P L D 1988 Karachi 404 (PLP)

SALEEM AKHRAR, J.‑‑The appellant has filed this appeal against the judgment and decree passed by a learned Single Judge of this Court on the original side in a suit filed under the Banking Companies (Recovery of Loans) Ordinance, 1979. At the time of filing the appeal the appellant did not deposit the decretal amount in Court. nor any security was furnished. Without realising it the office places this appeal for admission and on 11‑12‑1986 the appeal was admitted. Notice of the appeal as well as application for stay tugs issued to the respondents. The respondent No.l filed counter‑affidavit pleading that the appeal is not maintainable as subsection (h) of section 12 of the Ordinance snakes the appeal inadmissible, unless the appellant deposits in cash in Court an amount equivalent to the amount of decree or at the discretion of the High Court furnishes security to the extent of the said amount. We have heard Mr. J. H. Rahimtooliah the learned counsel for the appellant and Mr. lqbal H. Kazi for the respondent No. I. Amongst other contentions which for the present moment we are not discussing Mr. Rahimtoollah contended that if section 12 (5) is applicable then the security furnished by the appellant to the respondent No.l should be treated as sufficient security for the purpose of admitting this appeal and no additional security should be required. On the other hand Mr. Kazi contended that the provision of section 12(51 of the Ordinance is mandatory inasmuch as it gives a negative direction not to admit the appeal till such time the decretal amount is deposited or in the discretion of the High Court security is furnished by the appellant. It is an admitted position that the respondent X0.3 had mortgaged its immovable property with the respondent No.l as security for payment of loan and further that the value of the property is sufficient to meet the decretal amount. The trial Court has passed a decree against all the respondents jointly and severally and a preliminary decree under Order XXX1V has been passed against respondent o.O. It has not filed any appeal against the said judgment and decree. In these circumstances question arises whether the security already furnished by the appellant should be treated as a security for the purposes of admitting the appeal or he may be directed to deposit the decretal amount or furnish fresh security in addition to the security already furnished. This question came up for consideration before two separate Benches and it seems that there is a difference of opinion. In First Appeal 60180 (Consolidate Sugar Milts Ltd. v. Pakistan Industrial anti Credit Investment Corporation) when the appeal was filed the office raised objection that provision of section 12(5) has not been complied with. However, the learned Admitting Bench admitted this appeal and notice was issued to the respondent. When the application for stay of decree was taken up for hearing, the abjection regarding non‑compliance of section 12(x) was considered and the learned Bench observed as follows:‑ "On a plain reading of the provision, it would be very clear that stay cannot a granted, rather an appeal cannot be admitted, unless the appellant deposits in cash an amount equal to the decretal amount, or, if the High Court so orders on its discretion, security is furnished. We asked Mr. Zari if he was prepared to deposit the decretal amount, and his main contention was that the respondent was fully secured, as the mill itself was mortgaged with the respondent, who also had $ floating charge on the :hill and held a full power of attorney in regard to the assets of the appellant mill. It seems Mr. Zari would wish us to interpret subsection (5) of section 12 of the Ordinance? the manner that, if a security had been giver by the judgment‑debtor at the time of obtaining the debt, the same should be considered to be sufficient even after the decree has been passed. We are afraid we cannot accept that contention in view of plain terms of taw. On the other hand, we are of the view that the Legislature was conscious that banking loans are generally advanced after security because if that was not so, then section 4 may not have found a place in the Ordinance. Section 4 provides for the‑Banking Company calling upon the debtor to furnish further security. On such premises, we are very clear in our mind that subsection (5) of section 12 of the Ordinance contemplates security aliunde, and without reference to the security that was offered at the time of obtaining the loan, or the mortgage that was created at that time. In these circumstance, we asked Mr. Zari if the appellant could furnish Bank Guarantee, and, in fact, Mr. Aziz Munshi with his usual fairness, stated before us that if a Bank Guarantee is furnished by the appellant the decree may be stayed. Mr. Zari stated that the appellants were in no position to furnish Bank Guarantee. We, therefore, dismiss this application." In another appeal namely First Appeal. No.65/81 General Investment Ltd. v. The Union Bank of Middle East the appeal was placed for admission with office objection that section 12(5) of the Ordinance has not been complied with. The learned Bench admitted the appeal and deferred the consideration of the office objection after notice to the respondent. The respondent then filed an application for review of the. order of admission. When the stay application cane up for hearing, this objection was raised and the learned Bench made the following observation: "Mr. Zari next contended that the respondents were secured, zo that security, or, deposit may be dispensed with. We must state that the security referred to in section 12(5) of the ;Banking Companies Ordinance is aliunde and independent of? the security which in circumstances nay be the subject‑matter of the suit itself. The security under section 12(5) of the Ordinance is designed to control jurisdiction of the Court anti . such security is entirely independent. In any case, on ? ????????furnishing security in this Court, the appellant could stake an application for permission to sell the property already mortgaged and such application shall be considered on merits. In these circumstances, we will grant stay of execution of the decree on the appellant furnishing security to the extent of the claim in the suit. The application made by the respondents for recall of the order of admission shall be placed before the Bench of the Judges that admitted the appeal." The application for recalling the order of admission was ordered to be fixed before the same Bench which had admitted the appeal. When this application came up for hearing before the learned Bench the security furnished by the appellant at the time of obtaining the loan was treated as a security for the purpose of admission of appeal and the following observation was made:‑ "In view of the provisions contemplated under section 12(5) of the said Ordinance, we find as informed by Mr. Zari, that property in question which is very valuable has already been mortgaged with the respondents and the same property may be treated as security for the purpose of section 12(5) of the dg said Ordinance. It is also pointed out by Mr. Zari that the preliminary decree passed in the suit is for sale of the property and no particular amount is mentioned therein. In such circumstances, since discretion is given to the Court under section 12(5) of the Ordinance to order for security instead of insisting on deposit of cash, we feel that compliance wilt rye made if the mortgaged property which is already with the bank directed to be treated as security contemplated under section 12(5) of the said Ordinance. We‑ accordingly accept the oral prayer made by Mr. A.A. Zari during the course of arguments that the properties which are already mortgaged with the respondents may be treated as security in terms of section 12(5) of the Banking Ordinance. Since the objection of the learned counsel relates only to the non‑furnishing of the security before admitting the appeal to regular hearing and now we have reached the conclusion that the property mortgaged with the respondents should be treated as a security in terms of section 12(5) of the Ordinance objection raised by the appellant eras been substantially complied with and we accordingly see no reason to recall our order of admission. The application filed by the respondents is accordingly dismissed but there will be no order as to costs." The orders passed in the aforesaid appeals were challenged before the Supreme Court and by a consolidated judgment the appeals were disposed of which is reported in (General Investment Ltd v . Dubai Bank Ltd.) 1984 S C M R 634. 'this judgment, however, kept the question involved in it open as appeals were disposed of in terms of agreement between the parties. The relevant observations are as follow s: ‑ "Leave to appeal was granted in these appeals in order to set at rest the conflict of opinion between the various Benches of the High Court on the interpretation of section 12(5) of the Ordinance. The main contention of the learned counsel for the appellant is that the provisions of section 12(5), if literally construed as done in the order of the learned Judges of the High Court dated 15‑2‑1982, will render nugatory the right of appeal given by sections 12(1) (2) 43) and (4) of the Ordinance. His argument was that the object underlying the provisions of section 12(5) was not to penalise or punish the appellants by compelling them to furnish a second security, when the decretal ?amount is fully secured by an equitable mortgage but to secure the interest of the decree‑holder when the Banking Company ??? succeeds in getting a decree. Mr.Naimur Rehman, the learned counsel for Dubai Bank Limited respondent in Civil Appeal ?? No.K‑67 of 1982 and appellant in Civil Appeal No.K‑68 of 1982) on the other hand assail the order of the High Court dated 2?‑4‑1982 and argued that iii the clear terms of section 12(5) .the Court was round to order security equal in value to ???????? the decretal amount either in cash or by way of other surety as a condition precedent to the very entertainment of the ???????? appeal and had, therefore, violated the mandatory provisions of law in treating the existing mortgage security in favour of the decree‑holder prior to the institution of the suit, as a security for purposes of the said provisions. Mr.Aziz Munshi ???? who appeared for the respondent in Civil Appeal No.K‑71 of 1982 also took up the same position. ?????????????? After nearing the learned counsel at length, however, Mr.Naimur Rehmar. and Mr.Aziz Munshi submitted that their ???????? main anxiety was to Secure the interests of the decree‑holder effectively by a sufficient security and as the Court had not ???????? applied its mind to this aspect, even if they accept the mortgage security as a security for the purposes of section 12(5), their clients' interest will be exposed to risk if subsequently the existing security is found to be inadequate in value qua the decretal amount. they agreed that they would not insist on a Security aliunde the initial security under section 12(5) for the purpose of stay of execution. of the decree pending the disposal of the appeals in the High Court. In view of this is not necessary to go into the question of law raised the arguments of the learned counsel for the parties in this appeal." Therefore, the question of law involved in this appeal has not been finally and conclusively decided by the Supreme Court. The two learned Benches of this Court have expressed different opinions. In view of conflict of opinion between the two learned Benches of this Court and as the question involved is of general importance relating to the interpretation of the provisions of Banking Companies (Recovery of Loans)? Ordinance it would be in the interest of justice that consideration of the following question may be referred to a larger Bench constituted by the Hon'ble Chief Justice:‑‑ "Where the appellant does not deposit the decretal amount in Court before admission of appeal, can the security furnished to the Bank for repayment of loan be treated as a security for the purposes of admitting the appeal as required under section 12(5) of the Ordinance? A.A./U‑29/K ????????????????????????????????????????????????????????????????????????????????????? Order accordingly