court, Official Liquidator (Applicant in C.Ms. Nos. 7 and 8 of 2022) Syed Bulent Sohail and Zarmeeneh Rahim.

Malik Aneeq Ali Khatana, Barrister S.M. Hafeez Shah.

Rashid Mehmood, Civil Judge 1st Class/Research Officer Lahore High Court (Rawalpindi Bench).

Date of hearing: 20th December, 2022.

Each will have to accept that those who live by the sword must risk dying by the sword as well. That is the inevitable risk of litigation…. What can the court do to prevent what, to those outside the litigation, may seem like an unseemly, or at least uncommercial, squabble? We can and we do encourage mediation, the earlier the better. It does have an extraordinary knack of producing compromise, even where the parties appear, at the start, to be intractably opposed.1

(Sir Alan H. Ward, Judge, Court of Appeals, England and Wales)

2024 C L D 724

[Lahore]

Before Sultan Tanvir Ahmad, J

Sheikh MUHAMMAD ANWAR and 4 others---Petitioners

Versus

JUDGE BANKING COURT and another---Respondents

Writ Petition No.38033 of 2023, decided on 2nd February, 2024.

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

----S. 2 (g)(ii)---Willful default---Scope---Utilization of finance facility for a purpose other than for which the facility is obtained is a "Willful default".

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

----S. 2 (g)(iii)---Willful default---Scope---Removal or transfer, misappropriation or sale of collaterals can constitute willful default when it takes place without permission of financial institution.

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

----S. 20(1)(d)---Offence, punishment for---Pre-condition---Punishment for S. 20(1)(d) of Financial Institutions (Recovery of Finances) Ordinance, 2001, is dependent upon determination of civil liability / decree.

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

----Ss. 9 & 20---Simultaneous civil and criminal proceedings---Permissibility---Petitioners / borrowers were aggrieved of initiation of civil as well as criminal proceedings by financial institutions---Validity---Object of civil proceeding is to enforce civil rights, whereas criminal proceeding is to punish the offender for committing criminal offence---Both proceedings, even if relating to same matter can proceed simultaneously---Criminal Courts are empowered to postpose proceedings when criminal liability is intimately connected with the result of civil proceedings---Criminal and civil proceedings against petitioners/borrowers can be maintained simultaneously---Powers of Banking Courts could not be abridged as normal procedure of law was followed---High Court declined to interfere in proceedings of criminal complaints pending before Banking Courts---Constitutional petition was dismissed, in circumstances.

Messrs Long Grain Rice Mills (Pvt.) Ltd. through Chief Executive v. Habib Bank Limited through Senior Manager (CAD) and Senior Manager (Remedial) and another 2016 CLD 551; Akhlaq Hussain Kayani v. Zafar Iqbal Kiyani and others 2010 SCMR 1835; Miraj Khan v. Gul Ahmed and 3 others 2000 SCMR 122; Abdul Haleem v. The State and others 1982 SCMR 988; Dr. Sher Afgan Khan Niazi v. Ali S. Habib and others 2011 SCMR 1813; Muhammad Aslam v. The State and others 2017 SCMR 390; Central Board of Revenue and another v. Khan Muhammad PLD 1986 SC 192; Malik Khuda Bakhsh v. The State 1995 SCMR 1621; Mauj Din through Legal Heirs and others v. Settlement Commissioner, Lahore Division and others 2002 SCMR 2001; Seema Fareed and others v. The State and another 2008 SCMR 839; Mian Ayaz Anwar and others v State Bank of Pakistan and others 2019 CLD 375; Misbah Ud Din Zaigham and 03 others v. Federal Investigation Agency through Assistant Director (FIA/CBC/LHR) and another 2021 CLD 906; Syed Mushahid Shah and others v. Federal Investment Agency and others 2017 SCMR 1218; Syed Wajahat Hussain Zaidi v. Banking Court No. 1 and others 2018 CLD 1273; Haji Sardar Khalid Saleem v. Muhammad Ashraf and others 2006 SCMR 1192; Muhammad Aslam v. The State and others 2017 SCMR 390; The Deputy Inspector-General of Police Lahore and others v. Anis-ur-Rehman Khan PLD 1985 SC 134; Karachi Transport Corporation and another v. Muhammad Hanif and others 2009 SCMR 1005; Syed Askari Hadi Ali Augustine Imam and another v. State (Delhi Admn.) and another AIR 2009 SC 3232; Salman Ashraf v. Additional District Judge, Lahore and others 2023 SCMR 1292; The State v. Illahi Bux and others PLD 1965 (W.P.) Kar. 231 and Muhammad Amin v. Momin Khan and 2 others PLD 2014 Pesh. 49 ref.

Shahid Ikram Siddiqui, Muhammad Imran Malik, Akif Majeed Butt, Hassan Ismail, Asim Tufail Farooqi, Muhammad Bilal Mehmood, Barrister Sajid Ikram Siddiqui, Fazal Mahmood Chaudhary, Rao Zahid Tasawar, Shahzad Ahmad Qureshi, Mian Asghar Ali, Mian Ghulam Mohy-ud-Din, Tehseen Sarwar, M. Faizan Saleem, M. Imran Saleem, M. Usman Saleem, Taimur Saleem, Ms. Maha Batool, Ms. Hira Asif Awan, Nadeem Irshad, Muhammad Riaz, Ch. Abdul Razzaq and Ch. Mahmood-ur-Rehman for Petitioners.

Tariq Kamal Qazi, Shoaib Rasheed, Syed Moazam Ali Shah, Barrister Syed Ali Rizvi, Hfeez Saeed Akhtar, Barrister Sheheryar Riaz, Syed Aatir Raza, Ali Yousaf, Afnan Malik, Haroon Yazdani, Muhammad Irfan, Rana Haseeb Ahmad Khan, Ahmad Jamal, Abdul Muqtadir Khan, Barrister Ahmed Pervaiz, Jawad H. Tarar, Ch. Muhammad Ijaz Jamal, Kh. M. Ajmal, Majid Ali Wajid, Muhammad Nashit, Ansar Shahzad, Bilal Riaz Sheikh, Nadeem Ahmad, Qaiser Abbas, Sheikh Zeeshan Ishfaq, Falak Sher, M. Nadeem, Asher Ellahi, Moeed Ahmad, Hussain Javed, Salman Ahmad, Muzammil Ashraf Qureshi, Tariq Nawaz Bhatti, Saeed Mushtaq, Mian Zaheer Ahmad, M. Jawad Khan Lodhi, Muhammad Ahmad Khan Niazi, Nauman Ahmad Chaudhary, Syed Samir Sohail, Rana Muhammad Ishaq, Shoaib Rashid, Ms. Manahil Khan, Abdul Hameed, Ch. Sohail, Rana Muhammad Akram, Syed Moazzam Ali Shah, Suhaib Ahsan, Zain-ul-Abideen, Ms. Ambreen Moieen, Ms. Javira Latif, Amir Wakil Butt, Syed Hassan Gillani, Atif Sattar Arieen, Ms. Lubna Saleem for Respondents.

Mir Haroon-ul-Rasheed, Assistant Attorney General.

Muhammad Nasim Saqlain, Assistant Attorney General.

Salman Asif Warraich, Assistant Advocate General.

Makhdoom Owais, Assistant Director Investigation, FIA, and Zahoor Ahmad, Sub-Inspector FIA/CBC/LHR.

2024 C L D 776

[Lahore]

Before Sultan Tanvir Ahmad, J

NAFEES AHMAD---Petitioner

Versus

ZIA-UD-DIN---Respondent

Regular First Appeal No.69211 of 2023, decided on 17th April, 2024.

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

----O. XXXVII, R. 2(2)---Suit for recovery on the basis of cheque---Condition attached with leave granting order, non-compliance of---Leave granting order, recalling of---Application to leave to defend filed by the appellant/defendant was granted to him subject to furnishing security / surety bond, however, he remained unable to comply with the condition and as a result thereof leave granting order was recalled by the Trial Court and decree was passed in favour of the respondent/plaintiff---Argument of the appellant / defendant was that by recalling the leave granting order he was wrongly ousted from producing his defence and the Trial Court acted in haste while recalling the leave granting order---Validity---Order sheet of the Trial Court reflected that after about two and a half months of the grant of leave subject to condition (filing of surety bond),the counsel of appellant requested for some time to file surety bond when he was given last opportunity---Thereafter, on next date of hearing once again same request was made when absolute and final opportunity was granted---On next hearing the appellant was himself present in the Court and he gave undertaking with respect to submission of surety---But, the previous conduct continued and the Court clearly observed that the surety should be filed before closing hours of the Court but the appellant failed, apparently leaving the Trial Court with no other option but to recall the leave granting order, and as a consequence of the same leave to appear and defend the suit was deemed to be dismissed---Such conduct of the appellant was sufficient indication of the fact that the appellant accepted the condition and then caused undue delay of about four months just to avoid expeditious decision in suit---Thus, said recalling order of the Trial Court essentially meant that the appellant had no leave to appear and defend the case in terms of O.XXXVII, R.2(2) of the Code---Trial Court had rightly decreed the suit---Appeal was dismissed, in circumstances.

Muhammad Ramzan and others v. Ghulam Qadir 2011 SCMR 659; Murtaza Haseeb Textile Mills v. Sitara Chemical Industries 2004 SCMR 882 and Abdullah v. Shaukat 2001 SCMR 60 ref.

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

----O. XXXVII, Rr. 1 & 2---Penal Code (XLV of 1860), S. 489-F---Suit for recovery on the basis of cheque---Criminal as well as civil litigation regarding the cheque---Scope---Decree was passed in favour of the respondent/plaintiff by the Trial Court---Contention of the appellant /defendant was that he had been discharged from the criminal cases registered under S. 489-F of Pakistan Penal Code, 1860---Validity---Both the criminal as well as civil cases have different standards of proof and acquittal or discharge from criminal case does not absolve a litigant from civil liability, if burden is discharged by the other side as per settled principles of civil standard of proof---Trial Court had rightly decreed the suit---Appeal was dismissed, in circumstances.

Sultan Ali Dogar and Ali Raza Hanjra for Appellant.

Mian Imran Mushtaq for Respondent.

2024 C L D 839

[Lahore (Multan Bench)]

Before Muhammad Sajid Mehmood Sethi and Raheel Kamran, JJ

Messrs TEAM PACKAGES and others---Appellants

Versus

MCB BANK LIMITED---Respondent

Execution First Appeal No.13 of 2023, decided on 20th May, 2024.

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

----Ss.3, 10(4), explanation, 19 & 22---Suit for recovery of finances---Execution proceedings---Cost of funds---Appellant / judgment debtor was aggrieved of dismissal of his objections regarding recovery of cost of funds prior to recovery of decretal amount---Validity---Execution of decree passed by Banking Court was governed by S.19 of Financial Institutions (Recovery of Finances) Ordinance, 2001, which contained no provision for applicability of explanation contained in S. 10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---No reference was made to application of such explanation in S.3 of Financial Institutions (Recovery of Finances) Ordinance, 2001, which prescribed duty of a customer to pay cost of funds of financial institution---Decree-holder bank erred in law in appropriating repayments made by judgment-debtors towards other amounts such as cost of funds instead of decretal debt on the pretext of applicability of explanation in S.10(4) of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court set aside order passed by Banking Court as it was unlawfully approved---Appeal was allowed accordingly.

Habib Bank AG Zurich through Manager v. Mustafa Shamsuddin Ghatilla and 2 others 2003 CLD 658; SME Bank Limited through Branch Manager v. Messrs Punjab Store through Proprietor and another 2022 CLD 251; Messrs Divine Developers (Pvt.) Ltd. and others v. Bank of Punjab 2019 CLD 489 and Habib Bank Limited through Authorized Attorneys v. Pak Poly Products (Pvt.) Ltd. and 3 others 2013 CLD 1661 ref.

Muhammad Manzoor-ul-Haq for Appellants.

2024 C L D 852

[Lahore]

Before Abid Aziz Sheikh, J

AL BARAKA BANK PAKISTAN LIMITED through Authorized Officers---Plaintiff

Versus

EDEN HOUSING LIMITED through Chief Executive Officers and others---Respondents

C.O.S. No.233635 of 2018, heard on 2nd November, 2023.

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

----Ss. 9(5) & 10(1)---Suit for recovery filed by the bank against the borrower /company as well as its directors/guarantors---Petition to leave to defend---Failure of the defendant(s)---Petition for leave to defend ('PLA') purportedly filed by all/eight defendants (company and its directors/guarantors) showed that only three (out of eight) defendants had signed the same who had also filed their affidavits in (their respective) personal capacity and no PLA had been filed on behalf of rest of the (five) defendants---As per provisions of the Ss.10(1) & 9(5) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('the Ordinance, 2001'), where the defendant fails to file PLA and obtain leave from the Court to defend the suit, the allegation of facts in the plaint shall be deemed to be admitted and the Court may pass a decree in favour of the plaintiff on the basis of plaint or other material---PLA having not been filed by the all the defendants, the allegations of fact including availing of loan facility by the defendant/company was deemed to be admitted---No substantial question of law and fact had been raised in PLA filed by the defendants, which required recording of evidence for its resolution, therefore, PLA filed by the said defendants was dismissed, in circumstances---Suit was decreed in favour of plaintiff / bank and against defendants jointly and severally.

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

----Ss. 9 & 10---Suit for recovery filed by the bank against the borrower / company and its directors/guarantors------Petition for leave to defend---Failure of defendant(s)---Argument of the defendants was that signature of the one of directors/defendants on petition for leave to appear and defend ('PLA') might also be treated as basis on behalf of the company / defendant---Held, that said argument was misconceived as no Board of Directors' Resolution, Authority Letter or Memorandum and Articles of Association of the defendant / company had been placed on record authorizing the said defendant/director to represent the Company in the present suit and file PLA on its behalf, therefore, said PLA could not be treated on behalf of the Company as a defendant---PLA filed by the defendants was dismissed, in circumstances---Suit was decreed in favour of plaintiff /bank and against defendants jointly and severally.

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

----Ss. 2(d), 3, 9 & 10---Suit for recovery filed by the bank against the borrower /company and its directors/guarantors---Late payment charges /charity , recovery of---Penalty---Scope---Argument of the defendants was that amount of Rs.65,716,498 as late payment charges was not recoverable by the bank---Validity---Perusal of relevant clause of the "Master Murabaha Finance Agreement" (having been relied upon by the plaintiff/bank itself to justify late payment charges) showed that where amount payable by the customer under the principal documents was not paid by a specific date or within a week of the demand, the said amount be paid by the customer as charity @ 18% to the bank for donation by the bank on behalf of the customer for charity purposes---Such amount of charity claimed by the bank/plaintiff was not covered under the finance facility under S.2(d) of the Financial Institutions (Recovery of Finances) Ordinance, 2001 ('the Ordinance 2001 ') as said amount was merely a penalty, which was not permissible under the law---Charity or gift is something the doner gives or grants with his free will and can not be recovered as compulsion---Thus, the amount claimed as late payment charges / charity by the bank/plaintiff was declined---After excluding the amount claimed as late payment charges by the bank / plaintiff , suit was decreed in favour of plaintiff / bank and against defendants jointly and severally together with costs and cost of funds as contemplated by S.3 of the Ordinance, 2001.

Dr. Faiz Rasool and others v. The Askari Bank Limited through Branch Manager/Authorized Attorney 2015 CLD 1710 ref.

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

----S. 9---Suit for recovery filed by the bank against the borrower / company and its directors/guarantors---Liability of defendant(s) being legal heir(s)---Scope---Liability of defendants (being legal heirs of the deceased borrower (director/defendant) shall be only to the extent of the property inherited by them from the deceased borrower/defendant.

Muhammad Rizwan-ul-Hassan, Muhammad Sajid Qureshi and Hamza Irshad for Plaintiff.

Imran Anjum Alvi, Muhammad Faizan Sarwar and Abbas Ali Cheema for Defendants.

2024 C L D 872

[Lahore]

Before Shahid Karim, J

MUHAMMAD YOUNIS---Petitioner

Versus

Messrs SHAHID SURGICAL (PVT.) LTD. and others---Respondents

Civil Original No.81451 of 2021, decided on 24th April, 2024.

Companies Act (XIX of 2017)---

----Ss. 126, 136 & 160---Limitation Act (IX of 1908), S. 5 & Art. 181---Petition for rectification of register of members and to declare invalid the proceedings of a general meeting as well as election of directors, filing of---Limitation---Application for condonation of delay---Sufficient / reasonable cause---Scope---Petitioner (director / shareholder of the company) moved petition in the year 2021 challenging proceedings held in the year 2003---Petitioner also filed an application for condonation of delay on the ground that he came to know about impugned proceedings during perusal of certified true copies issued by Securities and Exchange Commission of Pakistan in the year 2020---Validity---Ground, taken by the petitioner, did not furnish a reasonable cause to compel the Court to condone the delay---Such petitions, like the present one for rectification etc., where no period of limitation is provided would be governed by Art. 181 of the Limitation Act, 1908, for which a period of three years is provided---Present petition was clearly beyond that period and challenged the transfer of shares which took place in the year 2003---Each day's delay had to be explained by the petitioner which had not been done sufficiently---Present petition being beyond the period of three years provided by law is clearly barred by statutes, which was dismissed---Consequently, main petition for rectification etc. filed in the year 2021 by the director / shareholder was also dismissed.

Messrs Bentonite Pakistan Ltd. v. Bankers Equity Ltd. 2023 SCMR 1353 ref.

Masood Ahmad Zafar and Awais Bin Tariq for Petitioner.

Usman Nasir Awan, Wajahat Ali and Mirza Waqas Baig for Respondents Nos.1, 2, 4 and 5.

Shan Saeed Ghumman for Respondent No.3.

2024 C L D 883

[Lahore]

Before Shahid Karim and Rasaal Hasan Syed, JJ

Mian SADIQ HUSSAIN and another---Appellants

Versus

ALLIED BANK PAKISTAN LIMITED and another---Respondents

R.F.A. No.1550 of 2015, heard on 6th May, 2024.

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

----Ss. 9 & 22---Suit for declaration and recovery of damages---Non-appearance as witness---Presumption---Appellants / plaintiffs being customers of respondent / defendant bank alleged that their fix deposit receipts were unauthorizedly encashed---Trial Court dismissed the suit---Validity---One appellant / plaintiff denied relationship of customer altogether and the other opted not to support his case on oath by appearing as witness, therefore, adverse presumption was raised against him---There was no plausible or cogent explanation in the evidence of appellants / plaintiffs as to what occasioned such deposit receipts to be placed with bank and what in specific was "Amanat" or entrustment which could be referred to that necessitated and which had prevented the respondent / defendant bank from adjusting amounts to settle outstanding liability so as to establish any foundational breach of trust, any contract or specifically unjustified encashment as was claimed---Issue-wise findings concluded that appellants / plaintiffs failed to prove their case and the suit was rightly dismissed by Trial Court---High Court declined to interfere in the judgment and decree passed by Banking Court as there was no misreading and non-reading of evidence nor there was any legal infirmity or jurisdictional defect---Appeal was dismissed, in circumstances.

Mian Asghar Ali for Appellants.

Waseem Ahmad and Ch. Saeed Hussain for Respondents.

2024 C L D 890

[Lahore]

Before Abid Aziz Sheikh, J

Messrs FUTURE VISION ADVERTISING (PRIVATE) LIMITED---Petitioner

Versus

FEDERATION OF PAKISTAN and others---Respondents

Writ Petition No.77742 of 2023, decided on 3rd June, 2024.

(a) Companies Act (XIX of 2017)---

----S. 257(1)---Expression "without prejudice to its power under S. 256, the Commission……"---Scope---Provision of S.257(1) of Companies Act, 2017, commences with the expression "without prejudice to its power under S. 256, the Commission"---When such expression is used, it means that anything contained in the provision following such expression is not intended to cut down generality of the meaning of preceding provision.

P Ramanatha Aiyar's Advance Law Lexicon, Volume 4 rel.

(b) Companies Act (XIX of 2017)---

----Ss. 256 (1) & 257 (1)---Affairs of company---Appointment of Inspectors---Jurisdiction---Petitioner / company assailed show cause notice issued by Commission regarding investigation of affairs of company on complaint filed by persons other than shareholders---Validity---Both in S. 256(1) and S. 257(1)(b) of Companies Act, 2017, Commission was to form an opinion before appointment of Inspectors---Such opinion under S. 257(1)(b) of Companies Act, 2017, was to be based upon circumstances suggesting various situations mentioned in clauses (i) to (vii) of S. 257(1)(b) of Companies Act, 2017---Formation of opinion under S. 256(1) of Companies Act, 2017, was not confined only to circumstances suggested in clauses (i) to (vii) of S. 257(1)(b) of Companies Act, 2017, but Commission had much wide powers to appoint Inspectors if it was necessary to investigate into affairs of the Company---Provision of S. 257(1)(b) of Companies Act, 2017, was a separate clause under which Commission had independent power to appoint Inspectors to investigate affairs of the Company if in its opinion there were circumstances suggesting the situation mentioned in subsections (i) to (vii) of S. 257(1)(b) of Companies Act, 2017---High Court declined to interfere in appointment of Inspectors to investigate affairs of petitioner / company---Constitutional petition was dismissed, in circumstances.

Tariq Iqbal Malik v. Messrs Multiplierz Group (Pvt.) Ltd. and 4 others 2022 CLD 468; Brothers Steel Ltd. and others v. Mian Mirajuddin and 15 others PLD 1995 SC 320 and Mian Miraj Din and others v. Brothers Steel Mills and others 1996 CLC 516 ref.

(c) Words and phrases---

----Punctuation mark "semicolon (;)"---Purpose and applicability---"Semicolon" is used to separate consecutive phrases or clauses independent of each other grammatically but dependent alike on some word preceding or following.

Words and Phrases Volume 38B rel.

Faisal Rasheed Ghouri for Petitioners.

Syed Sajjad Haider Rizvi, Assistant Attorney General for Pakistan for Respondent No.1.

Ruman Bilal for Respondents Nos.2 to 6.

2024 C L D 917

[Lahore]

Before Raheel Kamran, J

CHINA HARBOUR ENGINEERING COMPANY LTD. and others---Petitioners

Versus

Z. Z. ENTERPRISES and others---Respondents

Civil Revision No. 54865 of 2023, decided on 3rd May, 2024.

(a) Punjab Commercial Courts Ordinance (XIX of 2021) [since repealed]---

----S. 3---High Court (Lahore) Rules and Orders, Volume-I, Chap-1, Part-K, R. 10---Constitution of Pakistan, Arts. 202 & 203---Commercial Courts, function of---Scope---Punjab Commercial Courts Ordinance, 2021, [since repealed]---Effect---Petitioners/defendants sought revision of order (dated 31.05.2023) passed by the Civil Judge 1st Class (Special Court for Commercial Cases), Lahore, whereby suit for recovery of Rs.851,170,923/- along with specific performance of contract filed by respondents/plaintiffs was considered as commercial case---Plea of the petitioners/defendants was that the Civil Judge had acted contrary to the mandate of Rule 10, Part-K, Chapter-1, Volume-I of the Rules and Orders of the Lahore High Court, Lahore ('the Rule 10') as said R. 10 could not operate in vacuum unsupported by any law as the Punjab Commercial Courts Ordinance, 2021 ('the Ordinance 2021'), which was promulgated on 13.04.2021, stood repealed on 12.06.2021 while suit-in-question was instituted (on 14.09.2022) after more than one year of the Ordinance, 2021 being repealed---Validity---In order to secure expeditious disposal of cases of commercial nature, the Lahore High Court vide its Notification No.6032 DDJ/DR(PD&IT) dated 28.04.2020 ('the Notification') designated a few courts of Additional District and Sessions Judge and Civil Judges at couple of stations entrusting the work of commercial cases pertaining to their districts to the Judicial Officers already dealing with the cases of Overseas Pakistanis---Rule 10, Part-K, Chapter-1, Volume-I of Rules and Orders of the Lahore High Court, Lahore, provides that commercial cases should be disposed of as speedily as practicable, which are to include cases arising out of ordinary transactions of merchants, bankers and traders---Said notification also did not show that the courts were being designated as Commercial Courts in accordance with the Ordinance, 2001---Therefore, it was quite clear that the subject notification was issued on 28.04.2020 prior to the promulgation of the Ordinance, 2001 and its repeal had no legal effect upon functioning of the Commercial Courts---Even as per said R. 10, a plaintiff or appellant may apply at the time of preliminary hearing or by subsequent application before the final hearing thereof to have its case classed as commercial case---Petitioners had not been able to point out any prejudice being caused to them because of hearing and adjudication of the case-in-question by the Civil Judge designated as Commercial Court---Thus courts designated to hear cases of commercial nature were functioning in accordance with the C.P.C. and the Rules and Orders of the Lahore High Court under its superintendence and control within the scope of Arts. 202 & 203 of the Constitution---High Court did not find any illegality or irregularity in the impugned order warranting interference in exercise of its revisional jurisdiction---Civil revision, being devoid of any merit, was dismissed, in circumstances.

(b) Constitution of Pakistan---

----Arts. 202 & 203---High Court (Lahore) Rules and Orders, framing of---High Court, powers of---Scope---High Court (Lahore) Rules and Orders have been framed by the Lahore High Court in accordance with Art. 202 of the Constitution that empowers it to do so subject to the Constitution---Article 203 of the Constitution envisages that each High Court shall supervise and control all courts subordinate to it with the object to establish orderly, honorable, upright, impartial and legally correct administration of justice---Supervision and control over the subordinate judiciary vested in the High Courts under Art. 203 of the Constitution is exclusive in nature, comprehensive in extent and effective in operation.

Messrs Shaheen Air International Ltd. (SAI) and others v. Messrs Voyage De Air and others 2006 SCMR 1684 and Sh. Liaqat Hussain and others v. Federation of Pakistan and others PLD 1999 SC 504 ref.

(c) Punjab Commercial Courts Ordinance (XIX of 2021) [since repealed]---

----S. 3---Notification No.6032 DDJ/DR(PD&IT) dated 28.04.2020 issued by the Lahore High Court---Commercial Courts, functioning of---Scope---Punjab Commercial Courts Ordinance, 2021 [since repealed]---Effect---Petitioner/defendant sought revision of order (dated 31.05.2023) passed by the Civil Judge 1st Class (Special Court for Commercial Cases), Lahore, whereby suit for recovery (of Rs.851,170,923/-) along with specific performance of contract filed by respondents/plaintiffs was considered as a commercial case---Held, that contention of the petitioners that Commercial Courts were established pursuant to the promulgation of the Punjab Commercial Courts Ordinance, 2021 and the year of issuance of the Notification No.6032 DDJ/DR(PD&IT) [dated 28.04.2020 issued by the Lahore High Court] was 2021 instead of 2020, was apparently based on a misconception inasmuch as the official website of the Lahore High Court still showed the same notification dated as 28.04.2020; and a judgment of High Court in the case reported as M.C.R. (Pvt.) Ltd. Franchisee of Pizza Hut v. Multan Development Authority and others (2021 CLD 639) rendered on 08.03.2021 relied on the same notification having the date as 28.04.2020---Civil revision, being devoid of any merit was dismissed, in circumstances.

M.C.R. (Pvt.) Ltd. Franchisee of Pizza Hut v. Multan Development Authority and others 2021 CLD 639 ref.

(d) Punjab Commercial Courts Ordinance (XIX of 2021) [since repealed]---

----S. 3---Constitution of Pakistan, Art. 10A---Jurisdiction under the Code of Civil Procedure, 1908, exercise of---Scope---Courts of ordinary civil jurisdiction have been designated to hear and dispose of the commercial cases which are dealing with the same in accordance with the procedure provided under the Code of Civil Procedure, 1908, with the sole object to ensure expeditious disposal of the same on priority basis---Thus, for all practicable purposes all courts designated as Commercial Courts under the Notification No.6032 DDJ/DR(PD&IT) dated 28.04.2020 issued by the Lahore High Court are essentially Civil Courts exercising jurisdiction under the Code of Civil Procedure, 1908, for expeditious disposal of civil disputes---By considering a case as commercial one, the right of fair trial available to the opposite party is not being compromised since no special procedure has been laid down to dispose of the same.

S. Naeem Bokhari and Ijaz Janjua for Petitioners.

Barrister Hassan Khalid Ranjha, Additional Advocate General for Punjab.

Asad Ahmed Ghani and Muhammad Rizwan Rasheed for Respondents Nos.1 and 2.

2024 C L D 938

[Lahore (Rawapindi Bench)]

Before Mirza Viqas Rauf, J

NATIONAL COMMAND AUTHORITY FOUNDATION (NCAF) through Authorized Officer Col. (R) Muhammad Sabir---Appellant

Versus

Sheikh SAROSH IFTIKHAR and others----Respondents

F.A.O. No.90 of 2023, decided on 13th May, 2024.

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

----S.20 (4)---Civil Procedure Code (V of 1908), O.VII, R. 11(a)---Term "sufficient cause"---Scope---Term "sufficient cause" used in S. 20(4) of Arbitration Act, 1940, is alike and akin to phrase "where it does not disclose a cause of action" used in R.11(a) of O.VII, C.P.C.---This is one of the grounds for rejection of plaint recognized by said provision of law---Proceedings in terms of S. 20 of Arbitration Act, 1940, are though in the nature of proceedings in a suit but in strict sense it is not a suit---When such application is moved a show-cause notice is to be issued to all the parties to the agreement requiring them to explain why agreement should not be filed---If sufficient cause is not shown to the contrary, the agreement is ordered to be filed.

Lahore Stock Exchange Limited v. Fredrick J. Whyte Group (Pakistan) Ltd. and others PLD 1990 SC 48 rel.

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

----S.20---Arbitration---Reference to arbitrator---Scope---Application under S. 20 of Arbitration Act, 1940 cannot be resisted on the ground that agreement has become void---Such is a premature step to stifle arbitration clause.

Abdul Waheed v. Additional District Judge and others PLD 2021 Lah. 453 distinguished.

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

----S. 20---Civil Procedure Code (V of 1908), O.XXXIX, Rr. 1 & 2---Arbitration clause, invoking of---Termination of agreement---Interim injunction, grant of---Petitioner/Foundation was aggrieved of referring the matter between parties to arbitrator in view of arbitration clause and issuance of interim injunction in favour of respondent/land developer---Plea raised by petitioner / Foundation was that agreement between the parties was terminated while invoking arbitration clause in the agreement---Validity---Termination of contract by itself did not render arbitration clause redundant---Even in case of termination of contract by one of the parties, matter could still be referred to the arbitrators by the Court in terms of S. 20 of Arbitration Act, 1940---Temporary injunction was rightly granted in favour of respondent / land developer subject to deposit of remaining sale consideration in toto in the Court, which was so deposited---For grant of temporary injunction one has to show existence of prima-facie case, balance of convenience and irreparable loss---Respondent/land developer remained successful in such test---High Court in exercise of revisional jurisdiction declined to interfere in the order passed by Trial Court---Revision was dismissed, in circumstances.

Industrial Fabrication Company through M.D. v. Managing Director, Pak American Fertilizer Limited PLD 2015 SC 154 and Samsons Group of Companies v. Panther Developers and others 2022 CLD 932 distinguished.

Messrs Sadat Business Group Ltd. v. Federation of Pakistan through Secretary and another 2013 CLD 1451; BNP (Pvt.) Limited v. Collier International Pakistan (Pvt.) Limited 2016 CLC 1772 and Messrs Petrosin Products (Pvt.) Limited through Representative and others v. Government of Pakistan through Secretary, Privatization Commission of Pakistan, Ministry of Finance Government of Pakistan, Islamabad and 3 others 2000 MLD 785 rel.

Usman Jillani and Waseem Sultan Doga for Appellant.

Muhammad Ilyas Sheikh and Sh. Danyal Iftikhar for Respondent No.1.

Imran Shaukat Rao, Assistant Advocate General Punjab for Respondents Nos.2(a) to 2(k).

2024 C L D 956

[Lahore]

Before Ch. Muhammad Iqbal and Muzamil Akhtar Shabir, JJ

Mst. ASMA ABDUL WARIS---Appellant

Versus

STATE BANK OF PAKISTAN through its Governor and 4 others---Respondents

I.C.A. No.18654 in W.P. No.12119 of 2023, decided on 20th March, 2023.

Banking Companies Ordinance (LVII of 1962)---

----S.11---Employee of a private bank---Service appeal---State Bank of Pakistan, jurisdiction of---Appellant was dismissed from service and her appeal was not entertained by State Bank of Pakistan---Validity---State Bank of Pakistan did not have jurisdiction to hear and decide service matters of employees of banks---Where jurisdiction was not vested by law, Courts could not confer such jurisdiction on any authority---Jurisdiction could not be conferred by parties even by consent---Division Bench of High Court declined to interfere in judgment passed by Judge in Chambers of High Court as there was no illegality, jurisdictional defect or mis-reading of record and was well reasoned---Intra Court Appeal was dismissed, in circumstances.

Noor Badshah v. United Bank Limited and others 2015 PLC (C.S.) 468; MCB Bank Limited v. State Bank of Pakistan and others 2010 CLD 338; Eden Builders (Pvt.) Limited, Lahore v. Muhammad Aslam and others 2022 SCMR 2044; Water and Power Development Authority through Chairman, WAPDA and 4 others v. Abdul Shakoor through Legal Heirs PLD 2008 Lah. 175; Mall Development (Pvt.) Ltd. v. Waleed Khanzada and others 2022 SCMR 2080; Attaullah Khan v. Ali Azam Afridi and others 2021 SCMR 1979; Muhammad Hanif Abbasi v. Imran Khan Niazi PLD 2018 SC 189; The Collector of Sales Tax, Gujranwala v. Super Asia Mohammad Din and Sons 2017 SCMR 1427; Shahida Bibi and others v. Habib Bank Limited and others 2016 CLD 2025 (SC) = PLD 2016 SC 995; Muhammad Anwar and others v. Mst. Ilyas Begum and others PLD 2013 SC 255; Zia Ur Rehman v. Syed Ahmed Hussain and others 2014 SCMR 1015; Khalil-ur-Rehman and another v. Dr. Manzoor Ahmed and others PLD 2011 SC 512 and Muhammad Akram v. Mst. Zainab Bibi 2007 SCMR 1086 rel.

2024 C L D 990

[Lahore (Rawalpindi Bench)]

Before Jawad Hassan

WAQAS YAQUB---Petitioner

Versus

ADEEL YAQUB and another---Respondents

F.A.O. No.88 of 2023, heard on 7th May, 2024.

Arbitration Act (X of 1940)---

----S. 34---Specific Relief Act (I of 1877), Ss.42 & 54---Suit for declaration, injunction, rendition of accounts, recovery of damages and mesne profit---Arbitration---Stay of legal proceedings---Phrase "taking any other steps in the proceedings"---Applicability---Appellant / defendant was aggrieved of dismissal of his application to stay legal proceedings so as to refer the matter to arbitration---Validity---If in a contract, there is provision of resolution of dispute between the parties by way of arbitration and parties have agreed to such forum, then such forum is to be resorted to and given preference over filing of suit---If one of the parties to the contract by-passing forum of arbitration files a suit, then the other party can file application for stay as contemplated under S.34 of Arbitration Act, 1940 and if Trial Court is satisfied then order for stay of proceedings in the suit can be passed to enable resolution of dispute between the parties by way of arbitration only---Conditions precedent for application under S.34 of Arbitration Act, 1940 are that the party applying for stay has not filed written statement or taken "any other steps in the proceedings" indicating that right to invoke arbitration clause is intentionally abandoned in favour of Court proceedings---Nothing was available over surface of record to construe that conduct of appellant / defendant, in order to be termed as "a step in the proceedings", was such as would manifestly had displayed an unequivocal intention to proceed with the suit and giving up right to have the matter disposed of by arbitration---High Court set aside order in question as the same was passed by Trial Court in disregard of parameters and criteria for test laid down by the Supreme Court for ascertainment and determination of act of appellant / defendant in order to be termed as "a step in the proceedings"---High Court remanded the matter to Trial Court for decision afresh on application under S.34 of Arbitration Act, 1940---Appeal was allowed, in circumstances.

Pakistan International Airlines Corporation v. Messrs Pak Saaf Dry Cleaners PLD 1981 SC 553; Pakistan Stone Development Company Limited through Chief Executive Officer v. Muhammad Yousaf and another 2018 CLC 877; Province of Punjab through Secretary to Government of Punjab, Communication and Works Department and 4 others 1986 CLC 2800; "MD. ESACK v. Raja Miah and another PLD 1969 Dacca 719; Muhammad Farooq v. Nazir Ahmad and others PLD 2006 SC 196; Muhammad Ilyas Khokhar v. Ihsan Ilahi Mughal 2000 CLC 206; Muneer Flour Mills (Private) Limited and 4 others v. National Bank of Pakistan through Chief Manager and 2 others 2005 CLD 1019; Government of the Punjab and others v. Messrs Muhammad Asad & Co." 2021 CLC 2135; Aftab Ahmad Khan and another v. Wazir Ahmad and 4 others 2014 CLC 1401; Union of India, Applicant v. Girish Ghandra and others, Opposite Party AIR 1953 ALL. 149 (Vol.40, C.N. 66); Abdul Quddoos Dost Mohammad Momin and another, Plaintiffs-Appellants v. Abdul Ghani Abdul Rahman and another, Defendants-Respondents AIR 1954 NAGPUR 332; (Vol. 41, C. N. 115); Messrs SGEC-AMC JV through Authorized Officer v. National Highway Authority through Chairman 2024 CLD 301; BNP (Pvt.) Limited v. Collier International Pakistan (Pvt.) Limited 2016 CLC 1772; Karachi Dock Labour Board v. Messrs Quality Builders Ltd. PLD 2016 SC 121; National Highway Authority through Chairman, Islamabad v. Messrs SAMBU Construction Co. Ltd. Islamabad and others 2023 SCMR 1103 and TAISEI Corporation and another v. A.M. Construction Company (Pvt.) Ltd. and another 2024 SCMR 640 ref.

Qazi M. Waqas Arif and Syeda Nida Zahra for Appellant.

Sameed Khalid for Respondents.

Arshad Mahmood Malik, Assistant Attorney General with Barrister Sibah Farooq. Abid Aziz Rajori, Assistant Advocate General, Zarmeenah Rahim, Syed Bulent Sohail, Arbitrator.

Barrister Talha Ilyas Sheikh, MCIArb.

2024 C L D 1040

[Lahore]

Before Sultan Tanvir Ahmad, J

PUNJAB MASHHAD MEAT COMPLEX and another---Appellants

Versus

MASHHAD MEAT INDUSTRIAL COMPLEX---Respondent

F.A.O. No.79041 of 2023, decided on 16th April, 2024.

Arbitration Act (X of 1940)---

----S.34---Suit for recovery of money---Partnership deed---Arbitration clause, invoking of---Stay of proceedings---Communication prior to filing of suit---Appellants/ defendants were aggrieved of dismissal of their application filed under S.34 of Arbitration Act, 1940 for staying proceedings and directing the parties to pursue their remedies in terms of arbitration clause---Plea raised by respondent / plaintiff was that certain notices issued to appellants/ defendants were not responded and in Trial Court they had asked to file written statement---Validity---Request for adjournment for submission of written statement was recorded by Trial Court on the day when the Court was also confirming that the entire attachments to the suit were not available with appellants/defendants and the same were handed over to them on the given day---Trial Court had wrongly construed the intention of appellants / defendants to discard their right to invoke arbitration clause available in partnership deed---Any initial presumption arising against appellants/defendants stood dislodged---Referred communication, prior to institution of suit had no bearing, as S. 34 of Arbitration Act, 1940 provided that an application for stay could be instituted at any time after commencement of legal proceedings---Suit was relied upon for ascertaining the intention to waive off right of arbitration related to period prior to partnership deed which then required the disputes to be resolved through arbitration---Earlier suit of respondent / plaintiff pertained to year, 2014 which was disposed of on 16-02-2015 on the basis of partnership deed formally executed on 07-01-2015---Subsequent suit could not be termed as a continuation of the earlier suit, for the purposes of ascertaining situation in hand---This fact was mistakenly observed by the Trial Court---Preamble of partnership deed gave it a superseding effect besides the fact that specific clause of partnership deed provided that the same constituted the entire understanding between the parties with respect to the subject matter of the partnership deed---High Court in exercise of appellate jurisdiction, set aside the order passed by Trial Court and proceedings in the suit were stayed---Appeal was allowed, in circumstances.

Pakistan International Airlines Corporation v. Messrs Pak Saaf Dry Cleaners PLD 1981 SC 553; POSCO International Corporation through Authorised Officer v. Rikans International through Managing Partner / Director and 4 others PLD 2023 Lah. 116 and S.M. Hashim Hussain v. Pakistan Defence Officer's Housing Authority 2005 SCMR 1782 ref.

Rachappa Guruadappa, Bijapur v. Gurusiddappa Nuraniappa and others 1990 MLD 1383; Dunichand Sons and Co. v. Fort Gloster Industries Ltd. AIR 1962 Cal. 541 (V 49 C 116); Badsha Meah Sowdagar v. Nurul Haq and others PLD 1967 Dacca 250 and Messrs Pakistan Associates Construction Ltd. v. WAPDA and another 1989 MLD 203 rel.

Muhammad Naeem Sehgal and Huzaifa Naeem Sehgal for Appellant.

Ijaz Ali Akbar Sabzwari for Respondent.

2024 C L D 1089

[Lahore]

Before Shahid Karim, J

Ch. RIZWAN ALI RAA---Petitioner

Versus

GOVERNMENT OF PUNJAB and others----Respondents

Writ Petition No.30823 and 30822 of 2024, decided on 17th May, 2024.

Punjab Environmental Protection Act (XXXIV of 1997)--

----S.12---Constitution of Pakistan, Art. 199---Constitutional petition---Initial Environmental Examination (IEE) and Environmental Impact Assessment (EIA)---Petitioner assailed Scheme sought to be launched by Provincial Government to provide motorcycles to students, on the plea that the Scheme would cause environmental pollution and adverse impact on environment by induction of a large number of motorcycles in the traffic pattern of Punjab---Validity---Provisions of S.12 of Punjab Environmental Protection Act, 1997, were couched in mandatory terms and prohibited commencement of any project unless an Environmental Impact Assessment had been filed with Provincial Agency whose approval had been obtained in such regard---Such, a fortiori, applies to a scheme or undertaking by Government and is the essence of a responsible Government---Environmental Impact Assessment (EIA) as a sine qua non was to be submitted by Transport Department with regard to the Scheme to Provincial Agency and a prior approval had to be obtained before the Scheme was formally launched---High Court directed Transport Department, to do the needful as it was under obligation to do so---High Court further directed that before the Scheme was formally put into effect and the distribution of petrol motorcycles would take place, an EIA was to be submitted to Provincial Agency for its approval in accordance with law---Constitutional petition was disposed of accordingly.

Mian Ejaz Latif, M. Azhar Siddique and Ch. Arshad Gulzar for Petitioner.

Mrs. Hina Hafeez Ullah Ishaq and Syed Kamal Ali Haider Members of the Judicial Water and Environmental Commission.

Asad Ali Bajwa, Deputy Attorney General.

2024 C L D 1107

[Lahore]

Before Abid Hussain Chattha, J

MEEZAN BEVERAGES (PVT.) LIMITED through duly authorized Officer---Petitioner

Versus

COMPETITION COMMISSION OF PAKISTAN through Chairman and 2 others---Respondents

Writ Petition No. 48527 of 2021, decided on 26th June, 2024.

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

----S. 16 & Preamble---Intellectual Property Organization---Object, purpose and scope---Purpose of Intellectual Property Organization of Pakistan Act, 2012 is to consolidate regulation of all existing intellectual property laws included in its Schedule by Intellectual Property Organization and vests exclusive jurisdiction in the Tribunal to try all offences and adjudicate all suits and other civil proceedings regarding infringement or breach of intellectual property laws.

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

----Ss. 10 & 12---Intellectual Property Organization of Pakistan Act (XXII of 2012), S.3---Term "deceptive marketing practice"---Competition Commission and Intellectual Property Organization---Jurisdiction---Distinction---Provision of Competition Act, 2010, relates to competition laws, whereas, Intellectual Property Organization of Pakistan Act, 2012, pertains to intellectual property laws---Each enactment has created a specialized regulatory body and has put in place a self-contained regulatory framework to administer duties and obligations imposed by law---Provision of Intellectual Property Organization of Pakistan Act, 2012, consciously excludes Competition Act, 2010, from its Schedule---Legislature has intentionally kept Competition Act, 2010, beyond the purview of Intellectual Property Organization of Pakistan Act, 2012---Term 'deceptive marketing practices' under S. 10 of Competition Act, 2010, constitutes a necessary and essential element of competition law, jurisdiction of which is vested with Competition Commission of Pakistan under the Competition Act, 2010.

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

----Ss.10 & 37(2)---Competition Commission (General Enforcement) Regulations, 2007, Regln. 16 (2)---Intellectual Property Organization of Pakistan Act (XXII of 2012), Ss. 3 & 16---Constitution of Pakistan, Art. 199---Constitutional petition---Deceptive market practice---Show cause notice---Inquiry officer, appointment of---Petitioner company was aggrieved of issuance of show cause notice by Competition Commission under Regln. 16(2) of Competition Commission (General Enforcement) Regulations, 2007, as a complaint had been filed by respondent company alleging deceptive marketing practices and an inquiry officer had been appointed---Validity---In terms of deceptive marketing practices, jurisdiction of Competition Commission under Competition Act, 2010 and Intellectual Property Organization or the Tribunal under Intellectual Property Organization of Pakistan Act, 2012, were distinct and separate in terms of ambit and scope of such laws and did not amount to any inconsistency or conflict of jurisdiction---Show cause notice issued by Competition Commission was not without jurisdiction---Constitutional jurisdiction of High Court as a normal rule could not be invoked on mere suspicion or apprehension when no substantive right was infringed and aggrieved party had right to advance its defence in response to a notice---Challenge to a show cause notice in constitutional jurisdiction at premature stage and tendency to bypass remedy provided under concerned statute amounted to fetter rights conferred on statutory functionaries specially constituted for the purpose to initially decide the matter---Objections of petitioner company would have been decided by Competition Commission during proceedings under show cause notice but such an occasion did not arise due to filing of petition before High Court---Petitioner company did not approach High Court with clean hands and resorted to uncalled for litigation, obstructing the Commission as a regulator empowered under the law to undertake and perform its routine functions and duties---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

Competition Commission of Pakistan and others v. Dalda Foods Limited, Karachi 2023 SCMR 1991 ref.

Commissioner Inland Revenue and others v. Jahangir Khan Tareen and others 2022 SCMR 92 rel.

Adil Bandial for Petitioner.

Ali Javed Darugar for Respondents.

2024 C L D 1137

[Lahore]

Before Muhammad Sajid Mehmood Sethi and Asim Hafeez, JJ

M.L. TRADERS through Sole Proprietor and another---Appellants

Versus

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

Regular First Appeals Nos.1583, 1584 and 1443 of 2015, decided on 6th June, 2024.

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

----Ss. 9 & 22---Uniform Customs and Practice for Documentary Credits 500 (1993 Revision), Art. 23---Finance facility, recovery of---Letter of Credit---Goods damaged---Liability of insurance company---Determination---Novation, principle of---Applicability---Suit filed by respondent / bank was decreed against appellants / customers to recover finance facility advanced in terms of Letter of Credit---Appellants / customers claimed that goods were damaged as a consequence of alleged transshipment---Validity---Goods in question were insured and there was a role and responsibility of Insurance company, in the facts and circumstances encountered---Such aspect was not considered by Banking Court---Respondent / bank alleged that credit facility upon payment was transformed into PAD (Payment Against Documents) facility and eventually converted into FIM (Finance Against Imported Merchandize) facility---Whether cause of action was rested on the Credit arrangement or FIM facility, which triggered another moot question that whether doctrine of novation was attracted and what was the cause and effect of novation, if it actually happened---High Court declined to examine judgment of Banking Court in the context of incomplete, bald and inconclusive adjudication---Judgment and decree passed by Banking Court did not constitute a valid, fair and proper adjudication of all-inclusive issues / questions, and the judgment dealt with the partial issues superficially---High Court declared judgment passed by Banking Court ineffective and illegal as the questions raised and left unattended had jettisoned its lawful existence---High Court remanded the matter to Banking Court for decision afresh---Appeal was allowed accordingly.

Master Muhammad Bashir v. Moinuddin 1990 CLC 703; Muhammad Arshad Khan v. Chairman, M.D.A and 6 others 1997 MLD 3066; Bashir Ahmad v. Abdul Wahid PLD 1995 Lah. 98; Habib Bank Limited v. Judge Banking Court and others 2015 CLD 1875; Crescent Leasing Corporation Limited through Constituted Attorney v. Messrs Sarhad Goods Transport Company and 3 others 2013 CLD 854; Rehmatullah Khan and another v. Ghulam Farid and others 2009 SCMR 371; Administration Municipal Corporation, Multan through T.M.O and 2 others v. Haider Zaman Qureshi 2012 MLD 948; Shah Nawaz and another v. Nawab Khan PLD 1976 SC 767; MCB Bank Limited v. Sunshine Cloth Limited C.O.S No. 152/2010; United Bank Limited v. Messrs Ilyas Enterprises through Proprietor Mr. Ilyas Malik and 2 others 2004 CLD 1338; Messrs Sazco (Pvt.) Ltd. v. Askari Commercial Bank Limited 2021 SCMR 558; S.A. Hameed and others v. Allied Bank of Pakistan Limited and others 2004 CLD 1620 and Habib Bank Limited v. Tauqeer Ahmed Siddiqui and another 2009 CLD 312 ref.

Muhammad Imran Malik for Appellants.

Moeez Tariq for Respondents.

2024 C L D 1184

[Lahore]

Before Shahid Bilal Hassan, J

MUHAMMAD AFZAL---Appellant

Versus

BINYAMEEN SAJID---Respondent

R.F.A. No.11759 of 2021, heard on 16th May, 2024.

Negotiable Instruments Act (XXVI of 1881)---

----S.56---Civil Procedure Code (V of 1908), O.XXXVII Rr.1, 2 & O.VII, R.10---Recovery suit on the basis of negotiable instrument---Part performance---Payments received by the appellant in pursuance of different cheques issued from the same cheque books---Non-adoption of procedure of endorsement on the cheque before presenting it---Effect---Section 56 of the Negotiable Instruments Act, 1881 ('Act, 1881'), specifically provides for an endorsement on a negotiable instrument with regards to part-payment and thereafter the instrument could be negotiated for the balance amount---If the drawer and the payee of the cheque adopt the procedure given in S.56 of the Act 1881, then it would be open to the payee of the cheque to present the cheque for payment of only the endorsed balance amount, due to him---Without adopting the procedure as provided in S.56 ibid, the cheque could not be presented for encashment and suit under O.XXXVII, Rr.1 & 2 of C.P.C. could not be filed, rather a suit for recovery of balance amount of cheque before a court of plenary jurisdiction has to be instituted---After receipt of part payment, appellant did not adopt the procedure as provided under S.56 of the Act, 1881, therefore, he was barred from presenting the cheque in question in the bank for its encashment and instituting suit under O.XXXVII, Rr.1 & 2 of C.P.C.---Proper forum in this regard was Court of plenary jurisdiction i.e. Civil Court for getting his grievance redressed---Trial Court should have returned the plaint under O.VII, R.10, C.P.C. for its presentation before the court of competent jurisdiction, obviously, keeping in view barricade of limitation---Appeal was allowed accordingly.

Chaudhry Mohsin Iftikhar Gujjar for Appellant.

Mehboob Rasool Awan and Imran A. Mian for Respondent.

2024 C L D 1247

[Lahore]

Before Sultan Tanvir Ahmad, J

Muhammad Altaf---Appellant

Versus

Rana Shakeel Ahmad---Respondent

Regular First Appeal No. 676 of 2021, decided on 19th July, 2024.

Negotiable Instruments Act (XXVI of 1881)---

----S.118---Civil Procedure Code (V of 1908), O.XXXVII, Rr. 1 & 2---Contract Act (IX of 1872), S. 128---Suit for recovery of money---Liability of surety---Dishonored cheque---Presumption---Appellant / defendant was aggrieved of judgment and decree passed by Trial Court for recovery of amount mentioned in cheque which was dishonored on presentation---Plea raised by appellant / defendant was that he issued the cheque merely as surety---Validity---Appellant / defendant undertook to pay Rs.1,500,000/- without requirement of any reference to principal debtor---There was nothing on record suggesting that anything contrary had been settled between the parties---Witnesses were cross-examined in length but nothing adverse or sufficient to rebut the presumption arising under S. 118 of Negotiable Instruments Act, 1881, was noticed---Appellant / defendant admitted signing second agreement and did not deny issuance, presentation and dishonoring of the cheque---High Court declined to interfere in the judgment and decree and imposed cost upon appellant / defendant as Trial Court had reached the correct conclusion---Appeal was dismissed in circumstances.

Sukur Pradhan and others v. Orissa State Financial Corporation and others AIR 1992 Orissa 281; The Bank of Bihar Ltd. v. Dr. Damodar Prasad and another AIR 1969 SC 297; Pakistan Industrial Credit and Investment Corporation Ltd., Karachi v. Fazal Vanaspati Limited, Karachi PLD 1993 Karachi 90; National Bank of Pakistan v. F.S. Aitzazuddin and 2 others PLD 1982 Karachi 577 and Suresh Narain Sinha v. Akhauri Balbhadra Prasad and others AIR 1957 Patna 256 rel.

Malik Shahid Iqbal Babbar and Malik Ali Muhammad for Appellant.

Haroon Mehboob Butt, Barrister Muhammad Azaz and Tahir Habib for Respondent.

Dates of hearing: 14th May, 24th June, 2024.

Judgment

Sultan Tanvir Ahmad, J.---Through this single judgment, I intend to decide the titled appeal as well as Regular First Appeal No. 63163 of 2020, being outcome of same judgment and decree dated 22.09.2020 passed by the learned Additional District Judge, Lahore. Hereinafter, Muhammad Altaf shall be called as the 'Appellant' and Rana Muhammad Shakeel shall be called as the 'Respondent'.

1. Brief facts of the case are that on 24.05.2016 the Respondent instituted suit for recovery of Rs.15,00,000/- (the 'suit'), under Order XXXVII of the Civil Procedure Code, 1908 (the 'Code'), with the averments that the Appellant and his partner namely Ali Adnan (the 'principal-debtor') being importer of Japanese cars offered the Respondent to purchase a Honda Vezel 1500-CC, model 2010 (the 'vehicle') for which initially an agreement dated 11.10.2014 (the 'first agreement') was executed and the Appellant stood surety to the extent of Rs. 15,00,000-; that the Appellant also placed his thumb impressions and signed the first agreement with a note that he stood guarantor on behalf of principal-debtor and issued a cheque No. 131052122 dated 11.10.2014, the Bank of Punjab, for an amount of Rs.15,00,000/- (the 'cheque'); that Rs.22,50,000/- were paid as consideration of the vehicle. It is further pleaded in the suit that the principal-debtor failed to fulfill the terms of the first agreement or deliver the vehicle within the stipulated time period, upon which another agreement dated 16.12.2014 (the 'second agreement') was executed, which was again signed by the Appellant and as per the terms of the said agreement another amount of Rs.7,50,000/- was received by the Respondent; that despite receiving the entire amount the vehicle could not be delivered. The Respondent filed the suit upon dishonouring of the cheque on its presentation before relevant branch of the bank. The learned trial Court allowed the Respondent to defend the case and accordingly he filed his written statement. Out of divergent pleadings, the following issues were framed:-

1. Whether plaintiff is entitled for the decree and recovery of Rs.15,00,000/- on the basis of dishonour cheque No. 131052122 or not? OPP

2. Whether the agreement No.740 dated 11.10.2014 and agreement No.1120 dated 16.12.2014 were executed in favour of plaintiff on behalf of Ali Adnan with regard to the give and take of sale amount of vehicle in presence of witnesses or not? OPP

3. Whether plaintiff has come to the court with unclean hands and suit is barred by law not maintainable after obtaining decree against Ali Adnan for same amount in dispute from competent court of law? OPD

4. Whether the suit is liable to be dismissed due to mis-joinder and non- joinder of parties and based on mala fide intention to blackmail and harass the defendant? OPD

5. Relief.

1. After framing of issues, the parties produced their respective evidence. The learned trial Court gave issue-wise findings and granted the following relief to the Respondent, vide judgment and decree dated 22.09.2020: -

"..In view of my findings on issue No.1, the suit of the plaintiff is decreed with costs. The plaintiff is held entitled to recover principal amount of Rs.15,00,000/- from the defendant. Decree sheet be drawn accordingly…"

Being aggrieved from the above both sides have filed their appeals.

1. Malik Shahid Iqbal Babbar, learned counsel for the Appellant, has submitted that the Appellant has issued the cheque merely as a surety and the valid legal course for the Respondent was to get the liability of the principal-debtor to be first adjudged and only then the suit against the Appellant could have been filed. He has further submitted that the principal-debtor even otherwise, was a necessary party and in his absence no relief could be granted to the Respondent, which is ignored by the learned trial Court.

2. Conversely, Mr. Haroon Mehboob Butt, learned counsel for the Respondent has opposed the above argument and he has stated that the Appellant has clearly undertaken the liability as well as issued an independent instrument i.e. the cheque, requiring no liability to be adjudged against any other person; that the cheque being negotiable instrument carries presumption as to its correctness and valid consideration under section 118 of the Negotiable Instruments Act, 1881 ('N.I.A., 1881'). He has added that the Respondent is entitled to interest in view of sections 79 and 80 of N.I.A., 1881.

3. I have heard the arguments of the learned counsel for the parties and perused the record with their able assistance.

4. The first agreement is on record as Ex.P-1. The second page (backside of the stamp paper) contains a note / Ex. P-2 (the 'Note'), comprising of following term(s):-

Beneath the Note, the signatures as well as thumb impressions of the Appellant are available. It is significant that the first agreement and execution of the Note are not denied. The principal-debtor has also placed his thumb impressions and signatures on the Note.

1. From the reading of the Note it is evident that the Appellant has undertaken to pay Rs.15,00,000/- and he acknowledged issuance of the cheque. In his written statement (paragraphs Nos. 1 and 3, on merits) the Appellant has again admitted issuing of the cheque in favour of the Respondent, however, denied being partner of the principal-debtor and adopted the stance that he is just a surety. To wriggle out of the liability undertaken by the Appellant, it is much emphasized by the learned counsel for the Appellant that it is inevitable to first get the liability adjudged against the principal-debtor or have him in the array of parties as a defendant.

2. Section 128 of the Contract Act, 1872 (the 'Contract Act') provides that the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. The Note reflects that the Appellant undertook to pay Rs.15,00,000/-, apparently without requirement of any reference to the principal-debtor. There is nothing on record suggesting that anything contrary was settled between the parties. In case titled "Sukur Pradhan and others v. Orissa State Financial Corporation and others" (AIR 1992 Orissa 281) the Court after referring the entire case law from 1917 to 1992, reached to the conclusion that surety can be held liable to creditor irrespective of remedy which the creditor may have against principal-debtor and the creditor can proceed against the surety without exhausting his remedy against the principal-debtor. The general law as also stated in section 128 of the Contract Act is subject to the stipulations of the contract and if anything different is provided in the contract then the same is to be given effect. Same conclusion was drawn by the Supreme Court of India in case titled "The Bank of Bihar Ltd. v. Dr. Damodar Prasad and another" (AIR 1969 Supreme Court 297).

3. In cases titled "Pakistan Industrial Credit and Investment Corporation Ltd., Karachi v. Fazal Vanaspati Limited, Karachi" (PLD 1993 Karachi 90) and "National Bank of Pakistan v. F. S. Aitzazuddin and 2 others" (PLD 1982 Karachi 577), the Sindh High Court, facing the situation as in present case, made reference to section 137 of the Contract Act, which provides that mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety. It has been gathered by the learned Sindh High Court that a creditor cannot be compelled to first exhaust his remedy against a principal-debtor, when the contract does not provide anything contrary and mere forbearance to assert claim or pursue remedy against principal debtor, cannot discharge the surety. It will be beneficial to reproduce the following extract of National Bank of Pakistan case (supra): -

"…The liability of the surety arises immediately on the failure of the principal debtor and unless otherwise provided in the Contract a creditor cannot be compelled to first exhaust his remedy against the principal debtor before initiating any action against the surety. The liabilities of the principal debtor and the surety are separate and distinct. Even in cases where the liabilities of both the parties arise from the same transaction of the same document, the liabilities are distinct. Reference can be made to the case PLD 1975 Kar. 504. The surely is liable under his contract which he executes in favour of the creditor. In terms of the letter of guarantee the defendants have agreed that their liability to the plaintiff shall be that of principal debtor and at plaintiff's option the defendants may be treated as primarily liable for the amount due from the borrower. There is nothing to suggest that the plaintiff should first exhaust its remedy against the borrower/principal debtor. This view finds support from the provision of section 137 of the Contract Act, which provides that a mere forbearance to sue the principal debtor or to enforce any other remedy against him does not in the absence of any provision to the contrary discharge the surety. In these circumstances the fact that the creditor has not sued or joined the principal debtor can hardly be a defence in a suit against the surety. This principle is so well settled that it is not necessary to discuss the authorities on the point. Suffice to mention, AIR 1927 Lah. 396, AIR 1932 Lah. 419, AIR 1935 Mad. 748 and AIR 1957 Pat 256. In Mahanth Singh v. U. Ba. YI. (1), it was held that failure to sue the principal debtor until recovery was barred by the Statute of Limitation did not operate as discharge of the surety.

The creditor's right to proceed against the surety is not accessory to the right to proceed against the principal debtor personally. A surety in the absence of a contract to the contrary cannot compel the creditor to first exhaust his remedy against the principal debtor. In view of the above discussion as in the present case liability of the surety is based on a letter of guarantee, which is distinct from the liability of the principal debtor, the suit is maintainable."

(Underlining is added)

1. In case titled "Suresh Narain Sinha v. Akhauri Balbhadra Prasad and others" (AIR 1957 Patna 256), the arguments of learned advocate for surety that the suit cannot succeed unless the plaintiff has exhausted his remedies against the principal debtor, were repelled while concluding that failure to sue the principal debtor, until recovery was barred by the statutes of limitation, did not operate as discharge of the surety. The following extract from the above judgment is relevant:-

"(4) It was then contended on behalf of the appellant that even if there was a contract of guarantee between the parties, the suit cannot succeed unless the plaintiff has exhausted his remedies against the principal debtor, namely, the Modern Bank of India, Ltd. defendant No. 5, with its registered Head Office at Dacca. We do not think there is any substance in this argument. It is provided by S. 128 of the Indian Contract Act that the liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. There is high authority in support of this view in Mahanth Singh V. U. Ba YI, AIR 1939 PC 110 (G). It was held by the Privy Council in that case that failure to sue the principal debtor until recovery was barred by the statutes of limitation did not operate as discharge of the surety…."

1. In view of the above discussed provisions of the Contract Act and referred decisions, the argument of Malik Shahid Iqbal Babbar (learned ASC) that the principal-debtor was required to be proceeded against before institution of the suit against surety is found incorrect, therefore, the said argument stands rejected.

2. Now coming to the next contention regarding the second agreement and the stance that this agreement resulted into rescinding the first agreement or release the Appellant from his liability. This contention stand negated from the simple reading of the second agreement as a whole and in particular the following clause contained therein:-

2024 C L D 1277

[Lahore]

Before Abid Hussain Chattha, J

MUHAMMAD AKRAM RAHI---Appellant

Versus

The COPYRIGHT BOARD and others---Respondents

F.A.O. No.46541 of 2022, decided on 8th July, 2024.

(a) Jurisdiction---

----Determination---Principle---Question of jurisdiction of adjudicating forum goes to the very root of the case and if such forum is not vested with jurisdiction to decide the dispute or assumes jurisdiction not vested in it, the order passed by it is void ab initio and of no legal effect---When Court does not have jurisdiction, no amount of consent or acquiescence can invest such Court with such jurisdiction---Point of jurisdiction is purely a question of law which can be raised even if it has not been taken in writing, although propriety demands that it should be raised in the first instance---It is obligatory on Court in appellate jurisdiction, which is a continuation of original proceedings, to address the same.

Muslim Commercial Bank Limited v. Muhammad Anwar Mandokhel and others 2024 SCMR 298; Dr. Tahir Masud v. Amjad Ali Khan and 4 others 2019 PLC (C.S.) 1167 and WAPDA through Chairman and 3 others v. Khalid Pervaiz 2015 YLR 1598 rel.

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

----S. 41---Rectification---Scope---Term 'rectification' is not specifically defined in Copyright Ordinance, 1962 therefore, it entails ordinary dictionary meaning---In the context of Copyright Ordinance, 1962, term "rectification" means that Copyright Board can adjudicate all claims against grant or refusal of registration of copyright or an interest therein on application of the Registrar or an aggrieved person with or without allegations of infringement of intellectual property rights---Copyright Board apart from other functions is also conferred with jurisdiction to decide claims regarding infringement of copyrights under the Copyright Ordinance, 1962 which includes rectification applications based on infringement of intellectual property rights.

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

----Ss. 17, 18 & 39---Copyright Ordinance (XXXIV of 1962), S. 41---Intellectual property offences---Intellectual Property Tribunal---Jurisdiction, reconciliation of---Scope---Jurisdiction of all forums with respect to all suits and civil proceedings regarding infringement of intellectual property laws and that of Magistrate regarding offences under Copyright Ordinance, 1962 has been taken away by Intellectual Property Organization of Pakistan Act, 2012---Jurisdiction regarding such offences is vested with Intellectual Property Tribunal---For the purposes of reconciliation of S. 41(2) of Copyright Ordinance, 1962 with Intellectual Property Organization of Pakistan Act, 2012 all cases of rectification can be conveniently divided into two categories---First category of cases is of rectification simpliciter not based on any allegation of infringement or breach of any other intellectual property right under intellectual property laws included in Schedule of Intellectual Property Organization of Pakistan Act, 2012---Second category of cases is of rectification based on any allegation of infringement or breach of any other intellectual property right under intellectual property laws included in Schedule of Intellectual Property Organization of Pakistan Act, 2012---Determination of rectification cases by Copyright Board falling in first category does not create any inconsistency with jurisdiction of Tribunal under Intellectual Property Organization of Pakistan Act, 2012 and can be conveniently decided by Copyright Board---There is irreconcilable inconsistency with respect to second class of cases of rectification based on allegations of infringement of any existing intellectual property right under intellectual property laws included in Schedule of Intellectual Property Organization of Pakistan Act, 2012---Where rectification application contains allegations of infringement or breach of intellectual property rights under intellectual property laws included in Schedule of Intellectual Property Organization of Pakistan Act, 2012 jurisdiction to decide such application vests with Tribunal in terms of Ss. 17, 18 & 39 of Intellectual Property Organization of Pakistan Act, 2012.

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

----Ss. 41 & 77---Intellectual Property Organization of Pakistan Act (XXII of 2012), Ss. 17, 18 & 39---Copyright entry, cancellation of---Infringement and breach of intellectual property rights---Jurisdiction of Copyright Board---Scope---Appellant was aggrieved of cancellation by Copyright Board of copyright registration made in his name---Validity--Claim of rectification of copyright filed by respondents seeking cancellation of entry of copyright made in favour of appellant, in essence, was not rectification simpliciter but was based on allegations of infringement and breach of intellectual property rights of other authors and singers allegedly protected under intellectual property laws included in Schedule of Intellectual Property Organization of Pakistan Act, 2012---Such claim could not be determined without deciding allegations of infringement of intellectual property rights---Jurisdiction to decide rectification application coupled with allegations of breach of intellectual property rights under intellectual property laws included in Schedule of Intellectual Property Organization of Pakistan Act, 2012 exclusively rested with Tribunal created and existing under Intellectual Property Organization of Pakistan Act, 2012---High Court set aside order passed by Copyright Board which was passed without jurisdiction---Appeal was allowed accordingly.

Messrs Shaheen Chemist through Proprietors and 3 others v. Zahid Mehmood Chaudhry and another 2023 CLD 1; Muslim Commercial Bank Limited v. Muhammad Anwar Mandokhel and others 2024 SCMR 298; Dr. Tahir Masud v. Amjad Ali Khan and 4 others 2019 PLC (C.S.) 1167; WAPDA through Chairman and 3 others v. Khalid Pervaiz 2015 YLR 1598; Messrs Federal Bank for Cooperatives v. Commissioner of Income Tax, Companies Zone 2021 PTD 1203; Muhammad Multazam Raza v. Muhammad Ayub Khan and others 2022 SCMR 979 and Mahile Engine Components Japan Corporation v. Azam Autos and others (Suit No. 2058 of 2019) rel.

Saqib Asghar and Mudassar Hassan for Appellant.

Haris Bin Hassan Jang for Respondents Nos.2-a to 2-c.

Syed Danish Ghazi for Applicant (in C.M. No.3-C of 2022).

2024 C L D 1335

[Lahore]

Before Rasaal Hasan Syed, J

PUNJAB HIGHWAY DEPARTMENT through Chief Engineer and others---Appellants

Versus

Sh. ABDUR RAZAQ & COMPANY (PVT.) LTD. through Chief Executive---Respondent

F.A.O. No.524 of 2013, decided on 12th July, 2024.

Arbitration Act (X of 1940)---

----Ss. 8, 9 & 30---Arbitration---Objections, rejection of---Award made rule of Court---Principle---Appellant authorities were aggrieved of rejection of objections filed against award which had been made rule of the Court by Trial Court---Validity---While making award rule of Court, in a case where parties does not file objections, the Court is not supposed to act in a mechanical manner like the proverbial post office and place its seal on it---Court is obligated to look into the award and if it finds patent illegality on the face of award, the Court is empowered to set aside, modify or remit the award for reconsideration---Trial Court neither considered the reasons for setting aside the award nor considered as to whether award was liable to be remitted----By simply observing that award had been delivered by two Arbitrators who were Officers of the Department of appellant, irrespective of the fact whether the award was invalid, it was violative of the contract or otherwise violative of the rule of due process and it had no basis---High Court set aside rule of the Court and remanded the matter to Trial Court for decision afresh on the objection to the award by framing proper issues and allowing the parties to produce evidence---Appeal was allowed in circumstances.

A. Qutubuddin Khan v. Chec Millwala Dredging Co. (Pvt.) Limited 2014 SCMR 1268; M/s. Awan Industries Ltd. v. The Executive Engineer, Lined Channel Division and another 1992 SCMR 65; Karachi Dock Labour Board v. Messrs Quality Builders Ltd. PLD 2016 SC 121; Karachi Metropolitan Corporation v. Associated Constructors Ltd. 1984 CLC 1077; Umer Din through L.Rs. v. Mst. Shakeela Bibi and others 2009 SCMR 29; Allah Din & Company v. Trading Corporation of Pakistan and others 2006 SCMR 614 and The Director Industries And Mineral Development v. Dada Bhoyhormusjee & Sons 1990 MLD 301 rel.

Waheed Alam Asst. Advocate General for Appellant.

Riaz Karim Qureshi for Respondent.

2024 C L D 1350

[Lahore (Rawalpindi Bench)]

Before Mirza Viqas Rauf, J

MUHAMMAD TARIQ KHAN---Petitioner

Versus

The NATIONAL BANK OF PAKISTAN through President/CEO and 4 others---Respondents

Writ Petition No.2832 of 2021, decided on 27th March, 2024.

(a) Banks (Nationalization) Act (XIX of 1974)---

----S.11---National Bank of Pakistan (Staff) Service Rules, 2021, R.2---Re-instatement in service with back benefits---Petitioners were employees of National Bank of Pakistan who were proceeded departmentally and were dismissed from service---Prosecution case was that when the petitioners were posted as joint custodian/Manager (Operations) and Cashier respectively, an incident of robbery took place which also resulted in the assassination of security guard of the bank and a criminal case was registered, wherein petitioners were arrayed as accused---In addition to criminal proceedings, the petitioners were also proceeded departmentally---Petitioners were ultimately exonerated from the criminal proceedings but were dismissed in departmental proceedings---Held, that there was no legal impediment in conducting criminal and departmental/disciplinary proceedings side by side---Even in case of acquittal in criminal proceedings, employee could not claim immunity from being proceeded departmentally---Fate of departmental proceedings is always to be adjudged from the incriminating material placed in support of the charges against the delinquent employee---At the same time, one cannot keep himself aloof from the fact that if an employee is precluded to claim the premium of his acquittal in the departmental proceedings, he cannot be vexed merely on account of his conviction in the criminal case---In the process of inquiry, though the petitioners were associated and process was completed on 16h July, 2018, but it appeared from the inquiry report that later on the complainant sent further documents in support of the charges through courier under cover of his letter dated 13th September, 2018, which as per Inquiry Officer were routed to the petitioners so as to give a fair chance of defence for their response/reply with regard to the documents/evidence---Inquiry report was thus revised after taking into consideration the documents submitted by the complainant and the response received from the petitioners in terms thereof---Admittedly, one of the petitioners was absolved from rest of the charges except charge No.1, which too was proved partly to the extent of passing bogus late receipt of Rs. 5,700,000/- in respect of c/a 870-8 and authenticated late cash receipt in Branch Cash Balance Book (B-52)---From the bare reading of nature of the charges, it was manifestly clear that charges Nos.1 and 2 were clearly interlinked and dependent to each other---Charge No.2 was directly relatable to bogus receipts---It was quite strange that on the one hand it was opined by the Inquiry Officer that charge No.2 was not proved but on the contrary, the petitioner was held guilty of charge No. 1 partly to the extent of passing bogus late receipts---Findings of guilt with regard to charge No.1 were not tenable as per Inquiry Officer's own comments---Nature of charges against the other petitioner was almost the same---Inquiry Officer though absolved him from charge No.1 but found him guilty of charge No.2 partly, which findings on the face of it were not reconcilable in view of non-proving of charge No.1, being the main charge---Evidently, the petitioners were held guilty of the charges on the basis of additional material, which was later on purportedly received by the Inquiry Officer from the complainant with regard to which it was specific stance of the petitioners that it was never confronted to them---Though inquiry report stated that said material was confronted to the petitioners but there was no cogent evidence to that effect---Apparently for forming an opinion of guilt of the petitioners, statement of person "MP" recorded under S.164, Cr.P.C., and his affidavit was made basis but his statement under S.164, "Cr.P.C" could not be used against the delinquent employee without even affording him an opportunity to conduct cross-examination upon the person, who made such statement---Even otherwise, for the use of statement under S.164, "Cr.P.C", there is a mode provided under said Code, which was not adopted at all---Furthermore, in his statement as well as affidavit, "MP" nowhere named the petitioners as his culprits---In departmental proceedings, standard of proof of the allegations could not be equated with the standard of evidence against an accused in a criminal trial but one could not ignore the principle of natural justice while inflicting even meagre penalty upon a person as it amounted to depriving him from the right of earning---Right of fair trial, even otherwise, had been guaranteed by the "Constitution"---Petitions were allowed and as a sequel, the petitioners were reinstated in service with all permissible back benefits.

The Federal Government through Secretary Interior, Government of Pakistan v. Ms. Ayyan Ali and others 2017 SCMR 1179; National Bank of Pakistan and another v. Anwar Shah and others 2015 SCMR 434; Muhammad Naeem v. Federation of Pakistan and others 2023 SCMR 301; Federation of Pakistan through Chairman Federal Board of Revenue FBR House, Islamabad and others v. Zahid Malik 2023 SCMR 603 and LPG Association of Pakistan through Chairman v. Federation of Pakistan through Secretary, Ministry of Petroleum and Natural Resources, Islamabad and 8 others 2009 CLD 1498 ref.

The Federal Government through Secretary Interior, Government of Pakistan v. Ms. Ayyan Ali and others 2017 SCMR 1179; LPG Association of Pakistan through Chairman v. Federation of Pakistan through Secretary, Ministry of Petroleum and Natural Resources, Islamabad and 8 others 2009 CLD 1498; Muhammad Tariq Badr and another v. National Bank of Pakistan and others 2013 SCMR 314; Muhammad Naeem v. Federation of Pakistan and others 2023 SCMR 301; National Bank of Pakistan and another v. Anwar Shah and others 2015 SCMR 434 and Habib Bank Limited v. Gulzar Khan and others 2019 SCMR 946 rel.

(b) Banks (Nationalization) Act (XIX of 1974)---

----S.11---National Bank of Pakistan (Staff) Service Rules, 2021, R.2---Constitution of Pakistan, Art. 199---Jurisdiction of High Court---Non-statutory rules of service---Dismissal from service---Petitioners were employees of National Bank of Pakistan who were proceeded departmentally and were dismissed from service---Though jurisdiction of High Court under Art. 199 of the "Constitution" to some extent is limited with respect to the orders ensuing from the departmental proceedings determining the guilt or otherwise of an employee but High Court being custodian of the rights of citizens cannot shut its eyes when patent illegalities are floating on the surface of the record---Right of earning is right to life and no one can be allowed to take away such right in a clandestine manner---Petitioners were proceeded against in a non-transparent and haphazard manner in the departmental proceedings, which culminated into their dismissal from service---Impugned orders were apparently suffering from patent illegalities and were against the principles of natural justice---Petitions were allowed and as a sequel, the petitioners were reinstated in service with all permissible back benefits.

Ch. Imran Hassan Ali for Petitioner.

Muhammad Arshad Tabrez for Petitioner (in corrected Writ Petition No.3243 of 2021).

Malik Muhammad Siddique Awan for Respondents.

2024 C L D 1409

[Lahore]

Before Shahid Karim, J

MUHAMMAD WAHEED---Petitioner

Versus

ADNAN RIAZ and others---Respondents

F.A.O. No.74662 of 2022, decided on 3rd May, 2023.

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

----S. 19---Partnership Act (IX of 1932), S.4---Matter of use of trade mark before Intellectual Property Tribunal---Application for temporary injunction---Parties being siblings /(previous) partners---One of the partners restrained from using trademark till disposal of the suit---Legality---Petitioner assailed order passed by the Intellectual Property Tribunal ('the Tribunal'), whereby an application for grant of temporary injunction brought by respondents (two in number) was accepted ; and petitioner was restrained from the use of the trademark till disposal of the suit by holding that the trade mark belonged to the partnership---Validity---Issue-in-hand related to the rights under the business by the specific name and style ('Riaz & Sons') which was admittedly established by the father of the petitioner and two respondents---Undisputedly, both the parties had applied for registration of trademark in their own name which applications were pending---Both the parties claimed the exclusive use of the trademark---Existence of partnership arrangement established about seventeen years ago was also an undisputed fact which clearly showed that both the petitioner and respondents were partners in the firm---Thus, the issue between the parties related to the use of specific trademark ('Riaz & Sons') and also the respective obligations arising out of the partnership agreement---It had been held in the impugned order that the trade mark belonged to the partnership firm and not to the individual partners and that the partnership firm had not been dissolved and the assets of their father to the extent of 78% of the shareholding was to be distributed in accordance with the Partnership Act, 1932---Having held so, the Tribunal was wrong in granting injunction to one of partners i.e. respondents and restraining the petitioner from the use of the trademark till disposal of the suit---This would give a free hand to respondents to use the trademark to the exclusion of the petitioner which was iniquitous and did not fulfill the requirements of law---Clearly, the dispute had to be determined regarding use of the trademark and also the right of one of the parties to its use upon registration of the trademark, which applications were still pending---In the meantime, none of the parties could be restrained from the use of trademark to the exclusion of the other---Therefore, the Tribunal was wrong in accepting the application of respondents---High Court set-aside the impugned order restraining the petitioner from the use of the trademark till disposal of the suit---Appeal was allowed, in circumstances.

Muhammad Shakeel Abid for Appellant.

2024 C L D 1421

[Lahore]

Before Shahid Karim and Raheel Kamran, JJ

Haji KHALID DAD NASIR and another---Appellants

Versus

STANDARD CHARTERED BANK (PAKISTAN) LIMITED and others---Respondents

Execution First Appeal No.256203 of 2018, decided on 20th September, 2022.

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

----Ss. 19 & 22---Civil Procedure Code (V of 1908), S. 47, O. XXI, Rr. 90 & 100---Execution proceedings---Undivided property---Appellant / objector was co-sharer in an undivided property whereon petrol pump in question was situated---Plea raised by appellant / objector was that no auction could be held without partition of land which was a joint Khata---Validity---Nothing was available on record to establish that petrol pump was situated on landed property owned by respondent / judgment debtor---In absence of any demarcation of landed property pledged by respondent / judgment debtor for availing finance facility in question, Banking Court could not arrive at any conclusion to reject claim of appellant / objector that the petrol pump to be auctioned, was situated on his share of property in joint Khata---Appellants / objector who were neither defendants, customers, borrowers, mortgagors, indemnifiers of guarantors of respondent / decree holder bank had been held by the Banking Court to be not prejudiced in auction proceedings of property belonging to respondent / judgment debtor---Sale certificate was issued in favour of respondent / decree holder, without demarcation of property vis-à-vis appellant / objector---High Court set aside order in question and remanded the matter to Banking Court for decision afresh on the objection filed by appellant / objector--Appeal was allowed accordingly.

Iftikhar Ahmed Mian and Arslan Khan Swati for Appellants.

C.M. Rehman for Respondent No.4.

2024 C L D 1444

[Lahore (Multan Bench)]

Before Asim Hafeez and Anwaar Hussain, JJ

MUHAMMAD AKRAM (Deceased) through Legal Heirs---Appellant

Versus

ALLIED BANK LIMITED through Branch Manager---Respondent

R.F.A. No.125 of 2012, heard on 20th February, 2024.

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

----Ss.10(5)(6) & 22---Suit for recovery filed by Bank---Petition for leave to appear and defend---Requirements---Suit was decreed in favour of plaintiff / Bank holding defend that no substantial question of law was raised by the defendant /customer in his petition for leave to appear of defend---Defendant/judgment-debtor preferred appeal against the decree, however, he died during the pendency of the appeal and legal heirs of deceased customer/judgment-debtor (appellants) pursued the case before the Appellate / High Court---Plea of the appellants was that an opportunity be granted to them to contest the case by allowing leave to defend---Validity---Appellants remained unsuccessful to show the Court any substantial question of law having been raised through the petition for leave to appear and defend, which required trial through recording of evidence---Record revealed that the factum of renewal/ extension of finance facility upon request of the deceased was established---No document was indicated to show adjustment of finance facility of 2003-04 ; conversely, respondent / Bank established withdrawal of funds for adjusting overdue liabilities with funds extended through finance facility-in-question---Funds were made available and withdrawn through cheque which details were mentioned in relevant para of the plaint but the same were not explicitly rebutted in the leave application---It was established that amounts overdue were adjusted and working capital was made available for one year, at the request of predecessor of the appellants--- Finance and security documents were executed and acted upon--- Respondent / Bank had provided statement of account for the finance facility 2003-04 and 2005-06, wherein no objection was raised with respect to any entry / entries therein---In yet another para of the plaint, the respondent / Bank disclosed factum of a (previous) suit having been instituted by the Customer against the financial institution, which fact was neither denied nor any document/order was referred for disputing factum of institution of suit and effect of its dismissal---Dismissal of suit otherwise manifested acquiescence on the part of deceased qua legitimacy of the claim---Predecessor of the appellants was an obvious beneficiary of the finance facility, extended and availed---Suit had been instituted by the authorized officers and one of the signatories was identified as Branch Manager---Statement of accounts met the requirements of law---Thus, plea of the appellants (that opportunity be granted to them being legal heirs of the deceased to contest) was misconceived, especially in the context of absence of all substantial question of law and fact raised in the application for leave to defend the suit---Ambiguous objections raised otherwise called for no serious attention---Requirements in terms of S.10(5)(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 were not met---No illegality, error or defect was found in the impugned judgment and decree passed by the Banking Court---Appeal being merit-less, was dismissed, in circumstances.

Messrs Al-Barkat Seed Corporation and 3 others v. Silk Bank Limited and others 2023 CLD 372 distinguished.

Malik Shoaib Tahir Thaheem for Appellant.

Muhammad Saleem Iqbal for Respondent.

2024 C L D 1570

[Lahore Rawalpindi Bench]

Before Mirza Viqas Rauf, J

JADEED FEEDS INDUSTRIES (PVT.) LIMITED---Petitioner

Versus

BOARD OF REVENUE, PUNJAB through Chief Inspector of Stamps and others---Respondents

Writ Petition No.3455 of 2023, decided on 7th November, 2024.

(a) Words and phrases---

----Merger---Connotation---Merger is analogous and akin to amalgamation and absorption.

Black's Law Dictionary; Oxford, Advanced Learner's Dictionary and Cambridge Dictionary rel.

(b) Companies Act (XIX of 2017)---

----Ss. 279, 280, 281 & 282---Stamp Act (II of 1899), S. 3 & First Schedule, Art. 27-A [as inserted by Punjab Finance Act, 2008]---Constitution of Pakistan, Art. 199---Constitutional petition---Stamp duty, charging of---Merger of companies---Petitioner / company after approval of Scheme of Merger, was aggrieved of transfer of assets of merged companies being subjected to payment of stamp duty / mutation fee at the time of mutation or registration of merger of companies---Validity---In terms of S. 3 of Stamp Act, 1899, every "instrument" becomes "chargeable" with stamp duty of the amount indicated in First Schedule to Stamp Act, 1899 unless exempted---Provision of Art. 27-A of First Schedule to Stamp Act, 1899, which was previously not part of the Schedule but was inserted through Punjab Finance Act, 2008, brought the decree, rule of Court or an order of Court based on mutual consent of parties in cases involving transfer of an immovable property including sale, exchange, gift or mortgage, declaring or conferring a right in or title to an immovable property within ambit of an instrument chargeable to stamp duty---Order sanctioning merger of company is an "instrument" for all intents and purposes in the light of Stamp Act, 1899---Stamp duty is a provincial subject and in view of the scheme of distribution of legislative powers between Federation and Provinces as ordained in Art. 142(d) of the Constitution, the overriding effect of provisions of S. 282 (5) of Companies Act, 2017, or exemption from payment of stamp duty with respect to transfers under Scheme of Mergers is limited to the extent of Islamabad Capital Territory---Through merger, assets and liabilities of companies previously existing, stood transferred in the name of petitioner / company and fell within the ambit of Art. 27-A of First Schedule to Stamp Act, 1899---High Court declined to interfere in the matter---Constitutional petition was dismissed in circumstances.

Total Parco Pakistan Ltd. and Total Oil Pakistan (Pvt.) Ltd: In the matter of Judicial Companies Miscellaneous No.29 of 2015, decided on 28th September, 2022 (2023 CLD 241) and Divisional Superintendent, Quetta Postal Division and others v. Muhammad Ibrahim and others 2022 SCMR 292 ref.

Fatima Sugar Mills Limited through Company Secretary and others: In the matter of C.O.No.10 of 2012, decided on 16th March, 2015 (PLD 2015 Lah. 632) rel.

Muhammad Ilyas Sheikh and Muhammad Kashif for Petitioners.

Khalid Ishaq, Advocate General Punjab and Malik Amjad Ali, Additional Advocate General Punjab for Respondents.

2024 C L D 758

[Peshawar]

Before Ijaz Anwar and S M Attique Shah, JJ

FAQEER MUHAMMAD---Appellant

Versus

Messrs NATOVER LEASE AND REFINANCE LTD. through DMO, Peshawar and another---Respondents

FAB No.75-P of 2011 with C.M. No.379-P of 2011, decided on 10th July, 2023.

Companies Act (XIX of 2017)---

----S. 310---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), S. 9---Suit for recovery filed before the Banking Court by a Company undergoing winding up---Maintainability---Leave of the Court, not sought for---Scope and effect---Plaintiff (company under winding up) filed suit for recovery against lessee/purchaser of car---Defendant / lessee preferred appeal as the Baking Court decreed the suit after denying leave to contest filed by him---Validity---Section 310 of the Companies Act, 2017, stipulates that no suit shall be proceeded with or commenced against a company regarding which either a winding up order is passed or the provisional manager is appointed without the leave or permission of the court before which the winding up proceedings are pending---Undoubtedly, the said court also has the jurisdiction to entertain, dispose of any suit or proceeding by or against the company ; and, in case any such proceeding is pending in any other court, it can be transferred to and disposed of by the court which is dealing with the matter of winding up the company---In the present case, one year and two months before filing of recovery suit before the Banking Court (through Deputy Manager Operations under an authority letter), the Provisional Manager had already been appointed after the commencement of the winding up proceedings of the company; thus, recovery suit was not maintainable /competent being against the very mandate of the provisions under S. 310 of the Companies Act, 2017---Record was completely silent in respect of any permission / leave obtained from the concerned Court to file the suit against the appellant / company before the Banking Court in terms of S.310 of the Companies Act, 2017---Respondent (plaintiff/company) ought to have filed the suit after obtaining leave of the Court---Such legal aspect of the case had not been considered by the Banking Court while decreeing the suit filed by the company, thus suit-in-question was not competent in circumstances of the present case---Findings of the Baking Court suffered from illegality and material irregularity, warranting interference by the Appellate/High Court---High Court set-aside impugned decree and remitted the matter back to the Banking Court for its decision afresh after due compliance of the provisions of S.310 of the Companies Act, 2017---Appeal filed by the lessee (defendant) was allowed accordingly.

Messrs GAC Pakistan (Pvt.) Ltd. v. E.F.U. General Insurance Ltd and 2 others 2013 CLD 1568 ref.

Abdur Rahim Jadoon for Appellant.

Barrister Amir Khan Chamkani for Respondents.

2024 C L D 925

[Peshawar]

Before Wiqar Ahmad, J

NATIONAL BANK OF PAKISTAN and others---Appellants

Versus

Messrs PREMIER SUGAR MILLS AND DISTILLERY COMPANY, MARDAN---Respondent

F.A.O No.133-P of 2022 with C.M. No.152-P of 2024, decided on 13th April, 2024.

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

----Ss.2 (c) & 9---Civil Procedure Code (V of 1908), S. 47 & O.XXI, R.23A---Execution proceedings---Money decree---Objection to jurisdiction of Trial Court---Customer and banker---Scope---Decretal amount, non-deposit of---Effect---Respondent / decree holder due to some dispute with appellant / judgment debtor bank filed suit before Civil Court---During execution proceedings, appellant / judgment debtor bank without deposit of decretal amount filed objection petition to maintainability of suit before Civil Court instead of Banking Court---Objection filed by appellant / judgment debtor bank was dismissed by Executing Court---Validity---Respondent / decree holder being the investor in appellant / judgment debtor bank by way of purchase of Term Deposit Certificates, could not be termed as a person to whom finance had been extended by financial institution---Respondent / decree holder was also not a person on whose behalf appellant / judgment debtor bank issued any guarantee or letter of credit---Respondent / decree holder did not fall in the definition of customer and therefore he could not have knocked at the door of Banking Court---High Court declined to interfere in dismissal of objection petition as it was ill-conceived, and requisite decretal amount was also not deposited---Although a surety bond had subsequently been submitted in pursuance to an order passed by High Court but at the time of passing order in question neither the amount had been deposited nor surety bond was executed and on such score objection petition was also not maintainable---High Court declined to interfere in the order passed by Executing Court as there was no illegality or material irregularity---Appeal was dismissed, in circumstances.

F.A.O No.49 of 2008 and Irshad Mashi v. Emmanuel Masih 2014 SCMR 1481 rel.

Kashif Zaman along with Mehmooda Gul, Litigation Officer for Appellants.

Issac Ali Qazi, Maqsood Ali and Khushnuma for Respondents.

2024 C L D 207

[Balochistan]

Before Muhammad Kamran Khan Mulakhail and Muhammad Aamir Nawaz Rana, JJ

ABDUL GHAFFAR---Appellant

Versus

MUHAMMAD AYUB and another---Respondents

R.F.A. No. 26 of 2021, decided on 24th March, 2023.

Negotiable Instruments Act (XXVI of 1881)---

----S. 118---Qanun-e-Shahadat (10 of 1984), Art. 60---Civil Procedure Code (V of 1908), O. XXXVII, Rr. 1 & 2---Suit for recovery on the basis of promissory notes---Document, execution of---Proof---Presumption---Denial by the defendant---Comparison of signatures---Claim of the appellant/plaintiff was that on the request of respondents/defendants he arranged a loan of ten million rupees for which a guarantee agreement and promissory notes were executed--- Trial Court dismissed the suit of the appellant/plaintiff on the ground that he failed to prove execution of alleged documents---Validity---Record revealed that respondents had strongly denied the execution of both the agreement and promissory notes so much so that they filed an application under Art. 60 of the Qanun-e-Shahadat, 1984, for analysis of documents from the Forensic Science Lab ('the FSL'), in which regard, in the opinion of expert, (appellant') asserted signatures (in Urdu as well as in English) of both the respondents did not tally with the specimen/routine signatures supplied by them---Although the initial presumption under S. 118 of the Negotiable Instruments Act, 1881 ('the Act 1881') that a negotiable instrument was made or drawn, or accepted or endorsed for consideration, yet the said presumption was rebuttable, but in the present case, the respondents had straight away denied the execution of alleged promissory notes, therefore, the appellant had to discharge the said burden that the promissory notes had been duly executed and signed by the respondents---Opinion by the FSL after analysis of documents created serious doubts regarding execution of the promissory notes---Appellant had failed to prove payment to the respondents and execution of promissory notes---Contents of the promissory notes read that payment in millions was made, surprisingly, "in cash" at Court premises (Katchehri), therefore, the complete edifice upon which the appellant had built his case stood crumbled---Even alleged agreement having been exhibited by the appellant was not notarized in accordance with applicable laws which created another doubt regarding its authenticity---Even the Oath Commissioner, who according to the appellant had attested promissory notes, was not produced---Appellant also failed to prove his source and capacity to make payment, therefore, the presumption contained in S. 118 of the Act, 1881 stood rebutted---No infirmity in reasoning and no perversity in interpretation of relevant provisions of law had been noticed in the impugned judgment and decree passed the Trial Court---Appeal was dismissed, in circumstances.

Ghulam Murtaza v. Muhammad Rafi 2020 CLD 265 ref.

Ajmal Khan Kasi for Appellant.

Abdul Aziz Achakzai for Respondents Nos. 1 and 2.

2024 C L D 369

[Balochistan]

Before Abdul Hameed Baloch, J

SHAH MUHAMMAD and another---Petitioners

Versus

Dr. ABDULLAH KHAN and another---Respondents

Civil Revision No. 112 of 2014, decided on 13th June, 2022.

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

----Ss. 14, 17 & 26-A---Making award rule of Court---Principles---Filing of objections---Petitioners were aggrieved of making award as rule of Court by Trial Court as well as Appellate Court---Plea raised by petitioners was that Court had to state the reasons for making the award as rule of Court but failed to do so and the suit was time barred; and that Courts below were bound to dismiss the suit---Validity---Record showed that the respondent was appointed sole arbitrator by consent of the parties---Parties appeared before the arbitrator, took part in arbitration proceedings without any objection---Sole arbitrator prepared award signed by the parties without any protest---If a party had appeared before the proceeding of arbitrator without any protest, and the award was signed then subsequently it could not question the validity of award on the basis that award was made beyond statutory period of limitation---Procedure in filing award was a ministerial act---Provision of arbitration was a selection by parties for an early/expeditious solution of their dispute and dispensing with technicalities of law---Sanctity was attached to the award which could not be brushed aside until and unless it was shown that the arbitrator or umpire had mis-conducted himself or that award had been improperly procured or was otherwise invalid in terms of S. 30 of the Arbitration Act, 1940---While making an award the rule of Court, the Court had to examine the validity of award in a limited scope---Petition was dismissed accordingly.

2017 YLR 301; 2020 CLC 1605; 2013 CLD 719 and 2018 SCMR 662 ref.

Dr. Khalida Malik v. Mst. Farida Malik 1994 MLD 2348; Champsey Ghara and Company v. Jivrajh Balloo Spinning and Weaving Company AIR 1923 PC 66; Mian Corporation through Managing Partner v. Messrs Lever Brothers of Pakistan Ltd. through General Sales Manager, Karachi PLD 2006 SC 169; AIR 1984 Gujrat 114 and Besrock (Pvt.) Ltd. v. Pakistan Steel Mills Corporation 2013 CLD 719 rel.

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

----S. 115---Revisional jurisdiction of High Court---Scope---High Court had a narrow and limited jurisdiction to interfere in concurrent findings arrived by the Courts below while exercising power under S. 115, C.P.C.---Interference in revisional jurisdiction could be made only in the cases in which order or judgment rendered by the subordinate Courts were found to be perverse or suffering from jurisdictional error or defect of mis-reading or non-reading of evidence and conclusion---Petition was dismissed accordingly.

2022 SCMR 933 rel.

Bakhtiar Sherani for Petitioners.

Hameedullah Kakar for Respondent No. 2.

2024 C L D 462

[Balochistan]

Before Muhammad Kamran Khan Mulakhail and Shoukat Ali Rakhshani, JJ

BALOCHISTAN BAR COUNCIL through Vice-Chairman---Petitioner

Versus

GOVERNMENT OF BALOCHISTAN through Chief Secretary Balochistan, Civil Secretariat and 2 others---Respondents

C.P. No. 272 of 2023, decided on 24th November, 2023.

Balochistan Environmental Protection Act (VIII of 2012)---

----S. 28(2)---Balochistan Environmental Protection Tribunal Rules, 2017, R. 3(2)---Constitution of Pakistan, Art. 199---Constitutional petition---Quo warranto, writ of---Member Environmental Protection Tribunal---Appointment---Extension in second tenure---Petitioner/Bar Council assailed extension in appointment of respondent as Member Environmental Protection Tribunal---Validity---Re-appointment of Chairperson or any member was not provided under Balochistan Environmental Protection Tribunal Rules, 2017, except to extend his tenure only once, for a period of three years---Re-appointment of respondent was not supported by any law and rules framed thereunder---Such appointment was an extension of his tenure and there was also no provision in Balochistan Environmental Protection Act, 2012 and Balochistan Environmental Protection Tribunal Rules, 2017, for further (second) extension---Such extension of respondent was violation of law and was unique example of colourful exercise of power by Chief Minister by overlooking summary and relevant law and rules---Second extension of petitioner was nullity in the eyes of law and was ab-initio void---High Court set aside notification of extension of second tenure of respondent---High Court directed Provincial Government to de-notify respondent as Member Balochistan Environmental Protection Tribunal---Constitutional petition was allowed, in circumstances.

Mian Fazal Din v. Lahore Improvement Trust, Lahore PLD 1969 SC 223 ref.

Munir Ahmed Kakar for Petitioner.

Shai Haq Baloch, Additional Advocate General for Respondents Nos. 1 and 2.

Adnan Basharat and Shaukat Kakar for Respondent No. 3.

2024 C L D 491

[Balochistan]

Before Muhammad Ejaz Swati and Rozi Khan Barrech, JJ

MALIK & COMPANY through Proprietor---Petitioners

Versus

CHAIRMAN PAKISTAN TOBACCO BOARD, PESHAWAR and others-- Respondents

C.P. No. 747 and Civil Revision No. 201 of 2020, decided on 26th May, 2021.

Arbitration Act (X of 1940)---

----S. 20---Arbitration---Award made rule of the Court---Petitioner/contractor resisted payment of balance contractual amount and invoked arbitration clause---Trial Court appointed arbitrator who announced the award which was made rule of the Court---Validity---According to agreement, petitioner/contractor was required to make payment of balance amount in ten equal installments on monthly basis on first day of each month but not later than 10 of same month and the last final installment was due on 30-11-2002---Petitioner/contractor deposited an amount of Rs. 890,000/- with Pakistan Tobacco Board and an amount of Rs. 7,200,000/- along with penalty was to be paid---When petitioner/contractor was directed by the Board to deposit outstanding installment, he invoked arbitration clause of the agreement by way of filing an application under S. 20 of Arbitration Act, 1940---Question of loss suffered by petitioner/contractor on account of exemption letter issued by Pakistan Tobacco Board was properly determined in the agreement---Where two views were possible with regard to powers of an arbitrator and the ground upon which arbitration award could be set aside, the Court could not interfere with the award adopting its own interpretations---High Court declined to interfere in the matter---Constitutional petition was dismissed, in circumstances.

2018 SCMR 662 rel.

Adnan Ejaz for Petitioners (in Constitutional Petition No. 747 of 2020 and Civil Revision Petition No. 201 of 2020).

Syeda Tehmina Samad for Respondent No. 1 (in Constitutional Petition No. 747 of 2020 and Civil Revision Petition No. 201 of 2020).

2024 C L D 751

[Balochistan (Sibi Bench)]

Before Nazeer Ahmed Langove and Sardar Ahmed Haleemi, JJ

MUHAMMAD MUSA and 2 others---Appellants

Versus

NATIONAL BANK OF PAKISTAN through Branch Manager---Respondent

High Court Appeal No.(S)18 of 2021, decided on 7th March, 2024.

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

----Ss. 9 & 22---Suit for recovery of finance---Process, non-service of---Effect---Appellant / borrower assailed judgment and decree passed by Banking Court on the plea that no process was ever served upon him---Validity---Report of bailiff and courier service regarding service upon appellant / borrower was silent---It was the prime duty of Banking Court to ascertain as to whether service of summons was duly served upon appellant / borrower or not---Report of bailiff and courier service acknowledgement were not available on record---Provision of S. 9(5) of Financial Institutions (Recovery of Finances) Ordinance, 2001 was not complied with in letter and spirit and appellant / borrower was condemned unheard---High Court set aside judgment and decree passed against appellant / borrower and matter was remanded to Banking Court for trial afresh---High Court directed Banking Court to provide opportunity to appellant/borrower to file leave to defend application---Appeal was allowed accordingly.

Mubarak Ali v. First Prudential Modaraba 2011 SCMR 1496 and Province of the Punjab through Member Board of Revenue (Residual Properties) Lahore and others v. Muhammad Hussain through Legal Heirs and others PLD 1993 SC 147 rel.

Ali Hassan Bugti for Appellants.

Jahanzaib Majeed for Respondent.

2024 C L D 900

[Balochistan]

Before Zaheer-ud-Din Kakar and Gul Hassan Tareen, JJ

Syed MUHAMMAD ZAHIR and others---Appellants

Versus

Mrs. SHAHNAZ AKHTAR and others---Respondents

R.F.As. Nos. 22 and 33 of 2021, decided on 27th March, 2023.

Negotiable Instruments Act (XXVI of 1881)---

----S. 118---Civil Procedure Code (V of 1908), O.XXXVII, R. 2(2)---Suit for recovery on the basis of three cheques---Negotiable instrument---Presumption of truth---Scope---Application for leave to defend, acceptance of---Effect---Onus of proof---Plaintiff impugned the judgment passed by the Trial Court as his suit was partially decreed---Held, that provisions of S. 118 of the Negotiable Instruments Act, 1881 and O. XXXVII, R. 2(2) of the Civil Procedure Code, 1908, indicate that statutory presumption is attached with a negotiable instrument---Such presumption operates in favour of plaintiff unless and until leave to defend is granted---Where the Court, seized with such a suit, refuses leave to defend or where a defendant fails to fulfill a condition attached to a leave granting order or fails to apply within the prescribed time for leave to defend, then the Court shall decree the suit without any further proof of the suit on the basis of statutory presumption under S. 118 of the Negotiable Instruments Act, 1881---However, where the very execution of instrument is denied and leave is granted by the Court, then the said initial presumption in favour of plaintiff would not arise---In such a case, the mode of disposal of the suit from summary would convert to ordinary regular form of suit---In such circumstances the consideration for discharging the burden of proof would be the same as in an ordinary civil suit pending before a Civil Court---In the present case, after grant of leave to defend, appellant's predecessor submitted written- statement and denied execution as well as consideration of three cheques, sued upon---Therefore, the burden of proof of the execution of cheques by appellant' predecessor as well as consideration was upon the appellant---Appellant produced the official witnesses who merely produced the record of impugned cheques and dishonor slips and he had not led any evidence to prove that indeed the impugned cheques were executed towards fulfillment of an obligation or towards consideration---Appellant's own statement, without proof of consideration independently through concrete evidence, was not sufficient to prove his claim---Since, the appellant failed to discharge burden of proof, therefore, the burden did not shift upon the shoulders of defendants/respondents to disproof in rebuttal as the same would not make any difference---Defendants in evidence denied execution of the impugned cheques as well as the consideration mentioned therein---Thus, the Trial Court had misinterpreted S. 118 of the Negotiable Instruments Act, 1881 and was wrong in placing the onus of proof of relevant issue on the defendants---High Court set-aside the impugned judgment being not sustainable in law; resultantly, suit instituted by the appellant was dismissed---Appeal filed by the plaintiff was dismissed with costs of Rs. 50,000/- and costs of proceedings.

Syed Haider Aabdi v. Syed Javed Aabdi 1986 MLD 2298; Habib Bank Ltd. v. Ali Mohtaram Naqvi PLD 1987 Kar. 102 and Muhammad Aziz-ur-Rehman v. Liaquat Ali 2007 CLD 1542 ref.

Shabbir Sherani and Khalil Ahmed for Appellant (in Regular First Appeal No. 22 of 2021).

Adnan Ejaz Sheikh for Respondents (in Regular First Appeal No. 22 of 2021).

Adnan Ejaz Sheikh for Appellants (in Regular First Appeal No. 33 of 2021).

Shabbir Sherani and Khalil Ahmed for Respondent (in Regular First Appeal No. 33 of 2021).

2024 C L D 948

[Balochistan]

Before Muhammad Ejaz Swati and Nazeer Ahmed Langove, JJ

Dr. RASHID TARIN---Petitioner

Versus

The GOVERNMENT OF BALOCHISTAN through Chief Secretary, Civil Secretariat, Quetta and 2 others----Respondents

C.P. No.769 of 2023, decided on 19th October, 2023.

(a) Constitution of Pakistan---

----Art. 199---Writ of quo warranto---Appointment of Chief Executive Officer of a public sector company, challenging of---Aggrieved person---Scope---Petitioner filed constitutional petition challenging the appointment of the private respondent as Chief Executive Officer of People's Primary Health Initiative Balochistan (PPHI-B), a public sector company---Objection of the official respondents was that the writ petition was not maintainable as the petitioner had no locus standi to file the same---Held, that objection of the respondents was not tenable as in case of issuance of writ of quo warranto the person laying information before the court need not be an aggrieved person.

Hafiz Hamdullah v. Saifullah Khan and others PLD 2007 SC 52 ref.

(b) Companies Act (XIX of 2017)---

----Ss. 2(54), 4, 186 & 187---Public Sector Companies (Corporate Governance) Rules, 2013, R.5(2)---Public Sector Company (Appointment of Chief Executive) Guide Lines, 2015, issued by Securities and Exchange Commission of Pakistan, Clause 7 & Schedule 1---Chief Executive Officer of a public sector company, appointment of---Mechanism/eligibility criteria ---Power /role of the Government---Scope---Petitioner challenged the notification for appointment of the private respondent as Chief Executive Officer of People's Primary Health Initiative Balochistan (PPHI-B), a public sector company---Contention of the petitioner was that the relevant procedure /criteria had not been followed in the said appointment---Validity---Section 4 of the Companies Act, 2017, expressly provides that provision of the Companies Act pre-empts anything contained in any other law (or the Memorandum of Association or Article of Association of a company or contract or agreement or resolution etc.) and any provision or resolution to the extent of its inconsistency with any provision of the Companies Act, 2017, would be void---Sections 186 & 187 of the Companies Act, 2017, empower the Board to appoint the CEO of a Company, subject to S.186 (4) or 187 (4) of the Companies Act, 2017, which prescribes the (relevant) Government the power to nominate CEO of a Public sector Company---Apart from said provision, the company/ PPHI-B had been registered / renewed as a public sector association not for profit in terms of S.2(54) of the Companies Act, 2017, therefore, the appointment of its CEO and allied matters (criteria, process, evaluation of candidates, terms and conditions etc.) were further regulated under R.5(2) of Public Sector Companies (Corporate Governance) Rules, 2013 ('the Rules 2013') and Clause 7 and Schedule 1 of the Public Sector Company (Appointment of Chief Executive) Guide Line, 2015 ('PSC') issued by SECP---Rule 5(2) of the Rules, 2013 is meant for evaluation of candidate for the post of Chief Executive by the Board---After such evaluation the Board must recommend at least three persons to the Government for appointment as CEO of the concerned public sector company; the nominee concurred by the Government is to be appointed by the Board as Chief Executive---Following the specific criteria for such appointment was important---Said provisions (of the Companies Act, 2017, Rules, 2013 PSC) and Articles of Association (AoA) of the Company (PPHI-B) provide certain mechanism/eligibility criteria for the appointment of the CEO---It is obvious from the AoA that Board of Directors owes the Company and makes the Board responsible for placing the succession and appointment of the CEO---Procedure adopted by the official respondents for the appointment of the private respondent did not conform to the said provisions and AoA of the Company on the matters, therefore, impugned notification could not be sustained---High Court set-aside the impugned notification and directed the official respondents to take necessary steps for the appointment of new CEO of the company on merits and in accordance with law---Constitutional petition was allowed accordingly.

2019 SCMR 1952 and Ghulam Rasool v. Government of Pakistan through Secretary, Establishment Division Islamabad and others PLD 2015 SC 6 ref.

Munir Ahmed Kakar, Adnan Basharat and Ali Ahmed Kakar for Petitioner.

Shai Haq Baloch, Additional Advocate General along with Arif Shah, Chief Audit Officer PPHI-B for Respondents Nos.1 to 2.

Syed Ayaz Zahoor and Muhammad Ali Kanrani for Respondent No.3.

2024 C L D 965

[Balochistan (Sibi Bench)]

Before Muhammad Ejaz Swati and Abdullah Baloch, JJ

GHOUSIA RICE MILLS through Proprietor---Appellant

Versus

NATIONAL BANK OF PAKISTAN through Manager and 2 others---Respondents

High Courts Appeals No.(S) 01 of 2011 and 02 of 2013, decided on 21st September, 2017.

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

----Ss. 9 (a) & 22---Specific Relief Act (I of 1877), Ss. 21 & 42---Arbitration Act (X of 1940), Ss. 32 & 33---Suit for recovery of finance and declaration---Contractual liability---Arbitration clause, non-invoking of---Effect---Appellant / customer filed suit to recover finance amount from insurance company on account of damages caused to pledged goods due to flood whereas respondent / bank filed suit for recovery of finance facility---Trial Court decreed suit filed by respondent / bank while dismissed that of appellant / customer---Validity---As per insurance policy if any difference had arisen as to amount of loss or damage, such difference was to be referred to decision of an arbitrator to be appointed in writing by parties in difference---Appellant / customer instead of invoking arbitration clause filed suit which was otherwise barred under S.12 of Specific Relief Act, 1877 and Ss. 32 & 33 of Arbitration Act, 1940---Suit filed by respondent / bank was verified on oath and supported by all necessary documents including statements of account, loan application, agreement of loan, undertaking by appellant / customer, power of attorney, mutation for mortgage property and other relevant documents which were duly signed / attested as required under the law---Suit was covered within the definition of S. 9(1) of Financial Institutions (Recovery of Finances) Ordinance, 2001---Respondent / bank complied with the requirements of Ss. 9(2) & (3) of Financial Institutions (Recovery of Finances) Ordinance, 2001---High Court declined to interfere in judgments and decrees passed by Banking Court as there was no misreading or non-reading of evidence nor there were glaring illegalities or irregularities---Appeal was dismissed, in circumstances.

Talat Waheed for Appellant.

Syed Akram Shah for Respondents.

2024 C L D 383

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs JAMHEX COMPANY (PRIVATE) LIMITED and another---Applicants

Versus

APPELLATE BENCH REGISTRY---Respondent

M.As. Nos. 45(14)def/ABR and 45-1(14)def/ABR of 2023, decided on 25th August, 2023.

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

----Ss. 40-A & 33---Securities and Exchange Commission of Pakistan (Appellate Bench Procedure) Rules 2003, R. 8---Audi altrem partem, principle of---Proper and necessary party, non-impleading of---Scope---A party, to the proceedings culminating in an order-in-original, was not impleaded by the appellant while preferring appeal to the Appellate Forum; deficiency letter was issued by the Appellate Bench Registry to the appellant directing to implead said party as respondent being necessary party---Objection application was moved by the appellant assailing said directions/letter contenting that grievances of the party/ respondent had already been addressed through order-in-original---Validity---Principle of audi altrem partem meaning that "hear the other side" or " let the other side be heard " is a fundamental tenet of the procedural fairness ensuring that individuals be given fair opportunity to present their case, challenge evidence and respond to the arguments; it upholds the principles of justice, due process, and the protection of individual's rights---In the present case denying to implead respondent as a necessary party to the appeal would undermine the principle of dispensing justice---Furthermore, to avoid multiplicity and delay of proceedings respondent shall be impleaded as a party to the appeal---Respondent earlier remained part of the proceedings and to ensure the continuity of the proceedings warranted to make the same as a party to the appeal---If the decision of the appeal filed by the applicant was made without hearing respondent then rights of the later shall be infringed---Therefore, respondent was a necessary party to the appeal in the light of the said facts and principles---Appellate Bench directed the Applicant to implead respondent as a party in its appeal and to file amended memorandum of appeal within fifteen days, failing with which, appeal would not be registered---Bench further directed the respondent that upon submission of amended documents by the applicant/appellant and satisfaction of the respondents thereof, appeal of the Applicant against the order-in-original shall be duly registered---Objection application filed by the appellant was disposed of accordingly.

Barrister Shahzad Javed Panni for Applicant (Jamhex Company (Private) Limited) (in M.A. No. 45(14)def/ABR of 2023).

Barrister Usman Mughal for Applicant (Nitrokitnya) (in M.A. No.45-1(14)def/ABR of 2023).

Raja Farukh Ahmad (Additional Joint Registrar), Appellant Bench Registry, SECP for Respondent.

2024 C L D 415

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

MUHAMMAD FAISAL MUZAMMIL and 6 others---Appellants

Versus

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

Appeal No. 97 of 2020, decided on 25th August, 2023.

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

----Ss.40-A & 33---Filing of interim financial statements---Non-compliance---Effect---Appeal to the Appellate Bench of the Commission---Appellants were directors and chief executive of the company who contended that favorable order was passed by the High Court in a constitutional petition filed by the appellant---Validity---Company, admittedly, failed to timely transmit its interim financial statements for the default periods which were submitted subsequently---Reliance on the favorable order of the High Court passed in constitutional petition filed by the appellant could not rescue the appellant from the admitted default in transmission of first quarterly financial statements for the period ended March 31st, 2019 as the same was not the subject-matter of direction which was suspended by the High Court, thus drawing a clear distinction between the default period-in-question and the other periods---Bench upheld the impugned order to the extent of period-in-question, however, partially set-aside the same to the extent of two previous default periods, and also reduced the penalty imposed on the appellant to the extent of default period only---Appeal filed by the directors and chief executive of the company was disposed of accordingly.

Ms. Rabia Hassan, Ms. Asma Irfan, Company Secretary and Syed Taneem Haider, Chief Financial Officer for Appellants.

Amir Saleem, Additional Director, Adjudication-I, SECP and Sardar Sohaib Amin, Assistant Director, Adjudication-I, SECP for Respondents.

2024 C L D 442

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs AXIS GLOBAL LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR/HOD ADJUDICATION I---Respondent

Appeal No. 35 of 2020, decided on 31st August, 2023.

Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018---

----Reglns. 4(a), 13(7), 6(3)(a), 6(3)(c), 6(4), 6(8) & 7(1)(b)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 40-A & 33---Anti-Money laundering policies---Regulatory requirements, non-compliance of---Scope and effect---Appeal to the Appellate Bench of the Commission---Appellant who was licensed with Pakistan Stock Exchange ('PSX') as a securities broker, was imposed penalty by the Commission for contravention of Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018 ('the Regulations')---Contention of the appellant/company was that that NADRA Verisys System was non-feasible/unavailable to the stock-brokers---Held, that the appellant had a responsibility to strictly adhere to the relevant requirements outlined in the Regulations, ensuring full compliance in both letter and spirit especially in the context that that anti-money laundry policies had been in existence since the year 2012 under the PSX guidelines---Appellant's argument claiming the unavailability of the NADRA Verisys System lacked supporting evidence regarding any efforts made to obtain the said System---Respondent/Commission while passing the impugned order did take into account the factors contended by the appellant and imposed the penalty accordingly---Appellant failed to meet the mandatory requirements set forth in the Regulations---Regulated individuals were expected to demonstrate a high level of vigilance in adhering to Anti-Money Laundry laws and should not have sought excuses to evade compliance---However, recent record indicated a significant reduction in occurrences of non-compliance with the Regulations during the inspection when contrasted with the instances identified in the prior inspection---Persistence of non-compliance observed in the second evaluation suggested that the appellant had undertaken measures to enhance their diligence practices---Bench, under the said circumstances of the present case, considered it justified to reduce the penalty, therefore, the impugned order was modified to the extent that the penalty imposed upon the appellant was reduced from Rs.650,000 to Rs.300,000---Appeal, filed by the Securities Broker, was disposed of accordingly.

Hammad Kehar, Director and Salman Ahmed for Appellant.

Hammad Javed, Additional Director, Adjudication-I, SECP and Muhammad Faisal, Assistant Director, Adjudication-I, SECP for Respondent.

2024 C L D 480

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs AKD SECURITIES LIMITED---Appellant

Versus

DIRECTOR/HOD, ADJUDICATION-I, SECP ISLAMABAD---Respondent

Appeal No. 10 of 2022, decided on 25th August, 2023.

Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018---

----Reglns. 6(3)(c), 6(10), 13(1) & 14(3)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 40-A & 33---Regulatory requirements, non-compliance of---Scope and effect---Appeal to the Appellate Bench of the Commission---Appellant ,having been licensed with Pakistan Stock Exchange ('PSX') as a securities broker, was imposed penalty by the Commission for contravention of Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018 ('the Regulations')---Plea of the appellant was that nothing was done with intention and no mens rea was involved and that by obtaining the tax return/wealth statement of the client, the appellant had rightly determined the profile of the client in compliance of the Regulations---Validity---Arguments/pleas of the appellant were not tenable as the appellant was required to comply with the applicable requirements of the Regulations---Appellant should have been vigilant enough to follow the Regulations---Novice status of the customer did not match the unusual transactions pattern of the customer's profile---Appellant erred in its determination of the profile as the same did not correspond with the trading pattern of the client---Appellant failed to update the customer profile and report the transaction based on unusual and unexpected activities in violation of the Regulations---Thus, Appellate Bench viewed that appellant had failed to maintain the record as required under the law---No reason had been found for interference in the impugned order---Appeal was dismissed, in circumstances.

Muhammad Farid Alam, Chief Executive Officer, Naveed Anjum, Head of Compliance and Mudassir Ijaz, Manager Compliance for Appellant.

Muhammad Faisal, Assistant Director, Adjudication-I, SECP and Hammad Ahmed, Management Executive, Adjudication-I, SECP for Respondent.

2024 C L D 635

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

SOHAIL AHMED and others---Appellants

Versus

ADDITIONAL DIRECTOR, LISTED COMPANIES, ADJUDICATION DEPARTMENT-I---Respondent

Appeal No.78 of 2021, decided on 25th August, 2023.

Companies Act (XIX of 2017)---

----S. 237---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Circular No. 24 of 2017 issued by Securities and Exchange Commission of Pakistan---Transmitting of Quarterly Financial Statements to Securities and Exchange Commission of Pakistan by the company---Failure to transmit---Effect---Securities and Exchange Commission of Pakistan imposed penalty upon the appellants /company for failure for successive default periods---Contention of the appellants was that by filing of quarterly financial statements with the Pakistan Stock Exchange (PSX) and Company Registration Office (CRO) fulfiled the requirements of the provisions of the Companies Act, 2017---Validity---Relevant provisions transpire that subsection (1) of the S. 237 of the Companies Act, 2017 expressly provides the time for filing of quarterly accounts whereas subsection (2) of the S. 237 specifies mode for filing of the same (quarterly accounts) i.e. electronically---Furthermore, the Securities and Exchange Commission of Pakistan, in order to facilitate the companies and to streamline the filing process, issued Circular No. 24 of 2017 which makes it incumbent upon a listed company to electronically transmit its quarterly financial statement, in terms of S. 237(2) of the Companies Act, 2017, on the designated (given) e-mail address---Interim financial statements prepared accurately and in timely manner, provides a reliable source of information regarding a company's financial position and performance to its users, besides illustrating the results of the management's stewardship of resources entrusted to it---Appellants had fiduciary duties towards the Company and its shareholders while providing information to various stakeholders concerning their performances as to how diligently and ethically they were are discharging their fiduciary duties and responsibilities---Hence, contention of the appellants (that filing of quarterly financial statements with the concerned CRO and PSX fulfiled the requirements of the provisions the Companies Act, 2017) did not stricto sensu correspond with the relevant provision and might be construed as a mitigating factor attracting leniency, only if done within stipulated time, which was not the case in the present matter---Moreover, the argument of the appellants did not sustain on the touchstone of alternate filing modes as in most of the default periods, the same was done either with delay or not done at all---No case for interference by the Appellate Bench in the penalty imposing impugned order was made out---Appeal filed by the company was dismissed, in circumstances.

M. Javed Panni and Batrrister Shahzad Javed Panni for Appellants.

Amir Saleem, Additional Director, Adjudication-I and Sardar Sohaib Amin, Assistant Director, Adjudication-I for Respondents.

2024 C L D 645

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs HUM NETWORK LIMITED---Appellant

Versus

DIRECTOR/HOD, ADJUDICATION DEPARTMENT-I---Respondent

Appeal No.55 of 2022, decided on 23rd August, 2023.

Companies Act (XIX of 2017)---

----S.132---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Annual General Meeting, holding of---Stipulated period---Scope---Securities and Exchange Commission ('Commission') issued show-cause notice and subsequently imposed penalty upon appellant/ company for not holding Annual General Meeting of relevant financial year within a period of one hundred and twenty days---Contention of the appellant that Annual General Meeting for the financial year ended June 30, 2020 could not be held within the stipulated period due to litigation pending before the High Court and injunctive order passed by the High Court---Validity---Record revealed that multiple suits and applications pertaining to election of directors and holding of Annual General Meeting for the financial year ending June 30, 2020 were pending before the Single Bench as well as Division Bench of the High Court , wherein injunctive order was also passed---It was the case of the appellant that Annual General Meeting for the financial year ending June 30, 2020 was convened on July 16, 2021 upon express permission of the High Court---Contention of the appellant was supported by the certified true copies of the order sheet of the High Court which could not be refuted by the respondent---Appellate Bench set-aside the show-cause notice and impugned order passed by the Commission---Appeal filed by the company was allowed, in circumstances.

Ijaz Ahmed, Sarfraz Ahmed and Mohsin Naeem, Company Secretary for Appellants.

Amir Saleem, Additional Director, Adjudication-I, Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I and Sardar Sohaib Amin, Assistant Director, Adjudication-I for Respondent.

2024 C L D 652

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

DURAID QURESHI and another---Appellants

Versus

ADDITIONAL DIRECTOR/HOW, ADJUDICATION DEPARTMENT-I---Respondent

Appeal No.54 of 2022, decided on 25th August, 2023.

Companies Act (XIX of 2017)---

----S. 237---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Quarterly financial statements, non-transmitting of---Securities and Exchange Commission ('Commission') imposed penalty upon appellant/company for not timely transmitting quarterly financial statements---Validity---It was case of the appellant that quarterly financial statements for the default periods could not be timely transmitted as board meetings of the company for approval of said financial statements could not be held due to uncertainty with respect to legal status of the Board of Directors coupled with litigation pending before the High Court and injunctive order passed by the High Court---Said contention of the appellant appeared to be reasonable in the context that quarterly accounts for the default periods were transmitted within reasonable time after vacation of the restraining order by High Court allowing the company to hold Annual General Meeting---Record revealed that respondent/Commission issued warning to the other companies in the show-cause notice proceedings, but imposed penalty upon the appellant alone---Said admitted fact could be regarded as a mitigating factor---Appellate Bench, while taking a lenient view in the present case, converted the impugned order into warning---Appeal filed by the company was disposed of accordingly.

Ijaz Ahmed, Sarfraz Ahmed and Mohsin Naeem, Company Secretary for Appellants.

2024 C L D 660

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Sardar SHAHBAZ ALI KHAN KHOSA---Appellant

Versus

COMMISSIONER SUPERVISION DIVISION, SECP and 4 others---Respondents

Appeal No.24 of 2022, decided on 1st September, 2023.

(a) Pakistan Stock Exchange Limited Regulations---

----Chapt.18---Securities Act (III of 2015), S.7---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 20 & 33---Dispute between a securities broker and its client, resolution of---Arbitration proceedings---Scope---Client alleged that illegal/unlawful trades/transactions were made in his Trading Account maintained with the security broker---Commissioner Supervision Division, Securities and Exchange Commission of Pakistan, directed the parties to approach Pakistan Stock Exchange (PSX) to resolve their dispute through arbitration---Appellant/client impugned said order passed by the Securities and Exchange Commission of Pakistan---Validity---Record revealed the matter between the parties remained pending before the High Court and the Securities and Exchange Commission of Pakistan was directed by the High Court to decide the matter in accordance with law---Relevant law was very clear and unambiguous , therefore, any dispute between a securities broker and its client was subject to determination through the arbitration mechanism provided under Pakistan Stock Exchange Limited Regulations ('PSX Regulations), which is compendium of PSX Regulations made in exercise of powers conferred under S. 7 of the Securities Act, 2015, with the prior approval of the Securities and Exchange Commission, and in terms of the Account Opening Form, being the underlying agreement between the parties---Impugned order was passed in compliance with the Court's order as well as relevant law---No reason had been noticed for interference with the merits of the impugned order passed by the Commissioner Supervision Division, Securities and Exchange Commission of Pakistan---Appeal filed by the client was dismissed, in circumstances.

Criminal Original No.303-W/2021 ref.

(b) Pakistan Stock Exchange Limited Regulations---

----Chapt. 18---Securities Act (III of 2015), S. 7---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 20 & 33---Dispute between a securities broker and its client, resolution of---Arbitration proceedings---Scope---Client alleged that Illegal/unlawful trades/transactions were made in his Trading Account maintained with the security broker---Commissioner Supervision Division, Securities and Exchange Commission of Pakistan, directed the parties to approach Pakistan Stock Exchange (PSX) to resolve their dispute through arbitration---Appellant/client impugned said order passed by the Securities and Exchange Commission of Pakistan---Validity---Contention of the appellant was that the impugned order be modified making the same time-bound---Held, that the contention of the appellant was not tenable for the reason that in the applicable arbitration framework , an in-built timeline was provided, hence there was no need to issue a separate time-bound directions---No reason had been noticed for interference with the merits of the impugned order passed by the Commissioner Supervision Division Securities and Exchange Commission of Pakistan---Appeal filed by the client was dismissed, in circumstances.

(c) Pakistan Stock Exchange Limited Regulations---

----Chapt. 18---Securities Act (III of 2015), S. 7---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 20 & 33---Dispute between a securities broker and its client, resolution of---Arbitration proceedings---Scope---Client alleged that illegal/unlawful trades/transactions were made in his Trading Account maintained with the security broker---Commissioner Supervision Division, Securities and Exchange Commission of Pakistan, directed the parties to approach Pakistan Stock Exchange ( PSX) to resolve their dispute through arbitration---Appellant/client impugned said order passed by the Securities and Exchange Commission of Pakistan---Validity---Contention of the appellant was that during the arbitration proceedings, respondent had submitted fictitious documents---Validity--Presentation of any fake or fabricated document during the arbitration proceedings, generally, does not vitiate the proceedings, rather the arbitrator has the authority to determine through appropriate procedures whether the documents submitted by either party are real or fictitious---No reason had been noticed for interference with the merits of the impugned order passed by the Commissioner Supervision Division Securities and Exchange Commission of Pakistan---Appeal filed by the client was dismissed, in circumstances.

Appellant present in person, Ghulam Murtaza Malik, Ms. Suzain Khattac and Saeed for Appellant.

2024 C L D 672

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

SOHAIL AHMED and 3 others---Appellants

Versus

ADDITIONAL DIRECTOR, LISTED COMPANIES, ADJUDICATION DEPARTMENT-I---Respondent

Appeal No.77 of 2021, decided on 25th August, 2023.

Companies Act (XIX of 2017)---

----S. 237---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Circular No. 24 of 2017 issued by Securities and Exchange Commission of Pakistan---Transmitting electronically the Quarterly Financial Statements to Securities and Exchange Commission of Pakistan by a company---Failure---Effect---Securities and Exchange Commission of Pakistan imposed penalty upon the appellants (Chief Executive, Directors and Chief Financial Officer of Company) for failure of successive default periods---Contention of the appellants was that quarterly financial statements were filed with the Pakistan Stock Exchange (PSX) and Company Registration Office (CRO), however, the same could not be transmitted to SECP HQs due to oversight of the staff, therefore, as such the compliance of the law had been made---Validity---Subsection (1) of the S.237 of the Companies Act, 2017, expressly provides the timeline for filing of quarterly accounts whereas subsection (2) of the S. 237 specifies mode for filing of the same (quarterly accounts) i.e. electronically---Furthermore, the Securities and Exchange Commission of Pakistan, in order to facilitate the companies and to streamline the filing process, issued Circular No. 24 of 2017 which makes it incumbent upon a listed company to electronically transmit its quarterly financial statement, in terms of S. 237(2) of the Companies Act, 2017, on the designated (given) e-mail address---Interim financial statements prepared accurately and in timely manner, provide a reliable source of information regarding a company's financial position and performance to its users, besides illustrating regarding the results of the management's stewardship of resources entrusted to it---Appellants had fiduciary duties towards the Company and its shareholders while providing information to various stakeholders concerning their performances as to how diligently and ethically they were discharging their fiduciary duties and responsibilities---Hence, contention of the appellants ( that filing of quarterly financial statements with the concerned CRO and PSX fulfiled the requirements of the provisions the Companies Act, 2017) did not stricto sensu correspond with the relevant provision and might be construed as a mitigating factor attracting leniency , only if done within stipulated time, which was not the case in the present matter---Moreover, the argument of the appellants did not sustain on the touchstone of alternate filing modes as in most of the default periods, the same was done either with delay or not done at all---No case for interference by the Appellate Bench in the penalty imposing impugned order was made out---Appeal filed by the company was dismissed, in circumstances.

M. Javed Panni and Barrister Shahzad Javed Panni for Appellants.

Amir Saleem, Additional Director, Adjudication-I and Sardar Sohaib Amin, Assistant Director, Adjudication-I for Respondents.

2024 C L D 681

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs AXIS GLOBAL LIMITED---Appellant

Versus

The COMMISSIONER (SMD)---Respondent

Appeal No.61 of 2019, decided on 23rd August, 2023.

Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018---

----Reglns. 3, 4(a), 4(d), 6(2), 9(3), 11(2), 13 and 18(c)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 40-A and 33---Anti-Money Laundering policies---Regulatory requirements, non-compliance of---Effect---Appeal to the Appellate Bench of the Commission---Appellant, being a Trading Rights Entitlement Certificate (TREC) holder of Pakistan Stock Exchange ('PSX') having been licensed as a securities broker, was imposed penalty by the Commission for contravention of Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018 ('the Regulations')---Contention of the appellant was that some of the violations had been rectified prior to the hearing date---Validity---Appellant had an obligation to adhere to the relevant requirements of the Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations, 2018, which should have been followed by the appellant in their true letter and spirit---Argument that some violations had been rectified prior to hearing date at first place, was an admission on the part of the appellant, and might serve as a mitigating factor only where the violations had been corrected and necessary actions taken to comply with Regulations, 2018 prior to the issuance of the impugned order---Level of compliance was taken into account by the Commission and thus penalty was imposed accordingly---Outcome of a case always depends on specific circumstances and the severity of the violations committed---In the present case, the appellant failed to comply with mandatory requirements and neglected to implement mandatory policies that had been in effect since 2016---Money laundering is a serious crime and its severity cannot be under-estimated---Regulated individuals are expected to be highly vigilant in adhering to Anti-Money Laundering laws and should not offer excuses to avoid compliance---No reason to interfere with the merits of the impugned order was made out---Appellate Bench maintained the impugned order passed by the Commissioner (SMD) Securities and Exchange Commission of Pakistan---Appeal was dismissed, in circumstances.

Hammad Kehar, Director and Salman for Appellant.

Hammad Javed, Additional Director, Adjudication-I and Muhammad Faisal, Assistant Director, Adjudication-I for Respondent.

2024 C L D 721

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs DARSON SECURITIES (PVT.) LIMITED---Petitioner

Versus

COMMISSIONER SMD, SECP---Respondent

Appeal No.43 of 2019, decided on 29th August, 2023.

Securities and Exchange Commission of Pakistan (Anti-Money Laundering and Countering Financing of Terrorism) Regulations , 2018---

----Rglns. 3, 4(a), 13 and 6(2)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 40-A and 33---Anti-money laundering policies---Regulatory requirements, non-compliance of---Effect---Appeal to the Appellate Bench of the Commission---Appellant, having being licensed with Pakistan Stock Exchange ('PSX') as a securities broker , was imposed penalty of Rs. 250,000/= by the Commission for contravention of Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018 ('the Regulations')---Validity---Appellant had an obligation to adhere to the relevant requirements of the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018, which should have been followed by the appellant in true letter and spirit---In present case, the appellant failed to comply with the mandatory requirements and had neglected to implement mandatory policies that had been in effect since 2012---Money-laundering is a serious crime and its severity cannot be under-estimated---Regulated individuals are expected to be highly vigilant in adhering to Anti-Money Laundering laws and should not offer excuses to avoid compliance---However, record revealed that the appellant had made efforts to rectify the non-compliances and was striving to adhere to the Regulations, thus the Appellate Bench considered justified to reduce the penalty from Rs.250,000/= to Rs.150, 000/=---Appeal was disposed of accordingly.

Malik Dilawayz Ahmed for Appellant.

Hammad Javed, Additional Director, Adjudication-I and Muhammad Faisal, Assistant Director, Adjudication-I for Respondent.

2024 C L D 740

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

TANDLIANWALA SUGAR MILLS LIMITED---Appellant

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN and another---Respondents

Appeal No.85 of 2022, decided on 13th February, 2024.

(a) Companies Act (XIX of 2017)---

----Ss. 166 & 512---Listed Companies (Code of Corporate Governance) Regulations, 2019, Reglns. 6 & 37---Independent directors in a listed company, selection of---Mandatory requirement---Director Adjudication Securities and Exchange Commission penalized the appellant (a listed company) for its inability to have independent director(s)---Contention of the appellant (a listed company) was that the Companies Act, 2017, itself did not require having independent directors in a listed company---Validity---Subsection (1) of S.166 of the Companies Act, 2017 ('the Act 2017'), inter alia, recognizes the requirement of appointment of an independent director in a company under any law, rules, regulations or code, whereas subsection (3) of the S.166 of the Act, 2017 provides the manner of election of an independent director of a listed company---Subsection (5) of S.166 of the Act 2017 is an enabling provision whereby the Commission is empowered to specify the manner and procedure of selection of independent directors through regulations and Regln. 6 of Listed Companies (Code of Corporate Governance) Regulations, 2019 ('the Regulations') stipulates the same as mandatory; thus, in this context, said provisions makes it incumbent upon a listed company to elect independent directors---Use of words 'shall' (in S. 166(3) of the Act 2017) and 'mandatory' (in Regln. 6 of the Regulations) leaves no room for any ambiguity that the Legislative intent behind the said provision is to have independent directors of the Board of a listed company and the same is not directory in nature---Thus, the contention of the appellant /company was not tenable---Appellant was rightly penalized in terms of S. 512 of the Companies Act, 2017, read with Regln. 37 of the Listed Companies (Code of Corporate Governance) Regulations, 2019, on account of contravention of provisions of the Regulations, 2019---Appellate Bench maintained the impugned order passed by Director-Adjudication of the Commission---Appeal, filed by the listed company, was dismissed, in circumstances.

(b) Listed Companies (Code of Corporate Governance) Regulations, 2019---

----Rglns. 6, 37 & 38---Companies Act (XIX of 2017), Ss. 166 & 512---Provisions under Listed Companies (Code of Corporate Governance) Regulations, 2019---Independent directors, requirement of---Application for relaxation from such provisions, filing of---Securities and Exchange Commission ('the Commission') penalized the appellant (a listed company) for its inability to have independent director(s)---Contention of the appellant (a listed company) was that its application for relaxation should have been accepted by the Commission---Validity---Appellant (applicant for relaxation), being a listed company, was required to have independent directors under Regulation 6 of the Listed Companies (Code of Corporate Governance) Regulations, 2019 ('the Regulations, 2019') and S. 166 of the Companies Act, 2017---Regulation 38 of the Regulations deals with an application for relaxation from the provision of the Regulations which is to be filed before the Commission---Appellant, admittedly, filed such application while submitting the reply to a show-cause notice, having been served to it by the Commission and not earlier---Thus, such application did not vitiate the show-cause notice proceedings, which culminated into impugned order---Appellant was rightly penalized in terms of S. 512 of the Companies Act, 2017, read with Regln. 37 of the Listed Companies (Code of Corporate Governance) Regulations, 2019, on account of contravention of provisions of the Regulations, 2019---Appellate Bench maintained the impugned order passed by Director-Adjudication of the Commission---Appeal, filed by the listed company, was dismissed, in circumstances.

Barrister Iftikharuddin Riaz, Advocate Supreme Court for Petitioner.

Mahboob Ahmad, Additional Director, Adjudication-I, Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I and Raja Farukh Ahmad, Additional Joint Director, Adjudication-I for Respondents.

2024 C L D 747

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

SHAMS-UD-DIN---Appellant

Versus

DIRECTOR/HOD, ADJUDICATION-I, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No.15 of 2023, decided on 2nd October, 2023.

Companies Act (XIX of 2017)---

----S.159---Insurance Companies (Sound and Prudent Management) Regulations 2012, Regln. 2(5)---Insurance Ordinance (XXXIX of 2000), Ss. 54, 11 & 12---Election of directors, procedure for---Number of the candidates equalling number of directors---Minutes of the Extra Ordinary General Meeting (EOGM), submission of---Fitness and proprietary of the Company Secretary--- Scope---Securities and Exchange Commission ('the Commission') declared the company secretary not fit and proper for submitting minutes of EOGM which (meeting) was never held---Contention of the appellant (former Company Secretary) was that he submitted minutes merely as the same was demanded by the Commission whereas S. 159 of the Companies Act, 2017, was ambiguous as the same did not specify as to whether a meeting of the company was required to be held in case where the candidates contesting for the position of directors equaled the position of directors---Validity---There is no ambiguity in S. 159 of the Companies Act, 2017, as the same does not dispense the requirement of holding a general meeting of a company in case where the number of persons who offer themselves to be elected is not more than the number of directors---Appellant had not disputed the fact that he submitted to the Commission the extracts of the meeting of the EOGM (purportedly held on relevant date) despite the fact that no EOGM was held on such date with respect to election of directors of the Company---Said admission of the appellant, along with documents available on record, clearly manifested that at no stage the appellant tried to rectify his action prior to the issuance of show-cause notice rather presented false and fabricated minutes of the EOGM on the subsequent general meeting of the Company for approval---No reason for interference in the impugned order was made out---Appeal filed by the former company secretary was dismissed, in circumstances.

Appellant in person.

Hammad Javed, Additional Director, Adjudication-I, Shafiq-ur-Rehman, Additional Joint Director, Adjudication-I and Raja Farukh Ahmad, Additional Joint Director, Adjudication-I for Respondents.

2024 C L D 755

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

Messrs EAST WEST INSURANCE COMPANY LIMITED---Appellant

Versus

COMMISSIONER (INSURANCE), SECP---Respondent

Appeal No.107 of 2017, decided on 17th April, 2024.

Companies Ordinance (XLVII of 1984)---

----Ss.204-A(1) & 498---Insurance Ordinance (XXXIX of 2000), S.156---Anti-money laundering regulatory framework, non-compliance of---Appellant (Insurance Company) was penalized by the Securities and Exchange Commission for contraventions of Anti-Money Laundering Laws including Clauses 3, 4 & 5 of SRO Notification 20(I)/2012, ['the Directive'] and Circular No. 14 of the 2013 relating to 'Know-Your-Customer' and Anti-Money Laundering (KYC/AML)---Validity---Appellant had an obligation to adhere to the relevant requirements of the 'Directive' which should have been followed by the appellant in true letter and spirit---In the present case, the appellant failed to comply with the mandatory policies / Directive that have been in effect since the year 2012 --- Regulated individuals are expected to be highly vigilant in adhering to Anti-Money Laundering Laws and should not offer excuses to avoid compliance --- Record revealed that the Respondent/ Commission had earlier taken a lenient view with regard to contravention of S. 204-A of the Companies Ordinance, 1984---No reason was found to interfere with the merits of the impugned order --- Appellate Bench maintained the impugned order ---Appeal filed by the Insurance Company was dismissed, in circumstances.

Imran Ali Dodani, Director Legal and Johrey Laal, Director Audit and Compliance for Appellant.

Shafiq ur Rehman, Additional Joint Director, Adjudication-I and Raja Farukh Ahmed, Additional Joint Director, Adjudication-I for Respondent.

2024 C L D 762

[Securities and Exchange Commission of Pakistan]

Before Abdul Rehman Warraich, Commissioner and Mujtaba Ahmad Lodhi, Commissioner

AKD INVESTMENT MANAGEMENT LIMITED---Appellant

Versus

DIRECTOR (ADJUDICATION DEPARTMENT-I)---Respondent

Appeal No.11 of 2023, decided on 17th April, 2024.

Anti Money Laundering Act (VII of 2010)---

----S. 6(A)(2)(h)---Anti Money Laundering and Countering Financing of Terrorism Sanctions Rules, 2020, Rr.4(1) & 6(1)---Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018, Reglns. 6(2), 6(3), 6(4), 6(5), 9(3), 9(4) and 13(3)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Anti-money laundering regulatory framework, non-compliance of---Rectification of contraventions after visit of inception team of the Securities and Exchange Commission of Pakistan ('the Commission')---Appellant (Investment Management Company) was penalized by the Commission for contraventions of Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018 ('the Anti-Money Laundering Regulations')---Validity---Appellant had the responsibility to strictly adhere to the relevant requirements outlined in the Anti-Money Laundering Regulations and subsequent rectification actions did not absolve the appellant from the committed violations­---However, record revealed that most of the shortcomings pertaining to closed-ended funds which were converted into open-ended funds and the data received from CDC was not as per the recent requirements---Subsequently, the appellant took various rectification actions and measures to enhance their due diligence practices including screening of all clients against the complete list of proscribed persons updation of database, proper categorization of accounts and improving KYC/CDD processes and committed to ensure compliance with the applicable regulatory framework---Appellate Bench, under the circumstances, considering the magnitude of imposed penalty as unjustified, reduced the penalty into nearly half---Appeal filed by (Investment Management) Company was disposed of accordingly.

Muhammad Yaqoob for Appellant.

Ms. Asima Wajid, Additional Joint Director, Adjudication Division and Raja Farukh Ahmad, Additional Joint Director, Adjudication Division for Respondent.

2024 C L D 768

[Securities and Exchange Commission of Pakistan]

Before Abdul Rehman Warraich, Commissioner and Mujtaba Ahmad Lodhi, Commissioner

AKD INVESTMENT MANAGEMENT LIMITED---Appellant

Versus

COMMISSIONER (SCD)---Respondent

Appeal No.71 of 2019, decided on 17th April, 2024.

Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018---

----Reglns. 6(2), 6(3), 6(4), 6(5), 9(3), 9(4) & 13(3)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Ss. 40-A & 33---Anti-money laundering regulatory framework, non-compliance of---Rectification of contraventions after visit of the inception team of Securities and Exchange Commission of Pakistan ('the Commission')---Investment Management Company was penalized by the Commission for contraventions of Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018---Contention of the appellant /company was that rectification of the alleged contravention had been done---Held, that subsequent rectification actions by the appellant to comply with the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018 ('the regulations') did not absolve it (appellant) from committed violations---Said regulations were effective immediately after their issuance and warranted the appellant to ensure compliance in its true letter and spirit---No interference by the Appellate Bench was made out in the impugned order passed by the Securities and Exchange Commission of Pakistan---Appeal filed by the Investment Management Company was dismissed, in circumstances.

Muhammad Yaqoob for Appellant.

Ms. Asima Wajid, Additional Joint Director, Adjudication Division and Raja Farukh Ahmad, Additional Joint Director, Adjudication Division for Respondent.

2024 C L D 773

[Securities and Exchange Commission of Pakistan]

Before Mujtaba Ahmad Lodhi and Abdul Rehman Warraich, Commissioners

TPL LIFE TRAKKER LIMITED---Appellant

Versus

DIRECTOR/HEAD OF DEPARTMENT, ADJUDICATION DEPARTMENT-I---Respondent

Appeal No.79 of 2023, decided on 26th March, 2024.

Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2017---

----Regln. 5(6)---Companies Act (XIX of 2017), S. 199---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Investment in associated companies and undertakings---Recovery of accrued mark-up / interest receivable from associated companies---Regulatory requirements, non-compliance of---Company was penalized for not instituting any mechanism for the recovery of mark-up in accordance with regulatory requirement---Contention of the Appellant/Company was that failure to comply with the Companies Act, 2017 and the 2017 Regulations was unintentional as it relied on a legal opinion obtained from a reputable law firm---Validity---Contention of the appellant did not absolve it from committed violations as the recovery of interest/mark-up periodically and on regular basis was a mandatory requirement under S. 199 of the Companies Act, 2017, read with Regulation 5(6) of the Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2017, and any agreement between the appellant and its associated companies could not override the explicit dictates of legal provisions---Appellate Bench also considered that the interest and trust of shareholders had been violated---Appellant had submitted before the Appellate Bench that it had already started recovering the interest amount from its associated companies and it would provide the relevant details along with repayment schedule to the concerned department regarding recovery of the remaining interest amount---In view of the commitment to recover the interest, the Bench had not enhanced the penalty---Appellate Bench found no reason to interfere in the impugned order---Appeal, filed by company, was dismissed.

Syed Bulent Sohail and Salman K. Haider for Appellants.

Mehboob Ahmad, Additional Director, Adjudication-I, Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I and Raja Farukh Ahmad, Additional Joint Director, Adjudication-I for Respondent.

2024 C L D 837

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Haji MOHAMMAD ISMAIL MILLS LIMITED---Petitioner

Versus

EXECUTIVE DIRECTOR/HOD, ADJUDICATION-I SECP, ISLAMABAD---Respondent

Appeal No.38 of 2021, decided on 27th February, 2024.

Listed Companies (Code of Corporate Governance) Regulations, 2019---

----Reglns. 7 & 37---Companies Act (XIX of 2017), Ss. 192, 193 & 512---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Failure of company to appoint a female director---Mandatory provisions, violation of---Securities and Exchange Commission of Pakistan (SECP) imposed a penalty of Rs.50,000/- on the company---Contention of the appellant / company was that no female was willing to work as a director in the appellant-company as the company was not operational and a winding up petition was also pending before the Court---Validity---A public listed company has higher responsibility towards its stakeholders and is obligated to act in the best financial interest of the share holders of the company to safeguard it---Law has made some provisions mandatory in nature which have to be followed---Violation of mandatory provision merely on the basis that no one is willing to join has no justification---Appellant was still an existing legal entity and it had to comply with the legal requirements---However, in present case despite concerted efforts, the appellant found itself unable to appoint a female director on its board, due to reasons that qualified female candidates were reluctant to engage with a company grappling with multifaceted challenges including the appellant's dysfunctionality, restriction of share transfers and above all, winding up petition against the appellant---Appellate Bench while considering the mitigating factors converted the penalty into warning and directs the Appellant to be careful in future---Appeal filed by the company was disposed of accordingly.

Muhammad Sarfaraz, Company Secretary (Authorized Representative) for Appellant.

Mahboob Ahmad, Additional Director, Adjudication-I, Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I and Raja Farukh Ahmad, Additional Joint Director, Adjudication-I for Respondents.

2024 C L D 849

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Mian SHAHZAD ASLAM, (CEO) NAZIR COTTON MILLS LIMITED---Petitioner

Versus

HOD-ADJUDICATION-I, ADJUDICATION DIVISION SECP---Respondent

Appeal No.81 of 2020, decided on 29th February, 2024.

Listed Companies (Code of Corporate Governance) Regulations, 2017---

----Reglns. 6 & 32---Companies Act (XIX of 2017), Ss. 192, 193 & 512---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Regulatory requirements, non-compliance of---Company being dormant---Securities and Exchange Commission of Pakistan (SECP) imposed penalty of Rs.150,000/= on appellant-company for its non-compliance of regulatory requirements under the Listed Companies (Code of Corporate Governance) Regulations, 2017---Contention of the appellant /company was that it had been dormant, however, non-compliances, which formed the basis for impugned order , had been complied with---Validity---Respondent/SECP vide impugned order also warned the appellant to ensure compliance in future which, though with a delay, had been done by the company---Moreover, admittedly, the appellant / company was not operational since long and was a dormant entity---The company not being operative did not absolve it from statutory compliances under the law and on that account, it was the responsibility of the management of the company to realize and decide accordingly that being a listed company it had to comply with the law as long as it appeared on the register of companies---However, keeping in view the said circumstances and considering subsequent compliance as a mitigating factor, Appellate Bench by converted the penalty imposed vide impugned order into a warning and also directed the appellant to ensure compliance of the regulatory requirements in future strictly in accordance with the law---Appeal filed by the company, was disposed of accordingly.

Maqbool Husain Bhutta, Authorized Representative for the Appellant.

Mahboob Ahmad, Additional Director, Adjudication-I, Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I and Raja Farukh Ahmad, Additional Joint Director, Adjudication-I for Respondent.

2024 C L D 869

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs XPERT SECURITIES LIMITED---Appellant

Versus

DIRECTOR/HOD (ADJUDICATION-I), ADJUDICATION DIVISION---Respondent

Appeal No.09 of 2023, decided on 13th February, 2024.

Anti-Money Laundering Act (VII of 2010)---

----S. 6(A)(2)(h)---Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018, Reglns. 5(a) & 27(2)(c)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Mandatory provisions, contravention of---Securities and Exchange Commission of Pakistan (SECP) imposed a penalty of Rs.60,000/- on the appellant (a Trading Rights Entitlement Certificate (TREC) holder of the Pakistan Stock Exchange Limited (PSX) and licensed as a securities broker) for the contravention of the Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018---Contention of the appellant was that it had never engaged in any business or transaction nor had any clients---Validity---Despite the fact that the appellant did not have any transactions or clients, it was still obligated to adhere to the law as per the requirements at the time of registration as TREC---However, the appellant had addressed the non-compliance issues and submitted a compliance report to the respondent/SECP prior to the hearing---Said step by the appellant should be seen as a mitigating factor---Respondent / SECP did not appropriately weigh these circumstances before imposing the penalty---Appellate Bench, considering the said mitigating circumstances, set-aside the penalty imposing impugned order passed by the SECP---Appeal, filed by the company, was allowed in, circumstances.

Shaheer Bin Tahir, Chief Executive Officer for Appellant.

Hammad Javed, Additional Director, Adjudication-I and Muhammad Akram, Assistant Director, Adjudication-I for Respondent.

2024 C L D 882

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

DAWOOD FAMILY TAKAFUL LIMITED---Petitioner

Versus

COMMISSIONER INSURANCE, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No.105 of 2017, decided on 20th March, 2024.

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

----S. 33---Appeal before the Securities and Exchange Commission of Pakistan---Withdrawal of---Counsel for the appellant/company submitted that the present appeal had become infructuous for the reason that one of the proposed directors passed away, whereas approval for appointment of the other proposed director as director of the appellant /company had already been granted by the competent authority and thus he wished to withdraw the present appeal---In view of the said statement of the counsel for the appellant / company, the appeal was dismissed as withdrawn.

Hamza Siddiqui for Appellant.

Shafique ur Rehman, Additional Joint Director, Adjudication-I and Raja Farukh Ahmad, Additional Joint Director, Adjudication-I for Respondent.

2024 C L D 985

[Securities and Exchange Commission of Pakistan]

Before Aamir Khan, Commissioner and Abdul Rehman Warraich, Commissioner

MUHAMMAD LATIF---Appellant

Versus

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

Appeal No.27 of 2011, decided on 18th March, 2024.

(a) Securities and Exchange Ordinance (XVII of 1969) [Since repealed]---

----Ss. 2(1)(cc), 2(1)(da), 3(1) & 22---Commodity Futures Contracts, trading in---Proof---Evidence, deficiency of---Appellant (former partner of the firm dealing in Oil Seed Cake) was penalized by Securities and Exchange Commission of Pakistan ('the Commission') on allegation of operating as an 'Exchange' for trading of future contracts---Held, that the evidence relied upon by the respondent/Commission was inadequate for arriving at the conclusion that the appellant was involved in the alleged acts of operating as an Exchange for trading of futures contracts---Respondent / Commission interpreted the contents of a constitutional petition having been filed by the appellant before the High Court in a certain manner and the respondent / Commission treated it as an admission by the appellant that he was running such an "Exchange"---Moreover, respondent /Commission was unable to interrogate the appellant or find sufficient evidence in terms of any witnesses, bank statements or any other document to support his conclusion as per the impugned order---The standardized document provided by the respondent / Commission , purported to be the form/receipt used by the appellant as record for futures contract, was not reliable evidence; the appellant denied any association with the said form/receipt; and the said document did not mention any particulars of a trade or parties involved or any entity acting as an "Exchange"---Appellate Bench set-aside the impugned order passed by the Commission---Appeal was allowed, in circumstances.

(b) Securities and Exchange Ordinance (XVII of 1969) [Since repealed]---

----Ss.2(1)(cc), 2(1)(da), 3(1), 20 & 22---Commodity Futures Contracts, trading in---Proof---Evidence, deficiency of---Appellant (former partner of firm dealing in Oil Seed Cake) was penalized by Securities and Exchange Commission of Pakistan ('the Commission') on allegation of operating as an 'Exchange' for trading of future contracts---Held, that the Show Cause Notice (SCN), in so far as it related to the appellant and the consequent order, suffered from serious defects---The level of scrutiny, application of mind and due diligence expected from a public sector functionary were clearly lacking---Operating as an 'Exchange' without registration in terms of the Securities and Exchange Ordinance, 1969, is different from undertaking day to day activity in connection with the specific business which in the present case was trading of Oil Cakes by the firm---Moreover, the respondent/Commission , apart from a template receipt, failed to produce any document or evidence on the basis of which it could be established that the appellant, as a partner in the firm, was involved in the trading of futures contracts---Instead sole reliance for issuance of the SCN was a complaint and the complainant never appeared in any of the hearings or shared his personal testimony to pursue the present matter---Department must reflect on its order and ensure that cognizance of a matter must be backed by sound interpretation of law and should be corroborated with reasonable and reliable evidence and not on the basis of surmises and conjectures---Appellate Bench set-aside the impugned order passed by the Commission---Appeal was allowed, in circumstances.

Haq Nawaz Chattha, Advocate Supreme Court for Appellant.

Hmmad Javed, Additional Director, Additional-I, SECP.

Raja Farukh Ahmad, Additional Joint Director, Adjudication-I SECP.

Muhammad Faisal, Assistant Director, Adjudication-I, SECP.

Nemo for Respondent No.3.

2024 C L D 1050

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

Messrs SUI SOUTHERN GAS COMPANY LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR, ADJUDICATION-I, SECP, ISLAMABAD---Respondent

Appeal No.40 of 2021, decided on 22nd January, 2024.

(a) Companies Act (XIX of 2017)---

----Ss. 4, 132 & 505(1)(d)---Oil and Gas Regulatory Authority Ordinance (XVII of 2002), Ss. 6(2) & 8(2)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Appeal before the Securities and Exchange Commission of Pakistan ('the Commission')---Failure of the company to convene Annual General Meeting (AGM)---Effect---Provisions of the Companies Act, 2017---Special law, applicability of---Commission penalized M/s Sui Southern Gas Company Limited ('the Gas Company') as it failed to convene the Annual General Meeting (AGM) for the respective financial year as required under subsection (1) of S.132 of the Companies Act, 2017, ('the Act 2017')---Argument of the Appellant (Gas Company) was that special law (OGRA Ordinance) would prevail over the general law---Validity---Argument of the appellant was not untenable given the absence of a corresponding provision in the OGRA Ordinance vis-a-vis S. 132 of the Companies Act, 2017---Furthermore, the Respondent/Commission had highlighted S. 505(1)(d) of the Companies Act, 2017, which stated that "the provisions of this Act (Companies Act 2017) shall apply to any other company governed by any special enactment for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special enactments", which implied that S. 132 of the Companies Act, 2017, was applicable, as there was no conflict between said section and any section of the OGRA Ordinance---Moreover, S.4 of the Companies Act, 2017, explicitly states that the Companies Act, 2017, has an overriding effect---Additionally, it adheres to the well-established legal principle that in the event of inconsistency between two special laws, the one enacted later takes precedence, as was the case with the Companies Act, 2017, in the present matter---Appellate Bench did not find any reason to interfere with the impugned penalty imposing order passed by the Commission---Appeal filed by Gas Company was dismissed, in circumstances.

(b) Companies Act (XIX of 2017)---

----Ss. 4, 132 & 505(1)(d)---Oil and Gas Regulatory Authority Ordinance (XVII of 2002), Ss. 6(2) & 8(2)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Appeal before the Securities and Exchange Commission of Pakistan ('the Commission')---Failure of listed company to convene Annual General Meeting (AGM)---Effect---Provisions of the Companies Act, 2017---Special law, applicability of---Scope---Commission penalized M/s Sui Southern Gas Company Limited ('the Gas Company') as it failed to convene the Annual General Meeting (AGM) for the respective financial year as required under subsection (1) of S.132 of the Companies Act, 2017, ('the Act, 2017')---Argument of the Appellant (Gas Company) was that under the Oil and Gas Regulatory Authority Ordinance, 2002 (the 'OGRA Ordinance 2002'), being a special law, it was required to file a petition before the Oil and Gas Regulatory Authority (OGRA) for determination of Final Revenue Requirement (FRR) on annual basis and only thereafter finalize their financial statements based on OGRA's determination---Validity---Argument of the appellant (that the reason for delay in holding the AGM was due to the fact that OGRA had not approved the FRR on time) was baseless, as it was evident from the record (relevant OGRA's letter etc.) that the Appellant submitted the very petition for FRR to OGRA with delay and the same had also not been disputed by the Appellant---Said delay reflected negligence on the part of the Appellant---A listed company is under an obligation, inter alia to hold the AGM as per the law within 120 days of the close of its financial year which the Appellant had failed to do so---Appellate Bench did not find any reason to interfere with the impugned penalty imposing order passed by the Commission---Appeal filed by Gas Company was dismissed, in circumstance.

Nadeem Ahmad and Ms. Nida Zafar for Appellant.

Mehboob Ahmed, Additional Director, Adjudication-I, SECP and Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I, SECP for Respondent.

2024 C L D 1095

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

Messrs SUI SOUTHERN GAS COMPANY LIMITED---Appellant

Versus

EXECUTIVE DIRECTOR, ADJUDICATION-I, SECP, ISLAMABAD----Respondent

Appeal No.39 of 2021, decided on 20th January, 2024.

Companies Act (XIX of 2017)---

----Ss.4, 132 & 505(1)(d)---Oil and Gas Regulatory Authority Ordinance (XVII of 2002), Ss. 6(2) & 8(2)---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Appeal before the Securities and Exchange Commission of Pakistan ('the Commission')---Failure of listed company to convene Annual General Meeting (AGM)---Effect---Special law, applicability of---Scope---M/s Sui Southern Gas Company Limited ('the Gas Company ') was penalized as it failed to convene the annual general meeting (AGM) for the respective financial year despite availing extension of time by the Commission required under subsection (1) of S.132 of the Companies Act, 2017 ('the Act 2017')---Argument of the Appellant (Gas Company) was that it, time and again, approached the Commission for grant of extension due to the fact that the Appellant under the Oil and Gas Regulatory Authority Ordinance, 2002 (the 'OGRA Ordinance, 2002 '), being a special law, was required to file a petition before the Oil and Gas Regulatory Authority (OGRA) for determination of final revenue requirement (FRR) on annual basis and only thereafter it could finalize their financial statements based on OGRA's determination---Validity---Argument of the Appellant(Gas Company) that a special law prevails over the general is not untenable in the present case, given the absence of a corresponding provision in the OGRA Ordinance, 2002 vis-a-vis S.132 of the Act, 2017---Section 505(1)(d) of the Act, 2017 states that "the provisions of this Act shall apply to any other company governed by any special enactment for the time being in force except in so far as the said provisions are inconsistent with the provisions of such special enactment---This implied that S. 132 of the Act, 2017 is applicable regardless, as there is no conflict between said section and any section of the OGRA Ordinance, 2002---Moreover, S. 4 of the Act, 2017 explicitly states that the Act, 2017 holds an overriding effect---Additionally, it adheres to well-established legal principle that in the event of inconsistency between two special laws, the one enacted later takes precedence, as is the case with the Act, 2017 in the present matter---Claim of the Appellant (Gas Company) that the reason for delay in holding the AGM was due to the fact that OGRA had not approved the FRR on time was baseless, as the record indicated that the Appellant submitted the petition for FRR to OGRA with delay and the said fact had also not been disputed by the Appellant---Said delay reflected negligence on the part of the Appellant while a listed company is under an obligation, inter alia, to hold the AGM as per the law within 120 days of the close of its financial year which the Appellant had failed to do so---Appellate Bench did not find any reason to interfere with the Impugned order---Appeal filed by the Gas Company was dismissed.

Nadeem Ahmad and Ms. Nida Zafar for Appellant.

Mehboob Ahmed, Additional Director, Adjudication-I, SECP and Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I, SECP for Respondent.

2024 C L D 1118

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

PAKISTAN POVERTY ALLEVIATION FUND---Appellant

Versus

COMMISSIONER-COMPANY LAW, SECP---Respondent

Appeal No.3(14)Misc./ABR of 2023, decided on 22nd January, 2024.

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

----S. 33---Associations with Charitable and Not for Profit Objects Regulations, 2018, Regln. 7, clause (xvi)---Appeal before the Securities and Exchange Commission of Pakistan ('the Commission')---Maintainability---Prior approval of the Commission for appointment of the Chief Executive of the Company---Refusal letter issued by the Securities and Exchange Commission of Pakistan, assailing of---Appellant/Company was aggrieved of the refusal letter ('the impugned letter') sent by the Director, Company Law Division, in response to an application whereby the Appellant sought prior approval of the Securities and Exchange Commission of Pakistan ('the Commission') for appointment of the Chief Executive of the Appellant / Company---Record revealed that Appellant / Company had filed two constitutional petitions before the High Court but to no avail; it was argument of Appellant/Company that question of maintainability had already been determined and that no hearing opportunity had been provided to the Appellant by the Director, Company Law Division before issuing the impugned letter while the said officer of the Commission went beyond the scope of the Appellant's application, which (otherwise) was merely an application to seek prior approval for appointment of the Chief Executive of the Appellant / Company in terms of cl. (xvi) of Regln. 7 of the Associations with Charitable and Not-for-Profit Objects Regulations, 2018, and the Director issued determination under the Public Sector Companies (Corporate Governance) Rules, 2013 which tantamount to treating the Appellant a public sector company---Held, that Appellant in both constitutional petitions had also arrayed the concerned ministries of the Government of Pakistan; which showed that the matter at hand involved stakes of the relevant ministry/division as well, which had also been confirmed by the Appellant---Thus, matter at hand could not be treated as an order of the Commission---Appellate Bench referred the same to the Divisional Head/Executive Director, Licensing and Registration Division (formerly Company Law Division) of the Commission, for decision through a speaking order, in accordance with law, after granting opportunity of hearing to all the parties concerned---Appeal filed by the company was disposed of accordingly.

Feisal Hussain Naqvi, Advocate Supreme Court for Appellant.

2024 C L D 1167

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

KASB SECURITIES LIMITED---Appellant

Versus

DIRECTOR/HEAD OF DEPARTMENT, MSRD-SECP---Respondent

Appeal No.17 of 2014, decided on 31st January, 2024.

Securities and Exchange Ordinance (XVII of 1969)---

----Ss. 6(1) & 22---Stock Exchange Members (Inspection of Books and Record) Rules, 2001, Rr. 3 & 4---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Appeal before the Securities and Exchange Commission of Pakistan---Provisions of relevant laws, non-compliance of---Post acquisition and merger of the company---Scope and effect---Aggrieved of the penalty imposing order along with certain directions in wake of inspection report/proceedings, the company (KASB Securities Limited) filed an appeal; post filing of appeal appellant underwent acquisition and merge into its successor entity (AKD Securities Limited)---Submission of the appellant was that the impugned order was damaging for the reputation of its (appellant's) successor entity, inter alia, for the reason that the present appeal had been fixed after about eleven years of filing---Validity---Appellant had conceded before the Bench that under the law its successor entity was responsible for the liabilities of the appellant---Submission of the appellant (that the impugned order was damaging for the reputation of its successor entity) was not convincing as the record clearly suggested that the present appeal was filed by the appellant (KASB Securities Limited) more than a decade ago (in 2014) against the impugned order, which post, acquisition and merger, was now represented by successor entity (AKD Securities Limited)---Fact that the impugned order and the present appeal were on record at the time acquisition and merger took place made it amply clear that the successor entity was in knowledge of the penalty/ directions imposed/issued vide the impugned order and pending appeal there against---Moreover, the contention of the appellant that the present appeal was fixed after eleven years of filing was also not correct as record showed that previously, the present appeal was fixed for hearing on four dates---Bench did not find any reason to interfere with the impugned order---Appeal was dismissed, in circumstances.

Muhammad Farid Alam, Chief Executive for Appellant.

Hammad Javed, Additional Director, Adjudication-I, SECP.

Raja Farukh Ahmad, Additional Joint Director, Adjudication-I, SECP.

Muhammad Faisal, Assistant Director, Adjudication-I, SECP.

2024 C L D 1225

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

MAZHAR-UL-HAQ SIDDIQUI---Appellant

Versus

HOD, ADJUDICATION DEPARTMENT-I, SECP---Respondent

Appeal No.116 of 2021, decided on 16th January, 2024.

(a) Companies Act (XIX of 2017)---

----Ss. 134 & 136---Companies (Postal Ballot) Regulations 2018, Regln.8---Extraordinary General Meeting (EOGM), holding of---Contravention, allegation of---Jurisdiction of Securities and Exchange Commission of Pakistan (SECP)---Scope---Securities and Exchange Commission of Pakistan (SECP) penalized the Chairman of Board of Directors of Network Limited /Company, being Chairman of the EOGM (Appellant) on complaints of three members of the Company (the Complainants)---Allegation levelled by the complainants was that the Appellant had not complied with the requirements of Companies (Postal Ballot) Regulations, 2018 ('the Postal Regulations')---Appellant raised objection with respect to jurisdiction of the Commission to entertain the complaints challenging the proceedings of the EOGM submitting that the proceedings of the EOGM had never been challenged before the Court of competent jurisdiction---Validity---Under S. 136 of Companies Act, 2017 ('the Act, 2017'), the power to declare the proceedings of a general meeting invalid lie with the Court but, in the present case, the complainants approached the Commission---Though jurisdictional error is always fatal to any legal proceedings and a coram non judice order has no sanctity in eyes of the law, however, the present appeal was preferred against the impugned order passed under S. 134 of the Act, 2017, whereunder penalty was imposed on the Appellant for contravening the provisions of S. 134 of the Act and Regulations made thereunder---Hence, the contention of the appellant that the impugned order was passed without jurisdiction was not tenable and the impugned order did not suffer from any jurisdictional error---Appeal was disposed of.

(b) Companies Act (XIX of 2017)---

----Ss.2(66), 134, 143, 144, 145 & 479---Companies (Postal Ballot) Regulations, 2018, Regln. 8---Extraordinary General Meeting (EOGM), non-adjournment of---Contraventions, allegation of---Securities and Exchange Commission of Pakistan (SECP) penalized the Chairman of Board of Directors of Network Limited /Company, being Chairman of the EOGM (Appellant) on complaints of three members of the Company (the complainants)---Allegation levelled against the appellant was that it had not adjourned the meeting in terms of Regln.8 of the Companies (Postal Ballot) Regulations, 2018 ('the Postal Regulations')---Contention of the appellant was that S. 145 of the Companies Act, 2017, did not mandate adjournment of the meeting when a poll was demanded and that Regln. 8 of the Regulations, 2018 was contradictory to S. 145 of the Act, 2017 as such the same could not override the primary law---Validity---Admittedly, the notice was duly issued by the Company to hold the EOGM for voting to be held, inter alia, on agenda (as item # 3) pertaining to reversal of the decision of the Board whereby FD Shares Registrar was appointed---It was also an admitted fact that on a demand of poll through postal ballot, the appellant authorized voting to be conducted through postal ballot, however, the same was done on the day of the meeting (i.e. August 22, 2020)---Record (outcome of the voting) showed that 37.79% votes were cast against the resolution and thus special resolution to reverse the mentioned decision of the Board was not passed, as under Cl. (66) of S.2 of the Act, 2017, a special resolution had to be passed by a majority of three-fourth of such members of the company entitled to vote as were present in person or by proxy or vote through postal ballot at a general meeting---Thus, the imposition of penalty was not justified---Appellate Bench cancelled the penalty imposed on the appellant vide the Impugned Order---Appeal was allowed circumstances.

(c) Companies Act (XIX of 2017)---

----Ss.134, 143, 144, 145 & 479---Companies (Postal Ballot) Regulations 2018, Regln. 8---Holding of Extraordinary General Meeting (EOGM), non-adjournment of---Contraventions, allegation of---Securities and Exchange Commission of Pakistan (SECP) penalized the Chairman of Board of Directors of Network Limited/Company, being Chairman of the EOGM (Appellant) on complaints of three members of the Company (the complainants)---Allegation levelled against the appellant was that it had not adjourned the meeting in terms of Regln. 8 of the Companies (Postal Ballot) Regulations, 2018 ('the Postal Regulations')---Contention of the appellant was that it was a matter of record that the Company showed its willingness to hold another meeting but the Commission, despite asking, did not issue any guidance to hold a fresh poll---Validity---As the Company had sought guidance and offered the Commission to hold another meeting in matter-in-question but the Commission did not issue any such instructions, thus, the imposition of penalty was not justified---Appellate Bench cancelled penalty imposed on the appellant vide the Impugned Order---Appeal was allowed, in circumstances.

For the Appellants:

Ijaz Ahmed, Sarfraz Ahmed and Mohsin Naseem, Company Secretary.

For the Respondent:

Amir Saleem, Additional Director, Adjudication-I, SECP.

Muhammad Anwar Hashmi, Additional Joint Director, Adjudication-I, SECP.

Sardar Sohaib Amin, Assistant Director, Adjudication-I, SECP.

2024 C L D 1272

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

Messrs CRESCENT STAR INSURANCE LIMITED---Appellant

Versus

SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN---Respondent

Appeal No.42 of 2016, decided on 21st November, 2023.

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

----Ss. 45, 46 & 158---Companies Ordinance (XLVII of 1984) [since repealed], S. 4---Issuance of ordinary shares---Approval of the Securities and Exchange Commission of Pakistan ('the Commission') with certain conditions)---Penalty for false statement in documents (books, records, accounting, reporting etc.)---Commission granted approval of issuance of ordinary shares to the Appellant (Insurance Company) subject to the condition that the issuance of shares shall be in cash and the Appellant was required to submit bank statements to the Commission upon receipt of the subscription money from the shareholders and underwriters to the issue---Commission penalized the Appellant (Insurance Company) as inspection of the Appellant revealed that apart from subscription (of about one-fourth shares) from general public, remaining (about three-fourth) right shares were issued to the underwriters (three different companies); Inspection report revealed that the Appellant's bank account showed that on one date an amount (of Rs. 230 million) was credited and debited simultaneously eleven times and Rs. 0.573 million and 10.246 million were also credited on the same day ; while debit and credit transactions showed receipt of Rs.230 million against the subscription of right shares ,however, each transaction was credit and debited sequentially and the bank balance remained unchanged---Contention of the Appellant was that the impugned order was hit by the principle of double jeopardy as by an earlier order, passed about two years ago, it had already been penalized---Validity---Record revealed that by virtue of earlier order, the Appellant, was penalized on account of non-compliance of another statutory requirement (to maintain the minimum paid-up capital), whereas, the impugned order was a culmination of the Show Cause Notice having been issued under Ss. 45 & 46 read with S.158 of the Insurance Ordinance, 2000---Impugned Order had been passed under the provisions of the Insurance Ordinance which were not the subject of the earlier order dated---Contention of the Appellant was misplaced as mere mentioning of facts in an earlier order did not in any manner operate as an estoppel to invoke the relevant provisions of law on account of a contravention---Appellate Bench upheld the impugned order passed by the Commission---Appeal, filed by (Insurance) Company, was dismissed, in circumstances.

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

----Ss. 45, 46 & 158---Companies Ordinance (XLVII of 1984) [since repealed], S. 4---Issuance of ordinary shares---Approval of the Securities and Exchange Commission of Pakistan ('the Commission') with certain conditions)---Penalty for false statement in documents (books, records, accounting, reporting etc.)---Contention of the Appellant (Insurance Company) that the impugned order failed to establish "mis-statement" in terms of Ss. 45 & 46 of the Insurance Ordinance, 2000---Held, that said contention was mis-conceived as the Appellant had not denied any aspect of the transactions nor the manner in which they were reported in the financial record---Appellate Bench upheld the impugned order passed by the Commission---Appeal, filed by (Insurance) Company, was dismissed, in circumstances.

(c) Constitution of Pakistan---

----Art. 10-A---Insurance Ordinance (XXXIX of 2000), Ss. 45, 46 & 158---Companies Ordinance (XLVII of 1984) [since repealed], S.4---Issuance of ordinary shares---Approval of the Securities and Exchange Commission of Pakistan ('the Commission') with certain conditions)---Penalty for false statement in documents (books, records, accounting, reporting etc.)---Opportunity of fair trial given---Contention of the Appellant (Insurance Company) that the impugned order violated Art. 10-A of the Constitution was without any basis as it was evident from the record that Show-Cause Notice (SCN) was, inter alia, also issued to the directors of the Appellant and the ingredients of a fair trial had been fulfilled in the SCN proceedings---Appellate Bench rightly upheld the impugned order passed by the Commission---Appeal, filed by (Insurance) Company , was dismissed.

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

----Ss. 45, 46 & 158---Companies Ordinance (XLVII of 1984) [since repealed], S. 4---Issuance of ordinary shares---Approval of the Securities and Exchange Commission of Pakistan ('the Commission') with certain conditions)---Penalty for false statement in documents (books, records, accounting, reporting etc.)---Appellant (Insurance Company) was warned through the impugned order by the Commission---Contention of the Appellant that the approval granted by the Commission did not prohibit receiving of funds in tranches---Validity---Said contention had no relevance to the matter at hand as one of the underlying conditions for grant of approval by the Commission was that the issuance of shares shall be in cash---Appellant failed to comply with the said condition and had not offered any cogent reasoning that the mentioned condition was duly met in letter and spirit by the Appellant and was thus, inter alia, warned vide the impugned order---Appellate Bench rightly upheld the impugned order passed by the Commission---Appeal, filed by (Insurance) Company, was dismissed.

Saadat Ali Saeed for Appellant.

Hammad Javed, Additional Director, Adjudication-I, SECP.

Shafique Ur Rehman, Additional Joint Director, Adjudication-I, SECP.

Raja Farukh Ahmad, Additional Joint Director, Adjudication-I, SECP.

2024 C L D 1311

[Securities and Exchange Commission of Pakistan]

Before Abdul Rehman Warraich and Mujtaba Ahmad Lodhi, Commissioners

Messrs TPL LIFE INSURANCE LIMITED---Appellant

Versus

DIRECTOR/HOD, ADJUDICATION-I---Respondent

Appeal No.13 of 2023, decided on 24th October, 2023.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 12(1)(d), 12(1) (e), 12(4), 12 (5)(a), 45(6) & 156---Appeal before the Securities and Exchange Commission of Pakistan---Provisions under the Insurance Ordinance, 2000, non-compliance of---Scope and effect---Force majeure events---Scope---Securities and Exchange Commission of Pakistan ('the Commission') penalized Insurance Company for non-compliance of statutory requirements under the Insurance Ordinance, 2000---Stance of Appellant (Insurance Company) was that their non-compliance was due to force majeure events and the impact of the COVID-19 pandemic---Validity---Stance of the Appellant for their non-compliance with the Insurance Ordinance, 2000, did not adequately justify their violations---Penalty was rightfully imposed, given the apparent violations of the Insurance Ordinance, 2000, specifically the improper maintenance of records, failure to provide complete data and claims and the unauthorized shifting of records without Board approval---It is essential for all entities to adhere to regulatory requirements to maintain the integrity and trustworthiness of their operations---Extenuating circumstances and future precautionary measures taken by the Appellant did not absolve the Appellant from the violations---Penalty would serve as a reminder to the Appellant and others to adhere to the provisions of the Insurance Ordinance, 2000, and to maintain proper records, irrespective of unforeseen events and challenges such as force majeure events and pandemics---Appellate Bench acknowledged the difficulties faced by the Appellant but emphasized that regulatory compliance remained a fundamental obligation---Appellant should take impugned decision as an opportunity to review and strengthen their processes to ensure future adherence to the Insurance Ordinance, 2000---No reason to interfere in the impugned order by the Appellate Tribunal was found---Appeal filed by Insurance Company, was dismissed.

Kamran Rafique - Compliance Officer and Shah Zaman - Manager Account and Finance for the Appellant.

Hammad Javed, Additional Director, Adjudication-I, Securities and Exchange Commission of Pakistan, Shafiq-ur-Rehman, Additional Joint Director, Adjudication-I, SECP and Raja Farukh Ahmad Additional Director, Adjudication-I, SECP for the Respondents.

2024 C L D 1381

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs H.G. MARKETS (PRIVATE) LIMITED---Appellant

Versus

COMMISSIONER-SMD, SECP and another---Respondents

Appeal No.142 of 2020, decided on 5th September, 2023.

(a) Futures Market Act ( XIV of 2016)---

----Ss.57, Cls. (a) to (f), 123(8) & 123(10)---Commodity Exchange and Futures Contracts Rules, 2005, R. 20 & Sched.---Provisions relating to standards of conduct, non-compliance of---Whether broker fulfilled its duties diligently towards its customers---Appellant (a futures broker of the Pakistan Mercantile Exchange /PMEX)was penalized by Securities and Exchange Commission of Pakistan ('the Commission')---Allegation levelled by the complainants was that they had given discretionary authority to the employees of the appellant to trade in their accounts and the employees of the appellant indulged in excessive trading with the sole objective of generating commissions, resultantly they lost all or a significant part of their investments---Validity---Nature of relationship between the complainants and the appellants, as per account opening forms, showed that out of all the complainants, five accorded Discretionary Trading Authority (DTA) to the appellant for trading in their accounts whereas two did not give DTA to the Appellant, however, they both did share their login IDs and passwords with the appellant---Pertinently, in general all the Complainants had alleged loss caused to them by the trading carried out by the traders/employees of the Appellant, however, there was no documentary evidence on record showing that the complainants categorically instructed the appellant regarding stoppage of trading revocation of DTA and/or change of login ID and password, or any other written instruction to the effect which could be deemed as a clear instruction from the complainants to the appellant---On the contrary, there was also nothing produced by the appellant in support of its defense which could suggest that why the appellant (through its traders/employees) kept trading and kept incurring losses without seeking express instructions from the complainants---In the present case, the appellant failed to organize and control internal affairs in a responsible manner or employ fairness, due skill and care towards its customers i.e. the Complainants---There could be no justification for obtaining the login IDs and passwords of the two clients/ complainant, in absence of DTAs as the appellant was required to comply with the relevant provisions of the standards of conduct as envisaged under S. 57 of the Futures Market Act, 2016 ('Act 2016') read with Sched. to the Commodity Exchange and Futures Contract Rules, 2005 ('Rules, 2005')---Moreover, obtaining of DTAs from the customers did not absolve a regulated person i.e. the appellant from fulfilling the statutory requirements and maintaining the conduct at all times, as prescribed under the law---On the other hand, the primary document determining the nature of relationship between the appellant and the Complainants i.e. account opening forms, included disclosures in Urdu language as well and the same had been signed by all complainants---The DTAs given by the Complainants, except two, had not been signed by the Complainants during the Show-Cause Notice proceedings and apart from their statements alleging losses, no other documentary proof regarding any instruction, for instance correspondence with the appellant, had been provided by the Complainants in support of their claims against the appellant---Appellate Bench modified the impugned order to the extent that the penalty imposed upon the appellant vide impugned order was reduced to Rs.3,500,000/---Appeal was disposed of accordingly.

(b) Futures Market Act ( XIV of 2016)---

----Ss. 57, Cls. (a) to (f), 123(8) & 123(10)---Provisions relating to standards of conduct , non-compliance of---Appellant (a futures broker of the Pakistan Mercantile Exchange /PMEX)was penalized by Securities and Exchange Commission of Pakistan ('the Commission')---Allegation levelled by the complainants was that they had given discretionary authority to the employees of the appellant to trade in their accounts and the employees of the appellant indulged in excessive trading with the sole objective of generating commissions resultantly they lost all or a significant part of their investments---Contention of the appellant was that the statements of the complainants had no evidentiary value merely because of the reason that the same were not subjected to cross-examination---Validity---There were complaints and statements of the complainants on the one hand and on the other there were statements of the traders/employees of the appellant, who were given DTAs/login IDs and passwords by the complainants---Contention of the appellant was misconstrued as cross-examination of witnesses was not mandatory in Show-Cause Notice proceedings---Moreover, the said contention of the appellant appeared to be self-contradictory in the context of the statements of the traders/employees of the appellant who were also not subject to cross-examination and yet mere statements of the same were wrongly termed by the appellant as ones carrying evidentiary value to support the stance of the appellant---Appellate bench modified the impugned order to the extent that the penalty imposed upon the appellant vide impugned order was reduced to Rs.3,500,000/---Appeal was disposed of accordingly.

(c) Futures Market Act (XIV of 2016)---

----Ss. 57, Cls. (a) to (f), 123(8) & 123(10)---Provisions relating to standards of conduct, non-compliance of---Whether broker fulfilled its duties diligently towards its customers---Appellant (a futures broker of the Pakistan Mercantile Exchange (PMEX) was penalized by Securities and Exchange Commission of Pakistan ('the Commission'))---Allegation levelled by the complainants was that they had given discretionary authority to the employees of the appellant to trade in their accounts and the employees of the appellant indulged in excessive trading with the sole objective of generating commissions resultantly, they lost all or a significant part of their investments---Record revealed that in case of two complainants who did not give Discretionary Trading Authority (DTA) to the Appellant, the latter kept trading without obtaining the DTA, or to say the least, written instructions thereof, inter alia, resulting in losses suffered by the said complainants, which comprised of approximately two-thirds of the total loss suffered by all the Complainants and commissions of the appellant---Even in the case of the five Complainants who gave the DTA to the appellant, appellant failed to establish as to what mechanism was adopted to obtain their verbal instructions, as it had been alleged by the complainants that despite repeated attempts, they were unable to establish contact with the traders/employees of the appellant and hence, incurred huge losses---Obtaining a DTA placed a higher fiduciary responsibility on a broker and sending emails and text message notifications pertaining to trading activity did not absolve the broker from his duties, particularly where nothing was available on record to show any effort/action by the appellant, despite losses incurred by the complainants---Appellate bench modified the impugned order to the extent that the penalty imposed upon the appellant vide impugned order was reduced to Rs.3,500,000/---Appeal was disposed of accordingly.

(d) Futures Market Act (XIV of 2016)---

----Ss. 57, Cls. (a) to (f), 123(8) & 123(10)---Commodity Exchange and Futures Contracts Rules, 2005, R. 20 & Sched.---Provisions relating to standards of conduct , non-compliance of---Whether broker fulfilled its duties diligently towards its customers ---Appellant (a futures broker of the Pakistan Mercantile Exchange/PMEX) was penalized by Securities and Exchange Commission of Pakistan ('the Commission')---Allegation levelled by the complainants was that they had given discretionary authority to the employees of the appellant to trade in their accounts and the employees of the appellant indulged in excessive trading with the sole objective of generating commissions, resultantly they lost all or a significant part of their investments---Validity---Pertinently, the Commission, in exercise of powers conferred under Commodity Exchange and Futures Contracts Rules, 2005 ('the Rules 2005') issued directions (along with approved template of a Discretionary Trading Authority (DTA) both in English and Urdu languages, to be executed on a non-judicial stamp paper) dated January 23, 2017 and April 28, 2017, inter alia, to all the brokers of PMEX, with respect to DTAs wherein, inter alia, it was mentioned that the loss threshold of 25% of the investment amount would trigger revocation of the DTA and the discretionary mandate would continue only upon obtaining a fresh DTA---However, as said directions were not the subject matter of the Show-Cause Notice (SCN) or the impugned order, nor the same had been discussed during the hearing in the instant appeal, therefore, no findings in that respect were rendered in present order---Appellate bench modified the impugned order to the extent that the penalty imposed upon the appellant vide impugned order was reduced to Rs.3,500,000/---Appeal was disposed of accordingly.

(e) Futures Market Act (XIV of 2016)---

----Ss. 57, Cls. (a) to (f), 123(8) & 123(10)---Provisions relating to standards of conduct, non-compliance of---Whether broker fulfilled its duties diligently towards its customers---Appellant (a futures broker of the Pakistan Mercantile Exchange /PMEX) was penalized by Securities and Exchange Commission of Pakistan ('the Commission')---Allegation levelled by the complainants was that they had given discretionary authority to the employees of the appellant to trade in their accounts and the employees of the appellant indulged in excessive trading with the sole objective of generating commission, resultantly they lost all or a significant part of their investments---Contention of the appellant was that S. 57(d) of the Futures Market Act, 2016 ('the Act 2016') did not require the appellant to seek instructions from the customer in writing---Validity---Contention of the appellant was misconceived as the provision under S.57(d) of the Act, 2016 did not specify any other mode, and thus must be read in the context of overall scheme of law and the functions entrusted to the Commission where investor protection was of primary importance---Penalty imposed on the appellant vide impugned order was, inter alia, on account of contravention of clauses (a), (b), (c), (f) and (i) of S.57 of the Futures Market Act, 2016, and not under clause (d) of the S. 57(d) of the Futures Market Act, 2016---However, it could be argued that excessive trading had a subjective connotation but the said argument could have carried weight had there been recording of circumstances and investment objectives of the customer by the appellant as envisaged under S.57(d) of the Futures Market Act, 2016---Appellate Bench modified the impugned order to the extent that the penalty imposed upon the appellant vide impugned order was reduced to Rs.3,500,000/----Appeal was disposed of accordingly.

(f) Futures Market Act ( XIV of 2016)---

----Ss.57, Cls. (a) to (f), 123(8) & 123(10)---Commodity Exchange and Futures Contracts Rules, 2005, R. 20 & Sched.---Provisions relating to standards of conduct, non-compliance of---Whether broker fulfilled its duties diligently towards its customers---Appellant (a futures broker of the Pakistan Mercantile Exchange /PMEX)was penalized by Securities and Exchange Commission of Pakistan ('the Commission')---Allegation levelled by the complainants was that they had given discretionary authority to the employees of the appellant to trade in their accounts and the employees of the appellant indulged in excessive trading with the sole objective of generating commissions, resultantly they lost all or a significant part of their investments---Contention of the appellant was that Cls. 1(a) and (b) of the Schedule to Commodity Exchange and Futures Contracts Rules, 2005 ('the Rules, 2005') were not attracted---Held, that said contention was misconstrued as both the said provisions were part of the code of conduct for brokers under the Rules, 2005 and the same were attracted in the present case where the subject matter involved determination of fairness, due skill and care employed by the appellant towards the complainants as they were customers of the appellant, in light of the underlying contracts i.e., the account opening forms, and not customers of PMEX, where trading was carried out and funds were kept to ensure investor protection---Regarding Cls. 2(d) of the Schedule to the Rules, 2005, though account opening forms, Dictionary Trading Authorities (DTAs) and other documents containing risk disclosures were obtained by the Appellant, however, to ascertain the investment objective and risk tolerance, which varied from person to person, no evidence had been placed on record by the appellant (especially when it was being acknowledged that it was a high-risk market) to show investment objectives of the complainants in support of its contention that no case of excessive trading was made out---Appellate bench modified the impugned order to the extent that the penalty imposed, upon the appellant vide impugned order was reduced to Rs. 3,500,000/---Appeal was disposed of accordingly.

Feisal Hussain Naqvi, Advocate Supreme Court, Ahmad Abdul Rehman, Hussain Gulraze Mir, Chief Executive, Rashid Ali and Mobeen Gilani for Appellant.

Hammad Javed, Additional Director, Adjudication-I, SECP, Muhammad Faisal, Assistant Director, Adjudication-I, SECP and Syed Asif Ali, Additional Joint Director, Prosecution and Civil Litigation Department, SECP for Respondents.

2024 C L D 1403

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rahman Warraich, Commissioner

Messrs STATE LIFE INSURANCE CORPORATION OF PAKISTAN---Applicant

Versus

COMMISSIONER INSURANCE and thers---Respondents

Review Application No.04 of 2017, in Appeal No.94 of 2016 decided on 15th September, 2023.

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

----Ss.76 & 156---Order passed by Appellate Bench of Securities and Exchange Commission of Pakistan---Review---Scope State Life Insurance Corporation of Pakistan ('the Applicant') sought review against the order passed by the Appellate Bench of the Securities and Exchange Commission of Pakistan ('the Commission')---Validity---Pertinently, the applicant, at any stage of the proceedings, did not contest the fact(s) taken in the instant Review Application and had only raised question with respect to jurisdiction of the Commission to pass the Order in Original---Reliance of the applicant on Circular 14 of 2000, dated September 23, 2006, was misplaced for the reason that for the first time at review stage, it was raised---Show-cause notice was issued on June 06, 2016 and at that point in time Circular No. 05 of 2016, was already in field as the same was issued on January 26, 2016, and later its annexure was amended vide Circular No. 27 of 2020 (dated September 04, 2020)---In said regard, the Bench had adequately dealt with the applicability of Circular No. 05 of 2016 in para 11 of the impugned order---Applicant admitted that higher cash surrender value was shown to the policy holder due to a malfunction of a software program and inter alia for the said reason the direction to compensate the loss suffered by the policyholder was issued and penalty under Ss. 76 & 156 of the Insurance Ordinance, 2000, was imposed vide impugned order---Bench had already determined the question of jurisdiction, in view of the facts of present matter---Applicant failed to highlight any anomaly or illegality in the Impugned order---Review Application was dismissed, in circumstances.

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

----Preamble---Insurance matters---Securities and Exchange Commission of Pakistan---Powers---Insurance Ordinance, 2000 as a whole empowers the Securities and Exchange Commission of Pakistan as a regulator inter alia to take all necessary steps to ensure the interest of policyholders.

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

----Ss.2(xvi), 122(3), 125 & 127---Securities and Exchange Commission of Pakistan Act (XLII of 1997), Preamble---Disputes between the insurer and policyholder---Securities and Exchange Commission of Pakistan---Jurisdiction---Scope---Insurance Ombudsman---Powers---Insurance Company contended that S.122(3) of the Insurance Ordinance, 2000, explicitly barred Securities and Exchange Commission of Pakistan ('the Commission') to take cognizance of disputes between the insurer and policyholder---Validity---Section 122(3) of the Insurance Ordinance, 2000, bars the jurisdiction of a 'Court' (as defined in clause (xvi) of S. 2 of the Insurance Ordinance, 2000) and not the Commission---Commission is empowered to entertain the complaints of policyholders under the provisions of the Insurance Ordinance, 2000, and the Securities and Exchange Commission of Pakistan Act, 1997---Pertinently, Ss. 125 & 127 of the Insurance Ordinance, 2000 deal with the appointment, jurisdiction, functions and powers of the Insurance Ombudsman, respectively, which does not in any manner intervene with the powers of the Commission as envisaged under the law.

Waqas Asad Sheikh for Applicant.

Hammad Javed, Additional Director, Adjudication-I, SECP and Shafique ur Rehman, Additional Joint Director, Adjudication-I, SECP for Respondents.

Athar Ali Shah (legal heirs of Syed Aijaz Ali Shah) for Respondents.

2024 C L D 1412

[Securities and Exchange Commission of Pakistan]

Before Abdul Rehman Warraich and Aamir Khan, Commissioners

MAQSOOD AHMED---Appellant

Versus

COMMISSIONER-CRD, SECP and another---Respondents

Appeal No.70 of 2023, decided on 15th September, 2023.

(a) Companies Act (XIX of 2017)---

----Ss.464(4)(b), 464(5) & 480(b)---Companies Ordinance (XLVII of 1984 ) [since repealed], S.468---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Registration of document, refusal of---Order passed by Securities and Exchange Commission of Pakistan ('the Commission'), finality of---Appeal before the Appellate bench of the Commission---Maintainability ---Appeal before the Appellate Bench of the Commission was filed against an order having been passed by the Commission in year 2023, under S.464(4)(b) of the Companies Act, 2017, setting aside the order-in-appeal of the Registrar of Companies passed under S. 468(4)(a) of the erstwhile Companies Ordinance, 1984, ('the repealed Ordinance 1984') and order-in-original passed in year 2015 by the Joint Registrar under the repealed Ordinance 1984---Contention of the Appellant that Ss. 454(4)(b) & 480(b) of the Companies Act 2017 ('the Act 2017') were pari materia---Validity---It is imperative to note that S. 464 of the Act, 2017 [with the exception of its subsections (6) & (7)] is almost similar to S. 468 of the repealed Ordinance, 1984---Moreover, subsection (5) of S.468 of the repealed Ordinance, 1984 is identical to S.464(5) of the Act, 2017, as the former also renders finality to an order passed under subsection (4) of S. 468 thereof---Contention of the Appellant was misplaced for the reason that unlike S. 480(b) of the Act, 2017 (which is exclusively a remedial provision) S. 454(4)(b) of the Act, 2017 (like S. 468 of the repealed Ordinance, 1984) is an all-encompassing provision, inter alia, providing two statutory rights of appeal under S. 464(4) before rendering finality to an order of the Commission in terms of S.464(5) thereof---Pertinently, two rights of appeal have been provided under S.480 of the Companies Act, 2017, and the same (unlike S.464 of the Companies Act, 2017) does not contain any provision which can be construed as rendering finality to an order passed thereunder---Present appeal has been preferred against the final order of the Commission passed under S.464(4)(b) of the Companies Act, 2017 , which by virtue of explicit legislative dictum, shall not be called in question before any court or authority---Appellate Bench was of the view that subsection (5) of S.464 of the Companies Act, 2017, expressly barred calling in question final order of the Commission passed under subsection (4) of S.464 of the Companies Act, 2017---Appeal, being non-maintainable, was dismissed.

(b) Companies Act (XIX of 2017)---

----Ss.464(4)(b), 464(5), 480(b) & 481---Companies Ordinance (XLVII of 1984) [since repealed], S.468---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S. 33---Registration of document, refusal of---Order passed by Securities and Exchange Commission of Pakistan ('the Commission')---Appeal before the Appellate Bench of the Commission---Maintainability ---Finality of an order passed by the Commission---Effect---Appeal before the Appellate Bench of the Commission was filed against an order having been passed by the Commission in year 2023, under S.464(4)(b) of the Companies Act, 2017, setting aside the order-in-appeal of the Registrar of Companies passed under S.468(4)(a) of the erstwhile Companies Ordinance, 1984, ('the repealed Ordinance, 1984') and order-in-original passed in year 2015 by the Joint Registrar under the repealed Ordinance, 1984---Contention of the Appellant was that Ss. 454(4)(b) & 480(b) of the Companies Act, 2017 ('the Act, 2017') were pari materia---Validity---The analogy drawn by the Appellant between the said two provisions suffered from misinterpretation in view of S.481 of the Act, 2017, whereunder only the orders passed under S.480 of the Act, 2017 were amenable to the appellate jurisdiction of the Bench, in terms of S.33 of the Securities and Exchange Commission of Pakistan Act, 1997---Bare reading of S.481 of the Act, 2017 revealed that it provides a further right of appeal before the Bench against the order passed under S.480 of the Act, 2017---Whereas, the two rights of appeal provided under S.464(4) of the Act, 2017 are to be read in conjunction with subsection (5) of S.464 of the Act, 2017---Had the Legislature intended to provide this right, the same would have been clearly expressed in S.481 of the Companies Act, 2017 where statutory right of an appeal is available before the Bench exclusively against orders passed under S.480 of the Companies Act, 2017---Present appeal had been preferred against the final order of the Commission passed under S.464(4)(b) of the Companies Act, 2017, which by virtue of explicit legislative dictum, shall not be called in question before any Court or authority---Appellate Bench was of the view that subsection (5) of S.464 of the Companies Act, 2017 expressly barred calling in question final order of the Commission passed under subsection (4) of S.464 of the Companies Act, 2017---Appeal, being non-maintainable, was dismissed.

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

----S. 33---Companies Act (XIX of 2017), Ss.464(4)(b), 464(5) & 480(b)---Companies Ordinance (XLVII of 1984) [since repealed], S.468---Registration of document, refusal of---Order passed by Securities and Exchange Commission of Pakistan ('the Commission')---Appeal before the Appellate bench of the Commission---Maintainability---Finality to an order passed by the Commission---Effect---Appeal before the Appellate Bench of the Commission was filed against an order having been passed by the Commission in year 2023, under S.464(4)(b) of the Companies Act, 2017, setting aside the order-in-appeal of the Registrar of Companies passed under S.468(4)(a) of the erstwhile Companies Ordinance, 1984, ('the repealed Ordinance, 1984') and order-in-original passed in year 2015 by the Joint Registrar under the repealed Ordinance, 1984---Contention of the appellant was that Ss. 454(4)(b) & 480(b) of the Companies Act, 2017 ('the Act, 2017') pari materia---Validity---Bare perusal of S.33 of the Securities and Exchange Commission of Pakistan Act, 1997 ('the Act, 1997') transpires that the use of words "Except as otherwise provided" appearing in the beginning of the said provision are of utmost importance as the same signify the intent of the Legislature with respect to appellate jurisdiction of the Bench; the said words when read in conjunction with subsection (5) of S.464 of the Companies Act, 2017, make it unequivocal that the right of appeal under S.33 of the Act is available to an aggrieved person only where it has not been expressly taken away by the Legislature which is essentially the subject matter in the present Appeal as the same has been preferred against the final order of the Commission passed under S.464(4)(b) of the Companies Act, 2017, which, by virtue of explicit legislative dictum, shall not be called in question before any court or authority---Appellate Bench was of the view that subsection (5) of S.464 of the Companies Act, 2017, expressly barred calling in question final order of the Commission passed under subsection (4) of S.464 of the Companies Act, 2017---Appeal, being non-maintainable, was dismissed.

(d) Companies Act (XIX of 2017)---

----Ss.10(7), 16(10)& 464(5)---Companies Ordinance (XLVII of 1984) [since repealed], S.468---Securities and Exchange Commission of Pakistan Act (XLII of 1997), S.33---Order passed by Securities and Exchange Commission of Pakistan ('the Commission')---Finality---Scope and effect---Appeal before the Appellate Bench of the Commission---Maintainability---Jurisdiction of the Civil Court / other authorities---Scope---Appeal before the Appellate Bench of the Commission was filed against an order having been passed by the Commission in year 2023, under S.464(4)(b) of the Companies Act , 2017---Contention of the appellant was that by virtue of S.464(5) of the Companies Act, 2017, only the jurisdiction of the Civil Courts and other authorities is excluded---Validity---Contention of the appellant is misconceived in the context of the overall regime of the company law as there are only three provisions in the Companies Act, 2017, i.e. Ss.10(7), 16(10) & 464(5), where orders passed by the Commission attain finality---Owing to the nature of the subject matter that all the said provisions deal with the legislative intent through use of words "shall be final and shall not be called in question before any Court or other authority" appears to be quite clear in the said provisions and, thus, the same leaves no room for any ambiguity that the connotation of the term 'final' in S.464(5) of the Companies Act, 2017, is amplified by the words "shall not be called in question before any court or other authority "---Appellate Bench was of the view that subsection (5) of S.464 of the Companies Act ,2017 expressly barred calling in question final order of the Commission passed under subsection (4) of S.464 of the Companies Act, 2017---Appeal, being non-maintainable, is dismissed.

Imtiaz Haider, Nazir Ahmad Shaheen and Maqsood Ahmed for Appellant.

Khalid Latif for Respondent No.2.

2024 C L D 1447

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

YUSRA MEDICAL AND DENTAL COLLEGE (PRIVATE) LIMITED---Appellant

Versus

OFFICER AUTHORIZED, SECP and others---Respondents

Appeal No.17(13)/Misc./ABR/2022 (Objection Case), decided on 6th February, 2024.

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

----S. 33---Appeal before the Securities and Exchange Commission of Pakistan---Maintainability---Bar contained in S. 33 of the Securities and Exchange Commission of Pakistan Act, 1997---Scope---Appellant / Company was aggrieved of the order whereby the matter was sent to the Securities and Exchange Commission of Pakistan ('the Commission') as a representation---Appellant filed an appeal under S. 33 of the Securities and Exchange Commission of Pakistan Act, 1997 ('the Act 1997') before the Appellate Bench, with, inter alia, prayer of setting aside of the Investigation Report---However, the Appellant Bench Registry declined to register the appeal in view of the bar contained in S. 33 of the Act 1997 ; in response thereof, the appellant had requested to place the matter before the Bench to decide the question of maintainability---Contention of the appellant was that the present appeal was maintainable as the impugned order went beyond the scope of the Representation Order---Validity---Record revealed that various corporate issues leading to the dispute regarding shareholding/directorship of the appellant/ company existed amongst the two rival groups in the appellant/ company and there was a multiplicity of litigation pending before the various fora---It also appeared from the record that a constitutional petition was filed by the appellant before the High Court wherein it challenged the investigation report and the said constitutional petition was dismissed by the High Court---It was evident from perusal of said self-explanatory order of the High Court that the legality of the investigation report had already been determined---Perusal of the prayer of the appellant in the present appeal clearly showed that the present appeal was merely an attempt to directly/indirectly call in question the investigation report, the fate of which had already been determined by the High Court ; thus, the same could not be questioned again before the Bench---Bench was not convinced with the submissions rendered by the appellant as the same had failed to make out a case for admissibility of the present appeal---Appeal filed by the company, being non-maintainable, was dismissed.

Zafar Mahmood, Executive Manager for Appellant.

2024 C L D 1503

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Abdul Rehman Warraich, Commissioner

Messrs STATE LIFE INSURANCE CORPORATION OF PAKISTAN---Applicant

Versus

COMMISSIONER INSURANCE and others---Respondents

Review Application No.03 of 2017 in Appeal No.58 of 2016, decided on 15th September 2023.

Insurance Ordinance (XXXIX of 2000)---

----Ss. 2(xvi), 122, 125 & 127---Order passed by the Appellate Bench of Securities and Exchange Commission of Pakistan---Review---Scope---Complaints of policyholders regarding Insurance matter---Jurisdiction of Securities and Exchange Commission of Pakistan---Messrs State Life Insurance Corporation of Pakistan sought review against the order passed by the Appellate Bench of Securities and Exchange Commission of Pakistan---Applicant (Insurance Company) contended that the Bench did not consider the fact that S.122(3) of the Insurance Ordinance, 2000, explicitly bars jurisdiction of the Securities and Exchange Commission of Pakistan to entertain the complaints of policyholders---Validity---Contention of the applicant was misconstrued, as S. 122(3) of the Insurance Ordinance, 2000, bars the jurisdiction of a Court (as defined in Cls. (xvi) of S.2 of the Insurance Ordinance, 2000, and not the Commission which is empowered to entertain the complaints of policyholders under the provisions of the Insurance Ordinance, 2000, and the Securities and Exchange Commission of Pakistan Act, 1997---Moreover, pertinently Ss. 125 & 127 of the Insurance Ordinance, 2000, deal with appointment, jurisdiction, functions and powers of the Insurance Ombudsman, respectively, which does not in any manner intervene with the powers of the Commission as envisaged under the law---In the instant matter, the applicant admitted that higher cash surrender value was shown to the policyholder due to a malfunction of a software program and inter alia for the said reason direction to compensate the loss suffered by the policyholder was issued and penalty under Ss.75 & 156 of the Insurance Ordinance, 2000, were imposed vide impugned order---As the Bench vide impugned order had already determined the question of jurisdiction in view of facts of the matter, thus the Bench was of the view that the applicant failed to highlight any anomaly or illegality in the impugned order, hence, the same did not require any interference in review jurisdiction of the Bench---Review application was dismissed, in circumstances.

Waqas Asad Sheikh for Applicant.

Hammad Javed, Additional Director, Adjudication-I, SECP, Shafique ur Rehman, Additional Joint Director, Adjudication-I, Securities and Exchange Commission of Pakistan and Muhammad Ayub (on behalf of Mst. Nazir Fatima) for Respondents.

2024 C L D 1532

[Securities and Exchange Commission of Pakistan]

Before Akif Saeed, Chairman/Commissioner and Mujtaba Ahmad Lodhi, Commissioner

Messrs CNERGYICO PK LIMITED---Appellant

Versus

COMMISSIONER-SUPERVISION DIVISION, SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN ---Respondent

Appeal No.24(14)Misc./ABR/23, decided on 6th September, 2023.

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

----Ss.33 & 34---Companies Act (XIX of 2017), S. 258---Order passed by the Securities and Exchange Commission of Pakistan ('Commission') or the Commissioner(s), assailing of---Jurisdiction---Scope---Appeal before the Appellate Bench of the Commission---Maintainability---Company filed appeal before the Appellate Bench of the Commission being aggrieved of the investigation order passed by the Commission in exercise of powers under S. 258 of the Companies Act, 2017---Submission of the Appellant was that the impugned order was an order passed by the signature of Respondent( Commissioner -Supervision Division ) for having been signed for and on behalf of the Commission, however, the same is identical to the situation where any action of one Commissioner or an authorized officer of the Commission is deemed to be an action of the Commission for all practical purposes; thus, as appeal against the order of one Commissioner lies before the Appellate Bench, hence, under S. 33 of Securities and Exchange Commission of Pakistan Act, 1997 ('the SECP Act, 1997'), the jurisdiction to hear the present Appeal lies with the Appellate Bench---Validity---Perusal of the provisions of Ss. 33 & 34 of the SECP Act, 1997, leave no doubt that an order of the Commission, passed by two or more Commissioners, is appealable before the High Court, whereas an appeal against an order of the Commission, except in matters provided therein, passed by one Commissioner or an officer authorized shall lie before the Appellate Bench---Jurisdiction of the Appellate Bench to entertain an appeal is unambiguously provided in S. 33 of the SECP Act, 1997, which in no manner should be confused with the jurisdiction of the High Court under S. 34 of the SECP Act, 1997 ---Jurisdictional error is always fatal to any legal proceedings and a coram non judice order has no sanctity in eyes of the law---Said provisions expressly provide the jurisdiction of forums to avail statutory remedy i.e. appeal, and thus leave no room for any misconception---impugned order before the Appellate Bench in the present Appeal was neither an order by one Commissioner, nor of an authorized officer; on the contrary, the impugned order was a collective decision of the Commission, presently comprising of four Commissioners, which was signed by one Commissioner, for and on behalf of the Commission, as decided vide the Commission's decision---Thus, it clearly showed that the Appellate Bench was devoid of jurisdiction to hear the present Appeal in terms of express provisions of S. 33 of the SECP Act, 1997---Thus, the Appellate Bench lacked jurisdiction to entertain the present Appeal against the impugned order passed by the Commission and in consequence thereof, the Appeal was to be returned for filing before the court of competent jurisdiction---Appeal was disposed of accordingly.

Abdul Ahad Nadeem for Appellant.

2024 C L D 193

[Supreme Court of Pakistan]

Present: Munib Akhtar, Shahid Waheed and Musarrat Hilali, JJ

Mehr NOOR MUHAMMAD---Appellant

Versus

NAZIR AHMED---Respondent

Civil Appeal No.317-L of 2011, decided on 6th November, 2023.

(On appeal against the judgment dated 31.03.2008 passed by the Lahore High Court, Bahawalpur Bench, Bahawalpur in R.F.A. No. 10 of 1997).

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

----S. 4---Qanun-e-Shahadat (10 of 1984), Art. 17(2)(a)---Stamp Act (II of 1899), S. 2(5)(b)---Promissory note---Proof---No requirement of attestation--- Non-appearance of second attesting witness---Inconsequential---As per Section 4 of the Negotiable Instruments Act, 1881, a promissory note is required to contain four essential ingredients: (i) an unconditional undertaking to pay; (ii) the sum should be the sum of money and certain; (iii) the payment should be to or to the order of a person who is certain, or to the bearer, of the instrument, and; (iv) the maker should sign it---If an instrument fulfils these four conditions, it will be called a promissory note, and the requirement of attestation of a document provided under Article 17(2)(a) of the Qanun-e-Shahdat,1984, does not apply to a promissory note---If an instrument, notwithstanding the provisions of section 4 of the Negotiable Instruments Act, 1881, is attested by witnesses, the nature and character thereof shall not be affected---It shall remain a promissory note and shall not be converted into a bond within the meaning of section 2(5)(b) of the Stamp Act, 1899---If a promissory note is not witnessed, and it does not appear that any third person saw it signed, in such a case, the best evidence is the handwriting of the parties---Attestation of the promissory note was not a requirement of law; the non-appearance of the second witness could not be made a ground for excluding the promissory note from evidence.

Shiekh Muhammad Shakeel v. Shiekh Hafiz Muhammad Aslam 2014 SCMR 1562; Muhammad Ashraf v. Muhammad Boota PLJ 2016 SC 169 and January v. Goodman 1 U.S 2008 (1787) ref.

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

----S. 4--- Stamp Act (II of 1899), S. 36---Promissory note---Admissibility in evidence---Section 36 of the Stamp Act, 1899 provides that when a document has once been admitted in evidence, such admission cannot be called into question at any stage of the suit or in proceedings, on the ground that the instrument has not been duly stamped---Where a question as to the admissibility of a document is raised on the ground that it has not been stamped or has not been properly stamped, it has to be decided there and then when the document is tendered in evidence---Once the Court, rightly or wrongly, admits the document in evidence and allows the parties to use it in examination and cross-examination, so far as the parties are concerned, the matter is closed---It is, therefore, essential that parties to litigation, where such a controversy is raised, must be cautious, and the party challenging the admissibility of the document must be alert to see that the document is not admitted in evidence by the Court---Court is also required to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case---So, once a promissory note has been marked as an exhibit and the trial has proceeded along the footing that the promissory note is made an exhibit, and has been used by the parties in the examination and cross-examination of their witnesses, then section 36 of the Stamp Act, 1899, will come into operation---In the present case as the promissory note had been admitted in evidence, as aforesaid, it was not open to the Trial Court to exclude it from consideration while writing the final judgment, nor to the appellate Court---Admission of the document in terms of section 36 of the Stamp Act, 1899, cannot be reviewed or revised by the same Court or a Court of superior jurisdiction---Appeal was dismissed.

Javer Chand and others v. Pukhraj Surana AIR 1961 SC 1655; Rehmat Ali v. Wahid Bux NLR 1979 Civil (SC) 809 and Union Insurance Company of Pakistan Ltd. v. Hafiz Muhammad Siddique PLD 1978 SC 279 ref.

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

----S. 4---Civil Procedure Code (V of 1908), O. XXXVII, Rr. 1 & 2---Summary suit based on a promissory note---Promissory note---Burden of proof---Proof---Circumstantial evidence, reliance upon---Initial onus to prove whether the promissory note was a forged document was upon the defendant; he discharged this onus by making a statement, on oath, to the effect that he was an illiterate person and had thumb impressed several blank papers for the plaintiff---Onus then shifted to the plaintiff to prove that the transaction was bona fide and that the promissory note was legal---Plaintiff stated before the Trial Court that he accompanied the defendant and the witnesses to the Court premises, where at the instance of the defendant, a deed writer scribed the promissory note, upon which the defendant had thumb-marked, and the witnesses had signed, and then he gave Rs.800,000 to the defendant in the presence of the witnesses---However, in his cross-examination, the plaintiff admitted that he had no business relationship with the defendant or family ties with him, which raised the question as to why he lent a considerable amount to a stranger---Perusal of the promissory note in question showed that the blanks of a printed form of a promissory note were filled in with black ink, names of the parties and witnesses were also written with black ink, while the ink of the thumb mark (of the defendant) was purple---It was also clear that black ink superimposed the purple ink of the thumb mark, and this depiction elucidated that the paper was first thumb-marked and then written upon -- Fair and reasonable conclusion drawn from such circumstances was that the stance of the defendant that blank documents thumb-marked by him had been converted to a promissory note was correct---There was nothing on record to suggest that the defendant had, expressly or impliedly, authorized the plaintiff to use the said blank papers as a promissory note---Deed writer was one of the plaintiff's material witnesses, and he, in his statement, admitted that though he wrote the amount of Rs.800,000, but this fact was reflected in his register by pencil; he was confronted with the various entries made in his register in black ink and asked as to why he wrote the amount of Rs.800,000 with pencil and not black ink that he had used for the promissory note, and he had no plausible explanation to give in his cross-examination---Another witness of the plaintiff stated that the sum of Rs.800,000 was given to the defendant in the form of notes having denominations of 500 and 1000 in the Court premises---Again, this was an unusual act, because, normally, such dealing take place in private, where money can safely and securely be handed over and counted by the other party; this clearly cannot be done in Court premises, on the stall of a stamp vendor---Consequently payment of any amount to the defendant had not been proved---Plaintiff had failed to prove that the promissory note was not forged; therefore, he was not entitled to the decree he had sought in his plaint---Appeal was dismissed.

Johnson v. The Duke of Marlborough (2 Stark. Rep 313); Henman v. Dickinson (5 Bing. 183) and Simpson v. Stackhouse (9 Barr. 186) ref.

(d) Evidence---

----Circumstantial evidence--- Scope--- Circumstantial evidence is sufficient when it enables the Court to make reasonable inferences about the ultimate facts in issue; it must be more than mere conjecture, speculation, or guess.

Galloway v. United States 319 US 372 and Popken v. Formers Mut. HomesIns. Co. 180 Neb.250 ref.

Mrs. Tabinda Islam, Advocate Supreme Court for Appellant.

Mian Shah Abbas, Advocate Supreme Court via video link from Lahore for Respondent.

2024 C L D 531

[Supreme Court of Pakistan]

Present: Syed Mansoor Ali Shah, Athar Minallah and Irfan Saadat Khan, JJ

Civil Appeal No. 722 of 2012

(Against the judgment of Lahore High Court, Lahore, dated 14.5.2012, passed in Civil Revision No.691/2012)

And Civil Appeal No. 2649 of 2016.

(Against the judgment of High Court of Sindh, Karachi, dated 07.10.2016, passed in HCA No.99/2015)

TAISEI CORPORATION and another---Appellants

Versus

A.M. CONSTRUCTION COMPANY (PVT.) LTD. and another---Respondents

Civil Appeal No. 722 of 2012 and Civil Appeal No. 2649 of 2016, decided on 28th February, 2024.

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

----Preamble---Arbitration, concept of---Minimal interference by courts in international commercial arbitration---Minimal interference and support for the arbitration by the courts as an alternate mode of dispute resolution, explained.

The idea of arbitration is that of binding resolution of disputes accepted with serenity by those who bear its consequences because of their special trust in chosen decision makers. It is difficult for courts to achieve this kind of acceptance; public justice tends to be distant and impersonal. Arbitration is a private initiative. The idea of Arbitration is freedom reconciled with law. The philosophical premise is that people are free to arrange their private affairs as they see fit, provided that they do not offend public policy or mandatory law. Arbitration thus embodies the principles of autonomy and voluntariness, respecting the parties' freedom to design a process that best suits their needs. It reflects a philosophical shift towards self-governance in dispute resolution, allowing parties to choose their arbitrators and the applicable law, thereby creating a more tailored and potentially equitable outcome. The role of courts in the context of arbitration has therefore evolved with a trend towards minimal interference.

Jan Paulsson, Idea of Arbitration, Oxford University Press (2013) ref.

More significant is the minimal interference in international commercial arbitration that stands as a cornerstone in the resolution of cross-border commercial disputes, offering a preferred alternative to litigation in national courts for businesses worldwide. One of the foundational aspects of international commercial arbitration is its emphasis on neutrality, expeditiousness, efficiency and the ability to provide solutions tailored to the needs of international business transactions. International commercial arbitration plays a crucial role in resolving disputes arising from cross-border trade and commerce, expeditiously and efficiently. The global view on international commercial arbitration is therefore overwhelmingly positive, with businesses and legal professionals alike recognizing its benefits over traditional litigation.

(b) Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the "New York Convention")---

----Art. I---International commercial arbitration---Pro-enforcement bias of the New York Convention for enforcing foreign awards, explained.

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 plays a pivotal role, underpinning the global enforcement regime for foreign awards that has made arbitration a linchpin in international commerce. The Convention facilitates the recognition and enforcement of arbitration agreements and awards across its member States, significantly reducing the uncertainty and complexity associated with cross-border dispute resolution. The role of courts in the context of international commercial arbitration has thus evolved to support and complement the arbitration process. Courts are no longer seen as competitors to arbitration but as essential partners in ensuring the effectiveness and integrity of the process. Their duty is to support, not to supplant, the arbitral process.

This approach of minimal interference and support for the arbitral process is enshrined in the concept of "pro-enforcement bias", which refers to the inclination of legal frameworks, such as the New York Convention and national laws, to facilitate the enforcement of arbitral awards. This bias underscores the commitment to uphold the integrity of arbitration as a means of settling international disputes by limiting the grounds on which enforcement can be refused and placing the burden of proof on the party resisting enforcement. The courts' role is to interpret these provisions narrowly to promote certainty and predictability in international transactions. This bias is not about unjustly favoring one party over another but is aimed at promoting the effectiveness and efficiency of arbitration as a dispute resolution mechanism. The pro-enforcement bias underscores the commitment of the legal system, embodied in international conventions, like the New York Convention, to respect and uphold the parties' agreement to arbitrate and to ensure that the outcome of such arbitrations (the arbitral awards) are recognized and enforced with minimal interference. This bias is critical in providing parties with the confidence that their decisions to arbitrate disputes will be supported by courts around the world, thus enhancing the attractiveness of arbitration as a method of resolving international commercial disputes. This enforceability is crucial for the fluidity of international trade, providing businesses with the certainty and security needed to engage in cross-border transactions.

(c) Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011)---

----Ss. 2(b), 2(c) & 2(e) ---International commercial arbitration---Foreign arbitral award---Scope---Whether an award made in a Contracting State, in pursuance to an arbitration agreement governed by the law of Pakistan, is a foreign arbitral award for applicability of the Recognition and Enforcement of Arbitration Agreement and Foreign Award Act 2011?---Held, that as per the definitions provided in sections 2(b), 2(c) & 2(e) of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 ('the 2011 Act'), an arbitral award made in a State which is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 or in such other State as may be notified by the Federal Government in the official Gazette, is a "foreign arbitral award" for applicability of the 2011 Act---Nothing more is required to make an award the "foreign arbitral award" for applicability of the provisions of the 2011 Act---Law governing the main contract between the parties, the law governing the arbitration agreement, and the law governing the arbitration proceedings are all irrelevant and extraneous in determining the status of an arbitral award under the 2011 Act---In defining a "foreign arbitral award" for applicability of the 2011 Act, the legislature has adopted a pure "territorial approach" and has made in this regard the "seat of arbitration" the sole criterion---Not only the governing laws but also the nationality of the parties to the award are irrelevant in determining the status of an arbitral award under the 2011 Act---In the present case the Award had been made in a Contracting State, i.e., Singapore---Nothing more was required to make it a foreign arbitral award, for applicability of the 2011 Act---In this regard, the facts that the main contract between the parties and the arbitration agreement were governed by the law of Pakistan, did not have any effect.

(d) Interpretation of statutes---

----Repealed law---Scope---Court cannot administer a repealed law, except to the extent specified by the legislature itself in the repealing law or some other general law providing the effect of the repeal of laws.

(e) Interpretation of statutes---

----Expression 'means' used in a statute to define any word, term or expression---When the legislature employs the verb "means" in defining any word, term or expression, the definition provided is restrictive and exhaustive, and nothing else can be added to the same---Such definition being itself the most authentic expression of the legislature's intent as to the meaning of a particular word used in the law enacted by the legislature is binding on the courts and leaves no room for them to discover by way of interpretation some other intent of the legislature.

Commissioner of Income Tax v. Khurshid Ahmad PLD 2016 SC 545 ref.

(f) Interpretation of statutes---

----Prospective and retrospective effect of a law---Principles stated.

A new law that only deals with the procedure and does not in any way affect the substantive rights of the parties applies both prospectively to future proceedings as well as retrospectively to pending proceedings. However, a law that takes away or abridges the substantive rights of the parties only applies prospectively unless either by express enactment or by necessary intendment the legislature gives to it the retrospective effect. The notable point is that even a procedural law that affects, though indirectly, the substantive rights of the parties is to be applied only prospectively, in the absence of any contrary provision therein, such as the right to institute an action for the enforcement of a substantive right or the right to appeal arising from that action as an appeal is considered a continuation of the original action. Denial of the remedy, it is said, is destruction of the right. Without remedy, there is no right; it is the remedy that makes the right real. The proper approach, therefore, to the construction of a statute as to its prospective or retrospective applicability, in the absence of legislature's express enactment or necessary intendment, is not to decide what label to apply to it, procedural or otherwise, but to see whether the statute if applied retrospectively to a particular type of case would impair existing rights and obligations. Such an examination, however, is needed only where the legislature has not, by express enactment or necessary intendment, provided for retrospective effect; as the legislature can by express enactment or necessary intendment also affect the existing rights and obligations. The legislature which is competent to make a law also has the power to legislate it retrospectively and can by legislative fiat take away even the vested rights.

State v. Jamil PLD 1965 SC 681; Alam v. State PLD 1967 SC 259; Adnan Afzal v. Sher Afzal PLD 1969 SC 187; Abdullah v. Imdad Ali 1972 SCMR 173; Commissioner of Income Tax v. Asbestos Cement Industries 1993 SCMR 1276; Gul Hasan & Co. v. Allied Bank 1996 SCMR 237; Tariq Badr v. National Bank 2013 SCMR 314; Controller General of Accounts v. Abdul Waheed 2023 SCMR 111; PTCL v. Collector of Customs 2023 SCMR 261; Yew Bon v. Kenderaan 1983 PSC 1200 (Privy Council); In re: Joseph Suche & Co. Limited (1875) 1 Ch. D. 48; Sutlej Cotton Mills v. Industrial Court PLD 1966 SC 472 (5-MB); Shohrat Bano v. Ismail Soomar 1968 SCMR 574; Federation of Pakistan v. Muhammad Siddiq PLD 1981 SC 249; The Colonial Sugar Refining Co. v. Irving 1905 AC 369; Iftikhar Ahmed v. State 2018 SCMR 1385; Hassan Nawaz v. Muhammad Ayub PLD 2017 SC 70; Mubeen-Us-Salam v. Federation of Pakistan PLD 2006 SC 602; F.A. Khan v. Government of Pakistan PLD 1964 SC 520; Shahmir Transport Company v. Board of Revenue PLD 1964 Lah 710; Garikapati v. Subbiah Choudhury PLD 1957 SC (Ind.) 448; National Bank v. SAF Textile PLD 2014 SC 283; Shahida Zaheer v. President of Pakistan PLD 1996 SC 632; Yew Bon Tev v. Kenderaan Bas Mara 1983 PSC 1200 (Privy Council); Haider Automobile v. Federation of Pakistan 1969 SC 623; Molasses Trading v. Federation of Pakistan 1993 SCMR 1905 and Annoor Textile v. Federation of Pakistan PLD 1994 SC 568 ref.

(g) Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011)---

----Ss. 1(3) & 4---Arbitration Act (X of 1940), S. 34---International commercial arbitration---Scope of section 1(3) as to the retrospective effect of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 ('the 2011 Act') on arbitration agreements---As for subsection (3) of Section 1 of the 2011 Act, which states that the Act shall apply to arbitration agreements made before the date of commencement of the Act, it only applies for the purpose of Section 4 of the 2011 Act to stay the legal proceedings in respect of a matter which is covered by the arbitration agreement and to refer the parties to arbitration---Notable point, however, is that because of the retrospective effect given by Section 1(3) of the 2011 Act, all courts in Pakistan are to recognize and enforce arbitration agreements, wherein the parties have agreed to have the arbitration held in a Contracting State, within the scope of the provisions of Section 4 of the 2011 Act, not of Section 34 of the Arbitration Act, 1940 ('the 1940 Act'), despite that such agreements have been made before the commencement of the 2011 Act.

(h) Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011)---

----Ss. 1(4) & 10(2)---Arbitration (Protocol and Convention) Act (VI of 1937) [since repealed], S. 2---International commercial arbitration---Foreign arbitral award---Scope of Section 1(4) as to the retrospective effect of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 on foreign arbitral awards expounded.

Subsection (4) of Section 1 of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 ('the 2011 Act') states that the Act shall not apply to foreign arbitral awards made before 14 July 2005 and thus by necessary intendment gives the Act retrospective effect on foreign arbitral awards that have been made on or after the said date.

As per subsection (2) of Section 10 of the 2011 Act, notwithstanding its repeal the Arbitration (Protocol and Convention) Act, 1937 ('the 1937 Act') is to continue to have effect in relation to foreign arbitral awards made before the date of commencement of this Act and within the meaning of section 2 of the 1937 Act, which are not foreign arbitral awards within the meaning of section 2 of the 2011 Act.To come within the compass of the saving provisions of Section 10(2) of the 2011 Act, a foreign arbitral award must therefore fulfill both the conditions mentioned in clauses (a) and (b), i.e., (a) it must have been made before the date of commencement of the 2011 Act, and (b) it must fall within the meaning of "foreign award" as defined in Section 2 of the 1937 Act.

In section 10(2)(b) of the 2011 Act the phrase "which are not foreign arbitral awards within the meaning of section 2 of this Act" is like a proviso to the saving provisions and has qualified them in their scope and applicability. This phrase has exempted from the purview of the saving provisions those foreign awards which though fulfill both the conditions mentioned in clauses (a) and (b) of section 10(2) but they are also foreign arbitral awards within the meaning of Section 2 of the 2011 Act. It means that an award which is a foreign arbitral award within the meaning of Section 2 of the 2011 Act shall not come within the scope of the saving provisions and shall therefore be dealt with in accordance with the provisions of the 2011 Act, not of the 1937 Act.

The object of the saving provisions of Section 10(2) of the 2011 Act, is to save certain foreign arbitral awards, after the repeal of the 1937 Act, from falling within the scope of the Arbitration Act, 1940.

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

----Preamble---Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011), Preamble---International commercial arbitration---Foreign arbitral award---Non-applicability of the Arbitration Act, 1940 ('the 1940 Act')---Since, the 1940 Act relates, in pith and substance, to domestic arbitration, its status after the 18th amendment to the Constitution is that of a provincial law---The 1940 Act, a provincial law after the 18th amendment that came into force on 19 April 2010, cannot deal with international arbitration and any award made therein---So, in no way the remedies available to a party, before the 18th amendment, under the 1940 Act in relation to the Award made in an international arbitration would continue to be so after the 18th amendment, and more so, after the enactment of the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 by the Federal Legislature.

Shahbaz Garments v. Government of Sindh 2021 SCMR 1088 ref.

(j) Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011)---

----S. 2(c)---Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the "New York Convention"), Arts. III & V---International commercial arbitration---Foreign arbitral award---Non-interference by domestic courts in Pakistan---Exceptions --The New York Convention implemented in Pakistan by the Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 ('the 2011 Act'), contains no ground as to the invalidity of a foreign award or its being against the law of the Contracting States, to refuse its recognition and enforcement and thus leaves no room for the courts of a Contracting State to enter into the exercise of examining the merits of a foreign award on the points of facts or law---In accordance with its objective, the New York Convention grants the Courts of the Contracting States the discretion to refuse to recognize and enforce a foreign arbitral award only on the grounds listed in Article V of the Convention and places the burden to prove those grounds on the party opposing the recognition and enforcement of the award---Article V(1) provides five grounds whereby the recognition and enforcement of an award may be refused at the request of the party against whom it in invoked, and Article V(2) lists two further grounds on which the Court may refuse enforcement on its own motion---Ultimate burden of proof, however, remains on the party opposing recognition and enforcement---It is, therefore, only when the party against whom the award is invoked discharges this burden that a challenge may be sustained against the recognition and enforcement of an award---Language of Article V for refusing recognition and enforcement of foreign arbitral awards is permissive and not mandatory, and the exceptions stated therein are exhaustive and construed narrowly in view of the public policy favouring the enforcement of such foreign arbitral awards---Courts may nonetheless recognize and enforce the award even if some of the exceptions exist.

Gary B. Born, International Commercial Arbitration 3418-24 (2nd ed. 2014); Gary B. Born, International Commercial Arbitration 3413, 3418 and 3428 (2nd ed. 2014); Gary B. Born, International Commercial Arbitration 3413 (2nd ed. 2014); Redfern and Hunter on International Arbitration (6th ed. 2015); Albert Jan van den Berg's The New York Arbitration Convention of 1958 (1981); Russel on Arbitration, Sweet and Maxwell (24th ed. 2015) and Gary B. Born, International Commercial Arbitration 3410 (2nd ed. 2014) ref.

(k) Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act (XVII of 2011)---

----S. 2(c)---Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the "New York Convention"), Art. V---International commercial arbitration---Foreign arbitral award---Non-interference by domestic courts in Pakistan---Exceptions---Public policy---Objectives sought to be achieved by the New York Convention underscore the "pro-enforcement bias" informing the Convention, guiding the Courts towards a "narrow reading" of the grounds of defence listed in the Convention, particularly, the public policy ground---Ground of defence that the arbitrator's decision is erroneous in law or fact is, therefore, not provided in the Convention; it cannot be read into in any ground of defence provided in the Convention, particularly, the public policy ground, by a "liberal reading" instead of a "narrow reading" thereof---An expansive construction of the public policy ground "would vitiate the Convention's basic effort to remove pre-existing obstacles to enforcement---Recognition and enforcement of a foreign arbitral award may be refused by the courts of Pakistan on the public policy ground only where it would violate the most basic notions of morality and justice prevailing in Pakistan---Public policy ground cannot be used to examine the merits of a foreign arbitral award or to create more grounds of defence that are not provided for in the Convention, such as misapplication of the law of Pakistan by the arbitrator in making the award or the arbitrator's decision being contrary to the law of Pakistan.

Parsons and Whittemore v. Societe Generale, 508 F.2d 969 (2d Cir.1974) and Orient v. SNGPL 2021 SCMR 1728 ref.

(l) Interpretation of statutes---

----Prospective and retrospective effect of a law---Principles---While interpreting a provision of law or construing its effect, a constitutional court only declares what the law is and does not make or amend it---Law so declared by the court, therefore, as a general principle applies both prospectively to future cases and as well as retrospectively to pending cases, including the one in which it is declared---It is only as an exception to this general principle that while considering the possibility of some grave injustice or inconvenience due to the retrospective effect, the courts sometimes provide for the prospective effect of their judgments from such date as they think just and proper in the peculiar facts and circumstances of the case---But this exception cannot be invoked in a case where its effect would be tantamount to negation of the legislature's intent.

Malik Asad Ali v. Federation of Pakistan PLD 1998 SC 161 and Muhammad Khan v. Haider PLD 2020 SC 233 ref.

Zahid F. Ebrahim, Advocate Supreme Court for Appellant (in C.A. No. 722 of 2012) and the Respondent (in C.A. No. 2649 of 2016).

Uzair Karamat Bhandari, Advocate Supreme Court, Tariq Aziz, Advocate-on-Record, Sheikh Muhammad Ali, Advocate Supreme Court assisted by Ali Uzair Bhandari, Advocate for Respondent (in C.A. No. 722 of 2012) the Appellant (in C.A. No. 2649 of 2016)

Ch. Aamir ur Rehman, Addl. A.G.P. for the Federation (On Court's call).

Assisted by Muhammad Hassan Ali and Umer A. Ranjha, Law Clerks.

Date of hearing: 22nd February 2024.

Table of Contents

Preface…………………………………………………………………………………… 540

Facts………………………………………………………………………………………… 542

Proceedings of the courts below in Civil Appeal No. 722 of 2012…….. 543

Proceedings of the courts below in Civil Appeal No. 2649 of 2016…… 543

Competing contentions of the parties ………………………………………………… 544

(i) Whether the Award is a foreign arbitral award………………………………… 544

Relevancy of Hitachi…………………………………………………………….. 544

Definition of "foreign arbitral award" in the 2011 Act…………………… 545

Effect of word "foreign" in definition clause and option of reciprocity in the Convention ………………………………………………………………………… 546

The definition in Section 2(e) of the 2011 Act is restrictive and exhaustive……………………………………………………………………………. 547

The Award is a foreign arbitral award…………………………………………. 548

(ii) Whether the 2011 Act applies retrospectively to the Award made in arbitration proceedings commenced before its enforcement………………………. 548

Principles for construing a law as to its prospective and retrospective effect…………………………………………………………………………………. 549

Scope of Section 1(3) as to the retrospective effect of the 2011 Act on arbitration agreements……………………………………………………………. 550

Scope of Section 1(4) as to the retrospective effect of the 2011 Act on foreign arbitral awards…………………………………………………………….. 551

Effect of the 2011 Act on remedy under Sections 30 and 33 of the 1940 Act…………………………………………………………………………………….. 553

Effect of the change of legislative power on the subject of arbitration by the 18th Amendment to the Constitution ……..………………………………. 554

No remedy in the 2011 Act against the misapplication of the law of Pakistan in making an award ……………………………………………………. 556

Pro-enforcement bias of the New York Convention 556

The 2011 Act applies retrospectively to the Award made in arbitration proceedings commenced before its enforcement…………………………….. 561

Prospective or retrospective applicability of the construction of the 2011 Act 561

Decision in Civil Appeal No. 722 of 2012……………………………………………. 562

2024 C L D 600

[Supreme Court of Pakistan]

Present: Ijaz ul Ahsan, Syed Hasan Azhar Rizvi and Irfan Saadat Khan, JJ

STATE LIFE INSURANCE CORPORATION OF PAKISTAN and another-- Appellants

Versus

Mst. ZUBEDA BIBI---Respondent

Civil Appeal No. 343-L of 2020, decided on 13th December, 2023.

(Against the judgment dated 15.10.2020 of the Lahore High Court Lahore passed in Insurance Appeal No. 171 of 2016)

Insurance Ordinance (XXXIX of 2000)---

----S. 118---Life insurance claim---Death of insured in road accident---Legal heirs opting not to conduct post-mortem examination of deceased (insured)---Proof to establish cause of death---Scope---Payment of liquidated damages on late settlement of claim---Appellant (insurer) never challenged the validity of death certificate of deceased (insured)---Entry in the death register of concerned union council and the report of the incident lodged at police station were official documents and presumption of truth was attached with them and the same should be taken into consideration---In circumstances where a person is met with an accident/unnatural death, his legal heirs ordinarily avoid conducting post-mortem examination, however in the present case, if the appellant/insurer deemed it to be necessary, it should have done the same by itself in order to protect its rights---Record further reflected that the insurance claim was lodged by the respondent with the appellant by complying with all procedural requirements, however, the appellant had badly failed to make due payment (within the time) as prescribed under the law---High Court had rightly decreed the suit for recovery of claim along with liquidated damages as prescribed under section 118 of the Insurance Ordinance, 2000---Appeal filed by insurer was dismissed.

Khurshid Ali and 6 others v. Shah Nazar PLD 1992 SC 822 ref.

Ibrar Ahmed, Advocate Supreme Court for Appellants.

Imran Muhammad Sarwar, Advocate Supreme Court for Respondent.

Asad Ullah Khan, Additional Attorney General for Pakistan for the Federation.

2024 C L D 619

[Supreme Court of Pakistan]

Present: Munib Akhtar, Shahid Waheed and Musarrat Hilali, JJ

NADIR KHAN---Appellant

Versus

QADIR HUSSAIN and others---Respondents

Civil Appeal No.499 of 2017, decided on 26th January, 2024.

(On appeal against the judgment dated 19.01.2017 passed by the Peshawar High Court, Peshawar, in R.F.A. No.65-P of 2012).

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

----Ss. 7, 32(1)(c) & 32(2) & 32(3)---Suit for recovery along with profits against a partner---Partnership at will---Retirement of partner---Procedure provided for retirement not followed---Trial Court held the respondent (defendant in the suit) liable to pay the suit amount and passed a preliminary decree in favour of the appellant (plaintiff) against the respondents to the extent of Rs. 2,38,00,000/- ---Admittedly, the appellant, who was a third party, was the sufferer as he made a huge investment in the (partnership) firm---Since in the instant case no deed of contract had been brought on record determining the period of partnership and determination of partnership, therefore, the High Court rightly observed that the provision of Section 7 of the Partnership Act, 1932 ('Act') would apply, and hence the nature of the partnership was a partnership at will---High Court however erred in deciding the manner of retirement of the respondent---Section 32 (1) (c) of the Act explicitly mentions the precondition of issuing a notice by a retiring partner in writing to all other partners of his intention to retire, which was not issued by the respondent/ retiring partner in the present case---High Court in its reasons applied the procedure of retirement of a partner as given in Section 32 (2) of the Act, which states that the a retiring partner has the obligation of entering into an agreement with the third party and partners of reconstituted firm to discharge him from the liabilities of the partnership before retirement, however there was no agreement available in this case---Further, even if the respondent had fulfilled the requirements of Section 32 (1) (c) and Section 32 (2) of the Act, he would still not be discharged from the liabilities against a third party until a public notice was given by him or by any partner of the reconstituted firm as required under Section 32 (3) of the Act, but in the present case no such public notice was issued---Appeal was allowed and the impugned judgment passed by the High Court was set aside and consequently the judgment and decree of the Trial Court was restored.

(b) Administration of justice---

----When the law requires that a particular thing should be done in a particular manner, it must be done in that manner and not otherwise.

Syed Mastan Ali Zaidi, Advocate Supreme Court and Mehmood A. Sheikh, Advocate-on-Record for Appellant.

Ismail Khan Khalil, Advocate Supreme Court for Respondent No.1.

Ex parte for Proforma Respondents Nos.2-3.

Fida Gul, Advocate Supreme Court for Proforma Respondents Nos.4-6.

2024 C L D 708

[Supreme Court of Pakistan]

Present: Syed Mansoor Ali Shah, Jamal Khan Mandokhail and Athar Minallah, JJ

Malik ARSHAD HUSSAIN AWAN---Petitioner

Versus

Messrs UNITED BANK LIMITED---Respondent

Civil Petition No. 1393-L of 2020, decided on 22nd February, 2024.

(Against the judgment of Lahore High Court, Lahore, dated 18.06.2020 passed in F.A.O No. 512 of 2013).

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

----S. 7(2)---Civil Procedure Code (V of 1908), O.XXXII, R. 15---Mental Health Ordinance (VIII of 2001), Ss. 29 and 32---Suit for recovery of finance---Defendant of unsound mind---Guardian in the suit, appointment of---Banking Court, powers of---Banking Court has the power to determine the unsoundness of mind or mental infirmity of a person on an inquiry under Order XXXII of the C.P.C. based on the evidence and appoint a guardian for the suit for the limited purpose of representation before the court of law, without first seeking an appointment of a guardian under the Mental Health Ordinance, 2001.

Rule 15 of Order XXXII of C.P.C. provides that Rules 1 to 14 of Order XXXII shall apply to (i) persons adjudged to be of unsound mind and (ii) persons who though not so adjudged are found by the Court on inquiry, by reason of unsoundness of mind or mental infirmity, to be incapable of protecting their interests when suing or being sued. The said Rule, therefore, acknowledges two categories of persons of unsound mind: one who is already adjudged by a court of competent authority as a person of unsound mind; and the other, who is not so adjudged but the court itself on inquiry finds that the person is of unsound mind. In both cases, the court is to appoint a guardian for the suit for such a person. In the first category, in view of the provisions of Rule 4(2) of Order XXXII of C.P.C. the court is to ordinarily appoint the same person as guardian for the suit who has been appointed the guardian under the Mental Health Ordinance, 2001 ("MHO"); while in the second, the court may appoint any suitable person who has no interest against the person of unsound mind. In the second category, the court cannot decline to appoint the guardian for the suit merely for the reason that the defendant has not been so adjudged under the MHO by the competent authority.

Where no guardian has been appointed under the MHO, it does not preclude the Civil Court, or the Banking Court, to proceed and appoint a guardian for the suit under Order XXXII of C.P.C. so that the interest of a mentally disordered person is protected before the court of law and also ensures the continuation and efficient conclusion of the trial. The Banking Court, therefore, has the power to determine the unsoundness of mind or mental infirmity of a person on an inquiry under Order XXXII of the C.P.C. based on the evidence and appoint a guardian for the suit for the limited purpose of representation before the court of law, without first seeking an appointment of a guardian under the MHO.

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

----O.XXXII, Rr. 1, 3, 4(2) and 15---Mental Health Ordinance (VIII of 2001), S. 32---Minor---Defendant of unsound mind---'Guardian for the suit' and 'Guardian of the person or property'---Distinction---Concept of next friend or guardian for the suit is to provide proper representation to a minor or a person with unsound mind during litigation, in order to protect his interests; therefore, their role is limited to the particular litigation or legal action for which they are appointed---Guardian for the suit is also called as "Guardian ad Litem"; the Latin term "ad litem" means "for the lawsuit"---Thus, guardian for the suit is appointed by a court specifically for the duration of legal proceedings and his role is temporary and limited to the particular lawsuit or legal matter---This might involve making decisions about litigation, settlement or other legal strategies---A guardian of the person or property of a minor or a person of unsound mind, on the other hand, is a person legally appointed to manage all the affairs of another person---Such a guardian has the authority to make decisions on behalf of the said person in various aspects of life, including financial, medical, and personal matters.

Ms. Saba Saeed Sheikh, Advocate Supreme Court and Syed Fayyaz Ahmad Sherazi, Advocate-on-Record for Petitioner.

Jam Khurshid Ahmed, Advocate Supreme Court for Respondent.

2024 C L D 1032

[Supreme Court of Pakistan]

Present: Syed Mansoor Ali Shah, Muhammad Ali Mazhar and Athar Minallah, JJ

Messrs TANVEER COTTON MILLS (PVT.) LTD. and another---Petitioners

Versus

SUMMIT BANK LIMITED and others---Respondents

C.Ps.L.As. Nos. 1422-L and 1423-L of 2021 and C.M.As Nos. 1636-L, 1758-L and 1759-L of 2021 and C.M.As Nos.2160, 2161, 2216 and 2217 of 2024, decided on 28th June, 2024.

(Against the consolidated judgment of the Lahore High

Court, Lahore, dated 17.06.2021, passed in C.Os. Nos. 28 and 29 of 2013).

(a) Companies Act (XIX of 2017)---

----Ss. 6(1) & 387, proviso---Constitution of Pakistan, Art. 10A---Company ordered to be wound up by the Court---Appointment of liquidator to manage the affairs of the company---Winding-up order challenge to---Maintainability---Directors, powers of---Company that has been ordered to be wound up can challenge the winding-up order in its name, provided the institution of appeal and the person acting on behalf of the company are authorized by a resolution of its board of directors---Section 6(1) of the Companies Act, 2017 provides that "[a]ny person aggrieved by any judgment or final order of the Court passed in its original jurisdiction under this Act may, within sixty days, file a petition for leave to appeal in the Supreme Court of Pakistan."---It uses the general expression "any person aggrieved" and does not mention the specific persons competent to file a petition for leave to appeal---Company against which a winding-up order has been passed falls within the scope of the expression "any person aggrieved" and thus can file a petition for leave to appeal in the Supreme Court under Section 6(1) of the 2017 Act---Company can exercise such right of appeal through its directors---Upon the commencement of the winding-up proceedings, despite the appointment of the liquidator, certain powers still remain with the directors of the company who, before the winding-up order, had the ultimate responsibility for managing the company and acting in its best interests in their fiduciary capacity---Such powers are usually referred to as 'residuary powers', and are not affected by the provisions of company law like the proviso to Section 387 of the Companies Act, 2017---Therefore, a company against which the winding up order has been passed is to exercise its right of appeal through the board of directors---Board of directors can, by its resolution, authorise any person, including the former chief executive of the company, to act on behalf of the company in filing an appeal or a petition for leave to appeal against the winding-up order---When the directors can defend the original winding-up proceeding, they surely can also file and pursue an appeal arising from that original proceeding, as it is an integral part of defending the company from being wound up until it stands wound up or dissolved---This continuity ensures that the company retains its right of defense throughout the legal process---It is a necessary corollary of the company's right to appeal that its directors control the conduct of the appeal, just as they had control over the defence to the winding-up petition in the first instance---Denying the directors the capacity to exercise the company's right to appeal would effectively deprive the company of its locus standi to challenge the winding-up order, which would be contrary to the fundamental right of every person, including a juristic person like a company, to a fair trial and due process in the determination of civil rights and obligations, guaranteed by Article 10A of the Constitution---Regarding the expenses/costs for filing the appeal or petition for leave to appeal, the liquidator upon his appointment takes over the charge of all the assets and funds of the company, and the directors no longer have any control or authority to make or authorize any expenditure therefrom---Given this position, the directors inevitably have to arrange the funds for payment of fees to the counsel, etc., from their personal sources other than the funds and assets of the company and also bear the costs of appeal or petition for leave to appeal, if any, in case of dismissal---However, if the company's appeal succeeds and the winding-up order is set aside, they may get reimbursement of those expenses from the company's funds under a resolution of the board of directors made after the success of the appeal.

Re Diamond Fuel Company (1879) 13 Ch. D. 400; Ripon Press and Sugar Mill Company v. Gopal Chetti (1931) 58 Ind App 416; U.K. Jurisdiction: Re Union Accident Insurance Co. Ltd. (1972) 1 All ER 1105; Closegate Hotel Development (Durham) Ltd. v. McLean (2013) EWHC 3237 (Ch). Indian Jurisdiction; Anil Kumar Sachdeva v. Four 'A' Asbestos [1980] 50 Comp Cas 122 (Del); Sinha Watches v. Gujarat S.F.C. (1985) 58 Com Cas 489 (Guj); Tata Finance Ltd. v. Chemox Chemical Industries, [2000] 100 Com Cas 338 (Bom); Rishabh Agro Industries v. P.N.B. Capital Services AIR 2000 SC 1583; Modi Rubber Ltd. v. Madura Coats Ltd. MANU/UP/1521/2004=2004 SCC Online All 1400 Australian Jurisdiction: Re Laverton Nickel (1979) 3 ACLR 945; Re Rick Wilson (1982) 7 ACLR 354. South African Jurisdiction: O'Connell Manthe and Partners v. Vryheid Minerale 1979 (1) SA 553 (T); Storti v. Nugent (2001) 3 SA 783 (W); Praetor v. Aqua Earth Consulting CC (162/2016) [2017] ZAWCHC 8 Malaysian Jurisdiction; Sri Hartamas Development v. MBF Finance (1991) LRC (Comm) 595; KTL v. Azrahi Hotels (2003) 3 CLJ 49. Singapore Jurisdiction; Sun Electric Power v. RCMA Asia (2021) 2 SLR 478; Hin Leong Trading v. Rajah and Tann, (2022) SGCA 28; Closegate Hotel Development (Durham) Ltd. v. McLean (2013) EWHC 3237 (Ch) and Re Rick Wilson (1982) 7 ACLR 354 ref.

(b) Appeal---

----Person adversely affected---Appeal, right of---Where a right of appeal is provided from a judgment, decree or order without specifying the persons who can avail it, every person who is adversely affected and thus aggrieved by such judgment, decree or order can avail that right of appeal.

Shahid Ikram Siddiqui, Advocate Supreme Court, Muhammad Imran Malik, Advocate Supreme Court, Tariq Aziz, Advocate-on-Record and Mian Liaqat Ali, Advocate-on-Record for Petitioners.

Salman Aslam Butt, Sr. Advocate Supreme Court, Shehzada Mazhar, Advocate Supreme Court, Muhammad Shoaib Rashid, Advocate Supreme Court, Anis M. Shahzad, Advocate-on-Record and Mobin Ahmad Siddiqui, Advocate-on-Record for Respondents.

Barrister Haris Azmat, Advocate Supreme Court, assisted by Ms. Faiza Asad, Advocate and Ch. Akhtar Ali, Advocate-on-Record for Applicants (in C.M.As. Nos. 2216, 2217 of 2024)

Uzair Karamat Bhandari, Advocate Supreme Court, Khwaja Ahmad Hosain, Advocate Supreme Court and Faisal Siddiqi, Advocate Supreme Court, Amicus Curiae.

Akif Saeed, Chairman, SECP, Muzaffar Ahmed Mirza, CP, SECP, Shamshad A. Rana, SPP, SECP. Barrister Omer Malik, SPP, SECP and Hussain Raza, SPP, SECP for the SECP.

2024 C L D 1186

[Supreme Court of Pakistan]

Present: Syed Mansoor Ali Shah, Jamal Khan Mandokhail, Muhammad Ali Mazhar and Athar Minallah, JJ

Mst. SAMRANA NAWAZ and others---Appellants/Petitioners

Versus

MCB BANK LTD. and others---Respondents

C.P. No. 2646-L of 2018, C.A. No. 17-L of 2019 and C.A. No. 364-L of 2020, decided on 10th May, 2024.

(Against (i) judgment dated 20.11.2018 passed in E.F.A. No.620/2011, (ii) judgment dated 20.11.2018 passed in E.F.A. No.17/2012, and (iii) judgment dated 03.02.2020 passed in E.F.A No.231782/2018 respectively by the Lahore High Court, Lahore).

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

----O. XXI, R. 90, second proviso---Execution of decree---Auction sale---Application to set aside sale on ground of irregularity or fraud---Deposit of amount or furnishing of security in court---Meaning and scope of the second proviso to Rule 90 of Order XXI, C.P.C.---Deposit of the amount, which is required under the second proviso, is not to be made by the applicant along with the application but rather it is to be made on the direction of the court.

Alhamdi Begum v. NBP PLD 1976 Kar. 723; Shafique Shah v. Irshad Begum 1981 CLC 369; Rukhsana v. Muhammad Ilyas 1993 CLC 1949; Ali Match Industries v. IDB 1999 MLD 2127; Niamat Ali v. Muhammad Imran PLD 2003 Lah. 42; Sultan Mahmood v. HBFC 2006 YLR 2776 and Khursheed v. Inam-Ur-Rehman PLD 2009 Lah. 552 approved.

Habib and Company v. MCB PLD 2020 SC 227 overruled.

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

----O.XXI, R. 90, second proviso---Execution of decree---Auction sale---Application to set aside sale on ground of irregularity or fraud---Deposit of amount or furnishing of security in court---Purpose of the second proviso to Rule 90 of Order XXI, C.P.C.---Evidently, the purpose of the second proviso is to discourage frivolous objections---Condition stipulated in the second proviso for entertaining the application ensures that the rule is not misused to delay the completion of the sale and expeditious conclusion of the execution proceedings, and that the objections are made only by bona fide persons on valid grounds---If upon adjudication the application is found frivolous, the amount deposited or the security furnished, as the case may be, by the applicant is to be appropriated for awarding costs to the person(s) who suffer from the delay in completing the sale due to the filing of the application---Therefore, in determining the amount required to be deposited, the executing court should consider various factors such as the decretal amount, the time elapsed since filing the execution petition, the sale amount and the applicant's previous conduct, etc., and fix an amount reflective of the costs likely to be awarded to the affected party in case of dismissal of the application.

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

----S. 19(7)(a) & (b)---Civil Procedure Code (V of 1908), O.XXI, R.90, second proviso---Execution of decree---Auction sale---Application to set aside sale on ground of irregularity or fraud---Deposit of amount or furnishing of security in court---Effect of clauses (a) and (b) of Section 19(7) of the Financial Institutions (Recovery of Finances) Ordinance 2001 ("Ordinance") on the provisions of Rule 90 of Order XXI, C.P.C., particularly the second proviso thereof---Clauses (a) and (b) of Section 19(7) of the Ordinance are not comprehensive provisions regarding objections to the sale of property in the execution of a decree; they do not specify who can make objections or the grounds on which objections can be made---Therefore, these clauses cannot function independently of Rule 90 of Order XXI, C.P.C., regarding objections to the sale of property in the execution of a decree---It is worth noting that since Section 141, C.P.C., does not apply to applications under Rule 90 of Order XXI, C.P.C., 11 the procedure for investigating objections made under this rule is also summary, as provided in clause (a) of Section 19(7) of the Ordinance---Latter provision merely further prescribes a period of 30 days to complete the investigation of objections through a summary procedure---Clause (b) of Section 19(7) of the Ordinance provides for imposing a penalty of up to twenty percent of the sale price of the property if objections are found by the Banking Court to be malafide or aimed at delaying the sale of the property---This penalty amount, is to be deposited by the applicant, or its security furnished, as per the second proviso to Rule 90 of Order XXI, C.P.C., before the court entertains the application to set aside the sale---Thus, there is no conflict between the two provisions; clauses (a) and (b) of Section 19(7) of the Ordinance are only complementary to the provisions of Rule 90 of Order XXI, C.P.C., for the execution of decrees under the Ordinance---Banking Court is therefore bound to follow both the provisions in the matter of objections made to the sale of property in the execution of a decree.

Messrs Majid & Sons v. N.B.P 2002 CLD 1742 disapproved.

Pakistan Industrial Credit and Investment Corporation v. Government of Pakistan 2002 CLD 1 overruled.

Muhammad Imran Malik, Advocate Supreme Court and Shahid Ikram Siddiqui, Advocate Supreme Court for the Appellants/Petitioners (Through video link from Lahore).

Umar Farooq, Advocate Supreme Court, Ashar Elahi, Advocate Supreme Court, Hafeez Saeed Akhtar, Advocate Supreme Court, Muhammad Akram Gondal, Advocate Supreme Court, Muhammad Ilyas Sheikh, Advocate Supreme Court, Mrs. Kausar Iqbal Bhatti, Advocate-on-Record and Muhammad Dawood Khan, OG-II, SME Bank for Respondents (Through video link from Lahore).

2024 C L D 1221

[Supreme Court of Pakistan]

Present: Qazi Faez Isa, CJ, Naeem Akhtar Afghan and Shahid Bilal Hassan, JJ

Messrs OPTIONS INTERNATIONAL (SMC-PVT.) LTD. through CEO---Appellant

Versus

The COMPETITION COMMISSION OF PAKISTAN through Registrar and another---Respondents

Civil Appeal No. 1011 of 2024, decided on 7th August, 2024.

(On appeal against the judgment dated 29.05.2024 of the Competition Appellate Tribunal, Islamabad passed in Appeal No. 45 of 2023).

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

----S. 1(3)---Distorting competition within Pakistan---Scope---Use of the "Starbucks" name and logo---Both the 'Starbucks" name and logo were registered abroad and in Pakistan---Matter before the Competition Commission ("Commission"), and then before the Competition Appellate Tribunal ("Tribunal"), was with regard to the use of the Starbucks name and logo by the appellant and selling its products under such name and style---Complaint from the proprietor of the said tradename and trademark, Starbucks Corporation USA (respondent No. 2), was received by the Commission which took action on it, and passed the penalty imposing order, which penalty was enhanced by the Tribunal---Counsel for appellant contended that the Competition Act, 2010 ('the Act') only applied to 'undertakings and all actions or matters that take place in Pakistan and distort competition within Pakistan', as stipulated in subsection (3) of section 1 of the Act, however since Starbucks Corporation USA (respondent No. 2) did not have any outlet in Pakistan, nor had authorized anyone to use its name, logo and products in Pakistan, therefore, the appellant was not in competition with the respondent No. 2, its authorized user(s) and/or its products---Validity---Said contention had no substance---Appellant had put itself forward by selling its own products under the international brand name Starbucks and by using its logo, which must have had the effect of distorting competition within Pakistan because a local vendor selling similar products, as those being sold by the appellant, would be at a serious disadvantage and not able to compete therewith since the unsuspecting public would believe, understand or perceive the same to be the genuine products of the respondent No. 2---Appeal was dismissed.

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

----Ss. 1(3) & 38---Distorting competition---Use of the "Starbucks" name and logo---Matter before the Competition Commission ("Commission"), and then before the Competition Appellate Tribunal ("Tribunal"), was with regard to the use of the Starbucks name and logo by the appellant and selling its products under such name and style---Complaint from the proprietor of the said tradename and trademark, Starbucks Corporation USA (respondent No. 2), was received by the Commission which took action on it, and imposed a penalty of five million rupees on the appellant and ordered further additional penalty of one hundred thousand rupees per day from the date of passing of the order in case of non-compliance---Tribunal decided the appeal by enhancing the penalty amount from five million to six million rupees but reduced the per day penalty amount to five thousand rupees from one hundred thousand rupees---Validity---Counsel for the appellant conceded that the law authorizes the penalties which had been imposed under section 38 of the Competition Act, 2010 ('the Act')---Therefore, it was not understandable how the same could be objected to---No other point had been urged which may persuade the Court to take a view different from the one taken by the Tribunal---Appeal was dismissed.

Taimoor Aslam Khan, Advocate Supreme Court for Appellant.

Hafiz Naeem, Legal Advisor for Respondent No. 1.

Respondent No. 2 not represented.

2024 C L D 1254

[Supreme Court of Pakistan]

Present: Muhammad Ali Mazhar and Syed Hasan Azhar Rizvi, JJ

Mst. REHMAT BEGUM---Petitioner

Versus

MEHFOOZ AHMED and others---Respondents

Civil Petition No. 49-K of 2022, decided on 9th August, 2024.

(Appeal against the judgment dated 22.11.2021, passed by the High Court of Sindh, Circuit Court Hyderabad in IInd Appeal No .70 of 2021).

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

----O. VII, R. 11---Rejection of plaint---Principles relating to rejection of plaint under O. VII, R. 11, C.P.C stated.

A plaint cannot be rejected in piecemeal under Order VII, Rule 11, C.P.C. Even if one prayer contained in the plaint is found to be maintainable in the relevant facts and circumstances of the case, the plaint cannot be rejected in part. What is essentially required is that the plaintiff must demonstrate that not only a right has been infringed in a manner that entitles him to a relief but also that when he approached the Court, the right to seek that relief was in subsistence. Nothing more than the averments of the plaint have to be seen for the purposes of adjudicating whether the plaint unveiled any cause of action. However, the dearth of proof or weakness of proof in the circumstances of the case does not furnish any justification for coming to the conclusion that there was no cause of action disclosed in the plaint, because for the rejection of plaint under Order VII, Rule 11, C.P.C., the Court cannot take into consideration pleas raised by the defendants in the suit, as at that stage, the pleas raised by the defendants are only contentions in the proceedings, unsupported by any evidence on record. However, if there is some material apart from the plaint which is admitted by the plaintiff, the same can also be looked into and taken into consideration by the Court while deciding an application under Order VII, Rule 11, C.P.C. Moreover, the Court may, in exceptional cases, consider the legal objections in the light of averments of the written statement but the pleading as a whole cannot be taken into consideration for the rejection of plaint. The Court has to presume the facts stated in the plaint as correct for the determination of such application. In case of any mixed questions of law and facts, the right methodology and approach is to allow the suit to proceed to the written statement and discovery phases and to determine the matter either by framing preliminary issues or through a regular trial. This rule does not justify the rejection of any particular portion of the plaint or a piecemeal rejection, as the concept of partial rejection is seemingly incongruous to the provisions of Order VII, Rule 11, C.P.C. However, it should be kept in mind that astute drafting for creating illusions of cause of action are not permitted in law, and a clear right to sue ought to be shown in the plaint. Where there is a joinder of multiple causes of action, and at least some of these causes could potentially lead to a decree, a plea of demurrer cannot be admitted to reject the plaint. Similarly, if there are several parties and the plaint discloses a cause of action against one or more of them then, too, the plaint cannot be rejected, as what is required in law is not the reading of the plaint in fragments but reading it as a whole. The Court is under an obligation to give a meaningful reading to the plaint and if it is manifestly vexatious or meritless, in the sense that it does not disclose a clear right to sue, the court may reject the plaint, but before rejecting it must determine whether litigation of such a case will be absolutely vexatious and an abuse of the process of the court.

Undoubtedly, the plaint can be rejected under Order VII, Rule 11, C.P.C., at any stage of the proceedings to culminate the civil action, on the philosophy that incompetent lawsuits should be buried at their inception in order to save the precious time of the Court which may be consumed and dedicated in serious and genuine litigation, but at the same time, this underlying principle does not give license to invoke the same in every lawsuit just to prolong or drag the proceedings with mala fide intention or ulterior motives. On the contrary, such application must articulate, distinctly, how and in which condition, as enumerated under Order VII, Rule 11, C.P.C., is the plaint liable to be rejected, rather than filing it with sweeping or trivial allegations to waste the valuable time of the Court.

(b) Companies Act (XIX of 2017)---

----Ss. 2(9), 2(17) & 5---Partnership Act (IX of 1932), Ss. 4, 32, 39 & 40---Specific Relief Act (I of 1877), Ss. 12 & 54---Civil Procedure Code (V of 1908), O. VII, R. 11---Suit for specific performance of agreement, recovery and permanent injunction---Rejection of plaint---Scope---Partnership agreement---Agreement for transfer of shares between partners---Jurisdiction of Civil Court---In the present case the business entity was being operated through a registered partnership firm between the two partners i.e. the petitioner (defendant) and respondent No. 1 (plaintiff)---Said business was neither a corporate entity nor was it incorporated under the provisions of the Companies Ordinance, 1984, or the Companies Act, 2017 therefore, the assertion of the petitioner that the suit was barred by the provisions of Section 5 of the Companies Act, 2017 was misconceived and fallacious---As a matter of fact, Section 5 had no applicability or nexus in the matter---Therefore, it had nothing to do with the pending suit between the parties---Substratum of the plaint did not highlight any dispute with regards to the business of the partnership firm, nor did anybody approached the Court for dissolution of the partnership firm or rendition of accounts; but for all practical purposes, the respondent No.1 only entered into an agreement for buying out 50% share of the petitioner in the partnership firm against a valuable consideration, and due to the alleged breach and non-fulfillment of terms and conditions of the agreement, respondent No.1 filed the suit for specific performance of contract with some other ancillary reliefs---All the prayers mentioned by the respondent No.1 were not considered (by the Trial and Appellate Court) which had independent status and were not dependent upon the alleged right of execution of sale deed or transfer of 50% share of the partnership firm in favour of respondent No.1 against a valuable consideration---According to respondent No.1, the partnership business was a going concern and he wanted to buy out 50% share of another partner---Effect of the agreement in question was also to be decided by the Trial Court on whether the arrangement in question could be construed as an agreement for relinquishment of share or retirement from the firm---On the alleged consensus ad idem, the contract was signed, and on the alleged breach, respondent No.1 filed the suit---Court cannot force someone to file a suit for dissolution of partnership or rendition of accounts, but it has to see whether specific performance of contract is possible or not, and in this case, unless the parties were provided equal opportunity to lead the evidence, it was not possible to decide the matter summarily on the basis of an application under Order VII, Rule 11, C.P.C.---At present stage, the Trial Court could not presume or anticipate the outcome that if the case was made out on merits and the Court granted a decree of specific performance, what the plaintiff would do with the partnership business, and whether he would induct any other partner, continue as proprietor, or convert it into a corporate entity of business---That was not the issue before the Court right now---At present, the lis only related to the alleged sale agreement of 50% share of another partner against some valuable consideration---This was the core issue and dispute between the parties which needed to be adjudicated by the Trial Court---High Court had rightly set-aside the orders of Trial Court and First Appellate Court, whereby the plaint was rejected, and remanded the matter to Trial Court with directions to decide the suit on merits---Petition was dismissed and leave was refused.

(c) Interpretation of statutes---

----Internal aids for interpretation---Illustrations in a statute, purpose of---Internal aid of interpreting any statute or its provision can be derived primarily from the statute itself including its preamble, illustrations, headings, marginal notes, punctuation, transitory provisions, etc.---Illustrations should not be considered redundant or inconsequential, as they are evenly significant and constructive for securing the proper meaning of the provision---While they cannot influence the ordinary connotation of the section, they are beneficial to demonstrate the means and methods by which such sections are set in motion while interpreting the law.

Muhammad Arshad S. Pathan, Advocate Supreme Court for the Petitioner.

Nemo for Respondents.

2024 C L D 58

[Supreme Court of Canada]\

Before Wagner C.J. and Karakatsanis, Brown,\ Rowe, Kasirer, Jamal and O'Bonsawin, JJ

ANTOINE PONCE AND DANIEL RIOPEL---Appellants

Versus

SOCIÉTÉ D'INVESTISSEMENTS RHÉAUME LTÉE, MICHEL RHÉAUME INVESTISSEMENT LTÉE, AGENCE ANDRÉ BEAULNE LTÉE AND 9098-3289 QUÉBEC INC.----Respondents

Decided on 27th October, 2023.

(Appeal from a judgment of the Quebec Court of Appeal 2021 QCCA 1363, [2021] AZ-51794090)

Company---

----Group of companies---President---Implied contractual obligations---Obligation of loyalty---Obligation to act in good faith---Duty to inform---Remedy for breach---Certain company informed presidents of a group of companies that it was interested in acquiring their group---Presidents did not disclose such information to group's majority shareholders---Presidents purchased shareholders' interests in the group and resold them to the company for a profit---Question as to whether presidents' non-disclosure of interest expressed by the company in acquiring the group constituted a civil fault and if so, then what was the appropriate remedy.

Two presidents of a group of three companies in the insurance industry learned that a major company was interested in acquiring the group. Rather than revealing this to the group's majority shareholders, the presidents decided to buy the whole of the shareholders' interests themselves in order to resell them to the company for a substantial profit. Before the resale, the presidents and the purchaser company entered into an undertaking of confidentiality, which prevented the company from dealing directly with the group's majority shareholders. Upon learning of the resale, the shareholders filed a motion to institute proceedings for damages in the Superior Court, claiming approximately $24 million as compensation for the gain they would have made through that transaction of which they were deprived. They alleged that the presidents had breached their contractual and legal obligations and their fiduciary obligations and in particular their obligations to act in good faith, with loyalty and transparency, by failing to inform them of the interest expressed by the purchaser company in acquiring the group. The shareholders argued that, because of the presidents' unlawful actions, they were entitled to claim the equivalent of the excess profits made by the presidents. The Superior Court ruled in the shareholders' favour and ordered the presidents solidarily to pay them $11,884,743, an amount equal to the profits earned by the presidents on the resale. The court found that, under both the Civil Code of Québec (C.C.Q) and the Canada Business Corporations Act, the presidents, in their capacity as directors, owed duties of honesty, loyalty, prudence and diligence to the group. The trial judge found that these same duties could be extended to the shareholders because of an incentive pay agreement entered into by the shareholders and the presidents ("Presidents' Agreement") that governed the parties' relationship and entailed implied obligations for the presidents. The Court of Appeal affirmed the trial judgment and upheld the remedy awarded by the trial judge. However, it was of the view that the trial judge erred in finding that the duties of honesty and loyalty provided for in the Civil Code of Québec and the Canada Business Corporations Act could be extended to the shareholders. The court held that the presidents' conduct fell within the three criteria set out in Bank of Montreal v. Bail Ltée, [1992] 2 S.C.R. 554 and that the presidents breached the obligation of contractual good faith and the obligation to inform they owed to the shareholders.

The presidents' failure to inform the majority shareholders of the purchaser company's interest in acquiring the group was a breach of the requirements of good faith. They breached the obligation of contractual loyalty linked to good faith, which was an implied obligation under the contract through the combined effect of Arts. 1434 and 1375 C.C.Q. The Presidents' Agreement involved an implied obligation to inform that required the presidents to provide the shareholders with all information relevant to making an informed decision about the sale of their shares. This implied obligation flowed from the nature of that agreement, which reflected the presumed intention of the parties, in accordance with Art. 1434 C.C.Q. The presidents were also required to perform the Agreement in accordance with the requirements of good faith, which was included in the contract through imperative law under Art. 1375 C.C.Q. With regard to the remedy, the purpose of damages is to compensate for the gain lost as a result of fault and the quantum must be assessed so as to place the shareholders in the position they would have been in but for the presidents' fault. Disgorgement of profits is not available where there has simply been a breach of the obligation of good faith; in principle, it is available only where a person is charged with exercising powers in the interest of another. However, where a breach of the requirements of good faith prevents the aggrieved party from proving the injury sustained, it should be presumed that the injury is equivalent to the profits made by the party at fault. The presidents have shown no palpable and overriding error in the trial judge's conclusion that the shareholders' lost gain is equivalent to the profits made by the presidents. There is therefore no reason to interfere with the assessment of the quantum of damages.

With regard to the possible legal bases for the presidents' obligation to inform the shareholders of the interest expressed by the purchaser company in acquiring the group, the obligation of maximalist loyalty arising from the exercise of powers in the interest of another, like the one resting on an administrator of the property of others or a mandatory, is not at issue in the present case. The presidents are neither the shareholders' mandataries nor administrators of the property of others, which means that they cannot be held to an obligation of loyalty like the one provided for in Arts. 1309 para. 2 and 2138 para. 2 C.C.Q. In addition, the extra contractual obligation to inform related to good faith in the formation of contracts is of only theoretical importance in this case given the contractual relationship that the parties chose to establish with one another. The shareholders do not allege that there was a breach of the requirements of good faith at the pre-contractual stage, nor do they ask that the contracts for the sale of their interests in the group to the presidents be annulled. Rather, their focus is on the good faith performance of the Presidents' Agreement, which was fully applicable at the relevant time.

"L'obligation de loyauté dans les services de placement" (2012), 3:1 B.D.E. 19, at p. 21; "Loyalty" (2020), 66 McGill L.J. 121, at p. 122; M. Cantin Cumyn, "Le pouvoir juridique" (2007), 52 McGill L.J. 215, at p. 223 and Resolute FP Canada Inc. v. Hydro-Québec, 2020 SCC 43, at para. 69 ref.

The first legal basis for the duty to inform incumbent on the presidents is therefore the implied contractual obligation to inform the shareholders under the Presidents' Agreement. Pursuant to Art. 1434 C.C.Q., a contract binds the parties not only as to what they have expressed in it but also as to what is incident to it according to its nature and in conformity with usage, equity or law. In this case, the nature of the Presidents' Agreement leads to the conclusion that an implied obligation to inform was incident to it. The Presidents' Agreement was the cornerstone of the business relationship between the presidents and the shareholders. The role of each party in this relationship was clear. The Presidents' Agreement was a long-term agreement formalizing a mutually beneficial business relationship between the presidents and the shareholders and it required reciprocal contractual loyalty. It reinforced the high level of trust that the shareholders placed in the presidents and it expressly set out incentive pay terms and conditions for the presidents' benefit without spelling out reciprocal obligations for them. In light of the very nature of the Presidents' Agreement, the presidents had an implied obligation to inform the shareholders of any fact that might enable them to assess the companies' profits and value and decide whether to sell their shares and, if so, at what price. The non-disclosure of the purchaser company's interest was a direct breach of this implied obligation.

P.-A. Crépeau, "Le contenu obligationnel d'un contrat" (1965), 43 Can. Bar Rev. 1, at p. 7; Churchill Falls (Labrador) Corp. v. Hydro-Québec, 2018 SCC 46, [2018] 3 S.C.R. 101, at para. 74; D. Lluelles and B. Moore, Droit des obligations (3rd ed. 2018), at No. 1542 and Churchill Falls, at paras. 122-23, quoting Provigo Distribution Inc. v. Supermarché A.R.G. Inc., 1997 CanLII 10209 (Que. C.A.), at p. 25 ref.

The second legal basis is the obligation to perform the Presidents' Agreement in accordance with the requirements of good faith under Art. 1375 C.C.Q. Good faith in Quebec civil law is now an enacted standard of public order. Unlike maximalist loyalty arising from the exercise of legal powers, contractual loyalty is reciprocal because of the mutual nature of good faith. It requires a contracting party to act with loyalty by taking into account, within the limits of reasonable conduct, the interests of the other contracting party. Nevertheless, the obligation of loyalty rooted in contractual good faith in the performance of a contract does not require a contracting party to subordinate their interests to those of the other party. In this case, contractual loyalty tied to good faith did not prevent the presidents from performing the contract to further their self-interest, but it did require them to consider the interests of the other contracting parties. For this reason, it could impose on them a duty to inform. While they did not have to subordinate their interests to those of the shareholders, the presidents could not conceal the purchaser company's interest in the group without incurring contractual liability to the shareholders. By concealing that interest, they breached their obligation of good faith.

S. Grammond, A.-F. Debruche and Y. Campagnolo, Quebec Contract Law (3rd ed. 2020), at para. 327; National Bank of Canada v. Soucisse, [1981] 2 S.C.R. 339; Houle v. Canadian National Bank, [1990] 3 S.C.R. 122; Tardif v. Succession de Dubé, 2018 QCCA 1639, 51 C.C.L.T. (4th) 54, at para. 75; Provigo, at pp. 20-22; Baudouin, Jobin and Vézina, at No. 307; Lluelles and Moore, at No. 2017 and M. A. Grégoire, Liberté, responsabilité et utilité: la bonne foi comme instrument de justice (2010), at p. 209; see also Dunkin' Brands Canada Ltd. v. Bertico Inc., 2015 QCCA 624, 41 B.L.R. (5th) 1, at paras. 66-70 ref.

The interest expressed by the purchaser company satisfies, in the context of the Presidents' Agreement, each of the three criteria set out in Bank of Montreal v. Bail Ltée, [1992] 2 S.C.R. 554, which serve to determine whether particular information falls within the duty to inform: (1) knowledge of the information, whether actual or presumed, by the party owing the obligation to inform; (2) the fact that the information in question is of decisive importance; (3) the fact that it is impossible for the party to whom the duty to inform is owed to inform itself, or that the creditor is legitimately relying on the debtor of the obligation. With regard to the first criterion, the presidents knew of the purchaser company's interest and were fully aware of the financial value of that information. The second criterion is also satisfied because the purchaser company's interest would have had a major impact on the decision and on the determination of the value of the shareholder's shares and the sale price. The last criterion is doubly satisfied given the atmosphere of trust that existed between the parties and the fact that it was impossible for the shareholders to inform themselves of the purchaser company's interest. As a result, the requirements of good faith in the performance of the Presidents' Agreement imposed a duty on the presidents to inform the shareholders of the interest expressed by the purchaser company.

J.-L. Baudouin, "Justice et équilibre: la nouvelle moralité contractuelle du droit civil québécois", in G. Goubeaux et al., eds., Études offertes à Jacques Ghestin: Le contrat au début du XXIe siècle (2001), 29, at p. 33 ref.

Determining the appropriate remedy in the present case helps to clarify the boundary between restitution and compensation in civil law. Compensation for the injury caused by a breach of contractual loyalty is distinct from disgorgement of profits arising from non-performance of the obligation of maximalist loyalty in the exercise of powers. Disgorgement of profits without regard to injury is not an appropriate remedy in this case, because it is not in keeping with the compensatory function of civil liability. It is available only where a person is charged with exercising powers in the interest of another and it is meant to ensure compliance with the obligation of maximalist loyalty owed by a person on whom a power is conferred. An award of damages, on the other hand, serves to compensate the victim of a fault for the injury sustained, reflecting a compensatory logic related to contractual loyalty under Art. 1375 C.C.Q. and its purpose is to compensate for the gain lost as a result of fault. To justify an award of damages, the party wronged by a breach of contractual loyalty bears the burden of establishing compensable injury, in accordance with the fundamental principle of restitutio in integrum (or full reparation) that is central to the law of civil liability in Quebec.

Uni-Sélect inc. v. Acktion Corp., [2002] R.J.Q. 3005 distinguished.

Rainbow Industrial Caterers, at pp. 14-16; Lamb v. Kincaid (1907), 38 S.C.R. 516, at pp. 539-40; see also Callow, at para. 116; National Bank of Canada v. Corbeil, [1991] 1 S.C.R. 117; Provincial Bank of Canada v. Gagnon, [1981] 2 S.C.R. 98; see also Baxter, at p. 444, citing Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229 ref.

In the present case, the gain lost by the shareholders is compensable under the rule for assessing damages set out in Art. 1611 C.C.Q. Although the law of civil liability does not, as a general rule, excuse a plaintiff from proving the injury sustained, it is the presidents' disloyal conduct that prevents the shareholders from making such proof. The presidents' non-disclosure of information to the shareholders was accompanied by efforts to conceal the purchaser company's interest in the group. The presidents cannot be allowed to profit from their breach of the requirements of good faith by arguing that the shareholders failed to prove their injury. In accordance with Biotech Electronics Ltd. v. Baxter, [1998] R.J.Q. 430 (C.A.), the presidents' wrongdoing gives rise to a rebuttable presumption that the shareholders' lost advantage is equivalent to the profits unjustly realized by the presidents. The presumption established in Baxter serves as the basis for a method of calculating damages to compensate the aggrieved party for the injury sustained. It is based on a compensatory objective that is distinct from disgorgement of profits where disgorgement is awarded for a restitutionary purpose in the absence of any injury. The presidents have not rebutted this presumption and the damages owed to the shareholders are equivalent to the difference between the sale price received by the presidents on their resale of the shares to the company and the price received by the shareholders on the initial sale of the shares to the presidents. Appeal was dismissed.

Biotech Electronics Ltd. v. Baxter, [1998] R.J.Q. 430 (C.A.) ref.

Audrey Boctor, Étienne Morin-Lévesque and Laurence Boudreau for the Appellants.

Jean-Rémi Thibault, Louis P. Bélanger and Samuel Nadeau for the Respondents.

Solicitors for the appellants: IMK, Montréal.

Solicitors for the respondents: Litige Forseti Inc., Montréal.