2005 PLP 1445 (CLD)

Appellants/judgment debtors, through the filing of the present appeal under section 21 of the Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act 1997 (hereinafter referred to as Act), have called in question order dated 14-11-2000, whereby the learned Judge Banking Court dismissed appellant's objection petition for non-deposit of 20% of the auction money.

2. Precisely stated the facts of the case are that pursuant to passing a decree for recovery of Rs. 14,45,676 with costs and future mark-up, against the appellants, by the learned Judge Banking Court, Faisalabad, vide judgment and decree dated 15-9-1999, which attained finality, the decree-holder initiated execution proceedings. During the execution process, the questioned property was put to sale/auction and respondent No.2, being the highest bidder, was declared successful. Thereupon, the appellants filed the objection petition, under Order XXI, rule 90, C.P.C., and on the pointation of the learned counsel for the appellants, the learned Executing Court directed the appellants to deposit a sum of Rs.2,60,000, being 20% of the auction money, on or before 13-11-2000. The appellants failed to deposit the requisite amount as per the terms of the said order and, thus, the learned Executing Court dismissed their objection petition; sale/auction favouring the highest bidder was confirmed and sale certificate was ordered to be issued in his faovur, vide composite impugned order dated 14-11-2000, hence the present appeal.

3. Learned counsel for the appellants has contended that despite the request of the learned counsel for extension of time for deposit of a sum of Rs.2,60,000, the same was illegally declined by the learned Executing Court. He has further submitted that the sale was collusive between the auction purchaser and the Bank and that was the reason why no objection petition was filed by the decree-holder bank. He has added that no notice of auction was served upon the appellants, inasmuch as the Court Auctioneer did not attend the auction proceedings and all the proceedings culminating to the confirmation of sale, are nullity in the eyes of law. He has relied upon judgment, passed by this Court, Messrs Dawood Flour Mills and others v. National Bank 1999 MLD 3205 and Messrs Noor Hayat Industries (Pvt.) Ltd. through Chief Executive v. Judge Banking Court No.1, Multan and 5 others 2004 CLD 1281. Conversely, the learned counsel for the respondents has submitted that the objection petition was dismissed only for non deposit of 20% of the auction amount, therefore, the pleas raised by the learned counsel, at this stage, are irrelevant and cannot be considered by this Court. He has added that the auction proceedings were legal, valid and sale certificate had been granted to the auction purchaser, who is in possession of the property since long. He has further submitted that no sufficient cause was shown by the appellants for non-deposit of the requisite amount, as directed by the Court, therefore, there was no legal justification for extension of time.

4. Undoubtedly, appellant's objection petition was dismissed on the ground that they failed to comply with the terms of order dated 24-10-2000, whereby the learned Executing Court directed the appellants to deposit 20% of the auction money. Learned counsel for Bank has rightly submitted that other pleas raised by the learned counsel cannot be entertained, as they are out of context. Although it has been urged by the learned counsel that the appellant's counsel requested for extension in time, yet no such material has been placed on record to demonstrate that in fact any such like request was made to the learned Executing Court and on what grounds. Second Proviso to Order XXI, rule 90, C.P.C. envisages that no application under Order XXI, rule 90 shall be entertained, unless the applicant deposits such amount not exceeding twenty percent of the sum realized at the sale or furnishes such security, as the Court may direct. In view of the said provision of law and on the asking of the learned counsel for the appellants, the learned Executing Court, on 24-10-2000, directed the appellants to deposit 20% of the auction price, which order was not complied with by the appellants. Article 166 of the Limitation Act provides that an application under Order XXI, rule 90, C.P.C. has to be filed within thirty days from the date of the sale. It is settled law that the Court A has no power to extend the time for doing an act which has been determined and fixed by law. If any case is needed, judgment reported as Messrs Maqi Chemicals Industries (Pvt.) Limited through Chief Executive and 3 others v. Habib Bank Ltd. through Manager and 2 others 2003 CLD 571 can be referred. The learned Executing Court, on 24-10-2000, directed the appellants to deposit 20% of auction price, despite that the appellants could not take advantage of the extended period and failed to deposit the requisite amount. More importantly, no valid and legal ground was put forth before the learned Executing Court for extension of time, as even according to the stance of the appellants they could not arrange for the amount of Rs.2,60,

000. This can hardly be considered as valid and legal ground for extension of time.

5. As regards the contentions raised by the learned counsel for the appellants, suffice it to say that those are of no help to the appellants, at this stage, as their objection petition was not entertained and they were knocked out on the ground of non-deposit of 20% of the auction amount. Had the appellants deposited 20% of the auction price, as directed by the Executing Court, the learned Banking Court would have adjudicated upon and dealt with all the objections raised in their objection petition. The deposit of amount of 20%, of auction amount was sine qua non for entertaining the objection petition. The appellants are precluded from raising the pleas, which they took in their objection petition, as it was not entertained by the learned Banking Court on account of their own acts and omissions and they can blame nobody except themselves.

6. Now coming to the judgments relied upon by the learned counsel for the appellants. As regards judgment of Messrs Dawood Flour Mills and others (ibid), the same is not applicable in the case in hand, as in the said case objection petition was filed along with deposit of 20% of the bid amount:, as required under second Proviso to Order XXI, rule 90, C.P.C. and the entire decretal amount was paid by the judgment-debtors. The case of Messrs Noor Hayat Industries (Pvt.) Ltd. through Chief Executive (ibid), was decided with reference to the Financial Institutions (Recovery of Finances) Ordinance, 2001 while the present case is governed by the provisions of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, inasmuch as the appellants have themselves filed the appeal, under the provision of latter enactment. Reliance of the learned counsel on the said judgments is misdirected and those are of no avail to the appellants. Additionally, order dated 24-10-2000 manifests that the appellants themselves filed a miscellaneous application, thereby seeking permission to deposit a sum of Rs.2,60,000, being 20% of the auction price, and on their pointation, the Court directed them to deposit a sum of Rs.2,60,

000. Under the circumstances, the appellants are precluded from blowing hot and cold in the same breath, as on the one hand they filed the application seeking permission to deposit 20% of the auction price and on the other hand by relying upon the case of Messrs Noor Hayat Industries (Pvt.) Ltd. through Chief Executive, are arguing that the provision of C.P.C. are not applicable.

7. In the above perspective, we have examined the impugned order and find that the same does not suffer from any legal defect/error and we are not persuaded to reverse the said order, which is hereby maintained.

8. Upshot of the above discussion is that the present appeal is devoid of merits, hence the same stands dismissed leaving the parties to bear their own costs. M.H./C-73/L Appeal dismissed. 2005 C L D 1450 [Lahore] Before Muhammad Muzammal Khan and Syed Shabbar Raza Rizvi, JJ ASKARI COMMERCIAL BANK LIMITED through Attorneys-Appellant Versus IMPERIAL HOSIERY (PVT.) LIMITED through Chief Executive and 11 others

Respondents R.T.A. No.364 of 2004, heard on 29th March, 2005. Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001)

Ss.10 &. 17

Recovery of bank loan

Partial decree

Entitlement to mark-up for the period of rescheduled facility--Application for leave to appear and defend the suit, non-deciding of-Suit filed by hank was decreed by Banking Court partially without deciding application of defendant for leave to appear and defend the suit--Contention of bank was that decretal amount could not have been reduced without any just cause/reason and hank was entitled to recover mark-up beyond initial period of 362 days as the facility was rescheduled and availed by defendants

Validity

Under law in case of acceptance of application of defendant, the controversy between the parties was to he put to issues and in case of its rejection. the suit of hank was to be decreed to the extent it (bank) was entitled to the amount--Bank had claimed in the plaint that after expiry of fixed period, for which the finance was advanced, the same was rescheduled and defendants had been taking. benefits of the same

Repayment by defendants during the period beyond the time frame of original finance was enough proof of rescheduling of finance facility availed by them-Documents along with plaint included reply of defendants through their counsel to the legal notice issued by bank, acknowledging their outstanding liability which was prayed by them to be adjusted within the time prayed to be extended by the bank

All such matters remained undecided by Trial Court including non-determination of liability of defendants to liquidate their liability, in spite of repeated notices by the bank

Banking Court did not opt a lawful procedure for decision in the case and under misconceived manner/view of deciding the lis, disposed of the same through non-speaking/sketchy judgment

Judgment and decree passed by Banking Court was set aside and matter was remanded to Banking Court for decision afresh

Appeal was allowed accordingly. Tariq Kamal Qazi for Appellant. Nadeem Ahmed Sheikh for Respondents. Date of hearing: 29th March, 2005. JUDGMENT MUHAMMAD MUZAMMAL KHAN, J.

Instant regular first appeal is directed against the judgment/decree dated 10-6-2004 passed by the Banking Court No.1, Faisalabad whereby the suit of the appellant for recovery of Rs.32,58,289.32 was decreed for an amount of Rs.9,54,560 along with costs of funds at the prevailing rate from 1-7-1998, till the full/final realization of the decretal amount, jointly and severally with costs of the suit, against the respondents.

2. Succinctly, relevant facts are that. respondent No.1 through its Directors was granted finance facility by the appellant on 3-7-1996 to the tune of Rs.10.00 million by way of export refinance part-I for a fixed period against, the security of open pledge of stocks besides collateral securities in form of equitable mortgaged of properties, lien on export LC/Contracts, personal guarantees of the Directors of the Company besides execution of Finance agreement and other alike documents including the demand promissory notes, payable on demand of the appellant. The finance facility was reduced to the tune of Rs.4.00 Million on request of the loaner on 4-7-1997 for 362 days. Transactions between the parties remained normal till 30-6-1997 whereafter respondents tailed to abide by the terms/conditions of the finance agreement and the rules/regulations promulgated by the State Bank of Pakistan. On demand of the Bank, an amount of Rs.4.00 Million was repatriated to the State Bank of Pakistan and the liability with regard to over due amount was taken over by the appellant Bank. Thereafter the respondents were allowed finance with subsidized rate of mark-up but due to failure to reimburse the finance, they were held liable to pay mark-up at the rate of 19 percent. Liability of the respondents was reduced, as they had been depositing certain amounts towards the adjustment of their account. Respondents, in spite of all this, committed default resulting in legal notices by the appellant which were replied by the respondents, acknowledging their liabilities and praying time space for re-adjustment of the same. Repeated failure in re-adjustment of the finance facility and sale of pledged stocks in trade by the respondents, led to filing of suit for recovery by the Bank. Respondents in response to service of notice filed an application for leave to defend the suit.

3. The Banking Court cognizant of the suit after hearing the parties, partly decreed the suit of the appellant, calculating the liability of the respondents on the basis of mark-up for 362 days at the agreed rate of Rs.52.00 paisas per thousand per day for the agreed finance period only to the tune of Rs.7,52,

950. On account of non-shipment of the consignment by the respondents a penalty of Rs.2,01,000 was imposed and their total liability was worked out as Rs.49,54,560 and by adjustment of repaid amount by the respondents of Rs.4,00,000 remaining amount was said to be Rs.9,54,560 and for this amount the appellant's suit was decreed, as noted above. Banking Court neither decided the application of the respondents/defendants filed by them under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 praying leave to defend the suit nor any reason was furnished for declining the decree to the appellant, as claimed in the plaint. The appellant aggrieved of partial decretal of its suit, filed the instant first appeal before this Court which was admitted to regular hearing and after notice to the respondents, has now been placed for final determination. Respondents having been served, are represented through their counsel.

4. The learned counsel for the appellant submitted that the trial Court overlooked the fact that except respondent No.2 there was no proper application for leave to defend the suit by other defendants hence as against the defaulting defendants/ respondents, suit of the appellant as it stood, should have been decreed. It was further submitted that decision of the trial Court without deciding the fate of application under section 10 of Financial Institutions (Recovery of Finances) Ordinance, 2001 by respondent No.2 was unwarranted. According to him, respondent No.2 also failed to file a proper statement in terms of section 10(4) of the Ordinance, hence, this application was also liable to rejection under subsection (6), whereafter the suit as brought, deserved to be decreed, but a contrary view without any reason, is not sustainable at law. It was further argued that even after expiry of finance agreement, the finance facility of the respondents was re-scheduled, out of which they had been getting benefits. The precise submission was that the appellant was entitled to the entire suit amount which could not have been reduced without any just cause/reason but the impugned judgment is absolutely silent in this behalf. It was also assertively argued that; the appellant was entitled to recover mark-up beyond the initial period of 362 days as the facility was rescheduled and availed by the respondents.

5. The learned counsel appearing on behalf of the respondents refuted the arguments of the appellant, supported the judgment/decree of the trial Court and urged that the original loan amount having been repaid, the respondents were not liable to pay the suit amount. According to him, the mark-up was correctly worked out and the decretal amount including already penalty of Rs.2,01,000 with which the respondents could not have been burdened.

6. We have minutely considered the respective arguments of the learned counsel for the parties and have examined the record of the trial Court with their assistance. Besides the fact that the Banking Court has not give any reason for declining the decree to the appellant for the bulk of the suit amount as they have been granted only one third of the claimed sum, the judgment is absolutely silent about the late of the application under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 filed by the respondents. Under law in case of acceptance of application of the defendant, the controversy between the parties was to be put to issues and in case of its rejection the suit of the appellant was to be decreed to the extent the appellant was entitled to the amount. Dispute regarding non-filing of any petition by respondents, other than respondent No.2, and its result, also remained thirsty of decision. The appellant had claimed in the plaint that alter expiry of fixed period, for which the finance was advanced, the same was rescheduled and the respondents had been taking benefits of the rescheduling. The appellant also detailed the repayment by the respondents during the period from 30-8-1997 to 30-12-2000 in Para No.9 of the plaint and this period being beyond the timeframe of original finance, was enough proof of the rescheduling of the finance facility availed by the respondents. Be that as it may, documents along with the plaint which included the reply of the respondents through their counsel dated 29-9-1999 to the legal notice issued by the appellant, acknowledging their outstanding liability which was prayed by them to be adjusted within the time prayed to be extended from the Bank. All these platters remained undecided by the trial Court including the non-determination of liability of the respondents to liquidate their liability, in spite of repeated notices by the Bank. In these circumstances the judgment/decree impugned, is not sustainable at law and deserved to be reversed.

7. For the reasons noted above, we are of the considered view that the Banking Court No.1 Faisalabad did not opt a lawful procedure for decision of the case and under a misconceived manner/view of deciding the lis, disposed it of through a non-speaking/sketchy judgment. This appeal is accordingly allowed. The impugned judgment/decree dated 10-6-2004 is accordingly set aside and the case is remitted back to the Banking Court No. 1 Faisalabad, for fresh decision of application of the respondents under section 10 of the Financial Institutions (Recovery of Finances) Ordinance, 2001 and to decide the suit afresh, in accordance with law. There will be no order as to costs. M.H./A-448/L Case remanded.