1994 PLP 206 (CLC)

MUHAMMAD ASLAM ARAIN, J.‑‑In this Constitution petition the petitioners seek the following reliefs: (a) To declare the action initiated by the respondents vide letter Annexure `A' and the warrants of arrest Annexures `B' and `C', as without lawful authority and of no legal effect; (b) Prohibit and restrain the respondents from taking any coercive action for the recovery of the loan in which the said warrants were issued, i.e. the growers loan granted under the guarantee of the petitioners themselves or through any other agency by any process and in any manner whatsoever or otherwise give effect to the orders contained in Annexure `A' or act upon the warrants Annexures `B' and `C'.

2. The facts as given by the petitioners are that about 100 growers were advanced agricultural loan to the extent of Rs.25,000 each. The petitioners were at the relevant time joint partners of M/s. Tharparkar Cotton Ginner and had jointly offered themselves as guarantors for the repayment of the said agricultural loan of 100 growers. It is further the case of petitioners that the loan was advanced to growers against security i.e. hypothecation of their standing crops. Such loan was not recovered from the borrowers/principal debtors nor the respondent No. 1 took any steps to realise the loan from the securities. Instead, the respondent No.l adopted coercive methods through respondent No.2 for the recovery of the dues as arrears of land revenue. This necessitated the filing of Suit No.841 of 1989 by petitioners in this Court for declaration that the coercive steps being taken against them under the provisions of Land Revenue Act were illegal and unenforceable and for permanent injunction. Ad interim injunction was initially granted on 17‑6‑1989, but under order dated 8‑4‑1990, a learned Single Judge of this Court vacated the temporary injunction, as six months period was over since the grant of temporary injunction, in view of the embargo placed by rule 4‑A of Order 39 of C.P.C. The petitioners challenged the order dated 8‑4‑1992 of a learned Single judge in High Court Appeal, when the office raised an objection to the maintainability of appeal, as, under the provision of Banking (Recovery of Loans) Ordinance, 1979, no appeal lay against interim orders. The petitioners have thus filed the present petition and have claimed relief as stated above.

3. The contention of Mr. Muhammad Sharif, learned counsel for the petitioners is, that the loan advanced to the growers is not recoverable under National Bank of Pakistan Ordinance, 1949, as no provision for the recovery of bank arrears under Land Revenue Act is provided. It is next contended that the amount even if due, cannot be recovered as arrears of Land Revenue, unless such amount is determined by proper forum. He has referred to the following judgments in support of his contentions:‑‑ (i) Abdul Latif v. Government of West Pakistan and others (PLD 1962 SC 384); (ii) Zakaria A. Bawany v. City Deputy Collector, Karachi and 2 others? (PLD 1975 Karachi 1008); (iii) Tariq Mohsin Siddiqui v. Province of Sindh and others (PLD 1976 Kar.728); (iv) Haji Muhammad Aslam Aijaz Ali and others v. Cotton Trading Corporation of Pakistan and others (1985 CLC 848); (v) Agricultural Development Bank of Pakistan v. Sanaullah Khan and others (PLD 1988 SC 67). The contention of Mr. Soomro, the learned counsel for the respondent No.1 is that under section 4(7) of Loans for Agricultural Purposes Act, 1973 a procedure for recovery of loan‑arrears is provided and in case a land owner fails to repay the amount of loan, the Bank can apply to the Collector for recovery of the amount as arrears of land revenue. Since the borrowers failed to pay loan amount, the respondent No.1 sought recourse to the said provision of law for effecting recovery as arrears of land revenue. According to the learn advocate, word `borrower' is defined in section 2(b) of Banking Comp (Recovery of Loans) Ordinance, 1979 and that the petitioners guarantors, being covered by the definition of word `borrower', are liable to coercive action if the dues of the bank are not recovered from the growers. He has also argued that under section 25‑B of Banking Companies Ordinance, 1962, loans and advances made by a banking company for agricultural purposes are recoverable as arrears of land revenue. Syed Sarfraz Ahmed, the learned Addl. A: G. for the respondent No.2 has contended that the respondent No.1 had determined the amount payable by the petitioners or by the borrowers and on failure to succeed in effecting the recovery, the respondent No.2 was authorised to take measures under sections 80 and 82 of the Land Revenue Act, 1967 to effect the recovery by arrest and detention of petitioners in jail.

4. It is not in dispute that the petitioners were the guarantors for repayment of agricultural loan advanced to as many as 100 growers. There is nothing on record to show that any efforts were made by respondent No. 1 for recovery of loan which was secured against hypothecation of standing crop of the growers (loanees). We shall, therefore, proceed on the assumption that the agricultural loan advanced to such growers was not recovered and, therefore, the same was proposed to be recovered from the petitioners/guarantors. The recovery could be effected from the petitioners only after the amount of loan was determined by a proper forum after a proper adjudication and after giving a proper show‑cause notice and opportunity of hearing to the petitioners. Such course was not followed but straightaway, notice under section 82 of Land Revenue Act was issued against petitioners for their arrest and detention.

5. The facts of Abdul LatiPs case (PLD 1962 SC 384) were, that Abdul Latif was a Treasury Contractor and at the end of his term of contract, a deficiency of Rs.7484‑3‑3 in the stamps of treasury was found, which was sought to be recovered by the Tehsildar, at the instance of D.C., by bringing into operation the coercive provisions of the Punjab Land Revenue Act, without serving any show‑cause notice on Abdul Latif. It was held:‑‑ "That the action taken by the Deputy Commissioner against the appellant could not validly have been taken without giving him an opportunity of being heard."

6. In the case of Zakaria A. Bawany (PLD 1975 Kar.1008), this Court, while dealing with the expression "all sum due to the Corporation" in section 31 of Investment Corporation of Pakistan Ordinance, 1966 held: "Under section 31 of the Investment Corporation of Pakistan Ordinance only dues can be recovered as arrears of land revenue and since the dues are those which are determined and established, only such amounts would be recoverable as land revenue as are admitted or established by the competent Court of law." 7.In Tariq Mohsin Siddiqui's case (PLD 1976 Kar.728) a Division Bench of this Court while dealing with the issue of `amount due' to Government under Forest Act held: "A person proceeded against neither served with notice of demand nor given an opportunity to make representation against correctness of amounts claimed by Forest Department as dues, the notices issued by Recovery Officer under Land Revenue Act were held illegal and without jurisdiction." 8.In Haji Muhammad Aslam's case (1985 CLC 848) a notice under section 6 of the Cotton Ginners Control and Development (Repeal) Ordinance, 1977, whereby a demand of payment of certain amount was made, was challenged and a learned Single Judge of this Court while dealing with the word `determine' in section 6 of the Ordinance held at page 855: "The word `determine', therefore, both in its ordinary meaning and also as interpreted by the Courts of law, imports some element of adjudication which could not take place one‑sided if it is likely to affect the interest of another person. It is true that section 6 of the Ordinance, 1977, makes no provision for giving notice to the previous management of hearing them at the time of determination of "present value" or the difference between the present value and the net worth value but mere absence of such provision in the section or the Ordinance is not sufficient to exclude the application of the principles of audi alteram partem. It is now well‑settled law that the principles of audi alteram partem are deemed to be part of every statute which affects the rights of the citizen unless its application is excluded by express words or by necessary implication in the statute. If any authority is needed in this regard reference may be made to the case of the Abdus Saboor v. Karachi University (PLD 1966 SC 536). I, therefore, find no difficulty in holding that the defendant No.1 could not determine the present value of the assets and liabilities of the factory and the difference between the present value and net worth value without notice and without affording the plaintiff, an opportunity of hearing."

9. In a latest pronouncement by the Supreme Court of Pakistan in the case of Agricultural Development Bank of Pakistan (PLD 1988 SC 67), the facts were that the Bank had set into motion the process for the recovery of the outstanding dues of the deceased father under section 25 of Agricultural Development Bank Ordinance, 1965, without determination and ascertainment of the sum due. It was held that the power of coercive recovery could not be invoked against a person who did not secure the loan as an Agriculturist himself, the son having not obtained credit facilities or secured loan which was being recovered from him. The proceeding for recovery was held illegal. It was further held that provisions of sections 79 and 80 of West Pakistan Land Revenue Act, 1967, could be invoked only after determination of the amount of dues as fixed, ascertained and determined sum of money.

10. There is no cavil with the proposition that under section 4(7) of Loans for Agricultural Purposes Act, 1973, a Bank could apply to the Collector for recovery of the amount of un recovered loan as arrears of land revenue. Similarly, there is no dispute that the petitioners as guarantors would be liable to the Bank for repayment of loan if the recovery cannot be effected from the borrowers. But the point for consideration before us would be whether the sum claimed from the petitioners and sought to be recovered as arrears of land revenue; by their arrest and detention in jail, was determined or ascertained through a proper adjudication. In this case, we find that there is no such determination or ascertainment of the amount due, by any forum. The amount claimed from the petitioners is to be calculated by respondent No.l and determined by a competent forum before it could be said to be due. Before issuance of notice under section 82 of the Land Revenue Act, the petitioners were also not given any show‑cause notice under sections 80 and 81 of Land Revenue Act nor, they were heard.

11. For the aforesaid reasons the action of the respondent No.l in seeking recovery of bank dues from petitioners through respondent No. 2 by adopting coercive methoda under section 82 of Land Revenue Act, cannot be sustained. We, therefore, accept this petition, declare the letter Annexure `A' issued by Assistant Collector Grade‑I, National Bank of Pakistan Principal Office, Hyderabad to Deputy Commissioner and Collector (West), Karachi and also the warrants of arrest Annexures `B' and 'C' to have been issued without lawful authority and to be of no legal effect. In the circumstances, there shall be no order as to costs. H.B.T./R‑237/K?????????????????????????????????????????????????????????????????????????????????? Petition accepted.