2002 PLP 46 (CLD)

S. ALI ASLAM JAFRI, J.‑‑‑ This appeal filed on 9‑3‑1999 calls in question the order dated 2‑2‑1999 passed by the Banking Court No.II4, Karachi, refusing to set aside judgment and decree dated 15‑1‑1998 passed in Banking Suit No.38 of 1983 jointly and severally against the appellants/defendants Nos. 1 and 2 and respondent No.2 who was arrayed as defendant No.3 in the suit. 2. The facts relevant for the purpose of this appeal are that the respondent/ plaintiff ‑No.l a "Modarba" managed by the Modarba Management Company filed a suit for recovery of Rs.37,20,000 against the appellants and respondent No.2. 3. The case of the plaintiff is that defendant No. 1 by his letter dated 24‑9‑1992 applied to the plaintiff for a Modarba facility to the extent of Rs.3.00 million for the purchase of shares of various companies including the shares of Pakistan Chrome Mines Limited and share of First Premier Modarba and some other companies. Such Modarba agreement was entered between the plaintiff and the defendant No. 1 on 25‑5‑1992 wherein it was agreed that defendant No. 1 will act as agent of the plaintiff in purchasing the required shares of Rs.3.00 million, the price whereof shall be paid by the plaintiff to the supplier and the defendant No. 1 shall pay an amount of Rs.37,20,000 to the plaintiff as per schedule containing the break‑up of the same as mentioned in para.2 of the plaint. In pursuance of the said agreement the defendant No. 1 purchased the shares and issued such certificate, thereafter payment was made to defendant No.3 by the plaintiff. The defendant No.l pledged 1,20,000 shares of Pakistan Chrome Mine Limited, 46,000 shares of First Premier Modarba, 15,000 shares of KESC and 39,900 shares of Din Textile Mills Limited with the plaintiff as a security for re‑payment of the amount of Modarba facility. He had also executed, a promissory note to which defendant No‑2 executed her personal guarantee in favour of the plaintiff for re‑payment of the said amount to the plaintiff. After the purchase of the required shares, the defendant No. 1 by his letter dated 27‑5‑1992 informed the plaintiff accordingly and the plaintiff after receiving the bill issued by defendant No.3 a broker of Karachi Stock Exchange, issued a cheque dated 31‑5‑1992 for Rs.3 million in favour of defendant No.3 which was delivered to defendant No. 1 in pursuance of the buy‑back agreement executed by defendant No. 1 in favour of the plaintiff. 4. On 3‑8‑1992 Karachi Stock Exchange issued a notice informing that all transactions of Pakistan Chrome Mines Limited which took place between 21st July, 1992 to 2nd August, 1992 and all deliveries which were to take place on 10th August, 1992 should not be accepted by clearing house and the members involved in those transactions should settle the transaction mutually outside the clearing house. On verification from Pakistan Chrome Mines Limited regarding the genuineness of the shares and transfer deed held by the plaintiff in pledge by defendant No. 1, the company informed that the said 29,800 shares were cancelled. Somewhat similar position was noted in respect of the other shares of the other companies. Defendant No. 1 was informed that his security has fallen short. Anyhow the defendants failed to make payment of their instalments as per schedule and it further transpired that they had committed fraud upon the plaintiff by pledging spurious shares with him. The defendants Nos. l and 2 apparently in order to evade their liability filed Suit No. 1,18 of 1993 in, this Court against the plaintiff and defendant No.3 challenging the transaction and denying their liability in respect of spurious shares pledged by them with the plaintiff. It was under these circumstances that the plaintiff filed a suit against defendants for recovery of Rs.37,20,000 with mark‑up at the rate of 20% per annum from the date of suit till payment was made. The defendants according to plaintiff are jointly and severally liable for such payment. 5. The defendants Nos. 1 and 2 filed their written statement jointly while the defendant No.3 filed his written statement separately. In their written statement defendants Nos. 1 and 2 denied the plaintiff s claim, however, admitted that defendant No. 1 had entered into a Modarba agreement with the plaintiff and as such became agent/customer of the plaintiff and acquired certain shares from the supplier in the market to be sold to the plaintiff and subsequently to be re‑purchased from the plaintiff in accordance with the said agreement.. The defendant No.2 admitted to have executed personal guarantee for re payment of the amount. Execution of promissory note and other documents referred by plaintiff was admitted by defendant No. 1. However, it was pleaded that the defendant No. 1 had acted as an agent of plaintiff in good faith and performed his duty with due care and diligence in that capacity. Execution of pledge agreement and pledging of the share was also admitted. It was further stated that defendant No.3 had committed a fraud with .the defendants Nos. l and 2 and as such they denied their liability to make payment to the plaintiff as they had neither obtained finance from the plaintiff nor they were beneficiaries in that context. It was denied that defendant No. 1 was a customer in respect of the finance provided by the plaintiff to defendant No.3. Maintainability of the suit was also challenged. 6. The defendant No.3 in his written statement stated that no cause of action has accrued against him as he was stranger to the transaction. He denied his signature on the receipt Annexure "P/9" to the plaint. He further stated that he was only a broker when the shares were sold and in any manner a seller of the shares as such he shall not be liable and responsible for payment to the plaintiff. 7. In view of the pleadings of the parties, the following two issues were framed by the learned trial Court:‑‑ "(1). Whether, the defendants are liable to pay amount as claimed by the plaintiff? (2) What should the decree be?" 8. One Deveraj Viram Karia. Secretary of the plaintiff filed his affidavit‑in‑evidence and produced the documents. He was cross‑examined by the learned counsel for defendant No.3. Despite repeated opportunities the defendants Nos. l and 2 failed to cross‑examine the said witness and as such the plaintiff closed his side. The defendants Nos. l and 2 did not avail the chances to lead their evidence despite sufficient time having been given to them. The defendant No.3 filed his affidavit‑in‑evidence stating same facts as mentioned in his written. statement denying his liability. However, he showed his willingness to furnish the security before the trial Court for payment of the amount to the plaintiff if he wins his case, in order to maintain his market reputation. He further showed his willingness to pay the disputed amount by way of reasonable monthly instalments. 9. The learned trial Court after sifting the evidence on record and taking into consideration the written arguments filed by the counsel for the parties came to the conclusion that defendants Nos. l, 2 and 3 are jointly and severally liable to * pay the amount claimed by the plaintiff and decreed the suit with costs. 10. It is pertinent to mention here that suit was decreed on 15‑1‑1998 but no appeal was filed till 9‑3‑1999. It also appears that instead of filing an appeal the appellants/ defendants Nos. 1 and 2 filed an undated application under section 12 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act (XV of 1997) read with section 151, C.P.C. which was dismissed on 6‑6‑1998. However, this dismissal order was recalled by the trial Court and the application was re heard and it was again dismissed on 10‑10‑1998 alongwith another application filed under section 12(2), C.P.C. read with section 151, C.P.C. It is also necessary to state here that Execution Application No.215 of 1998 is pending adjudication before the trial Court. 11. We have heard the learned counsel for the parties and perused the record. 12. In view of factual and legal position as stated above, the learned counsel for the appellants was unable to convince us that the judgment and decree passed by the learned trial Court and the orders on application under section 12 of the Act or under section 12(2), C.P.C. call for any interference by this Court. The appellants being party to suit and having filed their written statement neither cross‑examined the witness produced by the plaintiff nor led any evidence in rebuttal. The case of the plaintiff has, gone unrebutted and unchallenged. Even otherwise it is based on documentary evidence which has not beers seriously disputed by the appellants rather admitted, by then. We find force in the contentions of Mr. Mansoorur Arfin learned counsel for the respondent that appeal is hopelessly time‑barred so also it has no merits. Instead of filing an appeal at the proper time, the appellants preferred to file applications under sections 12 of the Act and 12(2) of C.P.C., hence they have to thank their own stars. 13. The only argument advanced before us by the learned counsel for the appellants is that by a Notification dated 27‑5‑1997 in partial modification of Notification No.F.48(7)/80‑A(II), dated 30‑12‑1996 Federal Government had constituted a Tribunal consisting of Judge Banking Court No.l, Karachi to try all cases under Modarba (Floatation and Control) Ordinance (XXXI of 1980) within the Province of Sindh. The learned counsel for the appellants has therefore, argued that in view of the above notification the judgment and decree passed by the Banking Court No.II Karachi on 15‑1‑1998 is a nullity for want of jurisdiction. Mr. Salim Salaam Ansari learned counsel for the respondent No.3 who has not filed any .appeal and has supported the contention of Mr. Muhammad Aziz Khan whereas Mr. Mansoorul Arfin learned counsel for the respondent No.l has seriously disputed this position. 14. We have considered the submissions made by the learned counsel for the parties. No doubt by virtue of notification as referred to above a tribunal was set up which had become empowered to try all cases under Ordinance No. XXXI of 1980 within the Province of Sindh but it appears that the said notification was neither brought to the notice of Banking Court nor any such application was filed by any of the parties to the suit. In fact the suit proceeded all along without any objection or application for its transfer to the newly‑created tribunal, as such the bona fide act of the learned trial Court passing the judgment and decree on merits stands protected under the doctrine of de facto. It being based on bona fides and on merits should be assumed to have been passed de jure and shall be deemed to possess all attribute of a lawful operative and binding order. Reliance is placed on the case of Javed Iqbal v. Kh. Muhammad Arif 1999 SCMR 13 and Mehmood Khan Achakzai v. Federation of Pakistan PLD. 1997 SC 426. Doctrine of de facto which is based on higher consideration of public policy is calculated to ensure continuity, to avoid dislocation and to prevent confusion in the conduct of public affairs on the one hand, and the safeguard of public and private rights emerging from the de 'facto act of officer performing functions of the State in the ordinary course, on the other. In fact the doctrine of de facto is a well‑recognized doctrine embedded in our jurisprudence. Under this doctrine bona fide act in public interest performed by persons assuming authority, which turn out to be illegal, are assumed to have been performed by a de jure authority/ person and binding. The acts of the officers de facto performed by them within the scope of their assumed official authority in the interest of public or third person and not for their own benefit are generally as valid and binding as if they were the acts of officers de jure. Resultantly, this appeal was dismissed with costs. These are the reasons for the short order we had announced on. 30‑8‑2001 at the time of conclusion of arguments of the learned counsel for the parties. Q.M.H./M.A.K./A‑248/K Appeal dismissed.