1988 PLP 265 (MLD)

Bilal A. Khawaja for Respondent No.

3. AJMAL MIAN, J‑‑This case is fixed for hearing of C.MA. 3539/1987 for suspension of the impugned order passed by Respondent No.2 contained in their letter dated 17‑11‑1987 addressed to the President of Respondent No.

3. The operative portion of the direction is as follows: "Inform all banks not to allow any insurance cover to these companies till the payment is settled and no other business of loan commitment to be made till they sort out claims:" The above petition had come up for Katcha Peshi before a Division Bench of this Court on 21‑12‑1987 when pre‑admission notice was given to the respondents, in response to which Mr. Mansoor Ahmad Khan appeared for respondent No. 2, Mr. Bilal A. Khawaja for respondent No. 3 and Mr. Qadir A, Sayeed on Court notice. The petition was admitted to regular hearing on the above date and an ad interim order for suspension of the impugned operative portion of the order was passed. The case is fixed for hearing of the above application on the question whether the above order is to be confirmed or is to be vacated.

2. Mr. Mansoor Ahmad Khan learned counsel for respondent No. 2 has vehemently opposed the confirmation of the above order on the ground that under subsections (5) and (5A) of Section 11 of the Banks (Nationalisation) Act, 1974 (hereinafter referred to as the Act), the respondent No. 2 has the powers to issue directions/instructions from time to time to the nationalised banks and, therefore, the impugned directive is in consonance with the powers contained therein. It has been further submitted by him that since admittedly the petitioners have committed the breach of the Insurance Policies by not honouring the commitment, they have not approached the Court with clean hands, and, therefore, they are not entitled to any relief.

3. On the other hand Mr. K.M.A. Samdani learned counsel for the petitioners has submitted that under sections 44 and 44‑A of the Insurance Act, the petitioners were obliged to appoint the surveyors for the purposes of ascertaining the admissibility of the claims and since the three surveyors appointed by the petitioners submitted report recommending the rejection of the .claim, the petitioners have not dishonoured their commitments under the Insurance Policies. It has been further contended by him that the impugned directive has been issued without any prior show cause notice to the petitioners and in fact it amounts to depriving the petitioners to carry on the insurance business.

4. Before taking up the above contentions, it may be observed that the insurance policies were obtained from the petitioners by M/s. Attock Textile Mills Ltd., now known as SIBBAC Textile Mills Ltd. and they had mortgaged their factory and stocks with respondent No. 3 and one of the terms of the mortgage was to obtain the insurance cover. In this background of the facts, the Banking Council respondent No. 2 and M/s. National Bank of Pakistan respondent No. 3 are involved in the present case.

5. The question, whether factually the petitioner have dishonoured their commitment under the Insurance Policies and also the question whether the surveyors have illegally and in excess of their jurisdiction recommended the rejection of the insurance claim will be an issue in a proceeding before the competent forum. The question before us is as to whether respondent No. 2 which is admittedly a public functionary, discharging statutory functions under the Act, prima facie has acted in accordance with law by issuing the above directive, reproduced hereinabove. It is an admitted position that prior to the issuance of the above directive the petitioners were not issued any show‑cause notice nor they were given any notice of the intended action. We are, therefore, tentatively of the view that prima facie the above directive is in violation of the principles of natural justice, warranting suspension of the same. However, it was then contended by Mr. Mansoor Ahmad Khan that a Bank being a commercial organization is free to accept an insurance cover of a particular Insurance company or not to accept and such non‑acceptance does not involve violation of any vested right or principles of natural justice. In our view, the above submission is not pertinent to the point in issue. It is true that a particular bank may decline to accept an insurance cover of a particular Insurance Company as a commercial organization on some commercial considerations but the general direction of the nature, which will prima facie adversely affect the petitioners' reputation and business, prima facie, could not have been issued by respondent No. 2 which is a public functionary and controls all the nationalized banks without first hearing the petitioners ‑land without determination of the question by a competent forum that they have factually I committed the breach of the Insurance Policies. We would, therefore, confirm the interim order. H.B.T./P‑48/K. Interim order confirmed.