1998 PLP 1152 (CLC)

This application, under section 10 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, is filed by the learned counsel for defendants Nos. l to 4 without specifying as to on whose behalf the application has been filed. In support of the application, affidavit is sworn by the defendant No.2 who does not claim to be representing any other defendant. The learned counsel for defendants Nos. l to 4 submits that the application may be treated as one filed on behalf of defendants Nos. l to

4. I am afraid such request is not tenable in view of the provisions contained in section 10 of Act XV of 1997 which is to the following effect: "10:‑‑‑Subject to section 11, the Banking Court shall, upon an application made by a defendant within twenty‑one days, give leave to defend the suit, if a serious and bona fide is raised thereby. Provided that where service has been validly effected only through publication in the newspaper the Banking Court may extend the time for filing an application for leave to defend if satisfied that the defendant did not have knowledge thereof." ‑ The use of word 'thereby' in the above‑quoted provision, does carry a purpose. The word 'thereby' means ' by that means'. An applicant seeking leave to defend the proceedings is, therefore, required to narrate the necessary facts and grounds in the application itself. The present application does not contain any ground whatsoever muchless raising bona fide or serious dispute warranting grant of leave. The learned counsel for defendants Nos. l to 4 has referred to Rule 74 of Sindh Chief Court Rules (OS) and contends that the application being for leave to defend is required to be supported by affidavit wherein the grounds and facts on which the application is based, can be stated. Even if such contention is accepted, the affidavit filed in support of the application has been sworn by the defendant No.2 alone and the other defendants cannot claim the present application to have been preferred on their behalf, too. In the circumstances, I intend to consider the present application as one for grant of leave on behalf of defendant No.2 namely Ali Azhar Naqvi. The learned counsel for the defendants Nos. l to 4 has urged that the present proceedings cannot continue nor can be heard in view of the prohibition contained in section 316 of the Companies Ordinance. It is stated in the affidavit of defendant No.2 that learned Company Judge of this Court has been pleased. to order winding up of defendant No. l‑company in Judicial Miscellaneous No. 158 of 1996 through his order, dated 12‑8‑1997, and Official Assignee has been appointed the Official Liquidator of defendant No. l‑company. It is, however, pointed out by the learned counsel for defendants Nos. l to 4 that on Civil Miscellaneous Application preferred in Civil Appeal No. 1175 of 1997, an Hon'ble Judge of the Supreme Court has been pleased to pass the following order: "

1. Let the appeal and the stay application be fixed for hearing at an early date.

2. Meanwhile, operation of the impugned judgment is stayed.

3. The official assignee of the Sindh High Court shall prepare an inventory of the appellant's assets and shall send a copy of the same to this Court. Learned counsel appearing on behalf of the appellant undertakes that till the disposal of this matter the appellant shall not dispose of or alienate the assets of the company except doing transactions of the routine nature." It is contended by Mr. Akhtar Ali Mehmood that despite operation of the judgment, dated 12‑8‑1997 passed in Judicial Miscellaneous No. 158 of 1996 having been stayed, the provisions of section 316 of the Companies Ordinance would be attracted to the present proceedings in relation to defendant No. l as well as the other defendants. It is further urged that the appointment of Official Liquidator by the learned Company Judge in Judicial Miscellaneous No. 158 of 1996 has not been disturbed by the abovequoted order passed by Hon'ble Judge of the Supreme Court. Therefore, it is urged, the plaintiff cannot proceed against the defendants. It is further contended by Mr. Akhtar Ali Mehmood that the plaintiff in the present case is not a party to the proceedings before the Supreme Court of Pakistan and therefore can not take advantage of the above‑quoted order passed by the Supreme Court of Pakistan. In reply, it is argued by Mr. A.I. Chundrigar that section 316 of the Companies Ordinance merely prohibits proceedings against a company except by leave of the Court when a winding up order has been made or a Provincial Manager has been appointed. The proceedings against the defendants Nos.2 to 8 who had been sued as guarantors, according to the learned counsel for the plaintiff are based on an independent cause of action, and therefore, can be proceeded with notwithstanding order for winding up of the defendant No. l‑company. In the present case, according to Mr. Chundrigar, the order for winding up of defendant‑No. l‑company, having been stayed by the Hon'ble Supreme Court of Pakistan, the same is to be considered to have gone under an, eclipse and for the present, has to be treated as non‑existent. Mr. Chundrigar has further urged that the Official Assignee has been permitted through specific terms to prepare an inventory of the assets of defendant No. l‑company and send the same to the Hon'ble Supreme Court of Pakistan. The Official Assignee, therefore, cannot take any further proceedings as Official Liquidator towards winding up of the defendant No. 1 ‑company. The grant of stay by the Hon'ble Supreme Court of Pakistan has suspended operation of the judgment, dated 12‑8‑1997 passed in Judicial Miscellaneous No. 158 of 1996 which cannot be given any effect. It is further submitted by Mr. Chundrigar that his client cannot, for the present, move an application under section 316 of the Companies Ordinance seeking permission from the learned Company Judge for proceeding against defendant No. l‑company since such an action shall be violative of the said order passed by the Hon'ble Supreme Court of Pakistan. The plaintiff, it is submitted, despite not being a party to the proceedings before the Hon'ble Supreme Court is bound by the terms of the said order passed in Civil Appeal .No.1175 of 1997 whereby judgment, dated 12‑8‑1997 passed in Judicial Miscellaneous No. 158 of 1996 has been suspended. It is pertinent to mention that an order of winding up applies for the benefit of all the creditors and suspension thereof, likewise, affects all the creditors. Having considered the respective submissions of the learned counsel I find that the provisions contained in section 316 of the Companies Ordinance merely prohibit proceedings against a company which is ordered to be wound up or in relation to which Provisional Manager is appointed. The proceedings against co‑defendants who can independently be sued cannot be stayed by application of the provisions contained in section 316 of the Companies Ordinance. Under the Banking Companies (Recovery of Loans, Credit, Advances and Finances) Act, 1997, proceedings can independently be maintained against a surety or an indemnifier and the definition of word customer' contained in section 2(d) of the said Act, is enlarged by including a surety or an indemnifier therein. The learned counsel for the plaintiff, in this behalf, has rightly referred to the observation contained in the case of UBL v. Shaharyar Textile Mills Limited (1996 CLC 106). The cause of action against guarantors is based on the Letters of Guarantee executed which in the present case were admittedly executed by defendants ‑Nos.2 to

8. The language of section 316 of the Companies Ordinance is very clear and proceedings against a company alone are required to be stayed. In any event, in the present case, on account of stay granted by the Hon'ble Supreme Court of Pakistan, the defendant No.1 cannot urge that the matter against it should not proceed. The objection raised by Mr. Akhtar Ali Mehmood against present proceedings is, therefore, overruled being without substance. It is further urged by Mr. Akhtar Ali Mehmood that' the defendants have not been able to pay the amount claimed by the plaintiff due to negligence of the latter in fulfilling its commitments under the Finance Agreement. The learned counsel was asked if any obligation contained in the agreement could be pointed out which had not been fulfilled by the plaintiff; the reply by the learned counsel, however, is in the negative. Such ground, therefore, cannot warrant grant of leave to defend the proceedings. It was finally argued by the learned counsel for defendants Nos. l to 4 that although the defendants admit that the loan was availed by them and the various documents filed alongwith the plaint were duly executed, the statement of accounts filed by the plaintiff is improper and has not been prepared in accordance with the agreement between the 'parties. The learned counsel, however, is unable to point out any error in the statement of accounts. In the circumstances, the defendant No.2, having failed to raise any serious or bona fide dispute, is not entitled to grant of leave to defend the present proceedings and the application is dismissed.

2. This application for leave to defend is filed on behalf of defendant No.7. The only contention raised by Mr. Rizwan Ahmad Siddiqui is that the guarantee allegedly executed by his client does not bear signatures of defendant No.7. It was pointed out to the learned counsel that in para. 6 of the affidavit of defendant No.7, the signatures on personal guarantee have been admitted. The learned counsel upon being pointed out such factor, did not press this application any further which is, consequently, dismissed.

3. Mr. Makhdoom Ali Khan appearing on behalf of defendant No.9 has urged that his client holds the first charge on the mortgaged property of defendant No. l and is in possession of the original title documents. Such position is admitted in para. 3 of the plaint and Mr. A.I. Chundrigar submits that he presses for final mortgage decree subject to the first charge held by the defendant No.

1. It is further pointed out by Mr. Chundrigar that he does not claim any relief against defendant No.9 who has been joined as a peroforma party. The learned counsel wants it to be placed on record that under Order XXXIV, Rule 12 and 13, C.P.C., the defendant No.9 shall be entitled to satisfaction of its claim in preference to that of the plaintiff. In view of such statement made by the learned counsel for the plaintiff which is adopted as order of the Court, the learned counsel for defendant No.9 does not press this application which is accordingly dismissed. In view of the dismissal of the applications for leave to defend, filed on behalf of defendants Nos.2 and 7 and due to non‑filing of applications by the other defendants, the contents of the plaint are to be deemed to have been admitted and the plaintiff is entitled to decree forthwith. I have, however, proceeded to consider the plaint and the documents filed in support thereof. It is found that the statement of account filed alongwith the plaint is incomplete. Mr. A. I. Chundrigar requests for a short adjournment to file complete statement of accounts. In the first place, such statement of accounts ought to have been filed alongwith the plaint and the request made at this stage is not justified. However, in the interest of justice, the matter is adjourned to 30‑4‑1998 subject to payment of Rs.5;000 as costs to be deposited with the Nazir of this Court before the next date of hearing. A.A./U‑25/K Adjournment granted,