Present
Mr.
Justice Mushir Alam, CJ
Mr. Justice Aqeel Ahmed Abbasi.
Date
of hearing : 31.10.2011
Date
of judgment : 30.11.2011
Appellant : National Bank of Pakistan
through Mrs. Seema Waseem
Advocate
Versus
Respondents : M/s. White Gold Exporters (Pvt) Ltd.
and others
Respondent
No.5 : through M/s. Mansoor-ul-Arfin &
M. Shafi Siddiqui, Advocates
J U D G M E N T
Aqeel Ahmed Abbasi, J. Being aggrieved and dissatisfied with the order dated 06.03.2007 passed by the learned Single Judge of this Court in Execution No.54 of 2005 arising out of a Banking Suit No.B-48 of 2004, the appellant has preferred instant High Court Appeal under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance 2001, before this Court.
2. Brief facts as stated by the appellant are that, the appellant is a banking company incorporated in the Banking Ordinance 1949, whereas, respondent No.1, namely White Gold Exporters (Pvt) Limited, are the principal borrowers and respondent Nos.2, 3 and 4, being the Directors of the said company are also the guarantors and have mortgaged the properties of respondent No.1 with the appellant bank in order to secure finance facilities granted by the appellant bank to the respondent No.1. A cash (mortgage) limit of Rs.5 million and inland L/C (sight) limit of Rs.40 million was sanctioned by the appellant vide sanction advice dated 31.08.2002. Besides other terms the rate of markup was agreed to be 43.93 paisas/1000/day, 16% or part thereof with rebate as admissible under Head Office instructions Circular No.1/2000 dated 05.01.2000 and the date of expiry was agreed to be 30th June, 2003 at the date of final adjustment was agreed to be 30th July, 2003. An agreement of finance was executed and signed by the appellant and respondent No.1 as security for repayment of finance of said facilities. The respondent No.1 has executed the following documents:-
1. Agreement of Finance.
2. Promissory Note.
3. Authority to debit the account.
4. Letter of Hypothecation.
5. Letter of Guarantee of the directors
6. Charge on company’s fixed and current assets.
Apart from the above securities the respondent No.1 had mortgaged their following immovable properties in favour of the appellant.
a) Office No.105, 1st Floor, measuring 2550 Sq/Feet, on Plot Survey No.250/1, Block 19, Gulistan-e-Jauhar, KDA Scheme No.36, Karachi.
b) Mezzanine floor “B’ & “C” measuring 6261 Sq/Feet of Asia Pacific Trade Center, on Plot Surety No.250/1, Block 19, Gulistan-e-Jauhar, K.D.A Scheme No.36, Karachi.
c ) Office No.106 at Asia Pacific Trade Center, 1st Floor measuring 1807 Sq/Feets on Plot Survey No.250/1, Block 19, Gulistan-e-Jauhar, K.D.A. Scheme No.36, Karachi.
d) Office No.507, 5th Floor, measuring 1287 Sq/Feet, on Plot Survey No.250/1, Block 19, Gulistan-e-Jauhar, K.D.A Scheme No.36, Karachi.
e) Office No.508, 5th Floor measuring 1287 Sq/Feet on Plot Survey No.250/1, Block 19, Gulistan-e-Jauhar, K.D.A Scheme No.36, Karachi.
3. As per appellant, the above Finance Facilities were duly availed by the respondent No.1, however, they failed to pay the installments even after expiry of due dates, therefore, notices under Section 15 of the Banking Ordinance were also issued to the respondent Nos.1 to 4 through courier service asking them to pay the outstanding dues within the specific period but of no avail. It is stated that the respondent Nos.1 to 4 as per books of accounts maintained by the appellant bank are liable to pay a sum of Rs.43,381,095/- as principal amount and further sum of Rs.10,129,435/- as markup. The properties mortgaged with the appellant by the respondent No.1/Judgment Debtor in the year 2002 were in the name of the company of the respondent No.1/J.D, who availed the finance facilities and as security mortgaged the aforesaid properties. As per appellant, at no point of time respondent No.5 appears to have been the owner of the said properties, whereas, Mr. Amin Shahid acting for self and on behalf of the two minors namely Nida Amin and Rafay Amin, the true and lawful owners of the properties, after the death of Mst. Shahida Perveen, sold out the subject property to respondent No.1 i.e. M/s.White Gold Exporters (Pvt) Ltd. The record reveals that the properties in question were mortgaged by respondent No.1 in the year 2002, were in the name of the company M/s. White Gold Exporters (Pvt) Ltd. and the same were secured against the finance facilities availed by them and on failure to make repayment, the appellant filed a suit bearing No.B-48/2004 which was decreed. Accordingly, execution proceedings were started and the attachment were issued, whereas, respondent No.5 in collusion with the rest of the respondent resisted the said execution, however, deliberately avoided to defend the Suit No.B-48/2004, despite of the fact that the copy of the plaint of such suit was supplied to the respondent No.5, in Suit No.1435/2004. Suit No.B-48/2004 was decreed on 30th May, 2005 and the attachment or mortgaged properties was issued on 22.12.2005. The respondent No.5 has not filed any title document in her name in respect of subject property nor filed any application in this regard in High Court.
4. The appellant further stated that the respondent No.5 has filed frivolous and collusive suit bearing No.1435/2004 against the appellant and suit Nos.379/2003 and 426/2003 against the respondents No.1 to 4 for the same alleged claim. As per appellant, the collusive act of respondent No.5 with respondent Nos.1 to 4 and the builder who appears to be the husband of respondent No.5 is manifest from the contradictory claim of the respondent No.5 in different suits, whereas, the purpose of such frivolous proceedings was to create hurdles in the execution proceedings. Respondent No.5 filed CMA No.427/2006 in Execution No.54/2005 arising out of banking Suit No.48/2004, whereby the application under order 21 Rule 58 read with section 151 CPC, was dismissed by the learned Single Judge on 19.12.2006 by holding that “once the property documents are lawfully surrendered the party lost the status of ownership. If the respondent No.5 is aggrieved by any of the action of the builder, who happens to be her husband she may initiate the proceedings against the builder, who has executed sub-leases in favour of the Judgment Debtors/respondent No.1. For the aforesaid reason this application is misconceived and is dismissed accordingly.” As per appellant, such order was assailed by respondent No.5 by filing HCA No.13/2007 before a Division Bench of this Court, however, vide order dated 27.02.2007 the appeal was dismissed in the following terms:-
“In
view of the above, without entering into any further discussion, we deem it
appropriate to dispose of this appeal with the observations that the three
pending suits instituted by the appellant will be proceeded strictly in
accordance with law, without being influenced by any observation made in the
impugned order against the interest of the appellant. Moreover, if any decree
is passed in the suit against the respondent No.1 it will be binding on them.”
5. Thereafter vide impugned order dated 06.03.2007, the learned Single Judge of this Court in the Execution No.54/2005 pursuant to order passed in appeal No.13/2007 has interpreted the same in the following manner:-
“In
view of the above position, Suits bearing No.1435/2004 and 379/2003 are
directed to be proceeded on the points raised for determination of the rights
of the intervenor in the present execution proceedings.
Office
is directed to fix the above referred cases within four weeks. Subsequently
Execution Application No.54 of 2005 shall be heard and decided on its own
merits.”
6. Learned counsel for the appellant argued that the learned Single Judge while passing the impugned order has placed reliance heavily on the order dated 27.02.2007 passed by the Division Bench of this Court in High Court Appeal No.13/2007, which appeal filed by the respondent No.5/Intervenor was infact dismissed and no stay was granted as regard execution of proceedings in Execution No.54/2005. Per learned counsel, by impugned order the learned Single Judge has infact stayed the proceedings of Execution No.54/2005 till decision of the suits bearing No.1435/2004 and 379/2003 pending between the parties, which per learned counsel are frivolous and collusive suits filed by the respondents and have no bearing on the execution proceedings emanating from a banking judgment/decree pending before the learned Single Judge of this Court. It is further contended that the execution proceedings in the instant case is the outcome of judgment and decree in Banking Suit No.B-48/2004 for recovery filed by the appellant bank against the Judgment Debtors namely respondents No.1 to 4 and not against the respondent No.5/Intervenor. Per learned counsel, without prejudice to hereinabove, the impugned order which is in the nature of final order whereby the stay of the execution proceeding has been granted without depositing of decretal amount or the security by the respondent No.5 as required under the provision of Financial Institutions (Recovery of Finances) Ordinance 2001, read with Order 21 Rule 23-A CPC. While concluding the arguments, learned counsel has prayed that the impugned order dated 06.03.2007 may be set-aside and the cost of appeal may be allowed to the appellant.
7. Conversely, learned counsel for respondent No.5 have raised preliminary objection regarding maintainability of instant appeal on the ground that in terms of section 22 (6) no appeal, review or revision is maintainable against an interlocutory order of the Banking Court. Per learned counsel, since the execution is pending before the learned Banking Court whereas the impugned order is in the nature of an interlocutory order, therefore, instant appeal is misconceived in law and fact hence not maintainable.
8. Learned counsel has submitted that section 15 of the Financial Institutions (Recovery of Finances) Ordinance 2001 deals with the sale of the mortgaged property by the Bank on its own without intervention of the Banking Court. Learned counsel has argued that reading of the provisions of Section 15 suggest that in case of default by customer, a Financial Institution may send notices to the mortgagor demanding payment. Hence on account of failure to respond to the aforesaid notices, the Bank can take further steps and it is in this context that the Courts are restrained under Sub-section (12) of Section 15 in granting an injunction which too contains proviso such as:
(a) it is satisfied that no mortgage in respect of the immovable property has been created, or
(b) all moneys secured by mortgage of the mortgaged property have been paid; or
(c) the mortgagor or objector deposits in the Banking Court in cash the outstanding mortgage money.
9. Learned counsel submitted that in terms of Section 19 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 upon pronouncement of Judgment & Decree by a Banking Court the suit automatically stands converted into execution proceeding. In terms of Sub-section (3) of Section 19 the Financial Institutions may sell or cause the same to be sold with or without intervention of the Banking Court. Learned counsel contended that in case sale of property is without the intervention of the Court then the provision of Sub-Sections (5 to 12) of Section 15 shall apply mutatis mutandis as per Sub-section (5) of Section 19. However, in case the Financial Institution wishes to opt for sale of the property through the intervention of the Court then the provision of Sub-sections (5 to 12) of Section 15 would not be made applicable and on the contrary the provision of CPC would be invoked for sale of the mortgaged property. It has been further submitted that it is only the provision of sub-sections (5 to 12) of Section 15 which are made “mutatis mutandis” for its application for Section 19, however this does not include sub-section (3) of Section 15. Per learned counsel, Section 19 of the Financial Institutions (Recovery of Finances) Ordinance 2001, pertains to the execution proceeding which does not include a parallel or a similar sub-section like sub-section (3) of Section 15. Sub-section (3) of Section 15 is invoke-able when Financial Institution on its own invokes the provision of Section 15 for sale of the mortgaged property by sending notices and by following procedure provided therein. Learned counsel submitted that in case the Financial Institution wishes to sell the property without intervention of the Court then provision of Sub-sections (5 to 12) of Section 15 would be applicable. Whereas in case the Court’s indulgence is sought then the provision of CPC would apply, sub-sections (5 to 12) of Section 15 would not apply in that case and the court will be at liberty whether or not to grant injunction in the execution. Learned counsel stated that in view of the above, there is no room for directing the owner/(not being mortgagor) or tenant to deposit rent since the Financial Institution has not invoked Section 15 of the Financial Institutions (Recovery of Finances) Ordinance 2001.
10. Learned counsel for respondent No.5 has further argued that powers under sub-section 3 of Section 15 of the Financial Institutions (Recovery of Finances) Ordinance 2001, vest with the Banking Court and not with this Court while hearing the matter in an appeal against an interlocutory order arising out of execution proceedings.
11. Per learned counsel, sub-section 3 of Section 15 provides jurisdiction to the Banking Court to pass an appropriate order as deem fit and proper under the circumstances of the case against which no appeal lies. Hence passing an order by this Court while sitting and hearing the matter in an appeal would not only be without jurisdiction but would also tantamount to curtailing the right of appeal of any party. It is contended that at the most and without prejudice to the above submission, this Court can direct the learned Single Judge to decide the same application who is ceased of with the matter and before whom the same application is pending for adjudication. In support of his contention, the learned counsel for the respondent No.5 has placed reliance on the cases reported as Messrs Habib Bank Ltd. V. Messrs Bela Automotives Ltd. 2006 CLD (Karachi) 169, Nazir Ahmed Vaid and others v. Habib Bank AG Zurich 2005 CLD (Karachi) 1571, Messrs Huffaz Seamlen Pipe Industries Ltd., and 2 others v. Messrs Security Leasing Corporation Ltd. 2002 SCMR (SC) 1419, Malik Israr Salim v. Citi Bank NA Lahore and another PLJ 2003 (Lahore) 739 (DB), Messrs Tri Star Polyester Ltd., v. Citi Bank 2001 SCMR (SC) 410 and Bolan Bank Limited v. Capricorn Enterprise (Pvt) Ltd. 1998 SCMR (SC) 1961,
12. We have heard the learned counsel for the appellant as well as learned counsel for respondent No.5 and perused the record. In order to examine the scope of the provision of Section 22 subsection (6), it will be advantageous to reproduce the said provision hereunder:-
“22(6) No
appeal, review or revision shall lie against an order accepting or rejecting an
application for leave to defend, or any interlocutory order of the Banking
Court which does not dispose of the entire case before the Banking Court other
than an order passed under subsection (11) of section 15 or subsection (7) of
section 19.”
13. From perusal of the provision of above noted section it is seen that the legislature has provided restriction for filing an appeal, review or revision against an order accepting or rejecting an application for leave to defend or any interlocutory order of the Banking Court which does not dispose of the entire case before the Banking Court. However, such restriction is subject to exception to order passed under sub-section (11) of section 15 or sub-section (7) of section 19 against which orders, an appeal can be preferred under the Financial Institutions (Recovery of Finances) Ordinance, 2001.
14. It will be equally relevant to reproduce hereunder the provision of section 15(11) and section 19 (7) which read as follows:
“15(11)
All disputes relating to the
sale of the mortgaged property under this section including disputes amongst
mortgagees in respect of distribution of the sale proceeds, shall be decided by
the Banking Court.
19(7) Notwithstanding anything contained
in the Code of Civil Procedure 1908 (Act V of 1908), or any other law for the
time being in force—
(a) the Banking Court shall follow
the summary procedure for purposes of investigation of claims and objections in
respect of attachment or sale of any property, whether or not mortgaged,
pledged or hypothecated, and shall complete such investigation within 30 days
of filing of the claims or objections;
(b) if the claims or objections
are found by the Banking Court to be mala-fide or file merely to delay the sale
of the property, it shall impose a penalty upto twenty percent of the sale
price of the property;
(c) the Banking Court may, in its
discretion, proceed with the sale of the mortgaged, or pledged or hypothecated
property if, in its opinion the interest of justice so require:
Provided
that the financial institution gives a written undertaking that in the event
the objections are found to be valid, or are sustained, it shall in addition to
compensating the aggrieved party by the payment of such amount as may be
adjudged by the Banking Court also pay a penalty upto twenty percent of the
sale proceeds and such amounts shall be recoverable from the financial
institution in the same manner as in execution of decrees passed hereunder.”
15. From perusal of the provisions of section 15 (11) it is seen that in case of disputes relating to the sale of the mortgaged property including disputes amongst mortgagees in respect of distribution of the sale proceeds the same are to be decided by the Banking Court and a party aggrieved by such decision can still file an appeal under section 22 of Financial Institutions (Recovery of Finances) Ordinance, 2001. Similarly, from perusal of the provisions of section 19 (7) it is seen that notwithstanding the provisions of Civil Procedure Code or any other law for the time being in force the Banking Court has authority to follow the summary procedure for the purposes of investigation of claim and objections, if any, in respect of attachment or sale of any property whether or not mortgaged pledged or hypothecated, within a period of thirty days from filing of such claim or objections. If Banking Court is of the opinion that claim or objections are malafide or filed merely to delay the sale of the property then a penalty upto 20% of sale price of the property can be imposed. Whereas, Banking Court in its discretion can proceed with the sale of the mortgaged or pledged or hypothecated property if, in its opinion the same will be in the interest of justice. However, it will be subject to written undertaking by Financial Institutions to the effect that in the event the objections are found to be valid or are sustained, it shall in addition to compensating the aggrieved party by the payment of such amount as may be adjudged by the Banking Court also pay a penalty upto twenty percent of the sale proceeds and such amount shall be recoverable from the financial institution in the same manner as in execution of decrees passed hereunder. The order passed under this subsection can be assailed by filing High Court Appeal under Section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001.
16. It is pertinent to note that case before the Banking Court stood disposed of vide judgment dated 30th May 2005 and decree dated 4th June 2005 passed in Banking Suit No.B-48 of 2004, whereas during execution proceedings in Execution No.54 of 2005 an Objector i.e. Respondent No.5 obtained the impugned order dated 6.3.2007 whereby the learned Single Judge in an attempt to interpret an order dated 27.2.2007 passed in H.C.A No.13 of 2007, has in fact stayed the execution proceedings emanating from a judgment and decree passed by a Banking Court.
17. Record of the case reveals that
respondent No.5 was neither a party in the Banking Suit No.B-48 of 2004 nor
filed any application to become a party to the proceedings. However, the
respondent No.5 moved an application under Order 21 Rule 58 C.P.C. for the
first time in the execution proceedings claiming ownership of certain
properties which were duly mortgaged by the respondent No.1 and others with the
bank at the time of obtaining finance facilities. Such application i.e. CMA
No.727/2006 was however dismissed on 19.12.2006 by the learned Single Judge of
this Court in Execution No.54 of 2005 whereby it was held that the objector could not produce any material
on record which could suggest that the applicant or the builder were the owners
of the properties on the date of their mortgage with the bank. It was
further held that all the six properties were leased out in the name of
respondent No.1 i.e. M/s. White Gold
Exporters (Pvt) Ltd. Learned Single Judge further observed that “once the property documents are lawfully
surrendered the property looses the status of ownership. If the applicant is
aggrieved by any of the action of the builder which happens to be her husband
she may initiate proceedings against the builder who has executed sub-lease in
favour of the J.D. Company.” Accordingly, application was dismissed
with cost.
18. Feeling
aggrieved by such order respondent No.5 filed Special High Court Appeal No.13
of 2007 before a Division Bench of this Court, who vide its order dated
27.2.2007 dismissed the appeal in the following terms:-
“In
view of the above, without entering into any further discussion, we deem it
appropriate to dispose of this appeal with the observations that the three
pending suits instituted by the appellant will be proceeded strictly in
accordance with law, without being influenced by any observation made in the impugned
order against the interest of the appellant. Moreover, if any decree is passed
in the suit against the respondent No.1 it will be binding on them.”
However, it appears that during pendency of
the execution application, at the instance of the objector i.e. respondent No.5,
learned Single Judge of this Court while making an attempt to interpret the
order passed in the above mentioned H.C.A No.13 of 2007 dated 27.2.2007 has
passed the impugned order which has in fact disposed of the execution
proceedings by granting stay for indefinite period i.e. dependent upon
determination of the rights of the objector/respondent No.5 in Suits bearing
No.1435/3004 and 379/2003. It may be noted that there is no stay operating
either in the suits filed by the objector/respondent No.5 nor any appeal is
pending against such judgment and decree. Similarly, the objections filed by
the respondent No.5 through application under Order 21 Rule 58 CPC have already
been dismissed whereas appeal against such order also met the same fate. Under
these circumstances, the impugned order passed by the learned Executing Court
restraining the execution of a banking judgment and decree amounts to review of
its own order, whereas it further
negates the effect of the order passed in High Court Appeal No.13 of 2007,
which in our view is not permissible in law.
19. Accordingly,
we are of the view that the impugned order, besides being in the nature of a
final order, whereby the entire execution proceedings have come to a “hault”
since 6.3.2007, otherwise falls within the exceptions provided under section 22
(6) hence appealable. The case law referred to by the learned counsel for the
respondent on this account is not attracted to the facts and circumstances of
this case. We, therefore, set aside the impugned order dated 06.03.2007and
direct the learned Single Judge to proceed with the execution proceedings
strictly in accordance with law and dispose of the same within a reasonable
period not exceeding three months from the date of receipt of this order. As
regards pending suits the same may also be heard and disposed of on their own
merits strictly in accordance with law preferably within a period of six
months.
Instant High Court Appeal stands disposed of
in the above terms.
JUDGE
CHIEF JUSTICE
Karachi
Dated:
30-11-2011