P L D 1974 Supreme Court 319 (PLP)

In the application presented by the Industrial Development Bank of Pakistan before the learned District Judge of Lahore, it was stated that the industrial concern operating under the name and style of Messrs Muhammad Afzal Muhammad Khaleel was a partnership concern, and had obtained a loan of Rs. 3 lacs from the Bank for the purchase of machinery and construction of buildings etc. vide agreement executed on the 16th of October 1963. The loan was to be repaid in sixteen instalments of Rs. 18,750 each, commencing with: effect from 7‑11‑1964, but the industrial concern defa ulted in paying the instalments as well as the interest due thereon. The Bank calculated that as on 31‑12‑1970 a sum of Rs. 2,37,984.37 was outstanding against the present petitioners, which the Bank was entitled to recover by the sale of the immovable property and the machinery of the Firm. It was, therefore, prayed that an order for the sale of those properties, or such other property of the partnership as was likely to fetch an amount equivalent to the outstanding liability of the Firm, may be passed by the Court. A prayer was also made for an ad interim order of attachment in respect of the properties in question. On receiving the application, the learned District Judge passed an order of ad interim attachment of the properties mentioned in the Schedules to the application, and issued notice to the petitioners for 13‑9‑1971 to show cause as to why the order should not be made absolute. The peti tioners were served, and appeared before the Court on 29‑2‑1972. They were directed to file their reply on 19‑4‑1972, on Which date the Court was on leave and no one appeared for the petitioners. Under the provisions introduced by the Law Reforms Ordinance, 1972, the Ministerial Officer of the Court adjourned the matter to 19‑5‑1972, on which date the petitioners were again absent and ex parte proceedings were ordered against them. Finally, on 13‑6‑1972, the learned District Judge passed an order, confirming the ad interim order of attachment, and also passed a decree in favour of the Bank for a sum of Rs. 2,69,982.16 on the basis of the accounts presented by the Bank. The petitioners made an application to the learned District Judge for ‑setting aside the ex parte order made by him on the 13th of June 1972, but the same was dismissed by him on 14‑9‑1972. He observed that the applica tion was time‑barred, and that sufficient cause had not been shown for the 'absence of the petitioners on 19‑4‑72 and no fresh notice was required to be issued, under the Law Reforms Ordinance, for the next date of hearing. Aggrieved by these orders of the learned District Judge, the petitioners filed an appeal in the High Court, which was, however, dismissed in limine. The learned Judge observed that in terms of the provisions contained in rule 5 of Order XVII of the Code of Civil Procedure no fresh notice was necessary for the appearance of the parties on the date fixed by the Ministerial Officer of the Court, and on that date the learned District Judge was competent to proceed with the case on merits. As regards the contention that the learned District Judge was not competent to pass a decree, while considering an application under section 39 of the Ordinance, the High Court observed that this was correct, but it was open to the learned District Judge to investigate into the question of the liability of the petitioners and to decide that question one way or the other. The learned Judge added that "the order of the learned District Judge will be read in this light." While seeking leave to appeal, the learned counsel for the petitioners has not said anything on the question of the validity of the ex parte proceed ings taken by the learned District Judge by reason of the non‑appearance of the petitioners on 19‑4‑1972, 19‑5‑1972 and 13‑6‑1972. Nor has he made any submissions with regard to the refusal of the learned District Judge to set aside his ex parte order of the 13th of June 1972. The only point urged by the learned counsel is that while acting under section 39 of the Industrial Development Bank Ordinance, 1961, as amended in 1965, the learned District Judge had no power or jurisdiction to pass a decree against the petitioners, and to that extent the order is a nullity in the eye of law. It is submitted by the learned counsel that the High Court should have accepted the petitioners' appeal and set aside the order in question. Section 39 of the Industrial Development Bank of Pakistan Ordinance, 1961, is a lengthy section, dealing with several substantive and procedural matters, but for our present purpose it would suffice to reproduce here only those provisions which are directly relevant. Subsection (l) of this section is in the following terms:‑ "(1) Where by reason of the breach of any condition of any agreement between the Bank and an industrial concern, the Bank becomes entitled to require the immediate payment of any loan before the due date or where an industrial concern fails to re‑pay such loan by the due date or in compliance with the notice under section 38, an officer of the Bank, generally or specially authorised by the Board in this behalf, may apply to the District Judge within the local limits of whose jurisdiction the concern carries on the whole or a substantial part of its business, for one or more of the following reliefs, namely:‑ (a) an order for the sale of the property pledged, mortgaged, hy pothecated or assigned to the Bank as security for the loan, or (b) transfer of the management of the concern to the Bank, or (c) an, injunction ad interim where there is apprehension that machinery or equipment may be removed from the premises of the concern without the permission of the Board." Subsection (3). of section 39 provides that "when the applications is for the relief mentioned in clause (a) or clause (c) of subsection (1), the District Judge shall pass an order ad interim attaching the property re ferred to in clause (a) as aforesaid or such other property of the concern as is likely in his estimation to fetch, on being sold, an amount equivalent to the outstanding liability of the concern to the Bank together with the costs of the proceedings taken under this section with or without an injunc tion ad interim restraining the concern from transferring or removing any machinery or equipment without the consent of the Bank." Subsection (8) empowers the District Judge to investigate the claim of the Bank, and subsection (9) authorises him, inter alia, on completing the investigation, to confirm the order of attachment or direct the sale of the attached property. Subsection (10) then lays down that "an order under this section for the attachment or sale of property shall be carried into effect as far as may be in the manner provided in the Code of Civil Procedure, 1908 (Act V of 1908) for the attachment or sale of property in execution of a decree as if the Bank were the decree‑holder." It will be seen from the above quoted provisions of section 39 of the Ordinance that while the District Judge, acting under this section, has not been specifically empowered to pass a decree, at the instance of the Bank, yet an order of attachment or sale made by him is to take effect as if the Bank were the decree holder. It seems to us that the learned District Judge must have been influenced by this provision when he used words, in his order dated the 13th of June 1972, to the effect that he would pass a decree in favour of the Bank for a certain amount. The learned Judge in the High Court was right in saying that technically a decree could not be passed. but the learned District Judge could certainly fix the liability of R the petitioners in terms of subsection (8) of section 39, and he could confirm the interim order of attachment or direct the sale of the property under subsection (9) thereof. In view of the relevant provisions contained in section 39 of the Ordinance, the contention raised on behalf of the petitioners is nothing but a technicality, which has been adequately taken care of by the High Court in the judgment under appeal. We would also clarify that under section 39 of the Ordinance, the learned District Judge was not empowered to pass a decree as such, and to that extent his order of the 13th of June 1‑972 can be ignored. However, the determination of the petitioners' liability was within the power and jurisdiction of the learned District Judge, and he was also competent to confirm the interim order of attachment, or to direct the sale of the property in terms of subsection (9) of section 39 of the Ordinance. We consider, therefore, that no justification is made out for our inter ference in the matter. We would, accordingly dismiss this petition. S. A. H. Petition dismissed.