P L D 1966 (W (PLP)

WAHIDUDDIN AHMAD, J.

This Letters Patent Appeal is horn the order of a learned Single Judge, in Execution Application No. 19/1961, decided on 30th October 1961. By this order the learned Single Judge, directed the appellant's Association to pay the attached amount in Court within a week's time.

2. Briefly, the facts leading to this appeal are that Messrs Ralli Brothers Ltd., respondent No. 1 obtained a decree for Rs. 24,153 in Suit No. 179/1960. Against Messrs Mahmud & Co., respondent No.

2. In Execution Application No. 19/1961, the decree‑holder applied for the attachment of Rs. 10,000 deposited with the appellants Association for the satisfaction of the decree. On 15th March 1961, the money deposited with the appellants was attached. On 2nd June 1961, the appellants filed objections against the attachment of the amount in dispute on two grounds. Firstly, that the amount was not attachable and, secondly, that it was subject to the lien of the members of the Association whose claim had been notified to the appellants Association. The learned Single Judge, dismissed the objections on the following observations: "It is true that in terms of Article 5‑B, the amount deposited with the Karachi Cotton Association is subject to lien in favour of other members' to whom the depositing member may be indebted in respect of cotton transactions. This lien in favour of the members of the association is stated in the article to be next to the lien of the Association itself. This provision does not have the force of law and may be at best taken to be a term of contract amongst the members. It is unnecessary in this case to examine the force of contract as opposed to the decree of Court because the lien holder Messrs Gut Ahmad Textile Mills have not cared to utilise the deposited money for the satisfaction of their claim. Mr. Ramchandani informed me that Messrs Gut Ahmed Textile Mills took out execution of their decree against the defendant but did not attach the deposit, but Mr. Jamtatrai says that their claim has been registered by the Association. In other words no action has been taken to appropriate the money towards the satisfaction of this claim. Mr. Fonseca has contended in these circumstances that Messrs Gut Ahmed Textile Mills are not entitled to priority in the distribution as requested by Mr. Ramchandani and that in any case the Karachi Cotton Association has no reason for not "paying the amount into Court. This is correct." The appellants have challenged this order in this Letters Patent Appeal,

3. In support of the appeal Mr. Dingomal, the learned counsel for the appellants has relied on rules 5 (b) and 5 (c) of the Articles of Association. In order to appreciate the contention of the learned counsel it would be useful to reproduce them. These are in the following terms:‑‑ "5 (b).‑Every applicant for original Membership shall declare in his application the name or names of his partner or partners and shall furnish such other information as the Board may require and shall pay with his application the said deposit of Rs. 3.000 which shall be liable to forfeiture by a resolution of the Board for any default made by the Member in payment of any money payable by him to the Association or to any other Original Member or Members, (sic) or Associate Member or Members, of the Association under or in virtue of the Bye‑laws from time to time in force. The deposit shall bear interest at the rate of 3 per cent. per annum from the date of acceptance of the application for Membership. This deposit together with interest if any shall be subject to a lien in favour of the Association which the Association shall have a first' charge thereon for all sums due to the Association by the Member making the deposit. Postponed to and coming immediately after the said lien the deposit shall in every case be subject to a lien in favour of such of the other members (of any and every class) as the maker of the deposit is indebted to in respect of cotton transactions for the total amount of such indebtedness. For such indebtedness this lien shall be a second charge upon the deposit. 5 (c).‑Persons, firms or companies not accepted by the Board as Original Members and who are not Commonwealth subjects may be admitted as Members of the Association if approved by the Board, provided that the Board are satisfied that the respective countries of which they are nationals afford similar trading facilities to Pakistan subjects trading in cotton or cotton goods and provided they shall each deposit with the Association a sum of Rs. 10,000 which shall bear interest at the rate of 3 per cent. per annum and be subject to the liens and liable to the forfeiture provided in Article 5 (b). Persons, firms or companies eligible for membership under this article applying for membership after 1st September 1939, shall each deposit with the Association a sum of Rs. 20.000 which shall bear interest at 3 per cent. per annum and be subject to the liens liable to forfeiture provided in Article No. 5 (b). Persons, firms or companies eligible for membership under this "Article and applying for membership after 1st January 1944, shall each deposit with the Association a sum of Rs. 30,000 which shall bear interest at 2 per cent. per annum and be subject to the liens and liable to forfeiture provided in Article 5 (b)." It will be noticed that persons, firms or companies not accepted by the Board as original members are admitted as members of the Association on deposit of a sum of Rs. 10,000 which bears interest at the rate of three per cent. per annum. Under the Articles of Association referred to above the deposit together with interest if any is subject to a lien in favour of the Association as a first charge thereon for all sums due to it by the member making the deposit. It is further provided that in case there is no such lien the deposit shall in every case be subject to a lien in favour of such of the other members as the maker of the deposit is indebted to in respect of cotton transactions for the total amount of such indebtedness. According to the rules this lien shall be a second charge upon the deposit.

4. It is not disputed by Mr. Dingomal that the appellants Association had no claim against respondent No.

2. The learned counsel only contended that Messrs Gul Ahmed Textile Mills Ltd., had obtained a decree from this Court for a sum of Rs. 33,282 in Suit No. 130/1960 against respondent No.

2. He further brought to our notice that Messrs Hussain Textile Mills Ltd., had also obtained a decree for Rs. 11,312 against respondent No. 2 but he was unable to give any particulars about it. The learned counsel contended that the above‑mentioned parties are members of the appellants Association and, therefore, in terms or rule 5 (c) they have a lien on the amount of Rs, 10,000 deposited with it. In our opinion, the contention of the learned counsel has no force, because there is nothing to show on the record that the decree of Messrs Gul Ahmed Textile Mills Ltd., relates to cotton transaction or that the said decree‑holder had registered their claim with the appellants Association before the order of attachment was issued by the Executing Court. Further there is nothing to show from which Court Messrs Hussain Textile Mills Ltd. obtained decree and on what date. It is also not proved on the record that the alleged decree was in respect of cotton transaction and the claim was registered with the appellants Association before the date of attachment. In these circumstances, the appellant's contention that the above‑mentioned two parties had lien on the amount deposit with then has not been satisfactorily established. In order to attract the provisions of rule 5 (b) and rule 5 (c), reproduces above, for the benefit of the members of the Association, it was the appellant to establish that the claim of the above essential for mentioned two members were in respect of cotton transaction and had been registered with them before the date of the attachment. None of these ingredients have been fulfilled in the present case. It is, therefore, not possible for this Court to hold that the appellants Association is entitled to retain the amount deposited with them for the purpose mentioned in rule 5 (b) and rule 5 (c).

5. Mr. Naimuddin, the learned counsel for respondent No. 1 has drawn our attention to a decision of the Supreme Court in Civil Appeal No. K‑16‑1964, (unreported) decided on 27th May 1965. In that case also a creditor filed a suit for the recovery of Rs. 45,500 against one of the members of the Karachi Stock Exchange Ltd. After filing the suit he made an application for restraining the debtor from realising a sum of Rs. 15,000 held in deposit on the account of the debtor by the Karachi Stock Exchange Ltd. A learned Single Judge of this Court on 7th February 1961, made the above restraining order absolute. A year later, on 2nd February 1962, the creditor applied that the Karachi Stock Exchange Ltd., be called upon to deposit in Court the amount of Rs. 15,000 or such lesser amount as may be in its possession. This application was resisted by the Karachi Stock Exchange Ltd., but the learned Single Judge rejected the objections and directed the Karachi Stock Exchange Ltd., to deposit the amount for the satisfaction of the creditor's decree. This order was challenged before their Lordships in the above‑mentioned appeal, but it was upheld on the following observations "In the present case, there is nothing to show that a declara tion of default was made, or the matter was referred to the Defaulters' Committee, and consequently, it is difficult to accept the contention that the deposit in this case should, by reason of rules 44 to 49 of the General Rules, have been left in the control of the Karachi Stock Exchange. A sufficient period of time, that is over four years has elapsed since the occasion arose for investigating the state of Messrs Purviz Dalal's affairs as a member of the Karachi Stock Exchange. It is not open to the Exchange in the circumstances to advance any general grounds of responsibility to its other members or the public for satisfying the dues of Messrs Purviz Dalal for under its own rules, by the date the application for transfer of the deposit to the High Court was made; the exact state of affairs should have been ascertained and appropriate steps should have been taken under the rules. The fact that no such action was taken is sufficient in our opinion for concluding that the deposit bad assumed the character of a debt due from the Exchange to Messrs Purviz Dalal. It is clear that the Exchange cannot be allowed to hold on to the security deposit, in the absence of any power of the purpose derivable from the rules and exercisable in the existing circumstances Accordingly, we are of the view that the order of the learned Single Judge directing that the deposit should be paid into the High Court was a proper order to make in the case, and we hereby dismiss this appeal with costs." Thus, it will be noticed that their Lordships in an identical case upheld the view of the High Court on the ground that the Karachi Stock Exchange Ltd., could not be allowed to hold onto the security deposit, iii the absence of any power for the purpose derivable from the rules, and exercisable in the circumstances of that case. In the light of the above observations it is perfectly clear to us that in this case the appellants have not laid down any foundation to attract the provisions of rule 5 (b) and rule 5 (c). It is not established on the record that the decree of Gul Ahmed Textile Mills Ltd. was obtained in respect of the cotton transaction or that their claim was registered with the appellants Association before the attachment order was passed in the above mentioned Execution Application. It is further not proved on the record from which Court and on what date Messrs Hussain Textile Mills Ltd., obtained decree against respondent No. 2 and whether it relates to cotton transaction or their claim was registered with the appellants Association before the attachment order was issued. In these circumstances, the claim of the appellants to retain the amount of Rs. 10,000 deposited with them cannot be accepted as good.

6. It seems to us that the appellants if at all, could exercise their power to retain the amount in dispute for the satisfaction of the claim of their members only if the claim in question related to cotton transaction and had been registered with them prior to the attachment. This is a condition precedent to invoke the application of the above‑mentioned rules of the Articles of Association. Unfortunately, in the present case, this condition is lacking and, therefore, the amount in dispute was rightly treated as debt due to the Judgment‑debtor attachable in the decree. We are satisfied that in such circumstances the learned Single Judge was fully justified in dismissing the objections of the appellants.

7. Before parting with this case, it may be mentioned that in the order under appeal the learned Single Judge has already safeguarded the interest of respondents Nos. 2 and 3 creditors by directing them to exercise their right for rateable distribution under section 73, C. P. C.

8. In the result, we find no force in this appeal, which is dismissed with costs. K.B.A. Appeal dismissed.