2005 PLP 422 (CLD)

Date of hearing: 4th June, 2004. C.M.A. No.188 of 2004 under section 151, C.P.C. seeks direction to the CIRC to proceed in accordance with SPB Scheme under Circular No.29 and in terms of the Scheme offered by it. Learned counsel for the judgment debtors contended that, CIRC through widely circulated incentive scheme offered settlement to various class and categories of the borrowers. Such offer was also extended to the J.D. through offer letter dated 29‑5‑2003. J.D. accepted the same and in furtherance and part performance deposited 10% down payment but CIRC demanded balance amount in lump sum instead of recovering it in instalments, necessitating listed application. It is stated by Ms. Soofia Saeed, learned counsel for J.D. that in terms of BPD Circular No.29 on payment of 10% forced sale value the settlement agreement was to be executed, providing schedule of payment spread over three years as per BPD Circular referred to above. Mr. Khalid Javed, learned counsel appearing for CIRC submits that incentive scheme is applicable only in terms of the Scheme as offered by CIRC it has no relevance with Circular BPD No.29 issued by State Bank of Pakistan. It was further contended that CIRC is neither a Banking Company nor a Financial Institution, therefore, any scheme or circular issued by State Bank of Pakistan is not binding on CIRC. Mr. Khalid Javed, learned counsel urged that J.D. was offered incentive in terms of CIRC Scheme which do not provide for payment in instalment. It was further urged that CIRC has a life of six years from the date of its establishment i.e. 22nd September, 2000; therefore, recovery in instalment spread over period of three (3) years could not be effected during its remaining tenure of CIRC that is up to 21st September, 2006. In order to appreciate contention of learned counsel, relevant condition on which settlement was offered by CIRC reads as follows: "CIRC has introduced a scheme for amicable settlement of non‑performing assets (hereinafter called "CIRC Settlement Scheme") in line with SBP. BPD Circular No.29 dated 15th October. 2002 with immediate effect." (Underlined for emphasis). J.D. accepted the above offer, CIRC through letter required the J.D. to deposit 10% of the offered amount in order to qualify for processing the case under CIRC Scheme. J.D. deposited the 10% amount as demanded through pay order dated 19‑7‑2003 under covering letter of the same date and requested for the settlement of draft agreement. In response dated 30‑10‑2003 CIRC demanded lump sum payment of the settled amount within thirty days. J.D. through various letters reminded the CIRC of the offer made under the CIRC Scheme lastly the CIRC through final reply dated 4‑12‑2003 wrote as follow: "This refers to your letter dated November 20th 2003 bearing Reference No.Gvpmd/ NBL(NDFC)/ 2003/ 115 on the subject. Since the Board of Directors of CIRC has decided to consider only confirmed offer for settlement against full payment, CIRC cannot accept your proposal for settlement on three years basis." Above reply prompted listed application. Front the reading the CIRC Settlement Scheme as offered (Annexure `J/ 1' to application as offered to J.D. and Annexure `A/2' to the counter‑affidavit filed by CIRC, as advertised). Relevant clause already reproduced above. It is evident that scheme offered, was represented to be in line with SBP. BPD Circular No.29 dated 15th October, 2002. Para.12 of the BPD Circular No.29 dated 15‑10‑2002 reads as follow: "

12. The settlement, in above categories shall be made only on the basis of cash recovery. The borrower has to make at least 10% cash down payment of settled amount at the time of signing of agreement and remaining amount may be paid in instalments at least on quarterly basis within a maximum period of 3 years from the date of signing of agreement. Under the above arrangements the borrower will only be eligible for write‑off after repayment of entire agreed amount. In case of non- adherence of terms of agreement, the borrower will not be eligible for any concession." From bare reading of para. 12 of the Scheme under BPD Circular No.29 of State Bank of Pakistan, it appears that, borrower availing the incentive scheme was required to make at least 10% cash down payment of settled amount at the time of signing of agreement. Remaining amount could be paid in instalments at least on quarterly basis within a maximum period of 3 years from the date of signing of agreement. It is accepted norm and practice in the Legislative as well as in commercial instruments that certain statutory provisions, stipulation, terms and conditions of other statutory or commercial instruments are incorporated or adopted by reference. Such is for the sake of convenience to avoid repetition and verbosity and to keep the Legislative or commercial instruments precise and of convenient length. Adopted provision of the statutory or commercial instrument is reckoned very much part of the principal instrument in which it is adopted by reference. Terms and conditions of the adopted provisions or the instrument have the same force and could be enforced as the terms and conditions of the principal instrument itself. Adoption by reference of other instruments or any part thereof is generally made where such instrument by and large is acceptable and generally followed. Best example that could be cited is in cases of mediation clause in commercial transaction by reference rule of arbitration of various regional and internationally acknowledged trade bodies and associations are not only adopted but enforced by the parties as well as by the Court. For instance parties may agree by reference to follow model rules and regulations of `Arbitration Courts of Chamber of Commerce and Industry, Geneva', London Maritime Arbitration Association Terms, PNI Club, ICC International Court of Arbitration etc. to name a few. In the instant case as can be seen the CIRC introduced a scheme for amicable settlement of non- performing assets in line with SBP, BPD Circular No.29 dated 15th October, 2002 with immediate effect. CIRC offering that its scheme is in line with SBP, BPD Circular No.29, in fact adopted the incentive scheme of State Bank of Pakistan with all its salient features one of the important clause is 12 as reproduced above which provide recovery of the balance amount in instalments. Once CIRC invited borrowers to avail the incentive settlement represented to be in line with BPD Circular No.29. Then in all fairness, equity and under law CIRC is bound by the offer made by it and accepted by the J.D. more particularly when J.D. without reservation paid 10% down payment of the forced sale value as demanded. It may be noted that payment of 10% cash down payment of settled amount is condition precedent to enter into an agreement. When such payment is made by the borrower and accepted by the CIRC a binding contract came into existence and as per CIRC Scheme (in line with BPD Circular No.29) remaining amount made paid in instalments at least on quarterly basis within a maximum period of 3 years from the date of signing of agreement. CIRC cannot be allowed to play hot and cold in the same breath, when CIRC Scheme was represented to be in line with BPD Circular No.29 then CIRC cannot be allowed to follow the part of the clause 12 of BPD Circular No.29, that suits it and refuse to follow the part that favour or facilitate the borrower in liquidating the liability. The CIRC Ordinance, 2000 is a beneficial legislation, promulgated in the public interest to deal with financial institutions and their assets. To assist the business sector by dealing with distressed enterprises and to promote the rehabilitation of national economy by making provisions for the acquisition, restructuring, rehabilitation, management disposition and rationalization of non‑performing loans and other assets of various banks and financial institutions and for matters ancillary thereto. In case CIRC does not adhere to the commitment and representation made by it in its incentive scheme, it would shatter the confidence of the distress enterprises that' opted for the scheme but would also be in negation to the declared object and purpose of the Ordinance, 2000. CIRC demand for payment of entire amount in lump sum certainly is not in line with BPD Circular No.29. In my opinion CIRC is bound by the representation made by it that its incentive Scheme is "in line with SBP, BPD Circular No.29 dated 15th October, 2002 with immediate effect". Once an offer is accepted a binding contract comes into being, more particularly when the party accepting the offer acts in furtherance thereto makes the down payment within time. Contention of Mr. Khalid Javed, that CIRC has life of six years from the date of commencement of the Ordinance, 2000, therefore, the payment schedule cannot spread beyond its life. Such contention of learned counsel is not well‑founded. In terms of section 35 of CIRC Ordinance, 2000, CIRC has a life of six years from the date of Ordinance, which may be extended further by the Federal Government by law. There is no provision in the Ordinance, 2000, which restrains CIRC from undertaking any task or business as specified under section 18 thereof that may materialize or spread over a period beyond its life. In terms of section 39 of the Ordinance, 2000, to meet any such exigency reservation of the authority with the Federal Government to remove the same by order published in the official Gazette is purposeful. A contract entered by and between the parties when they are competent to do so is not only binding on the parties concerned but also binds their successors. Even in terms of winding up of the CIRC vesting of its assets and liabilities is provided for in terms of section 35 thereof. For the foregoing reason application is allowed. CIRC is directed to forward the agreement in terms and in consonance with BPD Circular No.29 within two (2) months setting out Schedule of payment of the remaining amount in instalments at least on quarters basis within a maximum period of 3 years from the date of signing of agreement. Judgment‑debtor to pay remaining amount as may be determined by the CIRC in line BPD Circular No.29. M. B.A. / N‑49 / K Application allowed.