2007 PLP 69 (CLD)

MUNIB AHMED KHAN, J.

Through these three petitions, the petitioners have challenged the orders of Banking Court dated 6-12-2004, passed in separate but similar different banking proceedings. Main ground of attack of these petitions is that Banking Court has no jurisdiction in the matter, as according to the notices issued by the Bank, the finance involved was more than Rs.1,000 million, specifically Rs.1046.114 million collectively due from the properties of petitioners, therefore, the Banking Court, which has been defined in section 2(b) is High Court as the jurisdiction of Banking Court headed by Banking Judge is Rs.50 million only. Mr. Ali Sajjad learned counsel for the petitioners has pointed out that in the legal notices dated 23rd April, 2003, 23rd May, 2003 and 10th July, 2003, it has been tried to establish that against certain account operated by the petitioners a total sum of Rs.1046.114 Million along with cost etc. was payable by them. Learned counsel for the petitioner has pointed out notice published in daily Dawn dated 9-8-2003, wherein the claim of the Bank has been mentioned as Rs.1046.114 Million (Principal Rs.829.580 Million and mark-up Rs.216.534) as on 31-12-2002. He has submitted that even in the said public notice, all the properties of the petitioners have been taken together and above total amount has been shown as claim of the Bank. In the circumstances, learned counsel has prayed that the order dated 6-12-2004, whereby writ of possession has been issued may be set aside, as the Banking Court has no jurisdiction in the matter. According to the facts coming on record, the Banking Court initiated the action against the petitioners by filing application under section 15(6) of Financial Institutions (Recovery of Finances) Ordinance, 2001 (hereinafter referred to as FIO), with the prayer that direction be issued to the occupant of the property, being subject-matter of the petition, to hand over vacant possession. In the said application, it was stated that the Bank was mortgagee of the property and by virtue of power conferred upon the Bank under section 15 of the FIO, it is entitled to sell the mortgaged property without intervention of the Court by public auction and that the Bank has served notice on the mortgagors, as required under section 15 of the FIO towards sale of property. It was also mentioned that the matter was publicized in daily Dawn Karachi and that one of the property described in that notice was subject-matter of the application under section 15(6) of the FIO and that notice was also sent to the occupant of the property to hand over the possession but he failed to do so, therefore, that application under section 15(6) ibid was filed. It is pertinent to point out that in the said application made under section 15(6), the petitioners were not impleaded as party but the occupant of the property was arrayed as respondent whereas the petitioners, after knowing the pendency of the matter, filed application under Order I, rule 10, C.P.C. for becoming a party. Besides contesting the matter in the Banking Court, the petitioner also resorted to Balochistan High Court as well as to the Honourable Supreme Court, on the point that section 15 of FIO was in conflict with Articles 4 and 174 of the Constitution. Balochistan High Court, during the hearing, passed some orders including furnishing of Guarantee of Rs.500 Million and granted status quo. Honourable Supreme Court was also approached in that matter which issued certain directions in the matter. However, the Balochistan High Court dismissed the said petition of the petitioners. The proceedings in Balochistan High Court as well as before Honourable Supreme Court are not relevant to the issue raised before this Court, as the following specific issues have been raised by Mr. Ali Sajjad, learned counsel for the petitioner:-- (1) that the Banking Court was not the "Court" as envisaged under section 15(6) of FIO as word "Court" mentioned in it has been defined under section 2(b), which means "High Court", as through notices of the bank as well as advertisement, amount due from the petitioner was Rs.1046.114 Million. (2) That C.P.C. is applicable by virtue of section 7(2) of the FIO but the Bank failed to comply with Order XXI, rule 66, C.P.C. (3) That the alleged auction was not public auction, as the properties have been thrown out, much below the market value. (4) That the Bank has failed to file Statement as required under section 15(10) of the FIO as even at the date of order dated 6-12-2004 there was no statement. Learned counsel for the plaintiff has relied upon 2002 CLD 441, 2003 CLD 689, 2002 YLR 969, 2002 CLD 264, PLD 2002 SC 452, 2006 CLD 812 and 2004 CLD

215. On the other hand, learned counsel for Bank Messrs Nafees Siddiqui and Izhar Alam Farooqi as well as learned counsel for one , of the auction-purchaser Ms. Wajihah Mehdi in C.P. No.219 of 2005 at the first hand objected to the maintainability of the petition on the ground that the petitioner has already exhausted his remedy till Honourable Supreme Court and, secondly, he could avail the remedy by filing of appeal under section 22 of the FIO against the order dated 6-12-2004 passed by Banking Court whereby the possession has been granted with police aid. All the three learned counsel have emphasized that the definition as given in section 2(b) is applicable only when a suit is filed by the Banking Court but in the proceedings under section 15 "Court" means "Banking Court" only and not "High Court". Mr. Nafees Siddiqui, learned counsel, through his written synopsis has pointed out that admittedly respondent-Bank has issued combined notices to the mortgagor and that all three notices, as required under section 15 ibid were given and that against each property separate application under section 15(6) has been filed, as each property has been purchased by defendant auction-purchaser. Mr. Izhar Alam Farooqi learned counsel for auction-purchaser in one of the matters and Advocate for another auction-purchaser, has tried to define the words "case" and "suit" and has submitted that the "suit" is covered by definition of section 2(b) of FIO while other proceedings, including that which was filed under section 15(6) are covered by word "case" which can be filed in the Banking Court irrespective of the money involved. He has further submitted that property has already been sold and sale-deeds have been executed during the period from 25-3-2004 to 20-4-2004 during which period there was no Stay by the Honourable Supreme Court as the petition was dismissed for non-prosecution on 25-3-2004. He has further submitted that this Court cannot grant relief, which is subsidiary and ancillary to the main relief and that point of jurisdiction was never raised by the petitioner before Banking Court and it could not be raised now. He has relied upon 1987 PLC 605, PLD 1986 Lah.184, PLD 1983 Karachi 112, AIR 1965 Kar. 99, AIR 1965 SC 834, PLD 1972 SC 337, 1983 CLC 3075, PLD 1987 SC 512, 1987 CLC 1338, 1994 SCMR 1555, PLD 1985 SC 104, PLD 1982 SCMR

633. Ms. Wajihah Mehdi, learned counsel has submitted that on the basis of restraining order on some dates by Balochistan High Court and by the Honourable Supreme Court the Banking Court 'adjourned the matter from time to time but after dismissal of the petition by the Honourable Supreme Court and Balochistan High Court nothing was left and the Banking Court has rightly passed order dated 6-12-2004. She has also drawn attention of the Court to Banking Law, specially section 2(b), defining "Banking Court" as well as section 15 pertaining to the sale of the mortgaged property. She has also argued the point of jurisdiction and emphasized upon doctrine of de fecto Court and that the Banking Court after passing of the order and specially handing over the property to the auction purchaser has become functus officio, therefore, the matter has come to an end and could not be reopened now. She has referred Black Law Dictionary to define the word "defecto" and has submitted several authorities to force her contentions. She has further submitted that the petitioner has no locus standi as he was alien to proceedings under section 15(6) of FIO and that the factual controversy in respect to the mortgage and handing over possession could not be agitated upon under Article 199 of the Constitution. Learned counsel has relied upon 1997 SLJ 550, SBLR 2004 Sindh 623, 2003 CLD 689, 2002 CLD 441, 2002 YLR 696, 1999 SCMR 900, 2002 CLC 147, 2006 AC 44, 2004 UC 310, 2002 CLC 1438, 2001 CLC 1267, PLD 1987 SC 512, 2004 SCMR 1965, PLD 1983 Kar.122 and 2006 SCJ

509. After hearing the arguments and going through the relevant provisions of law as well as the case-law cited, we have observed that admittedly the bank has initiated its demand of Rs.1046.114 Million along with cost of funds @ 8% by its legal notice dated 23rd April, 2003 second notice was repeated on 23rd May, 2003 and third was issued on 10th June, 2003. In all the three notices it was specifically mentioned that these have been issued under section 15 of the FIO; a cursory look at all the notices shows that they are silent in respect to mortgaged property nor there is a bifurcation of the claim of Rs.1046.114 Million in any respect. The only bifurcation in respect of the principal amount and mark-up which were Rs.829.580 Million plus 216.534 Million. These notices were replied by the petitioner asking thereby relevant documents and bifurcation of the claim as well as the properties but no reply was given to its queries. Further to its notice, the bank published notice of sale in terms of section 15(4) of the FIO. In the said notice, a lump sum amount of Rs.1046.114 Million as on 31-12-2002 has been given while 14 properties have been mentioned therein, but it has not been mentioned as to what property has been mortgaged by which person or entity and what amount is due against each property. For the convenience, section 15(4) of the FIO is reproduced as under:-- "15(4) Where a mortgagor fails to pay the amount as demanded within the period prescribed under subsection (2) and after the due date given in the final notice has expired, the financial institution may without the intervention of any Court, sell the mortgaged property or any part thereof by public auction and appropriate the proceeds thereof towards total or partial satisfaction of the outstanding mortgage money": Provided that before exercise of its power under this subsection, the financial institution shall cause to be published a notice in one reputable English daily newspaper with wide circulation and one Urdu daily newspaper in the Province in which the mortgaged property is situated, specifying particulars of the mortgaged property, including name and address of the mortgagor, details of the mortgaged property amount of outstanding mortgage money, indicating the intention of the financial institution to sell the mortgaged property. The financial institution shall also send such notices to all persons who, to the knowledge of the financial institution, have an interest in the mortgaged property as mortgagees. It is apparent from the above proviso to section 15(4) that besides detail of mortgaged property name of mortgagor and outstanding amount against the property is to be given. Since separate amount has not been given against each property, therefore, notice in the newspaper is to be taken as a whole and the amount involved is to be considered as Rs.1046.114 Million which identify the jurisdiction of the Court. As far as the word "Court" is concerned, it is defined under section 2(b) which reads as follows:-- "2(b) Banking Court means:-- (i) In respect of a case in which the claim does not exceed fifty million rupees or for the trial of offences under this Ordinance, the Court established under section 5; and (ii) In respect of any other case, the High Court. In the light of above, it is clear that the word "Banking Court" used in section 15(6) of FIO can be "High Court" only due to involvement of more than Rs.50 million and not the "Banking Court". The words "suit" and "case" have no difference within the meaning of the FIO and contention of the learned counsel in this respect does not appeal to mind. The civil jurisdiction of Banking Court in respect to finance is only up to Rs.50 million while for trial of offences under the FIO is unlimited. It has also been observed from the documents and arguments that the Bank failed to file proper accounts of sale proceeds within 30 days of the sale, as required by section 16(10) of FIO. This requirement is mandatory and irrespective of the fact as to who has filed application under section 15(6), a "Bank" of "auction-purchaser", but filing of the account is must. It is strange that without coming on record any amount, the Banking Court has assumed the jurisdiction without looking into the mandatory directions of law in respect to the publication of notice under section 15(4) its effect including determination of financial liability of a customer, as well as financial statement under section 15(10) of FIO. Which are necessary to entrust jurisdiction upon a particular Court. Learned counsel for the respondents have further submitted that the petitioner has not objected to the jurisdiction of the Banking Court, therefore, it cannot challenge the jurisdiction before this Court. In this respect it will be pertinent to mention that petitioner was not impleaded as a party, when action under section 15(6) FIO was initiated and he himself appeared before the Court with the application under Order I, rule 10, C.P.C. and in paragraph No.3 of the said application he has stated:-- "No document, whatsoever, which creates liability against intervenor has been placed before this Honourable Court for due appreciation. Hence this application is not maintainable." The petitioner has also filed another application under Order XXI, rules 58, 59, 60, C.P.C. in the Banking Court for holding an inquiry. From above two applications, it appears that the petitioner has not been provided proper opportunity despite the fact that he himself appeared in Court. The impugned order dated 6-12-2004 itself shows that learned counsel for the respondent have objected to appearance of petitioner's counsel on the ground that the petitioner has no locus standi in the matter. In the circumstances, it cannot be said that the petitioner has consented to the jurisdiction of Banking Court and even otherwise when there is grave violation in observance of substantive provision of law, even consent cannot entrust the jurisdiction upon a forum which was never vested in it. In the circumstances, it is clear that Banking Court had no jurisdiction to entertain the matter and the order passed by it, suffers from principle of corum non judice and is liable to be set aside. It will be pertinent to point out that bank has allegedly sold three properties of the petitioner at its own, at a valuable location and apparently below the market value but in spite of that, it concealed the facts and did not file statement of account for a longer period of more than a year and even the order dated 6-12-2004, which has been seriously assailed before this Court, also contain direction to the Bank to file statement under section 15(10) which would have been done much earlier by the Banking Court before assuming the jurisdiction. It has further been noted that, by virtue of section 7(2) of the FIO Civil Procedure Code is applicable, therefore public auction notice by the Bank would have been issued in terms of Order XXI, rule 66, C.P.C. which is reproduced to highlight the requirement of public auction notice:-- "Order XXI, rule

66. Proclamation of sales by public auction.

(1) Where any property is ordered to be sold by public auction in execution of a decree, the Court shall cause a proclamation of the intended sale to be made in the language of such Court; (2) Such proclamation shall be drawn up after notice to the Decree-holder and the Judgment-debtor and shall state the time and place of sale, and specify as fairly and accurately as possible: (a) The property to be sold: (b) The Revenue assessed upon the estate or part of the estate, where the property to be sold is an interest in an estate or in part of an estate paying revenue to the Government; (c) any encumbrance to which the property is liable; (d) the amount for the recovery of which the sale is ordered; and (e) every other thing which the Court considers material for a purchaser to know in order to judge the nature and value of the property. (3) Every application for an order for sale under this rule shall be accompanied by a statement signed and verified in the manner hereinbefore prescribed for the signing and verification of pleadings and containing, so far as they are known to or can be ascertained by the person making the verification, the matters required by sub-rule (2) to be specified in the proclamation; (4) For the purpose of ascertaining the matter to be specified in the proclamation, the Court may summon any person whom it thinks necessary to summon and may examine him in respect to any such matters and require him to produce any document in his possession or power relating thereto." From the proceedings in hand, it is apparent that above requirements have not been fulfilled, in the given circumstances, the authorities cited by the learned counsel for the respondent are not attracted. Learned counsel, specifically, Ms. Wajihah Mehdi has argued that since the Court has become functus officio after handing over property, therefore, the matter has come to an end. She has relied upon several authorities but all those authorities are not attracted in the case in hand as the orders passed by Banking Court have not become a fait accompli, as its orders are not irreversible and factual position can be restored. We also do not agree with the objections of learned counsel in respect to maintainability of the petition, as the Banking Court has wrongly assumed the jurisdiction and bank has gravely violated the law to its own benefit, secondly, the order passed by Banking Court falls within sub-clause (6) of 22 of FIO and are not subjected to appeal. Even otherwise, grave illegality has been committed by the Bank against its customer, as being reflected in the factual position narrated above, therefore, it is declared that the order dated 6-12-2004 is not maintainable and is set aside, as very proceedings before the Banking Court with all its consequences were corum non judice and was assumed wrongly by the Banking Court and are of no legal effect, hence the parties do stand at place where they were at the time of filing of proceeding in the Banking Court under section 15(6) of the FIO, 2001. S.M.B. /A- 126/K??????????????????????????????????????????????????????????????????? ??????????? Petition allowed.